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  5. Ashimori Industry Co., Ltd. Business Report FY ended Mar. 2016

Ashimori Industry Co., Ltd. Business Report FY ended Mar. 2016

Financial Overview

(in million JPY)
FY ended Mar. 31, 2016 FY ended Mar. 31, 2015 Rate of Change (%) Factors
Overall
Sales 51,380 48,067 6.9

-Sales increased for four years in a row, with sales in this past fiscal year setting a new record high.
-Sales for more models and sales of more products globally led to increased sales, along with increasing production capacity to handle greater production volumes.
Operating income 2,071 1,025 102.0 -Income increased significantly, thanks to operations outside Japan, especially at the Mexican subsidiary.
Ordinary income 1,700 1,306 30.2 -
Net income attributable to owners of the parent 1,360 1,470 (7.5) -
Automotive Safety Systems
Sales 38,444 35,932 7.0 -Seat belts and airbags: While sales were lower in Japan because of lower vehicle production volumes, sales for the year increased, thanks to new-car launches outside Japan.
-Steering wheels: Sales increased because of more orders for models mounted with the company’s products in Japan.
Operating income 1,830 904 102.4 -Income increased due to improved productivity and enhanced quality at production plants outside Japan (Mexico, Thailand, and Korea).

Global Business Activities


-Ashimori Korea Co., Ltd., the Korean unit of the Company, announced that it will hold a completion ceremony for its new plant in Wonju, Gangwon-Do. This plant has a building area of 2,670 square meters on 9,120 square meters of land. It will produce seat belts and airbags for automakers such as SsangYong Motor. Approximately JPY 1 billion will be invested in the new plant, which is expected to generate approximately JPY 4.1 billion in sales in the fiscal year ending March 2019.


-The Company decided to establish a second plant at Ashimori Industria de Mexico, S.A. de C.V.
New Plant Outline

  • Building floor space: 6,300m sq.
  • Amount of investment: MXN 200 million or JPY 1.3 billion
  • Planned launch: July 2017
  • Main business activities: Manufacture and sale of automotive seatbelts, airbags, and interior products


-The Company will increase the local procurement ratio at its plant in Mexico from the current 26% to over 60% by the end of 2017. The Company will enhance cooperation with local suppliers in Mexico and improve product quality by using know-how acquired at its other plants and by quantifying its evaluation criteria. By doing so, the Company will increase the number of locally produced parts which conform to OEMs' quality standards. While car sales remain favorable in North America, the Company intends to win more orders for its parts for use in cars produced in North America by increasing the local procurement ratio to a level which meets the requirement for an exemption from import duty under the North American Free Trade Agreement (NAFTA). The Mexico plant, which began operations in September 2013, produces seat belts, air bags and interior parts. Since it has not been long since the opening of the plant, the local procurement ratio is only 26%, far below the figures of its Thai and Chinese plants (61% and 63%, respectively). Therefore, the plant procures parts from the Company's Thai and Chinese plants. The Company finds it difficult to raise the local procurement ratio partly because OEMs set rigorous quality standards especially on critical safety parts, which consist of a large number of components. (From an article in the Nikkan Jidosha Shimbun on April 1, 2015)

Return Production to Japan

-The Company plans to reorganize its manufacturing operations. Plans include transferring production to Japan from the Company's overseas facilities that currently export components to its Japanese facilities. The Company will calculate the exchange rate at the break-even point for all products by March 2016. Based on the figures, the Company aims to establish a flexible production network between Japan and overseas. The Company will primarily move production of interior components that are easy to transfer; it plans to move production of two kinds of interior parts from China to Japan in May and June, respectively. The formation of the flexible production network will allow the company to establish a stable profit structure that will not be affected by exchange rate fluctuations. (From an article in the Nikkan Jidosha Shimbun on April 14, 2015)



Mid-term Management plan (FY ending Mar. 2017 - FY ending Mar. 2019)

Financial Targets and Actual Results (in million JPY)
FY ended Mar. 31, 2015
(Actual Result)		 FY ended Mar. 31, 2016
(Actual Result)		 FY ending Mar. 31, 2017
(Forecast)		 FY ending Mar. 31, 2018
(Target)		 FY ending Mar. 31, 2019
(Target)
Overall
Sales 48,067 51,380 52,000 57,000 62,000
Operating income 1,025 2,071 2,100 2,500 3,000
-Operating margin (%) 2.1 4.0 4.0 4.4 4.8
Ordinary income 1,306 1,700 2,000 2,400 2,900
Net income attributable to owners of the parent 1,470 1,360 1,500 1,700 2,100
ROA (Return on Assets) (%) 4.0 3.7 3.8 4.1 4.8
Automotive Safety Systems
Sales 35,932 38,444 37,500 40,500 44,300
Operating income 904 1,830 1,900 1,900 2,100
-Operating margin (%) 2.5 4.8 5.1 4.7 4.7

