AGC Inc. Business Report FY ended Dec. 2017
Financial Overview |
(in million JPY) |
| FY ended Dec. 31, 2017 | FY ended Dec. 31, 2016 | Rate of change (%) | Factors | |
| Overall | ||||
| Sales | 1,463,532 | 1,282,570 | 14.1 | - |
| Operating profit | 119,646 | 96,292 | 24.3 | -Shipment volume increased in all business segments -Consolidation of the acquired company |
| Profit before tax | 114,424 | 67,563 | 69.4 | - |
| Net income | 69,225 | 47,438 | 45.9 | - |
| Glass segment | ||||
| Sales | 733,953 | 679,071 | 8.1 | -Generally firm, shipment volume increased |
| Operating profit | 27,064 | 31,825 | (15.0) | -Raw materials and fuel prices rose, distribution costs increased -Registered a gain on the revision of the pension plan of a U.S. subsidiary last year |
Product Development
Carbon fiber reinforced thermoplastic（CFRTP）
-The company announced a newly developed technology that enhances the performance of carbon fiber reinforced thermoplastic (CFRTP). By using its fluoropolymer to improve existing CFRTP, AGC's new technology greatly improves the material's impact resistance, reduces the product defects that occur under high temperature molding, and also improves yields. The enhanced CFRTP allows for a wide range of applications such as automobiles, aircraft, and sport products that require lighter-weight materials. The future CFRTP market size is expected to expand rapidly in automotive applications with an estimated increase of at least 60-times today's monetary value by the year 2030. (From a press release on December 14, 2017)
Automotive display cover glass
-The company will boost production capacity for larger in-vehicle displays in response to increasing demand for its product. This new curved cover glass is surface-treated using the company's proprietary technology, a process that includes chemical strengthening treatment, optical thin-film coating, and surface printing. The finished product brings vehicle interiors to a new level of sophistication. (From an article in the Nikkan Jidosha Shimbun on June 8, 2017)
Awards
-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)
R&D Structure
-The Group is advancing a comprehensive technological strategy through its R&D Headquarters, which is in charge of the following R&D functions.
- Advanced technological R&D Dept.: In charge of creating innovative fundamental technology and establishing common, fundamental technologies such as cutting-edge advanced IT technology and analytical technology
- Product Development R&D Dept.: Create new products based on market perspectives and solve technological issue with products
- Production Technology Dept.: Carry out investments and maintenance in production facilities, develop production technology, and solve related issues.
- Intellectual Property Dept.: Conduct research, analysis, patent filings; acquire and make full use of patent rights; and establish and advance intellectual property strategies.
-In February 2017, the Company announced that it is reorganizing its R&D structure. The Company will build a new R&D building at its Keihin Plant in Tsurumi Ward, Yokohama, consolidating the fundamental technology R&D function, new-product-development function, and process-development function under one roof, since they were split among the Keihin Plant and Central R&D Dept. that is in Yokohama, Kanagawa Ward. The Company is doing this to form a seamless R&D structure. In addition, the Company plans to make space to conduct collaborative activities with other companies and research institutions, by making use of the space in the Keihin Plant. It plans to make it an urban base for creating value. The new R&D building’s floor space will be 47,000m sq. The Company has plans to launch the new R&D structure from June 2020. (From a February 3, 2017 press release)
-AGC Automotive has R&D centers in three regions: Japan (Central R&D Dept. and Product Development Center), USA: (Detroit R&D Center), and Belgium: (Gosselies Technovation Center), which conduct R&D activities on automotive glass-forming technology and engage in product development. The five core technologies of the AGC Group, namely design technology for glass materials, glass production and processing technology, fluoride/chemical technology, thin-film-forming technology (surface treatment), and fiber optics and electronics design technology, will become the basis for fusing elemental technologies such as digital design-technology, surface-treatment technology, and automotive glass production technology.
