NTN Report 2022
For
For thethe fiscal
fiscal year
year ended
ended March
March 31,
31, 2022
2022

NAMERAKA is a Japanese word meaning smooth and harmonious.
Bearing technology is used to smoothen the rotating parts of any type of machine.
With more precise bearing technology, shafts can rotate more smoothly,

By exhibiting ultra-low friction, bearings enable greater energy efficiency,
helping to make electric vehicles, robots andeven a natural energy-based society function more smoothly.

The first thing that comes to mind when I hear
“NAMERAKA” is a strong commitment to support eachother with respect and acceptance.
As the Marketing Manager - Aftermarket, my roleis assisting in the development of the NTN Marketing
Strategy and executing the delivery of our UBE“The Ultimate Bearing Experience” transformation.
Acting as a liaison with sales and operations
leadership, my role is to ensure harmonization
between the Strategic Marketing, Training and
Education, Engineering,
Customer Operations, andSales Execution departments.
My favorite part is amost recent project; theimplementation and executionof our NTN Campus Virtual
Platform, with one of our largest
distributor partnerships. 100+
external employees attended
our online training platform. It
was a tremendous success, and
Kelly Lusk
er - Aftermarket
Marketing ManagI cannot wait to do it again!

This is the “raison d’être”of our Group (purpose ofbeing). This word refers to
the way in which we intend
to play a role in society
beyond our economic
activity alone. Its sensecomes from vision andChristophe Espine
ctor
meaning, in this case,Communications Dire
that of harmony and theharmonious. Contribute a notion of: “At our level in all
humility but with great determination we want to makethe world more fluid and more harmonious through thecontribution of all and of our products with their highperformance levels and their durability.”At the concrete level? Producing technologies
that will improve the world for present and future
generations by preserving our planet and providing
technological and innovative solutions, is what making
the world NAMERAKA is all about.

NTN Group Information

NTN-SNRROULEMENTS

Sustainability Management

NTN BEARING CORP.
OF CANADA LTD.

Value Creation Story

minimizing energy loss as much as possible.

About Us

Make the World “NAMERAKA”

A “NAMERAKA Society” we aim for
NTN (CHINA) Investment Corp.
(NCIC)NAMERAKA spotlights our contributions on life; bothindividually and as a group. It is about recognizing ourown gifts and using them to contribute and give backto the world; both big and small.
As the Customer Relations Manager for the
Industrial Aftermarket Business Unit, I am so pleased
to see the team express their genuine concern forour customers when communicating with them. They
convey appreciation for their business and showing
empathy when there is a problem. This kind ofgiving requires them to be cognitive, emotional andcompassionate. There is no
additional monetary value, yet
this type of giving is priceless.
They are doing their part tospread NAMERAKA throughout
the community. This to me is thetrue spirit of NAMERAKA. We
are the face of NTN, ensuring
the customer’s experience is apositive one.

One of our missions is toincrease the value of the NTN
brand by having customers
and employees share “Makethe world NAMERAKA” in
China region and linking it toactions.
In China, there is an old
saying meaning “How do
we sweep the world withoutcleaning the house?” What this Xiaofei Wang
Deputy Supervisor
saying suggests is that “If ourSales Planning Dept.
company is not NAMERAKA,Enterprise Planning
we cannot make the world
NAMERAKA as well.”While continuing to promote awareness andunderstanding of NAMERAKA among customers andemployees, I would like to work with my colleagues
smoothly in order to gain empathy. This activity
eventually makes their behavior NAMERAKA, andmaking NCIC even more NAMERAKA. I believe that
if NCIC is able to become a NAMERAKA company,
NAMERAKA will be also conveyed to customers andcreate empathy, which in turn will make the whole ofsociety NAMERAKA.

Rhonda Katsiamakis

Customer Relations Man
ager
Industrial Aftermarket
Business Unit

SASB Index

NTN Bearing Corp.
of America*NAMERAKA Society: A society where people can easily lead a secure and fulfilling life in harmony with nature.

01 NTN Report 2022

NTN Report 202202About Us
5

Founders' Spirits

We shall contribute to international society through creating
new technologies and developing new products.
CredosChallenge

Leaves growthrough the spirit ofCollaboration collaboration
with coexistence andco-prosperity

Commitment

 e maximize the quality of work aiming for first-classW
quality under safety-first policy.
We intend to be the strongest partner delivering customer
delight beyond satisfaction.
We support improving lives of people around the world
through our work.

NTN Group aims to realize a “NAMERAKA Society” through practicing its corporate
philosophy. As a company that is trusted and needed by communities including
stakeholders, we engage in business activities with an emphasis on respect of humanrights and compliance.
Employees

NTN Group respects diversity, individuality and a safe and healthy workplaceenvironment where employees can work successfully.

Customers

NTN Group seeks to maximize customer satisfaction and trust by providing
products and services of superior quality, safety and reliability.

Business
partners

NTN Group, in a fair and free environment, builds good partnerships with its
business partners and works together for mutual growth and development.

Localcommunities

NTN Group respects cultures and customs in the local communities and builds long-term
trust relationships by meeting their expectations through its business activities.

Shareholders

NTN Group focuses on return for shareholders by sustainable profitable growth andbuilds long-term trust relationships with shareholders through active communications.

Environment

NTN Group harmonizes its business activities with nature and contributes to preserve theglobal environment by providing its technologies, products and services.

1 A company where its corporate philosophy is understood by all employees

Our Vision

around the world, and where all employees think and act by themselves
2 A company that has a global presence with original new products and services

appreciated for high quality and functions

Value Creation Story

Priority Measures

73

Governance39

Business Strategies

83

Officers

45

Promotion of DX (Digital Transformation)

87

Outside Director Dialog

46

Reduce Variable Cost / Procurement
Reformation

91

Communication with Stakeholders

93

8th Stakeholder Dialog

47

Control Increase of Fixed Costs / Improve
Assets Turnover
CFO Message

Management Commitment

19

Value Creation Process

21

Materiality

23

Risks, Opportunities and Measures

Sustainability Management

27

NTN’s Capital and Strengths

53

29

Strengths and Materiality Initiatives inthe Value Chain

Toward Realization of a
“NAMERAKA Society”

56

Contribute to Carbon-Free Society

103 Global Network

DRIVE NTN100 Phase 2

59

Realize Carbon Neutrality

105 Third-Party Opinion

31

Review of Management Plan

63

Contribute to Prosperous Lives

106 Investor Information

33

Main Management Indexes

64

Environmental Protection

107 SASB Index

49

NTN Group Information
97

Consolidated Financial
Indicators (Past 11 Years)

99

Consolidated Financial
Statements

Editorial Policy

Production concept of “NTN Report 2022”

The NTN Group believes that building trusting relationships
with shareholders and investors, customers, business
partners, the international society, local communities, andemployees and contributing to the global environment
will lead to enhancement of corporate value. In order toreport our business activities and sustainability activities
to our stakeholders, we have published the “NTN Report(Integrated Report)” since the fiscal year ended March 31,
2010. We will use this report as a means of communicatingwith our stakeholders to deepen their understanding of us,
thereby contributing to the realization of a “NAMERAKA
Society.”

We started “DRIVE NTN100” Phase 2, our three-year medium-term management
plan in April 2021. In the fiscal year ended March 31, 2022, the first year of theplan, we achieved profitability for the first time in four fiscal years. This is a resultthat came after we continued to steadily implement various measures amid achallenging business environment although we sustained the impact of a shortageof semiconductors and soaring logistics costs, including steel materials.
In December 2021, we released an initial version of our roadmap for realizing
a “NAMERAKA Society.” This is an overview of our management to ensure that
our Group continues to grow as a company that contributes to society, and it
represents our activities to address ESG issues. The NTN Group will contribute tocarbon neutrality through its business and practice ESG management to realize a“NAMERAKA Society.”
This report describes these topics.

Reporting Period andOrganization Covered
Reporting Period
Fiscal year ended March 31, 2022
(April 1, 2021-March 31, 2022)
Includes some activities for the fiscal year
ending March 31, 2023

Organization Covered
NTN Group
Includes some reports about NTN only

Reference Guidelines

Disclaimer

We are enhancing disclosures with reference to the following
guidelines and others.

This report contains
outlooks and forecasts
regarding NTN’s futureplans, strategies, andbusiness results. Please
understand that actual
business results may varyfrom the forecasts madeherein by the Company.

International Integrated Reporting Council (IIRC)“International Integrated Reporting Framework”
Ministry of Economy, Trade and Industry“Guidance for Integrated Corporate Disclosure and Company-Investor
Dialogues for Collaborative Value Creation”
GRI (Global Reporting Initiative)“Sustainability Reporting Standards”
SASB (U.S. Sustainability Accounting Standards Board) Standards

Types of Information Provided by NTN
Overview

NTN Report

Details

Securities
ReportFinancial Information

03 NTN Report 2022

Prosperous Human Development

37

13

3 A company which everyone involved can be proud of the “NTN” brand

Realization of a “NAMERAKA Society”

Sustainable Supply Chain

67

SASB Index

Stance to
Stakeholders

 e accept and respect differences in each other.
WWe help each other, treating all associates honestly.
We take care of the natural environment and maintaincoexistence with local community.

Financial and Non-Financial Highlights

65

Target Areas to Invest R&D Resources

NTN Group Information

Management Policy

Flowers bloom andfruits growthrough fulfilling
our commitments

 e challenge passionately without being satisfied with theWcurrent situation.
We respond quickly to any changes, emphasizing on-siteverification.
We enrich our lives by thinking, acting with initiative andcontinuing to grow.

11

NTN’s Business Environment

35

Sustainability Management

NTN SPIRIT

Buds appear when
we challengewith frontier spirit

Guidelines

7

A History of Challenge andDevelopment
Nurtured Business

34

Value Creation Story

Corporate Philosophy

The Frontier Spirit / The Coexistence and Co-prosperity Spirit

About Us

Overview for realizing a “NAMERAKA Society”

CONTENTS

Business Report(to shareholders)

Report on Corporate Governance

Financial Report

Sustainability Activities Information(on website)
Non-financial Information

This report presents both financial and nonfinancial information, focusing on especially
important topics. More detailed information
is available in the Securities Reports andFinancial Reports. Detailed information on
the Company’s sustainability activities is alsoavailable on our website.
https://www.ntnglobal.com/en/index.html

NTN Report 202204About Us

A History of Challenge and Development

high level of technological expertise.
We will continue to contribute to international society through creating new technologies and developing new products.

1927

NTN History

1918“Frontier Spirit” and “Coexistence and Co-prosperity Spirit”
inherited since its foundation
Start of ball bearing research and manufacturing at
Nishizono Ironworks

1937

Name changes to the
Toyo Bearing Mfg. Co., Ltd.

1910

1920

1930

The Deming Prize is one of the world’s
most prestigious awards for TQM (total
quality management). NTN is not only the
first bearing manufacturer, but also thefirst Japanese machinery manufacturer
to win the award. The Company was oneof the first machinery manufacturers to
adopt statistical quality control, and thequality control was applied throughout
the Company. This effort was recognized,
resulting in this honor.

1950*Deming Prize: A prize
created by the Japanese
Union of Scientists andEngineers to honor theachievements of W.
Edwards Deming, a U.S.
engineer, statistician,professor, author, lecturer,
and management
consultant who popularized
statistical quality control inpostwar Japan and built
the foundation needed
to raise the quality ofJapanese products to world
standards.

1960

1970

Technology partnership was formed with UK
manufacturer Hardy Spicer to produce driveshafts(constant velocity joints), a promising productexpected to enjoy rapid future growth in demand forautomotive applications, and production
started at the Kuwana Plant.
First driveshaft model produced

1964

NTN supplies journal bearings for the first
0 Series Shinkansen

NTN has helped enable faster and lighter rolling stocks bydeveloping technology tailored to the evolution of high-speed
rail and providing high-quality, high-reliability products. NTN’s
products have been adopted for the first 0 Series Shinkansen
as well as the latest model Shinkansen. Our journal bearings for
0 Series Shinkansen were recognized as Tribology Heritage* by
the Japanese Society of Tribologists.
* Tribology Heritage: Tribology-related
technology and things recognized by theJapanese Society of Tribologists as having
a particularly important contribution to thedevelopment of science and technology.

05 NTN Report 2022

1970s

Evolution of hub bearings

2020

1989

Establishment of brand statement“Make the world NAMERAKA”

Name changes to
NTN Corporation

082

In line with the company namechange, we also changed themeaning of NTN to represent“For New Technology Network,”
and adopted it as a new direction
moving into the future.

We have established the brand statement tocommunicate globally our goal to realize a sustainable“NAMERAKA Society.”

Current head officebuilding

Quality

1980

1990

2000

The latter half of the 1970s saw NTN
release its axle bearings (GEN1) that were
the forerunners of our hub bearings thatnow have the world’s No.1 market share.
In the 1980s, these products evolved into
hub bearings (GEN2) by combining the axle
bearings with peripheral components suchas knuckles in a single unit. The evolution
into GEN3 was subsequently accomplishedby packaging additional parts such as hub
bolts, flanges and knuckles into a single unit
to improve ease of assembly on automobile
assembly lines. The GEN3 began massproduction in Japan for the first time in the
mid-1980s.
The lineup has continued to evolve.
Refinements are still being made today, suchas by adding sensors and improving ease of
assembly.

Construction of Japan’s firstaerospace bearing plant
NTN has been producing bearings for aerospace
applications with high function and high quality. We
are a certified supplier of main shaft bearings to
the world’s four major jet engine manufacturers, acurrently unrivaled achievement among Japanesemanufacturers.
Jet engine main shaft bearings

Technical service units
driving worldwide

At our sales bases around theworld, we visit customers bytechnical service units. Technicalservice units are completely
custom-made multifunctional vansequipped with product samples
and maintenance tools. We provide technical diagnostics and technicalworkshops as well as detailed support for resolving customer issues.
Even after our products are delivered, we use technical service units to
support enhancement in productivity and safe operation of our customers’facilities. Through direct dialog with customers, we are working to learn
the problems of “customers around the world” to resolve problems insociety.

GEN3

The H-IIA Launch Vehicle No. 26 with theAsteroid Explorer Hayabusa 2 onboard waslaunched from the Tanegashima Space Center.
Our spherical plain bearings are used in
the hinges that open the solar panels on the
Hayabusa 2 in outer space, contributing to thesuccessful completion of its mission in outerspace.

Services

Spherical plain bearing
adopted for Hayabusa 2

Jet engine
cross-section
Outer ring
Inner ring

Retainer
GEN2

2020

Provide bearings to the
Hayabusa 2 asteroid probe

Rolling elements(ball/roller)

GEN1

2010

2014

2000-

1986

Original Technologies

SASB Index

The late

Start of driveshaft manufacturing

Current head officebuilding of NTN-SNR
ROULEMENTSPlant

2018

History of Product and Services

1963

P.27

On March 1, 2018, NTN celebrated its 100th anniversary
and adopted a communication key phrase: “Make the WorldNAMERAKA, NTN.”

Germany
Mettmann Plant

NTN becomes the firstJapanese machinery
manufacturer to win the
Deming Prize*

Seeking to expand business in theEuropean market, NTN invested in
French bearing manufacturer SNR
ROULEMENTS in 2007, making
it a consolidated subsidiary thefollowing year.The addition of SNR
ROULEMENTS to the NTN Grouphas boosted our European sales,making our business development
more geographically balanced, withsales from Japan, the Americas,
Europe, and Asia and other regions
each accounting for approximately
25% of the total.

Company’s 100th anniversary

Old head office building

1954

1940

Since 1950, we have enjoyed more opportunities toexpand exports of bearings. In 1961, NTN establishedits first overseas sales company in Dusseldorf, Germany,to create a system that can respond flexibly to local
demand. In terms of production, NTN established amanufacturing subsidiary in Germany in 1971. It was thefirst Japanese manufacturer in Europe. In the same year,
we established a bearing manufacturing subsidiary in the
U.S. Subsequently, we strengthened the local production
system by establishing not only plants for finishedproducts, but also plants for the pre-production process.
Through these overseas expansions, we havepromoted the local production to manufacture products
for customers around the world in places where theyneed our products.

NTN’s Strengths(Competitive Advantages)

NTN Group Information

1900

SNR ROULEMENTS acquisition

Sustainability Management

NTN’s Founders’ Spirit, which has been valued since its
founding in 1918, consists of two elements: “Frontier Spirit”
that leads us to always take on challenges and “Coexistence
and Co-prosperity Spirit” that leads us to develop together
with society. The Founders' Spirit has been incorporated
into NTN's corporate philosophy as DNA, and it has been
inherited over 100 years.
Young engineer Jiro Nishizono started the Nishizono
Ironworks in Kuwana, Mie Prefecture in 1918 when he
Noboru Niwa
Jiro Nishizono
was 21 years old. Noboru Niwa (later the Company’s
first President) was running a machinery and tool trading
company called Tomoe Trading Co. that he had started
in Osaka at the age of 22. In 1922, Tomoe Trading Co.
successfully bid for cargo of bearings that had been loaded
in a Swedish vessel that sank off the coast of Japan. Niwa
had transactions with Nishizono Ironworks before, and asked
Nishizono Ironworks to refurbish the bearings. Niwa soldBearings at thethe bearings and bought grinders with the proceeds fromtime of the start
the sale. Thus, bearing manufacturing got fully underway.
of the business
The Company’s products have carried the NTN logo, which
stands for Niwa, Tomoe and Nishizono, since the start of the
production.

2008

Overseas sales and production
strengthening/expansion

Value Creation Story

Establishment of NTN Mfg. Co., Ltd.
with capital of 50,000 yen

1960-1970s

About Us

Since its founding, NTN has maintained the quality-first approach, and built up reputation and achievements with its

About Bearings
Bearings are eco-products that reduce energy consumption by supporting various rotating mechanical parts and reducing friction.
The coefficient of friction of a smoothly rotating bearing is 0.001. This means that you can move a 1,000kg object placed on
the ground with a force of pulling an approximately 1kg object. Use of bearings makes it possible to move things with light force,
contributing to reduction of energy consumption.
Bearings are mounted inside machinery and are usually hidden from view. But they play a key role in improving the safety andreliability of machinery, helping realize a “NAMERAKA Society.”
General-purpose bearings are composed of four types of components: inner rings, outer rings, rolling elements (balls/rollers)
and retainers. While the structure seems simple, any irregularities or cracks in the rings or rolling elements will prevent thebearings from turning smoothly. Every ball used in bearings must be manufactured with a high degree of technological expertiseand enough precision to ensure that surface roughness is less than one ten thousandth of a millimeter.

NTN Report 2022

06

About Us

Nurtured Business
About Us

Net sales

642.0

billion yen

Operating income

6.9

Aftermarket applications
billion yen

Fiscal year ended March 31, 2022

112.2 billion yen (17%)

Industrial machinery applications

126.1billion yen (20%)

Metal industry
equipment

ULTAGE
spherical roller bearings withhigh-strength cage EMA TypeULTAGE
sealed four-row tapered roller
bearings CROU..LL

Paper-making
machinery

Food processing
machinery

Cement equipment

NTN Group Information

Mining machinery

Sustainability Management403.7 billion yen (63%)

Net sales bybusiness sector

Products for MRO
As business for MRO (Maintenance, Repair and Overhaul), NTN sells bearings for repair such as mining, paper
manufacturing, steel, and food machinery. We contribute to the stable operation of our customers' facilities around theworld through a comprehensive product lineup and a prompt delivery system.
Automotive aftermarket parts
NTN offers a wide lineup of products ranging from passenger cars to heavy trucks, and handle parts kits with bearings andperipheral components as a set. Through expanding our network of distributors mainly in Europe and the U.S., NTN meetsthe needs of customers seeking high quality products in the automotive aftermarket.
Maintenance tools
We sell maintenance tools that support the mounting and dismounting of bearings, and “NTN Portable Vibroscope” thatcan easily diagnose bearing conditions simply by installing it on equipment. We also provide a reporting service in which
NTN's technical experts diagnose and analyze bearings based on the data measured by the “NTN Portable Vibroscope,”

Value Creation Story

Aftermarket applications

Automotive applications

P.39(billion yen)

Aftermarket
Net sales

Fiscal year ended March 31, 2021
Results

Fiscal year ended March 31, 2022
Results

Fiscal year ending March 31, 2023
Forecast

91.5

112.2

121.0

101.9

126.1

140.0

369.5

403.7

459.0

Total

562.8

642.0

720.0

Aftermarket

8.9(9.7%)

14.7

Operating income

Industrial machinery(Operating margin)

0.4(0.3%)

Automotive-12.4(-3.4%)

Total

-3.1

(-0.6%)

Asia and others(13.1%)

16.5(13.6%)

4.1(3.2%)

6.5(4.6%)-11.9(-2.9%)

0.0(0.0%)

6.9(1.1%)

23.0(3.2%)

Remote technical support services

NTN Portable Vibroscope

Auto parts

Technical training / maintenance tools

Part kits with combinations of several
bearings

Americas

07 NTN Report 2022

Plummer blocks

180.8 billion yen (28%)

Net sales byregion127.1billion yen (20%)

PolyLube sealed bearings forfood processing machinery

Japan

153.0 billion yen (24%)

EuropeULTAGE
spherical roller bearings
Type EA, Type EM

SASB Index

Industrial machinery
Automotive

181.2 billion yen (28%)

Induction heater

Self-centering hydraulicpuller with arms
Technical service units

NTN Report 202208About Us Nurtured Business
About Us

Industrial machinery applications

P.41

Construction
machinery

Agricultural
machinery

Gearboxes

Aerospace

P.43

NTN provides a wide range of products for automobiles as a specialist in the power/drive trainsystem, contributing to fuel efficiency and reducing CO2 emissions. In addition to core productsof hub bearings (the world’s No.1 market share), driveshafts (the world’s No.2 market share),and various bearings, NTN provides module products with high functions by combining our
products with peripheral components and fusing our core technologies to contribute to thecreation of safe, secure, and comfortable future automobiles.

Rolling stock

OthersValue Creation Story

NTN supplies a wide range of bearings for various industrial machinery such as construction machinery, agricultural
machinery, wind turbines, robots, aircrafts, railway rolling stocks, machine tools, and electronic equipment to reduce
the environmental impact. NTN contributes to the development of industry and the creation of a sustainable society byproviding products and services that meet the needs for automation and labor saving at manufacturing sites including
detection of abnormality in bearings through sensing.

Automotive applications

Driveshafts
About 45%
Hub bearings
About 35%

Composition of automotive sales
Engines

Pulley bearings
for high-speed
rotation

Sustainability Management

High-density, high-strength sintered
gears for starter motors

Auto tensioner with thevariable damper
mechanism for
ISG-equipped engine

Accessories

Mechanical clutch units for nextgeneration steering systems

Split needle roller bearings(for camshafts)Steering components

Helping ensure stable
food production

Helping ensure high robot
productivity

Used for worldwide jetengine applications

Helping ensure safety ofworldwide high-speed
railways

Needle roller bearings forrocker arms

NTN Group Information

Applications forresource mining and civilengineering

Seats
Clutches for seat
lifters

Machine tools

Electronic devices

Office equipment

RobotsBrakesSASB Index

Long-life series
TAB bearings

Ball screw drive modules
for electric hydraulic brakes

Axle/Drivetrain

Automatic /manual transmissions

i-WRIST™
Helping ensure highmachining precision

Used for hard discdrive and thin fan motor
applications

Helping ensure precision
operation of copier/multifunctional printerWind turbine

Realizing high-speed,
high-performance visualinspection and space saving

Transmissions

TRINITTE™

CVT

Needle roller and cageassembly bearings forplanetary gear

Realizing continuous andstable parts picking
ULTAGE tapered
roller bearings
for automotive
applications

Green energy products

BEAREE seal
rings

Thrust needle roller
bearings

Products corresponding to EVs

World’sNo.

1market share

Wind Doctor™
Support rotation of main shafts, gearboxes,
generators, etc.

Improve wind turbine
utilization rate throughcondition monitoring

Can be transported to the required locationand generate/supply electricity

Contribute todisaster prevention
and mitigation with
the industry’s No.1
quietness

Hub bearings
High Speed Deep Groove Ball
Bearings for EVs and HEVs

World’sNo.

2market share
Ra-sHUB

09 NTN Report 2022

sHUB

eHUB

Driveshafts

NTN Report 2022

10

Financial and Non-Financial Highlights

About Us

About Us

Financial Data

Non-financial Data

Net Sales

Operating Income/Operating Margin

6.9

billion yen

800.0

744.7 733.8

60.0

720.0
652.0

600.0

642.0
40.0

562.8

%

Operating income

39.9

3.7%

3.2%
1.2%

7.3

(Billion yen)

30.0

30.0

10.0

-0.6%

Net Income (Loss)/
Average Shareholders’ Equity (ROE)

Equity to Capital Ratio*1

0

%

(%)

(%)

(yen)

15

40

18

10

30

8.4

(23.4)

20.6

5.1
20

20.4

(26.0) (26.5)–25

2018 2019 2020 2021

(Fiscal years
2022 2023
ended/ending(Forecast) March 31)

Inventories /Inventory Turnover Ratio

214.8

billion
yen

3.0

0

2018 2019 2020 2021

400.0
3.6

19.8 37.9

194.5 182.9

3.0

40.0

176.8 214.8

200.0

30.0
20.0

billionyen

Capital expenditures
Depreciation and amortization(Billion yen)

57.7

50.0

3.6
3.2

179.7

0

15

37.6 37.5(Fiscal years
ended/ending

35.5

23.8

37.9

0
2018 2019 2020 2021

19.8

Either ‘Excellent’ or ‘Good’

51

88

%

1.0

100

1%

80

‘Needs some
improvement’72‘Needs much improvement’

68

67

64

63

60

40

40

20

20

0

2018 2019 2020 2021 2022 2023

(Fiscal years
ended/ending(Forecast) March 31)02018 2019 2020 2021 2022 2023

(Fiscal years
2022 2023
ended/ending(Forecast) March 31)(Forecast)

51

49

48

51

(Fiscal years
ended/ending(Forecast) March 31)*1 The figures in ( ) take into account a part of the subordinated bonds through public offering that is recognized as equity (50%).

0

18%

Japan

Japan
Scope 250

1.62

(1.28)

1.31

Japan Scope 1
Overseas Scope 1

22.5

168

Japan Scope 2
Overseas Scope 2(10,000 m3)

65.3

30
20

326
62.9
53.7

28.1
24.0

31.1

21.7

5.8

4.6

5.5

4.4
33.5

23.8

(Fiscal years
ended/ending(Forecast) March 31)

0

4.9
2018

4.8
2019

57.7
22.5
5.0
24.7

23.6

4.5

4.0

5.5

5.2

2022

103

ten thousand
m3

Japan

Overseas

347
134

15.4
(10,000
tons)

20

243
104

200

272
103

97.8% 97.4% 96.9% 96.9% 95.8% 97.3%
17.7

10.9

89

18.2
15.5

15

125

2023

100

(Fiscal years
ended/ending(Forecast) March 31)

0

194

213

177

154

10.9

10

168

5

181

2018 2019 2020 2021 2022 2023

(Fiscal years
ended/ending(Forecast) March 31)

095.8 %

Waste generation (Japan)
Waste generation (Overseas)
Recycling rate (Japan and Overseas)

17.7

306

281

Recycling rate

ten thousand
tons

15.4
13.1

9.0

9.3

11.3

8.0

4.8

23.5

2021

132

21.6

29.9

2020

300

55.1

Number of respondents: 113

Waste generation

Overseasten thousand
m3

70%

Waste Generation/Recycling Rate

400

72.2

40

(1.11) (1.05)

2018 2019 2020 2021 2022 2023

Overseas
Scope 224.7 5.060
1.38

Overseas
Scope 1

ten thousand tons ten thousand tons ten thousand tons ten thousand tons

1.87

‘Good’(Fiscal years
ended/ending(Forecast) March 31)

Japan
Scope 1102018 2019 2020 2021 2022 2023

‘Excellent’

11%

54

51

2018 2019 2020 2021 2022 2023

Water Consumption

5.5

times

0

(Fiscal years
ended/ending
March 31)

CO2 Emissions [Scope 1 and 2]

80

0.93

%

100

(10,000
tons)

1.16

23.0

(Forecast) March 31)

Customer Satisfaction Survey
Responses*4

Ratio of Overseas Production%(Fiscal years
ended/ending

2018 2019 2020 2021 2022 2023(%)

0(times)

2.0

0

5

10.0

11 NTN Report 2022

2018 2019 2020 2021 2022 2023

(%)

70
37.3

5

(Forecast) March 31)

60

3.0

41.0

19

16

14

5

(Forecast) March 31)

63

45.2
38.9

23
19

15

0

(Fiscal years
ended/ending

2018 2019 2020 2021 2022 2023

80

1.38(1.11)

100.0

0

25

64

63

10

67

Net D/E Ratio*1

Depreciation andAmortization

Capital Expenditures

60.0
3.8

(Fiscal years
2022 2023
ended/ending(Forecast) March 31)

billionyen

Inventories
Inventory turnover ratio(Billion yen)

200.0

62

20

Ratio of Local Procurement*3

5

64

20

23.5

23.1

65

60

0

12

Capital Expenditures /Depreciation and Amortization

Inventory Turnover
Ratio

Inventories

300.0

66

17.4

-7.1
-22.8

4.1

-11.6

yen

10
-2.9

30

40

(Fiscal years
ended/ending(Forecast) March 31)

6
0

35

%

SASB Index

4.0

5

27.4

(%)

100

20.2

20.0
17.5

2018 2019 2020 2021 2022 2023

15

30.2

(%)

80

5.0

Cash Dividends

23.1(26.0)

%

–50.0

19

%

NTN Group Information

4.0(Fiscal years
ended/ending(Forecast) March 31)2018 2019 2020 2021 2022 2023

63

Sustainability Management

-7.0
-44.0

-20.0

2.7% 2.8%

10.0
0

-3.1
(Fiscal years
ended/ending(Forecast) March 31)

3.1% 3.1%

Percentage of Hired Female
Graduates*2

15.0

6.9

0

2018 2019 2020 2021 2022 2023

10.0

7.3

%

R&D expenditures
Ratio of R&D expenditures to sales

21.0 21.7

20.0

2.7

billionyen

2.8% 3.0%

25.0

20.3

1.1%

7.5

0

17.4

billion yen(Billion yen)

20.0

Ratio of R&D
expenditures to sales

R&D expenditures

23.0

20.0

200.0

Operating margin

5.4%

27.2
400.0

1.1

billion yen(Billion yen)(Billion yen)

Operating Margin

Percentage of Employees Overseas

Value Creation Story

642.0

Operating income

R&D Expenditures
Ratio of R&D Expenditures to Sales

Profit (Loss) Attributed to
Owners of Parent

6.8

6.8

6.2

5.0

6.4

6.9

2018 2019 2020 2021 2022 2023

(Fiscal years
ended/ending(Forecast) March 31)*2 Organization covered: NTN only
*3 From NTN Report 2021, the ratio of direct materials procurement in own country (region) is calculated and presented.
*4 Survey period: From October 2020 to September 2021

NTN Report 2022

12

Value Creation Story

Management Commitment
About Us

Over the past year, the environment surrounding the
NTN Group was a very challenging one. The automotive
industry, which accounts for approximately 70% of our
net sales, saw a prolonged shortage of semiconductors
and other materials amid the coronavirus pandemic andmany of our customers had no choice but to reduce
production, which adversely affected the businessperformance of the NTN Group. In the same year,
harsh situations continued as prices of steel and othermaterials and fuel and logistics costs all surged witha rise in personnel expenses. Furthermore, Russia’s
invasion of Ukraine has heightened the uncertainty of the
global economy.

13 NTN Report 2022

SASB Index

Reviewing basic operations
to strengthen competitiveness

NTN Group Information

Eiichi Ukai

In April of last year, when I took office as President,
Executive Officer and CEO, I promised our investors andstakeholders that I would accelerate the transformationof the business structure by steadily implementing the
Medium-Term Management Plan “DRIVE NTN100”
Phase 2. I then devoted my energy to business
management over the past year, while thinking that my
mission is to strengthen the financial structure and build
a corporate structure that can respond to changes in thebusiness environment, thereby revitalizing the NTN Group
as well as to foster an executive team that will lead thefuture generation.
As the world is constantly evolving, as exemplified
by a major transformation in the automotive industry,
we have contributed to conservation of the global
environment for over 100 years by globally delivering
products that reduce friction to minimize energy
consumption to the almost limit. Because we havetechnologies, production capabilities and product qualitythat enable us to compete at high levels with competitors
across the world, we believe that the NTN Group canfurther exercise its strengths with an eye to the carbonfree era. By steadily and promptly work on each issue
we face, we will follow a path toward revitalization of the
NTN Group and move forward to further growth.
We regard the second year of the three-year
management plan “DRIVE NTN100” Phase 2 as animportant turning-point year for continuously focusing onstrengthening our financial structure and proceeding withplanting seeds for future growth. I am taking the lead forthis transformation and employees of all departments
including Development, Procurement, Manufacturing andSales will unite as one to strive to improve our businessperformance.

In this business environment, the NTN Group has
started to thoroughly strengthen its competitiveness withfirm resolve by reviewing its basic operations including“buying,” “producing” and “selling” as a manufacturer.
Regarding “buying,” we are pushing through Variable
Cost Reformation by promoting global procurement andcentralized purchasing and by strengthening category
management with these measures being the pillars of
the reformation. In addition, regarding “producing,” weare moving ahead with production reformation activities
through a full implementation of cash flow management,
and with the reorganization of production sites in Japan.
Meanwhile, regarding “selling,” we are enhancing service
initiatives, supply capacity and production systems
and organizations by taking measures with the main
focus on a shift from just selling bearings (hardware) to
expanding the lineup of products that offer added value
with sensors (software). These initiatives are being madeby employees who engage in technologies and R&D
and share the direction of such initiatives. I feel that theinitiatives have already been producing good results.
Furthermore, with regard to “selling,” we have madethe utmost efforts to reduce costs as a manufacturer
and are proceeding with price revisions to respond toincreased costs such as rising prices of raw materials
while asking customers to understand such revisions.
As for projects in which it is difficult to ensure profit, wehave changed our general sales policy that focuses ona market share, and have been implementing selection
and concentration. Through these initiatives, we havesucceeded in producing positive results in the past year.

Sustainability Management

Director
Representative Executive Officer, President
CEO (Chief Executive Officer)

Focusing on resolving
each business issue

Value Creation Story

We will accelerate our efforts for revitalization of NTN
through transformation of its business structurein the Medium-Term Management Plan.

Promoting transformation
with “SQCCD” regarded as the pillarof business management
Operational reforms including a change in the sales policy
adds a new dimension to the organization. To cope withsuch issues, I concluded that principles that should beshared across the NTN Group as a manufacturer (in otherwords, a manufacturer’s chief support) are absolutely
necessary. For this reason, I internally announced a
specific mindset (way of thinking, starting point for allideas) that serves as the pillar of business management.
The mindset is called “SQCCD.” “SQCCD” is an acronymof Safety, Quality, Compliance, Cost and Delivery.
Safety indicates business management with the highest
priority given to the safety of employees, customers andbusiness partners. QCD is commonly used but based on
my extensive experience in the quality department andoverseas businesses, I think ensuring safety is the top
priority in business management.
Quality represents our idea that we aim to further
improve not only product quality but also quality of work
NTN Report 2022

14

Value Creation Story Management Commitment
About Us

15 NTN Report 2022

The shift to EVs is a great business
opportunity for the NTN Group
Needless to say, the transition to electric vehicles (EV) isa major issue in the automotive industry. As a result of
the shift to EVs, less parts are used to assemble vehicles
and some people have informed us about their concern
regarding the negative impact of the use of less parts on the
NTN Group’s businesses. Conversely, however, we regard
the shift to EVs as a great business opportunity for us.
Approximately 80% of sales in the automotive
business come from products for drive trains including
driveshafts (CVJ) and hub bearings. Driveshafts areimportant parts that transmit motor power to tires. In
the case of EVs, power comes from a motor, not froman engine, and as the initial input torque increases,
the size of driveshafts also increases. In proportion
to the increase, the base price is expected to rise. In
addition, as a result of changing the power to motors,
more advanced technologies such as low vibration
performance are required. In this regard as well, we
think the Company, which has the second largest sharein the global market for driveshafts and has worked
on technical development, can draw on a competitive

Strengthening the framework
for expanding the aftermarket business
Regarding the aftermarket business, which is a priority
issue in “DRIVE NTN100” Phase 2, we are channelingenergy into expansion of such business. As for global
standard inventories, which are necessary for repair, wehave already secured a top-selling product lineup. This
enables us to get closer to finishing up development ofa system that globally supplies products in response tosudden demand from customers. Going forward, we willfurther accumulate inventories and, at the same time,
work to strengthen the management of inventory assets
in an initiative to reduce work-in-process inventories
through production reforms, which are concurrently
moving forward. In doing so, we will enhance ourcompetitiveness.
In addition, regarding the aftermarket business,
we will fuse an idea of DX (digital transformation) withbearings, which serve as the foundation of businesses of
the NTN Group.
When looking out at the world, it is no exaggeration
to say that all moving machines contain bearings.

SASB Index

We share a common direction
and implement our plan.

P.56 Contribute to Carbon-Free Society:
Save energy for EVs and electrification

Furthermore, although there are various data concerning
the surroundings of rotating bearings, such data have notbeen utilized so far. I believe these data are resources.
For example, attaching a sensor to bearings makes it
possible to accurately monitor the status of a machine.
Industrial machinery is not allowed to stop even for a
moment and therefore machinery deterioration statusneeds to be accurately ascertained according to its
operating time. In this regard, we believe “talking
bearings”, which are under development by us, canmeet customer needs for things such as planned
maintenance. Regarding condition monitoring for which
efforts have started to be made in the fields of windturbines, etc., in addition to our condition monitoring
systems (CMS) that have already been commercialized
and launched into the market, other interesting products(such as bearings that have a built-in sensor and do notneed an external power source) have been created inhouse one after another. Since these products constitutea promising field, we will broaden their application areasin the future.
Going forward, collecting big data from a wide range
of industrial machinery will make it possible to predict
when equipment used in a specific line of a specificfactory of a specific customer at a specific frequency willneed to be repaired. Customers will be able to perform
planned maintenance accurately and the Company canestimate an appropriate level of inventories, which willlead to a pull manufacturing system. We believe this will
give us a major advantage in the aftermarket business.

NTN Group Information

With regard to earnings results for FY2021, although theautomotive business, which accounts for approximately

P.49 CFO Message

advantage. Actually, we have received many inquiries
from customers in Europe and the Americas and our
driveshafts are used in many EVs. Thus, the driveshafts
have major potential from the medium-term perspective.
On the other hand, regarding hub bearings, low
price campaigns by our competitors in China, South
Korea, etc. are a threat to us and it has become difficult
to secure profit by offering products with the existing
performance and quality. However, the Company iscapable of supplying high value-added hub bearings
by taking advantage of technologies cultivated indevelopment of in-wheel motors. Currently, we areproceeding with collaboration with Japanese automotive
manufacturers in order to launch our new products suchas eHUB and sHUB into the market.
In regard to bearings for engines and transmissions,
our supply volume is not large, so the impact of theshift to EVs on our business for such bearings is
considered to be limited. We actually believe the change
from engines to motors will be a business opportunity
and we have already started to focus on marketing
activities in-house. Especially in terms of developmentof technologies to support higher speeds of motors,
the Company is ahead of other companies and we areconfident that we can meet new needs associated withthe shift to EVs. Through the above-mentioned activities,
we will establish a robust competitive advantage with aneye to the next generation and aim to drive growth in theautomotive business.

Sustainability Management

Accelerating transformation
into a business with a structurethat can secure profit

70% of our net sales, had a hard time with market
confusion, the industry machinery business and theaftermarket business were on a recovery trend. As a result,net sales, operating income and profit attributed to ownersof parent for the full fiscal year under review amounted
to 642.0 billion yen, 6.9 billion yen and 7.3 billion yen,respectively. We will expand the aftermarket business aswell as further strengthen to reduce variable costs throughVariable Cost Reformation and reduce fixed costs throughproduction reforms as a manufacturer and leads to ourrevitalizaton. After advancing above measures, we willcontinue to steadily implement passing on costs arisingfrom a surge in resource prices to selling price, reducing
or withdrawing from unprofitable businesses, and others
in order to improve the operating margin. Holding theview that these reforms of the business structure will
make it possible to lower the break-even point, we willtransform into a business with a structure that generates
profit even if the sales volume declines due to negative
market factors.
We develop business globally with strengths on
original technologies, quality and services, but someof our global competitors enjoy more than 10%
operating margin. The NTN Group has an objective tocreate corporate value, and we will improve that point
during “DRIVE NTN100” Phase 2 and thereby ensurerevitalization of the NTN Group and establish a new
growth platform.

Value Creation Storyand personnel based on the belief that “a company is its
people”. Compliance means, needless to say, compliancewith laws and regulations. In addition, we will thoroughly
promote management through ESG activities. We regard
Cost as the source of corporate competitiveness and havetaken measures to ensure cost awareness. As for the final
element, Delivery, we will work more diligently than everto ensure that work deadlines and due dates for deliveryof products to customers are met based on the idea thattime is a resource.
In the last year, as part of the Bad News First
measure, I have requested each site to make a prompt
report on SQCCD. Additionally, at the beginning of aweekly Executive Officers’ meeting held at the head
office, information on SQCCD is shared and responsive
measures are discussed there and then so that themeasures can be implemented promptly. Moreover, sincelast year, the President’s policy including SQCCD has
been communicated to managers and other employees
in order to ensure the entire Group is aware of it.
Approximately 24,000 people in the Group share ideas
and a common direction, and I hope that it will serve as
the driving force for the steady implementation of “DRIVE
NTN100” Phase 2.

