Thursday, June 9, 2022
PIOLAX, INC.
(Code: 5988)
Yukihiko Shimazu, President

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Contents
I. Medium-Term Management Plan (FY22 to FY24)
・Business Environment
・Management Indicators
・Growth Strategies(1. Automotive Business, 2. Medical Device Business)

II. Review of Capital Policy
III. Promotion of ESG Management

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Vision, Basic Policies, And Management Strategies

VisionAs a pioneer creating elasticity, widely
contribute to industries and society.

Basic 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

Continued increase in global automobile
production
Global automobile production forecast (Unit: 1 million cars)

2021

•
•

•
•
•
•

2022

2023

2024

2030

84 77 86 83

92

97

105

Accelerated shift to EVs
Strengthen R&D capabilities responding to rapid
market expansion.
Acquire orders for CASE-compliant products.
(A dedicated department is established.)
Investment in growth foundations
Improve productivity through IoT and DX.
Relocate global production.
Develop domestic infrastructure.
Open a base in the EU (German office).

•
•
•
•
•
•
•
•
•
•
•

Red letters: Modified from theprevious version

Reduced production of major customers
Decreased orders for existing Piolax
products due to the shift to EVs
Global economic downturn due to the COVID19 crisis
Material supply issues (Difficulties ofprocurement and soaring purchase costs)
Rising labor costs
Turmoil in global logistics
Trade conflicts between the U.S. and China,
and conflicts in Ukraine
Foreign exchange fluctuation(Sharp yen depreciation)
Impact of lockdown in Shanghai
Rising energy costs
Cyber attacks

Discovery of new businesses(A dedicated department is established.)
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Management Indicators - 1
Medium-term management plan (FY22-FY24) and review of previous plan (FY21-FY23)
Operating profit

Sales
Previous(100 mil. JPY)

New

800
650
550

551

627

(100 mil. JPY)
700

683

720

105

100

90
78

Actual

44

2023

2024

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8.0%

9.3%

2021

50

0

100
15%

15.0%

13.2%

13.9%
10%

5%

2022

2023

2024

Net income(100 mil. JPY)

100

20%

Previous

41

42

New

84

74

82

64

44

ActualThe targets for FY21 were achieved, but the plan
has been revised downward for FY22 and FY23
due to delayed recovery in automobile
production and pressure on profits by higher
material and logistics costs.
Achieving sales of ¥70 billion will be postponed
one year to FY24, but the company is planning apath of steady growth.

12.0%

9.5%

0

2022

58

52

Operatingprofit ratio

Actual100

2021

Previous
New
Operating profit ratio (Previous)
Operating profit ratio (New)

2021

2022

2023

2024

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Management Indicators - 2: by Segment
Assumptions for FY24 sales plan (72 billion yen)
Recovery of global car production by OEMs to the FY19 level
Increase in sales per car by 10% for each new model
Exchange rate: 1 USD = 120 JPY
Operating profit in the medium-term plan will be secured by the increase in marginal
profit due to higher sales and streamlining.
Operating profit

Sales(100 mil. JPY)

Previous
New
Operating profit ratio (Previous)
Operating profit ratio (New)(100 mil. JPY)

800

Previous
503

506

New
599

583

644

636

671

99

100

88

74

Actual

45

41 9%

0

0

2021 Actual

2022

2023

2024

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Actual8%2021 Actual

57

15%

Operatingprofit ratio
30%

97
15%

12%

10%

15%

14%

0%

2022

2023

2024

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Management Indicators - 2: by Segment
Factors for downward revision: uncertainty about product supply due to component
procurement risks, delayed launch of new products due to voluntary recall of in-houseand imported products
Impact of voluntary recall was reflected in FY21.
Accelerate the introduction of new products from FY22 for early profit recovery.
Operating profit

Sales(100 mil. JPY)

50

Previous
47(100 mil. JPY)

New
56

51

45

44

47

49

11%
8%

Actual

3
6%

2023

2024

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2021 Actual

322Actual

0

2022

20%
15%

5
4

0

Operatingprofit ratio

65%2021 Actural

Previous
New
Operating profit ratio (Previous)
Operating profit ratio (New)

1

6%
3%

2023

5%
0%

2%

2022

10%

2024

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Progress of Management Strategy: Automotive - 1
Management strategy andSpecific measurespriority issues(FY21 actual)
Establish e-Products Development
1.Product and customer
Dept. to respond to CASE
strategy
・Develop CASE parts andreceive orders
・Diversify customers andproducts
・Maximize profit margin foreach product・Achieve global high quality

Medium-term management
plan initiatives
Accelerate response to CASE

Non-Japanese OEM sales ratio: 14%
Improve sales per car for new model
Mainstay models: +20% (from FY18)

