Aichi Steel Corporation Business Report FY ended Mar. 2015

Financial Overview

(in million JPY)
FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 Rate of
Sales 240,647 237,420 1.4


10,616 9,627 10.3 -
11,141 9,810 13.6 -
Net income 6,023 5,503 9.4 -
Sales by Segment
Steel 114,808 114,669 0.1 -Volume of stainless steel sold increased, and in monetary terms, sales of stainless steel and special steels increased, in spite of lower sales of special steel.
Forged products 108,976 106,140 2.7 -Higher selling prices along with favorable currency translation increased total sales, in spite of lower volumes sold by subsidiaries outside Japan.
Electromagnetic products 12,665 12,644 0.2 -Higher volumes of Magfine were sold.


-The Company announced that connecting rods made from its new steel material are used on the next-generation turbo engines that are featured on the redesigned Toyota Auris. The steel, which was developed jointly with Toyota, offers a 50 percent improvement in strength level than the previous steel material. In addition, the rods can be made 15 percent lighter than conventional rods used on same displacement engines. According to the supplier, these improvements mark the first major innovation in connecting rod steel technology in approximately 20 years. The Company aims to generate JPY 500 million in sales of the technology in the initial year. Revenues from the technology are expected to reach JPY 3 billion by 2020, the final year of the Company's long-term business plan. (From an article in the Nikkan Jidosha Shimbun on April 8, 2015)

-The Company announced that it has started supplying its AUS316L-H2 stainless steel for Toyota's MIRAI fuel cell vehicle. The stainless steel is used for components in the MIRAI's high-pressure hydrogen gas system. The product for the MIRAI employs cold processing in order to increase the strength of the previous AUS316L-H2, which was released in November 2013. (From a press release on December 16, 2014)

Business Acquisition

-The Company announced that the Company and Unitika Ltd., which produces polymers, functional materials and fibers, have signed a basic agreement under which the Company will acquire Unitika's metal fiber business. The Company currently procures amorphous wires for its magnetic impedance (MI) sensors from Unitika and other suppliers. The acquisition of Unitika's metal fiber unit will enable the Company to establish a seamless production system for MI sensors, which includes materials production. It will also make it easier for the Company to improve production technologies and reduce costs in the upstream processes. The Company thereby intends to enhance its capability to supply compact and high-performance sensors with high cost competitiveness in the growing market. The two companies plan to sign a contract for the business transfer by the end of March 2015. (From an article in the Nikkan Jidosha Shimbun on February 7, 2015)

Recent Development in Production

-The Company will substantially increase production of forged parts for engines and transmissions in Thailand by the spring of 2015. From March 2015 onward, the Company will simultaneously launch 60 production items, the largest scale in the Company's history, and supplies the forged parts for the new International Innovative Multi-purpose Vehicles (IMVs) produced by Toyota Motor Corporation. The Company will increase production by simultaneously operating four new facilities, i.e., 1600-ton (second machine), 3000-ton and 4500-ton stamping machines and one screw press. The Company plans to expand the annual production capacity for forged parts at its plant in Thailand to 18,000 tons by the end of 2016, which are about 9 times the 2014 level. The Company will accelerate local production of parts further and expand its overseas business while contributing to an improvement in the competitiveness of the new IMVs. (From an article in the Nikkan Jidosha Shimbun on January 29, 2015)

-The Company will accelerate the restructuring of its forging plant near headquarters in Tokai City, Aichi Prefecture, Japan. The Company is replacing obsolete manually operated facilities to highly efficient automated facilities and is consolidating its production lines. The Company has introduced a 4,500-ton stamping machine, a screw press, and other state-of-the-art machines at the plant, consolidating 85 forging lines into 80 in the fiscal year ending in March 2015. The Company intends to further introduce automated facilities into lines that produce shafts for use in continuously variable transmissions and consolidate six lines into four. (From an article in the Nikkan Jidosha Shimbun on December 26, 2014)

-The Company said that its new 4,500-ton stamping machines will start full-scale operations at its forging plants at the head office in Tokai city, Aichi Prefecture, Japan, and a Thai production subsidiary. In Japan, the new machine will replace a 6,000 to 6,500-ton class stamping machine which manufactures large crankshafts for a V8 or an inline six-cylinder engine. On the occasion of renewing aged machines, the Company will install the downsized 4,500-ton stamping machine suitable for making lightweight and small crankshafts for inline four-cylinder or other smaller engines. Crankshaft production using the machine will begin in March 2015 in Japan and in January 2015 at the Thai subsidiary. Crankshafts produced in Thailand will be supplied for the diesel engines which will be installed on Toyota's next-generation Innovative International Multipurpose Vehicle (IMV). (From an article in the Nikkan Jidosha Shimbun on December 11, 2014)

