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5. Nidec Corporation Business Report FY ended Mar. 2017

Nidec Corporation Business Report FY ended Mar. 2017

Business Acquisitions

-The Company announced on August 2 that it will acquire the motors, drives and electric power generation businesses of Emerson Electric Co. (Emerson), a U.S based electrical and electric equipment manufacturer. Through the acquisition, Nidec will broaden its lineup of industrial products and secure business bases in Europe and Asia. The company will also enhance its capability to develop new proposals to customers by combining Nidec's motor technology with Emerson's drive technology. The purchase price is USD 1.2 billion (JPY 122.4 billion), the largest transaction Nidec has ever made. (From an article in the Nikkan Jidosha Shimbun on August 3, 2016)

Contracts

-The Company said it has been awarded a contract to supply major drive system components for China’s low-speed electric vehicles (LSEVs). The product is an integrated unit consisting of a motor, gearbox, and other components. Sales from this business are expected to reach approximately JPY 3 billion. The company plans to expand its supply capacity for the product in China, where the LSEV market is expected to grow with the tightening of environmental regulations. On a global basis, the company is aiming to boost its LSEV business JPY 10 billion to JPY 20 billion by expanding sales in other markets like ASEAN countries and India. (From an article in the Nikkan Jidosha Shimbun on June 28, 2016)

New mid-term strategic objectives for FY 2020

-Constant pursuit of high growth to sustain profits:

• Consolidated sales target: JPY 2 trillion (includes JPY 500.0 billion based on new M&As)
• Automotive sales alone: JPY 700 billion – 1 trillion
• Consolidated profit margin target: 15% or higher
• ROE (return on equity): 18% or higher (based on target of 60% shareholders' equity ratio)
• 5-region based operations: Japan, China, Asia, the Americas, and EMEA (Europe, Middle East, and Africa)

-Estimated market scale and targeted global market share of automotive products in 2020:

• Electric power steering motors: 70 million units/50% share
• Electric dual-clutch motors: 10 million units/70% share
• Electric oil pumps: 11 million units/30% share
• Electric water pumps: 34 million units/20% share

-Modularization:

• Electric power steering power-packs (Nidec motor with Nidec Elesys ECU)
• Electric oil pump power-pack (Nidec motor, Nidec Elesys invertor, Nidec Tosoku/Nidec GPM pump and case)

-Expanded powertrain business:

• Shifting from hydraulics to electrification. Aiming to launch powertrain business.
• Example: SR motor with built in SiC inverter, which is smaller, lighter, and more energy efficient than existing ones.

-Received orders for components used in the drive systems for low-speed electric vehicles (LSEVs) in China

• Motor, Gear box, Controller, Battery charger
• Focus on products for automobiles in China, and tri-wheel vehicles in India and Southeast Asia

-In-house production of following operations: stamping, plastic-molding, die-casting, shaft machining, housing machining.

-Expanding the use of LiDAR (Laser imaging Detection & Ranging) in the automotive sector (autonomous driving, etc.)

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

-Overall, R&D expenses are forecasted to be JPY 60,000 million in the fiscal year ending March 2018.

R&D Structure

-Nidec Research and Development Center in Japan, Nidec Research and Development Center in Singapore, and Nidec Research and Development Center in Taiwan conduct research on basic technologies related to motors in general that are expected to become a core part of the Company's global R&D strategy.


-Shiga Technical Center engages in research and development activities aimed at new product development, mass production of new models, and improvement of product quality related to small precision DC motors and fan motors, excluding those used for HDDs.

R&D Activities

-Nidec Corporation is strengthening its development of new products targeting emerging markets such as China, India and Brazil as well as developed markets.
-The Company is developing next-generation of;

• small and high-performance power steering motors,
• motors for applications other than power steering such as seats, brakes and sunroofs, and ancillary electronic control units (ECUs),
• brushless motors used for hydraulic and electric power systems
• package products that combine motors with sensors and control units

-Automotive motors: R&D activities in Germany, Spain, and Japan on motors, to increase product life and make them smaller and lighter.

• Seat and sunroof motors: commercialization of compact, brush motor not requiring rare-earth metals
• Engine cooling motors: development of compact and light brush fan motors

-Chassis control: (brakes and steering system):

• Brakes: Commercialization (development/production) of ECU for regenerative braking system, and ECU for electronic stability control systems.
• Electric power steering system: Developed ECU for both brush and brushless motors. Conducting advanced development of ECU for brushless motors designed to provide functional safety

-Other R&D activities:

• Highly functional/high-performance control-valve assembly for automatic transmissions and constant-variable transmissions
• Electric oil pumps: Combining technologies of group companies in optimal manner.
• Electric hydraulic actuator for transmissions

-With respect to stepping motors, in an effort to expand the range of their applications to automobiles, Nidec Sankyo has been downsizing products, enhancing product performance and improving cost-performance.


-With respect to vehicle traction motors, Nidec Motor engages in modularization of motors with encoders based upon its rare earth-free SR motor technology, and in development activities aimed at hybridization and electrification of large-sized vehicles such as construction and agricultural machinery.


-This company is engaged in developing products and elemental technology on system devices such as automotive lenses, automotive motors, etc. at the Tokyo R&D Center.

• Optical products: Switch from developing products for digital cameras, to products for automotive lenses and mobiles.
• Motors: Switch from developing products for digital cameras, to products for mobiles, vehicles, and medical.

-Overall, capital expensiture is forecasted to be JPY 100,000 million in the fiscal year ending March 2018.


Installed Large Servo Press Machines at New Plant in Ohio
-The Company announced plans to produce large servo press machines for the U.S. and Mexico at a new plant in Ohio. Two new plants in northern Spain are also planned. The plants will cost an estimated USD 88.1 million to build and will begin production by 2020. To diversify its automotive-related businesses, Nidec will build servo presses that offer greater versatility in pressure and speed than hydraulic models and are better suited to work with thin-gauge high strength steel. The Company entered the press machinery market in 1997 with the acquisition of a Japanese press maker and now ranks third worldwide in press machines, following Germany's Schuler and Japanese rival Aida Engineering. (From Mexico-Now on February 25, 2017)

Nidec Sankyo Established New Plant in Mexico
-Nidec Sankyo has invested USD 15 million for the construction of a new plant at the Colinas de San Luis Industrial Park in San Luis Potosi, Mexico. The site has ample space for a second stage expansion in the future. Construction of the plant will be completed by July, with operations to start in August. The plant is expected to have over 300 employees by 2019. (From a Mexico-Now article on January 3, 2017)