Asahi Tec Corporation Business Report FY2008
|Financial Overview||(in millions of JPY)|
|FY2008||FY2007||Rate of change(%)||Factors|
|Sales||218,806||315,885||(30.7)||-Demand in Japan for construction machinery parts destined for export increased, as did demand for electric devices used in power transmission systems. But because of a downturn in the global automotive market, exports of motor cycles from Japan to developed and emerging-market countries decreased. Demand in Japan for cars and trucks also dropped. As the Company's customers adjusted their levels of inventory, they also decreased orders. Automotive demand in North America, Asia, and Europe shrunk, which was also exacerbated by the negative currency translation due to the strong yen. As a whole, overall sales declined.|
|Operating income||(3,145)||3,340||-||-The Company revised its products' selling prices; devised a cost reduction plan based on either selling or closing its North American plant and selling its European subsidiary; and cut sales and general administrative costs. In spite of the Company's undertaking these initiatives, however, they were still not enough to offset higher materials prices and a sudden decline in sales in and after the third quarter. The Company also introduced a plan to systematically improve its profitability, for example, by temporarily suspending operations at some of its plants. But a sharp downturn in the automotive market worldwide had a huge negative impact. As a whole, income decreased.|
|Parts Business Segment|
|Sales||208,257||306,362||(32.0)||-In Japan, demand for automotive parts destined for shipment to emerging countries declined. In Asia, Europe and, North America, sales also decreased due to lower demand.|
Recent Developments in Japan
-The Company announced its large-scale organizational change to reinforce its aluminum and iron casting/forging business. Specifically, it will integrate its aluminum business and wheel business, and set up a new group to manage the iron casting/forging business. The Company will also integrate some back-office sections in order to achieve better efficiency. (From an article in the Nikkan Jidosha Shimbun on Jan. 22, 2009)
Recent Developments Outside Japan
-The Company announced that it will increase its production capacity in Thailand for producing cast iron parts used in chassis, powertrains, suspensions, and engines.
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|R&D Expenditure||(in millions of JPY)|
-The Company has 107 R&D engineers as of March 2009.
Recent Developments (Parts business)
|Magnesium die casting||The Company, which already launched mass-production of large magnesium die cast products mainly for passenger vehicles, is engaged in expanding the development, design and application of magnesium die cast products. The Company also is developing technology that enables materials to be recycled very cost effectively.|
|Internal smoothing technology||The Company has already launched mass-production of intake manifolds for use in passenger vehicles, and cylinder heads for use in motor cycles, using internal smoothing technology that enhances engine performance. It also successfully confirmed that the addition of internal residual stress drastically improves both the durability and strength of materials. The Company is now preparing to to actually apply its new findings in this area, further collecting detailed data.|
|New Aluminum casting and forging||Technology that makes it possible to produce aluminum cast automotive parts is seen as a promising way to make automotive parts lighter. But on the other hand, aluminum parts are less cost effective than steel parts and they are lower in quality compared to plated products. The Company is focusing its R&D activities on these issues, working to minimize them while developing new casting methods that can produce high-strength components. It hopes that this will open more opportunities for aluminum casting operations to be utilized, giving the Company a greater competitive advantage over other companies. It is now developing a casting method to improve the properties of the materials used, enabling them to be shaped more easily and offer improved quality by better controlling each step in the cooling and material-filling processes, from melting special aluminum alloy up to shaping and fixing.|
|Iron casting||In order to further expand the number of applications in which hyper ductile iron can be used, the Company designed lighter products. It also developed technology that makes it possible to improve the properties of the materials used, and reduce costs too, in response to its customers' requirements.|
|Powertrain chassis||Metaldyne Corporation is engaged in establishing casting technology that can be used to design frames and make light-weight powertrain chassis.|
|Capital investment||(in millions of JPY)|
-The focus of the Company's investments in its parts business was on renewing and maintaining equipment to enhance its production efficiency when it comes to manufacturing general auto parts.
Investments Outside Japan
-The Company announced that it will increase its production capacity in Thailand for producing cast iron parts for chassis, powertrains, suspensions, and engines. To do so, the Company built a new production facility at its subsidiary in Thailand, Asahi Tec Metals (Thailand) Co., Ltd. This new facility will increase its monthly production capacity 36.3%, or to 1,500 tons, starting this month, and 20% more, or to 1,800 tons, by the end of 2009. Investing 2.2 billion yen, the Company will use the new facility to strengthen its capacity to supply highly accurate products of the utmost quality as a way to win new orders mainly from Japanese manufacturers, which are now expanding their operations in Thailand. The new local facility will allow the company to meet a growing demand for ductile iron casting products in Thailand. (From an article in the Nikkan Jidosha Shimbun on Sep.18, 2008)