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President's Message

In a rapidly changing business environment, we will fully leverage our positioning as a small, specialized independent manufacturing company to improve our corporate value.

Dear Shareholders,

I would like to begin by expressing my deepest gratitude to all of our shareholders for their continued support.

It's my pleasure to present this overview of the Akebono Group's business results during the 122nd fiscal period (from April 1, 2017 to March 31, 2018).

Looking at various management indices, the Group's consolidated net sales for the period stood at \264.9 billion, down 0.4% year on year. This was mainly due to a decline in revenue in North America despite firm demand in European and Asian markets.

On the earnings front, buoyed by measures aimed at improving profitability for our North American business and an increase in orders from Asian customers, operating profit amounted to \8.1 billion, compared with \4.2 billion in the previous fiscal year, and ordinary profit stood at \5.8 billion, compared with \0.8 billion in the previous fiscal year. Due in part to the recording of an impairment loss on non-current assets at our European plants in Trencin, Slovakia, and Arras, France, profit attributable to owners of the parent was \0.8 billion, compared with \0.4 billion in the previous year..

Fiscal 2017 marked the second year of "akebono New Frontier 30 - 2016 (aNF30-2016)," a medium-term business plan ending in fiscal 2018. The plan is centered on three key initiatives: rebuilding North American operations; establishing global networks based on product-based business units; and expanding the high-performance brake business and recreating European operations. We have been working hard to expand profit by implementing these and other initiatives. Thanks to these efforts, our business performance in Asia has exceeded our plans. As for the goal under aNF30-2016 of reclaiming our sound financial condition, we have already achieved a certain level of success even though we are still in the middle of executing the plan. Free cash flows increased \10.0 billion year on year to \8.3 billion. Interest-bearing debt fell \8.4 billion to \109.7 billion. In addition, the equity to total assets ratio improved 1.5% to 13.9%. However, it is my regret to announce that, because this recovery is not enough to make up for the huge losses recorded in the 120th fiscal period, we plan not to pay cash dividends for the fiscal year under review.

I would like to express my sincere apologies to our shareholders in this regard.

Furthermore, based on the results of the fiscal year under review, we have decided not to pay out performance-linked compensation to full-time executive officers or those above that rank.

The automotive industry seems to be entering a once-in-a-century transformative period. Amid this rapidly changing business environment, we will quickly and fully leverage our positioning as a small, specialized independent manufacturing company in our business with the aim of improving our corporate value and reclaiming our sound financial condition, the goal of aNF30-2016.

We sincerely ask our shareholders for their continued support and encouragement.

May 2018Hisataka Nobumoto
President and CEO
Akebono Brake Industry Co., Ltd.