Tokai Rubber Industries Business Report FY2007

Business Highlights

Financial overview
In million JPY FY2007 FY2006 Rate of Change (%) Factors
Sales 311,995 280,302 11.3 -
Operating income 24,704 23,096 7.0
Ordinary income 24,171 22,843 5.8
Current net income 14,241 13,907 2.4
Rubber product business
Sales 256,021 228,046 12.3 Refer to the following explanation.
Operating income 20,585 19,977 3.0 -

Performance at the rubber-products business
<Automotive rubber products>
Sales of automotive rubber products rose year-on-year, supported by greater production volume by Japanese automakers, which called for increased parts production at the Company's subsidiaries in North America, Asia, and Europe.
- Automotive anti-vibration-rubber products : sales of electronic control engine mounts increased
- Automotive hoses : sales increased in the area of environmentally friendly products such as low permeability hoses made of resin-rubber composite.  

Domestic Business

The Company held a groundbreaking ceremony for TRI Kyushu, which was established in December 2007 and will start operation in January 2009. It will become fifth production facility for anti-vibration rubber in Japan for the TRI Group.  
>>>See Capital Investment for more details

Overseas business

The Company announced on April 17 that Tokai Imperial Rubber India Private Ltd. has held an opening ceremony at its new plant in Faridabad, Haryana, India. Tokai Imperial Rubber India was established in November 2005 to produce automotive hoses; it is a joint venture between the Company and Imperial Auto Industries Ltd., an Indian hose supplier. Production at the new facility is intended to support Japanese automakers, which are willing to procure hoses locally in India. Sales target for fiscal 2010 is set at 1.2 billion yen. No other Japanese car hose maker has made a foray in the country. (From a story in the Nikkan Jidosha Shimbun on Apr. 18, 2007)

New mid-term business plan "2012 TRI GROUP VISION"
The Company unveiled "2012 TRI GROUP VISION (2012V)", the new mid-term management plan spanning the period of fiscal 2007-2012. Under 2012V, he Company intends to achieve a consolidated sales of 400 billion yen coupled with at least 10% consolidated ordinary profit in FY2012. (From a press release on Nov. 2, 2007)


R&D Expenditure
<Rubber products business>
R&D expenses for FY 2007 were 6,305 million yen.

R&D structure

The Company conducts R&D activities at the following four facilities in an effort to develop new products and create new business fields:
- Elemental technology research facility: conducting research on cutting-edge composite technology related to control, design and materials. 
- Material technology research facility: developing new materials
- Product development center: developing new products and bringing them into the market 
- Manufacturing research center: developing innovating manufacturing technology.

Construction of new technology research center , "Technopia"
In order to improve efficiency and speed of R&D activities, the Company will consolidate development departments which are currently located at Headquarters and a number of other facilities, and establish a new technology research center, "Technopia" at the site adjoining  its Komaki plant in Komaki city, Aichi prefecture.  
>>>See Capital Investment for more details

Technical tie-up
<Automotive anti-vibration rubber business> Technical tie-up with Trelleborg AB (publ) in Sweden
<Automotive hose business> Technical tie-up with Hutchinson S.N.C. in France

Investment Activities

Investment Expenditure
Total amount of capital investment was 28,487 million JPY in FY2007.

<Rubber Products Business>
The Company invested 22,696 million JPY in the rubber business for anti-vibration rubber and hose production facilities at the Company's locations as well as at DTR Tennessee, Inc.
<Plastic products and other business>
The Company invested 5,791 million yen, mainly in plastic products production facilities at the Company and at Tokai Chemical Industries, Ltd.

Domestic Investment
In January 2008, the Company held a ground-breaking ceremony at the premises of TRI Kyushu Ltd., which was established in December 2007 and is due to begin operations in January 2009. TRI Kyushu is TRI Group''s fifth anti-vibration rubber plant in Japan. The new plant, fully automated with latest machinery, manufactures anti-vibration rubber and resin hoses for automobiles. 8.3 billion yen has been earmarked in initial investment. The new company is planning to achieve annual sales of approximately 10 billion yen in FY2012. (From a press release on Jan. 30, 2008)

In May 2007, the Company announced a construction of a new building specifically for an engineering laboratory in order to reinforce its development capability. The new laboratory will be built adjacent to its Komaki Works in Komaki city, Aichi prefecture, and the construction is to be completed in July 2008. The total investment is 3.2 billion yen. The Company intends to promote efficiency and to speed up its operations by consolidating development functions, now located separately in its headquarters and the works, at the new building. The Company believes development of elemental and material technologies is vital to getting a competitive edge in its future automotive vibration isolating rubbers, hoses and other next-generation products. The decision was made based on the need to secure better environment-rooms suitable for molecular design or high-precision processing and clean rooms, for example-as well as more spaces for the development of these technologies. The Company will also set up a showroom in the building to invite public attention to its products and technologies. (From a story in the Nikkan Jidosha Shimbun on May. 10, 2007)

New Facility

Equipment to be installed Facility Estimated amount of investment (million JPY) From To
Headquarters and Komaki Plant Aichi pref. Japan New R&D facility 3,185 May. 2007 July. 2008