Nidec Corporation. Fiscal 2017 Financial Results Fiscal Year Ended March 31, 2018 <IFRS> Disclaimer Regarding Forward-looking Statements

Transcription

1 TSE: 6594 OTC US: NJDCY Nidec Corporation Fiscal 217 Financial Results Fiscal Year Ended March 31, 218 <IFRS> April 25, 218 Disclaimer Regarding Forward-looking Statements These presentation materials and the related discussions contain forward-looking statements including expectations, estimates, projections, plans and strategies. Such forward-looking statements are based on management s targets, assumptions and beliefs in light of the information currently available. Certain risks, uncertainties and other factors could cause actual results to differ materially from those discussed in the forward-looking statements. Such risks and uncertainties include, but are not limited to, changes in customer circumstances and demand, exchange rate fluctuations, and the Nidec Group s ability to design, develop, mass produce and win acceptance of its products and to acquire and successfully integrate companies with complementary technologies and product lines. Please see other disclosure documents filed or published by the Nidec Group companies, including the Japanese securities report, for additional information regarding such risks and uncertainties. Nidec undertakes no obligation to update the forward-looking statements unless required by law. The first slide features the compression part of an oil pump manufactured by Nidec GPM GmbH. 2

2 Consolidated Profit/Loss Millions of Yen, except for EPS, dividends and FX rate FY216 FY217 Change FY218 Forecast Net sales 1,199,311 1,488, % 1,575, Operating profit 139, , % 19, Operating profit ratio 11.6% 11.3% % Profit before income taxes 141, , % 185, Profit attributable to owners of the parent 111,7 131, % 145, EPS (Yen) % Dividends (Yen) FX Rate (Yen/US$) Average: Term end: % -5.3% Assumed FX rate: Yen/US$: 1 Yen/Euro: 125 Note: Based on the current forecast of sales volume, every one yen appreciation or depreciation against the U.S. dollar and the euro for FY218 is estimated to have an annualized impact of 9. billion yen and 1.7 billion yen on net sales, respectively, and 1.1 billion yen and.4 billion yen on operating profit, respectively. 3 Summary of FY217 Net sales, operating profit, profit before income taxes and profit attributable to owners of the parent simultaneously marked the fourth consecutive annual records Annual operating profit of Automotive, Appliance, Commercial and Industrial Products exceeded that of Small Precision Motors, driving Vision 22 realization. 4

3 Three Major Actions to Achieve 3 Billion Yen Operating Profit in FY22 1. Strengthening management 1) New COO Yoshimoto will be in charge of overseas operations (hands-on management) 2) Replacing local management members including CEO of ACI division 2. Pursuing structural reform to accomplish business portfolio transformation Relocating production sites and converting to growing products, fully utilizing flexibility of One 3. Investing aggressively in growth areas (5 bil. yen in 3 years) 1) Starting volume production site of traction motors for EV / PHEV (May 219) 2) Boosting production capacity for speed reducers for small robots (2, units per month by December 219) 3) Aggressively investing into home appliance areas where adoption of brushless DC motor technology is picking up its speed 5 Year-on-Year Changes (Twelve Months Ended Mar. 31, 218) <Net Sales> , ,199.3 FY16 <Operating Profit> +4.1 Exchange rate +8.9 Small Precision Motors +19. Automotive, Appliance, Commercial and Industrial Products Machinery -.2 Electronic and Optical Components and Others -1.1 FY FY16 Exchange rate Small Precision Motors Automotive, Appliance, Commercial and Industrial Products Machinery Electronic and Optical Components and Others Eliminations/ corporate One-time loss (Structural Reform Expenses) FY17 6

