Friday, June 9, 2023
PIOLAX, INC.
(Code: 5988)
Yukihiko Shimazu, President
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1

Contents
I. Medium-Term Management Plan (FY23 to FY25)
・Business Environment
・Management Indicators
・Growth Strategies(1. Automotive Business, 2. Medical Device Business)

II. Capital Policy
III. Promotion of ESG Management

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3

Vision, Basic Policies, And Management Strategies
As a pioneer creating elasticity, widely
contribute to industries and society.

VisionBasic
Policies

1. Reform existing businesses.
2. Take on the challenge of new/next-generation
businesses.
3. Strength the management foundation.
4. Actively invest for the future.
5. Promote ESG management.

Management
Strategies

1. Product and customer strategy
2. Business strategy
3. Regional strategy
4. Growth investment strategy
5. Management capital strategy

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Business Environment
Growth factors

Risk factors

Delayed recovery in global car
production

Forecast of global car production (Unit: 1 million cars)

2023

2024

2025

2030

92 85

97 89

92

105

Accelerate shift to EVs
Strengthen R&D capabilities.
Acquire orders for CASE-compliant
products.
Investment in growth foundations
Improve productivity by IoT and DX.
Relocate global production.
Develop domestic infrastructure.
Strengthen EU market entry.

Red letters: Modifications
from the previous version

・Reduced production of major
customers
・Decreased orders for existing Piolax
products due to the shift to EVs
・Possible re-spread of corona infection
・Accelerating Inflation
・Material supply issues (Difficulties inprocurement, soaring purchase costs)
・Rising labor costs
・Global logistics disruption and soaring
logistics costs
・U.S-China trade friction, Ukraine
conflict, and Taiwan Incident

Discovery of new businesses

・Foreign exchange fluctuations

Execute profit structure reforms toensure a growth path.

・Cyber attacks

Reinforce human assets development.
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・Rising energy costs
・Securing of human assets
5Management Indicators - 1
Medium-term management plan (FY23 to FY25)
and review of previous plan (FY22 to FY24)
Operating profit

Sales
Previous

720

683

605

630

680

720

OPR (Current)
100

43

39

7.1%

0

2023

(FY)

2024

2025

In FY22, sales and profits were down fromthe plan due to automobile production
cutbacks and rising costs in materials,
energy and others, and the achievement of
70 billion yen in sales will be postponed foranother year. We will undertake "profit
structure reform" for three years for growth.

40

2022

2023

(¥100 mil.)Previous

100

13.9%

13.2%

6.3%

6.8%

0

33

34

2022
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15%
12.1%

10.0%

10%

5%
(FY)

2024

2025

Net income
Current

74

50

Operatingprofit ratio
20%

87

90

68

100

2022

OPR (Previous)

100

Result584(¥100 mil.)Current

Result800

Current

Result(¥100 mil.)Previous

82

55

69

31

2023

(FY)

2024

2025

6

Management Indicators - 2: by Segment
Assumptions for FY25 sales plan (¥67 billion)
Recovery of global car production to the FY19 level will be in FY25 or after.
Increase per-car sales by 10% for each new model.
Exchange rate: 1 USD = 130 JPY
Sales are sluggish, and earnings remain under pressure due to lower marginal profit
and higher costs. Aim to secure earnings through profit structure reform.

Previous
562

636

671

630

583

670

(¥100 mil.)

100

8%

0

2022

2023

(FY)

2024

2025

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Current

OPR (Previous)

OPR (Current)
97

67

15%

14%

Operatingprofit ratio

30%

85
13%

40
7%

2022

2023

7%

0

Previous

88

42 39

Result540

Current

Result800

Operating profit

Sales(¥100 mil.)

15%

11%

0%
(FY)

2024

2025

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Management Indicators - 2: by Segment
Assumptions for FY25 sales plan (¥50 billion)
Launch and sales increase of new products (micro catheter, gastrointestinal endoscopy
guidewire, etc.)

Customer management and sales support system by introducing Salesforce, andmultifaceted marketing and sales activities by introducing marketing automation.
Operating profit deteriorated due to the impact of parts procurement risk on productsupply and increased costs of materials, energy and logistics.
Sales(¥100 mil.)

50

Previous

43 44

Preious
OPR (Previous)

4

Current
47 47

Operating profit(¥100 mil.)

49 49

50

Current
OPR (Current)
3

0

2022

2023

(FY)

2024

2025

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2%

ResultResult

0

1

2

2%

2022

6%

1

3%

0.5
1%

2023

(FY)

20%
15%

2
1

Operatingprofit ratio

2%

2024

10%
5%

4%

0%

2025

8

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INC.

