Daido Metal 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 | 81,400 | 85,015 | (4.3) | Japan -JPY 2 billion decrease y/y. In addition to the migration of bearing production to plants outside Japan, sales of automotive products decreased due to lower vehicle production by OEMs in Japan. Also, imports of industrial equipment fell because of stagnant demand outside Japan. Outside Japan -Loss of JPY 1.5 billion due to negative currency translation because of the high value of the yen. However, sales increased on the calendar year when calculated in local currencies. |
| Operating income | 7,114 | 7,633 | (6.8) | -Income decreased because of lower sales volumes, which was combined with higher depreciation expenses and initial start-up expenses such as labor costs that rose in line with expanding operations outside Japan. |
| Ordinary income | 6,796 | 8,129 | (16.4) | -Loss of JPY 800 million yen due to negative currency translation due to weak currencies against the strong yen in China and other emerging countries. |
| Profit for the year attributable to owners of the parent | 3,919 | 4,459 | (12.1) | - |
| Automotive Bearings | ||||
| Sales | 52,926 | 56,618 | (6.5) | 1) |
| Operating income | 7,031 | 6,661 | 5.6 | |
| Automotive bearings (non-engine) | ||||
| Sales | 17,178 | 17,748 | (3.2) | 2) |
| Operation income | 3,395 | 4,064 | (16.5) | |
Factors
1)
-Sales in Japan fell because of lower automotive production.
-Sales increased due to strong demand and more aggressive sales activities in North America, and the increase in production volume that resulted with the opening of a new production plant in Mexico.
-Sales fell in Europe, where sales were strong; and in Asia, where sales grew slightly, because of negative currency translation.
2)
-Sales were strong based on local currencies in Europe, however sales and income ended up being lower in yen due to negative currency translation and lower sales volumes in Japan.
Company established
-The Company will establish a new production subsidiary for processing bearing materials in Takeo City, Saga Prefecture. The Company anticipates growing demand for bearings for automotive and other industries both in and outside Japan. Thus, the Company will establish a supply network for bearing materials at two locations: the new subsidiary's plant and the Inuyama plant in Aichi prefecture. The new plant will begin operations in June 2016. The investment in the new plant will amount to JPY 6 billion in two to three years. The wholly owned production subsidiary will be capitalized at JPY 100 million. The Company chose Saga Prefecture in consideration of earthquake and other disaster risks and ease of recruiting human resources. (From an article in the Nikkan Jidosha Shimbun on March 26, 2015)
Award
-The Company has been named a preferred supplier of plain bearings by Robert Bosch GmbH for the third consecutive year. In presenting the award, Bosch cited Daido's outstanding services over the past years and inducted the company into the elite ranks of its strategically most important suppliers. (From a press release on April 8, 2016)
Mid-term Management Plan (starting from fiscal year ending in March 2013 and ending in fiscal year ending in March 2018)
-Maintain the world’s highest* share of slide bearings, as a major, global slide-bearing manufacture.
-Continue to maintain the world’s largest* market share of automotive engine bearings, of which slide bearing are the core products.
-Maintain the world’s highest* market share of non-automotive bearings for ships (excluding mega-ships), industrial equipment and machinery, and rotating equipment.
-Operate under a five-regional structure to increase sales.
-Continue to demonstrate technological excellence and strengthen R&D capabilities to meet the needs of all regions around the world.
-Build a solid financial base.
*According to the Company’s estimate
Targets
| FY ended March 2013 | FY ended March 2014 | FY ended March 2015 | FY ended March 2016 | FY ending March 2017 | FY ending March 2018 | |
| Stage 1 | Stage 2 | |||||
| Actual | Estimated | Planned | ||||
| Sales (in JPY millions) | 70,800 | 77,300 | 85,000 | 81,400 | 81,500 | 111,000 |
| Operating profit (in JPY millions) | 6,200 | 7,300 | 7,600 | 7,100 | 7,700 | 16,700 |
| Profit margin (%) | 8.9 | 9.5 | 9.0 | 8.7 | 9.4 | 15 or higher |
Market share in the world
| Calendar year 2010 (Prior to mid-term plan) |
Calendar year 2015 | Final target at end of Stage 2 (FY ending March 2018) |
|
| Engine half bearings | 30% | 31.8% | 40% |
| Bearings for small turbochargers | 26% | 32% | 40% |
*Shares are based on the Company’s estimates
Challenges under Stage 1
From the fiscal year ended in March 2013 to the fiscal year ended in March 2015
| Location and Details | Stage of completion |
| Dyna Metal Co., Ltd. (Thailand) 3rd production plant | Completed |
| Daido Precision Metal (Suzhou) Co., Ltd. (China) 2nd production plant | Completed |
| Daido Metal Czech s.r.o. (Czech) 2nd plant | Completed |
| PT. Daido Metal Indonesia (Indonesia) 2nd plant | Completed |
| Daido Metal Mexico S.A. de C.V. (Mexico) new plant | Completed |
| The European Technical Center （Czech） | Established |
Product Orders
-In 2012, the Company won an order from BMW for bearings used in the new-type diesel engines mounted on the BMW 3 Series and 1 Series.
-In 2014, the Company won a new order from Volvo for bearings used in new-type gasoline and diesel engines.
Challenges for Stage 2
From the fiscal year ended in March 2016 to the fiscal year ending in March 2018
- Early profitability of North American operations
- Launch automotive engine bearing business at BBL Daido Private Ltd. (India).
