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G-TEKT Corporation Business Report FY ended Mar. 2015

Financial Overview

(in million JPY)
FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 Rate of Change
(%)		 Factors
Overall
Sales 193,769 181,517 6.7 -
Operating income 9,643 14,121 (31.7) -
Ordinary income 8,983 13,852 (35.2) -
Net income 4,652 8,020 (42.0) -
Japan
Sales 41,187 41,519 (0.8) -Lower unit-production levels by major customers
-Increased sales of die facilities in line with the customers' rush to launch new types of products.
Operating income 2,137 3,179 (32.8) -In addition to costs associated with changes made to product mix, costs to respond to production changes and procure dies to launch new products increased.
North America
Sales 66,612 60,613 9.9 -Sales increased due to favorable currency translation, although unit-production levels were about the same as they were the previous year.
Operating income 2,476 2,558 (3.2) -Sales of die facilities that were needed for customers to launch new products increased, although production costs increased.
Europe
Sales 10,111 9,472 6.7 -Sales increased due to favorable currency translation, although unit-production levels decreased because of the unstable economic situation in Europe.
Operating income 959 889 7.9 -Cost-reduction initiatives and favorable currency translation.
Asia
Sales 32,806 32,550 0.8 -Although commercial production launch at G-TIM in Indonesia and unit-production increases in India helped increase sales, customers' production levels in Thailand, a major market, significantly decreased.
Operating income 2,574 4,010 (35.8) -In Thailand, depreciation costs increased because the Company established a new plant, even though the Company was able to significantly reduce both labor and production costs.
China
Sales 31,901 30,698 3.9 -In addition to a rapid drop unit-production levels in the second half of the year, unit sales prices also fell. Nevertheless, as a result of favorable currency translation, sales increased.
Operating income 1,594 2,982 (46.5) -Increased labor and depreciation costs.
South America
Sales 11,149 6,662 67.4 -In addition to higher sales of products, sales of die facilities also increased due to customer demand to launch new products.
Operating income 444 465 (4.5) -Cost increased such as labor costs, even though sales were higher.

Contracts


-The Company has received an order for members, the body frame components of the next-generation Sienta, from Toyota Motor Corporation. G-TEKT will produce the members using high-tensile steel sheets at its plant in Ota City, Gunma Prefecture and supply them to Toyota Motor East Japan, Inc. in Ohira-mura, Miyagi Prefecture. This is the Company's first order from Toyota in Japan although G-TEKT has supplied its parts to Toyota outside Japan. Taking advantage of its plants in the northern Kanto region, the Company has successfully received the first order. As Toyota is localizing the procurement of parts in the northeastern region, Toyota-affiliated parts suppliers in the central region are increasingly branching out into the northeastern region. Non-Toyota parts suppliers, which are headquartered in the Kanto region, are also finding opportunities to start business with Toyota. (From an article in the Nikkan Jidosha Shimbun on November 7, 2014)

Recent Development Outside Japan


-The Company reorganized its production structure to optimally localize production in the region and respond to increased unit-production volumes of Subaru. It transferred the production line dedicated to Honda products at Austin Tri-Hawk Automotive, Inc. (ATA) in the USA and installed a new 2,500-ton transfer press.
-Launched hot-stamping production and a second production line.
-Austin Tri-Hawk Automotive, Inc. (ATA) received an award for quality from Subaru.
-G-TEKT Mexico Corp. S.A. de C.V. (G-MEX) received a new order for transmissions from Musashi Seimitsu Industry. It launched production of auto-body parts for Mazda.


-Launched production of auto-body parts for Beijing Automobile Works.
-Received a new order from Fujian Benz.
-Auto Parts Alliance (China) Ltd. (APAC) in Guangzhou is building a plant to produce transmission parts
-Auto Parts Alliance (China) Ltd. (APAC) received awards for quality from Honda and Nissan.


-G-TEKT Eastern Co., Ltd. (G-TEC) in Thailand launched operations at its second plant. It received a new order from Ford.
-PT. G-TEKT Indonesia Manufacturing (G-TIM) launched production of auto-body parts and transmission parts. It received a new order from Daihatsu.


-Honda placed an order for its next-generation Civic.
-Jaguar Land Rover placed a new order for aluminum auto-body parts.


-The Company launched production of auto-body parts for Toyota and Nissan.
-G-KT do Brasil Ltda. (G-KTB) in Brazil received an award for quality from Honda.

Outlook for FY ending Mar. 2016

(in millions of JPY)
FY ending Mar. 2016
(Forecast)		 FY ending Mar. 2015
(Actual Results)		 Rate of Change
(%)
Sales 212,000 193,769 9.4
Operating income 11,400 9,643 18.2
Ordinary income 10,100 8,983 12.4
Net income 5,400 4,652 16.1


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

R&D Expenditure

(in million JPY)
FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Overall 641 459 415

R&D Structure

-R&D activities involving new technologies and new products are conducted at the Company's main Technology Development Department.

