November 6, 2014
NTN Corporation

Contents
I. Progress of “Revival 2014”
II. For further growthIII. Financial Results for the First Halfand Forecast of FY2014• This presentation and comments made in this conference or during the following Q&A session include forward-looking
statements about management decisions for future performance and future business strategies.
• 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 depending on various
factors such as changes in product demand, exchange rates and interest rates and contingent liabilities.

11/6/20142

I. Progress of “Revival 2014”
II. For further growthIII. Financial Results for the First Halfand forecast of FY2014

11/6/20143

Changes in Consolidated Financial Results(first half results and full-year forecast)
Operating margin

Net sales(100 million yen)

Net Sales

FY2014 1H (Results)
Net sales: 3,362 (100 million yen)
Operating income: 183 (100 million yen)
Operating margin: 5.4％
Net income: 93 (100 million yen)
1H dividends
2.5 yenOperating income

Operating income

3,230

160

NTN 2010
for The Next Step
11/6/2014

Global Advance
2013

3,362
420

183

(100 million yen)

FY2014 Full Year (Forecast)
Net sales: 6,600 (100 million yen)
→6,730 (100 million yen)
Operating income:400 (100 million yen)→420 (100 million yen)
Operating margin:
6.1％ → 6.2％
Net income: 200 (100 million yen)
Full year dividends: 5 yen

Revival 2014

*FY2014 2H exchange rate: remains at US$100 yen, €130 yen

4Progress of "Revival 2014" Policies
1. “Emergency Measures”
 Reduce personnel costs and fixed
costs→ Plans were brought forward to

FY2012 2H

 Limit capital expenditure→ Increase for future growth

3. “Structural Reform”
 Reforms to personnel costs→ Early retirement→ Strengthening system of aftermarket business Acceleration of overseas production→ Continue shifting to overseas production→ Establish new companies in China, Mexico

 Selection of business Reduce inventories→ Plans forecast to be achieved withinventory turnover ratio→ Establish logistics subsidiary→ Withdraw from some precision product businesses

2. “Centralization of Management
Resources”

4. “Expansion of New Products and
New Businesses”

 Sales expansion for Aftermarket

 Strengthen development of module
products and system products

 Strengthening Industrial machinery
business globally
 Greater profits in Automotive Business→ on page 7 to 8
11/6/2014

 Full operation of the EV systemproducts business Development of composite material
products and market deployment→ on page 95

Achievement Forecast of “Revival 2014”
Initial plans for net sales and operating income, and latest
forecast "Revival 2014" (100 million yen)
Both net sales and operating income
have exceeded plans in theautomotive business

13,120

The reduction in proportionalcosts such as local procurement
largely exceeded plans

11,700Aftermarket
Industrial
machinery
Aftermarket

Automotive
Industrial
machinery
Automotive

Initial plans Forecast results
Total 2 years
2014/11/6

Initial plans Forecast results
Total 2 years

CentralizationofManagement
Resources(proportionalcosts)

Structural
ReformEmergency
Measures

Initial plants Forecast results
Total for 2.5 years from FY2012 2H

6

Progress of “Centralization of Management
Resources”-1(1) Sales expansion for aftermarket→ Establish Aftermarket Business Headquarters
with 200 employees→ Enhance development of end users in cooperation
with distributors→ Mobile activities with technical service unit
→ Expand product lineup of automotive parts in North America

Americas

EuropeAsia

Net sales for Industrial machineryJapan

Net sales for Aftermarket→ Secure new orders for aircraft, wind turbines and rolling stock→ Increase in demand for machine tools and robots→ Delays in demand recovering construction machineryand mining machinery(100
millionyen)(100
millionyen)

2014/11/6(2) Strengthening the industrial
machinery businessJapan

Americas
EuropeAsia

7Progress of “Centralization of Management
Resources”-2(3) Greater profits in the automotive business
Operating margin
for automotive→ Increase use of local steel materials→ Increase local production of finished products→ Increase local procurement of pre-process
(100
parts
million→ Limit price reductions→ Improve sales cost of low-profit products

2014/11/6

yen)

Net sales for Automotive→ Release new module products andsystem products to market

Japan

Americas

EuropeAsia

8Expansion of new products and new businesses(new main products)

