Kokusan Denki Co., Ltd. Business report FY2006

Business Highlights

Financial overview
In million JPY FY2006 FY2005 Rate of Change (%) Factors
Sales 23,245 21,418 8.5 Sales increased due to an increased in sales of outboard motor electric components for the USA and in-car motors
Operating income 394 406 (2.9) -
Ordinary income 473 481 (1.7) Ordinary income decreased due to an the enormous impact of materials price increases despite the company's efforts such as improving its operating capacity, initiating cost reductions including initial cost reductions and implementing JIT reform in response to an increase in sales
Net income 321 302 6.2 Net income increased due to the profit gained on a sale of idle land (land used for company housing), despite a  temporary extraordinary loss as a result of revising the motor and electric generator businesses and a re-evaluating business property
Electric Products Division
Sales 13,868 13,581 2.1 - Year-on-year sales grew, thanks to a significant rise in sales of products for outboard boat-motors in the booming U.S. market.
Operating income 701 583 20.2
Generator Division
Sales 2,568 3,612 (28.9) Slowing sales of engine-power generators, the company's main stay product, due to an inventory adjustment in the North American market
Operating income (39) 87 -
Motor Division
Sales 6,809 4,223 61.2 Revenue grew due to an increase in the sales of power steering motors for 4WD vehicles
Operating income 144 106 35.8

Challenges for FY 2007
1 Achieving globalization, more new business, and increased revenue based on sales activities that focus on making concrete presentations and proposals.
- Addressing the exhaust emission regulations, energy conservation, and the implementation of higher level functions through investigating core technologies, i.e, electronic fuel injection systems; vehicle motors with superior vibration, water, and heat resistance, etc.
-To actively participate in joint-development projects with overseas customers as well as to respond to domestic customers' expansion activities overseas. 

2 Developing human resources and highly efficient management structure
-To develop an organization that transfers authority to and promotes newer staff. Also continue and further develop leading technologies that the Company has fostered for years. 
-To establish a new production-control system capable of responding to small-lot/multi-product production and capable of providing quick delivery encompassing further development of JIT deliveries.
-Reducing the fixed-expense ratio
-Lowering materials costs in spite of the exorbitantly high raw materials.
-Strengthening the Company's overall competitive advantages through streamlining processes.

3 Improving customer satisfaction
-To engage in initiatives that incorporate "quality into designs" and "cost engineering" that responds to customers' needs at the time products are developed.
-To ensure quality control in processes through TQC activities.

4 Strengthening environmental management
-To promote the ISO 14001 environmental management system, aiming to achieve zero emissions.


R&D Expenses
in million yen FY2006 FY2005
Electrical Products Division 195 179
Generator Division 10 6
Motor Division 67 26
Others 34 31
Total 306 242

Major R&D Activities:
Electrical Products Division

Activities included:
- Working on highly efficient high-output ACG and regulators.
- Improving ignition and fuel injection systems.
- Adding more R&D staff for fuel injection systems that incorporate highly efficient/high-powered magnet regulators. Developing and increasing sales of electric products used in motorcycles, ATVs, snowmobiles, outboard boat motors, and various types of motors on a global basis.  

Generator Division
Under the aim of achieving energy savings, size reductions, improved efficiency, and noise reductions, the Company is developing for the North American market high quality inverter generators based on permanent-magnetic generators; and radio frequency floodlights without regulators, which are a patented technology.

Motor Division
Currently developing and expanding sales of various actuator motors, auger rotating motors, and tile motors for motorcycles, buggies, snowmobiles, agricultural equipment, and outboard boat-motors that demonstrate excellent properties in terms of vibration, pressure, and dust resistance.
With energy savings as the Company's goal, it is currently developing small sized, highly efficient, low cogging automotive motors for automobiles. It is electrifying motors such as small-sized ABS motors and auxiliary motors that are being made more convenient to install. 

Investment Activities

The Company spent 1,228 million yen for capital investments in FY2006,
focusing on constructing a new motor production line, rationalizing investments to achieve energy saving, introducing IT, making investment for molds in response to orders for new products, and investing to replace aging facilities.

The major investments on mechanical equipments in FY 2006
Segment in million yen Main facilities
Electrical Products Division 261 Electric components rationalization facilities, etc.
Motor Division 383 Construction of new motor production line

Capital investment plans for FY2007 (as of March 2007)
Site name Location Type of facility Planned investment amount (million yen) Commencement and completion Month/Year


Headquarters factory
Numazu city, Shizuoka prefecture Electric components production rationalization facilities 228 Apr. 2007 Sep. 2008
Headquarters factory
Numazu city, Shizuoka prefecture To install new equipment for use in R&D 28 Apr. 2007 Sep. 2008