Business Results for the 1st Half
ended May 31, 2014

July 16, 2014

1Overview

Quarterly Financial Results and Forecast

OperatingIncome
㻢(Billions of yen)
58.0

Net Sales㻢㻜㻺㼑㼠㻌㻿㼍㼘㼑㼟
Operating Income

41.3

43.9

43.9

52.8

43.2

43.2

45.5

5.2

47.3
4.8

39.5
㻠㻜

㻠

4.1

㻞㻜

2.9

2.3

2.2

Original Plan

2.8

2.5

Original Plan

3.1
2.8

㻞

㻜0

㻜
㻝㻞㻛㻝㻽㻞㻽

㻟㻽

㻠㻽

㻝㻟㻛㻝㻽

㻞㻽

㻟㻽

㻠㻽

㻝㻠㻛㻝㻽

FY2013

FY2012

㻞㻽㻚FY2014

FY2014 1st Half Results & Full Year Forecast

2Overview(Billions of yen)

FY2014FY2013
1st Half

Full Year䠄䠇33.9%䠅

(rate of increase)

Net Sales

82.8

175.6

[profit ratio on net sales]

Operating Income

Ordinary Income

Net Income

1st Half[6.3%] 5.2[6.5%] 5.3

2.2[7.0%] 12.3

[6.7%] 11.6

6.7

Full Year F䠄䠇22.4%䠅

110.9

215.0

䠄䠇91.7%䠅

䠄䠇58.0%䠅

[9.1%] 10.0

[9.1%] 19.5

䠄䠇77.1%䠅

䠄䠇58.1%䠅

[8.5%] 9.4[8.6%] 18.5

䠄x 2.1䠅

䠄䠇56.6%䠅

4.7

10.53

To Accomplish Our Mid-term Business PlanOverview(Billions of yen)

Net Sales

OperatingIncome㻞㻡㻜㻞㻡㻺㼑㼠㻌㻿㼍㼘㼑㼟㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㻵㼚㼏㼛㼙㼑㻝㻥㻚㻡㻞㻜㻞㻜㻜㻝㻡㻚㻡㻝㻜㻚㻜㻝㻠㻚㻢㻟㻚㻠 㻟㻚㻤㻝㻠㻣㻚㻞㻝㻞㻚㻟㻝㻜㻚㻢㻞㻝㻡㻚㻜㻝㻡㻝㻣㻡㻚㻢㻝㻜㻞㻜㻠㻚㻤㻝㻥㻟㻚㻢㻣㻚㻢㻡㻜㻝㻡㻚㻡㻝㻟㻚㻞㻝㻡㻜㻝㻜㻜㻝㻢㻚㻣㻤㻚㻞㻝㻤㻢㻚㻣㻝㻣㻢㻚㻜㻝㻜㻣㻚㻡㻝㻢㻢㻚㻜㻝㻣㻞㻚㻞㻝㻟㻠㻚㻤㻝㻡㻤㻚㻤㻝㻠㻢㻚㻢㻡

䠘Mid-term Plan 2016䠚
Net Sales䠖 ¥250 billion
Operating Income 䠖 ¥25 billion㻝㻟㻟㻚㻥㻜䕧㻟㻚㻞㻜
FY䕧㻡㻜㻝㻜㻞㻜㻟㻜㻠㻜㻡㻜㻢㻜㻣㻜㻤㻜㻥㻝㻜㻝㻝㻝㻞㻝㻟㻝㻠㻝㻡

㻝㻢

4

Breakdown of FY2016 Sales Growth(Billions of yen)

250.0

Important 6 Products
Growth rate FY2013 to FY2016

Other
15.0

Automotive Bearings
x 1.4
Automotive Hydraulics
x 1.6

215.0
Other
10.0

Hydraulic Equipment
for Construction Machines
x 2.1

60.0

30.0

RobotsNet Sales175.6㻲㼅㻞㻜㻝㻟Overview

x 1.8
Hydraulic Equipment
for Industrial Machines
x 1.5
Cutting Tools
x 1.8㻲㼅㻞㻜㻝㻠㻲㼅㻞㻜㻝㻢5

Sales Expansion of Important Products 1Overview

1. Automotive Bearings 䠄Growth rate FY2013 to FY2016䠖 x1.4䠅
䠘Overseas䠚䞉For the purpose of integrated production,add production lines at USA,Thailand, China, and Czech
䞉Go into Production atIndia
䠘Domestic䠚䞉Drive Non-human lines㻞㻜㻜㻲㼅㻞㻜㻝㻟

