May 20, 2019
NTN Corporation

Contents
Ⅰ. Outline

Ⅱ. Financial Results for FY2018 andForecast for FY2019
Ⅲ. Initiatives of “DRIVE NTN100”• This presentation and comments made in this conference or during the following Q&A session include forward-looking
statements about future performance and future business strategies, all of which are based on decisions of the
management of the Company currently available.
• These statements represent the best judgment of the management of the Company based on the information currently
available. However, there can be no assurance that future results will meet any expectation, estimate or projection
conveyed by these statements or comments. Actual results may differ materially from Management projections dependingon various factors such as changes in product demand, exchange rates and interest rates, and contingent liabilities.

2019/5/20

2Outline: Trends in consolidated financial results
FY2018: Despite strong demand for industrial machinery and aftermarkets, sales and profits declined due to the impact ofadditional tariffs and decreased in automotive demand and soaring steel materials.
FY2019: Sales and profits will be declined due to a deterioration in the demand environment and upfront investments in
IT core systems and Wakayama Works. However, the company is working to improve profitability by reducing
costs and other measures, and plans to pay a dividend of annual ¥15, the same amount as in FY2018.
Operating margin（JPY bn）

FY2018 results Figures in brackets are FY2017 results
Net Sales: ¥733.6bn(¥744.4bn)
YoY-1.5%, Volume -0.9%

Operating Income: ¥26.9bn (¥39.6bn)
YoY-32.0%, Volume -29.5%

Extraordinary Losses: -¥19.3bn (-¥4.3bn)
Net Income: -¥7.0bn (¥20.4bn)
Year-end Dividend: year-end ¥7.5 *Annual ¥15.0

FY2019 forecast
Net Sales: ¥730.0bn YoY-0.5%, Volume +0.7%
Operating Income: ¥24.0bn YoY-10.9%, Volume -5.9%
Net Income: ¥9.5bn
Factored in ¥4.5bn in extraordinary losses

Annual Dividend: Interim ¥7.5, year-end ¥7.5
*Annual ¥15.0
2019/5/20

Note: “Net income” shows the “net income attributable to shareholder (parent company)”.

3Outline: Asset Impairment and Dividends
FY2018 results
Net Sales:¥733.6bn
Operating Income:¥26.9bn
Ordinary Income:¥22.2bn
Extraordinary Losses:-¥19.3bn
Pretax Income:¥2.9bnNet Income:-¥7.0bn①An impairment loss of ¥17.0bn. Total extraordinary losses of¥19.3bn were recorded.
An impairment loss of ¥17.0bn on the assets of domestic
manufacturing facilities and domestic manufacturing subsidiaries
fixed assets were reduced in view of deteriorating demand and low
growth in Japan.

②Increased tax expense because the company could not record
tax effects mainly for impairment losses
Net income was negative (-¥7.0bn) after recording tax expensesof ¥9.1bn.

Despite severe financial results, operating income andordinary income were profitable, and the Company
maintained the amount of dividends based on a policy ofstable dividends from a medium-term perspective.

Interim ¥7.5, year-end ¥7.5 (annual ¥15)
Focus on improving earnings and generating free cash flow.
2019/5/20

4

Contents
Ⅰ. Outline

Ⅱ. Financial Results for FY2018 andForecast for FY2019
Ⅲ. Initiatives of “DRIVE NTN100”

2019/5/20

5★Financial Results for FY2018 Key Factors
１．Consolidated Statements of Operation
２．Net Sales by Region
３．Net Sales and Operating Income by Business Sector
４．Results by Business Sector （Quarterly Trend）
５．Analysis of Operating Income
６．Net Sales and Operating Income by Company Location(1)Japan, Americas(2)Europe, Asia & Others
７．Inventories
８．Capital Expenditure and Depreciation
９．Interest-Bearing Debt
１０．Cash Flows
2019/5/20

6

Financial Results for FY2018 : Key Factors
FY2018 Results◇ Net sales: ¥733.6bn, a -¥10.8bn decrease year-on-year(Excl. forex, decrease -¥6.8bn)◇ Operating income: ¥26.9bn, a -¥12.7bn decrease year-on-year(Excl. forex, decrease -¥11.7bn)◇ Extraordinary income/loss: -¥19.3bn◇ Net income: ¥-7.0bn, -¥27.3bn decrease year-on-year◇ Planned fiscal year-end dividend of ¥7.5 (Annual: ¥15)

