November 5, 2018
NTN Corporation

Contents
Ⅰ. Outline
Ⅱ. Financial Results for First Half andForecast for FY2018
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 managementof 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 depending on various
factors such as changes in product demand, exchange rates and interest rates, and contingent liabilities.

2018/11/5

2

Trends in consolidated financial results:
Results of 1H and Full year Forecast
For 1H, although Net Sales increased year-on-year, Operating income decreased reflecting increases ofcost due principally to the increase in price of steel material, tariff rate in the U.S. and other factors.
Considering costs putting pressure on profit, we revised forecast of full year Operating income decreasing fromprevious fiscal year, although there are continuous strong demands.
FY2018 1H Result
Operating Margin

1H Result

Full year forecast

in brackets are previous announcement

Net Sales: ¥370.2 billion (¥370.0 billion)
YoY+3.4%, Excl. exchange rate effect +2.8%（billion yen）

（billion yen）

(Year on Year）
Net Sales +3.4%（Excl. Exchange
rate +2.8%）
Operating Income -8.6%（Excl. Exchange
rate -10.8%）
Operating Margins -0.5pt

Operating Income: ¥15.4 billion (¥20.0 billion)
YoY-8.6%, Excl. exchange rate effect -10.8%

Net Income: ¥8.1 billion (¥7.0 billion)
YoY-2.9%

Interim dividend: ¥7.5

FY2018 Full year Forecast
in brackets are previous announcement

Net Sales: ¥750.0 billion (¥750.0 billion)
YoY+0.8%, Excl. exchange rate effect +1.5%

Operating Income: ¥35.0 billion (¥43.0 billion)
YoY-11.6%, Excl. Exchange rate effect -6.0%

Net Income: ¥15.0 billion (¥21.0 billion)
Incl. extraordinary loss ¥6.0 billion

Annual dividend: ¥15 *interim ¥7.5,year-end ¥7.5

2018/11/5

Note: Net Income: Net Income attributable to shareholders
FY2018 2H exchange rate: US$1=105yen(Unchanged), €1=130 yen (Unchanged)

3

Contents
Ⅰ. Outline

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

2018/11/5

4

Contents★ Financial Results for FY2018 First Half : 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 and others
７．Inventories
８．Capital Expenditure and Depreciation
９．Interest-Bearing Debt
１０．Cash Flows

2018/11/5

5

Financial Results for the First Half of FY2018 : Key Factors
Results of FY2018 Second Quarter(April, 2018-September, 2018)◇Net Sales： ¥370.2 billion
・Increase of ¥12.3 billion, year-on-year(Excluding exchange rates: Increase of ¥9.8 billion)◇Operating Income： ¥15.4 billion
・Decrease of ¥1.5 billion, year-on-year（Excluding exchange rates : Decrease of ¥1.8 billion)◇Ordinary Income： ¥12.6 billion
・ Decrease of ¥1.1 billion year-on-year(Excluding exchange rates: Decrease of ¥1.6 billion)◇Net income attributable to shareholder(parent company)： ¥8.1 billion
・Decrease of ¥0.2 billion, year-on-year(Excluding exchange rates: Decrease of ¥0.6 billion)◇Free Cash Flow： -¥9.3 billion, decrease of ¥21.5 billion, year-on-year
2018/11/5

6

Financial Results for the First Half of FY2018 : Key Factors

Revised FY2018 Full year forecast◇Net Sales： ¥750.0 billion, No revise from the previous announcement◇Operating income： ¥35.0 billion,
Decrease of ¥8.0 billion compared with previous announcement (¥43.0 billion)◇Extraordinary losses： ¥6.0 billion
No revise from the previous announcement◇Net income attributable to Shareholder (parent company)： ¥15.0 billion,
Decrease of ¥6.0 billion compared with previous announcement (¥21.0 billion)◇In regards to dividends, the Company plans ¥15 for this fiscal year
No revise from the previous announcement(an interim dividend of ¥7.5 and year-end dividend of ¥7.5)◇Exchange-rate form the third quarter：
1USD = ¥105 (previous announcement, ¥105)
1EURO = ¥130 (previous announcement, ¥130)
2018/11/5