㻞㻜㻝㻠

㻞㻜㻝㻡

㻞㻜㻝㻢

2. Automotive Hydraulics 䠄x1.6䠅
䠘 Overseas䠚䞉Reach full-scale productionat China
To aim integrated production
䠘 Domestic 䠚䞉Insourcing for cost reduction䞉Develop new products㻝㻡㻜㻜㻲㼅㻞㻜㻝㻟㻞㻜㻝㻠

㻞㻜㻝㻡

㻞㻜㻝㻢

6

Sales Expansion of Important Products 2Overview

3. Hydraulic Equipment for Construction Machines 䠄x2.1䠅
㻟㻜㻜䠘Overseas䠚䞉Add production linesat China
To aim integrated production
䠘Domestic䠚䞉Install New product lines
䞉Drive Flexible manpower lines㻜㻲㼅㻞㻜㻝㻟

㻞㻜㻝㻠

㻞㻜㻝㻡

㻞㻜㻝㻢

4. Robots 䠄x1.8䠅
䠘Overseas䠚䞉Add production lines
for MZ07 at China
Automate production line
䞉Open Technical center䠘Domestic䠚䞉Drive Non-human lines㻞㻡㻜䞉Ramp up processing process㻜㻲㼅㻞㻜㻝㻟㻞㻜㻝㻠㻞㻜㻝㻡

㻞㻜㻝㻢

7

Sales Expansion of Important Products 3Overview

5. Hydraulic Equipment for Industrial Machines 䠄x1.5䠅
㻞㻡㻜䠘Overseas䠚䞉Ramp up production lines
at China䠘Domestic䠚䞉Ramp up processing process

䞉Develop New series㻜㻲㼅㻞㻜㻝㻟㻞㻜㻝㻠

㻞㻜㻝㻡

㻞㻜㻝㻢

6. Cutting Tools 䠄x1.8䠅
䠘Overseas䠚䞉Start local production at USA
䞉Reconstruct production bases
at ASEAN
䠘Domestic䠚䞉Drive Non-human lines
䞉Install New product lines㻡㻜㻲㼅㻞㻜㻝㻟

㻞㻜㻝㻠

㻞㻜㻝㻡

㻞㻜㻝㻢

For the purpose of sales order expansion

8Overview

I. Consolidation of business structure䖃Increasing local employee on oversea subsidiaries
USA, China (cutting tool, Hydraulic Equipment, Robots)
䖃Construction of Robots technical center

II. Creation of new products䖃Extend the line-up,
mainly for Industrial Machines
Carbide drill, Energy saving hydraulicunits, Precision bearings,and Compact robots
910

Consolidated Financial Highlights of FY2014 1st Half FY2014 1st Half
(Billions of yen)

FY2013st
1 Half (A)Net Sales

82.8(profit ratio on net sales)

Increase/Decrease(Change Rate)(B) – (A)FY2014st
1 Half(B)

110.9(+33.9%)+28.0

Operating Income(6.3%)

5.2(9.1%)

10.0(+91.7%)+4.8

Ordinary Income(6.5%)

5.3(8.5%)

9.4(䠇77.1%)+4.1

Extraordinary
income0.3

0.0-0.3

Extraordinaryloss

1.1

1.2

+0.0

2.2

4.7

Net Income(+109.0%)

+2.4
11

FY2014 1st Half

Consolidated Financial Data

(Billions of yen)

FY2013

FY2014

1st Half (A)

1st Half(B)Total Assets

209.6

Stockholder's equity(stockholder's equity ratio)

Interest-bearing debt
(Net D/E ratio)

Increase/Decrease(B) – (A)

221.4

+11.7

(33.9%)

71.1(36.3%)

80.4

+9.2

(0.6X)

72.2(0.5X)

58.5

-13.6

Capacity investment

6.7

8.8

+2.1

Depreciation andamortization4.9

5.7+0.8

Number of employees

6,010

6,270+260

Exchange rate (USD)

87 yen101 yen(Euro)113 yen139 yen

14 yen depreciation
against USD
25 yen depreciation
against Euro

12FY2014 1st Half

Sales by Region and Market Segment(Billions of yen)