4 Quarter-on-Quarter Changes (Three Months Ended Mar. 31, 218) <Net Sales> Q3/FY17 <Operating Profit> 44.6 Exchange rate Small Precision Motors +1.5 Automotive, Appliance, Commercial and Industrial Products Machinery -.4 Electronic and Optical Components and Others -3.3 (Q3:-2. ->Q4:-5.3) Q4/FY Q3/FY17 Exchange rate Small Precision Motors Automotive, Appliance, Commercial and Industrial Products Machinery Electronic and Optical Components and Others Eliminations/ corporate One-time loss (Structural Reform Expenses) Q4/FY17 7 Consolidated Annual Sales and Operating Profit (FY28-FY217) (Net Sales in Billions of Yen) 2, 1,5 1, 5 Lehman Crisis Sales (LHS) Thai Floods Operating profit (RHS) Structural Reform Extending record high (Operating Profit in Billions of Yen) Marking the fifth consecutive year of increase in net sale and operating profit following the structural reform in FY212. FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 (Forecast) US GAAP IFRS This slide includes forward-looking statements. See Disclaimer on Page 2. 8

5 Sales and Operating Income per Product Group (FY28-FY217) (Sales in Billions of Yen) Small Precision Motors (LHS) Operating profit (RHS) Automotive, Appliance, Commercial and Industrial Products (LHS) 2, Machinery (LHS) Electronic and Optical Components (LHS) Others (LHS) 1,5 1, 5 (Operating Profit in Billions of Yen) Automotive, Appliance, Commercial and Industrial Products Steady growth led by successful business portfolio transformation and increased earning power FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17 US GAAP IFRS 9 Consolidated Cash Flow (FY28-FY217) 25 Operating CF Investment CF Free CF High level operating CF of over 1 billion yen -25 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Areas highlighted in dark purple in investment CF indicates expenditure for business acquisitions US GAAP IFRS 1

6 Dividends and EPS (FY28-FY217) (Yen) Earnings per share (yen) Dividends (yen) FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 (Forecast) US GAAP IFRS Steady growth in dividend payouts underpinned by healthy EPS increase This slide includes forward-looking statements. See Disclaimer on Page CAPEX, Depreciation, R&D CAPEX Depreciation R&D Continuing aggressive investments to support organic growth FY16 FY17 FY18 FY16 FY17 FY18 FY16 FY17 FY18 (Forecast) (Forecast) (Forecast) This slide includes forward-looking statements. See Disclaimer on Page 2. 12

7 FY218 Forecast Millions of Yen, except for EPS, dividends and FX rate 1H/FY218 2H/FY218 Full-Year Net sales 75, 825, 1,575, Operating profit 9, 1, 19, Operating profit ratio 12.% 12.1% 12.1% Profit before income taxes 87,5 97,5 185, Profit attributable to owners of the parent 7, 75, 145, EPS (Yen) Dividends (Yen) FX Rate (Yen/US$) FX Rate (Yen/Euro) This slide includes forward-looking statements. See Disclaimer on Page Mid-Term Strategic Goal Vision22 This section includes forward-looking statements. See Disclaimer on page 2 of this presentation. 14

8 Vision22: Mid-Term Strategic Goal Continuous pursuit of profit & strong growth 1. Target for consolidated net sales: 2 trillion yen (including sales attributable to new M&A of approx. 5 billion yen) 2. Sales target for Automotive: 7 billion to 1 trillion yen 3. Target for consolidated operating profit ratio: 15% 4. Target for ROE: 18% (assuming shareholders equity ratio of 6%) 5. Five regional HQ management units This slide includes forward-looking statements. See Disclaimer on Page Three 6 Billion Yen Businesses Are Key to Achieving 2 Trillion Yen Net Sales FY21 Net sales: 676 billion yen FY217 Net sales: trillion yen FY22 Net sales: 2 trillion yen (target) (Sales: Billions of Yen) Small Precision Motors Automotive Appliance, Commercial and Industrial Products Other Product Groups 1 T New M&A <Organic growth> (Target) 6. <Organic growth> (Target) 6. <Organic growth> (Target) Key Growth Areas Key Growth Areas Key Growth Areas 2. <Organic growth> (Target) This slide includes forward-looking statements. See Disclaimer on Page 2. 16

