NSK Ltd. Business Report FY ended Mar. 2016

Financial Overview

(in millions of JPY)
FY ended Mar. 31, 2016 FY ended Mar. 31, 2015 Rate of Change (%) Factors
Sales 975,319 974,885 0.0 -
Operating income 89,534 86,958 3.0 -
Ordinary income 87,208 84,626 3.1 -
Current net income 65,719 59,383 10.7 -
Automotive Business Division
Sales 689,122 656,998 4.9 1)
Operating income 67,909 60,461 12.3 -


1) Sales
-Sales at the automotive business for the fiscal year that ended in March 2016 were JPY 689,122 million, a 4.9% year-on-year (y/y) increase, which set a new sales record for the Company. This was due to continued, robust growth in North America and the effects of mass-production and cost-cutting initiatives.

  • Japan: Sales decreased due to lower production of minicars.
  • Americas: Sales increased due to a strong market in North America, and higher sales of EPS and automotive bearings.
  • Europe: Sales increased due to a continuing but slight market recovery.
  • China: Even though growth in the automotive market slowed, tax incentives for compact cars help boost sales.
  • Other Asian Markets: Sales grew due to higher sales of EPS, although there were inconsistencies in the region's markets.

Product Development

-The following are R&D achievements developed by the automotive business during the fiscal year that ended in March 2016.

  • Ball bearings featuring high-speed/superior sealing performance for automotive engine belt-idler tensioners
  • World's smallest thrust-needle bearing for planetary-gear mechanisms installed in automatic transmissions.
  • Ball-bearings with superior sealing performance for automotive engine fan clutches
  • Next-generation creep-free bearing for hybrid and electric vehicles
  • Electrical power steering (EPS) system equipped with Active-on Centering Control
  • World's lightest electric power steering (EPS)
  • Advanced Assist Steering II

High sealing performance and high speed capability seal for idler pulley bearing
-The Company has developed a new bearing for use in automotive belt idlers and tensioner pulleys. By improving the traditional bearing seal, the new product offers durability at high speeds and sealing performance that is more than twice as strong as the conventional design. The product is expected to generate JPY 1 billion in sales in 2020. (From a press release on July 1, 2015)

Thin thrust needle roller bearings for planetary gear mechanism for use in automobile step AT
-The Company has developed a new roller bearing for planetary gears used in automatic transmissions. The new roller bearing uses the world's smallest rollers among automotive bearings. The new product can replace slide bearings on the periphery of planetary pinions in automatic transmission systems. The new roller bearing offers a reduction of 70% to 80% in friction loss as well as a weight reduction of 40% thanks to the adoption of resin. As the new product serves as a value‐added technology for improving the efficiency of multi-speed automatic transmissions, NSK will actively propose it to automakers and parts suppliers in an effort to achieve sales of JPY 1.8 billion from this product in 2020. (From an article in the Nikkan Jidosha Shimbun on October 15, 2015)

Ball-bearings with superior sealing performance for automotive engine fan clutches
-The Company has developed a new ball bearing with excellent sealing performance for use in fan clutches built in cooling fans of rear-wheel-drive vehicles. By improving sealing performance to prevent intrusion of foreign materials, anti-dust performance increased by about 30 times and mud water resistant performance also grew by approximately 8 times. The Company will market this bearing globally mainly in emerging markets where vehicles are driven in a harsh environment. Annual sales goal of this product has been set at JPY 500 million in 2020. (From an article in the Nikkan Jidosha Shimbun on November 20, 2015)

Next-generation creep-free bearing for hybrid and electric vehicles
-The Company has developed a new bearing for the transmissions and other drive systems of hybrid and electric vehicles. The new bearing features a highly rigid outer ring and an O-ring made of new materials with an optimum squeeze allowance. These improvements lessen the load on the bearing when the motor is running at a high speed, and enhances quietness. The company aims to generate JPY 1.5 billion from the sales of this new bearing in 2020. (From an article in the Nikkan Jidosha Shimbun on February 24, 2016)

