Akebono Brake Industry Co., Ltd. Business Report FY ended Mar. 2018

Financial Overview

(in millions of JPY)

FY ended Mar. 31, 2018 FY ended Mar. 31, 2017 Rate of Change
Sales 264,921 266,099 (0.4) -Demand was strong in Europe and Asia, but lower in North America.
Operating income 8,143 4,223 92.8 -
Ordinary income 5,796 761 661.4 -
Net income attributable to owners of the parent 782 354 121.0 -

Factors and Recent Developments

-Increased sales but lower income. Higher costs for steel in line with huge cost surges in the market for materials. Higher bonus payments tied to performance-based results.

-The decrease in sales this past year in North America resulted from US OEMs’ ceasing production of wagon-type vehicles and a decrease in orders for friction materials in line with temporary inventory adjustments of after-market products.
The Company is making progress in normalizing its productivity in North America by implementing various initiatives to achieve a stable income through responding to the steady decrease in sales that started at its North American operations in 2015.

-The Company is still continuing to experience slow sales of after-market friction-materials in the USA. It is trying to curb the fall in sales of friction materials that have high profit margins. In addition, there is a labor shortage in the USA.

-There was a huge surge in the cost of materials such as steel (totaling JPY 1.0 billion). Costs incurred last year for external consulting (JPY 2.1 billion) and air-freight to ship products in an emergency (JPY 1.2 billion) ended. In addition, the Company improved its performance by reducing labor costs (JPY 1.4 billion) and rationalizing production and procurement operations (JPY 1.7 billion). Compared to the previous year’s operating profit of JPY -3.0 billion yen improved to JPY 1.8 billion.

-European operations posted higher sales, but lower profit.
Some of the reasons were a reduction in the highly profitable friction-materials business at the plant in France and various costs incurred at the plant in Slovakia for disk brakes designed for high-performance mass-market vehicles. Also, the operating profit margin in the 4th quarter significantly fell due to inventory adjustments.

-Higher sales and profits at the operations in China, Thailand, and Indonesia.
In Indonesia in particular, the ratio of production allocated to highly profitable motorcycle brakes helped the Company achieve an operating profit-margin in the 10% range.

Outlook for FY ending Mar. 31, 2019

>>>Outlook for next fiscal year’s sales, operating profit margins, etc.

Mid-term Management Plan

-Based on its long-term vision, the Company set growth targets under its “Global 30” plan for the 2020 fiscal year that ends in March 2021. It aims at capturing 30% of the global market share for factory-installed brake-disk pads and achieving an operating profit margin of 10%.

-In working to achieve the targets it set under Global 30, the Company set FY2018, which ends in March 2018 and is the final fiscal year of its akebono New Frontier 30 – 2016 mid-term management plan, as the first year of Global 30.

Targets for the fiscal year that ended in March 2018:
Sales: JPY 265.0 billion
Operating profit: JPY 8.0 billion
Current net profit: JPY 3.0 billion

Sales and operating profit targets were basically achieved, but current net profit was significantly lower than the target

New Mid-term Management Plan "akebono New Frontier 30 - 2016"

1) Rebuild North American Operations

Rebuild Akebono Brake Corporation (ABC) foundation

-Strengthened management and organizational improvements led by ABC

Stronger cost management -Shift from emphasis on sales to profitability
-Necessary adjustments to sales and purchasing prices
Increase productivity -Made effective use of Mexico plant
-Achieved safety first
-Stabilized quality
-Reduced emergency shipments to zero
2) Install product specific business divisions for a global network
  1. Establish product specific business units responsible for sales, R&D and other critical functions
Business unit

HP (High Performance)

HP disc brakes, brake pads

With Europe as the center, increase market share through competitiveness in performance and cost

Foundation brakes Disc brakes, drum brakes, mechanical parts Global expansion, with augmented safety and quality. Maintain profitability and product volume.
Infrastructure and Mobility

Industrial, rolling stock and sensor products

New business and increased sales through technological innovation and combined technologies


Brake pads, lining

Increase competitiveness through the Company's strengths in raw material and NVH technologies (NVH = Noise, Vibration and Harshness)
Aftermarket Service parts Increase global profitability in emerging markets and niche markets
  2. Establish a global strategy through enhanced regional marketing functions
  3. Carry out a global product strategy based on the concept of standardization and enhanced product features (standardized products in addition to custom "toppings"or S+t)
  4. Rationalization achieved through global purchasing activities
3) Expand HP (High Performance) business and create new businesses in Europe

  1. Incorporate high performance technologies into mass production models to create unique products with added value
   :Currently producing high performance 6 pot brake caliper. Introducing world’s first mass produced 10 pot caliper.

2. The Company formerly manufactured friction materials in France. However, with the opening of Akebono Brake Slovakia s.r.o. in 2015, the Company is now able to produce disk brakes with aluminum calipers under a seamless production system in Europe.

