NIPPON LIGHT METAL HOLDINGS COMPANY, LTD. ANNUAL REPORT 2018

http://www.nikkeikinholdings.co.jp

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

Printed in JapanA N N UA L R E P O RT 2018Year ended March 31, 2018

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.

Head Office

Major Shareholders

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(Ratio of Stock Holding)Japan Trustee Services Bank, Ltd.
(trust accounts)(8.3%)

EstablishedBy carrying on development of new applications for aluminum and aluminum materials, theOctober 1. 2012

NLM Group is to continue to support customers in wide-ranging industrial sectors and contribute toimproving the quality of people’s lives and protection of the environment.

Shares of Common StockNLM Group

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

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

2018

2017

2018
Thousands of
U.S. dollars

Millions of yen¥448,381 ¥481,439 $4,531,617
30,22529,893281,372
19,52018,012
169,541

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

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

Paid-In Capital¥46,525 million

For the year:
Net sales 
Operating profit Profit attributable to owners of parent 

The Master Trust Bank of Japan, Ltd.
(trust accounts)(8.3%)

448,623
173,624

467,300
189,322

4,398,532
1,782,022

151,643

141,494

1,331,834

Operating Profit

35

500

400

28

400

300

21

300

200

14

200

100

7

100

53,010Stock Exchange Listings
Tokyo
Transfer Agent of Common Stock

Nikkei-Keiyu-Kai(2.6%)The Light Metal Educational Foundation, Inc.
(2.4%)
Asahi Mutual Life Insurance Co.
(2.1%)
Mizuho Bank, Ltd.
(1.8%)

Sumitomo Mitsui Trust Bank, Ltd.
Last Shareholders’ Meeting

Japan Trustee Services Bank,Ltd(trust accounts 5)(1.8%)

June 26, 2018

Total Assets

500

Number of Shareholders

Japan Trustee Services Bank,Ltd(trust accounts 9)(2.7%)

Trust & Custody Services Bank,Ltd(securities investment trust account)(1.8%)(As of March 31, 2018)

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

2013

2014

Billions of yen

2015

2016

2017

2018

Years ended March 31

0

2013

2014

Billions of yen

2015

2016

2017

2018

Years ended March 31

0

2013

2014

Billions of yen

2015

2016

2017

2018

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............................................................................................................ 9
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

2018

2017

2018

yen

U.S. dollars

Per share data (yen and dollars):
Net profit —basic —diluted 
Cash dividends 
Net assets ¥34.58
31.46
8.00
257.82¥29.09—8.00
280.93$0.27—0.08
2.64

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

¥291
166

¥353
228

$3.322.15

Note: U.S. dollar amounts have been translated, for convenience only, at the exchange rate of ¥106.24= U.S.$1.00. See Note 2 of the Notes to the Consolidated Financial Statements.

Net profit per Share

Net Assets per Share

Cash Dividends per Share

35.0

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

2013

2014

2015

2016

2017

2018

Years ended March 31

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

0
Yen

2013

2014

2015

2016

2017

2018

Years ended March 31

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

0
Yen

2013

2014

2015

2016

2017

2018

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 2017 (the year from April 1, 2017 to March 31, 2018).
2

Business Environment of Fiscal 2017
During the fiscal year under review, the domestic aluminum
industry saw an increase in overall demand for aluminumproducts compared with the previous year, led by robust
demand for products for use in cars and trucks in thetransport industry and products for use in semiconductor and
LCD manufacturing equipment in the machinery industry.
Prices trended upward partly owing to the impact of decreased
production in China, a key producing country.
Three Basic Policies in the Mid-Term
Management Plan and Initiatives in Fiscal 2017
Under such circumstances, the NLM Group (the “Group”)
steadily and surely delivered results in the second year of the
Mid-Term Management Plan, which covers the period fromfiscal 2016 to fiscal 2018.
Under the first basic policy in the Mid-Term Management
Plan, “create new products and business models bystrengthening cooperation within the Group,” we createdmany new high value-added products in fields where
innovation is progressing. Specifically, mindful that weight
reduction and heat dissipation in electric automobiles are
increasingly important considerations, we commenced salesof battery cooling plates that combine the Group’s design,
alloy development, and processing technologies. In addition,
we created a wide range of new products that leverage theGroup’s distinctive strengths related to lithium-ion batteries
and semiconductors.
In implementing the second basic policy in the Mid-Term
Management Plan, “business development through strategies
by region and by sector,” we channeled management
resources into fields selected in view of the matrix of regions
and markets and strove to maximize return on investment.
To cite specific examples, in Japan we increased thenumber of production lines for CFC-free thermal insulated
incombustible panels and also increased production capacity
in the aluminum sheet business step by step through the
improvement of facilities. Overseas, we actively pursued
business expansion in regions other than China and Southeast
Asia, establishing a marketing base in North America andcommencing manufacture of aluminum paste for paints at a
joint venture company established in India in fiscal 2016.
Improving the profitability of struggling businesses isa key element of the third basic policy in the Mid-Term
Management Plan, “strengthening of corporate culture(strengthening of business foundations).” First of all,profitability has improved in the trailer business in China
and the truck business in Thailand, which are unprofitableoverseas businesses, through the introduction of new products
and strengthening of sales networks. In Japan, earnings
significantly improved at Toyo Rikagaku Kenkyusho, which
achieved progress in the improvement of non-defective rate
and production system streamlining, supported by the Group.
The business foundation of the alumina business was also
strengthened as a result of efforts to improve the product mix
and revise product prices, despite factors that reduced profits,
such as soaring raw material and fuel prices.
Overview of Consolidated Financial Results
As a result of the initiatives described above coupled with anincrease in the market prices of aluminum ingots, an indicatorof sales prices in the Aluminum Ingot segment, Aluminum
Sheet segment and Aluminum Extrusions segment, net sales
increased 7.4% year on year to ¥481.4 billion. In terms of
profit, operating profit decreased 1.1% year on year to ¥29.9
billion, partly owing to higher prices of raw materials andfuels. Ordinary profit increased 12.5% year on year to ¥29.5
billion partly due to an increase in equity in earnings ofaffiliates and a decline in foreign exchange losses. However,profit attributable to owners of parent decreased 7.7% year on
year to ¥18.0 billion, reflecting the recording of special losses
such as a litigation settlement in the fiscal year under review,
and also because the Company recorded special gains in theprevious year, including gain on sales of investment securities.
Year-end dividend payment will be ¥4 per share, which,combined with the interim dividend of ¥4 already paid, willbring annual dividend payment to ¥8 per share (the sameamount as the previous year).
Overview by Business Segment
Net sales in the Aluminum Ingot and Chemicals segment
increased 9.1% year on year, to ¥111,100 million, while
operating profit decreased 11.6% year on year to ¥8,954
million. Regarding alumina-related products, although
exports of mainstay alumina and aluminum hydroxide
products decreased, domestic sales were robust. In the
Aluminum Ingot segment, regarding the core secondary
alloy products for automotive applications business, sales
increased in line with the start of operation of a new factoryin Thailand. Net sales of this segment increased, affected by3

To Our Shareholders

the increase in sales prices, which reflected the ingots market.
Profits decreased owing to higher raw material and fuel prices
in both segments as well as intensifying price competition in
the Aluminum Ingot segment.
Net sales in the Aluminum Sheet and Extrusions segment
increased 9.0% year on year to ¥106,955 million, andoperating profit increased 25.6% year on year to ¥9,767
million. In the Aluminum Sheet segment, in addition tobrisk demand for thick plates for semiconductor and LCD
manufacturing equipment and related parts, shipments ofproducts for lithium-ion batteries and for PC and tablet cases
were robust. In the Aluminum Extrusions segment, demandfor products for truck outfitting and for industrial tools andmachinery was at a high level. Profits increased owing to theincrease in sales prices in both segments, reflecting conditionsof the aluminum ingots market, coupled with the increase in
the percentage of high value-added products in the Aluminum
Sheet segment and improvement of the profitability of the
sheet fabrication business.
Net sales in the Fabricated Products and Others segment
increased 9.3% year on year to ¥169,019 million, while
operating profit decreased 4.5% year on year to ¥9,783
million. In the truck outfitting business, amid continuing
high domestic demand, sales increased as a result of
increasing production capacity by introducing a rotating
shift system. Regarding capacitors for air conditioners, salesof new products for electric vehicles increased favorably
in addition to robust sales of products for mini vehicles inJapan, the mainstay market. Sales of shaped parts exceeded
the previous year’s level thanks to an increase in the numberof automobiles manufactured in Japan and brisk exports to
China. In the Panel System segment, in addition to favorable
sales in industrial refrigerator and freezer sector, where
sales of panel systems for low-temperature distribution
warehouses increased greatly, and demand for panel systems
for use in clean rooms was robust. In the Carbon Productsegment, sales of our major products including carbon
blocks for blast furnaces and electric furnaces, and cathodes
increased. Factors contributing to the decrease in profit werehigher materials prices and a rise in expenses in line with
the implementation of a rotating shift system in the truck
outfitting business.
Net sales in the Aluminum Foil, Powder and Paste segment
increased 0.7% year on year to ¥94,365 million, while
operating profit decreased 11.4% year on year to ¥4,856
million. With regard to high-purity aluminum foil forelectrolytic capacitors, sales of high value-added products
4

were robust. Although sales of some standard foil products
declined, sales of water-repellent fabricated foil for foodproducts and plain foil for lithium-ion battery surfaces werebrisk. Although sales of products for home appliances andfood packaging materials for ink decreased, sales of mainstay
products for automobile paint increased, mainly in overseas
markets. As for powder products, sales of aluminum nitride
for heat dissipation substrate were buoyant. In the Solarsegment, although sales of mainstay products of back sheets
for solar cells were lower than the previous year’s level due
to intensifying price competition and curtailment of sales tocertain users who pose creditworthiness concerns, sales of new
functional ink for solar cells increased favorably.
Outlook for Fiscal 2018
Whereas improvement in corporate earnings and theemployment and income situation is progressing and themoderate recovery of the Japanese economy is expected tocontinue, there is concern that heightening of trade friction
resulted from the U.S. administration’s implementation ofpolicy, the prospects for the U.K.’s Brexit negotiations, thesituation in the Middle East and North Korea, and otherpolitical and geopolitical risks will be a drag on economic
expansion.
Meanwhile, demand for aluminum products is expected toremain robust owing to such factors as progress in conversionof components to aluminum in line with the rise of lightweightautomobiles and increased use of aluminum in semiconductorand LCD manufacturing equipment.
Under such circumstances, the Company projects net
sales of ¥510.0 billion, operating profit of ¥32.0 billion, andordinary profit of ¥31.0 billion in fiscal 2018. The NLM Groupaims to achieve steady growth in the final year of the MidTerm Management Plan under the slogan of Team NLM“Groundbreaking Innovator of Aluminum and Beyond.”
I would like to ask for the continuous support of ourshareholders in these efforts, just as we would do everything in
our power to further develop the Group.
June 2018

President & CEO
Ichiro Okamoto

Special Feature: An Interview with President Okamoto

Based on the three-year Mid-Term Management Plan, whose final year is the fiscal year
ending March 31, 2019, the Group has adopted 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

What is your assessment of the financial results for the fiscal year ended
March 31, 2018, the second year of the Mid-Term Management Plan?
Ordinary profit for the fiscal year under review was ¥29.5 billion, compared to a forecast of ¥28.0 billion. I see
positive signs that we have developed into a strong corporate group by pursuing Group-wide cooperation andoffering proposals that anticipated customer wants. In terms of individual businesses, we achieved solid results inmaterials for semiconductor manufacturing equipment, products for the transport sector, and the panel systembusiness.
As a result of the above, we paid an interim dividend for a second consecutive year and declared an annual
dividend of ¥8 per share.

