TBK 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 47,058 45,607 3.2 -In Japan: Customer demand to buy new vehicles increased due to a recovery in the truck industry. Number of mid-size/large-size trucks (payload capacity of 4 tons and over) increased 9.6% year-on-year.
Operating income 2,934 3,422 (14.3) -
Ordinary income 2,870 3,452 (16.9) -
Current net income 2,152 2,675 (19.6) -


Factors
1) Acquired new commercial rights.

2) Responded by developing products that suit market needs and are environmentally friendly.

  • Models designed for emerging countries where low-cost products are in demand.
  • Development of environmentally friendly products such as electric pumps requiring low-energy consumption.

3) Expand business overseas
-Worked to expand business operations Thailand, China, India, and the U.S.A.

Mid-term Management Plan

-The final performance targets for the 12th Mid-term Management Plan* are as follows:

  • Sales: JPY 50,000 million (JPY 30,000 million in Japan, JPY 20,000 million outside Japan)
  • Percentage of sales revenue generated outside Japan: 40%

*Covers the period starting from April 1, 2013 and ending March 31, 2016.

1. Expand new products and business sectors
-The Company will step up marketing of self-powered retarders for small to large trucks and buses. The Company will propose the new retarders as more energy-efficient replacements for conventional electromagnetic retarders and exhaust brakes used in a wide range of models. Mass production of the new retarders is expected to begin by March 2016. The products are initially targeted at next-generation models from four Japanese truck and bus manufacturers and other customers. The Company hopes to produce 2,000 units per month for the Japanese market alone, intending to introduce the new products globally after securing stable sales in Japan. The Company will also study the possibility of using the electricity generated from the self-powered retarders for other applications. (From an article in the Nikkan Jidosha Shimbun on March 25, 2014)

-The Company will start to produce its newly developed electric water and oil pumps at its Fukushima plant within March 2014. The Company developed its first electric pumps based on its technology for mechanical pumps, which is the Company's main product. The Company will propose the product for exhaust gas recirculation coolers and inverters of electric vehicles. The Company aims to initially produce 10,000 units per month, but is planning to increase the monthly volume to 100,000 units. The electric pumps are canned motor pumps, and have seal-less structures. The Company's electric pumps are available in two types: one made of aluminum alloy, and another made of polyphenylene sulfide plastics. Currently, the Company is receiving inquiries from a dozen of Japanese, U.S., and European automakers and construction equipment companies, and has already received some orders. (From an article in the Nikkan Jidosha Shimbun on March 14, 2014)

2. Expand sales outside Japan
-Expand commercial rights in Asia, strengthen foundations of business operations, and provide greater support.

Outlook for FY ending Mar. 31, 2016

(in millions of JPY)
FY ending Mar. 31, 2016
(Forecast)
FY ended Mar. 31, 2015
(Result)
Rate of change
(%)
Sales 49,000 47,058 4.1
Operating income 2,300 2,934 (21.6)
Ordinary income 2,100 2,870 (26.8)
Net income 1,500 2,152 (30.3)

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

R&D Expenditure

(in million JPY)
FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Brake Business 689 468 441
Engine Components and others 727 708 709
Total 1,417 1,176 1,150



R&D Structure

-The R&D activities are promoted by No.1 Development Dept., No.2 Development Dept., New Products Development Dept. and the Experiment Department.
-The Group has a total of 78 researchers, which account for about 5.5% of its entire workforce.

-The Company has a test course in Tokachi (Obihiro), Hokkaido, Japan.

R&D Activities

-Major R&D Activities during FY ended Mar. 2015 are as follows:

Division Detail
Brake Business -An increasing number of the Company's air wedge drum brakes are being installed on Japanese OEMs vehicles. Working to further expand business, the Company is advancing development of next-generation models that are going to be significantly lighter in weight and lower in cost.

-The Company's next-generation brake, which is an air-disk brake, is now being developed as a module. The Company is now working on creating proprietary pads, rotors and other parts, and preparing for future applications.

