EXEDY Corporation Business Report FY ended Mar. 2016

Financial Overview

(in million JPY)
FY ended Mar. 31, 2016 FY ended Mar. 31, 2015 Rate of Change
Sales 268,752 256,011 5.0

-Sales set a new record high, thanks to strong orders, including additional orders for products that were launched in the previous year.

Operating income 21,305 17,887 19.1 -Income increased due to higher sales volumes and favorable currency translation, in spite of higher depreciation costs because of capital investments.
Ordinary income 18,112 19,582 (7.5) -
Profit for the year attributable to owners of the parent 12,013 9,503 26.4 -
MT business
Sales 71,667 71,447 0.3 -Sales were higher due to increased orders from OEMs and increased sales of aftermarket products.
Operating income 10,891 9,374 16.2 -Income increased due to effective cost-cutting initiatives.
AT business
Sales 166,393 156,947 6.0 -Sales were higher as a result of additional orders for products that were launched in the previous year.
Operating income 9,430 9,797 (3.7) -Income fell due to higher depreciation expenses.

Production Operations

-The Company announced that it will construct a new plant to manufacture torque converters at its Ueno Division in Mie Prefecture, Japan. The new plant is scheduled to start operations in January 2017. (From a press release on August 7, 2015)

-The Company plans to develop a new production line that will produce 50% more torque converters per line compared to current lines by the fiscal year ending in March 2018. The Company will introduce the new line to the Ueno Division’s plant (in Iga city, Mie prefecture), its main plant in Japan. The Company intends to develop a unique method to speed up the production line and boost output capacity. As automotive transmission makers expand their production, demand for torque converters has increased in Japan. By developing a new, more efficient production line, the Company intends to stabilize its supply and improve cost competitiveness to raise its profit ratio in Japan. (From an article in the Nikkan Jidosha Shimbun on July 28, 2015)

-The Company aims to increase its sales by 17.2% to JPY 300 billion in the fiscal year ending in March 2018 (FY 2017) from the FY 2014 level. The Company will increase its global production capacity for torque converters by 11% by expanding its plants in and outside Japan. In addition, the Company will increase production of clutch discs for motorcycles in India. Orders for its core products, such as torque converters and clutch parts, are increasing thanks to growing global auto sales. The Company intends to build up a supply network capable of meeting growing demand and attaining its sales objectives. (From an article in the Nikkan Jidosha Shimbun on July 23, 2015)

Award of Recognition

-The Company announced that it has received the Excellence in Quality Award from Toyota Motor Hokkaido Inc. (From a press release on July 10, 2015)

Outlook for FY ending 2017

(in million JPY)
FY ending Mar. 31, 2017
FY ended Mar. 31, 2016
(Actual Results)
Rate of Change
Sales 250,000 268,752 (7.0)
Operating income 18,500 21,305 (13.2)
Ordinary income 18,000 18,112 (0.6)
Profit for the year attributable to owners of the parent 12,000 12,013 (0.1)

>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)

R&D Expenditures

(in million JPY)
FY ended Mar. 31, 2016 FY ended Mar. 31, 2015 FY ended Mar. 31, 2014
MT business 1,255 884 863
AT business 1,754 1,574 1,533
Others 998 1,095 685
New products 1,366 1,654 1,490
Total 5,374 5,208 4,573

R&D Structure

-As of the fiscal year that ended March 2016, the Group had 444 R&D staff, which accounted for 2% of the entire workforce.
-The Company’s R&D activities are being conducted at the following locations.

Name Location
DYNAX Corporation Hokkaido
Outside Japan
EXEDY Chongqing Co., Ltd. Chongqing, China
EXEDY DYNAX SHANGHAI Co., Ltd. Shanghai, China
EXEDY Friction Material Co., Ltd. Chonburi, Thailand
EXEDY ENGINEERING ASIA Co., Ltd. Chonburi, Thailand
EXEDY India Ltd. Maharashtra, India

R&D Activities

MT business
-In the automobile sector, the Company is developing clutches and dual mass-fly wheels with high-performance dampers, which can effectively absorb vibration generated from lean-burn engines and direct-injection diesel engines that comply with environmental issues and lower fuel consumption.

-In the commercial-vehicle sector, the Company is developing products such as actuators and motor drivers that operate clutches that are controlled by control units, as products for ATMs that automate the startup and shifting of manual clutches and manual transmissions.

AT business
-The Company is developing torque convertors, lock-up clutches, and wet clutches.

-The Company is continuing to make use of the latest computer systems for research that leads to improving oil flow, surface pressure analysis, and slip properties inside wet clutches.

-The Company developed and started receiving orders for a torque converter that it developed, which dampens vibration when the clutch is engaged at slow speed, increasing the lockup range up to slow-speed range in order to reduce fuel consumption.

-Dynax Corporation, a consolidated subsidiary, is developing friction materials for lock-up clutches as well as parts for automatic transmissions, fostering its technology on wet friction-materials that use unwoven fabric. It is developing parts designed for DCTs mounted on commercial vehicles, mass-producing the first wet dual clutch for commercial vehicles.

Other business
-The Company is developing new products for hybrid vehicles, such as dry multi- plate clutches that disengage the motor and engine, and which can fit in the motor’s inside circumference; dampers that absorb vibration that occurs when the engine is switched to the motor and vice versa, and when the engine is running; and dampers with torque limiters that prevent excessive load input on the engine.

Capital Expenditure

(in million JPY)
FY ended Mar. 31, 2016 FY ended Mar. 31, 2015 FY ended Mar. 31, 2014
MT Business 4,859 4,422 4,662
AT Business 19,795 19,851 16,943
Others 2,187 3,439 6,310
Total 26,842 27,713 27,915

MT business
-Capital spending to streamline, as well as respond to increased production, at the Company and subsidiaries in Asia.

AT business
-Capital spending to respond to increased production at the Company and subsidiaries in Japan and Asia.

Investments Outside Japan

-The Company announced that EXEDY DYNAX Europe Ltd., EXEDY's Hungarian subsidiary, will expand its plant to increase its paper-based clutch disc production capacity. The subsidiary will purchase a plot of land of approximately 37,000 square meters next to its existing plant. This will increase the total land area to 57,000 square meters, and extend the plant area by 7,725 square meters to 12,360 square meters. The expanded plant will add seven production lines for a total of ten production lines, and will boost its capacity to approximately 75 million paper-based clutch discs per year. The new facility is scheduled to start operations in January 2016. (From a press release on November 25, 2014)

Planned Capital Investments

-In the fiscal year ending in March 2017, the Company plans to spend JPY 32,000 million Group-wide on facilities and equipment, investing JPY 6,000 million in the MT business and JPY 24,000 million in the AT business.