0

Furukawa Electric Co., Ltd. ANNUAL REPORT 2010

Develop New Businesses andRestructure Operating Portfolio

11Create New Businesses

11

Next-Generation Vehicles
Energy / Smart grids
High-Density Optical Telecommunications

Strengthen Existing Businesses

17

Expand Transmission Infrastructure Business Globally
Enhance Functional Materials BusinessRestructure Traditional Processing Businesses

Reform Organizational Climate

21

ComplianceGroup Management
Human Resource Development Activities
Environmental Conservation Activities

Improve Financial Strength

22

Asset Rationalization
Enhance Investment Efficiency

Special Feature

New Frontier

2012

Furukawa Electric Established the 3-year Medium-Term Plan New Frontier 2012 to Seek
Growth Opportunities in New Businesses and Markets in the Period from FY2011 to FY2013
At the start of fiscal 2011, Furukawa Electric launched its
medium-term New Frontier 2012 plan for the period of fiscal
2011 to 2013.
The primary goal of the plan is to bolster research anddevelopment aimed at the creation of new eco businesses. The
plan also calls for the reinforcement of our existing businesses,
including the transmission infrastructure business, in order totarget growth in demand from emerging markets where largescale infrastructure investments are expected to continue.
In this manner, we will seek growth opportunities innew businesses and markets that represent the new frontier
for our Group, and will rein in asset risk so as to develop amanagement base that can flexibly respond to the revised tax
system and fluctuations in commodity prices.

10

Furukawa Electric Co., Ltd. ANNUAL REPORT 2010

New Frontier 2012 Quantitative Targets
We will build up shareholders’ equity and pay off debt with profits while maintaining total
assets at current levels.
(Billions of yen)

End-Mar. 2010

Total assets

835.8

Shareholders’ equity

162.6

Debt

362.1

D/E ratio

2.2

ROA

2.4%

Total asset turnover

1.0

End-Mar. 2013 Plan

900.0
210.0
320.0
1.5
5.6%
1.1

Change
+7%
+29%
-12%
-0.7
+3.2p
+0.1

Note) ROA = Operating income (loss) / Total assets

We will boost operating income to ¥50 billion through strengthening each business segment.
(Billions of yen)

FY2013 Plan

FY2010Net sales

809.7

Operating income

20.3

Net income

9.7Note) We have calculated figures for fiscal 2010 on the assumption that the exchange
rate will be USD/JPY 92.90 and the price of copper, aluminum and crude oilwill be ¥610.30 per kg, ¥190.20/kg and US$ 69.60 per barrel, respectively. The

1,000.0
50.0
25.0

Change
+24%
+46%
+58%

forecasts for fiscal 2013 are based on the assumption that the exchange
rate will be USD/JPY 90 and the price of copper, aluminum and crude
oil will be ¥640 per kg, ¥220/kg and US$ 79 per barrel, respectively.

We will reduce capex by 15% compared with the previous medium-term plan.
(Billions of yen)

FY07-10 Avg.

Capital expenditure*

38.5

Depreciation and amortization

42.4

FY11-13 Avg.

33.0
40.0

Change-5.5-2.4*Capital expenditure focus: Copper foil, automotive parts, optical fibers, etc.

11

Furukawa Electric Co., Ltd. ANNUAL REPORT 2010

Develop New Businesses andRestructure Operating Portfolio

I

Special Feature

Create New Businesses

New Frontier

2012

Focus area

Roadmap for the development of
new eco businesses

2010
Eco-car market growing globallyWorld eco-car market outlook(Million units)
20

(%)
100

16

Next-Generation
VehiclesOn-vehicle antennas

Combustion 80
engines
60

12

HEVs

8

Lightweight aluminum harnesses
Foils for Li batteries
Ultra long-life batteries

20
EVs

2010

2015

UWB radar40

40

We will focus on the development of key technologies
used in next-generation vehicles, including lithium-ion
batteries and lighter weight material solutions.

