NTN Report 2023
For the fiscal year ended March 31, 2023

(2) Percentage grid electricity

Leaves grow through thespirit of collaboration with
Collaboration(3) Percentage
renewableand co-prosperity
coexistence(1) Total amountof wastefrommanufacturing
Flowersbloom
andCommitment
Waste Management

fruits grow through fulfilling
our commitments(2) Percentage hazardous

Unit of Measure

Fiscal year ended
Guidelines

GWh*

and Pollution Prevention

SASB CodeMarch 31, 2023

We challenge passionately without being satisfied
with the current situation.
P.58 Resource Recycling
TJ* quickly toandPollution
Prevention
We respondanychanges,emphasizing
on-site verification. Material Balance
We enrich our lives by thinking, acting with initiative
P.58 Resource Recycling
and continuing to grow.

TR-AP-130a.1

Material
Balance in each other.
We accept and respectdifferences
We help each other, treating
all associates honestly.
P.58 Resource Recycling
We takeGWh*care of the naturalenvironment
and Pollution
Preventionand maintaincoexistence with localMaterial
community.
Balance

We maximize the quality
work aiming
for first-class
P.58ofResource
Recycling
quality underton* safety-firstand policy.
Pollution Prevention
Material Balance
We intend to be the strongest
partner delivering
customer delight beyond satisfaction.
Resource
Recycling
We support improvingP.58
livesof people
around theton*
and Pollution Prevention
TR-AP-150a.1
world throughour work.
Material Balance(3) Percentage recycled

Total units recalled

Design for Fuel Efficiency

Stance to
Stakeholders
Materials Efficiency

Competitive Behavior

P.58 Resource Recycling
and Pollution Prevention
Material Balance

NumberNot disclosed

Revenue from products designed to increase fuelReportingP.50-51 Contribute to
TR-AP-410a.1
efficiency and/or reduce
emissionscurrency
Carbon-Free
Society environment
NTN Group
respects diversity, individuality
and a safe andhealthy workplace

Employees

Materials Sourcing%

NTN Group aims to realize a “NAMERAKA Society” through practicing its corporate philosophy.
As a company
is trusted
including stakeholders,
we engage in
Numberthatof recalls
issued and needed by communities
NumberNot disclosed
business activities with an emphasis on respect of human rights and compliance.
TR-AP-250a.1

Management
PolicyProduct Safety

where employees can work successfully.

P.61 Sustainable supply
chain/Procurement activities

NTN Group seeks to maximize customer satisfaction andwith
trust
providingan byemphasison products andCustomers
Description of the management of risks associatedDiscussion andservices of superior quality, safety andreliability.
TR-AP-440a.1
environment and society
with the use of critical materials

Business partners

Analysis

P.67-68 Prosperous Human

Development/Respectfor
NTN Group, in a fair and free environment, builds good partnerships
with its businesshuman rights
partners and works together for mutual growth and development.

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

Local communities

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

NTN Group focuses on return for shareholders by sustainable profitable growth and builds
Shareholders
long-term
trustasrelationships
Total amount of monetarylossesa result of with shareholders through active communications.

ReportingP.95-98 Consolidated
legal proceedings associated with anti-competitive
TR-AP-520a.1
currency
Financial Statements
behavior regulations
NTN Group harmonizes its business activities with nature and contributes to preserve theEnvironment

global environment by providing its technologies, products and services.

Activity Metrics
Topic

Our Vision
Activity MetricFiscal year endedof Measure
1 A company where itsMetriccorporate philosophy isUnit
understoodby all March
employees
around SASB
the Code31, 2023

world, and where all employees think and act by themselves P.39 Reorganization of
Number of parts produced

Number2 A company that has a global presence with original new products
production
and services

appreciated for high quality and functions
Weights of parts produced

M/T

Area of manufacturing plants

number of bases*

Not disclosed

3 A company which everyone involved can be proud of the “NTN” brandP.17-18 Value Creation
Process

TR-AP-000.A
TR-AP-000.B
TR-AP-000.C

Realization of a “NAMERAKA Society”*Information is disclosed in units different from those required by SASB.

01 NTN Report 2023

SASB Index

Buds appear
when we challengewith frontier spirit(1) Total energy consumed

Challenge

and even the natural energy society.

SASB Index

So bearing is a technology for energy conservation.

NTN SPIRITNTN Group Information

CredosMetricEnergy Management

NTN Group Information

Sustainability Disclosure Topics and Metrics
Topic

will smoothly change the future of electric vehicles, robots,

Sustainability Management

The Frontier Spirit / The Coexistence and Co-prosperity Spirit

Corporate
We shall contribute to international society through creating
new technologies
and developing new products.
Philosophy
TRANSPORTATIONSECTOR-AutoParts

Its technology, which has been refined in bearings,

Sustainability Management

shafts will rotate more smoothly and with infinitely less energy loss.

Value Creation Story

With more precise bearing techniques,

Value Creation Story

Bearing technology to make every rotating part of a machine smooth.

Founders’ Spirits

About UsNAMERAKA is a Japanese word meaning smooth and harmonious.

Overview for realizing a “NAMERAKA Society*”

About Us

Make the world “NAMERAKA”*NAMERAKA Society: A society where people can easily lead a secure and fulfilling life in harmony with nature.

02104

2023
2023
ReportNTN NTN
ReportMy “NAMERAKA” initiative is to contribute to the development of a sustainable society bybalancing procurement work and childcare.
The procurement division builds relationships of trust with suppliers and engages inprocurement activities based on the perspectives of “fairness and impartiality,” “compliancewith laws and regulations,” “green procurement,” and “co-existence and co-prosperity.”
In addition to balancing quality, price, and delivery time, we also want to contribute to
the realization of a global environmentally friendly society by selecting products that areenvironmentally friendly.
I focus on childcare at the same time as I work efficiently. I have two children, ages 4 and8, and I cherish the time I get to spend with them after work, such as reading books to themand help them study. I believe that another contribution I can make to society is to nurture
healthy bodies and kind, compassionate hearts in the children who will be responsible for the
future of our society.

The important thing I realize about “NAMERAKA” is how to live and work smoothly byminimizing actions lead to problems while generating activities of good relationships andcollaborations with people in our daily lives and work.
As the aftermarket sales manager, I found various challenges in the past years such as big
fluctuation of market demand and supply, highly competitive market, cost increase situationand price up activities. To deal with these challenges and difficulties, I took NAMERAKA
concepts to work smoothly with customers and our internal teams.
For example, I help dealers to achieve their purchase plans and to expand their market
share by uniting those dealers’ capability and NTN technical support and stock managementwith sincere and honest two-way communications. I believe the respectfulness, harmony andresponsibility are the key fundamentals of job accomplishment and sustainable growth.

Dandan Cui
CVJ Group Project Manager
Procurement Dept., SCM Strategy HQ,

As part of our Corporate Social Responsibility approach, SNR CEVENNES decided to
become an actor in the process of maintaining the employment of disabled workers.
We first outsourced some of our activities in the workshops of our “ESAT” (Work Aid
Establishment and Service) partner.
Then, we included disabled “ESAT” workers in our production workshop to make themfully participate in the life of the plant up to the running of a GEN3 bearing’s production line.
Jean-François is now autonomous for bearings’ production.

The automotive industry is undergoing a major transition from ICE to electrified vehicles.
NTN can play an important role to make this a smooth transition by practicing and promoting
our core philosophy and spirit.
Engineering R&D is listening to the voice of the customer for what is needed to meet or
exceed the technical requirements of electric vehicles and to promote our best technologies.
We know lighter weight, more efficient and long life bearing products are a key. NTN will leadby practicing the 3C’s of NTN Spirit. The challenges of the future are accepted now as we
collaborate internally and with our customers and are committed to be a leading automotive
supplier to reach the end goal of a “NAMERAKA Society” for everyone.
Eric Whipple

GEN3 Hub Bearing Manufacturing Dept.
Croupillac’s Plant

Engineering Director,
Automotive OE Business Unit

A History of Challenge andDevelopment

NTN’s Business Environment

58

Environmental Protection

30

Rebuild Business Portfolio and
Product Portfolio

60

Sustainable Supply Chain

62

Prosperous Human Development

69

Governance79

Officers

83

Outside Director Dialog

Production concept of “NTN Report 2023”

87

Communication with Stakeholders

89

9th Stakeholder Dialog“DRIVE NTN100” Phase 2, a three-year medium-term management plan
started under a new organization led by President Ukai, who took office inApril 2021, aims to revitalize NTN by strengthening our financial structure.
In the fiscal year ended March 31, 2023, our business performance
was improved steadily even under a tough business environment due tocontinued influence of global semiconductor shortage and unprecedented
cost inflation including raw materials, energy, and logistics cost. Still, weposted higher sales and profits compared to the previous fiscal year, but
the operating income fell short of the announced forecast. We will continue
to implement each initiative with firm resolve also in the final year.
In addition, we are promoting ESG management based on ourroadmap to realize a “NAMERAKA Society” for sustainable growthover the medium to long term, while strengthening initiatives related toclimate change and human capital.
This report describes these topics.

31

R&D (Research & Development)

11

Financial and Non-Financial Highlights

33

Business Strategies

39

Control Increase of Fixed Costs /Improve Assets Turnover

41

Reduce Variable Cost /Procurement Reformation

42

Promotion of DX(Digital Transformation)

43

CFO Message

Management Commitment

17

Value Creation Process

19

Materiality

21

Risks, Opportunities and Measures

23

NTN’s Capital and Strengths

25

Strengths and Materiality Initiatives
along the Value Chain“DRIVE NTN100” Phase 2
27

Review of Management Plan

03 NTN Report 2023

We are enhancing information disclosure by referring to the following guidelines, etc.
• IFRS Foundation “International Integrated Reporting Framework”• Ministry of Economy, Trade and Industry “Guidance on Integrated
Disclosure and Dialogue for Value Creation”.
• SASB (U.S. Sustainability Accounting Standards Board) Standards• GRI (Global Reporting Initiative)
Sustainability Reporting Standards
https://www.ntnglobal.com/en/csr/gri.html

29

Nurtured Business

13

Target guidelines

The Group believes that building relationships of trust withshareholders, investors, customers, business partners, the international
community, local communities, and employees and contributing to
the global environment will enhance corporate value. To report to ourstakeholders on the business and sustainability activities of our group,
we have been publishing the NTN Report (Integrated Report) since thefiscal year ended March 31, 2010. We will use this Report as a toolfor dialog with our stakeholders to deepen their understanding of ourcompany and contribute to the realization of a “NAMERAKA Society.”

7

Value Creation Story

Editorial policy

Sustainability Management

NTN Group Information
93

Consolidated Financial Indicators(Past 11 Years)

95

Consolidated Financial Statements

99

Global Network

47

Toward Realization of a
“NAMERAKA Society”

50

Contribute to Carbon-Free Society

101 Third-Party Opinion

53

Realize Carbon Neutrality

102 Investor Information

57

Contribute to Prosperous Lives

103 SASB Index

Period and scope of coverage
Period ofcoverage

Fiscal year ended March 31, 2023
(April 1, 2022 to March 31, 2023)
Includes some activities for the fiscal year ending March 31, 2024

Scope ofcoverage

NTN Group
Includes some non-consolidated reporting of NTN

SASB Index

Jean-François BOISSONNADE

CONTENTS

5NTN Group Information

NTN Bearing Corp. of America

About Us

Aftermarket Sales Manager
Aftermarket Sales Department

which we aim for

SNR CEVENNES“I am happy and proud of myself with this work at NTN. Even if you are a person withdisability, you can have access to the regular environment. With the help of a monitor,
anything is possible! Don’t be afraid, you can try like me! ”

Kittitat Lasorn

Sustainability Management

A “NAMERAKA Society”

Value Creation StoryNTN Bearing Thailand Co., Ltd.

About UsNTN Corporation

Disclaimer
This report contains projections and outlooks regarding our plans, strategies
and performance for the future. Please understand that actual results may
differ materially from those discussed in this report.

NTN communication
Overview

Details

NTN Report

Annual Securities Report

Business Report(Shareholders’ Newsletter)

Corporate Governance
ReportFinancial Results
Briefing Materials

Sustainability Initiatives(Website)

Financial Information

Non-financial Information

This report focuses on the most important financial and non-financial
information. For more detailed financial information, please refer to the annual
securities report and financial results presentation materials. In addition, oursustainability activities are introduced in detail on our website.
https://www.ntnglobal.com/en/index.html

NTN Report 2023

04

About us

A History of Challenge and Development

achievements through its advanced technology. NTN will continue to contribute to the international society throughcreating new technologies and developing new products, aiming to realize a “NAMERAKA Society”.

History of NTN

Old head office building

1954
Noboru Niwa

1920

First in the Japanesemachinery industry toreceive the Deming Prize*

Jiro Nishizono

The Deming Prize is the world’s highest
ranking award for TQM (Total Quality
Management), and NTN was the firstcompany to receive this award in the
bearing industry, as well as in theJapanese machinery industry. The
company was the first in the machineryindustry to introduce statistical quality
control, and was recognized for its efforts
in promoting quality control throughout
the company.

Bearings at thetime of the startof the business

1930

1940

1950

1960

1970

100th anniversary of the company’s founding
On March 1, 2018, the company celebrated its
100th anniversary, and on this occasion, launched
the communication word “Make the world
NAMERAKA(smooth), NTN”

2020

Established the brand statement“Make the world NAMERAKA”
We have established a brand statement to communicate
our commitment to a sustainable “NAMERAKA Society” in aconsistent manner on a global basis.

In conjunction with the company name change, themeaning of NTN was changed to N.T.N, which stands for“For New Technology Network (connecting the world withnew technology),” as a guiding principle for the new future.

2008

The company name of NTN-SNR ROULEMENTS S.A.
changed to NTN Europe S.A.

Head office relocation

SNR ROULEMENTS becomes a subsidiary
To expand our business in the European market, weinvested in SNR ROULEMENTS of France in 2007 andmade it a subsidiary the following year.

1980

2023

Toward improved brand awareness in Europe

1990

2000

The head office was relocated to Daibiru-Honkan to secure
the business continuity and the safety and security of
employees in the event of natural disaster.

Quality

2010

Started production of driveshafts
The company entered into a technical tie-up with
Hardy Spicer Co., Ltd. of the U.K. and began
production of driveshafts (constant velocity joints) at
the Kuwana Works as a promising product for which
demand for automotive applications was expected
to rapidly increase in the future.
Driveshaft at the beginningof production

1964

Delivered journal bearings for the first
0 Series Shinkansen
We have contributed to the higher speed and lower weightof rolling stock by developing technologies in line with theevolution of high-speed rail and providing high-quality, highly
reliable products.
Our products have been used on the first generation 0 series
Shinkansen as well as on the latest generation of Shinkansens.
The journal bearings for the 0 Series Shinkansen have also beenrecognized as a “Tribology Heritage*” by the Japanese Societyof Tribologists.
*Tribology Heritage: Tribology-related
technologies and objects recognized by theJapanese Society of Tribologists as having
made particularly important contributions
to the development of science andtechnology.

05 NTN Report 2023

Late 1970s

Evolution of hub bearings

The axle bearing (GEN1), the predecessorof the hub bearing for which we hold the
top class share of the global market, wascommercialized in the late 1970s. In the
1980s, the GEN1 evolved into a hub bearing(GEN2) with a knuckle and other peripheral
parts integrated as a unit. The GEN3 wasfurther evolved to integrate all of hub bolts,
flange, and knuckle for easier assembly on
vehicle assembly lines, and mass productionof the GEN3 began in Japan for the firsttime in the mid-1980s. Even today, theproduct continues to evolve, such as incombination with various sensors and further
improvements in ease of assembly.

From 2000 onward

1986

Constructed Japan’s first plant
specialized in aerospace bearings
We have been producing high-function, highquality bearings for aerospace applications and are
currently the only company in Japan to be certified
as a supplier of main shaft bearings by the four
major jet engine manufacturers in the world.
Bearings for jet engine
main shafts

Jet engine
cross-sectional
view

Technical service units
driving worldwide

For sales sites of the technicalservice cars running around theworld, we visit our customers withfully customized, multifunctional
technical service cars equipped withproduct samples and maintenancetools, and offer technical diagnosis
and technical training sessions toprovide detailed support for solving customer problems. Even after delivery of
our products, we continue to support our customers to improve productivity
and safe operation of their facilities by using our technical service cars. Above
all, we work to solve problems in our society by talking directly with customers
to find out what problems “customers around the world” are having.

What is a bearing?
Outer ring
Inner ring

GEN1

GEN2

GEN3

Rolling elements(ball/roller)
Retainer

2020

2014

SASB Index

History of Product and Services

1963

Original Technologies

1989

Company name changed to
NTN Corporation*Deming Prize:
Established by theUnion of Japanese
Scientists and Engineers
to commemorate theachievements of Dr.
Deming of the U.S., who
popularized statisticalquality control in postwar
Japan and laid thefoundation for raising
the quality of Japanese
products to a worldclass level.

P.23

NTN Group Information

1910

Company name changed to
Toyo Bearing Mfg. Co., Ltd.

2018

Sustainability Management

Since its founding in 1918, NTN has always valued twoof its founder’s spirits: the “Frontier Spirit” of continuallychallenging ourselves and the “Co-existence andCo-prosperity Spirit” of developing alongside society.
These founder’s spirits are embedded in the corporate
philosophy as part of NTN’s DNA, and we still possessthem more than 100 years later. In 1918, Jiro Nishizono,
a 21-year-old young engineer, founded Nishizono
Ironworks in Kuwana, Mie Prefecture. Noboru Niwa, wholater became the company’s first president, started his
own business at the age of 22, running a machine toolbusiness in Osaka called Tomoe Trading Co.
In 1922, Tomoe Trading Co. purchased the entire
cargo of bearings from a Swedish ship that sank inJapan and asked Nishizono Ironworks, with whom it
had a business relationship, to recondition the bearings.
With the profits from the sale of these bearings, newgrinding machines were purchased and full-scale bearing
production was started. From the beginning of production,
the bearings were marked with NTN, the initials of Niwa,
Tomoe and Nishizono.

1937

NTN’s Strengths(Competitive Advantages)

Value Creation Story

Since 1950, momentum has been building for the expansionof bearing exports. In 1961, we established our first overseas
sales company in Düsseldorf, Germany, to respond flexibly to
local demand. In terms of manufacturing, in 1971 we became
the first Japanese company to establish a manufacturing
company in Europe in Germany, and in the same year weestablished a bearing manufacturing subsidiary in the U.S.
Subsequently, the local production system was strengthenedby establishing not only plants for finished products but also
plants for pre-production processes.
082
Through these overseas expansions, we have promoted
the shift to local production, producing our products where
our customers around the world need them.

Established “NTN Mfg. Co., Ltd.”
with capital of 50,000 yen“Frontier Spirit” and “Coexistence and Co-prosperity Spirit”
handed down from the company’s founding
Begins research and production of ball bearings at Nishizono
Ironworks in Uchibori, Kuwana-cho, Kuwana-gun, Mie Prefecture

1900

Strengthened and expanded
overseas sales and local production

1927

1918

1960s to 1970s

About Us

Mettmann Plant,
Germany

Since the company’s inception, NTN has been committed to the “Quality First” principle, and has built up trust andProvided bearings for theAsteroid Explorer “Hayabusa 2”
The H-IIA Launch Vehicle No. 26 with the Asteroid
Explorer “Hayabusa 2” and others onboard waslaunched from the Tanegashima Space Center.
Our spherical plain bearings are installedin the hinge section where Hayabusa 2 opens
its solar panels in space, contributing to theaccomplishment of Hayabusa 2’s mission in space.

Services
Spherical plain bearing usedin Hayabusa 2

Bearings are eco-friendly products that support the rotation of all kinds of machinery and reduce energy consumption by
reducing friction. The coefficient of friction of a smoothly rotating bearing is 0.001. This means that an object weighing 1,000 kg
placed on the ground can be moved by the pulling force of an object weighing about 1 kg. Bearings are used to move things
lightly, contributing to reduced energy consumption.
A typical bearing consists of four parts: the outer ring, the inner ring, the rolling elements, suchas steel balls, between the rings, and the retainer, which sets the position of the rolling elements andmaintains the spacing between them. Although the configuration is seemingly simple, bumps anddistortions in the inner and outer rings and rolling elements prevent smooth rotation. Even a single ballin a bearing is so precise that the difference in surface bumps is less than 1/10,000th of a millimeter,
requiring high technology in manufacturing.
Bearings are built into machines and used in places that are usually out of sight, but they areimportant parts that play a role in enhancing the safety and reliability of machines, contributing to therealization of a “NAMERAKA Society”.
Bearings,
Let’s Learn!

NTN Report 2023

06

About us

Nurtured Business
About Us

Net sales

774.0

billion yen

Operating income

17.1

Aftermarket applications
billion yen

Fiscal year ended March 31, 2023

130.4 billion yen (17%)

Mining machinery

Metal industry
equipment

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

Industrial machinery applications

Paper-making
machinery

Food processing
machinery

Sustainability Management

500.4 billion yen (65%)

Net sales bybusiness sector

In our aftermarket applications business, we provide bearings for repair for general machineries and automotive aftermarket parts,
maintenance tools, and devices to detect abnormality in bearings through our distributors. In this way, we help improve productivity
and ensure stable equipment operation.
We also provide a wide range of technical services to resolve issues related to bearings, such as how to handle them. Our remotetechnical support services share information about the customer’s manufacturing site with NTN’s technical experts by means ofcameras and other equipment so that we can provide quick assistance in resolving issues.
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” that customers can use to easily diagnose bearing conditions simply by installing it on equipment.
We provide full support for our customers, from supply to after services, such as “NTN Aftermarket Academy” online to enable
customers to acquire bearing knowledge.

Value Creation Story

Aftermarket applications

Automotive applications

P.33

Cement equipment

139.5 billion yen (18%)

NTN Group Information(billion yen)

Fiscal year ended March 31, 2023
Results

Fiscal year ending March 31, 2024
Forecast

Aftermarket

112.2

134.0

133.0

Industrial machinery

126.1

139.5

133.0

Automotive

403.7

500.4

544.0

Total

642.0

774.0

810.0

Aftermarket

14.7

Operating income

Industrial machinery(Operating margin)

Automotive

Net sales

Total(13.1%)

22.3

4.1(3.2%)-11.9(-2.9%)

6.9(1.1%)

Asia and others(16.6%)

22.5(16.9%)

7.3(5.2%)

7.5(5.7%)-12.4(-2.5%)

0.0(0.0%)

17.1(2.2%)

30.0(3.7%)ULTAGE
spherical roller bearings
Type EA, Type EM

Remote technical support services

NTN Portable Vibroscope

Auto parts

Technical training / maintenance tools

201.6 billion yen (26%)
Part kits with combinations of several
bearings

Net salesby region

07 NTN Report 2023

Induction heater

Self-centering hydraulicpuller with arms

Americas155.2 billion yen (20%)

Plummer blocksJapan

170.9 billion yen (22%)

EuropePolyLube sealed bearings forfood processing machinery

SASB Index

Fiscal year ended March 31, 2022
Results

Technical service units

246.2 billion yen (32%)

NTN Report 2023

08

About Us Nurtured Business
About Us

Industrial machinery applications

P.35

Construction
machinery

Agricultural
machinery

Gearboxes

Aerospace

P.37

NTN provides a wide range of products for automobiles as a specialist in the power/drive
train system, contributing to fuel efficiency and reducing CO2 emissions. In addition to coreproducts of hub bearings, driveshafts, and various bearings, NTN provides module productswith high functions by combining our products with peripheral components and fusing
our core technologies to contribute to the creation of safe, secure, and comfortable future
automobiles.

Machine tools

OthersValue Creation Story

NTN supplies a wide range of bearings for various industrial machinery such as construction machinery, agricultural
machinery, robots, aircrafts, wind turbines, machine tools, railway rolling stocks, 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
Steering components
Sustainability Management

Mechanical Clutch Unit for
Next-generation Steering

Seats
Clutches forseat lifters

BrakesCombined Controller
Module Electric Oil
Pump

Rolling stock

Helping ensure stable
food production

Helping ensure high robot
productivity

Office equipment

Electronic devices

Used for worldwide jetengine applications

Helping ensure highmachining precision

Axle/Drivetrain

RobotsHelping ensure precision
operation of copier/multifunctional printerUsed for hard discdrive and thin fan motor
applications

i-WRIST™

TRINITTE™

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

Realizing continuous andstable parts picking

High Speed Deep Groove Ball
Bearings for EVs and HEVs

SASB Index

Needle Roller and Cage
Assemblies for Planetary Gear

Motor

Helping ensure safety ofworldwide high-speed
railways

NTN Group Information

Applications forresource mining and civilengineering

Ball Screw Drive Module
for Electric Hydraulic Brake

Driveshafts
Hub bearings

Wind turbine

Green energy products

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

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

Improve wind turbine
utilization rate throughcondition monitoring

sHUB

eHUB

Compact Lightweight Rear Driveshaft
R Series

Can be transported to the required locationand generate/supply electricity

CreepLess Bearing

09 NTN Report 2023

Ra-sHUB

Hub Bearings with High
Resolution Rotational Sensors

Low Friction
Hub Bearing III

GEN4 Hub Joint

High Efficiency Fixed
Type CVJ “CFJ”

NTN Report 2023

10

Financial and Non-Financial Highlights

About Us

About Us

Financial Data

Non-financial Data

Net Sales

Operating Income/Operating Margin

17.1

billion yen(Billion yen)

1,000.0

60.0
774.0

733.8
652.0

2.2

billion yen(Billion yen)

750.0

Operating Margin

Operating income

1.2%

20.0

1.1%

30.0

10.0

7.3

2019 2020 2021 2022

-7.0

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

years
2023 2024 (Fiscal
ended/ending(Forecast) March 31)

Equity to Capital Ratio*1

5

%

(%)

(%)

(yen)

15

40

18

10

30
5.0

5.0

20.6
20

20.4

23.1

12
10

25.8

25.4

6
0

–25

-22.8
2019 2020 2021 2022

years
2023 2024 (Fiscal
ended/ending(Forecast) March 31)

239.4

billionyen

3.2

Inventories
Inventory turnover ratio(Billion yen)02019 2020 2021 2022

400.0

22.3 42.0
billion
yen

3.7

3.6
3.2

194.5 182.9

3.0

176.8 214.8

3.2

50.0
40.0

239.4

220.0
30.0
20.0

billionyen

Capital expenditures
Depreciation and amortization(Billion yen)

57.7

0

2019 2020 2021 2022

20

2

0

2019 2020 2021 2022 2023 2024

(Fiscal years
ended/ending

54

%

37.3

35.5

23.8

37.9

39.0

88

%

60

‘Needs much improvement’

60
49

40

40

20

20

0

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

0

27.0
1.0

(Fiscal years
ended/ending
March 31)

48

51

51

54

‘Excellent’

23%

10%

56

46.3

ten thousand tons

1.4

1.2

1.1

40

62.0

59.2

54.9

300

56.4

53.7

(0.9)

(10,000
tons)

348
281
243

62.0

272

20

284
15

200
52.8

30
(1.0)

16.3

ten thousand m3

349

72.8

46.3

48.6

46.3

Recycling rate

ten thousand
tons

97.2

Waste generation%

Recycling rate

97.1% 96.9% 96.9% 95.8% 97.2% 96.0%
18.1
15.5

15.4

18.1

16.3

13.1

10

45.7
100

20

Number of respondents: 113

Waste generation(10,000 m3)

50

(1.3)
(1.1)

Scope 265%

Waste Generation/Recycling Rate

400

60

1.9

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

2019 2020 2021 2022 2023 2024

284

ten thousand tons
Scope 10

Water Consumption

Scope 2

10.1

times

80

1.2

22.3

5

10
(Fiscal years
ended/ending(Forecast) March 31)

2019 2020 2021 2022 2023 2024

*1 The figures in ( ) take into account a part of the subordinated bonds through public offering that is recognized as equity (50%).

11 NTN Report 2023

(Forecast)

Scope 1

10.0

2019 2020 2021 2022 2023 20242019 2020 2021 2022 2023 2024

(10,000
tons)

1.6

19.8

(Fiscal years
ended/ending%‘Needs some
improvement’

71

70

67

4.4

Either ‘Excellent’ or ‘Good’

80

72

3.9

Customer Satisfaction Survey
Responses*4

2%

64

3.9

(Forecast) March 31)

(%)

63

4.0

2019 2020 2021 2022 2023 2024

100

years
2023 2024 (Fiscal
ended/ending(Forecast) March 31)(times)

2.0

0

(%)

70
42.0

4.3

(Forecast) March 31)

Ratio of Overseas Production

CO2 Emissions [Scopes 1 and 2]

1.2(1.0)

100.0

0

4

100

0

3.0

45.2
38.9

0

Net D/E Ratio*1

Depreciation andAmortization

Capital Expenditures

60.0
3.8

years
2023 2024 (Fiscal
ended/ending(Forecast) March 31)

Capital Expenditures /Depreciation and Amortization

Inventory Turnover
Ratio

Inventories

200.0

6

-7.1

Inventories /Inventory Turnover Ratio

300.0

63

5

5

10
-2.9

63

62

64

40

(Forecast) March 31)

80(28.2) (28.8)

9.0

SASB Index

4.0

5(23.4)(26.0)(Fiscal years
ended/ending

2019 2020 2021 2022 2023 2024

70

%

8
64

60

Ratio of Local Procurement*3

15
27.4

10

65

0
(Fiscal years
ended/ending(Forecast) March 31)

yen

(%)

15.0

2019 2020 2021 2022 2023 2024

Cash Dividends

25.4(28.2)

%

–50.0

(%)

100
80

22.7

5.0

-11.6

4.4

%

NTN Group Information

5.0

2019 2020 2021 2022

2.4%
18.7

17.4

63

0

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

2019 2020 2021 2022 2023 2024

0

10.8
2019

9.3
2020

8.6
2021

10.6

10.1

2022 2023

8.0
2024

(Target)(Fiscal years
ended/ending
March 31)0

Sustainability Management

0
-44.0

-20.0

17.5

Ratio of Female Managers*2

2.8%

10.0

0

years
2023 2024 (Fiscal
ended/ending(Forecast) March 31)

11.0

6.9

-3.1
0

20.0

20.0
10.4

%

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

2.7%

21.7

30.0

2.4

billionyen

3.1% 3.1%

3.0%

20.0

17.1

-0.6%
7.5

250.0

(Billions yen)(Billion yen)

25.0

2.2%
27.2

562.8

18.7

billion yen

3.7%

3.7%
40.0

500.0

Operating margin

10.4
30.0

810.0

642.0

%

Ratio of R&D
expenditures to sales

R&D expenditures

Ratio of Overseas Employees

Value Creation Story

774.0

Operating income

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

Profit (Loss) Attributed to
Owners of Parent

2019 2020 2021 2022 2023 2024

(Target)(Fiscal years
ended/ending
March 31)02019 2020 2021 2022 2023 2024

(Fiscal years
ended/ending(Target) 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 2021 to September 2022

NTN Report 2023

12

Value Creation Story

Management Commitment
About Us

Fiscal year ended March 31, 2023:
Results and Issues

With the steady implementation of our Medium-term Management Plan “DRIVE NTN100” Phase 2, we are promoting
the transformation of our business structure and accelerating initiatives designed to strengthen our financial
framework and build a resilient corporate structure capable of responding to changes in the business environment.
We recognize that we still face many challenges, but we also see positive signs. For example, our aftermarket andindustrial machinery businesses are showing expansionary trends, and the Americas and Europe regions returned
to profitability in the fourth quarter of the fiscal year ended March 31, 2023. In this, the final year of “DRIVE NTN100”
Phase 2, we will focus even more intently on the key issues of the Medium-term Management Plan, and thereby
transform ourselves into a company capable of securing profits. I therefore wish to take this opportunity to bring our
stakeholders up to date on our current status and outlook.

13 NTN Report 2023

NTN Report 2023

SASB Index

Eiichi Ukai

For the fiscal year ending March 31, 2024, we areforecasting net sales of 810 billion yen and operating
income of 30 billion yen. The aftermarket and industrial
machinery businesses are expected to reach record
highs by continuing to pass on rising costs to sales
prices and revising prices in unprofitable businesses.
Meanwhile, in the automotive business, we will aim
to achieve year-on-year increases in sales and profit
and break free from operating losses as easing
semiconductor shortages lead to a recovery inautomobile production.
In comparison with the initial targets of the Mediumterm Management Plan ending in the fiscal year ending
March 31, 2024, we anticipate that net sales will expand
but operating income will fall off the target of 42 billion
yen or more by 12 billion yen. Likewise, although ouroperating margin is gradually rising, it will remain at 3.7%
for the fiscal year ending March 31, 2024, compared tothe target of 6% or more.
Thus, we will be unable to achieve the Medium-termManagement Plan’s initial targets. Nonetheless, I see it
as management’s responsibility to make achievement
happen early in the new Medium-term Management
Plan, which will start in the fiscal year ending March 31,
2025. We are making thorough preparations during thecurrent fiscal year and will proceed with a concertedGroup-wide effort under the new Medium-termManagement Plan.
Specifically, we reworked the organizational structureof our head office in April 2023. The key componentof this reorganization was the establishment of theGroup Management Headquarters and the SCM
Strategy Headquarters. In particular, the SCM Strategy
Headquarters has a framework that consistently
manages operations related to overall supply chain
management, from procurement to production, supply
and demand control (production control), logistics,
and other areas. By consolidating functions to achieve
efficiency and overall optimization, and by strengthening
the Group’s management functions, we will makesteady progress in business reformation aimed at
improving profits.

NTN Group Information

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

Outlook for fiscal year ending March
31, 2024 and the Next Medium-termManagement Plan

Sustainability Management

a company
capable of securing profits.

