NGK Spark Plug 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
Change (%)
Sales 329,758 302,798 8.9 -
Operating income 51,661 23,754 117.5 -
Ordinary income 54,960 27,674 98.6 -
Net income 32,704 20,909 56.4 -
Automotive components
Sales 271,834 248,795 9.3 -Strong sales of products for new-car assemblies and products for after-service especially in North America and emerging countries; and favorable currency translation because of the weak yen supported sales growth.
Operating income 58,893 33,159 77.6

6th Mid-term Plan 「Evolution」 (covers fiscal years ending March 2014 to March 2016)

Basic Policies
-Maximize management resources, strive toward evolution, and tackle bold challenges for businesses in new regions and fields

-Initiate marketing strategies for sales and technology in new business areas
-Further develop absolute superiority by making use of proprietary technology and creating a new technical foundation
-Strengthen production operations to achieve true product creation
-Establish a strategic supply chain and strength its functions
-Enhance the Group by clearly assigning work functions and clarifying responsibilities of subsidiaries and affiliated companies
-Create a corporate framework that continually develops human resources capable of facing challenges in terms of new values and overcome changes in the business environment
-Strengthen functions and strategies company-wide and establish a company-wide management framework
-Thoroughly implement CSR activities globally

Financial goals under the mid-term plan after revision
New plan after revision FY2014 ending March 2015 FY2015 ending March 2016
Sales JPY 334 billion (JPY 331 billion) JPY 365 billion (JPY 363 billion)
Operating profit JPY 62 billion (JPY 48 billion) JPY 70 billion (JPY 60 billion)
Note: Figures in parenthesis are figures before the revision, based on the former plan.

Operations Outside Japan

-In 2013, the Company announced that it has established a new representative office in Vietnam. The new company, The Representative Office of NGK Spark Plugs (Vietnam) Co., Ltd. in Hanoi, is engaged in selling spark plugs and oxygen sensors in the country. (From a press release on December 9, 2013)

-In order to meet brisk demands in emerging markets, the Company established a spark plug production subsidiary in Chonburi, eastern Thailand in 2013. The new company, SparkTek (THAILAND) CO., LTD., is a 100% subsidiary of NGK and is capitalized at THB 440 million (approx. JPY 1.39 billion). Total investment will be approx. JPY 3 billion. Construction of a 120,000-square-meter-plant will begin in February 2014. The new plant will be operational in April 2015, and is expected to produce 18 million units annually by 2016. In 2020, the annual production capacity will increase to 140 million units. (From an article in the Nikkan Jidosha Shimbun on August 3, 2013)

Established Nittoku Denshi Co., Ltd.

-In 2013, the Company acquired the electronics circuit manufacturing business from Ohens Co., Ltd., located in Togo, Aichi prefecture, and established a new company, Nittoku Denshi Co., Ltd. Ohens had been a commissioned manufacturer of printed-circuit boards for NGK Spark Plug. The company went bankrupt and asked NGK Spark Plug to undertake its business. The acquisition cost was JPY 350 million. NGK Spark Plug had outsourced assembly of printed-circuits (used in glow plugs for diesel engines) and various sensors to other companies. With the establishment of Nittoku Denshi, NGK Spark Plug will build an integrated production system within the group to improve product quality and competitiveness. Annual sales of Nittoku Denshi are estimated at JPY 600 million. (From an article in the Nikkan Jidosha Shimbun on September 10, 2013)

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 334,000 329,758 1.3
Operating income 62,000 51,661 20.0
Ordinary income 64,000 54,960 16.4
Net income 40,500 32,909 23.1

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


R&D Expenditure

(in millions of JPY)
FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 FY ended Mar. 31, 2012
Overall 19,400 17,100 16,036
-R&D expenditures, excluding costs for upgrading current products; and applied research 4,017 3,733 3,542
-Automotive Components Group 839 837 773

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, SOFC project 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.
-The Company developed and began delivering to European OEMs long-reach spark plugs that have new insulators with improved voltage resistance, which maximize engine cooling performance because of their small diameter and elongated shape.

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 is working on developing an integrated unit combining glow plugs and pressure sensors, which contribute to reducing exhaust-gas emissions and raising fuel efficiency more than other company's conventional glow-plugs with pressure sensors. This was achieved by improving the precision of low-pressure sensing and by very minutely controlling fuel injection. In addition, the cold-start capability of engines was vastly improved by the Company's being able to assemble a ceramic heater capable of generating high-temperature heat.

-The Company is developing sensors that need to comply with exhaust-gas-emissions; offer improved performance in terms of resistance to heat, thermal shock/impulse, vibration, and water penetration; and also reduce energy and the consumption of resources.
-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.

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.

Investment Activities

Capital Expenditure

(in millions of JPY)
FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 FY ended Mar. 31, 2012
Overall 41,034 24,012 14,004
-Automotive Components Group 34,353 17,960 11,854

-In the fiscal year that ends March 2015, the Company plans to invest 56,900 million yen in facilities and equipment, among which 46,600 million yen will be allocated to Automotive Components Group.

Planned Capital Investment

(As of Mar. 31, 2014)
Company Name Segment Planned investment
(in JPY millions)
Planned investment
(in JPY millions)
Parent company
Automotive 32,697 Production increase and R&D facilities
Technical ceramics 10,003 Production increase and facilities to streamline operations
Consolidated subsidiaries in Japan Automotive 1,666 Production increase and repair facilities
Technical ceramics 38 Production increase and repair facilities
Consolidated subsidiaries outside Japan Automotive 12,262 Production increase and facilities to streamline operations
Technical ceramics 234 Production increase and facilities to streamline operations