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5. Toyoda Gosei Co., Ltd. Business Report FY ended Mar. 2020

Toyoda Gosei Co., Ltd. Business Report FY ended Mar. 2020

Financial Overview

(in millions of JPY)

Recent Developments

<U.S.>
Increased production capacity at three subsidiaries in the USA
-Toyoda Gosei Co., Ltd. announced on November 20 that its three production subsidiaries in the U.S. will expand production capacity. These three subsidiaries are Toyoda Gosei Texas, LLC, TG Missouri Corporation, and TG Kentucky, LLC. By the end of the fiscal year that ends in March 2022 (FY 2021), a total of about USD 60.3 million (JPY 6.54 billion) will be invested to expand plant buildings in order to install additional forming machines and coating facilities. Toyoda Gosei plans to increase its sales of automotive interior and exterior parts such as radiator grilles in North America to about JPY 87 billion by FY 2025 (about 1.3 times from FY 2018). (From an article in the Nikkan Jidosha Shimbun on November 21, 2019)

Established a new technology and sales office in Ohio, USA
-On May 20, Toyoda Gosei Co., Ltd. (Toyoda Gosei) announced that it will establish a new base for technology development and sales operations in Ohio, U.S. The new site was established to meet the needs of Honda’s research and development base and other facilities located nearby. It will start operation in July as the Ohio Office of Toyoda Gosei North America (TGNA, based in Michigan). The office will initially employ five people who will be in charge of the design and sales of interior/exterior parts and airbags. The number of employees will grow to 10 until the mid-2020s. (From an article in the Nikkan Jidosha Shimbun on May 21, 2019)

<India>
Reorganized the Indian subsidiary in order to establish the most optimum production framework
-Toyoda Gosei Co., Ltd. announced that it will restructure its production subsidiaries in India to optimize its production network in that country. The company will transfer all its shares in Toyoda Gosei South India Pvt. Ltd. (TGSIN) to Toyoda Gosei Minda India Pvt. Ltd. (TGMIN) in 2020. India is a market of focus in Toyoda Gosei’s medium and long term 2025 business plan. The company established TGMIN’s Gujarat Plant and Gurgaon Sales and Engineering Office in 2018, and will continue to enhance its development and production capacity in this emerging market. TGSIN supplies interiors and exteriors and other parts mainly to Toyota Motor in South India, while TGMIN supplies airbags, steering wheels, and other parts mainly to Suzuki Motor in North India. With this restructuring, Toyoda Gosei intends to develop a more flexible supply system in India that is not bound by product categories. (From a press release on April 2, 2020)

<China>
Enhanced the production operations at the plant located in the Chinese interior, which manufactures weather stripping
-On November 15, Toyoda Gosei Co., Ltd. (Toyoda Gosei) announced that it will bolster its weatherstrip production capacity in inland China. Toyoda Gosei will expand plant buildings at Hubei Toyoda Gosei Zheng Ao Rubber & Plastics Sealing Science and Technology Co., Ltd. (TG Zheng Ao), which became a Toyoda Gosei subsidiary in December 2018, 1.8 times to 31,600 square meters and double weatherstrip production capacity at TG Zheng Ao by May 2021. Specific production capacity has not been disclosed. Hubei Rock, the predecessor of TG Zheng Ao, has a track record of supplying weatherstrips to Dongfeng Honda Automobile Co., Ltd., Dongfeng Motor Corporation, and other customers. Toyoda Gosei will increase the production capacity at TG Zheng Ao to gain a foothold in expanding its business in inland China. (From an article in the Nikkan Jidosha Shimbun on November 18, 2019)

<Germany>
-Toyoda Gosei Co., Ltd. announced that it will transfer its entire ownership stake in Toyoda Gosei Meteor (TGM), its production subsidiary in Germany, to SCUR-Alpha 1123 GmbH (the company plans to change its name to AEQPH GmbH), an affiliate of a German business fund. The procedures for this transfer of ownership shares and management rights will be completed by the end of December 2019. At the completion of this transaction, TGM and its subsidiary Meteor Sealing Systems will no longer be consolidated subsidiary of Toyoda Gosei. (From a press release on November 22, 2019)

<Vietnam>
Increased production of airbag parts
-On November 13 Toyoda Gosei Co., Ltd. announced that it will increase the output of its airbag parts in Vietnam to meet growing demand for airbags globally. Specifically, the company will expand the production of passenger-side airbag parts and the parts for knee airbags that protect occupants’ legs. The company will invest approximately JPY 1.8 billion to construct a new building at its Thai Binh Plant of Toyoda Gosei Haiphong Co., Ltd. (TGHP, Haiphong, Vietnam), starting production of passenger-side airbag parts and the parts for knee airbags in October 2021. The production capacity will increase to 25 million bags by 2023, about 1.5 times the FY2018 level. Because sewing of airbags is time-consuming, the number of employees at the Thai Binh Plant will increase nearly threefold to 2,000 by the end of FY2023 from about 700 at present. Most of the airbag parts produced there will be sent to Japan, where airbag modules are assembled. Airbags and other safety system products are a key business in Toyoda Gosei’s Business Plan, and by FY2023 the company plans to increase global airbag production to 100 million units annually, approximately 1.6 times the level in FY2018. (From an article in the Nikkan Jidosha Shimbun on November 14, 2019)