EPS with Active-on Centering Control
-The Company has developed "Active-on Centering Control," a new electric power steering (EPS) technology to improve driver comfort when returning the steering wheel to center. The strain the driver feels when returning the wheel can be reduced by constantly adjusting the steering wheel angle. These adjustments can be achieved by installing a steering angle sensor and regulating the EPS, with no specialized components required. The new technology provides a cost-effective solution to increase steering comfort, and NSK hopes to achieve practical application as soon as 2017. (From an article in the Nikkan Jidosha Shimbun on January 22, 2016)

-The Company developed an advanced variable steering angle mechanism that can automatically control the turning angle of the driving wheels and the movement of the steering wheel. The new mechanism is expected to help prevent collisions and improve the safety of the driver. The Company plans to commercialize the technology by 2020. The system consisting of two sets of gears and motors is mounted on the lower end of the steering shaft. The motor can control the steering angle independently of the operation by the steering wheel. When needed for safety, it can turn the steering wheel to the opposite direction to the actual steering angle. Automated steering is regarded as indispensable in future autonomous vehicles. Steering wheels of existing steering system are designed to turn in accordance with the turning angle of the driving wheels, which may cause arm injuries to the driver. The new variable steering angle mechanism can be integrated into existing steering systems. It is expected to meet growing requirements for more advanced safety technologies, as automakers accelerate development of autonomous cars. (From an article in the Nikkan Jidosha Shimbun on November 26, 2015)

World's lightest EPS
-The Company has developed the world's lightest column type electric power steering (EPS). Parts such as the torque sensor and reduction gear have been made more compact, which leads to a 13% reduction weight for the EPS unit as a whole. The torque sensor functions have also been improved, and safety has been enhanced through the addition of low power operation maintenance and a monitoring system. The EPS can be installed on a range of automobiles from mini vehicles to B-segment compact cars. The Company will begin mass production of the EPS in 2017 as a next-generation, environmentally-friendly product. (From an article in the Nikkan Jidosha Shimbun on January 22, 2016)

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.

R&D Expenditure

(in millions of JPY)
FY ended Mar. 31, 2016 FY ended Mar. 31, 2015 FY ended Mar. 31, 2014
Overall 11,155 10,660 9,919
Automotive Business Division 7,732 7,417 6,795

-The Company plans to spend JPY 13,000 million in R&D activities in the fiscal year ending in March 2017.

Capital Expenditure

(in millions of JPY)
FY ended Mar. 31, 2016 FY ended Mar. 31, 2015 FY ended Mar. 31, 2014
Overall 54,996 49,197 45,448
Automotive Business Division 34,194 34,646 32,613

Investments in automotive business
-The Company is investing to boost productivity and add facilities and equipment to respond to growing demand for needle-bearings in Japan and China.
-The Company is investing worldwide in EPSs.

Investments in Japan

-In July 2015, the Company held an opening ceremony for its new data center in Okinawa Prefecture, Japan. The facility will have a data backup function and will serve as its second data center in Japan. The main data center in the Tokyo metropolitan area controls the company’s overall computer systems in Asia. The establishment of a second center is intended to mitigate disaster risks by enabling the company to maintain a stable supply system. The Tokyo data center has a seismically isolated structure and is equipped with an emergency power supply system. However, a large earthquake centered beneath the Tokyo Metropolitan Area or the East Nankai Trough may damage the Tokyo data center. NSK chose Okinawa for the site of the additional center, as the prefecture has had the fewest number of earthquakes in Japan. (From an article in the Nikkan Jidosha Shimbun on July 15, 2015)

Investments outside Japan

-NSK Needle Bearing Korea Co., Ltd. (NNBK), a Korean subsidiary of the Company, announced that it will construct a new plant in Cheonan, Chungcheongnam-do. NNBK was established in February 2004. Its plant in Changwon, Kyungsangnam-do produces needle bearings and other products. (From a press release on May 20, 2015)

Planned Capital Investments for FY ending March 2017

Planned Capital Investment
(in millions of JPY)
Overall 62,000 -
Automotive related products 41,000 -Invested to strengthen operations in Japan and Korea.
-Invested to rationalize and enhance production facilities.

