UNIPRES Corporation Business Report FY ended Mar. 2014

Business Highlights

Financial Overview

(in millions of JPY)
  FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 Rate of
change (%)
Factors
Sales 289,491 237,832 21.7 1)
Operating income 15,435 16,025 (3.7) 2)
Ordinary income 17,518 18,153 (3.5)
Net income 8,208 11,218 (26.8)

Factors
1) Sales
-Sales grew 21.7% year-on-year due to an increase in North American production and an impact of weaker yen.

2) Operating income
-Operating income dropped year-on-year. Although the Group's production streamlining initiatives exerted some positive effects on income, the gain was more than offset by the impact of increased anticipatory investment and investment to expand production in North America.

Business Performance

<Japan>
-Sales decreased by 1.1% year-on-year, while operating income increased 24.8% year-on-year as a result of the Company's operational streamlining efforts.

<North America>
-Sales rose 82.2% year-on-year thanks to an increase in production volume at the Company's major customer. Weaker yen also contributed to the significant gain. In terms of profit, the Company posted an operating loss of JPY 5,300 million due to costs for dealing with model changes and for expanding production. (In the previous year, the Company generated JPY 300 million in operating income.)

<Europe>
-Sales increased 16.9% year-on-year mainly due to weaker yen, while operating income grew 3.9% year-on-year.

<Asia>
-Sales increased 27.7% year-on-year largely because of favorable currency translation. Operating profit rose 42.2% year-on-year, because the initial cost for a new plant in China was more than offset by saving through the Company's operational streamlining efforts.

Business acquisition

-On March 13, 2014, the Company and Yachiyo Industry Co., Ltd. in the Honda Group signed a basic agreement, under which the Company will acquire the sheet metal business of Yachiyo Manufacturing of Alabama, LLC (YMA), Yachiyo's consolidated subsidiary in the U.S. With this acquisition, the Company intends to strengthen its automotive body parts business, while exploring new business opportunities with Honda. The Company plans to spend JPY 1,500 million on the deal, which is expected to be completed by October 2014. 

Joint Ventures

-In November 2013, the Company announced that it will establish a joint venture (JV) for producing automotive stamping parts in Dalian, Liaoning Province, China, in January 2014. The JV, Unipres Sunrise Corporation, will be capitalized at CNY 50 million (JPY 800 million). 40% of the capital will be invested by Unipres (China) Corporation, 40% by Xiangyang Sunrise Machinery Co., Ltd., and the remaining 20% by Xiangyang Jisheng Machinery Co., Ltd. The Company will invest JPY 1.5 billion to construct a new plant which will start operations in August 2015. The 19,000-square-meter plant will be built on an 80,000-square-meter plot. The JV will recruit 300 employees, and achieve sales of JPY 7 billion in the fiscal year ending March 2017.

Sales Promotions

Sales promotion to Honda
-In May 2013, the Company announced that it is poised to increase its sales generated through business with Honda Motor to JPY 8 billion by FY ending Mar. 31, 2015, which is double the result in FY ended Mar. 31, 2013. In addition to winning more orders from Honda in the U.S. market, the Company has recently received a new contract from Honda's Mexican facilities to supply body structural parts, starting in FY ending Mar. 31, 2014. Honda plans to expand its production capacity mainly in the emerging markets, aiming to boost its global vehicle sales to 6 million units a year by FY ending Mar. 31, 2017.

-In the current mid-term business plan ending March 2017, the Company aims boost its sales to Honda to JPY 17,000 million, which is triple the corresponding result for the year ended March 2014.

Expanding sales for Renault-Nissan alliance's CMF-based vehicles
-Focus is set on the C- and D-segment vehicles (compact and large models) based on the alliance's Common Module Family (CMF) architecture.
The Company has already won contracts for the following models:

  • Nissan "Qashqai" (produced in England and China)
  • Nissan "X-Trail" (produced in Japan, China and Russia)
  • Nissan "Rogue" (produced in U.S.A.)
  • Dongfeng Renault's sport-utility vehicle (SUV)
Sales promotion of Transmission parts
-In November 2012, the Company announced that It's aiming to increase sales of transmission components to JPY 60 billion by FY ending Mar. 31, 2017, which is double the result in FY ended Mar. 31, 2012. It aims to achieve this target by stepping up overseas production of stamped precision parts used in continuously variable transmissions (CVT), while boosting sales of its torque converters developed in-house.

