COMPANY RESEARCH AND ANALYSIS REPORT

Nippon Piston Ring Co., Ltd.
6461
Tokyo Stock Exchange First Section

18-Jan.-2022
FISCO Ltd. Analyst

Masanobu Mizuta

FISCO Ltd.
https://www.fisco.co.jp

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Nippon Piston Ring Co., Ltd.
6461 Tokyo Stock Exchange First Section

18-Jan.-2022
https://www.npr.co.jp/english/ir/index.html■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Company profile.. ................................... ......................................................................................................

01

2. Outline of results.................................... ......................................................................................................

01

3. Growth strategy...........................................................................................................................................

02■Company overview--------------------------------------------------------------------------------------------------------------------------------------------------- 03
1. Company overview......................................................................................................................................

03

2. History................................................... ......................................................................................................

03■Business summary--------------------------------------------------------------------------------------------------------------------------------------------------- 05
1. Business summary. . ............................... ......................................................................................................

05

2. Characteristics and strengths......................................................................................................................

07

3. Main customers..................................... ......................................................................................................

07

4. Manufacturing bases...................................................................................................................................

08

5. New products and businesses.....................................................................................................................

10

6. Risk factors and earning characteristics. .....................................................................................................

11■Results trends--------------------------------------------------------------------------------------------------------------------------------------------------------------- 12
1. Outline of results for 1H FY3/22...................................................................................................................

12

2. Financial condition................................. ......................................................................................................

13■Outlook-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 14• FY3/22 results outlook.................................................................................................................................

14■Growth strategy----------------------------------------------------------------------------------------------------------------------------------------------------------- 15
1. Long-term vision and 8th Medium-term Management Plan. ........................................................................

15

2. Market environment.....................................................................................................................................

16

3. Priority measures.........................................................................................................................................

18■Shareholder return policy---------------------------------------------------------------------------------------------------------------------------------- 22

We encourage readers to review our complete legal statement on “Disclaimer” page.

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Nippon Piston Ring Co., Ltd.
6461 Tokyo Stock Exchange First Section

18-Jan.-2022
https://www.npr.co.jp/english/ir/index.html█ SummaryIn the 1H FY3/22 results, sales increased by double digits and every
profit item became profitable, while orders trended at a level higher
than forecast. Is responding to the evolution of the automobile
engine and progressing sales growth for non-automobile engines
Nippon Piston Ring Co., Ltd. <6461> (hereafter, also “the Company”) is a major manufacturer of products including
piston rings and valve seat inserts that are used as vehicle engine parts. It supplies a wide range of products tothe world’s leading auto manufacturers. Applying the core technologies that it has cultivated across its history of
approximately 90 years since its establishment, the Company is also increasing sales for non-automobile engines
as new products and businesses.
1. Company profile
The Company’s main products of piston rings and valve seat inserts are parts performing important functions
related to automobile engine performance, contributing to enhanced fuel efficiency by improving heat and abrasion
resistance. In actuality, there are only five manufacturers in the world that are able to provide high-quality piston rings,
including the Company. For valve seat inserts as well, its strength is its expertise in sintered alloy powder blending,and it holds the leading market share, approximately 40%, for Japanese auto manufacturers.
In order to increase sales for non-automobile engines, the Company is progressing new products and businesses,
mainly in the fields of industrial equipment and medicine. To give an example, in the medical field, it is aiming to create
products and a business for NiFreeT, a new medical material of a titanium-tantalum alloy that is highly biocompatible
being nickel-free and non-magnetic.
2. Outline of results
In the 1H FY3/22 consolidated results, net sales increased 29.9% year on year (YoY) to ¥25,497mn, operating
income was ¥1,731mn (compared to a loss of ¥1,487mn in the same period in the previous fiscal year), ordinary
income was ¥1,858mn (a loss of ¥1,249mn), and net income attributable to owners of parent was ¥1,277mn (aloss of ¥1,944mn). Demand in the automotive industry recovered from the rapid decrease in the same period in theprevious fiscal year due to the impact of the novel coronavirus pandemic (hereafter, COVID-19), and the number ofvehicles produced globally increased. However, presently manufacturers are being forced to adjust production due
to the shortage of in-vehicle semiconductors and the stagnation of the supply of parts, so this recovery trend has
slowed down slightly. Yet even in this situation, the Company continued to work to reduce costs and fixed costs,
and as a result, every profit item became profitable.
For the FY3/22 consolidated results, the Company announced upwardly revised forecasts in August 2021. It is
now forecasting an increase of 12.6% YoY in net sales to ¥51,000mn, operating income of ¥2,600mn (compared
to a loss of ¥165mn in the previous fiscal year), a rise of 660.6% in ordinary income to ¥2,700mn, and net income
attributable to owners of parent of ¥1,700mn (a loss of ¥813mn). As of the 2Q, the Company had left unchanged the
upwardly revised forecasts announced in August 2021, taking into consideration that presently auto manufacturers
are being forced to adjust production due to the shortage of in-vehicle semiconductors, stagnation of the supplyof parts, and rising raw material prices, and has made excellent progress toward achieving the forecasts for the full
fiscal year by, for instance, reaching more than 60% of the target for profit. Therefore, at FISCO we think it is highly
likely that results will be higher than forecast.

We encourage readers to review our complete legal statement on “Disclaimer” page.

01 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Nippon Piston Ring Co., Ltd.
6461 Tokyo Stock Exchange First Section

