NSK Q1 FY2027: Operating Profit Triples, Full-Year Forecast Raised

In the first quarter of FY2027 (April–June 2026), NSK saw operating profit expand 3.1 times year-on-year to ¥14.961 billion, while revenue grew 30.6% to ¥255.638 billion and net profit attributable to owners of the parent surged 795.6% to ¥9.701 billion. The consolidation of the steering business (NSK Steering & Control, formerly an equity-method affiliate) contributed significantly, together with increased orders for bearings used in semiconductor manufacturing equipment and machine tools, fueled by global AI investment. A sharply weaker yen, averaging ¥159.49 to the dollar compared with ¥144.60 a year earlier, also provided a tailwind.

Reflecting the strong start, the company raised its full-year consolidated forecasts for FY2027. Revenue is now projected at ¥1,040.0 billion (up 14.1% from the previous year) and operating profit at ¥50.0 billion (up 28.8%). Under its "Bearings & Beyond" strategy unveiled in May 2026 as part of the NSK Vision 2036 and Mid-Term Management Plan 2028, the company aims to strengthen core earnings and accelerate expansion into new business areas.

Segment results for the quarter (year-on-year comparison):

(Note: Steering Business figures are for the consolidated quarter; no comparable prior-year segment data.)

Industrial Machinery Business: Sales of bearings and linear motion products for semiconductor manufacturing equipment and machine tools expanded, driven by AI-related investments. In Japan, demand for semiconductor equipment remained strong, while China saw growth in machine tool applications. Segment operating profit surged fivefold, with the margin improving to 7.7%, despite soft aftermarket demand in Europe.

Automotive Business: Revenue was flat at ¥98.863 billion, but operating profit increased 37.7% to ¥4.576 billion thanks to cost reductions and the tailwind from the weaker yen. Sales declined or were sluggish across all regions: Japan, the Americas, Europe, and China. European demand was weak, and sales of automatic transmission components in Japan fell. However, sales of ball screws for electric brakes grew in China, signaling potential from electrification-related parts.

Steering Business: Following the acquisition of the remaining shares in NSK Steering & Control (NS&C) in September 2025, this was the first full quarter of consolidation. The segment generated revenue of ¥44.263 billion and operating profit of ¥1.570 billion. The integration gives NSK global control over its steering operations, strengthening its earnings base.

Total assets at end-June 2026 stood at ¥1,297.799 billion, up ¥58.030 billion from the previous fiscal year-end, mainly due to the steering consolidation and an increase in short-term borrowings. Total liabilities rose ¥44.753 billion to ¥592.387 billion, but the equity ratio remained strong at 52.8% (down from 54.2% at end-March 2026).

Cash flow from operating activities was a positive ¥28.532 billion (vs. ¥27.413 billion a year earlier). Investing activities saw a net outflow of ¥35.423 billion, reflecting payments for "acquisition of other non-current assets" likely tied to the steering buyout, including ¥28.0 billion in such payments. Financing activities generated ¥18.278 billion largely from net short-term borrowings. Cash and cash equivalents at quarter-end were ¥156.783 billion, up ¥14.660 billion from the start of the fiscal year.

The full-year dividend forecast was unchanged at ¥34 per share (interim ¥17, year-end ¥17). No share buyback was announced; capital policy remains aligned with the medium-term plan's emphasis on "appropriate equity capital control."

Key risks facing NSK include:

• Geopolitical risk and tariff policy: U.S. tariff measures and a slowing Chinese economy weigh on automotive demand. In the Americas, the company is already experiencing revenue pressure from tariff reimbursements to customers.
• Structural shift in the automotive market: The transition to EVs may reduce long-term demand for engine-related components, requiring a faster shift to new products such as ball screws for electric brakes.
• Exchange rate volatility: While the weak yen boosts earnings, a sharp reversal could quickly erode profits. The full-year assumption of ¥156.12 per dollar is already more conservative than current spot rates.
• Cyclical industrial machinery demand: The current AI-driven boom could cool, and a semiconductor market correction would sharply reduce earnings.

Through the "portfolio transformation" and "relentless structural reforms" outlined in the Mid-Term Management Plan, NSK aims to build resilience against these risks.

NSK raised its full-year FY2027 forecasts from the May 12, 2026 initial announcement. The revised targets and year-on-year comparisons are shown below:

The upgrade reflects stronger-than-expected first-quarter progress and the full-year impact of the steering consolidation. However, the company expects first-half operating profit of ¥26.0 billion (up 46.8% year-on-year) and second-half profit of ¥24.0 billion, implying a slight deceleration. The conservative second-half view likely factors in U.S. tariff impacts and European economic uncertainty.

The quarter's defining event was the September 2025 acquisition of all shares in NSK Steering & Control (NS&C) from Japan Industrial Solutions (JIS), making the steering business a wholly consolidated subsidiary. This brought the global steering operations under NSK's umbrella, significantly boosting revenue and profit. Steering, which includes electric power steering (EPS) for automakers, is positioned as a growth area aligned with vehicle electrification and autonomous driving.

In May 2026, NSK unveiled its "NSK Vision 2036", targeting a decade-long transformation to "Co-creating ideal movement with tribology solutions." The corresponding Mid-Term Management Plan 2028, under the "Bearings & Beyond" banner, focuses on maximizing returns from core bearings and linear motion products while evolving the business model toward unit products and solution-based offerings. The steering consolidation is a key element of this portfolio transformation, expected to contribute to earnings stability.