NIPPON LIGHT METAL HOLDINGS COMPANY, LTD. ANNUAL REPORT 2017

http://www.nikkeikinholdings.co.jp

Nippon Light Metal Holdings Company, Ltd.
NYK Tennoz Building, 2-20, Higashi-Shinagawa 2-chome
Shinagawa-ku, Tokyo 140-8628, Japan

Printed in JapanA N N UA L R E P O RT 2 017
Year ended March 31, 2017

Profile

Corporate Data

Since its establishment, the NLM Group has been Japan’s sole fully integrated aluminum manufacturer
offering varieties of products ranging from aluminum raw material to fabricated products.
Aluminum has properties that make it a superb industrial material: it is lightweight and has
excellent processability, corrosion resistance, thermal conductivity, and recyclability. Nippon Light
Metal applies its core strengths — a wealth of knowledge about aluminum and its characteristics andtechnological capabilities that have been developed over many years — to supply a highly diversified
range of products to a number of key industrial sectors, including the automotive, electrical andelectronics, information and telecommunication, environment, safety, energy,
construction, railroad, and food products industries.
By carrying on development of new applications for aluminum and aluminum materials, the
NLM Group is to continue to support customers in wide-ranging industrial sectors and contribute to

Head Office

Major Shareholders

NYK Tennoz Building
2-20, Higashi-Shinagawa 2-chome
Shinagawa-ku, Tokyo 140-8628, Japan
http://www.nikkeikinholdings.co.jp
Phone: 81-3-5461-8601
Fax: 81-3-5461-8681

The Master Trust Bank of Japan, Ltd.
(trust accounts)(7.4%)

EstablishedThe Dai-ichi Mutual Life Insurance Co.
(3.2%)

October 1. 2012

improving the quality of people’s lives and protection of the environment.

Paid-In Capital¥46,525 million

NLM Group

Shares of Common Stock

Nippon Light Metal Holdings Company, Ltd. and its consolidated subsidiaries Years ended March 31

Authorized: 2,000,000,000
Issued: 619,937,500

2017

2016

2017
Thousands of
U.S. dollars

Millions of yen

For the year:
Net sales 
Operating profit Profit attributable to owners of parent ¥464,405 ¥448,381 $3,996,622
26,82130,225
269,40915,533
19,520173,991

Net Sales

452,194
144,419448,623
173,624

3,998,779
1,547,589

184,989

121,643

1,351,662

Operating Profit

Nippon Light Metal Holdings Company, Ltd.
Nippon Light Metal Company, Ltd.

Stock Exchange Listings

Nippon Light Metal Company, Ltd.

Nippon Light Metal Holdings Company, Ltd.

500

400

28

400

300

21

300

200

14

200

100

7

100

Transfer Agent of Common Stock
Sumitomo Mitsui Trust Bank, Ltd.
Last Shareholders’ Meeting

Total Assets

Nippon Light Metal Holdings Company, Ltd.

35

47,727Tokyo

At year-end:
Total assets 
Net assets 
Short-term borrowings and long-term debt,
including bonds and capital lease obligation 

500

Number of Shareholders

June 27, 2017

Nippon Light Metal Company, Ltd.

(Ratio of Stock Holding)Japan Trustee Services Bank, Ltd.
(trust accounts)(7.2%)

Nikkei-Keiyu-Kai(2.6%)The Light Metal Educational Foundation, Inc.
(2.4%)
Trust & Custody Services Bank,Ltd(securities investment trust account)(2.2%)
Asahi Mutual Life Insurance Co.
(2.1%)
Japan Trustee Services Bank,Ltd(trust accounts 9)(2.1%)
Mizuho Bank, Ltd.
(1.8%)CHASE MANHATTAN BANK GTS CLIENTSACCOUNT ESCROW (1.7%)(As of March 31, 2017)

Cautionary Statement
This annual report contains various projections and estimates. Important factors that could alter these projections and estimates include
changes in the balance of aluminum supply and demand, fluctuations in the price of aluminum ingot and foreign exchange rates, as well
as shifts in Japanese government policies and regulations. The Company cautions, therefore, that the projections and estimates contained

0

2012

2013

Billions of yen

2014

2015

2016

2017

Years ended March 31

0

2012

2013

Billions of yen

2014

2015

2016

2017

Years ended March 31

0

2012

2013

Billions of yen

2014

2015

2016

2017

herein involve risk and uncertainty, and that actual results could differ materially from those expressed or implied.

As of March 31

55

Contents
Consolidated Financial Highlights.................................................................................. C2
To Our Shareholders......................................................................................................... 2
Special Feature................................................................................................................. 5
NLM Group Topics............................................................................................................ 8
Our ESG Approach............................................................................................................ 10
NLM Group......................................................................................................................... 15
Review Of Operations...................................................................................................... 16
Consolidated Six-Year Summary.................................................................................... 20
Financial Review............................................................................................................... 22
Consolidated Balance Sheets........................................................................................ 24
Consolidated Statements Of Income............................................................................. 26
Consolidated Statements Of Comprehensive Income................................................ 27
Consolidated Statements Of Changes In Net Assets................................................. 28
Consolidated Statements Of Cash Flows...................................................................... 29
Notes To Consolidated Financial Statements.............................................................. 30
Report Of Independent Auditors.................................................................................... 52
Overseas Network............................................................................................................ 53
Directors And Officers..................................................................................................... 54
Corporate Data.................................................................................................................. 55

2017

2016

2017

yen

U.S. dollars

Per share data (yen and dollars):
Net profit —basic —diluted 
Cash dividends 
Net assets ¥28.5625.10
6.00
239.39¥34.58
31.46
8.00
257.82$0.31
0.28
0.07
2.30

Stock information (TSE) (yen and dollars):
Stock price:
High 
Low 

¥237
161

¥291
166

$2.591.48

Note: U.S. dollar amounts have been translated, for convenience only, at the exchange rate of ¥112.19 = U.S.$1.00. See Note 2 of the Notes to the Consolidated Financial Statements.

Net profit per Share

35.0

Net Assets per Share

Cash Dividends per Share

Nippon Light Metal Holdings Company, Ltd.

Nippon Light Metal Holdings Company, Ltd.

Nippon Light Metal Holdings Company, Ltd.

Nippon Light Metal Company, Ltd.

Nippon Light Metal Company, Ltd.

Nippon Light Metal Company, Ltd.

300.0

10.0

28.0

240.0

8.0

21.0

180.0

6.0

14.0

120.0

4.0

7.0

60.0

2.0

0
Yen

2012

2013

2014

2015

2016

2017

Years ended March 31

Net Income per Share = (Net Income - Amount
not attributable to common shareholders) /Average Number of Shares Outstanding

0
Yen

2012

2013

2014

2015

2016

2017

Years ended March 31

Net Assets per Share = (Net Assets-Minority
interests in consolidated subsidiaries) /Number of Shares Outstanding at Year-end

0
Yen

2012

2013

2014

2015

2016

2017

As of March 31

1

To Our Shareholders

Ichiro Okamoto, President & CEO

I would like to take this opportunity to extend my sincere gratitude to
our shareholders for their continued support of our business operations.
I hereby report on the operating results for Nippon Light Metal
Holdings Company, Ltd. (“NLM Holdings”) for fiscal 2016 (the year from
April 1, 2016 to March 31, 2017).
2

Business Environment of Fiscal 2016
During the year under review, in the transport industry,
demand for cars and trucks were robust, although demand
from construction-related fields remained unchanged. As
a result, the domestic aluminum industry saw an increasein overall demand. In terms of price, the aluminum ingots
market (hereinafter, the “ingots market”) experienced a slow
downturn until the middle of the fiscal year due in part to theeffect of foreign exchange, but was on an upward trend in thelatter half.
Mid-Term Management Plan and Its Three Basic Policies
Under such circumstances, the NLM Group (the “Group”)
formulated the Mid-Term Management Plan, which will lastfor three years starting from April 2016, and has been striving
to maximize consolidated revenue under the following threebasic policies.
Under the first basic policy, “create new products andbusiness models by strengthening cooperation within theGroup,” we pursued creation of added values that leverage
originality and distinctiveness, which are produced throughcooperation within the Group. As a result, we created a groupof new high valued-added products during the year underreview by combining extensive business domains, fromdevelopment of alloys that are used as materials to processing
and surface treatment technologies, in the fields of materials
related to lithium-ion batteries and materials for smartphones.
With regard to the second basic policy, “businessdevelopment through strategies by region and by sector,”
we embarked on the establishment of a marketing base,targeting fields of automobiles, electrical and electronics andfood and distribution, where use of aluminum is expected to
expand from now on, in North America, which is positioned
as an important market. Furthermore, the second factorythat had been constructed by a local subsidiary of Nikkei MC
Aluminium Co., Ltd., which is engaged in secondary alloy
business for automobiles, began operations in Thailand. In
India, Toyo Aluminium established a joint venture, which
manufactures and sells aluminum paste for paints.

Of the third basic policy, “strengthening of corporate
culture,” regarding raising of the profitability of struggling
businesses such as chemicals and aluminum sheets,
profitability improved as a result of cost reduction and otherefforts in the alumina business of chemicals, while neworders increased and improvement of the earnings structureis steadily advancing in the aluminum sheet business thanks
to focus on highly profitable products and enhancement ofcooperation within the Group.
Overview of Consolidated Financial Results
Overall sales volumes increased due to robust performancein the Aluminum Ingot segment, the Aluminum Sheet andExtrusions segment, the truck outfitting business, the Panel
System segment, etc. However, net sales of the Group decreased
3.5% year on year, to ¥448.4 billion due to the decline in sales
prices in the fields linked to the ingots market. Meanwhile,in terms of profit, in addition to the effects of higher sales
volumes and cost cuts, the decline in crude oil prices also
contributed to higher profits. Operating profit and ordinary
profit increased 12.7% and 7.0% year on year, to ¥30.2 billionand ¥26.3 billion, respectively. Profit attributable to owners ofparent increased 25.7% year on year, to ¥19.5 billion.
Year-end dividend payment will be ¥5 per share, which,combined with the interim dividend of ¥3 already paid, willbring annual dividend payment to ¥8 per share (¥2 greaterthan the annual dividend payment for the previous year).
Overview by Business Segment
Sales in the Alumina, Chemicals and Aluminum Ingot
segment decreased 7.3% year on year, to ¥101.8 billion, while
operating profit increased 10.8% year on year, to ¥10.1 billion.
Regarding alumina-related products, exports of mainstay
alumina and aluminum hydroxide products decreased
sharply. In the Aluminum Ingot segment, regarding the coresecondary alloy products for automotive applications business,sales increased both in Japan and overseas. However, net sales
for the segment decreased, greatly affected by the decline insales prices, which reflected the ingots market. Profits were3

To Our Shareholders

higher than the previous year due to factors such as theincrease in sales volumes and the fall in fuel prices.
Sales in the Aluminum Sheet and Extrusions segment
decreased 5.0% year on year, to ¥98.2 billion, while operating
profit increased 154.3% year on year, to ¥7.8 billion.
Sales volumes of thick plates for semiconductor and LCD
manufacturing equipment as well as thick plates for railway
cars increased in the Aluminum Sheet segment, while sales fortruck outfitting and railway cars also grew in the Aluminum
Extrusions segment. However, net sales for the segment
decreased compared to the previous year, due to the decline
in sales prices of aluminum ingots which reflected conditionsof the market. The significant improvement in profitability
was mainly due to an increase in sales volumes in both thesegments.
Sales in the Fabricated Products and Others segment
increased 3.7% year on year, to ¥154.7 billion, and operating
profit decreased 6.5% year on year, to ¥10.2 billion. The
increase in sales was due to the increased sales in theTransport-Related segment as a result of the robust domestic
demand in the truck outfitting business, the brisk sales ofanodized aluminum foil for aluminum electrolytic capacitors
in the Electronic Materials segment and sales that remained
about the same level as the previous year in the Panel Systemsegment. The decline in profitability was due to the increase incost to cope with a rapid rise in production in the Electronic
Materials segment and a sharp decrease in sales volumes ofthe mainstay products as our customers’ industry experienced
a decline in earnings as well as the decline in sales prices in
the Carbon Product segment.
Sales in the Aluminum Foil, Powder and Paste segment
decreased 8.1% year on year to ¥93.7 billion, while operating
profit decreased 19.8% year on year, to ¥5.5 billion. Althoughwater-repellent fabricated foil for food products werestrong, fabricated foil for pharmaceutical packaging weresluggish and shipments of plain foil for lithium ion battery
surfaces also decreased mainly due to the effect of inventory
adjustments. With regard to high-purity aluminum foil forelectrolytic capacitors, its overall sales volumes decreased
from the previous year due to harsh price competition,
despite robust sales of new products. As for paste products,
4

mainstay products for automobile paint and home applianceswere sluggish. Regarding powder-related products, sales ofaluminum nitride products decreased. While orders for new
products of functional ink for solar cells were strong, sales ofback sheets for solar cells decreased from the previous year
due to intensified price competition, in addition to a decline inshipments, reflecting remaining concerns about credit issues
among certain users and reduction of subsidies by the Chinese
government.
Outlook for Fiscal 2017
With regard to the Japanese economy for fiscal 2017, a
gradual recovery is expected to continue, as the tendency of
improvements in the employment and income situation iscontinuing. As for overseas economies, while the economy
is expected to be strong in the U.S. and Europe, uncertainty
resulting from political situations in various countries isincreasing. As a result, the outlook for the world economy
lacks optimism.
Under such circumstances, based on the Group’s
mission (corporate philosophy) of “be forever committed
to the development of new applications for aluminum andaluminum-related materials and thereby contribute to theimprovement of people’s quality of life and environmental
protection,” the Group will strive to maximize its consolidated
revenue, under the slogan of Team NLM “Groundbreaking
Innovator of Aluminum and Beyond” and in line with the MidTerm Management Plan, formulated last year. The next fiscal
year is projected to register net sales of ¥470.0 billion, operating
profit of ¥30.0 billion, and ordinary profit of ¥28.0 billion ona consolidated basis. I would like to ask for the continuous
support of our shareholders in these efforts, just as we would do
everything in our power to further develop the Group.
June 2017

President & CEO
Ichiro Okamoto

Special Feature: An Interview with President Okamoto

Based on the three-year Mid-Term Management Plan, the first year of which being the
fiscal year ended March 31, 2017, the Group shall adopt the following basic policies:(i) Create new products and business models by cooperation within the Group(ii) Business development through strategies by region and by sector(iii) Strengthening of corporate culture (strengthening of business foundations)

Q1

How would you evaluate the financial results, etc. for the fiscal year ended
March 31, 2017?
The fiscal year ended March 31, 2017 was the first year of our three-year Mid-Term Management Plan which
was announced in May 2016. Compared to the initially planned ¥25.0 billion in ordinary profit for the firstyear, we made, in actuality, ¥26.3 billion in ordinary profit. In terms of revenue, we are off to a good start.
In terms of sales, we have managed to keep up with the results of the previous fiscal year largely due tothe rise in demand in transport-related products, such as automobile-related products, truck outfitting, andrailway cars, despite a decline in revenue in certain segments, primarily due to a fall in prices reflecting theclimate of the ingots market. We choose to focus more on the profit margins of each product rather thansales; this, I believe, is one of the reasons our Management Plan is starting out favorably.
As a result of the above, we were able to give out an interim dividend in December 2016, for the first timein 24 years counting from its days as Nippon Light Metal Company, Ltd., before its establishment as aholdings company.

Q2

We have seen exponential growth these two years since you have been President.
Do you think this growth will continue into the future?
The world has undergone drastic changes in these two years, especially with Brexit and the election of Donald
Trump as President of the U.S. It is our belief that we should heed the influx of messages from Japanesecitizens that more or less say “we should change our ways in business.” Unstable factors are arising in the
Asian region as well, with the stagnation of the Chinese economy and the death of Thailand’s King, Bhumibol
Adulyadej.
The business environment that surrounds the Group is of no exception, affected by rapid changes inforeign exchange rates brought about by the aforementioned world events. However, going forward, theGroup shall work as one and strive for further growth by implementing various measures.
5Special Feature: An Interview with President Okamoto

Q3

How does the business performance stay strong under the rapidly changing
business environment?
We believe that the main factor of this is the result of our efforts of over 10 years in “creating new products
and business models by cooperation within the Group.” In particular, our 2012 efforts in changing into agroup-managed company enabled through a holding company structure, with the aim of “strengthening
cooperative efforts within the Group,” has further flattened the Group structure, facilitating the lateral
cooperation among organs, in turn birthing a significant amount of new products and businesses.

Q4

What strategies in particular have you prepared, regarding “creating new
products and business models by cooperation within the Group?”
The aluminum industry has been expanding towards a mass-producing, mass-consuming management scale,
mainly due to the high demand of aluminum as a result of the recent rise of lightweight automobiles.
Meanwhile, our strategy is to thoroughly utilize the advantages of group cooperation and to continue tocreate products with high added value.
To achieve this, we set “the value of the NLM Group shall be decided by the customers” as our basic
stance, and plan to aim for growth while adding on products (including periphery services) and businessmodels to our manufacturing process, based on the perspective of our customers.

Q5

How is the progress of the “business development through strategies by region
and by sector?”
When proactively investing in growing business areas, segments where management resources will be invested
are selected by considering the combination of region and market segment, in order to maximize theprofitability of our investments.
In the previous fiscal year, we invested in the truck outfitting business operated by Nippon Fruehauf Co.,
Ltd., with the combination of Japan and transportation. Although efforts were made in investing instrengthening the productivity of large freezer cars, van trailer (dry and refrigerator) and containers (fordomestic and railway use) in the previous fiscal year, what made vehicle productivity increase exponentiallycompared to previous years is the full-scale operation of a new production line that started in March 2017.
Similarly, we invested in the new factory of Nikkei MC Aluminium Co., Ltd., used for secondary alloys,
with the combination of Thailand and the automotive segment. Our existing factory in Thailand is located in
the center of the country, and has long been in full production. In March 2017, a new factory is established in
Si Racha, Chonburi Prefecture, Southern Thailand. The new factory produces 18,000 tons annually, andtogether with the existing factory, produces 58,000 tons per year.
*For more details on these two investments, please refer to the “NLM Topics” on page 6.