18-Jan.-2022
https://www.npr.co.jp/english/ir/index.html

Summary

3. Growth strategy
The global automobile market is forecast to grow in the medium term, due in part to vehicle use expandingin emerging countries. For the Company, an issue will be responding to the effects of medium- to long-term
environmental regulations (greater fuel efficiency of gasoline engines, declining use of gasoline engines, increased
use of new clean fuel engines, spread of electric vehicles, etc.). With regards to this sort of business environment,
the Company anticipates that the likelihood is low that the spread of electric vehicles will suddenly progress, andits policy is to continue to strengthen the foundation of the core businesses. In addition, based on the trend of thegradual spread of electric vehicles, it is also focusing on increasing sales for non-automobile engines through new
products and businesses.
The numerical targets in The Next NPR 2030 long-term vision are net sales of ¥100bn, an operating income
margin of at least 10%, for non-automobile sales to provide at least 40% of net sales, and a reduction in the CO 2
emissions volume of 46% (compared to FY3/14) in FY3/31. Moreover, the numerical targets in the 8th Medium-termManagement Plan are net sales of at least ¥54bn, an operating income margin of at least 8%, for non-automobile
sales to provide at least 15% of net sales, and a reduction of the CO 2 emissions volume of 25% (compared to
FY3/14) in FY3/24. In addition, the Company’s policy is to progress the 8th Medium-term Management Plan’s fivepriority measures, which are (1) build an overall optimized product manufacturing system, (2) promote technicalsolution proposal-oriented sales by utilizing core technologies and products, (3) strengthen the development andcreation of new products and businesses, (4) conduct structural reforms of people and organizations (awarenessreforms), and (5) take a leap forward toward becoming a sustainable company.
Key Points
Is a major manufacturer of automobile engine-use piston rings and valve seat inserts
In the 1H FY3/22 results, sales increased by double digits and every profit item became profitable. Orders also
trended at a level higher than forecast• Is responding to the evolution of the automobile engine, at the same time as increasing sales for non-automobile
engines••㻾㼑㼟㼡㼘㼠㼟㻌㼠㼞㼑㼚㼐㼟㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻛㼘㼛㼟㼟㻌㻔㼞㼕㼓㼔㼠㻕

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Source: Prepared by FISCO from the Company’s financial
 results

We encourage readers to review our complete legal statement on “Disclaimer” page.

02 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Nippon Piston Ring Co., Ltd.
6461 Tokyo Stock Exchange First Section

18-Jan.-2022
https://www.npr.co.jp/english/ir/index.html█ Company overview
A major manufacturer of piston rings and valve seat inserts
1. Company overview
The Company is a major manufacturer of products including piston rings and valve seat inserts that are used as
vehicle engine parts. Its corporate philosophy is to advance all things while placing the customer first, respondflexibly to environmental changes, secure profits appropriately, and reward our shareholders and other stakeholders;
act in harmony with society, secure a position as a global comprehensive parts manufacturer, and contribute to theadvancement of humanity; and always strive to innovate and improve results, promote the prosperity of the company
and improve the lives of employees.
As of the end of 1H FY3/22, the head office was located in Saitama City, Saitama Prefecture, and total assets were¥65,205mn, net assets were ¥33,412mn, capital was ¥9,839mn, the equity ratio was 48.6%, and the number ofoutstanding shares was 8,374,157 shares (including 666,146 treasury shares).
The Group consists of 13 companies in total—the Company and 12 consolidated subsidiaries, following theabsorption merger of consolidated subsidiaries Nippon Ring Service Co., Ltd. and NPR Business Services Co.,
Ltd. on April 1, 2021.
2. History
Nippon Piston Ring Co., Ltd. was established in December 1934 in Tamura-cho, Shiba Ward, Tokyo City, atwhich time it also opened the Kawaguchi Plant. It then opened the Yono Plant in April 1939, and was listed on
the Tokyo Stock Exchange (TSE) in May 1949. Subsequently, it started overseas business development from the1970s, providing a wide range of products to the world’s leading auto manufacturers. Since the 2000s, it has been
accelerating business development for the growth markets of China, ASEAN, and India.
Also, the Company acquired a dental implant business and obtained approval for medical equipment manufacturing and marketing in October 2014, aiming to increase sales for non-automobile engines as new products andbusinesses applying the core technologies accumulated since its establishment (tribology = technologies relating
to friction, wear, and lubrication; surface treatment technologies; powder metallurgy technologies; and precision
processing technologies). Utilizing this, it began imports and sales of radiology medical equipment in September
2020, and started a technological investigation in April 2021 toward a specific project jointly with Professor Noriyuki
Hisamori of Sophia University for NiFreeT, which is a new medical-use material of a titanium-tantalum alloy. In June
2021, it began a joint development program for implantable medical devices with Medtronic <MDT>, a medical
equipment manufacturer that ranks first for global sales (consolidated net sales of US$28.9bn in FY4/20).

We encourage readers to review our complete legal statement on “Disclaimer” page.

03 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Nippon Piston Ring Co., Ltd.
6461 Tokyo Stock Exchange First Section

18-Jan.-2022
https://www.npr.co.jp/english/ir/index.html

Company overview

History
Date
December 1934

Event
Established Nippon Piston Ring Co., Ltd., in Tamura-cho, Shiba Ward, Tokyo City, and opened the Kawaguchi Plant

April 1939

Opened the Yono Plant

May 1949

Listed on the Tokyo Stock Exchange

June 1964

Established Nippon Ring Service Co., Ltd.

January 1973

Established Schöttle Motorenteile GmbH in West Germany

July 1973

Established NPR of America, Inc. in U.S.A.

April 1974

Established NPR FUKUSHIMA WORKS CO., LTD.

September 1982

Established NPR Kawaguchi Works Co., Ltd., and NPR Distribution Center Co., Ltd.

December 1983

Established NPR Imanishi Works Co., Ltd., (currently NPR Shimane Co., Ltd.)

October 1984

Relocated the Kawaguchi Plant. Opened the Tochigi Plant

June 1989

Opened the Nogi Branch Plant of the Yono Plant (currently the Nogi Branch Plant of the Tochigi Plant)

April 1990

Established NPR IWATE CO., Ltd.

February 1996

Capital participation in IP Rings Ltd., in India

July 1997

Established Siam NPR Co., Ltd. in Thailand as a joint venture with Siam Cement Public Co., Ltd. (currently Cement Thailand
Holdings)

May 1998

Transferred the headquarters to Yono City (currently Saitama City), Saitama Prefecture

December 1999

Established NPR of Europe GmbH. in Germany

December 2000

Established PT. Nippon Piston Ring Indonesia (currently PT. NT PISTON RING INDONESIA) in Indonesia

December 2001

Converted Siam NPR Co., Ltd., (Thailand) into a wholly-owned subsidiary

September 2002

Opened the Ichinoseki Plant of NPR IWATE CO., Ltd.

October 2004

Established NPR Manufacturing Michigan, Inc. in U.S.A.

January 2005

Merged Schöttle Motorenteile GmbH. with NPR of Europe GmbH

February 2005

Established NPR Auto Parts Manufacturing (Yizheng) Co., Ltd. in China

March 2005
February 2006
March 2006

Established NPR SINGAPORE PTE. LTD. in Singapore
Established NPR Trading (Shanghai) Co., Ltd. in China (liquidated in December 2009)
Established PT. NPR MANUFACTURING INDONESIA in Indonesia.

