Annual Report(Integrated Report)
2021
Year ended March 31, 2021

Contributing to
the Construction ofSocial Infrastructure

Editorial Policy
This “Annual Report (Integrated Report)” is a publication for the Furukawa
Company Group’s shareholders and other investors. It is an integrated
report that includes financial information from the Group’s “Annual
Securities Report” and environmental, social, and governance (ESG)related information from its “Corporate Governance Report” and “CSR
Report.” The intention of this Annual Report is to foster a more accurate
understanding of the integrated thinking, strategies, and actions of theGroup while covering the information necessary for shareholders and otherinvestors.
In addition to these reports, we disclose financial statements, financial
results briefing materials, and post various other information on our corporate website in a timely and appropriate manner.

Contents
About the Furukawa Company Group1

The Furukawa Company Group’s Value Creation Process2

Chairman’s Message

4

Interview with the President

5

Special Feature: “Marketing-Based Management” Initiatives
Incorporating CSV Perspectives

10

Review of Operations

12

Topics18

ESG Information
https://www.furukawakk.co.jp/pdf/e/ar2021.pdf
Target Period: April 2020–March 2021
(Some activities before and after this period are also included.)

Annual Report (Integrated Report)

Annual Securities
ReportCorporate Governance
Report

CSR
Report(Financial information)(ESG information)(ESG information)

		
The Furukawa Company Group’s ESG Activities

19

CSR and ESG Issues
		20“Marketing-Based Management” That Incorporates CSV Perspectives
		21

ESG Close-Up		

22

Corporate Governance		

24

Message from an Outside Independent Director

27		Directors and Audit & Supervisory Board Members

28

Risk Management		30Compliance		31

Environmental Initiatives		32Social Initiatives
		

33

Financial Information

Forward-Looking Statements
This Annual Report (Integrated Report) contains information about the Furukawa Company Group’s plans, strategies, and future prospects. Such information,
which is based on information currently available and reflects determinations
deemed rational by the Group at the present time, includes various risks anduncertainties. Actual results may differ significantly from forecasts contained
herein due to these changing uncertain factors.

Consolidated 11-Year Data

34

Management’s Analysis of Operating Results,
Financial Position, and Cash Flows

38

Corporate Data

84

Corporate History85

About the Furukawa Company GroupThe key to the success of the Furukawa Company Group, which recently celebrated the 146th anniversary of its founding, began with thedevelopment of the Ashio Copper Mine by founder Ichibei Furukawa. Since then, we have moved in line with the times and developed andadvanced our technologies, amassed through mine development, to build our two current business domains: the Machinery business andthe Materials business. Today, we are increasing our focus on niche products that reflect our expertise and boast a high market share. We
are also stepping up efforts to practice “marketing-based management”*1 that incorporates
CSV*2 perspectives by deploying our unique technologies and past experience. In particular, our
Machinery business, positioned as a core business, responds to market needs and contributes tothe development of social infrastructure.
By continuing to offer products that are indispensable to society, we aim to resolve various
social issues and help realize a sustainable society. We are working hard every day to achieve our
Vision for 2025, entitled FURUKAWA Power & Passion 150*3, as we approach fiscal 2026, the150th anniversary of our founding.
Ashio Copper Mine (around 1920)*1 “Marketing-based management”
This means incorporating marketing into the core of management to provide products and services recognized as valuable in chang‑	ing markets, as well as to identify and resolve issues and problems faced by customers, with the aims of deepening ties withcustomers, achieving sustainable growth, and increasing corporate value.
*2 CSV (creating shared value)
This is a management framework that enables companies to co-create “social value” and “corporate value” by tackling social,environmental, and other issues.
*3 FURUKAWA Power & Passion 150
The “Power & Passion” symbol expresses the “power and speed” and the “passion and enthusiasm” aspects of our business approach.
The perfect red circle conveys the connections and bonds we have with customers, and “150” represents the 150th anniversary of our
founding in 2025, which is the year for achieving our vision.

Management Philosophy

The Furukawa Company Group will remain indispensable to society by always embracing a spirit of challenge, advancing the technologies that have underpinned the foundation of society that originated in mining development.

Action Guidelines
In order to live up to our Management Philosophy, we put our Action Guidelines of Innovation, Creativity and Harmony into practice,
while always bearing in mind the three key words, Luck, Stolidity and Perseverance that best represents the spirit of our founder.
Innovation : We will work constantly at self-innovation by embracing a future-oriented mindset.
Creativity: We will seek to create reliable, appealing products that meet market needs.

Harmony: We will improve management transparency and contribute to the development of a society that is in harmony with the environment.

Financial / Non-Financial Performance
2016/32017/3

2018/3

2019/32020/32021/3

161,800

149,830

167,696

174,117

165,216

159,703

Operating income (Millions of yen)

7,989

6,546

7,821

8,915

8,693

5,592

Profit attributable to owners of parent (Millions of yen)

5,056

4,254

4,774

4,654

4,432

7,468

Profit attributable to owners of parent
per share (Yen)

125.13105.29118.16116.23112.23190.73Return on equity (ROE) (%)

7.5

5.9

5.9

5.7

5.8

8.9

Return on sales (%)

3.1

2.8

2.8

2.7

2.7

4.7

Total asset turnover (Times)

0.8

0.7

0.8

0.8

0.8

0.7

CO2 emissions (Thousand t)

24

25

26

26

22

21

Total emissions including waste, etc. (t)

6,832

5,347

6,884

7,160

7,039

5,912

Number of employees (Persons)

2,521

2,616

2,690

2,757

2,755

2,752

Fiscal year

Net sales (Millions of yen)

Annual Report 2021

1

The Furukawa Company Group’s Value Creation Process
The Furukawa Company Group has a long history of 146 years. Since our beginning in mine development, we have undergone varioustransformations, diversified our operations, and overcome many difficulties. This history forms the foundation of today’s Furukawa Company
Group. Embracing the philosophy of Ichibei Furukawa, our founder, we have practiced marketing-based management that incorporates
CSV*3 perspectives by developing mines and other technologies that support social infrastructure. As a result, we have continued to innovate
products and services that are reliable and appealing and satisfy social and market needs. With a commitment to “category leadership anduniqueness,” we aim to create “corporate value” by providing infrastructure, products, technologies, services, and the like that help resolve
social issues. At the same time, we will continue fostering the creation of “social value” by improving social infrastructure and realizing asafe, environmentally friendly, and prosperous society.

Management Philosophy
The Furukawa Company Group will remain indispensable to society by always embracing a spiritof challenge, advancing the technologies that have underpinned the foundation of society thatoriginated in mining development.

Mining technologies
Exploitation
technologies

Drilling
technologies

Transport / Mineral processing
technologies

Hydrauliccontrol
technologies

Slurrytransportation
technologies

Grinding
technologies

Exhaust gas
treatment
technologies

StrategyRock Drill Machinery

UNIC Machinery

Industrial Machinery

Manufacture and sale ofhydraulic breakers, hydrauliccrushers, hydraulic crawler drills,
tunnel construction and mining
machinery, etc.

Manufacture and sale of UNIC
cranes, mini crawler cranes,
ocean cranes, UNIC carriers, etc.

Manufacture and sale of pumps,
crushers, and other materialrelated machines, bridges,
belt conveyors and heat- andabrasion-resistant castings;
various construction contracts

Vision for 2025
Medium-Term Business Plan

ROE
ROA

CSR*1
ESG*2

*1 CSR
The purpose of our CSR activities is to realize ourManagement Philosophy of “remaining a company thatis indispensable to society.” This means fulfilling our
CSR to stakeholders—customers, business partners,
employees, shareholders and other investors, local
communities, and the global environment—byclarifying our responsibilities, considering andaddressing goals and issues, and explaining the
progress and outcomes of our initiatives.
*2 ESGThe Group recognizes ESG as one of the criteria for
corporate investment and an important perspective
for business operations. We strive to enhance
corporate value by clarifying the relationship between
ESG and our CSR priority issues, medium-term CSR
targets, and relevant major SDGs by classifying themas CSR and ESG issues in the environmental (E),social (S), and governance (G) fields.

2

FURUKAWA CO., LTD.

Machinery Business“Corporate Value”“Marketing-Based Management”

Seeking to realize our Management Philosophy, we are currently implementing our Vision for 2025 in the approach to our 150th
anniversary in fiscal 2026. The vision is divided into three phases, each with its own medium-term business plan. In our business activities,
which center on the Machinery business and the Materials business, we will bring together technologies cultivated over many years and new
strategies while also taking return on equity (ROE), return on assets (ROA), business portfolio management, corporate social responsibility(CSR), ESG, and risk management into account. We will also help achieve the Sustainable Development Goals (SDGs) and continue
contributing to the realization of a sustainable society by resolving various social issues, including national resilience challenges, a declining
workforce, and moves toward a decarbonized society. This is the Group’s value creation process for realizing its Management Philosophy.

Smelting
technologies“Category leadership and uniqueness”
Flash smelting
technologies

MetalsSulfuric acidproduction
technologies

Electric
technologies

ChemicalsElectronics

Products /Technologies /Services“Social Value”
Creation

Establish social infrastructure
Realize a prosperous society that issafe and environmentally friendlySale of electrolytic
copper, electrolytic
gold, electrolytic
silver, sulfuric acid,etc. (producedby smelting on
consignment)

Manufacture andsale of sulfuric acid,polyferric sulfate
aqueous solution,
sulfate band,
cuprous oxide,
cupric oxide, etc.

Manufacture andsale of high-purity
metal arsenide,
crystal products,
core coils,
aluminum nitride,
opticalcomponents, etc.

Materials Business

Creation through Business Activities

Business
Portfolio
Management

Risk
Management

Social Issues /Needs
Incorporated CSV*3 Perspectives*3 CSVFor the Furukawa Company Group, creating
shared value (CSV) means creating “corporate
value” by providing infrastructure, products,
technologies, services, and the like that help
resolve social issues. It also means fostering thecreation of “social value” by improving social
infrastructure and realizing a safe, environmentallyfriendly, and prosperous society.

Annual Report 2021

3

Chairman’s Message

Greetings from Chairman Naohisa Miyakawa
Based on resolutions of the Shareholders’ Meeting held on June29, 2021 and the subsequent Board of Directors’ meeting,Minoru Nakatogawa was appointed as president and representative director, and Naohisa Miyakawa was appointed as chairman
and representative director.

Naohisa Miyakawa
Chairman and Representative Director

I have served as president for eight years, having assumed the& Remuneration Committee, which mainly consists of outside

position in June 2013. In 2015, we renewed our Management

directors, Mr. Nakatogawa replaced me as president. In addition

Philosophy and clarified our desire to remain indispensable toto a strong spirit and determination, President Nakatogawa hassociety. At the same time, we established our first long-terma big heart and is very well-liked, and I am confident that he will

vision, FURUKAWA Power & Passion 150, and have been working

carry on the reform path that I have been advancing and promote

to transform the Company to achieve this vision. In the lead-up

it even more strongly.

to the 150th anniversary of our founding in 2025, we adopted

Naturally, my role as chairman in the new organization willa backcasting method divided into three phases. Under Phase 1,

be to support President Nakatogawa in all aspects. By entrusting

covered by Medium-Term Business Plan 2019, we achieved our

President Nakatogawa, who has strong leadership skills, with aconsolidated operating income target (key performance indi-wide range of general management tasks, I will focus on solving

cator (KPI)) of ¥8.5 billion in fiscal 2019 and 2020. Due to theissues to realize Vision for 2025, which was left unfinished whensubsequent worldwide spread of COVID-19, however, we had to

I was president. Specifically, I will focus on such issues as formu-

postpone the announcement of Medium-Term Business Plan 2022

lating an overseas strategy for the Rock Drill Machinery segment,(Phase 2, initially scheduled to start in April 2020), which targeted

reviewing the contracted copper smelting business of the Metals

further improvements in profitability. Instead, we announced oursegment, shaping the future concept of the Furukawa Osaka

management strategies and priority issues in the form of Medi-

Building in the Real Estate segment, and expanding our businessum-Term Business Policy 2022.

through alliances, as well as need for carbon neutrality and digital

Given the fact that the pandemic is not expected to be re-transformation. I will work on these issues in close consultation

solved for some time, we have positioned fiscal 2022 and 2023 aswith President Nakatogawa and further stimulate activities to raisea period for solidifying our management base in order to realize

awareness about the need for internal reforms.

Vision for 2025. For this reason, we decided that we should en-

I look forward to the ongoing support and understanding of all

trust the second half of Vision for 2025 to the next generation of

stakeholders as we continue transforming the Furukawa Company

leaders, who will strongly promote reinforcement of the Compa-

Group under the new management structure.

ny’s structure over the next two years and lead us into the Phase
3 starting in fiscal 2024. Following a report from the Nomination

4

FURUKAWA CO., LTD.

August 2021

Interview with the President“Our goal is to be a company that is notsatisfied with the status quo, but continues toinnovate with a sense of speed.”In this segment, Minoru Nakatogawa, who was appointed aspresident and representative director in June 2021, speaks about
his aspirations for the corporate management of the Furukawa
Company Group, as well as his thoughts and initiatives forrealizing our Vision for 2025.

Minoru Nakatogawa
President and Representative Director

Q1. What are your honest impressions of your appointment as president, and what are your				 aspirations for the future management of the Company?
Following a report by the Company’s Nomination &Remuneration Committee, I was elected and assumed theposition of president at the Shareholders‘ Meeting held on
June 29, 2021 and the subsequent meeting of the Boardof Directors. The world is undergoing upheaval with drasticchanges in global affairs, people’s changing
behavior due to COVID-19, changes in values and lifestyles,
and moves toward a decarbonized society. My primary mission is to achieve our Vision for 2025 at all costs within theremaining five-year deadline. The concept and targets of thevision are becoming more widely understood among

executives and employees. Based on the direction that
Chairman Miyakawa has taken, I will promote reforms anddo my best to achieve the targets.
I believe that the speed of social transformation will
increase in the future. Addressing various issues will leadto the creation of new markets, which is a great business
opportunity for us. By providing products, technologies,
and services that help resolve social issues, we will continue
working to improve social infrastructure and realize a safe,
environmentally friendly, and prosperous society, and thus
help create a sustainable society. I will forge ahead with thisstrong desire in mind.

Q2. The Group now has a new administration. Could you tell us about the division of roles between				 you and the chairman, and how you will carry on Vision for 2025 in the future.				
				 Also, what areas will you focus on as president?
As president, I will be responsible for the overall managementof the Company. I also hope to receive advice and suggestions
from Chairman Miyakawa based on his extensive management
experience. As we work to realize Vision for 2025, we will
determine our roles according to circumstances, addressing

such matters as unfinished tasks, priority issues, and alliancesand M&As.
To realize Vision for 2025 Vision, I would like to create anenvironment in which executives and employees can frankly express their opinions while encouraging more active discussions.

Annual Report 2021

5

Interview with the President(PDCA) cycle to achieve our goals. If necessary, we must makechanges without hesitation. Here, it is important for management to understand policies and issues and provide guidance
and training to subordinates, which I also consider to be partof my responsibilities.

First, we need clarify the priority order of various measuresand tasks, and instill awareness and consciousness of the needto ensure that particularly important things are completed
on time. We must also meticulously investigate the causes of
any unfulfilled tasks and implement the plan–do–check–act

Q3. How do you evaluate the Group’s performance in fiscal 2021? Also, what are your thoughts on
		 initiatives for fiscal 2022?

In fiscal 2021, the global spread of COVID-19 hada significant impact on our business performance.
Although the pandemic was unexpected, it revealed that
the Group’s various divisions have not yet developed
powerful frameworks that are resilient to economic trends.
Nevertheless, we posted consolidated operating income of¥5.6 billion, well above our initial forecast of ¥2.0 billion(announced on August 12, 2020), owing largely to increased
operating income in the Industrial Machinery segment and
UNIC Machinery segment. This shows that the Group isgaining ground in some areas. Although the Metals segment
enjoyed an increase in operating income thanks to surging
market prices, we reaffirmed that we are still susceptible toexternal factors that could cause significant fluctuations in
our performance.
In fiscal 2022, the outlook for the global economy remains
uncertain due to the COVID-19 pandemic and the tense
relationship between the United States and China, so we

believe it is time to solidify our business foundation in orderto realize Vision for 2025. In particular, we recognize that
the Rock Drill Machinery segment, which fell into the red
in fiscal 2021, was not only affected by COVID-19 but also
had problems with its business structure. For this reason, weare reviewing our management system and implementing
structural reforms. In terms of our overseas strategy, ourmost important task is to restore that segment into one
that can contribute to our overall business performanceby delivering a V-shaped recovery in earnings. We will dothis by setting priority market regions, selecting the rightmodels, and promoting reforms through reorganizationand consolidation of overseas subsidiaries. In the Life Cycle
Support (LCS) business, which we have been working on forsome time, we are gradually introducing hydraulic crawler
drills equipped with operational support systems in Japanand overseas, and we hope to link this to future sales of new
machines and components.

Medium-Term Business Plan, etc.

Creation of “corporate value” and“social value”

Vision for 2025 (ideal image for 150th anniversary of foundation)(Established November 6, 2015)

Time period

Phase 1

Phase 2Phase 3Time period

FY2018–2020

FY2021–2023

FY2024–2026

Positioning

Build foundations
for renewed growth

Expedite growth andfurther improve profitability

Complete realization of
Vision for 2025

Name

Medium-TermBusiness Plan 2019

Medium-TermBusiness Policy 2022

Medium-TermBusiness Plan 2025

We postponed announcement ofMedium-Term Management Plan 2022
and instead decided to formulate/announce consolidated performance
forecasts for each single fiscal year.

We will consider disclosing the plan
when we announce our results forfiscal 2023.

Performanceindicators

OperatingincomeApprox. ¥8.5 billion [¥8.6 billion*]

ROE

Approx. 6–7% [5.8%*]* Figures in brackets represent actual results for fiscal 2020.

6

Targeting consolidated
annual operating
income regularly inexcess of ¥15 billion

Become a corporate group that leverages its reputation for
category leadership and uniqueness to deliver growth

FURUKAWA CO., LTD.

Interview with the President

Thanks to business structural reforms implemented several
years ago, the Industrial Machinery segment is now able togenerate steady income. In addition to improving the accuracy
and probability of orders for large-scale projects, we will reinforce
our earnings base by stepping up proposals for belt conveyors,which help reduce CO2 emissions when transporting earth andsand, and by capturing replacement demand for pumps andmaterials-related machines.
In the UNIC Machinery segment, we have completed large-scale
capital investments in the Sakura Plant, which serves as a “motherfactory” under a three-pronged production system (Japan, China
and Thailand) aimed at further improving production efficiency. In
terms of overseas business development, we will do what we can,even with the COVID-19 pandemic, to increase the overseas sales
ratio, which is currently around 20%.
In the Metals segment, it has become difficult to generate
profits in light of current ore purchasing conditions andcontracted copper smelting costs, without the benefit of risingcopper prices that we enjoyed in fiscal 2021. Although production
volume has been decreasing, we still need to make a fundamental
review of our contracted copper smelting business.
In the Electronics segment, our business performance is still
recovering alongside a turnaround in the semiconductor market.
In this context, we are enjoying growing sales of aluminum
nitride, which we have been focusing on as a strategic product,and expect it to contribute to profits in the future. In theChemicals segment, sulfuric acid, cuprous oxide, and otherexisting products are generating stable profits, but we still face
the issue of commercializing and cultivating metallic copper
powder at the sample shipment stage. In the Real Estate segment,
we will continue working to create a future concept for the
Furukawa Osaka Building.
In Phase 2 (fiscal 2021–2023) of Vision for 2025, we were hit
by COVID-19 and postponed the announcement of Medium-TermBusiness Plan 2022 (announcing Medium-Term Business Policy
2022 in fiscal 2020 instead). Under the policy, in fiscal 2022 and2023 we will focus on consolidating our management foundation,
strengthening our business structure, and quickly recovering ourbusiness performance in order to realize Vision for 2025. Goingforward, we will do our utmost to solidify the “foundations forrenewed growth” we built under Medium-Term Business Plan
2019, and “expedite growth and further improve profitability,”
the objective of Phase 2. We will also target dynamic growth bystepping up efforts to form alliances and M&As.

Vision for 2025
“FURUKAWA Power & Passion 150”
Become a corporate group that leverages
its reputation for category leadership anduniqueness to deliver growth
We are targeting consolidated operating income regularly
in excess of ¥15 billion as we approach our 150th
anniversary in fiscal 2026.

Strategies for Achieving Vision for 2025
1 Increase the value of the Furukawa brand through 						“marketing-based management” that incorporates
		CSV perspectives
We will incorporate marketing into the core of management toprovide products and services recognized as valuable in changing
markets, as well as to resolve issues and problems faced bycustomers, with the aims of increasing corporate value andachieving sustainable growth. We will also strive to achieve theSustainable Development Goals (SDGs) and otherwise resolve
various social issues, including such domestic issues as building
national resilience and the declining working-age population,and thus help realize a sustainable society.
●Reinforce technological sales capabilities (proposals and		solutions) reflecting customer needs● Develop products, technologies, and services that meet		market needs● Achieve category-leading positions by concentrating on		niche products that have competitive advantages and using		differentiation strategy● Cultivate and create new markets and product categories;
		build a new business model● Enhance our products, technologies, and services, which		underpin our social infrastructure, to help resolve social issues
2 Sustainably expand the Machinery business●

Reinforce revenue bases in growing overseas markets mainly		in business related to infrastructure and resource development● Strengthen and enhance stock business● Maximize business opportunities by demonstrating
		comprehensive Group competencies and reinforcing
		engineering strengths
3 Strengthen and expand our human resource bases●

Build vibrant human resources and corporate culture for a		new Furukawa● Secure, utilize, and develop diverse human resources in		Japan and overseas● Put even more effort into training sales and marketing personnel
4 Actively promote investments to increase corporate value

Q4. As part of corporate reform efforts, youare promoting ROE reform, business portfolio
review, and operational reforms at the fieldlevel. Please tell us what you have achieved,
what remains to be done, and how you plan
to over come the challenges?

We are working to improve profitability and efficiency in order toenhance ROE, a KPI. In the UNIC Machinery segment, we havecompleted our capital investment program at the Sakura Plant,●●

Make proactive capital investments necessary for growth
Expand business through strategic M&A and alliances

5 Establish a robust corporate foundation●

Increase corporate value by improving profitability and		capital efficiency, targeting ROE of more than 10%● Establish a strong financial base
● Achieve balanced appropriations between investments for		growth and return to shareholders● Increase corporate value by emphasizing business practices
		that reflect CSR and ESG issues recognized and to be solved
		by the Group

Annual Report 2021

7

Interview with the President

and we are now seeing the benefits of greater production
efficiency and other improvements. Thanks to automation
and robotization of production lines,
we have reduced average lead times by approximately 10%,enabling us to reduce inventory levels.
On the other hand, the Rock Drill Machinery segment has
fallen into the red. To overcome this situation, we need tochange our basic approach to all processes, including productplanning, sales, and manufacturing. Accordingly, we are
currently reviewing our strategies and working diligently to
overcome the challenges.
As for reviewing our business portfolio, we are examining
the success or failure of our corporate value creation by
segment through the introduction of the cost of capitalconcept. Regarding the Metals segment, which has
been challenging for some time, our priority is to makea fundamental review of our contracted copper smelting
business, because income in this segment fluctuatessignificantly according to changes in copper prices. We are on
track to reduce annual copper production to around 70,000
tons by fiscal 2022. This will lead to lower exports, which
will improve profitability somewhat. In the contracted copper
smelting business, we cannot start reforms immediately

in light of our relationships with companies that buy our
products and companies with which we have joint ventures.
Nevertheless, we will not postpone our final decision as weforge ahead with our reassessments.
With respect to production, the Technology Division and
the Sakura Plant have begun examining and promoting
digital transformation initiatives. We will continue to promote
digital transformation by applying it to other production
sites as well. Our administrative departments have been
particularly slow, but with the relocation of the head
office at the end of July 2021, we are now using a “freeaddress” system and working to improve office efficiency,
going paperless as a matter of course. At the same time, it
is important to develop products incorporating ICT and AI
technologies to increase productivity, efficiency, and laborsavings in order to promote digital transformation amongcustomers and markets. In response to these needs, in fiscal
2021 we launched a fully automatic drill jumbo, which has
been highly evaluated by our customers as a product thatmatches their requirements. We will continue focusing on
developing products that help these customers achieve digitaltransformation.

Q5. ESG initiatives are becoming more and more important in recent years. Please tell us about the		 ESG initiatives of the Furukawa Company Group.
As a corporation, it is essential that we pursue ESG initiatives.
Our Vision for 2025 advocates enhancing corporate value
through business practices that take CSR and ESG issues
into consideration as part of efforts to reinforce our businessfoundation. Accordingly, we regard ESG as indispensable tocreating corporate value for the Group.
With respect to the environment, the Japanese
government has declared its aim to become carbon neutral
by 2050, and has set a national target of reducing CO2
emissions by 46% by 2030 compared with the fiscal 2014
level. The time has come to move toward a decarbonized

8

FURUKAWA CO., LTD.

society. For us, it is a matter of course that we reduce CO2
emissions and target carbon neutrality. We are currently
implementing our fourth medium-term reduction planfor the 10-year period starting from fiscal 2019, which
we formulated before the government’s declaration. We
now need to review our numerical targets and formulate
and implement a new reduction plan. To this end, we will
establish a new organization as soon as possible to examine
specific CO2 emission reduction measures.
We own forests on the sites of the Ashio Copper Mineand other closed mines. These forests absorb around 8,000
tons of CO2 per year, equivalent to about 38% of the 21,000
tons we emitted in fiscal 2021. The global movement toward
carbon neutrality can also be seen as an opportunity topractice the Group’s “marketing-based management thatincorporates CSV perspectives.” To this end, we will help
realize a decarbonized society by providing customers withproducts, technologies, and services that are highly effective
in reducing CO2 emissions.
With regard to governance, institutional regulations andrules are becoming more and more stringent every year,
evidenced by the new market classification of the Tokyo
Stock Exchange and the revision of Japan’s Corporate
Governance Code. These rules are also a trend of the times,
and we intend to address new guidelines and requirements
as they emerge. We recognize that the primary focus ofgovernance is to ensure that the Board of Directors engages
in sufficient discussions and that judgments and checks are
made properly. With this in mind, we conduct questionnaire-

Interview with the President

based surveys of all directors, including outside ones, toanalyze the effectiveness of the Board of Directors. Suchevaluations have been improving year by year, leading to
the revitalization of the Board. I intend to continue actively
engaging in various discussions at Board of Directors‘
meetings. Each year, the Board discusses the appropriatenessof maintaining strategic shareholdings, but our plan is tocontinue selling shares that we no longer need to hold.
With respect to society, in order to continue growing
sustainably, it is extremely important to have a humanresource strategy that activates the abilities of our executives
and employees and enables us to constantly attract newand excellent talent. To achieve this, we recognize thatproviding work environments that are rewarding and givea sense of fulfillment is our natural responsibility. To realize
Vision for 2025, we also must create a diverse organization.
Traditionally, our company, which hires many technicalemployees, has had a small number of female employees.
Due to the globalization of our business, meanwhile, it isalso becoming more and more important to appoint foreign
nationals. To create an energized organization with diverse
human resources, we will further strengthen the recruitment
and training of diverse talent. From a risk management
perspective, moreover, consideration of the environment,
safety, and human rights throughout the supply chain is
becoming increasingly important. Accordingly, we willcontinue providing verification and guidance throughout
the supply chain.

Q6.		

Finally, please tell us about the Furukawa Company Group’s concept of CSV, which balances
		 “corporate value” and “social value.”
For some time, we have been practicing “marketing-based
management,” which places corporate value improvement
and sustainable growth—achieved by identifying andsolving issues that our customers are facing or have not yet
noticed—at the core of our management. In May 2020,
we redefined and renamed the term “marketing-based
management that incorporates CSV perspectives” in order tofurther strengthen our commitment to enhancing corporate
value and achieving sustainable growth, as well as addressing
the SDGs and various other social challenges, to help realize
a sustainable society. Our concept of CSV is to simultaneously
create “social value” and “corporate value” while addressing
various social issues. We believe that we can create“corporate value” only if we foster the creation of “social
value” by improving social infrastructure and realizing a safe,
environmentally friendly, and prosperous society.

By ensuring that all executives and employees are fully
aware of this concept, we will be able to change the behaviorof each individual in the Group. We will also spread theconcept more broadly by linking it to our business partners
and the entire supply chain. In these turbulent times,
companies cannot survive unless they transform themselves.
Our goal is to be a company that is not satisfied with thestatus quo, but continues to innovate with a sense of speed.

In closing, I would like to say that we will continue listening
carefully to the opinions of our stakeholders as we work
together as executives and employees to realize Vision for2025. On behalf of the Furukawa Company Group, I lookforward to your ongoing understanding and support.

Annual Report 2021

9

Special
Feature“Marketing-Based Management” Initiatives Incorporating CSV Perspectives“Marketing-Based Management” Incorporated CSV Perspectives
The Furukawa Company Group formulated its Vision for 2025 to fulfill its Management
Philosophy of remaining indispensable to society. One of the strategies for achieving
Vision for 2025 is to increase the value of the Furukawa brand through“marketing-based management” that incorporates CSV perspectives.
We will create “corporate value” by providing infrastructure, products,
technologies, services, and the like that help resolve social issues.
At the same time, we will foster the creation of “social value” by improvingsocial infrastructure and realizing a safe, environmentally friendly, andprosperous society. In these ways, we will help build a sustainable society.
In this special feature, we introduce two initiatives as specific examples of “marketing-based management” that incorporates CSV perspectives.

Case 1The Challenge of Developing a Fully Automatic Drill Jumbo
Along with roads and railways, tunnels play a major role in social infrastructure because they enable vehicles to pass throughmountainous areas in short time periods. At mountain tunnel
construction sites, tunnel drill jumbos are used to drill holes into
which explosives are inserted for blasting. Accordingly, they areimportant machines that greatly affect the safety and efficiency ofworkers, as well as the cost and time of tunnel construction. The
Rock Drill Machinery segment’s tunnel drill jumbos have an 80%
share of the domestic market. They are used in tunnel construction work for the new Hokkaido Shinkansen lines, the Linear
Chuo Shinkansen Line, and other projects, as well as in ongoing
construction of freeways.

Site delivery of fully
automatic drill jumbo

In recent years, mountain tunnel construction contractors havefound it difficult to attract workers due to the occurrence ofaccidents caused by falling rocks and the like, as well as theretirement of skilled workers. In response, Japan’s Ministry ofLand, Infrastructure, Transport and Tourism has been promoting“i-Construction,” which means deploying ICT to help makeconstruction sites unmanned. Accordingly, major general contractors have been accelerating their ICT efforts, including by setting
up dedicated i-Construction divisions. To address these needs, webegan developing a fully automated drill jumbo in 2016.

Drilling test byboom

10 FURUKAWA CO., LTD.

Automating the drilling process, which used to rely on theintuition and experience of skilled workers, requires the use ofa surveying machine inside the tunnel to perform measurement
and sensors mounted on the drill jumbo to determine the best
position of the vehicle body. The tunnel face (excavation surface
at the end of the tunnel) is then scanned in 3D to determine theoptimal drilling position and angle. It is also necessary to automatically control each boom based on the drilling plan created fromthe tunnel alignment and cross-sectional alignment. Furthermore,high-precision hydraulic control is required to perform the meticulous manual operation, conventionally done by skilled workers
using electrical control.
Drawing on the drilling and hydraulic control technologies
accumulated by the Rock Drill Machinery segment, as well as thecontrol system technologies of the Technology Division, we conducted repeated trial and error programming on test machines.
As a result, in June 2020, four years after the start of development, we completed and launched J32RX-Hi ROBOROCK®, a fully
automatic drill jumbo. Building relationships of trust with generalcontractors at numerous job sites, facing challenges together, andcombining the technologies we have cultivated with cutting-edge
technologies led to the creation of this fully automatic drill jumbo.
It is a perfect example of “marketing-based management.” We
expect it to reduce the burden of workers at numerous mountaintunnel construction sites and contribute to improved construction
safety, accuracy, and efficiency.
We are now analyzing various data obtained from fully automatic drill jumbos currently in operation and using that data to
improve subsequent drilling plans and blasting patterns, as wellas to enhance preventive maintenance of the machines. We havealready received numerous requests from customers for additional
functions, and we will continue to develop, improve, and upgrade
our fully automatic drill jumbo with a view to releasing successor
models.

Console enabling fully
automatic operation

Special Feature

Case 2Developing a New Cone Crusher
A crusher is a machine that crushes rocks and other solid materials
to a desired size at quarries and other facilities in the steel,chemical, and nonferrous metal mining industries. There arevarious types of crushers, such as cone crushers, jaw crushers, androll crushers, and their uses vary according to the raw material,
crushing process, and end-product (rocks of desired particle sizeand diameter). The GEOPUS series of cone crushers, handled by
our Industrial Machinery segment, are mainly used in stone
crushing plants to produce aggregate for important social
infrastructure, including road paving, crushed stone for concrete
aggregate, and paving stone for railway tracks.
Since launching the GEOPUS series in 2000, we have continued
making improvements to enhance performance and productivity.
The new GEOPUS C3 cone crusher, developed in 2019 with aview to downsizing while maintaining conventional performance,
has two key added functions. The first is a crushing chamber witha new configuration that provides a smoother flow of raw materials compared with conventional machines, thereby shortening
the time between raw material input to product output. As aresult, the same processing volume as before can be maintainedeven though the machine has been downsized. We also enhanced
the overall design to deliver improved price competitiveness andeconomic efficiency for customers. The second is a feed control
function, which measures the amount of raw material added to

New cone crusher site
Crushed rockMantleRock crushing flow
1

1

Raw material input
Raw materials crushed by drillingand blasting are transported to theplant and fed into the hopper.