7

1. Consolidated Statements of Operation
FY2017

1H

2H(billion yen)
Year on year

FY2018Full year

1H

Full year

FY2018 1H②-①

Results Results Results Results Forecast
①

②

Total

Excl.Forex

Forex

Net sales

357.9

386.4

744.4

370.2

750.0

12.3

9.8

2.4

Operatingincome

16.8

22.8

39.6

15.4

35.0

-1.5

-1.8

0.4

Operatingmargin

(4.7%)(5.9%)(5.3%)(4.2%)(4.7%)(-0.5%)

Ordinary income

13.6

17.6

31.3

12.6

29.0

-1.1

-1.6

0.5

Extraordinary
income/loss

-

-4.3

-4.3

-

-6.0

-

-

-

Net income
attributable toshareholder(parent company)

8.4

12.0

20.4

8.1

15.0

-0.2

-0.6

0.4

US＄

111.0

110.7

110.8

110.3

107.6

-0.8

EURO

126.2

133.1

129.6

129.9

129.9

3.7

Exchangerate

2018/11/5

8

2. Net Sales by Region(billion yen)
FY2017FY20181H

2H

Full year

Results

Results

Results①

1H

Year on year

Full year

FY2018 1H②-①

Results Forecast
②

Total

Excl.Forex

Forex

Japan

99.5

104.8

204.3

102.3

210.0

2.8

2.8

-

Americas

98.8

102.9

201.7

100.4

201.0

1.6

2.5

-0.9

Europe

82.5

93.1

175.6

85.5

172.5

3.0

0.6

2.4

Asia andothers

77.2

85.6

162.8

82.0

166.5

4.8

3.9

0.9

Total

357.9

386.4

744.4

370.2

750.0

12.3

9.8

2.4

2018/11/5

9

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

＜Net Sales by Business Sector＞
FY2017FY20181H

2H

Full Year

Results

Results

Results①

1H

Year on year

Full year

FY2018 1H②-①

Results Forecast
②

Total

Excl.Forex

Forex

Aftermarket

56.2

60.4

116.7

61.1

120.0

4.8

4.3

0.6

Industrial
machinery

57.3

61.8

119.1

62.0

125.5

4.6

4.2

0.4

Automotive

244.4

264.2

508.6

247.2

504.5

2.8

1.4

1.4

Total

357.9

386.4

744.4

370.2

750.0

12.3

9.8

2.4

＜Operating Income by Business Sector＞
FY2017FY20181H

2H

Full Year

Results

Results

Results①

1H

Year on year

Full year

Results Forecast②

FY2018 1H②-①

Aftermarket

6.8

8.2

15.0

7.8

15.2

1.0

Industrial
machinery

0.8

2.0

2.8

1.6

4.1

0.8

Automotive

9.2

12.6

21.8

5.9

15.7

-3.3

Total

16.8

22.8

39.6

15.4

35.0

-1.5

2018/11/5

10

4. Results by Business Sector （Quarterly Trend）＊All figures in billion yen.
Automotive
200.0
180.0
160.0
140.0

179.0 178.9

190.5 195.9②-①
189.2

28.9
0
27.4###28.90
00
0 29.70028.012029.30
305

Industrial machinery

0

31.6
32.0

30.5
31.2

Aftermarket

20.0

181.0
0

30.6
0
0
0
30.8

120.0

11.7%

15.2%

10.7%

13.4%

3.5%

4.0%0

4.7% 0 4.9%

3.7%

2.1%

0.9%

13.7%
18.0

0

0
0
14.0
0
16.0

0
02.4%
0

0
3.9%
0
0
12.5

100.0

10.0

80.0

8.6

4.8

8.2

3.4

8.0

123.7 120.7 131.9 132.3 127.5 119.6

40.0

6.0

3.7

2.0

FY2017
1Q

2018/11/5

0.0

FY2018
2Q

3Q

4Q

1Q

2Q

4.3

0.7 1.3

3.1
0.3

0.6

4.0

20.0
0.0

1.7%
1.0%

12.0

10.3

60.0

3.6%

12.3%

4.9

4.1
5.5
1.1

6.2

6.4

FY2017
1Q

9.9

3.8
4.7

0.5
1.2

FY2018
2Q

3Q

4Q

1Q

2Q

11

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

Positive factors
（8.5）
Scale
effects
Exchange
rates
0.4

Increase inpersonal
costs

Negative factors（ 9.9 ）

Sales pricelevel
Increase in
1.7
variable costs Expenses etc.
(Depreciation +0.6,
0.8
other +2.3)

