NTN Corporation Business Report FY ended Mar. 2015

Business Highlights

Financial Overview

(in millions of JPY)
  FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 Rate of change (%) Factors
Overall
Sales 701,900 638,970 9.8 -
Operating income 43,850 33,003 32.9 -
Ordinary income 38,868 28,670 35.6 -
Net income 23,352 (14,648) - -
Automotive Market
Sales 480,473 433,944 10.7 -Sales of automotive products increased due to production of new products in the automotive market and greater product demand from customers.
Operating income 18,351 11,999 52.9 -



Increasing Operating Profit

-The Company is determined to increase its operating profit to more than 5% in the fiscal year ending in March 2018 (FY2017) from 2.8% in FY 2013. The Company aims to reduce material costs and focus on developing and selling modules that are made of multiple parts, rather than selling each component, such as hub bearings, constant velocity joints, and transmission parts. In order to obtain more orders from new customers and improve its profitability in its automotive business, the Company will beef up proposals of its high value-added modules. (From an article in the Nikkan Jidosha Shimbun on August 28, 2014)

New Medium-term Management Plan "NTN100" Initiatives (FY ending Mar. 31, 2016 - FY ending Mar. 31, 2018)

-Basic Policy: "Innovative changes towards next 100 years"

Field Action plan
1) Development business in new fields -In the electric-vehicle sector, acquired license plate for its electric mobility vehicle, the Q'mo.
-Development of "In-wheel Motor System"
-Start of series production of "Mechanical clutch unit" which supports steer-by-wire technology.
-Start of series production of "Ball screw drive module" which enhances reliability of electric hydraulic brake
-Enter new fields of business related to natural energy (Micro hydro turbine, Horizontal axis wind turbines, Vertical axis wind turbines)
-Start of sales: Summer 2016 (planned)
-Sales target (FY2025): JPY 50 billion/year
2) Structural reform of the driveshaft business -Establish a system capable of reliable supply from anywhere in the world to suit regional fluctuations.
-Owns 17 driveshaft production plants globally.



Outlook for FY ending Mar. 31, 2016

(in millions of JPY)
FY ending Mar. 31, 2016
(Forecast)
FY ended Mar. 31, 2015
(Actual Results)
Rate of Change
(%)
Sales 725,000 701,900 3.3
Operating income 50,000 43,850 14.0
Ordinary income 45,000 38,868 15.8
Net income * 31,000 23,352 32.7
Automotive Market
Sales 493,000 480,473 2.6
Operating income 20,500 18,351 11.7

*As for FY ending March 2016, it's defined " Net income attributable to owners of the parent".

>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)

R&D Expenditure

(in millions of JPY)
  FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Overall 18,088 17,820 16,174



R&D Structure

-In Japan, R&D activities are centered on cutting edge technologies to lead the Company's global operations.
-In Europe, the Company is developing technologies for products sold in the local market.
-The Company is offering technical services in Japan and other Asian countries, the Americas and Europe to support its customers in each market.
-In China, NTN China Technology Center is fostering collaborations with universities, while performing various testing in order to develop products that meet the needs of local customers and suit local climate conditions.

R&D Facilities

Facility Location
Industrial Technical Center Mie Pref., Japan
Advanced Technology R&D Center Mie Pref., Japan
NTN R&D Center Shizuoka Pref., Japan
New Product Development R&D Center Shizuoka Pref., Japan
Production Engineering R&D Center Shizuoka Pref., Japan
CVJ·Axle Unit Technical Center Shizuoka Pref., Japan
NTN Bearing Corp. of America -
Industrial Engineering Dept.
Illinois, USA
NTN Bearing Corp. of America -
NTN Automotive Center
Michigan, USA
NTN Waelzlager (Europe) G.m.b.H. -
Engineering Dept.
Erkrath, Germany
NTN Transmissions Europe -
Research and Development Dept.
Allonnes, France
NTN-SNR Roulements S.A. Annecy, France
NTN China Technical Center Shanghai, China



