Univance Corporation Business Report FY2007

Business Highlights

Financial overview
(in million JPY) FY2007 FY2006 Rate of
Sales 77,843 75,453 3.2 Sales of AT parts and motorcycle parts decreased as a result of major carmakers' reducing their production volumes. This was offset, however, by increased sales of industrial machinery.
Operating income 2,690 1,566 71.8 -
Ordinary income 2,758 2,134 29.2 -
Net income 1,366 1,289 6.0 -
Manual Transmission Division
Sales 8,214 7,599 8.1

Sales of manual transmissions for mid-duty trucks were down, while those for light-duty trucks were up.

Operating income 292 42 595.2 Increased sales and rationalization initiatives contributed to improving operating income.
4-wheel drive systems Division
Sales 25,984 25,391 2.3 Sales of transfers for large pickup trucks decreased due to a sharp rise in crude oil prices in North America. While sales of transfers for mid to small cars were brisk, especially in Asia.
. 1,093 1,159 (5.7) Operating income was down due to decreased sales of value-added products
Automobile parts Division
Sales 35,818 36,238 (1.2) Even though new sales of CVT transfers increased, sales of AT parts were down.
Operating income 731 (87) - Operating income increased, thanks to a rise in sales of value-added products and other main products.

Business reorganization

-The Company announced a plan to dissolve Across Co., Ltd., its subsidiary based in Hamamatsu-shi, Shizuoka prefecture that manufactures automotive drivetrain components. The decision was made because the subsidiary was making poor performance in the market where product needs and employment environment are changing. The dissolution of the failing company will allow the Company to improve its Group management. Across, established in 1961, manufactures automotive parts mainly for the Company. (From a story in the Nikkan Jidosha Shimbun on Sep. 26, 2007)

Business plan
-The Company targets achieving sales of 80,000 million yen and a business operating profit of 5% for the fiscal year ending March 2010.

Major plans for the future are as follows:
-In the North American market, the Company will launch into the business of manufacturing FF units, as it expects a decrease in sales of large SUVs and FR pickup trucks, as well as the growing trend to continue of customers choosing more fuel-efficient, compact FF CUVs.

-In Asia, the Company aims to establish itself as a drivetrain systems manufacturer. Expecting the market for pickup trucks and FR commercial vehicles in Asia to grow, the Company will focus on marketing transfers for FR vehicles; and manual transmissions. As a result, it will build a production facility in the ASEAN region.

-As a measure to combat global warming, the Company will develop next-generation, environmentally friendly drivetrain systems that are lightweight and compact.


R&D Structure
-As of Mar. 31, 2008 the number of overall R&D staff is 182, approximately 10.5% of employees within the Group.

R&D Expenditure

(in million JPY) FY2007 FY2006 FY2005
Amount 2,061 2,134 2,080
Ratio in total sales 2.6% 2.8% 3.1%

R&D Activities (FY2007)
(1) Manual Transmission
-The Company worked on R&D activities in the area of transmissions for recreational vehicles and medium-size commercial vehicles, with added focus on environmental conservation such as reducing exhaust emissions, as well as reducing the amount of shifting that drivers have to do.

-The Company conducted R&D activities on reducers for hybrids and electric vehicles. It started production of motor gear boxes for hybrid cars.

(2) 4-Wheel Drive Systems
-Focusing on R&D activities in the area of transfer units suitable for full-sized SUVs and pickup trucks in North America, the Company is working to expand its product lineup and become more competitive.

-Utilizing its variety of proprietary technology, the Company is developing next-generation 4WD systems in order to become more cost-competitive. It also is developing and manufacturing differential carriers for ATVs, taking advantage of its technology on 4WD.

(3)Automobile Parts
-The Company is conducing R&D activities on VAs, utilizing its strength in production technology and expertise as a manufacture of unit-based products.

-Implemented research and development on one-way clutches applying the Company's proprietary technology to improve competitiveness and to expand market share.

Investment Activities

Capital Expenditure (FY2007)
Segment Amount (millions of yen) Details and objectives
Overall 2,775 -
Manual Transmission 135 Maintaining and updating existing facilities
4-Wheel Drive Systems 1,094 Adding new facilities in order to start production
Automobile parts 1,277 Adding new facilities in order to start production; and maintaining and updating existing facilities

Plan for installing new facilities (FY2008)
Segment Planned amount (millions of yen) Details and objectives
Overall 3,099 -
Manual Transmission 193 Strengthening its development activities
4-Wheel Drive Systems 900 Adding new facilities in order to start production
Automobile parts 804 Adding new facilities in order to start production