NOK Corporation Business Report FY ended Mar. 2016

Financial Overview

(in million JPY)
FY ended Mar. 31, 2016 FY ended Mar. 31, 2015 Rate of
Change (%)
Sales 746,147 693,689 7.6 -
Operating income 48,258 67,085 (28.1) -
Ordinary income 53,727 80,776 (33.5) -
Profit for the year attributable to owners of the parent 30,053 46,813 (35.8) -
Sealing product division
Sales 296,189 296,875 (0.2) -Demand in Japan decreased because of the tax increase on minicars. Nevertheless, the amount of sales increased due to growing demand in the North America and favorable currency translation.
Operating income 32,531 33,487 (2.9) -Income fell because of rising labor costs in emerging countries and increased depreciation expenses.

Expansion of flexible print board (FPC) business

-The Freudenberg Group is to transfer its 50 percent shareholding in enmech GmbH & Co. KG, Weinheim, Germany, and enmech Hungary Bt, Pecel, Hungary to its joint venture partner, NOK Corporation, Tokyo, Japan. The business is now transferred at the beginning of 2016. enmech has been a Freudenberg Group and NOK Corporation joint venture since 2002. The Japanese partner company will incorporate enmech into its subsidiary Nippon Mektron, the world’s market leader in flexible printed circuit boards and its European subsidiary Mektec Europe. enmech has systematically developed its FPC technology over the past few years and today offers solutions for the automotive industry with its portfolio of mechatronic products. The range of services that enmech offers comprises the development and production of mechatronic solutions based on large, flexible circuit boards including connector technology. Both enmech companies with some 500 employees and sites in Weinheim, Berlin and Pecel, Hungary are to be managed as independent companies – but integrated into Mektec Europe. (From a press release on January 11, 2016)

-The Company is aiming to increase its sales of flexible printed circuits (FPCs) for automotive parts to JPY 45 billion for FY 2016 (ending in March 2017), an increase of 50% from FY 2014. FPCs are small, thin, and have the characteristic of being flexible, which has led to an increase in inquiries from Japanese auto parts suppliers for use in automotive lamps. As FPCs contribute to reducing vehicle weight and improving design flexibility, the Company is expecting further growth in demand. In its mid-term business plan for the period from FY 2017 to 2019, the Company will increase the FPC business share of its electronics sales to 10% from the FY 2015 level of 8%. (From an article in the Nikkan Jidosha Shimbun on January 5, 2016)

Production Activities

-The Company will shift production of castings for anti-vibration rubber products for the Japanese market to Japan, starting at the beginning of 2017. Currently, the Company imports most of the castings from its plant in China. However, cost competitiveness of the China-made castings has declined due to the appreciation of the Chinese yuan. Shifting production to Japan is to improve the cost competitiveness. Currently, the Company produce castings for anti-vibration rubber products at its plants in China and Thailand. The Company will increase its global production capacity by 20 to 30% by adding production in Japan, and hope to bolster the sales of anti-vibration rubber products. (From an article in the Nikkan Jidosha Shimbun on May 14, 2015)

Mid-term Management Plan (FY ending March 2015 - FY ending March 2017)

Recent Investment Activities in Japan
-The Company announced its plan to enhance automated operations at its oil seal plants in Japan. The intention is stated in the Company's three-year business plan started in April 2014. Over the next three years, the Company will invest a total of JPY 65 billion globally in its seal business. Of this amount, JPY 45 billion will be spent on raising the ratio of fully automated operation in Japan from the current 20-30% to 50% by FY ending Mar. 2017. This will allow the Company to improve its cost competitiveness in Japan where demand for oil seals is forecast to decline. In order to boost profitability of the seal division as a whole, the Company also intends to promote automated production and save labor costs at its plants in emerging countries as well. During FY ended Mar. 2012 - FY Mar. 2014, the Company invested a total of JPY 62.5 billion in plants and equipment of its seal business. As the fund was primarily appropriated for production capacity expansion projects outside Japan, the Company has decided to shift its focus to improving productivity in both Japan and emerging markets. (From an article in the Nikkan Jidosha Shimbun on May 16, 2014)

R&D Expenditure

(in million JPY)
FY ended Mar. 31, 2016 FY ended Mar. 31, 2015 FY ended Mar. 31, 2014
Overall 7,632 8,096 7,622
-Seal 5,861 6,261 5,752

R&D Activities

-The Company worked to develop environmentally friendly products such as products contributing to lower energy use by lowering frictional loss; and other eco-friendly products for hybrid, electric, and fuel-powered vehicles.