0

2020

Battery sensors

Nano metal powders

Source: Mizuho Bank

Investments in smart grids increasing
Smart grid investment 2010–2030(Trillions of yen)

US

EU

Japan

Total

Smart meters

1.7

1.3

0.5

3.5

Power controls

5.9

4.5

1.8

12.3

Inverters

4.1

4.3

3.8

12.6

Superconducting
conducting cables

7.3

5.5

2.2

15

Batteries

32

32

6.4

69

Energy /Smart Grids

Nano metal powders

SC cables
Offshore LNG
transport piping
Fiber lasers for processing

Source: Nomura Securities

Growing demand for high-density opticaltelecommunications globally
Optical fiber market outlook(Million km)
200
Growth rate: 6-7%

AfricaMiddle East
EuropeOther APAC
India

160
120
80
40
0

2008

We will play a leading role in developing new
innovative smart grid technologies, as one of the few
manufacturers with expertise in both powertransmission and telecommunications.

2009

Source: CRU September 2009

2010

2011

2012

High-Density
Optical
Telecommunications

We will provide high quality products and our expertise
to international markets as Japan’s top supplier of
optical telecom infrastructure solutions.
PON systems
Light source for tunable lasers
High-function optical devices

China

Active optical cables

Japan
CALA
NAR

Glass blanks for memory disks

Furukawa Electric Co., Ltd. ANNUAL REPORT 2010

Becoming a Contributor to the Environmental
and Energy Revolution
With the issues of global warming as well as resource depletion
growing more serious, the world needs to embark on a newenvironmental and energy revolution to achieve the vision of alow-carbon society.
Against this background, Furukawa Electric will focus on
the three eco business areas of next-generation vehicles, smart

grids (next-generation transmission networks), and highdensity optical telecommunications, as areas of environmental
business that leverage our strength in materials technologies.
We will produce innovative products and proprietary 2010
technologies in these areas, as well as increase research anddevelopment spending by 20% compared to fiscal 2009 todevelop new business segments that will form the basis of our
future growth.

Product line

2013

12

Sales plans by new
business category(Billions of yen)
60

2016

Next-generation vehicles

Intelligent transportation systems
Harnesses

High-voltage harnesses for EVs

50

Materials for secondary batteries

Activators for Li batteries

High-density
optical telecom

Power electronics

GaN power devices

40

Power electronics

GaN power devices

Materials for secondary batteries

Mass storage batteries for smart grids
SC limiters

SC storage

Riser pipes for undersea oil and gas resources
Ultra-short-pulse fiber lasers

30

Superconductivity
Pipes for transporting offshore oiland gas resources
Fiber lasers
20

Energy /smart grids

Access systems
10

High-performance fibers
Optical interconnection systems

Coherent components
Optical interconnection
Mass storage components
0

2010

2013
(Plan)

2016(Plan)

13

Furukawa Electric Co., Ltd. ANNUAL REPORT 2010

Special Feature

New Frontier

2012

Develop New Businesses andRestructure Operating Portfolio

Create New Businesses

Next-Generation
VehiclesA variety of technical challenges, including improving
performance and fuel consumption, reducing CO2
emissions, and pursuing safety and comfort, still must be
resolved in order to promote the further spread of electric,
hybrid, and other next-generation vehicles.
Furukawa Electric has accumulated a vast base ofknowledge and expertise in providing a broad mix ofmaterials and components to the auto industry. Our indepth understanding of automaker needs also positions
us to address technical developments that resolve
challenges in the industry. Beginning with lower-weightbodies and cables, we are making eﬀorts to address amultitude of challenges, including improving the function
and performance of vehicle lithium-ion batteries anddeveloping on-vehicle antennas, radar, and sensors that
ensure safe and comfortable driving.

