KYB Corporation (Formerly, Kayaba Industry Co., Ltd.) Business Report FY ended Mar. 2016

Financial Overview

(in millions of JPY)
FY ended Mar. 31, 2016 FY ended Mar. 31, 2015 Rate of Change
Sales 355,320 370,327 (4.1) -Even though sales of automotive products were strong, the main factor for the drop in sales was the slowdown in the construction-machinery market in China.
Operating income 4,327 14,461 (70.1) -
Profit before tax 2,825 14,892 (81.0) -
Profit/loss for the year attributable to owners of the parent (3,161) 8,036 - -The Company reported an extraordinary loss of USD 62 million (approximately JPY 7,400 million) for payment of a fine under a plea agreement it entered with the U.S. Department of Justice under the US antitrust law.
AC (Automotive Components)
Sales 240,903 237,203 1.6 1)
Operating profit 5,220 8,378 37.7 -

*From the fiscal year that ended in March 2016, the Company started making its consolidated financial statements based on the IFRS.

1) AC (Automotive Components)
Automotive hydraulic shock absorbers (shock absorbers, suspension systems, stay dampers)
-Sales in Japan and Asia were lower, but because of the strong European and American markets, sales increased 2.1% y/y, to JPY 162.6 billion.

Hydraulic devices (power-steering systems and CVT vane pumps)
-Although sales of hydraulic pumps fell, sales of power-steering systems and CVT vane pumps increased.  As a result, sales increased 0.9% y/y to JPY 46.3 billion.

Extraordinary Loss

-The Company announced on September 17, 2015 that the company entered into a plea agreement with the U.S. Department of Justice (DOJ), agreeing to pay a fine of USD 62 million (JPY 7,440 million) based on charges of violating the U.S. antitrust laws related to the sales of shock absorbers for cars and motorcycles. With regard to this case, JPY 7,440 million is recorded as an extraordinary loss in the second quarter of the fiscal year ending in March 2016. The Company has fully cooperated with the DOJ during its investigation that began in April 2014 on the price cartel of automotive parts. The DOJ says the Company was involved in the price manipulation of shock absorbers for cars and motorcycles during the period from the mid-1990s to 2012. (From an article in the Nikkan Jidosha Shimbun on September 18, 2015)

Corporate name changed

-The Company announced that it plans to change its corporate name to KYB Corporation, effective October 1, 2015. The change is subject to approval at a general shareholders' meeting on June 24. The company adopted KYB as its brand name and company logo in 2005. Since then, it has been working on increasing the name recognition of KYB. In commemoration of its 80th anniversary, it has decided to change its official name in order to boost its brand identity. (From an article in the Nikkan Jidosha Shimbun on May 26, 2015)

Product adoption and orders

-The Company announced that its shock absorber with improved damping force performance has been adopted for Toyota Motor Corporation's new Prius. The Company optimized the shape of shock absorber components with computer analysis, and improved the response by rectifying the operating oil flow. The company realized a weight reduction of about 700 grams per vehicle by adopting hollow piston rods. (From an article in the Nikkan Jidosha Shimbun on May 28, 2016)

-The Company received orders from Honda Motor Co., Ltd. for its shock absorbers for the next-generation Civic in four countries. The Company had previously received orders from Honda in Japan and the U.S. The company successfully received the new orders for the Civic by organizing a global development team. The Company's sales primarily come from the Toyota Motor Corporation. Its shock absorber sales from Honda accounts for about 5% of the company's total shock absorber sales. By extending the area of supply for the next-generation Civic, the Company will expand its sales to Honda. The Company will manufacture shock absorbers at its plants in the U.S., Brazil, Thailand, and Malaysia and supply them to Honda's plants in the respective countries. The annual supply volume is expected to total 2.2 million units. (From an article in the Nikkan Jidosha Shimbun on July 14, 2015)


-Major awards given in FY ended Mar. 2016:

Customer Name of Award Details of Award
Toyota Motor East Japan, Inc. Appreciation of Quality Achieving quantitative quality objectives

R&D Expenditure

(in millions of JPY)
FY ended Mar. 31, 2016 FY ended Mar. 31, 2015 FY ended Mar. 31, 2014
Overall 7,760 8,910 6,916
-AC (Automotive Components) 5,121 5,943 4,493

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
-Test course
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.
KYB Technical Center (Thailand) Co., Ltd. Thailand -
KYB Europe Headquarters GmbH (Spain Branch) Spain -Development of shock absorbers
KYB (China) Investment Co., Ltd. China -Development of shock absorbers
KYB Americas Corporation U.S. -Development of shock absorbers
KYB Manufacturing Czech, s.r.o. Czech -Development of shock absorbers

