Nisshinbo Holdings Inc. Business Report FY2011

Business Highlights

Financial Overview

(in millions of JPY)
  FY ended Mar. 31, 2012 FY ended Mar. 31, 2011 Rate of
Sales 379,340 325,555 16.5 -
Operating income 23,043 19,842 16.1 -
Ordinary income 8,680 25,268 (65.7) -
Net income 9,415 11,184 (15.8) -
Automotive Brakes
Sales 47,450 46,118 2.9 1)
Operating income 4,254 5,090 (16.4)
Electronics Business
Sales 169,906 112,820 50.6 -Performance was lower due to the losses accumulated by the Company's consolidated subsidiaries, Japan Radio Co., Ltd. and New Japan Radio Co., Ltd.
Operating income (4,111) 6,183 -
Sales 8,258 7,283 13.4 -
Operating income 373 (294) - -
Precision equipment
Sales 25,190 32,020 (21.3) -Both revenue and profit were lower because its operations processing automotive precision parts won less program business as a result of the Great East Japan Earthquake and the flooding in Thailand.
Operating income (1,069) 1,413 -

-In its domestic operations during the first half of the year, the Company suffered from a sharp drop in program business with Japanese OEMs, which had to cease operations directly after the Great East Japan Earthquake. However, for the year, revenues were up due to a speedy recovery in program business awards starting from the third quarter. However, due to the high costs of raw materials, operating profit slightly decreased year-on-year.

-As for its business operations outside Japan, the Company's subsidiaries in the U.S.A and Thailand confronted problems at Japanese OEMs that were affected by the Great East Japan Earthquake and the flooding in Thailand、which created production stoppages and higher costs of imported materials. As a result, these operations posted lower revenues and operating profits. Nevertheless, revenues and profits rose at its Korean and Chinese subsidiaries due to strong demand in those countries.


-The Company aims to create a synergy from acquisition of TMD Friction Group S.A., Luxembourg, early. It plans to form a project team consisting of staffs from both companies in each area of the brake business in order to clarify areas in which large synergy effects can be created in the short term and to sort out problems to solve in the medium to long-term. After TMD joined, the Nisshinbo Group has become the largest automotive brake friction manufacturer. Each company, however, excels in different products and regions and the company aims to overcome difficulties early so that it should benefit from the acquisition. The project team will be organized early in the new year by selecting four experienced staff members each from Nisshinbo Brake and TMD in each area of production, R&D, purchasing and logistics.  Eight members each, therefore, will work for different areas. Nisshinbo Brake plans to clarify problems in three months and evaluate synergy effects on mutual complementation, sharing and division of roles in production operations and product lineups. (From an article in the Nikkan Jidosha Shimbun on December 24, 2011)

-The Company announced on November 30, 2011 that it has completed purchasing all shares of TMD Friction Group S.A., a brake friction manufacturer headquartered in Luxembourg. Nisshinbo has spent 440 million euros (46 billion yen) for the transaction to own all 3,100,000 TMD shares, making the Luxembourg-based supplier its wholly owned subsidiary. (From an article in the Nikkan Jidosha Shimbun on December 2, 2011)

-The Company said it would buy all the shares in the TMD Friction Group S.A., a Luxembourg-based brake friction materials manufacturer. The acquisition is expected to create a new global leader in the brake friction materials business. The company , which ranks fourth among global friction materials suppliers in terms of sales, is spending 440 million euros (approximately 46.2 billion yen) to purchase TMD Friction, the world's second largest supplier in the industry with 16 facilities in 10 countries. In 2010, TMD Friction generated sales of 637 million euros (approximately 66.8 billion yen). The combined market shares of both companies will reach 15 percent, which is large enough to overtake the industry's leader, Federal-Mogul Corporation of the U.S.A. Shizuka Uzawa, president of the company says, purchasing of TMD Friction will add production bases in untapped regions such as Europe, Brazil and Mexico to our operations, allowing us to cover the most of automobile production countries. The number of the Group's global facilities will thereby increase dramatically to 24 in 14 countries. Having expertise in different areas, the two companies are looking to generate huge synergies in the global market. The company, which focuses on non-asbestos friction materials for disc pads and other products, has been supplying its products mainly to Japanese and Korean automakers. TMD Friction, on its part, is an expert in developing and manufacturing low steel materials, having a large presence in the European auto industry where low steel pads are popularly used. In its new three-year business plan, The company is aiming to raise its yearly sales to 600 billion yen by the year ending March 2018. The company is confident that the acquisition will make it possible to achieve 80 percent of the sales target. (From an article in the Nikkan Jidosha Shimbun on September 28, 2011)

New Company

-The Company announced that it has established Nisshinbo Business Management (Shanghai) Co., Ltd. in Shanghai, a new company to oversee operations of its group in China. The new company is capitalized at 2 million USD. (From a press release on March 29, 2012)

