― Supporting the World’s Key Industries Through Technologies ―
Shinagawa Refractories
Presentation Material on
Results for Fiscal Year
Ended March 2013
June 10, 2013
Securities Code Number: 5351
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
0
Table of Contents
I. Corporate
Profile
1. History
2. Basic Management Goals (Formulated on October 1, 2009)
II. Overview of
Financial
Results
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)
III. Future
Strategies
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
IV. Supplementary
Notes
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 Products
4. Key Features and Strengths
5. Key Features and Strengths
(1) Ultra-High Temperature Technology
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 Base
7. Key Features and Strengths (3) Global Business
Expansion
8. Current Status of the Expansion of Overseas Business
Locations
9. Domestic and Overseas Production System
10. Global Procurement System
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
1
I. Corporate Profile
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
2
1. History
[Established in 1875]
[Established in 1938]
Shinagawa Refractories Co., Ltd.
JFE Refractories Corporation
(First private company in Japan to
manufacture fire bricks)
(Operated as a subsidiary of the Kawasaki Steel
Corporation Group since 1944)
Aiming to solidify operational base and establish a steady supply
system through further expansion of the refractories business
Merged on October 1, 2009
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
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
3
2. Basic Management Goals (Formulated on October 1, 2009)
Following the merger to create the new “Shinagawa Refractories,”
five basic goals were formulated.
Basic Goals of Shinagawa Refractories
(i)
(ii)
(iii)
(iv)
(v)
To be the world’s leading supplier of a full range of refractory
products
To be responsive to the needs of our customers
To enhance the well-being of our shareholders, customers, and the
communities that support us
To provide our employees with a safe, pleasant and rewarding
workplace
To remain profitable with a solid financial base that supports the
aforementioned goals
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
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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
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1. Consolidated Financial Highlights for Fiscal Year Ended March 2013
(2) Operating Results
(Unit: million yen)
FY ended
March 2012
Results
FY ended March 2013
Initial forecast*
YoY
Results
Against
initial
forecast
Net sales
103,038
103,300
99,204
-3.7%
-4.0%
Operating
income
6,000
5,700
4,770
-20.5%
-16.3%
Ordinary
income
5,864
5,500
5,154
-12.1%
-6.3%
Net income
1,998
3,000
2,576
+28.9%
-14.1%
*Initial forecast: Figures announced on May 10, 2012
● 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.
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
7
2. Net Sales by Business Segment
(Unit: million yen)
FY ended March 2012
FY ended March 2013
Results
Results
YoY
Refractories and related products
76,171
73.9
71,741
72.3
-5.8%
Furnace construction and engineering
24,044
23.3
24,846
25.0
+3.3%
2,822
2.8
2,616
2.7
-7.3%
103,038
100.0
99,204
100.0
-3.7%
Real estate, leisure, etc.
Total
Note: Figures in square brackets [ ] indicate net sales share (%) by business segment.
Refractories and related products
Furnace construction and engineering
(Million yen)
(Million yen)
-4,429
FY ended
March 2012
FY ended
March 2013
Real estate, leisure, etc.
(Million yen)
+801
FY ended
March 2012
-205
FY ended
March 2013
FY ended
March 2012
FY ended
March 2013
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
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3. Operating Income by Business Segment (Segment Profit)
(Unit: million yen)
FY ended March 2012
FY ended March 2013
Results
Results
Refractories and related products
5,244
486
1,353
7,085
-1,084
6,000
Furnace construction and engineering
Real estate, leisure, etc.
Total
Adjustment
Total operating income
74.0
6.9
19.1
100.0
4,063
715
1,171
5,950
-1,179
4,770
YoY
68.3
-22.5%
12.0
+46.8%
19.7
-13.5%
100.0
-16.0%
―
-20.5%
Note: Figures in square brackets [ ] indicate operating income share (%) by business segment.
Refractories and related products
Furnace construction and engineering
(Million yen)
(Million yen)
(Million yen)
-1,181
FY ended
March 2012
FY ended
March 2013
Real estate, leisure, etc.