6

Q6

How successful was the third basic policy, “strengthening of corporate culture?”
We implemented two measures to improve our financial structure.
Firstly, all stock acquisition rights affixed to yen-denominated convertible bonds with stock acquisitionrights due 2018 issued in December 2013 were converted to shares through the exercise of said rights because
the Company’s stock price continued to be higher than the conversion prices during fiscal 2016. As a result,loans decreased while equity increased.
Secondly, through exercising all the aforementioned stock acquisition rights and converting them intoshares, an amount of ¥10.0 billion in hybrid finances (subordinated loans and bonds) recorded in March2012 were repaid in advance or redeemed early by means of funds on hand, external loans, etc., thus
improving our financial structure.
As a result of the above, our equity ratio has improved significantly from 28.8% at the end of theprevious fiscal year to 35.6%.

Q7

Please give our shareholders and other stakeholders a message.
I believe the efforts of proactive investments made during the last three years under the previous Mid-Term
Management Plan have paid off, and this is linked to the successful performance of fiscal 2016. The conceptof fighting together as “Team NLM” beyond the borders of our business andthe Group has also reached every one of our employees, and “exploratory
activities” aimed at creating new products are also being actively held.
The Company is constantly amidst competition, and without growth
the Company will have no chance of survival in such a world. In order tomake the NLM Group a continuously growing corporate group, I
wish to live out our strength as a fully integrated manufacturerof aluminum-based raw materials, continue to provide
customers with new values that they would expect from us,
and become a company that customers would like tochoose to work with.
I would like to ask for the continuous support ofour shareholders and other stakeholders towards the
NLM Group.
Ichiro Okamoto President and CEO

7

NLM Group Topics

Two-fold Increase in Large-size Refrigerator Truck Productivity After Introduction of
New Lines at Nippon Fruehauf Co., Ltd.

~ Vehicles that used to take two years to manufacture now take only one ~In 2016, Nippon Fruehauf Co.,
Ltd., a subsidiary of theCompany, made efforts toenhance the productivity oflarge-size refrigerator trucks“The Refrigerator Trucks,” vantrailers (dry and refrigerator)
The Refrigerator Trucks
and containers (for domestic
and railway use), but the official operation of the new
production line began in March 2017.
The new line’s land and buildings were built on anarea of approximately 3,300 m2 near the Company’s
factory (Atsugi City, Kanagawa Prefecture). The heavyload operations of the above mentioned products,
which used to be done by flexible production, wererelocated to a new dedicated production line. This newline boasts high productivity in large-size refrigerator
bodies (insulation material injected, foaming type),with 40 trucks per month, and van trailer andcontainers, with a total of 20 trucks per month. Both ofthese are, compared with the past, doubled in

production volume.
The domestic demand forlarge-sized cargo trucks is
steadily expanding due tofactors such as the replacement
demand of vehicles that meetexhaust emission regulations
and the need for larger vehicles.
Nippon Fruehauf Co., Ltd. has also received a lot oforders from customers. The large-size refrigerator
trucks, van trailers and containers mentioned above
used to take two years to manufacture, but with therecent enhancement of our production lines, we foreseethat we can shorten this period by around a year.

Van trailer

New Factory for secondary alloys established in Thailand~ Productivity increased by around 45% ~In March 2017, the Company
are widely used in making
and its subsidiary, Nikkei MC
vehicle wheels and engines. The
Aluminium Co., Ltd., establishedexisting Nikkei MC Aluminium
a new factory used forCo., Ltd. factory in Thailand issecondary alloys in the Si Racha,
located at Well Grow Industrial
Chonburi Prefecture, Southern
Estate, Chachoengsao
Thailand. The new factory
Prefecture, and after the
produces 18,000 tons annually.
productivity enhancementNewThaifactorybegan
operation
in
March
2017
Secondary alloys are madeefforts made in 2014 it now(Chonburi Prefecture)using die-casting and castingproduces 40,000 tons annually.
methods on raw materials such as scrap aluminum, andSince it has always been continuously in full production,8the new factory will help increase productivity, while atthe same time act as a backup factory in times of natural
disasters such as floods. The two factories together
produce 58,000 tons per year.
With the introduction of facilities such as energy
saving melting furnaces that reuses waste heat, we
produce alloys for automobile parts, thereby serving
mainly Japanese manufacturers of automobile parts.
In 2012, Thailand reduced taxes to encourage
the purchasing of new cars, but its resale

restriction period ends in 2017, so we foresee thedemand for buying replacements. At the same time,
we also foresee the expansion of automobile
exports from Thailand to other parts of Southeast
Asia.
The new factory is able to utilize scrap aluminum,
which has a low content of aluminum, and also
provide a range of high-quality products at a low
price, attending to a wide range of needs fromJapanese and also overseas manufacturers.

NLM Holdings Holds Company Tour for Families of Employees
In August 2016, NLM Holdings held the “Tour of theCompany for Families 2016” at its head office inTennozu Isle, Tokyo, with the aim of allowing theGroup’s employees to show their family members what
they do at work with pride.
This is the first time the event was held, and 14
families or a total of 43 people (23 adults, 20 children)
participated, consisting mainly of elementary school
children visiting their parents’ workplaces. Upon seeinga side of their parents that they would not usually see,the children responded with comments such as “That’s
cool!” and “Wow, my mom/dad knows so much!” Theother family members who were adults also gave

Group photo

positive responses, such as “I’m glad he/she is working
in a good environment,” and “This was a good chance
to show the kids what rush hour trains are like and how
their Dad works at the company.” Among theemployees, there were opinions such as “I’m glad mykids started to become interested in aluminum.”
NLM Holdings places importance on corporate social
responsibility (CSR) activities. Going forward, we willcontinue creating a working environment where
employees of the Group can dedicate themselves both towork and their families to the best of their abilities, andthereby create a company that employees are proud of.
Schedule of “Family Visit to the Company 2016”
1

Introduction to the Company

2

Exchanging of business cards with the President

3

Visit to workplaces of the children’s parents

4Lunch at the company’s canteen

5

Learning session on aluminum, etc.

Participating in a learning activity

9Our ESG Approach

CORPORATE GOVERNANCE
Introduction
Nippon Light Metal Holdings Company, Ltd. (“NLM Holdings”) is aholding company listed on the First Section of the Tokyo Stock
Exchange. It has formed the “NLM Group” which consists of 73
consolidated subsidiaries, with Nippon Light Metal Company, Ltd.
(“NLM”) and Toyo Aluminium K.K. as the core business companies,
and 17 affiliates accounted for by the equity method. The NLMGroup engages in businesses revolving around the manufacture andsale of aluminum products and related products. (See page 15 formore details.)

Governance Structure
The Board of Directors of the Company consists of 12 directors, ofwhom three are outside directors (including two independent
officers*). 13 Board of Directors meetings were held in fiscal 2016.
To ensure agile management and sufficient deliberation by the
Board of Directors, an executive officer system has been adopted toseparate the tasks of management and execution.
From the viewpoint of maintaining the institutional
independence of the auditing function, the Company has establisheda Board of Statutory Auditors, which consists of six statutory
auditors, of whom three are outside auditors. 12 Board of Statutory
Auditors meetings were held in fiscal 2016. Also, there is an employee
designated to exclusively provide assistance for auditing duties.
* “An outside director/auditor who is unlikely to have conflicts of interest
with general shareholders,” as stipulated by Tokyo Stock Exchange, Inc.

Internal Control System
The Company’s Board of Directors has resolved the Basic Policy on
the Implementation of Internal Control Systems, and strives toenforce it thoroughly.

Compliance Program
The Compliance Committee, made up of the Company’s directors
and chaired by the President and CEO, formulates the Compliance
Promotion Plan. It also receives reports on the implementation
status of the plan as well as on whistle-blowing cases, and monitors
the status of compliance promotion activities.
The NLM Group’s code of conduct is summarized in the Group
Compliance Code, which has various requirements for all directors
and employees of the Group, including compliance with laws andregulations, corporate ethics and business etiquette, sensible
conduct, and active communication with stakeholders. To ensure
the thorough dissemination of this code, the Group Compliance
Code is published as a handbook that is distributed to all employees,
which allows them to carry it around with them at all times.
Furthermore, to thoroughly disseminate the code and facilitate
its understanding, compliance meetings are held twice a year ateach workplace, where the repetitive learning method is employed.
Opinions are exchanged on topics including problems at one’s
workplace and compliance violation cases in other departments,
with a total of more than 2,000 meetings held each year, andaround 20,000 participants (participation rate of about 92%) in
fiscal 2016.

Figure 1 Trend in number of cases reported to the
NLM Hotline deemed as compliance violation cases

Governance of the GroupThe NLM Group’s basic approach to management is systematized in
the Group management policy, which consists of three pillars and 13
basic policies.

case
15

13

▶ http://www.nikkeikinholdings.com/company/keiei.html

Regarding the governance of the Group, while respecting theautonomy of each company, management is carried out based on
the Group regulations, etc. stipulated by the Company. For mattersthat affect the entire Group, an Executive Committee which consistsof members including the Company’s directors makes decisions after
examining an issue from multiple perspectives. Among such issues,
matters of particular importance are deliberated and determined at
Board of Directors meetings.
10

10

10

9
7

5

3
0

2012

2013

2014

2015

2016 FY

Besides setting up an internal whistle-blower system at major
companies, the “NLM Hotline” has also been established as acommon whistle-blowing channel for the Group. The NLM Hotline
receives reports of about 20 cases each year.

Risk Management System
The NLM Group’s risk management system responds to risks
classified into three categories: strategic risks related to businessstrategies, market and economic fluctuations, regulatory reforms,
etc.; operational risks related to product and service defects,
environmental accidentals, etc.; and hazard risks related to naturaland accidental disasters. In particular, major risks are specified,with a focus on operational risks. In order to respond flexibly toeach type of risk, a central corporate department is set up to workwith each business department in handling the risks.
The Company’s Board of Directors receives reports regarding thestatus of risk management overall twice a year, evaluates the statusof risk management, and issues necessary instructions.
In fiscal 2016, various initiatives were implemented, such as thestrengthening of information management throughout the Group,
formulation of personal information protection rules for the Group
in line with regulatory reforms, and promotion of the formulation ofbusiness continuity plans.

Corporate Social Responsibility
The NLM Group has systematized its mission towards theenvironment and society as its corporate social responsibility (CSR),
using international standards such as ISO26000 and SDGs as
references. CSR activities are carried out based on the promotional
plan adopted by the CSR Committee (Chairman: President and CEO
of NLM Holdings). The status of the activities is published on the
Company’s website, as well as in the CSR Report released every year.
(▶ http://www.nikkeikinholdings.com/csr/index.html)
The Company was selected as a constituent of the MSCI JapanESG Select Leaders Index, one of the ESG indices selected by theGovernment Pension Investment Fund (GPIF), in July 2017.

Internal Control over Financial Reporting
To ensure financial reporting is conducted appropriately, aninternal control system related to financial reporting (J-SOX) has
been set up and put into operation. Accordingly, each company anddepartment in the Group has designated a person in charge ofinternal control promotion and an internal control facilitator, toencourage the appropriate establishment and usage of controls.
These efforts are evaluated by an auditing department with a certain
minimum level of auditing capabilities and whose independence issecured. The status of design, operation and evaluation is reported tothe statutory auditors, the accounting auditor, and the Company’s
Board of Directors, after which necessary adjustments are made. The
results are released as a Report on Internal Control. (Located at theend of the Securities Report▶ http://www.nikkeikinholdings.co.jp/ir/ir-data/p6.html)

ENVIRONMENT
Environmental Management System
The NLM Group has introduced and is employing an environmental
management system based on ISO14001 at each site. In addition, an
Environment Committee has been established to implement
environmental conservation initiatives for the entire Group. Besides
formulating the environmental policy and plans to promote
environmental conservation activities, the Environment Committee
also monitors the implementation of these activities at each site.

Material Balance
The areas in which the NLM Group’s business activities have thegreatest impact on the environment are greenhouse gases, recycling,water, and biodiversity. The main inputs are water, energy, andaluminum. The main outputs are water, greenhouse gases, andwaste materials.
11Our ESG Approach

Reduction in Greenhouse Gas Emissions
The NLM Group’s initiatives to reduce greenhouse gas emissions
began in fiscal 2005. A 13% reduction from 1990 levels was achieved
in fiscal 2010, exceeding the goal of a 10% reduction. (First phase of
reduction plan)
The second phase of the reduction plan began in fiscal 2013, witha goal of achieving a 15% reduction from 2005 levels by fiscal 2020.
In fiscal 2016, greenhouse gas emissions were 796 kilotons, a 3.7%
increase year on year, as reduction efforts continued to be offset by
an increase in emissions due to an increased number of plants andincreased production.
Total emissions of the NLM Group, including overseas locations,were 933 kilotons in fiscal 2016. As emissions from overseas
locations are expected to continue increasing, we plan toimplement efforts to reduce emissions, focusing on energy-saving
initiatives.

Figure 3
Greenhouse Gas Emissions (Scope 3)
k ton-CO2
2,500

2,000

1,500

1,000

500

0

2012

2013

2014

2015

2016 FY

Recycling
Figure 2
Greenhouse Gas Emissions (Scope 1 and 2 only)
k ton-CO2
1400
1200 1,144
973

1000
800

745

748

695

768

796

600

* Estimated value based on the basic unit (9.22 Tons-CO2/Tons-Al)
indicated in the Carbon Footprint Communication Program

400
200
0

The NLM Group conducts aluminum recycling that is efficient interms of both energy and value. Each melting process is based on
closed-loop recycling, while the business of secondary alloy
manufacturing based on open-loop recycling is handled in andoutside of Japan by Nikkei MC Aluminium Co., Ltd. The percentage
of aluminum reused through open-loop recycling, or the recycling
rate of aluminium , is 32.7%. Accordingly, this removes the need touse 1.4 TWh of electricity in the aluminum refining process which isequivalent to a reduction of 977 k-tons* in greenhouse gas
emissions.

87

89

105

131

137

2005 2012
Base Line

2013

2014

2015

2016

Water
2020 FY
TargetJapan
Besides Japan

Note Reduction targets for emission amounts outside of Japan are
undecided.
Data on emission amounts outside of Japan were collected at 12
sites in fiscal 2012, 10 sites in fiscal 2013-2014, 14 sites in fiscal
2015, and 17 sites in fiscal 2016.

12

The NLM Group takes in 23.7 million m3 of water (excluding
seawater) and discharges 30.4 million m3 of water annually inJapan.

Environmental Audit
The Company implements environmental audits conducted by the
corporate staff, in order to monitor the environmental conservation
efforts of each site and make adjustments as necessary. Results of
the audits are reported to the officer in charge of environmental
issues, and shared with the Executive Committee, Environment
Committee, etc. of the Company.

Topics

Reducing Sulfuric Acid Waste to ZeroIn May 2016, Nikkei Niigata Co., Ltd.
installed equipment for collecting
and reusing sulfuric acid waste
generated in the aluminum surface
treatment process. The equipment
employs pressure dialysis, a new
method in the field of surface treatment, which can reduce theprocessing volume of industrial waste generated from about
100 tons of sulfuric acid waste per month to zero.
Tons

Processing Volume of Acid Waste

100.0

97.6

80.0

and harassment. To achieve goals including the promotion of diversity
and realization of work-life balance, we promote participation of
women in the workplace, expand the employment of people withdisabilities, and endeavor to reduce long working hours.
The status of these activities is monitored by the corporate staff
through labor audits. 335 items are checked, including adherence tolaws and regulations, and adjustments are made as necessary.

Fair Operating Practices
To prevent unfair competition, the NLM Group has formulated the Group
Guidelines on the Prevention of Cartels and Collusions, and requires all
officers and employees to follow it. The dissemination and entrenchmentof the guidelines are advanced through the Compliance Program, while
the education of managers and persons-in-charge is conducted throughindividual programs designed for each business structure.

60.0

Community

40.0
20.0
0.0

5.0
Pre-installation
2015/9-2016/4

0.0

Installation period Post-installation
2016/5-2017/1
2017/2-2017/6

PEOPLE AND SOCIETY
Human Rights
In addition to protecting human rights within the Group, the NLMGroup also conducts human right protection activities within thescope of its influence.
Each year, NLM conducts research on more than 300 companies
which are its transactional business partners regarding CSR
procurement, and obtains their agreement on the NLM Group Human
Rights Policy in the process. Furthermore, as part of the humanrights due diligence program, we check for cases of human rights
violations through on-site visits and interviews to the management at
manufacturing and factory sites. Also, we have obtained the signatureof consent to our Human Rights Policy from each of the smelting
companies of aluminum, our main raw material.

Labor Practices
The NLM Group positions its employees as its most important
stakeholders. We strive to create a safe working environment where all
employees can find joy and meaning in their work. Such efforts revolvearound realizing a workplace with zero work accidents, that allows forgood health and health improvement, and is free of discrimination

The NLM Group conducts its business activities in 178 regions of 11
countries. In each region, we aim to be a respectable corporation by
conducting fair and transparent business activities and harmonious
management while adhering to local as well as international laws
and regulations.
Our involvement with regional societies are summarized in theSocial Contribution Policy of the NLM Group (CSR Report 2017▶
http://www.nikkeikinholdings.com/csr/download/), and we willcontinue contributing to the development of regional societies.
The NLM Group participates in 255 community programs, andmade community investments of ¥163 million in fiscal 2016.