Mid-term Management Strategy

Setting up global production and sales operations (Strengthen organizational structure outside Japan) Expand business outside Japan by enhancing production plants worldwide
  1. Increase sales to Korean OEMs in line with production launch at new plant in 2016.
  2. Increase sales in Mexico, with production launch at new plant in 2017.
  3. New sales offices planned for Europe and the US.
  4. Enhance production plants in Japan, which are the main operations, in order support global operations.
  5. Increase local production for local consumption and improve productivity.
Increase sales of interior parts worldwide
  1. In regard to shade products, which lead electrification technology in Japan:
    ・Increase sales to European OEMs by launching more operations in Europe.
    ・Develop value-added products to increase sales in Japan.
    ・Expand business in North America by collaborating with Japanese OEMs’ transplants. Increase orders for models exclusive to North America. Win new customers among local OEMs.
Develop new-generation products Making use of core technologies to advance integration and systemization. Core technologies
  1. Braiding/Weaving (Tubular fabrics, wide-width fabrics, ropes, belts, cords, etc.)
  2. Winding/Fastening (Seat belts, automotive interior parts, tighteners, etc.)
  3. Resin (Coating) Processing (Fire hoses, PALTEM liners, SZ structural materials, etc.)
  4. Inflating (Air bags, air roll system, bags for civil engineering applications, etc.)
Develop products for autonomous driving systems
  1. Fusion with sensing technology.
  2. Fusion with Human Machine Interface (MHI) technology.
  3. Technology to protect more than vehicle occupants such as pedestrians and bicycle riders.
  4. Technology to protect the elderly.
  5. Enhance electronics technology and weaving/sewing technology.
Increase sales by enhancing value to customers
(“Best Partner” strategy)
  1. Enhance capabilities to make better product presentations and implementations, in order to jointly develop next-generation technology. (Advance technical expertise and increase resources for more advance research).
  2. Enhance testing technology that includes CAE analysis technology and testing devices.
  3. Conduct more sales activities to make maximum use of local production facilities (Asia and Mexico) and sales offices (North America and Europe).
  4. Technical support to optimize capabilities in making product presentations.
Enhance competitive advantages by improving costs
  1. Streamline operations by automating assembly operations.
  2. Produce components in-house.
  3. Procure products locally.

Outlook for FY ending Mar. 31, 2017

(in million JPY)
FY ending Mar. 31, 2017
(Forecast)		 FY ended Mar. 31, 2016
(Actual Results)		 Rate of Change
(%)
Overall
Sales 52,000 51,380 1.2
Operating income 2,100 2,071 1.4
Ordinary income 2,000 1,700 17.6
Net income attributable to owners of the parent 1,500 1,360 10.3
Automotive Safety Systems
Sales 37,500 38,444 (2.5)
Operating income 1,900 1,830 3.8


-The Company plans to spend JPY 4.4 billion yen in capital investments in the fiscal year ending in 2017, which 2.6 times more y/y. As a result, operating income is expected to increase only slights.


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

R&D Expenditure

(in millions of JPY)
FY ended Mar. 31, 2016 FY ended Mar. 31, 2015 FY ended Mar. 31, 2014
Overall 939 952 884
-Automotive Safety Systems 471 541 476

R&D Activities

Seatbelts
-The Company developed and improved the reliability of new devices that comply with government regulations in every country and which pass assessment tests.
-The Company developed and commercialized devices that are designed for production worldwide.

Airbags
-The Company developed and improved the reliability of new modules for new collisions mode.
-The Company is developing and commercializing products that can be manufactured worldwide.

Interior products
-The Company expanded its product range of shades and tonneau covers, and expanded the types of cargo-nets it can supply. It also developed highly functional products and new materials; in addition to improving designs.
-Outside Japan, the Company is commercializing products, increasing the operations and number of customers.

Capital Expenditure

(in million JPY)
FY ended Mar. 31, 2016 FY ended Mar. 31, 2015 FY ended Mar. 31, 2014
Overall 1,800 1,728 1,224
-Automotive Safety Systems 1,568 1,405 1,068


Automotive Safety Systems
-The Company made capital investments mainly at its Osaka Plant to rationalize and strengthen production of automotive products, as well as augment R&D facilities.

-The Company plans to spend JPY 4.4 billion yen in capital investments in the fiscal year ending in 2017, which 2.6 times more y/y. It will spend JPY 3.4 billion in the automotive safety parts, mainly in the Mexican subsidiary’s second production plant (JPY 1.2 billion).

Planned Capital Investments

 (As of Mar. 31, 2016)
Name of Company/Plant
(Location)		 Purpose Planned investment
(in million JPY)		 Starting Month Completing Month Capacity increase on completion
The Company's
Osaka Plant
(Osaka, Japan)		 To rationalize production facilities for automotive safety systems and high performance products 2,779 Apr. 2015 Mar. 2017 Practically none as this is to improve quality
Ashimori Korea Co., Ltd.
(Gangwon-do, Korea)		 To construct production facilities for automotive safety systems 930 Jul. 2015 Mar. 2019 -
To enhance production facilities for automotive safety systems 200 May 2016 Mar. 2018 -
Ashimori Industria de Mexico, S.A. de C.V.
(Guanajuato, Mexico)

 To enhance production facilities for automotive safety systems 1,300 Jul. 2016 Jul. 2017 -