Shibaura Machine is an integrated manufacturer of industrial machinery with a track record in large machine tools. The company manufactures, sells, and provides maintenance services for plastic processing equipment (molding machinery) and machine tools. Automobiles are a key customer sector. Shibaura Machine also has customers across a range of other industries, including energy and optics. The company was established in 1938, with capital provided by Shibaura Engineering Works Co., Ltd. (now Toshiba Corporation [TSE1: 6502]). Initially, Shibaura Machine was a government-controlled corporation heavily involved in manufacturing large machine tools used to make weapons. As part of an effort to develop business in the civilian sector after World War II, the company was split up under the Enterprise Reorganization Act in 1949, forming the new Shibaura Machine Works. In 1961, the company merged with Shibaura Machine Tool Co., Ltd. (the other company resulting from the split) to form Toshiba Machine Co., Ltd. (with Toshiba owning a 48.5% stake). The company built on its technological origins in manufacturing large, high-precision machine tools to develop various types of industrial machinery, such as printers, textile machinery, hydraulic equipment, food-processing equipment, and semiconductor fabrication equipment. Over time, the company streamlined its businesses toward its current focus on plastic processing equipment (molding machinery) and machine tools. In 2017, the company bought back its own shares from Toshiba, thereby exiting the Toshiba group. In 2020, the company changed its name from Toshiba Machine Co., Ltd. to Shibaura Machine Co., Ltd. (As of March 31, 2020, Toshiba owned a 2.8% stake.) In 2020, the company transitioned from an organization based on business units to one with internal companies.
In FY03/21, the company generated revenue of JPY92.6bn, deriving 69% from the Metal & Plastics Industrial Machines segment, 23% from the Machine Tools segment, 6% from the Control Systems segment, and 2% from the Other Products segment. Within the mainstay Metal & Plastics Industrial Machines segment, 50% of revenue was from injection molding machines, 19% was from die-casting machines, and 31% was from extrusion machines. By region, in FY03/21 the company produced 44% of revenue in Japan, 24% in China, 15% in other parts of Asia, 13% in the US, and 4% in other regions.
Operating profit (before intra-segment adjustments) in FY03/21 amounted to JPY1.2bn in the Metal & Plastics Industrial Machines segment. The Machine Tools segment reported an operating loss of JPY828mn, and the Control Systems segment a loss of JPY39mn. Over the five years to FY03/21, OPM ranged from 1.8% to 5.8% in the Metal & Plastics Industrial Machines segment, a negative amount to 1.4% in the Machine Tools segment, and a negative amount to 7.8% in the Other Products segment (which previously included the now-separate Control Systems segment). The company does not disclose profits by product type within the Metal & Plastics Industrial Machines segment, but Shared Research understands that profitability is highest for die-casting machines for automakers, as demand is stable and competition low. Next in line is extrusion machines (as more applications are being developed), followed by injection molding machines (used for a wide range of products, from everyday items to auto parts). In the Machine Tools segment, the company specializes in large equipment for which economies of scale are difficult to achieve and customization is prevalent. Accordingly, fixed costs (for design technologies and production facilities) are high. Shared Research understands that breakeven in this business requires annual revenue of around JPY25.0bn. In the past, Control Systems was part of the Other Products segment, and most of the control systems the company produced was for internal use. Along with the organizational shift toward a system of internal companies in FY03/21, Control Systems became an independent reportable segment with the remit of expanding sales outside the company.
Injection molding machines operate by injecting molten plastic material into molds, where the material is clamped and hardened. A similar procedure, called casting, is used for aluminum and other base materials, and the machines are called die-casting machines. With extrusion machines, plastic resin is heated to soften it and then squeezed out through an orifice or rolled into the desired shape. This process is used to make a host of products and parts, from everyday items to precision machine parts. Machine tools operate by using tools to mechanically cut away excess material from blanks of steel or other metals to produce machine parts. Control systems are used to control the operation of machines such as these. In this category, the company produces industrial robots, servo motors, and FA controllers.
The company generates earnings by providing new and existing clients, primarilyin the automotive sector, with machinery and equipment. The company also sells maintenance services for this equipment. In the Metal & Plastics Industrial Machines and Machine Tools segments, lead times for products that require little customization typically range from two to six months from order to delivery. Products requiring substantial customization may have lead times of 12 to 18 months. Rather than high-volume sales of general-purpose machinery, Shibaura Machine leans toward the sale of equipment that is tailored to customers’ production processes. Accordingly, the company often collaborates with customers from the initial stages of developing production processes.
The company has taken its separation from the Toshiba group as an opportunity to reform a business structure that tended to retain technology but generate little profit. The company is currently following the Management Reform Plan, a medium-term management plan unveiled in 2020 that focuses on boosting profitability. Shibaura Machine has found that it falls below the industry average (mainly in comparison with competitors) on such indicators as output per person and SG&A expenses as a percentage of revenue. To optimize the allocation of management resources, the company has transitioned from an organization based on business units to a system comprising internal companies. In addition, the company called for between 200 and 300 volunteers for early retirement. (The company had 3,360 employees as of end-FY03/20). As a result, 252 employees opted for early retirement (from mid-March to end-September 2020). To make technology development more flexible and enhance production efficiency, Shibaura Machine established an R&D center and a manufacturing center whose activities span all the internal companies.
The company is also reorganizing its production system in accordance with this strategy, redefining the functions of domestic and overseas production bases and identifying which plants are responsible for making what types of machines. Factories in Japan are responsible for manufacturing high-value-added products, such as large, specialty, and precision processing machines. Following this reorganization, the Gotemba plant (Gotemba, Shizuoka Prefecture) makes machine tools. The Numazu plant (Numazu, Shizuoka Prefecture) produces Metal & Plastics Industrial Machines and functions as a core factory. The Sagami plant (Zama, Kanagawa Prefecture) manufactures robots and control systems. The company has three overseas factories, in China (Shanghai), Thailand (Rayong Province), and India (Chennai). The plants in China and Thailand produce electrically driven, small and medium-sized injection molding machines and compact die-casting machines. Production of hydraulic injection molding machines is concentrated at the plant in India. The plant in China oversees production of SCARA robots (a type of industrial robot).
To make effective use of part of its Sagami plant site, the company has decided to begin considering the joint operation of a logistics facility in collaboration with Mitsui Fudosan Co., Ltd. (TSE1: 8801).
In FY03/21, the company reported orders of JPY88.6bn (-5.9% YoY), revenue of JPY92.6bn (-20.7% YoY), operating profit of JPY381mn (-89.2% YoY), recurring profit of JPY872mn (-77.2% YoY), and a net loss attributable to owners of the parent of JPY2.9bn (net income of JPY7.3bn in FY03/20). Particularly in the Metal & Plastics Industrial Machines segment, performance was affected by sluggish capex demand due to protracted trade friction between the US and China and the COVID-19 pandemic. Specifically, the company faced a falloff in demand from the automotive sector for injection molding machines and die-casting machines. Gross profit fell 25.6% YoY, due to shrinking revenue and a deterioration in utilization rates. However, moving into 2H the company maintained profitability on an operating basis thanks to resurgent demand in North America and India, as well as lower activity-related expenses and other fixed costs. In FY03/20, the company posted extraordinary gains on sales of shares of subsidiaries and associates when it sold all shares held in NuFlare Technology Inc. (delisted in March 2020) to Toshiba Electronic Devices & Storage Corporation. The absence of this income in FY03/21 plus a reversal of some deferred tax assets led to a net loss attributable to owners of the parent.
The company’s forecast for FY03/22 calls for orders of JPY124.0bn (+39.9% YoY), revenue of JPY106.0bn (+14.4% YoY), operating profit of JPY2.7bn (+607.1% YoY), recurring profit of JPY2.2bn (+152.0% YoY), and net income attributable to owners of the parent of JPY1.0bn (net loss of JPY2.9bn in FY03/21). Despite the uncertainties (impact of the global COVID-19 pandemic, semiconductor shortages and other supply chain disruptions), the company anticipates an upswing in economic activity due to recovery in the US and Chinese economies and the recommencement of economic activity in Japan. In the beginning of FY03/22, orders were on a recovery track. By segment, in FY03/22 the company anticipates Metal & Plastics Industrial Machines orders of JPY86.9bn (+36.4% YoY), orders in the Machine Tools segment of JPY27.5bn (+57.7% YoY), and orders in the Control Systems segment of JPY8.5bn (+38.2% YoY). Within the Metal & Plastics Industrial Machines segment, the company anticipates 43% of orders for injection molding machines, 22% for die-casting machines, and 35% for extrusion machines. Behind the anticipated rise in overall revenue and profit, the company expects the Metal & Plastics Industrial Machines segment to deliver sharply higher profit YoY and believes the Machine Tools and Control Systems segments will become profitable on an operating basis. Specifically, for the Metal & Plastics Industrial Machines segment the company forecasts revenue of JPY73.5bn (+14.3% YoY) and operating profit of JPY2.1bn (+81.5% YoY). In Machine Tools, the company expects revenue of JPY24.7bn (+18.3% YoY) and operating profit of JPY400mn (loss of JPY828mn in FY03/21). In Control Systems, the company anticipates revenue of JPY7.8bn (+5.5% YoY) and operating profit of JPY200mn (loss of JPY39mn in FY03/21).
