Nisshinbo Holdings Inc. Business Report FY2008
Business Highlights
| Financial Overview | (in millions of JPY) |
| FY2008 | FY2007 | Rate of change (%) |
Factors | |
| Overall | ||||
| Sales | 286,166 | 322,411 | (11.2) | -Despite a significant increase in both sales and profit at the Mechatronics Division, which was the result of strong sales of production equipment for solar cells, the Company's overall sales and profit decreased year-on-year mainly because of lower sales of brakes and electronic components, which were hard hit by the slowing economy. |
| Operating income | 407 | 12,033 | (96.6) | |
| Ordinary income | 7,150 | 18,916 | (62.2) | |
| Net income | (1,285) | 12,289 | - | |
| Automotive Brakes | ||||
| Sales | 53,260 | 66,397 | (19.8) | Brakes: -Sales and operating income in and outside Japan in the brakes sector fell from what they were a year ago due to the global financial crisis, which led to a significant fall in vehicles sales in the second half of the year. This was followed by a drop in vehicle production worldwide by both Japanese and Korean automakers. ABSs: -Sales and operating income in this sector decreased year-on-year, because the Company transferred the business to Continental Automotive. |
| Operating income | 3,309 | 8,871 | (62.7) | |
| Electronics Business | ||||
| Sales | 60,549 | 76,474 | (20.8) | -Sales went down compared to the previous year's result mainly due to a decline in exports reflecting the slowing demand in the global market. Sales at New Japan Radio, one of the companies in the Group, also suffered from falling sales of semiconductors, its major product line, because its customers cut down their production volumes. |
| Operating income | (3,918) | 1,103 | - | |
Spin-offs of and Reorganizations to Major Businesses
-The Company announced that it will restructure the Company into a holding company. The Company will split its textile business unit as a separate fully-owned textile company, its precision device business unit as a wholly owned mechatronics company, its brake product business unit as a wholly owned brake company, its chemical product business unit as a wholly owned chemical company, and its paper product business unit as a wholly owned paper product company. The transition to the new structure will be made through share transfer. Upon the completion of the transition, the name of the Company will be changed to Nisshinbo Holdings Inc., effective April 1, 2009. New Japan Radio Co., Ltd., one of the Company's subsidiaries and a producer of electronic components, will continue to function as the group's core business operation in Electronics Division. (From a press release on May 13 2008)
-The Company announced its structural reforms and new management, decided in accordance with company split-up scheduled for April, 2009. Under planned Nisshinbo Holdings, Inc., the current in-house operating companies will be established as independent companies: Nisshinbo Textile Co., Nisshinbo Brake Co., Nisshinbo Paper Products Co., Nisshinbo Mechatronics Co. for precision instruments and Nisshinbo Chemical Co. Organizational reforms will be implemented at each company, where new divisions/departments will be formed. Nisshinbo Holdings will take over Corporate Strategy Center, Business Support Center and Business Development Division from Nisshinbo Industries, Inc. At Nisshinbo Brake Co., Administration, R&D and Production divisions will be newly established and Production Division will have Friction Material Manufacturing Department and Brake Manufacturing Department. Nisshinbo Chemical Co. will set up new departments including Fuel Cell Dept. and Elastomer Dept. (From an article in the Nikkan Jidosha Shimbun on Feb. 28 2009)
Businesses Restructuring
-As of the end of Dec. 2008, the Company transferred its ABS production operations to Continental Automotive Corporation.