P.57 Contribute to Carbon-Free Society:
Increase efficiency of manufacturing equipment

Promoting the ESG managementwith a road map
to realize a “NAMERAKA Society”
The NTN Group has been promoting the ESG
management with the aim of achieving medium- tolong-term sustainable growth. Last year, we createda road map for realizing a “NAMERAKA Society.” To
NTN Report 2022

16

Value Creation Story Management Commitment
About Us

P.53 Roadmap for realizing a “NAMERAKA Society”

We promote the ESG
management based on aroad map.

P.75 Strengthen governance
P.72 Message from the Executive Officer
in Charge of Human Resources

17 NTN Report 2022

SASB Index

P.59 Realize Carbon Neutrality

Not only efforts related to the environment but also
strengthening the human resource base is essential forsustainable growth.
As mentioned at the beginning of this document,
revitalization of NTN and fostering an executive teamthat will lead the future generation are listed as missions
under the President’s policy. The Company made atransition to a Company with a Nominating Committee,
etc. in 2019 and I became the first President nominatedby the committee. What is important here is to build asystem that fosters my successor and then a successor
to that successor. Last year, we held a group training
session for Operating Officers in which Outside Directors
also participated. In addition, regarding managers, “NTN
Next Leader Program (NNLP),” a program for fostering
candidates for directors and executives has been started.
I think it is important for promising personnel to takecharge of a demanding workplace, thereby gaining
experience. I often say as a joke, “Don’t just gather
chestnuts from a fire, use them to make candied
chestnuts!” What I mean by this is that experiencing
various workplaces and sometimes getting into the thickof it will improve the qualities of individual employees andthis will eventually lead to development of future directors
and executives. Based on this viewpoint, going forward,
we will strengthen on-site education and training, which
is more than just words on paper.

By first implementing the Medium-Term Management
Plan steadily and thereby increasing the operating
margin, we need to pave the way for improvement ofcorporate value and resumption of dividends as soon as
possible.
Currently, the Company is earnestly working on thecreation of new businesses in parallel with revitalization of
its core businesses. Such new businesses include budsof businesses utilizing our fundamental technologies toenable us to contribute to the resolution of social issues.
The NTN Group will press onward with pride with its 100
years of contribution to the global environment throughenergy consumption reduction technologies. We aredetermined to achieve the challenging goal of revitalizing
NTN and we kindly ask for your continued support.

NTN Group Information

With regard to the environment segment in particular,considering that the fact that products offered by us
make a significant contribution to carbon neutrality needs
to be shared once again across the Group, last year,
I took measures to make it known by our personnel
that our products and further improvement of related
technologies will lead to enhancing corporate values
through realization of a carbon-free society.
In terms of business, not only continuous creationof products that enable the minimization of energy loss
but also reduction of CO2 emissions generated during
the manufacture of products is an important issue. As a
specific target, we will endeavor for zero emissions by
2035 in relation to Scope 1 and 2. Regarding heating
for forging, heat treatment and other processes that
consume a large amount of energy, we have alreadystarted to convert from fossil fuel to electricity as well
as examine the possibilities of utilization of hydrogenand ammonia. In addition to this, efforts will be madeto adopt the highest level of thermal insulation materials
for heating furnaces. Moreover, as for Scope 3, our goal
as of now is to implement such measures by 2050 incooperation with suppliers.
In addition, economic value is expected to be createdby introducing a new process in the course of aiming
for carbon neutrality. For example, in the process ofheat treatment, improvement of processing stability
and quality can be expected for vacuum furnaces that
do not use atmospheric gas and consume less energy,
and expansion of the induction heating method basedon use of electricity is expected to improve economic
performance through high heat efficiency. With sucheconomic value in mind, we will explore the possibilitiesof new technology.

on those past results, we will accelerate our efforts
by clarifying points that need to be strengthened.
Furthermore, in 2015 the Company signed the United
Nations Global Compact which aims to build aframework for the international community to realize
sustainable growth. The Company advocates ten
principles in four areas including human rights, labour,
environment and anti-corruption. Going forward, we willcontinue to promote activities to put the ten principlesof the United Nations Global Compact into practice andachieve SDGs.

Sustainability Management

Furthermore, starting this fiscal year, ESG-related
items must be set in relation to business execution by
Executive Officers, and a new corporate award system“NTN PROUD AWARD” that commends employees who
conducted ESG activities has been introduced. Throughthese activities, we will accelerate the ESG management
across the NTN Group.

What I am painfully aware of after experiencing work
globally is that we need to work together as a team. Even
with an excellent leader, if the team doesn’t function,
results cannot be produced. A path to success can beseen only when the leader of a team wins the confidenceof all the other team members and all the members shareideas, advancing toward a challenging goal. We will takemeasures to cultivate such corporate culture.
Also, in terms of management, I would like to placea focus on the concept of public interest capitalism,
also known as human capital management. Corporate
activities are promoted by the power of each and every
employee and “a company is its people.” In recent years,
DX has accelerated and AI and other technologies havegained popularity. Under these circumstances, mobilityof personnel has increased, making it increasingly
necessary to invest in human resources. To make theCompany appealing to its employees, we will strengthen
cost competitiveness by taking measures such as
consistent cost reduction and earn an appropriate levelof profit, thereby investing in human resources. The
Company will generate additional profits in the future by
remunerating daily efforts of employees and continue togrow with its stakeholders.
Our efforts to realize a “NAMERAKA Society”
contribute to attainment of sustainable development
goals (SDGs) adopted by the United Nations. Of SDGs,
17 development goals share many common interests
with efforts made by the Company in its history. Based

Value Creation Story

resolve various issues related to ESGs, backcasting froma desirable future needs to be performed to determine
in a detailed manner what target must be achieved andwhen. To identify a specific future that is expected as anextension of the current business activities of the NTNGroup, perspectives of forecasting and backcasting havebeen forged. In doing so, we determined initiatives that
we should work on.

P.75 Strengthen governance
P.70 Prosperous Human Development:
Human resource development

NTN Report 2022

18

Value Creation Story

Value Creation Process
About Us
Value Creation StoryNTN Group has identified materiality responding to SDGs in order to contribute to solving social issues. Taking
advantage of management capital developed over more than 100 years and the unique features of NTN, we conductbusiness activities based on our corporate philosophy through the value chain.
By providing products such as bearings and driveshafts as well as technical services, and creating environmental
and social value, we aim to realize a “NAMERAKA Society” where people can easily lead a secure and fulfilling life inharmony with nature. We will continue to promote ESG management to achieve sustainable growth and contribute tosolving social issues.

Contribute to solving social issues

NTN’s Business Model
P.21

Contribute to society
through creation of originaltechnologies

Form management systems /corporate organization
which are essential for NTN, as a global company(Reduce negative impacts)

Aftermarket
Business(Strengthen positive impacts)

Resource recycling
and pollution
prevention

Human resource
development

Response toparadigm shift

Promote diversity

Procurement activities
with an emphasis on theenvironment and society

Thorough compliance

Respect forhuman rights

Strengthen governanceHigh performance
products for
EV/electrification

We shall contribute tointernational society throughcreating new technologies anddeveloping new products.

NTN SPIRIT

NTN’s Strengths

Challenge /Collaboration /Commitment

P.27

Contribute topopularization of thenext generation mobility

No.1 in Japan interms of the numberof wind turbines
monitored

Contribute tospread ofwind turbines

New products utilizing
original technologies(i-WRISTTM,
microscopic coating
device, green energy
products)

Contribute to disasterprevention/mitigation
Provide safety/
security in the eventof disaster

23,38363%

Manufacturing Manufacturing bases 70 bases in 14 countries
Ratio of overseas production
51%
Capital
Number of patents

Original
TechnologiesnMo

Qualityoz

Performance Target(Target for Fiscal YearEnding March 31, 2024)

Intellectual for which reward was paid
129
Capital
9 bases in 4 countries
R&D bases
Social andsatisfaction survey 113 companies
Relationship Customer
Excellent + Good88%
CapitalNaturalCapitalEnergy consumption 6,623 TJ/year
Water consumption 2,715 thousand mContribute to progressof labor saving anddevelopment ofregenerative medicine

uk

es

l

Number of employees (consolidated)
Percentage of overseas employees

Sa

Human
CapitaluriShareholders’ equity
197.9 billion yen
Financial Interest-bearing debt
394.0 billion yen
Capital Cash and cash equivalents 121.5 billion yen

Contribute to CO2
reduction fromenvironmentcontributing products
1,398 thousand
tons/year

SASB Index

Globalizationof the business

World No.2
Driveshafts

Corporate
Philosophy

Management Capital

Make the world
NAMERAKA

Hub bearings

Pro
cu

&D

Response toenvironmental issues
Changes indemographics

World No.1

Value Chainten

Provide safety and comfort

S to B-eco 55.9%

m
re

P.23

New
Businesses

P.29

Improve the reliability of
products and services(Quality assurance, stable supply)

Automotive
Business

NTN Group Information

Realize a sustainable society
using natural energy

Promote safety
and health

Environmentcontributing
products

Realization of a NAMERAKA Society

Risks and
Opportunities
Surrounding NTN

Respond toclimate change

R

Reduce energy loss

Industrial
MachineryBusiness

Outcome

OutputP.39

Sustainability Management

Materiality

Business Activities

Net sales

Services

700.0 billion yen or more

Corporate Governance
P.73

3

Operating income

yen or more
42.0 billion(6% or more)

FCF

27.0 billion yen or more

Strengthen management capital

19 NTN Report 2022

NTN Report 2022

20

Value Creation Story

Materiality

Identification process

Materiality

STEP 3

Evaluation and analysis of materiality candidates

Evaluate the 99 items extracted in STEP 1 on a three-point scale from theperspectives of “expectations from society” and “relevance to our business.”
Regard items with high evaluations as materiality proposals and organize theminto “positive impact” and “negative impact.”

STEP 2High

Materiality proposals
Organize into two categories below inrelation to social issues

Low

Items that strengthen positive impacts
Relevance to our businessCollect suggestions and opinions fromacademics and experts in the field of CSR /sustainability, as well as Outside Directors
regarding ideas about materiality identificationand ESG strategies that should be focused on.

Validity assessment in overseas
affiliated companies
STEP 4

STEP 5

Conduct a questionnaire survey targeting thepresidents of our overseas affiliated companies
and confirm that all overseas affiliatedcompanies agree with the materiality proposals.

Identify materiality

The Board of Directors resolved 13 items ofmateriality.

Items that reduce negative impacts
High

KPIs and targets for the fiscal year ending March 31, 2023

Related SDGs

Detail page

Development related to low friction, miniaturization and weight reduction of products for automobiles and industrial machinery
Completion of development themes
Development related to module products for EVs and electrification Completion of development themes

P.56

Realize a sustainable society using natural energy

Development related to products and services that contribute to the stable operation of wind turbines

P.58

Provide safety and comfort

Development related to robot-related modules Completion of development themes
Raise awareness of independent power supply units and implement proposal activities for disaster mitigation and disaster prevention

Completion of development themes

Sustainability Management

Reduce energy loss
Environment

SocialDialog with academics and experts

Value Creation Story

Contribute to society through creation of original technologies (Strengthen positive impacts)

STEP 1

Expectations
from society

In March 2015, we signed the United Nations Global Compact, which is a global framework for theinternational community to achieve sustainable growth, and we are aiming to realize the SDGs. In
December 2020, we identified 13 items of materiality that our group should prioritize toward therealization of the SDGs. The materiality is linked to the two perspectives of “Contribute to society
through creation of original technologies” and “Form management systems / corporate organization
which are essential for NTN, as a global company” set forth in our corporate philosophy. The former isto meet the expectations of society through our products and services, and the latter is the foundation
to support ESG management. In the fiscal year ended March 31, 2022, we established measures and
KPIs for each materiality and are working to achieve these goals. These initiatives have been reported
to the Board of Directors based on consideration by the Sustainability Committee, which is organizedacross departments.

Extract social issues with reference to the GRI Standard, which is an internationalframework in the field of sustainability.
Extract items that are candidates for materiality based on the direction of
structural changes that have a major impact on the economy / environment /society and the company's efforts.

About Us

Extraction of materiality candidates

P.63

Materiality

KPIs and targets for the fiscal year ending March 31, 2023

Detail page

Reduce CO2 emissions in business activities (Scope 1 and 2) 50% reduction by the fiscal year 2030 (compared to the fiscal year 2018)
Reduce CO2 emissions in business activities (Scope 1 and 2) Achieve carbon neutrality by the fiscal year 2035
Reduce CO2 emissions in business activities (Scope 3) Achieve carbon neutrality by the fiscal year 2050

P.59

Resource recycling and pollution prevention

Water consumption intensity 4.30 m3/million yen (Japan) 3.14 m3/million yen (Overseas)
Waste generation intensity 164 kg/million yen (Japan) 279.4 kg/million yen (Overseas)
Recycling rate 97.9% (Japan) 96.9% (Overseas)

P.64

Improve the reliability of products and services(Quality assurance, stable supply)

Maintain high level of customer satisfaction More than 90% of responses for “Excellent” and “Good”
Maintain 100% certification for quality management systems (ISO9001/IATF16949)*Applies to domestic and overseas consolidated manufacturing subsidiaries (excluding bases that have not started mass production).
Number of participants in specialized quality education courses 100 or more
Progress in restructuring the domestic core systems[1] Sales and logistics, financial accounting, human resources and salaries, and technology areas Introduction completed as of the
fiscal year ended March 31, 2022
[2] Production area Introducing by site (completed at all sites in March 2024)

P.65

Procurement activities with an emphasis on environment and society

Conduct CSR questionnaires for suppliers continuously and maintain and improve achievement level of results

P.66

Respect for human rights

Analyze and evaluate the results of questionnaires of overseas affiliates
Survey on the situation of foreign workers working in Japan (Monitoring)

P.67

Promote safety and healthOperate occupational safety and health management system continuously
6 domestic manufacturing affiliates have acquired GSC certification (as of March 2022, 2 companies have acquired certification)
Maintain “White 500” certification for Health and Productivity Management Organization (Large enterprise category)
Achievement of the annual plan of the Risk Survey targeting manufacturing sites 100%

P.69

Human resource development

Number of participants in “NTN Next Leader Program” 50
Holding of “NTN PROUD AWARD,” as ESG Corporate Award

Promote diversity

Ratio of female managers 9% for NTN (target for the fiscal year ending March 31, 2024)
Ratio of male childcare leave acquisition 30% (target for December 2024)

P.71

Thorough compliance

Annual number of Compliance Committee meetings held 2
Helpline recognition level in survey of compliance awareness 85% or more

P.81

Strengthen governance

Assessment of effectiveness of the Board of Directors and improvement

P.75

SASB Index

Respond to climate change
Environment

SocialRelated SDGs

NTN Group Information

Form management systems / corporate organization which are essential for NTN, as a global company (Reduce negative impacts)

P.70、72

Governance

21 NTN Report 2022

NTN Report 2022

22

Value Creation Story

Risks, Opportunities and Measures
About UsNTN Group views the global trend of carbon neutrality (environmental impact reduction and decarbonization), the accelerating
electrification to achieve the carbon neutral goal, and a business environment facing labor shortages and human rights issues
from the perspectives of “Response to paradigm shift,” “Response to environmental issues,” “Changes in demographics,”
and “Globalization of the business.” We will contribute to solving social issues while continually growing through our businessactivities by implementing countermeasures in line with the materiality of anticipated risks and opportunities.
Opportunities for the Company
Using driveshafts' patented technologies to propose products that aresmaller and lighter
Growing demand for high performance products for EVs
A possibility of growth in demand for parts replacement as car sharing
increases the operating rate of vehicles

Globalization of thebusiness

Electrification ofindustrial machinery

Reduced use of bearings due to electrification of internal combustion and hydraulic equipment

Demand for high performance products such as higher efficiency products
Increasing demand for high value-added products such as bearings with built-in sensors

Spread of AI and IoT

Difficulty in securing digital talent, for which demand is increasing
Rationalization of distributor network
Securing of aftermarket demand using industrial IoT Platforms (PFs) (missed demand opportunities outside
PFs)

Advances in equipment-related manpower saving
Rising demand for bearings with sensors
Growing demand for analysis and analytical technologies

Spread ofinfectious diseases(COVID-19)

Decrease in scale of sales due to economic
stagnation
Crisis of business continuity
Damage to employees’ health and safety

Shutdown of business activities due to the spread of
infectious diseases within the workplace
Disconnection of supply chain

Growing demand for manpower-saving technologies
Utilizing microscopic coating technologies for drug discovery

Reduction in CO2emissions

Rising procurement and energy costs
Decline in product needs due to the declining
usage of general-purpose machinery
Requirements for carbon neutrality in business activities

Suspension of dealing with customers anddeterioration of corporate image in the event of
failure to respond to the demands of society

Requests for energysaving machinery

Decrease in the number of parts where bearings are used due to changes in the energy transmission type andstructure of machines
Establishment of a new mechanical structure that does not require bearings

Increasing demand for energy-saving products
Responding to new needs

Reduction inenvironmental impact

Decrease in corporate image/ESG rating when environmental impact cannot be reduced
Cost increase due to incurrence of costs by suppliers and limitation on suppliers that can meet environmental
standards

Development of new customers through compliance with advanced
environmental and customers’ standards
Increasing demand for high-quality, long operating life products

Response tonatural disasters

Shutdown due to a disaster
Spillage of oil, chemical substances, etc. caused by natural disasters
Disconnection of supply chain

Increasing demand for emergency power source
Expansion of partnerships

Medium- to longterm labor shortage

Impact of a human-dependent production system on stability of operations

Accelerating labor saving and automation of production lines

Growth of emerging
countries

Entry of emerging manufacturers
Soaring procurement prices due to the entry of competitors
Shortage of limited materials and resources

Expansion of sales opportunities due to increasing demand
Increasing demand for new driveshafts due to transition to front-wheel drive (FF) vehicles
Increasing demand for high performance products that meet environmental regulations

Issue of businesssuccession

Suppliers and sales distributor going out of businessStart of business with new suppliers

Trade friction andtariffs

Sluggish global demand
Disconnection of supply chain caused bydependence on one country (China risk, etc.)

Prevention of childlabor (human rights)

Stopping the supply of parts
Suspension of dealing with customers and deterioration of corporate image in the event of failure to respondto human rights issues

Improvement of corporate image through active response to human rights issues

Response toconflict minerals

Deterioration of quality
Suspension of dealing with customers and deterioration of corporate image in the event of failure to respondto conflict minerals issues

Improvement of corporate image through active response

Rise of low-cost
products

Intensified price competition due to aggressive
sales by emerging manufacturers

Downward pressure on profits due to higher tariff
costs
Rapid exchange-rate fluctuations

Loss of sales opportunities
Loss of brand value due to lower prices

Increasing demand for wind turbines, including offshore ones
Increasing demand for railways
Increasing demand for green energy products

Development of new fields
Introduction of smart factories in the company

Increasing needs for improvement of fuel efficiency (electricity consumption
efficiency)
Expansion of next-generation mobility (EVs, hydrogen-related)

Promotion of environment-friendly business activities
Pursuit of circular economy

SASB Index

Changes indemographics

Expansion of sales channels due to entry of new EV manufacturers
Expanding sales opportunities for driveshafts and hub bearings that support
not only gasoline-powered vehicles and HEVs but also axle/drivetrain of EVs
Increase in ASP (average sales price) due to size-up of driveshafts
corresponding to the motor's output characteristics

NTN Group Information

Response toenvironmental issues

Spread of nextgeneration mobility

Decrease in the total number of bearings used per unit
Demand for higher performance products such as lighter weight products
Reorganization of the automotive industry

Sustainability Management

Response to paradigm shift

23 NTN Report 2022

Risks for the Company

Value Creation Story

NTN’s Business Environment

Expanding opportunities to supply products and services utilizing global networks

Growing demand for high performance, highly functional products due to lower quality of products on the market
Demonstrating competitive advantage through differentiation of products and services
NTN Report 2022

24

Materiality

Value Creation Story Risks, Opportunities and Measures(Reduce negative impacts)

1

Reduce energy loss

4

Respond to climate change

2

Realize a sustainable society using
natural energy

5

Resource recycling andpollution prevention

3

Provide safety and comfort

6

Improve the reliability of
products and services (Quality
assurance, stable supply)

7

Procurement activities
with an emphasis on theenvironment and society

8

Respect for human rights

9

Promote safety
and health

10 Human resource development
11 Promote diversity
12 Thorough compliance
13 Strengthen governance

Strengthen development of products for electrification and high value-added products
Provide next-generation mobility modules for industrial machinerySpread of AI and IoT

Provide service solutions through CMS technology,etc.
Develop service-oriented businesses that lead to
product sales and transform into new businessformats

Spread ofinfectious diseases(COVID-19)

Life science-related R&D centered on microscopic coating technology
Provide robot-related modules such as i-WRISTTM in response to labor-saving issues
Promote the work style reform

Promote development of environment-contributing
products
Promote use of energy-saving production
equipment
Use renewable energy

Develop hydrogen-related products
Promote production reform and reorganization aimed at improving productivity
Strengthen the automotive aftermarket business

1

3

6

1
E-commerce based on the new IT core system
Realization of smart factories, including a new plant in Wakayama
Strengthen external collaboration

Develop lighter-weight, higher efficiency driveshafts and low friction hub bearings
Provide next-generation mobility modules
Develop hydrogen-related products

Globalization of thebusiness

3

3

9

10

1

2

4

5

6

7

2

3

9

3

6

9

10 11

12

Provide compact, lightweight and low-torque products
Product development utilizing original technologies

Reduction inenvironmental impact

Selection of business partners that can comply with green procurement and CSR procurement standards
Reduce environmental impact in manufacturing processes (conserve water, increase the recycling rate, reduce
the use of hazardous materials, etc.)

Response tonatural disasters

Formulation of BCPs and BCP drills at the NTN Group
Provide independent power supply utilizing renewable energy-based power generation and storage
technologies

Medium- to longterm labor shortage

Provide robot-related modules such as i-WRISTTM in response to labor-saving issues
Realize smart factories, including a new plant in Wakayama
Promote and maximize the diversity of employees

Promoting production reform and reorganization
Promote the work style reform

Growth of emerging
countries

Stable supply of basic products

Global production supporting optimal supply

Realize the best mix of global and local procurement

6

Issue of businesssuccession

Support business continuity through dialog with
suppliers

Develop new business partners

Reorganize suppliers and shorten supply chain6

Trade friction andtariffs

Realize the best mix of global and local procurement through variable cost reformation

Prevention of childlabor (human rights)

Promote human rights due diligence
Globalization of compliance

Response toconflict minerals

Promote human rights due diligence
Implement CSR questionnaire surveys of suppliers

1

Implement various training programs in compliancewith laws and regulations in each region

Promote development of service-oriented
businesses
Active outsourcing of general-purpose products

Develop and provide long operating life products
Strict control of environmentally hazardous substances
contained in products

Expand bearing refurbish business and MRO business

SASB Index

Changes indemographics

2

Requests for energysaving machinery

Expand product lineup and inventory
Develop markets for the aftermarket business

2

NTN Group Information

Response toenvironmental issues

Increase sales of large bearings and CMSs forwind turbines
Increase sales for rolling stock
Expand sales of green energy products

Strengthen CAE analysis technology
Develop “talking bearings” (= use of sensors forbearings)
Provide robot-related modules such as i-WRISTTM in
response to labor-saving issues

Related Materiality

Sustainability Management

Electrification ofindustrial machinery

Value Creation Story

Response to paradigm shift

Provide lighter-weight, higher efficiency driveshafts and low friction hub bearings
Provide next-generation mobility modules for EVs
Concentrate production of high performance products for EVs (a new plant in Wakayama)

Rise of low-cost
products

25 NTN Report 2022

(Strengthen positive impacts)

Main Measures

Spread of nextgeneration mobility

Reduction in CO2emissions

Form management systems /corporate organization
which are essential for NTN, as a global company

About Us

NTN’s Business Environment

Contribute to society through creation oforiginal technologies

7

6
Start business with new suppliers
Acquire new human resources

6

7

8

Respond to conflict minerals surveys conducted by customers
Stable supply of adapted products

6

7

8

Integrated sales strategy in aftermarket and industrial machinery businesses
Differentiation by services

6
NTN Report 2022

26

Value Creation Story

NTN’s Capital and Strengths
About Us

By investing management capital developed over more than 100 years, NTN has strengthened original technologies,
quality and services that lead to future growth. NTN develops the strengths to each business and conducts businessactivities that meet the needs globally.

Invested CapitalThree Strengths of NTN

Future Direction

Aftermarket business

R&D bases: 9 bases in
4 countries
Global structure supporting
high technologicalcapabilities

Originaltechnologies

Develop and provide products and the Multi Track Magnetic
Ring equipped with a high resolution rotational sensor developed
based on NTN-SNR's ASB® (Active Sensor Bearing), a global
standard technology
Develop monitoring services for large wind turbines by CMSs
(Condition Monitoring System). Capture the top market sharein Japan by providing enhanced support, as the number of
installed units exceeds 200

Quality

Human resource development programs to pass on know-how,such as the Global QC Circle Convention, NTN Technical Skills
Competition, and TQM Convention
Encourage employee to engage in ESG activities through the“NTN PROUD AWARD”

Capital expenditures:
19.8 billion yen
Manufacturing process to maintainand improve quality
Customer satisfaction survey: 113
companies, Excellent + Good: 88%
Number of visits with technicalservice units: 143 (+16 from theprevious year)
Number of aftermarket web
seminars: 239 in the fiscal year
ended March 31, 2022

Provide products and services to customers from approximately
200 bases in 34 countries around the world
Respond to market needs in various locations with R&D system
in four regions

Problem-solving customer responsiveness
Services

27 NTN Report 2022

Human
CapitalManufacturing
CapitalIntellectual
CapitalNo.1 domestic aftermarket share with the largest domestic
distributor network
Provide remote technical support services globally
Contribute to solving all customer issues through detailed
responses(From products to service-oriented (solutions))

Social and
Relationship CapitalIndustrial machinery business

P.41

Response to climate change
Introduction of renewable energy is expanding to achieve carbon neutrality
and realize a decarbonized society.
NTN has a strong position in large bearings for main shafts of windturbines, and has the largest market share for wind turbine's condition
monitoring systems (CMS) in Japan. We also sell green energy productsthat utilize our proprietary blade technologies. We expect these products togrow along with the future growth of the market.

Responding to Robotization
Stable supply of highperformance products
Spread sophisticated quality
control practices using IoT/
AI to manufacturing divisions,
including suppliers

At manufacturing sites, there is a growing demand for manpower savingsand further efficiency improvements due to labor shortages.
NTN is contributing to labor saving and automation through the useof high value-added products such as bearings with built-in sensors andMulti Track Magnetic Ring in addition to Wrist Joint Module “i-WRISTTM” thatapplies CVJ-technology. We expect sales of related products to expand inline with the growing demand for robotization.

Strengthen the development of
human resources who “think
and act by themselves” toachieve workplace goals
The corporate philosophy isunderstood by all employees
around the world

Automotive business

Global network

SG&A expenses:
99.1 billion yen
SG&A expenses
to support highly
satisfactory services
Financial
CapitalQuality of human resources and work

In the aftermarket for all types of machinery, the need for maintenanceservices and solution businesses not for a single bearing but for the entire
facility is expanding, thanks to the popularization of AI and IoT.
NTN has achieved the top aftermarket share in Japan through its
leading distributor network and services, and has expanded its overseas
network. In the future, we will expand our services by utilizing our expertisein sensing technology, etc. as well as digital technologies, thereby further
capturing demand.

Expand sales in the Middle East
and Africa

Provide advanced preventive
maintenance services byusing big data
Expand remote technicalsupport services and on-line
technical workshops for
end-users

SASB Index

High reliability demonstrated by the long-standing track record ofdeveloping the first quality control system that won the Deming
Prize in the Japanese machinery industry and supplying it for lifesupporting applications such as the Shinkansen and aerospace
Acquired world-class market share for axle/drivetrain productsthat support safe driving of automobiles

Manufacturing bases:
70 in 14 countries•The Global QC Circle Convention
held for the first time on web in thefiscal year ended March 31, 2022
•The TQM Convention held byconnecting to each site remotely inthe fiscal year ended March 31, 2022

Production bases:
70 in 14 countries
In addition to manufacturing
globally, FIRST, a system
for immediate delivery ofgeneral-purpose products, isin operation

Respond to new market needsof CASE such as autonomous
driving and sharing
Develop and upgrade AI
algorithm to predict residual life
Develop “talking bearings” withbuilt-in sensors in the bearing toissue an alert for abnormalities

Product quality

Number of employees (consolidated):
23,383

Energy consumption: 6,623TJ/year
Promotion of CO2 emissions
reduction and renewable energy
introduction

Sensing technology

Expanding services through hardware and software

NTN Group Information

R&D expenditures:
17.4 billion yen
Ratio of R&D expenditures tosales: 2.9%
(Average for the last five years)
Investment in R&D forsustainable growthDifferentiation throughadvances of cultivatedtechnology, including low
friction and diversification offunctions of hub bearings,
which have the No.1 global
market share
Develop hydrogen-related
and other products toachieve carbon neutrality

Sustainability Management

Our strengths in manufacturing technologies include heat
treatment, precision machining, and precision measurement,
which are indispensable for the manufacture of bearings, and wepursue tribology technologies through R&D of bearings
Not only rolling bearings, but also a wide range of materials suchas resins, sintered metals, and magnetic materials, as well as
advanced technologies such as fluidic dynamic pressure type
technology for the development of units and module products
consisting of sliding bearings, and electrical and machine parts,
and we market them as composite material products

P.39

Value Creation Story

Tribology technologies
Number of patents forwhich reward was paid: 129
Enhancing correspondence
education and training
systems for technologicalhuman resource
development

Development of Strengths in Each Business

P.43

Responding to the shift to EVs
In the automotive market, as response to the environment is required, fuelefficiency and CO2 emission regulations have been strengthened in various
countries, and the government-driven adoption of EVs and electrification has
been accelerating.
NTN boasts the world's No.1 market share for hub bearings, which
support tire rotations, and the world's No.2 market share for driveshafts,
which pass the rotations of engines and motors to tires. NTN has its strength
in strong technological capabilities andoverwhelming market share for axle/
Composition ofdrivetrain products.
automotive sales
Driveshafts and hub bearings are
our mainstay products, which accountfor approximately 80% of our net sales
for automotive applications, and are
Othersessential not only for ICEV (internal
combustion vehicles), but also for HEVs
Driveshafts
About 45%and EVs. Demand is expected to continue
expanding in the future. We will ensure
Hub bearings
About 35%superiority in the marketplace by pursuingeven lighter weight, higher efficiency,
and lower friction, and by providing highperformance products.

NaturalCapitalNTN Report 2022

28

Value Creation Story

Materiality

Strengths and Materiality Initiatives in the Value Chain

Form management systems /corporate organization
which are essential for NTN, as a global company(Strengthen positive impacts)(Reduce negative impacts)

1

Reduce energy loss

4

Respond to climate change

2

Realize a sustainable society using
natural energy

5

Resource recycling andpollution prevention

3

Provide safety and comfort

6

Improve the reliability of
products and services (Quality
assurance, stable supply)

7

Procurement activities
with an emphasis on theenvironment and society

8

Respect for human rights

9

Promote safety
and health

About UsNTN Group is promoting initiatives in line with materiality for responding to SDGs by leveraging our strengths ineach process of R&D, procurement, Monozukuri and sales. As we carry out our business activities based on our
corporate philosophy of “We shall contribute to international society by creating new technologies and developing new
products,” we create value in the value chain, leading to sustainable growth.

Contribute to society through creation oforiginal technologies

10 Human resource development
11 Promote diversity
12 Thorough compliance
13 Strengthen governanceValue Creation Story

Lead to new R&D themes
Sales

We are building a technological foundation forsustainable growth and a foundation for business
transformation through an enhancement of the value ofexisting products by cultivating and deepening our coretechnologies and development of products in new areas,
recognizing changes in the business environment.
In the automotive field, we are developing productsthat contribute to electrification and autonomous
driving, and have developed and marketed “high-speed
deep groove ball bearings for EVs and HEVs,” which
are designed for high-speed rotation of motors due todownsizing of electric drive unit products. We are also
working on the market development of the “Ra-sHUB,”
which independently controls the left and right steering
angles of the rear wheels, which is expected to improvevehicle stability and reduce tire running resistance.
In the industrial machinery field, the wind power
generation business is expanding as the use ofrenewable energy advances, and the adoption of ourbearings for wind turbine main shafts is increasing.
Furthermore, by utilizing our bearing condition
monitoring service business using “Wind DoctorTM”
and our partners’ maintenance technologies to repair
and inspect wind turbines, we start a one-stop service
to provide everything from condition monitoring tomaintenance for wind turbines.
As a business in the new area, we will contribute toimprovements in reliability of automobiles and industrial
machinery in hydrogen society by developing “hydrogen
embrittlement resistant bearings” that have long
operating life under conditions where rolling bearings
may fail at early stage.

In Japan as well, procurement from overseas business
partners is advancing and global transactions are
expanding.
In accordance with our Procurement Policy
established in response to the various targets of SDGs,
we will pursue international and open procurement byworking to promote local procurement and optimal
local procurement from a global perspective. We will
aim for stable procurement that is responsive to market
fluctuations while focusing on competitive quality andprice as well as certainty in delivery times. In addition, bycomplying with laws, regulations and ethical standards
and conducting fair and impartial business transactions,
we will not only ensure the confidence of our customers
and society in us, but also improve the competitivenessof our business partners, thereby continuing “sustainablegrowth” together with our business partners.
We will contribute to the creation of a sustainable
society and environment by promoting Green Procurementin which we procure from business partners, who comply
with environment laws and implement measures toconserve the environment, with consideration given to the
reduction of environmental burdens.
We will deepen our mutual understanding withpartners through business, and strive for Coexistence
and Co-prosperity based on a relationship of trust.

As a production reform, we are promoting streamlining
to optimize the entire process, including logistics,
and are working to improve throughput by reducing
inventory and shortening lead time. Our manufacturing
sites are promoting the changes to smart factories,
efficiently collecting all kinds of information within thefactory and analyzing the information to improve thespeed of improvement. We are also promoting lowcarbon manufacturing to achieve carbon neutrality,
which will lead to increased corporate value and profit
generation.
In addition, to maintain and improve quality, “Builtin Quality” is essential to incorporate quality into the
production process, from the development stage
through the manufacturing process to the delivery of
products to customers, by building conditions andsystems that ensure that quality is maintained at all
times. In order to ensure stable quality at all times, weare strengthening design reviews at each step andrisk analysis when changes occur, which are likely tocause quality problems, to build quality throughout
the company. We are promoting the establishment of
global quality assurance system, such as incorporating
remote audits when start-up of production at overseas
business sites to improve processes and provide
quality guidance to local employees.

In response to the rapid adoption of EV in theautomotive market and the growing need forelectrification in the industrial machinery market, we aredeveloping consulting-type sales activities by providing
high-value-added products that apply IoT technologies
to encourage customers to develop new products,
and services and solutions that monitor the conditionof bearings on wind turbines. In addition, for existingmodels that are currently under mass production, weare striving to respond closely to the ever-changing
global situation in order to ensure a stable global
supply. For the aftermarket, we are working to improvecustomer satisfaction not only by selling products,
but also by providing technical services such as
demonstrations and study sessions on how to handle
bearings. In the fiscal year ended March 31, 2022, we
held over 200 remote technical seminars in Japan andoverseas amid the ongoing pandemic.
Amid the dramatic changes in customer needs
resulting from the paradigm shift in the external
environment, we will strive to improve the NTN
brand and further improve customer satisfaction bycontributing to the realization of a sustainable society
represented by carbon neutrality, as well as enhancing
the functionality and added value of products.

Results

Number of cases ofpatent publication

Press release
related to our researchand technology

Localprocurement ratio

CSR questionnaire tosuppliers

241cases

20cases67%

partners
620 business

Efforts in accordance with materiality

9

Promote health management
Prevent occupational
accidents

Create a safe andsecure workplace

1

Save energy for EVs and electrification
Increase efficiency of manufacturing
equipment,

2

Contribute to the spread of wind turbines use withhardware and software
Contribute to the arrival of a hydrogen society

3

Contribute to automation and labor saving in the
manufacturing industry by providing robot-related
modules
Contribute to disaster prevention and mitigationby providing independent power supply

29 NTN Report 2022

10

4

Promote the work style reform
Create a workplace to enhance employee engagement

Reduce CO2 emissions from procured components
and materials
Scope3

Ratio of overseas
production

51%

4

Promote employment of
persons with disabilities

Reducing CO2 emissions in manufacturing
Scope1

Number of visits Number of online Customer satisfaction survey
with technical technology seminars
Ratio of “Excellent”
service units
heldand “Good”

100%

Promote female advancement
Promote senior employee
advancement

11

Quality management system
certifications at
consolidated subsidiaries

Scope1

12

143 239

88%

13

Strengthen governanceThorough compliance1

Expand the bearing recycling business5

Use sustainable resources
Manage and reduce environmentallyhazardous substances

4

7

Promote green procurement
Advance CSR procurement

6

Build the Quality Assurance System
Create a foundation for stable supply
Utilize digital technologies for stable supply

6

Build the Quality Assurance System
Create a foundation for stable supply
Utilize digital technologies for stable supply

8

Response to risks related to human rights in the
supply chain

8

Response to risks related to employees’human rightssupply

12

Thorough compliance

13

Strengthen governance

6

Build the Quality Assurance System
Create a foundation for stable supply
Utilize digital technologies for stable supply

SASB Index

Monozukuri

NTN Group Information

Procurement

Sustainability Management

Strengths that create value

R&D

Reduce CO2 emissions in logistics activities
Scope3NTN Report 2022

30

Value Creation Story

Review of Management Plan

DRIVE NTN100 Phase 2

About Us

In 2018, when we celebrated our 100th anniversary, we launched the Medium-term Management Plan “DRIVE
NTN100” to drive forward transformation of the business structure for the new 100 years. For the three years from thefiscal year ending March 2022 to the fiscal year ending March 2024, we are working on various measures as initiatives
for the Medium-term Management Plan “DRIVE NTN100” Phase 2.

April 2011
April
to 2011
Marchto2013
March 2013

Revival
Revival2014 2014

NTN100
NTN100April 2013
April
to 2013
Marchto2015
March 2015

DRIVE
DRIVE
NTN100
NTN100April 2015
April
to 2015
Marchto2018
March 2018

From April
From
2018
April 2018

Net Sales*Net Sales*
OperatingOperating
Margin Margin(Billion yen)(Billion yen)

800.0

800.0

701.9 701.9

744.7 744.7

717.0 717.0

683.6 683.6

639.0 639.0

400.0

600.0 543.5

543.5

539.6 539.6

0

Net sales growth rate
GDP growth rate ineach region+ something extra

6

6Operating margin

4

4

2

2

0

0

6.0

5.4

5.3

or more10% or more
Total asset turnover
1.0 or more

3.7
1.3

2012

2012

ending March 31, 2028

642.0 642.0
562.8 562.8

5.2

2013

2013

Basic policy
Acceleration of globalization by“On local sites with local materials
by local personnel”

2014

2014

2015

2015

Basic policy
Reform business structure to
generate profit

Expand business globally with a focus
on growth markets
Establish world’s No.1 businesssegments
Establish new business segments suchas EV systems
Expand sales for Industrial machinery,
Aftermarket & Distributor
Expand sales in growth market
Expand local production andprocurement

Review
The Great East Japan Earthquake
in March 2011 and Greece’s fiscal
collapse that came to light in 2010
led to the European financial crisis
following the further downgrade of
the Greek credit rating in July 2011.
In addition, the impact of the floodingin Thailand on the automotive
industry from the end of October
2011 led to a turnaround in businessperformance. As a result, we had nochoice but to change direction.

Emergency measures

2016

2016

Centralization of management resources

Structural reform

2018

Foundation building for Our Vision
Implement main policies based on 3 Basic Policies tobecome a co-creative partner company for customers
ASE
A
n Ch
gio
ina N, etc.
Re Eu
Ame rope
Japa ricas
n
Produ

ct

age

Busin
strat essegyBusineMan

age

Philo ss founbusinsophy, dation
ess p policy,
roces
s

Man

age

Man

th

Grow

bility

ta
Profi

n

datio

Foun

Concentrate resources(personnel, materials and cash)
on priority areas

2019

2019

2020

2020

Strengthen management andfinancial foundation

2022

years ended/ending(Fiscal years ended/ending
March 31) March 31)
2024 (Fiscal
2024

2022

Basic Strategy

Drive Forward Transformationof Business Structure for the
New 100 Years
DRIVE NTN Transformation
for New 100

Reform business structure from“volume” to “value” to generate
profitDigitalization(latest digital technology)

Resources(Management resources that NTN has developed)

Innovation (development of innovative technologies, products and services)
Variable cost reformation (procurement reformation)
Efficiency improvement(achievement of the world’s No.1 productivity and quality/improvement of asset efficiency)

Business Operating Policies

NTN’s Revitalization
Phase 2Phase 1

Phase 3

Crisis Response Period
Growth

1. Develop Businesses in New Areas
2. Expand Aftermarket BusinessProfitability

3. Structural Reform of the Driveshaft
Business
4. “Monozukuri” with Next-generation
Technology

Foundation

5. Strengthen the Management
Foundation
6. Strengthen the Financial
Foundation

Expansion of new product and new businessMainthemes

Review
We were able to achieve numericaltargets, exceeding the plan, but thebenefits from exchange-rates werealso substantial, and with regard to
the basic policy of “Reform businessstructure to generate profit,” issues
remained unaddressed. We also
recognized the need to create new
businesses in order to sustainably
grow into the next 100 years.