Commercialization of module products and system products
Automotive

Industrial machinery

Parallel Link type High Speed
Angle Control Equipment

CMS for wind turbines

Mechanical Clutch Unit

Ball Screw Drive
Module for Electric
Hydraulic Brake

Awarded "ChoMonozukuri Award"
Innovative Parts andComponents Award 2014

Handy Type Failure
Detection Device

Strengthen development ofcomposite material products

Bearing Technical Calculation
System for Machine Tools

Testing Machine forWind Turbine

Acceleration of EV system products
demonstration projects

Automotive + Industrial machinery Industrial machinery

New material
Bearphite CL

Low Torque Seal
Ring for Automotive
Transmission

Sintered metal + plastic
Hybrid Bearphite HP

11/6/2014

High
Performance
Magnetic Corefor Induction
Hardening
Equipment

Special plastic
Sliding Bearing
Unit for High Load
Applications

Annecy City,
FranceIwata City,
Shizuoka Prefecture

Ise City,
Mie Prefecture

In-wheel Motor System

First certificationacquired in Japan9

I. Progress of “Revival 2014”
II. For further growthIII. Financial Results for the First Halfand forecast of FY2014

11/6/201410

Positioning of New Medium-term Management Plan

FY2025NTN vision for next 10 years(1) A company where its corporate philosophy is being adopted
by all employees around the world.

(2) A company with original products and services, celebrated
for its high quality and functions, and has a global presence.
(3) A company where everyone involved with NTN has pridein the “NTN” brand.

FY2017100th anniversary

New Medium-termManagement Plan=

Build foundation for achieving
FY2025 vision

FY2015FY2014“Revival 2014”= Reform business structure to generate profit

FY2013
11/6/201411

Basic Policy of New Medium-term Management Plan
Establish business strategies for each business, productand region, and main policies for business foundation
based on 3 Basic Policies
Asia
EuropeAmericasJapan
米州

Business unit

Region

商品軸

Concentrate
management resourceson strategic areas
Reform businessstructure from volume
to value
Strengthen
management andfinancial foundation

2014/11/6

12

Basic Policy of New Medium-term Management Plan
“Growth”“Earn”

1. Aftermarket– Growth in all products and regions

2. Industrial machinery market– Growth with new technologies and new
products– Earn with base products

3. Automotive market– Growth with module/system products– Earn with axle bearings and CVJs

4. New areas– Growth in new areas such as EV and newenergy with cutting edge technology“Establish”
1. Enhancing compliance globally
2. Strengthening corporate
governance system

3. Revitalizing local communities
through social contribution activities
4. Strengthening financial foundation

Strengthen engineering such as research, technical development andservices, even further to become a co-creative partner company forcustomers
2014/11/6

13

Targets of New Medium-term Management Plan
FY2017

Net sales

Operatingmargin100th
anniversary

Forecast

NEW
Plan 21

11/6/2014

Rapid Advance21

FY2025
Double thecurrent
net sales

GCA
21

For the
Next.

GA
2013

Revival2014

TargetTargetNew
Medium-termManagement Plan

14

I. Progress of “Revival 2014”
II. For further growthIII. Financial Results for the First Halfand forecast of FY2014

11/6/201415

Ⅲ. Financial Results for the First
Half and Forecast of FY2014
November 6, 2014
NTN Corporation
This presentation and comments made in this conference or during the following Q&A session include forward-looking
statements about management expectations for future performance and future business strategies. 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 thesestatements or comments. Actual results may differ materially from management projections depending on various
factors such as changes in product demand, exchange rates, interest rates and contingent liabilities.

2014/11/6

16

Contents★Financial Results for the First Half of FY2014
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 Region(1)Japan, Americas(2)Europe, Asia & Others
７．Inventories
８．Interest-Bearing Debt
９．Capital Expenditure and Depreciation
１０．Cash Flows
2014/11/6

17

Financial Results for the First Half of FY2014 : Key Factors

FY2014 1H Results◇Net sales was 336.2 billion yen, a 29.1 billion yen (+9.5%) increase in revenue year-on-year
・ The aftermarket increased chiefly in Japan and Asia, with approximately 10% increase inrevenue year-on-year
・ Industrial machinery had an approximately 9% increase in revenue year-on-year due toincreased demand from customers in Japan and the Americas
・ Automotive increased in Japan, the Americas and China, with approximately 9％ increase
in revenue year-on-year◇Operating income was 18.3 billion yen, a 5.8 billion yen (+40%) increase in profit year-on-year◇Extraordinary income or loss: -2.4 billion yen (extraordinary income +300 million yen,
extraordinary loss -2.7 billion yen)
◇Income for current term was 9.3 billion yen, a 5.8 billion yen increase in profit year-on-year

