business results for q2, forecast for fy2019 and the 6 mid ... · forecasted business environment...

December, 2019

NSK Ltd.

Cautionary Statements with Respect to Forward-Looking StatementsStatements made in this report with respect to plans, strategies and future performance that are not historical fact are

forward-looking statements. NSK cautions that a number of factors could cause actual results to differ materially from

those discussed in the forward-looking statements.

Note : This document is an English translation of material written initially in Japanese.

The Japanese original should be considered the primary version

Business Results for Q2, Forecast for FY2019

and The 6th Mid-Term Management Plan

Copyright NSK Ltd. All Rights Reserved. 1

Contents

1． Business Results for Q2

2． Business Forecast for FY2019

3． The 6th Mid-Term Management Plan

(Supplementary Information)

Copyright NSK Ltd. All Rights Reserved. ２

1．Business Results for Q2

Copyright NSK Ltd. All Rights Reserved.

Business Environment

Summary of Business Results

3

Summary of Consolidated Business Resultsfor the Six Months Ended September 30, 2019

YOY

Sales : ¥ 434.8 billion (-¥ 74.8 billion / -14.7%)

Segment Income＊ : ¥ 16.7 billion (-¥ 29.7 billion / -63.9%)

Operating Income : ¥ 15.8 billion (-¥ 29.2 billion / -64.9%)

(O.I. %) (3.6%) (-5.2p)

Net Income Attributable toOwners of the Parent :

¥ 11.8 billion (-¥ 19.1 billion / -61.8%)

✓ Consolidated Business Results for FY2019: 1H (Apr.-Sep.)

＊Segment Income : Operating income before deduction of other operating expenses

✓Uncertainty and stagnation of world economy persisted due to the prolonged US-China trade friction.

✓Demand decrease in both the industrial machinery and automotive businesses continued.

✓Exchange rate : further appreciation of the yen, primarily in CNY and EURO.

✓Decreased in both sales and operating income year-on-year mainly due tovolume decline.

✓Interim dividend :¥20/per share (same amount as the interim dividend in FY18; as planned.)


(Billions of yen)

FY2018 FY2019

1st half

<Actual>

1st half

<Actual>

Increase/

Decrease

YOY

Difference

YOY

1st half<FCST>

Sales 509.6 434.8 -74.8 -14.7% 464.0

Operating income 45.0 15.8 -29.2 -64.9% 25.0

<%> <8.8%> <3.6%> <5.4%>

Income before income taxes 45.1 15.6 -29.6 -65.5% 25.0

Net income attributable to owners of the parent 30.9 11.8 -19.1 -61.8% 19.0

(Ex. rate: 1USD=)

( 〃 1EUR=)

( 〃 1CNY=)

110.27

129.84

16.75

108.63

121.41

15.68

-1.64

-8.43

-1.07

-1.5%

-6.5%

-6.4%

110

125

16.5

*Reference

Segment income 46.4 16.7 -29.7 -63.9% 26.5

<%> <9.1%> <3.8%> <5.7%>

Major Indexes

ROE 11.4% 4.5%

Net D/E ratio (times) 0.23 0.28

Inventory turnover (times) 6.8 5.5

Summary of Consolidated Business Resultsfor the Six Months Ended September 30, 2019

＊Segment Income : Operating income before deduction of other operating expenses


(Billions of yen)

FY2018

1st half

<Actual>

FY2019

1st half

<Actual>

Increase/

Decrease

YOY

Difference

YOY

FY2019

1st half<FCST>

Sales 135.9 119.7 -16.2 -11.9% 129.0

Industrial MachineryBearings

104.7 97.2 -7.5 -7.2% 103.0

Precision Machineryand Parts

31.2 22.5 -8.7 -27.9% 26.0

Operating

Income <%>

16.7<12.3%>

8.3<6.9%>

-8.4 -50.3% 12.0<9.3%>

(Ex. rate:1USD=)

( 〃 1EUR=)

( 〃 1CNY=)

110.27

129.84

16.75

108.63

121.41

15.68

-1.64

-8.43

-1.07

-1.5%

-6.5%

-6.4%

110

125

16.5

5

53.4 51.3 53.5 52.1 49.0 48.2

15.9 15.3 14.7 13.811.9 10.6

69.366.6 68.2 65.9

60.8 58.9

8.8 7.9 8.2 7.9

4.93.4

Q1 Q2 Q3 Q4 Q1 Q2

Ind BRG Precision O.I.

FY19FY18

12.7% 11.9% 12.1% 12.0%8.0% 5.8%

O.I. (%)

1USD= 109.07 111.47 112.91 110.19 109.90 107.36

1EUR= 130.06 129.62 128.79 125.13 123.49 119.33

1CNY= 17.13 16.37 16.33 16.33 16.07 15.29

Business Results: Industrial Machinery Business

✓Bearings: sales decreased due to sluggish sectors including capital goods (machine tools, robots) and consumer goods (home appliances), while infrastructure-related (wind turbines, railcars) remained robust.