Proprietary technologies used in next-generation vehicles
For safety
Ultra-wideband RF radar (UWB radar)
A sensor for detecting obstacles andmoving objects within a range of several
tens of meters from a vehicle. The radar
has a distance-measuring accuracy ofunder 10 centimeters.

For the improvement of HV and EV performance

For improving fuel efficiency and reducing CO2 emissions
Aluminum shielded harness for HEVs
The harness has the same level of shielding as
conventional copper braided shield wires against
the electromagnetic effects generated by the large
currents in the motor during driving. The harness
also reduces vehicle weight.
High-strength high-heat conductive
aluminum alloys (for the hood, body, and outerand inner panels)
Superior heat conductivity, high strength, easy
molding qualities are combined in our
high-performance aluminum alloy. Use of these alloys
in a vehicle’s body, interior materials, and parts
casings will reduce weight, yet retain high strength.

High-voltage connector for HEV power supplies
A water-proof connector for use inhigh-voltage batteries featured in
hybrid as well as electric vehicles. We
have successfully developed acompact design.
Ultra long-life batteriesThis high-performance battery significantly
improves charge-acceptance performance,
which is a downside of conventional batteries.
The battery was developed for next-generation
eco-friendly vehicles such as idling-stop or mild
hybrid cars.
Copper foil for lithium-ion batteries
Copper foil used in the negativeelectrode of batteries with excellent
performance in terms of flexibility,
surface smoothness, and thickness. The
foil also improves the service life andreliability of batteries.

Furukawa Electric Co., Ltd. ANNUAL REPORT 201014

While a multitude of elemental technologies is required
to realize the vision of smart grids, of particularimportance is the fusion of power transmission andtelecommunication technologies. Furukawa Electric has
drawn considerable attention as one of the few companies
globally to possess expertise in both technologies. We
will continue to focus on developing new technicalinnovations in these fields as well as utilizing ourstrong knowledge base in a variety of technologies.
For example, we are developing optical telecom
circuits and devices for power systems to make powertransmission and distribution networks more intelligent.
We are also working on a variety of smart grid technologies,
including high-performance storage systems to ensurestable power supplies, and superconducting cables thatprevent power loss during transmission and distribution.

Energy /Smart Grids

Proprietary technologies used in energy / smart grids

For the introduction of IT solutions forthe power grid

Aerial lines
Power cables

Mega solar (photovoltaic system)
Transmits supply data•

Information network
Next-generation automatic power Distribution
Optical cables
Next-generation automatic meter reading
Radio antenna

OfficesHousesStorage

Electric vehicles

Offshorewind power

Fuel cell
Information
control

Household photovoltaic systemsurplus electricity••Sells
Transmits demand data

For the stable supply ofelectricity
Electric power storage cells
Stores wind and otherrenewable energies
Discharges power in linewith demand••

Industrial plant

For the reduction of electricity lost duringtransmission and distribution
Superconducting cables

lines required to form smart grids•Transmission•Superconductivity results in zero power loss

Flow of electricity
Flow of information

Superconducting fault current limiter
Reduces short circuits in the system and preventsa ripple effect during an accident or disaster•

Power electronics / devices

Concentrated power supply
Thermal generation system
Controlled in line with supplydemand balance
Covers any shortfall from energysaving technologies

•
•

15

Furukawa Electric Co., Ltd. ANNUAL REPORT 2010

Special Feature

New Frontier

2012

Develop New Businesses andRestructure Operating Portfolio

Create New Businesses

High-Density Optical
Telecommunications

Furukawa Electric has developed the expertise toconstruct complete packaged solutions in the field of
optical telecommunications that support high-density,
high-speed communications. From backbone to metro
networks, our products and technologies encompass
the full spectrum of the optical telecommunications
field, from photonic components such as semiconductor
lasers and optical amps to network devices, opticalfiber cables, and transmission equipment.
In addition, with the spread of cloud computing*, the needhas arisen to focus on not only the conventional technologyof telecommunications but also on data communications.
Furukawa Electric possesses the technologies requiredfor high-speed, high-density server storage solutions,
including disk materials and optical inter connections.
As such, Furukawa Electric has established a superior
track record of developing diverse technologies in the highdensity optical telecommunications field. Leveraging this,we will continue to respond to the sophisticated needs ofcommunications infrastructure.
*Cloud computing:This denotes computing tasks and software accessed over a network
instead of directly through a desktop computer or software.

