Akebono Brake Industry Co., Ltd. Business Report FY ended Mar. 2013

Business Highlights

Financial Overview

(in millions of JPY)
  FY ended Mar. 31, 2013 FY ended Mar. 31, 2012 Rate of Change
Sales 206,050 209,584 (1.7) 1)
Operating income 4,315 3,835 12.5 -
Ordinary income 3,402 2,097 62.2 -
Net income 518 (3,215) - -

1) Sales
-Operating revenue in FY ended Mar. 2013 fell 7.0%, down to 89.5 billion yen. During the first half of the fiscal year, the level of product orders remained high because of the business being generated in line with recovering from the Great East Japan Earthquake, and because of the eco-car sales incentive programs that were in effect. However, from the 3rd quarter and after, OEMs transferred production outside Japan and export volumes fell, contributing to the lower performance for the year.

<North America>
-Operating revenue grew 2.2% year-on-year to 98.4 billion yen, thanks to a recovery in orders from Japanese OEMs and strong sales to U.S.-based OEMs.
-The region was able to record its first profit in five years as a result of ending production of some unprofitable products, which it acquired from Robert Bosch LLC, and receiving larger orders for new products that were profitable.

-Operating revenue fell 1.7% year-on-year to 4.9 billion yen because of the stagnant auto market in Europe and lower sales of export products destined to China.

-Operating revenue fell 5.9% year-on-year to 13.2 million yen. This was due to a slowdown in motorcycle sales attributed to a change in the government's loan policy, even though the volume of orders received from Japanese OEM transplants was high.

-Operating revenue increased 14.9% year-on-year to 6.1 billion yen because of robust orders that the Company was winning until the 3rd quarter, which were coming from Japanese OEM transplants in the country. However, during the 4th quarter, the number of product orders dropped drastically because of the boycott on Japanese-branded vehicles that was triggered by the territorial dispute between Japan and China.

-Operating revenue increased 78.2% year-on-year to 5.1 billion yen, supported by an increase in orders that came from local OEMs in the country, including those from Japanese transplants.

Business Policies

Expanding Brake Systems Business for Global Platform Vehicles
-The Company will expand the production and sale of brake systems designed for global-platform vehicles built by Japanese, U.S., and European OEMs. In 2013 the Company set up a supply network by making use of its production plants in Japan, the U.S.A., China, and Southeast Asia, aiming to increase the percentage of operating revenue generated by sales of brake systems to global-platform vehicles to 20% by 2020. (from a November 14, 2012 Daily Automotive news article)
  • Japanese and European OEMs have ordered brake systems for global-platform vehicles that have started to be built and sold in Japan, North America, Europe, and China in 2013. In addition to manufacturing these at production plants in Japan, the U.S.A., and China and supplying them locally, products destined to Europe are being delivered from Indonesia and Thailand.
  • Brake systems, which the Company won orders for from Luxury-car OEMs in Europe, will be manufactured in the U.S.A., with deliveries forecast to start from the second half of 2014. A high-performance brake, designed for sports cars, and which use aluminum calipers will be built in the U.S.A. and exported to Europe.
Localizing Production of Disc-brake Component Parts
-The Company will start production of disc brake components in Thailand. It is going to manufacture pistons for brake calipers, starting in September. Producing these parts to be integrated into products made at the Company's brake assembly plant locally will allow the Company to improve its product cost competitiveness and profitability. By establishing a system in which the group's respective plants can mutually supply products to each other, the company intends to eliminate the risks of supply disruptions in case of natural hazards and other disasters that might cause production suspensions. After the great earthquake in March 2011, which badly interrupted the supply chains, Japanese parts manufacturers are now decentralizing production of products that are being made exclusively in Japan to prevent such problems. The Company's Thai facility now uses pistons shipped from Japan. (From an article in the Nikkan Jidosha Shimbun on August 6, 2012)  

Re-launching Operations in the Brake Corner Module Business
-The Company will develop a brake corner module, which is a combination of brake components and body assembly parts that can be readily mounted to a new vehicle. The Company will prepare for launching the project, aiming to start deliveries to Japanese automakers around 2014-2015. Currently, the Company has no corner module business with Japanese car manufacturers, though it once tapped into the corner module market in Japan in 2002. The Company, however, has recently received requests for the module products, as automakers are shifting to more efficient development and procurement methods to improve their competitive edge. The company is now poised to re-enter the business of corner modules, which can offer high performance and cost efficiency. It is going to step up activities to make proposals on the technology to car manufacturers. (From an article in the Nikkan Jidosha Shimbun on April 12, 2012)

Lower Copper-content Brake Friction Material
-The Company is poised to start production of its automotive brake friction materials, which reduce the amount of copper utilized as early as 2013. The new materials will meet the new copper regulations starting in 2021 in California, in the United States., and are also expected to be used for the brakes of certain trim levels of a European automaker's new model, which will be released next year. Currently, brake friction manufacturers are carrying out research and development of low-copper products in a fiercely competitive environment. Some have already developed prototypes and started product evaluation, but the Company has a head start in launching the new low-copper materials ahead of its rivals. (From an article in the Nikkan Jidosha Shimbun on Dec. 21, 2012)