Hopper2

2
Primary crushing
Rock is crushed by a jaw crusher.

Jaw crusher

33Secondary crushingPrimary crushed rock is crushed
by a cone crusher.

Cone crusher
Crushed rock4

4
Sorting
Crushed rocks separated into
different sizes by screen.

ScreenGEOPUS C3 cone crusher

Tooth plate

Shaft
Cross section

the hopper with an ultrasonic sensor and automatically adjusts
it, thus improving production efficiency. Conventional machinesrequire some manual control by an operator, but this function
automatically controls the optimal filling volume for high-density
crushing, thereby ensuring stable quality and yield.
In a test plant set up in cooperation with a customer, we wereable to reduce the input volume of raw material by 16% compared with a conventional machine, meaning that only 179 tonsof material was needed to produce 100 tons of crushed stone,
instead of 213 tons, providing a substantial improvement.
GEOPUS C3 is a new cone crusher with a control function thatmaximizes high-density crushing and crushing performance. It
is more compact than conventional machines but maintains thesame throughput and delivers improved production efficiency.
We are currently reviewing our customers’ crushing plants andmaking technical proposals, highlighting GEOPUS C3 as ourflagship product. We have already received positive feedback
from customers, which is testament to the “marketing-based
management” that we advocate and practice. Going forward, we
will continue making proposals to enhance customers’ production
efficiency while collecting operational data and making new improvements with the aim of building an operational management
system that can predict failures in advance.

Product

We are committed to offering products, technologies, and services recognized as valuable in changing markets in order to meetthe needs of customers and identify and solve issues they are not
yet aware of. Our fully automatic drill jumbos and our new conecrushers help resolve social issues, such as declining number ofskilled workers and the need for better workplace safety, while

enhancing production and economic efficiency. Accordingly, theseproducts can create both “social value” and “corporate value”.
By practicing “marketing-based management” that incorporates
CSV perspectives, the Furukawa Company Group will continue
resolving various social issues to help create a sustainable society,while at the same time remaining indispensable to society.

Annual Report 2021

11

Review of Operations

Machinery
The Machinery Business consists of three segments: Industrial Machinery (pumps, crushers, belt conveyors, steel bridges,etc.), Rock Drill Machinery (hydraulic breakers, blast hole drills, tunneling/mining equipment, etc.), and UNIC Machinery(UNIC cranes, mini crawler cranes, UNIC carriers, etc.).
In fiscal 2021, total sales of the Machinery Business—consisting of
the Industrial Machinery, Rock Drill Machinery, and UNIC Machinery segments—amounted to ¥68,636 million, down 17.0% year
on year, and operating income was ¥3,969 million, down 46.0%.
All three segments reported year-on-year declines in sales andincome.
For the year, the Machinery Business accounted for 43.0%
of consolidated net sales (down 7.1 points year on year) and
71.0% of operating income (down 13.5 points). Of the Machinery
Business’ total sales, the Industrial Machinery segment accounted
for 24.3%, the Rock Drill Machinery segment for 35.2%, and the
UNIC Machinery segment for 40.5%.
We launched our Medium-Term Business Policy 2022 in the
midst of an extremely uncertain global economic situation due tothe spread of COVID-19. It is difficult to predict when the situation will return to normal, and medium-to-long-term businessconditions remain unclear. Nevertheless, we recognize our increasing responsibilities as a Group with respect to taking disasterprevention and mitigation measures, providing infrastructure
to reinforce national resilience, and the like. We also recognize
other social issues that we must tackle. These include promoting
labor-saving and unmanned construction sites to compensate forlabor shortages stemming from future declines in the working-age
population, as well as contributing to energy conservation andreduction of CO2 emissions.

During the period covered by Medium-Term Business Policy
2022, we expect domestic demand to remain steady for services
related to new Shinkansen lines, the Linear Chuo Shinkansen Line,national resilience, and regional revitalization, as well as the Osaka
Kansai Expo in 2025. In addition to capturing business related
to these projects, we will strengthen our earnings foundationin expanding overseas markets, centered on infrastructure andresource-related development.

% of Net Sales
43.0%(Billions of yen)
Operating Income (Right)

100

66.8

% of
Operating Income
71.0%

73.5

77.6

20

82.7
68.6

50

10

3.6

0

6.6 7.3

5.1

4.0'17/3 '18/3 '19/3 '20/3 '21/30

Note: Percentage figures are
before internal adjustments.

Priority Fields of Machinery Business

産業機械部門Concrete

Machinery Business

00.0%

機械事業

ロックドリル部門

ユニック部門

00.0%

00.0%

To mine for gravel and limestone, which are raw materials for concrete, we supply hydraulic売crawler
上 高drills that are used to drill holes in rock, in which gunpowder is inserted for blasting. We also have hydraulic breakers, which are used to break large rocks into 構
small成pieces,
比 and crushers and screens, used at plants to achieve the desired rocksizes. These products contribute to demand for concrete in various areas.
0
20
40
60
80
100

Crushes and cuts bedrock
into small pieces
Material for concrete andthe like

機械事業
営業利益
構 成 比

Hydraulicbreakers

ロックドリル部門 ユニック部門

産業機械部門Hydraulic crawler drills

00.0%
0

20

0

20

00.0%

0.00%
40

60

80

100

40

60

80

100

Crushers

Civil engineering and construction worksites

Tunnel projects
We develop and manufacture tunnel drill jumbos, which are used to create openings for loading gunpowder needed for rock blasting in mountain tunnel projects.
We also develop and make belt conveyors for transporting large amounts of earthand sand, as well as shield pumps, which use water to pump excavated earth andsand in underground tunnel projects. Here, our drilling and wastewater treatment
technologies, amassed through mine development, come to the fore.

A single UNIC crane can transport and unload building materials and the like.
In addition to UNIC cranes, we offer mini crawler cranes, which can operate
independently in places inaccessible by truck, and hydraulic crushers that play
0 at demolition
20 sites. Our construction
40
60
80 exceptional 100
a major role
machinesfeaturefunctionality, operability, and safety and are also environmentally friendly.

Mini crawler cranes
Hydrauliccrushers

Tunnel drill jumbos
Belt conveyors

Shield pumps

12 FURUKAWA CO., LTD.

UNIC cranes

Industrial Machinery
Performance Review
In the Industrial Machinery segment, the impact of COVID-19
was limited, although some construction work was suspended or
postponed. For the year, we received an order related to a new
upgraded bridge on the Yamashiro Comprehensive Sports Park
Joyo Line (Kyotanabe City, Kyoto Prefecture) and another for a
SICON®*1 enclosed hanging conveyor for construction of the No. 1
tunnel of the Linear Chuo Shinkansen (Kita-Shinagawa, Tokyo).
As a result, the order balance at fiscal year-end was higher thanthe previous fiscal year-end.
Sales of materials-related machinery declined from the previous
fiscal year, when we sold equipment for an intermediate storage
facility (Futaba-machi, Futaba-gun, Fukushima Prefecture). For
the year, we booked sales from large-scale projects, includingcargo handling equipment for an international bulk terminalat the Port of Onahama, a belt conveyor for the Tokyo Gaikan
Expressway, and a SICON® enclosed hanging belt conveyor for the
Sakaigwa-Kanamori retention basin project (Machida City, Tokyo).
However, total segment sales declined because most of the construction work was completed in the previous fiscal year. Consequently, segment sales decreased 28.2% year on year, to ¥16,682
million, and operating income fell 34.1% to ¥2,114 million.
Future Measures
Going forward, we will continue the strategy stated underMedium-Term Business Plan 2019 of “Increasing our involvement
in section plant construction projects and expanding our contractor business, including large-scale projects for both the public andprivate sectors, in order to transition from a standalone machinery manufacturer, strengthen our engineering capabilities*2, andenhance our business foundation in the domestic market.” As ourbasic strategy to establish a solid growth trajectory, we will attract
new orders by providing technical proposals for section plant

Furukawa Industrial Machinery Systems Co., Ltd.
President and Representative Director

Katsuhira Kawashita

construction and other projects, cultivate demand for SICON®
enclosed hanging conveyors, and strengthen our earnings foundation by capturing new demand for pumps and materials-related
machines. In the contractor business, we will continue striving
to win orders for large-scale construction projects by envisaging
unexpected situations and engaging in rigorous risk management
and project management, while proposing conveyance technologies using our own belt conveyors, with the aim of resolving
various social issues.
With respect to strengthening our engineering capabilities,
following our reorganization in April 2018, our proprietary belt
conveyor conveyance technologies have been adopted for multiple large-scale projects. In materials-related machinery, we
received orders for crushers, screens, granulators, and some plant
equipment through technical proposals for section plant construction projects. These orders have contributed significantly to theperformance of the Industrial Machinery segment, and we can
now see the direction in which we should go. Our future task is toincrease the accuracy and probability of receiving orders for largescale projects.
*1 SICON® is a registered trademark of ContiTech Transportbandsysteme GmbH.
*2 Engineering capabilities: The ability, as part of the sales process, to use
experience, technology, and knowledge as tools in order to make
optimal proposals to customers based on consideration of a compre‑	
hensive balance of all factors, including functions, costs, operating
environment, and safety.

Main achievements
Delivered our first SICON®*1 enclosed hanging conveyor to transport sediment in the Sakaigawa-Kanamori retention basin
project; also received an order for a second unit, related to a tunnel of the Linear Chuo Shinkansen● Made a technical proposal to replace a customer’s stone crushing machine with a new high-efficiency cone crusher(GEOPUS C3), a strategic product for the stone crushing industry● Established a stable profit structure through our stock business●

Main issues
Improve the accuracy and probability of receiving orders for large-scale projects●●●

Swiftly develop slurry pumps with improved maintainability, as well as highly efficient small and medium-sized modular screens
Generate sales of steel segments for tunnel construction

Net Sales (Billions of yen)

Operating Income (Billions of yen)

14.0 15.9 18.0 23.2 16.7

0.1

'17/3 '18/3 '19/3 '20/3 '21/3'17/3 '18/3 '19/3 '20/3 '21/3

1.0

2.1

3.2

2.1

GEOPUS C3 cone crusher

Belt conveyor
Annual Report 2021

13

Rock Drill Machinery
Performance Review
The Rock Drill Machinery segmented posted a year-on-year
decline in sales, impacted by the spread of COVID-19 in Japanand overseas. Domestic sales decreased due to a significant dropin shipments of hydraulic crawler drills, hydraulic breakers, andhydraulic crushers. This was caused by temporary postponementsof new machinery purchases stemming from a general decline inmachine utilization rates and economic uncertainty. On the other
hand, we posted an increase in sales of tunnel drill jumbos, whichwere unaffected by the aforementioned factors, with J32RX-Hi
ROBOROCK®, a fully automatic drill jumbo launched in June 2020,
making a contribution. Overseas, with the exception of China
and some other countries and regions, economic activity levels
remained low due to restrictions on behavior and other factors, aswell as a general reluctance to purchase machinery that persisted
throughout the year. As a result, total overseas sales declined
year on year, mainly due to a decrease in shipments of hydrauliccrawler drills in Southeast Asia and lower shipments of hydraulicbreakers to equipment rental companies in North America.
Consequently, sales in the Rock Drill Machinery segment were
down 12.7%, to ¥24,149 million, and the operating loss was¥1,325 million, compared with operating income of ¥143 million
in the previous year.
Future Measures
Our basic policy is to expand earnings in both the flow businessand stock business*3 by strengthening our Life Cycle Support(LCS)*4 capabilities. To this end, we renewed our management
structure and reassessed existing initiatives. As a result, we concluded that we need to clarify our strategies by product andby region and reorganize and consolidate overseas subsidiaries
accordingly. In the flow business, our most urgent issue is tostrengthen and rebuild our overseas marketing capabilities, andwe will rigorously implement a policy of selection and concentration to achieve this. First, we will focus on Europe and the UnitedStates (where the functions and performance of our original
products are highly evaluated) for hydraulic breakers and Southeast Asia (where there is solid demand for tunnels and otherinfrastructure) for drill jumbos. Second, we will concentrate onsales of hydraulic crawler drills by selecting models based on their

Furukawa Rock Drill Co., Ltd.
President and Representative Director

Masahiro Ogino

superior functions. Third, we will review our overseas structuresand reorganize and consolidate overseas subsidiaries in line with
our priority regions. In the stock business, we will promote LCS
to strengthen our hydraulic crawler drill business. In addition to
improving the accuracy of replacement demand forecasts, wewill provide various support programs that benefit our customers’ businesses. These include maintenance programs (such as
extended warranties and full maintenance packages), operating
information analyses to improve work efficiency, and customer
support programs to propose reductions in consumables. Throughsuch support programs, we will reinforce our stock business andbolster sales of new machines and components. With respect totunnel drill jumbos, we will strengthen our lineup of machinesthat help enhance safety and efficiency at tunnel excavation sites.
These include fully automatic drill jumbos and automatic rockbolters, which we developed jointly with the Technology Division.
We will also continue addressing other issues at mountain tunnel
construction sites, including increasing the use of ICT and making
sites unmanned.
*3 Stock business: Refers to after-market business (sales of spare parts,
maintenance services, used product trade-ins and sales, etc.) and rental
business, as opposed to flow business (product sales), which is more
susceptible to economic fluctuations. With relatively stable earnings,
we have positioned our stock business as one of our “foundations forrenewed growth” and are working to continuously expand andstrengthen it.
*4 Life Cycle Support (LCS): Providing and supporting optimal manage‑
ment services to reduce the cost of machinery ownership and operating
costs as much as possible throughout its entire life cycle (machine
selection and delivery, operation and maintenance, major repairs andreconditioning, and disposal and replacement).

Main achievements
Developed and launched of J32RX-Hi ROBOROCK® fully automatic drill jumbo●

Main issues
Strengthen and rebuild our overseas marketing capabilities / Rigorously implement a policy of selection and concentration/ Establish priority regions, centralize sales through focused model selection, and review our overseas structures● Promote LCS to strengthen our hydraulic crawler drill business●

Net Sales (Billions of yen)

Operating Income (Loss) (Billions of yen)

27.0 30.2 30.4 27.7 24.1

0.9

'17/3 '18/3 '19/3 '20/3 '21/3'17/3 '18/3 '19/3 '20/3 '21/3

14 FURUKAWA CO., LTD.

1.8

1.7

0.1

-1.3

Fully automatic drill jumbo

Hydraulic crawler drills

UNIC Machinery
Performance Review
In Japan, the spread of COVID-19 led to postponement of truck
deliveries, suspension and postponement of construction work,and postponement of investments by rental companies. The
impact of the pandemic was particularly strong in the Tokyo
Metropolitan Area and caused orders for UNIC cranes to languishinitially. Since the second quarter, however, demand for trucks has
gradually recovered, and orders for UNIC cranes have mostly reachprevious-year levels. However, total segment sales decreased,
affected mainly by declines in orders compared with the previous
fiscal year, when there was a rush in demand and increased orders
ahead of a partial revision of mobile crane structural standards
and the enactment of exhaust emission standards for light trucks.
Overseas sales also declined, due mainly to a fall in shipments of
UNIC cranes in Southeast Asia stemming from COVID-19, as well
as lower shipments of mini crawler cranes in Europe and North
America caused by suspension of construction work at urban
construction sites. Accordingly, segment sales declined 12.5%,
to ¥27,804 million, and operating income fell 20.3%, to ¥3,180
million.
Future Measures
Looking ahead, we will seek to secure stable income from domestic sales and expand income from overseas sales by promoting
advanced functions and higher added value in order to strengthen
our competitiveness, advancing the stock business, and reinforcing our overseas product, sales, service, and technological capabilities. Accordingly, we will work to maximize the benefits of capital
investments in the Sakura Plant and promote further automation.

Furukawa UNIC Corporation
President and Representative Director

Kenji Yamakawa

At the same time, we will enhance competitiveness by increasing functionality and high added value of our UNIC cranes, mini
crawler cranes, and UNIC carriers, while developing new functions
and options to meet diversifying applications. We will also
reinforce our service system by expanding our overseas sales
network and strengthening our sales capabilities at the retail level.
We are currently engaged in a capital investment program thatstarted in April 2016, aimed at reinforcing the “mother factory”
functions of our Sakura Plant, which has a three-pronged production system (Japan, China, and Thailand). Most of the planned
work has been completed, although some of the machinery andequipment will not be completed until fiscal 2022. Going forward,
we will reform our hydraulic equipment manufacturing processes
by consolidating processing machinery in a newly establishedhydraulic equipment factory to enhance production efficiency.
We will also reform our coating processes by installing cationicelectrodeposition and other coating equipment to improve thequality of coating. In addition, we will double our crane-mounting capacity and reform our body mounting processes by cutting
outsourcing costs and shortening delivery times to improve
profitability. In these ways, we will strive to pursue and maximize
the benefits of capital investment.

Main achievements
Started selling UNIC cranes for medium-duty trucks with the best lifting performance in its class● Almost completed large-scale capital investment program at the Sakura Plant, which began in 2016, achieving improved
production efficiency●

Main issues
Maximize benefits of capital investment program aimed at reinforcing the “mother factory” functions of our Sakura Plant,
which has a three-pronged production system (Japan, China, and Thailand)● Resume other activities, such as sales guidance and service technology guidance for overseas dealers●

Net Sales (Billions of yen)

25.8 27.4 29.2 31.8 27.8

Operating Income (Billions of yen)

2.6

2.3

2.8

4.0

3.2
UNIC cranes'17/3 '18/3 '19/3 '20/3 '21/3'17/3 '18/3 '19/3 '20/3 '21/3

Mini crawler cranes

UNIC carriers

Annual Report 2021

15

Materials Business% of Net Sales
55.2%(Billions of yen)
Operating Income (Right)
100

Materials

90.0 92.7
79.4

79.0

The Materials business—consisting of the Metals,
Electronics, and Chemicals segments—posted an 11.1%
increase in sales, to ¥88,203 million, and a 34.0% jumpin operating income, to ¥1,041 million. The Materials
business accounted for 55.2% of net sales and 18.6% of
operating income.

% ofOperating Income
18.6%

1.9

50

0

1.6

88.2

4

2

1.4

0.8

1.0

'17/3 '18/3 '19/3 '20/3 '21/30

Note: Percentage figures are
before internal adjustments.

MetalsPerformance Review and Future Measures
The price of electrolytic copper plummeted at the end of theprevious fiscal year due to the prospect of a slowdown in global
economic growth caused by the spread of COVID-19. It started at
US$4,772/ton in April 2020, but subsequently trended upward,
buoyed by resumption of economic activity in China, Europe, andthe United States and subsequent anticipation of general economic recovery. The market was also bolstered by the settlementof the U.S. presidential election, the enactment of additional
economic stimulus measures, and the launch of COVID-19 vaccines. As a result, the price ended the fiscal year at US$8,850/
ton. The domestic price of electrolytic copper started the year at¥570,000 and ended at ¥1.03 million. From the third quarter,
month-to-month demand for copper wire and other copper
products remained mostly unchanged year on year due to recovery of production in the automobile industry, but demand forelectrolytic copper fell significantly. The Company’s volume salesof electrolytic copper declined to 81,998 tons (down 1,866 tons
year on year), due to the gradual reduction of production volume
following a review of the contracted smelting ratio, but segment
sales in value terms increased thanks to higher overseas market
prices. Accordingly, sales in the Metals segment sales rose 13.3%
year on year, to ¥76,095 million, and operating income jumped
65.8%, to ¥499 million.
In the Metals segment, profits fluctuate significantly due tothe impact of international market trends and ore purchasing

Furukawa Metals & Resources Co., Ltd.
President and Representative Director

Masanori Saito

conditions. Determining the profitability and future potential of
the contracted copper smelting business is a priority issue, andtherefore we plan to make a fundamental reassessment of thatbusiness.

Main achievements
Engaged in plan to reduce electrolytic copper production
to 70,000 tons/year or lower by fiscal 2023●

Main issues
Undertake fundamental review of the contracted copper
smelting business●

Net Sales (Billions of yen)

67.9 77.3 80.1 67.2 76.1

Electrolytic copper

Gibraltar Copper Mine in Canada'17/3 '18/3 '19/3'20/3 '21/3

Operating Income (Billions of yen)

1.7

16 FURUKAWA CO., LTD.

Furukawa Denshi Co., Ltd.
President and Representative Director

Hitoshi Iida

0.6

0.3

0.5

'17/3 '18/3 '19/3 '20/3 '21/3

Electronics
Performance Review and Future Measures
Demand for mainstay crystal products and coils declined significantly, mainly due to the impact of COVID-19 on production
activities in the automobile and other sectors. From the second
quarter onward, this segment benefited from a recovery trend,with sales of coils remaining at previous-year levels despite a
decease in sales of crystal products. Sales of high-purity metallic
arsenic were boosted by relatively stable demand for compound
semiconductors, a major application for that material, while
demand for aluminum nitride for use in thermal management
components and semiconductor manufacturing equipment components increased, leading to higher overall segment revenue. As
a result, the Electronics segment posted a 4.3% decrease in sales,to ¥5,741 million, and operating income of ¥162 million, compared with an operating loss of ¥35 million in the previous fiscal year.

0.9

Our basic strategy going forward is to promote growth and newmarket launches of aluminum nitrides and diffractive opticalelements (DOEs), which are strategic products, as well as hybrid
coils. In aluminum nitrides, we will utilize our high-value-added firing
technology to target business expansion while developing aluminum
nitrides with high levels of thermal conductivity and toughness. In
DOEs, we will deploy our microfabrication technology to expand
sales channels. And in hybrid coils, we will employ a high degree ofdesign freedom to develop attractive product samples.

Main achievements
Achieved increased sales of large-sized aluminum nitride
products and high thermal conductivity products thatmeet market needs; installed a new firing furnace● Generated higher sales of DOEs to new customers aspart of our technical support for laser processing machines●

Main issues
Need to achieve full commercialization of hybrid coils(currently limited to sample development)●

Net Sales (Billions of yen)

5.8

6.3

6.5

5.5

5.7

'17/3 '18/3 '19/3 '20/3 '21/3

Operating Income (Loss) (Billions of yen)

0.0

0.3

0.4

(0.0)

0.2

'17/3 '18/3 '19/3 '20/3 '21/3

Aluminum nitride

Chemicals
Performance Review and Future Measures
In the Chemicals segment, sales of cupric oxide increased due tohigher unit prices, mainly reflecting higher base copper prices andstrong demand for use of that material in circuit boards. On theother hand, sales of cuprous oxide decreased due to a decline insales volume to major customers stemming from weak demand
for marine vessel paints, a major application for that product.
Volume sales of sulfuric acid increased thanks to strong sales ofhigh-value-added products, but the
impact of COVID-19 and lower demand
stemming from inventory adjustments
by customers led to a decline in value
terms. As a result, sales in the Chemicals segment slipped 5.1% year on
year, to ¥6,367 million, and operating
Cupric oxide
income fell 25.5%, to ¥380 million.
Net Sales (Billions of yen)

5.3

6.3

6.1

6.7

6.4

Operating Income (Billions of yen)

0.1

0.5

0.4

0.5

0.4

Furukawa Chemicals Co., Ltd.
President and Representative Director

Kazuyoshi Iwama

Going forward, our basic strategy is to expand income fromcuprous oxide and other existing products while commercializing
and fostering newly developed products, such as metallic copper
powder. In sulfuric acid, we will further differentiate ourselves
through our high-quality offerings, and in metallic copper powder
we will enhance product quality, establish mass production andsales systems, and develop attractive product samples to expand
sales channels.

Main achievements
Increased sales of high-quality sulfuric acid, mainly forbattery applications, as well as higher sales of cupricoxide for high-end PCs and servers●

Main issues
Delay in rolling out sales plan for metallic copper powder
due to COVID-19, despite efforts to develop samples for
multilayer ceramic capacitors (MLCCs)●'17/3 '18/3 '19/3 '20/3 '21/3'17/3 '18/3 '19/3 '20/3 '21/3

Real Estate
Performance Review and Future Measures
The Muromachi Furukawa Mitsui Building (commercial name:
COREDO Muromachi 2), our main facility, experienced a downtrend in visitors from around March 2020 due to the spread of
COVID-19, and the building was temporarily closed following thegovernment’s emergency declaration in April 2020. Even after
the building’s reopening, visitor numbers were lower than usual,
so we reduced or exempted rents for some commercial tenants,
which had a negative effect on revenue. However, overall rental
Net Sales (Billions of yen)

3.1

3.3

3.0

2.4

2.1

'17/3 '18/3 '19/3 '20/3 '21/3

Operating Income (Billions of yen)

1.3

1.3

1.2

0.7

0.7

'17/3 '18/3 '19/3 '20/3 '21/3

revenues remained mostly on par with the previous fiscal year. Thiswas because a reduction in the number of large office tenants inthe previous year, which led to a decrease in revenues, was offset
by higher revenues from the tenants who replaced them. However, the closure of the Furukawa Osaka Building in December 2019
had a negative impact on overall segment revenue. Accordingly,
sales in the Real Estate segment decreased 11.7% year on year, to¥2,108 million, while operating income edged up 0.1%, to ¥737
million.
Looking ahead, our basic strategy is to continue making effective use of real estate owned by
the Group, including the Furukawa
Osaka Building, while securing
stable earnings from the Muromachi
Furukawa Mitsui Building. Anotherchallenge is to decide our future
plan for the site of the Furukawa
Osaka Building, which is now closed.
(Demolition of that building began in Muromachi Furukawa Mitsui Building(commercial name: COREDO Muromachi 2)
fiscal 2021.)
Annual Report 2021

17

TOPICS

MATERIALS

BUSINESS

Potential of aluminum nitride:Heat-dissipating materials that enhancesophisticated electronic devices
Materials
Aluminum nitride used in heat-dissipating materials

Features of aluminum nitride

In recent years, demand for heat-dissipating materials has been
growing as electronic devices become increasingly sophisticated,
integrated, miniaturized, and thinner. Heat-dissipating materials
are essential to prevent abnormal operation of electronic equipment by releasing the heat generated internally to the outsideair. They are used in high-capacity communication devices andequipment, including smartphones and PCs, as well as in inverter
devices for railway cars, communication base stations, semiconductor manufacturing equipment, next-generation automobiles(such as hybrid cars and EVs), and the like.
Heat-dissipating ceramics materials include aluminum oxide(Al2O3) also known as alumina, aluminum nitride (AIN), and siliconcarbide (SiC). In the market, alumina, which is inexpensive, has
the largest share, while aluminum nitride, which is expensive andhighly functional, still has a small share. Features of aluminum
nitride include high thermal conductivity, insulation (does notconduct electricity), heat uniformity, and corrosion resistance.
Accordingly, it is now being used in semiconductor manufacturing
equipment, parts, and devices where these features are particularly needed. We expect demand for aluminum nitride as a heatdissipating material to increase amid the growing performancerequirements of 5G and other communication devices, expansionof data centers, and proliferation of power semiconductors andnext-generation automobiles, as well as the rising performancerequirements of semiconductors, electronic devices, and otherequipment and terminals.

Our Electronics Division has built a production system for molding,sintering, and processing procured aluminum nitride raw materials (powder). We also manufacture and sell aluminum nitride
components, substrates, and fillers for use as heat-dissipationmaterials. Our strength lies in the sintering technology we haveaccumulated over the years, including with respect to sintering
time and temperature adjustment. Our proprietary technologies
and know-how enable us to manufacture products with uniform
thermal conductivity and insulation properties, as well as worldclass large-scale items (up to 500mm in diameter and 20–30mm
thick) that are resistant to warping, cracking, and discoloration—
factors that often arise during the sintering process. In the domestic ceramics industry, therefore, we are well-known as a contract
manufacturer of aluminum nitride products. In addition, we havea lineup of four grades of sintered aluminum nitride products(components and substrates)—with thermal conductivities of
90W, 170W, 200W, and 230W—to meet customer needs. In fact,
we developed and launched the highest-grade product, with thermal conductivity of 230W, ahead of other companies. Currently,
we are developing an even higher-grade sintered material with athermal conductivity of 250W, and we anticipate strong demand
from laser processing machine manufacturers who are aiming forhigher output power.
Order volumes have been rising since 2019 and we expect
market demand to continue growing. In response, we are increasing our production capacity, having added one sintering furnacein 2020. We will continue leveraging our proprietary technologies
to offer a range of high-quality products centered on aluminum
nitride. By promoting development and commercialization,
we hope to make aluminum nitride one of the pillars of theElectronics segment.

Three main products of aluminum nitride
Components
Our aluminum nitride products are used in components for semiconductor
manufacturing equipment where their properties, which include heat uniformity
and corrosion resistance, are important. The use of aluminum nitride components makes it possible to make high-quality, fine-grained semiconductors
and improve the productivity of semiconductor manufacturing equipment.
Our aluminum nitride heat-dissipating insulator components are also used inhigh-voltage power sources installed in railway cars, satellites, and aircraft.

Substrates
Our aluminum nitride substrates, sliced to a thickness of less than 1mm, areused for heat-dissipation and insulation in high-power laser devices. They arealso used in high-power LEDs for camera flashes and projector lamps, as wellas in communication modules. We make and sell these substrates mainly to
precision processing companies that manufacturer semiconductor lasers andcommunication devices.

Fillers

Components containing aluminum nitride materials

Semiconductor manufacturing
equipment components

Crucibles for organic EL panel
manufacturing equipment

Various processed
products

Substrates containing aluminum nitride materials

Aluminum nitride
substrates(Approx. 100mm square)Film deposition
wiring substrates

Laser module parts Laser processing
machine parts

Fillers containing aluminum nitride materials
Thermal conductive sheet
Heat
Heat sink spreader

Our aluminum nitride fillers are used in silicone and other resin-based heatdissipation sheets and sealing materials incorporated in smartphones, notebook
PCs, automobiles, and the like. We make and sell these products mainly to
manufacturers of resins and thermal conductive sheets and adhesives.

Stand

18 FURUKAWA CO., LTD.

Aluminum nitride filler(0.1mm or less)

Thermal conductive
sheet made of resin

Example of use of thermal
conductive sheetsESG Information

E

S

G

Environment

Society

Governance

The Furukawa Company Group’s ESG Activities
Since its founding in 1875, the Furukawa Company Group has worked diligently to resolve a number of issues, including
the emergence of pollution at the Ashio Copper Mine. The experiences and efforts of our early pioneers have paved theway for our approach to ESG and the Sustainable Development Goals (SDGs) today. Promoting an integrated thinking
that combines our business and CSR activities ensures that we carry on the DNA cultivated by our pioneers. At the sametime, it enables us to realize a sustainable society and continue advancing as a company.

Remaining a Company That Is Indispensable to Society
Under its long-term Vision for 2025, the Group is working to increase the value of the Furukawa brand through “marketing-based
management” that incorporates CSV perspectives. ”The visionalso clarifies our commitment to “increase corporate value byemphasizing business practices that reflect CSR and ESG issues
recognized and to be solved by the Group.” By promoting an
integrated thinking that combines our business and CSR
activities, we will work to create social value and corporate valueby helping resolve various social issues faced by stakeholders.
These include achieving the SDGs, the need to build national
resilience in Japan, and a declining working-age population.

CSR Promotion System
We need to pursue CSR initiatives in order to solidify our foundation for conducting business activities. The Group’s CSR policy is topromote business activities on a foundation that is firmly responsive to the environment and society, in addition to governance. To
powerfully promote CSR activities, we established the CSR Promotion Meeting to clarify our responsibilities to stakeholders andspearhead CSR activities. Chaired by the Company’s president, theMeeting deliberates various CSR-related issues, such as basic CSR
activity policy, the CSR promotion system, formulation of activity
plans, verification and evaluation of activity status, and development of priority measures. The CSR Promotion Meeting consistsof four committees (Risk Management Committee, Compliance
Committee, Environmental & Safety Management Committee,
and Quality Assurance Committee) and two departments (Human
Resources & General Affairs Department and Purchasing Department). The Meeting collaborates with each Group company andthe headquarters, which is the executive division for CSR activities,
to advance a PDCA cycle of planning, implementation, evaluation,and improvement.

CSR Promotion System

Reporting

1

Interaction

Committee / Department

Guidance / Instruction

Implementation Body

Risk Management
Committee

2P

Compliance
Committee

Human Resources &General Affairs Department

Environmental &Safety Management
Committee

Purchasing
Department

Guidance /Instruction

D Do
3

Formulate the plan

Execute the plan

Reports ateach PDCA
stage
C Check Check the outcome

ReportingA

Quality AssuranceCommittee

CSR Promotion
Department

Plan

Act

Take countermeasures
as necessary

3. Group companies / departments

1. President and Representative Director
2. CSR Promotion Meeting

Relationships with Stakeholders
In the course of strengthening CSR activities and demonstrating
our Management Philosophy, we have identified our stakeholders
as listed below. Our quest is to clarify our responsibilities to each
Stakeholder

Responsibility

stakeholder group and maintain close communications, in order tobuild relationships of trust and thus maximize corporate value.

Stakeholder

Responsibility

Customers

We shall provide customers with high-quality products
and services in order to increase satisfaction levels.

Employees

We shall create safe, healthy, and motivating workplacesin which our diversified human resources can excel while
adopting appropriate evaluation standards and fair
incentives.

Business
partners

We shall build mutually beneficial relationships conduciveto harmonious coexistence through stable procurement
activities based on the principles of fairness and economic
rationality.

Local
communities

We shall build and maintain favorable relationships oftrust by pursuing social contribution activities aimed atharmonious coexistence with local communities.

Shareholders
and otherinvestors

We shall work to maximize corporate value throughcommunications focusing on timely, appropriate information disclosure and IR activities.

Globalenvironment

We shall protect biodiversity by developing environmentally friendly technologies and products while minimizing theenvironmental impact of our activities through savings ofenergy and resources and reduction of waste.

Annual Report 2021

19

The Furukawa Company Group’s ESG Activities

CSR and ESG Issues
One policy as part of our Vision for 2025 states our commitment to “increase corporate value by emphasizing businesspractices that reflect CSR and ESG issues recognized and to be solved by the Group” as a core foundation of management. We also clarified the relationship between ESG, CSR priority issues, medium-term CSR goals (fiscal 2021–2023),
and relevant major SDGs.

