Financial Overview

(in millions of JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	Rate of change (%)	Factor
Overall
Sales	82,750	70,721	17.0	-
Operating income	8,833	6,805	29.8	-
Ordinary income	9,374	7,151	31.1	-
Net income	6,189	4,483	38.1	-
Automotive parts
Sales	77,971	66,281	17.6	1)
Operating income	8,147	6,154	32.4

Factors
1) Automotive parts
-Sales and income increased year-on-year due to higher production volumes of new vehicles built in and outside Japan, and favorable currency translation.

Strengthened commercial partnershipwith Cooper Standard Automotive

<Brazil>
-The Company will jointly establish a new weather strip plant in Brazil with its US partner, Cooper Standard Automotive, Inc. (CSA). The new Brazilian company will be capitalized at USD 8.3 million (JPY 800 million). 40% of the capital will be invested by Nishikawa Rubber's U.S. subsidiary and the remaining 60% will be capitalized by CSA. The joint venture will be established in December 2013 and be operational in the first half of 2014. This will be the third joint production base between the two companies. The other two production facilities are in Thailand and the U.S. This facility is also the Company's first facility in Brazil. The new company's name is yet to be decided. The JV is expected to generate sales of BRL 55 million (JPY 2.3 billion) in the fiscal year ending in December 2014. (From an article in the Nikkan Jidosha Shimbun on August 8, 2013)

Restructuring

-The Company announced that it will merge its subsidiaries, Nishikawa Bussan Co., Ltd. and Seiwa Kogyo Co., Ltd., effective April 1, 2014. Nishikawa Bussan, as the surviving company, will absorb Seiwa Kogyo, which will be dissolved as a result of this merger. Nishikawa Bussan manufactures and sells industrial rubber products and molds, and Seiwa Kogyo is engaged in processing and selling industrial rubber products. (From a press release on September 12, 2013)

Nishikawa Group's 2020 Vision

-Reaffirm that sealing and foam-forming technology form the basis of the Group, making them its areas of superior strength.

-Financial objectives:

• Consolidated sales: over JPY 100 billion
• Consolidated profit margin: over 10%
• Consolidated ROA: over 10%

-Basic strategies

Areas	Initiatives
Operations	1. Expand and augment global operations 2. Deeply research sealing and foam-forming technology 3. Innovate new, core business operations
Systems/assembly	1. Respond to global expansion 2. Improve high cost-structure 3. Rebuild organization and operations

Outlook for FY ending Mar. 31, 2015

(in millions JPY)

	FY ending Mar. 31, 2015 (Forecast)	FY ended Mar. 31, 2014 (Actual Results)	Rate of Change (%)
Sales	80,000	82,750	(3.3)
Operating income	7,000	8,833	(20.8)
Ordinary income	7,000	9,374	(25.3)
Net income	4,700	6,189	(24.1)

R&D Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012
Overall	321	250	214
Automotive parts	203	171	140

 

R&D Structure

-Consolidated the previously separate R&D functions of the automotive business and the general industrial materials business in March 2014, working to enhance common activities, share expertise, and revitalize in regard to technology, expertise, and human resources.

R&D Activities

Developing Technology to Reduce Product Weight
-In responding to the need to create lighter weight products, the Company has already established specifications for weight-reducing standards based on developing technology that enables it to use plastic materials, which are especially being called upon to reduce the weight of glass-run channels, door inner seals, and trunk seals; and technology that enables it to create thinner-walled and foam-molded products. It is currently commercially producing these and expanding their content rate on new-model vehicles.
-The Company is currently working on reducing product weight based on the concepts of "less", "hybrid", and "module".
-The Company is reducing the weights of various materials used for seals.

Developing Technology to Improve Sound-proofing Performance
-In order to improve the sound-proofing performance of door-hole seals and enhance the sound-proofing performance of non-door parts, the Company is continuing its R&D activities on augmenting and enriching related benchmark activities for combining foam-forming technology with non-standard materials. In the fiscal year that ended Mar. 31, 2014, the Company completed developing high-performance, next-generation seal holes, mass-producing and delivering them for customers.
-The Company is considering launching R&D activities on elemental technology to create sealing materials for automotive doors.

