Pacific Industrial Co., Ltd. Business Report FY2012
Business Highlights
Financial Overview |
(in millions of JPY) |
FY ended Mar. 31, 2012 | FY ended Mar. 31, 2011 | Rate of Change (%) |
Factors | |
Overall | ||||
Sales | 79,579 | 84,631 | (6.0) | - |
Operating income |
3,699 | 5,151 | (28.2) | - |
Ordinary income |
4,147 | 5,281 | (21.5) | - |
Current net income | 3,297 | 2,969 | 11.0 | - |
Stamping/resin product business | ||||
Sales | 56,841 | 60,209 | (5.6) | -Sales revenue generated in Japan, its major market, remained at a normal level during the first half of the year. However, for the year as a whole, operating revenue decreased due to several negative factors, including the change of the fiscal year accounting period during the first half of the year in the U.S.A., and the high evaluation of the yen that caused negative currency translation. |
Operating income | 1,669 | 2,950 | (43.4) | -Operating profit fell year-on-year because of the huge decrease in revenue during the first half of the year and the drop in product selling prices due to the extremely competitive market. This was in spite of the efforts the company made to enhance its cost structure and reduce depreciation expenses. |
Valve product business | ||||
Sales | 22,361 | 24,091 | (7.2) | -The Great East Japan Earthquake and the flooding in Thailand created havoc in the supply chain all over the world, affecting production at the Company’s major customers. Sales of TPMSs in North America, a major market, significantly fell. In addition, the high evaluation of the yen also negatively impacted the Company’s performance. |
Operating income | 2,040 | 2,219 | (8.1) | -Operating profit was down year-on-year due to the high evaluation of the yen against other currencies and the extreme rise in the cost of materials. |
New Company
-The Company announced that it will form a wholly-owned regional headquarters, which will be tentatively called Pacific Industries China Corporation, in Tianjin, China. The new company, capitalized at 30 million USD, will be established in May 2012. Pacific Industrial has two Chinese subsidiaries, Tianjin Pacific Auto Parts Co., Ltd. and Changsha Pacific Hanya Auto Parts Co., Ltd. (From a press release on March 21, 2012)
-The Company announced that it will form a wholly-owned sales company in Brussels, Belgium. The new company, which will be tentatively called Pacific Industries Europe NV/SA, will sell automotive parts, including Tire Pressure Monitoring System (TPMS). With capital of 1 million euros, the new company will be established in July 2012. (From a press release on March 21, 2012)
Joint Ventures
-The Company announced on Nov. 4 its plan to set up a new plant in Hunan Province, China. It will establish a new manufacturing subsidiary by the end of this November, jointly with some other firms including Hanya Seisakusho Co., Ltd., Obu, Aichi Pref., whose major customer is Mitsubishi Motors Corp. This is Pacific Industrial's first cooperation in overseas manufacturing with Hanya Seisakusho. The joint venture will lease a local plant, prepare it in order to start production as early as July 2012 and supply body stamping parts to Mitsubishi Motors. It is expected to achieve two billion yen sales in FY 2014. The new company, which will become Pacific Industrial Co.'s third operation in China, will be owned 47 percent by three companies of the Pacific Group, including Pacific Industrial Co.; 47 percent by Hanya Seisakusho; and 6 percent by Metal One Corp., a steel trading company. Pacific Industrial Co. and Hanya Seisakusho, thereafter, will supply stamping parts such as body structural parts to Mitsubishi Motors through this joint venture. (From an article in the Nikkan Jidosha Shimbun on November 7, 2011)
Recent Development Outside Japan
<China>
-The Company's subsidiary, Tianjin Pacific Auto Parts Co., Ltd., will start supplying automotive stamped parts for the first time to Great Wall, from March 2013.
