Asahi Glass Co., Ltd. Business Report FY ended Dec. 2015
|(in million JPY)|
|FY ended Dec. 31, 2015||FY ended Dec. 31, 2014||Rate of change (%)||Factors|
|Sales||1,326,293||1,348,308||(1.6)||-In spite of favorable currency translation because of the weak yen, sales fell due to fewer sales of displays.|
|Operating profit||71,172||62,131||14.6||-Sales improved due to the reorganization of the construction glass business in Europe and North America.
-Drop in raw-material and fuel prices.
|Profit before tax||84,522||41,163||105.3||-Posting of gains from modifying post-retirement benefits.|
|Profit for the year||46,287||20,475||126.1||-|
|Sales||691,411||684,607||1.0||-Sales of automotive glass barely increased, thanks to strong demand in North America, a recovery in demand in Western Europe, and favorable currency translation due to the weak yen. However, sales results were impacted by lower new-vehicle production volumes in Japan, some countries in Asia, and Eastern Europe.|
Automotive display cover glass
-The Company has developed practical applications of high-function cover glass for use in car-mounted curved displays. Since automotive displays will become more complicated in shape and increase in area, the resistance of display covers to scratches and weather will increase in importance. Because of this, the Company will market high-function cover glass as a more reliable component than plastic covers to automakers and parts suppliers with the aim of making it for practical use in a few years. The Company anticipates that its high-function cover glass will be adopted particularly in Europe, where demand for cover glass is high. AGC Display Glass Yonezawa Co., Ltd., an AGC group company in Yonezawa City, Yamagata Prefecture, has successfully created technologies for processing and mass-producing three-dimensional cover glass for use in curved displays. The Company has already started shipping samples of curved cover glass to European OEMs to which it supplied cover glass for plain displays before. The Company is expected to produce prototypes and shift to actual evaluation. (From an article in the Nikkan Jidosha Shimbun on June 23, 2016)
-The Company will increase its supply capacity for cover glass used in car-mounted displays. Full-scale operation will begin at production facilities that are currently being augmented in April. The Company will increase its production capacity in response to growing demand for high-performance cover glass that improves the visibility and operability of display panels for car navigation and other driving information systems. AGC Display Glass Yonezawa Co., Ltd., an AGC group company in Yonezawa City, Yamagata Prefecture, will boost production of cover glass for car-mounted displays. Although a specific production volume has not been announced, AGC's cover glass production capacity is expected to double. The Company is making these moves because its cover glass will be used in more than 30 car models, including those the company already supplies, and sustainable growth in demand is expected. The Company is also preparing to mass-produce cover glass with a sophisticated three-dimensional curved surface design. (From an article in the Nikkan Jidosha Shimbun on March 30, 2016)
Ultraviolet (UV) and infrared (IR) ray blocking glass
-The Company announced that its high-function UV Verre Premium Privashield glass has been adopted by Toyota for the AERAS Premium-G and AERAS SMART, the top grades of the partially-redesigned Estima and Estima Hybrid. The Company's special glass cuts ultraviolet (UV) and infrared (IR) rays, and is used for all rear doors and windows. The Estima and Estima Hybrid have become the world's first minivans featuring glass that reduces UV by 99% on all windows (excluding wing windows). (From an article in the Nikkan Jidosha Shimbun on June 17, 2016)
-The Company has obtained a Seal of Recommendation from the U.S. Skin Cancer Foundation (SCF) for its "UV Verre Premium Privashield," glass for automotive rear doors and rear windows that blocks 99% of ultraviolet (UV) rays. With this glass in addition to its other UV-cut glass products for windshields and front doors that have already been approved by the SCF, the Company is the first in the world to offer SCF-approved automotive glass for all directions. (From an article in the Nikkan Jidosha Shimbun on December 22, 2015)
-The Company will start sales of "UV Verre Premium Privashield," its newly developed glass for automotive rear doors and rear windows that blocks 99% of ultraviolet (UV) rays in November 2015. The glass also reduces infrared (IR) rays significantly. With this new glass in addition to its UV-cut glass for windshields and front doors, the Company achieved 99% UV-cut glass for automotive windows in every direction for the first time in the world. (From an article in the Nikkan Jidosha Shimbun on November 25, 2015)
Low-melting adhesive fluoropolymer
-The Company has released a new low-melting adhesive fluoropolymer that bonds with other materials. This new fluoropolymer adds an adhesive property to the conventional anti-stick property of fluoropolymer materials. The fluoropolymer also achieves a low melting point that enables development of new applications for the fluoropolymer as a laminate material. (From an article in the Nikkan Jidosha Shimbun on October 6, 2015)
-Toyota Motor Corporation announced that it has honored the quality of the fabricated & encapsulated glass of AGC Automotive Americas Co. (San Antonio, U.S.) with the Excellence Award. (From a press release on March 16, 2016)
-The R&D Center, which is responsible for developing the entire Group's technical strategies, is in-charge of the following R&D functions:
- Central R&D Center: development of new materials and products, and common platform technology
- Production-technology Center: Research, development, and design of production technology
- Engineering Center: Construction of production facilities and development and maintenance of existing facilities and equipment.
