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  5. Fine Sinter Co., Ltd. Business Report FY ended Mar. 2015

Fine Sinter Co., Ltd. Business Report FY ended Mar. 2015

Financial Overview

(in million JPY)
FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 Rate of
Change
(%)		 Factors
Overall
Sales 37,838 36,807 2.8 -
Operating income 1,180 1,224 (3.6) -
Ordinary income 1,175 1,245 (5.6) -
Net income 549 717 (23.4) -
Powder metallurgy product business
Sales 35,868 34,784 3.1 -Automotive parts: new products launched in China and U.S.; higher sales in line with launch of production in Indonesia.
Operating profit 2,267 2,310 (1.9) -

Production Operations

Consolidated production of engine valve seats
-The Company will consolidate production of engine valve seats in western Japan to its Shiga plant in Aisho, Shiga Prefecture. At its Yamashina plant in Yamashina-ku, Kyoto, two production lines including a sintering furnace will stop operations by the end of the fiscal year ending in March 2015 (FY 2014). Most of the production at the Yamashina plant, except for some special products, will be consolidated to the Shiga plant. This summer, the Company plans to replace an old line with a next-generation production line at the Shiga plant. The new line can halve the line length, production costs, and initial capital investment. The line also can significantly improve efficiency in production and supply. After transferring production and introducing a new line, the Company will check product performance and quality in cooperation with its customers. The Company aims to strengthen production in Japan by quickly reorganizing production of valve seats, the Company's major product, between FY 2014 and FY 2015. The Company will improve average utilization rate of its four plants in Japan from present 60% to 70% by the end of FY 2014. (From an article in the Nikkan Jidosha Shimbun on July 11, 2014)

Production launch in China of planetary carriers for continuously variable transmissions
-The Company announced that it will start producing planetary carriers for continuously variable transmissions (CVTs). Production will begin around the summer of 2014 in China, where the Company received the first planetary carrier order from Toyota Motor Corporation that plans to launch local production of CVTs. In Japan, Toyota manufactures planetary carriers for CVTs in-house at its Miyoshi Plant in Aichi Prefecture. In line with Toyota's overseas production project, the Company has added a new production line to its Chinese subsidiary, Precision Sintered Products (Wuxi) Co., Ltd. The production line will initially make 240,000 planetary carriers per year for Toyota's new CVT plant in Jiangsu Province. In order to meet expected growth in demand for the product, the line will be capable of producing up to 360,000 units per year. (From an article in the Nikkan Jidosha Shimbun on June 26, 2014)

Mid-term Business Plan

-In June 2015, the Company announced its Mid-term Management Plan 2020, which targets consolidated sales of JPY 46.5 billion and consolidated operating margin of 10% in FY2020.

Outlook for FY ending Mar. 31, 2016

(in million JPY)
FY ending Mar. 31, 2016
(Forecast)		 FY ended Mar. 31, 2015
(Actual Results)		 Rate of Change
(%)
Sales 39,800 37,838 5.2
Operating income 1,500 1,180 27.1
Ordinary income 1,200 1,175 2.1
Net income 700 549 27.3


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

R&D Expenditures

(in million JPY)
FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Overall 204 191 208

R&D Structure

Powder metallurgy product business
-The Company, in aiming to speed up R&D activities on automotive parts, is advancing R&D activities on materials, manufacturing methods and facilities based on a co-working of technological development and production technology.

R&D Activities

Materials
-The Company is developing materials that achieve high rigidity; and also new, high-heat conductivity materials, which are designed to comply with Toyota's TNGA. The Company is advancing production of low-cost materials (rare-metal-free materials), which it has completed developing. Also, the Company completed developing a less time consuming sintering method for producing metal injection molding (MIM) parts, and is now producing them. In addition, the Company is working to develop uses for Ti and SUS materials.

Facilities
-The Company is preparing to launch mass-production of shock absorber parts and valve sheets on seamless, revolutionary production lines both in and outside Japan. Also, it is in the midst of designing an advanced production line to produce transmission hubs, on which it developed a new production method.

Investment Expenditures

(in millions of JPY)
FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Overall 2,880 5,949 2,593
-Powder metallurgy product business 2,740 5,756 2,584


Powder metallurgy product business
-Invested to mainly renew aging facilities in Japan; and increase facilities and equipment to boost production at its subsidiaries overseas.

