Japan's economy remained relatively steadily overall throughout the current consolidated fiscal year, as demonstrated by improved corporate profitability enjoyed primarily by export-related sectors that benefited from a weaker yen, as well by greater capital investments and an improved employment outlook, despite a somewhat unpredictable outlook for the US economy.
In fact, corporate profitability was improved for companies in a broad range of business including home-appliance, industrial machinery and machine tools, and iron & steel/non-ferrous metals, which saw brisk exports, in addition to the automobile-related sector.
Under these business environments, the KITO Group, which upholds a medium and long-term management vision of "aspiring to be the "True Global No.1 Hoist Manufacturer" in the genuine sense of the word through the consistent delivery of values that exceed customer expectations while maximizing the values of the KITO brand," formulated an Intermediate Five-Year Plan with the consolidated fiscal year under review (FY2006)
as Year 1, and embarked on a number of undertakings in FY2006 in an attempt to reach the stated targets before the end of the fiscal year ending March, 2011.
In the domestic sales, KITO made focused efforts to further increase its market share in its core product categories including electric chain hoists, lever hoists and manual chain hoists, and actively explored opportunities to market its solution business, which takes advantage of KITO's superior engineering capabilities and an array of applications to address customers' specific concerns (solution-based marketing).
Service-related departments were incorporated into the National Sales Division during the current period. The unification of sales and servicing facilitates the supply of good-quality after-sales services while at the same time preparing grounds for incremental business opportunities.
As for overseas sales, KITO concentrated on undertakings geared to sales expansion by reaching firms in a wide range of industrial sectors including wind power generation in North America. These efforts resulted in sales which, supported by prolonged and solid demand, remained at a healthy level.
In Asia and especially in China, Jiangyin Kito Crane Co., Ltd., KITO's consolidated subsidiary, built solid foundations for themselves in the market by commencing joint production with KITO of cranes especially made for use in cleanrooms for semiconductors.
In Europe, where the Group's presence needed to be enhanced, KITO EUROPE GmbH, a wholly owned subsidiary, was established in Dusseldorf, Germany, in May 2006 to lead efforts to build a sales structure (network).
Thus, KITO's very first step in the direction of setting in place a global tri-polar structure with North America, Asia and Europe as cores started in the current consolidated fiscal year.
The production lines, especially those at Yamanashi headquarters, experienced high production loads at a level not seen since 1991 at the height of the "bubble economy." In a concerted effort, KITO continued to further refine its Assemble-To-Order system, and parallel efforts were made to reinvent its quality control system and to enhance and upgrade production facilities. These measures, combined with the
introduction of automated aluminum die-casting lines that can be put into service around the clock, resulted in improved productivity at quality levels that remained the same or became enhanced. Supplemented by drawdowns of inventories, these improvements enabled KITO to effectively meet strong demand.
In addition, active attempts were made to keep inventories at an appropriate level, to encourage production reinvention outside Japan and to develop personnel with capability to promote global business, as part of KITO's efforts to optimize the Groupwide manufacturing capabilities (production and supply procurement).
Other highlights included the construction of a new factory dedicated to the production of special-purpose use hoists on the premises of Jiangyin Kito Crane Co. Ltd., KITO's production base in China, for an increased level of production to meet the Chinese market's growing demand for special-purpose use products. SIAM KITO CO., LTD in Thailand became a consolidated subsidiary after KITO's equity stake in the concern
was increased to about 65 percent in December, 2006. Plans are underway to build a new crane factory with higher production capacity in a suburb of Bangkok to satisfy the robust appetite of Japanese capital companies there for capital investments.
As a result of these efforts, KITO posted consolidated net sales of \31,795 million (up 18.2% year on year), consolidated operating profit of \4,418 million (up 24.0%), consolidated recurring profit of 4,519 million (up 23.7%) and net sales of \2,788 million (up 20.8%) in the current consolidated fiscal year, and all numerical targets for the consolidated fiscal year set out at the beginning of this fiscal year were
achieved.
As for future outlook, we expect that, given the continuing firmness exhibited in corporate business results and personal consumption, the overall economy will remain healthy despite some uncertainty over the foreign exchange, the stock market and oil prices as well as the US economy.
In these business environments, the KITO Group will remain committed to the further expansion of domestic sales and to undertakings designed to gain a solid footing in North America and China. We also plan to embark on measures primarily through KITO EUROPE GmbH to increase our presence in the European market and Germany in particular and to increase exposure to promising frontier markets such as India, Russia and
Central and South American nations.
Parallel to these moves, KITO will step up its efforts to refine and boost the company's infrastructure and organizations to allow continual growth and to ensure and improve legal compliance through Group-wide action aimed at stronger internal control for a more transparent corporate management.
FY2007 will mark the second year of the Medium-Term Five-Year Plan. We have selected "For the Global Next Stage" as the new slogan designed to help achieving the medium and long-term vision of "aspiring to be the "True Global No.1 Hoist Manufacturer" in the genuine sense of the word." Under the new slogan, all employees and officers of the KITO Group have renewed their commitment to reinvention in a concerted
action.
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