HI-LEX CORPORATION Performance for the fiscal year ended in October 2006

Business Highlights

Financial overview
In million yen FY2006 FY2005 Rate of Change (%) Factors
Sales 117,120 102,134 14.7 - Overall sales grew primarily due to greater sales of new cable products.
4,879 5,247 (7.0) - Despite the Company's initiatives to reduce costs, the effects of any achievements gained were not enough to offset the losses.
Ordinary profit 6,532 6,607 (1.1) - The Company received greater interest and dividends
Net profit 3,628 4,078 (11.0) - An increase in minority shareholder's interest 
Sales by geographic region
Sales 61,631 55,141 11.8 - Sales grew, supported by greater sales to major customers.
2,898 2,601 11.4 - The Company was able to keep its production costs from rising in spite of surging material costs.  
North America
Sales 41,363 37,523 10.2 - Sales increased, thanks to greater revenue earned at its production and sales subsidiary in Mexico. 
692 1,201 (42.4) - Operating profit decreased due to increased costs to hike production in Mexico.  
Sales 25,218 18,090 39.4 - Although demand weakened in Indonesia, the Company enjoyed greater sales in China and Korea. 
1,662 1,376 20.8 - Operating income increased, supported by greater profit earned in China and Korea. 
Sales 3,855 3,171 21.6 - Sales increased, thanks primarily to growing business with existing customers. 
(242) (140) - - The operating loss grew larger due to costs incurred for increasing production volume. 

New subsidiary
HI-LEX Corporation will establish a new company, HI-LEX Hungary Cable Manufacturing ZRT, in Hungary by July, 2006. The new company, which will produce and sell control cables and window regulators, is capitalized at 3 million pounds. HI-LEX Hungary will be 100% owned by HI-LEX Corporation. (From a press release by the company on Jun. 16)

Challenges for fiscal 2007
Increase development capabilities
-Reorganize the operations.
-Increase human resources systematically as required by each segment.
Reinforce cost competitiveness
-Improve productivity and reduce production costs through production improvement activities called CAPS.
-Reduce costs by implementing VA and VE programs.
-Reduce purchasing costs of materials based on the global optimum procurement policy..
Undertake global operations
-Expand operations in emerging markets such as Asia, East Europe and Russia.
-Increase business efficiencies in mature markets: Japan, the U.S.A., and Europe.  
Assure and improve quality
-Pursue and construct a systematic and scientific scheme to stem defects from coming out.


in million yen FY2006 FY2005 FY2004
R&D expense 912 852 648

New materials
The focus of development activities is set on the following: 
- Technology to greatly improve the performance of plastics, greases and other smooth organic materials when used in cables.
- Technology to manufacture high durable PLG torque inners and high-performance door lock inners in-house.  
- Introducing environmentally friendly materials, after revamping its control standard regulating the use of harmful substances.    

New technologies
- The Company aims to incorporate its heteromorphic double wiring technology into seat cables and PKB cables. It will continue its development activities to optimize float length and reduce stroke loss.  

New products
- The Company developed and commercialized power sunshades, electric key locks, new screen lifting and lowering devices for motorbikes, and new winch equipment for wheelchairs.