In February 2020, the company unveiled a new medium-term management plan, the Management Reform Plan. Coinciding with the company’s transition from “Toshiba Machine” (and a member of the Toshiba group) to the new “Shibaura Machine,” this plan marks a departure from the plans the company announced during its era as Toshiba Machine. Focused mainly on improving profitability, by its final year (FY03/24) the plan calls for revenue of JPY135.0bn (CAGR of 3.7% during the plan’s period), OPM of 8.0% (CAGR for operating profit of 32.3%), a target dividend payout ratio of 40%, and ROE of 8.5%.
1) The company has accumulated a host of technologies, enabling it to build a wide variety of machinery from the ground up.
2) The company builds strong relationships with customers by contributing to their manufacturing processes from the prototyping stage.
3) High-value-added products are central to earnings.
1) Fixed costs (design and production facilities) are high in the Machine Tools segment.
2) In the Control Systems business, the company was a late entrant into the mass market.
3) The company has lagged behind competitors in offering recurring-revenue services in the Metal & Plastics Industrial Machines segment.
|Gross profit margin||26.1%||27.8%||27.9%||27.0%||27.5%||28.7%||28.4%||28.0%||28.7%||26.9%|
|Operating profit margin||6.2%||6.7%||4.1%||3.8%||3.2%||4.0%||4.0%||3.3%||3.0%||0.4%||2.5%|
|Recurring profit margin||7.5%||8.1%||5.7%||5.3%||4.2%||4.9%||6.0%||4.7%||3.3%||0.9%||2.1%|
|Per-share data (split-adjusted; JPY)|
|Shares issued (year-end; '000)||166,886||166,886||166,886||166,886||166,886||166,886||149,886||29,977||29,977||29,977|
|Treasury shares ('000)||14,853||14,853||14,857||14,861||14,864||46,196||29,204||5,842||5,842||5,831|
|EPS (fully diluted; JPY)||-||-||-||-||-||-||-||-||-||-|
|Dividend per share (JPY)||9.0||9.0||7.5||8.0||12.0||12.0||14.0||45.0||85.0||199.3||75.0|
|Book value per share (JPY)||467.7||522.3||554.0||616.1||614.0||639.0||3,369.8||3,447.1||3,605.5||3,402.4|
|Balance sheet (JPYmn)|
|Cash and cash equivalents||20,689||21,327||21,779||20,708||16,656||29,914||30,394||25,592||47,907||42,417|
|Total current assets||111,174||106,840||111,476||121,736||120,987||101,615||107,207||108,838||122,364||102,752|
|Tangible fixed assets||21,120||19,829||21,108||20,715||19,249||21,125||21,305||20,765||20,541||20,758|
|Investments and other assets||9,567||15,168||12,428||15,691||14,933||17,039||19,510||20,479||10,816||10,213|
|Total current liabilities||56,355||52,987||47,326||52,254||48,795||47,481||57,827||53,488||53,006||38,969|
|Total fixed liabilities||14,841||9,851||17,136||16,052||16,170||15,929||9,601||14,037||14,258||13,174|
|Total net assets||71,101||79,399||84,217||93,669||93,345||77,120||81,334||83,197||87,018||82,152|
|Total liabilities and net assets||142,297||142,238||148,680||161,975||158,310||140,530||148,762||150,723||154,282||134,296|
|Total interest-bearing debt||18,210||16,859||16,596||17,213||16,909||14,890||14,390||14,390||14,390||14,390|
|Cash flow statement (JPYmn)|
|Cash flows from operating activities||368||7,435||3,024||-457||2,781||9,948||6,813||-2,176||5,312||192|
|Cash flows from investing activities||-947||-2,195||-1,509||-1,281||2,252||-2,983||-3,921||-1,493||19,772||-1,537|
|Cash flows from financing activities||-1,094||-3,003||-1,684||-774||-1,761||-19,089||-2,102||-1,785||-1,964||-4,956|
|Total asset turnover||87.4%||85.0%||77.7%||80.1%||73.2%||74.5%||80.8%||78.4%||76.6%||64.2%|
|% of revenue||1.3%||1.3%||1.4%||1.8%||1.4%||1.5%||1.6%||1.6%||2.0%||2.4%||2.3%|
Shared Research updated the report following interviews with Shibaura Machine Co., Ltd.
|(JPYmn)||Q1||Q1–Q2||Q1–Q3||Q1–Q4||Q1||Q1–Q2||Q1–Q3||Q1–Q4||Q1||% of Est.||1H Est.|
|Gross profit margin||28.1%||28.5%||28.5%||28.7%||30.0%||26.9%||27.0%||26.9%||26.5%|
|Operating profit margin||-||2.7%||3.0%||3.0%||0.2%||-||-||0.4%||1.6%||1.5%|
|Recurring profit margin||-||4.0%||4.2%||3.3%||-||-||-||0.9%||1.5%||0.6%|
|Gross profit margin||28.1%||28.9%||28.4%||29.2%||30.0%||24.1%||27.1%||26.7%||26.5%|
|Operating profit margin||-||6.0%||3.5%||3.2%||0.2%||-||0.9%||1.8%||1.6%|
|Recurring profit margin||-||8.3%||4.5%||0.5%||-||-||1.4%||4.5%||1.5%|
Sales by quarter
Operating profit by quarter
Orders: JPY27.2bn (+115.9% YoY)
The company recorded orders of JPY27.2bn (+115.9% YoY). As with other companies in the machinery sector, Shibaura Machine is susceptible to regional and industry-specific business volatility. However, capex demand continued to recovery, particularly in China and the US. In Q1 FY03/22, growth in injection molding machines and extrusion machines in the Metal & Plastics Industrial Machines segment drove orders, and ultra-precision processing machine orders were strong. Recovery was observed for orders in the Machine Tools and Control Systems segments, particularly from clients in Japan and North America. Injection molding machines have been recovering since 2H FY03/21, and in FY03/22 orders have been at pre-COVID-19 levels. Against this business environment, the Shibaura Machine group worked to implement its Management Reform Plan (medium-term management plan). Under this plan, the company is working to transform itself into a highly profitable company by enacting management reforms centered on reorganization, investing in growth fields, and pursuing financial strategies aimed at boosting capital efficiency (ROE).
Revenue rose 26.4% YoY to JPY25.6bn in Q1 FY03/22. This was broadly in line with company expectations, amounting to 49.2% of forecasted 1H revenue. Gross profit was JPY6.8bn (+11.5% YoY) and GPM was 26.5% (-3.5pp YoY). Although the absence in FY03/22 of high-margin projects of the kind booked in FY03/21 led to YoY GPM decline, the company’s structural reforms as a whole are progressing in line with the medium-term plan. SG&A expenses rose 5.2% YoY due to an increase in transportation expenses accompanying higher revenue, despite the company’s efforts to curb personnel expenses through structural reforms. As a result, operating profit saw significant recovery (+967.8% YoY) to JPY422mn. The company recorded a net loss due to a partial reversal of deferred tax assets.
|Operating profit margin||0.9%||5.3%||5.0%||4.9%||2.4%||0.4%||2.0%||1.8%||1.9%|
|Operating profit margin||0.9%||8.5%||4.3%||4.5%||2.4%||-||4.8%||1.3%||1.9%|
Orders for injection molding machines were up 100.6% YoY, from JPY5.0bn (61% of segment orders) in Q1 FY03/21 to JPY10.0bn (57%) in Q1 FY03/22; the increased orders came mainly from Japan, the US, and China. Revenue rose 14.4% YoY, from JPY6.5bn (50% of segment revenue in Q1 FY03/21 to JPY7.4bn (42%) in Q1 FY03/22, with growth predominantly in Japan, India, and China. (Figures for the breakdown of the Metal & Plastics Industrial Machines segment are calculated by Shared Research based on material disclosed by the company. The same is true for the segment breakdowns below.)