Product Development

New strut shock absorber
-The Company developed a new strut shock absorber and unveiled it at the Tokyo Motor Show. The new strut shock absorber features a plastic-made outer tube. The Company deems the new shock absorber to be one of the future technologies for making shock absorbers lighter and will propose this to OEMs. The complex shape of the outer tube is achieved by injection molding of carbon-fiber reinforced thermoplastics (CFRTP). The new strut shock absorber composed of a CFRTP-made outer tube is about 20% lighter than a traditional strut shock absorber composed of a metallic outer tube. A strut shock absorber links a car body to a tire. Thus, strut shock absorbers are required to possess high strength. The new strut shock absorber offers strength and durability on a par with a traditional product. The Company, however, confirm the degree of durability of the new strut shock absorber because plastics deteriorate with time. (From an article in the Nikkan Jidosha Shimbun on November 6, 2015)

Load Sensing Shock Absorber
-The new shock absorber detects changes in the vehicle’s payload by changing its length, and mechanically switches the damping force provided. The shock absorber provides good ride comfort and ensures stable handling even when a vehicle's payload changes. The Company expects that demand for the new shock absorber will come from minivans and wagons. The shock absorber automatically switches the damping force between two levels depending on the vehicle's payload. It applies a weak damping force when the payload is light, and a strong damping force for a heavy payload. The shock absorber also has a mechanism to prevent instantaneous switching of the damping force. Thus, the shock absorber keeps the damping force unchanged even if it expands or contracts during driving operations. (From an article in the Nikkan Jidosha Shimbun on August 25, 2015)

New communication terminal for vehicles
-KYB Corporation developed a new communication terminal for vehicles including trucks, buses and taxis. Information is communicated between the terminal and the server via mobile telephone networks or satellite communication systems. Commercial production will begin in the fall of 2016 after the evaluation of on-going monitoring tests with concrete mixer trucks. (From an article in the Nikkan Jidosha Shimbun on November 20, 2015)

Software development
-The Company announced that it has developed new software for drive recorders and released it to truck and bus fleet operators for use in not only recording collisions but also preventing accidents. The software has two new features. One feature called “Warning Map” alerts the driver with audio guidance when the vehicle comes close to accident-prone areas or pre-registered dangerous spots. The radius of dangerous spots can be arbitrarily set by the user. The driver can also register dangerous spots by pressing a button while driving on such roads, and these spots will be shared among the user’s entire fleet. The other new feature sends images and data to fleet dispatchers through a Wi-Fi connection and allows them to monitor driving situations in real time. (From an article in the Nikkan Jidosha Shimbun on October 26, 2015)

R&D Activities

Technology for integrating control of steering systems and actuators
-The Company has started developing a new technology to integrate control of a vehicle's steering system and shock absorbers. The new technology is based on steer-by-wire technology, which provides electronic control of steering systems. The Company was the first company to commercialize steer-by-wire technology. The new technology allows the coordinated control of an electronically controlled shock absorber and a steering system, thus improving driving comfort and stability. The Company will research and develop the new technology with plans to commercialize the technology, as it believes the new technology is vital for advanced driver assistance systems and future autonomous driving applications. (From an article in the Nikkan Jidosha Shimbun on July 27, 2015)

Capital Expenditure

(in millions of JPY)
FY ended Mar. 31, 2016 FY ended Mar. 31, 2015 FY ended Mar. 31, 2014
Overall 21,300 29,785 29,908
-AC (Automotive Components) 15,070 19,152 18,391

Planned Capital Investments

Planned investment FY ending Mar. 31, 2017: JPY 16,600 million
AC (Automotive Components): JPY 12,400 million

Plan to Increase Delivery Capacity

-The Company plans to boost its annual production capacity of automotive shock absorbers to 6 million units in Mexico in 2020, a threefold increase from the 2016 target. The Company will enhance its local supply capacity to join the wave of Japanese automakers' production expansion in the country, and to meet increasing demand for the products for new vehicles and the aftermarket. Automakers are increasingly using Mexico as a hub to export their small cars to the U.S. market. Toyota Motor Corporation will also go into full-scale production in the country. (From an article in the Nikkan Jidosha Shimbun on August 19, 2015)

Outlook for FY ending Mar. 31, 2017

(in millions of JPY)
FY ending Mar. 31, 2017
FY ending Mar. 31, 2016
(Actual Results)
Rate of Change
Sales 346,000 355,320 (2.6)
Operating income 13,800 4,327 218.9
Profit before tax


2,825 356.6
Profit for the year attributable to owners of the parent 9,200 (3,161) -

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

New Mid-term Business Plan (Fiscal year ending March 2015 - Fiscal year ending March 2017)

Basic policies
①Automotive components
-Win customers based on R&D activities conducted in five locations around the world
-Expand sales business

②Hydraulic components
-Expand sales to agricultural machinery, aircraft, and railroad cars
-Remain cost-competitive in terms of hydraulic products for construction industry

③Fostering human talent
-Foster and maintain human talent capable of supporting global growth strategy; create a global executive management team

④Developing new products and technologies
-Build a product-development framework based on market needs

⑤Product creation
-Improve Group productivity and reduce international logistic fees by implementing initiatives to reduce lead-time by half outside Japan and at suppliers

-Enhance regional headquarters functions in Europe, China, and the Americas.