Management Performance/Financial Analysis (Fiscal year ended March 31, 2026)
Overview of Operating Results
Consolidated Operating Results
During the fiscal year under review, the global economy continued a gradual recovery, although weakness was observed in some regions. Regarding the Japanese economy, while it is necessary to monitor the impact of the situation in the Middle East, improvements were seen in personal consumption and capital investment, leading to a gradual recovery. Overseas, the U.S. economy continued to expand moderately, although some weakness was observed. The Chinese economy showed a gradual slowdown, while the economies of other emerging countries in Asia showed signs of recovery and expansion. The European economy showed signs of recovery in the eurozone.
Amid this environment, in order to continue the acceleration of “transformation of business structure” set forth in the Medium-Term Management Plan “DRIVE NTN100” Final, which began in April 2024, and to complete the revitalization of NTN, we will focus on implementing structural reform centered on production reorganization, and on improving our “earning power” through the strengthening of “SQCCD.”*1
- Safety, Quality, Compliance, Cost & Cash, and Delivery & Development
Net sales for the fiscal year under review amounted to 826,344 million yen (up 0.1% year on year). Regarding profit and loss, although there was an impact from the decrease in scale, operating income amounted to 31,034 million yen (up 35.2% year on year), reflecting price pass-on measures and reductions in variable costs. Ordinary income amounted to 23,484 million yen (up 24.2% year on year), due mainly to an improvement in foreign exchange gains and losses resulting from the weaker yen, and profit attributable to owners of parent amounted to 12,871 million yen (compared with a loss attributable to owners of parent of 23,801 million yen in the previous fiscal year), reflecting the impact of tax effect accounting in the Japan segment, among other factors.
Operating results by reporting segment (company location) were as follows:
| (1) Japan | In the bearing and others business, sales in aftermarket applications increased. Sales in OEM applications increased in industrial machinery applications and decreased in automotive applications. In the CVJ/Axle business, sales in OEM applications decreased in automotive applications due to a decline in customer demand. As a result, net sales amounted to 352,161 million yen (down 0.7% year on year). Segment income amounted to 9,192 million yen (down 18.0% year on year) mainly due to the impact of a decrease in the scale of sales, despite price pass-on measures. |
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| (2) Americas | In the bearing and others business, sales in industrial machinery applications increased, and in the CVJ/Axle business, sales in automotive aftermarket applications increased, in each case on a local currency basis; however, both businesses were affected by exchange rates and by a decline in customer demand in automotive OEM applications. As a result, both businesses recorded lower sales, and net sales amounted to 263,591 million yen (down 3.1% year on year). Segment income amounted to 5,469 million yen (compared with a segment loss of 395 million yen in the previous fiscal year) mainly due to reductions in variable and fixed costs, despite the impact of U.S. trade policy. |
| (3) Europe | In the bearing and others business, sales in automotive applications decreased. In the CVJ/Axle business, sales in automotive OEM applications decreased due to a decline in customer demand. As a result, net sales amounted to 197,462 million yen (up 3.6% year on year). Segment loss amounted to 1,061 million yen (compared with a segment loss of 4,163 million yen in the previous fiscal year) mainly due to reductions in variable and fixed costs, despite the impact of a decrease in the scale of sales. |
| (4) Asia and other areas | In the bearing and others business, sales in aftermarket applications and industrial machinery applications increased, while sales in automotive applications decreased. In the CVJ/Axle business, sales in automotive aftermarket applications increased, while sales in automotive OEM applications decreased due to a decline in customer demand. As a result, net sales amounted to 167,732 million yen (down 0.5% year on year). Segment income amounted to 17,573 million yen (up 19.1% year on year) mainly due to reductions in variable and fixed costs, despite the impact of a decrease in the scale of sales. |
Operating results by business segment were as follows:
| (1) Bearing and Others | Net sales amounted to 348,890 million yen (up 2.4% year on year) mainly due to a recovery in customer demand and the impact of exchange rates. Operating income amounted to 12,256 million yen (down 10.4% year on year) mainly due to the impact of a decrease in the scale of sales, despite price pass-on measures and reductions in variable costs. |
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| (2) CVJ/Axle | Net sales amounted to 477,453 million yen (down 1.5% year on year) mainly due to a decline in customer demand. Operating income amounted to 18,778 million yen (up 102.4% year on year) mainly due to price pass-on measures and reductions in variable costs, despite the impact of a decrease in the scale of sales. |
Forecast for the Year Ending March 31, 2027
The global economy is expected to continue to pick up. However, there are uncertainties regarding the situation in the Middle East, the impact of trade policies in the U.S., and price increases and global monetary tightening, and these events with high uncertainty may become an important risk.
Under such circumstances, as our full-year earnings forecast, we expect net sales of 810.0 billion yen, operating income of 33.0 billion yen, ordinary income of 21.0 billion yen, and profit attributable to owners of parent of 15.0 billion yen. We are assuming exchange rates of ¥150/US$1.00 and ¥175/EUR1.00.
R&D and Capital Expenditures
R&D Expenditures
In the fiscal year under review, research and development expenditures for the entire Group were 19,950 million yen (an increase of 294 million yen year on year), with a ratio to net sales of 2.4%.
