Kinugawa Rubber Industrial Co., Ltd. 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 | |
| Overall | ||||
| Sales | 76,135 | 74,543 | 2.1 | 1) |
| Operating income | 6,930 | 7,292 | (5.0) | |
| Ordinary income | 7,419 | 8,084 | (8.2) | - |
| Net income | 4,289 | 4,694 | (8.6) | - |
Factors
1) Sales and Operating income
-Sales were lower 4.9% year-on-year (y/y) to JPY 43,361 million as a result of lower production volumes of vehicles by major customers. Operating profit decreased 15.1% y/y, down to JPY 3,975 million, due to lower operating capacity and changes to product line up.
-Sales increased 36.7% y/y to JPY 12,719 million due to the Company's receiving greater numbers of orders from new customers, its major customers' increasing production of vehicles, and its new Mexican plant's increasing its production capacity of body-sealing parts and launching production of anti-vibration rubber and hose parts. The operating loss, which greatly improved year-on-year, was JPY 134 million. This was in contrast to last year's loss of JPY 705 million.
-Sales in the region rose 2.2% y/y (JPY 22,055 million) due to higher sales volumes to local OEMs, in spite of a drop in orders from customers in China, who decreased their vehicle production volumes. The operating profit fell 4.5% y/y (JPY 3,053 million), as a result of the Company's making changes to product lineup and incurring initial startup expenses for a new production plant.
Developments at subsidiaries outside Japan
-Local subsidiaries grew their operations as a result of winning more orders for hoses and anti-vibration products.
| Country | Local subsidiary | Comments |
| China | Kinugawa Rubber (Wuhu) Co., Ltd. | Fourth production plant in China. Launched production of anti-vibration products in February 2014. |
| Fuzhou Teito Rubber Co., Ltd. | Increased production capacity of hoses. | |
| India | Kinugawa Rubber India Pvt Ltd. | Launched production of hoses in January 2014. |
| Thailand | Kinugawa (Thailand) Co., Ltd. | Launched production of hoses in May 2014. |
| Mexico | Kinugawa Mexico S.A. de C.V. | Relocated and expanded plant. Launched production of anti-vibration products in June 2014 and hoses in September. |
| Brazil | Kinugawa Brasil Ltda. | Launched production in July 2014. |
| Russia | Kinugawa RUS LLC | Launched production in July 2014. |
Mid-term Management Plan "Kinugawa Challenge 2015"
-Management target for FY ending Mar. 2016
- Sales: Over JPY 100,000 million
- Operating profit: Over JPY 12,000 million
- Operating profit margin: 12% or higher
-The Company forecast at the end of the fiscal year that ended in March 2015 that it will take one to two more years to achieve its business targets mentioned above, which are sales of over JPY 100,000 million and an operating profit margin of 12% or higher. Among the reasons, one is market changes such as the slowdown in automotive vehicle production in emerging countries.
-The Company will triple its sales in China in the fiscal year ending March 2016 (FY2015) over FY 2012 level. The Company is expecting an increase in local demand from Japanese, U.S., and European automakers which are expanding production in China and will increase local production of auto body seals mainly. The Company will establish a satellite plant in Dalian, Liaoning Province, in order to deal with an increase in order from its major customer, Nissan Motor Co., Ltd. The Dalian plant is scheduled to start operations in 2015. (From an article in the Nikkan Jidosha Shimbun on April 24, 2014)
Outlook for FY ending Mar. 31, 2016 |
(in millions of JPY) |
| FY ending Mar. 31, 2016 (Forecast) |
FY ended Mar. 31, 2015 (Actual) |
Rate of Change (%) |
|
| Sales | 80,000 | 76,135 | 5.1 |
| Operating income | 8,400 | 6,930 | 21.2 |
| Ordinary income | 8,000 | 7,419 | 7.8 |
| Net income | 5,000 | 4,289 | 16.6 |
>>>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 | 1,063 | 1,074 | 995 |
| -Body seal parts | 623 | 605 | 594 |
| -Brake and molding parts | 351 | 329 | 235 |
R&D Activities
-The Company is focusing its development activities on environmentally friendly elastomer materials and processing technology. Also, the Company is aiming to launch operations in new fields, as well as conduct joint R&D activities by collaborating with universities and research institutes in other industrial sectors.
Body seal parts
-The Company is working on ways to integrate materials, designs, production methods and processes on a global scale, developing body-sealing products that will improve its quality and competitiveness.
-The Company has been developing low-density, highly-rigid materials that are environmentally friendly, supplying ultra-lightweight body sealing products.
-The Company is working to expand the use of functional modular products with improved designs and fewer individual components.
-The Company is working to expand the use of plastic products in which highly functional elastomer materials are used, taking environmental impact and recycling into consideration.
-The Company is localizing operations globally to maintain its very cost-competitive advantages and build an innovative, localized materials procurement network that makes optimum use of regional characteristics. This includes implementing seamless production processes and establishing satellite plants.
Brake and molding parts
-The Company is working to expand the use of molded products that use lightweight rubber materials and TPV materials.