Planned Capital Investments

 (As of Mar. 31, 2015)
Company Name Location Business Planned amount of investment (millions of USD) Start Completion Production capacity increase on completion
American Fine Sinter Co., Ltd. Ohio,
USA		 Facilities and equipment to produce powder metallurgy products; construct new facilities at plant 31 Jan.
2015		 Mar.
2017		 Increase production capacity by 790 tons annually

Data

  Mar. 2015 Mar. 2014 Mar. 2013
Powder metallurgy product business 2,131 2,122 1,866
Hydraulic equipment business 33 27 25
Centralized functions company-wide
 61 62 59
Total 2,225 2,211 1,950

Sales by Segment

(in million JPY)
  FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Sales Operating
income		 Sales Operating income Sales Operating income
Powder metallurgy product business 35,868 2,267 34,784 2,310 32,629 2,411
Hydraulic equipment business 1,960 562 2,016 625 1,962 555
Others 9 0 7 (1) - -
Adjusted amount - (1,650) - (1,710) - (1,679)
Total 37,838 1,180 36,807 1,224 34,591 1,287

 

Sales by Geographic Area

(in million JPY)
  FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Japan 25,787 26,653 27,306
Asia 8,736 7,386 5,109
North America 3,314 2,768 2,176
Others - - -
Total 37,838 36,807 34,591

(Note) Sales are based on customer locations, categorized by country or region.

Sales by Main Products

(%)
  FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
-Engine components 30.2 28.5 28.0
-Shock absorber components 15.8 15.2 15.0
-Transmission components 12.0 13.2 14.3
-Body components 7.8 8.0 8.2
-Steering components 7.1 8.3 9.2
-Brake components 0.6 0.7 0.9
-Others 13.0 12.9 11.3
Total of automotive components 86.5 86.8 86.9
Hydraulic machinery 7.2 7.1 6.9
Parts for railroad cars 4.0 3.9 4.1
Parts for industrial machinery 2.3 2.2 2.1
Total 100.0 100.0 100.0

Consolidated

 >>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)
FY ended Mar. 31, 2011 FY ended Mar. 31, 2012 FY ended Mar. 31, 2013 FY ended Mar. 31, 2014 FY ended Mar. 31, 2015
Sales (Thousand yen) 34,466,321 33,356,128 34,591,985 36,807,931 37,838,262
Income from ordinary business activities (Thousand yen) 2,072,735 1,262,290 1,374,146 1,245,831 1,175,570
Net income (Thousand yen) 1,061,147 2,138,203 1,218,205 717,880 549,732
Comprehensive income (Thousand yen) 1,216,946 2,086,582 2,099,276 1,817,239 1,967,165
Net assets (Thousand yen) 10,874,121 12,666,082 14,516,167 15,842,074 17,445,901
Total assets (Thousand yen) 33,290,215 32,797,955 33,435,627 38,066,257 40,339,754
Book value per share (yen) 445.0 527.81 603.34 649.95 712.28
EPS (yen) 48.16 97.05 55.30 32.60 24.97
Diluted EPS (yen) - - - - -
Net asset ratio (%) 29.5 35.5 39.7 37.6 38.9
ROE (%) 11.3 20.0 9.8 5.2 3.7
PER 5.0 2.9 5.4 10.0 13.7
Cash flow from operating activity (Thousand yen) 4,802,601 3,208,221 3,773,179 2,596,788 3,830,826
Cash flow from investment activity (Thousand yen) (1,395,811) (1,816,749) (2,317,324) (4,259,393) (3,472,684)
Cash flow from financial activity (Thousand yen) (2,643,046) (2,761,750) (1,606,305) 880,692 (1,246,589)
Balance at the term-end of cash and cash equivalents  (Thousand yen) 5,332,246 3,850,639 3,879,349 3,278,226 2,830,230
Number of employees 1,781 1,874 1,950 2,211 2,225

 

Non Consolidated

FY ended Mar. 31, 2011 FY ended Mar. 31, 2012 FY ended Mar. 31, 2013 FY ended Mar. 31, 2014 FY ended Mar. 31, 2015
Sales (Thousand yen) 28,517,439 28,219,010 28,563,350 28,529,613 27,422,587
Income from ordinary business activities (Thousand yen) 1,222,782 747,217 789,149 569,500 563,351
Net income (Thousand yen) 542,554 1,858,427 586,948 361,274 272,679
Paid-in Capital (Thousand yen) 2,203,000 2,203,000 2,203,000 2,203,000 2,203,000
Number of stock outstanding 22,100,000 22,100,000 22,100,000 22,100,000 22,100,000
Net assets (Thousand yen) 9,431,449 11,141,625 11,729,105 11,948,063 12,370,898
Total assets (Thousand yen) 28,721,188 28,209,245 27,465,052 28,377,198 28,066,844
Book value per share (yen) 428.06 505.72 532.51 542.63 561.92
Dividend per share (yen) 9.00 9.00 11.00 10.00 10.00
EPS (yen) 24.62 84.35 26.65 16.41 12.38
Diluted EPS (yen) - - - - -
Net asset ratio (%) 32.8 39.5 42.7 42.1 44.1
ROE (%) 5.9 18.1 5.1 3.1 2.2
PER 9.8 3.3 11.3 19.9 27.6
Payout ratio (%) 36.56 10.67 41.28 60.94 80.78
Number of employees 898 920 915 923 903