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Progress of Management Strategy: Automotive - 1
Management strategy andpriority issues
1. Product and customer
strategy

・Develop CASE parts and receive
orders・Diversify customers and products
・Maximize profit margin for eachproduct・Achieve global high quality

2. Business strategy

・Discover new businesses
・Reform profit structure

3. Regional strategy

・Expand sales in North America andChina
・Expand profitability in ASEAN
・Make strategies for Continental
Europe・Strengthen regional management
functions

Specific measures(FY22 actual)

Medium-term management
plan initiatives

Launch e-Products Development
Dept. specific for CASE parts to
expand sales.

Accelerate response to CASE.
→ Separately explained

Non-Japanese OEM sales ratio: 13%

FY25: 17%

Increase per-car sales for new models. FY25: Major models +10% or more(from former ones)
Major models: +48% (from former
ones)
Start new QA system.

Improve quality through the new QA
system.

Start MIRAI Business Dept. todiscover a third business.

Discover new businesses not confinedto the existing automotive andmedical devise businesses.

Initiate profit structure reform.

・Select and invest in growth areas.
・Reduce fixed costs at Piolax Japanby 1 billion yen over 3 years.

Expand sales in N.A. (U.S. andMexico) and China.
Overseas sales ratio
N.A.: 37%. China: 32%.

FY25
N.A./China: 35% each

Expand sales to European OEMs byGerman Representative Office.

New strategies for Continental Europe
Expand sales to non-Japanese(German) OEMs.

Strong performance of Piolax India
and Indonesia
10% operating profit ratio in ASEAN
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and India

Improve profitability in ASEAN and
India.
FY25 operating profit ratio: 15%

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Progress of Management Strategy: Automotive - 2
Management strategy andpriority issues
4. Growth investment
strategy

・Develop infrastructure inJapan・Strengthen R&D investment
・Promote DX

5. Management capital
strategy

・Pursue capital efficiency
・Return profits toshareholders
・Promote ESG management

Specific measures(FY22 actual)

Medium-term management plan
initiatives

Start construction of new Moka Plant.

FY23: Complete Phase 1 construction andstart operation.
FY24: Start Phase 2 construction.
FY25: Complete Phase 2 construction andstart operation.

Strengthen investment in CASE/new
businesses.
R&D costs to sales: 1.2%

Strengthen investment in CASE/new
businesses.
Increase R&D costs mainly for CASE parts.
R&D costs to sales in FY25: 1.5%

Review capital policy and shareholder
return.
100% dividend payout ratio from
FY22 to FY24

FY25: Continue 100% dividend payout
ratio

Promote ESG management.
・Update and disclose information
based on the TCFD recommendations.
・Introduce renewable energy atdomestic plants from FY23.
・Revise executive compensation
system (add performance-linked
factors) from FY23.

Promote ESG targets
・Promote measures toward carbon
neutrality.
・Improve TCFD disclosure.
・Reinforce human capital initiatives.
・Enhance governance.

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Sales expansion of CASE products【Actions in FY23】

Accelerate order taking. Focus on development and production of products thatcombine performance and cost competitiveness.
Launch e-Products Development Dept. specific for CASE products in April 2022.
Plan production of CASE products at the new Moka Plant.
Target products

Sales expansion plan of CASE products¥10 bil.
OPR 15%

Power supply port
Actuator

Sales(¥100 mil.)Expanding sales

OthersExpanding production
at new Moka Plant

100

Bus barVibration stopper Vibration
control
Reduced gear
accessories¥5 bil.
¥1 bil.

Powertrain parts

Battery

CASE products
sales ¥10 bil.
in FY30
e-AxelBattery
Gas vent tube

ADAS

0

Filter2022 Actual

2023

2024

2025

・・・

2030

(FY)

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Sensor bracket

Camera cover

12Diversification of Customers/Products
Targets for FY25
■Sales ratio of non-Japanese OEMs: 17%■Per-car sales for new models: +10% or more (from former models)
Per-car sales increase of major newmodels of Japanese OEMs
(Japan) in FY22

Growth rate
Model A
Model B
Model C
Model D
Model E
Model F
Model G

Total *

+53%
+15%
△16%
+17%
+25%
+80%
+37%
+48%

Sales by OEMs(¥100 mil.)

