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  5. Hwaseung R&A Co., Ltd. Business Report FY ended Dec. 2014

Hwaseung R&A Co., Ltd. Business Report FY ended Dec. 2014

Highlights in Recent Years

Financial Overview (Consolidated)

(in millions of won)
FY ended Dec. 31, 2014 FY ended Dec. 31, 2013 Rate of
Change
(%)		 Remarks
Sales 1,696,590 1,632,278 3.9 -Sales of automotive parts for FY2014 totaled 1,081,195 million won, which made up 63.7 percent of the Company's overall revenue.
Operating income 87,884 73,241 20.0 -
Net income 53,464 (34,733) - -

Business Partnership

-Kinugawa Rubber Industrial Co., Ltd. announced on July 20 that it will form a business alliance with HS R&A Co., Ltd., an automotive rubber parts manufacturer based in Korea. Based on the tie-up agreement, the two companies will collaborate on production of automotive rubber and plastic products in India, while mulling the possibility of such partnership in other countries as well. Leveraging each company's management resources efficiently, the two companies aim to quickly meet increasing demand for locally produced components especially in emerging countries. (From an article in the Nikkan Jidosha Shimbun on July 21, 2011)

Subsidiaries


-In May 2012, the Company established HSTR Otomotiv. San Tic. Ltd. Sti in Kayseri, a wholly owned subsidiary to handle processing of automotive components.


-In March 2011, Hecheng Vehicle Parts (Taicang) Co., Ltd. started supplying low-pressure hoses to BMW.


-The Company announced that HS Automotive Alabama Inc. completed its second plant in May 2013. The US subsidiary produces and sells hoses, weather strips and tubes. (From a press release, August 14, 2013)

-In December 2008, HS Automotive Alabama, Inc. has absorbed Hwaseung Detroit Networks, Inc. (From a press release on January 8, 2009)

-In January 2007, the Company established its wholly owned company Hwaseung Detroit Networks, Inc. in Detroit, the U.S. It aims to reinforce sales and marketing activities of automotive parts in the country and North America. (From a press release by the company on Jan. 12, 2007)


-In March 2013, the Company acquired all Hwaseung T&C shares for 50,657 million won. Hwaseung T&C based in Yangsan City, Gyeongsangnam-do produces weather strips and hoses. (From a press release, March 29, 2013)

-The Company spun off its industrial rubber products business, establishing in its place Hwaseung Exwill Co., Ltd. effective April 1, 2007.

Certification

-In January 2012, the Company acquired the Grand 5-Star Quality Certification from the Hyundai Kia Automotive Group. (From a March 16, 2012 press release)

R&D Structure

-The Company established its R&D center in May 1991.

R&D Expenditure (Non-consolidated)

(in millions of won)
FY ended Dec. 31, 2014 FY ended Dec. 31, 2013 FY ended Dec. 31, 2012
Amount 26,695 16,891 14,919
% of sales 4.0% 2.6% 2.3%

Recent Developments (FY ended Dec. 31, 2014)

Area of development Outline
Air conditioner drain hoses with heat-insulating covers -Improves heat-insulating properties
Packing materials for hatch covers -Prevents the deformation of injection stamped hatch cover packing
Oil distribution equipment -Prevents sticking of the rotating member to the fixed member
Tube-socket assemblies -Reinforces sealing between the socket and the tube

Technical Alliance (Licensing-in)

Partner Technology Contract period
Nichirin Co., Ltd. Brake hose Mar. 2013 - Mar. 2016
Air conditioning hose Mar. 2013 - Mar. 2016
Power steering hose Mar. 2013 - Mar. 2016
Power steering hose Mar. 2013 - Mar. 2016

Data

Sales by Products (Consolidated)

 (in millions of won)
FY ended Dec. 31, 2014 FY ended Dec. 31, 2013 FY ended Dec. 31, 2012
Automotive parts Hose, Weather strip 1,480,538 1,385,653 1,243,759
Materials CMB, TPE, Silicon 393,182 406,583 426,950
EPDM 4,768 4,465 5,128
Subtotal 397,950 411,048 432,078
Industrial rubber products Belt, hose, etc. 136,568 142,252 159,842
Others 701,119 574,516 -
Sales total 2,716,175 2,513,469 1,835,679
Internal transaction (1,019,585) (881,190) (402,104)
Total 1,696,590 1,632,278 1,433,575

Production Capacity / Result (Consolidated)

(in millions of won)
Division Company FY ended Dec. 31, 2014 FY ended Dec. 31, 2013 FY ended Dec. 31, 2012
Capacity Result Capacity Result Capacity Result
Automotive parts The Company 287,683 247,761 305,045 240,753 294,383 234,676
Hwaseung Climate Control Industries Co., Ltd. 45,412 44,089 42,797 38,212 32,063 28,627
Hwaseung T&C Co., Ltd. 130,396 110,837 99,512 84,585 - -
Hecheng Vehicle Parts (Taicang) Co., Ltd. 232,569 209,313 225,422 202,880 221,961 199,765
Beijing Hecheng R&A Vehicle Parts Co., Ltd. 43,783 41,594 51,326 48,760 46,585 44,256
HSI Automotives Ltd. 58,375 50,786 62,203 52,250 64,116 54,498
HS Automotive Alabama Inc. 84,926 78,302 60,492 58,012 52,447 47,517
HSTR Otomotiv. San Tic. Ltd. Sti 6,376 5,420 1,291 1,097 - -
Subtotal 889,520 788,102 848,088 726,549 711,555 609,339
Materials Hwaseung Material Co., Ltd. 398,087 275,842 407,960 292,548 438,199 314,758
Hwaseung Special Rubber (Taicang) Co., Ltd 96,785 87,106 95,046 85,542 94,230 84,807
Hwaseung Material India Private Ltd 44,232 30,962 43,894 28,092 28,284 25,173
Subtotal 533,104 393,910 546,900 406,182 560,713 424,738
Total 1,422,624 1,182,012 1,394,988 1,132,731 1,272,268 1,034,077

Capacity Utilization Rate (Consolidated)

 (in millions of won)
Business division FY ended Dec. 31, 2014 FY ended Dec. 31, 2013 FY ended Dec. 31, 2012
Capacity Result C.U.R Capacity Result C.U.R Capacity Result C.U.R
Automotive parts 889,520 788,102 88.6% 848,086 726,548 85.7% 711,555 609,339 85.6%
Materials 533,104 393,910 73.9% 546,900 406,182 74.3% 560,713 424,738 75.7%
Total 1,422,624 1,182,012 83.1% 1,394,986 1,132,730 81.2% 1,272,268 1,034,077 81.3%

* C.U.R: Capacity Utilization Rate

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