Identifying CSR Priority Issues
The Group identifies CSR priority issues and reinforces its CSR activities to ensure that its business activities contribute to society inthe broader sense. To identify priority issues, we selected important CSR-related issues from the perspectives of both stakeholders
and the Group, then analyzed and evaluated the importance of
those issues and finalized the Group’s CSR priority issues.

unanimously adopted by the United Nations for achievement
around the world by 2030.

Establishing a Robust Management Foundation: 		
Increase corporate value by emphasizing businesspractices that reflect CSR and ESG issues recognized
and to be solved by the Group

Steps to Identify CSR Priority Issues
Extract issues

Evaluate importance to stakeholders and the GroupIn order to pursue its business activities and fulfill its corporatesocial responsibility, the Group has identified CSR priority issues,
formulated medium-term CSR goals to resolve these issues, and is
stepping up CSR-related efforts through the PDCA cycle. Throughthese initiatives, we aim to help accomplish the SDGs, which wereAnalyze the importance of issues

Decide and approve priority issues

CSR Priority Issues Classified by ESG Section
ESG Section

CSR Priority Issues

E

Promoteenvironmental
protection activities

Medium–Term CSR Goals (FY2021–2023)

Promote continuous improvements in environmental performance(CO2, water, waste, chemical substances)● Promote improvements in on-site capabilities● Strengthen efforts to achieve zero accidents/disasters● Promote biodiversity conservation activities●(Environment)

Strengthen management of changes aimed at improving
product quality● Strengthen education and information management to raiseawareness about quality●

Offer products andservices that satisfy
customers

S(Society)

Build fair andimpartial business
relationships andrelationships ofreciprocal trust withbusiness partners
Promote social
contribution activities
Realize comfortableworkingenvironments for
employees and givethem fair evaluationand treatment
Build a meticulous
group governancesystemG(Governance)

Communicate withshareholders andother investors●

Strengthen quality assurance management●

Review and improve product safety evaluation system

Build CSR-oriented procurement system
Strengthen supplier management● Strengthen internal CSR activities●●

Promote social contribution activities aimed at coexistencewith local communities● Maintain and build good relationships of trust with local communities●

Develop talented human resources
Promote health management● Promote diversity● Improve working environments
●
●

●
●

Ensure timely and appropriate information disclosure
Increase corporate value through communication via IR● Strengthen the IR system●●

Strengthen awareness-raising education to entrench compliance
Thoroughly disseminate the Charter of Corporate Conduct andthe Code of Conduct for Officers and Employees● Develop and expand various guidelines and manuals● Entrench timely and appropriate reporting of compliance violations●

Strengthen
compliance

20 FURUKAWA CO., LTD.

Build crisis management system
Build robust risk management system●

Major Related SDGs

E

S

G

Environment

Society

Governance“Marketing-Based Management” That Incorporates CSV Perspectives
The Group will generate “corporate value” by providing infrastructure, products, technologies, and services that help
resolve social issues, while at the same time striving to create “social value”. Of the 17 SDGs, we are focusing particularattention on achieving Goal 11 (“Make cities and human settlements inclusive, safe, resilient and sustainable”) and Goal
9 (“Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation”). We will
also strive to create “social value” by building social infrastructure as stated in “The Furukawa Company Group’s Value
Creation Process” (please see pages 2–3), while realizing a safe, environmentally friendly, and prosperous society.

Deploying “Marketing-Based Management” that Incorporates CSV Perspectives to Address the SDGs
The Furukawa Company Group practices “marketing-based management” that incorporates CSV perspectives and creates “social value” by improving social infrastructure and realizing a safe, environmentally friendly, and prosperous society. In these ways, we will help achieve the SDGs.
SDGs with High Contribution Levels ( ◎ : Especially Important; 〇 : Important)
Main Products, Technologies,
and Services

ChemicalsElectronics

Metals

UNIC
Machinery

Rock Drill
Machinery

Industrial
MachinerySegment

Pumps

Belt conveyors

Steel bridges
and steelstructures

Tunnel drill
jumbosHydrauliccrawler drills

Hydrauliccrushers

UNIC cranes

Mini crawler
cranes

○

◎

◎

◎

○

◎

◎

○

◎

◎

◎

◎

◎

◎

◎

◎

○

◎

○

◎

Ocean cranes○
Electrolytic
copper○High-purity
Coils
metallic arsenide

Opticalcomponents(lenses)

Sulfuric acid

Ferrous sulfate○
Aluminumsulphate○◎

Examples of “Marketing-Based Management” That Incorporates CSV Perspectives(1) Rock Drill Machinery segment (Machinery business):
Helping improve social infrastructure with tunnel
construction machines
In modern society, railways and roads have become indispensablemeans of transportation, and both require construction of tunnels.
Furukawa Rock Drill Co., Ltd., a member of the Furukawa Company Group, makes and sells
tunneling machines.
(Detailed article posted in CSR
Report 2021)(2) Electronics segment (Materials business):
Helping realize a prosperous society through aluminum nitride
Modern society is characterized by advances in communications technology, the emergence of hybrid cars and EVs, the development oflaser-based devices, and the need for labor savings in railway vehicles.
In this context, the advancement of semiconductor device technology is essential to realizing a prosperous society. Furukawa Denshi
Co., Ltd., a member of the
Furukawa Company Group,
makes and sells aluminum
nitride, a heat-dissipating
material that supports
increasingly sophisticatedelectronic devices.
(Detailed article posted in CSR
Report 2021)

Fully automatic drill jumbo

Aluminum nitride
Annual Report 2021

21

ESG Close-Up

Efforts to Strengthen and Expand Our Human
Resource Bases
We have positioned efforts to “strengthen and expand our humanresource bases” as an important policy for achieving our Vision for 2025,
FURUKAWA Power & Passion 150. In this section, Atsushi Takano, Senior
Executive Officer and General Manager of the Human Resources &General Affairs Department, answers our questions about the humanresource strategy of the Group.
Senior Executive Officer
General Manager, Human Resources& General Affairs Department

Atsushi Takano

Q1. You have positioned efforts to “strengthen and expand our human resource bases” as an		 important policy for achieving our Vision for 2025. What is the true meaning behind this?
We recognize that the world is currently in a period ofchange that could be called a major turning point. Under
such circumstances, it is essential to break away fromconventional homogeneous behavior and create innovation
with new ideas in order to achieve our Vision for 2025. I
believe it is critical for us to embrace, develop, and utilize awide range of diverse human resources, and for this reason
we have positioned expansion and strengthening of ourhuman resource bases as a key policy. Based on such a policy,
we seek to establish human resources who can solve customers’ problems, provide new value, and earn customers’ trust.

Q2. Part of your policy is a commitment to “building vibrant human resources and corporate culture for		 a new Furukawa.” Can you provide more details?
Creating innovation requires new ideas that are not bound by
conventional norms. Therefore, we need to transition fromthe “old Furukawa” into a “new Furukawa.” By creating a
corporate culture in which employees, who are full of vitality
and capable of generating new ideas, can work with vigor
and enthusiasm, I believe we can realize a new Furukawa.

At the same time, we need to change the mindset of executives and management, as well as employees. We are also
working to create a Groupwide human resource development
system and corporate culture by hiring management-level
personnel from outside the Group and reforming behavioral
practices through education and training.

Q3. Over the past few years, you have been promoting workplace and workstyle reforms. Please tell us		 about your specific efforts and results, as well as areas that are still undergoing reform.		
We decided to review our personnel system with the aim ofcreating comfortable working environments where diverse
human resources can maximize their abilities and accept roles
and remuneration commensurate with their abilities. In theprocess, we can create a company that employees findrewarding. In July 2019, we abolished our existing professional
qualification grade system and introduced a role-grading
system that sets the grade according to the magnitude of each
employee’s expected role, to more effectively give employees
the roles we want them to fulfill. In line with this, we also
revised our personnel appraisal system. We have adopted amechanism for evaluating employees who have tackled
difficult tasks, and we are working to encourage
employees to embrace challenging goals more actively. The
new system, which evaluates all positive failures and gives
points for challenges undertaken, is an innovative appraisal
system for the Group.
Furthermore, in order to maintain and improve the motivation of older employees in light of the declining numberof young workers, we extended the retirement age from 60
to 65 in April 2020 and have since been improving working
conditions for employees aged over 60. We will continue
studying ways to pass on the skills of these older employees
while utilizing their abilities.

22 FURUKAWA CO., LTD.

At our new head office, which was relocated at the end of
July 2021, the office space will be designated as a “groupaddress” (free address for each department). Adopting theconcept of activity-based working (ABW), we are considering
office environments that encourage more creative results,
including casual meeting spaces that promote communication and collaboration, spaces where people can concentrate
on work alone, and enclosed spaces suitable for remotemeetings.
While proceeding with workplace and workstyle reforms as
described above, we recognize that we are still in the processof reforming, and we intend to further improve workplaceenvironments by promoting initiatives for diverse workstyles,
including with the support of digital transformation.

“Refreshment” zone
for meetings

E

S

G

Environment

Society

GovernanceQ4. Utilizing diverse human resources, especially by improving the status and abilities of female and non-Japanese		 workers, is becoming increasingly important. Please tell us about Furukawa’s diversity initiatives.
I believe that employing a diverse workforce will lead toinnovation and increase productivity and competitiveness. It is
important to utilize a diverse range of human resources, notonly women and foreigners but also people with disabilities
and the elderly, so they can make the most of their abilities.
We also recognize the importance of diversifying our humanresources from the perspective of attracting people who cancope with the future decline in the working-age population
due to the falling birthrate and aging population.
With respect to the advancement of women, we aim toincrease the ratio of female employees in management positions. In the past, we hired mostly technical personnel, where
Number of female employees (persons)Female manager ratio (%)

283 359 391 415 411 413

Number of foreign employees (persons)Foreign employee ratio (%)

447 527 585 590 585 567

21.7
20.1

21.4

21.2

20.6

17.7

2.0

1.7
1.2

1.5

2.1

1.4

'16/3 '17/3 '18/3 '19/3 '20/3 '21/3'16/3 '17/3 '18/3 '19/3 '20/3 '21/3

the ratio of women is low, so the ratio of female managers isstill low, at 2.11% (fiscal 2021), although it is rising. Aiming
to increase the ratio of female managers, we are working
to attract and expand the number of female candidates for
management positions by setting a target of 20% or more
for the ratio of female employees in the planning group of
new graduates and a target of less than 10% for the turnover rate after 10 years of employment. We also conduct
diversity training and harassment training for managers andhave introduced a telework system for employees who areraising children or caring for family members. In addition, we
have established two courses—the National Employee Course
and the Area Employee Course—that differ according towhether or not employees are subject to transfer. We havealso introduced a system to allow employees to work without
being disadvantaged in terms of position or role assignments
due to such reasons as childcare or nursing care. Throughthese efforts, we intend to increase opportunities for promoting the advancement of women.
The number of foreign employees has been increasing year
by year as the Group’s globalization progresses. Traditionally,
we have hired a certain number of new foreign graduates in
the planning group every year, but since their backgrounds
have been biased toward certain countries, we are now
focusing on hiring people from other countries and regions
from the perspective of diversity. In the future, we will consider and take action on appointing employees from overseas
subsidiaries as official employees of the parent company.
In addition, we will extend the retirement age to maintainand improve the motivation of older employees while striving
to increase the employment rate of people with disabilities.

Q5. Please tell us about your system for utilizing human resources and the linkage between personnel 				 evaluations and targets (KPIs) for improving corporate value.
As mentioned earlier, through a series of personnel system
and workstyle reforms, we have taken various measures that
include modifying our human resource development andpersonnel evaluation systems. We believe that our employees’
ability to understand and solve customers‘ problems and provide new value will lead to “marketing-based management,”
set forth as a policy of Vision for 2025. To this end, we areconducting a fundamental review of our training system sothat our employees can put “marketing-based management”
into practice. Starting next year, we plan to conduct training
based on the new human resource development system,

which we hope will encourage each employee to practiceproblem-solving for customers. In addition, the goal evaluation
sheet used for evaluating the goals of each employee includes
a column for entering the Vision for 2025 of the department
to which the employee belongs, as well as that department’s
goals for each fiscal year. In this way, we endeavor to spreadawareness of our management policies by making individual
employees mindful of Vision for 2025 and their organization’s
objectives when setting their own goals. In the future, we willconduct further reviews and consider linking our targets (KPIs)
at the field level to improve ROE.

Q6. With advances in globalization, not only employees of Furukawa but also those of its business		 partners are required to respect and comply with human rights rules and engage in proper risk
		 management. Please tell us about your initiatives, including efforts to spread awareness of		 Furukawa’s Management Philosophy and Vision.
Departments that come into contact with business partners,
such as our sales and purchasing departments, communicate
the Group’s policies and ideas to the employees of thosebusiness partners. In addition to explaining our Management
Philosophy and Vision for 2025 to employees during initialtraining at the time of hiring, we provide training on humanrights, compliance, decarbonization, and the like. We also
educate and train our employees on the Group’s way of thinking from time to time, including through job-grade-based training.

In addition to creating “corporate value” by helping
employees understand the Group’s Management Philosophy
and Vision etc., we ensure that employees are fully aware of“marketing-based management” that incorporates CSV
perspectives—which means continuously fostering thecreation of “social value”—and incorporating it into their
daily work and activities. We believe this will benefit thesustainability of our Group.

Annual Report 2021

23

The Furukawa Company Group’s ESG Activities

Corporate Governance
The Group maintains fundamental policies regarding corporate governance with respect to heightening managerial transparency,
building an effective managerial framework through ongoing efforts to transform its corporate structure, increasing its corporate
value by generating consistent profits, and contributing to its shareholders and other stakeholders.
Under these policies, each of the Group’s operating companies assumes clear asset and profitability management responsibilities
while maintaining unity as a Group. We aim to promote agile management and provide products and services that satisfy our customers and maximize the “corporate value” of the entire Group.

Overview of Corporate Governance System andReasons for Its Adoption
The Company employs a company system with a Board of
Directors and an Audit & Supervisory Board to supervise businessexecution. In addition, we have appointed Outside Directors toensure the validity of decision-making and the objectivity andtransparency of management. The Audit & Supervisory Board
Members are managers of other companies and persons withknowledge of financial accounting, who use their specialized
knowledge and experience to give advice to management andcheck the status of operations. We consider that management
oversight is functioning effectively under the current system.
Directors and Board of Directors
The Board of Directors, chaired by Chairman and Representative
Director Naohisa Miyakawa, holds regular meetings once amonth, and extraordinary meetings as necessary, and supervises
the business execution of the entire Group as a supervising body.
The Board consists of nine members as of June 29, 2021, including three Outside Directors.
Nomination & Remuneration Committee
The Nomination & Remuneration Committee serves as an optional
advisory body to the Board of Directors. It receives requests foradvice from the Board of Directors regarding candidates for Directors and Audit & Supervisory Board Members, as well as selection
and dismissal of Representative Directors and Executive Directors
and remuneration for Directors, then deliberates and reports asnecessary. The Committee met five times between September
2020 and May 2021. It consists of the following four members.

Chairman: Tatsuya Tejima, Outside Director
Member: Yoichi Mukae, Outside Director
Member: Kazumi Nishino, Outside Director
Member: Naohisa Miyakawa, Chairman and Representative Director
Member: Minoru Nakatogawa, President and Representative		
Director (since June 29, 2021)
Executive Officer System
The Company employs an Executive Officer System, which facilitates
quicker decision-making, and defined responsibilities in terms of keeping
management supervisory functions separate from executive functions.
Executive Officers perform their tasks according to business plans
determined by the Board of Directors, and report the status of businessexecution as appropriate to the Board of Directors and the Management
Committee. The Company has 15 Executive Officers as of June 29, 2021,
including three serving concurrently as Directors.
Management Council and Management Committee
The Management Council consists of all full-time directors of theCompany and is chaired by Minoru Nakatogawa, President andRepresentative Director. The Council makes decisions on basic
management policies, strategic planning, and important matters of
the Group. Full-time Audit & Supervisory Board Members may attend
Management Council meetings and express their opinions. Of theimportant matters submitted to the Management Council, those ofmanagerial importance in terms of magnitude and content are also
submitted to the Board of Directors for decision. In addition, important matters pertaining to each company in the Group are submitted
to the Board of Directors after decisions of the respective Group
companies have been made.

Corporate Governance System
Shareholders’ Meeting
Election and Dismissal

Board of Directors

nine directors(including three outside directors)
Advisory

ReportOversees

Election and Dismissal

AuditsReports Reports

Audit & Supervisory Board

four members(including two outside members)

Cooperation

AuditsElection and Dismissal

Accounting Auditor

Cooperation

Cooperation Audits

Nomination &Remuneration Committee＜Management＞
Representative Director

Reports

Accounting Dept., others

Management Council
CSR Promotion Meeting
Management Committee＜Internal Control Division＞
AuditsExecutive Officers (15 persons)

All Divisions and Group Companies

24 FURUKAWA CO., LTD.

Internal Audit Department

E

S

G

Environment

Society

Governance

The Management Committee consists of internal directors and internal Audit & Supervisory Board Members, as well as executive officers,
general managers of business divisions, managers of departments not
attached to business divisions (excluding general manager of the Secretary Department), and the presidents of core Group operating companies. The Committee is chaired by Minoru Nakatogawa, President andRepresentative Director, and meets monthly.

(2) With the exception of some items that were identified as
		 issues to be improved in the previous year, improvement		 efforts made good progress, resulting in an increase in posi‑			 tive opinions and evaluations of these efforts.
(3) Factory inspections by outside directors and Audit & Supervi‑
		 sory Board Members could not be carried out due to the		 COVID-19 pandemic, which is an ongoing issue.

Audit & Supervisory Board and Its Members
The Audit & Supervisory Board consist of four members (twofull-time and two outside) as of June 29, 2021 and is chaired byMinoru Iwata, a full-time member. It meets from time to time tomake decisions on audit policies, business decisions, methods ofinvestigating the status of assets, and other matters related to the
execution of duties by Audit & Supervisory Board Members. The
Company has appointed one supplementary Audit & Supervisory
Board Member (pursuant to Article 329, Paragraph 3 of the Companies Act) in case the number of members stipulated in laws andregulations falls short. The appointment of supplementary Audit &Supervisory Board Members shall be effective until the beginningof the Ordinary Shareholders‘ Meeting relating to the last fiscal
year ending within four (4) years after the appointment’s resolution. In the event that a supplementary member assumes office asan Audit & Supervisory Board Member, the term of office shall be
until the expiration of the term of the retiring member.

In addition, we recognized the need to address the following fiveissues in order to make further improvements.
(1) The Company shall endeavor to foster the efficient opera‑			 tion of Board of Directors’ meetings by making explanatory		 materials concise and clear, including by digitizing materials
		 to enhance their visual appeal.
(2) To foster more accurate analysis and evaluation of the		 Group’s performance by outside officers, the Company shall		 provide more regular information on relevant industry trends		 and the like.
(3) The Company shall endeavor to stimulate discussions by		 enhancing supplementary explanations of opinions on		 relevant matters at Management Council meetings when		 directors in charge explain agenda items.
(4) In addition to meetings of the Board of Directors,		 the representative directors and outside directors shall		 exchange opinions at management roundtable meetings to		 share and deepen their understanding of management issues.
(5) The Company shall step up information-sharing on the		 business of each Group company by conducting factory tours
		 for outside directors, explaining the current status of Group		 companies, and reporting on the progress of product		 development at Board of Directors’ meetings.

Status of Internal Audits and Audits by the Accounting
Auditor and Audit & Supervisory Board Members
We established the Internal Audit Department as an internal auditingorganization. The Department has five members and conducts audits on
the status of management and business execution in the Group’s overall
operating activities. In accordance with the audit policy determined by
the Audit & Supervisory Board, members of that board attend meetingsof the Board of Directors, Management Council, Management Committee, and other important bodies. At those meetings, Audit & Supervisory
Board Members audit the execution of duties by directors by listening tobusiness reports from directors and others, and by investigating businessoffices and subsidiaries. The Company has appointed Ernst & Young
ShinNihon LLC as its accounting auditor. There is no conflict of interest
between the Company and the accounting auditor or the managing
partners of accounting auditor who engage in audits of the Company.
Audit & Supervisory Board Members work closely with the accounting
auditor as part of the Company’s audit policy. At the beginning of eachfiscal year, the Company receives an explanation of the annual audit
plan from the accounting auditor and prepares an audit plan for Audit& Supervisory Board Members. Audit & Supervisory Board Members also
receive explanations of the audit results from the accounting auditor
regarding the settlement of accounts for the fiscal year and request reports from time to time. In addition, they work closely with the Internal
Audit Department, receiving reports on the results of internal audits. The
Internal Audit Department and the accounting auditor also exchange
opinions and information as needed.
Evaluating the Effectiveness of the Board of Directors
To analyze and evaluate the effectiveness of the Board of Directors, the Company conducts questionnaire-based surveys of
Directors and Audit & Supervisory Board Members and exchanges
opinions with Outside Officers. The results of these activities arereported to the Board of Directors, which analyzes the current
situation and discusses future initiatives.
The Board of Directors met to analyze and evaluate responses
to the questionnaire regarding the Board of Directors conductedin fiscal 2021 and confirmed the following three points.
(1) The average value of evaluations improved over the previous
		 year, and there are many items whose evaluations have		 increased, so the overall trend is improving.

In addition to these efforts, we will strive to enhance the qualityof discussions at Board of Directors‘ meetings by providing information
in a timely manner to further improve the Board’s effectiveness.

Independence of Outside Directors and Outside
Audit & Supervisory Board Members
The Company appoints Outside Directors and Outside Audit &Supervisory Board Members with abundant experience and expertise in various fields, as well as impartial perspectives. This is toensure the appropriateness of the Company’s management
decisions and the effectiveness of oversight and audits of management. As of June 29, 2021, the Company has three Outside
Directors and two Outside Audit & Supervisory Board Members.
In addition, the Company stipulates that Outside Officers(Outside Directors and Outside Audit & Supervisory Board
Members, including candidates) do not fall under the following
criteria concerning independence. Outside Officers who meetsuch criteria are designated and registered as Independent
Directors/Auditors under the rules of the Tokyo Stock Exchange.
As of June 29, 2021, the Company has four Independent Officers.
Independence Standards for Outside Officers(Must not meet the following criteria)(1) Executive Directors, and employees of the Group(2) Business partners of the Group (those who provide		 products or services mainly to the Group and whose		 transactions with the Group were equivalent to more than
		 2% of net sales of the business partners in the most recent
		 fiscal year of such business partners) or executives of such		 business partners(3) Main business partners of the Group (those who are provided
		 products or services by the Group and whose transactions
		 with the Group were equivalent to more than 2% of net
		 sales of the Group in the most recent fiscal year of the		 Group) or executives of such business partners
Annual Report 2021

25

The Furukawa Company Group’s ESG Activities(4) Executives of financial institutions that are major lenders to		 the Group (lenders whose loan amounts were equivalent		 to more than 2% of the Group’s consolidated total assets
		 at the most recent fiscal year-end)(5) Individuals earning ¥10 million or more per year from the		 Group in monetary or other benefits as specialists (including
		 consultants, accountants, and lawyers) excluding executive
		 remuneration, or individuals employed by companies
		 earning ¥100 million or more per year from the Group(6) Individual shareholders who hold 10% or more of the		 Company’s voting rights (or Executive Directors, Executive
		 Officers, or employees of corporations that hold 10% or		 more of the Company’s voting rights)(7) Individuals who had fallen under (1) to (6) above in the past		 three-year period(8) Relatives (second degree or closer) of persons who fall under		 (1) to (7) above

Remuneration for Directors and Audit & Supervisory Board Members
The Company has established the following policies for determining the content of remuneration for each individual director as
follows.
(1) Basic policies- The remuneration system for Directors shall function soundly		 as an incentive for the sustainable enhancement of corporate
		 value, and the amount of remuneration for each individual		 Director (hereinafter, “individual remuneration”) shall be		 determined appropriately according to the responsibilities of		 each position.
- Remuneration for Executive Directors shall consist of basic
		 remuneration, additional remuneration for Directors,
		 additional remuneration for Representative Directors, and		 stock-based remuneration. Outside Directors who are		 responsible for supervisory functions shall be paid only 				 a certain amount of basic remuneration in consideration
		 of their duties, and all remuneration for Directors shall be		 paid monthly in monetary form.
(2) Policies for determining individual remuneration- Individual remuneration amounts shall be determined in		 accordance with the remuneration standards for Directors,
		 taking into consideration the position, responsibilities, trends
		 at other companies, and salary levels of employees, as well as		 business performance and other factors.
- The basic remuneration for Executive Directors shall be		 performance-linked remuneration, while the additional
		 remuneration for Directors, additional remuneration for		 Representative Directors, and stock-based remuneration shall		 be fixed.
- For stock-based remuneration, contributions to the Executive
		 Shareholding Association are obligatory as a medium-to		 long-term incentive.
(3) Policies for determining the calculation method, etc., ofperformance-linked compensation- Regarding basic remuneration for Executive Directors, the		 externally disclosed consolidated operating income figure		 shall be used as a performance indicator in order to link		 remuneration to short-term business performance and raise		 awareness of the need to improve business performance		 each fiscal year.
- The amount of basic remuneration for Executive Directors
		 shall, in principle, fluctuate up and down by around 10%
		 according to actual results against the abovementioned
		indicator.

26 FURUKAWA CO., LTD.

(4) Policies for determining payment ratio for each type inindividual remuneration- Regarding remuneration of the Executive Directors, the basic
		 remuneration, which is performance-linked, shall account for		 around 80% of the total, and the rest shall be fixed.
- Stock-based remuneration shall be around 10–15% of total
		 remuneration for Executive Directors.
(5) Matters concerning the method of determining the content of
individual remuneration- The Nomination & Remuneration Committee, whose principal
		 members are independent Outside Directors, shall		 deliberate on individual compensation in accordance with the		 policies described in (1) through (4) above.
- The President and Representative Director, who is in a		 position to oversee and control the overall performance of		 the Company, shall decide specific details of individual
		 remuneration based on the resolution of the Board of
		 Directors and the deliberations by the Nomination &		 Remuneration Committee.
Remuneration for Audit & Supervisory Board Members isdetermined through consultation between such members.

Officer type

Directors (Excluding
Outside Directors)
Audit & Supervisory
Board Members(Excluding Outside
Members)

Total remuneration by type
Number(Millions of yen)
Totalof eligible
remuneration
Performance- Retirement officers(Millions of yen) Fixedlinked(Persons)
benefitcompensation

110

110

—

—

6

16

16

—

—

2

Outside Directors
Outside Audit &Supervisory Board
Members

28

28

—

—

3

16

16

—

—

2

Total

171

171

—

—

13

Notes:
1. The Company resolved to abolish its retirement allowance system for
Directors and Audit & Supervisory Board Members at the conclusion of the 140th
Annual Shareholders’ Meeting held on June 28, 2007.
2. The above figure for total fixed remuneration does not include payments (totaling¥41 million) by four subsidiaries of the Company to three Directors concurrently
serving as Directors or Audit & Supervisory Board Members of those subsidiaries.
It also does not include payments (totaling ¥21 million) by six subsidiaries of theCompany to two Audit & Supervisory Board Members concurrently serving as Directors
or Audit & Supervisory Board Members of those subsidiaries.
3. The performance indicator for performance-linked remuneration is consolidated
operating income, which is disclosed externally. However, the Company decided tostart paying performance-linked remuneration in fiscal 2022 based on its performancein fiscal 2021. Since fiscal 2021 will be the first year of the system’s introduction,
therefore, we have not yet applied the policy for determining calculation methodof performance-linked remuneration (part of Directors’ remuneration policies). For thisreason, performance-linked remuneration figures are not available for fiscal 2021.

Strategic Shareholdings
The Company owns strategic shareholdings for the purpose of
improving corporate value over the medium and long terms by
maintaining and strengthening relationships with importantbusiness partners.
Each year, the Board of Directors examines each stock of theCompany’s strategic shareholdings and verifies the appropriateness of continual ownership after comprehensive
consideration—both qualitative and quantitative—of various
factors, including purpose of holding and associated benefits andrisks. The Company then moves to sell shares deemed by
the Board not to be meaningful.

Message from an Outside Independent Director

Outside Independent Director

Kazumi Nishino

In 2019, I assumed office as an outside independent director, a position responsible for checking on the Company’s business
management. Since then, I have endeavored to approach my duties as a university faculty member with a specialty inbusiness strategy theory and technology management theory. This means reframing the Company’s business conditions
and management issues within the context of management theory, comparing them with similar cases, and candidly raising
any questions or opinions that may emerge from this process at meetings of the Board of Directors. In my own way, I seek
to provide different perspectives, such as by looking at seemingly complex realities through a theoretical framework or byfinding out what other industries or companies have done to address similar management issues.
The current business environment is changing on a daily basis, and the future is increasingly uncertain. Under these
conditions, many companies, not just our own, are faced with a difficult task in steering their business. Additionally, someof the business issues discussed at meetings of the Board of Directors have a considerable impact on our future earnings
structure and corporate growth. Of course, we examine these management issues in detail and make fair judgments.
However, we also try to consider the potential ripple effects of decision-making and how to create value for the Group in the
future.
Naturally, a single decision will have a certain impact on various stakeholders. From the perspective of corporate social
responsibility, it is essential to consider any ripple effects on these stakeholders and how to address them. Accordingly,
we will work together to develop policies and initiatives aimed at building a company that can evolve side by side with its
stakeholders, including employees, as well as a company where employees exercise their abilities to the fullest and findmeaning in their jobs.
Creating value for the Group’s future is also an important task in order to enhance corporate value. We have six
core operating companies that range in scope from machinery to materials. What these businesses have in common is aGroupwide goal of “contributing to the formation, maintenance, and development of social infrastructure.” Our original
copper mining business made significant contributions to the formation of the foundations of modern Japan and thedevelopment of industry. Similarly, each of the Group’s current businesses supports various aspects of social infrastructure
in Japan and around the world. Without forgetting these core elements, which could be considered the very reason for theCompany’s existence, we will take on individual challenges while aspiring to be an organization that can continually create
new value. At the same time, I would like all employees, from young to senior, to actively think about and propose how they
can contribute to future social infrastructure in each of the Group’s businesses, and I hope that they will further advance thedevelopment of the technologies, products, and services needed to achieve this.
Going forward, we will remain committed to building a corporate group that can make ongoing contributions to society.

August 2021

Annual Report 2021

27

Directors and Audit & Supervisory Board Members(As of June 29, 2021)

Naohisa Miyakawa

Minoru Nakatogawa

Chairman and Representative Director
April 1975: Joined the Company
June 2007: Executive Officer, General Manager,
Human Resources & General Affairs
Department, and General Manager,
Secretary Department
June 2009: Executive Officer of the Company,
President & Representative Director of
Furukawa Denshi Co., Ltd.
June 2011: Director and Senior Executive Officer of theCompany, President & Representative Directorof Furukawa Denshi Co., Ltd.
June 2013: President & Representative Director
June 2021: Chairman and Representative Director (current
position)
Holdings in the Company: 37,200 shares
Attendance at Board of Directors‘ meetings: 16 /16 times

President and Representative Director
April 1983: Joined the Company
June 2017: Executive Officer of the Company, Executive
Vice President & Director of Furukawa UNIC
Corporation (In charge of Promotion of Midterm Business Plan)
June 2018: Executive Officer of the Company, President& Representative Director of Furukawa UNIC
Corporation
June 2019: Director and Senior Executive Officer of theCompany, President & Representative Director of Furukawa UNIC Corporation
June 2020: Director and Managing Executive Officer of
the Company, President & Representative
Director of Furukawa UNIC Corporation
June 2021: President and Representative Director(current position)
Holdings in the Company: 6,800 shares
Attendance at Board of Directors‘ meetings: 15 /16 times

Reason for Appointment
As President and Representative Director, Naohisa Miyakawa spearheaded the Company’s

management by demonstrating strong leadership, including by formulating FURUKAWA Power &Passion 150 (Vision for 2025) and Medium-Term Business Plan 2019 and promoting management
reforms. We have elected him as a director, judging that it is necessary to utilize his abundant
experience and insight in the Company’s management in order to improve corporate value and achievesustainable growth.

Reason for Appointment
Minoru Nakatogawa has held important positions in the Company and Group companies after serving
in the Legal Department and the Public Relations/IR Department for many years. Since June 2018,he has provided leadership as President and Representative Director of Furukawa UNIC Corporationand helped enhance corporate value as head of the UNIC Machinery segment. We elected him as adirector, judging that it is necessary to utilize his abundant experience and leadership in the Company’s
management in order to achieve FURUKAWA Power & Passion 150 (Vision for 2025).

Masahiro Ogino

Kiyohito Mitsumura

Senior Managing Director and Senior Managing
Executive Officer
Assistant to the President; in charge of Rock Drills
Segment
April 1982: Joined the Company
June 2015: Executive Officer of the Company, President& Representative Director of Furukawa
Metals & Resources Co., Ltd.
June 2017: Director, Senior Executive Officer, andGeneral Manager, Corporate Planning
Department
June 2019: Director, Managing Executive Officer, andGeneral Manager, Corporate Planning
Department
June 2021: Senior Managing Director and Senior
Managing Executive Officer of the Company(current position), President & Representative
Director of Furukawa Rock Drill Co., Ltd.
(current position)
Holdings in the Company: 7,500 shares
Attendance at Board of Directors‘ meetings: 16 /16 times
Reason for Appointment
Masahiro Ogino has extensive experience and a proven track record in the Materials business andoverall management. As head of the Materials segment, he has helped strengthen the Company's
management structure by taking on a wide range of important roles, including management
planning, public relations and investor relations, and human resources. We have elected him as adirector, judging that it is necessary to utilize his abundant experience and execution capability in the
Company’s management in order to improve corporate value and achieve sustainable growth.