2018

Basic policy

Mid-term business structural reform

Toward future growth

2017

Basic policy

Short-term measure to generate profit

Centralization of resources to priority
fields2017-0.6
2021 2021

Foreign exchangesensitivity
50% reduction

SASB Index

Priority measures
Priority measures

1.1

1.2

Business

08

NTN in the fiscal year
700.0 or700.0
more or more

Crisis Response
Crisis Response
Period Period

Review
We took measures for transformation to cope with the majorchanges in the external environment, the strengthening ofbasic technologies and products, and the development of
new business areas. Through these initiatives, we recognizedthat the next challenge is to “drive forward transformation ofbusiness structure for the new 100 years.”(2021)

Improve profitability andinvestment efficiency of existingproducts and businesses

Ensure the health and safety of
employees

Improve profitability andinvestment efficiency of existingproducts and businesses

Materialize new businessby creating products andbusinesses

Secure cash and continue
business

Select new business and review
the allocation of management
resources

Establish management system
to facilitate reform of businessstructure

Prepare for future growth

Strengthen corporate governance(Rebuild management foundation)

Build newbusinesses andcore business area

CreateGrow
Harvest* “Loyalty,” which was previously included in “non-operating income,” has been changed to be included in “net sales” from the fiscal year ended March 31, 2021.
The period for retroactive adjustment is after the fiscal year ended March 31, 2017, which is subjected to audit by an audit firm.

31 NTN Report 2022

NTN Group Information

200.0

(%)

8

733.8 733.8

652.0 652.0

3.8
200.0

Phase 3Phase 3
From AprilFrom
2024April 2024 (%)

6.7

6.2

400.0

Phase 2Phase 2
April 2021April
to March
2021 to2024
March 2024

Sustainability Management

600.0

Phase 1Phase 1
April 2018April
to March2018 to2021
March 2021

Value Creation Story

GlobalGlobalAdvance
Advance2013 2013

NTN Report 2022

32

Value Creation Story

DRIVE NTN100 Phase 2

Main Management Indexes

Value Creation Story

DRIVE NTN100 Phase 2

NTN’s Business Environment
About Us

NTN’s Business Environment

Net Sales and Operating Income Targets

Net sales

700.0 billion yen or more

Target annual sales growth of 3% (over 3 years) based on net sales of 652.0 billion yen
in the year ended March 31, 2020

Japan

Market shrink due to thedepopulation(decreasing birthrate and aging
population)
Promoting response to climatechangeMaterialization of Society 5.0

Save labor andreorganize production
Use external
resources
R&D of electrificationand new products

Americas

Moderate population andeconomic growth
Policy shift by the new president
Economic policy shift to respondto climate change
U.S. and China struggling forhegemony
Medium- to long-term decline incrude oil priceStrengthen products
for large vehicles
Expand aftermarket
business
Promote local
procurement

EuropeTrend of population declining
Economic policy for climatechange (European Green Deal)
Significant strengthening of
regulations for fuel efficiency and
CO2
Uncertainty due to Brexit

Focus on products
for EV
Expand aftermarket
business
Develop Middle East /Africa market

ChinaWorld’s No.1 population(decreasing birthrate and aging
population over the long-term)
Economic policy for climatechange and next-generation
technology (Made in China 2025)
Social infrastructure investment
in inland areas
Significant strengthening of
regulations for fuel efficiency and
CO2

Expand volume
Focus on products
for EV
Focus on windturbines and rollingstocksStrengthen CMS
business

Asia

Increase of population and middleincome group
Social infrastructure investment
Progress of digitization in emerging
countries

Expand volume
Utilize LCC products
to strengthen costcompetitiveness
Expand aftermarket
business

Spread of nextgeneration mobility
Electrification ofindustrial machinerySpread of AI and IoT
Spread of infectious
diseases (COVID-19)

Phase 12019

2020

Phase 2
2021

2022

2024
(Target)

45.2

57.7

23.8

19.8

60.0 or less(3 years total)

Ner cashu flow

(billion yen)

-22.4

-18.1

18.5

11.5

27.0 or more

3.8

3.6

3.2

3.0

4.1

Inventory Turnover
Ratio(Times)Equity to
Capital Ratio
Net D/E Ratio(Times)

20.6%

20.4%
(23.4%)

23.1%(26.0%)

20% or more
(23% or more)

1.2

1.9

1.6
(1.3)

1.4
(1.1)

1.5 or less(1.2 or less)

3.3%

1.0%

-0.4%

0.8%

5.0%

USD

¥110.9¥108.7¥106.0¥112.3¥103.0Euro¥128.4¥120.8¥123.7¥130.5¥125.0Exchange Rate Data

*1 Dividend: We aim to resume dividends from the interim dividend in the second year of Phase 2 (FY2022).
*2 The figures in ( ) take into account a part of the subordinated bonds through public offering that is recognized as equity (50%).

33 NTN Report 2022

Medium- to longterm labor shortage
Growth of emerging
countries
Issue of businesssuccession

Globalization of thebusiness

Return on Invested
Capital (ROIC)

27.4%

Reduction inenvironmental
impactResponse to natural
disasters

SASB Index(billion yen)

Changes indemographics

Capital Expenditures

Requests for energysaving machinery

NTN Group Information

Response toenvironmental issues

Other Management Indexes (Fiscal years ended /ending March 31)

Reduction in CO2emissionsSustainability Management

42.0

billion yen or more
Operating income(operating margin of 6.0% or more)

DRIVE NTN100

Value Creation Story

Response toparadigm shift

Fiscal year ending March 31, 2024 (final year of Phase 2)

NTN’s Main Strategies

Trade friction andtariffs
Prevention of childlabor (human rights)
Response to conflictminerals
Rise of low-cost
products

NTN Report 2022

34

Value Creation Story

DRIVE NTN100 Phase 2

Target Areas to Invest R&D Resources

Data acquisition module• FFT analysis• Various types of signal
processing including
envelope processing

NTN / User
• Vibration and trend
graph display• Waveform analysis anddisplayi-WRISTTM
IWS series

Ra-sHUB

Renewable energy-related

DLC Coating Spherical
Roller Bearing

N3 N-CUBE
used as eco toilet

Hydrogen-related

Hydrogen is drawing attention as a next-generation energy source, and many peripheraldevices are being studied and developed. In addition to fuel cell vehicles (FCVs), we arepromoting development of products used in infrastructure facilities such as hydrogencompression pumps. Mechanical parts used in hydrogen-related equipment are often used
under special environments such as hydrogen exposure and high pressure, and higher
reliability and durability are required.
We have developed a hydrogen embrittlement resistant bearing that has three times
longer operating life than our standard bearings against the failure of bearings at an earlystage caused by hydrogen by adopting a new steel material in which a large number of hardand fine metal compounds are dispersed on the surface of the bearing raceway and a newly
developed special heat treatment technology.
In addition, we aim to apply this technology to various infrastructure facilities required forthe social implementation of hydrogen.

6
High Speed Deep Groove Ball
Bearings for EVs and HEVs

Pursuit of safety and comfort

SASB Index

35 NTN Report 2022

Carbon neutrality(Environmental impact
reduction anddecarbonization)

Regarding core products, main shaft bearings for wind turbines are becoming larger
as wind turbines become larger. To meet the needs for stable operation of these windturbines, we are developing asymmetrical spherical roller bearings for large wind turbines,
aiming to improve their operating life under actual load distribution. In addition, as acountermeasure against wear caused by differential sliding unique to spherical roller
bearings, DLC (diamond like carbon) coating with excellent wear resistance is formed on
the roller surface to enhance bearing reliability.
We have developed and are selling N3 N-CUBE, which provides mobile power in theevent of a natural disaster. In addition, we have developed and are selling N3 N-CUBE,
which is equipped with a flush toilet and treatment tank, to be installed in parks andfacilities short of a commercial power supply. We will contribute to the realization of a lowcarbon society by marketing these green energy products.

5

Next-generation mobility module

Responding to the automation of automobiles and realizing carbon neutrality are urgent tasks,
and further energy saving and high functionality are required.
We have developed “High Speed Deep Groove Ball Bearings for EVs and HEVs” that arecompatible with high-speed rotation of motors for downsized electric drive units. We haveachieved a dmn value of 1.8 million, an indicator that expresses the rotational performance ofbearings, and the products have already been used in the market. We have also developed
Ra-sHUB, which controls the steering angles of the left and right rear wheels separately. By
controlling the steering angle of the left and right rear wheels separately according to thesteering angle of the front wheel and running information, the cornering performance andhigh-speed straight driving stability of the vehicle can be improved. At low speeds, the vehicle
is able to have a small turning circle since the minimum turning radius can be reduced and therunning resistance of the tires is restrained, contributing to energy savings in future automatic
driving.
Going forward, we will leverage our core competencies to incorporate next-generation
technologies and further collaborate with market technologies to develop products that are
adapted to a carbon neutral society.

4

Strategic direction for R&D

NTN Group Information

Wind turbine• Vibration sensor• Rotation sensor

i-WRISTTM for appearance inspection

3

Utilize core competence
and cooperation withexternal organizations

Sustainability Management

We market the i-WRIST , a wrist joint module for robots that applies the joint of driveshafts,
one of our core products. The i-WRISTTM is small, space-saving, and works the same way as
a human wrist, also allowing high-speed movements. Until now, i-WRISTTM has been installedwith cameras and dispensers and used in automated appearance inspection devices as well
as automated coating devices for grease and adhesives. The ability of robots to perform tasks
done by humans has resulted in stabilized appearance quality and shortened cycle time, which
has been well received.
In the future, in addition to the introduction of i-WRISTTM series, we will propose small
modular products compatible with next-generation robots and contribute to the further
promotion of automation at production sites.
TM

ESG
Profit creation
Pursue high productivity
and quality
Improve efficiency inasset management

into 6 target areas

We shall contribute to international society through creating
new technologies and developing new products

Service/solution

Robot-related module

Management basesthat support our businesses

2

Developbusinesses
in new areas

Corporate philosophy

Masaki Egami

In the wind power generation field, we will leverage the technology of a maintenance company
specializing in wind power generation to extend from condition monitoring services aroundbearings using Wind DoctorTM to maintenance services. We contribute to the stable operationof wind power generation equipment by providing a one-stop service from facility condition
monitoring to maintenance. In addition, we have developed a bearing diagnostic applicationcompatible with EdgecrossTM, an industrial IoT platform. This software collects data fromsensors installed near the bearing to diagnose bearing abnormalities, and is expected to be
used for predictive maintenance in all industries.
In the future, we will make further progress in AI analysis technology to enable prediction of
the operating life of bearings.

2

Pursue competitive
advantages(overother suppliers)

SustainablegrowthInput of R&D resources

Value Creation Story

1

Strengthen coretechnologies andproducts“DRIVE NTN100” Phase 2

About Us

1

With the goal of contributing to the realization of a carbon neutral society,
the Group is promoting R&D based on the two pillars: pursuing (evolving) the
performance and functions of its rolling bearings, hub bearings, driveshafts, andother basic products as well as developing (exploring) core technologies that havebeen cultivated into new areas.
While actively utilizing external collaboration with NTN Next Generation Research
Alliance Laboratory in Osaka University and other organizations, we will accelerate
our contribution to the international society by developing new products and services
for the following six fields in which we can leverage our core technologies, as
outlined in our medium-term management plan “DRIVE NTN100” Phase 2.

Executive Officer CTO (Chief Technology Officer)

Our vision toward a new 100 years
10 year targets

Hydrogenembrittlement resistantradial bearing

Hydrogen embrittlement resistant thrust bearing

Life science-related

We are applying the technology of repair equipment to repair
minute defects in liquid crystal panels and color filters todevelop microscopic coating application equipment that canlaminate high-viscosity fluids. As a part of these activities, weare developing the drug discovery support cell chip whichfeatures three-dimensional coating of human iPS-derived cellson the plate.
There is a possibility that it will be a substitute for animal
experimentation using mice, etc., and the next-generation drug
discovery is expected to become highly efficient.

Development of threedimensional cell chipDevelopment of
test kit

Microscopic coating
applicator

NTN Report 2022

36

Value Creation Story

DRIVE NTN100 Phase 2

Industrial Machinery Market

Priority Measures

Select target areas
Improve selling price and reduce or withdraw from unprofitable areas
Reduce costs by procuring materials and parts from optimal locations(actively utilize materials from China and India)

We categorize NTN’s main businesses into a “Creation sector,” “Growth sector,” and “Harvest sector” and concentrate
management resources on these sectors. As to business portfolio, we focus on expansion of aftermarket business.
Automotive business

Creation
sectorLife sciences (drug discovery andregenerative medicine)
Hydrogen energy market
Expand market for wrist joint robots
Condition Monitoring (CMS)

Expand sales in the Middle East andAfricaDevelop “Talking bearing” and“Thinking bearing”

Products adapting to electrification
eHUB, sHUB
Electric brake

GrowthsectorGreen energy products
Robot / gearbox
Wind turbines (ultra-large size bearing)
Machine tools (European market)
Rolling stock (Chinese market)

From product sales business toservice-oriented business
Strengthen MRO
Bearing refurbishment business
Failure detection

Products adapting to electrification
Electric module products
Existing products fitting EV
Low friction, higher efficiency

Improve profitability by enhancing costcompetitivenessConstruction machinery (electrificationand high-performance products)
Agricultural machinery (sales expansionof CVJ for industrial machinery)
Aerospace

Secure saleable inventory
Highly competitive products(BU, etc.)
Use of overseas production andexternal procurement

Focus on the vehicle segment where
NTN’s strengths can be utilized
Optimize customers portfolio
Secure volume in growth markets

Expand businesses
Concentrate resources

Harvestsector

Secure stable profit

2020

Aftermarket businessIndustrial machinery business
Automotive business

17%
20%
63%

Fiscal year
endingMarch 31, 2031

Aftermarket businessIndustrial machinery business
Automotive business

Creation
sector

40%

HarvestsectorAftermarket

P.39

Expand overseas business
Develop new applications andderivatives

Service /solution business (CMS)

Establish maintenance service for wind turbine
bearings and overseas expansion

Gain bearing demand by leveraging
CMS technology

GearboxDevelop RV gearbox bearing
Expand sales of elastic bearings for wave motion gears

Expand sales in China(Follow changes in the industry)

Wind turbine

Focus on capturing demand in China
Drive sales and profit increase

Improve profitability by capturing
aftermarket demand
Expand production capacity

Machine tools

Expand sales of machine tools in China and India
Utilize products manufactured in a plant in Germany to sellthem on the European market

Expand CMS needs due to spread of
IoT
Expand sales of bearings with sensors

Rolling stock

Promote drastic cost reduction measures including
local production in China

Capture demand for railway network
expansion and subway in China

Construction machinery

Utilize competitive materials and components
Adapt to electrification, shift to high function products

Agricultural machinery

Expand sales of high value-added products
Expand sales of CVJ for industrial machinery

Follow changes in social structure andinfrastructure
Make sure to capture demand forelectrification

Aerospace

Withdraw from or reduce unprofitable projects
Improve profitability by concentrating productionin NTN-SNR (France)

Automotive Market

2021-2023
Rebuild revenue baseUse of NTN Portable Vibroscope(In addition to sales of devices, analysis report business)
Strengthen technical support functions in overseas sales
companies (ASEAN and India regions)Technical service units activities and technical seminars for distributors
Further strengthen measures against counterfeit bearings

Strengthen theability to supply

Strengthen
structure andorganization

37 NTN Report 2022

Maintain available stock for aftermarket
Prioritize production capacity for aftermarket (use of new IT core system)
Expand use of overseas manufacturing sites and external procurement
Expand sales in growing industries through integrated response from OEM to aftermarket

2 Optimize portfolio to support

Promote variable cost reduction through procurement reformation
Reduce manufacturing fixed cost by reforming Monozukuri and improving
productivity
Reduce fixed cost by utilizing RPAs and improving the organizational
structure and systems
Thorough selling price management, reduction and withdrawal from
unprofitable areas (regions and products)

Develop high performance and high value-added
products responding to the environment, EVs, andelectrification
Expand sales of electrification products
Order winning activities aimed at portfolio optimizationand concentrated investment in focus segments

Driveshafts (CVJ)
Commercialize the condition monitoring ofcustomers’ equipment by utilizing sensor
technology and IoT and grasp the demand forbearing aftermarket
Develop and expand
technical service throughthe use of remote support
cameras
Accelerate “Made by NTN” by actively utilizing
products manufactured overseas

Axle / hub bearings

Bearings

Strengthen the network system with distributors
and expand e-commerce

Improve profitability by short-term concentration through task force activities for key market

Relocate automotive aftermarket's headquartersfunctions to Europe

Strengthen sales structure in the Middle East and Africa (A sales company
established in UAE in January 2021)

Expand sales in potential markets such as China
through the use of resources in Europe

sustainable growth2021-2023

Promote earning improvement NOT relying on the merit of scale

From products to services

Basic products

Strengthen
service response

Expand bearing refurbish business

1 Strengthen the profit structure

2020

2024-

Increasing the brand value
Strengthen
product-and-service
business

P.43

Initiatives to be focused on during the three-year period (From the fiscal year ended March 31, 2022 to the fiscal year ending March 31, 2024)

One of the issues we face in expanding our aftermarket business is our low brand awareness abroad. To improve brand value, weneed to enhance our competitiveness in aftermarket business from a variety of perspectives, including the promotion of businessdevelopment in the service-oriented business, such as bearing refurbish services, remote technical support services, reinforcement oftechnical support such as on-line seminars, reinforcement of supplying capabilities by securing available stock for aftermarket, andreinforcement of our system and organization to focus on priority industries through integrated actions from OEM to aftermarket. Overthe next three years, we will focus on these measures.
2020

Earn profits in MRO market
Expand sales for space industry

New areas (Electrification)

SASB Index

Strengthen e-commerce
Promote business development in theservice-oriented business

Growth strategy to respond to market change

Gain large customers
Promote acquisition of overseas certified standard

Initiatives to be focused on during the three-year period (From the fiscal year ended March 31, 2022 to the fiscal year ending March 31, 2024)
By sharing sales strategies across different types of businesses,
concentrate resources on important industries
Strengthen organizational structure to improve supply capacity, service
response, and profitability

VS FY2020

Robot-related business(i-WRISTTM)

60%“DRIVE NTN100” Phase 2 strategy

2024-

NTN Group Information

Fiscal year
ended
March 31, 2022

2021-2023
Rebuild the revenue base

GrowthsectorReduce fixed cost and expand supply capacity by outsourcing manufacturing (breaking away from self-sufficiency) of standard
products such as ball bearings
Businesscomposition
ratio

We will reorganize our business into the following 3 fields and restructure our business and product portfolios by throwing
management resources in a concentrated manner.
“Create sector”: Establish new business areas for Wrist Joint Module “i-WRISTTM”, servicing solutions (CMSs) and hydrogen-energy“Grow sector”: Focus on wind turbines and rolling stock in response to decarbonization trend to expand business and throw
management resources in a concentrated manner“Harvest sector”: Secure stable earnings from sales of products for construction machinery and agricultural machinery by adding
more value and strengthen cost-competitivenessSustainability Management

Aftermarket business

Expand sales of Wrist Joint Module“i-WRISTTM”
Expand service / solution business (CMS)
Expand renewable energy-related products

Value Creation Story

Industrial machinery business

About Us

Initiatives to be focused on during the three-year period (From the fiscal year ended March 31, 2022 to the fiscal year ending March 31, 2024)

Rebuild Business Portfolio and Product Portfolio

Establish new areas for
future growth

P.41

2024Strategy for sustainable growth

Deepen production reforms (streamlining) under way in Japan
Horizontal expansion of production reforms to global manufacturing
bases
Concentrated investment in high-performance products and automation

Shift to large-sized SUV/PUP and EVs
Secure volume in growth markets

Carefully select capital investments that are directly linked todifferentiation and competitivenessDevote energy into enhancing cost-competitiveness with a focus on
variable cost
Develop differentiated products complying with regulations for EVs, fuelefficiency and CO2

Develop differentiated high valueadded products
Realign portfolio based on customers
and vehicle segments

Strengthen sales activities especially for high-performance applications
Focus on enhancing production capacity and cost competitivenessespecially in Japan and China
Promote use of external partners on production of standard typeproducts

Invest resources in high performance
bearings through the selection

Increase production of gearboxes for electric hydraulic brakes
Promote cost reduction (Shorten assembly CT / Promote production in
China / Use Chinese materials)
Develop new products for integrated electrical modules

Advantage Small, lightweight, highefficiency, low vibration

Advantage Super low friction

Advantage Super high speed, ultralow friction
Expand sales of electric oil pumps
Commercialize eHUB/ sHUB
Commercialize electric brakes

Estimated
effects of EV/
electrification

No effects,
stable growthNo effects,
stable growth

Flat sales,
Toward highperformance
products

Increase volume
Grow together

NTN Report 2022

38

Value Creation Story

DRIVE NTN100 Phase 2

Business Strategies
Percentage of total sales

Executive Officer

112.2 billion yen

Global supply chain tightening and soaring costs due tothe COVID-19 and Ukraine situations, etc.
Strong brand power of European and U.S. competitors inoverseas aftermarket
Commoditization of general-purpose bearings, rise of LCC
products, borderless market, sophistication of imitation
products
Increase in the role customers expect of bearing
manufacturers (providing services as well as products)

Domestic and overseas distributor networks and strong
long-term collaboration with major distributors
Wide lineup of productsTechnical capabilities and knowledge accumulated
through our extensive experience in delivering products to
OEMs
Provision of detailed technical services

Our Vision
Transformation to a profitable company through bearings and services
systems, in the repair of equipment such as paper andsteel, it is sometimes required for bearing suppliers toprovide services and maintenance for all equipment,
including peripheral parts. We also provide condition
monitoring using NTN Portable Vibroscope, remotetechnical support services, and repair and refurbishmentservices for bearings. In addition, we aim to improve

12.8%

116.7

118.8

11.6%

13.6%

13.1%
9.7%

150.0

45.0
112.2

109.4
91.5

100.0

50.0

0

121.0

15.0

2018

brand power and increase sales and profitability in theaftermarket business by leveraging our accumulated
know-how such as measuring the operating data of
industrial machinery and facilities using a newly developed“talking bearing TM” with built-in sensors and generators toprovide services that meet customer needs.

15.2

2019

12.7

2020

30.0
14.7

16.5

2022

2023

8.9

2021

15.0

0

(Fiscal year ended/(Forecast) ending March 31)

Transformation to a
profitable company
through bearings andservices

Hardwareand software
business

Service and maintenance

Product

NTN Portable Vibroscope
Remote technical support services
Bearing refurbish businessResults for the fiscal year ended March 31, 2022
and forecast for the fiscal year ending March 31, 2023
In the fiscal year ended March 31, 2022, sales increasedin each region due to the revitalization of economic
activities following the coronavirus pandemic. In addition
to the rapid recovery in demand, a combination of global
supply chain disruptions made stable supply a challenge.
In Europe, sales in the fiscal year ending March 31, 2022
recovered to 112.2 billion yen, which was higher than
before the pandemic (the fiscal year ended March 31,2020). Operating income also increased compared to theprevious fiscal year due to an increase in sales volume andthe promotion of price increase activities.
In the fiscal year ending March 31, 2023, we plan

to have 121 billion yen in sales, which is 108% overthe previous fiscal year. The outlook for the COVID-19
remains uncertain and there are concerns about thenegative impact on sales and profits in Europe due to theprolonged situation in Ukraine. However, demand remains
firm, particularly for industrial machinery aftermarket
applications, and securing supply is a challenge. In
addition, costs have soared recently due to the tighteningof the global supply chain, and we will continue topromote price increase activities in areas that cannot be
absorbed by ourselves, such as steel prices and logistics
costs.

SASB Index

NTN's strengths

12.9%(Billion yen)

Operating income margin

NTN Group Information

Changes in the market environment

39 NTN Report 2022

17%

Operating income (right axis)

Sustainability Management

also utilizing products, parts, and materials manufactured
overseas to meet active demand. We will promote priceincrease activities in response to steep rises in steel prices,logistics costs, and other costs that we cannot absorb
in-house.
One of the issues facing our aftermarket business is the
low level of brand recognition in overseas markets. Stablesupply alone is insufficient to raise brand awareness, and
it is necessary to enhance the appeal of the NTN brandand appeal to customers from a variety of perspectives,
including the development of a high-quality, competitive
product lineup, provision of customer-oriented and finetuned technical services, and countermeasures against
imitations. As the commoditization of bearings progresses
and the market becomes increasingly borderless,competition with other companies is becoming fiercer
every year. We aim to leverage our strengths to improve
our brand power and expand our market share.

Changes in the market environment and NTN's strengths

The market environment is changing day by day, and ourability to respond flexibly to new needs is required forsustainable growth. In the bearing aftermarket business,the role that customers need from suppliers is expanding,and in addition to the needs and services of conventional
products, such as high quality and performance, awide lineup, quick delivery response, and quick delivery

Sales (left axis)

Etsu Harima

Business environment
While the spread of the COVID-19 resulted in an
increase in stay-at-home consumption, transportvolume has increased worldwide with the revitalizationof economic activities stemming from the pandemic.
In addition to the original lack of containers, ports andharbors are becoming congested, and the delay in sea
transport is becoming the norm. As a result, not only aretransportation costs soaring significantly, but the pricesof various products and raw materials are also soaring,raising concerns about adverse effects on the economy.
The future of the Russian invasion of Ukraine is also
uncertain.
The business environment is changing daily, but
stable supply is important in the aftermarket business,
and we are focusing on maintaining standing inventories
and strengthening our systems for immediate delivery. In
terms of systems, last year we launched FIRST, a system
for the immediate delivery of popular products. We are

Trend in business performance

Value Creation Story

We provide our customers with products and services that meet the maintenance needsof industrial machinery and automobiles. In industrial aftermarket applications, we supply
bearings for repair used in equipment such as mining, paper making, steel, cement,
and food, in addition to bearings for general machinery. In automotive aftermarket
applications, we offer a product lineup of repair parts and auto parts kits composedof bearings and peripheral components to meet customer demands. We also provide
services such as “Remote Technical Support Services” to provide quick technical support
even in the event of disasters such as heavy rain and earthquakes, and in the situationof travel restrictions during the coronavirus pandemic, and “NTN Aftermarket Academy”
online to enable customers to acquire bearing knowledge. We also aim to realize a“NAMERAKA Society” by providing products and services that meet the needs of ourcustomers through various proposals, such as condition monitoring of equipment using
NTN Portable Vibroscope, and repair and refurbishment of bearings, thereby contributing
to the improvement of productivity and stable operation of equipment.

About Us

Aftermarket

TOPICS

Initiatives to strengthen supply capabilities
In the aftermarket business, which contributes toimproving the productivity and stable operation ofcustomer equipment, it is important to provide a stablesupply of necessary products. We aim to create asystem that is not significantly affected by fluctuations
in market demand by maintaining standing inventoriesof popular products and building an immediate delivery
system.
As one to realize a stable supply, as well as
focusing on accumulating stock of popular products,
last year we launched FIRST, a system for theimmediate delivery of popular products. We willcontinue to increase the product range under thesystem and minimize lost sales opportunities while
expanding the application range of the system.
We are also actively utilizing overseas production
bases to supplement our supply capabilities. In the

future, in regards to radial ball bearings, centeredon standard products, we will start outsourcing
production.
As for parts and materials procured domestically,
there are cases in which procurement cannot
be carried out as in the past due to supply chain
disruptions and supplier labor shortages. However, we
will respond to current rising demand and increased
costs by utilizing parts and materials on a timely basis,including procurement from overseas.
For products in which demand is expected toincrease further in the future, we decided to add
a new line of radial ball bearings to our domestic
production sites in order to boost supply capacity forthe aftermarket business.
Through these measures, we will strive to capture
global demand and expand sales and profits.

NTN Report 2022

40

Value Creation Story

DRIVE NTN100 Phase 2

Business Strategies
Percentage of total sales

119.1

123.4

100.0

0.3%

-1.9%
105.1

Operating income margin

3.2%
126.1

4.6%
140.0

15.0

101.9

10.0
6.5

50.0

2.8

4.1

3.1

5.0

0.4

0
2019

-2.0
2020

2021

0
2022

2023

(Fiscal year ended/(Forecast) ending March 31)

Sustainability Management

Our Vison
To be a company that customers rely on most for its exceptional technological competence

Increased needs for automated machine operation and sensing
Competition to develop high value-added products
Intensified competition due to the influx of low cost products

Market trends

Under this environment, NTN will step away fromcompetition in the field of low-priced products and focus
on high-value-added products based on our proprietary
technologies such as i-WRISTTM, magnetic rings, andsensor bearings, in order to meet customer needs in linewith social structure changes.

Initiatives that leverage NTN's strengths

Expansion of electrification invarious industrial machinery

Electrification compatibility (high-performance products)
Develop and introduce high-performance products that respond to the electrification of
construction and agricultural machinery

Expansion of wind turbineswith to the switch toward
renewable energy

Further strengthening of business for wind turbines
Participation in Japan’s offshore wind turbine projectIncrease production capacity and expand demand in China
Establishment of CMS (hardware & software) businessand commencement of overseas development

Expansion of sustainabletransportation

Responding to changes in social infrastructure
Railway: Expansion focused on the Chinese high-speed
railway
Hydrogen: Growth strategy for the next 10 years

Manpower shortages in the
manufacturing industry

Responding to the expansion of
the robot market
Gearboxes for robots
Wrist Joint Module “i-WRISTTM”
Cultivating needs with robotics
and sensing technologies

In market trends that transform with changes in social
structure, we expect expansion of “electrification,”“wind turbines,” “sustainable transportation,” and the“robot market.” Taking advantage of NTN’s strengths, inaddition to developing and providing high-performance,

Results for the fiscal year ending March 31, 2022
and forecast for the fiscal year ending March 31, 2023
In the fiscal year ended March 31, 2022, demand formining and the recovery in the construction market
increased primarily for construction equipment in Japan
and North America. In addition, sales increased for
gearboxes in Japan behind expanding demand forindustrial robots, and for agricultural machinery in North
America and Europe, supported by continued strong
demand for grain.
Meanwhile, sales decreased for rolling stock due toreduced passenger demand due to COVID-19 spreading
again, and a reduction in wind turbines in China. As aresult, net sales were 126.1 billion yen. Operating income
was 4.1 billion yen due to the effects of passing on thesteel and raw material costs to selling prices and scaling
down or withdrawing from unprofitable businesses.
Although the outlook for the fiscal year ending March
31, 2023 is unclear due to the impact of the Chinese
lockdown and the situation in Ukraine, we expect sales
growth in major industries such as construction machinery,
agricultural machinery, gearboxes, aircrafts, and machine
tools. We forecast net sales to be a record 140 billion yen
and operating income of 6.5 billion yen.

SASB Index

Against the backdrop of trends toward the realization of acarbon-free society, the demand for social infrastructures
for wind turbines and rolling stock will continue to grow,and as the working population declines, the demand for
robot related products that realize labor saving will expand,
and the need for automated operation of machinery andcondition monitoring systems will increase.

the development of sustainable industry in the growthfields of rolling stock, which are expanding against the
backdrop of changes in social infrastructure, construction
machinery and agricultural machinery, which are facing
the need for electrification, and wind turbines, which
contribute toward carbon neutrality.

NTN Group Information

We supply bearings to the industrial machinery market
in a wide range of sizes, from miniature sizes of several
millimeters in outer diameter used in electronic machinery
to ultra-large sizes of several meters used in wind turbines.
Based on this bearing technology, we will continue to be
an indispensable company for our customers and support

Increased demand for in robot-related products

41 NTN Report 2022

2.5%

2018

Increased demand for social infrastructure such as wind turbines and rolling stock

Decreasein theworkforce

126.1 billion yen

2.4%

150.0

Etsu Harima

Business environment

Realizationof a carbonfree society

20%(Billion yen)

Operating income (right axis)

Value Creation Story

Executive Officer

Trend in business performance
Sales (left axis)

We are responding to customer demand for long operating life, improved loading capacity,and higher speed, all of which are required by all types of industrial machinery, with theworld’s highest standard new-generation bearings, the ULTAGE Series. Bearings with evenlower torque and compact and lighter weight will also reduce the environmental burden invarious fields of industrial machinery.
Furthermore, we will promote modularization and advanced intelligence by deepening
bearing technology through the integration of sensors and precision equipment
technology, and create new products and services by utilizing abnormality detection
technology, condition monitoring system (CMS) and IoT. Specifically, we will promote sales
expansion of Wind DoctorTM wind turbine condition monitoring system, and i-WRISTTM, awrist joint module that contributes to automation and labor saving at manufacturing sites.
By providing these products and services, we will contribute to industry development andthe creation of a sustainable society.

About Us

Industrial Machinery Market

TOPICSWind turbine maintenance business

i- WRISTTM

Mounting camera and lighting
device to i- WRISTTM
Adopted to auto appearance inspection

high-precision bearing products in these areas, NTN
will also respond to customer needs by developing
module products that integrate mechanical and electricalcomponents, and adding services and maintenancebusinesses.

We have formed a business partnership with Hokutaku Co., Ltd. that specializes inmaintenance for wind turbines. We will provide quick maintenance by integrating
our CMS high-precision anomaly detection technology with Hokutaku’s expertise inmaintenance services, and expand our wind turbine-related business.

Function extension of Wrist Joint Module “i-WRISTTM”
While rolling out Wrist Joint Module “i-WRISTTM” in the market, we have received
various requests and have developed the new “IWS series” which extended fourfunctions. In recent years, with the decline in the working population, the demand
for automation of work processes, including appearance inspection, which has been
relying on manpower until now, has been growing. Through the provision of the
IWS-series of i-WRIST, NTN will contribute to further improvements in productivity
and quality by pushing the robotization and automation of customer production
sites.

Main shaft Support 100m
diameter blade

Generator

Ultra large tapered
roller bearing, etc.

Deep groove ballbearing, etc.
Detect bearing
abnormality at
early stage

Gearbox

Cylindrical roller
bearing, etc.

Condition Monitoring
System (CMS)Wind DoctorTM

NTN Report 2022

42

Value Creation Story

DRIVE NTN100 Phase 2

Business Strategies
Percentage of total sales

63%

403.7 billion yen

Vehicles with e-Axle

120

77

77

60
40

76

20
0

66

60

82

59

58

19

6
2

8
3

10
6

15
8

12

FY19

FY20

FY21

FY22

FY23

93

54

23

94

48

27

94

96

41

36

30

98

99

100

101

102

104

30

28

26

24

23

32

32

29

33

31

34

34

32

35

16

31

47

27

43

23

39

19

FY24

FY25

FY26

FY27

FY28

FY29

FY30

FY31

FY32

FY33

Source: IHS Markit

Results for the fiscal year ended March 31, 2022
and forecast for the fiscal year ending March 31, 2023

43 NTN Report 2022

40.0

21.8

20.0

8.7
0
-3.7
2019

2020

-12.4
2021

0

-11.9
2022

2023

(Fiscal year ended/“Top supplier in the Power/Drive Train system”
Company with No.1 proposal ability that makes customers happy with an overwhelming speed x solution
No. 1 company with proposal capabilities that satisfies customer with overwhelming speed and solutions
The rise of electrified vehicles throughout the world’s
automotive markets calls for functional automotive
components with different characteristics or more
rigorous performance requirements than are required forconventional internal combustion engine vehicles. We
will accommodate these needs by offering differentiatedtechnical expertise and lineups of advanced products
providing features such as size/weight reduction, higher
speed rotation, lower torques and less noise/vibrations
in order to secure a competitive advantage over ourcompetitors.
Another major wave, Ride Sharing and MaaS, isbased on the absolute reliability of the drive systemfiscal year fettered by the continued lack of semiconductor
supply, the situation in Ukraine, and the lockdown in
China. On the other hand, it is expected that the global
number of passenger cars produced will return to thelevel in the fiscal year ended March 31, 2020 in two to
three years. We are reforming our business structure to
generate profits even when demand does not recover
sufficiently. We will steadily reflect cost increases in selling
prices and lower the break-even point by reducing fixed
costs. We expect operating income to return to profitability
in the fiscal year ending March 31, 2023.

responsible for running, turning, and stopping vehicles.
Carmakers are shifting the focus and resource of
their development work from the tangible (vehicle
performance) to the intangible (services), creating an
expanding range of areas in which NTN can contributeto vehicle safety, reliability and comfort. By recognizingthese dynamic changes in the business environment
as an opportunity, we will provide value that exceeds
customer expectations through product development
and advanced technical services that are ahead ofmarket needs. By doing so, we aim to become theleading manufacturer in the drivetrain component
segment essential to the automotive market.

TOPICSFirst order received for high efficiency fixed type CVJ

51

In the fiscal year ended March 31, 2022, net sales
increased from the previous year, which was affectedby the spread of the COVID-19 , to 403.7 billion
yen. However, the reduction in production by car
manufacturers due to the shortage of semiconductors
was greater than expected, and was only 109.3% higher
than in the previous year. Operating loss was 11.9 billion
yen, mainly due to an increase in procurement costs,
energy costs and logistics costs, despite an increase in
the scale of sales.
In the fiscal year ending March 31, 2023, we expect
net sales to be 459 billion yen, 113.7% up on the previous

403.7

SASB Index

84
80

89

369.5

60.0

459.0

NTN Group Information

Trends in Global Vehicle Production

100

-2.9%

Sustainability Management

Supply network in a short supply chain utilizing global manufacturing bases

ICE

437.0

-3.4%

Our Vison

Product lineup for e-Axle with high-speed rotation, creep-resistance, and electro-corrosion resistant performance

HEV

491.3

(Forecast) ending March 31)

High-efficiency products that reduce CO2 and contribute to Well-to-Wheel, electric module products

EV

200.0

0.0%

-0.8%

508.6

400.0

Hideaki Miyazawa

Increasing need for carbon-free products(Unit: Million units)

600.0

2018

Increasing demand for e-Axle (motor reduction gears) associated with BEVshift

Strength

1.8%(Billion yen)0

Accelerating the shift to EVs and electrification due to fuel efficiency and CO2 regulations and government-led
targets for electrification in various countries

Strength

Operating income margin

4.3%

Business environment and NTN's strengths

Strength

Operating income (right axis)

Value Creation Story

Executive Officer

Trend in business performance
Sales (left axis)

In response to the rapidly expanding trend toward CASE in the automotive market, weare responding to tour customer needs as a specialist in the power/drive train system bycontinuing to enhance the functionality of our basic products, such as hub bearings anddriveshafts, including low friction, lighter weight, more compact design, and improved
durability, while at the same time, by enhancing our lineup of new products with highspeed rotation, creep-resistance, and electro-corrosion resistant performance required of
e-Axle.
In addition to these basic products, we are combining products with peripheral
components and integrating our core technologies. Through continuous development andproposals for new products that deliver precise and smooth control, such as electric oil
pumps, ball screw modules, and hub bearings with steering functions, we will contributeto the creation of safe, secure, and comfortable cars for our customers.

About Us

Automotive Market

In Europe, where CO2 regulations are
becoming stricter, we received our
first order for high efficiency fixed type
CVJ (CFJ) for mass production, which
will help reduce CO2 emissions andimprove electricity costs.

First order received for third-generation tapered
roller hub bearings
We received our first mass-production order for the third
generation tapered roller hub bearings (GEN3 HUR) that
integrate hub shafts and inner rings to achieve both high rigidity
and light weight for commercial vehicle front wheels in Europe.

Achieved dmn value of 2.2 million
with high speed ball bearing
Our high speed deep groove ballbearings have achieved a high speed
dmn value of 2.2 million under oil
lubrication for e-Axle, HEV motors andtransmissions.

Received whole order for in-housemanufactured driveshafts from domestic
automobile manufacturer
Production is scheduled tocommence gradually in fiscal
year ending March 31, 2023.

Received orders for CVJ in EVs and hub bearings
for EVs in Europe’s premium brands
We received orders for EV projects
that are being developed globally inmultiple locations.

Developed the industry's first Creepless Bearingthat stops creeping
For drive motors, transmissions, ande-Axle, which are becoming increasingly
compact and lightweight, we havedeveloped Creepless bearing thatstops the progressive wave type creep
generated by distortion of the outer ring.

NTN Report 2022

44

Value Creation Story

DRIVE NTN100 Phase 2

Promotion of DX (Digital Transformation)

1“DRIVE NTN100” Phase 3

New IT core system
P.65
Stabilize new coresystemIntegrate accumulated data such as
sales / production / procurement /logistics/ finance / process / CMS

Promote utilization of inventory within NTN Group2

CAE: Streamline development / trial production / analysis
Introduce communication tools in response to work stylereforms

P.70
Promote
RPA useP.70

Environmental business(to adapt to “carbon neutrality”), etc.

Promote smart factory

Optimize production by introducing IoT and AI into production process
Realize streamlined production by “visualization” of process condition

Predict breakdowns in advance by using AI

Business reform with digital technology
CAE: Streamline development / trial production /analysis
By standardizing and using numerical analysis
technologies as tools, we have created a system thatenables general design engineers to perform calculations
with the same level of quality as numerical analysis
experts, with the aim of improving the efficiency ofanalysis operations in development.
In “DRIVE NTN100” Phase 2, we have developed
an integrated calculation system for axle bearings, andhave begun full-scale operation in design departments.
By analyzing the procedure for numerical analysis,
which was previously performed by specialist engineers,and fully automating it, we have greatly reduced thecalculation time required for design studies.
In other internally developed calculation systems,
we will work to automate the creation of data input
for analysis and output processing, analyze and utilize
existing data, and introduce numerical optimization. We
will also improve the capacity of our in-house calculation
facilities and incorporate cloud computing to makeeffective use of resources.

