Nidec : Presentation materials

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Nidec Corporation

Third Quarter Fiscal 2020 Results

Three and Nine Months Ended December 31, 2020

January 25, 2021

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 a refrigeration compressor manufactured by Embraco, Nidec's subsidiary.

Shipments of compressors for household and commercial refrigerators are recently increasing due to stay-home demands.

2

Consolidated Profit/Loss

This slide includes forward-looking statements. See Disclaimer on Page 2.

Millions of Yen, except	Q3/FY2019	Q3/FY2020		FY2020
for percentages, EPS,	Change
(Apr-Dec)	(Apr-Dec)	Forecast
and FX rates
Net sales	1,159,608	1,184,991	+2.2%	1,550,000
Operating profit	93,204	115,535	+24.0%	155,000
Operating profit ratio	8.0%	9.7%	-	10.0%
Profit before	93,050	109,340	+17.5%	150,000
income taxes
Profit attributable to	49,326	83,636	+69.6%	120,000
owners of the parent
EPS (Yen)	83.80	142.79	+70.4%	204.87
FX rate (Yen/US$)				Assumed for Q4:
Average:	108.67	106.11	-2.4%	Yen/US$: 105
Term end:	109.56	103.50	-5.5%	Yen/Euro: 117
Note: Based on the current forecast of sales volume, every one yen appreciation or depreciation against the U.S. dollar and t he euro for FY2020 is estimated to have	3
an annualized impact of 10.0 billion yen and 1.9 billion yen on net sales, respectively, and 1.1 billion yen and 0.4 billion yen on operating profit, respectively.

Summary of Q3/FY2020

• Nine months net sales stood at record high ¥1,185.0 billion, 2.2% higher Y/Y. Nine months operating profit increased 24.0% Y/Y to ¥115.5 billion.
• Q3 quarterly net sales increased 4.4% Q/Q to ¥433.2 billion, marking a record high for two consecutive quarters. Operating profit increased 12.0% Q/Q to ¥46.4 billion due to increased sales and contributions from comprehensive improvements on cost structure and optimization of fixed cost through WPR4 program.
• Upward revision to full-year FY2020 financial forecasts.

4

Year-on-Year Changes (Nine Months Ended Dec. 2020)

(Billions of Yen)

+20.5+0.1

+14.3

-2.7

+9.4

1,185.0

1,159.6

-16.2

Apr-Dec/FY19

Exchange

Small Precision

Automotive

Appliance,

Machinery

Electronic

Apr-Dec/FY20

Rate

Motors

Products

Commercial

and Optical

and Industrial

Components

(Billions of Yen)

Products

and Others

+4.6

+3.1

+2.4

+11.5

+10.5

-0.5

-4.3

-5.0

115.5

93.2

Structural

Appliance,

Electronic

Apr-Dec/FY19 Exchange

Small Precision

Automotive

Machinery

Eliminations/

Apr-Dec/FY20

Commercial

and Optical

Rate

Reform

Motors

Products

Corporate

5

and Industrial

Components

Expenses

Products

and Others

Quarter-on-Quarter Changes (Three Months Ended Dec. 2020)

(Billions of Yen)

+14.6

+9.5

+0.6

-2.1

-1.9

-2.4

433.2

414.9

Jul-Sep/FY20

Exchange

Small Precision

Automotive

Appliance,

Machinery

Electronic

Oct-Dec/FY20

Commercial

and Optical

Rate

Motors

Products

and Industrial

Components

Products

and Others

(Billions of Yen)

+3.0

+2.7

+1.2

+0.5

-0.2

-1.1

-0.7

-0.5

46.4

41.4

Jul-Sep/FY20

Exchange

Structural

Small Precision

Automotive

Appliance,

Machinery

Electronic

Eliminations/ Oct-Dec/FY20

Commercial

and Optical

Rate

Reform

Motors

Products

Corporate

and Industrial

Components

Expenses

Products

and Others

6

Consolidated Cash Flow
Cash is King! Improved free cash flow through continued efforts to improve CCC*
(Apr-Dec)>			Record high
(Billions of Yen)		(Billions of Yen)				quarterly
							operating CF
Operating CF	Investment CF	Free CF					and free CF
132.2		146.2		Operating CF	Investment CF	Free CF
						70.1
					53.7
		68.9					45.1
		22.4
				29.0
				-5.2
			-27.6	-24.6		-24.9
		-77.2
		Areas highlighted in dark
		purple in investment CF
-169.4		indicates expenditure for	Q1		Q2		Q3
-301.7		business acquisitions
Q3/FY20 (Apr-Dec)
Q3/FY19 (Apr-Dec)
					*CCC: Cash Conversion Cycle	7

