SHOWA Corporation Business Report FY ended Mar. 2018

Financial Overview

(IFRS, in million JPY)
FY ended Mar. 31, 2018 FY ended Mar. 31, 2017 Rate of Change (%) Factors
Overall
Revenue 291,989 259,495 12.5 -Revenue increased due to higher sales of the products for motorcycles, vehicles and steering systems.
Operating income 25,296 (3,263) - -
Profit before taxes 26,042 (2,407) -
Profit for the year attributable to owners of the parent 13,855 (11,444) -
Automobile
Revenue 92,209 84,563 9.0 -Revenue increased due to higher sales mainly in China and Japan.
Operating income 5,969 4,801 24.3 -
Steering
Revenue 102,041 86,205 18.4 -Sales increased due to higher sales mainly in China and Asia.
Operating income 15,110 7,820 93.2 -
Gas Spring
Revenue 3,245 3,464 (6.3) -
Operating income (8,397) (25,703) - -

Recent Development Outside Japan


-The Company has started discussions on increasing its production capacity for automotive shock absorbers and electric power steering (EPS) systems in China. The Company's main customer, Honda, is enjoying robust sales in China, and its vehicle production volume is expected to continue to increase. The Company will decide on investment to boost automotive parts production capacity in China by the end of March 2019. Currently, the Company's four subsidiaries in China produce shock absorbers and EPS systems supplied for the CR-V, Accord, and Civic that are assembled by Honda's Chinese joint ventures. Honda's car sales in China reached a record high in 2016, and the Company is receiving an increasing number of orders for shock absorbers and EPS systems. Honda's Chinese joint venture, Dongfeng Honda Automobile Co., Ltd., is building its 3rd plant in Wuhan, which will start operations in the first half of 2019. (From an article in the Nikkan Jidosha Shimbun on December 28, 2017)

Outlook for FY ending Mar. 31, 2019

(IFRS, in million JPY)
FY ended Mar. 31, 2019
(Forecast)
FY ended Mar. 31, 2018
(Actual Result)
Rate of Change
(%)
Overall
Revenue 280,000 291,989 (4.1)
Operating income 27,000 25,296 6.7
Profit before taxes 27,200 26,042 4.4
Profit for the year attributable to owners of the parent 17,000 13,855 22.7

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

R&D Expenditure

(in million JPY)
FY ended Mar. 31, 2018 FY ended Mar. 31, 2017 FY ended Mar. 31, 2016
Motorcycle/General 3,136 3,119 2,945
Automobile 3,550 3,692 3,562
Steering 3,811 3,999 3,902
Gas Spring 99 125 101
Total 10,598 10,934 10,534

R&D Facilities

Name (Location) Main R&D Activities
R&D Automotive Parts
(Saitama, Japan)
Research and development of shock absorbers for 4-wheeled vehicles, gas springs
R&D Center (Tochigi)
(Tochigi, Japan)
Research and development of hydraulic devices, power steering systems and drivetrain-related components and materials
R&D Center (Tochigi), Shioya Proving Ground
(Tochigi, Japan)
Test course
R&D Motorcycle Parts
(Shizuoka, Japan)
Research and development of shock absorbers for 2-wheeled vehicle

-On October 20, the Company held a ceremony to celebrate the completion of its winding courses built at the Company's Tochigi R&D Center Shioya Proving Ground. The Company expects that the winding roads replicating general roads in the U.S. and Europe will speed up the development of new value-added products. The total length of the courses is about 1,500 meters. The courses copy conditions on U.S. roads with many ups and downs and sharp curves, and on EU roads with gentle curves and slopes. The Company intends to fully utilize the courses to develop products for autonomous driving including advanced driver assistance systems. (From an article in the Nikkan Jidosha Shimbun on October 23, 2017)

R&D Activities

Automobile Business

  • The Company launched production of its Intelligent Electronic Control Adaptive Suspension (IECAS), an electronically controlled damper system.
  • In working to make autonomous driving a reality, the Company is working on developing technology that coordinates the control of steering systems, etc.


Steering Business

  • The Company is focusing on enhancing the feel and ease of steering, while increasing the power and making the second-generation Dual Pinion Assist-EPS (DPA-EPS) system the lightest such system in the world.
  • By coordinating control with the electronically controlled damper system (IECAS), the Company is working to raise steering stability and riding comfort to a higher dimension.

Capital Expenditure

(in million JPY)
FY ended Mar. 31, 2018 FY ended Mar. 31, 2017 FY ended Mar. 31, 2016
Motorcycle/General 2,200 1,911 1,788
Automobile 2,200 2,388 3,496
Steering 1,920 3,825 7,216
Gas spring 90 2,265 166
Other 460 608 255
Total 6,870 10,997 12,921

Planned Capital Investment

-The total amount of capital investment planned at the end of FY ending March, 2018, was JPY 10,640 million. The following outlines major construction projects for new facilities, etc.

Facility
(Location)
Type of facility Planned investment
(million JPY)
Construction start month Planned completion Production capacity growth after completion
Saitama Plant
(Gyoda City, Saitama, Japan)
Production facilities for automobile parts, production machinery facilities, and other 1,244 Apr. 2017 Mar. 2019 (Note 2)
Gotemba Plant
(Gotemba City, Shizuoka, Japan)
Production facilities for automobile parts 629 Apr. 2017 Mar. 2019 (Note 2)
Tochigi R&D Center
(Tochigi, Japan)
R&D facilities 406 Apr. 2017 Mar. 2019 (Note 2)
Asaba Plant
(Fukuroi City, Shizuoka, Japan)
Production facilities for automobile and motorcycle parts 1,120 Apr. 2017 Mar. 2019 (Note 1)
American Showa, Inc.
Sunbury Plant
(Ohio, USA)
Production facilities for automobile and motorcycle parts 803 Oct. 2015 Mar. 2019 (Note 2)
Showa Canada Inc.
(Ontario, Canada)
Production facilities for automobile parts 613 Jul. 2016 Mar. 2019 (Note 2)
Showa Autoparts Mexico, S.A. de C.V.
(Mexico Guanajuato)
Production facilities for automobile parts 449 Oct. 2017 Mar. 2019 (Note 1)
P.T. Showa Indonesia Manufacturing
(Cikarang, Indonesia)
Production facilities for automobile and motorcycle parts 737 Mar. 2016 Mar. 2019 (Note 2)
Summit Showa Manufacturing Co., Ltd. (Chonburi, Thailand) Production facilities for automobile and motorcycle parts 391 Jan. 2018 Mar. 2019 (Note 2)
Showa Auto-Parts Vietnam Co., Ltd.
(Vietnam Hanoi)
Production facilities for motorcycle parts 480 Oct. 2017 Mar. 2019 (Note 2)
Showa India Pvt. Ltd.
(Haryana, India)
Production facilities for automobile and motorcycle parts 758 Apr. 2014 Mar. 2019 (Note 1)
Guangzhou Showa Autoparts Co., Ltd.
Wuhan Plant
(Wuhan, China)
Production facilities for automobile parts 648 Sep. 2017 Mar. 2019 (Note 1)

(Note 1) Since the investments are mainly made under projects to enhance capabilities and rationalize operations, any actual increase in capacities, once the projects are completed, are forecast to be slight.
(Note 2) Due to difficulty in calculating production capacity growth after completion, the figure is not provided here.