ACTION

FOR THE FUTURE

Management Principles
Founding Philosophy

Index
The Toyo Kanetsu Group’s
Value Creation Story

30	Special Feature 3:
Resolving Social Issues with New Solutions

2 History of Toyo Kanetsu

32	Special Feature 4:
Initiatives to Support the Sustainable Growth of
the Entire Group

4 President’s Message
12	The Toyo Kanetsu Group’s
Value Creation Process
14	The Toyo Kanetsu Group Medium-TermBusiness Plan (Fiscal 2022–2024)

34 Material Issues and KPIs
36 The Toyo Kanetsu Group’s ESG Data Highlights

		 Basic Policy for New Segments

Governance		 17 Logistics Solutions Business38 Board of Directors

		 18 Plant Business

40 Chairman’s Message

		 19 Next-Generation Energy Development
Business

42 Dialogue among Three Outside Directors

		 20 Business Innovation and Other Businesses

53 Business Risks

22 Message from the Executive Officer of Finance

54 Director Profiles

Business Overview

24 The Toyo Kanetsu Group’s Material Issues

56 Fiscal 2021 Results by Segment6

29	Special Feature 2:
Our Steps to a Carbon-Neutral Society

Founding
Philosophy

Five Principles in
the Toyo Kanetsu
Group’s Code of Conduct

Code of Conduct

46 Corporate GovernanceMaterial Issues
26	Special Feature 1:
Initiatives for Climate Change

Be Creative,
Be Good for Society• Adhere to laws, regulations,and rules

Management Vision• Fulfill responsibilities to society

Become a Solution
Innovator that solves
social issues throughinnovative technology andexecution capability• Conduct business activities
transparently and in good faith• Adhere to standards of
ethical conduct• Create health-conscious
work environments

Data Section
58 Consolidated Financial Highlights

Group Medium-Term Business Plan
(Fiscal 2022–2024)

60 Domestic and Overseas Offices
61 Corporate Profile and Stock Information

Please see pages 14–21 for details.

Editorial Policy
Since fiscal 2019, the Company has published the TKK Report, an integrated report that conveys information about its management strategy,
business environment, ESG (environmental, social, and governance) issues, and finances annually,with the aim of furthering an understandingof its corporate value from a medium- and long-term perspective. In preparing this report, the Company referred to sources that include

ACTION FOR THE FUTURE
The ability to exceed expectations andbecome a force for the future

the International Integrated Reporting Framework (<IR> Framework) of the IFRS Foundation. We welcome any feedback or opinions from­readers in order to make this report better and easier to understand.

 etails about results for fiscal 2021, the fiscal year ended March 31, 2022, are available in the TKK Report 2022 Financial
D
Section, which is on the Company’s website.

https://www.toyokanetsu.co.jp/global/ir/tkk_report.php
Please visit the Company’s website for other information for investors.

https://www.toyokanetsu.co.jp/global/ir/

Logistics Solutions

Plant

Next-Generation
Energy Development

Business Innovation
and Others

ACTION FOR
NEXT LOGISTICS

ACTION FOR
INFRASTRUCTURE

ACTION FOR
NEXT ENERGYACTION FORSUSTAINABILITY

Become the power
behind the logistics
system of the future

Become a force that
supports social
infrastructure

Become a force
supporting the futureof energy

Become a force
that supportsa sustainable society

Cautionary Note Regarding Forward-Looking Statements
In this report, contents not based on historical fact are future estimates and projections about Toyo Kanetsu and the Toyo Kanetsu Group’splans, strategies, and earnings that were made based on currently available information. Actual results may differ significantly from theseforward-looking statements due to business-related risks and various uncertain factors.

TKK Report 2022

1

The Toyo Kanetsu Group’s Value Creation Story

History of Toyo Kanetsu
Plant BusinessFirst LNG tanks ordered from Brunei

Contribution to the Expansionof Clean Energy

Our founder’s desire to always anticipate and contribute tosociety’s needs has become a cornerstone of our­business, especially in the logistics and energy fields.

The first ordered tank built at theShowa Sekiyu Muroran refinery

Plant Business

When our tank business first supplied liquefied
natural gas (LNG) tanks to Brunei in 1969, LNG
was just beginning to attract attention as a sourceof clean energy. We were well-positioned to growinto a manufacturer capable of producing everything from ambient temperature to cryogenic­storage tanks. Since then, Toyo Kanetsu hasdelivered one of the world’s largest tanks (230,000kl), and now boasts a share of more than 10% of
the global market. We also have the number one
share in maintenance for domestic refineries.

2021
80th anniversary of
Toyo Kanetsu’s founding

2000s

Providing Energy Infrastructure
to Support Rapid Growth
Toyo Kanetsu was founded in 1941 as Toyo Kanetsu
Kogyo K.K.
With war on the horizon, increased military demand
for firebricks and other refractories was anticipated.
Spun off from Toyo Tile Co., Toyo Kanetsu Kogyo wasestablished to take over the operation of the former’s
industrial kiln furnace manufacturing and sales division.
The Company operated independently of its parent, andthe first president, Yoshio Funo, and the second president, Zenkichi Kinugawa, worked together to expand
the business.
The Company’s postwar restart was the result of construction projects to supply heating and cooling boilers
to various locations of troop garrisons. The technology
developed during this boiler production period waspassed on to later tank production.

Certificate from the API

In 1950, the Company received its first order tomanufacture oil storage tanks and, as demand for
petroleum and other stable energy supplies grew,quickly expanded overseas and began manufacturing tanks in great numbers in the Middle East
and Asia. In 1958, the Company became the firstJapanese company to gain API (American
Petroleum Institute) certification and quickly
gained renown as a world-class provider of­ambient-temperature storage tanks.

Next-Generation Energy Development Business

Becoming Carbon Neutral
1970s

1970
Listed on the First
Section of the Tokyo
Stock Exchange

Concentrated management
resources in the tank andconveyor businesses

1969
Changed the Company
name to Toyo Kanetsu K.K.

Yoshio Funo,
our first president

1950s
Corporate motto handwritten by Mr. Funo

Rapistan conveyor (delivered to the Harumi
Post Office of the Ministry of Posts andTelecommunications)

Logistics Solutions BusinessLabor-Saving and Streamlining Cargo Handling
Operations during the Construction BoomFounding
Years

A line of trucks carrying our boilers lined up in
front of the Nihonbashi Head Office2

TKK Report 2022

Utilizing Toyo Kanetsu’s world-class low-temperature and cryogenic tanktechnology, we are currently developing the technology for a large-scale­liquid hydrogen storage tank in collaboration with the Tokyo Institute ofTechnology and Hokkaido University, with support from the New Energy andIndustrial Technology Development Organization (NEDO).

Logistics Solutions Business

1955

Founding

2022
Moved to the Tokyo Stock Exchange
Prime Market

Logistics Solutions Business

1941

Establishedthe Strengths ofToyo Kanetsu

Early conveyor for civilengineering andconstruction work

In 1952, we saw belt conveyors’ potential aslabor-saving equipment and opened the
Yokohama Plant to manufacture them for­construction use. A construction boom led todemand for labor-saving solutions and the rationalization of cargo handling operations. To meetthis demand, we created the first automatic pressure conveyor (APC) and started production in
1960. The APC system was widely accepted bydomestic customers who required high-speed,
reliable conveyor systems, and the Company
succeeded in capturing domestic demand in thismarket. The Company then shifted its focus to
growing the logistics business.

Providing Pioneering
Logistics Solutions
In the Logistics Solutions Business, the Company
entered the airport baggage handling system (BHS)
market in response to a rapid increase in demandfor efficient, high-volume baggage handling as­larger commercial jet aircraft came into widespreaduse. In the three years from the first delivery ofa BHS in 1971 to 1974, more than 30 airports inJapan began using our BHS, and our BHS share at
airports in Japan is now over 80%.
In addition, during the postwar period of rapid
economic growth, the need for labor-saving solutions
surged due to rising costs and distribution centerswere pressed to expand their scale of operations inorder to respond to diversifying customer demands.
Starting with the delivery of the Rapistan Conveyor
System, which was completed in 1969 and boasted
the largest scale and most advanced efficiency in
Asia at the time, the Company developed a new
and innovative logistics system. In 1996, we delivered the world’s first conveyor-based automatic
handling system for a large-scale auction market,
which won the Technology Prize in the Logistics
Awards organized by the Japan Institute of
Logistics Systems in fiscal 1997.

Tri-Planar® three-dimensional
conveyor

World’s first conveyor-based
automatic handling system fora flower market

Providing Logistics
Solutions That Meetthe Needs of Society

Multishuttle system

Amid the growing need for speedy delivery of a wide variety of products inthe expanding e-commerce market, the Multishuttle automatic case storage
system, which performs the four functions of storing, picking, sorting, andreplenishing has been adopted by many customers in the e-commerce andmanufacturing industries since its first introduction in 2010 due to its highwarehousing and storage capacity.
In the airport BHS market, we are actively involved in supplying major
overseas airports and are participating in the planning of major airport
developments in developing countries in conjunction with Japanese­government’s Official Development Assistance (ODA). We are also
­developing cutting-edge technologies to meet various requirements related
to anti-terrorism measures and smooth immigration control procedures
while working to meet demand for the more efficient handling of air cargo
other than baggage.
The declining birthrate and aging population are becoming more acuteissues, and the need for labor and manpower savings is becoming more
and more important. Utilizing cutting-edge AI and IoT technologies, we­supply systems that meet the needs of our customers and provide backup
services that allow them to operate with peace of mind.
Business Innovation Business

Maintenance and management conductedby an Eco Analysis Corporation employee

To create a new pillar of business andsolidify our foothold in the environment-related business, an area that is
expected to see major growth going
forward, we established corporate­venture capital (CVC) funds in 2017,and added two new companies to theGroup, Kankyo Research Institute Inc.
in 2018 and Eco Analysis Corporationin 2021.

TKK Report 2022

3

President’s Message

Exceed Expectations
and Become a Forcefor the Future
Realizing Our Vision through Straightforward
Decision Making
I was appointed President & Representative Director on April 1, 2022.
From the moment I joined Toyo Kanetsu, I have had a strong desire to
be involved in the management of this company, which contributes tosociety and is committed to helping find solutions to social issues
going forward. So, when I was approached to take on the position,
I didn’t hesitate to accept.
My 37 years in the company began in the Design Department of the
Logistics Business. Next, I was transferred to the Systems
Department, where my main job was to accompany sales staff on their
President and Representative Director

Takashi Owada

visits to customers to find out their needs and make proposals.
Logistics is a highly competitive industry and, because it is sensitive tofast-changing consumer trends and product characteristics, it is rapid-

April 1985

Joined the Company

October 2002 Transferred to
Toyo Kanetsu Solutions K.K.
(currently the Company)

4

TKK Report 2022

April 2008

Executive Officer andGeneral Manager of System Division

April 2015

Managing Executive Officer of
Toyo Kanetsu Solutions

April 2018

Executive Officer of the Company
Director, Managing Executive
Officer of Toyo Kanetsu Solutions

April 2019

Managing Executive Officer,
Division Manager of Logistics
Solutions Division

June 2019

Director, Managing Executive
Officer, Division Manager of
Logistics Solutions Division

April 2021

 irector, Executive Vice President,
D
Division Manager of Logistics
Solutions Division

April 2022

President & Representative
Director (current position)

ly becoming commoditized. The key to winning in this field is quickly
formulating new proposals that can be promptly realized and translated into the next stage of development. Times have changed and today
logistics is considered a key component of corporate management
strategies as companies vie to handle a widely varying demands.
One of my most vivid recollections is tackling the challenge of creating an unprecedented fully automated system for receiving and shipping potted plants for a flower market. In addition to testing thetechnology used to transport them stably at high speed on a conveyor
line more than 30 kilometers long, the fact that the items being transported were delicate live plants presented a unique challenge. Initially,
the engineering team was reluctant to take on the project, and werepeatedly ran into problems. Nevertheless, by introducing new
TKK Report 2022

5

President’s Message

conveyor equipment and trays that we jointly devel-

Similarly, from my perspective as President looking

oped with the customer we successfully completed

at the Group’s business as a whole, we must firstthe project. When the system went into operation,clarify our vision and articulate we want to achieve,

the top of the conveyor looked like a beautiful field ofanalyze and understand the current situation, andflowers. I believe our success was the result of clari-then decisively determine our options and priorities

fying the issues before us and applying sound solu-

based on our own experience before finally making

tion policies to create a completely new system thatstraightforward decisions.

combined our well-honed technological expertise.

Creating the New Management Vision
Over the past two years, we have seen the COVID-19

demonstrated, and that the cumulative effect of suchpandemic engulf the entire world, Russia invade

solutions will create the strength to support the future.

Ukraine, and other unprecedented events. With global

We have adopted the slogan “ACTION FOR THE

warming gaining traction as a social issue and the

FUTURE” to convey that we must face challenges

declining birthrate and aging population becoming

head-on while eagerly seeking out the new and culti-

more serious in Japan, I feel that as a company,

vating the ability to incorporate it into our actions for

we cannot continue to do things and think in thethe future. Toyo Kanetsu employees are very serious

same tried and true ways.

and diligent, but I feel that we need to work together

Recognizing these issues, our new Medium-TermBusiness Plan upholds the Management Vision of theprevious Medium-Term Business Plan, “Innovative

to improve our communication and ability to takeLooking Back on the Previous Medium-Term Business Plan

on challenges.
Under the new Management Vision and slogan, we

solutions for logistics & energy,” with the addition ofhave modified our structure for executing initiatives,

Let us turn now to a detailed discussion of our(GP3) system, which realizes labor saving by inte-

two key phrases, “innovative technology” andspecifically, in April 2022, we divided our operations

Medium-Term Business Plans. First, looking back on

grating all fulfillment center processes from picking­“execution capability.”

into four clearly defined businesses. The Plant &the previous Medium-Term Business Plan, we wereto packing and labeling into a one-stop system, andMachinery Business has become the Plant Business,able to achieve a certain level of success in establish-

the Autonomous Mobile Robot (AMR) system to ourwhich supports existing infrastructure through main-ing our business foundation to support the next stage

customers, whose adoption of these products

tenance, and the Next-Generation Energy

Management Vision

Our Management Vision advocates
becoming a Solution Innovator thatsolves social issues through innovativetechnology and execution capabilityof growth, which was the basic policy of the plan.

reflects their recognition of our expertise regarding

Development Center, which develops storage tanks

In terms of numbers, operating profit and ROE

new technologies and ability formulate solutions

for such next-generation energy sources as hydrogen

doubled from ¥1.41 billion and 2.9%, respectively, inand fuel ammonia. For the future, we are also consid-

fiscal 2018 at the end of the previous Medium-Term

In the Plant & Machinery Business, although theering consolidating the development divisions ofBusiness Plan covering the period of 2016–2018 todomestic refinery maintenance business was firm,

these businesses to create synergies.

¥2.81 billion and 6.4%, respectively, in fiscal 2021,

market conditions continued to be severe due to the

new solutions unbound by restrictive thinking orover the first two years of the current plan. In particu-

sluggishness of new construction projects in Japanframeworks through the combination of state-of-the-Logistics Solutions
Businesslar, the Logistics Solutions Business posted recordand overseas. By strengthening cost and process

profits for the third consecutive year despite factors

management and rationalizing projects, we were able

Plant Businessthat pushed up costs, including supply shortages forto return to profitability in the final year of theparts and a rise in personnel, leading to the assess-­previous plan.

“Innovative technology” means creating completely

art technology with our own know-how. “Execution

Logistics Solutions
Business

capability” means we are ready and able to take on
new and difficult challenges without hesitation. These

Plant & Machinery
Businessphrases demonstrate our resolve, and we strongly
believe that new solutions can be realized only when
execution capability that goes beyond expectations is

Other Businesses(Life & Work
Environmental Business)

Next-Generation Energy
Development BusinessBusiness Innovation andOther Businesses

ment that this business has established a stableearnings base as a core business.
In the field of e-commerce, where we excel, we

using conventional products.

In Other Businesses, Eco Analysis Corporation
was added to the Group, paving the way for businessexpansion in the environmental field.

proposed the Goods to Person for Pick and Pack

6

TKK Report 2022

TKK Report 2022

7

President’s Message

companies, a focus of recent years.
Taking a long-term view of the Group, our businesses

the timing of breakthroughs may vary. To bring this tofruition, I believe that in all of our businesses, we mustare well positioned to meet the challenges of thecreate new solutions by applying our accumulated

future and we can expect significant growth, althoughexperience and technological innovation.

Medium-Term Management Policy: Establish a Growth Path for the Future

The Group’s Long-Term, Sustainable Growth Potential

energy storage tanks for such substances as fuelBusiness Plan (fiscal 2022–2024) period, we will chal-ammonia, MCH (methylcyclohexane), liquid CO2, andlenge and realize specific measures in line with our

liquid hydrogen, which are being prepared for practi-

basic policy of establishing a growth path for the future.

cal use in a carbon-neutral society. Toyo Kanetsu

In the Logistics Solutions Business, we will work toalready has experience in manufacturing ammonia

expand the business domain of distribution center

storage tanks and various types of large-scale

systems. The functions of a distribution center are­storage tanks, and we will strive to strengthen ourreceiving, replenishing, and shipping. In addition totechnological and cost competitiveness by leveraging

our strengths in shipping systems, we will expand

our expertise. In the area of large-scale liquid hydrogenour business domain to include engineering andstorage tanks, in addition to conducting research and­consulting for the entire process of receiving, han-development we are steadily acquiring construction

dling inventory, and restocking, aiming to propose

technology through the implementation of projects

solutions that exceed our customers’ expectations

subsidized by the New Energy and Industrial

The new Medium-Term Business Plan was formulat-

2050, increasing demand for automation. In Japan,

while catering to their wishes. Specifically, throughTechnology Development Organization (NEDO), anded by backcasting from the long-term perspectives

the ratio of e-commerce to total commerce has yet

the enhancement of our warehouse management

preparations are under way for future commercialization.

of 2030 and 2050. The impetus for this was the iden-

to expand and airport logistics demand is expected

system (WMS), we will work to improve efficiency byWith regard to Business Innovation and Other

tification of 10 management issues with long-term

to pick up in a post-COVID-19 world, so market

linking information pertaining to not only receiving

Businesses, as I mentioned when discussing theimportance, and the establishment of a Future

growth potential in our specialty markets such as

and shipping, but also pre- and post-shipping­trajectory of our long-term vision, we will pursue

Creation Project by each business entity based on

e-commerce, co-ops, and airports is large.

