NSK (NSK) (TOKYO: 6471) today announced its financial results for the fiscal year ending March 2015. The company achieved strong results for both sales and profit.
1. Business overview
(1) Qualitative information regarding consolidated business results
The NSK Group is working to implement its mid-term management plan for the three years beginning April 2013, aiming to achieve net sales of yen1 trillion in the year of 2016 - the 100th anniversary of the company's foundation. In order to enhance its corporate foundation, the NSK Group has adopted a business strategy of growth with a focus on profitability, and is implementing measures to develop the management capability required to handle yen1 trillion in sales volume.
Looking at global economic conditions for the year ended 31 March 2015, the Japanese economy showed signs of a gradual recovery due to the impact of lower crude oil prices and various policies by the Japanese government and the Bank of Japan, despite slow recovery in consumer spending following the consumption tax rise. The US economy continued to recover steadily. The European economy also showed signs of an upturn, primarily in the Eurozone, despite the impact of government debt problems and geopolitical risks. In Asia, economic conditions in the ASEAN bloc remained weak overall, although the Indian economy showed signs of recovery. Meanwhile, the pace of economic growth in China also slowed.
In this economic environment, consolidated net sales for the year ended 31 March 2015 totalled yen974 885 million, a year-on-year increase of 11.8%, and operating income totalled yen97 327 million, a year-on-year increase of 43%. Ordinary income was yen91 002 million, a year-on-year increase of 36.3%. Net income after adjusting for income taxes, minority interests, and other factors was yen61 962 million, a year-on-year increase of 98.8%.
Business segment information
1. Industrial machinery business segment
Demand in the industrial machinery business continued to gradually recover worldwide. Looking at results by region, sales in Japan increased, primarily in the machine tool and semiconductor sectors, driven by steady demand for smartphone-related machinery. Sales in the Americas grew, primarily in the general machinery sector. In Europe, sales increased due to steady demand in the wind turbine and machine tool sectors. In China, government stimulus policies drove strong demand in the railway and wind turbine sectors. Despite market stagnation, sales of industrial machinery bearings in the ASEAN region grew, primarily in the aftermarket sector.
As a result, net sales in the industrial machinery business totalled yen276 361 million, a year-on-year increase of 13.7%, and operating income was yen34 362 million, a year-on-year increase of 44.9%.
2. Automotive business segment
The global automotive market continued its gradual expansion, driven by the strong North American market, despite slower demand growth in China. Looking at results by geographic breakdown, the automotive market in Japan was slow to recover from the impact of the consumption tax rise, and sales declined as NSK shifted part of its production overseas in line with automakers' requirements for local procurement. In the Americas, sales increased due to strong market demand in North America in addition to the effect of production transfer from Japan. In Europe, continued recovery in the automotive market led to higher sales. In China, electric power steering system (EPS) sales rose significantly due to the intake of new orders, while sales of automotive bearings - primarily to European and Japanese automakers - were also strong despite slower market growth. Meanwhile, although market conditions in other parts of Asia varied by country, sales to Japanese and Korean automakers rose.
As a result, net sales in the automotive business totalled yen656 998 million, a year-on-year increase of 11.3%, and operating income totalled yen65 718 million, a year-on-year increase of 33.6%.
Business forecast for the year ending 31 March 2016
The global economic outlook remains uncertain due to the impact of US monetary policy on emerging countries, particularly China, as well as rising geopolitical and economic risks. However, the global economy is expected to continue its gradual recovery despite areas of weakness.
Given such circumstances, NSK forecasts the following financial results for the year ending 31 March 2016.
Year ending 31 Mar 2016 | % change from previous year | ||||||
Consolidated financial highlights | |||||||
Net sales | yen 1 020 000 | million | +4.6% | ||||
Operating income | 102 000 | +4.8% | |||||
Ordinary income | 100 000 | +9.9% | |||||
Net income | 70 000 | +13.0% | |||||
Industrial machinery business | |||||||
Net sales | yen 292 000 | +5.7% | |||||
Operating income | 38 000 | +10.6% | |||||
Automotive business | |||||||
Net sales | yen 701 000 | +6.7% | |||||
Operating income | 70 000 | +6.5% |
o Exchange rate forecast for the year ending 31 March 2016:
US $1=yen115, 1EUR=yen125
Notes
All forecasts are based on a number of assumptions regarding business environment and policies, and are subject to change with various factors. Actual financial results may differ materially and NSK accepts no liability whatsoever for any direct or consequential loss arising from any use of this report.
