NICHIRIN Business report FY2007

Business Highlights

Financial overview

(in million JPY) FY2007 FY2006 Rate of Change(%) Factors
Sales 44,026 40,997 7.4% -Although few new vehicle models were launched, which usually results in sluggish sales, domestic sales at the Company increased year-on-year, thanks to favorable OEM business with its major customer, and increased sales of products destined for export to China and other Asian countries. Despite soaring prices of materials such as metals and rubber, operating profit also rose year-on-year. Apart from greater sales, some of the contributing factors to the rise include improved productivity at the Company and its subsidiaries; a shift to in-house production of some components; the Company's having streamlined its operations including its logistic systems; and its having reduced product selling prices. 

-In North America, sales of products for use in large vehicles and leisure vehicles fell due to sluggish consumer spending and high oil prices. Overall sales, however, went up from those of the previous year, thanks to favorable business including new contracts with Japanese automakers' transplants in the country. The Company, which posted an operating loss last year, returned to profitability by improving productivity, reducing costs, transferring production operations to enhance efficiency, and carrying out a business improvement project that was launched last year at its Canadian subsidiary.  

-Sales and profit improved in China, thanks to strong business by Japanese automakers in the country, which were supported by surging vehicle sales in the market. The Company thereby posted favorable financial results in all major automotive markets, namely, Japan, North America, Asia, and Europe.
Ordinary income 1,784 1,486 20.1%

Targets for 2008
-To enhance its production lines in response to the changing global market, and to improve profitability by having its subsidiaries supply each other with parts and products they've each manufactured.  
-To establish a global quality assurance system, and achieve topnotch and uniform quality levels worldwide.
-To improve its production structure based on the NNP (Nichirin New Production) initiative, and reduce costs by diversifying its purchasing methods.
-To strengthen its technical development capabilities by integrating its R&D and technological functions into the Nichirin R&D Center.


R&D Expenses
(in thousand yen) FY2007 FY2006 FY2005
Total 1,005,198 994,411 850,024

Technology Licensed-out (as of December 2007)
Company Country Content of Contract Period of Contract
From To
HS R&A South Korea Manufacturing technology for air conditioner hoses used in automobiles Feb.24, 2007 Feb. 23, 2010 (The contract will be renewed automatically  every three years)  
Manufacturing technology for automotive brake hoses Nov. 3, 2007 Mar. 4, 2010
Manufacturing technology for automotive power steering hoses  Oct. 28, 2007 Mar. 4, 2010
PT.Mitra Metal Perkasa Indonesia Assembling technology for automotive brake hoses Oct. 26, 2007 Oct. 25, 2010

New Product Development
R&D focus is set on the following areas;
Automotive hoses
-Automotive hoses that improve the safety of vehicles such as ABS hoses and brake hoses with higher braking performance and durability.

Car air conditioning hoses
-Its environmentally friendly EF-Tubes, which are CO2 piping hoses, are used in some fuel cell vehicles. The Company also supplied prototypes of the products to manufacturers of air conditioning systems inside and outside Japan. It intends to promote sales of this highly flexible and impermeable tubes to other markets as well.  

Other hoses
-The Company developed hoses for systems that reduce NOx emissions from diesel engines. Mass production of these hoses is scheduled to begin in the next fiscal year.

Investment Activities

Capital Investment
(in thousand yen) FY2007 FY2006 FY2005
Japan 695,668 1,170,103 608,920
North America 225,468 455,492 437,180
Asia, Europe 50,588 132,156 206,655
Total investment 971,725 1,757,751 1,252,756