NSK Ltd. Business report FY2007

Business Highlights

Financial overview
In million JPY FY2007 FY2006 Rate of Change (%) Factors
Overall
Sales 772,036 717,225 7.6 -
Operating income 69,343 62,383 11.2 Income grew, thanks to both higher production levels and efficiency, which resulted from increased sales and production volumes, improved profitability in its export business because of the appreciation of the yen, and a reduction in purchasing costs.
Ordinary income 64,854 57,595 12.6 -
Current net income 42,613 34,853 22.3 -
Automotive related division
Sales 435,705 397,863 9.5 <Bearings>
-Japan: Sales of needle bearings grew, thanks to a greater need for automatic transmissions.
-The Americas: Sales increased in Brazil and Canada. However, sales of minivans in the USA were slow, with volumes unchanged from those of the previous year.
-Europe and Asia: Sales increased, especially in China where the Company successfully increased the volume of hub unit bearings it sold by increasing its marketing efforts and production capacity in the country. 

<Automotive parts>
-Japan: The Company successfully increased sales of high-output, electric power-steering systems to a large extent. Sales of components for automatic transmissions were also strong.
-The Americas: Sales to Japanese automakers grew, but overall sales declined as a result of many automakers' ceasing production of some models.
-Europe: Sales of electric power-steering systems declined as a result of automakers' making model changes to their vehicles.
-Thailand and China: Sales of steering columns increased.

Operating income 30,660 22,687 35.1 Profitability improved, as the Company increased its utilization ratio while reducing procurement costs for parts and materials sourced from outside the Company. 

Business Plan
Mid-term Business Plan (FY2006-2008)


1.Overall Business Targets for FY2008
Sales: 740 billion JPY
Operating income: 74 billion JPY
Operating margin: 10.0%
ROE: 15.0%

2. Major challenges in the automotive segment

■Expanding production facilities in newly emerging markets
Growing the business even more by further strengthening production and technological facilities
-Maintaining strong business relations with Japanese users
-Providing European and US users with solutions to their global projects
-Expanding the Company's presence in local markets

Location Users Plans
Japanese European or US Local Production
(Bearings)
Production
(Steering systems)
Test Center
China YES YES YES To be increased To be increased Activities to be transferred and expanded
India YES YES YES Production launched To be increased None
ASEAN YES YES YES To be increased To be increased Construction completed
Brazil YES YES - Construction completed None Expansion completed

■Expansion plans for facilities producing EPSs
2008: Poland EPS Plant, No.2 Building
2008: India EPS Plant
2009: Dongguan NSK, No.2 Building
2009: North American No.2 Steering Systems Plant
2010: NSA Wanda

R&D

-10,240 million JPY was spent on R&D expenses for the entire group in FY2007.
Out of the total 5,994 million JPY was spent on automotive products.


R&D Structure of Automotive Products Division
-The Company is working to further develop technologies on tribology (friction and lubrication), materials, analysis and mechatronics to strengthen core technologies such as that on motion and control;  and swiftly reflect these new technologies in products

- Under the leadership of its Technology Development Center, the Company ensures that its R&D facilities in Japan and overseas closely communicate with each other so as to share, and make common use of, technologies in order to improve the Company's capabilities for developing products and technology.
Name Location
Technology Development Center Japan
Europe Technology Centre UK
USA Technology Centre USA
China Technology Center China
Poland Technology Center Poland
Malaysia Technology Center Malaysia
Korea Technology Center Korea
Brazil Technology Center Brazil


Major achievements in the automotive sector
-The Company created solutions to make vehicles more environmentally friendly, efficient, and fuel-economical.

-The Company developed dual pitman arm steer-by wire-systems for the first time in the world.

