NSK Ltd. 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
Sales 974,885 871,742 11.8 -
Operating income 97,327 68,049 43.0 -
Ordinary income 91,002 66,785 36.3 -
Current net income 61,962 31,167 98.8 -
Automotive Business Division
Sales 656,998 590,545 11.3 1)
Operating income 65,718 49,201 33.6 -


1) Sales
-Sales at the automotive business in the fiscal year ending March 2015 were JPY 656,995 million, an 11.3% y/y increase because sales in the North America were strong, with growth continuing to increase slightly worldwide, even though the rate of sales growth in China slowed down.

-Even though the market showed signs of recovery after the consumption tax was raised, sales in Japan were lower as a result of the Company's transferring production outside Japan because OEMs are procuring products locally.
-Sales increased not only because of strong growth in the North American market but also because the Company transferred production to the Americas from Japan.
-Sales increased as a result of the automotive market's continued slow growth.
-In spite of a lower rate of growth in China, sales of automotive bearings to mainly Japanese and European OEMs increased. The Company's receiving new orders for electric power steering systems significantly increased sales.
-Even though the markets in each country varied considerably, sales to Japanese and Korean OEMs increased.


-The Company has received new orders to supply its hub unit bearings to Daimler AG and Ford Motor Company. The Company's bearings are already delivered for Daimler's Mercedes-Benz C-Class and will be manufactured for the next-generation Mercedes-Benz E-Class, SLK-Class, and CLK-Class. The Company supplies hub bearings to Daimler for the first time in more than ten years since the products were used in the first generation of the Mercedes-Benz M-Class. In addition, the Company will provide the bearings for Ford's new Mustang. This is the first time that the Company has received an order for its hub unit bearings from Ford. The Company will supply approximately 200,000 units to each automaker annually, and the total supply volume is expected to amount to approximately 400,000 units per year. The Company aims to win new orders for other European models as well, as it looks to expand business with foreign automakers. (From an article in the Nikkan Jidosha Shimbun on December 1, 2014)

Mid-term Management Plan (FY ended Mar. 31, 2014 - FY ending Mar. 31, 2016)

-The Company announced its mid-term management plan that covers three years starting from the fiscal year ending in March 2014. In the plan, the Company aims to achieve sales of JPY 1 trillion in 2016, the year in which the Company will celebrate its 100th year since being founded. Under the vision of "establishing a corporate base supporting JPY 1 trillion", the Company established the following seven management objectives, which are its strategies for "profit-oriented growth" and "management capabilities for handling JPY 1 trillion in business".

Profit-oriented growth:

  • Achieve higher growth in emerging countries
  • Strengthen customer and sector strategies
  • Strengthen production and R&D capabilities
  • Form strategic alliances

Management capabilities for handling JPY 1 trillion in sales:

  • Strengthen governance and compliance
  • Modify business structure
  • Advance global management

-In May 2014, the Company revises its automotive business sales target upward to JPY 640 billion for the fiscal year ending in March 2016 (FY 2015). The FY 2015 sales target was originally set at JPY 590 billion in its mid-term management plan. However, the Company already achieved the original goal in FY 2013 thanks to strong automotive market. The Company also sets a new operating profit target for automotive business at 8.3% or higher, an increase of 1.4% from the original target. The Company aims to increase the sales and operating profit to achieve the new targets by increasing local production outside Japan while reducing procurement costs. The Company will reinforce its automotive business, which is enjoying strong sales, in order to offset weak sales of high-margin industrial machinery business. The Company will expand production of bearings at its plant in Hefei, Anhui Province, China that started operations in spring 2013 and at the Mexican plant that began operations in spring 2014. Production of bearings for continuously variable transmissions (CVTs) in Thailand will also be increased. In addition, the Company will accelerate production transfer of electronic power steering (EPS) to plants outside Japan to meet growing demand.

Automotive Products Business Issues Responses
1. Automotive Bearings:
  Expanding in demand growth regions
-Sales expansion in Asia: Continuing to expand production capacity and increase localization.
-Mexico plant began operation.
2. Automotive Components:
  Continued EPS expansion
-EPS adoption rate increasing
-Sales increasing in column type EPS
-Well-balanced customer base
-Expanding outside Japan
-Working to transfer and achieve permeation of technologies outside Japan
(Products, Production, Administration)
-Developing next-generation technology

Electric power steering (EPS) business
-The Company will expand sales of its electric power steerings (EPSs) by 20 percent or more from its present level to 10 million units a year in the fiscal year ending March 2018 (FY 2017). To respond to a growing demand for EPSs with an expansion of vehicle production, NSK is receiving an increasing number of orders for its column type EPSs from both Japanese and European OEMs. The Company aims to increase sales volume globally, mainly in China and Europe. NSK will also strengthen development of its rack or pinion type EPSs anticipating a greater demand. The Company will establish a profit-oriented business base by reinforcing its lucrative EPS business. (From an article in the Nikkan Jidosha Shimbun on December 16, 2014)

