Shin-Kobe Electric Machinery Co., Ltd. Business report FY2008

Business Highlights

Financial overview (in millions of JPY)
  FY2008 FY2007 Rate of change (%) Factors
Sales 70,926 78,067 (9) - Sales decreased substantially due to the decline in automobile production.
- Operating income decreased due to a substantial decline in revenue from the automotive industry reliant synthetic resin division.
- Ordinary and current net income decreased substantially due to a downturn in business at the Company's affiliates and other factors.
Operating income 5,153 5,720 (10)
Ordinary income 3,056 5,189 (41)
Current net income 1,162 2,931 (60)

Battery and Electric Equipment Division
- Division sales were 52 billion 298 million yen, a 3% decrease compared to the previous fiscal year, and operating income was 5 billion 180 million yen, a 60% increase compared to the previous fiscal year.

<Automotive Batteries>

- Sales of automotive batteries were 29 billion 778 million yen, a 5% decrease compared to the previous fiscal year.
- Despite a decrease in demand resulting from economic slowdown, sales of service parts increased as a result of the Company's efforts to increase sales, for example, by cultivating new customers.
- While sales of  environmental-responsive, highly regenerative automotive batteries increased, sales of batteries for new vehicles substantially decreased as a result of reduction in automobile production.

Synthetic Resin Division
- Sales of the division were 18 billion 628 million yen, a 22% decrease compared to the previous fiscal year. Operating loss was 43 million yen (operating income of the previous fiscal year was 2 billion 466 million yen).

- Sales of thermoplastic resin molds decreased as a result of reduction in automobile production, except for IPM housings for hybrid vehicles, sales of which declined relatively moderately.
- As to thermo-setting resin molds, sales of high-strength resin gear for the balance shaft system decreased due to sluggish sales of automobiles overseas. Sales of other automotive parts also decreased as a result of decline in automobile production volume and other factors.

<Seat products>
- Sales of seat products for automobiles decreased as did consumer use, partly because of market shrinkage for vacuum forming use, as a result of the economic downturn.

<Laminates and shielded board>
- Demand for in-car products, which was strong in the first half, declined suddenly and substantially in the second half. Consequently, sales decreased as a whole.


R&D Expenditure ( in millions of JPY )
  FY2008 FY2007 FY2006
R&D expenses (in millions of Yen) 1,819 1,490 1,595
Numbers of researchers (persons) 185 151 141
industrial property rights (items) 769 763 798

R&D Structure
- The Company promoted the development of cutting-edge high technologies, which were essential to developing new advanced products, in close cooperation with R&D divisions of the Hitachi Group companies such as Hitachi, Ltd. and Hitachi Chemical Co., Ltd.

R&D Activities
<Batteries and Electrical Equipment Products>
- The Company conducted R&D activities that address the service parts market for automotive batteries and the next new systems for automobiles, focusing on lead acid and lithium-ion batteries.
- Newly developed products include batteries for taxis and commercial vehicles, the new Tuflong series, and valve-regulated type lead-acid batteries, UP-A.
- R&D cost was 962 million yen.

<Synthetic Resin Products>
- The plastic R&D center and the development center at Hikone Works lead R&D activities to develop products which are aimed to launch in the near future, further toward market launch where technological innovation proceeds very rapidly in short period. Examples of these products are laminates, molds and seat products. 
- Newly developed products include high-strength resin gear for the balance shaft system to be used on an AR engine.
- R&D cost was 857 million yen.

Technical assistance contracts (as of March, 2009)
Partner point Country Content of contract Contract Period
EXIDE Industries Ltd. India License and offering of technical information on lead acid batteries For 5 years since April 1, 1999.
Contract was extended by one year from April 2009.
Valve-regulated (sealed) lead-acid batteries For 5 years since June 22, 2005
Panasonic Storage Battery Co., Ltd. Japan Licensing agreement on lead storage batteries For 10 years since July 1, 2004

Investment Activities

The Company made a capital investment of 3,908 million yen (including intangible fixed assets) in order to upgrade and expand facilities for growing the product range and overall streamlining in the fiscal year ended in March 2009.

- With regard to batteries and electric equipment products, the Company made a capital investment of 1 billion 866 million yen for streamlining automotive lead acid batteries and developing industrial lithium-ion batteries.

- With regard to synthetic resin products, the Company made a capital investment of 2,007 million yen for increasing production of strategic automotive resin parts and other purposes.