The Punch Industry Group’s Network
Group companies

Sales offices

China

UK
Germany

PUNCH INDUSTRY (Dalian) CO., LTD. (Dalian Plant, Chongqing Plant)
PUNCH INDUSTRY (Wafangdian) CO., LTD.
Japan
PUNCH INDUSTRY (Wuxi) CO., LTD.
PUNCH INDUSTRY CO., LTD.
PUNCH INDUSTRY (Dongguan) CO., LTD.
Korea
(Kitakami Plant, Miyako Plant, Hyogo Plant)
PUNCH SPRING (Dalian) CO., LTD.
Pintec Corporation
TurkeyThailandIndia

PUNCH INDUSTRY INDIA PVT. LTD.

Malaysia

TaiwanPhilippines

PUNCH INDUSTRY SINGAPORE PTE. LTD.

Indonesia

USA

PUNCH INDUSTRY USA INC.

Vietnam

PUNCH INDUSTRY VIETNAM CO. LTD.
PUNCH INDUSTRY MANUFACTURING VIETNAM CO. LTD.

Australia

PT. PUNCH INDUSTRY INDONESIA

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and Investor Relations information.

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Inquiries

Corporate Strategy Planning Office, IR&PR Division
Omori Bellport E-5F., 6-22-7 Minami-oi, Shinagawa-ku, Tokyo, 140-0013, Japan

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E-mail: info-corp@punch.co.jp

Disclaimer Regarding Forward-Looking Statements
This annual report contains forward-looking statements regarding Punch Industry’s future plans,
strategies, and forecasts. Such statements are not based on historical fact, but are expectations,estimates, and forecasts based on information currently available. These expectations, estimates,
and forecasts involve many potential risks and uncertainties, including changes to the economy,
exchange rate variations, changes in the competitive environment, the outcome of current or
future litigation, or the continued usefulness of capital procurement. As a result, actual businessresults may differ materially from these statements. Accordingly, investors are cautioned not toplace undue reliance on forward-looking statements. Punch Industry is not obliged to amendthese forward-looking statements based on new information or future events.

(Japanese language only)

ANNUALR E PORTSUPPO RTING P RODUCT MANUFACTURING
AROUND THE WORLDPUNCH INDUSTRY MALAYSIA SDN. BHD.

Singapore2020

Supporting Product Manufacturing
around the World
Punch Industry Group’s Strengths

Performance Highlights

High customer satisfaction

Operating profit/
Operating profit ratio

Net sales(Millions of yen)

Abundant lineup of
versatile standard products(Millions of yen)

36,755 36,648

Special-order products

Customer-oriented
sales structure

Broad responsivenesswith 2,000 machines

Finely tailored response andproposal capabilities

6.9%
5.4%

3/20163/20173/20183/20193/2020

These are what the Punch Industry Group makes!

These are what the Punch Industry Group makes!

Key productKey productEjector pins are used to eject and release themolded body from a mold.

As key components for press dies, punches areused to make holes in and/or engrave designs on
sheet metal. Punch Industry derives its name fromthese products.

Key productCore pins are used to mold parts.
Core pins shape and engrave the portions of thepart which they penetrate.

Punch Industry Co., Ltd.

1,249
8.9%

Holder guide posts
Holder guide posts are used to correctly align theupper and lower press dies.

3/2018(Millions of yen)

2,909

3/20199.8%

3/20203/20162,776

3/20173/20183/20193/2020R&D expenditure(Millions of yen)

2,989

443

438

3/20193/2020

367
11.8%

2,011

306

3/20203/2016

323

960
1,292

6.0%

(3,485)3/20163/20173/20183/20193/20203/20163/20173/20183/2019

Sales by Region
Japan

Other

Southeast Asia
and India

41.2%

27.1%

6.3%
4.1%

3/2018Automobile

6.8%

4.4%

3/2017

Sales by Industry

Europe,the United States, etc.

Punches

Key product3/2017

1,375

Components for Press Dies
Upper and lower press dies are fitted to a press machine, which moves up anddown. Sheet metal is inserted between the two dies, which are then pressed
together to form a product that takes the same shape as the upper and lower
dies. The Punch Industry Group manufactures and sells components used inthese press dies.

Core pins

01

Corporate
Vision

Plastic molds are used in the manufacture of many plastic products, such as
the outercasings of smartphones and digital cameras. Each product is made byheating resin until it melts, injecting the melted resin into a die mounted
on an injection molding machine, and then allowing it to cool and solidify.
The Punch Industry Group manufactures and sells components used in thesemolds.

Ejector pins

712

Capital investments

1,788

We aim to become the leading
brand in the mold and die
components industry andachieve high profitability byleveraging our competitive
advantage as a comprehensive
manufacturing and sales
company.

Molds and dies are necessary for making automobiles, electronic equipment, and consumer electronics—essential items in our daily lives—swiftly, uniformly, and in mass quantities. The Punch Industry Group makes the componentsthat constitute such molds and dies. Deploying strengths amassed over the years—advanced technological capabilities, productquality, and meticulous services—we support global manufacturing and people’s comfortable lives.

