Slide 1: NSK Ltd. Financial Conference FY2023
NSK Ltd. Financial Conference FY2023 March, 2024 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 forward-looking statements. NSK cautions that a number of factors
Slide 2: Company Profile
Company Profile The first Japanese bearing manufacturer / Share of bearings: No.1 in Japan, No.3 worldwide <Mission Statement> NSK contributes to a safer, smoother society and helps protect the global environment through its innovative technology integrating Motion & ControlTM. As a truly internatio
Slide 3: FY2022 Sales Breakdown by Business Segment
FY2022 Sales Breakdown by Business Segment ＊() excluding Steering business 3% Electric power steering Railways Others Industrial Machinery Axle tapered roller 26% Bearings bearings FY2022 Industrial Robots Automotive Components Sales 34% ¥938.1 billion Including Friction Plates Steering Business Bal
Slide 4: Business Trends – Consolidated Business Trend
Business Trends – Consolidated Business Trend – (Billions of yen) 15.3% 14.8% 13.9% Established steering ◆ ROE business as equity-method 10.4% affiliate 9.2% 9.9% 10.0% 9.6% 5.6% 7.8% 9.7% 8.0% 3.3% 3.4% 3.8% 3.5% 6.9% ● Operating Income % 0.9% 3.0% 3.0% 2.8% 2.8% 1,020.3 0.1% 2%~ Sales 975.3 991.4
Slide 5: Business Trends – Sales by Business Segment
Business Trends – Sales by Business Segment – (Billions of yen) ■ Industrial Machinery Bearings ■Precision machinery and parts ■ Automotive Bearings ■ Automotive components ※FY22~ ■ Automotive Established steering business as equity-method affiliate Forecast Industrial 28% 26% 50% 46% Automotive 71%
Slide 6: Business Trends – Sales by Customer Location
Business Trends – Sales by Customer Location – (Billions of yen) Japan The Americas Europe China Other Asia Non-Japan ratio 66.3% 67.4% 66.9% 65.2% 65.5% 62.2% 63.5% 62.9% 62.2% 63.1% 63.3% 1,020.3 991.4 Established steering 871.7 974.9 975.3 949.2 938.1 business as 142.8 141.1 865.2 equity-method a
Slide 7: Mid-Term Management Plan 2026 (MTP2026) FY2022 to FY2026
Mid-Term Management Plan 2026 (MTP2026) FY2022 to FY2026 Copyright NSK Ltd. All Rights Reserved. 6
Slide 8: MTP2026: Overall Image and Positioning
MTP2026: Overall Image and Positioning 6th MTP MTP2026 Post2026 Rebuild corporate foundation for sustainable growth FY19-20-21 FY22 ー 24 ー 26 Continue Build business base and strengthen resources in "Change & Go Beyond" to become exceling for next preparation for next growth phase new type of trilli
Slide 9: New Type of Trillion-yen Company
New Type of Trillion-yen Company Portfolio reform; 10% operating margin; 10% ROE Expand Industrial ≫ Portfolio reform 1 Machinery business 2 Deploy bearings + precision machinery to drive earnings 3 Grow new products Bearings & Beyond FY17 MTP2026 Post2026 Sales: ¥1 trillion Sales: ¥1 trillion ■ Ind
Slide 10: Progress of MTP2026 as of FY2022
Progress of MTP2026 as of FY2022 Copyright NSK Ltd. All Rights Reserved. 9
Slide 11: Change of Business Environment in MTP2026
Change of Business Environment in MTP2026 ✓Changing Business Environment Slow recovery in volume of automotive production due to semiconductor shortages, slower economic growth in China, US-China friction (nationalism), expansion of inflation, increasing risk of slowdown in economic growth due to mo
Slide 12: Mid-Term Initiatives Toward 10% ROE and Higher PBR
Mid-Term Initiatives Toward 10% ROE and Higher PBR ✓Growth with Profitability: Rebuild Business Foundation to Focus on Bearings and Precision Products to Achieve Operating Income Above 10% ≫ Reflect inflation costs in sales prices ≫ Improve asset efficiency and profitability on downwardly revised as
