NAS Battery Fire Incident and Response
October 28, 2011
NGK INSULATORS, LTD. has announced that it decided today to revise its forecasts of full-year consolidated financial results due to the enactment of safety countermeasures and other responses to a fire incident on September 21 this year relating to NAS (sodium-sulfur) batteries manufactured and sold by NGK.
1. Outline of the Incident and Course of Events
On September 21, NGK-manufactured NAS batteries for storing electricity owned by The Tokyo Electric Power Company, Incorporated (Head Office: Chiyoda-ku, Tokyo) and installed at the Tsukuba Plant (Joso City, Ibaraki Prefecture) of Mitsubishi Materials Corporation (Head Office: Chiyoda-ku, Tokyo) caught on fire.
The fire occurred at around 7:20 a.m. on September 21, and at around 3:55 p.m. that afternoon the fire authorities declared the fire had been brought under control. Thereafter, the temperature of the combustion residue was monitored and at 3:25 p.m. on October 5 the fire authorities confirmed that the fire had been extinguished.
At present, the fire authorities are investigating the cause of the fire. NGK, for its part, formed an Accident Investigation Committee (chaired by Takeyuki Mizuno, Director and Senior Vice President) on September 21, which is looking into the cause of the fire and measures to prevent a reoccurrence.
NGK began shipping NAS batteries in 2002 and since then they have been installed in a total of 174 locations in 6 countries around the world, storing 305,000 kilowatts of electricity. In February 2010, a fire broke out in an NAS battery operating at a customer's business premises. However, the NAS battery that caused the fire was a different, special type of battery. NGK implemented preventative measures with respect to this special type of battery, as well as re-confirmed the safety of all NAS battery types. NGK regrets there has been another fire despite these efforts.
NGK is putting the highest priority on identifying the cause of this incident and looking at measures to prevent a reoccurrence. At the same time, NGK has temporarily halted production of NAS batteries in the meantime. Furthermore, in order to make doubly sure of safety, NGK also asks customers who need to maintain a minimal level of functionality such as using the batteries as an emergency power source and so on, to consult with it on an individual basis about the method of operation.
NGK deeply regrets any worry or inconvenience to customers, local authorities and residents. The Company is doing its best to ensure that customers can use NAS batteries with peace of mind.
2. Outlook and Impact on Business Performance
Despite the best efforts with the help of interested parties, more time is needed to identify the cause of the fire a month after the incident. At present, NGK continues to place top priority on safety measures and therefore asks customers not to use NAS batteries for the time being. NGK will also not manufacture batteries at its plants for the time being. Regarding new shipments, NGK has no option but to postpone shipments until safety is confirmed. Accordingly, NGK expects to see a sharp drop in sales of batteries that it had expected to be concentrated in the fourth quarter of the current fiscal year, and also expects to incur a loss on operations at plants from October.
Additional special losses may arise for additional safety measures on the installed batteries and at the manufacturing stage. However, because of the uncertainty at this stage, NGK has not determined its net income forecast. NGK will make an announcement as soon as it is reasonably able to do so.
For details of revisions to operating results, please refer to the separate press release issued today titled "Notice Regarding Differences in Business Forecasts and Revisions to Business Forecasts."
(Reference) Forecasts of consolidated financial results for the fiscal year ending March 31, 2012 (April 1, 2011 to March 31, 2012)
(Millions of yen, except per share data and percentage)
This document contains forward-looking statements that are based on management's expectations, estimates, projections and assumptions that were available and reasonable at the time of release. Actual future results and trends may differ materially from those in the forecasts due to a variety of factors.