Denso Corp - Company Strategy & Performance Analysis
Denso Corporation (Denso) manufactures and supplies advanced automotive technology, systems and components. The company, and its subsidiaries and affiliates, offers a range of OEM automobile components. Some of its key products include powertrain control systems, thermal systems, electronic systems, information and safety systems, electrification systems, small motors, and industrial systems including robots, bar code readers, automatic recognition systems, and household and industrial air-conditioning equipment. Denso supplies these products to major automobile manufacturing companies across the world. The company operates its manufacturing facilities in Asia-Pacific, the Americas and Europe. Denso’s headquarters are located in Kariya, Aichi, Japan.
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Revenue of thermal systems increased over 2015 to 2016 due to a rise in the production and sale of cars and air conditioners
Under the thermal systems segment, Denso manufactures air conditioning systems for cars, and radiators, cooling fans, inter coolers, oil coolers, engine cooling modules, reserve tanks, and air conditioning systems for buses. It produces construction equipment, truck refrigeration units, and air purifiers. The thermal systems segment grew at a rate of 7.1%, from US$11,647m in FY2015 to US$12,469.6m in FY2016, accounting for 30.4% of the company’s total revenue. This was largely due to growth in the production of vehicles in China and Europe and increased sales of air-conditioning systems.
Increased sale of vision sensors and millimeter-wave radar sensors led revenue of this segment to grow
Revenue generated by the information and safety systems segment grew at a rate of 21.5%, from US$5,694.6m in FY2015 to US$6,921.4m in FY2016. This was due in part to growth in the sale of display products and vision sensors and millimeter-wave radar sensors in Japan and North America. These products were supplied to Toyota Motor Corporation for its Toyota Safety Sense P technology package. In FY2016, the revenues generated accounted for 16.6% of the company’s total revenue.
Increased sale of products related to hybrid cars supported the growth of electrification systems revenue
Electrification systems include hybrid and electric car driving systems, and power supply products. The company manufactures starting system parts such as alternators. Revenue for this segment increased at a rate of 12.9%, from US$3,681.3m in FY2015 to US$4,154.7m in FY2016, attributed to a growth in the sale of power control units and motor stators in Japan. This segment accounted for 10.1% of the company’s total revenue in FY2016.
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