Second Consolidated
Mid-term Management
Plan
FY2017（132nd period) to FY2019 (134 th period）

June 6, 2016

NIHON PARKERIZING CO., LTD.

1

Contents
Ⅰ．Business achievements for recent years
１．Business areas
２．Initiatives to strengthen and expand business base
３．Changes in management indicators over time
４．Looking back on the last three years

Ⅱ．Second Consolidated Mid-term Management Plan
１．Market perception and business direction
２．Fundamental Management Policy
３．Positioning of the Mid-term Management Plan
４．Mid-term Management Plan- Fundamental Policy
５．Mid-term Management Plan- Numerical Targets
６．Shareholder returns【Fact Book】 List of Affiliated Companies

NIHON PARKERIZING CO., LTD.

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Business
Achievements for
Recent YearsⅠ

NIHON PARKERIZING CO., LTD.

3

Business Areas and Sales Composition
RatiosOther
4％

FY 2016
Jobbing36％

109,000
million yen

Chemicals
40％

Equipment
20％

Sales by segment

Chemicals

Conversion Coating Chemicals
Rolling oil and lubricants
Rust proof oil
Electroless plating solution

Equipment

Pre-treatment and ED equipment
Waste water treatment equipment
Powder coating equipment
Heat exchangers

Jobbing

Rust proof jobbing
PlatingHeat treatment
Painting

Otherbusiness

Building maintenance
Manufacture and sale of metal
test pieces
Manufacture and sale of bolts
Export of specialty steel products

NIHON PARKERIZING CO., LTD.

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Contributing Through Surface Modification Technology in a
Wide Variety of Industries

Surface Modification Business
Chemicals
Development

Aerospace

Chemicals

Jobbing Services

Equipment
Manufacture

Construction
materials

Autos

Steel
furniture

Agricultural
machinery

Brewing

electronics

MetalsBeverage
cans

Glass

Selfdefense

railways

Tools

Food

construction

Batteries

EnergySteelHouseholdElectric
appliances

ElectricalmachineryNon-steel

Rubbermachinery

NIHON PARKERIZING CO., LTD.

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Chemicals Business: Supply of Diverse Range of Surface
Treatment Chemicals

Auto

Beverage cans

Steel

AircraftElectronic parts

Realizing new added value with surface modification
NIHON PARKERIZING CO., LTD.

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Equipment Business: Surface Treatment Plants
Pre-treatment /painting plants forthe automotive industry

Top coat

The total conveyor length reaches several
thousand meters! We handle the processes
over the full-line, from pre-treatment to ED,
mid- and top coats of paint, and baking anddrying.

Capacity of production≒20,000U/Mo.

Surfacer coat
E coatPre-treatment and painting plant for
general industry
We also handle a diverse range of products such as
pre-treatment and ED coating of heavy construction
materials, and integrated painting and drying booths
for large products in aircraft.

NIHON PARKERIZING CO., LTD.

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Equipment Business: Waste Water Treatment,
Powder Coating, Heat Exchangers

Waste water treatment equipment
Realizing optimal systems according to the components of thewaste water, at low running cost.

Powder Coating Equipment
Using electrostatic force to deposit powder paint.

Heat

exchangers

Enabling efficient heating and cooling with less energy.

NIHON PARKERIZING CO., LTD.

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Jobbing Business: Conversion treatments, plating

Conversion treatments

R u s tp r o o f i n g

Lubricant treatment for plasticity forming

Solid lubricant treatment
Electroless nickel plating
Composite nickel plating
NIHON PARKERIZING CO., LTD.

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Jobbing Business: Heat Treatment

G a s

c a r b u r i z i n g

G a s

s o f tn i t r i d i n g

ISONITE®（Salt bath soft nitriding）
P V D / C V DNIHON PARKERIZING CO., LTD.

c o a t i n g s

10Other Business

Building maintenancework

Sale of metal test
piecesSolar power
generation

Manufacture and sale ofcold forging bolts

Export of specialty
steel products

NIHON PARKERIZING CO., LTD.

