Pacific Industrial Co., 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
Sales 91,976 83,700 9.9 -
Operating income 5,500 4,340 26.7 -
Ordinary income 7,062 5,372 31.5 -
Net income 4,587 2,807 63.4 -
Stamping/resin product business
Sales 64,529 59,614 8.2 -Even though production levels at customers in Japan were nearly the same as they were the previous year, they were higher in the U.S.A. and China. In addition, favorable currency translation due to the weak yen contributed to higher sales.
Operating income 1,334 1,449 (7.9) -Even though the Company improved its material resources and reduced the costs of goods, it incurred higher expenses in connection with launching operations in China.
Valve product business
Sales 27,087 23,747 14.1 -Sales of valves and TPMS products were strong, sales of compressor products significantly increased in Korea, favorable currency translation due to the weak yen.
Operating income 4,177 2,928 42.7 -Improvement in material resources, lower costs of goods, and favorable currency translation due to the weak yen.

Expanding business in the TPMS (Tire Pressure Monitoring Systems)

-Factory-installed tire pressure monitoring systems are already mandatory in North America, Europe, and Korea. With safety regulations already being enacted in North America and fuel-efficiency regulations being enacted in Europe and other regions, TPMSs are being introduced. In addition, Taiwan and Russian are planning to enact regulations. Considering that there is a possibility that Japan and China will enact regulations, the Company is expanding its production volumes in the U.S.A. and China.

-In January 2014, the Company produced its 100 millionth unit.

-As of May 2014, the Company has a 22% market share of TPMSs in North America.

-Production operations of TPMSs are as follows:
Production facilities
Annual production capacity as of 2016
Sales Regions
Kita Ogaki Plant
(Gifu Pref., Japan)
16 million units Worldwide
Pacific Auto Parts Technology (Changshu) Co., Ltd.
(Jiangsu, China)
3 million units China, etc.
Pacific Manufacturing Ohio, Inc.
(Ohio, USA)
3 million units North America, Europe

Medium-term management plan OCEAN-15

OCEAN-15 numerical targets FY2015
Sales JPY 95 billion
Ordinary income In the 6% range
Percentage of revenue generated overseas Over 40%
Total asset turnover 1.05
-Initiatives to achieve the objectives outlined in the mid-term management plan.
<Strategy for products and technology>
1. TPMS: Localize production in China
-TPMSs, which contribute to automotive safety and fuel efficiency, are becoming mandatory in various countries worldwide. Under the assumption that China will also enact regulations, the Company established a subsidiary in Changshu, called Pacific Auto Parts Technology (Changshu) Co., Ltd., in July 2014. Commercial operations are scheduled to start in April 2016. All of the JPY 3,000 million in capital investment for the subsidiary was invested by the Company.

2. Reducing weight based on ultra-high-tensile processing technology
-The Company will establish new production lines to manufacture structural components that have the strength of 1.2–1.5 GPa by fiscal year 2015. The Company plans to introduce large stamping machines of 2,500-3,000 tons at its three Japanese plants in Gifu Prefecture, the Kyushu region and the Tohoku region. It also plans to install these machines at facilities in the USA and China. This will allow the Company to manufacture products using ultra-high-tensile steel plates. In addition, Pacific Industrial will produce hot stamped parts at another plant in Gifu Prefecture. This will be the Company's first entry into the manufacture of hot stamped parts. Total investment in the new equipment is estimated to be JPY 2.4 billion. Through these projects, the Company is poised to meet the needs of automakers that are developing lightweight vehicles with high collision performance. (From an article in the Nikkan Jidosha Shimbun on November 20, 2013)

3. Strengthening high-precision-stamping capabilities
-Due to the net shape of high-precision parts for engines and transmissions, they can be produced through stamping. The Company is aiming to increase its sales by 50% by the end of the fiscal year that ends in March 2019 by strengthening production, developing new technology, and winning more customers.

4. Expanding business by manufacturing aluminum die-cast products

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 93,000 91,976 1.1
Operating income 6,500 5,500 18.2
Ordinary income 7,400 7,062 4.8
Net income 5,000 4,587 9.0

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


R&D Expenses

(in million JPY)
  FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 FY ended Mar. 31, 2012
Overall 735 647 603
-Stamping/resin products business 176 133 122
-Valve products business 479 447 344
-In Common 71 58 133


R&D Structure

-The R&D organization consists of the technology and production technology functions at each business, and the technology planning function.
-Advancing collaboration among concerned departments company wide, the Company conducts R&D activities based on joint industry-academia-public collaboration such as with specialized manufacturers, universities, and research institutes, in order to create new materials and new production methods for new products, enhance its competitive strengths, and speed up R&D activities.
-The Company's subsidiary, PI Systems, conducts R&D activities on software.

R&D Activities

Departments Major activities
Stamping/resin products business -R&D department of the Technology Planning Center; Stamping Technology and Plastics Technology Departments of the plastics business

-Stamped products: development of cold stamping technology to strengthen ultra-tensile materials; and new production methods for hot stamping

-Plastic products: development of forming technology in order to reduce weight, soundproof, and heat proof; creation of plastic interior of double-tank oil pans that reduced weight, and not only lowered fuel consumption but also improved it.
Valve products business -R&D and Production Technology Departments of the valve business, R&D Department of the TPMS business -Tire valves: development of valve caps that have thin, metal skins with plastic surfaces

-Automotive air-conditioner valves: development of pressure control valve for electric compressors

-TPMS: development of automatic locator that can automatically detect the position on the tire where TPMS are attached

-High-precision stamped products: expanding uses for parts by mass-producing sensor plates, etc.
Common -Technology Planning Center -R&D activities on compound materials

-R&D activities on metal-plasticity processing

-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

Ultra-light-weight, foam engine cover
-The Company developed an ultra-light-weight foam engine cover, for which it was presented the Award for Best Automotive Part in the 2013 Environmental Technology Awards, sponsored by the Monozukuri Nippon Conference and the Nikkan Kogyou Shinbun (Daily Industrial Newspaper).

