May 17, 2016

NTN Corporation

Contents
I. Progress of the Medium-term Management
Plan, “NTN100”

II. Financial Results for FY2015 andForecast for FY2016
III. Q&A session• This presentation and comments made in this conference or during the following Q&A session include forward-looking
statements about future performance and future business strategies, all of which are based on decisions of the
management of the Company currently available.
• These statements represent the best judgment of the management of the Company based on the information currently
available. However, there can be no assurance that future results will meet any expectation, estimate or projection
conveyed by these statements or comments. Actual results may differ materially from Management projections dependingon various factors such as changes in product demand, exchange rates and interest rates, and contingent liabilities.

2016/5/17

2

Contents
I. Progress of the Medium-term Management
Plan, “NTN100”

II. Financial Results for FY2015 andForecast for FY2016
III. Q&A session

2016/5/17

3

Results in the first year of “NTN 100” andForecast for the second year
• Increase in Net sales and Operating Income year-on-year in FY2015• For FY2016, affected by strong yen, we expect a decrease of Net Sales and Operating Income
in year on year (Exclude exchange rates, increase Net sales and Operating Income)First year

(100 million yen)

Operating income

Second year

FY2015 (Results)(100 million yen)

Net sales : 717,000 million yen
Year on Year +2.2%
Operating income :47,800 million yen
Year on Year +8.9%

Year-end dividend :5 yen (10 yen annually)

FY2016 (Forecast)
Net sales: 690,000 million yen
Year on Year -3.8%(Excluding exchange rates +4%)
Operating income :35,000 million yen
Year on Year -26.7%(Excluding exchange rates +3%)
Dividend(annually):
12 yen (increased dividend)

2016/5/17

Net income for the FY2015 period and later shows the "Net income attributable to shareholder (parent company)."4Results and Forecast for
After Market Business< Results of FY2015 (compared with FY2014) >Net sales : 113.6 billion yen (+ 1.1%), Operating income : 17.7 billion yen (-8.0%)• In Japan, there was reduced demand and performance was flat
• In the Americas, sales of auto parts increased due to positive trends in North America but
performance was weighed down by deceleration of the South America economy, and overallsales fell in North America, and also China< Forecast for FY2016 (compared with FY2015) >Net sales(100 million yen)

OperatingMarginJapan

Increase share also due to the impact of
the economic downturn.
Strengthen discovery of new projects

AmericasStrengthen cooperation with distributors
Enhance auto parts lineup

EuropeConduct sales promotions for auto parts
Fall in demand from emerging markets
Strengthen Asia’s MRO team

Asia and
Increase of customer demand inothersthe northeast and inland parts of China

2016/5/17

5Progress of “NTN 100” :Aftermarket Business - Looking backAchievements
1. Strengthened the quick delivery system
Enhanced lineup of hot-selling products
Globally expanded the automatic stock
replenishment system
2. Strengthened the service system
Implemented a technical academy for thecustomers
Held the Aftermarket Academy
3. Globally increased the market share
In spite of a decrease demand, strengthened
supply capabilities and services, achieved
a +0.5 point improvement in Japan, Americas,
Europe and Asia

+0.5pt(Our estimate)

Share will also increase steadily
but has been affected by the economic slowdownof emerging economies
Transition in amount of aftermarket in the Americas and China
Americas performance fell
affected by the economic
slowdown in South America-5%With an economic slowdown in
China, sales fell

-20%

IssuesEven in the situation in which the economy of
emerging countries slowing down, we must increase
sales and further expand market share2016/5/17

6

Progress of “NTN 100” :Aftermarket Business: points to strengthen
1. Enhance brand image
1. Strengthen the relationship with customers
around the global
Technology training academy:
2 companies/day (FY2015) → continued expansion

Technical Service Unit

Aftermarket
Academy2. Expand the ULTAGE series
Expand input of products that can boast of
the world’s highest standard of bearing function
3. Expand in the aftermarket business for industrial machinery
in emerging countries, and increase presence
Increase the number of distributors by
Transition in amount of auto parts
オートパーツの物量推移
enhancing the support system
Improve the order accuracy of MRO projects by using IT

2. Expand auto parts

To lead growth, focus on regions leading growth such as
Europe and the Americas (North America)and enhance a greater lineup of auto parts
Parts kit for
tracks2016/5/17