Q2

Profits have increased during the three years since you became president.
Do you expect this trend to continue?
During the past few years, although the business environment has changed drastically as indicated by wild
fluctuations in aluminum ingot prices, Brexit, the North Korea issue, and moves by the U.S. administration toraise tariffs on steel products and aluminum products, the trend for the NLM Group as a whole has been towardhigher profit.
I think this is an outcome of the Group’s active promotion of internal cooperation and the ability of R&D,
production, and sales to come together to systematically engage in “the creation of value that delights
customers.”
However, I am not satisfied with the status quo and am managing with a sense of urgency to ensure that the
NLM Group continues to grow from now on.

5Special Feature: An Interview with President Okamoto

Q3

What does “managing with a sense of urgency” involve?
The NLM Group must be a business group that constantly creates the ultimate in value for customers. Customers
will only gravitate to us if we bring broad and deep expertise to the projects on which they are concentrating theirefforts and resources, and since business is essentially a competitive endeavor, we have to respond swiftly.
In addition, the Group must have manifold strengths. Even if a market is growing, we cannot enter it unlessthe Group has strengths that it can leverage in that market. To sell technology in the form of products, we musthave sales capabilities, production infrastructure, a service system, and distribution, and we can prevail incompetition only if we have expertise and the necessary organizational structure to back it up.
With a view to achieving sustainable growth, we are endeavoring to identify “what is required in order tocontinue creating new value for customers” and “what we need to do so that customers can perceive andexperience value unique to the NLM Group.”

Q4

In March 2018, the “Team NLM HINT-BOX” showroom opened on the third
floor of the head office. What is the showroom’s mission?
I believe that the key to “creating value for customers” is to discover “what customers want and need.” However,that is not a simple task. I think we must begin by making sure customers are fully informed about the Group’s
products and “the strengths (technologies, human resources, networks, etc.)” we can deploy.
First, as a way of facilitating a deeper understanding of the Group, we launched a project team whose goal
was to prepare a venue that, unlike typical showrooms, was conceived and designed “to inspire customers.” At theresulting showroom, “Team NLM HINT-BOX,” we start with the unique approach of attaching a tagline to eachproduct so that visitors will wonder, “What’s this?” Then, we explain the features and strengths of the products,
encourage visitors to handle the actual products, and present a narrative on the making of each product.
Conjuring up an “Aha!” revelatory moment increases the likelihood of positive associations of NLM becoming
embedded in the customer’s mind. In this way, the showroom serves as “a reminder that NLM is a fascinatingcompany,” becoming the “catalyst” to motivate customers to contact us when they encounter a challenge, andhelping them find what they are seeking. We opened the showroom and named it “Team NLM HINT-BOX”
because we hope to directly obtain “hints (direct feedback)” from customers visiting the showroom. I hope thatmany people will visit the showroom and experience the NLM Group “up close.”6

Q5

What challenges is the NLM Group tackling in the final year of the MidTerm Management Plan?
I think there are three key challenges. The first is to “refine strengths while focusing on the customer’s
perspective,” which I mentioned earlier. The second is to “look to the future and consider the possibility ofincreasing profitability in ways that transcend existing frameworks.” The third is to “increase the quality ofhuman resources,” the people who tackle those challenges.
What links these three challenges is the slogan I constantly repeat: Team NLM “Groundbreaking Innovatorof Aluminum and Beyond.” Based on the corporate philosophy of “Be forever committed to the development of
new applications for aluminum and aluminum-related materials and thereby contribute to the improvement ofpeople’s quality of life and environmental protection,” the NLM Group will work to achieve its targets for the final
year of the Mid-Term Management Plan.
I would like to ask for the continued support of our shareholders and other stakeholders towards the NLMGroup.

Ichiro Okamoto President & CEO(Photo taken at the “Team NLM HINT-BOX” showroom)

7

NLM Group Topics
Feature:Selection as ESG Stock by the GPIF and CSR Activities of the NLM GroupThe Company’s stock was selected as an ESG stock by the GPIF
For the two consecutive years of 2017 and 2018, the Company’s stock was selected as one of the 251 stocks of the MSCI Japan ESG
Select Leaders Index, which is one of the ESG indices selected by the GPIF.
Reason for selection as an ESG stock
We believe that the Company’s stock was selected as an ESG stock
based on a favorable evaluation for the NLM Group’s management
efforts from the three perspectives of environment, society, andgovernance. These efforts include the improvement of safety andways of working of our employees as human assets, the promotionof diversity including the active participation of women, ensuring
human rights in the supply chains and activities for protecting theenvironment and preserving biodiversity, not to mention ensuring
compliance.

CSR activities of the NLM GroupThe NLM Group commenced CSR activities in full scale in 2011. As we have promoted such activities by ensuring consistency
between international goals with our own issues by referring to ISO26000, an international standard, the number of items for theaction plan, which was initially 98, has increased to 138 at present, and Group initiatives are becoming more proactive every year.
Based on organizational governance and compliance, the NLM Group
conducts CSR activities in line with the following three frameworks:(1) Activities that lead to the happiness and pride of employees(2) Activities that lead to the profits of our stakeholders(3) Activities that can help overcome social issues or contribute to
the public interest

Shown below are typical examples of our CSR initiatives.
SocialActivities that can help
ContributionThe
overcome social
Environment
issues or contribute Community
Involvement andto the public
Development
Humaninterest
RightsFair Operating
Practices
ConsumerIssuesLabor
Practices

Activities thatlead tothe profits ofourstakeholders

Activities that lead to the happinessand pride of employees

Org
aniz
ational governanceceComplian

Corporate governance and internal control, and others

ENVIRONMENT
Meeting of the Group’s environmental practitioners held
overseas (Thailand) for the first time

The NLM Group aims to create a sustainable society that coexists inharmony with the global environment. Viewing the development of
human assets as one of the critical issues of the environmental
conservation department, we are promoting various educational
initiatives on environmental conservation according to the business
operations of each site (Note). In October 2016, we held a meeting ofenvironmental practitioners, which is a part of such activities, for the
first time at an overseas venue. Given the rising need for environmental
management overseas, to respond to this situation in a group-wide
manner, we held the meeting in Thailand, where we have many sites
and where a large number of environmental initiatives are promoted.
The NLM Group will continue to hold meetings of environmental
managers in our efforts to reduce domestic and overseas
environmental risks.
(Note) Scope of application of the environmental management system and the unit thereof

SOCIAL
Nikkei Siam Aluminium Ltd. participated in the Group’s
Conference for Presentation of Improvement Cases

The NLM Group promotes the development of human assets who
can play active roles globally. As one of these initiatives, we hold
8

Meeting of environmental
practitioners (Thailand)

Scene of presentation of improvement case by a team

the Conference for Presentation of Improvement Cases, which aims
at developing human assets for manufacturing sites and promoting
improvement activities, gathering participants from different sites
including overseas bases.

GOVERNANCE
We make efforts to communicate with our shareholders and investors

The Company values communication with shareholders andinvestors and makes efforts to facilitate such communication. For
example, since nine years ago, we have been using videos andnarrations at the general meetings of shareholders to facilitate anunderstanding of the agenda items and business topics. In
addition, we disclose information on the internet at an early stage
and allow our shareholders to exercise their voting rights on theinternet. Furthermore, responding to an increase in foreign
shareholders, in 2017, we began issuing an English version of thenotice of convocation of the general meeting of shareholders.
Quality assurance system
The NLM Group is pushing ahead with strengthening the quality
assurance system in order for us to allow customers to use our
products that combine the technologies and expertise of groupcompanies with a sense of security. As one of these initiatives, we
conduct quality audits of our domestic and overseas bases every
year. In fiscal 2016, we checked the methods of the management andassurance of inspection equipment used in the processes, in addition
to the existing audit items, and confirmed that none of the 64 bases
have any problems.
Also, since fiscal 2014, the NLM Group has been conducting
independent studies of quality (Hinshitsu Jishuken), which are aimed
at improving the quality assurance level of the overall group. Throughthis program, we strive to foster human assets who can play theleading role in quality assurance.

Our ESG Approach

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.
The Board of Directors of the Company consists of 13 directors, ofwhom four are outside directors (including three independent
officers*). 12 Board of Directors meetings were held in fiscal 2017. To
ensure agile management and sufficient deliberation by the Board of
Directors, an executive officer system has been adopted to separate
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. 11 Board of Statutory
Auditors meetings were held in fiscal 2017. Also, there is an employee
designated to exclusively provide assistance for auditing duties.

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 76
consolidated subsidiaries, with Nippon Light Metal Company, Ltd.
(“NLM”) and Toyo Aluminium K.K. as the core business companies,
and 15 affiliates accounted for by the equity method. The NLMGroup engages in business revolving around the manufacture andsale of aluminum products and related products.

Governance Structure
The NLM Group’s basic approach to management is systematized in
the Group management policy, which consists of three pillars and 13
basic policies.
Regarding the governance of the Group, while respecting theautonomy of each company, management is carried out based on theGroup regulations, etc. stipulated by the Company. For matters that
affect the entire Group, an Executive Committee which consists of* “An outside director/auditor who is unlikely to have conflicts of interest
with general shareholders,” as stipulated by Tokyo Stock Exchange, Inc.

Figure 1 Governance Structure
NLM’s CORPORATE GOVERNANCE STRUCTURE
General Meeting of Shareholders
Appointment / removal

Audit reports

Appointment / removal

Appointment / removal

Directors
Outside directors

Audit reports

Board of Directors
Appointment/ removal

Accounting Accounting
auditoraudit

President and CEOGroup Executive
Committee

Officers• Compliance Committee• CSR Committee• Quality Committee• Environment Committee

Operations,subsidiaries and affiliates
Reports andproposals
Information exchange

Board ofauditors

Appointment / removal

Statutory
auditorauditsAuditors
Outsideauditors

Internal
audit

Central CSR and Audit OfficeInformation exchange

Audit reports / information exchange

9Our ESG Approach

Communication with Stakeholders
The NLM Group values sharing information and exchanging
opinions through communication with stakeholders, and opinions it
receives are reported to persons responsible for the respective
businesses and business managers, and handled so that such
opinions are reflected in management.
Stakeholder

Method of communication

Employees

Share issues and exchange opinions through the labor
union, etc. Make regular communication mainly throughindividual interviews, meetings, and various events.

Customers

Persons responsible for sales and businesses shareissues and exchange opinions through usual businessnegotiations.

Business
partners

Persons responsible for purchase and businesses
share issues and exchange opinions throughopportunities such as usual business negotiations andbriefings for business partners.

Regional
society

Each business location maintains communication
through participation in local events and businesslocation events to which local residents are invited.
Further, shares issues and exchanges opinions byholding regular and irregular briefings for residents inregions with a relatively large environmental impact, etc.

Shareholders Share issues and exchange opinions mainly throughand Investors general meetings of shareholders, financial results
briefings, tours of business locations, and individual
meetings.
Overall

Discloses this report, CSR report, and various
communication tools principally on the website, andshares information and exchanges opinions throughtelephone, e-mail and other means.

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 Compliance Code ispublished as a handbook that is distributed to all employees, whichallows them to carry it around with them at all times.
Furthermore, to thoroughly disseminate the Compliance Codeand facilitate its understanding, compliance meetings are held twicea year at each workplace, where the repetitive learning method is
employed. Opinions are exchanged on topics including complianceproblems at one’s workplace and compliance violation cases in one’s
and other workplaces. In fiscal 2017, a total of 2,102 meetings were
held, and a total of 20,237 employees participated in such meetings(participation rate of 92%).
Besides setting up the NLM Group’s whistle-blower system at major
companies, the “NLM Hotline” has also been established as a common
whistle-blowing channel for the Group. Under these systems, whistleblowers are thoroughly protected so that they can report any
misconduct and illegal act without fear of retaliation. The NLM
Hotline receives consultations and reports of about 20 cases each year.

