Top Message

The year ended March 31, 2011 began with the global economy on track for recovery as the confusion of the financial crisis subsided and the benefits of governments’ economic stimulus measures emerged. During the course of the year, concern arose over risk related to European sovereign debt, exchange rate volatility, and the ending of economic stimulus measures. Nevertheless, the economic growth of emerging countries created burgeoning demand that led to a recovery in our business results. Despite the almost complete suspension of automotive manufacturing in Japan in March due to the earthquake, for the full year we were able to post significant year-on-year increases in net sales and operating income. Moreover, based on a fixed exchange rate, orders surpassed our previous peak recorded in the year ended March 31, 2008. prior to the financial crisis.

In the year ending March 31, 2012, the second to last year of the mid-term plan prepared in October 2009, Japan’s overall business climate is likely to trend more strongly toward recovery, as demand stemming from rebuilding of regions afflicted by the earthquake and tsunami and inventory restocking counteract a significant reduction in manufacturing activity due to the earthquake and such risks as power shortages. Meanwhile, with respect to the global economy, we should bear in mind the risk of increased uncertainty as economic conditions waver between recovery and stagnation. We must monitor emerging trends and developments carefully, including the progress of economic recovery in the United States, the effect on the eurozone economy of southern European countries’ fiscal reconstruction problems, and the risk of economic slowdown in China due to monetary tightening aimed at curbing inflation.

In these economic conditions, the issues we must tackle remain the same. Namely, we must step up the pace of the growth strategies and profitability enhancement measures that we are implementing in accordance with the mid-term plan. As part of our growth strategy in emerging countries, our 11th production base in China—a large size bearing plant in Shenyang, Liaoning Province—will start full-scale operations in the current fiscal year. Further, July saw the establishment of a ball bearing manufacturing company in inland China, located in Hefei, Anhui Province, which will become our 12th production base in the country. In Thailand, we have begun manufacturing electric power steering (EPS) systems. We also plan to raise production capacity at existing production bases in other regions to cater to market growth.

As a profitability enhancement measure, we are ramping up production capacity at overseas plants with a view to manufacturing 50% of products outside Japan. At the same time, however, we intend to truly strengthen overseas manufacturing capabilities. In this initiative, we will heighten the ability of local manufacturing to create added value by performing a wide range of advanced functions independently. In addition, we will work to adjust the mix of products sold to strengthen our business structure. Currently, the Automotive Business accounts for 60% of net sales, while the Industrial Machinery Business generates 40%. By growing the latter at a rate higher than the former, we aim to adjust this ratio to 55:45. Ultimately, our goal is to reach a ratio of 50:50. Improving the balance between the robust profitability of the Industrial Machinery Business and the high volume of the Automotive Business will enable an even stronger profit structure.

By our 2016 centennial, we aim to achieve net sales of ¥1 trillion. However, this does not mean that we are simply trying to increase sales. We want all stakeholders to recognize NSK as a leading global company with strong earning power and highly transparent business management.

In all our efforts, we would like to ask for their continued support and understanding.