Futaba Industrial Co., Ltd. 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
Change (%)
Factors
Overall
Sales 365,246 372,083 (1.8) -Even though sales were higher in North America, income as a whole fell year-on-year due to the debt crisis in Europe and the drop in demand in China for Japanese products as a result of the tense Japan-China relations.
Operating income (360) 2,630 -
Ordinary income (1,136) 335 - -
Current net income (4,040) (4,521) - -

New Company

<China>
-Chongqing Futaba Automotive Parts Co., Ltd., a new production plant in Chongqing, was established in November 2012 as a wholly owned subsidiary of the Company. The new company is capitalized at 1 billion yen. The plant building has 8,200 sq. meters of space and is scheduled to launch commercial operations from Nov. 2013, manufacturing suspension parts that will be supplied mainly to Changan Suzuki. The Company decided to establish its new subsidiary in Chongqing in order to respond to the need for OEMs to procure parts locally in China.

Business Plan

Reducing the Workforce
-The Company announced its plan to reduce the number of its nonpermanent employees from the current 900 to 550 by March 2013. The Company has fixed-term employees and temporary staff working at its seven plants in Aichi Prefecture. Anticipating a production cutback by automakers later this year after the termination of the eco-car incentive scheme, the Company is going to freeze hiring of nonpermanent employees during the second half of this year. It is set to downsize its workforce by not recruiting replacements for those retiring for contract expiration. (From an article in the Nikkan Jidosha Shimbun on August 1, 2012)

Revamping Production Structure
-The Company has set up a special committee to overhaul its production operations for improving profitability. Up until recently, the Company has worked on its production line renovation project in steps at the time of model changeovers. But the auto parts supplier is now poised to complete the whole revamping project by March 2014. The Company will replace its conventional, heavily equipped linear-shaped lines with more compact and lean U-shaped production lines. All its 150 production lines will be switched to the new layout. At the same time, the Company will reallocate product items among its facilities to enhance supply efficiency. (From an article in the Nikkan Jidosha Shimbun on Jun. 8, 2012)

Outlook for FY ending 2014

(in millions of JPY)
  FY ending Mar. 31, 2014
(Forecast)
FY ended Mar. 31, 2013
(Actual Results)
Rate of Change
(%)
Overall
Sales 377,000 365,246 3.2
Operating income 2,600 (360) -
Ordinary income 1,400 (1,136) -
Net income 100 (4,040) -

-The Company forecasts that results in Japan for fiscal year ending Mar. 31, 2014 will be 5.7% lower that they were in the FY ended Mar. 2013. Nevertheless, it predicts double-digit growth in North America, Europe, and Asia, which will improve its overall results by 3.2%.


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

R&D

R&D Expenditure

(in millions of JPY)
  FY ended Mar. 31, 2013 FY ended Mar. 31, 2012 FY ended Mar. 31, 2011
Overall 2,162 2,214  2,130

-Most of the Company's R&D activities are for automotive components.

R&D Activities

-The Company developed smaller and lighter exhaust heat recovery devices, but which actually achieve higher performance in hybrid vehicles, improving fuel efficiency. The Company aims to win more businesses for these devices.
-The Company is also focusing on developing heat management systems so as to maximize energy efficiency.
-The Company continued to work on developing PM/NOx treatment devices for diesel vehicles to reduce exhaust emissions.

Investment Activities

Capital Expenditure

(in millions of JPY)
  FY ended Mar. 31, 2013 FY ended Mar. 31, 2012 FY ended Mar. 31, 2011
Overall 16,667 13,382  15,188

-The Company invested in installing production equipment at the automotive parts business (mainly assembly and welding lines and dies and jigs) to streamline operations and reduce labor to improve its productivity, and also to deal with model changes.

-Breakdown of investment for FY ended Mar. 31, 2013: 11,379 million yen in Japan; 3,056 million yen in North America; 699 million yen in Europe, and 1,531 million yen in Asia.

Investments Outside Japan

<Thailand>
-During FY ended Mar. 2013, the Company further invested in its Thai subsidiary YMP Press & Dies (Thailand) Co., Ltd., increasing its shareholding to 30%. This latest investment enabled the Company to expand the subsidiary's plant building and further enhance its capability to respond to the Thai market and increase its program business in terms of manufacturing and supplying mufflers, exhaust manifolds, and suspension parts. Its major customers include Japanese OEMs such as Suzuki and Toyota.

