Taiho Kogyo Business Report FY2008

Business Highlights

Financial Overview (In million yen)
- FY2008 FY2007 Rate of Change Factors
Overall
Sales 90,152 108,883 (17.2) Sales decreased due to sluggish auto sales worldwide, mainly in North America.
Operating income (1,223) 5,756 - Income dropped due to a significant decline in sales.
Ordinary income 1,393 5,620 -
Net income 1,812 3,695 - -
Automotive Component Business
Sales 71,248 87,653 (18.7) -
Operating income 2,421 8,571 (71.8) -

Nippon Gasket Consolidates Functions in New Headquarters

In August 2008, Nippon Gasket Co. Ltd., the Company's subsidiary, moved its headquarters to Toyota, Aichi Prefecture, from Higashi Osaka, Osaka Prefecture, in order to consolidate all its planning, management and marketing departments under one roof at its new headquarters. These departments used to be located both in Osaka and Toyota. The headquarters is also geographically closer to its No.1 client, Toyota Motor Corporation, and to its parent company. Nippon Gasket intends to improve its work efficiency by undertaking this move.

Business Results forecast (in millions JPY)
- FY2009 FY2008 (actual) Rate of change
Sales 68,000 90,152 (24.6%)
Operating income (3,200) (1,223) -
Ordinary income (2,700) (1,393) -
Net income (1,700) (1,812) -

Sales forecast by business (in millions JPY)
- FY2009 FY2008 (actual) Rate of change
Bearings 23,840 30,422 (21.6%)
Die-casting 12,570 15,051 (16.5%)
Gaskets 8,460 10,063 (15.9%)
ASSY products 12,820 15,710 (18.4%)
Equipment 10,140 18,686 (45.8%)

Sales forecast by customer (in millions JPY)
- FY2009 FY2008 (actual) Rate of change
Parts for Toyota 34,507 39,009 (11.5%)
Equipment for Toyota 8,726 15,485 (43.6%)
Toyota group 6,811 10,271 (33.7%)
Others 17,956 25,387 (27.3%)

R&D

R&D Structure

-The Company set up its R&D structure so that it can address diverse issues under a consolidated framework consisting of several divisions such as the basic research division dealing with tripology (friction/wear/lubrication technology) and other themes; the product development division; and the production technology development division, all working at the  Main Technology Building.

-In addition to the above, the Company also has a friction technology research center, an engine experiment center, and a production technology development center.

R&D Expenditure (In million yen)
  FY2008 FY2007 FY2006
Overall 1,465 1,501 1,542
Automotive parts business 1,428 1,408 1,440

R&D activities in recent years (Automotive Parts Business)


1. Sliding bearings:

-The Company was successful in producing engine bearings, which are compatible with high performance engines; special bearings, which are used in compressors; and also various other bearings.

-In the area of engine bearings, the Company developed and launched both copper and aluminum bearings with overlays that are both completely lead-free.

-The company successfully developed overlay materials using lead-free, solid lubricants to meet recent needs for enhanced engine performance. These materials are being used on major vehicle models in and outside Japan. The Company was successful in conducting sales activities that increased its global presence, as it won new supply agreements from overseas makers with which it had never transacted business before.

-The Company developed overlay materials which use lead-free solid lubricant.

-The Company developed soft metal overlay materials.

-The Company's lead-free bearings are now used in hybrid engines.

-The Company completed a line up of lead-free bushes and applied them to transmissions and other products.

2. Die-casting products

-The Company developed and commercialized sleeves for oil control valves. It is currently supplying them to manufacturers both at home and abroad.

-The Company developed and commercialized cam housings and further developed highly-functional products such as differential gear carriers.

3. Electronics assembly business

-The Company developed and commercialized coils and core assemblies for solenoid valves, parts for continuous variable valve timing systems, and EGR valves for small-diesel and large-diesel engines.


-The Company   successfully developed electronic control EGR valves that offer precise control and a large volume of flow. These were designed in compliance with new long-term exhaust emission regulations for commercial vehicles that started from October 2005.

-The Company developed and commercialized cam housings and is currently conducting R&D activities to expand their application to more sophisticated parts such as differential carriers.

