Fukoku Co., Ltd. Business Report FY ended Mar. 2014

Business Highlights

Financial Overview

(in millions of JPY)
  FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 Rate of Change (%) Factors
Overall
Sales 64,300 56,906 13.0 -Both sales and income improved year-on-year because Japanese OEM’s business performance significantly improved in North America and Asia. Also, until the beginning of autumn in Japan, demand continued to be lower year-on-year. However, after that, new model launches were made and last-minute demand to buy new cars grew before the consumption tax went up.
Operating income 3,047 2,664 14.4
Ordinary income 3,519 3,072 14.6
Current net income 2,457 1,898 29.5
Functional products
Sales 30,419 26,721 13.8 -Won numerous supply agreements both in and outside Japan.
Operating income 3,410 3,792 (10.1) -Impacted by business operations migrating to mainly the ASEAN region.
Anti-vibration products
Sales 25,724 21,888 17.5 -Won numerous supply agreements both in and outside Japan.
Operating income 2,482 1,372 80.9 -

Recent Development Outside Japan

<Czech>
-The Company announced that it will establish a wholly-owned subsidiary to manufacture and sell industrial rubber and plastic products in the Czech Republic. Capitalized at CZK 60 million (approximately JPY 300 million), the new company, which will be tentatively called Fukoku Czech s.r.o., will be established in March 2014. Production is scheduled to begin during the fiscal year ending March 2016. (From a press release on December 24, 2013)

<Mexico>
-The Company announced that its consolidated subsidiary, Fukoku America Inc., will establish a subsidiary in Mexico. The new company, which will be tentatively called Fukoku Mexicana, S.A. de C.V, will be engaged in marketing activities for industrial rubber and plastic products. Capitalized at MXN 5.2 million (approximately USD 400,000), the subsidiary is scheduled to be set up in January 2014. (From a press release on December 24, 2013)

Supply Agreements

-The following are major supply agreements in Fiscal Year ended Mar. 31, 2014.

Functional products
Product Customers Status
Boots for electronic parking systems Japanese parts supplier Won supply agreement
Pressure relief valve for turbo-cars Japanese parts supplier Commercial production started
Anti-vibration rubber for water pumps Japanese parts supplier Commercial production started
Rubber for regulator valves compliant with exhaust gas emissions regulations Japanese parts supplier Commercial production started
Check valve for turbo-cars Japanese parts supplier Commercial production started

Anti-vibration products
Product Customer Status
Gasoline engine damper pully Japanese OEM Won supply agreement
Viscosity damper Japanese OEM transplant in China Commercial production started
Gasoline engine solid pully Japanese OEM transplant in Indonesia Won supply agreement
Diesel engine damper pully for ASEAN market Japanese OEM transplant in Thailand Won supply agreement
Center bearing Japanese OEM transplant in Indonesia Won supply agreement
Torque rod Japanese OEM transplant in Indonesia Commercial production started

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

Outlook for FY ending Mar. 31, 2014

(in millions of JPY)
FY ending Mar. 31, 2015
(Forecast)
FY ended Mar. 31, 2014
(Actual Results)
Rate of Change (%)
Sales 66,000 56,906 2.6
Operating income 3,400 3,047 11.6
Ordinary income 3,400 3,519 (3.4)
Net income 2,000 2,457 (18.6)

R&D

R&D Expenditure

(in millions of JPY)
  FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 FY ended Mar. 31, 2012
Overall 1,340 1,271 1,191

Investment Activities

Capital Expenditure

(in millions of JPY)
  FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 FY ended Mar. 31, 2012
Overall 4,333 5,609 3,863
Functional products 2,597 3,369 2,010
Anti-vibration products 1,065 1,712 1,450

-Invested in facilities and plant buildings mainly at Fukoku Korea, Siam Fukoku, and Fukoku India.
-Company spent 5,609 million yen in capital investments Group-wide in order to enhance its competitive advantages to win more business, investing mainly in construction projects at Fukoku Korea, Siam Fukoku, and Fukoku India.

Planned Capital Investments

(As of Mar. 31, 2013)
Company
Office
Purpose Estimated amount of investment (in millions JPY) From To
Siam Fukoku Co., Ltd. Installing facilities for manufacturing industrial rubber 366 jan.
2014
Nov.
2014