Riken Corporation Business Report FY2008

Business Highlights

Financial Overview (in millions of JPY)
  FY2008 FY2007 Rate of Change(%) Factors
Overall
Sales 80,909 95,765 (15.5)

-Sales declined because of sluggish sales in the global car market.

-Income declined due to a sales decline and resulting drop in marginal profit, and to increases in material prices throughout the year.

Operating income 245 7,346 (96.7)
Ordinary income 482 8,765 (94.5)
Current net income (1,118) 4,165 -
Automotive/Industrial Machinery Component Division
(excludes transactions among divisions)
Sales 67,627 81,590 (17.1) -Cuts in auto production caused a decline in orders and resulting decline in sales.
Operating income (1,377) 5,297 - -Income declined due to cuts in auto production and to higher material prices.

R&D

R&D Expenditure (in millions of JPY)
  FY2008 FY2007 FY2006
Group 1,542 1,576 1,482
Automotive/Industrial Machinery Component 1,168 1,393 1,378


R&D Structure
-The R&D Division, Ring Technology Development Division, and Product Development and Engineering Technology sections under each manufacturing division, are in charge of the Company's R&D activities.

-The Company established a new department, called the Next-generation Product Planning Department, in order to reinforce the Company's planning activities for creating new products that can be used in new and expanding areas such as hybrid and electric vehicles.


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


Product Development
DLC piston rings for aluminum liners
-Improving fuel economy is one of the important themes in recent development activities on engines, as it directly contributes to cutting CO2 emissions. A growing number of manufacturers, therefore, choose to use aluminum instead of cast iron as an alternative material for liners, as aluminum is lighter and cools down faster. The Company developed DLC piston rings for aluminum liners. These piston rings are being used by European automakers in their engines. The Company started mass-producing this particular piston ring in March 2008, becoming the first company in Japan to do so.


Technical Tie-ups
(As of Mar. 2009)
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, blocks and pistons Aug. 22, 2005 Terms for extending the agreement are subject to  negotiation
Siam Riken Ind. Co., Ltd. Thailand Manufacturing methods for piston rings and other forged steel engine components Apr. 19, 2009 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, 2007 7 years
Allied Ring Corp. USA Manufacturing methods for piston rings Sept. 1, 1989 Terms for extending the agreement are subject to  negotiation
Grede Foundries, Inc. USA Manufacturing methods for ductile forged components Jul. 17, 2005 by 2007.07.16
Manufacturing methods for lower control arm Jul. 23, 2001 8 years from the start of delivery of mass produced products
Manufacturing methods for Sheet parts Sep. 16, 2003 8 years from the start of delivery of mass produced products
Korea Piston Ring Inc. Korea Manufacturing methods for piston rings Mar. 1, 2005 by 2010.03.01
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

Investment Activities

Investment Expenditure (in millions of JPY)
  FY2008 FY2007 FY2006
Group 6,292 7,208 6,428
Automotive/Industrial Machinery Component 5,469 6,334 5,735

Automotive/Industrial Machinery Component Division
-The Company invested mainly in production facilities for increasing the production capacity for piston rings and valve lifters.


Planned Capital Investment (As of Mar. 2009)
Company
 Office
(Location)
Purpose Planned investment amount (in millions of JPY) Starting Estimated completion Production capacity increase upon completion
New addition
Riken Corp.
Kashiwazaki Plant 
(Niigata Prefecture, Japan)
Installing production facilities for making piston rings 914 Apr. 2009 Oct. 2010 No effect on production capacity
Refurbishment
Riken Corp.
Kashiwazaki Plant
(Niigata Prefecture, Japan)
Installing production equipment to manufacture piston rings and other automotive components  198 Apr. 2009 Oct. 2010 No effect on production capacity
Riken Corp.
Kumagaya plant
(Saitama Prefecture, Japan)
Enhancing utilities and working environment  169 Apr. 2009 Oct. 2010 No effect on production capacity
P. T. Pakarti Riken Indonesia Head office plant (Surabaya, Indonesia) Installing new equipment to produce auto parts 293 Apr. 2009 Oct. 2010 No effect on production capacity