TBK CO., LTD. Business report FY2007

Business Highlights

Financial overview (in millions of JPY)
  FY2007 FY2006 Rate of Change(%) Factors
Overall  
Sales 47,282 41,974 12.6 -
Operating income 4,429 3,458 28.1
Ordinary income 4,349 3,327 30.7
Current net income 3,010 1,666 80.7
Automotive component manufacturing business  
Sales 46,744 41,436 12.8

-Sales at the automotive brake division were supported by greater sales to Japanese truck manufacturers. These included sales of brakes for models destined for export and some new businesses.

-Sales at the automotive pump division rose thanks to favorable performances at the company's consolidated subsidiaries overseas. Sales of engine related products also increased.

Operating income 5,385 4,317 24.7 -Operating income increased due to greater sales and the company's cost reduction initiatives.


Contracts

-The Company won increased business in Japan and other Asian countries.

-Transition to full air brake systems completed in all domestic truck manufacturers. An air wedge drum brake for heavy-duty vehicle was adopted by all domestic truck manufacturers and is used in an increasing number of vehicle models.

-The Company won a new water pump business from a foreign passenger vehicle manufacturer. Production of these water pumps started during the latter half of FY2007.


Domestic business
-The Company, a leading supplier of brake systems for commercial vehicles, will significantly expand its engine component business as part of its new operations. In addition to marketing large-sized casting components such as cylinder heads and crank shafts as well as turbocharger parts, The Company will seek to gain new orders for construction machinery and engines for industrial applications. Production system will be reinforced by investment of about 2.5 billion yen for the coming three years to develop the engine-related business as another profit-making source next to brake systems, its mainstay product. The Company entered into the engine component business in 2005 and aims to increase sales of the business by 1.5 times to 6.9 billion yen in 2009 from 4.7 billion recorded in FY2007. Sales ratio of engine components in the entire group sales, currently standing at 11 percent (FY2007), will be raised to about 15 percent by FY2009. (From a story in the Nikkan Jidosha Shimbun on Jun.1, 2007)


Overseas business
-The Company will strengthen its business of brake and engine parts for commercial cars in China. The company will establish a new plant as a local supplier for Japanese truck manufacturers and begin full-fledged production of drum brakes and water pumps in 2008. It aims to generate sales of 1.7 billion yen in fiscal 2008. The Company made the first entry into China in the mid-1990s when it began brake lining manufacturing. In 2004, it also began producing brakes for commercial vehicles jointly with a local manufacturer. But its sales in China in fiscal 2006 were only 100 million yen, mainly because of fierce price competition in the commercial vehicle brake market in China. (From a story in the Nikkan Jidosha Shimbun on Jun.25, 2007)

-The Company will significantly reinforce its diesel engine components business in the U.S. While increasing production capacity with an investment of one billion yen by fiscal 2010, The Company will also work on to win new orders. The company will market engines for trucks, its mainline, as well as engines for construction machinery and industrial applications that are expected to be in great demand on the global market. The company will raise annual sales to 4.5 billion yen by fiscal 2010 from 500 million (projection for the current fiscal year). The Company focuses on lessening dependence on normal truck engines and accelerating globalization in its management strategy for the near future. In consideration of a shrinking or leveling off domestic truck market, expecting needs of 80,000 units in total, the company will seek to increase local production and develop new customers, aiming to establish a sound business base at an early date. Global sales target for fiscal 2009 was set at 14.6 billion yen, 1.6 times that of previous year. (From a story in the Nikkan Jidosha Shimbun on Aug. 24, 2007)

R&D

R&D Section
-The following departments are engaged in R&D activities: No. 1 Development Dept., No. 2 Development Dept., No. 3 Development Dept., No.4 Development Dept., and the Experiment Department.

-The Group has a total of 75 researchers, which account for about 5.5 percent of its entire workforce.

-Total R&D expenses were 937 million yen in FY2007.

Brake Business

-Transition to full air brake system completed in all domestic truck manufacturers, and an air wedge drum brake for heavy-duty vehicle was adopted by more vehicle models. 