9 Current Outlook for the Four Areas (Over 2 Tri. Net Sales and Operating Profit of 3 Bil. in FY22) (Sales: Billions of Yen) 6, 6 Small Precision Motors (Operating profit ratio) 2% (Sales: Billions of Yen) 6, 6 Automotive (Operating profit ratio) 2% 4, % 4, % 3, 3 1% 3, 3 1% 1,5 15 5% 1,5 15 5% FY14 FY15 FY16 FY17 FY18 FY19 FY2 % FY14 FY15 FY16 FY17 FY18 FY19 FY2 (Forecast) (Target) (Target) (Forecast) (Target) (Target) % (Sales: Billions of Yen) 1, 1, Appliance, Commercial and Industrial Products (Operating profit ratio) 2% (Sales: Billions of Yen) 4, 4 Other Product Groups (Operating profit ratio) 2% 7, % 3, 3 15% 5, 5 1% 2, 2 1% 2,5 25 5% 1, 1 5% % % FY14 FY15 FY16 FY17 FY18 FY19 FY2 FY14 FY15 FY16 FY17 FY18 FY19 FY2 (Forecast) (Target) (Target) (Forecast) (Target) (Target) This slide includes forward-looking statements. See Disclaimer on Page Vision22: Measures for Gross Profit Ratio Improvement (1) Profit ratio (%) 4% 3% 2% 1% % Gross profit ratio Operating profit ratio Gross profit ratio over 31% 22.9% 23.5% 22.8% 23.8% 24.% Operating profit ratio over 15% 19.3% 11.6% 11.3% 1.8% 9.7% 1.% 2.5% FY12 FY13 FY14 FY15 FY16 FY17 FY2 (Forecast) (Target) Aiming for substantial improvement of gross profit ratio <Main measures> 1. Reduction in material cost 2. Reduction in direct labor cost US GAAP IFRS *Please refer to Notes on page 33. This slide includes forward-looking statements. See Disclaimer on Page 2. 18

10 Vision22: Measures for Gross Profit Ratio Improvement (2) Implementing group-wide measures to improve gross profit ratio across Nidec s global production sites <Cost structure on a consolidated basis> Reduction in material cost 1. Increase joint procurement 2. Increase in-house production Gross profit ratio Indirect labor cost Material cost Depreciation Direct labor cost Reduction in direct labor cost 1. Accelerate automation 2. Introduce further IoT technologies (Target) This slide includes forward-looking statements. See Disclaimer on Page Motors Increasingly Becoming Mission-Critical for All Industrial Solutions Biggest innovative waves Nidec has ever seen are coming in different areas -automobiles, robots, home appliances and drones- Automotive electrification, EV and PHEV -From internal combustion engine to electric motor -Once-in-a-century technological revolution Expansion of robot applications -Collaborative robots advance into food, logistics and service industries. -Rapid market growth Decarbonization Robotization Home appliances driven by brushless DC motors -Cordless and high functionality -Innovative evolution of home appliances Power saving Manpower-saving in agriculture & logistics -Serious labor constraints -Industry 4. Automatization 2

11 Small Precision Motors: HDD Market Mid-Term Trend (Millions of Units) PC External Consumer Electronics Data Center Enterprise (Near Line Drive) '13 '14 '15 '16 '17 '18 '19 '2 (CY) Nidec s estimates based on various sources Server Application Revised slightly from previous conservative estimate (Millions of Units) <Previous> <Revised> (October 25, 217) CY CY CY This slide includes forward-looking statements. See Disclaimer on Page HDD Market Short-Term Trend <FY17 Actual> <FY18 Forecast> (Millions of Units) HDD Shipments Nidec Motor Shipments Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY17 FY18 FY17 HDD shipments were 399 mil. units, 3% less than what Nidec estimated a year ago. Nidec expects modest 375 mil. HDDs to be shipped in FY18. Nidec s market share remains firm. Nidec s estimates based on various sources. This slide includes forward-looking statements. See Disclaimer on Page 2. 22