April 2006

Established NPR Auto Parts Manufacturing (Zhenjiang) Co., Ltd. in China.

May 2006

Established NPR Manufacturing Kentucky, LLC. in U.S.A.

January 2011
March 2011
December 2011
March 2012
July 2012
December 2012
July 2013
October 2013

May 2014

Merged the four US subsidiaries, of NPR US Holdings, Inc., NPR of America Inc., NPR Manufacturing Michigan, LLC. and NPR
Manufacturing Kentucky, LLC. Changed the company name to NPR of America, Inc.
Transferred all stocks held of NPR Shimane Co., Ltd.
Established NPR AUTO PARTS MANUFACTURING INDIA PRIVATE LIMITED in India
Absorbed and merged NPR Kawaguchi Works Co., Ltd. and NPR Distribution Center Co., Ltd.
Conducted an absorption merger of NPR Auto Parts Manufacturing (Yizheng) Co., Ltd., and NPR Auto Parts Manufacturing(Zhenjiang) Co., Ltd.
Established NPR Powdered Metals Manufacturing (Yizheng) Co., Ltd. in China.
Converted PT. NT PISTON RING INDONESIA into a wholly-owned subsidiary, and it ceased to be a joint venture
Transferred shares of NPR Powdered Metals Manufacturing (Yizheng) Co., Ltd. to Yizheng Shuanghuan Piston Ring Co., Ltd.
(currently ASIMCO Shuanghuan Piston Ring (Yizheng) Co., Ltd.) and made it a joint venture. Changed the company name to NPR
ASIMCO Powdered Metals Manufacturing (Yizheng) Co., Ltd.
Acquired the metal injection molding business of Sumitomo Metal Mining Co., Ltd.

October 2014

Acquired the dental implant business of ISHIFUKU Metal Industry Co., Ltd.

October 2015

Established the Dental Implant Medical Device Center in the Tochigi Plant

October 2018

Transferred a part of the equity intertest in NPR of Europe GmbH. to Daido Metal Co., Ltd. <7245>

September 2020

Started imports and sales of radiology medical devices

April 2021

Conducted an absorption merger of Nippon Ring Service Co., Ltd., and NPR Business Services Co., Ltd.
Started a technological investigation with Sophia University for NiFreeT, which is a new medical-use material of a titanium-tantalum
alloy

June 2021

Stated a joint development program with Medtronic <MDT> for implantable medical devices

August 202

Developed cobalt-free valve seat inserts

October 2021

Established the Sustainability Promotion Office

Source: Prepared by FISCO from the Company’s securities report and press releases

We encourage readers to review our complete legal statement on “Disclaimer” page.

04 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Nippon Piston Ring Co., Ltd.
6461 Tokyo Stock Exchange First Section

18-Jan.-2022
https://www.npr.co.jp/english/ir/index.html█ Business summary
Main products are automobile engine-use piston rings and valve
seat inserts and provides a wide range of products to the world’s
leading auto manufacturers
1. Business summary
The business segments are the Products for Automobiles Business, Products for Marine Engines and Other Products
Business, and Others (merchandise sales, etc.). Additionally, the main products include piston rings, valve seat
inserts, and assembled sintered camshafts, which are all important functional components of a vehicle’s engine.
Major products

Source: The Company’s results briefing materials

We encourage readers to review our complete legal statement on “Disclaimer” page.

05 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Nippon Piston Ring Co., Ltd.

18-Jan.-2022

6461 Tokyo Stock Exchange First Section

https://www.npr.co.jp/english/ir/index.html

Business summary

In net sales by segment, the Products for Automobiles Business provides the majority of net sales*. Furthermore,in the composition of net sales by product, roughly speaking, piston rings provide 50% and valve seat inserts 20%,and this has not changed greatly in the last five fiscal years.
*	Due to the impact of COVID-19, particularly in 1H FY3/21, the number of vehicles produced globally declined greatly, andtherefore the Company’s net sales decreased similarly.

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Source: Prepared by FISCO from the Company’s financial results㼀㼞㼑㼚㼐㼟㻌㼕㼚㻌㼠㼔㼑㻌㼏㼛㼙㼜㼛㼟㼕㼠㼕㼛㼚㻌㼛㼒㻌㼚㼑㼠㻌㼟㼍㼘㼑㼟㻌㼎㼥㻌㼜㼞㼛㼐㼡㼏㼠㻼㼕㼟㼠㼛㼚㻌㼞㼕㼚㼓㼟㻭㼟㼟㼑㼙㼎㼘㼥㻌㼟㼕㼚㼠㼑㼞㼑㼐㻌㼏㼍㼙㼟㼔㼍㼒㼠㼟㻹㻱㼀㻭㻹㻻㻸㻰

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Source: Prepared by FISCO from the Company’s results briefing materials

We encourage readers to review our complete legal statement on “Disclaimer” page.

06 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Nippon Piston Ring Co., Ltd.
6461 Tokyo Stock Exchange First Section

18-Jan.-2022
https://www.npr.co.jp/english/ir/index.html

Business summary

2. Characteristics and strengths
The Company’s main products of piston rings and valve seat inserts are parts performing important functions
related to automobile engine performance, contributing to enhanced fuel efficiency by improving heat and abrasion
resistance.
The main roles of piston rings include functions to seal gas leaks in an engine’s combustion chamber, control
lubricating oil (engine oil), transfer combustion heat that escapes, and minimize piston abrasion. They are usedwithin the combustion chamber in the harsh conditions of a temperature of 300ºC, and are an important functional
component related directly to engine performance. Therefore, in actuality there are only five companies in the world(one in the U.S., one in Germany, and three in Japan), including the Company, that are able to provide high-quality
piston rings. In terms of technological trends, there are requirements such as for lower friction and improved abrasion
resistance, high-performance and high-quality materials, and surface treatment. The Company’s strengths include
its advanced precision processing, surface treatment, and materials and powder metallurgy technologies that it has
cultivated across its history of 90 years since its establishment.
Valve seat inserts are the seats of the valves and exhaust valves and play the role of maintaining the airtightness ofthe combustion chamber. They are required to have durability that does not deteriorate even when impacted at hightemperatures and airtightness that reliably seals in combustion gas. Therefore, sintered alloy is used as a material
with high heat resistance and abrasion resistance. One of the Company’s strengths is its expertise in sintered alloy
powder blending, for which it holds the top share, approximately 40%, for Japanese auto manufacturers.
3. Main customers
As its customers, the Company supplies a wide range of products to the world’s leading auto manufacturers,
including Toyota Motor Corporation <7203>, and one of its features is that it does not rely on any specific auto
manufacturer for more than 10% of net sales. Moreover, its supply of products to major auto manufacturers in the
U.S. and Europe and local auto manufacturers in China is increasing.
Main customers

Source: The Company’s results briefing materials

We encourage readers to review our complete legal statement on “Disclaimer” page.

