TPR Co., Ltd. Business Report FY ended Mar. 2019

Financial Overview

(in million JPY)
  FY ended Mar. 31, 2019 FY ended Mar. 31, 2018 Rate of Change (%) Factors
Sales 192,619 187,398 2.8 -Sales rose because of increased product orders received in Japan, and the addition of new consolidated subsidiaries
Operating income 18,309 20,775 (11.9) -Decreases because of sharp rises in raw-materials costs, the economic slowdown in China, higher costs in connection with producing new technology, and new-product development costs.
Ordinary income 21,765 24,023 (9.4)
Net income attributable to owners of the parent 11,515 12,154 (5.3)

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

Recent Business Developments

Growing the Non-powertrain Parts Business
-The Company aims to make non-powertrain parts its key products from 2030. Demand for vehicles equipped with internal combustion engines is likely to reach its peak in 2030 or later. It has been developing new materials and products, such as carbon nanotubes (CNTs) and aluminum brake drums. The company intends to set numerical targets in its new mid-term business plan for the three years starting from April 2021. It has already received orders for aluminum brake drums from an electric vehicle maker, and foreign automakers have also shown interest in them. While the Company has received increasing inquiries about its new materials and products, these products are not yet competitively priced. The company aims to strengthen performance and cost competitiveness of non-powertrain products. (From an article in the Nikkan Jidosha Shimbun on March 12, 2019)

Strengthening Production and Sales of Cylinder Liners
-The Company will strengthen its production and sales systems for automotive cylinder liners. In China, the company aims to strengthen cost competitiveness of its products by streamlining cylinder liner production for diesel engines. It will invest about JPY 1 billion to establish more efficient diesel engine cylinder liner production lines in the country. Diesel engines have advantages in terms of fuel economy for commercial vehicles such as trucks that run long distances. The Company predicts that in China, car sales will be temporarily sluggish but commercial vehicle sales will go well, according to Masanobu Kishi, President of the Company. The company has judged that it will be able to expand sales of diesel engine cylinder liners in the country. New production lines will start operations in the middle of 2019. In India, the Company will expand production capacity to respond to increasing orders from Japanese automakers that are expanding their production capacity. The company is aiming to expand sales by investing in plants and facilities to expand production capacity for powertrain parts including cylinder liners. (From an article in the Nikkan Jidosha Shimbun on February 28, 2019)

Launching Business in Carbon Nanotubes (CNTs)
-The Company will join the carbon nanotubes (CNTs) market. CNTs are used as an electrode material to improve performance of lithium-ion batteries for electric vehicles. The Company will install a new manufacturing line at its plant in Okaya City, Nagano, Japan, planning to commence mass production of CNTs by the end of 2018. The initial production capacity will be 1-2 tons a year. While supplying CNTs to automakers, the company will use CNTs for TPR Group's production of rubber, resin products and capacitors, to develop competitive products. The company is concerned that its powertrain business for internal combustion engines, the company's business pillar, may shrink with automakers' shift to electric vehicles. To cope with this situation, TPR will make use of CNTs to make non-powertrain business as the second pillar of its operations. (From an article in the Nikkan Jidosha Shimbun on May 22, 2018)

Mid-term management plan

-On June 14 the Company announced a new mid-term management plan for three years under which it aims to increase net sales by 5.6% to JPY 205.8 billion and operating income by 7.1% to JPY 24 billion in fiscal year 2020 (ending in March 2021) from FY 2017 levels. The Company will strengthen its new businesses and expand operations by putting effort into products that meet needs for weight and friction reduction, such as broadening the scope of application of super low-friction surface processing (diamond-like carbon coating) and starting mass production of uniquely shaped oil rings. By region, sales in Asia, where demand for diesel cylinder liners is growing, are projected to increase 25.2% from the FY 2017 level. Sales in Japan, where the supplier has received new orders for Toyota and Mazda vehicles, are projected to increase 18.1% from the FY 2017 level. Meanwhile, sales in North America are forecast to drop substantially by 20.1% from the result in FY 2017. The Company plans to make a capital investment of JPY 40.5 billion in total for the three years, down 1% and almost unchanged from the amount in the previous medium-term plan. The Company will invest in mass production of diesel cylinder liners, as well as facilities for streamlining operations in China. The company will invest in research and development, promotion of new businesses, as well as facilities for cutting costs and streamlining operations in Japan. (From an article in the Nikkan Jidosha Shimbun on June 15, 2018)

R&D Expenditure

(in million JPY)
FY ended Mar. 31, 2019 FY ended Mar. 31, 2018 FY ended Mar. 31, 2017
Overall 6,008 5,566 5,335
-TPR Group (excluding Faltec) 3,390 3,192 2,770
-Faltec Group 2,618 2,374 2,564

Major R&D Facilities

-R&D activities are conducted at the Technical Centers located within the Nagano Plant and in the Okaya-City, Nagano Pref. Japan.