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Initiatives to Strengthen andExpand Business Base (1/2)
Europe’s debt
crisis

2010

Great EastJapan
EarthquakeThaifloods

2011

2012【Chemical】

Europe’s debtcrisisYen depreciates, shares rise
Oil price drops/China slows

2013

2014

Expand sales of next
generation surface
treatment chemical

Establishedsubsidiary in
India【Equipment】

Risingyen

Electronic components
market expansion

Tie-up with Dürr

Establishedsubsidiary inShanghai

Put new powder coating
equipment on market

2015
Renewed License
Agreement with
Henkel, concluded
agency agreements
in new fields

Establishedcompany in
Mexico【Jobbing
Expand heat treatment business overseas (China, Thailand, Indonesia, Mexico)
Expanded heat treatment plant in
China (Foshan)【Other】

Construction ofheat treatment
plant in Mexico

Entered solar
power generation
business

GNT Companies
Selection 100
JPX400launched

NIHON PARKERIZING CO., LTD.

Started steel
products
exportJapan Society
for Technologyof Plasticity,
Award

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Initiatives to Strengthen andExpand Business Base (2/2)
Chemicals businessGaining new customers and providing new technology that matches customers’ needs.
Established a new subsidiary in China (Shanghai). New plant under construction.
Renewed license with Henkel (Germany) in 2015, and concluded agency agreements in new fields.

Equipment business

Since 2011, capital and business tie-up with Dürr (Germany), promoting advanced technologies
particularly environment-related technologies.
In the overseas market, received order for auto body painting covering full-line.
Established a local company in Mexico (for equipment)
Through developing applications for powder coating equipment, expanded sales of new model pumps
and powder coating guns to the auto industry

Jobbing business

Actively promoted equipment investment, particularly in China, North and Central America, and
ASEAN countries.
Expansion of the heat treatment plant in China (Foshan).
Construction of a heat treatment plant in Mexico.

Other



In 2013, we started up solar power generation utilizing idle land.
In 2015, we started exporting steel products.

NIHON PARKERIZING CO., LTD.

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Changes in Management
Indicators- P/L
ＣＡＧＲ 6.3%
Increased
35.5%in 5 years(Unit: million yen)
30,000Sales

99,79325,00080,48384,758102,514

10,000120,000

100,000

89,91980,00020,00015,000109,063

Increased
27.8%in 5 years

Operatingincome12,327

11,411

13,146

15,393

14,85015,76660,00040,00020,000

5,000

0

0

2011/3

2012/3

2013/3

2014/3

2015/3NIHON PARKERIZING CO., LTD.

2016/314

Changes in Management IndicatorsRatio of Overseas shares
150,000(Unit: million yen)

43.1%
38.6%

37.1%

100,000

50,000031.7%
80,48389,91984,75834,72925,511

31,421

54,97253,337

2011/3

2012/3

Japan

43.8%

55,1902013/3

Overseas

99,793

102,51443,042

44,91856,751

45.7%

50.0%

109,063

40.0%

49,87530.0%（overseas）increased
95.5% in 5 years

57,59659,18820.0%（Japan）Increased
10.0%
7.6% in 5 years

2014/3

2015/3

2016/30.0%

Overseas Sales Proportion（Note） Sales are based on the location of customers.

The Parker Group was one of the first to establish businesses
overseas, and the proportion of our overseas sales has risen withthe expansion in demand overseas.
NIHON PARKERIZING CO., LTD.

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Changes in Management IndicatorsEquipment Investment & Research andDevelopment Costs
Equipment investment (million yen)Overseas investment
うち海外

10,02010,539

7,791

Bolstered manufacturing equipment in
Mexico, China, Thailand and elsewhere
to take advantage of robust overseas
demand.
Mexico

3,324
2,237

4,599

2,928

6,825
3,431

4,914

5,276
China
(Foshan)

1,964

2011/3 2012/3 2013/3 2014/3 2015/3 2016/3

R&D Costs (million yen)
2,132

2,189

2,096

2,151

2,112

2,181

2011/3 2012/3 2013/3 2014/3 2015/3 2016/3

In recent years we have focused ourdevelopment on “creating new value” by adding
not only corrosion resistance but also otherfunctions to the surface of substrates, and ourinvestment in R&D has continuously exceeded2000 million yen/year.
Electron probe micro
analyzer

μ-ＸPS analysis equipment

NIHON PARKERIZING CO., LTD.

