Highlights FY2007 (ended Mar. 2008)

Financial Overview

(in million JPY)	FY2007	FY2006	Rate of change (%)	Factors
Overall
Sales	1,157,594	1,025,297	12.9	Sales increased due to the Company's enhanced development capabilities for creating technology, and its excellent product quality. This is also the result of improving the efficiency of its production and sales operations.
Operating income	77,650	64,630	20.1	Income rose since higher materials prices were offset by increased sales.
Ordinary income	72,896	66,968	8.9	Income rose since increases in materials prices and a rise in depreciation costs due to the revision of the corporate tax system were offset by strong sales.
Current net income	43,446	44,900	(3.2)	-
Mechanical Components Division
Sales	954,968	826,045	15.6	Since sales of steering, bearing and powertrain parts were brisk both in and outside Japan, mainly in Europe and Asia, sales increased.
Operating income	59,569	43,665	36.4	-

Contracts

The Company announced that its "rack-cross electric power steering (RC-EPS)" was adopted by General Motors Corporation (GM) for its full-size SUVs (sport utility vehicles), Chevrolet Tahoe Hybrid and GMC Yukon Hybrid. It is the first electric power steering (EPS) system adopted by full-size SUVs. Its RC-EPS is equipped with high-output compatible motors designed exclusively for the product and a two-speed transmission with ball screws and bevel gears, thus featuring higher output and efficiency. This has made it possible for large vehicles with a weight of over 3 tons to adopt the new technology. (From an article in the Nikkan Jidosha Shimbun on Jan. 23, 2008)

New Incorporations

-India

In Jul. 2007, the Company established a new joint venture, JTEKT Sona Automotive India Ltd. (JSAI), in Haryana, India for the manufacture of electric power steering in partnership with Sona Koyo Steering Systems Limited (Sona Koyo). Manufacturing operations at JSAI are scheduled to start in Jan. 2010.

Sona Koyo of India has formed a joint venture with American Axle & Manufacturing Holdings, Inc. (AAM). The new company, AAM Sona Axle Private Limited (AAM Sona Axle), will manufacture and sell light truck, passenger car, and SUV axle assemblies for the India market.


Business Plan

The Company will enter the continuously variable transmission (CVT) chain market, following a successful development of highly efficient, large torque compatible involute chains with the aim to commercialize the projects by 2009 and achieve annual sales of one million units or 10 billion yen in 2012. In response to automakers' shifting to CVTs from automatic transmissions to improve fuel efficiency, It will designate CVT chains as its major business next to bearings and steering systems. The newly developed involute chain features spiral form, which has not yet been commercialized in and outside Japan. They are capable of reducing noise, which was the weak point of conventional CVT chains, and can be used in wider range of torque, more than double the upper limit of torque (approx. 350 N.m) for metal belts. They improve fuel efficiency by four to five percent compared with conventional CVTs. (From an article in the Nikkan Jidosha Shimbun on Apr. 9, 2007)

The Company will enhance the partnership with Fujikiko Co., Ltd., a group member supplier manufacturing steering systems and sheet parts, for expanding the power steering business. It will work on downsizing and upgrading performance of next-generation electric power steering systems (EPS). As for a column type EPS, which is expected to show a rapid rise in demand in the future, the company will endeavor to enhance its product competitiveness by integrating the system with supporting parts of the column. Taking advantage of collaboration with Fujikiko, which has a long business relationship with Nissan, the Company will seek to explore new markets and customers. (From an article in the Nikkan Jidosha Shimbun on Oct. 29, 2007)

R&D Structure

-R&D facilities in Japan

Facility	Location
R&D center	Nara Pref.
	Osaka Pref.
	Aichi Pref.

R&D Expenditure

(in million JPY)	FY2007	FY2006	FY2005
Overall	30,857	29,957	24,718

R&D activities (FY2007)

Steering Division

The Company developed for the first time in the world an electric power steering system for large-sized SUVs and pickup trucks of three tons or more, on which hydraulic power steering systems are being installed. The new steering system was launched in the North American market in December 2007. This will make the Company the only supplier of a complete lineup of electric power steering systems, from those for mini cars up to those for large-sized SUVs and pickup trucks. 

In December 2007 the Company started commercial production of variable flow control (VFC) pumps in the North American market. These energy-saving pumps are designed for conventional hydraulic power steering systems. The flow in these pumps can be controlled depending on the driving condition, thereby  reducing energy loss by half while improving fuel efficiency. 