-The Company is developing seals for HEVs, which are resistant to electric insulation.
-The Company is localizing all tools to improve its cost-competitiveness in terms of global production.
-The Company is expanding in-house machining processes such as multi-stage kneading, welding processes, and metal-fitting processes.
-The Company is developing next-generation brake-caps, as well as new production methods and materials.
-The Company reduced the time and expenses needed for R&D activities by developing digital development technology (FEM analysis).
Product Development
All-plastic glass-run
- The Company developed a single-unit glass-run based on the use of plastics, mainly for European and American customers. The Company was able to improve the looks of the design, reduce wind-noise, and improve water-tightness by integrating partitions and weather-strips. Also, the Company was able to lower total costs by modularizing the products. In addition, the Company made the products lighter, as well as improved their recyclability and looks, by making them from all plastic.
Technological Licensing Agreements |
(As of Mar. 31, 2015) |
| Partner | Country | Purpose | Contract period |
| Faltec Co., Ltd. | Japan | Window moldings and their manufacturing methods | From Apr. 1, 2000 until the production terminates. |
Technical Assistance Contracts |
(As of Mar. 31, 2015) |
| Partner | Country | Purpose | Contract period |
| Metzeler | UK | Manufacturing technology for automotive weather-strips | From Nov. 25, 1988 until production terminates. |
| Renault Samsung Mortors | Korea | Technical assistant agreement for sealing products for automobile bodies. | From Mar. 1, 2003 until production terminates. |
Investment Expenditure |
(in millions of JPY) |
| FY ended Mar. 31, 2015 | FY ended Mar. 31, 2014 | FY ended Mar. 31, 2013 | |
| Overall | 3,900 | 3,700 | 2,700 |
| -Body seal parts | 2,900 | 3,200 | 2,200 |
| -Anti vibration parts | 400 | 200 | 200 |
| -Hose parts | 200 | 100 | 100 |
| -Brake and molding parts | 200 | 100 | 100 |
-The Company's main purposes for making capital investments were to set up production lines for modules and rationalize operations.
-Investment expenditure for FY ending Mar. 2016 is expected to be JPY 3,400 million.
Planned Capital Investments |
(As of Mar. 31, 2015) |
| Company/Office Name | Location | Equipment to be installed | Planned amount of investment (in millions of JPY) |
Start | Complete | Remark |
| Kinugawa Koriyama Co., Ltd. | Fukushima Pref. Japan |
Production facilities of body seal parts | 19 | Apr. 2015 | Mar. 2016 | * |
| Kinugawa Oita Co., Ltd. | Oita Pref. Japan |
Production facilities of body seal parts | 286 | Apr. 2015 | Mar. 2016 | * |
| Kinugawa Antivibration Co., Ltd. | Tochigi Pref. Japan |
Production facilities of anti vibration parts | 50 | Apr. 2015 | Mar. 2016 | * |
| Kinugawa Brake Parts Co., Ltd. | Tochigi Pref. Japan |
Production facilities of brake and molding parts | 100 | Apr. 2015 | Mar. 2016 | * |
| Head Office | Chiba Pref. Japan |
Test and research facilities and others | 380 | Apr. 2015 | Mar. 2016 | - |
| Teito Rubber Co., Ltd. | Saitama Pref. Japan |
Production facilities of hose parts | 97 | Apr. 2015 | Mar. 2016 | * |
| Kinugawa Mexico, S.A. de C.V. | Guanajuato, Mexico |
Production facilities of body seal parts, anti vibration parts and hose parts | 770 | Jan. 2015 | Dec. 2015 | * |
| Kinugawa Rubber (Wuhu) Co., Ltd. | Wuhu, China |
Production facilities of body seal parts and anti vibration parts | 375 | Jan. 2015 | Dec. 2015 | * |
*No significant change will take place, as the investment is for rationalizing operations and readying equipment to handle model changes.