FY2019 Forecast◇ Net sales: ¥730.0bn, a -¥3.6bn decrease year-on-year◇ Operating income: ¥24.0bn, a -¥2.9bn decrease year-on-year◇ Extraordinary income/loss: -¥4.5bn◇ Net income: ¥9.5bn, +¥16.5bn increase year-on-year◇ Dividends: Plan for annual dividend of ¥15 yen (Annual)◇ Exchange rates: 1US$ = ¥110, 1EURO = ¥125
2019/5/20

71. Consolidated Statements of Operation(billion yen)

Year on year

FY2017FY2018FY2019Results

Results

Forecast

①

②

③

Total

Volume

Forex

Total

VolumeForex

Net sales

744.4

733.6

730.0

-10.8

-6.8

-4.0

-3.6

5.5

-9.1

Operating income

39.6

26.9

24.0

-12.7

-11.7

-1.0

-2.9

-1.6

-1.3

Operating margin(5.3%)(3.7%)(3.3%)(-1.6%)

Ordinary income

31.3

22.2

18.0

-9.0

-8.1

-0.9

-4.2

-2.9

-1.3

Extraordinary
income/loss

-4.3

-19.3

-4.5

-14.9

-15.0

0.0

14.8

14.8

0.0

Net income attributable
to shareholders(parent company)

20.4

-7.0

9.5

-27.3

-26.7

-0.6

16.5

17.4

-0.9

US＄

110.8

110.9

110.0

0.0

0.0

-0.9

-0.9

EURO

129.6

128.4

125.0

-1.2

-1.2

-3.4

-3.4

Exchangerate

2019/5/20

FY2019③-②

FY2018②-①(-0.4%)

8

2. Net Sales by Region(billion yen)
FY2017FY2018Year on year

FY2019FY2018②-①

FY2019③-②

Results①

Results②

Forecast③

Total

Volume

Forex

Total

Volume

Forex

Japan

204.3

207.2

209.5

2.9

2.9

-

2.3

2.3

-

Americas

201.7

201.5

194.0

-0.2

0.8

-1.0

-7.5

-5.0

-2.4

Europe

175.6

167.8

169.5

-7.8

-6.2

-1.6

1.7

5.3

-3.7

Asia andothers

162.8

157.0

157.0

-5.7

-4.3

-1.4

-0.0

2.9

-2.9

Total

744.4

733.6

730.0

-10.8

-6.8

-4.0

-3.6

5.5

-9.1

2019/5/20

93. Net Sales and Operating Income by Business Sector＜Net Sales by Business Sector＞(billion yen)

FY2017FY2018FY2019Year on year

Results

Results

Forecast①②③

Aftermarket

116.7

118.8

121.0

2.2

2.7

-0.6

2.2

3.7

-1.6

Industrial
machinery

119.1

123.4

121.0

4.3

4.8

-0.5

-2.4

-1.0

-1.4

Automotive

508.6

491.3

488.0

-17.3

-14.3

-3.0

-3.3

2.7

-6.0

Total

744.4

733.6

730.0

-10.8

-6.8

-4.0

-3.6

5.5

-9.1

FY2018②-①
Total

VolumeFY2019
③-②
Forex

Total

Volume＜Operating Income by Business Sector＞
FY2017FY2018FY2019Results

Results

Forecast①②③(billion yen)

Year on year
FY2018②-①
Total

VolumeFY2019
③-②
Forex

Total

VolumeAftermarket

15.0

15.2

16.0

0.2

0.8

Industrial
machinery

2.8

3.1

4.0

0.3

0.9

Automotive

21.8

8.7

4.0

-13.1

-4.7

Total

39.6

26.9

24.0

-12.7

-2.9

2019/5/20

Forex

Forex

10

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

Automotive

Industrial machineryOperating Income/ Operating Margin

Net Sales
200.0
180.0
160.0
140.0

Aftermarket

190.5195.9189.2 ②-①
181.0 181.9 181.5
179.0178.9
31.6
30.5
31 28.9
0
0
0
28.2
29.6
30.6
27.4 189
28.9 000
0 29.7
0 32.000
31.2
28.0 120029.3 030.8 30.5 031.0

