HARADA INDUSTRY CO., LTD. Business Report FY2010

Business Highlights

Financial Overview

(in millions of JPY)
  FY2010 FY2009 Rate of Change (%) Factors
Overall
Sales 21,460 17,802 20.5 1)
Operating income 1,483 346 328.4 -
Ordinary income 1,331 202 557.0 -
Net income 847 (64) - -
Automotive Components Division
Sales 20,904 17,112 22.2 -
Operating income - 405 1065.6 -

Factors
1)
-The Company conducted activities to increase sales in mature-market areas (Japan, Europe, and North America) and in developing-market areas, while implementing initiatives throughout the Group to improve the ratio of the cost of goods and to control operating costs. Also, aiming at rationalizing and enhancing efficiencies in its sales structure, it revamped its sales functions in Japan. It consolidated the operations of the Niigata Plant and Iwata Plant of Harada Communications, Inc. into one plant in Niigata. In working to reorganize its production operations in Japan, the Company further strengthened its management base.

<Japan>
-Sales to external customers increased year on year 4.0%, to 9 billion, 625 million yen, while internal sales among regional business units were up 0.6%, to 819 million. Business operating profit increased 36.9% year-on-year, to 660 million yen. This was the result of increased unit-production volume of vehicles exported, in spite of the negative affects of the Great East Japan Earthquake and lower new-car sales after the eco-car sales incentives ended.

<Asia>
-Sales to external customers were 3 billion, 420 million yen, a 45.8% increase year-on-year as a result of the expanding Chinese market and various sales activities the Company conducted in the Asian markets. Internal sales among regional business units were up year-on-year due to the recovery in the Japan-bound market, reaching 7 billion, 447 million yen (a 44.9% increase). Business operating profit increased 76.2% year-on-year, to 576 million yen.

<North & Central America>。
Sales to external customers were 7 billion, 154 million yen, a 35.6% increase year-on-year; internal sales among regional business units were up year-on-year, reaching 4 billion, 460 million yen (a 17.3% increase); and business operating profit was 295 million yen, compared to a 285 million yen loss the previous year. This performance was due to a market recovery in the U.S.A and Mexico and due to promotions the Company conducted to increase sales, in spite of being impacted by negative currency translation.

<Europe>
Sales to external customers were 1 billion, 259 million yen, a 36.5% increase year-on-year; internal sales among regional business units were up year-on-year, reaching 27 million yen (a 27.2% increase); and business operating profit was 21 million yen, compared to a 121 million yen loss the previous year. This performance was due to a market recovery in Europe and due to promotions the Company conducted to increase sales, in spite of being impacted by negative currency translation.

Restructuring

-The production facilities of Harada Communication Systems Co., Ltd., its domestic manufacturing subsidiary, will be consolidated from two plants in Niigata and Iwate to one plant in Niigata. Productive operation of some products will be transferred from domestic to overseas plants. This is meant to strengthen the group's management structure by raising productivity and improving efficiency in operation on a global level. The consolidation is expected to be facilitated by the end of the year. (From an article in the Nikkan Jidosha Shimbun on August. 2, 2010)

-The Company will absorb its wholly-owned subsidiary "Harada Shoji Co., Ltd." that is responsible for domestic sales in the aftermarket as of October 1. This reorganization is aimed at streamlining and consolidating the domestic sales and administrative functions. Harada Shoji will be liquidated. (From an article in the Nikkan Jidosha Shimbun on May. 20, 2010)

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

Outlook for FY2011

(in millions of JPY)
  FY2011
(forecast)
FY2010 Year-on-year Fluctuation
Overall 20,800 21,460 (660)
Operating income 900 1,483 (583)
Ordinary income 750 1,331 (581)
Net income 450 847 (397)

 

R&D

R&D Expenditure

(in millions of JPY)
  FY2010 FY2009 FY2008
Overall 919
852 1,051
Automotive Components Division -
702 923
-Total R&D expenses were 919 million yen, broken down as follows: Japan (834 million yen) and North & Central America: (84 million yen).

R&D Facilities

Radio wave measurement site Tokyo, Japan
Hanamaki (Test site) Iwate Pref., Japan
Harada Europe R&D Centre Kent, U.K.

R&D Activities

Automotive antenna business
-In response to the developments towards digitization of TV and radio broadcasts around the world, the Company completed the development of a connector that has an ultra-compact amplifier designed for digital terrestrial broadcasting, a satellite radio antenna for North America, and a DAB antenna for Europe. It continuously mass-produces and supplies these products.

Next-generation automotive antenna business
-In response to growing needs from car makers for flat or integrated antennas, the Company began developing antennas for satellite radio receivers; and multi-function antenna systems for onboard, integrated telematics services.

Basic R&D activities
-The Company started to develop future antenna concepts. The Company conducted fundamental research and development in order to improve the performance of digital multi media reception; build an onboard LAN; and commercialize a compact composite antenna that enables high-capacity communication.

Developments aimed at environmental protection
-Leveraging its strength in making coaxial cables in-house, the Company completed the development of a light-weight coaxial cable. In addition, it continuously markets products that respond to automakers' efforts to improve fuel economy.

Investment Activities

Capital Expenditure

(in millions of JPY)
  FY2010 FY2009 FY2008
Overall 502
186 536
Automotive Components Division  - 176 517

-In order to respond to the sophistication of mobile communications, the Company invested 520 million yen in facilities and equipment in Japan, Asia, North & Central America, and Europe.

<Japan>
The Company invested in facilities and equipment producing onboard automotive equipment and communications devices, and in R&D facilities, to enhance its capabilities, spending 235 million yen.

<Asia>
-In order to enhance its facilities and equipment producing onboard automotive devices, the Company invested 220 million yen.

<North & Central America>
-The Company invested in facilities and equipment producing onboard automotive devices, and in R&D facilities, to enhance its capabilities, spending 56 million yen.

<Europe>
In order to enhance its R&D capabilities in the area of onboard automotive devices, the Company invested 8 million yen