Nikko
Corporate Report
2021
Nikko Corporate Report 2021
Fiscal year ended March 31, 2021
Contents
Table of Contents, Editorial Policy | 01 | GOVERNANCE | |||||||||||||||||||||||||
Corporate Governance | 59 | ||||||||||||||||||||||||||
VISION | Message from Newly Appointed Outside Directors | 64 | |||||||||||||||||||||||||
Nikko Group's Corporate Philosophy | 02 | Governance Discussion by Outside Directors | 65 | ||||||||||||||||||||||||
Executives | 67 | ||||||||||||||||||||||||||
Transition and History of Social Issues | 03 | ||||||||||||||||||||||||||
CEO's Message | 05 | CORPORATE DATA | |||||||||||||||||||||||||
Value Creation Process | 11 | ||||||||||||||||||||||||||
Nikko Group in Figures | 13 | FY 2020 Business Summary and FY 2021 Outlook | 69 | ||||||||||||||||||||||||
Financial Data of the Past 10 Years | 73 | ||||||||||||||||||||||||||
STRATEGY | Financial Statements of the Past 2 Years | 75 | |||||||||||||||||||||||||
Medium-Term Management Plan | 15 | Stock Information | 78 | ||||||||||||||||||||||||
Company Overview and Offices and Sites | 79 | ||||||||||||||||||||||||||
Topic 1: Maintenance Service Business | 17 | ||||||||||||||||||||||||||
Summary of Subsidiaries | 80 | ||||||||||||||||||||||||||
Topic 2: Overseas and New Businesses | 19 | ||||||||||||||||||||||||||
Segment Highlights | 21 | ||||||||||||||||||||||||||
Business Strategies | |||||||||||||||||||||||||||
AP (Asphalt Plant-Related) Business | 23 | ||||||||||||||||||||||||||
BP (Concrete Plant-Related) Business | 25 | Editorial Policy | |||||||||||||||||||||||||
Environment- and Conveyor-Related Business | 27 | Nikko Group Corporate Report 2021 aims to disclose Nikko Group's medium- | |||||||||||||||||||||||||
Other Businesses | 28 | ||||||||||||||||||||||||||
and long-term value creation efforts from both financial and non-financial | |||||||||||||||||||||||||||
CFO's Message | 29 | aspects to all stakeholders, including our shareholders and investors. The | |||||||||||||||||||||||||
Risks and Opportunities | 33 | Report is edited referring to The International Integrated Reporting | |||||||||||||||||||||||||
Framework established by the International Integrated Reporting Council | |||||||||||||||||||||||||||
(IIRC) and the Guidance on Integrated Disclosure and Dialogues for Joint | |||||||||||||||||||||||||||
SUSTAINABLITY | Value Creation by the Ministry of Economy, Trade and Industry of Japan. | ||||||||||||||||||||||||||
Target readers : All stakeholders connected to the Nikko Group | |||||||||||||||||||||||||||
Promotion of Sustainability | 35 | Reporting period: The Report mainly covers FY2020 (April 1, 2020 to | |||||||||||||||||||||||||
DX Solutions and Pursuit of Customer Satisfaction | 39 | March 31, 2021) but also includes information before | |||||||||||||||||||||||||
and after this period. | |||||||||||||||||||||||||||
For a Stronger Value Co-creation Platform | 41 | ||||||||||||||||||||||||||
Reporting scope: The Report covers the Nikko Group comprising Nikko | |||||||||||||||||||||||||||
Improvement of Employee Engagement | 47 | Co., Ltd. and ten subsidiaries (all of which are | |||||||||||||||||||||||||
consolidated subsidiaries). | |||||||||||||||||||||||||||
Roundtable Discussion by Employees with | |||||||||||||||||||||||||||
49 | Company name: "Nikko" and the "Company" refer to Nikko Co., Ltd. The " | ||||||||||||||||||||||||||
Prior Work Experience | Nikko Group" and the "Group" refer to the Nikko Group, | ||||||||||||||||||||||||||
including consolidated subsidiaries. | |||||||||||||||||||||||||||
CARBON NEUTRAL | Note on forward-looking information | ||||||||||||||||||||||||||
Response to Carbon Neutral | 51 | This Report includes statements on future outlook. We appreciate that you | |||||||||||||||||||||||||
understand that actual performance may differ from the Company's | |||||||||||||||||||||||||||
Metrics, Targets, and Governance Structure | 56 | projections. | |||||||||||||||||||||||||
Nikko Group's Corporate Philosophy | VISION | |
Nikko Group's Promise
Future creation that starts from an' '
We will continue to be the leading manufacturer of asphalt and batching plants.