Slide 13: Growth with Profitability – Industrial Machinery Business
Growth with Profitability －Industrial Machinery Business－ ✓Aim to be 50% of sales by continuing strategies focusing on electrification, automation, digitalization and global push to reduce environmental impact ✓Strengthen supply capacity and enhance technical service systems ≫ FY26 targets: Sales of
Slide 14: Growth with Profitability – Automotive Business (excl. Steering)
Growth with Profitability －Automotive Business (excl. Steering Business)－ ✓Accelerate production restructuring due to downward revision of automotive production volume assumption in MTP2026 ✓Developing new customers’ in EVs and receiving orders for electrification are proceeding as planned ≫ FY26 ta
Slide 15: Growth with Profitability – Steering Business
Growth with Profitability - Steering Business - ✓Terminated joint venture discussion with thyssenkrupp AG and signed joint venture agreement with Japan Industrial Solutions III Investment Limited Partnership (JIS) ✓Changed status of NSK Steering & Control, Inc., a subsidiary of the Company, to equit
Slide 16: MTP2026 Shareholder Return Policy and Progress
MTP2026 Shareholder Return Policy and Progress Policy Progress Continue stable shareholder returns - Payout ratio: 30-50% ≫ FY22 actual cash dividends per share ¥30 - Total return ratio: approx. 50％ ≫ FY22 actual dividend payout ratio 83.6％ - Buybacks: flexibly implemented ≫ FY23 planned cash divide
Slide 17: Stock & Bond Information
Stock & Bond Information ■ Dividend Transition (yen) 2,885.8% 140% ■ Payout ratio (Payout ratios are based on IFRS from FY2015.) ■ 100th anniversary Commemorative dividend 100%～ 120% ■ Year end ■ Interim 88.2% 100% 80% 44.1% 77.3% 83.6% 60% 37.2% 27.7% 24.4% 28.0% 30.5% 40% 20% 38 40 40 0% 28 34 10
Slide 18: Latest Financial result FY2023 Q3
Latest Financial result FY2023 Q3 Copyright NSK Ltd. All Rights Reserved. 17
Slide 19: Key Points - Consolidated Business Results for FY2023 Q3
Key Points - Consolidated Business Results for FY2023 Q3 ✓FY2023 Q3 Actual (Continuing operations) Industrial: China’s economy continued to stagnate and scrape the bottom Automotive: Steady growth in global automotive production Q3 YTD (Apr. – Dec.) Actual ≫ Sales ¥588.1 bn ≫ Operating income ¥19.3
Slide 20: Summary of Consolidated Business Results for FY2023 Q3
Summary of Consolidated Business Results for FY2023 Q3 ✓ Sales in Q3 QTD increased QOQ due to increasing sales of Automotive Business. ✓ Sales in Q3 YTD increased YOY due to growth in Automotive exceeding the decline in Industrial Machinery Increase/ Increase/ Increase/ Q3 QTD Decrease Decrease Q3 Y
Slide 21: Operating Income: Factors Behind Change
Operating Income: Factors Behind Change （FY2022 Q3 YTD ⇒ FY2023 Q3 YTD）(Continuing operations) (Billions of yen) Volume/ Mix ✔ Cost of steel, parts, energy, etc. -4.4 ✔ Labor cost increase -5.8 Equity Transfer of Effect of method increased Increase/ exchange rate profits etc. costs Decrease fluctuat
Slide 22: Industrial Machinery Business
Industrial Machinery Business ■Sales (Ind BRG) ■Sales (Precision) ■S.I. ● S.I.(%) (Billions Increase/ Difference FY2022 FY2023 Decrease YOY 100.1 of yen) Q3 YTD Q3 YTD YOY (Excluding 95.2 95.3 96.3 93.4 Actual Actual (Effect of exchange effect of 88.3 85.9 83.9 exchange rate fluctuations) rate fluct
Slide 23: Automotive Business
Automotive Business ■Sales ■S.I. ● S.I.(%) (Billions FY2022 FY2023 Increase/ Difference (FY21 ■Sales(Auto BRG+AT) ■Sales(Steering) Decrease YOY (Excluding of yen) Q3 YTD Q3 YTD YOY effect of Actual Actual (Effect of exchange exchange 129.6 The steering business is classified rate fluctuations) rate