Figure 2 Trend in Number of Cases Reported to
And Consulted with the NLM Hotline for
Which Investigation was Conducted
case
10
10
9
8

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. Each company and department in the Grouphas designated a person in charge of internal control promotion andan internal control facilitator, to encourage the appropriate
establishment and usage of controls. The status of such efforts isreported to the Company’s Board of Directors every half-year, andguidance is provided as necessary.

Compliance Program
The Company’s Compliance Committee is made up of the Company’s
directors and chaired by the President and CEO. The Committee’s policies
are embodied in the Compliance Promotion Plan, and the implementation
status of the plan is reported to the Committee every quarter.
The NLM Group’s code of conduct is summarized as the Group
Compliance Code, which has various requirements for all directors
10

7

7

6
4

3

2
0

2013

2014

2015

2016

2017 FY

Risk Management
The NLM Group’s risk management system responds to risks classified
into three categories: strategic risks related to business strategies,
market and economic fluctuations, regulatory reforms, etc.;
operational risks related to product and service defects, environmental
accidentals, etc.; and hazard risks related to natural and accidental
disasters. In particular, major risks are specified, with a focus on
operational risks. In order to respond flexibly to each type of risk thatarises, NLM Holdings’ central risk supervisory department works withbusiness companies and departments in handling the risks.

The Company’s Board of Directors receives reports regarding thestatus of risk management every half-year, evaluates it, and issues
necessary instructions. What provides the basis of this step is auditsof more than 250 cases a year conducted within the NLM Group for
76 companies by a central supervisory department for each risk of
NLM Holdings. There is an audit team for each field including
quality assurance, environmental conservation, labor management,
information system, accounting and duties, and internal control.
Each audit team implements the audit plan, and results of theaudits, along with adjustments, are reported to the officer in chargeof risk issues, the President and CEO of NLM Holdings, and theCompany’s Board of Directors.

Internal Control over Financial Reporting
To ensure financial reporting is conducted appropriately, aninternal control system related to financial reporting has been set up
and put into operation. These efforts are evaluated by an auditing
department with the necessary auditing capabilities and whose
independence is secured. The status of design, operation andevaluation is reported to the statutory auditors, the accounting
auditor, and the Company’s Board of Directors, after which
adjustments are made as necessary.
In fiscal 2017, it was confirmed that the NLM Group’s internal
control continued to be effective.

CSR INITIATIVESIntroduction
The CSR activities of the NLM Group are carried out based on the
CSR Promotional Plan adopted by the CSR Committee (Chairman:
President and CEO of NLM Holdings), and the status of the activities
is reported in the CSR Report every year, as well as published on the
Company’s website, etc.
The NLM Group’s CSR initiatives have also been valued byinvestors, and the Company was selected as a constituent of the
MSCI Japan ESG Select Leaders Index of the Government Pension
Investment Fund (GPIF) in July 2017, and as a constituent of the
SNAM Sustainable Investment of Sompo Japan Nipponkoa AssetManagement Co., Ltd. in June 2018.

ENVIRONMENT
Environmental Management System
The NLM Group has established the Environment Committee,
chaired by the President and CEO, to implement environmental
conservation initiatives for the entire Group. Besides formulating theenvironmental policy and plans to promote environmental
conservation activities, the Group 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 at sites in Japanare water (23 million m³), energy (9.8 PJ of electric power, 5.0 PJ offuel), and aluminum (174 kilotons). The main outputs at sites inJapan are water (28.2 million m³), greenhouse gases (802 kilotonsCO2), and waste materials (32.4 kilotons of recycled/reduced, 2.2
kilotons of land fill).

Reduction in Greenhouse Gas Emissions
The NLM Group’s initiatives to reduce greenhouse gas emissions atsites in Japan began in fiscal 2005. A 36% reduction, equivalent to
496 kilotons, from fiscal 1990 levels was achieved in fiscal 2010.
(First phase of reduction plan)
The second phase of the reduction plan, which began in fiscal
2013, has a goal of achieving a 15% reduction from 2005 levels andreducing emissions to 973 kilotons or less by fiscal 2020.
In fiscal 2017, greenhouse gas emissions were 802 kilotons, a
0.8% increase year on year, as reduction efforts continued to beoffset by an increase in emissions mainly due to increased
production since fiscal 2014.
Meanwhile, as the achievement of the goal for fiscal 2020(second phase of the reduction plan) is now in sight, we haveformulated the third phase of the reduction plan. The new voluntaryaction plan aims for “reducing Scope 1 and Scope 2 greenhouse gas
emissions intensity per unit of sales to 1.82 tons-CO2 per million yen
by fiscal 2030 at the NLM Group’s sites in Japan.”
Total emissions of the NLM Group, including overseas locations,were 930 kilotons, a 0.4% decrease year on year, in fiscal 2017. As
emissions from overseas locations are expected to continue
increasing mainly due to increased production and number oflocations, we plan to continue implementing efforts to reduce
emissions by utilizing energy-saving expertise cultivated in Japan.
11Our ESG Approach

Figure 3 Greenhouse Gas Emissions(Scope 1 + Scope 2)

PEOPLE AND SOCIETY

k ton-CO2

Human Rights

1200 1,143

The NLM Group conducts human right protection activities within
the scope of its influence. Regarding human right protection
activities within the Group, we conducted a fact-finding survey onGroup employees in fiscal 2017, and confirmed that children under
the age of 15 did not work in any of the Group businesses.
Each year, NLM also conducts research on more than 300
companies which are its transactional business partners regarding
CSR procurement, and confirms their approval of the CSR
Procurement Policy including the NLM Group Human Rights policies.
Furthermore, we check for human rights violations throughon-site visits and interviews to the management at manufacturing
and factory sites of partners. Also, regarding aluminum virgin
ingots, the Group’s main raw material, we have obtained thesignature of consent to the Group’s Human Rights Policy from eachof the smelting manufacturers in the world.

973

1000
800

695

748

768

796

802

2014

2015

2016

2017

600
400
200
0

2005
Base Line20132020 FY
TargetRecycling
The NLM Group implements aluminum recycling initiatives throughbusiness. Locations with melting processes use scrap collected fromGroup companies and customers as the main raw material.
Meanwhile, Nikkei MC Aluminium Co., Ltd. handles secondary
alloy business, which uses scrap purchased from the market as themain raw material, in and outside of Japan. This scrap aluminum iscollected from 22 countries around the world and totals 176 kilotons
a year (fiscal 2017 result). By using scrap as raw material, 2,390
Gwh of electricity can be saved compared to the amount of electricity
required for producing the same amount of aluminum by refining.
This is equivalent to 1,266 kilotons in greenhouse gas emissions(end-use CO2 emission intensity: 0.516).
Since scrap has a high value, is easily remelted and widelyused in areas such as construction, automobiles, and daily
necessities, it is considered to be well suited for recycling. Our
secondary alloy business initiatives also contribute to saving
resources and energy.

Water
In fiscal 2017, the NLM Group took in 23.0 million m3 of water(excluding seawater) and discharged 28.2 million m3 of water
annually in Japan.

Environmental Audit
The Company implements environmental audits conducted by NLM
Holdings’ central supervisory department, in order to monitor theenvironmental conservation efforts of each site and makeadjustments as necessary. Results of the audits are reported to theofficer in charge of environmental issues, and shared with the
Executive Committee, Environment Committee, etc. of the Company.
12

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 discriminationand 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 ofthese activities is monitored by the staff of NLM Holdings’ central
supervisory department through labor audits which cover 335 items. In
fiscal 2017, problems concerning long working hours were taken up,
and a review of the 36 Agreement* as well as visualization of overtime
hours, among other things, were carried out.
* Provisions under Article 36 of the Labor Standards Act. A labormanagement agreement that enables workers to work overtime, and has
an effect of limiting maximum overtime hours.

Fair Operating Practices
The NLM Group aims to conduct fair and transparent business activities
while adhering to laws and regulations of each country and region as
well as international laws and regulations. In fiscal 2017, to prevent
unfair competition and corrupt practices, we revised the Guidelines on
the Prevention of Cartels and Collusions, formulated anti-bribery rules,

and require all officers and employees to follow them. The disseminationand entrenchment of the guidelines and rules are advanced through thecompliance-oriented programs.

Involvement with Regional Communities
The NLM Group conducts its business activities in 178 regions of 10
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.
We are also actively involved in the development of regionalsocieties and make contributions in accordance with the Social
Contribution Policy of the NLM Group. In fiscal 2017, the NLMGroup participated in 282 community programs, and madecommunity investments of ¥133 million.

Figure 4 Trend in Amount of Expenditure forSocial Contributions
Millions of yen
200

163
150

95

100

133

121

117

2014

2015

50
0

2013

2017 FY

2016

Data Section : ESG Related Data
Item
Environment
Amount of greenhouse gas emissions (Scope 1 and Scope 2)
Greenhouse gas emission intensity per unit of sales
Breakdown of Scope 3 emissions*2 Category 1 Purchased goods and services*3

Scope of Calculation
Consolidated (Japan)
Consolidated (besides Japan)*1
Consolidated (Japan)
Consolidated

Category 2 Capital goods
Consolidated
Category 3 Fuel and energy not included in Scope 1 or 2 Consolidated
Category 4 Upstream transportation and distribution
Consolidated
Category 5 Waste generated in operation
Consolidated
Category 6 Business travel
Consolidated
Category 7 Employee commuting
Consolidated
Electricity
Consolidated (Japan)
Energy consumption
Fuels
Consolidated (Japan)
Consolidated (Japan)
Energy consumption intensity per unit of sales
Consolidated (Japan)
Weight of raw materials used in production
Consolidated (Japan)
Amount of SOx emissions
Consolidated (Japan)
Amount of NOx emissions
Consolidated (Japan)
Total volume of water intake*4
Consolidated (Japan)
Total volume of water discharged
Consolidated (Japan)
Amount of COD emissions
Recycled/Reduced
Consolidated (Japan)
Amount of waste and byproducts
Disposed (landfill)
Consolidated (Japan)
discharged
Environmental conservation cost: Investment Consolidated (Japan)
Environmental accounting
Environmental conservation cost: Expenses
Consolidated (Japan)
Economic effect of environmental conservation
Consolidated (Japan)
activities: Gains
Economic effect of environmental conservation
5 6 Consolidated (Japan)
activities: Increases/decreases in expenses* *Consolidated
Number of cases of lawsuits, penalties, or forfeitures concerning the environment

Number of accidents concerning the environment*7
Number of complaints concerning the environment*8
Employees*9
Full-time officers
Number of employees
Employees (Managerial positions)
Employees (General positions)
Employees

Consolidated
Consolidated
Consolidated
Consolidated
Consolidated
Consolidated
Consolidated
Consolidated
Consolidated

Male
FemaleMale
FemaleMale
FemaleTotal

FY2015FY2016FY2017

Unit

768
—
2.09
1,858
17
34
11
3
0
3
8.5
4.9
36.5
678
312
437
22.6
26.1
92
33.2
2.4
1,612
5,517
383

796
138
2.19
1,962
21
33
11
4
0
3
9.5
4.9
39.6
618
339
388
23.7
30.5
109
33.5
2.9
2,009
5,847
397

★ 802

Ktons-CO2
Ktons-CO2
Tons-CO2/million yen
Ktons
Ktons
Ktons
Ktons
Ktons
Ktons
Ktons
PJ
PJ
GJ/million yen
Ktons
Tons
Tons
million m3
million m3
Tons
Ktons
Ktons
million yen
million yen