FY24: 16%

Build new quality assurance system

Improve quality through the new QA
system

2.Business strategy

Establish MIRAI Business Dept. todiscover a third business

Discover new businesses other thanthe existing automotive and medical
devise businesses

3.Regional strategy

Expand sales in North America (U.S.
and Mexico) and China
Overseas sales ratio
N.A. and China: 35% each・Discover new businesses

・Expand sales in North America
and China
・Expand profitability in ASEAN
・Make strategies forContinental Europe
・Strengthen regional
management functions

Open a representative office inGermany

Achieve profitability in Indonesia
Operating profit ratio in ASEAN and
India:
11%© PIOLAX, INC.
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Copyright

FY24: +10% (from FY21)

FY24
Maintain the current 35% in N.A. andChina
New strategies for Continental
EuropeFurther expand sales from nonJapanese (German) OEMs
Improve profitability in ASEAN andIndia
FY24 Operating profit ratio: 15% 10

Progress of Management Strategy: Automotive - 2
Management strategy andSpecific measurespriority issues(FY21 actual)
4.Growth investment
Start construction of new Moka Plant
strategy
at full scale
・Develop infrastructure in Japan
・Strengthen R&D investment
・Promote DX

5.Management capital
strategy
・Pursuit capital efficiency
・Return profits toshareholders
・Promote ESG management.

Medium-term management
plan initiatives
FY23: Complete the phase 1
construction and start operation
FY24: Start the phase 2 construction

Strengthen investing in CASE/ newbusinesses
Ratio of R&D costs to sales: 1.2%

Strengthen investing in CASE/ newbusinesses
FY24 :1.5%

Review capital policy andshareholder return

FY22 to FY-24

Promote ESG management.
・Set up Sustainability Committee
・Endorse TCFD and disclose
information
・Disclose the target of carbon
neutrality in 2050
・Comply with the revised corporate
governance code.

Promote ESG targets
・Promote measures toward carbon
neutrality
・Improve TCFD disclosure
・Promote diversity
・Enhance governance

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100% dividend payout ratio

11Expand sales of CASE-compliant products[Actions in FY22]
Shift focus from development to order taking
Launch e-Products Development Dept. in
April 2022 to respond to CASE consisting ofmembers from sales, development, andproduction engineering(100 mil. JPY)

100

Power supply port
Actuator

Bus bar

OthersVibration
stopper

Sales expansion plan of CASE products
10 bil. JPY

Sales expansion target
By product ratio

Vibration
control

Reduction gear
accessories

Accelerateorder taking

In 2030CASE parts

E-Axel10 billion JPY

Powertrain parts

Battery
Gas vent tube

ADAS

3 bil. JPY

Sales
expansionof 1 bil. JPY

Battery

Filter3
Sensor bracket

02021
Actual

2022

2023

2024

2025

Camera cover・・・ 2030

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Initiatives by Overseas Sites
Diversify products and customers (Enhance sales from non-Japanese OEMs)
Europe (U.K. and Germany)・Enhance sales from German OEMs using the representative office inGermany・Consider production relocation in Europe(100 mil.
JPY)

ASEAN and India

500

・India: Pune sales office opened in 2021 to enhance sales from IndianOEMs
・Strengthen collaboration among sites in Thailand, India, and Indonesia

Medium-term plan of sales ofoverseas sites
475
Europe345

China

ASEAN and・Enhance sales from Chinese OEMs
Production of ADAS sensor bracket has started for Guangzhou
Automobile Group・Enhance sales from developing EV manufacturers
Expand fastener business with Didi to EV parts business

India
China
North America

North American (U.S. and Mexico)

・Expand production capacity of the U.S. and Mexico plants
・Enhance sales from Big 3
・Enhance sales from VW and Hyundai
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02021 Actual

2024*Consolidated journal entries (internaltransactions) are included in the numbers.

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Infrastructure Development in Japan
Infrastructure development for future growth
1. New Moka Plant
Construction of phases 1 and 2
Start of construction: Second half of FY22
Full-scale operation: FY23
Investment amount: 5.9 bil. JPY (FY22-FY24)
Future Plan
FY24: Start of phase 2 construction
FY25: Start of operation (2nd stage)
FY30: Start of operation (3rd stage)<Next-generation plant> Global Mother Plant
Introduction of next-generation equipment andinjection molding machines
Automated lines through AI and IOT technologies
Efficient production through DX
Target: 200% increase in productivity in FY30

