ADVICS CO., Ltd. Business Report up until FY ended Mar. 2015

Business Highlights

Recent Years

Business Overview (FY ended Mar. 31, 2015)

-Sales for FY ended March 31, 2015 reached JPY 527,300 million, up 3.1% year-on-year due to growth in vehicle production by the Company's major customers outside Japan.  
-Operating profit was JPY 9,600 million, a fall of 31.4% year-on-year. The decline was due to increased costs for preparing production infrastructure, although there were some positive impacts of the Company's profitability improvement efforts and a weak yen.

Business Plan

-The Company has started formulating a long-term vision that sets its business goal for the fiscal year ending March 2019 (FY 2018) and onward. The Company's present mid-term business goal to FY 2017 aims at increasing consolidated sales to JPY 600 billion. As of the end of March 2014, the Company posted a 14.3% sales increase from the preceding fiscal year to JPY 511.5 billion. After the global financial crisis in 2008, the company has expanded production in Thailand and China, and is planning to further expand production in Indonesia, Brazil and the Czech Republic. So far, the company has supplied products mainly to Japanese automakers, but it will start supplying disc brake calipers to Daimler AG of Germany in 2015. (From an article in the Nikkan Jidosha Shimbun on July 9, 2014)

Recent Development Outside Japan

-In September 2014, the Company announced that it plans to establish a production subsidiary in Mexico in 2016. Japanese automakers, such as Honda Motor Co., Ltd., Nissan Motor Co., Ltd. and Mazda Motor Corporation, have been expanding local assembly of vehicles in Mexico. In response to this trend, Advics plans to build a plant in Lagos de Moreno, the state of Jalisco. The investment in this project will amount to JPY 1.5 billion. The Company will start local production of drum brakes in March 2016 to meet new orders received in Mexico. Advics has already established five production bases in North America, and this new plant will be the first one in Central America. The Company aims at net sales of JPY 3.4 billion for the fiscal year ending in March 2019. (From an article in the Nikkan Jidosha Shimbun on September 26, 2014)

<South Africa>
-In April 2014, the Company announced that it will enter the South African market by the fiscal year ending in March 2017 (FY 2016). This will be the Company's first entry into Africa. Advics has established a new subsidiary in South Africa. The subsidiary will rent part of a plant of Toyota Tsusho Corporation and will initially start operations with final assembly of disk brake calipers, rotors, and drum brakes for Toyota Motor Corporation. Advics hopes to generate its sales at the JPY 4 billion level in FY 2016. The Company also aims to expand its sales to other automakers and to enhance its production capacity in South Africa. (From an article in the Nikkan Jidosha Shimbun on April 23, 2014)

-In April 2014, the Company announced that Aisin Seiki Co., Ltd., Aisin AI Co., Ltd., and Advics Co., Ltd. will expand production in Brazil. Aisin AI and Advics will establish their own manufacturing subsidiaries at the site of Aisin Seiki's production base in Itu, Sao Paulo. Aisin AI will commence production of manual transmissions in August 2014 while Advics will start manufacturing brake parts in October 2015. Aisin Seiki itself will add another new plant at the same site to start producing engine parts by February 2016. Combined capital investment of these three group companies will amount to JPY 4.1 billion. (From an article in the Nikkan Jidosha Shimbun on April 23, 2014)

-In April 2014, the Company announced that Aisin Seiki Co., Ltd. and Advics Co., Ltd. will expand business in Indonesia. Aisin Seiki and Advics will build their respective plants on a site in Karawang which was newly acquired by Aisin group. Combined investment of the two companies amounts to JPY 7.5 billion. Aisin Seiki will start producing auto body components and engine parts in January 2015, while Advics will commence production of brake boosters and drum brakes in December 2014. Both companies will supply the products to Toyota Motor Corporation and Daihatsu Motor Co., Ltd. This is a part of Aisin group's strategy to expand its global business by effectively utilizing management resources. (From an article in the Nikkan Jidosha Shimbun on April 23, 2014)

<Czech Republic>
-In April 2014, the Company announced that it established a manufacturing subsidiary of brake parts in Czech in March 2014, and will start local production in Europe in 2015. This is the Company's first production base in Europe, and the fifth plant in the world. This move is in response to the first order for disc brake calipers which was received from Daimler AG of Germany. Taking this opportunity, Advics intends to expand its business in Europe. The subsidiary, Advics Manufacturing Czech s.r.o., was set up in Pisek, Czech Republic with a capital of CZK 186 million (JPY 950 million). It is wholly funded by Advics Europe GmbH, a subsidiary of Advics Co., Ltd. Kenichi Kataoka of Overseas Business Promotion Department at Advics headquarters will be assigned as the subsidiary's president. (From an article in the Nikkan Jidosha Shimbun on April 22, 2014)

