Aisin Seiki Co., Ltd. Business Report FY ended Mar. 2016

Financial Overview

(in million JPY)
FY ended Mar. 31, 2016 FY ended Mar. 31, 2015* Rate of Change
Sales 3,243,178 2,964,619 9.4 -Sales increased y/y thanks to greater vehicle production volumes at major customers overseas.
Operating profit 176,435 166,103 6.2 -Ordinary income declined y/y due to a rise in R&D costs, and to an increase in depreciation costs.
-Unfavorable currency translation.
Ordinary income 186,887 188,377 (0.8)
Profit for the year attributable to owners of the parent 96,974 77,550 25.0
Aisin Seiki Group
Sales 1,178,873 1,085,530 8.6 -Sales increased y/y thanks to greater vehicle production volumes at major customers overseas.
Operating profit 61,505 48,170 27.7 -Operating profit increased y/y due to a rise in sales amount, and result of the earnings structure reinforcement activity.

*From this consolidated reporting period, the method for reporting domestic sales in Japan by the Company and some of its subsidiaries was changed, and is now being reported on an inspection basis. Previously, sales were reported on a shipment basis, which emphasized profits. As a result, for the fiscal year ending March 2015, the figures here reflect the changes in this accounting policy, after retroactive adjustments were made.

Aisin Group's Business Restructuring Program

-Reorganizing the following three segments:

  • Manual transmission business: integrating Toyota's development and production functions into Aisin AI
  • Brake business: integrating development and production functions of Toyota, Denso, and Aisin Seiki into Advics
  • Body parts business: Aisin Seiki converting Shiroki Corporation into its wholly owned subsidiary

Manual transmission
-Toyota Motor Corporation, Aisin Seiki Co., Ltd., and its subsidiary Aisin AI Co., Ltd., have made a further agreement regarding the consolidation of development and production of manual transmissions under Aisin AI. The development of manual transmissions for mass-produced vehicles will be consolidated at Aisin AI by the end of 2016. Toyota's manual transmission production functions in Japan will be transferred to Aisin AI's plant in Japan around February 2016. Outside Japan, Aisin Seiki plans to acquire a stake in Toyota's subsidiaries, Toyota Autoparts Philippines Inc. and Toyota Kirloskar Auto Parts Private Ltd. in India in January 2016 and July 2016, respectively, to strengthen its competitiveness. (From an article in the Nikkan Jidosha Shimbun on October 1, 2015)

-The Company and Shiroki Corporation announced that they have signed a share exchange agreement to turn Shiroki into a wholly-owned subsidiary of Aisin Seiki, effective April 1, 2016. In accordance with this transaction, Shiroki is slated to be delisted on March 29, 2016. After the transaction, Shiroki’s corporate name and head office will remain the same. The two companies reached a basic agreement on this consolidation in December 2014. (From a press release on December 23, 2015)

-Toyota Boshoku Corporation, Aisin Seiki Co., Ltd., and Shiroki Corporation announced that they have signed a contract under which Aisin Seiki and Shiroki will transfer their seat structure business to Toyota Boshoku. (From an article in the Nikkan Jidosha Shimbun on May 14, 2015)

Reorganizing Domestic Production Structure
-The Company announced that it will integrate its Driving Safety Product Group and Electronic Parts Group on April 1, 2016. The new group will be named the Driving Safety and Electronic Products Group. The Company is transferring its control brake business to its subsidiary Advics Co., Ltd. (Kariya City, Aichi Pref.) due to the reorganization of the Toyota Group’s parts business. Since the number of employees in the Driving Safety Product Group manufacturing control brakes will decrease, the Company will integrate the two groups to improve the efficiency of its operations and development work. This will reduce the number of business groups at the Company from seven to six. (From an article in the Nikkan Jidosha Shimbun on February 27, 2016)

Business trend

-The Company will make its first foray into the camera monitor aftermarket in fiscal year 2016 (ending in March 2016). The Company's first camera monitor will be a "rear multiview camera" that allows the viewing of blind spots with a camera mounted on the rear license plate. The Company will market it via Tacti Corporation, a Toyota Group company engaged in the distribution of automotive parts and accessories, and other parts trading companies. The demand for camera monitor systems is growing, primarily from new car drivers who want to improve the safety performance of their vehicles, which prompted the Company's decision. The rear multiview camera the company is preparing for sale displays images acquired with the camera on the car navigation system monitor to improve safety for parking and other driving activities. It offers normal and wide view modes that enable the driver to confirm a wide area around the rear of the car. The camera ensures high-definition images of 1 million pixels and provides clear images even at night. Although similar products are already on the market, the Company will sell it by appealing to the high image quality, nighttime performance, and other advantages of the camera. (From an article in the Nikkan Jidosha Shimbun on March 29, 2016)

