Montupet Business report FY2006

Business Highlights

Business overview
-The Company's financial performance declined in 2006 due to such factors as soaring energy prices, deteriorating performance of the wheel business, and insufficient transfer of development costs of a crankcase for Chrysler in Canada to sales prices. Also, output of three major components for Renault cars dropped dramatically because of delays in launching the Logan in Iran and the new Twingo. Nevertheless, an excellent performance at the plant in Mexico partly compensated for such negative factors.
Minus factors experienced in 2006 are, however, expected to be dissolved in 2007 by measures that the Company has taken as mentioned below..
-Profitability of the wheel business is expected to improve through the closure of the Belfast Plant, its consolidation to the Chateauroux Plant and elimination of the double layer cost structures.
-Raising sales prices and doubling sales volume in 2007 of crankcases for Chrysler.
-Sales volume of cylinder blocks for Renault will increase, because launching of the Logan in Iran began in March 2007 and the new Twingo in June 2007.
-Along with reorganization of production facilities including the closure of the Belfast Plant and suspension of the operation at the Nogent-Oise Plant, a new plant will be built in Bulgaria, which is scheduled to start production of the following three parts in 2008.
1.Cylinder blocks for a 2-liter diesel engine of Renault
2.K7 cylinder blocks for the Logan in Romania
3.Cylinder blocks for the Audi V6 diesel engine, which is the first contract awarded by a German automaker.
This plant has also won orders from Ford, Fiat and PSA-BMW.


(in thousand Euros) FY2006 FY2005 FY2004
R&D costs 1,972 1,969 1,829

R&D focus
-Production management
-Improving the accuracy of machining tools (reducing the margin of error of metrication)
-Accumulating development know-how
-Developing innovative manufacturing technologies, materials, machine tools (improving heat resistance), and products based on research themes introduced at each facility.