Denso Corporation Business Report FY2009

Business Highlights

Financial Overview

(in billion JPY)
  FY2009 FY2008 Rate of Change
Sales 2,976.7 3,142.7 (5.3) 1)
Operating income 136.6 (37.3) - -
Ordinary Income 152.7 (35.3) - -
Net Income 73.4 (84.1) - -
Automotive business
Sales 2,927.7 3,042.7 (37.8) 2)
Operating income 142.0 (11.5) - -

-The market showed a sign of recovery, stimulated by economic policies implemented by various countries. The level of recovery was most significant in Asia, especially in China. Sales, however, decreased year-on-year due to negative currency translation, in addition to other factors.

-Sales in Japan decreased by 4.9 percent year-on-year to 2,041.3 billion yen because of a decline in vehicle production volume in Japan as well as losses from negative currency translation, which more than offset an increase in exports of components designed for vehicles produced overseas.

<The Americas>
-Sales in the Americas dropped by 4.9 percent year-on-year to 532.2 billion yen due to a decrease in vehicle production in the U.S.

-Sales in Europe fell by 11.1 percent year-on-year to 411.1 billion yen, because of a reduction in vehicle production.

<Australia and Asia>
-Sales in the region rose by 5.2 percent year-on-year to 534.1 billion yen, supported by an increase in vehicle production by Japanese automakers in China and a recovery in sales in ASEAN countries.

Heat Devices
-Although sales of air conditioner compressors to Toyota and European carmakers increased, overall sales of heat devices decreased by 10.4 percent year-on-year to 901.7 billion yen due to a fall in vehicle production volumes by other carmakers around the world.

Powertrain devices
-Sales of powertrain devices fell by 7.8 percent year-on-year to 684.4 billion yen, because of a decrease in production by global automakers and a drop in sales of diesel common rail systems in Europe.

Information and safety systems
-Sales of information and safety systems rose by 11.7 percent year-on-year to 526.8 billion yen, supported by increased requirements for car navigation systems and other devices from Toyota.

Electronic devices
-Sales of electronics devices fell by 9.5 percent year-on-year to 265.8 billion yen due to a decrease in sales of starters and alternators from Japanese automakers that had reduced their production volumes.

-Sales of electrical devices increased by 8.9 percent year-on-year to 297.3 billion won, thanks to strong sales of ECUs to Toyota.

-Sales of motors climbed 1.9 percent from the previous year's result to 222.5 billion yen because of increased requirements for wiper systems and power window motors from Toyota.


-The Company has developed the world's first air conditioner system using an ejector and it will be installed on the new Prius of Toyota, the Company announced.

-The Company announced that it has developed a battery monitoring unit for lithium-ion batteries used in vehicles. The new monitoring unit is installed in the Toyota Prius Plug-in Hybrid.
>>>See R&D for more details

Recent Developments in Japan

-The Company, Freescale Semiconductor, and TRW Automotive Holdings Corp. announced that they have formed an industry consortium to drive further development and deployment of the Distributed Systems Interface (DSI) Standard, a communication standard for automotive safety systems. The consortium will promote development of advanced DSI standards and expansion of the range of application, while seeking broader participation by the automotive industry. DSI is designed to connect remotely placed sensors to the main airbag electronic control unit in automobiles in order to ensure safe use of each airbag. Deployment of the system will help automakers improve connection performance and reduce weight of wire harnesses. (From an article in the Nikkan Jidosha Shimbun on Sep. 10, 2009)

-The Company will accelerate its efforts on improvement of automotive semiconductor production. By achieving high productivity through production process reviews and other efforts, it aims to enhance itself so as not to be affected by demand variation. Revamping of operations at its semiconductor plants has made less progress compared to other products' plants. Along with increasing electronics in powertrains as seen in hybrid and electric vehicles, however, demand for automotive semiconductors is expected to grow in the area of powertrain in addition to the area of control systems. Semiconductors for its products are currently manufactured at its Kota Plant, Kota-cho, Nukata-gun, Aichi Pref. and its subsidiary, Denso Electronics Corp., Chitose, Hokkaido Pref. Its LSI (large-scale integration) is produced also at the Takatana Plant, Anjo, Aichi Pref. By reinforcing production improvement efforts at these semiconductor manufacturing operations, the Company aims to raise its capabilities for in-house manufacturing of demand-expanding semiconductors. (From an article in the Nikkan Jidosha Shimbun on Sep. 18, 2009)

