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5. Nissin Kogyo Co., Ltd. Business Report FY ended Mar. 2019

Nissin Kogyo Co., Ltd. Business Report FY ended Mar. 2019

Business Reorganization

-Veoneer, Inc. announced that it has signed a binding agreement with Nissin Kogyo, its joint venture partner in Veoneer Nissin Brake Systems (VNBS), providing for certain structural changes to the joint venture and reaching an agreement on the funding of VNBS. Under the agreement Veoneer will acquire Nissin Kogyo’s interests in the US operations of VNBS, referred to as VNBA. VNBS will transfer the technologies to VNBA.  The US operations of VNBS, including the transferred or licensed technologies, will thus become a wholly-owned Veoneer business. In return, effective upon closing, Veoneer will release Nissin Kogyo from any obligations to fund VNBA in the future. The VNBS operations in Japan and China will remain a part of the joint venture, with Veoneer owning 51% and Nissin Kogyo owning 49% of the joint venture. Under the agreement, Nissin Kogyo will either provide guarantees for certain VNBS commercial loans, or contribute capital to VNBS, in either case corresponding to 49% of the funding Veoneer has previously unilaterally provided VNBS. Veoneer expects to receive approximately USD 20 million as debt repayment from VNBS after such funding. (From a press release on June 17, 2019)

Recent Business Developments

-The Company announced that it will close its Sao Paulo Plant in Brazil at the end of April. The business there has become unprofitable due to factors such as inflation and a rise in procurement costs. Although Nissin Kogyo has made efforts to improve the business structure at the plant, the company has assessed that it will be difficult for the plant to improve the structure. The Sao Paulo Plant began operations in October 2008. It produces brake systems and aluminum parts for automobiles. Nissin Kogyo has another plant in Brazil. The supplier produces parts for motorcycles at its Manaus Plant in the country. (From an article in the Nikkan Jidosha Shimbun on February 28, 2019)

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

-For FY ending Mar. 31, 2020, JPY 4,800 million is planed for R&D expenditure.

R&D Facilities

Major R&D Achievements in Automobile Parts

Foundation brake development
-In meeting the needs for improving fuel economy and making light-weight products, the Company developed a new-design, low-drag disc brake. Expanding content ratio of lighter weight brakes on more new vehicle models by replacing existing materials with aluminum ones.
-The number of vehicles on which electric parking brakes (EPBs) are being mounted is increasing in line with the electrification of automobiles. The Company is advancing cost-cutting initiatives across all of its product lines, as well as increasing local production outside Japan.

Development of weight reduction technology
-In meeting the requirement for lighter weight products, replace steel suspension parts and brackets with aluminum ones, which will reduce weight between 30-40%.
-The Company is expanding the use of aluminum materials and enhancing its casting technology for front knuckles, automotive products in which input loads are high and cast-iron is general used.

-In FY ending Mar. 2020, the Company plans to invest JPY 11,500 million in facilities and equipment.