Parts kit for
Passenger cars

CAGR: Annual average growth rate from FY2012 to FY2016

7Results and Forecast for
the Industrial Machinery Business< Results of FY2015 (compared with FY2014) >Net sales : 104.1 billion yen (-4.5%), Operating income : 5.6 billion yen (-10.3%)• In Japan, there was decreased demand for construction machinery and mining machinery.
Also associated reduced demand for gear box• In Americas, increased demand for wind turbines, decrease in demand for construction machineryand mining machinery, and there was strong demand for wind turbines in Europe and China
Operating
Net sales< Forecast for FY2016 (compared with FY2015) >Margin(100 million yen)Japan

Further reduce demand for construction
machinery and mining machinery
Sluggish demand for steel, and also for machine tools

Further reduce demand for construction
Americas machinery and mining machinery
Increased sales for wind turbines

EuropeIncrease sales of products for aircraft
Increase sales of gear box and general machinery

Decrease in sales of construction machinery
Asia and and machine tools
others Decreasing demand for products for wind turbines
in China as a reflection of the previous term
2016/5/17

8

Progress of “NTN 100” :Looking back on Industrial Machinery Business and points to improve
Achievements
1. Against the background of environmental issues,
expanded demand for products for wind turbines,
aircraft, and rolling stocks, which are areas we focus on

Ratio bybusiness sector

Construction
machinery

2. Made practical use of CMS(Condition Monitoring System for Wind Turbine)

IssuesWind turbine

To expand net sales, we must make efforts in growth fields
and enhance the industrial machinery business overall

Points to strengthen

Aerospace

1. Narrow down the targets in the growth areas andreorganize the technology sector
Strengthen capabilities of new product development
Develop products and technology in fields such as robots

Rolling stock

2. Improve production efficiency by modernizing
equipment and restructuring Enhance
product competitiveness2016/5/17

Pie chart: Comparison with industry composition ratio of FY2015 Bar graph: Transition in amount (indexation)
CAGR: Annual average growth rate from FY2012 to FY2016

9Results and Forecast for
the Automotive Business< Results of FY2015 (compared with FY2014) >Net sales of 499.3 billion yen (+3.9%), operating income of 24.4 billion yen (+33.2%)• In Japan, Cover the decrease in demand due to the effect of the increase in light automotive tax
with demand for exports of vehicles to North America• In Americas, strong demand in North America but overall a slight decrease due to delay in massproduction of some new cars and South American market downturn
Operating< Forecast for FY2016 (compared with FY2015) >MarginNet sales(100 million yen)Japan

Recover new car sales with new models
Keep an eye on effect of Kyushu earthquakes andfuel efficiency fraud problem

Strong sales of large vehicles against
Americas the backdrop of weaker prices of crude oil
Increase sales with start up of a plant in Mexico

EuropeAlso there is a downturnin the Eastern European market,
overall, strong sales continue

Asia and Continue to expand demands in China
Increased sales of D/S and products forotherstwo-wheel vehicles in ASEAN
2016/5/17*D/S: Drive Shafts

10

Progress of “NTN 100” :Looking back on D/S Business and points to strengthen
Achievements
1. Improved profitability with stabilized the North American
supply structure, and reduced variable costs

North American new base

D/S components

Strengthened supply capacity by mass-production
for finished products(U.S. company Bower)(April2017
mass production: NDA)
starting in China (Xiangyang) and Mexico.
Established “NTN Driveshaft Anderson (NDA)” in the United States.
Switched to local production of components
Automotive business

2. Started deploying high-value-added products in the market

Changes in operating margin

Promoted weight reduction and the standardization of partsin the “ADS module”
Released the “Lightweight Driveshaft for FR vehicle”
for premium cars

IssuesFurther improvement of some products that haveproduction inefficiencies and low profit

Points to strengthen
1. Reduce variable costs by having centralized purchasing ofcomponents
2. Expand sales of products for SUV and premium cars inNorth America and Europe

Lightweight Driveshaft for FR
vehicle for premium cars

2016/5/17*D/S: Drive Shafts

11

Progress of “NTN 100” :Efforts for “Develop Business in New Areas”
Natural Energy Business
1. Established the Green Energy Products Division.
2. Commercialize natural energy productsWind and solar hybrid street light:
Wind and solar hybrid street light
Scheduled for release in July 2016
Micro hydro turbine:
Scheduled for release in December 2016
Compact wind turbine :Scheduled for release in late 2017
Compact wind turbine
3. Start a demonstration test utilizing natural energy
Established Green Power Parkin the Advanced Technology R&D Center(vertical axis)

Micro hydro turbine

Green Power ParkEV Business
1. Established the Electric Module Products Division.

