Top Message

The global economic crisis caused a sharp fall in demand in all of our businesses and markets in the year ended March 31, 2009, and both sales and income were substantially lower. In the autumn of 2008, we established Task Force—Emergency Profitability Improvement to conduct an in-depth review of the human, physical, and financial elements of our organization and implement customer-focused measures designed to increase sales in a rapidly shrinking demand environment. While these measures produced tangible results, they could not fully offset the impact of the crisis. We therefore will take further steps to improve administrative efficiency and reform cost structures. At the same time, we will work aggressively to expand sales in areas in which our market share is still low and in the Chinese market, which has continued to grow even in the present environment. Other areas targeted for sales expansion include the market for clean energy technology. We will relentlessly move forward with these measures with the aim of securing positive income results in the year ending March 31, 2010.

 Since 2003, NSK has achieved business expansion and steadily increased its presence through its growth strategies and profitability enhancement measures. However, we believe that a totally different world awaits us at the end of the present recessionary tunnel, and that growth strategies based on traditional patterns will not be effective in that world. In other words, we anticipate a paradigm shift. There have been, for example, cataclysmic changes in the automobile industry, which is our biggest source of demand. Those changes, including an accelerating shift from gasoline-powered vehicles to hybrids and electric cars, and the decline of the Detroit Three, will rewrite the world map of automobile manufacturing and trigger a parallel restructuring process in the automotive parts industry. In the industrial machinery market, we predict continuous growth in demand for environmentally friendly products. This segment is also likely to change geographically because of escalating competition in a number of regions, such as China, India, ASEAN, Latin America, the Middle East, and Russia.

 We have significant assets, including our customer base, technologies, production systems, and global networks. Our goal now is to strengthen those assets and use them as a foundation for further improvement of our ability to adapt to this paradigm shift from the medium- and long-term perspectives. Our basic stance toward this task calls for the continuing reinforcement of our division-based business administration structure. We also aim to strengthen our position in Japan, our home market, while at the same time evolving toward increasingly global management and business operations. Another focus will be the further improvement of our ability to provide total quality through the reinforcement of QCD (Quality, Cost, Delivery) advantage as the source of our competitiveness.

 We hope that these efforts will win us the continued understanding and support of our shareholders and investors.

July 2009