H-ONE CO., LTD Business Report FY2009

Business Highlights

Financial Overview

(in millions of JPY)
  FY2009 FY2008 Rate of change(%) Factors
Sales 117,538 136,790 (14.1) -Production touched bottom in the first half of the year, and is now heading for recovery. However, it's still at approximately 70% of its peak. As a result, sales declined for the year.
Operating income 902 779 15.8 -
Ordinary income 1,513 658 129.9 -
Current net income 262 (2,281) - -

Recent Developments in Japan

-The Company will reorganize its business framework to address the challenge of becoming more profitable amid the slowing automotive market with no prospect of speedy recovery. The Company will strengthen its die making capacity in China, Thailand, and India based on its project to transfer its global supply hub for dies from its domestic plants to these more cost-competitive countries. In addition to the capacity increase, the Company will enhance technical support to these offshore facilities, helping them raise the number of outputs at a higher pace than their original plans smoothly. At the same time, the Company is considering closing one of its facilities in the Kanto region, namely those in Koriyama, Fukushima and Ota, Gunma by the end of this fiscal year. The closure will eliminate excess capacity the Company currently has in Japan, allowing it to establish leaner business operations, which can withstand reduced production volume. (From an article in the Nikkan Jidosha Shimbun on May 20, 2009)

-The Company will accelerate its production reorganization plan in Japan. The Company, which is capable of manufacturing more than 1 million auto bodies per year, will scale back its capacity to 700,000 by the end of 2009. The cutback is based on a request by Honda Motor Co., Ltd., the Company's major customer, to establish a leaner management structure so that it can secure profits by producing some 700,000 sets per year. The request was made at the beginning of this year to each of Honda's parts suppliers, as the automaker projected that the Japanese vehicle market would be shrinking over the medium run. While accelerating optimization of its domestic production capacity, the Company is transferring some of redundant equipment such as general-purpose robots to its plants in Thailand and India. In addition, it is mulling the possibility of moving some of them to China. Through such initiatives, the Company will enhance the ratio of automated operations at its Asian facilities, whose labor expenses have been climbing, thereby enhancing its cost competitiveness in the market. (From an article in the Nikkan Jidosha Shimbun on Nov. 13, 2009)

>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)


R&D Expenditure

(in millions of JPY)
  FY2009 FY2008 FY2007
Overall 692 740 667

-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.

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 Mar. 31, 2010)

Partner Country Contract Contract term
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 Expenditure

(in millions of JPY)
  FY2009 FY2008 FY2007
Overall 8,049 13,899 26,008

-The Company's capital investment was mainly directed towards the automotive business.
-Also, 4,819 million yen was spent on installing special manufacturing equipment to support mass production of components for new vehicle models; the remaining 3,230 million yen was spent in installing general production equipment and expanding production facilities.

New Equipment Installations

(As of Mar. 31, 2010)

Company Name Location Estimated total amount of investment
(in millions of JPY)
Project duration
From To
Kameyama Factory
Mie Pref. Japan 2,887 Apr. 2009 Feb. 2012
Maebashi Factory
Gunma Pref. Japan 468 Apr. 2009 Oct. 2011
Koriyama Factory Fukushima Pref. Japan 1,551 Mar. 2009 Jan. 2012
Consolidated Subsidiaries
KTH Parts Industries Inc. Ohio, USA 2,162 Dec. 2009 Dec. 2011
Kalida Manufacturing, Inc. Ohio, USA 583 Sep. 2010 Dec. 2011
KTH Leesburg Products, LLC. Alabama, USA 396 Dec. 2009 Dec. 2011
KTH Shelburne Manufacturing, Inc. Ontario, Canada 881 Apr. 2010 Apr. 2011
GH Auto Parts Industries Inc. Guangdong, China 3,360 Jan. 2010 Dec. 2011