NGK Insulators, Ltd. · ØDemand for insulators in the Japanese market tends to increase gradually. (Expecting the increase of 500KV projects from 2008) ØOverseas demand in U.S.,

1

NGK Insulators, Ltd.

Oct. 2007

Today's Speaker

TitleName

Susumu Sakabe

Hiroshi Wada

Shun Matsushita

Vice PresidentFinance and Accounting Dept.

Director & Senior Vice President

President & Chief Executive Officer

2

1stH Result

12.0

18.525.8

Sep.'06 Sep.'07Est. Sep.'07

34.932.0

22.0

Sep.'06 Sep'07Est. Sep.'07

173.7173.0

143.4

Sep.'06 Sep.'07Est. Sep.'07

(July'07)

Revision (Sep.'07)１73.０

(Result)(Result)

■Sales ■Operating Income

(July'07) (Result)(Result)

■Net Income

(July'07) (Result)(Result)

¥ Bil.

Revision (Sep.'07)32.０

Revision (Sep.'07)24.5

■Point for IstH Result　（Unit：¥ Bil.）

Sales & Income increased from the 1stH of previous yearSales of SiC-DPF in the Ceramic Products Business largely increased.

　 Weaker Yen contributed to rise in sales & income.Impact of weaker yen（120¥ /$、160¥/ER）　Sales＋5.4 Op. Income＋2.2

　【Variance from the 1stH of previous year】　 Sales　　　 +30.3（Power+4.6, Ceramic products+21.2, Electronics+3.2, Engineering+1.3）

Op. Income +12.9（Power+1.6, Ceramic products+8.7, Electronics+1.2, Engineering+1.3）

1stH Sales & Income increased from the forecast in July　　【Variance】　　 Sales　　 + 0.7（Power+1.0, Ceramic products -0.1, Electronics-0.5, Engineering+0.3）

Op. Income + 2.9（Power+0.5, Ceramic products+1.6, Electronics-0.4, Engineering+1.1）

■Forecast for Fiscal year Ended March 2008　Continuing growth in ceramic products and turning to profit for NAS batteries

Sales : Forth consecutive period of growth (Record-High)Income: Fifth consecutive period of double-digit Op. Income growth

3

75 78 80

84

16265

7376

77

5653

4543

43

68 8062

143 161127

96

78

68

43

0

50

100

150

200

250

300

350

03/'05 03/'06 03/'07 03/'08Est. 03/'08Est. 03/'08Est.

284

¥ Bil.

Net Sales of NGK

Power

CeramicProducts

Engi-neering

Elec-tronics

266 320

After consolidation elimination

（Ａｐｒ.’07) （Ｏｃｔ.’07)

362340

362

（Ｊｕｌｙ’07)

24.331.3

52.0 53.0

65.0 67.0

12.016.5

29.4 31.038.5

44.5

0

10

20

30

40

50

60

70

03/'05 03/'06 03/'07 03/'08Est. 03/'08Est. 03/'08Est.

Operating IncomeNet Income

¥ Bil.

Income of NGK

annual average

Major extraordinary items ;03/’06 (¥3.7Bil.)Restructuring Expense　 ¥3.4Bil. Gain on sales of securities

¥3.0Bil. Gain on return of pension trust03/’08 ¥10.0Bil. Gain on sales of securities

<147>

<116>

<137><134><¥/Euro>

<111><108><¥/$>

<161>

<118><110>

<150> <161>

<119>（Ａｐｒ.’07) （July’07) （Oct.’07)

Forecast in Sep.■Op.　65■Net　44

4

　　Power Business　Sales & Operating Income

75 80 80

6268

-3.8%

2.8%

8.5% 9.4%9.4%

-20

0

20

40

60

80

100

03/'05 03/'06 03/'07 03/'08Est. 03/'08Est.-4.0

1.0

6.0

11.0

16.0

Sales Op. Income Ratio ¥Bil. (　)Op.Income

（6.4）

（-2.4）（1.9）

（7.5）

（July 07) （Oct.’07)


（7.5）

OverviewDemand for insulators in the Japanese market tends to increase gradually. (Expecting the increase of 500KV projects from 2008)Overseas demand in U.S., China and Middle-East Asia is active.Demand for NAS (sodium-sulfur) batteries is largely expected to increase with increase of wind power generation.