Value Creation Story

We will transform
our business structure
and thereby become

The NTN Group reported net sales of 774.0 billion
yen and operating income of 17.1 billion yen in thefiscal year ended March 31, 2023. With increases inincome and profit, we enjoyed solid improvementsin performance compared to the previous fiscal
year, which was heavily impacted by the COVID-19
pandemic. Moreover, our aftermarket and industrial
machinery businesses marked record-high net sales
and operating income. These businesses are benefittingfrom recovering demand and foreign exchange rates.
Even before I became president, I was in charge of bothbusinesses, and from the very beginning, we focusedon earning power. We strove to reduce costs as muchas possible within the company, and then engaged
in repeated negotiations with customers and revised
prices in unprofitable businesses. These efforts are now
bearing fruit.
However, overall operating income fell far short of ourannounced figure of 26 billion yen. Consequently, we
have not met the expectations of our investors and otherstakeholders, a fact that I take very seriously.
Our operating income was lower than expected forchanges in the external environment and other reasons.
Chief among them were adjustments in productionthat we made in anticipation of a slow recovery inautomotive market demand, higher-than-expectedenergy costs, additional price increases for various
materials as a result of those costs, and our acceptanceof suppliers’ demands for higher prices. While changes
in the external environment were also a factor, achallenge we must undertake is the revitalization of ourautomotive business, which accounts for more than
60% of our Group’s net sales but which has been in
the red for four fiscal years. A major point we must taketo heart is that we were unable to generate adequate
profits despite the fact that driveshafts and hub
bearings—mainstay products that account for about
80% of our automotive business—have a significant
impact on our business performance. We will endeavor
to secure profits from driveshafts and hub bearings bystrengthening our cost competitiveness and passing on
rising costs to sales prices.
To strengthen our cost competitiveness, we willcontinue making unrelenting efforts to reduce costs
through procurement reforms, production reforms,
and other initiatives. One of the measures we will takeis to promote new procurement of parts with costcompetitiveness or cost advantages in terms of tariffs
after quality evaluations. We will strive to reduce variable
costs by using parts with higher cost competitiveness,
which we will do after obtaining approval fromautomakers, our customers, to make process changes.
As for passing on rising costs to sales prices, somecustomers have had harsh words for us during pricenegotiations. Nonetheless, some other customers

tell us that they want to continue doing business with
NTN and urge us to notify them if we are struggling
with a problem. I therefore get the sense that they
appreciate the value of our company. We will use
this as a springboard for strengthening trust with ourcustomers. Negotiating with customers is never easy,
but we are determined to press forward with pricenegotiations, including for businesses that we have
not yet passed on higher costs to sales prices in fiscal
year ended March 31, 2023.

14

Value Creation Story Management Commitment
About Us

Promoting reform in production and allother operations

In 2015, NTN signed the United Nations Global
Compact. In line with this, we continue striving to realize
ten principles in four areas—human rights, labour,
environment, and anti-corruption—that we consider tobe universal values. Aspiring to tackle environmental
issues, we launched a Carbon Neutrality Promotion
Project in July of last year. Then, in April of this year,
executed a reorganization that involved establishing a
Carbon Neutrality Strategy Promotion Department in theGroup Management Headquarters to bring this project
into closer alignment with management. We will continue
to formulate and promote strategies to achieve carbon
neutrality under this new structure.
Human capital management has become a hot topic
in recent years. Based on our belief that “the company
is its people,” we recognize that strengthening ourhuman resource base is essential for sustainable growth
and are therefore striving to develop diverse humanresources, taking “prosperous human development” as
one of the ESG issues. In addition, we started holding
Executive Officer-led “town hall meetings” this year. I
have communicated face-to-face with employees inJapan and overseas on numerous occasions, and now
our Executive Officers are more proactively visiting theirrespective departments to listen to employees in theworkplace. In this way, we are finding out what troubles
all employees have. We are endeavoring to enhancecommunication by clearly identifying what we can do as

NTN’s purpose and push to higher
corporate value
SASB Index

15 NTN Report 2023

Enhancing sustainability by practicing
ESG management

a company and providing feedback.
In the area of corporate governance, NTN transitioned
from a Company with a Board of Company Auditors to
a Company with a Nominating Committee, etc., in June
2019. Under this structure, we are striving to enhance
our corporate value over the medium and long term.
The Board of Directors is now chaired by a female
Outside Director. In addition, the Nominating Committee,
Compensation Committee, and Audit Committee
are all chaired by Outside Directors. In this way, weare employing a structure designed to strengthen
governance and increase corporate value.

NTN Group Information

I believe brand value will be an important topic in our
pursuit of more profitable business going forward.
Especially in the aftermarket segment, it is attractive as abusiness since we have an ability to take the initiative inpricing. On the other hand, a brand power in the market
is a key factor in determining prices.
When I was posted to Singapore, I encounteredsomething that left a strong impression on me. When I
compared our price of a particular product with thoseof our competitors, I discovered that our product soldat a lower market price than theirs, even though they
were almost identical in performance and quality. The
only thing that can account for this difference in price isbrand value. Suppose a customer has a bearing breakand needs a new one right away, and a supplier has
the ability to deliver one quickly and also offer solutions
to the problem. There are many customers who arewilling to pay a higher price for that kind of ability. This
experience—this concept—is what led me to strongly
advocate the importance of “availability” to NTN
employees every day.
Our goal is to be the price leader in the aftermarket
segment. In such a business model, it is importantthat we have a large inventory of products on hand sothat we can deliver them as quickly as possible when

In our mainstay automotive business, we will focus on
adjusting amid the shift to electric vehicles (EVs). Many
people are concerned that the shift to EVs will reduce
the number of parts that must be supplied. But as I havesaid in the past, for NTN Group—whose main products
are driveshafts and hub bearings used in EV drive units—
the shift will be rather advantageous.
In addition to our existing products, we have alreadydeveloped a high-speed deep groove ball bearing that
achieves the highest rotation speed in the industry, making
it suitable for “e-Axle” drive systems for EVs and motors
and transmissions for hybrid electric vehicles (HEVs).
Moreover, because EVs have better acceleration andrequire higher vibration damping performance, we are also
developing electric modules and other components thatare adapted to the unique behavior of EVs. We will createhigh-added-value products through efforts like these.
Looking at scheduled mass production start-ups
over the next three years, we anticipate that the ratio of
products we make for HEVs and EVs, which have higher
added value than those for internal combustion engines(ICE), will increase. We are currently working on a variety
of projects, which I will share with you as soon as they
can be announced to the public.
In terms of sustainability, I believe an importantquestion for the coming age will be how to makeproducts that remain usable for long periods of time.
Moreover, even products that have long service lives
will eventually reach a point when they can no longer
be used as is. We will therefore need to detect productconditions quickly and perform maintenance to ensure
even longer service life. In other words, I believe“maintain” leads to “sustain.”
Traditionally, the NTN Group’s business has focused
mainly on manufacturing and marketing bearings andother forms of hardware. However, we are now steppingup efforts to attach sensors to hardware to collect dataaround them during operation and link it to monitoring
services through software. I believe this will translate into
new profit opportunities.
Specifically, we offer condition monitoring systems
for various types of equipment, such as bearings in windturbines and bearings in machine tool spindles (rotating
shafts). We have also commercialized a diagnostic reportbusiness for bearings using NTN Portable Vibroscope.

Sustainability Management

Increasing profitability by enhancing
brand value

Medium- to-long-term business outlook

We are also developing “Talking BearingTM” with built-in
sensor functions without any changes in bearing volume
or appearance. Fully exploring this concept will allow us
to provide high-added-value solutions our competitors
cannot match.
One possibility for the future is the application of big
data on operating conditions that is gathered throughsensors. This capability will allow us to notify customers
of predicted equipment malfunctions before they occur
and to offer new added-value services linked to planned
preventative maintenance.
Furthermore, if we can accurately predict the service
life of parts based on equipment operating hours andother factors using big data, we will be able to forecast
demand. What bearings will be needed? When will they
be needed? And how many will be needed? Being able
to read demand will allow us to also read inventory levels,
which will naturally lead to more precise planning of
inventories, production, and procurement. In other words,
we will be able to develop “pull”-type marketing strategies
by obtaining accurate information from the market. Thisbusiness model is the exact opposite of the “push”type model, in which production plans are prepared by
anticipating demand based on rule of thumb. This is thekind of digital transformation (DX)-led business structurereform that our Group aims to achieve.

Value Creation Story

Although production reform is something we havebeen working on for years, our efforts have tended
to remain at partial optimization. Consequently, someproduction facilities are seeing better productivity, but
production line takt time (production time per single
product) happened to stay unimproved. In contrast, theproduction reform we are currently undertaking aims
for optimization in all areas, including the reductionof work-in-process inventories from the standpoint ofcash flow management. Our goal is to change how weapproach Monozukuri and also to change the mindsetof the employees working on site. We are endeavoring
to execute fundamental reforms with the advice of acompany that has long tackled similar production issues
and achieved positive results.
In addition, we revamped our IT core system in anundertaking aimed at comprehensively grasping all
information pertaining to our domestic supply chain.
We now have the ability to analyze product costs, sales
prices, and profits in a timely manner.
We intend to move boldly in transforming ourbusiness portfolio through these changes to ourorganizational structure and IT core system. We alreadyhave a firm vision of what we want to achieve. I will sharethe details with you when we make a formal decision.

customers need them.
At the same time, if we are going to make it ourbusiness to propose solutions that promptly address
the various issues our customers face, then we musthave personnel with the experiences and skills to
execute those solutions—in other words, field engineers.
Strengthening capabilities in this area cannot be
accomplished overnight, but I believe we must work
toward this goal through education, training, andpractical activities.

While pushing forward with efforts to reform our businessstructure over the past year, I reflected upon NTN’s
mission and purpose as a citizen of the world. Specifically,
I thought about how, for over a century, we have been
supplying the world with products that minimize energy
consumption by reducing friction, and that this fact islinked to our contribution to the global environment andforms the foundation of our Group’s business.
Over the next 50 to 100 years, our mission withrespect to climate change and other global issues will
be to help solve those issues by providing products
and services while limiting the environmental footprintof our business wherever possible. I am confident thatthe accumulation of such activities will bear fruit andultimately enhance our Group’s corporate value.
Lastly, I know that our price book-value ratio (PBR)
is below 1.0 and must be improved. This is a matter weare discussing internally. We want to continue being acompany that produces things we can leave to future
generations with pride. With this in mind, we will move
forward, striving to become a company valued by society
and capable of increasing its economic value while
appropriately returning profits to all of its stakeholders,
including investors, shareholders, customers, employees,
business partners, and society at large. I respectfully
request your continued support for NTN in this endeavor.

NTN Report 2023

16

Value Creation Story

Value Creation Process
About Us
Value Creation Story

Our Group has identified materiality to address the SDGs in order to solve social issues, and is developing businessactivities based on its corporate philosophy throughout the value chain by leveraging the management capital it has
accumulated over its more than 100-year history and the uniqueness of NTN it has fostered.
By providing products and technical services, including bearings and driveshafts, and by 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.

Contribution to solving social issues

NTN Business Model
P.19

Improve the reliability of
products and services

Promote diversity

Procurement activities
with an emphasis onenvironment and society

Thorough compliance

Promote safety
and healthStrengthen governanceValue Chain(Quality assurance, stable supply)

Respect forhuman rights

Corporate
Philosophy

Number of employees 23,027(consolidated)

Ratio of overseas employees 63%

Manufacturing capital
Production sites 70 sites in 14 countries
Ratio of overseas production 54%

Intellectual capital

Challenge /Collaboration /Commitment

NTN’s Strengths

No. 1 in Japan in
the number of windturbines monitored

Contribution to the
popularization ofwind turbines

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

Contribution todisaster prevention/
mitigation, providing
safety and security
during disasters
Contribution tolabor-saving
progress and thedevelopment ofregenerative
medicinei
Original
Technologies

es

n
Mo

Social and relational capital
Customer satisfaction survey 113 ompanies
Excellent + good88%

Contribution to the
expansion of
next-generation
mobility

P.23

Number of patents held 6,192
R&D sites 9 sites in 4 countriesl

Human capital

NTN SPIRIT

Sa

Shareholders’ equity 220.7 billion yen
Interest-bearing debt 371.3 billion yen
Cash and cash equivalents 110.7 billion yen

Highly functional
products for EVs
and electrification

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

CapitalsFinancial capital

Driveshafts

Contribution to CO2
reduction byenvironmentcontributing
products:
1,474,000 tons/yearoz

Performance Target(Forecast for fiscal year
ending March 31, 2024)

Quality

Net sales

810 billion yen

Natural capital

Corporate Governance

Energy consumption 6,456 TJ/year
Water consumption 2,841,000 m3

P.69

Services

Operating income

30.0 billion yen (3.7%)

FCF

29.0 billion yen

Strengthening of capitals

17 NTN Report 2023

NTN Report 2023

18

SASB Index

Globalizationof the business

Pro
cu

&D

Response toenvironmental issues
Change indemographics

Hub bearings

P.25

ur

Provide safety
and comfort

Human resource
development

Make the world
NAMERAKANTN Group Information

Response to
the paradigm shift

Reduceenergy loss

Resource
recycling andpollution prevention

S to B-eco 52.6%

nt
me
re

P.21

New
Businesses

Aftermarket
Business

Realization of a NAMERAKA Society

Risks and
Opportunities
Surrounding NTN

Realize asustainable society
using natural energy

Foundation to support ESG management

OutcomeEnvironmentcontributing
products

Automotive
Businessuk

Respond toclimate change

Industrial
MachineryBusiness

R

Contribution to solvingsocial issues toward
the future we aim for

OutputP.33

Sustainability Management

Materiality

Business Activities

Value Creation Story

Materiality

Identification process

STEP 1

STEP 5

Relevance to our business

Target

FY2035

Reduce CO2 emissions in business activities (Scope1, 2)

FY2050

Reduce CO2 emissions in business activities (Scope3)

FY2022Development related to products and services that contribute to the stable operation of windturbines FY2022 Completion of development themes

Detail page

Scope1, 2
Reduction of 22.6% compared to the FY2018
Scope3Develop and promote action plans

P.53

Launch a one-stop service that provides everything from bearing supply
to abnormality detection and maintenance for wind turbines, etc.

Development of high speed deep groove ball bearings for
EVs and HEVs, etc.

Development related to low friction, miniaturization and weight reduction of products forautomobiles and industrial machinery FY2023 Completion of development themes)

FY2022 Completion of development themes

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

Provide safety and comfort

Development related to robot-related modules
)

P.52

P.50

Development of Rotary Actuator Type Hand, etc.
N3 N-CUBE was adopted by several municipalities(e.g., circulating flush eco-toilets, bus stop waiting areas, etc.)

FY2023 Completion of development themes

NTN Group Information

Development related to robot-related modules

FY2023 (Achieve carbon neutrality
Achieve carbon neutrality

Development related to low friction, miniaturization and weight reduction of products forautomobiles and industrial machinery FY2022 Completion of development themes

Reduce energy loss

FY2022

4

50% reduction (Compared to the FY2018)

Development related to products and services that contribute to the stable operation of windturbines FY2023 Completion of development themes)

FY2022SocialThe Board of Directors resolved 13 items ofmateriality.

Actual results of FY2022

Reduce CO2 emissions in business activities (Scope1, 2)

FY2023 (Identify materiality

High

FY2030

FY2023 (3Materiality proposals

Target FY

Realize a sustainable society using natural energy

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

STEP 4

Sustainability Management

Environment

2

Respond to climate change

High
Expectations from society

1

Related SDGs

Validity assessment in overseas
affiliated companies

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

STEP 2

Collect suggestions and opinions from academics
and experts in the field of CSR/sustainability, as
well as Outside Directors regarding ideas aboutmateriality identification and ESG strategies thatshould be focused on.

STEP 3

Evaluation and analysis of materiality candidates

Contribution to solving social issues toward the future we aim for
Materiality

Dialog with academics and experts

Extract social issues with reference to the GRI Standard, which is aninternational framework 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 effort.

Value Creation Story

In March 2015, we signed the United Nations Global Compact, which is a global framework for theinternational community to realize sustainable growth, and we are aiming to achieve the SDGs.
In December 2020, we identified 13 items of materiality that the Group should prioritize to address
in response to the SDGs, and we are driving efforts to achieve the targets set for each materiality.
Our initiatives toward materiality are outlined in a roadmap for realizing a “NAMERAKA Society,” andprogress is regularly reviewed by the Sustainability Committee, which includes members from acrossthe organization, and reported to the Board of Directors as appropriate.
The identified materialities are also linked to the NTN corporate philosophy of “We shall contributeto international society through creating new technologies and developing new products.” By
promoting materiality initiatives, we aim to realize a “NAMERAKA Society” through the Group’s
sustainable growth and the creation of environmental and social value.

About Us

Extraction of materiality candidates

P.57

Raise awareness of independent power supply units and conduct sales activities for disastermitigation and local revitalization

Foundation to support ESG management
Materiality

Related SDGs

Target FY

TargetWater consumption intensity

5

Waste generation intensity

Resource recycling and pollution prevention

Recycling rate
FY2023 ()

164 kg/million yen (Japan) 279.4 kg/million yen (Overseas)

159.7kg/million yen (Japan) 251.0 kg/million yen (Overseas)

97.9% (Japan) 97.5% (Overseas)

Water consumption intensity
Recycling rate

4.36 m3/million yen (Japan) 2.83 m3/million yen (Overseas)

6

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

96.0% or more (Global)

FY2023 (7

Procurement activities with an emphasis on environment and society

Social8)19 NTN Report 2023

“Excellent” + “Good”: 88%
Maintain 100% certification

Number of participants in specialized quality education courses

145

100 or more

P.60

Introduction completed at 7 production sites
On track to complete implementation during FY2023

Start of the information security emergency response system (NTN-CSIRT)

Continue

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

Result Achievement 87%

FY2022

Continue operation of occupational safety and health management system
6 domestic manufacturing affiliates have acquired GSC certification

2 companies have acquired certification
4 companies that have not yet acquired the certificate arecontinuing their efforts to complete the achievement during FY2023

Maintain “White 500” certification for Health and Productivity Management Organization(Large enterprise category)

Accreditation maintained for three consecutive years

Achievement of the annual plan of the Risk Survey targeting manufacturing sites

Degree of achievement 100%

Promote safety and healthContinue

GovernanceMore 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 basesthat have not started mass production).
Progress in restructuring the domestic core systems
Production area Competed the introduction to all sites(For sales and logistics, financial accounting, human resources and salaries, and technology
areas, already introduced in FY2021)

FY2023

P.58

98.7% (Japan) 96.2% (Overseas)

3.98 m3/million yen (Global)

Maintain high level of customer satisfaction
Continue

100%

P.61

FY2022Analyze and evaluate the results of questionnaires of overseas affiliates

Analysis and evaluation completed

Continue

Survey on the situation of foreign workers working in Japan (Monitoring)

Started counting the number of foreign workers (monthly)

Number of participants in “NTN Next Leader Program”

59

9

Respect for human rights

10

Human resource development

11

Promote diversity

12

Thorough complianceContinue

Helpline recognition level in survey of compliance awareness 85% or more
*Raise the target to 90% or more in FY2023, and promote initiatives

88.4%

13

Strengthen governanceContinue

Enhance Corporate Governance

Enhance Corporate GovernanceContinue
FY2023
December 2024

SASB Index

FY2022

Environment

Detail page

Actual results of FY2022

4.30 m3/million yen (Japan) 3.14 m3/million yen (Overseas)

50

Holding of “NTN PROUD AWARD” as ESG Corporate Award
Ratio of female managers

First Global Congress to be held in June 2023

9% for NTN

Ratio of male childcare leave acquisition

4.4% for NTN
30%

Annual number of Compliance Committee meetings held

37.2%
2

P.66

P.67
P.63,88
P.65

2*Targets marked with “continue” in the target FY are targets we will aim to achieve each year, and ( ) are newly set targets.

P.77
P.71
NTN Report 2023

20

Value Creation Story

Risks, Opportunities and Measures
About UsNTN Group analyzes risks and opportunities for each business environment such as the global trend of carbon
neutrality, the accelerating electrification to achieve the carbon neutral goal, labor shortages and human rights
issues, and takes countermeasures in line with the materiality. In order to respond to drastic changes in the external
environment, we are implementing regular reviews on anticipated risks and opportunities.
NTN’s Business Environment

Risks for the Company

Opportunities for the Company

Main Measures

Reduced use of bearings due to electrification of internal combustion andhydraulic equipment

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

Strengthen development of products for electrification and high valueadded products
Provide next-generation mobility modules for industrial machinerySpread 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

Provide service solutions through CMS technology, etc.
Develop service-oriented business that lead to product sales andtransform into new business formats
Strengthen CAE analysis technology
Develop “Talking BearingsTM” (= use of sensors for bearings)
Provide robot-related modules such as i-WRIST in response to laborsaving issues

Spread ofinfectious
diseases(COVID-19)

Decrease in scale of sales due toeconomic stagnation
Crisis of business continuity
Damage to employees’ healthand safety

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 thedeclining usage of general-purpose
machinery
Requirements for carbon neutrality inbusiness activities

Requests forenergysaving
machinery

Decrease in the number of parts where bearings are used due to changes in theenergy transmission type and structure 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
impactDecrease 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

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

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

Suspension of dealing with customers
and deterioration of corporate image
in the event of failure to respond to thedemands of society

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 thecompany

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

Increase sales of large bearings and CMSs for wind turbines
Increase sales for rolling stock
Expand sales of green energy products
Promote development of environment-contributing products
Promote energy conservation in production facilities
Introduction of renewable energy

E-commerce based on the new IT coresystemRealization of smart factories including
Wakayama WorksStrengthen external collaboration

6

Promotion of environment-friendly
business activities
Pursuit of circular economy

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.)

8

10

1

2

3

3
Develop and provide long operating life
products
Strict control of environmentallyhazardous substances contained in
products
Expand bearing refurbish business and
MRO businessChanges indemographics
Globalization of thebusiness

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

Stable supply of basic products
Global production supporting optimal supply

Issue of businesssuccession

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

Support business continuity through dialog with suppliers
Develop new business partners

Trade friction
andtariffs

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

Expanding opportunities to supply products and services utilizing global
networks

Realize the best mix of global and local procurement throughprocurement reform

Prevention ofchild labor(human rights)

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

Improvement of corporate image through active response to human rights
issuesPromote human rights due diligence
Globalization of compliance
Implement various training programs in compliance with laws andregulations in each region

Start business with new suppliers
Acquire new human resources

Response toconflict minerals

Deterioration of quality
Suspension of dealing with customers and deterioration of corporate image in theevent of failure to respond to conflict minerals issues

Improvement of corporate image through active response

Promote human rights due diligence
Implement CSR questionnaire surveys of suppliers

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

Rise of low-cost
products

Intensified price competition due
to aggressive sales by emerging
manufacturers

Growing demand for high performance, highly functional products due tolower quality of products on the market
Demonstrating competitive advantage through differentiation of products
and services

Expand product lineup and inventory
Develop markets for the aftermarket business
Promote development of service-oriented businesses
Active outsourcing of general-purpose products

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

Promote production reform andreorganization
Promote the work style reform

5

6

7

2

4

8

4

6

8

10 11

Realize the best mix of global and local
procurement

6

Reorganize suppliers and shorten
supply chain

6

7

6
6

7

9

12

6

7

9

6
Materiality

21 NTN Report 2023

4

4Provide compact, lightweight and low-torque products
Product development utilizing original technologies

Provide robot-related modules such as i-WRISTTM in response to laborsaving issues
Realization of smart factories including Wakayama Works
Promote and maximize the diversity of employees

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

42

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

Medium-to
long-term labor
shortage

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

3

3

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

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

2

SASB Index

Electrificationof industrial
machinery

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(Wakayama Works)

NTN Group Information

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 toenvironmental issues

Spread ofnext-generation
mobility

Value Creation Story

Response to paradigm shift

Using driveshafts’ patented technologies
to propose products that are smaller
and lighter
Growing demand for high performance
products for EVs
A possibility of growth in demandfor parts replacement as car sharing
increases the operating rate of vehicles

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

Materiality

P.19

NTN Report 2023

22

Value Creation Story

NTN’s Capital and Strengths
About Us

NTN is committed to investing the management capital it has accumulated over our 100+ year history to strengthen its
strengths in original technology, quality, and service for future growth. NTN also deploys these strengths in each of its
businesses to conduct business activities that meet the needs of the world.

Invested Capital

NTN’s Three Strengths

Future Direction

Deployment of Strengths in Each Business
Aftermarket business

Number of patents held:
6,192
Enhanced correspondence
education and training system
for technical personnel
development

Originaltechnologies

R&D expenditures:
18.7 billion yen

Responding to new CASE
market needs such as
autonomous driving and sharing
Development and advancementof AI algorithms to predictremaining useful life
Development of “Talking
BearingsTM,” which incorporatea sensor in the bearing thattransmits abnormalities

Human resource development for passing on know-how through the
Global QC Circle Convention, the NTN Technical Skills Competition,and the TQM Convention
Encouraging ESG activities by employees with the NTN PROUD
AWARD

Capital investment:
22.3 billion yen
Manufacturing process to maintainand improve quality
Customer satisfaction survey: 113
companies, Excellent + Good: 88%
The number of technical service
car visits for the fiscal year
ended March 31, 2023 was 235
Held 335 aftermarket Webinars

Production sites:
70 sites in 14 countries
In addition to global production,“FIRST”, a system for theimmediate delivery of popular
products, is in operation

Providing products and services to customers from approximately
200 locations in 34 countries around the world
Responding to market needs in each region through a four-pole
global R&D system

Problem-solving customer responsiveness
ServicesIntellectual
CapitalNo.1 aftermarket share in Japan with the largest distributor network
in Japan
Providing remote technical support services globally
Contribution to solving all kinds of customer issues by providing
detailed support (from products to solutions)Social and
Relationship Capital

P.35

Addressing climate change
Renewable energy is increasingly being deployed to achieve a carbonneutral and decarbonized society.
We are strong in large bearings for the main shafts of wind turbines, and
we also have the largest market share in Japan for condition monitoring
systems (CMS) for wind turbines. In addition, we also sell green energy
products that utilize our proprietary blade technology, which we expect togrow as the market expands.

Robotization
Stable supply of highperformance products
Expanding the sophisticationof quality control using IoT and
AI to the manufacturing sector,
including suppliers

Strengthening the developmentof human resources who can“think and act by themselves” toachieve workplace goals
Our corporate philosophy
is instilled in our employees
around the world

Global network

SG&A expenses:
108.8 billion yen
SG&A expenses that
support service with highlevels of satisfaction

Manufacturing
CapitalPersonnel and work quality

Industrial machinery business

Sales expansion in the
Middle East and Africa regions

Providing advanced preventive
maintenance services throughthe use of big data
Expanding remote technicalsupport services and online
technical workshops for endusers

At manufacturing sites, there is a growing demand for labor savings andfurther efficiency gains due to labor shortages.
We are contributing to manpower saving and automation through highvalue-added products such as sensor-integrated bearings and Multi Track
Magnetic Rings in addition to the i-WRIST TM wrist joint module based on
CVJ technology. With the increasing demand for robotization, we expect toexpand sales of related products.

Automotive business

SASB Index

QualityIn the aftermarket for all types of machinery, the need for maintenanceservices and solution businesses for entire facilities rather than just bearings
is expanding, driven by the spread of AI and IoT.
NTN has the No. 1 share of the domestic aftermarket with its leading
distributor networks and services, and has also expanded its overseas network.
In the future, we will expand our services by utilizing our sensing technology andother know-how and digital technologies to capture further demand.

NTN Group Information

Energy consumption: 6,456 TJ/year
Promotion of CO2 emissions reduction
and renewable energy introduction

23 NTN Report 2023

Sensing technology

High reliability proven by a long track record of supplying products
for applications that support human life, such as the Shinkansen
and aerospace, by developing a quality control system that won the
Deming Prize, the first of its kind in the Japanese machinery industry
Achieving the world’s top class share in axle/drivetrain productsthat support safe driving

Production sites:
70 sites in 14 countries•Eight representative teams fromaround the world participated in the
Global QC Circle Convention•69 teams from all over the world
entered NTN PROUD AWARD

Human
CapitalDifferentiation through evolutionof cultivated technologies,
including low friction andmultifunctional hub bearings
Development of products toachieve carbon neutrality, suchas hydrogen-related products

Product quality

Number of employees (consolidated):
23,027

Financial
Capital

We are strong in manufacturing technologies such as heat
treatment, precision machining, and precision measurement,
which are indispensable for bearing manufacturing, and we pursue
tribology technology through bearing R&D.
We develop and sell not only rolling bearings, but also sliding bearings,
electrical and mechanical parts, and unit/module products combining
them as composite material products, using a wide range of materials
such as resin, sintered metals, magnetic materials, etc., and advanced
technologies such as fluid dynamic pressure technology

Development and supply of products equipped with highresolution rotation sensors and double-row magnetic rings, which
are the extension of NTN Europe’s ASB® (Active Sensor Bearing)
technology, the world standard
Developed monitoring services for large wind turbines using
the Condition Monitoring System (CMS) and achieved the top
market share in Japan with more than 200 units installed throughextensive support

Ratio of R&D expenditures to
net sales: 2.4%
Invested in R&D forsustainable growth

Expansion of services through hardware + software

Sustainability Management

R&D sites:
9 sites in 4 countries
Global structure supporting
high technological capabilities

Value Creation Story

Tribology technology

P.33

P.37

Adaptation to EVs
As the automotive market demands environmental responsiveness,fuelefficiency and CO 2 emission regulations for automobiles are being tightenedin many countries, and the shift to EVs and electrification is accelerating at
the initiative of governments.
We boast the world top class share of the market for hub bearings, which
support tire rotation, and driveshafts, which transmit the rotation of engines
and motors to tires, and our strength lies in our high technological capabilities
and dominant market share in automotive axle/drivetrain products.
Driveshafts and hub bearings are
Composition of
our main products, accounting forautomotive sales
approximately 80% of our automotive
sales, and are essential not only for internal
combustion engine vehicles (ICEVs) but
Othersalso for electric vehicles such as HEVs andEVs, and demand is expected to continue
Driveshafts
growing. We will pursue further weight
About 45%
reduction, higher efficiency, and lower
Hub bearings
friction, and provide highly functional
About 35%
products to ensure our superiority inthe market.

NaturalCapitalNTN Report 2023

24

Value Creation Story

Materiality

Strengths and Materiality Initiatives along the Value ChainContribution to solving social issues
toward the future we aim for

1

Respond to climate change

2

Realize a sustainable society using
natural energy

3

Reduce energy loss

4

Provide safety and comfort

About Us

The Group is promoting initiatives in line with the materiality to respond to the SDGs by leveraging its strengths in
R&D, procurement, Monozukuri (manufacturing), sales, and each of these processes. In developing business activities
based on our corporate philosophy of “we shall contribute to the international society by creating new technologies
and developing new products,” we create value in the value chain, leading to sustainable growth.

Foundation to support ESG management

5

Resource recycling and pollution
prevention

8

Promote safety and health

12 Thorough compliance

6Improve the reliability of
products and services(Quality assurance, stable supply)

9

Respect for human rights

13 Strengthen governance7

Procurement activities with anemphasis on environment andsociety

10 Human resource development
11 Promote diversity
Value Creation Story

Connecting to new R&D themes
Sales

We are building a technological foundation forsustainable growth by enhancing the value of existingproducts through deep plowing and deepening our coretechnologies and developing products in new areas that
capture changes in the business environment.
In the automotive field, we are developing productsthat contribute to electrification, and have developed
a bearing that achieves a dmn value* of 2.2 million asa further high-speed response to “High Speed Deep
Groove Ball Bearings for EVs and HEVs,” which aredesigned for high-speed motor rotation due to thedownsizing of electric drive unit products.
In the industrial machinery field, the use of robots at
production sites is accelerating and work operations are
becoming more diverse. We have developed a “Multi
Track Magnetic Encoder Integrated Rolling Bearing” thatcan detect the rotation speed, direction, and absolute
angle of robot joints, enabling improved joint motion
accuracy and a reduction in the number of parts.
In the new area of business, we have developed a“Talking BearingTM” that incorporates a power generation
unit and wireless device into an existing rolling bearing
and wirelessly transmits information on temperature,vibration, and rotational speed to help realize advanced
condition monitoring of equipment.

In Japan, procurement from overseas suppliers is
progressing and global transactions are expanding.
In accordance with the Procurement Policy
established in response to each of the SDGs, we will
pursue international and open procurement by promoting
local procurement and procurement in optimal locations
from a global perspective, and aim for stable procurementthat responds immediately to market fluctuations,while emphasizing quality and price advantages anddelivery reliability. In addition, by complying with laws
regulations and ethical standards and conducting fairand equitable transactions, we will not only ensure thetrust of our customers and society, but also improve thecompetitiveness of our business partners and continue toachieve “sustainable growth” together with them.
We will contribute to the creation of a “sustainable
society and environment” by promoting “green
procurement,” in which we procure from suppliers thatcomply with environmental laws and regulations andare committed to environmental conservation, withconsideration given to reducing their environmental
impact. We will deepen mutual understanding with ourbusiness partners through business transactions andstrive for coexistence and co-prosperity based on trust.

As part of production reforms, we are promoting
streamlining to optimize the entire process, including
logistics, and are working to improve throughput by
reducing inventories and lead times. Manufacturing
sites are promoting DX to efficiently collect and analyze
information, visualize problems, and quickly make
improvements to increase productivity. We will also
promote low-carbon manufacturing to achieve carbon
neutrality, which will lead to increased corporate value,customer satisfaction, and profit generation.
In terms of quality, we are striving to ensure stable
quality throughout the “process” from the development
stage to the manufacturing process and delivery of
products to customers. Specifically, we are “buildingin quality” throughout the company by conducting
design reviews at each step, strengthening risk analysis
when changes occur, and conducting quality audits at
manufacturing sites. We promote the establishmentof a global quality assurance system by incorporating
remote audits, improving processes, and providing
quality guidance to local employees when starting up
production overseas.

