Yachiyo Industry Co., Ltd. Business Report FY ended Mar. 2014

Business Highlights

Financial Overview

(in millions of JPY)
  FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 Rate of
Change (%)
Factors
Overall
Sales 251,171 238,967 5.1 1)
Operating income 9,323 5,421 72.0 -
Ordinary income 9,252 5,598 65.3 -
Net income 1,093 1,779 (38.6) -
Japan
Sales 113,290 130,156 (13.0) 2)
Ordinary income 254 71 257.7 -
Americas
Sales 59,644 45,507 31.1 3)
Ordinary income 2,231 397 462.0 -
China
Sales 23,208 15,722 47.6 4)
Ordinary income 3,156 2,128 48.3 -
Asia
Sales 55,028 47,581 15.7 5)
Ordinary income 3,938 3,331 18.2 -

Factors
1) Sales
-Overall sales increased 5.1 percent year-on-year due to the impact of favorable currency translation, which more than offset a decrease in sales of automotive parts and complete vehicles in Japan and other Asian countries.

2) <Japan>
-Sales fell 13.0 percent year-on-year due to a decrease in orders for automotive components and complete vehicles.

3) <USA>
-Sales increased 31.3 percent year-on-year due to growth in sales at both Yachiyo Manufacturing of Alabama, LLC and US Yachiyo Inc. Favorable currency translation also contributed to the increase.

4) <China>
-Sales increased 47.6 percent year-on-year due to growth in sales at both Yachiyo Zhongshan Manufacturing Co., Ltd. and Yachiyo Wuhan Mfg. Co., Ltd. Favorable currency translation also contributed to the increase.

5) <Asia>
-Sales increased 15.7 percent year-on-year due to the impact of favorable currency translation, which more than offset a decrease in sales at Siam Goshi Manufacturing Co., Ltd.

Restructuring

Expand its resin parts business
-The Company will expand its resin parts business. By capitalizing on its expertise in molding and painting resin fuel tanks and bumpers, the company will start developing and marketing a wider variety of resin car components including body panels and interior parts. The company placed resin parts business as a pillar in its midterm business plan starting in April 2014. Automakers are expanding the use of resin materials to wider areas, even to outer panels, as a part of their efforts to develop lighter and fuel-efficient vehicles. (From an article in the Nikkan Jidosha Shimbun on February 7, 2014)

Enter the hot stamped parts market
-The Company will enter the hot stamped parts market. Hot stamped parts are made by stamping hot steel sheets. The company has started to develop technologies for low-cost mass production of high-tensile vehicle body frame parts which can offer a tensile strength level of 1,500MPa. The Company will introduce an electrical heating method to form the steel in order to reduce production costs. The hot stamping business requires a large initial investment. However, the hot stamping process can easily form parts which have complex shapes, which are difficult to form by a cold stamping process that uses super high-tensile materials. The decision to enter the market was made due to the introduction of hot stamped parts to mini vehicle production by Honda Motor Co., Ltd., the Company’s major customer. (From an article in the Nikkan Jidosha Shimbun on December 13, 2013)

Sell the sheet metal components business to Unipres
-The Company announced that it has signed an agreement to sell the sheet metal components business of Yachiyo Manufacturing of Alabama, LLC (YMA) to Unipres Corporation. Unipres is a Nissan-affiliated structural components manufacturer that hopes to expand business with Honda by strengthening operations in North America. Meanwhile, Yachiyo also announced that it will set up a new plant in Georgia in the United States. The facility will take over YMA's fuel tank business, and will manufacture 400,000 plastic fuel tanks per year for Honda's facility in Alabama. The plant will also have a sunroof production line with an annual capacity of 200,000 units in order to cater to growing demand in North America. (From an article in the Nikkan Jidosha Shimbun on March 14, 2014)

Outlook for FY ending Mar. 2015

(in millions of JPY)
  FY ending Mar. 2015
(Forecast)
FY ended Mar. 2014
(Actual Results)
Rate of Change
(%)
Sales 210,000 251,171 (16.4)
Operating income 7,100 9,323 (23.8)
Ordinary income 6,600 9,252 (28.7)
Net income 1,000 1,093 (8.5)
>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)

R&D

R&D Expenditure

(in millions of JPY)
  FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 FY ended Mar. 31, 2012
Overall 4,837 4,721 4,092

R&D Facilities

Facility Location
Tochigi R&D Center Tochigi Pref.,
Japan
Saitama R&D Center Saitama Pref.,
Japan
Goshi Giken Co., Ltd. Saitama Pref.,
Japan
Yachiyo of America Inc. Ohio,
U.S.A.

R&D Activities

  • Mass-production of technology to mass-produce fuel tanks for new vehicle models
  • Mass-production of sun-roofs for new model vehicles
  • Development of fuel tanks for new vehicle models
  • Development of sun-roofs for new model vehicles
  • Development of a metal-honeycomb, high-density cell carrier for motorcycles, which meets exhaust gas emissions regulations both in and outside Japan.
  • Research and development of new-design resin fuel tanks
  • Research and development of new types of sunroofs and related technologies
  • Research and development of environmentally friendly auto parts
  • Research and development of press forming technology capable of handling semi-melted aluminum materials
  • Research and development on driver-assist systems for vehicles transporting the physically challenged.
  • The Company conducted R&D activities in order to launch business into new sectors.