Contracts

-Toyoda Gosei Co., Ltd. (Toyoda Gosei) announced that its extra-large spindle grilles are used on the Lexus LM, a luxury minivan sold in China. The Lexus LM was launched for the growing luxury minivan segments in Asian and other markets. The flagship model adopts the new spindle grille, which is 1.5 times larger than the grilles on existing Lexus models. Toyoda Gosei has exploited its expertise in plastic molding and surface decoration using plating and painting to produce spindle grilles that give a bold look to the face of Lexus brand vehicles. (From a press release dated March 26, 2020)

-On April 3 Toyoda Gosei Co., Ltd. announced that it developed a battery case made of plastic, which has been adopted for the Corolla and Levin plug-in hybrid vehicles (PHVs) released by Toyota Motor Corporation in China, in March. The battery case maintains a gap between the batteries stored inside to allow for cooling by outside air via holes in the sides. The case is also insulated with internal conductors inside the plastic to ensure safety. (From an article in the Nikkan Jidosha Shimbun on April 4, 2019)

-Toyoda Gosei Co., Ltd. (Toyoda Gosei) announced on March 27 that it has started to supply its first plastic turbo duct made for Toyota Motor Corporation’s new Hiace that will be sold overseas. The new plastic turbo duct weighs 800 g (half as much as turbo ducts made of metal and rubber), and is manufactured at a lower cost. Toyoda Gosei intends to promote the new turbo duct for other applications such as electric eco-car cooling pipes. (From an article in the Nikkan Jidosha Shimbun on March 28, 2019)

R&D Activities

Signed a licensing agreement for an LED patent
-Toyoda Gosei Co., Ltd. (Toyoda Gosei) announced that it has concluded a licensing agreement with Stanley Electric Co., Ltd. (Stanley Electric) regarding a patent for nitride red phosphor and LEDs that use its phosphor. Nitride red phosphor is used in combination with blue LEDs or ultraviolet LEDs in the manufacturing of high color rendering LEDs and warm color LEDs. These LEDs are used in application such as room or space lighting and backlights for liquid crystal displays. This agreement will allow Stanley Electric to use Toyoda Gosei’s patented technology for LEDs using nitride red phosphor. (From a press release dated January 17, 2020)

Technology on decorative elements (embellishments) such as radiator grills
-On November 21 Toyoda Gosei Co., Ltd. announced that it has developed a decorative technology to emphasize brightness and shading. When used for automotive radiator grilles, the technology enhances the three-dimensional effect, highlighting the design of the grille. The company will consider application of the technology to other exterior products. It has been adopted for the radiator grille of the Lexus IS F-Sport model launched by Toyota Motor Corporation in October 2019. When metallic materials that reflect light are mixed into paints, the orientation of the metallic materials is aligned, enhancing the lightness difference between the front and depth of the painted surface by 40% from that of the existing radiator grille.(From an article in the Nikkan Jidosha Shimbun on November 22, 2019) 

Electric-vehicle inverter using gallium nitride (GaN)
-Nagoya University, Toyoda Gosei Co., Ltd., Panasonic Corporation, and others announced on October 23 that they have developed an electric vehicle (EV) inverter using gallium nitride (GaN) under contracts from the Ministry of the Environment, and a first-ever EV equipped with it was successfully run. GaN is gaining attention as a material for next-generation power semiconductors. Commercialization is expected to be achieved around 2025. Previously, output of GaN semiconductor inverters was several kilowatts. The GaN inverter has fast switching GaN transistors arranged in parallel, which achieved an output of 20 kilowatts. GaN inverters can reduce loss during power conversion more than 20% compared with existing inverters. They are expected to contribute to the improvement of travel distance and the reduction of battery sizes. (From an article in the Nikkan Jidosha Shimbun on October 24, 2019)

Exhibited the MX191, a Toyota Group-wide effort, at the Tokyo Motor Show
-Toyota Boshoku Corporation announced that it will showcase MX191, an interior space concept based on the advent of autonomous driving scene in the future, which the company leveraged the technical know-how within the Toyota Group companies at the Tokyo Motor Show. Working in close collaboration with Aisin Seiki Co., Ltd., Denso Corporation, Toyoda Gosei Co., Ltd., and Tokai Rika Co., Ltd., Toyota Boshoku has incorporated numerous advanced systems in its future concept. MX191 incorporates numerous advanced technologies of unique seat arrangements, next generation safety systems integrated into seat and cabin, and an intelligent cabin environment that uplifts occupants status to be refreshed, relaxed, or awake during autonomous driving. In addition, Toyota Boshoku will also exhibit executive lounge seat which is installed in Toyota Alphard and Velfire. (From a press release on October 3, 2019)