We aim to become the top manufacturer in the Asian market by expanding our overseas business. We will brush up our core technologies of heating, mixing and kneading, material handling, and control to expand our business.
We will continue to be a future creation company that contributes to society.
Nikko Group Corporate Charter
Management Philosophy
Adopting a customer-first policy, the Nikko Group provides customers with truly
satisfactory products and services, while continually promoting self-reform to win the broad trust and fulfill our mission as a solutions partner evolving with customers.
Company Motto
- Serve society through business.
- Work toward prosperity with sincerity and responsibility.
- Produce appropriate profits through original ideas and improvement efforts.
*Batching plant: A concrete plant that uses the batching method
01 Nikko Corporate Report 2021 | Nikko Corporate Report 2021 02 |
Transition and History of Social Issues
Transition of social issues | ||
Improvement in labor | Development and | Response to |
expansion of land | ||
productivity of civil | environmental | |
infrastructure (railroad, | ||
engineering works | pollution | |
roads, ports, and dams) | ||
VISION
Realization of recycling-oriented society Development of infrastructure in emerging countries
1919 ●Nihon Kogu Product Co., Ltd. was established
Establishes the registration date of August 13th as foundation day ●"Tombo" registered as trademark
1920 ●Extraordinary general shareholders meeting held
Matsusaburo Yano appointed to Senior Managing Director
●First product, a shovel, goes on sale.
1921 ●Head Office relocated to Akashi
1923 ●Supplies materials for reconstruction following major earthquake that devastated the Kanto region
1932 ●Constructs a forging plant and warehouse for wooden handle material
1933 ●Construction of rolling mill decided
1934 ●Second Plant opens
1938 | ●Third Plant starts operations |
1945 | ●Most of the plants burnt down by war |
1946 | ●First Plant back into operation |
●Construction work completed for the Second | |
Plant Wood processing and manufacture of | |
wooden handles restart | |
1948 | ●Construction work completed for the Fourth Plant |
●Company designated as a factory | |
manufacturing essential goods | |
1949 | ●Shares listed on the Osaka Securities Exchange |
1950 | ●Shovel demand surges following the start |
of the Korean War | |
1951 | ●Starts manufacture of winches and mixers |
1956 | ●Completes construction of a concrete plant |
1958 | ●Nikko's first asphalt plant |
1959 | ●Tokyo office opens |
1960 | ●Completes first asphalt plant that uses |
electron tube-based control system | |
1962 | ●Lists shares on the Tokyo Stock Exchange |
1963 | ●Completes first automated concrete plant |
1964 | ●Relocates the head office functions to |
Eigashima Plant | |
1966 | ●Starts manufacture of fully automated |
concrete plants | |
●Starts manufacture of belt conveyer system | |
1968 | ●Company renamed to Nikko Co., Ltd. |
●Completes first crushing plant | |
1969 | ●Opens operator training center |
1971 | ●Establishes Nikko Electronics Co., Ltd. |
1974 | ●Signs technology tie-up with Benninghoven, |
a leading industrial burner maker then based in West Germany, and the Dutch company Philips
1975 ●Develops environmentally friendly CNAP series of asphalt plants
1976 ●Launches Tombo-kai
1977 ●Develops recycling plant and mixture silo designs
1981 ●Conducts first BP operator training
1983 ●Establishes Nikko Gate Co., Ltd. ●Completes BonD (Bag-filter on Dryer) series
●Develops
WISE series of concrete plants
1992 ●Participates in project to assemble on-site asphalt plants for Kansai International Airport
1994 ●Establishes Tombo Industry Co., Ltd. ●Conducts the 100th AP operator training session
1995 ●Establishes Nikko Sec Co., Ltd.
