ADVICS Co., Ltd. Business Report FY ended Mar. 2016

Recent Years

Business Overview (FY ended Mar. 31, 2016)

-Sales for FY ended March 31, 2016 reached JPY 551,200 million, up 4.5% year-on-year due to growth in vehicle production by the Company's major customers outside Japan, especially in North America.
-Operating profit was JPY 8,800 million, a decrease of 8.0% year-on-year. The decline was due to increased costs for depreciation allowance, although there were some positive impacts of the Company's profitability improvement efforts and a weak yen.

Business Plan

-Toyota Motor Corporation (Toyota) announced that Aisin Seiki Co., Ltd. (Aisin), Denso Corporation (Denso), Sumitomo Electric Industries, Ltd. (Sumitomo Electric) and Toyota have agreed to increase the capital and adjust the share-holding ratio of Advics, Co., Ltd. (Advics), a brake manufacturer in Kariya, Aichi Prefecture. In September 2016, Advics will issue new stocks of JPY 10.338 billion through third-party allocation with Aisin, Toyota, and Denso underwriting the sale. At the same time Sumitomo Electric will transfer a portion of its holdings to Denso. As a result, Aisin's stake in Advics will change from 55% to 51%, Denso's stake from 18% to 34%, and Sumitomo Electric's stake from 18% to 6%. Toyota's stake will remain unchanged at 9%. The increased capital will be used to strengthen Advics' business foundation. (From an article in the Nikkan Jidosha Shimbun on May 2, 2016)

Recent Development Outside Japan

-Advics Co., Ltd. announced that it has started supplying its disc brake calipers for Daimler’s Mercedes-Benz cars. The products are manufactured at its subsidiary, ADVICS Manufacturing Czech s.r.o., in the Czech Republic. (From a press release on December 24, 2015)

Explosion at the Kariya Plant

-At 12:05 p.m. on May 30, an explosion occurred at the Kariya Plant of Advics, Co., Ltd., which is a major brake system manufacturer and subsidiary of Aisin Seiki Co., Ltd. Four people were injured and taken to the hospital. They remain conscious. According to the company, a gas explosion happened near a painting line for brake parts at the plant. The explosion caused a fire that was put out. The cause of the fire is under investigation. The plant suspended operations and all the employees evacuated. (From an article in the Nikkan Jidosha Shimbun on May 31, 2016)

-On May 31, Advics, Co., Ltd. gradually restarted operations on production lines other than the painting line on the second floor at its Kariya Plant where an explosion occurred on May 30. There is no time frame for restarting production on the painting line because the fire department is investigating the damaged line area to find the cause of the accident. Production of brake boosters and other components that account for 15% of the plant's total sales is expected to be suspended for the time being. Because of this, the company is making adjustments to have alternative production of these parts carried out at its other plants. (From an article in the Nikkan Jidosha Shimbun on June 1, 2016)

-Advics Co., Ltd. (Advics, Kariya City, Aichi Prefecture) announced the cause of an explosion that occurred at its Kariya Plant brake parts coating line on May 30, 2016, and what countermeasures the company will take in the future. Advics believes that there was unburnt gas in the drying oven during repair work for a ventilating fan, which exploded when the fan was turned on afterward. As a result of this, when fans are turned off in the future, the company will automatically shut down drying and deodorizing oven burners, and take other safety measures. The coating line will be restored by August. Currently, other Aisin Group companies are doing substitute production for brake boosters, parking brakes, and other parts made by Advics. The company is aiming to restart normal operations at the Kariya Plant in August. (From an article in the Nikkan Jidosha Shimbun on July 2, 2016)

Manufacturing plant restructuring

-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)

R&D Expenditure

(in millions of JPY)
FY ended Mar. 31, 2016 FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Total 19,300 19,000 19,500 19,300

Product Development

-Advics Co., Ltd. will draw a technology roadmap for the next 10 years in order to increase its development efficiency. The long-term plan is scheduled to be finalized by the end of 2016. Special focus will be placed on next-generation technologies and products for Advanced Driver Assistance Systems (ADAS) and autonomous vehicles, as well as those that can reduce environmental impact. The company believes that brake systems will hold a key to high performance ADAS, and will step up exploratory development for sophisticated brake technologies that can stop the car safely and can be integrated into the next-generation ADAS. (From an article in the Nikkan Jidosha Shimbun on April 20, 2016)

-Advics Co., Ltd. (headquartered in Kariya, Aichi Prefecture) has developed a new electronic braking system with improved hydraulic response. The new braking system has been chosen for the fully redesigned Prius hybrid which will be launched soon by Toyota Motor Corporation. The new braking system offers a smoother braking feel and an extended range of energy recovery that helps reduce fuel consumption of vehicles. Furthermore, the braking system provides functional extensibility to support advanced driver assistance system control in the future. (From an article in the Nikkan Jidosha Shimbun on October 27, 2015)

Capital Expenditure

(in millions of JPY)
FY ended Mar. 31, 2016 FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Total 23,730 25,800 13,180 11,412

Planned Capital Investment

-The Company plans to invest JPY 43,600 in equipment to produce brake- and chassis-related products (as of March 31, 2016).