-16 engineers work at the Product Development Section as of March 2015.

R&D Activities

-Major R&D activities and achievements in the FY, which ended Mar. 31, 2015

  • Developing hot-press technology
  • Developing forming technology to manufacture high tensile strength steel sheets
  • Developing non-destructive inspection technology to test spot-welded points.
  • Developing stamping technology for transmission components
  • Developing technology to create forming simulations
  • Developing technology that contributes to reducing vehicle weight

Capital Expenditure

 (in million JPY)
FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Overall 43,671 21,056 18,181


Capital Investments in FY ended Mar. 31, 2015
-The Company invested a total of JPY 18,108 million to respond to new product launches, broken down as follows. Japan: JPY 7,929 million; Asia: JPY 4,603 million; China: JPY 3,684.
-As fundamental investments to increase production capacity, the Company invested a total of JPY 25,563 million, broken down as follows. North America: JPY 13,063; Asia: JPY 5,470; Japan: JPY 4,729

Investments in Japan

-Gumma Plant: Boosted in-house production of dies for hot stamping.
-Tochigi Plant expansion: Installed large-sized transfer press. Enhanced transmission parts business as the head function and strengthened supply capabilities to respond to greater numbers of orders.

-The Company will start producing hot-stamped components in Japan in 2015. G-TEKT has received an order from Honda for hot-stamped components in Japan, after another order in the U.S. Thus, hot-stamped components will be produced and supplied in both countries. In line with the production start of hot-stamped components in Japan, the Company will introduce facilities for manufacturing metal molds specifically designed for the hot-stamped components at its plant in Japan. The metal molds manufactured in Japan will also be supplied to the company's plant in the U.S. As Honda increases adoption of super high-strength hot-stamped components, the supplier has been engaged in the development of techniques for mass-producing such components. G-TEKT will meet demands for lightweight and high-strength parts by supplying its hot-stamped components as well as cold-stamped components that are made from high-tensile steel sheets. (From an article in the Nikkan Jidosha Shimbun on February 3, 2015)

Investments Outside Japan


-The Company announced that it has decided at its board meeting to make an additional investment in its new Mexican subsidiary, G-TEKT Mexico Corp S.A. de C.V., based in Guanajuato. The subsidiary has been seeking marketing opportunities of transmission parts since its establishment in September 2013. As the business plan for the subsidiary has been finalized, G-TEKT Mexico will set up manufacturing operations. G-TEKT plans to increase the subsidiary's capital to USD 15 million (JPY 1.5 billion) by April 2015. It will also invest USD 32.2 million (JPY 3.28 billion) to construct a plant. Sales at the subsidiary are expected to reach USD 25.8 million (JPY 2.63 billion) in the fiscal year ending March 2020. (From an article in the Nikkan Jidosha Shimbun on April 3, 2014)

Planned Capital Investments

(As of Mar. 31, 2015)
Plant Location Equipment to be installed Estimated amount of investment
(in millions of yen		 From To Purpose of investments
Saitama Plant Saitama Pref., Japan Equipment for manufacturing auto parts (dies, jigs and tools) 2,156 Sep.
2013		 Dec.
2015		 Dealing with new model
Jefferson Industries Corporation Ohio,
USA		 Equipment for manufacturing auto parts (stamping and welding equipment) 1,900 Jan.
2015		 Dec.
2017		 Increasing production capacity
Austin Tri-Hawk Automotive, Inc. Indiana,
USA		 Equipment for manufacturing auto parts (dies, jigs and tools) 2,056 Nov.
2014		 Sep.
2015		 Dealing with new model
Equipment for manufacturing auto parts (stamping and welding equipment) 2,423 Jan.
2015		 Jul.
2017		 Increasing production capacity
G-TEKT (Thailand) Co., Ltd. Ayutthaya, Thailand Equipment for manufacturing auto parts (dies, jigs and tools) 4,364 Sep.
2013		 Feb.
2017		 Dealing with new model
G-TEKT Eastern Co., Ltd. Rayong,
Thailand		 Equipment for manufacturing auto parts (stamping and welding equipment) 1,698 Jan.
2014		 Dec.
2017		 Increasing production capacity
Expanded plant building at production plant 1,781 Dec.
2014		 Dec.
2017		 Increasing production capacity
Auto Parts Alliance (China) Ltd. Guangdong, China Equipment for manufacturing auto parts (dies, jigs and tools) 3,550 Dec.
2013		 Jul.
2017		 Dealing with new model
Equipment for manufacturing auto parts (stamping and welding equipment) 1,950 Dec.
2013		 Dec.
2017		 Increasing production capacity
Wuhan Auto Parts Alliance Co., Ltd. Hubei,
China		 Equipment for manufacturing auto parts (dies, jigs and tools) 1,648 Feb.
2014		 Jun.
2017		 Dealing with new model