Message from the Top Management

New Mid-term Management Strategy

NICHIDAI will work on the development of a new mid-term management strategy to ensure its continuous growth.Updated June 25,2018

photo:Motonobu Furuya

Development of a new mid-term management strategy in light of the changing environment

Since FY March 2015,NICHIDAI has pressed ahead with its mid-term management strategy with its four key challenges: “Responding to overseas business development”, “launch of new businesses”, “Enhancing product competitiveness by QDC improvement”, and “Expansion of domain other than the automobile industry”. One of the fruits of these is the consolidated net sales of over 15,000 million yens accomplished at the FY March 2018, which was the record-high amount for the company.

Considering our future business environment again, it is evident that there are three trends that cannot be overlooked.

The first point is the acceleration of automobile electrification. The fast shift from internal-combustion engine to electric vehicle is enforcing all manufacturers involved in the automotive industry to adapt to the situation.

The second point is the shift from diesel engine to gasoline engine. Fraudulent inspection issues by an automobile manufacturer have decreased the share of diesel engine car in new-car sales in Europe, which is driving the shift to other power-train models including electric vehicle.

A bunch of these movements has a great impact on the NICHIDAI Group whose main customers belong to the Japanese automobile industry and the restructuring of its strategy is required.

The third point is the tight conditions in the Japanese labor market. To secure enough workers, it is imperative to adapt to the work style reform. It is required to improve productivity by streamlining the workplace environment and promoting the ICT implementation.

In this period of change, I have discussed much with the corporate officers for more than a year about the future vision of the NICHIDAI Group and its business development. As a result of these discussions, we made up our mid-term management strategy composed of the following “three challenges ”:

  • Challenge 1: “Challenge to adding resilience to existing business”
  • Challenge 2: “Challenge to the next generation”
  • Challenge 3: “Challenge to a great place to work”

Approaches 1 and 2 have been developed based on our previous mid-term management strategy in consideration of our forecast for future business environments. Approach 3 is a new approach to improve the satisfaction of our employees. We consider this approach as a challenge required for the NICHIDAI’s sustainable growth.

Considering changes as opportunities for the development of new businesses

As previously mentioned, the shift to automobile electrification is an irreversible trend. This change will surely have an impact on components composing an automobile and it is also expected that a change will occur in the application of our precision forging technologies. On the other hand, we expect that high demand will be maintained for at least another 10 years for internal combustion engines used for hybrid cars. Thus, my mission is to consider the balance between these two areas to properly steer the company’s businesses.

To ensure our sustainable growth, we need to discover new seeds from our core technologies for precision forging and create our future profitable businesses. We will make every effort on technological development including shift from conventional construction methods and combination of different construction methods to promote expansion of our business.

Assumed technology road map

Assumed technology road map

Review of the previous mid-term management strategy

We spent four years from FY March 2015 to construct the foundation for our continuous growth.

Improvement of corporate culture by restructuring
April 2014:
Merged NICHIDAI PRECISION CORPORATION (a subsidiary responsible for domestic assembly business)
April 2015:
Resumed operations in Kyotanabe Factory (The capacity of filter production was enhanced in Ujitawara Factory and the assembly process for turbocharger components was transferred to Kyotanabe Factory.)
Enhancement of corporate governance
June 2015:
Shifted to a company with an audit and supervisory committee
July 2015:
Adopted the corporate officer system
Enhancement of development system
December 2016:
Implemented the press for research and development, “NFD-1000”

Consolidated net sales and operating profit margins by year

Consolidated net sales and operating profit margins by year

※Rounded down to the nearest million yen

NICHIDAI achieved its record-high sales for the full year.
We will work on a new mid-term management strategy for further growth.

At the end of March 2018 (from April 1 2017 to March 31 2018, hereinafter “This Term”), NICHIDAI recorded increased sales in all its three businesses with its consolidated net sales over 15,000 million yens. Although our future business circumstance is unpredictable in the current situation where the automobile industry has entered a period of change and political risks have emerged, we will certainly take opportunities for sound growth.

Q. How was the company’s performance of the current period and its business circumstance?

A. We achieved our record-high sales.

The Japanese automobile industry that is our main customer in the current period indicated a trend of high sales with a moderate growth rate in US and Chinese markets and also recorded good sales in Japan, showing a trend of large automobile production volume.

Increased sales in all our businesses in such a business circumstance brought us our record-high consolidated net sales over 150 million yens for the first time. From the viewpoint of profits, we also accumulated profits in all our businesses and successfully achieved numerical targets almost as planned.

As a result, we recorded a consolidated net sales of 15,248 million yens (up 7.8% year-on-year), operating income was 755 million yens (up 17.6% year-on year), ordinary income was 778 million yens (up 20.9% year-on-year), and net income attributable to owners of the parent 522 million yens. ( up 23.0% year-on-year)

Q. How do you foresee the NICHIDAI’s performance and business environment surrounding it in next term?

A. I expect our sales will be 15,700 million yens against the backdrop of the growth of Indian and ASEAN markets.

As further market growth is expected in the market of India and ASEAN countries for the Japanese automobile industry, there is a prospect that the volume of automobile production will still be at a high level. On the other hand, we are facing negative factors such as the low growth in American and Chinese automobile markets and economic impacts caused by various political risks.

