Financial overview

In million JPY	Mar. 2007	Mar. 2006	Rate of change	Remarks
Consolidated
Sales	96,218	80,310	19.8	See note 1) below
Operating income	1,402	1,506	(6.9)	See note 2) below
Ordinary profit	2,109	2,455	(14.1)
Net profit	1,481	1,631	(9.2)
Automotive Heat Exchangers
Sales	43,637	37,357	16.8	See note 3) below

Remarks
(1) Sales increased, primarily due to winning new orders for automotive parts at its subsidiaries abroad, and due to steady exports construction and industrial equipment by its customers.

(2) Income and profits increased due to increased production and sales as well as improved profitability of its subsidiary companies in Asia and Europe. But price increases of its main material nonferrous metals worldwide had a negative impact on the profits. Also, the parent company itself was slow in launching new products and responding to increased sales of products in the construction and industrial machinery sectors in the first half of the fiscal year. As a result, the Company was not able to ensure appropriate profits.

(3) Thanks to increased production of vehicle models destined for export due to the depreciation of the yen; and increased use of EGR coolers on diesel-powered vehicles due to high oil prices and environmental requirements, sales rapidly increased. Overseas, T.Rad North America, Inc. and T.Rad Italia S.p.A, which received new orders for products for passenger vehicles, and T.Rad (Thailand) Co., Ltd., which focused on mass-producing products for motorcycles, increased sales.

Contracts
The Company will start a full scale sales activities toward Toyota Motor Corp. It will introduce Toyota Production System (TPS) thoroughly to its major production sites to achieve highly efficient production and quality competitiveness. It will also market its strength that it can produce a full automotive heat-exchanger system from radiators to small-sized coolers for hybrid vehicles to win major orders. In FY 2005 the Company's products held 25% share in Toyota vehicles in Japan and the share is expected to grow to 30 to 40% in FY 2006. The supplier hopes to maintain over 40% level in the future. (From an article in the Nikkan Jidosha Shimbun on Dec.15, 2006)

Overseas Business
<North America.>
The Company will start producing exhaust gas recirculation (EGR) coolers, which are diesel engine components, in North America for expanding its business in that market. The company has won an exclusive supply agreement for the product from DaimlerChrysler for their large-sized SUVs. The Company will take this opportunity to focus on achieving superior quality and productivity from the initial stage of manufacturing. The production will go into full-scale operation between the end of this year and the first half of next year to establish an annual production capability of at least 300,000 units at an early date.

<The Czech Republic>
The Company had been producing products for the European market at its subsidiary in Italy, but it will construct a new production line at the Czech plant to consolidate its EGR cooler production operations for the European market. The new line is scheduled to start producing EGR coolers around summer 2008.

<Thailand>
A new EGR cooler production line will be added to its Thai subsidiary's plant. The new line is scheduled to start producing EGR coolers around summer 2008.

see Investment for details

Domestic Business
The Company has tripled its domestic production capacity for exhaust gas recirculation coolers (EGR coolers) used in diesel-powered vehicles. In response to increasing demand for EGR coolers, especially those targeted for the next generation, the Company has set up two new manufacturing lines for the next-generation EGR coolers at its Shiga Works. The addition of the new lines has increased threefold the company's monthly production capacity to 90,000 units.

see Investment for details


Challenges in the future
(1) Developing epoch-making products and production engineering technology
(2) Reorganizing its corporate structure and raising its profitability
(3) Establishing worldwide operations based a five-region organizational structure
(4) Entering new business areas

R&D Expenditure
-R&D expenses (consolidated) in FY 2006 (ended Mar 2007) were 2,513 million yen. 
-Number of industrial property rights secured by the end of March 2007 is 125.

Manufacture and sales of heat exchangers
1. ) Developing new products and improving existing products
<New business area>
- In the environment-and-energy-related area, the Company developed new products for the fuel cell sector. The Company worked on new products for the sector+ dealing with electric generation systems based on gas from waste materials, and cooling systems for electronic devices.
- Automotive fuel cells: The Company continuously improves products in order to further improve the performance of existing heat exchangers.
- Developing cooling systems for hybrid cars and PCs.
<Current business areas>
- The Company is now working to develop products with higher performance, and which are lighter weight and lower in costs.
- Modularizing and systemizing cooling systems.
- Developing recyclable products and a heat exchanger that improves engine emissions.

2. ) Basic Research
- - -	Basic research on materials and new machining technology Researching stainless steel as a material for use in high temperature heat exchangers Research on nickel solder material, surface treatment, and welding technology
-	Improving efficiency by improving fundamental technology
-	Working on consignment from, and conducting joint-development with, external organization such as universities.

Licensing of technology to other companies (as of March 2007)

Partner	Contract	Contract Period
Indonesia PT.Batarasula Mulia	Manufacturing technology for Radiators	2004.12.16 - 2009.12.15
Pakistan Loads Ltd.	Manufacturing technology for Radiators	2005.10.30 - 2010.10.29
India Tata Toyo Radiator Ltd.	Manufacturing technology for Radiators	2006.01.01 - 2012.12.31
Thailand Torc Co., Ltd.	Manufacturing technology for Radiators	1990.06.08 -
Thailand Alexon Co., Ltd.	Manufacturing technology for Radiators	2003.02.11 - 2008.02.10
Thailand Radicon Co., Ltd.	Manufacturing technology for Radiators	2003.02.11 - 2008.02.10
China Qindao Radiator Co., Ltd.	Manufacturing technology for Radiators	2002.10.29 - 2007.10.28
China Qindao Radiator Co., Ltd.	Manufacturing technology for Radiators	2003.02.14 - 2008.02.13
Taiwan Rising Sun Heat Exchanger Industry Co., Ltd.	Manufacturing technology for Radiators	2005.03.08 - 2013.03.07
China Toyo Heat Exchanger (Qingdao) Co., Ltd.	Manufacturing technology for aluminum heat exchangers	2005.03.31 - 2013.03.31
China Toyo Radiator (Qingdao) Co., Ltd.	Manufacturing technology for Radiators	2005.07.05 - 2010.07.04

R&D