Hyundai Mobis_Business Report FY2007

Business Highlights

Highlights in FY2007

Financial Overview (iin billions of won)
- FY2007 FY2006 Rate of
Sales 8,490.9 8,168.0 4.0% - In FY2007, which ended in Dec. 2007, sales at the module business reached 5,648.7 billion won, which made up 66.5 percent of the Company's total revenue.  
Operating income 824.5 816.6 1.0% -
776.6 686.7 13.1% -

Domestic business

-On Jun. 1, 2007, the Company absorbed KASCO, its affiliate making brake products, in order to establish a stable supply structure in the area of brake products. The KASCO facility is now called the Hyundai Mobis Changwon Plant.

Wholly owned subsidiary
The company purchased additional 200,000 shares of IHL held by Eco Plastic Corporation, making the Korean auto lamp supplier its wholly owned subsidiary. It said it spent 15 billion won for the transaction, aiming to strengthen its key auto parts business. (From a press release on Jun. 20, 2007)

New plant
-In Sep. 2007, the Company held a gala groundbreaking ceremony at its new plant site in Gimcheon City. The new facility will make automotive lamps.

Share transfers
ARRK Corporation, a designer and manufacturer of dies based in Osaka, Japan, announced on February 16 that PLAKOR Corporation, which is its consolidated subsidiary, has acquired all 7.6 million shares or a 40 percent share of Eco Plastic held by the Company. PLAKOR paid 3,458 million yen for the deal, and obtaining the management rights of Eco Plastic. PLAKOR was established in 1989 to manufacture dies for bumpers and other automotive products. It is headquartered in Hwaseung city, Korea. (From a news release by the company on Feb. 16, 2007)

The Company will sell off it propeller shaft business to Central Corporation of Korea. The transaction is valued at 19.4 billion won. With this move, It intends to put increased focus on key automotive components, such as brakes and steering systems. (From a press release on Jun. 20, 2007)

Business overseas
-In Oct. 2007, the Company was awarded a contract to supply automotive lamps to Zotye Auto of China. Over a period of five years starting from 2007, the Company's Jiangsu facility will supply Zotye Auto 210,000 sets of automotive lamps, which are worth 30 million US dollars in total.

Mobis America, Inc. established Mobis Georgia, LLC in the U.S. The new company is capitalized at 457.85 million won, which was wholly provided by Mobis America. Mobis Georgia will manufacture and sell automotive module products. (From a press release on Jul. 24, 2007)

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-Czech Republic
The Company announced an establishment of "Mobis Automotive Czech s.r.o." as its wholly-owned subsidiary in Czech Republic. Capitalized at 726 million won, the new company will manufacture and sell module parts. (From a press release by the company on Jan. 17, 2007)

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The Company and more than 10 other auto parts suppliers including Daewon Kangup Co., Ltd. showcased their products at the "2007 Mobis Supplier Expo" held at Volkswagen's (VW) headquarters in Wolfsburg, Germany on Dec. 12 through 13, 2007. Nearly 300 procurement personnel and engineers, who were from VW, Audi, and other automakers invited to the event, attended. Along with 12 products such as cockpit modules, power steering pumps, steering columns, motor-driven power steering (MDPS) systems, and airbags made by the Company, more than 60 other products including powertrain and chassis components manufactured by small and medium size Korean companies were exhibited at the VW development center. Since 2000, it has held similar expositions with these parts suppliers, visiting numbers of global carmakers such as GM, Chrysler, Toyota, Nissan, Honda, and Mitsubishi Motors in efforts to increase sales. (From a press release on Dec. 13, 2007)

Business plans (FY2008)

The Company announced its business plans for fiscal year 2008. In Korea, it targets generating sales of 9,297,400 million won, which is a 9.5 percent increase from FY2007's 8,490,900 million won; and posting an operating profit of 909.1 billion won, a rise of 10.3 percent compared with FY2007''s 824.5 billion won. The Company also aims to increase its sales outside Korea to 6,400 million dollars (up 23 percent year-on-year), which is included in its targeted global revenues of 1.5 trillion won. In terms of production, the Company is poised to strengthen its module business by expanding the production capacity of its core components, building the framework to produce 3 million conventional brake systems (CBSs), 2.87 million anti-lock brake systems (ABSs) and Electronic Stability Control (ESCs) systems, 3.25 million airbag systems, 1.6 motor-driven power steering (MDPS) systems, and 2 million lamps worldwide by 2010. (From a press release on Jan. 30, 2008)


R&D Structure
Facility Location
Yong-in (CarTronics) R&D Center Yong-in,
Shanghai R&D Center Shanghai,
Detroit R&D Center Detroit,
Frankfurt R&D Center Frankfurt,

