AKEBONO REPORT 2016

27/54

TOPICSIn October 2014, Akebono established A&M Casting (Thailand) Co., Ltd. for the production of cast-iron automotive parts, in a joint venture with Mohka Manufacturing Co., Ltd. The joint venture’s production will center on cast-iron brake caliper components for Akebono Brake (Thailand) Co., Ltd. Production volume will be 600 tons per month until 2017, and from 2018 is scheduled to rise to 1,300 tons per month in anticipation of market trends. The new company is also considering sales of cast-iron components to other companies in Thailand. A cornerstone-laying ceremony was held in December 2014, followed by a furnace ignition ceremony in December 2015, attended by executives from both Akebono Brake Industry and Mohka Manufacturing. A&M Casting (Thailand) Co., Ltd., Established as Part of Strengthening Global Competitiveness, Holds Furnace Ignition CeremonyIn Thailand, domestic sales of new cars continued to be sluggish, but production of automobiles in Thailand hit a record high, boosted as export numbers reflected the impact of worldwide sales expansion of eco-cars in addition to pickup trucks. In Akebono’s Thailand operations, stagnant domestic demand was compensated by strong exports, and increased aftermarket sales for Middle East markets. As a result, sales rose by 9.8% year on year, or ¥0.5 billion, to ¥6.0 billion. On the earnings side, while depreciation costs increased, the increase in orders for aftermarket products contributed significantly, and operating income rose 81.1% year on year, to ¥0.5 billion, for increases in both sales and profits.In Indonesia, both production and sales of automobiles and motorcycles in fiscal 2015 fell below those of the previous year, but the domestic sales market is expected to expand further over the medium to long term. Akebono’s operations in Indonesia experienced sluggish domestic demand and a drop in production as Japanese automobile manufacturers adjusted inventories at the end of the fiscal year, as well as decreased orders from motorcycle manufacturers. However, sales of brake-related products for global platform cars and being marketed in Europe were strong. As a result, sales rose by 1.1% year on year, or ¥0.2 billion, to ¥16.6 billion. Operating income fell 7.6%, or ¥0.1 billion, year on year to ¥1.7 billion, largely due to a drop in orders, a rise in labor costs, and an increase in depreciation costs.Akebono will continue its aggressive business expansion centered on China, and expects sales to increase. However, operating income is expected to remain flat due to changes in product mix, persistently high labor costs, and an increase in expenses associated with environmental measures, among other factors.Executives and employees attended the ignition ceremonyOutline of Subsidiary(1) Name: A&M Casting (Thailand) Co., Ltd.(2) Location: Ratchaburi Industrial Estate, Ratchaburi Province, Kingdom of Thailand (approx. 100 km west of Bangkok)(3) Representative: Masami Nagasaki(4) Business: Manufacture and sale of cast-iron automotive components(5) Date of establishment: October 2014(6) Equity ratios: Akebono Brake Industry Co., Ltd. 74.9% Mohka Manufacturing Co., Ltd. 25.1%(7) Lot area: approx. 37,000 m2(8) Building area: approx. 5,000 m2(9) Start of production: August 2016 (tentative)Fiscal 2016 Strategy and Outlook Review of Operations26AKEBONO REPORT 2016