120.0

20.0

13.7%

10.7% 11.7%

3.5%

4.0%

2.1%

0.9%

18.0

0

016.0
0
014.0

15.2% 13.4%

4.7%
04.9% 002.4% 0 3.9%
0 12.5

100.0

10.0

80.0

8.6

8.2

8.0

123.7 120.7

131.9 132.3

127.5 119.6 123.3 120.9

6.0

3.7

2.0

20.0

FY20171Q

2019/5/20

0.0

FY2018
2Q

3Q

4Q

1Q

2Q

3Q

4Q

4.3

4.8
3.4

3.1

0.7

1.3

1.7%

2.1%

2.6%

1.0%

1.0%

1.2%

4.9

6.2

6.4

FY2017
1Q

9.9
4.1
1.1

0.3

0.6

4.0

40.0

0.0

0
3.6%
0
0

12.3%

12.0

10.3

60.0

3.7%

13.1%

12.3%

4.7

6.2

5.5

5.4

3.8

3.5

3.9

0.5 0.70.8
1.2 1.3 1.5

FY2018
2Q

3Q

4Q

1Q

2Q

3Q

4Q

11

5-1. Analysis of Operating Income （FY2018 ）＊All figures in billion yen.

Positive factors（1.5）
Increase inpersonal
costs
Scale effects
1.5
4.6

FY2017Full year
Operatingincome-12.7

Negative factors（14.1）

Increase invariable costs
Sales price2.5
levels
2.4

Exchange rates
1.0

Expenses etc.
(Depreciation 1.6,
Other 2.0)

3.6

39.6

FY2017 Full year < Results >vs
FY2018 Full year < Results >2019/5/20

FY2018Full year
Operatingincome26.9

12

5-2. Analysis of Operating Income （FY2019）＊All figures in billion yen

Negative factors（7.2）

Positive factors（4.3）
Decrease in Scale effects
variable costs
1.3
3.0

Sales pricelevels2.5

Increase in
Exchangepersonal costs
Expenses etc.
rates
1.2
1.3

-2.9

(Depreciation 1.0
Other 1.1)
2.2

FY2018Full year
OperatingincomeFY2019Full year
Operatingincome26.9

24.0
FY2018 Full year < Results >vs
FY2019 Full year < Forecast >2019/5/20

13

6. Net Sales and Operating Income by Company Location＊All figures in billion yen《 Japan 》《 Americas 》
Net Sales

Net Sales
450.0

250.0

320.8

347.3

353.1

356.0

300.0

200.0

191.4

198.5

198.3

FY2017FY2018FY2019

2.2%

0.5%

190.0

150.0
100.0

150.0

50.0
0.0

FY2016FY2017FY2018FY20190.0

FY2016

Operating Income

Operating Income

40.0

20.0

30.0

1.4%

2.3%

0.2%

0.8%

10.0

20.0
10.0

15.0

4.5

8.0

FY2016

2019/5/20

FY2017

3.6%

8.3

7.1
4.3

5.0

0.7

0.0

4.3%

FY20183.0
FY20191.0
0.0

FY2016FY2017FY2018FY201914

6. Net Sales and Operating Income by Company Location＊All figures in billion yen《 Europe 》
Net Sales《 Asia and others 》
Net Sales《 欧州 》

250.0

200.0

250.0

169.0

192.5

184.0

185.0

200.0

150.0

150.0

100.0

100.0

50.0

50.0

0.0

《 アジア他 》

FY2016FY2017FY2018FY20190.0

142.3

FY2016

162.0

155.6

152.0

FY2017FY2018FY2019Operating Income

Operating Income

20.0

30.0

15.0

2.0%

1.5%

0.5%

1.9%

10.0
5.0
0.0

2019/5/20

25.0

20.0
15.0

3.3
FY20162.8
FY20173.5
1.0
FY2018FY2019

10.2%

12.1%

11.1%

19.6

17.2

14.5

8.6%

13.0

10.0
5.0
0.0

FY2016FY2017FY2018FY201915

7. Inventories
Overseas

4.0

Inventory turnover ratio

4.1
3.8

4.0

4.0

Inventories(billion yen)

250.0
200.0

171.5

179.7

194.5

182.0

3.0

150.0

100.0

118.6

123.5

132.9

124.7

2.0

1.0
50.0

52.9

56.2

61.6

57.3

FY2016FY2017FY2018FY20190.0

Inventories(Overseas)(Japan)Inventory turnover ratio(times)2019/5/20

Inventory turnover ratio(times)