Major Contracts

-The Company announced that it would supply its brake systems for the McLaren "P1", an ultra high-performance road car from the British sports car brand. Since establishing collaboration with Vodafone McLaren Mercedes in 2007, the Company has been developing high-performance braking technologies to support the Formula 1 team to compete in a series of international car racing. Based on its midterm business strategy, the Company aims to differentiate its products and technologies from those of its competitors. Winning a program for the ultra high-performance McLaren "P1" has created a significant milestone for the Company, as it is looking to expand business for high-performance road cars. (From an article in the Nikkan Jidosha Shimbun on Feb. 28, 2013)  

Outlook for FY ending Mar. 31, 2014

(in millions of JPY)
  FY ending Mar. 31, 2014
FY ended Mar. 31, 2013
(Actual Results)
Rate of Change
Sales 224,000 206,050 8.7
Operating income 8,000 4,315 85.4
Ordinary income 6,700 3,402 96.9
Net income 2,500 518 382.6

-For fiscal year ending Mar. 31, 2014, the Company aims to achieve record-breaking operating sales in North America, China, Thailand, and Indonesia.

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

Mid-term Management Plan

-The Company announced its mid-term management plan, called Global 30, which outlines long-term plans that are set to end at the close of fiscal year 2020, which ends in March 2021. One of the targets under the Plan is to raise the Company's global market share of disc brake pads sold to OEMs to 30%.

-In order to achieve the objectives of Global30, the Company revised the schedule, making a new mid-year management plan, called Akebono New Frontier 30 - 2013 that sets fiscal year 2015 (ending March 2016) as the final year. The major points are outlined below:
1) Differentiate technology designed for the future
  • Launch brake operations for mass-market, high performance vehicles
  • Establish a supply network that can deliver to global platforms
  • Develop low-cost brakes for developing countries
  • Establish technology that can respond to next-generation environmental needs; increase facilities producing next-generation friction materials
2) Efforts and developments overseas for revolutionary cost reductions
  • Reduce costs based on product sharing and standardization
  • Establish an organizational structure in North America and Europe, which can generate profits
  • Review the operating structure, aligning it with demand; and review resource distribution
3) Speed up the migration of global operations so they are based on Japan, the U.S.A., Europe, and Asia, and not only Japan, the U.S.A and Europe.
  • Expand operations into developing countries
  • Establish a global supply network and R&D structure
-Numerical Targets (in 100 millions of JPY)
- Mid-term Management Plan Long-term vision
FY ended Mar. 31, 2013
(Actual Results)
FY ended Mar. 31, 2014
FY ended Mar. 31, 2016
FY ended Mar. 31, 2021
Sales 2,060 2,244 2,500 3,000
Operating income 43 80 200 360
Operating Profit Margin 2% 4% 8% 12%
Market share of OE disc-brake pads 18% 18% 20% 30%


R&D Expenditure

(in millions of JPY)
  FY ended Mar. 31, 2013 FY ended Mar. 31, 2012 FY ended Mar. 31, 2011
Overall 2,304 1,747  1,256

-The Company forecasts spending 11.0 billion yen in 2014.

R&D Structure

Name Location Remark
Development division Hanyu, Saitama Pref. -
Ai-Ring (Test Course) Iwaki, Fukushima Pref. Largest-scale test course in Japan among domestic auto-parts suppliers' facilities
Akebono Research & Development Centre Ltd. Hanyu, Saitama Pref. -Materials development: control of specially-made friction, low environmental impact, crisis management
-Next-generation friction materials development: compact, light-weight, high performance
-Friction behavior research: friction behavior mechanisms
-Process development: productivity, low environmental impact
North America
Akebono Engineering Center Michigan, USA -
Akebono Europe S.A.S. Gonesse, France -
Akebono Advanced Engineering (UK) Ltd. Wokingham, UK -
China Technical Center - -

-The Company has announced that it has decided to establish Akebono Engineering Center, Europe S.A.S. (tentative), a new R&D center for foundation brakes on the outskirts of Reims, France. The Company currently operates the R&D center "CREA" in Gonesse, France for work on friction materials, and a friction material production plant in Arras, France. By establishing a new R&D center for foundation brakes, the Company aims to break into the European foundation brake business. The Company is planning a specific study for this new R&D center, which is expected to become operational in 2015. (From a press release on November 2, 2012)

R&D Activities

Friction materials for brakes
-Development of high-quality products (mainly high-performance brake-pads for passenger cars and low-cost brake-pads) that provide superior performance in terms of noise and vibration, and which reduce wheel dust (a phenomenon that has recently become the focus of attention), and which use safe frictional materials that take environmental concerns into account.
-Develop new friction materials that comply with recently enacted environmental regulations on friction materials in several U.S. states, including Washington.

