Musashi Seimitsu Industry Co., Ltd. Business Report FY ended Mar. 2018

Financial Overview

(in million JPY)
FY ended Mar. 31, 2018 FY ended Mar. 31, 2017 Rate of Change (%) Factors
Sales 237,910 180,522 31.8 -Company-wide, sales rose year over year because of the contribution made by the HAY Group for the entire year, instead of for half of the year as was the case during the previous fiscal year. In addition, favorable currency translation due to the weak valuation of the yen and higher income in Asia contributed to the improved business performance.
Operating income 15,767 11,166 41.2 -
Ordinary income 15,929 10,323 54.3
Net income attributable to owners of the parent 10,351 6,315 63.9

Business Activities

-Leveraging the synergy effects that resulted from the acquisition of the HAY Group, which was completed in 2016, the Company is manufacturing motorcycle parts making use of the HAY Group’s expertise in ultra-highspeed forging machines and large-size-gear production technology, in order to strengthen sales activities mainly in Europe. In addition, one means of responding to the expanding Chinese market was establishing a new R&D center in the country and increasing capacity mainly at the operations in Nantong. The Company is responding to the needs for local R&D and production activities.

-From a sales perspective, the Company received greater numbers of orders worldwide for differentials, its major product item. Also, inquiries for next-generation products such as high-precision gears are increasing in line with the growing demand for electric vehicles.


-Major supply agreements made during the fiscal year that ended March 2018:

Customers/Models Products Production plant Supply starting
Astra Daihatsu Motor
Transmission assemblies and camshafts Musashi Auto Parts Indonesia Oct. 2016
Aisin AW Automatic transmission parts for front-mounted/front-wheel drive vehicles Head office Early 2018
BYD Automotive ball joints Musashi Auto Parts (Zhongshan) Co., Ltd. (China) Within 2018

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

R&D Expenditure

(in million JPY)
FY ended Mar. 31, 2018 FY ended Mar. 31, 2017 FY ended Mar. 31, 2016
Overall 3,489 2,910 2,373

R&D Structure

Division Business in charge
Development Div. - Developing chassis, engine and drivetrain products
- Developing technologies for the next generation
- Managing intellectual properties
Production Technology Dept. / Plastic molding Engineering Department -Conducting R&D work on new production technology
-Conducting R&D work on new plastic molding technology
Technology Div., Kyushu Musashi Seimitsu Co., Ltd. -Conducting R&D work on production technology for motorcycle and general-purpose gears, camshafts, etc.

R&D Activities

Development of Powertrain Products
Drivetrain Product Development

-The Company started commercial production of light-weight differential assemblies that are 10% lighter in weight than previous ones, equipping them with its proprietary small-size, high-precision bevel gears. It is working to find further applications for them.
-The Company is steadily winning orders for its light-weight differential assemblies designed to respond to each level of engine displacement.
-The Company is conducting a constant level of R&D activities on weight reduction and local procurement in continuing activities to win new orders.

-The Company is sharing its expertise with its production facilities outside Japan in order for them to ensure the same level of quality as that being attained in Japan. It started commercial production of planetary assemblies that are highly competitive. Going forward, it will conduct sales activities highlighting the capabilities of its production technology.

Development of Linkage & Suspension (L&S) Products
Suspension product development
-Winning new orders for compact ball joints developed by using optimal designs and positioning weight reduction as the focal point by optimizing the use of aluminum.
-In order to further reduce environmental impact, the Company is developing light-weight products made of aluminum and conducting sale activities to increase orders.

Advanced-Technology Development
-The Company is conducting R&D activities to develop proprietary electronic control units that are smaller, lighter, and more efficient; for hybrid, electric, and personal-mobility vehicles.
-The Company is researching the control mechanisms of electronic control units by using simulation and rapid-prototyping technology based on CAE.
-The Company is conducting analysis on required functions based on ISO26262.

Production-Technology Development

-In the area of processing, the Company is designing optimal processes, aiming to initiate local procurement of its own-brand products.
-Create technology that differentiates differentials by reducing their size and weight. Advance process design that puts local characteristics to use and makes use of local facilities.
-The Company developed production methods to produce high-precision planetary assemblies for use in recently developed, lightweight, and compact multiple-stage automatic transmissions.

-Focusing on ways to reduce the costs for rack end housings, such as reducing the number of processes and costs, working to launch commercial production in FY2018.
-Working to jointly develop the forging of the low-cost MT DOG that can overcome global competition; through combining the respective technologies of both Musashi Seimitsu and HAY.

Capital Expenditure

(in million JPY)
FY ended Mar. 31, 2018 FY ended Mar. 31, 2017 FY ended Mar. 31, 2016
Overall 12,792 13,303 9,295

-Breakdown of investments by region in FY ended Mar. 31, 2018 (in million JPY)
Region Respond to new models Increase production Streamline operations Renew existing facilities Overall
Japan 1,746 - 524 542 3,950
North America 454 894 209 - 2,149
Europe 654 1,245 - 709 3,726
Asia 561 492 462 - 2,679
South America - - - 119 288

Investments Outside Japan

-The Company will increase production capacity at Musashi Seimitsu Auto Parts (Nantong) Co., Ltd. in Nantong, Jiangsu, China. First, an integrated production system of differential assemblies will be established by 2020. The Nantong facility, which has processed cases of differential assemblies, will handle production and assembly of differential gears by installing new equipment. The differential gear is a major component of differential assemblies. For the medium- and long-term, the Nantong facility will increase its production items to include ball joints and other automotive parts. Musashi Seimitsu intends to expand its business in China, where the automotive market continues to grow, by increasing supply of automotive parts. (From an article in the Nikkan Jidosha Shimbun on March 15, 2018)

-will start research and development in China by the end of this year. The supplier established a research and development center in China to supply products that meet the needs of locally-funded OEMs whose technological level is rising, as well as Japanese OEMs expanding their Chinese operations. Musashi Seimitsu is installing testing equipment and creating a system there to speedily develop products that suit customers' requirements. The company also established a research and development center in North America in 2016. It plans to establish that in Europe as well to strengthen its research and development structure and expand business globally. The Chinese R&D center was established in 2017 and will be fully operational in 2018. The R&D center will promptly develop parts that fulfill demand from the Chinese market, while the company's center in Japan will continue leading basic technology and upfront development. (From an article in the Nikkan Jidosha Shimbun on March 22, 2018)

Planned Capital Investment

(As of Mar. 31, 2018)
Region Planned investment
(in million JPY)
Major details and objectives of production facilities
Overall 22,000 -
-Japan 4,663 Switch over to respond to new models, conduct R&D activities, increase production capacity of automotive parts, renew existing production facilities
-North America 2,800 Increase production capacity of automotive parts, switch over to respond to new models
-Europe 5,309 Increase production capacity of automotive parts, streamline operations, renew existing production facilities
-Asia 8,625 Renew existing production facilities, streamline operations, increase production capacity of automotive and motorcycle parts
-South America 603 Renew existing production facilities, switch over to respond to new models