ALPHA Corpolation Business report FY2007

Business Highlights

Financial Overview
in million JPY FY2007 FY2006 Rate of Change (%) Factors
Sales 53,687 48,355 11.0 -
Operating income 1,938 1,949 (0.6)

-Profit declined due to escalating material prices. Product selling prices and margins worsened due to a shift in the market from large vehicles to compact vehicles. Income declined year-on-year due to a sudden appreciation of the yen and the resulting currency-exchange loss.

Ordinary income 1,411 1,796 (21.4) -
Net income 610 1,322 (53.8) -
Automobile Parts Business
Sales 46,526 40,804 14.0 -Sales increased because the Company's major customer increased its global sales 9.6% year-on-year and the Company's subsidiary in China, Alpha (Guangzhou) Automotive Parts Co., Ltd., started commercial operations.
Operating income 1,614 1,318 22.4 -Income grew, thanks to a successful improvement in the efficiency of its production operations resulting from the launch of commercial operations at its subsidiary in China and the establishment of a new plant of Alpha HI-LEX C.V., its subsidiary in Mexico. This was partially off set by the Company's having to pay higher costs for materials.

Overseas business
- In Apr. 2007, Mexican subsidiary Alpha HI-LEX S.A. de C.V. has completed the construction of a new production facility in Queretaro Province.


R&D Expenditure
R&D expenses for FY2007 totaled 1,878 million yen, of which 1,495 million yen was invested in the Automobile Parts Business.

R&D Activities

Development in the field of advanced technologies:
The Company, in addressing the most pressing areas of development, namely technology in the fields of communications, cryptography, and biometrics, is conducting R&D activities, envisioning joint-development activities with both Japanese and non-Japanese manufacturers that are specialists in these fields.

Automobile Parts Business
-Electric steering locks: The Company launched electric steering locks in 2004. The Company then reduced the weight of the locks in 2006. In 2007, the Company developed a new-generation system, which is even lighter and more compact, and began delivering the product to new customers.
-Exterior handles: In 2007, the Company developed and launched sales of exterior handles with new safety functions that meet the growing need for greater safety at the time collisions occur. It also developed and started selling new pop-up exterior handles that meet the need for side doors to have perfectly flat surfaces. At the 2007 Motor Show, the Company exhibited exterior handles embedded with LEDs that illuminate the feet of approaching drivers. The Company is now advancing the development of this particular system, readying it for mass production.
-Dimple keys: The Company started offering automakers dimple key systems that have high-security cylinders, like the ones being applied in residential use.
-IC card communication units: At the 2007 Motor Show, the Company exhibited its IC card communication system that uses a non-contact IC card, which essentially can be used as a key for houses, leisure facilities and automobiles. It was displayed for exhibition purpose only, but may in the near future generate synergy effects with other business units.

Investment Activities

Capital Investment
Total capital investment for FY2007 was 2,475 million yen.

Automobile parts business
-The Company made a 685 million yen capital investment at Alpha HI-LEX C.V., in response to increased orders received.
-The Company made a 1,564 million yen capital investment in its automotive parts business in order to meet the need to produce products for new vehicle models.

- In April 2007, The Mexican subsidiary Alpha HI-LEX S.A. de C.V. has completed the construction of a new production facility in Queretaro Province. Mexican-based Alpha HI-LEX S.A. de C.V., which engages in the painting and assembling of door handles, built a new plant preparing for a potential increase in customer needs. The new plant has launched mass-production on a trial basis in April 2007 as an initial step for full-fledged mass-production due to start in July 2007. The Company intends to nearly double the production capacity to 1.2 million units and upgrade overall operational efficiency at its Mexican subsidiary by installing modern machinery with latest painting technology as well as automatic cleaning devices at the new plant. With the newly-established production site in Queretaro, the company is aiming at dramatically improving the yielding percentage and establishing a system capable of meeting and handling robust demand from its customers. (From a press release on Apr. 1, 2007)

New equipment installations (Automobile Parts Business)
Type of facility Planned investment
(million JPY)
Start Completion Increase in production capacity upon completion
The Company

Gunma Plant
(Gunma Pref., Japan)

Dies and machinery to manufacture products for new vehicle models 770 Apr., 2008 Mar., 2009 No significant increase, as the project mainly is to renew dies.
Head Office
(Yokohama City, Japan)
Electroplating and painting equipment 113 Apr., 2008 Mar., 2009 No production increase, as the project is to just renew drainage equipment.
Alpha Industry (Thailand) Co., Ltd.
(Prachin Buri, Thailand)
Additional building for electroplating lines 120 Apr., 2008 Dec., 2008 New project
Machinery to produce key sets 207 Apr., 2008 Dec., 2008 New project
Alpha (Guangzhou) Automotive Parts Co., Ltd.
(Guangdong prov., China)
Dies and machinery to manufacture products for new vehicle models 333 Apr., 2008 Dec., 2008 New project
Plant buildings 62 Apr., 2008 Dec., 2008 New project