Figure 4
Social Contributions Accounting for Fiscal 2016
Assistance todisaster-stricken areas

10
12
22

8%

Education

15

6%

Others163

million yen

67

9%Environmental related

41%

Regional promotion

37

23%

Academic andresearch programs

13%
13

ESG Related Data : Data Section ( ▶ ; Non-Consolidated Data, ● ; Japan only)
Unit

FY2012FY2013

FY2014FY2015FY2016FY2020 Target

PJ
K tonsmillion m3
million m3

14.0
559
—
29.0

12.9
543
—
27.9

12.7
640
—
26.3

13.4
678
22.6
26.1

14.4
618
23.7
30.4

12.0
—
—
27.0

Ktons-CO2
Ktons-CO2
Ktons-CO2
Ktons-CO2
Ktons-CO2
Ktons-CO2
Ktons-CO2
Ktons-CO2
Ktons-CO2
Ktons-CO2
Tons
Tons
Tons
Ktons
Ktons

346
399
745
53
34
87
399
433
—
—
372
380
101
28.6
3.5

310
386
695
54
35
89
364
421
—
—
379
396
110
34.3
2.2

308
440
748
60
45
105
368
485
2,020
2,872
402
496
93
38.9
2.0

287
285
481
512
768(*1)796(*1)
66
77
65
60
131
137
354
361
546
572
1,927
2,035
2,826
2,968
312
339
437
388
108
131
33.2
33.5
2.4
2.9

—
—
973
—
—
—
—
—
—
—
350
370
110
29.0
3.0

mg-TEQ
mg-TEQ
kg
kg
kg
kg

753
18
70
839
0
66

822
6
7
839
0
66

1,345
19
0
552
0
0

1,036
21
0
904
0
0

1,049
16
0
722
0
0

—
—
—
—
—
—

• Environmental conservation cost: Investment• Environmental conservation cost: Expenses• Economic effect: Gains• Economic effect: Increases/decreases in expenses(*3)

million yen
million yen
million yen
million yen
cases
cases
cases

1,615
6,643
382
(246)
0
3
5

1,014
5,903
357
(350)
0
1
7

1,526
4,925
433
(415)
0
1
7

1,612
5,517
383
3,174
0
2
11

2,009
5,847
397
2,770
0
3
4

—
—
—
—
0
0
0

• Attendance rate of directors%%%%
million yen
million yen
million yen
million yen

96.4
85.7
97.6
95.2
76
4
24
6

97.2
91.7
94.4
88.9
166
8
48
12

100.0
100.0
97.2
94.4
173
8
48
12

99.3
100.0
95.8
91.7
165
10
51
15

97.0
88.9
92.3
84.6
168
15
52
16

cases

13

10

7

3

9

—

1,435
15,354—

1,623
17,136—

1,874
18,547—2,038
19,60093

2,230
19,991
92

—
—
100

0
14
4

0
5
0

0
8
1

0
8
3

0
10
4

—
0
0

—
—

—
—

175
0

170
0

187
0

—
—

10,392

10,43813,335
13,674
13,126
1,520
1,506
1,529
1,458
1,494
56
67
73
7,650
7,512
9,301
9,764
9,091
1,284
1,432
2,458
2,337
2,433
2.07
1.92
1.91
1.89
2.41
1.94
2.09
2.05
2.06
2.12
Apr-2010 Apr-2011 Apr-2012 Apr-2013 Apr-2014
97.1
93.2
92.9
98.1
93.7
22
12
18
20
17
1.17
0.87
0.96
0.70
0.46

—
—
—
—
—
over 2.0
over 2.0

Environment● Energy consumption
Quantity of raw materials used in production● Total volume of water intake● Total volume of water discharged
Amount of greenhouse gas emissions• Japan• Besides JapanSCOPE 1SCOPE 2
Total JapanSCOPE 1SCOPE 2
Total Besides Japan• Total SCOPE 1• Total SCOPE 2• SCOPE 3• Total amount of Greenhouse Gus emissions

Amount of SOx emissions
Amount of NOx emissions● Amount of COD emissions● Amount of waste and byproducts discharged: Recycled/Reduced● Amount of waste and byproducts discharged: Disposed (Land fill)● Amount of emissions of substances controlled under the PRTR●●

• 243_dioxins• 309_nickel compounds• 411_formaldehyde●

Environmental accounting(*2)

EmissionTransfer
EmissionTransfer
EmissionTransfer

Number of cases of lawsuits, penalties or forfeitures concerning the environment
Number of accidents related to the environment
Number of complaints related to the environment from outside
GovernanceAll
Outside directors only
• Attendance rate of statutory auditorAll
Outside auditor only
• Total remuneration of directors
All
Outside directors only
• Total remuneration of statutory auditors All
Outside auditor only●

Compliance
Reports to NLM Hotline(*4)
Compliance meetings• Total number of meetings held
• Total number of participants• Meeting participation ratio

Quality
Number of legal violations in the delivery of products/services
Number of reports of quality issues
Number of recalls
PeopleFull-time officers (Male)
Full-time officers (Female)
Employees• Total• Managerial positions (Male)• Managerial positions (Female)• General positions (Male)• General positions (Female)▶Employment rate of people with disabilities (*5) Nippon Light Metal▶Fixation rate (at least 3 years in company)

Toyo Aluminium
Nippon Light Metal

Number of cases of absence from work due to accidents(*6)(*7)
Frequency rate of absence from work due to accidents(*6)
Community
Amount of expenditure for social contributions

times
employees
%
cases
cases
cases

employees
employees
employees
employees
employees%%
Entry year
%
cases
(*8)

million yen

}

71

}

95

121

117

163

100.0
0
0.0
—

*1 Guaranteed by an independent third party (KPMG AZSA Sustainability Co., Ltd.). (For more details, please refer to the CSR Report 2017.) *2 Calculated in accordance with the Environmental Accounting Guidelines(2005 Edition) *3 Calculation formula: Cost increase/decrease = previous fiscal year’s expenses – current fiscal year’s expenses. Therefore, a negative figure represents an increase in expenses. *4 Cases reported where acompliance violation was suspected and the matters were investigated and resolved *5 As of June 1 each year. The statutory employment rate is 2.0%. *6 Calendar year basis *7 Accidents requiring at least a day ofabsence from work (excluding accidents that occurred while commuting to work) *8 Number of people who died or injured due to work accidents for every 1,000,000 hours worked

14

NLM Group
Nippon Light Metal Group consists of 77 subsidiaries and 23 affiliates (as of March 31, 2017).
The Group’s major operations and the business relations between the Company, major consolidated subsidiaries andaffiliates accounted for by the equity method are shown in the diagram below.
Nippon Light Metal Holdings Company, Ltd.

Aluminum
Ingot andChemicals(Manufacture and Sales)● Nippon Light Metal Co., Ltd.
● Aluminium Wire Rod Co., Ltd.
● Nikkei MC Aluminium Co., Ltd.
● Nikkei MC Aluminum America, Inc.
● Nikkei MC Aluminium (Thailand) Co., Ltd.
● Nikkei MC Aluminium (Kunshan) Co., Ltd.
● Ihara Nikkei Chemical Industry Co., Ltd.
● Guangxi Zhengrun Nikkei High Purity
Aluminium Technology Co., Ltd.
● CMR Nikkei India Private Ltd.
(Manufacture and Sales)(Sales and Others)● Nippon Light Metal Co., Ltd.

● Nikkeikin Kakoh Kaihatsu Holdings● Toyo Rikagaku Kenkyusho Co., Ltd.
● Toyo Precision Appliance (Kunshan) Co., Ltd.

Aluminum
Sheet andExtrusions(Sales and Others)● Nikkei Sangyo Co., Ltd.
● Tamai Steamship Co., Ltd.

Co., Ltd.

● Nikkei Sangyo Co., Ltd.

● Nikkei Extrusions Co., Ltd.
● Nikkeikin Aluminium Core Technology Co., Ltd.
● Shandong Nikkei Conglin Automotive Parts Co., Ltd.
● Nikkei (Shanghai) Body Parts Co., Ltd.
● Nikkei Siam Aluminium Ltd.
● Riken Light Metal Industry Co., Ltd.
● Huafon Nikkei Aluminium Co., Ltd.
● Nonfemet International (China-Canada-Japan)

Aluminium Co., Ltd.

FabricatedProducts
and Others(Manufacture and Sales)(Sales and Others)● Nippon Light Metal Co., Ltd.

● Nikkei Information System Co., Ltd.

● NLM ECAL Co., Ltd.

● Nikkei Logistics Co., Ltd.

● Nikkei Sangyo Co., Ltd.

● Sumikei Nikkei Engineering Co., Ltd.

● Nikkei Panel System Co., Ltd.

● Toho Earthtech Inc.

● Nikkei Matsuo Co., Ltd.
● Nippon Electrode Co., Ltd.
● Nippon Fruehauf Co., Ltd.
● Fruehauf Mahajak Co., Ltd.
● Shandong Conglin Fruehauf Automobile Co., Ltd.
● Nikkei Heat Exchanger Co., Ltd.

(Manufacture and Sales)● Toyo Aluminium K.K.

Aluminum
Foil, Powder
and Paste● Hunan Ningxiang JiWeiXin Metal Powder Co., Ltd.
● Toyal Zhaoqing Co., Ltd.
● Toyal America, Inc.
● Toyal Europe S.A.S.U.
● Toyo Aluminium Ekco Products Co., Ltd.
● Sam-A Aluminium Co., Ltd.

C U S T O M E R● Consolidated subsidiaries: 73 companies● Affiliates accounted for by the equity method: 17 companies(As of March 31, 2017)15

Review of Operations
Consolidated
Net Sales

Aluminum Ingot and Chemicals
Profile Alumina and Chemicals segment produce aluminum hydroxide, alumina and chemicals
used in various fields. These products are used as raw materials for flame retardants, ceramics andother products and as industrial materials in paper and pulp manufacturing. Aluminum Ingot segment manufacture various kinds of aluminum alloys and enjoy an excellent
reputation for the development of high-performance alloys in response tocustomer requirements.
Net Sales

Consolidated Operating Profit(Millionsof Yen)(Millionsof Yen)120,000

12,00090,0009,000

60,0006,000

30,000

3,000

0

’15

’16

’17

0

’15

’16

’17

22.7
101,840%

Millions of Yen

Principal Products• Aluminum• Aluminum hydroxide• Chemicals (chemical products)• Caustic soda
• Chlorinated chemical products• Aluminum ingot• Aluminum alloys● Overview of results for fiscal 2016

In the Alumina and Chemicals segment, with regard to the mainstay

customers were acquired in the U.S., and shipments of molten

alumina and aluminum hydroxide products among alumina-related

aluminum, which does not require remelting and has the effect of

products, despite robust domestic sales of products for coagulants

suppressing carbon dioxide emissions, increased in China. However,and refractory materials, sales fell from the previous year’s levels, duesales were lower than that of the previous year, as they were heavily

to a large decrease in exports, mainly of those to Korea. In terms ofaffected by the decline in sales prices of aluminum ingots which

chemicals, sales of coagulants and inorganic chlorides were robust,reflected conditions of the market. Meanwhile, profits improved owing

and the sales volume of organic chlorides also increased, although

to higher sales volumes and lower fuel prices.

it was subject to customers’ fluctuating demand. As a result, overall

In addition, the second factory of Nikkei MC Aluminium (Thailand)sales for the segment fell short of the previous year’s levels due to theCo., Ltd., a company engaged in the business of secondary alloy

decrease in sales of alumina-related products, but profits improved

products for automotive applications in Thailand, which had been

owing to cost reduction and other efforts.

under construction, began operations in March 2017.

In the Aluminum Ingot segment, sales volumes increased, as sales

As a result, the Alumina, Chemicals and Aluminum Ingot segmentof the mainstay secondary alloy products for automotive applications

sales decreased 7.3% year on year to ¥101,840 million, operatingrose in Japan backed by a robust demand, while overseas, newprofit increased 10.8% year on year to ¥10,126 million.

Aluminum Billet

16

Review of Operations
Consolidated
Net Sales

Aluminum Sheet and Extrusions
Profile The NLM Group’s aluminum sheet and extrusions are used in a wide rangeof market sectors, for instance for automotive parts and railway cars in the transport industry
and for semiconductor and liquid crystal manufacturing equipment and photosensitive
drums in the electrical machinery and electronics industries. The Group applies technologies
and expertise accumulated over many years to actively develop products that meet userneeds and provides customers with high-performance sheets and extrusions.
Net Sales

Consolidated Operating Profit(Millionsof Yen)(Millionsof Yen)120,000

8,000

90,0006,000

60,0004,000

30,000

2,000

0

’15

’16

’17

0

Applications

98,165

Millions of Yen

21.9%

Principal Products• Automobile

’15

’16

’17

• Automobile suspension parts • Lead-free cut aluminum alloy• Quick freezing coagulated powder extruded materials• High-intensity molded aluminum sheet
Transport•• Large structural materials for railway rolling stock• Flap for trucks• Electronics• Thick plate for semiconductor and LCD manufacturing
equipment • Foil stock • Photosensitive drum materials
Industrial
Printingroll • Industrial materials••• Building materials and • Aluminum honeycomb panel • Scaffolding
infrastructure materials • Building materials● Overview of results for fiscal 2016

In the Aluminum Sheet segment, sales volumes increased, as sales ofautomobile models they can be installed on. Nonetheless, owing tothick plates for semiconductor and LCD manufacturing equipment

robust sales for truck outfitting and railway cars, as well as effects

as well as sales of thick plates for railway cars were robust, on top ofof launching new products for automobiles in Japan and increased

an increase in sales of sheet materials for PC and tablet cases, andsales of nuclear energy-related products in the second half of thesales of sheet materials for truck outfitting. However, sales of the

fiscal year, sales volumes of the segment increased year on year.

segment decreased compared to the previous year, due to the decline

Accordingly, although sales were on par with the previous year due

in sales prices of aluminum ingots which reflected conditions of theto the decline in sales prices of aluminum ingots which reflectedmarket. In terms of profits, due to the increase in sales volumes, theconditions of the market, profits improved significantly.

decrease in fuel prices, and an increase in the percentage of highly

As a result, while Aluminum Sheet and Extrusion segment sales

profitable products sold, profits increased significantly compared todecreased 5.0% to ¥98,165 million, operating profit increased 154.3%

the previous year.

to ¥7,775 million.

In the Aluminum Extrusions segment, sales of solar panel racks
were sluggish, and shipments of products for automobiles wereslow at some locations in China, affected by a slump in sales of theAluminum Sheet

17

Review of Operations
Consolidated
Net Sales

Fabricated Products and Others
Profile The NLM Group includes several companies that handle distinctive fabricated products.
In particular, Nippon Fruehauf’s truck bodies and Nikkei Panel
System’s commercial refrigerators and freezer panels enjoy an
excellent reputation for quality, and are market share leaders in their respective fields.
In addition, the Group provides familiar aluminum fabricated products, including anodized
aluminum foil for aluminum electrolytic capacitors, automotive parts, and carbon products.
Net Sales

Consolidated Operating Profit(Millionsof Yen)(Millionsof Yen)160,000

12,000120,000

9,000

80,0006,000

40,000

3,000

0

’15

’16

’17

0

Applications• Automobile• Transport• Electronics• Building materials
and infrastructurematerials

’15

’16

’17

• Food and lifestyle154,684
Millions of Yen

34.5%

Principal Products• Cast and forged parts for automobiles• Heat exchangers for automobiles• Van truck bodies and trailers• Anodized foil for electrolytic capacitors• Clean rooms• Landscape engineering products• Solid truss structural materials (Aluminum truss)• Plant package for communication base stations• Panels for commercial refrigerators and freezers● Overview of results for fiscal 2016

In the Transport-Related segment, revenue increased in the truck

used in areas including home appliances, renewable energy, and devices

outfitting business, as logistics activities increased, corporate sentimentinstalled on automobiles. In terms of profits, as there was an increase inof logistics-related companies towards investment was favorable on thecosts and other effects arising from the sudden increase in production,back of low fuel prices, and domestic demand continued to stay at a highprofits were lower than the previous year.

level due to a rise in replacement needs related to emissions regulations.

In the Panel System segment, with regard to shipments of industrial

Profits were also notably higher than last year, as a result of efforts torefrigerators and freezers, on the back of higher food safety awareness,

improve manufacturing productivity and reduce processing fees.

the trend of robust demand of large systems for plants that process

In the area of capacitors for air conditioners, in the mainstay market

food products continued from the previous year, and demand for small

for mini vehicles in Japan, sales decreased markedly in the first half

systems for stores also remained strong. With regard to clean rooms,of the year due to the sluggish demand caused by the mini vehicle tax

investments related to flash memory and organic electroluminescent

hike, but became robust in the second half due in part to the launch ofdisplays, as well as demand related to the pharmaceutical and bio field

new automobile models. Coupled with an increase in sales volumes ofcentering on generic drugs were robust, and sales were maintained at the

products for room air conditioners in Thailand and neighboring ASEAN

previous year’s levels. As a result, overall segment sales exceeded levels ofcountries, on the whole, sales were higher than the previous year’s levels.

the previous year.

In the Shaped Parts segment, amid a recovery in the number

In the Carbon Product segment, demand of our major products,

of automobiles manufactured in Japan, sales of related parts forincluding carbon blocks for blast furnaces and electric furnaces,

environmentally-friendly automobiles increased in the first half of thecathodes, and unshaped materials for electrodes, decreased significantly

year, but demand in the North American market and sales of luxury

as our customers in the steel and aluminum smelter industry

vehicles decreased in the second half, leading to sales levels that wereexperienced a decline in earnings. Consequently, in addition to a sharp

slightly lower than the previous year.

reduction in sales volumes, sales prices also dropped, resulting in a

In the Electronic Materials segment, regarding anodized aluminum
foil for aluminum electrolytic capacitors, sales significantly surpassed

severely unfavorable situation.
As a result, Fabricated Products and Others segment sales increased

the previous year’s levels, as capacitor manufacturers who are our

3.7% to ¥154,684 million, while operating profit decreased 6.5% tocustomers had higher sales, owing to robust demand for condensers¥10,245 million.