Orders for die-casting machines rose 133.3% YoY, from JPY1.9bn (23% of segment orders) in Q1 FY03/21 to JPY4.4bn (25%) in Q1 FY03/22, reflecting a recovery in capex demand, particularly among automakers in Japan, Southeast Asia, and China. Revenue rose 22.6% YoY, from JPY2.6bn (20% of segment revenue) in Q1 FY03/21 to JPY3.2bn (18%) in Q1 FY03/22, driven by sales to automakers in Japan and China.
Orders for extrusion machines rose 141.6% YoY, from JPY1.3bn (16% of segment orders) in Q1 FY03/21 to JPY3.2bn (18%) in Q1 FY03/22. In China, orders rose for LiB separator film production lines. Revenue rose 81.6% YoY, from JPY3.9bn (30% of segment revenue) in Q1 FY03/21 to JPY7.1bn (40%) in Q1 FY03/22 on increased sales of of LiB separator film production lines in China, as well equipment for manufacturing optical sheets and films in Taiwan and South Korea.
Segment operating profit was JPY329mn (+4.1% YoY). Segment OPM was 1.9% (-0.5pp YoY) due to the absence in Q1 FY03/22 of high-margin projects of the kind booked in Q1 FY03/21, despite a strong recovery in terms of revenue.
|Operating profit margin||-||1.5%||1.4%||1.0%||-||-||-||-||2.8%|
|Operating profit margin||-||4.4%||1.2%||-||-||-||-||2.8%||2.8%|
Machine tools orders rose sharply in Japan, China, and North America. Orders for precision processing machines for use with optical molds rose in China.
Revenue increased from sales ofmachine tools for use in the wind power industry in China, but declined from sales for use in industrial machinery fell in Japan. Sales of high-precision machine tools for use with optical molds in the smartphone an dautomotive industries rose in China and Taiwan.
Segment operating profit entered the black, with a profit of JPY158mn in Q1 FY03/22 (versus an operating loss of JPY258mn in Q1 FY03/21). In addition to higher revenue, mainly for precision processing machines, the company improved its earnings structure by cutting costs.
|Operating profit margin||-||-||0.1%||-||-||-||-||-||-|
|Operating profit margin||-||6.2%||1.8%||-||-||-||-||5.1%||-|
In this segment, the company mainly offers industrial robots and electronic control systems.
Orders and revenue both increased in the Control Systems segment. In addition to solid demand for industrial robots for use in the smartphone industry in China, sales of electronic control systems such as linear motors for semiconductor fabrication equipment rose in Japan.
The segment operating loss widened to JPY83mn (operating loss of JPY13mn in Q1 FY03/21). This was brought about by changes to the sales composition, despite increased revenue.
|Operating profit margin||-||-||-||-||-||10.0%||4.8%||2.2%||4.4%|
|Operating profit margin||-||-||4.8%||11.2%||-||26.5%||-||-||4.4%|
For details on previous quarterly and annual results, please refer to the Historical financial statements section.
|(JPYmn)||1H Act.||2H Act.||FY Act.||1H Act.||2H Act.||FY Act.||1H Est.||2H Est.||FY Est.|
|Cost of revenue||42,583||40,718||83,301||30,923||36,807||67,730|
|Gross profit margin||28.5%||28.8%||28.7%||26.9%||26.9%||26.9%|
|Operating profit margin||2.7%||3.3%||3.0%||-||1.4%||0.4%||1.5%||3.5%||2.5%|
|Recurring profit margin||4.0%||2.5%||3.3%||-||3.1%||0.9%||0.6%||3.5%||2.1%|
Product lead times vary widely, from two months to more than a year. Shibaura Machine anticipates higher orders and revenue based on a recent rise in orders. The company forecast assumes that business will recover in line with its Management Reform Plan (medium-term management plan). On the profit front, the company expects to begin benefiting in 2H from the streamlining of overseas production bases called for under the plan, transferring all production of small metal & plastics industrial machines and SCARA robots overseas from Japan. At the same time, the company forecast assumes a sharp rise in materials and shipping costs. For this reason, the company conservatively assumes OPM will be below FY03/20 levels.
Previously, Shibaura Machine recognized revenue at the time of shipment. The company has adopted a new revenue-recognition method from FY03/22. It expects this change to negatively affect revenue by around JPY13.0bn and operating profit by approximately JPY1.8bn. The company forecast assumes an exchange rate of JPY103/USD. (The actual rate for FY03/21 was JPY111/USD).
The company forecasts orders of JPY86.9bn (+36.4% YoY) in the Metal & Plastics Industrial Machines segment, JPY27.5bn (+57.7% YoY) in the Machine Tools segment, and JPY8.5bn (+38.2% YoY) in the Control Systems segment. Within the Metal & Plastics Industrial Machines segment, the company expects injection molding machines to account for 43% of orders, die-casting machines for 22%, and extrusion machines for 35%.
Shibaura Machine anticipates revenue of JPY73.5bn (+14.3% YoY) in the Metal & Plastics Industrial Machines segment, JPY24.7bn (+18.3% YoY) in the Machine Tools segment, and JPY7.8bn (+5.5% YoY) in the Control Systems segment. Within Metal & Plastics Industrial Machines, the company anticipates 48% of revenue will derive from injection molding machines, 19% from die-casting machines, and 33% from extrusion machines.
The company forecasts operating profit of JPY2.1bn (+81.5% YoY) in the Metal & Plastics Industrial Machines segment, JPY400mn (loss of JPY828mn in FY03/21) in the Machine Tools segment, and JPY200mn (loss of JPY39mn in FY03/21) in the Control Systems segment. The company anticipates higher revenue and profits across the board, as orders are rising in all segments. The Machine Tools and Control Systems segments were unprofitable in FY03/21, but the company forecasts a return to profitability in FY03/22 for both segments.
Despite supply chain disruptions stemming from shortages of semiconductors and other components, the company expects higher demand for Metal & Plastics Industrial Machines both in Japan and overseas, from manufacturers of automobiles (including EVs). In addition, the company anticipates ongoing growth in demand from manufacturers of medical equipment and containers.
As in the Metal & Plastics Industrial Machines segment, shortages of semiconductors and other components are disrupting supply chains in the Machine Tools segment. That said, the company expects demand for large machine tools to remain robust in sectors related to social infrastructure and energy (automaking, wind power generation, semiconductors, and construction machinery). The company also anticipates solid growth in demand from China from manufacturers of molds for optical lenses used in smartphones and automobiles.
As in the Metal & Plastics Industrial Machines and Machine Tools segments, shortages of semiconductors and other components are disrupting supply chains in the Control Systems segment. However, the company expects a rise in demand for industrial robots from Chinese manufacturers of smartphones and EV batteries. The company also anticipates strong demand for linear motors from semiconductor manufacturers and an increase in demand related to automation and labor-saving systems.
|Results vs. Initial Est.||FY03/12||FY03/13||FY03/14||FY03/15||FY03/16||FY03/17||FY03/18||FY03/19||FY03/20||FY03/21|
|Revenue (Initial Est.)||110,000||128,000||115,000||125,000||125,000||118,000||120,000||135,000||122,000||92,000|
|Results vs. Initial Est.||8.7%||-5.5%||-1.7%||-0.5%||-6.2%||-5.7%||-2.6%||-13.0%||-4.3%||0.7%|
|Operating profit (Initial Est.)||6,200||8,000||5,500||6,000||6,200||4,600||5,200||6,900||5,300||-1,400|
|Operating profit (Results)||7,411||8,078||4,625||4,788||3,806||4,473||4,640||3,834||3,529||381|
|Results vs. Initial Est.||19.5%||1.0%||-15.9%||-20.2%||-38.6%||-2.8%||-10.8%||-44.4%||-33.4%||-|
|Recurring profit (Initial Est.)||6,200||9,000||6,000||6,800||7,200||5,100||5,800||7,700||6,300||-2,400|
|Recurring profit (Results)||8,948||9,823||6,501||6,542||4,966||5,406||6,982||5,573||3,825||872|
|Results vs. Initial Est.||44.3%||9.1%||8.3%||-3.8%||-31.0%||6.0%||20.4%||-27.6%||-39.3%||-|
|Net income (Initial Est.)||4,500||5,800||3,500||4,500||6,500||3,400||4,200||5,700||4,400||-2,600|
|Net income (Results)||6,721||7,891||4,444||4,312||4,806||1,776||5,016||4,079||7,338||-2,898|
|Results vs. Initial Est.||49.4%||36.1%||27.0%||-4.2%||-26.1%||-47.8%||19.4%||-28.4%||66.8%||-|
Revenue discrepancies between initial forecasts and results are due mainly to year-end shifts in delivery dates, causing revenue to be recognized in a different fiscal year than the company had initially expected. Product lead times vary from two to around 18 months. Delivery lead times are two to six months for products requiring relatively little customization, and the company erects large-scale facilities in anticipation of customer demand. In FY03/20, demand began to expand for LiB separator film production lines. Delivery lead times on these products are around 1–1.5 years.