Recent Developments Outside Japan

-The Company announced that it has agreed with Robert Bosch GmbH to discontinue their joint venture to develop and produce diesel particulate filters (DPF). They founded Advanced Diesel Particulate Filters Sp.zo.o. 50/50 joint venture, Wroclaw, Poland in July 2007, which was to manufacture DPF substrates using cordierite ceramics from 2009. With the European market downturn triggered by the worldwide recession started last fall, however, the expected demand cannot be anticipated any more. Robert Bosch will take up the plant building under construction with no plan to manufacture DPF independently. (From an article in the Nikkan Jidosha Shimbun on May 21, 2009)

-The Company announced that it will combine sales, service and logistics functions of its two subsidiaries, a manufacturing company and a holding company in Australia, on Apr. 1, 2010. As the Australian tariff for import cars will be reduced from 2010, the import car ratio in sales is expected to rise. By improving management efficiency of the local operations, the Company aims to prepare itself to better serve its clients, local vehicle manufacturing plants. Specifically the Company is integrating Australian Automotive Air Pty. Ltd. (AAA), which produces car air conditioning systems, radiators and instrument clusters, and sales, service and logistics functions at Denso International Australia Pty. Ltd. (DIAU), its holding company in Croydon, Victoria, into AAA. Taking this opportunity, AAA will change its name to Denso Automotive Systems Australia Pty. Ltd. (DNAU). DIAU will continue to be a holding company. (From an article in the Nikkan Jidosha Shimbun on Nov. 19, 2009)

New Company

-The Company announced that it will establish a new company in Tangier, Northern Morocco to manufacture car air conditioning systems. The production facility is scheduled to be completed in April 2011 and start operations in December the same year. The new company will be called Denso Thermal Systems Morocco S.A.R.L. It will be capitalized at 2.5 million euros (303 million yen), which will be fully provided by Denso International Europe B.V. The Group plans to invest 11.4 million euros (1,381 million yen) by fiscal year 2011, aiming to generate 12 million euros (1,454 million yen) in sales in fiscal year 2013. (From an article in the Nikkan Jidosha Shimbun on Mar. 24, 2010)

>>>Financial Forecast for the Next Fiscal Year(Sales, Operating Income etc.)

Outlook for FY2010

(in billions of JPY)
Year-on-year Fluctuation
Sales 3,060.0 2,976.7 83.3
Operating income 138.0 136.6 1.4
Ordinary income 150.0 152.7 (2.7)
Net income 98.0 73.4 24.6
R&D Expenditure 285.0 270.1 14.9
Investment Expenditure 143.0 111.4 31.6
-Japan 92.0 75.0 17.0
-North and South America 13.0 10.2 2.8
-Europe 13.0 13.0 0
-Oceania 25.0 16.3 8.7


Sales by Region

(in billion JPY)
  FY2010 FY2009 Year-on-year Fluctuation
Japan 2,075.0 2,041.3 33.7
North America 544.0 532.2 11.8
Europe 404.0 411.1 (7.1)
Oceania 562.0 534.1 27.9


R&D Expenditure

(in billion JPY)
  FY2009 FY2008 FY2007
Overall 270.0 297.1 311.5
Automotive business 263.6 288.3 302.5

-The Company has decided that it will maintain the FY 2009 level for its FY 2010 R&D expenditure. The Company had a policy to limit its R&D expenditure to approx. 8% of the sales amount. The Company will replace its budgeting policy linked to sales by the buildup approach based on issues since it needs to enhance its efforts for future innovative technologies as well as addressing the high needs for environmental responsiveness and safety. (From an article in the Nikkan Jidosha Shimbun on Jan. 5, 2010)

R&D Structure

-In 1991, the Company established Denso Research Laboratory in Aichi Prefecture. The Laboratory is involved with semiconductor electronics, information technology, human-machine-interface technology and other areas. As of March 31, 2010, the laboratory has a workforce of 420.

R&D Activities

-The Company developed what is called Energy Management Technology, which is designed to increase energy efficiency, reduce load levels, and promote the use of regenerative systems in an integrated manner. Integrating these technological systems enhances fuel efficiency.

