Kayaba Industry Co., Ltd. (KYB) Business Report FY ended Mar. 2013

Business Highlights

Financial Overview

(in millions of JPY)
  FY ended Mar. 31, 2013 FY ended Mar. 31, 2012 Rate of Change
Sales 305,752 337,158 (9.3) -
Operating income 10,473 21,537 (51.4) -
Ordinary income 13,561 22,755 (40.4) -
Current net income 7,789 13,897 (44.0) -
AC (Automotive Components)
Sales 184,802 186,664 (1.0) 1)
Operating profit 5,106 6,154 (17.0) -

1) AC (Automotive Components)
Hydraulic Shock-absorbers for Four-wheel Vehicles
-Overall sales of hydraulic shock absorbers for four-wheel vehicles increased 3.0 percent on a year-over-year basis. Sales remained the same level as last year in Japan, while production slowed down in Europe. Sales of these products grew in North America and Thailand. Aftermarket sales were favorable especially in emerging markets.

Hydraulic Equipment for Four-wheel Vehicles
-As for the business performance of power-steering products, the Company's main hydraulic equipment for four-wheel vehicles, sales dropped 9.6 percent from last year's level mainly due to falling demand in China.

Global supply structure for hydraulic pumps for CVTs

-The Company is establishing a global supply structure for hydraulic pumps used in vehicles with continuously variable transmissions (CVTs). Its facilities in Japan and China currently produce a total of 280,000 units per month. In addition, the company will begin their production at its plant in Thailand this fall, which will be followed by operation launch at its new facility in Mexico next year. These two new factories are to output a total of 150,000 pumps per month, boosting the Company's global production capacity to 430,000 units per month, up 50% from the current volume. The enhancement is a move to deal with Japanese OEMs and transmission suppliers' expanding their production volumes. The Company intends to build a global supply structure with these four production facilities to be in line with the local production of its customers. The Company also considers increasing production at each base after 2014. (From an article in the Nikkan Jidosha Shimbun on Mar. 5, 2013)

Establish a co-parent company with Yamaha Motor

- The Company and Yamaha Motor Co., Ltd. announced that they would establish a joint-venture company, which will manufacture and sell hydraulic shock absorbers for motorcycles. The Company will spin off the motorcycle operations of its automotive components business to form KYB Motorcycle Suspension Co., Ltd., in which Yamaha will take a stake as of July 1, 2013. Based on this partnership between the motorcycle manufacturer and the supplier of hydraulic shock absorbers, the two companies aim to develop high quality and cost-competitive shock absorbers for motorcycles, and establish a supply system to deliver products worldwide, including to the emerging markets. The Company and Yamaha will own 66.6% and 33.4% equity stakes respectively in the joint venture, which will be capitalized at 400 million yen. (From an article in the Nikkan Jidosha Shimbun on Jan. 30, 2013)


-FY ended Mar. 31, 2013:  "Special Award for Reducing the Number of Repair Parts" given by Toyota Motor Corp.

Mid-term Management Plan (FY ended Mar. 31, 2012 - FY ending Mar. 31, 2014)

AC (Automotive Components)
Tasks Measures
FY ended Mar. 31, 2013 FY ended Mar. 31, 2014
1. Strengthen R&D structure -USA: Introduce evaluation equipment
-China: Increase engineers
-Europe: Strengthen development resources
-North America: Establish tehnical center newly
-Japan: Concetrate evaluation structure
2. Expand overseas sales for OEMs -Started co-operation with Mando Corp. of Korea in Brazil
(KYB-Mando do Brasil Fabricante de Autopecas S.A. Investment ratio 50%)
-Strengthen global sales structure
-Optimize products for target market
3. Double aftermarket sales of shock absorbers (SA) -Add new production lines (USA, China, Brazil)
-Global sales 16 million pcs. /year
-Establish sales office in Russia.
-Add new production lines (USA, China, Brazil)
-Global sales forecasted 17.5 million pcs. /year
4. Prepare manufacturing structure  of CVT pumps -Thailand: Completed building new plant in Mar. 2013 -Thailand: Start of production in July, 2013.
-Mexico: Complete building of new plant by Dec. 2013.