12 Small Precision Motors: Trend for Other Small Motors Diversified demands for thermal management generating inquiries for fan motors (Millions of Units) 5 45 <Shipment volume of fan motors> (Nidec parent alone) <Market needs> IoT & ICT (5G) Higher demand for cooling fans 4 Large data capacity (Big Data) Intelligence (CPU installed) 2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY16 FY17 23 Small Precision Motors: Trend for Other Small Motors Already gaining orders and receiving inquiries in one of the Four Big Waves Manpower-saving in agriculture and logistics Agricultural revolution <Enlarged picture> Industrial multirotor YMR-8 by Yamaha Motor (from Yamaha Motor s website) From Yamaha Motor s website Compact, light-weight and high-performance motors co-developed with Yamaha Motor 24

13 Automotive: Shipment Outlook for Automotive Motors (Key Applications) (Million Units) Orders building up steadily. Shipments expected to exceed 1 million units in FY22. <Shipment outlook as of April 217> <Shipment outlook as of April 218> Braking system Sunroof Seat adjustment Engine cooling Oil pump Dual clutch EPS * *EPS: Electric Power Steering (Million Units) FY16 FY17 FY18 FY19 FY2 FY16 FY17 FY18 FY19 FY2 This slide includes forward-looking statements. See Disclaimer on Page Automotive: Key Global Production Sites Responding quickly to customers requirements from Nidec s global production sites in the same region Nidec Motors & Actuators (Poland), Sp. z o.o Nidec Automotive Motor (Zhejiang) Corporation Nidec (Dalian) Limited Nidec Elesys (Zhejiang) Corporation Nidec GPM Automotive Pumps (Suzhou) Co. Ltd. Nidec Elesys Americas Corporation Nidec GPM GmbH Nidec Tosok (Zhejiang) Corporation Nidec Tosok Die Casting (Pinghu) Corporation Nidec Elesys (Zhongshan) Corporation Nidec Kaiyu Auto Electric (Jiangsu) Co., Ltd. Nidec Tosok de Mexico S.A. de C.V. Nidec Motors & Actuators Nidec Sankyo CMI Corporation Nidec Automotive Motor Mexcicana S de RL de C.V. Nidec Motors & Actuators (Spain) S.A. Nidec Elesys Corporation Tokyo Maruzen Industry Co., Ltd. Nidec GPM do Brasil Automotiva Ltda. Nidec India Private Limited Nidec Tosok (Vietnam) Co., Ltd. Nidec Tosok Precision Vietnam Co., Ltd. Nidec Tosok Akiba (Vietnam) Co., Ltd. Nidec Elesys (Thailand) Co., Ltd. 26

14 Strategy of Traction Motor System (E-Axle) for EV and PHEV Nidec s compact and light-weight E-Axle leading to steady order increase EV traction system technology Use oil cooling technology to make E-Axle compact and light-weight Coolant Nidec s product strategy Provide total solution including traction motor, EOP*, EWP**, actuator, etc. Radiator Fan radiator Motor MO EOP Oil cooler Parts composing E-Axle (supplied by Nidec) EWP Inverter EOP EWP Gear Actuator Gear *EOP: Electric Oil Pump, **EWP: Electric Water Pump Beijing International Automotive Exhibition (April 25 to May 4, 218) Nidec showcases latest automotive technologies at Auto China 218. <Major exhibits> Traction motor system (E-Axle) for EV and PHEV (first public appearance) Demonstrations of ADAS using latest image processing technology and sensor fusion unit integrating a monocular camera and a millimeter wave radar Demonstration of steer-by-wire system Product line-ups related to electrification of powertrain (electric water and oil pump, vacuum pump, etc.) 28