New In-wheel Motor System

2. Expanding electric module products fornext-generation vehicle
Market development of New In-wheel Motor System
and Two Motor On-board Drive System
Two Motor On-board Drive System
Scheduled to release Electric Motor / Actuator
Electric Motor / Actuator
2016/5/17

12

Progress of “NTN 100” :Efforts for strengthening the Management Foundation
Strengthening of global governance and risk management
1. Promote global awareness of the corporate philosophy
Recognition: Distribute the card to all employees in their own language
Understanding, empathy, practice: development and implementation of
education and training programs,
Consider introducing the company award

2. Ensure compliance
Ensure compliance and reduce risks by the “Compliance Committee”

Corporate philosophy chanting card invarious languages (Japanese version)

Ensure observance of the Subcontracting Act and Anti-Monopoly Act
with the “Fair Trade Monitoring Committee”
Hold the “CSR Global Meeting” with the Overseas District Internal Control Section,and strengthen the global internal control system.
Enhance the governance system of affiliated companies

3. Strengthen risk management
Prevent and reduce risks with the "Risk Management Committee
Educate and train employees in the Business Continuity Plan (BCP)

2016/5/17

CSR Global Meeting13

Progress of “NTN 100” :Strengthening of the Financial Foundation: Results and Forecast
1. Strengthen asset efficiency
Reduction of interest-bearing debt
(excluding foreign exchange impact)
Inventory reduction(inventory turnover)
Capital expenditure

FY2015

Actual

FY2016
Forecast

20 billion yen reduction

26.2 billion yen reduction

7.2 billion yen reduction

4.0 times / year

4.0 times / year

4.0 times / year

4.5 times / year

50 billion yen

36.3 billion yen

76.3 billion yen / 2 years

135.0 billion yen / 3 years

NTN 100

Sale of assets

FY2017NTN 100 3-year period
60 billion yen reduction /3 years

Sale of assets with no prospective use

FCF

17.9 billion yen

12.5 billion yen

10 billion yen

67 billion yen / 3 years

Equity to capital ratio

30.0%

29.2%

30.0%

30.0% or more

Net D/E ratio

1.0

1.1

1.1

1.0 or less

ROE

12.0%

6.3%

8.2%

Over 14%

FY2016
Forecast
5.1%(If exchange rates are at
the same level as theprevious year)（6.6%）FY2017NTN 100 3-year period
8.8%

FY2016
Forecast
Annual 12 yen

FY2017NTN 100 3-year period
Dividend payout ratio of
30% is basic idea

2. Improvement of the profit margin
on salesOperating margin

3. Shareholder return
Dividends

FY2015
Announced
6.9%

Announced
Annual 10 yen

Actual
6.7%

FY2015

ActualAnnual 10 yen

Dividend payout ratio of 17% Dividend payout ratio of 35% Dividend payout ratio of 40%

2016/5/17

14

I. Progress of the Medium-term Management
plan, “NTN100”

II. Financial Results for FY2015 andForecast for FY2016
III. Q&A session

2016/5/17

15

Contents★Financial Results for FY2015 : Key Factors
１．Consolidated Statements of Operation
２．Net Sales by Region
３．Net Sales and Operating Income by Business Sector
４．Results by Business Sector （Quarterly Trend）
５．Analysis of Operating Income(1) FY2015(2) FY2016
６．Net Sales and Operating Income by Region(1) Japan, Americas(2) Europe, Asia and others
７．Inventories
８．Interest-Bearing Debt
９．Capital Expenditure and Depreciation
１０．Cash Flows
2016/5/17

16

Financial Results for FY2015 : Key Factors
FY2015 Results◇ Net sales: 717.0 billion yen, a 15.1 billion yen (+2.2%) increase year-on-year◇ Operating income: 47.8 billion yen, a 3.9 billion yen (+8.9%) increase year-on-year◇ Extraordinary income/loss: -11.3 billion yen (extraordinary income +4.4 billion yen,
extraordinary losses -15.7 billion yen)
◇ Net income attributable to shareholder (parent company): 15 billion yen, -8.3 billion
yen (-35.6%) decrease year-on-year◇ Planned fiscal year-end dividend of 5.0 yen (Annual: 10 yen, +4 yen year-on-year)