4.6

8.1

2.9
FY2017
1H
Operatingincome16.8

2018/11/5-1.5

FY2017 1H < Results >vs
FY2018 1H < Results >FY20181H
Operatingincome15.4

12

5-2. Analysis of Operating Income （FY2018 Full year ）＊All figures in billion yen.

Positive factors（11.6）
Scale
effects

Negative factors（16.2）

Increase inpersonal
costs
5.4

Sales price
level

11.6
3.7

Exchange
rates
2.2

Expenses etc.
Increase invariable costs (Depreciation +2.8,
other +1.5)
0.5

-4.6
FY2017Full year
Operatingincome39.6
FY2017 Full year < Results >vs
FY2018 Full year < Forecast >2018/11/5

4.3

FY2018Full year
Operatingincome35.0

13

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

Net Sales
200.0

168.9

178.5

174.8

150.0

150.0
100.0

97.4

101.1

98.9

FY20171H

FY20172H

FY2018
1H

100.0
50.0
50.0
0.0

FY20171H

FY20172H

FY20181H

Operating Income

Operating Income

10.0
8.0

10.0

1.9%

6.0
4.0

2.7%

0.2%

8.0

3.2

4.0

0.4

0.0
FY2017
2H

3.3%

3.7

3.4

FY20181H

FY20171H

FY2017
2H

2.7%

2.6

2.0
0.0

FY2017
1H

3.8%

6.0

4.8

2.0

2018/11/5

0.0

FY20181H

14

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

150.0

100.0

150.0

90.8

101.7

93.8

100.0

77.4

50.0

0.0

《 アジア他 》

FY20171H

FY20172H

FY20181H

0.0

FY2017
1H

Operating Income

5.0

15.0

1.3%

1.6%

3.0
2.0
1.0
0.0

2018/11/5

80.9

FY20172H

FY2018
1H

12.4%

12.1%

10.5

9.8

FY20172H

FY20181H

50.0

Operating Income
4.0

84.6

1.2
FY2017
1H

0.5%

1.6

10.0

11.8%

9.1

5.0

0.5
FY20172H

FY20181H

0.0

FY20171H

15

7. Inventories
Inventories(billion yen)Overseas

4.0

Inventory turnover ratio

4.0

3.9

3.9

4.1

4.0

3.8

4.0

4.0

250.0
200.0

171.5

179.6

182.5

189.3

118.6

122.5

127.0

131.1

179.7

188.9

197.3

189.0

123.5

128.9

135.2

127.8

3.0

150.0
100.0

2.0

1.0
50.0

52.9

57.1

55.5

58.2

56.2

60.0

62.1

61.2

FY2016 4Q
Results

FY2017 1Q
Results

FY2017 2Q
Results

FY2017 3Q
Results

FY2017 4Q
Results

FY2018 1Q
Results

FY2018 2Q
Results

FY2018
Forecast

0.0

0.0

Inventory turnover ratio(times)

Japan

300.0

(billion yen)

FY2016
4Q
Results

FY2017
1Q
Results

FY2017
2Q
Results

FY2017
3Q
Results

FY2017
4Q
Results

FY2018
1Q
Results

FY20182Q
Results

FY2018
Forecast

171.5(Overseas) (118.6)(Japan) (52.9)
Inventory turnover ratio
4.0(times)179.6(122.5)(57.1)
4.0

