Nippon Piston Ring Co., Ltd. Business report FY2006
Business Highlights
( In millions of JPY ) | FY2006 | FY2005 | Rate of Change (%) |
Factors |
Overall | ||||
Sales | 48,150 | 48,773 | (1.3) | see note 1) below |
Operating income | 2,027 | 3,452 | (41.3) | see note 2) below |
Ordinary income | 1,700 | 3,394 | (49.9) | |
Current net income | 743 | 2,161 | - | |
Automotive Parts Division | ||||
Sales | 42,092 | 42,807 | (1.7) | see note 3) below |
Operating income | 1,744 | 2,821 | (38.2) |
Factors
1. The Company increased the supply capacity at its production sites and
increased the volume of its OEM sales. As a result, its affiliated companies
at home and abroad won new orders. But its overall sales decreased due
to the change in the accounting term at its US sales company and the decrease
in orders for aftermarket parts.
2. Though the Company made efforts to reduce costs, both operating
and ordinary income decreased mainly because it established manufacturing
subsidiaries overseas and launched new products. Due to an extraordinary
loss of 1740 million yen for liquidating depreciated shares of affiliated
companies, the Company's net profit also dropped.
<Automotive parts division>
3. In spite of there being positive factors contributing to this business
sector such as increased automotive production volume in Japan, thanks
to strong sales of products for export; and increased orders for new parts,
both sales and profit decreased mainly because of the change in the accounting
term at its US sales company.
-Thanks to strong automotive production in Japan, sales of piston rings
in the domestic market remained unchanged from the previous year. Overseas,
however, due to the change in the accounting term at its US sales company
and the reduction of orders for aftermarket parts, the Company's sales
were 22,044 million yen, down 1.5% from the previous term.
-The demand for replacement cylinder liners for trucks, to
comply with emission regulations, has subsided. In addition, sales
in North America was slow. Furthermore, the change in the accounting
term at its US sales company had a negative impact on the Company's
sales, which were 7,430 million yen, down 9.8% from the previous
term.
-Sales of parts for valve operating systems increased by 3.6% over those
of the previous term to 12,618 million yen, as sales of assembled sintered
camshafts and valve seats increased, thanks to strong automotive production
volume in Japan.
Production Structure
The Company announced that it will piston ring production in Indonesia
in July 2006. The company established a fully-owned manufacturing subsidiary
"PT. NT. Piston Ring Indonesia" in March 2006 in Pasuruan, East
Java of Indonesia, which plans to manufacture key components of automotive
engines such as cast iron piston rings on a scale of 1 million units a
month in fiscal 2008. A total of approximately 1.9 billion yen is invested
in the new plant with a workforce of approximately 200.(From a story in
the Nikkan Jidosha Shimbun on Jul. 27, 2006)
R&D
R&D Expenditure | (in millions of JPY) |
- | FY2006 | FY2005 | FY2004 |
Group | 1,705 | 1,811 | 1,738 |
Automotive Parts Division | 1,637 | 1,739 | 1,669 |
1. Piston rings for aluminum bores
The Company is developing technology for commercializing rings for aluminum bores in gasoline engines. The Company has completed evaluations on prototypes and is now preparing to mass produce them.
2. Low friction piston rings
-The company developed piston rings which serve as seals under low tension,
winning new program business for hybrid and compact gasoline engines.
-These piston rings, which are based on high-precision designs and the
Company's production technology, are being mass-produced and equipped
in even high-power gasoline engines. In addition, the Company is working
to develop new materials, surface treatments, and design technology, which
are indispensable technological elements for reducing friction loss.
3. Durable piston rings for diesel engines
-In order to comply with diesel-engine emission regulations, the Company
increased the volume of piston rings (which have undergone PVD surface
treatment) that it mass produces. These piston rings are highly resistant
to scuffing and wear.
-In order to comply with emission regulations, including the Post New
Long-term Regulation and Euro-V, and fuel economy requirements for heavy-duty
vehicles, the Company is developing piston ring technology in order to
offer piston rings that have high output and enhance fuel economy.
4. Valve seats
The Company worked on developing the following. For gasoline engines,
it developed materials that are designed to respond to requirements for
lower fuel consumption and lean combustion; and for diesel engines, it
worked on materials that comply with gas emissions regulations. In addition,
it worked on various valve seats that can handle alternative fuels such
as bio-alcohol, as an sample. These items were mass-produced and now are
being equipped on vehicles manufacture by various automakers at home and
abroad.