-In the automotive safety and IT segment, the Company is developing high, value-added products by integrating automotive braking products and electronic parts.

-In the oil-seal segment, in addition to developing and launching sales of conventional coated seals, the Company has developed and launched sales of low-friction seals designed to reduce friction force while still maintaining reliability, by combining low-friction rubber materials and torque grease, which was jointly developed by the Company and a subsidiary, NOK Klueber Co., Ltd. Also, the Company developed and launched products designed for emerging countries. The products, which have improved anti-dust performance, are designed to respond to tough road conditions.

-In its O-ring business, the Company launched material that can handle new coolants and which are environmentally friendly; and coating material that makes assembly easier. In addition, it conducted R&D activities to develop a material that is workable with hydrogen gas used in fuel cells.

-As part of its activities designed to create seals for use in EVs and HEVs, the Company developed smaller and low-reaction force gaskets and integrated seal parts of flexible printed circuit boards (FPCs) for next-generation vehicles, launching commercial production of some of them.

-The Company is advancing preparations to start producing and supplying sealing products for cars running on fuel-cell battery stacks.

Electronic Device
-The Company is conducting R&D activities on processes, materials, and parts on flexible print circuit-boards (FPCs) for automotive use; as well as developing new FPCs. The concept behind development activities is to create core technologies for FPCs in terms of making them higher definition, improving their features, and modularizing them.

-The Company is developing technology that achieves highly reliable connections between FPCs and cables, and FPCs and devices, making product presentations to customers about the related technology.

R&D Facilities

Facility Location
Shonan Development Center Kanagawa Pref., Japan

Technical Cooperation Agreement

(As of Mar. 31, 2016)
Partner Content Signed on
Introduction and licensing of such seal product as oil seal, O ring and related technologies Jan. 1, 2009

Capital Expenditure

(in million JPY)
FY ended Mar. 31, 2016 FY ended Mar. 31, 2015 FY ended Mar. 31, 2014
Overall 61,399 41,470 40,615
-Seal 21,996 18,680 21,914

Sealing business
-The Company mainly invested in its operations in Japan and at Wuxi Nok-Freudenberg Oilseal Co., Ltd. and Thai NOK Co., Ltd.

Planned Capital Investment

(As of Mar. 31, 2016)
Equipment Amount
(in million JPY)
Date of start Scheduled date of completion

Fukushima Plant (Fukushima Pref.)

Facilities for manufacturing oil seals 3,412 Apr. 2015 Mar. 2018

Tottori Plant (Tottori Pref.)

Facilities for manufacturing anti-vibration rubber 5,537 May 2015 July 2017

Unimatec Singapore Pte. Ltd.

Facilities for manufacturing chemical alloys 7,705 Sep. 2015 Mar. 2018
MEKTEC Manufacturing Corp. (Zhuhai) Ltd. (Zuhai, China) Facilities for manufacturing flexible print circuit-boards 12,618 Jan. 2016 Aug. 2016

Outlook of Capital Expenditure for FY ending Mar. 31, 2017

(in billion JPY)
FY ending Mar. 31, 2017
FY ended Mar. 31, 2016
(Actual Results)
Rate of
Change (%)
Japan 32.3 21.1 53.1
Asia 42.7 39.2 8.9
Europe/USA 0.6 1.2 (50.0)
Total 75.6 61.5 22.9

Outlook for FY ending Mar. 31, 2017

(in million JPY)
FY ending Mar. 31, 2017
FY ended Mar. 31, 2016
(Actual Results)
Rate of
Change (%)
Sales 664,600 746,147 (10.9)
Operating income 35,000 48,258 (27.5)
Ordinary income 37,500 53,727 (30.2)
Profit for the year attributable to owners of the parent 22,500 30,053 (25.1)

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