Clutch release bearing for a manual transmission
-The Company developed a clutch release bearing for a manual transmission, "TRZ series," which is 40 percent lighter than existing products and has a top-level competitive advantage in cost. Adoption of the clip spring system has reduced the number of components and the product size, and use of plastic materials has contributed to reducing weight. This bearing has been developed targeting at compact cars with a manual transmission, which are expected to become popular in BRICs. (From an article in the Nikkan Jidosha Shimbun on May. 18, 2007)

Energy-saving bearing technology for automotive air conditioners
-
The Company developed energy-saving bearing technology for automotive air conditioners; the new thrust needle bearings for compressors in the air conditioning systems contribute to a one percent reduction in fuel consumption during operation of the air conditioner. The improvement was made possible by modifying the bearing structure, which resulted in a smaller contact area between a needle and race (case) that come under load when the bearing is in operation. The new design reduces friction, which is crucial for fuel saving, while ensuring the same level of durability as that of existing bearings. Leveraging this advanced technology, the Company intends to meet requirements of carmakers that are making every effort to comply with tighter CO2 emission regulations. (From an article in the Nikkan Jidosha Shimbun on Jul. 26, 2007)

Multi sensing hub unit

-The Company developed and began sample supply of the industry's first multi sensing hub unit, which is capable of detecting the load between vehicle tires and the road surface in three directions: lateral force, backward and forward force, and vertical force. By employing its proprietary load calculation method, the Company was able to work out three directional loads by comparing phase difference detected by wheel speed sensors installed inside each hub. The multi-sensing technology can control rolling and bumping at any time, leading to increased driving comfort. In addition, the new sensing unit will make it easy to gather necessary data to support by-wire systems and driver support systems. (From an article in the Nikkan Jidosha Shimbun on Sep. 25, 2007)

Variable steering angle mechanism for column type EPS
-The Company has developed a variable steering angle mechanism for column type electric power steering (EPS) systems. This new technology will help automakers to employ column EPSs in medium and small vehicles more easily, since the ball speed reduction device of the mechanism is optimally downsized, allowing the steering mechanism to be integrated into an EPS unit. The company is currently working on turning the technology into a practical business solution for the OEM market, targeting five years from now. (From an article in the Nikkan Jidosha Shimbun on Sep. 27, 2007)

Compact tilt telescopic steering column
-The Company has developed a compact tilt telescopic steering column, which operates electrically and achieves the lightest weight. While the tilt (up and down) and telescopic movement (right and left) of the steering column were adjusted separately using different motor units, the new steering column features an integrated adjustment system with its proprietary two-dimensional link and has achieved the optimized parts layout, which allows a 16% reduction in weight and a 10% reduction in the number of components compared to the equivalent conventional products. The new steering columns are expected to be installed on new vehicles sold in 2010. (From an article in the Nikkan Jidosha Shimbun on Oct. 3, 2007)

New control mechanism of EPS

-The Company developed electric power steering control system to provide assistance in steering for maximizing the tire grip. Excessive steering on a slippery road or at high speeds makes tires lose the grip power and plunges the vehicle into an unstable position. The new control mechanism calculates the optimal steering angle in accordance with running speeds. In case tires lose the grip power, it provides the driver with information required for "appropriate steering maneuver" in order to prevent slip and regain the grip by appropriate steering action. NSK has developed this mechanism for the first time, and aims to apply the device to vehicles within two years. (From an article in the Nikkan Jidosha Shimbun on Dec. 18, 2007)

Technology to expand the control range at low speed
-The Company developed technology to expand the control range at low speeds for driving assistance devices including Electronic Stability Control (ESC). Adoption of the company's proprietary magnet with higher magnetic attraction in a wheel speed sensor, which is a component indispensable for controlling function, has improved detection performance by 10 percent. Asserting this technology will lead to better driving assistance even under the condition of low speeds, NSK plans to start delivery of sensor-integrated hub units within 2008 in a bid to increase their installations on vehicles. (From an article in the Nikkan Jidosha Shimbun on Mar. 24, 2008) 

Investment Activities

-In fiscal year 2007 that ended March 31, 2008, the Company's capital investments totaled 53,905 million yen, which were mainly used for large- and super-large-sized bearings, automotive bearings, and electric power-steering systems. 


