NOK : Business Report for the 117th Ter

(Translation)

Physical copies of electronically provided information sent to shareholders who request them

Business Report for the 117th Term

From April 1, 2022 to March 31, 2023

NOK CORPORATION

(Securities Code No. 7240)

To Our Shareholders

Representative Director, Masao Tsuru Chief Executive Officer

Consolidated Financial Statements

. . . . . . . . . . . . . . . . .	.對 .	. . . . . . . . . . .
To Our Shareholders			1
.................	對.
Financial Highlights (Consolidated)			2
(Physical copies of electronically provided information sent
to shareholders who request them along with the Notice
of the 117th Annual Shareholders' Meeting)
Business Report
1. Current Status of the NOK Group	3
.................	對...
2. Outline of the Company			13

Consolidated Balance Sheet. . . . . . . . . . . . . . . . . .對 . . 22

Consolidated Statement of Income. . . . . . . . . . . . . . . 23

Financial Statements

Balance Sheet. . . . . . . . . . . . . . . . . .對 . . . . . . . . . . . . . 24

Statement of Income. . . . . . . . . . . . . . . . . .對 . . . . . . . 25

Independent Auditor's Audit

Report Concerning Consolidated Financial Statements . 26

Independent Auditor's Audit
Report Concerning Financial Statements	.............	28

Audit Report by Board of Corporate Auditors. . . . . . . . . . 30

(Reference)

Topics. . . . . . . . . . . . . . . . . .對 . . . . . . . . . . . . . . . . . .對 . . . . 31 Information for Shareholders

The following are not included in the physical copies of electronically provided information sent to shareholders who request them, under laws and regulations and Article 14-2 of the Articles of Incorporation of the Company.

1. "System for Ensuring Properness of Operations" in Business Report
2. "Consolidated Statement of Changes in Net Assets" and "Notes to Consolidated Financial Statements" in the Consolidated Financial Statements
3. "Statement of Changes in Net Assets" and "Notes to Financial Statements" in the Financial Statements

We would like to express our sincere thanks for your loyal patronage.

We would appreciate it if you could confirm the business report on the operations and results for the 117th term of the NOK Group (April 1, 2022 to March 31, 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 consolidated business results for the fiscal year ended March 31, 2023, net sales were 709,956 million yen (up 4.0% from the previous fiscal year).

In profit and loss, operating income was 15,378 million yen (down 50.9% from the previous fiscal year), ordinary income was 26,557 million yen (down 42.5% from the previous fiscal year), and profit attributable to owners of parent was 13,320 million yen (down 48.4% from the previous fiscal year).

During the current fiscal year, the Japanese economy saw signs of gradual recovery, despite a temporary contraction in economic activity due to the impact of lockdown in China as a result of the spread of novel coronavirus and the supply shortage of semiconductors and other components.

However, the outlook remains uncertain due to soaring raw materials prices and energy prices, geopolitical risks such as the Russia-Ukraine conflict, and the continued supply shortage of semiconductors and other components in some regions.

Under these circumstances, in the seal business of the NOK Group, although sales revenue increased, operating income fell due to surging raw material and energy prices that outpaced attempts to pass the costs on through price increases.

In its Electronic Product business, the extent of operating loss declined thanks to increased sales revenue, efforts to limit personnel expenses, and foreign exchange rate movement.

With recognition that it is key to further recover the earnings capability of the Electronic Product business, we are determined to push forward with various measures.

For details, please refer to the "Business Report" mentioned below.

We would like to ask a favor of each shareholder to have a deep understanding of the business environment surrounding the NOK Group, management direction and our determination. We also ask you for your further support and cooperation.

June 2023

1

Financial Highlights (Consolidated)

Net Sales

(Billions of yen)

800
			682.5	710.0
	626.8	596.4
600
400
200
0	114th term	115th term	116th term	117th term
	(FY2019)	(FY2020)	(FY2021)	(FY2022)

Ordinary Income

(Billions of yen)

50			46.2
40
30				26.6
20	17.4	18.3
10
0	114th term	115th term	116th term	117th term
	(FY2019)	(FY2020)	(FY2021)	(FY2022)

Net Income (Loss) Per Share

(Yen)

200.00

				149.37
150.00
100.00					77.55
50.00
0
(12.83)	(7.87)
(50.00)		114th term	115th term	116th term	117th term
		(FY2019)	(FY2020)	(FY2021)	(FY2022)

Operating Income

(Billions of yen)

40
			31.3
30
20
		14.5		15.4
	12.0
10
0	114th term	115th term	116th term	117th term
	(FY2019)	(FY2020)	(FY2021)	(FY2022)

Prot (Loss) Attributable to Owners of Parent

(Billions of yen)

30
	25.8
20
	13.3
10
0
(2.2)	(1.4)

(10)			114th term	115th term	116th term	117th term
				(FY2019)		(FY2020)	(FY2021)	(FY2022)
				Total Assets/Net Assets
				Total Assets		Net Assets		(Billions of yen)

1,000
		803.0	857.3	862.8
800
728.7
600			554.4	577.3
	502.1
	447.2
400
200
0	114th term	115th term	116th term	117th term
	(FY2019)	(FY2020)	(FY2021)	(FY2022)

Note: Amounts described in Financial Highlights (Consolidated) are rounded off to the nearest described point.

