IR | Management Principles -NIDEC SANKYO CORPORATION

1. Management Policy

Based on its “Customers First” principle, the Nidec Sankyo Group aims to strengthen its competitiveness through the accumulation and development of core technologies, to maintain high profitability, and to become a company that can achieve continuous development.
In addition, while pursing globalization of management and greater efficiencies throughout the Group, Nidec Sankyo strives to implement environmental measures, company ethics and other compliance initiatives throughout the Group. Nidec Sankyo also works to maximize shareholder value by achieving strong growth, greater earnings and a rising share price over the long term and seeks to fulfill its responsibilities to all shareholders.

2. Target Management Index

The Nidec Sankyo Group aims to achieve a more than 10% operating income margin to strengthen its profitability structure so that it can address changes in its management environment.

3. Current Situation and Outlook of Management Strategies

In the future, the Nidec Sankyo Group will develop its business, giving first priority to expanding earnings in line with the expansion of sales, while proactively investing its management resources in the development of new products, new markets and new customers. Nidec Sankyo also aims to gain a competitive advantage in productivity through the development of thorough cost-saving measures such as reducing the purchase costs of parts and components as well as the promotion of innovation in manufacturing, returning to the starting line as a manufacturer, to establish a firm profitability structure.
In fiscal year 2008, the Nidec Sankyo Group will continue to promote revenue-increasing activities by aggressively cultivating new products, new markets and new customers and will dynamically take on challenges involving our basic principles of addressing cost structure and profit enhancement in pursuit of company-wide cost-saving measures and productivity improvements, despite concerns about risks such as an increase in production costs in China in connection with a rise in the minimum wage and escalated appreciation of RMB and the steep rise in the cost of raw materials in addition to the appreciation of the yen against the dollar.
Our approach to each product’s development is as follows: For stepping motors, we will work on aggressive sales activities with the aim of attaining double-digit growth. For lens actuators for mobile phones, which enjoy continued expansion in the market, we will proactively expand sales to meet market needs for compact and thin-model products. For DC motors, we will promote a business shift from use in audio-visual units to use in IT devices and industrial equipment from quantity to quality. More specifically, we will promote the cultivation of new products and expand business, aiming at mid-scale markets, such as AC servo motors for industrial and business use, energy-saving and environment-related motor units for home appliances and household equipment. For Control device units, we will actively develop proposal-based marketing by combining proprietary technologies in order to cultivate new demand and increase profits. For card readers, we will vigorously implement business expansion in promising new markets, leveraging our dominant superiority in this market. The large-screen LCD TV market is steadily expanding, and the world’s top makers are setting up new factories that adopt large glass panels for the 7th and 8th generations and beyond. A production scale expansion is anticipated in view of new entries from China and other countries, and continued active investments can be expected. Under these circumstances, our LCD glass-panel-handling robots are widely recognized for their superiority in stability in handling, high rigidity, high reliability and energy savings and have established the top share in the industry. In addition, we will strive for further business expansion by adding glass-panel-handling robots for solar batteries and semiconductor robots to our lineup in order to respond to various handling needs with our high quality products.

4. Priority Issues

(1)	Implement strategies to increase sales We will work aggressively to increase sales through reinforcement of existing products and thoroughly developing new products, markets and customers.
(2)	Implement strategies to improve earnings To solidify and enhance its profit structure, the Company as a whole is working to reduce costs by reforming its cost structure through a basic review of product designs and promoting in-house manufacturing, as well as by implementing an in-depth assessment of expenditures.
(3)	Implement strategies to improve speed In order to improve speed in all aspects of the business, we are working to greatly enhance the speed of our market response by establishing a synchronized development, production, and sales structure, and working to respond to the demands of our customers.
(4)	Innovation in manufacturing In order to address the trend toward a sharp increase in the prices of raw materials on a global scale and a decline in product prices in markets, we will make efforts to improve our productivity by proactively promoting innovative manufacturing and labor savings, including overseas facilities. We will also focus our efforts on human resources development based on recognition that the development of human resources forms the foundation of manufacturing.

5.Profit-Sharing Policy

The Nidec Sankyo Group intends to build good relationships with stakeholders and expand its business, while contributing to the emergence of a better society. Stable dividends are important to our shareholders. At the same time, it is our responsibility to declare dividends in proportion to the Company’s business performance. Profit sharing with shareholders, therefore, is based on comprehensive consideration of the Company’s long-term welfare.
Nidec Sankyo makes it a basic policy to declare dividends from its surplus fund twice a year, that is, an interim dividend and a year-end dividend, and stipulates in its Articles of Incorporation that the Company may declare dividends from its surplus fund upon resolution of the Board of Directors in accordance with the provision set out in Clause 1 of Article 459 of the Corporation Law and that the Company may declare an interim dividend, setting out September 30th of each year as a record date, upon resolution of the Board of Directors. Concerning dividends for the current fiscal year, based on the above policy, Nidec Sankyo will declare a dividend of ¥10.00 per share, including an interim dividend (¥5.00 per share). As a result, the dividend payout ratio in the current term is 37.9% (on a consolidated basis).
As for retained earnings, we will appropriate it to research and development as well as capital investment to promote further growth of our Group in the future.