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2020 JTEKT (JTEKT) financial report, global revenue reduction and loss, China re

2021 - 06 - 05

A few days ago, JTEKT (JTEKT) disclosed financial data for 2020*1. In 2020, the global economy will experience a significant negative growth due to the impact of the new crown pneumonia epidemic. Although there are signs of economic recovery in the second half of the year, various economic activities are still severely restricted, and the situation is not optimistic. Affected by this, JTEKT’s global sales in 2020 were 1,246.3 billion yen (approximately 77.89 billion yuan2), a decrease of approximately 12.2% from the previous year. Among them, under the strong measures of the Chinese government, the spread of the epidemic has been controlled, and production and market sales in various industries have also quickly recovered. In this environment, JTEKT’s China business will generate approximately RMB 10.07 billion in sales in 2020, an increase of approximately 22.5% over the previous fiscal year.
At the same time, thanks to the increase in sales and the support of government subsidies, the profit of JTEKT China's business in 2020 increased by 46% year-on-year, and the 2020 business plan was successfully achieved. For 2021, JTEKT will further accelerate reforms and has formulated a new mid-term business plan for this purpose.
*Note 1: April 2020-March 2021
*Note 2: This press release sets 1 yuan (RMB) = 16 yen as the conversion standard
JTEKT takes "safety, environmental protection and comfort" as its tenet and is committed to "producing energy-saving, environmentally friendly, and socially trustworthy products". JTEKT brand automotive steering gear and drive components, Koyo brand bearings and oil seals, TOYODA brand machine tools and other products are active in many fields such as automobiles and industrial machinery.

Regarding the "mechanical appliance parts business group", as China resumed economic activities before other countries and regions, sales of steering gear and bearings have returned to a higher level than the previous fiscal year. In regions outside of China, although sales have rebounded since the second quarter, they still cannot compensate for the impact of the sharp decline in sales in the first quarter caused by the expansion of the new crown epidemic. In this severe environment, the business's global sales in 2020 were 1,115.99 billion yen (approximately 69.75 billion yuan), a year-on-year decrease of 11.3%.

In the field of automotive steering gear, in order to win the global competition, we are committed to thoroughly improving the cost of the entire process, and actively researching and developing next-generation products and advanced technologies for autonomous driving and electrification. In terms of unmanned driving, JTEKT’s long-term participation in the “Strategic Innovation and Creation Project” promoted by the Cabinet Office of Japan has implemented large-scale bus autonomous driving precision parking technology at Japan’s Haneda Airport (through automatic and precise parking control to achieve vehicle The empirical experiment of technology that minimizes the gap between the target point and the target point has contributed to the realization of the next-generation public transportation system. At the same time, JTEKT has also actively developed wire-controlled steering technology (SBW), steering authority transfer technology, high-precision corner control technology, etc. to support highly automated driving and improve the safety of cars in automated driving. In addition, in order to cope with functional safety design, increasingly complex technologies and increasingly diversified customer needs, JTEKT is also actively promoting independent research and development of MCUs, and will start selling vehicles equipped with self-developed MCUs in October 2020. JTEKT will further strengthen its product research and development capabilities and provide a variety of safe and safe products when the era of true autonomous driving arrives.

In the field of automotive drive components, JTEKT will target the world's leading drive system supplier, comprehensively carry out cost reduction activities, establish a global production mechanism, strengthen drive system development capabilities, and actively promote its contribution to the future global environment Technology research and development. In terms of product development, our torque control device (TORSEN LSD, electronically controlled four-wheel drive 4WD coupling, ITCC) has contributed to the realization of a new generation of "GR YARIS" high-level sports driving technology developed by Toyota Motor Corporation. In addition, the high-pressure hydrogen storage valve and pressure reducing pump developed by our company are also adopted by Toyota Motor Corporation’s "MIRAI". JTEKT will continue to contribute to the realization of a hydrogen society in the field of high-pressure hydrogen supply systems.
In the bearing field, we aim to further enhance our competitiveness, vigorously promote the improvement of productivity and production technology innovation, and strive to become the world's best supplier. In terms of cost improvement, our company actively promotes global procurement, looking for suppliers with the best quality and the most reasonable prices worldwide. Since the third quarter, initial results have been achieved. In addition, in terms of product development, JTEKT has made contributions to the low fuel consumption and high efficiency of automobiles, and in order to respond to the electrification market, we have developed the "Fifth Generation Low Torque Tapered Roller Bearing LFT-V" , This product has achieved lighter weight and lower torque in the same series of products of our company. In terms of industrial machinery, in order to respond to changes in the global and social environment and respond to customer needs in a timely manner, we have developed energy-saving and renewable energy products and are committed to contributing to the world.
On the other hand, JTEKT’s other core business group "Machine Tool and Mechatronics Business Group", due to reduced sales in Japan and North America and other reasons, global sales in 2020 will be 130.286 billion yen (approximately 8.14 billion yuan), a year-on-year decrease of approximately 19.3%.