Outlook for FY ending Mar. 31, 2017

(in billion JPY)
FY ending Mar. 31, 2017
FY ending Mar. 31, 2016
(Japan standard)
(Actual Results)
Rate of Change
Sales 3,400.0 3,243.1 4.8
Operating profit 175.0 176.4 (0.8)
Ordinary income - 186.8 -
Profit for the year attributable to owners of the parent 90.0 96.9 (7.2)

-In the fiscal year ending March 2017, profit increases are expected in line with higher sales. However, the Company expects to lose JPY 38.0 billion due to negative currency translation and lose JPY 20.0 billion due to the negative impact of the Kumamoto earthquakes; in addition to higher fixed costs such as increased depreciation costs and R&D expenses. An increase in profit will be the result of doing accounting based on IFRS (JPY 16.8 billion) and the price difference gained through exchanging shares with Shiroki (JPY 19.5 billion). In the end, operating profit is expected to be on par with that reported during the previous fiscal year.

Outlook for sales by region

(in billion JPY)
FY ending Mar. 31, 2017
FY ending Mar. 31, 2016
(Japan standard)
(Actual Results)
Rate of Change
Japan 1,992.0 1,824.1 9.2
North America 527.0 564.4 (6.6)
Europe 280.0 281.4 (0.5)
China 345.9 330.9 4.5
Asia and others 255.1 242.1 5.4

>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)

R&D Expenditure

(in 100 million JPY)
FY ended Mar. 31, 2016 FY ended Mar. 31, 2015 FY ended Mar. 31, 2014
Aisin Seiki Group 689 670 651
Aisin AW Group 658 554 524
ADVICS Group 193 190 195
Aisin Takaoka Group 12 14 13
Others 73 62 58
Total 1,626 1,491 1,443

-The Company has set the highest levels of capital and research and development (R&D) expenditures for its key group companies for the fiscal year ending in March 2016 (FY 2015). The Company will increase its R&D costs by JPY 10.9 billion to JPY 160 billion from the FY 2014 levels. Tha Company has raised the R&D budget on the assumption that regulations on fuel economy, exhaust gas emissions and automotive safety will be tightened globally over the medium- to long-term. (From an article in the Nikkan Jidosha Shimbun on May 8, 2015)

R&D Facilities

-The Company will strengthen its research and development (R&D) in China. Its local R&D subsidiary, Aisin (Nantong) Technical Center of China Co., Ltd., will construct a new building with evaluation facilities and a proving ground. This will allow the Company to conduct R&D activities from parts design through assessment and to develop automotive parts that meet the needs of both non-Chinese automakers and local automakers in China in a timely manner. The new building is planned to be completed in December 2015 and will be operational in January 2016. An 11,400-square-meter building and a 240-meter proving ground will be built on a site of 26,097 square meters. The capital investment is JPY 1 billion for the building and is JPY 2 billion for the evaluation facilities over the next two years. The subsidiary will boost its workforce to 200 by 2020 from 80 in 2015. (From an article in the Nikkan Jidosha Shimbun on April 21, 2015)

Introduction of development tools common to the group

-The Company has started standardizing basic software platforms for electronic components among its group companies. Aisin Seiki, Aisin AW Co., Ltd. (headquartered in Anjo City, Aichi Prefecture) and Advics Co., Ltd. (headquartered in Kariya City, Aichi Prefecture), have introduced U.S.-based Mentor Graphics, Inc's Automotive Open System Architecture (AUTOSAR) development tool. Three companies will gradually standardize their software platform bases for chassis components, automatic transmissions and electronic braking systems. Until now, the three companies have individually developed software for their automotive components. Therefore, the standardization of the basic software platforms will lead to a substantial improvement in development efficiency. To build on the standardized software platforms, each company will concentrate on developing individual applications that determine the competitiveness of its products to maintain its competitive edge. (From an article in the Nikkan Jidosha Shimbun on April 21, 2015)

R&D Activities

-The Company focuses its R&D activities on advanced automotive technologies to support product systemization, modularization and ITS products. It is also expanding the scope of its development activities into scientific researches related to living environment and biological systems, fuel cells and laser technologies. The Company's recent development achievements include electric AWD unit for HEV and intelligent parking assist system.

