Shin-Kobe Electric Machinery Co., Ltd. Business Report FY2009

Business Highlights

Financial Overview

(in millions of JPY)
  FY2009 FY2008 Rate of change (%) Factors
Sales 72,839 70,926 2.7 -As a result of the Company making Hitachi AIC Inc., which runs a condenser business, a consolidated subsidiary as of October 1, 2009, sales ended slightly up year-on-year.
Operating income 5,264 5,153 2.2 -
Ordinary income 4,618 3,056 51.1
Current net income 2,740 1,162 135.8

Streamlining Operations

-The Company, Hitachi Chemical Co., Ltd., and Hitachi AIC Inc. (Moka City, Tochigi Pref.) announced on July 28 that Hitachi AIC, which is a wholly owned subsidiary of Hitachi Chemical, will transfer its condenser business to the Company as early as October 1. The Company, also a subsidiary of Hitachi Chemical, manufactures lead and lithium-ion batteries, while further expanding the scope of its new energy business. The integration is thereby expected to create huge synergies within the Hitachi Group. The areas to be transferred from Hitachi AIC are aluminum electrolysis condensers, film condensers, as well as vapor deposition apparatuses related to these technologies. Sales and assets of the businesses totaled 11.5 billion yen and 7.6 billion yen, respectively in 2008. Automotive applications of Hitachi AIC's condensers include headlamp igniters.(From an article in the Nikkan Jidosha Shimbun on July 29, 2009)

Expanding production in China

-The Company will increase its production capacity for automotive batteries in China. By the end of fiscal year 2010, it is planning to install additional facilities at Hitachi Storage Battery (Dongguan) Co., Ltd., one of its consolidated subsidiaries, so as to double the annual production volume there to 2 million batteries from the current 1 million. In China, where vehicle production continues to expand, the Group has been receiving requests from local facilities of Japanese automakers to hike production of batteries. The expansion will allow the Company to meet such requirements, which will lead to greater sales. (From an article in the Nikkan Jidosha Shimbun on Dec. 28, 2009)

Battery and Electric Equipment Division
-Sales at the Battery and Electric Equipment Division were 46 billion, 485 million yen, a 11% decrease year-on-year; and operating income was 3 billion, 104 million yen, a 40% decrease year-on-year.

Automotive Batteries Division
-Sales at the Automotive Batteries Division were 25 billion 373 million yen, a 15% decrease year-on-year.
-Sales of batteries for the aftermarket slightly increased as price reductions were offset by an increase in sales volume through finding new customers and working to further increase sales. 
-Sales of batteries for new vehicles decreased substantially due to a significant decrease in automotive production and price reduction made on lead batteries in the first half of the fiscal year, although a recovery in sales volume was seen in the second half.

Synthetic Resin Division
- Sales at the Synthetic Resin Division were 19 billion, 90 million yen, a 2% increase year-on-year; and operating income was 1 billion, 804 million yen. The Company posted an operating loss of 43 million yen in fiscal year 2008.

-Sales of thermoplastic molds increased, thanks to the strong sales of electric composite molds for hybrid vehicles.
-Sales of thermosetting molds also increased because the Company supplied more vehicle models with its high-strength resin gears used in balance shaft systems, in China. 

Seat products
-Sales of products used in seats substantially decreased because the Company couldn't fully surmount the impact of the sluggish economy.

Laminates and shielded board
-Although the Company enjoyed strong sales of products designed for environmentally friendly cars, sales of other products continued to be slow. As a result, overall sales at the Laminates and Shielded Board Division decreased. 

Lithium-ion Batteries for HV Business

-Hitachi, Ltd. announced on Oct. 19 completion of its mass production line for the third-generation lithium-ion batteries to be used in the next-generation hybrid vehicles. Its full-scale operation will commence in 2010. The current monthly production capacity is 40,000 unit cells, which will be increased by 300,000 unit cells when the full-scale operation begins. According to Hitachi, the new line is capable of meeting the needs for manufacturing over 100,000 hybrid vehicles per year. Hitachi's lithium-ion batteries have been sold mainly in Japan and the US for commercial hybrid vehicles including light-duty trucks. The company, however, will accelerate sales expansion for application in passenger hybrid vehicles with sharply increasing demand, taking advantage of the new production line built at the site of headquarters plant of Hitachi Vehicle Energy, Ltd., Hitachinaka, Ibaraki Pref., Japan. This affiliate was jointly established by Hitachi, Ltd., Shin-Kobe Electric Machinery Co., Ltd. and Hitachi Maxell, Ltd. The batteries will be sold through Hitachi Automotive Systems, Ltd., Chiyoda-ku, Tokyo, a 100% subsidiary of Hitachi, Ltd. founded by spinning off its automotive business. (From an article in the Nikkan Jidosha Shimbun on Oct. 20, 2009)

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


R&D Expenditure

( in millions of JPY )
  FY2009 FY2008 FY2007
R&D expenses (in millions of Yen) 2,525 1,819 1,490
Numbers of researchers (persons) 218 185 151
Industrial property rights (items) 751 769 763

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
-Focusing on lead-acid batteries and lithium-ion batteries, the Company developed new products that are capable of meeting needs in automotive battery aftermarket as well as responding to the next new systems for automobiles and new industrial uses at its Batteries Research and Development Center, Industrial Lithium-ion Batteries Development Center, and Hitachi Vehicle Energy, Ltd.  
-The Company developed new products such as Tuflong ECO series, automotive batteries for alternator regenerative system.
-The Company's research and development expenditure for products such as batteries and electrical equipment was 1 billion, 675 million yen.

-A cooperative R & D project on batteries by twelve private firms including Toyota Motor Corp. and Hitachi Ltd., Kyoto University and the government has started in Japan. The project will research the yet-to-be defined lithium-ion behavior by using the state of the art analysis facilities to achieve longer life and higher performance of the battery. It also aims to see by FY 2015 a clear vision of development of a high-capacity lithium-ion battery with which a vehicle will run 300 km on a single charge. In increasingly fierce competition on development of a high-capacity secondary battery, the All-Japan development team has been established to forge Japan as a storage battery nation. The project, formally named as "advanced scientific basic research project on innovative storage batteries," has participants of seven universities including Kyoto Univ. and twelve private corporations including Toyota, Nissan, Honda, Mitsubishi Motors, GS Yuasa, Panasonic, Hitachi, Shin-Kobe Electric Machinery and Mitsubishi Heavy Industries. In the beginning, about 50 researchers will work on the development task. (From an article in the Nikkan Jidosha Shimbun on June 13, 2009)

<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. 
-The Company developed new products such as electric composite moldings for hybrid vehicles.
-The Company's research and development expenditure for synthetic resin was 758 million yen.

Technology Licensing-in Agreement

(As of Mar. 31, 2010)

Partner Country Content of contract Contract Period
Panasonic Storage Battery Co., Ltd. Japan Obtained the rights for both the patent and the execution of  technological expertise in the field of lead-acid batteries July 1, 2004 through
June 30, 2014

Investment Activities

Capital Expenditure

(in millions of JPY)
  FY2009 FY2008 FY2007
Overall 2,975 3,908 3,173

-The Company invested 1 billion, 701 million yen in batteries and electric devices, streamlining industrial lead-acid batteries and setting up trial production facilities for industrial lithium-ion batteries and lithium-ion capacitors.
-The Company made a capital investment of 725 million yen in synthetic resin to increase its production capacity of strategic automotive resin components.