R&D Activities

-The Company worked on developing new products from a variety of aspects. These included lower friction, heat control, lighter weight, cleaner exhaust gas emissions, and alternate fuels (bio-fuels, CNG).

-The Company, in working to make products that have even greater levels of precision, developed new production methods that automate inline measuring, radically reduce costs, and minimize energy used in production operations.

-The Company is migrating its new technologies to business operations outside Japan, working to achieve the world’s highest level of identical quality by partnering with companies outside Japan, and conducting PR activities promoting new products and technology to customers outside Japan.

-In order to quickly respond to the needs arising in line with the growth of electric vehicles, the Company is strengthening its capabilities in non-powertrain products. As a result, the Company focused its energy in introducing new technology in seals that mainly include rubber and composite products made lighter in weight by the use of aluminum and plastics. In this regards, the Company is building its R&D framework to create functional, cost-competitive products ahead of its customers, while exploring new business sectors.

R&D Achievements
<Powertrain components>

  1. Piston Rings
    -Commercialized ultra-low-friction and low-oil-consuming piston rings, in response to need for lower fuel consumption
    -Commercialized high Diamond Like Carbon (DLC) coating, which is highly wear-resistant, improving reliability.
    -Built a piston-ring production line that ingeniously reduces product costs, in responding to need for low-cost products.
  2. Cylinder Liners
    -Commercialized small-diameter, thin-walled, high heat-conductive cylinder liners for small-sized engines, in response to need for lower fuel consumption and longer reliability.
    -Commercialized heat-control liners to lower friction
    -Validated low-friction, inner-circumference property to improve reliability
    -Commercialized a gravity-cast "ASLOCK" liner.
  3. Valve Seats, Valve Guides
    -Commercialized high wear-resistant valve-seat material in response to alternative fuels
    Built a valve-seat production line that ingeniously reduces product costs, in responding to need for low-cost products.
    -Commercialized a high heat-conductive valve

<Non-powertrain Products>

  1. Plastic, rubber products
    -Commercialized resin seal ring for transmissions
    -Enhanced precision of automotive rubber seal-parts
  2. Cast-product applications
    -Commercialized a brake-drum insert applying "ASLOCK" liner technology

Capital Expenditure

(in million JPY)
FY ended Mar. 31, 2019 FY ended Mar. 31, 2018 FY ended Mar. 31, 2017
Japan 4,477 4,103 3,986
Asia 3,152 2,057 4,585
North America 655 559 378
Others 33 23 144
Faltec Group 5,597 6,330 4,446
Total 13,916 13,074 13,541

Planned Capital Investments (Automobile related product business)

(As of Mar. 31, 2019)
Name of the company
Location Type of facility and purpose Planned investment
(million JPY)
Planned construction start date Planned completion Increased capacity upon completion
The Company's
Nagano factory
Nagano Pref.,
Facilities for producing piston rings, conducting R&D activities, etc. 4,300 Apr. 2019 Mar. 2020 Increase capacity by 3%
Faltec Europe Ltd. Tyne and Wear,
Facilities for manufacturing auto parts 2,400 Apr. 2019 Jan. 2020 Increase capacity by 25%
Anqing TP Goetze Liner Co.,Ltd. Anhui Province,
Facilities for producing cylinder liners 1,600 Oct. 2018 Dec. 2019 No impact on production capacity
TPR Industry Co., Ltd. Yamagata Pref.,
Facilities for producing cylinder liners 1,300 Apr. 2019 Mar. 2020 No impact on production capacity
Faltec Co., Ltd. Kanagawa Pref.,
R&D activities and facilities for manufacturing auto parts 900 Apr. 2019 Aug. 2020 Increase capacity by 15%

-The Company will construct a new resin seal-ring plant for automatic transmissions (ATs) in Anhui Province, China, within two years. It will invest about JPY 1 billion on the new plant, including land, buildings, and production equipment. In the medium term, to respond to tightening environmental regulations, the company will consider transferring production of rubber products at its plant in Shanghai City to the new plant. The Company established a joint venture for resin product businesses with Anqing Huanxin Group Co., Ltd. in Anhui Province in 2014. The joint venture produces seal rings that prevent oil and air leakage from AT rotary shafts. It has decided to construct a new plant around 2020 to respond to demand from Aisin AW Co., Ltd. (a subsidiary of its main customer, Aisin Seiki Co., Ltd.), which has been strengthening production capacity. (From an article in the Nikkan Jidosha Shimbun on February 21, 2019)