>>>Click here to view images of Toyota Gosei’s Products

>>>Click here to view images of Toyota Boshoku’s Products

Investments in Venture Enterprises

Established the Venture Capital Investment Department in January 2019
-Toyoda Gosei announced that it will establish a Corporate Venture Capital Department in January 2019. This new department will serve as the company’s center for flexible and swift investment in startups and venture capital to accelerate open innovations for practical application and commercialization of new technologies and products. The Corporate Venture Capital Department will invest quickly in startups that are promising for synergy with Toyoda Gosei’s core technologies. Investment targets will be venture capital to gather information on the above startups, and startups with resources and technical abilities in the following four fields: Robotics, Semiconductors, Next-generation automotive parts, and Materials. The department will have an operating budget of 3 billion yen, and will invest it for a period of two years starting in January 2019. (From a press release on November 9, 2018)

TRYETING, an AI Platform Start-up
-Toyoda Gosei Co., Ltd. (Toyoda Gosei) announced on August 29 that it has invested JPY 50 million in an artificial intelligent (AI) platform startup company, TRYETING Inc. (TRYETING, Nagoya City, Aichi Prefecture). Toyoda Gosei established a venture investment planning department and started investment in automotive-related startup companies including QBIT Robotics Corporation (a robot development company) and Slab Inc. (a resin 3D printer maker) from 2019. TRYETING is the fourth company it has invested in. Toyoda Gosei aims to efficiently develop high-performance materials by combining its accumulated material design technology and TRYETING’s AI technology. (From an article in the Nikkan Jidosha Shimbun on August 30, 2019)

Invested in S-Labo, a 3D Printing Tech Company
-On July 29 Toyoda Gosei Co., Ltd. (Toyoda Gosei) announced that it will invest in Slab Inc. (Slab, based in Kyoto), a developer of plastic 3D printers. The two companies will work together to improve the precision and speed of 3D printers to apply them for product development and production. Toyoda Gosei has established a corporate venture capital dept. in January 2019, and this is the third investment project following the first one in IMUZAK Inc. in Yamagata with strength in optical design and the second investment in Tokyo-based robot development venture company QBIT Robotics. Slab’s 3D printers are capable of creating objects using general-purpose plastics. Toyoda Gosei intends to enhance the performance of the 3D printers and use them to make parts produced in low volumes and for decoration of exterior parts. (From an article in the Nikkan Jidosha Shimbun on July 30, 2019)

Invested in Imuzak, an Optical-design Company
-On May 15 Toyoda Gosei Co., Ltd. (Toyoda Gosei) announced that it will invest in IMUZAK Inc. (IMUZAK) to begin joint development. IMUZAK is a startup company located in Yamagata, Northeastern Japan, with strengths in optical design and assessment. Toyoda Gosei intends to commercialize resin transparent to infrared light and human-machine interface (HMI) functions making use of optical technology. This investment is the first to be made by Toyoda Gosei’s newly established Corporate Venture Capital Dept., started in January 2019 to invest JPY 3 billion in venture companies and venture capitals. Toyoda Gosei invested JPY 50 million in IMUZAK, which will give Toyoda Gosei an equity stake of 19.1% in IMUZAK. (From an article in the Nikkan Jidosha Shimbun on May 16, 2019)

R&D Facilities

-Toyoda Gosei Co., Ltd. will step up efforts to develop in-house human resource personnel who are capable of teaching quality improvements and predictive maintenance using Internet of Things (IoT) technology and data analysis. The company has a dozen or so employees with such capabilities in Japan. It plans to increase the number of such people to more than 50 at an early stage, with deployment to its overseas bases in mind. Toyoda Gosei will let personnel familiar with its production technologies take the lead to maximize cost reduction and quality improvement effects. (From an article in the Nikkan Jidosha Shimbun on July 29, 2019)
 

Forecast for business results in fiscal year ending in March 2021

-The Company has not released any forecast for its business results.

Mid-and-Long Term Business Plans

-On May 22 Toyoda Gosei Co., Ltd. (Toyoda Gosei) announced its mid-and-long term business plans, in which the supplier aims to achieve sales revenue exceeding JPY 1 trillion in fiscal year 2025 (ends in March 2026), an increase of about 20% from that of FY 2017. To achieve this objective and tackle challenges in the automotive industry, the company will use its resources mainly for developing new products that respond to the spread of autonomous driving and automobile electrification, commercializing new technologies, expanding existing businesses for airbags and other products, and venturing into innovation. The targeted operating profit margin and ROE for FY 2025 are 8% (5.1% in FY 2017) and 10% (6.6%), respectively. The company is targeting the achievement of sales revenue amounting to JPY 170 billion in FY 2025 in the fields of new products and new technologies. (From an article in the Nikkan Jidosha Shimbun on May 23, 2018)