FY2016

Financial Results
Briefing
June 6, 2016

NIHON PARKERIZING CO., LTD.

Contents
Ⅰ．Introducing the company
Ⅱ．Overview for Consolidated Results for
FY2016
Ⅲ．Overview of the Mid-term Management
Plan
Ⅳ．Earnings Forecasts for FY2017

NIHON PARKERIZING CO., LTD.

2

Ⅰ．Introducing the Company

NIHON PARKERIZING CO., LTD.

3

Management Philosophy
We will contribute to the preservationof our global environment andcreation of a wealthy society bycreating new value through surface
modifications of a great variety of
substrates which make the most oflimited resources.

NIHON PARKERIZING CO., LTD.

4

Overview of the Company
Company name:Nihon Parkerizing Co., Ltd.

Chairman & C.E.O:

Shun Ono

President & C.O.O:

Kazuichi Satomi

Headquarters:

15-1, 1-chome, Nihonbashi, Chuo-ku, Tokyo

Established:

July 12, 1928

Capital:

4.5 billion yen (as of March 2016)

Sales:

109,000 million yen (FY2016)

Listing:First Section of Tokyo Stock Exchange, 1967

Other:JPC Nikkei Index 400（January 2014）
Global Niche Top Company 100 (March 2014)

Founded in 1928, Nihon Parkerizing will celebrate its 90 th anniversary in 2018. The history
of Nihon Parkerizing starts from the company being granted a patent in Japan for thetechnology developed by Dr. Parker in 1915, for generating a phosphate coating on steel toprevent corrosion. In the beginning, the technology was mostly developed for the Army
Ministry, however following the war, business expanded in conjunction with the growth of
the automotive industry.

NIHON PARKERIZING CO., LTD.

5

Stock Market Related Topics
JPX Nikkei Index 400（from January 2014）
The JPX Nikkei Index 400 is comprised of 400 stocks selected from among TSE-listed companies (1stand 2nd sections, Mothers, and JASDAQ) after a scoring process based on;（1）Screening by eligibility criteria and market liquidity indicators,（2）Screening by quantitative indicators (3yr average ROE, 3yr cumulative operating profit, market
capitalization) and,
（3）Screening by qualitative factors (appointment of independent outside directors, adoption of IFRS,
disclosure of English earnings information).

Global Niche Top Company Selection100（March, 2014)
GNT Companies are companies selected by the Ministry of Economy, Trade and Industry (METI) thathave captured a global market share of 20% or over in their niche in at least one of the last three
years. In the case of large corporations (in the manufacturing industry, those with capital over 300
million yen and more than 300 employees), the scale of the global market for the niche product orservice must be between 10 and 100 billion yen.

NIHON PARKERIZING CO., LTD.

6

Market Share (Automotive Pre-treatment )Global ShareBy maintaining an integrated approach to development fromdeveloping

initialideas

throughtoproduct

development,

implementing flexible and swift research and development with thegoal of expanding product sales both in Japan and overseas, wehave been able to achieve a 20% market share in the global
market for pre-treatment in the automotive industry.

Share of business at
Japanese Auto
Manufacturers

We have achieved a 70% share of the global pretreatment business of Japanese auto manufacturers.

NIHON PARKERIZING CO., LTD.

（Based on research by
Nihon Parkerizing）

7

Global Network
Network in 15 Countries

Chemicals
Jobbing
Equipment, other
Note: Includes subsidiaries, affiliated companies and their subsidiaries.

NIHON PARKERIZING CO., LTD.

8

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■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（Thailand）■Thai Parkerizing Co., Ltd.
■PET Trading Co., Ltd.
■Parker Engineering (Thailand) Co., Ltd.
■Kanigen (Thailand) Co., Ltd. & 1 other（Indonesia）■P.T. Nusantara Parkerizing■P.T. Parker Metal Treatment
Indonesia■P.T. Parker Engineering Indonesia

NIHON PARKERIZING CO., LTD.

■ Nihon Parkerizing
and subsidiaries□ Affiliated companies

9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.

10

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.

11

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.

12

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

Top coat

The total conveyor length reaches several
thousand meters! We handle theprocesses over the full-line, from pretreatment to ED, mid- and top coats ofpaint, and baking and drying.

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 thecomponents of the waste water, at low running cost.

Powder Coating Equipment
Using electrostatic force to deposit powder paint.

Heat

exchangers

Enabling efficient heating and cooling with lessenergy.

NIHON PARKERIZING CO., LTD.