Under its corporate philosophy of “We shall contribute to international society through creating new technologies and developing new products,” the NTN Group addresses social issues and promotes research and development activities aimed at realizing a sustainable “NAMERAKA Society.”
Under the Medium-term Management Plan “DRIVE NTN100” Final, which began in April 2024, we revised our organizational structure to a product-based one in order to accelerate the transformation of our business structure, thereby strengthening our supply capabilities and ability to propose solutions. In research and development, we operate on the dual axes of “strengthening core products and core technologies” and “developing in new fields,” with the aim of achieving the Company's sustainable growth, and we are working on product development that leverages our core competencies, centered on tribology technology.
Capital Expenditures
The NTN Group (the Company and its consolidated subsidiaries) makes capital investments that are primarily focused on improving production capacity, labor-saving rationalization, maintaining and updating existing facilities, improving the safety environment, and researching and developing new products.
In Japan, we made capital investments of 13,311 million yen, including the installation of building facilities and bearing manufacturing equipment at Wakayama Works, seismic reinforcement work at the needle bearing plant at Iwata Works, and the installation of Constant Velocity Joint (CVJ) manufacturing equipment at NTN FUKUROI CORP.
In the Americas, we made capital investments of 3,812 million yen, including the relocation of the head office of NTN USA CORP. and NTN BEARING CORP. AMERICA.
In Europe, we made capital investments of 11,085 million yen, including the construction of the head office and the installation of bearing manufacturing equipment at NTN Europe S.A., and the renewal of Constant Velocity Joint (CVJ) manufacturing equipment at NTN Transmissions Europe.
In Asia and other regions, we made capital investments of 4,420 million yen, including the installation of solar power generation equipment at NTN Manufacturing (Thailand) Co., Ltd., construction of buildings at NTN NEI Manufacturing India Pvt. Ltd., and the installation of Constant Velocity Joint (CVJ) manufacturing equipment.
In addition to the above, we recorded an adjustment of minus 165 million yen on the intersegment transfer of equipment, resulting in total capital investments of 32,464 million yen for the current consolidated fiscal year.
The funds required were financed by our own capital and loans.
Financial Position and Cash Flow
Assets, Liabilities, and Net Assets
Current assets increased 11,139 million yen (up 2.1%) from the previous fiscal year end and amounted to 545,000 million yen. This is mainly due to an increase of 8,210 million yen in notes and accounts receivable-trade and an increase of 6,323 million yen in finished goods & purchased goods. Fixed assets increased 11,112 million yen (up 3.4%) from the previous fiscal year end and amounted to 333,675 million yen. This is mainly due to an increase of 7,218 million yen in construction in progress and an increase of 4,625 million yen in asset for retirement benefits. As a result, total assets increased 22,251 million yen (up 2.6%) from the previous fiscal year end and amounted to 878,676 million yen.
Current liabilities decreased 60,581 million yen (down 14.3%) from the previous fiscal year end and amounted to 361,932 million yen. This is mainly due to a decrease of 40,000 million yen in the current portion of bonds payable and a decrease of 22,035 million yen in the current portion of convertible bonds. Fixed liabilities increased 20,140 million yen (up 10.9%) from the previous fiscal year end and amounted to 205,353 million yen. This is mainly due to an increase of 32,482 million yen in long-term loans and a decrease of 8,611 million yen in liability for retirement benefits. As a result, total liabilities decreased 40,440 million yen (down 6.7%) from the previous fiscal year end and amounted to 567,286 million yen.
Total net assets increased 62,690 million yen (up 25.2%) from the previous fiscal year end and amounted to 311,389 million yen. This is mainly due to an increase of 26,508 million yen in translation adjustments, an increase of 11,000 million yen in common stock, an increase of 11,000 million yen in capital surplus, and an increase of 8,256 million yen in retained earnings.
Cash Flows
Net cash provided by operating activities amounted to 57,179 million yen (up 11,556 million yen, or 25.3%, year on year). This was mainly due to the cash inflow factors of 40,493 million yen in depreciation and amortization, 15,202 million yen in profit before income taxes, and 14,640 million yen in decrease in inventories, partially offset by the cash outflow factor of 9,385 million yen in income taxes paid.
Net cash used in investing activities amounted to 26,276 million yen (up 316 million yen, or 1.2%, year on year). This was mainly due to the expenditure of 29,118 million yen in purchase of property, plant and equipment.
Net cash used in financing activities amounted to 35,322 million yen (up 16,614 million yen, or 88.8%, year on year). This was mainly due to the cash outflow factors of 52,886 million yen in repayment of long-term loans and 50,000 million yen in redemption of bonds, partially offset by the cash inflow factor of 68,500 million yen in proceeds from long-term loans.
After adjusting for 8,062 million yen due to the effect of exchange rate changes and a decrease of 99 million yen in cash and cash equivalents resulting from exclusion from consolidation, cash and cash equivalents as of the end of the current consolidated fiscal year amounted to 131,255 million yen, an increase of 3,543 million yen (up 2.8%) from the end of the previous fiscal year.