Revision to FY2020 Forecast

Full-Year Financial Forecasts>

Millions of Yen,	As of Apr. 30,
except for percentages,
2020
EPS and FX rates
Net sales	1,500,000
Operating profit	125,000
Operating profit ratio	8.3%
Profit before	125,000
income taxes
Profit attributable to	100,000
owners of the parent
EPS (Yen)	170.72
FX rate (Yen/US$)	105
FX rate (Yen/Euro)	117
	(Assumed)

This slide includes forward-looking statements. See Disclaimer on Page 2.

As of Oct. 26,		As of Jan. 25,
2020		2021
1,550,000		1,550,000
140,000		155,000
9.0%		10.0%
136,000		150,000
105,000		120,000
179.26		204.87
105		105
117		117
(Assumed for Q3		(Assumed for Q4)
onward)

8

Mid-Term Strategic Goal

Vision2020

This section includes forward-looking statements. See Disclaimer on Page 2.

9

Vision2020: Mid-Term Strategic Goal (unchanged from April 2015)

Continuous pursuit of profit & strong growth

1. Target for consolidated net sales: 2 trillion yen (including sales attributable to new M&A
   of approx. 500 billion yen)
2. Sales target for Automotive: 700 billion to 1 trillion yen
3. Target for consolidated operating profit ratio: 15%
4. Target for ROE: 18%
   (assuming shareholders' equity ratio of 60%)
5. Five regional HQ management units

This slide includes forward-looking statements. See Disclaimer on Page 2. 10

Progress of WPR4

Along with sales recovery, operating profit ratio steadily improved after forming the bottom in Q4 FY19

						Record-high
						net sales for
		(Operating Profit :	(Sales: Billions of Yen)	two consecutive	(Operating Profit
(Sales: Billions of Yen)		quarters	Ratio: %)
		Billions of Yen)	500		Net Sales				18%
				Operating Profit Ratio (%)
						433.2
			450	408.3			414.9	16%
			400		375.2				14%
			350			336.9
								12%
WPR1	WPR2		300				10.0%	10.7% 10%
		250			8.3%
			200	7.7%				8%
		WPR4	150						6%
		WPR3	100		4.1%				4%
								2%
			50
			0						0%
				Q3/FY19	Q4	Q1/FY20	Q2	Q3
				This slide includes forward-looking statements. See Disclaimer on Page 2.	11

Automotive: Vision for Traction Motor Business (Product Architecture)

Green transformation is triggering innovations in the auto industry, similar to those in the TV and camera industries that occurred in the past

Industrial structure	Industrial structure	accelerating in automobiles>

		LCD	DSC			EV
Horizontal		Liquid Crystal	Digital Still	Horizontal
	Display	Camera		Electric Vehicle
specialization		・Simple		specialization
(Global)			(Global)		・Simple
		・Low price			・Low price
					ICE	Key action #1
	CRT* TV	Film			Strengthening cost
Vertical		camera			Internal Combustion	competitiveness
		Vertical	Engine
integration
・Complicated
	integration	・Complicated
(Local)	・High price
			(Local)	・High price

	Product design		Product design
Integral	Modular
Integral	Modular
architecture	architecture
architecture	architecture	12
* CRT: Cathode Ray Tube

Automotive: Vision for Traction Motor Business (Product Life Cycle Theory)

This slide includes forward-looking statements. See Disclaimer on Page 2.

Growth we experienced for over 30 years in the HDD industry is expected to happen in the automotive industry, triggered by electric vehicle development

E-Axle shipment forecast>

(Million units)
700		Turning Point	CY2010
	Peak of		651 million units
				HDD shipments
600
500
		From CY	2005 onwards
400		Perpendicular recording			HDD market grew
		(Larger storage capacity)			significantly after
							technological
300	From CY 2000 onwards				innovations related
				to motors, magnetic
	HDDs equipped with
				heads, media, etc.

