Nidec Corporation TSE: 6594 OTC US: NJDCY http:// www.nidec.com/en-global/ Third Quarter Fiscal 217 Results Three and Nine Months Ended December 31, 217 <IFRS> January 24, 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 vehicles using EV traction motors manufactured by Nidec Leroy-Somer Holding. For details, please see slide 18. 2
Consolidated Profit/Loss Millions of Yen, except for EPS and FX rates 3Q/FY216 (Apr-Dec) 3Q/ (Apr-Dec) Change Forecast Net sales 868,228 1,15,921 +27.4% 1,45, Operating profit 16,173 127,127 +19.7% 17, Operating profit ratio 12.2% 11.5% - 11.7% Profit before income taxes 17,747 119,723 +11.1% 163, Profit attributable to owners of the parent 81,617 94,763 +16.1% 128, EPS (Yen) 275.18 32.6 +16.3% 432.32 FX rate (Yen/US$) Average: Term end: 16.63 116.49 111.7 113. +4.8% -3.% 15. (Assumed for 4Q) Note: Based on the current forecast of sales volume, every one yen appreciation or depreciation against the U.S. dollar and the euro for is estimated to have an annualized impact of 8.8 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 3Q/ Record-high nine-months net sales, operating profit, profit before income taxes and profit attributable to owners of the parent Record-high three-months net sales, operating profit, profit before income taxes and profit attributable to owners of the parent 4
Year-on-Year Changes (Nine Months Ended Dec. 217) <Net Sales> +39.2 +1.6 +174.7 +16.9 +5.3 1,15.9 868.2 Apr-Dec/FY16 <Operating Profit> Exchange Rate +5.9 +3.1 Small Precision Motors +12.7 Automotive, Appliance, Commercial and Industrial Products +3.7 Machinery +.1 Electronic and Optical Components and Others -4.5 Apr-Dec/FY17 16.2 127.1 Apr-Dec/FY16 Exchange Rate Small Precision Motors Automotive, Appliance, Commercial and Industrial Products Machinery Electronic and Optical Components and Others Eliminations/ Corporate Apr-Dec/FY17 5 Quarter-on-Quarter Changes (Three Months Ended Dec. 217) <Net Sales> +5.9 +6. +2.5 +2.4 +.5 372.8 39. Jul-Sep/FY17 <Operating Profit> Exchange rate +.7 Small Precision Automotive, Appliance, Machinery Motors Commercial and Industrial +1. Products +.9 +.1-1.2 Electronic and Optical Components and Others -.3 Oct-Dec/FY17 (*) 43.5 44.7 Jul-Sep/FY17 Exchange Rate Small Precision Motors Automotive, Appliance, Commercial and Industrial Products Machinery Electronic and Optical Components and Others Eliminations/ Corporate Oct-Dec/FY17 *Please refer to Notes on page 19. 6
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) 4 4 35 35 3 3 25 25 2 2 15 1 5 Lehman crisis Japan earthquake Thai floods Structural reform 15 1 5 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 Q3-5 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 US GAAP IFRS FY17-25.4-5 7 Mid-Term Strategic Goal Vision22 This section includes forward-looking statements. See Disclaimer on Page 2. 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 9 Three 6 Billion Yen Businesses Are Key to Achieving 2 Trillion Yen Net Sales FY21 Net sales: 676 billion yen FY216 Net sales: 1.199 trillion yen 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 437.1 6. <Organic growth> (Target) 6. <Organic growth> (Target) 6. <Organic growth> (Target) 348.4 Key Growth Areas 69.2 94.2 164.2 261.1 31.9 Key Growth Areas 19.1 Key Growth Areas 2. <Organic growth> (Target) 1
HDD Market Short-Term Trend HDD Shipments Nidec Motor Shipments (Millions of Units) 96 Previous Forecast (October 25, 217) 13 98 91 96 Revised Forecast (January 24, 218) 14 13 92 HDD shipment forecast revised upward (Millions of Units) Annual forecast Previous forecast Revised forecast 82 89 83 77 82 89 86 78 HDD shipments 388 395 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 (Actual) (Actual) (Forecast) (Forecast) (Actual) (Actual) (Actual) (Forecast) Nidec motor shipments 331 335 Nidec s estimates based on various sources. 11 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 12