Sales by region㻤㻞㻚㻤㻱㼡㼞㼛㼜㼑㻘㻌㻠㻭㼙㼑㼞㼕㼏㼍㻘㻥㻚㻢㻝㻝㻜㻚㻥㻱㼡㼞㼛㼜㼑㻘㻣㻚㻣㻭㼙㼑㼞㼕㼏㼍㻘㻝㻡㻭㼟㼕㼍㻘㻌㻞㻥㻚㻢㻝㻝㻜㻚㻥㻗㻥㻜㻚㻝㻑䠇㻡㻢㻚㻝㻑䠇㻡㻤㻚㻤㻑㻭㼟㼕㼍㻘㻌㻝㻤㻚㻢䠇㻝㻡㻚㻥㻑㻶㼍㼜㼍㼚㻘㻡㻜㻚㻠㻶㼍㼜㼍㼚㻘㻡㻤㻚㻠Sales by market㻤㻞㻚㻤㻱㼚㼑㼞㼓㼥㼍㼚㼐㻵㼚㼒㼞㼍㼟㼠㼞㼡㼏㼠㼡㼞㼑㻘㻌㻝㻡㻚㻞㻵㼚㼐㼡㼟㼠㼞㼕㼍㼘㼙㼍㼏㼔㼕㼚㼑㼞㼥㻛㻌㻹㼍㼞㼗㼑㼠㼟㼍㼘㼑㼟㻘㻌㻞㻠㻚㻝㻭㼡㼠㼛㼙㼛㼎㼕㼘㼑㼟㻘㻌㻠㻟㻚㻡㻱㼚㼑㼞㼓㼥㼍㼚㼐㻵㼚㼒㼞㼍㼟㼠㼞㼡㼏㼠㼡㼞㼑㻘㻌㻞㻝㻚㻟㻵㼚㼐㼡㼟㼠㼞㼕㼍㼘㼙㼍㼏㼔㼕㼚㼑㼞㼥㻛㻌㻹㼍㼞㼗㼑㼠㼟㼍㼘㼑㼟㻘㻌㻟㻜㻚㻡㻭㼡㼠㼛㼙㼛㼎㼕㼘㼑㼟㻘㻌㻡㻥㻚㻝䠇㻠㻜㻚㻝㻑䠇㻞㻢㻚㻢㻑䠇㻟㻡㻚㻥㻑㻲㼅㻞㻜㻝㻟
1st Half㻲㼅㻞㻜㻝㻠
1st Half㻲㼅㻞㻜㻝㻟
1st Half㻲㼅㻞㻜㻝㻠
1st Half

13

FY2014 1st Half

Sales and Operating Income by Business Segments(Billions of yen)

FY2013

Machinery &Tool(B)䠉(A)

13.3

16.9

䠄+26.9%䠅

+3.5

Machine Tools

10.7

10.5

䠄-1.4%䠅-0.1

Robots

6.6

8.6

䠄+29.1%䠅

+1.9

Net Sales

30.7

36.0

䠄+17.5%䠅

+5.3

3.5

䠄+33.9%䠅

+0.8

䠄8.5%䠅

䠄9.7%䠅

2.6

Bearings

30.3

43.5

䠄+43.7%䠅

+13.2

Hydraulic Equipment

15.3

22.4

䠄+46.2%䠅

+7.1

Net Sales45.6

66.0

䠄+44.5%䠅

+20.3

5.6

䠄x 2.7䠅

+3.5

8.7

䠄+36.7%䠅

+2.3

0.8

䠄+57.4%䠅

+0.3

110.9

䠄+33.9%䠅

+28.0

10.0

䠄+91.7%䠅

+4.8

Operating Income
Materials &Others(%)

Cutting Tools

Operating Income

Components

Increase/Decrease

FY2014
1st Half(B)

1st Half (A)䠄4.5%䠅

Net Sales
Operating Income

6.4
䠄8.8%䠅

Total Net Sales
Total Operating Income

䠄8.5%䠅

2.0

䠄10.1%䠅

0.5
82.8

䠄6.3%䠅

䠄9.1%䠅

5.2

14

FY2014 1st Half

Factors for Change in Operating Income(Billions of yen)

(Profit up 11.2 billion yen)
(Profit down 6.4 billion yen)

