2017 New Year's Message

Happy New Year everyone! I hope that you all had a safe and enjoyable year-end holiday break and are now refreshed and ready to press onward with operations in 2017.

From the moment the company was established in October 2013, the members of the UACJ Group have focused their sincere efforts on becoming an aluminum industry leader in a competitive global market.

Fiscal 2017 brings with it the final year of Global Step I, the UACJ Group’s first mid-term management plan. In the last three months of fiscal 2016, our hope is to complete the remaining objectives set for the term and hit the ground running in the new fiscal year.

The mid-term management plan encompasses three important policies:

1. Expand growth products in the transportation field―focusing on automobiles―and the energy field, and strengthen business in growth regions such as Asia,
2. Construct an optimal production network for each business sector utilizing the synergies created through unification, and
3. Develop unique technologies and products by applying our vast technological prowess to fundamental research.

I believe we have made successful progress to date, and the current development and implementation of these policies continues to be sound.

Looking to the flat rolled products business, UACJ (Thailand) Co., Ltd. reached the production volume of 10,000 tons per month in October of last year. In fiscal 2017, our goal is to achieve profitability and a system capable of producing 200,000 tons per year. In November of last year it was agreed that production capacity should be raised to 320,000 tons per year, and the decision was made to inject a capital investment of approximately 37 billion yen in facilities.

In North America as well, we plan to invest approximately US$175 million towards facilities in the Logan Mill via Tri-Arrows Aluminum Inc. (TAA), one of our US subsidiaries. Targeting a yearly production capacity of 400,000 tons, this investment will help maintain TAA’s position as a leading supplier of low-cost, high-quality can stock in North America, and establish it as an important hub for supplying the base materials for automotive body sheets.

Constellium-UACJ ABS LLC, which receives base materials from TAA, began shipping sample automotive body sheets in June of last year. The company is currently ramping up production to a yearly capacity of 100,000 tons, and is implementing further improvements in order to acquire customer approval and establish an optimal production network.

Structural reform in Japan continues to progress on schedule, with most of it to be completed by the end of fiscal 2016. The reallocation of product mixes is resulting in the realization of optimal product lineups at each of our domestic flat rolled products manufacturing facilities. Product reallocation is not an end itself, but a means to achieve our ultimate goal: to have cost and quality advantages over our competitors in the same industry, both domestically and abroad, through a combination of product mix reallocation and improvements.

Changes are also starting to be made in the extrusion, foil products, casting and forging, copper tubing and precision-machined components businesses, as well as in research and development. For example, we acquired a North American company that manufactures and sells automotive aluminum structural materials and components, which led to the establishment of UACJ Automotive Whitehall Industries, Inc.

To overcome existing obstacles impeding growth in the organization, a new division—the Automotive Business Development Division—has been created. Introduced to promote cross-departmental and Group-wide collaboration, the goal of this new division is to support the Group-wise promotion of aluminum businesses serving the automotive industry. In addition to members from the flat rolled products business, the division includes members from the extrusion and precision-machined components businesses, and research and development. Members from the copper tubing, foil, and casting and forging businesses will be requested to support projects and activities as needed.

Our goal for Global Step I in fiscal 2017 is to increase ordinary income to 35 billion yen, 15 billion yen more than the 20 billion yen forecasted for the fiscal year ending March 31, 2017 in the 2016 Investor Relations Report. To achieve this, we must remain strongly motivated, working together as a group with each and every one of us playing his/her role accordingly. As we press onward, I wish to remind you to always be aware of the risks involved and to never be blinded by pessimism or optimism. Applying a level-headed approach of continuous action based utilizing PDCA cycles, we will succeed. With a clear vision, jointly sharing responsibilities and staying connected, we will enhance the reliability and speed of our activities, growing as a group that is capable of consistently meeting its targets.

As I have expressed before, ‘maximizing customer satisfaction,’ ‘maintaining strict compliance,’ and ‘thorough attention to safety, the environment and quality’ are indispensable for our existence and to continue developing as a company. I ask you once again to keep these three points in mind as you go about your work.

Once again, on behalf of all management, Happy New Year. Let’s make this year a great one for everyone in the UACJ Group, ensuring a safe, comfortable and rewarding workplace with zero accidents and injuries!

Mitsuru Okada
Representative Director and President