Furukawa Electric Co., Ltd. Business Report FY2010

Business Highlights

Financial Overview - The Furukawa Electric Co., Ltd.

(in millions of JPY)
  FY2010 FY2009 Rate of Change (%) Factors
Sales 925,754 809,693 14.3 -Even though the price of copper rose tremendously, sales of automotive wire harnesses and MCPETs increased, mainly at the high-function materials and light metals businesses.
35,144 20,321 72.9 -There was a remarkable improvement in the operating loss at the metals and light-metals businesses, with favorable performance in the automotive sector of the electronic components/electronics business.
31,422 19,347 62.4 -
Current net income 12,213 9,704 25.9 -The Company recorded an extraordinary loss of 15.1 billion yen, suffering losses attributable to the Great East Japan Earthquake, the devaluation of marketable securities purchased for investment, and the application of asset retirement obligation accounting standards. However, the Company was able to post an extraordinary profit of 7.3 billion yen from the sale of fixed assets, etc.
Electronics and Automotive Systems
Sales 209,624 117,232 18.3 -The Company was able to sustain strong sales throughout the year in both in and outside Japan of automotive wire harnesses and auto parts. In addition, there was robust demand for coils used in smart phones.

7,801 7,179 8.7 -

-The Company has acquired from Lear Corporation the remaining shares in Furukawa Lear Corporation (FLC) in the U.S. The wire harness production and sales joint venture, has thereby become a wholly owned subsidiary of Furukawa Electric, adopting a new name, Furukawa Wiring Systems America, Inc. (FWSA.) The acquisition will allow the subsidiary to strengthen ties with the Furukawa Group's other subsidiary specializing in wire harness, connector, and electric device business in North America in efforts to enhance overall cost efficiency and improve product quality. FWSA now supplies about 90 percent of its products to Honda. By 2015, it intends to double its sales from the current level of 6 billion yen by stepping up efforts to expand business with customers other than the Honda Group. (From an article in the Nikkan Jidosha Shimbun on June. 18, 2010)

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

Sales and Operating Income by Segment (FY2012 plan, in 100 million of JPY)

Segment   FY2010
Telecommunications Sales 1,493 1,600
96 100
Energy and Industrial Products Sales 2,530 2,500
9 80
Metals Sales 1,529 1,700
32 55
Electronics and Automotive Systems Sales 2,096 2,300
78 110
Light Metals Sales 2,090 2,200
115 140


R&D Expenditure - The Furukawa Electric Co., Ltd.

(in millions of JPY)
  FY2010 FY2009 FY2008
Overall 18,296 17,270 19,789
Electronics and Automotive Systems 3,807 3,659 4,288

R&D Structure

Facility Location
Yokohama R&D Laboratories Kanagawa Pref.
The Furukawa Electric Co., Ltd.
Automotive Research Center
Kanagawa Pref.

-The Company is enhancing its capabilities of research and development for next generation vehicles, including an electric and hybrid vehicle. At the Yokohama R&D Laboratory of its research and development headquarters, a new organization "Research and Development Center for Next Generation Batteries" will be set up on September 16. Also, on the same day the "Next Generation Vehicle Project Team" will be organized at the R&D Center for Automotive Systems and Devices in Hiratsuka, Kanagawa Prefecture. In the mid-term business plan "New Frontier 2012," the company has laid out plans to create a new business in the areas of next generation vehicles and SmartGrid technologies. The new R&D center and project team were set up to support this program. Furukawa aims to develop new products leveraging its technologies. The R&D center for next generation batteries will be working for development of battery materials to meet objectives of "large capacity," "long life" and "high reliability" that are required of next generation batteries, which are expected to play an important role in next generation vehicles and SmartGrid systems. (From an article in the Nikkan Jidosha Shimbun on September. 16, 2010)

Product Development

 Technology for Next-generation Vehicles
-The Company is continuing its R&D activities in developing radar systems in which ultra-wideband (UWB) technology is applied. These are anticipated to serve as useful, vehicle-monitoring  sensors that improve the safety features of vehicles. The Company is having technical discussions with systems makers and car makers.

-Developing compact motors, designed for hybrid cars, which can be made smaller due to their no longer having the necessity for interphase insulating paper; and coils that can offer a high level of output, the likes of which has never been seen before. In line with this, the Company is pressing forward with R&D activities aimed at developing next-generation coils that have a lower dielectric constant, greater resistance to high voltages, and thinner membranes. 

-Developed an easy-to-use cable for fast charges.  The company aims to start its commercial production together with a connector to an EV body by the end of this year.  It is Furukawa Electric’s first business in the parts for fast chargers. Polyvinyl chloride (PVC) is used in the cable and wiring and coating structure have been devised to ensure flexibility for easy handling when operating the charger.  Use of PVC for the outer layer has greatly reduced weight compared to the rubber cable. (From an article in the Nikkan Jidosha Shimbun on March 3, 2011)

 Automotive battery sensors
-The Company is forecast to begin commercial production of automotive battery sensors for automakers in 2012. By controlling the batter power, the Company hopes to improve the energy efficiency of vehicles.