3,174

2,770

0
2
11

0
3
4

170
0
1,506
67
8,258
2,270
12,101

187
0
1,529
73
8,385
2,278
12,265128
2.09★ 1,926
22
28
11
4
0
3
9.8
5.0
38.4
576
389
375
23.0
28.2
89
32.4
2.2
1,983
5,247
486

million yen(1,440) million yen
0 cases
0 cases
10 cases
190
0
1,540
90
8,295
2,083
12,008

employees
employees
employees
employees
employees
employees
employees

13Data Section : ESG Related Data
Item
Employees*9
Number of employees by country/region Japan
Asia
U.S. and Europe

Number of new hires*10

Total
Percentage to employees
Number of new graduates who were recruited*10
Number of those who left the company*10 Total
Percentage to employees
Fixation rate at least 3 years in the company*10*11

Number of those who were re-employed after retirement
Labor Union participation rate
Average age*10
Average years of service*10
Average number of working hours per year*10
Average number of overtime hours per year*10
Average number of days of annual leave taken*10
Average rate of annual leave taken*10
Number of employees who newly took childcare leave*10

Number of employees who newly took nursing care leave*10
Number of employees who used reduced working hour system*10
Number of employees on leave due to mental health issues*10

Scope of Calculation

FY2015FY2016FY2017

7,109
961
2,419
1,337
236
39
—
—
—
—
—
—
17
100
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2.41
2.12
13
7
56
4
0.70
0.59

7,173
980
2,506
1,331
235
40
—
—
—
—
—
—
26
100
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2.47
2.05
9
8
43
9
0.46
0.00

7,361
1,048
2,243
1,089
231
36
596
7.1
197
401
3.5
88.4
8
100
39.1
36.9
11.5
7.7
2,146
1,974
324
161
9.9
9.7
52.5
71.6
1
55
2
1
0
61
34
2
29.2
2.59
2.03
12
8
65
5
0.56
0.27

employees
employees
employees
employees
employees
employees
employees%
employees
employees
employees%
employees%
years of age
years of age
years
years
hours/employee
hours/employee
hours/employee
hours/employee
days
days
%
%
employees
employees
employees
employees
employees
employees
employees
employees
thousand yen/
employee
%
%
cases
cases
cases
cases

Consolidated
Consolidated

3
2,038
19,600
180
93

9
2,230
19,991
126
143

7
2,102
20,237
182
107

cases
times
Total number ofparticipants
cases
cases

Consolidated
Consolidated
Consolidated

0
8
3

0
10
4

0 cases
6 cases
2 cases

Consolidated

117

163

133 million yen

Consolidated

68Consolidated
Male
Consolidated
FemaleConsolidated
Male
Consolidated
FemaleConsolidated
Male
Consolidated
FemaleConsolidated (Japan)
Consolidated (Japan)
Consolidated (Japan)
Consolidated (Japan)
Consolidated (Japan)
Consolidated (Japan)
Non-consolidated (Nippon Light Metal Co., Ltd.)
Non-consolidated (Nippon Light Metal Co., Ltd.)
Consolidated
Male
Consolidated
FemaleConsolidated
Male
Consolidated
FemaleConsolidated (Japan)
MaleConsolidated (Japan)
FemaleConsolidated (Japan)
MaleConsolidated (Japan)
FemaleConsolidated
Male
Consolidated
FemaleConsolidated
Male
Consolidated
FemaleConsolidated (Japan)
MaleConsolidated (Japan)
FemaleConsolidated (Japan)
MaleConsolidated (Japan)
FemaleConsolidated (Japan)
MaleConsolidated (Japan)
FemaleConsolidated (Japan)
MaleConsolidated (Japan)
FemaleAverage education/training expenses per year*10

Consolidated

Employment rate of people with disabilities*12*13

Non-consolidated (Nippon Light Metal Co., Ltd.)
Non-consolidated (Toyo Aluminium K.K.)
Consolidated (Japan)
Consolidated (besides Japan)
Consolidated (Japan)
Consolidated (besides Japan)
Consolidated
Non-consolidated (Nippon Light Metal Co., Ltd.)

Number of workplace injuries*14

Lost-time injuries
Non-lost-time injury

Frequency rate of lost-time injuries*14*15
Compliance
Number of cases reported to the NLM Hotline for which investigation was conducted
Number of meetings held
Compliance meetings
Number of participants

Number of patent publications*14
Number of patent registrations*14
Quality assurance
Number of legal violations in the delivery of products/services
Number of reports of quality issues
Number of recalls
Community
Amount of expenditure for social contributions
GovernanceInterim and year-end dividend per share

Consolidated
Consolidated
Consolidated

Unit

8 yen

The ★ mark indicates that a third party, KPMG AZSA Sustainability Co., Ltd., has provided independent assurance for the reliability of the data.
*1. From fiscal 2017, the amount of CO2 emissions related to electricity is calculated by using CO2 emission factors by country included in “CO2 emission from fuel combustion 2017” released by
the IEA. The figures for fiscal 2016 have been restated accordingly. *2. The emissions are calculated by multiplying the activity amount by the CO2 emission factor published by the Ministry of
Economy, Trade and Industry and the Ministry of the Environment.” *3. The Scope 3 Category 1 emissions are calculated based on the volume of purchase of the top three items in terms ofpurchase volume. Of the items, the aluminum ingots are those purchased by Nippon Light Metal Co., Ltd.” *4 The seawater intake quantity is not included.” *5. Changes in expenditure arecalculated using the following formula: Changes in expenditure = expenditure incurred during a base period (fiscal 2016) – expenditure incurred during the current year (fiscal 2017)*6. - (minus) indicates an increase in expenditure. *7. Environmental problems that affect external parties (such as the leakage of oil or chemicals)” *8. Number of petitions from external
parties (such as those regarding smell and noise) *9. Contract employee (full-time) is not included. *10. Starting from fiscal 2017, consolidated figures are reported. *11. Percentage of
employees who are still at the company as of April 1 in the year that is three years after they joined the company.” *12. During the calendar year (from January to December). *13. Injuries that
resulted in one or more days’ absence from work (excluding commuting injuries). *14. As of June 1 immediately after the end of each fiscal year. The statutory employment rate is 2.2% (2.0%
on and before March 31, 2018).

14

NLM Group
Nippon Light Metal Group consists of 79 subsidiaries and 22 affiliates (as of March 31, 2018).
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 Aluminum (Thailand) Co., Ltd.
● Nikkei MC Aluminum (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.
● 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: 76 companies● Affiliates accounted for by the equity method: 15 companies(As of March 31, 2018)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(Millionsof Yen)120,000

12,00090,0009,000

60,0006,000

30,000

3,000

0

●

’16

’17

’18

0

’16

’17

111,100%

Millions of Yen

Principal Products

Consolidated Operating Profit(Millionsof Yen)23.1• Aluminum• Aluminum hydroxide• Chemicals (chemical products)• Caustic soda
• Chlorinated chemical products• Aluminum ingot• Aluminum alloys’18

Overview of results for fiscal 2018

In the Alumina and Chemicals segment, with regard to theoverall sales of this segment exceeded the previous year’s

mainstay alumina and aluminum hydroxide products amonglevels, but sharp increases in prices of raw materials and fuels

alumina-related products, despite a decrease in exports, mainly

lowered profits. Despite the shift to a product mix emphasizingof those to Korea, domestic sales of products for coagulants

profitability, revision of product prices, and other efforts, profits

and refractory materials were robust. In terms of chemicals,

decreased.

whereas demand for organic chlorides decreased, sales ofIn the Aluminum Ingot segment, regarding the mainstay

coagulants and inorganic chlorides increased. As a result,secondary alloy products for automotive applications, thedomestic sales volume was unchanged from the previous year,
but sales overseas increased in line with the start of operationof a new factory in Thailand. Sales of this segment exceeded theprevious year’s level because sales prices of aluminum ingots
increased, reflecting market conditions. Meanwhile, profits
decreased owing to intensifying price competition in addition tohigher prices of raw materials and fuels.
As a result, in the Alumina, Chemicals and Aluminum Ingot
segment, net sales increased 9.1% year on year to ¥111,100
million, but operating profit decreased 11.6% year on year to¥8,954 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

10,00090,0007,500

60,0005,000

30,000

2,500

0

●

’16

’17

’18

0

Applications

106,955
Millions of Yen

22.2%

Principal Products• Automobile

’16

’17

’18

• 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 2018

In the Aluminum Sheet segment, in addition to brisk demand

ingot market. In terms of profits, due to the increase in thefor thick plates for semiconductor and LCD manufacturing

percentage of high value-added products and improvement ofequipment and related parts, shipments of sheet materials forthe profitability of the sheet fabrication business, profits of thislithium-ion batteries and truck outfitting as well as fabricatedsegment increased.

sheet products for PC and tablet cases were robust. Sales ofIn the Aluminum Extrusions segment, sales of products forthis segment exceeded the previous year’s level owing to theautomobiles were sluggish in Japan and in certain countries

increase in sales prices, reflecting conditions of the aluminum

overseas, affected by a slump in sales of the automobile models
they can be installed on. Nonetheless, sales of products forautomobiles in other overseas countries were brisk. In addition,
demand for products for truck outfitting and for industrial
tools and machinery was at a high level. Sales of this segment
exceeded the previous year’s level owing to the increase in sales
prices, reflecting conditions of the aluminum ingot market.
Profits of this segment also increased.
As a result, in the Aluminum Sheet and Extrusion segment,
net sales increased 9.0% year on year to ¥106,955 million
and operating profit increased 25.6% year on year to ¥9,767
million.

Aluminum 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)200,000

12,000150,000

9,000

100,000

6,000

50,000

3,000

0

●

’16

’17

’18

0

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

’16

’17

’18

• Food and lifestyle

169,019
Millions of Yen

35.1%

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 2018

In the Transport-Related segment, the truck outfitting businessyear mainly because of intensifying competition from products

achieved an increase in sales from the previous year, reflecting

manufactured overseas.

higher production capacity as a result of the introduction of aIn the Panel System segment, regarding products forrotating shift system (two shifts), in addition to the continuing

industrial refrigerators and freezers, demand for panel systems

high domestic demand, but profits decreased owing to higher

for plants that process food products was robust and demandmaterials prices and a rise in expenses in line with thefor panel systems for low-temperature distribution warehouses

implementation of two shifts.

increased greatly in line with the expansion of online sales ofSales of capacitors for air conditioners increased markedly

fresh produce. With regard to clean rooms, demand related tofrom the previous year as sales of new products for electric

semiconductor devices, such as flash memory, remained firm

automobiles increased favorably in addition to robust sales

and demand related to generic drugs also increased. As a result,of existing products for mini vehicles in Japan, the mainstay

sales of the Panel System segment were high, exceeding themarket, reflecting an increase in demand.

previous year’s level.