Reason for Appointment

Kiyohito Mitsumura has contributed to the enhancement of corporate value as leader of the Machinery
business, positioned as a core business. He also served as President and Representative Director of
Furukawa Rock Drill Co., Ltd. for five years from June 2014. We have elected him as a director, judging
that it is necessary to utilize his abundant experience and execution capability in the Company’s
management in order to improve corporate value and achieve sustainable growth.

Tatsuki Nazuka

Reason for Appointment

Managing Director
Assistant to the President; in charge of Industrial
Machinery Segment, UNIC Machinery Segment, Metals Segment, Environmental & Safety Management
Department, and Purchasing Department
April 1980: Joined the Company
June 2012: Executive Officer and General Manager,
Corporate Planning Department
Sep. 2013: Executive Officer, General Manager,
Corporate Planning Department, and General
Manager, CSR Promotion Department
April 2014: Executive Officer and General Manager,
Corporate Planning Department
June 2014: Senior Executive Officer of the Company,
President & Representative Director of Furukawa
Rock Drill Co., Ltd.
June 2015: Director and Senior Executive Officer of theCompany, President & Representative Directorof Furukawa Rock Drill Co., Ltd.
June 2018: Managing Director and Managing Executive
Officer of the Company, President & Representative Director of Furukawa Rock Drill Co., Ltd.
Holdings in the Company: 12,500 shares
Attendance at Board of Directors‘ meetings: 16 /16 times

Hiroyuki Sakai

Director and Senior Executive Officer,
In charge of Electronics Segment, Chemicals
Segment, and Technology Division
April 1981: Joined the Company
June 2015: Executive Officer and Deputy General Manager,
Development Division
June 2017: Executive Officer and Deputy General Manager,
Development Division
Oct. 2017: Executive Officer and General Manager,
Technology Division (current position)
June 2019: Director (current position), Senior Executive
Officer (current position)
Holdings in the Company: 7,400 shares
Attendance at Board of Directors‘ meetings: 16 /16 times

Director and Senior Executive Officer
In charge of Real Estate Business and Corporate
Department*1
April 1982: Joined the Company
June 2013: General Manager, Financial Department
June 2015: General Manager, Accounting Department
and General Manager, Financial Department
June 2017: Executive Officer and General Manager,
Business Process Re-engineering Department(current position)
June 2019: Director (current position), Senior Executive
Officer (current position)
June 2021: General Manager, Real Estate Division (current
position), General Manager of Corporate Planning
Department (current position)
Holdings in the Company: 7,600 shares
Attendance at Board of Directors‘ meetings: 16 /16 times

Tatsuki Nazuka has been working in the Technology Division for many years and has professional
knowledge and experience in technological and product development. Since June 2017, he has helped
promote the Group’s technology strategy and technology development as General Manager of theTechnology Division (former Development Division). We have elected him as a director, judging that it isnecessary to utilize his specialized knowledge and experience in the Company’s management in orderto improve corporate value and achieve sustainable growth.

Reason for Appointment*1 Corporate Department
Corporate Planning Department, Business Process Re-engineering
Department, CSR Promotion Department, Accounting Department,
Financial Department, Human Resources & General Affairs Department,
Legal Department, Information System Department, and Internal Audit
Department

Hiroyuki Sakai has a wide range of experience and knowledge in the field of management, having held
key positions in the Company and other Group companies. As General Manager of the Business Process
Re-engineering Department since June 2017, he has spearheaded the Company’s real estate businessand addressed a wide range of management issues, while promoting standardization, streamlining, andproductivity improvements and re-engineering the Group’s business processes. We have elected him
as a director, judging that it is necessary to utilize his wide-ranging knowledge and experience in the
Company’s management in order to improve corporate value and achieve sustainable growth.

28 FURUKAWA CO., LTD.

Tatsuya Tejima

Yoichi Mukae

Outside Independent Director
April 1969: Joined Toho Zinc Co., Ltd.
June 2003: Representative Director and Managing
Director, and Managing Executive Officer of
Toho Zinc Co., Ltd.
June 2005: Representative Director and Senior Managing
Director, and Senior Managing Executive
Officer of Toho Zinc Co., Ltd.
June 2006: Representative Director and COO of Toho
Zinc Co., Ltd.
June 2008: Representative Director and President of
Toho Zinc Co., Ltd.
June 2017: Advisor of Toho Zinc Co., Ltd., Director of
the Company (current position)
June 2018: Outside Director, HANWA Co., Ltd.
(current position)
Holdings in the Company: 0 shares
Attendance at Board of Directors‘ meetings: 16 /16 times
Reason for Appointment

Tatsuya Tejima has been involved in corporate management for many years and has extensive experienceand broad knowledge as a manager. Based on these, he has provided advice on the Company’s
management and appropriately supervised business execution from an objective perspective that is
independent of the management team. We have elected him as an outside director, confident that hecan continue providing useful advice and appropriate supervision of the Company’s management.

Kazumi Nishino

Outside Independent Director
April 1992: Joined Fuji Photo Film Co., Ltd. (retired in
March 1996)
April 2006: Associate Professor, Department ofManagement of Science & Technology,
Graduate School of Management of Science& Technology, Tokyo University of Science
Graduate School
April 2017: Associate Professor, Graduate School ofCommerce and Management of Hitotsubashi
University
June 2019: Associate Professor, Graduate School ofBusiness Administration, Hitotsubashi University (current position), Outside Director,
Orient Corporation (current position), andDirector of the Company (current position)
Dec. 2019: Outside Director, MiRTeL Co., Ltd.
(current position)
Holdings in the Company: 3,000 shares
Attendance at Board of Directors‘ meetings: 15/16 times

Reason for Appointment

Outside Independent Director
April 1975: Joined Ministry of International Trade andIndustry
June 2004: Director-General for Commerce andDistribution Policy, Minister’s Secretariat of
Ministry of Economy, Trade and Industry
August 2006: Managing Director of The Shoko Chukin
Bank, Ltd.
August 2008: Advisor of The Kansai Electric Power Company,
Incorporated
June 2009: Managing Director of The Kansai ElectricPower Company, Incorporated
June 2013: Director, Managing Executive Officer of The
Kansai Electric Power Company, Incorporated
June 2015: President & Representative Director of
The Kanden L&A Company, Limited andPresident & Representative Director of
KANDEN EL AUTO SYSTEM Co., Ltd.
June 2019: Director of the Company(current position)
June 2020: Advisor of The Kanden L&A Company,
Limited (current position), Representative
Director of Research Institute of Economy,
Trade and Industry (current position), andPresident of GS1 Japan (current position)
Holdings in the Company: 0 shares
Attendance at Board of Directors‘ meetings: 16 /16 times

Yoichi Mukae has a wide range of experience and knowledge, having held important positions
at the Ministry of Economy, Trade and Industry for many years and engaged in the managementof private companies after retiring from the Ministry. In addition, he has high levels of characterand insight and has provided advice on the Company’s management and appropriately supervised
business execution from an objective perspective that is independent of the management team. We
have elected him as an outside director, confident that he can continue providing useful advice andappropriate supervision of the Company’s management.

Reason for Appointment

Kazumi Nishino specializes in business strategy theory as an Associate Professor at Hitotsubashi University
Graduate School and has specialized knowledge and a practical research track record on business model
analysis, logic of new business creation, and product development management. Based on these, she has
provided advice on the Company’s management and appropriately supervised business execution from an
objective, professional, and diverse perspective that is independent of the management team. We haveelected her as an outside director, confident that she can continue providing useful advice and appropriate
supervision of the Company’s management.

Minoru Iwata

Reason for Appointment

Audit & Supervisory Board Member (Full-Time)
April 1979: Joined the Company
June 2011: Executive Officer and General Manager,
Accounting Department
June 2013: Director, Senior Executive Officer, andGeneral Manager, Accounting Department
June 2015: Director
June 2016: Managing Director
June 2019: Audit & Supervisory Board Member(Full-time) (current position)
Holdings in the Company: 9,700 shares
Attendance at Board of Directors‘ meetings: 7/7 times

Minoru Iwata has considerable knowledge of finance and accounting and a wealth of experience in overallmanagement, having been involved in the Accounting Department for many years since joining the Company
and in the management of the Company as a director since 2013. We have elected him as an Audit &Supervisory Board member, judging that he is capable of conducting objective and appropriate audits.

Kazuo Inoue

Audit & Supervisory Board Member (Full-Time)
April 1980: Joined the Company
June 2011: General Manager, Real Estate Division
June 2014: Executive Officer, General Manager,
Corporate Planning Department
June 2016: Senior Executive Officer and General
Manager, Corporate Planning
Department
June 2017: Audit & Supervisory Board Member(Full-time) (current position)
Holdings in the Company: 5,100 shares
Attendance at Board of Directors‘ meetings: 7/7 times
Reason for Appointment

Kazuo Inoue has been working in the Accounting Department for many years, and has also served as
Director of a Group company and executive officer of the Company. Accordingly, he has considerable
knowledge of finance and accounting and a wealth of experience in overall management. We haveelected him as an Audit & Supervisory Board member, judging that he is capable of conducting objective
and appropriate audits.

Tetsuro Ueno

Outside Audit & Supervisory Board Member
April 1976: Joined The Dai-Ichi Kangyo Bank, Ltd.
April 2009: Deputy President (Representative Director)
and Deputy President & Executive Officer ofMizuho Bank, Ltd.
April 2011: Advisor of Mizuho Bank, Ltd.
June 2011: Deputy Chairperson and Executive Officer of
Chuo-fudosan Co., Ltd.
June 2012: Representative Director and President of
Seiwa Sogo Tatemono Co., Ltd.
June 2013: Audit & Supervisory Board Member of
Chuo-fudosan Co., Ltd.
June 2015: Audit & Supervisory Board Member of theCompany (current position)
June 2018: Special Advisor of Seiwa Sogo Tatemono
Co., Ltd.
June 2021: Advisor of Seiwa Sogo Tatemono Co., Ltd.
(current position)
Holdings in the Company: 1,500 shares
Attendance at Board of Directors‘ meetings: 7/7 times

Masayuki Yamashita

Outside Audit & Supervisory Board Member
April 1980: Joined Asahi Mutual Life Insurance Company
April 2016: Representative Director and Senior Executive
Officer, Asahi Mutual Life Insurance Company, Outside Director of Rasa Industries, Ltd.
(June 2014)
June 2016: Audit & Supervisory Board Member of
the Company (current position)
April 2018: Director, Asahi Mutual Life Insurance
Company
June 2018: President & Representative Director, Info
Techno Asahi Co., Ltd.
June 2019: Outside Director, Rasa Industries, Ltd. (Audit &Supervisory Committee)
Holdings in the Company: 0 shares
Attendance at Board of Directors‘ meetings: 7/7 times
Reason for Appointment

Masayuki Yamashita has a wealth of experience at financial institutions and a proven track record
as an Outside Audit & Supervisory Board Member at other companies. We have elected him as an
outside Audit & Supervisory Board member, confident that he can utilize his experience to enhance
the Company’s auditing system.

Reason for Appointment

Tetsuro Ueno has been engaged in corporate management for many years, and has extensive experienceand a wide range of knowledge as a manager. Based on these, he has conducted effective audits froma standpoint that is independent of the Company's management. We have elected him as an Audit &Supervisory Board member, judging that he is capable of conducting objective and appropriate audits.

Annual Report 2021

29

The Furukawa Company Group’s ESG Activities

Risk Management
The Group recognizes risk management as an important part of its operations and constantly analyzes and evaluatesrisks in its business activities. At the same time, we are working on risk treatments (avoidance, reduction, sharing, orretention) and countermeasures by investigating, evaluating, and reconsidering risks after they materialize.

Framework for Promoting Risk Management
The Group’s business activities could potentially be badly impacted
by various risks related to such factors as accidents, natural disasters, and epidemic diseases. To protect human life and property
and minimize damage and loss when such risks materialize, theGroup, spearheaded by its Risk Management Committee, is working to establish and strengthen its risk management system. For
particularly important issues, the Board of Directors and the Management Council engage in meticulous deliberations and makedecisions. For matters related to environmental protection andquality assurance, including product safety, we established theEnvironmental & Safety Management Committee and the Quality
Assurance Committee, respectively, to manage specialized deliberations and investigations and implement countermeasures. In
addition, the Internal Audit Department conducts internal auditsof the Group in order to ensure the effectiveness of risk responses
and management in business activities.
Risk Management System
President and Representative Director
CSR Promotion Meeting
Guidance・Instruction

Reporting

CSR Promotion
Department(Secretariat)

Furukawa Co., Ltd.
Risk Management Committee

Human Resources &General Affairs Department(Secretariat)

Business Risk
Review Subcommittee*

Furukawa Co., Ltd.

Each department

Core Operating
Companies

Furukawa Industrial
Machinery Systems Co., Ltd.
Furukawa Rock Drill Co., Ltd.
Furukawa UNIC Corporation

Furukawa Metals &Resources Co., Ltd.
Furukawa Denshi Co., Ltd.
Furukawa Chemicals Co., Ltd.

* Group companies represented in the Business Risk Review Subcommittee are
the same as those represented in the Risk Management Committee.

Business Continuity Management (BCM)
The Group’s core operating companies have completed formulation of business continuity plans (BCPs), and we have started toreview them in order to accommodate organizational changes andother issues. In the future, we will also focus on BCM.

Quality Assurance
Quality Assurance Management
The Group takes a variety of measures to ensure that all the
products and services it provides to customers are safe and satisfactory. We aim to guarantee quality that we can be proud of asa Japanese manufacturer, even for products procured overseas,
made in overseas factories, or exported.
Quality Assurance Management System
In fiscal 2021, the Group reviewed its quality assurance management system. In order to establish a system that guarantees
not only product safety but also reliable quality for customers,
we reorganized the Product Safety Committee, established withthe head office of Furukawa Co., Ltd., and renamed it the Quality Assurance Committee. We also established the new Quality
Assurance Control Department within the Technology Division to
manage the Group’s quality assurance system and promote activities related to quality assurance and product safety. In conjunction
with these, we formulated our “Quality Assurance Basic Policy”
and our “Quality Assurance Action Guidelines,” based on which
the Group will unite to provide manufacturing quality and services
that earn the trust and satisfaction of customers.
Quality Assurance Committee
The Quality Assurance Committee consists of the Quality Assurance Advisory Council, which brings together quality assurance
managers from core operating companies, and subcommittees
representing our Machinery and Materials businesses. Together,
these bodies promote compliance with laws and regulations related to manufacturing, quality assurance, and product safety, as
well as the creation of products that customers can use safely andwith peace of mind. Based on the idea that product safety is partof quality assurance, moreover, we will continue conducting risk
assessments and other activities to improve product safety levels.
To reduce the occurrence of complaints at each business site,
in fiscal 2021 we conducted preventive education activities andenhanced DR and SR at the design stage. At the same time, we
promoted visualization of workplace “change points” (a themefrom the previous year), and we introduced ICT in our manufacturing and inspection processes to enhance operational efficiency.
In fiscal 2022, we will pursue educational activities to eradicate
defects emanating from change points, conduct quality improvement activities through mutual quality patrols among businesssites, and review regulations to strengthen the quality assurance
systems of each business site.
Quality Assurance Management System
President and Representative Director
CSR Promotion Meeting
Guidance・Instruction

Group BCP System
Secretariat of
headquarters for BCP

Headquarters for
BCP

Furukawa Co., Ltd.

General Affairs Team
Human Resources Team

1

2

3

4

Public Relations Team
Finance Team

Headquartersinan emergencyofeach company

Information Analysis Team

1. Director-generals of headquarters for BCP
2. Vice Director-generals of headquarters for BCP

30 FURUKAWA CO., LTD.

3. Committee members of headquarters for BCP
4. Secretariat of headquarters for BCP

ReportQuality Assurance Committee
Quality Assurance Advisory Council

CSR Promotion
Department(Secretariat)

Quality Assurance
Control Department(Secretariat)

Core Operating Companies

Machinery Subcommittee

Materials Subcommittee

Furukawa Industrial
Machinery Systems Co., Ltd.
Furukawa Rock Drill Co., Ltd.
Furukawa UNIC Corporation

Furukawa Metals &Resources Co., Ltd.
Furukawa Denshi Co., Ltd.
Furukawa Chemicals Co., Ltd.

E

S

G

Environment

Society

GovernanceComplianceIn addition to complying with laws and regulations, the Group believes it has a corporate obligation to take serious andresponsible actions in terms of social and ethical aspects. To fulfill this obligation, we established “The Furukawa Company Group’s Charter of Corporate Conduct” and “The Furukawa Company Group’s Code of Conduct for Officers andEmployees.” We strive to ensure that all officers and employees of the Group carry out their duties with a full understanding of the importance of compliance.

Framework for Compliance
The president of Furukawa Co., Ltd. serves as head of compliancemanagers of the Group. We also have compliance managers ineach department and Group company. In addition, we established
the Compliance Committee to promote compliance activities
throughout the Group. The Committee deliberates on importantmatters related to compliance and strives to improve the framework for compliance and raise awareness. The Committee strives
to share information on Groupwide compliance by reporting
matters it has discussed to the CSR Promotion Meeting as appropriate.

Internal Reporting System
The Group has adopted an internal reporting system to facilitate
early detection and correction of compliance violations. This has
involved developing a framework that enables an extensive rangeof reporting and inquires by establishing points of contact forreporting and consultation requests inside and outside (law office)the Group. We also stringently safeguard confidential and personal information regarding whistleblowers.
The Compliance Committee conducts investigations uponreceiving notification or consultation, and subsequently takes
necessary action to address such matters. We also facilitateawareness of the internal reporting system by posting such content to our in-house portal site and distributing brochures
to Group officers and employees.

Compliance Education
The Group strives to foster a corporate culture that emphasizes
compliance. For example, we issue “Compliance News” to provide information on compliance to all executives and employees.
We also have top management occasionally give talks on theimportance and priority we place on compliance.
In fiscal 2021, we were unable to gather all of our target
employees together for compliance training due to COVID-19.
However, we managed to conduct item-specific training using a
web-conferencing system and by distributing videos.

Basic Policy and Guidelines for Preventing Bribery
In January 2021, the Group established its Basic Policy for Preventing Bribery and Basic Guidelines for Preventing Bribery. Throughthese, we clarified both internally and externally our commitment
to preventing bribery as started in “The Furukawa Company
Group’s Code of Conduct for Officers and Employees,” while also
clarifying specific items to be implemented in business activities toprevent bribery. We will comply with the policy and guidelines andcontinue relentless efforts to prevent bribery.

Compliance throughout the Entire Supply Chain
In order to maintain compliance as a Group, we need all parties
across the entire supply chain, including suppliers, to also practicecompliance with laws and regulations. With this in mind, we established “The Furukawa Company Group CSR Promotion Guidelines” for suppliers to help them respect human rights and labor,
comply with laws and regulations, and practice corporate ethics.

Human rights and labor(1) Respect human rights.
(2) Have no involvement with child labor, forced labor, or		 unlawfully cheap labor, whether directly or indirectly.
(3) Achieve a work environment with no discrimination or		 harassment of any sort committed against employees.
(4) Comply with labor laws and provide positive working
		 conditions.
Legal compliance and corporate ethics(1) Comply with Japanese and overseas laws and social norms.
(2) Do not provide or receive benefits in contravention of laws
		 or commercial practices.
(3) Do not commit acts that hinder fair and free competition.
(4) Do not maintain any relationships with antisocial forces.
(5) Do not infringe on the intellectual property rights of		 third parties.
(6) Establish structures for the prevention, quick discovery, and		 handling of improper conduct.
(7) Do not use minerals unearthed in conflict-affected areas
		 and materials produced in production processes that		 infringe on human rights or damage the environment as		 raw materials.
The Furukawa Company Group CSR Promotion Guidelines (excerpt)

The Furukawa Company Group’s Charterof Corporate Conduct
1. Providing high-quality products and services
The Group shall pursue technology developmentthat helps to realize a sustainable society, and it
shall provide products and services that satisfy
customers.
2. Harmony with the global environment
The Group shall work on reducing environmental
risks and pursue corporate activities that are inharmony with the global environment.
3. Ensuring compliance
The Group shall engage in its corporate activities
in a fair manner based on the ethical values 		
expected of corporations and business persons
as members of society.
4. Highly transparent corporate activities
The Group shall appropriately disclose its corporate
information and engage in constructive dialogue
with a wide range of stakeholders to build trust.
5. Respect for human rights
The Group shall respect the human rights of all
individuals.
6. Enhancement of work environment
The Group shall establish a work environmentthat takes into consideration the health and safety
of individuals and realize workstyles that respect thediverse values of officers and employees.
7. Participation in and contribution to society
The Group shall actively participate in society andcontribute to its development.

Annual Report 2021

31

The Furukawa Company Group’s ESG Activities

E

S

G

Environment

Society

Governance

Environmental Initiatives
Our basic approach to the environment is embodied in our “Charter of Corporate Conduct”, our “Basic Environmental Management
Principle”, and our “Environmental Conservation Activity Policies”. We are committed to reducing environmental risks and realizing
a sustainable society in which our corporate activities are in harmony with the global environment. Based on this commitment, weformulated numerical targets for environmental performance (CO2 emissions, water resource used, total emissions including waste)
and engage in environmental protection activities accordingly.

Environmental & Safety Management Committee
The Environmental & Safety Management Committee, which
consists of the heads of each production site, proposes anddeliberates on important matters related to environmental management. The Committee meeting in April 2021 was changed toa web-based meeting in order to prevent the spread of COVID-19.
The Committee reported and deliberated on the results of theevaluation of key environmental and safety activities held in fiscal
2021, as well as key environmental and safety targets for fiscal
2022, all of which were approved. It also discussed the progressof the Fourth Medium-Term Reduction Targets and their futuretransition, as well as the frequency of accidents and disasters
and the status of efforts to achieve accident- and disaster-free
operations in the future. The Committee also received a reporton efforts to achieve carbon neutrality from the Environmental &Safety Management Department and requested the cooperationof related parties.
Environmental/Safety Promotion System
President and Representative Director
CSR Promotion Committee
Guidance・Instruction

ReportEnvironmental & Safety
Management Committee
Environmental & Safety
Promotion Council(Environmental Council, Safety Council)

Environmental & Safety
Management Department(Secretariat)

Fiscal 2021 was the second year of our Fourth Medium-Term
Reduction Targets, which cover the 10-year period from fiscal 2020
to fiscal 2029 and are based on our Vision for 2025. During theyear, we introduced facilities and equipment that satisfy Japan’s
Top Runner standards and improved the efficiency of production
processes at each plant. We also achieved our reduction targets forCO2 emissions, water consumption, and total waste emissions due to
production cuts at some plants caused by the COVID-19 pandemic.
In the third year of the Fourth Medium-Term Reduction Targets, we
are working to accurately grasp the progress of each company withthe aim of achieving the reduction targets.

C

ol
u

Furukawa Co., Ltd.

CSR Promotion
Department(Secretariat)

Fourth Medium-Term Reduction Targets andSecond-Year ResultsnWith respect to measures to address global warming, we formulated our new Fourth Medium-Term Reduction Targets for the
10-year period from fiscal 2020 based on our Vision for 2025.
We are pursuing activities according to these targets and havestarted discussions on how to achieve carbon neutrality. As part ofour environmental protection initiatives, we are taking preventive
measures to improve and strengthen our ability to address risks.
We also promote initiatives to reduce the negative impact of ourbusiness activities on ecosystems, as well as activities to conserve
biodiversity, including the sound development of forests.

Relationship with the Mining BusinessIn the copper business, and particularly at mine development sites,
there are concerns that resource development activities may leadto increased environmental impacts. Recognizing such concerns,
we are promoting various initiatives to prevent this from happening. For example, we are working to develop and adopt newtechnologies, as well as existing ones, to satisfy increasingly stringent requirements aimed at minimizing impacts on ecosystems
and water resources and restoring sites to their original condition
after development. In addition, our mining-related machines havebeen widely used in resource development and infrastructure development projects, not only in Japan but also in many countries
worldwide, thus contributing to economic development. In recent
years, we have been promoting products to help minimize environmental impacts at worksites through reduced CO2 emissions,
reduced noise, improved work efficiency, and the like. Although
copper is a product created through resource development, it has
attracted more and more attention in recent years for its specificmaterial-based characteristics, which can be used to minimize environmental impacts. For example, copper is used in the renewable energy sector to reduce CO2 emissions and is an indispensable
material in the development of EVs and infrastructure in emerging countries. Through our involvement in the copper business,therefore, we believe we are contributing to the environment andsociety.

m

Global Warming and Environmental Protection
Initiatives

Core Operating
Companies

Furukawa Industrial
Furukawa Metals &Machinery Systems Co., Ltd. Resources Co., Ltd.
Furukawa Rock Drill Co., Ltd. Furukawa Denshi Co., Ltd.
Furukawa UNIC Corporation Furukawa Chemicals Co., Ltd.

Addressing Chemical Emissions
Based on Japan’s Chemical Substances Control Law, the Group
works proactively to improve its usage status and management
method of chemical substances and takes measures to prevent
environmental problems from arising. For example, we report ouractivities under the Pollutant Release and Transfer Register (PRTR)
system to gain an understanding of the amount of chemical
substances generated. We then compare this with emission data
published by the national government and check the proportionof our own emissions, and reflect the results in our future management activities. In the Materials business, we appropriately
manage our chemical substances by using safety data sheets (SDS)
to disseminate information on the associated potential hazards.
Note: Amounts of chemical substances emitted/relocated under PRTR
reporting requirements are disclosed in the Group’s CSR Report 2021.
32 FURUKAWA CO., LTD.

CO2 Absorption by Our Forests
The amount of CO2 absorbed by our forest holdings is approximately 8,000 tons of CO2 per year, which is equivalent toroughly 38% of the Group’s total CO2 emissions in fiscal 2021.
The Group promotes its own tree-planting activities throughthe Furukawa Forest Tree Planting Association and activities toplant cherry trees in Ashio.
CO2 emissions fromour business activities

CO2 absorbed by
our forests

FY2021 CO2 emissions
Approx. 21,000 t-CO2 /year

Approx. 8,000 t-CO2/year

CO2
CO2

CO2

Approx. 38% of
total CO2 emissions

The Furukawa Company Group’s ESG Activities

E

S

G

Environment

Society

GovernanceSocial Initiatives
In order to realize its Management Philosophy, which is to remain indispensable to society, the Furukawa Company Group will
fulfill its responsibilities to all stakeholders through ongoing efforts to help create “social value”, specifically by developing social
infrastructure and realizing a safe, environmentally friendly, and prosperous society. We believe that contributing to society is thecornerstone of our social initiatives. With efforts to realize a sustainable society drawing broad attention, we will look at all pointsof contact between our corporate activities and society, identify various social issues ranging from global and global-scale issues toissues rooted in each region, and engage in activities that help resolve those issues.

Realizing a Fulfilling Work Environment
We are pursuing a variety of reforms aimed at improving laborproductivity and creativity through the growth of each employee
and to provide healthy and fulfilling environments for our diverse
workforce.
Three Priorities for Realizing a Fulfilling Work Environment
Develop diversified human resources according to years ofDevelop and service, job title, work content, ability, and the like;utilize human optimally utilize talented human resources regardless ofresources
employee course; and set challenging personal goals andconduct proper evaluations
Implement
workstylereforms

Establish more comfortable work environments throughautomation and systemization, shorter and more efficientmeeting times, and flexible adoption of various work
arrangements (flextime, teleworking, staggered work
hours, and the like); and emphasize mindset reforms to
improve work efficiency

Providehealthy
workplaces

Reduce total annual working hours, improve paid annual
leave uptake rate, improve regular health checkup rate,and implement active health-related initiatives

Promoting Diversity
Supporting the Advancement of Female Employees
In accordance with our Action Plan for Promoting Support for
Female Employees, we are expanding various systems to support
the activities of women.
Action Plan for Promoting Support for Female Employees(April 1, 2021–March 31, 2026)

Target No. 1

Percentage of women among new graduate hires:
20% or higher

Target No. 2

Number of female managers: 10 or more

Target No. 3

Percentage of female employees in the planning group
who resign voluntary within five years after joining thecompany: 10% or lessTarget No. 4

Encourage employees to take paid annual leave: 12 days
(average per person per year)

Support for Employees Raising Children
We are expanding the range of employees who can access ourvarious childcare-related systems. We are also enhancing support
for employees who are raising children, including by converting part of their childcare leave into paid leave. In addition, we
encourage male employees to take childcare leave to give themmore opportunities to participate in childcare.
Hiring People with Disabilities
The Company hires people with disabilities at various workplaces
and for various types of work, promoting their independence andparticipation in society.
Hiring Foreign Nationals
In its proactive pursuit of overseas business expansion, the Groupmakes hiring decisions irrespective of nationality. We are committed to deepening partnerships with our non-Japanese employees
while emphasizing mutual respect for individual differences.
Extension of Retirement Age
Effective April 1, 2020, Furukawa Co., Ltd. extended its mandatory retirement age from 60 to 65 and fundamentally revised its
various personnel systems, salary structure, and retirement benefit
system. Our aim is to create environments where employees caneasily maintain their motivation while at the same time stimulating
the transfer of skills from older employees and the developmentof mid-career and younger employees.

Respect for Human Rights
Prohibiting Harassment and Discrimination
The Group is committed to “creating a motivating corporate culture that rejects human rights violations and discrimination whileembracing the diverse values of individuals and evaluating themfairly.” Based on this commitment, we take resolute measuresagainst harassment and discrimination based on our internal rules.
Human Rights Training
Our Code of Behavior for employees provides that basic humanrights should be respected, and discriminatory language andbehavior is prohibited. All newly hired employees are required toattend human rights seminars, while employees who participate injob-grade-based training are also required to join internal training
concerning harassment in the workplace. This enables them tolearn about creating comfortable workplaces and specific casesof actions that constitute human rights violations.

Human Resource Development
We employ human resources who are willing to seize any challenge, based on our fundamental belief that “people” are thekey to unlocking the unlimited potential of our company. We also
work to build a motivating corporate culture that recognizes thediverse values of individuals and rejects human rights violations
and discrimination. In developing human resources, we aim to
optimize our business framework and maximize corporate value
by fostering professional human resources and creating work
environments where employees can fully demonstrate theircapabilities.
Personnel Appraisal System
On July 1, 2019, we abolished our existing professional qualification grade system and introduced a role-grading system that sets
the grade according to the magnitude of each employee’s expected role, to give employees the roles more effectively we expect
them to fulfill. This role-grading system includes a personnel
appraisal system, based on which we assess such factors as work
performance, goal achievement levels, motivation, and capabilities. In this way, we are working to guide and train employees,
develop their skills, and allocate them appropriately, and thus
create an environment in which motivated employees can workwith peace of mind.