45 NTN Report 2022

Realize the best mix of global and local procurement (optimal procurement)
Strengthen category management (by function / specialization) and
implement strategies by category
Expand and accelerate unification of contract operations (centralizedpurchasing)
Reorganize partner manufactures and shorten supply chain

Achievements of “DRIVE NTN100” and steady implementation of new measures
Achievements of reform

20.0 billion yen / 3rd year

P.58
Realize a sustainable society
using natural energy

Promote the change to smart factories
Launch of a new plant in Wakayama
Optimize production by introducing IoT and AI into
the production process
Realize streamlined production by “visualization” ofprocess conditions
As a “NTN NAMERAKA Factory,” we are promoting
the use of smart factories with the vision of delivering“satisfaction” to customers “rapidly.” Visualization of“things,” “facility,” and “energy” is completed, andpreventive and predictive measures are implemented
by analyzing the data obtained. In addition, we aim
to maximize throughput while maintaining proper inprocess inventory by combining automatic warehousing
and automatic transportation. Using this system asa model, we will accelerate the reformation of quality(improved traceability, reduced defect rate), environment(saving energy, reduced CO2 emissions), facilities (failure
prediction, preventive maintenance), and manufacturing(shortened lead times, reduced inventory, and visualizedcost) at all business sites.

Efforts focused on in fiscal year ended March 31, 2022
Control the upward cost trend and supply chain tension for raw materials, energy and transport
From the start of the 3-year mid-term plan, ourintention was to make the most of NTN Group’s
international status combined with a strong local
presence. On increasingly global markets, witheconomic cycles that have become unpredictable,
the “Best mix of local and global” policy gives us theadvantage to cooperate with a reliable and responsive
regional supplier network as well as a panel of global
suppliers capable of addressing international business.

Each NTN partner is offered the opportunity to accessmore global projects, a guarantee of substantial
volumes and a scale effect offering potential forcompetitiveness.
The fiscal year was a real test for our policy and wewere able to measure its effectiveness and relevance,
allowing us to better control the upward cost trend
and supply chain tension for raw materials, energy andtransport.

SASB Index

CMS (Condition Monitoring System)

Monitor operating condition of wind turbines, rolling stocks, etc.

Develop information on global purchasing and analyze
categories (characteristics of parts / areas)
Start unification of contract operations (centralizedpurchasing)
Actively examine and adopt new partner manufacturers(including LCC)“DRIVE NTN100” Phase 2

Create new business

Launch of a new plant in Wakayama

4“DRIVE NTN100” Phase 1

NTN Group Information

Digital technology

RPA: optimize routine operations, and go paperless forreports, utilizing IT core system

3

Upgrade business administration

Business reform with digital technology

In the basic operations of “buying,” “producing,” and “selling” as a manufacturing company, we will strengthen costcompetitiveness in the process of “buying” materials and parts by promoting global procurement, realizing an optimal combination
with local procurement, strengthening category management, and expanding and accelerating centralized purchasing as a meansof procurement reform. We will reduce variable costs by 20 billion yen over three years of “DRIVE NTN100” Phase 2, half of which,at 10 billion yen, has been promoted as achievements of procurement reformation. In the fiscal year ended March 31, 2022, weachieved the effect amount as targeted in the first year.

Sustainability Management

Strengthen responsiveness to market changes by“visualization” of sales / production / procurement /logistics, and optimize inventory

Integrate data

Reduce Variable Cost / Procurement Reformation

Value Creation Story“DRIVE NTN100” Phase 2 (Increase efficiency / accumulate data)

DRIVE NTN100 Phase 2

About Us

The NTN Group’s Medium-term Management Plan, “DRIVE NTN100” Phase 2 calls for accelerating the transformationof our business structure by integrating digital technologies with the management resources we have cultivated. Under
this basic strategy, we will innovate our core systems to visualize sales, production, procurement, and logistics in an
integrated manner, promote optimal inventory that responds quickly to fluctuations in demand, and utilize inventory
within the Group. We will also promote the change to smart factories by introducing IoT and AI and optimizing andstreamlining the manufacturing process as a whole. In addition, we are working to create and expand new businesses
such as monitoring the operating status of wind turbines and rolling stock by introducing and expanding a condition
monitoring system (CMS) as well as predicting failures in combination with AI.

Value Creation Story

Build a supplier base capable of supporting the NTN Group
Our ambition in the mid-term plan is to build aninternational network of specialists working together
and in permanent interaction to establish global
strategies for each of our purchasing categories,
effectively implemented locally.
Central to our strategy, the objective of the reformof our category management approach is to build asupplier base capable of supporting the NTN Groupin its many future challenges, such as electric vehicles
or carbon neutrality, to name but two. By relying on
the spirit of partnership, which is truly part of our DNA,
we identify our preferred partners, according to criteriaof technological leadership, competitiveness, quality,
responsiveness, SDGs, from a global supply chain
perspective.
The identification, pre-selection and introduction of
new suppliers, was a major activity in 2021. The strong
dynamism in all regions has already enabled us to start
new supplies, in particular in the competitive Asian
countries.
The global economic context has also led us toreconsider and redesign our global raw materials
purchasing strategy, the category of primary
importance in our performance.

Accelerate centralized purchasing for driveshafts and hub bearings
The centralization of purchasing is an important axe of
the reform of variable costs, the keywords of which areglobalization, simplification and agility:- The primary objective is to globalize volumes,
allowing us to offer broader opportunities to ourpartners, a source of development and increased
competitiveness.
- Simplification of the supplier relationship by setting up
a single contact and improving supplier management

by standardizing and digitalizing our processes.
- Agility: the operational teams of the production sites
can concentrate on the operational management of the
supply chain for more flexibility.
The process was initiated in 2021 for the CVJ and
Axle automotive product lines and overhaul of the NTN
category management focused on these two families
as a priority.

NTN Report 2022

46

Value Creation Story

DRIVE NTN100 Phase 2

Reorganization of production
Concentrate management
resources in products /processes where NTN canleverage its strengths

Reorganize domestic
production bases ofradial bearings

Outsource production of standard type products to overseas
bearing manufacturer (Break away from “self-sufficiency”)
For special products, implement reorganization of production
with a new plant established in Wakayama playing a central role

The market environment surrounding NTN is changing
rapidly, as seen in the electrification and EV of theautomobile market. Based on the growth strategies
of each business headquarters, we will reorganize our
production system in Japan from the perspectives of
product axis, base axis, and BCP, thereby strengthening
profitability through the overall optimization of production.

In reorganizing production, we will, in principle, freeze
investment in capacity expansion and reduce costs by
converting the management resources of withdrawal
and shrinking products. At the same time, we will shift toinvest in maintaining and upgrading facilities as well as
natural disaster risks and safety measures.

Creating a new Monozukuri (manufacturing) system
Since 2019, we have been promoting production reform
activities aimed at reducing lead times and improving
inventory turnover ratio across the entire supply chain,from materials procurement to sales to customers.
The production reform activities have been promoted
mainly in production sites in Japan, and have expanded
to 15 domestic sites by the fiscal year ended March 31,
2022. As a result to date, we have already shortenedlead times at several domestic sites through streamlining
activities, such as the introduction of pull-type production,and have achieved a doubling of inventory turnoverratio and operating margin. In addition, these activities
are being expanded to plants manufacturing finishedproducts and sales divisions, and the scope of these
activities is expanding to cover the supply chain up to thedelivery of products to customers.
In production reform activities, we are working on
production leveling (streamlining) by synchronizationof component parts as well as designing and keeping
inventories of finished products and work in process
to the extent necessary. Such leveling in plants thatbegan this initiative has been performed progressively
from the beginning of the month to the middle of themonth to the end of the month, realizing after-hours
reductions by improving on-time production capacity.
We are also working to cut down on the purchase ofparts and materials and promote partial delivery throughthe introduction of small-lot production, which helps toreduce costs.
Inventory turnover ratio is an important indicator formeasuring the results of production reform activities.
We are working to strengthen management, including
monthly follow-ups by senior management and theposting of the trend of indicators on our website for
employees and dashboards for management.

With regard to standard products, we will expand
outsourcing production to NTN's affiliate, TUNGPEI INDUSTRIAL CO., LTD. in September 2022
(approximately 5 million units/month). In this way, we
will strengthen our ability to supply products for theaftermarket through high-efficiency production andcontrol investment in maintaining and upgrading facilities
to improve profitability. The expansion of outsourcing
to TUNG PEI INDUSTRIAL CO., LTD. is planned to becompleted in October 2024.
In addition, we will utilize the space and management
resources created by the reorganization of radial bearings
to establish a high-efficiency production system byconsolidating manufacturing bases for tapered roller
bearings, needle roller bearings and precision bearings,
and strengthen profitability by redefining our productportfolio. At the same time, we will establish a foundation
for a future manufacturing system by implementing
investment to locate and upgrade bases in light ofearthquake resistance and the risks of tsunami disasters.

TUNG PEI INDUSTRIAL CO., LTD.

Production reform is “management reform,” and thethree-pronged activities of management, promoters, andpractitioners are fundamental. We actively engage inreform education in collaboration with the department incharge of human resources development, including rankbased education on the Lean Production System, which
serves as the foundation for production reform activities,
as well as practical training on reform methods and plantwide training sessions.
In particular, we incorporate innovations such as
Kanban and Mizu-sumashi (parts supply) into the content
of our educational programs while paying attention sothat the purpose is not to introduce such innovative
methods. We ensure that the mindset of knowing why
educational programs are necessary (why innovations
are needed) is thoroughly understood. Depending on
the business site, we are firmly fostering the ability tothink and devise new options ourselves by promoting thechange of landscape (eliminating unnecessary goods andvisualizing required goods) through sorting and setting-inorder activities on site.

Manufacturing is based on “human resource
development.” The development of human resources,
the core of activities at not only dedicated units but also
at each business site, is an urgent issue. We have started
implementing special education for development andinitiatives such as the development of in-house education
trainers.

SASB Index

47 NTN Report 2022

Lead by specialized organization
Expand lean production method horizontallyDevelop human resources to promote reforms

NTN Group Information

A new plant in Wakayama (Main passage where automatic guided
vehicles and people come and go)

Promote overall optimization (rationalizationof overall SCM) and break away from partial
optimization (rationalization by process)Monozukuri is “human resource development”

Plan and progress of production reorganization
In “DRIVE NTN100” Phase 2, we are reorganizing
the production of radial bearings, one of NTN's coreproducts. With the shift to a carbon-free society, themarket for radial bearings is expected to expand for highperformance products for electric vehicles specializing
in low-vibration, high-speed rotation, and insulation
performance. NTN has positioned high-performance
products for electric vehicles as one of its key products.
We will consolidate these products at the Wakayama
Works, which was completed in October 2019, Ball
Bearing Plant of Iwata Works, and NTN Mie Corporation,
our main manufacturing base for medium-sized radial
bearings to strengthen price competitiveness andaggressively enter the market through the introduction of
the latest production technologies.

Realize streamlined
production and increase
throughput

Sustainability Management

Basic policy in production reorganization

Production reform

Value Creation Story

In “DRIVE NTN100” Phase 2, we need to urgently improve the cash flow by optimizing production as a whole, and wewill reduce logistics costs and inventory assets by consolidating and organizing business sites. We will also use external
partners to reduce manufacturing costs. In terms of our capital investment, we will, in principle, freeze investment in
expansion of capacity and shift to investment for risk and safety measures such as natural disasters, as well as measures
to maintain and upgrade facilities and improve efficiency. Costs will be kept to 60 billion yen or less for the three years.
Based on these assumptions, we are promoting production reorganization and production reformation activities in order
to control increases in fixed costs and improve asset turnover.

About Us

Control Increase of Fixed Costs /Improve Assets Turnover

Promoting production reform including human resource development

Implementation of three-pronged activities through on-site guidance meetings
Regarding production reform initiatives to realize
manufacturing that NTN aims for, on-site guidance
meetings are held regularly at each business site with thesupport of consultants to identify and share issues at local
site with local materials and to consider countermeasuresrelated to specific goods and information.
On-site guidance meetings are a forum for nurturing
human resources to maximize the abilities of target
workplaces and everyone involved in their operations,raise motivation, and bring about a change in behavior.
They are also a place to commend challenges andchange, and learn together across different job positions.
Executive Officers, not just those in charge of production,
participate actively to promote and establish activities by

providing opinions from a variety of perspectives, andimplement three-pronged activities that reaffirm the roles
that stakeholders should play.

On-site guidance
meeting

NTN Report 2022

48

Value Creation Story

CFO Message

Breakdown ofprofit-increasing factors(47.0)

Toward Establishing a Management Base to
Realize Sustainable Growth as a Global Company

Executive Officer CFO (Chief Financial Officer)

Tetsuya Sogo

Net sales(billion yen)2021/3Results

2022/3Results

2023/3
Forecast

562.8

642.0

720.0

Operating income

-3.1

6.9

23.0

(Operating margin)(-0.6%)(1.1%)(3.2%)

Ordinary income

-5.7

6.8

20.0

Extraordinary
income/loss

4.5

10.8

-3.0

Profit attributable toowners of parent

-11.6

7.3

10.0

Inventories

176.8

214.8

200.0

Free Cash Flow

18.5

11.5

18.0

Net D/E ratio

1.6

1.4

1.3

Dividends (¥)

0.0

0.0

5.0

106.0

112.3

120.0

123.7

130.5

135.0

Exchange rate US$
(¥)
EURO

49 NTN Report 2022

Analysis of the forecasted profits for the fiscal

ending March 31, 2023 and key points of
2 yearmeasures to achieve the forecasted profits<Year-on-year analysis of profits for the fiscal year
ending March 31, 2023>- Breakdown of profit-increasing factors (47.0 billion yen) The largest profit-increasing factor for the current fiscal
year is the price pass-on measure of 28.8 billion yen.
An increase in variable costs of 26.0 billion yen including

a rise in prices of steel materials of 22.0 billion yen
and other increase of 4.0 billion yen such as a rise inelectricity, gas fees, prices of materials and parts havebeen factored in. Furthermore, we assume an increase
in sea freight rates of 6.0 billion yen and an increase of
personnel expenses in U.S. manufacturing companiesof 1.8 billion yen due to the COVID-19 pandemic. As aresult, costs will increase by 33.8 billion yen in total due
to a sharp increase in inflation. In this regard, we aim topass all of those increased costs on to our customers.
However, regarding the recovery of such amounts in thecurrent fiscal year, 28.8 billion yen is planned as a target
that must be achieved, factoring in a conservative bufferof 5.0 billion yen.
Net sales for the current fiscal year are expected toincrease by 78.0 billion yen year on year to 720.0 billion
yen. This amount, however, factors in the impacts of
exchange rates (21.8 billion yen) and price pass-on
measures (28.8 billion yen) and therefore a sales volume
increase on a physical quantity basis is 27.4 billion yen.
We expect a profit increase of 12.3 billion yen, whichis calculated by multiplying the amount of the sales
volume increase by the marginal profit ratio.
In addition, a profit increase due to the weaker yen is
projected to be 5.9 billion yen.
- Breakdown of profit-decreasing factors (30.8 billion yen) Regarding variable costs, an increase of 19.1 billion
yen and the corresponding decrease in profits are
expected, taking into consideration a rise in prices ofsteel materials, etc. of 26.0 billion yen and an expected
result from our cost reduction activities of 7.0 billion yen
including the impact of variable cost reformation. In theprevious fiscal year, variable cost-increasing factors,
including a rise in prices of steel materials, etc. of 9.6
billion yen and a rise in electricity and gas fees andprices of materials and parts, amounted to 13.5 billion
yen. Therefore, in the current fiscal year, we assume anabnormal surge in prices of raw materials that is about
twice the increase of the previous fiscal year.
With regard to fixed costs, personnel and other expenses
are expected to increase by 11.8 billion yen, resulting
in a decline in profits. Of those, a total of 7.8 billion yen
resulting from a 6.0 billion yen increase in sea freight rates
and a 1.8 billion yen increase in U.S. personnel expenses
will be passed on to customers and the remaining
amount of 4.0 billion yen is set according to the existing
policy to restrain an increase in fixed costs to 15% or lessof a sales volume increase of 27.4 billion yen.
<Key points of measures to achieve the forecasted
results for the fiscal year ending March 31, 2023>
The biggest issue for the current fiscal year is a sharp

NTN Revitalization Scenario(Fiscal Year Ending March 2023)
Priority Issues for
the Current Fiscal YearSASB Index

Consolidated Statements of Operation<Key points of forecasts for the fiscal year ending
March 31, 2023>
In the fiscal year ending March 31, 2023, as theoutlook continues to be uncertain due to a shortage ofsemiconductors, the COVID-19 pandemic, the situationin Ukraine and other factors, increases in prices of raw
materials, sea freight rates, etc. are expected to be atleast twice their increases of the fiscal year ended March
31, 2022. Regarding these abnormal cost increases,
the important measures for the current fiscal year are to
vigorously promote thorough price pass-on measuresand reliably implement measures including variable costreformation to reduce variable costs and control fixed
costs according to the plan as we did in the previous
fiscal year. Based on this, we forecast 720.0 billion yen
in net sales, 23.0 billion yen in operating income and10.0 billion yen in profit attributable to owners of parent
for the fiscal year ending March 31, 2023, taking into
consideration the current weaker-yen environment andglobal sales decrease factors. As top-line instability
continues, we will reduce inventory assets, secure18.0 billion yen of free cash flow and lower the net
D/E ratio according to the plan. In addition, we are to
resume dividend payments, beginning with the interim
dividends for the current fiscal year, as initially plannedin the Revitalization Scenario. Whatever changes occur
to the external environment including sales, prices ofraw materials, etc., thoroughly implementing the above
important measures that should be carried out by theentire NTN Group will lead to maintaining the course forachieving the NTN Revitalization Scenario in the fiscal
year ending March 31, 2024.

+16.1

NTN Group Information<Key points of financial results for the fiscal year
ended March 31, 2022>
For the fiscal year ended March 31, 2022, we announced
the initial forecasts of 660.0 billion yen in net sales and15.0 billion yen in operating income. During the period,
however, we revised the forecasts downward to 630.0
billion yen in net sales and 6.0 billion yen in operating
income, taking into consideration a much higher-thanexpected level of semiconductor shortage and surge inprices of steel and other raw materials in the first half ofthe year. Despite a higher surge in prices of raw materials
and a greater-than-expected rise in personnel expenses
in the U.S. due to the COVID-19 pandemic in the revised
forecasts, the actual result was that net sales andoperating income exceeded what was published in therevised forecasts and came to 642.0 billion yen and 6.9
billion yen, respectively. This was because in a weakeryen environment, sales slightly exceeded our assumption
and we reduced variable costs as planned, thoroughlymanaged fixed costs and improved selling prices. On
the other hand, although there was no choice but toincrease inventory assets to a higher level than planned
due to a disruption in the supply chains of customers,
we attained significant improvement in free cash flows by
accelerating sales of cross-held shares and other assets
and achieved a substantial increase in net income fromthe initially announced forecast. In addition, the net D/E
ratio was further lowered as compared to the announced
forecast. In a tough external environment with significant
fluctuations and instability of top-line revenue, a surge inprices of raw materials, etc., we produced good results
by steadily implementing measures that should be takenby the entire NTN Group to reduce variable costs, control
fixed costs and address cash flow issues in order toachieve the NTN Revitalization Scenario.

2022/3Full year
operatingincome(Results)
6.9

Expenses etc.
(Depreciation, others)-4.7
Increase inpersonnel
2023/3
expenses
Full year-7.1
operatingincome(Forecast)
23.0

Sustainability Management

Actual results for the fiscal year ended

31, 2022 and forecasts for the fiscal
1 Marchyear ending March 31, 2023

Sales price
level
+28.8

Exchange Increase inrates variable costs
+5.9
-19.1

Value Creation Story

Even in a very tough management environment, as exemplified by the
COVID-19 pandemic, a shortage of semiconductors, the situation in
Ukraine and a surge in prices of raw materials, we have been steadily
moving forward to revitalize NTN in the fiscal year ending March 31, 2024,
while maintaining a course set forth in the NTN Revitalization Scenario.

Scaleeffects+12.3

Breakdown ofprofit-decreasing factors(30.8)

increase in costs of 33.8 billion yen and a measure
to address the issue is to reflect at least 28.8 billion
yen in prices during the current fiscal year. However,the 28.8 billion yen amount includes 6.0 billion yen inincreased costs for the previous fiscal year for which
the implementation of a price pass-on measure isdelayed to the current fiscal year. As such, with regard
to passing increased costs for the current fiscal year
on to prices during the current fiscal year, 22.8 billion
yen or 67% of such costs is conservatively set as anachievement level, but our target is still 100%.
On the other hand, unstable top-line revenue is
expected to fluctuate significantly in the current
fiscal year as well but it is important to continue tothoroughly improve productivity and cut down costs
and thereby reliably implement variable cost reduction
and fixed cost control measures according to the plan,
while reducing inventory assets that increased in theprevious fiscal year and aiming for 100% price passthrough in order to, among other purposes, achieve
profitability in the automotive business.
Furthermore, as the growth rate in the aftermarket
business is small in the current fiscal year, we needto take measures to strengthen our ability to respondto aftermarket demand and add as many sales as
possible to the forecasted net sales for the aftermarket
business by focusing on expanding inventories foraftermarket services while reducing inventories forOEM.
In parallel with the above activities, we will work to,among other activities, improve the profit ratio of theautomotive business and expand the aftermarket
business and, at the same time, must ensure theachievement of the NTN Revitalization Scenario in thefiscal year ending March 31, 2024 by accelerating
three drastic transformation measures (Pricing Power,
Cash Conversion Cycle and Strategic Partnership) inorder to revitalize NTN and promote product/businessportfolio reformation, production/logistics reformation
and Variable Cost Reformation with firm resolve.

About Us

Analysis of Operating Income(2022/3 Results vs 2023/3 Forecast)

Revitalization Scenario

Promotion of sales priceDefinition of Revitalization
increase
Pass increased raw material
1. Creating Corporate Valuecosts on selling prices
ROIC 5%
Withdraw from unprofitable
2. Strengthen financial position
products and negotiate for priceNet D/E 1.0
increase
3. Realize stable dividends
Reduction of variable costs
DOE 4%
through variable costreformation
Acceleration of transformation
for revitalization- 1 point in the variable cost ratio
Fixed cost control in the phaseof increasing volume
Within 15% of the increase involume1. Pricing Power(product/business portfolio reformation)
2. Cash Conversion Cycle(production and logistics reformation)
3. Strategic Partnership(variable cost reformation)

3

Relationship between forecasts for the
fiscal year ending March 31, 2023 and thosefor the fiscal year ending March 31, 2024

Results of examining, by using uniform exchange rates,
whether forecasts for the fiscal year ending March 31,
2023 are consistent with the course for achieving the NTN
Revitalization Scenario in the fiscal year ending March 31,
2024 are shown in the next page. The targets (700.0 billion
NTN Report 2022

50

Value Creation Story CFO Message

Operating income
645.0
Exchange rate A
Latest announcementin May 2022
1US$ = ¥120
1EURO = ¥135

390.0

54.2%

Break-even point

617.0

590.0

Net sales
660.0
13.0

Net sales
633.0
13.0

363.0

55.0%

336.0

53.1%

(in billion yen)

570.0

595.0

Net sales
700.0
42.0

Net sales
727.0
42.0

364.0

391.0

52.0%

53.8%

284.0

284.0

294.0

294.0

2023/3
Latestannouncement

2023/3
Latestannouncement

2023/3
Latest announcement
excluding pricepass-on measures

2024/3Medium-termManagament Plan

2024/3Medium-termManagament Plan
including pricepass-on measures

Exchange rate A

Exchange rate B

Exchange rate B

Exchange rate B

Exchange rate B

The overview of the NTN Revitalization Scenario
formulated in the fiscal year ended March 31, 2020
was provided in the CFO Message two years ago.
Thereafter, in order to respond to significant changes
in the external environment, such as the COVID-19
pandemic, a shortage of semiconductors and a surge
in prices of raw materials, we took risk hedge measures
assuming the worst-case scenario, as exemplified by
the securing of 100.0 billion yen of funds including
commitment line agreements with our main banks, andthe issuance of hybrid bonds worth 50.0 billion yen. In
doing so, we focused on thorough fixed cost reduction(42.7 billion yen) in the two-year period until the fiscal
year ended March 31, 2021. Since the fiscal year ended
March 31, 2022, we have accelerated the three drastictransformation measures described below and havebeen aiming to reduce interest-bearing debt and resume
stable distribution of dividends through free cash flow
control while implementing measures to reduce variable
costs by approximately 7.0 billion yen per year andcontrol fixed costs according to the sales volume (within
15% of an increase in sales volume).

2) Cash Conversion Cycle (production/logistics reformation):
We have been promoting production reformation since
the fiscal year ending March 31, 2020 and many of our
production sites in Japan succeeded in reducing workin-process and shortening production lead times. We areworking to apply such successful practices across moresites, but in the environment with significant changes in
top-line revenue, our efforts to reduce inventory assets
have currently not produced good results in the NTNGroup as a whole and the number of our inventory
turnover days is consistently approximately 40 days
larger than that of competitors in Japan. We cover
this weak point by implementing factoring and othermeasures and have produced positive results in terms of
the Cash Conversion Cycle, as a whole. However, a large
volume of inventory assets still remains a heavy dragon us in this competitive environment. Starting from thecurrent fiscal year, we will link the production reformationthat produced results in production sites in Japan to

SASB Index

4

NTN Revitalization Scenariothat must be achieved andour future vision<Vision for future sustainable growth>
We are in a situation where it is increasingly difficult tomake forecasts, but our future vision is that no matter
what changes occur to the external environment, we
will accelerate the establishment of organizational
culture where all regional business sites and divisions
autonomously pursue overall optimization for survival bysharing the perspective of corporate value maximization,in other words, the establishment of a global learningorganization. For that purpose, each business site needs
to enhance the autonomy of its daily management andadministration work to promptly respond to changes ina situation surrounding the business site under close
coordination within the entire NTN Group so that thebusiness site can use its relationship with the head office
as a stepping stone for making a leap forward. On theother hand, the head office will focus on formulating andpromoting a global financial strategy, brand strategy,
business portfolio strategy, production/technology
strategy, etc. and enhance the cohesion of the entire
NTN Group by stepping up functions of the head office
as a global strategic headquarters. I myself will maintaina keen awareness of investment in personnel as a nonfinancial indicator and will have direct dialogs including
global web meetings with leaders of all divisions within
and outside Japan to explain and discuss strategies anddirections to be adopted by us.

NTN Group Information

First, if the exchange rates for the forecasts (720.0
billion yen of net sales and 23.0 billion yen of operating
income) for the fiscal year ending March 31, 2023 areconverted to the exchange rates as of formulating
the Medium-term Management Plan for the fiscal
year ending March 31, 2024, net sales and operating
income are changed to 660.0 billion yen and 13.0
billion yen, respectively.
Note that the amount of costs passed on to sales
prices and included in such net sales is 28.8 billion
yen and if the exchange rates for the Medium-termManagement Plan are applied to this amount, theamount is changed to 27.0 billion yen. Then, if the27.0 billion yen is regarded as a temporary external
factor and excluded from the net sales and thevariable costs, the net sales and the operating income
are changed to 633.0 billion yen and 13.0 billion yen,respectively. These amounts can be compared withthe targets (700.0 billion yen of net sales and 42.0
billion yen of operating income) for the fiscal year
ending March 31, 2024 based on the same exchange
rates and the same conditions.
In this case, net sales will increase by 67.0 billion yen
from 633.0 billion yen to 700.0 billion yen over a period
from the fiscal year ending March 31, 2023 to thefiscal year ending March 31, 2024. Accordingly, fixed
costs will increase by 10.0 billion yen, or 15% of 67.0
billion yen, resulting in an increase from 284.0 billion
yen to 294.0 billion yen. Meanwhile, if the variable cost
ratio is assumed to be further lowered by one point to
52% as planned, the targets of 700.0 billion yen in net
sales and 42.0 billion yen in operating income will beachieved in the fiscal year ending March 31, 2024 asinitially planned.
However, as the excluded 27.0 billion yen of costs are
actually to be added, the net sales and the operating
income will come to 727.0 billion yen and 42.0 billion
yen, respectively. As such, the operating income ratio
will be worse than the 6% target and the break-evenpoint will rise. That being said, we recognize that it isabsolutely necessary to take price pass-on measuresin order to respond to the sharp rise in costs under
the current circumstances, and even in the case ofa further rise in prices of steel materials, etc., we will

carry out 100% price pass-through with firm resolve.
If this trend continues, profits do not increase and only
net sales grow and therefore, the profit ratio declines.
However, even if net sales increase due to the pricepass-on measures, this does not affect invested
capital. Therefore, NTN will take measures to reliably
implement stable distribution of dividends with ROIC
= 5%, the net D/E ratio = 1.0 and DOE = 4% whichis the definition of revitalization of NTN by steadily
reducing interest-bearing debt while reliably ensuring
operating income.
For your information, interest-bearing debt and equity
capital are 370.0 billion yen and 200.0 billion yen as
set forth in forecasts for the fiscal year ending March
31, 2023 and we plan to further reduce interestbearing debt in the fiscal year ending March 31,
2024. However, even if the current level of invested
capital (570.0 billion yen) remains unchanged, if
42.0 billion yen of operating income is ensured, theROIC is calculated to be 5.2% in the formula: (420x 0.7)/5,700, assuming that the effective tax rate is
30%. Therefore, we can achieve the 5% target in a
reliable manner.

3) Strategic Partnership (variable cost reformation):
The Medium-term Management Plan for the fiscal year
ended March 31, 2022 to the fiscal year ending March
31, 2024 aims to reduce variable costs by approximately
7.0 billion yen per year through variable cost reformation
etc., and the result for the first fiscal year (ended March
31, 2022) was a decrease of 8.5 billion yen. We aremoving forward with reviewing product specifications,
exploring new suppliers and breaking away fromself-sufficiency through collaborations with partnercompanies, and in this way, we will aim not only to
produce variable cost reduction effects in the short term
but also to continue to significantly reduce investments
and complement human and technical resources bybuilding strategic partnerships.

Sustainability Management

307.0

yen of net sales and 42.0 billion yen of operating income) for
the fiscal year ending March 31, 2024 can be attained by,as previously, restraining an increase in fixed costs acrossthe NTN Group to 15% or less of an increase in net sales
and reducing variable costs by 7.0 billion yen per year to cut
the variable cost ratio by one point as planned.

51 NTN Report 2022

Fixed cost

Value Creation Story

Exchange rate B
Medium-termManagament Plan
1US$ = ¥103
1EURO = ¥125

Net sales
720.0
23.0

Variable costthe logistics reformation and introduce the successful
practices to overseas sites, thereby steadily minimizing
the current gap between our competitors and us.

<Progress of transformation toward
Revitalization of NTN>
1) Pricing Power (product/business portfolio reformation):
Investment decision criteria (NPV, IRR) and businessperformance evaluation criteria (EVA, ROIC) that wereset by globally introducing the concept of capital costsin the fiscal year ended March 31, 2020 have taken root,
strengthening the investment selection and follow-up
systems. Also, the systems for monitoring the statusof creation of corporate value, clarifying issues andtaking measures are being strengthened with regard toeach group company in each region of each business.
Regarding the OEM business for automobiles andindustrial machinery in particular, while thoroughly
verifying investment returns and taking into consideration
NTN’s competitive advantages such as future producttechnologies and production technologies, we thoroughly
implement a policy in which measures to expand
investments simply for winning price competitions
are eliminated and such available funds are used toinvest in the aftermarket business. This will surely leadto improvement in the product portfolio of each OEM
business and improvement of the business portfolio
through expansion of the aftermarket business in the
future. Especially in the automotive business, the trend
toward decarbonization and EVs has created a business
opportunity for NTN to utilize its technological advantage.

About Us

Lower Break-even Point towards Revitalization

NTN Revitalization Scenario - Toward Corporate Value Creation (ROIC 5% or More)
Net D/E Ratio
Net
D/E
Ratio

3.0

Fiscal year ended March 31, 2018 (Results)

Fiscal year ending March 31, 2024
(Medium-term Management Plan)

Net sales: 744.7 billion yen
Operating income: 39.9 billion yen

Net sales: 700.0 billion yen
Operating income: 42.0 billion yen (6% or more)(%)*Dotted lines are
estimation when
formulating the scenario

2.5

ROIC

ROIC

5.0

2.0

0.0

1.5

-5.0

“Selection and 1. Sales of assets
Concentration” 2. Business integration and closure

1.0

Fiscal year ended March 31, 2022 (Results)

0.5
0Net sales: 642.0 billion yen
Operating income: 6.9 billion yen
2018/3

2019/32020/3“Structural
Reform”
2021/3

Crisis Response Period

1. Fundamental review of marketing and pricing strategy
2. Strengthen production control and inventory control
3. Break out of self-sufficiency

2022/32023/32024/3Medium-term Management Plan

Achieve ROIC 5% or more, maintain ROE 8% or more, return 4% to shareholders, and allocate the remaining 4% tosustainable growth in the future.
NTN Report 2022

52

Sustainability Management

Toward Realization of a “NAMERAKA Society”
About Us

Our Management Policy for the Group is to aim to realize a “NAMERAKA Society” through practicing its corporate
philosophy, and as a company that is trusted and needed by communities including stakeholders, we engage inbusiness activities with an emphasis on respect of human rights and compliance. Based on this policy, in December
2021, we formulated a roadmap for realizing a “NAMERAKA Society” in order to achieve the targets of 13 items ofmateriality identified in December 2020.
Roadmap for realizing a “NAMERAKA Society”

ESG issues

Materiality

Initiatives

Respond to climate change

Reduce CO2
emissions inbusiness activities

Realize carbon
neutrality

2020s

2030s

Visualize and improve electric power at production plants

Scope1 and 2(compared to
FY2018)Introduce internal carbon pricing

Contribute tospread of windturbine andhydrogen society

Contribute to the spread of wind turbine use with hardware and software

Hardware

SoftwareHydrogen embrittlement
resistant bearing

Propose CO2 reduction by high efficiency and low friction of core products (CVJ, hub bearing, and bearing)

World’s No. 2
market share

World’s No. 1
market share
Hub bearing that supports the wheel

CFJ

50% reduction in
torque loss
(compared to EBJ ofconventional products)

62% reduction in friction(compared to 2009)
Low friction hub bearing III

Propose CO2 reduction by multi-functional module products utilizing core technology
Contribute to stable vehicle
driving and improved fuelefficiency
Adaptation to avoidance
behavior of self-driving cars

Contribute to fuel efficiency of HVsuch as drive assist and power
regeneration during deceleration
eHUB

Reduce energy loss

Product realization of further environment-contributing productssHUB

Control steering angle at the left and right rear
wheels separately
Expected to contribute to autonomous driving

Support electrificationof brakes and auxiliary
equipment such as pumps

Ra-sHUBElectric motor actuator

Contribute to reducing wasteful electricity consumption by increasing the operating rate of manufacturing facilities through IoT and sensing
Wi-Fi

Talkingbearing

Condition
Monitoring
SystemNTN Portable
Vibroscope

Edge Application for
Bearing Diagnostics

Contribute to reducing CO2 emissions in the entire supply chain by reusing used bearing
Bearing refurbish
business

Extra-large
bearing for paper
mill application

Production

Spindle formachine tool

Recycling

Establish robot-related modules to compensate for labor shortage due tothe declining working-age population

Robot-related

SocialWrist joint
modulei-WRISTTM

Contribute toprosperous lives

Use

Circular economy
Establish bearing refurbish business

Propose solutions for automation, efficiency, and labor saving at production sites

Visualinspection

Provide safety and comfort

SASB Index

Increase efficiencyof manufacturing
equipment

NTN Group Information

Save energy
for EVs andelectrification(new areas)

FY2050Carbonneutrality

Contribute to hydrogen society

Driveshaft that transmits driving force

Contribute tocarbon-free society

Scope3

Realization of a “NAMERAKA Society”

Environment

Save energy
for EVs andelectrification(core products)

Scope1 and 2

Sustainability Management

Realize a sustainable society
using natural energy

After 2050

FY2035
Carbonneutrality

FY203050%

Promote introduction of natural energy generation and purchase ofrenewable electricity

2040s

Value Creation Story

Contribution to solving social issues toward the future we aim for

Provide independent power supply equipment that contributes to the preparation for natural disasters
Disaster mitigationand disasterprevention

Green Power
StationN3 N-CUBE

Foundation to support ESG management
ESG issues

Materiality

53 NTN Report 2022

Environment / Environmental protection

Resource recycling andpollution prevention

Social / Sustainable supply chain

Social / Prosperous human development

GovernanceImprove the reliability of products and services(quality assurance and stable supply)

Promote safety
and health

Human resource
development

Thorough compliance

Procurement activities with an emphasis onenvironment and society

Respect forhuman rights

Promote diversity

Strengthen governance

NTN Report 2022

54

Materiality

Sustainability Management Toward Realization of a “NAMERAKA Society”

Sustainability Management

Materiality

Contribution to solving social issues toward the future we aim for(1) Confirmation of power usage status and systematic reduction of CO2 emissions by visualizing power consumption in the
product manufacturing process(2) Introduction of solar and wind power generation facilities at business sites and the promotion of purchasing renewableenergy power(3) Utilization of internal carbon pricing
Five initiatives that NTN Group focusses on
toward a carbon-free society

Save energy
for EVs andelectrification(core products)

Contribute to
Carbon-Free
Society

Bearing refurbish
business

Save energy
for EVs andelectrification(new areas)

Increase
efficiency of
manufacturing
equipment

Foundation to support ESG management
Environment
We are striving for “environmental protection” by promoting efforts in resource recycling and pollution prevention as part ofour business activities.
Social
We will strive to improve the reliability of our products and services, promote CSR procurement, and aim to realize a“sustainable supply chain.” In addition, we believe that it is important for business operations to protect the safety of
employees who support the business and improve the quality of human resources. Based on this thought, we are working
to achieve “prosperous human development” by promoting safety and health, and fostering a culture of learning anddevelopment in the workplace.
Governance
As a company that is trusted and needed by society, we engage in business activities with an emphasis on compliance. We
also strive to increase corporate value over the medium to long term through management that emphasizes transparency
and fairness.

55 NTN Report 2022

Development related to low friction, miniaturization and weight reduction of products
for automobiles and industrial machinery

Completion of development themes

Development related to module products for EVs and electrification

Completion of development themes

Save energy for EVs and electrification
Amid increasingly stringent fuel efficiency standards andCO2 emission regulations, the development of electricvehicles driven by electric drive units in place of gasoline
engine vehicles is accelerating. We are contributing toenergy conservation in electric vehicles by developing
deep groove ball bearings for automobiles compatible
with high-speed rotation of motors installed in electricvehicles, and module products that add steeringfunctions to hub bearings.

Providing high-performance bearings(core products)
Electric drive units installed in EVs and HEVs are required
to conserve energy, and there is a growing demand forfurther reductions in friction and in size and weight. We
have developed deep groove ball bearings for highspeed rotation of motors for the purpose of miniaturizing
electric drive units, and have succeeded in high-speed
rotation. It is already being marketed as a “High Speed
Deep Groove Ball Bearing for EVs and HEVs” withdmn value* 1.8 million. We have optimized the internal
specifications of bearings based on our long years ofbasic research, increased the strength by reviewing cage
shapes and materials, and optimized cage and pocket
shapes to suppress cage deformation under centrifugal
force. These technologies minimize energy loss due tofrictional resistance during bearing rotation and realize
high-speed rotation. Because it has same dimensions as
the conventional product, it can replace existing products
and can be used in both grease and oil lubrication
environments.
In recent years, the number of oil lubricated motors
with excellent cooling effect to suppress heat generation
has increased, and we have received many inquiries
about our products for oil lubrication.

Providing high-performance module products(new areas)
We have developed “Ra-sHUB” hub bearings with asteering function for rear wheels, which individuallycompensates for the steering angles on the right and left
sides, by making full use of the technologies we haveaccumulated in our hub bearings, for which we boast theworld’s No.1 market share.
The rear-wheel steering systems on the market arelimited to some suspension systems, such as multilink system used in luxury vehicles, and it is difficult toachieve a large steering angle with the existing structure.
“Ra-sHUB” is a module product that adds a steeringfunction to our hub bearings with using our proprietary
technologies. They are as small as existing hub bearings,
and can be mounted on any type of suspension system,to achieve rear wheel steering. By controlling the steering
angle of the rear tires from the steering angle and driving
information of the front wheels separately from the left
and right sides, the cornering performance and highspeed straight driving stability of the vehicle can be
improved. At low speeds, the minimum rotation radius
can be reduced to improve the vehicle’s small turning
performance and tire traveling resistance. This productwill also contribute to future energy savings in automatic
driving.

Characteristics of “Ra-sHUB”• Module product with steering function for hub
bearings• Controls the rear wheel angle independently on theleft and right sides• Rotation angle +/-10 degree• Improved cornering performance and high-speed
straight driving stability of vehicles• Reduce the minimum rotation radius of the vehicleLargerotation radius*dmn value: Index of the bearing rotational performance
Rolling element pitch circle diameter mm rotational speed min-1

General vehicles

Ra-sHUBHigh Speed Deep Groove Ball
Bearings for EVs and HEVs

SASB Index

Contributeto spread ofwind turbine
and hydrogensociety

KPIs and targets for the fiscal year ending March 31, 2023

NTN Group Information

Contribution to society by providing products and services
In “contribute to carbon-free society,” we will contribute to
the spread and stable operation of wind power generationequipment by providing bearings that support the increase in sizeof wind power generation equipment and by providing condition
monitoring services that utilize IoT. In addition, as a response to
the electrification and EVs shift in the automobile industry, weare promoting higher efficiency, smaller size and lighter weight ofcore products, and developing multifunctional module productsthat utilize core technologies.
In “contribute to prosperous lives,” we will propose solutions
such as robot-related modules to meet the growing demand forlabor saving due to the declining working population. In addition,
to prepare for frequent natural disasters, we will contributeto disaster mitigation and disaster prevention by providing
independent power supplies and others.