Area of devlopment
Development of modules
-Chassis modules
-Cockpit modules
-Front end modules

Development of system components
-CBS/ABS/ESP parts
-MDPS/Propeller shafts/Power steering pumps
-Airbag systems

Advanced R&D
-Components for fuel cell cars
-New materials for component development
-Modules for finished cars for overseas market 

Module systems consisting of :
- Chassis
- Driver seat
- Front-end

-Injection systems and IP systems

-Injection systems and IP systems
-Auto parts
-Diesel particulate filters (DePF) and diesel oxidation catalysts (DeOC)

R&D Expenditure (in billions of won)
- FY2007 FY2006 FY2005
Amount 93.4 80.6 98.3
% of sales 1.10% 0.99% 1.30%

In FY2008, the Company will also increase spending on research and development activities by 14.8 percent year-on-year to 126.8 billion won, focusing on hybrid vehicles and fuel cell vehicles as well as cutting-edge technology such as integrated chassis control systems, lane-departure warning systems, and automatic parking systems. (From a press release on Jan. 30, 2008)

Recent developments (FY2007)

The Company manufactured electronic control units (ECUs) and optical sensors, which are core technologies of electric power steering systems. No other Korean manufacturer has ever made these components on its own. The ECUs and sensors are designed to be embedded inside the steering shafts in order to adjust the steering angle and control the motor according to the car's speed. By making these products in-house, the Company will be able to improve cost efficiency, minimize the risk of exchange-rate fluctuations, and establish a stable supply structure to offer core vehicle products. Switching from imports to in-house production is expected to bring in additional sales of 60 billion won to the company. With its capacity to manufacture 800,000 electric power steering systems per year at its plant in Poseung, Gyeonggi-do, the Company currently supplies these products to the Hyundai new Avante XD and i30, and the Kia Cee'd. It will also provide them to the successor models of the Hyundai Verna and the Kia Seraro and aims to expand the application of these products in other vehicles. (From a press release on Nov. 19, 2007)

Technical Alliance (License-in)
Area of alliance Contract period
Production of power steering systems Feb. 17, 2005
Feb. 16, 2015
Automotive Lighting
Technology to design halogen & high-intensity discharge (HID) headlamps Three years from January 19, 2007

Investment Activities

Domestic investments (FY2007)
-In May 2007, the Company built additional lines at its Poseung facility, which is making motor-driven power steering systems (MDPSs). As a result of this expansion project, which cost the Company 7,749 million won, the plant's annual production capacity increased from around 400,000 units to 800,000 units.

-In Jul. 2007, the Company spent 10,388 million yuan in order to raise its ABS production capacity in Cheonan from 1 million units to 2 million units.

Domestic investment project (FY2008)
-The Company plans to invest 29,226 million won in order to increase its capacity to make conventional brake systems (CBSs) in Changwon. It will also spend 34,702 million won in its new lamp facility, which is now under construction in Gimcheon.

Foreign investments (FY2007)
-Czech Republic

The Company held a ground-breaking ceremony at its new plant site in Nosovice, Czech Republic. The Company, which already manufactures auto parts in Slovakia, will invest 56.8 billion won in its second plant in Europe, which will produce modules and be built on 100,000 square meters of land. The new plant will hire around 800 local employees and manufacture complete chassis modules, cockpit modules, and front-end modules for use in Hyundai's strategic models marketed in Europe. It plans to manufacture 300,000 units per year in the Czech Republic by using the same "tunnel conveyor systems" used at Ohio Module Manufacturing Company (OMMC) operated by the Company. In a tunnel conveyor system, module production lines and car assembly lines are connected by tunnel conveyors, which deliver finished module products to the car assembly lines. The Company expects this system to enhance its productivity and cost efficiency and reduce shipping costs by 7 billion won. (From a press release on Aug. 31, 2007)

The Company held a gala groundbreaking ceremony at its new plant site in Georgia, U.S.A. The new facility will be built on 83,000 square meters of land within the premises of Kia's plant. It will manufacture modules for use in SUVs built by the automaker. The Company plans to hire some 600 people at this Georgia Plant, which will become its third production facility in the U.S., following the ones in Alabama and Ohio. The new plant will manufacture 300,000 chassis modules, cockpit modules, and front-end modules per year. It says, "We plan to enhance our production structure further by establishing cooperative relationships among our facilities. For example, our Georgia Plant will manufacture front-end modules and cockpit modules using bumpers and instrument panels produced at our Alabama Plant." (From a press release on Oct. 18, 2007)