-Mid-term Business Plan
FY ending Mar. 31, 2014
Sales 400 billion JPY
Operating income ratio 8.0%

Outlook for FY ending Mar. 31, 2014

(in millions of JPY)
  FY ending Mar. 31, 2014
FY ending Mar. 31, 2013
(Actual Results)
Rate of Change
Sales 336,000 305,752 9.9
Operating income 15,800 10,473 50.9
Ordinary income 16,600 13,561 22.4
Net income 10,000 7,789 28.4

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


R&D Expenditure

(in millions of JPY)
  FY ended Mar. 31, 2013 FY ended Mar. 31, 2012 FY ended Mar. 31, 2011
Overall 5,468 4,035 3,218
AC (Automotive Components) 3,398 2,401 1,733

R&D Structure

Facility Location Research Activities
KYB Developmental Experiment Center Kamo-gun,
Gifu Pref.
-Development and testing of suspensions and steering devices for four- and two-wheel vehicles
Basic Technology R&D Center Sagamihara City, Kanagawa Pref. -Conducting basic research on hydraulic equipment and automobile devices and developing new products and technologies.
Electronics Technology Center Sagamihara City, Kanagawa Pref. -Designing and testing of electronic equipment. Accumulating production engineering technologies.
Production Technology R&D Center Kani City,
Gifu Pref.
-Development of technologies to improve product performances and reduce costs.
Machine Tools Center Kani City,
Gifu Pref.
-Accumulating knowhow for designing production equipment.
-Carrying out projects to manufacture production equipment in-house.

Established Electronics Technology Center
-The Company announced that it has established the Electronics Technology Center in Sagamihara City, Kanagawa Prefecture in order to improve its development capabilities in the area of electronics components. Functions of the new facility include designing and assessing of electronics devices and development of their manufacturing technologies. The engineering center, which opened on April 1 with a workforce of 40, is located on the premises of the Basic Technology R&D Center of the KYB Sagamihara Plant. Integration of designing and development activities, human resources, and technical knowhow into the new operation, will allow the company to establish a seamless production system for electronics components, which will include development, prototype manufacturing, up to mass production. The consolidation is expected to reduce production lead-time significantly. (From an article in the Nikkan Jidosha Shimbun on April 13, 2012)

R&D Activities

AC (Automotive Components)
CVT vane pumps for mid- and heavy-duty vehicles
-Products for Jatco: The Company developed high-performance, small displacement CVT vane pumps that can withstand higher revolution. The new products use the same components as existing products and can be produced on the same production lines. Production can be conducted outside Japan.

Adjustable shock absorbers
-Products for Toyota and Nissan: The Company developed shock absorbers that can control damping forces according to the vibration frequency levels. The new products are used on both the Toyota Lexus "LS460" and the Nissan "Cima".

Electric Power Steering systems (EPS)
Products for Subaru vehicles: The Company developed an advanced EPS system featuring a new torque sensor, a high-torque brushless motor, and a noise control mechanism. This EPS technology is used on the "Legacy".

Investment Activities

Capital Expenditure

(in millions of JPY)
  FY ended Mar. 31, 2013 FY ended Mar. 31, 2012 FY ended Mar. 31, 2011
Overall 39,215 27,172 8,915
AC (Automotive Components) 18,086 9,378 3,988
Major investment in FY ended Mar. 31, 2013
AC (Automotive Components)
-Pumps for CVT (Thailand)

Planned Capital Investments

Planned investment FY ending Mar. 31, 2014: 29,100 million JPY
AC (Automotive Components): 17,400 million JPY
-Pumps for CVT (Thailand)
-Plant expansion (Czech Republic)
-Plant for springs for aftermarket (Czech Republic)