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5. Nissin Kogyo Co., Ltd. Business Report FY ended Mar. 2016

Nissin Kogyo Co., Ltd. Business Report FY ended Mar. 2016

-The Company spun off the automotive brake control and brake appliance division, which became a discontinued business segment. As a result, sales, as well as earnings before taxes, for the fiscal years that ended in March 2015 and 2016 are shown for the remaining business sectors.

Joint Ventures

-On March 31, 2016, the Company spun off its automotive brake-control and brake appliance business and turned it into a joint-venture company with Autoliv (Sweden), called Autoliv-Nissin Brake Systems (ANBS). Nissin has a 49% stake while Autoliv has the remaining 51%. The Company aims at continuing to grow its business in the integrated brake system segment while increasing sales to global OEMs.

-Autoliv-Nissin Brake Systems (ANBS) combines the current brake control business of Autoliv with a “carve-out” of Nissin Kogyo's automotive braking business. ANBS has manufacturing facilities in Japan, China, and the U.S. It will be part of Autoliv's Electronics business segment (consisting of passive safety electronics products, ADAS products and brake control systems). The enterprise value of the joint venture is around JPY 58.2 billion (USD 524.4 million). Autoliv purchased 51% of the joint venture for JPY 29.7 billion (approximately USD 264 million. (From a press release on April 1, 2016)

-With manufacturing facilities in Japan, China and the United States, Autoliv-Nissin Brake Systems (ANBS) will include approximately 2,000 technical, commercial, manufacturing and administrative employees focused upon the design, development and production of "Brake Control and Brake Apply Systems" for the global light vehicle market. The joint venture will have three engineering sites and two test tracks with access to over 1,200 patents and other intellectual property. (From a press release on September 9, 2015)

-In November 2015, the Company established an R&D center, Autoliv Nissin Brake Research Asia Co., Ltd., in Bangkok, Thailand.

Contracts

-The Company has taken its first order from Mazda Motor Corporation and started supplying aluminum rear brake calipers for the all-new "Roadster" sports car. Following this first order, the auto parts supplier intends to win more orders from Mazda by actively making new proposals to Mazda, whose auto sales are steadily growing. The rear brake calipers are all manufactured in Nagano and shipped to Mazda's plant in Hiroshima. The order quantity is not disclosed. (From an article in the Nikkan Jidosha Shimbun on April 30, 2015)

-Major supply agreements during the fiscal year that ended March 2016.

Nissin Kogyo’s Innovative Automotive Initiatives

Making use of technology on aluminum, launch high, value-added products that meet the need for improved fuel efficiency.

• Work to offer more, stronger aluminum frame parts that reduce vehicle weight
• Further expand sales of aluminum calipers

Develop and increase sales of advanced products that raise added value of autonomous brakes

• Launch electric parking brakes (EPB)
• Expand product range of drum-brake type EPBs

Rebuild the profit structure of the caliper business based on a scrap and build approach

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

-For FY ending Mar. 31, 2017, JPY 5,000 million is planed for R&D expenditure.

R&D Facilities

R&D Activities

-With a global perspective in mind, the Company is developing products, materials, and manufacturing methods in the pursuit of making its products designed mainly for two- and four-wheel vehicles lighter, smaller, more fuel efficient, safer and more comfortable. These include basic brake systems, mechatronics-based automatic control-systems for motorbike, and aluminum products, which form the backbone of its product range.

-The Company is working to develop products, materials, and manufacturing methods that contribute to reducing CO2 emissions.


-The Company focused on developing products that meet the market needs in North America, such as basic braking systems and aluminum products.

Major R&D Achievements in Automobile Parts

Foundation brake development
-To respond to the requirement for lower fuel consumption, the Company optimized the development of products for brakes which has less drag torque and less weight using aluminum technology. Also, the Company is lowering costs and producing more products locally at its global sites.
-The Company further expanded the applicable sizes of its series of new-design, low-drag, disc brake systems, including 15 inch front brakes.

Development of weight reduction technology
-In addition to making its iron made engine mounting brackets and knuckles lighter in weight, the Company developed aluminum chassis parts that are approximately 40% lighter. In addition, the Company is further working on developing parts that are thin-walled by using high-strength aluminum that has a particular characteristic of being easily stretched. The aluminum-cast engine mounting brackets are being equipped on 4 vehicle models, the aluminum-cast rear knuckles are being equipped on 3 vehicle model, while aluminum-cast front upper arms are being equipped on 1 vehicle model.

Product Development

Electrically controlled parking brake, rear; EPB
-The Company has developed a new electric parking brake (EPB). The new EPB comes with a choice of drum and disc types. The Company will begin production of both types of new EPBs in 2017. For the Company it is the first time to develop the new drum-type EPB, while it has produced disc-type EPB. The Company will separate its automobile brake control operations to establish a joint venture (JV) with Autoliv, Inc., a Swedish manufacturer. In line with the establishment of the JV, the Company is focusing on its automobile brake caliper business and other drivetrain components business. Since demand for EPBs is expected to grow, the Company will shift its EPB business into full gear in an effort to increase its competitiveness in the brake market. (From an article in the Nikkan Jidosha Shimbun on December 10, 2015)

-In FY ending Mar. 2017, the Company plans to invest JPY 11,000 million in facilities and equipment.