Work–Life Balance
Creating Comfortable Workplace Environments
We promote activities to help employees maintain their healthand achieve a good work–life balance by reducing overtime andimproving the rate at which they take paid annual leave.
TargetOvertime hours(monthly average)
Percentage of paid
annual leave taken

15.5 hours
60%

Total actual working hours

2,000 or less

Percentage of employees
receiving regular healthchecks100%

FY2021 Results
15.2 hours(non-managerial employees)
61.6%(non-managerial employees)
1,952(non-managerial employees)

  100% (all employees)

Fiscal 2021 activities- Set annual leave encouragement days and encouraged
employees with low uptake rates (less than 5 days/year) to taketheir leave- Introduced teleworking and expanded coverage of flextime system- Considered developing a teleworking environment for sales staff- Reduced number of face-to-face meetings and encouraged
web-conferencing
Annual Report 2021

33

Consolidated 11-Year Data
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31

Financial Data
2011/3

2012/3

2013/3¥ 165,639¥ 157,566¥ 165,540

Cost of sales

146,364

138,097

144,224

Gross profit

19,274

19,46921,315

Selling, general and administrative (SG&A) expenses

16,453

17,314

17,952

Operating income

For the year: (Millions of yen)
Net sales

2,821

2,155

3,363

Profit (loss) before income taxes

447(2,662)

5,433

Profit (loss) attributable to owners of parent

563(1,660)2,977

Cash flows from operating activities

3,743

4,978

5,491

Cash flows from investing activities(1,644)(3,153)(2,253)

Cash flows from financing activities(5,703)(3,782)

252

Capital expenditures

2,112

3,588

2,926

Depreciation and amortization
Research and development expenses

3,289
2,225

3,328
2,622

3,014
2,559

At year-end: (Millions of yen)
Total assets¥ 196,235¥ 193,972¥ 186,077

Current assets

80,19981,49879,508Current liabilities

70,45674,80774,439Net assets

47,622

47,66951,507

Interest-bearing liabilities
Total equity

89,26545,84985,79646,02280,635
50,111For the year: (Millions of yen)Segment performance

2011/3

2012/3

2013/3

Net sales of Machinery¥   47,026¥   53,198¥   56,852

Industrial

10,655

12,94912,895

Rock Drill

23,88024,14423,306

UNIC

12,490

16,10520,651

92,203

77,91788,026

Metals

79,98068,114

77,945

Electronics

7,147

4,616

4,988

Chemicals

Net sales of Materials

5,076

5,187

5,094

Net sales of Real Estate

1,578

1,233

1,059

Operating income (loss) of Machinery

(567)

1,970

2,924

Industrial

(30)

708

779

Rock Drill

(350)

334

(68)

UNIC

(187)

928

2,213

3,044

325

324

Operating income (loss) of Materials
Metals

1,495

308

283

Electronics

1,280

(234)

(263)

Chemicals

269

251

304

635

357

220

Operating income of Real Estate

34 FURUKAWA CO., LTD.

2014/3

2015/3

2016/32017/3

2018/3

2019/32020/32021/3¥ 163,026¥ 172,544¥ 161,800¥ 149,830¥ 167,696¥ 174,117¥ 165,216¥ 159,703

139,777

146,657

136,447

126,207

142,427

147,675

138,941

137,50923,24925,88725,352

23,62325,26926,442

26,27522,194

16,363

16,962

17,363

17,077

17,44817,526

17,582

16,602

6,886

8,925

7,989

6,546

7,821

8,915

8,693

5,592

7,092

6,160

6,631

6,711

6,595

7,003

7,281

9,907

3,977

9,793

5,056

4,254

4,774

4,654

4,432

7,468

1,983

10,241

7,652

9,819

5,351

11,785

8,401

6,043

(3,129)(10,892)(2,855)(3,585)(5,855)(3,387)(5,074)2,245(4,562)

3,318(8,166)(5,030)(2,529)(4,205)(4,843)(3,123)

11,430

2,557

2,869

5,425

5,021

5,442

5,939

4,144

2,828
2,539

3,223
2,227

3,191
2,680

3,138
2,464

3,260
2,293

3,474
1,505

3,589
1,178

3,879
1,164

¥ 199,409¥ 207,318¥ 195,650¥ 208,035¥ 222,212¥ 215,368¥ 209,697¥ 218,275

76,84080,56476,31579,57987,48687,44185,726

88,626

73,97663,87059,75059,79079,32260,37752,55547,83956,31470,582

68,26379,58487,08780,447

77,967

94,364

77,22054,69582,05468,78376,241
66,46073,50777,65973,31285,012

72,597
78,21770,41375,544

69,683
91,7702014/3

2015/3

2016/32017/3

2018/3

2019/32020/32021/3¥   71,112¥   75,991¥   72,232¥   66,804¥   73,453¥   77,581¥   82,692¥   68,636

18,528

16,713

14,926

14,042

15,872

17,971

23,237

16,682

26,84330,911

30,077

26,97930,20030,372

27,66324,14925,741

28,36727,22925,78327,381

29,23731,79127,804

90,162

93,27185,64478,96889,98792,722

79,367

88,20378,68581,514

74,19367,854

77,33480,06867,15076,095

5,381

5,743

5,478

5,816

6,308

6,527

5,506

5,741

6,097

6,014

5,974

5,298

6,345

6,127

6,711

6,367

1,013

2,536

3,046

3,074

3,339

2,999

2,386

2,108

5,334

6,552

5,882

3,580

5,084

6,568

7,344

3,969

1,851

1,711

1,038

104

1,005

2,089

3,208

2,114
(1,325)

341

1,225

2,217

897

1,783

1,690

143

3,142

3,615

2,627

2,579

2,295

2,789

3,993

3,180

1,696

1,770

983

1,871

1,649

1,396

777

1,041

1,503

1,450

1,155

1,738

867

582

302

499

(124)

53

(369)

18

330

408

(35)

162

316

268

197

115

451

407

510

380

(43)

776

1,277

1,266

1,340

1,164

736

737

Annual Report 2021

35

Consolidated 11-Year Data
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31

Financial Analysis Data
2011/3

2012/3

2013/3Per share amounts:* (Yen)
Basic earnings¥   13.94¥  (41.07)¥   73.65

Cash dividends
Net assets

0.00
1,134.44

0.00
1,138.75

20.00
1,239.94

Profitability: (%)
Cost of sales margin

88.4

87.6

87.1

Gross margin

11.6

12.4

12.9

SG&A expense margin

9.9

11.0

10.8

Operating margin
Return on sales

1.7
0.3

1.4
(1.1)

2.0
1.8

Efficiency and soundness:
Return on equity (ROE) (%) (Note 1)

1.2

(3.6)

6.2

Return on assets (ROA) (%) (Note 2)

0.3

(0.9)

1.6

Debt-to-equity (D/E) ratio (Times) (Note 3)

1.9

1.9

1.6

Equity ratio (%) (Note 4)
Total asset turnover (Times) (Note 5)

23.4
0.8

23.7
0.8

26.9
0.9

Investment indicators:
Dividend payout ratio (%) (Note 6)

—

—

27.2

Dividends on equity (DOE) ratio (%) (Note 7)

—

—

1.6

Price book value ratio (PBR) (Times) (Note 8)
Stock price at fiscal year-end (Yen)*
Market capitalization (Millions of yen)

0.8

0.7

0.9

860
34,783800
32,356

1,090
44,08521,000463

20,000468

24,000448

ESG Data
CO2 emissions (t-CO2)*
Drain volume (Thousand m3)
Total emissions including waste, etc. (t)

5,610

6,395

6,389

Valuables

2,327

2,301

2,567

Waste

3,283

4,094

3,822

594

497

461

Water resources (Thousand m )

661

652

641

Number of directors (Persons)

7

8

8

Energy (Thousand GJ)
3

Number of outside directors (Persons)
Number of employees (Persons)
Number of female employees (Persons)*

1

1

1

2,728

2,752

2,342

—

—

—

2,016
18.42

2,044
20.75

2,030
19.00

LME copper price (average; US$/ton)

8,139

8,485

7,855

JPY rate per US$ (average for fiscal year)

85.71

79.07

83.10

Copper production volume (Tons)

89,52376,896

90,387

Copper sales volume (Tons)

89,17682,597

96,789Total actual working hours (Hours)*
Overtime hours (monthly average) (Hours)*
Other Data

Notes: 1. Return on equity (ROE) = Profit (loss) attributable to owners of parent /		 Average total equity × 100
2. Return on assets (ROA) = Profit (loss) attributable to owners of parent /		 Average total assets × 100
3.	Debt-to-equity (D/E) ratio = Interest-bearing liabilities (fiscal year-end) /Total equity [Shareholders’ equity] (fiscal year-end)
4.	Equity ratio = Total equity [Shareholders’ equity] (fiscal year-end) /Total assets (fiscal year-end) × 100

36 FURUKAWA CO., LTD.

5. Total asset turnover = Net sales / Average total assets
6. Dividend payout ratio = Total cash dividends / Profit (loss) attributable to owners of parent
		 × 100
7. Dividends on equity (DOE) ratio = Total cash dividends / Average net assets × 100
8. Price book value ratio (PBR) = Stock price (fiscal year-end) / Net assets per share2014/3

2015/3

2016/32017/3

2018/3

2019/32020/32021/3¥   98.40¥  242.34¥  125.13¥  105.29¥  118.16¥  116.23¥  112.23¥  190.73

30.00
1,353.41

50.00
1,702.21

50.00
1,644.81

50.00
1,922.04

50.00
2,104.07

50.00
1,978.09

50.00
1,926.32

50.00
2,348.53

85.7

85.0

84.3

84.2

84.9

84.8

84.1

86.1

14.3

15.0

15.7

15.8

15.1

15.2

15.9

13.9

10.0

9.8

10.7

11.4

10.4

10.1

10.6

10.4

4.2
2.4

5.2
5.7

4.9
3.1

4.4
2.8

4.7
2.8

5.1
2.7

5.3
2.7

3.5
4.7

7.6

15.9

7.5

5.9

5.9

5.7

5.8

8.9

2.1

4.8

2.5

2.1

2.2

2.1

2.1

3.5

1.4

1.2

1.1

0.9

0.9

0.9

0.9

0.8

27.4
0.8

33.2
0.8

34.0
0.8

37.3
0.7

38.3
0.8

36.3
0.8

36.0
0.8

42.0
0.7

30.5

20.6

40.0

47.5

42.3

43.0

44.6

26.2

2.2

3.2

2.9

2.7

2.4

2.4

2.5

2.3

1.4

1.2

1.0

1.1

0.9

0.7

0.6

0.6

1,860
75,2282,120
85,744

1,660
67,1392,050
82,913

1,985
80,284

1,393
56,3401,060
42,872

1,336
52,20523,000429

27,000455

24,000471

25,000465

26,000410

26,000477

21,930477

20,903
474

7,746

6,266

6,832

5,347

6,884

7,160

7,039

5,912

3,003

3,168

3,374

2,489

2,928

3,357

3,203

2,456

4,743

3,098

3,458

2,858

3,956

3,803

3,836

3,456

454

474

429

458

483

511

438

427

633

651

666

671

623

692

680

671

8

7

8

9

9

9

9

9

1

1

2

3

3

3

3

3

2,413

2,456

2,521

2,616

2,690

2,757

2,755

2,752

—

—

283

359

391

415

411

413

2,075
25.50

2,136
26.27

2,105
23.80

2,064
20.65

2,138
26.85

2,117
25.40

2,083
22.36

1,952
15.22

7,104

6,554

5,215

5,154

6,444

6,341

5,860

6,879

100.24109.93120.13108.42110.85110.91108.74106.06

87,76790,44786,466

84,06288,004

81,346

77,06874,386

94,966

96,67594,327

91,294

90,10485,146

83,864

81,998* • The Company conducted a 1-for-10 stock consolidation of shares of common stock, effective October 1, 2017. In the above table, per-share figures for the fiscal 2017and prior years have been recalculated based on the number of shares outstanding after the stock split.
• CO2 emissions (t-CO2) are shown in units of 1,000 tons for fiscal 2019 and earlier.
• For number of female employees, only figures for fiscal 2016 and later are shown because numbers of male and female employees were not counted in some­categories before then.
• Total actual working hours in fiscal 2021 includes annual leave time as well as absent time.

Annual Report 2021

37

Management’s Analysis of Operating Results, Financial Position, and Cash Flows

Operating Results

This was due to operating income declines in the Industrial
Machinery, Rock Drill Machinery, and UNIC Machinery segments.
Specifically, the Industrial Machinery segment posted a ¥1,095
million (34.1%) decrease, the Rock Drill Machinery segment
posted a ¥1,467 million decrease (for an operating loss, comparedwith operating income in the previous year), and the UNIC
Machinery segment posted an ¥813 million (20.4%) decrease.
The Metals segment reported a ¥1,011 million (65.8%) jump in
operating income (a ¥943 million increase for electrolytic copperand a ¥46 million increase for electrolytic gold) to ¥198 million,
thanks to a significant rise in metals prices. This was despite adecline in income from the contracted copper smelting businessdue to deterioration in copper concentrate purchasing conditions.
The Electronics segment posted a ¥197 million increase in operating income, returning to profitability (from an operating loss inthe previous year), due to increased sales of high-purity metallic
arsenic and aluminum nitride. The Chemicals segment reported a¥130 million (25.5%) decrease in operating income due to lower
sales of sulfuric acid and cuprous oxide.
Other income increased ¥4,558 million year on year, to ¥6,855
million. Main factors included a ¥4,078 million gain on sales ofinvestment securities (up ¥4,058 million year on year) stemmingfrom the sale of strategic holdings in two companies, ¥356 million
in equity in earnings of affiliates, ¥702 million in foreign exchange
gains, a ¥25 million gain on sales of noncurrent assets (down¥629 million from the previous year, when we reported a ¥584
million gain associated with the sale of Furukawa Daimyo Buildingin Chuo-ku, Fukuoka City, Fukuoka Prefecture).
Other expenses declined ¥1,169 million, to ¥2,540 million.
Main factors included ¥731 million in rental building demolition
costs related to demolition work on the Furukawa Osaka Building,foreign exchange gains (compared with ¥554 million in foreignexchange losses in the previous year), and the absence of a loss
on impairment of investment securities (which totaled ¥1,030
million in the previous year due to falling prices of listed stocks).
Total income taxes (including enterprise tax, inhabitants’ tax,
and business tax) declined ¥402 million, to ¥2,237 million. The
effective tax rate decreased 13.7 points, to 22.6%, due largely adecrease in the valuation allowance resulting from sales of strategic holdings. Profit attributable to non-controlling interests
decreased ¥8 million, to ¥202 million. As a result, profit attributable to owners of parent increased ¥3,037 million (68.5%), to¥7,468 million.
Return on equity (ROE) rose 3.1 points, to 8.9%, and profit
attributable to owners of parent per share jumped 69.9%,
to ¥190.73.

In fiscal 2021, ended March 31, 2021, consolidated net sales
totaled ¥159,703 million, down ¥5,513 million (3.3%) comparedwith the previous fiscal year.
The Industrial Machinery Division posted a ¥6,555 million(28.2%) year-on-year decline in sales, due to the fact that most of
the construction work for large-scale projects, including cargohandling equipment for an international bulk terminal at the Portof Onahama and intermediate storage facilities (Okuma-machi,
Futaba-gun, Fukushima Prefecture) was done in the previous
fiscal year.
The Rock Drill Machinery segment reported a ¥3,514 million(12.7%) decline in sales (a ¥1,060 million decrease in domestic
sales and a ¥2,453 million decrease in overseas sales). In Japan,
the segment faced a significant decrease in shipments of hydrauliccrawler drills, hydraulic breakers, and hydraulic crushers due tothe worldwide spread of COVID-19. Overseas, we reported adecline in shipments of hydraulic crawler drills, especially inSoutheast Asia, while in North America, shipments of hydraulicbreakers to equipment rental companies were also down.
The UNIC Machinery segment reported a ¥3,987 million(12.5%) decline in sales (a ¥2,916 million decrease in domestic
sales and a ¥1,070 million decrease in overseas sales). In Japan,
there was a significant decline in shipments, mainly due to thepartial revision of the mobile crane structural standards in theprevious fiscal year and a rebound from the increase in the previous year, when there was a rush in demand prior to enactment of
exhaust emission standards for light trucks. Overseas, shipmentsof UNIC cranes decreased, mainly in Southeast Asia, where thespread of COVID-19 had a significant impact, and in Europe andNorth America, shipments of mini crawler cranes decreased due tothe suspension of construction work at urban construction sites.
The Metals segment posted an ¥8,945 million (13.3%) increasein sales (a ¥6,582 million increase in sales of electrolytic copperand a ¥2,424 million rise in sales of electrolytic gold). This was
mainly due to a significant rise in overseas market prices after
April 2020 of electrolytic copper, which had plummeted at theend of the previous fiscal year.
Cost of sales decreased ¥1,432 million (1.0%) year on year, to¥137,509 million, and the cost of sales margin rose 2.0 points, to86.1%. In addition, selling, general and administrative expenses
decreased ¥980 million (5.6%), to ¥16,602 million, due to a
general decrease in operating expenses caused by restrictions
on activities stemming from COVID-19.
Operating income fell ¥3,101 million (35.7%), to ¥5,592
million, and the operating margin slipped 1.8 points, to 3.5%.

Net Sales (Billions of yen)

149.8 167.7 174.1 165.2 159.7

Operating Income (Billions of yen)
Operating Margin (%)

6.5

7.8

4.4

4.7

8.9

8.7

5.1

5.6

'17/3 '18/3 '19/3 '20/3 '21/3
Operating Income
Operating Margin

38 FURUKAWA CO., LTD.

4.3

4.8

4.7

4.4

5.3
3.5

'17/3 '18/3 '19/3 '20/3 '21/3

Profit Attributable to
Owners of Parent (Billions of yen)
Return on Sales (%)

2.8

2.8

2.7

7.5

4.7
2.7

'17/3 '18/3 '19/3 '20/3 '21/3
Profit Attributable to Owners of Parent
Return on Sales

Financial Position

R&D and Capital Expenditures

At March 31, 2021, total assets amounted to ¥218,275 million,up ¥8,578 million (4.1%) from a year earlier. Current assets rose
¥2,900 million (3.4%), to ¥88,626 million. Main reasons for theincrease were a ¥5,101 million (40.3%) jump in cash and cash
equivalents and a ¥2,623 million (8.6%) decline in receivables–
trade. Total investments and other assets increased ¥5,699 million(4.6%), to ¥39,832 million. This was mainly due to a ¥6,858
million increase in investment securities (sales of strategic holdings
had a ¥1,473 million negative impact on investment securities,
while market valuation of listed shareholdings had an ¥8,325
million positive impact).
At fiscal year-end, current liabilities totaled ¥47,839 million,
down ¥4,716 million (9.0%) from a year earlier. Main factors
included a ¥3,568 million (33.6%) decrease in electronicallyrecorded obligations and a ¥2,139 million (16.9%) decrease inaccounts payable—other.
Long-term liabilities declined ¥3,104 million (3.9%), to ¥76,072
million. Main factors included a ¥3,404 million (53.5%) increasein deferred tax liabilities and a ¥6,802 million (71.5%) fall in
liability for retirement benefits. The increase in deferred tax
liabilities was mainly due to increases in unrealized holding gain
on securities, net of income taxes, and retirement benefits liability
adjustments. The decrease in retirement benefits liability adjustments was due to a ¥3,464 million decrease in retirement benefit
obligation as a result of revisions to the retirement benefit system,
as well as a ¥ 3,187 million increase in plan assets stemming fromrising stock prices and other factors. More information on thecauses of the year-on-year changes in retirement benefit obligation and plan assets is provided in “14. Retirement Benefit Plans.”
As a result of the above, total liabilities decreased ¥7,820
million (5.9%), to ¥123,911 million.
Net assets increased ¥16,398 million (21.0%), to ¥94,364
million. The increase was mainly due to an increase in unrealized
holding gain on securities, net of income taxes, resulting from anincrease in the market value of listed shareholdings; an increasein unrecognized prior service costs that had not been expensed(reduced) due to the revision of the retirement benefit system;
and a decrease in unrecognized actuarial gains/losses that had notbeen expensed due to a rise in stock prices; a ¥10,871 million(240.2%) increase in accumulated other comprehensive income;¥7,468 million in profit attributable to owners of parent; and a¥5,355 million (7.5%) increase in total shareholders’ equity due to¥1,961 million in payment of dividends from retained earnings. As
a result, total equity amounted to ¥91,770 million, and the equity
ratio was 42.0%, up 6.0 points year on year. The debt-to-equity(D/E) ratio improved 0.1 point, to 0.8 times.

The Furukawa Company Group actively engages in R&D on
high-value-added products and new materials that meetwide-ranging market needs. In the fiscal year under review, total
research and development expenses amounted to ¥1,164 million,
down 1.1% from the previous fiscal year. Of this total, ¥7 million
was allocated to the Industrial Machinery segment, ¥118 million
to the Rock Drill Machinery segment, ¥195 million to the UNIC
Machinery segment, ¥25 million to the Metals segment, ¥104
million to the Electronics segment, and ¥184 million to theChemicals segment. We also spent ¥531 million on corporate
research aimed at developing basic technologies for each segment
and creating new businesses. This was allocated to all of thebusiness segments.
In fiscal 2021, capital expenditures (including purchase ofintangible fixed assets) declined 30.2%, to ¥4,144 million. Of thistotal, ¥1,253 million was allocated to the Industrial Machinery
segment, ¥438 million to the Rock Drill Machinery segment, ¥947
million to the UNIC Machinery segment, ¥347 million to the
Metals segment, ¥325 million to the Electronics segment, and¥156 million to the Chemicals segment, aimed primarily at
improvements in production efficiency. In addition, ¥3 million was
allocated to the Real Estate segment, mainly for maintenance ofbuildings, and ¥677 million went to the Others segment, mainly
for investments in facilities to prevent mining pollution at suspended mines. Funds for these expenditures are sourced frominternal funds and borrowings. Depreciation and amortization
increased 8.1%, to ¥3,879 million.

Cash Flows
In the fiscal year under review, net cash provided by operating
activities amounted to ¥6,043 million, down ¥2,358 million fromthe previous fiscal year. This was mainly due to a decrease inadjusted income from non-cash profit/loss items and the likeresulting from the decrease in operating income.
Net cash provided by investing activities totaled ¥2,245 million,up ¥7,319 million (from ¥5,074 million used in investing activities
in the previous fiscal year). This was mainly due to ¥5,551 million
in proceeds from sales of investment securities (up ¥5,201 million
year on year) and ¥3,474 million in purchases of property, plantand equipment and intangible assets (down ¥2,697 million). The
increase in proceeds from sales of investment securities was dueto the fact that the Company annually examines the appropriateness of continuing to hold strategic shares and sells them asnecessary to make effective use of assets and improve financial
soundness. Another factor was our sales of investment securities
during the year in order to secure liquidity on hand to immediately
address emergency demand for funds arising from the COVID-19

Basic Earnings per Share (Yen)

Net Assets (Billions of yen)
Return on Equity (ROE) (%)

Total Assets (Billions of yen)
Equity Ratio (%)

105.29 118.16 116.23 112.23 190.73

79.6 87.1 80.4 78.0 94.4

208.0 222.2 215.4 209.7 218.3

8.9
5.9

'17/3 '18/3 '19/3 '20/3 '21/3

5.9

5.7

5.8

'17/3 '18/3 '19/3 '20/3 '21/3
Net Assets
Return on Equity (ROE)

42.0
37.3 38.3 36.3

36.0

'17/3 '18/3 '19/3 '20/3 '21/3
Total Assets
Equity Ratio
Annual Report 2021

39

pandemic. The decrease in purchases of property, plant andequipment and intangible assets was mainly due to the fact that,in the previous fiscal year, the Company made significant capital
investments and other expenditures to increase the production
capacity of the Takasaki Yoshii Plant.
Net cash used in financing activities was ¥3,123 million, down
¥1,720 million from the previous fiscal year. Main factors were¥742 million (down ¥1,432 million from the previous year) in
repayment of short- and long-term debt, net of proceeds fromsame, aimed at reducing interest-bearing debt. Of this amount,interest-bearing debt (borrowings) increased ¥2.0 billion (¥8.0
billion repaid out of ¥10.0 billion raised) due to the Company’s
procurement of long-term working capital from financial­institutions to improve its cash position in light of the COVID-19
pandemic.
As a result, the year-end balance of cash and cash equivalents
totaled ¥17,748 million, up ¥5,101 million from a year earlier.

 onsolidated Operating Cash Flow AllocationC
and Capital Strategy
As stated in the “Notice Concerning Postponement of­Announcement of Medium-Term Business Plan 2022” (dated
May 13, 2021), we decided to postpone the announcement ofthat plan. For this reason, we have not disclosed our consolidated cash flow allocation plan for the Group for the period from
April 2020 to March 2023, which is Phase 2 of Vision for 2025.
Nevertheless, we will continue to “actively promote investmentsthat contribute to increased corporate value” while aiming
to establish a robust financial foundation. At the same time,
we will endeavor to make optimal allocations of cash flows in­consideration of shareholder returns.
As for allocation of capital expenditures, our cumulative threeyear allocation in Phase 1 (April 2017 to March 2020) totaled¥16,403 million (capital expenditures and other payments of¥16,394 million). This was used mostly for investment in the

Machinery business, which is positioned as a core business. In
fiscal 2021, we allocated ¥4,144 million (capital expenditures andother payments of ¥3,473 million).
As of March 31, 2021, we plan to make capital expendituresof ¥8.0 billion in fiscal 2022 and beyond. Of this amount, we haveearmarked ¥3.8 billion to the Machinery Business, including forthe construction of a new office building at the Oyama Works, aswell as ¥5.3 billion for the Group as a whole. Going forward, we
will continue allocating capital expenditures that help us enhance
our manufacturing capabilities, mainly in the Machinery business,in order to “actively promote investments that contribute toincreased corporate value.”
We also reduced interest-bearing debt (borrowings) from¥73,507 million on March 31, 2017 to ¥69,683 million on March
31, 2021 (¥3,094 million reduction in Phase 1 and ¥730 million in
fiscal 2021). Going forward, we will continue placing top priority
on improving efficiency and profitability without excessive relianceon financial leverage, while endeavoring to improve financial
soundness in order to achieve the financial targets set for fiscal
2026, the final year of Vision for 2025, as set forth in MediumTerm Business Policy 2022, announced in May 2020.
Furukawa places great importance on improving returns ofprofits to all shareholders. Our basic policy is to appropriate profits
after comprehensive consideration of various factors, including
retained earnings required to finance capital expenditures andresearch and development expenses necessary to bolster earnings,
as well as future business development and other factors. We
strive to return profits to shareholders in a stable and ongoingmanner. In principle, we aim to pay annual dividends fromretained earnings of ¥50.00 per share or higher for a consolidated
payout ratio of 30% or higher, based on consolidated earnings(excluding extraordinary income/loss situations). In the three-year­period of Phase 1, we made cumulative appropriations fromretained earnings of ¥5,958 million, for a consolidated dividend
payout ratio of 43.3%. In fiscal 2021, we made a total of

Consolidated Cash Flow Allocation(Millions of yen, rounded down)

FY2021FY2018FY2019Cash flows from operating activities

5,350

11,7858,401

25,537

6,043

Payments for capital expenditures, etc.

(5,396)(4,827)(6,171)(16,394)(3,474)

Payments/collections of other investments

FY2020FY2018–2020(cumulative)

(458)

1,440

1,096

2,078

5,718

(5,855)(3,387)(5,074)(14,315)

2,245Free cash flow

(504)

8,398

3,327

11,221

8,288Interest-bearing debt

(206)

(679)

(2,174)(3,059)(742)(1,961)

Cash flows from investing activities

Cash dividends(2,020)(2,020)(1,978)(6,017)

Share buybacks(1)(1,209)(421)(1,631)

(165)

(302)

(297)

(270)

(870)

(254)

(2,529)(4,205)(4,843)(11,577)(3,123)

OthersCash flows from financing activities

Financial Indicators

Financial
indicator

FY2017(base year forcomparisons)

FY2020

FY2021

FY2026(Image)Debt-to-equity (D/E) ratio*1

0.9 times

0.9 times

0.8 times

0.6–0.7 times range

Interest-bearing debt to
EBITDA ratio*2

7.6 times

5.7 times

7.4 times

4–5 times

Issuer credit rating

BBB (JCR)BBB (JCR)BBB (JCR)

BBB+ or higher(Japanese rating agency)*1 Debt-to-equity (D/E) ratio = Interest-bearing liabilities (fiscal year-end) ÷ Total equity (fiscal year-end)*2 Interest-bearing debt to EBITDA ratio = Interest-bearing debt (fiscal year-end) ÷ [Operating income + Depreciation and amortization]

40 FURUKAWA CO., LTD.

May 13, 2021), we decided to postpone the announcement ofthat plan. For this reason, we have not disclosed our target for
fiscal 2023, the final year of Phase 2 of Vision for 2025. However,
we decided to announce our single-year consolidated performance forecasts for fiscal 2021 and fiscal 2022 at the respective
financial results briefings (fiscal 2021 held on May 13, 2021 andfiscal 2022 scheduled for May 2022).
In fiscal 2021, we reported operating income of ¥5,592 million.
Compared with fiscal 2017 (benchmark year for comparison
purposes), operating income of the Machinery business was
111%, operating income of the Materials business was 56%, andoperating income of the Real Estate business was 58%. Of total
consolidated operating income, the Machinery business, positioned as a core business, accounted for 69% (53% in fiscal 2017and 83% in fiscal 2019), the Materials business accounted for
18% (28% in fiscal 2017 and 9% in fiscal 2019), and the Real
Estate segment accounted for 13% (19% in fiscal 2017 and 8%
in fiscal 2019).
We are also stepping up efforts to increase ROE. Among thecomponents of ROE, we are placing top priority on improving
profitability and efficiency. In addition to accurately monitoring
cost of capital, we practice business portfolio management thattakes cost of capital into account when allocating management
resources, including capital expenditures. In these ways, we will
work to establish an optimal business portfolio and pursue overall
optimization of management resource allocation.
In fiscal 2021, we posted a ¥5,513 million year-on-year decline
in net sales, due mainly to lower sales in the Machinery businesscaused by the COVID-19 pandemic. However, we reported an
improvement in profitability, thanks mainly to improved net
income margin stemming from a ¥4,078 million gain on sales ofinvestment securities, reported as extraordinary income. ROE for
the year was 8.9%.

¥1,954 million in appropriations from retained earnings (¥50.00
per share). However, the consolidated dividend payout ratio fell to26.2%. This was due in part to an increase in profit attributable toowners of parent per share stemming from the sale of strategic
shareholdings, as well as the posting of a gain on sales of investment securities (reported as extraordinary income) to secureliquidity on hand to immediately meet emergency demand forfunds to address COVID-19. As announced on May 13, 2021,
we plan to pay annual dividends of ¥50.00 in fiscal 2022, for a
consolidated dividend payout ratio of 54.3%.
With respect to treasury stock, over the three-year period of
Phase 1, we purchased a total of 1,186,300 shares, for a totalpurchase price of ¥1,628 million, and in November 2020 wepurchased 140,500 shares, for a total price of ¥165 million. We
will continue contemplating the purchase and cancellation oftreasury stock as appropriate, taking into consideration stock
price trends, capital efficiency, cash flows, and other factors.

Analysis of Performance Indicators
Our Vision for 2025, FURUKAWA Power & Passion 150, willend in fiscal 2026 when we mark the 150th anniversary of the­Company’s founding. Under the Vision, we are targeting consolidated annual operating income regularly in excess of ¥15 billion
and double-digit ROE. As Phase 1 of the Vision, we formulated
Medium-Term Business Plan 2019 (covering the three-year period
from fiscal 2018 to fiscal 2020), with targets of operating incomein the ¥8.5 billion range and ROE in the 6–7% range. We achieved
our targets for consolidated operating income for two consecutive
fiscal years (¥8.9 billion in fiscal 2019 and ¥8.7 billion in fiscal
2020), but ROE remained in the low 5% range for all three years,
falling short of our target.
As stated in the “Notice Concerning Postponement ofAnnouncement of Medium-Term Business Plan 2022” (datedPerformance
Indicators

Operating income(Billions of yen)

ROE
(%)

ROE
Double-digit

16

14

14

12

12

10

8.9

10
8
6

8.7

5.9

5.8

6.5

5.6

4

Performanceindicators

Operating income
ROE

4
2
0

FY2017(base year forcomparisons)

FY2020

FY2021

FY2026(Image)¥6.5 billion¥8.7 billion¥5.6 billion

Regularly in excess of ¥15 billion

5.9%

5.8%

8.9%

ROE Double-digit

Cash Dividends per Share (Yen)

Cash Flows (Billions of yen)

11.8

9.8

8.4

50

50

50

50

50

6.0
2.2

(2.5)
(3.6)
(4.8)
(3.4)
(5.9)
(5.0)
(4.2)
(5.1)
Capital Expenditures
Depreciation and Amortization

6

0

5.4

'17/3 '18/3 '19/3 '20/3 '21/3

8

2

Capital Expenditures (Billions of yen)
Depreciation andAmortization (Billions of yen)

5.4 3.1 5.0 3.3 5.4 3.5 5.9 3.6 4.1 3.9

Operatingincomeregularly inexcess of¥15 billion(3.1)'17/3 '18/3 '19/3 '20/3 '21/3'17/3 '18/3 '19/3 '20/3 '21/3

Cash Flows from Operating Activities
Cash Flows from Investing Activities
Cash Flows from Financing Activities
Annual Report 2021

41

Segment Analysis

jumbos and urban redevelopment and construction investment,
while overseas shipments of hydraulic crawler drills were strong,
mainly in Europe and North America. These resulted in improved
profitability, with ROA of 5.7% in fiscal 2018 and 5.0% fiscal
2019. In fiscal 2020, however, ROA slipped to 0.4%. This was due
mainly to increased costs associated with making our hydrauliccrawler drills compliant with exhaust emission regulations indeveloped countries, as well as rising depreciation costs related
to the Takasaki Yoshii Plant since fiscal 2018, which led to a fallin the operating margin. In fiscal 2021, the segment reported a¥3,514 million (12.7%) year-on-year decline in sales, mainly due
to the spread of COVID-19 in Japan and overseas, resulting in an
operating loss and deterioration of both the total asset turnoverand operating margin. Nevertheless, we strove to improve efficiency by postponing or revising plans for capital expenditures
after the second stage of construction at the Takasaki Yoshii Plant
and by optimizing inventory levels.
In the UNIC Machinery segment, ROA improved 1.8 points,from 11.2% in fiscal 2017 to 13.0% in fiscal 2020, but slipped
2.6 points to 10.4% in fiscal 2021 (deterioration of 0.8 pointfrom fiscal 2017). In Phase 1, we reported an increase in total
assets associated with a capital investment program the Sakura
Plant started in fiscal 2017 and faced rising steel prices andincreasing production costs related to capital investments madeduring manufacturing. In Japan, seeking to further enhancecompetitiveness by increasing the functionality and added
value of UNIC cranes, we undertook a full model change of our“G-FORCE” series, releasing new models featuring improved
levels of operability and safety. Overseas, we reorganized oursales network and strengthened our sales capabilities while
expanding and reinforcing our production bases for machines
destined for export. We also began to reap the benefits of capital
investments in the Sakura Plant, which are now contributing to
improved production efficiency and profitability. These measures helped improve segment profitability, with ROA rising to

In order to strengthen and instill efforts to improve ROE, we have
set return on assets (ROA) as a performance and management
indicator for each segment, and we are working to improve
profitability (operating margin) and efficiency (total asset turnover), which are components of ROA. Our ROA results by segment in fiscal 2017 (benchmark year), fiscal 2020 (final year of
Phase 1), and fiscal 2021 are as follows.
In the Industrial Machinery segment, ROA improved 12.9
points, from 0.5% in fiscal 2017 to 13.4% in fiscal 2020, but fell
4.6 points to 8.8% in fiscal 2021 (an improvement of 8.3 points
from fiscal 2017). In Phase 1, we undertook an organizational
restructuring in April 2018 to strengthen our engineering capabilities, which enabled us to expand our contractor business. In
materials-related machinery, we attracted orders for crushers,
screens, granulators, and certain types of plant equipment for asection plant project as a result of our technical proposals, which
greatly contributed to business performance improvement. The
segment’s operating margin has improved since fiscal 2017,with operating income in fiscal 2021 being the second highest
in the last 15 years, after fiscal 2020. In fiscal 2021, the segment
reported a ¥6,555 million (28.2%) year-on-year decline in sales,
mainly due to the fact that most of the construction work forlarge-scale project projects, such as cargo handling equipment
for an international bulk terminal at the Port of Onahama andmachinery for an intermediate storage facility (Okuma-machi,
Futaba-gun, Fukushima Prefecture), was completed in the previous fiscal year. As a result, both the total asset turnover ratio andoperating margin deteriorated from fiscal 2020.
In the Rock Drill Machinery segment, ROA deteriorated 2.5
points, from 2.9% in fiscal 2017 to 0.4% in fiscal 2020, but fella further 4.2 points to –3.8% in fiscal 2021 (deterioration of 6.7
points from fiscal 2017). In Phase 1, we reported strong domestic
shipments of hydraulic breakers and hydraulic crawler drills infiscal 2018 and 2019 on the back of firm demand for tunnel drill
ROE Breakdown Analysis
ROE