-Factory deployment:
  • The Company's new transmission plant in Mexico will start mass-production in July 2014.
  • Unipres Precision Guangzhou Corporation won first contract for its torque converters developed in-house. Mass-production of these products is scheduled to start in August 2015. 
Expanding Body components business and Plastic parts business in Mexico
  • Honda "Fit":  Received order for Body parts and Steering hanger. Received first order for Filler tube from Honda.
  • Mazda "Axela": Received order for Body parts and Filler tube. Received order for Plastic parts.
  • Mazda "Demio": Received order for Body parts. Received order for Plastic parts.

Mid-term Management Plan (April 2014-March 2017)

-Sales target for FY ending March 2017 is set at JPY 320,000 million, which is 10.5% higher than the result in FY ended March 2014.

Outlook for FY ending March 31, 2015

(in millions of JPY)
  FY ending Mar. 31, 2015
(Forecast)
FY ending Mar. 31, 2014
(Actual result)
Rate of Change
(%)
Sales 285,000 289,491 (1.6)
Operating income 17,000 15,435 10.1
Ordinary income 16,500 17,518 (5.8)
Net income 8,000 8,208 (2.5)
-Sales are expected to remain at the same level as the previous year, as vehicle production is forecast to decline in Japan.
-Operating income is projected to rise year-on-year, because the effects of business improvements in North America are likely to offset the negative impact of decreasing vehicle production in Japan.

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

R&D

R&D Expenses

(in millions of JPY)
  FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 FY ended Mar. 31, 2012
Overall 3,200 3,000 2,400

R&D Activities

-The Company has 275 research and development staff members as of March 31, 2014.
-The Company has 95 industrial property rights as of March 31, 2014.

<Product Development>
-Optimizing the strength and rigidity of products
-Developing products that are more compact and lighter in weight
-Designing products in which stamping technology can be applied
-Shortening development periods

<Material Development>
-High-strength steel plates
-Highly rigid plastic materials
-Lightweight plastic materials

<Process Development>
-Stamping process for super high-strength steel plats
-Hot stamping method
-Precision metal stamping
-Stamping process for light-alloy materials
-Welding process for light-alloy materials
-Processing of high-strength pipes
-Stamping process for high-strength plastics
-Compound molding process for plastic composites

Products Development

Thin-walled Fender Protectors
-The Company developed a 16.7% lighter fender protector by reducing the thickness of products made using the deep drawn plastic molding method. This improvement was made possible by switching to a hinge-like design, adopting a bead shape to ensure high rigidity, and using the Company's original USS forming method.

Body structural parts made from Ultra high-tensile steel
-In May 2013, the Company announced that its body structural parts made from 1.2GPa ultra high-tensile steel with superior formability have been chosen for use on the Nissan "Infiniti Q50" for the North American market. High-strength steels offering significant weight-saving attributes normally have some disadvantages in terms of formability. By using cutting edge simulation systems and integrating its expertise in the areas of stamping and welding techniques, the Company has achieved mass-production of complex shaped components adopting the 1.2GPa material.

Process Development

Mass-production of Hot stamped products using new Direct water-cooling method
-In May 2013, the Company and Nippon Steel & Sumitomo Metal Corporation, have jointly developed a direct water-cooling method for hot stamping operations, which contributes to tripling the productivity level of mass production lines. New 1.5MPa structural parts manufactured using this technology have already been chosen for applications on the Nissan "Fairlady Z" sport vehicle. Hot stamping technology, which offers high levels of product strength and formability, is suitable for making lighter parts for automobiles. The technology, however, has normally been disadvantageous in terms of the time required for the hardening process.

Investment Activities

Capital Investment

(in millions of JPY)
  FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 FY ended Mar. 31, 2012
Overall 29,900 24,400 17,800
Investment amount by region:
<Japan>
The Company invested JPY 4,900 million mainly to renew auto-parts production facilities and equipment to respond to model-changes made by its customers.

