KOITO MANUFACTURING CO., LTD. Business report FY2007

Business Highlights

Financial overview
(in million JPY) FY2007 FY2006 Rate of Change (%) Factors
Sales 470,648 452,520 4.0 Domestic sales increased, thanks to the growing volume of automotive production and new product sales. Sales overseas were strong, especially in the area of automotive lighting and related products. Sales marked a record-high figure.
Operating income 28,959 21,328 35.8 -
Ordinary income 30,397 24,600 23.6 -
Current net income 15,581 13,374 16.5 -
Automotive lighting-related
Sales 517,114 477,585 8.3 Domestic business: Sales increased because of a successful market launch of LED headlamps and greater volumes of its advanced lighting systems such as discharge headlamps, adaptive front lighting systems (AFSs) and LED rear combination lamps being installed as OEM equipment on automakers' new vehicles.

Overseas business: Sales rose outside Japan, as the Company won new business in emerging countries such as  China and Thailand.
Operating income 26,981 21,870 23.4

Domestic Business
Since December 2007, the Company has been constructing a second plant in Kyushu, which is scheduled to start operations in September 2008.
>>>See Capital Investment for more details
Overseas Business
In July 2007, the fourth plant of North American Lighting, Inc. in Alabama U.S.A. started commercial production.
In September 2007, the second plant of India Japan Lighting Private Limited., located in the northern part of Haryana, began operations.
>>>See Capital Investment for more details

Plants in Japan and China to supply each other with products
The company's plants in Japan and China will supply each other with components for car lamps to compensate for shortages among its Kyushu plant and three plants in China. This is expected to enhance the marketability of products made in China, as well as to improve price competitiveness of domestic products by importing low-cost China-made components. As soon as the Kyushu plant has achieved the capability of sustainable production of 1 million units per year, which is an initial target, it will start a trial of the mutual supply system. (From an article in the Nikkan Jidosha Shimbun on May. 9, 2007)

Change of Company Name
The Company announced in February 2008 that it changed the name of Fuzhou Tayih Industrial Co., Ltd., its consolidated subsidiary in China, to "Fuzhou Koito Tayih Automotive Lamp Co., Ltd.", to strengthen alliance among its Chinese group companies. (From an article in the Nikkan Jidosha Shimbun on Feb. 06, 2008)


R&D Structure
Automotive lighting related business:
Research and development activities are performed globally at the Company's four principle R&D facilities: the production engineering division and research laboratory of Koito Manufacturing which plays a central role of these activities, the Technical center of North America Lighting Inc. in the United States, Koito Europe NV technical section in Belgium, and the  Technical center  of Shanghai Koito Automotive Light, Inc. in China.
Furthermore, to improve skills of the Company's R&D staff, a technical conference is held annually and attended by the technical staff from eight nations.

The number of R&D staff in the entire Group is 2,105.

R&D Expenditure
The total amount of  R&D expenditures for FY2007 was 20,889 million yen.
The breakdown by business segment:
Automotive lighting business: 19.750 million yen; Electrical devices other than lighting: 912 million yen;

R&D Focus
Automotive lighting-related business
- Development of core automotive lighting technologies such as optical technology, electronics, and mechanism. 
- Development of manufacturing technology
- Development of simulation technologies, etc.

Product Development
In May 2007, the Company developed the world's first LED headlamps that are capable of being commercialized. The new headlamps use high-output white LEDs. The Company utilized its proprietary optical control system that supports high-light intensity. The features of the headlamps include longer lives, lower power consumption, and a more compact size, all of which make the headlamps more environmentally friendly.

Overseas Technical Alliances (as of Mar. 2008)
Company Country Products Associates Contract Period
Electro Optica, S.A. de C.V Mexico Automotive Lighting and Accessories Provide technological information, sales and manufacturing license 17 years from April 22, 1992
Industrias Arteb S.A Brazil 5 years from Jun. 8, 2006
Farba Otomotiv Aydinlatma ve Plastik Fabrikalari A.S. Turkey 12 years from Oct. 24, 1997
Automotive Lighting UK Ltd. UK 18 years from Feb. 24, 1993
Hella Australia Pty Ltd Australia 15 years from May 1, 1994
Hella (South Africa) (Pty.) Ltd. South Africa 5 years from May 4, 2006
EP Polymers (M) Sdn. Bhd. Malaysia 15 years from Apr. 29, 1995
AuVitronics Ltd. Pakistan 5 years from Mar. 7, 1995

Investment Activities

The total amount of capital investments made during FY2007 was 27,677million yen.

