Market Environment and Performance for
the Year Ended March 31, 2007
Amid a healthy demand environment, NSK’s automotive products business grew well and sales in each of the operating areas, Japan, the Americas, Europe and Asia, increased. In automotive bearings, export demand increased, mainly from Japanese automotive manufacturers, and sales of hub unit bearings and needle roller bearings rose globally. In automotive components, the launch of high-power electric power steering (EPS) systems in Japan and Europe contributed substantially to performance, and sales of automatic transmission (AT) components and steering columns increased.
As a result, overall net sales of automotive products increased by 12.7% year on year to ¥397.9 billion in the year ended March 31, 2007. Operating income increased by 30.5% year on year to ¥22.7 billion, and the operating income margin steadily improved from the previous year’s 4.9% to 5.7%. This is due to the enhancement of capacity utilization due to volume growth, cost reduction in external procurement, implementation of measures to improve productivity, the start of mass production at the steering systems plant in Poland and the needle roller bearing plant in China in the previous year, and contribution to profit led by smooth production expansion.
Outlook and Priority Policies for the Year Ending March 31, 2008
Outlook: Business Growth Trend Likely to Continue Slowly
Regarding the prospects for the world's automotive markets in the year ending March 31, 2008, demand should remain firm in Europe and the Americas. Demand in emerging markets, such as China and India, is expected to continue growing. Based on this outlook, NSK expects global automobile production to increase slowly.
In automotive bearings, sales of bearings made in Japan are expected to grow, led by increasing demand for export. Sales of hub unit bearings for the still strongly expanding Chinese market are forecast to increase substantially. In automotive components, sales of electric power steering (EPS) systems are forecast to surge, because of their increased adoption in vehicles.
As a result, total net sales of automotive products are expected to rise by 3.1% to ¥410.2 billion, operating income is expected to increase by 11.1%, to ¥25.2 billion, and operating income margin is estimated to reach 6.1%, under steady implementation of measures to improve profitability, which is a priority policy of the year ending March 31, 2008.
Priority Policies: Consolidation of Our Stable Source of Income and Order-winning Activities
For sales of automotive products in the year ending March 31, 2008, NSK will strive to strengthen profitability. In domestic plants, NSK will maximize capital investment effects and reduce external procurement cost. Further, NSK will strive to enhance profits through APS (Advanced Production System) activities conducted by the production, sales and R&D departments working closely together.
In overseas plants, NSK will strive to improve profitability through the promotion of global procurement, which encompasses the most appropriate supply and expansion of in-house manufacturing, as well as through improvements in productivity. Meanwhile, NSK will implement capital investment to respond to growing overseas demand. In the U.S.A., a second steering systems plant will be completed in Tennessee, meeting demand for steering columns and anticipated major orders for electric power steering (EPS) systems from Japanese manufacturers. In India, NSK will start production of automotive bearings in Chennai to respond to rapidly growing automobile production. Further, a second building will be completed at the automotive bearing plant in Thailand, to respond to the demand there. NSK will further reinforce business foundations through starting up new plants smoothly, and expanding production sites.
NSK will also work hard to win more orders for bearings for drivetrains and high-power electric power steering (EPS) systems, leading to expansion of the automotive products business.
- Supported by an overall favorable demand environment, net sales increased by 12.7% year on year to ¥397.9 billion, and operating income increased by 30.5% year on year to ¥22.7 billion. Operating income margin rose from 4.9% to 5.7% year on year, and NSK is making steady progress in earning recovery in this segment.
- Enhancement of capacity utilization due to volume growth, the reduction of external procurement costs and improvement in productivity contributed a lot to an improvement in revenues.
- To consolidate its earnings base, NSK will proceed with the improvement of productivity globally, thereby increasing profitability in the year ending March 31, 2008. NSK will also focus on ensuring that the newly built overseas plants in the U.S.A., India and Thailand will take off smoothly to reinforce overseas business capabilities.