<North America>
The Company invested JPY 12,200 million mainly to renew auto-parts production facilities and equipment to respond to model-changes made by its customers and to increase its production volume.

<Europe>
The Company invested JPY 6,000 million yen mainly to renew auto-parts production facilities and equipment to respond to model-changes made by its customers.

<Asia>
The Company invested JPY 6,600 million yen mainly to renew auto-parts production facilities and equipment to respond to model-changes made by its customers; and to establish a new company in China.

-For FY ending March 2015, the Company will continue to invest heavily, planning to spend JPY 28,000 million in plants and equipment. Compared to the amount invested in the previous year, it will be a JPY 1,900 million decrease.

Investments Outside Japan

<Russia>
-In October 2013, the Company announced that It will establish a wholly-owned subsidiary, Unipres Russia LLC, in Saint-Petersburg, Russia. The new company, which will become operational in June 2015, will manufacture and sell car body stamping parts. With an investment of approximately JPY 6 billion (USD 61 million), the new plant will have a land area of 100,000 square meters and a floor area of 18,000 square meters. Sales are expected to reach JPY 6 billion in 2016. The plant will hire 230 people, and will initially assemble body stamping components for the next-generation Nissan "X-Trail" and Nissan "Qashqai" by using stamped components delivered from the Company's plants in the U.K., China, and Japan. These products will be supplied to the automaker's Russian factory. Nissan is expanding its Russian Plant, as it transfers production of models that are currently assembled at its plant in Sunderland, the U.K..

Planned Capital Investments

(As of Mar. 31, 2014)
Company
Facility
(Location)
Target of Investment Planned
Investment
Total
(in million yen)
Start End
(Scheduled)
Headquarters
(Kanagawa Japana, Shizuoka Japan)

Improve working environment and strengthen crisis management framework

1,800 Apr.
2014

Mar.

2015

Tochigi Plant
(Tochigi Pref., Japan
Kanagawa Pref., Japan)
Improving production operations, renewing production facilities and equipment to respond to model changes, and conducting other initiatives.  1,500 Apr.
2014

Mar.

2015

Fuji Plant
(Shizuoka Pref., Japan)
Improving production operations, renewing production facilities and equipment to respond to model changes, and conducting other initiatives.  1,400 Apr.
2014

Mar.

2015

Unipres Kyusyu Co., Ltd.
Headquarters & Plant
(Fukuoka Pref., Japan)
Improving production operations, renewing production facilities and equipment to respond to model changes, and conducting other initiatives. 1,300 Apr.
2014

Mar.

2015

Unipres U.S.A., Inc.
Headquarters & Plant
(U.S.A.)
Improving production operations, renewing production facilities and equipment to respond to model changes, and conducting other initiatives.  4,000 Apr.
2014

Mar.

2015

Unipres Southeast U.S.A., Inc.
(U.S.A.)
Improving production operations, renewing production facilities and equipment to respond to model changes, and conducting other initiatives. 1,000 Apr.
2014

Mar.

2015

Unipres Mexicana, S.A. de C.V.
Headquarters & Plant
(Mexico)
Building new plant for transmission parts,
Enhancing production operations and renewing production facilities due to vehicle model change
2,900 Jan.
2014
Dec.
2014
Unipres (UK) Limited
Headquarters & Plant
(UK)
Improving production operations, renewing production facilities and equipment to respond to model changes, and conducting other initiatives.  1,300 Jan.
2014
Dec.
2014
Unipres Russia LLC
(Russia)
Establish a plant at a new production site and install new facilities and equipment. 3,100 Jan.
2014
Dec.
2014
Unipres Guangzhou Corporation
Headquarters & Plant
(China)
Improving production operations, renewing production facilities and equipment to respond to model changes, and conducting other initiatives. 1,300 Jan.
2014
Dec.
2014
Unipres Zhengzhou Corporation
Headquarters & Plant
(China)
Improving production operations, renewing production facilities and equipment to respond to model changes, and conducting other initiatives. 1,900 Jan.
2014
Dec.
2014
Unipres Precision Guangzhou Corporation
Headquarters & Plant
(China)
Improving production operations, renewing production facilities and equipment to respond to model changes, and conducting other initiatives. 4,400 Jan.
2014
Dec.
2014