-The Company produces EPSs at 8 plants in 6 countries: Japan, the U.S., China, Thailand, India, and Poland. Among these plants, the Soja Plant of NSK Steering Systems Co., Ltd. serves as the mother plant.
-The Company's EPS sales reached JPY 209 billion in the fiscal year ended March 2014. Sales almost doubled in three years. The Company expects its annual EPS sales for the fiscal year ending March 2016 will increase further to JPY 250 billion.
-The Company forecasts that the global installation rate of EPSs on new vehicles will grow to 80% by 2018 from the 60% in 2013.
-While column-type EPSs and rack-type EPSs are becoming the mainstay of EPS products, the Company increases its focus on column-type EPSs, its area of expertise.

Outlook for FY ending March 31, 2016

(in millions of JPY)
  FY ending Mar. 31, 2016
FY ended Mar. 31, 2015
(Actual result)
Rate of Change
Sales 1,020,000 974,885 4.6
Operating income 102,000 97,327 4.8
Ordinary income 100,000 91,002 9.9
Net income 70,000 61,962 13.0

>>>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 10,660 9,919 10,432
Automotive Business Division 7,417 6,795 6,681

R&D Structure

-With core R&D operations conducted in the technical centers in Japan (Fujisawa, Kanagawa Pref.), the Company has six technical centers in Japan, two in Americas, three in Europe, and three in Asia, conducting R&D activities at 14 centers in total.

Product Development

-The following were achieved during the fiscal year ending March 2015.

  • Ultra-long-life planetary shafts for automatic transmissions
  • Ball bearings with new retainer plate, for diesel engines
  • Low Drag Friction Plate Nν (nu) Multi-segment for automatic transmissions
  • Automotive electric power steering system that complies with ISO26262
  • Low-friction, reduction gear for electric power steering system

Electric power steering (EPS)
-The Company has developed the world's first electric power steering (EPS) that fully complies with the ISO26262 functional safety standard. The new column type EPS features downsized electronic control unit and sensors. The Company has already started supplying the new EPS to automakers in Europe for use in their compact models. NSK will make the company's other EPS products compliant with the ISO26262 standard one by one. Demand for functional safety is growing globally. Thus, the Company intends to win orders from a wide variety of automakers by developing EPSs that are compliant with the standard. The Company aims to achieve sales of JPY 250 billion in its whole EPS business by March 2016. The Company started supplying the new EPS globally in the spring of 2014. (From an article in the Nikkan Jidosha Shimbun on December 25, 2014)

-The Company announced that it has developed a low-friction decelerator for electric power steering (EPS) systems. New grease developed by the Company has lowered friction resistance by 17% from that of conventional products. This improves the responsiveness of the EPSs and enhances steering feel. The Company plans to mass-produce new EPS units equipped with the low-friction decelerator, starting in 2017. It aims to supply the new value-added products to various automakers. (From an article in the Nikkan Jidosha Shimbun on December 27, 2014)

-The Company has developed a new quiet and highly durable ball bearing with improved grease for drive motors of electric vehicles. Conventional ball bearings for electric drive motors generate an unusual sound resulting from vibrations of the bearing's outer ring when the grease hardens at a low temperature. The newly developed ball bearing increases the fluidity of the grease by optimizing the blending of a thickener that maintains lubricant. The new bearing also has a lighter outer ring to reduce vibrations at a low temperature and thus prevent an unusual sound. The base oil of the improved grease displays excellent heat resistance. This property contributes to about 10% reduction in deterioration and leakage of the grease. The new ball bearing also reduces friction by 20% to 40% compared with that of conventional ball bearings. The bearing contributes to improving the driving comfort and extending the driving range of electric vehicles. The Company aims to achieve sale of JPY 500 million with the new bearing in 2020. (From an article in the Nikkan Jidosha Shimbun on December 13, 2014)

-The Company has developed a new ball bearing that is designed to support a shaft for manual transmissions (MTs) and dual clutch transmissions. The new bearing enables automated assembly of a ball bearing to a retainer plate (fixed part) and thus improves productivity fivefold. The new product is shaped so that it can adapt to increased torque load of an engine as well as variations in transmission layout. NSK aims to achieve sales of JPY 1 billion with the ball bearing in 2018. (From an article in the Nikkan Jidosha Shimbun on December 11, 2014)