Reduce energy loss

Sustainability Management

Reduce CO2 emissions in business activities
In “realize carbon neutrality,” we have set “Achieve carbon neutrality by the fiscal year 2035 (by the fiscal year 2050 for theentire supply chain)” as the target, and are working to reduce CO2 emissions in our business activities. We are accelerating
our efforts toward carbon neutrality by mainly implementing the following measures.

Realize a sustainable society using natural energy

Value Creation Story

The roadmap for realizing a “NAMERAKA Society” consists of “contribution to solving social issues toward the future
we aim for” and “foundation to support ESG management,” which forms the base for its activities. The roadmap defines
related materiality and specific measures based on the seven ESG issues of “realize carbon neutrality,” “contribute tocarbon-free society,” “contribute to prosperous lives,” “environmental protection,” “sustainable supply chain,” “prosperous
human development” and “governance.” In order to resolve ESG issues, we have defined the measures that must be taken
by combining the perspective of forecast, which identifies the anticipated future as an extension of conventional businessactivities, with the perspective of backcast, which considers what needs to be done and at what point in time by working
backwards from the targeted future. The Group promotes ESG management based on this roadmap for sustainable growthover the medium to long term.

Contribute to
Carbon-Free Society

About Us

Approach to ESG management

Reduce energy loss

Small
rotation radius

Vehicles equippedwith Ra-sHUB

Image of action at low speed

NTN Report 2022

56

Sustainability Management Contribute to Carbon-Free Society
About Us

NTN continues unwavering efforts to realize its corporate
philosophy by developing and providing higher-grade
products that contribute to the environment whilequantifying bearings, driveshafts and green energy
products, which are our main products.

The abnormality occurred in a bearing installed inmachinery and equipment will cause the deteriorationof performance and sometimes the shutdowns of theequipment. However, if the condition of the bearings
is properly monitored, problems can be prevented bydealing with them at the appropriate time. Following
the condition monitoring service provided by “Wind
DoctorTM,” a condition monitoring system for windturbines, we have developed a “Sensor Integrated
Bearing Unit” for machine tools, as well as a trial version
of a “Edge Application for Bearing Diagnostics,” and are
evaluating them for a variety of applications.

Trend in achievements and forecasts
Driveshafts and hub bearings, which are our main
products and account for about 50% of our net sales,
and green energy products contributed 1,398 thousand
tons of CO2 reduction in the fiscal year ended March
31, 2022. Sales of S- to B-eco grade* environmentcontributing products, which are the result of our recent
development efforts, comprised 55.9% of net sales in thefiscal year ended March 31, 2022.
* Products are classified according to environmental factor standards specified for
different products in line with technology standards across the world.

Calculation methods for environmental
factors and eco-efficiency

Environmental =factors

Eco-efficiency of developed products

Early

Note

Warning

Indication ofdiagnostic
results

User

Edge
application
Basic software

Analysis anddiagnosis

Edge Application for
Bearing Diagnostics

Data collection
process

Environmental impact*3

A-eco

B-eco

C-eco

D-eco

2.6%
21% 0.1% 24.2% 0.3% 24.7% 2.0%
27.4%
27.6%
15%
42%

14.8%

17.2%

55.9%
22.2%

25.7%

40.3%

33.8%

30.8%

29.0%

22%

20.6%

24.0%

17.6%

15.1%

2018

2019

2020

2021

year ended/2022 (Fiscal
ending March 31)

132.3

139.8

2021

year ended/2022 (Fiscal
ending March 31)

Contribution to CO2 reduction*(10,000 tons)

121.3

127.5

2018

2019

148.5

Production site

No internet
connection required

Vibration data
(digital file)

Data logger

Industrial PCs

Cloud server

Bearing refurbish businessWe are engaged in the business of refurbishing bearings
used in various types of machinery and equipment,such as extra-large sized bearings for paper mill, large
sized bearings for steel mill, and bearings for railway
application. Bearing life can be extended by performing
reconditioning based on our technical know-how before
a failure occurs in the bearings in use, which leads tocost reductions for customers and shorter lead times fortheir purchases. We are contributing to the reduction ofenvironmental burdens and the realization of a recyclingoriented society through this initiative because we canreduce the emissions of resources such as energy andsteel material, as well as greenhouse gas emissions,compared to manufacturing new bearings.

100
50
0

0

1998

2020

Calculation standard
JAPIA LCI Calculation Guidelines by Japan Auto Parts Industries Association(Consumer Use-phase LCI calculation tool)*Applicable to S to C-eco products

57 NTN Report 2022

Development related to products and services that contribute to the stable operationof wind turbines

Contribute to spread of wind turbine andhydrogen society
In order to realize a carbon-free society, natural energy
generated using wind and solar power to generate
electricity and hydrogen energy that does not emit
CO2 when used, and can be stored and transported togenerate electricity at locations where it is required, areattracting attention as next-generation clean energy.
In the field of wind power generation, we havedeveloped bearings for the main shafts of large windturbines , which are highly durable, and have begun
maintenance for wind power generation. In thehydrogen-related field, we have also developed hydrogen
resistant bearings that prevents premature failure ofbearings caused by hydrogen atoms.
We will contribute to the realization of a sustainable
society through product development and businessinitiatives.

Extra-large sized spherical roller bearing for
paper mill application

Progress in wind power generation is expected toward
the realization of carbon neutrality. In order to meet theneeds for stable operation of wind turbines, we aremarketing “left-right rows asymmetrical spherical roller
bearings,” which are often used as main shaft bearingsin large wind power generation equipment, to improve
service life under actual load distributions such as
wind loads in spherical roller bearings, which are often
used as large wind turbine main shaft. In addition, asa countermeasure against wear caused by differential
sliding characteristic of spherical roller bearings, DLC(diamond like carbon) film with excellent wear resistanceis formed on the roller surface to enhance bearing
reliability. Furthermore, in order to improve the operation
rate of wind power generation, we provide wind power
generation operators with a service that distributes
operational status using “Wind DoctorTM,” a Condition
Monitoring System (CMS) for wind turbines. We haverecently entered into a business alliance with Hokutaku
Co., Ltd. (hereinafter referred to as “Hokutaku”), which
specializes in wind power generation maintenance, andwill begin maintenance for wind power generation. Basedon our accumulated “Wind DoctorTM” technology for highprecision detection of bearing abnormalities with and theidentification of defective parts, we will provide prompt
maintenance services utilizing the extensive experienceand know-how of Hokutaku. Through this businessalliance, not only will the man-hours required by theCompletion of development themes

operator to make arrangements be reduced, but also theoperation shutdown time will be minimized by promptly
performing maintenance after an abnormality is detected.
As wind turbines continue to grow in size and offshore
wind turbines become a major source of wind power inthe future, improvements in the accuracy of condition
monitoring and appropriate maintenance based on
accurate data analysis will become even more important
to ensure stable operation of equipment. We willcontribute to the expansion of the market for wind power
generation equipment as a supplier that can provide
these series of services on a one-stop basis.

Wind DoctorTM

Asymmetrical
spherical roller
bearing

HydrogenFor the purpose of saving energy, there is a tendency
to reduce the viscosity of lubricating oil used in rolling
bearings and to reduce the supply volume due toreducing the agitation resistance of oil and miniaturizingof the oil supply pumps, and bearings are required tocope with more severe lubrication conditions. Under
such poor lubrication, lubricant film is likely to run out,
and when the rolling elements and raceways comeinto contact with each other and a new surface on
the raceway surface is created, the lubricating oil
decomposes, generating hydrogen atoms that can enter
the steel material, resulting in premature bearing failure.
This is so-called hydrogen embrittlement.
We have developed a hydrogen embrittlementresistant bearing that has more than three times a longer
life compared to our standard bearing against premature
failure of bearings caused by hydrogen through the
adoption of a new steel material with many hard, finemetal compounds dispersed on the bearing raceway anda newly developed special heat treatment technology.
Furthermore, we aim to apply this technology tovarious infrastructure facilities required for the social
implementation of hydrogen, which is attracting attention
as a next-generation energy.

SASB Index

S-eco

Vibration data
(analog data)

KPIs and targets for the fiscal year ending March 31, 2023

Wind power

Product value*2

Trend in composition of environment-contributing
products by grade (driveshafts and hub bearings)

150

NormalVibration sensor*1 D-eco product (Products that help to reduce energy loss of finished products atthe same performance level as that of around 1997)*2 Values are quantified by using the QFD method (including CO2 reduction
contribution of finished products)*3 From the perspective of evaluating contribution toward measures against
climate change, environmental impact is calculated as CO2 emissions
generated throughout the process of raw materials mining to production (using
the LCI calculation tool by the Japan Auto Parts Industries Association)

1998

Edge Application for Bearing Diagnostics

Eco-efficiency of benchmark products*1

Eco-efficiency =100%“Sensor Integrated Bearing
Unit” for machine tools

Realize a sustainable society using natural energy

NTN Group Information

To quantify products’ environmental friendliness, NTN
adopted environmental factors and eco-efficiency thatare defined in formula and as follows.

Materiality

Sustainability Management

Increase efficiency of manufacturing
equipment

Value Creation Story

Development ofenvironment-contributing productHydrogen embrittlement
resistant bearing
Please refer to our website for details on “Contribute to carbon-free society.”https://www.ntnglobal.com/en/csr/idea/carbon-free.html
NTN Report 2022

58

Sustainability Management

Respond to climate change

Energy conservation of production
facilities

Respond to climate change
KPIs and targets for the fiscal year ending March 31, 2023
50% reduction by the fiscal year 2030 (compared to the fiscal year 2018)

Reduce CO2 emissions in business activities(Scope 3)

Achieve carbon neutrality by the fiscal year 2050

Achieve carbon neutrality by the fiscal year 2035

Carbon neutrality promotion project launched

CO2 emissions reduction results

CO2 emissions/emission intensity [Overseas]

Scope 1: Direct emissions

Scope 1 (Americas)

Scope 2 (Americas)*1

Scope 1 (Europe)
Scope 1 (Asia)

Scope 2 (Europe)*1
Scope 2 (Asia)*1

Scope 2: Indirect emissions*

Emission intensity(ten thousand tons)

50
40

Intensity (tons/million yen)

0.86

0.85

38.1

0.85

30.0

27.4

30
20

0.78

34.2

33.3

0.69
28.8

29.7

23.4

24.6

23.6

10
4.8
0

60

0.8

50

0.6

4.5

2019*2

2020(Benchmark)

4.0
2021

5.4
2022

5.2
2023

19.0

0.4

16.7

0.2

2.4
2031
(Target)40

Intensity (tons/million yen)

1.2
0.85

0.0

0.00

0
2036 (Fiscal year ended/ending March 31)

20
10

0.89

0.91

28.6

26.1

1.0

0.84

33.9
27.5

28.1

5.8

0

0.8

0.65

30

0.43

Emission intensity(ten thousand tons)

1.0

Improvement of heat insulation of outer wallof heat treatment furnace
The NTN Group is working to reduce energy loss inthe heat treatment process by adding heat insulating
materials to the outer walls of heat treatment furnaces
and by applying heat insulating coatings. These
measures have resulted in reduced use of city gas andelectricity and lower heat dissipation from the furnace
body, thereby reducing CO2 emissions and improving theworking environment.

26.3

24.0

21.7

22.5

21.6

17.0
14.1

4.6

4.4

5.0

4.8

2.9

2019*2(Benchmark)

2020

2021

2022

2023

0.6

0.42

2031
(Target)

0.4
0.2

0.0
0.0

0
2036 (Fiscal year ended/ending March 31)*1 Calculated using emission factors sourced from “Electric Utility Emission Factors”(Ministry of the Environment and the Ministry of Economy, Trade and Industry).
*2 Set the carbon neutral benchmark as fiscal year ended March 31, 2019.

*1 Calculated using emission factors sourced from “Emissions Factors 2021” (IEA) .

Please refer to the website for Environmental data of each site
https://www.ntnglobal.com/en/csr/environment/sitereport/total.html

Please refer to the website for Environmental data of each site
https://www.ntnglobal.com/en/csr/environment/sitereport/total.html

Site name

Measures

Facilities

CO2 reduction(tons-CO2)

NTN Mie

Adding insulation

City gas furnace

19

NTN Noto

Heat-insulating
coating

Electric furnaces

58

Introduction of renewable energy
As part of our efforts to achieve carbon neutrality, we
have installed renewable energy generation equipment
for our own consumption at our business sites undervarious schemes. (PPA*1, leasing, and self-investment)
to reduce CO2 emissions (Scope 2). Emissions by 412
tons-CO2 in Japan and 8,210 tons-CO2 overseas werereduced in fiscal year ended March 31, 2022.*2*1 PPA (Power Purchase Agreement): A contract to install solar power generationequipment owned by a third-party power producer on a roof or other locationand purchase its electricity.
*2 Calculated using emission factors sourced from “Electric Utility Emission Factors”(Ministry of the Environment and the Ministry of Economy, Trade and Industry) inJapanese sites and calculated using emission factors sourced from “Emissions
Factors 2021” (IEA) in overseas sites.

Japan

Power generation (kWh)1,021,348

Reducing CO2 emissions in logistics
The NTN Group is reducing CO2 emissions (Scope 3
Category 9) during product transportation by improving
logistics efficiency. Main measures include “shortening
transportation distances by optimizing distribution
routes,” “increasing the loading ratio by expanding theuse of module outer boxes,” “reducing the numberof containers by increasing the loading ratio of export
containers” “promotion of reuse and recycling (repair)of wooden pallets,” and “having carries strictly adhere
to non-idling requests” , and so on. In the fiscal year
ended March 31, 2022, CO2 emissions from Japanese
product transportation were 12.7 thousand tons-CO2/
year (target: 12.3 thousand tons-CO2/year) and CO2
emission intensity was 0.0375 tons-CO2/ million yen(target: 0.0345 tons-CO2/ million yen) and falling shortof both the CO2 emissions and emission intensity
targets. The reason for the underachievement was
mainly transportation inefficiency (high frequency smalllots) due to the COVID-19 pandemic and shortage ofsemiconductors. To do deal with this, we are promoting
improvement of transportation efficiency by optimizing
truck loading capacity.
CO2 emissions/emission intensity in logistics
CO2 emissions (Japan)

Results of renewable energy generation(Fiscal year ended March 31, 2022)
Region

New CVJ plant (Hikari Seiki Industry)

CO2 emission intensity (Japan)(thousand tons)

20

CO2 reduction (tons-CO2)
412

France1,100,990

56

China

13,279,603

8,154

Total

15,401,941

8,621

15

0.0353
12.9(tons/million yen)

0.03580.03520.0358

13.9

14.0

13.3

0.036910.9

0.0375

12.7

0.04
0.03

10

0.02

5

0.01

0
2017

59 NTN Report 2022

SASB Index

CO2 emissions/emission intensity [Japan]*Calculated using emission factors sourced from “Electric Utility Emission Factors”(Ministry of the Environment and the Ministry of Economy, Trade and Industry) inJapanese sites*Liquefied petroleum gas

Construction example (Fiscal year ended March 31, 2022)*1 Please refer to the website for the CO2 emissions verification opinion form.
https://www.ntnglobal.com/en/csr/pdf/kensyouikensho2022.pdf*2 Calculated using emission factors sourced from “Emissions Factors 2021” (IEA) in overseas sites.

Hikari Seiki Industry Co., LTD. (Japan) installed a total of
350 solar panels on the roof of its new CVJ plant, whichbegan generating electricity in July 2021 and reduced
CO2 emissions by 40 tons in the fiscal year ended March
31, 2022.* The equipment has also disaster/emergency
power supply capabilities as an option.

NTN Group Information

The NTN Group is committed to reducing CO2 emissions and emission intensity in all of its business activities. We undergo
third-party verification*1 to ensure the reliability of the data. In the past, from the perspective of reducing energy consumption,
CO2 emissions were calculated using the electricity emission factors of the location-based method for the benchmark year,
but from this fiscal year we are switching to calculating CO2 emissions using the electricity emission factors of the marketbased method.*2 In the fiscal year ending March 31, 2031, we aim to reduce CO2 emissions by 50% of fiscal year ended
March 31, 2019 levels.
We are working on activities with the goal of achieving carbon neutrality by the fiscal year ending March 31, 2036.

The NTN Group is working to reduce CO2 emissions(Scope 1) generated by processing machines and heat
treatment facilities in the manufacturing process. For
heat treatment facilities, which are major sources of CO2
emissions, we have completed fuel conversion to LPG*
and city gas at major facilities as a first-stage energysaving measure. In the future, we will not only expand theuse of highly efficient high-frequency heating equipment
and electric furnaces based on the renewable energyuse, but also consider the use of green ammonia andhydrogen, which do not emit CO2 during production anduse, to promote carbon neutrality through the use ofdiverse energy sources.

Sustainability Management

In July 2022, the Group launched the Carbon Neutrality Promotion Project, which is supervised by the President, Executive
Officer. With the aim of steadily promoting the action plan to achieve the carbon neutral target, we are working on threepriority measures: (1) visualization of power consumption, (2) renewable energy purchase plan, and (3) introduction of aninternal carbon pricing system.

Self-invested photovoltaic installations
on roofs

Value Creation Story

Reduce CO2 emissions in business activities(Scope 1 and 2)

About Us

Materiality

Realize Carbon Neutrality

Materiality

2018

2019

2020

2021

0
2022 (Fiscal year

ended March 31)

NTN Report 2022

60

Sustainability Management Realize Carbon Neutrality
About Us

Initiatives for TCFD recommendations
Outline of the future society assumed in scenario analysis

Governance
The Group has established the Sustainability Committee as an organization to promote sustainability management, and has
established a system to report its efforts to the Board of Directors as appropriate.

Future imageof society

Structure

When the temperature rises by 4 °C (Physical)

When the temperature rises less than 1.5 °C(Transition)

Environmental policies such as from the government
are passive, and the move to low-carbon anddecarbonization has not progressed.
The scale and intensification of natural disasters due
to climate change are progressing.
The number of hot days increases even in seasons
other than summer, increasing the risk of heat stroke.

Due to the aggressive environmental policies of thegovernment and other parties, carbon taxes havebeen introduced, fossil fuel-derived electricity islimited, and the industrial structure is centered on
renewable energy (wind power, hydrogen, etc.).
The industry as a whole is strengthening efforts suchas energy saving to reduce CO2 emissions.

Sustainability Committee

Major items to
be deliberated

Chairperson : Executive Officer
Secretariat : ESG Promotion Department
Members: Departments in charge of sustainability management

Officers
Employees• Identifying Materiality• Amendment/Abolition of corporate philosophy system/CSR policy• Sustainability activity plan

Risks and opportunities
Classification

Anticipated risks and opportunities
Downtime at our plants and within the supply
chain due to extreme weather conditions (heavy
rain, floods, storms)

Risk management<Internal>
Regular confirmation using a hazard map of domestic
business sites<Business Partners>
Encouragement to build BCP and BCM throughProcurement Policy briefing sessions and CSR
Procurement Guidelines
Introduction of supplier crisis management system

PhysicalTransition

Opportunities

Risk of heat stroke among employees at plants
and such

Identification of working environments where air
conditioning is not effective
Systematic implementation of heat measures

Increase in procurement and operating costs
due to carbon taxes, etc.

Promotion of decarbonization in our business activities

Increase in demand for solutions that are usefulin preparing for natural disasters and in theevent of disasters

Securing a lifeline that prevents power shutdown due tonatural disasters (providing stationary independent power
supply units and transportable independent power supply
units to the market)

Increase in demand for energy saving inmechanical devices

Reduction of CO2 emissions by core products

Spread of wind power generation equipment

Provision of large bearings and CMS services for windturbines

Spread of hydrogen energy

Development of product technology and market provisionof bearings for hydrogen energy-related equipment

Spread of EVs and electrified vehicles

Development of product technology and market provisionof electric module products

SASB Index

Transition

Our financial condition, results of operations and cash flows could be impacted by extreme weather conditions (such as
operating or shutting down operations due to heavy rain, floods or storms) associated with climate change (temperature
increases), and by stricter environmental regulations (such as increased procurement costs for raw materials and energy
due to the introduction of carbon taxes) in the countries and regions in which we operate.
Regarding the effects of climate change (temperature increases), the risks and opportunities assumed based on the
scenario in which the temperature rise during the 21st century is “4 °C” and “less than 1.5 °C” are as follows.

Our countermeasures

NTN Group Information

Risks

Physical

Strategy
We link the results of scenario analysis in line with TCFD recommendations to related materiality indicators and targets(Opportunity : reduce energy loss, Risk: respond to climate change), and develop them into business activities. In
addition, we concentrate our R&D resources on areas that lead to “carbon neutrality (environmental impact reduction anddecarbonization)” and the “pursuit of safety and comfort,” and are accelerating our R&D activities for future growth.

In the automobile industry, the electrification and EVs
shift is progressing.
Sustainability Management

Board ofDirectors

Organization

Value Creation Story

In May 2021, we expressed our support of TCFD (Task Force on Climate-related Financial Disclosures) recommendations.
We identify the risks and opportunities posed by climate change in our business and reflect them in our management
strategies. We also disclose information based on TCFD recommendations. Through dialog with a wide range ofstakeholders, the Group will further strengthen its efforts to address climate change and contribute to the sustainable
development of society through its business activities.

Considering the introduction of internal carbon pricing

Metrics and targets
Among the materiality of the Group, the target of “respond to climate change” is “Achieve carbon neutrality by the fiscal
year 2035 (by the fiscal year 2050 for the entire supply chain).” Also, we have newly set “50% reduction in CO2 emissions inbusiness activities in the fiscal year 2030 compared to the fiscal year 2018” as KPIs (management indicators) for the fiscal
year ending March 31, 2023 and beyond.

61 NTN Report 2022

NTN Report 2022

62

Sustainability Management

Contribute to
Prosperous Lives

Provide safety and comfort

Provide safety and comfort

KPIs and targets for the fiscal year ending March 31, 2023

Completion of development themes

3.14 m3/million yen (Overseas)

Waste generation intensity

164 kg/million yen (Japan)

279.4 kg/million yen (Overseas)

Recycling rate

97.9% (Japan)

The NTN Group has established a framework to comprehensively promote the 3Rs (Reduce, Reuse, and Recycle), whichtake into consideration the sustainable use of natural resources and the reduction of input resources such as raw materials
and water, as well as waste. In addition, we are thoroughly managing chemical substances used in our products andmanufacturing processes, and actively promoting the conversion of procured products that contain chemical substances
designated to PRTR* law into alternative products. We have set annual targets for the intensity of waste generation andrecycling rate, as well as amount of chemical substances designated to PRTR law handled, and are promoting efforts toachieve these targets.
*Act on Confirmation, etc. of Release Amounts of Specific Chemical Substances in theEnvironment and Promotion of Improvements to the Management Thereof

Material balance of business activities (Fiscal year ended March 31, 2022)
INPUT

OUTPUT

Resources

thousand
70.8 tentons

Steel materials

thousand69.3 tentons

Resin materials, grease, etc.

1.5Development/
DesignGasoline

Forging/
Turning

SOx*3

thousand m
214 ten

WastewaterHeat
treatmenttenthousand m3

3

142 ten thousand m
72 ten thousand m

Rivers3

Sewers3

PRTR

Grinding/
Polishing

3

3

*3

chemical substances

21 tons

Released/Transferred

PRTR chemical substances*3

Waste generation

75 tons

HandledAssembly

Logistics

8,539

154,316 tons

147,785 tons
6,531 tons

Recycled
Landfilled

Atmosphericemissions Scope 3
Category 9 *2

ten thousand
tons/km1.3
ten thousand tons

*1 Calculated using emission factors
sourced from “Electric Utility
Emission Factors” (Ministry of theEnvironment and the Ministry of
Economy, Trade and Industry) inJapanese sites and calculatedusing emission factors sourced
from “Emissions Factors 2021”(IEA) in overseas sites.
*2 Scope 3 CO2 emissions are
results in Japan only.
*3 NOx, SOx, PRTR chemical
substances, and recycled amountare results in Japan only.

*1 Calculated using emission factors sourced from "Electric Utility Emission Factors" (Ministry of the Environment and the Ministry of Economy,
Water
consumption/consumption
Waste
generation/recycling
rate [Japan and Overseas]
Trade
and Industry)in Japanese sites and calculated usingintensity
emission factors sourced from "Emission Factors 2021"(IEA) inoverseas sites.
[Japanand Overseas]*2 Scope
3 CO2 emissions
are results in Japan only.
*3 NOx, SOx, PRTR substances, and recycled amounts are results in Japan only.

Water consumption (Japan)(ten thousand m )Water consumption (Overseas)

Intensity (m /million yen)
3

3.96

4.17

326

347

132
194

3.87

104
213

3.97

281

134

200
100

177

243
89
154

3.80

2019

2020

2021

3.73

4

(ten
thousand
tons)

20

306

3

15

103

125

2

10

168

181

1

5

0

0

272

0
2018

Waste generation (Japan)

Consumption intensity

3400“N3 N-CUBE,” which
was adopted as
independent power
supply for the flood
prevention center inYoshida Town, Shizuoka
Prefecture, Japan

thousand
10 tentons
thousandtons
47 ten
55 tons
13 tons

NOx*3

3

Industrial water58
ten thousand tons

Scope 1 CO2 emissions

96 ten thousand m
150 ten thousand m
25 ten thousand m

Top water

Atmosphericemissions
Scope 1+2 *1

ten thousand tons

SASB Index

272

Ground water169

Scope 2 CO2 emissions

3

Water

Atmosphericemissions Scope 3
Category 1 *2

ten thousand
tons

55 kL
Kerosene
639 kL
Diesel oil
388 kL
Heavy oil A
158 kL
LPG
12,676 tons
City gas
28,767 thousand m
Electricity
1,269 GWh
Fuel

300

63 NTN Report 2022

Raw materials procurement

6,552 TJ

EnergyFreight weight×distancei-WRISTTM

Please refer to the website for details on “Resource Recycling and Pollution Prevention.”
https://www.ntnglobal.com/en/csr/environment/chemical.html

Material balance

Traffic“N3 N-CUBE,” which
was installed as an eco
toilet at the Tado Sanjyo
Park in Kuwana City,
Mie Prefecture, Japan

96.9% (Overseas)

NTN Group Information

Based on our knowledge of driveshafts, we havedeveloped “i-WRISTTM,” a wrist joint module for robots
that employs our own linking mechanism. “i-WRISTTM,”
is compact, space-saving, and has a wide range ofangles. It also allows vertical articulated robots etc.
to change difficult and tight positions (angles) at thesame speed, and at the shortest distance, as a humanwrist. “i-WRISTTM,” is equipped with cameras anddispensers, and by equipmentalize them, is marketed
as an automated visual inspection equipment or
automated coating device for grease and adhesives. By
replacing operations performed by humans, it has beenhighly rated in the market for leading to the stability of
appearance quality and shortening the cycle time.

From the viewpoint of disaster mitigation and disasterprevention in the event of natural disasters, we havedeveloped and marketed “N3 N-CUBE,” a transportable
independent power source containing small-sized
wind generators, solar panels, and storage batteries incontainers. Bases for flood protection and rescue activities
in the event of disasters along the coast, as well as flood
prevention centers for stockpiling and storing supplies,
are in place in each region. It has been proposed thatthey be used to supply electric power for lighting and air
conditioners in the centers in normal times, and to be used
it an emergency power source in the event of a disaster.
We have also developed an “N3 N-CUBE” equipped witha circulation type flush toilet and treatment tank to beinstalled at parks and facilities in mountainous regions
etc. where commercial power has not been introduced.
Water used in the toilet is filtered in the treatment tankand circulated as reclaimed water. The power used here
is generated by “N3 N-CUBE.” Maintenance only requires
a few changes of water a year, and no water supply or
sewerage construction is required. Because water isrecycled as reclaimed water, it is possible to use cleanwater without draining it outside. The exterior of the toilet
is also equipped with digital signage powered by “N3
N-CUBE,” which lights up the area around the toilet, evenat night, contributing to security.

4.30 m3/million yen (Japan)

Sustainability Management

Robot-related

Disaster mitigation and disasterprevention

Water consumption intensity

Value Creation Story

Raise awareness of independent power supply units and implement proposal activities for disaster mitigation anddisaster prevention

In order to support people's lives, there is an urgent needto respond to labor-savings in line with the shrinking
working population at manufacturing sites. On theother hand, we are also promoting disaster prevention
measures to reduce the impact on people's lives in theevent of a disaster or similar event. We have developed“i-WRISTTM,” a wrist joint module that contributes tohuman substitution at the production site. We have also
developed and marketed “N3 N-CUBE,” which houses
small-sized wind generators, solar panels, and storage
batteries in containers from the perspective of disasterprevention and disaster mitigation. Through theseproducts, we provide peace of mind and comfort tocustomers, and contribute to local communities.

Resource recycling and pollution prevention

Resource recycling and pollution prevention

Materiality

KPIs and targets for the fiscal year ending March 31, 2023
Development related to robot-related modules

Materiality

Environmental Protection

Sustainability Management

About Us

Materiality

Materiality

2022

year ended/2023 (Fiscal
ending March 31)

Waste generation (Overseas)

97.8%

97.4%

17.7

17.7

10.9

6.8

2018

10.9

6.8

2019

96.9%

96.9%

Recycling rate

97.3%

95.8%

18.2
15.5
9.3
6.2

2020

13.1
8.0
5.0

2021

15.4
9.0
6.4

11.3

6.9

2022

2023 (Fiscal year ended/(Target)(Target)Please refer to the website for Environmental data of each site
https://www.ntnglobal.com/en/csr/environment/sitereport/total.html*Please refer to the website for the results of water stress analysis by “AQUEDUCT” andwater consumption by region.
https://www.ntnglobal.com/en/csr/environment/chemical.html#anchor01

ending March 31)

Please refer to the website for Environmental data of each site
https://www.ntnglobal.com/en/csr/environment/sitereport/total.html

NTN Report 2022

64

Materiality

Sustainability Management

Sustainable Supply Chain

Procurement activities with an emphasis onenvironment and society

About Us

Materiality

Improve the reliability of products and services(Quality assurance, stable supply)

Improve the reliability of products and services(Quality assurance, stable supply)

Materiality

KPIs and targets for the fiscal year ending March 31, 2023

KPIs and targets for the fiscal year ending March 31, 2023
Value Creation Story

Maintain high level of customer satisfaction

Procurement activities with an emphasis on environmentand society

Conduct CSR questionnaires for suppliers continuously and maintain and improve achievement level of results

More than 90% of responses for “Excellent” and “Good”

Maintain 100% certification for quality management systems (ISO9001/IATF16949)*Applies to domestic and overseas consolidated manufacturing subsidiaries (excluding bases that have not started mass production).

Number of participants in specialized quality education courses

Basic approach to procurement
activities

100 or more

Progress in restructuring the domestic core systems

Build the quality assurance system
Create the quality to improve customer
satisfaction

65 NTN Report 2022

Restructured

Rebuilding the system for each site

NTN Group (Domestic)
Business information management
Global master management
Financial accounting
Customer
Projectmanagement
EDI

Distributor
systemOverseas
systems

Technology
information
control

Supply chain managemen
Sales management

Workflow

Production and sales adjustment

Human
resources
management

Production management

Indirect materialpurchasing

Cost management

Warehouse inventory
management

Directmaterialpurchasing

Business partners

As a company-wide project, we are rebuilding our
mission-critical systems by standardizing businessprocesses and systems using ERP* and other new
packaged systems. This will serve as an IT foundation
to support future DX promotions, and we are promoting
business speed and service levels as well as more

Overview of NTN core systems using ERP and otherpackage systems (as of June 2022)

Affiliates outside Japan

Stabilize new core system*ERP is an abbreviation of Enterprise Resource Planning (enterprise resource
planning).
Packaged software that oversees the company's core operations, including sales,
logistics, production, accounting, and human resources.

Customers

In order to improve customer satisfaction and provide
products/services in a consistent manner, the Group’s
domestic and overseas manufacturing sites haveacquired ISO9001 certification, which is an international
management system standard. We are steadily working
to acquire certification for new businesses and newly
launched plants. 100% of our domestic and overseas
consolidated subsidiaries related to manufacturing
have acquired certification for their quality management
systems.
We have also acquired IATF16949 certification, astandard for the automotive industry, and JISQ9100 andNadcap, standards for the aerospace industry, as well as
CRCC (China) certification for the railroad industry.

efficient operations. Following the start of operations of
new systems in the areas of financial accounting, humanresources and salaries, and technology, a new system
for sales, logistics, supply and demand adjustment,
inventory management, etc. of finished products in the
SCM field began full-scale operations in August 2020.
Thereafter, we are promoting activities to introduce new
systems into the production, procurement, process,work-in-process, and cost domains at each plant.
The new systems have enabled us to improve theefficiency of drawing and prototype control through thedigitization of sales activities and the introduction of a
project management system, to speed up price anddelivery deadline response, to strengthen inventory
management, and to enhance cost management. In
addition, we aim to ensure a stable supply and respondflexibly to fluctuations in demand based on factual datasuch as fresh demand information, inventory information,and sales results.

Procurement
EDI

Manufacturingexecution system

Please refer to our website for other initiatives related to “Improve the reliability of
products and services (Quality assurance, stable supply).”
https://www.ntnglobal.com/en/csr/sc/customer.html

Risk management for suppliers
From the viewpoint of risk management, we begin
transactions with our business partners after checking
their management structure, quality, and environmental
management.
We also conduct annual survey for business partners,
which we have already conducted transactions with,to continuously monitor their business conditions. If wedetermine that a transaction involves a high risk, we
strive to minimize our procurement risk and ensure stableprocurement by implementing risk reduction measurescommensurate with the magnitude of the impact, taking
into consideration procurement parts, transaction
amounts, etc.
With regard to a natural disaster or an infectious
disease, we have established a risk management
database, and in the event of an emergency, we
immediately confirm the safety of business partners andmanage the risk associated with ensuring a stable supplyof our products throughout the supply chain.

CSR questionnaire for suppliers
Questionnaire items
1

Compliance2

Human rights and labor

3

Environment

4

Quality and safety

5

Information security

6

Business Continuity Management (BCM)

7

Social contribution

8

CSR procurement

SASB Index

Quality management system

Introducing by site (completed at all sites in March 2024)

In April 2021, we formulated a Procurement Policy
corresponding to each SDGs. Based on the perspectivesof “Fairness/impartiality,” “Compliance with Laws andRegulations,” “Green Procurement,” and “Coexistence
and Co-prosperity,” purchasing departments at ourhead office play a central role in building a relationshipof trust with business partners and we are conducting
purchasing activities. Based on the “NTN Group
Green Procurement Standards,” we are promoting
green procurement, which prioritizes environmental
preservation efforts and procurement from business
partners with superior environmental quality. We havealso established “NTN CSR Procurement Guidelines” andare requesting active promotion of CSR activities. We arealso working to achieve local procurement at all of ourmanufacturing sites, including those outside Japan, andto procure materials from optimal locations globally.
In May 2022, we announced our “Declaration ofPartnerships Building” with the aim of building newpartnerships by promoting collaboration, coexistence
and co-prosperity with business partners in the supply
chain and businesses seeking to create value.

NTN Group Information

Customer needs for lightweight products, quieter
operation, lower torque leading to energy savings,
and longer product life are changing over time. In
order to ensure that our customers are satisfied with
our products, it is important to respond swiftly to theirchanging demands and to build relationships of trustwith them. We strive to maintain and improve productquality globally in accordance with our Basic Quality
Policy, which serves as the basic philosophy for all of ourmanufacturing activities, in order to create quality thatsatisfies our customers.
We also conduct customer satisfaction surveys as anopportunity to hear directly from our customers about
their satisfaction level and requirements. In the survey
for the fiscal year 2021 (ended March 31, 2022), a totalof 113 customers responded and 88% of the overall
evaluations were “Excellent” or “Good.” Going forward,
we will continue to provide quality that is responsive tocustomer needs in order to further improve satisfaction.

Introduction completed as of the fiscal year ended March 31, 2022

We conduct annual survey of business partners to further
raise awareness of “NTN CSR Procurement Guidelines”
and to confirm compliance.
By the fiscal year 2021 questionnaire, the achievement
ratio of human rights and labor, and quality and safety
was more than 90%, indicating that business partners
were also highly conscious. However, the ratio of business
continuity management (BCM), social contribution, andCSR procurement was less than 80%, and it meant that
their awareness was not high at this stage.
In recent years, companies have been required to
not only achieve corporate performance (economic
value), but also to be an entity that is needed by society(social value). To help business partners understand thatsocial value is important, we will continue to engage inawareness-raising activities.

Sustainability Management[1] Sales and logistics, financial accounting, human resources
and salaries, and technology areas[2] Production area

CSR questionnaires for suppliers

DegreeDegree ofof achievement
achievement according
according to
to CSR
CSR questionnairequestionnaire results
results
1 Compliance

100
8 CSR

procurement8060

2 Human rights

and labor

40
20
7 Social

contribution0

6 BusinessContinuity
Management (BCM)

3 Environment

4 Quality andsafety5 Information security
Please refer to our website for other initiatives related to “Procurement activities
with an emphasis on environment and society.”https://www.ntnglobal.com/en/csr/sc/client.html

NTN Report 2022

66

Materiality

Sustainability Management

Promote safety and health

Human resource development

Promote diversity

One of the ESG issues facing the Group is the “prosperous human development.” We are advancing specific initiatives
based on the following pillars: “securing human resources who will lead the next generation to take on the challenge oftransformation,” “creating a rewarding environment that respects the diversity of employees,” “fostering a culture of learningand development in the workplace,” “realizing a workplace where employees can work safety and healthily” and “respectfor human rights.”

Respect for human rights
KPIs and targets for the fiscal year ending March 31, 2023

Analyze and evaluate the results of questionnaires of overseas affiliates
Survey on the situation of foreign workers working in Japan (Monitoring)

Based on the two perspectives of “respect” and“remedy” set forth in the United Nations Guiding
Principles on Business and Human Rights, ourGroup prioritizes “responding to human rights risks in
employees,” “responding to human rights risks in the
supply chain,” and “building a framework that ensures
access to remedies.” In the fiscal year ended March
31, 2022, we began identifying negative human rights
impacts in our business activities (P: identification
and assessment of risks) in order to develop humanrights due diligence. We first conducted a humanrights questionnaire for our overseas affiliates in order
to ascertain the actual situation. We will analyze andevaluate the results of the questionnaire and promote theidentification of risks.

Overview of human rights due diligence
United Nations Guiding Principles on Business andHuman Rights

Respect[Responsibility to Respect Human Rights]
Identification andassessment of risks

Management
PolicyP

Human Rights
PolicyPrevention andmitigation ofnegative impact

D

July, 2020

Procurement
PolicyDecember,
2019

April, 2021

Remedy[Responsibility to remedy human rights violations]
Complaint handlingA
Information
disclosure

C
Additionalverification

Human rights risk management

Building a framework that ensures access to remedies

Responding to human rights risks in
employees
Sound labor-management relations based on labormanagement consultations
We strive to share the content of each measure between
labor and management in a forum where labor andmanagement can exchange information with each other.
We hold quarterly “Labor-Management Roundtable
Meetings,” in which executive managers provide
thorough explanations about the Business Management
Policy, management environment, and other topics tothe labor union and listen to the views of the labor union.
In addition, we hold labor-management committee
meetings as appropriate according to each measure that
leads to improvement of “motivation to work” and “easeof work,” with the aim of exchanging opinions to deepen
mutual understanding and deciding on work styles thatlead to improvement of attractiveness of a place to work.
Survey of foreign workers
We will investigate the working condition of employees inour group, grasp the actual condition of foreign workers,
and respond to issues identified.

Responding to human rights risks in the
supply chain
Correspondence to forced labor and child labor(Conflict mineral surveys)
Incomes from the mining of tin, tantalum, tungsten
and gold (3TG) in the conflict areas of the Democratic
Republic of the Congo (DRC) and neighboring countries
could be a source of capital for armed forces, which
could lead to human rights infringement, illicit mining andsmuggling.

67 NTN Report 2022

Number of conflict mineral surveys(responding to requests from customers)
Japan(Number of cases)

500

464
384

400
300

337

341

106

97

210

231

244

263

2016

2017

2018

2019

300
90

Overseas
451

151

147

121

200
100

313

304

2020

2021

SASB Index

The Group believes that in order to contribute to asustainable society and continue to be a “company
needed by society,” it is essential to fulfill our corporate
responsibilities relating to respect for human rights
and to earn the trust of society. Accordingly, we haveincluded “respect for human rights” in our Management
Policy. In addition, we have established a Human Rights
Policy, which stipulates that we will not violate any
form of human rights. We also strive to create a work
environment in which all employees of the Group canwork safely and comfortably.

Outline of Human Rights Policy
1. NTN will respect internationally-recognizedhuman rights.
2. NTN will not violate the human rights of others.
3. NTN will respond appropriately to any negative
impacts its business activities may have onhuman rights.

NTN Group Information

Human rights due diligence

In April 2016, we established our CSR Procurement
Guidelines, upholding the policy of “Responsible
mineral procurement,” to continuously monitor whether
the mineral resources contained in materials andcomponents used in our products are mined fromconflict and high-risk areas.
In the fiscal year ended March 2022, we traced
back through our supply chain of 256 business partners
to identify the material smelters, and more than 93%
of such partners reported that they do not use any
conflict minerals. We will continue to conduct this survey
periodically.
Companies listed on U.S. Stock Exchanges are
required to disclose any use of conflict minerals under
the U.S. Dodd-Frank Act. Based on the results of
the above survey, we respond to inquiries from ourcustomers regarding conflict minerals.
As human rights issues are gaining attention globally,
corporate awareness of such issues is growing.
Regardless of the U.S. Dodd-Frank Act, the numberof companies voluntarily eliminating the use of conflictminerals is increasing as shown in the chart below.

