Aisin Seiki Co., Ltd. Business Report FY ended Mar. 2017

Financial Overview

(in million JPY)
FY ended Mar. 31, 2017 FY ended Mar. 31, 2016 Rate of Change
(%)
Factors
Overall
Sales 3,564,306 3,243,178 9.9 -Unit sales of new vehicles increased
Operating profit 190,825 176,435 8.2 -Increased sales; and the favorable results of initiatives to strengthen profit structure, such as cost improvements
Ordinary income 214,005 186,887 14.5
Profit for the year attributable to owners of the parent 123,474 96,974 27.3
Aisin Seiki Group
Sales 1,353,101 1,181,240 14.5 -Strong sales worldwide of chassis parts
-Gains from turning Shiroki Corporation into a wholly owned subsidiary
Operating profit 80,593 70,888 13.7 - Increased sales; and the result of initiatives to strengthen profit structure, such as cost improvements

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

Management Consolidation
Transfer of Piston Business to Art Metal Manufacturing
-The Company and Art Metal Mfg. Co., Ltd. (Art Metal Mfg.) announced that they have agreed to the transfer of Aisin Seiki's piston business to Art Metal Mfg. The two companies agreed on a business merger in 2016. Through the business transfer, Aisin Seiki and Art Metal Mfg. will enhance their competitiveness by utilizing their technical expertise, customer foundation and overseas locations, and eliminating redundant business functions. The Company will transfer its piston development unit on April 1 and piston production unit thereafter. (From an article in the Nikkan Jidosha Shimbun on March 25, 2017)

-The Company announced that it has acquired additional 8,835,000 of outstanding shares in Art Metal Mfg. Co., Ltd. (Nagano, Japan) and now owns 65% of the voting shares in Art Metal. In April 2016, the two companies reached a basic agreement on their business integration, and they have been discussing plans including Aisin Seiki's acquiring the majority ownership of Art Metal shares. Art Metal is a major piston supplier, and its sales in 2015 were the third highest in the global piston market. Aisin Seiki's piston sales were the fourth highest, and the integration is expected to increase the Group's share in the market to approximately 17%. Currently, the top spot is taken by Germany-based Mahle GmbH that has a 26% market share, and second place is taken by U.S.-based Federal-Mogul Holdings Corporation that has an 18% share. (From an article in the Nikkan Jidosha Shimbun on February 3, 2017)


Reorganizing Domestic Production Structure
-The Company announced the details of its virtual company (VC) system to be launched with other Aisin group companies on April 1, 2017. Four inter-organizational companies to be set up for each core business will collaborate in research and development and business operations. Four presidents have been appointed to head up each company. Kazuhisa Ozaki, currently director and senior managing officer at Aisin Seiki (to become president of Aisin AW in June) will assume the presidency at the Powertrain VC; Satoshi Ogiso, currently president of ADVICS Co. Ltd., will be president of the Driving Safety VC; Masahiro Nishikawa, currently senior managing officer at Aisin Seiki, will become president of the Car Body VC; and Hiroshi Uenaka, currently senior managing officer at Aisin Seiki, will take the post of president of the Information and Electronics VC. (From an article in the Nikkan Jidosha Shimbun on February 25, 2017)

Outlook for FY ending Mar. 31, 2018

(in billion JPY)
FY ending Mar. 31, 2018
(IFRS)
(Forecast)
FY ending Mar. 31, 2017
(Japan standard)
(Actual Results)
Rate of Change
(%)
Sales 3,670.0 3,562.6 3.0
Operating profit 230.0 228.6 0.6
Profit for the year attributable to owners of the parent 116.0 126.6 (8.4)

Outlook for sales by region

(in billion JPY)
FY ending Mar. 31, 2018
(IFRS)
(Forecast)
FY ending Mar. 31, 2017
(Japan standard)
(Actual Results)
Rate of Change
(%)
Japan 2,202.0 2,073.1 6.2
North America 538.0 568.0 (5.3)
Europe 295.0 309.9 (4.8)
China 368.0 360.7 2.0
Asia and others 267.0 250.6 6.5


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

R&D Expenditure

(in 100 million JPY)
FY ended Mar. 31, 2017 FY ended Mar. 31, 2016 FY ended Mar. 31, 2015
Aisin Seiki Group 720 689 670
Aisin AW Group 692 658 554
ADVICS Group 180 193 190
Aisin Takaoka Group 12 12 14
Others 71 73 62
Total 1,677 1,626 1,491

Capital Expenditure

(in million JPY)
FY ended Mar. 31, 2017 FY ended Mar. 31, 2016 FY ended Mar. 31, 2015
Aisin Seiki Group 102,805 105,570 107,262
Aisin Takaoka Group 15,781 23,077 21,190
Aisin AW Group 72,319 123,236 78,820
ADVICS Group 39,771 23,730 25,800
Others 13,378 19,996 15,552
Elimination (6,607) (1,422) (809)
Overall 237,449 294,188 247,816

-In the fiscal year that ended in March 2017, the Company spent JPY 237.4 billion in capital expenditures, mainly to produce and revamp new products that comply with redesigned vehicles built by its major customers, and to develop new technology and new products.



Investments in Japan
-The Company announced on May 26 that a new plant for aluminum die casting will be constructed within the premises of its Nishio Plant in Nishio City, Aichi Prefecture, and the new plant will start producing automatic transmission cases in April 2017. Aisin Seiki will invest JPY 11.14 billion in the new plant including for buildings and facilities. The new plant will be built because Aisin AW Co., Ltd., a subsidiary of Aisin Seiki, will boost production of automatic transmissions. The Nishio Plant produces automatic transmission cases, engine crankcases and other die casting parts, with an annual production capacity of 100,000 tons. The new 11,500 square-meter die casting plant will have an annual production capacity of 13,000 tons. (From an article in the Nikkan Jidosha Shimbun on May 27, 2016)

Investments outside Japan

-Aisin USA Manufacturing announced plans to invest more than USD 99.9 million to expand its manufacturing operations in Seymour, Indiana, creating up to 100 jobs by the end of 2018. Aisin USA Manufacturing, which manufactures automotive components and systems, such as door frame components, latching systems, seating and trim molding, plans to begin work on upgrades in late 2016. The company supplies parts for the Honda Odyssey, Chevrolet Traverse, Toyota Highlander, Toyota Camry, Toyota Avalon, Toyota Corolla, Toyota RAV 4 and Lexus models. (Indiana Economic Development corporation release from August 23, 2016)



Planned Capital Investments

(As of Mar. 31, 2017)
Planned investment
(in million JPY)
Mainly for the following facilities
Aisin Seiki Group 135,500 Facilities to produce vehicle bodies and engines
Aisin Takaoka Group 18,300 Metal-casting facilities
Aisin AW Group 81,000 Facilities for producing drivetrains
ADVICS Group 22,000 Facilities for producing brakes and chassis
Others 11,100 Facilities for producing drivetrains
Elimination (7,900) -
Total 260,000 -


-In the fiscal year that ends in March 2018, the Company plans to spend JPY 260.0 billion in capital investments, which is a 11.7% y/y increase. The money will be spent mainly to produce and revamp new products that comply with redesigned vehicles built by its major customers, and to develop new technology and new products.