Developing Technology to Reduce Environmental Impact
-The Company is studying material recycling in order to effectively use resources.
-The Company is developing next-generation materials to reduce material loss/waste, make seal-material production lines more energy-efficient, and create materials for eco-friendly cars like electric vehicles; and developing new materials using plant resources.

Capital Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012
Overall	7,146	5,409	3,617
Automotive parts	7,032	5,305	3,483

Automotive parts
-The Company invested in facilities and equipment to produce new-type seals. It is also investing to rationalize its operations under the aim of lowering costs.

Investment Outside Japan

<Mexico>
-The Company will expand its plant that produces automotive body sealing products in Guanajuato, Mexico, in 2016. An additional building will be built at the plant site and the number of workers will be doubled to 800. In Mexico, demand for body sealing products is increasing as Japanese and other automakers are expanding vehicle production volume in the country. Japanese automakers are using Mexico as the export hub of small cars mainly destined for the U.S. The Company will expand its production capacity to meet the needs of automakers to procure parts within Mexico. The Company will make an additional investment in the plant that started operations in October 2013 to cope with the expected increase in demand partly due to a recovery in the U.S. automotive market. (From an article in the Nikkan Jidosha Shimbun on July 24, 2014)

 

Planned Capital Investments

(As of Mar. 31, 2014)

Plant	Equipment to be introduced	Estimated amount of investment (in million JPY)	Project Period
			From	To
The Company
Shiraki Plant (Hiroshima Pref., Japan)	-Manufacturing equipment for automotive seals and Components for general industry	521	Nov. 2013	Mar. 2015
Asa Plant (Hiroshima Pref., Japan)	-Manufacturing equipment for automotive seals and Components for general industry	1,207	Sep. 2013	Mar. 2015
Yoshida Plant (Hiroshima Pref., Japan)	-Manufacturing equipment for automotive seals and interior/exterior components -Manufacturing equipment for exterior walls for housing	492	Nov. 2013	Mar. 2015
Mihara Plant (Hiroshima Pref., Japan)	-Manufacturing equipment for automotive seals. -Manufacturing equipment for exterior walls for housing	449	Aug. 2013	Mar. 2015
Others	-Buildings and R&D equipment and others	1,095	Oct. 2013	Mar. 2015
Domestic subsidiaries
Nishikawa Bussan (Hiroshima Pref., Japan)	-Manufacturing equipment for automotive seals and dies	240	-	Mar. 2015
Nishikawa Big Ocean Co., Ltd. (Hiroshima Pref., Japan)	-Manufacturing equipment for automotive seals and Components for general industry	159	Mar. 2014	Mar. 2015
Nishikawa Rubber Yamaguchi (Yamaguchi Pref., Japan)	-Manufacturing equipment for automotive seals	201	Mar. 2014	Mar. 2015
Overseas subsidiaries
Nishikawa Cooper LLC. (Delaware, USA)	-Manufacturing equipment for automotive seals	1,150	Dec. 2013	Dec. 2014
Nishikawa Tachaplalert Cooper Ltd. (Nakhonratchasima, Thailand)	-Manufacturing equipment for automotive seals	1,814	Dec. 2013	Dec. 2014
Shanghai Nishikawa Sealing System Co., Ltd. (Shanghai, China)	-Manufacturing equipment for automotive seals	924	Dec. 2013	Dec. 2014
Guangzhou Nishikawa Sealing System Co., Ltd. (Guangzhou, China)	-Manufacturing equipment for automotive seals	750	Dec. 2013	Dec. 2014
Nishikawa Cooper Mexico S.A. de C.V. (Guanajuato, Mexico)	-Manufacturing equipment for automotive seals	1,240	Dec. 2013	Dec. 2014
PT. Nishikawa Karya Indonesia (West Java, Indonesia)	-Manufacturing equipment for automotive seals	1,240	Dec. 2013	Dec. 2014