Aichi Steel Corporation Business Report FY ended Mar. 2017

Financial Overview

(in million JPY)
FY ended Mar. 31, 2017 FY ended Mar. 31, 2016 Rate of
Sales 212,837 214,120 (0.6) -
7,218 5,883 22.7 -Last year, higher costs were incurred because of the need to use alternate production lines because of the explosion that occurred at the Chita Plant.
6,863 5,835 17.6 -
Net income attributable to owners of the parent 5,064 20 25,220 -Last year, the Company reported an extraordinary loss of JPY 4,426 million yen to cover the expenses incurred to replace facilities that had been either destroyed or damaged by an explosion.
Sales 97,450 94,321 3.3 -Sales increased due to higher demand, especially for special, automotive steel mainly in Japan.
5,735 6,157 (6.9) -
Forged products
Sales 97,751 102,248 (4.4) -Sales decreased due to lower product-selling prices and lower sales results recorded at overseas subsidiaries because of negative currency translation.
686 (1,217) - -
Electromagnetic products
Sales 13,673 13,495 1.3 -Sales increased due to higher sales volumes of heat-dissipating parts for invertors equipped on hybrid vehicles.
262 416 (37.0) -

Recent Development in Production

-The Company announced that it has constructed a new facility within the premises of Aichi Steel's Higashiura Plant and installed production equipment of metal fiber (amorphous wires) that the company acquired from Unitika Ltd at the new facility. The company also started production at the facility. With the production equipment, the company has established a seamless production system for magnetic impedance (MI) sensors, which includes materials production. The new facility has a floor area of 1,600 square meters and can produce 40,000 km of metal fiber per year. (From a press release on May 26, 2016)

-The Company announced that it starts the construction of a new servo press for developing the next generation forging technology. This press is a future technology which covers complicated shapes leading to new products and new process, while traditional hot forging does not. The Company aims at accelerating advanced products’ development. The new press will be installed at the R&D plant in Tokai city, Aichi prefecture. The start of construction is November 21, 2016. The start of production is expected to be June 2017. Investment amount is JPY 600 million. (From a press release on December 1, 2016)

-The Company announced that it has installed two hot forging lines to produce CVT shaft parts at its 4th forging plant in Tokai City, Aichi Pref. The new lines improve productivity by 60% over the existing lines and are able to conduct high-speed automatic forging. The forging speed is one of the highest in the world. The two lines will have a total monthly production capacity of 340,000 units. The company has invested JPY 3.8 billion in the new lines. (From an article in the Nikkan Jidosha Shimbun on February 2, 2017)

-The Company announced that it will establish three new product-based business units; the "Hagane company," "Kitaeru company," and "Smart company" effective April 1. The Hagane company will be in charge of special bar steel and stainless steel; the Kitaeru company forged products; and the Smart company sensors, magnets and other products. (From an article in the Nikkan Jidosha Shimbun on March 7, 2017)

2020 Vision

Financial objectives for the fiscal year ending in March 2021

  • Consolidated sales: JPY 300 billion
  • Operating income: JPY 20 billion

-Initiatives to achieve the objectives of the 2020 Vision

Issue Initiative
Re-create safety and security ①Revising methods to make operations easier and prevent reoccurrences through conducting thorough training on operating procedures and following rules.
②Create a safe and secure workplace through lock-outs at production plants and fail-safe procedures.
③Re-create a Business Continuity Plan (BCP) and Backup Action Plan (BAP) based on uniform and consistent management of inventory, including customer processes, and production risks.
Strengthen competitiveness of major business operations

①Strengthen profitability by implementing ZZZ200 (1*) with a view to achieving the 2020 vision and by quickly recognizing costs.

(*1) The ZZZ200 effort embraces the philosophy of "fractional management." Under this concept, cost of sales is the denominator. Important to this figure is the extent to which we can conduct production and sales efficiently without waste or loss.
②Reap the benefits of rectification and innovative product creation by implementing thorough, planned capital investments based on 4S Re-engineering (Simple, Slim, Short, Straight Re-engineering).
③Create products based on following the Toyota New Global Architecture (TNGA), working with customers from the start.
④Thailand has become an important supply base for IMV (Innovative International Multi-purpose Vehicle) products. In response the Company will strengthen its ASEAN forging locations through its Thai subsidiary.
⑤Positioning the production plants in Japan as lead plants, set up a supply chain that includes the Philippines, Indonesia, China, and the US and set up a strong, global business structure that takes into consideration a Business Continuity Plan (BCP) and Backup Action Plan.
Building global operations ①Ensure improved and stable management based on effective use of limited resources at forging plants outside Japan, i.e., limited production volumes and effective management based on limited resources.
②Reap the benefits of a forge-steel consistency globally by forming a partnership with Usha Martin Limited located in Kolkata, West Bengal, India.
Strengthen profit structure by launching new businesses ①Respond to the next generation based on developing products and technology that make use of proprietary products and technology and by creating innovative plans for new products.
②Respond to recreating infrastructure and hydrogen-based society/lifestyle through market penetration based on the special features and beneficial qualities of stainless-steel products.
③Increase profits through developing and expanding the business by making use of the strong brand in terms of electromagnetic products and the organizational structure that ensures consistent product delivery.

  • Electro-magnetic business: Develop compact motors for use in automobiles
  • Sensor business: Development of magnetic sensors, including through synergies based on an alliance with ROHM Co., Ltd.
  • Components for cooling the inverters on hybrid units: Having a major share of the market. As HV, PHV, EV, FCV become more prevalent, expect the need demand for these components to continue growing.

