Nittan Valve Co., Ltd. Business Report FY ended Mar. 2016
Financial Overview |
(in million JPY) |
| FY ended Mar. 31, 2016 | FY ended Mar. 31, 2015 | Rate of Change (%) |
Factors | |
| Overall | ||||
| Sales | 42,494 | 43,105 | (1.4) | - |
| Operating income | 3,124 | 2,617 | 19.4 | - |
| Ordinary income | 3,140 | 3,201 | (1.9) | - |
| Net income attributable to owners of the parent | 953 | 658 | 44.8 | - |
| Small engine valves | ||||
| Sales | 34,826 | 34,902 | (0.2) | -In Japan, sales were just slightly lower because sales of both automobile and motorcycle engine valves fell as a result of the Company’s migrating production of some products outside Japan, even though the production of hollow engine-valves was launched. -Outside Japan, sales were lower in Asia because customers placed fewer orders in Taiwan and Indonesia and because of negative currency translation, in spite of the fact that sales in China were strong and production was launched in Vietnam. -In North America, sales were higher to due greater production volumes in line with the market recovery. -In Europe, sales were lower because customers placed fewer orders and because of negative currency translation. |
| Operating income | 2,944 | 2,002 | 47.1 | -Negative factors that impacted performance were (1) fewer product orders received in Japan and some locations outside Japan, and (2) initial start-up costs incurred for setting up a subsidiary in India. -Positive factors were (1) the recovery of the North American market, and (2) higher sales due to operations in Europe and Vietnam returning to profitability. Overall, sales increased y/y. |
| Variable cam phasers, gears | ||||
| Sales | 2,894 | 3,789 | (23.6) | -Variable cam phasers: sales were lower due to fewer product orders received because of model changes. -Precision-forged gears: While sales of precision-forged gears for automobiles increased in China and Europe, they decreased for industrial equipment and for automobiles in Southeast Asia. As a result, sales were lower overall y/y. |
| Operating income | (152) | 225 | - | - |
Factors
1) Valve lifters
-Sales were lower due to fewer product orders received because of model changes.
Supply of Hollow head valves
-The Company will supply its hollow head engine valves preferentially to Japanese and Korean OEMs, with which it has built good business relations. The Company started mass-producing the products this year. The Company will help its key customers develop distinctive proprietary technologies on engine performance that stands out among technologies of other foreign OEMs. Thus, the supplier intends to carefully select an OEM, to which it will supply these valves. For the time being, the supplier will produce these valves only at its Sanyo plant (in Sanyo-Onoda City, Yamaguchi Prefecture, Japan), control the quality of these products thoroughly, and improve mass production techniques for these valves. The hollow head engine valve is hollow from the stem through the head. It seals metallic sodium in the hollow as a coolant to achieve lightweight and high thermal dissipation. As a high performance valve that improves vehicle fuel and thermal efficiencies, the hollow head engine valve is selected for the Honda "Step WGN". (From an article in the Nikkan Jidosha Shimbun on August 29, 2015)
3-years Management Strategy (FY ending Mar. 2017 - FY ending Mar. 2019)
Financial objectives for the fiscal year ending in March 2019
- Consolidated sales: JPY 46.0 billion
- Consolidated operating income: JPY 5.1 billion
- Net income attributable to owners of the parent: JPY 2.6 billion
- ROE: 8% or more
-The Company announced its fiscal 2016-2018 mid-term business plan. Under the new plan, the Company will strive to win new orders for solid and hollow valves in its mainstay valve operations by pursuing the research and development of technologies compliant with fuel-efficient engine standards. The Company will promote the use of highly-competitive new products such as high durability rocker arms and heat insulating valves that utilize its unique forging technologies. The Company will also proceed with preparation for volume production of brake mechanism parts for supply to European OEMs, with the aim of achieving annual sales of JPY 1 billion from the parts. (From an article in the Nikkan Jidosha Shimbun on June 8, 2016)
