NSK REPORT 2019 Year Ended March 31, 2019 Integrated Report NSK REPORT 2019

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NSK REPORT 2019 Year Ended March 31, 2019 Integrated Report NSK REPORT 2019 NSK REPORT 2019 Year ended March 31, 2019 Integrated Report NSK REPORT 2019 NSK used environmentally friendly paper and printing methods for this publication. CAT. No. E8412 2019 B-10 Printed in Japan @NSK Ltd. 2019 Mission Statement NSK contributes to a safer, smoother society and NSK’s Value Creation Story helps protect the global environment through Vision TM its innovative technology integrating Motion & Control . We formulated NSK Vision 2026 to mark As a truly international enterprise, we are working across national the 100th anniversary of our foundation boundaries to improve relationships between people throughout the world. in 2016, aiming to create new value over the next decade. Origin Sustainability Management Principles Action Guidelines Mission Over the 100 years since its Promote ESG Management 1 To provide our customers with Beyond Limits, Beyond Today innovative and responsive Statement foundation in 1916, NSK has taken NSK’s Value Created Placing“ safety,”“ quality,” solutions through our world on the challenge of developing Beyond Frontiers “compliance,” and“ environment” leading technologies. innovative technologies as Japan’s Environmental contribution Customers (low friction, high efficiency, Employees as core values, NSK will help find Beyond Individuals first bearing manufacturer and improvement of transmission efficiency) 2 To provide challenges and solutions to social issues by opportunities to our employees, has supported the development Contribution to an advanced technological society utilizing their skills and Management Principles / Beyond Imagination of industries worldwide while realizing value co-creation as it encouraging their creativity and meets the expectations of Action Guidelines Beyond Perceptions contributing to the reduction of Realization of a more prosperous society Local individuality. energy loss. Suppliers Communities stakeholders. Growth of a wide range of industries 3 To identify the needs of the Challenging the Future present and future, and to meet Advancement of mobility societies these needs by being flexible, agile, and dynamic. Businesses Shareholders Improvement of shareholder value Future Strategy (Year ended March 31, 2019) and Generations 4 To contribute to the communities Investors in which we operate. NSK Vision 2026 NSK’s Seven Key SDGs Sales: ¥991.4 billion The Company launched its 6th 5 To manage our business from an Mid-Term Management Plan for Industrial Machinery Business (27 ) international perspective and to % the three years beginning in April develop a strong presence Automotive Business (70%) throughout the world. 2019 in order to achieve its vision for Bearing sales (including 2026:“ Establish a corporate foundation industrial/automotive) for sustainable growth.” NSK will build its No. 1 market share in Japan, No. 3 worldwide business base and strengthen resources to SETTING THE FUTURE IN MOTION reach the next growth phase. We bring motion to life, to enrich lifestyles, Value Base and to build a brighter future. Four Core Technologies + 1 Global Business Foundation NSK’s Four Core Technologies are“ tribology,” which NSK has 208 production sites, sales sites Dedicated to uncovering society’s needs, controls friction and wear;“ materials,” which affects and R&D centers in 30 countries and regions we set ideas in motion, product performance;“ numerical simulation,” which is around the world, all of which are managed by indispensable for optimal product design and development; six headquarters worldwide. Leveraging this to deliver solutions beyond imagination. and“ mechatronics,” which realizes complex and minute network, we work in close collaboration globally We’re NSK. movement. In combination with“ manufacturing while engaging in agile local-oriented engineering,”̶ upon which our Four Core Technologies take management. And, we’re setting the future in motion. shape̶we take on the challenge of creating new value. CONTENTS Highly Evaluated by Outside Agencies (SRI/ESG) NSK Report 2019 Editorial Policy Over and above their financial aspects, companies that merit high evaluations The NSK Report 2019 is designed to provide all stakeholders with a deeper NSK’s Value Creation Process The 6th Mid-Term Management Plan Human Resource Management ……………… 50 for their environmental and social contributions are being recognized for their understanding of how the Company collaborates in the creation of value that meets the NSK’s Business …………………………………… 02 “New Initiatives Targeting Growth”…………… 30 Supply Chain Management …………………… 52 expectations of the world over the medium to long term, and of the processes that will promise of long-term sustainable growth. These companies are