Data
| Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2013 | |
| Japan | 1,555 | 1,579 | 1,615 |
| Americas | 898 | 749 | 635 |
| Asia | 1,861 | 1,823 | 1,499 |
| Total | 4,314 | 4,151 | 3,749 |
Sales by Product |
(in millions of JPY) |
| FY ended Mar. 31, 2015 | FY ended Mar. 31, 2014 | FY ended Mar. 31, 2013 | |
| Body seal parts | 42,451 | 39,488 | 32,450 |
| Anti vibration parts | 12,058 | 13,188 | 13,105 |
| Hose parts | 9,563 | 9,704 | 8,730 |
| Brake and molding parts | 4,696 | 4,837 | 4,720 |
| Other products | 6,469 | 6,373 | 6,110 |
| Other business | 895 | 950 | 1,104 |
| Grand total | 76,135 | 74,543 | 66,221 |
Sales by Geographic Area |
(in millions of JPY) |
| FY ended Mar. 31, 2015 | FY ended Mar. 31, 2014 | FY ended Mar. 31, 2013 | ||||
| Sales | Operating Profit | Sales | Operating Profit | Sales | Operating Profit | |
| Japan | 43,361 | 3,976 | 45,614 | 4,684 | 46,370 | 4,553 |
| North America | 12,719 | (134) | 9,304 | (705) | 5,921 | (1,030) |
| Asia | 20,055 | 3,053 | 19,623 | 3,197 | 13,929 | 2,772 |
| Consolidated Elimination | - | 34 | - | 116 | - | 88 |
| Total | 76,135 | 6,930 | 74,543 | 7,292 | 66,221 | 6,383 |
Consolidated |
>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.) |
| Year Ending Mar. 31 | FY ended Mar. 31, 2011 | FY ended Mar. 31, 2012 | FY ended Mar. 31, 2013 | FY ended Mar. 31, 2014 | FY ended Mar. 31, 2015 |
| Sales (thousand yen) | 64,579,280 | 70,611,516 | 66,221,799 | 74,543,568 | 76,135,763 |
| Income from ordinary business activities (thousand yen) | 7,486,151 | 8,555,240 | 7,046,424 | 8,084,908 | 7,419,355 |
| Net income (thousand yen) | 4,467,894 | 5,300,270 | 3,975,454 | 4,694,301 | 4,289,397 |
| Comprehensive income(thousand yen) | 4,188,724 | 5,426,491 | 5,398,985 | 7,528,678 | 7,695,428 |
| Net assets (thousand yen) | 16,847,484 | 21,625,740 | 26,332,764 | 31,535,005 | 38,021,275 |
| Total assets (thousand yen) | 42,379,837 | 46,713,128 | 49,073,134 | 61,038,933 | 71,371,598 |
| Book value per share (yen) | 236.50 | 312.59 | 379.58 | 453.90 | 546.67 |
| EPS (yen) | 66.56 | 79.16 | 59.13 | 69.83 | 63.81 |
| Diluted EPS (yen) | - | - | 59.10 | 69.73 | 63.66 |
| Net asset ratio (%) | 37.5 | 45.0 | 52.0 | 50.0 | 51.5 |
| ROE (%) | 31.9 | 28.7 | 17.1 | 16.8 | 12.8 |
| PER | 6.3 | 8.1 | 8.0 | 6.1 | 8.2 |
| Cash flow from operating activity (thousand yen) | 6,533,843 | 5,941,962 | 3,138,392 | 5,790,696 | 4,851,103 |
| Cash flow from investment activity (thousand yen) | (1,187,957) | (1,311,502) | (3,585,505) | (5,068,267) | (5,159,040) |
| Cash flow from financial activity (thousand yen) | (5,732,367) | (4,380,382) | (228,107) | 250,357 | 1,629,699 |
| Balance of cash and cash equivalents (thousand yen) | 2,574,988 | 2,821,659 | 2,959,755 | 4,424,339 | 6,173,518 |
| Number of employees | 3,472 | 3,513 | 3,749 | 4,151 | 4,314 |
Non Consolidated
| Year Ending Mar. 31 | FY ended Mar. 31, 2011 | FY ended Mar. 31, 2012 | FY ended Mar. 31, 2013 | FY ended Mar. 31, 2014 | FY ended Mar. 31, 2015 |
| Sales (thousand yen) | 41,102,898 | 44,005,244 | 37,866,092 | 37,052,990 | 33,960,551 |
| Income from ordinary business activities (thousand yen) | 3,587,858 | 4,668,407 | 4,639,934 | 3,902,957 | 3,793,963 |
| Net income (thousand yen) | 2,335,782 | 2,395,090 | 3,384,349 | 2,975,022 | 2,745,686 |
| Paid-in Capital (thousand yen) | 5,654,585 | 5,654,585 | 5,654,585 | 5,654,585 | 5,654,585 |
| Number of shares outstanding (thousand) | 67,299 | 67,299 | 67,299 | 67,299 | 67,299 |
| Net assets (thousand yen) | 12,750,713 | 15,196,367 | 17,951,335 | 20,421,513 | 21,978,135 |
| Total assets (thousand yen) | 28,215,707 | 31,819,269 | 32,459,465 | 36,168,028 | 40,989,214 |
| Book value per share (yen) | 189.96 | 226.01 | 266.60 | 302.94 | 325.68 |
| Dividend per share (yen) | 5.00 | 6.00 | 8.00 | 9.00 | 10.00 |
| EPS (yen) | 34.80 | 35.77 | 50.34 | 44.25 | 40.85 |
| Diluted EPS (yen) | - | - | 50.31 | 44.19 | 40.75 |
| Net asset ratio (%) | 45.2 | 47.8 | 55.2 | 56.3 | 53.4 |
| ROE (%) | 19.9 | 17.1 | 20.4 | 15.5 | 13.0 |
| PER | 11.8 | 17.9 | 9.4 | 9.7 | 12.8 |
| Payout ratio (%) | 14.4 | 16.8 | 15.9 | 20.3 | 24.5 |
| Number of employees | 283 | 282 | 287 | 285 | 292 |