Calsonic Kansei corporation Business report FY2006

Business Highlights

Financial overview
(in million JPY) FY2006 FY2005 Rate of Change (%) Factors
Sales 700,775 715,494 (2.1) Sales dipped from the previous year due to a decrease in car sales by its major customers. The fall was also attributed to selling off subsidiaries, of which the sales volumes had been included previously. 
Operating income 12,266 24,587 (50.1) - Operating income decreased year-on-year, as it was negatively affected by a decrease in car sales by key customers. The decline was also due to deteriorating capacity utilization as a result of realigning product mix; increased depreciation costs; and losses incurred from new model launches.   
Ordinary income 10,270 24,594 (58.2) - Due to the negative impact of declining sales, ordinary income plunged from what it was last year.
Net income 156 19,232 (99.2) - Net income tumbled from the previous year due to a large amount of costs incurred for restructuring efforts. 

Transfer of headquarters- The Company held the groundbreaking ceremony on Jan. 15, 2007 for the new Research and Development Center in Nisshin-cho, Kita-ku, Saitama City. The construction is scheduled to be completed in March 2008. The headquarters currently located in Nakano-ku, Tokyo will also moved to this new site. The designing division, which presently operates in Sano (Sano City, Tochigi Prefecture), Atsugi (Aikawa-cho, Kanagawa Prefecture) and Oppama (Yokosuka City, Kanagawa Prefecture), will be integrated into the new R&D Center to enhance the Company's technological capabilities. (From a press release by the company on Jan. 15, 2007)

New Subsidiary in Romania
- The Company announced that it set up a new company in Romania, Calsonic Kansei Romania S.R.L., to manufacture air conditioning and heat exchange products. The new company was established in order to respond to a new business contract to supply air conditioning and heat exchange products from fiscal 2007. The establishment of the production base in Rumania, where labor costs are relatively lower, will allow the company to increase its competitiveness and generate higher profit. By establishing the new company in such area, the Company also aims at winning new orders for its main products including air-conditioning and heat exchange products. (From a story in the Nikkan Jidosha Shimbun on Jun 22, 2006)

Production in India
-The Company will undertake its manufacturing operation in India. The project is to respond to new orders from Suzuki Motor Corporation for car air-conditioning units, as well as to a local production plan by its leading shareholder, Nissan Motor Co. The Company aims to conduct a full-scale operation by 2010. The Company will also adopt car air-conditioning compressors made in Thailand, instead of supply from Japan, in a bid to change the parts procurement system in India to sourcing, mainly from leading competitive countries (LCC.). (From an article in the Nikkan Jidosha Shimbun on Dec. 20, 2006)

Restructuring Projects
- The Company announced dissolution of its two sub-subsidiaries at home and abroad. It will close by year end Calsonic Kansei Netherlands B.V. (Barneveld, Netherlands), an intake and exhaust system parts plant with falling production, and transfer its production to Calsonic International (UK) Ltd. (Llanelli, Wales). N & S Chemical Industry Co., Ltd., a compound supplier in Bungo Takada City, Ohita Prefecture, suffering from long slump, will be dissolved by February 2007. (From an article in the Nikkan Jidosha Shimbun on Sep. 30, 2006)

- The Company announced that it will dissolve PT. Kansei Indonesia Manufacturing, its production subsidiary in Indonesia, and integrate the automotive meter and other parts manufacturing business to Calsonic Kansei (Thailand) Co., Ltd. After the dissolution of the Indonesian unit, the group will consolidate its manufacturing activities in ASEAN countries at the Thai facility and Calsonic Compressor (Malaysia) Sdn. Bhd., which supplies car air conditioner compressors, improving business efficiencies in the region. (From an article in the Nikkan Jidosha Shimbun on Jan. 13, 2007)

- The Company announced that it will change the name of Calsonic North America, Inc, one of its subsidiaries in the U.S.A., to Calsonic Kansei North America, Inc. The Company, in a bid to work on administrative & structural integration and further facilitate efficiency in operations, will merge Calsonic North America, Inc., its production subsidiary, with Calsonic Kansei North America, Inc., its regional administration company in North America, effective Apr. 1, 2007. Consequently, Calsonic North America, Inc. will be dissolved. Following the completion of this transaction, the remaining company will adopt the name of the existing administration subsidiary, Calsonic Kansei North America, Inc. (From a press release by the company on Jan. 30, 2007)

- The Company announced that it will liquidate Calsonic Australia Pty. Ltd., its subsidiary for manufacture and sales of automotive heat-exchanger systems, as of December 2007 and withdraw itself from manufacturing in Australia in order to optimize its global production operations. Its Thai operation will supply parts for Australia instead. Necessary liquidation procedures will be completed by December. The Company has decided on the withdrawal as orders and production have been decreased over the past several years. (From an article in the Nikkan Jidosha Shimbun on Mar. 24, 2007)



Investment Activities

Investments in fiscal year 2006 (ended in March 2007)
Total investment for the period reached 39,500 million yen, including 25,900 million spent for the automotive business. 

- In addition to introducing additional equipment to deal with model changeovers by major customers, the Company invested heavily in constructing a new headquarters building and a R&D center; as well as in measures to streamline production. 
- Spending for the automotive segment was focused on preparing production lines for new module products and other components at the Gunma Plant, CKK Corporation, Calsonic North America, Inc., Calsonic Kansei Mexicana, and Calsonic Kansei (Thailand) Co., Ltd.

The Company plans to invest a total of 38,000 million yen in FY2007.