2

(Physical copies of Reference Materials for the 117th Annual Shareholders' Meeting sent to shareholders who request them along with the Notice)

BUSINESS REPORT for the 117th Term April 1, 2022 to March 31, 2023

1. Current Status of the NOK Group

1. Business Overview

1. Business conditions and results
   With regard to the business environment surrounding the NOK Group during the current fiscal year, the Japanese economy saw signs of gradual recovery, despite a temporary contraction in economic activity due to the impact of lockdown in China as a result of the spread of the novel coronavirus and the supply shortage of semiconductors and other components. However, the outlook remains uncertain due to soaring raw materials prices and energy prices, geopolitical risks such as the Russia-Ukraine conflict, and the continued supply shortage of semiconductors and other components in some regions.
   In the automobile industry, while production declined both in Japan and overseas owning to the effect of lockdown in China and the supply shortage of semiconductors and other components, it is currently on a moderate recovery trend. However, the outlook remains uncertain due to the ongoing impact of the supply shortage of semiconductors and other components.
   In the electronics industry, demand for smartphones declined due to the two novel coronavirus lockdowns in China. Demand for HDDs also decreased.
   Under these circumstances, the operating results of the NOK Group by business segment were as follows:

Sales Composition by Business (Consolidated)

	Other businesses
	28,366
	4.0%
		Net sales
Special lubricants	709,956
		Millions of yen

Development rollers,

Charge rollers

Seal business

347,066

48.9%

Oil seals

Electronic

Product business

334,523	Flexible printed circuits
47.1%
(FPC)

3

Results of the Business Activities by Business Segment

Seal business

Sales for automobile applications increased as a result of foreign exchange rate movements as well as passing on soaring raw material prices and energy prices to selling prices, despite the negative effect of lockdown in China and the supply shortage of semiconductors and other components. Looking at demand for general industrial machinery applications, demand from manufacturers of machine tools in Japan remained firm while demand mainly from manufacturers of construction machinery was negatively affected by lockdown in China. Meanwhile, sales to manufacturers of general industrial machinery increased as a result of foreign exchange rate movements as well as passing on soaring raw material prices and energy prices to selling prices. However, overall, excluding the impact of foreign exchange rates and the impact of selling price transfers, real net sales declined.

As a result, net sales stood at 347,066 million yen (up 3.2% year on year). Operating income amounted to 17,885 million yen (down 49.6% year on year) mainly due to soaring raw material prices and energy prices that exceeded price pass-through.

Electronic Product business

Demand for automobile applications increased despite the negative impact of lockdown in China, the Russia- Ukraine conflict and the supply shortage of semiconductors and other components. Demand for smartphones decreased due to the impact of new lockdowns in some Chinese cities. And demand for HDDs also decreased. Although sales rose throughout the entire period, real net sales decreased on the back of the significant effect of foreign exchange rate movements.

As a result, net sales stood at 334,523 million yen (up 4.2% year on year). Operating loss came to 3,712 million yen (compared to an operating loss of 5,040 million yen in the same period of the previous fiscal year) due to the effect of a decrease in personnel expenses and foreign exchange rate movements.

Other businesses

Sales increased reflecting a recovery in demand related to office equipment as well as the positive effect of foreign exchange rate movements, despite a decline in demand for special lubricants in conjunction with decreased demand for automobiles.

As a result, net sales totaled 28,366 million yen (up 11.8% year on year). Operating income came to 1,200 million yen (up 34.3% year on year).

In summary, the NOK Group posted the following operating results: Net sales totaled 709,956 million yen (up 4.0% year on year); operating income was 15,378 million yen (down 50.9% year on year); ordinary income ended at 26,557 million yen (down 42.5% year on year), resulting in 13,320 million yen in profit attributable to owners of parent (down 48.4% year on year).

(ii) Capital investment and fund procurement

The NOK Group made capital investments of 47,759 million yen in total (up 16.4% from the previous fiscal year) mainly for increasing production capacities in Japan, China and Southeast Asian countries.

These investments were financed by our own funds.

4