Daido Metal Co., Ltd. Business Report FY ended Mar. 2019
Financial Overview |
(in million JPY) |
| FY ended Mar. 31, 2019 | FY ended Mar. 31, 2018 | Rate of change (%) | Factors | |
| Overall | ||||
| Sales | 107,718 | 106,648 | 1.0 | - |
| Operating income | 6,944 | 6,511 | 6.7 | -Negative factors were the economic slowdowns in China and Korea, which affected sales of automotive engine bearings and other bearings; changes to the product line up; and the labor market in Japan. Positive factors that increased operating income were increased sales of non-automotive bearings, increased sales of products other than bearings, and effective streamlining initiatives. |
| Ordinary income | 6,976 | 6,708 | 3.5 | - |
| Profit for the year attributable to owners of the parent | 4,565 | 3,281 | 39.1 | - |
Factors
Engine-bearing Business
-Sales in this business decreased 0.9% year-over-year (y/y) to JPY 64,835 million, including internal sales within business segments. Operating profit was JPY 8,292 million, a y/y decrease of 10.7%.
-In FY2018 new-car sales were strong, so sales of automotive bearings increased. Sales of bearing for trucks increased just slightly year-over year. Even though sales of turbo-charger bearings fell because of lower demand worldwide, they nevertheless increased for the year. Outside Japan, sales in North America remained constant; however, sales decreased because of sluggish new-car sales in China, Korea, and Europe.
Recent Business Developments
-The Company will open a Chinese technical center in 2019. The aim of this move is to respond more speedily to the needs of its customers and to win more orders from Japanese, U.S., and European carmakers operating in China, as well as Chinese local automakers. The Chinese government's new energy vehicle (NEV) regulations will go into effect in 2019. Daido Metal expects that the new technical center will contribute to an order increase not only for engine bearings, its main product, but also for the electric vehicle parts produced by the company and Daido Metal Group companies. (From an article in the Nikkan Jidosha Shimbun on July 30, 2018)
-The Company announced that it will establish a subsidiary to manufacture aluminum die-casting products for EVs in Samutprakarn, Thailand. The company aims to increase orders for its products and secure its place as a pioneer. The subsidiary will be capitalized at THB 200 million. It is scheduled to start operations in February, 2020. (From a press release on January 10, 2018)
Acquisition
-Nippon Piston Ring Co., Ltd. (Nippon Piston Ring) announced that it will transfer 30% of the shares of its wholly-owned subsidiary, NPR of Europe GmbH (NPR of Europe), to Daido Metal Co., Ltd. (Daido Metal). Nippon Piston Ring and Daido Metal decided that strengthening their relationship via capital tie-up is necessary in order to boost their presence in the European market, and announced in December 2017 that they have reached a basic agreement to negotiate a share transfer. Nippon Piston Ring aims to strengthen sales of Daido Metal’s products like engine bearings in Europe. (From an article in the Nikkan Jidosha Shimbun on August 1, 2018)
Mid-term Management Plan
-The Company outlined the following four major policies:
- Refining current business segments
- The Company is working to have the number-one share of plain (slide) bearings. The breakdown of global market share in calendar year 2018 is provided below.
| 2018 Global Market Share (%) | Ranking | |
| Automotive engine bearings | 33.1 | 1 |
| Small-turbo-charger bearings | 24.0 | 1 |
| Low-speed diesel-engine bearings for ships | 54.0 | 1 |
| Medium-speed diesel-engine bearings for ships and industrial use | 15.0 | 3 |
| Polymer bearings | 12.9 | 2 |
| Bearings for rotating equipment such as electric-power-generator turbines | 3.7 | ｰ |
- Developing and growing new businesses
- Launch operations in new business segments through conducting M&As; and by launching production of aluminum die-cast products for electric vehicles at the new production plant in Thailand.
