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Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
1
Presentation Material on Results for Fiscal Year Ended March 2013
Presentation Material on Results for Fiscal Year Ended March 2013
June 10, 2013June 10, 2013
Securities Code Number: 5351
― Supporting the World’s Key Industries Through Technologies ―
Shinagawa Refractories― Supporting the World’s Key Industries Through Technologies ―
Shinagawa Refractories
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 2
Table of Contents
I. Corporate Profile
II. Overview of Financial Results
III. Future Strategies
1. History
2. Basic Management Goals (Formulated on October 1, 2009)
1. Market Trend: Changes in Crude Steel Production
2. Basic Policies for Medium-Term Management Plan (FY2012-FY2014)
3. Medium-Term Management Plan: Review of FY2012
4. Measures for FY2013 (1) Reinforcement of Domestic Sales Capability
(2) Establishment of Optimal Production System
(3) Improvement of Technical and Cost Competitiveness
(4) Promotion of Overseas Business Expansion
5. Medium-Term Growth Vision
1. Consolidated Financial Highlights for Fiscal Year Ended
March 2013
(1) Operating Environment and Measures
(2) Operating Results
2. Net Sales by Business Segment
3. Operating Income by Business Segment (Segment Profit)
IV. Supplementary Notes
4. Factors Behind Changes in Operating
Income (Year-on-Year Comparison)
5. Consolidated Balance Sheets
6. Consolidated Cash Flows
7. Outlook of Consolidated Earnings for Fiscal
Year Ending March 2014
6. Key Features and Strengths (2) Solid Customer Base7. Key Features and Strengths (3) Global Business Expansion8. Current Status of the Expansion of Overseas Business Locations9. Domestic and Overseas Production System10. Global Procurement System
1. Changes in Net Sales and Ordinary Income During Past 11 Years (Consolidated Basis)2. What are the Roles of the "Refractory Industry"?3. Major Products4. Key Features and Strengths5. Key Features and Strengths (1) Ultra-High Temperature Technology
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
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I. Corporate Profile
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 4
1. History
Shinagawa Refractories Co., Ltd.
[Established in 1875]
JFE Refractories Corporation
[Established in 1938]
Aiming to solidify operational base and establish a steady supply Aiming to solidify operational base and establish a steady supply system through further expansion of the refractories businesssystem through further expansion of the refractories business
Merged on October 1, 2009Merged on October 1, 2009
(First private company in Japan to manufacture fire bricks)
Shinagawa Refractories Co., Ltd.
Will promote the streamlining of operations through the prompt realization of integration effects and focus on the development of
a management base to respond to environmental changes
(Operated as a subsidiary of the Kawasaki Steel Corporation Group since 1944)
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 5
2. Basic Management Goals (Formulated on October 1, 2009)
Following the merger to create the new “Shinagawa Refractories,” five basic goals were formulated.
(i) To be the world’s leading supplier of a full range of refractory products
(ii) To be responsive to the needs of our customers
(iii) To enhance the well-being of our shareholders, customers, and the communities that support us
(iv) To provide our employees with a safe, pleasant and rewarding workplace
(v) To remain profitable with a solid financial base that supports the aforementioned goals
Basic Goals of Shinagawa RefractoriesBasic Goals of Shinagawa Refractories
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
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II. Overview of Financial Results
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 7
1. Consolidated Financial Highlights for Fiscal Year Ended March 2013 (1) Operating Environment and Measures
[Operating environment] Remained extremely challenging overall
● Steel industry First half of the year: Impact of strong automobile sales due to subsidies for eco-friendly cars Second half of the year: Impact of a decline in sales as a reaction
Crude steel production for FY2012 increased by 0.8% year on year to 107 million tons (impact of Great East Japan Earthquake in the previous fiscal year)
● Amid sluggish domestic demand, operating environment remained tough as our exporting activities and overseas subsidiaries were significantly affected by yen appreciation up to the end of previous year as well as a decline in sales in overseas markets.
[Key measures taken during FY2012]
Worked on the reinforcement of domestic sales capability, establishment of optimal production system, and promotion of overseas business expansion as key initiatives.