200FDB* motors

CY1995

100 Release of Windows 95 86 million units

0

1980

1985

1990

1995

2000

2005

2010

Introduction Growth

(Units)

Turning Point

Shipment units (LHS)

CY2035

All new vehicles sold in

Constructing in-

China are eco-friendly

(No gasoline vehicles)

Key action #2

house production

system for inverters

Around CY2024

Preparing for

and gears as well as

mass-production

preparing for

Estimating that

for rapid growth

assembly line.

cost of EV power

CY2030

of market

Pursuing the cost

competitive

trains will become

10 million units

lower than that of

(JPY/Wh)

advantage of mass

ICEs**after 2024

4 folds

production.

Battery

Approx. ¥14/Wh

CY2025

in 5 years

cost

15

2.5 million units

(RHS)

Approx. ¥10/Wh

10

2025

2035

2045

2020

2050

*FDB: Fluid Dynamic Bearing

Introduction

Growth

**ICE: Internal Combustion Engine

(Created by Nidec based on various sources)

(Created by Nidec based on various sources) 13

Automotive: Sales of Vehicles with Nidec's E-Axle

The total number of vehicles using our E-Axle (traction motor system) exceeds 100K units.

E-Axle>

(Units)

(Source: MarkLines)

12,000

Aion S

Aion LX

Aion V

iA5

HYCAN007

Geometry C

Q3 sales

10,000

increased

25% Y/Y

8,000

6,000

4,000

2,000

0

Apr May June July Aug Sep Oct Nov Dec Jan	Feb Mar Apr May June July Aug Sep Oct Nov Dec
FY19	FY20	14

Automotive: Quarterly Results

Profitability of automotive existing business*maintained double-digit operating profit ratio

after bottoming out in Q1 FY20

											*
	(Operating profit :				(Operating profit
	Millions of Yen)
(Sales: Millions of Yen)											ratio: %)
			Operating profit (LHS)
	*				Operating profit (LHS)
			Operating profit ratio (RHS)		Operating profit ratio (RHS)
	50,000
												20.0%
			16.6%
	40,000	14.3%					13.5% 12.6%					16.0%
			16.0%			11.6%					12.5%
			11.0%
										10.5%
	30,000	14.1%									12.0%
			9.0%
								8.4%
									7.1%
	20,000											8.0%
					9.0%	9.0%
				7.9%
												7.2%
	10,000				5.9%			4.7%				5.0%	4.0%
								3.6%	-0.5%
	0												0.0%
		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1		Q2	Q3
	Covid-19		FY2018			FY2019			FY2020

Sales of traction motors started being included.

Nidec Mobility started being included		Expenses for traction motors		Nidec Mobility started being included
in scope of consolidation.		started being recorded.		in scope of consolidation.

*Existing business: Excluding impact of traction motor related business and Nidec Mobility's business from Auto business 15

Appliance, Commercial & Industrial: Quarterly Results

Operating profit ratio has steadily improved after bottoming out in Q4 FY19

(Sales: Millions of Yen)

(Operating Profit Ratio: %)

(Composition ratio: %)

Sales

Operating Profit Ratio

Operating

160,000

16.0%

profit

120,000

12.0%

Outsourcing

cost

9.1%

8.8%

WPR4

53%

7.2%

80,000

8.0%

4.7%

40,000

4.0%

12%

Labor cost

Variable cost

Depreciation

0

0.0%

19%

Fixed cost

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

FY17

FY18

FY19

FY20

(Target)

Optimizing outsourcing costs

• Fundamental review of supply chain
• Accelerating vertical integration of parts made in- house
• Enhancing global procurement program

Optimizing labor costs

• Enhancing competitive advantage by integrating vertical parts manufacturing functions
• Eliminating low profit manufacturing lines
• Reinforcing lean production

Optimizing fixed costs

• Continuing to integrate and streamline production sites
• Slimming of indirect costs (headquarters function costs)

This slide includes forward-looking statements. See Disclaimer on Page 2. 16

Small Precision Motor: Quarterly Results

Sales of other small precision motors hit a record due to new stay-home demand

Compressor

Ventilation blower

cooling fan

(Window ventilation

Refrigerator

device)

(Sales: Millions of Yen)

Sales of HDD Motors (LHS)

Sales of Other Small Motors (LHS)

(Operating Profit Ratio: %)

Robot blower

Stick cleaner

Operating profit ratio of Small Precision Motors (RHS)