1997 | ●Establishes Nikko Machinery Co., Ltd. |
1998 | ●Obtains ISO9001 registration |
1999 | ●Opens Beijing office |
2000 | ●Develops soil decontaminating plant |
2001 | ●Establishes Nikko (Shanghai) Construction |
Machinery Co., Ltd. | |
2007 | ●Establishes Nikko Group Corporate Charter |
2008 | ●Develops a liquid biomass (alternative to |
fossil fuel) burner | |
●Acquires ownership of Maekawa Kogyosho Co., Ltd. | |
2012 | ●Tohoku Branch launches quake-disaster |
recovery project | |
●Develops large soil decontaminating plant | |
●Develops a solid biomass (alternative to | |
fossil fuel) burner | |
2013 | ●Develops plant especially for |
quake-disaster recovery |
2014 ●Develops MBD series for recycled mixtures ●Develops DASH-Hyper mixer
2015 ●Develops VP series asphalt plants using new design
2018 ●Builds Techno Center on Akashi head-office property
●Opens showroom on the first floor of the Head Office; strengthens CSC
●Mobile Plant Business starts operating in earnest ●Holds Nikko Messe 2018 marking 100th foundation anniversary
2019 ●Marks the 100th foundation anniversary ●Marks 100th foundation anniversary with ceremony
2020 ●Establishes Nikko Asia (Thailand) Co., Ltd.
●Establishes Nikko NilKhosol Co.,Ltd.
1919
Start-up era
In the Taisho era, Japan's economy boomed after World War I as trade grew and various industries developed. In such a situation, the executives of Suzuki Trading, a Kobe-based general trading firm boasting the top annual sales in Japan at that time, established Japan Tool Manufacturing Co., Ltd., which manufactured and sold hardware for construction such as shovels, spades, and pickaxes in August 1919.
1950
Postwar reconstruction and business expansion
The Korean War broke out in 1950, and the production of shovels expanded on the back of special procurement. Reflecting robust civil engineering works, the Company began manufacturing concrete plants in 1956. As road construction expanded with the beginning of motorization, the Company developed an asphalt plant prototype in 1958. It built the foundation for transforming itself from a tool manufacturer to a construction machinery manufacturer.
1970
Transformation into a construction machinery manufacturer
The Company expanded operations to construction machinery, such as asphalt plants and belt conveyors, which are essential for construction works, and in 1968 changed its name to Nikko Co., Ltd.
It carried out development of products in response to the needs of the time through technological alliances with Boeing of the U.S., Benninghoven of Germany, and Philips of the Netherlands.
1990
Promotion of recycling pavement waste and expansion into Asia
In 1998, the Company established the Environment Business Department to develop cutting-edge plants and devices that were environmentally friendly by using its plant engineering technology.
In 2001, the Company established Nikko (Shanghai) Construction Machinery Co., Ltd., aiming for a full-scale entry into the Chinese market.
Since the development, in 1977, of recycling plants that reuse asphalt pavement waste, the Company has been promoting the recycling of all asphalt.
20102021
Making plant products low-carbon and decarbonized and promotion of remote maintenance
The Company developed a solid biomass fuel that can be used at asphalt plants in 2012. It focused on low-carbonization and decarbonization of plants by commercializing a combustion burner for diverse alternative fuels.
The Company advanced control and analysis technologies and strengthened remote support to enhance proactive prevention-type remote maintenance of customer plants.
In 2020, the Company established Nikko Asia (Thailand) Co., Ltd. as the base for tapping into Southeast Asia and accelerated business expansion in Asia following the subsidiary in Shanghai.
Head office factory at the time of founding
1958: Nikko's first asphalt plant
1968: Nikko's NAP-602, the first made-in-Japan plant used for construction of Tomei Expressway
2013: Introduction of plants especially for quake-disaster | 2020: Establishment of Nikko Asia (Thailand) Co., Ltd. |
recovery |
03 Nikko Corporate Report 2021 | Nikko Corporate Report 2021 04 |
CEO's Message | VISION | |
We aim to become a leading company in decarbonized society through active investment in technologies for CO2 emission reduction and environmental recycling.
Representative Director, President and CEO
Masaru Tsuji
Q1 | Review and summary of the Medium-Term Management Plan | ||
and policy of the next medium-term plan | |||
The Medium-Term Management Plan is entering into its final fiscal year in FY 2021. What were the | |||
positive and negative points? Also, what is the policy for the next Medium-Term Management Plan? | |||
The current Medium-Term Management Plan enters into its final fiscal year in FY 2021 and our initial goals were
38.0 billion yen in net sales and 3.0 billion yen in operating income. At this point, we are expecting consolidated net sales of 39.0 billion yen and operating income of 2.3 billion yen for FY 2021. Net sales are expected to exceed the target reflecting aggressive sales activities, while operating income is expected to underperform the target. We will be unable to achieve the operating income target because we plan to invest 300 million yen in R&D expenses in the decarbonization field and the AP (asphalt plant) Related Business is unlikely to achieve the profit target (see p. 15).
