Market Environment and Performance for
the Year Ended March 31, 2007
Demand for products used in machine tools remained at a high level. Demand for products used in photofabrication equipment for liquid crystal display (LCD) panels substantially increased, although demand for products used in semiconductor and liquid crystal production equipment entered an adjustment phase from the middle of the year under review. As a result, net sales of precision machinery and parts increased by 18.1% year on year to ¥77.7 billion, led by increases in sales in each area of operation—Japan, the Americas, Europe and Asia.
Operating income increased by 107.3% year on year to ¥11.5 billion, which was a twofold increase over the previous year. This remarkable growth in operating income was due mainly to volume growth caused by increases in sales, reduction of external procurement costs, and improvements in productivity carried out at each plant, especially at the Maebashi Plant (NSK Precision Co., Ltd.), which manufactures ball screws. Operating income margin substantially improved to 14.8% from 8.5% in the previous year.
As a result, the precision machinery and parts segment accomplished all targets early—¥75.0 billion in sales, ¥10.5 billion in operating income, and 14.0% in operating income margin, which were set forth in the mid-term plan to be met by the year ending March 31, 2009. In the year ended March 31, 2007, NSK realized profit maximization in an expansionary phase of demand that substantially contributed to business performance.
Outlook and Priority Policies for
the Year Ending March 31, 2008
Outlook: Forecasting High Demand in the Machine Tools Sector and Recovery in the Semiconductor Sector
In the year ending March 31, 2008, in the business environment of precision machinery and parts, we are forecasting continued high demand in the machine tools sector and a recovery in the last half of the fiscal year of demand for products used in semiconductor production equipment. However, demand for photofabrication equipment for liquid crystal display (LCD) panels is expected to slow down. As a result, total net sales are forecast to decrease by 1.6% from the year under review, to ¥76.5 billion, operating income is expected to be flat at ¥11.6 billion, a 0.5% increase. This is supported by continued implementation of measures for improvement in productivity. The operating income margin is forecast to be 15.2%.
Priority Policies: Improvement in Profitability through Reinforcement of Products and Marketing Capabilities
We will reinforce the precision machinery and parts business to further improve our presence and acquire new customers as the only manufacturer to supply all products for the machinery sector, including ball screws, linear guides, spindles and bearings. We will reinforce marketing capabilities in Japan by taking advantage of a new marketing structure launched in October 2006. We will continue our global sales expansion by focusing on industries on a region-by-region basis, developing product strategies and pursuing product development that meets each type of demand. In addition, we are continually improving production efficiency, including productivity gains and shorter overall lead times. In the LCD panel market, in which demand is expected to expand over the long and medium term, we will try to increase orders from customers by launching “EGIS”—new photofabrication equipment for LCD panel production, which proactively meets users’ needs to reduce manufacturing costs for the increasingly larger LCD panels.
- Net sales increased by 18.1% year on year to ¥77.7 billion. Operating income increased by 107.3% year on year to ¥11.5 billion, which was a twofold increase over the previous year. Operating income margin improved to 14.8% from 8.5% in the previous year. Target figures set forth in the mid-term plan were accomplished early in sales, operating income and operating income margin.
- NSK realized profit maximization in an expansionary phase of demand, led by measures to improve productivity under way at the Maebashi Plant (NSK Precision Co., Ltd.) and others. This led to substantial increases both in sales and profit.
- NSK will strive to improve business performance by steadfastly capturing demand in the machine tools and semiconductor production equipment-related sector, and by steadily implementing priority policies, despite temporary demand weakness for products used in liquid crystal production equipment.