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Looking Back on the Last Three YearsChanges in Management Indicators
Unit: million yen
Ref.
2013/3
N

e

t

S

l

e

2014/3

2015/3

2016/3s

89,91999,793

102,514

109,063

income13,146

15,393

14,85015,766

Operating income to net sales
ratio

14.6%

15.4%

14.5%

14.5%

O r d i n a r y

i n c o m e

15,17918,046

17,453

17,921

Ordinary income to net sales
ratio

16.9%

18.1%

17.0%

16.4%

Net income attributable top a r e n t c o m p a n ys h a r e h o l d e r s

8,463

10,142

9,975

10,320

ROA

10.9%

11.5%

9.9%

9.5%

Operatinga

Last 3 years

In 3 years:
Sales increased 19,144 million yen（＋21.3%）
Ordinary income increased 2,742 million yen（＋18.1%）
Ratio of ordinary income to total assets (ROA) kept above 8%
NIHON PARKERIZING CO., LTD.

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Looking Back on the Last Three
Years- Results and Issues
Results

 Cleared the management target of: expanding consolidated sales morethan 3% each year while maintaining ROA over 8%.
 Bolstering of manufacturing equipment overseas, particularly in North
America, Mexico, China, and Thailand, contributed to expansion of sales.
 Expanded our penetration of aircraft and electronic parts industries.
 Put new products on the market through development of applications andfunctions.
 Strengthened financial base by building up capital.

Issues Necessary to continue to review strengthening of business base mid-term.
 Necessary to expand revenue further by creating new businesses andmarkets.
 Continual development of next-generation key products that are highvalue added & low cost is indispensable.
 Conversion to a leaner corporation is necessary (improved profitability,
cost cutting).
 Further strengthening of collaboration within the Group is necessary.
 Further encouraging new ways of thinking.

NIHON PARKERIZING CO., LTD.

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Second Mid-term
Consolidated Midterm Management
Plan(April 2016 to March 2019)ⅡNIHON PARKERIZING CO., LTD.

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Market Perception and BusinessDirection
Looking at the surface treatment market

 Shift of manufacturing of autos overseas & move towards local
procurement continuing.
 Steel industry facing a tough situation as oversupply by China
continues.
 Increasing demand for materials other than steel, due to the shift
towards lighter materials for vehicles.
 Meeting needs of next-generation vehicles & competition inenvironmentally friendly technology.
 Increasing severity of cost competition in Japan and overseas.

Business direction
 Strengthen and expand our business base and realize unceasing
growth through global promotion of our business base, development of
new markets, and expansion of our surface modification business.
 Maintain our technical advantages in the market in the field of surface
modification of a variety of substrates.
 Increase customer satisfaction by increasing our presence in various
countries and regions.
 Take up the challenge of creating a new business model.
NIHON PARKERIZING CO., LTD.

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Fundamental Management Policy《Management Philosophy》‘ We will contribute to the preservation of our global environmentand creation of a wealthy society by creating new value throughsurface modifications of a great variety of substrates which makethe most of limited resources. ’《Fundamental Management Policy》
1.

2.

3.

The fundamental management policy of the Nihon Parkerizing Group is to maintain our position asa global leader in metal surface treatment technology, taking advantage of our extensive
experience in this field to contribute to industry, such as automotive and steel industries, anduphold our technical superiority in the market in the field of surface modification of a great variety
of substrates.
As well as furthering global expansion into South-east Asia, China, the U.S. and Europe in order toadapt to significant changes in the economic environment, the Nihon Parkerizing Group is working
to strengthen collaboration between Group members in Japan and overseas and strengthen thefoundations of our management practices
The Nihon Parkerizing Group takes an active approach to environmental preservation, which weperceive as one of our top management priorities, and we aim to embody a corporate group which
contributes to global environmental preservation through the activities of our Group businesses.

NIHON PARKERIZING CO., LTD.

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Positioning of the Mid-termManagement Plan
Corporate
Philosophy
Group Company Action Principles

Mid-term Management
Plan
Yearly Policy
Policies of each division
and affiliate

Policymanagement

WorkreformThorough implementationof PDCA’Executive s code of
conduct

Fundamental
Management Policy

Changing
ways ofthinking

Corporate mission
Action guidelines for realizing
corporate philosophy
Target form andfundamental policy for its
realization.
Strategy and detailed
guidelines for achieving
fundamental management
policyClarifies the key policies foreach year based on Midterm Management Plan,
numerical targets (KGI/KPI)
and key strategies.

Three pillars for realizing
sustainable growth

Achieve sophisticated targets
together

NIHON PARKERIZING CO., LTD.

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Mid-term Management Plan- Fundamental
PolicyOur aim is to be THE leading global company in the field of surface
modifications, maintaining our technical superiority in the market of
surface modifications for a wide array of substrates.