FY2014 Full year Forecast◇Net sales was revised to 673 billion yen (previously 660 billion yen)
Operating income was revised to 42 billion yen (previously 40 billion yen)
◇2H extraordinary income or loss will be -1.6 billion yen (previously 0 yen)
◇No change to the exchange rate for 2H (1US$ = 100 yen, 1EURO = 130 yen)
2014/11/6

18

1. Consolidated Statements of Operation(100 million yen)
1H

FY2013
2H

Results

Results①

1H

Full year
Results

Results②③

FY20142H

Full year
Forecast Forecast④

Year on year
FY2014FY2014
1H
Full year③－①④－②

Net sales

3,072

3,318

6,390

3,362

3,368

6,730

291

340

Operatingincome

130

200

330

183

237

420

52

90

Operatingmargin

(4.2%)(6.0%)(5.2%)(5.4%)(7.0%)(6.2%)(1.2%)(1.0%)

Ordinary income

103

183

287

167

193

360

63

73

Extraordinary
income/loss

- 16

- 295

- 311

- 24

- 16

- 40

-8

271

Net income/loss

34

- 181

- 146

93

107

200

58

346

US＄

98.9

101.5

100.2

103.0

100.0

101.5

4.2

1.3

EURO

130.0

138.6

134.2

138.9

130.0

134.5

8.9

0.2

Exchangerate

2014/11/6

19

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

FY2013
1H

2H

FY2014
Full year

1H

2H

Full year

Results Results Results Results Forecast Forecast①②③④

Year on year
FY2014FY2014
1H
Full year③-①④-②
Volume Forex Volume Forex

Japan

851

940 1,791

942

973 1,915

91

0

124

0

Americas854

892 1,746

955

940 1,895

66

35

129

20

Europe798

865 1,663

840

800 1,640

- 14

56

- 29

6

Asia &
Others569

621 1,190

625

655 1,280

39

17

86

4

3,072 3,318 6,390 3,362 3,368 6,730

182

108

310

30

Total

2014/11/6

20

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

FY2013

FY2014
Full year

FY2014
1H

FY2014
Full year

Results Results Results Results Forecast Forecast

③-①

④-②

1H

2H

①

Full year

②

1H

2H

③

548
567
496
543 1,038
Industrial
483
529 1,012
526
499
machinery
Automotive 2,093 2,246 4,339 2,289 2,301
Total
3,072 3,318 6,390 3,362 3,368＜Operating Income by Business Sector＞
Aftermarket

FY2013

2014/11/6

Automotive
Total

VolumeForex

Volume

Forex

1,115
1,025
4,590
6,730

32
28
122
182

20
16
73
108

71
7
231
310

5
6
19
30

(100 million yen)

FY2014

Year on year
FY2014
1H

FY2014
Full year

Results Results Results Results Forecast Forecast

③-①

④-②

2H

①
Industrial
machinery④

Full year

1H

Aftermarket

Year on year

82
14
35
130

96
19
85
200

Full year

1H

②

③

177
33
120
330

89
21
72
183

2H

④

103
22
113
237

192
43
185
420

Volume

Forex

7
8
37
52

Volume

Forex

15
10
65
90
21

4. Results by Business Sector （Quarterly Trend）
Automotive

Industrial machinery

Net Sales’14/3-1Q
2014/11/6

2Q

3Q

4Q ’15/3-1Q

Aftermarket

Operating Income/ Operating Margin

2Q’14/3-1Q

2Q

3Q

4Q ’15/3-1Q

2Q

22

Sales Trend for Aftermarket< 1H Results (compared with FY2013 1H) >• Machine tools and construction machinery increased in Japan via distributors. Collaboration
with major distributors for industrial machinery in the Americas led to expansion of MRO.
Automotive aftermarket was positive. Sales for major distributors increased in Asia with a
new Chinese sales system.
Operating margin
Net Sales(100 millionyen)< 2H Forecast (compared with FY2014 1H) >Japan

Recover demand for machine tools
via distributors
Cooperate with distributors to develop new end users