800

670
540

17%

13%

Non-JPN OEMs

48%

48%

0

* The calculation method for the total of per-car sales growth rate has beenrevised starting this fiscal year.
The total, calculated by the formula “(Per-car sales of a new model – per-car salesof its former model) x number of cars a year,” is regarded as sales increase, andthe total for 7 models are divided by the sales of their former models.

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Nissan39%
2022 Actual

Other JPN OEMs

35%

(FY)

2025

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Initiatives by Overseas Bases
Diversify products and customers(Enhance sales to non-Japanese OEMs)
Europe (U.K. and Germany)・Enhance sales to German OEMs using German representative
office.
・Consider production relocation in Europe.

ASEAN and India(¥100 mil.)Sales of overseas basesin the medium-term plan
556

500

425

・India: plant expansion, increase sales to Indian OEMs,
response to EV shift
・Strengthen collaboration among Thailand, India and Indonesia.

EuropeASEAN, India

China

China

・Enhance sales to Chinese OEMs.
・Enhance sales to start-up EV makers: get orders for existingparts (fasteners, etc.) and develop business to EV parts.

N.A.

North American (U.S. and Mexico)

・Expand production capacity of the U.S. and Mexico plants
・Enhance sales to Big 3.
・Enhance sales to VW and Hyundai.

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02022 Actual

(FY)

2025

* Consolidated sorting (internal transactions)
are included.

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Initiatives by Piolax China
Enhance sales toIncrease sales to Chinesestart-up EV makers(¥100 mil.)Sales of bases in China by OEMs

250

【Target】
Chinese OEMs
(incl. EV start-ups)

Expand sales channels by existingparts (fasteners, O/C parts, etc.).

30%

CASE products

Battery peripherals (heat management parts)
Gas vent tube

European/KOR OEMsCHN EV start-ups

Bus bar

CHN OEMs

ADAS brackets

JPN OEMs(Brackets for camera, radar, sonar, etc.)
0

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2022
Actual

…

2025
(FY)

…

2030

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Initiatives by Piolax India
Expansion of the plant
Phase 2

【Plant expansion plan】

Phase 3Phase 1

Start of construction: June 2023
Completion: February 2024
Area: 2,255 m2
Purpose: Production of new ordered parts.
Space for future production increase.

Enhance sales

Total costs: 120 mil. rupees (¥190 mil.)A sales office is opened in Pune to increase sales to
Indian OEMs (Mahindra, Tata).

Toward OPR of 12% or more(¥100 mil.)

25

0

Sales and operating profit ratioin India
Sales (Left)

(FY)

30%

OPR (Right)

2022 2023 2024 2025 ・・・ 2030
ActualPlant in India (Chennai)

Increase orders for future

To prepare for the expanding Indian automotive
industry, a space is secured for the future increase inorders and production.
0%・Estimated car production volume
FY23: 5.5 mil. cars → FY30: 6.5 to 7.5 mil. cars
・EV policy of the Indian government

30% for 4 wheels and 80% for 2 or 3 wheels in 2030

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Infrastructure Development in Japan - 1
Infrastructure development for future growth
1. New Moka Plant
Construction in Phases 1 and 2
Full-scale operation for Phase 1 area: 2 nd half of FY23
Investment: ¥10.1 billion (FY23 to FY25) – increased due to facility expansion andsoaring material prices
Total floor space: About 28,700 m2 (at the completion of Phase 2 construction)
Future plan: Start of Phase 2 construction in FY24 for full-scale operation in FY25

2. Yokohama area renewal project

Infrastructure development of Yokohama area (Head Office, YTC)
Head Office relocated in FY22 due to the aged building which has been
demolished in the 1st half of FY22
Construction of the new Head Office starts in FY23
Aim to improve productivity of indirect departments through infrastructuredevelopment in view of consolidation of departments and work style reforms
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Infrastructure Development in Japan - 2
Construction of new Moka Plant<Next-generation,
global mother plant>
Next-generation equipment andmolding lines
Automated lines with the use of AI/IoT
Efficient production by DX

Current plant
Phase 2 plant
Phase 1 plant

200％ productivity improvement
by 2030

Efforts for carbon neutrality
Increase in in production capacity for
CASE products (battery-related parts,
ADAS brackets)

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Capital Investment for Sustainable Growth
Capital investment for future growthcentered on infrastructure development in Japan

Expansion of overseas plants

・Expansion of plant in India
・Expansion plan of plants in China(Wuhan) and Korea
・Renovation of plant in the U.S. to make
CASE products.

Capital investment forenvironmental response

Consolidated depreciation

Medium-term planNon-consolidated depreciation¥26.6 bil.