✓Precision: Strongly affected by stagnation in sectors such as semiconductors and machine tools as well as customer inventory adjustment.

✓ Operating income decreased due to volume decline and product mix.


FY2018

1st half

<Actual>

FY2019

1st half

<Actual>

Increase/

Decrease

YOY

Difference

YOY

FY2019

1st half<FCST>

Sales 357.6 302.2 -55.4 -15.5% 321.0

AutomotiveBearings 176.5 162.2 -14.3 -8.1% 172.0

AutomotiveComponents 181.1 139.9 -41.1 -22.7% 149.0

Operating

Income <%>

26.7

<7.5%>

7.1

<2.3%>

-19.6 -73.6% 13.0

<4.0%>

(Ex. rate:1USD=)

( 〃 1EUR=)

( 〃 1CNY=)

110.27

129.84

16.75

108.63

121.41

15.68

-1.64

-8.43

-1.07

-1.5%

-6.5%

-6.4%

110

125

16.5

6

1USD= 109.07 111.47 112.91 110.19 109.90 107.36

1EUR= 130.06 129.62 128.79 125.13 123.49 119.33

1CNY= 17.13 16.37 16.33 16.33 16.07 15.29

89.4 87.1 88.2 84.2 82.6 79.6

93.8 87.2 83.576.2 72.6 67.3

183.3 174.3 171.6

160.5 155.2 147.0

15.3 11.4

11.8 6.4 5.1

2.0

Q1 Q2 Q3 Q4 Q1 Q2

Auto BRG Auto Comp O.I.

FY18 FY19

8.3% 6.6% 6.9%4.0% 3.3% 1.4%

O.I. (%)

Business Results: Automotive Business

✓Vehicle production volume declined: -12% in China, -20% in India YOY.

✓Automotive components: Volume decrease in AT-related products toward China. EOP in steering business.

✓Operating income decreased, largely affected by volume decline despite the reduction of labor cost.


2．Business Forecast FY2019(Updated and disclosed on November 5th)


Forecasted Business Environment

Business Forecast

8

Summary of Consolidated Business Forecastfor the Year Ending March 31, 2020

✓ Revision to original business forecast

vs. May forecast

Sales : ¥ 860.0 billion ( -¥ 85.0 billion / -9.0%)

Operating Income : ¥ 32.0 billion ( -¥ 31.0 billion / -49.2%)

(O.I. %) （3.7%）Net Income Attributable toOwners of the Parent :

¥ 21.0 billion ( -¥ 24.0 billion / -53.3%)

✓ 2nd half: Reviewed exchange rate assumptions: USD=¥108 (originally ¥110),

EUR=¥120 (originally ¥125), CNY=¥15.3 (originally ¥16.5)

✓ FY19 full-year dividend (forecast) remains unchanged at ¥40 per share

(Interim: ¥20, 2nd half: ¥20).

✓Delay in economic recovery.✓Industrial Machinery: Demand adjustment in machine tools, electrical,

and semiconductors expected to be sustained.✓Automotive: Global production volume to fall below 90 million. Decrease

primarily in China and India.


FY2018 FY2019

(Billions of yen)

Full year<Actual>

1st half<Actual>

2nd half＜Revised FCST＞

Full year＜Revised FCST＞

Increase/

Decrease

YOY

Difference

YOYFull year＜May FCST＞

Sales 991.4 434.8 425.2 860.0 -131.4 -13.3% 945.0

Operating income<%>

79.3

<8.0%>

15.8

<3.6%>

16.2

<3.8%>

32.0

<3.7%>

-47.3 -59.6% 63.0

<6.7%>

Income before income taxes 79.2 15.6 15.9 31.5 -47.7 -60.2% 62.5

Net income attributable to owners of the parent 55.8 11.8 9.2 21.0 -34.8 -62.4% 45.0

(Ex. rate: 1USD=)

( 〃 1EUR=)

( 〃 1CNY=)

110.91

128.40

16.54

108.63

121.41

15.68

108.00

120.00

15.30

108.32

120.71

15.49

-2.59

-7.69

-1.05

-2.3%

-6.0%

-6.3%

110

125

16.5

Segment income 83.3 16.7 18.3 35.0 -48.3 -58.0% 66.0

<%> ＜8.4%＞＜3.8%＞＜4.3%＞＜4.1%＞＜7.0%＞

Summary of Consolidated Business Forecastfor the Year Ending March 31, 2020

Segment Income : Operating income before deduction of other operating expenses


(Billions of yen)

