GS Yuasa International Ltd. Business Report FY ended Mar. 2015

Financial Overview

(in millions of JPY)
FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 Rate of Change
(%)
Factors
Overall
Sales 369,760 347,995 6.3 -Sales reached a record high, as the Company acquired majority stakes in local operations and added them to its consolidated financial statements. A weak yen and stronger sales of automotive lithium-ion batteries also boosted sales.
Operating income 20,914 18,197 14.9 -Operating profit and ordinary profit reached record highs due to an increase in sales of automotive lithium-ion batteries and lower selling prices outside Japan.
Ordinary income 22,357 20,333 10.0
Net income 10,043 9,982 0.6 -
Domestic Automotive Batteries
Sales 51,747 56,905 (9.1) -Sales declined y/y due to sluggish demand for automotive lead-acid storage batteries and a decline in sales of other vehicle-related components.
Operating income 2,397 3,310 (27.6) -Operating profit declined y/y due mainly to higher lead prices.
Overseas Operations
Sales 183,759 164,252 11.9 -Sales increased y/y as a result of turning a Thai affiliate and an Indonesian subsidiary into a consolidated subsidiary. A weak yen also boosted sales.
Operating income 10,786 8,996 19.9 -Operating profit increased y/y due to lower lead prices and reduced sales prices.
Lithium-ion Batteries
Sales 45,181 32,501 39.0 -Sales increased y/y due to growth in sales of lithium-ion batteries for HVs and PHVs.
Operating income (2,626) (7,243) - -Smaller operating loss due to improved capacity utilization and the effects of streamlining efforts.

Operations outside Japan


-The Company plans to increase production of automotive lead-acid batteries in Thailand to 5 million units per year by FY 2018 ending March 2019. This will be a 70 percent gain from the 3 million units produced in FY 2012. Demand for these batteries is expected to grow significantly in the Thai market, where the government has introduced the second phase of its eco-car program and Japanese automakers are stepping up production. The company expects to supply its batteries not only for vehicles sold in Thailand, but also for those destined for exports to its neighboring countries such as Myanmar, Cambodia, and Laos. In these countries including Thailand, sales of vehicles with engine stop-start systems are likely to expand, and these vehicles use lead-acid batteries. The company expects that this whole region will develop into huge OEM and after-sales markets in the future, and intends to utilize its Thai operations as its major supply hub. (From an article in the Nikkan Jidosha Shimbun on April 17, 2014)

Third mid-term business plan

-FY ending March 2016 is the final year of the Company's third mid-term business plan. Although economies are slowly recovering both in Japan and outside Japan, the Company predicts that it will be unable to achieve its financial targets (sales of JPY 450 billion, operating profit of JPY 36 billion, and operating margin of 8.0%), as each business segment is facing difficult conditions.

Financial targets by segment

FY ending Mar. 31, 2016 Sales
(in billions of JPY)
Operating Income
(in billions of JPY)
Domestic Automotive Batteries 62.0 6.5
Domestic Industrial Batteries and Power Supplies 87.0 12.5
Overseas Operations 228.0 15.5
Lithium-Ion Batteries 60.0 1.0
Others 13.0 0.5
Total 450.0 36.0

Earnings Forecast by Segment for FY ending Mar. 31, 2016

(in billions of JPY)
FY ending Mar. 31, 2016
(Forecast)
FY ended Mar. 31, 2015
(Actual)
Rate of
Change
(%)
Domestic Automotive Batteries Sales 52.0 51.7 0.6
Operating income 3.0 2.4 25.0
Domestic Industrial Batteries and Power Supplies Sales 81.0 79.8 1.5
Operating income 9.0 8.7 3.4
Overseas Operations Sales 218.0 183.8 18.6
Operating income 12.0 10.8 11.1
Lithium-Ion Batteries Sales 40.0 45.2 (11.5)
Operating income 0.0 (2.6) -
Others Sales 9.0 9.2 (2.2)
Operating income 0.0 1.7 -
Total Sales 400.0 369.8 8.2
Operating income 24.0 20.9 14.8

Note: As part of its structural reorganization, the Company transferred its lighting and membrane system business to its Domestic Industrial Batteries and Power Supplies Division, effective FY ended March 2015.

Initiatives to achieve objectives set for FY ending March 2016

-Domestic Automotive Battery Division: expand sales of high-value added products such as batteries for vehicles with an automatic engine stop-start system

-Lithium-on Battery Division: return to profitability by responding to changes in business environment

Company
Major initiatives
Lithium Energy Japan -Streamline purchasing processes by utilizing efficient logistics systems
-Collaborate with business partners in order to improve productivity
Blue Energy -Improve profitability by increasing yield ratio and reducing costs
Lithium Energy and Power -This joint venture was formed in November 2013 with Robert Bosch and Mitsubishi Corporation
–It began developing next-generation lithium-ion batteries at the end of 2013
-In 2015, the JV began preparing for mass-production. It aims to commence mass production in 2017.

