FRANKFURT -- Denso Europe's new president, Nobuaki Katoh, says his operations will make money in fiscal year 2005-06 after two straight years of losses.
"I expect an operating profit for this year," Katoh said during an interview in September at the Frankfurt auto show.
Denso posted an operating loss of 63 million euros, or about $76 million at current exchange rates, in Europe in its 2004-05 fiscal year, which ended March 31.
The supplier blamed the shortfall on the costs of opening a heating, ventilation and air conditioning plant in Liberec, Czech Republic, and expanding a factory in Szekesfehervar, Hungary, that specializes in common-rail diesel systems.
He said both plants are at full capacity now.
"It takes time for new facilities to become profitable," said Katoh, who replaced Michio Fukuzaki in June.
Fukuzaki returned to Japan as the senior managing director of Denso's sales group.
Denso wants to be one of Europe's top five suppliers by 2010. To achieve that goal, the Japanese supplier is investing heavily in the region -- and is losing some money in the process.
Denso's European deficit in the 12 months that ended March 31 was nearly double the previous financial year's $39.8 million loss. Overall, Denso reported record global revenues of 2.8 trillion yen, or about $24.54 billion at current rates, during its fiscal year.
Denso was profitable in its other regions: Japan, the Americas and Asia-Oceana.
Katoh said he intends to lower Denso Europe's overall costs by getting better prices for raw materials and improving the production processes at the company's 16 European factories. Katoh said he wants to have the same high level of productivity and quality at all of Denso's plants in Europe.
Katoh joined Denso in 1971. He is credited with developing the business strategy that made Denso the world's top supplier of air conditioners. From 1999 until his arrival in Europe, Katoh worked in the company's planning department where his main task was to globalize Denso further.