Product Development

Grease lubrication type high speed deep groove ball bearing
-The Company has developed the "Grease lubrication type high speed deep groove ball bearing" that can withstand the industry's highest speed of rotation, at the rotational speed doubled from conventional bearings. The new bearing is intended for use in motors mounted in electric vehicles (EVs) and hybrid vehicles (HVs). The bearing uses a new plastic retainer. The retainer's shape and the material ratio have been optimized to minimize centrifugal distortion of the retainer at high rotational speeds. A smooth grease supply along the raceway surface also helps to increase sliding between the retainer and steel balls. The filled grease has also been optimized with a combination of consistency to resist centrifugal force at high rotational speeds and viscosity to supply lubrication constituents to the raceway surface even during high-speed rotation. As a result, the new bearing provides a solution to the lack of lubrication when operating at high rotational speeds. The Company will globally introduce the new bearing as a product which contributes to reducing size and weight of EVs and HVs. With the new product, the Company aims to achieve sales of JPY 200 million in the fiscal year ending in March 2017. (From an article in the Nikkan Jidosha Shimbun on March 5, 2015)

Low section and high strength press-formed pulley
-The Company has developed a new press‐formed pulley with low section and high strength for use in accessory belt drive system of automotive engines. Design for optimum shape and improved press forming technology enabled the application of a steel plate whose thickness is 50% larger than that of the conventional steel plate. This more than doubled the load resistance of the pulley. The cross-sectional area has been reduced to 70% of a conventional pulley, so that the pulley can be used with a bearing whose outer diameter is large. This can quadruple the service life and improve load resistance of the bearing. With the new pulley, the Company aims to achieve JPY 200 million sales from automakers in the fiscal year to end in March 2016. (From an article in the Nikkan Jidosha Shimbun on June 14, 2014)

EBW (Electron Beam Welding) driveshaft
-The Company has developed a new driveshaft called the "EBW Driveshaft" that utilizes electron beam welding to manufacture inboard outer rings for constant velocity joints (CVJs). Conventional inboard outer rings were designed and manufactured for each model. The "EBW Driveshaft" is manufactured by using electron beam welding to join a cup from among cups standardized at various sizes, and a stem (shaft) from among stems individually designed based on vehicle models. This will allow the Company to offer reliable driveshafts that contribute to reducing development lead-time. (From a press release on May 22, 2014)

Low-torque seal ring
-The Company has developed the world's first low-torque seal rings for automotive transmissions using its proprietary technology to form V-shaped lubrication grooves on the surface of the seal rings. The new seal rings are made of polyether ether ketone (PEEK) plastic containing special filler. During injection molding, a V-shaped lubrication groove is formed on the surface of each seal ring. As a result, the new seal ring achieved a 60% reduction in shaft rotation torque compared to conventional products. They also ensure a lower wear amount, which is one tenth at a maximum. The material composition has also been changed to reduce the width of the seal rings by 30%. The new products will contribute to greater efficiency and downsizing of automotive transmissions and continuously variable transmissions. The Company will also try to apply the new seal rings to agricultural machinery and construction machinery to generate sales of JPY 100 million in the fiscal year ending March 2017. (From an article in the Nikkan Jidosha Shimbun on March 19, 2014)

Technology License-out Agreement

(As of Mar. 31, 2015)
Company Country Contractual coverage Contract period
National Engineering Industries Ltd. India Technical license related to manufacture of ball bearings etc. Nov. 2, 2011-
Dec. 31, 2017
Taiway Industry Co., Ltd. Taiwan Technical license related to manufacture of constant velocity joints Mar. 26, 2003-
Nov. 23, 2021
Unidrive Pty. Ltd. Australia Technical license related to assembly of constant velocity joints Feb. 15, 1983-
Jun. 10, 2015



Capital Expenditure

(in millions of JPY)
  FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Overall 31,266 33,162 48,979

 
-Capital expenditure for FY ending Mar. 2016 is planned to be JPY 50,000 million.

