Financial Overview

(in millions of JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	Rate of Change (%)	Factors
Overall
Sales	32,950	32,415	1.7	-Even though operations outside Japan were affected by the high evaluation of the yen, performance was strong due to sales generated mainly in Asia. Sales in Japan and North America, which were severely impacted by the Great East Japan Earthquake, recovered in the second half of the year due to strong orders the Company received. However, overall the Company saw slight rise year-on-year, being affected by negative currency translation, lower production volumes because of the flooding in Thailand and fewer orders because of the financial instability in Europe.
Operating income	658	2,203	(70.1)	-
Ordinary income	836	2,192	(61.9)	-
Current net income	(895)	565	-	-
Engine Valve
Sales	21,709	21,562	0.7	1)
Operating income	351	1,660	(78.9)	-
Variable cam phase, gears
Sales	6,010	5,987	0.4	2)
Operating income	28	182	(84.6)	-

Factors
1)
<Small engine valves>
-In Japan, the Company set up operations to handle a new line of products for compact cars. Sales of products destined for outside Japan were strong.

-Outside Japan, performance in Asia was impacted by the high evaluation of the yen and the Great East Japan Earthquake. Nevertheless, sales overall of engine values for four-wheel vehicles were strong. In North America, production was affected by the impact the Great East Japan Earthquake and the flooding in Thailand had on the supply change. As a result, operating income was significantly lower year-on-year when the results were finally settled, taking into account the high evaluation of the yen.

2）
<Variable cam phase, gears>
-Operating performance was down year-on-year because the recovery in demand in Japan that was to happen after the Great East Japan Earthquake was slower than predicted. This was in spite of the fact that the business experienced greater sales as a result of adjusting its product mix and selling greater product volumes in North America.

>>>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	696	1,117	1,391
Engine Valve	174	-	-
Variable cam phaser	379	-	-

R&D Activities

 <Small engine valves>
-The Company continued developing hybrid engine values that also can function as motors, improving their performance in terms of making them lower in cost and more reliable. These valves are currently being mounted on some vehicle models.
-The Company’s small-engine valve business completed the fundamental technology needed to develop materials compatible with diversified fuel properties such as for alternative-fuel engines that use ethanol and gasoline. The business is now working on commercializing these materials.
-The Company is developing smaller and more heat-resistant valves for compact engines, working on hollow stem valves.

<Variable cam phaser, gears>
-In its variable cam-phaser and gear business, the Company is working to meet the constant demand for improved fuel performance, developing a variable valve timing design that is extremely large angle and has a high exchange response, which should achieve greater efficiency and have a better variable compression ratio in terms of achieving lower engine friction and offering a better combustion cycle. 

Product Development

Hollow stem valve
-The Company will start to mass-produce a hollow stem valve, which is an engine valve with its core cavitated, in 2012. Compared with a conventional solid stem valve, the hollow valve is 10 percent lighter. In addition, the company has also developed a technology to mass produce a hollow head to be paired with a hollow stem valve, combination of which offering as much as 20 percent cutdown on weight from a solid stem valve. Volume production of the hollow head is scheduled to begin in 2014. Adoption of the lighter engine valve enables automakers to attenuate the strength level and trim the weight of valve springs and other components used around the engine component. The company will present the product to car manufacturers by highlighting such advantages. Because of increased workloads and costs required for manufacturing the hollow stem valve, its introduction has been so far limited to motorsport vehicle engines and other technologies. Based on the technology applied to sport cars, the company developed a highly durable and cost-efficient hollow stem valve for production vehicles. The new technology also contributes to decreasing vibration. Nittan Valve aims to make the time and cost for mass-producing the hollow-type stem valve and valve head on a par with the solid stem valve in efforts to ensure their competitive edge in the market.　(From an article in the Nikkan Jidosha Shimbun on December 19, 2011)

Technical Alliances

(As of Mar. 31, 2012)