-Streamline the structural design of S-cam brakes for emerging countries. Promote R&D activities in order to respond to expanding needs.
Engine Components and others -The Company promoted the improvement and development of water and oil pumps for engines of small, medium, and heavy-duty vehicles and buses.
Other -The use of retarder, as auxiliary brakes, has expanded for medium and heavy-duty vehicles, as it is regarded as a suitable device for engines designed to meet the exhaust emission regulations. The Company have worked on enhancing its product mix of retarders, in addition to increasing the number of vehicle models on which they can be adopted.



Technology Licensing-out Agreement

-The Company and Sangshin Brake Co., Ltd. of Korea have signed an agreement, under which TBK will be licensing-out technology related to the development of self-generating retarders for commercial vehicles. The contract is valued at JPY 150 million (approximately KRW 1,500 million). When the retarders are released, Sangshin Brake will pay 3% of the sales to TBK for a period of 10 years. The contract covers Korea and other foreign markets where Hyundai and its suppliers are operating. Sangshin Brake plans to begin mass-producing the retarders in 2018, and aims to generate JPY 600 million (approximately KRW 6,000 million) through the retarder sales during the same year. Sangshin Brake, based in Daegu, Korea, manufactures brake components such as brake pads and brake shoe assemblies for Hyundai Motor, Hyundai Mobis, Mando, Korea Delphi, Korea GM and other companies. (From a press release on April 30, 2014)

List of Technology Licensing-out Agreements

(As of Mar. 31, 2015)
Name of the contractor Country Contract item Contract coverage Contract period
TBKK (Thailand) Co., Ltd. Thailand Automotive brakes, camshafts, oil pumps, water pumps 1. To set the rights for establishing industrial property rights.
2. To supply technical information
3. To grant manufacture and sales licenses
Mar. 29, 1990 - 10 years from sales launch (then automatic extension every year)
Sangsin Brake Co., Ltd. Korea Brakes for large vehicles Same as above Jan. 14, 1994
10 years from mass production starting date (then automatic extension every year)
Full Win Developments Ltd. China Brake linings Same as above Aug. 1, 2002
10 years from the effective date (then automatic extension every year)
Chang chun TBK SHILI Auto Parts Co., Ltd. China Friction materials for brakes used in commercial vehicles Same as above Dec. 22, 2005
10 years from mass production starting date (then automatic extension every year)
TBK America, Inc. USA Water pumps and oil pumps for automobiles Same as above Nov. 15, 2006
10 years from the initial payment date
(then automatic extension every year)
Sangsin Brake Co., Ltd. Korea Electromagnetic retarders Same as above From Sep. 30, 2010
10 years from sales launch (then automatic extension every year)
TBK India Private Ltd. India Water pumps and oil pumps for automobiles Same as above From Jun. 28, 2011
10 years from mass production starting date
Changchun FAWSN TBK Co., Ltd. China Brakes for commercial vehicles Same as above From Jul. 5, 2012
10 years from mass production starting date (then automatic extension every year)
Sansin Brake Co., Ltd. Korea Self-generating retarders Same as above From Apr. 30, 2014
10 years from the effective date (then automatic extension every year)



Capital Investment

(in million JPY)
FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Automotive Components 6,791 4,673 2,899
by Segment
-Japan 2,159 2,214 1,982
-Asia 4,604 2,420 873
-North America 76 73 55


-Major investments during FY ended Mar. 2015 regarding automotive components are as follows:

  • Japan: JPY 447 million for engine component business
  • Asia: JPY 1,484 million for engine component business, JPY 301 million for brake business



Investments Outside Japan

<Thailand>
-The Company announced that its Thai subsidiary, TBKK (Thailand) Co., Ltd., has started constructing a new plant at the Amata Nakorn Industrial Estate, in Chonburi Province, Thailand. The plant will manufacture automotive parts such as water pumps, oil pumps, and brakes. THB 10.79 billion (approximately JPY 37.77 billion) will be invested in the new facility, which will cover a land area of 93,000 square meters and a floor area of 32,500 square meters. Construction is scheduled to be completed by September 2015 and mass production is expected to start in the first half of 2016. (From a press release on May 8, 2015)