Aichi Machine Industry Co., Ltd. Business Report FY ended Mar. 2016

Non Consolidated

(in million JPY)
FY ended Mar. 31, 2016 FY ended Mar. 31, 2015 FY ended Mar. 31, 2014
Sales (million yen) 119,000 110,000 98,000

Management Plan

Engine production to rise 9% to 480,000 units in FY 2015
-The Company revealed that its engine production volume in FY 2015 (ending in March 2016) is forecast to increase by 9% year-on-year (y/y) to 480,000 units. This is because production of the 2.5-liter QR medium-sized engine has increased, primarily for the North American market. The company expects that in addition to the QR engine, production of small-sized engines for new cars will also increase, for a rise of 15 to 16% y/y in FY 2016. The QR engine is equipped in vehicles such as the Nissan Rogue in the North American market, and the Qashqai in European markets. Demand for the QR engine is growing due to strong sales of these models. (From an article in the Nikkan Jidosha Shimbun on January 26, 2016)

-In 2016, The Company has launched an initiative to achieve zero abnormal-stoppage on its engine machining lines. In order to improve production efficiency and become more competitive in the global market, the company will make full use of its knowledge accumulated at its plants, while adopting advanced information technology. At the same time, it will use the overall equipment effectiveness (OEE) as a key performance indicator. Nissan Motor Co., Ltd., which is Aichi Machine's parent company and major customer, is procuring products and components from the most cost competitive plants in terms of various factors including delivery, currency, and productivity. Aichi Machine hopes to achieve OEE of 100% initially on its 2.5-liter QR engine production lines. (From an article in the Nikkan Jidosha Shimbun on January 22, 2016)

Increasing sales ratio outside Nissan and Renault
-In 2014, the Company will increase sales to the automakers outside Nissan and Renault of France. The Company plans to increase the ratio to 10% of total sales from current 4 to 5% in the fiscal year ending March 2017. The Company is aiming to double sales outside Nissan and Renault by expanding its customer base for manual transmissions (MTs) and engine parts. At the same time, the Company hopes to reinforce its contribution to Nissan and Renault by improving technologies and cost competitiveness. (From an article in the Nikkan Jidosha Shimbun on March 6, 2014)

Engine production in Japan to remain at around 300,000 units during the period between FY2013 and FY2016
-The Company said it is forecasting its yearly engine production in Japan to remain at around 300,000 units during the period between FY2013 and FY2016. As Nissan Motor is aiming to produce 1 million vehicles per year within Japan, Aichi Machine Industry is expecting to maintain the same production level as that of FY2012. Meanwhile, in response to Nissan's strategy to boost its production and sales in emerging countries, Aichi Machine Industry is going to increase domestic production of engine components for supply to overseas engine assembly plants to the level of 900,000 units a year. In addition, Aichi Machine Industry is carrying out initiatives to support the production launch of engines and manual transmissions at Nissan's facilities in overseas markets where the Company does not have its own production sites. (From an article in the Nikkan Jidosha Shimbun on Feb. 1, 2013)

Capital Investment

-The Company has set a capital investment plan of JPY 13 billion for the fiscal year ending in March 2016. The volume is about threefold larger than usual. The investment will be appropriated for a new machining line to produce engine parts destined for the North American market and new facilities to manufacture powertrains for small hybrid vehicles. Production volumes of the Company's core product lines such as small engines and manual transmissions have been decreasing due to the market stagnation in Japan and emerging countries. Meanwhile, the Company plans to strengthen its production capacity in expectation of an increase in its cost competitiveness thanks to the weak yen and new orders following a planned new car release in Japan. (From an article in the Nikkan Jidosha Shimbun on March 9, 2015)