In response to the rapid shift to EVs in the automotive
market and the growing need for electrification in theindustrial machinery market, we provide high valueadded module products in line with customers’ newproduct development, and service solutions for windturbines that utilize IoT technology to monitor thecondition with bearings. We are developing consultingbased sales activities. In addition, for existing models
currently in mass production, we are striving to takemeticulous measures to ensure stable supply on a
global basis amid the ever-changing global situation.
For the aftermarket, we not only sell products, but also
provide technical services such as demonstrations
and workshops on how to handle bearings to increasecustomer satisfaction. In the fiscal year ended March
31, 2023, we held more than 300 technical seminars inremote format in Japan and abroad as the COVID-19
pandemic continued.
As customers’ needs are drastically changing due tothe paradigm shift in the external environment, we will
strive to improve our NTN brand and further enhancecustomer satisfaction by contributing to the realizationof a sustainable society as characterized by carbon
neutrality, as well as by increasing the functionality andadded value of our products.

*dmn value: An index of bearing rotational performance; bearing pitch
circle diameter (mm) x rotational speed (min-1)

Results
produced

Number of patentpublications:

Research andtechnology-related
newspaper articles:

Ratio of local
procurement:

Number of business partners
conducting CSR
questionnaires for suppliers:

Ratio of overseas
production:

Acquisition rate of quality
management system forconsolidated subsidiaries:

440

15

70%

629

54%

100%

Efforts in accordance with materiality

8

Promote health management
Prevent occupational accidents

Create a safe andsecure workplace

3

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

4

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

25 NTN Report 2023

101

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

Reduce CO2 emissions from procured components
and materials
Scope3

Promote female advancement
Promote senior employee
advancement

111

Promote employmentof persons withdisabilities

Reducing CO2 emissions in manufacturing
Scope1

Scope2

Number oftechnical service
car visits:

235

12

Thorough compliance3

6

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

5

Use sustainable resources
Manage and reduce environmentally hazardous
substances

1

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

9

Respond to human rights risks in the
supply chain

9

Respond to human rights risks in employees

SASB Index

Monozukuri (Manufacturing)

NTN Group Information

Procurement

Sustainability Management

Strengths that create value

R&D

Number ofPercentage of
online technical customer satisfaction
seminars:(excellent/good):

335
13

88%

Strengthen governance

Expand the bearing refurbish business

Reduce CO2 emissions in logistics activities
Scope3

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

NTN Report 2023

26

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 ended 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

Phase 1Phase 1

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

652.0 652.0

3.8

0

0

2012

2012

2013

2013

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

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

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

6

6

Operating margin

4

4

2

2

0

0

10% or more
Total asset turnover
1.0 or more
Foreign exchangesensitivity
50% reduction

2022

2023

2023

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

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

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

SASB Index

Priority measures
Priority measures

2016(Forecast)

1.1

1.2

2014

3.7

2.2

1.3

Business

200.0

3.7

8

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.

27 NTN Report 2023

NTN Group Information

200.0

642.0 642.0

5.4

5.3

(%)

8

NTN in the fiscal year
ending March 31, 2028

562.8 562.8

5.2

(%)

(Forecast) (Forecast)Crisis Response
Crisis Response
Period Period

6.7

6.2

400.0

774.0 774.0

733.8 733.8

Phase 3Phase 3810.0 From AprilFrom
2024April 2024

Sustainability Management

600.0

Phase 2Phase 2
April 2021April
to March
2021 to2024
March 2024810.0

April 2018April
to March2018 to2021
March 2021

(Billion yen)(Billion yen)

800.0

Value Creation Story

GlobalGlobalAdvance
Advance2013 2013

NTN Report 2023

28

Value Creation Story“DRIVE NTN100” Phase 2

NTN’s Business Environment

Value Creation Story“DRIVE NTN100” Phase 2

Rebuild Business Portfolio and Product Portfolio
About Us

NTN’s Business Environment

Electrification ofindustrial machineryJapan

Spread of AI and IoTMarket 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

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.

Creation
sectorEstablish new areas for
future growth

Spread of infectious
diseases (COVID-19)

Industrial machinery business

Aftermarket businessLife sciences (drug discovery
and regenerative medicine)

Expand sales in the Middle East
and Africa

Products adapting toelectrification

Hydrogen energy market

Develop “Talking bearing” and“Thinking bearing”

eHUB, sHUB

From product sales business toservice-oriented business

Products adapting toelectrification

Wind turbines (ultra-large size
bearing)

Strengthen MRO

Electric module products

Bearing refurbish business

Existing products fitting EV

Machine tools (European market)

Failure detection

Low friction, higher efficiency

Secure saleable inventory

Focus on the vehicle segment
where NTN’s strengths can beutilized

Expand market for wrist joint
robotsAmericas

Requests for energysaving machinery

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

Secure stable profit

Construction machinery(electrification and highperformance products)
Agricultural machinery (sales
expansion of CVJ for industrial
machinery)Highly competitive products(BU, etc.)
Use of overseas production andexternal procurement

Optimize customers portfolio
Secure volume in growthmarkets

Aerospace
Reduce fixed cost and expand supply capacity by outsourcing manufacturing (breaking away from selfsufficiency) of standard products such as ball bearings

SASB Index

Changes indemographics

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

Medium- to longterm labor shortage

Business composition ratio

Growth of emerging
countries
Issue of businesssuccession
China

Globalization of thebusiness

29 NTN Report 2023

Improve profitability byenhancing cost competitivenessHarvestsectorEuropeWorld’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 andCO2

Aftermarket business

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

Trade friction andtariffs

17%

Fiscal year ended
March 31, 2023

Industrial machinery
business

Automotive business

65%

18%

Aftermarket businessPrevention of childlabor (human rights)
Response to conflictminerals
Rise of low-cost
products

Rolling stock (Chinese market)

NTN Group Information

Reduction inenvironmental
impactResponse to natural
disasters

Expand businesses
Concentrate resources

Robot / gearbox

Sustainability Management

Response toenvironmental issues

Reduction in CO2emissions

Strengthen products
for large vehicles
Expand aftermarket
business
Promote local
procurement

GrowthsectorElectric brake

Condition Monitoring (CMS)
Green energy products

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 price

Automotive business
Value Creation Story

Response toparadigm shift

Spread of nextgeneration mobility

NTN’s Main Strategies

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

Industrial machinery
business

40%

Fiscal year ending
March 31, 2031

Automotive business60%

NTN Report 2023

30

Value Creation Story“DRIVE NTN100” Phase 2

R&D (Research & Development)
About Us

“DRIVE NTN100” Phase 2

NTN’s Intellectual Property Strategy

With the goal of contributing to the realization of a carbon-neutral society, ourgroup is promoting research and development based on two pillars: the evolutionof our core products, such as rolling bearings, hub bearings, and driveshafts, andthe application of our accumulated technologies to new areas, or exploration.
We will accelerate our contribution to the international society by promoting thefollowing six areas set forth in the Mid-term Management Plan “DRIVE NTN100”
Phase 2, while strengthening external collaboration with the NTN Next Generation
Research Alliance Laboratory, Osaka University, which started its new structure in
April 2023.

Investing R&D resources

The Group’s intellectual property is a source of creating new value, andwe are promoting the appropriate protection and utilization of intellectual
property rights globally in line with our business and R&D strategies.
In addition to intellectual property rights that will help maintain andstrengthen the competitiveness of our core products, we will create
intellectual property that will ensure pioneer profits by utilizing the IP
landscape in new areas. In the field of energy supply including wind power
generation in GX*, our group has obtained many patents among bearing
manufacturers. Production technology and software are also important
technologies that we will protect and utilize through our open/closed
strategy to improve our competitive advantage.

Executive Officer CTO (Chief Technology Officer)

in six target areas
R&D Direction•Carbon neutrality (Reductionof environmental impact anddecarbonization)•Pursuit of safety, security,and comfort

Masaki Egami

Value Creation Story

NTN’s basic stance on R&D*GX: Green Transformation1

To achieve carbon neutrality, the electrification of automobiles and EVs is essential, and we aredeveloping module products that will contribute to the further enhancement of rolling bearing
functionality and performance, as well as to the electrification of automobiles.
We have developed and started providing samples of “Bearing with Insulating Coating” and“Creepless Bearing” to suppress electrical pitting of bearings and wear of aluminum housings,
which are increasingly required as electric drive units become smaller and higher voltages areapplied. In addition, we have developed a rolling bearing that achieves a dmn value* of 2.2
million as a further high-speed response to “High Speed Deep Groove Ball Bearings for EVs
and HEVs,” which support the miniaturization of motors.
We will continue to develop products that anticipate market needs and contribute to theshift to EVs, autonomous driving, and carbon neutrality by leveraging our core competencies
and incorporating next-generation technologies.
* dmn value: An index of bearing rotational performance; bearing pitch circle diameter (mm) x rotational speed (min-1)

31 NTN Report 2023

TRINITTETM cooperatively connectedwith a picking robot

i-WRISTTM IWS series

Bearing with Insulating
Coating

Applied areas in parallel axis
e-Axle (red circle)

Bus waiting area using“N3 N-CUBE”

Hydrogen-related

Hydrogen is attracting attention as a next-generation energy source, and technologicaldevelopment is being actively pursued globally in all aspects of its utilization, including
production, transport, storage, and use. We are developing the application of products usedin high-pressure hydrogen compressors for hydrogen stations, which are indispensable forthe widespread use of fuel cell vehicles (FCVs). Mechanical parts used in hydrogen-related
equipment are used in special environments such as hydrogen exposure and high pressure,requiring higher reliability and durability.
We have started sample production and delivery of Hydrogen Embrittlement ResistantBearings with longer service life achieved by special heat treatment technology to prevent
premature failure of rolling bearings caused by hydrogen. In addition, resin products developed
using our composite material technology have been adopted as sealing components forhydrogen environments, and we are working to further improve their performance throughindustry-academia collaboration.
We will continue to promote the development of technologies and products applicable to
FCVs and equipment for various infrastructure facilities necessary for the social implementationof hydrogen.

6

DLC Coating Spherical
Roller Bearing

SASB Index

Next-generation mobility module

The main shaft bearings are becoming larger in diameter in line with the increasing size of
power generation equipment, particularly for offshore wind turbines. We have developed
a market for Asymmetrical Spherical Roller Bearings with a DLC (diamond-like carbon)
coating on the roller surface for superior wear resistance, contributing to the stable
operation of wind turbines.
Meanwhile, we are developing the N3 N-CUBE, a mobile power supply using naturalenergy, for the market. For the purpose of disaster prevention and regional infrastructuredevelopment, the product is used in evacuation centers during disasters, emergency foodand medical supplies storage warehouses, waiting rooms at bus stops in locations where itis difficult to install grid power, flush toilets with freestanding treatment tanks, and workation
facilities. With increasing awareness of safety and security, it is expected to be applied to awide range of applications. We continue to contribute to the creation of a safe and securecommunity for local residents.

5

Robot-related module

We have launched the TRINITTETM, our unique feeder for picking robots that supplies parts
from a rotating disk and automatically resupplies parts even if they are missed, and it has been
well received. We have developed a compact and lightweight “Rotary Actuator Type Hand” forpicking robots to be used in combination with TRINITTETM. When attached to a SCARA robot,
picking can be performed from the side or diagonally. This product can significantly reduce
the number of parts missed, and it realizes stable and continuous picking of parts with an
inexpensive equipment configuration.
In the i-WRISTTM wrist joint module for robots, the maximum weight capacity has been
increased from 1 kg to 3 kg to accommodate a wider range of end-effectors than before, which
has been well received.
We will continue to propose module products for robots that contribute to the promotion ofefficiency and automation as a measure to reduce manpower at manufacturing sites.

3

Talking Bearing

TM

Renewable Eenergy-related

NTN Group Information

The need for predictive maintenance through equipment condition monitoring is increasingat manufacturing sites. While maintaining the standard size of a rolling bearing, we havedeveloped a “Talking BearingTM” that incorporates a sensor, power generation unit, and wirelessdevice to measure temperature, vibration, and rotational speed, and transmit the obtained
data wirelessly. Talking BearingsTM are products that do not require special equipment design
or wiring for installation and facilitate the introduction of equipment condition monitoring,
contributing to improved production efficiency and stabilized quality at production sites.
In addition, a bearing diagnostic application compatible with the industrial IoT platform“Edgecross” has been developed and a free trial version is now available. Industrial PCs andrelated equipment with the basic software installed are loaned free of charge for a certain periodof time to users who are considering building an IoT system to experience the usefulness of thisapplication.
In the future, we will work to expand our service business by integrating AI analysis
technology with bearing technology to further enhance the functionality of condition monitoring.

2

4

Service/solution

Sustainability Management

Six target areas to invest R&D resources

HydrogenEmbrittlement ResistantRadial Bearing

Hydrogen Embrittlement Thrust Bearing

Life Sscience-related

As one of the applications of our proprietary microscopic coating
applicator, which excels in the quantitative and fixed positional
application of high-viscosity liquids, we are developing cell chips
with human iPS-derived cells coated on a plate. Using this device,
it is possible to form three-dimensional cellular tissue, and it has
been shown that the response is more similar to that of the humanbody than conventional two-dimensional tissue. It is expected toreplace animal experiments using mice and other animals for safety
evaluation in the drug discovery process.
We will continue our manufacturing research for further
functionalization and mass production of 3D cell chips to contributeto improving efficiency and speeding up the development of nextgeneration drug discovery.

Microscopic coating
applicator

Development of threedimensional cell chipDevelopment of
test kit

NTN Report 2023

32

Value Creation Story“DRIVE NTN100” Phase 2

Business Strategies
About Us

“DRIVE NTN100” Phase 2 strategy
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)

Aftermarket Business

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
2020

Executive Officer

From products to services

Increasing the brand value
Strengthen
product-and-service
businessStrengthen
service response(In addition to sales of devices, analysis report business)
Strengthen technical support functions in overseas sales
companies (ASEAN and India regions)

Develop and expand
technical service throughthe use of remote support
camerasTechnical service units activities and technical seminars for distributors

Strengthen theability to supply

Strengthen
structure andorganization

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

Accelerate “Made by NTN” by actively utilizing
products manufactured overseas
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

TOPICS

Initiatives to strengthen supply capacity
We are working to enhance our brand value to expand
our aftermarket business. One of these measures is tostrengthen supply capacity for the aftermarket. In order toensure a stable supply of popular products to our global
distributor network, which is one of NTN’s strengths, weare expanding our “FIRST” system for immediate deliveryof popular products for the aftermarket. FIRST is a systemthat keeps an inventory of popular products for aftermarket
and automatically supplies bearings to NTN Group sales
companies according to actual sales.
In terms of production, we are shifting to overseas
production of standard small radial ball bearings inorder to expand supply capacity. We promise to provide
global quality by “Made by NTN”, maintaining the same
quality as products manufactured in Japan even if they

are manufactured overseas. We are also expanding our
production facilities in Japan for medium-sized radial ballbearings to supply for the aftermarket in a timelier manner.
In addition to product supply, we are also working
to strengthen our aftermarket service. NTN Portable
Vibroscope is easily portable and can be used to diagnose
the condition of equipment and bearings periodically.
For the purpose of preventive maintenance of operating
facilities, we have started a business to provide customers
with a “diagnostic report service” in Japan by analyzing thedata measured by this device. We have received numerous
inquiries since we launched promotional activities for thisbusiness on the web in March 2023. We plan to expand
this business globally.

SASB Index

Operating income (right axis)

Use of NTN Portable Vibroscope

Further strengthen measures against counterfeit bearings

Business performance
Sales (left axis)

Commercialize the condition monitoring ofcustomers’ equipment by utilizing sensor
technology and IoT and grasp the demand forbearing aftermarket

Expand bearing refurbish business

NTN Group Information

Net sales for the fiscal year ended March 31, 2023 totaled 134.0 billion
yen as a result of year-on-year growth in all regions, including overseas
and Japan, due to a recovery in demand from the COVID-19 pandemic
and strengthened supply capacity, despite the impact of the situation in
Ukraine. Operating income was 22.3 billion yen, a record high for both net
sales and operating income, as a result of efforts to absorb cost increases
caused by external factors such as surging raw material and energy prices,which were passed on to selling prices.
For the fiscal year ending March 31, 2024, we are forecasting net salesof 133 billion yen, down 1 billion yen year on year, due to the still uncertain
situation in Ukraine and the risk of a global economic recession, but
excluding the impact of exchange rates, we are forecasting 103% year on
year volume growth. In the current fiscal year, we will continue to strengthen
our supply capacity for the aftermarket, as we did in the previous fiscal
year, and at the same time, we will continue to raise prices by revising theprice list and other means in order to pass on higher inflationary costs toselling prices, aiming to improve profit margins.

33 NTN Report 2023

Rebuild revenue basewell as expanding our production capacity at domestic
plants. In response to demand for replacement of
automotive-related bearings and constant-velocity joints,
we are implementing activities appropriate for each
locality, with a view to transferring our headquartersfunctions to Europe, a center place of our sales.
We are also promoting expansion from products toservices, in other words, innovation to businesses thatwill make profit by adding various services to bearings.
More specifically, we have started measurement ofoperating data of industrial machinery and facilities
using “Talking BearingTM ” with built-in sensors andgenerators, and analytical and diagnostic report services
for measurement data obtained by using NTN Portable
Vibroscope. In remote technical support services, wehave enabled engineers in Japan to provide advice onequipment for overseas users via monitors. Throughsteady implementation of a series of these initiatives, wewill establish a business model for providing even better
services, beyond simply selling bearings.
In our future aftermarket business, we will focus onproviding high added-value by not only enhancing the“availability” of inventories through the FIRST immediatedelivery system for general-purpose products but
also improving “solutions” through combination ofvarious services. In the aftermarket business, which isindispensable for higher productivity and stable operationof customer equipment, we are creating a system thatis not significantly affected by fluctuations in market
demand. With our eyes on capturing further global
demand, etc., we will strive to achieve an even higher
profit ratio.

Results for the fiscal year ended March 31, 2023
and forecast for the fiscal year ending March 31, 2024

2024-

Sustainability Management

In our aftermarket business results in the fiscal year
ended March 2023, both sales and operating income
marked a record high, with an operating margin of
16.6%. We understand these results as outcomes ofour continued price increase activities, including pricelist revision, to enable us to reflect higher prices of raw
materials, energies, etc. in selling prices, as we did in theprevious fiscal year. However, we are still behind global
competitors in terms of the market share in the global
market, and I think there is room for us to increase thesales profit ratio further.
With regard to standard catalog products, expansionof fast-moving items inventory and development ofa prompt delivery system will lead to a wider sales
opportunity. Therefore, we will increase the numberof sales companies accessible to FIRST, a system
for the immediate delivery of popular products, while
expanding inventories of popular products for theaftermarket. I think we can increase our sales further
by improving inventories of popular products anddeveloping an immediate delivery system for orders
from all over the world.
As for MRO (Maintenance, Repair and Overhaul)
projects, we put our focus on relatively large bearings
such as those for steel manufacturing and paper
manufacturing machines. In addition to standard
products, which are facing harsher price competition
under commoditization, we will strengthen sales
activities for high value-added bearings by leveraging
NTN’s strengths. We will also focus on responding to
new demands by enhancing our supply capacity for theaftermarket through production transfer to overseas, as

Etsu Harima

2021-2023

Value Creation Story

Aiming at both share expansion andprofit ratio improvement

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

Operating income margin

16.9%
12.8% 11.6% 9.7% 13.1% 16.6%(Billion yen)
45.0
134.0 133.0
118.8
112.2
109.4
100.0
30.0
91.5
22.5
22.3

(Billion yen)

150.0

50.0

0

15.2

12.7

14.7

15.0

8.9

2019 2020 2021 2022 2023 2024

NTN Portable Vibroscope0(Fiscal year ended/(Forecast) ending March 31)

NTN Report 2023

34

Value Creation Story“DRIVE NTN100” Phase 2“DRIVE NTN100” Phase 2 strategy

Business Strategies

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)

Industrial Machinery Business

2020

Executive Officer

Creation
sectorGrowthsectorHarvestsector

2.5%
123.4

100.0
50.0
0

-1.9%

0.3%

3.2%

Operating income margin

5.2% 5.7%

139.5 133.0
126.1

105.1 101.9
7.3

7.5

(Billion yen)

15.0
10.0
5.0

4.1

3.1
0.4

0

-2.0
2019 2020 2021 2022 2023 2024

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 Europe

Earn profits in MRO market
Expand sales for space industry(Fiscal year ended/(Forecast) ending March 31)

Wrist joint module “i-WRISTTM”
IWS series improved portability

Development of “Multi Track Magnetic
Encoder Integrated Rolling Bearing”

A new grade “IWS-C01” with improved portability of the“IWS series” of i-WRISTTM wrist joint modules has beendeveloped. The maximum payload has been increased
from 1 kg to 3 kg, enabling a wider range of end-effectors
to be mounted and products to be handled than in thepast, and contributing to automation and streamlining ofvarious manufacturing processes as well as labor savings
at production sites.
Specifically, when controlling the posture of productswith i-WRISTTM in visual inspection applications, it ispossible to handle not only small and lightweight plastic
parts, but also most products that are heavy enough tobe handled by human hands, such as small aluminum
die-cast parts. In addition, when “i-WRISTTM” is controlled
by an end-effector attached to it, it can be equipped withlarge lighting and a high-performance camera, enabling
detection of finer scratches and dents. In addition to visualinspection, the system can also be utilized in processes
where the load on the end-effector fluctuates greatly, suchas deburring.
Through further performance improvement andapplication developmentof “i-WRISTTM”, NTN
will contribute toautomation, efficiency,and quality stabilization
at manufacturing sites.

As a product that supports the expansion anddiversification of robot demand, we have developed a “Multi
Track Magnetic Encoder Integrated Rolling Bearing” thathas excellent environmental resistance and is capable ofhigh-precision angle detection. A magnetic ring and sensor
are attached to the deep groove ball bearing that supports
the joint mechanism of the robot to provide detection ofrotational speed, direction, and absolute angle, contributing
to improved robot performance, smaller and lighter weight,
and reduced man-hours for assembly and set-up. In
addition, magnetic encoders have excellent environmental
resistance, enabling high detection accuracy even in
operating environments where dust and oil are present.
The developed product integrates a bearing and amagnetic encoder, eliminating the need for mounting
and setup work for the rotary encoder and coupling,
and facilitating robot
assembly. The bearing
dimensions and load
capacity are the same as
Magnetic
those of general bearings Deep groove Multi Tracksensor ICball bearing Magnetic Ring
and can be applied to
Encodera wide range of robot
types.
Deep grooveball bearing
NTN will propose thisEncoder
new product to robot
manufacturers, etc., andpromote the expansion
Multi Track Magnetic Encoderof the robot peripheral
Integrated Rolling Bearing
module field.

i-WRISTTM IWS series

NTN Report 2023

SASB Index

150.0

Operating income (right axis)

Robot-related business(i-WRISTTM)NTN Group Information

35 NTN Report 2023

Business performance
Sales (left axis)

VS FY2020

Gain large customers
Promote acquisition of overseas certified standard

TOPICS

Results for the fiscal year ended March 31, 2023
and forecast for the fiscal year ending March 31, 2024

(Billion yen)

2024Growth strategy to respond to market change

Sustainability Management

internal combustion engines to motors advances also inconstruction machinery and agricultural machinery. Thisis because many of motor manufacturers are alreadyour customers in the industrial machinery industry, so
we are promoting initiatives that will surely connect thiscompetitive advantage to outcomes.
With regard to industrial robots, the demand has
been growing for the purpose of labor-saving, and robot
arm reducers, one of its indispensable components, areindeed a collection of bearings. We will respond to new
demands by providing bearings necessary for realizing
high-accuracy movement.
As for wind power generation, a long design life of
20 years or more is required, and thus extra-large sized
bearings to be built into such equipment must ensure an
extremely high quality and reliability. In this regard, we
have strength of our competitive advantage recognizedin the big Chinese market. We will differentiate ourselves
and provide high added value by using CMSs (condition
monitoring systems) that realize timely replacement ofbearings through monitoring. We consider wind power
generation to be a promising market, partly because
Japan also seems to focus on offshore power generationin the future.
For rolling stock application, which requires highquality and reliability, China is likewise an important
market for us. In the Chinese market, domestic
production of main parts such as bearings has beenpromoted as a national policy, to which we need to
pay attention regarding its future development. We
will continue to focus on launching new products andservices in growing markets to further improve ouroperating margin.

In the fiscal year ended March 31, 2023, sales reached a record high of
139.5 billion yen on the back of increased sales for construction machinery
due to increased mining demand and for aircraft due to a recovery inpassenger demand. Although there were increases in proportional costs
such as steel and energy prices, record operating income of 7.3 billion yen
was achieved due to activities to pass on selling prices and the impact offoreign exchange rates.
In the fiscal year ending March 31, 2024, the demands of aircraft andgearbox are expected to remain strong. On the other hand, for wind power
generation, with the peak demand in 2020, the demand adjustment phase is
expected to continue in the current fiscal year.
Under these assumptions, we will work to further improve profit margins.
We will continue to pass on inflationary costs, raise prices and withdraw
from unprofitable businesses, and engage in cost reduction activities suchas procurement of low-cost parts, including those made in India, mainly forbearings for wind power generation and rolling stock.

2021-2023
Rebuild the revenue baseEtsu Harima

In the industrial machinery business, both of our sales
and operating income hit a record high in the fiscal
year ended March 31, 2023. The operating margin wasover 5%, partly due to our continuous cost reduction
activities, price increases in unprofitable businesses, andinfluence of exchange rates. However, we are far fromsatisfied with these figures, and have already recognizedissues for improvement in all fields of production, sales,
and technologies. By addressing these issues properly,
we think that the operating margin will improve further.
As specific measures, we will shift from the strategy
of pursuing the scale of sales through low-margin,
high-volume sales. In terms of bearings, we regard
ourselves to be reaching a point of transition fromoffering a comprehensive collection of products, like
department stores, to focusing on markets where we candemonstrate our value.
On the other hand, we are also required to respond tohigher costs, such as raw materials, fuels, and labor. We
need to take a two-way strategy of continuing activities
for productivity improvement and cost reduction whilereflecting higher costs in product prices. For unprofitablebusinesses, price increase and scale reduction are
required, together with strategies for fighting out infocused growth markets. As for general bearings, wewill concentrate on offering added value, by assuming
growth of competitors in China and India.
Markets we think we should focus on in the future
include construction machinery, agricultural machinery,
and industrial robots, for which growing demand are
expected, as well as infrastructure-related markets suchas wind power generation and rolling stock.
With the current trend of decarbonization, big
business opportunities will emerge if a shift from

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

Value Creation Story

Enhancing the profitability throughstrategic expansion

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)

36

Value Creation Story“DRIVE NTN100” Phase 2

Business Strategies
About Us

“DRIVE NTN100” Phase 2 strategy
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)

Automotive Business

Executive Officer

Hideaki Miyazawa

2021-2023

2024-

Promote earning improvement NOT relying on the merit of scale
Driveshafts (CVJ)

Axle / hub bearings

Bearings

New areas (Electrification)

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

600.0

1.8%
491.3

-0.8%
437.0

400.0
200.0

500.4
369.5 403.7(1) Started mass production of highly efficient fixed
type constant velocity joint “CFJ”
With stricter CO2 regulations and therapid shift to BEVs, we have begun
mass production of high-efficiency
fixed constant velocity joints (CFJs),
which contribute significantly to
reducing vehicle CO2 emissions andimproving electricity costs.

0.0% (Billion yen)
60.0
544.0

0

0

The “R Series” is the world’s smallest
and lightest rear CVJ product, with a
30% weight reduction and a 3 to 5%
reduction in outer ring outer diametercompared to conventional products.
Since the start of mass production in
2018, sales have steadily increased, and this year, the adoptionof BEVs for European premium brands is expanding.

40.0
20.0

8.7

0

-3.7
-12.4 -11.9 -12.4
2019 2020 2021 2022 2023 2024

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

No effects,
stable growth

Flat sales,
Toward highperformance
products

Increase volume
Grow together

We have been shifting our sales to BEVs and large SUVs, where we can take advantage of the technologicalsuperiority of our products, and our activities are beginning to bear fruit.

Operating income margin-3.4% -2.9% -2.5%

Advantage Super low friction

No effects,
stable growth(Fiscal year ended/(Forecast) ending March 31)(3) Started mass production of “3rd Generation
Tapered Roller Hub Bearings”
Mass production of the third generation tapered roller hub
bearing with integrated hub shaft and inner ring for front wheelsof commercial vehicles for Europe, which combines high rigidity
and light weight.

SASB Index(Billion yen)

Advantage Small, lightweight, highefficiency, low vibration

Estimated
effects of EV/
electrification

TOPICS

Business performance
Operating income (right axis)

Strategy 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(2) Expand sales of compact and lightweight“R series” driveshafts for rear end

Sales (left axis)

sustainable growth

NTN Group Information

37 NTN Report 2023

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

2020

Results for the fiscal year ended March 31, 2023
and forecast for the fiscal year ending March 31, 2024
For the fiscal year ended March 31, 2023, net sales were 500.4 billion yen due
to a gradual recovery in automobile production and the impact of passing on
inflationary costs to selling prices, although semiconductor supply shortages
continue. However, in addition to soaring energy and procurement material
costs globally, sales in the China region fell more than 50% below expectations
due to the disruption caused by the zero-COVID-19 policy and the terminationof the passenger car purchase tax reduction program, resulting in a significant
decline in operating income of -12.4 billion yen.
Although the outlook for sales in the fiscal year ending March 31, 2024
remains uncertain, we expect sales to increase as the supply shortage ofsemiconductors gradually eases and automobile production is expected torecover as in the previous fiscal year. To improve profits, we will continue tothoroughly implement price revisions, including withdrawal from unprofitablebusinesses, as well as 100% price shifting of inflationary costs, including thosecarried over from the previous fiscal year. Furthermore, we will accelerate
procurement reforms and expand our procurement network, especially inemerging countries, while ensuring quality.

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)

Sustainability Management

is expected to increase as the shift to all-wheel drive
continues. Despite increased battery weight due toelectrification, reasonable electric cost is required, so
reducing parts weight is essential. Also, unlike ICEs, EVs
increase output simultaneously and require each part tobe rigid against larger torque. This allows us to leverage
our technological strengths to meet the conflicting weight
reduction demands and improved durability.
In parts supply, price competition with Low Cost
Countries (LCCs), mainly from emerging countries, isintensifying. In this competitive environment, we willdevelop a differentiation strategy based on value, notprice. Our unique value proposition lies in our ability todeliver proposals that directly solve customer problems
with an amazing speed. The backbone of our problemsolving capabilities is the accumulation of technicalexpertise that we have gained over many years ofhandling global projects, a level of expertise that is
unrivaled by LCCs. We will develop our business at an
appropriate price by having our customers recognize theunique added value that we offer as value.
At the same time, by promoting procurement andproduction reforms within the company and working toshorten and appropriate the supply chain, we will strive
to reduce the retention time of semi-finished products,
quickly cash in merchandise, and reduce inventories.
In particular, we will accelerate the use of low-costmaterials and parts that we have not yet been able
to penetrate deeply. On the production side, we willfurther strengthen productivity improvement activities
to minimize total cost increases even as unit prices ofprocured goods and energy rise, thereby promoting a
different design and production philosophy from the past.
In order to promote a series of measures, negotiations
with customers are essential. As I did before the
COVID-19 pandemic, I will personally travel overseas
to meet with customers to deepen my understandingof this issue. Return to profitability at all costs throughcontinuously implementing a series of measures. I know
it is my responsibility.

Basic products

The automotive business has been in the red for four
consecutive fiscal years since 2019. Two main reasons
exist for this: the external environment and internal
responses. External factors, which had a great impact,
were the spread of the COVID-19 pandemic, subsequent
semiconductor shortages, and unprecedented cost
increases. First of all, due to the COVID-19 pandemic,
the production of automobiles itself shrank from 95
million units to 75 million units per year, and demand forour products disappeared as a result.
Just as the COVID-19 pandemic subsided andautomotive manufacturers were about to ramp up
production, they were hit with a semiconductor shortage.
The semiconductor shortage has become more of anissue as the shift from ICEs to EVs and electrification has
increased the number of semiconductors needed per
vehicle to about seven times the previous number.
In addition, the rising cost of steel and other materials,
as well as rising energy costs, have rapidly increased ourmanufacturing costs.
The failure to respond adequately to these changes inthe external environment was another major reason forthe deficit. In other words, we were unable to pass on
increased costs to customers during the period, and, on
the production side, we were unable to respond flexibly
to rapid changes in demand, which resulted in a build-up
of work in progress. Although we have been affected bymany external circumstances, we are still ashamed of thefact that we have been in the red for some time.
So how will NTN’s automotive business withstandthe revitalization in the future? The shortage ofsemiconductors is not yet over. However, automobile
production is recovering, reaching 85 million units. We
are determined to make a profit in the fiscal year ending
March 31, 2024, and we are determined to promote ourbusiness.
Fortunately, the trend toward EVs and electrification
is a positive factor for us. In EV and electrification,
demand for hub bearings and driveshafts, which accountfor about 80% of sales in the automotive business,

2 Optimize portfolio to support

Value Creation Story

Provide unique suggestions to quickly resolve customer issues
Aiming to be a leading manufacturer in the power/drive train system

1 Strengthen the profit structure(4) Started mass production of driveshafts andhub bearings for BEVs of Japanese automobile
manufacturers
Mass production of driveshafts and hub bearings for flagship
BEVs of several Japanese automakers has started in Japan andoverseas.

(5) Development of various solution bearings for
e-Axle· High-speed rotating bearing dmn value*2.2 million
achieved
Our high-speed deep groove ball bearings for e-Axle haveachieved a high-speed rotation dmn value* of 2.2 million under
oil lubrication.
*dmn value: An index of bearing rotational performance; bearing pitch circle
diameter (mm) x rotational speed (min-1)· CreepLess Bearing Development
For e-Axle, which is becoming smaller and lighter, we havedeveloped a creep-less bearing that uses the industry’s first
method to stop progressive wave type creep generated by outerring distortion.
· Development of bearings with insulating coatings
By applying an insulating coating to the outer ring outer
diameter and width surface of the bearing, we have developed abearing with an insulating coating that can withstand voltages of
100 V or more, thereby suppressing the occurrence of electricalcorrosion and making it suitable for 800 V batteries.

