Sumitomo Electric Industries, Ltd. Business Report FY ended Mar. 2014

Business Highlights

Financial Overview

(in million JPY)
FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 Rate of Change (%) Factors
Sales 2,568,779 2,159,942 18.9 -
Operating income 120,058 76,790 56.3 -
Ordinary income 145,354 94,116 54.4 -
Net income 66,748 37,955 75.9 -
Automotive Business
Sales 1,350,124 1,070,650 26.1 -Sales and income from wire harnesses increased year-on-year, thanks to robust sales outside Japan such as in North America and Asia, favorable currency translation because of the weak yen, and successful cost-reduction initiatives.
-Tokai Rubber Industries, as a result of being acquired by the Company, added to the consolidated business performance and achieved higher sales and income year-on-year.
Operating income 71,781 53,116 35.1

Joint Venture

-The Company and Sumitomo Wiring Systems, Ltd. (SWS) will start producing automotive wiring harnesses in Russia by the spring of 2014. The Company and SWS will establish a joint venture in August 2013 with OAO Zavod Radioapparatury (ZRA), a manufacturer of communication devices and wires in Russia. The new JV will utilize ZRA's existing manufacturing plants in Russia. The Company's Group has been operating a sales subsidiary in Russia, but this will be the first production base for wire harnesses in the country. To expand sales, the Company and SWS will promote its products to automakers that have presence in the Russian market. (From an article in the Nikkan Jidosha Shimbun on July 6, 2013)

Business Plan

Entering into automotive battery market
-The Company enters the automotive battery market for electric vehicles and plug-in hybrid vehicles. The Company developed a battery which can supply electricity both to vehicles and home appliances. In anticipation of an increase in demand for electricity supply to home appliances from vehicles, the firm aims to receive orders from automakers as soon as possible. (From an article in the Nikkan Jidosha Shimbun on December 5, 2013)

Outlook for FY ending Mar. 31, 2015

(in million JPY)
FY ending Mar. 31, 2015
FY ended Mar. 31, 2014
(Actual Results)
Rate of Change
Sales 2,700,000 2,568,779 5.1
-Automotive Business 14,000 13,510 3.6
Operating income 125,000 120,058 4.1
Ordinary income 142,000 145,354 (2.3)
Net income 110,000 66,748 66.3

-Sales in the automotive business for the fiscal year ending March 2015 are forecast to increase due to continued, robust demand for wire harnesses and products manufactured by Tokai Rubber Industries. Initiatives for both of these businesses are outlined below:
  • Wire harness: Continue to focus on R&D and sales of lighter weight, aluminum harnesses, and low-environmental-impact high voltage harnesses.
  • Tokai Rubber: Create maximum synergy with the anti-vibration rubber/hose business that was acquired in 2013 and establish a supply network worldwide as a global supplier.
>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income, etc.)

Mid-term Management Plan

-In 2013, the Company released the "17 Vision," its mid-term business plan for fiscal 2013 through fiscal 2017. Financial targets are as follows:
(in billion JPY)
FY ending Mar. 31, 2015
FY ending Mar. 31, 2016
FY ending Mar. 31, 2018
(Targeted by end of Mid-term Plan)
Sales 2,700.0 2,600.0 3,000.0
Operating income 125.0 130.0 180.0
Operating profit margin 4.6% 5.0% 6.0%

Automotive Business
-In order to meet the targeted objectives outlined in its mid-term management plan, the Company will further expand its operations involved with its mainstay product items, namely harnesses, connectors, and anti-vibration rubber; based on the following strategies.
1) Increase the share of sales to non-Japanese OEMs
  • Increase its market share of harnesses, connectors, and anti-vibration rubber
2) Speed up new product development
  • Better respond to the need for weight reduction (aluminum harnesses, etc.) and more modularization
  • Increase sales of electronics products (central gateways, etc.)
  • Develop and commercialize products for next-generation and eco-friendly vehicles (products for idling stop systems, etc.)
3) Reduce costs
  • Pursue the idea of producing products at the optimum locations
  • Enhance technology on automation


R&D Expenditure

(in million JPY)
FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 FY ended Mar. 31, 2012
Overall 99,520 94,287 86,582
-Automotive Business 62,069 57,866 49,017

-The Company plans to invest JPY 98,000 million for oveall R&D expenditure during FY ending Mar. 2015, of which JPY 61,000 will be allocated to Automotive Business.

R&D Activities

Wire harnesses / In-vehicle electronic equipments
-R&D activities are mainly conducted at AutoNetworks Technologies, Ltd., which is jointly owned by the Company and Sumitomo Wiring Systems, Ltd. R&D activities are mainly focused on developing new products meeting safety, comfort and environmental needs.

-Wire harnesses:
  • The Company is building harness architectures that can be mounted in next-generation vehicles' onboard systems, conducting R&D activities on elemental technologies needed to meet this need. 
  • Also, in order to reduce vehicle weight and be environmental friendly, the Company is developing lighter weight harnesses. It has succeeded in this area, developing and starting mass-production of harnesses using aluminum, which is lighter in weight than copper.
  • Moreover, the Company is continuing its R&D activities on high-voltage harnesses and connectors for the growing EV/HEV sector.

-In-vehicle electronics devices:

  • The Company is now developing electronics devices such as PDs (power distributors) and next-generation in-vehicle LAN (Local Area Network) units in order to respond to the rapid advances taking place in IT. The Company is also launching systems with advanced features and/or networking capabilities.
-Rubber products:
-The Company is conducting advanced R&D activities on technology that can reduce costs, comply with environmental concerns, enhance riding comfort, and be applied globally.

Investment Activities

Capital Expenditure

(in million JPY)
FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 FY ended Mar. 31, 2012
Overall 150,823 147,883 135,039
-Automotive Business 88,237 76,914 60,498

-The Company invested in the automotive business to increase production and improve the efficiency of wire harnesses and vibration isolating rubber.

Investment Plan (FY ended Mar. 31, 2015)

-The Company plans to invest JPY 160,000 million.
-Its Automotive Business Division plans to invest JPY 85,000 billion mainly in its facility that produces wire harnesses and vibration-isolating rubber.