+228
FY ended
March 2012
FY ended
March 2013
-182
FY ended
March 2012
FY ended
March 2013
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
9
4. Factors Behind Changes in Operating Income (Year-on-Year Comparison)
Positive
factors
+4.0
(Unit: 100 million yen)
Negative factors
-16.3
Change in amount -12.3
(Million yen)
Reduced
cost of
refractories
Quantity, sales
price, product
lineup of
refractories
+4.0
-11.3
60.0
Decline in profit
as a result of
decrease in
sales of
affiliates
-3.9
Others
-1.1
FY ended March 2012
47.7
FY ended March 2013
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
10
5. Consolidated Balance Sheets
(Unit: million yen)
FY ended
March 2012
FY ended
March 2013
Change
Current assets
63,141
61,285
-1,856
・Notes and accounts receivable-trade: -1,306
Noncurrent assets
43,347
45,395
+2,048
・Investment securities: +1,919
106,489
106,681
+191
Current liabilities
48,207
44,891
-3,315
Noncurrent liabilities
19,673
18,941
-731
Total liabilities
67,881
63,833
-4,047
Shareholders' equity
33,943
36,047
+2,104
・ Retained earnings: +2,104
Accumulated other
comprehensive income
209
1,922
+1,713
・ Valuation difference on available-for-sale
securities: +1,343
4,454
4,877
+422
38,608
42,847
+4,239
106,489
106,681
+191
Total assets
Minority interests
Total net assets
Total liabilities and
net assets
・ Notes and accounts payable-trade: -2,231
・ Short-term loans payable: -1,149
・ Long-term loans payable: -915
・Capital adequacy ratio: 35.6%
(up 3.5 points)
・Interest-bearing debt/cash flow ratio:
5.3 years (improved by 3.3 years)
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
11
6. Consolidated Cash Flows
(Unit: million yen)
FY ended
March 2012
FY ended
March 2013
Change
Cash flows from
operating activities
3,954
6,064
+2,109
Cash flows from
investing activities
-1,967
-2,808
-840
Cash flows from
financing activities
-5,085
-2,707
+2,378
Cash and cash
equivalents at the
end of period
9,480
10,153
+672
[Main contents of cash flows from operating activities]
・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
[Main contents of cash flows from investing activities]
・Purchase of property, plant, and equipment:
-2,066
・ Repayments of guarantee deposits received:
-412
[Main contents of cash flows from financing activities]
・ Proceeds from issuance of bonds: 395
・ Decrease in short-term loans payable: -2,340
・ Redemption of bonds: -140
・ Cash dividends paid: -471
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
12
7. Outlook of Consolidated Earnings for Fiscal Year Ending March 2014
(Unit: million yen)
FY ended March 2013
FY ending March 2014
YoY
Results
Net sales
Forecast
99,204
100.0
96,500
100.0
-2.7%
Operating income
4,770
4.8
4,500
4.7
-5.7%
Ordinary income
5,154
5.2
4,400
4.6
-14.6%
Net income
2,576
2.6
2,300
2.4
-10.7%
Note: Figures in square brackets [ ] indicate ratios against net sales (%).
[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
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1. Market Trend: Changes in Crude Steel Production
● 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)
2,000
(Million tons)
300
C rude steel production in the w orld (calendar year)
C rude steel production in Japan (fiscal year)
1,500
1,347
1,248
1,000
851
102
904
969
1,061
1,529
200
1,235
1,146
111
250
1,431
1,341
150
111
110
1,547
113
113
118
106
122
106
500
107 Virtually flat
100
96
50
0
0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
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
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2. Basic Policies for Medium-Term Management Plan (FY2012-FY2014)
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 markets
with future growth potential
(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
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
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3. Medium-Term Management Plan: Review of FY2012
(1) Reinforcement of domestic sales capability
Achieved certain results for the expansion of sales channels through the development of exclusive products
including new mold powder products, dense magnesia-carbon bricks for converters, etc.
(2) Establishment of optimal production system
The second stage of production consolidation was completed by September 2012 in accordance with the plan
and the third-stage consolidation project has been commenced.
(3) Improvement of technical and cost competitiveness
● 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
(4) Promotion of overseas business expansion
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
(5) Enhancement of safety measures and compliance
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
17
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
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
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4. Measures for FY2013
(2) Establishment of Optimal Production System
FY ended
March 2011
1H
STEP 1
Monolithic
refractories
●Relocation between east and west
●Product consolidation in the western Japan
region
STEP 2
Shaped
refractories,
etc.
●Magnesia-carbon bricks (AkoOkayama)
●Precast shapes (HinaseAko)
●Plastic refractories (OkayamaAko)
STEP 3
Functional
shaped
refractories
●New firing furnace for slide-gate plates (Okayama)
●Slide-gate plates, nozzles, etc.