Initiatives for carbon neutrality

2. Yokohama area renewal project
Replan infrastructure development for the entire Yokohama area (Head Office and Yokohama
Technical Center)
Head office relocated in March 2022 due to aging of the building which is to be demolished in
FY22
Aim to improve productivity of indirect departments by establishing infrastructure based on work
style reforms
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Image of New Moka Plant - 1
Global Mother Plant which will publish the Piolax brand worldwide
Respond to a wide variety of demands in the automotive industry through advanced
production equipment and systems
Establish a highly profitable production system: 200% productivity
Cutting-edge plant that is people-and environment-friendly

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Image of New Moka Plant - 2
Current Moka Plant
MGO building(Moka General Office)

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Image of New Moka Plant - 3
Phase 1construction

Plastic building

MGO building

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Image of New Moka Plant - 4
Phase 2construction

Metal building

Plastic building
MGO building

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Image of New Moka Plant - 5

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Capital Investment for Sustainable Growth
Capital investment for future growthcentered on infrastructure development in Japan
FY22-24• Infrastructure development in Japan

Capital investment and depreciation
Medium-term plan
Total 22.6 bil. JPY- New Moka Plant- Yokohama area renewal plan

U.K.

Thailand90
Capital investment<Capital investment in environmental measures>
Promote energy self-sufficiency throughrenewable energy by solar panels(100 mil. JPY)

70

Depreciation• Expansion of overseas plants• Capital investment in environmental
measures

Infrastructuredevelopment in Japan
7.4 bil. JPY(10)

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50
30
10

(30)
(50)

2019

2020

2021

2022

2023

2024

20

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Progress of Management Strategy: Medical Device Business
Management strategy
and priority issues
1.Product andcustomer strategy

Specific measures(FY21 actual)

Medium-term management plan
initiatives■ Launch differentiated products
to specific markets

Medium-term launch plan
(Strategic new products)■Expand the market share in Japan ofendoscope business・Minimally-invasive treatment such as“catheter for liver cancer”
・Strengthen development and launchof products that satisfy unmet needs

2.Business strategy

3.Regional strategy

4.Growth investment
strategy■ Accelerate development andlineup of new products■ Strengthen sales network in
Japan■ Strengthen overseas expansion(Catheter for liver cancer, guide wirefor digestive endoscope)
・Asia: Develop Piolax brand・U.S. and Europe: Expand OEM■Strengthen quality improvement
initiatives■Digital shift

FY21: 33% → FY24: 36%■Launch new products
・Sales plan
1 billion JPY (FY22-FY24)
・Products to be launched
1) New endoscope products
2) Guide wires for digestive endoscope(Domestic OEM Business)
3) Catheter for liver cancer in Asia

■Continue measures for FY21

Promotion utilizing marketing
automation.
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Introduction of New Medical Device
Expand market share with newly launched guide wire for digestive endoscope
2 in 1 guide wire (GW)High-spec GW that combines two factors required for GW
Tip endMax. outer diameter: φ0.64 mm (0.025 inches)←Seeking side

To be launched in
October 2022 in Japan
Back end
Support side→

Hydrophilic coating

Medium-term sales plan (FY24)■ Sales of 200 million JPY from thisnew GW■ Increase Piolax share of sales indigestive endoscope
Current: Approx. 33%* → FY24: 36%* Ref.: In-house estimate based on date of R&D
Co., Ltd. for FY20

Appeal points: Image of contact areas

Combined device (Image of contact with lumen)
Our existing GW

Our new GW

1. Our surface treatment technologies reduce contact surface(point contact): low friction resistance and high slipperiness.
2. Low friction resistance improves torque performance sothat GW control by a surgeon is transmitted directly to the tip.
3. Different rigidities and shapes between the ends can
reduce operation time and costs even in case of difficult
choices of pile duct branches.

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For Creating Corporate Value - 1
Trends of ROIC and WACC
EVA spread remained negative for three consecutive years since 2019
ROIC

WACC

8.0%

2.0%

2017

2018

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2019

2020

2021

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For Creating Corporate Value - 2
Trends of PBR and EVA
PBR also declined significantly since 2019 when EVA spread turned negative

Aim for positive EVA spread and PBR greater than 1
EVA spread

PBR
1.5

PBR
EVA spread

1

6Strengthen shareholder
returns and pursue
capital efficiency
0

0.5

-6

2017

2018

2019

2020

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Measures to turn EVA
spread positive

Introduce balance
sheet management
Enhance cash
management in the
Piolax Group

2021

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Review of Capital Policy
FY23 management
indicators (Previous)

FY24 management indicators (Revised)

8% or more

ROE

8% or more(Final target: 10% or more)

