To Our Shareholders

• We are pleased to report our business results for the interim period of the 118th term (April 1, 2023 to September 30, 2023).
  Recognizing the importance of achieving the basic management policy of establishing a highly profitable and strong corporate group by "producing and selling original products-backed by technology-which are useful to society, all over the world," the NOK Group develops business management based on this policy.

• 

In the business environment surrounding the Group in the first six months of the current consolidated fiscal year, restrictions on behavior related to COVID-19 were eased, and the normalization of economic activities has progressed.

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 354,239 million yen (up 0.4% year on year), operating income was 4,863 million yen (down 20.5% year on year), ordinary income was 16,389 million yen (down 1.0% year on year) and profit attributable to owners of parent was 12,181 million yen (up 19.6% year on year).

Regarding the future business environment surrounding the Group, while the effects of COVID-19 have subsided and economic activities are on the road to recovery, the outlook remains uncertain due to factors such as economic trends in the U.S., China, and other countries, raw materials and energy costs, and the surfacing geopolitical risk in the Middle East.

In the seal business, the supply shortage of semiconductors and other components in the automobile industry is being alleviated, and domestic and overseas demand for products for automobile applications is on a recovery trend. For general industrial machinery applications, the Group faces the challenge of responding to declining demand due to the economic slowdown in China. We will maintain a system to achieve an even higher level of stable quality and stable product supply, and develop new businesses and new products for responding to medium- to long-term changes in the business environment; for example, the electrification of automobiles.

In the electronic product business, demand for smartphones remained flat due to the prolonged replacement cycle by end-users. The demand for automobile applications is expected to increase mainly for batteries in tandem with electrification. We will continue to further expand sales of products for electric vehicles and expand business areas where fluctuations in demand are minimal, thereby creating a business portfolio that is less susceptible to changes in demand.

In other businesses, while sales of special lubricants temporarily declined due to a reduction of car production and other factors, we expect they will gradually recover. For products for office equipment, we will work to improve productivity, competitiveness in quality and cost, and profitability in order to cope with the slowing growth of the office equipment market.

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 37.5 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 2023