Sales of shaped parts exceeded the previous year’s level owing

In the Carbon Product segment, sales of our mainstay products,

to robust order-taking, reflecting an increase in the number ofincluding carbon blocks for blast furnaces and electric furnaces

automobiles manufactured in Japan, and brisk exports to China.

and cathodes, increased, as earnings of our customers in the

In the Electronic Materials segment, regarding anodized

steel and aluminum smelting industry recovered. Consequently,

aluminum foil for aluminum electrolytic capacitors, sales

sales of the Carbon Product segment substantially exceeded thesurpassed the previous year’s level, owing to an increaseprevious year’s level and profits also greatly improvedin demand, reflecting expansion of investment for factory

As a result, in the Fabricated Products and Others segment,

automation and the progress of electrification and motorization

net sales increased 9.3% year on year to ¥169,019 million, whileof automobiles, but profits were unchanged from the previous

operating profit decreased 4.5% year on year to ¥9,783 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

●

’16

’17

’18

0

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

’16

’17

19.6
%

94,365

Millions of Yen

Principal Products• Aluminum foil
• Aluminum foil for electrolytic capacitors• Powder and paste• Back sheets for solar cells• Electrode ink for solar cells’18

Overview of results for fiscal 2018

In the Aluminum Foil segment, with regard to high-purity

Accordingly, sales of the Aluminum Foil segment exceeded thealuminum foil for electrolytic capacitors, sales of high value-

previous year’s level.

added products were robust. Regarding standard foil, whereas

In the Powder and Paste segment, whereas sales of paste

sales of antenna circuit foil for IC cards declined and demand

products for home appliances and food packaging materials forfor fabricated foil for pharmaceutical packaging was sluggish,ink decreased, sales of mainstay paste products for automobile

sales of water-repellent fabricated foil for food products

paint increased, reflecting greater adoption of Colored Alpaste

and plain foil for lithium-ion battery surfaces were brisk.

mainly in overseas markets. As for powder products, sales ofaluminum nitride for heat dissipation substrate were buoyant.
As a result, sales of the Powder and Paste segment exceeded theprevious year’s level.
In the Solar segment, although sales of new functional ink
products for solar cells increased favorably, sales of the Solarsegment were lower than the previous year’s level because ofa decrease in demand for mainstay products of back sheets
for solar cells owing to the reduction of subsidies by the
Chinese government and intensifying price competition, andalso because we curtailed sales to certain users who pose
creditworthiness concerns.
As a result, in the Aluminum Foil, Powder and Paste segment,
net sales increased 0.7% year on year to ¥94,365 million, but
operating profit decreased 11.4% year on year to ¥4,856 million.
Aluminum Foil

19

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

Gross Profit and Gross Profit Margin2013
100,000

25

80,00020

60,00015

40,00010

20,000

5

0

2013
2014
2015
Gross Profit Margin
Gross Profit

2016

2017

2018

0

Years ended March 31 %Millions of yen

Interest-bearing Debt

200,000

160,000

120,000

80,00040,000

0

2013

2014

2015

2016

2017

2018

Years ended March 31

Millions of yen

Free Cash Flows

25,00020,00015,00010,0005,000

0-5,0002013

Millions of yen

20

2014

2015

2016

2017

2018

Years ended March 31

2014(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.............................................................................

¥371,887
62,715
16.9
8,154
6,873
3,355

¥402,829
69,00317.1
12,617
12,7305,128

93,902
63,161
126,218
88,606
371,887

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

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

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

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

226,807
150,901
5,022
49,808
181,520
129,824
105,787
4,629
10,778
198,668

18,030
16,259(14,025)
17,121(5,175)

18,14816,435(18,998)
14,001
5,762¥6.17—193.333.00¥9.43—203.03
4.00

3.7
3.3
25.0

5.8
4.8
25.5

545,126
5,063
10,392545,126
4,984
10,438Note 1: U.S. dollar amounts have been translated, for convenience only, at the exchange rate of ¥106.24 =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.

Return on Capital Employed (ROCE)
2015

2016

2017

2018

2018
(Thousands of
U.S. dollars)(Note 1)

(Millions of yen)129¥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¥481,439
94,03519.5
29,89329,53318,012$4,531,617
885,11919.5
281,372
277,984
169,541

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
448,381111,100
106,955
169,019
94,365
481,439

1,045,745
1,006,730
1,590,917
888,225
4,531,617

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)30,225

8,954
9,767
9,783
4,856
(3,467)29,89384,281
91,93392,08445,708(32,634)
281,372

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

267,059
154,002
3,187
43,052
191,729
86,249167,115
6,842
15,365
139,997

2,513,733
1,449,567
29,998405,234
1,804,677
811,833
1,572,995
64,402
144,625
1,317,743

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)

25,86817,126(14,948)
21,077(17,040)

243,486
161,201(140,700)
198,390(160,392)¥17.74
15.59
223.275.00¥28.5625.10
239.396.00¥34.5831.46
257.828.00¥29.09$0.27

8.2
8.3
26.6

9.0
12.3
28.8

9.6
13.5
35.6

10.7
10.8
37.2

545,126
4,495
13,335545,126
4,794
12,961

619,937
4,939
13,126

619,937
5,177
12,855

6

3

0

2013

2014

2015

2016

2017

2018

Years ended March 31%

Return on Equity (ROE)

15

12

9

6

3

0

2013

2014

2015

2016

2017

2018

Years ended March 31%

R&D Expenditures

6,000

—

—

280.93
8.00

2.64
0.08

5,000

4,000

3,000

2,000

1,000

$

48,7290

2013

Millions of yen

2014

2015

2016

2017

2018

Years ended March 31

21

Financial Review

Overview
During fiscal year 2017 (the year ended March 31, 2018) the Japanese
economy remained on a moderate recovery track, reflecting
improvement in corporate earnings and the employment and income
situation. The world economy also generally recovered at a modest
pace, as the recovery of the U.S. economy continued and theperformance of the Chinese and Thai economies improved.
The domestic aluminum industry saw an increase in overall
demand for aluminum products compared with the previous year, led
by robust demand for products for use in cars and trucks in thetransport industry and products for use in semiconductor and LCD
manufacturing equipment in the machinery industry. Prices trended
upward partly owing to the impact of decreased production in China,
a key producing country.
Under such circumstances, the Group steadily and surely delivered
results in the second year of the Mid-Term Management Plan (fiscal
2016 to fiscal 2018) (hereinafter, the “Mid-Term Plan”).

Overview of Consolidated Business Performance(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, 2018 March 31, 2017 [Percent changes]

481,439448,381

33,058 [7.4%]

Operating profit

29,89330,225(332) [(1.1%)]

Ordinary profit

29,533

26,252

3,281 [12.5%]

Profit attributable toowners of parent

18,012

19,520(1,508) [(7.7%)]

Net income per share (Yen)

29.09

34.58

(5.49) [(15.9%)]

the previous year, partly owing to higher prices of raw materials andfuels. Ordinary profit increased from the previous year partly due toan increase in equity in earnings of affiliates and a decline in foreignexchange losses. However, profit attributable to owners of parent was
lower than the previous year’s level, reflecting the recording of special
losses such as a litigation settlement in the fiscal year under review,
and also because the Company recorded special gains in the previous
year, including gain on sales of investment securities.

Although net sales exceeded the previous year’s level as a result of
brisk sales in the Aluminum Sheet segment, Aluminum Extrusions
segment, and Panel System segment coupled with an increase in themarket prices of aluminum ingots, an indicator of sales prices in the
Aluminum Ingot segment, Aluminum Sheet segment and Aluminum
Extrusions segment, operating profit was virtually unchanged fromNet Sales By Segment

Net sales

Earnings and Expenses
NLM Holdings’ consolidated net sales for the fiscal year under review
increased 7.4% year on year to ¥481.4 billion ($4,532 million). For
sales and other aspects of financial performance by business segment,

Total Net Assets

Equity Ratio

500

200

40

400

160

32

300

120

24

200

80

16

100

40

8

0

2013

Billions of yen

2014

2015

2016

2017

2018

Years ended March 31

0

2013

Billions of yen

2014

2015

2016

2017

0

2018

As of March 31

%

2013

2014

2015

2016

2017

2018

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

please see the Review of Operations on pages 16 to 19.
The cost of sales was ¥387.4 billion ($3,646 million), and the costof sales ratio was 80.5%. Selling, general and administrative expenses
were ¥64.1 billion ($604 million). As a result, operating profit
decreased 1.1% year on year to ¥29.9 billion ($281 million).
Non-operating income increased 9.2% year on year to ¥4.2 billion($40 million). Equity in earnings of affiliates increased 707.8% year
on year to ¥1.0 billion ($9 million) and dividend income increased
218.2% year on year to ¥0.7 billion ($6 million). Non-operating
expenses decreased 41.7% year on year to ¥4.6 billion ($43 million).
As a result, ordinary profit rose 12.5% year on year to ¥29.5 billion($278 million).
Special gains totaled ¥0.3 billion ($3 million), and special losses
were ¥3.1 billion ($29 million). Special losses included a litigation
settlement amounting to ¥2.0 billion ($19 million).
As a result, profit before income taxes during the fiscal year underreview was ¥26.8 billion ($252 million). Corporate, inhabitant andbusiness taxes amounted to ¥4.9 billion ($46 million) and deferredincome taxes during the fiscal year under review were ¥1.8 billion($17 million). Profit was ¥20.0 billion ($188 million).
As a result of the above, profit attributable to owners of parent in thefiscal year under review decreased 7.7% year on year to ¥18.0 billion($170 million). The average number of shares outstanding rose from564,497 thousand in the previous year to 619,227 thousand.
Accordingly, net income per share decreased from ¥34.6 in the previous
year to ¥29.1 ($0.27). The annual cash dividend per share wasunchanged from the previous year at ¥8.0 ($0.08), by resolution at theGeneral Meeting of Shareholders held on June 26, 2018.
Overview of Consolidated Balance Sheets(Millions of yen)March 31, 2018 March 31, 2017

Changes in
Comparison

Total assets

467,300

448,623

18,677

Total liabilities

277,978

274,999

2,979

Net assets

189,322

173,624

15,698

37.2

35.6

1.6

Equity ratio (%)

Assets, Liabilities and Shareholders’ Equity
Total assets as of March 31, 2018 increased ¥18.7 billion year on yearto ¥467.3 billion ($4,399 million). Total liabilities increased ¥3.0
billion year on year to ¥278.0 billion ($2,617 million). This was
mainly due to exercising of advance repayment and early redemptionof an amount of ¥10.0 billion in hybrid finances (subordinated loans
and bonds) recorded in March 2012 and repayments of long-term

debt. Interest-bearing debt decreased ¥9.8 billion year on year to¥140.0 billion.
Total net assets increased ¥15.7 billion year on year to ¥189.3
billion ($1,782 million), thanks primarily to an increase in retained
earnings due to the recording of profit in the fiscal year under review
as well as an increase in shareholders’ equity due to share conversionof convertible bonds with stock acquisition rights. Net assets per share
increased ¥23.11 year on year to ¥280.93 ($2.64), while the equity
ratio rose 1.6 percentage points year on year to 37.2%.
Cash Flows
Cash and cash equivalents on a consolidated basis as of March 31, 2018
decreased ¥5.8 billion year on year to ¥30.5 billion ($287 million).
Net cash provided by operating activities totaled ¥25.9 billion ($243
million). Net cash used in investing activities was ¥14.9 billion ($141
million). The main outflows were payments for purchases of fixed
assets. Net cash used in financing activities totaled ¥17.0 billion ($160
million). The main inflows were ¥15.3 billion ($144 million) inproceeds from long-term debt, and the main outflows were ¥21.2
billion ($199 million) in repayments of long-term debt.
Outlook for Fiscal 2018
Whereas improvement in corporate earnings and the employment
and income situation is progressing and the moderate recovery of theJapanese economy is expected to continue, there is concern thatheightening of trade friction resulted from the U.S. administration’s
implementation of policy, the prospects for the U.K.’s Brexit
negotiations, the situation in the Middle East and North Korea, andother political and geopolitical risks will be a drag on economic
expansion.
Meanwhile, demand for aluminum products is expected to remainrobust owing to such factors as progress in conversion of components
to aluminum in line with the rise of lightweight automobiles andincreased use of aluminum in semiconductor and LCD
manufacturing equipment.
Under such circumstances, based on our Mid-Term Plan which will
last for three years ending in fiscal 2018, we will strive to maximize
consolidated revenue by creating new products, strengthening
cooperation within the Group, and enhancing profitability of overseas
bases.
Our forecasts for the year ending March 31, 2019 are net sales of¥510.0 billion, ordinary profit of ¥31.0 billion, and profit attributableto owners of parent of ¥20.0 billion. We expect net income per shareto total ¥32.30 and cash dividend per share of ¥8.0.