-The Company has developed a new planetary shaft for use in a planetary gear system for automatic transmissions. The Company has developed the new product by optimizing the material components and heat treatment conditions. The new planetary shaft has achieved a long lifespan, 2.5 times that of an existing swaged-type product. The new product is designed to be more easily swaged than conventional products, thus frequency of troubles such as cracking at assembly is reduced. If the new shaft is designed to have a lifespan equivalent to that of an existing product, its width can be shortened by 30%. NSK aims to achieve sales of JPY 2 billion in 2018 with the new product. (From an article in the Nikkan Jidosha Shimbun on October 2, 2014)

-The Company will increase production of transmission bearings featuring a plastic cage. The Company has received an order from an Asian manufacturer for its first tapered roller bearings featuring a plastic cage design. Mass production of the new product began in early 2014. NSK will step up its marketing efforts to other manufacturers, with full-fledged operations expected to begin within the next five years. Staring with this product, the company will release various types of transmission bearings using a plastic cage. In order to win more orders, the company will appeal its added value including reduced loss of driving power and lighter weight compared with conventional bearings. NSK will consider producing one-third of its transmission bearings by using a plastic cage in the future. (From an article in the Nikkan Jidosha Shimbun on June 2, 2014)

Automotive Parts
-Friction Plate with Low Drag Torque

-The Company has developed a new low-torque tappet roller bearing for diesel engines. For this new bearing, a roller bearing is newly adopted, while the roller shaft surface is coated with chrome. These enhancements help reduce frictional resistance with the cam by 10% and ensure durability required for diesel engines, which are used under a harsh lubricating condition. As demand for higher fuel performance is growing, this new product is expected to increase the company 's sales of tappet roller bearings for diesel engines by 50% from the current level to JPY 1.5 billion by 2019. (From an article in the Nikkan Jidosha Shimbun on December 8, 2014)

Capital Expenditure

(in millions of JPY)
  FY ended Mar. 31, 2015 FY ended Mar. 31, 2014 FY ended Mar. 31, 2013
Overall 49,197 45,448 48,025
Automotive Business Division 34,646 32,613 31,936

Investments in automotive business
-Ball bearing and steering system facilities in China
-Ball bearing plant in Mexico
-Needle bearing facilities in Japan and China

-The Company held the opening ceremony of a new automotive bearing plant in the state of Guanajuato, Mexico. The plant started mass production of bearings in July 2014. With an investment of JPY 6 billion, the Company acquired a 100,000-square-meter land in Guanajuato, central Mexico, and built a 13,000-square-meter plant in the first phase construction. The Company has introduced cutting-edge automated production lines to the plant in order to ensure high quality of the products. It plans to supply bearings from the new plant not only to the North American markets including Mexico but also to other regions in the world in the future, taking advantage of Mexico's customs agreements with Europe and South Korea. (From an article in the Nikkan Jidosha Shimbun on December 18, 2014)

-NSK Needle Bearing Ltd., a subsidiary of the Company headquartered in Takasaki-shi, Gunma Prefecture, plans to more than triple its sales of bearings for automatic transmissions (ATs) in China to JPY 7 billion by the fiscal year ending in March 2017 (FY 2016) from JPY 2 billion in FY 2013. Demand for multi-speed ATs is growing in the global market. NSK Needle Bearing intends to promote local production and strengthen local supply capacity of bearings at its plant in China, in order to reduce the number of bearings that are currently exported from Japan. The Company aims to boost sales ratio of bearings for ATs in the company's total sales in China to 50% from 20% in FY 2013. In Japan, the bearing manufacturer will also expand production of bearings for ATs and increase its sales by more than 10%. (From an article in the Nikkan Jidosha Shimbun on September 30, 2014)

Planned Capital Investments for FY ending March 2016

  Planned Capital Investment
(in millions of JPY)
Overall 55,000 -
Automotive related products 35,500 -Invested to strengthen operations in Japan and China.
-Invested to rationalize and enhance production facilities.

Investments in automotive business
-Upgrade needle bearing facilities in Japan and China
-Upgrade steering system facilities outside Japan, mainly in China

-The Company aims to increase its production capacity of bearings by 5% every year worldwide including Japan. The Company plans to invest more than JPY 20 billion annually in upgrading the aging equipment at its plants in order to increase its production capacity efficiently while maintaining the sizes of its plants. The investment amount will account for half of the Company's total capital investment per year. As vehicle production grows worldwide, the demand for bearings has also increased. Therefore, it is indispensable for the company to strengthen its production capacity. With the increase in the capital investment, The Company aims to establish a safer production system to reinforce its bearing business and increase the number of orders. (From an article in the Nikkan Jidosha Shimbun on January 16, 2015)