Awards
-The Company has received the "Technology & Development Award" and the "Parts Standardization Award" at the Toyota Motor Corporation's 2012 Global Supplier Convention. The "Technology & Development Award" is for Pacific Industrial's double tank oil pan. Meanwhile, the "Parts Standardization Award" recognizes its development for ornament standardization using film technology. (From a press release on February 27, 2012)
Medium-term management plan OCEAN-15
OCEAN-15 numerical targets | FY2015 (Planned) |
|
Sales | 95 billion yens | |
Ordinary income | In the 6% range | |
Percentage of revenue generated overseas | Over 40% | |
Total asset turnover | 1.05 |
Outlook for FY ending Mar. 31, 2013 |
(in millions of JPY) |
FY ending Mar. 31, 2013 (Estimate) |
FY ended Mar. 31, 2012 (Result) |
Rate of Change (%) |
|
Sales | 78,000 | 79,579 | (2.0) |
Operating profit | 3,800 | 3,699 | 2.7 |
Ordinary income | 4,500 | 4,147 | 8.5 |
Net income | 3,100 | 3,297 | (6.0) |
R&D
R&D Expenses |
(in millions of JPY) |
FY ended Mar. 31, 2012 | FY ended Mar. 31, 2011 | FY ended Mar. 31, 2010 | |
Stamping/resin products business | 122 | 114 | 73 |
Valve products business | 344 | 84 | 84 |
In Common | 133 | 525 | 518 |
Overall | 603 | 735 | 684 |
R&D Structure
-The R&D activities of the Company are being conducted by the R&D technical functions and the production-technology functions at each division, with the R&D Technical Planning Department in charge of activities designed to create products for the future. The R&D functions collaborate with each other in developing new materials and production methods so as to develop new products and strengthen the Company's competitive advantages.
-The Company's subsidiary, PI Systems, conducts R&D activities on software.
-The Company, in working to speed up R&D developments and further deepen research, works closely with specialized companies, universities, and R&D organizations under an R&D framework based on industry-academia-government cooperation.
R&D Activities
Business segment |
Departments |
Major activities |
Stamping/resin products business | -Technical Planning Department -R&D Department No. 1, Production Technology Department |
-The Company researched and developed new stamping methods, including cold stamping technology for ultra high-tensile steel. |
Valve products business | -R&D Department No. 2; Production Technology Department, and TPMS Department |
-The Company developed new tire-valves by applying technology in the field of tire-valve seals. |
Common | -Technical Planning Department |
-The Company is working on developing lighter weight, multi-functional composite materials. -The Company is developing products designed for its TPMSs. -The Company is working to develop environmentally friendly products that require less materials and reduce environmental impact. |
Product Development
Double-chamber oil pan-The Company is the first in the world to develop and commercialize a double-chamber oil pan. The interior of the oil-pan consists of two chambers that increase the speed at which the engine oil temperature rises. This enhances fuel efficiency and reduces CO2 emissions. This oil-pan received the Toyota Technical Development Award in 2011.
Cold-forged pressing process creates ultra high tensile steel
-The Company designed a process for a cold-forged press that can produce ultra high tensile steel. This latest cold-forging process, compared to the heat-forging process, produces about eight times more steel and reduces costs by 20%.
Investment Activities
Capital Expenditure |
(in millions of JPY) |
FY ended Mar. 31, 2012 | FY ended Mar. 31, 2011 | FY ended Mar. 31, 2010 | |
Stamping/resin products | 4,688 | 3,074 | 3,888 |
-In Japan | 3,322 | 2,687 | 2,636 |
-Outside Japan | 1,366 | 387 | 1,252 |
Valve products | 2,139 | 1,936 | 424 |
Overall | 6,855 | 5,065 | 4,359 |
<Stamping/resin products>
-In Japan, the Company invested to purchase the land and buildings of the plant in Tohoku that it had been leasing; and to prepare for the production of new products such as dies needed for new model vehicles.
-Outside Japan, the Company invested to prepare for production of new products at its stamping facilities in China and North America.
<Valves>
-In Korea, the Company invested to increase the production volume of compressors, etc.
-The Company is planning to invest 8.51 billion yen in capital improvements in facilities and equipment in the fiscal year that ends March 2013.