Final target: 10% or more, positive EVA spread

Consolidated
dividend payout
ratio

30% or more

100%
Dividends and Dividend Payout Ratio

ROE trend

Dividend

Final target: 10% or more
8% or more

10%

Dividend payout ratio (Right axis)

100%

(JPY)

150

5.8%
4.3%

22%

4.5%

45

31%
45

31%
35

34%

100%

127

50%
100% dividend
payout ratio

45

0%

0

0%
2018 2019 2020 2021 2022 2023 2024

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2018

2019

2020

2021

2022

2023

2024

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Financial Planning and Capital Policy
Cash allocation
Cash allocation image for three years
from FY22 to FY24

Three-year capital policy from FT22 to FY24
Control the increase in equity capital(100 mil.
JPY)

100% dividend payout ratio
Newborrowing

500

Earnedoperatingcash flow
Excessfunds

Working
capitalFlexible purchase/retirement of treasury stock
Capitalinvestment

Capital investment for growth
Shareholder
returns

Working
capitalConstruction of a new Moka Plant
Yokohama area renewal plan
Expansion of overseas plants
Capital investment related toenvironmental response0
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Promote ESG Management -1
Applicablemajor SDGs

PiolaxESG Vision 2030

Major initiatives• Energy• Emission into the air• WasteCorporate activities aiming fora carbon-free society and arecycling-oriented society

・Activities toward carbon
neutral: reduction ofgreenhouse gas and energy
consumption, etc.

• Employment• Occupational health andsafety• Diversity, equal
opportunity

Creation of a vibrantworkplace where employees
can work with a sense of
security

・Promotion of work stylereform・Promotion of diversity
・Respect for human rights• Compliance enhancement• Governanceenhancement

・Fair and equitabletransactions and improved
trustworthy relationships
・Stable organizational
management by enhanced
governance・Compliance with modified
corporate governance・Enhanced compliance withrisk management

Materiality

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E

Promote ESG Management -2
Initiatives for climate change

Disclosing information based on TCFD recommendations
In March 2022, we announced our endorsement of the TCFD recommendations anddisclosed information on our initiatives based on the TCFD recommendations.
We will further strengthen our activities to enhance information disclosure.
Roadmap for carbon neutrality (CN)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 in thewhole group.

Please refer to our website for details.
Disclosure Based on the TCFD Recommendations: https://www.piolax.co.jp/resources/pdf/csr/PIOLAX_TCFD.pdf
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S

Promote ESG Management -3
Promoting diversity and health management

We regard the promotion of diversity as an important management issue. We will strive
to create a comfortable working environment by improving our education system andreforming work styles so that human resources with diverse backgrounds can fully
demonstrate their abilities and individuality.
In order to secure and utilize diverse human resources, we will consider initiatives to raise
the ratio of female managers to 30% and actively recruit foreign and mid-career
employees.
Certification of the highest ranking (third stage) of "Eruboshi" as an
outstanding company

We will continue to make efforts to “expand the number of female managers” and “develop
a workplace environment where anyone can work comfortably and play an active role”.

Certification as an “excellent health management corporation in 2022”(large corporate division)

The source of vitality that supports our business environment is our “human assets or our employees
and their families. As one of the most important management objectives, we will continue our
support to promote mental and physical health and realize work-life balance of all employees.

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Promote ESG Management - 4

GGovernance system: increasing the diversity of the Board of Directors
The Board of Directors if approved at our General Meeting of Shareholders on June 24, 2022
9 directors in FY21 → 10 directors in FY22
<New system><Director skill matrix>

1) Increase of female directors (+1)

1 female (among 9 members) → 2 (among 10)
Ratio of female directors: 20%

2) Increase of outside directors (+1)

3 members → 4 (one retired, two newly appointed)
Ratio of outside directors: 40%

3) Increase of directors with skills relating
to ESG/ sustainability (+2)
2 members → 44) Increase of directors with skills relating
to DX/IT (+1)
2 members → 3

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G

Promote ESG Management - 5
Governance system: establishment of Sustainability Committee

December 2021
Setup of Sustainability Committee
Establishment of Sustainability Policy

Corporate Governance System Chart

Outline of Sustainability Committee
Members Chairperson: President
Members: Persons elected from the Board of
Directors and assigned by the Chairperson
Secretariat Management & Planning Group, Corporate
Planning GroupFrequency Meeting: 4 times a year (held as needed)ofReport to the Board of Directors: twice a year
meetings
Main
topics- Formulation of policies and materiality related
to sustainability and ESG management- Setting of targets and monitoring of progress- Disclosure based on the TCFD
Discussions in the committee are regularly
reported to the Management Committee and theBoard of Directors.
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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 thistime and contain risks and uncertainties and that actual results
may significantly differ from the projections.

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