Motor for wheel &

blower

main brush

Vacuum cleaner

Living room

Home appliance

16.8%

200,000

15.6%

13.0%

13.0% 13.5%

13.7%

15.8%

15.6%

20.0%

Robot cleaner

9.7%

5.1%

2.6%

10.0%

150,000

0.0%

Axial-flow fan

Hot water supply

for ventilation

DC pump

100,000

51,321 42,050

39,606 39,571

47,163 32,211

DC blower fan

for tank circulation

38,008

37,043

for warm water bidet

Kitchen

48,782

36,858

Sanitary/Water supply utility

Dishwasher

40,055

Dishwasher pump

50,000

(BLDC*)

75,551

84,279

57,551

71,301

72,248

61,356

69,998

72,198

49,301

67,375

71,881

Record

0

high

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Printer/

FY2018

FY2019

FY2020

Smart phone

PC

Game console

Multi-function printer

Tactile device

Small BLDC* fan/Heat-sink module

Main motor for office equipment

* BLDC: Brushless DC motor

17

Demand Boosted by Work-From-Home in "With Corona" Era

Ultra thin/ultra small fan motor "UltraFlo FDB (UFF)" supports the solid demand for work-from-home

Utilizing HDD-				Over 5M unit
nurtured FDB	(Million units)	shipments for three
technology				consecutive quarters
	6

5

4

3

2

1

0

Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3
	FY18			FY19			FY20

18

Nidec IR Contacts

Japan	Tel:	[phone]	E-mail: [e-mail]
EMEA Tel:	[phone]	E-mail: [e-mail]
U.S.	Tel: [phone]	E-mail: [e-mail]

Nidec logo is a registered trademark or a trademark of Nidec Corporation in Japan, the United States and/or certain other countries.	19
"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.

Appendix

Performance Trends

&

Product Group Overview

20

Starting New Top Management

1. Return to top-down management

• Mr. Shigenobu Nagamori, Chairman & CEO, will be in charge of
  Small Precision Motors, group companies, M&A strategies, etc.
• Mr. Jun Seki, new President & COO, will be in charge of
  Automotive and Appliance, Commercial and Industrial

2. Management that focuses on growth

• Starting full-fledged groundworks for net sales of 10 trillion yen
• Sticking to winning overwhelming No.1 market share through top-down sales activities

3. Strengthening HR* development

- Fundamental reform of personnel evaluation system

(clear & fair evaluation, dynamic and strict HR* measurements)

- Ensuring HR* education that enhances Emotional Quotient

*HR: Human Resources

21

Starting WPR4 (Refortifying WPR3 Project)

(Sales: Billions of Yen)

(Operating profit ratio: %)

WPR ?>

450	Base Scenario			Net sales				18%	1.	Taking "unprecedented slowdown
(Historical High)
								caused by COVID-19"as a large
400				Operating profit ratio(%)		16%
					opportunity to enhance structural
350								14%		reform, implementing drastic
										measures to reform the profit
300								12%		structure of Nidec group
250								10%	2.	Structural reform to retain positive
								operating profit even when the sales
200								8%		are cut half the recent peak level
150								6%	3.	Targeting to retain the recent peak
								level of operating margin when the
100								4%		sales are to recover to 75% of the
								recent peak
50								2%	4.	Targeting to double its operating
0								0%		margin when the sales are to recover
								to 100% of the recent peak
	Q3/FY19 Q4/FY19	Case1	Case2	Case3	Case4	Case5	Case6	Case7

22

Three 600 Billion Yen Businesses Are Key to Achieving 2 Trillion Yen Net Sales

		FY2010				FY2019			FY2020
Net sales: 676 billion yen			Net sales: 1.535trillion yen			Net sales: 2 trillion yen (target)
(Sales: Billions of Yen)								1 T
		Small Precision Motors		Automotive		Appliance, Commercial and		Other Product Groups
					Products		Industrial Products				New M&A

		600.0	600.0	600.0
	562.6	<>
		growth>	growth>	growth>
424.3		(Target)	(Target)	(Target)
348.4	333.2				200.0
			Key Growth Areas
Key Growth Areas		214.7		<>
			growth>
164.2
Key Growth Areas				(Target)
94.2
69.2

This slide includes forward-looking statements. See Disclaimer on Page 2.