­processes. Furthermore, we are pursuing new devel-business expansion mainly through M&A in theopments over the course of the plan with regard to­environmental area and work to develop this area

Development Business demand for tank maintenanceairport logistics, one of our areas of specialty, which

into the third pillar of our business while engaging

is expected to continue due to the stability of thewas particularly affected by the COVID-19 pandemic,

in synergy creation by gathering technologies andhaving responded in the past to the changing times

existing infrastructure. On the other hand, although

including further business expansion through fully

know-how from AI/IoT venture companies that wethrough the Plant & Machinery Business and now to

we are in the midst of a transition to a carbon-neutral­automated baggage handling systems and expansion

invest in through corporate venture capital and otherthe present situation through the Logistics Solutions

society that looks to hydrogen and fuel ammonia as

into Asia, where the need for logistics automation

Group companies.

Business, it is looking to the Environmental Businessnext-generation energy sources, we believe that it

is expected to become more widespread due toand Next-Generation Energy Development Businesswill take some time before the demand for new tank­soaring labor costs.

as its future mainstays.

construction becomes actualized.

these issues to develop strategies from correspondingly long-term perspective.
The Group is moving toward its 100th anniversary,

The Logistics Solutions Business, which has

8Given this environment, during the Medium-Term

In the Plant and the Next-Generation Energy

In the Plant Business, we will secure stable earnings

For the fiscal year ending March 31, 2025, the final
year of this plan, we have set numerical targets asfollows: net sales of ¥65.0 billion, operating profit of

In the Business Innovation and Other Businesses,

by fulfilling standing orders for legally obligated oil¥4.2 billion, and ROE of 8.0%. We believe that both

evolved into one of our core businesses, is expectedwhich comprises all other Group companies, we expect

tank maintenance and thorough high-quality project

achieving these numerical targets and the process by

to enter an era of full automation, as the labor-­

demand related to living and working environments tomanagement. We will utilize our knowledge and tech-which they are achieved will yield future growth. Under

intensive work environments at distribution centersremain strong, backed by growing social interest in risks

nology to fully support customer requests related tothis plan, we will establish a revenue base throughwill soon become a thing of the past. Moreover,associated with changes in the global environment. We

such issues changes in oil type.

stable growth of the Logistics Solutions Businessthe working population in Japan is expected towill establish a third business through synergies withIn the Next-Generation Energy Development

decrease approximately 30% from current levels byexisting businesses through M&A of environmental

Business, we will develop and provide next-generation

TKK Report 2022

while building a third business and conducting R&D.

TKK Report 2022

9

President’s Message

Aiming for ¥10 Billion in Growth and R&D Investment over Three Years

Concluding Thoughts

To establish a growth path for the future, we have

I have shared with employees a vision of the future

Under the slogan “ACTION FOR THE FUTURE,”

Regarding R&D, we are advancing the development

budgeted ¥10 billion, nearly double the amount ofof next-generation energy storage tanks for suchthat the Toyo Kanetsu Group will create, one in which

the Toyo Kanetsu Group is moving forward as one

the previous Medium-Term Business Plan, for capital

substances as liquid hydrogen and fuel ammonia.

the Group will be able to help solve social suchtoward the future. We would like to take this opportu-

expenditure and R&D, which will be undertaken

In the Logistics Solutions Business, we will conduct

issues as the realization of a carbon-neutral society,nity to thank our stakeholders for their continued­flexibly with a focus on growth investments,

R&D related to overall solutions spanning receiving

an aging society with a declining birthrate, andunderstanding and support.

including M&A.

through shipping, as well as that related to equip-­environmental problems. The Logistics Solutions

ment and workflow analysis systems based on key

Business, Plant Business, Next-Generation Energy

Businesses we are investing in environment-related

video and data fusion technologies, while further

Development Business, and Business Innovation andareas, where we can expect synergistic effects withadvancing non-stop logistics operations to prevent

Other Businesses may achieve breakthroughs at dif-our existing environment-related subsidiaries. In theoperational errors and problems, thereby strengthening

ferent times, but all of them serve as necessary and

Logistics Solutions Business, we are considering

our competitive edge.

important businesses that contribute to society, andIn terms of M&A, in Business Innovation and Other

investing in WMSs with the aim of becominga ­comprehensive engineering company.

Regarding capital expenditure, in addition to recurring

we are passionate about their operations. We madeinvestments, we will pay attention to BCP measures.

three promises to our employees in order to move
forward with our businesses as a united company:

Proactive ESG Management
The Medium-Term Business Plan includes measuressolar power generation and energy-saving equip-

to strengthen our management foundation in addition

ment. We will also reduce Scope 3 GHG ­emissions

to business initiatives. To foster a corporate culture in

by expanding sales of Ecoloveyor ®, ­energy-saving

which each and every employee practices “ACTION

conveyors that do not require a compressor for com-

FOR THE FUTURE” and to support the sustainable

pressed air and move only when loaded with bag-growth of the entire Group, we will develop three main

gage or parcels.

measures: enhancement of comprehensive human

Next, in terms of the social aspects of ESG man-

resources capabilities, strengthening of planning capa-

agement, Toyo Kanetsu was certified as one of thebilities and business support, and ESG management.

“2022 Certified Health & Productivity Management ®

With regard to the environmental aspect of ESG

Outstanding Organizations” for its efforts to create

management, we disclosed our greenhouse gas

a workplace environment that enables flexible(GHG) emissions in May of this year following

employee workstyles and for its diversity initiatives

Companywide study sessions and discussions by

and will continue these activities in the future. We will

top management, and we have declared that thealso promote diversity and inclusion by hiring

Group will achieve carbon neutrality by 2050 for

non-Japanese employees and people with disabilities

Scope 1 and Scope 2 emissions and reduceand conducting projects to promote the advance-­emissions to 50% of 2019 levels by 2030. We havement of women. In community service activities, weendorsed the TCFD (Task Force on Climate-Related

will continue to make local contributions, including

Financial Disclosures) recommendations and madeongoing donations to public libraries.

disclosures in line with the recommendations in June

Finally, on the governance side, two female outside

2022. The Group’s Scope 1 and Scope 2 GHG emis-

directors joined the management team upon thesions were 5,142 t-CO2e (fiscal 2021), more thanapproval of the Annual General Meeting of

50% of which were from electricity consumption. We

Shareholders in June 2022, marking progress toward

will continue to reduce GHG emissions by utilizing

ensuring the diversity of the Board of Directors.

1. Dreams and fulfillment
2. Open and comfortable workplace
3. Work status improvements
For a company to grow, each of its employees
must have a dream and a sense of fulfillment in theirwork, they must feel free to openly discuss their opinions, they must be able to find consensus, and theymust be able to take action and try new things without hesitation. We will make Toyo Kanetsu a company
where every one of us can experience growth.
Right now, we are facing a time of unprecedented
crisis, the likes of which we have never experienced
before, and we believe that the future will continue tobe uncertain. We see this as an opportunity forchange, and we go back to the basics of manufacturing and deliver new solutions to the world. As acompany with its name on the Prime Market of theTokyo Stock Exchange, we will establish a growth
path for the future by managing from a global perspective, disseminating information, and engaging insincere dialogue with stakeholders.

August 2022
President and Representative Director

Note: Health and Productivity Management ® is a registered trademark of theNonprofit Organization Kenkokeiei.

10

TKK Report 2022

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11

The Toyo Kanetsu Group’s Value Creation Process

Founding Philosophy

Social Environment
Declining birthrate andaging society
Decreasing working
population andlowered production

Transition to nextgeneration energy
Growing momentum
toward the realizationof carbon neutrality

INPUT

The Toyo Kanetsu Group’s Business Model

Financial capital

Logistics Solutions BusinessTotal assets ¥64.3 billion
Shareholders’ equity
¥34.5 billion

Plant Business

Manufacturing
capitalCapital expenditures¥1.2 billion

Human capital

Impact of changes
in living environmenton the naturalenvironment, etc.

Concern for the work
environment
Ensuring occupational
health and safety

OUTPUT
Profitability for growthPage 17

Net sales¥59.1 billion
Operating profit¥2.8 billion
Operating profit ratio
4.7%
ROE6.4%

Page 18

Shareholder returns

Next-Generation Energy
Development Business

Page 19

Business Innovation
and Other Businesses

Page 20

Securing humanresources andenhancing diversity
Female managers
5.4%
35.1% of mid-career hires inmanagement positions
67% of paid leave taken(FY2021 target for leave taken:
13 days or more)Toyo Kanetsu’s Strengths

R&D costs
¥0.6 billion
152 patents held

Social andrelationship capital
9 consolidated subsidiaries,of which 3 are overseas
Promote collaboration andpartnerships with diverse
stakeholders

More than 80 years of continuously
supporting social infrastructure

Reduction ofenvironmental impact

Technical capabilities and trust cultivated through a wealth of experience

GHG emissions
Scope 1 + 2 5,142 t-CO2e
GHG emission reduction of
134 t-CO2e (compared to
FY2019)Pioneering development capabilities
and bringing in new technology

Natural capital
1,058 kl energy used
(crude oil equivalent)
9,000 m3 water used

Realize labor-saving
and unmanned
logistics sites throughtechnologicalinnovation andsolutions capabilities

Offer social infrastructure technologies
that contribute to
the realization ofa carbon-neutral society

Realize a diverse andsustainable living
environment(Fiscal 2021 results)

Management Vision

Becomea Solution
Innovator thatsolves social
issues throughinnovativetechnology andexecution
capability

Provide a safe, secure,and attractive
workplace

Business Foundation(Fiscal 2021 results)

OUTCOME

Total dividends
¥1.2 billion
Dividends per share¥145

1,713 employees(consolidated)
Annual training costs¥36.2 million

Intellectual capital

Concern about living
environment risks“Be creative, be good for society”

Corporate culture

Corporate governanceHigh awareness of social contribution

Highly transparent business operations

The Toyo Kanetsu Group’s Material Issues

A

B

Issues to be addressed throughInitiatives addressing material issues to sustainably improve corporate value
our business to improve our corporate value

C
Fundamental initiatives to undertake before addressing A and B issues
Please see pages 24–37 for details.

12

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13

The Toyo Kanetsu Group Medium-Term Business Plan
(Fiscal 2022–2024)
Toyo Kanetsu has formulated a new Medium-Term Business Plan with the aim of­continuously improving its corporate value by using innovative and pioneering­technologies and solutions to solve social issues.

Social Issues to Be Addressed by the Toyo Kanetsu GroupThrough each of the Group’s businesses, we will solve three social issues and provide
value to the society of the future.

Looking Back on the Previous Medium-Term Business Plan (Fiscal 2019–2021)

Social Issues and Concerns

Despite the impact of the COVID-19 pandemic and other factors, we were able to achieve the revised­targets for net sales, operating profit, and ROE of the previous revised Medium-Term Business Plan.

¥59.1 billion
Net sales ¥45.2 billion¥2.8 billion
Operating profit
doubledOperating profit(Including corporate
expenses)

ROE

Carbon neutrality

Living environment risks

Logistics Solutions

Plant and Next-Generation
Energy Development

Business Innovation

Realization of fully
automated solutions

Realization of a clean
energy society

Creating a diverse andsustainable living environment

Medium-Term Business Plan targets¥46.0 billion
Operating profit ¥2.1 billion
ROE 
5%Net sales 

6.4%¥1.4 billion

Decrease in working
population

2.9%
FY2018Planning with Backcasting

FY2021

With an eye on the 100th anniversary of the Company’s founding, we are
Policy­analyzing the market and seeking a new strategic direction, and formulating

Establish a foundation for rapid growth

Medium-TermBusiness Plan Targets

Logistics Solutions
Business

Plant & Machinery
Business

Other Businesses(Life & Work Environmental
Business etc.)

Strengthening theManagement Foundation

Results

plans based on backcasting.

Summary

Net sales ¥28.0 billion¥32.9 billion Build a stable profit structure

Operatingprofit ¥2.6 billion¥3.1 billion

Operatingprofit (¥400 million)

Net sales ¥8.0 billion¥11.1 billion Expand the Environmental

Operatingprofit ¥800 million¥570 million• Progress in large-scale liquid hydrogen tankconstruction research• Seeking opportunities for new tank installation orders

Business domain• Creating a corporate culture that
achieves change and results• Further strengthen governanceas a Group• Environmental M&A• Turn existing subsidiaries into stable revenue sources• Seek further business expansion

Progress in system reforms• Promotion of women to management positions,reform of personnel system• Recognized as a Certified Health & Productivity
Management Outstanding Organization

2030

2022

2018

Logistics
Solutions
Business
Plant &
MachineryBusiness
Other
Businesses

Logistics Solutions
Business

High growth throughexpansion of
offered value

Plant and NextGeneration Energy
Development
Business

Secure stable earnings
and participate in
next-generationenergy markets

Business Innovation
and OtherBusinesses

Creation andcultivation of a third
pillar of business

Period of market expansion against
a backdrop of labor-reducing andhigh-efficiency technology
Transition to a next-generationenergy market
Increased interest in environmental impacts
and changes, including climate change
and living conditions

Earnings growthLong-term strategic direction2024

to profitability¥15.0 billion Transition• Stable orders in domestic repair business¥9.1 billion

Note: The above operating profit does not include corporate expenses.

Make plans withbackcasting• Provide solutions through new systems• Growth in the maintenance business• Scope for business expansion

Net sales ¥110 million

100thanniversaryoffounding

Market trends and trend analysis

14

TKK Report 2022

TKK Report 2022

15

Logistics Solutions Business

Basic Policy for New Segments
Basic Policy of the New Group Medium-Term Business Plan (Fiscal 2022–2024)
Under the new management vision, we will establish a growth path toward the next stage of

Logistics Solutions Businessrapid progress through action and robust future-oriented investment in each business area.

Medium-Term
Management Policy

Establish a growth path for the future
ACTION FOR THE FUTURE
The ability to exceed expectations and become a force for the future

Senior Executive Officer
Division Manager,
Logistics Solutions Division

Yasunori Kobayashi

Logistics Solutions

Evolve into a high-growth company by expanding
business scope

Plant

Contribute to a stable energy infrastructure throughthe maintenance business

Next-Generation Energy
Development

Participate in next-generation energy infrastructure byacquiring new technologies

1

Realize labor-saving and automated logistics sites through technological innovationand solution capabilities

Business Innovation
and Others

Accelerate the Group’s growth and take on the challengeof establishing a third pillar of business2

Further advance logistics systems through the development of new solutions that
integrate video and digital information

Propose new value for the entire Group and support
sustainable growth

Corporate

Medium-Term Business Plan
FY2024 Targets¥65.0 billion¥59.1 billion

Net sales¥52.1 billion¥65.0 billion

Net sales

Operating profit¥3.3
billion¥4.2¥2.7
billionFY2021 (Results)

FY2022

FY2023

FY2024

6.4%

6.0%

6.0%

8.0%

¥32.9 billion Net sales ¥31.0 billion¥3.1 billion Operating profit¥3.1 billion¥32.6 billion¥3.3 billion¥36.4 billion¥3.7 billion

Net sales¥9.0 billion¥380 million¥8.5 billion¥400 million¥8.5 billion¥450 million

Net sales¥2.0 billion
Operating profit (¥470 million)¥2.5 billion¥350 million¥2.4 billion(¥260 million)

Subtotal (Plant, Next-Generation
Energy Development)¥15.0 billion Net sales ¥11.0 billion¥110 million Operating profit (¥90.0 million)¥11.0 billion¥50.0 million¥10.9 billion¥190 million

Business Innovation andOther Businesses¥11.1 billion Net sales ¥10.1 billion¥570 million Operating profit ¥800 million¥13.7 billion¥890 million¥17.7 billion¥1.2 billion¥4.2 billion
8.0%

ROE

(Including corporate
expenses)

ROE

Logistics Solutions Business
Plant Business
Next-Generation Energy Development

TKK Report 2022

Competitive Advantages

IssuesOperating profit

 xpanding engineering scope for further
Elabor-reducing and labor-saving potential
 reating new added value that meetsC­customer needs

 roject execution skills to deal with complex andP
new mechanisms¥57.3 billion¥2.8
billionOperatingprofitValue Propositions

 bundant experience in the distribution and airport
Abaggage handling fields, and system development
capabilities cultivated through this experience

Numerical Targets of the Plan

16

We will expand the possibilities
of automation and provide
logistics solutions that fulfill
our customers’ needs.

Business Strategy for the New Medium-Term Business PlanbillionSloganACTION FOR NEXT LOGISTICS Become the power behind the logistics system of the future

Basic
PolicyEvolve into a high-growth company
by expanding business scope

Priority Measures
Measure1
Measure2

FY2024 Targets

Measure

3
Net
sales

¥36.4

billionOperatingprofit¥3.7

Measurebillion4

Expand operations from partial tototal engineering
Improve proposal capabilities and expand
customer base by leveraging our strengths
Strengthen service business by developing
and securing human resources
Develop new solutions that integrate
video and digital information

TKK Report 202217

Plant Business

Plant Business

Next-Generation Energy Development BusinessWe excel at the maintenance of safety andstable supply of energy storage facilities
and boast advanced technologicalknow-how along with extensive
Senior Executive Officer
Division Manager,
Plant Business Division
construction experience.

Through the provision of our advanced technological capabilities, we will contribute to
the conversion of infrastructure to suchnext-generation energy sources
Executive Officer
Chief of the Next-Generation Energy
Development Centeras hydrogen and fuel ammonia.