14

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

16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.

17

Research and Development
The Central Research Laboratories operates as
the nucleus for our fundamental research anddevelopment of technology and products,
bringing together all of our business areas.
We aim to create an organization capable offlexible and swift research and developmentwith the goal of expanding product sales inboth Japan and overseas, through an
integrated approach to development fromdeveloping initial ideas through to productdevelopment.
Central Research Laboratories (Hiratsuka,
Kanagawa Prefecture)

Automotive

Steel
Rolling

Non-steelSurfacehardening

Cuttingedge
fields

Surface Modification toStart off the 21st Century
Plasticity
forming

Composite
processing

NIHON PARKERIZING CO., LTD.

Analysis18

Ⅱ．Overview of Consolidated Results for
FY2016NIHON PARKERIZING CO., LTD.

19

Key Strategy Initiatives

Chemicals
Business

Push forward with development of high value
added technology that is high quality and low
cost, maintaining our lead in the market.
Swiftly put products on the market that meet theneeds of our customers overseas.
Renewed license agreement with Henkel(Germany) and concluded an agency agreement in
new fields.

NIHON PARKERIZING CO., LTD.

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Key Strategy Initiatives

Equipment
Business

Expand sales in Japan outside the auto
industry
Take advantage of expansion of equipment
investment by auto manufacturers overseas,
particularly in Asia.
Establish company in Mexico
Reducing costs through local procurement andcombining components into units, to improve
competitiveness and differentiation.
NIHON PARKERIZING CO., LTD.

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Key Strategy Initiatives

Jobbing
Business

Enhance manufacturing equipment
particularly in Mexico, China andThailand, to take advantage of robust
overseas demand.
Promote cost reduction and ensure
market competiveness.

NIHON PARKERIZING CO., LTD.

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Consolidated Results: Year on Year
Unit: million yen

2015/3

2016/3change% change

Sales

102,514

109,063＋6,549＋6.4%

Profit on sales

37,73540,436＋2,701＋7.2%

Operating income(Operating income to
net sales ratio)

14,85015,766（14.5%）（14.5%）

＋915

＋6.2%

Non-operating
i
n
c
o
m
e

2,602

2,154

△447

△17.2%

Ordinary income(Ordinary income to
net sales ratio)

17,453

17,921（17.0%）（16.4%）

＋468

＋2.7%

9,975

10,320

＋345

＋3.5%

9.9%

9.5%

△0.4%

Item
Net

Net income attributableto parent companys h a r e h o l d e r s

ROA（Ratio of ordinary income
to total assets）

Net income per
s
h
a
r
e

80.45yen

Renewed our record amount
Overseas sales proportion 45.7％

Renewedrecordourearnings

Exchange loss 566 million
yen

Renewed record earnings

Maintained ROA above 8%83.24yen ＋2.79yen

Effect of yen depreciation: Sales＋ approx. 3400 million yen, Operating income＋ approx. 500 million yen

NIHON PARKERIZING CO., LTD.

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Changes in Consolidated Results(Unit: million yen)
60,00050,000109,063
99,793

Sales
80,48384,758

13.5%

14.6%

102,514

15.4%

Operating income also on
Operatingthe rise
80,000income ratio
14.5%

14.5%

30,00060,000Operatingincome20,00010,000

Sales consistently on an
upward path

100,000

89,91940,00015.3%

120,000

12,327

11,411

13,146

15,393

14,85015,766040,000Operating income ratio
20,000maintained at around 14%0

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

NIHON PARKERIZING CO., LTD.

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Changes in Equipment Investment(Unit: million yen)

10,02010,539

7,791

Significant equipment investment
amounts in FY2016
Mexico:2,247 million yen
Thailand: 1,750 million yen
China:
1,268 million yen

4,599
3,431

3,324

2011/3

2012/3

Jobbing
Business

2013/3ChemicalBusiness

Enhance manufacturing
equipment particularly in Mexico,
China and Thailand, to takeadvantage of robust overseas
demand.

2014/3

2015/3Equipment
Business

2016/3

Depreciation cost 4,633 million yen（Year on year＋928 million yen)

Other
Business

NIHON PARKERIZING CO., LTD.

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Equipment Investment: Mexico
Parker Trutec Mexicana(Guanajuato plant)

Gas carburizing
G a ss o f tn i t r i d i n g
ISONITE®

NIHON PARKERIZING CO., LTD.