Profitability
Return on sales

Efficiency
Total asset turnover

Leverage
Financial leverage

FY2017 (results)

:

5.9%

2.84%

0.74 times

2.80 times

FY2020 (results)

:

5.8%

2.68%

0.78 times

2.76 times

FY2021 (results)

:

8.9%

Comparison with FY2017

4.68%

0.75 times

2.56 times

Profitability: Improved

Efficiency: Improved

Leverage: Down

ROA Transition by Segment
FY2017(base year for comparisons)

FY2020

FY2021

Operating
IncomeTotal
Operating
Total
OperatingOperating(Loss)Asset
ROA
IncomeAsset
ROA
MarginMargin(Millions(Millions (Operating Turnover(Operating Turnoverof yen)(Times)Income)of yen)(Times)Income)Operating
Total
Operating
IncomeAsset
ROA
Margin(Millions(Operating Turnoverof yen)(Times)Income)Consolidated

3.2%

0.7

4.4%

6,546

4.1%

0.8

5.3%

8,693

2.6%

0.8

3.5%

5,592

Industrial
Machinery

0.5%

0.9

0.6%

104

13.4%

1.1

12.2%

3,208

8.8%

0.8

10.7%

2,114

Rock Drill
Machinery

2.9%

0.9

3.3%

897

0.4%

0.8

0.5%

143

(3.8%)

0.7(5.5%)(1,325)

UNIC
Machinery

11.2%

1.1

9.9%

2,578

13.0%

1.0

12.5%

3,993

10.4%

0.9

11.4%

3,180

Metals

6.2%

2.4

2.6%

1,738

1.1%

2.5

0.5%

302

1.7%

2.6

0.7%

499

Electronics

0.2%

0.8

0.3%

17

(0.5%)

0.8(0.6%)

(35)

2.3%

0.8

2.8%

162

Chemicals

0.7%

0.3

2.1%

114

3.1%

0.4

7.6%

510

2.3%

0.4

5.9%

380

Real Estate

4.0%

0.1

39.4%

1,265

2.7%

0.1

30.7%

736

2.8%

0.1

34.7%

737

42 FURUKAWA CO., LTD.

13.0% in fiscal 2020. In fiscal 2021, there was a significant fall indomestic shipments compared with the previous fiscal year, when
there was a rush in demand and increased shipments ahead ofa partial revision of mobile crane structural standards. Overseas
shipments also declined, mainly to regions highly affected by
the spread of COVID-19. As a result, the segment reported a¥3,987 million (12.5%) year-on-year decline in sales and deterioration of both the total asset turnover and operating margin.
However, the segment made a steady contribution to our overall
Machinery business.
In the Metals segment, ROA declined 5.1 points, from 6.2%
in fiscal 2017 to 1.1% in fiscal 2020, but improved 0.6 point to
1.7% in fiscal 2021 (deterioration of 4.5 points from fiscal 2017).
Profit in this segment fluctuates significantly, because raw copperore and bullion products are affected by international market
trends—including supply/demand balance, speculative transactions, and geopolitical and economic conditions—while smelting
profitability is impacted by copper concentrate purchasing conditions. We are working to reduce the effects of these fluctuations
by entering forward exchange contracts, hedging through futurescontracts, and the like. To improve earnings, we are also establishing an optimal production and sales system with an emphasis on
profitability. Due to deteriorating copper concentrate purchasing
conditions and increasing smelting costs, however, generating
profits in the smelting business is becoming more difficult eachyear. In Phase 1, operating margin in this segment declined from
2.6% in fiscal 2017 to 1.1% in fiscal 2018, 0.7% in fiscal 2019,
and 0.5% in fiscal 2020. In fiscal 2021, however, both the total
asset turnover and operating margin improved year on year, asa significant rise in metal prices absorbed the decline in profits
from contracted copper smelting, resulting in higher revenue
and earnings.
In the Electronics segment, ROA declined 0.7 point, from 0.2%
in fiscal 2017 to –0.5% in fiscal 2020, due to the segment’s
posting of an operating loss, but improved 2.8 points to 2.3% in
fiscal 2021 (improvement of 2.1 points from fiscal 2017). In fiscal
2018 and 2019, the first two years of Phase 1, this segment
benefited from healthy demand for compound semiconductors—
the main application for high-purity metallic arsenic, which is
positioned as a mature product—as well as steady demand forcrystal products used in individual semiconductor devices. These
resulted in improved profitability, with ROA of 4.5% in fiscal 2018
and 5.7% in fiscal 2019. Due to subsequent deterioration of thesemiconductor market, however, sales and profits of mature
products declined, and this segment posted an operating loss infiscal 2020, with ROA falling to –0.5%. In fiscal 2021, the segment posted losses through the third quarter, continuing fromthe previous fiscal year. From the second quarter, however, we
benefited from recovery in demand for coils and crystal products.
Sales of high-purity metallic arsenic were boosted by stabledemand for compound semiconductors, while demand for aluminum nitride for use in thermal management components andsemiconductor manufacturing equipment components increased,leading to higher overall segment revenue. As a result, the segment returned to profitability, offsetting the previous year’s
operating loss, and posted a year-on-year improvement in theoperating margin.
In the Chemicals segment, ROA improved 2.4 points, from
0.7% in fiscal 2017 to 3.1% in fiscal 2020, but slipped 0.8 points
to 2.3% in fiscal 2021 (improvement of 1.6 points from fiscal
2017). In Phase 1, growth in sales of both existing products (suchas sulfuric acid, cuprous oxide, and cupric oxide) and high-valueadded sulfuric acid contributed to increased earnings in thissegment. As a result, the operating margin showed overall
improvement, from 2.1% in fiscal 2017 to 7.1% in fiscal 2018,
6.6% in fiscal 2019, and 7.6% in fiscal 2020. In fiscal 2021, salesof cupric oxide increased due to strong demand for its use incircuit boards. However, sales of cuprous oxide decreased due to
weak overall demand for marine vessel paints, while the impact
of COVID-19 and inventory adjustments by customers led to a
decline in sales of sulfuric acid. As a result, segment sales declined
and the operating margin deteriorated from the previous year.
In the Real Estate segment, ROA declined 1.3 points, from
4.0% in fiscal 2017 to 2.7% in fiscal 2020, but improved 0.1
point to 2.8% in fiscal 2021 (down 1.2 points from fiscal 2017).
In Phase 1, we closed the Furukawa Osaka Building in December
2019. Until then, however, rental income decreased as tenants
moved out. Meanwhile, the Muromachi Furukawa Mitsui Building(commercial name: COREDO Muromachi 2), which is our main
facility, continued operating smoothly, but rental income declined
due to a decrease in floor space occupied by large tenants fromthe fourth quarter of fiscal 2019. As a result, the operating
margin showed overall decline, from 39.4% in fiscal 2017 to39.9% in fiscal 2018, 38.5% in fiscal 2019, and 30.7% in fiscal
2020. Seeking to effectively utilize our business resources, wesought to enhance efficiency by selling idle assets and assetsthat are no longer expected to contribute to earnings. The latterincludes the Furukawa Daimyo Building (Chuo-ku, Fukuoka City,
Fukuoka Prefecture), which was sold in April 2019. In fiscal 2021,
we reduced or exempted rents for some commercial tenants of
the Muromachi Furukawa Mitsui Building, which was temporarilyclosed and faced low visitor numbers due to COVID-19. However,
we generated solid revenues from new tenants following a
reduction in the number of large office tenants in the previous
year. As a result, the segment’s operating margin improved year
on year.

Business Risks(1) Foreign Exchange Fluctuations
The Furukawa Company Group engages in production, procurement, and sales activities in Japan and overseas, and therefore
is at risk of foreign exchange fluctuations in connection with its
export business, the import of raw materials, primarily copper ore,and smelting and processing income. While the Group utilizes
foreign exchange contracts and other methods to mitigate thisrisk, its operating results and financial position may be adversely
affected by significant movements in exchange rates.
(2) Fluctuations in Nonferrous Metals Markets
International prices of electrolytic copper, a mainstay productof the Group, and other nonferrous metals are decided by the
London Metals Exchange (LME) in U.S. dollars to reflect international market conditions. Such prices fluctuate according to theinternational supply–demand balance, speculative transactions,international political and economic circumstances, and the like.
Accordingly, the Group utilizes forward delivery transactions andother hedging techniques to minimize the impact of fluctuating
LME prices. However, significant movements in such prices may
affect the Group’s operating results and financial position.
The Group also invests in overseas copper mines to procure
copper concentrate. Any fluctuations in LME prices may impact
the business performance of those mines, which may affect theGroup’s operating results and financial position.
(3) Interest Rates
The Group’s fiscal year-end balance of interest-bearing liabilities(debt) was ¥69,683 million, equivalent to 31.9% of total assets.
Any increase in debt-related costs arising from changes in interest
rates may adversely affect the Group’s operating results andfinancial position. Although funding costs may increase if market
interest rates rise, the Group has prepared for sudden changes ininterest rates by utilizing an optimal combination of borrowing
arrangements, including fixed-rate instruments.

Annual Report 202143

(4) Investment Securities and Land
Historically, the Furukawa Company Group has maintained
holdings of investment securities, which are subject to market
valuations, as well as land. As of March 31, 2021, the carrying
value of investment securities as stated in the balance sheets was¥29,137 million, while land stood at ¥53,437 million. Accordingly,
the Group’s operating results and financial position are at risk of
impairment losses, losses from devaluation, and losses on sales if
securities and land prices decline significantly.
Regarding securities, every year the Board of Directors comprehensively considers the benefits and risks associated with individual holdings, both qualitatively and quantitatively, in order toverify the suitability of maintaining such holdings. Securities
judged to be unsuitable as a result of such verification are sold.
As for other fixed assets held by the Group, a significant deterioration of business conditions could result in a decline in profitability, while falling market prices could lead to impairment losses.
Any of these factors may adversely affect the Group’s operating
results and financial position.
In fiscal 2021, the Rock Drill Machinery segment reported an
operating loss, due mainly to the spread of COVID-19. Any futurechanges in the business environment may lead to a decline inprofitability and make the Group unable to recover investments,
resulting in impairment losses.
(5) Fluctuations in Demand
The Furukawa Company Group’s products are sold both in Japanand overseas. Therefore, any major fluctuations in demand in its
major markets—such as Japan, North America, Europe, andAsia—may adversely affect the Group’s operating results andfinancial position. Due to the nature of its products, moreover,sales from domestic public works projects account for a highproportion of net sales. Therefore, any major fluctuations in public
investments may adversely affect the Group’s operating results
and financial position.
(6) Country Risk
The Furukawa Company Group conducts its production,­procurement, and sales activities on a global basis in order toexpand its sales network, strengthen cost-competitiveness, andreduce currency risk. Any number of local events could hamper
the Group’s smooth business operations. These include local
political unrest, sharp economic slowdown, deterioration of public
security, trade sanctions, cultural and legal differences, special
labor–management relations, and terrorism. Such events could
affect the Group’s operating results and financial position.
(7) Natural Disasters, Infectious Diseases, andOther Force Majeure
The occurrence of natural disasters (such as earthquakes, tsunamis, floods, and typhoons) and accidents (such as large-scale fires)
could cause substantial damage to the Group’s production facilities and procurement sources and a breakdown of its distribution
network. Also, the worldwide spread of infectious diseases, suchas COVID-19, could render inoperable the Group’s business
operations and owned facilities, as well as the operations of its
suppliers. Either of these events may prevent the Group fromsupplying products in a reliable manner, which could affect its
operating results and financial position.

44 FURUKAWA CO., LTD.

Regarding the worldwide spread of COVID-19, which materialized in early 2020, the virus continues to spread, with the exception of some countries and regions, and there is no indication ofwhen the pandemic will be brought under control. The Group hastaken rigorous measures to prevent infections among employees,
including introduction of stringent hygiene management andteleworking systems. If the pandemic continues for a prolonged
period, however, our operations may be suspended due toemployee infections, while any slowdown in the supply chain andsuspension or contraction of customers’ business activities could
lead to a decline in revenue, which could affect the Group’s
operating results and financial position.
The Group has taken the following measures to ensure thesafety of its employees and to ensure the sustainability of each ofits businesses.
Measures to prevent the spread of COVID-19
To prevent the spread of COVID-19 to the maximum extent possible,
employees in areas where local governments have issued urgent
requests to stay at home, we introduced staggered working hours
on February 27, 2020 and a work-from-home arrangement on
March 27, 2020. Since April 7, 2020, when the national government
declared a state of emergency, the Group has made all employees
aware of the measures to prevent the spread of COVID-19, andpublished related information on its corporate website.
Main measurestaken to prevent
infection• Reducing infection risk of infection throughtelecommuting, shortened working hours,
rotating work schedules, etc.
• Preventing airborne infection by installing
partitions between desks and in officemeeting rooms• Increasing the number of shuttle buses
between production facilities and nearest
railway stations, and introducing timebased systems at employee cafeterias

Main measures toprevent infection• Meetings, events, dinners, business trips,
after hours• Measures to ensure health• Response to set onset of cold symptoms
and close contact

Cash flow measures to address COVID-19
The Group has entered into overdraft and commitment line
agreements with financial institutions in order to raise working
capital efficiently. To immediately address any unexpected need forfunds stemming from the COVID-19 pandemic, however, in fiscal
2021 we procured long-term working capital and sold investment
securities in order to secure liquidity on hand.
Procurement oflong-term working
capitalRaised ¥10 billion in long-term working
capital from financial institutions in
May 2020 (of which ¥8 billion was repaid
in February 2021)

Sale of investment
securities¥5.4 billion in proceeds from sale ofinvestment securities in August 2020

The Group has eight business segments: Industrial Machinery,
Rock Drill Machinery, UNIC Machinery, Metals, Electronics,
Chemicals, Real Estate, and Others. The impact of the COVID-19
pandemic varies from segment to segment, and the outlook forthe period during which it will affect the Group is uncertain.
Therefore, it is difficult to rationally calculate the magnitude of
impact that the pandemic may have on the Group’s businessenvironment. Please refer to the Company’s Annual Securities
Report for details of the main impacts on each business segment,
based on our assumptions at the present time.

(12) Official Regulations
The Furukawa Company Group engages in business in Japan andoverseas and thus is subject to legal regulations of various nations,
including rules related to licensing, taxation, the environment,labor, antitrust, and export controls. The Group takes care tofaithfully comply with such official regulations. Due to changes inlaws and regulations, however, existing legislation may be tightened or new legislation enacted, which could increase the cost of
responding and impact business continuity, and thus affect theGroup’s operating results and financial position.

(8) Product Quality
The Group manufactures products in accordance with globally
recognized quality control standards and strives constantly toestablish, maintain, and improve its quality assurance system.
However, there is no guarantee that all products will be defectfree in the future. To mitigate such risk, we take out productliability insurance, recall insurance, and the like. However, in theevent that a product defect leads to major liability claims or recallsthat exceed our expectations, public trust in the Group and its
products may be lost, which could affect its operating results andfinancial position.

(13) Retirement Benefit Obligation
The employees of the Furukawa Company Group are covered bya defined benefit corporate pension plan and a non-contributory
funded employee pension plan. Liability for retirement benefits
are provided at an amount calculated based on the retirement
benefit obligation and the fair value of pension plan assets at thebalance sheet date as of March 31, 2021. In calculating retirement benefit obligation, the Group adopts assumptions in connection with the discount rate and expected rate of return on plan
assets, as well as other assumptions. However, the Group’s
operating results and financial position are at risk in the event thatthe actual discount rate and expected rate of return on plan assets
differ materially from the assumptions, as well as in the event of achange in the assumptions on which retirement benefit obligation
are made.

(9) New Product Development
The Group actively engages in new product development withthe aim of bringing to market products incorporating new technologies and functions that meet customer needs. In some of ourbusinesses, however, there are products that are in mature stagesof their life cycles. Such products may be subject to reduced
profit margins because they are difficult to differentiate fromthe competition. If the Group is unable to develop or market
new products that will become future pillars of such businesses,
its operating results and financial position could be affected asa result.

Forward-looking statements in the above section are based on
judgments of the Group as of the date of submission of its Annual
Securities Report (June 29, 2021).

(10) Human Resources
To achieve future growth, the Group hires talented people—both
new graduates and mid-career professionals—and provides
training to enhance their competitive strengths. If the Group isunable to attract sufficient human resources required for its
business, however, its operating results and financial position
could be affected as a result.
(11) Environmental Protection
The Furukawa Company Group places the highest importance on
environmental protection, environmental safety, and preventionof pollution at its various business sites, both in Japan and overseas, respecting all laws and regulations. Furthermore, in Japan
the Group takes all necessary measures to ensure proper environmental management of suspended and closed mines, including
prevention of water pollution from such mines, as well as managing the safety of tailing dams. Due to changes in relevant regulations, however, legislation may be tightened and unexpected
situations may arise at each business site, which could increase
the cost of responding and thus affect the Group’s operating
results and financial position.

Annual Report 2021

45

Consolidated Balance Sheets
Furukawa Co., Ltd. and consolidated subsidiaries
As of March 31, 2021 and 2020

Thousands of
U.S. dollars (Note 5)

Millions of yen

2021

ASSETS
Current Assets:
Cash and cash equivalents
Receivables—tradeFinished products
Work in process
Raw materials and supplies
Other current assets
Allowance for doubtful accounts
		Total current assets¥

Property, Plant and Equipment, at Cost (Notes 7 and 20):
Land and timberlands
Buildings and structures
Machinery and equipment
Lease assets (Note 11)
Construction in progress

17,74828,03015,991
9,840
11,5895,569(142)
88,626

2021

2020
¥

12,64730,653
16,951
10,514
10,9444,180(163)
85,726$160,297
253,164
144,427
88,869104,672
50,298(1,278)800,448

Accumulated depreciation
		 Property, plant and equipment, net

55,29353,67047,195
1,159
1,271
158,588(68,771)
89,81755,34452,93346,0691,180
1,317
156,844(67,005)
89,838499,394
484,733
426,258
10,46911,483
1,432,338(621,126)
811,212Investments and Other Assets:
Investment securities (Note 6)
Investments in affiliates
Long-term loans receivables
Deferred tax assets (Note 15)
Assets for retirement benefits (Note 14)
Other assets
Allowance for doubtful accounts
		 Total investments and other assets
		Total assets

30,887
3,562
4,087
—
194
1,676
(574)
39,832
218,275

24,029
3,308
3,791
1,458
345
1,778
(575)
34,133
209,697

278,968
32,171
36,909—1,753
15,140(5,183)359,757
1,971,417

46 FURUKAWA CO., LTD.

¥

¥

$

Thousands of
U.S. dollars (Note 5)

Millions of yen

LIABILITIES AND NET ASSETS
Current Liabilities:
Short-term debt (Note 7)
Current portion of long-term debt (Note 7)
Lease obligations (Note 7)
Payables—trade
Electronically recorded obligations
Accounts payable—other
Income taxes payable
Provision for environmental measures
Other current liabilities
		 Total current liabilities

2021

¥

Long-Term Liabilities:
Long-term debt (Note 7)
Lease obligations (Note 7)
Provision for environmental measures
Liability for retirement benefits (Note 14)
Deferred tax liabilities (Note 15)
Deferred tax liabilities on surplus on the revaluation of land
(Note 15)
Asset retirement obligations
Other long-term liabilities
		 Total long-term liabilities
Net Assets (Note 8):
Shareholders’ equity:
Common stock without par value:
		Authorized—80,000,000 shares
		Issued—40,445,568 shares
Capital surplus
Retained earnings
Treasury stock, at cost:		2021—1,369,919 shares		2020—1,229,045 shares
		 Total shareholders’ equity
Accumulated other comprehensive income:Unrealized holding gain on securities, net of income taxes
Deferred gain (loss) on hedges
Surplus on the revaluation of land, net of income taxes
Translation adjustments
Retirement benefits liability adjustments
		 Total accumulated other comprehensive income
Non-controlling interests
		 Total net assets
		 Total liabilities and net assets

¥

8,437
2,139
219
11,6396,863
10,512
1,054
7
6,969
47,839

2021

2020

¥

8,570
3,011
222
9,532
10,331
12,651
729—
7,508
52,555$76,20019,316
1,980
105,119
61,98894,9409,521
6562,944432,074

59,107
394
86
2,709
9,761

58,831
443
120
9,511
6,357

533,846
3,557
780
24,46888,160

1,402

1,408

12,667234
2,377
76,072229
2,276
79,175

2,114
21,470687,063

28,2082
50,02628,208—44,508

254,77021
451,823(1,863)—76,374(1,697)—71,018(16,824)—
689,790

11,303
351
2,610
(827)
1,960
15,3972,594
94,364
218,275

5,364
(322)
2,620
(340)
(2,797)
4,525
2,423
77,967
209,697

102,090
3,170
23,569(7,468)
17,698139,059
23,431
852,280
1,971,417¥$

The accompanying notes are an integral part of these statements.

Annual Report 2021

47

Consolidated Statements of Income
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31, 2021 and 2020

Thousands of
U.S. dollars (Note 5)

Millions of yen

2021

Net Sales¥

Cost of Sales (Note 17)

2021

2020

159,703¥

165,216$

1,442,402(137,509)(138,941)(1,241,950)

		Gross profit

22,194

26,275200,452

Selling, General and Administrative Expenses (Note 10)(16,602)(17,582)(149,943)

5,592

8,693

50,509Interest and dividend income

929

991

8,393

Equity in earnings (losses) of affiliates

356

(51)

3,215

		Operating income
Other Income (Expenses):

Interest expense

(457)

(512)

(4,123)

Other income (expenses), net (Note 18)

3,486(1,840)31,487

		 Profit before income taxes

9,907

7,281

89,480(2,172)(1,425)(19,617)

Income Taxes (Note 15):
Current(65)(1,214)(588)

		 Total income taxes(2,237)(2,639)(20,205)

Profit

7,670

4,641

69,275

Profit Attributable to Non-Controlling Interests

(202)

(210)

DeferredProfit Attributable to Owners of Parent

¥

7,468

¥

4,432

(1,822)$

Yen

67,453
U.S. dollars (Note 5)

Profit Attributable to Owners of Parent per Share

¥

191

¥

112

$

1.72

Net Assets per Share

¥

2,349

¥

1,926

$

21.21

The accompanying notes are integral part of these statements.

48 FURUKAWA CO., LTD.

Consolidated Statements of Comprehensive Income
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31, 2021 and 2020

Thousands of
U.S. dollars (Note 5)

Millions of yen

2021

Profit

¥

2021

2020

7,670

¥

4,641

$

69,275

Other Comprehensive Income (Loss):
Unrealized holding gain (loss) on securities, net of income taxes
Deferred gain (loss) on hedges

5,941(3,983)53,661

642

(334)

5,798

Translation adjustments

(435)

(43)

(3,927)Retirement benefits liability adjustments
Share of other comprehensive income (loss) of affiliates
accounted for using equity method
		 Total other comprehensive income (loss) (Note 9)

4,757

(407)

42,960

(31)

66

(282)

10,874(4,702)

98,210Comprehensive Income (Loss)

18,544(61)

167,485

18,350(275)

165,737

194

215

1,748

Comprehensive Income (Loss) Attributable to:
Owners of parent
Non-controlling interests
The accompanying notes are an integral part of these statements.

Annual Report 2021

49

Consolidated Statements of Changes in Net Assets
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31, 2021 and 2020

For the year ended March 31, 2021

Millions of yen
Number ofshares ofcommonstock(thousands)

Balance at beginning of year
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stockReversal of surplus on the revaluation of land
Increase by merger of consolidated
subsidiaries
Net change during the year
Balance at end of year

40,446————

Shareholders’ equity
Commonstock¥

Capitalsurplus28,208————¥Retainedearnings

—
—
—
—
—

¥

44,508 ¥(1,961)
7,468—
11(1,697) ¥
—
—
(165)
—
—

—

—

2

—

—
40,446—28,208—2—
50,026¥¥

For the year ended March 31, 2021

Total
shareholders’equityTreasury stock,at cost71,018(1,961)
7,468
(165)
11
2

—
(1,863) ¥—76,374

Total­accumulated
Retirement
other
benefits liability
comprehensive Non-controlling
adjustments
incomeinterests(Note 14)Total
net assets¥¥

Millions of yen
Accumulated other comprehensive income
Surplus on the
Unrealized
revaluation ofholding gain onland, net of
securities, net of Deferred gain
income taxes (loss) on hedges income taxes

Balance at beginning of year
¥ 5,364 ¥Cash dividends paid—
Profit attributable to owners of parent—
Purchase of treasury stock—Reversal of surplus on the revaluation of land—
Increase by merger of consolidated—
subsidiaries
Net change during the year
5,940
Balance at end of year
¥ 11,303 ¥Translation
adjustments(322) ¥ 2,620 ¥
—
—
—
—
—
—
—
—
—

(340) ¥ (2,797) ¥ 4,525 ¥ 2,423 ¥ 77,967————(1,961)
—
—
—
—
7,468
—
—
—
—
(165)
—
—
—
—
11

—

—

673
(11)
351 ¥ 2,610 ¥—2

Millions of yen
Number ofshares ofcommonstock(thousands)

50 FURUKAWA CO., LTD.

—

(487)
4,757
10,871
101
11,043(827) ¥ 1,960 ¥ 15,397 ¥ 2,594 ¥ 94,364

For the year ended March 31, 2020

Balance at beginning of year
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stockReversal of surplus on the revaluation of land
Net change during the year
Balance at end of year—

40,446—————40,446

Shareholders’ equity
Commonstock¥¥

28,208—————28,208¥¥Retainedearnings

Treasury stock,at cost41,892(1,977)
4,432
—
161
—
44,508¥¥(1,277)
—
—
(421)
—
—
(1,697)

Total
shareholders’equity¥¥68,824(1,977)
4,432
(421)
161
—
71,018

For the year ended March 31, 2020

Millions of yen
Accumulated other comprehensive income
Surplus on the
Unrealized
revaluation ofholding gain onland, net of
securities, net of Deferred gain
income taxes (loss) on hedges income taxes

Balance at beginning of year
¥ 9,340 ¥Cash dividends paid—
Profit attributable to owners of parent—
Purchase of treasury stock—Reversal of surplus on the revaluation of land—
Net change during the year
(3,976)
Balance at end of year
¥ 5,364 ¥Translation
adjustments

12 ¥ 2,781 ¥
—
—
—
—
—
—
—
—
(334)
(161)
(322) ¥ 2,620 ¥For the year ended March 31, 2021

Total
­accumulated
Retirement
other
benefits liability
comprehensive Non-controlling
adjustments
incomeinterests(Note 14)Total
net assets(350) ¥ (2,390) ¥ 9,393 ¥ 2,230 ¥ 80,447————(1,977)
—
—
—
—
4,432
—
—
—
—
(421)
—
—
—
—
161
10
(407)
(4,867)
193(4,675)(340) ¥ (2,797) ¥ 4,525 ¥ 2,423 ¥ 77,967

Thousands of U.S. dollars (Note 5)
Shareholders’ equity
Commonstock

Balance at beginning of year
Cash dividends paid
Profit attributable to owners of parent
Purchase of treasury stockReversal of surplus on the revaluation of land
Increase by merger of consolidated
subsidiaries
Net change during the year
Balance at end of year

$ 254,770————

Capitalsurplus$——$ 254,770$

Retainedearnings

—
—
—
—
—

Treasury stock,at costTotal
shareholders’equity$ 401,984 $ (15,331) $ 641,424(17,710)—(17,710)67,453—67,453—(1,494)(1,494)
96
—
96

21

—

—
21

—
$ 451,823

—

21

—
—
$ (16,824) $ 689,790

The accompanying notes are integral part of these statements.

For the year ended March 31, 2021

Thousands of U.S. dollars (Note 5)
Accumulated other comprehensive income
Surplus on the
Unrealized
revaluation ofholding gain onland, net of
securities, net of Deferred gain
income taxes (loss) on hedges income taxes

Translation
adjustments

Total­accumulated
Retirement
other
benefits liability
comprehensive Non-controlling
adjustments
incomeinterests(Note 14)Total
net assets

Balance at beginning of year
$ 48,445 $ (2,909) $ 23,665 $ (3,069) $(25,262) $ 40,871 $ 21,884 $704,179
Cash dividends paid
—
—
—
—
—
—
— (17,710)
Profit attributable to owners of parent
—
—
—
—
—
—
—
67,453Purchase of treasury stock
—
—
—
—
—
—
—
(1,494)
Reversal of surplus on the revaluation of land
—
—
—
—
—
—
—
96
Increase by merger of consolidated
—
—
—
—
—
—
—
21
subsidiaries
Net change during the year
53,644
6,079(96) (4,400) 42,960
98,188
1,546
99,735
Balance at end of year
$102,090 $ 3,170 $ 23,569 $ (7,468) $ 17,698 $139,059 $ 23,431 $852,280
The accompanying notes are integral part of these statements.

Annual Report 2021

51

Consolidated Statements of Cash Flows
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31, 2021 and 2020

Thousands of
U.S. dollars (Note 5)

Millions of yen

2021

Operating Activities:
Profit before income taxes
Foreign exchange losses (gains)
Depreciation and amortization
Equity in earnings (losses) of affiliates
Impairment loss
Increase (decrease) in retirement benefit liability
Loss (gain) on disposal and sales of property, plant and equipment
Loss (gain) on impairment of investment securities
Loss (gain) on sales of investment securities
Increase (decrease) in provision for deposition field restoration
Increase (decrease) in provision for cost of removal of office tenants
Interest and dividend income
Interest expense
Receivables—trade
Inventories
Payables—trade
Accounts payable—other
Other
		Subtotal
Interest and dividends received
Interest paid
Income taxes paid
Income taxes refunded		 Net cash provided by operating activities

¥

9,907
(433)
3,879
(356)
75
185
126
—
(4,078)
—
—
(929)
457
2,550
646
(1,259)(2,561)(1,509)
6,700
1,004
(462)
(1,863)
664
6,043

2021

2020

¥

7,281
228
3,589
51
241
(25)
(511)
1,030
(18)
(219)
(432)
(991)
512
(17)
208
(5,085)
3,271
664
9,778
1,036
(512)
(2,160)
259
8,401

$

89,480(3,908)35,038(3,215)
675
1,669
1,136
—
(36,834)——(8,393)
4,123
23,034
5,834(11,372)(23,128)(13,628)
60,5109,070(4,173)(16,829)
5,997
54,575Investing Activities:
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of investment securities
Proceeds from sales of investment securities
Collection of long-term loans receivables
Other
		 Net cash provided by (used in) investing activities(3,404)
—
—
5,551
—
97
2,245

(6,120)
1,058
(527)
350
111
54
(5,074)(30,740)——
50,140—878
20,278Financing Activities:
Proceeds from long-term debt
Repayment of long-term debt
Proceeds from short-term debt
Repayment of short-term debt
Purchase of treasury shares
Cash dividends paid
Repayment of finance lease obligations
Other
		 Net cash used in financing activities
Effect of Exchange Rate Changes on Cash and Cash Equivalents
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Cash and Cash Equivalents at End of Year

10,427(11,034)
10,331(10,466)—(1,961)(232)(188)(3,123)(63)
5,101
12,647
17,7486,460(7,471)
17,387(18,551)(421)(1,978)(248)(22)(4,843)(54)(1,571)
14,21812,647

94,174(99,657)
93,307(94,524)—(17,715)(2,099)(1,695)(28,210)(570)
46,073
114,224
160,297

The accompanying notes are integral part of these statements.

52 FURUKAWA CO., LTD.

¥

¥

$

Notes to the Consolidated Financial Statements
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31, 2021 and 2020

1. Basis of Presentation
The accompanying consolidated financial statements of Furukawa
Co., Ltd. (the “Company”) and consolidated subsidiaries(together, the “Furukawa Group”) are prepared in accordancewith Japanese generally accepted accounting principles (JapaneseGAAP), which are different in certain respects as to the applicationand disclosure requirements of International Financial ReportingStandards (IFRS), and are compiled from those prepared by theCompany as required under the Financial Instruments andExchange Law of Japan.

2. Summary of Significant Accounting Policies(1) Principles of Consolidation
The Company had 31 subsidiaries and 11 affiliates as of March
31, 2021. The consolidated financial statements included
the accounts of the Company and 31 subsidiaries as of March
31, 2021.
For the purpose of preparing the consolidated financial
statements, all significant intercompany transactions, accountbalances and unrealized profits among the Furukawa Group
have been eliminated.
Certain foreign subsidiaries have been included on the basisof a fiscal year ended on December 31, but prior to the parent
company’s fiscal year ended on March 31. Relevant adjustments
have been made for significant transactions with such
subsidiaries during the intervening period from January 1 toMarch 31.
Investments in subsidiaries and affiliates which are notaccounted for by the equity method are carried at cost becauseof their immaterial impact on the consolidated financial
statements.
(2) Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid investmentswith a maturity of three months or less when purchased.
(3) Short-Term Investments and Investment Securities
Securities other than equity securities issued by subsidiaries andaffiliates are classified into three categories: trading, held-tomaturity or other securities. The Furukawa Group does not holdany trading or held-to-maturity securities as of March 31, 2021
and 2020. Marketable securities classified as other securities arecarried at fair value with changes in unrealized holding gain or
loss, net of the applicable income taxes, included directly in net
assets. Fair value is determined based on the average of themarket value during the last month of the fiscal year. Nonmarketable securities classified as other securities are carried atcost. Cost of securities sold is determined by the moving averagemethod.

