H-one Co., Ltd. Business report FY2008

Business Highlights

Financial Overview (in millions of JPY)
FY2008 FY2007 Rate of change(%) Factors
Sales 136,790 158,042 (13.4) -Sales decreased, substantially due to production adjustment at major customers in the third quarter onward.
Operating income 779 6,549 (88.1) -
Ordinary income 658 6,631 (90.1) -
Current net income (2,281) 4,325 - -

Recent Developments in Japan
-The Company closed its Tokyo plant. Production of items produced there were consolidated to other plants.

-The Company reexamined its global investment priorities based on the current management environment and froze or postponed its plans.

-With regard to development and technology, the Company consolidated its two separately-located development facilities in Koriyama city, Fukushima prefecture. The Company also tried to reduce costs for die and welding facilities by enhancing the development system for global-production vehicle models and by standardizing specifications for production facilities, jigs and tools.

Recent Developments outside of Japan
-In order to strengthen production and technical bases, the Company enhanced its ability to provide support from Japan to its Group companies overseas. The Company also examined the cost advantages of these companies and worked to build a complementary system among them.

-The Company built additional buildings and introduced pressing machines at its plants in Thailand and India to prepare for expansion of new business as well as to ensure production capacity for the future.

<North America>
-The Company has decided to install 2,500-ton stamping machines to its auto parts plant in Ohio.

>>>See Investment for more details


R&D Expenditure (in millions of JPY)
FY2008 FY2007 FY2006
Overall 740 667 650

-Most of the Company's R&D expenditure was directed to automotive parts related businesses.

R&D Structure
-Centering on its development technology headquarters, the Company carried out R&D activities in cooperation with many research and development institutions including those of Honda Group.

-The Company reviews its development operations to be prepared for its major client Honda's strategy to increase global models. It plans to complete reorganization of its development and engineering departments including trial and volume production facilities by FY 2010, which is aimed to improve the overall development efficiency by 30%. Basic research functions and research areas have already been consolidated. By FY 2009, it will concentrate functions to develop molds and welding facilities and development management functions, which spread over two bases in eastern Japan and three bases in central Japan, onto its Koriyama factory, Fukushima Prefecture. By FY 2010, it also plans to consolidate its trial production operations. (From an article in the Nikkan Jidosha Shimbun on Jun.13, 2008)

R&D Facility
Research and development center Tochigi pref. Japan

Recent R&D Achievements (Automotive Component Division)
-Developed a welding/mating process

-Developed stamping process technology for high tensile materials and light weight materials

-Developed a class sheet metal components stamping process

-Developed functional parts by incorporating thick plate precision stamping technology and assembly technology

-Developed material hardening technology

-Developed an in-house information system based on CAD, CAM, and CAE technology; and trained engineers to use it

Technological Cooperation (As of March 2009)
Partner Country Contract Contract term
Midwest Stamping Corporation U.S.A. Automotive parts From Sep.10, 1987 to Oct.3, 1997 (Automatically renewed yearly)
UYT Ltd. UK Automotive parts From July 17,2001 to July 16, 2006 (Automatically renewed yearly)
Yachiyo of Ontario Manufacturing Inc. Canada Automotive parts From July 1, 2006 to Jun.30, 2010 (Automatically renewed yearly)

Investment Activities

Capital Investment (in millions of JPY)
FY2008 FY2007 FY2006
Overall 13,899 26,008 25,739

-The Company's capital investment was mainly directed towards the automotive business.

-Also, 5,436 million yen was spent on installing special manufacturing equipment to support mass production of components for new vehicle models; the remaining 8,463 million yen was spent in installing general production equipment and expanding production facilities.

Domestic Investments
-The Company has decided to make a capital investment of about 16 billion yen in FY 2009 as originally planned. While automobile production is expected to be decreased, the supplier has decided that downsizing investment and postponing establishment of its business foundation will eventually be disadvantageous in the medium- to long-term competition. Its plan to increase the production capacity of the Kameyama Factory in Kameyama City, Mie Prefecture, Japan, which supplies to Honda's Suzuka Factory, remains unchanged. The Company, however, has officially decided to put off the projected plant construction in Kumagaya City, Saitama Prefecture during the current mid-term business plan period through FY 2010. (From an article in the Nikkan Jidosha Shimbun on Nov. 14, 2008)

Overseas Investments
<North America>
-The Company will reinforce its production operation in North America. It has decided to install 2,500-ton stamping machines to its auto parts plant in Ohio and start to operate them in the fall of 2009, in an aim to respond to expanding local production by its major customer, Honda Motor Co., Ltd. The Compnay has worked on production expansion plans to respond to Honda's decision to start operating its new Indiana plant in FY 2008 and raise its total North American auto production capacity from current 1.44 million units to 1.60 million units. (From an article in the Nikkan Jidosha Shimbun on May 22, 2008)

New Equipment Installations
Company Name Location Estimated total amount of investment
(in millions of JPY)
Project duration
From To
Kameyama Factory
Mie Pref. Japan 3,631 June, 2008 Mar. 2012
Maebashi Factory
Gunma Pref. Japan 2,324 Nov. 2008 Nov. 2011
Koriyama Factory Fukushima Pref. Japan 2,853 July, 2008 Jan. 2011
Consolidated Subsidiaries
KTH Parts Industries Inc. Ohio, USA 4,810 Dec. 2008 Mar. 2011
Kalida Manufacturing, Inc. Ohio, USA 1,550 Nov. 2008 Mar. 2011
KTH Leesburg Products, LLC. Alabama, USA 2,144 Jan. 2009 Mar. 2011
KTH Shelburne Manufacturing, Inc. Ontario, Canada 2,316 Jan. 2009 Mar. 2011
GH Auto Parts Industries Inc. Guangdong, China 1,493 Sep. 2008 Nov. 2010
QH Auto Parts Industries Inc. Shandong, China 143 July, 2008 Mar. 2010
WH Auto Parts Industries Inc. Hubei, China 1,763 Aug. 2008 May, 2010
H-one Parts (Thailand) Co., Ltd. Ayutthaya, Thailand 1,344 Aug. 2008 Feb. 2010
H-one India PVT., Ltd. Uttar Pradesh, India 263 Dec. 2008 Mar. 2010