DENSO CORPORATION Business report FY2006
|(in billion JPY)||FY2006||FY2005||Rate of Change
|Sales||3,609.7||3,188.3||13.2||- Sales increased year-on-year due to stable car production by Japanese automakers at home and abroad. Aggressive marketing by the sales division also contributed to the rise .|
|Ordinary Income||322.1||283.1||13.8||- Ordinary income rose from the previous year's level as a result of the
increased rate of capacity utilization, thanks to greater sales; and the company's all-out efforts to reduce costs and improve operational efficiencies.
|Sales||3,489.0||3,066.9||13.8||Refer to the following list.|
Sales of Automotive Products
|(in billion JPY)||FY2006||FY2005||Rate of Change
|Heat Devices||1,138.0||1,031.8||10.3||The sales volume of of heat devices increased over that of the previous year due to greater exports and increased sales to European customers.|
|Powertrain devices||830.1||733.5||13.2||Sales of powertrain devices increased year-on-year, thanks to strong sales of diesel engine common rail systems in Europe. Favorable demand for hybrid vehicle products also contributed to the rise.|
|Information and safety systems
||583.9||499.8||16.8||Sales of information and safety systems rose from last year due to the
greater sales of car navigation systems in North America; and strong demand for meters and remote key systems, which reflects the increase of these devices being applied in electronics devices in vehicles.
|Electronic devices||330.0||266.1||24.0||Sales at the electronics device division increased over those of the previous year. The rise was mainly due to stronger sales of alternators and other electronic devices, as well as greater demand for hybrid car parts and safety related products including ECUs for electric power steering systems.|
|Electrical devices||310.7||270.0||15.1||Sales at the electrical device segment rose from what they were last year, thanks to increased vehicle production in Japan; and to strong sales of ECUs and sensors. The application of these ECUs and sensor in electronics devices is growing.|
|Motors||248.8||224.7||10.7||Sales volume at the motor business increased over those of the previous
Sales by region
|(in billion JPY)||FY2006||FY2005||Rate of Change
|Sales||2,541.3||2,289.0||11.0||Domestic sales rose year-on-year, thanks to a greater number of vehicles being produced in Japan, and to increased exports of products designed for the global market.|
|215.3||207.7||3.7||Operating income increased slightly year-on-year despite soaring material prices. The rise was due to an increased rate of capacity utilization, thanks to greater sales; streamlining initiatives by the company; and gains from favorable exchange rate translation.|
|Sales||769.1||690.4||11.4||Although production volume at Japanese automakers' plants remained at the same level as last year, the Company achieved a year-on-year sales increase in the Americas through aggressive marketing activities.|
|29.2||21.9||33.4||Operating income in the Americas rose year-on-year due to an increased rate of capacity utilization, thanks to greater sales; and the company's efforts to improve operational efficiencies.|
|Sales||519.3||423.0||22.8||- The Company achieved year-on-year growth in European sales by increasing the product volume it supplies to both Japanese and European automakers.|
|12.2||1.6||682.6||- Operating income in Europe skyrocketed from what it was last
year, thanks to the following factors:
greater sales in the Czech Republic and Hungary; and significantly improved profitability as a result of various streamlining measures.
|Australia and Asia|
|Sales||480.2||395.1||21.5||Sales in the region increased year-on-year, thanks to strong sales of vehicles made by Japanese and Korean manufacturers in Thailand and China.|
|45.9||36.7||25.1||Operating profit in the region grew year-on-year, due to an increased rate of capacity utilization thanks to greater sales; and the company's efforts to improve operational efficiencies.|
The Company supplies the following products to the Lexus LS460 launched in September 2006:
- the world's first motor-driven electric variable valve timing control systems (VVT-iE);
- New Pre-Crash Safety (PCS) System components such as Stereo Image-Processing ECUs; Driving Assistance ECUs; Front Millimeter-Wave Radars; and Pre-Crash Seatbelt ECUs;
- new air conditioning systems;
- remote security systems;
- and power control ECUs.
>>>See Recent Development for more details
New Joint Ventures
- In October 2006 the Company and Robert Bosch of Germany reached an agreement to establish a 50-50 joint venture company to develop and manufacture diesel particulate filters (DPFs) in Eastern Europe.