182.5(127.0)(55.5)
3.9

189.3(131.1)(58.2)
3.9

179.7(123.5)(56.2)
4.1

188.9(128.9)(60.0)
4.0

197.3(135.2)(62.1)
3.8

189.0(127.8)(61.2)
4.0

Inventories

2018/11/5

16

8. Capital Expenditure and Depreciation(billion yen)

Investment(Japan)

Depreciation(Japan)

Investment(Overseas)

Depreciation(Overseas)

60.0

30.0

22.1
17.0

18.5

18.5
15.5

15.0

10.8

11.9

9.1

6.2

6.6

6.4

19.1

19.5

19.2

12.2

13.2

11.8

6.9

6.3

7.4

12.9
11.9

6.6

9.1

45.0
40.0
26.5

18.5

24.0

30.0

16.0

0.0
FY2016 2H Results

FY2017 1H Results

FY2017 2H Results

FY2018 1H Results

FY2018 Forecast

0.0(billion yen)(Overseas)(Japan)FY20162H Results
17.0(10.8)(6.2)

FY2017
1H Results①
2H Results
15.5
22.1
(9.1)
(12.9)(6.4)(9.1)

FY2018
1H Results②
19.5(13.2)(6.3)

Depreciation(Overseas)(Japan)FY20162H Results
18.5(11.9)(6.6)

FY2017
1H Results①
2H Results
18.5
19.1
(11.9)(12.2)(6.6)(6.9)

FY2018
1H Results②
19.2(11.8)(7.4)

Capital expenditure

2018/11/5

②-①
3.9
(4.1)
(-0.2)FY2018
Forecast
45.0(26.5)(18.5)②-①
0.7(-0.1)(0.8)

FY2018
Forecast
40.0(24.0)(16.0)

17

9. Interest-Bearing Debt
OverseasJapan

Net D/E ratio

600.0

1.0

1.0

320.8

329.6

340.4

95.8

87.8

91.1

94.2

223.6

226.0

233.0

238.4

246.2

263.4

FY2017 2Q
Results

FY2017 3Q
Results

FY2017 4Q
Results

FY2018 1Q
Results

FY2018 2Q
Results

FY2018
Forecast

1.0

0.9

320.2

318.4

321.7

321.7

91.5

90.9

98.1

228.6

227.5

FY2016 4Q
Results

FY2017 1Q
Results

400.0
300.0

1.0

1.0

1.0

500.0

1.0

Net D/E ratio

Interest-bearing debt
(billion yen)

1.1

360.0
96.6
0.5

200.0
100.0
0.0

0.0

(billion yen)

FY2016
4Q
Results

FY2017
1Q
Results

FY2017
2Q
Results

FY2017
3Q
Results

FY2017
4Q
Results

FY2018
1Q
Results

FY20182Q
Results

FY2018
Forecast

360.0
340.4
329.6
320.8
321.7
321.7
318.4
320.2
(Overseas) (91.5)(90.9) (98.1) (95.8) (87.8) (91.1) (94.2) (96.6)(Japan) (228.6) (227.5) (223.6) (226.0) (233.0) (238.4) (246.2) (263.4)
Net Interest-bearing
264.0
252.7
244.0
234.7
247.2
234.8
239.2
240.9
debt

Interest-bearing debt

2018/11/5

18

10. Cash FlowsFY2017FY2018FY2018FY20162H Results 1H Results① 2H Results 1H Results② Forecast
25.1
32.2
29.6
17.1
60.0

(billion yen)
Ⅰ．Cash flow fromoperating activities

②－①

-15.1

Ⅱ．Cash flow frominvesting activities

-17.6

-20.0

-28.4

-26.4

-60.0

-6.4

Ⅰ+Ⅱ．Net cash flow

7.5

12.2

1.2

-9.3

0.0

-21.5

Ⅲ．Cash flow fromfinancing activities

4.7

-5.3

-2.2

11.8

11.0

17.2

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

1.6

0.7

0.2

-0.9

-1.0

-1.6

13.7

7.6

-0.8

1.6

10.0

-6.0

Ⅴ．Net increase in cash andcash equivalents
80.0

60.0
40.0
20.0

CF from operating activities

CF from investing activities

32.2

25.1

Net CF

60.0

29.6
17.1

12.2

7.5

1.2

0.0

0.0
-20.0
-40.0

-17.6

-20.0

-9.3
-28.4

-26.4
-60.0

-60.0
FY20162H Results

2018/11/5

FY2017
1H Result

FY20172H Results

FY2018
1H Results

FY2018
Forecast

19

Contents
Ⅰ. Outline

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

2018/11/5

20

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

NTN in 10 years

Points focused in 3 years
To strengthen management bases that
support our businesses

