NHK Spring Co., Ltd. Business Report FY ended Mar. 2016
Financial Overview |
(in millions of JPY) |
| FY ended Mar. 31, 2016 | FY ended Mar. 31, 2015 | Rate of Change (%) | Factors | |
| Overall | ||||
| Sales | 640,516 | 601,434 | 6.5 | - |
| Operating income | 35,041 | 32,702 | 7.2 | - |
| Ordinary income | 36,111 | 39,075 | (7.6) | - |
| Net income | 21,592 | 23,873 | (9.6) | - |
| Suspension Springs Division | ||||
| Sales | 124,511 | 121,769 | 2.3 | -Sales increased y/y due a rise in vehicle production both in North America and China, which more than offset the impact of production falls in Japan and Thailand. |
| Operating income | 12,062 | 8,779 | 37.4 | -Operating income declined y/y due to large spending on facilities and equipment in North America where demand is growing. |
| Seat Division | ||||
| Sales | 296,054 | 266,270 | 11.2 | -New-vehicle production of major customers increased both in and outside Japan. |
| Operating income | 9,824 | 11,069 | (11.2) | -Operating income fell y/y due to large start-up costs in North America and a sales decline in Thailand. |
| Precision Parts Division | ||||
| Sales | 142,943 | 137,035 | 4.3 | -Sales increased y/y due to increased vehicle production outside Japan, growth in HDD production, and effects of a weak yen. |
| Operating income | 10,074 | 8,706 | 15.7 | - |
Product Development
CFRP coil spring
-The Company has developed a new coil spring made of carbon fiber reinforced plastics (CFRPs). The new coil spring is 67% lighter than a conventional steel coil spring. The Company intends to commercialize this product as one of its technologies that respond to OEMs' needs for lighter auto components. The new coil spring has achieved weight reduction from 3.7 kg, the weight of a conventional coil spring, to 1.2 kg, while keeping the same strength and stiffness as those of the conventional product. Although the diameter of its material and its overall size are larger, the new CFRP-made coil spring offers substantial weight reduction. Thus, the Company will continue to examine strength and durability of the new coil spring with regard to movements unique to springs. The Company has so far developed methods to reduce the weight of suspension springs, such as changing material diameter and using a hollow‐body material. (From an article in the Nikkan Jidosha Shimbun on November 5, 2015)
R&D Activities
-In response to the need for products ensuring environmental protection and vehicle safety, the Company is developing lighter weight suspension springs, as well as springs capable of preventing high-frequency-vibration. It is working on developing seat safety-mechanisms. Also, it is advancing R&D activities on parts for hybrid, electric, and clean-diesel vehicles.
Suspension spring business
-The Company is working on developing suspension springs that are smaller, lighter, and more durable so as to improve fuel efficiency and reduce CO2 gas emission.
- FSD (Fully Stressed Design) a method to ensure even stress distribution without relying on parts)
- FRP (Fiber Reinforced Plastics)
-Ongoing activities: developing processing methods that use less-expensive materials, while making products stronger and lighter; and developing production methods capable of lowering costs through automation.
Seat business
-The Company is developing seats that are lighter; products for use in biomedical signal seats; and seats with improved comfort and operating performance
- Injection molded Carbon Fiber Reinforced Plastics (CFRP) front-seat frame: Replacing sheet-metal parts, the Company is developing CFRP front-seat frames that are 20% lighter than current products, and which have improved designs and structures.
- Refresh seat making use of biomedical signal processing: improved prototypes, customer presentations, conducting exhibits.
- Seats with improved comfort and operating performance: a human-like model was completed that can foresee low-frequency occupant behavior when vehicles are cornering, nearing the objective of creating a high-performance seat that is needed to reduce occupants' shifting. The Company started work on a system that can automatically evaluate comfort based on pressure stress distribution data, when occupants are seated, nearing the objective of a basic sorting algorithm. In addition, the Company created a process that can effectively develop high-precision CAE seat models.
Precision parts business
-The Company is developing precision parts for automotive engines and transmissions.
- Development of technology on motor parts, fuel-cell battery parts, and weight reduction for improving fuel efficiency, based on high-precision stamping process technology for next-generation vehicles.
- Development activities to make better performing and more reliable products by developing high-strength materials; and reducing product costs by making use of inexpensive materials.
