Hitachi Chemical Co., Ltd. Business Report FY ended Mar. 2015
Business Highlights
Financial Overview |
(in millions of JPY) |
| FY ended Mar. 31, 2015 | FY ended Mar. 31, 2014 | Rate of Change (%) |
Factors | |
| Overall | ||||
| Revenue | 525,061 | 488,725 | 7.4 | -Revenue increased year-on-year due to the effective initiatives implemented under the mid-term plan that started in the fiscal year that ended March 2014, and also due to favorable currency translation. |
| Operating Income | 29,226 | 36,569 | (20.1) | -Operating income fell year-on-year due to expenses incurred for an early retirement program and company-paid-assistance for job relocations. |
| Income before income taxes | 34,692 | 39,463 | (12.1) | - |
| Net income | 22,867 | 29,144 | (21.5) | - |
| Net income attributable to owners of the parent | 22,587 | 29,464 | (23.3) | |
| -Functional Materials | ||||
| Revenue | 275,769 | 261,179 | 5.6 | 1) |
| Operating Income | 23,494 | 25,633 | (8.3) | - |
| -Advanced Components and Systems | ||||
| Revenue | 249,292 | 227,546 | 9.6 | 2) |
| Operating Income | 5,846 | 10,966 | (46.7) | - |
Factors
1) Revenue
Electronic Material
-Sales of varnish used in electric insulation were around the same level as those of the previous year due to steady demand for the automotive industry.
Inorganic Material
-Sales improved year-on-year because of greater sales of carbon electrode material for lithium-ion batteries due to strong sales of products to eco cars.
Polymer Science Material
-Sales of functional resin were higher year-on-year due to strong demand for hardening agents in the automotive and heavy-electric-equipment sector.
2) Revenue
Automotive Components
-Sales of molded-resin parts, friction materials, and powdered metallurgy products were higher year-on-year due to strong sales at subsidiaries outside Japan.
Energy storage devices and systems
-Sales of vehicle batteries were about the same as they were the year before because higher sales outside Japan were offset by lower sales inside Japan.
Restructuring
Merging Shin-Kobe Electric Machinery
-The Company will merge its wholly-owned subsidiary, Shin-Kobe Electric Machinery Co., Ltd. (SKEM), effective January 1, 2016. Hitachi Chemical, as a surviving company, will absorb SKEM, which will be dissolved as a result of this merger.
Completed the absorption of Hitachi Powdered Metals Co., Ltd.
-The Company announced that it completed the absorption of its wholly-owned subsidiary, Hitachi Powdered Metals Co., Ltd., effective April 1 2014. This merger was announced in December 2013. Hitachi Powdered Metals will continue its operations under the name of the Matsudo Works, a business office of Hitachi Chemical. (From a press release on April 1, 2014)
Setting up regional headquarters
<U.S.>
-The Company announced that it will use its U.S. sales subsidiary, Hitachi Chemical Company America, Ltd. (HCA), as its regional headquarters to oversee other subsidiaries in the United States, effective April 1 2015. Hitachi Chemical has a sales company, two manufacturing companies, and a research and development company in the country. As a result of this reorganization, Hitachi Chemical Diagnostics, Inc., which manufactures and sells diagnostic reagents, and Hitachi Powdered Metals (USA), Inc., which manufactures and sells powdered metal products, will become HCA's wholly-owned subsidiaries. Hitachi Chemical Research Center, Inc., which is engaged in the biotechnology-based research and development, will be absorbed by HCA. (From a press release on February 3, 2015)
<Thailand>
-The Company announced that it will merge its four consolidated subsidiaries in Thailand in April 2015. Hitachi Powdered Metals (Thailand) Co., Ltd., as a surviving company, will absorb the Group's other Thai businesses excluding a local joint venture. The other three subsidiaries are Japan Brake (Thailand) Co., Ltd., Hitachi Storage Battery (Thailand) Co., Ltd., and Hitachi Chemical (Thailand) Co., Ltd. In line with this merger, the surviving company will change its corporate name to "Hitachi Chemical Asia (Thailand) Co., Ltd." and will move its headquarters to a new location in the same Chachoengsao Province. The company will hire about 1,300 people, the same as the total number of employees at the four subsidiaries. Its capital will be increased to THB 2.18 billion (approximately JPY 7.1 billion) from the current THB 764.45 million (approximately JPY 2.49 billion). By consolidating its management resources into a single company, the Company aims to enhance its overall operations, while strengthening its market position to expand its business in the growing Southeast Asian market. (From an article in the Nikkan Jidosha Shimbun on September 2, 2014)
Contracts
-The Company announced that its Chinese subsidiary, Hitachi Chemical Automotive Products (Zhengzhou) Co., Ltd., has started producing rear doors for the new Nissan "X-Trail". The subsidiary is Hitachi Chemical's first production and sales site for automotive interior and exterior plastic molded components in China. (From a press release on April 17, 2014)
Outlook for FY ending Mar. 31, 2016 |
(in millions of JPY) |
| FY ending Mar. 31, 2016 (Forecast) |
FY ended Mar. 31, 2015 (Actual Results) |
Rate of Change (%) |
|
| Revenue | 570,000 | 525,061 | 8.6 |
| Operating Income | 55,000 | 29,226 | 88.2 |