also attracting achieve both social contribution and corporate development. History of NSK’s Overseas Expansion ………… 04 Financial Strategy / Policy on Shareholder Compliance ……………………………………… 53 interest from a socially responsible investment (SRI) perspective while forging In the fiscal year under review, NSK launched its 6th Mid-Term Management Plan. an increasingly important presence among a wide range of institutional In NSK Report 2019, we explain, from both financial and non-financial perspectives, the To Our Stakeholders ……………………………… 06 Returns ……………………………………………… 32 Corporate Governance ………………………… 54 investors. Acknowledged for its integrity, NSK has been included in the management issues and specific measures that we will tackle over the three years of the NSK’s Value Creation Model …………………… 12 Creating Value with Stakeholders ……………… 34 Interview with NSK’s Outside Directors ……… 58 following internationally recognized SRI/ESG indices as of August 2019. Plan to realize NSK’s goal in 2026, the 110th anniversary of its foundation. This Report provides a concise summary of all information deemed important in NSK’s Business Activities and Corporate Value Risk Management ………………………………… 36 Management ……………………………………… 62 the Group’s efforts to create corporate value. For more detailed information about the Creation (Deepening of Value Chain)…………… 14 NSK Group’s products, business activities and financials, we ask that you refer to the Company’s website. Detailed information about NSK’s approach Financial and Non-Financial Highlights ……… 16 Activity Report (Actual and Forecast) Data Section and initiatives in corporate social responsibility (CSR) can be found in the CSR section of our website and in our Sustainability Business Activities Report Consolidated Financial Statements …………… 64 Report (formerly CSR Report). In putting together this Report, Sustainable Growth Strategies Industrial Machinery Business ……………… 38 Management’s Discussion and Analysis of we referred to the International Integrated Reporting https://www.robecosam. https://www.ftserussel https://www.ftserussell. Framework of the International Integrated Reporting Council Looking Back on Past Mid-Term Automotive Business …………………………… 40 Financial Position, Results of Operations and com/csa/indices/ l.com/products/ com/products/indices/ (IIRC) as well as the Guidance for Collaborative Value Creation Management Plans ……………………………… 20 Core Technologies and Taking Up the Challenge Cash Flows ………………………………………… 68 djsi-index-family.html indices/ftse4good blossom-japan formulated by Japan’s Ministry of Economy, Trade and Industry. Toward 2026 of Creating New Value Basic Knowledge of Bearings…………………… 70 Disclaimer (The 6th Mid-Term Management Plan)………… 22 Four Core Technologies + 1 …………………… 42 Glossary …………………………………………… 72 Statements made in this integrated report with respect to plans, strategies and future CSR/ESG Management…………………………… 24 Establishment of the Needle Development Center …… 43 NSK Group ………………………………………… 74 performance that are not historical facts are forward-looking statements. NSK cautions New Initiatives Targeting Growth Global Business Foundation …………………… 44 Information for Investors / Company Data …… 76 that several factors could cause actual results to differ materially from those discussed in http://vigeo-eiris.com/ https://www.issgoverna forward-looking statements. Industrial Machinery Business Initiatives to Strengthen CSR/ESG Management Third-Party Assurances ………………………… 77 nce.com/esg/ratings/ https://www.sjnk-am. This document is an English translation of NSK Report 2019 dated September 20th, Message from Top Management 26 Environmental Management 46 corporate-rating/ com/ 2019, that was originally prepared in the Japanese language, and it is provided for ……………… ………………… convenience purposes only. Therefore, this document does not include any event that has Automotive Business Safety Management …………………………… 48 occurred, or has been found to have occurred, on or after September 20th, 2019. NSK makes no representation or warranty that this document is a complete or accurate Message from Top Management……………… 28 Quality Management …………………………… 49 translation of the original Japanese text, and it is not intended to be relied upon. In the event that there is a discrepancy between the Japanese and English versions, the Japanese version shall prevail. This document is not intended and should not be construed as an inducement to purchase or sell stock in NSK. NSK REPORT 2019 01 Mission Statement NSK contributes to a safer, smoother society and NSK’s Value Creation Story helps protect the global environment through Vision TM its innovative technology integrating Motion & Control . We formulated NSK Vision 2026 to mark As a truly international enterprise, we are working across national the 100th anniversary of our foundation
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