15 Appliance, Commercial and Industrial (ACI): Nidec Techno Motor s Production Increase Responding to a surge in demand for brushless DC motors in China triggered by heightened efficiency standards for air conditioners 25 2 <Quarterly Net Sales of Nidec Techno Motor> (Surpassed forecast) (Surpassed forecast) Expected to exceed 1 billion yen mark in annual sales Q Q1 Q2 2Q 3Q Q3 4Q Q4 Q1 Q2 Q3 Q4 FY17 Forecast (Previous forecast as of October 25, 217) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY17 Actual FY18 (Actual) (Forecast) 29 Appliance, Commercial and Industrial (ACI): Modularization Strategy Evolving from a motor-alone supplier to a module provider Aiming for significant growth in air conditioners, freezer refrigerators, washers, etc. <Global market size for Nidec s products (TAM*)> <FY215> <Motor-alone market > <Module market> 1. Air conditioner Unit: 13 million Fan DC ratio: 25% Inverter ratio: 45% Fan motor 24 billion yen Fan blade Compressor Control Fan motor Heat exchanger, etc. 2 trillion yen 2. Refrigerator Unit: 17 million Inverter ratio 15% Compressor motor 1 billion yen Compressor Compressor motor Control 1.5 trillion yen 3. Washer Unit: 11 million Motor DC ratio: 15% Drive motor 16 billion yen Gear unit Drive motor Control.5 trillion yen Global market 5 billion yen 4 trillion yen *TAM: Total Addressable Market Nidec estimates based on various sources. This slide includes forward-looking statements. See Disclaimer on Page 2. 3

16 Nidec-Shimpo s Production Plans for Speed Reducers Winning cost competition against emerging market players by producing speed reducers for robots in the Philippines Reducers for machines (left in blue) Production volume: 8, units/month (in operation) Nidec-Shimpo (Zhejiang) Corporation Nidec-Shimpo Corporation Starting massproduction Conceptual drawing in FY218 Hoa Lac Hi-tech Park Hanoi, Vietnam Reducers for robots (right in green) Zhejiang province, China Nagaokakyo-city, Kyoto, Japan Manila, the Philippines Ueda-city, Nagano, Japan Ueda Factory Nagaokakyo Factory Nidec Subic Philippines Production volume: 1, units/month (starting in Q1/FY218) 2, units/month (planned in Q3/FY218) 5, units/month (planned in December 219) Production volume: 2, units/month (in operation) 3, units/month (planned in Q3/FY218) 5, units/month (planned in December 219) Preparing equipment installation Production volume: 1, units/month (planned in Q3/FY218) 35, units/month (planned in Q1/FY219 1, units/month (planned in December 219) This slide includes forward-looking statements. See Disclaimer on Page Nidec Center for Industrial Science Address production technological issues through innovative and practical R&D Pilot production lines Processing pilot production lines Precision inspection equipment <Examples of efforts> 1) Reduction in material cost (new materials) Benchmarking prices in China to reduce cost. Using Kansai Science City s pilot line to select best materials. 2) Reduction in direct labor cost (new method) Promote automation based on production engineering Completed construction of first section (January 218) 1 期棟 (218 年 1 竣 予定 ) 32

17 CSR* -Strengthening Nidec Group s CSR* framework -Providing more ESG** related information CSR 情報 Message from Our President E/Environment Special topics S/Society CSR philosophy and basic policy G/Governance *CSR: Corporate Social Responsibility **ESG: Environmental, Social and Governance From Nidec s CSR website 33 Nidec IR Contacts Japan Tel: ir@nidec.com U.K. Tel: iwai.yuji@nidec.com U.S. Tel: nagase.kiyoshi@nidec.com *Note: During the three months ended December 31, 217, Nidec Corporation completed its valuation of the assets acquired and the liabilities assumed upon the acquisition of motors, drives and electric power generation businesses of Emerson Electric Co. (currently Nidec Leroy-Somer Holding, Nidec Control Techniques Limited, etc.) and Canton Elevator, Inc. As a result, consolidated financial statements for the three months and the year ended March 31, 217, the three months ended June 3, 217 and September 3, 217 reflect the revision of the initially allocated amounts of acquisition price. Also, during the three months ended March 31, 218, Nidec Corporation completed its valuation of the assets acquired and the liabilities assumed upon the acquisition of Vamco International, Inc. As a result, consolidated financial statements for the three months ended June 3, September 3 and December 31, 217 reflect the revision of the initially allocated amounts of acquisition price. In Addition, during the three months ended March 31, 218, Nidec Corporation completed its valuation of the assets acquired and the liabilities assumed upon the acquisition of Tokyo Maruzen Industry Co., Ltd., and partially SV Probe Pte. Ltd. As a result, consolidated financial statements for the three months ended June 3, September 3 and December 31, 217 reflect the revision of the initially allocated amounts of acquisition price. Nidec logo is a registered trademark or a trademark of Nidec Corporation in Japan, the United States and/or certain other countries. All for dreams logo is a registered trademark of Nidec Corporation in Japan, and a trademark in the United States and/or certain other countries. 34

