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5. Furukawa Electric Co., Ltd. Business Report FY ended Mar. 2019

Furukawa Electric Co., Ltd. Business Report FY ended Mar. 2019

Furukawa G Plan 2020 mid-term management plan (established in 2016)

-The Company continues strengthening of the automotive business as a priority area. Specifically, the Company intends to meet the needs for lighter products, which are increasing with the advancement of vehicle electrification and autonomous driving, using its aluminum wire harnesses and aluminum corrosion-proof terminals. Also, the Company is accelerating the development of peripherals monitoring radar.
-In FY 2020, the Company aims to achieve consolidated operating income of JPY 55 billion or higher, net income attributable to the owners of the parent of JPY 30 billion or more, and ROE of 10% or higher.

Business Plan

-At a presentation meeting held for the press on July 4, Furukawa Electric Co., Ltd. (Furukawa Electric) announced plans to bolster its business involving radar systems for advanced driver assistance systems (ADAS) and other in-vehicle parts at an accelerated pace. Furukawa Electric's automotive parts operations include wire harness and in-vehicle parts businesses. The company will increase the proportion of in-vehicle parts business performance to its total automotive parts operations' operating income to 50% by fiscal year 2025 (ending in March 2026) from the FY 2017 level of 36%. The supplier will strive to win new orders for its radar systems or battery state sensors from non-Japanese OEMs. In addition to in-vehicle rear detection radars that have already been put into volume production, the supplier will develop a new pulse-type in-vehicle radar for front detection and start mass-producing it between 2022 and 2023. By doing so, Furukawa Electric will increase its total production volume of radars to about six times from the FY 2017 level by FY 2025. In anticipation of widespread use of 48 V mild hybrid systems, the company will develop parts like a power supply component and high performance in-vehicle lighting system in an effort to bolster its in-vehicle parts business. Meanwhile, Furukawa Electric will improve productivity in its wire harness business by doubling the site area of its Philippine plant and automating inspection and other processes. (From an article in the Nikkan Jidosha Shimbun on July 6, 2018)

Acquisition

-On November 21 Furukawa Electric Co., Ltd. (Furukawa Electric) announced that it will acquire management rights of Minda Furukawa Electric Private Ltd. (Minda Furukawa), a joint venture between Furukawa Electric subsidiary and Spark Minda, Ashok Minda Group of India, an automotive component supplier. Furukawa Electric Group will raise its stake in Minda Furukawa from 49% to 75% by the end of January 2019. With this acquisition, Minda Furukawa will be renamed to Furukawa Minda Electric Private Ltd (Furukawa Minda). Since its establishment in 2007, Minda Furukawa has supplied wire harnesses and automotive components to Japanese automakers’ manufacturing plants in India. After the acquisition of management rights, Furukawa Electric will make efforts to improve product quality, reduce costs, adhere to delivery dates, and enhance development capabilities and management at Furukawa Minda. (From an article in the Nikkan Jidosha Shimbun on November 22, 2018)

Recent Development in Japan

-Furukawa Electric Co., Ltd. announced that it will boost production of oxygen-free copper strips used for automotive power semiconductor substrates. The company plans to raise its monthly production volume to 20 tons by around 2019. Oxygen-free copper strips are soldered to insulation boards to create semiconductor circuits and radiate heat. Demand for power semiconductors is expected to rise with proliferation of plug-in hybrid and electric vehicles. Furukawa Electric will improve production efficiency and establish a system that will enable it to boost production. (From an article in the Nikkan Jidosha Shimbun on September 25, 2018)

Recent Development outside Japan

<Philippines>
-Furukawa Electric Co., Ltd. (Furukawa Electric) announced that its subsidiary Furukawa Automotive Systems Inc. (Furukawa AS, Kora Town, Shiga, Japan) will strengthen its production capacity for automotive wire harnesses at its plant in the Philippines. This move is to deal with new orders for global strategic models for markets like North America. Furukawa AS will invest approximately JPY 10 billion to enlarge the area of its Pilipino Plant. Previously, Furukawa AS's Mexican plant supplied wire harnesses to North America. Having established a wire harness production system in Asia that meets cost and quality requirements, the company started to supply wire harnesses from the Philippines and Vietnam. This time, Furukawa AS won new orders as a result of it being highly evaluated for the low costs and high quality of its wire harnesses produced in Asia. (From an article in the Nikkan Jidosha Shimbun on May 23, 2018)

