Slide 1: Financial Conference: Consolidated Business Results, Forecast, and The 5th Mid-term Plan
FINANCIAL CONFERENCE Consolidated Business Results, Forecast, and The 5th Mid-term Plan May 16, 2016 NSK Ltd. Cautionary Statements with Respect to Forward-Looking Statements Statements made in this report with respect to plans, strategies and future performance that are not historical fact are forw
Slide 2: Contents
Contents １．Consolidated Business Results for the Year Ended March 31, 2016 2．The 5th Mid-Term Management Plan 3．Consolidated Business Forecast for the Year Ending March 31, 2017 (Supplementary Information) 1
Slide 3: Consolidated Business Results for the Year Ended March 31, 2016
1．Consolidated Business Results for the Year Ended March 31, 2016 2
Slide 4: Summary of Consolidated Business Results for the Year Ended March 31, 2016
Summary of Consolidated Business Results for the Year Ended March 31, 2016 Business Environment ✓ Japan: Uncertainty increased, US: Robust demand, Europe: Moderate recovery trend, Emerging markets: Low growth continued. ✓ Forex: Appreciation of Yen accelerated from the beginning of the year. Unstabl
Slide 5: Summary of Consolidated Business Results for the Year Ended March 31, 2016
Summary of Consolidated Business Results for the Year Ended March 31, 2016 FY2014 FY2015 Increase/ (Billions of yen) Difference <Actual> <Actual> Decrease YOY [JGAAP] [JGAAP] YOY Net sales 974.9 975.3 +0.4 +0.0% Operating income 97.3 94.7 -2.6 -2.7% <%> <10.0%> <9.7%> Ordinary income 91.0 94.0 +3.0
Slide 6: Business Results: Automotive Business
Business Results: Automotive Business Auto BRG Auto Comp O.I O.I (%) （Billions of yen） FY2014 FY2015 Increase/ 11.1% 10.6% 11.9% Difference <Actual> <Actual> Decrease 10.3% 10.1% 10.3% YOY 9.1% [JGAAP] [JGAAP] YOY 9.0% 176.8 173.5 177.9 172.2 168.4 165.4 Sales 657.0 689.1 +32.1 +4.9% 154.6 157.2 94.
Slide 7: Business Results: Industrial Machinery Business
Business Results: Industrial Machinery Business Ind BRG Precision O.I O.I (%) FY2014 FY2015 Increase/ 16.0% （Billions of yen） Difference <Actual> <Actual> Decrease 13.4% YOY 11.4% 10.5% 11.5% 12.3% [JGAAP] [JGAAP] YOY 8.3% 8.9% 73.5 70.4 70.3 Sales 276.4 259.8 -16.6 -6.0% 65.7 66.8 66.3 11.8 61.8 61
Slide 8: Operating Income: Factors Behind Change (FY2014 to FY2015)
Operating Income: Factors Behind Change (FY2014 ⇒ FY2015) (Billions of yen) Volume increase etc (incl. product mix) Effect of exchange Decline in rate fluctuations -3.9 sales price Reduction in external procurement +5.4 costs etc -8.3 97.3 [JGAAP] Increase in other costs +10.2 94.7 [JGAAP] -6.0 FY14
Slide 9: The 5th Mid-Term Management Plan
2．The 5th Mid-Term Management Plan 8
Slide 10: 4th MTP: Achievements and Shortcomings
4th MTP: Achievements and Shortcomings Outline Numerical Targets / Results 《The 4th Mid-term Management Plan》 Establish corporate fundamentals appropriate for a company with net sales of 1 trillion Yen FY2015 FY2015 Original Target Actual Net Sales ¥940.0 billion ¥975.3 billion Business Strategies C
Slide 11: Theme of the 5th Mid-Term Management Plan
Theme of the 5th Mid-Term Management Plan FY13 FY14 FY15 FY16 FY17 FY18 2026 The 4th MTP The 5th MTP NSK Vision 2026 Founded in 1916 2013 ～ 2015 2016: 100th Anniversary Setting the Future in Motion Embark on new Realize Vision chapter in evolution towards next 100 years Developing Corporate Respond
Slide 12: The 5th MTP Concept
The 5th MTP Concept NSK Vision 2026 Setting the Future in Motion Embark on new chapter in evolution towards next 100 years Sustainable Growth Deliver new value to society Work together with stakeholders Operational Reconstruct profit base Innovate Excellence Increase and stabilize profitability Mono
