Furukawa Electric Co., Ltd. Business Report FY ended Mar. 2014

Business Highlights

Financial Overview

(in million JPY)
  FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 Rate of Change
Sales 931,781 924,717 0.8 -Sales of automotive parts increased year-on-year, thanks to favorable currency translation due to the weak yen, and strong sales of wire harnesses.
Operating income 25,456 17,763 43.3 -Operating income increased year-on-year, thanks to effective and thorough cost-cutting initiatives; and a recovery in demand in the information/communications sector, which had been sluggish during last year.
Ordinary income 25,532 17,612 45.0 -
Current net income 5,608 3,576 56.8 -
Sales by Division
Electronics and Automotive Systems 282,866 236,758 19.5 -Sales of automotive parts increased year-on-year, thanks to an overall worldwide increase in vehicle sales. In Japan, sales of wire harnesses for light-weight vehicles and newly launched vehicle models were strong.
Metals 125,942 124,936 0.8 -
Light metals 94,028 180,700 (48.0) -

Joint Venture

-The Furukawa Battery Co., Ltd. announced that it will establish two new joint venture companies in Indonesia with PT. Central Sole Agency (CSA), a subsidiary of the Indomobil Group. PT. Furukawa Indomobil Battery Manufacturing, which will manufacture lead-acid batteries for automobiles, and PT. Furukawa Indomobile Battery Sales, which will be engaged in sales of lead-acid batteries and other products, are scheduled to be established in December 2013. The manufacturing company will be capitalized at USD 19 million (approximately JPY 1.9 billion), of which 51 percent will be invested by Furukawa Battery and the remaining 49 percent will be invested by CSA. (From a press release on November 25, 2013)

Business Plan

Strengthening product structure of wire harnesses outside Japan
-The Company is going to step up its development and production operations for automotive wire harnesses outside Japan. Up until now, the Company has been conducting majority of its development and sales activities in Japan. It, however, is going to transfer part of the functions for such operations overseas to cater to the needs of Japanese automakers, its major customers, which are increasing offshore production. The Company will strengthen its production structure by boosting its capacity especially in the emerging markets of Southeast Asia and Latin America. It is intending to form new management companies in Southeast Asia and North America, following the establishment of a new subsidiary in Shanghai that is overseeing the group's wire harness business in China. Candidate sites for the new setups include Thailand, Indonesia, the U.S. and Mexico. As for manufacturing, plans include the group's ongoing facility expansion project in the Philippines as well as operation launch at a new factory in Malaysia. In addition, the Company is mulling the possibility of adding a wire harness production line to its Brazilian subsidiary, which now engages in production and sales of fiber optic cables. Furthermore, a new plant project in Mexico will also be considered. (From an article in the Nikkan Jidosha Shimbun on Apr. 16, 2013)

Mid-term management plan
-In 2013, the Company mapped out its mid-term management plant "Furukawa G Plan 2015" which cover the period from FY2013 through FY2015. The Company is poised to expand its business in the areas of energy/communications infrastructure as well as automotive products, while improving its profit and financial structure. By FY2015, sales are expected to reach JPY 900 billion, while operating profit is expected to climb to JPY 38 billion. The Company aims to achieve 75 percent of the operating profit gain at its energy/communications infrastructure division and automotive division.


Expanding production volume of electrolytic copper foil in Taiwan
-The Company plans to reorganize its three plants which manufacture electrolytic copper foil for lithium-ion batteries for hybrid vehicles. As its Japanese plants are facing with deteriorating profitability due to an electric utility rate increase, the Company will boost production capacity at its subsidiary in Taiwan. In Japan, operations at the Imaichi Plant in Tochigi Prefecture will be discontinued by the end of March 2014. Furukawa Electric will integrate its domestic electrolytic copper foil production into the nearby Imaichi Higashi Plant. (From an article in the Nikkan Jidosha Shimbun on February 19, 2014)

Focusing on highly functional magnet wires
-The Company and its subsidiary, Furukawa Magnet Wire Co., Ltd., announced that they will discontinue production and sales of medium- and large-sized polyester-covered enameled wires and certain heat-resistant solderable enameled wires. Production will cease in the first half of FY 2014. The companies will focus on "highly functional magnet wires" such as flat wires for automobiles and various heat-resistant enameled wires for electric and industrial motors. (From a press release on December 17, 2013)

Merger of Furukawa-Sky and Sumitomo Light Metal
-The Company announced that Furukawa-Sky Aluminum Corporation and Sumitomo Light Metal Industries, Ltd. have finished their business integration, effective October 1, 2013. Furukawa-Sky, as the surviving company, will absorb Sumitomo Light Metal, which will be dissolved as a result of this merger. In addition, Furukawa-Sky will also change its corporate name to "UACJ Corporation". (From a press release on April 26, 2013)

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


R&D Expenditure

(in million JPY)
  FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 FY ended Mar. 31, 2012
Overall 17,461 20,210 18,949
-Electronics and Automotive Systems 4,343 4,549 4,306
-Metals 931 1,069 1,138
-Light metals 1,374 2,859 2,897

R&D Facilities

Facility Location
R&D Center for Automotive Systems & Devices Kanagawa Pref.,
Yokohama R&D Laboratories Kanagawa Pref.,
Metal Research Center Tochigi Pref.,
Furukawa Electric Institute of Technology Ltd. Hungary