4. Balance weight business

-The Company commercialized lead-free balance weights. It was successful in developing lead-free, clip-on balance weights like those being used in overseas markets.

-The Company The Company also started commercial production of stick-on balance weights.

5. Gasket business

-The Company's subsidiary, Nippon Gasket, enhanced its development capabilities in the area of metal-head gaskets.

Investment Activities

Capital Expenditure (In million yen)
  FY2008 FY2007 FY2006
Overall 7,193 9,645 9,240
Automotive Parts Business 7,468 9,066 8,674

Automotive Parts Business (FY2008)

-In this business segment, capital investment focused on expanding production capacity and maintaining and updating manufacturing facilities.

-In Japan, the Company's subsidiary, Taiho Gifu Co., Ltd., invested in manufacturing facilities that produce bearing products.

-At Taiho Kogyo Corporation of Yantai, the Company expanded the facilities producing bearings. NHK Gasket (Thailand) Co., Ltd. of Thailand obtained a site for constructing a new plant. 

New facilities (Automotive Parts Business)

The Company's Group plans to invest 2.7 billion yen in FY2009, which ends on March 31, 2009. The breakdown of major investments is as follows.
Plant Facilities to be built Planned investment (million JPY) Objective
The Company
Headquarters and Headquarters plant
(Aichi Pref., Japan)
Production facilities to manufacture die casting products 646 Maintenance and renewal
Hosoya plant
(Aichi Pref., Japan)
Production facilities to manufacture bearings, etc.

220

New products
Earthquake reinforcement work on buildings 115 Basic investment
Shinohara plant
(Aichi Pref., Japan)
Precision mold facilities 142 Maintenance and renewal
Kyushu plant
(Kagoshima Pref., Japan
Production facilities to manufacture bearings, etc. 93 New products
Koukai plant
(Aichi Pref., Japan)
Production facilities to manufacture bearings, etc. 220 New products
Toki plant
(Aichi Pref., Japan)
Production facilities to manufacture assembly products 63 Maintenance and renewal
Subsidiaries
Taiho Seiki Co., Ltd.
Headquarters and Headquarters plant
(Aichi Pref., Japan)
facilities where design and development activities can be conducted, and facilities for manufacturing automotive suspension components  150 Expansion, increasing production capacity, maintenance and renewal
Taiho Gifu Co., Ltd.
Headquarters and Headquarters plant
(Gifu Pref., Japan)
Production facilities to manufacture die casting products 138

Expansion, increasing production capacity, maintenance and renewal

Nippon Gasket Co., Ltd.
Headquarters
(Aichi Pref., Japan)
Renovation of headquarters building 60 Basic investment
Nippon Gasket Co., Ltd.
Shiga Plant
(Shiga Pref., Japan)
Production facilities to manufacture gasket products 247 R&D, maintenance and renewal
Renovations of building exteriors 14 Basic investment
Taiho Corporation of America
Headquarters and Headquarters plant
(Ohio, USA)
Production facilities to manufacture bearings, etc. 145 New products, maintenance and renewal
PT. Taiho Nusantara
Headquarters and Headquarters plant
(Karawang, Indonesia)
Production facilities to manufacture bearings, etc. 117 Expansion, increasing production capacity
Taiho Corporation of Europe
Headquarters and Headquarters plant
(Ujhartyan, Hungary)
Production facilities to manufacture bearings, etc. 57 Maintenance and renewal
Taiho Corporation of Korea
Headquarters and Headquarters plant
(Daegu, Korea)
Production facilities to manufacture bearings, etc. 10 Maintenance and renewal
Taiho Kogyo Corporation of Yantai
Headquarters and Headquarters plant
(Yantai, China)
Production facilities to manufacture bearings; and installation of plating lines 238 Expansion, increasing production capacity, maintenance and renewal
Taiho Manufacturing of Tennessee LLC
(Tennessee, USA))
Production facilities to manufacture gasket products 44 New products
Nippon Gasket (Thailand) Co., Ltd.
(Samut Prakan, Thailand)
Production facilities to manufacture gasket products 37 Expansion, increasing production capacity