Japan

300.0

0.0

FY2016
Results

FY2017
Results

FY2018Results(billion yen)
FY2019Forecast

171.5(118.6)(52.9)
4.0

179.7(123.5)(56.2)
4.1

194.5(132.9)(61.6)
3.8

182.0(124.7)(57.3)
4.0
16

8. Capital Expenditure and Depreciation（billion yen）

Investment（Japan）

Investment（Overseas）

Depreciation（Overseas）

Depreciation（Japan）

60.0

50.0
45.2
35.4

36.6

37.5

22.0

24.0

39.5

38.9
22.8
27.5

30.0
23.2

0.0

37.6

12.2

23.5

13.2

FY2016 Results

15.6

24.0

23.6

17.7

13.5

FY2017 Results

27.2
15.3

15.5

FY2018 Results

FY2019 Forecast(billion yen)

Capital expenditure(Overseas)(Japan)FY2016
Results
35.4(23.2)(12.2)FY2017①Results
37.6(22.0)(15.6)FY2018②Results※ 45.2(27.5)(17.7)FY2019③Forecast
50.0(22.8)(27.2)

②-①
7.6
(5.4)
(2.2)

③-②
4.8
(-4.7)
(9.5)

②-①
1.4
(-0.4)
(1.8)

③-②
0.6
(0.4)
(0.2)

※ In addition, capital expenditure of ¥9.6 billion of intangible fixed assets

Depreciation(Overseas)(Japan)

2019/5/20

FY2016
Results
36.6(23.5)(13.2)FY2017①Results
37.5(24.0)(13.5)FY2018②Results
38.9(23.6)(15.3)FY2019③Forecast
39.5(24.0)(15.5)

17

9. Interest-Bearing Debt
Japan

Overseas

Net D/E ratio

600.0

1.1
1.0

0.9

400.0
300.0

1.2

320.2

320.8

91.5

87.8

350.3

360.0

99.1

102.0
0.5

200.0
100.0

228.6

233.0

251.2

258.0

FY2016FY2017FY2018FY2019FY2016FY2017FY2018FY2019Results

Results

Results

Forecast

320.2(91.5)(228.6)
240.9

320.8
(87.8)(233.0)
234.7

350.3
(99.1)(251.2)
266.9

360.0
(102.0)(258.0)276.0

0.0Interest-bearing debt

(Overseas)(Japan)Net Interest-bearing debt

2019/5/20

Net D/E ratio

500.0(billion yen)Interst-bearing dept

1.2

0.0

18

10. Cash FlowsFY2016
Results(billion yen)

FY2017①Results

FY2018②Results

FY2019③Forecast

③-②

②-①

Ⅰ．Cash flow fromoperating activities

43.0

61.8

43.2

60.0

-18.6

16.8

Ⅱ．Cash flow frominvesting activities

-37.7

-48.4

-65.6

-60.0

-17.3

5.6

Ⅰ+Ⅱ．Net cash flow

5.4

13.4

-22.4

0.0

-35.8

22.4

Ⅲ．Cash flow fromfinancing activities

-10.8

-7.5

20.7

1.0

28.3

-19.7

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

0.6

0.9

-1.0

-0.5

-1.9

0.5

Ⅴ．Net increase in cash andcash equivalents

-4.8

6.8

-2.6

0.5

-9.4

3.1

100.0

CF from operationg activities

80.0

60.0
40.0

CF from investing activities

60.0

61.8

43.0

20.0

Net CF

43.2
13.4

5.4

0.0

0.0
-20.0

-22.4

-40.0

-60.0

-37.7

-48.4

-80.0
FY2016 Results

2019/5/20

FY2017 Results

-65.6

-60.0

FY2018 Results

FY2019 Forecast

19

Ⅰ. Outline

Ⅱ. Financial Results for FY2018 andForecast for FY2019
Ⅲ. Initiatives of “DRIVE NTN100”

2019/5/20

20

Outline of Medium-term Management Plan “DRIVE NTN100”
NTN in 10 years

Initiatives for Realizing Our Vision“DRIVE NTN100” (April, 2018-March, 2021)
Accelerating Initiatives in the Next 3 Years
towards target 10 years later