FY2018 FY2019

Full year<Actual>

1st half<Actual>

2nd half＜Revised

FCST＞

Full year＜Revised

FCST＞

Increase/

Decrease

YOY

Difference

YOYFull year＜May FCST＞

Total Sales 991.4 434.8 425.2 860.0 -131.4 -13.3% 945.0

Operating income 79.3 15.8 16.2 32.0 -47.3 -59.6% 63.0

<%> 8.0% 3.6% 3.8% 3.7% 6.7%

IndustrialMachineryBusiness

Sales 270.0 119.7 119.3 239.0 -31.0 -11.5% 265.0

Industrial Machinery Bearings 210.3 97.2 98.3 195.5 -14.8 -7.0% 210.0

Precision Machinery and Parts 59.7 22.5 21.0 43.5 -16.2 -27.2% 55.0


<%> 12.2% 6.9% 7.3% 7.1% 10.9%

AutomotiveBusiness

Sales 689.7 302.2 292.3 594.5 -95.2 -13.8% 650.0

Automotive Bearings 348.9 162.2 162.8 325.0 -23.9 -6.9% 352.5

Automotive Components 340.8 139.9 129.6 269.5 -71.3 -20.9% 297.5


<%> 6.5% 2.3% 2.9% 2.6% 5.1%

Others Sales 62.9 25.5 26.5 52.0 -10.9 -17.4% 59.0


<%> 8.9% 4.8% 4.9% 4.8% 6.8%

Eliminations (sales) -31.2 -12.5 -13.0 -25.5 +5.7 -29.0

Other operating expenses / Adjustments -4.2 -0.8 -2.2 -3.0 +1.2 -3.0

10

Forecast by Business Segment


Industrial Machinery Business -Business Environment-

100.0 108.8 104.7 105.6 97.2 98.3

26.9 30.5 31.2 28.5

22.5 21.0

126.9

139.3 135.9 134.1

119.7 119.3

10.2

18.1 16.7 16.2

8.3 8.7

1H 2H 1H 2H 1H 2H

Ind BRG Precision O.I.

FY19FY18FY17

8.1%

13.0% 12.3% 12.0%

6.9% 7.3%

O.I.(%)

Sales / Operating Income

Demand recovery delay.

Infrastructure: robust

Product mix worsened.

High Fixed cost.

-Sales initiatives: Capture demand in robust sectorsand aftermarket proactively.

-Fixed cost measures: Maximize operation andhuman resources structures. (transfer personnel across plants)

-Stick to CF: Reduce inventory, curb capital expenditure. -Measure against exchange rate:

Local procurement (Non-Japan),Global procurement(Japan) 11

RevisedFCST

Down from May Forecast Up from May Forecast

[Demand trend by Sector] ↑ Increase, →Unchanged, ↓Decrease

Sector

Actual 20/3 2H Forecast Forecast

20/3 1H

vs.

19/3 2H

20/3 2H vs. 20/3 1H 21/3 1H

vs.

20/3 2HAs of

May 2019

As of

Oct. 2019

Cap

ital g

oo

ds

Pre

cis

ion

Eq

uip

men

t

Machine Tools ↓↓ ↑↑ ↓ →

Semicon-ductors ↓↓ ↑↑ → ↑

Robotics ↓↓ ↑ ↓ →Injection Molding ↓ ↑↑ ↓ →

Motors ↓ ↑ → ↑Fluid

Machinery ↓ ↑ → ↑Steel Plant Facilities → → → ↓

Agricultural Machinery ↓ → → →

Infra

stru

ctu

re

Wind Turbines → ↑ ↑↑ →

Railcars ↑ → ↑↑ →Mining /

ConstructionMachinery

↓ → ↓ →

Co

ns

u-m

er

go

od

s

Home Appliances → → ↓ ↑

Aftermarket → → → →


Automotive Business -Business Environment-

Global Vehicle Production Volume

170.6 180.4 176.5 172.4 162.2 162.8

181.6 191.1 181.1

159.7 139.9 129.6

352.1 371.4

357.6 332.1

302.2 292.3

31.2

34.7

26.7

18.2

7.18.4

1H 2H 1H 2H 1H 2H

Auto BRG Auto Comp O.I.

FY19FY18FY17

8.9% 9.4% 7.5%5.5%

2.3% 2.9%

O.I.(%)

Sales / Operating Income

Economic environment deterioration.

Auto market slowdown.

High fixed cost.

Decrease in EPS.

-Leverage human resources for productivity improvement activities.

-Build solid supply chain (dual source)Prepare for trade/exchange rate risks.

-Curb capital expenditure.-Continue development activities towardregrowth in EPS business.

12

（unit : M）

FY 19 FcstFY15Act

FY16Act

FY17Act

FY18Act (in the

planning phase)

(as of Oct. 2019)

Source: IHS Automotive, NSK Estimates

Production Volume by Japanese Automakers（unit : M）

FY 19 FcstFY15Act

FY16Act

FY17Act

FY18Act (in the

planning phase)

(as of Oct. 2019)

RevisedFCST

9.0 9.1 9.4 9.5 9.5 9.6

17.7 17.9 16.9 16.8 16.8 16.5

21.0 21.9 22.2 21.7 21.8 21.0

24.1 27.5 27.6 25.9 27.5 23.7

3.94.1 4.0 4.2 4.3

4.0

13.513.9 15.0 14.7 15.2

12.9

89.294.4

95.1 92.8 95.187.7

0.0

20.0

40.0

60.0

80.0

100.0

Japan North America Europe China ASEAN6 Others

9.0 9.1 9.4 9.5 9.5 9.6

18.7 19.4 19.9 19.8 20.5 19.4

27.7 28.5 29.3 29.3 30.0 29.0

0

10

20

30

40 Non-Japan Japan


3． The 6th Mid-Term Management Plan(Announced on May 14th)


Provide values through evolution of MOTION ＆ CONTROLTM

ESG management

Utilization of robust managerial resources

Business growth and profitability

Value created

<NSK’s 7 key SDGs>

NSK contributes to a safer, smoother society and helps protect the global environment

through its innovative technology integrating Motion & ControlTM.

