Akebono Brake to push capital ratio above 30% in fiscal 2015
TOKYO -- Akebono Brake Industry will likely boost its capital ratio to over 30% in fiscal 2015, as strong sales of automobile brakes, especially in North America, help build up capital and reduce its debt.
Capital ratios, calculated by dividing a business' capital base by total assets, is a common marker for a company's financial health. Akebono Brake's ratio has not topped 30% since fiscal 2007, and dropped to 17.6% at the end of fiscal 2008.
But the figure recovered to 26.4% in fiscal 2013. This year, strong sales of brake parts will likely push the company's net profit up 65% to 4 billion yen ($38 million) and raise its capital ratio to about 28%.
Akebono Brake acquired the North American brake business of Germany's Bosch in 2009 and bolstered capital investment there to increase productivity. It expanded production capacity in China as well, and the resulting increase in interest-bearing liabilities kept its capital ratio down.
The company is planning to shrink capital investment by about 20% this fiscal year to 17 billion yen, which would help curb its liabilities.
It also predicts 2 billion yen in positive free cash flow this fiscal year, up sharply from a 1.4 billion yen negative flow the year before, and expects a 10 billion yen cash flow in fiscal 2015, which would boost its ability to repay debts.