KOITO MANUFACTURING CO., LTD. Business report FY2006

Business Highlights

Financial overview

(in million JPY) FY2006 FY2005 Rate of Change (%) Factors
Overall
Sales 452,520 397,509 13.8 - Sales marked a record-high figure, thanks to favorable business worldwide at the Company's key business of automotive lighting.
Operating income 21,328 22,262 (4.2) -
Ordinary income 24,600 25,640 (4.1) -
Current net income 13,374 12,731 5.1 -
Automotive lighting-related
Sales 477,585 417,833 14.3 Domestic business:
- Sales increased year-on-year because of increasing OE applications of advanced lighting systems such as high intensity discharge headlamps, adaptive front lighting systems (AFSs), LED rear combination lamps, and headlamp leveling systems.

Overseas business:
- Sales also rose outside Japan, as the Company won new business to supply headlamps and signal lamps to North America, Europe, China and Thailand.  
Operating income 21,870 23,264 (6.0)
Other businesses (Manufacture of automotive components, other than lighting devices)
Sales 34,181 27,838 22.8 - Sales also increased at the Company's other businesses, besides its lighting devices business, thanks mainly to increased sales of seats and other components for the aircraft industry, and more demand for automotive headlamp cleaners.  
Operating income (187) 1,255 - - The Company posted an operating loss due to increased costs for preparing production lines to manufacture new aircraft seats. It was also affected by soaring materials prices. 

Domestic Business
Koito Kyushu Co., Ltd., a new facility in Saga City, Saga Prefecture, launched production in October 2006.  

>>>See Capital Investment for more details

Overseas Business
Guangzhou Koito Automotive Lamp Co., Ltd. in Guangzhou, China became operational in March 2007. 

New equipment installment (Selected)
>>>See Capital Investment for more details

Sale of Joint Venture in Korea
The Company announced that it will divest its entire holdings of Innovative Hightech Lighting Corp. (IHL), its joint venture in Korea, to its partner, Hyundai Mobis Co., Ltd., a company of Hyundai Kia Automotive Group. The Company will basically withdraw from Korea by this decision. This will also terminate its technical support contract with IHL. There seems to have been a disagreement between the Company and Hyundai Group, which requested the Company of expanding IHL overseas along with Hyundai Group's growing overseas production. IHL was established in 1997 as a Japan-Korea joint venture and produced automotive lamps for Korean automakers.(From an article in the Nikkan Jidosha Shimbun on Mar. 1, 2007)

New Contracts

The Company won from two German automakers supply awards for its next-generation head lamps. The Company will supply to Audi high intensity discharge head lamps for its new sport utility vehicles, which will be released in 2008; and head lamp units to Porsche for the Carrera and the Boxster-models slated for complete makeovers in 2009. This is the first time for the Company to win business from Audi. The Company says it has already launched design-in activities for the lamps with both companies. The volume and amount of each contract are under wraps. (From an article in the Nikkan Jidosha Shimbun on Nov. 6, 2006)


New Medium-term Business Plan
The Company revised upward the consolidated sales in its five-year medium-term business plan for fiscal 2010 to 520 billion yen, up 20 billion yen. Behind this revision there is an expected increase in global vehicle production at 74 million units, up 9 million compared with 2005 record, as well as an establishment of its Kyushu plant designated as the Company's export center, and an order increase over the medium term which has been becoming obvious due to the strengthening of production bases in Europe, the U.S. and Asia. Unconsolidated sales of the Company will be raised by 10 billion yen to 240 billion yen. Considering an expansion in the installation rate of high value-added products such as high intensity discharge head lamps, advanced front lights with movable headlamps and light axis and the headlamp leveling system, the Company predicts a bigger increase in both sales and profit margin than that of the sales volume. (From a story in the Nikkan Jidosha Shimbun on May 15, 2006)

R&D

R&D

Investment Activities

The total amount of capital investments made during FY2006 was 34,489million yen.

In Automobile lighting related business, 33,283 million yen was invested in its facilities to increase production capacity in response to both new products and model changes of vehicle manufacturers, improve product quality, rationalize its production, and reduce costs.

Domestic Investments
The Company announced production start-up of Koito Kyushu Co., Ltd., its new plant in Saga City, Kyushu, Japan. Headlamps and rear combination lamps are produced and their annual production volumes will be raised to the level of 1 million units each by 2009. Currently 300 employees are hired, which will be increased to 800 in three years. (From an article in the Nikkan Jidosha Shimbun on Oct. 5, 2006)

Overseas Investments

The Company started discussions on a new headlamp production facility in North America. With its new rear combination lamp plant (No.4 plant in North America) now preparing for a production launch in the middle of 2007, the company's No.5 plant in the region is likely to be constructed on the site of its plant in the Muscle Shoals Industrial Park in Alabama, U.S.A. within the next few years. Planned amount of investment in this project is 2.4 billion yen. The Company decided to build an additional factory because its existing headlamp production facility (No.2 plant) is already approaching its capacity limit. Despite the overall decline in vehicle production in the U.S. due to slumping sales by American automakers including GM and Ford, the Company projects that local production by major Japanese car makers, its main customers, will grow steadily. (From an article in the Nikkan Jidosha Shimbun on Dec. 26, 2006)

The Company announced that Guangzhou Koito Automotive Lamp Co., Ltd., its wholly owned subsidiary in China, has started operations at its new plant in Guangzhou City, China. The Company's third Chinese facility will have the capacity to make 500,000 headlamps and rear combination lamps annually for supply to local plants of Toyota Motor Corporation and other automakers. Guangzhou Koito Automotive Lamp Co., Ltd., established in November 2005, has invested approximately 4.5 billion yen in constructing the new plant with a total floor area of 18,000 square meters on an 80,000 square meters land. Approximately 300 workers were hired at the new plant. Sales at Guangzhou Koito Automotive Lamp are expected to reach 2.6 billion in fiscal year ending in March 2007.(From an article in the Nikkan Jidosha Shimbun on Mar. 6, 2007)

New equipment installment (Selected)

Company / Plant  Equipment to be introduced Estimated
amount  of
investment
(in million JPY)
Project Period
From To
Shizuoka Plant
(Shizuoka, Japan)
Manufacturing equipment for automotive lamps, etc 5,001 Apr.
2007
Mar.
2008
Haibara Plant
(Shizuoka, Japan)
Manufacturing equipment for automotive lamps, etc 5,570 Apr.
2007
Mar.
2008
Sagara Plant
(Shizuoka, Japan)
Manufacturing equipment for automotive lamps, etc 1,266 Apr.
2007
Mar.
2008
Koito Kyushu Ltd. Manufacturing equipment for automotive lamps, etc 4,068 Mar.
2007
Mar.
2008
North American Lighting Inc.
(Illinois, USA)
New plant
Manufacturing equipment for automotive lamps, etc
6,303 Mar.
2007
Mar.
2008
Shanghai Koito Automotive Lamp Co., Ltd.
(Shanghai, China)
Manufacturing equipment for automotive lamps, etc 2,996 Mar.
2007
Mar.
2008
Thai Koito Campany Limited
(Samutprakarn, Thailand)
New plant
Manufacturing equipment for automotive lamps, etc
1,576 Apr.
2007
Mar.
2008