New orders received increased despite the COVID-19 pandemic, growing 18% to 40.0 billion yen in FY 2020 compared with FY 2019. However, the overseas business was affected by COVID-19. Established in the previous fiscal year, the Thai subsidiary won orders at an early stage despite the impediments caused by restrictions on travel. However, costs such as export expenses will increase due to the delay in the development of the local manufacturing base. Net sales of Nikko (Shanghai), our Chinese subsidiary, also declined about 4% in FY 2020 compared with a year ago.
In the existing business fields, the AP- and BP- (concrete plant) Related Businesses in Japan were not affected by COVID-19 and capital investments by customers have
been strong. Operating income of the AP-Related Business is likely to come to 1.25 billion yen compared with the medium-term plan target of 1.9 billion yen, and one of the factors behind the shortfall is that the number of new unit-type AP (Value-Pack series), aimed at differentiating us from competitors by shortening on-site work with improved performance of recycled mixture manufacturing, fell below the plan. Under the Medium-Term Management Plan, we aimed to raise the ratio of the new AP to more than a half of domestic sales, but we have not made sufficient progress, and therefore, we need to further promote the product among customers.
A positive point during the Medium-Term Management Plan was that we made capital investment by focusing on the future. In particular, we made capital investment in three fiber lasers and others for factories in FY 2019 and 2020 to differentiate product performance and improve productivity. The improvement has already been seen in the results and we are expecting factory income to increase further. We will also start the maintenance service business from FY 2021 as we developed a mechanism of prevention and maintenance based on an annual maintenance contract. At the same time, we made progress in DX and work style reform thanks partly to the impact of COVID-19 and we also built mechanisms for online business negotiations and telecommuting, which is expected to improve productivity in the future.
05 Nikko Corporate Report 2021 | Nikko Corporate Report 2021 06 |
CEO's Message
VISION
Currently, we are formulating a new three-yearMedium-Term Management Plan and we are expecting the favorable business environment to continue. There are the upcoming EXPO 2025 in Osaka, continued renovation works of infrastructure, bullet train extension work, and restoration from torrential rain disasters. The Fundamental Plan for National Resilience, with a project scale of 15 trillion yen, will be implemented over five years starting 2021 as a disaster prevention and mitigation measure.
road, revetment, bridge reinforcement, and reconstruction of buildings, we will drive forward the upgrading and reinforcement plans for asphalt mixture and ready-mixed concrete supply facilities (plants, etc.), and upgrade the functions of the facilities (plants) for construction waste recycling, highly strong materials, and materials for workability. As for profitability, we would like to bring the operating margin of the domestic business close to 10% taking into account the introspection of the current
Among the future risks for the company is the | In the future, if there is an industry reorganization |
possibility of a decline in the number of APs installed, | where the volume of asphalt mixture manufactured |
if there comes a stage where customers demand fully | remains unchanged, the plants that survived the |
electrified plants (to which we cannot respond) | reorganization will become larger in scale, and they |
leading to reorganization of customers. Our share of | may be replaced by more high-end plants. That will be |
the AP market in Japan was 75% in FY 2020, and the | a business opportunity for us. |
impact of such a risk will be large. |
●Trend of Asphalt mixture output and number of asphalt plants installed
To respond to the construction-related demands such as
medium-term plan and the issues.