NTN Report 2023

38

Value Creation Story“DRIVE NTN100” Phase 2

To revitalize our company, we urgently need to improve our cash flow through overall optimization of production.
In production restructuring, we are concentrating management resources on products and processes in which we candemonstrate our strengths, and we are promoting the realization of streamlined production and increased throughput inproduction reform.

About Us

Control Increase of Fixed Costs /Improve Asset Turnover

Production reform
Realize streamlined
production and increase
throughput

Promote overall optimization (rationalizationof the entire SCM) instead of partial
optimization (rationalization by process)Led by a dedicated promotion organization
Horizontal expansion of lean production system
Develop human resources to promote reform

Results and progress in the fiscal year ended March 31, 2023

Concentrate management
resources in products/
processes where NTN canleverage its strength

Reorganize domestic
production bases ofradial bearings

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

Basic policy on production reorganization
enhance profitability by optimizing the entire supply chain.
In the production reorganization, we will freeze
investment in capacity expansion in principle, curb
costs by utilizing management resources for withdrawn
and downsized products, and shift to investment innatural disaster risk and safety measures, as well as inmaintenance and renewal of facilities.

Strengthening tripartite activities
In order to accelerate the speed of production reform, whichis “management reform,” it is essential to have a tripartite
system of management, promoters, and practitioners.
A video message from the President is posted on thecompany website to communicate throughout the company
the roles played by each level and the president’s strong
desire for the activities.
The management level (general managers of eachproduction site, presidents of affiliated companies etc.), having
made progress in fostering a general mindset, is working tostrengthen specific “behavioral” management for reform.
For promoters and practitioners, we provide group training
sessions where they can interact with other promoters to

Issues and priority measures for the fiscal year ending March 31, 2024
This fiscal year is a key year toward the new medium-term
management plan, and we will promote reform activities
focused on numerical values and the harvesting of results inorder to improve the cash conversion cycle.
In Japan, we will create scenarios for KPI achievement at
each production site and strengthen follow-up on the “surface”
side in order to make reform activities at production sites more
self-reliant (rules, system development, and human resource
development).
We will also expand the aim from data analysis tomultiple targets that maximize effectiveness, and accelerate
the development of the entire supply chain activities fromprocurement to sales for popular products with long leadtimes across suppliers and production sites.

Wakayama Works to consolidate high-performance products

39 NTN Report 2023

obtain hints for solving problems and promoting activities,
strengthen ties with their peers, and build a relationship ofmutual learning.
We also hold study sessions for sales divisions to learn
the importance of collaboration
between production andsales. After the study session,
there were cases where
information was shared withthe manufacturing division froma different angle, leading toactivities to build the entire supply
Internal website: message fromchain across related divisions.
the President

SASB Index

the backdrop of the transition to a decarbonized society. We
have positioned high-performance products such as “highspeed rotation and low torque” and “low noise and low
vibration” as one of our priority products, and have started toconsolidate high-performance products to Wakayama Works,
Ball Bearing Plant of Iwata Works, and NTN Mie Corporation,
which is the main manufacturing base for medium-sized radial
bearings. We will differentiate ourselves from our competitors
by introducing the latest production technology to ensure ourcompetitive advantage in terms of technical responsivenessand price competitiveness.
The space and management resources created by thereorganization of radial bearing production will be used toestablish a highly efficient production system by consolidating
manufacturing bases for tapered roller bearings, needle roller
bearings, and precision bearings, and to enhance profitability
by redefining the product portfolio. In addition, we will
establish a foundation for future manufacturing systems bylocating bases in consideration of the risk of natural disasters
such as earthquakes and tsunamis.

NTN Group Information

Production reorganization plan and progress
In “DRIVE NTN100” Phase 2, we are promoting thereorganization of production of radial bearings, one of ourcore products. Competition in the market for standard radial
bearing products is expected to increase further due to therise of LCC products and increasing commoditization. In
October 2022, we began to expand production outsourcing(approx. 5 million pcs/month) to our affiliated company,
TUNG PEI INDUSTRIAL CO., LTD. Utilizing the production
capacity and high efficiency production of the company,
we will strengthen the supply capacity of products for theaftermarket and reduce investment in maintenance andrenewal of production facilities, thereby enhancing profitability.
The expansion of outsourcing to TUNG PEI INDUSTRIAL CO.,LTD. is planned to be completed by October 2024, and wewill continue to strengthen cooperation with this company as
one of our main manufacturing bases for radial bearings.
On the other hand, the market for high-performance
products with high-speed rotation, low vibration, andinsulation performance is expected to expand due to theongoing shift to electrification and EVs in automobiles against

Sustainability Management

The market environment surrounding NTN is rapidlychanging against the backdrop of the transition to a
decarbonized society, including the shift to electrificationand EVs in the automotive market and the expansion of
the renewable energy business in the industrial machinery
market. Based on the growth strategy of each businessheadquarters, we will reorganize the production system inJapan from the viewpoint of product axis and base axis toengaged in activities covering the entire supply chain fromour manufacturing sites to each other and from suppliers tosales. In ball bearing supply chain optimization activities, wehave launched initiatives to shorten lead times in cooperation
with suppliers.
In addition, we have also started activities in the global
supply chain, and for export semi-finished products at the
Iwata CVJ Plant, we are working to establish a system forback-sailing based on actual demand in North America,
leading to a reduction in work-in-process inventory at theplant in North America. In the case of bearings for rolling stockin China, the change of transportation routes and the use of
a new warehouse
have produced
significant results:
transportation
lead time -39%,transportation cost
-78%, and inventory
at local sales
companies -33%.
Ball bearing supply chain optimization activity kickoff

Value Creation Story

Reorganization of production

For about three years since the start of activities, we havepromoted activities mainly at domestic business sites,
expanding the number of locations to 24.
The model numbers and lines targeted at each location
have reduced lead times, and some locations have seen an
improvement in inventory turnover, a management indicator.
At the Large Bearing Plant of Kuwana Works, throughput
increased 12.5% and inventory turnover increased 5% (bothcompared to the previous year), and at the NTN Kamiina
Corp., inventory reductions due to process streamlining andassociated reductions in external warehouse costs resulted in
improved profits.
However, on a company-wide basis, the company
has not completely broken away from a structure that issusceptible to demand fluctuations and other external
environmental influences, and its indicators have beensluggish. Therefore, we have been accelerating “surface”
activities that fill the two axes of “expansion from model
numbers to others” and “development of activities thatconnect the entire supply chain.”In particular, during the last fiscal year, we have been fully

As for activities linking Japan and overseas, we will
accelerate PSI (production, sales, and inventory) visualization
targeting the reduction of overseas semi-finished productinventory, and develop a system that is resistant to demand
fluctuations. Particularly, for small-lot aftermarket products,
we will design and manage strategic inventories on a global
basis to reduce lost sales opportunities and achieve high profit
margins.
In anticipation of full-scale global reform activities startingin the next fiscal year, we have already started production
reform activities in each region, starting with China and
ASEAN countries. We will establish a promotion system foreach region, utilizing local consultants.

Delivering “speedy” “satisfaction” to customers through DX

NTN Report 2023

40

Value Creation Story“DRIVE NTN100” Phase 2

Reduce Variable Cost/Procurement Reformation

Promotion of DX (Digital Transformation)

In the Medium-term Management Plan, “DRIVE NTN100” Phase 2, the NTN Group’s basic strategy is to accelerate thetransformation of its business structure by integrating digital technology with the Company’s accumulated management
resources. Based on this basic strategy, we are promoting the sophistication of business management through therenewal of our IT core system. We support the formulation of global sales strategies by building a system that enables
an instant grasp of the profit and loss status of each region, business, and product type, and by visualizing the profit
and loss status. In addition, we are optimizing inventory holdings to respond immediately to demand fluctuations byvisualizing the supply chain, and in the manufacturing process, we are promoting a smart factory by introducing IoT
and AI, overall optimization, and streamlining. For customers, we are working to create and expand new businesses
by expanding the introduction of condition monitoring systems (CMS) that monitor operating conditions of the windturbines, etc., and by providing advance prediction of failures by combining AI.
“DRIVE NTN100” Phase 3“DRIVE NTN100” Phase 2 (Increase efficiency / accumulate data)

Realize the best mix of global and local procurement (optimal procurement)
Expand and accelerate unification of contract operations (centralized purchasing)
Strengthen management by category1

41 NTN Report 2023

CAE: Streamline development / trial production / analysis

and by improving the quality and quantity of information
shared globally, we are making the best decisions andselections.
In fiscal year ending March 31, 2024, we will globally
disseminate the strategies planned and drafted in Japan,
and by sharing information more frequently globally,
we aim to establish management by category and toachieve procurement that is not affected by the external
environment as much as possible.

Upgrade business administration
P.64
Promote
RPA useIntroduce communication tools in response to work stylereforms3

Promote smart factory

Optimize production by introducing IoT and AI into production process

4

CMS (Condition Monitoring System)

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

Shorten development time and increase efficiency bypromoting Digital Transformation of design work
Aiming to shift from numerical analysis to explain experimental
results to numerical analysis that can replace experiments, we
are working to incorporate advanced analytical techniques andto develop and improve analytical systems that incorporate
the know-how of dedicated engineers so that even ordinary
design engineers can perform the same level of analysis as
analytical engineers. In “DRIVE NTN100” Phase 2, the following
technological developments have improved convenience andshortened product design lead times.
Automation of analysis processes required for design
and introduction of optimal design technologies
Reduce calculation time by designing a system thatmakes effective use of computing resources and bymodeling appropriately
Visualization of input/output, creation of support
tools/templates for complicated input work
In addition, we are also working to analyze design informationand computational data using AI and visualization tools to create
new value that contributes to design.

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

P.39
Reorganization of production

Launch of Wakayama Works
Realize streamlined production by “visualization” of process condition

Create new business

P.40
Production reform

P.52
Realize a sustainable society
using natural energy

SASB Index

Tung Pei Industrial Co., Ltd. can be facilitated. In thefiscal year ending March 31, 2024, we will use AI andother technologies to strengthen price data analysis for
products and parts that have been centrally purchased,
and aim for digital transformation of quotation operations.
Also in China and India, where local procurement is mainpurchasing means, we will visualize and standardize
procedures so that similar measures can be implemented
in these countries.

(3) Strengthen management by category
Mainly in Japan, we are planning and implementing
a procurement strategy that considers the latest
external environment by categorizing products andparts. In addition, as material prices and procurement
availability change significantly due to the influenceof the external environment, sharing information by
category with procurement personnel of each region
has become increasingly important. In the purchasing
division at our head office, we increase the number of
personnel engaged in procurement planning/strategy,

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

Predict breakdowns in advance by using AI(2) Expand and accelerate unification of contract operations (centralized purchasing)
Previously, the production control section of each site
was in charge of supplier selection and quotation, andin Japan, we have assigned these operations to thepurchasing departments at our head office. By the fiscal
year ended March 31, 2023, centralized purchasing of allaxle products and about 50% of ball bearings and CVJs
has also been completed. This centralized purchasing
has facilitated cross-organizational selection of suppliers
and the development of new suppliers, and in particular,
for ball bearings, smooth transfer of small products toBusiness reform with digital technology

Integrate accumulated data such as
sales / production / procurement /logistics/ finance / process / CMS

NTN Group Information

we have initiated our activities based on these countries
as global procurement bases. Most recently, we havesuccessfully exported bearing parts from India to Japan
and North America, and have also started exports fromSouth Korea to Japan and North America. In the fiscal
year ending March 31, 2024, we will strengthen ourcollaborative systems with local suppliers and expand“optimal procurement,” and at the same time, instead of
placing too much importance on a single base, we will
promote dual-sourcing and multi-sourcing to achieve
cost reductions and stable procurement.

2

Digital technology

In the past, we promoted activities based on the policies
of “local procurement in each region” and “China as
an export base for procurement,” however, due tothe soaring labor costs in Europe and the U.S. after
COVID-19 pandemic, weakening of the yen, and the
trading friction between China and the US, we believethat local procurement and China as an export base are
no longer our optimal solutions. Therefore, in “DRIVE
NTN100” Phase 2, in addition to Japan and China,
we added South Korea, which has long been a major
procurement source for European locations, and India,
whose drastic growth in the future can be expected, andP.60
Stabilize newcore system

Promote utilization of inventory within NTN Group

20.0 billion yen / 3rd year

(1) Realize the best mix of global and local procurement (optimal procurement)

Integrate data
Sustainability Management

Achievements of reform

New IT core system

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

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

Value Creation Story“DRIVE NTN100” Phase 2“DRIVE NTN100” Phase 2

About Us

In the basic operations of “buying,” “producing,” and “selling" we will strengthen cost competitiveness in the process of“buying” materials and parts by reducing variable cost and procurement reform. In the second year of “DRIVE NTN100”
Phase 2, we achieved results that were largely in line with our targets through procurement reforms, even as costs
continued to rise more than expected.
In the fiscal year ending March 31, 2024, our focus will be placed on [1] Realize the best mix of global and local
procurement, [2] Expand and accelerate centralized purchasing and [3] Strengthen management by category, whose
global activities have been limited due to reasons such as the impact of COVID-19 pandemic, and we aim to ensure
successful achievement within this fiscal year by clarifying policies and strategies under the leadership of Japan.

Value Creation Story

DX human resource development
We offer AI and data literacy courses to promote
the use of data and digital technologies to solve
business issues and to transform organizations,with 782 participants taking courses in the fiscal
year ended March 31, 2023. By actively increasing
the number of participants in each age group andworkplace, we will expand the base of AI literacy,
data analysis, and other digital literacy applications
throughout the company. The program offers a varietyof learning opportunities depending on the level ofthe participants, and by offering an advanced course,
we aim to develop human resources who can makeadvanced use of data analysis and machine learning.
High end
Middle skill

Base skill

NTN Report 2023

42

Value Creation Story

CFO Message
About Us

Executive Officer, CFO (Chief Executive Officer)

Masaaki Yamamoto

billion yen increase in the Americas due to special factors
such as higher labor costs and disruptions in production.
In terms of expenses and other costs, there were special
factors such as a 7.5 billion yen increase in transportation
costs mainly due to soaring ocean freight rates and a
1.8 billion yen increase in depreciation costs associatedwith the full-scale operation of IT core systems in Japan.
Excluding these special factors, the increase in fixed
costs was 3.7 billion yen, less than 15% of the 26.8
billion yen increase in volume-based sales.

Value Creation Story

Toward establishing a business foundationfor enabling sustainable growth as a
global company

billion yen, including procurement reforms, in responseto the 37.0 billion yen in price hikes of various materials
including energy prices, resulting in a negative factor of
31.4 billion yen. Recently, compared to the 37.0 billion
yen of cost increases in the previous fiscal year, the paceof steel price increases in particular has calmed down,
but inflationary costs continue to rise.
In fixed costs, personnel costs increased by 10.7
billion yen, and expenses etc. rose by 8.3 billion yen,amounting to a negative factor of 19.0 billion yen. The
increase in personnel expenses was mainly due to a 6.0*All figures in billion yen

Positive factors(60.7)

An urgent task for achieving the NTN Revitalization Scenario is to realign our automotive business. We have set a target of eliminating
the operating loss in the fiscal year ending March 31, 2024, by thoroughly passing on inflationary costs to sales prices, reducing
variable costs through procurement reforms, and continuing to control fixed costs.

Scale effects+12.1

2022/3Full year
Operatingincome(Results)
6.9

Actual results for the fiscal year ended March 31, 2023

Increase invariable costs-31.4

Cost reduction +5.6
Cost increase -37.0

Increase inpersonnel
costs
-10.7

2023/3Full year
Operatingincome(Results)
17.1

Expenses etc.
(Depreciation,
Others)-8.3

NTN Group Information

Actual results for the fiscal year ended March 31, 2023, and forecast for the
fiscal year ending March 31, 2024

1

Negative factors(-50.4)
Exchange
rates
+14.6

Sales price
level
+33.9

Sustainability Management

Analysis of Operating Income (2022/3 Results vs 2023/3 Results)
Analysis of Operating Income (2022/3 Results vs 2023/3 Results)+10.3

Key points

43 NTN Report 2023

business. In contrast, the aftermarket business andindustrial machinery business each posted recordhigh operating income, achieving the operating margin
targets set in the Medium-term Management Plan
“DRIVE NTN100” Phase 2 one year ahead of schedule.
We have resumed dividend payments for the first timein three fiscal years, paying an annual dividend of 5 yen
per share.
2

Profit Analysis (year on year)

Breakdown of positive factors (60.7 billion yen)
The largest positive factor is the sales price level,
accounting for 33.9 billion yen. We worked to pass on
to our customers the higher steel prices as well as otherinflationary cost increases such as higher variable costs
and higher ocean freight rates. However, we did notmeet some of our targets, mainly for our automotive
customers. The scale effects of 12.1 billion yen arosefrom the impact of higher sales and production (9.9billion yen), inventory valuation, and other factors. Adding
the impact of exchange rates of 14.6 billion yen to thistotal, the positive factors amounted to 60.7 billion yen.
Breakdown of negative factors (50.4 billion yen)
In variable costs, we carried out cost reductions of 5.6

Forecast for the fiscal year ending March 31, 2024
1

SASB Index

For the fiscal year ended March 31, 2023, net sales were774.0 billion yen (up 20.6% year on year), operating
income was 17.1 billion yen (up 149.2%), ordinary
income was 12.0 billion yen (up 76.8%), and profit
attributable to owners of parent was 10.4 billion yen(up 41.2%). However, compared with the forecasts
announced in October 2022, operating income fell shortby 34.2%, ordinary income was 47.6% lower, and profit
attributable to owners of parent was 13.6% lower. The
shortfall in profits compared with our forecasts was
mainly due to production adjustments made in the
fourth quarter with a focus on cash flow in anticipationof a delay in the recovery of demand from automotive
customers; an additional rise in variable costs, including
accepting price increases from suppliers; and also to
insufficient progress on raising our sales prices. On theother hand, we controlled fixed costs amid fluctuating
sales and improved both free cash flow and our net D/E
ratio. By steadily carrying out various measures, we met
our announced targets in these areas.
In terms of profit/loss by business segment, theautomotive business suffered severe results, continuing
to post an operating loss for the fourth consecutive
fiscal year. This was mainly due to additional increases
in variable costs, failure to raise sales prices, andlockdowns that affected the high-margin Chinese

Key points

Continuing on from the previous fiscal year, the key
issues for the fiscal year ending March 31, 2024, will beto strongly drive the transfer of inflation costs to sales
prices, and to steadily reduce variable costs, including
procurement reforms and control fixed costs. Looking at
the year ahead by business segment, it will be essential
to maintain operating margins in the industrial machinery
business, where sales volume is down from the previous
year, and in the aftermarket business, where sales
volume is flat. We must also eliminate operating losses in
the automotive business, where we expect sales volume
to grow as the semiconductor shortage eases, by both
responding to increased production and implementing
the above key issues. In addition, as a medium- tolong-term initiative for enhancing the profitability of theautomotive business, we plan to carry out a realignmentof our organization and production, mainly in Europe
and the Americas. For the fiscal year ending March 31,
2024, after factoring in some losses from restructuring
and other factors, we project net sales of 810 billion yen,operating income of 30 billion yen, extraordinary lossesof 4 billion yen, and profit attributable to owners of parentof 11 billion yen. The Company plans to pay an annual
dividend of 10 yen per share.
ReturntoShareholders
Shareholders
Return toInterim dividends

Year-end dividends

15 yen* 15 yen

10 yen 7.5

7.5

10 yen

5

5

5 yen
5
2017/3

7.5

2018/3

7.5

2019/3

5 yen
2.5

5
2020/30 yen 0 yen

2.5

2021/32023/3*Including 100th anniversary commemorative dividends

2022/352024/3(Forecast)

NTN Report 2023

44

Value Creation Story CFO Message
About Us

2

Profit Analysis (year on year)32023/3Full year
Operatingincome(Results)
17.1

45 NTN Report 2023

Positive factors(31.7)

Sales price
level
+22.9

Scale effects+5.2

Expenses etc.
(Depreciation,
Others)+3.0

Negative factors(-18.8)Exchange
rates
+0.5

Increase invariable costs-14.8

Cost reduction +6.5
Cost increase -21.3
Increase inpersonnel
costs
-3.9

2024/3Full year
Operatingincome(Forecast)
30.0

FY2023/3
Results

FY2024/3
Forecast 2

2 - 1

562.8 billion

700.0 billion or more

774.0 billion

810.0 billion

110.0 billion

Operating income-3.1 billion

42.0 billion or more

17.1 billion

30.0 billion-12.0 billion

Operating margin-0.6%

6% or more

2.2%

3.7%

-2.3pt(Aftermarket)

9.7%

12.0%

16.6%

16.9%

+4.9pt(Industrial machinery)

0.3%

4.0%

5.2%

5.6%

+1.6pt(Automotive)

-3.4%

4.7%

-2.5%

0.0%

-4.7pt18.5 billion

27.0 billion or more

20.4 billion

29.0 billion

2.0 billion

3.2

4.1

3.2

3.7

-0.4

20.4%

20% or more

25.4%

25.8%

+5.8pt1.6

1.5 or less

1.2

1.1

-0.4

ROIC

-0.4%

5% or more

2.0%

3.6%

-1.4ptROE-7.1%

8% or more

5.0%

5.0%

-3.0ptFCF
Inventory turnover ratio
Equity to capital ratio
Net D/E ratio

Toward medium-to long-term growth
Our current Medium-term Management Plan ends in thefiscal year ending March 31, 2024, and the next threeyear medium-term management plan will start from April
2024. Ahead of this, we carried out an organizational
reform in April of this year with the aim of enhancing
the strategic functions of the head office division. In thehead office division, we will transform ourselves into anorganization that can contribute to the business activitiesof the entire group. We will do this by enhancing ourability to formulate the head office and business divisions
are in talks aimed at drawing up the next medium-term
management plan. The next medium-term management
plan will continue the measures set forth in the current
Medium-term Management Plan. These include lowering
the break-even point for sales (product/business portfolio
reform, procurement reform, fixed cost control) andexpanding cash flow (production and logistics reform).
While we will not be able to achieve our medium-term
management targets for ROIC of 5% and ROE of 8%, wewill work to achieve these at the earliest possible date.
In addition, we will steadily promote structural reforms

SASB Index*All figures in billion yen

Net sales

DRIVE NTN100
Phase2 1

NTN Group Information

Analysis of Operating Income (2023/3 Results vs 2024/3 Forecast)Analysis of Operating Income (2023/3 Results vs 2024/3 Forecast)

FY2021/3
Results

Sustainability Management

Breakdown of negative factors (18.8 billion yen)
In variable costs, we plan to carry out cost reductionsof 6.5 billion yen, including procurement reforms, in
response to 21.3 billion yen in price hikes of various
materials including energy prices, resulting in a negative
factor of 14.8 billion yen. Although the pace of steel
price increases in particular has eased compared to the37.0 billion yen of cost increases in the previous year,
inflationary costs continue to rise.
As for fixed costs, we expect personnel expenses tolead to a negative factor of 3.9 billion yen. Labor costs
are likely to increase mainly in Japan (1.4 billion yen) andEurope (1.6 billion yen) due to rising prices and otherfactors. In the Americas, however, where labor costs rosein the previous fiscal year due to soaring labor costs andproduction disruptions, we expect these cost increases
to ease. The increase in fixed costs, which includes a
3.9 billion yen increase in personnel expenses and a
1.9 billion yen increase in expenses and other items
excluding transportation costs, is set at 5.8 billion yen.
This is based on our existing standard of limiting theincrease to within 15% (6 billion yen) of the 40.1 billion
yen increase in sales volume.

The fiscal year ending March 31, 2024, will be
the final year our Medium-term Management Plan
“DRIVE NTN100” Phase 2, aimed at strengthening
our financial position. The business environment haschanged drastically since we formulated the Mediumterm Management Plan. This was mainly due to thesituation in Ukraine as well as the economic slowdown
in China stemming from lockdowns in response to there-emergence of COVID-19. Prices of raw materials,
energy, and other materials have soared. Prolonged
semiconductor supply shortages have slowed theresumption of automotive production.
Despite these difficult conditions, we expect tomeet the operating margin targets in the Medium-teamManagement Plan for the aftermarket business andfor the industrial machinery business. However, we will
not be able to achieve the operating margin target in
the Medium-term Management Plan for the automotive
business. This is due to the impact of soaring materials
prices which continue to bring costs that we will have topass on to sales prices.
Although we will not achieve our operating margin
targets for the entire company due to the automotive
business, whose sales volumes are large, we have beensteadily improving our financial position through steadyrecovery of our performance each fiscal year, as well as
the sale of idle assets, and robust financial management
within the Group. As a result, we expect to achieve theMedium-term Management Plan targets for free cash
flow, equity ratio, and net D/E ratio.
Although some of the goals set in the Medium-termManagement Plan, such as ROIC of 5% and ROE of 8%,
will be pushed back to the next fiscal year and beyond,we will continue our management to strive for corporate
value creation.

Comparison with Medium-term Management Plan target

Value Creation Story

Breakdown of positive factors (31.7 billion yen)
The largest positive factor, in keeping with the previous
year, is sales price levels, amounting to 22.9 billion yen.
Scale effects are expected to be limited to 5.2 billion
yen as a result of a conservative estimate of the impact
of inventory reductions and of a deteriorating productmix as a result of higher ratio of automotive business.
Although we expect an increase in expenses due to theincrease in scale effects, we anticipate total expenses
to decrease by 3.0 billion yen as marine transportation
costs, which rose sharply in the previous fiscal year,
begin to decline. This, together with a 0.5 billion yen
impact from exchange rates, is expected to result in
positive factors of 31.7 billion yen.

Comparison with Medium-termManagement Plan targets

such as realigning our production as we work to further
strengthen our financial position.
In addition, we plan to set and disclose targets for
non-financial indicators such as promoting carbon
neutrality and investing in human resources (humancapitalism). We aim to increase corporate value by
steadily improving our financial strength and non-financial
indicators, and to achieve a P/B ratio of greater than
1 by engaging with investors to gain the appreciationof the stock market. I would like to thank all of our
stakeholders for their continued support, guidance andencouragement.

+12.9

NTN Report 2023

46

Sustainability Management

Toward Realization of a “NAMERAKA Society”
About UsIn December 2021, we formulated a roadmap for realizing a “NAMERAKA Society” as an overview of our management
to ensure that our Group continues to grow as a company that contributes to society. The roadmap shows the Group’s
approach to materiality, envisioning the period from the 2020s to the 2050s.

Roadmap for realizing a “NAMERAKA Society”

ESG issues

Realize carbon
neutrality

Materiality
Respond to climatechange2020s

Initiatives

2030s

Visualize and improve electric power at production plants
Reduce CO2
emissions inbusiness activities

Scope1 and 2
FY203050%

Promote the introduction of natural energy generation and purchase ofrenewable electricity

H2

Hydrogen embrittlement
resistant bearing

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

Product realization of further environment-contributing products

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 avoidancesHUB behavior of self-driving cars

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

Ra-sHUB

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

Support electrificationof brakes and auxiliary
equipment such as pumps
Electric motor actuator

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

Condition
Monitoring
SystemNTN Portable
Vibroscope

TalkingbearingTM

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

Provide safety and comfort
Contribute toprosperous lives

Use

Circular economy
Establish bearing refurbish business

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

Visualinspection

SASB Index

Increase efficiencyof manufacturing
equipment

NTN Group Information

Reduce energy loss

Contribute to hydrogen society

Software

Driveshaft that transmits driving force

Save energy
for EVs andelectrification(new areas)

FY2050Carbonneutrality
Sustainability Management

HardwareScope3

Realization of a “NAMERAKA Society”

Environment

Save energy
for EVs andelectrification(core products)

Contribute tocarbon-free society

Scope1 and 2

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

After 2050

FY2035
Carbonneutrality(compared to
FY2018)Introduce internal carbon pricing

Realize a sustainable society
using natural energy

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

47 NTN Report 2023

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 for human rights

Promote diversity

Strengthen governance

NTN Report 2023

48

Materiality

Sustainability Management Toward Realization of a “NAMERAKA Society”

Sustainability Management

Materiality

Reduce energy loss

Save Energy for EVs and electrification
The electrification of cars and electric vehicles are essential
to achieving carbon neutrality, and the electric drive units
needed to power vehicles are becoming more sophisticatedand powerful at an accelerating rate. We will contributeto energy conservation for electric vehicles by developing
automotive deep groove ball bearings compatible with theminiaturization of electric drive units and the high-speed
rotation of motors, as well as modular products that add
energy recovery and steering functions to hub bearings.

Contribution to solving social issues toward the future we aim for

Five initiatives that NTN Group focusses on
toward a carbon-free society

Save energy
for EVs andelectrification(core products)
Spread ofwind turbine,
contributeto hydrogensociety

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.

49 NTN Report 2023

Characteristics of “Ra-sHUB”

SASB Index

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 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.

The electric drive units used in EVs and HEVs are
increasingly needed to be more efficient, compact
and lightweight. The development of e-axles, in which
the motor is integrated with an inverter and reduction
gearbox, is gaining momentum. We have alreadymarketed “High Speed Deep Groove Ball Bearing for
EVs and HEVs” with a dmn value* 1.8 million, and highly
evaluated by our customers. Rolling bearings used in
motors and reduction gears, which are becoming smallerand faster, are required to rotate at higher speeds. We
have developed a high speed deep groove ball bearing
with a dmn* value of 2.2 million under oil lubrication by
optimizing the internal dimensions of the bearing throughthe establishment of a calculation method for the amountof oil supplied to optimize the balance of heat generated
by the bearing and its lubrication conditions, and byreviewing the cage shape to suppress deformation
caused by centrifugal force.
Furthermore, the housing of the drive unit is thinner,
reducing the overall weight of the drive unit. “Creepphenomenon,” in which the bearing gently rotates andshifts on the mating surface between the housing andbearing, may occur due to outer ring deformation causedby the rotational load. We have developed “Creeplessbearings” with a relief portion on the outer diametersurface of the bearing outer ring to make the housing
and bearing mating surfaces discontinuous, thereby
stopping creep and preventing abnormal noise andvibration in the equipment and reducing bearing life.
In the future, the demand for bearings in theautomotive market is expected to continue to grow in
response to the progress of EVs and HEVs. We willcontinue to enhance and develop our product lineupthat anticipates market needs and contribute to thecarbon neutrality of automobiles by leveraging ourcore competencies and incorporating next-generation
technologies.

We are developing “Ra-sHUB” hub bearings with asteering function for rear wheels, which individuallycompensates for the steering angles on the right andleft sides by making full use of the technologies we haveaccumulated in our hub bearings.
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. In addition,
as the level of automated driving increases, vehicle
operation control must become even more sophisticated.
“Ra-sHUB” also contributes to safe driving during crisis
avoidance.

NTN Group Information(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

Providing high-performance bearings (core products)

Providing high-performance module products(new areas)

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 represents
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.” We have defined the measures that must be taken by combining the perspectiveof forecast, which identifies the anticipated future as an extension of conventional business activities, with the perspectiveof backcast, which considers what needs to be done and at what point in time by working backward from the targeted
future.
We will promote ESG management along the roadmap to achieve sustainable growth, creating environmental and social
value. We aim to realize a “NAMERAKA Society.”

Contribute to
Carbon-Free Society

About Us

Promotion of ESG management

Reduce energy loss

• 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

General vehicles

Ra-sHUB

Small
rotation radius

Vehicles equippedwith Ra-sHUB

Image of action at low speed(*dmn value: Index of the bearing rotational performance Rolling element pitch circle
diameter mm x rotational speed min-1)

High Speed
Deep Groove Ball
Bearings for EVs
and HEVs

Creepless Bearing
NTN Report 2023

50

Sustainability Management Contribute to Carbon-Free Society
About UsTo improve productivity at manufacturing sites, there isa desire to minimize equipment downtime by monitoring
equipment operating conditions and accurately andsystematically performing maintenance and parts
replacement based on the data. Furthermore, in recent
years, with the advancement of DX and IoT technologies,
there is a growing need for remote and automatic
monitoring of equipment that is not restricted by location
or time, as well as the stabilization and improvementof manufacturing quality through the use of condition
monitoring information obtained.
To meet these condition monitoring needs, we havedeveloped “Talking bearingTM,” which incorporates a power
generation unit and wireless communication device intoa standard rolling bearing without changing the bearing
dimensions or load capacity and wirelessly transmits
sensing information on temperature, vibration and rotation
speed. The energy generated by the rotation of the bearings
is used to power sensors and wireless communication
devices to transmit sensing information automatically.
Because the sensor is built into the bearing, the bearing
condition can be detected with greater sensitivity than when
the sensor is mounted externally on the equipment housing,allowing earlier detection of abnormalities.
This newly developed product will enable advanced
condition monitoring. It will help increase the efficiency andproductivity of manufacturing facilities.

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 1,474 thousand
tons of CO2 reduction in the fiscal year ended March
31, 2023. Sales of S- to B-eco grade environmentcontributing products, which are the result of our recent
development efforts, comprised 52.6% of net sales in thefiscal year ended March 31, 2023.
*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
To quantify products’ environmental friendliness, NTN
adopted environmental factors and eco-efficiency thatare defined in formula and as follows.
Environmental =factors

Eco-efficiency of developed products
Eco-efficiency of benchmark products*1
Product value*2

Eco-efficiency =Environmental impact*3

Bearing refurbish business

Trend in composition of environment-contributing
products by grade (driveshafts and hub bearings)
S-eco
0.1%

24.2%

0.3%

14.8%
100%

1998

24.7%

A-eco
2.0%

17.2%

27.4%

B-eco
2.6%

27.6%

C-eco
2.8%

D-eco

26.9%
52.6%

22.2%

25.7%

22.9%

30.8%

29.0%

31.3%

40.3%

33.8%

20.6%

24.0%

17.6%

15.1%

16.1%

2019

2020

2021

2022

year ended/2023 (Fiscal
ending March 31)

139.8

147.4

Contribution to CO2 reduction*(10,000 tons)

150

127.5

148.5

132.3

Talking bearingTM

100

We 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. We provide optimal bearing refurbishing
services based on our bearing technology know-how in
response to these customer requirements. Furthermore,along with training on the proper use of bearings andcondition monitoring services, we will expand ourcomprehensive approach to NTN Group’s materiality,
which includes “Provide safety and comfort,” “Reduceenergy loss,” and “Resource recycling and pollution
prevention.”