23

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

2017

March 31,
2018

2018

(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 ¥36,346 ¥30,722
135,955
154,785
24,30528,276
16,112
17,67518,803
20,6905,487
4,388
10,731
11,612(1,345)(1,089)246,394
267,059$289,175
1,456,937
266,152
166,369
194,748
41,303
109,300(10,251)
2,513,733

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 54,53554,659134,450
138,620
279,999
284,029
31,40433,2195,104
7,242(354,261) (363,767)
151,231
154,002514,486
1,304,782
2,673,466
312,679
68,166(3,424,012)
1,449,567

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

3,190
3,190

3,187
3,187

29,99829,998Investments 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 

35,818
4,845
7,556
(411)
47,80832,276
3,501
7,530
(255)
43,052

303,803
32,95470,877(2,400)405,234¥448,623 ¥467,300$4,398,532

Total assets 

24

2017

March 31,2018

(Millions of yen)

2018
(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 ¥60,161
22,311
67,3002,909
31,596
184,277¥56,148
20,18578,6302,110
34,656
191,729$528,502
189,994
740,117
19,861
326,203
1,804,677

Long-term liabilities:
Long-term debt (Notes 6 and 7) Liabilities for retirement benefits (Note 9) 
Other long-term liabilities (Notes 6, 7 and 10) 
Total long-term liabilities 
Total liabilities 69,171
20,583968
90,722274,999

65,161
19,775
1,313
86,249277,978

613,338
186,135
12,360811,833
2,616,510

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

46,525
19,064
101,593(67)
167,115437,924
179,443956,259(631)
1,572,995

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

4,181
(144)
145
3,111
(451)
6,842
15,365
189,322

39,354(1,355)
1,365
29,283(4,245)64,402
144,625
1,782,022¥448,623¥467,300$4,398,532

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 (706,127 shares in 2017 and 714,480 shares in 2018) 
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,
2018

2017

(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 profit:
Interest income Dividend income Equity in earnings of affiliates 
Rental income Technical support fee 
Other Total non-operating profit 
Non-operating expenses:
Interest expense 
Loss on disposal of fixed assets 
Rental expense 
Other Total non-operating expenses 
Ordinary profit Special gains:
Gain on bargain purchase 
Gain on sales of investment securities 
Gain on sales of fixed assets 
Total special gains Special losses:
Settlement package 
Loss on impairment of fixed assets (Note 16) 
Loss on step acquisitions 
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 assets Net profit Cash dividends 
The accompanying notes are an integral part of these financial statements.

26

2018

¥448,381
356,817
91,564
61,33930,225¥481,439
387,404
94,03564,14229,893$4,531,617
3,646,498
885,119
603,747
281,372

101
307
141
747
363
2,189
3,848

90
670
998
758
432
1,254
4,202

847
6,306
9,394
7,135
4,066
11,80439,552

1,782
546
576
4,917
7,821
26,252

1,363
564
599
2,036
4,562
29,533

12,8295,309
5,638
19,16442,940277,984

—
2,821
409
3,230

300
—
—
300

2,824
–
–
2,824

—
1,192
—
1,192
28,290

2,029
933
117
3,079
26,75419,098
8,782
1,101
28,981
251,827

5,280
2,529
7,809
20,481961¥19,520

4,932
1,819
6,751
20,003
1,991¥18,012

46,423
17,12263,545
188,282
18,741$169,541(U.S. dollars)(Note 3)(Yen)

¥257.82
34.58
8.00

¥280.93
29.09
8.00

$2.640.27
0.08

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

Years ended March 31,
2018

2017

2018
(Thousands of
U.S. dollars) (Note 3)(Millions of yen)

¥20,481¥20,003$188,281

Net unrealized gains (losses) on securities 

1,365

(14)

(132)

Net unrealized gains (losses) on hedges 

179

(218)

(2,052)Foreign currency translation adjustments (1,247)

900

8,471

Remeasurements of defined benefit plans 

223

782

7,361

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

459

4,321

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

(650)

1,909

17,969¥19,831¥21,912$206,250¥19,273¥19,801$186,380

558

2,111

19,870¥19,831¥21,912$206,250

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

2017
Shareholders’ equity

Accumulated other comprehensive income

Commonstock

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

7,440

7,440

Treasurystock,
at costProfitNet
ForeignNetunrealized unrealized Revaluation currency Remeasurements attributable tonon-controlling
Totaltranslationof defined
gains (losses) gains (losses) surplus
interests
net assets(Note 12) adjustments benefits planson securities on hedges(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 Change of scope of consolidation 
Purchase of treasury stock 
Disposal 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 ¥(113)¥2,892¥(105)¥145¥ 3,871¥(1,503) ¥14,235 ¥144,419
14,880(4,896)
19,520(4,896)
19,520

94

(249)
(1)
49

70

¥46,525¥19,064¥89,076¥(65)

1,337

179¥4,229¥74(1,996)¥145¥ 1,875

233

(155)
—
(1)
119
1,337
179
(1,996)
233

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

2018
Shareholders’ equity

Accumulated other comprehensive income

Commonstock

Additional
paid-in
capital¥46,525¥19,064 ¥89,076

Retainedearnings

Treasurystock,
at costProfitNet
ForeignNetunrealized unrealized Revaluation currency Remeasurements attributable toTotaltranslationof defined non-controlling
gains (losses) gains (losses) surplus
interests
net assets(Note 12) adjustments benefits planson securities on hedges(Millions of yen)

Balance at April 1, 2017 
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 Change of scope of consolidation 
Purchase of treasury stock 
Disposal 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, 2018 ¥(65)¥4,229

¥74

¥145

¥1,875¥(1,270) ¥13,971 ¥173,624—(5,575)18,012(5,575)18,012
80

(2)
(48)

¥46,525¥19,064 ¥101,593

—
80
(2)
—
(48)
(218)
1,236
819

¥(67)¥4,181(218)¥ (144)

1,236

¥145

¥3,111

819

1,394
1,394
¥ (451) ¥15,365 ¥189,322

2018
Shareholders’ equity
Commonstock

Additional
paid-in
capitalRetainedearnings

Accumulated other comprehensive income
Treasurystock,
at costProfitNet
ForeignNetunrealized unrealized Revaluation currency Remeasurements attributable toTotaltranslationof defined non-controlling
gains (losses) gains (losses) surplus
interests
net assets(Note 12) adjustments benefits planson securities on hedges(Millions of yen)$437,924 $179,443 $838,441
Balance at April 1, 2017 
Issuance of new shares exercise of subscription
rights to shares (52,476)
Cash dividends 
169,541
Profit attributable to owners of parent 
Changes in a parent’s ownership interest due totransactions with non-controlling interests 
753
Change of scope of consolidation 
Purchase of treasury stock 
Disposal of treasury stock 
Net unrealized gains (losses) on securities 
Net unrealized gains (losses) on hedges 
Foreign currency translation adjustments 
Remeasurements of defined benefits plans 
Net increase in profit attributable to noncontrolling interests $437,924 $179,443 $956,259
Balance at March 31, 2018 
The accompanying notes are an integral part of these financial statements.

28$(612) $39,806$697$1,365$17,649$(11,954) $131,504 $1,634,263—(52,476)
169,541
—
753
(19)
—
(452)
(2,052)
11,634
7,709

(19)
(452)

(2,052)

11,634

7,709
13,121$(631) $39,354$(1,355)$1,365$29,283

13,121$(4,245) $144,625 $1,782,022

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

2017

Years ended March 31,
2018(Millions of yen)

2018
(Thousands of
U.S. dollars)(Note 3)

Cash flows from operating activities
Profit before income taxes 
Depreciation and amortization 
Gain on bargain purchase 
Settlement Package 
Loss on impairment of fixed assets 
Loss on step acquisitions 
Gain on sales of investment securities 
Gain on sales of fixed assets 
Increase (decrease) in allowance for doubtful accounts Increase in liability for retirement benefit Interest and dividend income Interest expense 
Equity in earnings of affiliates 
Increase in notes and accounts receivable – trade 
Decrease (increase) in inventories (Decrease) increase in notes and accounts payable – trade 
Other Subtotal Interest and dividend income received Interest paid 
Income taxes paid 
Net cash provided by operating activities ¥ 28,290 ¥ 26,754
16,602
17,126
—
(300)
—
2,029
1,192
933
—
117
(2,821)
—
(409)
—
180
(417)
456
413
(408)
(760)
1,782
1,363
(141)
(998)
(1,066) (18,327)
476(7,075)(478)
10,594469(24)
44,124
31,4281,100
1,332(1,750)(1,349)(6,986)(5,543)36,48825,868$ 251,827
161,201(2,824)19,098
8,782
1,101
—
—
(3,925)
3,887(7,154)
12,829(9,394)(172,506)(66,595)
99,718(224)
295,821
12,538(12,698)(52,175)
243,486

Cash flows from investing activities
Payments for purchases of fixed assets Proceeds from sales of fixed assets Proceeds from sales of investment securities 
Other Net cash used in investing activities (17,039)
2,116
3,330
(294)
(11,887)(19,395)
816
4,096
(465)
(14,948)(182,558)
7,681
38,554(4,377)(140,700)

Cash flows from financing activities
Net decrease in short-term borrowings Proceeds from long-term debt 
Repayments of long-term debt Proceeds from issuance of bonds 
Redemption of bonds 
Cash dividends paid 
Cash dividends paid to non-controlling interests 
Other Net cash used in financing activities 
Effect of exchange rate changes on cash and cash equivalents Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of the year 
Increase in cash and cash equivalents from newly consolidated subsidiary 
Cash and cash equivalents at end of the year (Note 4)(640)(4,176)
18,613
15,294(32,184) (21,174)—
665(3,200)(665)(4,912)(5,578)(680)(687)(1,429)(719)(24,432) (17,040)
(368)
293
(199)
(5,827)36,48536,286—58¥ 36,286 ¥ 30,517(39,307)
143,957(199,303)
6,259(6,259)(52,504)(6,466)(6,769)(160,392)
2,758(54,848)
341,547547$ 287,246

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 statutory reserve(additional paid-in capital and the legal reserve) 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 inexcess of 25% of common stock upon approval at a shareholders’ meeting. Any such transferred 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.
(r) Accounting standards issued but not yet effective
Implementation Guidance on Tax Effect Accounting and Implementation Guidance on Recoverability of Deferred Tax Assets On February 16, 2018,
the ASBJ issued “Implementation Guidance on Tax Effect Accounting” (ASBJ Guidance No. 28) and “Implementation Guidance on Recoverabilityof Deferred Tax Assets” (revised 2018) (ASBJ Guidance No. 26).
(1) Overview
The accounting treatment for taxable temporary differences related to investments in subsidiaries when an entity prepares separate
financial statements was modified. In addition, the accounting treatment related to the recoverability of deferred tax assets in entities that
qualify as Category 1 was clarified.
(2) Scheduled date of adoption
The Company expects to adopt the implementation guidance from the beginning of the fiscal year ending March 31, 2019.
(3) Impact of the adoption of implementation guidance
The Company is currently evaluating the effect of the adoption of this implementation guidance on its consolidated financial statements.
Accounting Standard and Implementation Guidance on Revenue Recognition
On March 30, 2018, the ASBJ issued “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29) and “Implementation Guidance on
Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30).
(1) Overview
This is a comprehensive accounting standard for revenue recognition. Specifically, the accounting standard establishes the following fivestep model that will apply to revenue from customers:
1. Identify the contract(s) with a customer
2. Identify the performance obligations in the contract
3. Determine the transaction price
4. Allocate the transaction price to the performance obligations in the contract
5. Recognize revenue when (or as) the entity satisfies a performance obligation32

(2) Scheduled date of adoption
The Company expects to adopt the accounting standard and implementation guidance from the beginning of the fiscal year ending March
31, 2022.
(3) Impact of the adoption of accounting standard and implementation guidance
The Company is currently evaluating the effect of the adoption of this accounting standard and implementation guidance on its
consolidated financial statements.
2. ACCOUNTING CHANGE
Not applicable.
3. U.S. DOLLAR AMOUNTS
The rate of ¥106.24 = U.S.$1, the approximate exchange rate prevailing at March 31, 2018, 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.
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, 2017 and 2018 is summarized as follows:
2017

