TEITO RUBBER LTD. Business report FY2006

Business Highlights

Financial overview
In million JPY FY2006 FY2005 Rate of Change (%) Factors
Sales 8,098 8,152 (0.7)

-Sales decreased due to a decline in product prices as a result of fiercer competition with other companies in the same industry.

Operating income 125 89 40.5 Operating income increased as a result of the Company's vigorous efforts in collaboration with its parent company to reduce purchasing and manufacturing costs (an NP-II activity), and improve its production processes and yield (an MI activity).
Ordinary income 84 51 64.8
Current net income (1,024) (291) - Current net income decreased because the Company set up 1,100 million yen in estimated product liability reserves.

Established a subsidiary in the United States
In July 2006, the Company established Teito Rubber America Inc. in Michigan, U.S.A. This subsidiary sells automotive rubber hoses in the U.S.

Objectives for FY2007

To take steps to prevent similar issues dealing with quality, which is what occurred in North America and reduced the Company's performance significantly, and to deal with higher materials costs, the Company will forge a midterm management plan centering on the Teito Rubber Structural Reform II, and build a profitable structure that is not influenced by sales fluctuations and ensures profits over the long run.

To assure it maintains its competitive edge as a group, the Company, in collaboration with its parent company, will continue activities to reduce purchasing costs (an NP-II activity) and manufacturing costs (an MI activity). It will also streamline its business operations, improve its quality assurance system, restructure its domestic manufacturing facilities, and re-examine its production allocations worldwide. Moreover, it will train and recruit human resources capable enough to assume important roles in these structural reforms and growth strategies.


Recent Developments
New products
Succeeded in developing the following products.
-Fuel hoses that reduce fuel-vapor permeation to zero.
-Water hoses which significantly improve performance of fuel cells.
-Various hoses made from materials that do not contain environmentally harmful substances but at the same time retain existing performance levels.

Technical development on production/processing methods
-The Company worked to eliminate certain extrusion methods that were regarded as unneeded or wasted energy in terms of technology, successfully developing lines free of these unneeded processes. 
-The Company pursued ways to thoroughly eliminated unnecessary technology in processes, successfully automating and  linking processes, and achieving consistency too.

Technical Alliances
Licensing-in (as of March 2007)
Company name Country Technology Contract period
Meiji Rubber & Chemical Co., Ltd. Japan Manufacturing technology for  medium- and high-pressure hoses Five years from Sep. 27, 1989
(Automatic renewal from then on)

Licensing-out (as of March 2007)

Company Name Country Contract Contract period
Meiji Rubber Kasei Japan Licensing of patent rights for TS-type process heads and technologies concerning continuous processing of cloth reinforced rubber hoses (under TS method).  Five years from Sep.1989
(Automatic renewal from then on)
Orion Rubber Mfg. Philippines Licensing of patent rights for TS-type process heads and technologies concerning continuous processing of cloth reinforced rubber hoses (under TS method), and technical partnership for manufacturing braided rubber hoses using the TBL method developed by the Company. Five years  from Feb.1992
(Automatic renewal from then on)
Kasmina  Vietnam Technologies for manufacturing single-layer rubber hoses. One year from July 1998 
(Automatic renewal from then on)
Technical assistance for outer braided/inner braided hoses.    One year from March 2005
(Automatic renewal from then on)
Technical assistance for spiral hoses. Five year from March 2005
(Automatic renewal from then on)
Indocarlo Indonesia Technical assistance for manufacturing of fuel hoses/breather hoses (single-layered/double-layered rubber hoses without braid reinforcement) for motorcycles and water hoses (braid-reinforced rubber hoses) for automobiles. Seven year from September 2004
(Automatic renewal from then on)
Technical assistance for manufacturing fuel hoses and master vacuum hoses for automobiles Seven years from September 2005
(Automatic renewal from then on)

Investment Activities

In FY 2006, the Company's capital investments amounted to 106 million JPY, mainly to make facilities more efficient, to carry out maintenance and updating of facilities in a well planned manner, to deal with new vehicles, and to implement environmental safety measures.

New equipment installations

In line with its medium-term business plan, the Company plans to focus its investment in the following projects.
1. Focusing on the Teito Rubber structural reform-II, the Company will implement manufacturing reforms in the areas of extrusion, molding, and the finishing processes to improve quality and reduce manufacturing costs.
2. The Company will invest to improve the working environment for its employees, as planned, and ensure for their safety.
3. The Company will carry out maintenance and updating of facilities that are the basis of its manufacturing operations.

The capital investment planned for FY2006 is 319 million JPY
Estimated amount of capital investment for FY2007  (in thousand yen)
Segment  Estimated amount of investment 
Rationalization/quality improvements 54,000
New technology and methods 185,000
Upgrading the main system 24,000
Repairs/upgrading 23,000
Others 33,000
Total 319,000