Keihin Corporation Business Report FY ended Mar. 2017

Financial Overview

(IFRS, in millions of JPY)
FY ended Mar. 31, 2017 FY ended Mar. 31, 2016 Rate of Change
Revenue 325,550 341,576 (4.7) -
-Motorcycle / general-purpose products 82,869 86,994 (4.7)
-Automobile products 242,681 254,582 (4.7)
Operating income 22,954 16,440 39.6 -Income increased to due to extremely effective streamlining initiatives. This was despite negative factors such as increased depreciation expenses and the effect of negative currency translation.
Pre-tax income 20,729 15,549 33.3 -
Profit for the year attributable to owners of the parent 11,084 5,677 95.2 -

Business Developments and Performance by Region

-Sales of motorcycle parts and general-purpose products increased, especially those delivered to Indonesia and Thailand.
-Sales of automotive parts increased in Japan. Deliveries of heat-exchangers for climate-control systems to China and Europe increased.
-Sales were JPY 136.9 billion, an increase of JPY 4.4 billion year-over-year (y/y).

-Sales of motorcycle parts and general-purpose products decreased in South America.
-Sales of auto parts decreased in North America.
-The final posted sales revenue after currency translation was JPY 108.8 billion, down by JPY 13.6 billion y/y.

-Sales of motorcycle parts and general-purpose products increased mainly in Indonesia and Vietnam.
-Sales of auto parts increased in Thailand and Malaysia.
-The final posted sales revenue after currency translation was JPY 96.9 y/y, down by JPY 4.8 billion y/y.

-Sales of motorcycle parts, auto parts, and general-purpose products increased.
-The final posted sales revenue after currency translation was JPY 73.9 billion, down by JPY 1.9 billion y/y.

Recent Development in Japan

-The Company has received an air-conditioning units order from Honda Motor Co., Ltd. (Honda) for its next-generation mini vehicle. Honda's current model uses a competitor's product. However, Keihin succeeded in winning the order by cutting costs through increased productivity, and at the same time increasing its competitive edge with its pursuit of reduced size and weight for air-conditioning units. The Company will invest JPY 1.5 billion at its Suzuka Plant in Suzuka City, Mie Prefecture to build a new production line with an annual capacity of 300,000 units, and start supplying its products at the end of fiscal year 2016 (ending in March 2017). With the new order, the company plans to double its annual air-conditioning unit production volume in Japan to 600,000 units. (From an article in the Nikkan Jidosha Shimbun on June 22, 2016)

Recent Development outside Japan

-The Company will start producing injectors for motorcycles in India. The company plans to make a capital investment of several billion yen in three fiscal years starting from April 2017 to install a new production line and facilities. It will consider constructing a new plant if the new line cannot be added to its existing plant in India. All carburetors for use in motorcycles in India are expected to be replaced with injectors by 2020 in accordance with tightening environmental regulations. About 10 million motorcycles are sold annually in the Indian market, and demand for injectors is expected to rise sharply by 2020. The Company will build an injector supply network at an early stage to expand its business in the country. Production of carburetors will continue at the company's existing plant after 2020. Most motorcycles in India are powered by carburetor-equipped engines. Since replacement demand for spare parts is expected to continue for the time being, the plant will work to meet it. (From an article in the Nikkan Jidosha Shimbun on September 29, 2016)

Major Supply Agreements received in FY ended Mar. 2017

OEM Model Products delivered
Honda "Accord" New power control units (PCUs)
Japan:"Freed" Electric control units and fuel-supply products


Products for gasoline-fuel-injection systems
America:"Ridgeline" Products for V6 combustion-engine systems
Ford America, China:"Fusion" Condensers for air-conditioner
Audi China:"A6L e-tron" Condensers for automotive heat-exchangers
Mazda Japan:"CX-5" Electric control units for power rear-gates supplied by Hi-Lex Corporation.


-Keihin Thermal Technology (Thailand) Co., Ltd. (TTH), a Keihin Group company, was awarded the Q1 Award from Ford Motor Company (Thailand) Limited, an award recognizing excellence in quality. TTH manufactures products for automotive climate-control systems. It was awarded the Q1 Award, being duly recognized for the quality of its condensers.