5. Assembled sintered camshafts
-The Company developed assembled sintered camshafts for high-performance
gasoline engines with VVT (Variable Valve Timing), and for passenger-car
and commercial-vehicle diesel engines. The volume of these being mass-produced
and equipped on vehicles is increasing.
-The Company successfully achieved developing next-generation assembled
sintered camshafts and has begun mass production of them in 2006. .
6. MIM products
The Company developed light magnetic materials based on the MIM method,
enabling the Company to increase the production volume of injector parts.
7. New sintered products
The Company developed an iron-based sintered alloy to be used as reinforcement material,
further succeeding to combine it with aluminum materials. Now the Company
has begun selling the new alloy for use in gasoline-powered vehicles.
8. Cylinder liners
-The Company decided the specifications of cylinder liners for diesel
engines that cope with the new long-term gas emissions regulation.
-The Company is developing and assessing new materials as well as surface
processing and machining methods in order to comply with emission regulations
including the Post New Long-term Regulation and Euro-V, which will be
enforced from fiscal year 2008 and after; and to comply with fuel economy
requirements for heavy-duty vehicles.
New technology development
The Company has developed a new technology to reduce vibration and noise
generated by a widened gap between the bearing and crank shaft caused
by heat expansion, which is a problem of cylinder blocks made of aluminum
alloy. Reinforcement made of sintered material cast around the bearing
serves as a hoop to reduce vibration. Applying this technology to development
of higher value-added products to improve engine performance in the area
of vibration and noise on which research and development is being focused,
the company aims at expanding sales of such products. The company has
been receiving inquiries from several automakers, and is expecting a strong
demand. (From an article in the Nikkan Jidosha Shimbun on Dec.13, 2006)
Contracts for technical licensing (As of March 2007)
Name of the licensed company | Country | Details | Term of contract |
Sejion Cam Co., Ltd. | Korea | Sintered camshaft production methods | Seven years from Sep. 13, 1996 after the start of mass-production (Annual renewed after the term) |
Henan Zhongyuan Engine Fitting Co.,Ltd. | China | Cylinder liner production methods | Until the Company no longer supplies the products |
Yizheng Shuang Huan Piston Ring Co., Ltd | China | Oil ring production methods | Until December 26, 2012 |
IP Rings | India | Oil ring production methods | Until October 6, 2010 |
India | Nitrogenous ring production methods | Until February 20, 2010 | |
India | Steel ring production methods | Until February 20, 2008 | |
India | Oil ring assembly production methods | Until November 30, 2011 | |
India | Manufacturing methods of chrome plated rings and casting iron rings | Until March 31, 2008 | |
GK S Sinter Metals | India | Sintered alloy valve seat manufacturing methods | Until March 30, 2010 |
GKN Sheepbridge Stokes Ltd. |
UK | Cylinder liner production methods |
Until the end of supply of products |
CAMISA S,A, DEC.V. |
Mexico | Cylinder liner production methods |
Until February 6, 2007 |
Investment Activities
Investment Expenditure | (in millions of JPY) |
- | Mar., 2007 | Mar., 2006 | Mar., 2005 |
Group | 8,795 | 5,060 | 2,853 |
Automotive Parts Division | 8,545 | 4,603 | 2,736 |
-Capital investments in its Japanese operations were made to reinforce production facilities, enabling them to respond to new production increases.
-Capital investments in its overseas operations were made in order for the Company to focus on constructing new facilities that are to start manufacturing valve seats in China.
New Facility
Name | Location | Type of facility | Planned total investment (1000 JPY) | Construction start month | Planned completion month | Capacity upon completion |
NPR Auto Parts Manufacturing (Yizheng) Co., Ltd. | Yizheng, Jiangsu Province, China | Construction of new plants | 2,574 | 2005.01 | 2007.12 | 20,400,000 units/month |
NPR Manufacturing Kentucky, LLC | Kentucky, U.S.A. |
Construction of new plants | 5,500 | 2006.05 | 2011.06 | 18,000,000 units/month |
PT. NT Piston Ring Indonesia | Pasuruan, Indonesia |
Construction of new plants | 1,900 | 2006.09 | 2007.07 | 12,000,000 units/month |
-A new plant is being constructed in the U.S. to enable the Company to start producing products in the USA in order to enhance sales to Japanese and local automakers operating in the country.
-A new plant is being constructed that will begin production of cast iron piston rings.