Cooperate with major distributors to expand
MRO sales
Americas Accelerate automotive sales with greater
product lineup

EuropeAsia
2014/11/6

Expand industrial machinery by reorganizing
sales system
Maintain share despite political instability inEastern Europe
Increase sales to major distributors and focus on
expanding MRO sales in both China and ASEAN

23

Sales Trend for Industrial Machinery< 1H results (compared with FY2013 1H) >• Reducers for robots increased in Japan. Aircraft and machine tools also positive.
• Construction machinery increased in the Americas. Rolling stock increased in China.
Demand for agricultural machinery decreased in Europe and Americas.
Operating margin
Net Sales(100 millionyen)< 2H Forecast (compared with FY2014 1H) >Japan

Steady demand for machine tools and aircraft
Reduction in demand for construction machineryfor China

Americas

Reduction in demand for construction machinery
Fewer wind turbines installed in North America

EuropeGreater sales of aircraft, rolling stock
Demand for reducers to slowly recoverAsia
2014/11/6

Reduction in winter demand for wind turbines
in China
Spot orders for HDD dynamic bearings to end in 1H

24

Sales Trend for Automotive< 1H results (compared with FY2013 1H) >• In Japan, sales to North America remained strong despite effects of increased consumption
taxes. Sales of new module products also contributed.
• In the Americas, sales increased with steady sales of new vehicles. Sales increased in China
by more than the growth in new vehicle sales.
Operating margin
Net Sales(100 millionyen)< 2H Forecast (compared with FY2014 1H) >Japan

Sales of new vehicles to slow.
Exports to North America of car makers toremain steady

Increase in sales to Japanese car makers
Americas Reduction in sales to American car makers
and sales will remain unchanged

EuropeAsia
2014/11/6

Recovery of new car sales in Europe
Increase in sales to European car makers
Start of mass production of CVJs for new models
in China
Start of mass production of Axle bearings for
new models in Asia

25

5. Analysis of Operating Income （FY2014 Full year）＊All figures in 100 million yen.

Positive factors（ 127 ）
Decrease invariable costs

Exchange rates
Scale
merits83

Negative factors（ 75 ）
Increase in personal costs

19

Expenses etc.
(Depreciation +2, Other -23)

42

26

21

12

Sales price levels+52
FY2014
1H
OperatingincomeFY2013
1H
Operating
Income130183
FY2013 1H < Results >vs
FY2014 1H < Results >2014/11/6

26

5. Analysis of Operating Income （FY2014 Full year）＊All figures in 100 million yen.

Negative factors（ 172 ）

Positive factors（ 262 ）
Decrease invariable costs

92

Increase in personal costs
Expenses etc.
79
(Depreciation -1, Other -46)

47
Scale merits

170

+90

45

Sales price levels
Exchange rates

1

FY2014
Full year
Operating
Income420

FY2013Full year
Operating
Income330
FY2013 Full year < Results >vs
FY2014 Full year < Forecast >2014/11/6

27

6. Net Sales and Operating Income by Region《 Americas 》《 Japan 》
Net Sales

Operating Income

2014/11/6(100 million yen)

Net Sales(100 million yen)

Operating Income28

6. Net Sales and Operating Income by Region《 Europe 》
Net Sales

Operating Income

2014/11/6(100 million yen)

《 Asia & Others 》
Net Sales(100 million yen)

Operating Income29

7. Inventories
Japan

3.7

Inventories(100 million yen)

3,000

Overseas

Inventory turnover ratio (times)

3.7

3.8

3.9

3.4

3.3
2,250

1,633 1,644 1,645

1,826

3.7

4.0

3.0

1,665 1,718 1,799

1,680

1,500

2.0
1,102

1,093

1,098

1,253

1,140

1,158

1,243

1,147

750

0

4.0

1.0
530

552

547

573

525

560

556

533

Mar-13Jun-13

Sep-13

Dec-13Mar-14Jun-14

Sep-14Mar-15Jun-14(100 million yen)Sep-14Mar-15Mar-13Jun-13

Sep-13

Dec-13Mar-14Inventory turnover ratio (times)

Inventories at end of September 2014 increased by +8.1 billion yen compared
to end of June (+2.5 billion yen if excluding exchange rates).