- Intellectual Property Center: Study, analyze, file patents for, obtain rights for, exercise rights of, and set up strategies for intellectual property.
- Divisional R&D Centers: development of new products and new types of products for current divisions and related divisions; and improve production technology.
-On January 1, 2016, the Company reorganized the operating structure within its R&D Center, changing the Central, Production-Technology, and Engineering Centers to the Advanced Technology Center, Product-Development Center, and Production-Technology Department. In addition, it changed the Intellectual-Property Center to the Intellectual Property Department.
-AGC Automotive has R&D functions in the following locations: the Central R&D Center and Product-Development Center in Japan, the Detroit R&D Center in the USA, and Gosselies Technovation Center in Belgium. The Company is integrating its elemental technology (digital-design technology, surface-treatment technology, and automotive-glass-production technology) based on using its five, core technologies, which are glass-material design technology; glass-production/processing technology; fluorine technology; thin-film-forming technology, i.e. surface treatment; and optical/electronic technology.
Technology Licensing-out Agreement
|(As of Dec. 31, 2015)|
|Company||Country||Contractual coverage||Contract period|
|PT Asahimas Flat Glass Tbk||Indonesia||Provision of manufacturing technology for float glass||Ten year from Jan. 1, 1993. (automatic extension every year thereafter)|
|(in million JPY)|
|FY ended Dec. 31, 2015||FY ended Dec. 31, 2014||FY ended Dec. 31, 2013|
-The Company predicts it will spend JPY 42,500 million on R&D expenses in the fiscal year ending in Dec. 2016.
|(in million JPY)|
|FY ended Dec. 31, 2015||FY ended Dec. 31, 2014||FY ended Dec. 31, 2013|
-During the fiscal year that ended in Dec. 2015, the Company made capital investments in its glass business for new production facilities in Indonesia to manufacture float sheet-glass for construction and automotive-use.
-The Company plans to spend JPY 150,000 on capital investments in the fiscal year ending in Dec. 2016.
-During the mid-term management plan covering 2015 through 2017, the Company is presuming that capital investments will be JPY 400 billion yen, or within the amount of depreciation and amortization expenses. By concentrating on business sectors where growth is foreseen, the Company predicts it will allocate 35% each to the glass and electronics businesses, and 30% to the chemicals business.
Recent Development Outside Japan
-The Company celebrated the first shipment from a plant operated by P.T. Asahimas Chemical, an Indonesian subsidiary headquartered in Jakarta. The ceremony, held at the Anyer Plant in Banten Province, commemorated the completion of enhancements to boost production capacity at the facility. Commercial production is scheduled to start in the first quarter of 2016. The facility will produce caustic soda and polyvinyl chloride (PVC) as a response to increasing demand in Southeast Asia, where production for vehicles and other manufactured goods has been rising. (From an article in the Nikkan Jidosha Shimbun on February 17, 2016)
-The Company announced that its Vietnamese subsidiary has changed its name to AGC Chemicals Vietnam Co., Ltd. from Phu My Plastics & Chemicals (PMPC). In addition, the Company has integrated the brand name of its polyvinyl chloride (PVC) products for the Southeast Asian market to ASNYL, which is the brand name used by Asahimas Chemical, AGC's chemical subsidiary in Indonesia. Through such initiatives, AGC will reinforce the presence of the AGC brand in the region. (From a press release on June 30, 2016)
-The Company will increase production capacity of the polyvinyl chloride (PVC) facility by 50% at Phu My Plastics & Chemicals Co., Ltd. (PMPC; headquartered in Ba Ria–Vung Tau Province, Vietnam), AGC's subsidiary in Vietnam. The Company aims to meet the growing PVC demand in Southeast Asia and increase its share of the Southeast Asian PVC market. After the PVC facility enhancement, PMPC's annual production capacity will increase from the current 100,000 tons to 150,000 tons in 2016. PVC is lightweight and fire retardant and also has electrical insulating properties. Consequently, PVC is used for automotive undercoat materials and a wide variety of materials in different industries. Vietnam is the third largest PVC market in Southeast Asia following Thailand and Indonesia. As the Vietnamese PVC market is expected to continue to grow, the Company has decided to bolster its production capacity. With PMPC's increased production capacity, AGC Group's annual PVC production capacity in Southeast Asia will reach 700,000 tons. (From an article in the Nikkan Jidosha Shimbun on March 26, 2015)
-The Company will change the name of its automotive glass production subsidiary in Suzhou, China. "AGC Flat Glass (Suzhou) Co., Ltd." will be renamed "AGC Automotive (Suzhou) Co., Ltd." The Company will incorporate the word "Automotive" to bolster the image that its subsidiary is an automotive glass production base. The new name is similar to those of the Company's two other automotive glass production subsidiaries in China, AGC Automotive China Co., Ltd. and AGC Automotive Foshan Co., Ltd. The occasion of the name change will be used as an opportunity to strengthen collaboration among these three subsidiaries. (From an article in the Nikkan Jidosha Shimbun on March 7, 2016)