Cost reductions;+1.5

Price down;-1.3
Raw materials
up;-1.5

Improved operating
capacity; +7.1

Effect of Sales and Outputs
reduction; -3.7



Effect of exchange
rate; +2.1
Unity of FY;+0.5+4.8
Billion yen

10



5.2


㻲㼅㻞㻜㻝㻟㻌㻝㼟㼠㻌㼔㼍㼘㼒㻲㼅㻞㻜㻝㻠㻌㻝㼟㼠㻌㼔㼍㼘㼒

15

16

Consolidated Financial Highlights of FY2014 PlanFY2014(Billions of yen)

FY2013(A)

FY2014
Forecasts (B)175.6

Net Sales

Increase/Decrease(Proportion)(B) – (A)215.0(+22.4%)+39.3(profit ratio on net sales)

Operating Income(7.0%)

12.3(9.1%)

19.5(+58.0%)+7.1

Ordinary Income(6.7%)

11.6(8.6%)

18.5(+58.1%)+6.8

Extraordinary
income0.4

0.0-0.4

Extraordinary
loss

1.2

1.2

+0.0

6.7

10.5

Net Income(+56.6%)+3.7
17

Consolidated Financial Data

FY2014(Billions of yen)

FY2013(A)
Total Assets

FY2014
Forecast (B)Increase/Decrease(B) – (A)

226.0

+18.0

207.9

Stockholder's equity(stockholder's equity ratio)

Interest-bearing debt
(Net D/E ratio)䠄37.1%䠅

77.1

䠄38.1%䠅

86.0

+8.8

䠄0.5X䠅

55.1

䠄0.5X䠅

60.0+4.8

Capacity investment

12.6

20.0+7.3

Depreciation andamortization

10.3

11.5

+1.1

Number of employees

6,072

6,300

+228

Exchange rate (US$)(Euro€)

92 yen
121 yen

100 yen
137 yen

8 yen depreciation
against USD
16 yen depreciation
against Euro

18

Sales by Region and Market Segment
Sales by region(Billions of yen)㻝㻣㻡㻚㻢
㻱㼡㼞㼛㼜㼑㻘
㻤㻚㻥㻭㼙㼑㼞㼕㼏㼍㻘



㻞㻜㻚㻣

FY2014

Sales by market㻞㻝㻡㻚㻜㻱㼡㼞㼛㼜㼑㻘㻌㻝㻟㻗㻠㻡㻚㻣㻑㻭㼙㼑㼞㼕㼏㼍㻘㻞㻥㻗㻠㻜㻚㻝㻑㻗㻠㻝㻚㻟㻑㻭㼟㼕㼍㻘㻌㻡㻣㻭㼟㼕㼍㻘㻌㻠㻜㻚㻟㻞㻝㻡㻚㻜㻝㻣㻡㻚㻢㻱㼚㼑㼞㼓㼥㼍㼚㼐㻵㼚㼒㼞㼍㼟㼠㼞㼡㼏㼠㼡㼞㼑㻘㻌㻟㻞㻚㻢㻵㼚㼐㼡㼟㼠㼞㼕㼍㼘㼙㼍㼏㼔㼕㼚㼑㼞㼥㻛㻌㻹㼍㼞㼗㼑㼠㼟㼍㼘㼑㼟㻘㻌㻡㻜㻚㻠㻱㼚㼑㼞㼓㼥㼍㼚㼐㻵㼚㼒㼞㼍㼟㼠㼞㼡㼏㼠㼡㼞㼑㻘㻌㻠㻝㻚㻡㻵㼚㼐㼡㼟㼠㼞㼕㼍㼘㼙㼍㼏㼔㼕㼚㼑㼞㼥㻛㻌㻹㼍㼞㼗㼑㼠㼟㼍㼘㼑㼟㻘㻌㻢㻝㻚㻡㻗㻥㻚㻣㻑㻗㻞㻣㻚㻟㻑㻗㻞㻞㻚㻜㻑㻗㻞㻜㻚㻤㻑㻭㼡㼠㼛㼙㼛㼎㼕㼘㼑㼟㻘㻌㻝㻝㻞㻶㼍㼜㼍㼚㻘㻝㻜㻡㻚㻣㻶㼍㼜㼍㼚㻘㻌㻝㻝㻢㻲㼅㻞㻜㻝㻟㻲㼅㻞㻜㻝㻠㻲㼅㻞㻜㻝㻟㻲㼅㻞㻜㻝㻠

