Operation of Lines 6 and 7 and Line Expansion

「Except for new installations and similar projects for routine equipment renewal, there are no plans for new installations or similar projects involving significant equipment.」

「Regarding manufacturing, W-SCOPE KOREA CO., LTD. (WSK) has been gradually suspending operations of its separator production lines since the second half of the current fiscal year in response to declining customer demand.」

「Meanwhile, the company is continuing to introduce to the new large film-forming lines, whose installation was completed in the fourth quarter of the previous fiscal year, the same productivity-enhancement technology used at WSK.」

「At W-SCOPE CHUNGJU PLANT CO., LTD. (WCP), mass production continued on the No. 1 through No. 6 large film-forming lines. In parallel, trial operations were conducted on the new large film-forming lines whose installation was completed in the fourth quarter of the previous fiscal year. The company is also introducing the same productivity-enhancement technology used at WSK to these new large film-forming lines and plans to begin mass-production operations sequentially during the current fiscal year.」

「At W-SCOPE CHUNGJU PLANT CO., LTD., installation of 2 new film-forming lines was under way during the fourth-quarter consolidated accounting period. The new lines had not yet begun mass-production operations, while the equipment overall operated stably.」

「Regarding manufacturing, improvement work on existing lines at W-SCOPE KOREA CO., LTD. (WSK) has progressed smoothly. In addition, the relocation of WSK's No. 3 plant to W-SCOPE CHUNGJU PLANT CO., LTD. (WCP) was completed by the end of the third quarter, and the company is proceeding with the consolidation of the separator business at WCP and the expansion of the ion-exchange membrane business at WSK.」

「Shipment-quality evaluation of samples from the film-forming lines where improvements have already been completed is finished, and evaluation of mass-production samples is under way.」

「Regarding manufacturing, improvement work on existing lines at W-SCOPE KOREA CO., LTD. (WSK) has progressed smoothly, and samples are being shipped from film-forming lines where the improvements have already been completed.」

「Regarding manufacturing, W-SCOPE KOREA CO., LTD. (WSK) continued to work on improving production efficiency. At W-SCOPE CHUNGJU PLANT CO., LTD. (WCP), production volumes on WCP's No. 5 and No. 6 lines, which correspond to the group's cumulative No. 14 and No. 15 lines and began mass-production operations in the fourth-quarter consolidated accounting period of the previous fiscal year, stabilized, resulting in a substantial increase in film-forming line output.」

「W-SCOPE KOREA CO., LTD. (WSK) continued to work on improving production efficiency. At W-SCOPE CHUNGJU PLANT CO., LTD. (WCP), production volumes on the cumulative No. 14 and No. 15 lines, which began mass-production operations in the fourth-quarter consolidated accounting period of the previous fiscal year, stabilized, resulting in a substantial increase in film-forming line output.」

「WSK continued to work on improving production efficiency. At W-SCOPE CHUNGJU PLANT CO., LTD. (WCP), production volumes on the cumulative No. 14 and No. 15 lines, which began mass-production operations in the fourth-quarter consolidated accounting period of the previous fiscal year, stabilized, resulting in a substantial increase in film-forming line output. Output from the coating lines also increased as 2 lines were added year on year.」

「At W-SCOPE CHUNGJU PLANT CO., LTD. (WCP), production on the cumulative No. 14 and No. 15 film-forming lines, which began mass-production operations in the fourth-quarter consolidated accounting period of the previous fiscal year, has stabilized and sales volumes have increased.」

「At W-SCOPE CHUNGJU PLANT CO., LTD. (WCP), 2 new film-forming lines and 2 coating lines began mass-production operations during the fourth-quarter consolidated accounting period, substantially increasing production of coated separators.」

「At W-SCOPE CHUNGJU PLANT CO., LTD. (WCP), the 4 existing production lines continued to operate smoothly in mass production, while preparations for mass-production shipments from 2 new production lines were also completed.」

「Regarding manufacturing, WCP's 4 existing lines continued to operate smoothly in mass production, while installation of the cumulative No. 14 and No. 15 lines was completed. Following product prototyping, the company was awaiting the start of mass-production shipments from the new lines. However, because the start was slightly delayed, the transfer of production of products for automotive projects manufactured by WSK to WCP's new lines has not progressed, resulting in a delay of several months in optimizing production across the group.」

「At WSK, mass-production testing is being conducted on separators for a new automotive battery model scheduled to begin mass-production sales from the fourth quarter of the current consolidated fiscal year on some production lines. At W-SCOPE CHUNGJU PLANT CO., LTD. (WCP), the existing 4 lines have been operating smoothly in mass production, construction of the new mass-production lines, WCP's No. 5 and No. 6 film-forming lines, has progressed, and trial operations are expected to begin in the second quarter of the current consolidated fiscal year.」

「Demand for coating products also increased on production lines for consumer applications, so 2 coating lines were added during the fourth-quarter consolidated accounting period and preparations for mass production are under way. At W-SCOPE CHUNGJU PLANT CO., LTD. (WCP), production for automotive batteries likewise recovered during the fourth-quarter consolidated accounting period, creating a situation in which production had to be expanded urgently. Demand for consumer applications also continued to recover. Since demand for coating products has increased substantially across all projects, the company is proceeding with the addition of 4 new coating lines.」