>>>See Recent Development for more details
- In December 2006 TD Automotive Compressor Georgia, LLC (TACG) held a grand opening ceremony at its new facility in Georgia, U.S.A. on November 30. TACG is a joint venture between Toyota Industries Corporation and the Company to produce car air-conditioning compressors.
>>>See Capital Investment for more details
- In January 2007, Aisin Seiki Co., Ltd., Toyota Boshoku Corporation, and the Company announced that the three Toyota group companies jointly held an opening ceremony at their two new plants in Foshan City, Guangdong Province, China.
>>>See Capital Investment for more details
The Company announced that it would consolidate all functions of its subsidiary, Denso Elecs Co., Ltd., to its Agui Plant. Denso Elecs manufactures electronic products developed by Denso Wave Inc., such as bar-code readers and IC card readers as well as industrial robots. The company will build a new facility on the premises of its Agui Plant to produce bar-code readers and IC card readers and transfer Denso Elecs' headquarters and electronic product manufacturing plant from the Company's Takatana Plant. With this move, all of Denso Elecs functions will be centered at the Agui Plant. Also, in fiscal 2007 or later, the company will move the development division of Denso Wave, currently located on the same premise as the Company's headquarters, to the Agui Plant. The Company intends to make the Agui Plant a group's mechatronics base through these moves. (From a story in the Nikkan Jidosha Shimbun on Jun. 02, 2006)
The Company has developed "the 2010 mid-term action plan" for five years to 2010 in order to achieve its 10 year management policy, "DENSO Vision 2015." It aims to achieve over 4,000 billion yen for consolidated net sales and 10% for return on equity (ROE) by 2010. Specifically, in product development, The Company plans to develop products that meet the two main market trends of higher performance and lower cost, as well as to develop "the world-best and the first" systems and components. In manufacturing capabilities, the Company sets quality as the top priority and will make its best efforts to achieve zero defects and a safer working environment. As the Company accelerates its global operations, it plans to establish its business structure si so that it is not to negatively affected by currency exchange fluctuations. For that purpose, it will strengthen its global development and design capabilities by utilizing the expertise of its human resources worldwide and will concentrate and disperse production items to create the most efficient operations in the global market. It also aims to achieve autonomous management by local managers at each overseas operation. (From a story in the Nikkan Jidosha Shimbun on Jul 29, 2007)
The Company, which has a 30 percent share of the worldwide automotive air conditioning industry (based on FY 2005 sales), plans to boost the portion in the same market to 35 percent by fiscal 2010. This target is based on the projection that sales of its car air conditioners will increase to 22 million units by fiscal 2010 (compared to the current level of 16.28 million units as of FY 2005) to support growing sales of vehicles built by Japanese automakers especially in emerging nations and the U.S. The Company predicts that the global car air conditioning market will grow by 16 percent to a leve of around 62.80 million units by 2010, and that it can achieve a lgreater growth by the same year. (From an article in the Nikkan Jidosha Shimbun on Feb.19, 2007)
The Company announced on that it has revised its "Green Procurement Guidelines" to expand targets to all suppliers, requesting them to strengthen their environmentally friendly procurement activities. The guidelines are based on the company's long-term environmental policy "DENSO EcoVision 2015," announced last year. Denso group's global environmental activities are being conducted along with these guidelines. The guidelines have been revised to further reduce the use and release of environmentally hazardous substances in total supply chains. The targets are expanded to all suppliers, including equipment, construction and distribution suppliers, in addition to suppliers for parts, materials and secondary raw materials. Also, in addition to the original two areas for activities, that is, establishment of an environmental management system, and management and reduction of the use of environmentally hazardous substances, three new areas are added requesting suppliers to beef up their environmental activities. They include promotion of environmental activities in the production stages at suppliers, introduction of lifecycle assessment, and reduction of carbon dioxide emissions as well as packaging materials in distribution process. (From an article in the Nikkan Jidosha Shimbun on Aug. 25, 2006)