● Completed the consolidation of production of magnesia-carbon bricks as the second stage of the establishment of optimal production system across the Company (first half of the year)
● Commenced the consolidation of production of slide-gate plates, nozzles, etc. primarily used during the continuous casting process as the third stage ( aiming to complete the consolidation during FY2013)
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 8
1. Consolidated Financial Highlights for Fiscal Year Ended March 2013 (2) Operating Results
● Net sales decreased by 3.7% year on year due to a decline in sales in overseas markets and in sales of overseas subsidiaries, reflecting the sluggish European economy and slowdown in growth in the Chinese economy. This was despite production and sales of refractories for domestic markets remaining unchanged from the previous fiscal year.
● Operating income plunged by 20.5% year on year while ordinary income was diminished by 12.1% year on year.
● Net income increased by 28.9% year on year due to the non-existence of loss on disaster of 352 million yen recognized for the previous fiscal year, among other factors.
Net sales
Results Initial forecast* Results
Operating income
Ordinary income
Net income
103,038
6,000
5,864
1,998
103,300
5,700
5,500
3,000
99,204
4,770
5,154
2,576
FY ended March 2012 FY ended March 2013
-3.7%
-20.5%
-12.1%
+28.9%
YoYAgainst initial
forecast
-4.0%
-16.3%
-6.3%
-14.1%
(Unit: million yen)
*Initial forecast: Figures announced on May 10, 2012
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 9
Refractories and related productsRefractories and related products Furnace construction and engineeringFurnace construction and engineering Real estate, leisure, etc.Real estate, leisure, etc.
(Million yen) (Million yen) (Million yen)
Total 103,038 -3.7%
Refractories and related products
Furnace construction and engineering
Real estate, leisure, etc.
76,171
24,044
2,822
-5.8%
+3.3%
-7.3%
73.9
23.3
2.8
100.0
2. Net Sales by Business Segment
Results
FY ended March 2012YoY
FY ended March 2012
FY ended March 2013
FY ended March 2012
FY ended March 2013
FY ended March 2012
FY ended March 2013
Note: Figures in square brackets [ ] indicate net sales share (%) by business segment.
(Unit: million yen)
-4,429 +801-205
99,204
71,741
24,846
2,616
72.3
25.0
2.7
100.0
Results
FY ended March 2013
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
5,950 100.0
4,770
-1,179
4,063
715
1,171
68.3
12.0
19.7
Results
FY ended March 2012YoY
Results
FY ended March 2013
10
3. Operating Income by Business Segment (Segment Profit)
Total 7,085 -16.0%100.0
Total operating income 6,000 -20.5%
Adjustment -1,084 ―
Refractories and related products
Furnace construction and engineering
Real estate, leisure, etc.
5,244
486
1,353
-22.5%
+46.8%
-13.5%
74.0
6.9
19.1
Note: Figures in square brackets [ ] indicate operating income share (%) by business segment.
(Unit: million yen)
-1,181 +228 -182
FY ended March 2012
FY ended March 2013
FY ended March 2012
FY ended March 2013
FY ended March 2012
FY ended March 2013
Refractories and related productsRefractories and related products Furnace construction and engineeringFurnace construction and engineering Real estate, leisure, etc.Real estate, leisure, etc.