(million yen) 100,000
Virgin mixture (left scale) | Recycled mixture (left scale) | Number of installed asphalt plants (right scale) | |||
2,000 | |||||
●Net Sales and Operating Income Plans under Medium-Term Management Plan
(million yen) | Operating income (left axis) | Net sales (right axis) | Operating margin | |||||||||||||||
7,000 | Previous Medium-Term | Numerical Plan and Results of the | 70,000 | |||||||||||||||
6,000 | Management Plan | Medium-Term Management Plan | 60,000 | |||||||||||||||
1st year | 2nd year | 3rd year | ||||||||||||||||
5,000 | 7.0% | 6.0% | 5.9% | 6.0% | 6.4% | 5.8% | 7.1% | 6.1% | 7.9% | 5.9% | 50,000 | |||||||
4.8% | 4.5% | |||||||||||||||||
4,000 | 35,700 | 35,151 | 36,500 | 37,866 | 38,000 | 39,000 | 40,000 | |||||||||||
34,110 | 35,114 | |||||||||||||||||
32,073 | 32,717 | 31,780 | ||||||||||||||||
30,707 | ||||||||||||||||||
3,000 | ||||||||||||||||||
3,000 | 30,000 | |||||||||||||||||
2,600 | ||||||||||||||||||
2,249 | 2,300 | 2,302 | 2,300 | |||||||||||||||
1,944 | 2,103 | 2,053 | ||||||||||||||||
2,000 | 1,832 | 20,000 | ||||||||||||||||
1,629 | 1,427 | |||||||||||||||||
1,000 | 10,000 | |||||||||||||||||
0 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | Medium-term | 2019 | Medium-term | 2020 | Medium-term | 2021 | 0 | |||||
(fiscal year) | ||||||||||||||||||
plan | (results) | plan | (results) | plan | (estimates) | |||||||||||||
1st year plan | 2nd year plan | 3rd year plan |
8,000
6,000
4,000
2,000
0
1,753 | ||||||
1,652 | ||||||
1,407 | 1,500 | |||||
1,189 | 1,140 | |||||
1,043 | ||||||
1,040 | 1,000 | |||||
500 | ||||||
1995 | 2000 | 2005 | 2010 | 2015 | 2020 2021 | 0 |
(fiscal year) | ||||||
(estimated) |
Q2 | Nikko Group's future measures for achieving carbon neutral |
In 2020, the global momentum of DX and decarbonization gathered pace and a clear trend emerged of Japanese companies aiming to achieve carbon neutral. In the capital market also, companies listed on the Prime Market will be required by revised CGC to make climate-related financial disclosures and in the future it is likely that companies will have to make nature-related financial disclosures. What changes will the status of Nikko Group's carbon neutral initiatives (including plans) and risks and opportunities for achieving decarbonization bring about on the long-term business environment?
As for the company's opportunity, we consider it a great chance to accelerate our business expansion given our background in building CO2 reduction technologies and environment and recycling technologies for many years. We have a track record in developing equipment to recover rare metals from waste batteries and waste circuit boards of home electronics, a plant to recycle waste plasterboards, CO2 absorption equipment using concrete sludge, carbon neutral fuel use of waste glycerin, waste wood tar, wood chips, and ashes from burning waste among others.
If the needs for carbon neutral become tangible overseas, we believe the potential demand will become larger. Specifically, we are paying attention to the
introduced gas burners. What's more, we are expecting to receive orders for recycling plants soon.
Nikko Group's management philosophy is a customer-first policy, and we have been honestly responding to customer requests for products, which has ensured the sustainability of our business. This is primarily because maintenance service accounts for 60% of net sales, and I believe that this management philosophy is our mightiest weapon that will be effective in any country around the world even if we enter into the era of carbon neutral (see pp. 31 and 51).
We plan to boost environment-related R&D expenses to 730 million yen over three years of the next Medium-Term Management Plan. We plan to spend 700 million yen in R&D expenses in FY 2021 and expect to spend a total of 2.5 billion yen, including the environment-related 730 million yen in the three years of the next medium-term plan (FY 2022 to 2024). In more concrete terms, we aim to develop products such as a series of biomass burners, combustion system for ammonia and hydrogen, AI-based judgment system, sand drying and supply system, and various mixing equipment. We also plan to increase the number of employees engaged in research and development by
seven from current 43 to 50 in three years and are also considering acquiring a test center (1.0 billion yen in investment) as part of capital investment. Achievement of carbon neutral, a direction the world is heading towards, is the duty of a company, and we plan to work on it proactively. We emit 1.3 million tons of CO2 a year in Japan, as our mainstay product AP is a heating system which burns fuel oil and gas. We will switch fuels for AP to reduce CO2 emissions from our products by 50% by 2030, by 80% by 2040, and achieve zero emissions by 2050.
potential in China, which has the largest AP demand in the world and where implementation of environmental measures is relatively delayed. Nikko (Shanghai), our Chinese subsidiary, has been seeing increasing demand for AP for recycled mixtures, and it is transforming into a market format where we can leverage the strength of our environment and recycling technologies. We also established a subsidiary in Thailand, and we believe that eventually all of Asia will require carbon neutral APs. For example, Taiwan tightened its environmental regulations to require use of gas instead of fuel oil as fuel, and many plants
07 Nikko Corporate Report 2021 | Nikko Corporate Report 2021 08 |
This is an excerpt of the original content. To continue reading it, access the original document here.
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
NIKKO Co. Ltd. published this content on 29 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 November 2021 15:49:04 UTC.