1.Variable cost reformation
2.Structural Reforms for Man-hours and Resource
Smart Manufacturing（utilize IoT, AI and Robot）
Robotization in backoffice Dept.(introduce RPA)

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

2018/11/5
For more details of “DRIVE NTN100”, please refer to:21
https://www.ntnglobal.com/en/investors/pdf/findata/mtermplan2018.pdf

“DRIVE NTN100”:
Financial Summary of Aftermarket Business and Initiatives for Future
Sales: Increased compared to the plan of first year of medium-term due to strengthened service anddemand for commercial product and aftermarket
Income : Ensure the profit of the plan of first year of medium-term due to the improved sales price although
there is the material price soring and deterioration of productivity caused by tight supply-demand balance

Summary of aftermarket businessTransition in physical quantity by location+1% compared to plan（billion yen）

CAGR+4.5%
CAGR+7.3%
CAGR+4.3%

CAGR+4.2%

FY2009FY2017

FY2020Initiatives of “DRIVE NTN100”
1. Continue to strengthen technical services including maintenance
2. Establish production system which is not affected by variation of OEM
business

Aug.: Start production of precision
bearings in Germany

Oct.: Start delivering tapered
roller bearing made in Italy to U.S.

Transform from a “Manufacturing Company” that provides bearings into a“Company that Delivers Value to Customers” that provides services→Utilize sensing technology for industrial machinery business
Aftermarket
bearing

2018/11/5

MRO

Expand sales bystrengthening technicalservice and prompt
delivery system

Check & Repair business
Nov.: Develop Handy Type Failure
Detection Device II

22

“DRIVE NTN100”:
Financial Summary of Industrial Machinery Businessand Trend of main business
Sales: increased compared to compared to the plan of first year of medium-term forconstruction and agricultural machinery, wind turbine and machine tools, etc.
Income: decreased compared to the plan of first year of medium-term due to the steel and material price soring anddeterioration of productivity caused by tight supply-demand balance although the sales price improved（billion yen）

Summary of Industrial Machinery BusinessTransition in physical quantity by businesses(indexation)+8%
Construction（billion yen）

+13%

-9%

Wind Turbine
Strong demand
from customers
in U.S.

Machinery
Demandincreased mainly
from U.S.
customer+9%+5%Agricultural
Machinery
Strong demandmainly for large
machine in U.S.

2018/11/5

Transition in physical quantity by businesses(Fixed exchange rate) +4% compared to plan

Machine Tools
Increased bydemand in Europe
and Asia

GearboxDecreased
due topostpone ofinvestmentcompared toplan, etc.

Strengthen procurement
management system
Profit improvement by efficient
productivity

23

“DRIVE NTN100”:
Financial Summary of Industrial Machinery Businessand Initiatives for Future
Initiatives of “DRIVE NTN100”
1. Further development of core technologies;
development of high-performance products
2. Develop businesses in new areas
Robot related business(Robotics)
Service, solution business
Become a company that customers in the industrial
machinery market rely on most for its exceptional
technological competence

Respond changes in external environment
・Spread of IoT and utilization of AI
・Increased demand of robot related business・Prevention by monitoring

1. Further development of core technologies:
development of high-performance products

2. New areas:
Robot related business and Service, solution businessAccelerate development of products utilizing
NTN unique technology
Realize both high-speed
rotational performance andload resistance
Enable one machine tool toconduct rough processing tofinish processing

