Riken Corporation Business Report FY ended Mar. 2013

Business Highlights

Financial Overview

(in millions of JPY)
  FY ended Mar. 31, 2013 FY ended Mar. 31, 2012 Rate of Change(%) Factors
Sales 71,543 75,650 (5.4) 1)
Operating income 4,721 5,444 (13.3) -
Ordinary income 6,078 6,905 (12.0)
Current net income 3,645 4,051 (10.0)
Automotive/Industrial Machinery Component Division
Sales 59,565 63,265 (5.8) -
Operating income 3,940 4,381 (10.1) -

1) Financial Results
-Sales decreased year-over-year due to a drop in demand for automotive components in the second half of the year and slow sales in other business fields. Declining motorcycle sales in Indonesia negatively affected the Company's business as well.

New Company

-The Company announced that it has established Riken Mexico S.A. de C.V., a subsidiary to manufacture and sell engine parts in Mexico. The new plant will start operations in July 2014. Following plans announced by Japanese automakers to increase their production volumes in Mexico, the group intends to develop an efficient local supply system to win new programs. The facility will be located on approximately 20,000 square meters of land in Aguas Calientes. It will be capitalized at 100 billion pesos (approximately 600 million yen), involving a total investment of about 1.7 billion yen. The subsidiary will initially produce engine valve lifters with a plan to add other products to its lineup if required. (From an article in the Nikkan Jidosha Shimbun on Nov. 26, 2012)

Mid-term Business Plan

-The Company has mapped out its new midterm business plan for fiscal year 2012 through 2015. Focus will be placed on expanding its business overseas, especially in the emerging markets, while investing heavily in new business areas. In Japan, it is going to enhance its manufacturing technology further to accelerate development of environmentally friendly components for next-generation vehicles. The company is poised to improve its cost efficiency in the extremely competitive international market in an effort to win more business. Based on its projection that internal combustion engine will remain the dominant drive source in the foreseeable future, Riken will strive to develop technologies that support biofuel and other alternative fuel engines, turbocharged direct-injection engines for compact vehicles, and fuel saving systems, use of which are growing significantly. In addition, it plans to launch new business for next-generation vehicles by leveraging its area of expertise. (From an article in the Nikkan Jidosha Shimbun on July 10, 2012)

>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)


R&D Expenditure

(in millions of JPY)
  FY ended Mar. 31, 2013 FY ended Mar. 31, 2012 FY ended Mar. 31, 2011
Group 1,299 1,347 1,286
Automotive/Industrial Machinery Component 1,105 1,233 928

R&D Structure

-The Next-Generation Product Planning Division inaugurated its planning activities with the aim of creating new products in areas with high growth potential such as hybrid and electric vehicles.

-R&D activities in the Automotive/Industrial Machinery Component Business are conducted by the R&D Department, Piston-ring Technological Development Department, Piston-ring Production Technology Department, and the product development and production technology sections at each of the manufacturing divisions.

R&D Activities

-Automotive/Industrial Machinery Components
1. Low friction and long-lasting gasoline-engine piston rings that lower fuel consumption.
2. Diesel engine piston rings to meet requirements for low fuel consumption and emission regulations.
3. Low-friction automotive and industrial machinery seal parts, designed to lower fuel consumption
4. Light-weight, low-friction, automotive and industrial machinery valves
5. Surface treatment technology that responds to all kinds of surfaces, and which enhances the gliding properties of products.
6. Light-weight, high-strength suspension parts
7. High-strength aluminum-made products demonstrating excellent durability

Technology licensing-out Agreement

(As of Mar. 31, 2013)
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, cam shaft, and knuckles 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 10 years
Shriram Pistons & Rings Ltd. India Manufacturing methods for piston rings Mar. 1, 2007 7 years
Allied Ring Corporation USA Manufacturing methods for piston rings Jan. 1, 2009 5 years
Grede Holdings LLC USA Manufacturing methods for knuckles and damper forks Aug. 17, 2010 5 years
Manufacturing methods for lower control arm Aug. 17, 2010 5 years
Korea Piston Ring Inc. Korea Manufacturing methods for piston rings Mar. 1, 2010 5 years
Xiamen Riken Ind. Co., Ltd. China Manufacturing methods for piston rings Aug. 1, 1999 14 years
Manufacturing methods for camshafts Oct. 1, 2004 9 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

Capital Expenditure

(in millions of JPY)
  FY ended Mar. 31, 2013 FY ended Mar. 31, 2012 FY ended Mar. 31, 2011
Group 4,899 2,848 2,305
Automotive/Industrial Machinery Component 4,439 2,653 1,773

Automotive/Industrial Machinery Component Division
-The Company invested in machining and surface-treatment facilities at its own plants in general; and in casting facilities at its subsidiary in Indonesia.

Planned Capital Investments

(As of Mar. 31, 2013)
Location Purpose Planned investment amount (in millions of JPY)
Kashiwazaki Plant Niigata Prefecture, Japan Installing production facilities for making piston rings and auto parts 1,461
Riken Mexico, S.A. De C.V. Aguascalientes, Mexico Installing new equipment to produce auto parts 796
P.T. Pakarti Riken Indonesia Surabaya, Indonesia Installing new equipment to produce auto parts 1,478