Investment Activities

Capital Expenditure

(in million JPY)
  FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 FY ended Mar. 31, 2012
Stamping/resin products 8,100 4,209 4,688
-In Japan 4,356 2,012 3,322
-Outside Japan 3,744 2,197 1,366
Valve products 3,013 3,610 2,139
-In Japan 1,406 987 -
-Outside Japan 1,606 2,623 -
Others 103 30 -
Elimination (49) (29) -
Total 11,168 7,820 6,855
<Stamping/resin products>
-In Japan: installed stamping machines at plants in Higashiogaki, Kyushu, and Kurihara in order to boost production capacity; invested to increase production capacity and manufacture to new products such as dies for new vehicle models.

-Outside Japan: installed stamping machines to expand stamping operations at Tianjin, China; set up new facilities and installed stamping machines at production plant in Changsha, China; invested in North American stamping business to manufacture new products.

-In Japan, the Company mainly invested to upgrade assembly lines for TPMSs and increase production of valves.
-Outside Japan, the Company invested to increase production of compressors in Korea.

-The Company plans to invest JPY 16,090 million as capital expenditure during FY ending Mar. 2015.

Investment in Japan

Production optimization in Tohoku region
-The Company announced that it will expand its Kurihara Plant in Miyagi Prefecture by the fall of 2014. The Kurihara Plant produces plastic automotive components and performs welding and surface-finishing processes for stamped vehicle components. The Company plans to construct an additional plant and install press machines to create an integrated production structure for stamped body components. New operations are expected to start in November 2014. The expansion will allow the Company to localize production of stamped body products for its customers in the Tohoku (northeast) region by transferring the operations from its main plant in central Japan. At the same time, the Kurihara Plant's molding and painting lines for plastic products will be transferred to the nearby Wakayanagi Plant. The Company intends to invest approximately JPY 2.3 billion in this project to optimize its production structure in northeast Japan. (From an article in the Nikkan Jidosha Shimbun on November 5, 2013)

Investment Outside Japan

-The Company announced that its Thai subsidiary, Pacific Industries (Thailand) Co., Ltd., has finished the construction of a second plant, which manufactures resin products such as wheel caps as well as tire valves. Mass production of wheel caps is scheduled to start at the beginning of 2014. (From a press release on July 13, 2013)

Planned Capital Investments

(As of Mar. 31, 2014)
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, etc. 4,011 Oct. 2013 Mar. 2016 -
The Company
Higashi Ogaki Plant
(Gifu Pref., Japan)
Stamped and resin New products, etc. 1,902 Aug. 2012 Aug. 2015

10% production capacity increase of stamped and plastic products

The Company
Yoro Plant
(Gifu Pref., Japan)
Stamped and resin, Valve Production expansion, etc. 1,297 Oct. 2011 Mar. 2017 50% production capacity increase of high-precision, stamped products
The Company
Kurihara Plant
(Miyagi Pref., Japan)
Stamped and resin Production expansion, etc. 2,795 Mar. 2013 Jun. 2015 Expand product-plant building; install stamping facilities
The Company
Kyushu Plant
(Fukuoka Pref., Japan)
Stamped and resin New products 202 May. 2013 Aug. 2015 -
The Company
Kita Ogaki Plant
(Gifu Pref., Japan)
Valve New products, etc. 1,700 Mar. 2012 Jun. 2016 -
The Company
Mino Plant
(Gifu Pref., Japan)
Valve Production expansion, streamlining etc. 302 Dec. 2013 Feb. 2016 -
The Company
(Gifu Pref., Japan)
Common R&D, etc. 389 Mar. 2013 Apr. 2015 -
Pacific Manufacturing Ohio, Inc.
(Ohio, USA)
Stamped and resin,
New products, etc. 426 Apr. 2014 Mar. 2015 -
Pacific Manufacturing Tennessee, Inc.
(Tennessee, USA)
Stamped and resin New products, etc. 1,800 Jun. 2014 Jul. 2015 Construct plant building; install new stamping machines
Pacific Valve Industrial Co., Ltd.
(Yangsan, Korea)
Valve Maintenance and retooling, etc. 196 Jan. 2014 Dec. 2014 -
Pacific Air Controles Co., Ltd.
(Asan, Korea)
Valve Production expansion, etc. 1,915 Jan. 2014 Dec. 2014 40% production capacity increase for compressor products
Pacific Industries (Thailand) Co., Ltd.
(Chachoengsao, Thailand)
Stamped and resin Maintenance and retooling, etc. 136 Apr. 2014 Mar. 2015 -
Valve New products, etc. 215 Apr. 2014 Mar. 2015 -
Tianjin Pacific Auto Parts Co., Ltd.
(Tianjin, China)
Stamped and resin New products, etc. 1,876 Jan. 2013 Dec. 2014 Expand stamping processes
Changsha Pacific Hanya Auto Parts Co., Ltd.
(Changsha, China)
Stamped and resin New products, etc. 2,537 Jan. 2013 Dec. 2014 Construct plant building; install new stamping machines
Pacific Auto Parts Technology (Changshu) Co., Ltd.
(Changshu, China)
Valve New products, etc. 3,000 Jul. 2014 Mar. 2016 New facilities to produce TPMS products