TS Tech Co., Ltd. Business report FY2006
Business Highlights
Financial
overview
Factors
1)
-Increase in orders for new Civic and CR-V
-Japan: Increase in supply agreements for products to be used for mini-vehicles destined for the export market
-China: Operations started at Wuhan TS.
2)
-Increased profit due to greater revenue
-Increase in sales of high value-added products
Performance by region
<Japan>
-The total amount of sales was 177 billion 28 million yen, a year-on-year increase of 22 billion, 359 million yen (or a 14.5% increase), as a result of robust program business won from customers in response to rising exports and an increase in export sales of seat components, etc. for subsidiaries overseas.
<North America>
-While the automotive market was in a slump, Japanese car makers enjoyed robust sales mainly in the small-car sector. The total amount of sales was 179 billion, 42 million yen, a year-on-year increase of 17 billion 298 million yen (or a 10.7% increase), as a result of receiving steady program business from customers as well as gaining the benefits of favorable forreign-currency translation, among other factors.
<China>
-The total amount of sales was 43.4 billion yen, a year-on-year increase of 15 billion, 753 million yen (or a 57.0% increase), as a result of winning robust program business from customers (due to a continuously expanding market in China), gaining the benefits of favorable foreign-currency translation, and adding the subsidiaries located in Ningbo and Wuhan as new consolidated entities.
New Program Business Won
Sales expansion strategy
-The Company plans to increase sales of the active headrest, which is expected to be widely used as a new safety device. Positioned as a major product in its promotional campaign, product improvement and cost reduction efforts will be made to achieve a greater competitive advantage. The Company will focus on making other auto-manufacturers, besides Honda, major customers to increase the number of models on which its products are equipped, mainly in markets outside Japan. The Company has announced its mid-term strategy, which is to raise its annual automotive seat production volume from the current 2.25 million units to a maximum of three million. (From an article in the Nikkan Jidosha Shimbun on Feb.16, 2007)
-The Company will promote sales of seat parts for high-end cars as a means to grow new business. It will position trim covers (or seat coverings) made of genuine leather produced at its Chinese plant as a strategic products, proposing them to auto manufacturers besides Honda, and marketing them to automakers and seat suppliers in Europe, China and Japan. Sales to automakers (excluding Honda) for the fiscal year ended March 2006 were 30 billion yen, accounting for about 8.4% of total sales. The company expects non-Honda sales to increase to about 30% maximum in the future. While it intends to continue placing the highest priority on the business it has with Honda, the company will strive to develop a new revenue sources to cope with the globalization taking place in the automotive industry as well as with the escalating competition among parts suppliers. In line with this, the Company opened a new, specialized production base in Zhejiang Province, China and a sales office in Europe in 2004. (From an article in the Nikkan Jidosha Shimbun on Jan.31, 2007)
Global business
<China>
-Ningbo FTZ TS Trimont Automotive Interior Co., Ltd supplied trim covers for North America Group in June 2006, and started producing and exporting products to Japan and the UK.
-Wuhan TS-GSK Auto Parts Co., Ltd. established in FY2006 started commercial production. TS Tech Sun (India) Limited increased its production capacity.
<UK>
-TS Tech UK Ltd. started producing seats for the Honda CR-V. The Company won a new supply agreement for the vehicle, with the supply volume remaining at a high level.
<USA>
-The company established TS Tech Indiana, LLC as a production facility to manufacture seats for four-wheel vehicles.
<Mexico>
-The second plant of Tri-Con De Mexico was constructed in order to expand the production of trim covers in Mexico, and further improve the Company's cost advantage. The production capacity is about 30,000 units per month, and the number of employees is about 850.
| (in millions of JPY) | Mar. 2007 | Mar. 2006 | R.C.(%) | Factors |
| Sales | 417,950 | 357,486 | 16.9 | see note 1) below |
| Operating income | 16,416 | 11,125 | 47.6 | see note 1) below |
| Ordinary income | 17,167 | 11,484 | 49.5 | |
| Net income | 9,759 | 6,564 | 48.7 |
1)
-Increase in orders for new Civic and CR-V
-Japan: Increase in supply agreements for products to be used for mini-vehicles destined for the export market
-China: Operations started at Wuhan TS.
