Nippon Sheet Glass Co., Ltd. Business Report FY ended Mar. 2015

Business Highlights

Financial Overview

(in million JPY)
  FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 Rate of change (%) Factors
Sales 626,713 606,095 3.4 -
Operating income 22,338 734 2943.3
Profit before taxes 4,807 (15,120) -
Profit for the year attributable to owners of the parent 1,668 (16,605) -
Automotive Glass Business
Sales 313,956 305,114 2.9 1)
Operating income (before exceptional items) 9,372 11,154 (16.0)

Business Overview

1) Automotive Glass Division
-Sales, which barely increased year-on-year, were the result of favorable currency translation. Operating profit was slightly lower year-on-year due to the severe market conditions continuing in most of the regions.

-Sales in Europe account for 46% of the Automotive Glass Division's sales.
-OEM sales: Sales based on the same currencies were about equal to what they were the previous year.
-Aftermarket sales: Sales at the AGR sector were lower year-on-year due to lower demand caused by the weather.
-Operating profit increased year-on-year due to an improved product range.

-Sales in Japan account for 17% of the Automotive Glass Division's sales.
-OE sales: Unit sales were higher year-on-year. Even in spite of the consumption-tax increase, demand remained strong. However, passenger-car sales decreased slightly in the fourth quarter.
-Sales increased year-on-year due to higher demand; however, operating profit was affected by higher investment costs.
-AGR sales: The market was lower year-on-year.

<North America>
-Sales in North America account for 26% of the Automotive Glass Division's sales.
-OEM sales: Unit sales continued to be strong, increasing year-on-year.
-AGR sales: Both sales and operating profit were higher year-on-year due to strong demand that positively affected results.

<Other regions>
-Both sales and operating profit were lower year-on-year, due to the continued, severe market conditions in South America.

The NSG Group's long-term strategic vision and mid-term business plan

<Strategic vision>
-The Group aims to be recognized as a "Value-added (VA) Glass Company".

-The Group believes that the key growth sector in the glass market is value-added products featuring greater complexity and functionality. Its product line already includes a wide range of VA products, not only from the Technical Glass business unit but also from the Architectural and Automotive units.

-The Group will focus its business resources on the development and sales of VA glass. By becoming a VA Glass Company, the Group aims to become more profitable with a lighter asset base and a stable financial structure that is less susceptible to economic conditions.

<Mid-term business plan for April 2014 through March 2018>
-On May 15, 2014, the Company announced its new mid-term management plan, which covers the fiscal year ending in March 2018.

-The greatest objectives under the mid-term management plan are achieving solid, financial sustainability and starting changes to become a value-added glass company.

-The reorganization efforts that have taken place up to now have improved the Group's profitability and will support the mid-term management plan's objective of making the Company a leaner organization. In addition, based on a balance between regions and businesses, the Company will be able to maintain the ability to respond to changing and diversifying economic developments in the world.

-The mid-term management plan makes it possible for the Company to achieve its long-term objectives by maintaining solid financial sustainability and providing value-added products and services.

Financial targets for fiscal year ending March 2018

  FY ending March 2018
FY ended March 2015
(Actual results)
FY ended March 2014
(Actual results)
Sales JPY 670 billion or more JPY 626.7 billion JPY 606.1 billion
Operating profit (*) JPY 60 billion JPY 25.2 billion JPY 22.4 billion
EBITDA JPY 100 billion JPY 57.9 billion JPY 54.4 billion
Net Debt JPY 300 billion JPY 374.1 billion JPY 379.1 billion
ROE 10% or more 0.9% -

Note: depreciation expenses for intangible assets acquired from Pilkington and operating profit before deduction of individual disclosure items.

Operating Plan

-The Company announced that it will further increase its production capacity of the Super UV cut glass in Japan. The Company already boosted the production level in November 2013. The Super UV cut glass blocks about 99 percent of UV rays and is mainly used for automotive front doors. The Company supplies the glass as original equipment on the Toyota Noah and Voxy, the Nissan Dayz Roox, and the Mitsubishi eK Space. (From a press release on June 19, 2014)

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

R&D Expenditure

(in million JPY)
  FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Overall 8,200 7,900 7,300
-Automotive Glass Division 3,100 2,800 2,800

R&D Activities

Automotive Glass Division
-In Japan, the Company is continuing its R&D activities on super UV-blocking glass, which blocks even more UV rays than existing glass. The Company has launched sales of infrared-ray absorbing products, with plans to increase production capacity.

-The Company won new orders from OEMs as a result of developing lighter weight glass. For example, in Europe, the Company reduced the weight of windshield glass by 2.5 kilos per vehicle, but the glass still retains its basic, mechanical performance. In addition, in Japan, an automotive glass that is 2.3mm thick became the benchmark for “light weight”, when it comes to producing reinforced automotive glass.

-High-speed-data communication in automobiles is one of the promising fields of technology. The Company won an order to develop glass antennae for the first time from a major European OEM.

-The Company is finding greater opportunities to sell its products integrated with head up displays and advanced driver-assist systems.

Capital Expenditure

(in million JPY)
  FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Overall 36,600 31,600 26,000
-Automotive Glass Division 17,500 10,700 13,500

Automotive Glass Division
-Investment was mainly for acquiring automotive glass machining facilities in Poland.

Planned Capital Investment

(As of Mar. 31, 2015)
Company or
Target of Investment Planned Investment
(in million JPY)
Start End
Pilkington Automotive Poland Sp.zo.o
(Warsaw, Poland)
Facilities for producing processed glass 3,345 2nd quarter of fiscal year ending March 2015 3rd quarter of fiscal year ending March 2016