18

Review of Operations
Consolidated
Net Sales

Aluminum Foil, Powder and Paste
Profile The core company in this segment is Toyo Aluminium K.K. The company has established its position as the leading manufacturer by using the features of aluminum to develop awide range of products beneficial to society, industry and daily life, including packaging forfood and pharmaceutical products, electronics, aluminum pastes, and materials for solar cells.
Expanding into new fields based on our own technology, we are marketing various kinds andtypes of materials and products of high functionality in both domestic and overseas markets.
Net Sales

Consolidated Operating Profit(Millionsof Yen)(Millionsof Yen)120,000

8,000

90,0006,000

60,0004,000

30,000

2,000

0

’15

’16

’17

0

Applications• Food and lifestyle• Electronics• Automobile• Environmental / Energy

’15

’16

20.9
%

93,692Millions of Yen

Principal Products• Aluminum foil
• Aluminum foil for electrolytic capacitors• Powder and paste• Back sheets for solar cells• Electrode ink for solar cells’17● Overview of results for fiscal 2016

In the Aluminum Foil segment, sales volumes of high-purity

In May 2016, we established TOYAL MMP INDIA PRIVATE

aluminum foil for electrolytic capacitors decreased compared to the

LIMITED as a joint venture with a local company, to conduct theprevious year due to fiercer price competition, despite strong sales ofmanufacturing and sales of aluminum paste for general paints in

new products and the recovering trend of overall demand. Regarding

India. This marks our fifth manufacturing base in addition to Japan,

standard foil, while sales of water-repellent fabricated foil for foodthe U.S., France, and China. We will continue our efforts to expand

products were strong, sales of fabricated foil for pharmaceutical

our sales channels in India, as well as in the ASEAN, Middle East, andpackaging were sluggish, and shipments of plain foil for lithium

African regions.

ion battery surfaces decreased as they were affected by inventory

In the Solar segment, regarding functional ink for solar cells, we

adjustments. Accordingly, sales for the overall segment fell short ofreceived a healthy order volume as we launched new products before

the previous year’s levels.

other companies did. However, for the mainstay products of backIn the Powder and Paste segment, regarding paste products, sales

sheets for solar cells, shipments decreased due to credit issues amongof food packaging materials for inks were robust, and sales of thecertain users and a reduction in subsidies granted by the Chinese

new products Colored Alpaste and glass flakes were also strong.

government, and along with intensified price competition, overall

However, sales of the mainstay products for automobile paint weresegment sales decreased year on year.

sluggish, and sales of products for home appliances decreased. As for

As a result, Aluminum Foil, Powder and Paste segment sales

powder products, sales of the mainstay product aluminum nitride

decreased 8.1% to ¥93,692 million, and operating profit decreased

decreased, and sales of the overall segment decreased compared to19.8% to ¥5,478 million.

the previous year.

Aluminum Foil

19

Consolidated Six-Year Summary
Nippon Light Metal Holdings Company, Ltd. and its consolidated subsidiaries Years ended March 31

Nippon Light Metal Company, Ltd.

Gross Profit and Gross Profit Margin
Nippon Light Metal Holdings Company, Ltd.

80,00020

60,00015

40,00010

20,000

5

0

2012
2013
2014
Gross Profit Margin
Gross Profit

2015

2016

2017

0

Years ended March 31

Millions of yen

Interest-bearing Debt
Nippon Light Metal Holdings Company, Ltd.
Nippon Light Metal Company, Ltd.

200,000

160,000

120,000

80,00040,000

0

2012

2013

2014

2015

2016

2017

Years ended March 31

Millions of yen

Free Cash Flows
Nippon Light Metal Holdings Company, Ltd.
Nippon Light Metal Company, Ltd.

25,00020,00015,00010,0005,000

0-5,0002012

Millions of yen

20

2013

2014

2015

2016

2012

%
25

Nippon Light Metal Company, Ltd.

100,0002017

Years ended March 31

2013(Millions of yen)

Financial Results
Net Sales..................................................................................................
Gross Profit.............................................................................................
Gross Profit Margin (%).........................................................................
Operating Profit (Loss)...........................................................................
Ordinary Profit (Loss)............................................................................
Profit attributable to owners of parent..................................................
Segment Information
Net Sales:
Aluminum Ingot and Chemicals......................................................
Aluminum Sheet and Extrusions.....................................................
Fabricated Products and Others.......................................................
Aluminum foil, powder and paste....................................................
Total...................................................................................................
Operating Profit (Loss):
Aluminum Ingot and Chemicals......................................................
Aluminum Sheet and Extrusions.....................................................
Fabricated Products and Others.......................................................
Aluminum foil, powder and paste....................................................
Elimination or corporate items........................................................
Total...................................................................................................
Financial Position
Current Assets.........................................................................................
Property, plant and equipment..............................................................
Intangible assets.....................................................................................
Investments and other assets.................................................................
Current liabilities ...................................................................................
Long-term liabilities...............................................................................
Shareholders’ equity (Note 3)................................................................
Total accumulated other comprehensive income (Note 3)..................
Non-controlling interests (Note 3).........................................................
Interest-bearing Debt (Note 2)...............................................................
Cash Flows
Cash Flows from Operating Activities.....................................................
Depreciation and Amortization........................................................
Cash Flows from Investing Activities......................................................
Capital Expenditures.........................................................................
Cash Flows from Financing Activities....................................................
Per Share Data (yen and dollars)
Net Profit (Loss) - basic..........................................................................
- diluted.....................................................................
Net Assets (Note 3)..................................................................................
Cash Dividends........................................................................................
Indices
Return on Capital Employed (ROCE)(%).....................................................
Return on Equity (ROE)(%)..................................................................
Equity Ratio (%).....................................................................................
OthersNumber of Shares Outstanding (thousands)...................................................
R&D Expenditures..................................................................................
Number of Employees.............................................................................

¥403,009
67,55916.8
13,6659,709
2,856¥371,887
62,715
16.9
8,154
6,873
3,355

99,56070,618
127,972
104,859
403,00993,902
63,161
126,218
88,606
371,887

5,227
1,569
6,392
3,402
(2,925)
13,665

3,273
1,675
6,974
(771)
(2,997)
8,154

225,200
149,919
6,601
40,951
192,070
121,752
100,033
434
8,382
187,697

217,648
153,238
6,338
42,562
182,173
122,989
102,297
2,851
9,476
188,844

19,537
17,040(18,289)
23,167(6,915)18,030
16,259(14,025)
17,121(5,175)¥5.25—184.71
2.00¥6.17—193.33
3.00

4.9
2.9
23.8

3.7
3.3
25.0

545,126
4,902
10,041

545,126
5,063
10,392

Note 1: U.S. dollar amounts have been translated, for convenience only, at the exchange rate of ¥112.19 =U.S.$1.00. See Note 2 of the Notes to the Consolidated Financial Statements.
Note 2: Interest-bearing Debt = Long-term debt and Short-term borrowings, excluding capital lease obligations +Notes discounted + Notes endorsed
Note 3: Numbers used for the year ended March 2010 have been revised according to the current segmentcategories.

Nippon Light Metal Holdings Company, Ltd.
2014

2015

2016

2017

Return on Capital Employed (ROCE)
Nippon Light Metal Holdings Company, Ltd.

2017
(Thousands of
U.S. dollars)(Note 1)

(Millions of yen)¥402,829
69,00317.1
12,617
12,7305,128¥431,477
76,98717.8
19,30520,6009,645¥464,405
89,23719.2
26,821
24,526
15,533¥448,381
91,56420.430,22526,252
19,520$3,996,622
816,151
20.4
269,409
233,996
173,991

105,488
71,274132,261
93,806
402,829

114,339
82,823138,088
96,227431,477

109,844
103,340
149,220
102,001
464,405

101,840
98,165
154,684
93,692
448,381

907,746874,989
1,378,768
835,119
3,996,622

2,917
2,668
7,224
2,889
(3,081)
12,617

6,069
4,230
7,704
4,183
(2,881)
19,305

9,138
3,058
10,958
6,829(3,162)
26,821

10,126
7,775
10,245
5,478(3,399)30,22590,25869,302
91,31848,828(30,297)
269,409226,807
150,901
5,022
49,808
181,520
129,824
105,787
4,629
10,778
198,668

248,906
153,235
4,543
50,593202,220
117,672
111,791
9,631
15,963
188,990

247,363
152,183
3,328
49,320186,881
120,894
124,884
5,300
14,235
182,207

246,394
151,2313,190
47,808184,277
90,722
154,600
5,053
13,971
149,835

2,196,221
1,347,990
28,434426,134
1,642,544
808,646
1,378,019
45,040124,530
1,335,546

18,14816,435(18,998)
14,001
5,762

11,78016,406(7,119)15,869(17,581)

37,77016,356(19,419)
18,861(10,708)

36,48816,602(11,887)
19,908(24,432)

325,234
147,981(105,954)
177,449(217,773)

Nippon Light Metal Company, Ltd.

10

8

6

4

2

0

2012

¥17.74
15.59
223.275.00¥28.5625.10
239.396.00¥34.5831.46
257.828.00$0.31
0.28
2.30
0.07

5.8
4.8
25.5

8.2
8.3
26.6

9.0
12.3
28.8

9.6
13.5
35.6

000
000
000

545,126
4,984
10,438545,126
4,495
13,335545,126
4,794
12,961

619,937
4,939
13,126000$44,024
000

2014

2015

2016

2017

Years ended March 31%

Return on Equity (ROE)
Nippon Light Metal Holdings Company, Ltd.
Nippon Light Metal Company, Ltd.

15

12

9

6

3

0

2012

2013

2014

2015

2016

2017

Years ended March 31%

R&D Expenditures
Nippon Light Metal Holdings Company, Ltd.
Nippon Light Metal Company, Ltd.

6,000

¥9.43—203.03
4.00

2013

5,000

4,000

3,000

2,000

1,000

0

2012

Millions of yen

2013

2014

2015

2016

2017

Years ended March 31

21

Financial Review

Overview
Although the Japanese economy during fiscal 2016 (the year ended
March 31, 2017) experienced appreciation of yen and the stagnationof export and production until the middle of the fiscal year, yen
turned to a depreciation trend in the latter half, thereby improving
indicators. In addition, the Japanese economy showed a gradual
recovery trend backed by strong corporate earnings withimprovements in the employment and income environment inprogress.
In the transport industry, demand for cars and trucks were robust,
although demand from construction-related fields remained
unchanged. As a result, the domestic aluminum industry saw anincrease in overall demand compared to the previous year.
Meanwhile, in terms of price, the aluminum ingots market
experienced a slow downturn until the middle of the fiscal year due inpart to the effect of foreign exchange, but was on an upward trend in
the latter half, both affecting product prices.
Under such circumstances, fiscal year ended March 31, 2017 was
the first year of the Group’s Mid-Term Management Plan (fiscal 2016
to fiscal 2018) (hereinafter, the “Mid-Term Plan”). Although net sales
decreased, profits increased favorably, as stated below.

Net Sales By Segment(Millions of yen)
Changes in
Comparison
Previous
Fiscal year
fiscal year (Decrease in brackets)
under review
Changes
The year ended The year ended
March 31, 2017 March 31, 2016 [Percent changes]

Net sales

448,381464,405

Operating profit

30,22526,821

3,404[12.7%]

Ordinary profit

26,252

24,526

1,726[7.0%]

Profit attributable to ownersof parent

19,52015,533

3,987[25.7%]

Net income per share (Yen)

34.58

28.56

6.02[21.1%]

Nippon Light Metal Company, Ltd.

Earnings and Expenses
NLM Holdings’ consolidated net sales for the fiscal year under review
decreased 3.5% year on year to ¥448.4 billion ($3,997 million). For

Equity Ratio

Nippon Light Metal Holdings Company, Ltd.

Nippon Light Metal Holdings Company, Ltd.

Nippon Light Metal Company, Ltd.

200

40

400

160

32

300

120

24

200

80

16

100

40

8

0

2012

Billions of yen

2013

2014

2015

2016

2017

Years ended March 31

0

2012

Billions of yen

2013(16,024)[(3.5%)]

Overall sales volumes increased due to robust performance in the
Aluminum Ingot segment, the Aluminum Sheet and Extrusions
segment, the truck outfitting business, the Panel System segment, etc.
However, net sales decreased due to the decline in sales prices in thefields linked to the aluminum ingots market. Meanwhile, in terms of
profit, in addition to the effects of higher sales volumes and cost cuts,
the decline in crude oil prices also contributed to significantly higher
profits than the previous year’s levels.

Total Net Assets

Nippon Light Metal Holdings Company, Ltd.

500

Overview of Consolidated Business Performance

2014

2015

2016

0

2017

As of March 31%

Nippon Light Metal Company, Ltd.

2012

2013

2014

2015

2016

2017

As of March 31

Aluminum Ingot and Chemicals
Aluminum Sheet and Extrusions
Fabricated Products and Others
Aluminum Foil, Powder and Paste

Note: Numbers used for the year ended March 2010 have been revised according to the current segment categories. Numbers used for the year ended March 2010 do notinclude numbers form the Building Materials segment.

22

sales and other financial performance by business segment, please see
the Review of Operations on pages • to •.
The cost of sales was ¥356.8 billion ($3,180million), and the cost of
sales ratio was 79.6%. Selling, general and administrative expenses
were ¥61.3 billion ($547 million). As a result, operating profit
increased 12.7% year on year to ¥30.2 billion ($269 million).
Non-operating income totaled ¥3.8 billion ($34million) during theyear under review. Equity in earnings of affiliates decreased 86.0%
year on year to ¥0.1 billion ($1.3 million) and dividend income fell
26.2% year on year to ¥0.3 billion ($2.7 million). Non-operating
expenses were ¥7.8 billion ($69.7 million). As a result, ordinary profit
rose 7.0% year on year to ¥26.3 billion ($234.0 million).
Special gains totaled ¥3.2 billion ($29 million), and special losses
were ¥1.2 billion ($11million). Special gains include gain on sales ofinvestment securities of ¥2.8 billion ($25 million), and all theamounts of special losses were loss on impairment of fixed assets.
As a result, profit before income taxes during the period underreview was ¥28.3 billion ($252 million). Corporate, inhabitant andbusiness taxes amounted to ¥5.3 billion ($47million) and deferredincome taxes during the fiscal year under review were ¥2.5 billion($23 million). Profit was ¥20.5 billion ($183 million).
As a result of the above, profit attributable to owners of parent in
the fiscal year under review increased 25.7% year on year to ¥19.5
billion ($174 million). The average number of shares outstandingrose from 543,826 thousand in the previous year to 564,497
thousand. Accordingly, net income per share rose from ¥28.6 in theprevious year to ¥34.6 ($0.3). The annual cash dividend per share
increased by ¥2.0 year on year to ¥8.0 ($0.07), by resolution at theGeneral Meeting of Shareholders held on June 27, 2017.
Overview of Consolidated Balance Sheets(Millions of yen)March 31, 2017 March 31, 2016

Changes in
Comparison

Total assets

448,623452,194(3,571)

Total liabilities

274,999

307,775(32,776)

Net assets

173,624

144,419

29,205

35.6

28.8

6.8

Equity ratio (%)

Assets, Liabilities and Shareholders’ Equity
Total assets as of March 31, 2017 decreased ¥3.6 billion year on year to¥448.6 billion ($3,999 million). Total liabilities decreased ¥32.8 billion
year on year to ¥275.0 billion ($2,451 million). This was due toexercising of advance repayment and early redemption of an amountof ¥10.0 billion in hybrid finances (subordinated loans and bonds)

recorded in March 2012. Interest-bearing debt decreased ¥32.4 billion
year on year to ¥149.8 billion.
Total net assets increased ¥29.2 billion year on year to ¥173.6 billion($1,548 million), thanks primarily to an increase in retained earnings
due to the recording of profit in the fiscal year under review as well as
increase in shareholders’ equity due to share conversion of convertible
bonds with stock acquisition rights. Net assets per share increased¥18.43 year on year to ¥257.82 ($2.30), while the equity ratio rose 6.8
percentage point year on year to 35.6%.
Cash Flows
Cash and cash equivalents on a consolidated basis as of March 31,2017 fell ¥0.2 billion to ¥36.3 billion ($323million).
Net cash provided by operating activities totaled ¥36.5 billion ($325
million). Net cash used in investing activities was ¥11.9 billion ($106
million). The main outflows were payments for purchases of fixed
assets. Net cash used in financing activities totaled ¥24.4 billion ($218
million). The main inflows were ¥18.6 billion ($166 million) inproceeds from long-term debt, and the main outflows were ¥32.2
billion ($287 million) in repayments of long-term debt.
Outlook for Fiscal 2017
With regard to the Japanese economy, a gradual recovery is expected,
as the tendency of improvements in the employment and income
environment is continuing. As for overseas economies, while theeconomic slowdown in China seems to have bottomed out, we cannot
forecast rapid expansion and rapid growth in the overall economies
in the emerging countries. While the economy is expected to be strong
in the U.S. and Europe, there are uncertain factors affected by policiesof the new U.S. administration and Brexit.
Meanwhile, the demand for aluminum products is expected to risesteadily, thanks to the further demand of lightweight automobilesand expansion of use in materials for trucks in the transport industry
and in industrial devices.
Under such circumstances, based on our Mid-Term Management
Plan which will last for three years ending in fiscal 2018, we will
strive to maximize consolidated revenue by expanding sales of new
products, strengthening cooperation within the Group and enhancing
profitability of overseas bases.
Our forecasts for the year ending March 31, 2018 are net sales of¥470.0 billion, operating profit of ¥30.0 billion, ordinary profit of¥28.0 billion, and profit attributable to owners of parent of ¥18.0
billion. We expect net income per share to total ¥29.07 and dividend
per share of ¥8.0.