-The company developed a new drum brake for medium-duty vehicles for major domestic manufacturers. 

-The Company is conducting research and development activities, which are focusing on safer, environmentally friendly, and energy-saving products, accumulating its technology and passing it on to engineers for the future.

-R&D expenses were 548 million yen in FY2007.

Pump Business
-The company promoted the improvement and development of water and oil pumps for small to large engines. 

-The company developed water and oil pumps for engines of domestic OEMs which meet the new long term exhaust emission regulations.

-R&D expenses were 309 million yen in FY2007.

Other divisions
-The use of retarder has expanded for small,  medium, and heavy-duty vehicles and buses, as it is regarded as a suitable device for engines designed to meet the exhaust emission regulations.

-The Company worked on enhancing its product mix of retarders, in addition to increasing the number of vehicle models on which they can be adopted.

-R&D expenses were 79 million yen in FY2007.


Contracts for receiving technical assistance (As of March 2008)
Name of the contractor Country Contract item Contract coverage Contract period
Arvin Meritor Corp. U.S.A. Brake parts for large trucks 1: To set the rights for establishing industrial property rights.
2: To supply technical information
3: To grant manufacture and sales licenses
From March 8, 1991 to March 6, 2011


Contracts for giving technical assistance (As of March 2008)
Name of the contractor Country Contract item Contract coverage Contract period
TBKK (Thailand) Co., Ltd. Thailand Automotive brakes, camshafts, oil pumps, water pumps 1. To set the rights for establishing industrial property rights.
2. To supply technical information
3. To grant manufacture and sales licenses
March 29, 1990 - 10 years from sales launch (then automatic extension every year)
Sangshin Brake Ind. Co., Ltd. Korea Brakes for large vehicles Same as above January 14, 1994
10 years from mass production starting date (then automatic extension every year)
TBK India Private Ltd. India Water pumps and oil pumps for automobiles Same as above June 28, 1998
7 years from mass production starting date (then automatic extension every year)
GSB-TBK Automotive Components, S.L. Spain Same as above Same as above June 7, 2000
10 years from mass production starting date (then automatic extension every year)
Full Win Developments Ltd. China Brake linings Same as above August 1, 2002
10 years from the effective date (then automatic extension every year)
Hangzhou TBK-APG Brakes Co., Ltd. China Same as above Same as above July 30, 2003
10 years from mass production starting date (then automatic extension every year)
Chang chun TBK Shili Auto Parts Co., Ltd. China Friction materials for brakes used in commercial vehicles Same as above Dec.22, 2005
10 years from mass production starting date (then automatic extension every year)
TBK America, Inc. USA Same as above Same as above November 15, 2006
10 years from the initial payment date
(then automatic extension every year)

Investment Activities

Capital investment (in millions of JPY)
Unit FY2007 FY2006 FY2005
Brake production facilities 300 790 824
Pump production facilities 911 642 618
Companywide N.A. 3,630 3,027


Overseas
<Thailand>
-The Company will enhance its production capability in Thailand. It will begin local production of gears, key components for engine oil pumps, at its own facilities. In addition to internal consumption of products including gears it will manufacture in-house, It will start selling the products to outside customers. The company will invest 700 million yen to construct a gear manufacturing facility and complete the preparation for the local production within this fiscal year. Then later, it aims to generate yearly sales of 600 million yen in and after 2008. from the gear business. While the company's sales in Thailand have tentatively been hovering at low levels in the aftermath of political confusion and resulting economic turmoil in 2006, the company appears to forecast its future sales as around 4 to 6 billion yen in the future. The launch of the local gear production will allow the company to establish a stronger basis for making profit. (From a story in the Nikkan Jidosha Shimbun on Jun.13, 2007)


Plans for construction of new facilities (As of March 2008)
Company
Office Name
Location Expected Investment
(millions of yen)
Started Complete
TBK America, Inc. Indiana, U.S.A. 504 May 2008 July 2008