Enhancing andexpandingbusiness baseTechnologydriven company

Achievingsustainable growth
Strengthening thestructure of theorganization

NIHON PARKERIZING CO., LTD.

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Enhancing and Expanding
Business BaseStrengthen collaboration between Group companies in Japan andoverseas,
daring to take up challenges in the global market!


Increasing customer satisfaction (CS) through sales activities that
foster our relationships with customers.
Intensify our marketing
Increase our brand strengthBoost our entry into the aircraft and electronic parts industries.



Create demand through development of applications.

Take up challenges in surface modification of a wide variety of substrates.
Seek introduction of new technologies, tie-ups, investment (equipment,
acquisitions) expansion

Bolsteringo v e r s e a s
b u s i n e s sActive investment in equipment
Expand sales of strategic productsGain business at local manufacturers overseas

Creating a new
business modelActively investigate M&A and alliances

Take up the challenge of creating a new business model

Maintaining
and expandinge x i s t i n g
b u s i n e s sDeveloping
new markets
Expandings u r f a c e
modificationb u s i n e s s

NIHON PARKERIZING CO., LTD.

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Technology-driven Company
Seek innovative functions for surfaces, andcontribute to a wide range of industrial fields with innovations
based on our core technology!
Development of products for next generation vehicles-Developing functional surface chemicals to meet the needs of weightsavings in autos
 Developing products for the aircraft market-Meeting changing needs such as material changes and environmental
needs (chrome-free, etc.)C o r etechnology
creation

Create demand through development of diverse functions-insulation, conductivity, hydrophilicity, anti-finger print, design, etc.

Development of differentiated technology- Reduction of environmental load, development of energy-saving systems(Development of systems that eliminate waste product, shortens treatment
processes, and simplify plant layout)Efficiency inR&D
Speeding up
p r o d u c tcommercialization

Enhance fundamental researchSelect research topics keeping in mind future growth areas
Pay further attention to the market and customers’ needs when planningresearch ideas.

Speed up the shift to mass production by effective utilization of trial
manufacture plants

NIHON PARKERIZING CO., LTD.

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Strengthening the Structure of theOrganization
Strengthening corporate structure through the
３G（Global・Group・Governance）
B o o s t
q u a l i t y
c o n t r o l Boost quality control globally

Cut costs

 Cost reduction (optimize procurement, manufacturing and supply on
global scale Increase efficiency in indirect operations

D e v e l o p
Global HR Foster personnel who can succeed in the increasingly globalized
economic environment.
 Promote diversity (actively promote non-Japanese and women)

Strengthen
G r o u p
Collaboration

 Strengthen collaboration within the Group in all processes in sales,purchasing, production, quality, research and management

Enhancegovernance Enhance disclosure Strengthen risk management
 Strengthen internal control and compliance

NIHON PARKERIZING CO., LTD.

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Mid-term Management Plan- Numerical
Targets
Unit: million yenmMarch 2016（actual）

March 2019（plan）

s109,063

120,000

Operating income（Operating income to net
sales ratio）

15,766（14.5%）

19,000（15.8%）

Ordinary income（Ordinary income ratio）

17,921（16.4%）

21,000（17.5%）Net income attributableto parent companys h a r e h o l d e r s

10,32012,000

I
N

t
e

t

e
S

a

l

e

NIHON PARKERIZING CO., LTD.

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Mid-term Management PlanNumerical Targets (Sales by segment)
Chemical
薬品事業
business

Equipment
装置事業
business

Jobbing
加工事業
business（Unit: million yen）
Other
その他事業
business

48,10042,80043,741

38,923
24,40022,4303,968

2016/34,700

2019/3

Note: Sales amount is sales to external customers.

NIHON PARKERIZING CO., LTD.

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Shareholder Returns
 Dividend PolicyWe will place priority on continuous and consistent dividends, determining dividend
distribution after comprehensive consideration of trends in achievements and payout ratio.



We are working to bolster internal reserves to strengthen our corporate financial strengthand secure future profits. Internal reserves are utilized for overseas investment andequipment investment to realize quality and cost required by the market and for researchand development to meet market needs.



Based on a target payout ratio of 30% on a non-consolidated basis, we will determine theamount of dividends after giving sufficient consideration to consolidated achievements, futurebusiness expansion and earnings.

