TEITO RUBBER LTD. Business report FY2006
Business Highlights
Financial
overview
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.
| 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.
R&D
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)
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)
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 |