EV & PHEV Market Forecast and Nidec s Traction Motor Sales Target (Millions of Units) 12 1 8 6 4 2 1.6 EV & PHEV Market Forecast OEM s in-house manufacturing Outsourcing (Nidec s TAM*) 8. 2.4 3.6 Estimated Nidec s motor TAM*: 5 to 6 million units in CY225 Aiming to gain higher market share 5.2 6.6 9.1 1.1 1.6 1, 1 8 6 4 2 Nidec s Traction Motor Sales Target (excluding expected sales from joint venture with Groupe PSA**) CY17 CY18 CY19 CY2 CY21 CY22 CY23 CY24 CY25 Nidec s estimates based on various sources. FY17 FY18 FY19 FY2 FY21 FY22 FY23 FY24 FY25 *TAM: Total Addressable Market **Please refer to slide 18 regarding the joint venture with Groupe PSA. 13 Expanding Speed Reducer Production Capacity to Capture Diversifying Demand for Compact Collaborative Robots Launching factories for high precision speed reducers FLEXWAVE at home and abroad Production capacity for compact-robot speed reducers (Millions of Units) 3 2 Fortyfold (compared to FY216) Utilizing Nidec Subic Philippines factory Nidec-Shimpo launches factories in Subic, the Philippines and Ueda, Japan. Phase 2 1 Start production in the first phase of Ueda factory and in the Philippines Phase 1 FY16 FY17 FY18 FY21 Launching Ueda Factory (utilizing unused property in Nidec Seimitsu s HQ factory) 14
Other Small Motors: Steadily progressing on Switch Everything to Brushless DC Strategy Compact, efficient, quiet and long-life brushless DC motors into every aspect of life <Nidec s sales target of Other Small Motors by application> 1. AV and drones 2. OA equipment (Forecast) (Target) 3. Auto and industrial Sanitary accommodation Kitchen equipment 4. Communications 5. Refrigerators 6. Air conditioners Twofold growth expected 7. Vacuum cleaners 8. Beauty and cooking equipment 9. Service robots Fourfold growth expected 1 2 3 4 15 Drone Motors Performance Research and development targeting broad range of markets and applications <Drone applications and Nidec s motor output range> Electric power plane Over 2kW Air taxi Over 1kW Drone motors Agriculture Over 1W Measurement, logistics Over 65W Aerial photo, infrastructure inspection Around 2W Toy Up to 1W Hobby, selfie Up to 1W Scene from TV commercial Compact, low output Large, high output 16
M&A: drivexpert GmbH Gained ECU R&D unit to bolster *AMEC s business in Europe Expanding engineering capacity <Outline of New Subsidiary> <Products> Company name Headquarters drivexpert GmbH Ilmenau, Thuringia, Germany Foundation 21 Principal business Development and design of automotive ECU hardware and software Capital 25, CEO Number of employees Michael Löffler 23 (as of November 217) Sales 1.2 million (for the fiscal year ended December 31, 216) *Automotive Motor & Electric Control Business Unit 17 Joint Venture with Groupe PSA Supplying low-cost, high-efficient EV traction motors by combining PSA s knowledge and Nidec Leroy-Somer s technical capability <Outline of the Joint Venture> Company name Main business Foundation Location (planned) Number of Employees Shareholders Initial Share Capital Total Investment To be determined Development, production and sales of traction motors for EVs, PHEVs and MHEVs March or April 218 (subject to antitrust filing approval) Head office: Carrieres sous Poissy, France (PSA location) R&D facility: Carrieres sous Poissy, France (PSA location) Production facility: Tremery, France (PSA location) Approximately 6 people initially (number of employees after mass production is to be determined ) Nidec Leroy-Somer Holding: 5% PSA Automobiles*: 5% (*PSA Automobiles is a Francebased group company of Groupe PSA) 15 million 22 million <History and plan> 1995 219 222 Leroy-Somer Holding and PSA start collaborating on EV development. <1 st step> Bluecar PSA plans to electrify half of its all models. (Other manufacturer s EV traction motors will be used.) <2 nd step> PSA plans to electrify 8% of its all models. (The joint venture s EV traction motors will be used.) <Five Primary Brands> Vauxhall Peugeot DS Opel Citroen e-mehari 18