Business Plan

-The Company will double its production of gold-plated products used for cooling parts of inverters in Japan. The Company will boost production capacity at its Chita Plant (in Tokai city, Aichi prefecture), and will install new production lines at its Gifu Plant (in Kakamigahara city, Gifu prefecture). The operations of the new facilities at these plants will start in 2016. The Company plans to invest a few billions of yen in total in the enhancement of production capacity. The Company is a Toyota group supplier, and the demand for the Company's plated parts used for the hybrid vehicles will grow as Toyota Motor Corporation increases number of hybrid models. The Company will disperse production locations while increasing production capacity, and will ensure its supply capacity even in disaster situations. (From an article in the Nikkan Jidosha Shimbun on June 4, 2015)

Greatly strengthen earning power at all business sectors
-Reduce costs company wide under ZZ100, which is an initiative to achieve JPY 10 billion in profits by the end of the fiscal year that ends March 2017
-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 company wide
-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

Outlook for FY ending Mar. 31, 2016

(in million JPY)
FY ending Mar. 31, 2016
FY ended Mar. 31, 2015
(Actual Results)
Rate of Change
Sales 243,700 240,647 1.3
Operating income 11,000 10,616 3.6
Ordinary income 10,400 11,141 (6.7)
Net income 6,600 6,023 9.6

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

R&D Expenditure

(in million JPY)
FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Steel 2,204 2,049 2,416
Forged products 116 177 167
Electromagnetic products 1,216 1,244 1,013
Total 3,538 3,471 3,597

R&D Structure

-The Company has about 230 employees engaged in R&D as of March 31, 2015.

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
  • In making transmission units lighter and able to offer higher output, conducting 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).

Forged-products business:
-The following were the main R&D results achieved:
1) Greater efficiency and lower costs for hot-forging processes

  • In manufacturing CVT shafts, conducting high-speed automatic forging and further reducing the number of production cycles.
  • Installing a 4,500 ton stamping machine to handle only small crank shafts to achieve high speed, automatic multi-piece forging
  • Looking to grow globally, the Company created its production structure so as to manufacture rear axle shafts through screw-forming, which is an alternate production method for upset forging.
  • Ensuring stable operation of a forging furnace 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 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 heat-radiation parts for onboard electronics devices
  • Having received financial support from the Ministry of Economy, Trade and Industry, completed work to install latest production facilities involved with resource productivity of rare-earth elements.
  • Participating in a project sponsored by the New Energy and Industrial Technology Development Organization (NEDO) to develop technology on magnetic materials used in highly efficient motors designed for next-generation vehicles.
  • Based on a technical alliance with Rohm in developing MI sensors, increasing sales of MI elements by making use of the synergy effects from both companies; as well as developing products for next-generation applications, which make use of the high-precision and energy-saving qualities of MI sensors.

Capital Expenditure

(in million JPY)
FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Steel 4,721 3,199 3,952
Forged products 5,967 7,730 5,995
Electromagnetic products 2,003 1,960 227
Others 61 41 98
Total 12,752 12,930 10,272

-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, 2015)
Type of
Type of
Planned investment
(in million
Start Completion Production capacity upon completion
Chita Plant
(Aichi Pref., Japan)
Steel etc. Facilities for producing steel, rolling equipment, etc. 14,891 Sep.
Kariya Plant
(Aichi Pref., Japan)
Steel Rolling equipment, etc. 180 Mar.

Forging Plant
(Aichi Pref., Japan)

Forged products Facilities for producing forged products 7,456 Oct.
Higashiura Plant
(Aichi Pref., Japan)
Electro magnetic products, etc. Facilities for producing electronic functional materials and components, etc. 93 Aug.
Seki Plant
(Aichi Pref., Japan)
Electro magnetic products Facilities for producing electronic functional materials and components 230 Oct.
Electronic Components Plant
(Aichi Pref., Japan)
Electro magnetic products Facilities for producing electronic functional materials and components
230 Dec.

*The production capacity upon completion is expected to be around the same level as what it was at the end of March 2015.