As a truly international enterprise, we are working across national boundaries to improve relationships between people

throughout the world.

<Mission Statement>

-Safety, Quality, Compliance,

and Environment

-Corporate governance

-Personnel, Technology,

Organization, Information

-Balance investment in future

growth with shareholder returns

under a stable financial structure

Establish corporate foundation for sustainable growth (Ideal structure of NSK in 2026)

14

Vision for 2026 ：Establish a corporate foundation for sustainable growth

3 key management tasks

-Environmental contribution(low friction, high efficiency, safe)

-Improvement of transmissionefficiency

-Contribution to an advanced technological society

-Realization of a more prosperous society

-Growth of a wide range of industries-Advancement in mobile society-Improvement of shareholder value


949.2 1,020.3 991.4 945.0

1,000.0

1,500.0

5th MTP (Results)

FY16 FY17 FY18

Embark on new chapter in evolution toward next 100

years

6th MTP

FY19 FY20 FY21

-New initiatives targeting growth

-Enhance managerial resources

-Contribute to the environment and society

Build business base and

strengthen resources in

preparation for next growth

phase -ESG management

-Utilization of robust managerial resources

-Business growth and profitability

Establish corporate foundation

for sustainable growth.Evolution of

MOTION ＆ CONTROLTM

Secure sales of ¥1 trillion and profitability

6.7%8.0% 8.0%

(Billions of yen)

VISION 2026

Au

tom

otiv

e

Bu

sin

es

sIn

du

stria

l Mach

inery

B

usin

ess, O

thers

CAGR +3% Double-digit profitability

-Respond to changes in business environment

-Rebuild profit base

-Develop new products, target new fields

Sustained Growth

Transition to growth with profitability

Challenge next growth phase

15

(as of May 2019)

Positioning of the 6th MTP toward 2026


Safety, Quality, Compliance, Environment

New initiatives targeting growth

Enhance managerial resources

Op

era

tion

al

Excelle

nce

Contribute to

the environment and society

Personnel, Technology, Organization, Information

Build business base and strengthen resources in preparation for next growth phase

Co

nsta

nt p

urs

uit o

f co

mp

etitiv

en

ess


6th MTP Concept -Strategy House-

16

Cre

atio

n o

f new

va

lue

Ch

alle

ng

ing

Inn

ovatio

n

NSK Core Values


Growth

Profitability

Efficiency

Financial

Stability

Shareholder

returns

Capital

expenditure

R&D

Management Targets6th MTP

5th MTP(FY18)

Results

Sales/

Growth ratio

Operating

Income %

ROE

Net D/E ratio

Equity ratio

Payout ratio

Share buyback

Capital expenditure(3-year total)

R&D

Expenses

¥991.4 billion

8.0%

10.4%

0.27 times

49.4%

(3-year total)

(Share buyback)

¥35.0 billion

36.3%

¥208.5 billion

(3-year total)

¥86.3 billion

Sales growth

2%/year

0.3 times

50%

Payout ratio30 - 50%

Cash dividend¥40/share

¥180.0billion

vs. Sales

3 - 4%

Management Targets6th MTP

Secure stable profitability

ROE exceeding cost of capital

Maintain an A-level credit ranking

Continue stable dividendAcquisition of treasury shares

Agile capital policy

Investments to underpin

sustainable growth

Continue developing technologies for further growth

8% or more

10% or more

or more

Industrial Machinery：Achieve sales growththat surpasses market growth

Automotive Brgs：Achieve sales growththat surpasses growth in globalvehicle production volume.

Automotive Comps: Secure orders torestart growth in steering business.


Infrastructure

Automation,

Labor-saving

Environmental

protection measures

×

Core productsNew

productsAftermarket

Growth Area

Products, Services

✓

✓

✓

✓

✓

＋

Industrial Machinery Business

Consumer goodsWind turbines / Railcars

/ Construction

18

6th MTP<Strategy by

business segment>

Social needs and technological innovation

Capital goodsPrecision equipment

(Machine tools, Robots etc.)

New businesses

Smart technology

Higher-performance robotsFactory automation

Electrification, next-generation battery technology, renewable energy

Railway: Improved safety and comfortSmart innovation in construction and agricultural machinery

IoT, next-generation communications (5G)

Condition monitoring tools, remaining life diagnosis technology

ICT equip / High-functionality and energy-efficient home appliances

[Future Vision]

Evolve and construct new business foundation in response to changes in social needs- Growth exceeding economic cycle -


FY18 FY26

GAM

Precisionproducts

BearingsBearings for

Industrialinfrastructure

5 initiatives targeting growth

1

2

GAM

CMS

Actuators

<Growth strategy>

Expand business foundation through growth drivers such as

value provision, brand power and products + services.

