Stanley Electric Co., Ltd. Business Report FY ended Mar. 2015

Business Highlights

Financial Overview

(in millions of JPY)
  FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 Rate of Change (%) Factors
Overall
Sales 359,840 329,292 9.3 -Sales and operating income increased year-on-year. The Company worked on developing new products that best meet the needs of the global market, stepped up its marketing efforts to win more contracts, while expanding production capacity. It also boosted productivity by dramatically streamlining both its production processes and administrative operations.
Operating income 38,054 36,864 3.2
Ordinary income 40,610 40,097 1.3 -
Net income 25,198 24,345 3.5 -
Automotive products
Sales 270,223 244,030 10.7 -Sales and operating income increased year-on-year. Its performance was supported by growth in vehicle sales in the Americas, and a rise in motorcycles sales in Asia.
Operating income 24,780 26,889 (7.8) -Production became disorganized due to the convergence of too many launches of new models at some of the Chinese production plants.
-Soaring costs of raw materials in Indonesia due to the weak rupiah.
-Lower production volumes by customers in Japan and China.
Electronic Components
Sales 31,512 29,500 6.8 -Sales and operating income increased year-on-year thanks to a rise in sales of LED and LCD products for automobiles.
Operating income 5,765 5,144 12.1
Applied Electronic Products
Sales 57,914 55,291 4.7 -Sales and operating income increased year-on-year due to growth in sales of in-vehicle control panels.
Operating income 5,086 4,850 4.9



New Plant in Miyagi Prefecture

-In April 2014, the Company announced that it relocate its wholly owned subsidiary in Tome, Miyagi Prefecture, Stanley Miyagi Works Co., Ltd., and build a new production plant, reorganizing and expanding the operations. Construction of the new production plant started in September 2014, with plans to launch operations in September 2015. The Company invested JPY 3.8 billion in the subsidiary, which produces LED lighting, optical lens sheets, ultra-thin light-guiding panels, and other electronic products. In the future the new plant will produce automotive lighting.

New production plant in Mexico

-In April 2014, the Company established Stanley Electric Manufacturing Mexico S.A. de C.V., as subsidiary in the state of Jalisco to produce and sell automotive lamps and electronic products. The plant premises are 100,000 square meters and the plant building is 15,000 square meters. The subsidiary is capitalized at MXN 665 million (JPY 5.2 billion), with the Company investing 70% and Stanley Electric Holding of America investing 30%. The Mexican plant is scheduled to launch operations in the summer of 2016. Its annual capacity will be 240,000 units initially, which will gradually increase. The plant is being built first to respond to the growth in automotive production in Mexico. In the future, anticipating further, continued growth in the North American region, the plant could possibly supply products to the U.S. The plant targets sales of JPY 1.0 billion in FY 2016 and JPY 3.3 billion in FY 2017.

Establish Design and Development Company in China

-The Company will establish a new company dedicated to design and development of automotive lights in Tianjin, China, in August 2015. This is the first time for the company to set up a subsidiary specialized in design and development. The specialized development base will act to make the company more responsive to the needs of Japanese automakers in China. The new company is capitalized at USD 34 million (JPY 4.1 billion) and fully owned by Stanley Electric. The engineering division of Tianjin Stanley Electric Co., Ltd. will be separated to establish the new company at a site neighboring Tianjin Stanley Electric. The new subsidiary will be in charge of designing mainly headlights and tail lamps. It will also manufacture and sell dies for the lamps. It's expected to generate sales of JPY 2.3 billion in the initial fiscal year to end in March 2016 and JPY 2.7 billion in the next fiscal year. (From an article in the Nikkan Jidosha Shimbun on June 30, 2015)

The Fifth Medium-term Three Year Business Plan (April 2014 through March 2017)

1. Setting up a System for Managing Cash-flow -All Group companies are to generate cash regardless of what environmental circumstances they face, creating a framework to make effective use of the cash they created for the future growth of the Group.
-Maximize cash generated through sales activities and enhance corporate value based on a solid financial structure.
2. Growing and Expanding into New Business Areas -Raise the level of market information, and the analysis of such, to stay ahead of future developments.
-Effectively execute schemes for “company-wide innovation” that is the basis of creating new products and businesses.



Outlook for FY ending Mar 31, 2016

(in millions of JPY)
  FY ending Mar 31, 2016
(Estimate)
FY ended Mar. 31, 2015
(Result)
Rate of Change
(%)
Sales 375,000 359,840 4.2
Operating income 43,000 38,054 13.0
Ordinary income 46,000 40,610 13.3
Net income 28,000 25,198 11.1

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

R&D Expenditure

(in millions of JPY)
FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Overall 5,513 5,346 5,479
Automotive products 3,044 2,367 1,865
Electronic Components 1,794 2,476 2,619
Applied Electronic Products 578 361 724
Others 95 141 269



R&D Facilities

Name of Facilities Location
Research & Development Laboratory Yokohama City, Kanagawa Pref., Japan
Utsunomiya Technical Center Utsunomiya City, Tochigi Pref., Japan
Yokohama Technical Center Yokohama City, Kanagawa Pref., Japan
Opto Technical Center Yokohama City, Kanagawa Pref., Japan