50
0

0

1998

2019

2020

2021

2022

In order to realize a carbon neutral society, natural energy
generated using wind and solar power to generate
electricity and hydrogen energy that does not emit CO2
at combustion, are attracting attention as next generation
clean energy.
In the field of wind power generation, there is a
growing demand for developing higher durability andreliability of components than ever before, especially inoffshore wind power generation, due to the increasing
size of power generation equipment and the lack of easy
maintenance. In the hydrogen-related field, there is alsoa need to extend the service life of rolling bearings andplastic products used in hydrogen stations and otherhydrogen-related infrastructure.
We will contribute to the realization of a sustainable
society through product development and businessinitiatives.

Wind power
Wind power generation projects are expanding toachieve a carbon-neutral society. Especially in recent
years, offshore wind turbines have been installed in
sea areas with stable wind directions. Offshore windturbines are larger than their onshore counterparts, andtheir components must be highly durable and reliable.
In order to meet the needs, we are marketing “left-rightrows asymmetrical spherical roller bearings” with a DLC(diamond-like carbon) film on the roller surface, which
has excellent wear resistance, thereby enhancing thereliability of rolling bearings.
Furthermore, in order to improve the operation rateof 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. In 2022,
we entered into a business alliance with Hokutaku Co.,
Ltd. (hereinafter referred to as “Hokutaku”), expanding
the maintenance business for wind power generationequipment. If any abnormal trends are observed, we
will distribute information to wind power generation
operators that have installed our CMS and suggest
the need for maintenance. After that, upon request,
we will inspect the wind power generation equipment
jointly with Hokutaku, identify any abnormal parts andarrange for repair bearings in a single operation. Powergeneration companies have received this well for ourability to provide a full range of services from abnormality
detection, inspection and repair.

For offshore wind turbines, which are expected to
be expanded in the future, improving the accuracyof condition monitoring and performing appropriate
maintenance based on accurate data analysis will
become even more critical. As a manufacturer that can
provide products and services on a one-stop basis, wewill contribute to expanding the wind power generationequipment market.

Wind DoctorTM

Asymmetrical
spherical roller
bearing

HydrogenHydrogen is attracting attention as a next-generationenergy source, and technological development is being
actively pursued globally in all aspects of its utilization,
including production, transport, storage and use. We
are developing the application of products used in highpressure hydrogen compressors for hydrogen stations,which are indispensable for the widespread use of fuelcell vehicles (FCVs). Mechanical parts used in hydrogenrelated equipment are used in special environments
such as hydrogen exposure and high pressure, requiring
higher reliability and durability.
We have developed new steel material with many
hard, fine metal compounds dispersed on the bearing
raceway, combining them with a newly developed
special heat treatment technology to develop a hydrogen
embrittlement-resistant bearing that has more than
three times a longer life compared to our standard
bearing against premature failure of bearings caused byhydrogen and started sample prototyping and delivery.
In addition, resin products developed using ourcomposite material technology have been adopted as
sealing components for hydrogen environments. To
further enhance the functionality of these products, weare also working on development in collaboration withindustry and academia.

Hydrogen 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

year ended/2023 (Fiscal
ending March 31)

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

51 NTN Report 2023

Contribute to spread of wind turbine andhydrogen society

SASB Index*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)

Realize a sustainable society using natural energy

NTN Group Information

We continue unwavering efforts to realize its corporate
philosophy by developing and providing higher-grade
products that contribute to the environment whilequantifying the degree of environmental contribution of
our main products, such as bearings and drive shafts,
and green energy products.

Materiality

Sustainability Management

Increase efficiency of manufacturing
equipment

Value Creation Story

Development ofenvironment-contributing product

Extra-large sized spherical roller bearing for
paper mill application

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52

Sustainability Management

Realize Carbon Neutrality

Respond to climate change

Reduction of CO2 emissions from theburning of fuel and the use of electricity(Scope 1 and 2 )Respond to climate change

The NTN Group Target Year for Carbon Neutrality
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 Strategy Promotion Dept. LaunchedWith the Goal of Target Year for Carbon Neutrality

Please refer to the website for Environmental data of each site
Japan:https:// www.ntnglobal.com/en /csr/environment/sitereport-japan.html
Overseas:https:// www.ntnglobal.com/en /csr/environment/sitereport-overseas.html

The NTN Group is working on reducing CO2 emissions(Scope 2) by introducing self-consumption type naturalenergy generation to business sites based on various
schemes (PPA*1, lease, and self-investment). We are
actively promoting the procurement of renewable energy
and electricity offset with carbon credit. Reduced 477
tons of CO2 in Japan and 11,409 tons in overseas in thefiscal year ended March 31, 2023.*2

RegionScope 1: Direct emissions

Japan

1,073,015

430

China

11,961,519

7,348

Total

13,034,534

7,778

Scope 2: Indirect emissions*1(ten thousand tons)

80
72.8
60
40

59.2

54.9
62.0

56.4

53.7

Actual Procurement of Renewable Energy(Fiscal Year Ended March 31, 2023)

36.4
46.3

48.6

46.3

45.7

20
0

Site name

31.0
10.8
2019*2(Benchmark)

8.6
2021

10.6
2022

10.1
2023

8.0
2024

5.4
2031
(Target)0.02036 (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) inJapanese sites and calculated using emission factors sourced from
“Emissions Factors 2022” (IEA) in overseas sites.
*2 Set the carbon neutral benchmark as fiscal year ended March 31, 2019.

Energy type

Procurement(kWh)

CO2 emission
reduction(tons-CO2)

Nagoya Sales
Office80,98231

Hamamatsu
Automotive
Sales Office

13,077

5

20,05911

13,057,800

4,061

13,171,918

4,108

CO2-freeelectricity

Hiroshima
Automotive
Sales Office

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) ofwooden pallets,” and “having carries strictly adhere to
non-idling requests”. CO2 emissions from the transportof domestic products in the fiscal year ended March
31, 2023, was 12.9 thousand tons-CO2/year (target:
12.8 thousand tons-CO2/year), which is slightly below
the target. We will continue to promote the measures,
including optimizing a truck’s loading capacity to increasetransportation efficiency.
CO2 emissions in logistics* (Japan)(thousand tons)

20
15

13.9

14.0

13.3

10

10.9

12.7

12.9

2022

2023 (Fiscal year ended/

50

NTN-AT
Total

53 NTN Report 2023

CO 2 emission reduction(tons-CO 2)

CO2 emissions (Scope 1,2)

Reducing CO2 Emissions in Logistics
SASB Index*3 Please refer to the website for the CO2 emissions verification opinion from.
https://www.ntnglobal.com/en/csr/idea/carbon-neutrality.html#anchor02

Promotion of Introduction of Natural
Energy Generation and Renewable
EnergyPower generation*2(kWh)

NTN MANUFACTURING DE MEXICO, S.A.DE C.V.
(Mexico) installed a total of 1,180 solar panels on theroof of a factory based on PPA*1. Its operation started inAugust 2023, and the amount of power produced andCO2 reduction are expected to be 1,012,000 kWh/year
and 403 tons-CO2/year*2, respectively.
*1 A contract to install solar power generation equipment owned by a third-party
power producer on a roof or other location and 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 2022” (IEA) in overseas sites.

Natural Energy Generation Results(Fiscal Year Ended March 31, 2023)

CO2 emissions reduction results
The NTN Group is working on CO2 reduction in thewhole of the company’s business activities and aiming to
reduce CO2 by 50% compared to the fiscal year 2018 by
fiscal year 2030 and achieve carbon neutrality by fiscal
year 2035. We receive a third-party verification to ensure
no problem in the calculation method of CO2 emissions.
For Scope 2, the calculation uses emission factors*1 ofthe market-based approach for domestic business sites
and emission factors*2 of the location-based approachfor overseas business sites. We are also considering
emission factors of the market-based approach to
calculate the emissions of overseas businesses.

*Liquefied natural gas

An Example of the Introduction of Natural
Energy Generation Equipment in Overseas

NTN Group Information

The NTN Group is working on the following priority measures for the purpose of steadily promoting an action plan forachieving carbon neutral targets.
(1) Reduce CO2 emissions generated by
Carbon neutrality realization image
processing machines and heat treatment
equipment by visualizing the energy used
Reduction of CO2 emission
factor by an electricity
in the manufacturing process, and reduce
supplier
CO2 emissions by improving the efficiencyof energy used in utilities such as air, air
Improvement inconditioning, and lighting. [Reduction]
Visualization of energy
Activities to improve
Reductionenergy saving
Business activities by(2) Reduction of CO2 emissions by energy
energy savingenergy sources derived
conversion of heat treatment equipment
Energyfrom fossil fuel
Energy transformation of the heattransformation
Conversion treatment process[Conversion]
Purchase of CO2 -free electricity(3) Reduction of CO2 emissions derived
from fossil fuels by purchasing CO2-free
Energy creation
PPA of solar power, etc.
Creation
electricity [Conversion](onsite and offsite)(PPA of solar power)(4) Reduction of CO2 emissions derived from
2019
2036
Offset the remaining CO2 emissions
fossil fuels through renewable energy(Fiscal year ended/ending March 31)
from fossil fuelpower generation such as solar power
PPA [Creation]

Roller Factory (NTN Mie)

Sustainability Management

Based on the activity result of the carbon neutrality promotion project from July 2022 to March 2023, the “Carbon
Neutrality Strategy Promotion Dept.” was launched in April 2023. It inherits the projects, establishes the global promotion
system, and shifts to the execution phase, including the mid-to-long-term issues.

NTN Mie Corp. (Japan) installed a total of 828 solar
panels on the roof of a roller factory based on PPA*1.
Its operation started in April 2023, and the amount of
power produced and CO2 reduction are expected to be541,342 kWh/year and 205 tons-CO2/year*2, respectively.

Value Creation Story

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

The NTN Group is working to reduce CO2 emissions(Scope 1) from fuel combustion in heat treatment facilities
and boilers, etc. For heat treatment facilities, which area major source of CO2 emissions, we have completed
fuel conversion to LPG* and city gas at major facilities as
the first phase of energy-saving measures. In the future,
we will not only expand the use of high-efficiency highfrequency heating equipment and electric furnaces thatuse renewable energy, but also consider the use of green
energy sources such as ammonia and hydrogen, which
do not emit CO2 during production and use, to promote
carbon neutrality by utilizing a variety of energy sources.
In addition, The NTN Group is working to improvethe efficiency of air, air conditioning, lighting, and otherutilities as part of its efforts to reduce CO2 emissions(Scope 2) associated with the use of electricity in its
production activities. We are conducting steady activities
to reduce energy use by installing high-efficiency
compressors, air conditioning, lighting, and otherequipment, regularly taking measures to prevent air
leaks, and turning off non-operating equipment.

An Example of the Introduction of Natural
Energy Generation Equipment in Japan

About Us

Materiality

Materiality

2018

2019

2020

2021

ending March 31)*Including CO2 emissions during intra-company transportation
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54

Sustainability Management Realize Carbon Neutrality
About Us

Initiatives for TCFD recommendations

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.

Outline of the future vision assumed in scenario analysis

Future imageof society

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

Structural diagram

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.

Board ofDirectors

Organization

Major items to
be deliberated

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

Sustainability Management

Sustainability Committee

Risks and Opportunities
Officers
Employees

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

<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

Promote safety andhealthProcurement
activities with
an emphasis onenvironment andsociety

Promote safety andhealthIncrease in procurement
and operating costs due tocarbon taxes, etc.

Promotion of decarbonization in our business activities
Considering the introduction of internal carbon pricing

Respond to climatechangeIncrease in demand forsolutions that are usefulin preparing for natural
disasters and in the eventof disasters

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

Provide safety andcomfortIncrease in demandfor energy saving inmechanical devices

Reduction of CO2 emissions by core products

Reduce energy loss

Spread of wind power
generation equipment

Provision of large bearings and CMS services for windturbines

Realize asustainable society
using natural energy

Spread of hydrogenenergyDevelopment of product technology and market
provision of bearings for hydrogen energy-related
equipment

Realize asustainable society
using natural energy

Spread of EVs andelectrified vehicles

Development of product technology and market
provision of electric module products

Reduce energy loss

SASB Index

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

Transition

Risk of heat stroke among
employees at plants andsuch

NTN Group Information

Related materiality

Physical

Opportunities

Our financial condition, results of operations and cash flows could be impacted by extreme weather conditions (such as
shutting down operations and businesses 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.

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

Our countermeasures

Transition

Risk management

PhysicalResponses to the risks and opportunities assumed from the scenario analysis results, in line with the TCFD
recommendations, are applied to business activities as measures for related materialities such as “Reduce energy loss”
and “Respond to climate change.” In addition, we concentrate our R&D resources on areas that lead to “carbon neutrality(environmental impact reduction and decarbonization)” and the “pursuit of safety and comfort” and are accelerating our
R&D activities for future growth.

Risks

Strategy

Anticipated risks andopportunities

Metrics and targets

Among 13 items of materiality, the target of “respond to climate change” is “Achieve carbon neutrality by the fiscal year2035 (by the fiscal year 2050 for the entire supply chain).” Also, we have set a “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 ended March 2023 and beyond.
For the fiscal year ended March 31, 2023, CO2 emissions were reduced by 22.6% compared to the fiscal year 2018,
relative to the KPIs (management indicators). We recognize the need to strengthen further our efforts to achieve the plan.
As of April 1, 2023, we have established the Carbon Neutrality Strategy Promotion Department, a dedicated organization
for promoting carbon neutrality, to strengthen the promotion of various measures to achieve carbon neutrality.

55 NTN Report 2023

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Sustainability Management

Provide safety and comfort

Provide safety and comfort

Resource recycling and pollution prevention

Disaster mitigation and disasterprevention*Act on Confirmation, etc. of Release Amounts of Specific Chemical Substances in theEnvironment and Promotion of Improvements to the Management Thereof

Material BalanceMaterial balance of business activities (Fiscal year ended March 31, 2023)

INPUT

OUTPUT

Resources

58.3

ten thousand
tons

Steel materials

56.8

ten thousand
tons

Resin materials, grease, etc.

6,456 TJ

*4

Development/
DesignGasoline

Industrial water
Ground water

Forging/
Turning284

Heat
treatment

3

Grinding/
Polishing3371

Assembly

NOx*3

WastewaterRiversReleased/Transferredthousand m
225 ten3

214 ten thousand m
11 ten thousand m

3
3

19 tons

Waste generation 162,598 tons
Recycled
Recycling rate

ten thousand
tons/kmthousand
10 tentons
ten thousand
46 tons
41 tons
10 tons

PRTR *3 chemical substances

Landfilled

tons

Logistics

8,677

Scope 2 CO2 emissions

Sewers

164 ten thousand m
24 ten thousand m
96 ten thousand m

Traffic*2
Freight weight×distance56
ten thousand tons

SOx*3

ten
thousand m3

PRTR*3 chemical substances
HandledAtmosphericemissions
Scope 1+2 *1

SASB Index

Top water

201
ten thousand tons

Scope 1 CO2 emissions

3

Water

Atmosphericemissions Scope 3
Category 1 *2

thousandtons
1.5 ten

56 kL
521 kL
Kerosene
Diesel oil
390 kL
Heavy oil A
139 kLLPG
12,012 tons
City gas
27,683 thousand m
Purchased electricity
1,240 GWh
Purchased electricity(Renewable energy)
13 GWhNatural energy power generation 13 GWh
Fuel

Raw materials procurement

NTN Group Information

EnergySustainability Management

We have developed “N3 N-CUBE,” a transportable
independent power source containing small-sized wind
power generators, solar panels and storage batteries incontainers. The initial purpose of the development was tocreate storage facilities in preparation for natural disasters
and rescue facilities in the event of a disaster. However, as
the market has evolved, many of these facilities have also
been adopted as infrastructure equipment in places wherecommercial power has not been installed.
Disaster prevention centers are being built in various
locations to serve as disaster relief operations bases
and storage facilities for stockpiling emergency food andmedical supplies. We propose to install “N3 N-CUBE” inthe center to provide electric power for lighting and air
conditioning in the center in normal times and to use it asa first-aid facility and emergency power source during adisaster.
We have also developed the “N3 N-CUBE” equippedwith a circulation-type flush toilet and treatment tank to
be installed 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 tank andcirculated as reclaimed water. 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. In addition, our products
are widely used in various situations, such as in bus
waiting areas and workcation facilities.

The NTN Group has established a system to comprehensively promote the 3Rs (Reduce, Reuse, Recycle), taking into
consideration the sustainable use of resources, input resources such as raw materials and water, and waste reduction. In
addition, we thoroughly manage chemical substances used in our products and manufacturing processes, and actively
promote the conversion of procured products containing PRTR*-listed chemical substances to alternatives. We have set
annual targets for the amount of waste generated, the recycling rate, and the amount of chemical substances subject to
the PRTR Law handled, and are promoting efforts to achieve these targets.

Value Creation Story

We have launched the “TRINITTETM,” our uniquefeeder for picking robots, which supplies parts froma rotating disk that automatically provides parts andhas been well received. “TRINITTETM” is connectedin conjunction with a camera and picking robot andprovides continuous picking of moving workpieces byfollowing the workpieces on a circular arc path. We
have also developed a compact and lightweight “Rotary
Actuator Type Hand” for picking robots to be used in
combination with “TRINITTETM.” The position and posture
can be adjusted within a range of 0 to 100° by rotating
the mounting section with the chuck section gripping theworkpiece around the rotary axis of the rotary actuator.
When attached to a SCARA robot, picking can be
performed from the side or diagonally. This system cansignificantly reduce the number of parts missed, and it
realizes stable and continuous picking of parts with an
inexpensive equipment configuration.
In addition, in response to numerous requests for
improved portability of the “i-WRISTTM” wrist joint module
for robots, we have developed the “IWS-C01,” which
increased the maximum payload capacity from 1 kg to 3
kg. The “IWS-C01” has been well received by the market
as it has expanded the range of applications.
We will continue to propose modular products for
robots that contribute to the promotion of efficiency
and reduce manpower as a measure of automation at
manufacturing sites.

Environmental Protection

Materiality

Resource recycling and pollution prevention

Materiality

Manufacturing facilities are responding urgently to the need for automation to sustain economic activity in a social
environment with a declining birthrate and an aging population. We have developed a “Rotary Actuator Type Hand” andthe feeder for a picking robot, “TRINITTETM,” that contribute to human replacement and efficiency at production sites.
Meanwhile, as natural disasters due to abnormal weather and other factors increase, disaster prevention and mitigation
efforts are being promoted to reduce the impact of disasters on people’s lives. We have also developed and marketed“N3 N-CUBE,” which houses small-sized wind generators, solar panels, and storage batteries in containers from theperspective of disaster prevention and disaster mitigation, which are used in a wide range of fields.
Through these products, we provide peace of mind and comfort to customers.

Robot-related

Sustainability Management

About Us

Materiality

Contribute to
Prosperous Lives

Materiality

Atmosphericemissions Scope 3
Category 9 *2

157,999 tons
4,599 tons
97.2 %

1.3
ten thousand tons

*1 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 2022” (IEA) in overseas sites.
*2 Transport volume and Scope 3 CO2 emissions are results in Japan only.
*3 NOx, SOx, PRTR chemical substances, and recycled amount are results in Japan only.
*4 The energy of electric power is calculated using physical quantity (3.6MJ/kWh),and the energy of fuel is calculated using the emission facter sourced from
“Emission intensity database for calculation of greenhouse gas emissions of organizations through the supply chain (Ver.3.3)”(Ministry of the Environment).

Wrist joint module for visual inspection ofaluminum castings “i-WRISTTM”“N3 N-CUBE” installed asa waiting room at a bus
stop in Yoshida Town,
Shizuoka Prefecture,Japan

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

Rotary Actuator Type Hand

57 NTN Report 2023

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58

Materiality

Sustainability Management Environmental Protection

Reverdin’s Blue Butterfly sanctuary, Number of adultoccurrences (Nagano Works)
1-voltinism*(Number)500

2-voltinism*

3-voltinism*

300

100
0

Tree-planting scene at Chubudai Sports Park (Mikumo Works)

Five active
femalestransplanted.

80 butterfliesin the first
year

5

3
38
27

2020

2021

185 butterfliesin the second
year

Quality management system
In order to improve customer satisfaction and provide
products/services in a consistent manner, the Group’s
domestic and overseas manufacturing sites have acquired
ISO9001 certification, which is an international management
system standard. We are steadily working to acquirecertification for new businesses and newly launchedplants. 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 JIS Q 9100
and Nadcap, standards for the aerospace industry, as
well as CRCC (China) certification for the railway industry.

171

58
17

2022

105
40
year ended/2023 (Fiscal
ending March 31)*There are 1, 2, 3, and 4 voltinism, respectively, depending on the numberof generations per year, and those that are 3 or more voltinism are called
multi-voltinism.

Male 3-voltinism imago perched on a verbena flower.
Please refer to the website for details on “Environmental Protection.”
https://www.ntnglobal.com/en/csr/environment/protection.html

59 NTN Report 2023

We strive to maintain and improve product quality
globally in accordance with our 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 ended March 2023, a total of 113
customers responded and 88% of the overall evaluations
were “Excellent” or “Good,” as well as the results fromthe previous year. Going forward, we will continue toprovide quality that is responsive to customer needs inorder to further improve satisfaction.

Develop quality awareness of human resources
110

12

15

Create the quality to improve customer satisfaction

In order to enhance knowledge and awareness ofquality among employees, we provide specialized quality
education such as basic and advanced QC courses. In
the fiscal year 2022, 145 employees took part in thesecourses. In our training, we use examples of actual claim
cases that have occurred in the past to show specifically
how customers have been affected so that participants
can be reminded of the importance of quality.
In March 2023, we issued the third edition of our“Quality Control Handbook: Quality Guidelines”, which
describes our approach to quality and the basic actions
that are essential to maintain quality. In the future, wewill translate it into English and other languages, anddistribute it as a reference for suppliers, making it widely
available on a global basis.

Stabilize new core system
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
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.
Furthermore, we aim to ensure a stable supply forcustomers and respond flexibly to fluctuations in demandby linking future demand plans to plants, not only basedon fresh demand information, inventory information, andsales results, but also using statistical prediction.
*ERP is an abbreviation of Enterprise Resource Planning, which is packaged
software that oversees the company’s core operations, including sales, logistics,
production, accounting, and human resources.

Build the CSIRT system
SASB Index

331 butterfliesin the third
year

400

200

4-voltinism*

Build the quality assurance system

NTN Group Information

As part of its environmental contribution to the local
community, The NTN Group promotes environmental
protection activities in mutual cooperation with thelocal community through various activities such as
cleanups, weeding, and tree planting along roads, rivers,
beaches, and parks around its business sites. Throughour activities, we will continue to make further efforts tostrengthen cooperation and build good relationships withsurrounding residents and other interested parties.

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

Sustainability Management

Environmental Contribution to theCommunity

Nagano Works (Japan) signed a biodiversity partnershipagreement with Nagano Prefecture in 2019 and has
established a sanctuary for the endangered Reverdin’sBlue (butterfly) within the works to continue conservation
activities. Since the establishment of the sanctuary,
we have faced various problems, such as a lack ofindigo plants, on which the larvae feed, due to a large
number of inchworms and aphids, and predation of thelarvae by natural enemies such as paper wasps andpraying mantis. However, the population has steadily
increased as a result of replanting of indigo plant andimplementation of measures such as extermination ofnatural enemies on a case-by-case basis. In August
2022, we accepted work experience students from a
local high school and organized a special class to help
students understand the importance of biodiversity andparticipate in the conservation of the Reverdin’s Blue(butterfly). As for future activities, since the population
has been steadily increasing due to protection activities,
we will continue to accept outside visitors and increase
the number of sanctuaries within the business site tofurther increase the population through more active
protection activities.

Materiality

Procurement activities with an emphasis onenvironment and society

Value Creation Story

In cooperation with local residents and non-profit
organizations (NPOs), The NTN Group is working
to conserve forest ecosystems through sustainable
forest management, such as appropriate thinning andafforestation, and to preserve biodiversity by protecting
endangered species in the vicinity of each business siteand by maintaining natural parks. Since the COVID-19
pandemic, we have been working to ensure that ouractivities do not become a mere formality by adjusting
the number of participants and taking thoroughmeasures to prevent infection.

Conservation Activities for theEndangered Reverdin’s Blue (butterfly)

Sustainable Supply Chain

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

Biodiversity Preservation

Sustainability Management

In response to increasing risks of cyber attacks andinformation leakage, we newly established “The Basic
Policy of Information Security” as one of the NTN Group’s
Basic Policy to be set forth under our Management
Policy, in view of the importance of information security inrecent years.
As cyber attacks are becoming more complicatedand sophisticated every day, other companies have also
suffered similar damage such as information leakage quite
often. In case of an information security incident, a quick
response against information security risks is required,from detection to reporting and handling. Therefore, wehave been developing a cross-department emergency
system for handling information security risks (NTN-CSIRT:NTN Computer Security Incident Response Team).
Purposes of developing the information security
emergency response system (NTN-CSIRT)(1) Detect information security risks and acceleratecommunication, reporting, handling, and recovery in caseof risk occurrence(2) Reduce risk of and prevent information security incidents(3) Strengthen governance to enhance information security
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
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60

Materiality

Sustainability Management Sustainable Supply Chain

Prosperous Human
Development

Procurement activities with an emphasis on environmentand society
We conduct annual survey of business partners to further
raise awareness of “NTN CSR Procurement Guidelines”
and to confirm compliance.
By the fiscal year 2022 questionnaire, theachievement ratio of human rights and labor, quality
and safety, and information security was more than
90% However, the ratio of social contribution and CSR
procurement was less than 70%, and it meant that theirawareness 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.
Degree of achievement according to CSR questionnaires
Degree of achievement according to CSR questionnaire results
1 Compliance80

procurement

60
20
0

contribution

Risk management for suppliers

6 BusinessContinuity
Management (BCM)

3 Environment

4 Quality andSecuring human resources who will lead thenext generation to take on the challenge oftransformation

Amid a rapidly changing environment and the rapidlychanging relationship between employees andcompanies, the Group is working to “secure humanresources who will lead the next generation to takeon the challenge of transformation” by creating anenvironment that encourages each employee to think
and act independently, with passion and enthusiasm.

safetyP.63 Human resource development

5 Information security

2
CSR questionnaires 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

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

Creating a rewarding environment that
respects the diversity of employees

The Group respects and recognizes diverse values
regardless of nationality, race, culture, gender, age,disability, etc., and is committed to “create a rewarding
environment that respects the diversity of employees”
where people from all walks of life can freely contribute
better ideas and maximize their abilities.
P.65 Promote diversity

3

4

Realizing a workplace where employees
can work safely and healthily

Ensuring the safety and health of all people working in
the Group is the essential value that takes precedence
over all business activities as the foundation ofmanagement, and based on this fundamental stance, we
aim to “realize a workplace where employees can worksafely and healthily.”P.66 Promote safety and health

5

SASB Index

From the viewpoint of risk management, we begin
transactions with our business partners after checking
their management structure, quality, and environmental
management. Even after beginning transactions,
we conduct annual survey to confirm our partners’
business conditions, and provide partner-specificfollow-ups when deemed necessary. If we determinethat a transaction involves a high risk, we strive tominimize 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 risks such as natural disasters
and infectious diseases, we have established a risk
management system to immediately share information
with each business site and our business partners,
thereby ensuring a proper risk management that enables
a stable supply of our products even in an emergency.

and labor

Organization and human resource transformations are necessary to realize the basic
policy of our Medium-Term Management Plan, namely, to “for the new 100 years,
drive forward the transformation of our business structure, strengthen our financial
and organizational structure, and build a corporate structure that can respond flexibly
to changes in the business environment,” while adapting to rapid changes in theenvironment in recent years.
To this end, it is necessary to foster an organizational culture that works to solve
various social issues and increase social value, environmental value, and economic
value, and to develop diverse human resources that can work with job satisfaction.
With this aim, the Group has set “prosperous human development” as one of its ESG
issues. Furthermore, we will steadily work on concreate measures one by one, with“securing human resources who will lead the next generation to take on the challengeof transformation,” “creating a rewarding environment that respects the diversity of
employees,” “fostering a culture of learning and development in the workplace,” “realizing
a workplace where employees can work safely and healthily” and “respect for humanrights” as five pillars of our human resources strategy.

Five pillars of human resources strategy

2 Human rights

40
7 Social

Yasuhiro Kawabata

1

100
8 CSR

Executive Officer
Deputy Corporate General Manager,
Group Management HQ.
Human Resources Strategy Dept.
Personnel Dept.
General Affairs Dept.

Respect for human rights

NTN Group Information

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 2022, we announced our “Declaration ofPartnership 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.

Promote safety and health

Sustainability Management

CSR questionnaires for suppliers

Promote diversity

Value Creation Story

Basic approach to procurement activities

Human resource development

About Us

Materiality

Sustainability Management

Respect for human rights

The Group believes that fulfilling its corporate
responsibility regarding “respect for human rights” isessential to contribute to a sustainable society andremain a necessary business for the community. Basedon this belief, we are committed to not being complicit
in any form of human rights abuses and providing asafe and comfortable work environment for all Group
employees.
P.67 Respect for human rights

Fostering a culture of learning anddevelopment in the workplace

The Group provides growth opportunities based on
individual aptitudes and careers, from new hires toleaders. We also recognize that learning is essential toemployees’ personal growth and that personal growthleads to company growth. We are committed to “foster aculture of learning and development in the workplace.”
P.63 Human resource development

61 NTN Report 2023

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62

Sustainability Management Prosperous Human Development
About Us

Materiality

Human resource development

Basic approach to human resource
development

NTN’s human resource development
systemNew employees

OJT

Mid-level employees

Managers

Systematic and continuous education on operations
Introductory education
Education for new
supervisors

Pre-assignment education
First-year education

Rank-based
education

Education for existing
managers
Education for new
managers

Business skill education
Third-year education

Management education

G course training
Education for those in charge of new employee education

Education for next-generation
executive candidates

Basic education on products
Education on basic bearing technologies

Off-JT

Education on quality control
Education on production technology
Education on intellectual property

Specialty-based/issue-based
education

Education for female employee
Diversity education
Development of QC circle trainer, leaders and coaching
Global business skill education
Overseas trainee system
Overseas education/tuition reimbursement system
Data literacy/AI literacy education

63 NTN Report 2023

Fair evaluation and treatment

NTN has introduced a personnel evaluation system
to further vitalize our employees and improve themanagement efficiency by evaluating the achievementof business targets, the contribution in businesses, andthe performance of jobs in a certain period, reflecting
them properly in salary increase, bonus, promotion/
experience-based promotion, education, training, etc.,
implementing a fair personnel management, and raising
the job performance of evaluatees to promote ourbusinesses.
To ensure a proper operation of this system, we
provide evaluator training every year. We also make surethat the system for reflecting the results of personnel
evaluation in employees’ treatment is well known andthat evaluation will lead to human resource development.

Realize a variety of work styles

We have maintained an environment in which diverse
employees can work successfully by introducing ateleworking system and a flextime system and enhancing
the flexibility of when and where to work. Also formanagers, we provide job ranks to balance work and life
so that they can fulfill both child or other family care andmanagerial jobs and apply for a reduced work schedule
or a flextime system, which ensures that child or otherfamily care would not hinder career advancement.
In addition to these programs for current employees,
we have also introduced a job return system thatenables former employees who have left the company
due to marriage, child birth, fertility treatment, familycare, career advancement, etc. to come back to thecompany, and have maintained an environment in which
they can utilize their experience, knowledge, and knowhow accumulated while working in the company or after
leaving the company.

In a Japanese society where the decreasing labor force
is unavoidable due to the declining birthrate and aging
population, enhancement of productivity per person is
becoming a major issue.
To achieve a sustainable growth under suchcircumstances, we are required to further improve theproductivity and promote work style reforms to generatehigher business outcomes.
With the aims of responding to computerization
being promoted inside and outside the company andimproving the efficiency through automation of routine
jobs, we have continuously utilized various digital
tools such as RPA (Robotic Process Automation),while promoting business reforms, combined withstandardization of work processes, for back-office jobs
such as payroll calculation and slip processing.
In the future, we will develop an environment thatwill enable us to respond flexibly to changes in theenvironment surrounding us, which will lead to a higher
competitiveness and realization of work style reforms,
by promoting further paperless business information andautomation of routine jobs and reviewing the business
operation system at the company-wide level, in orderto promote proposal and materialization of new work
styles, based on the assumption of teleworking.

Implement employee engagement survey

SASB Index

To foster a culture of learning and development in theworkplace, we deploy programs to develop humanresources who “can think and act by themselves” forCreate a workplace to enhance
employee engagement

Promote RPA use

NTN Group Information*Off-JT is education and training outside the workplace.

In addition to conventional training for managers, weoffer an “NTN Next Leader Program (basic course/intermediate course)” for young managers with theaim of developing the number of candidates for nextgeneration management, who can make decisions on
management issues on long-term perspective.
The curriculum is designed to acquire viewpoints andknowledge required for management in a systematic way,with focuses on “reviewing from the managerial viewpoint
and taking a larger view” selectively in the basic sourceand “developing the ability for strategic planning andorganizational reform in the long term” in the intermediate
course. We have also introduced a succession plan
through selection of executive officer candidates. These
measures enable us to find management candidates at
an early stage and develop them in a planned manner.

