SANDEN Corporation Business report FY2007

Business Highlights

Financial overview (In million yen)
FY2007 FY2006 Rate of Change (%) Factors
Sales 263,728 242,517 8.7 -
Operating Income 10,715 6,751 58.7 -
Ordinary Income 9,140 4,500 103.1 -
Net Income 5,019 2,576 94.8 -
Automotive systems business
Sales 188,994 166,485 13.5 -Sales grew in Europe due to brisk car sales of the automakers to which the Company supplies products; and due to the Company's gaining new commercial rights. Sales were also strong in Asia and China, resulting from strong market growth in the region. The negative impact of soaring materials prices was offset by an increase in profit, a reduction in manufacturing costs by curtailing procurement costs, and favorable currency translation gains.
Operating Income 17,576 11,552 52.1

Reinforcing its competitive edge in the automotive systems segment
-The Company will accelerate its drive to strengthen its global production structure and develop next-generation products. Particularly in the field of compressors, the Company is accelerating its development activities on hybrid compressors and electric CO2 compressors that meet environmental standards of Europe and the U.S. In the area of air conditioning systems, it will work on establishing a stable supply structure to provide HVAC systems in Japan other Asian countries, aiming to increase its business presence. The Company will also focus on growing markets such as India and China by concentrating its resources in these areas.


R&D activities in FY2007
R&D expenses : 6,866 million yen including 4,502 million yen for the Automotive Equipment Systems Division.

Licensing of technology to other companies
(as of March 2008)

Partner Location Products Technology Contract Period
Visteon Climate Control USA Compressors for automotive air conditioners Manufacturing technology Effective May 1, 1994. (10 years from start of production by Ford)
Delphi Corporation USA Compressors for automotive air conditioners Manufacturing technology 10 years from Dec. 31, 1998

Investment Activities

Capital Investment for FY2007
14,300 million JPY
Automotive Systems Business:
In order to streamline its automotive production facilities, the Company invested 3,400 million yen in Europe, 100 million yen in North America, 700 million yen in Asia, and 7,600 million yen in Japan.

New facilities
-For fiscal year 2007, which ended on March 31, 2008, Sanden budgeted 12,000 million yen for capital investments. The Company invested in equipment used for the commercial production of new products, and it also invested to reinforce its technological development capabilities and to maintain and replace equipment and facilities. Of the total investment in the automotive segment, the Company spent 2,200 million yen in Europe, 300 million yen in North America, 1,500 million yen in Asia, and 5,800 million yen in Japan to strengthen compressor production, commercialize new products, and renew manufacturing facilities.

-Investment worth 2,000 million yen was spent to expand the Sanden Global Center of Technology, which is a facility where next-generation technology is being developed. This 2,000 million yen is also part of the total 12,000 million yen the Company spent.

Overseas Investment
-Tianjin Sanden Automotive Air-Conditioning Co., Ltd. (TSA), its joint venture company in China, officially celebrated the opening of its new plant. TSA was established in 2000 as a joint venture for the production of comprehensive air conditioning systems (HVAC units/Heat exchangers) in the fast-growing Chinese market. TSA, in response to an increasing volume of business in the region, started the construction of a newly renovated, 30,000 ! plant. TSA currently employs 360 people and supplies air conditioning systems not only to local auto makers, but to Japanese & European car manufacturers. TSA is aiming at enhancing its annual production capacity of air conditioning systems. from current 400,000 sets to 1,000,000 sets in the future. (From a press release on July 9, 2007)

-Sanden Vikas (India) Private Ltd. (SLV), a joint venture company established by the Company and Vikas Group of India, will invest a total of 1.5 billion yen for some new projects to further increase its market share of compressors for automotive air conditioners. SLV, which manufactures and sells automotive air conditioners for the Indian market, will build a new plant as part of the investment plan and produce variable capacity compressors for automotive air conditioners which are currently imported from its European production facility. The Company plans to boost the number of compressors sold in India from current 300,000 to 1,000,000 units in 2011, which accounts for approximately 30% market share with this particular product. The new plant will be constructed in New Delhi. Operations are expected to start early 2009. (From a press release on Nov. 1, 2007)