(Million yen) (Million yen) (Million yen)
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 11
4. Factors Behind Changes in Operating Income (Year-on-Year Comparison)
47.7
(Million yen)
Reduced cost of
refractories
+4.0
Quantity, sales price, product
lineup of refractories
-11.3
60.0
FY ended March 2012
(Unit: 100 million yen)
Decline in profit as a result of decrease in
sales of affiliates
-3.9
Others
-1.1
Positive factors+4.0
Negative factors
-16.3
Change in amount -12.3
FY ended March 2013
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 12
・ Notes and accounts receivable-trade: -1,306
・ Investment securities: +1,919
・ Notes and accounts payable-trade: -2,231 ・ Short-term loans payable: -1,149
・ Long-term loans payable: -915
・ Retained earnings: +2,104
・ Valuation difference on available-for-sale securities: +1,343
・ Capital adequacy ratio: 35.6% (up 3.5 points)・ Interest-bearing debt/cash flow ratio:
5.3 years (improved by 3.3 years)
-1,856
Change
+2,048
+191
-3,315
-731
-4,047
+2,104
+1,713
+422
+4,239
+191
5. Consolidated Balance Sheets
Current assets 61,28563,141
Noncurrent assets
Total assets
Current liabilities
Noncurrent liabilities
Total liabilities
Shareholders' equity
Accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets
FY ended March 2012
FY ended March 2013
45,39543,347
106,681106,489
44,89148,207
18,94119,673
63,83367,881
36,04733,943
1,922209
4,8774,454
42,84738,608
106,681106,489
(Unit: million yen)
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 13
6. Consolidated Cash Flows
・ Income before income taxes and minority interests: 4,704
・ Depreciation and amortization: 2,520・ Decrease in notes and accounts
receivable-trade: 1,594・ Decrease in inventories: 1,453
・ Decrease in notes and accounts payable-trade: -2,351
・ Income taxes paid: -1,762
+2,109
Change
-840
+2,378
+672
Cash flows from operating activities 6,0643,954Cash flows from investing activities
Cash flows from financing activities
Cash and cash equivalents at the end of period
FY ended March 2012
FY ended March 2013
-2,808-1,967
-2,707-5,085
10,1539,480
(Unit: million yen) [Main contents of cash flows from operating activities]
・ Purchase of property, plant, and equipment: -2,066
・ Repayments of guarantee deposits received:-412
・ Proceeds from issuance of bonds: 395・ Decrease in short-term loans payable: -2,340・ Redemption of bonds: -140・ Cash dividends paid: -471
[Main contents of cash flows from investing activities]
[Main contents of cash flows from financing activities]
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 14
7. Outlook of Consolidated Earnings for Fiscal Year Ending March 2014
Net sales
Forecast
Operating income
Ordinary income
Net income
99,204
4,770
5,154
2,576
96,500
4,500
4,400
2,300
FY ended March 2013 FY ending March 2014
-2.7%
-5.7%
-14.6%
-10.7%
YoY
(Unit: million yen)
Results
Note: Figures in square brackets [ ] indicate ratios against net sales (%).
100.0
4.8
5.2
2.6
100.0
4.7
4.6
2.4
[Background]
● The outlook of the Japanese economy remains uncertain due to the European financial crisis and economic slowdown of emerging economies such as China, despite signs of a turnaround backed by anticipation for economic recovery measures in the future.
● The situation is increasingly challenging as production costs are expected to rise further as a result of higher procurement costs for raw materials and fuels due to the depreciation of the yen since the beginning of the year.
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
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III. Future Strategies
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 16
1. Market Trend: Changes in Crude Steel Production
851904
9691,061
1,1461,248
1,347 1,3411,235
1,4311,529 1,547
102110 111 113 113 118 122
10696
111 106 107
0
500
1,000
1,500
2,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
0
50
100
150
200
250
300
Crude steel production in the world ( calendar year)
Crude steel production in J apan (fiscal year)
● Global crude steel production has been increasing on the back of rapid economic growth, etc. of emerging economies in Asia such as China.● Meanwhile, domestic crude steel production has remained at the level of around 110 million tons per year for the past 10 years.● With regard to market environment forecasts, while crude steel production is expected to remain virtually flat in Japan in the future, a growth trend is anticipated globally.
(Million tons) (Million tons)
Virtually flatVirtually flat
Growth trendGrowth trend
Source: “Global Changes in Crude Steel Production” (World Steel Association); “Overview of Steel Production” (Japan Iron and Steel Federation)
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 17
2. Basic Policies for Medium-Term Management Plan (FY2012-FY2014)
(1) Reinforcement of domestic sales capability
(2) Establishment of optimal production system
(3) Improvement of technical and cost competitiveness
(4) Promotion of overseas business expansion
(5) Enhancement of safety measures and compliance
Aiming to remain profitable and achieve further growth in order to be the world’s leading supplier of a full range of refractory products
in the increasingly competitive domestic market and in overseas marketswith future growth potential
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 18
3. Medium-Term Management Plan: Review of FY2012
(1) Reinforcement of domestic sales capability
(2) Establishment of optimal production system
(3) Improvement of technical and cost competitiveness
(4) Promotion of overseas business expansion
(5) Enhancement of safety measures and compliance
Achieved certain results for the expansion of sales channels through the development of exclusive productsincluding new mold powder products, dense magnesia-carbon bricks for converters, etc.