FY2016 Forecast◇ Net sales: 690.0 billion yen, a -27.0 billion yen (-3.8%) decrease year-on-year◇ Operating income: 35 billion yen, a -12.8 billion yen (-26.7%) decrease year-onyear◇ Net income attributable to shareholder (parent company):16 billion yen, a 1.0 billion
yen (+6.4%) increase year-on-year◇ Dividends: Plan for annual dividend of 12 yen (6 yen for both interim and fiscal
year-end)◇ Exchange rates: 1US$ = 105 yen, 1EURO = 120 yen
2016/5/17

17

1. Consolidated Statements of Operation(100 million yen)

FY2014
Results①

FY2015Results②

FY2016
Forecast③

Year on year
FY2015FY2016
②－①

③－②

7,019

7,170

6,900

151

- 270

Operating income

439

478

350

39

-128

Operating margin(6.2%)(6.7%)(5.1%)(0.4%)(-1.6%)

Ordinary income

389

382

270

-7

- 112

Extraordinary
income/loss

- 18

- 113

0

- 95

113

Net income attributable
to shareholders(parent company)

234

150

160

- 83

10

US＄

109.8

120.2

105.0

10.4

-15.2

EURO

138.7

132.6

120.0

-6.1

-12.6

Net sales

Exchangerate

2016/5/17

18

2. Net Sales by Region＜Net Sales by Region＞(100 million yen)

FY2014FY2015FY2016

Results

Results Forecast

Year on year
FY2015②-①

Year on year
FY2016
③-②

①

②

③

Total

Volume

Forex

Total

Volume

Forex

1,915

1,896

1,875

-19

-19

0

-21

-21

0

Americas 2,026

2,125

1,950

100

-48

148 -175

100 -276

Europe

1,712

1,690

1,590

-22

52

-74 -100

65 -166

Asia andothers

1,367

1,459

1,485

92

43

49

27

166 -140

Total

7,019

7,170

6,900

151

28

123 -270

311 -581

Japan

2016/5/17

19

3. Net Sales and Operating Income by Business Sector＜Net Sales by Business Sector＞
FY2014FY2015(100 million yen)

Year on year

FY2016FY2015②-①

Results Results Forecast
Aftermarket
Industrial machinery

Automotive
Total

①

②

③

Total

Volume

1,124
1,090
4,805
7,019

1,136
1,041
4,993
7,170

1,100
935
4,865
6,900

12
- 49
188
151

6
- 63
85
28

FY2016
③-②
Forex

Total

6 - 36
14 - 106
103 - 128
123 - 270

＜Operating Income by Business Sector＞
FY2014 FY2015 FY2016
Results Results Forecast
Aftermarket
Industrial machinery

Automotive
Total

2016/5/17

①

②

③

192
63
184
439

177
56
244
478

163
37
150
350

VolumeForex

54 - 90- 37 - 69
294 - 421
311 - 581
(100 million yen)

Year on year
FY2015②-①

FY2016
③-②

- 15
-6
61
39

- 14
- 19
- 94
- 128
20

4. Results by Business Sector （Quarterly Trend）＊All figures in 100 million yen

Automotive

2,000

1,887
1,670 1,692

1,600

267

280

1,769
296

281
295

1,400

269
259

1,828
290

268

Aftermarket

Operating Income/ Operating Margin

Net Sales(100 million yen)

1,800

Industrial machinery(100 million yen)

1,780 1,765 1,797
294

260

267

250

286

263

200

16.3% 16.2%

180

4.7%

160

3.4%

3.1% 3.2%

1,000

100

800

1,144

1,220

1,296

1,270

1,226

1,249

1,247

145

141

88

60
40

200

20

0

0

2Q

44

53

6.6%

5.2% 5.0%

3.9% 4.8% 3.3%
119

53

3Q

4Q

FY2015
1Q
2Q

3Q

4Q

9
35

108

95

43
50

42
26

46

110

39

19
12

9

17

15

400

2016/5/17

5.5%
3.8% 5.0%111

80

FY20141Q

8.9% 7.0%

16.0%
13.7%

268
120

1,145

5.6%

14.4%

140

1,200

600

17.8% 18.0% 18.2%

13
65

37

FY2014
1Q
2Q

46

3Q

4Q

69
48

FY2015
1Q
2Q

65

62

3Q

4Q

21

5-1. Analysis of Operating Income （FY2015）＊All figures in 100 million yen

Negative factors（ 118 ）

Positive factors（ 158 ）
Scale merits

6

Decrease in variable
costs
Exchange
rates

FY2014
Full year
Operatingincome439

50

Sales price levels

58

108

48

Increase in personal costs
Expenses etc.
(Depreciation +31,
Other -38)