TasksElectrical Insulators : Improvement of profitability・Keep up with expanding Chinese market(Start soon the new substation plant & the sales company in China)・Promote replacement of insulators in Japan.

NAS batteries : Achievement of breakeven・Cover growing demand for wind power generation and reinforceoverseas business

・Promoting radical cost reduction

5

２MW NAS batteries　17sets

２MW Converters　17sets33.5m

82m

44m

50MW Wind Farm（1.5MW×34sets）

34MW – NAS batteries（2MW×17sets）

NAS batteries &Wind Power GenerationsNAS batteries &Wind Power Generations

Rokkasyo Village in Aomori prefecture

NAS batteries facilitiesNAS batteries facilities Power Conversion System facilitiesPower Conversion System facilities Control facilitiesControl facilities

RokkasyoRokkasyo VillageVillage/ / NAS batteries facilitiesNAS batteries facilities（（under constructionunder construction））

6

　　

¥Bil.

Sales of Power Business

55.2 61.5 64.9 65.0

6.36.3

10.2 15.067.875.1

80.0

61.5

0

50

03/'05 03/'06 03/'07 03/'08Est.

Insulators NAS Batteries


（Oct.’07)

　　

¥Bil.

-2.3-3.10.5

-0.70.7

4.2

7.07.1

-2.4

7.56.4

1.9

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

03/'05 03/'06 03/'07 03/'08Est.

Insulators etc.NAS BatteriesTotal Op.income

Operating Income of Power Business

（Oct.’07)

7

161 162

84

126

9624.8%

26.9%

18.5%

24.5%

20.2%

0

20

40

60

80

100

120

140

160

03/'05 03/'06 03/'07 03/'08Est. 03/'08Est.0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0Sales Op. Income Ratio

　　Ceramic Products Business　Sales & Operating Income

¥Bil.

(　)Op.Income

（17.7）（16.9）

（40.0）

（31.0）

（July’07) （Oct.’07)


（43.5）

OverviewEmission regulations being tightened worldwide

◆Gasoline cars・Demand for Automotive catalytic converters (“Honeycomb Ceramics” for gasoline cars) continues to be high due to increase of number of automotive sales worldwide.

◆Diesel cars　・Demand for SiC-DPF increasing in Europe.・Demand for Cd-DPF & Large size honeycombs used for trucks

and construction equipment is going to increase caused by tighter emission regulations in 2010.

TasksIncrease capital expenditures for Cd-DPF & Large size honeycombs.Improve productivity and reduce cost for “SiC-DPF” .

8

12.5

31.348.0

2.3

20.0

12.0

7.86.5

162

126

9684

0

50

100

150

03/'05 03/'06 03/'07. 03/'08Est.

Sales of Other productsSales of Honeycomb ceramics Sales of Cd-DPF & Large size HoneycombSales of SiC-DPF

Sales Forecast of Ceramic Products Business¥Bil. After consolidation elimination

（Oct.’07)

Diesel related products

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014New Long Term Regulation Post New Long Term Regulation

Tier2/Bin#8 Tier2/Bin#5

EuroⅢ EuroⅣ EuroⅤ EuroⅥ

New Long Term Regulation Post New Long Term Regulation

US’04 US’07

EuroⅢ EuroⅣ EuroⅤ EuroⅥ

Same level as Tier4 & Tier4-b

US’10

Tier4-a Tier4-b

Step-3 Step-4

JapanUS

EuropeJapanUS

Europe

JapanUS

Europe

Passenger car

Truck

Off-road

Japan

US

Europe

Truck

Off-road

Passenger car

DOCDOC+DPF

DOC

Light, Medium

Heavy

DOC+DPF

DOC+DPF

DOC+SCR

DOC+DPF

DOC+DPF+SCR(Light Truck: DOC+NAC+DPF)

DOC+DPF+SCR

DOC+DPF+SCRDOC+SCR

DOC+DPF DOC+DPF+SCR

DOC+DPF+SCR

DOC：Diesel Oxidation Catalyst SCR：Selective Catalyst Reduction NAC：NOx Adsorber Catalyst）

EmissionEmission Regulation for Diesel & Technical TrendRegulation for Diesel & Technical Trend

9

　Electronics Business　Sales & Operating Income

7778736865

10.4%

15.0%17.8% 17.5%

19.2%

0

20

40

60

80

100

03/'05 03/'06 03/'07 03/'08Est. 03/'08Est.