The second stage of production consolidation was completed by September 2012 in accordance with the planand the third-stage consolidation project has been commenced.
● Achieved certain results for orders received both domestically and internationally on the back of steady progress in the development of new products and technologies● Stabilized the raw material procurement system through multiple procurement routes in China and the expansion of routes outside China
Made progress in building the foundation for overseas business expansion by steadily solidifying relationships with local companies in China, India, and Brazil, which we have focused on as future targets
Promoted activities toward the elimination of industrial accidents and enhancement of the compliance system
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 19
4. Measures for FY2013 (1) Reinforcement of Domestic Sales Capability
Speedy response to meet the needs of customers
Promotion of sales of highly functional and exclusive products
・ Highly durable tuyere bricks for
bottom-blowing converters
・ Highly functional submerged entry nozzle
・ Highly durable slide-gate plates
・ Dense magnesia-carbon bricks for converters, etc
・ Highly durable tuyere bricks for
bottom-blowing converters
・ Highly functional submerged entry nozzle
・ Highly durable slide-gate plates
・ Dense magnesia-carbon bricks for converters, etc
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 20
4. Measures for FY2013 (2) Establishment of Optimal Production System
Monolithic refractories
Shaped refractories,
etc.STEP 2STEP 2
Functionalshaped
refractoriesSTEP 3STEP 3
STEP 1STEP 1
1H 2H 1H 2H 1H 2H 1H 2H
FY ended March 2011
FY ended March 2012
FY ended March 2013
FY ending March 2014
●Magnesia-carbon bricks (AkoOkayama)
●Precast shapes (HinaseAko)
●Plastic refractories (OkayamaAko)
●New firing furnace for slide-gate plates (Okayama)
●Slide-gate plates, nozzles, etc. (AkoOkayama)
Completed●Relocation between east and west●Product consolidation in the western Japan region
Completed
To be completed In March 2014
(i) Magnesia-carbon bricks(ii) Fire clay and alumina bricks(iii) Slide-gate plates, nozzles, porous plugs (iv) Basic bricks
Consolidated the manufacturing of shaped refractories other than submerged entry
nozzle products as a mother plant
(i) Magnesia-carbon bricks (Completed in September 2012)(ii) Slide-gate plates, upper and lower nozzles
Specializes in monolithic refractories (+ precast shapes)
ConsolidationTo be completed
in March 2014
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 21
4. Measures for FY2013 (3) Improvement of Technical and Cost Competitiveness
● Development of original and competitive products
● Development and improvement of unrivaled, high-quality products
● Manufacturing of products with superior cost competitiveness
● Development of a design and installation system that is trusted by customers
● Reduction in purchase prices of raw materials, etc.
Key measures
Introduction of examples of specific measures
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 22
4. Measures for FY2013 (3) Improvement of Technical and Cost Competitiveness
(i) Improvement of durability of MHP tuyere bricks for BOF* MHP: Multi Hole Plug
*
With the use of special graphite, significantly reduced cracking and spalling
due to thermal stress during usage
Wear rate improved by
30-40%
After using the new product After using an existing product
* BOF: Basic Oxygen Furnace (Converter Furnace)
*
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 23
4. Measures for FY2013 (3) Improvement of Technical and Cost Competitiveness
(ii) Highly adhesive basic gunning refractories
[Comparison with existing products]
Use of a special new binder Relatively unaffected by temperature (greater acceptance limit of the amount of added water against hardening property)
Significant improvement in adhesiveness
Popular for use in repairing gunning refractories apply for electric furnaces, ladles, and RH degassers
(iii) Non-cement alumina magnesia casting refractories
As they do not contain CaO (calcium oxide) derived from cement, they have excellent slag penetration resistance.
With a special micro structure, they have excellent spalling resistance.
Used for nozzle bricks for ladles, Precast-shaped well blocks for purging plug. Durability has been improved by approximately 20%.
