Two of Japans top metalworking fluid providers said recently that with domestic automobile production and die-casting industries stagnant, their growth will likely continue to come from other parts of Asia and the Americas.
Yushiro Chemical Industry Co. issued a statement saying that its growth strategy is in line with the business needs of automotive manufacturers, which make up the majority of its business. The domestic car industry has been stagnant due to an aging population and the falling car-ownership trend, the company said in its three-year expansion plan. This has led to the shifting of automotive production overseas.
Moresco Corp. concurred. Production of automobiles in Japan remains stagnant, and we do not expect strong growth in the die-cast products segment, the company noted in its latest financial report. We think that the manufacturers of automobiles and two-wheelers will continue to expand overseas.
Despite flat domestic automotive production volumes in Japan, Moresco said there was an increase in domestic demand for metal cutting and die casting fluids during the companys most recent fiscal year. But due to a fall in prices, its Japanese revenue was almost unchanged compared to the previous year, according to the report.
Moresco said the recovery of Southeast Asias automotive industry helped it increase specialty lubricants sales in that region. Yushiro said it also has faith in Southeast Asian markets moderate economic recovery and that its one of the regions it will target for growth. It increased profits in Malaysia and Indonesia year on year through increased sales to existing customers there.
In addition to Southeast Asia, Yushiro said it will continue to expand its marketing, distribution and sales networks in the United States and China. To speed up growth, the company will look into possible alliances, mergers or acquisitions in Japan and North America.
Yushiros operating profits increased 12.3 percent to 2.4 billion (U.S. $21.7 million) in the companys financial year ending March 31, 2017. Although its revenue fell 3.5 percent to 29.6 billion, Yushiro expects its total sales to increase 6.1 percent to 31.4 billion this financial year and hopes to reach a target of 35.6 billion by fiscal year 2019-2020.
Both firms cited economic uncertainty in the United States caused by the current presidential administration. There was moderate recovery in exports to the U.S. and China amid improvements in employment and income, but uncertainty in the new U.S. administration affected the world economy, Yushiro said.
Due to steady automotive production volumes in the U.S., Brazil and Mexico, Yushiros sales in those countries increased in terms of their local currencies. However, a strong yen resulted in sales value falling 1.3 percent to 5.3 billion. In China, sales represented in yen dropped 8.8 percent to 4.3 billion.
Moresco had the same problem. Although its sales for specialty lubricants in North America increased in respect to local currencies, its margins in those markets fell due to the stronger yen. It said it increased sales in China, however, due to tax reductions for small vehicles bringing about an increase in automotive production and new lubricant customers.
The companies fared differently in India. Profits for Yushiros subsidiary in India fell 1.2 percent. Moresco, however, said the country is key to its growth. With high growth expected for India, the company will continue to develop new markets for its specialized lubricants in the country.
Morescos sales for its financial year ending February 2017 increased 1.6 percent to 26.7 billion, as a stronger yen and a fall in raw material prices lead to a drop in finished product prices. But with cost-saving initiatives and lower prices for raw materials, the company improved margins to increase operating profits by 11.8 percent, to 2.4 billion.
Moresco produces die-casting lubricants, mold release lubricants, lubricants for hot forging, metal cutting fluids and others, mainly for the automotive and steel industries. It has functional fluids plants in China, Thailand, Indonesia and the U.S. It said its annual sales of hard disc surface lubricants increased, as did high-temperature synthetic lubricants used for automotive bearings exports in the second half of the year.
Moresco noted it will focus on developing high-lubricity die cast oils, environmentally friendly forging lubricants and other original products. It also forecast increased demand for energy-saving specialized lubricants in the automotive parts production process. The company expects sales for specialized lubricants to jump 7.9 percent and synthetic lubricants to increase 3.3 percent.
Yushiro produces metalworking fluids mainly for the automotive, precision machining and semi-conductor industries. The company has subsidiaries in China, Thailand, Malaysia, India, Indonesia and throughout the Americas.
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