07 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Nippon Piston Ring Co., Ltd.
6461 Tokyo Stock Exchange First Section

18-Jan.-2022
https://www.npr.co.jp/english/ir/index.html

Business summary

4. Manufacturing bases
The Group’s manufacturing bases are the Company’s Tochigi Plant (which includes the Medical Device Center andthe Nogi Branch Plant), while manufacturing is also conducted within Japan by the manufacturing subsidiaries NPR
Fukushima Works Co., Ltd. and NPR IWATE Co., Ltd. (Ichinoseki and Senmaya), and overseas by the manufacturingsubsidiaries NPR of America, Inc. (U.S., NOA), NPR Auto Parts Manufacturing (Yizheng) Co., Ltd (China, NAMY),
NPR ASIMCO Powdered Metals Manufacturing (Yizheng) Co., Ltd. (China, NAPM), PT. NT Piston Ring Indonesia(Indonesia, NTRI), PT. NPR Manufacturing Indonesia (Indonesia, NPMI), SIAM NPR Co., Ltd. (Thailand, SNPR), and
NPR Auto Parts Manufacturing India Pvt. Ltd. (India, NPRI).
As the Group’s overseas sales bases, it has sales offices for NOA in the U.S., NAMY in China, SNPR in Thailand, and
NPRI in India. Furthermore, its sales subsidiaries include NPR of Europe GmbH. (Germany, NOE), NPR Singapore
Pte. Ltd. (Singapore, NPRS), E.A. Associates Sdn. Bhd (Malaysia, EAA), and an office in South Korea.
Bases in Japan

Source: The Company’s results briefing materials

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08 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Nippon Piston Ring Co., Ltd.
6461 Tokyo Stock Exchange First Section

18-Jan.-2022
https://www.npr.co.jp/english/ir/index.html

Business summary

Overseas bases

Source: The Company’s results briefing materials

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09 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Nippon Piston Ring Co., Ltd.
6461 Tokyo Stock Exchange First Section

18-Jan.-2022
https://www.npr.co.jp/english/ir/index.html

Business summary

5. New products and businesses
In order to increase sales for non-automobile engines, the Company is progressing new products and businesses,
centered on the industrial equipment and medical fields.
In METAMOLD (metal powder injection molding parts) for industrial equipment, it is working to increase sales ofdeflectors for ball screws for vehicles’ electric power steering and for SCARA robots. Furthermore, utilizing its
superiority in terms of the degree of freedom for shaping and use of materials, the Company’s policy is also todevelop businesses for CASE*-related parts and the robot, sensor, and medical fields.
*	An acronym for Connected, Autonomous, Shared & Services, Electric.

Strengthening the development and creation of new products and businesses (METAMOLD products)

Source: The Company’s results briefing materials

In the medical field, the Company acquired a dental implant business and obtained approval to conduct medical
equipment manufacturing and marketing in October 2014. Utilizing this, it began imports and sales of radiation
treatment products in September 2020, and started sales of oral scanners in April 2021.
Also, regarding NiFreeT®, which is a new medical-use material of a titanium-tantalum alloy that is highly biocompatible being nickel-free and non-magnetic, the Company started a technological investigation in April 2021 towarda specific project jointly with Professor Noriyuki Hisamori and his research laboratory, which specializes in the fieldof materials with biological functions used in advanced medical technologies, in the Department of Engineering andApplied Sciences, Sophia University. NiFreeT was developed in-house by the Company for use with piston rings asa shape-memorizing alloy, but has been classified as a medical-use material because it is nickel-free and presents
excellent processability. It is expected to be applied to dental screws, guidewires, catheter reinforcing materials, andother products, and the Company is aiming to develop products and a business at an early stage.

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10 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Nippon Piston Ring Co., Ltd.
6461 Tokyo Stock Exchange First Section

18-Jan.-2022
https://www.npr.co.jp/english/ir/index.html

Business summary

Strengthening the development and creation of new products and business(NiFreeT product (Ti-Ta alloy))Source: The Company’s results briefing materials

6. Risk factors and earning characteristics
A risk factor is that the number of vehicles produced may decrease due to changes in demand and the impact ofinfectious diseases, disasters, and other factors. However, in the medium term, the global automobile market will
grow, due in part to vehicle use expanding in emerging countries. So rather than a change in the number of vehicles
produced, a risk factor for the Company at the current time is the impact of medium- to long-term environmental
regulations (greater fuel efficiency of gasoline engines, declining use of gasoline engines, increased use of new clean
fuel engines, spread of electric vehicles, etc.). The Company anticipates that the probability that widespread use ofelectric vehicles will quickly increase is low. Its policy is to develop technologies for the evolution of the automobile
engine, including responses to the further improved fuel performance of gasoline engines and new clean fuel engines.
In addition, based on the trend of the gradual spread of electric vehicles, it is also working to increase sales for
non-automobile engines through new products and businesses.
Regarding competition risk, only a limited number of manufacturers can globally supply high-quality piston rings andvalve seat inserts. So, the market structure is that fluctuations in share are comparatively small in the context of theintegration of auto manufacturers and their acquisitions of companies to join their respective groups. Furthermore,as the Company provides a wide range of products to the world’s leading automobile manufacturers, the risk of it
relying on a specific automobile manufacturer is small.