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 24
4. Measures for FY2013 (3) Improvement of Technical and Cost Competitiveness
● Enhanced carbon-bonding by non-oxidation firing method● Reaction of additives with atmospheric gas to reinforce carbon-bonding Extremely minor damage to surface and edge around holes
● Homogenization of temperature distribution on firing Minimization of variability in quality
● Enhanced productivity
(iv) Non-oxidation firing furnace for firing slide-gate plates New process used
New material Conventional material
Worn area
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 25
4. Measures for FY2013 (4) Promotion of Overseas Business Expansion
North AmericaNorth America
AustraliaAustraliaAreas in which the Shinagawa Refractories Group has existing overseas business sites and offices
IndiaIndia
BrazilBrazil
[Overseas Production System of the Shinagawa Refractories Group]
Areas in which the Shinagawa Refractories Group is considering establishing new overseas business sites
ChinaChina
● Reinforcement of management foundation of existing overseas subsidiaries
● New business expansion in emerging economies such as China, India, etc.
● Development of global human resources
Continue to take measures to maximize the advantage of locations close to raw material production centers and customers both for existing and new businesses
Aiming to establish business sites quickly as future growth can be expected as a result of an increase in on-site production by customers (JSW, etc.)
China
India
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 26
5. Medium-Term Growth Vision
Covering a broad range of the world’s best refractory-related technologies with high cost competitiveness
Technology
Products
Broad product lineup
Sales capability
Provision of comprehensive solutions
●Shaped refractories
●Monolithic refractories
●Mold powder
●Ceramic fiber
●Advanced ceramics
●Chemical and other
products
●Development of materials
●Manufacturing technology
●Installation technology
●Furnace body analysis
●Diagnostic technology, etc.
●
Desig
n ●
Ma
nu
factu
ring
●
Insta
llatio
n
●
Ma
inte
nan
ce
●
Rep
air
Global supplier of a full range of refractory products with comprehensive capabilities across three key axes
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
27
IV. Supplementary Notes
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 28
1. Changes in Net Sales and Ordinary Income During Past 11 Years (Consolidated Basis)
52,78056,347 56,730
62,161
73,849
79,64884,565
81,64084,408
101,070 103,03899,204
1,5971,919
2,5332,789
3,986
4,659 4,810
2,949
2,400
5,804 5,864
5,154
0
20,000
40,000
60,000
80,000
100,000
120,000
March2002
March2003
March2004
March2005
March2006
March2007
March2008
March2009
March2010
March2011
March2012
March2013
0
2,000
4,000
6,000
8,000
10,000
12,000Net sales Ordinary income(Million yen) (Million yen)
Merged on October 1, 2009Merged on October 1, 2009
Consolidated financial results for the fiscal year ended March 2010 combine the consolidated financial results of Shinagawa Refractories Co., Ltd. for the first half of the year prior to the merger and consolidated financial results of the new merged company for the second half of the year.
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 29
2. What are the Roles of the "Refractory Industry"?
● Many varieties of materials used in public infrastructure such as iron and steel, nonferrous metals, cement, glass, etc. are manufactured in furnaces with refractory lining.
● The refractory industry provides foundational support to key industries through engineering feats, such as the manufacturing of refractories, furnace design, furnace construction, etc.
Refining of molten steel in converter
Fire bricks for converters
Refractory lining
Furnace construction
using fire bricks
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 30
3. Major Products 1/2
Refractories
Shaped refractories Monolithic refractories Mold powderShaped refractories (“fire bricks”) provide basic support to industrial furnaces and ultra-high temperature processing facilities
A complete system package including “product, design, installation and after-sales service” that can suit a wide range of applications
An essential component of high-quality steel(Powder-type material added to maintain the surface temperature inside casting molds. It prevents the steel from oxidizing and acts as a lubricant during the continuous casting process used to manufacture steel ingot plates and rods)
●Magnesia-based bricks●Carbon-containing bricks●Fire-clay and high-alumina bricks●Functional products for continuous casting●Silicon carbide bricks●Silica bricks, etc.
●Castable refractories●Precast shapes●Gunning refractories●Plastic and ramming mixes●Refractory mortars, etc.
Refractories are industrial materials that can resist ultra-high temperatures in excess of 1,500 degrees Celsius. Approximately 80% of refractory production is consumed by the steel industry.