Proprietary technologies used in high-density
optical telecommunications
For high-density data communications

Inter-regional network (core)
Intra-regional network (metro)
Access network

Zero-water-peak fibers
Hole structure fibers
Optical amplifiers
Semiconductor lasers

For the development of high-densitycommunication networks
High-performance routers
WDM transmission equipment and devices

For energy
efficiency andstorage solutions

GE-PON

High-speedtransmission
multi-mode fibers
Opticalinterconnection
High-density opticalfiber connectors
Disk materials
Heat sinks
Optical components
for optical digital
coherent
transmissionIPtelecommunications
network

FTTH

Base station

GE-PON

Home

MobileCompany network

Data center

Cloud computing

Furukawa Electric Co., Ltd. ANNUAL REPORT 2010

Message from the CTO

Strengthening Group-Wide R&D to Develop New
Technologies and Businesses
Combining Multiple Elemental Technologies

Furukawa Electric has established dedicated researchlaboratories focused on specific key technologies,
such as telecommunications, energy, electronics, andautomotive, to promote research and development
tailored to the needs of various industries.
We are also building an internal cross-sector
framework for research and development that spans
all Group companies. This will allow us to integrate
our expertise and knowledge in these technologies todevelop and create the new eco businesses outlined in
the medium-term plan.

Timely and Global R&D

In the smart grid business, we plan to establish a
dedicated research and development center within
the R&D division to capitalize on the resources of eachGroup company.
As smart grid projects are large-scale and, in manymarkets, nationalized, it is critical to gather market
information globally as well as create a framework
for launching new business ventures. Our aim is toanalyze this market information and develop links
with governments and power device manufacturers,
to ensure access to business opportunities and to
implement research and development initiatives directly
related to market needs.

Kazunori Nakamura
Chief Technology Oﬃcer

We are also in the process of developing a Groupwide framework for research and development activities
in the fields of next-generation vehicles and high-density
optical telecommunications.

Focusing on Next-Generation Batteries

Of particular importance to both smart grids and nextgeneration vehicles are next-generation batteries,
including lithium-ion batteries.
We are planning a Next-Generation Battery
Research & Development Center to bolster our
research and development initiatives in nextgeneration batteries. The Center will devise researchstrategies for next-generation technologies anddevelop activators and materials for batteries.
For its development of silicon activators as analternative to conventional carbon activators, whichhelps increase the lifespan of lithium-ion batteries,
Furukawa Electric’s technology was adopted
in the New Energy and Industrial Technology
Development Organization (NEDO) Li EAD Project
for the development of high-performance storage
systems for next-generation vehicles. The Center
will establish battery assessment technology inorder to conduct internal assessments of the final
battery product. This will move our development
forward more efficiently.

16

17

Furukawa Electric Co., Ltd. ANNUAL REPORT 2010

Develop New Businesses andRestructure Operating Portfolio

Strengthen Existing Businesses

Special Feature

New Frontier

2012

Focusing investment on growth markets
Market for transmission infrastructure
growing globally
Optical fiber market outlook
Increasing traffic will drive 3G mobile investment
in emerging countries and cloud computing indeveloped countries. Demand will drop but reboundagain, mainly in Asia.
(Million km)
200

Infrastructure
1 Transmission
Business
We will strengthen our internal structures to
respond first and foremost to capturing demand
from Asia.
Telecommunications
Launched JV for laying optical fibers
Telecommunications