Product Development

Laser headlamp
-The Company will launch a new laser headlamp that uses a laser light source in 2017. The new headlamp will achieve a high beam range of up to 310 meters, which is about 1.7 times that of a LED headlamp. The Company has almost finished developing the expected performance of the new headlamp. From now on, the Company will increase durability and other aspects to commercialize the new product. The Company regards the new product as a next-generation headlamp system which will offer greater safety and enable early detection of obstacles in front of a vehicle, and will widely propose it to auto manufacturers. Stanley Electric has been developing laser light source as a headlamp light source following the LED. With improvements in reflection and other technologies, the new headlamp will feature increased area of illumination and other performances that are suitable for automotive headlamp systems. Only the laser light source is used to emit high beams while the laser and LED light sources are combined to emit low beams. The new headlamp has substantially increased its low beam range from 115 meters with only the LED light source to 170 meters when the laser and LED light sources are combined. (From an article in the Nikkan Jidosha Shimbun on October 25, 2014)

Adaptive Driving Beam (ADB)
-In October 2014, the Company announced that it had developed an adaptive driving beam (ADB), a headlight that controls high-beam light distribution by turning off and on the LED light sources. ADB is an LED headlight system based on high-beams, and is designed to improve visibility at night. Based on information coming from an onboard camera, it can change high-beam light distribution by only controlling the turning on and off of the LED light source. Since no component parts are in the unit, headlights can be made smaller, lighter, and less costly. In addition, based on the Company's proprietary technology for turning on and off LED lighting, the ADB unit can turn on and off the lighting naturally, without giving the driver any sort of awkward sensation or strain. This product won the runner-up grand prize in the social-innovation segment in the CEATEC Japan Award. (from October 7, 2014 and October 10, 2014 Automotive Daily news articles)

Head-up display (HUD) adopting the Micro Electro-Mechanical Systems (MEMS)
-The Company plans to launch a head-up display (HUD) adopting the Micro Electro-Mechanical Systems (MEMS) in 2017. The Company developed MEMS mirror in-house and combined it with lasers produced by another company, in order to make an optical module for the new HUD. Compared to conventional HUDs which use liquid crystal displays as light sources, Stanley's new HUD will be smaller in size and consume much less electricity. Since HUDs are expected to prevail in the future, Stanley intends to market its value-added product as a next-generation HUD to automakers. (From an article in the Nikkan Jidosha Shimbun on October 9, 2014)

R&D Activities

-The Company, through its R&D Center, Production Technology Center, and Design Technology Center, is working to sustain and improve lighting technology to make it the highest level in the world, working under the concept of the "five lights", i.e., creating light, detecting/sensing light, freely mastering information on light, making use of light energy, and directing light.

1) Optoelectronics area
-High power white LEDs
-High power red/infrared LEDs
-High speed sensitive image sensors
2) Display area
-Super-high contrast LCDs
-Optical micro-scanners
-Display drive circuits
3) Source of light and illumination area
-Automotive lamps
-LED street lightings and indoor lightings
-Lighting power circuits and power sources
4) Software area
-Distribution light simulation systems
-Optical device optimal design tools
5) Materials and processing area
6) Styling and design of all products
7) Products utilizing above devices and technology


Technology Licensing-in Agreement

(As of Mar. 31, 2015)
Partner Technology Period
Hitachi Ltd. Patent on LCD Validity period of the patent
Nichia Corporation Patent on White LED Validity period of the patent
OSRAM GmbH Patent on White LED Validity period of the patent



Technology Licensing-out Agreement

(As of Mar. 31, 2015)
Partner Content Term
Thai Stanley electric Public Co., Ltd. (Thailand) Technology related to automotive lamps April 1, 2015 -
March 31, 2018
SL Lighting Corporation (Korea) Technology related to automotive lamps April 1, 2014 -
March 31, 2017
Lumax Industries Ltd. (India) Technology related to automotive lamps April 1, 2015 -
March 31, 2016



Capital Expenditure

(in millions of JPY)
FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Overall 38,834 27,652 31,164
-Automotive products 28,531 19,054 23,767
-Electronic Components 3,413 2,918 2,418
-Applied Electronic Products 3,012 1,998 1,416
-Others 125 31 281


-The Company announced that it would relocate Stanley Miyagi Works Co., Ltd., located in Tome, Miyagi Prefecture, and build a new production plant. Construction of the plant started in September 2014, with operations scheduled to begin in September 2015.

-The Company established Stanley Electric Manufacturing Mexico S.A. de C.V., which is scheduled to launch operations in the summer of 2016. It will produce and sell automotive lamps and electronic products.

Plans for New Production Facilities

(As of Mar. 31, 2015)
Name
(Location)
Type of facility Total amount
(in millions of  JPY)
Start Completion
Stanley Miyagi Works Co., Ltd.
(Miyagi Pref., Japan)
Automotive business facilities, Applied electronic products business facilities 4,304 Sep. 2014 Aug. 2015
Stanley Electric Manufacturing Mexico S.A. de C.V. Automotive business facilities 8,065 Jul. 2015 Jun. 2016
Wuhan Stanley Electric Co., Ltd.
(Wuhan, China)
Automotive business facilities 7,873 Jan. 2012 Aug. 2016