Automotive products
-The Company invested to expand its plants overseas so as to meet the continuous growth in demand for hub unit bearings.
-The Company also established additional production facilities overseas and strengthened its production facilities in Japan so as to meet the growing demand for bearings used in transmissions and other drivetrain products; for needle bearings; and for bearings used in electric components.
-The Company invested to expand its electric power-steering manufacturing facilities at home and abroad so as to meet the continuous growth in demand resulting in a shift in market needs, away  from hydraulic systems.
-A total of 22,982 million JPY was invested.


Investment Overseas
-The Company announced that it will start bearing production in India as the first Japanese bearing manufacturer. It will manufacture bearings for both Japanese and local automakers in India at the new plant built by NSK-ABC Bearing Ltd., its joint venture with ABC Bearings Ltd., a local bearing supplier in Mumbai, India. The land area is 80,000 square meters. For the initial stage of the project 500 million rupees (1.3 billion yen) were invested and a total of 800 million rupees (2.0 billion yen) is expected to be invested by 2010.(From an article in the Nikkan Jidosha Shimbun on Feb. 18, 2008)


Major new facilities for the automotive parts related business
  Planned investment (million JPY)

Started

Completed

Purpose

NSK Ltd. Ohtsu Plant
Manufacturing facilities for automotive bearings and ball bearings for general use  3,091 Apr., 2007 March, 2009 Upgrading production infrastructure, increasing capacity, and streamlining operations
NSK Ltd. Ishibe Plant
Manufacturing facilities for automotive bearings 4,415 Apr., 2007 March, 2009 Upgrading production infrastructure, increasing capacity, and streamlining operations
NSK Ltd.  Saitama Plant (Saitama Pref., Japan)
Manufacturing facilities for automotive bearings 2,697 Apr., 2007 March, 2009 Upgrading production infrastructure, increasing capacity, and streamlining operations
NSK Steering Systems  (Gunma Pref., Japan)
Manufacturing facilities for steering systems 4,452 Apr., 2007 March, 2009 Upgrading production infrastructure, increasing capacity, and streamlining operations
NSK Needle Bearing Co., Ltd.
Manufacturing facilities for needle bearings 4,019 Apr., 2007 March, 2009 Upgrading production infrastructure, increasing capacity, and streamlining operations
NSK Corporation
Manufacturing facilities for automotive bearings 2,791 Apr., 2007 March, 2009 Reorganizing and increasing production; and streamlining operations  
NSK Steeling Systems America. Inc.
Manufacturing facilities for steering systems 1,360 Apr., 2007 March, 2009 Upgrading production infrastructure, increasing capacity
NSK Brazil Ltda.
Manufacturing facilities for automotive bearings and ball bearings for general use  1,568 Apr., 2007 March, 2009 Upgrading production infrastructure, increasing capacity, and streamlining operations
NSK Bearings Europe Ltd.
Manufacturing facilities for automotive bearings and ball bearings for general use  1,885 Apr., 2007 March, 2009 Upgrading production infrastructure, increasing capacity, and streamlining operations
NSK Steering Systems Europe (Polska) Sp.Zo.o
Manufacturing facilities for steering systems 2,656 Apr., 2007 March, 2009 Upgrading production infrastructure, increasing capacity
NSK Bearings Manufacturing (Thailand) Co., Ltd.
Manufacturing facilities for automotive bearings 1,559 Apr., 2007 March, 2009 Upgrading production infrastructure, increasing capacity
Siam NSK Steering Systems Co., Ltd.
Manufacturing facilities for steering systems 986 Apr., 2007 March, 2009 Upgrading production infrastructure, increasing capacity
Kunshan NSK Co., Ltd.
Manufacturing facilities for automotive bearings and ball bearings for general use  3,016 Apr., 2007 March, 2009 Upgrading production infrastructure, increasing capacity
Changshu NSK Needle Bearing Co., Ltd.
Manufacturing facilities for needle bearings 1,627 Apr., 2007 March, 2009 Upgrading production infrastructure, increasing capacity
NSK Korea Co., Ltd
Manufacturing facilities for automotive bearings 1,008 Apr., 2007 March, 2009 Reorganizing and increasing production, and streamlining operations 
NSK-ABC Bearings Ltd.
Manufacturing facilities for automotive bearings 1,899 Apr., 2007 March, 2009 Upgrading production infrastructure, increasing capacity