2H
FY ended
March 2012
1H
2H
FY ended
March 2013
1H
2H
FY ending
March 2014
1H
2H
Completed
Completed
To be completed In March 2014
(AkoOkayama)
(i) Magnesia-carbon bricks
(ii) Fire clay and alumina bricks
(iii) Slide-gate plates, nozzles,
porous plugs
(iv) Basic bricks
Consolidation
Consolidated the manufacturing of shaped
refractories other than submerged entry
nozzle products as a mother plant
To be completed
in March 2014
(i) Magnesia-carbon bricks
(Completed in September 2012)
(ii) Slide-gate plates, upper and
lower nozzles
Specializes in monolithic
refractories (+ precast shapes)
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
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4. Measures for FY2013
(3) Improvement of Technical and Cost Competitiveness
Key measures
● 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.
Introduction of examples of specific measures
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
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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
* BOF: Basic Oxygen
Furnace
(Converter Furnace)
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
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
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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
Repair of ladle slag line
(iii) Non-cement alumina magnesia casting refractories
Used for nozzle bricks for ladles,
Precast-shaped well blocks for purging
plug. Durability has been improved by
approximately 20%.
 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.
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
22
4. Measures for FY2013
(3) Improvement of Technical and Cost Competitiveness
(iv) Non-oxidation firing furnace for firing slide-gate plates
New process used
● 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
Worn area
 Minimization of variability in quality
● Enhanced productivity
New material
Conventional material
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
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4. Measures for FY2013
(4) Promotion of Overseas Business Expansion
● Reinforcement of management foundation of
existing overseas subsidiaries
● New business expansion in emerging
economies such as China, India, etc.
● Development of global human resources
China
India
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.)
[Overseas Production System of the Shinagawa Refractories Group]
China
North America
India
Brazil
Australia
Areas in which the Shinagawa Refractories Group has
existing overseas business sites and offices
Areas in which the Shinagawa Refractories Group
is considering establishing new overseas business
sites
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
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5. Medium-Term Growth Vision
Global supplier of a full range of refractory products with
comprehensive capabilities across three key axes
Sales capability
Provision of comprehensive solutions
Technology
●Development of materials
Covering a broad range of the world’s
best refractory-related technologies
with high cost competitiveness
●Manufacturing technology
●Installation technology
●Furnace body analysis
●
●
●
●
●
●
Advanced ceramics
Ceramic fiber
Mold powder
Monolithic refractories
Shaped refractories
Repair
●
Chemical and other
products
Broad product lineup
●
Maintenance
Products
Installation
●
Manufacturing
●
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
Design
●
●Diagnostic technology, etc.
25
IV. Supplementary Notes
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
26
1. Changes in Net Sales and Ordinary Income During Past 11 Years
(Consolidated Basis)
(Million yen)
120,000
N et sales
O rdinary incom e
Merged on October 1, 2009
100,000
(Million yen)
12,000
101,070 103,038
99,204
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.
84,565
79,648
80,000
81,640
10,000
84,408
8,000
73,849
62,161
60,000
52,780
56,347
56,730
5,804
4,659
5,154
4,810
3,986
40,000
2,533
20,000
6,000
5,864
1,597
4,000
2,949
2,789
2,400
2,000
1,919
0
0
March
2002
March
2003
March
2004
March
2005
March
2006
March
2007
March
2008
March
2009
March
2010
March
2011
March
2012
March
2013
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
27
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
Refractory lining
Fire bricks for
converters
Furnace
construction
using fire bricks
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
28
3. Major Products 1/2
Refractories
Shaped refractories
Shaped refractories (“fire bricks”)
provide basic support to industrial
furnaces and ultra-high
temperature processing facilities
●Magnesia-based bricks
●Carbon-containing bricks
●Fire-clay and high-alumina bricks
●Functional products for
continuous casting
●Silicon carbide bricks
●Silica bricks, 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.
Monolithic refractories
A complete system package
including “product, design,
installation and after-sales
service” that can suit a wide range
of applications
●Castable refractories
●Precast shapes
●Gunning refractories
●Plastic and ramming mixes
●Refractory mortars, etc.
Mold powder
An essential component of highquality 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)
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
29
3. Major Products 2/2
Ceramic fiber
Lightweight
material featuring
low thermal
conductivity and
high thermal
insulation, making
it essential for
energy-saving
Advanced ceramics
Ceramic material with a broad range of characteristics
including excellent electrical insulation properties, abrasion
resistance, corrosion resistance, chemical stability,
mechanical strength, etc.