23

Consolidated Balance Sheets
Nippon Light Metal Holdings Company, Ltd. and consolidated subsidiaries

2016

March 31,
2017

2017

(Millions of yen)(Thousands of
U.S. dollars) (Note 3)

Current assets:
Cash and deposits (Notes 4 and 7) Notes and accounts receivable – trade (Note 7) Finished products Work-in-progress, including costs related to construction-type contracts 
Raw material and supplies Deferred tax assets (Note 10) 
Other current assets Allowance for doubtful accounts 
Total current assets ¥36,875 ¥36,346
135,357
135,955
25,27024,305
16,45916,112
18,29418,803
5,396
5,487
10,742
10,731(1,030)(1,345)247,363
246,394$323,968
1,211,828
216,641
143,614167,600
48,90895,650(11,988)
2,196,221

Property, plant and equipment (Note 6):
Land 
Buildings and structures 
Machinery and equipment 
Tools, furniture and fixtures Construction-in-progress 
Accumulated depreciation 
Total property, plant and equipment 54,91054,535132,114
134,450
275,101
279,999
31,07031,4046,500
5,104(347,512) (354,261)
152,183
151,231

486,095
1,198,413
2,495,757
279,918
45,495(3,157,688)
1,347,990

AssetsIntangible assets:
Goodwill 
Other intangible assets (Note 6) 
Total intangible assets 

45
3,283
3,328

—
3,190
3,190

—
28,43428,434

Investments and other assets:
Investment securities (Notes 5, 6 and 7) Deferred tax assets (Note 10) 
Other assets Allowance for doubtful accounts 
Total investments and other assets 

35,993
8,105
5,781
(559)
49,32035,818
4,845
7,556
(411)
47,808319,262
43,186
67,349(3,663)426,134¥452,194 ¥448,623$3,998,779

Total assets 

24

2016

March 31,2017

(Millions of yen)

2017
(Thousands of
U.S. dollars) (Note 3)

Liabilities and net assets
Current liabilities:
Short-term borrowings (Notes 6 and 7) Current portion of long-term debt (Notes 6 and 7) Notes and accounts payable – trade (Note 7) 
Income taxes payable 
Other current liabilities 
Total current liabilities ¥60,802
25,89467,9433,684
28,558186,881¥60,161
22,311
67,3002,909
31,596
184,277$536,242
198,868
599,875
25,929281,630
1,642,544

Long-term liabilities:
Long-term debt (Notes 6 and 7) Liabilities for retirement benefits (Note 9) 
Deferred tax liabilities on land revaluation surplus (Notes 10 and 12) 
Other long-term liabilities (Notes 6, 7 and 10) 
Total long-term liabilities 
Total liabilities 98,293
20,36450
2,187
120,894
307,775

69,171
20,583—968
90,722274,999

616,552
183,466—
8,628
808,646
2,451,190

39,085
11,46074,452(113)
124,884

46,525
19,06489,076(65)
154,600

414,698
169,926
793,974(579)
1,378,019

2,892
(105)
145
3,871
(1,503)
5,300
14,235
144,419

4,229
74
145
1,875
(1,270)
5,053
13,971
173,624

37,695660
1,292
16,713(11,320)45,040124,530
1,547,589¥452,194¥448,623$3,998,779

Net assets:
Shareholders’ equity:
Common stock:
Authorized: 2,000,000,000 shares Issued: 619,937,500 shares 
Additional paid-in capital Retained earnings Treasury stock, at cost (1,303,047 shares in 2016 and 706,127 shares in 2017) 
Total shareholders’ equity Accumulated other comprehensive income:Net unrealized gains (losses) on securities (Note 5) Net unrealized gains (losses) on hedges (Note 13) Land revaluation surplus (Note 12) 
Foreign currency translation adjustments 
Remeasurements of defined benefits plans 
Total accumulated other comprehensive income Non-controlling interests 
Total net assets Contingent liabilities (Note 15) 
Total liabilities and net assets 
The accompanying notes are an integral part of these financial statements.

25

Consolidated Statements of Income
Nippon Light Metal Holdings Company, Ltd. and consolidated subsidiaries

Years ended March 31,
2017

2016

(Thousands of
U.S. dollars) (Note 3)(Millions of yen)

Net sales 
Cost of sales (Note 14) 
Gross profit 
Selling, general and administrative expenses (Note 14) 
Operating profit 
Non-operating income:Interest income Dividend income Equity in earnings of affiliates 
Rental income Other Total non-operating income Non-operating expenses:
Interest expense 
Other Total non-operating expenses 
Ordinary profit Special gains:
Gain on sales of investment securities 
Gain on sales of fixed assets 
Total special gains Special losses:
Loss on impairment of fixed assets (Note 16) 
Loss on removal cost of fixed assets 
Total special losses 
Profit before income taxes 
Income taxes (Note 10):
Current Deferred 
Net profit Profit attributable to non-controlling interests Profit attributable to owners of parent Per share of common stock (Note 17):
Net asset 
Net income Cash dividends 
The accompanying notes are an integral part of these financial statements.

26

2017

¥464,405
375,168
89,23762,416
26,821¥448,381
356,817
91,564
61,33930,225$3,996,622
3,180,471
816,151546,742
269,409

97
416
1,008
648
1,874
4,043

101
307
141
747
2,552
3,848

900
2,737
1,257
6,658
22,74734,299

2,139
4,199
6,338
24,526

1,782
6,039
7,821
26,252

15,88453,82869,712233,996

—
—
—

2,821
409
3,230

25,145
3,645
28,790

678
332
1,010
23,516

1,192
—
1,192
28,29010,625—
10,625
252,161

5,835
1,180
7,015
16,501968¥15,533

5,280
2,529
7,809
20,481961¥19,520

47,06322,542
69,605
182,5568,565$173,991(U.S. dollars)(Note 3)(Yen)

¥239.39
28.56
6.00

¥257.82
34.58
8.00

$2.300.31
0.07

Consolidated Statements of Comprehensive Income
Nippon Light Metal Holdings Company, Ltd. and consolidated subsidiaries

Years ended March 31,
2017

2016

2017
(Thousands of
U.S. dollars) (Note 3)(Millions of yen)

¥16,501¥20,481$182,556

Net unrealized gains (losses) on securities 

(532)

1,365

12,167Net unrealized gains (losses) on hedges 

(80)

179

1,596

Foreign currency translation adjustments (2,358)(1,247)(11,115)

Remeasurements of defined benefit plans (1,413)

223

1,988

Equity of other comprehensive income (losses) of affiliates (727)(1,170)(10,430)

Total other comprehensive income (losses) (Note 8) 

(5,110)(650)(5,794)¥11,391¥19,831$176,762¥11,202¥19,273$171,789

189

558

4,973

¥11,391¥19,831$176,762

Net profit 
Other comprehensive income Comprehensive income Attributable to:owners of parent 
non-controlling interests 

The accompanying notes are an integral part of these financial statements.

27

Consolidated Statements Of Changes In Net Assets
Nippon Light Metal Holdings Company, Ltd. and consolidated subsidiaries

2016
Shareholders’ equity
Commonstock

Additional
paid-in
capitalRetainedearnings¥ 39,085¥ 11,179¥61,639

Accumulated other comprehensive income
Treasurystock,
at costProfitForeignNetNet
unrealized unrealized Revaluation currency Remeasurements attributable toTotaltranslation
gains on gains (losses) surplusof defined non-controllinginterests
net assets(Note 12) adjustments benefits planson hedges
securities(Millions of yen)

Balance at April 1, 2015 
Issuance of new shares exercise of subscription
rights to shares 
Cash dividends Profit attributable to owners of parent 
Changes in a parent’s ownership interest due totransactions with non-controlling interests 
Disposal of treasury stock 
Purchase of treasury stock 
Net unrealized gains (losses) on securities 
Net unrealized gains (losses) on hedges 
Foreign currency translation adjustments 
Remeasurements of defined benefits plans 
Net increase in profit attributable to noncontrolling interests 
Balance at March 31, 2016 ¥(112)¥3,493¥(25)¥145¥6,198¥(180) ¥15,963 ¥137,385(2,720)15,533(2,720)15,533281(1,452)(1)¥39,085¥11,460¥74,452¥(113)(601)¥2,892(80)¥(105)(2,327)¥145¥ 3,871(1,323)(1,171)
—
(1)
(601)
(80)
(2,327)(1,323)

(276)
(276)
¥(1,503) ¥14,235 ¥144,419

2017
Shareholders’ equity
Commonstock

Additional
paid-in
capitalRetainedearnings¥39,085¥11,460¥74,452

7,440

7,440

Accumulated other comprehensive income
Treasurystock,
at costProfitForeignNetNet
unrealized unrealized Revaluation currency Remeasurements attributable toTotaltranslation
gains on gains (losses) surplusof defined non-controllinginterests
net assets(Note 12) adjustments benefits planson hedges
securities(Millions of yen)

Balance at April 1, 2016 
Issuance of new shares exercise of subscription
rights to shares 
Cash dividends Profit attributable to owners of parent 
Changes in a parent’s ownership interest due totransactions with non-controlling interests 
Disposal of treasury stock 
Purchase of treasury stock 
Net unrealized gains on securities 
Net unrealized gains (losses) on hedges 
Foreign currency translation adjustments 
Remeasurements of defined benefits plans 
Net increase in profit attributable to noncontrolling interests 
Balance at March 31, 2017 ¥19,064¥2,892¥(105)¥145¥ 3,871¥(1,503) ¥14,235 ¥144,419
14,880(4,896)
19,520(4,896)
19,52094
70¥46,525¥(113)49(1)¥89,076¥(65)

(249)
1,337

¥4,229179¥74(1,996)¥145¥ 1,875

233

(155)
119
(1)
1,337
179
(1,996)
233

(15)
(15)
¥(1,270) ¥13,971 ¥173,624

2017
Shareholders’ equity
Commonstock

Additional
paid-in
capitalRetainedearnings

Accumulated other comprehensive income
Treasurystock,
at costProfitForeignNetNet
unrealized unrealized Revaluation currency Remeasurements attributable toTotaltranslation
gains on gains (losses) surplusof defined non-controllinginterests
net assets(Note 12) adjustments benefits planson hedges
securities(Thousands of U.S. dollars) (Note 3)$348,382 $102,148 $663,623
Balance at April 1, 2016 
Issuance of new shares exercise of subscription
66,316
66,316rights to shares (43,640)
Cash dividends 173,991
Profit attributable to owners of parent 
Changes in a parent’s ownership interest due to838transactions with non-controlling interests 
624
Disposal of treasury stock 
Purchase of treasury stock 
Net unrealized gains on securities 
Net unrealized gains (losses) on hedges 
Foreign currency translation adjustments 
Remeasurements of defined benefits plans 
Net increase in profit attributable to noncontrolling interests $414,698 $169,926 $793,974
Balance at March 31, 2017 
The accompanying notes are an integral part of these financial statements.

28$(1,007) $25,778$(936)$1,292$34,504$(13,397) $126,883 $1,287,270
132,632(43,640)
173,991437(9)(2,219)11,917$(579) $37,695

1,596

$660

(17,791)$1,292$16,713

2,077(1,381)1,061(9)
11,917
1,596(17,791)
2,077

(134)
(134)
$(11,320) $124,530 $1,547,589

Consolidated Statements of Cash Flows
Nippon Light Metal Holdings Company, Ltd. and consolidated subsidiaries

2016

Years ended March 31,
2017(Millions of yen)

2017
(Thousands of
U.S. dollars)(Note 3)

Cash flows from operating activities 
Profit before income taxes 
Depreciation and amortization 
Gain on sales of investment securities 
Gain on sales of fixed assets 
Loss on impairment of fixed assets 
Increase (decrease) in allowance for doubtful accounts Increase (decrease) in liability for retirement benefit Interest and dividend income Interest expense 
Equity in (earnings) losses of affiliates (Increase) decrease in notes and accounts receivable – trade (Increase) decrease in inventories 
Increase (decrease) in notes and accounts payable – trade 
Other Subtotal Interest and dividend income received Interest paid 
Income taxes paid 
Net cash provided by operating activities ¥23,516 ¥28,290
16,356
16,602–(2,821)
–
(409)
678
1,192
90
180
(266)
456
(513)
(408)
2,139
1,782
(1,008)(141)(2,776)(1,066)
6,399
476
646
(478)
(3,060)469
42,201
44,1241,010
1,100(2,130)(1,750)(3,311)(6,986)
37,77036,488$252,162
147,981(25,145)(3,645)
10,625
1,604
4,065(3,637)
15,884(1,257)(9,502)
4,243(4,261)
4,180
393,297
9,805(15,599)(62,269)
325,234

Cash flows from investing activities
Payments into time deposits Proceeds from sales of fixed assets 
Payments for purchases of investment securities 
Other Net cash used in investing activities (19,081)
176
173
(687)
(19,419)(17,039)
2,116
3,330
(294)
(11,887)(151,876)
18,861
29,682(2,621)(105,954)(8,292)
28,914(25,938)—(2,709)
(516)

(640)
18,613(32,184)(3,200)(4,912)(680)(5,705)
165,906(286,870)(28,523)(43,783)(6,061)(1,094)—(1,073)(1,429)(10,708) (24,432)
(591)
(368)
7,052
(199)
29,43336,485¥36,485 ¥36,286—(12,737)(217,773)(3,281)(1,774)
325,207$323,433

Cash flows from financing activities
Net increase (decrease) in short-term borrowings Proceeds from long-term debt 
Repayments of long-term debt 
Redemption of bonds 
Cash dividends paid 
Cash dividends paid to non-controlling interests 
Payments from changes in ownership interests in subsidiaries that do not
result in change in scope of consolidation 
Other Net cash used in financing activities 
Effect of exchange rate changes on cash and cash equivalents 
Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the year 
Cash and cash equivalents at end of the year (Note 4)
The accompanying notes are an integral part of these financial statements.

29

Notes to Consolidated Financial Statements
Nippon Light Metal Holdings Company, Ltd. and consolidated subsidiaries

1. SIGNIFICANT ACCOUNTING POLICIES(a) Basis of presentation
The accompanying consolidated financial statements of Nippon Light Metal Holdings Company, Ltd. (the “Company”) and its consolidated
subsidiaries are prepared on the basis of accounting principles generally accepted in Japan, which are different in certain respects as to theapplication and disclosure requirements of International Financial Reporting Standards, and are compiled from the consolidated financial
statements prepared by the Company as required by the Financial Instruments and Exchange Law of Japan. The notes to the consolidated financial
statements include certain financial information which is not required under accounting principles generally accepted in Japan, but is presented
herein as additional information. The accompanying consolidated financial statements include certain reclassifications for the purpose ofpresenting them in a form familiar to readers outside Japan.
(b) Principles of consolidation and accounting for investments in affiliates
The accompanying consolidated financial statements include the accounts of the Company and, with minor exceptions, companies substantiallycontrolled by the Company. All significant intercompany transactions and accounts have been eliminated in consolidation.
Investments in equity securities issued by unconsolidated subsidiaries and affiliates are accounted for by the equity method, except thatinvestments in certain unconsolidated subsidiaries and affiliates are stated at cost because the effect of application of the equity method would be
immaterial.
The difference between the cost and the underlying net assets of investments in consolidated subsidiaries or affiliates accounted for by theequity method has been allocated to identifiable assets based on fair value at the respective dates of acquisition. Any unassigned residual amount isrecognized as goodwill and amortized by the straight-line method over an estimated useful life, with the exception of minor amounts which arecharged to income in the year of acquisition.
(c) Translation of foreign currencies
All monetary assets and liabilities denominated in foreign currencies, whether long-term or short-term, are translated into Japanese yen at theexchange rates prevailing at the balance sheet date. The resulting gains and losses are included in net loss for the year.
Assets and liabilities of foreign subsidiaries and affiliates are translated into Japanese yen at the exchange rates prevailing at the balance sheet
date. Income statement accounts for the year are translated into Japanese yen using the average exchange rates during the year. The resulting
translation adjustments are accounted for as foreign currency translation adjustments, except for the minority interest portion which is allocatedto minority interests in consolidated subsidiaries.
(d) Cash and cash equivalents
Cash and cash equivalents in the consolidated statements of cash flows comprise of cash in hand, bank deposits available for withdrawal on
demand and short-term investments with an original maturity of three months or less and which are exposed to a minor risk of fluctuation invalue.
(e) Inventories
Inventories are principally stated at cost, determined by the moving average method is applied to costs related to construction-type contracts. In
addition, the amount of Balance Sheet is calculated by write-down method based on descent of profitability.
(f) Investment securities
Securities other than equity securities issued by subsidiaries and affiliates are classified into held-to-maturity securities or available-for-salesecurities.
Held-to-maturity securities are stated at amortized cost. Available-for-sale securities for which market quotations are available are stated at fairvalue with net unrealized gains or losses being included in net assets, net of the related taxes. Available-for-sale securities for which market
quotations are not available are stated at cost. Realized gains and losses on sales are determined using the average cost method and are included
in net profit for the year.
In cases where the fair value of held-to-maturity securities or available-for-sale securities has declined significantly and such impairment isother than temporary, such securities are written down to fair value and the resulting losses are charged to income for the year.
30

