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5. F-TECH Inc. Business Report FY ended Mar. 2017

F-TECH Inc. Business Report FY ended Mar. 2017

-Sales overseas increased during the fiscal year that ended in March 2017, growing to account for 87.2% of the Company’s total sales.

Recent Development in Japan

Increasing production in Japan
-The Company a Honda Group supplier of suspension components, will begin producing sub-frames in Japan from May 2016 for the European market. The sub-frames will be supplied for the all-new Honda Civic as knockdown components. Until now, sub-frames for the European Civic were supplied by local manufacturers that received technical support from F-Tech. The operation rate of the company's plants is lower because of weak demand, and the new sub-frames will be produced in Japan to take advantage of the idle capacity and yen depreciation. With the start of production for the overseas market, the operation rate of the company's large stamping machines is expected to reach full capacity in May from the current 80%. The sub-frames will be produced at F-Tech's Kameyama Plant in Kameyama City, Mie Prefecture, sometime in May or June. Sub-frames for the European produced Honda Civic Type R are supplied from Japan. The start of the production for the new Civic will significantly raise F-Tech's output. (From an article in the Nikkan Jidosha Shimbun on March 8, 2016)

Awards

-The Company has received the “Environmental Award” from Honda Motor Co., Ltd. for its outstanding efforts to reduce product lifecycle emissions in accordance with Honda Green Purchasing Guidelines. This is the third time that the company has won this award after FY 2011 and FY 2012. (From a press release on January 31, 2017)

Mid-term Management Plan

-The Company announced its 13th mid-term management plan, which covers the fiscal year ending in March 2017 through the fiscal year ending in March 2020. The targets are as follows: sales turnover of JPY 21,000 million and an operating income of JPY 10,500 million (an operating profit margin of 5%). The following is an outline of the business strategies.

＜R&D＞
-To advance the development of chassis systems by combining simulation technology and actual machine verification.
-To achieve a fusion of core and new technologies so as to reduce product weight and costs.

＜Engineering and Production＞
-To achieve quality control/assurance without depending on human skills through automating production and inspection functions.
-To create new technologies and improve products’ capabilities to comply with new materials.
-To reduce distribution/transportation costs by automating logistics functions.
-To create “smart factories” by making more use of IT.


＜Sales＞
-To further expand sales channels, increase technical licensing agreements/partners, and develop more markets in which to expand sales.

＜Management＞
-To enhance the corporate governance and financial structure, and strengthen global-management capabilities through developing human resources.

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

-By region for FY ended March 2017: Japan (JPY 1,341 million), North America (JPY 1,408 million), and Asia (JPY 488 million).

R&D Structure

-The Company established a road simulator at its R&D center in North America. This center, in collaboration with OEMs and Ohio State University in conducting R&D activities, enables the Company to develop, analyze, evaluate, and make proposals on not only sub-frames and suspensions but also on entire vehicle chassis.

R&D Activities

-For delivery to the Honda Freed, the Company significantly reduced the weight and cost of subframes and suspensions while improving productivity.

Further enhance and advance production technology

Hydroforming Technology
-Hydroforming is a manufacturing technology to form closed cross-sectional products by placing pipes inside closed dies, filling them with fluid, then applying pressure to mold the pipes into hollow shapes. Compared to traditional methods, it allows elimination of the stamping process, fewer number of dies, and may even lead to simplification of the welding process. Moreover, its greater strength and rigidity can contribute to lighter weight parts, as well as cost reduction.

Annealing Technology
-The Company is developing its own crushed-tube torsion beam that can be applied to heavier vehicles, by combining hydroforming technology with annealing technology in which heat treatment is applied after hydroforming to eliminate residual stress, and improves the durability of products.

FSW (Friction Stir Welding) Technology
-The Company developed new technology, FSW (friction stir welding), to continuously weld dissimilar metals of steel and aluminum, achieving weight reduction and high rigidity in chassis systems. The Company applied this technology to the production of front subframes with a hybrid structure of steel and aluminum for the first time in the world. With this technology, we achieved a 25% weight reduction compared to traditional steel subframes.

FUT-1 (Thick Plate Friction Cold Forging) Technology
-FUT-1 is the ultrapreprecise plasticity processing technology that the Company developed by integrating ultraprecise punching technology and heading forming technology. This has enabled substantial reduction in costs through achievement of the ultimate material yield rate and elimination of post-processes.
*FUT:F.tech Ultimate Technologies

-For the FY that ended in March 2017: Japan (JPY 3,839 million), North America (JPY 6,623 million), and Asia (JPY 3,861 million)
-In the FY that ended in March 2017, the company invested to launch new models, strengthen its organization, and streamline operations.