Slide 1: Financial Conference: Consolidated Business Results and Forecast
FINANCIAL CONFERENCE Consolidated Business Results and Forecast November 1, 2018 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 forward-looking statemen
Slide 2: Contents
Contents 1. Consolidated Business Results for the Six Months Ended September 30, 2018 2. Consolidated Business Forecast for the Year Ending March 31, 2019 3. Progress of the 5th Mid-Term Management Plan (Supplementary Information) Copyright NSK Ltd. All Rights Reserved. 1
Slide 3: 1. Consolidated Business Results for the Six Months Ended September 30, 2018
1. Consolidated Business Results for the Six Months Ended September 30, 2018 Copyright NSK Ltd. All Rights Reserved. 2
Slide 4: Summary of Consolidated Business Results for the Six Months Ended September 30, 2018
Summary of Consolidated Business Results for the Six Months Ended September 30, 2018 Business Environment ✓ Industrial machinery business: Generally remained solid. However, demand entered an adjustment phase. ✓ Automotive business: Robust in NA, production adjustment in China, WLTP in Europe. ✓ Unc
Slide 5: Summary of Consolidated Business Results for the Six Months Ended September 30, 2018
Summary of Consolidated Business Results for the Six Months Ended September 30, 2018 FY2017 FY2018 Increase/ 1st half 1st half Difference 1st half Decrease (Billions of yen) <Actual> <Actual> YOY <FCST> YOY Net sales 493.3 509.6 +16.3 +3.3% 509.0 Operating income 42.7 45.0 +2.2 +5.2% 47.0 <%> <8.7%>
Slide 6: Business Results: Industrial Machinery Business
Business Results: Industrial Machinery Business Ind BRG Precision O.I. O.I. (%) 14.2% FY2017 FY2018 Increase/ FY2018 11.8% 12.7% 11.9% Difference 1st half 1st half Decrease 1st half 8.8% YOY 7.3% <Actual> <Actual> YOY <FCST> (Billions of yen) 68.5 70.8 69.3 64.3 66.6 62.6 Net sales 126.9 135.9 +9.0
Slide 7: Business Results: Automotive Business
Business Results: Automotive Business Auto BRG Auto Comp O.I. O.I. (%) FY2017 FY2018 Increase/ FY2018 Difference 1st half 1st half Decrease 1st half 9.9% 9.9% 8.8% YOY 7.9% 8.3% <Actual> <Actual> YOY <FCST> 6.6% (Billions of yen) 187.8 183.6 183.3 174.2 178.0 174.3 Net sales 352.1 357.6 +5.4 +1.5% 3
Slide 8: Operating Income: Factors Behind Change (FY2017 1st half to FY2018 1st half)
Operating Income: Factors Behind Change (FY2017 1st half ⇒ FY2018 1st half) (Billions of yen, Figures are rounded to the nearest 100 million yen) Other operating expenses/ Equity 45.0 Reduction of external method profits procurement costs etc. +0.7 -0.0 Volume Effect of Decline in increase/ Mix +1.1
Slide 9: Sales Results by Customer Location
Sales Results by Customer Location FY2017 FY2018 Increase/ 1st half 1st half Difference 1st half Decrease (Billions of yen) <Actual> <Actual> YOY YOY <FCST> Net sales 493.3 509.6 +16.3 +3.3% 509.0 Japan 179.3 186.9 +7.6 +4.2% 190.5 Non-Japan 314.1 322.7 +8.7 +2.8% 318.5 <Non-Japan ratio> <63.7%> <63
Slide 10: 2. Consolidated Business Forecast for the Year Ending March 31, 2019
2. Consolidated Business Forecast for the Year Ending March 31, 2019 Copyright NSK Ltd. All Rights Reserved. 9
Slide 11: Summary of Consolidated Business Forecast for the Year Ending March 31, 2019
Summary of Consolidated Business Forecast for the Year Ending March 31, 2019 Forecasted Business Environment ✓ Global economy is moving toward a slowdown phase. ✓ Intensifying trade war. Geopolitical risks including Brexit. Instability in currency markets. Business Forecast ✓ Downward revision to or
Slide 12: Summary of Consolidated Business Forecast for the Year Ending March 31, 2019
Summary of Consolidated Business Forecast for the Year Ending March 31, 2019 FY2017 FY2018 Increase/ Full year 1st half 2nd half Full year Decrease Difference Full year <Actual> <Actual> ＜Revised FCST＞ ＜Revised FCST＞ YOY ＜May FCST＞ (Billions of yen) YOY Net sales 1,020.3 509.6 500.4 1,010.0 -10.3 -1
Slide 13: Forecast by Business Segment
Forecast by Business Segment FY2017 FY2018 Full year 1st half 2nd half Full year Increase/ Difference Full year ＜Revised ＜Revised Decrease (Billions of yen) <Actual> <Actual> YOY ＜May FCST＞ FCST＞ FCST＞ YOY Total Net sales 1,020.3 509.6 500.4 1,010.0 -10.3 -1.0% 1,020.0 Operating income 97.9 45.0 48.