18 Appendix Performance Trends & Product Group Overview 35 Sales by Product Group (FY217) Electronic & Optical Components.3% (.3%) Camera shutters, switches, trimmer potentiometers, processing, precision plastic mold products Machinery Industrial robots, circuit board testers, high-speed pressing machines, chip mounters, measuring equipment, power transmission equipment, factory automation system, card readers 54.7% (47.7%) Automotive, Appliance, Commercial and Industrial Products Others 9.9% (1.2%) Appliance Commercial Industrial 34.9% (25.9%) 4.8% (5.3%) T Services, music box products HDD Motors 12.9% (15.9%) Auto 19.9% (21.8%) 17.5% (2.5%) Parenthetic percentages represent FY216 mix Small Precision Motors 3.4% (36.5%) Other Small Motors Optical disk drive motors, OA equipment motors, polygon scanners motors, MPU cooling fans, game machine fans, PC/communications equipment fans, home appliance fans, automobile fans, vibration motors, brushed motors, stepping motors, actuator units 36

19 Consolidated Quarterly Net Sales and Operating Profit (Net Sales in Billions of Yen) 45 Net sales (LHS) Operating profit (RHS) 45 (Operating Profit in Billions of Yen) Lehman crisis Japan earthquake Thai floods Structural reform Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4-5 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 US GAAP IFRS FY Financial Highlights *Please refer to Notes on page 33. <Consolidated Net Sales and Operating Profit> Net sales Operating profit Operating profit ratio (%) % 11.7% 13.% 12.2% 11.3% 1.7% <Profit Before Income Taxes and Profit Attributable to Owners of the Parent> Profit before income taxes Profit attributable to owners of the parent % 1.% Q1/FY16 Q2 Q3 Q4 Q1/FY17 Q2 Q3 Q4 <Dividends and EPS> (Yen/share) Year-end Interim Consolidated EPS Q1/FY16 Q2 Q3 Q4 Q1/FY17 Q2 Q3 Q4 <Consolidated Cash Flow> Operating activities Investment activities Free cash flow (Forecast) 5. (Forecast) FY15 FY16 FY17 FY18 (Forecast) FY FY

20 Product Group Overview <Small Precision Motors> Sales Operating profit <Automotive, Appliance, Commercial and Industrial products> Sales Operating profit *Please refer to Notes on page Q1/FY16 Q2 Q3 Q4 Q1/FY17 Q2 Q3 Q4 <Machinery> Sales Operating profit Q1/FY16 Q2 Q3 Q4 Q1/FY17 Q2 Q3 Q4 <Electronic and Optical Components> Sales Operating profit Q1/FY16 Q2 Q3 Q4 Q1/FY17 Q2 Q3 Q4 Q1/FY16 Q2 Q3 Q4 Q1/FY17 Q2 Q3 Q4 39 Vision22: Pursuing Both Strong Growth with Profit and Financial Soundness Targeting operating profit ratio of 15% and ROE of 18% while sustaining and improving financial soundness 1,5 1,2 9 Shareholders equity ratio 42.3% Shareholders equity (LHS) Shareholders equity ratio (RHS) ROE (RHS) Operating profit ratio (RHS) 49.1% 47.5% 46.2% 41.3% 44.4% 54.9% 55.4% % % % 1,2. (%) 65% 6% 55% 5% 45% The three elements for ROE improvement Net profit on sales Total asset turnover Financial leverage 6 3 Operating profit ratio ROE 9.2% 8.9% This slide includes forward-looking statements. See Disclaimer on Page % 16.3% % 13.8% 14.8% % 12.1% 12.% 11.9% 13.9% 13.7% 15.% % 2.5% 9.7% 1.8% 1.% 11.6% 11.3% % FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY2 (Target) US GAAP IFRS 2% 15% 1% 5% % *Please refer to Notes on page 33. 4