Acquisions
-The Company plans to start a full-scale operation in India to produce brake friction materials as early as the autumn of 2008. It will soon install its state-of-the-art equipments at a new plant built by a local firm to which Nisshinbo provides technical support. For the first term of this project, friction materials for approx. 1.9 million brakes will be produced per year. At the opportunity that this local firm, Rane Brake Linings Ltd. (RBL) in New Delhi, will establish a separate company for the brake business, Nisshinbo will invest in it in a phased manner. India will be the 6th country after Japan, the U.S., Thailand, Korea and China where Nisshinbo will operate the brake business. Nisshinbo has discussed with RBL on ways to enter the brake business in India and agreed that RBL will form a separate brake business company and list it on the stock market to which Nisshinbo will make additional investment. (From an article in the Nikkan Jidosha Shimbun on May 29, 2008)
-The Company will make Nisshinbo Brake Sales Co., Ltd., a consolidated subsidiary of The Company, its wholly owned subsidiary through a stock-swap, which will become effective on October 1, 2008. (From a press release on Aug 28, 2008)
-The Company will additionally invest approx. 146 won (approx. 1.2 billion yen) in its Korea-based subsidiary Saeron Automotive Corporation and raise its stake in the subsidiary from 47.01% to 65.0%. With this additional capital increment the Company is aiming at reinforcing its automotive braking business in Korea. (From a press release on Nov 4, 2008)
Divestitures
-The Company announced that its subsidiary, Saeron Automotive Corp. (SAC), Cheonan City, Korea, and SAC's subsidiary, Saeron Automotive Beijing Corp. (SABC), Beijing, China, have decided to sell their sintered products business at 16 billion won (approx. 1.76 billion yen) to HSC, Korea. Both SAC and SABC have developed their businesses focused on friction materials for automobiles. They have decided to sell their sintered products business and to focus on the automobile brakes in order to promote selection and concentration of their management resources. HSC, the purchaser, is a joint venture of Korea-based Halla Group, which manufactures powertrain parts, and Canada-based Stackpole Ltd. (From an article in the Nikkan Jidosha Shimbun on Jun .20, 2008)
| Outlook for FY2009 | (in millions of JPY) |
| FY2007 (Actual) |
FY2008 (Actual) |
FY2009 (Forecast) |
|
| Sales | 322,411 | 286,166 | 262,000 |
| Operating income | 12,033 | 407 | 5,000 |
| Net income | 12,289 | (1,285) | 7,000 |
|
By Segment |
(in millions of JPY) |
| FY2007 (Actual) |
FY2008 (Actual) |
FY2009 (Forecast) |
||||
| Sales | Operating income | Sales | Operating income | Sales | Operating income | |
| Automotive Brakes | 66,397 | 8,871 | 53,260 | 3,309 | 40,000 | 1,380 |
| Electronics | 76,474 | 1,103 | 60,549 | (3,918) | 55,000 | (2,500) |
| ABSs (Mechatronics Division) |
6,585 | 370 | 4,031 | (159) | 3,060 | (120) |
|
Brake Business |
(in millions of JPY) |
| FY2007 (Actual) |
FY2008 (Actual) |
FY2009 (Forecast) |
||||
| Sales | Operating income | Sales | Operating income | Sales | Operating income | |
| Nisshinbo Holdings Inc./ Nisshinbo Brake Inc. |
31,293 | 3,212 | 27,450 | 1,032 | 24,900 | 1,090 |
| Nisshinbo Brake Sales Co., Ltd. | 29,297 | 218 | 25,599 | (56) | 25,280 | 25 |
| Subtotal | 60,590 | 3,430 | 53,049 | 976 | 50,180 | 1,115 |
| ABS | 6,585 | 370 | 4,031 | (159) | 3,060 | (120) |
| Domestic | 67,175 | 3,800 | 57,080 | 817 | 50,180 | 1,115 |
| Overseas | 32,855 | 4,998 | 25,634 | 2,405 | 15,345 | (181) |
| Subtotal | 100,030 | 8,798 | 82,714 | 3,222 | 65,525 | 934 |
| Elimination | (33,633) | 73 | (29,453) | 87 | (25,525) | 446 |
| Total | 66,397 | 8,871 | 53,260 | 3,309 | 40,000 | 1,380 |
R&D
| R&D Expenditure | (in millions of JPY) |
| FY2008 | FY2007 | FY2006 | |
| Overall | 11,932 | 12,479 | 12,244 |
| Automotive Brakes | 3,755 | 3,791 | 3,702 |
| Electronics | 6,095 | 6,452 | 6,414 |
| Chemicals | 980 | 1,209 | 369 |
R&D Facilities
| Business Division | Facility | Location |
| Automotive Brakes | Research and Development Center (in Tatebayashi Plant) |
Gunma Pref., Japan |
| Electronics | New Japan Radio Co., Ltd. | - |
R&D Activities
Automotive Brakes
<Friction Materials>
-The Company is working to develop value-added products with improved safety as well as improved sound and vibration performance.
-The Company is focusing on environmentally-friendly product development, such as R&D of green materials using non-harmful substances and initiatives to comply with the European Chemicals Agency's new REACH regulations.
-Seeking to bolster its competitive edge, the Company reinforced support systems for development activities conducted by its foreign subsidiaries. It also promoted cost reduction initiatives by aligning development, manufacturing and production technology.
<Automotive Brakes>
-In order to win more orders in its global business, the Company strengthened support of development for subsidiaries outside Japan and is promoting cooperation with technical tie-up partners outside Japan.
