KINUGAWA RUBBER INDUSTRIAL Business Report FY2006
Business Highlights
| Financial overview | ( in millions of JPY ) |
| - | FY2006 | FY2005 | R.C. (%) | Factors |
| Sales | 60,881 | 64,822 | (6.1) | see note 1) below |
| Operating income | 76 | 1,388 | (94.5) | see note 2) below |
| Ordinary income | 143 | 1,635 | (91.3) | |
| Net income | (1,397) | 316 | - | - |
| ( R.C. : Rate of Change ) |
1) Total sales decreased by 6.1% year-on-year to 60.881 billion JPY due to the decreased production of automobiles in Japan, the USA, and ASEAN countries; and due to other factors as well. This was despite the Company's efforts to obtain new orders from automakers.
<Body parts>
-Sales of body parts decreased by 10.8% year-on-year to 28.363 billion JPY due to the decrease in the number of orders received and also due to the lower performance of consolidated subsidiaries.
<Antivibration parts>
-Sales of anti-vibration parts decreased by 10.6% year-on-year to 10.378 billion JPY due to the decrease in the number orders received.
<Brake parts>
-Sales of brake parts decreased by 4.7% year-on-year to 13.236 billion JPY due to the decrease in the number of orders received.
2) Though the Company achieved its target set under the NP-II activities started in the last fiscal year, which were the second round of purchasing-cost reduction activities, the Company's operating income decreased by 94.5% on year-on-year to 76 million JPY, and consolidated ordinary income decreased by 91.2% year-on-year to 143 million JPY. These declines were due to a lower operating capacity rate, materials price increases resulting from a sharp rise in oil prices, and the continued operating loss of subsidiaries in North America.
Business performance by region
<Japan>
-Sales decreased by 3.5% year-on-year to 48.474 billion JPY, because the
Company could not offset the lower sales volume due to the decreased production
volume of its main customers with the increased sales volume generated
from other automakers and non-automobile products.
-Operating income decreased by 23.8% year-on-year to 1.953 million JPY
due to a lower operating capacity rate, the rising-price situation in
the materials market, and other factors.
<North America>
-Sales decreased by 12.3% year-on-year to 8.615 billion JPY due to the
decreased production volume of the Company's main customers.
-Operating loss was 1.547 million JPY, while that of the previous fiscal
year was 1.252 million JPY. The Company made preparations for producing
the Altima destined only for sales in the US market in FY2006. However,
having experienced problems connected to this, the Company still has not
been able to completely settle them. These factors were responsible for
the increased operating loss.
<East Asia>
-Sales decreased by 20.3% year-on-year to 3.790 billion JPY. Though the
sales increased at Fuzhou Fukwang Rubber & Plastic Co., Ltd., the
total sales decreased because Tianjin Starlight Rubber & Plastic Co.,
Ltd. in China had become a subsidiary based on the equity method in the
previous fiscal year and the lower sales volume in Taiwan.
-The Company posted an operating loss of 490 million JPY while it had
an operating income of 112 million JPY in the previous fiscal year. This
loss is mainly due to a lower operating rate in Taiwan.
Company Buy Out
The Company announced that it will acquire a 48.99 percent of the
outstanding share of CPR Gomu Industrial Public Co., Ltd. (Ayutthaya),
making the Thai rubber facility its subsidiary. Kinugawa Rubber says that
the planned takeover bid is approved by CPR's board of directors and major
shareholders including the founding family. By incorporating the Thai
based supplier of vibration-proof rubber products into its group, Kinugawa
Rubber intends to further increase its presence in Southeast Asia.(From
an article in the Nikkan Jidosha Shimbun on Mar. 12 2007)
Overseas business
-In June 2006, the Company announced that it will expand its production
facilities in Guangzhou, China, to more than double its production capacity
of auto body sealing parts.
-In Aug. 2006, the Company announced that it will turn the Huadu branch
plant of Fuzhou Fuguang Rubber Co., Ltd., Kinugawa's base in China for
producing rubber parts for automobiles, into an independent corporation,
and also establish a new company to oversee the Chinese operation overall
to fortify its foothold in the market with high growth potential.
See Investment for details
R&D
| R&D Expenditure | ( in millions of JPY ) |
| - | FY2006 | FY2005 | FY2004 |
| R&D | 1,976 | 2,023 | 2,104 |
| Body parts | 1,531 | 1,561 | 1,583 |
| Brake parts | 176 | 200 | 247 |
-The Company is working to develop products that meet the current and expected customer demand for high performance, high quality, and high value-added features, especially focusing on the development of environmentally friendly elastomer material and processing technology.