In the field of machine tools and mechatronics, JTEKT, as an innovative company in manufacturing and R&D products, has been committed to advancing machine tools, IoE solutions and life cycle support services. The high-precision grinder "GR7i-400" manufactured by JTEKT has realized the production of high-precision rolls required for the manufacture of lithium batteries, multilayer capacitors, and high-performance films. In the gear scraper, we have developed a trial machining digital simulation technology that helps customers achieve rapid mass production. In addition, the energy-saving performance of the "CBN Camshaft Grinding Machine" was also highly praised, and it was awarded the "Highest Minister of Economy, Trade and Industry Award" in the commendation of Japan's outstanding energy-saving machines and systems.

In order to achieve sustainable development, JTEKT predicts future market development trends, combines the social needs of aging, environment, energy and other issues with the technology and expertise cultivated in our company’s existing businesses, and actively explores new business areas . In 2020, we have focused on the nursing industry and are committed to solving pressing social issues such as declining birth rates, aging populations, and labor shortages. And in 2021, the two latest products developed by our company will be sold. "J-PAS fleairy" and "J-Walker Techtech".
"J-PAS fleairy" is a lightweight power-assisted suit that is manufactured based on a belt winding mechanism and has no frame and is similar to ordinary clothing. The use of soft materials that are safer and more reliable for the care recipient can effectively provide power support for the care work in various care scenarios.
"J-Walker Techtech" is an "independent walking training robot" for the purpose of extending the healthy lifespan of the elderly. Adopting Nordic walking training method and gamification function, through relaxed and pleasant training method, it has contributed to the "care" and "realization of self-reliance" of the elderly.
※"GR YARIS" and "MIRAI" are registered trademarks of Toyota Motor Corporation
※「TORSEN」「ITCC」「LFT」「J-PAS」「J-PAS fleairy」「J-Walker」「J-Walker Techtech」are our registered trademarks

In the future, the continuous expansion of the new crown epidemic may continue to have a huge impact on the world economy, and the excess liquidity caused by large-scale financial expansion will also bring counterproductive effects. The expansion of the debts of various countries has led to the stagnation of economic growth in the medium and long term, and the United States' tough policy toward China, etc., all of which can foresee the risks of economic downturn. Although, with the further promotion of the new coronavirus treatment and epidemic prevention system, various economic activities are expected to gradually return to normal, but it is necessary to predict in advance the risk of economic stagnation caused by the new crown epidemic's further expansion of infection.
In this environment, JTEKT has implemented important strategic measures related to the rise and fall of the enterprise. In order to break away from the low-yield system and rejuvenate the enterprise, we define 2021 as a "rebirth year", and will re-evaluate all previous strategic models and rebirth.

JTEKT’s future corporate issues will focus on strengthening the operating foundation and competitiveness. Improve the business efficiency of indirect departments by utilizing the unmanned, labor-saving, and digital transmission system (DX) of the production site. On top of this, through measures such as VA/VE of key objects and speeding up internal reorganization of the group, the sales ratio at the point of profit and loss divergence can be reduced, and a solid operating foundation can be established that can ensure that corporate profits are not affected by the economic situation. In addition to measures to reduce costs, JTEKT will also accelerate the development of high value-added products through predicting customer needs and thorough benchmarking analysis. Strive to provide customers with high-quality and inexpensive products and high-quality services that exceed expectations and are better than other companies.

In order to solve these issues and promote JTEKT's business operations, since April 2021, we have transformed the business organization from a specific product-oriented management model to a specific market-oriented management model. Specifically, the hub unit business units of the "Steering Business Headquarters", "Drive Business Headquarters" and "Bearing Business Headquarters" will be integrated into the "Automotive Business Headquarters." In view of the fact that the after-sales market, where demand will increase substantially in the future, will become a new pillar of the automotive business, we have established a new “after-sales business headquarters”. At the same time, due to organizational changes, the "Bearing Business Headquarters" was renamed the "Industrial Machinery and Bearing Business Headquarters", and the "Machine Tool and Mechatronics Business Headquarters" was renamed the "Machine Tool and Systems Business Headquarters".

In the future, JTEKT will predict the changes in the Chinese market and people’s lifestyles after the end of the global COVID-19 pandemic. With our unique technology and knowledge, JTEKT will continue to expand product sales to Chinese independent brand customers and further advance. Localized production, expand local procurement, accelerate the development of high value-added products, and provide Chinese customers with better products and complete solutions. JTEKT will revolve around the group vision "No.1 & Only One-Towards a better future", through "creating value", "manufacturing products", and "cultivating talents" to gather the strength of the entire group. Keep moving forward.

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