-The automotive business is increasing its investment in facilities to respond to the growing demand for needle bearings in Japan and Korea.

Outlook for FY ending March 31, 2017

(in millions of JPY)
FY ending Mar. 31, 2017
(IFRS, forecast)
FY ending Mar. 31, 2016
(Japan GAAP, Actual result)
Rate of Change*
Sales 920,000 975,300 (5.7)
Operating income 65,000 94,700 (31.4)
Profit before Taxes 63,000 90,400 (30.3)
Profit attributable to owners of the parent 40,000 67,200 (40.4)
Automotive Business Division
Sales 656,000 689,100 (4.8)
-Automotive bearings 306,000 314,300 (2.6)
-Automotive parts 350,000 374,800 (6.6)
Operating profit 49,000 73,400 (33.2)

*Comparison between actual results for the fiscal year that ended in March 2016 based on Japan GAAP, and the IFRS used for the fiscal year ending in March 2017.

-Based on assumption of slowdown in growth for the automotive business
-Continued high valuation of the yen in terms of foreign currency translation, and more competitive environment
-Rapid development of innovative technology

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

Mid-term management plan

-The Company celebrated its 100th year in business on Nov. 8, 2016. The Company established the NSK Vision 2026: Creating New Trends, envisioning its future in 2026, 10 years later.

-The Company set a new corporate slogan for the fifth mid-term management plan, which starts from the fiscal year ending in March 2017 and ends in the fiscal year ending in March 2019. The slogan is: "A New Start for the Next 100 Years". Two major policies are "operational excellence: continuous pursuit of competitive advantages" and "innovations and challenges: creating new value" in facing three issues: sustainable growth, rebuilding profit structure, and initiating spheres for new growth.

-The forth mid-term management plan, which covered the two years between the fiscal year that ended in March 2014 and the fiscal year that ended in 2016, was initiated under the slogan: Establishing a Corporate Foundation to Achieve JPY 1 Trillion Yen. In addition, two strategies were: "growth emphasizing profit" and "forging management capabilities to handle JPY 1 trillion in resources." There were implemented to achieve all quantitative objectives and improve profitability. The Company achieved significant growth, especially in its China operations and EPS business.

Quantitative Objectives for 5th Mid-term Management Plan 

(in millions of JPY)

FY ending Mar. 31, 2019

FY ending Mar. 31, 2016
(Actual result)
Rate of Change
Sales 1,000,000 975,300 4.6
Operating income 100,000 94,700 4.8
Net profit 70,000 67,200 9.9
Operating profit margin 10.0% 9.7% 13.0

-Capital investments:
-5th mid-term management plan: JPY 180 billion (budgeted)
-4th mid-term management plan: JPY 140 billion (actual)

-R&D expenses:
-5th mid-term management plan: JPY 40 billion (budgeted)
-4th mid-term management plan: JPY 31.7 billion (actual)

5th Mid-term Management Plan (Automotive business strategies)

(in millions of JPY)
FY ending Mar. 31, 2016
(Actual result)
FY ending Mar. 31, 2019
FY ending Mar. 31, 2022
Strategies by business
Powertrain business: Core business supporting the achievement of mid-term growth
-Powertrain products 190,000 240,000 280,000 -Needle bearings: greater sales for multi-step ATs
-Clutch packs: expand module business
-Electrical business 68,000 75,000 90,000 -Establish engine and wiring sectors as main businesses
-Develop new areas and new products in electrification to achieve growth
-Develop new applications based on electrification: electric chargers and in-vehicle motors