Numerical Targets

(in 100 millions of JPY)

- New Mid-term Management Plan Long-term vision
FY ended Mar. 31, 2016
(Actual Results)
FY ended Mar. 31, 2017
(Actual Results)
FY ended Mar. 31, 2018
(Actual Results)
FY ending Mar. 31, 2019
FY ending Mar. 31, 2020
Sales 2,813 2,661 2,649 2,550 -
Operating income (38) 42 81 100 -
Operating margin (%) - 1.6 3.1 3.9 -
Net income attributable to owners of the parent (195) 3.5 7.8 50 -
Market share of Global OEM disc-brake pads - - - - 30%

R&D Expenditure

(in millions of JPY)

FY ended Mar. 31, 2018 FY ended Mar. 31, 2017 FY ended Mar. 31, 2016
Overall 10,340 10,836 11,928

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
-Test and evaluation center of brakes using the test course
Akebono Research & Development Centre Ltd. Hanyu, Saitama Pref.

-Development of new material

  • Microminiaturized, lightweight brakes
  • Low environmental burden friction materials
  • Alternative to scarce materials

-Expanding into new fields

  • Development of proprietary materials
  • Development of energy-saving technologies
  • New technologies in value-added product manufacturing such as surface finishing technology
Akebono Advanced Engineering Co., Ltd. Hanyu, Saitama Pref. -Development of high performance brake system
North America
Akebono Engineering Center Michigan, USA -
Akebono Europe S.A.S. Gonesse, France -
Akebono Engineering Center, Europe S.A.S. Bezannes, France -Development of foundation brakes
Akebono Advanced Engineering (UK) Ltd. Wokingham, UK -Development of disc brakes designed for motor sports and for high performance vehicles
Akebono Europe GmbH Germany, Hessen -Development of disc brakes
China Technical Center - -Established in January 2011.
Thailand brake development location - -Established in January 2014.
-Development of brakes for ASEAN market

R&D Activities

-The Company is continuing R&D activities on new friction materials and next-generation brakes used in various transportation vehicles and industrial equipment.

Friction materials
-Developing friction materials that comply with environmental regulations on copper, which were enacted in various US states such as the state of Washington.
-Developing friction materials that maximize the characteristics of brakes, for electric vehicles (EVs), plug-in hybrid vehicles (PHVs), and hybrid vehicles (HVs)

Disk brakes/drum brakes
-Achieving commercialization of aluminum-alloy opposed-type brakes for high-performance vehicles.

Electrification technology
-Developing electric parking brakes in which the parking-brake function is operated by a compact electric motor

At AKEBONO Brake Research and Development Center, Ltd. , the Company conducts below works

  1. Developing and optimizing a fiber for use as a friction material binder, which is made from a complex mixture derived from oils of plants with woody characteristics.
  2. Developing an entirely new concept of next-generation brakes that make use of magneto rheological (MR) fluid, which have a very different mechanism from friction brakes
  3. Developing compact and lighter weight products by using new structural designs and adopting low-use materials that reduce environmental impact and offer comfort as a result of introducing automation, eliminating friction dust, and controlling vibration squeak made possible by improving response and control.

-Developing friction materials that comply with environmental regulations on copper, which were enacted in various US states such as the state of Washington.
-Developing disk brakes using light-weight aluminum alloy.
-Mass-producing disk rotors and drum brakes.

-Developing friction materials that comply with Europe’s very strict environmental regulations.
-Locating R&D centers in Germany and the UK. In the UK, developing disk brakes for motorsports vehicles.

Friction materials
-Developing products making use of the cost-effectiveness and performance characteristics prevailing in newly emerging countries by localizing procurement of parts and materials and applying methods appropriate to protecting the environment.

Disk brakes

-Developing low-priced products that offer needed functions and performance by researching and analyzing local needs and ways of doing things.

Product orders

-The Company announced that its brake calipers and brake pads will be equipped on the new-version Nissan Leaf. The products being equipped on the Leaf are single-action hydraulic brake calipers and brake pads. By controlling vehicle behavior by mounting devices such as those that prevent lateral sliding makes the pad movement smoother. The Company is improving materials that will lead to reducing vehicle weight, in order to extend the cruising distance of electric vehicles. (From a March 5, 2018 Nikkan Jidosha new article)

-The Company announced that its front 6-pot caliper brake pads will be equipped on the new-version Polestar 1 electric coupe, a model in Volvo’s high-performance car brand Polestar. Used together with high-performance pads, the 6-pot aluminum mono-block opposed piston-type calipers designed for luxury cars and high-performance cars achieve superior braking performance even at high speeds and high loads and during high-temperature braking, providing a significant level of comfort in luxury vehicles. (From an October 27, 2017 Nikkan Jidosha news article)

-The Company announced that its rear brake-pads will be equipped on the Toyota C-HR, while its front brake-pads will be equipped on the Prius PHV and Camry. The Company develops brake pads to suit the nature and weight of the vehicle models being equipped. For example, it gave the C-HR a special characteristic that takes into account its sporty driving nature. For the Camry, the Company focused on quietness and feel by controlling noise and squeaks. (From a September 28, 2017 Nikkan Jidosha news article)