-The Company announced that it will acquire, through AGC Automotive Europe, Poland-based NordGlass Sp. z o.o. from Polish Enterprise Fund VI (PEF VI), a private equity fund managed by Enterprise Investors. NordGlass manufactures and sells automotive replacement glass mainly for Central and Northern European markets. (From a press release on April 28, 2015)
-The Company announced on August 1 that it will establish a new plant in Morocco to produce automotive glass. This move marks the AGC Group's first operations in North Africa. The Company will set up a new company jointly with a local enterprise to supply automotive glass to European OEMs that branch out into Morocco. AGC Automotive Europe, a Belgian subsidiary of the AGC, has reached a basic agreement with Induver Holding, a glass manufacturer in Morocco, to set up a joint venture (JV) for manufacturing automotive glass. The new JV plans to build the new plant in Morocco by 2019. The new JV will combine AGC's production technologies for high quality products like automotive laminated glass and tempered glass with Induver's network there and supply highly-competitive products in an effort to expand its operations. (From an article in the Nikkan Jidosha Shimbun on August 3, 2016)
-The Company's subsidiary in Mexico held an opening ceremony of its new automotive glass plant. AGC president Takuya Shimamura and relevant parties from local governments and the industrial complex, 110 in total, attended the ceremony to celebrate the completion of the plant. AGC subsidiary, AGC Automotive Mexico S.A. de C.V. in San Luis Potosi established in 2013, has built an automotive glass plant with an annual production capacity of approx. 0.75 million tons. AGC Automotive Mexico has started commercial operations in the second half of 2015. The full-scale operation of the Mexican plant will boost Asahi Glass Group's automotive glass production capacity in North America from 3.6 million tons to 4.35 million tons a year. (From an article in the Nikkan Jidosha Shimbun on April 23, 2016)
-The Company will invest approximately JPY 18 billion in its subsidiary, AGC Glass Brazil (Sao Paulo, Brazil) to build a second float glass production plant in the southeastern region of the country. The new plant is scheduled to be completed by the end of 2018 and will increase AGC's yearly glass production capacity in Brazil to 2.4 times the current level, from 220,000 tons to 530,000 tons. AGC Glass Brazil manufactures raw glass sheets, laminated/tempered glass for automotive use, and glass products for construction. While the company currently has its annual production capacity of 220,000 tons, Brazil is expected to experience economic growth in the medium to long-term due to expanded production of products like automobiles, and the demand for automotive glass is also projected to grow. (From an article in the Nikkan Jidosha Shimbun on March 14, 2016)
Outlook for FY ending in Dec. 2016
|(in million JPY)|
|FY ended Dec. 31, 2016
|FY ended Dec. 31, 2015
|Rate of change (%)|
>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)
-Sales will be higher due to increased deliveries of glass and chemicals. Operating profit will also increase in line with the increase in deliveries, although lower selling prices of products will have a negative impact.
-Automotive glass: Deliveries will still continue to be favorable, although the Company is predicting that the automotive demand in some emerging countries will slow down.
Mid-term Management Plan
-The Company announced its new mid-term business plan called "AGC plus" for 2015 to 2017. By the final year, the Company aims to achieve an operating profit of JPY 100 billion, which is 60 percent higher than its 2014 result. Sales target is set at JPY 1.6 trillion, which is 18.6 percent higher than the 2014 level. Takuya Shimamura, president and CEO, says the Company will further accelerate its efforts to develop new products and technologies and to enter new markets to boost its profitability. It will do so by taking advantage of its diversified product line. The automotive division will expand global sales of high value-added glass products. Such profit-making products include light control glass, which is enjoying growing demand especially in Europe. The division also intends to win new business in the booming markets including the Middle East and Southeast Asia by stepping up collaborations with local companies. (From an article in the Nikkan Jidosha Shimbun on February 10, 2015)
-The Company will double the distribution ratio of its strategic businesses' operating profit in the next ten years. The Company intends to increase from the current 20% to 40% in 2025, with a focus on businesses such as the mobility sector. Over the next five years, The Company will add a strategic investment framework of JPY 300 billion to the current annual JPY 200 billion investment for facilities and development, and promote mergers and acquisitions (M&A) in new fields. In order to maintain its growth as a global company, the Company will expand its high-value-added product businesses. (From an article in the Nikkan Jidosha Shimbun on February 9, 2016)
Financial objectives for FY2017
- Sales: JPY 1,600.0 billion
- Operating profit: JPY 100 billion or more
- ROE： 5% or more
- D/E： 0.5 or less