R&D Expenditure |
(in millions of JPY) |
| FY ended Mar. 31, 2016 | FY ended Mar. 31, 2015 | FY ended Mar. 31, 2014 | |
| Overall | 16,328 | 15,702 | 13,803 |
| Ratio of R&D expenses to sales (%) | 2.5 | 2.6 | 2.4 |
| by Business | |||
| -Suspension springs | 3,199 | 2,707 | 2,148 |
| -Seating | 6,263 | 6,667 | 5,579 |
| -Precision Components | 3,741 | 3,392 | 3,462 |
-R&D Expenditure for FY ending March 2017 is planned to be JPY 16,800 million.
R&D Structure
-The Company's R&D Structure is comprised of the following functions: head office main R&D center and technical center; technical departments, engineering departments, and design departments at each production plant and business division; and R&D departments at subsidiaries.
-In the fiscal year that ended in March 2016, the Company had 1,032 R&D staff, which accounts for 6.1% of all employees.
Technical Licensing Agreements |
(as of March 31, 2016) |
| Licensing company | Licensee | Details | Period |
| NHK Precision Co., Ltd. | Acument Global Technologies, Inc. (The Netherlands) | Patent and production technology on Torx Punch | April 23, 2014- April 22, 2017 |
| Sumihatsu Co., Ltd. |
Pandrol UK Limited (U.K.) | OEM agreement for Pandrol e-clip | May 1, 2008- March 22, 2018 |
Capital Expenditure |
(in millions of JPY) |
| FY ended Mar. 31, 2016 | FY ended Mar. 31, 2015 | FY ended Mar. 31, 2014 | |
| Overall | 27,392 | 20,671 | 20,713 |
| by Business | |||
| -Suspension springs | 9,987 | 6,656 | 4,657 |
| -Seating | 5,130 | 4,380 | 3,638 |
| -Precision parts | 8,813 | 6,566 | 9,313 |
-Capital Expenditure for FY ending March 2017 is planned to be JPY 26,700 million.
-Capital investments in the fiscal year that ended in March 2016
- Suspension spring production facilities and equipment: Yokohama Plant, NHK of America Suspension Components Inc.; NHK-Uni Spring (Guangzhou) Co., Ltd.; and New Mather Metals, Inc.
- Seat production facilities and equipment: Toyota Plant; NHK Seating of America Inc.; and NHK Spring (Thailand) Co., Ltd.
- Precision parts production facilities and equipment: Ina and Komagane Plants, Topura, and NHK Spring (Thailand) Co., Ltd.
Compact production line for stabilizers
-The Company has developed a compact production line for stabilizers. The new line requires less cost and a smaller installation space than those needed for conventional lines. Such improvements will allow the supplier to make a profit on small-lot production. It will also make it easier for the Company to deal with considerable fluctuations in demand. The Company had already developed a compact production line for coil springs, and is utilizing it at its plants at home and abroad. The new line for stabilizers is scheduled to be introduced initially at the Company's plant in Mexico during FY 2015 (April 2015-March 2016). It will also be used at its subsidiary in Kyushu, Japan, starting in FY 2016. (From an article in the Nikkan Jidosha Shimbun on January 7, 2015)
Planned Capital Investment |
(As of Mar. 31, 2016) |
| Company or Facility (Location) |
Target of Investment | Planned Investment Total (in millions of JPY) |
Start | End (Scheduled) |
| Toyota Plant (Toyota City, Aichi Pref.) |
Seat production facilities | 1,104 | Jul. 2016 | Mar. 2018 |
| Gunma Plant (Ohta City, Gunma Pref.) |
Seat production facilities | 935 | Apr. 2016 | Mar. 2017 |
| Komagane Plant (Komagane City, Nagano Pref.) |
Precision parts production facilities | 1,277 | Apr. 2016 | Mar. 2017 |
| Isehara Plant (Isehara City, Kanagawa Pref.) |
New plant | 1,353 | Jun. 2016 | Apr. 2017 |
| NHK Spring (Thailand) Co., Ltd. (Chachoengsao Province) |
Precision parts production facilities | 587 | Apr. 2016 | Mar. 2017 |
| NAT Peripheral (Dong Guan) Co., Ltd. (Guangdong Prov., China) |
Precision parts production facilities | 703 | Apr. 2016 | Mar. 2017 |
| NHK of America Suspension Components Inc. (Kentucky, USA) |
Precision parts production facilities | 688 | Apr. 2016 | Mar. 2017 |
Investment Outside Japan
-The Company will set up a new company to produce suspension springs in Hungary in March 2015. The new company, tentatively named NHK Spring Hungary Kft., will be capitalized at EUR 1 million or JPY 135 million. The new company will be fully owned by the Company's subsidiary in the Netherlands, NHK Spring Europe B.V. The Company will build a plant with a floor space of 11,000 square meters on an 80,000-square-meter site in Komarom-Esztergom, a Hungarian county on the northern border with Slovakia. This plant will start its operations in December 2015 and will produce 3.5 million units of coil springs and 1.2 million units of stabilizers a year in the fiscal year ending on March 31, 2021. The Company already has a suspension spring plant in Spain. The new plant will allow the Company to enhance supply capacity and expand business in Europe. (From an article in the Nikkan Jidosha Shimbun on March 5, 2015)
