UNIPRES Corporation Business Report FY ended Mar. 2015

Financial Overview

(in millions of JPY)
FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 Rate of
change (%)
Factors
Sales 308,739 289,491 6.6 1)
Operating income 17,796 15,435 15.3 2)
Ordinary income 18,363 17,518 4.8 -
Net income 7,207 8,208 (12.2) -


Factors
1) Sales
-Sales increased 6.6% year-on-year (y/y) due to increased production volume in North America and favorable currency translation because of the weak yen.

2) Operating income
-Operating profit increased 15.3% y/y due to rationalization initiatives based on the Unipress Production System (UPS) and reductions in expenses incurred to increased production volume in North America.

Business Performance


-Sales decreased 12.0% y/y to JPY 100,981 million and operating profit decreased 29.1% y/y to JPY 7,092 million as a result of lower production volumes by customers in Japan.


-Sales increased 40.4% y/y due to increased production volumes by customers and favorable currency translation. The region reduced an operating loss to JPY 218 million due to reductions in expenses in response to increased production volume in North America.


-Sales increased 8.4% y/y to JPY 34,926 million and operating profit rose 55.3% to JPY 3,403 million due to favorable currency translation.


-Sales rose 0.6% to JPY 68,690 due to favorable currency translation. However, operating profit fell 13.8% to JPY 7,308 because economic growth in Thailand and other countries slowed and production volumes at customers in the region were lower.

Capital and Business Alliance

-In May 2015, the Company announced an expansion of capital and business alliance with Nippon Steel & Sumitomo Metal Corporation (NSSMC), under which NSSMC will acquire an additional 2.65 million shares in the Company. Unipres plans to dispose of the shares through a third party allotment effective May 29, 2015. The purchase price will be approximately JPY 6.56 billion (USD 54.9 million). As a result of this acquisition, NSSMC will raise the percentage of its shareholding in the Company from the current 10.89 percent to 16.46 percent. The Company and NSSMC have been cooperating on the development of new technologies to utilize ultra-high-tensile steel for automotive body structural components. Through this transaction, the two companies aim to further strengthen their alliance. (From a press release on May 14, 2015)

Business Acquisition

-Regarding the acquisition of the sheet metal components business from Yachiyo Manufacturing of Alabama, LLC (YMA), a U.S.-based consolidated subsidiary of Yachiyo Industry Co., Ltd., the Company announced that it has decided to conclude an asset purchase agreement with Yachiyo Industry and YMA. The deal is expected to close on October 1, 2014. In accordance with this acquisition, the Company has established Unipres Alabama, Inc., a subsidiary that will operate the sheet metal business. Operations are scheduled to start in October 2014, with a workforce of approximately 230 employees. The subsidiary has a plant area of 156,000 square meters and a floor area of 18,000 square meters. Sales are expected to reach JPY 6 billion (USD 58.5 million) by the fiscal year ending March 2016. (From a press release on August 5, 2014)

Global Operations


-The Company is expecting that its Chinese subsidiary, Unipres Precision Guangzhou Corporation, will increase its annual sales from the current level of approximately JPY 7 billion to more than JPY 10 billion by the fiscal year ending March 2017. The subsidiary supplies automatic transmission parts such as clutch packs, sun gears, and clutch drums to the local plants of Jatco Ltd. and Aisin AW Co., Ltd. In addition, it recently received a first order to supply torque converters, which is expected to lead to a significant sales increase. Sales of torque converters alone are forecast to reach approximately JPY 1 billion in FY 2015 and exceed JPY 2 billion in FY 2016. (From an article in the Nikkan Jidosha Shimbun on May 28, 2014)

-In January 2014, the Company and Xiangyang Sunrise Machinery Co., Ltd. (located in Dalian) formed a joint venture called Unipres Sunrise Corporation that is making preparations to launch production in August 2015 and supply products to Nissan’s new production plant in Dalian.


-In January 2014 the Company established Unipress Russia at the Nissan Supplier Park in St. Petersburg. Although Unipress Russia had plans to begin supplying frame parts to Nissan in June 2015, the company has now postponed the timing of its production launch indefinitely due to the slowdown in automotive sales caused by the drastic weakening of the Russian economy.


-In July 2014 a transmission parts plant was established at Unipress Mexico. The plant is building seamless production operations, starting from stamping operations, and will supply products to Jatco and other suppliers.

Increasing sales

Renault-Nissan common-module family: the C-segment
-The Company will supply products to the Nissan X-Trail, Qashqai, and Rogue; and to the Renault Kadjar (marketed in Europe). Parts for the Renault Kadjar will start to be delivered to Renault's production plant in Palencia, Spain. In addition, parts are also scheduled to be supplied to Renault's plant in Wuhan, China at some point in the future.

Transmission parts business
-The Company plans to increase its sales worldwide by implementing aggressive sales activities. Sales targets are shown in the table below.

Location Existing customers Customers placing new orders
Japan JATCO, Mazda, NSK-Warner, Subaru, Aisin AW Honda
China JATCO, Aisin AW Honda, BorgWarner
Mexico JATCO Honda, Aisin AW, BorgWarner


Plastics business
-The Company is planning to grow this business by implementing aggressive sales activities targeting the growing small-car segment.
-The Company won an order to supply protective fenders to small cars.