R&D Expenditure

(in million JPY)

R&D Activities

-In the automotive products and battery business, the Company mainly develops the following:

• Automotive wire harnesses using aluminum wire
• High-performance battery status detection sensors and electric power management system products
• High-performance in-vehicle monitoring radar
• High-performance coils for compact and high output motors for HVs and EVs 
• Practical application of carbon nanotube (CNT) wires

R&D Facilities

-Furukawa Electric Co., Ltd. (Furukawa Electric) announced that it has set up a research center in Silicon Valley, California, the U.S. to facilitate open innovation and global cooperation between industry and academia. The California center is Furukawa Electric's fourth research center outside Japan. With the establishment of the research center in Silicon Valley, the company will actively pursue cutting-edge technologies, market information collection, and open innovation. Furukawa Electric will accelerate cooperation with major universities and firms in the region. The company also opened a booth at the world-largest startup accelerator, the Plug and Play Tech Center in Silicon Valley, to explore promising startups. (From an article in the Nikkan Jidosha Shimbun on September 12, 2018)

Product Development

24 GHz band quasi-millimeter-wave band pulse-type peripheral monitoring radar
-On October 29 Furukawa Group‘s Furukawa Automotive Systems Inc. (Furukawa AS) in Shiga, Japan, announced that it has developed a 24 GHz band quasi-millimeter-wave band pulse-type peripheral monitoring radar. Compared with the existing product that went into commercial production in 2016, the new radar features improved velocity resolution and position-fix distances equivalent to that of millimeter radars. Furukawa AS is planning to increase the sales of its peripheral monitor business fourfold from its current level to JPY 20 billion in fiscal year 2025, ending in March 2026. (From an article in the Nikkan Jidosha Shimbun on October 30, 2018)

Interior light with an integrated speaker
-Furukawa Electric Co., Ltd. (Furukawa Electric) has developed an interior light with an integrated speaker. The new product uses Furukawa Electric's MCPET foamed sheet, which has excellent diffuse reflectance and acoustic characteristics, and triggers light and sound alerts in the event of an emergency. The supplier intends to promote the use of the product as a safety component, with an aim to start mass production in 2020. The MCPET is a microcellular foamed sheet of polyethylene terephthalate. It features a minute foam structure with a bubble diameter of 0.1 to 10 µm and a density of 100 million to 100 trillion bubbles/cm3, and offers high diffuse reflectance. When it is used in an LED reflector, it mitigates harsh light peculiar to LEDs and helps the reflector illuminate a vehicle cabin with soft light. A piezoelectric element attached to the center on the back side of the reflector is designed to vibrate the reflector so that the product acts as a speaker. (From an article in the Nikkan Jidosha Shimbun on July 23, 2018)
 

Capital Expenditure

(in million JPY)

Planned Capital Investment

-Planned capital investment in the FY ended in March 2020 will be JPY 48,000 million, with JPY 15,600 million for electric and electronics business, mainly for expanding production capacity.

Investment outside Japan

<Vietnam>
-On January 21 Furukawa Electric Co., Ltd. (Furukawa Electric) announced that it will invest JPY 3.5 billion to build a new aluminum electric wire production plant in Vietnam. The new plant will begin operations in September 2020 and the production capacity of aluminum electric wires will be increased fourfold by December 2021. Japanese and other automakers are increasing the use of lightweight wire harnesses that incorporate aluminum wires due to the trend in vehicle electrification. Furukawa Electric currently produces aluminum and copper electric wires in Tan Thuan Export Processing Zone in Ho Chi Minh City, Vietnam, and will build a two-story structure with a total floor space of 28,000 square meters within the Zone. The aluminum electric wire manufacturing line of the existing plant will be transferred to the new plant, which will include new manufacturing equipment to increase manufacturing capacity. Furukawa Electric made the decision to boost capacity to deal with the large order received from Japanese automakers for vehicles to be produced in 2021 onwards. (From an article in the Nikkan Jidosha Shimbun on January 22, 2019)