2)
-Increased profit due to greater revenue
-Increase in sales of high value-added products
Performance by region
<Japan>
-The total amount of sales was 177 billion 28 million yen, a year-on-year increase of 22 billion, 359 million yen (or a 14.5% increase), as a result of robust program business won from customers in response to rising exports and an increase in export sales of seat components, etc. for subsidiaries overseas.
<North America>
-While the automotive market was in a slump, Japanese car makers enjoyed robust sales mainly in the small-car sector. The total amount of sales was 179 billion, 42 million yen, a year-on-year increase of 17 billion 298 million yen (or a 10.7% increase), as a result of receiving steady program business from customers as well as gaining the benefits of favorable forreign-currency translation, among other factors.
<China>
-The total amount of sales was 43.4 billion yen, a year-on-year increase of 15 billion, 753 million yen (or a 57.0% increase), as a result of winning robust program business from customers (due to a continuously expanding market in China), gaining the benefits of favorable foreign-currency translation, and adding the subsidiaries located in Ningbo and Wuhan as new consolidated entities.
New Program Business Won
Sales expansion strategy
-The Company plans to increase sales of the active headrest, which is expected to be widely used as a new safety device. Positioned as a major product in its promotional campaign, product improvement and cost reduction efforts will be made to achieve a greater competitive advantage. The Company will focus on making other auto-manufacturers, besides Honda, major customers to increase the number of models on which its products are equipped, mainly in markets outside Japan. The Company has announced its mid-term strategy, which is to raise its annual automotive seat production volume from the current 2.25 million units to a maximum of three million. (From an article in the Nikkan Jidosha Shimbun on Feb.16, 2007)
-The Company will promote sales of seat parts for high-end cars as a means to grow new business. It will position trim covers (or seat coverings) made of genuine leather produced at its Chinese plant as a strategic products, proposing them to auto manufacturers besides Honda, and marketing them to automakers and seat suppliers in Europe, China and Japan. Sales to automakers (excluding Honda) for the fiscal year ended March 2006 were 30 billion yen, accounting for about 8.4% of total sales. The company expects non-Honda sales to increase to about 30% maximum in the future. While it intends to continue placing the highest priority on the business it has with Honda, the company will strive to develop a new revenue sources to cope with the globalization taking place in the automotive industry as well as with the escalating competition among parts suppliers. In line with this, the Company opened a new, specialized production base in Zhejiang Province, China and a sales office in Europe in 2004. (From an article in the Nikkan Jidosha Shimbun on Jan.31, 2007)
Global business
<China>
-Ningbo FTZ TS Trimont Automotive Interior Co., Ltd supplied trim covers for North America Group in June 2006, and started producing and exporting products to Japan and the UK.
-Wuhan TS-GSK Auto Parts Co., Ltd. established in FY2006 started commercial production. TS Tech Sun (India) Limited increased its production capacity.
<UK>
-TS Tech UK Ltd. started producing seats for the Honda CR-V. The Company won a new supply agreement for the vehicle, with the supply volume remaining at a high level.
<USA>
-The company established TS Tech Indiana, LLC as a production facility to manufacture seats for four-wheel vehicles.
<Mexico>
-The second plant of Tri-Con De Mexico was constructed in order to expand the production of trim covers in Mexico, and further improve the Company's cost advantage. The production capacity is about 30,000 units per month, and the number of employees is about 850.
R&D
R&D Expenditure
| Mar. 2007 | Mar. 2006 | |
| Group | 11,256 | 10,812 |
| Automotive business | 10,432 | 9,921 |
-The development focus is set on the area of safety technology, environmental technology, comfort technology, multifunctional technology, and high-quality finishing technology.
Key R&D areas in fiscal 2007
1.Safety technology
The Company focused its development activities on the following:
-Various static and dynamic testing;
-Computer and simulation analysis based on various data output;
-The company developed an active head rest which is designed to reduce neck injuries caused by impacts from the rear; and a seat weight sensor which controls the deployment of air-bags.
2.Environemntal technology
-The Company is carrying out R&D activities aimed at reducing the use of hazardous materials and volatile organic compounds, right from the product planning stage. Measures include research on substance content, and development and introduction of alternative materials.
-The Company conducted research to facilitate easier decomposition of seats for four-wheel vehicles, etc; and research on make monomaterial products.