Differences between forecast and actual results tend to be more pronounced for operating profit than for revenue. Shared Research understands that the main reasons are highly volatile component and material prices (tight supply and demand due to a limited number of suppliers) and an internal structure based on a wide range of accumulated technologies and expertise, which makes managing engineering and manufacturing costs difficult. To address this situation, the company is introducing structural reforms to improve profitability under the Management Reform Plan (unveiled in February 2020). One such measure was to call for volunteers for early retirement. In FY03/20, net income significantly overshot expectations. This disparity was due to extraordinary gains on the sale of shares in NuFlare Technology Inc., an affiliated company. (Reflecting that bump in the previous year, net income was down YoY in FY03/21.) For FY03/21, the company had expected an operating loss due to sharply lower revenue and an increasingly opaque outlook stemming from trade friction between the US and China and the COVID-19 pandemic. However, ultimately the company generated an operating profit for the year, as the operating environment improved in 2H and expenses continued to fall.
On May 15, 2019, the company unveiled the Revolution E10 Plan (RE10). The main thrust of this medium-term management plan was to boost enterprise value by raising profitability, enhancing product offerings, and investing in growth. Following the plan’s announcement, markets deteriorated rapidly due to US–China trade friction and ongoing geopolitical risk, and the operating environment grew more uncertain. Taking these factors into account, the company revised RE10, formulating a new medium-term management plan (FY03/20 to FY03/24) called the Management Reform Plan. This plan, announced on February 4, 2020, placed more emphasis on ensuring profitability. The Management Reform Plan straddles significant management changes, one being the company’s separation from the Toshiba Group (in April 2020 the company changed its name from Toshiba Machine to Shibaura Machine). Also, Shigetomu Sakamoto (formerly vice president) was appointed president and CEO on February 21, 2020.
When formulating this plan, Shibaura Machine sought to clarify the necessity of the plan and the issues the company faced. One issue was trade friction between the US and China, which was having the largest negative impact on orders across the machinery sector since the global financial crisis. Another issue surrounded the sale of NuFlare Technology Inc. (delisted on March 30, 2020) to Toshiba Electronic Devices & Storage Corporation. The company faced the concern that profitability could fall more rapidly due to an increase in assets and a decrease in profit on equity in affiliates. Given these considerations, the company decided it needed to make management decisions to build a highly profitable structure and review its capital policies. The plan comprises numerical targets, specific measures, investment planning, and financial strategy.
Numerical targets: The company’s targets for FY03/24, the final year of the plan, are revenue of JPY135.0bn, OPM of 8.0%, a dividend payout ratio of around 40%, and return on equity (ROE) of 8.5%.
For FY03/21, the company expected YoY declines in revenue (to JPY97.5bn) and operating profit (to JPY900mn) compared with FY03/20 levels (revenue of JPY116.8bn operating profit of JPY3.5bn), due to trade friction between the US and China, as well as deterioration in other areas of the operating environment. Actual FY03/21 revenue came to JPY92.6bn (-20.7% YoY) while operating profit was JPY381mn (-89.2% YoY).
FY03/21: As outlined in the Management Reform Plan, the company called for 200 to 300 employees to volunteer for early retirement, and the company concentrated its head office functions in Tokyo. In addition, the company transitioned from a system based on business units to one comprising internal companies. It streamlined manufacturing facilities in Japan and overseas and began considering realigning factories according to type of equipment. (In FY03/21, revenue was JPY92.6bn and operating profit was JPY381mn).
FY03/22 to FY03/24: Shibaura Machine will continue to streamline domestic and overseas manufacturing bases. The company aims to make technological development more flexible through the full-fledged operation of its R&D center. Similarly, the company plans to optimize its management of production efficiency when the new production center begins full operations.
|Metal & Plastics Industrial Machines||71,831||80,265||79,210||77,206||64,308||-||-||90,700|
|% of total||64.5%||68.7%||67.5%||66.1%||69.4%||-||-||67.2%|
|% of total||26.5%||20.3%||23.3%||25.4%||22.5%||-||-||24.9%|
|% of total||-||-||-||5.9%||6.3%||-||-||7.6%|
|% of total||9.0%||11.0%||9.2%||2.5%||1.7%||-||-||0.4%|
|Operating profit margin||4.0%||4.0%||3.3%||3.0%||0.4%||2.5%||5.0%||8.0%|
Specific measure (1): Enact management reforms centered on reorganization
Discontinue organization based on business units, which was behind the issue of specific optimization, and adopt a system of internal companies
Establish an R&D center and a production center to take on the shared functions of boosting production efficiency and reinforcing quality, cost, and delivery (QCD)
Relocate personnel and offer voluntary retirement to optimize the allocation of resources and reduce fixed costs
Specific measure (2): Promote investment in growth fields
Promote investment to expand applications in business fields that promise future growth
Investment planning/financial strategy: Pursue financial strategies aimed at boosting capital efficiency (ROE)
Invest cash on hand to facilitate the shift to a highly profitable structure, with the aim of boosting profitability and capital efficiency
Below, we have listed the measures the company plans to implement under the Management Reform Plan and their associated impact on profits. Compared with FY03/19 (operating profit of JPY3.8bn, OPM of 3.2%, ROE of 5.0%), Shibaura Machine expects the plan to have a JPY7.0bn positive impact on operating profit by its final year, FY03/24 (target operating profit of JPY10.8bn, OPM of 8.0%, ROE of 8.5%).
Profit-boosting effects (total of JPY10.1bn), due to
Profit-reducing effects (total of JPY3.1bn), due to:
The company conducted an in-house analysis of the following financial indicators before deciding what profitability-related measures to implement. According to the company, its performance is substantially below industry averages* by 50% or more on profitability indicators, such as return on equity (ROE), return on assets (ROA), and return on invested capital (ROIC). For ROE, the industry-average after-tax net profit margin is 7.9%, but 3.5% for Shibaura Machine. Total asset turnover is 0.8x for the company, the same as the industry average. The company’s financial leverage is 1.8x, versus an industry average of 2.0x, due to a lower after-tax net profit margin. Looking at indicators related to profit margins, the company had revenue per employee of JPY35mn (vs. an industry average of JPY39mn), a gross profit margin of 28% (vs. 28%), and an SG&A expense ratio of 25% (vs. 18%). As a result, the company concluded that it needed to raise profitability by improving productivity (revenue per employee) and lowering the SG&A expense ratio. To do so, the company devised the specific measure (1) to introduce a system of internal companies, reduce fixed costs, and call for voluntary retirement.
*The company calculated industry averages by using available data from the following 10 companies (all data are based on FY2018 results):
Japan Steel Works (TSE1: 5631), Okuma Corporation (TSE1: 6103), Makino Milling Machine (TSE1: 6135), Toyo Machinery & Metal (TSE1: 6210), Nissei Plastic Industrial (TSE1: 6293), Sumitomo Heavy Industries (TSE1: 6302), Haitian International Holdings Ltd. (HKG: 1882), L.K. Technology Holdings Limited (HK: 558), Engel Group (unlisted), and Buhler Group (unlisted)
The company also adopted the following governance measures to ensure implementation of the Management Reform Plan.
1． Consult with the Nomination Advisory Committee on:
2． Consult with the Remuneration Advisory Committee on:
3． Hold regular meetings attended only by independent outside directors to:
On March 5, 2020, the month after unveiling its Management Reform Plan, the company announced its “Long-Term Vision 2030 for a New Shibaura Machine.” The long-term vision’s subtitle is “becoming a corporate group which responds to megatrends in global manufacturing industry with innovative technology.”