(g) Allowance for doubtful accounts
Allowance for doubtful accounts is estimated by applying the average percentage of actual bad debts in the past to the balance of receivables. In
addition, an amount deemed necessary to cover non-collectible receivables is provided on an individual account basis.
(h) Property, plant and equipment and depreciation
Property, plant and equipment are stated at cost. Depreciation is computed principally using the straight-line method at rates based on theestimated useful lives of the respective assets, ranging from 2 years to 60 years for buildings and structures, and from 2 years to 22 years formachinery and equipment.
(i) Intangible assets
Intangible assets are amortized by the straight-line method over their respective estimated useful lives. Expenditure relating to computer softwaredeveloped for internal use is charged to income as incurred, except in cases where it contributes to the generation of income or future cost savings.
In these cases, it is capitalized and amortized using the straight-line method over its estimated useful life, which is no longer than 5 years.
(j) Retirement benefits
1) The retirement benefit obligation for employees is attributed to each period by the benefit formula method over the estimated years ofservice of the eligible employees.
2) Prior service cost is being amortized as incurred mainly by the straight-line method over the period of 15 years which is shorter than the
average remaining number of years of service of the employees. Unrecognized actuarial gain or loss is amortized by the declining-balancemethod over a period of 12 years from the year following that in which it arises, except for unrecognized costs with respect to employees
who retired under the early retirement program which were fully amortized at the time of the employees’ retirement.
(k) Lease transactions
Finance leases without options to transfer ownership of the leased assets to the lessee are accounted for as ordinary sale and purchase transactions.
These leased assets are depreciated to their respective salvage value of zero using the straight-line method over a period of leasing term. Financeleases with options to transfer ownership of the leased assets to the lessee are depreciated by the same method applied to the fixed assets owned by
the Company.
(l) Income taxes
The income taxes of the Company and its domestic consolidated subsidiaries consist of corporate income taxes, local inhabitants’ taxes andenterprise taxes. The Company and its wholly-owned domestic subsidiaries use the Japanese consolidated taxation system.
The Company and its consolidated subsidiaries apply the deferred tax accounting method. Deferred tax assets and liabilities are determinedusing the asset and liability approach, and recognized for temporary differences between the tax bases of assets and liabilities and those as reported
in the consolidated financial statements.
(m) Derivatives
All derivatives are stated at fair value with changes in fair value being included in net profit for the year in which they arise, except for derivatives
designated as hedging instruments.
The Company and its consolidated subsidiaries use derivatives to reduce their exposure to fluctuation in foreign exchange rates, interest rates,
and the prices of aluminum ingot and others in the market. Derivatives designated as hedging instruments are principally forward foreignexchange contracts, interest rate swap contracts, interest rate and currency swap contracts and aluminum ingot and others forward contracts. The
underlying hedged items are trade accounts receivable and payable, long-term bank loans and sales or purchases of aluminum ingot and others.
Gains and losses arising from changes in fair value of derivatives designated as hedging instruments are deferred and included in net profit in
the same period in which the corresponding gains and losses on the underlying hedged items or transactions are recognized. The Company and its
consolidated subsidiaries use interest rate swaps and interest rate and currency swaps to hedge their interest rate risk exposure. The related interest
differentials paid or received under the interest rate swap agreements are recognized in interest expense over the term of the agreements.
The Company and its consolidated subsidiaries evaluate the effectiveness of their hedging activities by reference to the accumulated gains orlosses on the hedging instruments and the underlying hedged items from the commencement of the hedges.
31Notes to Consolidated Financial Statements(n) Research and development costs
Research and development costs are charged to income as incurred.
(o) Appropriation of retained earnings
Appropriation of retained earnings is reflected in the consolidated financial statements for the year in which the appropriation is approved at an
ordinary general meeting of shareholders.
The Company’s retained earnings consist of unappropriated retained earnings and a legal reserve as required by the Corporation Law of Japan.
The Corporation Law provides that an amount equal to 10% of distributions from unappropriated retained earnings paid by the Company and its
Japanese subsidiaries be appropriated to the legal reserve. Such appropriations are no longer required when the total amount of additional paid-in
capital and the legal reserve equals 25% of their respective stated capital.
Under the Corporation Law, the Company is permitted to transfer to unappropriated retained earnings the portion of its statutory reserve(additional paid-in capital and the legal reserve) in excess of 25% of common stock upon approval at a shareholders’ meeting. Any suchtransferred portion is available for dividend distribution.
(p) Net profit per share
Basic net profit per share of common stock, presented in the accompanying consolidated statements of income, is computed based on the weighted
average number of shares outstanding during each year.
Diluted net profit per share reflects the potential dilution that could occur if securities were converted into common stock. Diluted net profit
per share of common stock assumes full conversion of the outstanding convertible bonds at the time of issuance with an applicable adjustment for
the related interest expense on a net of tax basis.
(q) Reclassification
Certain reclassifications of previously reported amounts have been made to conform them to the current year’s classifications.
2. ACCOUNTING CHANGE
The Company and its domestic consolidated subsidiaries adopted “Practical Solution on a change in depreciation method due to Tax Reform
2016” (ASBJ PITF No. 32, June 17, 2016) as a result of revisions to the Corporate Tax Act of Japan. Accordingly, the depreciation method for bothfacilities attached to buildings and other non-building structures acquired on or after April 1, 2016 were changed from the declining-balancemethod to the straight-line method.
The effect on operating income, ordinary income and profit before income taxes is immaterial.
3. U.S. DOLLAR AMOUNTS
The rate of ¥112.19 = U.S.$1, the approximate exchange rate prevailing at March 31, 2017, has been used for the purpose of presenting the U.S.
dollar amounts in the accompanying consolidated financial statements. These amounts are included solely for the convenience of the reader.
Accordingly, they should not be construed as representations that yen amounts actually represent, or have been or could be readily converted,
realized or settled in U.S. dollars at that rate.

32

4. CASH AND CASH EQUIVALENTS
A reconciliation of cash and cash equivalents in the accompanying consolidated statements of cash flows to cash and deposits disclosed in theaccompanying consolidated balance sheets at March 31, 2016 and 2017 is summarized as follows:
2016

2017

(Millions of yen)

Cash and deposits Time deposits with maturities in excess of 3 months 
Cash and cash equivalents ¥36,875(390)¥36,485¥36,346(60)¥36,2862017(Thousands of
U.S. dollars)$323,968(535)$323,433

Supplemental Disclosure of Non-Cash Transactions
Information on the convertible bonds during the years ended March 31, 2017 and 2016 is summarized as follows:
2016

2017

(Millions of yen)

Increase in common stock due to conversion of convertible bonds Increase in additional paid-in capital due to conversion of convertible bonds 
Decrease in treasury stock, at cost due to conversion of convertible bonds 
Decrease in bonds due to conversion of convertible bonds 

¥

—
—
—
—

¥

¥ 7,440
7,510
49¥15,0002017(Thousands of
U.S. dollars)$ 66,316
66,940437$133,693

5. INVESTMENT SECURITIES(a) Available-for-sale securities with available market quotations
The aggregate cost, carrying amount and gross unrealized gains and losses of available-for-sale securities comprising equity securities withavailable market quotations at March 31, 2016 and 2017 was as follows:
2016

2017

(Millions of yen)

Cost 
Unrealized gains 
Unrealized losses 
Carrying amount ¥3,9093,836(65)¥7,680¥3,7875,788(8)¥9,567

2017(Thousands of
U.S. dollars)$33,755
51,591(70)$85,276(b) Sales of available-for-sale securities
The realized gains on sales of available-for-sale securities for the years ended March 31, 2016 and 2017 was as follows:
2016

2017

(Millions of yen)

Sales proceeds 
Realized gains on sales 
Realized losses on sales 

¥173
102
—

¥3,330
2,842
—

2017
(Thousands of
U.S. dollars)$29,682
25,332—33

Notes to Consolidated Financial Statements

6. SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Short-term borrowings at March 31, 2017 bore interest at annual rates ranging from 0.08% to 5.22% and mainly consisted of bank loans andshort-term notes maturing at various dates within one year.
Long-term debt at March 31, 2016 and 2017 comprised the following:
2016

2017

(Millions of yen)

Loans, principally from banks and insurance companies due from 2018 to 2027 withinterest rates ranging from 0.20% to 4.75%:
Secured 
Unsecured Convertible bonds due December 10, 2018 (*1) Unsecured 2.51% bonds due March 29, 2072, redeemable before due date Unsecured 1.50% bonds due June 1, 2017, redeemable before due date Capital lease obligations due from 2017 to 2029 with interest rates ranging from
1.15% to 7.20% Less: portion due within one year 
Total long-term debt 2017(Thousands of
U.S. dollars)¥5,346
97,18315,0003,200
676¥2,084
86,917——673$18,576
774,730
—
—
5,999

2,782
124,187(25,894)¥98,293

1,808
91,482(22,311)¥69,171

16,115815,420(198,868)$616,552(*1) The details of the convertible bonds due December 10, 2018 are summarized as follows:
Stock type to be issued:
Common stock
Issue price per stock acquisition right:
None
Initial exercise price:¥198.9 per share
Total issue price:¥15,000 million
Exercisable period of stock acquisition rights: From December 23, 2013 to November 26, 2018*

The conversion price of the convertible bonds due December 10, 2018 was adjusted to ¥198.9 ($1.77) from ¥200 ($1.78) after June 25, 2016 pursuant to the terms and conditionsof the bonds because the ordinary general meeting of Shareholders held on June 24, 2016 approved the payment of a year-end dividend of ¥6 ($0.05) per share and an annual
dividend of ¥6 ($0.05) per share.

A summary of assets pledged as collateral for short-term borrowings and long-term debt at March 31, 2016 and 2017 as follows:
2016

2017

(Millions of yen)

Property, plant and equipment 
Investment securities 
Other intangible assets ¥43,376
60
381¥4,729
6—

2017(Thousands of
U.S. dollars)$42,152
53—

The aggregate annual maturities of long-term debt outstanding at March 31, 2017 are summarized as follows:
Years ending March 31,2018 
2019 
2020 
2021 
2022 
Thereafter 
34(Millions of yen)(Thousands of
U.S. dollars)¥22,311
18,262
11,732
6,903
2,885
29,140¥91,233$198,868
162,777
104,573
61,53025,715
259,738$813,201

7. FINANCIAL INSTRUMENTS(a) Overview
1. Policy for financial instruments
The Company and its consolidated subsidiaries (the “Group”) strive to diversify financing methods by managing temporary cash surpluses
primarily through short-term deposits, and by raising funds through bank borrowings and corporate bonds. The Group utilizes various derivative
financial instruments such as interest rate swaps, forward foreign exchange contracts, forward trading in aluminum ingots and currency swap
contracts for the purpose of reducing risk and does not enter into derivative transactions for speculative or trading purposes.
2. Types of financial instruments and related risk, and risk management for financial instruments
Notes and accounts receivable – trade are exposed to credit risk in relation to customers. The Group manages the risks by controlling the due dates
and outstanding balances by individual customers. Accounts receivable – trade denominated in foreign currencies are exposed to risk of exchange
fluctuations and are hedged by utilizing forward foreign exchange contracts. Stocks of investment securities, which are exposed to market
fluctuations, are mainly those of other companies with which the Group has business relationships. The Group periodically reviews the fair valuesof such stocks and the financial position of the issuers.
Notes and accounts payable – trade, have payment due dates approximately within one year.
Short-term borrowings are raised mainly in connection with business activities, and long-term borrowings are taken out principally for the
purpose of making capital investments. Variable rate borrowings are exposed to interest rate fluctuation risk and some of which denominated inforeign currencies are exposed to risk of exchange fluctuations. However, in order to reduce such risks, the Group utilizes interest rate swap andinterest rate and currency swap transactions as a hedging instrument for each individual contract. Assessment of the effectiveness of hedging
activities, which meets the requirements for special treatment of interest rate swaps, is omitted.
The execution and management of derivative transactions is performed based on the control procedure designated in management policy. In
addition, to reduce credit risk, utilizing derivative instruments is restricted to only highly rated financial institutions and major trading companies.
Notes and accounts payable – trade and borrowings, the Group prepares its cash flow plans to manage liquidity risk (the risk that the Groupmay not be able to meet its obligations on scheduled due dates).
3. Supplementary explanation of the estimated fair value of financial instruments
The notional amounts of derivatives in “(b) Estimated Fair Value of Financial Instruments,” are not necessarily indicative of the actual market
risk involved in the derivative transactions.
(b) Estimated Fair Value of Financial Instruments
The carrying value of financial instruments on the consolidated balance sheets as of March 31, 2016 and 2017 and estimated fair value is as follows:
2016
Carrying Value *1

Estimated Fair Value *1

Difference(Millions of yen)

(1) Cash and deposits (2) Notes and accounts receivable – trade (3) Investment securities
Stocks of subsidiaries and affiliates 
Other securities (4) Notes and accounts payable – trade (5) Short-term borrowings *2 (6) Current portion of bonds (7) Bonds (8) Long-term borrowings *2 (9) Derivative transactions 
for which hedge accounting has not been applied 
for which hedge accounting has been applied ¥36,875
135,357¥36,875
135,357

¥—
—

4,096
7,680
(67,943)(60,802)—(18,876)(102,529)

1,509
7,680
(67,943)(60,802)—(18,437)(102,913)(2,587)
—
—
—
—
439
(384)

—
(151)

—
(151)

—
—

*1 Liabilities are shown in parenthesis.
*2 The current portion of long-term borrowings is included in long-term borrowings.
35

Notes to Consolidated Financial Statements

2017
Carrying Value *1

Estimated Fair Value *1

Difference(Millions of yen)

(1) Cash and deposits (2) Notes and accounts receivable – trade (3) Investment securities
Stocks of subsidiaries and affiliates 
Other securities (4) Notes and accounts payable – trade (5) Short-term borrowings *2 (6) Current portion of bonds (7) Bonds (8) Long-term borrowings *2 (9) Derivative transactions 
for which hedge accounting has not been applied 
for which hedge accounting has been applied ¥36,346
135,955¥36,346
135,955

¥—
—

3,765
9,567
(67,300)(60,161)(673)—(89,001)

1,830
9,567
(67,300)(60,161)(673)—(90,116)(1,935)—————(1,115)

(8)
114

(8)
114

—
—

2017
Carrying Value *1

Estimated Fair Value *1

Difference(Thousands of U.S. dollars)(1) Cash and deposits (2) Notes and accounts receivable – trade (3) Investment securities
Stocks of subsidiaries and affiliates 
Other securities (4) Notes and accounts payable – trade (5) Short-term borrowings *2 (6) Current portion of bonds (7) Bonds (8) Long-term borrowings *2 (9) Derivative transactions 
for which hedge accounting has not been applied 
for which hedge accounting has been applied $323,968
1,211,828$323,968
1,211,828$——33,55985,275(599,875)(536,242)(5,999)—(793,306)

16,31285,275(599,875)(536,242)(5,999)—(803,244)(17,248)—————(9,938)

(71)
1,016

(71)
1,016

—
—

*1 Liabilities are shown in parenthesis.
*2 The current portion of long-term borrowings is included in long-term borrowings.
Notes
1. Method for determining the estimated fair value of financial instruments and other matters related to securities and derivative transactions(1) Cash and deposits, (2) Notes and accounts receivable – trade
Since these items are settled in a short period of time, their carrying value approximates fair value.
(3) Investment securities
The fair value of stocks is based on quoted market prices. For information on securities classified by holding purpose, refer to Note 5“Investment Securities.”36

(4) Notes and accounts payable – trade, (5) Short-term borrowings
Since these items are settled in a short period of time, their carrying value approximates fair value.
(6) Current portion of bonds
Since the fair value of floating-rate current portion of bonds reflects market interest rates within a short period of time, their carrying
value approximates fair value.
(7) Bonds
The fair value of bonds is based on the present value of the total of principal and interest discounted by an interest rate determined taking
into account the remaining period of each bond and current credit risk.
(8) Long-term borrowings
The fair value of long-term borrowings is based on the present value of the total of principal and interest discounted by the interest rate tobe applied if similar new borrowings were entered into. Interest rate swaps subject to special treatment and integral accounting method ofinterest rates and currency swaps are used for long-term floating rate borrowings. Principal and interest in which these swaps areembedded, are discounted using the current interest rate, which is estimated reasonably for similar borrowing of a complete maturity.
(9) Derivatives
Refer to Note 13, “Derivatives” of the notes the consolidated financial statements.
2. Unlisted stock of ¥24,217 million and ¥22,486 million ($200,428 thousand) as of March 31, 2016 and 2017 are not included in “(3)Investment securities” because no quoted market prices are available and it is extremely difficult to measure the fair value.
3. The redemption schedule for receivables and marketable securities with maturities at March 31, 2016 and 2017 are as follows:2016
Due within
one year

Due after one year but
within five years

Due after five years but
within ten years

Due after
ten years(Millions of yen)

Cash and deposits Notes and accounts receivable – trade 
Investment securities 
Held-to-maturity securities Government and municipal bonds ¥36,830
135,357

¥—
—

¥—
—

¥—
—

2
¥172,189

7
¥7

1
¥1

—
¥—

Due after five years but
within ten years

Due after
ten years

2017
Due within
one year

Due after one year but
within five years(Millions of yen)

Cash and deposits Notes and accounts receivable – trade 
Investment securities 
Held-to-maturity securities Government and municipal bonds ¥36,279
135,955

¥—
—

¥—
—

¥—
—

2
¥172,236

6
¥6

—
¥—

—
¥—

37

Notes to Consolidated Financial Statements

2017
Due within
one year

Due after one year but
within five years

Due after five years but
within ten years

Due after
ten years(Thousands of U.S. dollars)

Cash and deposits Notes and accounts receivable – trade 
Investment securities 
Held-to-maturity securities Government and municipal bonds $323,371
1,211,828

$—
—

$—
—

$—
—

18
$1,535,217

53
$53

—
$—

—
$—

4. The redemption schedule for bonds and long-term borrowings at March 31, 2016 and 2017 are as follows:2016
Due within
one year

Due after one year but
within five years

Due after
five years(Millions of yen)

Bonds Long-term borrowings ¥—25,261¥25,261¥15,676
53,147¥68,823¥3,200
23,964¥27,1642017
Due within
one year

Due after one year but
within five years

Due after
five years(Millions of yen)

Bonds Long-term borrowings ¥673
21,107¥21,780¥—38,690¥38,690¥—28,955¥28,955

2017
Due within
one year

Due after one year but
within five years

Due after
five years(Thousands of U.S. dollars)

Bonds Long-term borrowings $5,999
188,136$194,135$—344,861$344,861

Notional amount

Maturity over 1 year$—
260,308$260,308

5. The fair value of derivatives at March 31, 2016 and 2017 are as follows:(1) Derivative transactions for which hedge accounting has not been applied
		 Currency-related transactions
2016
Fair value(Millions of yen)

Currency swap contracts
U.S. dollars payment / Yen receipt 

38

¥—

¥—

¥—

		

Currency-related transactions
2017
Notional amount

Maturity over 1 year

Fair value (*)(Millions of yen)

Currency swap contracts
U.S. dollars payment / Yen receipt 

¥452

¥452

Notional amount

Maturity over 1 year

¥(8)

2017
Fair value (*)(Thousands of U.S. dollars)

Currency swap contracts
U.S. dollars payment / Yen receipt $4,029$4,029$(71)*1 Fair value calculation
The fair value is based on prices quoted from counterparty financial institutions.
*2 Currency swap contracts are hedged monetary receivables and payables arising from transactions among consolidated subsidiaries,
and designated accounting is applied in non-consolidated financial statements.
(1) Derivative transactions for which hedge accounting has been applied		Currency-related transactions
2016
Hedge item

Notional amount Maturity over 1 year

Fair value (*)(Millions of yen)

Forward foreign exchange
Deferred hedge method
Net Valuation method using forward foreign exchange contracts

Accounts receivable Accounts payable Accounts receivable Accounts payable 

¥179
1,810
790
232

¥—
—
—
—

¥0
(37)
(*)
(*)

(*) The fair value is based on prices quoted from counterparty financial institutions. The fair value of currency-related transactions
subject to assignment accounting (special treatment for forward foreign exchange contracts) is accounted for together with theunderlying trade receivable or trade payable subject to hedging.
Interest-related transactions
2016
Hedge item

Interest rate swap
Fixed rate payment / Floating rate receipt
Deferred hedge method
Short-cut method of interest rate swap transactions

Notional amount Maturity over 1 year

Fair value (*)(Millions of yen)

Long-term borrowings Long-term borrowings ¥2,089
38,932¥1,191
37,644¥(17)(*)(*) The fair value is based on prices quoted from counterparty financial institutions. The fair value of interest rate swaps subject tospecial treatment and integral accounting method of interest rates and currency swaps embeds in long-term borrowings subject
to hedging included in the fair value of the corresponding long-term borrowings.

