Nippon Piston Ring Co.,Ltd. Business Report FY ended Mar. 2013

Business Highlights

Financial Overview

(in millions of JPY)
  FY ended Mar. 31, 2013 FY ended Mar. 31, 2012 Rate of
Sales 47,018 49,168 (4.4) -
Operating income 2,225 3,847 (42.2) -
Ordinary income 2,184 3,336 (34.5) -
Net income 2,013 4,118 (51.1) -
Automotive Parts Division
Sales 41,284 42,532 (2.9) -On one hand, the Company received more product orders because of the recovery in production that came with the aftermath of the flooding in Thailand and the Great East Japan Earthquake, and because of the benefit that resulted from eco-car sales incentives. On the other hand, business performance was impacted by the fall in production volumes at Japanese OEMs in China.
Operating income 1,995 3,447 (42.1) -

New Company

-The Company will establish a subsidiary to produce valve seats in Yizheng, Jiangsu Province, China. The new company, called NPR Powdered Materials Manufacturing (Yizheng) Co., Ltd., will be formed in December, capitalized at 8.8 million dollars (approximately 700 million yen). The operation is scheduled to begin in July 2013, increasing the Group's supply capacity to serve not only Japanese automakers but also European and Chinese car manufacturers. Nippon Piston Ring has earmarked about 22 million dollars (approximately 1.7 billion yen) for this project. The new subsidiary will be absorbing the valve seat division of NPR Auto Parts Manufacturing (Yizheng) Co.,Ltd., Nippon Piston Ring's existing subsidiary in the same city. It will increase the production capacity to approximately 3 million valve seats a month by 2016. (From an article in the Nikkan Jidosha Shimbun on Nov. 30, 2012)

Mid-term Management Plan

-The Company developed its mid-term business plan for the period 2012 -2014. It will invest approx. 10 billion yen in facilities in the three years through 2014 in order to commercialize newly developed parts and increase production capacities worldwide. It will continue to work on improving the cost structure and enhance human resources development to upgrade manufacturing expertise. Technology development efforts will be focused on environmentally friendly products such as those featuring alternative fuels and fuel efficiency in order to increase orders from OEMs. (From an article in the Nikkan Jidosha Shimbun on Jun. 21, 2012)

Outlook for FY ending Mar. 31, 2014

(in millions of JPY)
  FY ending Mar. 31, 2014
FY ended Mar. 31, 2013
(Actual Results)
Rate of Change
Sales 48,000 47,018 2.1
Operating income 2,400 2,225 7.9
Ordinary income 2,200 2,184 0.7
Net income 1,400 2,013 (30.5)

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


R&D Expenses

(in millions of JPY)
  FY ended Mar. 31, 2013 FY ended Mar. 31, 2012 FY ended Mar. 31, 2011
Overall 1,526 1,361  1,280
-Automotive Parts Division 1,152 1,306  1,229

R&D Structure

-The Company is going to commence performance evaluation tests for automotive engine valves and valve seats in the United States by the summer of 2013. The Company will install measurement equipment at a test facility of Germany-based KS Kolbenschmidt, its partner company, to evaluate the performance of the components using actual engines. In the North American market, new contracts from U.S. and European automakers are expected to further increase in the future. By localizing the assessment activities that have been conducted in Japan, the Company aims to shorten the development period and expand its business in the region. (From an article in the Nikkan Jidosha Shimbun on Dec. 28, 2012)

R&D Activities

Piston-ring for next-generation thermal spraying bore cylinder
-The Company is developing piston-rings for thermal spraying bore cylinders with European customers. It is also working with both European and Japanese customers to develop optimum product-specifications for all types of next-generation thermal spraying bore cylinders, making use of the technical knowledge that it has gained through its hands-on experience of producing piston-rings.

Diesel-engine piston-rings demonstrating a superior level of durability
-In response to exhaust-gas emission regulations such as Euro- VI, US10, and others; and in response to 2015 Heavy-duty-vehicle Fuel-consumption Regulation, the Company is developing diesel-engine piston-rings demonstrating a superior level of durability. For example, it has completed development of a top-ring with a PVD membrane that provides superior performance in terms of wear and abrasion resistance and peeling resistance by applying technology it has gained on membrane control that reaches the nano-level. It has completed developing a new-shaped oil-ring that has low tension but high-performance in terms of adjusting lubrication. The Company is making great efforts toward launching commercial production of products that offer a balance between cleaner exhaust-gas emissions and lower fuel consumption, working to expand its market share.