-The Company is working on conducting research and development activities through a collaboration of industry, government, and academia in cooperation with research institutions including universities, in preparation for entry into new business areas.
Major developments
1.Body parts
-Development of coating material and adhesive which do not use organic solvent; in order to satisfy regulations which control the use of organic solvent.
-Development of hybrid rubber materials which do not require reforming coating.
-Development of highly recyclable, highly functional plastic materials
-Development of resin materials as alternatives to metal and low-density rubber, both designed to save weight.
-Development of high-gloss, metallic luster exterior components that improve design.
-Development of sealing components with high-performance insulating properties that improve sound reduction.
2.Brake parts
-Development of ultra-hard products that are aimed at improving the durability of brake cups exposed to high hydraulic pressure.
-Developed new manufacturing methods for producing brake couplings and piston seals.
| (As of March, 2007) |
| Partner | Country | Purpose | Contract period |
| Licensing of technology from other companies (as of March 2005) | |||
| Altia Hashimoto Co., Ltd. | Japan | Window moldings and their manufacturing methods | From 20004.01 until the production terminates. |
| Licensing of technology to other companies (as of March 2005) | |||
| Metzeler | UK | Manufacturing technology for automotive weather-strips | From 1988.11.25, until production terminates. |
| Chaiyaphon Rubber Co., Ltd. | Thailand | Technical assistant agreement for automotive anti-vibration rubber | From 2005.08.04 to 2015.08.03 |
| AIA | Korea | Technical assistant agreement for sealing products for automobile bodies. | From Sep. 2, 2003 to Sep. 1, 2008 |
Investment Activities
| Investment Expenditure | ( in millions of JPY ) |
| - | FY2006 | FY2005 | FY2004 |
| Investment | About 2,300 | About 3,300 | About 4,400 |
| Body parts | About 1,600 | About 2,000 | About 2,500 |
| Antivibration parts | About 200 | About 300 | About 400 |
| Brake parts | About 300 | About 300 | About 700 |
Enhancing production capacity in China
-The Company announced on August 30 that it will turn the Huadu branch plant of Fuzhou Fuguang Rubber Co., Ltd., Kinugawa's base in China for producing rubber parts for automobiles, into an independent corporation, and also establish a new company to oversee the Chinese operation overall to fortify its foothold in the market with high growth potential. The branch plant in Huadu, which will be named "Kinugawa Rubber (Guangzhou) Co., Ltd." after reorganization, will be established in October with a capital of 3.5 million dollars (approximately 410 million yen )to be invested entirely by the Company. A supervising company is likely to be established in Kinugawa Rubber (Guangzhou). Details of the plan have to be worked out shortly in preparations for the start-up. (From an article in the Nikkan Jidosha Shimbun on Aug. 31 2006)
-The Company announced that it will expand its production facilities in Guangzhou, China, to more than double its production capacity of auto body sealing parts. The total investment is 600 million yen. The company intends to respond to a growing demand from Japanese automakers for local parts procurement and begin exports to Europe and the U.S. So far, the main customers of the Chinese plant were those in China, but taking this occasion, the company will begin export to Europe and the U.S., aiming at expanding its business. The plant expansion will allow the company to make its production capacity more than double its current capacity. The expanded plant is expected to generate sales of 1.5 billion yen in 2006 and 2.1 billion yen in 2007.(From a story in the Nikkan Jidosha Shimbun on Jun 29 2006)
| Planned capital investment in FY2006 | ( in millions of JPY ) |
| Business segment | Purpose | Planned investment amount | Start | End | Remark |
| Kinugawa Koriyama Co., Ltd. (Fukushima Pref., Japan) | |||||
| Body parts | Manufacturing facilities | 93,730 | Apr., 2007 | Mar., 2008 | * |
| Kinugawa Oita Co., Ltd. (Oita Pref., Japan) | |||||
| Body parts | Manufacturing facilities | 205,320 | Apr., 2007 | Mar., 2008 | * |
| Kinugawa Antivibration Co., Ltd. (Tochigi Pref., Japan) | |||||
| Antivibration parts |
Manufacturing facilities | 93,500 | Apr., 2007 | Mar., 2008 | * |
| Headquarter (Chiba Pref., Japan) | |||||
| Management | Test & Research facilities | 567,065 | Apr., 2007 | Mar., 2008 | * |
| Teito Rubber Ltd. Headquarter Plant (Saitama Pref., Japan) | |||||
| Brake parts | Manufacturing facilities | 319,000 | Apr., 2007 | Mar., 2008 | * |
| Kinugawa (Thailand) Co., Ltd. (Ayutthaya, Thailand) | |||||
| Body parts | Manufacturing facilities | 296,000 | Jan., 2007 | Dec., 2007 | * |