-The Company announced that its subsidiary Keihin Thermal Technology Corporation (Keihin Thermal Technology) has received the "Volkswagen Group Award 2016," which recognizes Volkswagen’s best suppliers. It was the only Japanese company among the 21 that received awards. Automotive air conditioning condensers developed and produced by Keihin Thermal Technology have been adopted for models including the Golf and the Audi A4, and were recognized for contributing to product competitiveness in terms of quality and cost in Europe, North America, and China. (From an article in the Nikkan Jidosha Shimbun on June 15, 2016)

-The Company announced that it has received certificates of appreciation from Honda Motor Co., Ltd. for its outstanding contributions in four fields: product development; environmental technologies; components; and cost reduction. Among over 300 Honda suppliers, no other company has ever received the certificate for four areas at the same time. The certificate for development was given in recognition of excellences in two technologies: an electronic fuel injection system for small motorcycles; and a new power control unit (PCU) for hybrid vehicles. The fuel injection system is the world's first of its kind that features fuel pump with a filter clogging prediction system. The new PCU has been supplied for hybrid vehicles since November 2015, and has been also used on fuel cell vehicles since March 2016. The cost reduction award was granted for the company's achievement in automating its processes that relied on hunches and experiences on production lines for EGR valves, throttle bodies, and ECUs. The company accomplished this by introducing new manufacturing equipment and using robots. It also made other improvements by means like process integration, and created advanced production lines that will be a model for the company's global operations. (From an article in the Nikkan Jidosha Shimbun on April 4, 2016)

The 13th mid-term management plan (FY ending Mar. 2018 - FY ending Mar. 2020)

-Strengthen corporate capabilities in electrification
・Establish the xEV section, which oversees business strategies
・Establish the BMS Development Department
・Strengthen production-technology capabilities in the power-module segment
-Advance fuel-injection technology
・Advance developments in the upstream section
-Strengthen business framework to win new customers
・Establish Sales Promotion Department directly overseen by the company president

-Total capital investment amount: JPY 70.0 billion (Total in 12th mid-term plan was JPY 48.0 billion.)
・Invest to migrate to motorcycle fuel-injection systems in India, to advance activities under the xEV Section, and set up testing facilities to develop upstream products
・Increase capital-expenditure ratio, from 5% to 7%, in relation to consolidated revenue

-Total R&D expenses: JPY 67.0 billion (Total in 12th mid-term plan was JPY 57.6 billion.)
・Work to improve efficiencies by revamping flow of R&D activities and allocate R&D resources toward developing new business areas
・Increase R&D-expenditure ratio, from 6% to 7%, in relation to consolidated revenue.

Outlook for FY ending March 31, 2018

(IFRS, in millions of JPY)
FY ending Mar. 31, 2018
FY ending Mar. 31, 2017
(Actual Result)
Rate of Change
Revenue 318,000 325,550 (2.3)
Operating income 18,500 22,954 (19.4)
Pre-tax income 18,400 20,729 (11.2)
Profit for the year attributable to owners of the parent 10,500 11,084 (5.3)

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

R&D Expenditure

(in millions of JPY)
FY ended Mar. 31, 2017 FY ended Mar. 31, 2016 FY ended Mar. 31, 2015
Overall 19,404 19,559 18,606

-The R&D Expenditure for FY ending March 31, 2018 is planned to be JPY 22,300 million.

R&D Facilities

Japan Tochigi R&D Center
(Takanezawa Town, Tochigi Pref.)
Japan Kakuda R&D Center
(Kakuda City, Miyagi Pref.)
U.S. Keihin North America, Ltd.
(Anderson, Indiana)
Thailand Keihin Asia Bangkok Co., Ltd.
India Keihin Automotive Systems India Pvt. Ltd.
(Gurgaon, Haryana)
China Dongguan Keihin Engine Management System Co., Ltd.
(Dongguan, Guandong)
China Keihin R&D China Co., Ltd.
Germany Keihin Sales and Development Europe GmbH
(Ismaning, Bayern)

R&D Activities

Four wheel vehicle business
The Company developed and commercialized;
-Fuel-supply systems and induction-systems for environmentally friendly engines
-Gasoline direct-injectors
-Products for hydraulically controlling transmissions
-Fuel-supply products and systems designed to handle alternative fuels
-ECUs for engines and transmissions
-Motor and battery control-units for hybrid vehicles
-Cell voltage sensors unit for lithium-ion batteries
-Development and commercialization of power-control units for hybrid vehicles.
-Development and commercialization of products for car air-conditioning systems.
-Development and commercialization of heat-exchangers for car air-conditioning systems.

Capital Expenditure

(in millions of JPY)
FY ended Mar. 31, 2017 FY ended Mar. 31, 2016 FY ended Mar. 31, 2015
Total 16,575 14,593 18,915
by region: Japan 6,355 3,519 4,320
Americas 3,973 3,898 6,807
Asia 1,320 2,072 2,031
China 1,720 1,610 972

Capital investments in the FY that ended March 2017

-By investment type: Production (JPY 13,368 million), R&D (JPY 965 million), and Other (JPY 2,242 million)

Planned Capital Investments

(As of Mar. 31, 2017)
Segments Planned Amount of Investment
(in millions of JPY)
Japan 10,491
Americas 4,744
Asia 5,954
China 2,105
Total 23,295

-By investment type: Production (JPY 18,211 million), R&D (JPY 870 million), and Other (JPY 4,214 million)

-The Company increased the planned investment amount in India, within the Asian sector, to prepare for the production launch of fuel-injection systems for compact motorcycles.