Nisshinbo Holdings Inc. Business Report FY ended Mar. 2015

Business Highlights

Financial Overview

(in million JPY)
  FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 Rate of
change
(%)
Factors
Overall
Sales 523,757 494,350 5.9 1)
Operating income 13,744 13,175 4.3 -
Ordinary income 20,650 22,171 (6.9)
Net income 13,693 9,011 52.0
Automotive Brakes
Sales 161,886 148,699 8.9 2)
Operating income (2,068) (1,813) -
Electronics Business
Sales 209,115 187,742 11.4 -
Operating income 12,703 9,351 35.8
Chemicals Business
Sales 8,942 8,810 1.5 -
Operating income 514 105 389.5 -
Precision equipment
Sales 28,607 28,655 (0.2) -
Operating income 263 1,075 (75.5)


Factors
1) Overall Sales
-Sales increased year-on-year due to significant growth in the electronics and brake operations.

2) Sales - Automotive Brakes
Japan: Sales and profits increased year-on-year due to greater volumes of exports and favorable currency translation, even though sales at Japanese OEMs decreased once the last-minute buying spree ended after the consumption tax was increased.  

Outside Japan: Sales and profits increased year-on-year due to favorable currency translation (due to the weak yen) of results from subsidiaries in the U.S. and Korea, and because subsidiary operations in China turned a profit. However, sales and profits were lower at the operations in Thailand.

TMD Friction: As a result of higher automotive sales in Europe, business results improved. However, sales of aftermarket products decreased and depreciation expenses rose as a result of the weak yen.

Mid-term Management Plan

-Performance objectives by the end of the fiscal year that ends in March 2018 are as follows.
Sales: JPY 600 billion
Operating income: JPY 40 billion
ROE: 9% or more

The Company launched Next 2015, a new mid-term management plan that covers three fiscal year starting from April 2013.

Performance objectives for the fiscal year that ends in 2016 are as follows:
Sales: JPY 550 billion
Operating income: JPY 24 billion

In order to achieve these objectives, the Company will implement the following.
-strengthen its global competitiveness
-renew and grow the electronics business
-strengthen the brake business
-strengthen the profit structure of the textile, paper, precision instruments, and chemical products businesses

-In the fiscal year that ended in March 2015, the Company announced long-term, strategic objectives to be achieved in FY2025, and they are sales of JPY 1 trillion and an ROE of more than 12%.

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

Outlook for FY ending Mar. 31, 2016

(in million JPY)
  FY ending Mar. 31, 2016
(Forecast)
FY ended Mar. 31, 2015
(Actual Results)
Rate of Change
(%)
Sales 550,000 523,757 5.0
Operating income 20,000 13,744 45.5
Ordinary income 25,000 20,650 21.1
Net income 16,000 13,693 16.9
Sales by major business division
Automotive Brakes 170,000 161,886 5.0
Electronics 210,000 209,115 0.4
Chemicals 8,500 8,942 (4.9)
Precision equipment 30,000 28,607 4.9

R&D Expenditure

(in million JPY)
FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Overall 20,938 19,630 17,912
-Automotive Brakes 9,142 8,573 7,081
-Electronics 9,781 9,018 8,774
-Chemicals 490 580 479
-Precision equipment 12 23 49

R&D Facilities

Automotive Brakes
Nisshinbo Brake Inc.
Development Center and Testing Center
Gunma Pref., Japan
NAMI BD Center Detroit, USA
Saeron Automotive Cheonan, Korea
TMD Friction EsCo Leverkusen, Germany
TMD Friction do Brazil Indaiatuba, Brazil

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"

  1. 2. Thoroughly implementing Group concepts
    3. Developing human resources
    4. Strengthening quality assurance
    5. Advancing strategy for global operations
    6. Marketing differentiating products that are cost competitive
    7. Thoroughly complying with laws and responding to business risks


<Friction Materials>
-The Company is developing environmentally low-impact products that ensure a high level of reliability as important safety products that comply with regulations on copper, etc.; focusing on meeting customer needs in terms of reducing noise and vibration.

-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.

-In aiming to gain the synergy effects from TMD Friction Group S.A. as quickly as possible, the Company is continuing to develop products that satisfy global needs.

<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.

-Focus on making products lighter in weight in order to improve fuel efficiency, commercialize technology that responds to environmental concerns, and commercialize new technology with a vision toward the future.

-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.

Electronics
<Nagano Japan Radio Group>
-Development of elemental wireless power supplies, and fundamental research on technology to ensure high fastening reliability of coils for onboard use.

Chemicals
<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.

Company-wide
<Functional materials for radios>
-In responding to the hydrogen age, conducting R&D activities on carbon-alloy catalysts and hydrogen storage carbon that are the most reliable in the world, as replacements for platinum catalysts.


Major Technology Licensing-in Agreements

(As of Mar. 31, 2015)
Company
(Country)
Contract details Contract term
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
(yearly automatic extension after Nov. 2008)

Major Technology Licensing-out Agreement

(As of Mar. 31, 2015)
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. 2010
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. 3 years from
Dec. 2013
Know-how on design and manufacturing technology for drum brakes and related components. 3 years from
Jun. 2013

Capital Expenditure

(in million JPY)
FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Overall 36,909 19,895 20,123


Automotive Brakes
-Capital investments during fiscal year that ended in March, 2015:

  • JPY 4,888 million to add facilities for producing friction materials at TMD Friction GmbH and other subsidiaries.

Planned Capital Investment (automotive related)

(As of Mar. 31, 2015)
Company/plant name
(Location)
Details of the facility Planned investment amount
(millions of yen)
Start Expected to be completed in: Increase in manufacturing capacity after completion
TMD Friction Do Brasil S.A.
(Brazil)
Manufacture and sale of brake products 6,438 Feb.
2014
Dec.
2016
-
TMD Friction Esco GmbH
Germany
Manufacture and sale of brake products 7,400 Sep.
2015
Dec.
2020
-
Nisshinbo Somboon Automotive Co., Ltd.
(Thailand)
Manufacture and sale of brake products (Second phase of investment) 674 Apr.
2013
Sep.
2015
-
Manufacture and sale of brake products (Third phase of investment) 1,684 Sep.
2014
Dec.
2017
10% increase