The unexpectedly long and generalized weakness of the world's manufacturing sector took its toll on another bearing manufacturer last week. NSK Ltd. (Japan), Japan's largest bearing producer, reversed direction and significantly cut recently-issued sales and earnings forecasts for fiscal 2002.

In early September, NSK was still strongly upbeat in its forecasts for results from the first six months of fiscal 2002 (ended September 30). For the first half, the company projects sales up 1% over 2001, at ¥ 255 billion (USD $2.2 billion), and profits up 12% to ¥ 5.5 billion ($46.6 million).

Last week, however, the company reversed direction for the remainder of 2002 and slashed forecasts for the full year ending March 31, 2003.

Originally projected to be ¥ 510 billion ($4.1 billion), full-year sales are now set at ¥ 500 billion ($4 billion).

But profitability is NSK's real warning, battered by the sales drop in this extremely volume-sensitive business.

Profit projections, originally set at ¥ 4 billion ($32.3 million) for the full year, have been cut by 75%, to only ¥ 1 billion ($8 million).

The announcement caused NSK's stock to reverse yet again, immediately falling by over 10% to a new 52-week low on the Nikkei. After an upbeat rumor in late August, it had jumped over 6% the next day.

NSK is in the midst of a long-term, worldwide restructuring effort; the company indicated that most of the profitability improvement expected in the first half of 2002 was due to the restructuring, not because market conditions had improved.