Infrastructure in Japan
Consolidated capital investment
Non-consolidated capital investment

Infrastructure in
Japan: ¥10.1 bil.

(¥100 mil.)Capital investment

・Construction and operation of new Moka
Plant (Increased costs due to additional
equipment and soaring material prices)
・Yokohama area renewal plan

Capital investment and depreciation

Depreciation

FY23 to FY25
Infrastructure development in
Japan

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90
70
50
30
10
(10)
(30)
(50)

2020

2021

2022 2023
(FY)

2024

2025

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Profit Structure Reform (Non-consolidated)
Structural Reforms for Profitable Growth
Selection and concentrationof investments for growth

Building a lean profit
structure■Reducing orders for existing parts dueto the shift to EVs →FY23-FY25 (Non-consolidated)
・Reduce fixed costs of ¥1 billion.

CASE response, R&D for environmental
measures, capital investment

・Secure double-digit operating
profit ratio.

■Construction of new Moka Plant,
Yokohama area infrastructure

Reducing profitability of Piolax Japan(¥100 mil.)

350

Sales and operating profit ratio of PJ

333
12.1%

Sales (Left)

330

320

325

OPR (Right)

324

11.1% 10.3% 11.5% 10.5%

321

292
236

8.7%
4.5%

256

20%

■Active investment in human assets■Investment to improve efficiency(Digitalization, DX, IoT)

259

3.9%
1.6%

1.3%

100

0%

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
(FY)

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Progress of Management Strategy:
Medical Device Business
Management
strategy andpriority issues

Specific measures(FY22 actual)

1. Product andcustomer strategy■ Launch differentiated products
to specific markets
Planning and development of products
focused on specific areas of minimallyinvasive treatment

Medium-term launch plan (Strategic new
products)■Expand the market share in Japan ofdigestive endoscopy
Digestive endoscopy guidewire (Market size: ¥6.3
bil.)
FY23: 33％ → FY25: 36%*

■Speed up the introduction andlineup of new products
Contracts have already been signedwith domestic collaborators forendovascular devices. → 2 products tobe launched in FY23

■Launch new products
Sales plan: ¥1 bil. (FY23 to FY25)

Medium-term management plan initiatives

New products (for biliopancreatic treatment)①Digestive endoscopy guidewires(2 in-house sales products + 1 OEM product)

2. Regional
strategy■Strengthen overseas expansion
・New sales of devices for liver cancer
catheter treatment in China
Sales: ¥130 mil.

②Anticancer drug admixture device for livercancer catheter treatment for Asia: only one
product in the world

3. Growth
investment
strategy

・Plan the development of cerebral endovascular devices that apply technologies for
abdominal endovascular devices (microcatheters).

* Ref.: In-house estimates based on the data of R&D Co., Ltd. for FY21
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New Medical Device “VENTY”
Expand market share with newly launched guidewire (GW)
for digestive endoscope in FY23
Trinity concept - selectivity, support, and safety
High-spec GW satisfying required factors

Release in Japan
since April 2023

親水性coating

Medium-term sales plan (FY25)

Appeal point

Image of contact area

Combined device (Image of contact with lumen)■New GW “VENTY”
・Sales: ¥250 mil.
Aim 36％ share of digestive
endoscope guidewires in Japan.

*

Existing product

Piolax new product1. Our surface treatment technologies reduce contact area
(point contact): low friction resistance and high slipping
property.
2. Low friction resistance improves torque performance sothat GW control by a surgeon is transmitted directly to the tip.
3.The core wire rigidity is improved by 15%, meeting a wide
range of user needs.

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Capital Policy - 1
FY22-FY24
management indicators(Former medium-term plan)

FY23-FY25
management indicators

ROE

8% or more
Final target: 10% or more
EVA spread +8% or more (continuing)
Final target: 10% or more
EVA spread +Dividend
payout ratio

100%

100% (continuing)
Dividend and payout ratio

ROE trend
Final target: 10% or more
10%

8% or more

Dividend

Payout ratio (Right)(Yen)

100.9%

112%

100%

100%

100%

150

102＊

5.8%
4.3%

4.5%

31%

34%

45

35

45

2019

2020

2021

31%
3.4%

3.0%

0%

0

2019 2020 2021 2022 2023 2024 2025
(FY)

50%

100
100%
dividend payout ratio

0%
2022

(FY)

2023

2024

2025

＊ The interim dividend for FY2023 includes commemorative dividend of
10.00 yen (forecast) for the 90th anniversary of the Company's founding.