 Dividends: Actual and planned
2011/3 2012/3 2013/3 2014/3 2015/3 2016/3

Annual dividend
per share (yen)

10.00

10.00

12.50

13.75

15.00

16.50

To t a l d i v i d e n d s(million yen)

1,214

1,214

1,518

1,669

1,892

2,081

Payout ratio(consolidated)

16.6% 19.6% 18.3% 16.8% 18.6% 19.8%

Payout ratio (nonconsolidate)

30.2% 32.6% 29.2% 32.5% 34.9% 33.１%（Note）On April 1st, 2015, Nihon Parkerizing has instituted a 2-for-1 common stock
split, and the figures for dividends shown above take this into account.

NIHON PARKERIZING CO., LTD.

March 2017
dividend has yet tobe finalized.
However we willtake into
considerationachievements andstudy theappropriate levelof returns toshareholders inaccordance with
our fundamental
policy.

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List of Affiliated Companies As of 31

stMarch 2016)

Network of 43 subsidiaries & 12 Affiliated Companies（China）■ Parker Surface Technologies(Shanghai) Co., Ltd.
■Parker Engineering (Shanghai) Co.,Ltd.
■Kanigen (Shanghai) Trade Co., Ltd.
■Guangzhou Parkerizing Co., Ltd.
■Foshan Parker Surface Modification
Co., Ltd.
□Shenyang Parkerizing Co., Ltd.
□Shanghai Parkerizing Co., Ltd.
□Wuhan Parkerizing Chemical Co., Ltd.
(and 4 more companies)（Belgium）■P.I of Europe NV（Vietnam）■Vietnam Parkerizing Co., Ltd.
■Vietnam Parkerizing (Hanoi) Co., Ltd.
■Parker Processing Vietnam Co., Ltd.

（Japan）■Japan Kanigen Co., Ltd.t■Nihon Parkerizing Co., Ltd.
□Parker Corporation■Parker Engineering Co., Ltd. ■Kyodo Unso
□Yuugen Co., Ltd.
■Ozeki Chemical Industry Co., Ltd.□Parker Netsushori Kogyo Co., Ltd.
■Parker Industries, Inc.
■Hokkaido Parkerizing Co., Ltd.
■Parker Kako Co., Ltd.
□Nagaizumi Parkerizing Co., Ltd.
■Hamamatsu Netsushori Kogyo ■Kyowa
Co., Ltd. Manufacturing Co., Ltd. □Green-Techno■Komatsu Parkerizing Co., Ltd. ■Parker Giken Kogyo Ltd.
□Million Chemicals Co., Ltd.
■Paltec Test Panels Co., Ltd.
■Oita Parkerizing Co., Ltd.

（U.S.）■Parker Trutec Inc.
■Parker Trutec MMI Inc.
□Parkwood Engineering Development Corporation（Korea）■Dae Han Parkerizing Co.,Ltd.

（Taiwan）■Chung Jih Metal
Treatment Chemicals,
Inc.

（The Philippines）（India）■Nihon Parkerizing (India) PVT
LTD■Parker Engineering (India) PVT
LTD（Thailand）■Thai Parkerizing Co., Ltd.
■PET Trading Co., Ltd.
■Parker Engineering (Thailand) Co., Ltd.
■Kanigen (Thailand) Co., Ltd. & 1 other■Philippine Parkerizing Inc.

（Mexico）■Parker Trutec Mexicana S.A de C.V.
■Parker Eng. De Mexico S.A. de C.V.

（Malaysia）■Nihon Parkerizing Malaysia Sdn Bhd（Indonesia）■P.T. Nusantara Parkerizing■P.T. Parker Metal Treatment
Indonesia■P.T. Parker Engineering Indonesia

NIHON PARKERIZING CO., LTD.

■ Nihon Parkerizing andsubsidiaries□ Affiliated companies

30

The forward-looking statements such as forecast of financial consolidated
results contained in this document are based on the information
currently available to the Company and certain assumptions which are
regarded as legitimate. Actual results may differ from these forecast due
to various factors.
Significant factors which may affect actual results include but are notlimited to; a)state of the economy b)fluctuations in exchange ratesc)product competitiveness, d)regulations and e)limits of intellectual
property protection.
The information in this document is not intended to solicit investment.
Please make investment decisions at your own discretion.

NIHON PARKERIZING CO., LTD.

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Jump up to
Tomorrow

NIHON PARKERIZING CO., LTD.

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