HARADA INDUSTRY CO., LTD. Business report FY2006

Business Highlights

Financial overview
In million JPY FY2006 FY2005 Rate of Change(%) Factors
Sales 23,181 22,470


Operating income 1,507 1,606 (6.2)
Ordinary income 1,496 1,520 (1.5)
Net income 861 1,112 (22.5)
Automotive Components Division 
Sales 21,167 20,789 1.8 -Sales increased slightly year-on-year, thanks to gains from favorable exchange rate translation and greater demand for automotive manual antennas. 
Operating income 1,587 1,894 (16.2) -Operating income fell from what it was last year due to soaring materials costs.  

New business
-The Company won orders from Ford Motor Company to supply satellite radio antennas for the automaker's US models and glass antennas for its European models for the first time for each product. Both of them are complex antennas capable of responding to plural radio systems, GPS (Global Positioning System), and the cell-phone system. This integration technology was highly evaluated and resulted in getting new orders. Delivery of products with certain specifications has recently started, to be followed by a full-scale delivery in stages. The Company will supply the antennas for 160,000 vehicles in the U.S. market in the first year. The Company aims to expand sales of the multi-functional antennas overseas, taking advantage of the fact that it has won business with Ford. (From a story in the Nikkan Jidosha Shimbun on Jun. 28, 2006)

-The Company announced that its U.S. subsidiary has won volume supply awards from Ford Motor Company and DaimlerChrysler AG. Under the contracts, Harada Industry of America will provide the American automakers with automotive antennas and other products starting in 2007, which is expected to raise the group's annual revenue from the two companies to 6.5 billion yen by 2009. (From an article in the Nikkan Jidosha Shimbun on Dec. 4, 2006)

Overseas business
-The Company will expand its operation in Asia mainly in vehicle antenna markets. The supplier plans to increase its sales in Asia, except Japan, by 2.5 times in three years from the level of fiscal 2005. The Company has almost completed preparations for expansion of supplies to Japanese automakers, which are planning to increase their production in China and Thailand, and is planning to begin delivering its products to a Korean manufacturer this year. In addition, it will begin initiatives to win new orders from auto manufacturers of the U.S. and Europe for their manufacturing bases in Asia. The Company's sales in Asia come almost entirely from sales of automotive antennas, and were approximately 800 million yen in fiscal 2005. The Company, which aims at expanding sales to approximately 2 billion yen by fiscal 2008, will consider establishing an enhanced structure at its Shanghai Office to accelerate its efforts to win more orders. (From a story in the Nikkan Jidosha Shimbun on Jul. 21, 2006)

Challenges for the future
The Company mapped out its eighth medium-term business plan covering a three year period from fiscal year 2007. The plan includes the following targets:

1. Sales target: consolidated sales of 30,000 million yen
2. To cultivate new business fields by taking full advantage of its core technology
3. To establish the "Harada" standard in terms of improving its development and industrial engineering capability, as well as the efficiency of its total cost structure.
4. To set up an optimal organizational framework and a firm financial structure. 


Total R&D expenses for FY2006 was 1,142 million yen.
Out of the total amount, 975 million JPY was spent on the automotive components business.

Automotive antenna business 

-In line with the increasing move toward digitization in the world's TV and radio industry, the Company is focusing on the development of digital TV and radio antennas to support digital broadcasting services in each country when they become fully operative.
-The Company developed and started mass-production of TV antennas for terrestrial digital broadcasting.
-The Company has been working to reduce the costs of antennas used in digital TV and ETC devices, studying the possibility of developing products that are integrated units that combine several media devices into single units.

Next-generation automotive antenna business 
-The Company focused its development activities on automotive satellite radio antennas. It started supplying complex antennas for satellite radios for use in 2008 model year vehicles. 
-The development of complex, multifunctional telematics services has been completed, with the Company delivering them to automakers in the EU and Japan.

Proposals for prior development
-The Company is also working on developing antennas that can be built right into vehicle trunks. It is also in the process of developing ultra small digital TV amplifiers and antennas for anti-collision radar systems.  

Antennas in existing fields
-The Company has been active in sending engineers to auto manufacturers to further develop complex roof antennas and short pole type roof antennas and improve their performance. They engineers are also working on lowering the costs of amplifier modules used in glass antennas.  Also, the Company started development of glass antenna patterns, achieving some success. 

Equipment connected with the antennas business
-Having successfully standardized and reduced the size of noise filters, the Company has further increased its product lineup and conducted marketing activities worldwide in promoting these products. 

Automotive control equipment
-The Company has started mass-production of door lock actuators for North America, increasing the number of models in its product mix.
-The Company has been working on lowering the prices of its existing products, while carrying out development activities to engineer innovative, next-generation automotive antennas. 

-The Company will launch "HTD-101", a new in-car terrestrial digital broadcasting tuner in which high-performance antenna using its advanced technology nurtured through the development of "PALUSE"Series antennas and high-sensitivity automotive terrestrial digital broadcasting reception tuner unit. High performance"HTD-101" has adopted innovative antenna technologies, including a diversity system, for an upgraded reception capability. As a top performance product in the industry, "HTD-101" allows mobile objects to receive steadiest stream of broadcast signals. It also boasts highest level of reliability, functionality, and quality. (From a press release on Mar. 27, 2007)

Investment Activities

Capital Investments
Total capital investments for FY2006 were 622 million yen, the majority of which was spent for the Automotive Components Division and IT related Components Division 
-The focus of investments was to cope with the further advancement of mobile communication technology. 
-Capital investments for the Automotive Components Division were 581 million yen, which was spent to strengthen its production and R&D facilities.

-The Company will boost its production capacity in North America to meet growing demand from carmakers. The Company was awarded contracts for manual type antennas, relay cables and other products by Ford and DaimlerChrysler. The Company is going to add twenty production lines at its plant in Mexico to deal with such new orders, starting full operation in January 2007. Sales from increased production are expected to amount to 6.5 billion yen during the three years from fiscal 2007 to 2009. This new business is to take over previous supplies by a longstanding U.S. supplier of antennas, which ceased operation by filing for Chapter 11 bankruptcy. The Company is set to prepare for an increase in production in a short lead-time between three and four months. Leveraging such agile and highly flexible responsive capability, the Company aims to win more contracts of products for next models. With an Investment of 150 million yen, The Company is going to increase production lines to about 90 at its Mexican plant. (From an article in the Nikkan Jidosha Shimbun on Dec. 16, 2006)