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Machine Tools

Machine Tools Sales by Segment 62.0%

Segment sales and operating income both increased, partly due to a recovery in Europe and Japan in the second half of the fiscal year under review, in addition to a firm North American market. Looking ahead, we will take steps to enhance product lineups, such as developing a new series of fixed headstock automatic lathes.

Business Environment and Results in Fiscal 2014

MACHINE TOOLS SEGMENT SALES BY GEOGRAPHICAL REGION

In fiscal 2014, sales in the Machine Tools Segment increased in all markets. Demand remained strong in the U.S. and East Asian markets, while it bottomed out in the European market in the second half of the fiscal year, and also showed signs of recovering in Japan.

By region, the mainstay European market recovered from the second half of the fiscal year. In the Japanese market, sales increased mainly due to a recovery by car makers in the second half of the fiscal year. Sales in the U.S. market also rose, partly as a result of firm medical-related sectors, and the impact of exchange rates. Sales in the Asian market also rose atop strong demand from the mobile device-related and medical equipment sectors in East Asia.

As a result, both sales and operating income increased. Sales volume increased 2.6% to 1,884 units. By value, sales increased 17.8% to ¥26,970 million (US$264,412 thousand). Operating income rose by 15.3% to ¥3,598 million (US$35,274 thousand).

The Group exhibited a new model of its bestselling SB series of CNC Swiss-type multi-axis lathes at the China International Machine Tool Show (CIMT 2013) held in China in April 2013. Furthermore, the Group unveiled the Swiss-Type Automatic Lathe SV-38R complex machine at venues including the EMO Hannover 2013 international trade show held in Germany in September 2013 and MECHATRONICS TECHNOLOGY JAPAN 2013, held in Nagoya, Japan in October.

The Group also completed construction of a building for its new plant in Thailand, and began conducting assembly at the new factory in April 2013.

Outlook for Fiscal 2015

CNC Swiss-Type Automatic Lathe ST-38

In fiscal 2015, we will remain firmly focused on the mainstay North American and European markets of our Machine Tools Segment as we strive to establish beachheads in the emerging markets of Asia, where growth continues.

To this end, we will step up the development of new products with the aim of building up a track record in Asia and emerging markets. Having brought the new factory in Thailand on line, we will work to establish an integrated manufacturing framework that includes component machining. We will establish the optimum production and logistics structure for the segment around the three manufacturing bases in Japan, China and Thailand. In order to achieve growth and business expansion, we will establish a supply chain. To expand sales in the futures, we will launch a series of fixed-head CNC Automatic Lathes for processing precision components with large diameters.

In consideration of anticipated growth in sales to all the markets of the U.S., Europe, Asia and Japan, we are projecting higher sales and earnings for the segment in the year ending February 2015. Sales are projected to increase 18.7% to ¥32,000 million and operating income is projected to increase 40.6% to ¥5,060 million.

Sales Volume of Machine tools by Region

(Units)
  2013 2014 Change
Japan 353 351 (0.6%)
Asia 637 699 9.7%
Europe 519 526 1.3%
The Americas 328 308 (6.1%)
Total 1,837 1,884 2.6%
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Issues and Initiatives

Development

In product development, an issue is how to strengthen aspects of marketing, such as increasing our understanding of customer needs. We are addressing this by improving our acquisition of market information by posting some of our workforce overseas and holding more meetings with overseas sales subsidiaries and sales agents.

Manufacturing framework

At an early stage, we will establish a manufacturing framework that includes the Thai factory, which can do work operations up to the machining of components. We aim to have in place efficient production and distribution systems based on three production bases in Japan, China and Thailand.

Sales framework

One issue facing us is how to strengthen our sales bases in the emerging markets, especially Asia. In response, we are strengthening our sales bases in China and Southeast Asia, thereby improving our presale services, such as providing technological leadership and developing prototypes of machined components, in addition to after-sales services. Also, we are conducting personnel training of sales agents in order to expand sales.

  • No operating income ratio was calculated due to operating losses reported.

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