-The Company announced that the Company will work to improve the fuel efficiency of gasoline-powered vehicles by approximately 20 percent by around 2013 to 2015. In order to achieve this major challenge, it is planning to leverage a number of energy management-related systems that contribute to optimizing the overall energy efficiency of a vehicle. These technologies include a regeneration system during deceleration, a car navigation-cooperative system, and an air conditioning system utilizing cold storage. In addressing the fuel efficiency issues, the Company has given an eye on the fact that under the current technology, as much as 80 percent of fuel energy is being wasted as heat. (From an article in the Nikkan Jidosha Shimbun on Oct. 23, 2009)

Product Development

Exhaust gas temperature sensor
-The Company announced that it has developed an exhaust gas temperature sensor with improved temperature detection accuracy. The sensor is equipped with a newly developed sensing element, which improves detection accuracy to plus or minus 10 degrees Celsius from the plus or minus 30 degrees Celsius offered by conventional products. The sensor will be installed on diesel commercial vehicles to be released in the U.S. in fall 2009, as well as in vehicles to be launched in both Japan and Europe in and after 2010. The Company increased the probe length of the sensor to almost twice that of conventional products, which allowed the sensing tip to be put more deeply into the exhaust pipe. The Company achieved this by developing a vibration-resistant structure with an anti-resonance pipe to support the probe at its optimal position. These techniques resulted in higher detection accuracy of the most intensely heated, core part of the diesel particulate filter, contributing to cleaner diesel emissions and better fuel efficiency. The Company plans to incorporate the vibration-resistant sensor technology into the gasoline-powered vehicles with turbochargers as well. (From an article in the Nikkan Jidosha Shimbun on Apr. 22, 2009)

Air conditioner system
-The Company has developed the world's first air conditioner system using an ejector and it will be installed on the new Prius of Toyota, the Company announced. The new system reduces the power consumption of the compressor, which accounts for about 60 percent of the total energy consumption of the air conditioning system, by up to 25 percent. The ejector installed in the new air conditioner is a cylinder about 20 centimeters long with a diameter of about 1 centimeter. Part of liquefied refrigerant that has passed through the condenser is compressed when it flows through the ejector by being injected from a nozzle with a 1.5 millimeter diameter. The air conditioner refrigerant is generally compressed by the compressor, while the new system enables it to be compressed to a certain level through the ejector before it reaches the compressor. (From an article in the Nikkan Jidosha Shimbun on May 20, 2009)

Dual injector system
-The Company announced that the Company and Nissan Motor Co., Ltd. have jointly developed a dual injector system, which is designed to improve fuel efficiency in small-displacement gasoline engines. The new technology will be featured on production vehicles with 2-liter or smaller engines, starting at the beginning of 2010. The fuel delivery system uses two injectors per cylinder rather than one as in conventional port fuel injection engines. Nissan says no other automaker has ever mass produced a vehicle with such engine. The dual injector system results in smaller fuel droplets, which makes combustion performance more stable. It also adds continuous valve timing control on the exhaust side to conventional intake-side control, reducing pumping losses and raising fuel efficiency by approximately 4 percent compared with existing gasoline-powered engines in the same class. The technology, which generates less hydrocarbon emissions, also halves the amount of precious metals used in the catalyst. (From an article in the Nikkan Jidosha Shimbun on July 15, 2009)

Next generation idling stop mechanism
-The Company has developed the nation's first next generation idling stop mechanism to be installed on hybrid light-duty trucks. The new technology, which has been developed jointly by the Company, Toyota and the commercial vehicle division of Toyota Auto Body, allows electricity charged in batteries for a hybrid vehicle to be supplied to mounted auxiliary units like freezing equipment to run its operation during the engine stop. By using this system, the driver can maintain quality of loaded cargo while applying the idling stop device. The Company is looking to commercialize the technology within two or three years by continuing its efforts to optimize its specifications. (From an article in the Nikkan Jidosha Shimbun on Nov. 10, 2009)

