Aisan Industry Co., Ltd. Business Report FY2009

Business Highlights

Financial Overview

(in millions of JPY)
  FY2009 FY2008 Rate of
Change (%)
Factors
Overall
Sales 137,464 158,583 (13.3)

-Sales decreased year-on-year due to a decline in vehicle production in Japan, North America, and Europe; as well as to losses from negative currency translation.

Operating
income
4,353 1,382 215.0 -
Ordinary income 4,427 (1,888) - -
Net income 1,580 (5,723) - -
Automotive Components Division
Sales 132,925 152,145 (12.6) -

Sales by Region

(in millions of JPY)
  FY2009 FY2008 Rate of
Change (%)
Factors
Japan 98,167 105,087 (6.6) -A decrease in sales of throttle bodies and engine valves.
Asia 27,796 28,762 (3.4) -A decrease in sales of throttle bodies and fuel pump modules.
North America 15,543 21,917 (29.1) -A decrease in sales of throttle bodies and fuel pump modules.
Europe 8,103 13,196 (38.6) -A decrease in sales of fuel pump modules and throttle bodies.

Contracts

-The Company received orders from PSA Peugeot Citroen for a fuel pump module. Production will start in 2012. While the Company has supplied in Europe to Renault and a Toyota-Peugeot joint venture in Czechoslovakia, this is the first product of all to supply to PSA Peugeot Citroen itself. Aisan Industry France S.A. (AIF), its French subsidiary currently supplying fuel pump modules to Renault and Volkswagen, will assemble the product for Peugeot. (From an article in the Nikkan Jidosha Shimbun on May 26, 2009)

Recent Developments in Japan

-The Company will begin to work on a drastic cut of its product items including fuel pump modules and throttle bodies. Targeting reduction to less than 50% of the current production items, it will work on a 10 to 20% reduction every year, starting this fiscal year. Increased variety of automobile parts has become a factor which puts pressure on automakers' profits. The Company's plan to reduce products, therefore, will contribute to automakers' profits through promoting parts sharing. Taking opportunities of model renewals and new model launches, the supplier will make the proposals to automakers. It expects that reduction to below 50% will take more than five years. (From an article in the Nikkan Jidosha Shimbun on July 3, 2009)

Recent Developments Outside Japan

-The Company integrated its two subsidiaries in Korea in order to increase its business efficiency. The two companies are Hyundam Industrial Co., Ltd. and Samae Precision Co., Ltd.

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

R&D

R&D Expenditure (in millions of JPY)
  FY2009 FY2008 FY2007
Overall 6,863 7,491 7,208
*The above figures are all associated with automotive parts.

R&D Activities

-The Company commercialized low-volume purge canisters for use in hybrid electric vehicles sold in North America. When a hybrid electric vehicle is running on its electric motor and the engine is idle, the amount of air that blows away the gasoline vapor absorbed by the activated carbon in the canister decreases. The Company's engineers overcame this technical challenge by using a new material that stores heat inside the canister. The technology meets the zero evaporation standards introduced in the U.S.

-The Company developed and commercialized electric water pumps for use in electric vehicles sold in North America.

-The Company is working on enhancing its major products such as electronic throttle bodies, fuel pump modules, and EGR valves. Improvements to be made include enhancing its environmental responsiveness by reducing power consumption, cutting down on product weight, upgrading control units, and introducing new technologies such as biomass fuels. The company is also standardizing its major components so as to become more cost competitive.

-The Company is enhancing and expanding its systems business dealing with hybrid electric vehicles. In addition to responding to the existing requirements from car manufacturers, the company is aiming to develop innovative products that cater to the future needs of the green vehicle market.

-The Company is developing low-cost products for emerging markets by optimizing the functions of its products.

Investment Activities

Capital Expenditure

(in millions of JPY)
  FY2009 FY2008 FY2007
Overall 6,502 10,920 10,890

By Product and Subsidiary

Products Company Country Capital investment
(in million JPY)
Major three products
-Fuel pump modules
-Throttle bodies
-Canisters
The Company Japan 776
Franklin Precision Industry, Inc. USA 223
Aisan (Tianjin) Auto Parts Co., Ltd. China 296
Hyundam Industrial Co., Ltd. Korea 482
Total 2,233
Engine valves The Company Japan 275
Aisan (Foshan) Auto parts Co., Ltd. China 117
Total 392

Investment by Region

  Details
Japan -To respond to fuel economy and exhaust emission regulations, the Company made investments to produce new EAR valves and canisters for hybrid vehicles.
-The Company made investments to enhance production facilities for its main products, namely fuel pump modules, throttle bodies and engine valves.
-The Company invested in expanding its testing facilities to strengthen its capabilities to test and develop systems. In addition, it invested in products for green vehicles.
Europe -The Company made investments to expand its facilities in order to market fuel pump modules.
China -The Company made investments to expand its facilities in order to market fuel pump modules.
-The Company invested in launching a die production business in China in order to become more competitive in the global die casting industry.
Korea -The Company made investments to expand its facilities in order to market fuel pump modules.
North America -The Company made investments to enhance production facilities that manufacture throttle bodies.

Plans for New Facilities

Plant name
(Location)
Type of facility or project Planned amount of investment
(in million JPY)
Project period
From To
Headquarters Plant
(Aichi, Japan)
Facility upgrading 507 Feb.
2009
Jan.
2011
Anjo Plant
(Aichi, Japan)
Engine valve production facility 722 Apr.
2010
Mar.
2011
Throttle body production facility 191 Apr.
2010
Mar.
2011
Toyota Plant
(Aichi, Japan)

Fuel pump module production facility

767 Apr.
2010
Mar.
2011
Injector production facility 287 Apr.
2010
Mar.
2011
P.T. Aisan Nasmoco Industrial
(Indonesia)

A second plant

766 Jan.
2010
Dec.
2010
Hyundam Industrial Co., Ltd.
(Asan, Korea)
Fuel pump module production facility 547 Jan.
2010
Dec.
2010