NOK to Save Profitability for FPC Business toward F2009

NOK Corporation, a Japanese top maker of seal products and flexible printed circuits (FPCs), announced the firm tries to stem downtrend of operating income margin for the FPC business unit by cost reduction mainly at overseas production bases along its new 3-year management plan for fiscal 2007-2009 started April. The firm targets net sales of 220 billion yen for the FPC business unit in fiscal 2009, up by 32% from estimated sales in fiscal 2006, and operating profit of 23.9 billion yen, up by 27%.NOK aims to expand total consolidated net sales by 25% to 600 billion yen and operating profit by 53% to 62 billion yen in fiscal 2009 compared with estimated accounts for fiscal 2006 along the new 3-year plan.Masanobu Tsuru, president of NOK explained the firm will reduce FPC productive costs by improvement of offshore plants’ productivity through introduction of highly advanced equipment and yield rate for multilayered FPC. At the same time, the firm will try to expand FPC sales to overseas cell phone makers and strengthen sales sites in China and Europe as well as keep high market share for FPC applied to hard disc drives.NOK’s operating income margin for the FPC business unit declined to 16.4% in fiscal 2005 and 13.8% in first half of fiscal 2006 from 19% in fiscal 2003 and 19.4% in fiscal 2004. The background is that FPC’s unit price has sharply downed in recent years due to severe price competition in end product markets. The operating margin is estimated to become 11.3% through fiscal 2006 and will even down to 10.9% in fiscal 2009. However, Mr. Tsuru said the operating margin seemed lower than 10% in second half of fiscal 2006 and the margin could improve from this bottom.