- Forge a strong management foundation
- Establish a European engineering function and R&D center in Germany
- Work on organization and communications
| FY ended March 2019 (Actual) |
FY ending March 2021 (Planned) |
FY ending March 2024 (Planned) |
|
| Sales (in JPY millions) | 107,700 | 120,000 | 140,000 |
| Operating profit (in JPY millions) | 6,900 | 10,000 | 14,000 |
| Profit margin (%) | 6.4 | 8.3 | 10.0 |
| ROE(%) | 8.5 | 9.5 | 10.0 |
| Capital Expenditure(in JPY millions) | 7,300 | 10,100 | 10,000 |
>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)
R&D Expenditure |
(in million JPY) |
| FY ended Mar. 31, 2019 | FY ended Mar. 31, 2018 | FY ended Mar. 31, 2017 | |
| Overall | 2,047 | 1,923 | 1,821 |
R&D Structure
-Daido Metal Co., Ltd. (Daido Metal) will strengthen its research and development departments. The company will double the ratio of research and development costs to sales over the next six years to 4%, and open its first overseas R&D center in Germany. Demand for engine main sliding bearings, Daido Metal’s main products, is expected to decrease in the medium and long term. Daido Metal’s sales from its main products are increasing thanks to rising volume of vehicle production. The company will actively allocate profits to research and development in order to achieve sustainable growth. (From an article in the Nikkan Jidosha Shimbun on August 2, 2018)
R&D activities
Development of engine bearings to reduce fuel consumption, such as idle-stop and hybrid mechanisms
-Continue developing plastic overlays that significantly increase performance in terms of abrasion resistance, seizure resistance, and respond to friction characteristics, and which are capable of meeting all types of needs, in comparison with existing products.
Development of lead-free materials for copper-alloy bushes
-Developing bush materials that can withstand use under a high-temperature environment in order to comply with fuel-consumption and exhaust-gas regulations.
Developing new, plastic bearing materials
-Developing bearing materials for new, plastic bearings, which are thicker than conventional products, for automotive and general parts.
Developing materials for shock-absorber bearings to improve riding comfort
-Developing plastic materials for lead-free, plastic bearings used in automotive shock absorbers, which improve riding comfort such as by enhancing steering stability and vibration absorption; in addition to continuing to develop materials to further improve performance .
-Conducting theoretical analysis, analytical evaluation, individual-unit test evaluation, and simulation testing evaluations of plain bearings to find uses for them on other kinds of bearings.
Capital Expenditure |
(in million JPY) |
| FY ended Mar. 31, 2019 | FY ended Mar. 31, 2018 | FY ended Mar. 31, 2017 | |
| Overall | 7,273 | 8,694 | 12,329 |
| -Automotive engine bearings and non-engine bearings | 3,445 | 4,420 | 6,970 |
Planned Capital Investments (Bearing metal for automobiles business) |
(As of Mar. 31, 2019) |
| 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 | 615 | May. 2016 | Mar. 2020 |
| Gif Plant (Gifu Pref., Japan) |
Facilities and equipment to manufacture Coiled bushes | 312 | Oct. 2018 | Nov. 2019 |
| Bi-metal production plant (Aichi Pref., Japan) |
Facilities and equipment to manufacture bi-metals (bearing materials); and construct plant building | 2,432 | Oct. 2015 | Jan. 2020 |
| Home Office (Naka Ward, Nagoya) |
Invest in systems | 2,962 | Jan. 2018 | Apr. 2021 |
| Daido Plane Bearing Co., Ltd. (Gifu Pref., Japan) |
Facilities and equipment to manufacture half bearings | 962 | Dec. 2015 | Jun. 2030 |
| Iino Manufacturing Co., Ltd. (Yaita Plant) (Tochigi Pref., Japan) |
Building | 713 | Mar. 2019 | Apr. 2020 |
| Dong Sung Metal Co., Ltd. (Chungbuk, Korea) |
Facilities and equipment to manufacture half bearings | 270 | Jan. 2018 | Feb. 2019 |
| Daido Precision Metal (Suzhou) Co., Ltd. (Jiangsu, China) |
Building | 635 | Sep. 2016 | Dec. 2019 |
| IINO (Foshan) Technology Co., Ltd. (Guangdong, China) |
Building | 159 | Sep. 2018 | Mar. 2019 |
| Dyna Metal Co., Ltd. (Chachoengsao, Thailand) |
Facilities and equipment to manufacture half bearings | 207 | Mar. 2018 | Jan. 2019 |
| DM Casting Technology Co., Ltd. (Samutprakarn, Thailand) |
Facilities and equipment to manufacture aluminum die casts | 2,812 | Oct. 2018 | Feb. 2021 |
| ATA Casting Technology Co., Ltd. (Samutprakarn, Thailand) |
Facilities and equipment to manufacture aluminum die casts | 104 | Dec. 2018 | May. 2019 |
| Daido Metal Mexico S.A.de C.V. (Jalisco, Mexico) |
Facilities and equipment to manufacture half bearings | 458 | May. 2017 | May. 2019 |
| New European Company for Wind-turbine Bearings (TBD) | Plant and facilities for journal bearings used on electric-power-generating wind turbines | 2,903 | Oct. 2018 | Jan. 2021 |