Sales Op. Income Ratio¥Bil.(　)Op.Income

（10.1）（6.8）

（13.5）（13.1）

（July’07) （Oct.’07)


（15.0）

Overview “Beryllium Copper”: Demand for automotive micro-electronicsdevices and electrical appliances increases strongly in China.Copper price remains high.“Ceramic Components for Semi-conductor Production Equipment”:Outlook of demand is not clear due to decline of orders of SPE markers. “Ceramic Actuators for Color Printer Heads”: Demand increases due to change of our customer's (Seiko Epson) sales policy whichrecovers the sales volume of the printers.“Soshin Electric Products”: increases steadily supported bydemand for “blue tooth” etc.

TasksKeep growth in “Ceramic Components for Semi-conductor Production Equipment”:Promote recovery in “Ceramic Actuators for Color PrinterHeads” by development of higher performance products.Create new products

10

　　Engineering Business　Sales & Operating Income

43 43

5645

53

5.2%

2.8% 3.2%

5.8% 5.8%

0

20

40

60

80

03/'05 03/'06 03/'07 03/'08Est. 03/'08Est.

Sales Op. Income Ratio¥Bil.

(　)Op.Income

（1.4）（2.9）

（2.5）（1.5）

（Ｊｕｌｙ’07) （Ｏｃｔ.’07)


（2.5）

OverviewTough competition is continuing due to reduction of public investment related to Sewage Treatment Systems in Japan.Shift to the distinctive technical proposal competition from theprice competition.Increase the demand for renewal & reconstruction

TasksPreparation for the realization of consolidation of the waterenvironmental business operations with Fuji Electric Groups

Reinforce the development of new products & technologies　 and bring synergy effect from the consolidation.

Reinforce cost competitive power.

Promote overseas business

11

6875

73

200

96126

162143

100

8078

100

76

65

77

4343

52

45

0

100

200

300

400

03/'06 03/'07 03/'08Est. 03/'08Est. 03/'11Est.

320284

400

Electronics

Engineering

Ceramic Products

Power

¥Bil.

340

DPF・NAS・New Products etc’07 Medium Term Estimates / Sales


362

（Ａｐｒ．’07) （Ｏｃｔ.’07) （Ａｐｒ．’07)

（Ｏｃｔ.’07)

40.0

17.7

31.0

43.5

29.5

10.07.5

7.0

1.9

6.4

20.0

14.0

10.1

13.5

13.1

2.5

2.5

1.4

1.5

0

20

40

60

80

03/'06 03/'07 03/'08Est. 03/'08Est. 03/'11Est.

52.0

31.3

70.0

Electronics

Engineering

Ceramic Products

Power

¥Bil.

53.0

DPF・NAS・New Products etc

’07 Medium Term Estimates / Operating Income

10.8%16.3%

6.7%11.0%

10.4%15.6%

14.8％

18.5％

12%17.5%

ROEOP/Sales

67.0

（Ａｐｒ．’07) （Ｏｃｔ.’07) （Ａｐｒ．’07)

（Ｏｃｔ.’07)

12

16%17%15%OI Margin

22.0143.4

1st H

03/’07Actual

52.0320.1

Total

30.0176.7

2nd H

Operating Income

Sales

Total

9%9%7%OI Margin

2.4

32.9

6.4

75.1

4.0

42.2

Operating Income

Sales

Power Business

19%17%20%34.9

173.7

1st H

03/’08 Est. (Oct.’07)

67.0362.0

Total

32.1188.3

2nd H

9%8%11%

4.0

37.5

7.5

80.0

3.5

42.5

Semi-annual Sales and Operating Income by Segment

( ¥ Bil.)After consolidation elimination

25%25%24%OI Margin

14.962.7

1st H

03/’07 Actual

31.0126.4

Total

16.163.7

2nd H

Operating Income

Sales

Ceramic Products Business

3%11%-OI Margin

-2.2

10.5

1.5

45.3

3.7

34.8Operating Income

Sales

Engineering Business

27%25%28%23.683.9

1st H

03/’08 Est. (Oct.’07)

43.5162.0

Total

19.978.1

2nd H

6%11%-

-0.9

11.8

2.5

43.0

3.4

31.2

18%17%18%OI Margin

6.9

37.3

13.1

73.3

6.2

36.0

Operating Income

Sales

Electronics Business

18%15%20%

8.1

40.5

13.5

77.0

5.4

36.5

13

Summary of Cash Flow (¥ Bil.)