Slide 24: Consolidated Business Forecast for the Year Ending March 31, 2024
Consolidated Business Forecast for the Year Ending March 31, 2024 ✓Full-year forecasts announced in October remain unchanged ≫ As of Q3, 64% progress toward operating income forecast FY2023 FY2023 FY2022 YOY % of Full year Q3 Forecast Difference Full year (Effect of exchange (Billions of yen) Foreca
Slide 25: Consolidated Business Forecast by Business Segment
Consolidated Business Forecast by Business Segment ✓ Engage efforts toward achieving full year targets and Mid-Term Plan with an eye on the risk of slow recovery in industrial machinery ≫ Industrial Machinery Business FY2023 FY2023 ≫ Q4 demand forecast remains Full year Q3 YTD % of (Billions of yen)
Slide 26: FY2023 Summary and MTP2026
FY2023 Summary and MTP2026 ✓FY2023 Summary ≫ Profitability in industrial machinery declined due to slower-than-expected market. Europe structural reorganization initiated and ongoing. ≫ Automotive business steady due to the abatement of semiconductor shortages. Promoted price negotiations to reflect
Slide 27: Appendix
Appendix Copyright NSK Ltd. All Rights Reserved. 26
Slide 28: MTP2026 Key Priorities
MTP2026 Key Priorities We aim to be a needed and trusted company that contributes to the development of a sustainable society by creating new value through the fusion of tribology and information technology Create ESG Management new value Growth with Profitability Be needed, trusted, and Change & Go
Slide 29: Growth with Profitability – Industrial Machinery Business
Growth with Profitability – Industrial Machinery Business > Expand Industrial Machinery Business ■ Aim to capture expanding market demand in electrification, automation, digitalization ■ Strengthen supply capabilities and enhance technical services system ≫ FY26 targets: Sales of ¥450.0 billion; ope
Slide 30: Growth with Profitability – Automotive Bearings Business
Growth with Profitability – Automotive Bearings Business ＞ Respond to electrification of automobiles ■ Achieve increase in EV-related sales in excess of decline in ICE-related sales and thus surpass prior peak ■ Aim to achieve high market share in products related to low torque, high-speed rotation,
Slide 31: Growth with Profitability – Automotive Components
Growth with Profitability – Automotive Components > Restructure steering business and pursue alliances/M&As ■ Restore production volume and profitability through structural reform of steering business; return to profitability in FY23 (2nd half); achieve operating margin of 4% in FY26 ■ Utilize allia
Slide 32: Growth with Profitability – Grow New Products
Growth with Profitability – Grow New Products ■ Industrial Machinery Business Spread of automation, electrification, and predictive Acceleration of energy maintenance technologies transition Expand hydrogen-related businesses "Broaden CMS" Actuators for robots Synergies with BKV Sales target: Active
Slide 33: ESG Management – Promoting Carbon Neutrality
ESG Management – Promoting Carbon Neutrality ■ Build a carbon-neutral society through “Create and Utilize” approach ■ New target: Achieve Scope 1+2 -50% compared to FY2017 by FY2026 Achieve Scope 1+2carbon neutrality by FY2035 Environmental contribution by using “tribology” Reduce CO2 emissions from
Slide 34: MTP2026 Capital Allocation
MTP2026 Capital Allocation ■ Contributing to creating a sustainable society while continuously growing corporate value Invest for sustainable growth Growth with profitability Strengthen managerial resources ROE: 10%+ ✓Capital expenditures ROIC: 8%+ : ¥350.0 billion /5 years ESG management ≫ Ordinary