Battery monitoring unit for lithium-ion batteries
-The Company announced that it has developed a battery monitoring unit for lithium-ion batteries used in vehicles. The battery monitoring unit is designed to detect a battery's voltage, current, temperature, and other parameters to enable high-voltage batteries to be used safely and efficiently. The voltage control circuit featured in the new system is simpler and less expensive compared with those used in conventional monitoring units. The new monitoring unit is installed in the Toyota Prius Plug-in Hybrid. The Company's new voltage control method detects the average voltage of all cells and uses a simple logic circuit to detect if a cell is operating at a higher voltage than the average and make it discharge. The simple new method yet offers the same level of monitor performance as that achieved by the existing technology using sophisticated, analog-digital conversion circuits. (From an article in the Nikkan Jidosha Shimbun on Jan. 13, 2009)

Technological Alliance

-Honeywell announced that it has granted DENSO Corporation and DENSO International America, Inc. rights under patented technology for automotive multimedia and Global Positioning System (GPS) navigation devices. (From a press release on Apr. 7, 2009)

Major Technical Contracts

(As of Mar. 31, 2010)

Product Coverage Contract Term
Robert Bosch GmbH
-Anti-lock brake
-Traction control system
-Vehicle stability control
-Power assist brake
Acquiring licenses to use patented technology May 8, 2005 -
Mar. 15, 2020
Hitachi, Ltd.
-Gasoline EMSs Licensing of patents Jan. 1, 2006 -
Dec. 31, 2012
Delphi Corporation
-Gasoline EMSs Licensing of patents May 10, 2006 -
May 10, 2026
Nippon Seiki Co., Ltd.
-Instrument clusters Licensing of patents Mar. 21, 2007 -
Dec. 26, 2022
Doowon Heavy Industrial Co., Ltd.
-A/C systems Licensing of patents and expertise Feb. 19, 2008 -
Feb. 18, 2013
Delphi Corporation
-Variable bulb timing Licensing of patents Feb. 26, 2008 -
Apr. 23, 2018

Investment Activities

Capital Expenditure

(in billion JPY)
  FY2009 FY2008 FY2007
Overall 114.4 314.4 343.8
Automotive business 113.5 309.9 338.5

Investments in Japan

-The Company announced that it will start construction of a new plant in Fukushima Pref., Japan, which has been postponed due to the declining needs for new cars. Its subsidiary, Denso East Japan Corp., will invest approx. five billion yen to build a plant for car air conditioning systems and other products, aiming to start operations in May 2011. The new plant will be located at the Western Tamura Industrial Park, Tamura-shi, Fukushima Pref. The site area is approx. 237,000 m2 and the total floor area will be approx. 10,600 m2 at the start of operations. The projected sales for FY 2011 are approx. six billion yen. (From an article in the Nikkan Jidosha Shimbun on Jan. 22, 2010)

Investments Outside Japan

-The Company will expand its car air conditioner plant in India. The Indian facility, Denso Kirloskar Industries Pvt. Ltd., was established in 1998, with the Company investing 89 percent of the capital. The Company is investing additional 2.5 billion yen in the plant in order to more than double the plant's floor area, which now totals 5,400 square meters, to 14,400 square meters. From the late 2010, the Indian Plant will produce air conditioners for low-priced, "Entry Family Car" that Toyota Motor Corporation is going to start assembling in the country at the end of 2010. Denso Kirloskar Industries, which currently employs 270 people, is manufacturing and selling car air conditioner systems, their components, and radiators for local plants of Honda Motor Co., Ltd. and Suzuki Motor Corporation. (From an article in the Nikkan Jidosha Shimbun on Dec. 7, 2009)

-The Company announced that Denso do Brasil Ltda. (DNBR), its subsidiary, will establish a new plant in Brazil to manufacture car air conditioning systems. The Company aims to boost sales of its existing products and win orders for new products so as to support growing demand for automobiles in the country. The Company will invest 65 million Brazilian real (approximately 3.2 billion yen) in this expansion project, planning to start production operations in January 2011. The facility will be located on 300,000 square meters of land in Santa Barbara d'Oeste City, Sao Paulo State and employ 315 people. In line with the establishment, existing operations at DNBR's sub plant in Pindamonhangaba City, Sao Paulo State will be transferred to the new facility. (From an article in the Nikkan Jidosha Shimbun on Mar. 17, 2010)

Planned Capital Investments

(As of Mar. 31, 2010)

-The Company plans to invest a total of 143 billion yen in capital investments during fiscal 2010, which ends on March 31, 2011.
-Among the total, 142 billion yen will be spent on its automotive business mainly to increase production capacity in order to respond to automakers' production launches of next-generation and new vehicle models.