ADVICS CO., Ltd. Business Report up until FY ended Mar. 2014

Business Highlights

Recent Years

Business Overview (FY ended Mar. 31, 2014)

-Operating revenue for the fiscal year that ended March 2014 was 511,500 million yen, a year-on-year increase of 14.4% compared to the previous fiscal year. This result was possible due to the greater production volume by its major OEMs.
-As for operating profit, which was 14,000 million yen, a year-on-year increase of 9.8% compared to the previous fiscal year.

Manufacturing plant restructuring

-The Company is reorganizing its domestic production network by the end of March 2013. Its subsidiary AS Brake Systems, Inc. will end production of brake system components at the Mie Plant located on the premises of Sumitomo Wiring Systems, Inc., transferring production of disc brakes to the Itami Plant and anti-lock brake systems to the Handa Plant of Aisin Seiki with which Advics has a partnership on consignment of production. This is the company's strategy to consolidate production based on product item to enhance competitiveness leveraging economies of scale. The reorganization will reduce locations of parts production in Japan from 6 to 5. The consolidation is expected to further advance integration of the brake business that has been pursued by Aisin Seiki, Sumitomo Electric and Denso with Advics at the core of the scheme. Advics is developing into a full-fledged parts supplier complete with a structure from development and production to sales and human resources. An executive of the company says “We are aspiring to be a global supplier of brake systems by not only establishing a solid footprint in Japan, but also accelerating overseas operations. (From an article in the Nikkan Jidosha Shimbun on April 4, 2012)

Recent Development Outside Japan

-The Company announced that it is going to establish a new plant in Yunfu City, Guangdong Province, China around 2013. The new facility will manufacture brake boosters and disc brake calipers, starting in December 2013 to serve as Advics's fourth production facility in China, following the new plant in Fuzhou scheduled to come into operation in April 2013. The establishment in the southern region of China will complement the company's brake booster and caliper production operation, which is now conducted at its Tianjin Plant in the north, as demand for these products is rising in the country. The new company will be capitalized at approximately 1.2 billion yen, of which 80 percent is invested by Advics and 20 percent by Lioho Machine Works (China) Holding Co., Ltd. The plant with 18,400 square meters of building area on 66,700 square meters of land is expected to create some 350 new jobs by March 2017. (From an article in the Nikkan Jidosha Shimbun on May 23, 2012)

-In 2012, the Company aims to largely increase its sales in China to 100 billion yen a year by the business year ending March 2018. The figure is 2.5 times that of the estimated sales for the year ending March 2012. In order to achieve this target, the Company is looking to acquire new customers, targeting Chinese automakers and parts suppliers. It will also work on stepping up its supply volumes and enhance cost efficiency. In an effort to impress its original, advanced technology on Chinese manufacturers, the Company will hold test-ride events, inviting various local companies. Advics Chinese operation, which is now procuring the majority of parts and materials from Japan, will accelerate its moves to switch to local sourcing. Advics R&D Center in Changzhou City, Jiangsu Province will function as the procurement office to find new suppliers and help nurture the local parts manufacturing industry. (From an article in the Nikkan Jidosha Shimbun on March 19, 2012)

-The Company announced on April 5, 2012 that it is poised to make inroads into India by 2013. By utilizing sites that have been acquired by its parent company Aisin Seiki for its group companies, it will build facilities for production of brake boosters and master cylinders in the north and south of India in an attempt to switch supply source of them from Japan to local production for increasing its competitive edge. Production in the north will begin in June 2013 and in the south in December 2013. Initial production volume combined at the two sites will be 100,000 a month. The Company aims to generate sales in the range of 6 billion yen from operations at the two plants in 2016. (From an article in the Nikkan Jidosha Shimbun on April 6, 2012)

Business Plan

-In 2012, the Company mapped out a new long-term business plan to increase consolidated sales to a level of 600 billion yen by 2017 business year, 56.3 percent up from the estimated sales in 2011. In a bid to establish a strong foothold as a global supplier of brake systems, the Company is eager not only to expand business with current Japanese customers such as Toyota, but also to accelerate exploring new customers from local manufacturers in Europe and emerging countries. In line with this strategy, the Company will enhance its global supply capability, following inaugurations of a third plant in China and a facility in Thailand scheduled for 2013. It is also mulling construction of a new plant in India as early as in 2014 by sharing a local production facility that was just built by Aisin Seiki, for example. The brake system supplier will also decide on inroads into Europe by watching business activities of local suppliers. (From an article in the Nikkan Jidosha Shimbun on March 10, 2012)