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 31
3. Major Products 2/2
Ceramic fiber Advanced ceramics
Chemical and other products
Lightweight material featuring low thermal conductivity and high thermal insulation, making it essential for energy-saving
Ceramic material with a broad range of characteristics including excellent electrical insulation properties, abrasion resistance, corrosion resistance, chemical stability, mechanical strength, etc.
Heat-resistant paint, heat-resistant adhesives, multifunctional absorbent, desiccant, etc. with applicability to ceramic materials technologies
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 32
4. Key Features and Strengths
Leading company in terms of ultra-high temperature technologies
Solid customer base thanks to technological capabilities
Aggressive global business expansion
1
2
3
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 33
5. Key Features and Strengths (1) Ultra-High Temperature Technology (i) Two Technologies
Solid technology development and commercialization capabilities underpinned by two technologies
Leading company in terms of ultra-high temperature technology
Refractorymanufacturing
technology
Advancedfurnace
construction technology
●Refractories●Ceramic fiber●Advanced ceramics●Chemical products and other products
Customer-oriented technological response
Development capability to meet customer needs
●Furnace design●Engineering services ・ Furnace construction work
for blast furnaces, converters, incinerators, etc.
・ Ultra-fast relining of blast furnaces and hot stoves
・ Maintenance of furnaces used by iron and steelmaking works, etc.
+
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 34
5. Key Features and Strengths (1) Ultra-High Temperature Technology (ii) Customer-Oriented Technological Response
Work closely with customers at all times backed up by technologies and long track records of four divisions covering design, manufacturing, furnace
construction, and development.
Work closely with customers at all times backed up by technologies and long track records of four divisions covering design, manufacturing, furnace
construction, and development.
DesignDesign
ManufacturingManufacturing
Analysisand
development
Analysisand
development
Furnace construction
and repair
Furnace construction
and repair
Engineering DepartmentEngineering Department
WorksWorks
Research CenterResearch Center
Furnace Construction DivisionFurnace Construction Division
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 35
5. Key Features and Strengths (1) Ultra-High Temperature Technology (iii) Development Capability to Meet Customer Needs
With world-class research facilities, the Research Center focuses on the development of products to meet the needs of customers
With world-class research facilities, the Research Center focuses on the development of products to meet the needs of customers
Analysis of microstructures of refractories Water model simulation of molten steel flow in the mold
Structural analysis of converters
SEI(×500)
Zr O
AISi
EDS analysis data(color map)
Elements present in the area can be detected in a short period of time.
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 36
6. Key Features and Strengths (2) Solid Customer Base
Solid customer base thanks to technological capabilities
Meeting the needs of customers in various industries including the Japanese steelmaking industry, which boasts
the best technology in the world
Ultra-high temperature technologies are fundamental technologies for many industries
Steel industry is the main customer, accounting for approximately 80% of customer base
From the material industry to the field of energy production, environmentally friendly ultra-high temperature technologies are fundamental to all.
Steel Nonferrous metal
Cement
GlassChemicals
Incinerator, waste melting
furnace
Gas, electricity
etc.
Automobiles, ships and other transport equipment, buildings and various steel products
Sheet glass, bottle glass, flat-panel display glass, fiber optics
Net sales share by customers
FY ended March 2012 (non-consolidated)
Steel81.7%
Incinerators
5.1%
Cement0.9%
Others 12.3%
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 37
7. Key Features and Strengths (3) Global Business Expansion
Aggressive global business expansion
Starting from our launch into China in 1997, the Company has continued to expand overseas,
establishing production bases in Australia and the U.S.
■ Overseas net sales and market share (consolidated)
7,507 8,437
11,082 12,372
14,926
17,901
15,095
12,418
14,903 14,801
13,230
13.314.9
17.8 16.818.7
21.218.5
14.7 14.8 14.3 13.3
0
10
20
30
40
0
4,000
8,000
12,000
16,000
20,000
2003/ 3 2004/ 3 2005/ 3 2006/ 3 2007/ 3 2008/ 3 2009/ 3 2010/ 3 2011/ 3 2012/ 3 2013/ 3
Overseas net sales
Overseas net sales share
(Million yen)(%)
[China] Entered market in 1997●1997: Established a joint venture company, Shenyang Shinagawa Glorious Metallurgy Materials Co., Ltd. (current Shenyang Shinagawa Metallurgy Materials Co., Ltd.) ●2003: Made an equity investment in a joint venture company,
Jinan Ludong Refractory Co., Ltd. ●2005: Established a joint venture company, Shinagawa
Rongyuan Refractories Co., Ltd.●2008: Established a joint venture company, Liaoning
Shinagawa Hefeng Metallurgical Material Co., Ltd.
