NOK Corporation Business Report FY ended Mar. 2019

Financial Overview

(in million JPY)

	FY ended Mar. 31, 2019	FY ended Mar. 31, 2018	Rate of Change (%)	Factors
Overall
Sales	669,482	729,341	(8.2)	-
Operating income	23,140	44,934	(48.5)	-
Ordinary income	31,135	56,291	(44.7)	-
Profit for the year attributable to owners of the parent	3,419	35,281	(90.3)	-

Factors

-Seal Business: Sales were higher because deliveries of automotive seals increased in Japan due to strong sales of compact vehicles, and due to strong sales by Japanese OEMs in Southeast Asia.
Sales increased by JPY 4.8 billion year-over-year (y/y) to JPY 341.7 billion.

ｰElecronic Parts Business: Sales in the automotive segment were strong, but product demand for high-spec smartphones decreased. Overall, sales decreased.
Sales decreased to JPY 63.7 billion and operating profit fell to JPY 17.1 billion.

>>>Sales by Business Sector

New Three-year Management Plant
(From the fiscal year ending in March 2018 to the fiscal year ending in March 2020)

-Targets for the fiscal year ending in March 2020:
Sales: JPY 800 billion
Operating income: JPY 56 billion
Operating profit margin: 7.0%

-Business targets for the fiscal year ending in March 2020, which were announced in the fiscal year that ended in March 2019, are as follows. Sales: JPY 670 billion, operating profit: JPY 31 billion, and operating profit-margin: 4.6%.

R&D Expenditure

(in million JPY)

	FY ended Mar. 31, 2019	FY ended Mar. 31, 2018	FY ended Mar. 31, 2017
Overall	10,459	9,443	8,274
-Seal	7,828	6,738	6,209

R&D Activities

Seal Business

<Le-μ’s>
-By applying its expertise in the field of low-friction technology, the Company launched products that save energy and respond to harsh environments by reducing dust. It is also developing seals for E-mobility.

<O Rings>
-The Company launched sales of high-pressure seals for environmentally friendly engines, coatings that facilitate easier assembly, and seals for fuel-cell batteries. In addition, it is developing seals for E-mobility and seals that improve fuel consumption.

<Seal Rings for Rotating Bearings Used in Automatic Transmissions>
-The Company launched seal rings in a shape that supplies oil, the medium for seals. Compared to former seal rings, these reduce torque between 70% to 80%.

<New Products>
ｰThe Company is developing electronic devices, single-unit FPC parts for electric units, and heat-conduction rubber that works to improve heat dissipation.
-The Company is developing and currently selling some low-resistance, space-saving seal parts for cell stacks in fuel-cell batteries.

-In line with the growing attention that is being given to ADASs in the market, the Company has started to focus on the field of driver-assistance systems, especially in the area of drowsiness-detection systems based on using a rubber electrode that can measure vital signs of drivers.

Electronic-device Parts Business
-The Company is working on enhancing the reliability of FPCs; developing FPCs that measure voltage, in response to the growing demand for batteries; and FPCs for inverters.

R&D Facilities

Facility	Location
Shonan Development Center	Kanagawa Pref., Japan
Tokai Environmental-Technology R&D Center	Makinohara, Shizuoka Prefecture

Technical Cooperation Agreement

(As of Mar. 31, 2019)

Partner	Content	Signed on
Freudenberg (Germany)	Introduction and licensing of such seal product as oil seal, O ring and related technologies	Dec. 12, 2017

Capital Expenditure

(in million JPY)

	FY ended Mar. 31, 2019	FY ended Mar. 31, 2018	FY ended Mar. 31, 2017
Overall	70,118	58,388	65,135
-Seal	41,482	32,101	31,221

Sealing business
-The Company mainly invested in its operations in Japan and at NOK (Wuxi) Vibration Control China Co., Ltd. and Thai NOK Co., Ltd.

Planned Capital Investments

(as of March 31, 2019)

Facilities (Location)	Equipment	Amount (in million JPY)	Date of start	Scheduled date of completion
Company’s Nihonmatsu Operations (Fukushima Prefecture)	Equipment to manufacture oil seals	9,563	Apr. 2018	Mar. 2021
Company’s Nihonmatsu Operations (Fukushima Prefecture)	Facilities to manufacture gaskets	5,110	May. 2018	Apr. 2020