Sumitomo Electric Industries, Ltd. Business Report FY2009

Business Highlights

Financial Overview

(in million JPY)
  FY2009 FY2008 Rate of Change (%) Factors
Sales 1,836,352 2,121,978 (13.5) -
Operating income 51,728 23,527 119.9 -
Ordinary income 68,206 37,773 80.6 -
Current net income 28,708 17,237 66.5 -
Automotive related business
Sales 816,623 917,125 (11.0) -Demand for wire harnesses and anti-vibration rubber decreased and the price of copper dropped, due to production cuts by automakers worldwide in the first half of the year.
Operating income 34,526 6,142 462.1 -Mainly in the wire harness segment, the Company successfully reduced its labor costs and other fixed costs. It also optimized its production structure by migrating its production operations to low-cost regions.

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

Outlook for FY2010

(in billions of JPY)
  FY2010 FY2009 Year-on-year Fluctuation
Sales 2,000.0 1,836.4 163.6
-Automotive related business 915.0 816.6 98.4
Operating income 100.0 51.7 48.3
Ordinary income 120.0 68.2 51.8
Net income 60.0 28.7 31.3
R&D Expenditure 75.0 72.3 2.7
Investment Expenditure 110.0 73.3 36.7
-Automotive related business 48.0 29.6 18.4


R&D Expenditure

(in million JPY)
  FY2009 FY2008 FY2007
Overall 72,259 72,988 68,373
Automotive related business 37,512 38,890 40,891

R&D Activities

Wire harnesses / in-vehicle electronic equipment
-R&D activities are mainly conducted at AutoNetworks Technologies, Ltd., which is jointly owned by the Company and Sumitomo Wiring Systems, Ltd. R&D activities are mainly focused on developing new products meeting safety, comfort and environmental needs.

-Wire harnesses: The Company established the architecture to develop wire harnesses suitable for applications in next-generation, in-vehicle systems. It is now developing the fundamental technology that is needed.

-In-vehicle electronics devices: The Company isnow developing electronics devices such as PDs (power distributors)and next-generation in-vehicle LAN (Local Area Network) unitsin order to respond to the rapidadvances taking place in IT. TheCompany is also launching systems with advanced features and/or networkingcapabilities.

-Environment: The Company is now developing lighter wire harnessesby usingmaterials such as lighter aluminum wiresand smaller connectors. It also is developing high-voltage harnesses and components for EVs (electric vehicles) and HEVs (hybrid electric vehicles),which are two growing markets.

-The Company has succeeded in development and commercial production of the AZ91 magnesium alloy sheet through a unique casting and rolling process for the first time in the world. The new alloy sheet exceeds conventional products in terms of strength and corrosion resistance. AZ91 alloy is a magnesium alloy to which 9 percent of aluminum and 1 percent of zinc are added to improve its corrosion resistance performance. Due to difficulty in processing, the conventional AZ91 alloy has not been used in the form of a sheet. The new magnesium alloy sheet has achieved a high strength of 380 MPa by more than 1.5 times, and an elongation of over 10 percent by several times, compared with the cast sheet, but, in terms of the stamping workability, it has attained a level equivalent to that of the AZ31 alloy sheet, which is already widely used. (From an article in the Nikkan Jidosha Shimbun on Jan. 15, 2009)

Investment Activities

Capital Expenditure

(in million JPY)
  FY2009 FY2008 FY2007
Overall 73,306 131,597 119,887
Automotive related business 29,609 69,567 69,075

-The Company invested in the automotive business to increase production and improve the efficiency of wire harnesses and vibration isolating rubber.

Capital Investment Plan (FY2010)

-The Company plans to invest 110,000 million yen in FY2010.
-Its Automotive Business Division plans to invest 48,000 million yen mainly in its facility that produces wire harnesses and vibration-isolating rubber.