Sustainability Management

Basic approach to human rights

In order to further promote human rights initiatives, wehave formulated a Human Rights Policy in which all
Group employees share common sense of values related
to human rights and which serves as the basis for their
day-to-day activities and business activities. In doing so,
we are making efforts to ensure that human rights arerespected.
Based on the Human Rights Policy, we will addresshuman rights issues which are gaining more and moreglobal attention, as exemplified by the Sustainable
Development Goals (SDGs) and the UK’s Modern Slavery
Act, and fulfill our corporate responsibility for respecting
human rights.

Value Creation Story

Materiality

Human Rights Policy

About Us

Prosperous Human
Development

Respect for human rights

0

Excerpt from NTN CSR Procurement
Guidelines
Responsible mineral procurement
Mineral resources included in materials andcomponents will be checked for any negativesocial impacts on human rights, the environment,
etc. If a negative impact is suspected or verified to
be present, we will substitute a method that does
not use those conflict materials.
Prohibition of child labor
We will not violate the obligation to protect children
and will not employ children that do not meet theminimum working age of each country and region.
Prohibition of forced labor
We will ensure that all labor is voluntary and that
employees can leave their job freely. We will notuse forced labor.

NTN Report 2022

68

Sustainability Management Prosperous Human Development
About Us

Materiality

Promote safety and healthMateriality

KPIs and targets for the fiscal year ending March 31, 2023
6 domestic manufacturing affiliates have acquired GSC certification(as of March 2022, 2 companies have acquired certification)

Maintain “White 500” certification for Health and Productivity Management Organization (Large enterprise category)
Achievement of the annual plan of the Risk Survey targeting manufacturing sites

Safety and health efforts
Nurturing strong safety consciousness

Holding of “NTN PROUD AWARD,” as ESG Corporate Award100%

system that supports the safety of the Group. By
continually implementing our management system,
we will strive to comply with laws and regulations andimprove the level of safety and health.
All of our manufacturing sites have completed ISO
45001*1 certification, an international standard.
In the domestic manufacturing affiliates, twocompanies have acquired ISO 45001 certification, eightcompanies have acquired OSHMS*2 certification, and two
companies have acquired GSC*3 evaluations. Currently,
four affiliates are in the process of acquiring GSC
certification.
Three overseas affiliates have also acquired ISO
45001 certification.
*1 ISO45001: International standards for occupational health and safety
management systems*2 OSHMS: Japanese standard in compliance with the MHLW's “Guidelines on
Occupational Safety and Health Management Systems” (OSHMS Guidelines)*3 GSC: MHLW’s project for assessing occupational safety and health of small andmedium-sized business sites (Good Safety Company)

Approach to Kenko Keiei*(health management)
Certified as “Health and Productivity
Management Organization 2022 Large
enterprise category (White 500)” for thesecond consecutive year
In recognition of our efforts, we were certified by the
Ministry of Economy, Trade and Industry and the Japan
Health Council as one of the “White 500”, the top 500
corporations in the Health and Productivity Management
Organization 2022 ( Large enterprise category). This year
is the second consecutive year of certification.
In fiscal 2022, 2,869 corporations applied for the
Health and Productivity Management Organization (Large
enterprise category), and the top 500 corporations,
including ours, were certified as “White 500” ascorporations practicing particularly excellent healthmanagement.

Basic approach to human resource
development

Introduce communication tools in
response to work style reforms

Our human resource development aims to foster aculture of learning and cultivation in the workplacethrough the development of human resources capableof achieving business objectives and quickly responding
to changes in the business environment, based on thebasic concept of human resource policy of “enriching
human resources” aimed at realizing a “NAMERAKA
Society.” To achieve this objective, our basic policy forhuman resource development is to foster three typesof human resources: (1) human resources who arecompetent in the international community, (2) humanresources who are independent as individuals, and (3)human resources with creativity. Our human resource
development is based on individual self-development
and on-the-job training (OJT). In addition to providing
opportunities and various support systems to promote
this, we continue to provide various types of training as
Off-JT*, if necessary, with a long-term perspective in asystematic, planned and organized manner.

In order to reform work styles and prevent the spread of
the new coronavirus, we are developing an environmentthat enables flexible telework that is not constrained bylocation. We have introduced a communication tool withfunctions such as web conferencing, business chat,and schedule sharing using the cloud, with the aim ofrevitalizing communication and improving productivity
during telework.
We are also working to strengthen information
security for communication tools so that employees
can conduct their work safely and with peace of mind
anytime, anywhere.

*Education and training outside the workplace

Manager personnel development
In addition to conventional training for managers, wehave newly launched a “NTN Next Leader Program” foryoung managers with the aim of developing the numberof candidates for next-generation management, who canmake decisions on management issues on long-term
perspective.
This training is a curriculum for systematicallylearning the thinking and knowledge necessary for
management through a selective system. Through theseand other training programs, we will strive to cultivate
management-level candidates systematically and quickly.

Promote RPA use
In a Japanese society where the decreasing labor force
is unavoidable due to the declining birthrate and aging
population, working style reforms and measures to deal
with the shortage of human resources are becoming
major issues.
To resolve these issues, we are working to thoroughly
automate manual work and streamline and standardize
business processes through the use of RPA (Robotic
Process Automation) in conjunction with the restructuringof core systems.
In particular, in the “paperless,” “cashless,” and“stamp-less” work style reforms which have rapidly
become widespread in Japan after the coronavirus
pandemic, we are working to improve operational
efficiency and shift to high-value-added operations by
incorporating operational reforms using the latest IT
technologies.
In the future, we will further expand the scopeof application of digitalization in indirect operations,which will lead to improved productivity for the entire
organization, and aim to increase corporate value.

SASB Index

Risk assessment (RA) is conducted for equipment at thetime of installation, after a certain period of time elapses
after installation, when equipment or content of work is
modified, when something is pointed out as a result ofsafety patrols, or when near misses occur, in order toimprove the intrinsic safety of equipment.
To deal with risks that are identified in RAs, we
implement safety initiatives using engineering measures,such as safety covers and interlocks, in addition to
intrinsic measures for reviewing operations. Furthermore,
we consider risk reduction by means of managerial
measures (procedures, rules, etc.) and protective
equipment. Remaining risks are recorded in the residual
risk management sheet in accordance with the unified
company-wide residual risk management operation.
Based on this, stickers indicating residual risk levels are
put on the equipment for visualization. Furthermore,training on the residual risk of the equipment is provided
to operators to make sure that they know where thehazardous risk lies.

50

NTN Group Information

Intrinsic safety of equipment

Number of participants in “NTN Next Leader Program”

Sustainability Management

Through in-house training, we train a number of risk
assessment (RA) trainers at each business site, andconduct RA implementation guidance by RA trainers
on a workplace-by-workplace basis to promote
the improvement of RA capabilities of employees.
Similarly, we have trained risk prediction (KY) trainers,
implemented KY training on a workplace-by-workplacebasis, and improved the KY capabilities of employees todevelop people who are well-versed in safety practices
and who do not act unsafely.
To prevent human error, we provide training tomanagers with the aim of improving social skills thatcannot be attained only by providing systems or
knowledge, such as status awareness, decisionmaking,communications and leadership. In addition, we areusing the Safety Assessor qualification system to trainengineers who can promote the intrinsic safety ofequipment.

KPIs and targets for the fiscal year ending March 31, 2023

Value Creation Story

Operate occupational safety and health management
system continuously

Human resource development*Health management is a registered trademark of the NPO Health Management
Research Association.

Creating structures to support safety
We are promoting the introduction of an occupational
health and safety management system to create a

69 NTN Report 2022

Please refer to our website for other initiatives related to“Promote safety and health.”
https://www.ntnglobal.com/en/csr/sc/employee.html
NTN Report 2022

70

Sustainability Management Prosperous Human Development
About Us

Message from the Executive Officer
in Charge of Human Resources

Implement employee
engagement survey

Promote diversity
KPIs and targets for the fiscal year ending March 31, 2023

Ratio of female managers

9% for NTN (target for the fiscal year ending March 31, 2024)

Ratio of male childcare leave acquisition

30% (target for December 2024)

Career advancement of women
One of the biggest challenges in achieving diversity is
promoting women achievement in the workplace andclosing the gender gap. Currently, the percentage offemale managers in our group is 14% globally, and weare working to increase the number of managers inJapan, which is lower than in other regions.
In order for women to participate in important
decision-making in positions of responsibility, and tocreate innovation based on diverse opinions and flexible
ideas, we have introduced a leadership development
program for female employees and systematicallyprovide education to help them move up, thereby
creating an environment in which women can challenge
for managerial positions.
In addition to fostering women awareness anddeveloping their abilities, we will work to further promote

71 NTN Report 2022

Trend
the number
numberofoffemale
femalemanagers
managers
andsupervisors
Trend in theandsupervisorsat(employeesbelonging
belongingtoto
NTN)/As
April
at NTN (employees
NTN)/As
of of
April
1 1
Female managers (belonging to NTN)

(Persons)

140
120
100
80
60
40
20
0

75

81

49

53

55

20

22

26

69

94

106

114

Female supervisors

123

127

127

127

75

82

92

96

64

98

94

30

31

32

31

31

29

33

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Promote male employees to takechildcare leave
Measures to promote the participation of male
employees in childcare leave include awareness-raising
activities by posting posters’ promoting male employees’
childcare leave throughout the company, and holding
seminars to promote the development of the next
generation (papa seminars), to help male employees
learn about the importance of participating in childcare
and to deepen their understanding of internal systems forchildcare.
As a result of these efforts, the percentage of male
employees taking childcare leave in fiscal 2021 wasapproximately five times higher than that of fiscal 2019.
Please refer to our website for other initiatives related to“Promote diversity.”
https://www.ntnglobal.com/en/csr/sc/employee.html

How do we aim for “prosperous human development”, one of the ESG issues? The Executive Officer in chargeof human resources will explain our efforts to realize “respect for diversity and individuality,” “enhancement ofengagement” and “revitalization of the organization.”

Aiming for steady efforts aimed at“prosperous human development”

Putting “employees’ desire” in Human
Resources Policy

Organization and human resource reforms arenecessary to resolve various social issues andincrease social value, environmental value andeconomic value while adapting to rapid changes
in the environment in recent years. To this end it isnecessary to foster an organizational culture thatworks to increase value and to develop diverse
human resources that can work with job satisfaction.
With this aim, the Group has set “prosperous humandevelopment” as one of its ESG issues. Furthermore,
we will make “securing human resources who willlead the next generation to take on the challenge oftransformation,” “creating a rewarding environmentthat respects the diversity of employees,” “fostering
a culture of learning and development in theworkplace,” “realizing a workplace where employees
can work safety and healthily” and “respect forhuman rights” more specific policies and steadily
work on concrete measures one by one. At thesame time, we, the Human Resources division, must
respond to changes. Based on the five keywords of“Advancement, Visualization, Linkage, Efficiency, andGlobalization,” we will promote transformation andstrengthen the foundation from a higher and broader
perspective.

Amid continued harsh business performance,
we believe it is more important than ever toenhance employee job satisfaction and invigorate
the organization. Accordingly, we conducted an“employee awareness survey” targeting the head
office and sales divisions. The survey results wereshared with all the Executive Officers, and we havebeen able to firmly grasp the employees' desire to
make NTN an excellent company. In the future, wewill consider expanding the scope of the survey.
However, we often tend to seek results in aquick manner after such surveys, but first of all,we believe that it is important to reflect employees’
desire in the improvement activities of the workplaceand have them take root. In addition, we reaffirmed
the importance of listening to the opinions of ouremployees on a regular basis rather than limiting
ourselves to the “employee awareness survey.”
We will reflect the results of this survey and various“employees’ desire” in our personnel policies.

Fostering the next generation who cantake on the challenge of transformation
Management and senior management play animportant role in fostering a culture that enhances
employee motivation and supports the challenge oftransformation. In fiscal 2021, we have significantly
renewed and relaunched the training program withthe aim of systematically and early developing thenext generation of management executive, andexpanding the base of candidates. In fiscal 2022,
we will further review the content of the training andincrease the number of participants.
We will develop human resources who can
support our future business foundation and takeon the challenge of transformation even in an era ofuncertainty, uncertainty and rapid change.

SASB Index

Our group is working to create a workplace environment
in which a variety of human resources, regardless ofnationality, culture, gender, age, or disability, can create
better ideas with free ideas and maximize their abilities.
We will respect and recognize diverse values, andintegrate them to create an organization that generates
flexible ideas. While continuing to grow in a sustainable
manner, we will realize our company’s philosophy of “Weshall contribute to international society through creating
new technologies and developing new products.”

women's activities with raising the awareness of theentire workforce.

Yasuhiro Kawabata

NTN Group Information

Basic Approach to Diversity
and Inclusion

Executive Officer
Human Resources Strategy Department
Personnel Department

Sustainability Management

Materiality

Please refer to our website for other initiatives related to “Human resource
development.”
https://www.ntnglobal.com/en/csr/sc/employee.html

We will steadily promote“prosperous human development”
to increase corporate value.

Value Creation Story

To achieve sustainable enhancement of corporate
competitiveness, we believe that it is important to create
an open workplace in which each employee's abilities are
utilized and treated fairly, as well as a good relationshipof trust and communication between supervisors,
subordinates, and employees. We are working to
improve employee engagement.
In order to enhance the effectiveness of our initiatives,
we conducted an engagement survey in October 2021

to gauge the thoughts and feelings of our employees andtheir expectations for the company.
Through the development of personnel measures
to improve employee engagement, implementation of
workplace improvement activities, measures to reformworking styles, and initiatives linked to the promotion ofhealth and productivity management, we will realize the“good working environment” and “motivation” of eachand every employee.

Importance of recognizing “differences”
among countries and regions
The new corporate award system “NTN PROUD
AWARD,” which will start in fiscal 2022, wasestablished with the aim of praising employees’
ESG activities from a global perspective. We believe
this will further deepen their understanding of ESG
management and raise their awareness as a memberof NTN group, making it easier to disseminate ourpolicies and strategies to employees around the world.
From my experience in overseas assignments, I
think it is difficult to implement systems and measuresin the same way as in Japan, as laws and regulations,cultures, religions, and customs differ depending on
the country or region. In other words, there is a big
difference between proceeding with a project with
an awareness of the “differences” between Japanand other countries and proceeding without suchawareness. We will promote the creation of a workplaceenvironment in which diverse human resources canwork with enthusiasm while adding a global perspective
so that new discoveries and ideas can be discovered
while acknowledging each other’s differences.

NTN Report 2022

72

Materiality

Sustainability Management

Strengthen governance

GovernanceThorough compliance
About Us

Members composing Nominating Committee, Compensation Committee, and Audit Committee
Fiscal year ending March 31, 2023 (As of June 21, 2022)

Basic Approach

Nominating
Committee

Director

Hideaki Miyazawa
Toshinori Shiratori

1

Masaki Egami
Masaaki Yamamoto
Isao Ozako(Non-standing)Kouji Kawahara
Ryo Kawakami(Non-standing)Tomonori Nishimura(Non-standing)

Yuriya Komatsu Chairperson(Non-standing)

Akira Murakoshi(Non-standing)

The Management Meeting discusses
important matters relating to operational
execution, as a supporting body fordecisionmaking of President, Executive
Officer. The meeting is composed ofPresident, Executive Officer, and Executive
Officers who are designated by him, andheld twice a month in principle.

Inside Director

Appointment/
removal of Directors[Execution Organization]

Report/Propose[Supervision Organization]

Advise5 Management

1 Board of Directors

Delegate/supervise(Supervise the execution of duties of Directors and Executive Officers)(Decide the management policy, etc.)

Meeting(Decision-making support)
ReportReportReportDirectOfficers Meeting

Sustainability Committee

3 Compensation Committee(Sharing information)

Risk Management Committee

Basic information
Organizational design
Directors
Of those, independent
Outside Directors
Term of office of Directors
Executive Officers
Of those, Executive Officers
who have the authority ofrepresentation
Executive Officers
concurrently serving as
Directors
Structure to support duties of
Audit Committee
Accounting auditor

Company with
Nominating
Committee, etc.
12

Fair Trade Monitoring Committee

4 Audit Committee

Audit

Compliance Committee
Audit

6
1 year13
2

5

DirectReportDirectInternal Audit
Department

ReportAvailable (Internal
Audit Department)
Ernst & Young
ShinNihon LLC

Cooperate

Accounting auditor(audit firm)

6 Executive

Compensation Committee

SASB Index

Appointment/removal ofmembers of committees

2 Nominating Committee
ReportThe Nominating Committee decides
on the content of a proposal regarding
appointment/ removal of Directors, which
is submitted to the General Meeting of
Shareholders. The majority of the members
are Outside Directors. Three out of the fivemembers of the committee are Outside
Directors, and the committee is chaired byan Outside Director.
3

Executive
Officers

Nominating Committee
NTN Group Information

Representative
Executive Officer
President,
Executive Officer

2

Appointment/
removalof Executive Officers

Appointment / removal

Executive Officers
Executive Officers are elected by the
resolution of the Board of Directors, and arein charge of executional decision making
and execution of operations delegated by
the Board of Directors. Its term of officeis specified as a year by the Articles ofIncorporation. The number of Executive
Officers is 13 as of June 21, 2022.

Chairperson

General Meeting of Shareholders

Executive Officers Meeting

The Executive Officers Meeting is heldby President, Executive Officer under
the attendance of all Executive Officers.
Matters resolved at the Board of Directors
are instructed, and each Executive Officer
reports about the status of operational
execution. This meeting is held once a monthin principle, to make operational execution
more efficient and effective by sharing
information among Executive Officers.

Outside Director

The Board of Directors decides the basic
management policies, and supervises
the execution of duties of Directors
and Executive Officers. Except matters
stipulated by laws and regulations or the
Articles of Incorporation to be resolved
at the Board of Directors, the Board of
Directors delegated substantial authority
to Executive Officers with the aim tostrengthen the supervision of management,
and make decisions more promptly.
The Board of Directors is held once amonth in principle, but it is also held flexibly
as needed.
The Articles of Incorporation specify thatthe term of office of Directors shall be one
year, and the number of Directors shall bewithin 15. The number of Directors is 12
as of June 21, 2022, and six of them are
Outside Directors. The Board of Directors ischaired by Outside Director.

Sustainability Management

Corporate governance structure (as of June 21, 2022)

Management Meeting

are Chairpersons of committees,

Board of Directors

Value Creation Story

Noboru Tsuda*Please note that persons withare Outside Directors, persons withand persons with are members of committees.

6

Audit
Committee

Eiichi Ukai

Strengthening and enhancing our corporate governance is one of our top management priorities. We take steps to makemanagement more efficient and robust while working to increase management transparency by disclosing information toshareholders and investors in a prompt and accurate manner.
We made a transition from a Company with a Board of Company Auditors to a Company with a Nominating Committee,
etc. in June 2019 with the aim of establishing a prompt decision-making structure and operational execution organization,
strengthening the supervision of management, and improving management transparency and fairness. Under this structure,
we will work on further improvement of corporate value over the medium- and long-term.

5Compensation
Committee

The Compensation Committee decides on
the policy for compensation for Directors
and Executive Officers, and details ofcompensation for individual persons. The
majority of the committee are Outside
Directors. Three out of the five members of
the committee are Outside Directors, and thecommittee is chaired by an Outside Director.

4

Audit Committee

The Audit Committee audits the executionof duties of Directors and Executive Officers,
and decides on the content of a proposal
regarding appointment/removal of theaccounting auditor, which is submitted
to the General Meeting of Shareholders.
The majority of the members are Outside
Directors. Three out of the four members of
the committee are Outside Directors, and thecommittee is chaired by an Outside Director.
Also, assistants, including the Secretariat
of Audit Committee, are appointed from theInternal Audit Department to support theduties of the Audit Committee. Regarding
matters relating to appointment, personnel
relocation, disciplinary punishment,
evaluation, etc. of assistants, the approval
from the Audit Committee shall be requiredfor decision.

Audit

73 NTN Report 2022

NTN Report 2022

74

Sustainability Management Governance
About Us

Materiality

Strengthen governanceNominating Committee (From April 1, 2021 to March 31, 2022)

KPIs and targets for the fiscal year ending March 31, 2023

Members, the number of meetings, and attendance
Name

Assessment of effectiveness of the Board of Directors and improvement

2006

CSR Committee is establishedCompensation Advisory Committee is established2018

New corporate philosophy system is established

2008

Risk Management Committee is established
An Outside Director is appointed for the first time

2019

Transition to a Company with Nominating Committee, etc.
The number of Outside Directors is increased from 2 to 5
Sustainability Committee is established

2011
2012

The number of Outside Directors is increased from 1 to 2

2020

Woman appointed as an Outside Director

Fair Trade Monitoring Committee is established

2021

Flattening Executive Officer System

2015

Compliance Committee is establishedThe effectiveness of the Board of Directors is assessed2022

ESG items set in the Executive Officer evaluation system

Approach of Board of Directors

The appointment of Executive Officer

Directors other than Outside Directors are appointed froma wide range of fields, including manufacturing, marketing,technology, and administrative divisions. In addition,
Outside Directors are appointed after considering diversity
and balance, such as being a person with knowledge offinance, experienced management, and being a lawyer.
We believe that the current number of Directors is anappropriate size for strengthening corporate governanceand expanding our global businesses.

The appointment of an Executive Officer shall be
determined after careful deliberation by the Board of
Directors, comprehensively considering whether they
possess personalities, insights, capabilities, experience/
performance, etc. that are appropriate for fulfilling theirduties. In addition, if it becomes clear that an Executive
Officer lacks the required qualifications, he/she will bepromptly dismissed by the Board of Directors.

Diversity of Directors

Since June 25, 2021, the Company has removed theManaging Executive Officers and eliminates hierarchicalrelationships among Executive Officers and makes them
one team. It enables all Executive Officers to activate
discussions and respond to various issues quickly towardfurther enhancement of its corporate value.
In line with the flattening of the system, in April 2022
we abolished the conventional system of compensation
by position and shifted to a system of compensation for
Executive Officers based on the responsibilities of thedivision to which they are in charge.

75 NTN Report 2022

4 times/4 times

Kouji Kawahara

Outside Director

100%

4 times/4 times

Tomonori Nishimura

Outside Director

100%

4 times/4 times

Eiichi Ukai

Director

100%

4 times/4 times

Hiroshi Ohkubo

Director

100%

4 times/4 times

Flattening of the system and compensation

Introduction of ESG evaluation
Since April 2022, ESG items have been set as key
individual target measures for Executive Officers involvedin the calculation of annual incentives (bonuses). The
degree of achievement of these ESG items is one of
the evaluation indicators. By introducing ESG items into
the evaluation system, Executive Officers are promoting
active ESG initiatives.

Discussions on Nominating CommitteeStandards for Selection of Directors

The Nominating Committee was established inconjunction with the transition to a Company with aNominating Committee, etc. in 2019. The committee
was held four times for the year ended March 31, 2022,with discussions and resolutions mainly on the standards
for selection of Directors, skill matrix related to suchstandards for selection and the standards regarding theindependence of Outside Directors.

Candidates for Directors will be selected from inside andoutside the Company based on standards for selection of
Directors as described below, considering the diversity andbalance of the Board of Directors (including gender andinternationality), after careful deliberation by the Nominating
Committee.
• Must be in good condition both physically and mentally.
• Must have a high sense of ethics and a law-abiding
spirit.
• Must be able to engage in constructive discussion froman objective viewpoint.
• Must be highly motivated to improve their abilities.
• Must have excellent decision-making skills from acompany-wide and medium- to long-term perspective.
• Must have excellent insight and foresight concerningchanges to the overall environment and to society.
• Must have a sufficient record of performance andexpertise in relevant fields. (Corporate manager orexpertise)• Outside Directors must (1) have sufficient time toaccomplish their duties, (2) satisfy the standards
regarding the independence of Outside Directors,(3) ensure diversity between the Outside Directors, and(4) have the requisite abilities to accomplish duties as amember of any of the three Committees.

About Outside Directors
As of June 21, 2022, the Board of Directors consistsof 12 members, including six Inside Directors and six
Outside Directors, and the ratio of Outside Directors
is 50%. In this way, we strengthen the supervision ofmanagement and improve management transparency
and fairness. In addition, in order to ensure appropriate
corporate governance, we have established our own
standards regarding the independence of Outside
Directors, stipulating qualification and independence
standards for them. These standards are used forappointing Outside Directors. Also, all the Outside
Directors are designated as Independent Officers as
defined by the rules of the Tokyo Stock Exchange, Inc.
(TSE), and are reported to TSE as such.
For Outside Directors, we have established anenvironment where active discussions can be held at theBoard of Directors through actions such as explaining theissues as necessary prior to a relevant meeting of the Boardof Directors. Moreover, we continuously provide informationnecessary to effectively fulfill the roles and responsibilities
of an Outside Director by creating opportunities to deepen
their understanding of our business through on-site
inspection of business sites and other means.

SASB Index

Executive Officer

We conducted a self-assessment of the Board of
Directors by sending out questionnaires to Directors fromthe viewpoints such as role/structure/management of theBoard of Directors and management of committees. We
asked a third-party organization to conduct the survey,
received support for making the questionnaire,and
obtained third-party opinions on the results of thequestionnaire. Although this evaluation was generally
positive, there were comments regarding the mechanismand operation of the performance evaluation of Executive
Officers and other factors. Consequently, the Board of
Directors discussed future measures and other mattersbased on the third-party opinions. We will continue toanalyze and evaluate the effectiveness of the Board of
Directors on a regular basis to make improvements.

100%

NTN Group Information

Board of Directors

Assessment of effectiveness of the Board of Directors

Outside Director

Chairperson

Sustainability Management

2016

Upon the approval of the General Meeting of Shareholders
in the fiscal year ended March 2020, a female Director(Outside Director) was newly appointed for the first timeat the Company. The female Director with experience in adifferent industry than ours supervises management. This
will enable us to integrate diverse values and acceleratetransformation aimed at achieving sustainable growth.

Number of attendances
Value Creation Story

2004

AttendanceNoboru Tsuda

Governance-strengthening transition
Start of Operating Officer System
The Board of Managing Directors is reviewed andrenamed as the Business Strategy Committee

Title

Background

Outside Director

50%Management(3 persons)Financial institutions(2 persons)Lawyer (1 person)

NTN Report 2022

76

Sustainability Management Governance
About Us

Compensation Committee (From April 1, 2021 to March 31, 2022)

Audit Committee (From April 1, 2021 to March 31, 2022)

Members, the number of meetings, and attendance
Name

Members, the number of meetings, and attendance
Title

Attendance

Number of attendances

Name

Title

Attendance

Number of attendances

100%

8 times/8 times

Kouji Kawahara

Outside Director

100%

14 times/14 times

Outside Director

100%

8 times/8 times

Ryo Kawakami

Outside Director

100%

14 times/14 times

Yuriya Komatsu

Outside Director

100%

8 times/8 times

Tomonori Nishimura

Outside Director

100%

14 times/14 times

Eiichi Ukai*

Director

100%

7 times/7 times

Keiji Ohashi

Director

100%

14 times/14 times

Toshinori Shiratorii

Director

100%

8 times/8 times

Chairperson

Chairperson

Value Creation Story

Outside Director

Noboru Tsuda

Ryo Kawakami*The number of attendance after becoming as a member of the Committee

Compensation for Directors

Discussions at the Audit Committee

The Compensation Committee met eight times from April
2021 to March 2022.
The Compensation Committee aims to improve
fairness, transparency, and objectivity of procedures
regarding the decision making of compensation for
Directors and Executive Officers and enhance corporate
governance. Also, the committee passed resolutions
regarding the details of compensation (such ascompensation specified for each individual) of Officers.

Compensation for a Director consists only of fixedcompensation. Fixed compensation shall be calculated
by increasing basic compensation (which is determinedbased on his/her concurrent duties as an Executive
Officer and whether he/she works full-time or part-time),taking into account a committee to which a Director
belongs and his/her role at the committee.

Major items to be discussed at the Audit Committee
include the formulation of the Audit Committee’s auditing
standards, the formulation of auditing policies andauditing plans, the evaluation of the content of auditing
plans of the independent auditors, the assessment of theselection of independent auditors, and the assessmentof the status of development and operation of internal
control systems.

1st∙Points granted by BIP Trust for compensation of Officers∙KPI figures for BIP Trust for compensation of Officers in themedium-term management plan (April 2021 to March 2024)∙Additional contribution of shares to the BIP Trust account forcompensation of Officers∙Revision of basic policy for annual incentives (bonuses)∙Bonus for Executive Officers in 2021
∙Summer bonus for Operating Officers in 2021

3rd

∙Point table for BIP Trust for compensation of Officers∙Additional contribution of shares to the BIP Trust account forcompensation of Officers∙Conclusion of memorandum on revision of share delivery
regulations, internal regulations, and changes to trust contracts

4th∙Punishment of Executive Officer

5th∙Review of compensation levels and compensation structure of
Officers∙Winter bonus for Executive Officers in 2021
∙Report on activities to review the Executive Officer system

6th∙Policy for revision of Executive Officer Compensation inaccordance with flattening of the Executive Officer system

7th∙Punishment of Executive Officer

8th∙Revision of basic policy for determination of compensation, etc.
∙Determination of Executive Officer’s compensation∙Revision of stock issuance regulations and internal regulations

Basic policy for determining compensation
The system and level of compensation for Officers,
compensation specified for each individual, etc. aredetermined in the Compensation Committee chaired byan Outside Director using objective information including
the level and trends of other companies as reference.
Compensation for Executive Officers and compensation
for Directors are determined separately, and if a Director
also serves as an Executive Officer, those compensations
are added up.

77 NTN Report 2022

Fixed compensation
6

Performance-linked
compensation
Annualincentives

Medium- tolong-term incentives

4

Fixed compensation
Fixed compensation consist of basic salary, representation
and CxO fees.
Performance-linked compensation
Annual incentives
For Executive Officers, the Company determines whether
or not to provide payment of monetary compensationthat reflects the performance of a single fiscal year, basedon consolidated financial results indicators, etc. of theprevious fiscal year and, in the case of providing suchpayment, the total amount. The payment or non-payment
to each Executive Officer, and in the case of payment, theamount, is determined within the total amount of provisionby considering the Executive Officer’s progress on priority
target measures. Indicators related to the calculationof bonuses are based on consolidated financial results:
net sales, operating income and net income from theperspective of emphasizing the achievement of earnings
growth. The provision is made once a year in June after
the determination of the Compensation Committee.
Medium-to long-term incentives
The Company’s shares shall be issued based on theachievement level of major target figures in the Mediumterm Management Plan (money equivalent to theconverted amount of shares shall be paid for a certain
portion) as incentives to motivate them to achieve thetargets in the Medium-term Management Plan andcontribute to raising shareholder value, and in order topromote the holding of the Company’s shares.
Medium- to long-term performance targets include
key performance indicators (consolidated operating
margin, consolidated net sales, etc.) that take into
account the Company's management policies.

Audit Status
The Audit Committee members attend meetings ofthe Board of Directors and other major meetings inInternal Control/Internal Audit
Internal control system
We regard risk management and compliance as oneof the most important management issues, and haveestablished Internal Control Policy. Based on thisbasic policy, we maintain and operate the Group’s
internal control system, and are working to improve
the soundness and efficiency of our management byconstantly reviewing our internal control system in
response to changes in the business environment.
We conduct assessment of internal control overfinancial reporting in accordance with generally accepted
assessment standards for internal control over financial
reporting. In the fiscal year ended March 31, 2022, weevaluated the effectiveness of internal controls for 50
domestic and overseas companies.

Internal audit activities
The Internal Audit Department reports directly to the
President, Executive Officer and is in charge of internal
audit operations independently from the divisions to
be audited. The Internal Audit Department conducts
internal audits of the execution status of execution
organizations from the perspectives of compliance withlaws and internal regulations, appropriateness, and theeffectiveness and efficiency of business activities.
For internal audits, audits are conducted by eachorganization of the execution organization (operational
audits) and cross-organizational audits by risk andbusiness function (thematic audits). Based on the resultsof these audits, we provide advice and recommendations
for improvement to the divisions subject to audits, as wellas confirming the implementation status of improvement
measures and conducting follow-up audits.
Overseas, we have established the Administration& Internal Control Department within the General
Manager's Office of each region. The Internal Audit
Department and the Administration & Internal Control
Department work together to strengthen internal
controls while taking into account the circumstances andcharacteristics of each region.
The results of internal audits are reported to the
President, Executive Officer and to the Audit Committee.
The Audit Committee, the Internal Audit Department
and the Accounting Auditor work together to improve
efficiency and effectiveness of audits by regularly holding
meetings and exchanging information and opinions about
the policies, plans, and results of audits.

NTN Report 2022

SASB Index

2nd∙Decision of the order of substitution for the chairperson in theevent of an accident∙Policy for determining the amount of compensation of Officers or
the method of calculating such amount∙Director compensation∙Executive Officer compensation∙Compensation Committee's annual activity plans

Compensation for Executive Officers consists of fixedcompensation and performance-linked compensation,
which fluctuates according to performance. The ratio of
fixed compensation to performance-linked compensation
is approximately 6:4 as a standard.

NTN Group Information

Compensation Committee (April 1, 2021~March 31, 2022)

Compensation for Executive Officers

accordance with auditing standards, policies, andplans determined by the Audit Committee. The Audit
Committee receives reports or hears from Directors,
Executive Officers, employees, etc. on the status of theexecution of their duties, and audits the execution ofduties by Directors and Executive Officers. In addition to
the Board of Directors and Executive Officers Meeting,members of the Audit Committee attend and monitor
the Sustainability Committee, the Risk Management
Committee, the Compliance Committee, and the Fair
Trade Monitoring Committee, which operate internal
control systems.

Sustainability Management

Discussions at the Compensation Committee

78

Sustainability Management Governance
About Us

Overview of the Committees
Sustainability Committee

Risk Management Committee
To respond to various risks surrounding the businessesof the Group, we have established the Risk Management
Committee, chaired by the Executive Officer (Chief
Management Officer of risk management), who is incharge of the ESG Promotion Department, as an advisory
body on risk management to prevent risks from occurringand to minimize damage in the event of a crisis. The
committee mainly consists of the general managers of

79 NTN Report 2022

Fair Trade Monitoring Committee
The Fair Trade Monitoring Committee is chaired by
the President and Executive Officer and consists of
Executive Officers in charge of sales and procurement
divisions, an Outside Director, external lawyer and soon. In principle, this meeting is held twice a year to
discuss the implementation plans and the performance
reports for compliance with the Antimonopoly Act andthe Subcontracting Act, and to provide supervision andguidance on effective control for fair trade practices
along with education and awareness-raising activities. In
addition, we have established the Fair Trade Promoting
Group in Legal Department as an overall supervisorydepartment for compliance with antimonopoly law. Under
the direction of the Fair Trade Monitoring Committee,
the department conducts various activities (such as
education, instruction and audit) for relevant divisions.
Furthermore, overseas subsidiaries are monitored for the
implementation status of compliance with antimonopoly
law in cooperation with the Administration & Internal
Control Department in each region.

We have been developing a BCP/BCM structure
designed to respond to major earthquakes in Japan andare working to strengthen our disaster response systems,
including those of our group companies.
We have completed the formulation of BCP to enable
early disaster recovery at all domestic production sites.
Now we have also implemented BCP training to assess
the effectiveness of the formulated action plans and havetaken necessary advance measures. In doing so, we aremoving ahead with development of BCM.

Risks related to the global situation
Significant risks that the Group recognizes as having
the potential to have a significant impact on the financial
position, operating results and cash flow conditions ofconsolidated companies are listed in the securities report.
In addition, Russia's invasion of Ukraine began in
February 2022, and the global situation continues to beunstable. The Group also recognizes it as a risk and will
work on risk management and promotion of BCP/BCM
for the entire group.

Risk management process

Risk Category
1

1 Risks related to technology and R&D

Risk Identification

2 Risks related to procurement and logistics

Identifying risks fromthe business environment
surrounding the NTN Group
4

Risk Treatment

3 Risks related to production and inventory
4 Risks related to quality
2

Countermeasuresagainst risks selected
through risk evaluation

Risk Analysis

Analyze the degree of
impact of risks extracted
by identifying risks
3

SASB Index

Initiatives for TCFD recommendations
A cross-functional scenario analysis team was establishedunder the Sustainability Committee to conduct the
scenario analysis. In the scenario analysis, two casesof temperature increase of 4°C and less than 1.5°C
during the 21st century were assumed, and the risks andopportunities posed to our business were identified andcountermeasures were considered for each.

The Compliance Committee, chaired by the Executive
Officer in charge of Legal Department (Overall Control
Administrator of Compliance Promotion Activities),
handles global compliance risks, excluding violation
risks of the Anti-Monopoly Act and the Subcontracting
Act. The committee members are comprised primarilyof the heads of related risk management divisions.
The committee members formulate and implement
risk mitigation measures in cooperation with theCompliance Promotion Activity Supervisors appointed
at each business site in Japan and the Administration& Internal Control Department established at each
Office of General Manager in five overseas regions, andreport to the committee on action plans and the statusof implementation. The committee deliberates on thecontents of such reports and then reports the findings to
the Board of Directors.

Promotion of BCP/BCM

We have developed a Risk Management Policy thatoutlines our basic approach to prevention and handlingof risks that may hamper the execution of the Group'sbusiness, and the Risk Management Regulations thatset forth risk management organizations and their roles.
Through these measures, we promote group-widerisk and crisis-management and BCP/BCM (BusinessContinuity Planning/Business Continuity Management).
We convene the Risk Management Committee
as an advisory body for risk management twice ayear, in principle. The committee regularly checks risk
management process including identification, analysis,
evaluation, and treatment with regard to risks that havea major impact on the management of the NTN Group inlight of changes in the internal and external environmentand other factors. We have classified risks into thefollowing 12 categories from the perspective of ensuring
completeness. After that, an administrative manager
and a promotion department have been determinedfor each specific risk that will have a significant impact
on the management of the NTN Group. Through thesemeasures, we endeavor to reduce risks. The results ofthe discussion at the Risk Management Committee arereported to the Board of Directors.

NTN Group Information

Materiality measures and KPI discussions
The committee deliberated on the appropriateness ofthe measures and goal setting that were studied mainlyby the departments that manage each of the 13 items
of materiality. In particular, for the materiality related toclimate change, the committee confirmed that it will belinked to initiatives in line with TCFD recommendations
and deployed in business activities.

Compliance Committee

Basic approach to risk management

Sustainability Management

Spread of ESG management within the company
We have created a roadmap that shows the specificmeasures that the Group is taking to realize a“NAMERAKA Society.” In the process of preparing theroadmap, we have held numerous meetings with the
President, Executive Officer, and we are deploying it inhouse as an overview of management to ensure that ourGroup continues to grow as a company that contributes
to society.

the promotion departments of the risk management.
The committee regularly checks activities including
identification, analysis, evaluation, and treatment
with regard to risks that have a major impact on the
management of the NTN Group. The result of discussion
at the Risk Management Committee is reported to theBoard of Directors and instructions are fed back to therelevant departments.

Value Creation Story

The Sustainability Committee is chaired by the Executive
Officer in charge of the ESG Promotion Department(Chief Management Officer of sustainability activities),and consists of the head of department related to ESG.
In principle, this committee meets once a year to discuss
issues and initiatives related to the Group's sustainability
activities, and to report on these activities to the Boardof Directors as appropriate. The Committee met threetimes in the fiscal year ended March 31, 2022. The main
activities are as follows.

Risk Management

Risk Evaluation

Selection of preferential
responses to risks, analysisof which has been completed

5 Risks related to sales and marketing
6 Risks related to personnel and labor
7 Risks related to the environment and health & safety
8 Risks related to information systems
9 Risks related to finance and accounting
10 Risks related to legal affairs and compliance
11 Risks related to fire and disaster prevention, etc.
12 Others

Structure
Risk Management Committee
NTN Corp.
Individual business sites of NTN
Domestic subsidiaries
Overseas subsidiaries

Composition

Chairperson Executive Officer in charge
Secretariat ESG Promotion Department
Members
Departments in charge ofpromotion of Risk Management

Board of Directors
Reporting

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80

Sustainability Management Governance
About Us

Materiality

Thorough compliance
Corruption prevention initiatives

KPIs and targets for the fiscal year ending March 31, 2023
2

Helpline recognition level in survey of compliance awareness

85% or more

Basic approach to complianceAs part of its fraud prevention activities, the Groupinvestigates employee evaluations of the attitudes of thepresidents of affiliated companies.
It is said that there is a high probability of occurrenceof fraudulent acts in a company when motives/pressures,
opportunities, and rationalization triangles are formed.
While advancing the development of regulations, rules,
and penalties, it is important to develop an internal
corporate culture and environment. Therefore, we
regularly confirm changes in the organizational culture ofaffiliated companies through employee evaluations.
By disclosing the results of this survey to thepresidents of affiliated companies, we are making use of
the results to create an internal corporate culture of not
being motivated to conduct fraudulent acts, based on theawareness that fraudulent acts are constantly seen within
the company and at the head office. Also, such results
are used to create better relationships with employees.
In the fiscal year ending March 31, 2022, we
conducted a survey of approximately 1000 employeesof 10 affiliated companies (6 in Japan and 4 overseas)
where a change of the president or other event occurred.

Structure

Compliance Committee
Chairperson: Executive Officer
in charge
Secretariat: Legal Department

NTN business sites anddomestic subsidiaries
Compliance promotion
activity supervisors

NTN business sites

Domestic subsidiaries

Officers

Board ofDirectors

Employees
Fair Trade Monitoring Committee
Chairperson: President,
Executive Officer
Secretariat: Legal Department

81 NTN Report 2022

Administration &Internal Control Department,
Office of General Manager
in five overseas regions

Overseas Initiatives
Our overseas subsidiaries have developed and have been
operating in-house rules and regulations that are localized
to reflect relevant laws, regulations, and generally
accepted standards and practices in each country.
They also conduct audit activities related to these rules
and regulations as needed. The Legal Department isregularly sharing information and exchanging views with
the Administration and Internal Control Department at
the Office of General Manager in each region on related
initiatives, and maintaining and managing a structure inwhich the Group unites as one to prevent bribery.