Slide 13: 5th MTP: Automotive Business - Changes in Business Environment
5th MTP: Automotive Business 1 Changes in Business Environment Changes in Automotive Business Environment Diversification in Evolution in 2050 power source Vehicle Dynamics control EV/FCV 42% Integrated control PHEV 35% system HEV 15% ICE 8% Adaptation to Vehicle integrated driver control Sensing an
Slide 14: 5th MTP: Automotive Business - New Organization and Key Initiatives
5th MTP: Automotive Business 2 New Organization and Key initiatives Automotive Business: New Organization Automotive Powertrain Automotive Steering Refine elemental technology Division HQ and Actuator Enhance responsiveness (BRG + Components)) Division HQ toward system technology Manufacturing plant
Slide 15: 5th MTP: Automotive Business - Powertrain Business
5th MTP: Automotive Business 3 Powertrain Business Core business to underpin mid-to-long term growth 1) Expand Powertrain Business FY21 FY18 Transmissions FY15 Needle bearings: Expand sales from shift 280.0 to AT multistep 240.0 Clutch packs: Expand in module business 190.0 ＋17% ＋26% 2) Evolve/e
Slide 16: 5th MTP: Automotive Business - Steering and Actuator Business
5th MTP: Automotive Business 4 Steering and Actuator Business Sowing seeds for the next phase of growth (Billions of yen) FY21 1) Further development of Column EPS FY15 FY18 Expand customer base 320.0 Develop next-generation systems 290.0 280.0 -3% +14% 2) Development of Rack EPS Steering Busine
Slide 17: 5th MTP: Industrial Machinery Business - Changes in Business Environment
5th MTP: Industrial Machinery Business Changes in Business Environment Present demand trend Evolving mid-term needs FY18 FY18 W/T : Off Shore High Reliability Sector Sector Environ vs. FY15 vs. FY15 -ment Electrical / IT → Railcars ↑ Machine Tool : Assessm’t LCC Saving Steel Plant Machine Facilities
Slide 18: 5th MTP: Industrial Machinery Business - Key Initiatives
5th MTP: Industrial Machinery Business 2 Key Initiatives Key Initiatives in Industrial Machinery Business Respond to changes in business environment and expand target fields Operational Excellence Innovate and Challenge ・ Reinforce response capabilities and ・ Concentrate resources on focus sectors p
Slide 19: 5th MTP: Industrial Machinery Business - Focus Sectors
5th MTP: Industrial Machinery Business 3 Focus Sectors Wind turbines Meet needs of offshore W/T and enhance cost competitiveness New installed W/T Unit: GW 64GW Initiatives 54GW +18% - Meet needs in offshore increase wind turbine sector -High output power specs 2015 2018 -Countermeasures for Sales (
Slide 20: 5th MTP: Industrial Machinery Business - Focus Sectors AM
5th MTP: Industrial Machinery Business 4 Focus Sectors AM Strengthen high-profit aftermarket business Initiatives Developed countries: -Expand high added-value business (Asset Improvement Program) Sales (FY15 vs. FY18) Emerging countries: 20％ UP -Channel management (Quantity Quality) -Strengthen M
Slide 21: 5th MTP: Next-Generation Monozukuri - The NSK Smart Factory
5th MTP: Next-Generation Monozukuri The NSK Smart Factory NSK SmF (Smart Factory) - Visualize manufacturing process by linking objects and information - Develop highly flexible manufacturing system that is resistant to demand fluctuations - Create a vibrant work environment for employees Customer pe
Slide 22: 5th MTP: ESG
