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5. NTN Corporation Business Report FY ended Mar. 2018

NTN Corporation Business Report FY ended Mar. 2018

Contracts

-The Company received an order for its electric motor actuators and will start the supply from fiscal year 2018 (ends in March 2019). The Company will strengthen sales promotion of the product, aiming to achieve actuator sales of JPY 30 billion in FY 2025. NTN originally planned to attain JPY 30 billion in sales for the entire electrification business in FY 2025, but the target may be revised upward with the full-scale promotion of electric motor actuators. The Company will add three types of electric motor actuators: flat shaft BII, flat hallow shaft BIII, and brushless DC motor SP. NTN intends to win more orders by meeting detailed demands of automakers with its wide product range. (From an article in the Nikkan Jidosha Shimbun on March 13, 2018)

R&D Facilities

*Under negotiation with the counterparty as the contract expires.

R&D Structure

-The Company has established a joint research laboratory at Osaka University's Graduate School of Engineering. NTN and the university will cooperate in the research and development of next-generation electric vehicles (EVs) and natural energy by combining NTN's basic technologies and the university's experience in the research of artificial intelligence and the Internet of Things. The term of research is from September 2017 to March 2020. The new "NTN Next Generation Research Alliance Laboratory" is located at Osaka University's Suita Campus. NTN will strengthen cooperation with the university, which has advanced technology expertise, and accelerate research and development for the creation of new next-generation businesses. It will also use the laboratory as a setting for next-generation human resource development. (From an article in the Nikkan Jidosha Shimbun on July 6, 2017)

R&D Activities

Core business
-Automotive division: The division develops various products that contribute to improving fuel efficiency and design flexibility of the vehicle layout to respond to growing demand for vehicle electrification.
-The division markets new products globally, including low-torque, compact and lightweight hub bearings and driveshafts, as well as modules.

New business
-EV business: To respond to growing demand for vehicle elctrification and autonomous driving, the Company developed the electric motor actuator series, aiming to quickly respond to the customers' need for customized products. To date, the Company received many orders for the series.

-The Company developed the in-wheel motor drive system and the vehicle motion control technology. In April 2018, the Company signed a license agreemen with a China-based automaker to provide technical assistance.

Product Development

Electro-mechanical brake (EMB)
-Nissin Kogyo Co., Ltd. (Nissin Kogyo) and the Company will jointly develop an electro-mechanical brake (EMB) system that controls friction brakes with an electric motor. The two companies aim to put the brake into commercial application for electric vehicles (EVs) in 2025. EMBs are lighter than hydraulic brakes and use comparatively fewer components and have an advantage in cooperative control with regenerative brakes that covert deceleration energy into electric power. Nissin Kogyo and NTN will tap new needs by highlighting the system's strength to extend the mileage of EVs. They aim to commercialize it after securing a system fail-safe and clearing cost issues. (From an article in the Nikkan Jidosha Shimbun on November 7, 2017)

High-speed bearing for pulleys
-The Company announced that it has developed a high-speed bearing for pulleys that can support rotation speeds of up to 20,000 revolutions per minute (outer ring), 30% higher than existing products. The high-performance bearing features new housing and seal designs that enhance resistance to centrifugal forces. It prevents heating of the seal lips and deformation of the housing. In addition, the company adopted high-performance grease that does not become stiff at low temperatures in order to prevent noise that is generated by the vibration of the outer ring and the pulley. (From an article in the Nikkan Jidosha Shimbun on May 30, 2017)

Low Friction Hub Bearing II
-The Company announced that it has developed the "Low Friction Hub Bearing II” which reduces rotational friction by 50% and improves fuel efficiency of vehicle by approximately 0.42%. This developed product has a reduced number of contacted seal lips that make further low friction. NTN could maintain a high muddy water resistance with creating a labyrinth structure (clearance) in the seal and optimizing seal shape. The composition and viscosity of grease were also revised, and the grease that contributes to torque reduction is adopted. (From a press release on October 24, 2017)

eHUB hub bearing
-The Company announced that it has developed the eHUB hub bearing, which features a motor-generator function. The eHUB bearing is mounted on the rear (non-driven) wheels for front-wheel drive vehicles to reduce engine load with motor assist. It acts as a power generator to regenerate energy during deceleration. In combination with a 48V Mild Hybrid System, the eHUB enhances fuel economy by a maximum of 25% in comparison to vehicles with conventional engines. It can be used for the creep traveling of electric vehicles and attitude stability control for vehicles on slippery roads. NTN aims to achieve sales of JPY 10 billion for the fiscal year that ends in March 2026. (From an article in the Nikkan Jidosha Shimbun on October 30, 2017)

-Capital expenditure for FY ending March 2019 is expected reach JPY 55,000 million


-The Company announced that it will build a new facility in Wakayama to manufacture radial ball bearings. The company will reorganize radial ball bearing production sites in Japan and consolidate high-value-added products production at the new facility. It will have 60,100 square meters of total floor space on 109,100 square meters of land. There will be approximately 350 employees. Construction will start in July 2018. Mass production is scheduled to begin in June 2019. (From a press release on March 23, 2018)


-The Company announced that it will build a new plant for drive shaft parts processing in the U.S. The construction work will start in April 2017, with mass production slated to begin in April 2018. The Company will respond to strong demand for automobiles in the U.S. by enhancing its production capacity. NTK Precision Axle Corporation, a joint venture of NTN USA Corp. (a subsidiary of NTN), Takao Kogyo Co., Ltd., an automotive parts maker, and Neturen Co., Ltd., will build a second plant in Anderson, Indiana. The new plant, which is for turning and heat treatment processing, will have 162,000 square meters of land located to the west of a drive shaft plant that was established in 2015. (From an article in the Nikkan Jidosha Shimbun on April 13, 2017)

Main Investments in FY ended Mar. 2018

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

-The Automobiles sector outlook by region is provided below.

• Japan: Sales will increase with the positive effects of new model launches
• Americas: Sales will decrease due to the discontinuation of major models despite the positive effects of the launch of new models built in Mexico.
  
• Europe: Although sales to some models will decrease, overall sales will remain flat because of strong demand from European carmakers.
  
• Asia: Sales will increase due to the ongoing growth of Japanese carmkers in China and strong product demand from local carmakers, plus the positive effects of new model launches of Japanese and American carmakers.