3.Comfort technology
The development focus is set on the following:
-Development of technology aimed at improving the sitting comfort of occupants from the time they seat themselves in a car; and lessening occupants' fatigue during long-time driving.
-Development of technology to improve static comfort based on ergonomics studies; research on ways to measure fatigue using the Company's proprietary theories, and joint physiological studies with universities.
-Engineering of active devices to improve sitting comfort of next-generation car seats.
4. Multifunctional technology
-The Company is developing originally designed products for small cars and sport utility vehicles (SUVs), vehicles in which multifunctional features are on the rise.
-The Company developed and commercialized products such as detachable hand-carry center seats, tip-up & long-slide mechanisms, air conditioned seat systems, rear headrests with power lowering systems, and tip-up, one motion slide down rear seats.
-The Company is working on integrating its proprietary air conditioning seat technology and newly developed weight-sensor technology into other electric components.
5. High-quality finishing technology
-The Company is conducting R&D activities aimed at making the world's top quality seats in terms of their appearance as well. Development is based on the Company's proprietary technology assessment system, under which the degree that appearance contributes to each individual seat element is set.
6. Car interior technology
-The Company focuses on developing new and high-quality manufacturing technology, new decorating technology, and lighting technology, which increase the feeling of luxury in car interiors.
Investment Activities
| Capital Investment | (in millions of JPY) |
| Mar. 2007 | Mar. 2006 | |
| Group | 14,201 | 15,071 |
| Automotive business | 3,216 | N.A |
The investment focus in the Automotive
Business was on:
-and purchasing new production equipment and dies to make products
for the new CR-V, for which mass production started in Japan, North
America, the U.K., and Thailand, as well as for the new Civic marketed
in India and China.
-Expanding its technical centers in Tochigi, Japan; and North America.
-The second plant of Tri-Con De Mexico was constructed in order
to expand the production of trim covers in Mexico, and further improve
the Company's cost advantage. The production capacity is about 30,000
units per month, and the number of employees is about 850.
The Company will significantly increase its annual seat production
capacity to 2.9 million sets by 2010, a 30 percent increase from
the current level. This plan is in line with Honda Motor Co., Ltd.'s
plan to roll out 4.5 million vehicles worldwide. In order to support
Honda, the Company's primary customer, TS tech will work on improving
its development and production capabilities. Installation of additional
facilities is scheduled to be completed by the end of FY2006 with
an investment of approximately 11.1 billion yen. The Company will
boost seat production capacity, which is a major project under the
new medium-term business plan starting in the next fiscal year.
TS tech intends to ensure that it has the necessary volume of products
to back up Honda's global strategy by maintaining its technical
edge and cost advantages. In the last fiscal year, TS tech manufactured
some 2.25 million sets of seats. (From an article in the Nikkan
Jidosha Shimbun on Feb.6, 2007)
| Major Capital Investment Projects | (in millions of JPY) |
| Plant (City) | - | Type of facility | Start | End |
| Saitama Plant (Gyoda
city) |
Automotive business | Equipment to manufacture automotive seats and interior products | April 2007 | Mar.2008 |
| Saitama Plant (Kawagoe city) | Automotive business |
Equipment to manufacture automotive interior products |
April 2007 | Mar.2008 |
| Suzuka plant (Suzuka city, Mie prefecture) | Automotive business | Equipment to manufacture automotive seats and interior products | April 2007 | Mar.2008 |
| TS Tech North America, Inc (Ohio, U.S.A.) | Automotive business | Testing equipment | April 2007 | Mar.2008 |
| TS Trim Industries, Inc. (Ohio, U.S.A.) | Automotive business | Equipment to manufacture automotive interiors | April 2007 | Mar.2008 |
| TS Tech USA Corporation (Ohio, U.S.A.) | Automotive business | Equipment to manufacture automotive seats | April 2007 | Mar.2008 |
| Trimont MFG. Inc. (Ontario, Canada) | Automotive business | Equipment to manufacture automotive interiors | April 2007 | Mar.2008 |
| Guangzhou TS Automotive Interior Systems Co., Ltd. (GuangDong Province, China) | Automotive business | Equipment to manufacture automotive seats | April 2007 | Mar.2008 |