| Income before income taxes | 56,000 | 34,692 | 61.4 |
| Net income | 39,000 | 22,867 | 70.6 |
| Net income attributable to owners of the parent | 38,500 | 22,587 | 70.5 |
>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)
R&D Expenditure |
(in millions of JPY) |
| FY ended Mar. 31, 2015 | FY ended Mar. 31, 2014 | FY ended Mar. 31, 2013 | |
| Overall | 26,900 | 26,200 | 25,500 |
| -Functional Materials | 19,800 | 19,900 | 18,700 |
| -Advanced Components and Systems | 7,100 | 6,300 | 6,800 |
R&D Facilities
| Name of Facilities | Location |
| Tsukuba Research Laboratory | Ibaraki Pref., Japan |
| Tsukuba Research Laboratory (Yamazaki) | Ibaraki Pref., Japan |
| Tsukuba Research Laboratory (Shimodate) | Ibaraki Pref., Japan |
| Tsukuba Research Laboratory (Saitama) | Saitama Pref., Japan |
| Hitachi Chemical Research Center, Inc. | California, USA |
| Hitachi Chemical - SJTU Research & Development Center | Shanghai, China |
Product Development
Hands-free power liftgate
-The Company has developed a hands-free power liftgate made of plastic. The new liftgate system was developed jointly with Germany-based Brose Fahrzeugteile GmbH & Co. KG. Hitachi Chemical already supplies plastic liftgate modules for the Nissan "X-Trail", offering significant weight-saving feature to the SUV model. This time, the Company has added sensor solutions to provide extra advantages for loading and unloading. The new liftgate module uses capacitive sensors that are designed to respond to a simple movement, while preventing trapping of body parts or other objects. Users can open and close the liftgate by simply moving their foot near the sensor even without touching anything. This hands-free function gives a great convenience especially when the user is carrying many things. The plastic liftgate is expected to offer excellent sensing properties, as it doesn't contain metals that affect sensing performances. Compared with a conventional steel liftgate, the new liftgate module is 30% lighter. The lightweight system also increases the power motor efficiency and improves safety performances. (From an article in the Nikkan Jidosha Shimbun on March 20, 2014)
Next-generation lead-acid battery for start-stop system (ISS)
-The Company developed the next-generation lead-acid battery technology to achieve larger capacity and higher durability for application in vehicles' start-stop systems. It will start supplying high capacity lead-acid batteries to OEMs in the autumn of 2014 and those with high durability in the spring of 2015. The start-stop system reduces the effects on the environment by improving fuel efficiency and curbing CO2 emission. The Company has sold the lead-acid batteries for start-stop systems since 2010 and aims to be more competitive by upgrading the performance through this new technology. For the high capacity battery, a porous ingredient replaced the active agent of the electrode in order to expand the contact area with an electrolyte. The 5% higher-capacity battery endures repeated engine starting and larger electric load. (From an article in the Nikkan Jidosha Shimbun on April 24, 2014)
Technology Licensing-out Agreement |
(As of Mar. 31, 2015) |
| Company | Other company | Contract Details | Period |
| The Company and Japan Brake Industrial Co., Ltd. |
Federal-Mogul Corp. (USA) | Granting the working rights to the patent for disc brake pads. Providing technical information on disc brake pads. | Mar. 31, 2007 - Until the time production of vehicle models that use the subject products is stopped |
| The Company | Brembo S.p.A. (Italy) | Granting the working rights to the patent for disc brake pads. Providing technical information on disc brake pads. | Aug. 31, 2009 - Aug. 31, 2014 (The contract is scheduled to automatically renew every five years after the initial period ends.) |
| The Company | Hung-A Forming Co., Ltd. (Korea) | Approval to use technology that involves rear door modules (except for the inner panels) | Mar. 11, 2013 - Sep. 30, 2029 (The contract is scheduled to automatically renew every year after the initial period ends.) |
Technology Licensing-in Agreement |
(As of Mar. 31, 2015) |
| Group company name | Other Party to the Agreement | Contract details | Period |
| The Company | Hitachi, Ltd. | Acquisition of patent rights and license to use technical expertise on μ-Chip tags. | Apr. 20, 2007 - Apr. 19, 2017 |
| Shin-Kobe Electric Machinery Co., Ltd. | Panasonic Storage Battery Co., Ltd. (Japan) | Acquisition of patent rights and license to use technical expertise on lead storage batteries | Jul. 1, 2004 - Sep. 30, 2014 |
Capital Expenditure |
(in millions of JPY) |
| FY ended Mar. 31, 2015 | FY ended Mar. 31, 2014 | FY ended Mar. 31, 2013 | |
| Overall | 26,600 | 33,500 | 46,700 |
| -Functional Materials | 12,500 | 13,600 | 22,400 |
| -Advanced Components and Systems | 14,100 | 19,900 | 24,300 |
Major Capital Investment Projects
Advanced Components and Systems
- Installed R&D equipment for storage-battery systems in Japan.
- Increased production capacity of powdered metallurgy products in Indonesia.
- Increased production capacity of molded-resin parts in the U.S.
-Capital expenditure for FY ending March 2016 is planned to be JPY 44,000 million. (Functional Materials: JPY 19,000 million, Advanced Components and Systems: JPY 25,000 million)