39

Notes to Consolidated Financial Statements

Commodity-related transactions
2016
Hedge item

Notional amount Maturity over 1 year

Fair value (*)(Millions of yen)

Aluminum ingot forward contracts and others
Fair value hedge accounting

Accounts receivable Accounts payable 

¥657
2,593

¥—
—

¥9
(106)

(*) The fair value is based on prices quoted from counterparty trading companies..
Currency-related transactions
2017
Hedge item

Notional amount Maturity over 1 year

Fair value (*)(Millions of yen)

Forward foreign exchange
Deferred hedge method
Net Valuation method using forward foreign exchange contracts

Accounts receivable Accounts payable Accounts receivable Accounts payable 

¥282
1,210
1,586
473

¥—
—
—
—

¥5
(13)
(*)
(*)

(*) The fair value is based on prices quoted from counterparty financial institutions. The fair value of currency-related transactions
subject to assignment accounting (special treatment for forward foreign exchange contracts) is accounted for together with theunderlying trade receivable or trade payable subject to hedging.
Interest-related transactions
2017
Hedge item

Notional amount Maturity over 1 year

Fair value (*)(Millions of yen)Interest rate swap
Fixed rate payment / Floating rate receipt
Deferred hedge method
Short-cut method of interest rate swap transactions
Integral accounting method of interest rate andcurrency swap transactions

Long-term borrowings Long-term borrowings ¥1,190
30,682¥293
23,222¥(3)(*)

Long-term borrowings 

1,531

1,094

(*)

(*) The fair value is based on prices quoted from counterparty financial institutions. The fair value of interest rate swaps subject tospecial treatment and integral accounting method of interest rates and currency swaps embeds in long-term borrowings subject
to hedging included in the fair value of the corresponding long-term borrowings.
Commodity-related transactions
2017
Hedge item

Notional amount Maturity over 1 year

Fair value (*)(Millions of yen)

Aluminum ingot forward contracts and others
Fair value hedge accounting

Accounts receivable Accounts payable (*) The fair value is based on prices quoted from counterparty trading companies.

40

¥446
1,952

¥(12)
136¥(12)
136

Currency-related transactions
2017
Hedge item

Notional amount Maturity over 1 year

Fair value (*)(Thousands of U.S. dollars)

Forward foreign exchange
Deferred hedge method
Net Valuation method using forward foreign exchange contracts

Accounts receivable Accounts payable Accounts receivable Accounts payable $2,514
10,785
14,137
4,216

$—
—
—
—

$45
(116)
(*)
(*)

(*) The fair value is based on prices quoted from counterparty financial institutions. The fair value of currency-related transactions
subject to assignment accounting (special treatment for forward foreign exchange contracts) is accounted for together with theunderlying trade receivable or trade payable subject to hedging.
Interest-related transactions
2017
Hedge item

Notional amount Maturity over 1 year

Fair value (*)(Thousands of U.S. dollars)Interest rate swap
Fixed rate payment / Floating rate receipt
Deferred hedge method
Short-cut method of interest rate swap transactions
Integral accounting method of interest rate andcurrency swap transactions

Long-term borrowings Long-term borrowings Long-term borrowings $10,607 $2,612
273,482
206,988
13,646$(27)
(*)

9,751

(*)

(*) The fair value is based on prices quoted from counterparty financial institutions. The fair value of interest rate swaps subject tospecial treatment and integral accounting method of interest rates and currency swaps embeds in long-term borrowings subject
to hedging included in the fair value of the corresponding long-term borrowings.
Commodity-related transactions
2017
Hedge item

Notional amount Maturity over 1 year

Fair value (*)(Thousands of U.S. dollars)

Aluminum ingot forward contracts and others
Fair value hedge accounting

Accounts receivable Accounts payable $3,975
17,399$(107)
1,212$(107)
1,212(*) The fair value is based on prices quoted from counterparty trading companies.

41

Notes to Consolidated Financial Statements

8. OTHER COMPREHENSIVE INCOME
Each component of other comprehensive income for the year ended March 31, 2016 and 2017 were as follows:
2016

2017

2017
(Thousands of
U.S. dollars)(Millions of yen)

Unrealized gains (losses) on securities:
Amount arising during the year 
Reclassification adjustments for gains and losses included in profit (loss) attributableto owners of parent 
Before-tax amount 
Tax benefit Net-of-tax amount 
Unrealized gains (losses) on hedges:
Amount arising during the year 
Reclassification adjustments for gains and losses included in profit (loss) attributableto owners of parent 
Before-tax amount 
Tax benefit Net-of-tax amount Foreign currency translation adjustments:
Amount arising during the year 
Remeasurements of defined benefit plans:
Amount arising during the year 
Reclassification adjustments for gains and losses included in profit (loss) attributableto owners of parent 
Before-tax amount 
Tax benefit Net-of-tax amount Equity of other comprehensive income (loss) of affiliates:
Amount arising during the year 
Total other comprehensive income ¥(866)¥ 1,973$ 17,586

(100)
(966)
434
(532)

(21)
1,952
(587)
1,365

(187)
(17,399)(5,232)
12,167

205

203

1,809

(314)
(109)
29
(80)

49
252
(73)
179

437
2,246
(650)
1,596

(2,358)(1,247)(11,115)(2,041)

(38)

(339)

68
(1,973)560(1,413)

295
257
(34)
223

2,629
2,291
(303)
1,988

(727)
¥(5,110)(1,170)¥ (650)(10,430)$ (5,794)

9. RETIREMENT BENEFIT PLANS
The Company and its domestic subsidiaries have defined benefit corporate pension plans and a lump-sum payment retirement benefit planscovering substantially all employees in Japan. Additional benefits may be granted to employees according to the conditions under which
termination of employment occurs. Certain consolidated subsidiaries use the simplified method for calculation of retirement benefit obligation.
Certain foreign subsidiaries have defined contribution pension plans.
The changes in the retirement benefit obligation during the years ended March 31, 2016 and 2017 are as follows:
2016

2017

(Millions of yen)

Balance at the beginning of the year 
Service cost Interest cost 
Actuarial gain or loss Retirement benefits paid 
Others 
Balance at the end of the year 42¥36,260
1,980
477
1,348
(1,664)(159)¥38,242¥38,242
1,827
393
248
(2,332)35¥38,413

2017(Thousands of
U.S. dollars)$340,868
16,285
3,503
2,211(20,786)311$342,392

The changes in plan assets during the years ended March 31, 2016 and 2017 are as follows:
2016

2017

(Millions of yen)

Balance at the beginning of the year 
Expected return on plan assets 
Actuarial gain or loss 
Employer contributions Retirement benefits paid 
Others 
Balance at the end of the year ¥23,783
464
(693)
2,098
(1,115)(87)¥24,450¥24,450
386
210
1,197
(1,697)47¥24,593

2017(Thousands of
U.S. dollars)$217,934
3,441
1,872
10,669(15,126)418$219,208

The changes in liability for retirement benefits on the simplified method during the years ended March 31, 2016 and 2017 are as follows:
2016

2017

(Millions of yen)

Balance at the beginning of the year Retirement benefit expenses 
Retirement benefits paid Contributions for the plans Balance at the end of the year ¥6,320
960
(413)
(295)
¥6,572¥6,572
1,032
(563)
(278)
¥6,7632017(Thousands of
U.S. dollars)$58,579
9,199(5,018)(2,478)$60,282

The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheets as of March 31,
2016 and 2017 for the defined benefit plans:
2016

2017

(Millions of yen)

2017
(Thousands of
U.S. dollars)

Unfunded retirement benefit obligation 
Net liability for retirement benefits in the consolidated balance sheets ¥ 45,714(27,665)
18,0492,315¥ 20,364¥ 46,027(27,920)
18,1072,476¥ 20,583$410,259(248,863)
161,396
22,070$183,466

Liability for retirement benefits 
Net liability for retirement benefits in the consolidated balance sheets ¥ 20,364¥ 20,364¥ 20,583¥ 20,583$183,466$183,466

Funded retirement benefit obligation 
Fair value of plan assets 

The components of retirement benefit expenses for the years ended March 31, 2016 and 2017 are as follows:
2016

2017

(Millions of yen)

Service cost Interest cost Expected return on plan assets 
Amortization of unrecognized actuarial gain or loss Amortization of prior service cost Retirement benefit expenses on the simplified method Retirement benefit expenses on the defined benefit plan ¥1,980
477
(464)
10
(26)
960
¥2,937¥1,827
393
(386)
313
(27)
1,032
¥3,152

2017(Thousands of
U.S. dollars)$16,285
3,503(3,441)
2,790
(241)
9,199
$28,095
43

Notes to Consolidated Financial Statements

The components of retirement benefits liability adjustments included in other comprehensive income (before tax effect) for the years ended March
31, 2016 and 2017 are as follows:
2016

2017

(Millions of yen)

Prior service cost 
Actuarial loss 
Total ¥28
(285)
¥(257)¥24
1,949¥1,9732017(Thousands of
U.S. dollars)$250(2,540)$(2,290)

Remeasurements of defined benefits plans included in accumulated other comprehensive income (before tax effect) as of March 31, 2016 and2017 as follows:
2016

2017

(Millions of yen)

Unrecognized prior service cost 
Unrecognized actuarial gain or loss 
Total ¥(228)2,547¥2,319

2017(Thousands of
U.S. dollars)¥(200)2,262¥2,062$(1,783)
20,162$18,379

The fair value of plan assets, by major category, as a percentage of total plan assets as of March 31, 2016 and 2017 as follows:
2016

General account 
Domestic bonds 
Foreign stocks Domestic stocks Foreign bonds 
Others 
Total 

2017

34%
23%
14%
11%
9%
9%
100%

35%
23%
13%
11%
9%
9%
100%

The total fair value of plan assets includes 3% and 3% of the retirement benefit trust set to the corporate pension plan at March 31, 2016 and 2017separately.
The expected return on assets has been estimated based on the anticipated allocation to each asset class and the expected long-term returns on
assets held in each category.
The assumptions used in accounting for the above plans were as follows:
2016

Discount rate Expected rate of return on plan assets 

2017

1.0%
1.0%

1.0%
1.0%

Required contribution of the consolidated subsidiaries for the defined contribution pension plans as of March 31, 2016 and 2017 as follows:
2016

2017

(Millions of yen)

Required contribution 

44

¥6

¥7

2017
(Thousands of
U.S. dollars)$6210. INCOME TAXES
Significant components of deferred tax assets and liabilities at March 31, 2016 and 2017 were as follows:
2016

2017

2017
(Thousands of
U.S. dollars)(Millions of yen)

Deferred tax assets:¥11,216¥8,632$76,941

Net defined benefit liabilities 

6,065

6,223

55,468

Unrealized intercompany loss 

2,761

1,962

17,488

Accrued bonuses 

1,748

1,839

16,392

Allowance for doubtful accounts 

1,631

1,682

14,992

Loss on disposal of fixed assets 

766

722

6,436

Other 

9,947

9,056

80,720Total deferred tax assets 

34,134

30,116

268,437

Valuation allowance (16,156)(14,452)(128,817)

Total deferred tax assets, net of valuation allowance 

17,97815,664

139,620

Undistributed retained earnings of subsidiaries and associates (1,178)(1,567)(13,967)

Unrealized gain on securities (1,083)(1,515)(13,504)

Revaluation gain on subsidiaries 

(974)

(974)

(8,682)

Unrealized intercompany profit 

(912)

(907)

(8,084)

Other 

(834)

(879)

(7,835)(4,981)(5,842)(52,072)¥12,997¥9,822$87,548

Tax loss carry forwards 

Deferred tax liabilities:

Total deferred tax liabilities 
Net deferred tax assets Deferred tax assets and liabilities that comprise net deferred tax assets are included in the accompanying consolidated balance sheets as follows:
2016

2017

2017
(Thousands of
U.S. dollars)(Millions of yen)

Deferred tax assets (current assets) ¥5,396¥5,487$48,908

Deferred tax assets (investments and other assets) 

8,105

4,845

43,186

–

(102)

(909)

(504)

(408)

(3,637)

Other current liabilities (current liabilities) 
Other long-term liabilities 45

Notes to Consolidated Financial Statements

In addition to the above, the Company recorded deferred tax liabilities on land revaluation surplus of ¥50 million at March 31, 2016separately.
A reconciliation of the differences between the statutory income tax rate and the effective income tax rate for the years ended March 31, 2016
and 2017 was summarized as follows:
2016

Statutory income tax rate Increase (decrease) in taxes resulting from:
Undistributed retained earnings of subsidiaries and associates Permanently non-deductible expenses 
Amortization of goodwill Inhabitant taxes per capita 
Valuation allowance 
Equity in earnings of affiliates 
Other Effective income tax rate 

2017

33.1%

30.9%

4.3
1.7
1.4
0.6
(11.7)
(1.5)
1.9
29.8%

1.4
0.7
0.1
0.6
(6.0)
(0.2)
0.1
27.6%

The consumption tax increase to 10% was postponed from April 1, 2017 to October 1, 2019 via a tax reform proposal that was passed on November
18, 2016, amending the Act for Partial Amendment of the Consumption Tax Act and Others for the Fundamental Reform of the Taxation System for
Ensuring Stable Financial Resources for Social Security (Act No. 85, 2016) and the Act for Partial Amendment of the Local Allocation Tax System
and Others for the Fundamental Reform of the Taxation System for Ensuring Stable Financial Resources for Social Security (Act No. 86, 2016).
Consequently, the abolishment of the special local corporate tax and restoration of the corporate enterprise tax, revision of the local corporate tax,
and revision of the corporation levy for corporate inhabitant taxes have been postponed for the fiscal year starting after April 1, 2017 to the fiscal
year starting after October 1, 2019.
There is no change the statutory income tax rate used to calculate deferred tax assets and deferred tax liabilities, but the tax rate has been
reclassified between national tax and local tax.
The effect of this change is immaterial.
The Company and its consolidated subsidiaries adopted “Revised Implementation Guidance on Recoverability of Deferred Tax Assets” (ASBJ
Guidance No. 26, March 28, 2016) (hereinafter, the “Recoverability Implementation Guidance”) from the beginning of the fiscal year ended
March 31, 2017.
11. APPROPRIATIONS OF RETAINED EARNINGS
The following appropriation was approved at the ordinary general meeting of shareholders of the Company held on June 27, 2017:(Millions of yen)

Cash dividends ¥3,097(Thousands of U.S. dollars)$27,605

The Company is required to obtain the approval of shareholders at an ordinary general meeting of shareholders for appropriations of retained
earnings in conformity with the Corporation Law. Appropriations of retained earnings are, therefore, not reflected in the consolidated financial
statements for the year to which they relate but are recorded in the consolidated financial statements in the subsequent year after shareholders’approval has been obtained.
12. REVALUATION SURPLUS
A consolidated subsidiary of the Company revalued its land used for business purposes in accordance with the Land Revaluation Law. The
Company recognized its portion of consolidated subsidiary’s revaluation surplus.

