Yorozu Corp. Business Report FY ended Mar. 2014

Business Highlights

Financial Overview

(in millions of JPY)
  FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 Rate of change (%) Factors
Sales 138,340 110,550 25.1 1)
Operating Profit 8,025 7,107 12.9 -
Ordinary profit 9,425 8,403 12.2 -
Current net profit 5,139 5,301 (3.1)

Factors
1) Sales
Japan
-Sales increased by 2.1% year-on-year, up to JPY 51,525 million. Although sales to the biggest customer Nissan decreased, sales to Honda increased.

North America
-Sales in North America increased 38.0% year-on-year, up to JPY 52,205 million, thanks to greater production volumes in the U.S.A., in addition to favorable currency translation due to weakened yen.

China
-
Sales in China increased 38.2% year-on-year, up to JPY 48,657 million, thanks to greater sales because of increased production in China, and to favorable currency translation due to weakened yen.

Major Contracts

-In February 2014, the Company has received a new contract to supply suspension parts for Toyota's next-generation models under the Innovative International Multi-purpose Vehicle (IMV) series, which include minivans, SUVs, and pickups. These parts will be manufactured at the Company's factories in India and Thailand, and will be supplied to Toyota's plants in respective countries. This is the first time that the Company will deliver its products to Toyota in India. The Company expects the IMV program will significantly increase Its sales to Toyota, which aims to sell 1 million IMV vehicles annually. The Company has been setting up new facilities rapidly in emerging countries, in order to meet the demand from its largest customer Nissan Motor Co., Ltd. that is expanding its global manufacturing footprint. By expanding business also with Japanese automakers other than Nissan, the Company hopes to stabilize its plants' operating rate and improve profitability in the emerging market.

-Major contracts concluded in FY ended March 2014
OEM Model Products Start of Delivery
Japan
Nissan X-Trail -Front suspension member
-Rear suspension member
-
Skyline -Brake pedal
-Clutch pedal
-
Honda Vezel -Front suspension member
-Rear axle beam
-
USA
Nissan X-Trail -Front suspension member
-Rear suspension member
-
Mexico
Mazda Axela
(Mazda 3)
-Dust cover
-Engine bracket
Jan. 2014
Honda Vezel -Front suspension member
-Front lower arms
-Rear beam
Nov. 2014
Thailand
Suzuki Celerio -Body parts
-Front lower arms
May. 2014
Honda Vezel -Front suspension member
-Front lower arms
-Rear beam
Jan. 2015
Indonesia
Honda Brio -Front suspension member
-Front lower arms
-
Suzuki WagonR -Rear axle -
Nissan Datsun GO
Datsun GO+
-Front suspension member
-Lower arms
-Transverse link
-Rear axle beam
Apr. 2014
Honda Vezel -Front suspension member
-Front lower arms
-Rear beam
May 2015
India
Nissan Datsun GO
Datsun GO+
-Front suspension member
-Lower arms
-Transverse link
-Rear axle beam
Jan. 2014
China
Nissan X-Trail -Front suspension member
-Rear suspension member
-
Honda Vezel -Front suspension member
-Front lower arms
-Rear beam
Nov. 2014

Awards

-Major awards given in FY ended March 31, 2014
Award given by Awarded location Contents
Honda Yorozu Corporation Honda Development Award (for excellence in R&D field)
Honda Yorozu Mexicana SA. de C.V. HDM Reconocimient a la Exelencia
Honda Yorozu Automotive Tennessee, Inc. HMMU Quality Excellence Award
Nissan Yorozu Corporation Nissan Global Quality Award
Nissan Yorozu Corporation Nissan Japan Regional Quality Award
Nissan Yorozu Bao Mie Automotive Co.,Ltd. Nissan China Regional Quality Award
Nissan Yorozu Automotive Tennessee, Inc. NNA Regional Supplier Quality Award Finalist
Nissan Yorozu Automotive Tennessee, Inc. NNA Regional Supplier Zero Defect Certificate Winner
Nissan Yorozu Mexicana SA. de C.V. NNA Regional Supplier Quality Award Finalist
Nissan Yorozu Mexicana SA. de C.V. NNA Regional Supplier Quality Master Certificate Winner
Nissan Yorozu Mexicana SA. de C.V. NNA Regional Supplier Zero Defect Certificate Winner