　　 --1.8-3.3　Other investments11.3　4.75.9　Proceed, investment securities

-37.7

-40.3

36.84.5

-5.2-3.319.0

-10.932.7

03/’06

-21.3

-24.2

38.3-11.9

-4.1-3.823.8

-17.051.3

03/’07

-15.7

-27.0

57.1-24.3

2.3-3.626.5

-19.876.0

03/’08Est.

Investing Activities

　Property, plant & equip.

　Income taxes paid　Income before taxes

　Increase in Acct. Rec.

　Other changesOperating Activities

　Increase / Decrease in inventories

　Depreciation

-6.429.7　Proceeds from new borrowings---10.0　Redemption of bonds

-1.30.1Effect of exchange rate change

110.178.359.1Cash & eq. at End of Year

13.9

14.7

-0.7

-4.0-0.2

03/’06

19.2

0.9

-0.5

-4.7-0.3

03/’07

31.8

-9.6

-2.9

-6.7-

03/’08Est.

Net Changes in Cash & eq.

　Cash dividends 　Acquisition of treasury stock

　Other

Financing Activities

14

14.112.2 11.3 12.2 13.012.5

10.5 9.610.6 10.5

4.0%

5.6%

3.6%3.8%

4.6%

4.9%4.7%4.7%5.2%

6.6%

03/'04 03/'05 03/'06 03/'07 03/'08Est.

Consolidated R&D Parent R&DConsolidated R&D/Sales Ratio Parent R&D/Sales Ratio

R&D Input (¥ Bil.)

（Oct.’07)

3 3

1

0

0

1

2

5

3

2

1

2

48

4

17 11

3124

8

15

233

17

41

26 2731

27

17

241917

0

5

10

15

20

25

30

35

40

45

03/'04 03/'05 03/'06 03/'07 03/'08Est.

CorporateElectronics Bus.Engineering Bus.Ceramic Prod.Bus.Power Bus.Depreciation and amortization

¥Bil.

Capital Expenditures

（Oct.’07)

15

Number of Outstanding SharesMar.’96 355 Mil. Shares

-10 Buyback of StocksMar.’97 345

+29 Exercise of Warrants -10 Buyback of Stocks

Mar.’98 364-10 Buyback of Stocks


Mar.’00 339+37 Conversion of CBs -10 Buyback of Stocks



Mar.’03 346-


Mar.’05 337-

Sep.’07 337

AccumulatedBuyback

83Mil. Shares¥90.7Bil.

19 Mil.shares are heldas treasury stocks;others were retired.

ROE & EPS

24.4225.7823.0934.75

48.99

87.23

132.04

3.5% 4.1% 3.7%

10.8%

5.1%6.7%

14.8%

0

20

40

60

80

100

120

140

03/'02 03/'03 03/'04 03/'05 03/'06 03/'07 03/'08Est.2

4

6

8

10

12

14

16

18EPS ROE¥

%

（Oct.’07)

16

Disclaimer :This material is not an offer or a solicitation of an offer to buy or sell securities. Please note that although NGK has made careful efforts to update the contents in order toensure the accuracy, this material may not provide or reflect the latest information.NGK assumes no responsibility for losses that result from use of this material.Please be aware that decisions regarding investing are the responsibility of users themselves.

NGK Insulators, Ltd.2-56, Suda-cho, Mizuho-ku, Nagoya

467-8530, Japan

Finance & Accounting Department

Tel. : + 81-52-872-7186 Fax. : + 81-52-872-7160E-mail : [email protected]

NGK Homepage Address (English Version) ：http://www.ngk.co.jp/english/ir/index.html

Documents

NGK Insulators, Ltd. · ØDemand for insulators in the Japanese market tends to increase gradually. (Expecting the increase of 500KV projects from 2008) ØOverseas demand in U.S.,