NIDEC TOSOK CORPORATION Business Report FY2006
Business Highlights
Financial
overview
Remarks
-Sales in this business unit decreased 1.3% from the previous fiscal year to 5,815 million yen. Although the Company's four types of new products boosted its sales, there was a sharp drop in sales of existing products for the Company's principal customers. As a result, total sales in this business declined.
-Operating profit decreased 3.9%, to 1,386 million yen, compared with that of the previous fiscal year. The profit decline stems from the fact that the Company was not able to make up for its decreased sales in spite of taking bold cost reduction activities such as reducing costs for materials and terms of subcontractor arrangements, and boosting its productivity.
Overseas Operations
The Company announced on May 31, 2006 that it decided to have production of fan motors transferred from Nidec Tosok (Vietnam) Co., Ltd. to Nidec Vietnam Corp., which is the Company's wholly owned subsidiary established in October, 2005. The Company instead plans to expand its activities in the automotive parts business, which will require a larger production area. Nidec Vietnam plans to enter the Vietnamese market by commercially producing motors while Nidec Tosok (Vietnam) will utilize the fan motor production area to produce automotive parts. Production facilities and inventories will be transferred to Nidec Vietnam. (From an article in the Nikkan Jidosha Shimbun on May 25, 2006)
Challenges in the future
1) Progressing with new product development activities and conducting exploitation activities to develop new markets and customers.
2) Implementing rationalization and cost-reduction initiatives in order to enhance its earning capacity
3) Conducting thorough inventory management and working to improve cash flow by controlling accounts receivable.
| (in millions of JPY) | FY2006 | FY2005 | Rate
of Change(%) |
Remarks |
| Overall | ||||
| Sales | 23,430 | 26,518 | (11.6) | - |
| Operating income | 1,809 | 1,905 | (5.0) | - |
| Ordinary income | 1,953 | 1,872 | 4.3 | - |
| Net income | 1,182 | 1,095 | 8.0 | - |
| Automotive Component Business | ||||
| Sales | 15,815 | 16,023 | (1.3) | See below |
| Operating income | 1,386 | 1,442 | (3.9) | |
-Sales in this business unit decreased 1.3% from the previous fiscal year to 5,815 million yen. Although the Company's four types of new products boosted its sales, there was a sharp drop in sales of existing products for the Company's principal customers. As a result, total sales in this business declined.
-Operating profit decreased 3.9%, to 1,386 million yen, compared with that of the previous fiscal year. The profit decline stems from the fact that the Company was not able to make up for its decreased sales in spite of taking bold cost reduction activities such as reducing costs for materials and terms of subcontractor arrangements, and boosting its productivity.
Overseas Operations
The Company announced on May 31, 2006 that it decided to have production of fan motors transferred from Nidec Tosok (Vietnam) Co., Ltd. to Nidec Vietnam Corp., which is the Company's wholly owned subsidiary established in October, 2005. The Company instead plans to expand its activities in the automotive parts business, which will require a larger production area. Nidec Vietnam plans to enter the Vietnamese market by commercially producing motors while Nidec Tosok (Vietnam) will utilize the fan motor production area to produce automotive parts. Production facilities and inventories will be transferred to Nidec Vietnam. (From an article in the Nikkan Jidosha Shimbun on May 25, 2006)
Challenges in the future
1) Progressing with new product development activities and conducting exploitation activities to develop new markets and customers.
2) Implementing rationalization and cost-reduction initiatives in order to enhance its earning capacity
3) Conducting thorough inventory management and working to improve cash flow by controlling accounts receivable.
R&D
R&D Expenditure
Automotive parts
-To deal with the needs for comfortable, safe, fuel efficient, and environmentally friendly automobiles, the Company conducted R&D activities on electronic control technologies. The Company worked to increase its new products and forge technical developments in automatic transmissions, continuous variable transmissions and air-hydraulic control actuators that are capable of satisfying demands for high performance, high quality and global price competitiveness.
-To improve added value, the Company will complete the development and commercialization of electronic-hydraulic control systems for automatic transmissions and CVTs in fiscal year 2006 by leveraging its collective technologies. Furthermore, the Company is concurrently conducting multiple development activities for next-generation control systems and strengthening its development capabilities which includes conducting joint development activities with other companies.
Technological licensing-in agreements (as of March 2007)
Technological licensing-out agreement (as of March 2007)
| (in millions of JPY) | FY2006 | FY2005 | FY2004 |
| Overall | 798 | 666 | 1,051 |
| Automotive parts | 566 | 395 | 648 |
| Motors | - | 42 | 46 |
Automotive parts
-To deal with the needs for comfortable, safe, fuel efficient, and environmentally friendly automobiles, the Company conducted R&D activities on electronic control technologies. The Company worked to increase its new products and forge technical developments in automatic transmissions, continuous variable transmissions and air-hydraulic control actuators that are capable of satisfying demands for high performance, high quality and global price competitiveness.
-To improve added value, the Company will complete the development and commercialization of electronic-hydraulic control systems for automatic transmissions and CVTs in fiscal year 2006 by leveraging its collective technologies. Furthermore, the Company is concurrently conducting multiple development activities for next-generation control systems and strengthening its development capabilities which includes conducting joint development activities with other companies.
Technological licensing-in agreements (as of March 2007)
| Company Name | Partner | Country | Contractual Coverage |
Contract Period |
| Nidec Tosok | Nissan | Japan | Provision of technical information on image processing equipment and licensing of manufacturing and distribution rights | 6 years from June 28, 1993. (Automatic renewal) |
Technological licensing-out agreement (as of March 2007)
| Company Name | Partner | Country | Contractual Coverage |
Contract Period |
| Nidec Tosok | Telster Engineering |
South Korea | Provision of technical information and expertise to manufacture column type air micrometers, AE converters, and column type electric micrometers; and licensing of manufacturing and distribution rights | Five years from December 21, 2000 (Automatic renewal) |
| Nidec Tosok | Kefico | South Korea | Provision of technological information and expertise to manufacture RXC wiring plates and licensing of manufacturing and distribution rights | Eight years from March 24, 2003 |
| Nidec Tosok | Unick | South Korea | Provision of technological information and expertise to manufacture proportional valves for six-speed transmissions and licensing of manufacturing and distribution rights | Five years from May 26, 2007 (Automatic renewal) |
Investment Activities
Capital
Expenditure
Automotive parts
The Company invested mainly in machines and equipment , so it could transfer production to its subsidiary in Vietnam and also win new orders.
| (in millions of JPY) | FY2006 | FY2005 | FY2004 |
| Overall | 3,207 | 1,081 | 4,599 |
| Automotive parts | 3,002 | 572 | 2,068 |
| Motors | - | 201 | 121 |
Automotive parts
The Company invested mainly in machines and equipment , so it could transfer production to its subsidiary in Vietnam and also win new orders.
| New Facilities (Automotive products) | (in millions of JPY) |
| Name (Location) |
Type of facility | Estimated amount of investment | Project Period | Planned increase in capacity | |
| From | To | ||||
| Nidec Tosok
Headquarters Plant (Zama City, Kanagawa Pref.) |
Manufacturing equipment for Automotive Parts | 526 | 2007.04 | 2008.03 | - |
| Nidec Tosok
(Vietnam) Co., Ltd Headquarters Plant (Ho Chi Minh City, Vietnam) |
Manufacturing equipment for Automotive Parts | 839 | 2007.04 | 2008.03 | Investment in new products and to respond to increased production and in-house production.(7% increase) |