Growth drivers

Brand


-Wind power -Railways -Construction

-Information and communications-High-performance, energy-saving home appliances

FY26

Sales: +50%(vs. FY18)

Capture demand in growing sectors

Capture demand in sectors where markets expand reflecting social needs.

6th MTP<Strategy by

business segment>

Further expand NSK’s presence in demand areas including machine tools, robotics and automation.

Contribute to higher specs, environmental performance, labor-saving and reduction of downtime through NSK’s core precision products.

Provide values leveraging NSK’s strength, precision technology

19

Main spindle

・Rotation accuracy

・Heat-proof

・High-rigidity

Precision positioning

・Longer

precision life

・High-speed less noise

・Low abrasion

Condition monitoring

・Reduction of downtime

New proposal and contribution to required performance (Machine tools)

Main

spindleCMS

Core precisionproducts

Comprehensive

Product and

service-based

approach

Shift from

price-based to

value-based

approach


Industrial Machinery Business6th MTP<Strategy by

business segment>

4

5

Establish industrial actuators as new core product3 Leverage NSK’s strengths

to expand GAM business

Construct new business utilizing condition monitoring technology

Market expands as a key component supporting electrification

(Competitive advantages)Optimal design using NSK-produced component parts.Ensure high-quality, high-reliability, and high-performance.

Product-based + Solution-based businessContribute to customers’ productivityand quality improvement.Provide technology service and solutionservices

Establish CMS Development Center⇒ integrate business development

and engineering development

Product-

based

business

Solution-based

business by

providing

engineering and

solution services

20

-For railcars, construction, robots and medical use-Need for automation accelerates,

electrification in pneumatic/hydraulic devices

-Improved comfort, safety and environmental performance

Deliver unit/system products by leveraging NSK’s competitive advantage in component parts

Continue promoting 4 fundamental policies

- High-reliability products- Engineering support, service

response->Reduce end-user maintenance

costs

NSK’sstrengths

Strengthen channel

management

Cultivate

specialists

Supply/Logistics/Inventory

Promote utilization of ITAIP asset efficiency

program

Vibration control actuator(L: Actuator, R: Driver)

Customer/ End user

Improve productivity

Improve quality

Smart shop floor


Automotive Business6th MTP<Strategy by

business segment>

Powertrain

productsHUB bearings

Bearings for

in-vehicle motorsSteering Actuators

Electrification of power source

and in-vehicle parts

94 95 93 96 97 100107

116

4% 5% 7% 10%16%

21%

38%

54%

0%

20%

40%

60%

80%

100%

0

20

40

60

80

100

120

FY16 FY17 FY18 FY19 FY20 FY21 FY24 FY30

Electrification ratio (Right axis)

Global vehicle production increases moderately. Electrification ratio grows

Unit: Million

vehicles

C A S EConnected Autonomous Shared Electric

Advanced steering/control functions

Technology to support mechanical parts

High-efficiency, weight reduction, noise reduction

Areas NSK contributes to

×

21

（Source：IHS Automotive, NSK forecast in May 2019)

Vehicle needs /

technological innovation

Enviro

nmentSafety Comfort

Conve

nience

Mobility

Global vehicle production

[Future Vision]

Establish new presence by responding to innovations in vehicle technology- Achieve sales growth that surpasses growth in global vehicle production -


1 5 initiatives targeting growth

1 Expansion in Powertrain business

FY26


2 4 8 14 5 17

33 49

87 79

66 53

93 100 107

116

FY18 FY21 FY24 FY30

EV HEV ICE

EV

HEV

ICE


business segment>

Unit: Million

vehicles

Vehicle production volume forecast by

power sourceRespond to diversified powertrain in line

with shift to electric-powered vehicles

22

ICE

HEV

Respond to expansion in automatic

transmission (AT) systems and multistep AT

Increased variation in bearings used due to

diversification in transmission systems.-Deliver value through packaged optimized

design proposals.

EV

New products: Traction drive unit/systems

Technology proposals for motor reducers

and 2-speed transmissions-Improve electric-efficiency through lightweight low-torque products, noise reduction

AT

ICE＋HEV: demand expansion

to continue-Higher installation rate, multistep AT,

Largest customer increasing volume

-Increasing technological requirements

Compact, lightweight units

More efficient friction control

（Source：IHS Automotive, NSK forecast)



business segment>

Differentiate through technological

capability and improve electrical

efficiency

low noise,

low torque

Establish supply

structure

Improve safety, comfort and convenienceElectric brakes, fan motors, sliding seats

２

3

Expand sales by leveraging

engineering ability

High-reliability, low torque, high-load

4

5 Ball screws for brakes

Develop new applications

-Steer-by-wire etc.