Planned Capital Investments (Automotive Parts)

(As of Mar. 31, 2013)
Name
(Location)
Purpose Planned
investment
(in million
JPY)
Starting Planned Completion
Futaba Industrial Co., Ltd.
Head Office, Okazaki Plant
(Aichi Pref., Japan)
Production facility 1,750 Oct. 2011 Mar. 2014
Midori Plant
(Aichi Pref., Japan)
Production facility 670 Oct. 2012 Mar. 2014
Chiryu Plant
(Aichi Pref., Japan)
Production facility 200 Nov. 2012 Mar. 2014
Kota Plant
(Aichi Pref., Japan)
Production facility 1,090 Oct. 2012 Mar. 2014
R&D facility 400 Mar. 2013 Mar. 2014
Mutsumi Plant
(Aichi Pref., Japan)
Production facility 800 Nov. 2011 Mar. 2014
Tahara Plant
(Aichi Pref., Japan)
Production facility 1,140 Oct. 2012 Mar. 2014
Takahashi Plant
(Aichi Pref., Japan)
Production facility 970 Oct. 2012 Mar. 2014
Dies and jigs etc. 3,980 Mar. 2011 Mar. 2014
Consolidated subsidiary
Futaba Kyusyu Corp., Imari Plant
(Saga Pref., Japan)
Production facility 120 Apr. 2013 Mar. 2014
Futaba Kyusyu Corp., Miyata Plant
(Fukuoka Pref., Japan)
Production facility 20 Apr. 2013 Mar. 2014
Futaba Kyusyu Corp., Nohgata Plant
(Fukuoka Pref., Japan)
Production facility 350 Apr. 2013 Mar. 2014
Futaba Hiraizumi Corp.
(Iwate Pref., Japan)
Production facility 130 Apr. 2012 Mar. 2014
Apics Co., Ltd.
(Aichi Pref., Japan)
Production facility 240 Apr. 2013 Mar. 2014
FIC America Corp.
(Illinois, USA)
Production facility 850 Mar. 2013 Mar. 2014
Futaba Indiana of America Corp.
(Indiana, USA)
Production facility 680 Mar. 2013 Mar. 2014
Futaba Industrial Texas Corp.
(Texas, USA)
Production facility 180 Mar. 2013 Mar. 2014
FIO Automotive Canada Corp.
(Ontario, Canada)
Production facility 1,090 Mar. 2013 Mar. 2014
Futaba-Tenneco UK Ltd.
(Lancashire, UK)
Production facility 60 Dec. 2012 Dec. 2013
Futaba Industrial U.K. Ltd.
(Derbyshire, UK)
Production facility 610 Dec. 2012 Dec. 2013

Futaba Czech s.r.o.
(Havlickuv Brod, Czech Republic)

Production facility 800 Dec. 2012 Dec. 2013
Shenzhen Futaba Metal Products Co., Ltd.
(Guangdong, China)
Production facility 80 Dec. 2012 Dec. 2013
Tianjin Shuang Shye Mechanical Industrial Co., Ltd.
(Tianjin, China)
Production facility 330 Dec. 2012 Dec. 2013
Tianjin Futaba Shye Chan Mechanical Industrial Co., Ltd.
(Tianjin, China)
Production facility 1,230 Dec. 2012 Dec. 2013
Guangzhou Futaba Auto Parts Co., Ltd.
(Guangzhou, China)
Production facility 290 Dec. 2012 Dec. 2013
Dongguan Futaba Metal Products Co., Ltd
(Dongguan, China)
Production facility 260 Jan. 2013 Dec. 2013
Chngsha Futaba Auto Parts Co., Ltd.
(Hunan, China)
Production facility 280 Jan. 2013 Dec. 2013
Chongqing Futaba Automotive Parts Co., Ltd.
(Chongqing, China)
Production facility 340 Jan. 2013 Dec. 2013
FMI Automotive Components Ltd.
(Haryana, India)
Production facility 510 Mar. 2013 Mar. 2014
PT. Futaba Industrial Indonesia
(Bekasi, Indonesia)
Production facility 1,620 Mar. 2013 Mar. 2014