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Nitto Denko, Japan
COMPANY PROFILE
Nitto Denko, Japan Profile
Nitto Denko is a broad-based manufacturing group with three reporting segments – Industrial Tape, Optronics and Medical & Membrane. Its product range includes reverse osmosis membranes for water production and wastewater treatment that forms part of its Medical & Membrane division alongside medical care-related materials and related products. It manufactures air filters and related products for clean room applications, which form part of the Optronics segment that also produces materials for liquid crystal displays and printed-circuit boards. Headquartered in Osaka, Japan, Nitto Denko is comprised of more than 100 subsidiary companies. Analysis
Nitto Denko Group made good gains in fiscal 2010 with its net sales increasing 6.1% on the year earlier to ¥638 556 million, operating income 44.7% stronger at ¥85 143 million and net income up 48.4% at ¥55 743 million. Growth was particularly strong in the first half of the year supported by good results in China and other emerging economies. Sales of membrane products were up 8.6% on the 2009 figure at ¥18 443 million, reflecting strong demand for reverse osmosis membranes for industrial applications in China and North America and a recovery in orders for seawater desalination plants. With regards to the latter, a notable order was the supply of the company’s latest model membrane for a new desalination plant being constructed in the state of Victoria, Australia, that will supply 440 000 metric tonnes of water per day. Elsewhere in the Medical & Membrane segment, however, results were hampered by the need to suspend production at medical related products plants in Japan and the USA, with the former due to the Great East Japan Earthquake in March 2011. Consequently, overall segment sales were down 7.0% on the previous year at ¥34 486 million and an operating loss of ¥1590 million was recorded. In the Group’s Optronics divisions sales rose 6.9% on the 2009 comparator to ¥365 779 million, while operating income jumped 67.5% to ¥60 415 million. Sales of semiconductor related materials were steady, rising 1.3% on the previous year to ¥16 045 million, with sales growth being led by LCD related materials and processing materials. In Nitto Denko’s Industrial Tape segment net sales were up 7.1% at ¥238 290 million, with operating income 50.8% stronger at ¥26 420 million.
COMMENT Nitto Denko described fiscal 2010 as a transition from the previous period’s “Year to Endure” to a “Year of our Offensive”. Unfortunately, the current twelve months is seeing the Group’s endurance tested again. The first six months of fiscal 2011 saw the company’s sales dip 2.8% on a year ago to ¥314 666 million, while its operating income dropped 23.3% to ¥36 657 million. The Group’s membrane business has had mixed fortunes so far in 2011. While demand for general industrial applications has remained favourable in China, India and other emerging markets, it has suffered from delays and scale-backs for seawater desalination projects. The result at the mid-point of the year is that sales were down 5.4% on 2010 at ¥8652 million and an operating loss of ¥879 million had been recorded. More positive news is that the group, through its wholly-owned subsidiary Hydranautics, has entered into a collaboration agreement with the Singaporebased manufacturer of high performance hollow fibre membranes Memstar Technology Ltd. The partnership is targeting the wastewater reclamation and industrial fields in China in particular. Fiscal 2011 is also seeing the Group begin full-scale production of its latest RO membrane products. Other targets are improvements to the pre-treatment technology used with its membrane products and expanding its service business. ■
Key Figures (¥ million) Nitto Denko Corp
Year ended 31.3 2011
2010
2009
2008
2007
Sales Of Which: Optronics Medical & Membrane
638 556
601 859
577 922
745 259
679 822
365 779 34 486
342 282 37 090
314 315 54 114
432 332* 56 016**
356 941* 53 991**
Cost of Sales
444 037
440 714
455 763
548 551
496 361
Gross Profit
194 518
161 144
122 158
196 708
183 460
R&D Expenses
21 949
20 876
21 716
22 096
21 733
Operating Income Of Which: Optronics Medical & Membrane
85 245
56 086
13 838
77 954
69 037
60 415 (1590)
36 078 2492
(933) 6470
40 852* 9180**
31 449* 9568**
Ordinary Income
85 143
58 833
14 807
74 468
67 319
Net Income
55 743
37 570
267
46 634
41 201
*Electronic Products segment **Functional Products segment
Contact Details
President and CEO: Address:
January 2012
Yukio Nagira Herbis Osaka 2-5-25 Umeda, Kita-ku Osaka 530-0001, Japan
Tel: +81 6 6452 7102 Fax: +81 6 6452 3305 Web: www.nittodenko.com