Acquisitions
-The company announced that Solvay has completed the divestment of its 58.77% stake in its Thai subsidiary Vinythai PCL to Japanese company AGC Asahi Glass. The transaction was based on a total enterprise value of THB 16.5 billion (EUR 435 million). (From a press release on February 23, 2017)
-Following the closing of transactions for the acquisition of 58.77% of the outstanding shares in Vinythai PCL, Solvay’s Thai subsidiary, on February 22, AGC Asahi Glass completed acquiring additional 152,450 shares (0.01%) of the remaining 488,682,385 shares (41.23%) in Vinythai PCL via a tender offer that ended on April 7, 2017. (From a press release on April 12, 2017)
Technology Licensing-out Agreement |
(As of Dec. 31, 2017) |
| 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) |
R&D Expenditure |
(in million JPY) |
| FY ended Dec. 31, 2017 | FY ended Dec. 31, 2016 | FY ended Dec. 31, 2015 | |
| Overall | 43,912 | 39,212 | 38,927 |
| -Glass segment | 7,464 | 6,961 | 7,466 |
-The Company plans to spend JPY 45,000 million on R&D expenses for the fiscal year ending in December 2018.
Capital Expenditure |
(in million JPY) |
| FY ended Dec. 31, 2017 | FY ended Dec. 31, 2016 | FY ended Dec. 31, 2015 | |
| Overall | 165,100 | 126,000 | 125,100 |
| -Glass segment | 63,800 | 50,300 | 42,300 |
-Capital expenditure of the Company's glass segment during the fiscal year ended in December 2017 includes a new automotive glass manufacturing facility in Morocco.
-In the fiscal year ending in December 2018, the Company plans to invest JPY 220,000 million on capital expenditures.
Recent Developments Outside Japan
-Asahi India announced the commencement of commercial production at their Taloja float glass plant. Along with the Company’s fifth auto glass plant in Gujarat, the AIS Taloja plant will further add to the scale and flexibility of AIS in providing seamless supplies to customers in the architectural and auto segments, which includes all automotive OEMS. The plant has an installed capacity to manufacture 550 tonnes of glass per day. The plant equipped with the latest in glass manufacturing technology. (From a press release on November 9, 2017)
-In January 2017, the Company announced that it will establish a joint-venture company in Guangdong, China, AGC Flat Glass Protech（Shenzhen )Co., Ltd., which will build a new production plant to manufacture sheet glass for thin film transistor (TFT) liquid crystal displays (LCDs). The new plant is being built to respond to growing demand in China for the production of highly flexible glass for next-generation, large-size displays. It will establish the joint-venture company with Shenzhen China Star Optoelectronics Semiconductor Display Technology Co., Ltd., a local Chinese manufacturer, in the latter half of 2017. The plant is scheduled to start commercial operations in 2019. AGC Flat Glass Protech（Shenzhen )Co., Ltd. will be capitalized at JPY 10.8 billion yen and Asahi Glass will invest 70% and Shenzhen China Star Optoelectronics Semiconductor Display Technology Co., Ltd. will invest 30%. (From a January 19, 2017 news article in the Nikkan Jidosha Shimbun)
-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)
Outlook for FY ending in Dec. 2017 |
(in million JPY) |
| FY ending Dec. 31, 2018 (Forecast) |
FY ended Dec. 31, 2017 (Actual results) |
Rate of change (%) | |
| Sales | 1,550,000 | 1,463,532 | 5.9 |
| Operating profit | 130,000 | 119,646 | 8.7 |
>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)
-The exchnage rates assumed for FY2018 is JPY 110 to the dollar and JPY 135 for the Euro.
-The Company expects that high levels of shipment will continue and productivity will improve in Europe. For Asia, it expects the resolution of manufacturing troubles occurred last year and stable production.
Mid-term Management Plan
-The company announced its new AGC plus-2020 three-year mid-term business plan for the period ending in December 2020. In the field of automobiles, the company will focus on product development to create new business for future proliferation of autonomous driving, connected cars, and electric vehicles (EVs). It is aiming to raise overall operating profit to more than JPY 160 billion (an increase of over 30% from 2017), and the rate of return on equity 1.9 percentage point to more than 8.0%. Asahi Glass will promote information display screens like heads-up displays, and high-performance windshields that are equipped with communication and television antennas. The company will establish a radio wave darkroom in Europe by the end of 2018 to strengthen its antenna development system. For EVs, which require weight reduction to improve travel distance, Asahi Glass plans to start mass production of carbon fiber reinforced thermoplastic compounds. (From an article in the Nikkan Jidosha Shimbun on February 16, 2018)
Financial objectives for FY2020
- Operating profit: JPY 160 billion or more
- ROE: 8% or higher
- D/E: 0.5 or lower