The notes to the consolidated financial statements include
information which is not required under accounting principles
generally accepted in Japan but is presented herein as additional
information.
In preparing these statements, the Company makes certain
reclassifications and rearrangements to the consolidated financial
statements prepared in Japan in order to present these statements
in a form which is more familiar to readers outside Japan.
Certain amounts in the prior year’s financial statements havebeen reclassified to conform to the current year’s presentation.

(4) Inventories
Finished products and work in process relating to copper
products are stated at cost determined by the moving averagemethod (the balance sheet amounts of inventories are stated at
the lowered book values reflecting potential decline inprofitability). Other inventories are mainly stated at cost
determined by the average method (the balance sheet amounts
of inventories are stated at the lowered book values reflecting
potential decline in profitability).
(5) Allowance for Doubtful Accounts
In order to cover probable losses on collection, allowance for
doubtful accounts is calculated based on the historical default
rates for normal receivables plus the estimate of uncollectible
amounts determined by reference to specific doubtful receivablesfrom customers who are experiencing financial difficulties.
(6) Provision for Environmental Measures
Provision for environmental measures is provided to coverdisposal costs anticipated to be incurred with respect to the Law
Concerning Special Measures for Promotion of Proper Treatmentof PCB Wastes.
(7) Property, Plant and Equipment and Depreciation
Property, plant and equipment are stated at cost. Depreciationof property, plant and equipment except for lease assets ismainly calculated by the straight-line method based on theestimated useful lives of the assets. The range of useful lives ofproperty, plant and equipment is summarized as follows:
Buildings and structures
2 to 60 years
Machinery and equipment
2 to 22 years
Amortization is calculated by the straight-line method for
intangible assets except for lease assets.
Depreciation of lease assets arising from finance leasetransactions that do not involve transfer of ownership is
calculated by the straight-line method over the lease term withno residual value.

Annual Report 202153

(8) Retirement Benefits
The retirement benefit obligation for employees is attributed toeach period by the straight-line method over the estimated yearsof service of the eligible employees.
Actuarial gain or loss is amortized in the year following theyear in which the gain or loss is recognized primarily by thestraight-line method over periods (mainly 15 years) which areshorter than the average remaining years of service of theemployees.
Prior service cost is being amortized as incurred by thestraight-line method over periods (mainly 15 years) which areshorter than the average remaining years of service of theemployees.
Unrecognized actuarial gains and losses and unrecognizedprior service costs are recorded in “Retirement benefits liability
adjustments” in net assets after adjusting income tax effect.
(9) Surplus on the Revaluation of Land
Pursuant to the Law Concerning the Revaluation of Land, land
used for the Company’s business operations was revalued on
March 31, 2002. The income tax effect of the difference
between the book value and the revalued amount has beenpresented under liabilities as “Deferred tax liabilities on surplus
on the revaluation of land” and the remaining balance has beenpresented under net assets as “Surplus on the revaluation ofland, net of income taxes” in the accompanying consolidatedbalance sheets. Revaluation of land was determined based on
the official notice prices published by the Commissioner of the
National Tax Authorities in accordance with Paragraph 4, Article
2 of the “Enforcement Ordinance Concerning Land Revaluation,”with relevant adjustments. The carrying value of the land after
revaluation exceeded its fair value by ¥1,481 million ($13,385
thousand) and ¥1,440 million as of March 31, 2021 and 2020,
respectively.
(10) Income Taxes
Current income taxes comprising corporation tax, enterprise tax
and inhabitants’ taxes are provided for based on amounts
currently payable for each year. Deferred income taxes arisingfrom temporary differences between financial reporting and tax
bases of the assets and liabilities, which were measured using
the enacted tax rates and laws that will be in effect when thetemporary differences are expected to reverse, are reflected in
the consolidated financial statements.
The Company and its domestic wholly owned subsidiaries
file a consolidated corporation tax return.
(11) Amounts per ShareProfit attributable to owners of parent per share is computed
based on the profit available for distribution to shareholders ofcommon stock and the weighted-average number of shares ofcommon stock outstanding during the year.
Net assets per share are computed based on the net assets
excluding non-controlling interests and the number of common
stock outstanding at the year-end.

54 FURUKAWA CO., LTD.

(12) Foreign Currency Translation
Foreign currency-denominated monetary assets and liabilities
are translated into Japanese yen using the rates of exchange in
effect at the balance sheet date. Differences arising from thetranslation are included in the consolidated statement ofincome.
The balance sheet accounts of the foreign consolidated
subsidiaries are translated into yen at the rates of exchange in
effect at the balance sheet date, except for the components of
net assets excluding non-controlling interests, which aretranslated at their historical exchange rates. Revenue andexpense accounts are translated at the average rate of exchange
in effect during the year. Differences arising from the translation
are presented as “Translation adjustments” and “Non-controllinginterests” in the consolidated financial statements.
(13) Hedging Activities
The Furukawa Group uses derivative financial instruments forthe purpose of hedging the risks of adverse fluctuations inforeign exchange rates on the trade receivables, trade payables
and forecast transactions denominated in foreign currencies,
commodity prices and interest rates. All derivative financial
instruments except those below are stated at fair value andrelated gain or loss on the changes in the fair values of derivative
financial instruments is deferred as a component of net assets inthe balance sheet until the recognition of gain or loss on hedged
items when those derivative financial instruments qualify forhedge accounting.
Trade receivables, trade payables and forecast transactions
denominated in foreign currencies are translated at thecontracted rates if the relating forward contracts qualify forhedge accounting.
The interest rate swaps which qualify for hedge accounting
and meet specific matching criteria are not carried at fair value,
but any differences paid or received on the interest rate swaps
are recognized as adjustments to interest expense or income
over the life of each swap, thereby adjusting the effective
interest rate on the hedged items.
(14) Shareholders’ Equity
The Company Law of Japan provides that an amount equal to
10% of the amount to be distributed as distributions of capitalsurplus (other than the capital reserve) and retained earnings(other than the legal reserve) be transferred to the capital reserveand the legal reserve, respectively, until the sum of the capitalreserve and the legal reserve equals 25% of the common stock
account. Such distributions can be made at any time byresolution of the shareholders or by the Board of Directors if
certain conditions are met, but neither the capital reserve nor
the legal reserve is available for distributions.

(15) Adoption of Tax Effect Accounting for the Transition
from the Consolidated Taxation System to the GroupTax Sharing System
With respect to items for which a review of the Non-Consolidated
Taxation System was made in line with the transition to theGroup tax sharing system established under the Act for Partial
Revision of the Income Tax Act, etc. (Act No. 8 of 2020) and thetransition to the Group tax sharing system, the Company andsome of its domestic consolidated subsidiaries have not applied
the provisions of Paragraph 44 of the Implementation Guidanceon Tax Effect Accounting (Accounting Standards Board of Japan(ASBJ) Guidance No. 28 issued February 16, 2018) in accordancewith the treatment set out in Paragraph 3 of the Practical
Solution on the Treatment of Tax Effect Accounting for theTransition from the Consolidated Taxation System to the GroupTax Sharing System (Practical Issues Task Force (PITF) No. 39
issued March 31, 2020) and the amounts of deferred tax assets
and deferred tax liabilities are based on the provisions of tax
laws before the revision.

3. Significant Accounting Estimates(1) Retirement Benefit Plans
The amount recorded in the consolidated financial statements for the year ended March 31, 2021 is as follows:
Thousands of
U.S. dollars

Millions of yen¥

Assets for retirement benefits
Liability for retirement benefits
The employees of the Company and most of its domestic
consolidated subsidiaries are covered by defined benefit
corporate pension plans and non-contributory funded employee
pension plans as defined benefit plans. Assets for retirement
benefits and liability for retirement benefits are recorded basedon retirement benefit obligations and pension assets for the year
ended March 31, 2021. Retirement benefit obligations andpension assets are calculated based on mathematicalassumptions such as discount rates and expected rates of returnon plan assets.
The Furukawa Group uses a yield curve equivalence approachprimarily to determine discount rates. Specifically, we assign theyield on the Japanese Government Bond (JGB) yield curve
corresponding to the expected year of payment to the expected
retirement benefit for each fiscal year, and determine as aweighted-average discount rate a single discount rate that

194
2,709

$

1,753
24,468results in equal results between retirement benefit obligations
calculated by summing the results of calculating the discountpresent value and retirement benefit obligations calculated as
discount present value by a single discount rate. The discountrates for the Furukawa Group are mainly 0.4%.
The Furukawa Group determines expected rates of return onplan assets mainly by evaluating the past management
performance of pension assets and forecasts for future earnings.
Expected rates of return on plan assets for the Furukawa Groupare mainly 2.0%.
If there is a difference between actual results andpreconditions for discount rate or expected rates of return onplan assets adopted as the basis for calculating retirement
benefit obligations, or if the preconditions change, it may affectthe amount of retirement benefit obligations and retirement
benefit expenses.

The effect on the consolidated financial statements of the decline in the discount rates and expected rates of return on plan assets
was as follows:
Millions of yen

Discount rates: 1% drop
Expected rates of return on plan assets: 1% drop

Effect on retirement benefit obligations

Effect on retirement benefit expenses

Increase of ¥161—

Increase of ¥11
Increase of ¥52

Thousands of U.S. dollars

Discount rates: 1% drop
Expected rates of return on plan assets: 1% drop

Effect on retirement benefit obligations

Effect on retirement benefit expenses

Increase of $1,450—

Increase of $97
Increase of $467

Annual Report 202155

(2) Sales Based on the Percentage of Completion Method
The amount recorded in the consolidated financial statements for the year ended March 31, 2021 is as follows:
Sales based on percentage of completion method
Furukawa Industrial Machinery Systems Co., Ltd., aconsolidated subsidiary of the Furukawa Group, applies thepercentage-of-completion method for the portion of work
completed up to the end of the current period for construction
contracts for which completion is deemed to be certain (thecost-to-cost method is used in estimating progress toward
completion), and applies the completed contract method toother construction. In applying the percentage-of-completion
method, it is necessary to rationally estimate the total
construction revenue, total cost of construction and the progressof construction as of March 31, 2021. The total cost of
construction, which is the basis for revenue recognition by thepercentage of completion method, is estimated using theexecution budget for each construction contract.
Since construction is highly individual for each project, andthe work and work content related to the construction are

Millions of yen

Thousands of
U.S. dollars¥4,124$37,243

carried out in accordance with the customer’s requirements, it isdifficult to obtain a single judgment scale when estimating thetotal cost of construction. Accordingly, the estimate of the total
cost of construction involves certain assumptions anddeterminations that are based on specialized knowledge of andexperience in construction, and are subject to uncertainty.
Since construction is generally long-term, changes inconstruction contracts during construction progress, delays inconstruction due to bad weather, and fluctuations in construction
material unit prices and labor unit prices may occur. Therefore,
timely and appropriate review of total construction costs iscomplicated. Any change to the assumption for an estimate of
the total cost of construction may have a significant effect on
the amount recognized in the consolidated financial statements
for the following fiscal year.

4. New Accounting Standards Not Adopted as Yet(1) Accounting Standard for Revenue Recognition and Related Implementation Guidance• “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29 issued March 31, 2020)• “Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30 issued March 26, 2021)• “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19 issued March 31, 2020)
1. Overview
In May 2014, the International Accounting Standards Board(IASB) and the Financial Accounting Standards Board (FASB)
jointly issued Revenue from Contracts with Customers (IFRS 15
under IFRS and Topic 606 under U.S. generally accepted
accounting principles (U.S. GAAP)), a converged standard on therecognition of revenue from contracts with customers. In lightof IFRS 15’s mandatory application for annual reporting periods
beginning on or after December 16, 2017, the ASBJ had
projected the development of a comprehensive accounting
standard for revenue recognition and issued the corresponding
accounting standard and the implementation guidance. The
basic policy on development of the accounting standard by the
ASBJ is basically based on IFRS 15, from the standpoint ofcomparability of the financial statements between IFRS andJapanese GAAP. Also, certain additional alternative treatmentsthat do not impair comparability are provided where current
practices under Japanese GAAP should be addressed.

56 FURUKAWA CO., LTD.

2. Scheduled date of adoption
The Company and its domestic consolidated subsidiaries plan toadopt the accounting standard and related implementation
guidance from the beginning of the year ending March 31,
2022.
3.	The effect of adoption of the revised accounting standard
and related implementation guidance
There is no significant effect of the adoption of the accounting
standard and related implementation guidance on the
consolidated financial statements.

(2) Accounting Standard for Fair Value Measurement and Related Implementation Guidance• “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30 issued July 4, 2019)• “Accounting Standard for Measurement of Inventories” (ASBJ Statement No. 9 issued July 4, 2019)• “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10 issued July 4, 2019)• “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31 issued July 4, 2019)• “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19 issued March 31, 2020)
2. Scheduled date of adoption
The Company and its domestic consolidated subsidiaries plan toadopt the accounting standard and related implementation
guidance from the beginning of the year ending March 31,
2022.

1. Overview
The IASB and the FASB have provided similar detailed guidanceon fair value measurement (IFRS 13 Fair Value Measurement by
the IASB, and Fair Value Measurement (Topic 820) by the FASB).
Given this situation, the ASBJ issued “Accounting Standard for
Fair Value Measurement,” etc., as a result of its initiatives mainly
to promote the consistency between Japanese accounting
standards and international accounting standards regarding
guidance for fair value measurement and required disclosures.
The basic objective of the ASBJ in developing the accounting
standard for fair value measurement was to enhancecomparability between financial statements of domestic andforeign entities, through a unified measuring method.
Accordingly, the accounting standard fundamentally
incorporates the basic policies of IFRS 13. Furthermore, where
there are items that should be considered to reflect businesspractices in Japan, exceptional treatments have been establishedfor certain items to the extent that comparability is not impaired.

3.	The effect of adoption of the revised accounting standard
and related implementation guidance
The Company and its domestic consolidated subsidiaries have
not yet determined the effect of the adoption of the accounting
standard and related implementation guidance on the
consolidated financial statements.

5. U.S. Dollar Amounts
The translation of yen amounts into U.S. dollar amounts is
included solely for convenience, as a matter of arithmetic
computation only, at ¥110.72=US$1.00, the exchange rate
prevailing on March 31, 2021. This translation should not be

construed as a representation that yen have been, could havebeen or could in the future be converted into U.S. dollars at theabove or any other rate.

6. Investment Securities
The aggregate acquisition cost, carrying value and unrealized gain or loss pertaining to the marketable other securities as of March 31,
2021 and 2020 were as follows:
Millions of yen

Thousands of U.S. dollars

2021
Carrying value

Securities whose carrying value
exceeds their acquisition cost:
Listed stocks
Government bonds
Corporate bonds¥

Securities whose carrying value does notexceed their acquisition cost:
Listed stocks
Government bonds
Corporate bonds
Total

¥

Acquisition cost

2021
Unrealized gain
(loss)

Carrying value

Acquisition cost

Unrealized gain
(loss)

27,992 ¥——27,992

12,698 ¥——12,69815,295——
15,295$ 252,820 $ 114,681 $ 138,139
—
—
—
—
—
—
252,820
114,681138,139

1,145
—
—
1,145
29,137 ¥

1,207
—
—
1,207
13,905 ¥

(63)
—
—
(63)
15,232

10,337
10,904
(567)
—
—
—
—
—
—
10,337
10,904(567)$ 263,157 $ 125,586 $ 137,571

Annual Report 2021

57

Millions of yen

2020
Carrying value

Securities whose carrying value
exceeds their acquisition cost:
Listed stocks
Government bonds
Corporate bonds¥

Securities whose carrying value does notexceed their acquisition cost:
Listed stocks
Government bonds
Corporate bonds
Total

¥

Acquisition cost

Unrealized gain
(loss)

14,717 ¥——
14,717

7,152 ¥
—
—
7,152

7,565
—
—
7,565

7,561
—
—
7,561
22,278 ¥

8,792
—
—
8,792
15,944 ¥(1,231)——(1,231)
6,335

Gain on sales of securities classified as other securities with aggregate gains for the years ended March 31, 2021 and 2020 are
summarized as follows:
Thousands of
U.S. dollars

Millions of yen

2021

Sales proceeds
Aggregate gains
Aggregate losses

¥

2021

2020

5,551
4,078
—

¥

345
20
(2)

$

50,14036,834—

7. Short-Term Debt, Long-Term Debt and Lease Obligations
Short-term debt, most of which are unsecured, represented notes payable to banks, with the average interest rates of 0.4% and 0.7%
as of March 31, 2021 and 2020, respectively.
Long-term debt as of March 31, 2021 and 2020 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2021

Loans, principally from banks, insurance companies and government agencies,
most of which are secured, due 2021 to 2038¥

Current portion of long-term debt¥

61,246
61,246(2,139)59,107

2020¥¥

61,842
61,842(3,011)
58,8312021$ 553,162
553,162(19,316)$ 533,846

The average interest rates applicable to the above debt amounting to ¥61,246 million ($553,162 thousand) and ¥61,842 million
were 0.6% and 0.6% as of March 31, 2021 and 2020, respectively.

58 FURUKAWA CO., LTD.

The aggregate annual maturities of long-term debt subsequent to March 31, 2021 are as follows:
Thousands of
U.S. dollars

Millions of yen

2021

Years ending March 31,

¥

2022
2023
2024
2025
2026
2027 and thereafter

¥

2,139
5,171
9,076
6,016
3,426
35,41861,246$

19,316
46,705
81,97054,33330,946
319,892$ 553,162

Lease obligations as of March 31, 2021 and 2020 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2021

Lease obligations due 2020 to 2027¥

Current portion of lease obligations
¥

613
613
(219)
394

2021

2020

¥

¥

664
664
(222)
443

$

$

5,537
5,537
(1,980)
3,557

The aggregate annual maturities of lease obligations subsequent to March 31, 2021 are as follows:
Thousands of
U.S. dollars

Millions of yen

2021

Years ending March 31,

2022
2023
2024
2025
2026
2027 and thereafter¥¥
The Company and certain consolidated subsidiaries haveentered into overdraft and loan commitment agreements
amounting to ¥39,344 million ($355,345 thousand) with 23
banks and ¥38,102 million with 23 banks as of March 31,
2021 and 2020, respectively. The borrowings outstanding and

219
163
101
74
43
12
613

$

$

1,980
1,476
911
670
388
111
5,537

the unused balances under these credit facilities amounted
to ¥8,437 million ($76,200 thousand) and ¥30,907 million($279,145 thousand), respectively, as of March 31, 2021, andamounted to ¥7,663 million and ¥30,440 million, respectively,
as of March 31, 2020.

Annual Report 2021

59

Assets pledged as collateral and liabilities with collateral pledged as of March 31, 2021 and 2020 were as follows:(a) Assets pledged as collateralThousands of
U.S. dollars

Millions of yen

2021

¥

Property, plant and equipment, net

2021

2020

1,312

¥

1,321

$

11,852(b) Liabilities with collateral pledged
Thousands of
U.S. dollars

Millions of yen

2021

¥

Long-term debt (including current portion)

2021

2020

1,371

¥

1,556

$

12,383

8. Net Assets
Types and number of shares issued and in treasury
Thousands of shares
As of March 31,
2020

Shares issued:
Common stock		 Total
Treasury stock:
Common stock (Note)		 Total

Increase

Decrease

As of March 31,
2021

40,44640,446—­———40,44640,446

1,229
1,229

141
141

—
—

1,370
1,370

Note:	The increase of 141 thousand shares of equity in treasury stock was due to the purchase of shares based on the resolution of
the Board of Directors on November 26, 2020.
		 The increase of 0 thousand shares of equity in treasury stock was due to the purchase of shares of less than a standard unit.
Types and number of shares issued and in treasury
Thousands of shares
As of March 31,
2019

Shares issued:
Common stock		 Total
Treasury stock:
Common stock (Note)		 Total

Increase

Decrease

As of March 31,
2020

40,44640,446—­———40,44640,446

904
904

325
325

—
—

1,229
1,229

Note:	The increase of 325 thousand shares of equity in treasury stock was due to the purchase of shares based on the resolution of
the Board of Directors on February 26, 2020.
		 The increase of 0 thousand shares of equity in treasury stock was due to the purchase of shares of less than a standard unit.

60 FURUKAWA CO., LTD.

9. Other Comprehensive Income
Reclassification adjustments and tax effects allocated to each component of other comprehensive income for the years ended March
31, 2021 and 2020 are as follows:
Thousands of
U.S. dollars

Millions of yen

2021

Unrealized holding gain (loss) on securities, net of income taxes:
Amounts arising during the year
Reclassification adjustments for gains and losses included in profit
Amounts before tax effectTax effectUnrealized holding gain (loss) on securities, net of income taxes¥

Deferred gain (loss) on hedges:
Amounts arising during the year
Adjustments on the acquisition cost of assets
Amounts before tax effectTax effect
Deferred gain (loss) on hedges
Translation adjustments:
Amounts arising during the year
Retirement benefits liability adjustments:
Amounts arising during the year
Reclassification adjustments for gains and losses included in profit
Amounts before tax effectTax effect
Retirement benefits liability adjustments
Share of other comprehensive income (loss) of affiliates accounted
for using equity method:Amounts arising during the year
Reclassification adjustments for gains and losses included in profit
Share of other comprehensive income (loss) of affiliates accounted for using
equity method
Total other comprehensive income (loss)¥

12,403(4,078)
8,325(2,384)
5,941

2021

2020

(5,931)
1,021(4,910)927(3,983)$ 112,024(36,834)
75,190(21,529)
53,661

2,913(1,969)
944
(302)
642

(805)
364
(441)
106
(334)

26,311(17,785)8,526(2,728)
5,798

(435)

(43)

(3,927)

6,871
(5)
6,865
(2,109)
4,757

(594)
(1)
(595)
188
(407)

62,054(47)
62,006(19,046)
42,960

(77)
46

83
(17)

(695)
413

(31)

66

(282)

10,874¥¥(4,702)$

98,21010. Research and Development Expenses
Research and development expenses, included in selling, general and administrative expenses and cost of sales, for the years ended
March 31, 2021 and 2020 amounted to ¥1,164 million ($10,515 thousand) and ¥1,178 million, respectively.

11. Leases
Leases’ accounting
Finance lease transactions that do not involve transfer of ownership
1. Leased asset quality
Tangible assets
Mainly machinery and equipment
2. Depreciation method of leased assets
Please refer to “(7) Property, Plant and Equipment and Depreciation” in “2. Summary of Significant Accounting Policies.”

Annual Report 2021

61

12. Financial Instruments
1. Overview(1) Policy for financial instruments
In consideration of the annual financial plan, the Furukawa Group raises funds through mainly bank borrowings and bondissues. Further, the Furukawa Group raises short-term capital through mainly bank borrowings. The Furukawa Group uses
derivatives for the purpose of reducing risk and does not enter into derivatives for speculative or trading purposes.
(2) Types of financial instruments and related risk
Trade receivables—trade notes and accounts receivables—are exposed to credit risk in relation to customers. In addition, theFurukawa Group is exposed to foreign currency exchange risk arising from receivables denominated in foreign currencies. In
principle, the foreign currency exchange risks deriving from the trade receivables denominated in foreign currencies are hedged
by forward foreign exchange contracts.
Investment securities are exposed to market risk. Those securities are composed of mainly the shares of common stock ofother companies with which the Furukawa Group has business relationships.
Substantially all trade payables—trade notes, electronically recorded obligations and accounts payables—have payment due
dates within one year.
Short-term debt is raised mainly in connection with business activities, and long-term debt is taken out principally for the
purpose of making capital investments. Long-term debt with variable interest rates is exposed to interest rate fluctuation risk.
However, to reduce such risk and fix interest expense for long-term debt bearing interest at variable rates, the Furukawa Grouputilizes rate swap transactions as a hedging instrument for each contract. The assessment of effectiveness is omitted since itmeets conditions of specific matching criteria for interest rate swap.
Regarding derivatives, the Furukawa Group enters into forward foreign exchange contracts to reduce the foreign currency
exchange risk arising from the receivables and payables denominated in foreign currencies. The Furukawa Group also enters into
interest rate swap transactions to reduce fluctuation risk deriving from interest payable for debt bearing interest at variable rates.
In addition, the Furukawa Group enters into forward commodity exchange contracts to reduce fluctuation risk of the commodity
price of inventories. Information regarding the method of hedge accounting, hedging instruments, hedged items, hedging
policy and the assessment of effectiveness of hedging activities is found in “(13) Hedging Activities” in “2. Summary of Significant
Accounting Policies.”(3) Risk management for financial instruments(a) Monitoring of credit risk (the risk that customers or counterparties may default)
		 In accordance with the internal policies of the Furukawa Group for managing credit risk arising from receivables, each related
division monitors the creditworthiness of their main customers periodically, and monitors due dates and outstanding balancesby individual customer.
			 In utilizing derivatives, the Furukawa Group has transactions with major financial institutions or trading companies whichhave high credit to reduce credit risk.
(b) Monitoring of market risk (the risk arising from fluctuations in foreign exchange rates, interest rates and others)		 For trade receivables and payables denominated in foreign currencies, the Furukawa Group identifies the foreign currency
exchange risk for each currency on a monthly basis and principally enters into forward foreign exchange contracts to hedge
such risk. In order to mitigate the interest rate risk for loans payable and bonds bearing interest at variable rates, theFurukawa Group enters into interest rate swap transactions.
			 For investment securities, the Furukawa Group periodically reviews the fair values of such financial instruments.
			 In conducting or managing derivative transactions, each division makes transactions by approval of the directors oftransaction-related divisions.
(c) Monitoring of liquidity risk (the risk that the Furukawa Group may not be able to meet its obligations on scheduled due dates)
		 Based on the report from each division, the Furukawa Group prepares and updates its cash flow plans on a monthly basis to
manage liquidity risk.
(4) Supplementary explanation on the estimated fair value of financial instruments		The value of financial instruments is based on their quoted market price, if available. When there is no quoted market priceavailable, fair value is reasonably estimated. Since various assumptions and factors are reflected in estimating the fair value,
different assumptions and factors could result in different fair value. In addition, the notional amounts of derivatives in “13.
Derivative Transactions” are not necessarily indicative of the actual market risk involved in derivative transactions.

62 FURUKAWA CO., LTD.

2. Estimated fair value of financial instruments
	Carrying value of financial instruments on the consolidated balance sheets as of March 31, 2021 and 2020 and estimated fair value
are shown as follows. The following table does not include financial instruments for which it is extremely difficult to determine thefair value. (Please refer to Note 2 below.)
Millions of yen

Thousands of U.S. dollars

2021
Carrying value

Assets:(1) Cash and cash equivalents(2) Receivables—trade(3) Investment securities
Total assets
Liabilities:(1) Payables—trade(2) Electronically recorded obligations(3) Accounts payable—other(4) Short-term debt (*1)(5) Long-term debt (*1)
Total liabilities
Derivatives (*2)

2021

Estimated fair value

Difference

Carrying value

Estimated fair value

Difference¥

17,74928,03029,13774,916¥

17,74928,03029,13774,916¥————$ 160,303
253,164
263,157
676,624$ 160,303
253,164
263,157
676,624

$

—
—
—
—

¥

11,6396,863
10,512
8,437
61,246
98,697526¥

11,6396,863
10,512
8,437
62,071
99,522
526

¥

—
—
—
—
825
825
—

$ 105,119
61,98894,94076,200553,162
891,410$4,753$ 105,119
61,98894,94076,200560,614
898,863
$
4,753

$

—
—
—
—
7,452
7,452
—

¥

¥

¥

$

Millions of yen

2020
Carrying value

Assets:(1) Cash and cash equivalents(2) Receivables—trade(3) Investment securities
Total assets
Liabilities:(1) Payables—trade(2) Electronically recorded obligations(3) Accounts payable—other(4) Short-term debt (*1)(5) Long-term debt (*1)
Total liabilities
Derivatives (*2)¥

Estimated fair value

12,64730,653
22,27865,579¥9,532
10,331
12,651
8,570
61,842102,927
¥
418

¥

¥

Difference

12,64730,653
22,27865,579

¥

—
—
—
—

9,532
10,331
12,651
8,570
62,586103,671
¥
418

¥

—
—
—
—
744
744
—

¥

(*1) Current portion of long-term debt is included in long-term debt.
(*2) The value of assets and liabilities arising from derivatives is shown at net value, with the amount in parentheses representing net
liability position.
Notes:
1. Methods to determine the estimated fair value of financial instruments and other matters related to securities and derivative transactions
Assets(1) Cash and cash equivalents and (2) Receivables—trade		 Since these items are settled in a short period of time, their carrying value approximates fair value.
(3) Investment securities		The fair value of stocks is based on market prices. For information on securities classified by holding purpose, please refer to“6. Investment Securities” to the consolidated financial statements.

Annual Report 2021

63

Liabilities(1) Payables—trade, (2) Electronically recorded obligations, (3) Accounts payable—other and (4) Short-term debt
		 Since these items are settled in a short period of time, their carrying value approximates fair value.
(5) Long-term debt
		The fair value of long-term debt is based on the present value of the total of principal and interest discounted by the interest
rate to be applied if similar new loans were entered into.
Derivative transactions
Please refer to “13. Derivative Transactions” to the consolidated financial statements.
2. Financial instruments of which it is extremely difficult to determine the fair value as of March 31, 2021 and 2020
Thousands of
U.S. dollars

Millions of yen

2021

¥

Unlisted stocks

2021

2020

5,312

¥

5,058

$

47,982

Because no quoted market price is available and it is extremely difficult to determine the fair value, the above financial instruments are
not included in the above table of “(3) Investment securities.”
3. Redemption schedule for receivables and marketable securities with maturities after March 31, 2021 and 2020 are as follows:
For the year ended March 31, 2021
Due in one
year or lessMillions of yen

Cash deposits
Receivables—trade
Total

¥
¥

17,72528,03045,756

Due after one year
through five years

Due after five years
through ten years

¥

¥

¥

—
—
—

¥

—
—
—

Due after
ten years

¥

—
—
—

¥

For the year ended March 31, 2020
Due in one
year or lessMillions of yen

Cash deposits
Receivables—trade
Total

¥
¥

12,62130,653
43,274Due after one year
through five years

Due after five years
through ten years

¥

¥

¥

—
—
—

¥

—
—
—

Due after
ten years

¥

—
—
—

¥

For the year ended March 31, 2021
Thousands of U.S. dollars

Due in one
year or less

Cash deposits
Receivables—trade
Total$ 160,092
253,164$ 413,256

Due after one year
through five years

Due after five years
through ten years

$

$

$

—
—
—

$

—
—
—

Due after
ten years$$

4. The redemption schedule for long-term debt is disclosed in “7. Short-Term Debt, Long-Term Debt and Lease Obligations.”

64 FURUKAWA CO., LTD.

———

13. Derivative Transactions
The notional amounts and estimated fair value of the derivative instruments outstanding as of March 31, 2021 and 2020 for which
hedged accounting have been applied are as follows:
1. Currency-related transactions
Millions of yen
Method of hedge accounting

Principal method

Allocation method

Type of transaction

Forward foreign exchange contracts
Sell:
		U.S. dollars
		EUR
		U.S. dollars
Forward foreign exchange contracts
Sell:
		U.S. dollars
		EUR
Buy:
		U.S. dollars

Major object of hedge

As of March 31, 2021
Contract amounts

Maturing after one year

Fair value

Accounts receivables
Accounts receivables
Accounts payables

¥

396
136
4,987

—
—
—

¥

(7)
0
(209)

Accounts receivables
Accounts receivables

¥

—
—

—
—

(*)
(*)

Accounts payables

¥

1,962

—

(*)

Millions of yen
Method of hedge accounting

Principal method

Allocation method

Type of transaction

Forward foreign exchange contracts
Sell:
		U.S. dollars
		EUR
		U.S. dollars
Forward foreign exchange contracts
Sell:
		U.S. dollars
		EUR
Buy:
		U.S. dollars

Major object of hedge

As of March 31, 2020
Contract amounts

Maturing after one year

Fair value

Accounts receivables
Accounts receivables
Accounts payables

¥

256
93
3,275

—
—
—

¥

4
1
9

Accounts receivables
Accounts receivables

¥

153
328

—
—

(*)
(*)

Accounts payables

¥

4,083

—

(*)

Thousands of U.S. dollars
Method of hedge accounting

Principal method

Allocation method

Type of transaction

Forward foreign exchange contracts
Sell:
		U.S. dollars
		EUR
		U.S. dollars
Forward foreign exchange contracts
Sell:
		U.S. dollars
		EUR
Buy:
		U.S. dollars

Major object of hedge

As of March 31, 2021
Contract amounts

Maturing after one year

Fair value

Accounts receivables
Accounts receivables
Accounts payables

$

3,577
1,230
45,039

—
—
—

$

(61)
0
(1,885)

Accounts receivables
Accounts receivables

$

—
—

—
—

(*)
(*)

Accounts payables$

17,724—(*)

Note: The fair values of forward foreign exchange contracts are based on exchange rates or prices provided by financial institutions.
(*) The fair values by means of the allocation method for forward foreign exchange contracts are included in the fair values of thehedged accounts receivables and payables because the derivative transactions are treated as a part of hedged accounts receivables
and payables.