5th MTP: ESG Non-financial initiatives to improve corporate value Ｅ：Environment Ｓ：Society Diversity and human resource Environmental contribution Number of environmentally- friendly products developed development through our core business 200 -Increase number of female employees hired, -Introduce en
Slide 23: The 5th MTP Numerical Targets
The 5th MTP Numerical Targets FY2015 (Actual) FY2018 (Plan) Net Sales ¥975.3billion ¥1 trillion Operating Income ¥94.7 billion ¥100.0 billion Net Income ¥67.2 billion ¥70.0 billion Operating Income Margin 9.7% 10.0% 10.0% or more ROE 14.9% 10.0% or more Net D/E ratio 0.23 0.3 1US$= ¥120 1US$= ¥105 E
Slide 24: The 5th MTP Capital Expenditure, R&D Expenses
The 5th MTP Capital Expenditure, R&D Expenses Investment for future growth 4th MTP 5th MTP Actual Plan Capital Expenditure (incl. intangible assets) 149.0 billion 180.0 billion Operational Excellence 140.0 billion Enhance profitability, reorganize plant network, improve operation efficiency Innovate
Slide 25: The 5th MTP Summary
The 5th MTP Summary Embark on new chapter in evolution towards next 100 years ● Beginning new MTP under adverse environment ✓ Reconstruct profit base ✓ Reassess and enhance product capability and competitiveness ● Implement initiatives for sustainable growth ✓ Invest resources in the future ✓ Pursue
Slide 26: Consolidated Business Forecast for the Year Ending March 31, 2017
3．Consolidated Business Forecast for the Year Ending March 31, 2017 25
Slide 27: Summary of Consolidated Business Forecast for the Year Ending March 31, 2017
Summary of Consolidated Business Forecast for the Year Ending March 31, 2017 Forecasted Business Environment ✓ Adjustment phase in the industrial machinery business to continue, lack of a recovery driver. ✓ Automotive business forecast formulated assuming slower growth. ✓ Appreciation of the yen, in
Slide 28: Summary of Consolidated Business Forecast for the Year Ending March 31, 2017
Summary of Consolidated Business Forecast for the Year Ending March 31, 2017 (Billions of yen) FY2015 [JGAAP] FY2016 [IFRS] 1st half 2nd half Full year 1st half 2nd half Full year Difference Change <Actual> <Actual> <Actual> <Forecast> <Forecast> <Forecast> YOY YOY Net sales 489.7 485.6 975.3 450.0
Slide 29: Forecast by Business Segment
Forecast by Business Segment ※Change YOY: Comparison between FY2015 actual based on JGAAP and FY2016 forecast Automotive Business formulated based on IFRS for reference purposes (Billions of yen) FY2015 [JGAAP] FY2016 [IFRS] 1st half 2nd half Full year 1st half 2nd half Full year Difference Change <
Slide 30: Operating Income: Factors Behind Change (FY2015 to FY2016 Forecast)
Operating Income: Factors Behind Change (FY2015 ⇒ FY2016 Forecast) (Billions of yen) Decline in Reduction sales price in external procurement Effect of Costs etc exchange rate -12.0 Volume fluctuations Increase in increase other costs etc (incl. product +9.0 △73 94７ -9.0 mix) +3.0 -18.0 94.7 [日本基準]
Slide 31: Finance Strategy / Policy on Shareholder Returns
Finance Strategy / Policy on Shareholder Returns Credit rating: maintain level A Stabilize financial Net D/E ratio: around 0.3 base Balance investment in future growth with shareholder returns under a stable financial structure Growth with Shareholder profitability returns -Dividend payout ratio of
Slide 32: Shareholder Return for the Year Ending March 31, 2017
Shareholder Return for the Year Ending March 31, 2017 Enhance shareholder returns/ Acquire treasury stock FY2016 Plan Total: ¥38 Dividend -Ordinary dividend: ¥28 （Interim ¥14＋Year-end ¥14） -100th anniversary commemorative dividend: ¥10 （at time of the interim dividend） Acquisition of Total acquisiti
Slide 33: (Supplementary Information)