Chemical and other products
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
30
4. Key Features and Strengths
1
Leading company in terms of ultra-high
temperature technologies
2
Solid customer base thanks to technological
capabilities
3
Aggressive global business expansion
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
31
5. Key Features and Strengths
(1) Ultra-High Temperature Technology (i) Two Technologies
Leading company in terms of ultra-high temperature technology
Solid technology development and commercialization capabilities
underpinned by two technologies
●Refractories
●Ceramic fiber
●Advanced ceramics
●Chemical products
and other products
Refractory
manufacturing
technology
Customer-oriented
technological response
＋
Advanced
furnace
construction
technology
●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.
Development capability to
meet customer needs
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
32
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.
Research Center
Design
Analysis
and
development
Manufacturing
Furnace
construction
and repair
Engineering Department
Works
Furnace Construction Division
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
33
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
EDS analysis data
(color map)
Elements present in the area
can be detected in a short
period of time.
SEI
Si
(×500)
Zr
Structural analysis of converters
AI
O
Analysis of microstructures of refractories
Water model simulation of
molten steel flow in the mold
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
34
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
Automobiles, ships and
other transport
equipment, buildings and
various steel products
Nonferrous
metal
Incinerator,
waste melting
furnace
Chemicals
Gas,
electricity
Cement
etc.
Glass
Sheet glass, bottle
glass, flat-panel display
glass, fiber optics
Others 12.3%
Cement
Steel
0.9%
Incinerators
Net sales share
by customers
81.7%
5.1%
FY ended March 2012
(non-consolidated)
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
35
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)
[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.
(Million yen)
(%)
40
Overseas net sales
20,000
Overseas net sales share 17,901
14,926
16,000
15,095
13,230
12,418
12,372
30
11,082
12,000
8,000
14,903 14,801
7,507
8,437
13.3
14.9
17.8
16.8
18.7
20
21.2
18.5
14.7
14.8
14.3
13.3
10
4,000
[U.S.]  Entered market in 2006
●2006: Established Shinagawa Advanced Materials
Americas Inc. in Ohio
0
0
2003/3 2004/3 2005/3 2006/3 2007/3 2008/3 2009/3 2010/3 2011/3 2012/3 2013/3
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
36
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
Shenyang Shinagawa Metallurgy Materials Co., Ltd.
Liaoning Shinagawa Hefeng
Metallurgical Material Co., Ltd.
Shinagawa Advanced Materials Americas, Inc.
Shinagawa Rongyuan Refractories Co., Ltd.
Taiwan Liaison
Office
North America
Liaison Office
Shinagawa Refractories Australasia Pty. Ltd.
*
Jinan Ludong Refractory Co., Ltd.
Overseas business sites (* indicates affiliated
Overseas sales offices
companies. All others are
consolidated subsidiaries.)
Shinagawa Refractories Australasia New Zealand Ltd.
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
37
9. Domestic and Overseas Production System
[Overseas]
[Japan]
Developing a stable supply system by
establishing the Group’s manufacturing sites
closer to customers in order to respond
adaptively to customer needs
After a review of the production system
subsequent to the merger, promoting the
redevelopment of a steady supply system with
enhanced efficiency and speed
Okayama
・Shaped refractories
Hinase
China
North America
Tamashima
・Tap hole mix
・Monolithic refractories
・Unfired bricks
・Shaped basic bricks
・Mold powder for
continuous casting
Yumoto
・Monolithic refractories
・Functional products
for continuous casting
Kashima
Australia
Ako
Overseas business
sites of the Group
・Shaped refractories
・Monolithic refractories
・Tap hole mix
・Monolithic refractories
(Since October 2010)
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
38
10. Global Procurement System
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.
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.
[Production centers of main imported materials]
[India and Middle
East area]
[China and North
Korea area]
●Chromium ore
●Flake graphite, etc.
●Magnesite
●Flake graphite
●Chromium ore, etc.
(Ukraine,
Iran, Oman,
Pakistan,
India, Sri
Lanka)
[Americas area]
●Magnesite
●Flake graphite
●Dolomite
●Bauxite, etc.
(Canada, U.S.,
Guyana, Brazil)
Specialty materials
produced in Japan
include silica,
agalmatolite, etc.
[South Africa area]
[Australia area]
●Chromium ore
●Sillimanite
●Zircon
●Flake graphite, etc.
●Zircon
●Magnesite
(South Africa, Zimbabwe)
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
39
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
40
― Supporting the World’s Key Industries Through Technologies ―
Shinagawa Refractories
Presentation Material on
Results for Fiscal Year
Ended March 2013
June 10, 2013
Securities Code Number: 5351
Shinagawa Refractories Presentation of Results for Fiscal Year Ended March 2013
41