Annual Report 2021

65

2. Interest-related transactions
Millions of yen
Method of hedge accounting

Special accounting
procedure forinterest rate swap

Type of transaction

Receive/floating and pay/fixed

Major object of hedge

Long-term debt

As of March 31, 2021
Contract amounts¥

11,918Maturing after one year¥

Fair value

11,348(*)

Millions of yen
Method of hedge accounting

Special accounting
procedure forinterest rate swap

Type of transaction

Receive/floating and pay/fixed

Major object of hedge

Long-term debt

As of March 31, 2020
Contract amounts¥

12,533Maturing after one year¥

Fair value

11,917(*)

Thousands of U.S. dollars
Method of hedge accounting

Special accounting
procedure forinterest rate swap

Type of transaction

Receive/floating and pay/fixed

Major object of hedge

Long-term debt

As of March 31, 2021
Contract amounts$

107,636

Maturing after one year$

Fair value

102,488(*)(*) The fair values by means of the special accounting procedure for interest rate swap are included in the fair values of the hedged
long-term debt because the derivative transactions are treated as a part of hedged long-term debt.
3. Commodity-related transactions
Millions of yen
Method of hedge accounting

Principal method

Type of transaction

Forward product contracts
Sell:		Copper
Buy:
		Copper

Major object of hedge

As of March 31, 2021
Contract amounts

Maturing after one year

Fair value

Raw material

¥

—

¥

—

¥

—

Raw material

¥

9,115

¥

25

¥

742

Millions of yen
Method of hedge accounting

Principal method

Type of transaction

Forward product contracts
Sell:		Copper
Buy:
		Copper

Major object of hedge

As of March 31, 2020
Contract amounts

Maturing after one year

Fair value

Raw material

¥

—

¥

—

¥

—

Raw material

¥

6,944

¥

28

¥

(432)

Thousands of U.S. dollars
Method of hedge accounting

Principal method

Type of transaction

Forward product contracts
Sell:		Copper
Buy:
		Copper

Major object of hedge

As of March 31, 2021
Contract amounts

Maturing after one year

Raw material

$

—

$

—

$

—

Raw material$

82,323

$

227

$

6,699

Note: The fair values of forward product contracts are based on prices provided by trading companies.

66 FURUKAWA CO., LTD.

Fair value

14. Retirement Benefit Plans
For the year ended March 31, 2021
The employees of the Company and most of its domestic consolidated subsidiaries are covered by defined benefit corporate pension
plans and non-contributory funded employee pension plans as defined benefit plans. The employee retirement benefit plans provide
for lump-sum payments. The employee pension plans, which are funded, were instituted to replace a certain portion of the benefits
under the retirement benefit plans with respect to employees who retire at the mandatory retirement age. Certain consolidated
subsidiaries (both domestic and foreign) have defined contribution plans.
The Company revised its retirement benefit plans on April 1, 2020, shifting from the final salary proportional system to the points
system, extending the mandatory retirement age from 60 to 65 years old, and extending the age of old age benefit payment under
the defined benefit corporate pension system from 60 to 65 years old.
As a result of this revision, prior service cost (reduction of retirement benefit obligations) of ¥3,873 million ($35,589 thousand) is
incurred in the year ended March 31, 2021, and is amortized using the straight-line method over a certain number of years (15 years)
within the average remaining years of service of the employees.
The changes in the retirement benefit obligation during the year ended March 31, 2021 are as follows:
Thousands of
U.S. dollars

Millions of yen

2021

Retirement benefit obligation at April 1, 2020
Service cost
Interest cost
Actuarial loss
Retirement benefits paid
Prior service cost
Exchange translation adjustment
Other
Retirement benefit obligation at March 31, 2021¥¥

19,444
1,004
83
(28)
(552)
(3,873)(98)—
15,980$ 175,610
9,071
753
(256)
(4,989)(34,981)(881)—$ 144,328

The changes in plan assets during the year ended March 31, 2021 are as follows:
Thousands of
U.S. dollars

Millions of yen

2021

Plan assets at April 1, 2020
Expected return on plan assets
Actual loss
Contributions by the Company
Retirement benefits paid
Exchange translation adjustment
OthersPlan assets at March 31, 2021¥¥

10,278
204
2,762
815
(489)
(104)
—
13,465$92,825
1,843
24,943
7,364(4,419)(944)—$ 121,613

The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheet as ofMarch 31, 2021 for the Company’s and the consolidated subsidiaries’ defined benefit plans:
Thousands of
U.S. dollars

Millions of yen

2021

Unfunded retirement benefit obligation
Net liability for retirement benefits in the balance sheet

15,281(13,465)
1,817
698
2,515

$ 138,019(121,613)
16,407
6,309
22,715

Liability for retirement benefits
Assets for retirement benefits
Net liability for retirement benefits in the balance sheet

2,709
(194)
2,515

24,468(1,753)22,715Funded retirement benefit obligation
Plan assets at fair value

¥

¥

$

Annual Report 2021

67

The components of retirement benefit expense for the year ended March 31, 2021 are as follows:
Thousands of
U.S. dollars

Millions of yen

2021

Service cost
Interest cost
Expected return on plan assets
Amortization of prior service cost
Amortization of actuarial loss
Retirement benefit expense

¥

¥

1,004
83
(204)
(234)
408
1,058

$

9,071
753
(1,843)(2,112)
3,684
9,554

$

Note: Retirement benefit expense for consolidated subsidiaries adopting the simplified method which assumes retirement benefit
obligation to be equal to the benefits payable if all eligible employees voluntarily terminated their employment at fiscal year-end
are included in “Service cost.”
Prior service cost and actuarial loss included in other comprehensive income (before tax effect) as of March 31, 2021 are as
follows:
Thousands of
U.S. dollars

Millions of yen

2021

Prior service cost
Actuarial loss
Total

¥
¥

3,639
3,231
6,871

$
$

32,86929,18562,054

Unrecognized prior service cost and unrecognized actuarial loss included in accumulated other comprehensive income (before tax
effect) as of March 31, 2021 are as follows:
Thousands of
U.S. dollars

Millions of yen

2021

Unrecognized prior service cost
Unrecognized actuarial loss
Total

¥
¥

(3,507)764(2,744)$ (31,677)
6,898$ (24,780)

The fair value of plan assets, by major category, as a percentage of total plan assets as of March 31, 2021 are as follows:
2021

Bonds
StocksCash on hand and in banks
Other
Total

19%
59%
2%
20%
100%

Note: 47% of total plan assets are in a Retirement Benefit Trust for corporate pension plans and non-contributory funded employee
pension plans.
Matters related to the actual assumption
Major actuarial assumptions at the end of the period:
Discount rates
mainly 0.4%
Expected rates of return on plan assets mainly 2.0%
Expected rates of salary increase
7.4%
Defined contribution plan
The amount which a consolidated subsidiary has contributed or is obligated to contribute to the plan for the year ended March 31,
2021 is ¥17 million ($154 thousand).

68 FURUKAWA CO., LTD.

The changes in the retirement benefit obligation during the year ended March 31, 2020 are as follows:
Millions of yen

2020

Retirement benefit obligation at April 1, 2019
Service cost
Interest cost
Actuarial loss
Retirement benefits paid
Prior service cost
Exchange translation adjustment
Other
Retirement benefit obligation at March 31, 2020¥¥

20,136886
97(183)(1,475)—(17)—
19,444The changes in plan assets during the year ended March 31, 2020 are as follows:
Millions of yen

2020

Plan assets at April 1, 2019
Expected return on plan assets
Actual loss
Contributions by the Company
Retirement benefits paid
Exchange translation adjustment
OthersPlan assets at March 31, 2020¥¥

11,545218(1,125)
351
(690)
(21)
—
10,278The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheet as ofMarch 31, 2020 for the Company’s and the consolidated subsidiaries’ defined benefit plans:Millions of yen

2020

Funded retirement benefit obligation
Plan assets at fair value¥

Unfunded retirement benefit obligation
Net liability for retirement benefits in the balance sheet

18,770(10,278)
8,492
674
9,166

Liability for retirement benefits
Assets for retirement benefits
Net liability for retirement benefits in the balance sheet

9,511
(345)
9,166

¥

The components of retirement benefit expense for the year ended March 31, 2020 are as follows:
Millions of yen

2020

Service cost
Interest cost
Expected return on plan assets
Amortization of prior service cost
Amortization of actuarial loss
Retirement benefit expense

¥

¥

886
97
(218)
24
315
1,104

Note: Retirement benefit expense for consolidated subsidiaries adopting the simplified method which assumes retirement benefit
obligation to be equal to the benefits payable if all eligible employees voluntarily terminated their employment at fiscal year-end
are included in “Service cost.”

Annual Report 2021

69

Prior service cost and actuarial loss included in other comprehensive income (before tax effect) as of March 31, 2020 are as
follows:
Millions of yen

2020

Prior service cost
Actuarial loss
Total

¥

24
(618)
(594)

¥

Unrecognized prior service cost and unrecognized actuarial loss included in accumulated other comprehensive income (before tax
effect) as of March 31, 2020 are as follows:
Millions of yen

2020

Unrecognized prior service cost
Unrecognized actuarial loss
Total

¥

132
3,995
4,127

¥

The fair value of plan assets, by major category, as a percentage of total plan assets as of March 31, 2020 are as follows:
2020

Bonds
StocksCash on hand and in banks
Other
Total

20%
51%
2%
27%
100%

Note: 41% of total plan assets are in a Retirement Benefit Trust for corporate pension plans and non-contributory funded employee
pension plans.
Matters related to the actual assumption
Major actuarial assumptions at the end of the period:
Discount rates
mainly 0.2%
Expected rates of return on plan assets mainly 2.0%
Expected rates of salary increase
3.6%–5.3%
Defined contribution plan
The amount which a consolidated subsidiary has contributed or is obligated to contribute to the plan for the year ended March 31,
2020 is ¥19 million.

15. Income Taxes
The reconciliation between the effective tax rate reflected in the consolidated statement of income and the statutory tax rate for theyears ended March 31, 2021 and 2020 are summarized as follows:
Statutory tax rate
Non-deductible expenses for tax purposes
Non-taxable dividends and other income
Tax deduction such as R&D expenses
Inhabitants’ per capital tax
Equity in earnings and losses of affiliates
Undistributed profits of subsidiaries
Changes in valuation allowance
Different tax rates applied to subsidiaries
Adjustment of profit and loss on transfer
Other
Effective tax rate

70 FURUKAWA CO., LTD.

2021

2020

30.6%
0.2
(0.6)
(1.4)
0.7
(1.1)
1.1
(5.5)
(0.2)
—
(1.2)
22.6%

30.6%
0.4
(1.0)
(2.0)
1.0
0.2
0.4
3.2
(0.2)
2.0
1.7
36.3%

Deferred tax assets and liabilities as of March 31, 2021 and 2020 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2021

2021

2020

Deferred tax assets:
Liability for retirement benefits¥
5,466
Investment securities
1,540
Net operating loss carryforwards
3,414
Land
1,725
Other
1,152
Total gross deferred tax assets
13,297
Valuation allowance for net operating loss carryforwards(3,668)Valuation allowance for total amount of deductible temporary difference and others(3,657)
Total valuation allowance(7,026)
Total deferred tax assets
6,271
Deferred tax liabilities:
Statutory reserves provided for tax purposes(1,169)Gain from establishment of trust for retirement benefit plans(3,020)Land(7,169)Unrealized holding gain on securities(3,928)
Other(747)
Total deferred tax liabilities(16,033)
Net deferred tax liabilities¥ (9,761)
Deferred tax liabilities on surplus on the revaluation of land
¥ (1,402)

¥

7,534
2,284
3,800
1,725
1,378
16,721(3,668)(4,437)(8,105)
8,616(1,253)(3,020)(7,188)(1,544)(510)(13,515)¥ (4,899)¥ (1,408)$

49,372
13,90630,837
15,582
10,403120,099(30,427)(33,030)(63,456)
56,643(10,562)(27,274)(64,747)(35,473)(6,746)(144,803)$ (88,160)$ (12,667)

16. Contingent Liabilities
Contingent liabilities as of March 31, 2021 and 2020 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2021

Notes receivables discounted and endorsed
Loans guaranteed
Repurchase obligation of the securitization of receivables

¥

120
2,214
1,342

2021

2020

¥

151
2,847
1,469

$

1,080
19,99812,123

17. Write-Down of Inventories
The amount of write-down of inventories included in cost of sales for the year ended March 31, 2021 totaled ¥345 million ($3,112
thousand). For the year ended March 31, 2020, the Company reversed write-down in the amount of ¥157 million and credited it tocost of sales.

Annual Report 2021

71

18. Other Income (Expenses)—Other, Net
Other income (expenses)—other, net for the years ended March 31, 2021 and 2020 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2021

Gain on foreign exchange
Reversal of provision for cost of removal of office tenants
Gain on sales of noncurrent assets
Gain on sales of investment securities
Payments for idle mines
Foreign exchange losses
Loss on sales of noncurrent assets
Loss on impairment of investment securities
Rental building demolition costs
Impairment loss
Other, net

¥

¥

702
—
25
4,078
(770)
—
(151)
—
(731)
(75)
406
3,486

2021

2020

¥

¥

—
264
655
20
(715)
(554)
(144)
(1,030)
—
(241)
(96)
(1,840)

$

$

6,340
—
229
36,834(6,952)—(1,365)—(6,598)(675)
3,670
31,487

19. Segment Information
The reportable segments are constituent units of the Furukawa Group for which separate financial information is available. The Boardof Directors periodically examines these segments for the purpose of deciding the allocations of management resources and evaluating
operating performance.
The Company mainly manufactures and sells machinery, smelts on consignment and sells copper, and manufactures and sells
electronics and chemicals.
Under the holdings company structure, each main Group company plans domestic and overseas comprehensive strategies about
their products, and the Company manages and supervises them.
The Furukawa Group therefore categorizes segments classified by products based on main Group companies. The seven reportablesegments are as follows: Industrial Machinery, Rock Drill Machinery, UNIC Machinery, Metals, Electronics, Chemicals and Real Estate.
Main products and services belonging to each segment are as follows:(a) Industrial Machinery
		 Manufacture, sell, conduct installation work and manage operation for pumps, steel structures, steel bridges, industrial
machinery (crushers, grinding mills, screens, briquetting machines, material handling systems, environmental machinery,recycling machines and so on) and heat-resistant and wear-resistant castings(b) Rock Drill Machinery
		 Manufacture and sell rock drills such as hydraulic breakers, hydraulic crushers, boring drills (air pressure crawler drills, hydrauliccrawler drills, down-the-hole drills and so on) tunnel and mining drill jumbos (tunnel drill jumbos, concrete sprayers used inmine cavities, drill jumbos used in mines and so on) and environmental machinery(c) UNIC Machinery
		 Manufacture and sell UNIC cranes, mini crawler cranes, ocean cranes and UNIC carriers(d) Metals
		 After buying ore, manufacture and sell electrolytic copper, gold, silver and sulfuric acid which is smelted on consignment by
joint smelting company, dig and distribute limestone(e) Electronics
		 Manufacture and sell high-purity metallic arsenic, crystals, cores and coils, aluminum nitride ceramics and optical components(f) Chemicals
		 Manufacture and sell cuprous oxide, ferric polysulfate aqueous solution, aluminum sulfate, sulfuric acid, cuprous dioxide andcopper dioxide, and sell titanium dioxide(g) Real Estate		 Trade, intermediate and lease of real estate
The accounting method used for reportable segments is the same as that method stated in “2. Summary of Significant Accounting
Policies.” Operating income (loss) of reportable segments is based on operating income in the consolidated statement of income.
Intersegment sales and transfers are recorded based on the actual market prices.

72 FURUKAWA CO., LTD.

Segment information of the Furukawa Group for the years ended March 31, 2021 and 2020 was as follows:Year ended March 31, 2021

Millions of yen
Industrial
MachinerySales and operating income (loss):
Outside customers
Intersegment
Total
Operating income (loss)
Others:Segment assets
Depreciation
Investments in equity-method affiliates
Increase in tangible fixed assets and intangible fixed assets¥¥¥

Rock Drill
Machinery

27,804 ¥121
27,925
3,180 ¥

76,095 ¥220
76,315
499 ¥

5,741
—
5,741
162

22,464 ¥357—
508

34,054 ¥888—
634

30,126 ¥
1,036
127
1,130

30,521 ¥
181
3,028
74

6,960
282
216
370

Millions of yen¥¥¥

Real Estate

OthersAdjustments

Consolidated

6,367 ¥
55
6,423
380 ¥

2,108 ¥
14
2,121
737 ¥

756 ¥
1,574
2,330
(83) ¥— ¥ 159,703(5,068)—(5,068)
159,703(71) ¥
5,592

16,664 ¥242—
226

26,811 ¥432—
5

3,057 ¥
86
163
57

47,618 ¥ 218,275
76
3,581
—
3,534
464
3,469

Year ended March 31, 2020

Millions of yen
Industrial
Machinery¥¥¥

Rock Drill
Machinery

UNIC
Machinery

MetalsElectronics

23,237 ¥3,127
26,364
3,208 ¥

27,663 ¥30
27,693143 ¥

31,791 ¥160
31,951
3,993 ¥

67,150 ¥251
67,401
302 ¥

5,506
1
5,507
(35)

25,379 ¥336—
278

36,371 ¥
796
—
3,672

31,095 ¥
976
113
740

27,663 ¥
177
2,847
96

7,037
270
215
265

Year ended March 31, 2020

Millions of yen
Chemicals

Sales and operating income (loss):
Outside customers
Intersegment
Total
Operating income (loss)
Others:Segment assets
Depreciation
Investments in equity-method affiliates
Increase in tangible fixed assets and intangible fixed assets

Electronics

24,149 ¥25
24,175(1,325) ¥Chemicals

Sales and operating income (loss):
Outside customers
Intersegment
Total
Operating income (loss)
Others:Segment assets
Depreciation
Investments in equity-method affiliates
Increase in tangible fixed assets and intangible fixed assets

Metals

16,682 ¥3,059
19,741
2,114 ¥

Year ended March 31, 2021

Sales and operating income (loss):
Outside customers
Intersegment
Total
Operating income (loss)
Others:Segment assets
Depreciation
Investments in equity-method affiliates
Increase in tangible fixed assets and intangible fixed assets

UNIC
Machinery¥¥¥

Real Estate

OthersAdjustments

Consolidated

6,711 ¥
51
6,762
510 ¥

2,386 ¥
15
2,401
736 ¥

771 ¥
1,639
2,410
(95) ¥— ¥ 165,216(5,273)—(5,273)
165,216(68) ¥
8,693

16,677 ¥206—
728

26,717 ¥446—
122,595 ¥
95
100
(56)

36,163 ¥ 209,697
53
3,356
—
3,275
430
6,166

Annual Report 2021

73

Year ended March 31, 2021

Thousands of U.S. dollars
Industrial
MachinerySales and operating income (loss):
Outside customers
Intersegment
Total
Operating income (loss)
Others:Segment assets
Depreciation
Investments in equity-method affiliates
Increase in tangible fixed assets and intangible fixed assets

Rock Drill
Machinery

UNIC
Machinery

MetalsElectronics$ 150,670 $ 218,112 $ 251,121 $ 687,274 $
27,628
230
1,090
1,985
178,298
218,342
252,211689,259$ 19,089 $ (11,965) $ 28,722 $
4,511 $

51,853
1
51,854
1,459$ 202,889 $ 307,568 $ 272,089 $ 275,661 $
3,222
8,024
9,360
1,634
—
—
1,147
27,344
4,586
5,726
10,207672

62,865
2,548
1,952
3,341

Year ended March 31, 2021

Thousands of U.S. dollars
Chemicals

Sales and operating income (loss):
Outside customers
Intersegment
Total
Operating income (loss)
Others:Segment assets
Depreciation
Investments in equity-method affiliates
Increase in tangible fixed assets and intangible fixed assets$$

Real Estate

57,509 $500
58,0093,432 $

Others19,036 $123
19,1586,652 $

$ 150,509 $ 242,151 $
2,184
3,904
—
—
2,043
49

Adjustments

6,826 $
14,21721,043(746) $

Consolidated— $ 1,442,402(45,773)—(45,773) 1,442,402(644) $ 50,509

27,608 $ 430,077 $ 1,971,417
779
688
32,344
1,474—
31,917515
4,189
31,328(Related information)
Years ended March 31, 2021 and 2020
1. Information regarding products and services
Year ended March 31, 2021

Millions of yen
Copper¥Sales for outside customers

60,814

UNIC cranes¥

Year ended March 31, 2020

Sales for outside customers¥

54,231

UNIC cranes¥

Year ended March 31, 2021$

Sales for outside customers

549,263

2. Geographic segment information(1) Net sales
Year ended March 31, 2021
Millions of yen
Japan

Asia

¥

Others30,616¥

12,556

Total¥

159,703¥

165,216

Year ended March 31, 2020
Millions of yen
Japan

¥

129,339

Asia¥

Others

21,763¥

14,113Total

Year ended March 31, 2021
Thousands of U.S. dollars
Japan$ 1,052,479

74 FURUKAWA CO., LTD.

80,480Total¥

159,70321,446¥

165,216

Others¥89,538

Total

Thousands of U.S. dollars
Copper116,530

Others¥Millions of yen
Copper¥18,409Asia$

276,517

Others$

113,406

Total$ 1,442,402

UNIC cranes$

166,265

Others$726,874

Total$ 1,442,402

(2) Property, plant and equipment
The geographic segment information for the years ended March 31, 2021 and 2020 has not been presented, because the total assets
in Japan exceed 90% of consolidated totals.
3. Information regarding main customers
Year ended March 31, 2021
Millions of yen
Name of customer

Sales volume

Related segment

Furukawa Electric Co., Ltd.

¥ 24,230

MetalsYear ended March 31, 2020
Millions of yen
Name of customer

Sales volume

Related segment

Furukawa Electric Co., Ltd.

¥ 24,409

MetalsYear ended March 31, 2021
Thousands of U.S. dollars
Name of customer

Sales volume

Related segment

Furukawa Electric Co., Ltd.

$218,844

Metals

4. Impairment loss on property, plant and equipment
Millions of yen
Year ended March 31, 2021

Industrial
Machinery

Rock Drill
Machinery

UNIC
Machinery

Impairment loss onproperty, plant andequipment———

Year ended March 31, 2020

Industrial
Machinery

Rock Drill
Machinery

UNIC
Machinery

Impairment loss onproperty, plant andequipment———

Year ended March 31, 2021

Industrial
Machinery

Rock Drill
Machinery

UNIC
Machinery

Impairment loss onproperty, plant andequipment———

MetalsElectronics—

Chemicals—

Real Estate

— ¥

60

OthersAdjustments— ¥Consolidated

15 ¥

75

Millions of yen
MetalsElectronics——

Chemicals

Real Estate

— ¥

0 ¥

OthersAdjustments

240

Consolidated

— ¥

241

Thousands of U.S. dollars
MetalsElectronics——

Chemicals

Real Estate

— $

542

OthersAdjustments— $Consolidated

133 $

675

5. Amortization of goodwill and unamortized goodwill in reporting segments
Not applicable.
6. Gain on negative goodwill in reportable segments
Not applicable.

Annual Report 202175

20. Investment and Rental Properties
The Company and certain consolidated subsidiaries own office buildings for lease mainly in Tokyo and other areas. For the year ended
March 31, 2021, rental income was ¥1,076 million ($9,722 thousand), gain on sales of rental properties was ¥3 million ($27 thousand)and impairment loss on rental properties was ¥74 million ($671 thousand).
For the year ended March 31, 2020, rental income was ¥1,088 million, gain on sales of rental properties was ¥576 million,
impairment loss on rental properties was ¥241 million and other gain was ¥6 million.
The carrying value, net changes in the carrying value and the fair value of those properties as of and for the years ended March 31,
2021 and 2020 are as follows:Year ended March 31, 2021
Carrying value
As of March 31, 2020

Fair value

Net change

As of March 31, 2021

As of March 31, 2021

Millions of yen¥

30,705

¥

(498)

¥

30,207¥39,978Year ended March 31, 2020
Carrying value
As of March 31, 2019

Fair value

Net change

As of March 31, 2020

As of March 31, 2020

Millions of yen¥

31,632

¥

(927)

¥

30,705¥34,941

Year ended March 31, 2021
Carrying value
As of March 31, 2020

Net change

Fair value
As of March 31, 2021

As of March 31, 2021

Thousands of U.S. dollars$

277,320$(4,495)$

272,824$

361,077

Notes:
1. The carrying value represents the acquisition cost less accumulated depreciation and cumulative impairment loss.
2.	Net change in carrying value for the year ended March 31, 2021 mainly consists of increases due to use change in the amount of¥937 million ($8,461 thousand) and decreases mainly due to amortization in the amount of ¥369 million ($3,331 thousand), usechange in the amount of ¥925 million ($8,354 thousand), impairment loss on rental properties in the amount of ¥74 million ($671
thousand) and sales of land in the amount of ¥66 million ($601 thousand). Net change in carrying value for the year ended March
31, 2020 mainly consists of increases due to use change in the amount of ¥34 million and acquisition of land and buildings in theamount of ¥19 million and decreases mainly due to amortization in the amount of ¥376 million, impairment loss on rental properties
in the amount of ¥241 million and sales of land in the amount of ¥362 million.
3. The fair value is mainly estimated in accordance with appraisal standards for valuing real estate.

21. Subsequent Event(1) Appropriations of Retained Earnings
The following appropriations of retained earnings of the Company, which have not been reflected in the accompanying consolidated
financial statements, were approved at a shareholders’ meeting held on June 29, 2021:
Thousands of
U.S. dollars

Millions of yen

Year-end cash dividends (¥50.00=$0.45 per share)
Transfer to legal reserve¥¥

76 FURUKAWA CO., LTD.

1,954
195
2,149

$
$

17,646
1,765
19,411

Annual Report 2021

77

78 FURUKAWA CO., LTD.

Annual Report 2021

79

80 FURUKAWA CO., LTD.

Annual Report 2021

81

82 FURUKAWA CO., LTD.

Annual Report 2021

83

Corporate Data
Corporate Data (As of March 31, 2021)
Company Name:
Head Office:Tel:Date of Foundation:
Date of Establishment:
Stock Exchange Listing:
Securities Code Number:
Employees:

Stock Data (As of March 31, 2021)

Furukawa Co., Ltd.
2-6-4 Otemachi, Chiyoda-ku, Tokyo
100-8370, Japan (Tokiwabashi Tower)+81-3-6636-9501 (Since July 26, 2021)
August 1875
April 1918
Tokyo
5715
2,752 (Consolidated)

Principal Shareholders

Number of Percentage ofSharesTotal Shares(%)(Thousands)(As of March 31, 2021)

The Master Trust Bank of Japan, Ltd. (trust account) 2,482

6.35

Asahi Mutual Life Insurance Co.

2,373

6.07

Seiwa Building Co., Ltd.

1,935

4.95

Custody Bank of Japan, Ltd. (trust account)

1,688

4.32

The Yokohama Rubber Co., Ltd.

1,341

3.43

Furukawa Electric Co., Ltd.

877

2.24

Fuji Electric Co., Ltd.

862

2.20

Sompo Japan Insurance Inc.

839

2.14

Kawashima Co., Ltd.
Chuo Real Estate Co., Ltd.

756
687

1.93
1.75

Number of Shares Authorized:

80,000,000 shares

Number of Shares Outstanding:

40,445,568 shares

Number of Shareholders:

19,987

Stock Transfer Agent:

Sumitomo Mitsui Trust Bank, Limited
4-1, Marunouchi 1-chome, Chiyoda-ku,
Tokyo, Japan

Composition of Shareholders(As of March 31, 2021)
Financial Instruments Firms(Securities Companies)

Treasury Stock

1.59%

3.38%

Foreign Institutions

Individuals and Others

15.33%

24.67%

Other Japanese Companies

25.38%

Financial Institutions

29.65%

Notes: 1. The above excludes the Company’s holdings of treasury stock, totaling		1,369,919 shares.
2. The Company’s holdings of treasury stock, totaling 1,369,919 shares,
		are excluded from shareholding ratio calculations.

Directors and Auditors (As of June 29, 2021)
Chairman and Representative Director

Naohisa Miyakawa

Outside Independent Director

Tatsuya Tejima

President and Representative Director

Minoru Nakatogawa

Outside Independent Director

Yoichi Mukae

Senior Managing Director

Masahiro Ogino

Outside Independent Director

Kazumi Nishino

Managing Director

Kiyohito Mitsumura

Audit & Supervisory Board Member

Minoru Iwata

Director

Tatsuki Nazuka

Audit & Supervisory Board Member

Kazuo Inoue

Hiroyuki Sakai

Outside Audit & Supervisory Board
MemberTetsuro Ueno

Outside Audit & Supervisory Board
MemberMasayuki Yamashita

Director

Executive Officers (As of June 29, 2021)
Senior Managing
Executive Officer

Masahiro Ogino

President & Representative Director,
Furukawa Rock Drill Co., Ltd.

Executive Officer

Kenichi Kurita

Managing Executive
Officer

Katsuhira Kawashita

President & Representative
Director, Furukawa Industrial
Machinery Systems Co., Ltd.

Vice President & Representative
Director, Furukawa Industrial
Machinery Systems Co., Ltd.

Executive Officer

Kenji Yamakawa

President & Representative Director,
Furukawa UNIC Corporation

Senior Executive
Officer

Tatsuki Nazuka

General Manager, Technology
Division

Executive Officer

Tatsuyuki Muramatsu

Vice President & Representative
Director, Furukawa UNIC Corporation

Executive Officer

Hiroyuki Sakai

General Manager, Real Estate Division;
General Manager, Corporate Planning
Department; and General Manager,
Business Process Re-engineering
Department

Masanori Saito

President & Representative Director,
Furukawa Metals & Resources Co.,
Ltd.

Executive Officer

Hitoshi Iida

General Manager, Corporate
Strategy, Corporate Planning
Department

President & Representative
Director, Furukawa Denshi
Co., Ltd.

Executive Officer

Kazuyoshi Iwama

President & Representative
Director, Furukawa Chemicals
Co., Ltd.

Senior Executive
Officer

Senior Executive
Officer

Osamu Miyazaki

Senior Executive
OfficerAtsushi Takano

General Manager, Human
Resources & General Affairs
Department

Executive Officer

Tsutomu Kaneko

Deputy General Manager,
Technology Division

Senior Executive
OfficerTakeshi Miyajima

General Manager, Legal
Department

Executive Officer

Masayuki Kunou

General Manager, Environmental& Safety Management Department

84 FURUKAWA CO., LTD.

Corporate History
1875

Began the operation of the Kusakura Copper Mine in Niigata(Company foundation).

1877

Began the operation of the
Ashio Copper Mine in Tochigi.

1900

Set up a machinery works at the
Ashio Copper Mine and enteredinto the machinery business.

1914

Manufactured the first rock drillin Japan.

1918

1944

Spun off mining business from
Furukawa General Partnershipand established Furukawa Mining Co., Ltd.
Bought Osaka Smelter of Toa
Chemical Smelting Co., Ltd., andestablished it as Osaka Cementation and Refining. Entered into
the chemical business.
Built the Oyama Works of theMachinery Division of the Ashio
Copper Mine in Tochigi.

1950

Built the Takasaki Works of theRock Drill Division in Gunma.

1951

Began manufacturing oftitanium dioxide and cuprous
oxide at Osaka Cementation
and Refining.

1962

The key to the success of the
Furukawa Company Groupbegan with the developmentof the Ashio Copper Mine.

The first domestic rock drill
was developed (for the Ashio
Copper Mine).

At the Oyama Works, pumps
and mining machinery for copper mines were manufactured,
not only for internal use but
also to sell externally.

At the Takasaki Works, rock
drills were mass produced, andwe established the position of aleading rock drill manufacturer.

2003

Established a joint company for the
manufacturing and distribution of
UNIC cranes in China.

2005

Spun off the Machinery business,
Metals business, and Electronic
Materials and Chemicals businessand shifted to a group management
structure as the Furukawa Company
Group to enhance management.

2006

Established a rock drills sales company in China.

2007

Formed a capital and businessalliance for the GaN semiconductor
epi-wafer business with POWDEC
K.K.

2008

Furukawa Industrial Machinery Systems Co., Ltd. merged with
Furukawa Otsuka Iron Works Co., Ltd.

2009

Made Tohpe Corporation, which
manufactures and distributes paints
and chemicals, into a consolidated
subsidiary.

2010

Acquired interest in Canadiancopper mine.

2011

Established a sales company ofrock drill products in India.

1987

Bought UNIC Corporation(manufacturer of truck-mounted
cranes).

1989

The Japanese name changed
from Furukawa Kogyo Kabushiki Kaisha to Furukawa Kikai
Kinzoku Kabushiki Kaisha.

1990

Bought an American breaker sales
and manufacturing company.

1997

Established a manufacturer of
UNIC products / components
in Thailand.

1998

Established a sales company ofrock drill products in Holland.

Acquired interest in Gibraltar
Copper Mine (Canada)

Established a sales company ofrock drill products in Panama.

2012

Established sales company for UNIC
products in Russia.
With the sale of all of its shares inFurukawa Commerce Co., Ltd., theGroup has withdrawn from the fuelsbusiness.

Completed the Furukawa /Outokumpu flash smelting plant
at Ashio Smelting and Refining.
Completed research anddevelopment of high-purity(99.999%) metallic arsenic andcommenced with sales of it.

This is an affiliate company for
the UNIC business establishedin Taian, Shandong, China,
which manufactures anddistributes truck-mounted
cranes and other products.

Arsenic is one of the byproducts generated during
the smelting stage of copper
concentrates.centrates.

2013

The Group exited the paints businesswith the sale of all of its shares in
Tohpe Corporation.

Completed Muromachi Furukawa
Mitsui Building in Nihonbashi, Tokyo.

2014“UNIC” has become asynonym for truck-mounted
cranes in Japan.

This is an affiliate company for
the UNIC business establishedin Rayong, Thailand, which manufactures truck-mounted cranes andother products.

This is an affiliate company forthe construction and mining
machinery business establishedin Utrecht, Holland, which
distributes rock drill products.

Established a coil processing
company in the Philippines.

Muromachi Furukawa Mitsui
Building, consists of a commercial
facility (COREDO Muromachi 2),
offices, and rental accommodation.

Established the Tsukuba Development
Center, which integrates a technology
research operation.

2015

Renewed Management Philosophy
and established Vision for 2025.

2018

Established sales company forrock drills and other products
in Malaysia.

2021

Consolidated head office functions
and relocated to Tokiwabashi Tower
in Otemachi, Tokyo.

An affiliated company for theelectronic materials businessmakes coils in Bulacan Province,
Philippines.

Tokiwabashi Tower (in Tokyo
Torch redevelopment district)
Annual Report 202185

2-6-4 Otemachi, Chiyoda-ku, Tokyo 100-8370, Japan

https://www.furukawakk.co.jp