Capital Expenditure

(in millions of JPY)

FY ended Mar. 31, 2018 FY ended Mar. 31, 2017 FY ended Mar. 31, 2016
Total 11,550 18,670 18,568

-Capital expenditure breakdown follows:

Japan: JPY 2,734 million

North America: JPY 4,088 million

Europe: JPY 2,202 million

Indonesia: JPY 670 million

China: JPY 1,660 million

Thailand: JPY 196 million

-Capital expenditure allocations:

  • Japan: Improving quality and productivity at the Iwatsuki Plant; installing more equipment to respond to an increase in product orders for high-performance vehicles.
  • North America: installing more equipment to respond to an increase in product orders for pickup trucks.
  • Europe: installing more equipment to produce products for high-performance vehicles.
  • China: Installing more equipment to increase production capacity to respond to an increase in product orders and to comply with environmental requirements.
  • Indonesia/Thailand: Increasing production capacity

-Capital expenditure in fiscal year that ended in March 2018 was forecast to be JPY 15.0 billion.

-The Company is increasing the production capacity of brake calipers and brake pads at its plant in Glasgow, Kentucky (USA). The Company is renewing the plant layout by remodeling some production lines at the plant and adding two new production lines for brake calipers, adding one in October this year and the other one in February next year. The new lines are being added to meet the need for delivering more brake calipers to large-sized SUVs, of which the market in North America is growing. The expenditure will amount to several hundred million Japanese yen. Also, at the end of this year, the Company will increase the production capacity of after-market brake pads. To improve its financial situation, the Company had decided to keep capital expenditures below JPY 15.0, but changed its policy and will now concentrate its expenditures and effectively expand its operations at its plant in the USA, which is the largest market for the Company. (From an August 8, 2017 Nikkan Jidosha news article)

Planned Capital Investments

(As of Mar. 31, 2018)

Facilities & Activities Total investment (millions of yen) Start date Completion
Home office functions and others
(Hanyu, Saitama Prefecture, others)市他)
Rationalization, environmental protection, information systems, etc. 550 Apr. 2018 Mar. 2019
Facilities to conduct testing and R&D activities 1,440
Akebono Brake Iwatsuki Manufacturing Co., Ltd.(Saitama City, Saitama Prefecture) Facilities for manufacturing disk brakes and disk drums 3,250 Apr. 2018 Mar. 2019
Akebono Brake Fukushima Manufacturing Co., Ltd.
(Kori Machi, Fukushima Prefecture)
Facilities to manufacture brake linings and products for industrial machinery and railways 510 Apr. 2018 Mar. 2019
Akebono Brake Yamagata Manufacturing Co., Ltd.
(Sagae, Yamagata Prefecture)vv
Facilities to manufacture disk-brake pads 640 Apr. 2018 Mar. 2019
Akebono Brake Sanyo Manufacturing Co., Ltd.
(Soja, Okayama Prefecture)
Facilities to manufacture drum brakes 180 Apr. 2018 Mar. 2019
Akebono Research & Development Centre Ltd. (Hanyu, Saitama Prefecture) Facilities to conduct testing and R&D activities 70 Apr. 2018 Mar. 2019
Akebono Brake Corporation
(Michigan, USA)
Facilities to manufacture disk brakes, drum brakes, and disk-brake pads; and to conduct R&D activities 1,720 Jan. 2018 Dec. 2018
Akebono Brake Mexico S.A. de C.V.
(Guanajuato, Mexico)
Facilities to manufacture disk brakes 1,180 Jan. 2018 Dec. 2018
Akebono Europe S.A.S.
(Gonesse Cedex, France; etc.)
Facilities to manufacture disk brakes 230 Apr. 2018 Mar. 2019
Akebono Brake Slovakia s.r.o.
(Trencin, Slovak Republic)
Facilities to manufacture disk brakes 310 Apr. 2018 Mar. 2019
[Akebono Corporation (Suzhou)]
(Suzhou, China)
Facilities to manufacture disk brakes 380 Jan. 2018 Dec. 2018
[Akebono Corporation (Guangzhou)]
(Guangzhou, China)
Facilities to manufacture disk brakes and drum brakes 490 Jan. 2018 Dec. 2018
PT. Akebono Brake Astra Indonesia
(Jakarta, Indonesia)
Facilities to manufacture brakes and disk brakes 510 Jan. 2018 Dec. 2018
Akebono Brake Astra Vietnam CO., LTD
((Hanoi, Vietnam)
Facilities and plant to manufacture disk brakes and master cylinders 100 Jan. 2018 Dec. 2018
Akebono Brake (Thailand) Co., Ltd.
(Chonburi Province, Thailand))
Facilities to manufacture disk brakes 200 Jan. 2018 Dec. 2018
A&M Casting (Thailand) Co., Ltd.
(Chonburi Province, Thailand)
Casting plant and facilities 240 Jan. 2018 Dec. 2018