Riken Corporation Business Report FY ended Mar. 2014

Business Highlights

Financial Overview

(in million JPY)
  FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 Rate of Change (%) Factors
Sales 74,932 71,543 4.7 -Sales increased year-on-year due to an increase in orders outside Japan and the impact of favorable currency translation, which more than offset the negative impact of the Company’s realigning its product range in Japan.
Operating income 5,805 4,721 23.0 -
Ordinary income 7,286 6,078 19.9 -
Current net income 4,544 3,645 24.7 -
Automotive/Industrial Machinery Component Division
Sales 61,799 59,565 3.8 -
Operating income 4,842 3,940 22.9 -

Business Partnership

-The Company and Georg Fischer Automotive AG have signed a license and partnership agreement on July 1 regarding Riken's use of the Swiss company's "SiboDur," an iron alloy. The Japanese automotive parts supplier is now licensed to manufacture and sell the material in Japan and ASEAN countries. This will allow the Company to make thinner and lighter products by using SiboDur to optimize specific parts. The two companies intend to promote mutual use of their production sites and establish a flexible supply network to correspond with their customers' individual needs in the global market. (From an article in the Nikkan Jidosha Shimbun on August 22, 2013)

Proposing use of aluminum

-The Company will expand the application of its extrusion technology of quench-solidified aluminum alloy powders. This technology is currently used in forged parts for car air conditioners and valve retainers for motorcycles. Riken intends to apply the technology to produce aluminum parts which can replace metal parts including engine valves. The Company will propose this technology to automotive parts suppliers as a means to reduce the weight of forged parts significantly. (From an article in the Nikkan Jidosha Shimbun on February 5, 2014)

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


R&D Expenditure

(in million JPY)
  FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 FY ended Mar. 31, 2012
Overall 1,550 1,299 1,347
-Automotive/Industrial Machinery Component 1,527 1,105 1,233

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

-The Company unveiled a lightweight brake disk rotor at the 43rd Tokyo Motor Show. The rotor is 10% thinner than that of a conventional brake disk rotor, which reduced the weight of the component by more than 7%. The thinner rotor is expected to reduce raw material and production costs. Riken succeeded in reducing the brake disk rotor's weight and strengthening the rotor by mixing special additives with FC200 and FC250 grade cast iron. Meanwhile, the Comapny also enlarged the fin and improved both the heat removal properties and durability of the rotor. The Company will start producing the brake disk rotor in Indonesia and other countries and will supply it to Japanese automakers in 2015. (From an article in the Nikkan Jidosha Shimbun on December 3, 2013)

Technology licensing-out Agreement

(As of Mar. 31, 2014)
Company name Country Contract Contract date Contract period
Taiwan Riken Ind. Co., Ltd. Taiwan Manufacturing methods for various cast iron engine components such as piston rings, cylinder liners, blocks, cam shafts, and knuckles Aug. 22, 2008 9 years
Siam Riken Ind. Co., Ltd. Thailand Manufacturing methods for piston rings and other cast steel engine components Apr. 19, 2009 5.5 years
P.T. Pakarti Riken Indonesia Indonesia Manufacturing methods for joint and cast iron parts Jan. 1, 2006 10 years
Shriram Pistons & Rings Ltd. India Manufacturing methods for piston rings Mar. 1, 2014 7 years
Allied Ring Corporation USA Manufacturing methods for piston rings Jan. 1, 2014 3 years
Grede Holdings LLC USA Manufacturing methods for knuckles and damper forks Aug. 17, 2010 5 years
Manufacturing methods for lower control arms 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 15 years
Manufacturing methods for camshafts Oct. 1, 2004 10 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
Riken Mexico, S.A. De C.V. Mexico Manufacturing methods for valve lifters Sep. 1, 2013 5 years

Investment Activities

Capital Expenditure

(in million JPY)
  FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 FY ended Mar. 31, 2012
Overall 5,943 4,899 2,848
-Automotive/Industrial Machinery Component 5,610 4,439 2,653

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, 2014)
Location Purpose Planned investment amount (in million JPY)
Kashiwazaki Plant Niigata Prefecture, Japan Installing production facilities for making piston rings and auto parts 1,850
Riken Mexico, S.A. De C.V. Aguascalientes, Mexico Installing new equipment to produce auto parts 492
P.T. Pakarti Riken Indonesia Sidoarjo, Indonesia Installing new equipment to produce auto parts 849