 |
|
|
|
|
A message from the president about DENSO's mission and a vision
|
|
|
|
|
|
 |
|
| A Message From the President |
|
DENSO Group operations continue to advance worldwide as we apply our expertise in quickly identifying customer needs in all regions and responding by developing and supplying competitive, leading-edge products amid an increasingly challenging auto industry operating environment. Management effectiveness is also currently an important theme we are pursuing, and we are implementing measures to strengthen our global management structure. In this, my first opportunity to address DENSO shareholders and other investors since I became president and CEO, I am pleased to be able to present a summary of our performance and to outline our future plans.
|
|
| Fiscal 2008 Consolidated Results |
|
In fiscal 2008, the year ended March 31, 2008, consolidated net sales increased 11.5% year on year to ¥4,025.1 billion. This reflected growth in sales to Japanese automakers, who saw strong growth in finished vehicles for export and overseas production, as well as to automakers in Europe and the United States. On the earnings front, operating income rose 15.0% to ¥348.7 billion. This was a record for the Company. Operating income was supported by expanded output, cost reductions, improved productivity, and the contribution from other efforts to rationalize operations and enhance management efficiency throughout our organization. These factors successfully offset the negative influences of higher depreciation expenses, a lower foreign exchange gain owing to the rapid appreciation of the yen against the U.S. dollar and rising raw materials prices during the year.
By geographical segment, sales and profits grew in the Americas, Europe, and Asia & Oceania. In Europe, in particular, operating income more than doubled year on year from ongoing strong demand from European automakers for diesel common rail systems, air conditioning systems, and other components. Meanwhile, in Japan, net sales rose 7.3% year on year, but operating income declined 8.3% owing to higher depreciation accompanying a change in tax regulations, a lower foreign exchange gain and other factors.
Net income increased 19.1% to ¥244.4 billion. Reflecting our strong profit performance, we set the year-end dividend at ¥29 per share, bringing the dividend applicable to fiscal 2008 to ¥54 per share, a ¥9 increase from the previous fiscal year. Looking ahead, we will redouble our efforts to return profits to shareholders.
|
| Fiscal 2009 Forecasts and Initiatives |
|
As our forecasts suggest, we anticipate a historically harsh business environment in fiscal 2009 that portends an inevitable and significant decline in profit for the year. We project net sales holding generally flat year on year at ¥4,030.0 billion, primarily due to slowing automobile production in North America. Furthermore, we anticipate the loss of sales growth momentum to be joined by a widening foreign currency loss from a strong yen and ongoing rises in raw materials prices to reduce operating income 17.1% year on year to ¥289.0 billion.
We are implementing proactive measures to lessen the potential impact from the deterioration in business conditions, including close examination of the benefits of expenses to reduce costs, improving indirect and administrative work efficiency, and expanding the volume of import parts to take advantage of the strong yen.
We view fiscal 2009 as a critical year for making steady progress toward achieving our long-term plan targets in fiscal 2011. As we advance toward these targets, we will continue to be guided by our two key policies: "Contribute to the creation of an advanced automotive society" and "Evolve into a truly global corporation". There are three key themes, which I have explained later in this letter.
|
Contributing to the Creation of an Advanced Automotive Society
|
1) To establish a strong foundation of quality to meet customer expectations and the trust they place in us, we will encourage each associate in the workplace to build quality into their own processes and to verify the level of quality and degree of job completeness in each of their work processes.
2) We will steadily promote the development of "world-first products" as well as strengthen our abilities to develop low-cost products targeting the newly emerging small car and entry-car markets.
3) As the market evolves toward requiring a greater diversity of automotive power sources, wider availability of technologies for improved safety, and other emerging needs, we will step up proactive sales activities to meet new and evolving customer needs. We will also continue our sales expansion strategies to broaden our client base beyond Japanese automakers to the local automakers in newly emerging markets.
|
Evolving Into a Truly Global Corporation
|
1) We will reinforce the competitiveness of manufacturing globally through refinement of our worldwide production structure and by enhancing the production capability of each plant.
2) We will exert the collective strength of DENSO Group companies to bolster our global operations as a group. We will also develop a stronger framework for increased cooperation among, and self-reliance of, regions by fortifying and expanding necessary regional functions.
3) We will develop the systems and structures required to utilize our diverse human resources, and build a firm foundation for every associate to be motivated and bring out his/her full capability. We will also develop talented individuals who can perform on the global stage by instilling the DENSO Spirit, which as the foundation of our values underlies our daily activities and "the DENSO Approach to Working".
|
| Fulfilling DENSO VISION 2015 |
|
Supported in part by the healthy production output of Japanese automakers, we have made steady strides toward attaining the goals of the long-term plan of consolidated net sales in excess of ¥4 trillion and ROE of 10% by fiscal 2011. We are also looking ahead to fulfilling the objectives of DENSO VISION 2015, which aims to bring comfort and delight to the world.
|
(1) Environmental and Safety Fields
|
As countries around the world take steps to prevent global warming, such as reducing CO2 emissions and tightening regulations for vehicle fuel efficiency and exhaust emissions, we are accelerating development of technologies that will reduce the environmental impact. We are advancing product development to support gasoline, diesel, hybrid, biofuel and all power sources as each presents unique characteristics that meet specific regional and market demands.
In addition to environmental concerns, the automotive industry is also focusing on safety issues. Along with our airbag sensing systems and pre-crash safety systems, we are stepping up the development of driver assistance systems to identify and avoid potential dangers before an accident occurs. This includes systems based on gaze detection technology so that drivers don't miss seeing pedestrians, traffic signals and traffic signs, as well as vehicle-infrastructure cooperative systems to prevent collisions at intersections.
The ultimate objective that motivates our operations in the environmental and safety fields is to realize an automotive society with no environmental impact and no traffic accidents.
|
(2) Emerging Markets and Resource-Rich Countries
|
Our fundamental strategy for business development has been to support the overseas advancement of Japanese automakers, and accordingly to export products from Japan and reinforce local production overseas of products developed and manufactured in Japan. While this strategy has been successful, the market is undergoing a substantial transformation reflected in the rise of local regional automakers and the growing markets for compact cars and ultra-low-cost vehicles.
In these conditions, we are strengthening our management, development, sales and manufacturing structures as well as developing our workforce to enhance our ability to develop, manufacture, and supply products catered to the specific needs of each market and region. One step in this direction was the establishment of DENSO INTERNATIONAL ASIA CO., LTD. (DIAT) in Thailand, where automakers are focusing their manufacturing operations for the Asia region. DIAT enhances our management capabilities in the region and the new Technical Center within DIAT fortifies our development structure.
We are systematically establishing the structure for our R&D functions, from development to evaluation and testing, to enhance our product development and sales expansion activities to quickly and effectively meet specific automaker and market needs.
|
(3) Structural Reform
|
Our business environment has been changing dramatically since the start of 2008 with the sharp rise in the value of the yen, the slowing of the U.S. economy, and the ongoing steep rises in raw material prices. At the same time, these very conditions are stimulating us to implement positive improvement of our management practices. To this end, we are focusing on three key areas for structural reform: operations, costs, and management. In operations, we are constructing an operating structure capable of effectively responding to the changes in the business environment and customer needs. In terms of costs, we are seeking to reduce overhead costs and add value to our products with the aim of establishing a more resilient earnings structure. In management, we are reinforcing our global management systems to foster a greater sense of unity among DENSO Group companies around the world with the aim of leveraging our overall strength to support sustainable business growth.
We appreciate the continued support and understanding of our shareholders.
|
|
June 2008
Nobuaki Katoh
President and CEO
 |
|
|
|
|
|
|