ActualForecasts

ActualForecasts㻭㼡㼠㼛㼙㼛㼎㼕㼘㼑㼟㻘㻌㻥㻞㻚㻣

19

FY2014

Sales and Operating Income by Business Segments(Billions of yen)

FY2013
䠄A䠅(%)(B)䠉(A)

Cutting Tools

28.0

32.5

䠄+15.9%䠅

+4.4

Machine Tools

22.6

20.8

䠄-8.1%䠅-1.8

Robots

13.1

17.5

䠄+33.0%䠅

+4.3

Net Sales

63.8

70.8

䠄+10.9%䠅

+6.9

7.2

䠄+29.5%䠅

+1.6

Machinery &Tool

Operating Income䠄8.7%䠅

5.5

䠄10.2%䠅

Bearings

64.5

82.0

䠄+27.0%䠅

+17.4

Hydraulic Equipment

33.6

45.0

䠄+33.7%䠅

+11.3

Net Sales

98.2

127.0

䠄+29.3%䠅

+28.7

10.7

䠄+95.4%䠅

+5.2

17.2

䠄+26.0%䠅

+3.5

1.6

䠄+26.4%䠅

+0.3

215.0

䠄+22.4%䠅

+39.3

19.5

䠄+58.0%䠅

+7.1

Components

Operating Income
Materials &Others

Increase / Decrease

FY2014
Forecasts䠄B䠅

䠄5.6%䠅

䠄9.3%䠅

1.2

䠄9.3%䠅

175.6

Total Net Sales
Total Operating Income

䠄8.4%䠅

13.6

Net Sales
Operating Income

5.4

䠄7.0%䠅

12.3

䠄9.1%䠅

14Factors for Change in Operating Income

FY2014(Billions of yen)

(Profit up 18.1 billion yen)
35

Cost reductions;+3.2(Profit down 11.0 billion yen)Price down;-2.530252015

Effect of exchange
rate; +2.8
Unity of FY;+0.5105

Raw materials
up;-3.0

Improved operating
capacity; +11.6

Effect of Sales and Outputs
reduction; -5.5

+4.8
Billion yen

19.5
12.30㻲㼅㻞㻜㻝㻟㻲㼅㻞㻜㻝㻠Plan21

To Accomplish Our Mid-term Business Plan

FY2014(Billions of yen)

Net SalesOperatingIncome㻞㻡㻞㻡㻜㻺㼑㼠㻌㻿㼍㼘㼑㼟㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㻵㼚㼏㼛㼙㼑㻝㻥㻚㻡㻞㻜㻞㻜㻜㻝㻡㻚㻡㻝㻜㻚㻜㻝㻠㻚㻢㻟㻚㻠 㻟㻚㻤㻝㻠㻣㻚㻞㻝㻞㻚㻟㻝㻜㻚㻢㻞㻝㻡㻚㻜㻝㻡㻝㻣㻡㻚㻢㻝㻜㻞㻜㻠㻚㻤㻝㻥㻟㻚㻢㻣㻚㻢㻡㻜㻝㻡㻚㻡㻝㻟㻚㻞㻝㻡㻜㻝㻜㻜㻝㻢㻚㻣㻤㻚㻞㻝㻤㻢㻚㻣㻝㻣㻢㻚㻜㻝㻜㻣㻚㻡㻝㻡㻤㻚㻤㻝㻠㻢㻚㻢㻝㻢㻢㻚㻜㻝㻣㻞㻚㻞㻝㻟㻠㻚㻤㻡

䠘Mid-term Plan 2016䠚
Net Sales䠖 ¥250 billion
Operating Income 䠖 ¥25 billion㻝㻟㻟㻚㻥㻜䕧㻟㻚㻞㻜
FY䕧㻡㻜㻝㻜㻞㻜㻟㻜㻠㻜㻡㻜㻢㻜㻣㻜㻤㻜㻥㻝㻜㻝㻝㻝㻞

㻝㻟

㻝㻠㻝㻡

㻝㻢

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These materials describe our future earnings forecasts and business plans,
and are based on the assumption of an economic environment andbusiness policies that remain fixed as they are now. Therefore, please
note that actual earnings are subject to numerous factors, including
market fluctuations and currency fluctuations, which may result in adifferent earnings forecast.