-Chassis 91,000 100,000 114,000 -Hub-unit bearings: expand customer base and warranty performance plant
Steering and actuator business: Sow seeds to achieve future growth
-Steering 290,000 280,000 320,000 -Column EPS: expand customer base; develop next-generation systems
-Develop rack EPS: develop products that make use of strengths in elemental technology, for launch in 6th mid-term plan
-Actuators 1,000 2,000 25,000 -Make use of expertise and technology acquired in developing EPS
-Further advance elemental technology and mechatronics technology (electric brakes, etc.)
-Strengthen designing and development capabilities for ECUs (making AD Tech a wholly owned subsidiary)

-Environmental changes: 

  • Diversification of future power sources
  • Advances in controlling vehicle movements

-New structure: 

  • Further advance elemental technology in powertrains (bearings and components), vehicle dynamics (steering and actuators)
  • Improve response to systemization

-Major issues:

  • Expand drivetrain business and achieve growth based on making profits
  • Expand EPS customer portfolio
  • Respond to technological advances such as enhanced efficiencies, electrification, and autonomous driving
  • Develop rack-and-pinion EPS

Increase sales of bearings for multi-speed automatic transmissions
-The Company intends to increase sales of bearings for vehicle transmissions in Japan by 30% to about JPY 60 billion under its new mid-term management plan for the period from fiscal year 2016 to 2018. Automakers are stepping up efforts to increase the number of automatic transmission stages in order to improve fuel efficiency and traveling performance. Rising demand for bearing for transmissions is expected to accompany this trend. Over the coming years, the Company will install stamping machines at two plants operated by its subsidiary in Takasaki City, Gunma Prefecture, to expand production capacity of bearings for automatic transmissions and meet increasing demand. (From an article in the Nikkan Jidosha Shimbun on May 23, 2016)

Develop rack-and-pinion EPS
-The Company will increase its annual investment in research and development to around JPY 25 billion, a 20% increase over the current level, under its next mid-term business plan for the fiscal year ending in March 2017 (FY 2016) through FY 2018. Of the increased investment spending, JPY 12 billion will be invested in the development of electric power steering (EPS) systems. Half of the investment of JPY 12 billion will be allocated for the development of rack-assist EPS systems. There is a growing need for rack-assist EPS systems. Under the circumstances, the Company will accelerate the development of rack-assist EPS systems in addition to its mainstay column-assist EPS systems in an effort to further expand its EPS operations. (From an article in the Nikkan Jidosha Shimbun on December 18, 2015)

-The Company will reduce the size of its electric power steering (EPS) units by 30% to 40% from the current size by 2020. The Company will downsize not only its mainstay column-type EPS systems but also rack-and-pinion EPS systems that are under development. At the same time, the Company will improve the marketability of its EPS units by adopting a low-friction decelerator for EPS systems and ensuring the redundancy of the unit. As demand for EPS units is growing worldwide, the Company will strengthen the competitiveness of its EPS units through downsizing and other improvements to expand its sales further. (From an article in the Nikkan Jidosha Shimbun on October 22, 2015)

-The Company has started development of rack-type electric power steering (EPS) systems. The Company will develop such EPS systems for cars in D-segment and larger, and aims to mass-produce them from 2020 onward. Applications of autonomous driving technology on D-segment vehicles are expected to be accelerated in the future. Under such circumstances, there is a growing need for rack- and pinion EPS systems that have advantages in responsiveness and other types of performances. The Company is known for its column-type EPS systems primarily fitted on compact cars. By adding rack-type EPS systems in its product lineup, the Company aims to expand its EPS business, an engine of its growth. (From an article in the Nikkan Jidosha Shimbun on August 28, 2015)

-The Company will increase its research and development spending on electric power steering (EPS) systems by 30% from the current level in the next three years. The Company will strengthen the development of rack-and-pinion EPS systems in addition to its mainstay column-type EPS systems. The Company aims to receive orders for the rack-and-pinion EPS systems in 2019 and afterward. Along with the increasing availability of parking assistance systems and other advanced driver assistance systems, demand for rack-and pinion EPS systems is growing because of their superior output performances. The Company will expand the lineup of its EPS systems, which contribute greatly to its earnings, in an effort to achieve further growth. (From an article in the Nikkan Jidosha Shimbun on June 30, 2015)