Growth rate: 6-7%

Signed a JV agreement to produce optical fiber raw materials

160

AfricaMiddle East
Europe120

Other APAC
India

Telecommunications

China
Japan

Strengthening broadcast infrastructure business to capitalizeon the country’s use of a Japanese-style terrestrial digital
broadcast system

CALA
NAR

Energy

80
40
0

2008

2009

2010

2011

2012

Amid growth in the high-voltage cable market, ourmanufacturing subsidiary Shenyang Furukawa Cable Co., Ltd.
retains the top market share in China

Source: CRU September 2009

Energy market outlook
New investments in emerging countries and demand
from renewals in developed countries will drive longterm growth.
(Trillion km)
20
Eastern Europe
Latin America

15

AfricaMiddle East

10

Asia

5

0

1980

1990

2000

2010

2020

Note) Power demand in emerging regicns
Source: EIA International Energy Outlook 2009

2030

Establishing systems to respondto the needs of emerging markets,and raising our overseas sales
ratio to 35%

Furukawa Electric Co., Ltd. ANNUAL REPORT 2010

Meeting Global Infrastructure Demand and Providing
Value in Emerging Markets
Emerging markets, such as BRICs and ASEAN, are expected
to see continued market growth. This is precisely why thesemarkets represent the new frontier for Furukawa Electric.
To meet the needs of these markets, today Furukawa
Electric is moving forward with plans to bolster its

2 Functional Materials BusinessWe will strengthen our mass-production systems
for high performance materials and components
to capitalize on demand in growth markets.
Energy and Industrial Products

manufacturing sites and sales networks in each of theseregions. Currently, we have about 50 sales and manufacturing
facilities in BRICs and ASEAN markets. Making use of our global
supply network, we will look to increase our internationalsales ratio from 30.8% in fiscal 2010 to 35% in fiscal 2013, andeventually to 50% as a long-term target.

Eco and mobile device markets expanding
World Li-ion battery market outlook
The market is expanding-steadily, underpinned by
growing demand for next-generation vehicles andmobile devices.

Make full-scale inroads into the LED TV market using our
proprietary MCPET microfoamed reflective sheet(Trillions of yen)
3.0

Electronics and Automotive Systems

2.5

As the only manufacturer producing both aluminum andglass blanks for HDDs, aim to become the top
supplier of both. Work to achieve stablemass-production of glass blanks

1.5Electronics and Automotive Systems, Light Metals

1.0

0

3%

20.3%
Japan

Japan

65%

7%
Asia

25%

Asia

30.8%
249

billions of yen

HDD market outlook
The market for tough, impact-resistant glass blanks is
expanding on the back of growing demand for mobile
devices, including laptop computers.

500
Mobile 2.5”
400
300

35%

350

billions of yen

69.2%

200
Desktop 3.5”10002009 2010 2011 2012 2013 2014

Source: Gartner

FY2010

2020

600

North
America

4.9%

2015

(Million pcs / Year)
700

OthersNorth America

2010

Source: Daiwa Securities SMBC

Augment production while closely monitoring the demand
outlook for lithium-ion batteries used in EVs and HEVs.
Strengthen our global top share in aluminum foils used inpositive electrodes

5.6%

Mobile phones

0.5

Metals and Light Metals

OthersAutomobiles

2.0

Develop aluminum harnesses and bodies meeting theneeds of lighter weight vehicles. Retain our status as theglobal top supplier of aluminum compressor wheels fordiesel engines