Outlook for FY ending Mar. 31, 2018

(in million JPY)
FY ending Mar. 31, 2018
FY ended Mar. 31, 2017
(Actual Results)
Rate of Change
Sales 223,700 212,837 5.1
Operating income 10,000 7,218 38.5
Ordinary income 9,500 6,863 38.4
Net income attributable to owners of the parent 6,400 5,084 25.9

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

R&D Expenditure

(in million JPY)
FY ended Mar. 31, 2017 FY ended Mar. 31, 2016 FY ended Mar. 31, 2015
Steel 2,255 2,154 2,204
Forged products 38 57 116
Electromagnetic products 1,010 1,071 1,216
Total 3,304 3,282 3,538

R&D Structure

-The Company has about 250 employees engaged in R&D as of March 31, 2017.

R&D Activities

Steel Products Business
-Innovative production process for special steel

  • The Company is conducting R&D activities starting with new continuous casting machines, working to reduce loss of quality by implementing before and after processes and raising production efficiency.
  • The Company is maximizing the reengineering effects achieved through the bulk rolling process, raising production capacity by revamping logistics and achieving a stable level of quality.
  • The Company is strengthening the precision inspection processes at transport facilities by installing the latest precision lines, which are still being built, reducing shipment lead time and raising inspection capabilities in order to respond to the rising level of customer needs.

-Development of special steel for automotive use

  • Commercialize high-strength steel used for leaf springs equipped on trucks, in order to improve fuel economy.
  • The Company is conducting R&D activities on high-strength materials and parts that make engine parts (crank shafts, conrods) and drivetrain/transmission parts (gears, shafts) lighter in weight, which are vital to improving fuel economy.
  • Increase the range of steel for gears, which contain more molybdenum to lower costs, and speed up activities to increase sales.

-Development stainless steel to create sales markets

  • Boost the product lineup of and the business engaged in stainless-steel members, which are targeted to the energy infrastructure for which demand is expected to grow in the future.
  • Increase sales of stainless steel for high-pressure hydrogen used by hydrogen companies; and develop and commercialize steel for high-pressure hydrogen that lowers costs by reducing the number of alloys to further increase sales to hydrogen companies.

Forged-products Business

-Make forging processes more efficient and reducing costs of forged products

  • Install two hot-forging stamping lines for CVTs
    • Achieve world-class productivity in terms of producing shaft parts for vehicles equipped with CVTs, by using high-speed automatic forging lines.
    • The Company is improving its energy efficiency by using the latest Forging Isothermal Annealing (FIA) furnaces, and reducing production lead-time by improving logistics designed to save energy and reduce CO2.
    • The Company successfully improved productivity, reduced energy use, and shortened production lead-time, by integrating all processes involved with forging, from cutting materials up to machine processing.
  • Saved energy use and lowered CO2 by improving the heat-retaining performance of coils used for induction heating.
  • Developed surface-treatment technology in order to increase the product-life of forged dies, and increased the number of products applicable for the treatment.

Electromagnetic Products Business

-The following were recent activities achieved:

  • A rechargeable chainsaw motor using Dy free-bond magnet magfine, which was manufactured by using single-unit, extrusion-forming technology, an innovative manufacturing method developed in August 2016.
  • The Company is taking part in the New Energy and Industrial Technology Development Organization’s (NEDO’s) consignment business research to develop technology on magnetic materials for motors to be mounted on next-generation vehicles. The first phase in this national project to develop next-generation magnetic materials was completed.
  • From the fiscal year that ended in March 2017, the Company participated in the NEDO’s Program for Creating Innovative Strategic Energy-saving Technology.
  • During the fiscal year that ended in March 2016 and the fiscal year that ended in March 2017, the Company conducted R&D activities on a magnetic lane-guidance system for an autonomous-driving project under the Cabinet Office’s Strategic Innovation Program (SIP). The in-vehicle MI sensors in this system detect the magnetism in magnetic markers that are placed on the road and enable vehicles to automatically travel within their own lanes.

Capital Expenditure

(in million JPY)
FY ended Mar. 31, 2017 FY ended Mar. 31, 2016 FY ended Mar. 31, 2015
Steel 11,250 8,942 4,721
Forged products 8,739 4,752 5,967
Electromagnetic products 818 1,194 2,003
Others 24 520 61
Total 20,831 15,408 12,752

-Streamlining and renewing manufacturing facilities, making them environmentally compliant.

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

Electromagnetic products
-Enhancement of production capacity, etc.

Planned Capital Investment

(As of Mar. 31, 2017)
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. 11,263 Feb.
Kariya Plant
(Aichi Pref., Japan)
Steel Rolling equipment, etc. 454 Oct.

Forging Plant
(Aichi Pref., Japan)

Forged products Facilities for producing forged products 11,121 Dec.

Higashiura Plant
(Aichi Pref., Japan)

Electro magnetic products, etc. Facilities for producing magnet applied products, etc. 89 Nov.
Gifu Plant
(Gifu Pref., Japan)
Electro magnetic products, etc. Facilities for producing electronic functional materials and components, etc. 1,550 May
Seki Plant
(Aichi Pref., Japan)
Electro magnetic products Facilities for producing magnet applied products 58 Nov.
Electronic Components Plant
(Aichi Pref., Japan)
Electro magnetic products Facilities for producing electronic functional materials and components
110 Oct.

*The production capacity upon completion is expected to be around the same level as what it was at the end of March 2017.