Taiho Kogyo Co., Ltd Business Report FY2012

Business Highlights

Financial Overview

(in million JPY)
  FY ended Mar. 31, 2012 FY ended Mar. 31, 2011 Rate of Change (%) Remarks
Overall
Sales 81,809 78,656 4.0 -
Operating income 3,565 2,902 22.8 -
Ordinary income 3,887 3,040 27.9 -
Net income 2,005 2,036 (1.5) -
Automotive Component Business
Sales 70,905 69,759 1.6 -
Operating income 7,483 7,037 6.3 -

 

Contracts

-The Company's new type of plastic (RA) coated bearing, designed for eco-cars, is being equipped on the Lexus "GS450h". It has been featured on the vehicle since January 2012. This latest bearing reduces starting torque by 30%.

-The Company's latest plastic (RA) coated bearing designed for lower priced vehicles is being equipped on the Honda "N-BOX". It was first equipped in November 2011.

Acquisition
-The Company said on March 28 that it will acquire Chang Zhou Hengye axle bush Material Co., Ltd. (WBM), a major Chinese supplier of aluminum bearing materials. Taiho, which already has its own plant for bearings in China, intends to establish a comprehensive local production structure by adding a materials supplier under its management. By signing a contract by April, the Japanese supplier of automobile bearings will acquire a 100 percent stake in the Chinese materials manufacturer at a cost of around 570 million yen. Taiho is aiming to ensure product quality to meet needs of Japanese automakers through transplant of expertise on Japanese production engineering. (From an article in the Nikkan Jidosha Shimbun on March 30, 2012) 

Recent Development Outside Japan

<Hungary>
-The Company announced that its consolidated subsidiary in Hungary, Taiho Corporation of Europe, will open a new sales office, Taiho Corporation of Europe KFT., Dusseldorf Branch Office (TCED), in Germany. The new office will be operational in April 2012. (From a press release on February 2, 2012)

Outlook for FY ending Mar. 31, 2013

(in million yen)
  FY ending Mar. 31, 2013
(Estimate)
FY ended Mar. 31, 2012
(Result)
Rate of Change
(%)
Sales 88,000 81,809 7.6
Operating profit 4,600 3,565 29.0
Ordinary income 4,400 3,887 13.2
Net income 2,600 2,005 29.7

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

R&D

R&D Expenditure

(in million JPY)
  FY ended Mar. 31, 2012 FY ended Mar. 31, 2011 FY ended Mar. 31, 2010
Overall 3,020  2,496 1,499
Automotive parts business 2,810  2,398 1,419

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 Activities

Automotive Parts Business
<Bearing Business>
-The Company was successful in producing engine bearings that are compatible with high performance engines; special bearings that are used in compressors; and also various other types of bearings. The Company in particular, is working in an area requiring attention, that of lowering friction in order to reduce fuel consumption.  

-The Company's lead-free bearings, which are being equipped on environmentally friendly hybrid engines, are recognized as being highly reliable due to the RA coating that can respond to frequent starts and stops. The Company is currently working on R&D activities to develop next-generation coatings.

-The Company successfully reduced the number of processes required to produce bearings by 40%. During FY2012, the Company is actively working to maintain the cost advantages at its plants in Japan. Later, it will then do so outside Japan.

<Die-casting products>

-The Company has been mass-producing diecast products in which thin-walled-diecasting technology has been effectively applied to make the products lighter. In addition, it is making diecast products that are lower in cost as a result of eliminating the need for machining, and by optimizing cooling and fluidity through fluidity analysis based on CAE.


<Electronics assembly business
>
-The Company developed, and has started mass producing, electronically controlled EGR valves that ensure a high degree of precision as well as a generous amount of flow, complying with the New Long-term Gas Emission Regulations for Commercial Vehicles that went into effect in October 2005.

-The Company has been mass-producing EGR valves that comply with the post New Long Term Exhaust Gas Regulations of 2009 in Japan, and with 2010 exhaust gas regulations in the U.S.A. These valves have been awarded the Technical Development Award two years in a row from Hino Motors.