-The Company said its Thai subsidiary will establish a new seat cover sewing company in Cambodia. The subsidiary, NHK Spring (Thailand), Co., Ltd., anticipates future expansion of car seat production in Thailand and decided to beef up its capacity to produce seat covers. The new company, NHK Spring (Cambodia), Co., Ltd., will be established in April 2015, capitalized at THB 120 million or JPY 384 million. It will be 75% owned by NHK Spring (Thailand) and 25% by a local company. A 12,000-square-meter plant will be built on a 23,520-square-meter site in Poipet, a border town between Thailand and Cambodia. The plant will start producing seat covers in April 2016. Its sales target is THB 2.2 billion or JPY 7.04 billion in the fiscal year ending on March 31, 2021. (From an article in the Nikkan Jidosha Shimbun on March 5, 2015)
Outlook for FY ending Mar. 31, 2017 |
(in millions of JPY) |
| FY ending Mar. 31, 2017 (Forecast) |
FY ended Mar. 31, 2016 (Actual Results) |
Rate of Change (%) |
|
| Sales | 621,000 | 640,516 | (3.0) |
| -Suspension springs | 117,000 | 124,511 | (6.0) |
| -Seating | 291,000 | 296,054 | (1.7) |
| -Precision Components | 133,000 | 142,943 | (7.0) |
| Operating income | 33,000 | 35,041 | (5.8) |
| Ordinary income | 34,000 | 36,111 | (5.8) |
| Net income | 22,000 | 21,592 | 1.9 |
>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income, etc.)
-The Company forecasts that in the fiscal year ending in March 2017 sales will be JPY 19.5 billion lower y/y. This is because the Company has factored in a loss of JPY 40.0 billion due to negative currency translation due to the strong yen. However, if negative currency translation is not factored in, actual sales are forecast to be JPY 20.0 billion higher.
-In the automotive sector, the Company forecasts that automotive production will increase in Japan, the Thai economy will recover, and the US and Chinese markets will have strong demand. Without factoring for negative currency translation, sales will be higher y/y. The Company forecasts that sales at its seats business will increase y/y, as it predicts that it will win orders for more vehicle models and that it will incur lower start-up expenses, compared to those incurred in the fiscal year that ended in March 2016 to respond to new vehicle models.
-Activities by line of business:
| Business | Major activities |
| Suspension springs | -Establish new production plants in Kyushu (Japan), India, and Hungary |
| -Lowering weight and costs, and developing new technology globally | |
| -Further improve compact production lines | |
| Seating | -Prepare to respond to new orders for vehicle models |
| -Improve profitability at operations outside Japan, mainly in Asia | |
| -Introduce effective initiatives to streamline operations, in order to improve profit margins | |
| Precision Components | -Improve profitability of businesses delivering to North American models |
| -Improve production organization and operations for precision springs in Japan | |
| -Develop mass-production technology for next-generation suspensions |
Mid-term Business Plan (FY ending March 2015 - FY ending March 2017)
-The Company has set its sales target for the fiscal year ending March 2017 (FY2016) at JPY 670 billion, up 17.6% from FY2013. The Company targets an operating profit of JPY 51 billion, up 36.3% from FY2013, and a net income of JPY 34 billion, up 38.2% from FY2013. The Company aims to achieve a substantial increase in operating profit with an increase in sales coupled with business streamlining. The Company will increase upfront investments to strengthen its global supply networks.
-Major measures
- Enhance the production capacity of suspension springs in China and India.
- Win more orders for complete seats in and outside Japan to improve profitability.
- Planned capital investment for FY2014-FY2016 is JPY 76 billion (Springs JPY 26 billion, Seats JPY 17.1 billion), exceeding the level in the previous plan. Projected growth rate of suspension springs is especially high at 85.7%.
-Performance targets for Mid-term management plan (ending in March 2017)
- Sales: JPY 670 billion
- Operating income: JPY 51 billion (profit margin 7.6%)
- Ordinary income: JPY 54 billion (profit margin 8.1%)
- Net income: JPY 34 billion (profit margin 5.1%)