Outlook for FY ending Mar. 31, 2015

(in million JPY)
  FY ending Mar. 31, 2015
(Forecast)
FY ended Mar. 31, 2014
(Actual Results)
Rate of Change
(%)
Sales 149,000 138,340 7.7
Operating income 7,000 8,025 (12.8)
Ordinary income 6,800 9,425 (27.9)
Net income 3,500 5,139 (31.9)

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

R&D

R&D Expenditure

(in millions of JPY)
  FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 FY ended Mar. 31, 2012
Overall 1,603 1,404 1,354

R&D Structure

-The R&D Division's and Production Technology Division's R&D activities are mainly involved in developing new products and new production technology.

-The Company will increase the number of its engineers to 300 by March 2018, which will be a 70% gain from 180 in March 2013. It will expand its R&D workforce by 40%, while doubling the number of its production engineering staff during FY ending March 2018. With this enhancement, the Company hopes to respond to increasing requests from Its customers, especially Nissan Motor Co., Ltd. that is planning global releases of new models. Demand from OEMs other than Nissan is also growing. By adding new engineers to both the development and production divisions, the Company hopes to boost its capacity to design and test new products for the global market and to manage new production lines in emerging markets.

-The Company will build a new research and development (R&D) building on a premises of Yorozu Tochigi Corporation, its production subsidiary in Oyama city, Tochigi prefecture. The new building will start up in April 2014. R&D operations are currently conducted in a plant, but will be shifted to the new building. The Company will also hire more engineers for R&D work. Nissan Motor Co., Ltd., Its major customer, is currently working to expand its global sales by FY ending in March 2017. The new R&D building will address an expected increase in development work for the parts which will be supplied to Nissan.

Product Development

Front Suspension Member with Side Rail Construction
-Design in which the front suspension member is divided into the center part and the extremely rigid side-rails. Lowering the plate thickness of the center portion reduced weight by 17%. Used on Honda "FIT (4WD)" and "Vezel".

Brake pedal with single-unit frontal plate
-Single-unit frontal plate reduced weight by 27%. Costs were lowered by 38% due to the use of fewer parts. Adopted by Nissan "Altima".

Technology Licensing Agreements

(As of Mar. 31, 2014)
Name Country Contract coverage Period
Auto chassis International S.N.C. (ACI) France The Contract covers various business activities for rear beams for a passenger car (the YN5) manufactured by Suzuki in China. ACI is in charge of design and development of the relevant part and the Company in charge of production engineering, preparatory work for mass-production and production activities in China (G-YBM). ACI has given Yorozu a non-exclusive license. May 1, 2005
-Until production of the relevant passenger car is terminated
Jay Bharat Maruti Ltd. India To license out non-exclusive rights to produce rear beams the Company designed and developed for the Suzuki YV4. To sell related production equipment to manufacture these products and dispatch engineers to give technical assistance. March 2, 2009
-Until production of the relevant vehicle is terminated
DK Austech Co., Ltd Korea The non-exclusive licensing agreement involves the provision of technical information and support for preparing and manufacturing samples of curling pipe that will be used on the rear axle-beam and tray-ring arm of the Renault Samsung L38. December 1, 2012
-Until production of the relevant component is terminated
JBM Auto Limited
(JBM)
India To license out non-exclusive rights to produce rear beams, subframes and lower arms the Company designed and developed for the Honda "Brio" (TG2/T6E/T4Z). To sell related production equipment to manufacture these products and dispatch engineers to give technical assistance. September 1, 2012 - For 7 years
JBM Auto Limited
(JBM)
India To license out non-exclusive rights to produce subframes and lower arms the Company designed and developed for the Honda "Jazz" and "City" (2WF/2CT). To sell related production equipment to manufacture these products and dispatch engineers to give technical assistance. July 22, 2013
- For 7 years

