Asahi Tec Corporation Business Report FY ended Mar. 2012

Business Highlights

Financial Overview

(in millions of JPY)
  FY ended Mar. 31, 2012 FY ended Mar. 31, 2011 Rate of change (%) Factors
Overall
Sales 80,848 73,022 10.7 -
Operating income 3,440 2,337 47.2 -Overall financial performance rose year-on-year due to: (1) an improvement in profitability that resulted from the continued cost-cutting measures that the Company has been initiating, and (2) the strong increase in sales revenues.
Ordinary income 3,238 1,766 83.4 -
Net income 1,319 155 751.0 -
Ductile business
Sales 51,452 42,889 20.0 -Both operating revenue and profit at the Ductile business improved year-on-year due to the robust demand for trucks and construction equipment in developing countries, and due to the tremendous increase in program business that the Company was awarded from new customers.
Operating income 2,080 1,620 28.4
Aluminum business
Sales 26,104 24,386 7.0 -Even though the Great East Japan Earthquake and the flooding in Thailand negatively impacted the Company's aluminum business, both operating revenue and profit increased year-on-year, thanks to the significant increase in business the Company was awarded from new customers, and to the recovery in demand that occurred after the Earthquake and flooding.
Operating income 870 274 217.5

Contracts

-The Company announced that Techno-Metal (TMK), its wholly owned subsidiary in Nihonmatsu City, Fukushima Prefecture, has been awarded a contract from Ssangyong Motor in Korea to supply cylinder blocks. This is the first time for the automotive cast and forged parts supplier to deliver its products to a Korean company. When TMK initially accepted an order from Ssangyong for installation on a single model, the business was estimated to be worth 1 billion yen a year. After the delivery began, Ssangyong has asked for additional supply for its other vehicle model, placing a high value on the excellent product qualities. Volume of transaction is thereby expected to exceed the projection. (From an article in the Nikkan Jidosha Shimbun on June 30, 2011)

Joint Ventures

-The Company announced its plan of a joint venture with Rockman Industries Ltd for light alloy business in India. Rockman Industries, based in New Delhi, India, manufactures components such as aluminum die-casting products, and aluminum wheels and chains for motorcycles. (From a press release on February 10, 2012)

-The Company announced on June 28 that it has increased its stake in its aluminum wheel joint venture in China. The company has invested additional 300 million yen in Guangzhou Wheelhorse Asahi Aluminum Co., Ltd. (WAA), raising its shareholding ratio in the entity from 30 percent to 49 percent. In line with the expansion, WAA is going to double its production capacity from the current 1.5 million units to 3 million units by 2013. Currently, 60 to 70 percent of approximately 1.5 million aluminum wheels produced at WAA are exported to Japan. (From an article in the Nikkan Jidosha Shimbun on June 29, 2011)

Outlook for FY ending Mar. 31, 2013

(in millions JPY)
  FY ending Mar. 31, 2013
(Forecast)
FY ended Mar. 31, 2012
(Actual Results)
Rate of Change
(%)
Sales 84,000 80,848 3.9
Operating income 3,300 3,440 (4.1)
Ordinary income 2,500 3,238 (22.8)
Net income 1,900 1,319 44.0

R&D

R&D Expenditure

(in millions of JPY)
  FY ended Mar. 31, 2012 FY ended Mar. 31, 2011 FY ended Mar. 31, 2010
Ductile business 28 31 -
Aluminum business 84 77 -
Parts business - - 286
Total 112 128 315

R&D Activities

Ductile business
-In order to the respond to the risks involved with procuring rare-earth metals, the Company is researching into substitute materials.

-The Company is conducting R&D into production technology related to its core products (complicated-shaped parts), for which demand is forecast to rise in line with the growth in the transportation-equipment/machinery market.

Aluminum business
-The Company is mass producing products by putting to practical use its technology that improves engine performance. Specifically, it is applying its Asahi Tech Surface Treatment (AS Treatment), technology that smoothes the inner surfaces of products. And since the Company could see the progress it has been making in significantly improving products' fatigue strength by adding residual stress to the materials interiors, it is continuing its development activities by gathering detailed data on specific applications.

-The Company is developing an even lighter aluminum wheel by combining its proprietary, two-gate, low-pressure casting method with its flow-form technology.

Investment Activities

Capital Expenditure

(in millions of JPY)
  FY ended Mar. 31, 2012 FY ended Mar. 31, 2011 FY ended Mar. 31, 2010
Ductile business 1,751 1,342 -
Aluminum business 2,570 1,669 -
Parts business - - 1,050
Other 74 147 54
Total 4,395  3,158 1,104

Ductile business
-The Company invested mainly to renew and maintain its facilities and equipment for the purpose of rationalizing its production operations; and to install new machining equipment in order to produce products required by newly acquired customers.

Aluminum business
-The Company invested mainly in its consolidated subsidiary in Thailand, Asahi Tec Aluminium (Thailand) Co., Ltd., to enhance and increase machinery and equipment so they can be used to produce products required by newly won customers; and to improve and increase production facilities producing dies and other products.

Planned Capital Investments

(As of Mar. 31, 2012)
Company
Office
Location Business segment
Equipment to be installed
Estimated amount of investment (in millions of JPY) From To
The Company
Toyokawa Plant
Aichi Pref.,
Japan
Earthquake re-inforcement 185 Mar.
2012
Mar.
2013
Casting facilities 359 Feb.
2012
Aug.
2012
Techno-Metal Co., Ltd.
Kitamoto Plant
Saitama Pref.,
Japan
Machining facilities 325 Feb.
2011
May.
2012
Techno-Metal Co., Ltd.
Nihonmatsu Plant
Saitama Pref.,
Japan
Forging facilities 333 Jan.
2012
Sep.
2012
Asahi Tec Aluminium (Thailand)Co., Ltd.
Bang Pakong plant
Chonburi,
Thailand
Machining facilities 134 Mar.
2012
Apr.
2013
167 Dec.
2011
May.
2012
66 Dec.
2011
Apr.
2012