FUKOKU CO., LTD. Business report FY2008

Business Highlights

Financial Overview (in millions of JPY)
FY2008 FY2007 Rate of Change (%) Factors
Overall
Sales 52,024 56,405 (7.8) -Orders dropped drastically in the latter half of the year.
Operating income 373 2,767 (86.5) -Higher prices of rubber and steel materials were negative factors.
Ordinary income 57 2,565 (97.8) -
Current net income (1,976) 1,551 - -
Industrial rubber products
Sales 43,790 48,405 (9.5)

-Orders mainly for seal products including brakes and seals declined.

Operating income 344 2,539 (86.4)

-Declined orders and higher material prices had a negative impact.



Recent Developments outside Japan
<Thailand>
-The Company announced its plan to strengthen its production structure at the casting plant in Thailand run by its subsidiary Thai Fukoku Co., Ltd.

>>>See Investment for more details

<China>
-The Company announced the hiatus of Fukoku Rubber & Plastics (Shanghai) Co., Ltd., its 100% subsidiary producing wiper blades and seal products in China, as of March 31, 2009. In response to a large decrease in orders prompted by the deteriorating market situation, the company is planning to consolidate its operations to achieve higher productivity. (From an article in the Nikkan Jidosha Shimbun on Mar. 23, 2009).


Contracts
-Major orders received during fiscal 2008 were:
Product Customer Status
Isolation pulleys for small diesel engines Passenger car makers in Japan Commercial production started
Dumper pulleys for passenger cars Manufacturers in and outside Japan Commercial production started
Fuel system components made of fluorine specialty rubber Major parts makers in Japan Confirmed orders booked
Anti-vibration rubber for commercial cars
(5 parts including engine mount)
Commercial car manufacturers in Indonesia Confirmed orders booked
Rubber parts Brake manufacturers in China Confirmed orders booked

R&D

R&D Expenditure (in millions of JPY)
FY2008 FY2007 FY2006
Overall 837 897 931


Licensing of Technology to Other Companies (As of Mar. 2009)
Partner Contract Validity
Rood (U.S.A.) Design and manufacturing technology of torsion bushings and surface effects From October 23, 2001 to October 23, 2011
C.F. Gomma S.p.A Design and manufacturing technology for air springs From July 2, 2003 to July 1, 2013


Licensing of Technology from Other Companies (As of Mar. 2009)
Partner Contract Validity
Rood (U.S.A.) manufacturing technology of viscous mounts From October 23, 2001 to October 23, 2011
C.F. Gomma S.p.A. (Italy) Manufacturing technology of CVJ boots From December 1, 2002 to November 30, 2012

Investment Activities

Capital Investment (in millions of JPY)
FY2008 FY2007 FY2006
Overall 3,241 4,038 4,815
Industrial Rubber Business 2,883 3,671 4,428

-Industrial rubber products division invested mainly in rationalization and informatization programs.


Investments Outside Japan
<Thailand>
-The Company announced its plan to strengthen its production structure at the casting plant in Thailand, which is run by its subsidiary, Thai Fukoku Co., Ltd. Thai Fukoku manufactures anti-vibration products for the automotive industry. The Thai unit, in line with the projected increase in automotive anti-vibration product orders, especially damper orders, has been conducting in-house processing of casting parts to be incorporated in dampers for ensuring stable supply and cost reduction. As it becomes apparent that the increase in production capacity is required to fulfill an increasing number of programs, the Company decided to boost casting capacity at the plant from 400 tons/month to 550 tons/month with the installation of an additional electric furnace around June 2008. (From a press release on May 27, 2008)