Aichi Steel Corporation Business Report FY2007

Business Highlights

Financial Overview
(in million JPY) FY2007 FY2006 Rate of
Sales 253,462 235,637 7.6 Sales increased year-on-year, reflecting the benefits resulting from the Company's initiatives to establish an optimized production structure, improve profitability, and reduce initial costs.
10,884 10,610 2.6 Profit increased year-on-year, thanks to sales price improvements, initial cost reductions, and increased profits at its subsidiaries overseas, despite the soaring prices of raw materials.
9,332 10,109 (7.7) Ordinary income decreased due to the sudden appreciation of the yen against the dollar; which resulted in a non-operating loss.
Net income 5,692 4,922 15.7 -
By segment
Steel 140,282 128,078 9.5 Sales at the steel segment rose due to increased sales volume and improved sales prices.
Forged products 104,323 100,163 4.2 The forged products division worked on optimizing its production structure and improving sales prices. As a result, sales at the segment increased year-on-year.
Electromagnetic products 4,417 2,975 48.5 Sales at the electromagnetic products division rose due to the increased sales volume of the Company's neodymium-based bonded magnet called the Magfine.

Electromagnetic business

The Company is aiming to make the electromagnetic business its core business segment.

-Establishing a new plant


The Company will construct a new plant to manufacture magnetic particles and magnets. The new plant will serve as a hub for the Company's electromagnetic products business. Construction will start in March 2008 and the new plant will start operating in May 2009.

>>> See Investment for more details

Czech Republic

The Company established Aichi Magfine Czech s.r.o. in September 2007. The new company was capitalized at about 300 million yen as a joint venture among the Company's wholly owned subsidiary, Aichi Europe GmbH (AE); Toyota Tsusho Corporation; and Toyota Tsusho Europe S.A. (TTESA). The three companies' shareholdings are 65%, 30%, and 5%, respectively. The new subsidiary produces magnets for small and light motors.

In February 2008 Aichi Magfine Czech s.r.o. started production of a neodymium-base bonded magnet called the Magfine, supplying it to Robert Bosch GmbH.

>>> See Investment for more details

-Business plan

The Company will expand sales of Magfine, a neodymium-based bonded magnet that contributes to reduce the weight and size of a motor installed on the vehicle. It is developing magnet products as its new business, aiming to achieve sales of 50 billion yen in FY2010, more than ten times the expected sales for the current fiscal year. (From an article in the Nikkan Jidosha Shimbun on Jul. 11, 2007)


R&D Structure

The Company has about 190 employees engaged in R&D as of March 31, 2008.

R&D Expenditure
(in million JPY) FY2007 FY2006 FY2005
Overall 2,001 2,446 2,456

R&D activities of each business (FY2007)

Business Budjet
(in million JPY)
R&D activities
Steel 792 -Development of new special steel for automotive parts and a new manufacturing technique for producing stainless steel.

-The Company developed and commercialized chromium stainless steel which prolongs the life of engineered steel structures.
Forged products 100 -Development of forged products for automotive parts.

The Company developed elemental technology such as that used to reinforce die parts and lubricate dies.
Electro magnetic parts 1,108 -Development of Magneto-Impedance (MI) sensors, magnets for motors, dental magnetic attachments, heat releasers for automotive electronic equipment, and other products.

-The Company improved the sensitivity and performance of MI sensors, as well as developed heat-resistant magnets for motors.

Investment Activities

Capital Expenditure
(in million JPY) FY2007 FY2006 FY2005
Overall 13,165 28,359 21,373

Capital investment by business (FY2007)

Busienss Capital
(in million JPY)
Steel 6,289 Investment was made to rationalize manufacturing facilities, update aging facilities, and improve functions.
Forged products 5,432 Investment was made to enhance production capacity; as well as made for other purposes.
Electro magnetic parts 1,239 Investment was made to enhance production capacity; as well as made for other purposes.

Domestic investment activities

The Company will construct a new plant in Seki City, Gifu Prefecture to manufacture magnetic particles and magnets. This new facility will become a hub for the Company's electromagnetic products. Demand for the Company's proprietary neodymium-based anisotropic bonded magnet, the Magfine, is expected to increase, the Company's existing Chita Plant and Higashiura plant, however, do not have enough production capacity to satisfy this expected demand, so the Company needed to add this new plant. (The Magfine magnet is used in small, automotive motors.) The new Seki Plant, which will start operations in May 2009, will have the production capacity to produce 2 million units per month in the first year of operation. The Company will invest about 1 billion yen in the first stage and gradually increase the production capacity to keep up with growing demand. By using Magfine magnets, small automotive motors can be made 50% smaller and 40% lighter compared to motors using existing ferrite magnets. (From press release on January 31, 2008)

Overseas investment

-Czech Republic

Aichi Magfine Czech s.r.o. will start production of Magfine magnets in February 2008. Magfine magnets are neodymium-based anisotropic bonded magnets. It will supply these magnets to Robert Bosch GmbH. Aichi Magfine Czech plans to launch a production line that has the capacity to produce 200,000 units a month initially. The Company furthermore will increase the capacity to more than 2 million units per month by 2010. Since demand for these small, light-weight Magfine motors is expected to be more than 5 million units per month in 2010 collectively at home and abroad. Aichi Magfine Czech aims to enhance its production capacity to meet the demand. (From press release on December 13, 2007)

New equipment installation

Type of
Type of
Planned investment
Start Completion Production capacity upon completion
Chita Plant
(Tokai City, Aichi)
Steel etc. Production facilities for steel, rolling equipment, etc. 7,795 Feb.
Kariya Plant
(Kariya City, Aichi)
Steel Rolling equipment, etc. 900 July

Forging Plant
(Tokai City, Aichi)

Forged products Production facilities for forged products 3,033 Mar.
Higashiura Plant
(Chita Gun, Aichi)
Electro magnetic parts
Production facilities for products using magnets, etc. 638 Mar.
Gifu Plant
(Kakamigahara City, Gifu)
Electro magnetic parts
Production facilities for electronic functional materials and components 152 Sep.
Seki Plant
(Seki City, Gifu)
Electro magnetic parts
Production facilities for products using magnets, etc. 4,794 Dec.
New facilities
*The production capacity upon completion is expected to be around the same as that of at the end of March 2008.