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Capital Policy - 2
Toward PBR 1x
3-year capital policy (FY23 to FY25)
Curb the buildup of equity capital
100％ dividend payout ratio
Agile share repurchase/retirement
Trend of PBR and EVA spread

Trend of ROIC and WACC
PBR

ROIC

WACC

1.5

8.0%

2.0%
2017

2018

2019

(FY)

2020

2021

2022

PBR

EVA spread

EVA spread
(%)

6

1

0

0.5

-6
2017

2018

2019

(FY)

2020

2021

2022

＊ Starting this year, some of the calculation methods for graph indices are revised for unification.

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E

Efforts for Carbon Neutrality

Introduction of renewable energy

Moka Plant (Tochigi prefecture) and Fuji Plant (Shizuoka prefecture) have started to use
renewable energy 100% since April 2023.

Information disclosure based on the TCFD recommendations
We analyzed risks and opportunities based on climatechange of our bases in the U.S. and China in FY22 anddisclosed in March 2023.

Plan to install solar panels

Promote self-efficiency of renewable energy.

Roadmap for carbon neutrality (CN)Solar panels at the new Moka Plant (Image)Year 2030: 46% reduction
Year 2050: 100% reduction* We aim for carbon neutrality by 2050
for Scopes 1 and 2.
* Subject: Piolax and its domestic groupcompanies* We will continue to analyze overseas
group companies and further study inthe whole group.
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28

S

Efforts for Human Assets Development,
Diversity, Internal Environment

Formulate human assets development plan••

Formulate human assets development plan for future senior management.
Actively introduce measures like career planning support and 360-degree evaluation.

Survey employee satisfaction••

Conduct employee satisfaction survey since FY22.
Strengthen the development of human assets who have high engagement and cancontribute to increasing corporate value.

Reinforce training for new employees••

Resume plant training for new employees which had been halted due to COVID-19.
Extend the period from 2 weeks to 6 months (max.) to emphasize on-site learning.

Provide inflation allowance and revise employee stock ownership plan incentive•••

In response to recent price hikes, a uniform inflation allowance of 50,000 yen were paid toall employees of the Group (in Japan) in January 2023.
3% of employee stock ownership plan incentive is raised to 10% from FY23.
Promote a safe and secure work environment for employees.

Certification of the highest ranking (3rd stage) of "Eruboshi"
as an outstanding company
We will continue our efforts to increase the numberof female managers and develop a workplaceenvironment where anyone can work comfortably
and play an active role.

Certification as an “excellent health management corporationgroup in 2023” (large corporate division)
We will continue our support to promote mental andphysical health and realize work-life balance of all
employees, which is one of the most importantmanagement objectives.

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29

G

Strengthening Governance■2023

Aggressive Management

Aiming to enhance corporate value
over the medium to long term

Review the executive
compensation system andintroduce a performancelinked factor■2022
Increased the number of outside directors(3 to 4) (Female directors from 1 to 2)■2020
Assigned a female director for the first time

■2019
Established Nominating and Compensation Advisory Committee■2018
One third of directors are outside directors■2017
Introduced a stock compensation plan for directors■2016
Shifted to a company with Audit and Supervisory Committee

Board of Directors①Female directors: 20%(2 people among 10)②Outside directors: 40%(4 people among 10)

Assessment of Board EffectivenessIn order to enhance the objectivity of the evaluation,
external (third-party) advice is obtained once every three
years from revising the survey content to creating anaction plan.
In FY22, the effectiveness of Audit and Supervisory
Committee was also assessed voluntarily.

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30

G

Revision of Stock Compensation Plan for Directors

Introduce a performance-linked factor in line with the extension of theexisting stock compensation plan using a trust.
KPI: Net income and ROE as set forth in the Medium-Term Management Plan
*Officially determined upon approval at the General Meeting of Shareholders.

Compensation for executive directors subject to the plan will consist of basecompensation, monetary bonus as short-term incentive, and performancelinked stock compensation as long-term incentive, in order to further achieve
performance targets and sustainable increase in corporate value.
Introduce a stock compensation system for employee executive officers, too,using the same trust as for directors to provide incentives to enhance businessperformance.
<Current> Base salary + bonus + stock compensation(100% fixed by position)<New> Base salary + bonus + stock compensation(50% fixed by position + 50% fluctuated by position）
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31

Notes on Handling This Document
The forward-looking statements contained in this document
are based on information available to us at the time of
publication.
Please note that such statements are future projections at
this time and contain risks and uncertainties and that actual
results may significantly differ from the projections.

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