Value Propositions

Value Propositions

Provide highly reliable social infrastructure

Provide social infrastructure technologies that contribute to the realization of carbon neutrality

Hiroshi Ohgi

Competitive Advantages

Toshiyuki Mita

IssuesCompetitive Advantages

 xpertise in technologically advanced large
Etank maintenance nsuring flexible response to changing
E­maintenance needs and a stable profit structure

 high level of customer trust and a solidA­reputation cultivated through high quality andsafe operations over many years in Japanand overseas

 ddressing the aging of on-site supervisors, lackAof successors, and the passing downof technology

Business Strategy for the New Medium-Term Business Plan
SloganACTION FOR INFRASTRUCTURE Become a force that supports social infrastructure

Basic
PolicyContribute to a stable energy
infrastructure as society transitions
to the next-generation energy market

Measure

1

2

Net
sales

¥8.5

TKK Report 2022

billionOperatingprofit¥450

Measure3
millionSecure stable earnings by continuing toreceive maintenance orders and attracting
new orders

 esponding to the global energy shiftRand maintaining a solid market standing
 einforcing organizational capabilities,
R
including overseas offices, to acquire
new storage tank projects

 ossess the advanced technology and project executionP
capabilities needed to meet domestic and international
demand for new storage tank construction

Business Strategy for the New Medium-Term Business Plan
SloganACTION FOR NEXT ENERGY Become a force supporting the future of energy

Basic
PolicyCultivate advanced technologicalcapabilities and prepare for the arrivalof a next-generation energy society

Pursue efficiency through full utilizationof TKK Plant Engineering and collaboration
with partner companies
Expand business scope based on
our achievements and knowledge asa tank manufacturer

Issues apable of delivering storage tanks for next-­
C
generation energy and boasting the ­technical capabilities needed to meet ­construction requirements

Priority Measures

MeasureFY2024 Targets

18

Next-Generation Energy Development BusinessPriority Measures
Measure1
Measure2

FY2024 Targets

Net
sales

¥2.4

billionOperatingprofit-¥260

Measure3
million

Address storage needs for fuel ammonia,
MCH,* liquefied CO2, etc.
Capture demand for new storage tanks inoverseas markets
Acquire construction technology(design, welding inspection, construction)
for liquid hydrogen storage tanks* MCH: Methylcyclohexane, a liquid made through the­combination of hydrogen and toluene. It is one of the mostnotable hydrogen carriers.

TKK Report 2022

19

Business Innovation and Other Businesses

Business Innovation and Other Businesses

Capital Policy and Shareholder Return Policy
We have set the following based on optimizing the balance between financial soundness and the needto return profits to shareholders.

We will create businesses that support the
future with free perspectives and flexible
ideas in the midst of a great paradigm shift.

Capital Policy• To improve corporate value over the medium to long term, we will utilize retained earnings and borrowings toinvest in growth.
• We will maintain an equity ratio of at least 50% to ensure financial soundness and an optimal capital structure.

Director and Senior Executive Officer
Division Manager,
Business Innovation Division

Shareholder Return Policy

Akira Kakihara

Value Propositions
Provide services and solutions that contribute to the creation of a sustainable environment and society• Maintain a consolidated dividend payout ratio of 50% or more (minimum annual dividend of 100 yen per share).
However, this does not apply in the event of large financing needs.
• Although we have not adopted a set consolidated total return ratio, we will respond flexibly depending on
performance trends and other factors.
• This policy covers a three-year period beginning in fiscal 2022 and ending in fiscal 2024 and will be reviewed at
the end of the relevant period.
Please see page 22 for details.

Competitive Advantages

IssuesSustainable Management Advancement op-level performance and expertise in a wideTrange of business areas

 einforcing responsiveness to changes inRthe business environment

 bility to understand and respond to customer
A
needs through on-site contact

Securing stable profitability and market position

 xtensive collaboration channels throughE­corporate venture fundsIncreasing added value by leveraging
synergies among companies and promoting
open innovation

The Toyo Kanetsu Group will continue to advance sustainable management from an ESG perspective.

E

Environment• Reduce GHG emissions• Monitor energy consumption

Business Strategy for the New Medium-Term Business Plan
SloganS

Social• Promote diversity and inclusion• Ensure occupational healthand safety• Pursue coexistence withlocal communities

G

Governance• Practice sophisticatedrisk management• Ensure the diversification of
the Board of Directors

ACTION FOR SUSTAINABILITY Become a force that supports a sustainable society

Strengthening Management Foundations
Basic
PolicyTake on the challenge of establishinga third business to accelerate
the Group's growth¥17.7

billionOperatingprofit¥1.2

ensure a solid foundation.

1
MeasureStabilize earnings by strengthening thecompetitiveness of Group companies

Responding to
Climate Change Risks

Reform business model through theapplication of proprietary technology andknow-how and external collaboration

Strengthening
Risk Management

Measure3
billionIn order to cope with an increasingly complex business environment, we will strengthen our systems to

Achieve business expansion, including
through environmental businessrelated M&A

Measure2

FY2024 Targets

Net
sales

Priority Measures

Carbon Neutral Declaration
Achieve carbon neutrality with regard to
the Group’s GHG emissions by 2050.
Strengthen governanceby establishinga risk management committee

Disclosure based on
the TCFD Framework

Establishment of Risk Management
Office to ensure thoroughenterprise risk management (ERM)

Note: Includes the businesses of major domestic Group companies and other businesses such as realestate leasing and management, leasing, and copying and printing

20

TKK Report 2022

TKK Report 2022

21

Message from the Executive Officer of Finance

We will aggressively invest
in growth for the further
advancement of the Group.
Takeshi Yonehara
Senior Executive Officer
Head of the Corporate Division“To establish a foundation for all Group businesses”

M&A aimed at opening up such new fields asthat was set as the management policy.

­environment-related businesses to expanding thescope of existing businesses, supporting promising

Basic Capital Policy and Shareholder
Return Policy

funds needed to promote R&D and forward-looking

In its financial strategy, the Toyo Kanetsu Group has

Fiscal 2021 Performance Assessment

capital expenditure.

Over the past three years, we have invested morethan ¥6 billion, including approximately ¥3.5 billion in

Returning profits to shareholders is one of our mostcapital expenditures, in expanding our production

important management issues, and our basic policy

capacity. Over the next three years, we intend to

is to maintain a dividend payout ratio of 50% or

establish a sustainable future growth trajectory bymore. We recognize that there is little need to further

doubling this investment.

improve financial soundness and have judged it

Basic Approach to Financial Strategy andImportant Financial Indicators

start-ups, and pursuing new product R&D.

In addition to utilizing the ¥10 billion in operating profit

appropriate to maintain a roughly 50:50 ratio in thethat we expect to earn over the next three years, we

distribution of profits earned between new invest-

intend to raise the debt-to-equity ratio, which isments for growth and returns to shareholders,­currently about 0.37 times, to about 0.5 times by­thereby improving total shareholder return (TSR).

raising funds through indirect financing such as bank

Therefore, in this review, we announce the adoption ofloans while giving consideration to financial stability.

a capital policy of maintaining an equity ratio of 50% or
persistently focused not only on ensuring the stability

more, an indicator of ongoing financial soundness, andOutlook for Fiscal 2022

will continue to improve our stock price and TSR byof its financial base, but also on maintaining a healthy

In fiscal 2021, we were able to turn around the Plant

dialogue with the market and enhancing shareholder& Machinery Business, which had been in the red for

returns.

the past four years. The Logistics Solutions Businessflexibly acquiring treasury shares in the future.

With regard to our forecast for fiscal 2022, we recognize that the situation in Ukraine and the lockdown

Investment Policy and Financing Plan under
the New Medium-Term Business Plan

policies in China have had a serious impact on the

In the new Group Medium-Term Business Planalso saw profits steadily increase as the scale of its

announced in May 2022, we lay out our basic man-business expanded. In addition, earnings from Groupagement policy of establishing a future growth trajec-

companies and new businesses, classified under Other

We are currently in the midst of a period of major

price hikes, and rising labor costs, making the situa-

tory. To do so requires us to take a more aggressive

Businesses, were up and we continued to build themchange, including a shift in our business model, andtion unpredictable. We are therefore forecasting afinancial strategy that will secure sustainable growth

into new core businesses by stepping up M&A andintend to allocate approximately ¥10 billion over thedecrease in both net sales and operating profit.

and we have thus decided to invest in businesspursuing opportunities throughout the Group.

next three years to investment in growth and capitalAs our overseas net sales ratio is less than 2%,

expenditure as outlined in our Medium-Term Businessthe business model of importing overseas products

Plan. This covers a wide range of investment, fromfor commercialization and sale in Japan could havegrowth over the three years of the plan beginning in

Based on these results, I believe that the financial

fiscal 2022. We aim to achieve ROE of 8.0% in fiscal

results for fiscal 2021, the final year of the previous

2024, which we have set as a KPI, and secure theMedium-Term Business Plan, satisfied the goal

ROE

Total Shareholder Return (TSR)

(%)

(%)

supply chain, and that the Group is also experiencing
delivery delays due to parts and materials shortages,

an adverse impact on earnings if the yen depreciates.
For this reason, Toyo Kanetsu is entering into forward

120

10

New Medium-Term Business Plan Financial Strategy

against foreign exchange risks and enacting
107.3

106.1

8.0
8

6.5

6.4
4.9

6

90

74.7

Three-Year Total
102.1
Business CF
Approx. ¥10 billion

76.4

5.0

Reference
Depreciation:
Approx. ¥3 billion

60

2.9

4

30

2

FY201722

Financing as
neededFY2018TKK Report 2022

FY2019FY2020

FY2021

FY2024(Target)Dividends¥3 billion or more

FY2017FY2018FY2019FY2020

FY2021

similar measures.
Dividend payout ratio

50% or more

Growth investments
R&D¥10 billion scale
Regular capital
expenditure
Working capital00exchange contracts for imported goods to hedge

Growth investments• M&A• Other investments, etc.
R&D
• Logistics solutions
product development• Liquid hydrogen storage tank research, etc.

In response to parts and materials shortages, wehave launched internal projects and are starting to
make preemptive arrangements with various suppliers. Although we expect to accumulate a certain
amount of inventory in fiscal 2022, which may affectoperating cash flow, we believe that the level will
improve in fiscal 2024, the final year of the­Medium-Term Business Plan.
TKK Report 2022

23

Material Issues

The Toyo Kanetsu Group’s Material Issues

1

Basic Approach to Material Issues

The Toyo Kanetsu Group has identified 10 importantmaterial issues to prioritize with the objective of sustainably improving corporate value through business activities. By addressing these issues, the Group will ensuresustained growth and financial performance. Our material initiatives are designed to help contribute to the23

relevant SDGs, and, by proactively working to solvethese issues, we will fulfill the role expected of us bysociety.

issues into three categories (A, B, and C) in accor-

business activities. The four topics in category B are

dance with their characteristics. The two topics inimportant management issues to be addressed in

category A are social issues that could have a major

order for the Group to carry out these business

impact on the Group. We will provide value to society­activities sustainably. The four topics in category

and improve corporate value by contributing to theCare prerequisites for improving corporate value.

C

1

Research andpreparation

Management examined methods for identifying issues that are important for sustaining the growth of the
Toyo Kanetsu Group and of society, referring to international guidelines, such as the SDGs adopted at
the UN Sustainable Development Summit in 2015 and the Sustainability Accounting Standards Board(SASB), as well as to the Corporate Governance Code. We furthered the understanding of our employees
in these areas by holding in-house seminars about ESG initiatives, the SDGs, and integrated reports.

2

Listing of social
issues, identificationof important issues

All members of upper management participated in multiple discussions about material issues to reacha consensus on the strengths of the Toyo Kanetsu Group, social issues that directly affect its operations, and the role that the Group should play in the future. As a result, we identified priority social
issues needing resolution, as well as the Group’s own issues that must be addressed to solve suchsocial issues.

3

Incorporation of
opinions ofstakeholders

Toyo Kanetsu exchanged opinions with outside experts and institutional investors, listened to the­concerns and expectations of stakeholders of the Group, and made a list of identified issues.

4

Identification ofmaterial issues

The material issues discovered through this process were deliberated by the Management Council
and the Board of Directors, which identified and approved 10 material issues for the Group to addressin the future.

5

Setting of KPIs

Referring to guidelines, examples from other companies, interviews with relevant internal divisions, andother sources of information, we set KPIs by conducting discussions at internal meetings with the participation of members of management, after having listed several candidate KPIs for each material issue.

The Toyo Kanetsu Group’s Three Categories of Material Issues
resolution of those two issues, primarily through ourB

By giving due consideration to opinions inside and outside the Company and referencing global standards, the Toyo
Kanetsu Group identified its material issues in March 2019 through the following process. In addition, we set KPIs in
August 2020.
* Key performance indicators: Indicators for visualizing progress toward resolving identified material issues.

The Toyo Kanetsu Group has divided its materialA

Issues to be addressed
through our business toimprove our corporate value(1)	Respond to changes in the business environment caused byclimate change(2) Respond to the decline in Japan’s population

Initiatives addressing material
issues to sustainably improve
corporate value

(3)
(4)
(5)
(6)

Fundamental initiatives toundertake before addressingA

and B issues

Process for Identifying Material Issues and KPIs*

Training and utilization of human resources
Innovation in technologies and their usage
Promote collaboration with partner firms
Increase productivity(7) Ensure occupational health and safety(8) Execute steadfast compliance and corporate governance(9) Improve risk management(10)	Evolve our corporate culture into one that encourages
employees to quickly and proactively take on challenges

Please refer to pages 34–35 for more details about each material issue.

4

The Toyo Kanetsu Group’s Approach

The Toyo Kanetsu Group engages in business activities while positioning these 10 material issues as important guides
to consider when formulating business strategies and making decisions in each business.
With regard to initiatives for addressing material issues, the director serving as the chair of the CSR Committee istasked with monitoring progress in resolving said issues. In addition, through dialogue with various stakeholders,­management will keep track of
The Toyo Kanetsu Group’s CSR Structurechanges in stakeholder concernsand expectations of the Group
Board of Directors
while monitoring social trends. If
Management Council
deemed necessary, the Company
ReportCSR Committee
will flexibly revise its material
Chairissues and KPIs.
Director in Charge of CSR Management

Committee Members
Logistics Solutions
Division

Plant Business
Division

Next-Generation Energy
Development Center

Safety, Environment, andQuality Assurance Dept.

Business Innovation
Division

Corporate Division

Report/Consultation

CSR Subcommittee

24

TKK Report 2022

Secretariat

TKK Report 2022

25

A

Issues to be addressed through our business to improve our corporate value
Respond to changes in the business environment caused by climate change

Special Feature

1
Initiatives for
Climate Change

Carbon Neutral

In fiscal 2019, the Toyo Kanetsu Group­identified “respond to changes in the­business environment caused by climatechange” as a key material issue for theTOPIC

attainment of sustainable improvement in

01

corporate value. Recognizing that addressing

TOPIC

Disclosure of Greenhouse Gas(GHG) Emission Reduction
Targets for Carbon Neutrality

02

Disclosure Based on the Recommendations of the TCFD
(Task Force on Climate-Related Financial Disclosures)climate change is both a business risk anda new business opportunity, we are working

We have established and announced GHG emission

The Toyo Kanetsu Group endorsed the TCFD recommendations,to do so and are committed to disclosing

reduction targets for the Group’s business activities.

and we made appropriate disclosures in accordance with the recommendations in June 2022.

information regarding our progress. We
have made the following two disclosures
regarding climate change issues.

GHG Reduction Scope

Scope 1*1 emissions + Scope 2*2 emissions of
the Company and its domestic and overseas
consolidated subsidiaries*1 Scope 1: Direct GHG emissions from the Company’s use of fuel, etc.
*2 Scope 2: Indirect GHG emissions from the use of electricity and heat purchasedby the Company

GHG Reduction Targets

Achieve carbon neutrality by 2050
Achieve a 50% reduction in emissions by 2030
(compared to 2019 levels)
In addition, we will strive to reduce Scope 3*3 emissions throughout the value chain in cooperation with suppliers and customers.
*3 Scope 3: GHG emissions not included in Scopes 1 or 2 emitted indirectly inthe business supply chain
For details, please refer to the press release dated May 13, 2022 (Japanese only).

https://www.toyokanetsu.co.jp/pdf/toyo_kanetsu_2837.pdf

26

TKK Report 2022

Governance

Strategy

The Group’s Risk Management Committee, chaired bya director appointed by the Board of Directors, examines
the business risks the Group faces, including risks from­climate change, reporting to the Board of Directors and theManagement Council twice a year, which formulates andimplements the necessary plans. The Risk Management
Office functions as the secretariat of the Committee.
The members of the Risk Management Committee are
selected from among the directors or executive officers
in charge of relevant businesses in each division. Thisfacilitates the sharing of knowledge and experience incountering risks and addressing climate change issues
when formulating plans for implementation.

A scenario analysis was conducted to identify climatechange risks and opportunities that could significantly
impact the Group’s operations.
The period up to 2050 was covered in this analysis, andwe referred to several existing scenarios published by theInternational Energy Agency (IEA), the Intergovernmental
Panel on Climate Change (IPCC), and other organizations
from three perspectives: short-term (about 3 years),­medium-term (up to 2030), and long-term (up to 2050). The
analysis was exhaustive, assuming a world view based on
two climate change scenarios (one with an average­temperature increase of less than 2°C from the Industrial
Revolution to the end of the century, and one withan average temperature increase of 4°C).
We examined the risks and opportunities for theGroup based on two scenarios and their associatedbusiness and financial implications. Looking ahead to2050, we believe that the opportunities outweigh the

TKK Report 2022

27

risks regarding their overall financial impact on Logistics
Solutions Business, Next-Generation Energy Development
Business, and Plant Business that accounted for roughly
85% of the Group’s consolidated sales in fiscal 2020.
In the Logistics Solutions Business, we expect continued
growth in demand for advanced labor-saving and labor-­
reducing logistics systems due to environmental deterioration at logistics sites caused by climate change alongwith the declining birthrate and aging population. Thus,
we conclude that opportunities will fully outweigh risks.
In the Next-Generation Energy Development Business,
demand for conventional oil and gas storage tanks will

decrease as the use of fossil fuels is restricted. However,a shift to tanks for hydrogen and fuel ammonia, which
are next-generation energy sources, as well as for­liquefied CO2, is expected to drive demand upward.
In the Plant Business, maintenance demand for existing
oil and gas storage tanks will gradually decline, but we
expect to see growth in demand associated with conversion to next-generation energy storage tanks along withmaintenance demand for the new tanks. Looking at theoverall tank-related business through 2050, we believe thatthe risks and opportunities are roughly balanced.