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11 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Nippon Piston Ring Co., Ltd.
6461 Tokyo Stock Exchange First Section

18-Jan.-2022
https://www.npr.co.jp/english/ir/index.html█ Results trends
In the 1H FY3/22 results, sales increased by double digits and every
profit item became profitable. Orders also trended at a level higher
than forecast
1. Outline of results for 1H FY3/22
In the 1H FY3/22 consolidated results, net sales increased 29.9% YoY to ¥25,497mn, operating income was¥1,731mn (compared to a loss of ¥1,487mn in the same period in the previous fiscal year), ordinary income was¥1,858mn (loss of ¥1,249mn), and net income attributable to owners of parent was ¥1,277mn (loss of ¥1,944mn).
Additionally, the average exchange rates during the period were ¥107.82 to US$1 (¥108.23 in the same period in
the previous fiscal year) and ¥129.89 to 1 euro (¥119.31). From the start of the 1Q FY3/22, the Company adopted
the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020), but this had noeffect on results.
Outline of results for 1H FY3/22(¥mn)
1H FY3/21

1H FY3/22

Results%

Results%YoY

1Q FY3/22
Results

19,629100.0%

25,497100.0%

29.9%

13,01012,487

Products for Automobiles Business

16,66584.9%

21,848

85.7%

31.1%

11,264

10,584

Products for Marine Engines andOther Products Business

1,013

5.2%

1,269

5.0%

25.3%

601

668

Net sales

2Q FY3/22
Results

Others

1,951

9.9%

2,379

9.3%

22.0%

1,143

1,236

Gross profit

2,725

13.9%

6,144

24.1%

125.5%

3,241

2,903

SG&A expenses

4,213

21.5%

4,413

17.3%

4.7%

2,170

2,243

Operating income (loss)-1,487

-7.6%

1,731

6.8%

-

1,071

660

Products for Automobiles Business-1,269

-7.6%

1,527

7.0%

-

983

544

Products for Marine Engines andOther Products Business

-14

-1.4%

386

30.4%

-

209

177

Others

10

0.5%

88

3.7%

780%

4

84

Adjustment

-213

-

-271

-

-

-125

-146

Ordinary income-1,249

-6.4%

1,858

7.3%

-

1,196

662

Net income (loss) attributable to ownersof parent-1,944

-9.9%

1,277

5.0%

-

765

512

US$/¥

108.23-107.82----

Euro/¥

119.31-129.89----Exchange rate

Source: Prepared by FISCO from the Company’s financial results

Demand in the automotive industry to which the Company is related recovered from the rapid decrease in the same
period in the previous fiscal year due to the impact of COVID-19, and the number of vehicles produced globally
increased. However, presently manufacturers are being forced to adjust production due to the shortage of in-vehicle
semiconductors and the stagnation of the supply of parts. Yet even in this situation, sales increased by double digits
as the Company was able to capture demand in conjunction with market trends.

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12 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Nippon Piston Ring Co., Ltd.
6461 Tokyo Stock Exchange First Section

18-Jan.-2022
https://www.npr.co.jp/english/ir/index.html

Results trends

In profits, every profit item became profitable as a result of increased production and the Company’s continued efforts
to reduce costs and keeping down fixed costs. Gross profit increased 125.5% YoY and the gross profit margin rose
10.2 percentage points (pp) to 24.1%. Moreover, the increase in SG&A expenses was only 4.7% and the SG&A
expenses ratio improved 4.2 pp to 17.3%. On analyzing the factors affecting ordinary income, increasing factors
were ¥2.33bn from increased production, ¥390mn from cost reductions, ¥220mn from a decrease in labor costs,¥190mn from exchange rates (mainly the effects of the weak yen against the euro), and ¥160mn from a decrease invarious other costs. Decreasing factors were ¥70mn from rising raw material prices and ¥110mn from a decreasein the non-operating balance. The increases in raw material prices are passed on to product prices, but this still
represents a profit-decline factor as recovery was delayed for about half a year. Also, the decline in the non-operatingbalance was mainly due to a decrease in the employment adjustment subsidy amount that was provided in theprevious fiscal year as a response measure to the COVID-19 pandemic.
Looking at how results trended by fiscal quarter, net sales were ¥13,010mn in the 1Q and ¥12,487mn in the 2Q,
and operating income was ¥1,071mn in the 1Q and ¥660mn in the 2Q. Of these amounts, in the Products for
Automobiles Business, net sales were ¥11,264mn in the 1Q and ¥10,584mn in the 2Q, and operating income was¥983mn in the 1Q and ¥544mn in the 2Q. This was because results in the 2Q were affected by the production adjustments due to the shortage of in-vehicle semiconductors and the stagnation of the supply of parts. Nevertheless, at
FISCO, we think that these effects will be temporary.
Results by segment were as follows.
(1) Products for Automobiles Business
The Products for Automobiles Business was impacted by the suspension of operations of auto manufacturers
due to the shortage of in-vehicle semiconductors. Even so, net sales increased 31.1% YoY to ¥21,848mn andoperating income was ¥1,527mn (compared to a loss of ¥1,269mn in the same period in the previous fiscal year),mainly due to an increase in the number of vehicles produced globally. As for the composition of total net sales
by region, Japan provided 36.6%, Asia 29.7%, Europe 11.6%, North America 12.6%, and other regions 9.5%.
(2) Products for Marine Engines and Other Products BusinessIn the Products for Marine Engines and Other Products Business, net sales increased 25.3% YoY to ¥1,269mn,
including due to growth in demand for products used for industrial equipment, while operating income was¥386mn (compared to a loss of ¥14mn in the same period in the previous fiscal year).
(3) Others
In Others, which includes the merchandise sales business, net sales increased 22.0% YoY to ¥2,379mn andoperating income rose 780% to ¥88mn.
2. Financial condition
At the end of 1H FY3/22, total assets had increased ¥3,396mn compared to the end of the previous fiscal period to¥65,205mn. Main items included increases in cash and deposits, inventory assets, and investment securities anddecreases in intangible non-current assets. Of these items, the Company is continuously working to strategically
optimize inventory assets with an awareness of the supply chain as a whole. Total liabilities increased ¥251mn to¥31,792mn, which was mainly due to increases in notes and accounts payable - trade and electronically registeredobligations and decreases in interest-bearing debt. Total net liabilities increased ¥3,145mn to ¥33,412mn, primarily
because of increases in foreign currency translation adjustment, retained earnings, and valuation difference on
available-for-sale securities.