Points
1. Develop in new business areas and strengthen coretechnology and products for sustainable growth
2. Focus on management bases supporting businessin 3 years①Variable cost reformation②Structural Reforms for Man-hours and Resource
Smart Manufacturing（utilize IoT, AI and Robot）
Robotization in backoffice Dept.(introduce RPA)

③Enhance SCM and Concentrated Investment
Utilize new core IT system, efficient stock management andshortening LT, Intensively invest in high-value-added products

2019/5/20
For more details of “DRIVE NTN100”, please refer to:21
https://www.ntnglobal.com/en/investors/pdf/findata/mtermplan2018.pdf

“DRIVE NTN100” Factors of Impairment
Impairment loss of ¥17.0bn was recorded in the first year

Structural
background

ExternalfactorConscious
investment(DRIVE)

Investment efficiency in domestic production declined• Domestic manufacturing sites anddomestic manufacturing subsidiaries
Increased expenses for H.Q to support global businesses• The head office supports overseas business activities.
(Overseas sales ratio: over 70%)
• The domestic market is mature.
Sharp increase in expenses• Surge in demand• Soared prices of steel and secondary materials
The company made investments aimed at futurebusiness growth and asset efficiency• New Wakayama Works• Renovated IT core systems, etc.

futureMaturation of theJapanese market
makes structurally
it difficult togenerate profits

Assets of domestic production facilities will be impaired
Structural reforms will be implemented in the domestic manufacturing sector.
2019/5/20

22

“DRIVE NTN100”
Structural reforms implemented in the domestic manufacturing Sector
Structural reforms in the domestic manufacturing sector
1. Break away from self-suffiiency• Past: The company acquired technology superiority and scale effects by in-house manufacturing(vertical integration) of the pre-process• Current: Scale effect declined due to the increase in costs and the decline in sales prices.
• Future: Shift to overseas production and outsourcing domestic production (OEM supply)
Japan:
Concentrate domestic production on high value-added products, and invest cautiously
in Japan. General-purpose products and pre-processes will be outsourced
Overseas: Concentrate investments on growth areas. Utilize the alliance (ASEAN, India, etc.)
Consider the best solution for pre-process of local production; in-house or OEM byregion2. Variable cost reformation• Select suppliers and centralized purchasing• Establishment of an OEM supply network overseas
accompanying with outsourcing of domestic manufacturing

3.Restructure of businesses• Accelerate restructuring of domestic production of radial
bearings (New Wakayama Works, etc.)• Begin restructuring of domestic production of other products

2019/5/20

DRIVE NTN100
Build a strong domestic
base to support global
business

23

“DRIVE NTN100” Focus Points on in the 2nd year
Continue measures to strengthen the management bases to support medium-to
long-term growth, and focus on improving earnings and generating FCF in the
2nd yearStrengthen management bases
Ongoing measures for "DRIVE NTN100“① Variable cost reformation• Build a global procurement network to reduce procurement costs (Organizational change,
specialization of operations, strengthening of overseas procurement)② Structural reform of man-hours and resources• Reduce costs and LT by optimization in smart factory• Improve operational efficiency of back-office departments (use of RPA and CAE)

③ Strengthen supply chain management (SCM) and concentrate investment• Improve operational efficiency and asset efficiency through the renewal of IT core systems• Concentrate investments on high value-added products

Create amanagementbase to support
medium- andlong-term
sustainablegrowthKey Points
・ Reduce inventories
・ Restrain capital investment-Capital investment will be restrained(from FY2020 onwards, investment < depreciation cost)-Reduce investment (tangible fixed assets) from ¥150.0 billion
to ¥130.0 billion over the three-year period

・ Focus on earnings (price and production)
2019/5/20

Focus onprofitability
improvement andFCF creation24

Aftermarket Business of “DRIVE NTN100”
Result ,Issues in First Year and Efforts
Sales: Sales increased compared to initial forecasts due to measures to ensure supply under tight supply-demandsituation, and strengthening sales activities and technical services.(+2.0%）
Profit: Despite the impact of rising raw material prices and manufacturing costs, profits were largely in line with initial
forecasts due to improved selling prices and other factors.