Risk Management
As the environment surrounding the Company becomes
more complex and diverse, the Group is placing greater
importance on the appropriate management of risks that
may significantly impact its business, and the practice of
sophisticated risk management has been included as
one of the Group’s key management issues.
Under the supervision of the Board of Directors, theRisk Management Committee is responsible for all business risks of the Group, including climate change risk.
The committee conducts periodic reviews twice a year
and takes necessary measures in accordance with risk
management priorities.

The results of this scenario analysis of risks andopportunities for the Group’s businesses will be sharedwith each business division through the Risk Management
Committee and other mechanisms and reflected infuture business plans, including those for fiscal 2022.
The progress of such business plans will be incorporated into the semi-annual all-business review conductedby the Risk Management Committee and shared with
the Management Council and the Board of Directors.

Indicators and Targets
The results of supply chain emissions calculated according to the GHG protocol are as follows.
FY2019FY2020

FY2021

Scope 1 + 2 emissions(entire Group, including domestic and overseas)

5,276 t-CO2e

4,993 t-CO2e (1.4%)

5,142 t-CO2e

Scope 3 emissions(entire Group, including domestic and overseas)—

348,949 t-CO2e* (98.6%)—

Total GHG emissions—

353,942 t-CO2e (100.0%)—* Of total Scope 3 emissions, 198,684 t-CO2e were from Category 11 “use of sold products” and 128,769 t-CO2e were from Category 1 “purchased goods & services” andtogether accounted for 94% of total Scope 3 emissions.

To reduce GHG emissions, 57% of Scope 1 and 2 emissions in fiscal 2021 are from electricity use and 33%
from gasoline and diesel oil consumption. Therefore, we
believe that efforts to achieve our goal toward carbon
neutrality should focus on procuring electricity derived
from renewable energy sources and on converting company vehicles to EVs in the future.
We will consider specific measures for each categoryof Scope 3 emissions, such as reducing power consumption during product use. We will also work with our
suppliers and customers to formulate and implement
measures to reduce GHG emissions.

28

TKK Report 2022

Furthermore, from fiscal 2022, we will facilitate newcapital expenditure with the goal of significantly reducing GHG emissions. As a reference for investment decisions, we will promote decarbonized investment byintroducing an internal carbon pricing system thatapplies a set internal carbon price and converts it into ahypothetical cost to be used in formulating capital
expenditure plans.
Please refer to the press release dated June 28, 2022 for details (Japanese only).

https://www.toyokanetsu.co.jp/pdf/toyo_kanetsu_2926.pdf

AIssues to be addressed through our business to improve our corporate value
Respond to changes in the business environment caused by climate change

Special Feature

2
Our Steps toa Carbon-Neutral
Society
Next-generation energy sources are starting
to be utilized more widely with the intentionof reducing GHG emissions which cause
global warming.
We have been developing the world's firstlarge-scale liquid hydrogen tank aiming forthe full-scale commercialization of hydrogen
power generation around 2030. This projectis subsidized by Japan’s New Energy andIndustrial Technology Development
Organization (NEDO).
This is also highly evaluated by the
Ministry of Economy, Trade and Industry(METI) and we were selected as one of the“Companies Taking on the Zero-Emission
Challenge.” In addition, we participate in
the “Challenge Zero” project launched by
Keidanren (Japan Business Federation),and in the Clean Fuel Ammonia Association,
and are actively working on developmentfor next-generation energy storage tanktechnologies for fuel ammonia, MCH­(methylcyclohexane), and liquefied CO2.
Through these initiatives, we are developing
technologies to realize a carbon
neutral society.

TOPIC

Steady Progress in
Developing Large-Scale
Liquid Hydrogen Tank
Construction Technology

For efficient storage in large quantities, hydrogenmust be liquefied below cryogenic temperature of-253 degrees Celsius. Our liquid hydrogen tank is
groundbreaking and very unique in the world, in that
it is large-capacity and vacuum-insulated with aflat-bottomed cylindrical structure. We have alreadyachieved results in thedevelopment of high-­
performance heat insulation structures, vacuum
exhaust systems, and invarious performance tests
of welded joints underhydrogen exposure, andare steadily acquiring­technologies to support
a hydrogen-based society.

Vacuum insulation testing
equipment

TKK Report 2022

29

B

Initiatives addressing material issues to sustainably improve corporate value
Innovation in technologies and their usage

Special Feature

3

Innovation
  for Logistics

Resolving Social Issues
with New Solutions
In the Logistics Solutions Business,
we started manufacturing and selling­conveyers in 1952. Since then, ourgoods-friendly, user-friendly, and­operator-friendly products have been wellreceived by customers in airports, co-ops,
and general distribution industries.
In the future, logistics sites in Japan will
face a shrinking workforce due to an aging
population and declining birthrate, theeffects of which will become increasingly
serious, as well as diversified and fasterconsumption patterns due to the development and adoption of technology. As
demand for labor-reducing, labor-saving,and lead-time reducing solutions increase,businesses that contribute to automationand efficiency are expected to play an evenmore significant role in society.
To meet the needs of society, we arefocusing on utilizing open innovation todevelop new services while seeking to
add higher value to our existing mainstay­products. This next section introduces GP3,
AMR, and Digital Twin as examples ofsuch efforts.

TOPIC

01

TOPIC

Evolution of Goods to
Person for Pick andPack (GP3)GP3, developed by Toyo Kanetsu, is a new fixedpoint picking system that enables picking, packing,and labeling in a single location. This system
requires 40% less space compared to our previous
product. The single-location work simplifies picking
processes and thus helps reduce the number ofworkers. In the future, we aim to fully automate
warehouse work through further advances such as
combining the system with picking robots.

GTR (Goods to Robot picker)

30

TKK Report 2022

02

TOPIC

Development of AMR(Autonomous Mobile Robot)
and First Commercial Installation

We have continued to develop our AMR with our partner corporations, which respond to fluctuations in material volume and ishighly flexible. Powered by energy-saving batteries and witha short implementation period, the AMR will significantly reduce
environmental impact. The project is currently under way withthe first installation having taken place in fiscal 2021 and ismoving forward toward actual operation. We will accelerate
development based on new concepts, such as combining thiswith Multishuttle systems, to provide next-generation solutions
to a wider range of customers.

AMR (Autonomous Mobile Robot)

03

Proof of Concept and
Pilot Testing of IoT/
AI-using Digital Twin

We are conducting joint research and developmentwith a start-up venture on digital twin ­technology thatuses AI to analyze the operational data of logistics
facilities and reproduce and visualize them in a virtual
space. We conducted a demonstration in our automatedstorage and retrieval system for the Multishuttle and,based on the results of the test, introduced the systemon a trial basis for the co-op industry in fiscal 2021.
By visualizing issues and problems even in sophisticated and complex systems, we will make further
improvements and efficiencies in warehouse operations.

Optimization of the Multishuttle by AI algorithms

TKK Report 202231

Special Feature

4
B

Initiatives to Support the Sustainable
Growth of the Entire Group

Initiatives addressing material issues to sustainably improve corporate value
Training and utilization of human resourcesC

Fundamental initiatives to undertake before addressing A and B issues
Improve risk management

TOPIC

TOPIC

01 Enhancement of In-house Training

01 Improvement of the Risk Management System

We believe that employee education and growth isessential for business expansion and are promoting
enhanced training with the following clear objectives.
There are three main training themes: (1) training forcareer development in accordance with employees’autonomous career development and career stage
changes; (2) training to study current human resource
topics, such as workstyle reforms, harassment, and risk
management; and (3) training to promote corporate­culture reform and business problem solving, such as
diversity management and skill transfers. The in-housetraining is composed of
not only lectures but
also workshops to allow
employees to speak
about their own ideas
and plans. These opportunities serve as anoccasion for mutualcommunication throughout the Group and stimulate
attendees to be proactive.

Recognizing that risk management is becoming increasingly important given uncertainties in the business environment, such as the impact of the COVID-19 pandemic
and heightened geopolitical risks, we established the
Risk Management Office in April 2022 with the aim ofpracticing sophisticated risk management. The Risk
Management Office, in cooperation with the Risk
Risk Management Committee Structure

Board of Directors

TOPIC

Consultation

02 Advancing Talent Management Systems
As the corporate initiatives for diversity and inclusion
attract increasing attention, individual workstyles and values are becoming more ­varied, and the work environment, including employment patterns, is constantly
changing. Approaching these changes as an opportunity,
we have introduced a talent management system thattakes advantage of these changes to promote our business. The system is used as a communication tool toorganically link information on work experience, skills,
career aspirations, and more to promote strategic humanresource management that maximally reflects thestrengths of each­individual and to sharevalues necessary forreforming the corporate
culture. By leveraging
individual strengths andrevitalizing the organization, we aim to create anorganization and utilize
human resources appropriate to our position as a “solution innovator.”

TOPIC

03

ReportManagement Council

Risk Management Committee
Chair

Secretariat
Risk Management OfficeCommittee Member
Compliance
Committee

Logistics Solutions
Division

Plant Business Division

Business Innovation
Division

Corporate Division

Next-Generation Energy
Development Center

Safety, Environment, andQuality Assurance Dept.

Information
Security
Committee

TOPIC

Toyo Kanetsu Recognized as a 2022 Certified Health &Productivity Management Outstanding Organization

We have long regarded the maintenance and promotionof employee health as one of the most important­management issues and have established the Health andProductivity Management Declaration under the leadership of the president. As a result of these activities, wehave acquired 2022 Certified Health & Productivity
Management Outstanding Organizations certification. We
have made it a priority to create a comfortable work environment that emphasizes work-life balance and provides
support for health and healthy lifestyles and havestrengthened ­follow-ups based on the results of regular32

Management Committee and under the supervision of
the risk management officer, identifies and assesses various risks throughout the Group, takes countermeasures,and strengthens the systems to enable each Group­company to respond to risks in an integrated and­self-­directed manner.

TKK Report 2022

health checkups. We willcontinue to further
improve the system andstep up measures incooperation with ourindustrial physicians,
public health nurses,
and other industrial health staff.
For details, please see the press release published on March 9, 2022 (Japanese only).

02 Strengthening Information Security Measures
The risk of cyberattacks, such as the spread of malware
infection damage targeting the manufacturing industry, isincreasing. We implemented the following personnel andtechnical measures in order to strengthen our cyber security.
Personnel Measures: Information security training wasprovided for the entire Group, which made all employees
aware of security risks in the supply chain and easy-tounderstand ­explanations of measures to improve security

levels. Targeted e-mail drills were also conducted to­prepare for the possibility of e-mail cyber-attacks.
Technical Measures: Cloud storage was implemented
to securely handle information assets throughout theCompany and beyond. We plan to renew the authentication
infrastructure and strengthen device management in order toincrease the security and safety of the remote work
­environment established during the COVID-19 pandemic.

https://www.toyokanetsu.co.jp/pdf/toyo_kanetsu_2787.pdf

TKK Report 2022

33

Material Issues and KPIs
A

Issues to be addressed through our business to improve our corporate value(1) Respond to changes
in the businessenvironment causedby climate change

Climate change may have a major impact on the Company’s business environment. There is the risk of a negative
impact from weaker demand for storage tanks as energy use shifts away from fossil fuels. While considering measures to combat global warming, the Company will work on projects related to demand for fossil fuel alternatives,
such as hydrogen energy, and develop products and services with excellent environmental performance. In theseand other ways, Toyo Kanetsu will seek out new business opportunities in a bid to sustain business growth.

(2) Respond to the decline
in Japan’s population

It has become harder to secure human resources due to Japan’s declining population, which reflects a decreasein the birth rate and an increase in the number of elderly citizens. The Company understands the importance of
maintaining attractive workplaces that are comfortable, inclusive of diversity, and ­conducive to rewarding work.
In the Logistics Solutions Business, there is a risk that the contraction in the population will lower the purchasing power of consumers and lead to weaker demand overall. By developing labor-saving systems and taking
other steps to counter labor shortages, the Company believes it can turn this into a major growth opportunity.

FY

GHG emissions (Scope 1 + 2)*

2019

2020

2021

2022 (Target)

Unit

5,276

4,993

5,142

2,638

t-CO2e* Direct GHG emissions from in-house fuel use, etc. + indirect GHG emissions from the use of electricity and heat purchased by the Company
Note: Toyo Kanetsu and consolidated subsidiaries

FY

Rate of Annual Paid Vacation Taken

2019

2020

2021

2022 (Target)

Unit

58

68

67

70

%

Note: Toyo Kanetsu (non-consolidated)
At least 8 days in fiscal 2019, 10 days in fiscal 2020, and 13 days in fiscal 2021; fiscal 2022 target is 70% of new days granted forthe fiscal year.

B Initiatives addressing material issues to sustainably improve corporate value(3) Training and utilizationof human resources

To sustain growth, the Company must train its employees appropriately, imbuing them with knowledge and­technical skills related to its businesses while enhancing leadership skills, international awareness, and­responsiveness to changes in the business environment. We must advance measures to secure, train, anddeploy diverse human resources.

(4) Innovation intechnologies andtheir usage

The development and use of new technologies will allow the Company to provide new products and services whilestrengthening the competitiveness of existing businesses. Moreover, new technologies are likely to become thedriving force behind new business creation. In particular, efforts to develop new technologies in the fields of AI, IoT,
robotics, and failure prediction should be effective in resolving the social issue of increasing efficiency in logistics byhelping conserve and reduce labor as well as stabilize operations.

(5) Promote collaboration
with partner firms

The value chains in the Company’s businesses depend on numerous partners inside and outside Japan involvedin the supply of parts and materials, installation work, and IT engineering. Toyo Kanetsu works with its partners to
supplement areas where it has insufficient resources and provide cutting-edge ­technologies in such areas as AI
and IoT. These partnerships expand the scope of business domains that Toyo Kanetsu can enter and increase
opportunities to start new businesses.

(6) Increase productivity

Amid stronger demand from customers for the delivery of high-performance, low-priced equipment, Toyo
Kanetsu must continuously increase productivity with innovative technologies to keep winning orders and booking sales.

FY

Ratio of female managers*

2019

2020

2021

2022 (Target)

Unit

1.5

2.7

5.4

10.0

%

* Managers: Group managers and department heads, excluding executive officers (definition changed from fiscal 2021 results)

FY

Operating Profit per Employee

2019

2020

2021

2022 (Target)

Unit

2,608

3,306

2,967

2,044

Thousands of yen

Note: Toyo Kanetsu, non-consolidated

C

Fundamental initiatives to undertake before addressing A and B issues(7) Ensure occupational
health and safety

Safety is a priority in everything that Toyo Kanetsu does. If a safety- or health-related issue arises among our
employees, our most important resource, there is a risk that corporate value will be damaged considerably. Since
accidents must not happen, the Company is reinforcing its safety-first mindset by creating and implementing
safety management plans to prevent accidents from occurring.

2019

2020

2021

2022 (Targets)

Frequency Rate of Industrial Accidents

FY

0.95

1.39

1.20

0.00

Severity Rate of Industrial Accidents

0.01

0.05

0.02

0.00

Number of Fatal Work Accidents

0

0

0

0

Casualties/ million
working hours
Days lost/thousandworking hours
Cases

Unit

Unit

Note: Toyo Kanetsu, non-consolidated(8) Execute steadfast
compliance andcorporate governanceAs compliance with laws and regulations is a vital cornerstone of Toyo Kanetsu’s execution of trustworthy­business activities, the Company requires that all employees maintain a value system in which compliance is theirhighest priority. In addition, Toyo Kanetsu continuously reinforces its corporate governance system.

(9) Improve risk
management

Since Toyo Kanetsu Group engages in operations related to social infrastructure, management responds properlyand quickly to demand from society when a problem arises while taking steps to prevent accidents from occurring. As the scope of business expands with the introduction of new businesses and projects overseas and thefabric of society changes with ever greater speed, the risks the Company must address are growing in number
and magnitude. Toyo Kanetsu aims to further strengthen its ability and systems for identifying, assessing, andminimizing various risks, for example, by improving its credit and project screening capabilities and strengthening
internal security, in addition to stepping up its emergency preparedness around the world.

(10) Evolve our corporate
culture into one thatencourages employees to quickly andproactively takeon challenges

34

TKK Report 2022

In order to advance existing businesses and create new ones, we must nurture a corporate culture where all of
our employees can work together as one on challenges in new fields.

FY

2019

2020

2021

2022 (Target)

Rate of Information Security Training Participation

100

100

100

100

%

Number of Training Sessions Held on
Risk Management

6

5

6

3

Times

2019

2020

2021

2022 (Target)

Unit

76.4

72.3

70.7

100

%

Note: Toyo Kanetsu and consolidated subsidiaries

FY

Commendation System: Improvement
Proposal Submission Rate

Note: S ubmission rate = Total number of proposals submitted (Toyo Kanetsu, non-consolidated) ÷ number of eligible Toyo Kanetsu employees at theend of the second fiscal quarter. Total number of proposals is the aggregate; multiple proposals from one person are counted individually.