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13 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Nippon Piston Ring Co., Ltd.
6461 Tokyo Stock Exchange First Section

18-Jan.-2022
https://www.npr.co.jp/english/ir/index.html

Results trends

As a result, the equity ratio improved 2.2 pp compared to the end of the previous fiscal year to 48.6%. Interestbearing debt also decreased and there are no particular financial concerns for the Company and it can be said to
be maintaining its fiscal soundness.
Consolidated balance sheet(¥mn)
FY3/19FY3/20FY3/21

1H FY3/22

Change65,79363,60861,80965,205

3,396

Current assets

28,48927,623

26,131

28,776

2,645

Non-current assets

37,30435,98535,67836,429751

33,29832,31931,541

31,792251

Current liabilities

23,00122,05019,25420,805

1,551

Non-current liabilities

10,296

10,26912,287

10,987-1,30032,49531,28930,26733,412

3,145

30,18929,95028,29929,458

1,159

47.4%

46.9%

46.4%

48.6%

2.2pt

Total assets

Total liabilities

Net assets
Shareholders’ equity
Equity ratio

Source: Prepared by FISCO from the Company’s financial results█ Outlook
Has left the upwardly revised FY3/22 results forecasts unchanged,
but results may exceed them
• FY3/22 results outlook
For the FY3/22 consolidated results, the Company announced upwardly revised forecasts in August 2021. It is now
forecasting an increase of 12.6% YoY in net sales to ¥51,000mn, operating income of ¥2,600mn (compared to aloss of ¥165mn in the previous fiscal year), an increase of 660.6% in ordinary income to ¥2,700mn, and net income
attributable to owners of parent of ¥1,700mn (a loss of ¥813mn). Reasons for the upward revision in forecasts
include orders trending higher than forecast (despite taking into account the expected effects of COVID-19 andthe shortage of in-vehicle semiconductors), progress in cost-reduction activities and a weak yen compared to the
expected exchange rates. The expected exchange rates are ¥105.00 to US$1 (¥106.76 in the previous fiscal year)and ¥125.00 to 1 euro (¥121.88).
Consolidated outlook for FY3/22(¥mn)
FY3/21

FY3/22

Results% of net sales

Initial forecast

Revisedforecast% of net sales

YoY

45,276100.0%

50,00051,000100.0%

Operating income (loss)

-165

-0.4%

2,100

2,600

5.1%

-

Ordinary income

355

0.8%

2,100

2,700

5.3%

660.6%Net income (loss) attributable toowners of parent

-813

-1.8%

1,300

1,700

3.3%

-

US$/¥

106.76-105.00---Euro/¥

121.88-125.00---Net sales

12.6%

Exchange rate

Note: The FY3/22 forecasts are the upwardly revised forecasts announced in August 2021
Source: Prepared by FISCO from the Company’s financial results

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14 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Nippon Piston Ring Co., Ltd.
6461 Tokyo Stock Exchange First Section

18-Jan.-2022
https://www.npr.co.jp/english/ir/index.html

OutlookAs demand has been recovering from the rapid decline caused by COVID-19 in the previous fiscal year and thenumber of vehicles produced globally is increasing in the automotive industry to which the Company is related, andthe Company is working to reduce costs and keep down fixed costs on the profit front, it forecasts an increase insales and a significant increase in profits. On analyzing the factors affecting ordinary income, increasing factors
were ¥1.95bn from increased production, ¥900mn from cost reductions, ¥250mn due to exchange rates (mainly
the effects of the weak yen against the euro), and ¥60mn from a decrease in various other costs. Decreasing factors
were ¥400mn from rising raw material prices and ¥420mn from a decrease in the non-operating balance.
Exchange rate sensitivity (the amount that operating income is affected by a ¥1 fluctuation in an exchange rate) is
approximately ¥28mn for the euro-yen rate, but is much lower for the dollar-yen rate at around ¥5mn due to theprogress made in local production. The forecasts are for capital investment of ¥4bn (¥2.7bn in the previous fiscal
year), depreciation expenses of ¥4.1bn (¥4bn), R&D expenses of ¥1.8bn (¥1.6bn), and a ratio of R&D expenses to
net sales of 3.5% (3.6%). In FY3/21, the Company kept down capital investment in consideration of the impact of
COVID-19, but it intends to return it to the previous level in FY3/22 and had initially planned investment of ¥4.7bn.
However, the outlook is now for investment of ¥4bn as installation of some equipment have been pushed back to thenext fiscal year due to stagnation of parts procurement at equipment manufacturers and the impact of production
adjustments at auto manufacturers. The Company is prioritizing investment that is expected to have effects, such as
investment in automation, labor saving, and R&D in Japan and mainly new and increased production in China. It is
actively allocating R&D expenses to differentiating existing products and developing new products and businesses.
As of the 2Q, the Company had left unchanged the upwardly revised forecasts announced in August 2021, taking
into consideration that presently auto manufacturers are being forced to adjust production due to the shortage ofin-vehicle semiconductors, stagnation of the supply of parts, and rising raw material prices, and has made excellent
progress toward achieving the forecasts for the full fiscal year, particularly for profit items including 50.0% for net
sales, 66.6% for operating income, 68.8% for ordinary income, and 75.1% for net income attributable to ownersof parent. On considering other factors as well, such as that the yen is trending weaker than anticipated, at FISCO
we think it is highly likely that results will be higher than forecast.

█ Growth strategy
In The Next NPR 2030 long-term vision, is aiming for non-automobile
sales to provide at least 40% of net sales in FY3/31
1. Long-term vision and 8th Medium-term Management Plan
The Company formulated The Next NPR 2030 long-term vision before formulating its 8th Medium-term Management
Plan (FY3/22 to FY3/24), in order to respond to the major changes to the business environment surrounding
the automobile industry, including those related to exhaust gas regulations (the CO2 problem), the New Normal(COVID-19), the spread of EVs (Electric Vehicles), and the progress of CASE. The numerical targets for FY3/31 are
net sales of ¥100bn, an operating income margin of at least 10%, for non-automobile sales to provide at least 40%of net sales, and a reduction of CO2 emissions of 46% (compared to FY3/14).