7

+39
FY2015Full year
Operatingincome478
FY2014 Full year < Results >vs
FY2015 Full year < Results >軸ラベル

2016/5/17

22

5-2. Analysis of Operating Income （FY2016）＊All figures in 100 million yen

Negative factors（ 292 ）

Positive factors（ 164 ）
Exchange rates
Decrease in variable
costs

Scale merits

116

144
Sales price levels

48

65
FY2015Full year
Operatingincome478

Increase in personal costs

-128

40
43

FY2015 Full year < Results >vs
FY2016 Full year < Forecast >2016/5/17

Expenses etc.
(Depreciation -24,
Other -19)

FY2016
Full year
Operatingincome350

23

6. Net Sales and Operating Income by Region《 Japan 》《 Americas 》(100 million yen)

Net Sales

Net Sales(100 million yen)

2,500

4,000

3,236

3,433

3,377
2,985

3,000

2,000

-56

2,084

1,989
1,718

1,921

+95

1,500
2,000
1,000
1,000

500

0

0
FY2013

FY2014FY2015FY2013

FY2016FY2014

Operating Income

Operating Income

400

200

7.9%

8.0%

7.2%

300

1.6%

200

256

276

0.7%

26

14

FY2013

FY2014150

FY2016

2.8%

3.3%

58

63

FY2015FY2016

100

-34

100

1.5%

FY2015

241

47

50

+44

0

0
FY2013

2016/5/17

FY2014FY2015FY201624

6. Net Sales and Operating Income by Region《 Europe 》
Net Sales《 Asia and others 》(100 million yen)

《 欧州 》(100 million yen)

《 アジア他 》

2,500

2,500
2,000

Net Sales

1,824

1,872

1,835

1,724

-37

1,500

2,000
1,500

1,138

1,000

1,000

500

500

0

0
FY2013

FY2014FY2015FY2013

FY20161,329

FY2014

Operating Income

200

200

1.2%

1.7%

2.0%

2.5%

150

50

21

37

-6

31

50

44

FY2015FY2016

8.5%

7.6%

9.5%

3.9%
+25

100

100

1,465

+152

Operating Income
150

1,482

44

101

126

140

FY2015FY20160

0
FY2013

2016/5/17

FY2014FY2015FY2016FY2013

FY201425

7. Inventories◆ Inventory turnover ratio (FY2016 forecast) is 4.0 times
Japan

3.8
2,000

1,665

Overseas

Inventory turnover ratio

1,841

4.0

4.0

3.8
-59

1,782

4.0

1,720

1,500

1,000

1,140

1,285

1,231

1,186

2.0

1.0

500

525
0

551
FY2015534
0.0

FY2013

FY2013Results

FY2014
Results

FY2015Results

FY2016
Forecast

1,665

1,841

1,782

1,720

Overseas(1,140)(1,285)(1,231)(1,186)

Japan

(525)

(556)

(551)

(534)

3.8

3.8

4.0

4.0

Inventory turnover ratio(times)2016/5/17

556

FY2013Inventories

3.0

Inventory turnover ratio (times)

Inventories(100 million yen)

2,500

FY2016(100 million yen)26

8. Interest-Bearing Debt

2016/5/17

27

9. Capital Expenditure and Depreciation

2016/5/17

28

10. Cash Flows◆Net CF (FY2016 forecast) is 10 billion yen
FY2013Results(100 million yen)

FY2014
Results ①

FY2015Results ②

FY2016
Forecast ③

②－①

③－②

Ⅰ．Cash flow from operating
activities
Ⅱ．Cash flow from investing
activities
Ⅲ．Cash flow from financing
activities

691

251

462

552

211

90

-341

-313

-338

-452

-25

-115

66

-375

-280

-86

95

194

Ⅳ．Effect of exchanging rate translation
on cash and cash equivalents

20

18

-50

-30

-68

20

436

-419

-205

-15

214

189

Ⅴ．Net increase in cash andcash equivalents
1,000

CF from operating activities

691
500

349

462

CF from investing activities
552

251

125

Net CF

100

0

- 500

2016/5/17

- 341

- 313

FY2013

FY2014

- 62

- 338

- 452

FY2015FY201629

2016/5/17

30