We will continue to develop a work environment
where many employees can work sufficiently
successfully to realize a variety of work styles.

Sustainability Management

We are working on specific initiatives to realize two out of
the five pillars of our human resources strategy, namely,“securing human resources who will lead the next
generation to take on the challenge of transformation”
and “fostering a culture of learning and developmentin the workplace.” As our basic policy for humanresource development to enable “prosperous humandevelopment” toward realizing a “NAMERAKA Society”
stipulated in the Medium-term Management Plan,
we aim to foster three types of human resources: (1)human resources who are competent in the international
community, (2) human resources who are independent
as individuals, and (3) human resource with creativity. Ourhuman resource development is based on individual selfdevelopment and on-the-job training (OJT). In addition
to providing opportunities and various support systems
to promote this, we provide various types of rank-based,
specialty-based, and issue-based training as Off-JT*, ifnecessary, with a long-term perspective in a systematic,planned and organized manner, with adaptation to meetthe needs of the times.

Manager personnel development

Value Creation Story

all ranks. To expand our businesses for the next 100
years, it is indispensable for us to develop humanresources who can work successfully not only in Japanbut also overseas. As programs to enhance employees’
aspiration and develop internationally-minded persons,
NTN provides English-only training (global businessskill training) for young employees and put in place anoverseas education and tuition reimbursement system
as well. We also strive to increase the awareness,knowledge, and competence of all employees byenriching the content of corporate and technicalknowledge seminars through in-house e-learning andhave introduced programs for improving businessskills in which younger employees can voluntarily takepart. On the systemic side, we have implemented an
in-house recruitment system to promote employees’
career ownership and been engaged in autonomouscompetence development according to the skills andcareer plan of each employee. Meanwhile, we offer AI
and data literacy courses for promoting utilization ofdata and digital technologies, solving business issues,and leading to organizational innovation, in order toincrease the number and level of users of digital literacy,such as AI literacy and data analysis. For managers, we
provide training not only for new ones but also for thosewith certain years of experience (performance evaluator
training for existing managers) to improve their abilityof evaluating performance and providing guidance forsubordinates. We also offer seminars (NTN Next Leader
Program) to find and develop the new generation ofmanagement executives.

To achieve sustainable enhancement of corporate
competitiveness, we believe that it is important tocreate an open workplace in which each employee’s
abilities are utilized and treated fairly, as well as a good
relationship of trust and communication between
supervisors, subordinates, and employees. We areworking to improve employee engagement.
In order to enhance the effectiveness of ourinitiatives, we conduct an engagement survey to gauge
the thoughts and feelings of our employees and their
expectations for the company. Based on the survey
result, we also conduct activities to improve workplaceissues in department units, activate workplacecommunication through one-on-one meetings, and work
to develop an environment in which each employee has
a good reliable relationship with each other.
Through the development of personnel measures
to improve employee engagement (such as revision of
the managerial personnel system), 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.
Please refer to our website for other initiatives related to “Human resource
development.”
https://www.ntnglobal.com/en/csr/sc/employee.html

NTN Report 2023

64

Sustainability Management Prosperous Human Development
About Us

Promote diversity

Materiality

Materiality

Basic approach to diversity andinclusion

Female managers (belonging to NTN)

(Persons)

140
120
100
80
60
40
20
0

75

81

53

55

22

26

94

106

114

123

127

127

Female supervisors

127

116

75

82

92

96

64

98

94

86

30

31

32

31

31

29

33

30

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Nurturing strong safety consciousness

Measures to promote the participation of male employees
in childcare leave include awareness-raising activities by
posting posters’ promoting male employees’ childcare leavethroughout the company, and holding seminars to promote
the development of the next generation (papa seminars),
to help male employees learn about the importance ofparticipating in childcare and to deepen their understandingof internal systems for childcare.
As a result of these efforts, the percentage of male
employees taking childcare leave in fiscal 2022 increased to37.2%, from 11.2% in fiscal 2021.

Received a “Platinum Kurumin” certification
as a child-rearing support company
We were granted a “Platinum Kurumin” certification in October
2022 for our high level of supportive initiatives related to
employees’ child-rearing.
For employees in childcare, irrespective of their gender,
we distribute a maternity/childcare leave handbook thatsummarizes laws and in-house systems related to childcare,from detection of pregnancy to maternity leave, childcare
leave, and reinstatement, to make those systems known
within the company. As a program for managers, we distributea childcare support book designed for managers to deepen
their understanding of childbirth and childcare and maintainan environment in which employees facing childbirth andchildcare can demonstrate their maximum performance. In
addition, we provide a childcare boss handbook designed for
managers to develop an environment in which diverse humanresources, such as those in child and other family care, canwork sufficiently successfully and raise awareness for helping
subordinates balance work and private life.

Promote employment of persons withdisabilities
As part of developing an organization with diversity
in which everyone can work successfully, we actively
promote employment of persons with disabilities. Persons
with disabilities “collaborate” successfully at various
manufacturing sites and administrative departments with
their respective characteristics. In addition, as workplacesin which persons with disabilities can work as leading
members, we opened a dedicated workplace called“Yume Kobo (dream factory)” at each business site in
Kuwana, Iwata, and Okayama, which contributes to local
employment. We are also working to establish a work
environment in which even persons with disabilities canwork safely and easily, including barrier-free promotion.
The rate of employment of persons with disabilities was
2.57% in the fiscal year ended March 2023 through active
employment and retention programs.
Please refer to our website for other initiatives related to “Promote diversity.”
https://www.ntnglobal.com/en/csr/sc/employee.html

65 NTN Report 2023

We provide risk prediction (KY) training to improve therisk awareness of employees. By implementing risk
awareness training (KYT) on a workplace-by-workplacebasis, mainly led by trained employees, we aim todevelop people who can be aware of unsafe conditions
and do not act unsafely.
Similarly, we provide risk assessment (RA) training
on facilities and operations. Through trained employees’
participation in RA in their own workplaces, we intend
to improve the level of risk assessment implementation.
Also, through identification of hazards as part of the
RA procedure and understanding of risk estimation by
hazard, we aim to develop safety-conscious personnel
who are able to imagine potential risks, acts resulting
from personal carelessness, acts caused by impatience,omitted acts, etc.

Intrinsic safety of equipment
We continuously conduct risk assessment on facilities
and work environments to reduce manifest and potential
risks. In addition to taking engineering measures suchas safety covers and interlocks, we also ensure thesafety of facilities and operations through managerial
measures such as procedures, rules, 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
for operators to make sure that they know where thehazardous risk lies.

Creating structures to support safety
We are promoting the introduction of an occupational
health and safety management system to create asystem that supports the safety of the Group. By
continually implementing our management system and
PDCA cycle, we will strive to comply with laws andregulations and improve the level of safety and health.
All of our manufacturing sites have completed ISO
45001*1 certification, an international standard.
In our 16 domestic manufacturing affiliates, twocompanies have acquired ISO 45001 certification, eightcompanies have acquired JISHA OSHMS certification*2,
and two companies have acquired GSC certification*3 .
Currently, four affiliates are in the process of acquiring
GSC certification. Five overseas affiliates have alsoacquired ISO 45001 certification.
If any occupational accident should have occurred, its
information is shared on an occupational accident reportacross the entire company, including the occurrence
conditions and countermeasures. If an accident requiring*1 ISO 45001: International standards for occupational health and safety
management systems*2 JISHA 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 and productivity management)
Certified as a “Health and Productivity
Management Organization in the Large
enterprise category (White 500)” for the third
consecutive year
We were certified as a “Health and Productivity
Management Organization 2023 (White 500)” in the large
enterprise category, which is selected jointly by the Ministryof Economy, Trade, and Industry and the Japan HealthCouncil. This is our third consecutive year of certification.
“The Health and Productivity Management
Organization Recognition Program” is a system forrecognizing companies that practice particularly excellent
health and productivity management. This year, out of
2,676 applicant corporations, top 500, including NTN,
were certified as “White 500” companies.
This survey evaluates corporations’ initiatives to tackle
health issues and promote health from the viewpoints
such as “management principles/policies,” “system/
initiative implementation,” and “organizational structure.”
This year, NTN received a top-class evaluation amongcorporations in the machinery industry in terms of“organizational structure,” which evaluates the attitudeof the management for health issues and corporations’promotion structures.

SASB Index

Trend in the number of female managers and supervisors
at NTN (employees belonging to NTN)/As of April 1

Promote male employees to take childcare
leaveabsence should have occurred, or multiple occupational
accidents should have occurred at a same workplace(section) within a same fiscal year, a safety audit isconducted to prevent reoccurrence with members incharge of safety at other business sites.
In such cases, safety activities at the workplace arechecked on site to ensure the effectiveness of its safety
management system.
Regarding any occupational accident that has
occurred, we identify why the victim had taken relevant
actions, as well as the root cause, and provide guidance
that will lead to countermeasures.

NTN Group Information

One of the biggest challenges in achieving diversity is
promoting women achievement in the workplace andclosing the gender gap.
Currently, the percentage of female managers in ourgroup is 14.7% globally, 4.0% in Japan, and 4.4% at NTN,
revealing a lower level in Japan than overseas. In order
for women to participate in important decision-making in
positions of responsibility, and to create innovation basedon diverse opinions and flexible ideas, we have introduced
a leadership development program for female employees
and systematically provide education to help them moveup, thereby creating an environment in which women canaims to take managerial positions. In addition to fostering
women awareness and developing their abilities, we will
work to further promote women’s activities with raising theawareness of the entire workplace.

Safety and health efforts

Sustainability Management

Career advancement of women

Balance childcare and work

Value Creation Story

Our group is working to “creating a rewarding environmentthat respects the diversity of employees” in which a varietyof human resources, regardless of nationality, culture,gender, age, or disability, can freely contribute better ideas
and maximize their abilities. More specifically, we areworking to further secure human resources having various
career backgrounds by increasing employment of midcareer
workers and maintain environments and systems thatenable us to actively promote diverse human resources
to positions of responsibility at domestic and overseas
business sites.
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 newtechnologies and developing new products.”

Promote safety and health*Kenko Keiei is a registered trademark of the NPO Health Management Research
Association.

Certification mark of “Health and Productivity
Management Organization in the 2023
Large enterprise category (White 500)”
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 2023

66

Sustainability Management Prosperous Human Development
About Us

Materiality

Respect for human rights

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 formof human rights. We are also committed to awarenessraising activities related to respect for human rights andwork environment development so that varied employeesof the Group can all work safely and comfortably.

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.

Human rights due diligence
Outline of the 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.

Respect[Responsibility to Respect Human Rights]

Management
PolicyP

Human Rights
PolicyD

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

mined from conflict and high-risk areas. In the fiscal year
ended March 2023, we traced back through our supply
chain of 245 business partners to identify the material
smelters, and more than 97% of such partners reported
that they do not use any conflict minerals. We willcontinue 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 humanrights issues are gaining attention globally, corporateawareness of such issues is growing. Regardless of
the U.S. Dodd-Frank Act, the number of companies
voluntarily eliminating the use of conflict minerals isincreasing as shown in the chart below.

Number of conflict mineral surveys(responding to requests from customers)
500
384

400

Respond to human rights risks in the
supply chain

Japan

Overseas

464

451

457

151

147

157

313

304

300

2020

2021

2022

(Number of cases)

300

337

341

106

97

210

231

244

263

2016

2017

2018

2019

300
90

121

200
100

SASB Index

Overview of human rights due diligence

Prevention andmitigation ofnegative impact

Survey of foreign workers
We monitor the working condition of foreign workers in
our group and have a system in place to enable quick
response as necessary.

Correspond to forced labor and child labor (Conflictmineral 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
and smuggling. In April 2016, we established our
CSR Procurement Guidelines, upholding the policy of“Responsible mineral procurement,” to continuously
monitor whether the mineral resources contained inmaterials and components used in our products are

United Nations Guiding Principles on Business andHuman Rights

Identification andassessment of risks

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.

NTN Group Information

Based on the two perspectives of “respect” and“remedy” set forth in the United Nations Guiding
Principles on Business and Human Rights, our Groupprioritizes “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 order to ascertain the actual
situation about negative human rights impacts in ourbusiness activities, we conducted a human rights
questionnaire for our overseas affiliates. Analysis of thequestionnaire results showed a low possibility of risk
occurrence. We will continue to work for human rights
due diligence by conducting a questionnaire regularly.

Respond to human rights risks in employees

Sustainability Management

Human Rights Policy

Value Creation Story

Basic approach to human rights

0

Excerpt from NTN CSR Procurement Guidelines
Responsible mineral procurement
Mineral resources included in materials and components will be checked for any negative social impacts on humanrights, the environment, etc. If a negative impact is suspected or verified to be present, we will substitute a methodthat 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 the minimum
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 not use forced labor.

67 NTN Report 2023

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68

Materiality

Sustainability Management

Strengthen governance

GovernanceThorough compliance1

Fiscal year ending March 31, 2024 (As of June 27, 2023)

Basic approach

Nominating
Committee

Board of Directors

Audit
Committee

Eiichi Ukai
Hideaki Miyazawa
Masaki Egami
Masaaki Yamamoto
Shumpei Kinoshita
Isao Ozako
Ryo Kawakami(Non-standing)Tomonori Nishimura(Non-standing)

Yuriya Komatsu Chairperson(Non-standing)

Akira Murakoshi(Non-standing)Yasuo Kitani*Please note that persons withare Outside Directors, persons withand persons with are members of committees.

Corporate governance structure (as of June 27, 2023)

Management Meeting

The Management Meeting discusses
important matters relating to operational
execution, as a supporting body fordecision making 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.

Appointment/
removal of Directors[Execution Organization]

Report/Propose2[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)
ReportAppointment/removal ofmembers of committees

ReportReportOrganizational 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

69 NTN Report 2023

Company with
Nominating
Committees, etc.
11

Available (Internal
Audit Department)
Ernst & Young
ShinNihon LLC

Audit Committee

Direct6 Executive

Officers Meeting

Sustainability Committee

3 Compensation Committee(Sharing information)

Fair Trade Monitoring Committee

4 Audit Committee

Audit

Compliance Committee
Audit

1 year11

5Compensation Committee

The Compensation Committee decides
on the policy for determining details ofcompensation for Directors and Executive
Officers, and determines details ofcompensation for individual persons. The
number of members is five as of June27, 2023, and three of them are Outside
Directors. The committee is chaired by an
Outside Director.

4
Report52

3

2 Nominating Committee

Risk Management Committee

Basic information

The Nominating Committee decides
on the content of a proposal regarding
appointment/removal of Directors, which
is submitted to the General Meeting of
Shareholders. The number of members isfive as of June 27, 2023, and three of themare Outside Directors. The committee ischaired by an Outside Director.

SASB Index

Executive
Officers

Nominating Committee

NTN Group Information

Representative
Executive Officer
President,
Executive Officer

Appointment/
removalof Executive Officers

DirectReportDirectInternal Audit
Department

ReportCooperate

Accounting auditor(audit firm)

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 11 as of June 27, 2023.

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

Appointment / removal

6

Inside 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 11 asof June 27, 2023, and five of them are
Outside Directors. The Board of Directors ischaired by an Outside Director.

Sustainability Management

5

are Chairpersons of committees,

Board of Directors

Value Creation Story

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.

Compensation
Committee

About Us

Members composing Board of Directors, Nominating Committee,
Compensation Committee, and 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
duties of the Audit Committee are supportedby the Internal Audit Department, and theSecretariat of Audit Committee, etc. arestaffed by persons holding different posts
as well. These persons, who have propercapacity and experience for supporting
the Audit Committee, are appointed by the
manager of the Internal Audit Department,with the approval from the Internal Audit
Committee. Regarding matters related topersonal relocation, disciplinary punishment,
evaluation, etc. of such persons, theapproval from the Audit Committee shall be
required for decision.
The number of members is four asof June 27, 2023, and three of them are
Outside Directors. The committee is chairedby an Outside Director.

NTN Report 2023

70

Sustainability Management Governance
About Us

Materiality

Strengthen governanceNominating Committee (from April 1, 2022 to March 31, 2023)
Members, the number of meetings, and attendance

Governance-strengthening transition

2006

CSR Committee is established

2008

Risk Management Committee is established
An Outside Director is appointed for the first time
The number of Outside Directors is increased (from 1 to 2)

2012

Fair Trade Monitoring Committee is established2015

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

2016
2018

New corporate philosophy system is established2019

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

2020

Woman appointed as an Outside Director

2021

Flattening Executive Officer System

2022

ESG items set in the Executive Officer evaluation system
Female Outside Director appointed as the chairperson of
the Board of Directors

Approach of Board of Directors

The appointment of Executive Officers

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 Executive Officers 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

On June 25, 2021, the Company removed theManaging Executive Officers and eliminated hierarchicalrelationships among Executive Officers and made 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.

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.

Assessment of effectiveness of the Board of Directors
We annually evaluate the effectiveness of the Boardof Directors to improve the effectiveness. In the fiscal
year ended March 31, 2023, we conducted a selfassessment of the Board of Directors by sending out
questionnaires to Directors from the viewpoints such as
role/structure/management of the Board of Directors andmanagement of committees. Although this evaluation
was generally positive, it was mentioned, regarding theperformance evaluation of Executive Officers, that thetarget management system has been developed, but its
operation is still in the developing stage. There was also
another comment on reverification of matters resolved
at the Board of Directors. On these matters, we havedecided to continue discussion. We will continue toanalyze and evaluate the effectiveness of the Board of
Directors on a regular basis to make improvements.

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.

Number of attendances

Outside Director

100%

5 times/5 times

Kouji Kawahara

Outside Director

100%

5 times/5 times

Akira Murakoshi

Outside Director

100%

5 times/5 times

Eiichi Ukai

Director

100%

5 times/5 times

Isao Ozako

Director

100%

5 times/5 times

Noboru Tsuda

Chairperson

Discussions on Nominating CommitteeStandards for Selection of Directors

The committee was held five times for the year ended
March 31, 2023, with discussions mainly on the follow
up on the business execution plans of Executive Officers,
the structure of officers for the fiscal year ending March
31, 2024, and the selection of candidates for President,
Executive Officer, Representative Executive Officers andExecutive Officers and 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 Nomination
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 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 27, 2023, the Board of Directors consistsof 11 members, including six Inside Directors and fiveOutside Directors, and the ratio of Outside Directors is
45%. We will continue to 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 of the Outside
Directors are designated as Independent Officers as
defined by the rules of the Tokyo Stock Exchange, Inc.
(TSE), and are reported to TES 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 by secretariat and others prior to arelevant meeting of the Board of Directors. Moreover, we
continuously provide information necessary to effectively
fulfill the roles and responsibilities of an Outside Director
by creating opportunities to deepen their understandingof our business through on-site inspection of businesssites and other means.

SASB Index

Executive Officers

Attendance

NTN Group Information

Board of Directors

Title

Sustainability Management

2011

Name

Compensation Advisory Committee is established

Value Creation Story

2004

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

Background

Outside Director

45%

Management(2 persons)Financial institutions(2 persons)Lawyer (1 person)

71 NTN Report 2023

NTN Report 2023

72

Sustainability Management Governance
About Us

Compensation Committee (from April 1, 2022 to March 31, 2023)

Audit Committee (from April 1, 2022 to March 31, 2023)

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%

6 times/6 times

Kouji Kawahara

Outside Director

100%

15 times/15 times

Outside Director

100%

7 times/7 times

Ryo Kawakami

Outside Director

100%

15 times/15 times

Yuriya Komatsu

Outside Director

100%

7 times/7 times

Tomonori Nishimura

Outside Director

100%

15 times/15 times

Eiichi Ukai

Director

100%

7 times/7 times

Isao Ozako*

Director

100%

11 times/11 times

Masaaki Yamamoto*Director

100%

6 times/6 times

Chairperson

Chairperson

Value Creation Story

Outside Director

Ryo Kawakami

Tomonori Nishimura**The number of attendances after becoming as a member of the Committee*The number of attendances after becoming as a member of the Committee

Discussions at the Compensation Committee

1st∙Points granted by BIP Trust for compensation of Officers∙Bonus for Executive Officers in 2022

2nd

∙Decision of the order of substitution for the chairperson in theevent of an accident∙Basic policy for determination of compensation∙Director compensation∙Changes in compensation for Executive Officers due to organizational change∙Compensation Committee’s annual activity plans∙Executive Officer’s business execution plans

4th∙Review of compensation levels and compensation structure of
Officers∙Winter bonus for Operating Officers

5th∙Punishment of Executive Officer

6th∙Executive Officer compensation

7th∙Basic compensation for Executive Officers∙Executive Officer 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 andcompensation for Directors are determined separately,
and if a Director also serves as an Executive Officer,
those compensations are added up.

73 NTN Report 2023

Compensation for Executive Officers

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.
Fixed compensation
6

Performance-linked
compensation
Annualincentives

Medium- tolong-term incentives

4

Fixed compensation
Fixed compensation consists of basic compensation,compensation by responsibility and compensation byrepresentation.
Performance-linked compensation
Annual incentives
For Executive Officers, the Company determines whether or
not to provide payment of monetary compensation that reflects
the performance of a single fiscal year, based on consolidated
financial results indicators, etc. of the previous fiscal year and,in the case of providing such payment, the total amount. The
payment or non-payment of each Executive Officer, and in thecase of payment, the amount, is determined within the total
amount of provision by considering the Executive Officer’s
progress on priority target measures. Indicators related to thecalculation of bonuses are based on consolidated financial
results: net sales, operating income and net income fromthe perspective of emphasizing the achievement of earnings
growth. The provision is made once a year in June after thedetermination of the Compensation Committee.
Medium- to long-term incentives
Company’s shares shall be issued based on the achievementlevel of major target figures in the Medium-term Management
Plan (money equivalent to the converted amount of shares shallbe paid for a certain portion) as incentives to motivate them toachieve the targets in the Medium-term Management Plan andcontribute to raising shareholder value, and in order to promote
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.

Discussions at the Audit 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 independent auditors, and the assessment of theselection of independent auditors, and the assessmentof the status of development and operation of internal
control systems.

Audit Status
The Audit Committee members attend meetings ofthe Board of Directors and other major meetings inaccordance 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 Meetings,
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.

Internal Control/Internal Audit
Internal control system
We regard risk management and compliance as oneof the most important management issues, and haveestablished a basic approach to internal control system(Internal Control Policy). Based on this basic policy, we
maintain and operate the Group’s internal control system,
and are working to improve the soundness and efficiencyof our management by constantly reviewing our internal
control system in response to changes in the businessenvironment.

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 divisions subjects to audits, aswell as conducting follow-up audits to confirm theimplementation status of improvement measures until
their completion.
Overseas, we have established the Administration &Internal Control Department within the General Manager’s
Office of each region. The Internal Audit Department andthe Administration & Internal Control Department work
together to strengthen internal controls while taking into
account the circumstances and characteristics of eachregion. In the fiscal year ended March 2023, we resumed
operational audits by visiting overseas affiliates, which
had been voluntarily restrained due to the COVID-19
pandemic.
The results of internal audits are reported to the
President, Executive Officer and to the Audit Committee,
and are shared also with all Executive Officers. In
addition, the Audit Committee, the Internal Audit
Department and the Accounting Auditor hold regularmeetings to exchange information and opinions about
the audit policies, audit plans, audit results, etc., andstrive to improve efficiency and effectiveness of audits.

NTN Report 2023

SASB Index

3rd

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

NTN Group Information

Compensation Committee (from April 1, 2022 to March 31, 2023)

Compensation for Directors

Sustainability Management

The Compensation Committee was held seven times
from April 2022 to March 2023.
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.

74Sustainability Management Governance
About Us

Overview of the Committees

Risk Management
Basic approach to risk management

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 antimonopoly law 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.

Risk Management Committee

Fair Trade Monitoring Committee

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

To respond to various risks surrounding the business of
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
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.

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, theGroup conducts various activities (such as education,
instruction and audit) for relevant divisions in Japan.
Additionally, overseas subsidiaries are monitored for the
implementation status of compliance with antimonopoly
law in cooperation with the Administration & Internal
Control Department in each region.

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.

Promotion of BCP/BCM
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.

Sustainability Management

Compliance Committee

Under an ever changing environment surrounding ourGroup’s businesses, we are promoting sustainability
activities to solve environmental and social issues andenable our Group’s sustainable growth, as well as torealize a “NAMERAKA Society.”
As an advisory body on sustainability activities, wehave established the Sustainability Committee, chairedby the Executive Officer (Chief Management Officer ofsustainability activities), who is in charge of the ESG
Promotion Department. The committee mainly consists of
the General Managers of ESG-related departments anddeliberates on risks, opportunities, and initiatives related
to sustainability. The status of our initiatives is checked
regularly as materiality measures associated with risks
and opportunities. Risks, opportunities, and initiatives
discussed at the Sustainability Committee are reported to
the Board of Directors as necessary.

Value Creation Story

Sustainability Committee

Risk management process
NTN Group Information

1

Risk Identification

Identify risks fromthe business environment
surrounding the NTN Group
4

Risk Treatment

2

Countermeasuresagainst risks selected
through risk evaluation

Risk Analysis

3

SASB Index

Analyze the degree of
impact of risks extracted
by identifying risks

Risk Evaluation

Select preferential
responses to risks, analysisof which has been completed
Risk Category

1

Risks related to technology and R&D

5

Risks related to sales and marketing

9

Risks related to finance and accounting

2

Risks related to procurement and logistics

6

Risks related to personnel and labor

10

Risks related to legal affairs and compliance3

Risks related to production and inventory

7

Risks related to the environment and health & safety

11

Risks related to fire and disaster prevention, etc.

4

Risks related to quality

8

Risks related to information systems

12

Others

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

75 NTN Report 2023

Composition

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

Board of Directors
ReportNTN Report 2023

76

Sustainability Management Governance
About Us

Materiality

Thorough compliance

Basic approach to compliance

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

NTN business sites anddomestic subsidiaries
Compliance promotion
activity supervisors

77 NTN Report 2023

Helpline (whistle-blower system) andeducational activities

Domestic subsidiaries

Officers
Employees
Chairperson: President,
Executive Officer
Secretariat: Legal Department

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

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 andregulations as needed. The Legal Department is regularly
sharing information and exchanging views with the
Administration & Internal Control Department at the Officeof General Manager in each region on related initiatives,and maintaining and managing a structure in whic h theGroup unites as one to prevent bribery.

NTN business sites

Board ofDirectors
Fair Trade Monitoring Committee

Overseas initiatives

Overseas subsidiaries

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
as violations of in-house regulations, and conducts
investigation in accordance with Helpline Management
Rules that stipulate ensuring the confidentiality andChief Management Officer
Executive Officer in chargeof Legal Division

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.
SASB Index

Structure

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 ande-learning programs to raise awareness of the contentsof our in-house rules and regulations, and conduct selfaudits once a year to ensure thorough awareness of
the anti-corruption rules and regulations. Domestic
subsidiaries have also established and have been
applying their own internal regulations that are consistent
with the Company’s policies.

NTN Group Information

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 75 for Overview of theCommittees.)
Aside from the efforts made by the two committees, theLegal Department conducts the rank-based training andthe topic-specific training for officers and employees as partof compliance-related educational and awareness-raising
activities. In addition, we hold a group training session forCompliance Promotion Activity Supervisors in Japan oncea year. By sharing information and exchanging opinions onimportant issues, we are enhancing the promotion activities
at each business site and providing support for the initiatives
at each business site. Furthermore, with regard to activities
for global compliance risks such as corruption prevention,
we regularly exchange information and opinions with the
Administration & Internal Control Department at each Officeof General Manager in five overseas regions and legal/
compliance departments of overseas subsidiaries, thereby

As part of its fraud prevention activities, the Group has
investigated employee evaluations for the attitudes of thepresidents of affiliated companies and their corporate
culture related to compliance, since the fiscal year ended
March 2018.
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 ended March 2023, we conducteda survey of approximately 680 employees of 12 affiliatedcompanies (6 in Japan and overseas, respectively) wherea change of the president or other event occurred.

Initiatives in Japanprohibition of detrimental treatment against the whistleblower and collaborators of the investigation. Throughprovision of information in various compliance training
sessions and in the Code of Conduct Guidebook, wehave established a structure where all employees canutilize Helpline, not only as a tool to report misconduct,
but also as a means of raising questions and expressing
opinions and complaints regarding the Business Codeof Conduct, and maintaining satisfactory relationships
between the company, officers, employees, and business
partners. In 2022, we revised our Helpline Management
Rules in line with the implementation of the amended
Whistleblower Protection Act. According to the purposeof the act, we are performing proper operations,such as increasing persons eligible for protection andstrengthening protection. Whistle-blower systems
are being progressively created and operated also inoverseas regions, where they are tailored to local needs
and circumstances.

Sustainability Management

Promotion structureInternal corporate culture survey

Corruption prevention initiatives

Value Creation Story

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.

confirming each other’s ongoing activities and setting newagendas.
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.

Antimonopoly law compliance initiatives
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, any officer or employee who might
potentially contact competitors at an exhibition or
meeting or any other event is obligated to apply for
permission in advance and/or report it subsequently. Thismeans we have in place a system with which we canidentify the status of contact by officers and employeeswith competitors. Furthermore, we strengthen thecompliance system by conducting annual self-audits andinternal audits. Based on those results, each department
proactively plans and implements improvement
measures.
We work to put fair and free competition into practiceby continuing to upgrade our educational activities andraising the awareness 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

NTN Report 2023

78

Sustainability Management Governance
About Us

Officers (As of June 27, 2023)
Internal Directors

Members of Nominating Committee
Members of Audit Committee

Members of Compensation Committee
Chairperson of each committee

Hideaki Miyazawa

Yuriya Komatsu

Akira Murakoshi

Number of years as Director
6 years
Number of shares of theCompany held
93,900 shares

Number of years as Director
9 years
Number of shares of the97,100 sharesCompany held

Number of years as Director
Number of shares of theCompany held

Value Creation Story

Eiichi Ukai

Number of years as Director
1 yearNumber of shares of theCompany held
1,200 shares

2 years and
11 months
10,000 shares

Sustainability Management(Significant concurrent positions)
Outside Director, Dream Incubator Inc.
Outside Director, Daicel Corporation
Director, IA Partners Inc.
Advisor, Otsuka Chemical Co., Ltd.

Masaaki Yamamoto

Masaki Egami

Yasuo Kitani
Number of years as Director
Number of shares of theCompany held

2 years and
11 months
30,700 shares

1 yearNumber of years as Director
Number of shares of the
38,700 sharesCompany heldNew
0 shares

NTN Group Information

Number of years as Director
Number of shares of theCompany held

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

Shumpei Kinoshita

Isao Ozako
Skill matrix representing the main areas of experience of the Director candidates
1 yearNumber of years as Director
Number of shares of the37,100 sharesCompany held

Main areas of experience required of Directors

Name

Corporate
management

Manufacturing

Technology,
R&D

Sales

Corporate
and businessplanning

Finance andadministration

Legal affairs,
internal
controls,
compliance

Globalexperience

SASB Index

Number of years as Director
New
Number of shares of theCompany held
33,800 shares

Experienceof otherindustries,
diversity

Eiichi Ukai
Hideaki Miyazawa
Masaki Egami

Outside Directors

Ryo Kawakami
Number of years as Director
Number of shares of theCompany held

Tomonori Nishimura
4 years

Number of years as Director

0 shares

Number of shares of theCompany held

(Significant concurrent positions)
Attorney at law (Osaka Nishi Law Office,Legal Professional Corporation)

2 years and
11 months
6,300 shares(Significant concurrent positions)
Business Owner, NT Consul Biz.

Masaaki Yamamoto
Shumpei Kinoshita
Isao Ozako
Ryo Kawakami
Tomonori Nishimura
Yuriya Komatsu
Akira Murakoshi
Yasuo Kitani

79 NTN Report 2023

NTN Report 2023

80

Sustainability Management Governance
About Us

Directors

HideakiMiyazawa

100% Nominating Committee

Board of Directors 15/15
5/5
7/7
Compensation Committee

Mr. Eiichi Ukai possesses operational experience in areas such as
the Quality Assurance Division and Overseas Division, and broad
knowledge of the management of the Company promoting businessglobally based on these 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 and knowledge, etc. for management.

100%

Board of Directors 15/15

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

100%

Board of Directors 15/15

Masaaki
Yamamoto

100%

Board of Directors 11/11
6/6
Compensation Committee

Akira
Murakoshi

Yasuo
Kitani81 NTN Report 2023

100%

100%

Mr. Isao Ozako possesses operational experience in areas suchas the Manufacturing Division and Quality Assurance Division, andbroad 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
Audit Committee 15/15
7/7
Compensation Committee

Although Mr. Ryo Kawakami has not been directly involved incorporate 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 tocontinuously improve corporate value by conducting supervisionfrom the viewpoint to increase transparency and fairness ofmanagement through his duties such as providing appropriate
opinions on the independent standpoint from business executors.

Board of Directors 15/15
Audit Committee 15/15
6/6
Compensation Committee

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 toincrease transparency and fairness of management through his duties
such as providing appropriate opinions on the independent standpointfrom business executors.

Board of Directors 15/15
100% Compensation
7/7
Committee

Ms. Yuriya Komatsu 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 toincrease transparency and fairness of management through her
duties such as providing appropriate opinions on the independent
standpoint from business executors.

100%

Mr. Akira Murakoshi 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 toincrease transparency and fairness of management through his
duties such as providing appropriate opinions on the independent
standpoint from business executors.

Board of Directors 11/11
5/5
Nominating Committee

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

Representative Executive Officer,
Executive Officer

CEO (Chief Executive Officer)
Corporate General Manager, Group Management HQ.

Corporate General Manager,
Automotive Business HQ.

Hiroyuki Ichikawa

Masaki Egami*

Executive Officer

Executive Officer

Deputy Corporate General Manager,
Automotive Business HQ.
Composite Material Product Division

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

Takanobu Ozawa

Masayuki Kaimi

Executive Officer

Executive Officer

Americas Region
Legal Dept.
Internal Control Dept.

