TS TECH Co., Ltd. Business Report FY2011

Business Highlights

Financial Overview

(in millions of JPY)
  FY ended Mar. 31, 2012 FY ended Mar. 31, 2011 Rate of Change (%) Factors
Sales 305,482 357,489 (14.5) 1)
Operating income 9,401 20,163 (53.4) -
Ordinary income 10,927 21,508 (49.2) -
Net income 4,712 11,755 (59.9) -

-Due to the impact of the Great East Japan Earthquake and the flooding in Thailand on production volume, the amount of program business that the Company won from its major customers decreased. Plus, the Company also faced negative currency translation.

-In addition to the impact on production because of the Great East Japan Earthquake and the flooding in Thailand, the Company found itself in a very harsh economic environment due to the extremely high evaluation of the yen also. In addition to launching production of seats for Honda's new "Fit Shuttle" and "CR-V", the Company decided to construct a new seat-production facility in Saitama Prefecture to enhance its seat-production operations in order to remain competitive in the four-wheel vehicle seat market.

<The Americas>
-In April 2011, the Company started supplying seats and interior trim to Honda's North American operations. In spite of this, the Company faced a very harsh business environment in the first half of the year, with production being affected by the Great East Japan Earthquake. In the second half of the year, production was impacted by the flooding in Thailand. Nevertheless, in addition to a recovery in new program business the Company won mainly for the new Honda "Civic" after the Earthquake, the Company won firm orders for seats and interior trim for the new Honda "CR-V" that started being produced in North America in December 2011. 

-The Company began production of seats for the "EVERUS S1" being sold under the Guangqi Honda brand name, and for the new Honda "Civic".

-The Company began producing seats in Thailand and India for the Honda "Brio".

Recent Developments Outside Japan

-The Company is set to raise its global production capacity of automobile seats enough to be installed in 5 million cars by 2014 or 2015. In response to growing production by its main customer Honda and other automakers, the major Japanese supplier of seating systems will enhance production capacity, primarily in new emerging markets, to raise its global output from the current 3 million to 5 million seat sets a year. To save on investment in boosting capacity, TS TECH will look for a possibility of collaborating with other suppliers to build new plants or expand existing facilities. With a series of programs announced by Japanese automakers to increase production in emerging markets, competition in the global seat market is becoming more and more intense, involving major seat suppliers in the U.S. and Europe. TS TECH currently supplies 70 percent of seats for Honda models, including such global models as the "Fit", "Accord", "CR-V" and "Civic". Along with Honda's plans to boost production in emerging countries, like China, India, Southeast Asia and Mexico, the seat supplier intends to expand production capacity at its plants in Mexico, India, China, Thailand and Indonesia with an investment of around 10 billion yen only in plant building over the next 3-5 years. By enlarging production capacity in each market, TS TECH is poised to maintain a 70 percent share of seats for Honda vehicles. In Indonesia, it will produce seats for Honda's Brio slated to go into production at a new plant in 2014. Production volumes of seats will be secured by expansion of the existing plant as well as a partnership with a local supplier. The seats for the Brio are already supplied in Thailand and India. Indonesia will be the third supply base. Additionally, TS TECH is planning to begin deliveries to Volkswagen around 2014. In order to put the supply network in place, it will study a possibility of setting up a new production facility or collaborating with a local partner in Europe. (From an article in the Nikkan Jidosha Shimbun on Jun. 5, 2012)

-The Company announced that it will establish a sales company in Germany. TS Tech won a program to develop and manufacture seat frames for the third-row seat of Volkswagen's new sport utility vehicle, which is its first business with a European automaker. The company is poised to step up marketing in Europe, aiming to ensure business to supply full-seat systems as well. TS Tech is also going to select a manufacturing site in Germany, looking to start production about four years from now. Currently in Europe, the Group has a production subsidiary in the U.K. In Germany, it has a representative office near Volkswagen's headquarters in the suburbs of Wolfsburg. In addition to expanding business with Volkswagen, TS Tech is targeting Audi and BMW as well. The new German subsidiary, TS Tech Deutschland GmbH, will be established in Frankfurt in July. It will be capitalized at 10 million euros (approximately 1.2 billion yen), which will be fully invested by TS Tech. (From an article in the Nikkan Jidosha Shimbun on May 7, 2011)