New Company

-In 2011, the Company announced that it is establishing a wholly-owned subsidiary in Germany, which is expected to be established in July 2011. The new company, ADVICS Europe GmbH, will engineer and sell brake systems and components for automobiles. ADVICS set up an office in Belgium in 2008 and has been surveying European market. (From a press release on July 20, 2011)

Joint Venture

-In 2010, Aisin Chemical Co., Ltd. based in Toyota City, Aichi Prefecture, a supplier of chemicals and friction materials in the Aisin Seiki Group, announced on August 19 that it had established a subsidiary in China for production of disc brake pads, its third overseas production facility following in the U.S. and Thailand. The new China plant is targeting to generate 1.6 billion yen in sales in 2015 primarily from products that will be delivered finally to Toyota's local joint venture plant with its brake pad integrated in the brake system at a local plant in Tianjin of a brake system supplier Advics. The local subsidiary "Tangshan Aisin Chemical Co., Ltd.," which is capitalized at 600 million yen, was established in July with an investment of 60 percent by Aisin Chemical, 20 percent by Aisin Seiki and 20 percent by Advics. Production equipment will be installed at the local plant of Aisin Seiki located in Tangshan, Hebei Province. Production will start on one production line by May 2011. (From an article in the Nikkan Jidosha Shimbun on Aug. 20, 2010)


R&D Expenditure

(in millions of JPY)
  FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 FY ended Mar. 31, 2012
Total 19,500 19,300 15,700

R&D Activities

-During the fiscal year that ended in March 2014, the Company conducted R&D activities to create products that meet the need for improved driving performance and which also give drivers a feeling of greater driving safety when enjoying their cars.

Product Development

Next-generation braking system for light duty truck
-The Company is developing a next-generation braking system for light duty trucks. The new technology will be designed to bring a vehicle traveling at a low- to medium-speed to a stop when an obstacle that is likely to lead to a crash is detected in front. By collaborating with a supplier of millimeter-wave radars and other detection systems using radars and camera technologies, the company aims to commercialize the new brake system by 2017. In order to engineer an optimized brake product for light-duty trucks, Advics intends to boost the output of the brake motor and develop more sophisticated software for the electronic control system. (From an article in the Nikkan Jidosha Shimbun on Jun. 26, 2012)

Brake control modulator

-In 2011, the Company announced that it had newly developed a brake control modulator that is associated with pre-stop function for idle reduction. The system will be mounted on the new "Mira e:S" (to be launched in September 2011) from Daihatsu Motor. The newly developed pre-stop function for idle reduction system stops the engine before the vehicle comes to a complete stop, thus further improving fuel consumption and reducing environmental loads. Using information from various sensors, it detects vehicle behavior, engine running state and driver operations, and ensures safety when the idle reduction system activates until the vehicle stops by automatically applying pressure to the hydraulic brakes as needed. (From a press release on September 21, 2011)

Investment Activities

Capital Expenditure

(in millions of JPY)
  FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 FY ended Mar. 31, 2012
Total 13,180 11,412 8,239

Investments Outside Japan

-In 2012, the Company made an announcement of establishing a new plant in Thailand for production of brake calipers by 2013. The Company has up to now consigned production of its products to Aisin Seiki's plant in Thailand, but it has decided to build its own plant to expand its supply capacity. The new plant will be set up in the Pinthong Industrial Estate, Chonburi and start up production on the scale of supply to 15,000 vehicles a month. The production facility built at a cost of about 3.5 billion yen is slated to go into operation in July 2013. Products will be supplied initially to Toyota, but afterwards to other automakers as well. Prior to construction of the new plant, ADVICS Manufacturing (Thailand) Co., Ltd. was established in December 2011. The local organization will hereafter undertake a wide range of activities from plant management to marketing and exploring new business opportunities. (From an article in the Nikkan Jidosha Shimbun on February 10, 2012)