In Automobile lighting related business, 26,295 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
In December 2007, the Company announced a plan to build the second plant in Kyushu. The company already acquired an approximately 50,000-square-meter-site adjacent to its first plant in Kuboizumi-machi, Saga prefecture, and is planning to start the construction soon, investing 10 billion yen in total. In September 2008, the new plant will start producing headlamps, and in 2009, it plans to increase the yearly production capacity to around 1 million units. The No.2 plant will be constructed by Koito Kyushu Limited, Koito Manufacturing's wholly owned subsidiary. At the site of 50,000 square meters, the subsidiary will construct a new facility of approximately 30,000 square meters. Its workforce will be increased to 500 by September 2009. This will allow Koito Kyushu to expand its annual production capacity of headlamps to 2 million and signaling lamps to 1 million by the end of 2009. The subsidiary will have a total number of 1,100 employees. (From an article in the Nikkan Jidosha Shimbun on Dec. 6, 2007)

Overseas Investments

In July 2007, the Company announced a start of operation of its fourth North American plant newly constructed in the state of Alabama. The new facility will produce rear combination lamps, or signaling lamps, for U.S. Big 3 and Japanese automakers' plants in the U.S. The new plant was built in Muscle Shoals, a city approximately 100 kilometers west of Huntsville, one of major cities in Alabama, on a site of 121,000 square meters it acquired. The size of the plant is 20,000 square meters and the total investment was approximately 3 billion yen. With a workforce of 300, it plans to produce 1.8 million sets of signaling lamps per year by the end of May 2009. The operation is undertaken by North American Lighting Inc. (NAL), the Company's wholly-owned subsidiary established in 1983. The new Alabama plant and the three existing Illinois plants in Flora, Paris and Salem will coordinate for producing various types of automotive lamps. The Alabama plant will mainly serve new orders from Japanese automakers' local manufacturing bases in the South, whose vehicle production is continuing to increase. (From an article in the Nikkan Jidosha Shimbun on Jul. 19, 2007)

In September 2007 the Company announced that its second production facility in India will become fully operational from September 20. Koito already manufactures car lamps at its Chennai plant situated in southern part of India. The new plant was established in the north; it is located in Haryana, approximately 90 kilometers southwest of the capital city of New Delhi. The Haryana plant will become the company's second supply hub in India to support Maruti Suzuki India, Toyota Motor Corporation, Honda Motor Co., Ltd., and Tata Motors Limited, an indigenous automaker, which are increasing local production. The new facility has a building area of 10,000 square meters on a 57,000 square meter land that the Company acquired in the HSIDC Growth Centre, Bawal District, Haryana. The total 1.7 billion yen investment will allow the company to make additional 500,000 headlamps and 250,000 signal lamps per year. The plant will hire 150 employees by the end of March, 2008. (From an article in the Nikkan Jidosha Shimbun on Sep. 20, 2007)

New equipment installment (Selected)
Company / Plant  Equipment to be introduced Estimated
amount  of
(in million JPY)
Project Period
From To
Shizuoka Plant
(Shizuoka, Japan)
Manufacturing equipment for automotive lamps, etc 4,288 Mar.
Haibara Plant
(Shizuoka, Japan)
Manufacturing equipment for automotive lamps, etc 5,115 Apr.
Koito Kyushu Ltd. Manufacturing equipment for automotive lamps, etc 7,180 Mar.
North American Lighting Inc.
(Illinois, USA)
Manufacturing equipment for automotive lamps, etc 2,883 Mar.
Shanghai Koito Automotive Lamp Co., Ltd.
(Shanghai, China)
Manufacturing equipment for automotive lamps, etc 3,268 Mar.
Guangzhou Koito Automotive Lamp Co., Ltd.
(Guangzhou, China)
Manufacturing equipment for automotive lamps, etc 3,025 Mar.
Thai Koito Company Limited
(Samutprakarn, Thailand)
New plant
Manufacturing equipment for automotive lamps, etc
1,831 Apr.
India Japan Lighting Private Limited
(Nadu,Tamil , India)
Manufacturing equipment for automotive lamps, etc 1,221 Mar.