November 6, 2013

Agreement on establishment of joint venture with Continental Automotive Holding Co., Ltd. for manufacturing Electronic Brake Systems (EBS) component in China

Nisshinbo holdings Inc. have agreed with Continental Automotive Holding Co., Ltd., the subsidiary of the international automotive supplier Continental, Germany, to establish a joint venture for manufacturing and sales of valve blocks, key component of electronic brake systems (EBS) in the People’s Republic of China.
Together with Continental, Nisshinbo established the joint venture (Continental Automotive Corporation, CAC) in 2000 for the manufacturing and sales of Anti-lock Brake Systems, and have built and excellent partnership. Through the new joint venture, the two companies will build on this strong relationship of trust, merging both technological expertises to respond to the growth in demand from automotive market in China and achieve further growth.

1. Background of Joint Venture Establishment
China is the largest automotive market in the world in terms of both production as well as sales, and both production volume and EBS penetration are expected to rise. In 2012 around 15 million passenger vehicles were produced in China, and EBS penetration was around 75%. By 2020, production is expected to rise by 80% and EBS penetration is expected to rise to more than 80%. By providing a rapid response to the growth in demand from the Chinese market, Continental aims to grow its share in the EBS market. In order to do this, it will need to procure a stable supply of component parts that are competitive on both quality and price. Nisshinbo has Precision Parts Manufacturing Department in Precision Equipment Division, and with manufacturing bases in both Japan and Shanghai, we are aiming to expand the business. From these bases, Nisshinbo has already provided a stable supply of valve blocks, which are highly appreciated from Continental.
The establishment of the new joint venture will speed the expansion of the two companies’ operations.

2. Overview of New Joint Venture
(1) Company name: Nisshinbo-Continental Precision Machining (Yangzhou) Co. Ltd
(2) Location: Yangzhou, Jiangshu Province, China
(3) Business Area: Manufacturing and sales of Valve Blocks
(4) Representative: Chairman, Kenji Ito
(5) Capital: 200 million CNY
(6) Establishment: December, 2013 (planned)
(7) Start of Operation: January, 2015 (planned)
(8) Financial Closing: End of December
(9) Share: Nisshinbo Holdings Inc. 70.0%, Continental Automotive Holding Co., Ltd. 30.0%

3. Future Outlook
There is no influence on FY2013 Financial Results by this new joint venture establishment. Production will be started from January 2015 and the production volume will be expanded serially. It is expected that the sales reach 4~5 billion JPY in 2020.

4. Overview of Continental
(1) Company Name: Continental AG
(2) Establishment: 1871
(3) Business Area: Brake systems, systems and components for powertrains and chassis, instrumentation, infotainment solutions, vehicle electronics, tires, and technical elastomers
(4) Employees: Almost 175,000 employees
(5) Headquarter: Hannover, Germany
(6) Capital: 512 million Euro
(7) Big Shareholder: Schaeffler KG 46.0%
(8) Locations: 291 locations in 46countries
(9) Financial Results: 2012 Sales 32,736 million Euro, EBIT 3,073 million Euro
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