Hitachi Chemical Company, Ltd. Business report FY2006

Business Highlights

Financial overview
(in millions of JPY) FY2006 FY2005 Rate of
Sales 628,805 602,703 4.3 -
Operating profit 55,750 53,833 3.6 -
Ordinary income 56,714 54,429 4.2 -
Current net income 32,766 31,593 3.7 -
Advanced Performance Products
Sales 251,509 243,719 3.2 see note below
Operating profit 14,997 14,906 0.6
(Automotive related parts)
Carbon ceramics
-In the area of carbon products, sales of automobile electric brushes increased.
-In the area of ceramic products, sales of silicon nitride ceramics for automobile water pumps increased.

Automotive parts
-Although sales of interior and exterior molded components increased because there was a growing demand for them to be equipped on new vehicles in Asia, especially in Thailand, the Company could not offset the loss it incurred as a result of the overall weakened demand by its major customers.   
-Profits generated from sales of disk brake pads decreased due to the declining production volumes of its major customers.

Powder metallurgy products
-Sales increased due to the strong demand by automakers to equip metallurgy products in automobile air conditioners.


R&D Expenditure
(in millions of JPY) FY2006 FY2005 FY2004
Overall 27,800 26,900 25,100
Electronics Related Products 15,300 N.A. N.A.
Advanced Performance Products 11,500 12,000 11,000

New auto parts products
- The Company developed automobile lead storage batteries which demonstrate high performance in terms quick charges, being able to instantly store the electricity generated when the vehicle decelerates.
- The Company developed power metallurgical compounds for engines and VCT sprockets. By applying high precision heat treatment to these compounds, they are able to be processed into a very thin and complicated configuration.  

Technical Assistance Contracts (as of March 2007)
Company name Concerned company name Contract Details Period
Hitachi Chemical Company, Ltd.
 Japan Brake Industrial Co., Ltd.
Federal Mogul Corp. (USA) Permission of working rights to the subject patent. Provision of technical information on disc pads 2007.3.31-
Until the time production of vehicle models that use  the subject products is stopped
Shin-Kobe Electric Machinery Co., Ltd Exide Industries Ltd. (India) Permission of working rights to patent. Provision of technical information on automotive lead storage batteries 1999.4.1-
Permission of working rights to patent. Provision of technical information on sealed accumulators 1995.06.22-

Technological Licensing Agreements  (As of March 2007)

Group company name Other Party to the Agreement Contract details Period
Shin-Kobe Electric Machinery Co., Ltd. Panasonic Storage Battery Co., Ltd.(Japan) Acquisition of patent rights and license to use technical expertise on lead storage batteries July 1, 2004 to
June 30, 2014

Investment Activities

Capital investment
(in millions of JPY) FY2006 FY2005 FY2004
Overall 37,700 38,700 33,200
Electronics  Products 16,900 N.A. N.A.
Advanced Performance Products 19,100 19,100 16,500

The Company will build a new plant at the Yamazaki Works in Kamisu City, Ibaraki Prefecturewith an investment of approximately 2.5 billion yen, to further expand its optical sheet protective film business. The construction of the new plant will allow Hitachi Chemical to boost its production capacity for optical sheet protective films by approximately 40% by July 2007. (From a press release by the company on Nov. 28, 2006)