TKK Report 2022

35

The Toyo Kanetsu Group’s ESG Data Highlights
Material issuesA(2) Respond to
the decline
in Japan’s
population*1

2020

2021

Unit

Material issues

Energy consumption (crude oil equivalent)

885

927

1,058

kl

Energy consumption (electricity)

2,951

3,231

3,483

Thousand kWh

Energy consumption (LPG)

95

72

123

t

Energy consumption (city gas)

0.1

0.1

0.1

Thousand m3

CO2 emissions

1,763

1,959

1,783

t-CO2

GHG emissions (Scope 1 + 2)*2

5,276

4,993

5,142

t-CO2e

GHG emissions (Scope 3)*2, 3—

348,949—

t-CO2eCO2 emissions per unit of net sales

0.05

0.05

0.04

t-CO2/millions of yen

Water consumption

10.2

9.6

9.0

Thousand m

Total amount of waste generated

190

258

268

t

Paper consumption

13.4

12.2

9.5

t

Rate of employee participation in environmental
management training*4

—

37

—

%

Rate of employees voluntarily leaving the Company*5

2.8

1.7

1.9

%

Average number of service years

15.3

15.5

15.7

Years

Number of employees taking childcare leave

6

4

16

Persons

Number of employees taking childcare leave (male)

2

1

10

Persons

Number of employees taking childcare leave (female)

4

3

6

Persons

Number of employees returning to work afterchildcare leave*6

6

4

16

Persons

Number of employees working shortened hours

6

8

11

Persons

Number of employees working shortened hours (male)

0

0

0

Persons

Number of employees working shortened hours (female)

6

8

11

Persons010Persons

Rate of annual paid vacation taken*7

58

68

67

%

Average number of work hours*8

2,015

1,814

1,974

Hours

Average number of annual overtime work hours

287.40245.76268.57

Hours

Average number of monthly overtime work hours*9

23.95

20.48

22.38

Hours

Number of employees*10

560

575

577

Persons

Number of employees (male)

457

470

471

Persons

Number of employees (female)

103

105

106

Persons

Average age of employees

44.0

44.4

44.6

Years old

Average age of managers*11

52.2

52.0

51.4

Years old

Number of new graduate recruits

19

16

8

Persons

Number of new graduate recruits (male)

12

14

6

Persons

Number of new graduate recruits (female)

7

2

2

Persons

11

16

16

Persons

Number of mid-career recruits

TKK Report 2022

Number of non-Japanese employees

7

8

10

Persons

Managers as a percentage of all employees*11

12.1

12.9

12.8

%

2019

2020

2021

Unit

Ratio of female managers*11

1.5

2.7

5.4

%

Number of semi-management team leaders

46

55

56

Persons

Female semi-management team leaders as a percentage of total semi-management team leaders

2.2

12.7

12.5

%

52,143

44,69936,270Thousands of yen

93

78

63

Thousands of yen

Annual training costs

3

Number of employees taking nursing care leaveFY(3) Training andutilization ofhuman resources*1

Annual training costs (per employee)
Number of rewards provided for qualificationacquisition
Amount of compensation given for qualificationacquisition
Number of employees acquiring an importantqualification*12

21

14

37

Awards

1,100

850

1,440

Thousands of yen

106

97

90

Persons(4) Innovation in technologies and their usage*2

Annual cost of research and development(consolidated)

541,497

597,420602,872

Thousands of yen(6) Increase productivity*

Sales revenue per employee

55,07651,327

65,155

Thousands of yen

Operating profit per employee

2,608

3,306

2,967

Thousands of yen

1

C

Fundamental initiatives to undertake before addressing A and B issues(7) Ensure occupational
health and safety*1

0.95

1.39

1.20

Severity rate of industrial accidents

0.01

0.05

0.02

Number of fatal work accidents

0

0

0

Cases
Casualties/ million
working hours

Total number of work hours(8) Execute steadfast
compliance andcorporate governance(9) Improve risk
management*2(10) Evolve our corporate
culture into one thatencourages employees to quickly andproactively takeon challenges

Casualties/ million
working hours
Days lost/
thousand working
hours

Frequency rate of industrial accidents

Frequency rate of industrial accidents not
resulting in lost work time

Initiatives addressing material issues to sustainably improve corporate value(3) Training andutilizationof human
resources*1

36

2019

Issues to be addressed through our business to improve our corporate value(1) Respond tochanges inthe businessenvironment
caused byclimatechange*1

B

FY

3.50

1.39

1.50

3,146,153

2,882,716

3,332,459

Hours

Number of Group safety meetings held

1

1

1

Times

Number of safety patrols implemented

185

167

213

Times

Response rate for stress checks

94.0

93.8

96.0

%

Rate of compliance training participation*13

92.5

92.5

93.8

%

Number of helpline (whistleblower system) cases*2

7

5

7

Cases

100

100

100

%

93.6

93.5

92.4

%

6

5

6

Times

39

39

39

Persons

1,066

1,048

1,014

Cases

76.4

72.3

70.7

%

Rate of information security training
participation
Rate of safety confirmation drill participation(annual average)
Number of training sessions held on risk
management
Number of automated external defibrillator(AED) certificate holders
Commendation system: Number of
improvement proposals*14
Commendation system: Improvement proposal
submission rate*15*1 Toyo Kanetsu, non-consolidated.
*2 Toyo Kanetsu and consolidated subsidiaries.
*3 Figures are still being compiled for fiscal 2021.
*4	The figure for fiscal 2019 has been revised because results for the Logistics Solutions Division were originally omitted due to business integration. No results for fiscal 2019 due to the
COVID-19 pandemic. No results in fiscal 2021 as the implementation of education based on the Carbon Neutral Declaration and TCFD endorsement was delayed to f­iscal 2022.
*5	Includes full-time employees (including senior employees but excluding assignees) + Contract employees + Temporary workers + Number of incoming assignees + Seconded
employees (to the Company)*6 Percentage of employees returning to work, based on the total number of employees taking childcare leave.
*7 At least 8 days in fiscal 2019, 10 days in fiscal 2020, and 13 days in fiscal 2021; fiscal 2022 target is 70% of new days granted for the fiscal year.
*8 Includes full-time employees (including senior employees but excluding assignees).
*9 In the previous year’s report, annual rather than monthly average overtime hours were disclosed in error. This report discloses monthly average overtime hours.
*10 Includes directors, executive officers, and full-time employees*11 Managers: Group managers and department heads, excluding executive officers (definition changed from fiscal 2021 results).
*12 Number of employees who are 1st-class architects, engineers, or 1st-class construction management engineers*13 Includes directors, executive officers, and new employees, including those at Group companies.
*14 	Overall number of proposals for the Toyo Kanetsu Group as a whole, including subsidiaries. The total number of proposals is the aggregate; multiple proposals from one person
are all counted.
*15 	Submission rate = Total number of proposals submitted (Toyo Kanetsu, non-consolidated) ÷ Number of eligible Toyo Kanetsu employees at the end of the second fiscal quarter.
The total number of proposals is the aggregate; multiple proposals from one person are all counted.

TKK Report 2022

37

Governance

Board of Directors

38

Toshiaki Hiwatari

Yukari Sakai

Kazuto Abe

Toru Yanagawa

Akira Kakihara

Keisuke Kodama

Takashi Owada

Shigeharu Nakamura

Makiko Sato

Kazuo Ushida

Outside Director and
Audit & Supervisory
Committee Member

Outside Director

Director and
Audit & Supervisory
Committee Member

Director andChairman of
the Company

Director, Senior
Managing Officer

Director, Executive
Vice President,
Executive Officer

President &Representative
Director

Outside Director and
Audit & Supervisory
Committee Member

Outside Director

Outside Director and
Audit & Supervisory
Committee Member

TKK Report 2022

TKK Report 2022

39

Chairman’s Message

Supporting President Owada’s Leadership
through Supervision and Advice,
Utilizing His Original Experience in Dialogue
In April 2022, when the new Group Medium-Term

Director andChairman of
the Company

Business Plan officially started, I became Director
and Chairman of the Company. I would like to express

Toru Yanagawa

my deepest gratitude to all of our stakeholders fortheir support and for allowing me to serve as­president for the past eight years.
Currently, as Director and Chairman of the Company,
I am supporting my successor as President while
taking on a role with a greatly reduced percentage of

Through dialogue and mutual understanding, weto actively absorb various opinions and engage induties involving execution. In my other role as

say that maintaining dialogue was the most importantmanaged to regain the trust of the customer and wereplenty of dialogue before ultimately making

Chairman & Representative Director, I will strive tothing. When I became president of then-subsidiary

able to win back the order. We continue to have a gooda ­decision based on his own strong convictions.

exercise a highly effective supervisory and check-

Toyo Kanetsu Solutions, I think our logistics business

relationship with that customer to this day. This was

and-balance function over the management teamwas going through a transitional period to see if wethe original experience that cemented the importanceand I will continue to aim for the sustainable growth

could further grow the business. Our sales style wasof maintaining dialogue for me.

of the Company and enhancement of ­corporatesuch that decision making was habitually based onvalue over the medium to long term.

communication among middle-level employees, andThe business environment in which we operatecontinues to change at a dizzying pace, but socialchange provides opportunities for the Company toFurthermore, based on my experience, a president

grow. I hope that President Owada will fully utilize

top management was often out of loop and unable tois always at risk of becoming iron-fisted simply

the unique perspective he has gained from leading

entrust him to handle management strategy, as he isfully understand the true desires of our customers.

because he holds the greatest authority. As

the Logistics Solutions Business, now our core

now the head of the executive side. While it is

Because of this, we ran into difficulties with one of our

President Owada makes decisions in the future, it­business, while working on reforms and envisioning

President Owada who takes the initiative, the Board

clients as their management was reluctant to do busi-

will become increasingly valuable to have people,

a new image of the Company that both meets theof Directors discusses major strategic directions withness with us due to that lack of communication. I felt

including external stakeholders, who can give us

needs of the times and contributes to society. I am

the management team. At the same time, we believe

strongly that we could not continue with our previous

objective advice. It is also important to always be

confident that the Toyo Kanetsu Group will continue

it is necessary to have both functions in place toapproach and, together with our sales representatives,

sincere, regardless of the other party’s position or

to move forward with even greater dynamism undercheck excessive risk-taking and to push the

I personally went to the client, met with top manage-

status. When I approached President Owada about

President Owada’s leadership.

­management team to take appropriate risks.

ment, and carefully reestablished communication.

becoming president, I told him that it was important

I trust the judgment of President Owada and40

Looking back on my tenure as president, I would

TKK Report 2022

TKK Report 2022

41

Dialogue among Three Outside Directors
Ushida: I think exactly same way.

we were given to conduct in-depth interviews of each

Nakamura: When I was asked to be an outsideof the candidates. As we went through this process,director, Toyo Kanetsu had a very strong brandI began to see the expectations of my colleagues

image as one of the world’s leading storage tankregarding the ideal candidate begin to evolve.

manufacturers. However, when I arrived here andHiwatari said, whether people would want to follow

Company responsible for tanks, the Plant &the candidate as a leader or not. For example, theMachinery Business (now the Plant Business andenergy revolution may lead to a gradual decline in

Next-Generation Energy Development Business),demand for LNG, but if that demand turns to fuelwas sluggish, and it was the Logistics Solutions

ammonia and hydrogen, this could lead to significant

Business that was making great strides.

business opportunities for Toyo Kanetsu. There are

It made me wonder what kind of person would be

Kazuo
UshidaToshiaki
Hiwatari

Shigeharu
Nakamura

The point that I personally focused on was, as Mr.

looked into the business, I found that the part of thebound to be many different opinions about whether

the right president for a company in this position.

it’s worth investing in these areas or if we should justWho could be entrusted with this situation? The

keep the business going through the maintenancequestion for me was would whoever we chose bebusiness, but, in the end, it’s up to how the president

able to think with the right portfolio in mind whenleads the management to reach the right decision.

managing the Plant & Machinery Business—arguably

In times of rapid change, a president must be

important as it is the founding business—and thesteadfast and bold, ready to make big decisions andLogistics Solutions Business—the principal earner

well-liked enough that employees choose to be

for Toyo Kanetsu today? I expressed my opinions on

working alongside him to grow the Company. In this

this issue on various occasions.

regard, I considered President Owada to be the rightUshida: In June 2021, right after I was appointed toperson for the job.

the Board of Directors, the Advisory Committee

Top figures in the judicial circle,
the financial industry, and the precision manufacturing sector,
and each contributes their skills and experiences to
the Company’s corporate value.

began considering a successor to the President.
I was very impressed with the ample opportunities* Split into the Nominating Advisory Committee and the Compensation Advisory
Committee from June 2022.

Appointment of the New President
Hiwatari: The Nomination and Compensation

When Confucius was asked by his disciple

Committee* is a voluntary advisory body to the

Duanmu Ci if he had a single word to describe what

Board of Directors. Upon request of the Board, theone’s approach to life should be, he said “empathy,”Committee gives advice to the Board. Last July, themeaning compassion and consideration for those

Board of Directors requested the Committee advise

around you. Confucius continued, “Do not do untoon the selection of the next ­president, as the term ofothers what you would not have done unto you.” I

the current president ends this June.

believe that a leader should have this quality. I think

I believe that, of course, the president of Toyothat the reason why the members of the Advisory

Kanetsu should have leadership and a strong sense

Committee agreed that Takashi Owada was the mostof responsibility, but furthermore, the person has tosuitable candidate was because they recognized thishave the skills to listen to various opinions and takequality in him.

Toshiaki Hiwatari
He served as Administrative Vice-Minister ofthe Ministry of Justice, and then as Chief
Public Prosecutor of the Tokyo District Public
Prosecutors Office and Prosecutor General
before registering as an attorney. He was first
appointed as an Outside Audit & Supervisory
Board Member of the Company in 2012, andthen in June 2015, he was appointed outside
director (Audit & Supervisory Committee­member) of the Company and chairs theNomination Advisory Committee and theCompensation Advisory Committee. He also
serves as a legal advisor to TMI Associates,
outside director of The KAGOSHIMA BANK,
LTD. and Chairman of the Asia Crime
Prevention Foundation.

comprehensive action.

42

TKK Report 2022

TKK Report 2022

43

Dialogue among Three Outside Directors

Shigeharu Nakamura
After serving as Representative Director andExecutive Vice President of Resona Bank,
Outside Director of Saitama Resona Bank,and Representative Director and Presidentof Resona Research Institute, he wasappointed as an Outside Audit &Supervisory Board Member of the Company
in June 2013. He has been an outside
director (Audit & Supervisory Committee
member) of the Company since June 2015.
He is also an o
­ utside director (Audit &Supervisory Committee member) of RIKENTECHNOS CORP and an outside director of
Shoko Chukin Bank.

What We Can Expect of President Owada
Ushida: I would like to see the Logistics Solutions

environment are very different to those of the genera-

Business, which is currently expanding very rapidly,

tions who will be living on this planet in the coming

continue to grow. On the other hand, I want us todecades. In this sense, I think it is significant that two

discuss and carefully consider the Plant Businesscompanies involved in the environmental businessand Next-Generation Energy Development Business,have joined the Group. As a management team, ourwhich are struggling. I would also like to see the com-efforts to fulfill our responsibility to create andmercialization of new areas other than maintenance.

­preserve a proper foundation for the environmental

I would like to see the Logistics Solutions Businessbusiness have real social significance.

secure maximum profits and use those profits for

Hiwatari: I think your two perspectives as corporate

investment. I also really feel that the Company should

executives are spot on. From a slightly different

cherish the Plant Business and Next-Generation

angle, I would like the next president to consider

Energy Development Business, since both hold such

wages, the working environment, and diversity, forsignificance as founding businesses.

example, the inclusion of women and people with

Nakamura: In addition to the Logistics Solutions

disabilities, from the standpoint of how we as a com-Business and the Plant Business and Next-

pany can contribute to a sustainable society and aim

Unlike in the past, when everything was fine as

because of a construction boom, the Company went

Generation Energy Development Business, the third

to realize a work environment where all kinds oflong as you were making profit, today we have toto the United States to visit conveyor manufacturers

pillar of Toyo Kanetsu's business is the­people can work together. I hope that President

take a comprehensive approach that embraces

and developers. I think the key point is that theEnvironmental Business (Business Innovation

Owada will continue to work toward the realization of

everything from green energy and other environmen-

Company has proactively added its own touch to its

Business), which we are currently engaged in.

the Founding Philosophy of “Be Creative, Be Goodtal measures to the employee concerns mentioned

acquired technologies. This approach consists offor Society” with this in mind.

earlier. Management these days is extremely busy

a willingness to ­combine technology gained bybecause things are changing rapidly and there arereaching out to others with our own hard-won,more and more things to consider. With the decisionresearch-based technological know-how. It has

cycle becoming shorter and shorter, some decisions

grown into a system that today supports logistics

Supporting Toyo Kanetsu’s Future Development

are easy, but sometimes difficult decisions must be

for co-ops, e-commerce, and airports.

Ushida: The world is moving very quickly andalso always changing and adapting to meet differing­supportive and encourage the president and otherthe spirit of our founders will remain unchanged andalthough the content of our storage tanks may

requirements and ever-evolving aspects of security

members of the management team to always makecherished. I think this responsibility lies with uschange, so can the way we make them. Logistics aremust also be addressed.

the most optimal decisions.

­outside directors.

It is not merely that we need to keep up withtrends; our generation’s perceptions of themade under pressure. As a director, I want to be

The Board of Directors is the primary overseer of
Kazuo Ushida
After serving as Representative Director,
President, and Representative Director,
Chairman of the Board of Nikon Corporation, he
was appointed Outside Director (Audit &Supervisory Committee member) of theCompany in June 2021. He also serves as
Chairman of the Board of Nikon Corporation,
Chairman of the Japan Telescope Manufactures
Association, Chairman of the Japan OpticalIndustry Association, Chairman of the Japan
Optical Glass Manufacturers’ Association, andoutside director of JSR Corporation.