Joint Venture

-Nisshinbo Brake Inc. (Tokyo), which operates a joint-venture company in China with its Korean subsidiary, Saeron Automotive Corporation, is going to break ground for the joint venture's production facility in the middle of September. The establishment of the joint venture, Nisshinbo Saeron Automotive Co., Ltd., was initially announced in July last year with formation scheduled two months after that in September 2010. The new company was to launch production and sales of friction materials in the suburbs of Shanghai around the end of 2011. Due to a delay in registration procedures, however, the new business was set up six months behind schedule in February this year. Based on the revised schedule, its plant is expected to be completed in April 2012 and start production in July 2012. The new operation will quadruple the Group's production capacity in China. The company will thereby increase business not only with Japanese and Korean customers but also with European and U.S. manufacturers. (From an article in the Nikkan Jidosha Shimbun on August 8, 2011)

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

Outlook for FY ended Mar. 31, 2013

(in millions of JPY)
  FY ended Mar. 31, 2013
FY ended Mar. 31, 2012
Sales 475,000 379,340
-Automotive Brakes 126,800 47,450
-Electronics 184,000 169,906
-Chemicals 8,800 8,258
-Precision equipment 27,600 25,190
Operating income 15,000 4,170
Ordinary income 15,500 8,680
Net income 7,000 9,415


R&D Expenditure

(in millions of JPY)
  FY ended Mar. 31, 2012 FY ended Mar. 31, 2011 FY ended Mar. 31, 2010
Overall 16,285 11,608 8,817
Automotive Brakes 3,092 2,948 2,915
Electronics 11,357 7,025 4,538
Chemicals 107 352 455
Precision equipment 180 299 151

R&D Facilities

Automotive Brakes
Nisshinbo Brake Inc.
Development Center and Testing Center
Gunma Pref., Japan

R&D Activities

Automotive Brakes

The automotive brake division will work on developing new product and technologies based on the following strategies:
1. Ensuring "Safety First"
2. Recovering from the Great East Japan Earthquake; reorganizing its business operating structure.
3. Advancing its global operating strategy
4. Developing/growing sales of products that offer differentiating features and that are also cost competitive.
5. Establishing a consolidated management structure
6. Effectively responding to operational risks
7. Developing international human resources

<Friction Materials>
- In the area of friction materials, which are major products contributing to vehicle safety, the Company aims to ensure a high level of safety, reduce noise and vibration to meet customers demand, and develop environmentally friendly materials that meet restrictions on copper use.  

-The Company is enhancing development assistance to its overseas subsidiaries and promoting cost reduction activities in close collaboration among functions of development, manufacturing and production engineering with the aim of strengthening its competitive edge.

<Automotive Brakes>
-In order to expand global business operations, the Company is not only reinforcing its development assistance to its overseas subsidiaries, but also promoting technological collaborations with overseas partners.

-The Company is intent on not only development of new technologies for the future, but also commercialization of environmental technologies.

-Through standardizing components and increasing efficiency in development activities, as well as taking cost reduction measures from early stages in development, the Company is working on strengthening its competitive edge.

<The JRC Nihon Musen Group>
Each of the Group's business segments, including the marine device division, the communication equipment division, and the solutions and special equipment division, is conducting comprehensive R&D activities covering from mid- to long-term basic studies to new technologies connected to its business line.

<The New Japan Radio Group>
The Group is carrying out comprehensive research activities, including planning, designing and studies on production engineering for semiconductor products and microwave components.

<Fuel cells>
-The Company is conducting research and development activities to enhance performance of a fuel cell separator by taking advantage of features of carbon materials.

-The Company is improving durability performance of a dual electric layer capacitor.

Major Technology Introduction Agreements

(As of Mar. 31, 2012)
Contract details Contract term
TRW Automotive Inc.
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. 2009 to
Oct. 2012
Meritor Heavy Vehicle Braking Systems (UK) Limited.
Know-how on design and manufacturing technology for disc brake assemblies, drum brake assemblies and their components Nov. 2003 to
Nov. 2008
(yearly automatic extension after Nov. 2008)

Licensing of Technology to Other Companies

(As of Mar. 31, 2012)
Contract details Contract term
Rane Brake Linings Limited
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. 2010
Heng Tong Auto Parts Inc.
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. 3 years from
Dec. 2010
Heng Tong Auto Parts Inc.
Know-how on design and manufacturing technology for drum brakes and related components. 3 years from
Jun. 2010
TRW Automotive Inc.
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. 2009 to
Oct. 2012

Investment Activities

Capital Expenditure

(in millions of JPY)
  FY ended Mar. 31, 2012 FY ended Mar. 31, 2011 FY ended Mar. 31, 2010
Overall 15,704 12,800 13,027
Automotive Brakes 1,008 936 1,031
Electronics 2,988 3,419 N.A.
Precision equipment 1,106 N.A. N.A.
Chemicals N.A. N.A. 945

Automotive Brakes
- The Company invested mainly in increasing its capacity to produce friction materials at Saeron Automotive Corporation and Saeron Automotive Beijing Corporation, which are its consolidated subsidiaries.

Plan for New Facilities (automotive related)

(As of Mar. 31, 2012)
Company/plant name
Details of the facility Planned investment amount
(millions of yen)
Start Expected to be completed in: Increase of manufacturing capacity after completion
New Japan Radio Co., Ltd.
Kawagoe Plant
(Saitama Pref., Japan)
Electronic parts manufacturing facilities 1,412 Apr.