Robot related business ：Labor-saving applications using wrist joint modules

Angular Contact Ball Bearing for High-Speed andHeavy-Cutting Machine Tools

For shorter journal and reducing
journal bending
Contribute to safe and comfortable
driving of rolling stock
Short Type Sealed Journal Bearing Unit

2018/11/5

i-WRISTTM equipped with camera
enables automation of visualinspection conducted by humanService,solution: Intergrated sensor enables to prevent seizing
Sensor Integrated Bearing Unit
measures temperature, vibration andheat flux
Advanced condition monitoring andprevent bearing seizing
Sensor Integrated Bearing Unit

24

“DRIVE NTN100”:
Financial Summary of Automotive Business and Trend of Each Area
Sales: demand decreased in China due to backlash of tax reduction for small-size car. In Europe, demand also
decreased compared to the plan of first year of medium-term due to economic sanction on Iran in U.S. and WLTP
Income: decreased compared to the plan due to increase of cost caused by tariff and to the steel and material price soring(billion yen)

Summary of automotive BusinessNet sales & automotive production(indexation)
Line: Net Sales-2% compared to plan
Bar: Automotive Production

Net sales & automotive production (indexation) by business areas
±0

Japan
Recovery from effect of natural
disasters completed in 2nd half ofthe year and light weight cars andnew models remains strong

2018/11/5+2%

Americas
Demand for sedan decreased
but demand for EVs andlarge-size SUV and Pickup
increased well

-5%

EuropeDecreased due to WLTP
and economic sanction on
Iran and stagnant shift
from diesel to gas vehicle-6%

Asia & others
ASEAN growth well. In India,
sales decreased due topostpone of SOP on newmodels25

“DRIVE NTN100”:
Financial Summary of Automotive Business and Initiatives for Future
Initiatives of “DRIVE NTN100”
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

As an indispensable presence for the automotive market,
NTN will become a company that offers products andservices for vehicles all over the world

1. Strengthen core technologies and products
Accelerate development of products which contribute to
low friction and weight saving

Respond changes in external environment
・Electrification/EV/Automatic driving
Connected
Autonomous
SharedElectric

・Increase of global automotive
production (population growth)
2.New area: Respond to electrification and EVs
Expand electric device products

eHUB

CFJ-W

Low Friction
Hub Bearing II

2018/11/5

World's highest maximum operating
angle capability of 55°approximately
50% reduction in torque loss ratio
Contribute to a smaller minimum
turning radius of FF vehicle and low fuelconsumption
Reduces rotational friction by 50% compared
to conventional products without affecting
muddy water resistance
Improves fuel efficiency of vehicle byapproximately 0.42%

sHUB

Electric motor and actuator

Develop the products which respond toelectrification of vehicle motion control
Contribute to vehicle stabilization and low
fuel consumption

Expand core products for EVs
Adoption of NTN Core products, hub
bearing & driveshaft in EV manufacturer
increased
Contribute with Low torque, high rigidity,
high efficiency

26

“DRIVE NTN100”:
Initiatives to strengthen management bases
Robust management foundation

Initiatives of “DRIVE NTN100”

・Improve profitability
・Business expansion without the need for
additional workforce
・Improve efficiency in asset management

1. Variable cost reformation
2. Structural reform of man-hours and resources
3. Enhanced SCM and concentrated investment

1. Variable cost reformation
Establish Procurement HQ. in April
Expand production capability
Build supply chain to support to utilize
external production capability
Reduce external procurement cost

3. Enhanced SCM and concentrated investment
Renew core IT system and strengthen SCM

2. Structural reform of man-hours and resources
Smart Manufacturing（Robotization）
Utilize IoT, AI and Robot in manufacturing tohalve delivery time of prototype and reduce
LT by one third(Wakayama Works)

Robotization in backoffice dept.(introduce RPA)
Introduce RPA in HQ. and Technical dept.
Promote to apply with business reform

Establish CAE R&D Center in OctoberIntroduce latest CAE Technology
Quickly respond to customers by making designingand experiment more efficient

2018/11/5

System for Human resource, finance andtechnical information control already operated
System for SCM will be also operated (in 2nd half of FY2018)
Promote LT Reduction and efficient inventory asset