26

Equipment Investment: Thailand

Thai Parkerizing

Expansion ofhydrophilic treatment
equipment, etc.

NIHON PARKERIZING CO., LTD.

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Equipment Investment: China (Foshan)
Foshan Parker Surface
Modification Ltd.
No. 2 plant

Added a new gas
carburizing furnace,etc.

NIHON PARKERIZING CO., LTD.

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Changes in Financial Indicators- R&D Cost
In recent years we have focused ourdevelopment on “creating new value” byadding not only corrosion resistance but
also other functions to the surface of
substrates, and our investment in R&D hascontinuously
exceeded
2000
millionyen/year.

（Unit: million yen

2,132

2,189

2,096

2,151

2,112

2,181

Electron probe micro
analyzer

μ-ＸPS Analysis
equipment

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

We will continue to invest in R&D to develop
new surface functions and meet therequirements of next generation vehicles(weight savings, changes in materials, etc.)

NIHON PARKERIZING CO., LTD.

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Results by Segment: Year on Year (Chemicals
Business)（Unit: million yen）

45,00043,372

43,741

12,00011,000

Sales increased 369 million yen（+0.9％）year on year.
Operating income decreased 52 million yen（△0.6％）year on year.

10,00040,000

9,000

8,582

8,529

8,000
7,000
6,000

35,0005,000

2015/3

2016/3

Sales ■ Operating income
Note: Sales figures are for sales to external customers.
Note: Operating income figures are after changing method of
allocating segment costs.

In Japan, sluggish auto output led todecreased revenue.
Overseas, with the additional effectof yen depreciation, businessresults (after conversion to yen)were comparatively steady.
Operating income fell in part due torising labor costs in Asia.

NIHON PARKERIZING CO., LTD.

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Results by Segment: Year on Year (Equipment
Business)
Sales increased 1,626 million yen（+7.8%）（Unit: million yen)

25,0007,000

22,4306,000

Operating income increased 353 million
yen（+33.7％）

5,000

20,8034,000

20,000
3,000
2,000

1,050

1,403

15,0001,000
02015/3
Sales

2016/3■Operating income

In Japan, revenue fell.
Overseas, sales renewed their record
high, on the back of large-scaleequipment sales in China andIndonesia.
Operating income also rose.

Note: Sales figures are for sales to external customers.
Note: Operating income figures are after changing methodof allocating segment costs.

NIHON PARKERIZING CO., LTD.

31

Results by Segment: Year on Year (Jobbing
Business)（Unit: million yen)
40,00038,923

10,0009,000
8,000

35,8396,977

35,000

7,000
6,000

5,933

5,000
4,000
30,0003,000
2015/3

Sales

Sales increased 3,084 million yen（+8.6％）
Operating income increased 1,043
million yen（+17.6％）

2016/3■Operating income

Note: Sales figures are for sales to external customers.
Note: Operating income figures are after changing method of
allocating segment costs.

In Japan, the business environment
remains tough due to the shift of autoparts manufacturing overseas.
Overseas, heat treatment sales rosesignificantly in China, and sales werealso robust in the U.S. and Vietnam.
In Indonesia, the situation was toughas auto output fell.

NIHON PARKERIZING CO., LTD.

32

Results by Segment: Year on Year (Other
business)
Sales increased 1,469 million yen（+58.8％）（Unit: million yen）
5,000

500

3,968

4,000
3,000
2,000

400
300

2,498
269
203

1,000

200
100

0

0

2015/3
Sales

Operating income increased 65 million
yen（+32.4％）

2016/3■Operating income

The building maintenance businessincreased steadily.
One consolidated subsidiary engaged
in the manufacture and sales of bolts
was added to the Group, and revenue
and profits rose.

Note: Sales figures are for sales to external customers.
Note: Operating income figures are after changing methodof allocating segment costs.

NIHON PARKERIZING CO., LTD.

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Dividend Plan for FY2016【Dividend Plan for FY2016】
Payout ratio

Payout ratio

End of Q2

Year end

Total（Consolidated）（Nonconsolidated）

7.5yen9.0yen16.5yen

19.8%

33.１%

Note: It is extremely difficult to anticipate the direction of the economy and business results, and thedividend may change due to a number of factors.

FY2016 year end dividend will be increased by
1.5 yen.

NIHON PARKERIZING CO., LTD.

34

Ⅲ．Overview of Mid-term Management PlanNIHON PARKERIZING CO., LTD.