The future will bring many changes, but I hope that

Hiwatari: The perspectives from which we should

business execution and must make judgments ofdiscuss at the Board of Directors regarding thelegality and propriety. Of course, that is always a top­management policy that has been discussed by thepriority, but I believe that Toyo Kanetsu is a trust-Management Council are whether sufficient profit

worthy company.

can be secured, whether it should be done even if

President Owada has a personality that makes
people want to follow him. I would like to encourage
him in this aspect as well.

profit cannot be secured and whether it is acceptable
for society.
Following the annual General Meeting ofNakamura: It is said that corporate management in

Shareholders on June 28, 2022, the ratio of internala state of volatility, uncertainty, complexity andto outside directors became 5:5 with the addition of­ambiguity (VUCA) is an extension of the past with no

two new outside directors, both of whom are women.

future. That’s basically how I see it, too.

As the Company moves forward, the eyes of theOn the other hand, last year’s TKK Report 2021

­outside directors will be watching more closely thantells a story from the Company’s founding when its

ever, including in terms of diversity. We would likemain business was manufacturing storage tanks

to support Toyo Kanetsu as it continues to growusing its original boiler manufacturing technology.

and develop.

Anticipating further growth in demand for conveyors

44

TKK Report 2022

TKK Report 2022

45

Corporate Governance
Basic Approach
Toyo Kanetsu manages its operations while considering the perspectives of its stakeholders, including
shareholders, customers, suppliers, employees,
creditors, and local communities, and striving toensure efficiency, soundness, and transparency in

Audit & Supervisory Committee
management. The Company has a corporate governance system that facilitates accurate decision-­making, rapid business execution, and proper
supervision and monitoring of operations.

Changes in Strengthening of Corporate Governance
2000

Introduced an executive officer system

2016

2005

Established the Compliance Committee
Changed the maximum number of directors stipulated
in its Articles of Incorporation from 20 to seven ommenced evaluations of the effectiveness of theC
Board of Directors
Formulated a basic capital policy

2018

2008

Abolished the retirement allowance scheme for directors

Revised its Articles of Incorporation to allow an executive officer to be appointed as president

2015

 ransitioned to a “company with an audit and superTvisory committee” structure (shortening the term ofoffice of directors from two years to one year)
Changed its Articles of Incorporation to stipulate themaximum number of directors who are not Audit &Supervisory Committee members as seven and the
maximum number of Audit & Supervisory Committee
members as fourAppointed independent outside directors (threemembers of the Audit & Supervisory Committee
members)
Established the Nomination and Compensation
Committee (chaired by an outside director)
Formulated a shareholder return policy
Established its Corporate Governance Guidelines

2019Introduced a performance-linked stock compensation system2021

 esolved a policy for determining the compensationRof executive directors2022

 hanged the Articles of Incorporation to allow theCselection of person authorized to convene and preside at meetings of the Board of Directors to be
selected by a resolution of the Board
Reorganized the Nomination and Compensation
Committee into the Nomination Advisory Committee
and Compensation Advisory Committee
Appointed female directors

Structure

Director compensation system

Operational policy

Corporate Governance System
On June 26, 2015, Toyo Kanetsu switched froma “company with an audit and supervisory board” toa “company with an audit and supervisory committee”
structure. By giving voting rights in the Board of
Directors to directors who are members of the Audit& Supervisory Committee (including a number of­outside directors), we strengthened the functions of
the Board of Directors, as well as auditing and­supervisory functions, with the aim of building
a more effective corporate governance system.

Board of Directors
The Company’s Board of Directors consists ofa maximum of four directors who are members of the
Audit & Supervisory Committee (including one insidedirector, in principle) and no more than seven directors who are not members of the Audit & Supervisory
Committee, for no more than 11 directors. These
directors have extensive work experience, deep
insight, and high levels of specialization, are genderand age diverse, and possess international perspectives. We have thus ensured the Board of Directors is
sufficiently diverse and of an appropriate size.
Directors who are members of the Audit &Supervisory Committee are selected for their experience in corporate management and/or in-depth46

TKK Report 2022

understanding of the Company’s operations, as well
as for their knowledge in the necessary fields offinance, accounting, and law. At least one of these
directors is an expert in finance and accounting.
Utilizing the framework provided by the “company
with an audit and supervisory committee” structure, theBoard of Directors meets once a month, in principle, todeliberate and decide on important matters that are
fundamental to the Company based on resolutions
approved by the General Meeting of Shareholders;matters that should be discussed and authorized as
defined by laws, regulations, and the Articles ofIncorporation; and important matters related to­management principles, aims, strategic directions, andbusiness execution. The Board of Directors also­monitors business execution. From the standpoint ofenhancing the effectiveness and efficiency of businessexecution, important matters related to the operationsof the Company and the Group are deliberated andconsulted on by the Management Council, and thendecided by the Board of Directors. In accordance withlaws, regulations, and the Articles of Incorporation,­certain decisions related to important aspects of­business execution are entrusted to certain directors,
and core management matters that are especially
important must be approved by the Board of Directors.

The Audit & Supervisory Committee has four­members, including three outside directors to forma majority in accordance with the Companies Act.
The Audit & Supervisory Committee conducts organizational audits using the internal control system with
the intention of improving corporate value from an
independent and objective standpoint, fully aware of
the authority given only to members of the committee
and of the importance of the roles and duties they
are expected to perform. The Audit & Supervisory
Committee also audits and monitors business execution from an independent and objective vantage
point. For this reason, candidates who will serve as
both outside directors and members of the Audit &Supervisory Committee are independent and highly
specialized and possess extensive experience ascorporate managers.
The Audit & Supervisory Committee meets oncea month, in principle, and has one full-time member.
While coordinating with the Internal Audit Divisionand the accounting auditor, committee members­participate in Board of Directors’ and other important
meetings, read documents of significance, listen in
on updates to business execution, visit importantbases for audits, monitor and evaluate updates tothe internal control system, and audit business
reports and other briefing materials by investigating

conditions at subsidiaries, all in accordance with theauditing policies and auditing plans determined by
the Audit & Supervisory Committee. While monitoringand evaluating whether the accounting auditor isproperly conducting audits, the committee receives
reports and explanations from the accounting auditor
about the state of progress on its work and also
audits financial statements, supplementary documents,
and the consolidated financial statements.

Nomination Advisory Committee andCompensation Advisory Committee
To ensure transparency and appropriateness in theselection of director candidates and determination ofcompensation, outside directors constitute the majority
in all the Board of Directors’ advisory bodies. The
Nomination Advisory Committee and the Compensation
Advisory Committee, both of which are chaired by­outside directors, have been established to ensure thefairness and transparency of all procedures and provide
opportunities for appropriate involvement and advice
from outside directors. The Committees meet whenevernecessary to discuss matters related to the nominationand compensation of directors. The Board of Directors
makes decisions based on the discussions and reportsof the Committees.
Both committees consist of five members, including three outside directors.

Corporate Governance System (as of June 28, 2022)

General Meeting of Shareholders
Appointment, dismissal

Appointment,
dismissal,
non-reappointment

Appointment, dismissal

Board of Directors
Non-committee
member directors

Committee member
directors

Audit & Supervisory
Committee

LinkageAccounting auditor

Auditing,supervision

Consultation
Recommendation
Supervision

Business
Execution
Division

Nomination Advisory Committee
Compensation Advisory Committee

President and Representative Director

Report Monitoring,guidance
Audit

ReportMonitoring,guidance

Audit

Linkage

Management Council

Business execution in each division(businesses, Group companies, etc.)

ControlsupportInternal Control
Division

Audit andcontrolassessment

Internal Audit Division

TKK Report 2022

47

Corporate GovernanceEvaluation of Effectiveness of the Board of Directors

Board of Directors Skills Matrix

In order to confirm that the Board of Directors isfunctioning effectively overall, each director completes a self-evaluation of the Board every year aftergathering the necessary information from relevant
divisions for evaluating the effectiveness of the Boardof Directors, which then reaches a final evaluation­decision while referring to these opinions on its effectiveness. In addition to evaluating the effectivenessof the Board of Directors, evaluations are conducted
every year on whether the entire corporate governancesystem is operating in accordance with the Company’s
Corporate Governance Guidelines, with the objectiveof ­constantly improving the effectiveness of overall­corporate governance.

2. Each director is fully aware of the roles andresponsibilities expected of them by the Board of
Directors while properly carrying out their duties.
3. The Company will formulate a Medium-TermBusiness Plan that clarifies its strategic direction,and disclose the progress of the plan at financial
results briefings. In addition, the Company places
importance on ESG management and discloses
the status of ESG-related initiatives and otherinformation in its integrated report, the TKK Report.
4. The former Nomination and Compensation
Committee, chaired by an independent outside
director, was established as a voluntary advisory
body to the Board of Directors. The Committee
deliberated on matters related to director nominations and compensation, and ensured fairness andtransparency in the decision-making process withappropriate involvement of independent outside
directors. To further strengthen the advisory committee’s functions, in June 2022, the Nomination
and Compensation Committee was divided into
the Nomination Advisory Committee and theCompensation Advisory Committee, each chairedby an independent outside director.

In light of the Founding Philosophy, Management
Vision, slogan, and business plans, it has been determined that to fulfill its roles and responsibilities, theBoard of Directors needs skills in eight areas, including
management oversight, the formulation of future
growth strategies, and other areas that may contributeto improving corporate value in existing businesses.
In appointing directors, the Company takes into(3) Efforts to Improve the Effectiveness of the Boardof Directors
The Board of Directors will continue to ensure its
effectiveness, undertaking the following measures sothat it can adequately fulfill its vital roles, including
setting the strategic direction for the Company andfacilitating independent and objective audit functions. In addition, we will strengthen our efforts todeepen outside directors’ understanding of initiatives
undertaken by the various divisions and the environment in which the Group operates, and to pass on
outside directors’ knowledge and experience to
executive officers responsible for such divisions.
1. Gather information necessary for making
decisions;
2. Hold in-depth discussions from multiple­perspectives; and3. Take appropriate risks and proactively and boldly
make decisions.

Makiko Sato

Summary of Results of EffectivenessEvaluation in Fiscal 2021
The Company’s Board of Directors evaluated theeffectiveness of the Board of Directors mainly by asking,“Is the Board of Directors operating in accordancewith the Corporate Governance Guidelines?”(1) Method of Evaluation
From March to April 2022, the Board of Directors
conducted an evaluation of its effectiveness by­following the procedures outlined below.
1. The secretariat provided the reference materials
needed to evaluate effectiveness.
2. The Board of Directors asked questions about thereference materials supplied by the secretariat,
exchanged opinions, and asked for additional
information to be provided.
3. Each director completed the self-evaluation basedon a scoring sheet for effectiveness.
4. At the Board of Directors’ meeting held on April
26, 2022, the directors discussed the self-­
evaluations and reached a decision on the
final evaluation.
(2) Results of Evaluation and Analysis ofEffectiveness of Board of Directors
Through this evaluation process, the Company’s
Board of Directors affirmed that the Board of
Directors is functioning effectively overall. Below isa summary of the results of the evaluation.
1. The Company’s Board of Directors is appropriately
structured and operating in accordance with its
Corporate Governance Guidelines.

48

TKK Report 2022

consideration the criteria set forth in the Company’s
Corporate Governance Guidelines to ensure the­optimum balance of diversity and skill sets within thecohort of directors as set forth in the Articles ofIncorporation. For each director, a skills matrix
revealing the areas in which they are expected todemonstrate expertise based on their experience iscreated and disclosed.
Main Expected Areas of Expertise

Corporate
management /Organization
management

Legal, risk
management

Finance,accounting

International
experience

IT / innovation,newbusinesses

ESG, SDGs

Industry
experience /Sales

Production,engineering /R&D

Toru Yanagawa
Takashi Owada
Keisuke Kodama
Akira Kakihara
Yukari Sakai

Kazuto Abe
Toshiaki Hiwatari
Shigeharu Nakamura
Kazuo Ushida

Director Compensation
At its meeting held on February 26, 2021, the Boardof Directors approved a policy for determining individual
director (excluding outside directors and directors
who are members of the Audit & Supervisory
Committee, hereinafter referred to as “executive
directors”) compensation, and at its meeting held on
May 13, 2022, the Board approved revisions to thatpolicy. The resolution of the Board of Directors is­discussed with the Nomination and Compensation
Committee, the majority of which is composed ofindependent outside directors, and a report is received
from the committee. The Nomination and Compensation
Committee was reorganized into the Nomination
Advisory Committee and the Compensation Advisory

Committee by resolution of the Board of Directors on
May 13, 2022. The following is a summary of the policy for determining individual compensation of executive directors.
a) Basic policy• To ensure that compensation for executive directors
enhances their motivation to improve its performance and increase its corporate value over the
medium to long term and functions properly as
an incentive to share risks and returns arising fromchanges in its share price with share- holders, theCompany has adopted a compensation system
linking compensation with its business results and
TKK Report 2022

49

Corporate Governancestock value. The basic policy of this system is toestablish appropriate criteria that take into consideration each individual’s responsibilities when­determining the compensation for individual executive directors. Compensation for executive directors
comprises basic (monetary/fixed) compensation,
performance-linked monetary compensation, andperformance-linked stock compensation.
• In light of their duties, only basic compensation(monetary/fixed) is paid to directors who are Audit& Supervisory Committee members and non-­executive directors who are not Audit & Supervisory
Committee members.
• Of the above, concerning the method of determining
the individual compensation of non-executive directors who are not Audit & Supervisory Committee
members, the Company will ensure transparency inthe process by adopting the same method as thatused for determining individual compensation of
executive directors as described in e) below.
b) Policy on determining individual compensation
amounts for basic (monetary) compensation(including the policy on determining the timing andthe conditions for granting compensation)• Basic (monetary) compensation for the Company’s
executive directors shall be monthly fixed compensation. This compensation is determined in linewith a pre-existing compensation table according
to rank, comprehensively taking into consideration
factors that include the compensation levels ofother companies, the Company’s performance, andthe salary level of its employees.

• Alongside performance-linked monetary compensation (see c) 1. on the next page), the Company
will pay such basic (monetary) compensation as
monthly fixed compensation on a monthly basis for
one year during the next fiscal year.
c) Policy on determining the details of performancelinked monetary compensation and non-monetarycompensation (hereinafter referred to as“performance-linked stock compensation”) andthe method for calculating the amount and numberof points (including the policy on determining thetiming and conditions for granting compensation)
1. Policy on determining the details of performancelinked monetary compensation and the method for
calculating the amount and number of points• Performance-linked monetary compensation is
cash-based compensation reflecting key performanceindicators (KPIs) that the Company has establishedin order to raise awareness of the importance ofenhancing performance each fiscal year. The amountof this compensation is calculated by adding theamount of consolidated net income before taxes andother adjustments for each fiscal year to the projectedamount of consolidated net income before taxes andother adjustments for the next fiscal year.
• Executive bonuses of a certain portion of profits
may be paid by resolution of the General Meetingof Shareholders only in the event that the consolidated net income before taxes and other adjustments and stock dividend amounts are at a certain
level or higher.

Total Compensation by Director Category, Total Compensation by Type, and Number of Eligible Directors in Fiscal 2021
Total amount of compensation by type (¥ million)

Totalamount ofcompensation(¥ million)

Basic
compensation

Performancelinked
compensation

Performancelinked stockcompensation

Directors (excluding members of the Audit &Supervisory Committee and outside directors)

140

73

63

3

4

Directors (members of the Audit & Supervisory
Committee) (excluding outside directors)

16

16

—

—

1

Outside directors

26

26

—

—

4

Director category

Number of
eligible
directors

Notes: 1 T
 he number of directors (excluding Audit & Supervisory Committee members and outside directors) as of March 31, 2022 was three. This number differs from that shown
above as the above number includes one outside director (Audit & Supervisory Committee member) who completed their term and retired at the conclusion of the 113th
General Meeting of Shareholders held on June 29, 2021.
2 The amounts paid to directors (excluding Audit & Supervisory Committee members) do not include employee salaries of those serving concurrently as employee and director.
3T he maximum amount of compensation for eligible directors (excluding those who are Audit & Supervisory Committee members) was resolved to be within ¥20 million permonth (of this amount, within ¥1.7 million for outside directors) (not including employee salaries) at the 114th General Meeting of Shareholders held on June 28, 2022 (thenumber of directors at the time of this meeting was six, two of whom were outside directors). Separate from this compensation, a performance-linked stock compensation
system using a trust for directors (excluding outside directors and Audit & Supervisory Committee members who are directors) and executive officers who are ranked managing executive officer or higher and who are not directors was introduced at the same General Meeting of Shareholders (the number of eligible directors at the time of thismeeting was four), with the maximum amount of trust money resolved to be ¥167 million for each of the three fiscal years of the period covered.
4 The maximum amount of compensation for directors (Audit & Supervisory Committee members) was resolved to be within ¥5 million per month at the 107th General Meetingof Shareholders held on June 26, 2015 (the number of eligible directors (Audit & Supervisory Committee members) at the time of this meeting was four).
5T he performance-linked stock compensation column for the above directors (excluding Audit & Supervisory Committee members and outside directors) represents theamounts reported as expenses for fiscal 2021.

50

TKK Report 2022

2. Policy on determining the details of performancelinked stock compensation and the method for
calculating the amount and number of points(i) Details, amount, and method for calculating
performance-linked stock compensation• Performance-linked stock compensation grants thefollowing points each fiscal year to executive directors
and executive officers who are ranked managing
executive officer or higher and who are not directors(hereinafter, “directors and executive officers”) in
accordance with their rank and level of achievementof earnings indicators based on the Medium-TermBusiness Plan and other materials on the basis of
the share delivery regulations of the PerformanceLinked Stock Compensation System for Directors,
which was resolved at a meeting of the Board of
Directors on May 14, 2019, and the determinationof compensation details and amounts associatedwith the introduction of the Performance-Linked
Stock Compensation System for Directors andExecutive Officers, which was resolved at the 111th
General Meeting of Shareholders held on June 27,
2019, and based on the resolution of the 114th
Ordinary General Meeting of Shareholders held on
June 28, 2022, the Partial Revision of Amount andDetails of Remuneration, etc. for Directors andExecutive Officers in Relation to Continuation of the
Performance-Linked Stock Compensation System.
• Directors and executive officers who are notresponsible for business divisions or are responsible
for corporate divisions:
Points granted = Base points for rank ×
Performance-linked coefficient((1) x 1.0)*• Directors and executive officers responsible forbusiness divisions
Points granted = Base points for rank ×
Performance-linked coefficient ((1) x 0.5 + (2) x 0.5)** The performance-linked coefficients of the two indicators, (1) ROE and (2)operating profit, vary between 0% and 144% according to the level ofachievement of targets for these indicators of each division.