「At some WSK production lines, we suspended operations on certain production lines from mid-April through May because European automotive OEMs closed their plants as a COVID-19 countermeasure, but resumed production in June. W-SCOPE CHUNGJU PLANT CO., LTD. (WCP) likewise suspended operations on some production lines from mid-April through May, but resumed production in June.」

「At W-SCOPE CHUNGJU PLANT CO., LTD. (WCP), the cumulative No. 12 and No. 13 lines, which began operations in the second half of last year, steadily increased mass supply of automotive separators and made a significant contribution to the increase in revenue for the fiscal year.」

「Regarding manufacturing, WSK began mass production in the first half for a new automotive battery project on some production lines and focused on improving productivity, achieving improvement to a certain level by the end of the fiscal year. At WCP, some production adjustments were made on certain lines due to weak orders for consumer applications, as at WSK. However, the cumulative No. 12 and No. 13 lines, whose installation was completed in the second half, were prepared to begin mass supply of automotive separators within a short period. Mass production began sequentially from the fourth quarter, making a significant contribution to the increase in revenue for the fiscal year.」

「WSK's 9 production lines have generally operated smoothly, although some lines have been used for trial mass production of new products and sample production for new projects. WCP has continued mass-production sales on its cumulative No. 10 and No. 11 lines. Installation of the No. 12 line was completed at the end of June this year, customer approval has already been obtained, and preparations for mass production are complete. Similar preparations for the No. 13 line are scheduled to be advanced by the end of this year.」

「Regarding manufacturing operations, W-SCOPE KOREA CO., LTD.'s 9 production lines were engaged in sample production for EV projects and mass-production trials for line certification on some lines, but overall, all production lines are operating smoothly. At W-SCOPE CHUNGJU PLANT CO., LTD., installation of cumulative Lines 10 and 11 was completed in the second half of the previous year, and mass-production sales have begun, while production of samples for technical approval by major customers is also under way. Installation of cumulative Lines 12 and 13 is nearly complete, and trial operations will begin in the second half of the year.」

「Regarding manufacturing operations, W-SCOPE CHUNGJU PLANT CO., LTD. (WCP), whose installation work was completed in the second half of the previous year, began producing samples for technical approval by major customers on its cumulative Lines 10 and 11, while also beginning production for mass-production sales. WCP is also installing cumulative Lines 12 and 13, which are scheduled for completion in the second half of the current year.」

「At the beginning of fiscal 2019, 11 film-forming lines for mass production were operating. In the second half of the year, W-SCOPE CHUNGJU PLANT CO., LTD. is expected to complete construction of large film-forming Lines 12 and 13 and transition them to mass production.」

「The company has continued introducing large, state-of-the-art manufacturing lines and improving the manufacturing environment within its plants to address the expansion of the lithium-ion battery market and stringent quality requirements for separators used as safety materials.」

「The company has been making capital investments in preparation for the expansion of EV demand from the second half of 2019. Over the past year, 4 film-forming lines and 2 coating lines have started operations, increasing fixed costs including depreciation expenses.」

「Regarding manufacturing operations, W-SCOPE KOREA CO., LTD.'s Lines 8 and 9, which began operating in the second half of the previous year, continued mass-production shipments to certain customers while also producing samples for line approval by major customers. At WCP, construction of Lines 10 and 11 was completed, and preparations are under way to begin mass production.」

「Lines 8 and 9, the large film-forming lines, transitioned to mass production in the second half of 2017. At W-SCOPE CHUNGJU PLANT CO., LTD., the new production subsidiary, mass production on Lines 10 and 11 is scheduled to begin in the first half of 2018.」

「Against this market backdrop, the company has continued implementing its mass-production launch plan for large manufacturing lines, from Production Line 8 onward, in response to the rapid expansion in automotive-related demand. Production Line 8 began operating as planned in the third quarter, and a total of 4 large lines are expected to be operational by the first half of next year. In 2018, production capacity is expected to be more than twice the 2016 level.」

「Operating profit declined sharply year on year as repair expenses were incurred for ongoing renovations to manufacturing lines and the plant aimed at improving quality ahead of sales to the automotive market from next year onward, while productivity declined during the repair period. The decline also reflected higher depreciation expenses for expanded production lines, higher expenses from hiring personnel ahead of facility expansion, and increased sample shipments to new customers.」

「Operating profit was compressed by higher depreciation expenses for Production Lines 5 through 7 added the previous year, higher expenses from hiring personnel ahead of facility expansion planned for the second half of the current year, and increased cost of sales due in part to the appreciation of the South Korean won against the yen.」

「Lines 6 and 7 transitioned to mass production in September 2016. Line 5 began operating in September 2016, but technical issues delayed its transition to mass production by approximately six months from the original plan, resulting in output below the initial supply plan. Line 5 has since resolved its technical issues, achieved its originally planned production capacity from January 2017, and transitioned to stable mass production. The group has also decided to invest in Lines 8 through 13 and coating equipment, and work has already begun on Lines 8 through 11 and the coating equipment.」

「As a result, Lines 6 and 7 completed the transition to mass production in September.」

「Operating profit was affected as expected by lower initial utilization rates associated with the start-up of Lines 6 and 7 and increased fixed-cost burdens.」