Investment Outside Japan
<China>
-The Company plans to set up a new plant in Hunan Province, China by the end of 2013 business year. The company is preparing to kick off welding of body parts by using a rental plant in the area starting in July 2012. Additionally, it will build its own facility for localizing stamping to construct a comprehensive production system of vehicle body parts with an investment of 2-3 billion yen. Stamping parts at the new plant will be delivered to a new joint venture between Mitsubishi Motors and Guangzhou Automobile Group, which is slated to be formed by the first half of 2012 business year. Pacific Industrial has just won the business for the first production model, which is to enter production at the joint venture by 2012. It aims to increase product items by securing an integrated manufacturing in the neighborhood of the customer's production site. (From an article in the Nikkan Jidosha Shimbun on February 16, 2012)
<Korea>
-The Company announced that Pacific Air Controls Co., Ltd. (PAC), its consolidated subsidiary in Korea, will expand its plant to increase production capacity of casing components of compressor used in car air-conditioning systems. PAC began to conduct a comprehensive production from die casting molding to processing in 2011 and is now producing casing components for 1 million compressors annually. Pacific Industrial will invest 50 billion won (approximately 3.5 billion yen) in PAC between 2011 and 2015 to establish a production structure which will be able to produce casing parts for 3 million compressors in 2012 and for 4 million units in 2015. The total sales of PAC are estimated at 50 billion won (approximately 3.5 billion yen) in 2015. (From a press release on February 3, 2012)
Planned Capital Investments
|
(As of Mar. 31, 2012) |
Facility (Location) |
Business segment | Purpose | Planned total investment (in million JPY) |
Start | Planned completion | Production capacity growth after completion |
The Company Nishi Ogaki Plant (Gifu Pref., Japan) |
Stamped and resin | New products | 3,856 | Apr. 2011 | Mar. 2015 | None |
Production expansion and rationalization, etc. | 714 | Sep. 2011 | May. 2014 | None | ||
The Company Higashi Ogaki Plant (Gifu Pref., Japan) |
Stamped and resin | New products | 1,972 | Dec. 2010 | Sep. 2014 | None |
Production expansion and rationalization, etc. | 703 | Oct. 2011 | May. 2013 | None | ||
The Company Yoro Plant (Gifu Pref., Japan) |
Stamped and resin | Production expansion, etc. | 171 | Aug. 2010 | Aug. 2014 | None |
The Company Tohoku Plant (Miyagi Pref., Japan) |
Stamped and resin | Production expansion, etc. | 1,920 | Apr. 2012 | Mar. 2014 | Increase in production capacity to around 130% |
The Company Kita Ogaki Plant (Gifu Pref., Japan) |
Valve | New products | 512 | Nov. 2011 | Oct. 2014 | None |
Production expansion and rationalization, etc. | 476 |
Oct. 2011 |
Mar. 2014 | None | ||
The Company Mino Plant (Gifu Pref., Japan) |
Valve | Production expansion, etc. | 186 | Jan. 2012 | Dec. 2014 | None |
The Company Headquarters (Gifu Pref., Japan) |
Common | R&D, etc. | 119 | Sep. 2011 | May 2013 | None |
Pacific Industries USA Inc. (Ohio, USA) |
Stamped and resin, Valve |
New products, etc. | 693 | Apr. 2012 | Mar. 2013 | None |
Pacific Valve (Taiwan) Co., Ltd. (Taichung, Taiwan) |
Stamped and resin, Valve |
New products, etc. | 369 | Apr. 2012 | Mar. 2013 | None |
Pacific Valve Industrial Co., Ltd. (Yangsan, Korea) |
Valve | Maintenance and retooling, etc. | 83 | Jan. 2012 | Dec. 2012 | None |
Pacific Air Controles Co., Ltd. (Asan, Korea) |
Valve | Production expansion, etc. | 1,793 | Jan. 2012 | Dec. 2012 | Increase in production capacity to around 50% |
Pacific Industries (Thailand) Co., Ltd. (Chachoengsao, Thailand) |
Valve | Maintenance and retooling, etc. | 82 | Apr. 2012 | Mar. 2013 | None |
Tianjin Pacific Auto Parts Co., Ltd. (Tianjin, China) |
Stamped and resin | New products, etc. | 121 | Jan. 2012 | Dec. 2012 | None |
Changsha Pacific Hanya Auto Parts Co., Ltd. (Changsha, China) |
Stamped and resin | New products, etc. | 181 | Jan. 2012 | Dec. 2012 | Some facilities commenced operations in July 2012 |