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Midterm Business Plan

Midterm Business Plan "akebono New Frontier 30 - 2016"

Akebono has established a new midterm business plan, "akebono New Frontier 30 - 2016 (aNF30-2016)" for the three-year period ending with fiscal 2018. Goals of the new midterm plan include 1) rebuilding North American operations, 2) establishing global networks based on product-based business units, and 3) expanding high performance brake business and recreating European operations. By achieving these goals, Akebono aims to return to a sound financial condition and facilitate sustainable growth.

Akebono’s Ideal Form

Sustainable growth, based on
our Corporate Mission

akebono’s standing position
akebono’s standing position

Numerical Targets

Financial targets by year

(Billions of yen) FY2015
Actual
aNF30-2016
FY2016 FY2017 FY2018
Net sales Net sales
Operating income Operating income
Profit (loss) attributable
to owners of parent
Profit (loss) attributable to owners of parent
Equity ratio 11.6% 12.3% 14.1% 16.6%
Net D/E ratio 4.2 4.0 3.5 2.9
Free cash flow (2.6) 1.4 2.0 3.5

Fundamental Strategies

1. Rebuilding the North American operations

Initiative 1 Rebuild ABC foundation
・Strengthened management and organizational improvements led by Akebono Brake Corporation
Initiative 2 Stronger cost management
・Necessary adjustments to sales and purchasing prices
Initiative 3 Increase productivity
  • ・Utilization of Mexico Plant
  • ・Strengthen foundations with a return to fundamentals in terms of safety, quality and lead times
Regain customer trust, and return to profitability

2. Establishing global networks based on product-based business units

Increase profitability on a product basis, leading to competitiveness on a global level

  • Establish product-based business units responsible for sales, R&D, purchasing, production, manufacturing engineering and other functions
  • Establish a global strategy through enhanced regional marketing functions
  • Carry out a global product strategy based on the concept of standardization and topping (S+t)
  • Rationalization effects achieved through global purchasing activities
Business Main products Strategy
High Performance High performance 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, etc. Global expansion, with augmented safety and quality. Maintain profitability and product volume.
Infrastructure and Mobility Products for rolling stock, industrial machinery and sensors New business and increased sales through technological innovation and combined technologies
Friction Brake pads, lining and other friction materials Increase competitiveness through akebono’s strengths in raw material and NVH technologies
Aftermarket Brake pads, linings and other aftermarket parts Increase global profitability in emerging markets and niche markets

3. Expanding high performance brake business and recreating European operations

  • Strengthen high performance brake development structurecentered on Europe
  • Strengthen integrated production of high performance aluminum caliper brakes at Slovakia Plant
R&D Strategy
Absolute commitment to differentiated products, light weight, high performance, enhanced design and high quality
Sales Strategy
Expand on technologies gained through business in Europe, especially with premium German automakers, to develop and increase sales of high performance products to other companies
10-pot opposed aluminum monoblock brake caliper for high performance vehicles 6-pot opposed aluminum monoblock brake caliper for high performance vehicles

Return to a sound financial condition

Initiative 1 Control Investment
CAPEX
\18.6 billion
(Fiscal 2015 actual)
Annual CAPEX
amount \15.0 billion
maximum
Initiative 2 Reduce SG&A*
SG&A* sales ratio
in Japan 14.5%
(Fiscal 2015 actual)
12%
by Fiscal 2018
Initiative 3 Prioritize R&D
Shift priority from
application R&D to
advanced R&D
Reduce R&D
costs to \10.0 billion
by Fiscal 2018

* Selling, general and administrative expenses

Regional Initiatives

Japan

  • Smooth transition to new business unit structure
  • Expand Infrastructure and Mobility business
  • Further increase value added features of high performance products
Japan

North America

  • Quickly reestablish solid business foundation
  • Marketing focus on product profitability
  • Rescaling of production operations
  • Transfer production to Mexico and promote local procurement initiatives
North America

Europe

  • Achieve profitable operations at Slovakia Plant through local procurement and internal production of parts
  • Expand business in HP products and European brake pads
  • Restructure European production and R&D operations
Europe

Asia

  • Increase market share
  • Strengthen cost competitiveness
  • Develop and train local staff
  • Expand service parts business
Asia

Details of the new business plan are shown in the accompanying presentation.