Product Development

Electric AWD unit
-On January 21 the company announced that they jointly developed a new electric four-wheel drive (AWD) unit together with two other Aisin Group companies and Toyota Motor Corporation. The unit was used in the new "Prius" that was launched by Toyota in December 2015. In addition to being smaller than those made by competitors, it achieves improved performance by utilizing features such as a magnet-less induction motor that suppresses drag loss from magnetic force. The Company oversaw all aspects of the AWD unit design, Aisin AW Co., Ltd. handled the motor, and Aisin AI Co., Ltd. worked on parts like the gears and differentials. The new electronic AWD unit is the first new product jointly developed by Group companies. The new unit is also the Company's first electronic 4WD unit. (From an article in the Nikkan Jidosha Shimbun on January 22, 2016)

-Toyota Motor Corporation has adopted a method of attaching seats directly to the floor in the new "Prius" in collaboration with three Toyota group companies, Toyota Boshoku Corporation, Aisin Seiki Co., Ltd., and Shiroki Corporation. This eliminates the need for brackets to install seats, improves stability against horizontal vehicle movement, and giving the driver a sense of control unified with the car body. This new installation method became possible with the introduction of the Toyota New Global Architecture (TNGA) platform, and will be applied to other Toyota models as well. (From an article in the Nikkan Jidosha Shimbun on January 18, 2016)

Capital Expenditure

(in million JPY)
FY ended Mar. 31, 2016 FY ended Mar. 31, 2015 FY ended Mar. 31, 2014
Aisin Seiki Group 105,570 107,262 81,673
Aisin Takaoka Group 23,077 21,190 25,377
Aisin AW Group 123,236 78,820 74,854
ADVICS Group 23,730 25,800 13,180
Others 19,996 15,552 10,413
Elimination (1,422) (809) (763)
Overall 294,188 247,816 204,736

-During FY ended March 2016, the Company advanced production capacity for the production of automatic transmissions with production cooperation in the group, as well as worked to concentrate capital investments.

-The Company announced that it has developed its "Sixth Environmental Action Plan," a five-year plan starting from April 2016. The Company has set a long-term target of achieving zero CO2 emission from the present through 2050. During the five-year period of the sixth action plan the Company will establish a clean energy plant that operates with half the energy of conventional plants in order to realize this goal. With the clean energy plant as a model, the Company will strive to reduce its environmental impact by utilizing its know-how when building new plants, as well as for renovating existing plants. The new Mexican plant that will open in 2018 will be the Company's first clean energy plant. The Company will expand utilization of energy saving technologies and renewable energies, and also create a road map for expanding the use of clean energy plants like this around the world. (From an article in the Nikkan Jidosha Shimbun on March 31, 2016)

Investment Outside Japan

-In January 2016, the Company revealed that the Company will build a new JPY 6-billion-yen plant in Mexico. The plant will produce sunroofs and door frames, and is scheduled to be operational in January 2018. The Company has a plant in Northern Mexico that produces parts such as door frames, but these are mainly for export to the U.S. The new plant will supply parts for car makers that have production facilities in Mexico. Production capacity in the country is rising as Toyota is currently building a new plant there among other such activities. The Company will expand investments to meet rising demand in Mexico, with the aim of winning new orders. (From an article in the Nikkan Jidosha Shimbun on January 20, 2016)

-Tangshan Aisin Automotive Parts Co., Ltd., a subsidiary of the Company, announced that it has finished the third phase of its plant construction project. Approximately CNY 350 million was invested in this final phase, and a plant with a floor area of 32,063.7 square meters has been completed. The plant will produce automotive parts, precision stamping dies, precision hollow casting dies, and jigs for dies. The Company expects that the plant will generate CNY 380 million in sales when it begins full-scale production. The total investment in this three-phase project has reached CNY 1.5 billion. It is the Company's largest investment project in China. (From a press release on May 27, 2015)

Planned Capital Investments

(As of Mar. 31, 2016)
Planned investment
(in million JPY)
Mainly for the following facilities
Aisin Seiki Group 109,900 Facilities to produce vehicle bodies and engines
Aisin Takaoka Group 16,800 Metal-casting facilities
Aisin AW Group 78,000 Facilities for producing drivetrains
ADVICS Group 43,600 Facilities for producing brakes and chassis
Others 13,900 Facilities for producing drivetrains
Elimination (5,200) -
Total 257,000 -

-FY ended March 2017, the investing estimated amount will be JPY 257 billion, fall 12.6% from a year ago. The main reason is investment to a new and improved products which correspond to the model changes for customers, and R&D of new technology and new products.