Kinugawa Rubber Industrial Co., Ltd. Business Report FY2012

Business Highlights

Financial Overview

(in millions of JPY)
  FY ended Mar. 31, 2012 FY ended Mar. 31, 2011 Rate of change
Sales 70,612 64,579 9.3 -
Operating income 8,340 7,413 12.5 -
Ordinary income 8,555 7,486 14.3 -
Net income 5,300 4,467 18.6 -

Recent Developments outside Japan

-The Company is aiming to generate over 100 billion yen in sales and over 12 billion yen in operating profit in 2015. On top of expansion in sales in emerging markets like China and ASEAN economies, Kinugawa will make inroads into new markets, including India, Indonesia and Russia. It will not only continue efforts to increase sales of body sealing parts, but also explore new business opportunities of anti-vibration rubber, hoses and parts for construction machinery. By pursuing further cost reduction and efficiency in purchasing, Kinugawa is seeking expansion in sales, while maintaining a high operating profit margin. (From an article in the Nikkan Jidosha Shimbun on November 28, 2011)

-The Company will substantially expand its production facilities in Mexico by as early as the end of 2013 to around 5 times as large as the current level. In a bid to respond to a surge in production volume in Mexico by its leading customer Nissan, Kinugawa will not only increase capacity at its existing plant, but also construct a new plant. In Mexico, Honda and Mazda are also planning to build new plants. Production by Japanese automakers in Mexico is expected to soar significantly. The new plant will produce such new products as anti-vibration rubber products and hoses, which have not been manufactured overseas, in addition to mainstay body sealing products with the aim of increasing earnings by leveraging the expanded capacity. With an addition of locally produced items, Kinugawa intends to increase steady overseas sales by establishing a structure to deliver multiple types of products. (From an article in the Nikkan Jidosha Shimbun on March 22, 2012)

<Indonesia and India>
-The Company is set to start local production in Indonesia and India. The supplier will establish final processing plants for half-finished products like body seal parts in each country within the next two years. Also, it will shortly start a full-scale operation of Kinugawa Mexico, its second production site in North America. Furthermore, Kinugawa is planning to operate a new plant in Wuhu, Anhui Province in China to supply components to local automakers, starting in mid 2012. In addition to the existing facility in Thailand, the company will construct more plants in Asia where Japanese automakers are eager to boost production in a bid to expand its business in the area. Pursuant to a policy of locating its facility close to a Japanese automaker’s plant, Kinugawa is eying Chennai where Nissan, its major customer, is located, as a potential site in India. (From an article in the Nikkan Jidosha Shimbun on June 29, 2011)

Business Partnership

-The Company announced on July 20 that it will form a business alliance with HS R&A Co., Ltd., an automotive rubber parts manufacturer based in Korea. Based on the tie-up agreement, the two companies will collaborate on production of automotive rubber and plastic products in India, while mulling the possibility of such partnership in other countries as well. Leveraging each company’s management resources efficiently, the two companies aim to quickly meet increasing demand for locally produced components especially in emerging countries. (From an article in the Nikkan Jidosha Shimbun on July 21, 2011)


-The Company landed a deal with Volkswagen to supply body sealing parts for cars sold in the German domestic market. Delivery of the products will commence in 2012. While Kinugawa Rubber already has a business relationship with VW in North America, this is the first transaction in Germany entered due to an acclaimed quality and cost competitiveness of its products. Henceforth, the company is aiming to expand sales to other brands of the VW Group as well as new overseas customers. The products under the new contract will be delivered for new multiple models under the VW and Audi brands slated to go into production in Germany in 2012, including an SUV and a passenger car. They will be exported from the supply base Kinugawa owns in China to Germany, because the supplier has no production facility in Europe. The company is already delivering parts to VW's plants in the U.S. and Mexico. In 2012 it won a new business in North America. The start of this new business to Germany is expected to trigger expansion of transactions with VW. Kinugawa wants to lower share of sales to its largest customer Nissan from the current 60 percent to below 50 percent in fiscal 2015. (From an article in the Nikkan Jidosha Shimbun on January 26, 2012)

