Mixed results from Japan as report shows fall in Powder Metallurgy production
May 25, 2016
Sumitomo Electric Industries Ltd, Fine Sinter Co Ltd, Hitachi Chemicals Co Ltd and Mitsubishi Materials Corp, four of Japan’s leading companies with involvement in Powder Metallurgy production, have recently reported their full year financial results for the period April 1, 2015 to March 31, 2016. All but one of these managed to achieve growth in PM related sales for the year despite a 3.9% fall in Japan’s car production in the same period to 7.773 million cars.
The fall in car production was attributed to a declining domestic car market which saw new car registrations drop by 7.6% to 4.115 million units in the period April 2015 to March 2016. Around 90% of Japan’s PM production goes to the automotive sector.
Despite the relatively positive financial results reported by some of Japan’s major PM producers, the overall PM production in Japan is reported to have fallen in 2015. The Japan Powder Metallurgy Association (JPMA) reported that production of all PM products (PM bearings, PM structural parts, sintered friction materials, electrical collectors, etc) totalled 94,529 tonnes in 2015, a 5.3% drop on the previous year. The corresponding sales value of these PM products also fell but by a lower percentage of 2.6% to Yen 160,149 million ($1.453 billion).
The JPMA reported that the production of PM structural parts fell by 5% to 86,287 tonnes in 2015 with 81,200 tonnes of this amount supplied to the automotive sector. The production of PM bearings suffered a 6.6% fall to 6,284 tonnes in 2015.
Sumitomo Electric Industries Ltd
Sumitomo Electric Industries Ltd (SEI) based in Itami, Osaka, Japan, saw sales for the full year to March 31, 2016, increase by 3.9% to Yen 2.933 billion ($26.6 billion) compared with the previous year. Group operating income was up by 6.7% to Yen 143.5 billion ($1.301 billion). The largest SEI division is ‘Automotive’ and this division, which specialises in wiring harnesses, reported full year sales of Yen 1,541 billion ($13.979 billion), an increase of 3.6%.
SEI’s ‘Industrial Materials & Others’ division is the third largest after the ‘Automotive’ and ‘Environment and Energy’ divisions, and includes the production of cemented carbides (hardmetals), PM parts, and PM magnets, plus W, Mo, heavy metal, thermal management materials, ceramics, diamond tools and hardmetals produced at the fully owned A.L.M.T. subsidiary.
The ‘Industrial Materials & Others’ division saw full year sales decrease slightly (1.6%) compared with same period in 2014/2015 to Yen 312,154 billion ($2.831 billion). Hardmetals (cemented carbides) sales decreased to Yen 89.8 billion ($814.6 million ) for the 12 month period, and sales of Powder Metallurgy products saw no change at Yen 58.1 billion ($527 million). Sales at A.L.M.T. declined by nearly 14% to Yen 41.4 billion ($375 million). SEI is forecasting full year sales (March 31, 2017) of Yen 320 billion ($2.902 billion) for the Industrial Materials division.
Fine Sinter Co Ltd
Fine Sinter Co Ltd, based in Kasugai, Aichi Pref., operates two business segments which include (1) Powder Metallurgy products based on structural PM parts and Metal Injection Moulding; friction materials (for railway applications), and (2) hydraulic equipment such as motor pumps, solenoid valves, etc. Automotive PM products make up nearly 90% of sales; railroad applications around 4%, hydraulic equipment 7% and industrial machinery the remainder. Fine Sinter Ltd reported an 1.6% increase in full year sales for the period ending March 31, 2016, to Yen 38.3 billion ($347.4 million), and a 90% increase in net income to Yen 2,244billion.
The company operates six production plants in Japan, China and Indonesia and is involved in a joint venture with another Japanese PM producer, Tokyo Sintered Metals Ltd, for producing PM parts in the USA at American Fine Sinter (AFS) in Tiffin, Ohio
Hitachi Chemicals Co Ltd
Hitachi Chemicals Co Ltd, which includes two main business segments (1) Functional Materials and (2) Advanced Components and Systems, reported group sales up by 3.8% to Yen 546.5 billion ($4.957 billion) for the full year ended March 31, 2016 with net income up by 71.2% to Yen 39.2 billion ($355 million). The Advanced Components & Systems division which includes structural PM parts and PM bearings as well as vehicle batteries, printed circuit boards and diagnostic instruments, reported a 10.3% increase in sales to Yen 252.5 billion ($2.290 billion). Segment profit was up 246% at Yen 14.9 billion.
Mitsubishi Materials Corp
Mitsubishi Materials Corp (MMC) reported consolidated net sales for the 12 month period to March 31, 2016, totalling Yen 1,418 billion ($12.863 billion), down 6.5% on the corresponding period in the previous year. Operating profit was down by 20% to Yen 70.4 billion ($638.6 million).
Year-on-year decline in sales was said by MMC to have been affected by the decrease in copper and other key metal prices, as well as a fall in overall demand for cement which forms one of the MMC divisions. However, net sales of the ‘Advanced Materials & Tools division’ (AM&T), which includes cemented carbide (hardmetal) tools, structural PM parts and bearings, high performance alloy products and superalloys, were reported to have increased by 17% year-on-year to Yen 151.6 billion ($1.375 billion) with a further 8.5% rise in sales forecast for the 2016/2017 financial year. Full year operating profits for this division rose by just 0.9% to Yen 16 billion. This division has particularly benefited from robust sales of cemented carbide products in Japan and overseas, including the recent acquisition of a 51% shareholding in Hitachi Metals Ltd’s cemented carbide business which took effect on April 1, 2015.
The company claims to have more than 10% share of the global cemented carbide market, and is continuing its work to stabilise its sourcing of tungsten, a key constituent of cemented carbide products, by improving the recycling ratio and diversification of procurement sources. MMC also expects its mainstay sintered parts production to increase in line with growth in the automobile industry.
