PRESS KOGYO CO., LTD. Business report FY2006

Business Highlights

Financial overview

In million JPY FY2006 FY2005 Rate of Change (%) Factors
Sales 175,858 147,053 19.6 -
Operating income 10,249 8,721 17.5
Ordinary income 9,862 8,699 13.4
Net income 5,164 5,135 0.6
Automotive parts division
Sales 116,415 91,290 27.5 Sales and profit increased because four group companies including Thai Summit PKK. Co., Ltd. and its three subsidiaries became the Company's consolidated subsidiaries.
Automotive assembly division
Sales 25,019 26,293 (4.8) Sales were down due to a drop in assembly units of Mazda commercial vehicles.
Automotive stamping dies and assembly equipment division
Sales 3,514 6,126 (42.6) The volume of supply contracts for dies decreased.

Domestic business
The Company moved forward with its PPW (PressKogyo Production Way) activities to improve its proprietary technologies and management technologies in order to enhance the competitive edge of its core products. In addition, the Company worked on establishing a next-generation production line that either eliminates or reduces production processes and unnecessary and redundant work being carried out among the plants. One of these new production lines seeking to enhance productivity is producing frames for Isuzu's new Elf.

Global business
The Company was active in conducting marketing operations in Asia, North America and Europe to sell its core products in the global market.
USA: The Company marketed its core products such as frames and axles.
Thailand: The Company obtained additional stakes in four Group companies of Thai Summit PKK Co., Ltd., making them its consolidated subsidiaries to strengthen the management structure in the country. The Company also responded to the increased production volumes of pickup trucks in Thailand. The four companies are engaged in activities such as producing stamped parts or providing maintenance services on dies. By integrating these companies closely into the Group, the Company will strengthen the alliances created among its Group companies, led by Press Kogyo (Thailand) Co., Ltd., which will oversee these operations, from design and development up to production and quality assurance.
China: The production facility of PK-UD Axle Co., Ltd., constructed to produce axles for heavy-duty trucks and buses, has been completed.

In view of a declining demand for medium-duty trucks in Japan, Press Kogyo will accelerate globalization to raise the ratio of its overseas sales to 29% in FY2008, which is about 2.4 times of the present level (FY2006 result). (From an article in the Nikkan Jidosha Shimbun on Feb. 14, 2007)


- R&D expenses in FY2006 totaled 116 million JPY.

R&D Activities
1) Automotive parts division:
The Company's R&D activities include the following: establishing testing methods, improving its capabilities in evaluating product performance, developing new processing methods in welding and stamping, and standardizing elemental technologies. To prepare for producing high-tensile products and gearing up to produce products on a global basis, the Company evaluated basic data on welding, stamping and coating high-tensile materials, including both thin and thick plates; as well as assessing materials.

2) Company-wide R&D activities
The Company is working to present new products and methods that reduce environmental impact. In addition, the Company is conducting R&D activities to set up methods for carrying out development activities in the area of digital engineering.

Investment Activities

Capital investment in FY2006 totaled 6,462million JPY.

-Capital investments focused on building up its production operations, reducing costs, and improving quality in order to respond to new business related to frames, axles, suspensions, and construction machinery cabs, which are its main product areas.

The Company will transfer the production of frames for medium-duty trucks supplied to Isuzu Motors from its Kawasaki plant (Kawasaki city, Kanagawa prefecture) to Fujisawa plant (Fujisawa city, Kanagawa). Transfer of facilities and new installation is scheduled to be completed in May for full-scale production launch. By shifting the production of truck frames to the neighborhood of Isuzu's plant, its major customer, Press Kogyo will further enhance productivity including synchronized production while cutting distribution cost. The transferring cost will be 200 to 300 million yen. After the transfer Isuzu will maintain the production capacity of medium-duty trucks equal to the shipment in 2006, which is about 35,000 units. (From an article in the Nikkan Jidosha Shimbun on Mar. 5, 2007)

The Company will increase production capacity in Thailand, growing its business overseas. The company plans to hike 30 percent its local production capacity by 2010. It aims to meet this target by improving its production efficiencies of its main products such as frames and axles for pick-up trucks, as well as by installing new manufacturing equipment. With total pick-up truck production at Nissan Motor Co., Ltd., Honda Motors Co., Ltd., and Isuzu Motors, Ltd. is projected to reach around 450,000 units in 2007, the supplier aims to ensure a stable supply structure to support its major customers. The plan will also allow the company to achieve at an early date, its medium-term business target of increasing the ratio of its overseas sales to 30 percent; its overseas sales in fiscal 2006 accounted for 24 percent of the company's total revenue. Projecting that the truck market in Japan will further dwindle, the company is poised to put increase focus on the overseas business. Its Thai plant, which is positioned as the group's core manufacturing facility, enhanced its production structure by acquiring in 2005 a Nissan-affiliated local company specializing in the production of frames for use in small trucks. In Thailand, Press Kogyo now operates four manufacturing companies including an engineering company. In addition to being Nissan's exclusive supplier of frames and axles for pickups, the company provides these products to the local plants of Isuzu and Mitsubishi. (From an article in the Nikkan Jidosha Shimbun on Mar. 27, 2007)

< Details by division > (in million JPY)

Automotive parts 6,258
Automotive assembly
Construction machinery components
Automotive stamping dies and assembly devices 159
Other 44
Total 6,462

Important addition of new facilities

Division name

Type of facility Planned total investment
(million JPY)
Start month Planned completion Increase in production capacity upon completion
Kawasaki Plant Auto parts Processing equipment for mid-sized axles 280 June 2007 Aug. 2007 Increase in processing capacity by 20,000 per year
Fujisawa plant Auto parts Processing equipment for axles 105 Aug. 2006 June 2006 Increase in processing capacity by 20,000 per year
Auto parts Newly ordered panel production facilities 79 June 2006 Dec. 2007 Increase by 100,000 sheets per year
Onomichi Plant Same as above Machine processing equipment for axle hubs 132 Oct. 2006 Dec. 2007 Increase in processing capacity by 120,000 per year

Utsunomiya plant
Auto parts New equipment for large and medium size axle housings 466

Oct. 2007

Jan. 2009 Increase in production capacity to produce an additional 90,000 per year
Same as above Fusion-cutting equipment for axles 300 Aug. 2007 Jan. 2008 Increase in capacity to produce 80,000 per year
Same as above Dedicated facility to produce frame CKD 86 Jan. 2007 May 2007 Increase in capacity to produce 10,000 per year

Important modification of existing facilities


Division name

Type of facility Planned total investment
(million JPY)
Start month Planned completion Increase in production capacity upon completion
Kawasaki plant Auto parts Frame assembly and automated equipment 260 Aug. 2008 Mar. 2009 Rationalization
Fujisawa plant Auto parts Relocation of equipment for frame assembly 274 Jan. 2007 Aug. 2007 Increase in capacity to produce 20,000 per year
Every plant Auto parts Rationalization of existing equipment 300 Apr. 2006 May 2007 Rationalization