FY18 FY21 FY24 FY30

Number of in-vehicle motors

6,000

8,000

4,000

(NSK forecast)(Millions of

units)

23

Acceleration in autonomous driving

technology and electrification

Steering & Actuator businessExpand in-vehicle

motor business

Dramatic increase in in-vehicle motors due to electrification

Expand HUB bearing business

Growing need for safety and fuel efficiency

Expand actuator business

Extend product range Leverage “core assets” of mechanical

parts and software

・Reduce design man-hours, lead time

・Improve efficiency in R&D costs per project

Utilize strategic alliances

Restart growth in steering business

Experimental SbW vehicle with next-generationsteering control software

Steering & Actuator Sales

6th MTP

FY26


FY26


FY26



Finance Strategy / Policy on Shareholder Returns

- Net D/E ratio of around 0.3 times

- Ratio of net worth to total capital of around 50%

Maintain an A-level credit rating to support growth and

enable the company to withstand cyclical impact

Stabilization of

shareholder returns

Growth with profitability

Maintenance in stabilization of financial

base

Balance investment in future growth with shareholder returnsunder a stable financial structure

- ROE 10％ or morePursuit of capital efficiency

exceeding the cost of capital

- Payout ratio 30 - 50%¥40/share or more (6th MTP)

- Acquisition of treasury shares

Agile capital policiesTotal return ratio (3 years) approximately 50%

24

6th MTP


Contribute to the environment and society

Environment

E

Society

S

Governance

G

[SDGs Declaration]

25

EnvironmentalManagement

Safety management

Compliance

Quality management

Governance

Safety, Quality, Compliance, Environment

New initiatives targeting growth

Enhance managerial resources

Op

era

tion

al

Ex

ce

llen

ce

Ch

alle

ng

ing

Inn

ova

tion

Contribute to

the environment and society

Personnel, Technology, Organization, Information

Build business base and strengthen resources in preparation for next growth phase


NSK Core Values

Initiatives in the 6th MTP

- Contribute to the environment and society-

（Supplementary Information）

ESG management: NSK will fulfill its responsibilities to environmental and societal issues by strengthening managerial resources and NSK’s core values + corporate governance.

In line with our Mission Statement, NSK will work to resolve societal issues by conducting sincere and responsible business operations and achieving innovation in our products and services,

in order to help realize a sustainable society.We will uphold the spirit of all 17 SDGs, and have selected seven SDGs that are particularly

interlinked with our business, which we will place priority on tackling.

・Strengthen group governance

・Hold fruitful dialogues with stakeholders

・Reduction in CO2 emissionsSBT target：- 60% by 2050 (vs. 2017)

・Products that contribute to the environment by offsetting CO2 emissions・Effective use of resources : achieve 99% recycling rate at global plants

・Create quality and safety –focused culture which contributes to safety and peace of mind for market and customers

・Create an organization that is trusted by society and allows employees to work with vibrancy and achieve their full potential



Capture Demand in Growth Sectors : Railcars

地域別鉄道事業規模推移

High speed Safety

Extension of travel

distance

High-reliabilityHigh-performance

bearings

MRO

・OEM business receipt of first order.

・MRO business‐SNCF bearing for axle

shaft receipt order.

・Further expansionin Japan.・Building achievements

overseas.

Extend NSK presence multidirectionally

Actuator

CMS

NSK’s strengthsHigh-reliability, engineering analysis capability, track record in Asia

GAM sales expansion strategy

Comfort

Expand our

share in major

US paper

manufacturer

Global demand of

same customer

Sales expansion 1

Order Receipt

Improve brandpower

EU

China

Actuator：Vibration control CMS：-Early detection

of abnormalities.-Predictive maintenance.

<NSK’s strengths>-High-reliability products(severe usage environment [high temperature environments].)-Engineering support, service response.->Reduce end-user maintenance costs.

Paper

Heavy industry etc.NSK vibration control actuator

(left: Actuator, right: Driver) Other sectors

Source：SCI Verkehr, NSK prediction

26

Expansion in the global market

・CRRC-Entry into high-speed railway.-Expand market share insubway business.

27

（Global Aftermarket）

China：Expansion of railroads

EU :Higher performance, CMS needs

Europe

China

2022

23(単位：兆円)

World railway business scale

(Unit: Trillion Yen)

*Including new construction, maintenance, operation of vehicles

Sales expansion 2

Sales expansion 3

Enhance inventory

Effects to paper market of NA region->Receipt of order from one customer

Sales activity for another

customer underway

Effects to global

paper market

Accelerate initiatives

(Status of Initiatives)


Automotive Business

Traction Reducer＋Ultrahigh speed motor.Compact, light-weight, Noise reduction

Further expansion in electric-powered vehicles.

Response to electrification

FY30 forecast: electric-powered vehicles

ratio 57%(+4ppt)

Ball screws for brake booster :Steady sales activities

EV

HEV

Continue EPS sales activities.

Cooperation agreement with VW Group Components

Enhanceengineering skill Expand the lineup

Share management

resources

Speed up

development

・Column-type EPS：

・Rack-type EPS：

Roll-out to

other

OEMs.

