NGK Spark Plug Co., Ltd. Business Report FY2012

Business Highlights

Financial Overview

(in millions JPY)
FY ended Mar. 31, 2012 FY ended Mar. 31, 2011 Rate of
Change (%)
Sales 284,746 269,232 5.8 -
Operating income 24,478 28,770 (14.9) -
Ordinary income 23,740 27,379 (13.3) -
Current net income 25,524 23,680 7.8 -
Automotive components
Sales 222,635 197,213 12.9 -Although the Company’s performance was affected by Japanese OEMs adjusting their production volumes because of the Great East Japan Earthquake and the flooding in Thailand, the volume of product shipments to North American and European OEMs was strong.
-The Company recorded strong sales in the after-market sector in North America and developing countries. 
Operating income 30,703 31,943 (3.9)

New Company

-The Company announced that it will establish a new company in China to produce exhaust gas oxygen sensors for automobiles. A new plant with an annual production capacity of 2.4 million sensors will be set up in Changshu, Jiangsu Province and is scheduled to go into operation by the summer 2013. The Company has decided to build a new company to comply with requests from automakers - Japanese and otherwise – operating in China with the aim of enhancing local supply capacity. The company's name and capitalization is yet to be decided. The Company's Chinese corporation, NGK Spark Plug (Shanghai) Co., Ltd., which was inaugurated in 2006, is producing oxygen sensors for installation in new vehicles. As the automobile production advances in China, responsiveness to the environment and energy consumption is also increasingly required. Consequently the demand for oxygen sensors is on the rise. The Company has been considering the project of new plant construction to meet requests from various automakers for boosting production capacity. (From an article in the Nikkan Jidosha Shimbun on May 9, 2011)

Outlook for FY ending Mar. 31, 2013

(in million JPY)
  FY ending Mar. 31, 2013
FY ended Mar. 31, 2012
Rate of
Change (%)
Sales 278,700 284,746 (2.1)
Operating income 27,000 24,478 10.3
Ordinary income 28,300 23,740 19.2
Net income 21,400 25,524 (16.2)
Automotive components
Sales 2,172 2,226 (2.4)
Operating income 315 307 2.6

Product Strategy by Product
-The Company will grow its operating revenue by achieving strong sales of high-valued added sparkplugs to OEMs.
-The Company will position its glow-plugs as the third source of revenue for the Automotive Division.
-By collaborating with systems makers, the Company will speed up activities in its sensor business, expanding its market share in the gasoline-powered-vehicle, diesel-powered-vehicle, and two-wheel-vehicle sectors.

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


R&D Expenditure

(in million JPY)
  FY ended Mar. 31, 2012 FY ended Mar. 31, 2011 FY ended Mar. 31, 2010
Overall 16,036 15,763 13,907
R&D expenditures, excluding costs for upgrading current products; and applied research 3,542 3,152 2,468
Automotive components 773  828 843

R&D Structure

-The Company has various centers of R&D activities. There is the R&D Division that is a headquarters function, the New Business Development Division, and the R&D functions at each business division. In addition, the Company gathers and implements the latest technology through participating in academic conferences and associations, and conducting joint research with university and private-sector R&D organizations.
-The Company has technical centers in the U.S.A., Europe, Brazil, and Korea.

R&D Activities

Spark plugs
-The Company is developing smaller and more wide-ranging products by further increasing their heat resistance, high voltage resistance, and ignitability. It is working to create a seamless operating structure, from developing materials up to designing products and production methods.
-Some of the Company's small-diameter, long-reach plugs designed for high-output engines are being delivered to OEMs.

Glow plugs for diesel engines
-The Company developed plugs with a longer life and superior temperature rise characteristics. It also developed a temperature control system for plugs.

-The Company developed energy-saving, low-resource sensors, which have improved environmental durability in terms of high temperature, thermal shock, vibration, and water rupture.
-The Company developed sensors such as OBD (on-board diagnostics) sensors which are required under new exhaust-gas emission regulations; and sensors that control EGR systems.
-In order to develop technologies in various fields, the Company is researching and analyzing customer and market needs so as to ascertain what they will be in three to five years.

Other technologies
-The Company developed and commercialized ignition units for improving the durability of plugs for gasoline engines.

-The Company developed the next generation ASIC (Application Specific Integrated Circuit) for full-range air-fuel ratio sensors that have an interface function with an engine control circuit in automobiles.

Product Development

Pressure sensor with glow plug:
-During the fiscal year that ended March 31, 2012, the Company developed a new pressure sensor with a glow plug designed for diesel engines. This new sensor is combined with a glow heater. This latest development more finely controls fuel injection, and therefore reduces gas emissions and improves fuel efficiency.

Spark plugs

- The Company developed the Premium RX Plugs with an advanced PSPE (Projected Square Platinum Electrode (PSPE) system. The new spark plugs also offer high levels of ignition performance and durability.

Glow plugs
-The Company developed super fast ceramic heater elements, which offer excellent heating performance that is twice as high as its existing products.  

Investment Activities

Capital Investment

(in million JPY)
  FY ended Mar. 31, 2012 FY ended Mar. 31, 2011 FY ended Mar. 31, 2010
Overall 14,004 8,767 10,977
Automotive 11,854 6,365 7,325

-In the fiscal year that ends March 2013, the Company plans to invest 22 billion yen in facilities and equipment, among which 15.4 billion yen will be allocated to the Automotive Division.

Investment in Japan

-The Company announced that it will enhance its production capacity of sensor elements, which are key components for oxygen sensors. First, the Company will invest approximately 2.2 billion yen in the Komaki plant, Aichi Prefecture, Japan, to build a new material plant with a total floor area of about 7,300 square meters. In addition, with an investment of some 3 billion yen, the floor area of Ceramic Sensor Co., Ltd., a wholly-owned subsidiary of NGK Spark Plug, will be increased by about 2,100 square meters. These expansions will result in increasing its production capacity by approximately 15 percent. Production will begin in May 2013. (From a press release on March 23, 2012)

-The Company announced that it will invest approximately 28 billion yen to build a new plant, which will produce insulators for spark plugs, in Kani, Gifu Prefecture, Japan. Ground breaking for the plant will take place in November 2012, with production slated to start in April 2014. With a total floor area of around 78,000 square meters, the new plant will manufacture 13.5 million insulators per month for the first phase. (From a press release on January 12, 2012)

Significant Installation of New Equipment

(As of Mar. 31, 2012)
  Planned amount of investment
(in million JPY)
Purpose of investment Note

Komaki Plant
(Aichi Pref., Japan)

2,200 Production expansion, Installing R&D equipment Production will gradually be launched from May 2014
Ceramic Sensor Co., Ltd.
(Aichi Pref., Japan)
3,000 Retooling, Installing maintenance equipment Production will gradually be launched from May 2014
To be determined
(Gifu Pref., Japan)
28,000 Retooling, Installing maintenance equipment Production will be launched in a phased manner from April 2015

Installation of New Equipment

(As of Mar. 31, 2012)
  Planned amount of investment
(in million JPY)
Purpose of investment

Headquarters/Automotive business

11,593 Production expansion, Installing R&D equipment
Subsidiaries in Japan - automobile-related business 983 Retooling, Installing maintenance equipment
Subsidiaries overseas - automobile-related business 2,860 Retooling, Installing maintenance equipment