Main Investments in FY ended Mar. 2015

Region Name Content Total amount
(in million JPY)
Japan NTN Fukuroi Corporation Adding building and adding CVJ production facilities 11,177
NTN Okayama Works Adding bearing production facilities
Americas NTN Manufacturing de Mexico, S.A. de C.V. Adding building 5,186
NTN Driveshaft, Inc. Adding CVJ production facilities
NTN-Bower Corp. Adding building and adding bearing production facilities
Europe NTN-SNR Roulements S.A. Adding building and adding bearing production facilities 6,034
Asia others Xiangyang NTN-Yulon Drivetrain Co., Ltd. Adding building and adding CVJ production facilities 9,058
Shanghai NTN Corporation Adding bearing production facilities
Guangzhou NTN-Yulon Drivetrain Co., Ltd. Adding CVJ production facilities
Nanjing NTN Corporation Adding bearing production facilities



Investment in Japan

-The Company is constructing a new plant on the premises of its wholly-owned subsidiary, NTN Fukuroi Corporation, in Fukuroi City, Shizuoka, Japan. NTN Fukuroi produces constant velocity joints (CVJs). The new 10,000-square-meter plant will be built adjacent to the existing plant, and will start production in May 2014. The new plant will increase the combined area of plant buildings to 27,100 square meters. About 70 people will be working at the plant. The investment is expected to be around JPY 2 billion, though the Company has not unveiled the exact figure. NTN Fukuroi's current annual sales are JPY 10 billion, but are expected to be doubled in the fiscal year ending March 2016. (From an article in the Nikkan Jidosha Shimbun on February 5, 2014)

Investment Outside Japan

<Mexico>
-The Company will start mass production of hub bearings and constant velocity joints (CVJs) in Mexico in the fiscal year ending in March 2016 (FY 2015). The Company will construct a new plant at its subsidiary, NTN Manufacturing de Mexico, S.A. de C.V., that was established in Aguascalientes in 2013. The plant will be built on a 56,000-square-meter site and will have a total floor space of 11,200 square meters. It will start producing lightweight and compact third-generation hub bearings and CVJs in FY2015. Total capital investments in the plant will amount to JPY 12 billion. Sales target at the plant is set at JPY 20 billion for FY 2018. The plant will initially employ 100 people, but will increase the number to 300 in FY2017. The Company will establish a production network in the growing Mexican market to prepare for an expected increase in demand. The plant will supply its products to the customers in Mexico for the time being, but later will be the supply base for the entire North American market. In the Americas, the Company currently produces hub bearings and CVJs at its plants in the U.S., Canada and Brazil. (From an article in the Nikkan Jidosha Shimbun on May 16, 2014)

<China>
-The Company will establish a new constant velocity joint (CVJ) joint venture (JV) in Hubei Province in China, with Kian Shen Corporation. Kan Shen is a group member of the Taiwanese automaker, Yulon Motor Co., Ltd. The new JV is named Xiangyang NTN-Yulon Drivetrain Co., Ltd. and located in the Economic and Technical Development Zone in Xiangyang, Hubei. The JV is the Company's third plant in China. The plant will start mass production and supply CVJ to automotive manufacturers in China in April 2015. The 24,000-square-meter plant will be built on a 133,000-square-meter land. It's capitalized at USD 34 million, whose 60% is owned by NTN and 40% by Kan Shen. The JV aims to achieve sales target of JPY 14 billion in the fiscal year ending March 2018. 300 employees will be working at the plant initially, but the number will be increased to 500 in 2017. (From an article in the Nikkan Jidosha Shimbun on February 6, 2014)