35

Mid-term Management Plan- Numerical
Targets
Unit: million yen

Item
N e t

2019/3

2016/3%ChangeS a l e s

109,063

120,000+10.0%

Operating income(Operating income to
net sales ratio)

15,76619,000（15.8%）+20.5%（14.5%）

Ordinary income(Ordinary income to
net sales ratio)

17,921

21,000N e t
i n c o m eattributable to parent
company shareholders

ROA（16.4%）（17.5%）

10,32012,000(Ratio of ordinary income tototal assets)

9.5%

Further
improvement

R

8.9%

Further
improvementO

E

NIHON PARKERIZING CO., LTD.

+17.1%+16.2%

36

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.

37

Enhancing and Expanding
Business BaseStrengthen collaboration between Group companies in Japan andoverseas,
daring to take up challenges in the global market!
Maintaining
and expandinge x i s t i n g
b u s i n e s s

Increasing customer satisfaction (CS) through sales activities that
foster our relationships with customers.
Intensify our marketing
Increase our brand strength

Developing
new markets

Boost our entry into the aircraft and electronic parts industries.

Expandings u r f a c e
modificationb u s i n e s sCreate 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

Creating a new
business model

Actively investigate M&A and alliancesGain business at local manufacturers overseas

Take up the challenge of creating a new business model

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!

C o r etechnology
creation

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.)
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)
Enhance fundamental research

Efficiency inR&DSelect research topics keeping in mind future growth areas
Pay further attention to the market and customers’ needs when planningresearch ideas.

Speeding up
p r o d u c tcommercialization

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

NIHON PARKERIZING CO., LTD.

39

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 lBoost 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

Enhan cegovernance

Enhance disclosure
Strengthen risk management
Strengthen internal control and compliance

NIHON PARKERIZING CO., LTD.

40

Key Strategies by Segment
Chemicals business
Take up the challenge of technology for next generation vehicles
Expand business in the aircraft market
Promote development of applications for electronic parts & energy field
Develop environmentally-friendly and high value added products
Equipment business
Increase added value and brand strength through development ofdifferentiated technology
Improve technical and product strengths through making the mostof our business tie-up with Dürr (Germany).
Develop new markets in Japan and overseas
Jobbing business
Expand heat treatment business in Asia, and North and Central
America
NIHON PARKERIZING CO., LTD.

41

Ⅳ． Earnings Forecasts for FY2017

NIHON PARKERIZING CO., LTD.

42

Earnings Forecasts for FY2017
Unit: million yen

ChangeItem

2016/32017/3s a l e s

109,063

106,000△3,063△2.8%

Operating income(Operating income to
net sales ratio)

15,766

15,500（14.5%）（14.6%）

△266

△1.7%

Ordinary income(Ordinary income to
net sales ratio)

17,921

17,500（16.4%）（16.5%）

△421

△2.4%

10,320

10,200

△120

△1.2%

N e t

N e t
i n c o m eattributable to parent
company shareholders

Japan: Expected to continue at the same levelOverseas: Revenue anticipated to increase on local currency base, however, revenue may
decrease after yen conversion due to effect of yen appreciation
Presumed exchange rate: 108 yen/dollar

NIHON PARKERIZING CO., LTD.

43

March 2017 Dividend Plan
Fundamental 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
strength and secure future profits. Internal reserves are utilized for overseas
investment and equipment investment to realize quality and cost required by themarket and for research and development to meet market needs.
Based on a target payout ratio of 30% on a non-consolidated basis, we will determine
the amount of dividends after giving sufficient consideration to consolidated
achievements, future business expansion and earnings.

March 2017 dividend plan
March 2017 dividend has yet to be finalized. However we will take into considerationachievements and study the appropriate level of returns to shareholders in accordancewith our fundamental policy.

NIHON PARKERIZING CO., LTD.

44

Other Topics
Award
Awarded the 24 th Suga Weathering Technology
Foundation “Science and Technology Award”
Achievement title:
Development and commercialization of chrome-free surface treatment
technology based on weathering technology

About the Suga Weathering Technology Foundation Award:
Weathering is the aging, that is, the corrosion and fading, of industrial materials
by the natural environment.
The Suga Weathering Technology Foundation Award aims to contribute to thepromotion of the industrial development of Japan and the wealth of its people andpromote technology in this field.
The Foundation awards people of merit who have made outstanding achievementsin evaluation of materials life using accelerated testing, elucidation of the aging
mechanism and improving resistance to deterioration through surface treatment.

NIHON PARKERIZING CO., LTD.

45

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.

46