0.0

Results Results Results Results Results Results Results Forecast
Inventories
1,633 1,644 1,645 1,826 1,665 1,718 1,799 1,680
Overseas (1,102) (1,093) (1,098) (1,253) (1,140) (1,158) (1,243) (1,147)
Japan (530)
(552)
(547)
(573)
(525)
(560)
(556)
(533)
In ve n t o r y t u r n o ve rr at io (t im e s)

2014/11/6

3.3

3.7

3.7

3.4

3.8

3.9

3.7

4.0
30

8. Interest-Bearing Debt
Interest-bearing debt at end of September 2014 increased by +6.5 billion yen
compared to end of June (decrease of 1.5 billion yen if excluding exchange rates).
Overseas

Interest-bearing debt ratio (%)

5,000

47.0% 46.6% 46.4% 44.7% 45.0% 45.5%

4,000

3,608 3,697

3,759

3,793 3,818 3,719 3,784

1,363

1,347

1,445

3,000

1,322

1,427

1,374

44.7% 44.4% 50%

1,445

3,680

40%

1,348

30%

2,000
1,000
0

20%
2,286

2,334

2,412

2,348

2,391

2,345

2,340

2,332

Mar-13Jun-13

Sep-13

Dec-13Mar-14June-14

Sep-14Mar-15(100 million yen)

Mar-13Jun-13

Sep-13

Dec-13Mar-14June-14

Sep-14Mar-15Results

Results

Results

Results

Results

Results

Results

Forecast

10%0%Interest-bearing debt ratio(%)

Interest- bearing debt(100 million yen)Japan

3,608 3,697 3,759 3,793 3,818 3,719 3,784 3,680
Overseas (1,322) (1,363) (1,347) (1,445) (1,427) (1,374) (1,445) (1,348)
Japan (2,286) (2,334) (2,412) (2,348) (2,391) (2,345) (2,340) (2,332)
Ne t In t e r e st - be ar in g
2,747 2,749 2,600 2,633 2,521 2,688 2,673 2,530
de bt

In t e r e st - be ar in g de bt

In t e r e st - be ar in g de bt
r at io (% )2014/11/6

47.0%

46.6%

46.4%

44.7%

45.0%

45.5%

44.7%

44.4%
31

9. Capital Expenditure and Depreciation
Capital investment in FY2014 1H results was within the scope of depreciation
expenses.
Investment（Japan）
Investment（Overseas）
Depreciation（Japan）
Depreciation（Overseas）
300

300

169
150

184
86

138

98

Capital e xpe n ditu r eOverseasJapan

Depreci a ti on

OverseasJapan

2014/11/6

204

189
149

138
0

183

45

31
FY2 0 1 2 2 H Re su lt s

108

115

106
82

FY2 0 1 3 1 H Re su lt s

222

43

193
128

203

118

169

116

75

53

87

150

87
88

FY2 0 1 3 2 H Re su lt s

41

FY2 0 1 4 1 H Re su lt s0

FY2 0 1 4 2 H For e c ast(100 million yen)

FY2012
2H Results

FY2013
1H Results

FY2013
2H Results

FY2014
1H Results

FY2014
2H Forecast

FY2012
2H Results

FY2013
1H Results

FY2013
2H Results

FY2014
1H Results

FY2014
2H Forecast

169
(138)
(31)
184
(86)
(98)

183
(138)
(45)
189
(108)
(82)

149
(106)
(43)
204
(115)
(88)

128
(87)
(41)

193
(118)
(75)

222
(169)
(53)
203
(116)
(87)
32

10. Cash Flows(100 million yen)

FY2012
2H Results

FY2013
1H Results

FY2013
2H Results

FY2014
1H Results

FY2014
2H Forecast

Ⅰ．Cash flow from operating
activities

101

391

300

57

280

Ⅱ．Cash flow from investing
activities

-238

-183

-158

-145

-188

Ⅲ．Cash flow from financing
activities

226

81

-15

-98

-22

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

-17

10

10

1

-31

72

298

137

-185

39

Ⅴ．Net increase in cash andcash equivalents

CF from operating activities
500

391
208

250

CF from investing activities

Net CF

300
142

101

92

280

57

0

-250

- 137
- 238

- 183

- 158

- 145 - 88

- 188

-500
FY2012 2H
Results

2014/11/6

FY2013 1H
Results

FY2013 2H
Results

FY2014 1H
Results

FY2014 2H
Forecast

33

2014/11/6

34