Helpline (whistle-blower system) andeducational activities
In Japan, the whistle-blower system called Helpline
has been established within and outside the Company
and has been operated as a contact point for providing
consultation regarding violations of laws, Business Codeof Conduct, and in-house regulations. Helpline provides
consultation for cases such as suspected violationsof labor-related laws, including harassment, as well

Chief Management Officer
Executive Officer in chargeof Legal Division

Chief Management Officer
President, Executive Officer

Compliance Committee

Helpline Management
Department: Legal
Department

Fair Trade Monitoring
Committee

Internal Helpline

External Helpline

NTN Group company officers, employees, business partners, etc.

Antimonopoly law compliance initiatives
SASB Index

We have established and have been operating theCompliance Committee and the Fair Trade Monitoring
Committee to promote compliance through the activities
of both committees. (See page 79 for Overview of theCommittees.)
Aside from the efforts made by the two committees,
the Legal Department conducts the rank-based training
and the topic-specific training for officers and employees
as part of compliance-related educational and awarenessraising activities. In addition, we hold a group training
session for Compliance Promotion Activity Supervisors inJapan once a year. By sharing information and exchanging
opinions on important issues, we are enhancing thepromotion activities at each business site and providing
support for the initiatives at each business site.
Furthermore, with regard to activities for global compliancerisks such as corruption prevention, we regularly exchange
information and opinions with the Administration & Internal
Control Department at each Office of General Manager inInternal corporate culture survey

Chief Management Officer
Executive Officer in chargeof Legal Division

NTN Group Information

Promotion structure

five overseas regions and legal/compliance departmentsof overseas subsidiaries, thereby confirming each other’s
ongoing activities and setting new agendas.
In addition, we have established the Fair Trade Promoting
Group in Legal Department of an overall supervisorydepartment for compliance with antimonopoly law. Under
the direction of the Fair Trade Monitoring Committee, theGroup conducts various activities (such as education,
instruction and audit) for relevant divisions. Additionally,
overseas subsidiaries are monitored for the implementation
status of compliance with antimonopoly law in cooperation
with the Administration & Internal Control Department at the
Office of General Manager in each region.

We have established and have been applying in-houserules and regulations based on domestic and overseas
anti-corruption laws and social norms. Our in-houserules and regulations not only prohibit bribery from andto domestic and overseas public officials and business
partners, but also specify the rules and procedures
regarding provision of property or profit by our officers
or employees, and rules and procedures to prevent
bribery via our business partners. In addition, under thecircumstance that some countries even impose restraints
on the transfer of property or profit between privatecompanies, we have established rules and proceduresfor the receipt of property or profit in order to prevent
bribery by our officers and employees, to thoroughly
ensure the conduct of fair trade, and to prevent our
officers and employees from engaging in conflicts ofinterest. Furthermore, we have made it a policy to refuse
to receive gifts and entertainment from our business
partners in principle.
We conduct in-house training and e-learning
programs to raise awareness of the contents of our inhouse rules and regulations, and conduct self-audits
once a year to ensure thorough awareness of the anticorruption rules and regulations. Domestic subsidiaries
have also established and have been applying theirown internal regulations that are consistent with theCompany’s policies.

Sustainability Management

We believe that earning the trust of society is essential for
us to contribute to the realization of a sustainable society
and to continue to be a company needed by society.
Accordingly, we are placing importance on compliancein our Management Policy. We formulated the Business
Code of Conduct to specify the policy of actions which
officers and employees should observe so that we canconduct business activities in accordance with laws
and regulations and generally accepted standards andpractices in each country, and our internal rules. We havealso established and have been operating the compliancepromotion structure that includes rules related tocompliance, a whistle-blower system, the Compliance
Committee, and the Fair Trade Monitoring Committee.

Initiatives in Japan

Value Creation Story

Annual number of Compliance Committee meetings held

as violations of in-house regulations, and conducts
investigation in accordance with Helpline Management
Rules that stipulate ensuring the confidentiality andprohibition of detrimental treatment against the whistleblower. Through provision of information in various
compliance training sessions and in the Code of Conduct
Guidebook, we have established a structure where all
employees can utilize Helpline, not only as a tool to reportmisconduct, but also as a means of raising questions
and expressing opinions and complaints regarding theBusiness Code of Conduct, and maintaining satisfactory
relationships between the company, officers, employees,
and business partners.
Whistle-blower systems are being progressively
created and operated also in overseas regions, where
they are tailored to local needs and circumstances.

We regard any antimonopoly violations represent a
potential risk for the whole NTN Group. To ensure
thorough antimonopoly compliance, the Legal
Department and the Administration & Internal Control
Department in each region conduct training andawareness-raising activities related to antimonopoly
law compliance in accordance with local laws andcircumstances in each region.
In addition, we have established a system that
requires officers and employees to submit advanceapplications and follow-up reports when there is apossibility of contact with competitors in any event,such as exhibitions or meetings. Thus, we can ascertain
whether and how employees contact competitors.
Furthermore, we strengthen the compliance system byconducting annual self-audits and internal audits. Basedon those results, each department proactively plans
and implements improvement measures. We work to
put fair and free competition into practice by continuing
to upgrade our educational activities and raising theawareness of officers and employees.
Please refer to our website for other initiatives related to “Thorough compliance.”https://www.ntnglobal.com/en/csr/governance/compliance.html

Overseas subsidiaries

NTN Report 2022

82

Sustainability Management Governance
About Us

Officers (As of June 21, 2022)
Directors

Internal Director
1

Eiichi Ukai

2

1

3

Number of years as Director
Number of shares of the Company heldNew
27,500 shares

NTN Group Information4

Isao Ozako

Outside Director

910Masaki Egami

Number of years as Director
1 year and 11 months
Number of shares of the Company held
26,100 shares

6
New
34,100 shares

8 years
92,700 shares

Sustainability Management

78

7 years
74,200 shares

Hideaki Miyazawa

Number of years as Director
Number of shares of the Company held

4

Masaaki Yamamoto

Number of years as Director
Number of shares of the Company held

11

5 years
75,300 shares

Toshinori Shiratori

Number of years as Director
Number of shares of the Company held

5

2

Value Creation Story

Number of years as Director
Number of shares of the Company held

3

Members of Compensation Committee
Members of Nominating Committee
Chairperson of each committee
Members of Audit Committee

12
6

5

7

Noboru Tsuda

Number of years as Director
Number of shares of the Company held

8
6 years
30,800 shares

Kouji Kawahara

Number of years as Director
Number of shares of the Company held

3 years
56,900 shares

The main areas of experience of the Directors (Skill matrix)

Name

Eiichi Ukai
Hideaki Miyazawa

Corporate
management

Manufacturing

Technology
and R&D

Sales
andMarketingCorporate
and businessplanning

Finance andadministration

Legal affairs,
internal
controls,
compliance9Globalexperience

Experienceof otherindustries,
diversity

Ryo Kawakami

Number of years as Director
Number of shares of the Company held

10
3 years
0 sharesSignificant concurrent positions
Attorney at law (Osaka Nishi Law Office,Legal Professional Corporation)
Professor, Osaka University Law School

Tomonori Nishimura

SASB Index

Main areas of experience required of Directors

Number of years as Director
1 year and 11 months
Number of shares of the Company held
3,500 shares
Significant concurrent positions
Business Owner, NT Consul Biz.

Toshinori Shiratori
Masaki Egami
Masaaki Yamamoto
Isao Ozako
Noboru Tsuda
Kouji Kawahara
Ryo Kawakami

11

Yuriya Komatsu

12

Akira Murakoshi

Number of years as Director
1 year and 11 months
Number of shares of the Company held
10,000 shares

Number of years as Director
Number of shares of the Company held

Significant concurrent positions
Outside Director, Dream Incubator Inc.
Managing Director, IA Partners Inc.
Advisor, Otsuka Chemical Co., Ltd.

Significant concurrent positions

New
0 shares

Member of the Board, Mitsubishi Corporation

Tomonori Nishimura
Yuriya Komatsu
Akira Murakoshi

83 NTN Report 2022

Please see our website for past experience.
https://www.ntnglobal.com/en/csr/governance/structure.html

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84

Sustainability Management Governance
About Us

Directors

Number of Board of Directors andCommittee attended100

HideakiMiyazawa

100%

Toshinori
Shiratori

Masaki
Egami

Board of Directors 15/15

Mr. Hideaki Miyazawa possesses operational experience in areas such as
the Business Division for the automotive market and Overseas Division,and broad knowledge based on these achievements, among others. The
Company selects him with an aim to continuously improve corporate value,utilizing his experience and knowledge, etc. for management.

Board of Directors 15/15% Compensation Committee
8/8

100

Mr. Toshinori Shiratori possesses operational experience in areas such as
the Human Resources Division and Corporate Strategy Division, and broad
knowledge based on these achievements, among others. The Company
selects him with an aim to continuously improve corporate value, utilizing his
experience and knowledge, etc. for management.

100%

Mr. Masaki Egami possesses operational experience in areas such as theEngineering Division and Research and Development Division, and broad
knowledge based on these achievements, among others. The Company
selects him with an aim to continuously improve corporate value, utilizing his
experience and knowledge, etc. for management.

Board of Directors 15/15

Mr. Masaaki Yamamoto possesses operational experience in areas such as
the Finance Division and Overseas Division, and broad knowledge based onthese achievements, among others. The Company newly selects him withan aim to continuously improve corporate value, utilizing his experience andknowledge, etc., for management.

Isao Ozako

Mr. Isao Ozako possesses operational experience in areas such as
the Manufacturing Division and Quality Assurance Division, and broad
knowledge based on these achievements, among others. The Company
newly selects him with an aim to continuously improve corporate value,utilizing his experience and knowledge, etc., for management.

Kouji
Kawahara

Outside Directors

Ryo
Kawakami

Representative Executive Officer,
President, Executive Officer

CEO (Chief Executive Officer)

Board of Directors 15/15
4/4% Nominating Committee
Audit Committee 14/14

Mr. Kouji Kawahara possesses extensive experience in banking over many
years and broad knowledge including finance, among others. The Company
selects him with an expectation to continuously improve corporate value
by conducting supervision from the viewpoint to increase transparency andfairness of management through his duties such as providing appropriate
opinions on the independent standpoint from business executors.

CTO (Chief Technology Officer)
Research Division
New Product & Business Strategic Planning HQ.

Board of Directors 15/15
Audit Committee 14/14%
8/8
Compensation Committee

Although Mr. Ryo Kawakami has not been directly involved in corporate
management, he possesses broad knowledge, etc. based on extensive
experience as a lawyer familiar with corporate legal affairs. The Company
selects him with an expectation to continuously improve corporate value
by conducting supervision from the viewpoint to increase transparency andfairness of management through his duties such as providing appropriate
opinions on the independent standpoint from business executors.

Board of Directors 15/15
Nominating
Committee
4/4%
Audit Committee 14/14

Mr. Tomonori Nishimura possesses broad knowledge, etc. based on
extensive experience in the management of other companies. The Company
selects him with an expectation to continuously improve corporate value
by conducting supervision from the viewpoint to increase transparency andfairness of management through his duties such as providing appropriate
opinions on the independent standpoint from business executors.

100
100
100

YuriyaKomatsu

100

Board of Directors 15/15% Compensation Committee
8/8

Ms. Yuriya Komatsu possesses broad knowledge, etc. based on extensive
experience in the management of other companies. The Company selects
her with an expectation to continuously improve corporate value by
conducting supervision from the viewpoint to increase transparency andfairness of management through her duties such as providing appropriate
opinions on the independent standpoint from business executors.

Mr. Akira Murakoshi possesses broad knowledge, etc., based on extensive
experience in the management of other companies. The Company newly
selects him with an expectation to improve corporate value by conducting
supervision from the viewpoint to increase transparency and fairness ofmanagement through his duties such as providing appropriate opinions on
the independent standpoint from business executors.

2

Eiichi Ukai*

Mr. Noboru Tsuda possesses broad knowledge, etc. based on extensive
experience in the management of other companies. The Company selects
him with an expectation to continuously improve corporate value by
conducting supervision from the viewpoint to increase transparency andfairness of management through his duties such as providing appropriate
opinions on the independent standpoint from business executors.

Tomonori
Nishimura

Akira
Murakoshi

1

Board of Directors 15/15
4/4% Nominating Committee
8/8Compensation Committee

100

10
2

4

7

Executive Officer

Masaki Egami*

Executive Officer

Shumpei Kinoshita

Representative Executive Officer,
Executive Officer

3

Hideaki Miyazawa*
Corporate General Manager, Automotive Business HQ.
Global Procurement HQ.

5

Executive Officer

Masayuki Kaimi

Corporate General Manager, Production HQ.
China Region
Supply & Demand Control Dept.
Production Engineering Development HQ.
Composite Material Product Division

8

Executive Officer

Toshinori Shiratori*

9
4

11
3

13
6

Hiroyuki Ichikawa
Deputy Corporate General Manager,
Automotive Business HQ.

6

Executive Officer

Yasuhiro Kawabata

Human Resources Strategy Dept.
Personnel Dept.

9

Executive Officer

Tetsuya Sogo

Americas Region
Information Technology Dept.

CFO (Chief Financial Officer)

10 Executive Officer

11 Executive Officer

12 Executive Officer

Green Energy Products Division
Manager, Information Technology Dept.

Aftermarket Business HQ.
Industrial Machinery Business HQ.
Quality Assurance HQ.
NTN KOREA CO., LTD.
ASEAN, Oceania, and West Asia Region
India Region

Special Assignment

Etsu Harima

1

Executive Officer

Corporate Strategy Dept.

Koji Takahashi

7

8
5

SASB Index

NoboruTsuda

12

NTN Group Information

Masaaki
Yamamoto

Sustainability Management

Internal Directors

EiichiUkai

Mr. Eiichi Ukai possesses operational experience in areas such as the
Quality Assurance Division and Overseas Division, and broad knowledgeof the management of the Company promoting business globally based onthese achievements, among others, and has served as President, Executive
Officer of the Company since April 2021. The Company selects him with an
aim to continuously improve corporate value, utilizing his experience andknowledge, etc. for management.

Value Creation Story

Board of Directors 15/15
4/4% Nominating Committee
7/7Compensation Committee

Executive Officers (as of July 1, 2022)
Reasons for selection

Yozo Mimura

13 Executive Officer

Masaaki Yamamoto*

Europe & Africa Region
ESG Promotion Dept.
Legal Dept.
Trade Management Dept.
Internal Control Dept.
General Affairs Dept.

*Executive Officers concurrently serving as Directors

85 NTN Report 2022

NTN Report 2022

86

Sustainability Management

Outside Director Dialog
About Us

Noboru Tsuda

Yuriya Komatsu

Tomonori Nishimura

Every year, the NTN Report provides an opportunity for Outside Directors to discuss NTN’s management andsustainability issues. The contents of discussion is published as “Outside Director Dialog.” This year again, Director
Tsuda, Director Komatsu and Director Nishimura held a frank and honest talk.

NTN's current issues

The business results for the fiscal year ended March
31, 2022 were in a final surplus for the first time in four
years. First of all, what are your reviews of businessperformance and what are NTN's current challenges?
Komatsu: In the fiscal year ended March 31, 2022, we
downwardly revised the plan formulated at the beginningof the fiscal year, but we were able to ultimately achieve
results that exceeded the planned values at the beginningof the fiscal year. Stock prices have also risen, and in thisregard, I highly evaluate the hard work of management
and employees. On the other hand, there are concerns
about future net income. Selling the head office building
and disposing of cross-shareholdings resulted in
making a profit. As a result, in the event of deteriorationin business performance in the future or the event of
unforeseen circumstances, the buffer for avoiding net
loss was small by recording extraordinary gains. There

87 NTN Report 2022

are many borrowings, and our financial position is notstrong, so we need to maintain a sense of crisis. The
biggest challenge in improving our financial position andoperating cash flow is the large amount of inventory.
Considering the possibility that interest rates will rise in
the future, we have too many inventories in excess of
200 billion yen for a company of our size, and our interest
burden will also increase. If we can significantly reduce
our inventory, we will improve our operating cash flow
and asset efficiency, and we will be able to secure funds
that can be used for investment in the future, making us
a very good company. Of course, at this point in time, we
are making a company-wide effort to shrink inventories,
but I want everyone to have a mindset that allows themto choose to reduce inventories even if they lose theircurrent trade. To make such a decision easier, I think it
would be better for the frontline responsible persons andmanagers to be aware of operating cash flow as a KPI at
the same level as profits and sales.

A roadmap for realizing a “NAMERAKA Society” hasbeen formulated. Please tell us about your outlook andissues for sustainability activities in the future.
Nishimura: As the Group advocates achieving carbon
neutrality by the fiscal year 2035, I am paying attention
to what measures the Group will take with regard to this.
Of course, we will curb electricity consumption and use
renewable energy. I believe that there is a place for us tothrive in the development of carbon-free materials that takethe global environment into consideration. For example,
making biomaterials derived from plants and using themin new bearings, or working to develop lightweight,
hard, and rugged materials such as graphene, can be amessage to the outside, and if they can be used in otherindustries, our degree of social contribution will be high.
I feel that we have the foundation and human resources
for such research. I would like to see the company launchsuch new development projects in collaboration withgovernment agencies and other efforts to contribute to theachievement of carbon neutrality by the fiscal year 2035.

ESG issues toward the realizationof a “NAMERAKA Society”

SASB Index

Topic 1

Nishimura: I will make some additional comments in
response to my two colleagues and say that it is worth
noting that the inventory is too much. From the standpointof an Audit Committee member, I look around the factory,
which is the front line of production reform. Reducing
the inventory means that production will be halted if acertain quantity of finished products is secured, and thepeople on the front line feel very worried about this. If
production is halted, surplus man-hours will naturally
be generated. In what kind of situations will this surplus
man-hour be used? For example, I think it is effective
to allocate the man-hours for cost reduction, such aschanging the man-hours for external production to inhouse production or taking on new challenges in theform of other or new assignment. Continuing withconventional production methods will make it easy forthe front lines, but the era of selling a product once it has
been made has already become a thing of the past, and
it is important to produce goods in the proper manner.
With the progress of EVs, automobile companies areentering an era in which their main products are changing
steadily, and proper production is required. Especially
if we have too much excess inventory and it becomes
defective inventory, this will lead to the worst possible
outcome. I think it is essential that management and frontline staff work together to implement reforms to ensure
appropriate inventory levels. In addition, as Director Tsuda
mentioned, passing on cost increases to customers
is only a way to pass on rising raw material costs, andTopic 2NTN Group Information

Outside Director

Komatsu: Of course, both our management andexecutives are aware of these management issues, andwe are motivated to carry them out. The direction is
not wrong. The only concern is speed. As our financial
strength is falling, the risk of rising interest rates is rising
due to ongoing inflation, and I think we need to accelerate
the speed of companywide reforms to reduce inventories
to appropriate levels. I think that everyone in the company
has a sufficient sense of crisis, but even if we steadily
implement the right measures, if we fail to keep up withthe changes in the environment, we will be forced to takea tough response. Therefore, in addition to the content of
the reforms, I would like to emphasize “speed.”

Sustainability Management

Outside Director

cost reduction activities are essential to securing further
incomes. Furthermore, in order to achieve operating
income of 23 billion yen in the current fiscal year, I feel it isnecessary to review the allocation of resources, including
a fundamental review of the portfolio in the automotive
market, aftermarket, and industrial machinery market.

Value Creation Story

Outside Director

Tsuda: We have long recognized inventory as an issue
and are in the process of production reform. Although
it is difficult to see the results due to various factors,
such as the recent logistics disruption and the lockdown in Shanghai, we are working with a sense ofurgency. In terms of performance, we set an operating
income of 23 billion yen for the fiscal year ending March
31, 2023, but the key is whether or not cost increases
can be passed on in line with the surge in the prices ofsteel and other raw materials. On the other hand, we
also need to make further efforts to reduce costs. If werefuse supply because the cost cannot be passed on,
and if our competitors take it over, it means that it was
not cost competitive in the first place. We must placesome emphasis on cost reductions. This is a strategy ofraising prices in sales, reducing costs in manufacturing,and focusing on both. In addition, the lack of good
profit margins in the U.S. and Europe is a major issue.
In addition to the loss-making structure in the U.S. in
the first place, the sharp rise in labor costs has had amajor impact. Moreover, because the market in Europe
is mature, we must abandon unprofitable items andpromote rationalization. We are currently forming a
specialized team to work on drastic measures.

Tsuda: I am also paying attention to what happens tolarge-scale wind power generation. We produce large
bearings and deliver them to overseas manufacturers,
but Europe and China are advancing in this field while
Japan is lagging behind. Since Japan's energy policy isalso greatly involved in achieving carbon neutrality, wemust look at national policies and find our solution. It'squite a difficult challenge.

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88

Sustainability Management Outside Director Dialog
About Us

NTN's efforts to address theunstable global situation andthe impact of exchange rates

Russia's invasion of Ukraine has disrupted the value
chain, and companies are facing a crisis, such as soaring
energy prices. In addition, the yen is depreciating rapidly
due to the monetary policies of each country. Pleasetell us your opinion on NTN's approach to this unstablesituation and the exchange rate situation.
Komatsu: The soaring energy prices certainly createa difficult situation, but on the contrary, I think it is an
opportunity to break the business practice of “bargain

89 NTN Report 2022

Tsuda: The depreciation of the yen is positive forbusiness performance in the short term, but we do
not know how it will move in the future. Under such an
uncertain situation, blocking may progress for making
individual products in each country. We need to carefully
look at whether we can compete well in each country andregion's markets and whether we are cost competitive.
It is not an age in which anything can be made in cheap
regions overseas. I think this is a good opportunity toreview the situation in Japan.

Finally, what contributions will you, as an Outside
Director, make to NTN?
Nishimura: I have been appointed as a Director, andmy second term has ended. There was also a change in
the President, so I would like to talk about the changes
over the past year. First of all, speaking about a positive
point, the conclusion of the meeting was clarified under
the strong leadership of President Ukai. As a result, I
feel that the actions to be taken have been thoroughly
communicated in an easy-to-understand manner, andthat the actions have become quicker. In addition,in order to achieve the goals of the Medium-Term
Management Plan, each Executive Officer has come towork together and team management is beginning tomove forward.
On the other hand, there are two disappointing
points. The first point is that while top-down is thoroughly
implemented, bottom-up is insufficient. What I feelat the production reform site is that there is a lack ofcommitment to the results of the reforms. There is a goalof halving inventory and halving the cost of anything, and
it is difficult to see the attitude that everyone is alignedon the same vector towards this goal, and I feel that theactivities are biased toward some people.
We will become a strong company when the frontline
employees themselves think and devise ways to reduceinventories, reduce costs, effectively use assets, and takeother steps to make progress with reforms and become
self-confident, and establish a culture of promoting
further business reforms on a daily basis. To this end,
the role of leaders on the frontline is extremely important.
To move forward with confidence without fear of failure,
and to trust subordinates. Furthermore, if management,
production sites and sales sites can have a sense ofunity, reforms will proceed even further.
The second point is that there are fewer “buffers”
between operations conducted by different divisions.
This sometimes gives rise to gaps in handovers between
operations. This can result in situations in which it isunclear where responsibility lies. This is due to a lack ofunderstanding among people concerning the value of
their own operations. As in any business, if you are proudof your work and have an awareness of raising its value, I
think the number of gaps will decrease.
I go around the site as an auditor. In production reform
activities, we have had some success and achieved
profitability at Kamiina Works by halving inventories.
Horizontally turning this around should raise morale more.
I believe my role as an Outside Director is to create anenvironment in which such successful examples can beshared with everyone while supporting Executive Officers.

Komatsu: I agree with Director Nishimura on the positivechange discussed. I think it was a year in which thechange in NTN's management and the strength ofPresident Ukai's leadership were recognized.
With regard to our contribution to NTN, in addition
to promoting diversity, I would like to thoroughly monitor
various aspects. As I mentioned earlier, I believe that what
we intend to do and the direction we will take are correct.
It would not be a problem to proceed as it is. What I am
worried about is the ability to execute and again, speed.
With regard to execution, I recognize that my role is tomonitor the progress of the roadmap at meetings of theBoard of Directors and other occasions and to clarify thereasons, countermeasures, and deadlines for any areasthat have not been achieved or that have been delayed.
Regarding the speed, I will always ask them whether thisspeed will be acceptable. I would also like to assist withthe establishment of a framework for monitoring on acompany-wide basis in a timely and appropriate manner.
Tsuda: Six years have passed since I became a Director.
Meanwhile, in terms of governance, we adopted aCompany with a Nominating Committee, etc., and
the President was also replaced. From this year, thechairman of the Board of Directors will be an Outside
Director. I think I was able to contribute as the chairmanof the Nomination Committee as an Outside Director.
Furthermore, I feel the company has changed in termsof its improvement in the areas of accountability andtransparency, which are required by every organization.
You cannot run a business if you cannot explain it to us,
the Outside Directors, and obtain our understanding.
I believe that this has contributed to enhancing theprovision of information to society and to providing
sufficient explanations to employees. In the past, theExecutive Officer system also had positions such as“Senior Managing Director” and “Managing Director” thatmade it difficult to understand why a situation arises, but
now all positions except the President have been unified
into Executive Officers. In conjunction with this, the basic
compensation of Executive Officers has also become
more transparent, as can be understood by calculating
according to the content of jurisdiction. “Why?” or “I don’tknow well” can also lead to employee dissatisfaction.
It was six years that I worked while being conscious offulfilling accountability and increasing transparency. In
that respect, I feel that we are evolving. After that, there
is nothing to say if it is accompanied by achievements.
As an Outside Director, I will continue to look closely atmanagement with high hopes for NTN.

NTN Report 2022

SASB Index

Topic 3Contribution to NTN

NTN Group Information

Tsuda: Director Komatsu will chair the Board of Directors.
I think it is rare for Japanese companies to have thechairman of the Board of Directors as an Outside
Director and a woman, but I expect it to contribute to thepromotion of diversity in the company.

Nishimura: As Director Komatsu said, what we need to
do now is consider how to maintain physical strength.
President Ukai is also working with a sense of urgency
to improve our financial position as one of the importantmeasures in the Medium-term Management Plan. There
are a great deal of tasks that need to be done, such asefforts to increase the operating margins, conversion of
product portfolios, and reduction of fixed and proportionalcosts. If we do not manage our business with true
power and some amount of margin, we will be unable
to take the next first action. As the external environment
continues to change, we believe that improving ourcorporate structure will be a major point in determining
how we can respond to these changes. In addition to
reducing fixed costs, as I mentioned earlier, humanproblems are inevitable. I think the Board of Directors
should discuss whether there are any surplus man-hours,
and if so, whether these man-hours can be diverted to
DX or new businesses, and whether investment in humancapital is required to achieve it.

Topic 4

Sustainability Management

Komatsu: The issues of carbon neutrality and humanrights are exactly as both my colleagues mentioned. In
addition, I am concerned that diversity is not advancing
very much. I didn't have much opportunity to talk faceto-face with female employees because of the newcoronavirus, but from now on, I would like to actively
listen to their stories. In a Japanese company with along history, male managers intend to give consideration
to working women, but it is often the case that it isdifficult to promote women because their evaluation isbiased without realizing it. I prefer to have more womenin managerial positions and reserves, and in the end, I
think it is best to have female directors from within, andI would like to start working toward that. In addition, weare currently reviewing our personnel system, but if thecurrent system is one in which seniority-based ranks areraised, women will inevitably lag behind. If we become asystem that can be promoted regardless of age, gender,
or work style, I think diversity reform will progress.

sale” that has been entrenched in Japan for many
years. Passing on rising purchasing costs to prices iscommonplace in countries other than Japan. I would
like us to change our mindset and continue negotiations
with the belief that it is a matter of course. If we are able
to pass on cost increases, we will be able to manage
our company's supply in a flexible manner by looking at
the balance between supply and demand and building
a value chain in a situation where our company has anadvantage. I would like us to change a crisis into an
opportunity and work on it.
The value chain disruption can also be viewed
as an opportunity. In order to avoid dependence on
procurement in a particular region, we may be moving
to procure from Japan as well. It is important to havethe financial strength and the capacity to respond to
this situation. To this end, we must be able to makemanagement decisions to pass on cost increases evenif we lose business. Also, in a crisis situation, it will be
important to have a sense of speed to think while runningin terms of how to utilize the manufacturing and sales
personnel that had been assigned to the lost business.

Value Creation Story

Human rights have also recently become a major
issue. I think all Japanese companies are facing thisissue, but because Japan is a homogeneous society,I don't think we have had a high awareness of humanrights for many years. In reality, human rights issues haverecently become increasingly focused around the world,and Japanese companies have finally begun to raise theirawareness. It is difficult for some suppliers to understandthe extent to which they are aware of this issue.
Overseas business sites are making more progress, so
it is important to be able to conduct business activities
that give consideration to human rights as a whole while
carefully capturing global information.

90

Sustainability Management

Communication with Stakeholders
About Us

Stakeholders

Stance to
Stakeholders

Main Activities

Stakeholders

Stance to
Stakeholders

Main Activities

Value Creation Story“NTN PROUD AWARD,” as ESG Corporate Award

Employees

Local communities

Incentive payment patent system

We are working to raise the motivation of employees
and encourage job inventions by establishing the“Patent Management Rule” as well as the “Patent
Reward Rule” and providing performance-based
compensation for job inventions.

Global QC Circle Convention

We strive to improve safety, quality, andproductivity on a global basis, and with theconvention as a forum for international exchange,
we exchange information on a variety of activities.

91 NTN Report 2022

NTN Group, in a fairand freeenvironment, builds
good partnerships
with its business
partners and works
together for mutual
growth anddevelopment.

We invite distributors from across Japan to briefing
sessions on account settlement overview andaftermarket business measures to strengthen ourbond with distributors.

Shareholders andinvestors

Technical service units

We run completely-tailored, multi-functional
technical service units worldwide, equipped withteaching materials and exhibits to introduce our
products, and hold bearing technical seminars forour customers.

Briefing for suppliers

We share information on our globalization
initiatives and the business environment
surrounding our company with our business
partners and have external lecturers deliverlectures targeting the business partners.

Promotion of CSR procurement

Through CSR questionnaires based on the CSR
Procurement Guidelines, we promote activities
with our business partners to help themunderstand the importance of CSR procurement.

Environment

NTN Group focuses
on return forshareholders bysustainableprofitable growthand builds long-term
trust relationships
with shareholders
through active
communications.

NTN Group
harmonizes its
business activities
with nature andcontributes topreserve the global
environment by
providing its
technologies,
products andservices.

NTN Rotating School

As an environmental education program forchildren who will lead the next generation, mobiletype schools have been opened in various places
to deepen friendships with the local community.

Conservation of biodiversity

In cooperation with local residents and NPOs, we
are working to protect the environment of
Satoyama (village forest) areas around ourbusiness sites and to protect endangered species.

Shareholders' Meeting

The Shareholders' Meeting is a forum forcommunication to build long-term relationships oftrust with shareholders.

ESG briefing

In addition to holding results briefings for investors,
we also hold ESG briefings to promote
understanding of our ESG initiatives. The opinions
we receive at the briefings are used to strengthen
our activities and information disclosure.

SASB Index

Business partners

NTN Group seeks tomaximize customer
satisfaction and trust
by providing
products andservices of superior
quality, safety andreliability.

Nationwide Distributors' Meeting

We hold family tours and summer festivals at eachbusiness site as an opportunity to interact with
employees' families and neighboring residents.

NTN Group Information

Customers

NTN Group respects
cultures andcustoms in the local
communities andbuilds long-term
trust relationships bymeeting their
expectations throughits businessactivities.

Activities that contribute to the local
community (family tours, summer festivals,
etc.)

Sustainability Management

NTN Group respects
diversity, individuality
and a safe andhealthy workplaceenvironment where
employees can work
successfully.

“NTN PROUD AWARD” is a system that encourages
employees’ ESG activities and commends
outstanding initiatives linked to 13 items of materiality
responding to SDGs identified by the Group. The
system aims to promote understanding andawareness of SDGs among employees and fosters
their motivation and engagement.

Reducing environmental impact inbusiness activities

We are working to minimize harmful environmental
impacts by monitoring and reducing emissions of
CO2 and regulated chemicals in our businessactivities.

Sustainable resource use

We are striving for sustainable resource utilization
by reducing the use of resources such as raw
materials and water, and by thoroughly
implementing the 3Rs (reduce, reuse, and recycle)of waste.

Developing environment-contributing products

We are contributing to the realization of a carbonfree society by developing products that can help
reduce CO2 emissions during product use andnatural energy-related products.

NTN Report 2022

92

Sustainability Management

8th Stakeholder Dialog
About Us

How to proceed with ESG management

characteristics emerge in the three materiality categories

NTN: We formulated a roadmap to promote ESG

technologies.” On the other hand, the ten contents ofmanagement in line with materiality. Could you give us“Form management systems / corporate organization

your opinion on how to deploy materiality throughout thewhich are essential for NTN, as a global company” apply

company and promote ESG management in the future?

to all companies, so how about setting specific indicatorsof “Contribute to society through creation of originaland quantifying them? By doing so, you can not only
Kokubu: Materiality means that something is importantshow the impact externally, but also promote initiatives

for social issues, and under normal circumstances, thewith a sense of consent within the company.

Topic 2

Carbon neutrality

Expertsof social issues. However, this is extremely difficult for

NTN: We think it is necessary to confirm whether ourcompanies, and I have the impression that materiality

13 items of materiality are acceptable to our employees.

has been identified in order to build a company

It is pointed out that our materiality is exhaustive, butsustainability management system. In this sense, NTN's

there are some who believe that the company's efforts tomateriality is also currently used to determine important

address the current materiality have just been rearranged

areas for sustainability activities. Therefore, from amongfrom the ESG perspective. Rather than picking up what

the 13 items of materiality, the question of whether or not

we are doing, we need to show our goals and think

NTN can strategically address social issues by linking

about what we have to do to achieve those goals.

Sustainability Management

How to proceed with ESG management

the 13 items of materiality, I think that NTN’s distinctive

resolution of materiality needs to lead to the resolution

Topics of the dialog
Topic 1

Topic 1

Value Creation StoryTo reflect the opinions of our stakeholders in our sustainable corporate activities, we have annually held dialog withacademics and experts in various fields of sustainability since 2015. For this fiscal year, the 8th dialog was held in June.
Two years ago, we identified 13 items of materiality responding to SDGs and started to work on them. In May oflast year, we expressed our support for TCFD recommendations and proceeded with the identification of risks andopportunities that climate change poses to our business and the analysis of scenarios. Furthermore, in order to solve
various ESG issues, from the perspectives of “forecast” that identifies the future as an extension of our business and“backcast” from the future, which aims to realize a “NAMERAKA Society,” we have formulated a roadmap that defines
what goals are to be cleared and when.
In this dialog, we exchanged opinions with experts about the status of our activities and how to proceed in the
future. Based on the recommendations we received, we will promote company-wide initiatives to further increase
corporate value.

in the future.

NTN Group Information

NTN's activities with social issues will become important
Kokubu: In that regard, I look forward to the new NTN
PROUD AWARD that recognizes sustainability activities.

Akira
YamadaToshiya
ChikadaMichitaka
Shimizu

Eriko
Nashioka

Professor, Kobe University
Graduate School ofBusiness Administration

Senior Consultant
JMA Consultants Inc.

Executive Officer
Chief Manager
Global Warming Prevention
Promotion OfficeEnvironment Improving
Department
Sekisui House, Ltd.

Senior Director
ESG Management
Promotion Headquarters
Sekisui House, Ltd.

(Facilitator)
Representative
Director of Institutefor Environmental
Management
Accounting, CPA.

NTN

The award system has been difficult to implement,in that it is developed logically by dividing society issues

and there is some inconsistency between encouraging

into strengthening positive impacts and reducing negative

sustainability activities and seeking revenue responsibility.

impacts, while linking them to the corporate philosophy.

To overcome this, you must change the system of theI think that the ideas and values of the company are

entire company so that employees can be satisfied

appearing as a result of sincere efforts while referring toand motivated to conduct such activities. To put it thethe guidelines as well. Here are some of our examples ofother way around, if you can build a solid system, it will

how you can translate those ideas and values into future

become a stimulus and employees will be able to work

initiatives. Sekisui House, Ltd. (hereafter, Sekisui House)on the activities with enthusiasm.

reviewed the identified materiality in one year. This is
Executive Officer
Corporate Strategy Headquarters/Europe &Africa Region/General Affairs Department/CSR
Headquarters

Masaaki
Yamamoto

Executive Officer
Corporate General Manager, Human Resources
Headquarter/Manager, Global Human Resources
Development Department/EHS (Environment,
Health & Safety) Integrated Management
Department

Yasuhiro
Kawabata

Executive Officer
Corporate General Manager, Corporate Strategy
Headquarters

Shumpei
Kinoshita

Manager, Corporate Planning Department,
Corporate Strategy Headquarters

Takashi
Nishigaito

Manager, Corporate Communications
Department, Corporate Strategy Headquarters

TatsuoNagao

In addition, while the company’s purpose isManager, EHS (Environment, Health & Safety)
Integrated Management Department

Masayuki
Yamazakibecause the challenge of not being able to “personalize”

emphasized in recent sustainability management, the term
“purpose” is originally the significance of an individual’sManager, Procurement/Logistics Department,
Global Procurement Headquarters

Ryuma
Mano

the materiality when it was deployed to employees
became visible. To prevent a situation where only someexistence. When individuals’ purposes are aggregated,people in the company engage in ESG and sustainability

they become a common purpose, which in turn leads toinitiatives, we are creating a system that allows eacha corporate purpose. Instead of splitting the corporate

employee to personally address management issues. I

purpose into individual purposes, it’s a good idea to look

hope that taking a step to ensure employees’ awareness,

at employees’ purposes and proceed while making sureunderstanding, empathy, and action will lead to ESG andthat the corporate purpose is in line with them. I thinksustainability management in the true sense of the term.

it is important to carry out NTN PROUD AWARD until it

Manager, Production Strategy & Control
Department, Production Headquarters
Corporate General Manager, CSR Headquarters
Manager, Corporate Value Promotion
Department, CSR Headquarters

Yoshitaka
Suzuki
MasaakiMasumoto
KouheiIguchiSASB Index

Katsuhiko
KokubuShimizu: I feel that NTN's materiality is extremely good

becomes the company’s corporate culture.
Yamada: As a whole, I feel that aiming for “realizationof a NAMERAKA Society” is a good concept. Among(*Assignment and title of participants are as of the dialog held.)

93 NTN Report 2022

NTN Report 2022

94

Sustainability Management 8th Stakeholder Dialog
About Us

Yamada: When considering materiality in the future, I

Then we gathered more than 500 items. By thinking

propose that you discuss it with younger generations

within the business divisions, I think it was very good

who will be responsible for the future of each division. As

that we shared the need to respond to climate change

in the case of Sekisui House, the risks and opportunities

in our business activities and personalized it. In addition,differ for each business division. By considering thesome of the risks actually gathered were not noticed byrisks and opportunities, identifying the materiality, andthe secretariat. We can confidently say that TCFD-related

thinking about the story on their own, they will be able

information disclosed this fiscal year describes our risks

to naturally talk about the added value of the products

and opportunities.

when selling them.

Value Creation Story

what the risks and opportunities of their business are.

What will be important in the future is how to manage
Kokubu: No one has verified whether TCFD’s disclosuresof conventional risk management, and responding toare actually effective for investors’ decisions. However,these risks is becoming an issue. In addition, we needas it is also required by the Corporate Governance Code,to coordinate with companies that have newly joined themeasures need to be taken. To do so, you have to readGroup. Not surprisingly, those companies are responding

the guidelines properly and understand what information

to climate change in a similar way, but if they are groupis really needed in your company’s own disclosures.

companies, they must be managed in an integrated

Otherwise, it will be a “task for disclosure.” What ismanner. We are also considering responding to this issue.

needed is real reporting. This is also the case with carbon

process side. I believe that holding discussions based on

NTN: We have set the goal of achieving carbon neutrality

neutrality, and substantial activities are most important.
In other words, instead of purchasing renewable energy,

disclosed related information for the first time this fiscal

you should consider whether it is appropriate to change

NTN: We are visualizing how much we are using, but weyear. The reality is that it is still a “task for disclosure.” In

the energy structure.

in Scope 1 and 2 by the fiscal year 2035 in our roadmap.

also have to pay attention to how much we need. In thisaddition, one of Sekisui House's excellent points in its

Please tell us your opinions about our efforts to achieve

regard, a common issue for Japanese manufacturers at

efforts toward carbon neutrality is that the value of Net

NTN: Thank you very much for your various opinions.

the goals and how our organization should be.

present is that fewer engineers are able to understandZero Energy House (ZEH) is understood by customers

With regard to ESG management and carbon neutrality,

production equipment. We think it is important to be

and reflected in prices. We are also making environment-

we reaffirmed the importance of activities that are in line

Yamada: Many companies have set goals such as

familiar with production technologies and equipment incontributing products, but we are not able to reflectwith the actual conditions of our company, as well as theachieving carbon neutrality by 2030, but it is necessaryorder to visualize the amount of energy required.

them in prices. It will naturally be costly to aim for carbon

importance of directly communicating with employees

neutrality, but it is difficult to answer, “What party should

and customers. Based on the above recommendations,assume the price burden?” We would like to discuss

we will continue to promote our sustainability activities.

to make a master plan on what can be done specificallyto achieve the goal. The first thing a company should

What are your thoughts on TCFD recommendations(hereafter, TCFD)?

thoroughly implement is to reduce energy consumption.

what scenarios to talk about with customers.