「DRIVE NTN100」

First year(FY2018）results
Sales：YOY+1.8％, CAGR +4.8%(9 years)
Profit：YOY+1.2％, Operating margin 12.8%

Check & Repair business

Net Sales and Operating Margin of Aftermarket Business(JPY bn)

MRO

Sales and profit
almost achieved the plan in May

CAGR+4.8%(Volume, 9Yrs)

Aftermarket
bearing

Issues from the First Year
-Long Delivery times due to tight demand, and there was a
shortage of inventory for immediate delivery-Loss of sales opportunities due to a shortage of supply

FY2008

Ensure the ability to supply
Steadily capturing sales
2. Promote further price increases
1. Ensure the supply of aftermarket products
opportunities
Implement supply measures by expanding the use 3. Continue efforts to enhance the brands
Expanding product lineup, enhancing services, andof overseas products
strengthening organizational and organizational
Prepare inventories for quick delivery systems forstructuregeneral-purpose products

Efforts to Strengthen the Second Year (FY2019)2019/5/20

Launch the product made in Italy inglobal market

25

Industrial Machinery Business of “DRIVE NTN100”
Result ,Issues in First Year and Efforts
Sales: Increased compared to initial forecasts due to strong demand for construction machinery, wind turbine,
agricultural machinery and machine tools, etc. (+2.6%)
Profit: Decreased for initial forecast due to higher steel prices and secondary materials.

「DRIVE NTN100」

First year(FY2018) results
Sales: YOY+3.6％, CAGR＋5.1%(9 years)
Profit: YOY+11.3％. Operating margin 2.5%
Net Sales and Operating Margin of Industry machinery Business

Develop in
new areas(JPY bn)

Develop coretechnology and highperformance product

CAGR+5.1%(Volume , 9Yrs)

FY2008

Sales increased however
operating income decreased forthe plan in May

Issues from the First Year
-Establish a production system to respond to customer demand
fluctuations-Increase costs such as personnel costs, general andadministrative expenses, steel materials and other expenses

Efforts to Strengthen the Second Year (FY2019)
3. Focus on areas with medium and long-term growth
1. Strengthen production responses topotential (robots, wind turbine, rolling stocks, aircraft)customer's demand fluctuations
2. Improve internal and external productivity, 4. Win new projects with profit potential
5. New areas (Service, Solution Business, Robotincluding suppliers
Related Business)

2019/5/20

Focus on growth
areas
Capture profitableprojects

26

“DRIVE NTN100” Industrial Machinery Business
Progress of Strengthen Core Technology & Products/Develop Business in New Areas
Ongoing Initiatives for "DRIVE NTN100"
1. Develop Core Technology and Highperformance Product2. New Business Area : Robot Related &Service, Solution Business1．Develop Core Technology and Highperformance ProductDevelop unique technology and products

Target：become a company
that customers rely on most
Response to changes in environment
・Utilization of Iot and AI in industry
・Demand increased in robot related
business
・Prevention by monitoring

2-b．New business area：Service, Solution
Business
Business of monitoring service

High rotation and rigidity by unique
air-cooling technology(industry’s
first)
Improve dmn value from 140 mil. to
160 mil. for high rotation limit ofgrease lubricated bearing. Rigidity
improved 10%

CMS for wind turbine

Number of installation(accumulated)

Machine Tool Spindle Bearing with Air
Cooling Spacer for Grease Lubrication

2-a．New business area：Robot-related Business
Develop automation system using Wrist Joint Module
Use CVJ technology, operating angle 90°
Labor saving and quality improvement inproduction line when applied inappearance inspection
TM
i-WRIST→Strengthening collaboration with SIer in
Example of Appearance
the future
Inspection system

2019/5/20

Handy Type Failure
Detection Device II

Introduce CMS for wind turbines
in Japan
Promote monitoring service
Differentiation with CMS
technology（Collaboration with Academy,Life prediction by AI）
Device to detect abnormalities
using bearing diagnosis andvibration analysis technology
Enhance diagnosis tool and service27

Automotive Business of “DRIVE NTN100”
Result ,Issues in First Year and Efforts
Sales: Fell below initial forecasts due to a slowdown in the Chinese economy and a decrease in sales in Europe due tosanctions against WLTP and Iran in the U.S. (-3.1%)
Profits: Fell below initial forecasts due to a sharp decline in scale, increase steel prices, and the impact of additional tariffs.