R&D Expenditure

(in millions of JPY)
FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Domestic Automotive Batteries 685 676 663
Domestic Industrial Batteries and Power Supplies 2,258 1,923 1,793
Overseas Operations 643 658 684
Lithium-Ion Batteries 3,006 3,046 2,735
Others 131 191 351
Total 6,725 6,495 6,227

-R&D Expenditure for FY ending March 2016 is planned to be JPY 7,000 million.

R&D Facilities

Business Unit Company Division
Domestic Automotive Batteries GS Yuasa International Ltd. Technological development division
Overseas Operations Plants outside Japan
Technological development division
GS Yuasa International Ltd. Technological development division
GS Yuasa Asia Technical Center Ltd. (Thailand) -
Lithium-Ion Batteries GS Yuasa International Ltd. Research and technical development division
Lithium-ion battery development division
Lithium Energy Japan Technical Division
Blue Energy Co., Ltd. Technological development division

R&D Activities

Automotive business in Japan
-For vehicles equipped with an automatic engine stop-start system, the Company developed high-performance batteries that use lithium as an electrode material. The new batteries offer a 300% increase in charging capacity compared with the Group's conventional batteries. The Company adopted these technologies also for aftermarket products and released the ECO.R LONG LIFE series batteries, the industry's first of its kind that can support both conventional vehicles and those with an automatic engine stop-start system. Furthermore, the Company added two new products, K-42/50B19 and T-110/120D31, to the battery series.

Outside Japan

-In the area of automotive lead-storage batteries, the Company is working on developing batteries for charged-controlled vehicles and vehicles equipped with an automatic engine stop-start system. These batteries are targeted at vehicles being produced and used outside Japan.

Lithium-on batteries
-The Company is working on basic research on medium- and large-size batteries for improving their reliability, safety, and their energy density. In order to further improve the battery performance, the Company will search for and evaluate the performance of materials needed for next-generation positive electrodes and next-generation negative electrodes. It is also studying post-lithium-ion batteries.

-Lithium Energy Japan began operations at its Ritto Plant No.1 in April 2012, and began production at its Ritto Plant No.2 in October 2013. The company currently has the capacity to produce batteries for 10,000 EVs and 50,000 PHVs per year. It plans to produce these batteries mainly for Mitsubishi Motors.

-Blue Energy Co., Ltd. is collaborating with Honda R&D Co., Ltd. to develop batteries for various vehicles.

Capital Expenditure

(in millions of JPY)
FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Domestic Automotive Batteries 783 1,096 641
Domestic Industrial Batteries and Power Supplies 1,541 1,659 1,044
Overseas Operations 3,994 5,710 4,078
Lithium-Ion Batteries 1,877 6,912 24,943
Others 2,811 3,191 2,451
Total 11,008 18,570 33,159

-In FY ending March 2016, the Company plans to invest JPY 17,000 million in plants and equipment (JPY 3,400 million in the Lithium-ion battery business, JPY 5,500 million in Overseas operations, and JPY 8,100 million in domestic and other business)

Planned Capital Investment

(As of Mar. 31, 2015)
Facilities
(Location)
Equipment Amount
(in millions of JPY)
Date of start Scheduled date of completion Purpose of the investment
GS Yuasa International Ltd.
(Kyoto, Japan)
Facilities for manufacturing storage batteries, etc. for automotive applications 1,847 Mar. 2015 During FY ending Mar. 31, 2016 or after Reduce costs, add new manufacturing tools
Facilities for manufacturing lithium-ion batteries for automotive applications 350 Mar. 2015 During FY ending Mar. 31, 2016 or after Expand R&D facilities
R&D facilities, production facilities 3,431 Mar. 2015 During FY ending Mar. 31, 2016 or after Expand R&D facilities, reduce costs, new manufacturing tools
Lithium Energy Japan
(Shiga, Japan)
Facilities for manufacturing lithium-ion batteries for automotive applications 2,311 Mar. 2015 During FY ending Mar. 31, 2016 or after Add new manufacturing facilities and increase production capacity
Blue Energy Co., Ltd.
(Kyoto, Japan)
Facilities for manufacturing lithium-ion batteries for automotive applications 2,424 Mar. 2015 During FY ending Mar. 31, 2016 or after Add new manufacturing tools
Tianjin GS Battery Co., Ltd.
(Tianjin, China)
Facilities for manufacturing lead storage batteries 1,243 Dec. 2014 During FY ending Mar. 31, 2016 or after Increase production capacity
Siam GS Battery Co., Ltd.
(Samutprakarn, Thailand)
Facilities for manufacturing lead storage batteries 803 Dec. 2014 During FY ending Mar. 31, 2016 or after Increase production capacity
PT. Trimitra Baterai Prakasa
(Jakarta, Indonesia)
Facilities for manufacturing lead storage batteries 622 Dec. 2014 During FY ending Mar. 31, 2016 or after Increase production capacity
Century Yuasa Batteries Pty Ltd.
(Queensland, Australia)
Facilities for manufacturing lead storage batteries 578 Dec. 2014 During FY ending Mar. 31, 2016 or after Increase production capacity
Yuasa Battery (Shunde) Co., Ltd.
(Guangdong, China)
Facilities for manufacturing lead storage batteries 469 Dec. 2014 During FY ending Mar. 31, 2016 or after Increase production capacity