An extension of the Management Reform Plan, Long-Term Vision 2030 outlines the company’s “ideal form.” Against the backdrop of megatrends (global climate change and resource shortages, a changing demographic structure, and the ongoing march of technology), the long-term vision emphasizes the need to move from unit sales of industrial machinery to the provision of new, value-added. Specifically, the long-term vision targets Shibaura Machine’s reinvigoration as a highly profitable company (ROE of more than 10%), the revision and strengthening of capital policies and financial strategies, the centralized oversight of management resources (personnel and technologies), and a shift away from insular self-reliance (utilizing M&A, alliances, and collaboration with academia). The Long-Term Vision 2030 has four main thrusts, each outlined below.
An overall objective is to move away from selling standalone products and toward the sale of bundled goods and services. Rather than meeting customer demand by selling only physical products (e.g., machine tools and industrial machinery), the company intends to move toward a combination of physical products and services. These services will aim to enhance customers’ production plans and production efficiency, as well as their response to environmental issues. Internal company-specific policies for moving from the sale of machines as commodities to value-added sales involve digital transformation: lowering prototyping costs through the digitization of design data and moving production management systems online. The company also plans to invest proactively in growth markets and high-value-added fields.
Shibaura Machine has outlined specific policies for each internal company. In existing areas of business, the company has made a clear distinction between areas it intends to shrink or withdraw from and those where it plans to expand or strengthen operations. Shibaura Machine has also clearly identified new fields of business for each internal company (including areas of collaboration between internal companies).
|Principal objectives||Fields to withdraw from or reduce involvement in||Fields to enhance or increase involvement in (high-value-added/expansionary fields)||New fields|
|Metal & Plastics Industrial Machines Company||Injection molding machines, die-casting machines||Expand local production for local consumption overseas||Automobiles, resource conservation||Domestic production of standard hydraulic machines||Injection molding machines, die-casting machines||System engineering, dissimilar material joining machines|
|Extrusion machines||Expand business through investment||Energy, devices, new materials||Conical-type extruders||Extrusion machines||High-pressure continuous presses (all-solid-state batteries), reactive extrusion machines (biomass)|
|Machine Tools Company||Focus on specific domains by model selection||Energy, aircraft, optics, devices||Small and general-purpose machines||Large machines, special, dedicated machines, ultra-precision processing machines||Multifunctional machines, ceramic cutting machines, system engineering|
|Control Systems Company||Specialize in external sales, strengthen system engineering||Automation, labor savings||NC, controllers (external alliances)||Robots, servo motors, controllers||Collaborative robots, AGVs|
|New Business Company||Establish technology for adding new functions via surface structure control||Automation, devices||Film casting equipment: electronic circuit market (next-generation communications); Coaters: high-performance films, devices market (all-solid-state batteries, LiB ceramic capacitors, optical components, etc.); Imprint equipment: water purification and sterilization market (Deep-UV LEDs)|
The company explains that its customers in the manufacturing sector go through roughly four stages of production:
(1) prototype/initial production, (2) full-scale production, (3) increased production, and (4) aging of equipment. To date, the company’s machine tools and industrial machinery have contributed to customers only in the two middle stages. Going forward, the company plans to contribute at the first through third stages. It also intends to extend the contribution from the third through fourth stages by selling restored equipment (buying and reselling preowned equipment).
By contributing more actively at multiple stages of production, including prototyping and initial-stage small-lot production, the company plans to build a system to provide integrated services. The lineup will begin with the use of Shibaura Machine’s shared factories and facilities and continue through full-scale and ramped-up production.
Overseas sales account for less than 30% of machine tool revenue, compared with around 60% for competitors. The company recognizes the need to expand its overseas business, as Asia and other overseas markets are driving global business growth. In the Machine Tools Company, the company plans to avoid business involving general-purpose equipment, concentrating instead on large and high-precision machine tools (areas of competitive advantage).
During its era as Toshiba Machine, the company’s organization was based on business units. Under the new Management Reform Plan, the company has introduced a system of internal companies, mainly to heighten awareness of business profitability. At the same time, Shibaura Machine established an R&D center and a production center. These organizations operate across internal companies. These centers are designed to concentrate the basic technologies used in different internal companies’ businesses, as well as to cultivate and house specialists. In addition to its own engineers, the company is working to build alliances with outside organizations, such as fostering collaboration with academia. The company is also building its technology platform by employing advanced professionals and increasing interaction with engineers from outside the company in other ways.
Shibaura Machine manufactures and sells machine tools and industrial machinery (tools that are used to make other machines) to companies in the manufacturing sector. In FY03/21, the company produced revenue of JPY92.6bn, of which 69% was from the Metal & Plastics Industrial Machines segment, 23% from the Machine Tools segment, 6% from the Control Systems segment, and 2% from Other Products. Profitability varies by product category. Over the five years to FY03/21, OPM ranged from 1.8% to 5.8% in the Metal & Plastics Industrial Machines segment, a negative amount to 1.4% in the Machine Tools segment, and a negative amount to 7.8% in the Other Products segment (which previously included the now-separate Control Systems segment).
In addition to selling manufacturing equipment (its own machine tools and plastic processing equipment) to new and existing customers on a stand-alone basis, Shibaura Machine sells equipment by including it as a part of a manufacturing process proposal package. The company also generates revenue by providing maintenance on the equipment it sells.
Rather than mass-produced, general-purpose equipment, the company specializes in providing customized equipment that is developed to meet specific customer requirements. The company frequently collaborates with customers from the initial stages of production, selling its equipment to manufacturers directly. For general-purpose equipment, however, the company also sells equipment via trading companies.
The company manufactures and sells industrial equipment: injection molding machines, die-casting machines, extrusion machines, machine tools, high-precision machine tools, industrial robots, and electronic control systems.
In FY03/21, the company generated revenue of JPY92.6bn, deriving 69% from the Metal & Plastics Industrial Machines segment, 23% from the Machine Tools segment, 6% from the Control Systems segment, and 2% from the Other Products segment. Within the mainstay Metal & Plastics Industrial Machines segment, 50% of revenue was from injection molding machines, 19% was from die-casting machines, and 31% was from extrusion machines. By region, in FY03/21 the company produced 44% of revenue in Japan, 24% in China, 15% in other parts of Asia, 13% in the US, and 4% in other regions. The product mix has varied over the years, but over the five years to FY03/21, the Metal & Plastics Industrial Machines segment accounted for 98% of operating profit (before intra-segment adjustments), with Machine Tools and Other Products (including Control Systems) together providing 2%.
The company does not disclose profits by product type within the Metal & Plastics Industrial Machines segment, but Shared Research understands that profitability is highest for die-casting machines for automakers, as demand is stable and competition low. Next in line is extrusion machines (as more applications are being developed), followed by injection molding machines (used for a wide range of products, from everyday items to auto parts).
In the Machine Tools segment, the company specializes in large equipment for which economies of scale are difficult to achieve and customization is prevalent. Accordingly, fixed costs (for design technologies and production facilities) are high. Over the three years to FY03/21, annual revenue in this segment ranged from around JPY20.0bn to JPY30.0bn. Shared Research understands that breakeven in this business requires annual revenue of around JPY25.0bn.
The Control Systems segment was previously part of the Other Products segment, and most of the control systems the company produced was for internal use. Along with the organizational shift toward a system of internal companies in FY03/21, Control Systems became an independent reportable segment.
The company maintains two head offices, the Tokyo headquarters (Chiyoda-ku, Tokyo) and the Numazu headquarters (Numazu, Shizuoka Prefecture). In addition to the parent company, the Shibaura Machine group comprises 22 subsidiaries and one affiliated company.
In Japan, the company has five main branches (Tokyo headquarters, Tohoku branch, Chubu branch, Kansai branch, and Kyushu branch), four sales offices (Takasaki, Hamamatsu, Hiroshima, and Onomichi), and service stations. The company also has three plants in Japan (Numazu, Sagami, and Gotemba).
Shibaura Machine has five group companies in Japan: Shibaura Machine Engineering Co., Ltd., Toei Electric Co., Ltd., Fuji Seiki Machine Works, Ltd., Shibaura Semtek Co., Ltd., and Shibaura Sangyo Co., Ltd. Toei Electric and Fuji Seiki Machine Works are manufacturing and sales companies; the others provide sales and service. NuFlare Technology Inc. (delisted on March 30, 2020) was an equity-method affiliate that exited the group in January 2020, when Shibaura Machine sold its entire stake in NuFlare to Toshiba Electronic Devices & Storage Corporation.
