Nippon Piston Ring Co., Ltd. Business report FY2007

Business Highlights

Financial overview (in millions of JPY)
  FY2007 FY2006 Rate of
Sales 51,924 48,150 7.8 -Sales rose because the Company and its affiliates overseas successfully won new orders, thanks to the Company's boosting its production capacity overseas and selling greater volume of products on an OEM basis.
Operating income 2,575 2,027 27.0 -In spite of cost reduction activities, especially those conducted to lower fixed costs, income year-on-year was down as a result of an increase in costs due to a change in the depreciation method the Company used; and as a result of soaring materials prices. 
Ordinary income 1,232 1,700 (27.5)
Current net income 532 743 -
Automotive Parts Division
Sales 45,469 42,092 (1.7) -
Operating income 2,176 1,744 (38.3)

Business alliance

-The Company announced that it has concluded an agreement to establish a business alliance with KS Kolbenschmidt GmbH, a leading German piston supplier in Neckarsulm, Germany. The two parties will cooperate in marketing and sales expansion of modulized parts to U.S. and European automakers in China and other markets and also in joint research on environmental technologies. They will pursue synergy effect on a global level by improving their capabilities to modulize piston and piston ring related parts and to supply related systems. This alliance is aimed at establishing a global cooperative system in the area of parts related to the piston, a key engine component. Since European and U.S. automakers are increasingly purchasing pistons and piston rings as modules, the alliance is to meet these needs in major markets including Europe, the U.S. and China. (From an article in the Nikkan Jidosha Shimbun on Sep. 13, 2007)


R&D Expenditure (in millions of JPY)
  FY2007 FY2006 FY2005
Group 1,655 1,705 1,811
Automotive Parts Division 1,588 1,637 1,739

Achievements in R&D
1. Piston rings for aluminum bores
-To address technical challenges that are unique to aluminum bores, the Company, by utilizing the expertise it gained through developing and commercializing aluminum bores, is working to commercialize piston rings developed based on new technologies.

2. Low-friction piston rings
-The Company completed commercializing high precision rings for engines with large-diameter bores by applying ring designs that are high-precision and thinner in width;  and  by applying technology on processing that was developed through manufacturing rings for Formula car races.

3. Highly durable piston rings for diesel engines
-To comply with emission and fuel-consumption regulations such as EuroVI and US10 for heavy-duty vehicles, the Company launched new technology on PVD film so as  to develop piston ring technologies capable of achieving both lower emissions and better fuel consumption at the same time. 

4. Valve seats
-The Company began developing materials for gasoline engines that are more fuel efficient and lean burning;  and materials compliant with emission regulations for diesel engines. It also started developing valve seats for increasingly popular bio-alcohol fuels such as  E85, mass-producing them for automakers in and outside Japan. 

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 parts
-To meet the needs for highly functional engine blocks, the Company developed an iron-based sintered alloy that has superior reinforcement capability. To achieve this, the Company successfully combined both aluminum and cast iron, which coheres poorly with die-cast aluminum, in engine blocks. The Company is currently mass-producing this alloy for use in gasoline engines. It already has begun being used in diesel engines mounted on passenger vehicles in 2007. 

8. Cylinder liners
-The Company is moving forward in commercializing cylinder liners that are compliant with the New Long-term Emission Regulations, establishing a proprietary specification for these. These liners will be used on diesel engines. It is also developing and evaluating new and complex materials that satisfy regulations on emissions and fuel efficiency, in order for them to be effective in the future. 

Strengthening development
-The Company will strengthen engine parts development to prepare for future expansion of the market for vehicles powered by alternative fuels such as ethanol. Alternative fuel engine vehicles have higher temperature in engine combustion, compared to conventional vehicles. As a result, no combustion component will be produced to prevent wear of valve seat inserts, which are press-fitted into the valve seating face, and effective countermeasures are now being required. In order to solve the problem, the supplier will apply its unique technologies to develop new types of valve seats with self-lubricating property to win new orders. Alternative fuels are recoverable, clean and effective to reduce CO2 emissions. On the other hand, they make engine combustion temperature higher, reduce combustion components such as oxide, then lower effectiveness to prevent wear of sintered alloy valve seats and may cause adhesive wear. The company will improve durability of valve seats by offering self-lubricating property, changing components, improving shear stability and applying other technologies. Valve seat inserts are the supplier's mainstay products, which generate approximately 12% of, or the third largest, sales of the company. In fiscal 2009, the company is planning to upgrade its monthly global production to 19 million units, up 30% from the result in fiscal 2005. (From an article in the Nikkan Jidosha Shimbun on Jul.9, 2007)

Contracts for technical licensing (As of March 2008)
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 Piston ring production methods Until December 31, 2012
IP Rings India Oil ring production methods

Until October 6, 2010

India Nitrogenous ring production methods Until February 28, 2010
India Steel ring production methods

Until February 20, 2013

India Oil ring assembly production methods Until November 30, 2011
India Manufacturing methods of chrome plated rings and casting iron rings Until March 31, 2013
GK S Sinter Metals India Sintered alloy valve seat manufacturing methods Until March 30, 2010

Investment Activities

Investment Expenditure (in millions of JPY)
  FY2007 FY2006 FY2005
Group 7,098 5,060 2,853
Automotive Parts Division 6,634 4,603 2,736

-Capital investment in Japan was made to boost production capacity

-Capital investment outside Japan was made to establish and launch operations at production facilities in North America and Indonesia

New Facility
Name Location Type of facility Planned total  investment (1000 JPY) Construction start month Planned completion month Capacity upon completion
NPR Manufacturing Kentucky, LLC Kentucky,
Construction of new plants 5,500 2006.05 2011.06 18,000,000