- Ensure that business operations at Daido Metal Russia LLC contribute to business performance, in terms of bearings for trucks and bearings for non-Japanese OEMs
- Launch commercial production at Daido Metal Saga Co., Ltd. sometime during the fiscal year ending in March 2017, in order to enhance production capacity of bi-metals.
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 (%) |
|
| Sales | 81,500 | 81,400 | 0.1 |
| Operating income | 7,700 | 7,114 | 8.2 |
| Ordinary income | 7,700 | 6,796 | 13.3 |
| Profit for the year attributable to owners of the parent | 5,000 | 3,919 | 27.6 |
>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)
R&D Expenditure |
(in million JPY) |
| FY ended Mar. 31, 2016 | FY ended Mar. 31, 2015 | FY ended Mar. 31, 2014 | |
| Overall | 1,667 | 1,559 | 1,319 |
R&D Structure
-Established a technical center in the USA in October 2015.
R&D activities
Development of bearings for fuel-efficient engines with start-stop systems and hybrid mechanism
-Develop new resin overlays that lower friction and improve resistance to wear and seizure.
Development of lead-free overlay bearing
-The Company is developing and already making product presentations on automotive engine aluminum alloy bearings that demonstrate higher performance in terms of resistance to wear, seizure, and friction, and which also meet the highest standards in the world and comply with European lead regulations.
-The Company is developing and already making product presentations on new lead-free overlays and copper-alloy bearing materials that can withstand use in harsh environments.
Development of bearings for race cars
-The Company is developing, while continuing to deliver, highly reliable bearings that can endure ultra-high revolutions and be used in F1 racing cars.
Development of new resin bearing material
-The Company is developing a new type of resin bearing material that achieves higher performance and which can be used for automotive parts, general industrial-use parts, and electric-power-generator parts.
Development of shock-absorber material enhancing riding comfort
-Development of lead-free, resin bearing material that enhances riding comfort, i.e., steering stability and vibration absorption, for automotive shock absorbers. The Company is continuing to develop materials that further improve performance.
Capital Expenditure |
(in million JPY) |
| FY ended Mar. 31, 2016 | FY ended Mar. 31, 2015 | FY ended Mar. 31, 2014 | |
| Overall | 14,802 | 10,597 | 10,838 |
| -Automotive engine bearings and non-engine bearings | 7,598 | 6,947 | 8,502 |
| -Facilities to manufacture bi-metals (Bearing material) | 5,084 | 327 | 165 |
-Investment activities in FY ended Mar. 31, 2016
| Facility | Outlines |
| Automotive Bearings | |
| -Facilities specialized in processing | -The Company invested in facilities and equipment for the purpose of raising the production capacity at its own and at those of its consolidated subsidiaries (Daido Plain Bearing and NDC) in Japan. -At its consolidated subsidiaries outside Japan, the Company invested in facilities and equipment for the purpose of raising production capacity, especially at its Asian, European and North American plants. |
| -Production facilities producing Bi-metal (Bearing material) | -The majority of bi-metals used at domestic and overseas plants is supplied by the Company. The Company is making capital investments to increase production capacity and improve productivity at Daido Metal Saga, a subsidiary in Japan. |
Planned Capital Investments (Bearing metal for automobiles business) |
(As of Mar. 31, 2016) |
| Name (Location) |
Purpose of Equipment Installation | Estimated amount (in million JPY) |
From | To |
| Inuyama Plant (Aichi Pref., Japan) |
Facilities and equipment to manufacture half bearings | 523 | Jul. 2014 | Aug. 2016 |
| Gifu Plant (Gifu Pref., Japan) |
Facilities and equipment to manufacture rolled bushings | 143 | May 2015 | May 2016 |
| Bi-metal production plant (Aichi Pref., Japan) |
Facilities and equipment to manufacture bimetals (bearing materials); and construct plant building | 9,441 | Apr. 2014 | May 2017 |
| Production Engineering Center, R&D Center (Aichi Pref., Japan, etc.) |
Other facilities | 475 | May 2015 | Oct. 2016 |
| Headquarters (Aichi Pref., Japan, etc.) |
Investment in systems | 475 | Apr. 2014 | Apr. 2016 |
| Daido Plane Bearing Co., Ltd. (Gifu Pref., Japan) |
Facilities and equipment to manufacture half bearings | 4,123 | Sep. 2012 | Jul. 2017 |
| Dong Sung Metal Co., Ltd. (Yeongdong-gun, Korea) |
Facilities and equipment to manufacture half bearings | 1,019 | Jan. 2015 | Dec. 2016 |
| Dyna Metal Co., Ltd. (Chachoengsao, Thailand) |
Facilities and equipment to manufacture half bearings | 122 | Jun. 2015 | Feb. 2016 |
| Daido Metal U.S.A. Inc. (Ohio, Michigan, USA) |
Facilities and equipment to manufacture half bearings | 938 | Dec. 2014 | Jan. 2017 |
| Daido Metal Czech s.r.o. (Brno, Czech) |
Facilities and equipment to manufacture half bearings | 522 | Jul. 2013 | Dec. 2016 |
| Daido Metal Russia LLC (Nizhny Novgorod Oblast, Russia) |
Facilities and equipment to manufacture half bearings | 863 | Mar. 2013 | Jun. 2016 |
| Daido Metal Mexico S.A.de C.V. (Jalisco, Mexico) |
Facilities and equipment to manufacture half bearings and rolled bushings | 2,880 | Jun. 2014 | Jan. 2017 |