Shibaura Machine has 15 overseas affiliates, three of which are manufacturing and sales companies: Shibaura Machine (Shanghai) Co., Ltd.; Shibaura Machine Manufacturing (Thailand) Co., Ltd.; and Shibaura Machine India Private Limited. Other affiliates are sales and service companies: Shanghai Shibaura Machine Co., Ltd.; Shibaura Machine (Shenzhen) Co., Ltd.; Shibaura Machine Taiwan Co., Ltd.; Shibaura Machine (Thailand) Co., Ltd.; Shibaura Machine Singapore Pte. Ltd.; Pt. Shibaura Machine Indonesia; Shibaura Machine Vietnam Company Limited; Shibaura Machine Company, America; Shibaura Machine Company Mexico, S.A. de C.V.; Shibaura Machine do Brazil Comercio de Maquinas Ltda; Shibaura Machine Europe S.R.L.; and Shibaura Machine UK Ltd.
|Shibaura Machine Engineering Co., Ltd.||Numazu, Shizuoka||Metal & Plastics Industrial Machines, Other Products||Sales and service|
|Toei Electric Co., Ltd.||Mishima, Shizuoka||Control Systems||Production and sales|
|Fuji Seiki Machine Works, Ltd.||Sunto area, Shizuoka||Machine Tools, Other Products||Production and sales|
|Shibaura Semtek Co., Ltd.||Numazu, Shizuoka||Other||Sales and service|
|Shibaura Sangyo Co., Ltd.||Numazu, Shizuoka||Other||Sales and service|
|SHIBAURA MACHINE (SHANGHAI) CO., LTD.||Shanghai, China||Metal & Plastics Industrial Machines, Control Systems||Production and sales|
|SHIBAURA MACHINE MANUFACTURING (THAILAND) CO., LTD.||Rayong, Thailand||Metal & Plastics Industrial Machines||Production and sales|
|SHIBAURA MACHINE INDIA PRIVATE LIMITED||Chennai, India||Metal & Plastics Industrial Machines, Machine Tools||Production and sales|
|SHANGHAI SHIBAURA MACHINE CO., LTD.||Shanghai, China||Metal & Plastics Industrial Machines, Machine Tools, Control Systems||Sales and service|
|SHIBAURA MACHINE (SHENZHEN) CO., LTD.||Shenzhen, China||Metal & Plastics Industrial Machines||Sales and service|
|SHIBAURA MACHINE TAIWAN CO., LTD.||Taiwan||Sales and service|
|SHIBAURA MACHINE (THAILAND) CO., LTD.||Bangkok, Thailand||Metal & Plastics Industrial Machines, Machine Tools, Control Systems||Sales and service|
|SHIBAURA MACHINE SINGAPORE PTE. LTD.||Singapore||Metal & Plastics Industrial Machines, Machine Tools||Sales and service|
|PT. SHIBAURA MACHINE INDONESIA||Jakarta, Indonesia||Sales and service|
|SHIBAURA MACHINE VIETNAM COMPANY LIMITED||Hanoi, Vietnam||Sales and service|
|SHIBAURA MACHINE COMPANY, AMERICA||Illinois, US||Metal & Plastics Industrial Machines, Machine Tools||Sales and service|
|SHIBAURA MACHINE MEXICO, S.A. DE C.V.||Mexico||Sales and service|
|SHIBAURA MACHINE DO BRAZIL COMERCIO DE MAQUINAS LTDA||Sao Paulo, Brazil||Sales and service|
|SHIBAURA MACHINE EUROPE S.R.L||Milan, Italy||Sales and service|
|SHIBAURA MACHINE UK LTD.||UK||Sales and service|
In FY03/21, the company had no specific customers accounting for more than 10% of consolidated revenue.
The company engages in cross-shareholdings (policy-based holdings of shares in other companies). Taking a long-term perspective on increasing enterprise value, Shibaura Machine holds such shares upon considering overall relations with business partners, including the importance of these relations from the standpoint of business strategy. Each year, the Board of Directors reconsiders whether these policy shareholdings are appropriate. The Board evaluates the purpose of holding these shares, looking at the benefits and risks of holding them, along with capital costs.
|Ticker||Company||No. of shares||Balance sheet value (JPYmn)||Purpose of holding||Shareholdings in Shibaura Machine|
|7203||Toyota Motor Corporation||449,716||3,874||To facilitate business and forge strong relationships across all segments||No|
|8355||The Shizuoka Bank, Ltd.||910,660||792||To facilitate financial transactions and forge strong relationships||Yes|
|7911||Toppan Printing Co., Ltd.||277,979||519||To facilitate business and forge strong relationships in the Molding Machinery segment||Yes|
|4204||Sekisui Chemical Co., Ltd.||224,179||476||To facilitate business and forge strong relationships in the Molding Machinery segment||No|
|7988||Nifco Inc.||100,600||405||To facilitate business and forge strong relationships in the Molding Machinery segment||No|
|7201||Nissan Motor Co., Ltd.||425,364||261||To facilitate business and forge strong relationships across all segments||No|
|8316||Sumitomo Mitsui Financial Group, Inc.||51,202||205||To facilitate financial transactions and forge strong relationships||Yes|
|6118||Aida Engineering, Ltd.||204,000||202||To facilitate business and forge strong relationships in the Machine Tools segment||Yes|
|7186||Concordia Financial Group, Ltd.||444,215||199||To facilitate financial transactions and forge strong relationships||Yes|
|5851||Ryobi Limited||91,010||151||To facilitate business and forge strong relationships in the Molding Machinery segment||Yes|
|8309||Sumitomo Mitsui Trust Holdings, Inc.||28,294||109||To facilitate financial transactions and forge strong relationships||Yes|
|5999||Ihara Science Corporation||56,000||95||To facilitate purchasing transactions and forge strong relationships||Yes|
|6339||Sintokogio, Ltd.||97,800||75||To strengthen collaboration in sales and technology application||Yes|
|6305||Hitachi Construction Machinery Co., Ltd.||12,947||45||To facilitate business and forge strong relationships in the Machine Tools segment||No|
|6776||Tensho Electric Industries Co., Ltd.||46,500||25||To facilitate business and forge strong relationships in the Molding Machinery segment||No|
|5852||Ahresty Corporation||49,635||23||To facilitate business and forge strong relationships in the Molding Machinery segment||Yes|
|5610||Daiwa Heavy Industry Co., Ltd.||18,000||15||To facilitate business and forge strong relationships in the Machine Tools segment||Yes|
|7291||Nihon Plast Co., Ltd.||11,000||6||To facilitate business and forge strong relationships in the Molding Machinery segment||No|
|7925||Maezawa Kasei Industries Co., Ltd.||5,000||5||To facilitate business and forge strong relationships in the Molding Machinery segment||No|
|3103||Unitika Ltd.||10,000||4||To facilitate business and forge strong relationships in the Molding Machinery segment||No|
|6986||Futaba Corporation||3,993||3||To facilitate business and forge strong relationships in the Machine Tools segment||Yes|
The company manufactures industrial machinery and machine tools. In the mainstay Metal & Plastics Industrial Machines business, the company makes injection molding machines, die-casting machines, and extrusion machines. Major products in the Machine Tools business are double-column type machining centers, horizontal boring machines, vertical boring and turning mills, machining centers, and high-precision machine tools. Shibaura Machine also makes control systems. To date, the company used most of this equipment on its own machinery, but as external sales have expanded, in FY03/21 it established Control Systems as a new business segment. In this category, the company produces industrial robots, servo motors, and FA controllers. In the Other Products segment, the company handles machining on commission, engineering solution, and environmental measurement.
Injection molding machines operate by injecting molten plastic material into metal molds, where the material hardens as it cools. These machines have three main units: a molding unit, an injection unit, and a controller. The molding unit, which is usually made of metal, can be opened and closed and is in the shape of the final product. Material is injected into the mold, and a certain amount of pressure is applied and maintained to keep the material from changing shape while it is cooling. The injection unit contains a hopper of plastic material. When a screw inside the cylinder is turned, the plastic material is heated to a liquid state and accumulated in the front part of the screw before being injected into the mold. The controller is used to input conditions about the forming process. The controller unit controls injection speed, clamping force, cylinder and mold temperatures, amount of material to be injected, and other conditions (numerical values) related to forming. In recent years, numerical control (NC) has been gaining traction.
