NOK : 116th Fiscal Term Interim Business ReportPDF（1,779KB）

April 1, 2021 to September 30, 2021

NOK CORPORATION

(Securities Code 7240)

●Top Message

Masao Tsuru

Representative Director and President

To Our Shareholders

We are pleased to report our business results for the interim period of the 116th term (April 1, 2021 to September 30, 2021).

We would like to express our sincere gratitude for your unwavering support again during this term.

The NOK Group has been operating its business based on the management policy that it is important to establish a highly profitable corporate group by making unique and useful products backed by technology, and selling them at competitive prices all over the world.

With respect to the business environment surrounding the Group in the first half of the fiscal year, social activities and the trend of personal spending remained sluggish and the outlook for economic recovery continued to be unclear due to repeated declarations of state of emergency and the implementation of quasi-state of emergency measures, despite some progress observed in the rollout of the novel coronavirus vaccinations.

Under these circumstances, the Group has promoted various measures with the aim of achieving sustainable growth with an eye toward the future.

In the first half of the fiscal year on a consolidated basis, net sales totaled 324,368 million yen, up 27.1% year on year. Operating income was 14,868 million yen, compared with an operating loss of 8,612 million yen in the same period of the previous fiscal year; ordinary income was 21,830 million yen, compared with an ordinary loss of 8,664 million yen in the same period of the previous fiscal year; and profit attributable to owners of parent was 13,001 million yen, compared with a loss attributable to owners of parent of 10,464 million yen in the same period of the previous fiscal year.

Toward the future, the business environment surrounding the Group has been on a recovery trend in line with the decrease in the number of those infected with the novel coronavirus across the globe. On the other hand, the

Financial Highlight (consolidated)

	Net sales			Operating income or loss
Interim Full-year		(Billions of yen)		Interim	Full-year		(Billions of yen)
669.5	626.8	596.4		23.1
						14.5	14.9
				14.0	12.0
342.0	308.4	255.2	324.4			2.2
							-8.6
113th term	114th term	115th term	116th term		113th term	114th term	115th term	116th term
(FY 2018)	(FY 2019)	(FY 2020)	(FY 2021)		(FY 2018)	(FY 2019)	(FY 2020)	(FY 2021)

Note: Figures in financial highlights (consolidated) are rounded off.

Ordinary income or loss

Interim Full-year		(Billions of yen)
31.1
18.0	17.4	18.3	21.8
	4.1
		-8.7
113th term	114th term	115th term	116th term
(FY 2018)	(FY 2019)	(FY 2020)	(FY 2021)

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outlook for the future business environment remains unclear with ongoing concerns over a resurgence of infections and the supply of raw materials including semiconductors, in addition to potential risks which may have an impact on sales and costs such as a surge in transportation costs and labor shortage.

In the seal business, on the back of the temporary decrease in automobile production by domestic and overseas automobile manufacturers due to the shortage of semiconductors and raw materials, coupled with the impact of tight supply of parts due to the spread of the novel coronavirus infection in Southeast Asia, sales for automobile applications are expected to recover gradually as production of automobiles picks up again. As to sales to manufacturers of general industrial machinery, it is expected in sales for construction machinery that the entire market will steadily grow supported partly by economic stimulus measures taken by various countries. On the other hand, it is also anticipated that the external environment will remain highly uncertain represented by a global surge of raw material prices, the problem of power supply in China and subsequent economic deceleration, etc. Therefore, we will strive to build production systems to realize more stable quality and more stable product supply than ever, and develop new businesses and new products to respond to changes in the medium- to long-term business environment including the electrification of automobiles.

In the electronic product business, it is expected that demand will recover although there are currently concerns over the status of the novel coronavirus infections in Southeast Asia and the impact of the shortage of semiconductors. Meanwhile, we will consider how we should respond to the changes in demand for high-end smartphones and the changes in the structure of industries arising from the electrification of automobiles as our challenges. To respond to this situation, we will promote

sales expansion for new applications and continue to streamline the production system so that our production capacity matches future demand.

In other businesses, there are concerns in the roll business that demand for multifunction peripherals, printers and consumables will continue to decrease due to the promotion of paperless operations as a result of work style reform on the back of remote work, in addition to the sluggish growth in the existing office machinery market. In the special lubricant business, demand is expected to fall as a result of decreased automobile production. To cope with this situation, the sales, engineering and production departments will work together to improve competitiveness in quality and costs as well as expand sales by developing new products. We will also improve earning power by further enhancing management efficiency through measures such as cost control.

By steadily promoting these measures, the entire group will work together in order to achieve sustainable growth.

With regard to the interim dividend for this six-month period, we have decided to set it at 25 yen per share.

We are earnest in our determination to endeavor to meet the expectations of our shareholders.

We ask for your understanding of the current business climate and our management direction, as well as our commitment. The NOK Group greatly appreciates your continued support and guidance.