2018

(Millions of yen)

Cash and deposits Time deposits with maturities in excess of 3 months 
Cash and cash equivalents ¥36,346(60)¥36,286¥30,722(205)¥30,517

2018(Thousands of
U.S. dollars)$289,176(1,930)$287,246

Supplemental Disclosure of Non-Cash Transactions
Information on the convertible bonds during the years ended March 31, 2017 and 2018 is summarized as follows:
2017

2018

(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¥15,000

¥—
—
—
¥—

2018
(Thousands of
U.S. dollars)

$—
—
—
$—

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, 2017 and 2018 was as follows:
2017

2018

(Millions of yen)

Cost 
Unrealized gains 
Unrealized losses 
Carrying amount ¥3,7875,788(8)¥9,567¥3,824
5,799(4)¥9,619

2018(Thousands of
U.S. dollars)$35,994
54,584(37)$90,540
33

Notes to Consolidated Financial Statements(b) Sales of available-for-sale securities
The realized gains on sales of available-for-sale securities for the years ended March 31, 2017 and 2018 was as follows:
2017

2018

2018
(Thousands of
U.S. dollars)(Millions of yen)

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

¥26
14
—

¥3,330
2,842
—

$245
132
—

6. SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Short-term borrowings at March 31, 2018 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, 2017 and 2018 comprised the following:
2017

2018

(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 
Unsecured 1.50% bonds due June 1, 2017, redeemable before due date Unsecured 1.65% bonds due June 1, 2027, 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 2018(Thousands of
U.S. dollars)¥2,084
86,917673—¥1,377
81,835—637$12,961
770,284
—
5,996

1,808
91,482(22,311)¥69,171

1,497
85,346(20,185)¥65,161

14,092
803,332(189,994)$613,338

A summary of assets pledged as collateral for short-term borrowings and long-term debt at March 31, 2017 and 2018 as follows:
2017

2018

(Millions of yen)

Property, plant and equipment 
Investment securities ¥4,7296¥1,1149

2018(Thousands of
U.S. dollars)$10,486
85

The aggregate annual maturities of long-term debt outstanding at March 31, 2018 are summarized as follows:
Years ending March 31,
2019 
2020 
2021 
2022 
2023 
Thereafter 

34(Millions of yen)(Thousands of
U.S. dollars)¥20,185
12,494
7,340
3,246
6,902
35,179¥85,346$189,994
117,60269,08930,55364,966331,128$803,332

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, 2017 and 2018 and estimated fair value is as follows:
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

—
—

*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

2018
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 ¥30,722
154,785¥30,722
154,785

¥—
—

4,014
9,619
(78,630)(56,148)—(637)(83,212)

1,763
9,619
(78,630)(56,148)—(637)(83,991)(2,251)
—
—
—
—
—
(779)

24
(181)

24
(181)

—
—

2018
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 $289,175
1,456,937$289,175
1,456,937$——37,78290,540(740,117)(528,502)—(5,996)(783,245)

16,59590,540(740,117)(528,502)—(5,996)(790,578)(21,188)—————(7,332)226(1,704)226(1,704)——*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 ¥22,486 million and ¥18,643 million ($175,480 thousand) as of March 31, 2017 and 2018 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, 2017 and 2018 are as follows: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(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

—
¥—

—
¥—

Due within
one year

Due after one year but
within five years

Due after five years but
within ten years

Due after
ten years

2018(Millions of yen)

Cash and deposits Notes and accounts receivable – trade 
Investment securities 
Held-to-maturity securities Government and municipal bonds ¥30,661
154,785

¥—
—

¥—
—

¥—
—

2
¥185,448

4
¥4

—
¥—

—
¥—

37

Notes to Consolidated Financial Statements

2018
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 $288,601
1,456,937

$—
—

$—
—

$—
—

19
$1,745,557

38
$38

—
$—

—
$—

4. The redemption schedule for bonds and long-term borrowings at March 31, 2017 and 2018 are as follows:2017
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

Due within
one year

Due after one year but
within five years¥—
28,955¥28,955

2018
Due after
five years(Millions of yen)

Bonds Long-term borrowings ¥—19,363¥19,363¥—29,384¥29,384

Due within
one year

Due after one year but
within five years¥637
34,199¥34,836

2018
Due after
five years(Thousands of U.S. dollars)

Bonds Long-term borrowings $—
182,257$182,257$— $5,996
276,581
321,903$276,581 $327,899

5. The fair value of derivatives at March 31, 2017 and 2018 are as follows:(1) Derivative transactions for which hedge accounting has not been applied
		 Currency-related transactions
2017
Notional amount

Maturity over 1 year

Fair value(Millions of yen)

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

38

¥452

¥452

¥(8)

		

Currency-related transactions
2018
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

¥24

2018
Fair value (*)(Thousands of U.S. dollars)

Currency swap contracts
U.S. dollars payment / Yen receipt $4,255$4,255$226*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.
(2) Derivative transactions for which hedge accounting has been applied		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

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

Notional amount Maturity over 1 year

Fair value (*)(Millions of yen)

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.

39

Notes to Consolidated Financial Statements

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 

¥446
1,952

¥—
—

¥(12)
136(*) The fair value is based on prices quoted from counterparty trading companies..
Currency-related transactions
2018
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 

¥214
1,731
1,973
373

¥—
—
—
—

¥6
(23)
(*)
(*)

(*) 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
2018
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 ¥1,077
23,208¥185
21,604¥1(*)

Long-term borrowings 

1,094

656

(*)

(*) 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
2018
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

¥547
2,081

¥—
—

¥29
¥(194)

Currency-related transactions
2018
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 $2,014
16,293
18,571
3,511

$—
—
—
—

$56
(216)
(*)
(*)

(*) 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
2018
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 $10,137 $1,741
218,449
203,351
10,297

$9
(*)

6,175

(*)

(*) 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
2018
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 $5,149
19,588

$—
—

$273
(1,826)(*) 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, 2017 and 2018 were as follows:
2017

2018

2018
(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 
Reclassification adjustments for gains and losses included in profit (loss) attributableto owners of parent
Before-tax amountTax benefit
Net-of-tax amountRemeasurements 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 
Reclassification adjustments for gains and losses included in profit (loss) attributableto owners of parent
Before-tax amountTax benefit
Net-of-tax amount
Total other comprehensive income ¥1,973

¥13

$122

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

(14)
(1)
(13)
(14)

(131)
(9)
(122)
(131)

203

(494)

(4,650)

49
252
(73)
179

198
(296)
78
(218)

1,864
(2,786)734(2,052)(1,247)

923

8,688

—

(23)

(217)

(1,247)—(1,247)

900
—
900

8,471
—
8,471

(38)

964

9,074

295
257
(34)
223

319
1,283
(501)
782

3,003
12,076(4,715)
7,361(1,170)

362

3,406

—
(1,170)—(1,170)¥(650)

97
459
—
459
¥1,909

913
4,320
—
4,320
$17,969

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.

42

The changes in the retirement benefit obligation during the years ended March 31, 2017 and 2018 are as follows:
2017

2018

(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 ¥38,242
1,827
393
248
(2,332)35¥38,413¥38,413
1,764
384
(300)
(1,813)35¥38,483

2018(Thousands of
U.S. dollars)$361,568
16,604
3,614(2,824)(17,065)330$362,227

The changes in plan assets during the years ended March 31, 2017 and 2018 are as follows:
2017

2018

(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 ¥24,450
386
210
1,197
(1,697)47¥24,593¥24,593
300
664
1,278
(1,122)44¥25,757

2018(Thousands of
U.S. dollars)$231,485
2,824
6,250
12,029(10,561)415$242,442

The changes in liability for retirement benefits on the simplified method during the years ended March 31, 2017 and 2018 are as follows:
2017

2018

(Millions of yen)

Balance at the beginning of the year 
Increase by acquisition of a consolidated subsidiary Retirement benefit expenses 
Retirement benefits paid Contributions for the plans Balance at the end of the year ¥6,572
—
1,032
(563)
(278)
¥6,763¥6,763
25
968
(426)
(281)
¥7,049

2018(Thousands of
U.S. dollars)$63,658
235
9,111(4,010)(2,644)$66,350

The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheets as of March 31,2017 and 2018 for the defined benefit plans:
2017

2018

(Millions of yen)

2018
(Thousands of
U.S. dollars)

Unfunded retirement benefit obligation 
Net liability for retirement benefits in the consolidated balance sheets ¥46,027(27,920)
18,1072,476¥20,583¥46,386(29,263)
17,1232,652¥19,775$436,615(275,442)
161,173
24,962$186,135

Liability for retirement benefits 
Net liability for retirement benefits in the consolidated balance sheets ¥20,583¥20,583¥19,775¥19,775$186,135$186,135

Funded retirement benefit obligation 
Fair value of plan assets 43Notes to Consolidated Financial Statements

The components of retirement benefit expenses for the years ended March 31, 2017 and 2018 are as follows:
2017

2018

(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 ¥1,827
393
(386)
313
(27)
1,032
¥3,152

2018(Thousands of
U.S. dollars)¥1,764
384
(300)
333
(20)
968
¥3,129$16,604
3,614(2,824)
3,134
(187)
9,111
$29,452

The components of retirement benefits liability adjustments included in other comprehensive income (before tax effect) for the years ended March
31, 2017 and 2018 are as follows:
2017

2018

(Millions of yen)

Prior service cost 
Actuarial gain or loss 
Total ¥28
(285)
¥(257)

2018(Thousands of
U.S. dollars)¥20(1,303)¥(1,283)$188(12,265)$(12,077)

Remeasurements of defined benefits plans included in accumulated other comprehensive income (before tax effect) as of March 31, 2017 and2018 as follows:
2017

2018

(Millions of yen)

Unrecognized prior service cost 
Unrecognized actuarial gain or loss 
Total ¥(200)2,262¥2,062

2018(Thousands of
U.S. dollars)¥(180)959¥779$(1,694)
9,027$7,333

The fair value of plan assets, by major category, as a percentage of total plan assets as of March 31, 2017 and 2018 as follows:
General account 
Domestic bonds 
Foreign stocks Domestic stocks Foreign bonds 
Others 
Total 

2017

2018

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

34%
24%
14%
11%
9%
8%
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, 2017 and 2018
separately.
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:
Discount rate Expected rate of return on plan assets 
44

2017

2018

1.0%
1.0%

1.0%
1.0%

Required contribution of the consolidated subsidiaries for the defined contribution pension plans as of March 31, 2017 and 2018 as follows:
2017

2018

2018
(Thousands of
U.S. dollars)(Millions of yen)

Required contribution 

¥7

¥7

$66

10. INCOME TAXES
Significant components of deferred tax assets and liabilities at March 31, 2017 and 2018 were as follows:
2017

2018

2018
(Thousands of
U.S. dollars)(Millions of yen)

Deferred tax assets:¥8,632¥7,576$71,310

Net defined benefit liabilities 

6,223

6,165

58,029Unrealized intercompany loss 

1,962

1,962

18,468

Accrued bonuses 

1,839

1,972

18,562

Allowance for doubtful accounts 

1,682

1,591

14,976

Loss on disposal of fixed assets 

722

698

6,570

Other 

9,056

8,411

79,169Total deferred tax assets 

30,11628,375

267,084

Valuation allowance (14,452)(14,941)(140,634)

Total deferred tax assets, net of valuation allowance 

15,664

13,434

126,450

Undistributed retained earnings of subsidiaries and associates (1,567)(1,376)(12,952)