Investment Activities

Capital Investment

(in millions of JPY)
  FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 FY ended Mar. 31, 2012
Overall 21,588 17,057 11,737

Capital investments in FY ended Mar. 31, 2014

-The Company made capital investments as follows:

  • Japan: JPY 3,357 million to build Yorozu Technical Center (YGTC), and to launches of new-model vehicles
  • North America: JPY 9,857 million to install 1,000 ton press machine in one of the US plant (YAT), to start operation in the 2nd plant in Mexico (YAGM) and the new plant in Brazil (YAB), and to launches of new-model vehicles.
  • Asia: JPY 8,374 million to start operation in the 2nd plant in Thailand (Y-OAT) and a new plant in Indonesia (YAI), and to launches of new-model vehicles.
Operation started/will start,
  • Oct. 2011: At the 2nd plant in China
  • Nov. 2011: At the new plant in India
  • Jun. 2013: At the 2nd plant in Thailand
  • Aug. 2013: At the new plant in Indonesia
  • Oct. 2013: At the 2nd plant in Mexico
  • Jul. 2014: At the new plant in Brazil
*Opening production location in Russia is under consideration.

Investments Outside Japan

<China>
-In February 2013, the Company announced that It will increase production capacities at Its two plants in Guangzhou (Guangdong Province) and Wuhan (Hubei Province) by 50% each by the middle of 2015. In total, JPY 3.5 billion will be invested in building expansions and equipment additions at both plants. The Company has resumed its investment plans in China as Japanese car sales are gradually recovering. As Nissan and Honda are planning to boost production in China, the Company is poised to expand the number of suspension parts supplied to Japanese automakers. The Company will use the plant in Wuhan to supply parts to Nissan's facility in Dalian (Liaoning Province), which is scheduled to become operational in 2014.

New Facilities

(As of Mar. 31, 2014)
Business establishment Purpose Planned investment
(thousand yen)
Start Planned completion
Lend-lease contract (Yorozu Tochigi Corp.) Renewing 3000 ton FB control renewal 70 Dec. 2014 Jan. 2015
Installing facilities for new vehicle models 79 Jun. 2014 Oct. 2014
Lend-lease contract (Yorozu Oita Corp.) Installing facilities for new vehicle models 305 Oct. 2013 Feb. 2015
Lend-lease contract (Yorozu Aichi Corp.) Installing facilities for new vehicle models 329 Jun. 2014 Dec. 2014
Yorozu Automotive Tennessee, Inc. Installing facilities for new vehicle models 1,630 Feb. 2014 Sep. 2014
Yorozu Mexicana SA. de C.V. Installing facilities for new vehicle models 907 Apr. 2013 Jul. 2014
Yorozu Automotive Guanajuato de Mexico, S.A. de C.V. Stamping machinery 496 Feb. 2014 Dec. 2014
Installing facilities for new vehicle models 338 Jan. 2014 Aug. 2014
Yorozu Automotive Do Brasil Ltda. Plant building 2,623 Nov. 2012 Sep. 2014
Installing stamping machines and other equipment 1,408 Apr. 2014 Sep. 2014
Yorozu (Thailand) Co.,Ltd. Installing facilities for new vehicle models 2,553 Jan. 2014 Dec. 2014
Y-Ogura Automotive (Thailand) Co., Ltd. Stamping machinery 426 Oct. 2013 Dec. 2014
Yorozu Bao Mie Automotive Co.,Ltd. Installing facilities for new vehicle models 1,843 Nov. 2013 Nov. 2014
Whuhan Yorozu Bao Mit Automotive Co., Ltd. Installing facilities for new vehicle models 1,143 Jul. 2013 Jul. 2015
Stamping machinery 813 Mar. 2014 Mar. 2015
Yorozu JBM Automotive Tamil Nadu Pvt Ltd. Installing facilities for new vehicle models 467 Apr. 2014 Mar. 2015
Assembly machines and other machines 442 Apr. 2014 Mar. 2015
PT. Yorozu Automotive Indonesia Stamping machine and other machines 686 Apr. 2014 Mar. 2015