December 2021

Profit attributable to owners of parent, or loss attributable to owners of parent

Interim

Full-year

(Billions of yen)

Net income per share, or net loss per share

Interim Full-year(yen)

Total assets/Net assets

Total	Net	(Billions of yen)
assets	assets

785.1 728.7 803.0 815.6

9.7

13.0

55.79	75.17

485.5502.1 518.2

3.4 1.4

	-2.2	-1.4
		-10.5
113th term	114th term	115th term	116th term
(FY 2018)	(FY 2019)	(FY 2020)	(FY 2021)

7.92-7.87

19.77

	-12.83
		-60.50
113th term	114th term	115th term	116th term
(FY 2018)	(FY 2019)	(FY 2020)	(FY 2021)

447.2

113th term	114th term	115th term 116th term
(FY 2018)	(FY 2019)	(FY 2020)

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●Business Overview (consolidated)

Seal business

 Net sales	165,342 million yen
	Breakdown
			of net sales
	Year on year growth rate 34.4%
	51.0%

• Operating income 18,257 million yen

Operating loss of 854 million yen in the same period of the previous fiscal year

Sales for automobile applications increased reflecting a significant recovery of
demand despite the prolonged shortage of supply of parts including semiconductors
and the impact of the spread of the novel coronavirus in Southeast Asia. Sales to
manufacturers of general industrial machinery also increased on the back of robust	Oil seals
demand for construction machinery, machine tools, robots, etc.
As a result, net sales ended at 165,342 million yen (up 34.4% year on year).
Operating income totaled 18,257 million yen (compared with an operating loss of
854 million yen in the same period of the previous fiscal year) on the back of the
growth in sales despite the increases in personnel expenses and other costs.

Electronic product business

 Net sales	146,096 million yen
Breakdown
			of net sales
Year on year growth rate 19.3%
45.0%
 Operating loss	3,995 million yen
Operating loss of 7,176 million yen in the same period of the previous fiscal year
Sales for automobile and high-end smartphone applications increased as demand
recovered despite the impact of reduced production due to the shortage of supply
of components including semiconductors remaining in some areas.
As a result, net sales ended at 146,096 million yen (up 19.3% year on year).
Flexible printed circuits (FPC)
Operating loss totaled 3,995 million yen (compared with an operating loss of 7,176
million yen in the same period of the previous fiscal year) on the back of the growth
in sales despite the increases in personnel expenses and other costs.

Other businesses

 Net sales	12,930 million yen		Breakdown
	of net sales
Year on year growth rate 32.3%		4.0%
 Operating income	601 million yen
Operating loss of 609 million yen in the same period of the previous fiscal year
					Development rollers, charge rollers		Specialty lubricants

In the roll business, sales increased as demand for multifunction peripherals and repair parts, which had been sluggish due to the impact of the novel coronavirus, has been on a recovery trend. Sales in the special lubricant business increased thanks to a rise in demand for automobile applications.

As a result, net sales increased to 12,930 million yen (up 32.3% year on year). Operating income ended at 601 million yen compared with an operating loss of 609 million yen in the same period of the previous fiscal year.

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●Topics

Cushion rubber (cushion rubber for large deformation)

			Filling gaps, pressing parts, and preventing
	Applications
		part slippage in or on EV/HEV electric
			auxiliaries and other devices
			Achieving both large deformation and low reaction force
	Merits		Enabling appropriate load control
		Allowing for proposals for shapes and materials
		optimum for each application
			Made of materials that hardly affect electrical
			components

The geometric design technology of NOK enabled the development of cushion rubber that achieves both large deformation and low reaction force.

This product is made of materials that hardly affect electrical components so that it can be used for battery units and the like. In addition, compared with metal springs, this product is expected to be lightweight.

With its technology, NOK aims to support the improvement of the fuel efficiency of electric vehicles and contribute to the global environment.

Images of shapes

Superior technologies of NOK

Rubber Metal Sponge

sheets springs

   

   

   

   

〇：Excellent △：Good ×：Poor.

Shape of hollow membrane

Images of loading characteristics

Ex.) Decreasing load under high compression

Ex.) Increasing load under low compression

Amount of compression

NOK signed the United Nations Global Compact

NOK is developing businesses globally in areas such as China and Southeast Asia. In April this year, we became a signatory to the UN Global Compact (UNGC) to comprehensively announce to the world that NOK is a company that aims to realize a sustainable society and is a company that addresses human rights issues. We also actively collect information and exchange views by participating in several subcommittees.

Going forward, we will contribute to the realization of a sustainable society by supporting and implementing the Ten Principles of the UNGC in our business activities. The Ten Principles are related to issues such as "Protection of human rights," "Elimination of unfair labor practices," "Environmental measures," and "Anti-corruption."

Human rights

Principle 1: Support and respect the protection of human rights.

Principle 2: Make sure that you are not complicit in human rights abuses.

Labour

Principle 3: Uphold the freedom of association and the effective recognition of the right to collective bargaining.

Principle 4: The elimination of all forms of forced and compulsory labour.

Principle 5: The effective abolition of child labour. Principle 6: The elimination of discrimination in respect of employment and occupation.

Environment

Principle 7: Support a precautionary approach to environmental challenges. Principle 8: Undertake initiatives to promote greater environmental responsibility. Principle 9: Encourage the development and diffusion of environmentally friendly technologies.

Anti-corruption

Principle 10: Work against corruption in all its forms, including extortion and bribery.

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