Hitachi Metals, Ltd. Business report FY2007

Business Highlights

Financial overview (in millions of JPY)
  FY2007 FY2006 Rate of change(%) Factors
Overall
Sales 701,075 646,311 8.5 -Demand in the automotive and IT industries in particular remained strong.
Operating income 59,698 54,722 9.1 -Sales increased and efforts to cut costs and expenses were successful.
Ordinary income 54,448 51,630 5.5 -
Net income 27,034 22,062 22.5 -
High-grade Metal Products and Materials
Sales 292,370 273,567 6.9 -Demand for die and tool metals in the automotive industry, increased in part because of the Company's new product launches. Exports remained strong.
Operating income 28,664 24,302 17.9
Electronics and IT Devices
Sales 191,907 169,321 13.3 -Sales increased, largely thanks to solid demand for rare earth magnets for hybrid vehicles and electric power steering.
Operating income 20,277 18,069 12.2
High-grade Functional Components and Equipment
Sales 222,453 210,487 5.7 -Domestic demand for high-toughness, ductile cast iron increased mainly for application to trucks. Its applications outside Japan also grew. Applications of large-diameter aluminum wheels increased, resulting in strong demand both in and outside Japan.
Operating income 16,277 14,073 15.7


Business Restructuring
-As of April 1, 2007, the Company acquired its consolidated subsidiary, Neomax Co., Ltd. , which is involved in the manufacture of magnetic materials.

-In September 2007, the Company dissolved Hercunite Foundry Technology Ltd., a subsidiary of its UK based subsidiary, Hitachi Metals Europe GmbH. Hercunite Foundry was a manufacturer of heat-resistant casting components to be used in controlling the temperature range of gas emissions mainly from diesel engines. The Company decided to concentrate on heat-resistant casting component manufacturing operations at its Kyushu Works. (From a press release on Sep. 20, 2007)

R&D

R&D Structure
-The number of R&D staff is 829 as of the end of Mar. 31, 2008.


R&D Facility (Automotive Components Company)
Facility Location Outlines
Casting Technology Research Laboratory

Tochigi Pref.
Japan

Laboratory to research and develop products in order to meet the growing needs from the globalizing auto industry for more eco-friendly, lighter products and quicker product deliveries. It  develops a wide variety of leading edge products including formed and fabricated materials to component units.


R&D Expenses (in millions of JPY)
  FY2007 FY2006 FY2005
High-grade Metal Products and Materials 3,881 3,526 3,461
Electronics and IT Devices 7,059 7,079 5,955
High-grade Functional Components and Equipment 2,343 2,360 2,621
Others - - 17
Group 13,283 12,965 12,054
% of sales 1.9% 2.0% 2.0%


Major Research and Development (FY2007)
Division Development
Electronics and IT Devices -Small 3-axis accelerometer sensors
-Keyless entry antennas
High-grade Functional Components and Equipment -Expansion of the Company's product lineup of casting products  for automotive diesel and high-efficiency gasoline engines
-Development of new diesel particulate filters compatible with new long-term regulations
-Expansion of the Company's product lineup of large-diameter, fashionable aluminum wheels


Technology supply agreement (As of Mar. 2008)
Company
(Location)
Contract item Contract content Period
Mahindra Hinoday Industries, Ltd.
(India)
Automobile casting To supply manufacturing technology for automobile casting From June 26, 1996
to June 25, 2009

Investment Activities

Capital Expenditure ( in millions of JPY )
Segment FY2007 FY2006 FY2005
High-grade Metal Products and Materials 22,052 14,101 12,368
Electronics and IT Devices 13,350 13,773 9,609
High-grade Functional Components and Equipment 10,704 7,384 6,971
Service and Others 3,079 1,234 302
Consolidated elimination 142 295 390
Group 49,327 36,787 29,640


Capital investment projects in FY2007
Segment Objective of the investment
High-grade Metal Products and Materials Continuous rationalization of expansion of capacity to produce tool metals. Renewal of steelmaking facilities and introduction of large-scale forging machinery.
Electronics and IT Devices Rationalization of expansion of capacity to produce rare earth magnets to meet expanding demands in the automotive industry, which increasingly needs to become eco-friendly.
High-grade Functional Components and Equipment Expansion of capacity to produce heat-resistant casting components. Rational expansion to produce forged iron products.


Planned Investment Expenditure (FY2008) ( in million JPY )
Segment Planned amount of investment Objective of the investment
High-grade Metal Products and Materials 18,600 Establishment of rolling facilities outside Japan
Electronics and IT Devices 14,000 Large-scale production augmentation of amorphous metal materials
High-grade Functional Components and Equipment 9,800 Continuous expansion of capacity to produce heat-resistant casting components. Rational expansion of capacity to produce large-diameter automotive aluminum wheels to meet growing needs.
Service and Others 600 -
Group 43,000 -