• Directors and executive officers shall be granted
a maximum of 41,000 points (corresponding to
41,000 shares) (of which 30,340 points (corresponding to 30,340 shares) are for executive directors) each fiscal year in the three fiscal years fromfiscal 2022 through fiscal 2024 (hereinafter referred
to as the “initial period,” which is assumed to be
the period of the Medium-Term Business Plan) anda maximum of 123,000 points (corresponding to123,000 shares) (of which 91,020 points (corresponding to 91,020 shares) are for executive directors) in the three fiscal years of the initial period.
Moreover, the points granted shall be converted

into the Company’s shares at the rate of one shareper point when providing shares of the Company’s
stock to directors and executive officers.
(ii) Policy on determining the timing and conditions for
granting performance-linked stock compensation• The period of the performance-linked stock compensation system shall cover the initial period andevery three fiscal years starting from the end of theinitial period (or the period of the Medium-TermBusiness Plan formulated following the initial period).
• In principle, shares of the Company’s stock shall be
provided to directors and executive officers following
the determination of the Company’s performance inthe final fiscal year of each period covered by thecompensation system, in accordance with the
cumulative total of points granted in the period
covered. However, from the perspective of ensuring
capital for the payment of taxes, a number ofshares of the Company, corresponding to 50% of
the cumulative points, shall be converted into cash
and the cash amount equal to the amount of­converted shares shall be paid to directors andexecutive officers.
d) Policy on determining the ratio of the amount ofbasic (monetary) compensation, the amount of
performance-linked monetary compensation, andthe amount of performance-linked stock compensation to the amount of compensation for­individual directors Regarding the ratio of each type of compensationfor executive directors, as performance-linked
monetary compensation is calculated based on
performance in the preceding fiscal year and­projected performance in the next fiscal year, andas performance-linked stock compensation is thenumber of shares calculated based on ROE anddivisional operating profit—which are target KPIs
of the Medium-Term Business Plan for the initialperiod—the Company has not determined theratio, as said ratio will be decided by the performance in the relevant single fiscal year and thenext fiscal year and by the degree of achievementof targets for ROE and divisional operating profit
by each executive director in the initial period andthe subsequent three fiscal years. However, in­consideration of the intention behind introducing
performance-linked compensation, the structure ofcompensation types is such that the higher an
executive director’s rank, the more weight is
assigned to performance-linked compensation.
e) Matters regarding the method for determining
the details of compensation for individual­executive directors
TKK Report 2022

51

Business Risks

Corporate Governance The Company has stipulated policies and procedures for determining compensation for directors(excluding outside directors and Audit & Supervisory
Committee members who are directors) in its
Corporate Governance Guidelines, based on which
it determines the amount of compensation for­individual executive directors by a resolution of theBoard of Directors following deliberations and­recommendations by the Compensation Advisory
Committee, of which independent outside directors
form a majority, thereby ensuring the transparencyof the process for determining compensation.
f) Reasons why the Board of Directors decided tobring the details on compensation for individual
executive directors in relation to fiscal 2021 in linewith this policy The Nomination and Compensation Committee,
which was consulted by the Board of Directors,
conducted a multi-faceted examination of the draft
proposal, including of its consistency with decision-making policy, and confirmed specificamounts by applying them to the compensationtable before making its recommendations to theBoard of Directors. Accordingly, in determining thedetails of compensation for individual executive
directors, the Board of Directors basically respects
the committee’s recommendations, deeming them
to be in line with decision-making policy.

Cross-Shareholdings
Toyo Kanetsu has the following basic policies on
holding cross-shareholdings and the exercise of­voting rights.
(1)Toyo Kanetsu does not have cross-shareholdings
for purposes other than strengthening relationships
and partnerships with customers and suppliers,
with the objective of increasing corporate value.
New acquisitions of cross-shareholdings, as wellas buying and selling shareholdings, are conducted
and reported to the Board of Directors in accordancewith internal rules.

(2) Every year, the Board of Directors examines the
purpose for owning individual shares, the benefits
and risks of holding these shares, and whether
the holdings align with the cost of capital, in orderto determine whether it is appropriate to own
these shares.
(3) With regard to the exercise of voting rights, theCompany shall, in principle, be in opposition when
there are concerns that its purpose for owning
the stock does not align with management, suchas when:
1.Earnings have worsened for several years at theinvestee company, with no sign of a recovery insight; and2. Significant problems come to light in internal­controls related to financial reporting by the­investee, and improvements seem unlikely.
(4) In the event that a company that owns shares of
Toyo Kanetsu for cross-shareholding purposes
indicates its intention to sell these shares, theCompany shall not take inappropriate action that
may interfere with the sale of the shares, such as
suggesting the company would lose business with
the Company.
(5) Toyo Kanetsu shall not engage in business transactions with a company (in which it owns stock
for cross-shareholding purposes) that conflict with
its interests as well as with the common interestsof its shareholders, such as continuing to conductbusiness without adequate evidence of the economic rationale for the business transactions.
In fiscal 2021, the Company sold cross shareholdingsof three listed companies resulting in a total saleamounting to ¥574 million. As of March 31, 2022,
the total amount of investment stocks held for­purposes other than pure investment in theConsolidated Balance Sheets was ¥7,007 million,
which accounts for 19.2% of the consolidated net
assets of ¥36,477 million.

Of all the risks that could affect its business activities, certain of those potentially having a significant impact on
the Toyo Kanetsu Group are shown below. However, this is not an exhaustive list of risks related to the Groupand there are risks that are difficult to foresee.
For details please see the TKK Report 2022 Financial Section which is available on the Company’s website.

Category

1 Climate change

Corporate Governance Reporthttps://www.toyokanetsu.co.jp/pdf/corporate_governance_1.pdf
Annual Securities Reporthttps://www.toyokanetsu.co.jp/pdf/toyo_kanetsu_2921.pdf

Nature of risk
• Impact on the business environment in the event of a decrease in demand for LNG and crude oiltanks amid an acceleration in the shifting energy mix prompted by growing global environmental
awareness and the transition to a low-carbon and carbon-neutral society• Decrease in social trust in the event of the occurrence of environmental problems arising frombusiness activities
Logistics Solutions Business• Unexpected increase in costs due to various factors, such as compressed construction periods
due to unforeseen changes in construction plans under pressure to shorten delivery times anddelivery deadline adjustments due to carrying out multiple large projects simultaneously within acertain period of time• Impact on the execution of projects in the event that principal products and materials purchasedfrom specific overseas business partners cannot be purchased in a stable manner

2 Execution of projects

Plant Business and Next-Generation Energy Development Business• Impact on business execution in the event of shortages of construction workers, rising procurement
prices of materials and equipment, and delays in the transfer of technologies to project engineers• Shortages and price hikes for parts and materials due to COVID-19 outbreaks and geopolitical risks• Deterioration in profits from projects and adverse effect on the Group’s social reputation due toserious quality complaints or problems with products• In addition, the Group’s overseas operations carry the following inherent risks.
a) Unexpected changes in laws and regulations, b) Political and economic instability,c) Difficulties in securing human resources, d) Unfavorable tax system revisions, ande) Social disorder due to terrorism, war, epidemics, disasters, or other factors

3

4

Securing and developing
human resources• Impact on business activities from an outflow of human resources and rise in recruitment costs

Intensifying competition
for orders• Unreasonable downward pressure on profitability• Impact on the Group’s ability to obtain orders due to changes in terms of customer policies andplans, the business environment of the industry, and industry restructuring•Decline in the Group’s competitiveness in the event of delays in responding to market demandamid shortened product and technology life cycles• Impact on business results and financial position stemming from the recording of impairment losses
on non-current assets in the event that profitability declines and the Group cannot generate sufficient
cash flows due to dramatic changes in the business environment and business conditions

5 Launch of new businesses
6

Occupational healthand safety

7 Compliance• Adverse effect on business results and financial position in the event of delays in creating
a business that will become a third pillar to follow the Group’s two core businesses• Compensation for damages, criminal penalties, administrative punishment, and a decline inpublic trust in the event of an incident or accident•Financial penalties and a decline in public trust in the Group stemming from the violation of laws
and regulations in Japan and overseas

Natural disasters andepidemics• Serious material damage and human injury caused by greater-than-expected natural disasters• Risks in a wide range of areas caused by the impact of COVID-19

Information security and9 maintenance of information
infrastructure• Damage to the Group’s reputation for reliability due to the loss or leakage of confidential­information as a result of unforeseen cyberattacks• Loss of business opportunities in the event that the Group lags behind in digital transformation
initiatives

8

Logistics Solutions Business• Reflecting lower demand for logistics facilities, slowdown in investments in logistics-related
facilities as a result of a recession or Japan’s declining birth rate and aging population• Decline in demand for air travel lease refer to the Corporate Governance Guidelines, the Corporate Governance Report andP
the Annual Securities Report for details (in Japanese only).
Corporate Governance Guidelines
https://www.toyokanetsu.co.jp/pdf/corporate_governance_0.pdf

https://www.toyokanetsu.co.jp/global/ir/tkk_report.php

10 Market trends, etc.

Plant Business and Next-Generation Energy Development Business• Cancellation, postponement, or major revision of investment plans due to factors that include
global economic trends, economic and social conditions in oil and gas producing and consuming countries, energy and environmental policies in various countries, and trends in crude oiland LNG prices• In addition, the following risks are also possible in the event of the deterioration of the economic
environment.
a) Fluctuations in foreign exchange rates, b) Fluctuations in interest rates, andc) Valuation of securities held

Note: Forward-looking statements contained in this section are based on the understanding of the Company as of the submission date (June 28, 2022) of its Securities Report (inJapanese only) for the fiscal year ended March 31, 2022.

52

TKK Report 2022

TKK Report 2022

53

Director Profiles (As of June 28, 2022)
Directors

54

Director and Audit & Supervisory Committee Members

Toru Yanagawa

Takashi Owada

Kazuto Abe

Toshiaki Hiwatari

Director and Chairman of the Company
Years on the Board: 17 Company shares held: 20,396

President & Representative Director
Years on the Board: 3 Company shares held: 2,104

Director and Audit & Supervisory Committee Member
Years on the Board: 7 Company shares held: 3,695

Outside Director and Audit & Supervisory Committee Member
Years on the Board: 7 Company shares held: 775

Apr. 1975 Joined the Company
Apr. 1998 General Manager of Plant & Machinery Sales Department of Sales Division
Jul. 2000 	Executive Officer, General Manager of Plant & Machinery Sales Department ofSales Division
Jul. 2003 	Senior Executive Officer, Deputy Division Manager of Plant & Machinery DivisionJun. 2005 	Director, Senior Executive Officer, Deputy Division Manager ofPlant & Machinery Division
Apr. 2008 	Director, President & Representative Director of Toyo Kanetsu Solutions K.K.
(currently Toyo Kanetsu)
Apr. 2014 President & Representative Director
Apr. 2022 Director and Chairman of the Company (current position)

Apr. 1985 	Joined the Company
Oct. 2002	Transferred to Toyo Kanetsu Solutions K.K. (currently Toyo Kanetsu),
General Manager of System Sales No. 1 Department, Marketing Division
Jul. 2006 	General Manager of Systems Integration Department, System Division
Apr. 2008 Executive Officer and General Manager of System Division
Apr. 2015 Managing Executive Officer
Apr. 2018 	Transferred to the Company as an Executive Officer, seconded to Toyo Kanetsu
Solutions K.K. (currently Toyo Kanetsu) as a Director and Managing Executive Officer
Apr. 2019 Managing Executive Officer, Division Manager of Logistics Solutions DivisionJun. 2019 Director, Managing Executive Officer, Division Manager of Logistics Solutions Division
Apr. 2021 	Director, Executive Vice President, Division Manager of Logistics Solutions Division
Apr. 2022 President & Representative Director (current position)

Apr. 1976 Joined the Company
Jul. 2000 General Manager of Accounting Department, Business Administration Management
Division
Dec. 2002 Executive Officer
Jul. 2003 	Seconded to Toyo Kanetsu Solutions (currently Toyo Kanetsu), Executive Officer,
Deputy General Manager of Administration Division
Aug. 2004 Administration Division Manager
Apr. 2009 	Executive Officer, General Manager of General Affairs and Human Resources
Department, Administration Division, General Manager of Chiba OfficeJun. 2009 Outside Corporate Auditor, Toyo Koken K.K.
Apr. 2012 Executive Officer, Head of General Affairs & Human Resources and Chiba OfficeJun. 2012 Audit & Supervisory Committee Member
Jun. 2015 Director and Audit & Supervisory Committee member (current position)

Apr. 1970 Public Prosecutor, Tokyo District Public Prosecutors OfficeJun. 1997 Public Prosecutor, Supreme Public Prosecutors Office
Aug. 2002 Detective Superintendent, Ministry of JusticeJun. 2004 Administrative Vice-Minister of the Ministry of JusticeDec. 2006 Superintending Public Prosecutor, Tokyo High Public Prosecutors Office
Jul. 2008 Prosecutor General
Sep. 2010 	Joined Daiichi Tokyo Bar Association, Advisor Attorney to TMI Associates(current position)
Jun. 2012 	Outside Audit & Supervisory Board Member of the Company,
Outside Audit & Supervisory Board Member of Honda Motor Company, Ltd.
Oct. 2012 Outside Director of Nomura Securities Co., Ltd.
Jun. 2015 	Outside Director and Audit & Supervisory Committee Member of the Company(current position)
Oct. 2016 Outside Corporate Auditor, The KAGOSHIMA BANK, LTD.
Jun. 2017 	Outside Director and Audit & Supervisory Committee Member of
Honda Motor Company, Ltd.
Apr. 2019 	Outside Director and Audit & Supervisory Committee Member of Nomura Securities
Co., Ltd., Outside Director of The KAGOSHIMA BANK, LTD. (current position)
Aug. 2019 Chair of the Asia Crime Prevention Foundation (current position)

Keisuke Kodama

Akira Kakihara

Director, Executive Vice President
Years on the Board: 7 Company shares held: 6,119

Director, Senior Managing Officer
Years on the Board: Newly appointed

Apr. 1982 Joined the Company
Jul. 2006 General Manager of Domestic Sales Department of Plant & Machinery Division
Apr. 2009 	General Manager of Corporate Management Department of Corporate
Management Division
Apr. 2010 	Executive Officer, General Manager of Corporate Management Department ofCorporate Management Division
Apr. 2012 	Seconded to Toyo Kanetsu Solutions K.K. (currently Toyo Kanetsu) as
an Executive Officer
Apr. 2013 Transferred to Toyo Kanetsu Solutions K.K. as a Managing Executive Officer
Apr. 2015 	Transferred to the Company as a Managing Executive Officer,
Deputy Division Manager of Corporate Management DivisionJun. 2015 	Director, Managing Executive Officer, Deputy Division Manager of Corporate
Management Division
Apr. 2016 	Director, Managing Executive Officer, Division Manager of Corporate
Management Division
Apr. 2018 	Director, Senior Managing Officer, Division Manager of Corporate
Management Division
Apr. 2019 	Director, Senior Managing Officer, Division Manager of Corporate Division
Apr. 2020 Director, Executive Vice President, Executive Officer
Apr. 2022 	Director, Executive Vice President, Executive Officer, Assistant to the President(current position)

Apr. 1983 Joined Saitama Bank (currently Resona Bank, Limited)
Apr. 2003 	General Manager of Department No. 1 of Saitama Head Office Branch,
Saitama Resona Bank, Limited
Jul. 2005 General Manager of Shiki Branch
Jun. 2007 General Manager of Muromachi Branch of Resona Bank, Limited
Apr. 2013 General Manager of International Business Department
Oct. 2015 Seconded to the Company
Oct. 2016 	Transferred to the Company, Executive Officer, General Manager of Corporate
Management Department of Corporate Management Division
Mar. 2018 Director of Kankyo Research Institute Inc. (current position)
Apr. 2018 	Managing Officer, Deputy Division Manager of Corporate Management Division of
the Company
Apr. 2020 	Managing Officer, Manager of Life & Work Environmental Business Division,
Deputy Division Manager of Corporate Division
Apr. 2021 	Senior Managing Officer, Division Manager of Life & Work Environmental Business
Division, Deputy Division Manager of Corporate Division, Director of Eco Analysis
Corporation (current position)
Apr. 2022 	Senior Executive Officer, Assistant to the President, Division Manager of Business
Innovation Division of the Company
Jun. 2022 	Director, Senior Executive Officer, Assistant to the President,
Division Manager of Business Innovation Division (current position)

Shigeharu Nakamura

Kazuo Ushida

Outside Director and Audit & Supervisory Committee Member
Years on the Board: 7 Company shares held: 775

Outside Director and Audit & Supervisory Committee Member
Years on the Board: 1 Company shares held: 212