Slide 14: Operating Income: Factors Behind Change (FY2017 to FY2018 Revised Forecast)
Operating Income: Factors Behind Change (FY2017 ⇒ FY2018 Revised Forecast) (Billions of yen) Decline in 97.9 sales price/ Price increase Reduction of external Effect of procurement exchange rate costs etc. fluctuations -4.0 93.0 Increase in costs -2.5 +0.9 +6.0 Other operating expenses/ -8.3 Volume
Slide 15: Business Forecast by Customer Location
Business Forecast by Customer Location FY2017 FY2018 Increase/ Full year 1st half 2nd half Full year Decrease Difference Full year <Actual> <Actual> ＜Revised FCST＞ ＜Revised FCST＞ YOY ＜May FCST＞ (Billions of yen) YOY Net sales 1,020.3 509.6 500.4 1,010.0 -10.3 -1.0% 1,020.0 Japan 372.1 186.9 188.6 37
Slide 16: Management Policy for 2nd Half of Final Year
5th Mid-Term Management Plan: Management Policy for 2nd half of Final Year FY2018 Key challenges in the 2nd half ●The 5th MTP Actions for Wrap-up ✓ Pursuit of Operational Excellence Profitability improvement Agile response to changes in business environment ✓ Innovate and Challenge Sowing seeds for
Slide 17: 3. Progress of the 5th Mid-Term Management Plan
3. Progress of the 5th Mid-Term Management Plan Copyright NSK Ltd. All Rights Reserved. 16
Slide 18: Business Environment and Initiatives
The 5th MTP Business Environment and Initiatives The 5th MTP Concept ●Business environment in the 5th MTP NSK Vision 2026 Setting the Future in Motion ・Acceleration of technological evolution Embark on new chapter in evolution towards next 100 years (IoT, AI, robotics, CASE) ・China announces develop
Slide 19: Industrial Machinery Business: Business Environment and Final-Year Initiatives
The 5th MTP Industrial Machinery Business -Business environment and final-year initiatives- Demand trend by Sector Sales/Operating Income/Margin Actual Forecast Ind BRG Precision O.I. O.I. (%) 19/3 2H vs. 19/3 1H 19/3 1H （Billions of yen） Sector vs. 18/3 2H 13.0% 12.3% 13.0% As of May 2018 As of now
Slide 20: Automotive Business: Business Environment and Final-Year Initiatives
The 5th MTP Automotive Business -Business environment and final-year initiatives- Global Vehicle Production Volume Sales/Operating Income/Margin （Billions of yen） Japan North America Europe China ASEAN6 Others （unit : M） （IHS Automotive, NSK Estimates) Auto BRG Auto Comp O.I. O.I. (%) 94.4 94.9 97.4
Slide 21: Industrial Machinery Business: Examples of Initiatives for Next Growth
Industrial Machinery Business –Examples of NSK’s Initiatives for next growth- Commercialization of service using CMS technology Qualitative enhancement in AM business Utilize condition monitoring / diagnosis Improve portfolio as profit driver technologies for bearings and precision -Enhance resource
Slide 22: Automotive Business: Examples of Initiatives for Next Growth