Partner	Content of agreement	Project Period
Eaton Corporation (U.S.A.)	License agreement on small engine valves	July 1, 2011 - Jun.30, 2012
Eaton Corporation (U.S.A.)	License agreement on oil pressure valve lifters	July 1, 2011 - Jun.30, 2012
P.T. Federal Nittan Industries (Indonesia)	License agreement on small engine valves	5 years from Jun. 1, 2010
Shinwa Precision Co., Ltd. (Korea)	License agreement on oil pressure valve lifters	5 years from Aug. 1, 2010
Nittan (Thailand) Co., Ltd. (Thailand)	Technical assistance agreement on small engine valves	5 years from Feb. 1, 2012
Shinwa Precision Co., Ltd. (Korea)	License agreement on mechanical tappets	10 years from Dec. 5, 2002
Beijing Yoosung Shinhwa Automobile Parts Co., Ltd. (China)	License agreement on lash adjusters	10 years from Dec. 7, 2006
	License agreement on mechanical tappets	10 years from Jan. 1, 2008
Nittan Euro Tech sp.zo.o. (Poland)	License agreement on automobile  engine valves	5 years from Aug. 29, 2008 when delivery of licensed products started

Capital Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	FY ended Mar. 31, 2010
Overall	4,158	2,935	880
Engine Valve	3,292	2,322	-
Variable cam phaser	506	344	-

 

Capital Expenditure of the Automotive Components Business

(in millions of JPY)

Facilities	Amount of investment	Description of capitalization
Engine Valves
The Company	1,944	Modification and rationalization of equipment used to produce engine valves
U.S. Engine Valve (partnership) (NC, U.S.A.)	587	Installation of additional equipment to produce engine valves
P.T. Federal Nittan Industries (Indonesia)	346	Installation of additional equipment to produce engine valves
Variable cam phaser
The Company	506	Modification and rationalization of equipment used to produce precision forged gears for industrial machinery

Investments Outside Japan
<Vietnam>
-In Dec. 2011, the Company announced that it is going to establish a production and sales company in Vietnam. The decision was made at the company's board meeting held on December 20. The new subsidiary, Nittan Vietnam Co., Ltd. (tentative name), will be located in the suburbs of Hanoi to manufacture and sell small engine valves. It will be formed in May 2012 with a capital of 750 million yen, planning production launch in 2014. Nittan Valve has been producing engine valves for motorcycles also at its subsidiaries in Thailand and Indonesia. Its new Vietnam facility will become the Group's third subsidiary for the business in Southeast Asia. The company is aiming to increase its presence in the region by creating a subsidiary in Vietnam where the motorcycle market is expected to grow further. (From an article in the Nikkan Jidosha Shimbun on December 24, 2011)

Planned Capital Investments (Automotive Parts Business)

(As of Mar. 31, 2012)

Plant	Equipment to be installed	Estimated amount of investment (in million JPY)	From	To	Increase in production capacity (%)
Headquarters (Kanagawa Pref., Japan)	Manufacturing equipment for engine valves.	520	2012.04	2013.03	Mainly to rationalize and renew facilities
	Manufacturing equipment for precision forged gears	250	2012.04	2013.03	Mainly to rationalize and renew facilities
Sanyo Plant (Yamaguchi Pref., Japan)	Manufacturing equipment for engine valves	1,400	2012.04	2013.03	Mainly to rationalize and renew facilities, increasing production capacity by 10%
P.T. Federal Nittan Industries Headquarters (Indonesia)	Manufacturing equipment for engine valves	450	2012.01	2012.12	Mainly to rationalize and renew facilities, increasing production capacity by 12%
U.S. Engine Valve (partnership) Headquarters (U.S.A.)	Manufacturing equipment for engine valves	450	2012.01	2012.12	Mainly to rationalize and renew facilities, increasing production capacity by 24%
Nittan Thailand Co., Ltd. Headquarters (Thailand)	Manufacturing equipment for engine valves	620	2012.01	2012.12	Mainly to rationalize and renew facilities, increasing production capacity by 12%
Guangzhou Nittan Valve Co., Ltd. (China)	Manufacturing equipment for engine valves	480	2012.01	2012.12	Mainly to rationalize and renew facilities, increasing production capacity by 27%。