Intensively investing management resources in processes
in which our technical strengths can be demonstrated
Intensively invest in high-value-added products
・Reorganization of production system in Kuwana works
・Establish integrated production system in Hokuriku region
・Reorganization of production system of radial bearing(Wakayama works）･Reorganization of production system in Europe area(France)

Target of Variable cost reformation
3rd year: 3 billion yen on top of conventional cost reductions
10th year: 30 billion yen on top of conventional cost reductions

Target of reductions
in personnel expense in 3 years
Manufacturing dept. : 1 billion yen
Technical or managing dept. ：0.5 billion yen

27

Initiatives for ESG
NTN is working on ESG issues through the implementation of its corporate philosophy, contributing to the realization of asustainable society

GovernanceSocialEnvironmental

 Social contribution activities

 Develop innovative technologies,
products, and services

 Coexistence with local communities Reduce environmental burdens Work style reform Prevent global warming Strengthen and enhance corporate
governance Risk management
 Promote complianceGreen Energy Business
NTN Micro Hydro Turbine
large-scale construction
work to develop the waterlevel difference andgenerate power in water
channel"NTN Rotating School"
Support for function
Environmental education recovery of students withto the next generation
disabilities

Received 2018 Nikkei Global
Environmental Technology Awards（Award for Excellence）

Safety and Health Act
ISO45001 obtained in Japan
Establish EHS(Environment,
Health & Safety) Integrated
Managing Dept.

CSR Global Meeting

Supplier Meeting
Promote CSR
procurement

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

2018/11/5

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

28

Key Management Indicators of “DRIVE NTN100”
DRIVE NTN100
FY2018FY2020FY2017FY2018Results

Forecast

Plan

Net Sales\744.4 billion\750.0 billion\750.0 billion\800.0 billion

Operating Income\39.6 billion\35.0 billion\43.0 billion\57.0 billion

Operating Margin

5.3%

4.7%

5.7%

7.1%

Net Income\20.4 billion\15.0 billion\21.0 billion\30.0 billion

Capital expenditure\37.6 billion\45.0 billion\55.0 billion\170.0 billion/3 years

Target(incl. intangible \20.0 billion）

FCF\13.4 billion\0.0 billion\0.0 billion\45.0 billion/3 years

4.1 times

4.0 times

4.0 times

4.5 times

0.9

1.0

1.0

1.0 or less

Equity to capital ratio

30.2%

29.0%

29.5%

30％ or more

ROE

8.4%

5.8%

8.1%

10.0％ or more

NTN-ROI*

5.7%

4.8%

5.9%

7.5％ or more

Dividends

¥15.0

15.0円

¥15.0

\15.0 or more

USD

¥110.8

¥108

¥105

¥110

Euro

¥129.6

¥130

¥130

¥115

Inventory turnover ratio
Net D/E ratio

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

2018/11/5

29

Target of “DRIVE NTN100” by business sector
Revival 2014

NTN100DRIVE NTN100

FY2014FY2017

FY2020②vs①

Plan ③③vs②

Results ①

Plan

Results ②\701.9 billion\800.0 billion\744.4 billion

Automotive\480.5 billion\530.0 billion\508.6 billion+9％\550.0 billion+13%

Industrial Machinery\10.9 billion\120.0 billion\119.1 billion+12%\125.0 billion+11%