Apr. 1976 Joined Saitama Bank (currently Resona Bank, Limited)
Jun. 2006 	Director, Senior Managing Officer, Head of General Finance Department andCorporate Governance Office of Saitama Bank
Jun. 2008 	Representative Director, Executive Vice President, and Executive Officer of
Human Resources Services Department and Secretariat of Corporate Governanceof Saitama Bank
Jun. 2009 	Executive Officer, in charge of Corporate Communications Department andHuman Resource Services Department of Resona Holdings, Inc.
Jun. 2011 	Representative Director and Executive Vice President, Executive Officer,
Corporate Center (excluding Corporate Administration Department), Resona Bank, Ltd.
Jun. 2011 Outside Director of Saitama Resona Bank, Limited
Apr. 2012 President and Representative Director of Resona Research Institute Co., Ltd.
Jun. 2013 Outside Audit & Supervisory Board Member of the Company
Jun. 2014 	Supervisory Board Member of F-TECH INC., Audit & Supervisory Committee
Member of RIKEN TECHNOS CORP
Jun. 2015 	Outside Director and Audit & Supervisory Committee Member of the Company(current position)
Jun. 2016 	Outside Director and Audit & Supervisory Committee Member of
RIKEN TECHNOS CORP (current position)
Jun. 2018 Outside Director of Shoko Chukin Bank (current position)

Apr. 1975 Joined Nippon Kogaku Tokyo K.K. (currently Nikon Corporation)
Jun. 2005 	Managing Director and Senior Executive Officer,
President of Precision Machinery Company of Nikon Corporation
Jun. 2007 	Director and Senior Managing Officer, President of Precision Machinery Company of
Nikon Corporation
Jun. 2013 	Representative Director, Executive Vice President and Executive Officer ofIntellectual Property Division, President of Precision Equipment Company,
Deputy Officer of Corporate Planning Division of Nikon Corporation
Jun. 2014 	Representative Director, President and Chief Executive Officer of Medical Business
Development Division and New Business Development Division of Nikon Corporation
Jun. 2017 	Representative Director, President and Chief Executive Officer of New Business
Development Division, Optical Division, and R&D Division of Nikon Corporation
Apr. 2019 Chairman and Representative Director of Nikon Corporation
Apr. 2020 Chairman of the Board of Nikon Corporation
May 2021 Chairman of Japan Telescope Manufacturers Association (current position)
Jun. 2021 	Outside Director and Audit & Supervisory Committee Member of the Company(current position), Chairman of the Board of Nikon Corporation (current position),
Chairman of Japan Optical Industry Association (current position)
Apr. 2022 Chairman of Japan Optical Glass Manufacturers’ Association (current position)
Jun. 2022 Outside Director of JSR Corporation (current position)

Yukari Sakai

Makiko Sato

Outside Director
Years on the Board: Newly appointed Company shares held: 0

Outside Director
Years on the Board: Newly appointed Company shares held: 0

Apr. 1991 Joined Nomura Securities Co., Ltd.
Jan. 2005 Director of Corporate Tune Co., Ltd.
Jun. 2005 Standing Audit and Supervisory Committee Member of UNITED ARROWS LTD.
Jun. 2008 Outside Auditor and Supervisory Board Member, REPROCELL Inc.
Sep. 2013 Outside Auditor and Supervisory Board Member of Beauty Kadan Co., Ltd.
Jun. 2016 	Outside Director and Standing Audit & Supervisory Committee Member of
UNITED ARROWS LTD. (current position)
Oct. 2017 Outside Director and Audit & Supervisory Committee Member, Tea Life Co. Ltd.
Mar. 2019 External Director and Audit & Supervisory Board Member of Uzabase, Inc.
Jun. 2021 Outside Director of PACIFIC METALS CO., LTD. (current position)
Jun. 2022 Outside Director of the Company (current position)

Apr. 2000 Joined CyberAgent, Inc.
Oct. 2005 Seconded to WEDDING PARK CO., LTD.
Oct. 2006 Seconded to CyberAgent Ventures (currently CyberAgent Capital, Inc.)
Jun. 2016 	Founded iSGS Investment Works Inc., Director andRepresentative Partner (current position)
Dec. 2018 Outside Director of LiB, Inc. (current position)
Jun. 2021 Member of the Promotion Committee of Tokyo Data Platform Council (current position)
May 2022 	Member of the Committee for Evaluating the Conclusion of the “Exploration andDevelopment of Global Entrepreneurship for NEXT generation” Project at
Ministry of Education, Culture, Sports, Science and Technology (current position)
Jun. 2022 Outside Director of the Company (current position)

TKK Report 2022

Company shares held: 0

TKK Report 2022

55

Business Overview

Fiscal 2021 Results by Segment

Consolidated results for fiscal 2021
exceeded our financial outlook,with higher revenues andincome compared with fiscal 2020.

Logistics Solutions Business

Other Businesses

Plant & Machinery Business(Life & Work Environmental Business, etc.)

Note: This section provides an overview of fiscal 2021 results by former segment.

Logistics Solutions Business
Plant & Machinery Business
Other Businesses (Life & Work Environmental Business, etc.)

11,581

32,987

Net sales / Operating Profit(Millions of yen)

Net sales / Operating Profit(Millions of yen)

40,000Net Sales*1(Millions of yen)

59,17730,00028,887

27,23932,987

3,140

3,149

(Millions of yen)

4,000

20,0003,000

15,0002,000

20,000(Millions of yen)

3,000

15,006

572

0

3,149

108
Operating Profit*2(Millions of yen)

2,808

*1 Total does not include intersegment sales or transfers.
*2 Total does not include corporate expenses.

56

TKK Report 2022

FY2019Net sales (left axis)

FY2020(Millions of yen)

1,200

15,000880

2,000

10,0009,950

11,581
789
800

7,813

9,800

1,000

108
10,000(Millions of yen)

10,0002,812

15,006

Net sales / Operating Profit

1,000

5,000

0

0

FY2021

Operating profit (right axis)

Despite the stagnation of some projects
due to the COVID-19 pandemic and theeffects of shortages of and sharp pricerises for parts and materials, demand forautomation and labor-reducing equipment remained strong due to increased
shipments of goods associated with
e-commerce coupled with labor shortages.
We achieved record profits in this­business for the third consecutive year,
mainly due to profitability of projects forwarehouse automation equipment­incorporating Multishuttle technology forthe online shopping and wholesaleindustries, co-ops, and manufacturers.

0

(602)

Net sales (left axis)

FY2020

400

5,000

(305)

FY20196,729

572

FY2021-1,000Operating profit (right axis)

Although there was an increasing trend
in inquiries for new construction projects
in anticipation of the end of the pandemic,
the business environment remained challenging. However, maintenance projects
for domestic refineries remained strong
thanks to an expansion of orders andefforts to improve profitability, and, asa result, this business as a whole
returned to profitability.
Note: In fiscal 2021, sales and cost of sales both increased by¥3.29 billion compared with the previous accounting
method due to a change in the accounting standard forrevenue recognition.

0

FY2019Net sales (left axis)

FY2020

FY20210

Operating profit (right axis)

The various Group companies includedin this segment take advantage of theirunique capabilities to focus on businessdevelopment in their respective areas,
including the industrial machinery, general
construction, and environmental businesses. As a result of the inclusion in theGroup of Eco Analysis Corporation,
which is engaged in the environmental
field, sales reached a new record high.
However, income decreased due toa ¥427 million change in the cost of
sales to reflect a change in the asset
retirement obligations statement forleased property.

TKK Report 2022

57

Data Section

Consolidated Financial Highlights (Fiscal years ended March 31)
FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2021

FY2020(Millions of yen)

Net sales(Reference)

FY2021(Thousands of U.S. dollars)*2¥48,395¥52,457¥46,572¥41,932¥41,758¥45,188¥46,518¥43,617¥59,177$483,432

Operating profit

4,341

3,588

3,024

3,080

2,265

1,406

2,591

2,623

2,808

22,939Ordinary profit

4,776

3,891

3,227

3,441

2,646

1,771

2,970

3,053

3,474

28,380

Profit attributable to owners of parent

2,879

3,019

1,906

3,746

2,362

1,025

1,717

1,777

2,334

19,067

Total assets

54,51555,92851,36853,22855,81864,75660,98558,76464,290525,202

Total net assets

33,78936,58034,37635,481

36,66635,23434,602

36,48436,477

297,990

Total shareholders’ equity

32,10533,52532,13633,97834,20733,32432,72233,06834,450281,431(Yen)

Basic earnings per share*1

241.77260.76174.53373.78251.26112.80195.87212.41285.43(U.S. dollars)*2

2.33

Dividends per share*

50.00

40.00

50.00

120.00100.00100.00100.00115.00145.001.18

Net assets per share*1

2,821.75

3,159.08

3,339.15

3,702.00

3,941.68

3,897.68

4,095.51

4,461.06

4,460.55

36.43

1

(%)

Equity ratio

61.6

65.0

66.9

66.7

65.7

54.4

56.7

62.1

56.7

—

Dividend payout ratio

20.7

15.3

28.6

32.1

39.8

88.7

51.1

54.1

50.8

—

Return on equity (ROE)

9.0

8.6

5.4

10.7

6.5

2.9

4.9

5.0

6.4

—

Return on assets (ROA)

8.5

7.1

6.0

6.6

4.8

2.9

4.7

5.1

5.6

—

(Millions of yen)(Thousands of U.S. dollars)*2

Net cash provided by (used in) operating activities

2,606

(213)

4,041

(2,131)

3,726(6,698)

6,955

1,482

(1,097)

Net cash provided by (used in) investing activities(402)(1,120)(766)(1,714)(85)(1,315)

(812)

(338)

(830)

(6,780)Net cash provided by (used in) financing activities(767)(1,774)(3,640)(2,820)

2,032

3,249

(2,351)(5,176)

3,208

26,207(8,961)The Toyo Kanetsu Group prepares its consolidated financial statements in accordance with Japanese generally accepted accounting principles (GAAP).
Figures are rounded down to the nearest million yen.
*1 Toyo Kanetsu conducted a 10:1 reverse stock split for ordinary shares effective on October 1, 2017.
As a result, figures prior to the fiscal year ended March 31, 2017 have been restated for basic earnings per share, dividends per share, and net assets per share.
*2 Figures denominated in U.S. dollars were converted at a rate of ¥122.41 = $1, referring to the prevailing rate on March 31, 2022.

58

Net Sales by Former Business Segment

Operating Profit by Former Business Segment(Millions of yen)

(Millions of yen)
60,0004,000

50,0003,000

40,0002,000

30,0001,000

20,0000

10,000-1,0000-2,000Net Sales by Former Business Segment

FY2017FY2018FY2019FY2020

FY2021

Operating Profit by Former Business Segment

FY2017FY2018FY2019FY2020

FY2021

Logistics Solutions Business
Plant & Machinery Business

25,93910,03029,2748,421

28,887
9,950

27,2399,800

32,987
15,006

Other Businesses
Adjustment

6,470

8,237

7,813

6,729

11,581

Logistics Solutions Business
Plant & Machinery Business
Other Businesses

1,931
(178)
914

1,907
(1,221)
1,108

2,812
(305)
880

3,140
(602)
789

3,149
108
572

(682)

(745)

(133)

(151)

(397)

TKK Report 2022

TKK Report 2022

59

Domestic and Overseas Offices (As of March 31, 2022)
Toyo Kanetsu K.K. Head Office

2-11-1, Minamisuna, Koto-ku, Tokyo 136-8666, Japan

Chiba Plant

2, Tsukiji, Kisarazu-shi, Chiba 292-0835, Japan

Wakayama Plant

457, No, Arida-shi, Wakayama 649-0314, Japan

Corporate Profile and Stock Information (As of March 31, 2022)
Corporate Profile
Corporate nameToyo Kanetsu K.K.

Headquarters

2-11-1, Minamisuna, Koto-ku, Tokyo
136-8666, Japan

EstablishedMay 16, 1941

Capital¥18.58 billion

Number ofshares(Thousands)

Shareholding(%)

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

934

11.30

Nippon Life Insurance Company

414

5.01

Resona Bank, Limited

409

4.95

Custody Bank of Japan, Ltd. (Trust account)

351

4.25

Name

Sapporo Service Center

5-7-23, Atsubetsuchuo 3-jo, Atsubetsu-ku, Sapporo-shi, Hokkaido 004-0053, Japan

Sendai Service Center

4-4-11, Morisekinoshita, Natori-shi, Miyagi 981-1227, Japan

Saitama Service Center

1st Floor, Ishikawa Building, 3-14-7, Bessho, Minami-ku, Saitama-shi, Saitama 336-0021, Japan

Number ofissued shares

9,323,074

Tokyo Service Center

1-25-2, Minamisuna Koto-ku, Tokyo 136-8666, Japan

Share unit

100

Daiei Real Estate & Development Co., Ltd.

212

2.57

SUMITOMO LIFE INSURANCE COMPANY

115

1.39

Yokohama Service Center

2-22, 5th Floor Keihan Yokohama Building, Honcho, Naka-ku, Yokohama-shi, Kanagawa 231-0005, Japan

Number of
employees

1,173 (on a consolidated basis)Toyo Kanetsu Employee Stock Ownership Plan

113

1.37

Nagoya Service Center

1st Floor, Shoei Koporasu, 2-5-15, Kitayama Moriyama-ku, Nagoya-shi, Aichi 463-0017, Japan

Ticker code

6369

Sato Kogyo Co., Ltd.

111

1.34

Kansai Service Center

1-9-2, Senriokahigashi, Settsu-shi, Osaka 566-0011, Japan

Share registrar

Mitsubishi UFJ Trust andBanking Corporation

DANSKE BANK A/S FINNISH CLIENTS

110

1.33

Okayama Service Center

151-112, Hirata, Kita-ku, Okayama-shi, Okayama 700-0952, Japan

109

1.32

Kyushu Service Center

Stock Transfer Agency Department
Mitsubishi UFJ Trust and Banking
Corporation
1-1 Nikko-cho, Fuchu City,
Tokyo 137-8081
TEL (free dial within Japan):
0120-232-711
Mailing address: P.O. Box 29, Shin-Tokyo
Post Office, Tokyo 137-8081, JapanUBS AG LONDON A/C IPB SEGREGATEDCLIENT ACCOUNT

1st Floor, Fukuoka Zasshonokuma Daiichi Seimei Building, 1-3-1, Shinonomemachi, Hakata-ku,
Fukuoka-shi, Fukuoka 812-0871, Japan

Share registrar
address andcontact
information

Group Companies
Toyo Koken K.K.

Toyo Kanetsu Builtec K.K.

Kankyo Research Institute Inc.

2-11-1, Minamisuna, Koto-ku, Tokyo
136-8666, Japan

2-11-1, Minamisuna, Koto-ku, Tokyo
136-8666, Japan

104, Okadomachi, Hachioji-shi, Tokyo
192-0054, Japan

Stock exchange
listing

Tokyo Stock Exchange(Prime Market as of April 4, 2022)

Construction (planning, design, and construction ofbuildings and steel pipe piling work)
Gondola business (rental and sale of temporary
construction gondolas)

Independentaccounting
auditorGyosei & Co.

Investigation, measurement and analysis of­asbestos, sick building syndrome, noise/vibration,
odor, etc.

Share Price and Trading Volume

Shareholders and Distribution of Shares
Financial institutions

28.5%

Financial products traders 1.6%
Other corporations

10.8%

Foreign corporations, etc.
13.3%
(individuals)
Treasury stock

11.4%

Individuals, etc.

34.4%

Note: Percentage of total shares outstanding held by shareholder(¥)(Points)
TOPIX

Share price

5,000

2,500

4,000

2,000

2-11-1, Minamisuna, Koto-ku, Tokyo
136-8666, Japan

Worker dispatching business in Japan specializing
supervision for maintenance and design ofstorage tanks

2,000

2-11-1, Minamisuna, Koto-ku, Tokyo
136-8666, Japan

Leasing, comprehensive building management,
real estate and OA-related businessMidplaza Building 1, 8th Floor,
Jl. Jend. Sudirman Kav. 10-11,
Jakarta 10220, INDONESIA

Manufacture and sale of storage tanks

Toyo Kanetsu Singapore
Pte. Ltd.

16 Ayer Rajah Crescent,#03-04 Tempco Technominium,
3rd Floor, 139965 SINGAPORE

Construction and sale of storage tanks

Toyo Kanetsu (Malaysia)
Sdn. Bhd.

Sublot 51, 1st Floor Medan Jaya Commercial
Centre, 97000 Bintulu MALAYSIA

Manufacture and sales of storage tanks and­equipment and devices for material
handling system

TKK Plant Engineering K.K.

Toyo Service System K.K.

PT Toyo Kanetsu Indonesia

TKK Report 2022

84, Takeda Kitamitsuguicho Fushimi-ku,
Kyoto-shi, Kyoto 612-8419, Japan

Design, manufacture, installation, and sales ofwinches, hoists, lifting equipment, balancers,­conveyors, etc.

Note: The calculation of the percentage of total shares outstanding excludes treasury stock.

Maintenance/inspection/repair/data analysis ofenvironmental equipment and measuring­instruments, environmental surveys/assessment,
sales of environmental monitoring systems, sales ofenvironmental measuring instruments andreagents, etc.

Eco Analysis Corporation

60

Major Shareholders

1,500

3,000

(1,000 shares)
Trading volume

4,000
2,000

1,000
0

4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3FY2017FY2018FY2019FY20200

FY2021

Note: Prepared taking into account the 10:1 reverse stock split effective as of October 1, 2017.

Thank you for taking the time to read the TKK Report 2022. This report introduces new policies and measures, such as
the new Medium-Term Business Plan, the Carbon Neutral Declaration, and Toyo Kanetsu’s TCFD endorsement, as well
as expanded financial and governance content. The CSR Committee, which I chair, is working with all the b­ usiness division
heads to examine measures to further enhance dialogue with stakeholders as part of the Group’s contribution to therealization of a sustainable society while also taking ESG aspects into consideration. We will continue to strive to develop
our business by listening to your opinions and continue to be a company that can contribute to solving social issues.
Keisuke Kodama
Director, Executive Vice President, and Chair of the CSR Committee

TKK Report 2022

61

Contact Information

Toyo Kanetsu K.K.
Corporate Planning Department
Corporate Division
TEL: +81-3-5857-3333 FAX: +81-3-5857-3170
E-MAIL: tkkreport@toyokanetsu.co.jp
URL: https: //www.toyokanetsu.co.jp/