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5. Nisshinbo Holdings Inc. Business Report FY ended Mar. 2016

Nisshinbo Holdings Inc. Business Report FY ended Mar. 2016

Acquisitions

-The Company announced that it will acquire 100% of Nanbu Plastics Co., Ltd., a plastics supplier based in Shizuoka, Japan. After the transaction, which will be completed on October 19, Nisshinbo Mechatronics Inc. (Tokyo, Japan) will hold a 90% share, while Nisshinbo Singapore Pte. Ltd. will hold a 10% share in Nanbu Plastics. The value of the deal has not been revealed. With this acquisition, the Company aims to expand its automotive plastic business, the area of expertise of Nanbu, which produces plastic components used around wire harnesses and headlamps. Nanbu Plastics has 10 plants, including 5 plants outside Japan. The Company intends to build a mutually complementary relationship with the plastics supplier by sharing both companies' facilities and reducing costs through centralized purchasing, as demand for plastic parts is expected to grow. (From an article in the Nikkan Jidosha Shimbun on October 14, 2015)

Addition of Wholly Owned Subsidiaries

-In March 2016, Japan Radio Co., Ltd. of the electronics business turned Nagano Japan Radio Co., Ltd. and Ueda Japan Radio Co., Ltd. into wholly owned subsidiaries, under the aim of unifying operations and strengthening compliance. The Company hopes to achieve further growth by expanding business in the automotive sector.

Mid-term Management Plan

-Performance objectives by the end of the fiscal year that ends in March 2018 are as follows.

• FY ending Mar. 2018: Sales JPY 600 billion, ROE9%
• FY ending Mar. 2026: Sales JPY 1,000 billion, ROE12%
• CAGR: 6.6%
• How to fill the difference of sales (JPY 400 billion) between FY ending Mar. 2026 and FY ending Mar. 2018.
  -Expansion of the existing domains & demonstration of R&D: JPY 200 billion
  -Utilization of M&A: JPY 200 billion

-Mid-term Business Plan Strategies

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

R&D Facilities

R&D Activities

Electronics

-The communications devices business is developing automotive products such as millimeter wave radar, ETC 2.0 on-board equipment, and car-to-car and car-to-road communication devices, working under the keywords of “auto safety” and “sophistication”.


-New Japan Radio Group is focusing on developing mainly electronic devices, such as those for onboard communications devices and smart phones, in order to commercialize them. It is also researching “passive products”, which is a new field of business.

Automotive Brakes
1. Ensuring "Safety First"
2. Improve cash-flow management through monitoring KPIs (Key Performance Indicators).
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
The company is developing products and technology that meet those quality objectives.

-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.


-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, 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.

Precision instruments
-The plastics business is conducting R&D activities on climate-control fans and other automotive parts, making use of its forming and die technology in a wide range of fields.

Chemicals

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

-New Energy and Industrial Technology Development Organization of Japan (NEDO) will start a new research and development project to spread the use of fuel cell vehicles (FCVs) in earnest in Japan. With the new project, NEDO will promote the development of basic technologies for advanced analysis and evaluation of fuel cells, the creation of guidelines for designing new materials, and substantial improvement in productivity, which are essential for commercialization. In order to accelerate technological development at private companies, NEDO will cooperate with research institutes and FCV user enterprises in Japan to expand the FCV market and strengthen Japan's competitiveness in the FCV field. For the three research themes in the development of analysis technologies for fuel cells and six themes in the creation of concepts for cell stack materials, NEDO will entrust each theme to research institute(s). As for the research themes in the development of technologies for process commercialization, NEDO plans to subsidize projects by Ishifuku Metal Industry Co., Ltd., Toray Industries, Inc., Asahi Kasei E-materials Corporation, Screen Holdings Co., Ltd., Nisshinbo Chemical Inc. and Yumex Co., Ltd. (From an article in the Nikkan Jidosha Shimbun on June 6, 2015)

Company-wide

-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 investments during fiscal year that ended in Mar. 2016:

• Japan Radio Co., Ltd. (Development center and relocation of major production facilities) : JPY 5,650 million
• New Japan Radio Co., Ltd. (IC manufacturing facility and R&D equipment) : JPY 3,449 million
• Enhancing facilities for producing friction materials at TMD Friction GmbH and other subsidiaries: JPY 4,986 million

-In its new medium-term business plan for the three years starting from fiscal year 2016 (ending March 2017), Nisshinbo Brake Inc. plans to increase capital investment by 25% from its current three-year plan to JPY 40 billion. Under the new plan, the company will take measures which include, integrating its two manufacturing plants in Germany, moving its Brazilian plant, and updating the facilities at its Tatebayashi Plant in Japan. Along with rationalizing its production system, the company will prepare for the production of copper-free friction materials, which are expected to become popular. Nisshinbo Brake is expanding its business globally by means such as acquiring European friction material manufacturers. The company will raise the profit ratio of its mainstay friction material business by moving forward with streamlining the plants it will purchase. (From an article in the Nikkan Jidosha Shimbun on March 7, 2016)