Corporate General Manager, SCM Strategy HQ.
China Region
Production Engineering Development HQ.

Yasuhiro Kawabata

Shumpei Kinoshita*

Executive Officer

Executive Officer

Deputy Corporate General Manager,
Group Management HQ.
Human Resources Strategy Dept.
Personnel Dept.
General Affairs Dept.

Deputy Corporate General Manager,
Group Management HQ.
Corporate Strategy Dept.
ESG Promotion Dept.
Carbon Neutrality Strategy Promotion Dept.

Koji Takahashi

Etsu Harima

Executive Officer

Executive Officer

Green Energy Products Division
ICT Strategy Dept.

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

SASB Index

Outside Directors

YuriyaKomatsu

100%

Board of Directors 11/11
Nominating Committee
5/5
Audit Committee 11/11

Hideaki Miyazawa*

Representative Executive Officer,
President, Executive Officer

NTN Group Information

Tomonori
Nishimura

Mr. Masaaki Yamamoto possesses operational experience in areas
such as the Finance Division 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.
Mr. Shumpei Kinoshita possesses operational experience in areas suchas the Overseas Division and Finance 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.

Shumpei
Kinoshita

Ryo
Kawakami

Mr. Masaki Egami possesses operational experience in areas such as
the Engineering Division and Research and Development Division, andbroad 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.

Eiichi Ukai*

Sustainability Management

Internal Directors

Masaki
Egami

Isao
Ozako

Responsibilities of Executive Officers (as of April 1, 2023)
Reasons for selection

Value Creation Story

Eiichi
Ukai

Number of Board of Directors andCommittee attended

Masaaki Yamamoto*Executive Officer
CFO (Chief Financial Officer)
Deputy Corporate General Manager,
Group Management HQ.
Financial Strategy Dept.
Accounting Dept.
Europe & Africa Region*Executive Officers concurrently serving as Directors

NTN Report 2023

82

Sustainability Management

Outside Director Dialog
About Us

Akira Murakoshi

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, Director Komatsu
and Director Murakoshi, who took office June last year, held a frank and honest talk.

The second year of the Medium-termManagement Plan “DRIVE NTN100” Phase 2 forrevitalization of NTN has ended. Please look backover the year in which we tackled ourrevitalization with firm resolve.
Komatsu: Essentially, any Medium-term Management
Plan should first draw a big picture of how to convert thebusiness portfolio and then discuss which businesses tofocus. However, under our current Medium-termManagement Plan, we have proceeded with the reformfrom the beginning by positioning the three years as theperiod of “in-house arrangement” for the next leap
forward, by getting out of the red, increasing the profit
ratio, and improving our cash flow and financial structure.
In that regard, compared to the fiscal year ended
March 31, 2021, our operating margin, cash flow, and83 NTN Report 2023

financial structure have been improved. I think this canbe highly evaluated as the results of efforts of all
employees. On the other hand, I recognize that there areissues in the content and speed of improvements,
including the operating margin and the cash conversion
cycle. Rapid changes in the external environment suchas soaring material and transportation costs may be oneof the causes, but that also posed an opportunity forprice increase negotiation, so I think the results may havebeen better if there had been a little clearer intention.
President Ukai has repeatedly delivered in-housemessages saying that employees are allowed tonegotiate, with a strong will, for any business notprofitable enough, with possible discontinuation of thebusiness in mind, and the entire company has been
engaged in price increase and reduction of unprofitablebusinesses. As a result, the profit ratio has been
improved smoothly in the industrial machinery businessand the aftermarket business, while the automotive
business was hit by an operating loss again in theprevious year. By taking into account that the employees
in the automotive business have made equivalent efforts

Topic 2

SASB Index

Achievements of our efforts for
Topic 1 revitalization of NTN over the
past year

NTN Group Information

Yuriya Komatsu

Sustainability Management

Outside Director

hand, progress has not been made as expected for what
I have been saying for the three years after being
appointed as an Outside Director, including inventory
reduction and how to plan elimination and integration ofplants. These are still issues, I think.
Murakoshi: With regard to plants, I have visited plants in
Iwata and Kuwana after being appointed as a Director.
These plants are old and have been extended again andagain. I think these plants have issues in terms of theefficiency. At present, our capital expenditures are
restricted, so the reality is that there are limitations on
investments for efficiency improvement, manpowersaving, and no-man operation. Nonetheless, it is still
indispensable for us, as a company in the manufacturingindustry, to refine manufacturing facilities andtechnologies and maintain our competitiveness in termsof high productivity and product quality. From now on,
the trend of decreasing birthrate and aging population
will continue, as well as labor shortage, I think. Under
these circumstances, it is time for us to consider
seriously what to do with plants and where to invest
toward our new Medium-term Management Plan.
Komatsu: The current Medium-term Management Plan
will end in one year. Discussion has started for the next
Medium-term Management Plan, includingorganizational restructuring. Rather than setting
numerical targets achievable in three years, I hope that
the Medium-term Management Plan will present
medium- to long-term numerical targets, for example,
ROE and ROIC of 10% or higher, and serve to achieve
those challenging targets. I also want each Executive
Officer to show, regarding the action plans for each year,
how much the ROE and ROIC will be improved if theplans are met, together with what backup plans havebeen prepared in case they are not met.

Value Creation Story

Outside Director

to those in the other businesses, I assume that the
management of the Automotive Business Headquarters
failed to share the road map and KPIs for profitability
improvement and communicate their clear intention. I am
also concerned that employees unconsciously takeorders that will lead to an operating loss to cover the
fixed cost. First, it is necessary to stop bleeding bychanging the criteria for judging businesses to a cash
flow that will lead to the operating margin and better
inventory level, not to sales and gross profit. At the sametime, I expect that a plan for converting the businessstructure to enable a proper profit to be recorded in asustainable manner will be finalized promptly and sharedinside and outside the company.
Murakoshi: I was just appointed as an Outside Director
last year, so I’ll talk about what I have felt while watching
NTN over the past year. As Director Komatsu said, any
business has a certain lifecycle, and I think that we must
consider how to change the business portfolio at eachpoint of the cycle. With this viewpoint, I think our biggest
challenge is how to do with the automotive business, ourbiggest business division. Most of our automotive
business is for OEMs, but the business has notnecessarily contributed to profits due to recent high raw
material cost and unstable automotive production. Eachbusiness site has been dedicated to cost reduction andreflection of high raw material cost in product prices, but
in reality, it is not always easy to reflect our added values
such as products and technologies in product prices.
Regarding whether this is a problem that can be solvedin the short term or a structural problem, I feel itnecessary to watch carefully as for how our management
should be in the future.
President Ukai and other Executive Officers have astrong will to transform NTN. An agreement has also
been reached on what our main axis should be. For
example, when changing the direction of a large ship,even if you turn the steering wheel fully, the ship changes
its direction only slightly. Before the direction is changed
completely, it will take a while even if you keep fullsteering. Likewise, I think it requires determination andpatience to transform a large company. Reform of a largeorganization also brings strain and pain to theorganization. I think the President and other Executive
Officers, who are in control of the steering, understand it,
but I wonder if it has been known throughout thecompany. I feel that a challenge lies in whether people
other than managers are able to commit themselves tothe fact that we are in the middle of such a large reform.
Komatsu: In this dialog last year, I said that “we are
motivated, the direction is not wrong, the only concern is
speed.” As for this “speed,” I appreciate our success inraising sales prices faster than expected. Probably, thatis partly due to the general trend for price increase andstrong messages from President Ukai. On the other

NTN’s governance structure

NTN transitioned to a Company with aNominating Committee, etc., which is chaired byan independent Outside Director. Could you
share your impression about this major reform inour governance?
Murakoshi: As a result of becoming a Company with aNominating Committee, etc., we are certainly on theforefront in terms of a “structure.” But I have an
impression that our substantive reform is still halfway.
Personally, the design of a Company with a Nominating
Committee, etc. will work well in a system in which there
is a market of professional corporate managers withmobility and optimal managers are selected from themarket, like those in Western countries. On the other

NTN Report 2023

84

Sustainability Management Outside Director Dialog
About Us

Topic 3

Strengthening the managementfoundation

SASB Index

Komatsu: I highly evaluate the establishment of the
Carbon Neutrality Strategy Promotion Department tosucceed the Carbon Neutrality Promotion Project, which
had been promoted across divisions until last year. For aproject promoted across divisions, a problem may occur
later because it is often less visible and overlooked which
division is responsible for solution. This concern does notexist anymore. In this regard, however, again as with theMedium-term Management Plan, I want action plans tobe prepared and the PDCA cycle to be implemented,
rather than just responding to issues and tasks at hand.
In doing so, it is necessary to make it known to businessdivisions, including deciding who will be in charge ofeach plan.
Murakoshi: In my understanding, strengthening themanagement foundation means strengthening thecorporate functions. I feel that NTN has necessary
divisions in place, but some of them are still weak asfunctions. This may be a characteristic of manufacturers,
but I think a certain independence exists at eachmanufacturing site, or each plant, which inevitablycauses a tendency to increase the centrifugal force as anorganization. Conversely, the corporate division at thehead office is not used to having a centripetal force. To
ensure the total optimization, it is necessary for the
President and Executive Officers to strengthen and utilize
the divisions at the head office with a company-wide
viewpoint. A challenge in management is to prevent asituation where the head office organization exists, but
nobody listens to it. It is important for us, Outside
Directors, to monitor this carefully.

improving employee engagement to organize a task
force across all generations and divisions and discuss
how to interpret the results and what to change. The
true significance of employee awareness survey is tohave each department think for themselves, instead of
merely checking the result.
Komatsu: Also in previous dialog, I expressed myopinion on the issue of diversity at NTN. After having
opportunity to talk with female managers, I had an
impression that not so many women are motivated somuch for career advancement. Of course, it is naturalthat some women do not want to be promoted
considering the balance between work and life. However,there should be women who want to get promoted, and I
think a system should be in place that evaluates those
women fairly. I think it is acceptable that there is a female
manager working for reduced hours and all members in
the department finish work early and go home. Including
appointment of foreign employees, I want to speak up forthese issues this year as the COVID-19 pandemic has
calmed down.
Murakoshi: I am concerned that the age group of
executive candidates at NTN is pretty high. NTN is
implementing an initiative to foster candidates for nextgeneration management called NNLP (NTN Next Leader
Program), but the age group of participating employees
is also high. Unless starting selection and fostering ataround mid-40s, we will face a crisis of insufficientmanagement at a critical moment.
Komatsu: I completely agree with you. We have talked
about variety of issues, and I strongly feel responsibility
that we, Outside Directors, have to monitor management
and continue encouragement for purposes such as
revitalizing NTN.

NTN Group Information

How do you evaluate NTN’s initiatives forstrengthening the management foundations,
including establishment of the Carbon Neutrality
Strategy Promotion Department and reform of
the personnel system?

Komatsu: In terms of strengthening the managementfoundation, reform of the personnel system is also
required. Earlier, Director Murakoshi mentioned that
employees may not understand that a large reform isbeing underway. Every company has a difference in asense of crisis between top management and frontline
staff. I think the shortcut is to make realistic KPIs,
including personnel evaluation, known to frontline staff
and change the company using a system, rather than toblindly share a sense of crisis. For example, we may evenset the operating margin as a KPI for personnel
evaluation and say that it will be reflected in evaluation ofpromotion and bonus. At first, everyone may first blame
others, the head office or the production division for
example, but eventually, they will start to think how to
improve and take actions by themselves.
Murakoshi: As for the personnel system, I have heardthat review of the personnel system for managers is inprogress. I think a structure is in place but the systemdesign alone does not suffice to make the personnel
system function smoothly. The Personnel Department
itself is required to actually know each site and evaluate
whether personnel at each position work properly. For
achievement-based evaluation, a harder part comes after
a structure is established.
By the way, I think that employee awareness survey
can be used as one of indicators. I have heard that thesurvey was conducted also at NTN, but only in thecorporate divisions. I think expanding the scope to all
employees would help the management understand theactual conditions of the company. Based on the result,
we may be able to extract and solve issues forrespective departments, or extract company-wideissues in some cases. As for the latter, it is one way for

Sustainability Management

85 NTN Report 2023

from full-time Directors, but I feel an asymmetry of
information, partly due to a time constraint. I think the
key point for making the Board of Directors function iswhether there is a system in place to enable external
officers to obtain information sufficiently, rather thantransitioning to a Company with a Nominating
Committee, etc. as a “structure.”
Komatsu: I have been talking about similar things forsome time. I think this will be improved gradually in the
future. Now, the recognition of Outside Directors isincreasingly being enhanced. By keeping our current
active encouragement, I expect NTN to function well as a
Company with a Nominating Committee, etc.

Value Creation Story

hand, in a social environment in which new graduates
are employed en masse and move up the corporate
ladder to become managers, as in Japan, I have an
impression that we have a long way to go in terms ofwhether a Company with a Nominating Committee, etc.
can really function.
I don’t know how NTN had been like before thereform, so I cannot make a comparison, but I think
Outside Directors actively express their opinions.
However, that is because Executive Officers reach an
agreement at the management meeting before the Boardof Directors, which naturally leads to many opinions from
Outside Directors, so I feel there is an asymmetry of
information here. Anyway, I am very interested in NTN’s
initiatives, as a Japanese-style Company with aNominating Committee, etc., and I feel it necessary forme, as a member of the company, to further search forthe best solution.
Komatsu: As Director Murakoshi mentioned, I also feelthe difficulty of a Company with a Nominating
Committee, etc. I was appointed as the chairperson of
the Board of Directors last year, and regarding whether
the chairperson has overwhelming power or not, I don’t
feel being granted so much power.
But I think this is a “better” choice than before. The
major reason why I think so is related, in the first place, toan increased number of Outside Directors. We, Outside
Directors, are required to play a role of monitoring thecompany’s execution so that the company can grow andimprove its corporate value in a sustainable manner. As aresult of an increased number of people who monitor
corporate management with such recognition, we receive
many critical opinions, unlike at the Board of Directors
consisting of internal members only. Also, as achairperson, I am able to ask revision of the businessadministration structure based on Outside Directors’
opinions, and reporting to monitor the progress. In
addition, there are many cases in which internal Directors
and Executive Officers consider requests and opinionsfrom Outside Directors, so I think this means thegovernance has improved.
Murakoshi: I have also served as a Director at a
Company with a Board of Company Auditors, and I think
what matters, irrespective of the organizational design, isthe recognition and the amount of information each
Director has. For example, at the company I previously
worked for, people at the corporate general manager ormanager class explain the details of relevant projects
about three days before the Board of Directors, andenough discussion is held there. So the difference in theamount of information on the executive side is reduced
to a certain degree also at the Board of Directors. I haveattended NTN’s Audit Committee as much as possible
and was briefed about the contents of discussions at the
Executive Officers Meeting and the Management Meeting

Message from a new Director

Yasuo Kitani

As an Outside Director, I will do my best to contribute to the sustainable growth of
NTN by making the most of the knowledge I have gained through my many yearsof business experience in Japan and overseas as a banker and my experience as
an executive.
First of all, I will value communication with as many executives and employees
as possible, and speedily learn about the Company as it is, along with its history.
And then, I will appreciate what I see from a bystander’s vantage point, and while
correctly understanding the changes in the environment surrounding the Company,
I will make proposals in line with my responsibilities to help the Company grow in ahealthy manner.
Although I am an Outside Director, I am appointed to work on a full-time basis,
so I will work hard together with executives and employees to earn the support ofmany stakeholders and contribute to the development of NTN.

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86

Sustainability Management

Communication with Stakeholders
About Us

Stakeholders

Shareholders

Environment

87 NTN Report 2023

Nationwide Distributors’ Meeting
We invite distributors from across Japan to briefing sessions on accountsettlement overview and aftermarket business measures to strengthen ourbond with distributors.
Technical service units
We run completely-tailored, multi-functional technical service units
worldwide, equipped with teaching materials and exhibits to introduce our
products, and hold bearing technical seminars for our customers.

NTN Group, in a fair andfree environment, builds
good partnership with its
business partners andworks together for mutual
growth and development.

Briefing for suppliers
We share information on our globalization initiatives and the businessenvironment surrounding our company with our business partners and haveexternal lecturers deliver lectures 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 them understandthe importance of CSR procurement.

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

Activities that contribute to the local community(family tours, summer festivals, etc.)
We hold family tours and summer festivals at each business site as anopportunity to interact with employees’ families and neighboring residents.
NTN Rotating School
As an environmental education program for children who will lead the next
generation, mobile-type schools have been opened in various places todeepen friendships with the local community.
Conservation of biodiversity
In cooperation with local residents and NPOs, we are working to protect theenvironment of Satoyama (village forest) areas around our business sites
and to protect endangered species.

NTN Group focuses on
return for shareholders bysustainable profitable
growth and builds longterm trust relationships
with shareholders throughactive communications.

Shareholders’ Meeting
The Shareholders’ Meeting is a forum for communication to build long-term
relationships of trust 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.

NTN Group harmonizes
its business activities
with nature andcontributes to preserve
the global environment
by providing its
technologies, products
and services.

Reducing environmental impact in business activities
We are working to minimize harmful environmental impacts by monitoring
and reducing emissions of CO2 and regulated chemicals in our businessactivities.
Sustainable use of resources
We are striving for sustainable resource utilization by reducing the use ofresources such as raw materials and water, and by thoroughly
implementing the 3Rs (reduce, reuse, and recycle) of waste.
Developing environment-contributing productWe are contributing to the realization of a carbon-free society by developing
products that help reduce energy loss in finished products and naturalenergy-related products.

Overview of the system
Teams of several members from any group companies
can apply for the award. Activities that have connecteddaily jobs to the materiality, identified their own values,
and produced certain outcomes are to be awarded, withthe period from January to the end of December eachyear. Application is made directly by each team on the“NTN PROUD AWARD” page on our intranet. After theapplication period, the excellent awards, special awards,
and materiality awards are selected first in each global
region. Then, the top two teams selected for the excellent
awards and special awards in each region make theirpresentations at a global convention. Out of them, theprojects recognized as the most excellent activities are
granted with the president awards in the three divisions of“E: Environment,” “S: Society,” and “G: Governance.”

Holding of a global convention

SASB Index

Local communities

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

Basically, we aim to develop it into an award system thatwill lead to improved employee engagement, which inturn will lead to the further improvement of ourorganizational strength and corporate value, throughESG activities practiced by employees working in theGroup in their daily jobs and awarding their activities. The
Group’s materiality is closely linked to our corporate
philosophy. We will aim to realize our vision with our
employees doing daily jobs in connection with 13 items
of materiality identified by the company.

NTN Group Information

Business partners“NTN PROUD AWARD” as ESG Corporate Award“NTN PROUD AWARD” is a system that encourages employees’ ESG
activities and commends outstanding initiatives linked to 13 items ofmateriality responding to SDGs identified by the Group. The system aims topromote understanding and awareness of SDGs among employees andfosters their motivation and engagement.
Employee engagement survey
Based on the survey result, we conduct activities to improve workplace issues,
activate workplace communication and work to develop an environment inwhich each employee has a good reliable relationship with each other.
Global QC Circle Convention
We strive to improve safety, quality, and productivity on a global basis, andwith the convention as a forum for international exchange, we exchange
information on a variety of activities.

To commemorate our 100th anniversary, we established“NTN PROUD AWARD” for all global employees in theGroup to encourage practicing our corporate philosophy,
but no convention has been held since 2019 due to
COVID-19. This time, “NTN PROUD AWARD” has been
newly started as an in-house award system to encourageand promote ESG activities for our sustainable growth inmedium to long term and solution of social issues.
Through this system, we aim to realize a “NAMERAKA
Society” by improving the employees’ understanding andawareness of ESG and enhancing their motivation andengagement, which will lead to improvement of our social
value and solution of social issues.

Basic approach to NTN PROUD AWARD

Sustainability Management

Customers

NTN Group respects
diversity, individuality
and a safe and healthy
workplace environment
where employees canwork successfully.

Main Activities

New NTN being created through NTN
PROUD AWARD

Value Creation Story

Employees

Stance to
Stakeholders

On June 14, 2023, the first global convention for the new system
was held on the Web. This time, 69 teams made applications fromJapan and abroad, and 12 teams awarded through local screening
participated in the global convention. At the beginning of theconvention, President Ukai greeted by saying ‘Please gain a new
insight at this global convention. I hope that aggregation of yourgrowing powers will enable us to address our big challenge ofrevitalizing NTN and realize a “NAMERAKA Society.”’ The convention
was started with the president’s praise for the award winners fromeach region and expectation for this convention.
Each team presented their project activities and as a result of consideration, the president awards were granted
to Xiangyang NTN-Yulon Drivetrain Co., Ltd. in the environment division and NTN BEARING CORP.OF CANADA
LTD. in the society division. In addition, to express appreciation for a joint European team supporting Ukrainian
refugees, a president special award was set up and presented to the team.
Teams winning the president awards

Environment division
Society division

Team winning the president special award

Environment improvement andpromotion team

“Environment improvement and promotion team” (Xiangyang NTN-Yulon Drivetrain Co., Ltd.)“Team CANADA” (NTN BEARING CORP. OF CANADA LTD.)“NTN Europe team” (NTN Europe S.A., NTN Wälzlager (Europa) G.m.b.H., NTN-SNR RULMENTI S.R.L.)

Team CANADANTN Europe team

NTN Report 2023

88

Sustainability Management

9th Stakeholder Dialog
About Us

Topic 1

How to proceed with ESG management

Topic 2

Carbon neutrality

Akira
YamadaToshiya
ChikadaMichitaka
Shimizu

Eriko
Nashioka

Professor, Kobe
University Graduate
School of Business
Administration

Senior Consultant
JMA Consultants Inc.

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

Senior Director
ESG Management
Promotion Headquarters
Sekisui House, Ltd.

(Facilitator)
Representative Directorof Institute forEnvironmental
Management
Accounting, CPA.

NTN
Executive Officer
Deputy Corporate General Manager, GroupManagement Headquarters/Corporate Strategy
Department/ESG Promotion Department/Carbon
Neutrality Strategy Promotion Department

Shumpei
Kinoshita

Executive Officer
Deputy Corporate General Manager, GroupManagement Headquarters/Human Resources
Strategy Department/Personnel Department/
General Affairs Department

Yasuhiro
Kawabata

Deputy Corporate General Manager, SCM
Strategy Headquarters

YasuakiTakahashiManager, Corporate Strategy Department, GroupManagement Headquarters

Takashi
Nishigaito

Manager, Carbon Neutrality Strategy Promotion
Department, Group Management Headquarters

Masayuki
YamazakiManager, ESG Promotion Department, GroupManagement Headquarters

TetsuyaIshimoto(*Assignment and title of participants are as of the dialog held.)

89 NTN Report 2023

Kokubu: I see that NTN has set specific strategies and isgoing ahead along them. In your industry, the externalpressure toward sustainability is strong, but I don’t think
there are any deficiencies or issues in your target setting
for carbon neutrality, identification of materiality,
disclosure of related information, and initiatives. In otherwords, I can say that there are no problems in the“foundation.” However, as I also said last year, thefoundation is easy to build because it is a “form.” What is
important is to link it to the creation of actual corporate
value. It is necessary to focus on ESG activities becausea framework for evaluating them has already been
established and a low evaluation may affect investment,
but too much alignment with evaluation may make itmere a formality. Therefore, it is necessary to figure out
how not to make it mere a formality. In that point, I
strongly hope that “NTN PROUD AWARD” will be
successful as one of your systems for value creation. It
would be a good idea to bring out and deploy new
businesses from it. But it will not work out if you try toearn quick profit. Instead, you need to think it asinvestment for the future, even if certain time and cost
are required. The difficulty in creating value through ESG
management lies in not being able to set a goal soon
because you cannot tell what you can do. However, evenwhile you are uncertain, it is important to continue tothink what you can do by utilizing your bearings andrelated technologies and know-how, and to establish asystem that enables you to invest currently available
resources for that purpose. Otherwise, ESG

Nashioka: The importance of strategies was justmentioned, so please share how ESG has been
integrated into strategies at Sekisui House.
Shimizu: We announced our sixth Medium-termManagement Plan in March this year. This project wasstarted in June last year, and business divisions andcorporate divisions have repeated discussions together
for it. More specifically, regarding our global vision of“make home the happiest place in the world,” we haveconsidered our priority measures, or what we will achievewith the next Medium-term Management Plan.
With regard to ESG management, we have createdthe foundation through the fifth Medium-termManagement Plan, and we think the key for it is to“personalize,” as previously mentioned. “Participation of
all employees” was one of the pillars of ESG
management also in the fifth Medium-term Management
Plan, but we determined to further enhance the initiativeand promote the “ESG management throughparticipation of all employees,” unique to the Sekisui
House Group. This was set as our ESG management
strategy in the sixth Medium-term Management Plan.
Besides, to “build an organizational culture that fosters
innovation,” we established an award system called“SHIP (Sekisui House Innovation & PerformanceAwards)” and have implemented initiatives to develop
autonomous persons and organizations that will continue
to produce innovations. We are also working to “set andimplement ESG indicators” to utilize ESG indicators for
ensuring the transparency and effectiveness, including
setting ESG indicators easy to be understood byemployees and establishing a system to link ESG
indicators not only to compensation for directors but also
to awarding for business sites. Our strategies also

NTN Report 2023

SASB Index

Katsuhiko
KokubuNTN: Based on the various recommendations we
received in last year’s dialog, we are now promoting
activities for ESG management through not only bottomup but also top-down approaches to communicate
messages on risks and opportunities specifically linked to
management strategies with the timeline fixed in themedium to long term in an easy-to-understand manner.
Establishment of the “Carbon Neutrality Strategy
Promotion Department” was also part of it. Besides, wethink “NTN PROUD AWARD” was successful as the first
convention after system renewal, with participation of 69
teams from all over the world.
With regard to materiality, NTN is considering
incorporating the current materiality for achieving SDGs
into the next Medium-term Management Plan as themateriality for achieving the company’s purpose, while
proceeding with establishment of a system that enables
each employee to “personalize” sustainability activities.
We hope to obtain tips on our ESG management
promotion in the future in reference to initiatives
promoted by Sekisui House, Ltd. (hereafter, Sekisui
House), a company going ahead of us, though in anindustry different from ours, and opinions from experts.

NTN Group Information

Experts

How to proceed with ESG management

management will soon turn into a mere formality. In thisregard, “personalization by managers,” sited as one ofyour future issues, is an important aspect. It is
recommended that managers will proceed with it as atask, with more specific targets.
Meanwhile, who will bear the cost is another very
important issue. It is also related to the next topic,
carbon neutrality, and I think there are two vectors for
how to view the cost. One is to promote carbon
neutrality strongly with advanced technologies, ask
customers to understand the cost, and reflect the cost in
product prices. The other is to pursue carbon neutrality
at a level considered necessary and sufficient in theindustry and control the cost within the scope. It
depends on each company’s level of technologies which
strategy is reasonable, but it is necessary to refinestrategies through validation. It is also unpredictable how
fast and in which direction the external pressure will
move on. The pressure also differs depending on theregion, so it is necessary to set strategies by proactively
considering where you are located in the move toward
carbon neutrality.

Sustainability Management

Topics of the dialog

Topic 1

Value Creation StoryTo reflect the opinions of our stakeholders in our corporate activities, we have annually held dialog with academics
and experts in various fields of sustainability since 2015. For this fiscal year, the 9th dialog was held in May.
In last year’s stakeholder dialog, while we listened to how sustainability has actually been promoted in companies,
important viewpoints of “not making it a task for disclosure” and “making sure that employees can personalize
sustainability” were proposed. It was also recommended that we should confirm individual purposes while promoting
activities because the company’s purpose is an aggregation of purposes of each employee.
By referring to these recommendations we had received, NTN started a “Carbon Neutrality Promotion Project” inlast July to set targets and strategies toward achievement of carbon neutrality. In addition, to promote this project froma location closer to management, the organization was changed in April 2023 to the “Carbon Neutrality Strategy
Promotion Department” and turned to a department in the Group Management Headquarters.
Also, “NTN PROUD AWARD,” originally started in 2018, was revised into an ESG activity award system and newly
restarted on a full scale last year. Through these activities, we are steadily getting closer to achievement of ourmateriality targets.
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 for realization of a
“NAMERAKA Society.”90

Sustainability Management 9th Stakeholder Dialog
About Us

include reduction of capital cost through further
promotion of ESG management and improvement of ourcorporate value through the synergy of ROE
improvement and ESG management promotion.

Carbon neutrality

Yamada: I feel that a structure has gradually beenorganized toward a challenging goal. In establishing aroadmap, it is better to estimate first how much energy
consumption can be reduced. To do so, you need toaccumulate expertise from in-house energy-saving
specialists and set energy-saving control points andcompleteness evaluation standards for each equipment.
This will roughly clarify how much more energy can be
reduced at each plant. Once the potion of energy saving
is made clear, you can see how much more reduction isrequired using renewable energy, which makes therelated cost visible. With regard to energy saving, it canbe said that the Energy Conservation Promotion Group91 NTN Report 2023

Yamada: The most important thing in renewableenergies is “energy creation.” The first thing you should
consider after reaching complete energy saving is where
you can create electricity. You should first look for on-site
locations, and then off-site locations. This initiative should
be given a high priority. If this is not enough, purchaseCO2-free electricity. I recommend this sequence.
Nashioka: In summary, I think true carbon neutrality is to
ask each company to create electricity on-site. Could
you share a related business case at Sekisui House?
Chikada: For the past one year, we have focused on net
zero energy houses (ZEHs) for rent. While ZEHs for saleare gradually gaining popularity, those for rent are still far
from becoming popular.
There are two types of ZEHs for rent: building-wise
ZEHs and house-wise ZEHs. For our rental houses, we
promote the latter, in other words, the type of ZEHs that
aim at zero energy balance at each house. The former
has a high energy-saving performance as the whole

Chikada: That’s right. In 2009, we commercialized
houses with a pretty high energy-saving performance atthe time, the predecessor to ZEH. At the same time, wechanged our sales policy from “price-based” to “valuebased.” We started our journey in the direction ofpresenting high value-added products to customers,
making them understand the value, and selling our
products at adequate prices. At first, some sales
representatives felt uncomfortable, but once successful
experiences started to emerge, an increasing number ofrepresentatives followed suit. All of us studied quite hardbecause we needed to learn to talk about product value
in order to convince customers. I think this led topersonalization of carbon neutrality.
NTN: We understand it’s a good business model in thefood, clothing and housing industries, in that added value
is recognized by customers, which in turn creates a
positive chain reaction. Then, what initiatives should we
implement in our industry, which is far away from food,clothing and housing.
Chikada: We also have suppliers. And we communicate
to suppliers our expectation for them to use carbon-freebuilding materials. In the construction industry, a trend
toward using such materials even with higher costs has
also emerged. Likewise, demands for carbon-free
products may emerge at various bearing user companies.
Still, I think this should not be tackled by a single
company, but requires movement across industries.

Nashioka: Could each of you summarize today’s dialog?
Chikada/Shimizu: We have been engaged in ESG
management for three years, and realized that successwill be brought only through steady and diligent effort. At
the beginning, it was mentioned that “a form can becreated,” but we, having no form, were hit by the wave of
ESG after launching our products. We now feel thedifficulty of creating a form. We hope to continue ourengagement while sharing information each other.
Yamada: NTN has declared reduction of energy loss.
Bearings reduce energy loss caused by friction ofrotating objects, etc., but certain loss still remains. I think
you can increase the importance of and interest in
bearings by clearly explaining, for example, how much
impact automotive hub bearings have in global scale, or
your current effort to reduce the loss as much as
possible. I also feel it important to increase the sales ofenvironment-contributing products.

SASB Index

NTN: Through our Carbon Neutrality Promotion Project
started in July last year, we have been considering how
to materialize each initiative with the following threeteams organized: “visualization of power consumption,”“planning and consideration of purchasing renewableenergy power” and “consideration of internal carbon
pricing (ICP).” The activity period ended on March 31
this year, and the initiatives were taken over to the
Carbon Neutrality Strategy Promotion Department
organized in April.
Through each initiative, a rough roadmap was
prepared in Japan. In the future, we plan to establish a
Carbon Neutrality Promotion Committee structure for
global engagement in regional units. Could you give us
advice on challenges such as setting intermediate annual
targets and how to check a global CO2 reduction
roadmap once prepared.

Nashioka: I heard that something had motivated youremployees to personalize carbon neutrality.

Yamada: Recently, we are increasingly asked for advice
also from the supplier side. For example, one of ourcustomers asked us to show the result of LCA (Life Cycle
Assessment) of their products. If products are produced
completely with renewable energy, that would be a big
differentiator. If you can launch initiatives ahead of othercompanies, I think that will become your strength in the
future society.

NTN Group Information

Topic 2

Kokubu: Achievement of carbon neutrality is
unavoidable, but if you don’t understand what carbon
neutrality is, you may still be able to set a plan, but
unable to understand its meaning. For example, youhave a plan to reduce most of the emission by utilizing
renewable energy, but NTN seems to cover a higher ratio
by purchasing CO2-free electricity at present. If going to
extremes, you can achieve carbon neutrality if allelectricity you purchase is renewable energy. However,that means you practically make no efforts. Rather, it isimportant to try to generate the source of green
electricity as much as possible. When thinking ofelectricity self-sufficiency, carbon neutrality will probably
take on new meaning.

building, but you can’t tell whether each house is ZEH ornot, so we cannot convince residents of the advantagesof ZEHs, such as the comfort and lower utility costs. But
advantages of the latter are convincing, so we can evenraise the rent. Anticipating an increased number of ethicalconsumers decades later, we are now proposing wouldbe owners to build house-wise ZEHs, which will require
higher initial cost but remain competitive in the longer
term, and this proposal is being accepted. Also,
according to our survey on former residents of ZEHs forrent, 80% answered that they want to live in ZEHs again.
That means we are increasing ZEH fans. We are trying tocreate a trend toward ZEHs for both sale and rent.

Sustainability Management

Shimizu: The cost is partly absorbed in-house, butbasically, we ask the customer to understand the added
value and reflect the cost in product prices.