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

Outlook for FY ending Mar. 2013

(in millions of JPY)
  FY ending Mar. 2013
FY ended Mar. 2012
Rate of Change
Sales 363,000 305,482 18.8
Operating income 21,500 9,401 128.7
Ordinary income 23,000 10,927 110.5
Net income 12,500 4,712 165.3


R&D Expenditure

(in millions of JPY)
  FY ended Mar. 31, 2012 FY ended Mar. 31, 2011 FY ended Mar. 31, 2010
Group 9,641 9,620 9,617
Automotive business - 8,910 8,890

R&D Facilities

Technical Center Tochigi Pref., Japan
TS Tech North America, Inc. Ohio, U.S.A.

R&D Activities

Automotive Business
<Japan, Americas>
1) Safety technology
-In working to improve automotive safety, the Company is conducting R&D activities on recent developments in the world in the area of safety regulations and assessments, commercializing products based on its findings.
-The Company is developing methods for conducting a multitude of very precise analyses on collision testing.
-The Company has been effectively commercializing technology responding to auto-safety by developing lighter weight seats, which are the highest class in the world in terms of mitigating neck-area injuries during rear-end collisions; and by developing control sensors installed in seats, which deploy side-airbags, making them lighter and more compact, working to expand the types of vehicles in which these latest technologies can be installed.

2) Environmental technology
-The Company is conducting R&D activities on technology that will enable materials and parts used in products to be recycled. And as part of its efforts to improve fuel efficiency, the Company is reducing the number of onboard parts by creating optimal designs that make products lighter in weight. Plus, the Company is considering making plastic seat frames, in working to create practical technology that responds to the environment.

3) Technology responding to product appeal and comfort
-As part of the Company's R&D activities to design more comfortable seats, it is developing "comfort technology" aimed at improving initial seating comfort for the occupants and relieving fatigue while they sit for long hours.
-In line with making variable seat positions possible, the Company is developing seat-positioning mechanics that operate with one motion. In addition, it is commercializing easy-to-use products and strengthening its R&D capabilities in the area of electric/electronic auto parts such as multi-functional devices, which are all designed from the customers' points of view.

Investment Activities

Capital Investment

(in million JPY)
  FY ended Mar. 31, 2012 FY ended Mar. 31, 2011
Japan 2,879 4,216
The Americas 2,465 2,920
China 562 766
Asia/UK 1,993 1,384
Total 7,902 9,288

Investment in Japan

-In Dec. 2011, the Company announced that it will establish an additional seat factory on the premises of its Saitama Plant (Gyoda City, Saitama Prefecture). When the factory is completed, the company will work on improving its production operations in the Saitama area, while mulling the possibility of integrating its production functions, as it aims to ensure a greater degree of competitiveness in the automotive seat market. The new facility can be operated using only 50 percent of electricity consumed at the company's existing factory. In addition, an optimized materials transport system will be introduced to minimize environmental burdens. Incorporating the latest production technologies, the company aims to achieve an outstanding level of production efficiency, which is 30 percent higher than the existing factories, while establishing an excellent quality management system. The plant, which is worth 2.7 billion yen in investment, is scheduled to be completed in October 2012 and begin operations in January 2013. The new plant project was originally announced in August 2008. Due to the impact of the global financial crisis, however, the company had been reevaluating its viability. TS Tech will continue feasibility study on an interior product plant, which is also under review. (From an article in the Nikkan Jidosha Shimbun on December 27, 2011)

Major Capital Investment Projects

(As of Mar. 31, 2012)
Plant Location Investment targets Planned amount of investment (in millions of JPY) Start End
Saitama Plant Saitama Pref.,
Buildings, and facilities and equipment to produce seats and interior products for four-wheel vehicles. 1,968 Apr. 2012 Mar.2012
Technical Center Tochigi Pref.,
Prototyping and test facilities for interior products. 1,271 Apr. 2012 Mar.2013
TS Tech (Thailand) Co., Ltd.. Ayutthaya, Thailand Land, Buildings, and facilities and equipment to produce seats and interior products for four-wheel vehicles. 1,344 Jan.2012 Dec.2012