Planned Capital Investment

(As of Mar. 31, 2015)
Name Type of facility Total amount
(in million JPY)
Start Completion Purpose
NTN Corporation
R&D Division R&D facility 8,432 Apr. 2015 Mar. 2018 R&D and others
Okayama Works
(Bizen City, Okayama Pref.)
Facility for bearings and CVJs 5,975 Apr. 2015 Mar. 2018 Increase production volume and streamline operations
Iwata Works
(Iwata City, Shizuoka Pref.)
Facility for bearings, CVJs, precision apparatus products etc. 3,575 Apr. 2015 Mar. 2018 Increase production volume and streamline operations
Subsidiaries and affiliates
NTN Mie Corporation
(Kuwana City, Mie Pref.)
Building and facility for bearings 6,500 Apr. 2015 Mar. 2018 Increase production volume and streamline operations
NTN Akaiwa Corporation
(Akaiwa City, Okayama Pref.)
Facility for bearings 1,793 Apr. 2015 Mar. 2018 Increase production volume and streamline operations
NTN Kamiina Corporation
(Minowa-machi, Nagano Pref.)
Facility for bearings 1,607 Apr. 2015 Mar. 2018 Increase production volume and streamline operations
NTN Noto Corporation
(Shika-machi, Ishikawa Pref.)
Building and facility for bearings 1,545 Apr. 2015 Mar. 2018 Increase production volume and streamline operations
NTN Kinan Corp.
(Kamitonda-cho, Wakayama Pref.)
Facility for bearings 1,449 Apr. 2015 Mar. 2018 Increase production volume and streamline operations
NTN Fukuroi Corporation
(Fukuroi City, Shizuoka Pref.)
Facility for CVJs 1,397 Apr. 2015 Mar. 2018 Increase production volume and streamline operations
NTN Kongo Corporation
(Kawachinagano City, Osaka)
Facility for bearings 1,227 Apr. 2015 Mar. 2018 Streamline operations
NTN Powder Metal Corp.
(Kanie-cho, Aichi Pref.)
Facility for bearings, precision apparatus products etc. 1,225 Apr. 2015 Mar. 2018 Increase production volume and streamline operations
NTN Manufacturing de Mexico, S.A. de C.V.
(Aguascalientes,
Mexico)
Building and facility for bearings and CVJs 8,082 Apr. 2015 Mar. 2018 Increase production volume
NTN-Bower Corp.
(Illinois, USA)
Facility for bearings and CVJ parts 4,368 Apr. 2015 Mar. 2018 Increase production volume and streamline operations
American NTN Bearing Mfg. Corp.
(Illinois, USA)
Facility for bearings 3,066 Apr. 2015 Mar. 2018 Increase production volume and streamline operations
NTN Driveshaft, Inc.
(Indiana, USA)
Facility for CVJs 2,946 Apr. 2015 Mar. 2018 Increase production volume and streamline operations
NTK Precision Axle Corp.
(Indiana, USA)
Building and facility for bearings and CVJ parts 2,536 Apr. 2015 Mar. 2018 Increase production volume and streamline operations
NTN-SNR Roulements S.A.
(Annecy, France)
Building and facility for bearings 12,757 Apr. 2015 Mar. 2018 Increase production volume and streamline operations
NTN-SNR Rulmenti S.R.L.
(Sibiu, Romania)
Building and facility for bearings 4,907 Apr. 2015 Mar. 2018 Increase production volume and streamline operations
NTN Transmissions Europe
(Allonnes, France)
Facility for bearings CVJs 3,213 Apr. 2015 Mar. 2018 Increase production volume and streamline operations
NTN Manufacturing (Thailand) Co., Ltd.
(Rayong, Thailand)
Facility for bearings, CVJs, precision apparatus products etc. 4,820 Apr. 2015 Mar. 2018 Increase production volume and streamline operations
NTPT Co., Ltd.
(Chonburi, Thailand)
Facility for bearings and CVJs 1,697 Apr. 2015 Mar. 2018 Increase production volume and streamline operations
NTN NEI Manufacturing India Private Ltd.
(Rewari, India)
Facility for bearings 1,161 Apr. 2015 Mar. 2018 Increase production volume and streamline operations
Xiangyang NTN-Yulon Drivetrain Co., Ltd.
(Xiangyang, China)
Facility for CVJs 3,977 Apr. 2015 Mar. 2018 Increase production volume
Nanjing NTN Corporation
(Nanjing, China)
Building and facility for bearings 2,819 Apr. 2015 Mar. 2018 Increase production volume and streamline operations
Shanghai NTN Corporation
(Shanghai, China)
Facility for bearings and CVJs 1,773 Apr. 2015 Mar. 2018 Increase production volume and streamline operations
NTN-LYC (Luoyang) Bearing Corporation
(Luoyang, China)
Facility for bearings 1,511 Apr. 2015 Mar. 2018 Increase production volume and streamline operations