| Major challenges | Responses |
| Return to profitability of operations in Japan | -Export hollow engine valves to China and North America. ・Launch of production of hollow head engine valves in February 2015 at the Sanyo plant (Sanyo-Onoda City, Yamaguchi Pref. Japan). ・Consolidate the production of hollow engine valves in Japan. -Received a firm order in the fall of 2015 for hollow head engine valves that are to be mounted on global models in North America. -Consider investing in hollow head engine valves outside Japan by the fiscal year that ends in March 2018. -Targeting sales to exceed JPY 5.0 billion in the fiscal year that ends in March 2019; of hollow engine valves. |
| -Variable cam phasers, gears: Cam phase variation mechanism (VCP): Allocate resources to new product development and their production. Gears: Launch production of new gears developed by making use of forging and machining technology. |
|
| Income structure reformation | -Strengthen operations in Japan producing small engine valves. |
| -Strengthen competitive strengths in Indonesia and North America. | |
| -Increase production in India. |
Outlook for FY ending Mar. 2017 |
(in million JPY) |
| FY ending Mar. 31, 2017 (Forecast) |
FY ending Mar. 31, 2016 (Actual Results) |
Rate of Change (%) | |
| Sales | 42,600 | 42,494 | 0.2 |
| Operating income | 3,750 | 3,124 | 20.0 |
| Ordinary income | 3,800 | 3,140 | 21.0 |
| Net income attributable to owners of the parent | 1,700 | 953 | 78.3 |
>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)
R&D Expenditure |
(in million JPY) |
| FY ended Mar. 31, 2016 | FY ended Mar. 31, 2015 | FY ended Mar. 31, 2014 | |
| Overall | 511 | 459 | 616 |
| -Small engine valves | 255 | 290 | 366 |
| -Variable cam phasers, gears | 101 | 9 | 132 |
R&D Activities
Small engine valves
-Engine valves for downsized engines: next-generation, coolant-encapsulated hollow valves designed to improve fuel efficiency as a result of their being built lighter but with greater heat-resistant performance received multiple customer orders after starting series production. Further working on sampling and evaluation to get more customer orders.
Variable cam phasers
-The Company is developing variable valve timing mechanisms in order to increase their content ratio on new-type engines designed to continually improve fuel efficiency and comply with stricter exhaust-gas-emission regulations that will go into effect from 2020. In line with this, the Company is redoing the specs to satisfy the need for smaller sized mechanisms to comply with customer requirements.
Gears
-The Company is advancing near-net-shape forming of gears, reducing the amount spent on materials, and reducing energy consumption and scrap, working to achieve these all at the same time. In addition, it is working on environmentally friendly products.
-Steady new orders are being received, such as for high-load gear sets for SUVs.
Valve lifters
-Hydraulic lash adjusters: Received orders after proving reliability. Launch of production to be in the fiscal year that ends in March 2017.
-Roller rocker arms: Due to receiving new inquiries, the Company is launching sales activities to increase sales.
Capital Expenditure |
(in million JPY) |
| FY ended Mar. 31, 2016 | FY ended Mar. 31, 2015 | FY ended Mar. 31, 2014 | |
| Overall | 4,323 | 5,930 | 7,023 |
| -Small engine valves | 3,596 | 5,436 | 6,763 |
| -Variable cam phasers, gears | 304 | 163 | 124 |
-In the fiscal year that ended in March 2016, the Company made capital investments in the small engine valves, in order to increase, renew, and streamline engine valve production facilities.