46

13. DERIVATIVESIn the normal course of business, the Company and its consolidated subsidiaries utilize various derivative financial instruments in order tomanage the exposure resulting from fluctuation in foreign currency exchange rates, interest rates and the prices of aluminum ingot in the market.
The Company and its consolidated subsidiaries do not hold or issue derivative financial instruments for trading purposes.
14. NOTES TO CONSOLIDATED STATEMENT OF INCOME
Inventories
The amount of inventories written down due to a decline in profitability for the years ended March 31, 2016 and 2017 was ¥354 million and¥(216) million ($(1,925) thousand), respectively which is included in cost of sales.
Selling, general and administrative expenses
2016

2017

(Millions of yen)

¥12,279
18,290Freight charges Salaries, allowances and bonuses 

2017(Thousands of
U.S. dollars)¥11,958
18,362$106,587
163,669

Research and Development
Research and development costs charged to cost of sales and selling, general and administrative expenses for the years ended March 31, 2016 and2017 was ¥4,794 million and ¥4,939 ($44,024 thousand), respectively.
Gain on sales of fixed assets
2016

2017

(Millions of yen)—

Land 

2017(Thousands of
U.S. dollars)¥409$3,646

15. CONTINGENT LIABILITIESContingent liabilities at March 31, 2017 amounted to ¥1,481 million ($13,201 thousand) for loans guaranteed and other guarantees given in theordinary course of business.
16. LOSS ON IMPAIRMENT OF FIXED ASSETS
The domestic consolidated subsidiaries recognized ¥678 million ($6,017 thousand) of loss on impairment of fixed assets in the consolidated
statements of income, of which the significant items for the year ended March 31, 2016 were as follows:
2016

Location
Guangdong, China

Total

Major use
Operating assets

Asset category
Buildings and structures 
Machinery and equipment 
Tools, furniture and fixtures 
Others (Millions of yen)

¥228
195
37
47
¥507

Since the cash flows generated from operating activities resulting from the use of the groups of assets have been continuously
negative, the consolidated subsidiaries recognized an impairment loss of ¥507 million ($4,499 thousand) after noting a sign ofimpairment and evaluating a necessity of the impairment loss.
The consolidated subsidiaries has grouped the operating assets by the independent operating division which generates cash
flows, the rental assets by administrative business division and idle assets by individual asset itself.
47

Notes to Consolidated Financial Statements

The domestic consolidated subsidiaries recognized ¥1,192 million ($10,625 thousand) of loss on impairment of fixed assets
in the consolidated statements of income, of which the significant items for the year ended March 31, 2017 were as follows:
2017

Location
Tomakomai City,
Hokkaido Prefecture

Major use
Operating assets

Asset category
Buildings and structures 
Machinery and equipment (Millions of yen)

¥740
1
¥741

Total

(Thousands of
U.S. dollars)$6,5969$6,605Since the assets in Tomakomai City, Hokkaido prefecture have become idle and show signs of impairment, the consolidated subsidiaries recognized
an impairment loss of ¥741 million ($6,605 thousand) after noting a sign of impairment and evaluating a necessity of the impairment loss.
The consolidated subsidiaries has grouped the operating assets by the independent operating division which generates cash flows, the rental
assets by administrative business division and idle assets by individual asset itself.
17. AMOUNTS PER SHARE
Net profit and net assets per share for the years ended and as of March 31, 2016 and 2017 were summarized as follows:
1. Number of shares
2016

2017

(Thousands of shares)

Weighted average number of shares 
Effect of convertible bonds 
Diluted number of shares 

543,826
75,000618,826

564,498
55,881
620,379

2016

2017

2. Net profit per share(Millions of yen)

Net profit ¥19,520¥15,533
2016

2017
(yen)

Net profit per share 
Diluted net profit per share 

2017(Thousands of
U.S. dollars)$173,991
2017(U.S. dollars)¥28.56¥25.10¥34.58¥31.46

2016

2017

$0.31
$0.28

3. Net asset per share(Millions of yen)

Total net assets 
Non-controlling interests 
Net assets attributable to shares of common stock ¥144,419 ¥173,624(14,235)(13,971)¥130,184 ¥159,653
2016

2017
(yen)

Net assets per share 

48¥239.39

2017(Thousands of
U.S. dollars)$1,547,589(124,530)$1,423,059
2017(U.S. dollars)¥257.82$2.30

18. SEGMENT INFORMATIONThe reportable segments are components of the Company and its consolidated subsidiaries, for which their discrete financial information isavailable, and whose operating results are regularly reviewed by the Board of Directors to make decisions about resources to be allocated to thesegments and assess their performance.
The Company and its consolidated subsidiaries operate within four distinct business segments mainly in Japan: “Aluminum ingot andchemicals,” “Aluminum sheet and extrusions,” “Fabricated products and others” and “Aluminum foil, powder and paste.”
The “Aluminum ingot and chemicals” segment supplies aluminum remelted ingot used for various industrial materials, and produces a wide
spectrum of alumina and alumina hydrates ranging from raw materials to basic materials for ceramic compounds. The “Aluminum sheet andextrusions” segment produces sheet, coil, and extrusion products consisting primarily of shapes, tubes and rods. The “Fabricated products andothers” segment produces a variety of products which include wing bodies for transport vehicles, automobile components and electronic materials.
The “Aluminum foil, powder and paste” segment produces aluminum foil and aluminum powder used for various fields, such as daily necessaries,
energy, electronics and automobile. “Corporate items” includes unallocated operating expenses and corporate assets not specifically related toreportable segments.
Reportable segment information for the years ended March 31, 2016 and 2017 was as follows:
2016

The reportable segments
Aluminumingot andchemicals

Aluminum
sheet andextrusions

Fabricatedproducts
and others

Aluminum
foil, powder
and paste

Adjustment(Note 1)

Consolidated(Millions of yen)

Net sales
Customers ¥109,844¥103,340¥149,220¥102,001¥—¥464,405

Intersegment 42,42623,936

12,242

470(79,074)—

Total 152,270

127,276

161,462

102,471(79,074)

464,405

Operating profit ¥9,138¥3,058¥10,958¥6,829¥(3,162)¥26,821

Segment assets ¥107,598¥112,211¥146,603¥100,732¥(14,950)¥452,194

Depreciation and amortization ¥3,630¥4,882¥3,533¥4,115¥196¥16,356

Amortization of goodwill 

¥—

¥—

¥384

¥564

¥—

¥948

Loss on impairment of fixed assets 

¥—

¥—

¥—

¥678

¥—

¥678

Investment in equity-method affiliates¥3,804¥8,245¥5,413¥3,076¥—¥20,538

Capital expenditures ¥2,865¥6,042¥5,391¥4,445¥118¥18,861(Note 1).Adjustments amounts are as follows.
1)Adjustments of ¥(3,162) million ($(28,062) thousands) in segment profit are general corporate expenses.
2)Adjustments of ¥(14,950) million ($(132,677) thousands) in segment assets include ¥(36,596) million ($(324,778) thousands) in theelimination of transactions between segments and ¥21,646 million ($192,101 thousands) in corporate assets.
3)Adjustments of ¥196 million ($1,739 thousands) in depreciation and amortization expenses have primarily to do with corporate assets.
4)Adjustments of ¥118 million ($1,047 thousands) for capital expenditures are the increase in corporate assets.

49

Notes to Consolidated Financial Statements

2017

The reportable segments
Aluminumingot andchemicals

Aluminum
sheet andextrusions

Fabricatedproducts
and others

Aluminum
foil, powder
and paste

Adjustment(Note 1)

Consolidated(Millions of yen)

Net sales
Customers ¥101,840¥98,165¥154,684¥93,692¥—¥448,381

Intersegment 39,25523,147

11,681

508(74,591)—

Total 141,095

121,312

166,365

94,200(74,591)

448,381

Operating profit ¥10,126¥7,775¥10,245¥5,478¥(3,399)¥30,225

Segment assets ¥110,085¥111,776¥149,775¥95,111¥(18,124)¥448,623

Depreciation and amortization ¥3,746¥5,024¥3,535¥4,090¥207¥16,602

Amortization of goodwill 

¥—

¥—

¥—

¥45

¥—

¥45

Loss on impairment of fixed assets 

¥—

¥437

¥755

¥—

¥—

¥1,192

Investment in equity-method affiliates ¥4,096¥6,324¥5,788¥2,880¥—¥19,088

Capital expenditures ¥4,198¥5,376¥6,074¥4,046¥214¥19,908

Aluminum
foil, powder
and paste

Adjustment(Note 1)

Consolidated

2017

The reportable segments
Aluminumingot andchemicals

Aluminum
sheet andextrusions

Fabricatedproducts andothers(Thousands of U.S. dollars)

Net sales
Customers $907,746$874,989$1,378,768$835,119$—$3,996,622

Intersegment 349,897

206,320

104,118

4,528(664,863)—

Total 1,257,643

1,081,309

1,482,886

839,647(664,863)

3,996,622

Operating profit $90,258$69,302$91,318$48,828$(30,297) $269,409

Segment assets $981,237$996,310$1,335,012$847,767$(161,547) $3,998,779

Depreciation and amortization $33,390$44,781$31,509$36,456$1,845$147,981

Amortization of goodwill 

$—

$—

$—

$401

$—

$401

Loss on impairment of fixed assets $—$3,895$6,730$—$—$10,625

Investment in equity-method affiliates $36,509$56,369$51,591$25,671$—$170,140

Capital expenditures $37,419$47,919$54,140$36,064$1,907$177,449(Note 1).Adjustments amounts are as follows.
1)Adjustments of ¥(3,399) million ($(30,297) thousands) in segment profit are general corporate expenses.
2)Adjustments of ¥(18,124) million ($(161,547) thousands) in segment assets include ¥(39,543) million ($(352,465) thousands) in theelimination of transactions between segments and ¥21,419 million ($190,918 thousands) in corporate assets.
3)Adjustments of ¥207 million ($1,845 thousands) in depreciation and amortization expenses have primarily to do with corporate assets.
4)Adjustments of ¥214 million ($1,907 thousands) for capital expenditures are the increase in corporate assets.
50

Geographical sales for the years ended March 31, 2016 and 2017 were summarized as follows:
2016

Japan

Other

2017

Total

Japan

(Millions of yen)

¥368,004¥96,401

Other

2017

Total

Japan

(Millions of yen)

¥464,405¥363,394¥84,987

Other

Total

(Thousands of U.S. dollars)¥448,381$3,239,094$757,528$3,996,622

Geographical property, plant and equipment for the year ended March 31, 2016 and 2017 were summarized as follows:
2016

Japan

Other

2017

Total

Japan

(Millions of yen)

¥130,143¥22,040

Other

2017

Total

(Millions of yen)¥152,183¥130,433¥20,798

Japan

Other

Total

(Thousands of U.S. dollars)¥151,231$1,162,608$185,382$1,347,990

51

Report Of Independent Auditors

52

Overseas Network

OVERSEAS SUBSIDIARIES AND AFFILIATES
North America
Nikkei MC Aluminum
America, Inc.
Indiana, U.S.A.
Phone: 1-812-342-1141
Aluminum alloys(60%)

East Asia
Nikkei MC Aluminium(Kunshan) Co., Ltd.
Kunshan, China
Phone: 86-512-5763-1946
Aluminum alloys(85%)

Southeast Asia
Nikkei MC Aluminium(Thailand) Co., Ltd.
ThailandPhone: 66-3852-2296
Aluminum alloys(79%)

Toyal America, Inc.
Illinois, U.S.A.
Phone: 1-630-505-2160
Aluminum powder and paste(100%)

Nikkei (Shanghai) Body Parts
Co., Ltd.
Shanghai, China
Phone: 86-21-5986-9388
Automobile components(100%)

Nikkei Siam Aluminium
LimitedThailandPhone: 66-2909-7300
Aluminum sheet, foil
(100%)

Nikkei (Shanghai)International Trading Co., Ltd.
Shanghai, China
Phone: 86-21-6236-9659
Sales and marketing bases(100%)

Nikkei Singapore
Aluminium Pte. Ltd.
Singapore
Phone: 65-6293-3770
Trading and marketing(100%)

EuropeToyal Europe Société par
Actions Simplifiée
Unipersonnelle
Accous, France
Phone: 33-1-34-931020
Aluminum powder and paste(100%)NI Nikkei Shenzhen Co., Ltd.
Shenzhen, China
Phone: 86-755-2650-5656
Automobile components(55%)
Nonfemet International(China-Canada-Japan)
Aluminium Co., Ltd.
Shenzhen, China
Phone: 86-755-2661-1569
Extrusion(18%)
Toyal Zhaoqing Co., Ltd.
Zhaoqing, China
Phone: 86-758-3602-160
Aluminum paste(90%)
Sam-A Aluminium Co., Ltd.
Seoul, Korea
Phone: 82-2-3458-0600
Aluminum foil, paste(33%)(As of July 31, 2017)53

Directors And Officers

Directors

Audit & Supervisory Board Member

President
Representative Director

Nobuo Matsumoto
Takayuki Tsuchida
Koji Fukui
Yuzuru Fujita*2
Toshihito Hayano*2
Koji Yasui*2

Ichiro Okamoto
President and CEO of Nippon Light Metal Co., Ltd
Directors

Toshihide Murakami
Yasunori Okamoto
Hiroshi Yamamoto*2 Outside Member

President and CEO of Toyo Aluminium K.K.

Hiroyasu Hiruma
President and CEO of Nippon Fruehauf Co., Ltd.

Shozo Hamamura
Sho Adachi
President and Representative Director of Nikkeikin
Kakoh Kaihatsu Holdings Co., Ltd.

Officers

Yoshihiro Tomioka
Kotaro Yasuda
Masato Ono*1
Ryoichi Hayashi*1
Haruo Ito*1

Takashi Hara

*1 Outside Director

Kazuto Sanada

Masamichi Ueda
Hirokazu Takatoku
Minoru Sotoike
Hideki Amimura(As of June 27, 2017)
54

Profile

Corporate Data

Since its establishment, the NLM Group has been Japan’s sole fully integrated aluminum manufacturer
offering varieties of products ranging from aluminum raw material to fabricated products.
Aluminum has properties that make it a superb industrial material: it is lightweight and has
excellent processability, corrosion resistance, thermal conductivity, and recyclability. Nippon Light
Metal applies its core strengths — a wealth of knowledge about aluminum and its characteristics andtechnological capabilities that have been developed over many years — to supply a highly diversified
range of products to a number of key industrial sectors, including the automotive, electrical andelectronics, information and telecommunication, environment, safety, energy,
construction, railroad, and food products industries.
By carrying on development of new applications for aluminum and aluminum materials, the
NLM Group is to continue to support customers in wide-ranging industrial sectors and contribute to

Head Office

Major Shareholders

NYK Tennoz Building
2-20, Higashi-Shinagawa 2-chome
Shinagawa-ku, Tokyo 140-8628, Japan
http://www.nikkeikinholdings.co.jp
Phone: 81-3-5461-8601
Fax: 81-3-5461-8681

The Master Trust Bank of Japan, Ltd.
(trust accounts)(7.4%)

EstablishedThe Dai-ichi Mutual Life Insurance Co.
(3.2%)

October 1. 2012

improving the quality of people’s lives and protection of the environment.

Paid-In Capital¥46,525 million

NLM Group

Shares of Common Stock

Nippon Light Metal Holdings Company, Ltd. and its consolidated subsidiaries Years ended March 31

Authorized: 2,000,000,000
Issued: 619,937,500

2017

2016

2017
Thousands of
U.S. dollars

Millions of yen

For the year:
Net sales 
Operating profit Profit attributable to owners of parent ¥464,405 ¥448,381 $3,996,622
26,82130,225
269,40915,533
19,520173,991

Net Sales

452,194
144,419448,623
173,624

3,998,779
1,547,589

184,989

121,643

1,351,662

Operating Profit

Nippon Light Metal Holdings Company, Ltd.
Nippon Light Metal Company, Ltd.

Stock Exchange Listings

Nippon Light Metal Company, Ltd.

Nippon Light Metal Holdings Company, Ltd.

500

400

28

400

300

21

300

200

14

200

100

7

100

Transfer Agent of Common Stock
Sumitomo Mitsui Trust Bank, Ltd.
Last Shareholders’ Meeting

Total Assets

Nippon Light Metal Holdings Company, Ltd.

35

47,727Tokyo

At year-end:
Total assets 
Net assets 
Short-term borrowings and long-term debt,
including bonds and capital lease obligation 

500

Number of Shareholders

June 27, 2017

Nippon Light Metal Company, Ltd.

(Ratio of Stock Holding)Japan Trustee Services Bank, Ltd.
(trust accounts)(7.2%)

Nikkei-Keiyu-Kai(2.6%)The Light Metal Educational Foundation, Inc.
(2.4%)
Trust & Custody Services Bank,Ltd(securities investment trust account)(2.2%)
Asahi Mutual Life Insurance Co.
(2.1%)
Japan Trustee Services Bank,Ltd(trust accounts 9)(2.1%)
Mizuho Bank, Ltd.
(1.8%)CHASE MANHATTAN BANK GTS CLIENTSACCOUNT ESCROW (1.7%)(As of March 31, 2017)

Cautionary Statement
This annual report contains various projections and estimates. Important factors that could alter these projections and estimates include
changes in the balance of aluminum supply and demand, fluctuations in the price of aluminum ingot and foreign exchange rates, as well
as shifts in Japanese government policies and regulations. The Company cautions, therefore, that the projections and estimates contained

0

2012

2013

Billions of yen

2014

2015

2016

2017

Years ended March 31

0

2012

2013

Billions of yen

2014

2015

2016

2017

Years ended March 31

0

2012

2013

Billions of yen

2014

2015

2016

2017

herein involve risk and uncertainty, and that actual results could differ materially from those expressed or implied.

As of March 31

55

NIPPON LIGHT METAL HOLDINGS COMPANY, LTD. ANNUAL REPORT 2017

http://www.nikkeikinholdings.co.jp

Nippon Light Metal Holdings Company, Ltd.
NYK Tennoz Building, 2-20, Higashi-Shinagawa 2-chome
Shinagawa-ku, Tokyo 140-8628, Japan

Printed in JapanA N N UA L R E P O RT 2 017
Year ended March 31, 2017