Unrealized gain on securities (1,515)(1,548)(14,571)

Revaluation gain on subsidiaries 

(974)

(974)

(9,168)

Unrealized intercompany profit 

(907)

(907)

(8,537)

Other (879)

(1,066)(10,034)(5,842)(5,871)(55,262)¥9,822¥7,563$71,188

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:
2017

2018

2018
(Thousands of
U.S. dollars)(Millions of yen)¥5,487¥4,388$41,303

Deferred tax assets (investments and other assets) 

4,845

3,501

32,954

Other current liabilities (current liabilities) 

(102)

—

—

Other long-term liabilities 

(408)

(326)

(3,069)Deferred tax assets (current assets) 

45

Notes to Consolidated Financial Statements

A reconciliation of the differences between the statutory income tax rate and the effective income tax rate for the years ended March 31, 2017and 2018 was summarized as follows:2017

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

2018

30.9%

30.9%

(6.0)
(0.2)
(0.4)
1.4
0.6
0.7
0.6
27.6%

(2.5)
(1.2)
(0.4)
(0.1)
0.6
0.4
(2.5)
25.2%

11. APPROPRIATIONS OF RETAINED EARNINGS
The following appropriation was approved at the ordinary general meeting of shareholders of the Company held on June 26, 2018:(Millions of yen)(Thousands of U.S. dollars)¥2,478Cash dividends $23,325

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.
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, 2017 and 2018 was ¥(216) million and¥(416) million ($(3,916) thousand), respectively which is included in cost of sales.
Selling, general and administrative expenses
2017

2018

(Millions of yen)

Freight charges Salaries, allowances and bonuses 

46¥11,958
18,362¥12,508
19,373

2018(Thousands of
U.S. dollars)$117,733
182,351

Research and Development
Research and development costs charged to cost of sales and selling, general and administrative expenses for the years ended March 31, 2017 and2018 was ¥4,939 million and ¥5,177 ($48,729 thousand), respectively.
Gain on sales of fixed assets
2017

2018

(Millions of yen)

¥409

Land 

2018(Thousands of
U.S. dollars)——

15. CONTINGENT LIABILITIESContingent liabilities at March 31, 2018 amounted to ¥1,529 million ($14,392 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 ¥1,192 million 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 

Total(Millions of yen)

¥740
1
¥741

Since 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 after noting a sign of impairment and evaluating a necessity of theimpairment 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.
The domestic consolidated subsidiaries recognized ¥933 million ($8,782 thousand) of loss on impairment of fixed assets inthe consolidated statements of income, of which the significant items for the year ended March 31, 2018 were as follows:
2018

Location
Jiangsu, China
Total

Major use
Operating assets

Asset category
Machinery and equipment 
Tools, furniture and fixtures (Millions of yen)(Thousands of
U.S. dollars)

¥451
2
¥453

$4,24519$4,264Since the operating assets in Jiangsu, China have become idle and show signs of impairment, the consolidated subsidiaries recognized an
impairment loss of ¥453 million ($4,264 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.

47

Notes to Consolidated Financial Statements

17. AMOUNTS PER SHARE
Net profit and net assets per share for the years ended and as of March 31, 2017 and 2018 were summarized as follows:
1. Number of shares
2017

2018

(Thousands of shares)

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

564,498
55,881
620,379

619,227—
619,227

2017

2018

2. Net profit per share(Millions of yen)

Net profit ¥19,520¥18,012

2017

2018
(yen)

Net profit per share 
Diluted net profit per share 

2018(Thousands of
U.S. dollars)$169,541
2018(U.S. dollars)¥34.58¥31.46¥29.09
¥—

2017

2018

$0.27$—

3. Net asset per share(Millions of yen)

Total net assets 
Non-controlling interests 
Net assets attributable to shares of common stock ¥173,624(13,971)¥159,653¥189,322(15,365)¥173,957

2017

2018
(yen)

Net assets per share 48¥257.82

2018(Thousands of
U.S. dollars)$1,782,021(144,625)$1,637,396
2018(U.S. dollars)¥280.93$2.64

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, 2017 and 2018 was as follows: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(Note 1).Adjustments amounts are as follows.
1)Adjustments of ¥(3,399) million in segment profit are general corporate expenses.
2)Adjustments of ¥(18,124) million in segment assets include ¥(39,543) million in the elimination of transactions between segments and¥21,419 million in corporate assets.
3)Adjustments of ¥207 million in depreciation and amortization expenses have primarily to do with corporate assets.
4)Adjustments of ¥214 million for capital expenditures are the increase in corporate assets.

49

Notes to Consolidated Financial Statements

2018

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 ¥111,100¥106,955¥169,019¥94,365¥—¥481,439

Intersegment 

46,71424,997

12,344

510(84,565)—

Total 157,814

131,952

181,363

94,875(84,565)

481,439

Operating profit ¥8,954¥9,767¥9,783¥4,856¥(3,467)¥29,893

Segment assets ¥122,686¥117,781¥156,789¥97,821¥(27,777)¥467,300

Depreciation and amortization ¥3,886¥5,187¥3,814¥4,046¥193¥17,126

Loss on impairment of fixed assets 

¥6

¥602

¥244

¥81

¥—

¥933

Investment in equity-method affiliates ¥4,442¥2,262¥5,912¥3,140¥—¥15,756

Capital expenditures ¥5,914¥5,414¥4,624¥5,001¥124¥21,077

Aluminum
foil, powder
and paste

Adjustment(Note 1)

Consolidated

2018

The reportable segments
Aluminumingot andchemicals

Aluminum
sheet andextrusions

Fabricatedproducts andothers(Thousands of U.S. dollars)

Net sales
Customers $1,045,745$1,006,730$1,590,917$888,225$—$4,531,617

Intersegment 439,703

235,289

116,190

4,800(795,981)—

Total 1,485,448

1,242,019

1,707,107

893,025(795,981)

4,531,617

Operating profit $84,281$91,933$92,084$45,708$(32,634) $281,372

Segment assets $1,154,800$1,108,631$1,475,800$920,755$(261,455) $4,398,532

Depreciation and amortization $36,578$48,823$35,900$38,084$1,817$161,201

Loss on impairment of fixed assets $56$5,666$2,297

$762

$—

$8,782

Investment in equity-method affiliates $41,811$21,291$55,648$29,556$—$148,306

Capital expenditures $55,666$50,960$43,524$47,073$1,167$198,390(Note 1).Adjustments amounts are as follows.
1)Adjustments of ¥(3,467) million ($(32,634) thousands) in segment profit are general corporate expenses.
2)Adjustments of ¥(27,777) million ($(261,455) thousands) in segment assets include ¥(46,117) million ($(434,083) thousands) in theelimination of transactions between segments and ¥18,340 million ($172,628 thousands) in corporate assets.
3)Adjustments of ¥193 million ($1,817 thousands) in depreciation and amortization expenses have primarily to do with corporate assets.
4)Adjustments of ¥124 million ($1,167 thousands) for capital expenditures are the increase in corporate assets.

50

Geographical sales for the years ended March 31, 2017 and 2018 were summarized as follows:
2017

Japan

Other

2018

Total

Japan

(Millions of yen)

¥363,394¥84,987

Other

2018

Total

Japan

(Millions of yen)

¥448,381¥383,889¥97,550

Other

Total

(Thousands of U.S. dollars)¥481,439$3,613,413$918,204$4,531,617

Geographical property, plant and equipment for the year ended March 31, 2017 and 2018 were summarized as follows:
2017

Japan

Other

2018

Total

Japan

(Millions of yen)

¥130,433¥20,798

Other

2018

Total

(Millions of yen)¥151,231¥134,835¥19,167

Japan

Other

Total

(Thousands of U.S. dollars)¥154,002$1,269,155$180,412$1,449,567

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

EuropeToyal Europe Société par
Actions Simplifiée
Unipersonnelle
Accous, France
Phone: 33-1-34-931020
Aluminum powder and paste(100%)

East Asia
Nikkei MC Aluminum(Kunshan) Co., Ltd.
Kunshan, China
Phone: 86-512-5763-1946
Aluminum alloys(85%)
Nikkei (Shanghai) Body Parts
Co., Ltd.
Suzhou Plant
Suzhou, China
Phone: 86-512-6571-0550
Automobile components(100%)
Nikkei (Shanghai)International Trading Co., Ltd.
Shanghai, China
Phone: 86-21-6236-9659
Sales and marketing bases(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: 86-755-8999-1058
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%)

Southeast Asia
Nikkei MC Aluminum(Thailand) Co., Ltd.
ThailandPhone: 66-3852-2296
Aluminum alloys(79%)
Nikkei Siam Aluminium
LimitedThailandPhone: 66-2909-7300
Aluminum sheet, foil
(100%)
Nikkei Singapore
Aluminium Pte. Ltd.
Singapore
Phone: 65-6293-3770
Trading and marketing(100%)(As of July 31, 2018)53

Directors And Officers

Directors

Audit & Supervisory Board Member

President
Representative Director

Nobuo Matsumoto
Takayuki Tsuchida
Koji Fukui
Yuzuru Fujita*2
Koji Yasui*2
Shintaro Kawai*2*2 Outside Member

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

Toshihide Murakami
Yasunori Okamoto
Hiroshi Yamamoto
President and CEO of Toyo Aluminium K.K.

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

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

Officers

Yoshihiro Tomioka
Kotaro Yasuda
Toshikazu Tanaka
Masato Ono*1
Ryoichi Hayashi*1
Haruo Ito*1
Toshihito Hayano*1

Takashi Hara

*1 Outside Director

Masamichi Ueda
Minoru Sotoike
Hideki Amimura
Kazuto Sanada
Masato Saotome
Masakazu Ichikawa(As of June 26, 2018)
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.

Head Office

Major Shareholders

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(Ratio of Stock Holding)Japan Trustee Services Bank, Ltd.
(trust accounts)(8.3%)

EstablishedBy carrying on development of new applications for aluminum and aluminum materials, theOctober 1. 2012

NLM Group is to continue to support customers in wide-ranging industrial sectors and contribute toimproving the quality of people’s lives and protection of the environment.

Shares of Common StockNLM Group

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

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

2018

2017

2018
Thousands of
U.S. dollars

Millions of yen¥448,381 ¥481,439 $4,531,617
30,22529,893281,372
19,52018,012
169,541

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

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

Paid-In Capital¥46,525 million

For the year:
Net sales 
Operating profit Profit attributable to owners of parent 

The Master Trust Bank of Japan, Ltd.
(trust accounts)(8.3%)

448,623
173,624

467,300
189,322

4,398,532
1,782,022

151,643

141,494

1,331,834

Operating Profit

35

500

400

28

400

300

21

300

200

14

200

100

7

100

53,010Stock Exchange Listings
Tokyo
Transfer Agent of Common Stock

Nikkei-Keiyu-Kai(2.6%)The Light Metal Educational Foundation, Inc.
(2.4%)
Asahi Mutual Life Insurance Co.
(2.1%)
Mizuho Bank, Ltd.
(1.8%)

Sumitomo Mitsui Trust Bank, Ltd.
Last Shareholders’ Meeting

Japan Trustee Services Bank,Ltd(trust accounts 5)(1.8%)

June 26, 2018

Total Assets

500

Number of Shareholders

Japan Trustee Services Bank,Ltd(trust accounts 9)(2.7%)

Trust & Custody Services Bank,Ltd(securities investment trust account)(1.8%)(As of March 31, 2018)

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

2013

2014

Billions of yen

2015

2016

2017

2018

Years ended March 31

0

2013

2014

Billions of yen

2015

2016

2017

2018

Years ended March 31

0

2013

2014

Billions of yen

2015

2016

2017

2018

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 2018

http://www.nikkeikinholdings.co.jp

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

Printed in JapanA N N UA L R E P O RT 2018Year ended March 31, 2018