Nippon Piston Ring Co.,Ltd. Business Report FY ended Mar. 2014

Business Highlights

Financial Overview

(in millions of JPY)
  FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 Rate of
Sales 50,430 47,018 7.3 -
Operating income 1,759 2,225 (20.9) -
Ordinary income 1,733 2,184 (20.7) -
Net income 1,352 2,013 (32.8) -
Automotive Parts Division
Sales 44,378 41,284 7.5 -Sales increased year-on-year due to growth in sales of piston rings and valve seats. Sales were supported by a rise in vehicle production volumes both in Japan and overseas.
Operating income 1,582 1,995 (20.7) -Operating profit decreased year-on-year due to legal costs incurred for making a tax refund claim overseas.

Business Realignment

-The Company plans to discontinue the production of unprofitable items worth approximately JPY 3 billion in combined sales by the end of FY 2014. Cutting unprofitable products will allow the company to transfer surplus workers and equipment towards producing profitable items. This will lead to an increase in operating income. The manufacturer intends to keep its FY 2014 sales target at JPY 52 billion, unchanged from the goal stated in its FY 2012-2014 mid-term vision. (From an article in the Nikkan Jidosha Shimbun on August 20, 2013)

Joint Ventures

-The Company announced that it will convert its Chinese subsidiary, NPR Powdered Materials Manufacturing (Yizheng) Co., Ltd., into a joint venture with a local piston ring producer, ASIMCO Yizheng Shuanghuan Piston Ring Co., Ltd.(CYPR), effective October 2013. NPR Powdered Materials Manufacturing (Yizheng) was set up in Jiangsu province in December 2012 to manufacture valve seat inserts. NPR aims to expand its distribution channels for valve seat inserts by utilizing the sales network of CYPR. NPR will transfer a 50 percent stake worth USD 4.4 million in NPR Powdered Materials Manufacturing (Yizheng) to CYPR. The new joint venture will be called NPR ASIMCO Powdered Metals Manufacturing (Yizheng) Co., Ltd. Production of valve seat inserts by NPR Auto Parts Manufacturing (Yizheng) Co., Ltd.(NAMY), NPR’s other wholly-owned subsidiary, will be transferred to NPR Powdered Materials Manufacturing (Yizheng) prior to the establishment of the joint venture. Once established, the new joint venture will manufacture and sell valve seat inserts. Currently, NAMY produces one million valve seat inserts a month. After business is transferred, production will increase to three million a month by the end of fiscal year 2016. (From an article on the Nikkan Jidosha Shimbun on August 19, 2013)

-The Company announced that it signed an agreement with TPR Co., Ltd. to dissolve their Indonesian joint venture, PT NT Piston Ring Indonesia (NTRI). In accordance with this agreement, TPR will sell its entire 50 percent share of NTRI to NPR at a sales value of USD 15.7 million (approximately JPY 1.54 billion). The transaction date is scheduled for July 31, 2013. (From a press release on July 26, 2013)

Mid-term Management Plan

-In its fifth mid-term business plan that covers through March 2015, the Company is pursuing the following initiatives to accelerate structural reforms:

  • Effectively managing balance sheet and cash flow
  • Improving cost structure in all fields
  • Creating new business (non-engine segment) by leveraging technical expertise
  • Pursuing the world's highest quality by strengthening human resources development
  • Promoting CSR activities
Major financial targets for the fiscal year ending March 2015: ROA of over 6 percent; sales of over JPY 52 billion

Outlook for FY ending Mar. 31, 2015

(in millions of JPY)
  FY ending Mar. 31, 2015
FY ended Mar. 31, 2014
(Actual Results)
Rate of Change
Sales 51,000 50,430 1.1
Operating income 2,400 1,759 36.4
Ordinary income 2,200 1,733 26.9
Net income 2,000 1,352 47.9

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


R&D Expenses

(in millions of JPY)
FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 FY ended Mar. 31, 2012
Overall 1,591 1,526 1,361
-Automotive Parts Division 1,204 1,152 1,306

R&D Activities

Piston rings for next-generation fuel-efficient engines-Many manufacturers are developing liner-less, thermal sprayed engine bores to help reduce engine size and weight. The Company is developing new fuel-saving efficiency without decreasing the tensional force of piston rings. These technologies include micro-dimple surface on the inner peripheral sliding surface, new highly heat-conductive materials, and a diamond-like carbon coating technology that reduces friction.