Data

Mar. 31, 2015 Mar. 31, 2014 Mar. 31, 2013
Domestic Automotive Batteries 719 748 791
Domestic Industrial Batteries and Power Supplies 1,472 1,333 1,304
Overseas Operations 10,970 10,061 9,065
Lithium-Ion Batteries 544 543 454
Others 801 924 985
Total 14,506 13,609 12,599

Sales by Segment

(in millions of JPY)
  FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Sales Operating income Sales Operating income Sales Operating income
Domestic Automotive Batteries 51,747 2,397 56,905 3,310 55,648 3,931
Domestic Industrial Batteries and Power Supplies 79,822 8,657 79,242 12,199 72,427 10,813
Overseas Operations
183,759
10,786
164,252
8,996
119,885
6,380
Lithium-Ion Batteries 45,181 (2,626) 32,501 (7,243) 10,597 (11,249)
Others 9,248 1,698 15,094 936 15,951 (100)
Total 369,760 20,914 347,995 18,197 274,509 9,775

-As part of its structural reorganization, the Company transferred its lighting and membrane system business to its Domestic Industrial Batteries and Power Supplies Division, effective FY ended March 2015.

Sales by Geographic Area

(in millions of JPY)
  FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Japan 175,877 179,357 152,699
Asia 112,859 94,705 61,917
Europe & America 55,227 49,039 38,574
Others 25,795 24,892 21,319
Total 369,760 347,995 274,509

(Note) Overall sales are based on customer locations, categorized by country or region.

Consolidated

FY ended Mar. 31, 2011 FY ended Mar. 31, 2012 FY ended Mar. 31, 2013 FY ended Mar. 31, 2014 FY ended Mar. 31, 2015
Sales (million yen) 272,514 285,434 274,509 347,995 369,760
Income from ordinary business activities (million yen) 17,513 17,991 12,258 20,333 22,357
Net income (million yen) 11,722 11,733 5,767 9,982 10,043
Comprehensive income (million yen) 8,395 8,194 8,447 14,376 27,091
Net assets (million  yen) 122,310 136,221 141,189 154,702 182,187
Total assets (million yen) 247,446 278,426 290,368 340,462 359,522
Book value per share (yen) 262.48 278.87 303.65 337.82 390.98
EPS (yen) 28.39 28.42 13.97 24.18 24.33
Diluted EPS (yen) - - - 24.16 22.68
Net asset ratio (%) 43.8 41.3 43.2 41.0 44.9
ROE (%) 11.2 10.5 4.8 7.5 6.7
PER 19.47 15.97 27.27 22.62 22.23
Cash flow from operating activity (million yen) 25,478 8,287 19,069 19,704 19,729
Cash flow from investment activity (million yen) (25,444) (28,660) (29,249) (9,786) (14,519)
Cash flow from financial activity (million yen) 8 13,152 3,839 589 (5,798)
Balance at the term-end of cash and cash equivalents (million yen) 24,030 16,476 11,210 23,392 25,708
Number of employees 12,394 12,265 12,599 13,609 14,506

 

Non Consolidated

FY ended Mar. 31, 2011 FY ended Mar. 31, 2012 FY ended Mar. 31, 2013 FY ended Mar. 31, 2014 FY ended Mar. 31, 2015
Sales (million yen) 5,016 4,785 4,800 5,936 4,937
Income from ordinary business activities (million yen) 4,408 4,207 4,663 6,223 5,409
Net income (million yen) 4,251 3,737 4,171 5,527 4,636
Paid-in Capital (million yen) 33,021 33,021 33,021 33,021 33,021
Number of stock outstanding (1000) 413,574 413,574 413,574 413,574 413,574
Net assets (million yen) 116,969 117,366 118,255 121,269 121,371
Total assets (million yen) 147,492 146,861 151,657 161,809 161,732
Book value per share (yen) 283.33 284.30 286.46 293.77 294.04
Dividend per share (yen) 8 8 6 8 10
EPS (yen) 10.30 9.05 10.11 13.39 11.23
Diluted EPS (yen) - - - 13.38 10.45
Net asset ratio (%) 79.3 79.9 78.0 74.9 75.0
ROE (%) 3.7 3.2 3.5 4.6 3.8
PER 53.70 50.15 37.70 40.85 48.16
Payout ratio (%) 77.7 88.4 59.4 59.7 89.0
Number of employees 11 10 11 11 11