Filtration Industry Analyst
7
Nitto Denko, Japan Profile
Nitto Denko is a broad-based manufacturing group with three reporting segments – Industrial Tape, Optronics and Medical & Membrane. Its product range includes reverse osmosis membranes for water production and wastewater treatment that forms part of its Medical & Membrane division alongside medical care-related materials and related products. It manufactures air filters and related products for clean room applications, which form part of the Optronics segment that also produces materials for liquid crystal displays and printed-circuit boards. Headquartered in Osaka, Japan, Nitto Denko is comprised of more than 100 subsidiary companies. Analysis
Nitto Denko Group made good gains in fiscal 2010 with its net sales increasing 6.1% on the year earlier to ¥638 556 million, operating income 44.7% stronger at ¥85 143 million and net income up 48.4% at ¥55 743 million. Growth was particularly strong in the first half of the year supported by good results in China and other emerging economies. Sales of membrane products were up 8.6% on the 2009 figure at ¥18 443 million, reflecting strong demand for reverse osmosis membranes for industrial applications in China and North America and a recovery in orders for seawater desalination plants. With regards to the latter, a notable order was the supply of the company’s latest model membrane for a new desalination plant being constructed in the state of Victoria, Australia, that will supply 440 000 metric tonnes of water per day. Elsewhere in the Medical & Membrane segment, however, results were hampered by the need to suspend production at medical related products plants in Japan and the USA, with the former due to the Great East Japan Earthquake in March 2011. Consequently, overall segment sales were down 7.0% on the previous year at ¥34 486 million and an operating loss of ¥1590 million was recorded. In the Group’s Optronics divisions sales rose 6.9% on the 2009 comparator to ¥365 779 million, while operating income jumped 67.5% to ¥60 415 million. Sales of semiconductor related materials were steady, rising 1.3% on the previous year to ¥16 045 million, with sales growth being led by LCD related materials and processing materials. In Nitto Denko’s Industrial Tape segment net sales were up 7.1% at ¥238 290 million, with operating income 50.8% stronger at ¥26 420 million.
COMMENT Nitto Denko described fiscal 2010 as a transition from the previous period’s “Year to Endure” to a “Year of our Offensive”. Unfortunately, the current twelve months is seeing the Group’s endurance tested again. The first six months of fiscal 2011 saw the company’s sales dip 2.8% on a year ago to ¥314 666 million, while its operating income dropped 23.3% to ¥36 657 million. The Group’s membrane business has had mixed fortunes so far in 2011. While demand for general industrial applications has remained favourable in China, India and other emerging markets, it has suffered from delays and scale-backs for seawater desalination projects. The result at the mid-point of the year is that sales were down 5.4% on 2010 at ¥8652 million and an operating loss of ¥879 million had been recorded. More positive news is that the group, through its wholly-owned subsidiary Hydranautics, has entered into a collaboration agreement with the Singaporebased manufacturer of high performance hollow fibre membranes Memstar Technology Ltd. The partnership is targeting the wastewater reclamation and industrial fields in China in particular. Fiscal 2011 is also seeing the Group begin full-scale production of its latest RO membrane products. Other targets are improvements to the pre-treatment technology used with its membrane products and expanding its service business. ■
Key Figures (¥ million) Nitto Denko Corp
Year ended 31.3 2011
2010
2009
2008
2007
Sales Of Which: Optronics Medical & Membrane
638 556
601 859
577 922
745 259
679 822
365 779 34 486
342 282 37 090
314 315 54 114
432 332* 56 016**
356 941* 53 991**
Cost of Sales
444 037
440 714
455 763
548 551
496 361
Gross Profit
194 518
161 144
122 158
196 708
183 460
R&D Expenses
21 949
20 876
21 716
22 096
21 733
Operating Income Of Which: Optronics Medical & Membrane
85 245
56 086
13 838
77 954
69 037
60 415 (1590)
36 078 2492
(933) 6470
40 852* 9180**
31 449* 9568**
Ordinary Income
85 143
58 833
14 807
74 468
67 319
Net Income
55 743
37 570
267
46 634
41 201
*Electronic Products segment **Functional Products segment
Contact Details
President and CEO: Address:
January 2012
Yukio Nagira Herbis Osaka 2-5-25 Umeda, Kita-ku Osaka 530-0001, Japan
Tel: +81 6 6452 7102 Fax: +81 6 6452 3305 Web: www.nittodenko.com
Filtration Industry Analyst
7