FY2013 plan

18

19

Furukawa Electric Co., Ltd. ANNUAL REPORT 2010

Special Feature

New Frontier

2012

Develop New Businesses andRestructure Operating Portfolio

Strengthen Existing Businesses

1 Expand Transmission Infrastructure Business Globally
Capitalizing on expanding global investments

Infrastructure investments in power transmission
and telecommunications are expected to continue inemerging countries such as BRICs and ASEAN over the
long-term.
In China and India, further infrastructure
investments are anticipated due to growing traffic
on 3G mobile phone networks, while investment in
power transmission infrastructure in the Middle East,
Russia, India, and China is also expected to increase.
Eight countries in Latin America, including Brazil, have
employed Japanese-style terrestrial digital TV broadcast
systems, spurring demand for broadcast station
antennas and cable TV transmission systems.
The Furukawa Electric Group is reinforcing its supply
systems around the world to respond adequately to thisincreasing global demand. In India, our joint venturebusiness with a local company for the manufacture andlaying of optical fiber launched operations in March 2010.
We are also increasing production capacity at our opticalfiber joint venture manufacturing company in Xian, China.
In China, we boosted production capacity by 30%
at Shenyang Furukawa, a major manufacturer of highvoltage cable, in May 2009. Through Shenyang Furukawa
and affiliated company Viscas Corporation, we will strive
to become a top global supplierof ultra-high-voltage cables.
Furthermore, we are working
to expand business operations
in South America through our
locally incorporated subsidiary.
Such localized initiatives
will enable us to expand our
Installation of optical fiber
cable overseasinternational sales share.

2 Enhance Functional Materials Business
Li-ion battery materials for EVs and HEVs as well as
materials for HDD blanks

Furukawa Electric is looking to expand the operations of
its functional materials business by focusing on greater
value-added copper and aluminum foils used in lithiumion batteries for EVs and HEVs, as well as materials used inblanks for HDDs.
In the field of lithium-ion batteries for EVs and HEVs, weare a major supplier of copper and aluminum foils used inpositive and negative electrodes, and are striving to supply
higher value-added products in the segment, including
developing activators made of carbon and other materials.
The widespread use of lithium-ion batteries in EVs
and HEVs began in earnest in fiscal 2011. With the spreadof next-generation vehicles, we expect the lithium-ion
battery market to grow three-fold by fiscal 2013 and fivefold by fiscal 2014. As such, while carefully monitoring
demand, we will move forward with plans to augment our
production facilities.
As we are the only company in the world tomanufacture and sell both aluminum and glass materials
used in blanks for HDDs, we will aim to become thenumber one global supplier of these materials as well.

We enjoy a 50% share of the global market for aluminummaterials, a conventional mainstay material for blanks,
and will continue to maintain this share. At the sametime, we are also planning on making full-scale inroads
into the glass materials segment, in order to capitalize
on growing demand from mobile devices. Accordingly,
we have developed a proprietary manufacturing
process that utilizes our optical fiber production
technologies, launching mass production in April 2010.
In consideration of today’s global supply shortage, weplan to expand our production scale about twenty-foldin 2013.
In addition to these two areas, we have made fullscale inroads into the LED TV market with MCPET
microfoamed reflective sheet. We also provide solutionsin increased-productivity
semiconductor wafer
processing tape, lightweight
aluminum harnesses forvehicles, and aluminum
compressor wheels, where
we have established a top
share globally.
Glass blank for an HDD

Furukawa Electric Co., Ltd. ANNUAL REPORT 201020

3 Restructure Traditional Processing Businesses

Measures aimed at restructuring

magnet wire business• Consolidate
domestic copper piping business• Optimize• Reform structure of domestic aluminum business+

Position of traditional processing businesses

GrowthIn order to optimize its operating portfolio, Furukawa
Electric understands that it must not only extend its new
businesses and growth businesses, but also consider how
to improve less profitable businesses that have passed
their prime.
As a result, we have categorized our Group businesses
into the four areas of “Developing,” “Growth,” “Core,”and “Restructuring,” with the plan to promote thereform of less profitable businesses classified under the
Restructuring category.
The specific target of this reform process is simple,
lower value-added processed products such as copper
wires and strips, rolled aluminum products, electrical wire,and general plastic products. Although these traditional
processing businesses have focused primarily on theJapanese market, future growth is not expected due toweaker demand attributed to Japan’s aging society anddeclining birthrate. As such, where we once produced asingle product at several factories in order to diversify risk,

we will now shift strategy to produce one product at one
factory to enhance production efficiencies.
As part of moving forward with this new operating
model, Furukawa Electric launched the Business Viability
Assessment Committee in April 2010 to assess and discuss
the effectiveness of restructuring plans. (See page 22.)Development