The next thing that should be done is to change the

Chikada: Sekisui House expressed its support of TCFD

quality of energy, such as by purchasing renewablein 2018 and disclosed related information for the firstenergy. Regarding energy conservation, most companies

time in 2019. At first, we didn't know how to prepare theprobably feel that they have done everything they can,information, but through dialog with institutional investors

but in reality, many companies have not been able to

we are trying to refine it through trial and error. Last

“visualize” energy. In the manufacturing industry, process

year, we changed the way we analyze scenarios. Whenmanagement is performed to improve QCD, but we areconsidering the significance of working on TCFD, it isin an era where energy management must be performed

meaningless unless we proceed to the point of creating a

as well. Returning to the objectives and functions of eachsystem to respond to climate change within the company.

process, how much energy is required for the process

However, in the past, most of the analysis of risks

and how much energy is actually used? The difference isand opportunities was conducted by the departmenta loss, so we will reduce that loss and consider whether

in charge of the environment, and the results of thethere is any further area for improvement. Though ananalysis were not sufficiently shared within the company.

approach to energy saving in utility equipment is often

Response to TCFD must not be a “task for disclosure.”

taken, the important thing is to manage energy on the

Therefore, we asked all business divisions to consider

95 NTN Report 2022

SASB Index

NTN: We expressed our support of TCFD last year and

NTN Group Information

Carbon neutralitythat fact will be the key to achieving carbon neutrality.

Sustainability Management

Topic 2

this risk. There are risks that do not fall within the scope

NTN Report 2022

96

NTN Group Information

Consolidated Financial Indicators (Past 11 Years) (Fiscal years ended March 31)
2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

543,468
20,7233.8
16,357
5,993
54,44034,175
17,156

539,594
7,278
1.3(13,897)(14,195)
48,97934,841
16,174

638,970
33,003
5.2(2,451)(14,648)
33,16239,315
17,820701,900
43,8506.2
37,062
23,352
31,26640,391
18,088716,996
47,7706.7
26,942
15,03736,30038,27718,480683,636
35,9295.3
14,8892,830
35,39836,62919,196744,699
39,935
5.4
26,905
20,37337,58937,50521,007

733,846
27,222
3.7
2,938(6,958)45,172
38,926
21,661

651,956
7,517
1.2(33,949)(43,992)
57,67537,306
19,961

562,847(3,138)(0.6)(1,256)(11,641)
23,81735,47817,485642,023
6,880
1.1
17,6197,341
19,80937,89817,444

About Us

2012
Financial Data *1
Profit and Loss Statement

Value Creation Story(Millions of yen)
Net Sales *2(Millions of yen)
Operating Income(%)
Operating Margin(Millions of yen)
Income (loss) before Income Taxes
Net Income (Loss) Attributable to Shareholders (parent company) (Millions of yen)
(Millions of yen)
Capital Expenditures(Millions of yen)
Depreciation and Amortization(Millions of yen)
R&D expenditures

Balance Sheet(Millions of yen)693,257

768,461

848,037

856,121794,000

797,038

839,427

840,750

757,822836,563855,483

Net Assets
Inventories
Interest-bearing Debt

(Millions of yen)

212,126
155,107271,978

211,742
163,287
360,801

213,368
166,484
381,767

262,559
184,128
359,105

248,504
178,220
325,173

245,050
171,481
320,169

269,759
179,738
320,833

246,404
194,505
350,344

168,378
182,923
362,416

183,751
176,847
422,803

216,425
214,843
394,031

3.5
1.11
0.9
3.0
28.4
3.3

3.3
1.37
(1.9)
(7.2)
26.0
1.0

3.8
1.27
(1.8)
(7.3)
23.5
4.0

3.8
1.11
2.7
10.5
28.6
5.2

4.0
1.11
1.8
6.3
29.3
5.8

4.0
1.05
0.4
1.2
28.8
4.5

4.1
0.93
2.5
8.4
30.2
5.0

3.8
1.16
(0.8)
(2.9)
27.4
3.3

3.6
1.87
(5.5)
(22.8)
20.6
1.0

3.2
1.62
(1.5)
(7.1)
20.4
(0.4)

3.0
1.38
0.9
4.0
23.1
0.8

(Millions of yen)

17,052(52,842)
47,248(35,790)

20,505(56,604)
69,586(36,099)

69,058(34,132)
6,595
34,92625,120(31,293)(37,492)(6,173)

46,247(33,770)(27,958)
12,47762,387(41,218)(8,218)21,16961,799(48,358)(7,520)13,441

43,224(65,614)
20,745(22,390)

43,749(61,807)
7,413(18,058)

36,473(17,938)
54,671
18,5358,956
2,512(41,300)
11,468(Yen)

370.19375.84374.68461.21436.97431.66477.17433.32294.00321.04372.70

(Yen)

11.27
–
10.00

(26.69)–0(27.54)
–
2.00

43.91
–
6.00

28.28
–
10.00

5.33
–
10.00

38.36
–
15.00

(13.10)–15.00(82.83)–
5.00(21.92)
–
0.00

13.83
–
0.00

20,789
63
9
19.0
13
2
53.9
5,857
219.7
15.0

21,398
63
9
18.5
12
2
56.7
6,134
210.9
14.1

22,156
64
9
17.7
11
2
59.3
6,331
201.8
15.0

23,360
66
9
17.6
11
2
61.7
6,463
197.3
15.4

24,109
66
10
17.5
14
2
60.5
6,336
319.7
15.9

24,665
66
10
17.5
14
2
62.0
6,493
323.0
16.3

25,493
66
10
18.6
14
2
65.3
6,849
326.4
17.7

24,988
65
10
19.0
14
2
72.2
6,978
347.1
17.7

24,199
64
10
19.3
11
5
62.9
6,326
281.1
15.5

23,292
62
10
19.5
11
5
53.7
5,783
243.0
13.1

23,383
63
11
19.9
12
6
57.7
6,623
271.5
15.4

USD Average
EUR Average

79.08
109.02

82.91
106.78100.17134.21109.76
138.69120.15132.60108.39118.80110.85129.64110.88128.41108.73120.84106.01
123.66112.34130.53

USD at fiscal year end
EUR at fiscal year end

82.19
117.5794.05
109.80102.92120.73120.17141.65112.68130.32111.85127.70106.49119.48110.64131.00107.85124.21110.36129.32121.89136.01(Millions of yen)
(Millions of yen)

Sustainability Management

Total Assets

Various Indicators(Times)(Times)
(%)
(%)
(%)
(%)

NTN Group Information

Inventory Turnover Ratio
Net D/E Ratio
Net Income (loss)/Average Total Assets (ROA)
Net Income (loss)/ Average Shareholders’ Equity (ROE)
Equity to Capital Ratio
Return on Invested Capital (ROIC)

Cash FlowsNet cash provided by operating activities
Net cash used in investing activities
Net cash provided by financing activities
Ner cashu flow

(Millions of yen)
(Millions of yen)
(Millions of yen)

Per-share Data

(Yen)
(Yen)

SASB Index

Net Assets
Net Income (Loss)Net Income (Loss)
Diluted net income
Cash Dividends

Non-Financial Data
Number of employees (consolidated)
Percentage of employees overseas
Percentage of female employees (non-consolidated)
Average years of continuous employment
Number of Directors
Number of Independent Outside Directors
CO2 emissions*3
Energy consumption*4
Water consumption*5
Waste generation(%)(%)(Years)(10,000 tons)
TJ/year(10,000 m3)(10,000 tons)

Exchange Rate Data

*1 Effective from the fiscal year ended March 31, 2019, the Company has adopted the “Partial Revision of the Accounting Standard for Tax Effect Accounting”, etc. The figures forthe period from the fiscal year ended March 31, 2015 to the fiscal year ended March 31, 2018 have also been reclassified to reflect the above accounting standards. In addition,from NTN Rerpot 2022, we use the financial data listed in the Annual Securities Report.
*2 “Loyalty,” which was previously included in “non-operating income,” has been changed to be included in “net sales” from the fiscal year ended March 31, 2021. The figures forthe period from the fiscal year ended March 31, 2017 to the fiscal year ended March 31, 2020 have also been reclassified.

97 NTN Report 2022

*3 Scope 2 CO2 emissions since the fiscal year ended March 31, 2019 (Carbon neutral benchmark year) are calculated using emission factors sourced from “Electric Utility
Emission Factors” (Ministry of the Environment and the Ministry of Economy, Trade and Industry) in Japanese sites and calculated using emission factors sourced from
“Emissions Factors 2021” (IEA) in overseas sites.
*4 The energy of electric power is calculated using physical quantity (3.6 MJ/kWh), and the energy of fuel is calculated using the emission factor sourced from “Emission intensity
database for calculation of greenhouse gas emissions of organizations through the supply chain (Ver.3.1)” (Ministry of the Environment).
*5 Water consumption (10,000 m3) is collected from Japanese sites until the fiscal year ended March 31, 2015, and from Japanese and overseas sites from the fiscal year ended
March 31, 2016 onward.

NTN Report 2022

98

NTN Group Information

Consolidated Financial Statements (March 31, 2022)
Consolidated Statement of Operation(In million yen)2021

(In million yen)

2021

2022

Assets154,969

128,644

Notes and accounts receivable-trade116,604

125,507

Net sales

562,847

642,023

Cost of sales

477,666

536,070

Current liabilities

Gross profit

85,180105,953

Notes and accounts payable-trade

Selling, general and administrative expenses

88,31999,072

Operating income/loss (-)-3,1386,880
866

55,46861,03362,81560,881Non-operating income

Short-term loans

121,836

134,229

Interest income

852

Dividend income

568

605

Equity in earnings of unconsolidated subsidiaries

343

1,099

2,732

2,591

—

1,213

Other

3,146

1,090

Total non-operating income

7,644

7,467

Interest expenses

3,505

4,277

Derivative transaction losses

2,918

812

Other

3,823

2,441

Total non-operating expenses

10,248

7,532-5,742

6,815

5,699

10,483

—

3,850

4,996

6,491

Finished goods & purchased goods

91,848105,514Work in process

48,60055,939Accrued income taxes

Raw materials and supplies

36,39753,389Accrued bonuses for directors andstatutory auditors

2,125

4,544

36

29

68

57

Other

33,28237,533

Other

50,06460,486

Alowance for doubtful accounts-1,011-1,045

Total current liabilities

292,346

321,205

485,756

512,031

Fixed assets
Property, plant and equipment
Buildings and structures

225,560

237,099

Long-term liabilities
Bonds

80,00080,000Long-term loans

220,967

179,802

Reserve for product defect compensation

1,082

408

-138,245-149,144

Buildings and structures, net

87,314

87,955

Liabilities for retirement benefits

39,92036,852

Machinery, equipment and vehicles

710,231753,597

Other

18,495

20,790

Accumulated depreciation-598,067-630,990

Machinery, equipment and vehicles, net

112,164

122,607Land

32,44233,563

Construction in progress

22,231

15,55762,49565,498

Accumulated depreciation-56,203-59,385

6,291

6,113

Other, net
Total property, plant and equipment

260,443

265,797

Intangible fixed assetsl
Goodwill

1,983

Other

40,36342,046

Total intagible fixed assets

40,36344,029Investments and other assets

Deferred tax assets

43,836

24,679

2,437

3,495

—

1,555

Other

3,938

4,094

Alowance for doubtful accounts

-213

-200

Total investments and other assets

49,99933,624

Assets for retirement benefits

Total fixed assets
Total assets

317,853

Total liabilities

652,812

639,058

Net assets
Shareholders' equity
Common stock

54,34654,346

Additional paid-in capital

67,97067,970Retained earnings

52,78660,127-782-866

174,321

181,578

Net unrealized holding gain on othersecurities

8,646

1,044

Translation adjustments-6,86516,025

Accured retirement benefits adjustments-5,575-797

Treasury stock—

Investment securities

360,466

350,806

343,451

836,563855,483

Total shareholders' equity

Ordinary income/loss (-)
Extraordinary income
Gain on sales of investment securities
Gain on sale of tangible fixed assets
Proceeds from subsidy

5,769

—

Total extraordinary income

11,46814,333Extraordinary losses
Loss related to Anti-Monopoly Act

1,176

2,928

Impairment loss

2,462

601

Special factory operating loss

3,343

—

Total extraordinary losses

6,982

3,529

Income/loss(-) before income taxes and equity in earings of affiliated companies-1,256

17,619

Income and other taxes

3,220

5,071

Income and other taxes adjustment

6,113

3,451

Total income and other taxes

9,334

8,522

Net income/loss (-)
Profit attributable to non-controlling shareholders
Profit/loss (-) attributable to owners of parent-10,590

9,096

1,051

1,755

-11,641

7,341

Accumulated other comprehensive income

Consolidated Statement of Comprehensive Income(In million yen)

Total accumulated other comprehensive
income-3,794

16,272

13,224

18,574

Total net assets

183,751

216,425

Total liabilities and net assets

2021
Net income/loss (-)

2022-10,590

9,096

Other comprehensive income

Non-controlling shareholders’ equity* Please refer to our website for Management Performance and Financial Analysis, and Risk Factors.
https://www.ntnglobal.com/en/investors/finance.html* Consolidated Financial Statements are available on our website from the fiscal year ended March 31, 2022.
https://www.ntnglobal.com/en/investors/finstatement.html

99 NTN Report 2022

Non-operating expenses

SASB Index

Other

Total long-term liabilities

Gain on reversal of product defect compensation

NTN Group Information

Accumulated depreciation

Foreign exchange gains

Sustainability Management

Electronically-recorded monetary claims

Electronically-recorded monetary claims

Total current assets

2022

Value Creation Story

Cash and bank deposits(In million yen)

2021

2022

Liabilities

Current assets

Short-term loans receivable

About Us

Consolidated Balance Sheet

836,563855,483

Net unrealized holding gain on other securities

3,552-7,615

Translation adjustments

15,056

22,947

Accrued retirement benefits adjustments

7,024

4,795

Equity in equity-method affiliates

-513

1,759

Total other comprehensive income

25,11921,886

14,52930,983Comprehensive income attributable to owners of parent company

12,26827,407

Comprehensive income attributable to non-controlling shareholders

2,260

3,575

Comprehensive income(breakdown)

NTN Report 2022

100

NTN Group Information Consolidated Financial Statements (March 31, 2022)
About Us

Statement of Changes in Shareholders’ Equity

Statements of Cash Flows(In million yen)

(In million yen)

2021
Shareholders’ equity

Balance on April 1, 2020

54,346

67,970Retainedearnings

Treasurystock

62,138Net cash provided by operating activities

Accumulated other comprehensive income

-787

Total
shareholders'equityValuationandTranslationtranslation adjustments
adjustment

183,668

5,094-19,998

Accumulated
Total
accruedaccumulated
retirement
other
benefits
comprehensive
adjustments
income-12,607-27,511

Minority
interest

12,221

Total net
assets168,378

Changes during
the current period

Chenge in scope of
consolidation-11,641-11,641-11,641

2,289

2,289

2,289

Purchase of treasury stock-0

Sales of treasury stock

5

-0

-0

5

5

Income/loss(-) before income taxes and equity in earings of affiliated companies-1,256

17,619Depreciation and amortization

35,47837,898

Impairment loss

2,462

601

Goodwill depreciation—

160

Proceeds from subsidy-5,769—Special factory operating loss

3,343

—

Loss related to Anti-Monopoly Act

1,176

2,928

Increase/decrease (-) in allowance for doubtful accounts

-148

-53

Increase/decrease (-) in accrued retirement benefits for directors and statutory auditors-6-7

Increase/decrease (-) in reserve for product defect compensation

-50

-684

Increase/decrease (-) in liabilities in retirement benefits

-187

1,605

Decrease/increase (-) in assets for retirement benefits—-1,555Interest and dividend income-1,421-1,472

Interest expenses

3,505

4,277

Foreign currency translation adjustments / foreign exchange loses/gains (-)-2,942-1,067

Loss or gain (-) on derivative transactions

2,918

812

Equity in earnings (-) /loss of non-consolidated subsidiaries-343-1,099Gain (-) or loss on sale of tangible fixed assets
Gain (-) or loss on sales of investment securities

Total changes during the period
Balance on March 31, 2021

3,552

13,133

7,031

23,716

1,003

24,720——-9,352

4-9,347

3,552

13,133

7,031

23,716

1,003

15,372

54,346

67,97052,786-782

174,3218,646-6,865-5,575-3,794

13,224

183,751(In million yen)2022

Commonstock

Additional
Paid-in
capitalRetainedearnings

67,97052,786

Total
shareholders'equity-7,903-2,165Decrease (-) / increase in inventories

13,491-25,300

Increase/decrease (-) in trade payables-1,193

691

Other

2,259

-2,445

Subtotal

37,713

16,410Interest and dividend income received

1,865

1,717

Interest paid

-3,488-4,342

Subsidies received

4,895

898

Payment of special factory operating loss

-2,250—-990-3,125

Income taxes paid

-1,272-2,601

Net cash provided by operating activities

36,473

8,956

Increase in time deposits-4,830-1,339Decrease in time deposits

4,212

2,780

-21,900-16,336

Loss related to Anti-Monopoly Act
Accumulated other comprehensive income

Treasurystock

Decrease (-) / increase in trade receivables

ValuationandTranslationtranslation adjustments
adjustment

Accumulated
Total
accruedaccumulated
retirement
other
benefits
comprehensive
adjustments
incomeMinority
interest

Total net
assetsNet cash used in investing activities

Purchases of property, plant and equipment
Proceeds from sale of property, plant and equipment

Balance on April 1, 2021

54,346-782

174,3218,646-6,865-5,575-3,794

13,224

183,751

Changes during
the current period

—

4,740

Purchase of intangible fixed assets-7,724-5,534

Proceeds from sales of investment securities

9,464

17,052

Loss on purchase of stock of the consolidated subsidiary-31—

Proceeds from purchase of subsidiaries' stock resulting in change in scope of consolidation

—

1,200

Decrease/increase (-) in short-term loans receivable, net

Profit attributable to ownersof parent

7,341

7,341

7,341

-92

-92

-92

8

8

8

Othe
Net cash used in investing activities

Purchase of treasury stock
Sales of treasury stock
Net changes in items
other than shareholders'equity during the period
Total changes during the period
Balance on March 31, 2022

101 NTN Report 2022

-7,601

22,8904,777

20,066

5,350

25,416

—

—

7,341

-83

7,257

-7,601

22,8904,777

20,066

5,350

32,67454,346

67,97060,127-866

181,578

1,044

16,025-797

16,272

18,574

216,425

SASB Index

Shareholders’ equity-3,850-10,483

NTN Group Information

Net changes in items
other than shareholders'equity during the period—-5,699Sustainability Management

Loss attributable to ownersof parent

2022

Value Creation Story

Commonstock

Additional
Paid-in
capital

2021

2,663

15

206

-66

-17,938

2,512

Net cash provided by financing activities
Increase/decrease (-) in short-term loans, net-14,728

2,588

Proceeds from long-term loans

58,833

12,178

Repayment of long-term loans-38,774-52,330

Proceeds from bonds

50,000—

Repayment of lease payable-1,676-2,122

Proceeds from sale and leaseback

2,270

—

Other

-1,252-1,614

Net cash provided by financing activities

54,671-41,300

Effect of exchange rate changes on cash and cash equivalents

2,878

4,042

Increase/decrease (-) in cash and cash equivalents

76,084-25,788

Cash and cash equivalents at beginning of the year

71,165147,249

Cash and cash equivalents at end of the year

147,249

121,460

NTN Report 2022

102

NTN Group Information

Global Network (March 31, 2022)
About Us

Japan

EuropeCompany namePaid-in capital

Holdings aspercentage (%)

Company nameⅠ NTN Corporation (parent company)

29 NTN Europe Holdings SAS

EUR 1,000,000

Ⅱ Industrial Business Headquarters, Kuwana Works

30 NTN-SNR ROULEMENTS

EUR 123,599,542

100

Ⅲ Industrial Business Headquarters, Nagano Works

31 NTN TRANSMISSIONS EUROPE

EUR 39,988,327

100

32 EUROPE CREZANCY

EUR 11,500,000

100

33 NTN Wälzlager (Europa) G.m.b.H.

EUR 14,500,000

100

EUR 18,500,000

100

EUR 25,000

100

NTN TRANSMISSIONSⅤ Automotive Business Headquarters, Iwata Works

34 35

37

36

Ⅵ Automotive Business Headquarters, Okayama WorksⅦ Automotive Business Headquarters Mikumo Works
Ⅷ Composite Material Product Division, Engineering Plastics Works
1 NTN SALES JAPAN CORP
12 3

6 Ⅵ
Ⅰ 13

1

A

B

C

Ⅱ 2 14 D

JPY 480,000,000100

2 NTN MIE CORP.

JPY 3,000,000,000100

3 NTN HOUDATSU SHIMIZU CORP.

JPY 1,250,000,000100

4 NTN NOTO CORP.

JPY 1,000,000,000

100

5 NTN FUKUROI CORP.

JPY 1,500,000,000100

6 NTN AKAIWA CORP.

JPY 1,250,000,000

100

7 NTN OMAEZAKI CORP.

JPY 266,000,000

97.4

8 NTN Advanced Materials Corp.

JPY 400,000,000

99.34

9 NTN CASTING CORP.

JPY 450,000,000100

10 NTN KINAN CORP.

JPY 450,000,000100

11 NTN KAMIINA CORP.

JPY 725,000,000

80

12 Taira Forging Co.,Ltd.

JPY 30,000,000

56.67

13 NTN TECHNICAL SERVICE CORP.

JPY 200,000,000100

14 NTN LOGISTICS CO., LTD.

JPY 10,000,000

100

A

New Product Development R&D Center

B

Production Engineering R&D CenterC

CAE R&D Center

D

Advanced Technology R&D Center

E

G

F

23

19
20
21 17
22
18 27

(100)

USD 493,895,440

100

16 NTN BEARING CORP. OF AMERICA

USD 24,700,000

100

(100)

17 NTN DRIVESHAFT, INC.

USD 128,800,000

100

(100)

USD 119,000,000

100

(100)

38

USD 54,300,000

100

(100)

43 58 59

19 MFG. CORP.

25

USD 167,000,000

100

(100)

21 NTK PRECISION AXLE CORP.

USD 30,000,000

60

(60)

22 NTA PRECISION AXLE CORP.

USD 40,000,000

62.5(62.5)CAD 20,100,000

100

24 NTN-SUDAMERICANA, S.A.

USD 700,000

100

NTN MANUFACTURING DE
25 MEXICO, S.A.DE C.V.

MXN 594,205,718

100

NTN BEARING CORP. OF

100(2.72)

27 ASAHI FORGE OF AMERICA CORP.

USD 10,100,000

19.8(19.8)USD 6,000,000

49

F

100

(100)

56 49

40 NTN BEARING-THAILAND CO., LTD.

THB 780,000,000

100(99.999)

NTN Automotive Center

One consolidated subsidiary in addition to the Group companies above

57

54 55

41 (THAILAND) CO., LTD.

THB 1,311,000,000

100(99.999)

THB 700,000,00075(10.73)43 PT. NTN BEARING INDONESIA

USD 7,300,000

100

(100)

44 NTN BEARING INDIA PRIVATE LTD.

INR 300,000,000

100

(0.1)
(24.96)NTN MANUFACTURING

44

40 41
42

INR 4,808,000,000

97.4

46 NTN KOREA CO., LTD.

KRW 500,000,000

100

47 NTN (CHINA) Investment Corporation

USD 388,547,500

100

48 NANJING NTN CORP.

USD 180,000,000

100

49 SHANGHAI NTN CORP

USD 166,500,000

95

(95)

50 Guangzhou NTN-Yulon Drivetrain Co., Ltd.

USD 12,500,000

60

(12)

51 Xiangyang NTN-Yulon Drivetrain Co., Ltd.

USD 34,000,000

60

(60)

52 NTN-RAB (CHANGZHOU) CORP.

USD 28,440,000

100

HKD 2,500,000

100

54 TUNG PEI INDUSTRIAL CO., LTD.

Production

Production and sales

R&D base

Others

(86.67)

TWD 1,257,232,620

27.35

TWD 160,000,000

36.25

56 NTN-DONGPAI (Shanghai) Bearing Sales Co, Ltd.

USD 1,460,000

25

(25)

57 Shanghai Tung Pei Enterprise Co., Ltd.

USD 36,000,000

17.86(17.86)

USD 55,415,050

28.8(0.002)55 TAIWAY LTD.
Sales

(0.97)NTN NEI Manufacturing India
45 Private LTD.

53 NTN CHINA LTD.

BRL 390,739,432

28 USA CORP.

100

MYR 1,000,000(5)NTN do Brasil Producão de
26 Semi-Eixos Ltda.

Seohan-NTN Driveshaft

26

SGD 36,000,000

42 NTPT CO., LTD.

39

20 NTN-BOWER CORP.

23 CANADA LTD.

24

51
50 53

Holdings aspercentage (%)

39 NTN BEARING-MALAYSIA SDN.BHD.

46

48
52

Paid-in capital

38 NTN BEARING-SINGAPORE (PTE) LTD.

47 H

15 NTN USA CORP.

AMERICAN NTN BEARING

28(0.04)NTN-SNR R&D Center

Company name

Holdings aspercentage (%)

NTN DRIVESHAFT

100
100

Asia and Others

Paid-in capital

18 ANDERSON, INC.

EUR 50,000
GBP 2,600,000

Six consolidated subsidiaries in addition to the Group companies above

45

16

37 NTN BEARINGS (UK) LTD.

(100)

58 PT. TPI MANUFACTURING I NDONESIA
59 PT. Astra NTN Driveshaft Indonesia

IDR 120,000,000,000

49

H NTN China Technical Center

One consolidated subsidiary in addition to the Group companies above

NOTES 1. The scope of consolidation as of March 31, 2022 consisted of NTN Corporation and 59 consolidated subsidiaries (14 domestic and 45 overseas
subsidiaries). A total of 11 affiliates (10 overseas affiliates) were accounted for by the equity method.
The following changes to the scope of consolidation and application of the equity method were made during the fiscal year under review.
Consolidated subsidiaries: 2 additions/No removal
Affiliates: No additions/1 removal
2. Of the above subsidiaries, the following companies are specified subsidiaries: NTN USA CORP., NTN DRIVESHAFT, INC., NTN-BOWER CORP.,AMERICAN NTN BEARING MFG.CORP., NTN DRIVESHAFT ANDERSON, INC., NTN do Brasil Produção de Semi-Eixos Ltda., NTN-SNR
ROULEMENTS (‘NTN-SNR’), NTN NEI Manufacturing India Private LTD., NTN (CHINA) INVESTMENT Corporation, NANJING NTN CORP., andSHANGHAI NTN CORP.

103 NTN Report 2022

3. Figures in curved brackets under “Holding as percentage” indicate the percentage of indi-rectly owned holdings, and are included in the total holding.
4. None of the companies has submitted a securities registration statement or securities report.
5. Of the above subsidiaries, NTN-BOWER CORP. is a company with excess of debts and the amount of excess of debt is 11,941 million yen as ofMarch 2022.
6. Of the above subsidiaries, NTN BEARING CORP. OF AMERICA and NTN-SNR have sales (excluding internal sales between consolidated companies)
accounting for more than 10% of consolidated sales. Figures for NTN-SNR are consolidated figures encompassing eight NTN-SNR subsidiaries.
7. Of the above subsidiaries, Ⅰ to Ⅷ are NTN Corporation business units, 1 to 26 and 29 to 53 (in symbols ●●■■) are consolidated subsidiaries, and27, 28 and 54 to 59 (in symbols ●■■) are affiliates subject to the equity method.
NTN Report 2022 104

SASB Index

15

36 NTN Antriebstechnik G.m.b.H.
29 30 GNTN Next Generation Research Alliance Laboratory

Company name

NTN Mettmann

35 (Deutschland) G.m.b.H.

31

NTN Group Information

Americas

32

(100)

Sustainability Management

9

11
Ⅲ
8
5
Ⅷ
E
7
Ⅳ Ⅶ
10
Ⅴ

NTN Kugellagerfabrik

34 (Deutschland) G.m.b.H.

33

100

Value Creation Story

Ⅳ Industrial Business Headquarters, Kongo Works

4

Holdings aspercentage (%)

Paid-in capitalNTN Group Information

Third-Party Opinion

Investor Information (March 31, 2022)

NTN Group Information

About UsNTN Report 2022 third-party opinion
Professor, School of Business Administration,
Kwansei Gakuin University

Chika Saka

Stock Exchange Listings
Tokyo Stock Exchange(#6472)

Stock Price Range in the Fiscal Year
ended March 31, 2022
High: 355yen
Low: 181 yen

Number of Shareholders
59,691

Independent Audit Firm
Ernst & Young ShinNihon LLC

Breakdown of Shareholders

Breakdown of Number of Shares Held
National and local governments

Financial instruments firms

1.46%

6.36%

41.75%

532,463,000

Less than 1,000

8.90%

Financial institutions

13.06%
13.26%

3.74%
Between 10,000
and 49,999

Other corporations

Foreign owners

Between 1,000
to 4,999

Between 5,000 and 9,999

0.00%

1.43%

Between 50,000
and 99,999

532,463,000

3.00%

sharesshares

Between 100,000
and 499,999

1,000,000 or more

7.35%

Individuals

30.47%

64.65%

Between 500,000
and 999,999

NTN Group Information

4.57%
Recent Stock Price Range

Close
Open

Stock price (yen)

High
Low

Monthly Volume Traded

Open
Nikkei Stock
Close
Average

Nikkei Stock Average (yen)900

30,000600

20,000(Millions of shares)

200
SASB Index

105 NTN Report 2022

Common Stock
Authorized: 1,800,000,000
Issued and Outstanding: 532,463,527

150

100
300

10,00050

04 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
2020

2021

Status of inclusion in
ESG indexes

Response to the third-party opinion
We would like to thank Professor Saka for her valuable opinions.
Through the practice of our corporate philosophy, we aim to contribute to the resolution ofsocial issues surrounding the world and realize a “NAMERAKA Society” where people can easily
lead a secure and fulfilling life. In the fiscal year 2021, KPIs and the targets for the fiscal year ending
March 31, 2023 were clarified with the aim of using the materiality identified in December 2020 tocreate specific actions. Among these, we have also set carbon neutral targets. We have received
high praise for our activities, and we have been confident in our efforts to date.
In addition, in terms of creating standards for sustainability disclosure presented to us, we havenoticed that what investors require from companies is the financial impact associated with risks
and opportunities, the viability of resilient responses associated with those metrics and targets,and the ideal way of disclosing information from this perspective.
We will listen sincerely to the valuable opinions we have received this time and strive to increase
corporate value over the medium to long term.

General Meeting of Shareholders
The General Meeting of Shareholders
was held on June 21, 2022 in Osaka

Sustainability Management

In this report, the description of the value creation story was
greatly expanded from 16 pages to 40 pages last year. As for“NTN’s strengths,” it has been linked to “invested capital” andrisks, opportunities and measures, strengths and materiality
initiatives in the value chain, business strategies in the Mediumterm Management Plan, and efforts to strengthen the financial
position and revenue base have been incorporated into thevalue creation story. Regarding sustainability management,
the materiality and KPIs have been linked to the targets for the
fiscal year ending March 31, 2023. Integrated thinking wasmore reflected, the value creation story became compelling,
and the positioning of each initiative became easier tounderstand. The Integrated Report comprehensively covers
finance and non-finance to provide an overview while clarifying
the roles of entry to other reports and materials.
The value creation story thoroughly explains the investmentof R&D resources in six target areas, the restructuringof business and product portfolio through selection andconcentration, and the promotion of DX. Strategies tostrengthen competitiveness under the Medium-termManagement Plan have been steadily implemented, and the
direction of value creation is indicated in conjunction with therevitalization scenario of the CFO message.
In terms of sustainability management, each item is linked to
the KPIs for materiality and the targets for the fiscal year ending
March 31, 2023. In terms of reducing CO2 emissions, Scope 1
and 2 are set as ambitious targets for carbon neutrality by thefiscal year 2035. Scope 3 is also specified as a target by thefiscal year 2050. In the process of aiming for this goal, it is alsomentioned to pursue the creation of economic value, and there

Transfer Agent for Common Stock
Mitsubishi UFJ Trust and Banking Corporation
4-5, 1-chome, Marunouchi, Chiyoda-ku,
Tokyo 100-8212, Japan

Value Creation Story

ProfileAfter working as a full-time lecturer and assistantprofessor (associate professor) at the Schoolof Business Administration, Kwansei Gakuin
University, she has been a professor since 2008.
Currently, she is a member of Sustainability
Standards Board of Japan (SSBJ), a memberof the Science Council of Japan, a member of
the Osaka Prefecture Environmental Council, amember of the Osaka City Environmental Council,
and a managing director of the Accounting andEconomic Association of Japan. She received
the Japan Accounting Association Award. Her
publications include “Environmental Accounting”(Tokyo Keizai Publishing Co., Ltd.), etc. in the book.

is always an awareness of its links to value creation.
Disclosures based on TCFD recommendations, whichwere endorsed in May 2021, were also added to provide an
explanation of the current status of governance, strategy, risk
management, metrics, and targets, an awareness of risks andopportunities using scenario analysis and corporate responses.
Currently, the creation of sustainability disclosure standards
is advancing rapidly on a global level. However, NTN has
made disclosures of core content in anticipation of ISSB's
exposure draft, and information disclosure based on SASB
standards has been expanded from last year. Compliancewith global disclosure requirements is progressing, leading
to improved corporate evaluation. Looking ahead, strategies
will strengthen resilience by addressing the financial impactof risk and opportunities on a company's financial position,
performance, and cash flows, and in terms of metricss andtargets, the amount of assets and investments related to risk
and opportunities. If these items can be shown, it is expected
to lead to an increase in trust from global investors.
It should also be noted that the new theme of “prosperous
human development” includes initiatives concerning respectfor human rights, promote safety and health, human resource
development, and promote diversity. The management
commitment shows a strong will to develop human resources
for the next generation, indicating that the foundation is beinglaid for the realization of human capitalism. The message
that resonates with employees in the opening paragraph, the“NAMERAKA Society” we aim for must have been cultivated on
this foundation.
Regarding governance, in the fiscal year 2022, a new NTN
PROUD AWARD was established to recognize employee ESG
activities, and ESG items were introduced in the Executive
Officer evaluation system. These are expected to serve as
tools to promote ESG initiatives from both bottom and top
perspectives.
Throughout the whole process, the leadership of top
executives is becoming widespread, and a story of sustainablegrowth is being communicated to readers. I am confident that
this report can be communicated to stakeholders in an easyto-understand manner, thereby contributing to the realization ofcollaboration through the spirit of coexistence and co-prosperity.

Head Office
NTN Corporation
3-17, 1-chome, Kyomachibori, Nishi-ku,
Osaka 550-0003, Japan00

4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
2020

2022

2021

2022

*1 Inclusion status as of the end of July 2022.
*2 The inclusion of NTN Corporation in any MSCI index, and the use of MSCI logos, trademarks, service marks or index names herein, do not constitute asponsorship, endorsement, or promotion of NTN Corporation by MSCI or any of its affiliates.
The MSCI indexes are the exclusive property of MSCI. MSCI and the MSCI index names and logos are trademarks or service marks of MSCI or its affiliates.

MSCI Japan Empowering
Women (WIN) Select Index

MSCI Japan ESG
Select Leaders Index*2

S&P/JPX Carbon
Efficient Index

Inquiries
Corporate Strategy Department
T E L : 06-6449-3528
F A X : 06-6443-3226
E - m a i l : irmanager@ntn.co.jp

Executive Officer
ESG Promotion Department

Masaaki
Yamamoto

Sompo Sustainability Index

FTSE Blossom Japan Sector Relative Index

NTN on the Internet
NTN’s website offers a variety of corporate andproduct information, including the latest NTN Reportand financial results.
https://www.ntn.co.jp/

NTN Report 2022

106

SASB Index
About Us

We disclose information according to the requirements of the RESOURCE TRANSFORMATION SECTOR-INDUSTRIAL
MACHINERY & GOODS and the TRANFPORTATION SECTOR-AUTO PARTS, which are classified by SASB.
Although some indicators are not applicable to our company and indicators that we have not been able to disclose
are included, we disclose as much as possible and will continue to make efforts to enhance the disclosure of these
SASB topics.

TRANSPORTATION SECTOR-AUTO PARTS

Sustainability Disclosure Topics and Accounting Metrics
Topic(1) Total energy consumed

TJ*

P.97-98 Consolidated
Financial Indicators (Past
11 Years)(2) Percentage grid electricity

MWh*https://www.ntnglobal.
com/en/csr/environment/
sitereport/total.html(3) Percentage renewableMWh*https://www.ntnglobal.
com/en/csr/environment/
sitereport/total.html(1) Total recordable incident rate (TRIR)

Rate

https://www.ntnglobal.
com/en/csr/nonfinance.
html(2) Fatality rate

Rate

https://www.ntnglobal.
com/en/csr/nonfinance.
html(3) Near miss frequency rate (NMFR)

Rate

Not disclosed

Galloms per
1,000 ton-miles

N/A(1) Sales-weighted fleet fuel efficiency formedium- and heavy-duty vehicles

Materials Sourcing

Remanufacturing Design & Services

RT-IG-130a.1

RT-IG-320a.1

RT-IG-410a.2(3) Sales-weighted fuel efficiency for stationary
generators

Watts per gallon

N/A

RT-IG-410a.3

Grams perkirowatt-hour

N/A

Discussion andAnalysis

P.66 Sustainable supply
chain
P.67-68 Prosperous humandevelopment/Respect forhuman rights

RT-IG-440a.1

P.56-57 Contribute tocarbon-free society/
Reduce energy loss

RT-IG-440b.1

Qualitative
information*(2) Percentage grid electricity

MWh*https://www.ntnglobal.
com/en/csr/environment/
sitereport/total.html(3) Percentage renewableMWh*https://www.ntnglobal.
com/en/csr/environment/
sitereport/total.html

10,000 tons*

P.64 Recycling and pollution
prevention(2) Percentage hazardous

tons*

https://www.ntnglobal.
com/en/csr/environment/chemical.html#anchor02(3) Percentage recycled%

P.64 Recycling and pollution
prevention

Number of recalls issued

NumberNot disclosed

Total units recalled

NumberNot disclosed

Design for Fuel Efficiency

Revenue from products designed to increase fuelefficiency and/or reduce emissions

Reportingcurrency

P.57 Contribute to carbonfree society

TR-AP-410a.1

Materials Sourcing

Description of the management of risks associatedwith the use of critical materials

Discussion andAnalysis

P.66 Sustainable supply
chain
P.67-68 Prosperous humandevelopment/Respect forhuman rights

TR-AP-440a.1

Percentage of products sold that are recyclable%

Not disclosed

TR-AP-440b.1

Percentage of input materials from recycled or
remanufactured content%

Not disclosed

TR-AP-440b.2

Total amount of monetary losses as a result oflegal proceedings associated with anti-competitive
behavior regulations

Reportingcurrency

https://www.ntnglobal.
com/en/investors/fin.html

TR-AP-520a.1

Accounting Metric

Unit of Measure

Fiscal year ended
March 31, 2022

SASB CodeP.47 Reorganization of
production

TR-AP-000.A

Energy Management

Waste Management

SASB Code

TR-AP-130a.1

TR-AP-150a.1

TR-AP-250a.1

RT-IG-410a.4

Materials Efficiency

Competitive Behavior

Activity Metric
Topic

P.97-98 Consolidated
Financial Indicators (Past
11 Years)

Product Safety
N/A

Revenue from remanufactured products andremanufacturing services

TJ*

RT-IG-410a.1

Galloms per hour

Description of the management of risks associatedwith the use of critical materials(1) Total energy consumed

Accounting Metric(1) Total amount of waste from manufacturing(2) Sales-weighted fuel efficiency for non-road
equipment

Sales-weighted emissions of:(1) nitrogen oxides (NOx) and (2) particulate matter(PM) for: (a) marine diesel engines, (b) locomotive
diesel engines, (c) on-road medium- andheavy-duty engines, and (d) other non-road diesel
engines

Fiscal year ended
March 31, 2022

Topic

SASB Index

Fuel Economy & Emissions in
Use-phase

Unit of Measure

SASB CodeNTN Group Information

Employee Health & Safety

Fiscal year ended
March 31, 2022

Sustainability Management

Energy Management

Sustainability Disclosure Topics and Accounting Metrics
Unit of Measure

Accounting Metric

Value Creation StoryRESOURCE TRANSFORMATION SECTOR-INDUSTRIAL MACHINERY & GOODS

Activity Metric
Accounting Metric

Number of units produced by product category

Unit of Measure

Fiscal year ended
March 31, 2022

SASB Code

NumberN/A

RT-IG-000.A

Number

P.97-98 Consolidated
Financial Indicators (Past
11 Years)
P.19-20 Value Creation
Process

Topic

Activity Metric

Activity Metric
Number of employees

RT-IG-000.B

Number of parts produced

Number

Weights of parts produced

M/T

Area of manufacturing plants

number of bases*

Not disclosed

TR-AP-000.B

P.19 Value Creation
Process

TR-AP-000.C*Information is disclosed in units different from those required by SASB.

107 NTN Report 2022

NTN Report 2022108

1-3-17,
1-3-17, Kyomachibori,Kyomachibori, Nishi-ku,
Nishi-ku, Osaka
Osaka 550-0003,
550-0003, JapanJapan
https://www.ntnglobal.com/en/
https://www.ntnglobal.com/en/
CAT.No.1002/E 22.10.03 TK/TK