(Supplementary Information) 32
Slide 34: Consolidated Business Trend
(Supplementary Information) Consolidated Business Trend The 4th Mid-term Plan Operating Income % 16.1% 15.3% 14.9% 14.0% ROE 11.9% 12.1% 10.3% 10.6% 8.0% 9.2% 3.4% 5.2% 3.4% 2.0% 10.0% 9.7% 8.7% 9.0% 7.8% 5.0% 6.6% 6.8% 6.1% 6.1% 4.4% (Billions of yen) -1.4% 1.8% 1.9% 120 (Billions of yen) 1,000 974
Slide 35: Sales and O.I. by Business Segment
(Supplementary Information) Sales and O.I. by Business Segment (Billions of yen) FY2014 FY2015 FY2016 <Actual> <Actual> <Forecast> [JGAAP] [JGAAP] [IFRS] Net sales 974.9 975.3 920.0 Automotive business 657.0 689.1 656.0 Automotive bearings 306.4 314.3 306.0 Automotive components 350.6 374.8 350.0 In
Slide 36: Sales by Customer Location
(Supplementary Information) Sales by Customer Location FY2014 FY2015 FY2016 (Billions of yen) <Actual> <Actual> <Forecast> [JGAAP] [JGAAP] [IFRS] Net sales 974.9 975.3 920.0 Japan 328.8 318.4 319.5 Non-Japan 646.0 656.9 600.5 (Non-Japan ratio) (66.3%) (67.4%) (65.3%) The Americas 164.8 183.7 157.5 E
Slide 37: Sales and O.I. by Geographical Segment
(Supplementary Information) Sales and O.I. by Geographical Segment FY2014 FY2015 FY2016 (Billions of yen) <Actual> <Actual> <Forecast> [JGAAP] [JGAAP] [IFRS] Net sales 974.9 975.3 920.0 Japan 522.7 484.8 481.5 The Americas 156.7 177.7 148.5 Europe 138.8 135.5 125.5 Asia 353.9 363.5 332.0 Elimination
Slide 38: Consolidated Balance Sheets (FY2015)
(Supplementary Information) Consolidated Balance Sheets (FY2015) Assets Liabilities / Net assets (Billions of yen) (Billions of yen) Non-current assets Current assets Current liabilities Non-current liabilities Change from Net assets Ratio of net worth to total capital 1,129.2 FY2014 1,129.2 Change
Slide 39: Inventories / Interest-Bearing Debt, Capital Expenditure / Depreciation and Amortization
(Supplementary Information) Inventories / Interest-Bearing Debt, Capital Expenditure / Depreciation and Amortization (FY2015) Inventories Capital Expenditure Japan Non-Japan Inventory turnover Japan Non-Japan (Billions of yen)7.1 7.2 (Billions of yen) 46.9 50.0 142.2 130.6 26.0 90.1 30.9 83.1 24.0 5
Slide 40: 5th MTP Target by Business Segment
(Supplementary Information) 5th MTP Target by Business Segment 産 Automotive 業機械事業 産 業 機Machinery Industrial 械事業 Business Business (Billions of yen) (Billions of yen) Sales Operating Income/% Sales Operating Income/% 689.1 700.0 10.6% 656.0 9.1% 10.8% 11.8% 7.5% Business Targets 5.4% Auto 362.0 259.8
Slide 41: 5th MTP Sales and O.I. by Business Segment
(Supplementary Information) 5th MTP Sales and O.I. by business Segment FY2015 FY2016 FY2018 (Billions of yen) <Actual> <Forecast> <Forecast> [JGAAP] [IFRS] [IFRS] Automotive business Sales 689.1 656.0 セグメント別損益 700.0 Automotive bearings 314.3 306.0 338.0 Automotive comps 374.8 350.0 362.0 Operating i
Slide 42: 5th MTP Factors Behind Increase: Operating Income (FY2015 to FY2018)
(Supplementary Information) 5th MTP Factors Behind Increase Operating Income (FY2015 ⇒ FY2018) (Billions of yen) Reduction in external procurement Shift to costs IFRS Decline in -2.7 sales price +28.0 Volume increase -25.0 etc 100.0 Increase in 94.7 other costs [ＩＦＲＳ] [JGAAP] Effect of -20.0 exchang
Slide 43: 5th MTP Capital Expenditure, Depreciation and Amortization, R&D Expenses
(Supplementary Information) 5th MTP Capital Expenditure, Depreciation and Amortization, R&D Expenses （Billions of yen） FY2014 FY2015 FY2016 4th MTP 5th MTP FY2013-FY2015 FY2016-FY2018 <Actual> <Actual> <Plan> <Actual> <Plan> Capital expenditure 49.2 54.4 62.0 149.0 180.0 Capital expenditure (excl. i