Manufacturing plant restructuring

-In February 2015, Aisin Seiki Co., Ltd. and Advics Co., Ltd. announced that they are constructing a new plant on the premises of Aisin Seiki's existing plant in Handa City, Aichi Prefecture. Aisin Seiki will invest approximately JPY 11 billion in this plant and will lease the facility to Advics. This project is in connection with a plan to transfer the brake system production operations of Aisin Seiki and Denso Corporation to Advics in 2016 onwards. The new plant is expected to be completed in January 2016, and Advics will produce electronic stability control systems, regenerative brake systems, and hydraulic boosters. The plant will have 37,600 square meters of manufacturing space and 6,750 square meters of office space. Approximately 200 people are expected to be hired by 2016. (From an article in the Nikkan Jidosha Shimbun on February 21, 2015)

-Aisin Seiki Co., Ltd. plans to reorganize its production operations in the Chubu area (central Japan) in line with the Aisin Group's restructuring program, which includes a management integration between Aisin Seiki and Shiroki Corporation. By 2016, Aisin will transfer its braking parts production from its Handa Plant (Handa City, Aichi Prefecture) to a new plant, which will be established by Advics Co., Ltd. in the same city. Production of engine cooling water pumps at Aisin's Handa Plant was already moved to its Nishio Engine Components Plant (Nishio City, Aichi Prefecture) in May 2014. Through the group's restructuring project in 2016, Aisin intends to realign its production operations and aims to establish a solid production structure by around 2018. (From an article in the Nikkan Jidosha Shimbun on January 27, 2015)

-In November 2014, Toyota Motor Corporation announced that it will consolidate its development and production operations for diesel engines, manual transmissions, and brake systems into its main suppliers within the Toyota Group. Development and production of diesel engines will be integrated into Toyota Industries Corporation, while that of manual transmissions will be integrated into Aisin AI Co., Ltd., starting in 2016. Production of brake systems and components, which is now handled at Denso Corporation and Aisin Seiki Co., Ltd. in central Japan, will be consolidated into a new plant of Advics Co., Ltd. in the Aisin Group. The new plant is scheduled to be established in Handa, Aichi Prefecture around January 2016. The integration of the powertrain businesses will enable the Toyota Group to improve its development capability in each field and to allocate its management resources more efficiently, especially to the area of next-generation safety and environmental technologies. (From an article in the Nikkan Jidosha Shimbun on November 29, 2014)

R&D Expenditure

(in millions of JPY)
  FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Total 19,000 19,500 19,300

Product Development

-At the 2015 JSAE Automotive Engineering Exposition, the Company exhibited its electric parking drum brake, which is the industry's first of its kind that features a parking mechanism driven by an electric motor.

-The Company is accelerating the development of environmentally friendly technologies and safety products. Its new products include a regenerative braking system for the hybrid versions of the Nissan Pathfinder SUV, which was launched in the autumn of 2013. Conventionally, brakes for hybrids and gasoline vehicles were designed separately, but the new regenerative braking system for hybrids was developed based on the existing brake system used on gasoline engine models. Advics has also begun delivering a compact anti-lock braking system (ABS) for the Bolt, Yamaha Motor's new motorcycle. Dimensionally, the new motorcycle ABS is about half of that used in automobiles. During this fiscal year ending March 2015, Advics plans to introduce seven other products into the market. According to the Company's president, Takeshi Kawata, the brake system supplier will give an overriding priority on green technologies as well as safety systems to prevent serious accidents, while also advancing the development of technologies that support autonomous driving for the next generation. (From an article in the Nikkan Jidosha Shimbun on June 7, 2014)

Capital Expenditure

(in millions of JPY)
  FY ended Mar. 31, 2014 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Total 25,800 13,180 11,412

Investments Outside Japan

-Mexico: the Company will establish a new plant in Lagos de Moreno, Jalisco by investing approximately JPY 1.5 billion.

-Brazil: the Company will establish its own production lines at Aisin Seiki's additional plant to be constructed in Itu, Sao Paulo. Three Aisin Group companies will invest a total of JPY 4.1 billion in the new plant.
-Indonesia: the Company and Aisin Seiki will build their respective plants on a site in Karawang that was newly acquired by the Aisin Group. Investment by the two companies is expected to amount to JPY 7.5 billion.

-Czech Republic: the Company established a brake parts manufacturing subsidiary in Pisek, the Czech Republic, and will begin production in Europe in 2015.

-South Africa: the Company established ADVICS South Africa (Pty) Ltd. in March 2014. The new production subsidiary plans to rent part of Toyota Tsusho Corporation's local plant.

Planned Capital Investment

-The Company plans to invest JPY 28,600 in equipment to produce brake- and chassis-related products (as of March 31, 2015).