The Company's application it submitted to the Ministry of Economy, Trade and Industry (METI) for the CDM (clean development mechanism) project has recently been approved by the conference on promotion and utilization of Kyoto Mechanism as an official project of the government. METI will support the project and seek its approval by host parties (developing countries) and U.N. operational organizations. Through the CDM project, developed nations and host parties will jointly conduct projects to reduce CO2 emissions, and the developed countries that made investment are able to utilize the reduction to achieve their emission reduction goals. The Company's application is a project to diagnose and improve energy saving of air consumption and supply facilities at its Malaysian plant. The project will officially come into effect after being approved by the Malaysian government and the UN operating organization.(From an article in the Nikkan Jidosha Shimbun on Mar .26, 2007)
|(in billion JPY)||FY2006||FY2005||FY2004||FY2003||FY2002|
The Company announced that it will add 3,590 research and development staff globally, which is broken down to 2,700 in Japan and 890 in other countries, by 2010. This number is an increase over the staff number in 2004. While strengthening basic R&D activities in Japan, it will step up localizing application development to cope with the needs of Japanese automakers expanding their businesses overseas. (From an article in the Nikkan Jidosha Shimbun on Dec. 8, 2006)
In February 2007, the Company decided to establish a technical center in Bangkok, Thailand. In order to support China, India, and other emerging market economies, the new facility will help the Company develop superior products that best meet the needs of each market.
The Company announced on Oct. 26 that it has agreed with Robert Bosch GmbH, Germany, to set up a fifty-fifty joint venture in eastern Europe to develop and manufacture diesel particulate filters (DPFs). These are exhaust-gas aftertreatment devices for diesel-powered vehicles. The joint venture is planned to be established in early 2007 to start production of cordierite DPFs in 2009. As a result of the Euro 5 emission standard, expected to be effective in 2008, DPFs, which clean up particulate matter (PM), are presumed to become standard equipment for all new diesel-powered cars in Europe. The Company and Bosch, both leading global suppliers of diesel engine components, particularly fuel injection devices, will form an alliance and utilize the two companies' technologies and production know-how in order to manufacture high performance and cost-effective diesel particulate filters at an early date. (From an article in the Nikkan Jidosha Shimbun on Oct. 27, 20006)
New Product Development
For the Lexus LS460 released in September 2006, the Company developed the following products providing a high level of environmental sustainability, safety, comfort, and convenience:
The Company developed the world's first Motor-driven Electric Variable Valve Timing Control systems (VVT-iE), which provide better fuel economy and and reduces harmful emission substances;
The Company developed New Pre-Crash Safety (PCS) System components such as Stereo Image-Processing ECUs; Driving Assistance ECUs; Front Millimeter-Wave Radars; and Pre-Crash Seatbelt ECUs;
The Company developed new air conditioning system that provides individually customized air conditioning to each passenger seat. This was made possible by incorporating the world?ｽfs first matrix infrared ray sensor technology that detects the surface temperature of rear seat occupants;
The Company developed the world's first remote security system with remote immobilizer function;
The Company also developed power control ECUs, which helps controlling greater numbers of information equipment installed in vehicles.
Technical Assistance Contracts (As of Mar. 2007)
|Country||Company Name||Product||Contract details||Period|
|Germany||Robert Bosch GmbH||Anti-lock brake/
traction control system
Vehicle Stability Control
Power assist brake
|Licensing of patents||From May. 2005
to Mar. 2020
|Japan||Hitachi, Ltd.||Gasoline EMSs||Licensing of patents||From Jan. 2006
to Dec. 2012
|USA||Delphi Corporation||Gasoline EMSs||Licensing of patents||From May. 2006
to May. 2026
|Japan||Nippon Seiki Co., Ltd.||Measuring instruments||Licensing of patents||From Mar. 2007
to Dec. 2022
|(in billion JPY)||FY2006||FY2005||FY2004||FY2003|
- The planned amount of capital investment for fiscal 2007 is 353 billion yen, of which 351 billion yen is allocated for the automotive sector.
- Investment focus will be on expanding production to support greater demand, and developing compact and light products with enhanced functions for the next generation.
- The Company's new facility at the Kota Plant became operational in June 2006. The plant focuses on the production of IC wafers, allowing the company to respond to the rising demand for ECU systems. The increase in sales of ECUs reflects growth in use of car safety systems such as air bags; and energy saving systems, including electric power steering.