・International standard on Advanced Emergency Braking System was formed (June 2019).・Shorten braking start time from detection

-> improve superiority in ball-screw type.

Steering & Actuator Sales

Growth in Steering & Actuator Business

第6次中計

Actualize regrowth scenario

in the 7th MTP ・Establish a projectteam.・Joint development of new EPS products.

Demand expansion

EPS

BS

Response to diversified powertrain.

Development in Seamless 2-speed e-axle concept.

Increased variation in bearing used.

-> Sure to capture business opportunities.

*Traction Reducer:Response to prototype requestsfor 2 customers are underway

28

Two-speed transmission

Torque sensor＋electric shift actuator＋FP/SP

Increase acceleration and maximum speed, extend drive

distance, shock-free gear changing

6th MTP

Enhance competitiveness by leveraging core assets.

Changes in customer developmentschedule.

Highly responsive



NSK’s Contribution to the Environment

Maximize the environmental contribution through products and minimize the environmental impact from business activities

Global environment conservation committee

The highest decision-making body for environmental management.Safety Quality Compliance Environment

President

and CEO

CO2 emissions reduction through business activitiesCO2 emissions reduction

through products

1. Innovation in manufacturing engineering

Contribution through products

・Smart factory.

・Introduction of new-heattreatment technology.

・Install photovoltaic equipment.・Promote the purchase of

renewable energy (water,wind).

FY2018 Greenhouse gases (CO2 equivalent) Emissions (Scope1,2) 980 kt Contribution 1,390 kt

Goals

Heat treatment facility Heat pump chiller Steering plant in Thailand

29

・Reduction in CO2 emissions. Target：- 60% by 2050 (vs. 2017)

・Products that contribute to the environment by offsetting CO2 emissions.

・Effective use of resources : achieve 99% recycling rate at global plants.

Common value standard to take top priority in management decision-making and actions.

Added environment to NSK’s core values Shift to organizational structure under the direct control of the CEO

2. Promotion of energy-saving and fuel conversion

3. Utilization of renewable energy

・Upgrade to high-efficientfacilities.・Change heat source for air

conditioning.

・Calculation on the amount of contribution.-Formulate guidelines

Improvement in base performance of products.

+Contribution to energy diversification applications.

-Promote development of environmentally friendlyproducts.

NSK Eco-Efficiency Indicators (Neco)



560.4 545.8

240.6 285.0

285.4 234.1

1,086.5 1,064.9

Current liabilities Non- Current liabilities Total equity

578.8 583.5

507.6 481.3

1,086.5 1,064.9

Non-Current assets Current assets

Assets Liabilities / Total equity

-21.6

-26.3

+4.7

-21.6

-51.3

-14.6

+44.3

Ex. Rate FY18 End of Q4 FY19 End of Q2

1USD= 111.01 107.96

1EUR= 124.56 118.04

1CNY= 16.48 15.14

49.4% 49.3%

30

(Results of 1st Half of FY2019)

Consolidated Balance Sheet

Change from

Q4 FY18

Change from

Q4 FY18(Billions of yen)

(Billions of yen)

FY18 FY19

End of Q4 End of Q2

FY18 FY19

End of Q4 End of Q2

Ratio of equity attributable to owners of the parent to total assets


13.9

29.1

11.1

13.1

24.9

10.5

27.1

54.0

21.7

Japan Non-Japan

Inventories

Interest-bearing debt

63.3 64.9

96.2 92.7

159.5 157.6

6.6 5.5

Japan Non-Japan Inventory turnover

Capital Expenditure

Depreciation and Amortisation

238.6 248.6

36.2 31.5274.8 280.1

0.27 0.28

Japan Non-Japan Net D/E ratio

10.6 11.4 12.6

13.3 13.4 14.2

23.9 24.9 26.8

Japan Non-Japan

31

(Results of 1st Half of FY2019) Inventories / Interest-Bearing Debt,Capital Expenditure / Depreciation and Amortisation

(Times)

(Billions of yen) (Billions of yen)

(Billions of yen)(Billions of yen)

FY18 End of Q4 FY19 End of Q2

FY18 End of Q4 FY19 End of Q2

FY18 FY18 FY19

1st Half 2nd Half 1st Half

FY18 FY18 FY19

1st Half 2nd Half 1st Half


FY20181st half

<Actual>

FY20191st half

<Actual>

FY2019Full year

<FCST>(Billions of yen)

Capital Expenditure 81.1 21.7 60.0

Depreciation and

Amortisation 48.8 26.8 52.0

R&D Expenses(on a statutory basis)