「DRIVE NTN100」

First year(FY2018)results
Sales: YOY -3.4％, CAGR +5.0%(9 years)
Profits: YOY -60.3％, Operating Margin 1.8%
Net Sales and Operating Margin of Automotive BusinessNew area:
Elecrification, EVs(JPY bn)

CAGR+5.0%(Volume , 9Yrs)

FY2008

Sales increased however
operating income decreased forthe plan in May

Enhance CoreTechnology andproduct (Develop
for EVs）

Issues form the First Year
Respond quickly to changes in the market environment and external factors-Swiftly build a production system in the event of a decline in demand-Take to mitigate cost increases associated with additional tariffs on imported steel andproducts in the U.S.(pass-through of prices and local procurement and production).

Efforts to Strengthen the Second Year (FY2019)

Focus on measures to recover profitability and steadily solidify the foundation for the third year of growth
Reduce the impact of additional tariffs
1. Promote switch to local steel and local production by strengthening global procurement
2. Steadily harvest additional tariffs, materials, and transportation costs by passing on higher costs to prices
3. Secure profitable business scale by leveraging product functionality and technological superiority in highvalue-added projects such as EV and electrification

2019/5/20

Establish a stable earnings
structure in an uncertain
demand environment

28

“DRIVE NTN100” Automotive Business
Strengthen Core Technology & Products/Progress in New Areas
Ongoing Initiatives for "DRIVE NTN100"

Target：become a essential company to provide
products and service in the global market

1. Strengthen core technologies and products：
Become the world's top maker of drive-train systems(including EVs)
2. Develop businesses in new areas:
Respond to electrification and EVs

Response to changes in environment

1.Strengthen Core Technology & productRealize Super Low friction in drive-train system

・CASE(electrification, EVs etc.)
・Increase of production number of
new vehicle(increase of population)

２．Develop businesses in new areas:
Respond to electrification and EVs
Respond to electrification

Low Friction Hub Bearing Ⅲ
Develop grease pursuing low friction
Reduce rotational friction by 62% keeping its
durability
Contribute to improved fuel efficiency by 0.53%

Electric Motors and Actuators
For electrification of pump andaccessory
Promote the business formass-production

eHUB
Propose to improve fuelconsumption of 48V Mild
Hybrid SystemsHUB
HUB with steering assist
function. Propose it for
front but also rear steering
In-wheel Motor

Expand core products for EV
Low friction & torque, high rigidity &efficiency products
Current & New EV maker adopt the
products

Become Top manufacturer of drive-train system

2019/5/20

29

Initiatives for ESG
NTN is working on ESG issues through the implementation of its corporate philosophy, contributing to the realizationof a sustainable society Develop innovative technologies,
products, and services
 Reduce environmental burdens
 Prevent global warming

GovernanceSocialEnvironmental

 Social contribution activities
 Coexistence with local communities Work style reform Strengthen and enhance corporate
governance Risk management
 Promote compliance

Low Friction Hub Bearing Ⅲ
Reduce rotational friction by
62% keeping its durability
Contribute to improved fuelefficiency by 0.53%“NTN Rotating
Support Peace village
School” in Thailand International in German

Quantify “eco-friendly product index”
Quantify environmental contribution by our
product( in Sept.)

Selected as a bestpractice company 2018 by
Osaka Labour Bureau

ESG meeting forinvestors(in Dec. 2018）
Transition to Company with Nominating
Committee, etc. after approval in Annual
General Meeting of Shareholders on 25thJune

Responding to social issues

Adopted in the SRI indices

UN Global Compact Ten principles in four areas: human rights,
labor, environment, and anti-corruption

Promote the disclosure of ESG information

Sustainable Development Goals (SDGs) Business activities in consideration of SDGs
NTN is a company selected in the ESG indices adopted by the GPIF

2019/5/20

For More details, please refer to “NTN Report 2018”https://www.ntnglobal.com/en/investors/pdf/annual/ntn_report2018E.pdf

30

Key Management Indicators of “DRIVE NTN100”
FY2020Results

FY2018Results

DRIVE NTN100
FY2019Forecast

TargetNet Sales\744.4 billion\733.6 billion\730.0 billion\800.0 billion

Operating Income\39.6 billion\26.9 billion\24.0 billion\57.0 billion

Operating Margin

5.3%

3.7%

3.3%

7.1%

Net Income\20.4 billion-\7.0 billion\9.5 billion\30.0 billion

Capital expenditure\37.6 billion\45.2 billion\50.0 billion\170.0 billion/3 years

FY2017(incl. intangible \20.0 billion）
FCF\13.4 billion-\22.4 billion\0.0 billion\45.0 billion/3 years

