Univance Corporation Business Report FY ended Mar. 2013

Business Highlights

Financial Overview

(in millions of JPY)
FY ended Mar. 31, 2013 FY ended Mar. 31, 2012 Rate of
Sales 64,184 68,817 (6.7) -
Operating income 287 1,592 (82.0) -Operating income fell year-on-year due to a drop in sales volumes and capital-investment expenses incurred to strengthen operations at production plants outside Japan.
Ordinary income 732 1,601 (54.3) -
Net income 416 1,479 (71.9) -
Control-unit Business
Sales 32,402 36,736 (11.8) -Business results were lower due to a drop in sales of vehicle transmissions for pick-up trucks and SUVs destined for sale in the U.S.A.
Operating income 724 1,447 (50.0) -Operating income fell year-on-year because of lower sales and capital investment expenses incurred to strengthen operations at production plants outside Japan.
Parts Business
Sales 31,441 31,757 (1.0) -Sales fell slightly year-on-year due to lower production volumes of auto transmission parts, even though the Company won more new orders for CVT parts.
Operating income (477) 66 - -Operating income was lower year-on-year due to the drop in product selling prices and to capital investment expenses recorded to strengthen operations at production plants outside Japan.

Recent Development Outside Japan

<North America>
-The Company will start producing pulleys for continuously variable transmission (CVT) for Honda in North America. Production will begin at the end of 2013 in Kentucky, U.S, and the products will be delivered to Honda's production plants in North America. To date, transaction with Honda has been on a small scale, limited to steering parts. The Company expects that the delivery of main parts for CVT, which is large in size and takes much processing cost, will significantly increase the transaction amount with Honda. (From an article in the Nikkan Jidosha Shimbun on Mar. 29, 2013)

-The Company is going to manufacture power transfer units for 4WD vehicles based on a front-wheel-drive layout at its plant in Kentucky, USA, starting in 2013. Expecting orders from Japanese automakers that are assembling SUVs in the U.S., the Company is going to double the scale of its existing plant to meet their requirements. The Company has already been producing components used in motorcycles and buggies in North America, but it is the first time for it to conduct full-scale production of auto parts in the region. The move is intended to cater to the growing needs of its customers for local sourcing. (From an article in the Nikkan Jidosha Shimbun on April 26, 2012)


-In Feb. 2013, the Company decided to streamline its operations in Japan and conduct structural reforms. In Japan, the company is going to transfer operations currently conducted at its Hamamatsu Plant (Hamamatsu City) to its headquarters plant and the Kosai Plant (Kosai City, Shizuoka Prefecture) by the end of March 2015. It will also reduce headcount at each production base. Since Japanese automakers are accelerating their production globalization strategies, the Group's parts production business is growing outside Japan, while slowing at home. Based on its "Vision 2015" mid-term business plan, the company is aiming to improve the global competitiveness of its products and gain greater autonomy of its facilities overseas. The company's board of directors have decided that a drastic reform would be necessary to achieve such goals.

Management Policy

-In anticipation of the future, the Company is taking steps to strengthen its competitive advantages by developing products that lower fuel consumption to better respond to environmental needs, following the directives set under its management plan, the Univance Production Way, that calls for producing numerous products in small lots at low cost; and developing technologies. In addition, the Company is re-assigning its management resources to more effectively utilize them, while enhancing both its product competitiveness and its profit structure.
  • Expand the Control-unit Business by creating more competitive products that respond to customers' needs for "light weight" and "better fuel efficiency".
  • Develop more cost-competitive products by making better use of the Company's core technologies so as to grow the business
  • Strengthen and expand operations at three locations outside Japan, which are North America, Indonesia, and Thailand.
  • Reorganize business operations/plants in Japan and optimize management resources.
>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)


R&D Expenses

(in millions of JPY)
  FY ended Mar. 31, 2013 FY ended Mar. 31, 2012 FY ended Mar. 31, 2011
Overall 1,371 1,457  1,569
Ratio in total sales (%) 2.1 2.1  2.6

R&D Structure

-R&D activities at the Company are mainly carried out by the Product Development Division. 95 employees are conducting R&D activities, which accounts for approximately 5.5% of the Group's workforce.

R&D Activities

1) Control-unit Business
-The Control-unit Business follows the three policies outlined below, which form the common basis for all R&D activities performed at the Company. This Business develops new products that optimize the high level of technology that the Company has in the area of control, working to create cost competitive products.
  • Pursuit of greater functionality based on a high level of mechatronics.
  • Pursuit of products and product-creation designed to best suit each region
  • Pursuit of both environmental performance and competitive pricing.
<4-Wheel Drive Systems>
-In order to become more competitive in the transfer unit market, the Company's major line of business, the Company is developing lighter and more compact systems, while at the same time increasing its product range. It is focusing on transfer units for use in small pick-up trucks and SUV, which is a market segment that is growing worldwide.

-The Company, in order to make lighter and more cost-competitive products, is actively developing 4WD systems that take advantage of proprietary technology that the Company has cultivated over the years by working in transfer-units. It is designing them for 4WD vehicles, which have front-wheel drive, destined to be marketed in developing countries.

<Manual Transmissions>
-The Company is developing new transmissions for SUV, as well as for small- and medium-duty commercial vehicles. (Transmissions are its major products.) It is doing this by focusing on improving vehicle fuel efficiency, reducing emissions so as to meet environmental standards, and easing the burden on drivers behind the wheel.

-The Company is also strengthening its activities in engineering deceleration systems that can be equipped on various types of hybrid electric and electric vehicles.

2) Parts Business
-The Company conducts R&D activities on intermediate gearboxes, which are steering parts for compact cars, and on and manual-steering gearboxes.

-Going forward, in order to raise the competitive advantages of its products, the Company always works under an R&D policy that requires creating materials, production methods, and elemental design technology. In this regard, the Company is working mainly on its core product lines such as gearwheels, transmission axes, and companion flanges. In addition, the Company is producing products and materials in countries outside Japan so as to increase its local production volume overseas.

Investment Activities

Capital Expenditure

(in millions of JPY)
  FY ended Mar. 31, 2013 FY ended Mar. 31, 2012 FY ended Mar. 31, 2011
Control-unit Business 1,981 2,301  921
Parts Business 2,001 2,676  697
Others 2 74 25
Total 3,986 5,052 1,643

-The Company made capital investments mainly to launch new operations and to enhance its production facilities so as to increase production capacity.

Planned Capital Investment

(As of Mar. 31, 2013)
Planned amount
(in millions of JPY)
Details and objectives
Control-unit Business 2,414 Facilities for machine processing and starting new launch
Parts Business 1,927

Facilities for machine processing and starting new launch

Others 4


Total 4,346