-The Company was awarded a new contract from Honda for vehicle body sealing parts for the next generation "Fit" known as "Jazz" overseas. Door sealing parts will be supplied for the local production model in the ASEAN region. The Company has so far had no major business transactions with Honda either in Japan or abroad. The Company is expecting to boost its sales not only by expanding sales to its mainstay customer, Nissan, but also by exploring new business opportunities with automakers not belonging to the Nissan group. (From an article in the Nikkan Jidosha Shimbun on January 16, 2012)


-The Company announced it will increase its stake in Teito Rubber Co., Ltd. to turn the company into its wholly-owned subsidiary. Kinugawa now holds 66.98 percent stocks of Teito Rubber. By complete acquisition of the company, Kinugawa plans to construct a comprehensive corporate structure from manufacture of body seal, anti-vibration parts and hoses up to sales operations. (From a press release on May 12, 2011)

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


R&D Expenditure

(in millions of JPY)
  FY ended Mar. 31, 2012 FY ended Mar. 31, 2011 FY ended Mar. 31, 2010
Overall 998  1,052 1,046
Body parts 562  661 691
Brake parts 308  269 248

Major Developments

Body parts
-Development of materials and a new cross section structure with an aim to reduce a number of attachments. Development of weather strip seals with higher price competitiveness.
-Expansion of application of lighter sealing parts made of low specific gravity rubber for auto bodies.
-Expansion of application of combining interior components with more attractive design.
-Expansion of application of TPV G/RUN made of high-function elastomer with higher recycling efficiency.
-The Company launched worldwide initiatives designed around revolutionary product creativity that focuses on developing products that reflect the particular characteristics of each market, and which at the same time are cost-competitive in the global market. It also worked to build its R&D framework so as to be able to procure materials locally.

Brake parts
-The Company worked at procuring new materials to lower costs and at developing new production methods in order to create parts for next-generation rubber components for brake.

Technological Licensing Agreements

(As of Mar. 31, 2012)
Partner Country Purpose Contract period
Faltec Co., Ltd. Japan Window moldings and their manufacturing methods From Apr. 1, 2000 until the production terminates.

Technical Assistance Contracts

(As of Mar. 31, 2012)
Partner Country Purpose Contract period
Metzeler UK Manufacturing technology for automotive weather-strips From Nov. 25, 1988
until production terminates.
Renault Samsung Mortors Korea Technical assistant agreement for sealing products for automobile bodies. From Mar. 01, 2003
until production terminates.

Investment Activities

Investment Expenditure

(in millions of JPY)
  FY ended Mar. 31, 2012 FY ended Mar. 31, 2011 FY ended Mar. 31, 2010
Overall 1,100 900 1,200
Body parts 600 400 800
Antivibration parts 200 200 100
Brake parts 200 200 200

-Investment was focused on streamlining operations and revamping production lines in order to respond to model changes made by its customers.

Planned Capital Investments

(As of Mar. 31, 2012)
Company/Office Name Location Equipment to be installed Planned amount of investment
(in millions of JPY)
Start Complete Remark
Kinugawa Koriyama Co., Ltd. Fukushima Pref.
Auto body components production facilities 38 Apr. 2012 Mar. 2013 *
Kinugawa Oita Co., Ltd. Oita Pref.
Auto body components production facilities 123 Apr. 2012 Mar. 2013 *
Kinugawa Antivibration Co., Ltd. Tochigi Pref.
Anti vibration parts production facilities 156 Apr. 2012 Mar. 2013 *
Kinugawa Brake Parts Co., Ltd. Tochigi Pref.
Brake parts production facilities 49 Apr. 2012 Mar. 2013  *
Head Office Chiba Pref.
Test and research facilities 85 Apr. 2012 Mar. 2013 -
Teito Rubber Ltd. Saitama Pref.
Brake parts production facilities 173 Apr. 2012 Mar. 2013 *
Kinugawa Rubber (Guangzhou) Co., Ltd. Guangzhou,
Auto body components production facilities 244 Jan. 2012 Dec. 2012 *
Kinugawa Mexico, S.A.De C.V Guanajuato,
Auto body components production facilities 416 Jan. 2012 Dec. 2012 *
*No significant change will take place, as the investment is for rationalizing operations and readying equipment to handle model changes.