4.1 times

3.8

4.0

4.5 times

0.9

1.2

1.2

1.0 or less

Equity to capital ratio

30.2%

27.4%

27.1%

30％ or more

ROE

8.4%

-2.9%

4.1%

10.0％ or more

NTN-ROI*

5.7%

3.8%

3.3%

7.5％ or more

Dividends

¥15.0

¥15.0

¥15.0

\15.0 or more

USD

¥110.8¥110.9¥110.0¥110Euro¥129.6¥128.4¥125.0¥115

Inventory turnover ratio
Net D/E ratio

Exchange rates*NTN-ROI = Net operating income after tax / (Inventories + tangible fixed assets)

2019/5/20

31

DRIVENTN100Digitalization, Resources, Innovation, Variable cost reformation, Efficiency improvement
NTN Transformation for New 100years

2019/5/20

32

[Reference] Aftermarket Business:
Actual Results for FY2018 and Forecast for FY2019<Results for FY2018 (compared with FY2017)>
Net Sales: ¥118.8bn(+1.8%), Operating Income: ¥15.2bn(+1.2%)• Sales of industrial machinery aftermarket applications increased in all regions• Sales of automotive parts were remained unchanged due to a decrease in Europe,
despite an increase in the Americas and China
Net Sales(JPY bn)＜FY2019 forecast(compared with FY2018)>
OperatingMarginJapan+2％

Decrease in sales due to decrease in demandfor bearings for repair of machine tool

-2％

+2％

+10％

±0%

+4％

+5％

+1％

Expand sales due to the autoparts distribution
Americas network and discover of new projects forindustrial machinery

Sales of industrial machinery aftermarket are
Europe expected to be unchanged, but sales forautomotive aftermarket are expected to increase
Sales are expected to decrease in China,

Asia andothers but overall sales are expected to increase

due to strong demand in Asia
2019/5/20

Note: % in the bar graph represents year-on-year changes excluding exchange rates

33

[Reference] Industrial Machinery Business :Actual Results for FY2018 and Forecast for FY2019<Results for FY2018 (compared with FY2017)>
Net Sales: ¥123.4bn(+3.6%), Operating Income: ¥3.1bn(+11.1%)• Sales for wind turbine increased in the Americas and China• Sales of products for aircraft increased in Japan and Europe
Net Sales(JPY bn)＜FY2019 forecast(compared with FY2018)>
OperatingMargin

±0％

+9％

Japan

Sales decrease for construction machineryand machine tools but increase for rolling stock

Americas

Sales decrease for construction machinery,wind turbine, and agricultural machinery

±0％

-4％

Europe Sales increase for aircraft and rolling stocks
+6%

+4％

2019/5/20

+2％

-2％

Asia andothersSales increase for wind turbine and rolling stockin China but decrease for construction
machinery and machine tools

Note: % in the bar graph represents year-on-year changes excluding exchange rates

34

[Reference] Automotive Business :Actual Results for FY2018 and Forecast for FY2019<Results for FY2018 (compared with FY2017)>
Net Sales: ¥491.3bn(-3.4%), Operating Income: ¥8.7bn(-60.3%)• Sales in Europe declined due to the impact of Iranian sanctions and new emission metrics (WLTP)• Sales in China declined due to the rapid economic slowdown in the second half of the fiscal year
Net Sales(JPY bn)＜FY2019 forecast(compared with FY2018)>

OperatingMarginSales increase due to increasing production by
Japan major manufactures, model changed car androbust sales to Tier-1
+2％

+2％

-2％

-4％

-7%

+3％

-6％

+3%

Despite the effect of new projects,
Americas sales decrease due to the production end ofmajor models and sedan
Sales increase due to the completion of manufacturer's
Europe response to WLTP and demand shift diesel-to-gasoline
vehicle and the launch of new projects

Sales increased due to new projects in ASEAN
Asia andand India, a recovery in the Chinese market,
othersand projects for emerging EV manufacturers

2019/5/20

Note: % in the bar graph represents year-on-year changes excluding exchange rates

35