23

New 5 Big Waves in a Post-Pandemic World

Nidec's business solutions that solve the common problems of humankind

Vapor chamber Heat pipe

	Traction motor Traction motor system
	ADAS related product	（E-Axle）
Fan5G & Thermal solutions
Decarbonization
(Keywords: Tactile sense, image stabilization and heat ventilation module)
(Keywords: Drive/Turn/Brake, safety/comfort and thermal management）

Reducer Motor for drones

Automated guided vehicle

Manpower saving

(Keywords: Industrial robots, servicing robots and logistics)

Nearline HDD motor

Digital data explosion

Power saving

Home appliance motor

(Keywords: High speed / large data, GAFA* and "Stay Home")		(Keywords: Sterilization, hygiene and "Stay Home")
	Refrigerator compressor	24
* GAFA: Google, Apple, Facebook and Amazon

Sales by Product Group (Apr-Dec FY2020)

Services, music box products	0.2%
(0.3%)

Electronic & Optical

Components

Others

Parenthetic percentages represent FY2019 mix

Small Precision Motors

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

Appliance,

	3.9%
	(3.9%)
9.4%	HDD Motors
(9.9%)
	9.8%
	(10.1%)
	18.9%
	(18.8%)
	1.1850T
36.2%
(36.0%)	21.6%
	(21.0%)

28.7%

(28.9%)

Other Small MotorsOptical 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

Commercial and

Industrial Products

Automotive

Products

25

Consolidated Quarterly Net Sales and Operating Profit

	Profitability has recovered due to successful WPR4 cost restructuring
(Net Sales in	(Operating Profit in
Billions of Yen)	Billions of Yen)
	WPR3 WPR4

WPR1WPR2

Earthquake

Disaster

Lehman Crisis	Thai
	Floods

-25.4

Structural Reform

26

Financial Highlights

			(Billions of Yen)
							(Billions of Yen)
		Net sales		Operating profit		Operating profit ratio (%)
					Profit before income taxes	Profit attributable to owners of the parent

		408.3			414.9	433.2							38.6	43.3
	390.4
		375.2										34.9
360.9
				46.4
			336.9			32.4
					30.9					28.7
							29.7
					41.4					27.4
							23.9
	34.2	31.4						22.1
		27.8						20.1
27.6					10.7%
			10.0%
7.7%	8.7%	7.7%	15.4	8.3%							12.1	9.1
			4.1%				3.3
Q1/FY19	Q2	Q3	Q4	Q1/FY20	Q2	Q3	Q1/FY19	Q2		Q3	Q4	Q1/FY20	Q2	Q3
				*
		(Yen/share)								(Billions of Yen)

			Year-end		Interim			Consolidated EPS				Operating activities		Investment activities		Free cash flow
															132.2			146.2
																						68.9
				186								205
											(Forecast)
						30.0	30.0													-77.2
	27.5									-169.4
								(Forecast)
								99
	25.0			27.5		30.0
															-301.7
		FY18		FY19			FY20				Apr-Dec/FY19		Apr-Dec/FY20
*Adjusted based on the 2-for-1 split implemented as of April 1, 2020. "EPS" and "Dividends" are expressed assuming that the stock split occurred at the beginning of FY2018.	27

Product Group Overview
		(Billions of Yen)					(Billions of Yen)
		Sales	Operating profit					Sales		Operating profit
	111.8	115.1			119.0	116.5							106.9
108.0		104.4			92.2	90.2		92.3
		89.4	18.8					7.7
				18.1	75.5	75.3
	14.5	15.5		14.3			6.8	6.8			56.8
							4.7
10.5									4.3
									3.3
			4.6
											-0.3
Q1/FY19	Q2	Q3	Q4	Q1/FY20	Q2	Q3	Q1/FY19	Q2	Q3	Q4	Q1/FY20	Q2	Q3
		(Billions of Yen)							(Billions of Yen)
		Sales	Operating profit					Sales		Operating profit
	147.6	147.0	145.0		148.2	156.0	38.1	38.9	38.2			38.9	36.9
123.0				125.1		14.2	34.5	35.7
			13.1					7.4
8.7	9.9	8.5		9.0			5.3	5.9		6.0	6.2	6.1
							4.5
			6.8
Q1/FY19	Q2	Q3	Q4	Q1/FY20	Q2	Q3	Q1/FY19	Q2	Q3	Q4	Q1/FY20	Q2	Q3	28