Valve seats
-The Company is developing highly functional materials that can respond to smaller-built gasoline engines, supercharged direct injection systems, and exotic fuels such as natural gas and ethanol. Also, the Company is not only creating high-level specs but also specs that optimally meet the market needs in developing countries, aiming to satisfy customer needs in all regions of the globe and developing global technical services.

-The Company developed a low-cost engine valve seat with high wear resistance for automakers in emerging countries, including China. The Company has already started delivering the new valve seats to the Guangzhou Automobile Group of China and an Indian motorcycle manufacturer. In 2012, the Company also won a contract from Audi to supply its valve seats for engines powered by alternative fuel. Orders from non-Japanese automakers are expected to increase in the future. By actively offering its valve seats that meet the quality requirements from automakers, the Company is looking to obtain further contracts in the global market. (From an article in the Nikkan Jidosha Shimbun on Dec. 14, 2012)

Assembled sintered camshafts
-The volume of OE content rate of sintered cam lobes for direct-injection engines is growing. These cam lobes offer high performance in terms of anti-pitching (pitching resistance), anti-harshness/abrasion, and durability, all of which are required these days. In addition, customers are increasingly calling for lower material requirements in order to improve fuel efficiency, so the Company is pursuing ways to make assembled-type sintered camshafts even lighter in weight.

MIM Products
-Utilizing its technology on materials that show superior magnetic properties, the Company is developing fuel-injection products in order to increase the volume of their OE sales. Also, by combining plastic-molding technology, the Company intends to improve technology to mold large-sized and thin-skinned parts, products that conventionally have been difficult to mold.

New sintered-products
-The Company is researching and already marketing highly functional porous metals that offer excellent performance in terms of insulation and heat dissipation. It has already begun actual solutions to various market needs including the non-automotive-engine sector.

Cylinder liners
-In responding to the post, post-new long term regulations in Japan, the Company is currently conducting R&D activities so as to mass-produce cylinder liners for diesel engines, which are means to combat high-temperature erosion, a serious issue of concern. Also, in order to comply with the 2015 Heavy-duty-vehicle Fuel-consumption Regulation, the Company is currently developing technology to reduce fuel consumption based on its proprietary tribology technology.

Technology Licensing-out Agreement

(As of Mar. 31, 2013)
Name of the licensed company Country Date Details Term of contract
Seojin Cam Co., Ltd. Korea Jul. 01, 2000 Sintered camshaft production methods Until Jun. 30, 2016
Henan Zhongyuan Engine Fitting Co., Ltd. China Sep. 02, 2005 Cylinder liner production methods Until the Company no longer supplies the products
IP Rings Ltd. India Feb. 21, 2008 Steel ring production methods Contract renewal is currently under negotiation
Apr. 01, 2008 Manufacturing methods of chrome plated rings Contract renewal is currently under negotiation
Dec. 22, 2008 Steel ring production methods 6 years
Mar. 01, 2010 Nitrogenous ring production methods 5 years
Apr. 01, 2010 Oil ring production methods 5 years
Apr. 01, 2012 Oil ring assembly production methods 5 years

Investment Activities

Capital Expenditure

(in millions of JPY)
  FY ended Mar. 31, 2013 FY ended Mar. 31, 2012 FY ended Mar. 31, 2011
Overall 4,068 2,169  1,642
-Automotive Parts Division 3,850 1,963  1,466

-The Automotive Parts Division made a capital investment in order to maintain and upgrade existing facilities.

Planned Capital Investments

(As of Mar. 31, 2013)
Name Location Type of facility Planned total investment (in millions of JPY) Construction start month Planned completion month Capacity upon completion
NPR Auto Parts Manufacturing India Pvt. Ltd. Karnataka,
New production facility 1,800 Jul.
3 million a month
NPR Powdered Materials Manufacturing (Yizheng) Co., Ltd. Jiangsu,
New production facility 1,700 Dec.
3 million a month