 Product Development

High-pressure hydrogen tanks for FCV
-The Company will develop plastic liners for high-pressure hydrogen tanks of fuel cell vehicles (FCVs). The company will develop technologies to replace the tank body's aluminum liners with plastic liners. Plastic liners will reduce production cost of high pressure hydrogen tanks, as plastics are low-cost and easy-to-form materials. Yachiyo Industry has accumulated plastic parts production technologies through development of plastic fuel tanks, one of its major products. Expecting the wider use of hydrogen tanks on vehicles in the future, the company plans to enter the FCV parts market with the plastic liners. (From an article in the Nikkan Jidosha Shimbun on January 24, 2014)

Plastic fuel tank system with very low fuel-permeability
-The Company has developed a plastic fuel tank system with very low fuel-permeability which meets the new Low-Emission Vehicle (LEV) Program regulations in California, U.S. The tank system is manufactured using a new method in which valves and tubes are installed inside the tank before the tank is blow-molded. This eliminates the need to create holes in the tank to install these parts after the molding process. The innovative production technique has resulted in a 12 percent reduction in hydrocarbon permeability. California’s LEV program regulates vehicle emissions and greenhouse gases. Stricter guidelines are scheduled to be adopted in 2014 with the introduction of LEV III. The Company will accelerate its marketing efforts by featuring the environmental advantages of the new fuel tank. (From an article in the Nikkan Jidosha Shimbun on December 10, 2013)

Investment Activities

Capital Expenditure

(in millions of JPY)
  FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Japan 2,546 5,060
Americas 3,720 4,451
China 1,405 946
Asia 2,091 3,580
Overall 9,763 14,038

<Japan>
-The Company invested in preparing production facilities to deal with new programs, renewing facilities and equipment, and installing testing facilities and equipment.

<Americas>
-The Company invested in building a new plant and preparing production facilities to deal with new programs.

<China>
-The Company invested in increasing production capacity and preparing production facilities to deal with new programs.

<Asia>
-The Company invested in preparing production facilities to deal with new programs, building new plants, and increasing production capacity.

Planned Capital Investments

(As of Mar. 31, 2014)
Company/Facility
(Location)
Facility Details
Planned
Investment
Total
(in million yen)
Start End
(Scheduled)
Remarks
Kashiwabara Plant
(Saitama Pref., Japan)
Production facilities 216 Apr.
2014
Jan.
2015
Responding to new business, renewing facilities/equipment
Yokkaichi Factory
(Mie Pref., Japan)
Production facilities
1,186 Mar.
2014
Mar.
2015
Responding to new business, renewing facilities/equipment
Suzuka Plant
(Mie Pref., Japan)
Production facilities
1,391 Dec.
2013
Mar.
2015
Responding to new business
Kameyama Branch
(Mie Pref., Japan)
Production facilities
235 Apr.
2014
Jan.
2015
Renewing facilities/equipment
Tochigi R&D Center
(Tochigi Pref., Japan)
R&D facilities 92 Apr.
2014
Oct.
2014
Installing testing facilities, renewing equipment
Saitama R&D Center
(Sayama, Saitama Pref.)
R&D facilities 482 Apr.
2014
Dec.
2013
Installing testing facilities, responding to new business
Goshi Giken Co., Ltd. Production facilities
R&D facilities
425 Apr.
2014
Mar.
2015
Responding to new business, renewing facilities/equipment
US Yachiyo Inc.
(Ohio, USA)
Production facilities
486 Apr.
2013
Mar.
2015
Renewing facilities, reducing energy consumption, rationalizing operations, responding to new business
Yachiyo Manufacturing of Alabama, LLC
(Alabama, USA)
Production facilities 3,067 Aug.
2013
Dec.
2014
Responding to new business,
increasing production capacity
Yachiyo Mexico Manufacturing S.A. de C.V.
(Guanajuato, Mexico)
Production facilities
365 Feb.
2014
Nov.
2014
Responding to new business, increasing production capacity
Yachiyo Zhongshan Mfg. Co., Ltd.
(Guangdong, China)
Production facilities
1,714 Jan.
2013
Mar.
2015
Responding to new business,
increasing production capacity
Yachiyo Wuhan Mfg. Co., Ltd.
(Hubei, China)
Production facilities 421 May
2013
Mar.
2015
Responding to new business
Siam Goshi  Manufacturing Co., Ltd.
(Rayong Province, Thailand)
Production facilities
918 Feb.
2014
Mar.
2015
Renewing facilities, reducing energy consumption, rationalizing operations, increasing production capacity
Goshi-Thanglong Auto-Parts Co., Ltd
(Hanoi, Vietnam)
Production facilities
513 Apr.
2014
Dec.
2014
Reducing energy consumption, rationalizing operations, increasing production capacity,
responding to new business