19.0 9.2 19.0

R&D Expenses (on a managerial basis) 32.4 15.9 32.0

6th MTPFY2019-FY2021＜Original Plan＞

180.0

160.0

ー

vs. Sales

3 – 4%

32

(Supplementary Information) Capital Expenditure,

Depreciation and Amortisation, R&D Expenses


Numerical Targets / Results

FY18Original Plan

FY18

Actual

Sales ¥1 trillion¥991.4

billion

Operating

Income

¥100.0

billion

¥79.3

billionNet Income

attributable to owners of the

parent

¥70.0

billion

¥55.8

billion

Operating

Income %10.0% 8.0%

ROE10.0% or

more10.4%

Net D/E ratio 0.3 times 0.27 times

Exchange rateUSD=105

EUR=120

CNY=16.7

USD=110.9

EUR=128.4

CNY=16.5Achievements and Shortcomings

33

Embark on new chapter in evolution towards next 100 years

Business Foundation as 1 trillion Yen Company

NSK Vision 2026 Setting the Future in Motion

Industrial Machinery ・ Automotive

Sustainable Growth

Deliver new value to societyWork together with stakeholders

Reconstruct profit base

Increase and stabilize profitability

Monozukuri, quality, personnel

Expand into new growth fields

Growth in core businesses

New products, new fields

Operational

Excellence

Innovate

and Challenge

Safety ・ Quality ・ Compliance

Review of the 5th MTP

Concept of the 5th MTP

●Growth in powertrain business and recovery in industrial machinery business (FY2017 reached a record-high performance)

●Developed and proposed new technologies and products●Started smart-factory model-line operations ●Expanded initiatives to address social issues (ESG, SDGs)●Strengthened shareholder returns. Total return ratio 57% (3-year total)

●¥1 trillion sales and a double-digit operating profit ratio remains an ongoing challenge●Delay in EPS growth restart scenario ●Productivity improvements leveraging ICT



Automotive Business

689.7 70%Industrial Machinery Business

270.0 27%

Others

(Billions of yen)FY2018

Total 991.4

Steel Ball

FY2018 Sales Breakdown by Business Segment


Precision

59.7

6%

Ind Brg

210.3

21%

Auto Brg

348.9

35%

Auto Comp

340.8

35%

Others

31.7

3%


323.4 289.5354.5 363.8 333.3 329.1 328.8 318.4 330.5 372.1 367.5 356.0

78.870.6

85.5 86.3 103.4 134.5 164.8 183.7 165.2155.5 157.6 151.5111.9

98.5

102.2 108.0 102.7124.6

133.8 131.8 121.9137.9 130.1 121.5133.6

128.982.6 89.1 91.4

167.2210.2 204.4 201.2

212.1 195.0176.5

85.7 86.1 102.0

116.3

137.2 137.0 130.4142.8

141.1139.5

647.6587.6

710.4 733.2 732.8

871.7

974.9 975.3 949.21,020.3 991.4

945.050.1% 50.7% 50.1% 50.4%

54.5%

62.2%

66.3% 67.4%65.2%

63.5% 62.9% 62.3%

0.0

200.0

400.0

600.0

800.0

1,000.0

1,200.0

1,400.0

FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019

Japan The Americas Europe China Other Asia Non-Japan ratio

( Asia)

Japan

50%

Asia

21%

Europe

17%

Japan

38%

The Americas

16%

Europe14%

The

Americas

12%

(Billions of yen)

China19%

Other Asia13%

Japan

37%

The Americas

16%

Europe13%

China20%

Other Asia14%

Business Trends – Sales by Customer Location –

Forecast



522.8 522.2 581.0

628.5

717.2 772.0

647.6 587.6

710.4 733.2 732.8

871.7

974.9 975.3 949.2

1,020.3 991.4

17.8

26.0

38.3 42.6

62.4 69.3

22.1

11.3

43.5 44.4

32.4

68.0

97.3

65.3

97.9

79.3

0

20

40

60

80

100

120

0

200

400

600

800

1,000

(Billions of yen)

$ 125 116 108 110 117 115 101 93 86 79 83 100 110 120 108 111 111

EURO 118 131 134 137 150 162 145 131 113 109 107 134 139 133 119 130 128

Operating Income %

Operating Income (Right)Sales (Left)94.7

FY07 FY08FY05 FY06FY03 FY04FY02 FY09 FY10 FY11 FY12 FY13 FY14 FY15

・Select & Focus Strategies・Assembly of Streamlined Competitive Business Units

(Billions of yen)

・Growth Strategies

・Improve Profitability

・Respond to Paradigm Shifts

・Reorganize Business Structure

Developing Corporate

Fundamentals to Support a

1 trillion Yen Company

Embark on new

chapter in evolution

towards next 100 years

FY16 FY18

IFRSJP GAAP

1st MTP 2nd MTP 3rd MTP 4th MTP 5th MTP

FY17

-1.4%

8.0%

11.9% 12.1%14.0%

16.1%

1.8%

2.0%

10.3% 10.6%

5.2%

9.2%

15.3% 14.9%

9.9%

13.9%

10.4%

3.4%

5.0%6.6% 6.8%

8.7% 9.0%3.4%

1.9%6.1% 6.1%

4.4%7.8%

10.0% 9.7%6.9%

9.6% 8.0%

ROE

The 5th Mid-term Plan

Business Trends – Consolidated Business Trend –


business results for q2, forecast for fy2019 and the 6 mid ... · forecasted business environment...

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