Clarion Co., Ltd. Business Report FY ended Mar. 2015

Business Highlights

Financial Overview

(in million JPY)
  FY ended Mar. 2015 FY ended Mar. 2014 Rate of change (%) Factors
Sales 198,632 191,368 3.8 -Sales increased year-on-year as a result of higher sales to the OEM markets in Europe and China, growth in sales of "security and safety" products, and favorable currency translation.
Operating income 7,386 5,462 35.2 -Operating income increased as a result of improved operating capacity due to higher sales, and cost reductions.
Profit before tax 6,131 4,568 34.2 -
Profit for the year attributable to owners of the parent 4,875 3,985 22.3 -

*The Company adopted the International Financial Reporting Standards (IFRS) from the fiscal year that ended in March 2015. In order to compare results for the fiscal year that ended in March 2015 with the results for fiscal year that ended in March 2014, the financial results for the fiscal year that ended in March 2014 are also given based on IFRS.


-The Company announced that its all-around view camera system has been chosen for the Porsche Panamera sports sedan. This is the first time that Porsche AG has selected this safety camera system for its vehicles. The all-around camera system will be delivered to the global assembly lines for the Panamera, becoming Clarion's first product that is supplied directly to Porsche AG. In Japan, Clarion's navigation systems are featured on vehicles sold by Porsche Japan as dealer-installed optional equipment. (From an article in the Nikkan Jidosha Shimbun on October 7, 2014)

-The Company said that its cloud-based "Smart Access" information platform was chosen by Fuji Heavy Industries Ltd. (FHI), the maker of Subaru automobiles, for its new infotainment system. Clarion has been marketing this platform for aftermarket car navigation systems in and outside Japan, but will supply it to an automaker for original equipment for the first time. The platform allows a user to access to music and information such as weather forecast on an in-vehicle display by using smartphones' applications. The platform was chosen for the "SUBARU STARLINK," FHI's new infotainment system, to be installed on the 2015 Legacy and Outback in North America. FHI and Clarion will jointly develop the system. (From an article in the Nikkan Jidosha Shimbun on August 8, 2014)

Mid-term Management Plan

-The Company announced its mid-term management plan through the end of March 2018 (FY 2017). Looking ahead to the year 2020, Clarion will focus on its "Intelligent Safety system" business for a safer and more secure automobile society, and "Connectivity" business that enables vehicle-to-vehicle, vehicle-to-pedestrian, vehicle-to-infrastructure communications. The consolidated operating profit ratio target for FY 2017 is 5% or higher. In its product strategy, the Company will promote cost reduction reform for all products. As for the Intelligent Safety systems, the Company will expand the market area of automatic parking systems and SurroundEye which supports securing the view in a vicinity of a vehicle. In the field of in-vehicle navigation, display, and audio systems, Clarion aims to develop Smart Access further and differentiate itself in Human Machine Interface. "With Smart Access, Clarion will provide important information that leads to higher safety and security of users," the Company's president and Chief Operating Officer, Hidetoshi Kawamoto, said. (From an article in the Nikkan Jidosha Shimbun on May 28, 2015)

-The Company  is aiming to increase the sales ratio of in-vehicle cameras and car navigation systems for commercial vehicles from 4% for the fiscal year ended March 2014 (FY2013) to 8% by the fiscal year ending March 2017 (FY2016). The Company's sales subsidiaries outside Japan will enhance sales operations to commercial car makers and wholesalers. Currently, most of Clarion's cameras and car navigation systems for commercial vehicles are sold in Japan. By expanding business in foreign markets, the Company aims to achieve its sales target of JPY 250 billion for FY2016. In its three-year mid-term business strategy started in April 2014, Clarion plans to push up sales by 30% in FY2016 from the level in FY2013. In order to achieve this goal, the Company will expand sales of the products for both passenger and commercial car markets and cloud-based services. (From an article in the Nikkan Jidosha Shimbun on June 12, 2014)

Recent developments in production operations

-The Company  plans to globally standardize design and production of its car navigation systems. In Japan, the Company has already started utilizing the standardized design for its parts and architecture of navigation systems since 2014. Since then, automated assembly processes of the production line have been increased from the previous 50% to 80%. Over the next two years, the Uompany plans to introduce the standardization and automation to its plants outside Japan so that its production can be adjusted against fluctuations in exchange rates. The company's profit margin in Japan has been negatively affected by the cost of the imported parts due to the depreciation of the yen. Clarion plans to establish a flexible production system that will allow it to flexibly cope with fluctuations in exchange rates as well as to promote local production for local consumption in Japan. (From an article in the Nikkan Jidosha Shimbun on January 22, 2015)

Outlook for FY ending Mar. 2016

(in million JPY)
  FY ending Mar. 2016
FY ended Mar. 2015
(Actual Results)
Rate of Change
Revenue 220,000 198,632 10.8
Operating income 11,000 7,386 48.9
Profit before tax 10,000 6,131 63.1
Net income 7,000 4,875 43.6

*The Company adopted the International Financial Reporting Standards (IFRS) from the fiscal year that ended in March 2015.