Motorized technology
-Electric brakes that can be controlled by electric signals coming from small electric motors placed in the brakes.
-Development of technology on electric parking systems in which only the parking function has been motorized.

Akebono Engineering Center
-Conducts the following R&D projects:
  • Proprietary lubricating material that helps control NVH and friction.
  • Biomass polymer independent from petroleum-based materials
  • Reduction of cast-rare-earth metals
  • Functional particles for developing operations in new business fields.
  • Ceramic friction materials that aim for a stable, high-frictional coefficient, in order to reduce weight
  • Relationship between frictional materials and loss (reduction) of frictional behavior
  • Surface processing technology designed to achieve zero-emission
<North America>
Friction materials
-Development of friction materials that provide superior performance in terms of noise and vibration, and which comply with new environmental regulations on friction materials.

Brake design/structural development
-Development of light-weight, aluminum alloy disk-brake

-Development of friction materials that meet strict, environmental regulations in Europe; friction materials that meet regulations on European vehicles exported to Japan and the U.S.A.
-Akebono Advanced Engineering (UK) Ltd.: development of disc-brakes designed for motor sports; specializing in development of disc-brakes for high-performance vehicles

-Research and analysis on Chinese market needs and how products are being used, to develop products that can be delivered at low cost but which still provide needed features and performance

Investment Activities

Capital Expenditure

(in millions of JPY)
  FY ended Mar. 31, 2013 FY ended Mar. 31, 2012 FY ended Mar. 31, 2011
Total 19,800 14,300 5,100

-The Company invested the following amounts in facilities and equipment in its global operations: Japan: 8.8 billion yen, North America: 6.4 billion yen, Europe: 300 million yen, Indonesia: 1.4 billion yen, China 1.4 billion yen, and Thailand: 1.5 billion yen.

-Investment projects are as follows:
  • Japan: facilities to produce next-generation friction materials
  • North America: capital investment to develop new products
  • Europe: facilities for R&D activities
  • Indonesia, Thailand, China: capital investment to increase production in order to meet the rise in product orders
-The Company forecasts spending 15.0 billion yen in capital investments in fiscal year ended Mar. 2014.

Planned Capital Investments

(As of Mar. 31, 2013)
Facilities & Activities Total investment (millions of yen) Start date Completion
Headquarters and other facilities
(Tokyo, Japan)
Casting production facilities, equipment for new production methods, information equipment 1,140 Apr. 2013 Mar. 2014
Development division
(Saitama Pref., Japan)
Testing and R&D facilities, high-performance brake development facilities 1,343 Apr. 2013 Mar. 2014
Akebono Brake Iwatsuki Manufacturing Co., Ltd.
(Saitama Pref., Japan)
Production facilities manufacturing disc brakes and drum brakes 1,116 Apr. 2013 Mar. 2014
Akebono Brake Fukushima Manufacturing Co., Ltd.
(Fukushima Pref., Japan)
Production facilities manufacturing brake linings, industrial machinery, and railway products 146 Apr. 2013 Mar. 2014
Akebono Brake Yamagata Manufacturing Co., Ltd.
(Yamagata Pref., Japan)
Production facilities manufacturing disc brake pads 424 Apr. 2013 Mar. 2014
Akebono Brake Sanyo Manufacturing Co., Ltd.
(Okayama Pref., Japan)
Production facilities manufacturing disc brakes and drum brakes 152 Apr. 2013 Mar. 2014
Akebono Research & Development Center Ltd.
(Saitama Pref., Japan)
Testing and R&D facilities 20 Apr. 2013 Mar. 2014
Akebono Brake Corporation
(Michigan, USA and others)
Facilities to conduct R&D activities, and manufacture disk-brakes, drum-brakes, and disk-brake pads 6,700 Jan. 2013 Dec. 2013
Akebono Brake Mexico S.A. de C.V.
(Guanajuato, Mexico)
Facilities to manufacture drum-brakes 642 Jan. 2013 Dec. 2013
Akebono Europe S.A.S.
(Gonesse, France and others)
R&D facilities, production facilities manufacturing disc brake pads 312 Apr. 2013 Mar. 2014
Akebono Advanced Engineering (UK) Ltd.
(Wokingham, UK)
Facilities to develop high-performance brakes 190 Apr. 2013 Mar. 2014
Akebono Corporation (Suzhou)
(Suzhou, China)
Production facilities for manufacturing disc brake pads 737 Jan. 2013 Dec. 2013
Akebono Corporation (Guangzhou)
(Guangzhou, China)
Production facilities for manufacturing disc brakes and drum brakes 750 Jan. 2013 Dec. 2013
PT. Akebono Brake Astra Indonesia
(Jakarta, Indonesia)
Facilities to produce disc brakes and disc brake parts 348 Jan. 2013 Dec. 2013
Akebono Brake Thailand Co., Ltd.
(Chonburi, Thailand)
Production facilities for manufacturing disc brakes 720 Jan. 2013 Dec. 2013