Aichi Steel Corporation Business Report FY ended Mar. 2014

Business Highlights

Financial Overview

(in millions of JPY)
FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 Rate of
Sales 237,420 217,279 9.3

-Production and sales of steel and forged products were high because of continued demand in the automotive sector; and the recovery in demand in the fourth quarter for steel in the non-automotive sector.

9,627 7,332 31.3 -
9,810 7,929 23.7 -
Net income 5,503 4,898 12.3 -
Sales by Segment
Steel 114,669 104,223 10.0 -Income was higher because of greater sales.
Forged products 106,140 98,030 8.3 -Income was higher because of greater sales.
Electromagnetic products 12,644 11,242 12.5 -Income was higher because of greater sales of magfine and electronic components.

<Mid-term management plan for fiscal year ending March 31 2016>
Greatly strengthen earning power at all business sectors
-Reduce costs companywide under ZZ100, which is an initiative to achieve JPY 10 billion in profits by the end of the fiscal year that ends March 2015
-Achieve sustained profitability by establishing a new business model for the electro-magnetic business

Enhance the steel and forged product businesses in Japan as core functions to expand operations globally
-Strengthen organization to achieve better product creation capabilities
-Increase autonomy in operations outside Japan
-Globalize operations by actively selling to non-Japanese OEMs and forming partnerships with them

Enter new markets by strengthening sales and marketing activities companywide
-Strengthen all sales-related activities, from technology through to sales
-Advance initiatives on export and branding strategies
-Advance R&D and sales activities that target highly profitable products, by strengthening seamless production operations for steel and forged-products .

Strengthen consolidated management to create value in the Aichi Group

Objectives and Management Indexes
-The following targets are to be achieved by 2020, the Company's 80th year in business.
Consolidated sales: JPY 300 billion
Consolidated operating income: JPY 20 billion

High-Strength Grinding Material "AS Shot"

-In 2013, the Company announced it will expand sales of "AS Shot", a high-strength, environmentally-friendly grinding material in the fall of 2013. AS Shot reduces dust generated in the die cleaning process in automobile production and can be repeatedly used. The company's Chita plant in Tokai, Aichi Prefecture, Japan, is  ready to begin mass production of AS Shot. The plant is capable of producing 4,000 tons per year, approximately 400 times the present capacity. AS Shot will be sold to the customers in the automotive, bridge construction, shipbuilding and coating industries. The sales target for AS Shot in fiscal year 2015 has been set at 4,000 tons.(From an article in the Nikkan Jidosha Shimbun on July 19, 2013)

Technical Support

-In 2013, the Company announced that it signed an agreement to provide technical support to India-based Usha Martin Ltd. (UML). Aichi Steel will instruct UML in production technologies for improving the quality of special steel. UML, which owns a steel foundry in Jamshedpur, manufactures and sells special steel bars. By leveraging expertise of Aichi Steel, UML is poised to respond to the growing demand for special steel bars for the automotive industry in India. (From a press release on May 30, 2013)

Outlook for FY ending Mar. 31, 2015

(in millions of JPY)
  FY ending Mar. 31, 2015
FY ended Mar. 31, 2014
(Actual Results)
Rate of Change
Sales 238,000 237,420 0.2
Operating income 8,000 9,627 (16.9)
Ordinary income 7,200 9,810 (26.6)
Net income 4,600 5,503 (16.4)

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


R&D Expenditure

(in millions of JPY)
FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 FY ended Mar. 31, 2012
Steel 2,049 2,416 2,378
Forged products 177 167 205
Electromagnetic products 1,244 1,013 753
Total 3,471 3,597 3,337

R&D Structure

-The Company has about 220 employees engaged in R&D as of March 31, 2014.

R&D Activities

Steel business
-The following were the main R&D results achieved:
  • R&D on steel used in crank shafts and conrods, in order to lighten engine weight and enhance fuel economy
  • New-product development on steel for environmentally friendly gear wheels, which requires fewer resources, offering a good balance between product strength and lowering/eliminating alloys (MO, Cr-free). It is well suited to customers' new production processes, i.e., inline carburization.
Forged-products business:
-The following were the main R&D results achieved:
1) Greater efficiency and lower costs for hot-forging processes
  • For CVT shafts, high-speed automatic forging and further reduction in production cycle
  • Installation of a 4,500 ton stamping machine to handle only small crank shafts to achieve high speed, automatic multi-piece forging
  • Operating forge that uses less energy and reduces CO2 emissions
2) High-precision and low-cost cold-forging
  • Enhance the lineup of high-precision inner splines and packing lock gears
  • Develop production operations for rear axle shafts through screw-forming, which is an alternate production method for up-setters
  • Develop production method to manufacture hollow shafts in order to reduce both weight and size of products
  • Develop and install a 5-shaft processing machine to handle die machining in order to enhance precision and reduce costs
  • Develop surface processing technology in order to increase the product life of forging dies
Electromagnetic products business:
-The following were the main R&D results achieved:
  • MI sensor, motor magnets, magnetic attachments for use in dentistry, heat-radiation parts for onboard electronics devices
  • Technology on magnetic materials for use in high-efficiency motors designed for next-generation automobiles

Investment Activities

Capital Expenditure

(in millions of JPY)
FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 FY ended Mar. 31, 2012
Steel 3,199 3,952 6,361
Forged products 7,730 5,995 3,480
Electromagnetic products 1,960 227 793
Others 41 98 15
Total 12,930 10,272 10,649

-Rationalizing and renewing manufacturing facilities, etc., making them environmentally compliant.

Forged products
-Invested to enhance production capacity; and streamline, maintain, and renew production facilities

Electro magnetic products
-Enhancement of production capacity, etc.

Planned Capital Investment

(As of Mar. 31, 2014)
Type of
Type of
Planned investment
(in millions of
Start Completion Production capacity upon completion
Chita Plant
(Aichi Pref., Japan)
Steel etc. Facilities for producing steel, rolling equipment, etc. 5,097 Feb.
Kariya Plant
(Aichi Pref., Japan)
Steel Rolling equipment, etc. 265 Mar.

Forging Plant
(Aichi Pref., Japan)

Forged products Facilities for producing forged products 1,921 Nov.
Electronic Components Plant
(Aichi Pref., Japan)
Electro magnetic products Facilities for producing electronic functional materials and components 160 Dec.
*The production capacity upon completion is expected to be around the same level as what it was at the end of March 2014.