* Share price as of close on October 15, 2015. Shares outstanding as of end of the most recent quarter.
EPS, DPS and PBR have been adjusted to reflect the impending reverse stock split expected to be implemented on October 1, 2015.

 

* Estimates are those of the Company.
EPS, DPS have been adjusted to reflect the impending reverse stock split expected to be implemented on October 1, 2015.

 

 

 

 

 

 

 

<Corporate History>

 

 

 

<Market Environment>

◎ Global Automobile Production Volume

 

 

 

* Sales, operating profit are estimates of the respective companies. ROE is based upon actual data from the previous year. Market capitalization, PER, and PBR are based upon closing share prices of the respective companies as of August 28, 2015.

 

 

<Business Description>

◎ Main Products

 

 

 

 

 

<Piston Rings>

 

 

 

<Valve Seat Inserts>

 

 

<Camshafts>

 

 

◎ Customers

 

 

<Manufacturing and Sales Facilities>

<Japan>

 

 

<Overseas>

 

 

 

<Characteristics and Strengths>

 

 

 

 

 

 

 

 

Favorable Trends in Main Products Allow Both Sales And Profits to Grow

 

 

 

 

 

 

 

 

(4) Topics
◎ Reverse Stock Split, Share Unit Number Change, Dividend Estimate Revision

 

① Reverse Stock Split Overview

② Overview of Change in Minimum Trading Lot Share Number

 

 

③ Dividend Payment Revision

 

④ Impact upon Shareholders

While the number of shares was reduced by the reverse stock split, the Company's assets and capital remain unchanged. So the 1-for-10 reverse stock split has increased net asset per share by a factor of 10.

Both the share price and the dividend have increased by 10 fold, thus the total dividend payment remain unchanged.

The number of shares per one voting right was revised from one per 1,000 to 100 shares.

Odd lots of shares of less than one share arising from the reverse stock split will be disposed of in one lump sum by the Company with payment of an equivalent amount of the share price to shareholders. Payment for these odd lots of shares of less than one is expected to be made in December 2015.

Nippon Piston Ring is also asking holders of less than 10 shares to inform the company of their holdings of less than the minimum trading lot share number for purchase prior to the reverse stock split.

 

 

 

 

Expansion in Overseas Sales Contribute to Higher Sales, Profits

 

 

 

① Reflecting upon the Fifth Midterm Business Plan

 

② 6th Midterm Business Plan Overview

 

 

 

 

 

 

 

 

 

◎ Efforts in the Realm of Existing Business

<Expand Sales to Overseas Automobile Manufacturers>

 

<Gasoline Engine Use Piston Rings>

 

<Valve Seat Inserts>

 

◎ Efforts to Commercialize New Products

 

<Metal Injection Molding Products Business>

 

<Dental Implant Business>

 

 

 

 

<President Akira Yamamoto's mission>

I believe that my most important mission as the President is to "cultivate human resources."

"Cultivating highly capable human resources" is the single most vital element in improving corporate value by enabling our Company to respond flexibly to changes in customer patterns, laws and regulations, and other societal changes. This is a never ending issue and we will always endeavor to enhance it.

In the aftermath of the Lehman Shock, Nippon Piston Ring adopted a strategy of improving its financial conditions in order to fortify its business foundation. But conditions have improved since and we are now even more focused upon cultivating highly capable human resources.

From the time I was a member of the corporate planning department, I had identified the lack of lateral connections between staff of various positions within our Company as a weakness. We have four highly important plants in Iwate, Fukushima and Tochigi Prefectures, but the connection between staff at these plants and our headquarters was weak. Therefore, we established the "Committee of Management Strategy Proposal by Young Managerial Staff " comprised of managerial staff in their 30s, and an "Autonomous Research Committee" comprised of managers in their 40s. These committees consider various topics and discuss how they would change our Company if they are to become President. They report their findings and results to the managing directors at management strategy meetings every year. This system is designed to raise the motivation of our staff and to stimulate our managing directors serving as a great opportunity to cultivate human resources.

And while 20% of our employees within Japan are female, the first female staff was selected to take on a managerial position and a working team comprised of female workers was created in April 2015. By creating cross sectional teams, we can motivate our employees and gain their various input on how to improve our Company.

We are also implementing efforts to increase the internal collaboration between supervisory staff under 35 years of age. Through these efforts, out staff seems to have gladly adopted increased communication between employees working at different facilities, and we have noted a change in awareness and activities of employees. Furthermore, we have seen specific measures to improve productivity between our plants. We expect to expand these efforts to our overseas facilities.

 

<Issues and Responses>

◎ Improving Profitability

The largest issue is to improve profitability. Effective use of management resources will be implemented to achieve the goal of operating profit margin of 7% or more as defined in the 6th Midterm Business Plan. In doing so, the shortening of the period from purchase of raw materials to recovery of accounts receivables for main products is the single most important factor.

Reforms in the frontline of our factories are important to achieve these goals. Based upon the long years of experience in the frontline of manufacturing, I believe that there is still ample room to improve the work processes of our factory staff.

For example, you can tell that a worker is concentrating on work with a peace of mind when the brim of their cap is facing downwards. But if the brim is facing another direction, it is likely that they are not focused on their work at hand. This can lead to slow work processes and defective products, so the elimination of these types of issues is important in improving the overall work flow.

Moreover, global sourcing and innovative Japanese manufacturing capability need to be transferred to overseas facilities and instilled in local staff to improve quality levels companywide and to reduce cost of sales.

 

◎ New Product Endeavors

The dental implant business is an extremely important business for our future. While it is relevant in expanding our non-automobile engine parts business, it also holds importance in our efforts to expand our marketing capabilities for this and our other new businesses.

Nippon Piston Ring has long conducted business primarily with automobile manufacturers. Given this history, we need to continue to come up with innovation to expand our new products and businesses. To achieve this end, we need to strengthen our marketing capabilities.

We have endeavored to improve our financial conditions during the past several years, and we are currently well positioned to take advantage of our strengthened financials in our new endeavors.

While employees who have been transferred from the previous companies along with the acquisition of these businesses are responsible for operations, we will conduct active efforts to share information on initiatives in these businesses across the Company to inspire and raise awareness of existing staff from within Nippon Piston Ring to take on new challenges themselves.

 

◎ Other Business

Securing human resources is another important issue. The age distribution of our employees had become unbalanced due to certain situations the Company faced in the past. To resolve this issue, we will continue to hire new graduate employees under any circumstances.

We need to secure staff who can work effectively in our overseas facilities within five to ten years' time. At the same time, we need to increase the technological expertise levels in our overseas facilities to similar levels as those in our facilities in Japan. Given the current employment market, hiring of employees is a difficult task and we must resort to various methods to gain access to workers.

Another issue is the improvement of assembly technologies. While we have manufactured and sold products like piston rings and valve seat inserts independently as single products, acquiring peripheral technologies is crucial for the medical use materials realm including our dental implant business.

 

<Message to Investors>

In the aftermath of the Lehman Shock, difficult market conditions had continued. However, we have been successful in greatly improving our financial conditions during the past several years. We are now well positioned to grow our businesses against the backdrop of an expansion of the global automobile market.

While rapid growth may be difficult to envision, we expect to achieve stable earnings performance over the medium- to long-term based upon the strong relationship of mutual trust with many automobile manufacturers built upon our highly advanced technologies.

While we will continue to promote various efforts to further strength our financial position and to increase our competitive standing through aggressive investments, we have identified a target dividend payout ratio of 30% over the near term, and will endeavor to return an appropriate level of profits to our shareholders.