-The Company developed, and has started commercial production of, a new-type vacuum pump, which is capable of generating negative pressure and can be equipped on engines with totally renewed air-intake systems, which are the types of engines currently in compliance with environmental standards.

<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 also started commercial production of stick-on balance weights.

<Gasket business>
-In working on metal head gaskets for engines, the Company collaborated closely with its customers by making use of the CAE technology and expertise that Nippon Gasket Co., Ltd. (its consolidated subsidiary) has. 

Investment Activities

Capital Expenditure

(in million JPY)
  FY ended Mar. 31, 2012 FY ended Mar. 31, 2011 FY ended Mar. 31, 2010
Overall 6,123  2,456 1,890
Automotive Parts Business 4,789  2,391 1,654

Automotive Parts Business

-The Company made capital investments to switch over to producing new products and to increase its production capacity.

-In Japan, the Company made capital investments in its consolidated subsidiaries to switch over to producing new products and to increase its production capacity. It invested mainly in Taiho Gifu, where the Company invested in new facilities and equipment to produce bearings.

-Outside Japan, the Company invested mainly to switch over to producing new products and to increase its production capacity, especially at Taiho Corporation of America, where the Company installed equipment in order to switch production to handle new bearing products.

New Facilities (Automotive Parts Business)

-The Company plans to spend 8,000 million yen to make capital improvements during the 2013 fiscal year. The breakdown is according the projects listed below.
Plant Facilities to be built Planned investment
(in million JPY)
Objective
Taiho Kogyo Co., Ltd.
Headquarters and Headquarters plant
(Aichi Pref., Japan)
Production facilities to manufacture die casting products, etc. 252 Respond to switching over to producing new products, and maintain and renew facilities
Taiho Kogyo Co., Ltd.
Hosoya plant
(Aichi Pref., Japan)
Production facilities to manufacture bearings, etc.

1,456

Respond to switching over to producing new products, and maintain and renew facilities
Taiho Kogyo Co., Ltd.
Shinohara plant
(Aichi Pref., Japan)
Production facilities to manufacture assembly products 362 Respond to switching over to producing new products, and maintain and renew facilities
Taiho Kogyo Co., Ltd.
Kyushu plant
(Kagoshima Pref., Japan
Production facilities to manufacture bearings, etc. 448 Respond to switching over to producing new products, and maintain and renew facilities
Taiho Kogyo Co., Ltd.
Koukai plant
(Aichi Pref., Japan)
Production facilities to manufacture bearings, etc. 63 Respond to switching over to producing new products, and maintain and renew facilities
Taiho Seiki Co., Ltd.
Headquarters and Headquarters plant
(Aichi Pref., Japan)
Production facilities to manufacture bearings, etc. 194 Respond to switching over to producing new products, and maintain and renew facilities
TET Co., Ltd.
Kasugai plant
(Aichi Pref., Japan)
Processing facilities 83 Expand operations and increase production capacity
Taiho Gifu Co., Ltd.
Headquarters and Headquarters plant
(Gifu Pref., Japan)
Production facilities to manufacture bearings, etc. 128 Expand operations and increase production capacity
Nippon Gasket Co., Ltd.
Shiga Plant
(Shiga Pref., Japan)
Production facilities to manufacture gasket products 204 Respond to switching over to producing new products
Taiho Corporation of America
Headquarters and Headquarters plant
(Ohio, USA)
Production facilities to manufacture bearings, etc. 485 Respond to switching over to producing new products
PT. Taiho Nusantara
Headquarters and Headquarters plant
(Karawang, Indonesia)
Production facilities to manufacture bearings, etc. 12 Respond to switching over to producing new products
Taiho Corporation of Europe
Headquarters and Headquarters plant
(Ujhartyan, Hungary)
Production facilities to manufacture bearings, etc. 33 Maintain and renew facilities
Taiho Corporation of Korea
Headquarters and Headquarters plant
(Daegu, Korea)
Production facilities to manufacture bearings, etc. 63 Maintain and renew facilities
Taiho Kogyo Corporation of Yantai
Headquarters and Headquarters plant
(Yantai, China)
Production facilities to manufacture bearings, etc. 380 Respond to switching over to producing new products