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15 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Nippon Piston Ring Co., Ltd.
6461 Tokyo Stock Exchange First Section

18-Jan.-2022
https://www.npr.co.jp/english/ir/index.html

Growth strategy

The Company did not achieve the numerical targets in the 7th Medium-term Management Plan (with FY3/21 as
the final fiscal year, net sales of at least ¥58bn and an operating income margin of at least 7.5%) due to the severechanges in the business environment, including U.S.-China trade friction and COVID-19. However, in the 8th
Medium-term Management Plan announced in May 2021, as the stage of building a foundation toward realizing thetargets in the long-term vision, it has set the numerical targets for FY3/24 of net sales of at least ¥54bn, an operating
income margin of at least 8%, for non-automobile sales to provide at least 15% of net sales, and a reduction of CO2
emissions of 25% (compared to FY3/14).
Numerical targets
8th Medium-term Management Plan
FY3/24The Next NPR 2030
FY3/31

Net sales

At least ¥54bn

At least ¥100bn

Operating income margin

At least 8%

At least 10%

Percentage of net sales from non-automobile sales

At least 15%

At least 40%

-25%

-46%

CO2 emissions (compared to FY3/14)

Source: Prepared by FISCO from the Company’s results briefing materials

2. Market environment
The global automobile market is forecast to grow in the medium term, due in part to vehicle use expanding in emerging countries. For the Company, an issue will be responding to the effects of medium- to long-term environmental
regulations (greater fuel efficiency of gasoline engines, declining use of gasoline engines, increased use of new clean
fuel engines, spread of electric vehicles, etc.).
Looking at the long-term outlook up to 2030 for the number of vehicles produced by power train, based on IHS
data, the Company anticipates that by 2030, the ratio of powertrains equipped with an engine will be approximately
77%. As some auto manufacturers have declared that they will convert entirely to EVs (Electric Vehicles), the ratio ofbattery-type EVs will gradually increase. However, it is expected that as of 2030, the ratio of existing ICEs (Internal
Combustion Engines) will remain at slightly more than 30%, and moreover, that adoption of HVs (Hybrid Vehicles)with improved fuel efficiency, clean e-fuel vehicles that use renewable energy such as hydrogen to create fuel, andFFVs (flexible-fuel vehicles) will also newly spread.
On the other hand, when comparing the CO2 exhaust emissions of EVs to the CO2 exhaust emissions of HVs thatuse clean e-fuel such as hydrogen to improve fuel efficiency, the likelihood of EVs advancing immediately is low
as their superiority in terms of CO2 emissions will decrease under the current power generation mix in Japan, andthey are expected to survive and remain in developed countries. In May 2021, Toyota Motor’s vehicle installed witha clean hydrogen engine participated in and completed the Super Durable Series 2021 Powered by Hankook 3rd
NAPAC Fuji SUPER TEC 24-Hour Race, thereby appealing for the hydrogen engine to be one choice for a new clean
fuel vehicle toward the carbon-neutral era.

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16 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Nippon Piston Ring Co., Ltd.
6461 Tokyo Stock Exchange First Section

18-Jan.-2022
https://www.npr.co.jp/english/ir/index.html

Growth strategy

Market trends (configuration by powertrain)

Source: The Company’s results briefing materials

Engine possibilities

Source: The Company’s results briefing materials

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17 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Nippon Piston Ring Co., Ltd.
6461 Tokyo Stock Exchange First Section

18-Jan.-2022
https://www.npr.co.jp/english/ir/index.html

Growth strategy

In response to this sort of business environment and toward strengthening its core business foundation, theCompany’s policy is to improve the fuel performance of the gasoline engine and respond technologically to theshift to clean vehicles and the evolution of the engine due to new clean fuels such as hydrogen, and to further
improve quality and reduce costs. In addition, based on the gradual spread of EVs, it is focusing on increasing
non-automobile engine sales through new products and businesses.
3. Priority measures
In the 8th Medium-term Management Plan, the Company has set “Change as Chance” (finding opportunities withinchange) as its basic policy and its action guidelines to be “The New 5S” (Speed = speed of responding to changes;
Skill = skill for planning and executing strategy; Science = making decisions scientifically based on data; Spirit= enthusiasm to want to improve the organization; Safety = a safe and secure working environment and safety
awareness).
The Company has also set the five priority measures of (1) build an overall optimized product manufacturing system,(2) promote technical solution proposal-oriented sales by utilizing core technologies and products, (3) strengthen
the development and creation of new products and businesses, (4) conduct structural reforms of people andorganizations (awareness reforms), and (5) take a leap forward toward becoming a sustainable company.
(1) Build an overall optimized product manufacturing system
Through an awareness of the supply chain as a whole, including from raw materials procurement through to market
information, the Company is aiming to reduce lead times and inventory, and to build a production system thatmaximizes earnings by achieving rectification through eliminating bottlenecks, pursuing overall optimization fromthe partial optimization of each process, and progressing production and supply linked to demand. In relating tothis, it newly established the Global Procurement Department in the structural reforms implemented in October
2020.
Build an overall optimized product manufacturing system

Source: The Company’s results briefing materials

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18 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Nippon Piston Ring Co., Ltd.
6461 Tokyo Stock Exchange First Section

18-Jan.-2022
https://www.npr.co.jp/english/ir/index.html

Growth strategy(2) Promote technical solution proposal-oriented sales by utilizing core technologies and products
Previously, the sales and development departments both negotiated with customers separately. However, withthe structural reforms implemented in October 2020, the technical negotiation duties of the development departments were transferred to and integrated into the Engineering Sales Department (Engineering Sales Department
I supervises domestic sales, and Engineering Sales Department II supervises overseas sales). They are providing
solutions to problems such as reducing piston ring friction and valve seat thermal management, and contributing
to reducing fuel consumption. Moreover, the aim is to establish a model-based design and to be a solution provider
that undertakes design evaluations.
(3) Strengthen the development and creation of new products and businesses
Toward increasing sales for non-automobile engines, the Company is utilizing its core technologies, and promoting
development of new products and businesses centered on the electrification and robot business, medical devices
business, and motor business. In particular, in the industrial equipment field, it is increasing sales of METAMOLD
products, and in the medical field, it is creating products and a business for NiFreeT, which is a new biocompatible
material of a titanium-tantalum alloy. It is also working on initiatives such as developing an axial gap-type motorwith a powdered core. In the structural reforms implemented in October 2020, it integrated the METAMOLD
Business Promotion Department and New Products Business Development Department in order to increase thespeed at which work is progressed.
Strengthen the development and creation of new products and businesses

Source: The Company’s results briefing materials(4) Conduct structural reforms of people and organizations (awareness reforms)
With the aim of cultivating a corporate structure, organization and people that can change alongside the environment, the Company is promoting business structural reforms (optimizing procurement from a global perspective,
promoting reforms and abolitions of products, and DX (Digital Transformation)), organizational reforms (merging
domestic subsidiaries; newly establishing, integrating and abolishing organizations; and transitioning to becoming
a company with an audit and supervisory committee), and awareness reforms (reforming workstyles and convertingto job-based employment, conducting open innovation, and realizing diversity).

