Futaba Industrial Co., Ltd. Business Report FY ended Mar. 2016
Financial Overview |
(in million JPY) |
| FY ended Mar. 31, 2016 | FY ended Mar. 31, 2015 | Rate of Change (%) |
Factors | |
| Overall | ||||
| Sales | 437,640 | 422,874 | 3.5 | -Sales increased y/y due to the Company’s all-out efforts to improve its profitability. It reorganized is production structure, increased production efficiency, reduced costs, improved supply chain management, and cut delivery costs. |
| Operating income | 3,121 | 4,367 | (28.5) | - |
| Ordinary income | 636 | 2,116 | (69.9) | - |
| Net income attributable to owners of the parent | (1,195) | 1,039 | - | - |
| Sales by segment | ||||
| -Japan | 223,714 | 225,573 | (0.8) | - |
| -North America | 110,997 | 94,213 | 17.8 | -Robust sales |
| -Europe | 28,293 | 28,957 | (2.3) | - |
| -Asia | 74,635 | 74,130 | 0.7 | - |
Business Plan
-The Company will raise JPY 9.9 billion through a third-party allocation of shares with Toyota Motor Corporation underwriting the sale. The fund will be used to install hot stamping lines at its Kota Plant in Kota Town, Aichi Prefecture, and an affiliate in Ontario, Canada, which will require an investment of JPY 10.5 billion. The period during which payment will be made is from June 8, 2016 to May 22, 2017, and when it has concluded, Toyota's contribution ratio will rise from 12.26% as of March 31, 2016 to 31.39%. Hot stamping is a processing method to stamp high-tensile materials that are difficult to shape using the cold stamping method. Toyota has requested that the Company install hot stamping lines. The Company decided to raise capital-like funds because borrowing would harm its financial position. (From an article in the Nikkan Jidosha Shimbun on May 25, 2016)
-The Company announced that its equity-method affiliate, YMP Press & Dies (Thailand) Co., Ltd., filed a petition for commencement of legal liquidation proceedings with a local court at the end of February 2016. The Company holds 30% ownership of YMP, which designs and manufactures stamping dies, as well as automotive stamped and welded parts. YMP’s financial condition has been deteriorating due to economic stagnation in Thailand, and YMP is now suffering from large debts. As of end of March 2015, YMP owes a total debt of approximately JPY 29.55 billion. It is possible that the Company will not be able to receive repayment of loans that total JPY 668 million, and accounts receivable of JPY 447 million. However, the Company has already written off these debts, including its shares in YMP, as a loss, which is not expected to have an impact on the Company’s consolidated business results for this fiscal year ending March 2016. (From a press release on March 18, 2016)
Restructuring
-The Company will begin trials in order to introduce component by component organizational frameworks in FY 2016 (ending in March 2017). The Company will integrate development, production preparation, cost planning, procurement and other functions for its mainstay exhaust pipe and body components businesses into separate frameworks. Since the needs of users and market trends vary by components, frameworks will be created to allow the flexible development and supply of products based on corresponding strategies. By evolving into an agile organization, the Company intends to gain momentum to expand its performance. (From an article in the Nikkan Jidosha Shimbun on February 22, 2016)
-The Company will launch the second phase of its Futaba NGA (New Global Architecture) activities, its initiatives towards reforms in the areas of R&D, production engineering, and manufacturing operations. The Company has tentatively reorganized its business operations into 10 teams based on the product that each team deals with. Each team will outline its new product scenario for 10 years from now, and will accelerate sharing of common parts and introduction of manufacturing innovations. The reorganization will allow the Company to optimize the allocation of its development resources to each division. The Company will focus its resources to areas with high growth potential, while considering withdrawing from areas with no prospect. (From an article in the Nikkan Jidosha Shimbun on April 9, 2015)
New 5 year management plan (FY ending Mar. 2017 - FY ending Mar. 2021)
-In May 2016, the Company mapped out its 5 year management plan that covers the period between FY ending Mar. 2017 and FY ending Mar. 2021. The Company aims to increase its annual sales to JPY 440,000 million and raise its operating margin to 3.5%. Basic policy and major objectives are followings:
| Basic Policies |
| 1. Enforcement of the basics of "Safety, Quality, and MONOZUKURI (manufacturing) " |
| 2. Structural reformation and reinforcement of the cost management to secure a stable income. |
| 3. Optimization of facilities and effective allocation of management resources |
| 4. Further development of core technologies and application to new business fields |
| 5. Reinforcement of human resources development and organizational power |