- The Kitakyushu Plant began manufacturing core injector components for common rail systems in December 2006. This enabled the Company to establish its production structure based on three facilities, namely Zenmyo Plant; Siam Denso Manufacturing in Thailand ; and the Kitakyushu facility. The Zenmyo Plant and Siam Denso are already in full operation.
Aisin Seiki Co., Ltd., Toyota Boshoku Corporation and the Company, three companies in the Toyota group, announced that they held a joint opening ceremony of Aisin Seiki Foshan Body Parts Co., Ltd. (ASFB) and Toyota Boshoku Foshan Co., Ltd. (TBFC) on January 22nd (local time). ASFB is a subsidiary of Aisin Seiki and TBFC is a joint venture between Toyota Boshoku and the Company. ASFB has been producing electric sunroofs and motor housings for power seats from May 2006. TBFC started its production of oil filters for China and other Asian markets in July 2006 and it plans to expand its production for the European market in 2007. ASFB expects annual sales of approx. 377 million yuan (about 5.67 billion yen) while TBFC is planning to achieve about 100 million yuan (about 1.5 billion yen) in 2007. (From an article in the Nikkan Jidosha Shimbun on Jan. 24, 2007)
The Company announced it will build a new plant at its subsidiary in Turkey producing air conditioners, Denso Otomotiv Parcalari Sanayi Anonim Sirket (DNTR), to expand its production capacity. The new plant is scheduled to start operation in August 2007. DNTR is currently producing 140,000 automotive air conditioners per year, which it plans to raise to 250,000 units by 2010 with establishment of the new plant. In addition to automotive air conditioners, starters and alternators will be produced. The total investment through FY2007 will be approx. 2.4 billion yen. (From an article in the Nikkan Jidosha Shimbun on Apr. 6, 2006)
The Company announced that it will expand Denso Manufacturing Hungary Ltd. (DMHU) in a bid to reinforce production capacity of diesel common rail systems, which have been enjoying strong sales in Europe. The construction work will begin in April 2007 with a total investment of 38.3 million euros (approx. 5.7 billion yen). The facility will start operations in January 2008. The Company expects that this expansion will increase annual production to one million units from the present 650,000. (From an article in the Nikkan Jidosha Shimbun on Nov. 17, 2006)
Denso Sistemas Termicos Espana S.A. became operational in April 2006. The Spanish company will support increasing sales of car air conditioning systems in Europe.
The Company announced that it will expand its Kentucky plant in the U.S. to increase the production of components for fuel injection systems. It plans to start operations of the plant in June 2007, aiming to more than double sales (to 18 billion yen) in fiscal year 2010 or more compared with approx. 8.4 billion yen recorded in 2005. The plant is Kyosan Denso Manufacturing Kentucky, located in Mt. Sterling, Kentucky. An investment of 3.1 billion yen will be for the new plant consisting of 7,850 square meters within the existing premises in order to increase the production of automotive fuel pump modules, along with their components such as fuel filters and flanges. In conjunction with this expansion, the Company made an additional investment of about 1.8 billion yen in July 2006. Construction will begin in August and be completed by March 2007 to be ready for production. Sales at the Kentucky plant amounted to approximately 8.4 billion yen for fiscal 2005, and are expected to be increased to 18 billion yen by fiscal 2010. (From an article in the Nikkan Jidosha Shimbun on Aug. 9, 2006)
TD Automotive Compressor Georgia, LLC (TACG), held a grand opening ceremony at its new facility on November 30. TACG is a joint venture between Toyota Industries Corporation and the Company to produce car air-conditioning compressors. TACG, which also is the second joint venture between the two companies to produce car air-conditioning compressors in North America, began producing variable displacement compressors in December 2005. TACG's variable displacement compressors are currently supplied for the Toyota Camry and Chrysler Sebring, and TACG expects to produce 950,000 units in fiscal year 2006. Also TACG plans to annually produce two million units of variable displacement compressors by 2010. (From an article in the Nikkan Jidosha Shimbun on Dec .2, 2006)