The Company has developed a hall IC torque sensor for electric power steering (EPS) and will expand the application to EPS. The new sensor will work efficiently in a high-temperature engine room to ensure a stable steering operation. It uses highly-functional hall ICs with built-in digital computer, nonvolatile memory and thermal compensator, which has made it possible to check engine torque more accurately and reduce its property fluctuation for changes in temperature by 30% compared to traditional torque sensors. The new product complies with future European safety standards to be enacted starting 2010. It contains two IC chips and monitors their output variance, thus improving capability to detect malfunctions. (From an article in the Nikkan Jidosha Shimbun on Jun. 26, 2007)

Bearing & Drivetrain Components Division

-Bearing

The Company announced a development of a new electric pump for an idling stop system. The new product is the smallest in the world in size among electric pumps of equal performance, and it is carefully designed to work very efficiently in a certain oil pressure range, in which the device is used frequently. The company succeeded in making the new product 60% smaller than traditional-type pumps by adopting a brush-less and sensor-less motor and integrating a controller and a pump. The supplier also succeeded in improving efficiency of the pump by 5 to 10% and reduced the burden on the battery by optimal designing. By application of this new technology to hybrid vehicles that require electric pumps while running on motors, in addition to models with the idle stop mechanism, it aims to generate sales of 700 million yen in 2012. (From an article in the Nikkan Jidosha Shimbun on Jun.1, 2007)

The Company has developed a new "RD3 "bearing seal for automotive air conditioning compressor pulleys that boasts low torque and outstanding sealing capability and has begun mass-production. It intends to proceed with standardization of RD3 seal and expand the application of the seal to idler bearings and other bearings with outer ring rotation. (From a press release on Sep. 25, 2007)

The Company has developed a new lightweight hub unit for compact vehicles. The new hub unit offers a 30 percent reduction in product weight, without compromising on the level of rigidity and strength of conventional hub units. It achieved this by using its CAE (computer-aided engineering)-based design method for developing an axle assembly, which is composed of a hub unit, a brake drum, and a wheel. The company manufactures and sells weight-saving hub units targeting the compact vehicle segment; it aims to generate 3 billion yen per year through this business by 2011. (From an article in the Nikkan Jidosha Shimbun on Dec. 15, 2007)

The Company has developed a thrust needle bearing with considerably reduced rotational torque for automotive transmissions. This new low-torque bearing has approximately 50% less rotational torque than conventional bearings, which helps improve vehicles' fuel efficiency. It focused on the improvement of sliding resistance between the roller end and the retainer pocket face. Surface reforming treatment was executed for achieving exceptionally lower torque; a convex configuration was strategically applied on the retainer pocket face, which enabled a 50% reduction in rotational torque while maintaining long service life, high-speed rotation, strong friction resistance properties equivalent to those of the conventional products. With the introduction of low-torque thrust needle bearing, the Company aims to boost its total sales by 1.2 billion yen in 2012. (From a press release on Mar. 14, 2008)

The Company developed a new, continuously variable transmission (CVT) chain (called the JTEKT involute chain), which enhances fuel efficiency by 4-5% compared with conventional metal belts. Development is underway for commercialization.

The Company, in working on developing a hub unit with a sensor capable of detecting tire force, also started developing vehicle safety control technology utilizing its  expertise to detect the force of tires. 


The Company developed compact needle bearings that are designed for planetary wheels. These new bearings have product lives that are eight times longer than those of existing bearings. 

-Drivetrain

The Company developed new compact torque sensors for center differentials. These sensors are designed to be mounted on the highest class of hybrid vehicles in Japan. 

The DKC (diamond like carbon)-Si layer technology that the Company developed for electromagnetic clutches used on 4WD couplings (ITCCs), were not only made compact but also were designed to make high-performance ITCCs that will contribute to higher fuel efficiency. 

Capital Expenditure

-	FY2007	FY2006	FY2005
Overall	58,912	60,303	43,013
Mechanical Components Division	54,411	53,053	37,995

Overseas Investments (FY2007)

-India

In Jul. 2007, the Company established a new joint venture, JTEKT Sona Automotive India Ltd. (JSAI), in Haryana, India for the manufacture of electric power steering in partnership with Sona Koyo Steering Systems Limited (Sona Koyo). Manufacturing operations at JSAI are scheduled to start in Jan. 2010. The Company owns 51% of the joint venture, and Sona Koyo (also is located in Haryana and in which the Company holds 20.1%) owns 49%. The total amount of investment in JSAI is approximately 3.5 billion yen, and sales are projected to reach approximately 9 billion yen in 2010. (From a press release on Oct. 22, 2007)

Sona Koyo of India has formed a joint venture with American Axle & Manufacturing Holdings, Inc. (AAM). The new company, AAM Sona Axle Private Limited (AAM Sona Axle), will manufacture and sell light truck, passenger car, and SUV axle assemblies for the India market. The corporate headquarters of AAM Sona Axle will be located in Pune, India, and a new manufacturing facility will be constructed in north India. The facility is expected to launch in 2008 with the production of light vehicle axles for Tata motors. (From a press release on Oct. 30, 2007)

New Equipment Installment

Plant (Location)	Type of facility	Estimated amount of investment  (in million JPY)	Project Period
			From	To
Kokubu Plant (Osaka, Japan)	Manufacturing facilities for mechanical components	3,900	Apr. 2008	Mar. 2009
Tokushima Plant (Tokushima, Japan)	Manufacturing facilities for mechanical components	3,600	Apr. 2008	Mar. 2009
Kagawa Plant (Kagawa, Japan)	Manufacturing facilities for mechanical components	2,900	Apr. 2008	Mar. 2009
Daibea Co., Ltd. Head Office & Sakai Plant (Osaka, Japan)	Manufacturing facilities for mechanical components	4,700	Apr. 2008	Mar. 2009
Koyo Corporation  Of the U.S.A. (South Carolina, USA)	Manufacturing facilities for mechanical components	3,300	Jan. 2008	Dec. 2008