| Objectives and Initiatives of 5 year management plan |
| Objectives | Initiatives |
| Enhance innovative capabilities for major products | -Exhaust products: strengthen development capabilities for systemized products |
| -Body products: enhance SE capabilities and manufacturing creativity | |
| -Expand innovative production lines globally | |
| Expand exhaust parts globally | -Expand sales of exhaust parts in North America and China, which comply with regulations on fuel efficiency, exhaust emissions, and noise. |
| Respond to needs for safer and lighter body parts | -Establish technology for ultra high-tensile, hot stamping, and aluminum production technology |
| Optimize production plants | -Revise production plants by taking customers’ latest developments into consideration |
| -Improve efficiency of resourcing | |
| -Strengthen functions at supervisory companies | |
| Management reformation (Manufacturing process reformation) | -Improve efficiency by reorganizing operations, from development to production, of exhaust and body products separately. |
| Enhance initiatives on new technologies and new lines of business | -Expand hot stamping operations globally |
| -Launch initiatives to take control of currently outsourced ultra-high-tensile press processing technology | |
| -Launch business in devices promoting photosynthesis of agricultural crops |
Numerical Target of 5 year management plan |
(Unit: in hundred million JPY) |
| FY ended Mar. 2016 (Actual Result) |
FY ending Mar. 2017 (Forecast) |
FY ending Mar. 2019 (Target) |
FY ending Mar. 2021 (Target) |
|
| Consolidated sales | 4,376 | 4,070 | 4,200 | 4,400 |
| Consolidated operating margin (%) | 0.7 | 1.0 | 1.8 | 3.5 |
Outlook for FY ending 2017 |
(in million JPY) |
| FY ending Mar. 31, 2017 (Forecast) |
FY ended Mar. 31, 2016 (Actual Results) |
Rate of Change (%) |
|
| Overall | |||
| Sales | 407,000 | 437,640 | (7.0) |
| Operating income | 4,000 | 3,121 | 28.1 |
| Ordinary income | 2,000 | 636 | 214.0 |
| Net income attributable to owners of the parent | 500 | (1,195) | - |
>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)
Awards
-Futaba Industrial Texas Corp. (U.S.) has been awarded "Award of Excellence" or "Award of Special Recognition" by Toyota Motor Corporation. (From a press release on March 16, 2016)
-In February 2015, at Toyota's global supplier meeting, the Company has received "TNGA (Toyota New Global Architecture) awards" for its outstanding contribution to the program. Toyota suppliers are increasingly involving their production engineering and manufacturing divisions from the early stage of product designing and development. (From an article in the Nikkan Jidosha Shimbun on June 8, 2015)
R&D Expenditure |
(in million JPY) |
| FY ended Mar. 31, 2016 | FY ended Mar. 31, 2015 | FY ended Mar. 31, 2014 | |
| Overall | 3,079 | 2,940 | 2,586 |
R&D Activities
-The Company has conducted various research and development activities as follows:
- Development of lightweight and low-cost products in the areas of exhaust systems parts, body frame parts, chassis parts, and fuel systems parts to help automakers produce lighter vehicles
- Development of high-performance, compact, and lightweight exhaust heat recovery systems to improve the fuel efficiency of hybrids and other vehicles
- Development of heat management systems so as to maximize energy efficiency
- Development of high-strength body frame parts made from thin steel sheets by adopting hot-stamping methods and using high-tensile steel sheets that achieve 1,180 MPa. These technologies are expected to help automakers produce lighter vehicles with superior collision safety performances
- Development of CO/HC treatment devices for gasoline vehicles and PM/NOx treatment devices for diesel vehicles to reduce exhaust emissions
- Development of environmentally friendly heat exchange equipment
Product Development
-The Company's "Powerev" exhaust heat recovery unit serves as a heat exchanger that facilitates the warm up of an engine by transmitting the heat from the exhaust gas to the engine coolant. This unit can shorten the time for warming up an engine only for the purpose of air heating and reduce fuel consumption by 10% in winter. Consequently, the Powerev is suitable for improving fuel efficiency of hybrid vehicles (HVs) and cars with start-stop systems, which cut off engines when brakes are applied. At present, the Powerev is primarily used in HVs to improve heating system performance. The Company is, however, receiving requests from some automakers to develop a product for heating oil in order to further optimize the temperature control of powertrains. (From an article in the Nikkan Jidosha Shimbun on April 16, 2015)
Capital Expenditure |
(in million JPY) |
| FY ended Mar. 31, 2016 | FY ended Mar. 31, 2015 | FY ended Mar. 31, 2014 | |
| Japan | 18,536 | 9,828 | 8,998 |
| North America | 4,183 | 4,498 | 2,681 |
| Europe | 183 | 1,599 | 1,245 |
| Asia | 3,611 | 4,552 | 8,548 |
| Total | 26,514 | 20,480 | 21,474 |
-In FY ended Mar. 2016, 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.