Value Creation Story

NTN: Thank you very much. “Cost” was mentioned
earlier, and that is the very thing we are also concerned
about. Our products reduce energetic load inthemselves, which contributes to sustainability, but ofcourse, their production process consumes water andelectricity. It is difficult to reduce the environmental load
to zero in production of all products, but we sometimes
think that it would be easier to reflect cost increases in
product prices by segmenting each product. For
example, it may be effective to produce products using
only natural energy such as wind and solar power andconvince customers of the value. How do you regard theenvironmental cost at Sekisui House?

organized in the Carbon Neutrality Strategy Promotion
Department has a large role to play. “Visualization ofenergy consumption” is listed as one of your measures,but is it clear how and what to “visualize”? One possible
first step is to visualize how effectively energy has beenutilized in each process. This will quantify the total loss
and visualize the limit. Even if it is impossible to eliminate
all losses, I think the seriousness in engagement will differ
between energy-saving activities conducted blindly withthe limit unknown and those conducted, for example,
with knowledge that 80% of energy consumption in theprocess is loss. It is also necessary to think about fixedenergies. Energy-saving should always be discussed inconnection with production activities. By thinking thatenergies not contributing to production are all losses, it isbetter to proceed with initiatives for thoroughly reducing
fixed energies. In QCD activities, the lead time, manhours, quality standard, etc. are documented andmonitored for each product and process. Controllingenergies also at the same level will probably show theroute toward achieving your goal more concretely.

Kokubu: I have an impression that we had many talks
that lead to management during today’s dialog. This
reflects the fact that, although environmental initiatives
surely lead to management, each company has been
confused with the gap. Carbon neutrality is not an issue
that can be addressed through conventional methods ofproduction and sales. I think it is important to view it assomething you need to tackle strategically in a top-down
approach.
NTN: Thank you very much for your precious
recommendations. This is an opportunity for us to gain
insights. We’d like to reflect recommendations we
received today in our future initiatives. We will move
forward step by step while sharing the significance of ourinitiatives within the company. We would highly appreciate
your continued advice. Thank you very much for today.

NTN Report 2023

92

NTN Group Information

Consolidated Financial Indicators (Past 11 Years) (Fiscal years ended March 31)
2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

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

773,960
17,1452.2
10,807
10,36722,25342,04818,678768,461
211,742
163,287
360,801

848,037
213,368
166,484
381,767

856,121262,559
184,128
359,105

794,000
248,504
178,220
325,173

797,038
245,050
171,481
320,169

839,427
269,759
179,738
320,833

840,750
246,404
194,505
350,344757,822
168,378
182,923
362,416

836,563
183,751
176,847
422,803855,483
216,425
214,843
394,031869,827
237,425
239,385
371,292

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

3.2
1.2
1.2
5.0
25.4
2.0

(Millions of yen)

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)
11,46834,219(13,858)(33,258)
20,361(Yen)

375.84374.68461.21436.97431.66477.17433.32294.00321.04372.70415.64(Yen)(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

19.53
–
5.00

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
72.8
6,978
349.3
18.1

24,199
64
10
19.3
11
5
62.0
6,326
281.1
15.5

23,292
62
10
19.5
11
5
54.9
5,783
243.0
13.1

23,383
63
11
19.9
12
6
59.2
6,623
271.5
15.4

23,027
63.4
10
20
12
5
56.4
6,456
284.1
16.3

USD Average
EUR Average

82.91
106.78100.17134.21109.76
138.69120.15132.60108.39118.80110.85129.64110.88128.41108.73120.84106.01
123.66112.34130.53135.45140.91

USD at fiscal year end
EUR at fiscal year end

94.05
109.80102.92120.73120.17141.65112.68130.32111.85127.70106.49119.48110.64131.00107.85124.21110.36129.32121.89136.01132.68144.70

About Us

2013
Financial Data *1
Profit and Loss Statement(Millions of yen)
(Millions of yen)(%)
(Millions of yen)
(Millions of yen)
(Millions of yen)
(Millions of yen)
(Millions of yen)

Value Creation StoryNet Sales *2
Operating Income
Operating Margin
Income (loss) before Income Taxes
Net Income (Loss) Attributable to Shareholders (parent company)
Capital Expenditures
Depreciation and Amortization
R&D expenditures

Balance Sheet(Millions of yen)
(Millions of yen)
(Millions of yen)
(Millions of yen)

Sustainability Management

Total Assets
Net Assets
Inventories
Interest-bearing Debt

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.

93 NTN Report 2023

*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 2022” (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.3.3)” (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 2023

94

NTN Group Information

Consolidated Financial Statements (March 31, 2023)
Consolidated Statement of Operation(In million yen)

(In million yen)

As of March 31, As of March 31,
2022
2023

As of March 31, As of March 31,
2022
2023

Assets

Net sales

642,023

773,960

Cost of sales

536,070648,047

Current liabilities

Gross profit

105,953

125,912Selling, general and administrative expenses

99,072

108,766

Operating income

6,880

17,145Interest income

866

1,146

Dividend income

605

278

1,099

1,459

128,644

111,658

Notes and accounts payable-trade

Notes and accounts receivable-trade125,507

129,760

Electronically-recorded monetary claims

60,881

68,340Electronically-recorded monetary claims

6,491

6,902

Short-term loans

134,229

161,943

116,695

55,93962,256

Raw materials and supplies

53,38960,434

Short-term loans receivable

57

21

Other

37,53342,086

Alowance for doubtful accounts-1,045-790

512,031529,024

Total current assets

Accrued bonuses for directors andstatutory auditors

237,099

247,774

Accumulated depreciation-149,144-159,103

Buildings and structures, net

87,95588,671

Machinery, equipment and vehicles

753,597

778,061

Accumulated depreciation-630,990-659,788

Machinery, equipment and vehicles, net

122,607

Land

29

117
67,083

Total current liabilities

321,205

369,074

80,000179,802129,349408

251

Liabilities for retirement benefits

36,852

34,862

Other

20,79018,863
263,327

118,272

Total liabilities

639,058

632,40233,56333,452

Net assets

Construction in progress

15,557

17,424

Shareholders’ equity

Other

65,498

67,107

Accumulated depreciation-59,385-60,815

6,113

6,291

265,797

264,113

Common stock

54,34654,346

Additional paid-in capital

67,97067,970Retained earnings

60,127

69,166-866-856

181,578

190,626

Net unrealized holding gain on othersecurities

1,044

1,255

Translation adjustments

16,02528,079Treasury stock

Intangible fixed assets
Goodwill

1,983

1,768

Total shareholders’ equity

Other

42,04638,121

Accumulated other comprehensive income

Total intagible fixed assets

44,02939,890Investments and other assets
Investment securities

24,67925,434

Deferred tax assets

3,495

4,219

Assets for retirement benefits

1,555

3,312

Accured retirement benefits adjustments

-797

697

16,27230,032

Other

4,094

4,049

Alowance for doubtful accounts

-200

-217

Non-controlling shareholders’ equity

18,574

16,765

Total investments and other assets

33,62436,799Total fixed assets

343,451

Total net assets

216,425

340,802

237,425

855,483

869,827

Total liabilities and net assets* 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

95 NTN Report 2023

2,035

2,591

—

Gain on reversal of product defect compensation

1,213

—

Other

1,090

2,499

Total non-operating income

7,467

7,419

4,277

5,910

Foreign exchange losses

—

3,378

Derivative transaction losses

812

—

2,441

3,228

Other
Total non-operating expenses

7,532

12,517

6,815

12,047

Gain on sale of tangible fixed assets

3,850

1,716

Gain on sales of investment securities

10,483—

Total extraordinary income

14,333

1,716

Ordinary income
Extraordinary income

Extraordinary losses
Impairment loss

601

1,609

Business restructuring loss

—

1,348

Loss related to Anti-Monopoly Act

2,928

—

Total extraordinary losses

3,529

2,957

Net income before income taxes and equity in earnings of affiliated companies

17,61910,807

Income and other taxes

5,071

7,253

Income and other taxes adjustment

3,451-8,307

Total income and other taxes

8,522-1,054

Net income

9,096

11,861

Profit attributable to non-controlling shareholders

1,755

1,493

Profit attributable to owners of parent

7,341

10,367

Year ended March 31, 2022
(April 1, 2021 – March 31, 2022)

Year ended March 31, 2023
(April 1, 2022– March 31, 2023)

9,096

11,861

Consolidated Statement of Comprehensive Income(In million yen)

Net income

Total accumulated other comprehensive
incomeTotal assets

Derivative transaction gains

855,483

869,827

SASB Index

317,853

Total property, plant and equipment—

Foreign exchange gains

Interest expenses
80,000Total long-term liabilities

Other, net

Equity in earnings of unconsolidated subsidiaries

Non-operating expenses

Long-term liabilities

Reserve for product defect compensation

Non-operating income

NTN Group Information

Buildings and structures

4,307

60,486Long-term loans

Property, plant and equipment

4,544

Other

Bonds

Fixed assets

67,283

Sustainability Management

Work in process

Accrued income taxes

61,033

Value Creation Story

Year ended March 31, 2023
(April 1, 2022– March 31, 2023)

Cash and bank deposits

105,514(In million yen)

Year ended March 31, 2022
(April 1, 2021 – March 31, 2022)

Liabilities

Current assets

Finished goods & purchased goods

About Us

Consolidated Balance Sheet

Other comprehensive income
Net unrealized holding gain on other securities-7,615210

Translation adjustments

22,947

11,307

Accrued retirement benefits adjustments

4,795

1,417

Equity in equity-method affiliates

1,759

918

Total other comprehensive income

21,886

13,85330,98325,715Comprehensive income attributable to owners of parent company

27,407

24,128Comprehensive income attributable to non-controlling shareholders

3,575

1,587

Comprehensive income(breakdown)

NTN Report 2023

96

NTN Group Information Consolidated Financial Statements (March 31, 2023)
About Us

Statements of Changes in Shareholders’ Equity

Statements of Cash Flows(In million yen)

(In million yen

Year ended March 31, 2022
(April 1, 2021 – March 31, 2022)

Year ended March 31, 2023
(April 1, 2022– March 31, 2023)

Net income before income taxes and equity in earnings of affiliated companies

17,61910,807

Depreciation and amortization

37,89842,048

Impairment loss

601

1,609

Goodwill depreciation

160

214

Business restructuring loss

—

1,348

2022
Shareholders’ equity

Balance on April 1, 2021

54,346

Additional
paid-in
capital

67,970Retainedearnings

Treasurystock

52,786-782

Valuation
Total
andTranslation
shareholders’translation adjustments
equityadjustment

174,3218,646-6,865

Accumulated
Total
accruedaccumulated
retirement
other
benefits
comprehensive
adjustments
income-5,575-3,794

Net cash provided by operating activities
Minority
interest

13,224

Total net
assets183,751

Loss related to Anti-Monopoly Act
Increase/decrease (-) in allowance for doubtful accounts

Changes during
the current period

Profit attributable to ownersof parent

7,341

7,341

Purchase of treasury stock
Sales of treasury stock

7,341

-92

-92

-92

8

8

8

-7,601

22,8904,777

20,066

5,350

25,416

Increase/decrease (-) in accrued retirement benefits for Officers-788Increase/decrease (-) in reserve for product defect compensation

-684

-157

Increase/decrease (-) in liabilities in retirement benefits

1,605-1,228Decrease/increase (-) in assets for retirement benefits-1,555-1,756

Interest and dividend income-1,472-1,424

Interest expenses

4,277

5,910

Foreign currency translation adjustments / foreign exchange loses/gains (-)-1,067-3,519Loss or gain (-) on derivative transactions

812-2,035Equity in earnings (-) /loss of non-consolidated subsidiaries-1,099-1,459Gain (-) or loss on sale of tangible fixed assets-3,850-1,716

Gain (-) or loss on sales of investment securities-10,483—

Decrease/increase (-) in trade receivables-2,165

1,210

Decrease/increase (-) in inventories-25,300-15,044

691

11,443

Increase/decrease (-) in trade payables
Total changes during the period
Balance on March 31, 2022—
54,346—
67,9707,341-83

60,127

-866

7,257

-7,601

181,578

1,044

22,89016,025

4,777-797

20,066
16,272

5,350
18,57432,674
216,425

Other-2,445-1,949Subtotal

16,41044,079Interest and dividend income received

1,717

2,575

Interest paid

-4,342-5,165898—

Subsidies received(In million yen)

2023

Commonstock

Balance on April 1, 2022

54,346

Additional
paid-in
capital

67,970Retainedearnings

60,127

Accumulated other comprehensive income

Treasury
stock

-866

Total
shareholders’equity181,578

ValuationandTranslationtranslation adjustments
adjustment

1,044

16,025

Accumulated
Total
accruedaccumulated
retirement
other
benefits
comprehensive
adjustments
income-797

16,272

Loss related to Anti-Monopoly Act-3,125—

Income taxes paid

-2,601-7,271

Net cash provided by operating activities

8,956

34,219

Increase in time deposits-1,339-2,314

Decrease in time deposits

2,780

8,709

-16,336-19,705

Net cash used in investing activities
Minority
interest

Total net
assetsPurchases of property, plant and equipment

18,574

216,425

Proceeds from sale of property, plant and equipment

4,740

2,210

Purchase of intangible fixed assets-5,534-4,020

Proceeds from sales of investment securities

17,052——-26

Loss on purchase of stock of the consolidated subsidiary
Changes during
the current period

Proceeds from purchase of subsidiaries’ stock resulting in change in scope of consolidation
Decrease/increase (-) in short-term loans receivable, net

Distribution ofretained earnings-1,329-1,329-1,329Profit attributable to ownersof parent

10,367

10,367

10,367Other
Net cash used in investing activities-0

Sales of treasury stock

-0

9

-0

9

39

-66

1,248

2,512

-13,858

2,588

-377

Proceeds from long-term loans

12,17822,541

Repayment of long-term loans-52,330-52,832—

9-1,329-2,122-3,138

Repayment of lease payable
Proceeds from sale and leaseback

Net changes in items
other than shareholders’equity during the period

210

12,054

1,495

13,760-1,808

11,951

—

5,264

Other

-1,614-3,386

Net cash provided by financing activities-41,300-33,258

Effect of exchange rate changes on cash and cash equivalents

97 NTN Report 2023—

15

Increase/decrease (-) in short-term loans, net

Dividend payment

Balance on March 31, 2023

1,200

Net cash provided by financing activities

Purchase of treasury stock

Total changes during the period

SASB Index

Shareholders’ equity-308

NTN Group Information

Net changes in items
other than shareholders’equity during the period—-53

Sustainability Management

Distribution ofretained earnings

2,928

Value Creation Story

Commonstock

Accumulated other comprehensive income

—

—

9,038

9

9,048

210

12,054

1,495

13,760-1,80820,99954,346

67,97069,166-856

190,626

1,255

28,079697

30,032

16,765

237,425

4,042

2,112

Increase/decrease (-) in cash and cash equivalents-25,788-10,785

Cash and cash equivalents at beginning of the year

147,249

121,460

Cash and cash equivalents at end of the year

121,460

110,675

NTN Report 2023

98

NTN Group Information

Global Network (As of March 31, 2023)
About Us

Japan

EuropeCompany namePaid-in capital

Holdings aspercentage (%)

Company name

30 NTN Europe Holdings SAS

EUR 1,000,000

100

Industrial Business Headquarters, Kuwana Works

31 NTN Europe S.A.

EUR 322,639,919

100

Industrial Business Headquarters, Nagano Works

32 NTN TRANSMISSIONS EUROPE

EUR 124,988,315

100

Industrial Business Headquarters, Kongo Works

33 EUROPE CREZANCY

EUR 11,500,000

100

(100)

34 NTN Wälzlager (Europa) G.m.b.H.

EUR 14,500,000

100

(100)

EUR 18,500,000

100

EUR 25,000

100

NTN TRANSMISSIONS

35 36

38

37

Automotive Business Headquarters, Okayama Works
Automotive Business Headquarters Mikumo Works

33

Composite Material Product Division, Engineering Plastics Works

1 NTN SALES JAPAN CORP
12 3
11
8

E

6
13

1
5
7

10

A

B

C

2 14 D100

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

Americas
24

20
21
22 18
23
19 28

(100)

26

25

100

16 NTN BEARING CORP. OF AMERICA

USD 24,700,000

100

(100)

USD 1

100

(100)

USD 128,800,000

100

(100)

19 NTN DRIVESHAFT

USD 119,000,000

100

(100)

20 AMERICAN NTN BEARING
MFG. CORP.

USD 54,300,000

100

(100)

SGD 36,000,000

100

40 NTN BEARING-MALAYSIA SDN.BHD.

MYR 1,000,000

100

(100)

57 50

41 NTN BEARING-THAILAND CO., LTD.

THB 780,000,000

100(99.999)

58

55 56

42 NTN MANUFACTURING

THB 1,311,000,000

100(99.999)

THB 700,000,00075(10.73)44 PT. NTN BEARING INDONESIA

USD 7,300,000

100

(100)

45 NTN BEARING INDIA PRIVATE LTD.

INR 300,000,000

100

(0.1)
(24.96)(THAILAND) CO., LTD.

43 NTPT CO., LTD.
45

41 42
43
40

39
44 59 60

21 NTN-BOWER CORP.

USD 167,000,000

100

(100)

22 NTK PRECISION AXLE CORP.

USD 30,000,000

60

(60)

23 NTA PRECISION AXLE CORP.

USD 40,000,000

62.5(62.5)

INR 4,808,000,000

97.4

47 NTN KOREA CO., LTD.

KRW 500,000,000

100

48 NTN (CHINA) Investment Corporation

USD 388,547,500100

49 NANJING NTN CORP.

USD 180,000,000

100

50 SHANGHAI NTN CORP

USD 166,500,000

95

(95)

51 Guangzhou NTN-Yulon Drivetrain Co., Ltd.

USD 12,500,000

60

(12)

52 Xiangyang NTN-Yulon Drivetrain Co., Ltd.

USD 34,000,000

60

(60)

53 NTN-RAB (CHANGZHOU) CORP.

USD 28,440,000

100

HKD 2,500,000

100

CAD 20,100,000

100

(100)

25 NTN-SUDAMERICANA, S.A.

USD 700,000

100

(100)

55 TUNG PEI INDUSTRIAL CO., LTD.

26 NTN MANUFACTURING DE

MXN 594,205,718

100

(99)

56 TAIWAY LTD.

27 NTN do Brasil Producão de
Semi-Eixos Ltda.

BRL 390,739,432

100(2.72)

28 ASAHI FORGE OF AMERICA CORP.

USD 10,100,000

19.8(19.8)

29 Seohan-NTN Driveshaft

USD 6,000,000

49

USA CORP.

FNTN Automotive Center

One consolidated subsidiary in addition to the Group companies above

NOTES 1. The scope of consolidation consists of NTN Corporation and 60 consolidated subsidiaries (14 domestic and 46 overseas subsidiaries). A total of 10
affiliates (8 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: 1 addition/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 DRIVESHAFT
ANDERSON,INC., AMERICAN NTN BEARING MFG.CORP., NTN-BOWER CORP., NTN do Brasil Produção de Semi-Eixos Ltda., NTN Europe S.A.
(“NTN-EU”), NTN TRANSMISSIONS EUROPE, NTN NEI Manufacturing India Private LTD., NTN (CHINA) INVESTMENT Corporation, NANJING NTN
CORP., and SHANGHAI NTN CORP.

54 NTN CHINA LTD.

Sales

Production

Production and sales

R&D base

Others

(0.97)

46 NTN NEI Manufacturing India
Private LTD.

24 NTN BEARING CORP. OF

MEXICO, S.A.DE C.V.

27

52
51 54

Holdings aspercentage (%)

Paid-in capital

39 NTN BEARING-SINGAPORE (PTE) LTD.

47

49
53

USD 675,475,028

CANADA LTD.

99 NTN Report 2023

Asia and Others
48 H

15 NTN USA CORP.

ANDERSON, INC.

29

(100)

NTN-SNR R&D Center

Company namePaid-in capital

18 NTN DRIVESHAFT, INC.

100
100

Six consolidated subsidiaries in addition to the Group companies above

Holdings aspercentage (%)

17 NBCA Asset Finance LLC.

EUR 50,000
GBP 2,600,000(100)(86.67)

TWD 1,257,232,620

27.35

TWD 160,000,000

36.25

57 NTN-DONGPAI (Shanghai) Bearing Sales Co, Ltd.

USD 1,460,000

25

(25)

58 Shanghai Tung Pei Enterprise Co., Ltd.

USD 36,000,000

17.86(17.86)

USD 55,415,050

28.8(0.002)59 PT. TPI MANUFACTURING I NDONESIA
60 PT. Astra NTN Driveshaft Indonesia

IDR 120,000,000,000

SASB Index

F

38 NTN BEARINGS (UK) LTD.
G

46

15 16 1737 NTN Antriebstechnik G.m.b.H.
30 31 GNTN Next Generation Research Alliance Laboratory

Company name

NTN Mettmann

36 (Deutschland) G.m.b.H.

NTN Group Information

JPY 480,000,000

32

Sustainability Management

9

NTN Kugellagerfabrik

35 (Deutschland) G.m.b.H.

34

Value Creation Story

NTN Corporation (parent company)

Automotive Business Headquarters, Iwata Works

4

Holdings aspercentage (%)

Paid-in capital49

H NTN China Technical Center

One consolidated subsidiary in addition to the Group companies above

3. Figures in curved brackets under “Holding as a percentage” indicate the percentage of indirectly 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 15,728 million yen as of the end of
March, 2023.
6. Of the above subsidiaries, NTN BEARING CORP.OF AMERICA and NTN-EU have sales (excluding internal sales between consolidated companies)
accounting for more than 10% of consolidated sales. Figures for NTN-EU are consolidated figures encompassing eight NTN-EU subsidiaries.
7. Of the above subsidiaries, to are NTN Corporation business units, 1 to 27 and 30 to 54 (in symbols) are consolidated subsidiaries, and 28, 29,
and 55 to 60(in symbols) are affiliates subject to the equity method.
NTN Report 2023

100

NTN Group Information

Third-Party Opinion

Investor Information (March 31, 2023)

NTN Group Information

About UsNTN Report 2023 third-party opinion
Professor, School of Business Administration,
Kwansei Gakuin University

Chika Saka

Stock Exchange Listings
First Section of Tokyo Stock Exchange(#6472)

Common Stock
Authorized: 1,800,000,000
Issued and Outstanding: 532,463,527

Independent Audit Firm
Ernst & Young ShinNihon LLC

Number of Shareholders
60,346
Breakdown of Shareholders

Breakdown of Number of Shares Held

Financial instruments firms

2.99%

6.36%

3.63%

Sustainability Disclosure Opens the Door to Mediumand Long-Term Enhancement of Corporate Value

15.72%The sustainability-related financial information covered by
the ISSB’s Sustainability Standards can greatly assist inconnecting financial and sustainability information to achieve
true integrated thinking and integrated reporting. I believe that if
the “restructuring of the business and product portfolios” (P.30),
which is newly mentioned in “NTN Report 2023,” risks andopportunities, and measures to address them (P.56) are related
to the financial information, the report will be more persuasive
to global investors.
NTN’s steady response to sustainability, which can be readfrom the NTN’s report, will enable the company to align thevector of the “business structure transformation” mentioned in
the top message with the vector of the mission derived from
Purpose, which is “to reduce the environmental impact ofbusiness as much as possible while contributing to solving the
problem through the provision of products and services”. This
report may convince that each and every member in the various
departments of the organization is on the way to mid- to longterm value creation in the same direction. I expect it will be agreat help in achieving this goal.

11.72%

Foreign owners

Financial institutions

39.63%

532,463,000

Between 10,000
and 49,999

Less than 1,000

1.41%

8.46%

532,463,000

Between 50,000
and 99,999

2.79%

sharesshares

Between 100,000
and 499,999

1,000,000 or more

65.34%

7.38%

Individuals

29.94%

Between 500,000
and 999,999

4.77%
Recent Stock Price Range

Close
Open

Stock price (yen)

High
Low

Monthly Volume Traded

Open
Close

Nikkei Stock
Average

Nikkei Stock Average (yen)30,000600

20,000(Millions of shares)

200

SASB Index

900

150

100
300

10,00050

0

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. Of the 13 items of materiality that we have identified as priority
issues to be addressed, we have received high praise for our activities to set the concretemeasures and establish the new organization to achieve the goals for carbon neutrality. We havebeen confident in our efforts to date.
From the viewpoint of increasing the persuasive power of our efforts to investors, as you haveindicated, we will more specifically promote the measures for improving our activities to “climatechange”, strengthening the connections between sustainability information and financial
statement information, and promoting information disclosure, including efforts to develop thenext generation of human resources who will lead the transformation.
We will listen sincerely to the valuable opinions we have received this time and strive toimprove corporate value over the medium to long term.

Between 1,000
to 4,999

Between 5,000 and 9,999

Other corporations

Response to the third-party opinion

Stock Price Range in the Fiscal Year
ended March 31, 2023
High: 378 yen
Low: 195 yen

NTN Group Information

In June 2023, the International Sustainability Standards Board(ISSB) issued IFRS S1 and IFRS S2, the first sustainability
standards. In light of this, the NTN Report 2023 includes thefollowing three notable points.
First, NTN disclosure is generally in line with the general
requirements of S1: such as the same scope as theconsolidated financial statements is covered, information onsustainability-related risks and opportunities of materiality iscovered (P.21, 22), and comparative information is included.
Now, if the connections between sustainability informationand financial statement information could be reflected in value
creation stories, etc., it would be even more useful.
Second, a list of industry-specific accounting indicators
based on the SASB Standard disclosure criteria, which arerequired to be considered in S1, has been continuously
disclosed since “NTN Report 2021.” The fact that NTN has
already begun to recognize and disclose the topics in boththe “RESOURCE TRANSFORMATION SECTOR- Industrial
Machinery & Goods” and the “TRANSPORTATION SECTORAuto Parts” will certainly help NTN to reduce future financial
risks and seize opportunities.
Third, the S2 theme of “climate change” was positioned as
the first of the 13 materiality items as a contribution to solvingsocial issues. The Carbon Neutrality Strategy Promotion*Moved to the new address on the back cover inAugust 2023.

General Meeting of Shareholders
The General Meeting of Shareholders
was held on June 27, 2023 in Osaka

Sustainability Management

Noteworthy points in the NTN Report 2023

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 serving as a full-time lecturer and assistant(associate) professor at the School of Business
Administration, Kwansei Gakuin University, she has
been a professor since 2008. Doctor of Commercial
Science. Currently, she is a member of the
Sustainability Standards Board of Japan (SSBJ), a
member of the Business Accounting Council of the
Financial Services Agency, an affiliate member of the
Science Council of Japan, a member of theEnvironmental Council of Osaka Prefecture, amember of the Environmental Council of Osaka City,and the Executive Director of the Accounting andEconomic Association of Japan. She received theJapan Accounting Association Award. Her
publications include “Environmental Accounting”(Tokyo Keizai Publishing Co., Ltd.), etc. in the book.

Department of the Group Management Headquarters has been
established and governance has been strengthened to achieve
this goal. The addition of the “Carbon neutrality realization
image” and priority measures (P.53) for Scope 1 and 2 toward2035 strengthen the roadmap for a long-term response, whichis expected to lead to an increase in the level of future efforts.
Note that biodiversity, human capital, and human rights
are among the new project for the future proposed by the
IFRS Foundation in May 2023. These topics are also alreadydisclosed in the “NTN Report 2023.” In particular, the disclosureof human capital now specifies the “five pillars of the humanresources strategy” (P.62). The efforts to develop the next
generation of human resources who will lead the transformation
are expected to contribute to the realization of the varioustransformations described in the top message and the value
creation story.

Head Office
NTN Corporation
3-17, 1-chome, Kyomachibori, Nishi-ku,
Osaka 550-0003, Japan

4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
2021

2022

Status of inclusion in ESG indexes
Morningstar Japan ex-REIT Gender Diversity
Tilt Index

0

2023

0

4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
2021

2022

2023

* Inclusion status as of the end of July 2023.

S&P/JPX Carbon
Efficient Index

Inquiries
Corporate Strategy Department
E - m a i l : irmanager@ntn.co.jp

Executive Officer
ESG Promotion Department

Shumpei
Kinoshita

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
Report and financial results.
https://www.ntn.global.com

101 NTN Report 2023

NTN Report 2023

102

SASB Index

About Us

Make the world “NAMERAKA”

Information is disclosed in accordance with the requirements of the SASB classification of “RESOURCE
TRANSFORMATION SECTOR-Industrial Machinery & Goods” and “TRANSPORTATION SECTOR-Auto Parts.”
NAMERAKA
is a Japanese
wordtomeaningsmoothandharmonious.
Although there
are some indicatorsthat do not apply
us or that wehave notbeen
able to disclose, we will disclose as
much information as we can and continue to work to enhance our disclosure on these SASB topics.

Bearing technology to make every rotating part of a machine smooth.

TRANSPORTATION SECTOR-Auto Parts

Sustainability Disclosure Topics and Metrics

Sustainability Disclosure Topics and Metrics

shafts will rotate more smoothly and with infinitely less energy loss.

Topic

MetricUnit of Measure

Fiscal year ended
March 31, 2023

SASB CodeFiscal year ended
March 31, 2023

(1) Total energy consumed

TJ*

P.58 Resource Recycling
and Pollution Prevention
Material Balance(2) Percentage grid electricity

GWh*

P.58 Resource Recycling
and Pollution Prevention
Material Balance

MetricTJ*

and Pollution Prevention
Material Balance

Its technology, which has been refined in bearings,
Energy Management

GWh*

P.58 Resource Recycling
and Pollution Prevention
Material Balance(3) Percentage renewable

GWh*

P.58 Resource Recycling
and Pollution Prevention
Material Balance(3) Percentage renewable

GWh*

P.58 Resource Recycling
and Pollution Prevention
Material Balance(1) Total recordable incident rate (TRIR)

Number*https://www.ntnglobal.
com/en/csr/nonfinance.
html(1) Total amount of waste from manufacturing

ton*

P.58 Resource Recycling
and Pollution Prevention
Material Balance(2) Fatality rate

Rate

https://www.ntnglobal.
com/en/csr/nonfinance.
html(2) Percentage hazardous

ton*

P.58 Resource Recycling
and Pollution Prevention
Material Balance(3) Near miss frequency rate (NMFR)

Rate

Not disclosed(3) Percentage recycled%(1) Sales-weighted fleet fuel efficiency formedium- and heavy-duty vehicles

Gallons per
1,000 ton-miles

P.58 Resource Recycling
and Pollution Prevention
Material Balance

N/A

RT-IG-410a.1(2) Sales-weighted fuel efficiency for non-road
equipment

Number of recalls issued

NumberNot disclosed

Gallons per hour

N/A

RT-IG-410a.2

Total units recalled

NumberNot disclosed

Revenue from products designed to increase fuelefficiency and/or reduce emissions

Reportingcurrency

will smoothly change the future of electric vehicles, robots,and even the natural energy society.

Employee Health & Safety(3) Sales-weighted fuel efficiency for stationary
generators
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
enginesMaterials Sourcing

Remanufacturing Design & Services

Description of the management of risks associatedwith the use of critical materials

Revenue from remanufactured products andremanufacturing services

Watts per gallon

N/A

RT-IG-320a.1

Energy Management

Waste Management

Product Safety

N/A

RT-IG-410a.3

Qualitative
information*

P.50-51 Contribute to
Carbon-Free Society

TR-AP-410a.1

Discussion andAnalysisP.61 Sustainable supply
chain/Procurement activities
with an emphasis onenvironment and society
P.67-68 Prosperous Human
Development/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

RT-IG-410a.4

Materials Sourcing

Discussion andAnalysisTR-AP-150a.1

TR-AP-250a.1

Design for Fuel Efficiency
Grams perkilowatt-hour

TR-AP-130a.1

P.61 Sustainable Supply
Chain/Procurement
activities with an emphasison environment and society
P.67-68 Prosperous
Human Development/
Respect for human rights

RT-IG-440a.1

P.50-51 Contribute to
Carbon-Free Society/
Reduce energy loss

RT-IG-440b.1

Description of the management of risks associatedwith the use of critical materials

SASB Index

Fuel Economy & Emissions in
Use-phase

RT-IG-130a.1

NTN Group Information(2) Percentage grid electricity

SASB Code

Sustainability Management

Unit of Measure

Topic

So bearing is a technology for energy conservation.
P.58 Resource Recycling(1) Total energy consumed

Value Creation StoryRESOURCE TRANSFORMATION
Machinery & Goods
With moreSECTOR-Industrial
precise bearing techniques,

Materials Efficiency

Competitive Behavior

Total amount of monetary losses as a result oflegal proceedings associated with anti-competitive
behavior regulations

Reportingcurrency

MetricUnit of Measure

P.95-98 Consolidated
Financial Statements

TR-AP-520a.1

Activity Metrics
Topic

MetricNumber of units produced by product category

Fiscal year ended
March 31, 2023

SASB Code

NumberN/A

RT-IG-000.A

Number

P.17-18 Value Creation
Process
P.93-94 Consolidated
Financial Indicators (Past
11 Years)

Activity Metric
Number of employees

Activity Metrics

Unit of Measure

Topic

RT-IG-000.B

Activity Metric

Number of parts produced

Number

Weights of parts produced

M/T

Area of manufacturing plants

number of bases*

Fiscal year ended
March 31, 2023

SASB CodeP.39 Reorganization of
production

TR-AP-000.A

Not disclosed
P.17-18 Value Creation
Process

TR-AP-000.B
TR-AP-000.C*Information is disclosed in units different from those required by SASB.

2023
2023
01
103
NTN NTN
ReportReportNTN Report 2023

104

Daibiru-Honkan Bldg., 3-6-32,
Nakanoshima, Kita-Ku, Osaka 530-0005, Japan
https://www.ntnglobal.com/en/
CAT.No.1003/E 23.10.02 TK/TK