Aluminum Wire Harness
-The Company has developed technology for commercial production of a wire harness made of aluminum for automobiles. Presumably, an aluminum-based wire harness can be made 40-50 percent lighter than conventional copper products. Furukawa Electric has already established a comprehensive production structure within its group from aluminum alloy material to complete harnesses, and will be working with automakers to explore the demand for the new product, expecting to start its mass production by the end of fiscal year 2011. (From an article in the Nikkan Jidosha Shimbun on November. 25, 2010)

Cu-Ni-Si Copper Alloy
The Company has developed high performance Cu-Ni-Si copper alloy material "EFCUBE-820" for use in connectors for onboard electronic devices and other equipment related to information technology. Using its original metallic texture control technology, the company has realized two contradictory attributes: tensile strength and bending processability, which contributes to downsizing connectors. Furukawa has already made sample shipment of the new material to major manufacturers of connectors, and is aiming to produce 200 tons of the new copper alloy a month, including for new products in fiscal 2012. (From an article in the Nikkan Jidosha Shimbun on September. 8, 2010)

Investment Activities

Capital Expenditure - The Furukawa Electric Co., Ltd.

(in millions of JP )
  FY2010 FY2009 FY2008
Overall 27,947 25,433 41,275
-The Company invested in its electric pasts/electronics business for the following purposes: to begin commercial production, as well as increase production, of automotive electric parts and electronic functional materials; and consolidate facilities and equipment in line wit the integration of the coil operations.

Investment Activities

-The Company is planning to triple its capacity to manufacture electrolytic copper foils to 1,500 tons a month by July 2013. Electrolytic copper foils are used as negative-electrode materials of lithium-ion secondary batteries. The company plans to boost its capacity by investing 6.9 billion yen in establishing a new production subsidiary in Taiwan with a monthly capacity of 500 tons, while doubling the capacity at its major copper foil plant in Imaichi, Nikko City, Tochigi Prefecture to approximately 1,000 tons per month. With this move, the company intends to absorb new needs from the growing electric and hybrid vehicle markets, looking to raise its share in the global electrolytic copper foil market to 60 percent by 2013, up 20 percentage points from the current level. Up until now, the company has been producing electrolytic copper foils solely in Japan, but it is now expanding its operations overseas, as it believes worldwide demand for lithium-ion batteries will be largely increasing. The company chose Taiwan as its new production site, expecting to create synergy effects in terms of materials and human resources with its existing local plants producing copper foils for electronic circuits. In addition, since electric power charge in Taiwan is about the half of that in Japan, operations in the country are projected to reap cost benefits. The new, wholly owned Taiwanese subsidiary, Furukawa Electric Copper Foil Taiwan Co., Ltd., will be established in March 2011. Operations are scheduled to begin in September 2012 with a workforce of 100. The plant will be constructed on 40,000 square meters of land. Furukawa Electric will accelerate its efforts to establish excellent production technology at the new location, which will be positioned as the major global supply hub for automotive copper foils. (From an article in the Nikkan Jidosha Shimbun on February 2, 2011)

-The Company will further step up production of copper strips in Asia. Copper strips are used as materials for producing automotive connectors and other products. The company's plans include establishment of new coil centers to manufacture these products in China and Southeast Asia by 2012. In addition, Furukawa Metal Wuxi Co., Ltd., the company's existing subsidiary in China, is discussing creating a joint-venture company with Anhui Xinke New Materials Co., Ltd. (AX) of China, as a measure to enhance its procurement operations and improve its cost competitiveness. By establishing a stable supply network in response to growing demand in Asia, the Group aims to boost its profitability of its overall metals production business. (From an article in the Nikkan Jidosha Shimbun on October. 5, 2010)

-The Company will launch aggressive marketing activities of its copper alloy material used for connectors in vehicles. The electric product manufacturer has installed new large equipment at its domestic production facility, increased production and supply capacity, and shortened production lead-time. It has also succeeded in developing a new product with high-level tensile strength and bending processability. Taking advantage of an enhanced competitive edge in both production capacity and the product, Furukawa is set to reinforce its approach to automakers that demand high levels of quality and quantity. The company has installed at the copper alloy producing plant in Nikko, Tochigi Prefecture a new finishing mill and continuous annealing line, which are the first large-size equipment introduced since 25 years ago. It also has developed high-performance copper alloy material "EFCUBE-820" by using the industry's first technology. Leveraging these resources, it is aiming to expand business related to automobiles. (From an article in the Nikkan Jidosha Shimbun on September. 15, 2010)

-The Company will reinforce its business operations for electrolytic copper foil, which is used in lithium-ion batteries. The company will focus on expanding sales of the product especially for use in automotive batteries. By fiscal year 2012, it aims to increase the ratio of electrolytic copper foil sales for automobiles among its overall sales for lithium-ion batteries in general from the current 10 percent to around 30 or 40 percent. In order to meet an expected rise in demand in the future, Furukawa Electric is also mulling the possibility of establishing a new production facility and start operations there after fiscal year 2013. (From an article in the Nikkan Jidosha Shimbun on May 19, 2010)

-The Company is making concentrated investments in the area related to automobiles during the period of the mid-term business plan called "New Frontier 2012" running from 2010 through 2012 fiscal year. Out of 33 billion yen budgeted in the plan, approximately 14 billion yen will be earmarked for the automotive sector. Furukawa Electric plans to devote its resources to research and development of products especially for use in eco-cars, such as light weight aluminum harnesses and copper foils of lithium-ion batteries. The company will also address development of components to respond to market needs in developing countries. (From an article in the Nikkan Jidosha Shimbun on Apr. 27,2010)