Nidec IR Contacts Japan Tel: +81-75-935-614 E-mail: ir@nidec.com U.K. Tel: +44-27-716-5884 E-mail: iwai.yuji@nidec.com U.S. Tel: +1-212-73-7988 E-mail: 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. 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. 19 Appendix Performance Trends & Product Group Overview 2
Sales by Product Group (Apr-Dec ) Electronic & Optical Components 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 Automotive, Appliance, Commercial and Industrial Products Others 54.1% (46.2%) 9.6% (1.%) Appliance Commercial Industrial 34.5% (24.2%) 4.9% (5.5%).3% Parenthetic percentages represent FY216 mix (.3%) Services, music box products 1.159T HDD Motors 13.1% (16.6%) Auto 19.6% (22.%) 18.1% (21.5%) Small Precision Motors 31.2% (38.1%) 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 21 Financial Highlights *Please refer to Notes on page 19. <Consolidated Net Sales and Operating Profit> Net sales Operating profit Operating profit ratio (%) 39. 372.8 331.1 343.1 34.2 43.5 44.7 276.2 287.8 37.5 37.2 38.9 33.2 31.5 11.7% 11.5% 13.% 11.4% 12.2% 1.% 11.4% 29.1 <Profit Before Income Taxes and Profit Attributable to Owners of the Parent> Profit before income taxes Profit attributable to owners of the parent 41.5 37.2 36.2 33.6 31.5 28.1 29.4 28.2 22. 4.2 43.3 34.8 31.8 Q1/FY16 Q2 Q3 Q4 Q1/FY17 Q2 Q3 <Dividends and EPS> (Yen/share) Year-end Interim Consolidated EPS 33 4. 45. 374 5. 432 (Forecast) (Forecast) Q1/FY16 Q2 Q3 Q4 Q1/FY17 Q2 Q3 <Consolidated Cash Flow> Operating activities Investment activities Free cash flow 133.4 13. 46. 46.1 4. 4. 45. -56.9-87.4 FY15 FY16 FY17 Apr-Dec/FY16 Apr-Dec/FY17 22
Product Group Overview <Small Precision Motors> Sales Operating profit <Automotive, Appliance, Commercial and Industrial products> *Please refer to Notes on page 19. Sales Operating profit 94.8 13.7 19.2 19.2 116.9 119.2 15.8 16.2 13.8 16.9 19.2 116.7 124.6 2.6 21.1 2.2 17.4 13.8 14.2 14.2 15. 171.4 188.9 21.7 27.7 138.3 127.4 135.1 Q1/FY16 Q2 Q3 Q4 Q1/FY17 Q2 Q3 <Machinery> Sales Operating profit 7.2 4.9 5.3 5.6 6. 6.3 6.3 32.7 35.7 32.6 35.3 38. 27.1 26.7 Q1/FY16 Q2 Q3 Q4 Q1/FY17 Q2 Q3 <Electronic and Optical Components> Sales Operating profit 2.8 2.9 3.1 2.5 2.5 2.1 2.1 15.2 15.9 16.3 16.8 16.9 18.1 18.7 Q1/FY16 Q2 Q3 Q4 Q1/FY17 Q2 Q3 Q1/FY16 Q2 Q3 Q4 Q1/FY17 Q2 Q3 23 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% 745. 763. 5.4% 846.6 6% (%) 65% 6% 55% 5% 45% The three elements for ROE improvement Net profit on sales Total asset turnover Financial leverage 6 ROE 18% 16.3% 518. 15.% 13.8% 415.7 11.2% 12.1% 12.% 11.9% 9.2% 15% 13.9% 3 13.7% 1.7% 1.8% 11.6% 34.3 355.3 2.5% 8.9% 9.7% 1.% Operating profit ratio 37.2 297.1 2.% FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY2 (Target) US GAAP IFRS 2% 15% 1% 5% % *Please refer to Notes on page 19. 24
Vision22: Aiming for 15% Operating Profit Ratio (1) (Net Sales in Trillions of Yen) 2.5 2 1.5 1.5 571.6 B 13.9% 676. B 13.7% 1.7% 682.3 B 79.3 B 875.1 B 2.5% 9.7% 1.8% 1.3 T 1.% 1.18 T 11.6% 1.2 T 11.7% 1.45 T (Operating Profit Ratio, %) 15% 15 2 T 1 5 The main focus shifts to profit structure reform with stronger prospects for solid topline growth FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY2 (Forecast) (Target) *Please refer to Notes on page 19. US GAAP IFRS 25 Vision22: Aiming for 15% Operating Profit Ratio (2) Profit ratio (%) 4% 3% 2% 1% % Gross profit ratio Operating profit ratio 22.9% 23.5% 23.8% 22.8% 19.3% Gross profit ratio over 31% 24.5% Operating profit ratio over 15% 11.6% 11.7% 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. Cost reduction in outsourced materials and components 2. Cost reduction in direct labor US GAAP IFRS *Please refer to Notes on page 19. 26