-The Company plans to invest JPY 21,000 million during FY ending Mar. 2017.
Planned Capital Investments (Automotive Parts) |
(As of Mar. 31, 2016) |
| Name (Location) |
Purpose | Planned investment (in million JPY) |
Starting | Planned Completion |
| Futaba Industrial Co., Ltd. | ||||
| Head Office, Okazaki Plant (Aichi Pref., Japan) |
Production facility | 900 | 2015.05 | 2017.03 |
| Midori Plant (Aichi Pref., Japan) |
Production facility | 900 | 2015.03 | 2017.03 |
| Chiryu Plant (Aichi Pref., Japan) |
Production facility | 200 | 2015.10 | 2017.03 |
| Kota Plant (Aichi Pref., Japan) |
Production facility | 1,200 | 2014.03 | 2017.03 |
| R&D facility | 400 | 2016.03 | 2017.03 | |
| Building and Hot stamping facility | 6,000 | 2016.04 | 2019.03 | |
| Mutsumi Plant (Aichi Pref., Japan) |
Production facility | 1,500 | 2014.03 | 2017.03 |
| Tahara Plant (Aichi Pref., Japan) |
Production facility | 1,000 | 2014.10 | 2017.03 |
| Takahashi Plant (Aichi Pref., Japan) |
Production facility | 300 | 2015.12 | 2017.03 |
| Dies and jigs etc. | 6,900 | 2013.04 | 2017.03 | |
| Consolidated subsidiary | ||||
| Futaba Kyusyu Corp., Imari Plant (Saga Pref., Japan) |
Production facility | 100 | 2016.04 | 2017.03 |
| Futaba Kyusyu Corp., Nogata Plant (Fukuoka Pref., Japan) |
Production facility | 200 | 2016.03 | 2017.03 |
| Futaba Hiraizumi Corp. (Iwate Pref., Japan) |
Production facility | 500 | 2016.04 | 2017.03 |
| Apics Co., Ltd. (Aichi Pref., Japan) |
Production facility | 100 | 2016.03 | 2017.03 |
| FIC America Corp. (Illinois, USA) |
Production facility | 550 | 2015.10 | 2017.03 |
| Futaba Indiana of America Corp. (Indiana, USA) |
Production facility | 750 | 2016.01 | 2017.03 |
| Futaba Industrial Texas Corp. (Texas, USA) |
Production facility | 350 | 2016.03 | 2017.03 |
| FIO Automotive Canada Corp. (Ontario, Canada) |
Production facility | 100 | 2015.03 | 2017.03 |
| Building and Hot stamping facility | 4,500 | 2016.06 | 2017.12 | |
| Futaba-Tenneco U.K Ltd. (Lancashire, UK) |
Production facility | 100 | 2016.03 | 2017.03 |
| Futaba Industrial U.K. Ltd. (Derbyshire, UK) |
Production facility | 400 | 2015.10 | 2017.03 |
|
Futaba Czech s.r.o. |
Production facility | 800 | 2015.12 | 2017.03 |
| Shenzhen Futaba Metal Products Co., Ltd. (Guangdong, China) |
Production facility | 200 | 2016.04 | 2016.12 |
| Tianjin Shuang Shye Mechanical Industrial Co., Ltd. (Tianjin, China) |
Production facility | 150 | 2015.12 | 2016.12 |
| Tianjin Futaba Shye Chan Mechanical Industrial Co., Ltd. (Tianjin, China) |
Production facility | 800 | 2015.09 | 2016.12 |
| Guangzhou Futaba Auto Parts Co., Ltd. (Guangzhou, China) |
Production facility | 400 | 2015.08 | 2016.12 |
| Chngsha Futaba Auto Parts Co., Ltd. (Hunan, China) |
Production facility | 200 | 2015.12 | 2016.12 |
| Chongqing Futaba Automotive Parts Co., Ltd. (Chongqing, China) |
Production facility | 250 | 2015.07 | 2016.12 |
| FMI Automotive Components Ltd. (Haryana, India) |
Production facility | 450 | 2016.03 | 2017.03 |
| PT. Futaba Industrial Indonesia (Bekasi, Indonesia) |
Production facility | 400 | 2015.01 | 2017.03 |