RIKEN CORPORATION Business Report FY2006
Business Highlights
| Financial overview | ( in millions of JPY ) |
| - | FY2006 | FY2005 | R.C.(%) | Factors |
| Overall | ||||
| Sales | 91,272 | 88,675 | 2.9 | - |
| Operating income | 7,554 | 7,857 | (3.9) | - |
| Ordinary income | 9,058 | 9,549 | (5.1) | - |
| Current net income | 5,443 | 5,659 | (3.8) | - |
| Automotive/Industrial Machinery Component Division(excludes transactions among divisions) | ||||
| Sales | 77,691 | 74,282 | 4.6 | see note 1) below |
| Operating income | 5,440 | 6,256 | (13.0) | see note 2) below |
| ( R.C. : Rate of Change ) |
Factors
1) While the sales of piston rings only slightly increased, total sales
overall increased substantially, driven by the increased sales of camshafts;
and formed and fabricated materials
2) Operating income decreased despite the Company's continuous efforts at
streamlining the production division in order to reduce the unit selling
prices of its products, respond to the demand for higher quality and precision,
and pass on materials price increases.
Business tie-up
The Company announced that it has formed a global business alliance in
areas of production, sales and technology with MAHLE GmbH, a leading engine
parts supplier in Germany. They plan effective use of both companies'
management resources, seeking for higher competitiveness based on synergy
effects, mainly with piston rings and camshafts. In the meantime, they
will reinforce their joint piston ring supplier in North America and will
study possibilities in mutual use of their operations in Europe and China.
In the area of technology, they plan to establish cooperative operations
both for products and manufacturing, in consideration of expected tighter
environmental regulations. (From an article in the Nikkan Jidosha Shimbun
on Jun.25 2006)
R&D
| R&D Expenditure | ( in millions of JPY ) |
| - | FY2006 |
| Group | 1,482 |
| Automotive/Industrial Machinery Component | 1,378 |
<Main R&D activities>
-Automotive/Industrial Machinery Component
1. Low friction and long-lasting gasoline-engine piston rings that lower fuel consumption
2. Diesel-engine piston rings that comply with emissions regulations
3. Valve parts, transmission sealing rings
4. Various surface treatment technology that enables a high degree of high sliding
performance
5. Light- weight and high-strength chassis parts
6. In-vehicle NOx sensors
Technical Tie-up (as of March 2007)
| Company name | Country | Contract | Contract date | Contract period |
| Taiwan Riken Ind. Co., Ltd. | Taiwan | Manufacturing methods for various forged steel engine components such as piston rings, cylinder liners, sleeves, blocks and pistons | Aug. 22, 2005 | 3 years |
| Siam Riken Ind. Co., Ltd. | Thailand | Manufacturing methods for piston rings and other forged steel engine components | Apr. 19, 2004 | 5 years |
| P. T. Pakarti Riken Indonesia | Indonesia | Manufacturing methods for joint and forged parts | Jan. 1, 2006 | 5 years |
| Shriram Pistons & Rings Ltd. | India | Manufacturing methods for piston rings | Mar. 1, 2000 | Contract. Extension under negotiation |
| Allied Ring Corp. | USA | Manufacturing methods for piston rings | Jun. 13, 1988 | by 2007.12.31 |
| Grede Foundries, Inc. | USA | Manufacturing methods for ductile forged components | Jul. 17, 2005 | by 2007.07.16 |
| Lower Control Arm | Jul. 23, 2001 | 8 years from the start of delivery of mass produced products | ||
| Sheet parts | Sep. 16, 2003 | 8 years from the start of delivery of mass produced products | ||
| Riken of Korea Inc. | Korea | Manufacturing methods for piston rings | Mar. 1, 2005 | 5 years |
| Xiamen Riken Ind. Co., Ltd. | China | Manufacturing methods for piston rings | Aug. 1, 1999 | 10 years |
| Manufacturing methods for camshafts | Oct. 1, 2004 | 5 years | ||
| Riken Automobile Parts (Wuhan) Co., Ltd. | China | Manufacturing methods for piston rings, seal rings, valves and other cast iron products. | Mar. 1, 2005 | 10 years |
| Mahle Industria e Camercio Ltda. | Brazil | Manufacturing methods for piston rings for VW Brazil | Aug. 1, 1999 | 5 years Contract. Extension under negotiation |
Investment Activities
| Investment Expenditure | ( in millions of JPY ) |
| - | FY2006 |
| Group | 6,428 |
| Automotive/Industrial Machinery Component | 5,735 |
The Company heavily invested in its core business sector, the Automotive Parts Division that produces engine parts such as piston rings.
Automotive/Industrial Machinery Component Division
-The Company invested mainly in production facilities for increasing and streamlining the production operations of piston rings and valve lifters.
Planned capital investment for FY200窶啖
| ( in millions of JPY ) |
| Company Office (Location) |
Purpose | Planned investment amount | Starting | Estimated completion | Production capacity increase upon completion |
| New addition | |||||
| Riken Corp. Kashiwazaki Plant (Niigata Pref., Japan) |
production facilities for piston rings | 4,702 | Apr. 2007 | Oct. 2008 | 5%increase in production capacity. |
| Riken Corp. Kumagaya plant (Saitama Pref., Japan) |
Facilities for valve parts | 404 | Apr. 2007 | Oct. 2008 | 5% increase in production capacity. |
| Riken Castec Co., Ltd. Head office plant (Niigata Pref., Japan) |
Facilities for handling environmental measures | 1,064 | Apr. 2007 | Oct. 2008 | * |
| Riken Kikai Co., Ltd. Headquarters plant (Kashiwazaki, Niigata Pref., Japan) | Production facilities for piston rings | 741 | Apr. 2007 | Sept. 2008 | 5% increase in production capacity. |
| Riken Automobile Parts (Wuhan) Co., Ltd. | Production facilities for piston rings | 332 | Jan., 2007 | Mar. 2008 | * |
| Riken of Korea Inc. Head office plant (Daejon, Korea) |
Production facilities for piston rings | 229 | Apr. 2007 | Oct. 2008 | * |
| Refurbishment | |||||
| Riken Corp. Kashiwazaki Plant (Niigata Pref., Japan) |
Facilities for handling environmental measures |
451 | Apr. 2007 | Oct. 2008 | * |
| P. T. Pakarti Riken Indonesia Head office plant(Surabaya, Indonesia) | Production facilities for knuckles and other parts | 180 | Jan. 2007 | Sept. 2008 | * |