[Australia] Entered market in 1998●1998: Established a joint venture general refractory company●2003: Fully consolidated the joint venture company and
renamed it Shinagawa Refractories Australasia Pty. Ltd.
[U.S.] Entered market in 2006●2006: Established Shinagawa Advanced Materials
Americas Inc. in Ohio
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 38
8. Current Status of the Expansion of Overseas Business Locations
Expanding overseas business locations in China, Oceania, and the Americas with a focus on areas close to the production sites of our customers
Jinan Ludong Refractory Co., Ltd.
Taiwan Liaison Office
North America Liaison Office
Shinagawa Refractories Australasia New Zealand Ltd.Overseas business sites
Overseas sales offices
(* indicates affiliated companies. All others are consolidated subsidiaries.)
*
Shenyang Shinagawa Metallurgy Materials Co., Ltd.
Shinagawa Rongyuan Refractories Co., Ltd.
Liaoning Shinagawa Hefeng Metallurgical Material Co., Ltd.
Shinagawa Refractories Australasia Pty. Ltd.
Shinagawa Advanced Materials Americas, Inc.
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 39
9. Domestic and Overseas Production System
North AmericaNorth AmericaChinaChina
AustraliaAustralia
[Overseas]After a review of the production system
subsequent to the merger, promoting the redevelopment of a steady supply system with
enhanced efficiency and speed
Overseas business sites of the Group
Developing a stable supply system by establishing the Group’s manufacturing sites
closer to customers in order to respond adaptively to customer needs
[Japan]
Ako・ Shaped refractories・ Monolithic refractories
・ Unfired bricks・ Shaped basic bricks・ Mold powder for continuous casting
Hinase
Tamashima・ Tap hole mix・ Monolithic refractories
Okayama・ Shaped refractories
Yumoto
・ Monolithic refractories・ Functional products for continuous casting
Kashima
・ Tap hole mix・ Monolithic refractories
(Since October 2010)
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 40
10. Global Procurement System
[China and North Korea area]●Magnesite●Flake graphite●Chromium ore, etc.
[South Africa area]●Chromium ore●Sillimanite●Zircon●Flake graphite, etc.
[Australia area]●Zircon●Magnesite
[India and Middle East area]●Chromium ore●Flake graphite, etc.
[Americas area]●Magnesite●Flake graphite●Dolomite●Bauxite, etc.
(South Africa, Zimbabwe)
(Ukraine, Iran, Oman, Pakistan, India, Sri Lanka)
(Canada, U.S.,Guyana, Brazil)
Specialty materials produced in Japan include silica, agalmatolite, etc.
The Company depends on foreign sources for approximately 60% of refractory materials, 80% or more of which (approximately 50% of the total raw materials) are imported from China.
Amid such circumstances, the Company developed a balanced procurement system to source materials from production centers in five geographical areas around the world from the perspective of avoiding excessive dependency on specific regions.
[Production centers of main imported materials]
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013 41
Disclaimer
This document is intended to provide information on the results for the fiscal year ended March
2013 (April 2012 – March 2013) and is not intended to solicit investment in securities issued by
the Company.
The document was prepared based on data available as of June 10, 2013. Opinions,
forecasts, etc. described herein are based on the Company’s judgment at the time of the
preparation of the document. The Company does not warrant or guarantee the accuracy or
completeness of the information contained herein, and such information may change without
notice in the future.
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
42
Presentation Material on Results for Fiscal Year Ended March 2013
Presentation Material on Results for Fiscal Year Ended March 2013
June 10, 2013June 10, 2013
Securities Code Number: 5351
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Shinagawa Refractories― Supporting the World’s Key Industries Through Technologies ―
Shinagawa Refractories