GrowthNew eco businesses

Functional materials
business

RestructuringCore

Traditional processing
businesses

Transmission infrastructure
Rolled aluminum, automotive-

Carefully assess low-profit businesses and promote
greater efficiencies through a “One Product, One
Factory” approach-+

Profitability

Dummy Text: For a company to achieve its sustainable earnings and growth, it
must increase its sales. It has now become imperative for us to develop ouroperations from a global perspective so that we can improve our operations.
For this reason, in addition to our commitment to achieve an overseas sales

The New Frontier Fund
Investment in technology development, overseas
expansion, and M&A will be critical to achieving
the vision of Furukawa Electric’s new medium-termplan to develop new businesses and restructure its
operating portfolio.
For fiscal 2011 to fiscal 2013, we have increased
average annual research and development spending
20% above fiscal 2010 levels to ¥21.5 billion, andestablished the New Frontier Fund with a total of¥20 billion.
The New Frontier Fund, endowed through asset
sales and business profits rather than through a newoffering of capital stock, is being used to accelerate
our growth plans in new businesses and markets. Of
the ¥20 billion fund, ¥10 billion will be allocated forresearch and development, while the remaining ¥10billion will be used for M&A and business alliancesthat will enhance our mobility to respond to changes
in the management environment.
Launching and utilizing the New Frontier Fund
We will launch an internal ¥20-billion fund funded by asset disposal
and business profits to accelerate growth in new frontiers

R&D

M&A

¥10 billion allocated for R&D

Japan
Focused on R&D¥10 billion allocated for M&A andmobility to respondto changes in management
environment

Asia

Reinforce growthbusinesses

OthersUse mainly inemerging markets

21

Furukawa Electric Co., Ltd. ANNUAL REPORT 2010

Special Feature

New Frontier

2012

Reform Organizational Climate

A truly global corporation must understand andpractice CSR taking into consideration the local
customs, culture and legal systems in each country andregion in which it operates.
Based on this recognition, Furukawa Electric
will continue to move forward with the reform of its
organizational climate with the following perspectives.

3. Enhance monitoring
Conduct audit on compliance with the Anti-Monopoly Act
through the internal audit division
Seek guidance and advice from external
experts, including attorneys
4. OtherEstablish internal employee hotline for issues relating to the AntiMonopoly Act
Review regular rotation of human resources in the sales andmarketing division, etc.

•
•
•
•

Compliance
Furukawa Electric takes seriously the repeated
investigations by the Japan Fair Trade Commission on
suspicion of violations of the Anti-Monopoly Act. As we
implement measures to prevent future occurrences, wewill strive to ensure compliance best practices in every
aspect of our business going forward.
The third-party investigation committee on Violationsof the Anti-Monopoly Act , established in July 2009,
completed its investigation into the cause of these
violations and gave recommendations on specificcountermeasures in December 2009, with the committee’sreport released to both internal and external stakeholders.
Furukawa Electric has placed a compliance director
and compliance promotion officer in each businessdivision to reinforce its compliance structure and practices.
The Company is also taking steps such as strengthening
control over the price-setting process in the sales andmarketing division, enhancing monitoring by the internal
audit division and external experts and establishing an
employee hotline to report possible violations of the AntiMonopoly Act.
Future measures to develop and improve compliance practices
1. Strengthen the compliance structure andensure on-site best practices
Place a compliance director and compliance promotion officer ineach business division
Provide training and educational activities
Conduct compliance inspection activities within each businessdivision (confirmed using check sheets, etc)
2. Strengthen governance in sales and marketing division
Strengthen governance of price-setting process, etc.
Reexamine company participation, including attendees, inassociations and industry organizations

•
•
•

•
•

Group Management
The pursuit of efficiencies and cost reductions in
manufacturing throughout the world has resulted indemand not for individual components, but rather for the
supply of these components as integrated systems.
Given these global market needs, Furukawa Electric
will continue to enhance overall Group competitivenessby pursuing operations that combine the technologies
and products of each Group company.

