This article first appeared on GuruFocus.

Release Date: November 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

NSK Ltd (NPSKY) successfully consolidated the Steering Business as a wholly owned subsidiary, contributing significantly to sales and profits.

The company reported a year-on-year increase in sales by JPY14.6 billion and profits by JPY6.8 billion for the first half of the fiscal year ending March 2026.

NSK Ltd (NPSKY) revised its full-year forecast upwards, projecting sales of JPY885 billion and operating income of JPY30 billion, reflecting strong performance and strategic consolidation.

The Industrial Machinery segment saw a sales increase of 2.7%, driven by demand in China and spot orders for semiconductor equipment in the Americas.

Structural reforms and operational improvements have led to cost savings, with a reported JPY6.2 billion in savings over inflation-related expenses.

Sales in Europe declined due to the withdrawal of unprofitable products as part of structural reforms.

The Automotive business faces challenges with flat production volumes and increased tariff costs impacting profitability.

Despite improvements, the company is still far from achieving its midterm plan target of an 8% profit margin.

The impact of US tariffs and exchange rate fluctuations continue to pose challenges, with a one-month delay in cost recovery.

NSK Ltd (NPSKY) has not factored in risks related to rare earth metals and semiconductor shortages due to significant uncertainty.

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Q: Can you explain the impact of the Steering Business consolidation on your financial results? A: Unidentified Company Representative: The Steering Business, which became a wholly owned subsidiary on September 1, 2025, contributed JPY15.2 billion in sales and JPY3.8 billion in profits to our results. This consolidation has been a significant factor in our year-on-year sales and profit growth.

Q: What are the revised full-year forecasts for fiscal 2025, and what factors influenced these changes? A: Unidentified Company Representative: We have revised our full-year forecast to JPY885 billion in sales and JPY30 billion in operating income, reflecting an increase of JPY120 billion in sales and JPY8 billion in profits compared to the May forecast. This revision incorporates the impact of the Steering Business and the current demand environment.

Q: How are you addressing the impact of US tariffs on your business? A: Unidentified Company Representative: We have revised our full-year forecast to include an JPY11 billion impact from US tariffs. Our strategy is to mitigate 100% of increasing costs by transferring them to sales prices and improving our supply chain.

Q: What are the key initiatives in your midterm plan to improve profitability? A: Unidentified Company Representative: We are focusing on structural reforms, particularly in Europe, and expanding sales in the Industrial Machinery Bearings and Automotive sectors. We aim to improve profitability through operational improvements and strategic investments, including partnerships in robotics and automation.

Q: Can you provide more details on your strategic partnership with RT Corporation? A: Unidentified Company Representative: We have entered a strategic investment and business partnership with RT Corporation to enhance our capabilities in robotics and automation. This partnership will help us transform our business model and expand into the robot market, leveraging RT Corporation's strengths in AI and system design.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.