R&D Activities

Electronics and Automotive Systems
-The Company, along with conducting activities to increase sales and win new orders for wire-harnesses using aluminum wires, is developing related technology also.
-The Company began producing automotive battery sensors for delivery to OEMs in 2012. Controlling battery-power will increase the efficiency of energy-use by vehicles.
-The Company is continuing its activities to develop radar using 24GHz bandwidth. It is expected to create useful, vehicle-exterior-monitoring sensors that improve vehicle safety functions.
-The Company is accelerating the development of insulated thin-film coils.
-It is also working on developing wireless power-feeding system using electric field. The Company is currently discussing possible technical collaborations on the new, non-contact feeding technology with electronic equipment manufacturers.
-The Company conducted R&D activities on transistors and diodes by researching gallium nitride at the Advanced Power Device Research Association that it jointly established with the Fuji Electric Group. The two companies dissolved this joint development team in September 2013 after confirming the possibility of turning the technology into a practical business solution. The Company is currently advancing the development of the power device technology, aiming to commercialize it.
-Consigned by NEDO (New Energy and Industrial Technology Development Organization), the Company is developing new, lightweight conductors by making carbon bundles into single units. It has developed low conduction-resistance wire rods made exclusively of carbon nanotubes.

-The Company is developing aluminum-alloy wires for next-generation, automotive wire harnesses, and is already making product proposals to customers.
-In working to improve the properties of electrolytic copper foil for lithium-ion fuel cells, the Company was able to improve the requirements for special properties needed by customers.

Light Metals
-In working on lithium-ion batteries, the Company developed, and now is manufacturing, aluminum sheets for square external cladding and aluminum foil for laminated external cladding, both having positive-electrode-collecting bodies and batteries, delivering them to customers both in and outside Japan. Also, it is developing rolled copper foil that is used in electrical current collectors for negative electrodes.
-The Company is developing materials that are even thinner and that offer more features than conventional materials; for automotive heat-exchangers.

R&D Activities

-The Company will collaborate with the Furukawa Battery Co., Ltd. on the development of regenerative charging systems for vehicles equipped with automatic engine stop-start system. The two companies will jointly develop high-performance battery modules by utilizing Furukawa Electric's expertise in the area of charge/discharge control systems and Furukawa Battery's original capacitor-hybrid lead-acid battery technology. Up until recently, each company has been developing battery modules individually. With the new collaboration, the Furukawa Electric Group will accelerate the development of low-cost, long-life and lightweight battery modules supported by an advanced charge/discharge management system, which will meet the needs of automakers. (From an article in the Nikkan Jidosha Shimbun on February 5, 2014)

Product and Technology Development

Quantitative method to measure the changes in electrode thickness of lithium-ion batteries during charging and discharging cycles
-The Company has developed a quantitative method to measure the changes in electrode thickness of lithium-ion batteries during charging and discharging cycles. Demand for thinner current-collector copper foil is growing, as battery manufacturers are developing products which require a high-energy density. Furukawa Electric's new measuring technology is expected to support the development of thin, high-strength, current-collector copper foils. The new method can measure the expansion and shrinkage levels of the negative electrode during multiple charge-discharge cycles. The company performed a thickness measurement in the early stage of the charge-discharge cycle using a silicon-based electrode, which has large volume-change characteristics. As a result, it found abnormal thickness changes caused by foil deformation. No discrepancy was found in the actual electrode condition at dismantling. The quantitative measurement method demonstrates the relation between changes in electrode thickness, the deformation of the current collector and the copper foil strength. (From an article in the Nikkan Jidosha Shimbun on October 29, 2013)

Wire harness for automobiles
-The Company announced a newly developed wire harness for automobiles, "ECOBEAMEX-120α AESSX," to meet demand for halogen-free and phosphorus-free products. The Company combined the irradiated cross-linking technology with Furukawa's original "New type chemical cross-linking technology," and passed the strict automotive wire standards realizing the same cost required for the production of non halogen-free wire harnesses. (From an article in the Nikkan Jidosha Shimbun on May 31, 2013)

Investment Activities

Capital Expenditure

(in million JPY)
  FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 FY ended Mar. 31, 2012
Overall 37,436 47,772 33,582

Electronics and Automotive Systems
-The Company mainly invested in increasing the production volume of automotive electronics components, beginning mass-production of automotive battery products, and establishing new company buildings.

-The Company mainly invested in increasing the production volume of copper foils overseas, as use of these materials is expected to grow in the automotive, IT and the electronics markets. The Company also invested in projects to integrate production operations in Japan.

Light metals
-The Company mainly invested in facilities and equipment at its aluminum rolling mill, in order to increase production.

Investment outside Japan

-Furukawa Automotive Systems Inc. (Furukawa AS) announced that it will increase wire harness (WH) production in the Philippines. It will invest approximately JPY 2.5 billion to build a new factory within its existing WH plant in the Province of Batangas. The new facility, which will be operational in January 2014, will supply all products to Japan. The expansion is expected to double Furukawa AS' sales in the country to about JPY 12 billion. In addition to supplying wire harnesses to a Japanese automaker, from which the company has received new orders, the plant will partially replace Furukawa AS' Chinese subsidiaries in exporting more products to Japan. This will enable the Company to avert a sharp rise in personnel costs and possible labor disputes that may result from stepping up production in China. (From an article in the Nikkan Jidosha Shimbun on May. 23, 2013)

Planned Capital Investment

-By the end of the fiscal year that ends in March 2015, the Company plans to spend JPY 40,000 million in capital investments; for example, investing JPY 13,300 million at its electric/electronics business to launch and increase mass-production of automotive electrical parts, and investing JPY 10,200 million in its metals business to upgrade plant buildings at its copper rolling mill and restore production facilities.