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


-The Company announced that it has received the "2014 Nissan Global Supplier Award for Innovation" from Nissan Motor Co., Ltd. for its lane detection system. The lane detection system, which uses a monocular camera system mounted on the vehicle's front, is featured on Nissan's Active Lane Control technology. The Active Lane Control technology improves maneuverability by making small adjustments to the angle of tires and steering reaction force when the vehicle is moving at 70 km/h or faster. The technology is available on the new Nissan Skyline. (From an article in the Nikkan Jidosha Shimbun on September 3, 2014)

R&D Expenditure

(in million PY)
  FY ended Mar. 2015 FY ended Mar. 2014
Overall 17,536 16,819

R&D Activities

1) Expanding Smart Access, the Company's onboard cloud telematics service:
-In the fiscal year that ended in March 2015, the Company increased sales of voice-operated onboard information devices (and the corresponding compatible languages) for use in North America and Europe. Furthermore, for OEMs, the Company started providing new services that are part of next-generation infotainment systems.

2) Driver assistance function enhanced by improving image recognition technology using onboard cameras:
-In the fiscal year that ended in March 2015, the Company built a test car incorporating technology that improves still-object detection and spatial detection, based on the prototype platform Surround Eye that enhances image processing functions. The Company, working jointly with Hitachi Automotive Systems, Ltd. has successfully advanced automated parking to the point to where it can be commercialized. The companies are currently developing the business model.

-Hitachi Automotive Systems, Ltd. announced that it will, in conjunction with one of its group companies, Clarion Co., Ltd., accelerate the development of an advanced driver assistance system using an ADAS-based integrated control system. Their efforts are expected to help automakers put autonomous driving into practical use. The two companies have already collaborated on the development of an automatic parking system that combines Clarion's image recognition technology with Hitachi Automotive Systems' actuators and vehicle control equipment. They plan to launch the parking system in 2018. (From a press release on June 11, 2014)

-The Company is advancing R&D activities to achieve autonomous driving that some people are claiming will be launched in limited capacity in 2018 or later, developing technology in the following areas: image recognition, high precision location detection, communications, and elemental development aspects, in order to enhance them and make them more precise. In order to make it possible to expand business over the mid-term by making use of cameras, the Company has partnered with the Hitachi Group to continue focusing on the development of technology that will greatly contribute to commercializing high-level driving-assist systems.

3) R&D activities on diversified auto-interior acoustics technology
-By making use of technology that expands the dynamic range of the sources of sounds, technology that the Company has been developing from the past, the Company in the fiscal year that ended in March 2015 launched products incorporating Dynamic Beat Enhancer, a new function that provides a sense of beat and realism in terms of inherent sounds.

4) Development of in-vehicle platform based on Android OS
-The Company announced that it has become a member of the Open Automotive Alliance (OAA), which is a global alliance of technology and automotive companies committed to bringing Google's Android platform to cars. Clarion is developing new in-vehicle connectivity products to release them as early as 2015. (From a press release on June 26, 2014)

Technology Licensed-in Agreement

(As of Mar. 31, 2015)
Partner Country Outline of Licensing Agreement Contract period
Discovision Associate U.S.A. Licensed patent on manufacturing optical disc players Dec. 1, 1994
to the patent expiry date
Vehicle Information and Communication System Center Japan License on the use of VICS technical information Nov. 28, 1995 -
expiry date agreed by two parties
Google Inc. U.S.A. License on the use of voice-recognition and retrieval technology Apr. 30, 2013
- Aug. 31, 2016

Capital Expenditure

(in million JPY)
  FY ended Mar. 2015 FY ended Mar. 2014 FY ended Mar. 2013
Total 4,999 2,888 4,298

Investment in Japan

-The Company invested JPY 1,319 million in production equipment/facilities, dies, and so on.

Investment Outside Japan

-The Company invested JPY 782 million in renewing equipment and facilities for the EMS operations at Electronica Clarion, S.A. de C.V.

-The Company invested JPY 151 million in production equipment/facilities and other equipment at Clarion Hungary Electronics Kft.

-The Company invested JPY 2,746 million to renew plant facilities in China, manufacture dies for products to be used on new-model vehicles, and to expand manufacturing facility in Clarion Asia (Thailand) Co., Ltd.