Human Resource Development Activities
Furukawa Electric will undertake recruitment activities on
a global scale to train and hire human resources that fit
its model for growth. In addition, we will develop training
programs that instill not only technical knowledge in
specialist fields, but also practical business expertise, suchas finance and tax systems.

Environmental Conservation Activities
We have established a target to reduce CO2 emissions
by 15% compared to 2001 levels by fiscal 2013 and are
currently striving to reduce the environmental impact
resulting from our business activities to meet this target.
At present, we have achieved a 12% reduction, giving
us confidence that we can achieve our 15% target onschedule by continuing to improve production efficiencies
through process innovations.

Furukawa Electric Co., Ltd. ANNUAL REPORT 2010

Special Feature

New Frontier

2012

22

Improve Financial Strength

In order to implement the measures we have discussed
and continue expanding globally, Furukawa Electricmust build a corporate structure that can stand up tovarious management risks.
Our initiatives thus far, such as our extensive
cost-cutting efforts implemented to weather the
global financial crisis over the past two years, haveenabled us to steadily reduce interest-bearing debt
and improve asset efficiency. We will continue toimprove financial strength further to attain our fiscal
2013 targets of ¥1 trillion in net sales, ¥50 billion in
operating income (5% operating margin), and ¥25
billion in net income.

Asset Rationalization
Furukawa Electric will rein in asset risk by maintaining
total assets around the current ¥900 billion level andexpanding sales by developing new business segments
and strengthening existing businesses. Furthermore, wewill seek to increase profitability by continually working to
reduce inventory, receivables, and fixed costs.
With our emphasis on asset efficiency, ROA (return on
assets) on an operating income basis will be a key financial

indicator. Our target of 5.6% exceeds our previous recordof 4.9%, achieved in fiscal 2007. By using profits to pay off
interest-bearing debt and build up shareholders’ equity,
we plan to reduce interest-bearing debt to ¥320 billion, a
12% decline from fiscal 2010, and achieve a debt-to-equity
ratio of 1.5 by fiscal 2013.

Enhance Investment Efficiency
Furukawa Electric plans to reduce capital expenditures by
15% from ¥115.8 billion during the 2007--2010 mediumterm plan (¥38.5 billion annual average) to ¥100 billion
during the 2011--2013 medium-term plan (¥33 billion
annual average).
Capital expenditures during the first half of the
2007-2010 plan focused on the light metals segment,such as rolled metals and wrought copper. Goingforward, however, there will be less need for investments
to increase production in Japan, as the focus of capital
expenditures will be on generating new businesses anddeveloping new technologies. The key focus will include
investments aimed at the overseas expansion of copper
foils used in lithium-ion vehicle batteries, automotive
parts and optical fiber cables.

The Business Viability Assessment Committee and Investment Committee
Furukawa Electric established the Business
Viability Assessment Committee in April 2010
as an organization to improve asset efficiency
and accelerate the restructuring of its operating
portfolio. The Committee has been given the
mission to review less profitable businessand formulate restructuring strategies, and is
responsible for evaluating the feasibility andrelevance of restructuring plans devised byoperating divisions as well as the authority to makechanges where necessary.
In August 2009, Furukawa Electric establishedthe Investment Committee as a deliberative organ
to reduce potential risks and to bolster the priorreview of decision-making relating to financing andinvestments, such as capital expenditures and M&A.