| Capital expenditure for small engine valves | (in million JPY) |
| Production site | FY ended Mar. 31, 2016 | FY ended Mar. 31, 2015 | FY ended Mar. 31, 2014 |
| Nittan Valve Co., Ltd. (Japan) |
1,360 | 857 | 1,211 |
| Nittan (Thailand) Co., Ltd. (Thailand) |
869 | 920 | 124 |
| Guangzhou Nittan Valve Co., Ltd. (China) |
523 | 742 | 784 |
| U.S. Engine Valve (Partnership) (USA) |
365 | 881 | 2,288 |
| Nittan Vietnam Co., Ltd. (Vietnam) |
198 | 386 | 1,119 |
| Nittan India Tech Pvt. Ltd. (India) |
139 | 997 | - |
| PT. Federal Nittan Industries (Indonesia) |
- | 548 | 660 |
| Nittan Euro Tech sp.z o.o. (Poland) |
- | - | 522 |
Investment Outside Japan
-The Company started operations of its first new production line for saving manpower and stabilizing product quality at its Thai plant in August 2015. The Company aims to rationalize its production and enhance its competitiveness in emerging markets by freeing itself from a labor-intensive production approach. A second new line is slated to come on-stream within the fiscal year ending in March 2017. The new lines will produce engine valves, the Company's mainstay product. (From an article in the Nikkan Jidosha Shimbun on September 7, 2015)
-The Company will start deliberations on a new engine valve plant site and expand production capacity at its existing plant in China to meet roaring demand. The Company will seek a site around the existing plant in Guangzhou or other inland areas to start production in four to five years. The plant will start operations with three production lines initially. The existing plant will have 15 lines by the end of the fiscal year in March 2018, giving the Company a total of 18 production lines in China over the medium term. (From an article in the Nikkan Jidosha Shimbun on August 19, 2015)
-The Company will increase its U.S. plant's cost competitiveness to survive intensifying competition in the North American automotive engine valve market. In response to OEMs shifting their automobile production to Mexico, the Company will expand the price range of engine valves to prevent its own customers from shifting to suppliers in Mexico. The Company will improve the productivity of component pretreatment to reduce material costs, and will reduce the number of its partner company’s engineers that are dispatched to the U.S. plant. (From an article in the Nikkan Jidosha Shimbun on August 6, 2015)
-The Company will triple its engine valve production capacity in India. Production lines in the Company's plant in India will be increased to six from two by the fiscal year ending March 2019 (FY2018). This will boost annual production capacity of the plant to 14 million units from current 4 to 5 million. Going forward, the Company will significantly enlarge the existing plant to increase annual output to more than 20 million. (From an article in the Nikkan Jidosha Shimbun on July 24, 2015)
Planned Capital Investment (Automotive Parts Business) |
(As of Mar. 31, 2016) |
| 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 small engine valves. | 564 | 2016.04 | 2017.03 | Mainly to rationalize and renew facilities |
| Manufacturing equipment for precision forged gears, etc. | 82 | 2016.04 | 2017.03 | Mainly to rationalize and renew facilities | |
| Sanyo Plant (Yamaguchi Pref., Japan) |
Manufacturing equipment for small engine valves | 1,590 | 2016.04 | 2017.03 | Mainly to rationalize and renew facilities |
| PT. Federal Nittan Industries (Indonesia) |
Manufacturing equipment for small engine valves | 166 | 2016.01 | 2016.12 | Mainly to rationalize and renew facilities |
| U.S. Engine Valve (Partnership) (U.S.A.) |
Manufacturing equipment for small engine valves | 293 | 2016.01 | 2016.12 | Mainly to rationalize and renew facilities |
| Nittan (Thailand) Co., Ltd. (Thailand) |
Manufacturing equipment for small engine valves | 22 | 2016.01 | 2016.12 | Mainly to rationalize and renew facilities |
| Guangzhou Nittan Valve Co., Ltd. (China) |
Manufacturing equipment for small engine valves | 583 | 2016.01 | 2016.12 | Mainly to rationalize and renew facilities, increasing production capacity by 10% |
| Nittan Vietnam Co., Ltd. (Vietnam) |
Manufacturing equipment for small engine valves | 68 | 2016.01 | 2016.12 | Mainly to rationalize and renew facilities |
| Nittan India Tech Pvt. Ltd. (India) |
Manufacturing equipment for small engine valves | 525 | 2016.04 | 2017.03 | Mainly to rationalize and renew facilities, increasing production capacity by 25% |