Suzuki 2006 Annual Report Download - page 2

A MESSAGE FROM THE MANAGEMENT
In delivering our Annual Report 2006, we wish to extend our
greetings to you.
In terms of the business environment in which our group was
involved, there was concern about the impact of inflating oil
prices, etc. but domestically, there were increases in capital
investments due to improvements in business earnings,
increased demand, etc. Also individual consumption remained
steady resulting in a modest recovery in the business climate.
Overseas, change in global economies, including the
American economy, was generally favorable, and recovery was
steady.
Amid such circumstances, the launch of the “Suzuki Mid-
Term 5-Year Plan” was scheduled to bring the prospect of
decreased profits due to the burden of increased prior
investments in research and development, facilities, etc.,
however, consolidated net sales by our group for this term
came to 2,746,453 million yen (116.1% compared to the
previous year). Regarding consolidated income, increases in
depreciation expenses, research and development expenses,
overhead costs, etc., were absorbed by reductions in price
costs, increases in sales, and currency gains. Operating
income was 113,865 million yen (105.9% compared to the
previous year), ordinary income was 119,321 million yen
(108.9% compared to the previous year), and net earnings for
this term were 65,945 million yen (109% compared to the
previous year).
While non-consolidated net sales of our company were
1,690,169 million yen (114.1% compared to the previous year),
increases in depreciation expenses, research and
development expenses, overhead costs, etc. decreased
operating income to 47,482 million yen (89.9% compared to
the previous year) and ordinary income to 52,179 million yen
(98.6% compared to the previous year). Net earnings for this
term increased to 37,271 million yen (104.3% compared to the
previous year) due to reduction of extraordinary loss, etc.
Dividends at the end of the current fiscal year were an
ordinary dividend of 5 yen plus a special dividend of 1 yen, for
a total of 6 yen per share for the year (11 yen including interim
dividends).
Looking at the business environment surrounding our group,
currency fluctuations and other factors remain extremely
uncertain, and competition between rival companies has
increased even further, leading to an extremely severe
situation.
In order to deal with this serious situation, our group will
implement revisions in all fields and make efforts to strengthen
management culture under our basic corporate policy summed
up by the slogan “In order to survive, let us stop acting in a
self-styled manner and get back to basics.”
In addition to this, the number of directors was reduced to
nearly half of the former number, and a new director’s system
(executive and managing directors) was implemented to make
management in each section more flexible and efficient, speed
up operations, and clarify management responsibility. Board
members are now responsible for multiple departments so as
to eliminate the harmful effects of sectionalism and allow us to
look at operations from a managerial cross-cutting perspective.
In terms of motorcycles, in Japan efforts aimed at expanding
the sales of small motor vehicles and larger motorcycles will
continue. In European and North American markets, we will
promote the introduction of products that enhance a “Sporty,
Youthful, and Unique” brand image derived from our racing
activities in order to build up a highly profitable motorcycle
operation. And as the growth of economies rapidly increases
demand for motorcycles in Asia, we will introduce products that
meet with market needs and promote the development and
improvement of production systems.
In terms of automobiles both domestically and overseas,
efforts will be made to develop products and business activities
closely tied to the market. To increase sales in Japan, we are
transforming our Suzuki Arena dealers with additional staff and
education programs aimed at strengthening the sales force.
Overseas, onsite procurement of components, cost reductions
and further heightening of quality and productivity will be
pursued in order to strengthen our business base.
Furthermore, efforts will be taken to develop, in an effective
and efficient manner, products that closely suit each of the
world’s four central markets, and introduce them in a timely
fashion. And in protecting the global environment, we will
promote the development of products designed for low
environmental impact by reducing exhaust emissions,
improving fuel efficiency, reducing the amount of natural
resources required for their production, and facilitate recycling.
In addition, we will work toward maximizing the effectiveness of
our strategic alliances with Fiat in diesel engines, and with the
General Motors Corporation in hybrid and fuel cell vehicles, etc.
Although the General Motors group reduced their holdings
of our corporate stock to 3%, the General Motors Corporation
and Suzuki have had ties since August 1981 and our
constructive alliance has continued for over 25 years. We will
continue to promote concrete projects such as the cooperative
development of advanced technologies, our joint venture in the
CAMI project in Canada and new mid-sized SUV production at
CAMI, cooperative development of power train systems,
complementary supplying of OEM products, global joint
procurement, etc.
We supply OEM mini vehicles to the Nissan Motor Co., Ltd.
based on an April 2001 agreement, and as a prerequisite for
complementary supply, we will promote the expansion of OEM
supply in the future.
Under the motto ”Small Cars, —for a Big Future.” Suzuki has
set out our determination to continue active efforts to develop
small cars that our customers demand and to make efforts to
ensure that our products have a minimal impact on the global
environment. At the same time, we will focus on the key words
“Smaller, Fewer, Lighter, Shorter and Neater” in all aspects of
production, organization, facilities, parts, environment, etc., in
order to promote a highly efficient and healthy business
operation.
In terms of our directors and employees, all statutes, social
norms, and in-house bylaws, will be strictly observed and we
will act frankly and with sincerity.
We look forward to the continued support and
encouragement of all of our stockholders.
June 2006
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SUZUKI MOTOR CORPORATION