Automotive Business –Examples of NSK’s Initiatives for next growth- 3rd building at Haruna Plant, Japan Contributing to automotive innovation -Increased production capacity in response to -Value creation for autonomous and expanding AT demand -Established Needle Development Center electric vehicles
Slide 23: (Supplementary Information)
(Supplementary Information) Copyright NSK Ltd. All Rights Reserved. 22
Slide 24: Consolidated Business Trend
Consolidated Business Trend The 5th Mid-term Plan Operating Income % 9.2% 10.0% (Billions of yen) 10.0% 9.7% 9.6% Revised MTP 8.7% 9.0% 7.8% Fcst 6.6% 6.8% 6.1% 6.1% 6.9% (Billions of yen) 5.0% 4.4% 1,010.0 120 3.4% 1.9% 1,020.3 Revised 1,000.0 1,000 974.9 975.3 Fcst MTP 3.4% 949.2 93.0 100.0 871.7
Slide 25: Quarterly Business Performance
(Supplementary Information) Quarterly Business Performance (Billions of yen) Net sales 300 264.3 262.7 249.5 260.7 248.9 243.8 200 100 0 FY17 Q1 Q2 Q3 4Q FY18 Q1 Q2 (Billions of yen) Operating income Net income attributable to owners of the parent Operating income margin 40 9.6% 10.6% 10.4% 9.5% 7.8
Slide 26: Sales & Operating Income Results by Business Segment
(Supplementary Information) Sales & Operating Income Results by Business Segment FY2017 FY2018 Increase/ FY2018 Difference 1st half 1st half Decrease 1st half YOY (Billions of yen) <Actual> <Actual> YOY <FCST> Total Net sales 493.3 509.6 +16.3 +3.3% 509.0 Operating income 42.7 45.0 +2.2 +5.2% 47.0 <
Slide 27: Sales and O.I. by Geographical Segment
(Supplementary Information) Sales and O.I. by Geographical Segment FY2017 FY2018 Increase/ 1st half Full year 1st half Decrease Difference <Actual> <Actual> <Actual> YOY (Billions of yen) YOY Net sales 493.3 1,020.3 509.6 +16.3 +3.3% Japan 264.2 542.5 269.4 +5.2 +2.0% The Americas 74.1 152.6 76.9 +2
Slide 28: Consolidated Balance Sheet
(Supplementary Information) Consolidated Balance Sheet Assets Liabilities / Total equity Current liabilities Non- Current liabilities Non-Current assets Total equity Current assets Change from Change from Ratio of net worth to total capital (Billions of yen) (Billions of yen) Q4 FY17 Q4 FY17 1,097.4
Slide 29: Inventories / Interest-Bearing Debt, Capital Expenditure / Depreciation and Amortisation
(Supplementary Information) Inventories / Interest-Bearing Debt, Capital Expenditure / Depreciation and Amortisation Inventories Capital Expenditure Japan Non-Japan Japan Non-Japan Inventory turnover 7.4 6.8 (Times) 158.2 44.6 (Billions of yen) 143.1 (Billions of yen) 19.2 27.1 96.4 24.2 88.3 10.4 1
Slide 30: Capital Expenditure, Depreciation and Amortisation, R&D Expenses
(Supplementary Information) Capital Expenditure, Depreciation and amortisation, R&D Expenses FY2016 FY2017 FY2018 FY2018 5th MTP 5th MTP Full year Full year 1st half Full year FY2016-FY2018 FY2016-FY2018 (Billions of yen) <Actual> <Actual> <Actual> <FCST> ＜Revised FCST＞ ＜Original Plan＞ Capital Expen