Considering these circumstances, I expect that the dies sector of our net-shape business will enjoy a sales increase in Asian markets with increasing demands. In our filter business, too, it is expected that its sales will increase due to order receiving for new products.

Taking these points into account, I expect that our consolidated net sales for next term will be 15,700 million yens (up 3.0% year-on-year). I also foresee that our operating income will be 960 million yens (up 27.1% year-on-year), ordinary income will be 950 million yens (up 22.0% year-on-year), and net income attributable to owners of the parent will be expected to be 630 million yens. (up 20.6% year-on-year)

During the consolidated analysis of change in sales(Millions of yen)

During the consolidated analysis of change in sales

※Rounded down to the nearest million yen

Full-year outlook(Millions of yen)

Full-year outlook

※Rounded down to the nearest million yen

Q. How much dividend will the company pay?

A. It will pay 10 yens (18 yens on an annual basis) per share including a special dividend for year-end.

We also consider returning its profit to our shareholders as our important business mission. As our basic policy, we are working toward constantly paying them stock dividends securing internal reserves required for our future business development and stronger management culture.

We determine the amount of dividend in consideration of indicators such as our business environment, trends in the industry and payout ratio. We have considered the fact that we recorded a consolidated net sales over 15,000 million yens for the first time to set our year-end dividend per share at 10 yens (initially expected 8 yens + 2 yens of special dividend). As a result, the annual dividend per share is 18 yens. For next term, I expect we can provide 10 yens as the intermediate dividend and 10 yens as the year-end one, which makes up 20 yens dividend on an annual basis.

Now we can see buds of change in various areas in the business environment surrounding us. While a change in the industry brings risks to our existing businesses, it is also a good opportunity to make great progress in our business.

We are committed to making the best use of our ability of technological development and organizational strength to constantly record good performance in our existing businesses and certainly seize opportunities for our further growth.

I appreciate our shareholders’ understanding of the NICHIDAI group’s efforts and their expectations for our future growth.

Current team and next team for the Next Fiscal Year(Millions of yen)

Current team and next team for the Next Fiscal Year

※Rounded down to the nearest million yen

1Dividends per share(yen)

1Dividends per share

Net-Shape Business

net sales composition ratio

net sales,ordinary income/income ratio

※Rounded down to the nearest million yen
Overview of the current period

Our forging die division business recorded increased domestic sales due to a higher volume of orders received for new parts. Our precision forging division also enjoyed increased sales in domestic contracted development and scrolled forgings produced abroad.

As a result, we recorded the sales amount of 7,171 million yens (up 5.2% year-on-year) in our net-shape business.

In terms of revenue, the increased sales in both of our forging die division and precision forging division brought the ordinary income to 413 million yens (up 28.4% year-on-year).

Forecast of next period

As a prospect for next period, the sales amount of 740 million yens (up 3.2% year-on-year) is expected due to the forecast of sales increase with the recovery of forging die division in Asia and the same level of performance in precision forging as last year.

Assembly Business

net sales composition ratio

net sales,ordinary income/income ratio

※Rounded down to the nearest million yen
Overview of the current period

We enjoyed increased sales in both of parts for VG turbocharger and those for turbocharger for gasoline engine car in domestic and overseas markets. As a result, we recorded the sales amount of 5,915 million yens (up 9.8% year-on-year).

In terms of revenue, the effect of revenue growth due to increased production volume resulted in the ordinary income to 138 million yens (up 45.7% year-on-year).

Forecast of next period

As a prospect for next period, the almost same total sales amount of 5,900 million yens (down 0.3% year-on-year) as last year is expected due to variations in production volumes of increased parts and decreased parts after changing the production models for VG turbocharger parts.

Filter Business

net sales composition ratio

net sales,ordinary income/income ratio

※Rounded down to the nearest million yen
Overview of the current period

In Japan, we enjoyed increased sales in other products in spite of the unchanged level of sales in large seawater strainer. In addition, due to increased sales in filters for overseas pharmaceutical industry and THAI SINTERED MESH CO., LTD, we recorded the sales of 2,161 million yens (up 11.3% year-on-year) and ordinary income to 226 million yens (down 0.1% year-on-year) in our filter business.

Forecast of next period

As a prospect for next period, we estimate the record-high sales of 2,400 million yens (up 11.0% year-on-year) because our continuous efforts of sales expansion in a wide variety of areas are bearing fruit and consequently may contribute to the improvement of our overall performance and the maintenance of good sales in filters for the pharmaceutical industry.

Explanation regarding appropriate use of business forecasts and other special instructions
The above forecasts of operating results are based on the information available at the time this document was released, and actual operating results may differ from these forecasts due to various factors.

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