Highly durable piston rings for diesel engines
-In response to exhaust-gas emission regulations such as Euro- VI, US10, and fuel economy standards for heavy-duty vehicles, the Company developed a PVD coating technology that offers high levels of abrasion and peeling resistance by applying technology it has gained on membrane control that reaches the nano-level. Mass production of products using this technology has already begun, and the Company is currently developing PVD coating with higher performances.
-The Company is mass-producing its new-shaped oil-ring that has low tension but high-performance in terms of adjusting lubrication. The product achieves both cleaner exhaust-gas emissions and lower fuel consumption.

Valve seats
The Company is developing highly functional materials that can be used for smaller-built gasoline engines, supercharged direct injection engines, and new engines powered by natural gas, ethanol or other fuels. The Company is not only creating high-level specs but also specs that optimally meet the market needs in developing countries, as it aims to satisfy customer needs in all regions of the globe and to offer technical services worldwide.

Assembled sintered camshafts
-Sintered cam lobes for direct-injection engines are required to offer high performance in terms of anti-pitching and anti-abrasion properties . In addition, customers are increasingly calling for lighter and smaller products that help improve fuel efficiency, so the Company is pursuing ways to make assembled-type sintered camshafts that are even lighter in weight.

Metal-powder Injection Molding (MIM) products
-Expecting application to components around the engine that are exposed to high temperatures, the Company is working to develop MIM products made from high heat-resistant materials.

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
-The Company developed a new cylinder liner by forming a dimpled surface on the inner surface. This technology was developed based on the Company's tribological research. The Company is currently preparing for mass-producing the new cylinder liner. At the same time, it is developing new cylinder blocks
using this dimpled surface technology, intending to make it a standard for cylinder bores.

-The Company developed a new cylinder liner production technology, which increases a vehicle's fuel efficiency. This technology was developed jointly with Hino Motors, Ltd. The development team was able to reduce friction between the cylinder liner and piston rings by forming a dimpled surface on the cylinder liner's inner surface, thereby increasing the piston’s compression efficiency. This improvement led to a few percent gain in fuel economy. In utilizing this innovation, NPR has already developed a new cylinder liner for diesel engine vehicles and turned the technology into a practical business solution. Because the technology is also applicable to gasoline engine vehicles, the manufacturer plans to use it on various environmentally friendly models. The new cylinder liners will be manufactured at NPR Fukushima Works Co., Ltd., which is now preparing for mass production. (From an article in the Nikkan Jidosha Shimbun on December 2, 2013)

Motor Components for EVs
-The Company is developing motor components for electric vehicles. This is the company's first venture into the electric vehicle segment. By utilizing its expertise in metal components and collaborating with universities and customers, the company has already developed two products: a sintered core for motors; and aluminum bonding wire for power semiconductor chips. Patent applications for these technologies have already been submitted, and mass production is expected to begin by 2018. Nippon Piston Ring will continue developing high-performance motor components which will overcome technical difficulties faced by pioneers in this field. By doing so, the company hopes to establish its presence in the growing electric vehicle market as soon as possible. (From an article in the Nikkan Jidosha Shimbun on December 24, 2013)

Technology Licensing-out Agreement

(As of Mar. 31, 2014)
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 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
ASIMCO Shuanghuan Piston Ring (Yizheng) Co., Ltd. China Nov. 15, 2013 Piston ring production methods 7 years

Investment Activities

Capital Expenditure

(in millions of JPY)
FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 FY ended Mar. 31, 2012
Overall 4,849 4,068 2,169
-Automotive Parts Division 4,650 3,850 1,963

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

Planned Capital Investments

(As of Mar. 31, 2014)
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
Yizheng NPR ASIMCO Powder Metallurgy Manufacturing Co., Ltd. Jiangsu,
New production facility 2,000 Dec.
9 million a month