OEM Model Start of delivery
Daihatsu Be-go 2009
Suzuki Alto 2009
Suzuki Lapin 2010
Nissan Dayz 2013
Mitsubishi Motors eK Wagon 2013
Nissan Dayz Roox 2014
Mitsubishi Motors eK Space 2014
Honda S660 2015

Mid-term Management Plan (April 2015-March 2018)

(in millions of JPY)
FY ended Mar. 31, 2015
(Actual)
FY ending Mar. 31, 2016
(Plan)
FY ending Mar. 31, 2017
(Plan)
FY ending Mar. 31, 2018
(Plan)
Sales 308,739 304,000 320,000 330,000

Outlook for FY ending March 31, 2016

(in millions of JPY)
FY ending Mar. 31, 2016
(Forecast)
FY ended Mar. 31, 2015
(Actual)
Rate of Change
(%)
Sales 304,000 308,739 (1.5)
Operating income 21,000 17,796 18.0
Ordinary income 20,000 18,363 8.9
Net income 10,000 7,207 38.8

-Sales will be basically flat due to lower unit-production volume in Japan.
-Operating profit is forecast to increase due to an improving American-region market.


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

R&D Expenses

(in millions of JPY)
FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Overall 3,400 3,200 3,000

R&D Activities

-The Company has 306 research and development staff members as of March 31, 2015.
-The Company has 105 industrial property rights as of March 31, 2015.


-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


-High-strength steel plates
-Highly rigid plastic materials
-Lightweight plastic materials


-Stamping process for super high-strength steel plates
-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

Technology for improving collision-safety performance on the new Nissan Murano

-Based on a redesign of the chassis architecture, this technology improves energy absorption in the engine-compartment area during collisions. The Company analyzed forming and collusion performance and customized this technology to fit on Nissan's vehicles. In addition, by using ultra-high-tension materials (1.2GPa) the Company is improving the strength of interior cabins while lowering weight.


Capital Investment

(in millions of JPY)
FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Overall 27,300 29,900 24,400

Investment amount by region:


The Company invested JPY 6,900 million mainly to renew auto-parts production facilities and equipment to respond to model-changes made by its customers.


The Company invested JPY 12,400 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.


The Company invested JPY 1,600 million yen mainly to renew auto-parts production facilities and equipment to respond to model-changes made by its customers.


The Company invested JPY 6,200 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 2016, the Company will continue to invest heavily, planning to spend JPY 25,000 million in plants and equipment. Compared to the amount invested in the previous year, it will be a JPY 2,300 million decrease.

Investments Outside Japan

<U.K.>
-The Company announced that it will add two stamping machines at its British subsidiary, Unipres (UK) Limited, in January 2016. The additional production capacity will support new business received from Renault and AvtoVAZ. Demand from Renault is projected to increase further, because the French automaker is accelerating the use of the Common Module Family (CMF) platform with Nissan Motor, its alliance partner and Unipres’ main customer. By enhancing its UK subsidiary's capacity, the Company aims to meet expected growth in demand in Europe. (From an article in the Nikkan Jidosha Shimbun on November 25, 2014)

Planned Capital Investments

(As of Mar. 31, 2015)
Company
Facility
(Location)
Target of Investment Planned
Investment
Total
(in million yen)
Start End
(Scheduled)
Headquarters
(Kanagawa Pref., Japan, Shizuoka Pref., Japan)
Improve working environment and strengthen crisis management framework 3,900 Apr.
2015
Mar.
2016
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. 1,400 Apr.
2015
Mar.
2016
Fuji Plant
(Shizuoka Pref., Japan)
Improving production operations, renewing production facilities and equipment to respond to model changes, and conducting other initiatives. 1,600 Apr.
2015
Mar.
2016
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. 1,600 Apr.
2015
Mar.
2016
Unipres U.S.A., Inc.
Headquarters & Plant
(U.S.)
Improving production operations, renewing production facilities and equipment to respond to model changes, and conducting other initiatives. 1,900 Apr.
2015
Mar.
2016
Unipres Southeast U.S.A., Inc.
(U.S.)
Improving production operations, renewing production facilities and equipment to respond to model changes, and conducting other initiatives. 700 Apr.
2015
Mar.
2016
Unipress Alabama, Inc.
(U.S.)
Improving production operations, renewing production facilities and equipment to respond to model changes, and conducting other initiatives. 500 Apr.
2015
Mar.
2016
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
3,300 Jan.
2015
Dec.
2015
Unipres (UK) Limited
Headquarters & Plant
(UK)
Improving production operations, renewing production facilities and equipment to respond to model changes, and conducting other initiatives. 4,300 Jan.
2015
Dec.
2015
Unipres Guangzhou Corporation
Headquarters & Plant
(China)
Improving production operations, renewing production facilities and equipment to respond to model changes, and conducting other initiatives. 1,500 Jan.
2015
Dec.
2015
Unipres Zhengzhou Corporation
Headquarters & Plant
(China)
Improving production operations, renewing production facilities and equipment to respond to model changes, and conducting other initiatives. 1,300 Jan.
2015
Dec.
2015
Unipres Precision Guangzhou Corporation
Headquarters & Plant
(China)
Improving production operations, renewing production facilities and equipment to respond to model changes, and conducting other initiatives. 2,300 Jan.
2015
Dec.
2015