Die casting is the process of forming products by injecting molten metal (such as aluminum or magnesium) into a mold (called a die) at high pressure. The die-casting process offers a number of benefits: short production time, high dimensional precision, and compatibility with complex shapes. Also, a single die can be used to produce a large number of items in a short period of time, and little machining is required after casting. It is possible to produce thin-walled castings, and surface finishes tend to be good. Die casting is well suited to mass production, and the process is mainly used in manufacturing automotive parts. Die-casting machines are made up of a clamping unit (for opening and closing the die), an injection unit (for injecting molten metal into the die), an ejection unit (for ejecting the casting from the die), a unit for transporting molten metal, a unit that applies releasing agent to the die, a spraying unit (for cooling), and an extraction device (for picking up the product). Die casting, which is used for molten metals (aluminum, magnesium, and other non-ferrous metals and their alloys), differs from injection molding machines (which handle plastic resin) in a number of ways: injection speed, melting temperature, die release conditions, and automation systems. As a result, the two types of machines have different structures.
Extrusion machines are used to squeeze softened plastic resin out through an orifice and into air or water, where the plastic hardens as it cools. Extrusion is suited for the continuous forming of materials that have the same cross-sectional geometries. Extrusion machines comprise an extrusion unit, die (a “sizing die,” or the extrusion orifice), a cooling unit, a transport or winding unit (for winding continuously extruded materials onto rolls), and a cutting unit. Several methods are used to produce the pressure needed to extrude softened plastic resin. Using a screw is the most common. Extrusion is like injection molding in that the process is used to shape plastic resin. The difference is that injection molding forces the plastic into a mold, whereas extrusion shapes the plastic by squeezing it through a die. Also, extrusion is a continuous process, so is well suited to shapes such as sheets and hoses.
According to the Japanese Industrial Standard, “machine tool” is the general term for equipment used to machine (cut or grind) away excess metal into the desired shape, using electricity or another source of energy. Machine tools are essential to manufacturing, as they are the “machines that make machines.” Historically, Japanese and German manufacturers have had a strong presence in this sector. Machine tools come in many types, such as forming presses, sheet metal processing machines, electric discharge machines, gear cutting machines, drill presses, boring machines, milling machines, machining centers, lathe, grinders, and turning centers.
Machining centers are compound machine tools that use numerical control (NC) programming to automatically change between multiple cutting tools. As a result, a single machining center can handle drilling, planing, and other processes. By using different types of cutting tools and having a table to place work pieces on allows machining centers to be used for bending and complex physical machining. Specialized machine tools are typically used depending on the type of machining to be done: milling machines for cutting on flat surfaces, drill presses for drilling holes, lathes for turning, and boring machines for working holes. Machining centers allow multiple, complex machining processes to be performed automatically, once the necessary tools are in place and the machining information has been entered into the NC unit. To protect tools and prevent damage from flying metal cuttings, machining centers are often housed in boxlike structures.
Machining centers are separated roughly according to tool orientation: vertical (for small- or medium-scale machining), horizontal (for cutting, multisurface machining, and continuous machining over long periods of time) and double-column (the machine itself has a gate-like structure, and moves along the workpiece; suitable for machining large, heavy objects).
As the name suggests, with NC numerical information is used to instruct equipment operations. In the past, machine tools were operated manually, using wheels and levers, or cams were used for mechanically automated control. This type of control evolved into numerical control, as commands were encoded into programs to operate machine tools automatically. The world’s first NC machine tools were created by adding numerical control systems (which read instructions from paper tape) to existing machine tools. These systems, called servos, controlled the operations of machine tools’ motors. (Servo systems move physical items by automatically manipulating their location, direction, and attitude according to set values.) The use of computers made such control more precise, leading to the advent of computer numerical controlled (CNC) machine tools. In addition to machine tools, nowadays CNC servo mechanisms are essential in a variety of fields, including factory automation (FA) and industrial robots.
In FY03/21, companywide R&D expenditure amounted to JPY2.2bn. This figure included JPY918mn in R&D expenditure by the R&D center that was not allocated to individual segments.
In the Metal & Plastics Industrial Machines segment, the company works with Shibaura Machine Engineering Co., Ltd., a subsidiary, on R&D to improve cycle times, increase precision, raise forming quality, conserve energy, and reduce environmental impact for injection molding machines and die-casting machines. For extrusion machines, the company conducts R&D on kneading technology (to improve performance); concentrates on developments involving energy, the environment, and high-performance materials; and develops new forming systems. In FY03/21, R&D expenditure in this segment was JPY757mn.
In the Machine Tools segment, Shibaura Machine works with Fuji Seiki Machine Works, Ltd., a subsidiary, on R&D aimed at increasing levels of speed, precision, intelligence, and combined machining to raise the productivity of double-column type machining centers, horizontal boring machines, vertical boring and turning mills, and horizontal machining centers. In the field of high-precision machine tools, the company develops ultraprecision vertical machine tools and aspheric generator, as well as high-speed spindle and other underlying technologies. In FY03/21, R&D expenditure in this segment was JPY270mn.
In the Control Systems business, the company works with Toei Electric Co., Ltd., a subsidiary, on R&D involving high-performance NC controllers, servo controllers, IoT, and system robots. Aims are to accelerate control speeds, augment precision, reduce labor requirements, and increase automation. In FY03/21, R&D expenditure in this segment was JPY257mn.
In the Other Products segment, the company conducts R&D on material processing and casting technologies. In FY03/21, R&D expenditure in this segment was JPY14mn.
In FY03/21, companywide capital expenditure totaled JPY1.8bn and was aimed at boosting production capacity and streamlining. In the Metal & Plastics Industrial Machines segment, the company invested JPY510mn. This spending mainly went toward production capacity increases and the development of molding technologies. Capex in the Machine Tools segment totaled JPY181mn, centered on equipment to increase capacity and streamline production. In the Control Systems segment, capex totaled JPY242mn. As with the other segments, spending mostly went toward equipment to increase capacity and streamline production. In the Other Products segment, capex of JPY863mn went toward processing machinery and facilities to increase production capacity and streamline manufacturing.
Until FY03/21, the company had reported earnings in Metal & Plastics Industrial Machines, Machine Tools, and Other Products. In FY03/21, the company made Control Systems (formerly in Other Products) an independent segment, increasing the number of reportable segments to four.
|Metal & Plastics Industrial Machines||70,490||70,505||73,787||76,288||76,638||79,932||92,295||91,865||63,104||63,711|
|% of total||57.3%||62.9%||61.4%||61.2%||63.9%||68.3%||72.0%||68.3%||67.0%||71.9%|
|% of total||22.5%||21.1%||23.3%||26.2%||27.8%||20.7%||18.9%||23.3%||24.2%||19.7%|
|% of total||11.2%||8.4%||6.2%||4.8%||-||-||-||-||-||-|
|% of total||-||-||-||-||-||-||-||-||6.9%||6.9%|
|% of total||9.0%||7.6%||9.1%||7.9%||8.4%||11.0%||9.1%||8.4%||1.9%||1.5%|
|Metal & Plastics Industrial Machines||65,726||73,195||73,214||80,024||73,580||71,831||80,265||79,210||77,206||64,308|
|% of total||55.0%||60.5%||64.8%||64.3%||62.7%||64.5%||68.7%||67.5%||66.1%||69.4%|
|% of total||24.1%||23.9%||20.4%||22.6%||28.1%||26.5%||20.3%||23.3%||25.4%||22.5%|
|% of total||11.6%||8.1%||6.7%||-||-||-||-||-||-||-|
|% of total||-||-||-||-||-||-||-||-||5.9%||6.3%|
|% of total||9.3%||7.5%||8.1%||13.0%||9.2%||9.0%||11.0%||9.2%||2.5%||1.7%|
|Operating profit margin||6.2%||6.7%||4.1%||3.8%||3.2%||4.0%||4.0%||3.3%||3.0%||0.4%|
|Metal & Plastics Industrial Machines||4,396||6,089||4,965||3,853||1,710||3,525||4,659||3,510||3,747||1,157|
|Operating profit margin||6.7%||8.3%||6.8%||4.8%||2.3%||4.9%||5.8%||4.4%||4.9%||1.8%|
|Operating profit margin||5.0%||6.3%||-3.1%||3.0%||4.7%||1.4%||-||-||1.0%||-|
|Operating profit margin||7.5%||-||-||-||-||-||-||-||-||-|
|Operating profit margin||-||-||-||-||-||-||-||-||-||-|
|Operating profit margin||1.7%||-||2.1%||-||3.8%||4.0%||7.8%||4.0%||-||2.2%|
|Operating profit margin||2.3%||4.9%||5.8%||4.4%||4.9%||1.8%|
Main products in this segment are injection molding machines, die-casting machines, and extrusion machines. The company discloses revenue for each of these product categories, and in FY03/21 injection molding machines made up 50% of segment revenue, die-casting machines 19%, and extrusion machines 31%.