-The Company is working to reduce costs during the development phase by using standardized parts and improving efficiency of development operations.
Electronics
-Development of audio digital signal processors (DSP) is ongoing, targeting the car audio market.
Technological Alliance
-In 2000 the Company and Continental Teves of Germany established a joint venture to develop and commercialize next-generation brake systems such as ABS, traction control systems (TCS) and electronic stability controls (ESC).
Major Technology Introduction Agreements (As of Mar. 2009)
| Company (Country) |
Contract details | Contract term |
| TMD Friction Holding GmbH (Germany) |
Know-how on manufacturing technology and material composition for brake linings and disc pads. Also assistance in sales activities. (cross-licensing contract) |
10 years from Nov. 1991 (yearly automatic extension after Nov. 2001) |
| TRW Automotive Inc. (UK) |
Know-how on design and manufacturing technology for drum brake assemblies, brake valves and their components for automobiles. Also assistance in sales activities. (cross-licensing contract) | Oct. 2006 to Oct. 2009 |
| Meritor Heavy Vehicle Braking Systems (UK) Limited. (UK) |
Know-how on design and manufacturing technology for disc brake assemblies, drum brake assemblies and their components | Nov. 2003 to Nov. 2008 |
Licensing of Technology from Other Companies (As of Mar. 2009)
| Company (Country) |
Contract details | Contract term |
| Rane Brake Linings Limited (India) |
Know-how on manufacturing technology, material composition, and technical information on manufacturing facilities for brake linings, disc pads and clutch facings manufacturing. | 5 years from Jan. 2005 |
| TMD Friction Holding GmbH (Germany) |
Know-how on manufacturing technology and material composition for brake linings and disc pad manufacturing. Also assistance in sales activities. (cross-licensing contract) | 10 years from Nov. 1991 (yearly automatic extension after Nov. 2001) |
| Heng Tong Auto Parts Inc. (Taiwan) |
Know-how on manufacturing technology, material composition, and technical information on manufacturing facilities for brake linings and disc pads. Also, guidance on factory construction for licensed products. | 5 years from Dec. 2005 |
| Heng Tong Auto Parts Inc. (Taiwan) |
Know-how on design and manufacturing technology for disc brakes and their components. | Jul. 2007 to Jun. 2010 |
| TRW Automotive Inc. (UK) |
Know-how on design and manufacturing technology for drum brake assemblies, brake valves and their components for commercial vehicles. Also assistance in sales activities. (cross-licensing contract) | Oct. 2006 to Oct. 2009 |
Investment Activities
| Capital Expenditure | (in millions of JPY) |
| FY2008 | FY2007 | FY2006 | |
| Overall | 16,872 | 24,279 | 17,077 |
| Automotive Brakes | N.A. | 5,221 | 4,546 |
| Electronics Division | 2,843 | 4,847 | 3,592 |
Electronics
-A large part of this investment was made by its consolidated subsidiary, New Japan Radio Co., Ltd., for its semiconductor manufacturing facilities.
Investments in Japan
-The Company will withdraw from clutch friction material business to increase domestic production capacity of friction materials for disc brakes, whose domestic demand is growing. It will demolish a clutch facing line at Tatebayashi Plant to replace it by a new line for disc pads as early as FY 2009. The company expects a total investment of 1.7 billion yen to build a new line of 420-ton annual production capacity. In March 2010, the plant's disc pad output capacity will be increased to over 3,800 tons, up approx. 12%. While a part of the increase will be used to make up for the decreasing brake lining production as its domestic demand is being replaced by brake discs, most of them will be allocated for export as the disc pad supply is not overtaking the demand overseas. Nisshinbo plans to meet rising disc brake ratio in Japan and growing orders from overseas by reinforcing Tatebayashi Plant for the time being. (From an article in the Nikkan Jidosha Shimbun on Jun.12)
Plan for New Facilities (As of Mar. 2009)
| Company/plant name (Location) |
Business/ Details of the facility |
Planned investment amount (millions of yen) |
Start | Expected to be completed in: | Increase of manufacturing capacity after completion |
| The Company Chiba Plant (Chiba Pref., Japan) |
Chemicals/ capacitor manufacturing facilities |
1,925 | Mar. 2009 | Aug. 2010 | - |
| New Japan Radio Co., Ltd. Kawagoe Plant (Saitama Pref., Japan) |
Electronics/electronic parts manufacturing facilities | 696 | Oct. 2007 | Mar. 2010 | - |