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19 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Nippon Piston Ring Co., Ltd.
6461 Tokyo Stock Exchange First Section

18-Jan.-2022
https://www.npr.co.jp/english/ir/index.html

Growth strategy

Specifically, for example with regards to awareness reforms, it is improving work efficiency by introducing technologies such as IoT and RPA, at the same time as promoting workstyle reforms with increased “job satisfaction,”
supporting the activities of senior and female employees, and establishing environments in which employees canwork with job satisfaction, and it considered that these efforts are leading to an improvement in employees’ work
engagement.
(5) Take a leap forward toward becoming a sustainable company
For its initiatives toward the SDGs as important issues that the Company will tackle as a priority from among
the various issues that exist in society, it has specified co-existing with the global environment (contributing to
the environment through products and in business activities), co-existing with stakeholders (improving customer
satisfaction, employee safety and health, and realizing diversity), and building a foundation for sustainable growth(respecting human rights, corporate governance, and compliance), and it is conducting activities toward realizing
a sustainable society.
Taking a leap forward toward becoming a sustainable company

Source: The Company’s results briefing materials

Specifically, for contributing to the environment through products, the Company is developing products that willcontribute to improving consumption by 1.5%, while for contributing to the environment in business activities,
the Company is working to reduce CO 2 emissions. Furthermore, in March 2021, the Company was certified
under Excellent Health Management Corporation 2021 (large-scale corporations section) in the Excellent HealthManagement Corporations Certification System initiated by the Ministry of Economy, Trade and Industry andNippon Kenko Kaigi. This is the second time it has been certified, following on from last year. Moreover, as
initiatives to strengthen corporate governance, it established a nomination and remuneration advisory committee
in June 2020, and transitioned to being a company with an audit and supervisory committee in June 2021.

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20 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Nippon Piston Ring Co., Ltd.
6461 Tokyo Stock Exchange First Section

18-Jan.-2022
https://www.npr.co.jp/english/ir/index.html

Growth strategy

In addition, in August 2021, the Company developed cobalt-free valve seat inserts that do not use cobalt as araw material. It previously used cobalt as a material for valve seat inserts in order to improve abrasion resistance.
As background to this new product, being an essential material for batteries used in electric vehicles, cobalt’s
market price is soaring, and it’s a resource that presents many issues including from the sustainability perspective,
such as risks related to responsible mineral procurement as it is a rare metal. By developing cobalt-free valve seat
inserts, the Company has been able to ensure the same level of functionality as before without having to rely on
cobalt. It is working to increase sales of this product, and at the same time its policy going forward is to continue
to actively conduct measures to respond to environmental, human rights, and other social issues and contributeto building a sustainable society.
Furthermore, in October 2021, the Company newly established the Sustainability Promotion Office. Previously,
various measures toward realizing a sustainable environment and society were progressed centered on the CSR
Promotion Committee. However, in order to further strengthen these measures, it established the Sustainability
Promotion Office within the Corporate Planning Department as a specialist organization to plan and progress theexecution of sustainability-related operations.

We encourage readers to review our complete legal statement on “Disclaimer” page.

21 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

Nippon Piston Ring Co., Ltd.
6461 Tokyo Stock Exchange First Section

18-Jan.-2022
https://www.npr.co.jp/english/ir/index.html█ Shareholder return policy
The Company considers appropriately and stably returning profits to shareholders to be its most important management issue, and it does so after comprehensively considering factors such as results trends and businessdevelopment in the future. In accordance with this basic policy, it is forecasting an annual dividend of ¥60.0 for
FY3/22 (interim dividend of ¥20.0, period-end dividend of ¥40.0), an increase of ¥40.0 YoY. The basic dividend
policy set out in the 8th Medium-term Management Plan is to stably pay a dividend in accordance with results, while
ensuring a consolidated dividend payout ratio of around 30% or higher.
Also, in August 2020, the Company acquired 150,000 treasury shares with the aim of flexibly executing capital
policies in the future in response to changes to the business environment.

㻰㼕㼢㼕㼐㼑㼚㼐㻌㼜㼑㼞㻌㼟㼔㼍㼞㼑㻌㼍㼚㼐㻌㼐㼕㼢㼕㼐㼑㼚㼐㻌㼜㼍㼥㼛㼡㼠㻌㼞㼍㼠㼕㼛㻰㼕㼢㼕㼐㼑㼚㼐㻌㼜㼑㼞㻌㼟㼔㼍㼞㼑㻌㻔㼘㼑㼒㼠㻕

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Source: Prepared by FISCO from the Company’s financial resultsIn relation to the revision of new market categories for the TSE planned for April 2022, the Company submitted
an application to be selected for the Prime Market in November 2021. As a result of the primary judgement ofcompliance with the standards to maintain a listing, the Company was notified that the market capitalization of its
tradable shares as of the transition date (June 30th of the same year) did not meet the standard for the Prime Market.
Therefore, it formulated the Plan to Meet the Standards to Maintain the Listing in the New Market Categories with theaim of meeting the standards and maintaining its listing on the Prime Market while applying transitional measures.
By steadily executing the priority measures set out in the 8th Medium-term Management Plan and making results
visible, it is aiming to improve its corporate value (improve the market capitalization of its tradeable shares) andthereby meet the standards to maintain a listing on the Prime Market.

We encourage readers to review our complete legal statement on “Disclaimer” page.

22 22

Disclaimer
FISCO Ltd. (“FISCO”) offer stock price and index information for use under the approval of theTokyo Stock Exchange, the Osaka Stock Exchange and Nikkei Inc.
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This report has been prepared at the request of the company subject hereto based on theprovision of information by such company through telephone interviews and the like. However,
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by FISCO. The contents of this report are as of the time of the preparation hereof, and are
subject to change without notice. FISCO is not obligated to update this report.
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◾ For inquiry, please contact: ◾

FISCO Ltd.
5-13-3 Minami Aoyama, Minato-ku, Tokyo, Japan 107-0062
Phone: 03-5774-2443 (IR Consulting Business Division)
Email: support@fisco.co.jp