In Japan, the company manufactures and sells injection molding machines, die-casting machines, and extrusion machines. In addition, Shibaura Machine Engineering Co., Ltd., a subsidiary, sells, installs, repairs, and provides maintenance, as well as selling repair parts.
Overseas, the company, Shibaura Machine (Shanghai) Co., Ltd., and Shibaura Machine Manufacturing (Thailand) Co., Ltd. manufacture injection molding machines and die-casting machines. Shibaura Machine India Private Limited manufactures, sells, and provides maintenance on injection molding machines; it also sells and provides maintenance on die-casting machines. Shanghai Shibaura Machine Co., Ltd. and Shibaura Machine (Thailand) Co., Ltd. sell and provide maintenance services on injection molding machines, die-casting machines, and extrusion machines. Shibaura Machine (Shenzhen) Co., Ltd., Shibaura Machine Singapore Pte. Ltd., and Shibaura Machine Company, America sell and provide maintenance services on injection molding machines and die-casting machines. In FY03/21, Shibaura Machine Company, America generated more than 10% of consolidated revenue (revenue of JPY14.6bn, recurring profit of JPY544mn, and net income of JPY456mn).
The automotive industry accounts for around 60% of injection molding machine sales. Other customers include manufacturers of sundry items and containers, home electronics, telecommunications, and medical equipment. By region, Japan and the US account for nearly half of sales, with China, India, Southeast Asia, and other regions accounting for the remainder.
The company manufactures some specialty equipment to customer specifications, but because the range of molding products is extensive, most injection molding machines are customized to some extent to meet customer needs. For this reason, no clear distinction exists between specialty equipment and general-purpose equipment. The company and its overseas subsidiaries sell some injection molding machines directly to customers; others are sold through trading companies.
The company sells nearly 90% of its die-casting machines to manufacturers of vehicles (including motorcycles). Castings are used mainly for automotive drivetrain parts, such as engine blocks and transmissions. For EVs, castings are finding use in new types of auto parts, such as motor covers and battery cases. Japan accounts for around 30% to 40% of sales of die-casting machines, followed by China, the US, Southeast Asia, South Korea, India, and Mexico.
As with injection molding machines, on die-casting machines it is difficult to make a clear distinction between specialty equipment and general-purpose equipment. Compared with injection molding machines, die-casting machines tend to skew more toward specialty equipment because they are used to manufacture core, high-precision automobile components. In Japan, the company effectively has just two major competitors for die-casting machines, Toyo Machinery & Metal Co., Ltd. (TSE1: 6210) and Ube Machinery (a wholly owned subsidiary of Ube Industries, Ltd. [TSE1: 4208]), so the comparative advantages of each company’s products are relatively easy to identify. As with injection molding machines, the company and its overseas subsidiaries sell some die-casting machines directly to customers, while others are sold through trading companies.
In this category, the company’s main products are LiB separator film production lines and equipment for manufacturing optical sheets and films. The company’s primary customers are in China and Japan.
In the global market, the company has two competitors for LiB separator film production lines: Japan Steel Works, Ltd. (TSE1: 5631) and Bruckner Maschinenbau GmbH & Co. KG (a subsidiary of the Bruckner Group GmbH [Germany, unlisted]). Shibaura Machine has a full product lineup in this category (spanning upstream to downstream manufacturing). The company became involved in the process of using extrusion machines to produce separator films at the request of a customer in the chemical manufacturing sector. From there, the company gradually moved into manufacturing these machines.
The company primarily sells extrusion machines directly to customers, as forming methods are diverse, and the machines typically need to be tailored to customers’ production lines.
In FY03/21, segment orders were JPY63.7bn (+1.0% YoY), revenue was JPY64.3bn (-16.7% YoY), and operating profit was JPY1.2bn (-69.1% YoY). Orders for injection molding machines recovered notably in North America, China, and India. Revenue rose in North America and China but fell in Japan and Southeast Asia. For die-casting machines, orders and revenue were sluggish, due to bearish capex by automakers in Japan and overseas. In extrusion machines, orders were up in China for LiB separator film production lines and equipment for manufacturing optical sheets and films. Revenue was down, but sales rose in Japan for equipment to manufacture sheets and films made of new eco-friendly materials.
|Operating profit margin||4.7%||1.4%||-||-||1.0%||-|
Large machine tools account for around 80% of segment revenue. Principal products are double-column type machining centers, horizontal boring machines, and vertical boring and turning mills.
Horizontal boring machines operate by rotating or moving specialized cutting tools with respect to the workpiece. These machines are used to further machine out and extend the insides of holes that have been created by drills. Boring can be performed by other machine tools, as well, but specialized horizontal boring machines (whose main boring shaft is horizontal) tend to be used when machining large-diameter or deep holes in large workpieces.
Double-column type machining centers are typically used to machine large workpieces, such as parts for automotive dies, industrial machinery, ships, aircraft, and energy-related or other infrastructure equipment. These machining centers have a gatelike appearance, and the workpiece is machined between the two columns.
On vertical boring and turning mills, the main spindle is vertical. This type of lathe is typically used to machine large workpieces, such as parts for aircraft or construction machinery that are too big for facing lathes or are asymmetrically shaped.
In addition to these three types of machine tools, which are used mainly for large workpieces, the company has a lineup of tools (such as horizontal machining centers and roll grinders) for machining smaller workpieces.
Within the Machine Tools segment, high-precision machine tools account for around 20% of revenue. These machines are used for machining parts that require ultrahigh levels of precision in such fields as optics and medicine. The company’s main equipment in this category is machines to produce lenses and other optical molds, such as lenses for smartphones, security cameras, onboard automobile cameras, single-lens reflex cameras, projectors, and LED headlights for automobiles. The company’s machines are used to produce the molds used to make small lenses using injection molding, which requires a high level of precision. The company says it has a high share of the market for equipment used to make smartphone lenses.
In Japan, Fuji Seiki Machine Works, Ltd. manufactures and sells the above-mentioned machine tools. This subsidiary also provides installation, repair, and maintenance services and sells repair parts.
The company makes machine tools in Japan, providing local sales and maintenance services in overseas markets via Shanghai Shibaura Machine Co., Ltd., Shibaura Machine India Private Limited, Shibaura Machine (Thailand) Co., Ltd., Shibaura Machine Singapore Pte. Ltd., and Shibaura Machine Company, America.
In FY03/21, this segment generated revenue of JPY20.9bn (-29.7% YoY). The segment posted an operating loss of JPY828mn, compared with JPY300mn in profit in FY03/20. Machine tool orders and revenue were down YoY in Japan and overseas markets for industrial machinery and construction machinery. However, capex showed signs of recovery in 2H FY03/21 in Japan, North America, and China. In the high-precision machine tools category, orders for machines for optical molds fell in Japan. Revenue from machines for optical molds rose in Japan but fell in China and Taiwan.
|Operating profit margin||-||-||-||-||-||-|
Control Systems became a separate reportable segment in FY03/21. Main products in this segment are industrial robots, servo motors, and FA controllers.
In Japan, the company manufactures and sells industrial robots, servo motors, and FA controllers via Toei Electric Co., Ltd., a subsidiary. Overseas, Shibaura Machine (Shanghai) Co., Ltd. manufactures and sells industrial robots. Shanghai Shibaura Machine Co., Ltd. and Shibaura Machine (Thailand) Co., Ltd. sell and provide maintenance on industrial robots.
In FY03/21, this segment produced revenue of JPY6.1bn and an operating loss of JPY39mn (loss of JPY39mn in FY03/20). In China, demand was robust for equipment to automate the assembly of electronic devices and smartphones, but orders and revenue were down in Japan due to capex delays.
|Operating profit margin||3.8%||4.0%||7.8%||4.0%||-||2.2%|
Shibaura Sangyo Co., Ltd. handles the company’s w