(2) Qualitative information regarding consolidated financial position
Assets and liabilities
Total assets were yen1 129 164 million, an increase of yen128 232 million compared to total assets as of 31 March 2014. The main reasons for this increase were increases of yen7 770 million in cash and deposits, yen23 826 million in notes and accounts receivable, yen5 960 million in short-term investment securities, yen30 726 million in property, plant and equipment, yen14 740 million in investment securities, and yen29 621 million in net defined benefit assets.
Total liabilities were yen647 304 million, an increase of yen28 527 million compared to total liabilities as of 31 March 2014. The main reasons for this increase were increases of yen23 371 million in current portion of long-term loans payable, yen40 000 million in corporate bonds, and yen12 422 million in deferred tax liabilities, which offset decreases of yen15 000 million in current portion of corporate bonds and yen35 374 million in long-term loans.
Net assets
Net assets totalled yen481 859 million, an increase of yen99 704 million compared to net assets as of 31 March 2014. The main reasons for this increase were yen61 962 million in net income, yen21 659 million in translation adjustments, and yen19 542 million from re-measurements of defined benefit plans.
Cash flows
Total cash and cash equivalents at the end of the period were yen184 374 million, a year-on-year increase of yen15 434 million.
1. Net cash flow provided by operating activities
Net cash flow provided by operating activities totalled yen67 709 million, a decrease of yen2 633 million, compared to the same period of the previous year. This includes yen87 976 million in income before tax expenses and minority interests, and yen38 453 million provided by depreciation and amortisation, which offset an increase of yen16 119 million in notes and accounts receivable, yen18 878 million in Antimonopoly Act related loss paid, and yen30 687 million in income taxes paid.
2. Net cash flow used in investing activities
Net cash flow used in investing activities totalled yen46 335 million, an increase of yen3 932 million compared to the same period of the previous year. This includes yen43 891 million for purchase of property, plant and equipment.
3. Net cash flow used in financing activities
Net cash flow used in financing activities totalled yen8 304 million, an increase of yen5 100 million compared to the same period of the previous year. This includes a net increase of yen40 000 million in proceeds from issuance of corporate bonds, which was offset by decreases of yen25 123 million due to repayment of long-term loans, yen15 000 million due to repayment of corporate bonds, and yen11 353 million in dividends paid.
As of 31 Mar 2012 | As of 31 Mar 2013 | As of 31 Mar 2014 | As of 31 Mar 2015 | |||||
Shareholders' equity to total assets (%) | 33.2 | 36.2 | 35.9 | 40.4 | ||||
Shareholders' equity to total assets at market value (%) | 40.7 | 43.7 | 57.3 | 84.3 | ||||
Cash flow to interest ratio (years) | 5.2 | 5.7 | 4.5 | 4.8 | ||||
Interest coverage ratio (times) | 11.8 | 11.4 | 14.4 | 13.2 |
* Shareholders' equity to total assets: Shareholders' equity/total assets
* Shareholders' equity to total assets at market value: Market capitalisation/total assets
* Cash flow to interest ratio: Interest bearing debts/net cash provided by operating activities
* Interest coverage ratio: Net cash provided by operating activities/interest paid
(Notes)
1. All indices have been calculated based on consolidated data.
2. Market capitalisation has been calculated as: "Closing share price at end of the year" x "Common shares outstanding at end of the year".
3. Net cash provided by operating activities refers to the net cash provided by operating activities on the consolidated statements of cash flows. Interest-bearing debts refer to the total amount of liabilities paying interests on the balance sheet.
(3) Basic policy on appropriation of retained earnings and dividends
NSK places great importance on shareholder returns. It will maintain its basic policy of issuing a consistent dividend, and ensure its dividends better reflect its consolidated payout ratio and business results.
Considering this dividend policy, the year-end dividend for the fiscal year ended 31 March 2015 will be yen16 per share. Including the dividend of yen12 per share for the first half of the year, paid on 2 December 2014, the full year dividend will be yen28 per share, a year-on-year increase of yen12.
Dividends for the year ending 31 March 2016 are planned to be yen34 per share (yen17 per share for the first half of the year).
Safe harbour statement
This document is an English convenience translation of a document that was originally prepared in the Japanese language and is provided for convenience purposes only. NSK makes no representation or warranty that this document is a complete or accurate translation of the original Japanese text, and 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.
View this news release online at:
http://www.businesswire.com/news/home/20150511005327/en.
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