Aftermarket\112.4 billion\150.0 billion\116.7 billion+7％\125.0 billion+13%

Operating Income\43.9 billion\70.0 billion\39.6 billion-2%

Automotive\18.4 billion\32.0 billion\21.8 billion+32%\30.0 billion+62%

Industrial Machinery\6.3 billion\9.0 billion\2.8 billion-48%\7.0 billion+368%

Aftermarket\19.2 billion\29.0 billion\15.0 billion-20%\20.0 billion+47%

Operating Margin

6.2%

8.8%

5.3%

Net Sales

excl. Forex+9%-0.6pt\800.0 billion\57.0 billion

7.1%

excl. Forex

+12%

+68%

+2.4ptAutomotive

3.8%

6.0%

4.3%

+0.8pt5.5%+1.7ptIndustrial Machinery

5.7%

7.5%

2.3%

-3.1pt5.6%+3.9ptAftermarket

17.1%

19.3%

12.9%

-4.3pt16.0%+3.6pt\23.4 billion\42.0 billion\20.4 billion-\30.0 billion-

USD=\109.8

USD=\110

USD=\110.9-

USD=\110-Euro=\138.7

Euro=\130Euro=\129.6-

Euro=\115-

Net Income
Exchange rates

2018/11/5

30

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

2018/11/5

31

(Reference) Aftermarket Business :Result for the First Half and Forecast for the Second Half
＜Results for FY2018 1st Half (compared with FY2017 1st Half)＞

Net sales: ¥61.1 billion (+8.6%), Operating income: ¥7.8 billion (+14.6%)• In Japan, sales increased in industrial machinery aftermarket.
In Americas, Asia and others, sales increased in industrial machinery aftermarket and auto parts.
• In Europe, sales increased in industrial machinery aftermarket.

Net sales（billion yen）

＜Forecast for FY2018 2nd Half (compared with FY2017 2nd Half)＞

Operatingmargin

+8％

+4％

+2%

+16％

Japan

Decrease machine tools aftermarket

Americas

Steady sales for major distributors in industrial
machinery aftermarket. Increase auto parts.

EuropeIncrease sales mainly for major distributors
in industrial machinery aftermarket.
Steady sales for auto parts.

-4％

+8％

+2％

-6％

Short of stock due to increasing sales.

Asia and Decrease sales due to increasing demands
othersexceeding the supply.

2018/11/5 Note: % in the bar graph represents year-on-year changes excluding exchange rates

32

(Reference) Industrial machinery Business :Result for the First Half and Forecast for the Second Half
＜Results for FY2018 1st Half (compared with FY2017 1st Half)＞

Net sales: ¥62.0 billion (+8.1%), Operating income: ¥1.6 billion (+98.4%)• Strong demand for construction machinery increased sales in all regions.
• Sales increased for wind turbines in Americas, and aerospace in Europe.
OperatingmarginNet sales(billion yen)

＜Forecast for FY2018 2nd Half (compared with FY2017 2nd Half)＞

Japan
+2％

+13％

Steady demand for construction machinerywill continue. Increase in aerospace reflecting
projects for helicopters and new jet engines.

+2％

+12％

+9%

±0％

+8％

+8％

Increase demand for wind turbines.
Americas Sales for agricultural machinery reflecting
recovery of demand.

EuropeIncrease demand for new model in aerospace.
Increase demand for construction machineryand related machinery.

Asia and Increase in construction machinery in Asia.
others Increase demand for wind turbines in China.
2018/11/5 Note: % in the bar graph represents year-on-year changes excluding exchange rates

33

(Reference) Automotive Business :Result for the First Half and Forecast for the Second Half
＜Results for FY2018 1st Half (compared with FY2017 1st Half)＞

Net sales: ¥247.2 billion (+1.1%), Operating income: ¥5.9 billion (-35.7%)• In spite of natural disaster in Japan, sales increased thanks tostrong sales of vehicle using NTN products.
• Sales decreased due to stagnant shift from diesel to gas vehicle economic sanction on Iran andnew exhaust gas measurement standard＜Forecast for FY2018 2nd Half (compared with FY2017 2nd Half)＞

Net sales(billion yen)

Sales increased due to production ofJapan new models start and production recovery fromnatural disasters

Operatingmargin

+2％

+4％

±0％

±0％

-2%

-7％

+1％

±0％//

Although there is end of production of main
Americas models, Sales remains because EV products
grow well and new models in NTN Mexico
Sales decreased due to decreased demandfor diesel vehicle, economic sanction on IranEurope and production adjustment caused by
new exhaust gas measurement
Sales in ASEAN grow well for automobile andAsia andmotorcycle. However sales remains because ofothersdue to backlash of tax reduction for small-size car

2018/11/5 Note: % in the bar graph represents year-on-year changes excluding exchange rates

34