Components for Plastic Molds

3/2016

Profit (loss) attributable toowners of parent/
Return on equity (ROE)

Driven by the spirit of innovation, we will continue to develop and propose advanced
technologies in response to customer needs, for the benefit of society.

Business
Fields

6.3%

1,874

2.4%

(Millions of yen)

We will contribute to social development by embracing the spirit of environmental
consideration and compliance and promoting sound corporate activities that areappreciated by society.

5.4%

1,666

2,547

835

Know-how accumulated since
founding and unceasing
R&D efforts

We will create a vibrant corporate culture that fulfills people’s dreams, by placing
high value on vigorous energy and flexible ideas.

1,990

1,986

Sophisticated technologicalprowess

Management
Principles

2,731

2,578

35,348Flexible response tocustomized needs

Integrated production
structure(Millions of yen)

2,843

41,025 40,935

Timely andprecise solutions

Standard products

Ordinary profit

43.5%

26.0%

41.0%

Inside: 3/2019
Outside: 3/2020

43.7%

Inside: 3/2019
Outside: 3/2020

11.8%
48.6%
China

47.6%

18.5%
Consumer electronics &precision equipment

12.1%

Electronic devices &semiconductors

17.3%

Punch Industry Co., Ltd.

02

CEO MESSAGE
Priority Initiatives for Value Creation (VC)

We will implement VC2020 Plus to rebuild
management ahead of our next mid-termbusiness plan starting in fiscal 2022
In fiscal 2019, we made multiple downward revisions to our business outlook,recorded impairment losses in Japan and overseas, and reduced dividends,

VC2020 Plus

VC2020Establishment of 5-pole sales system

Establishment of 5-pole sales system- Establish sales network in Europe- Strengthen sales centered on five poles

Improvement of customer service

Enhance customer-focused marketing
capabilities- Develop products that reflect customer needs- Improve services using new Web-based technologies

Promotion of high profitability
business with reinforcement of R&D

Optimize the global production system andstrengthen R&D- Optimize domestic and overseas production systems- Reduce costs; start new businesses

Working-style reforms andhuman resource development- Realize good work-life balance- Develop global human resources

Reform of working stylewhich together caused great inconvenience and concern to our stakeholders.

Punch Spirit

Due to the further deterioration of external conditions, our business performance wasvery disappointing. Nevertheless, we see indications of steady progress in addressing
priority initiatives set out in our mid-term business plan, “Value Creation 2020 (VC2020).”

Improving profitability in Japan is a particularly urgent task. To

While keeping abreast of this trend, we have launched a new two-year plan
aimed at rebuilding our business.

order to achieve business recovery at an early stage.

Tetsuji Morikubo
Representative Director, President, Chief Executive Officer

labor-intensive approach is not suitable, we will continue

this end, we will strive to improve product quality, prices, delivery

effectively utilizing the Internet and other means to identify andtimes, and service levels, which together form the source of ourverify sales strategies, and we will replicate any positivecompetitiveness, so that we will always be the first choice of ouroutcomes laterally across Europe to establish a foothold there.

customers. We will also expand our line of special-order

Review of fiscal 2019 performancemarkets in Japan and China. In the Americas, where a

Regarding efforts to “Optimize the global production systemproducts, which are highly profitable, to get our business on theand strengthen R&D,” we will emphasize face-to-face sales andpath to recovery.

undertake manufacturing in the vicinity of our customers. Going

manufacturing, and R&D teams also produced results, especiallyIn the course of fiscal 2019, we came to realize that we haveforward, we will continue optimizing our production system whileat the Dalian Plant, which underwent expansion in China. Also,

many diverse competitors, including those located close to ouralways working to enhance production efficiency at our plants in

Due to prolonged US-China trade frictions that began two years

we are cultivating customers and products in new domains, suchcustomers who can provide meticulous responses, as well as ourJapan, China, Malaysia, and Vietnam. In fiscal 2019, weago, both sales and profit fell sharply in fiscal 2019.

as food/beverage/container-related and medical-related fields,

customers’ own in-house production facilities. For this reason,

established the Development Headquarters in Japan to integrate

and we feel that responses have been positive. Accordingly, we

we reaffirmed the importance of improving our ability to collectour sales, marketing, and manufacturing functions. The newwill aim to establish a similar strategy in Japan.

information and analyze our customers, so that we can identify

division is spearheading efforts to strengthen R&D, including byreviewing the processing methods for products that cannot be

Sales of automobile-related products, which account for a large
percentage of revenue, fell significantly worldwide, compoundedby sluggish sales of electronic device and semiconductor sectors.

In addition, we relocated the manufacture of standard

and confront competitors on a case-by-case basis in the future.

With respect to semiconductors, back in fiscal 2017 we enjoyedproducts from Japan to our plant in Vietnam, thus freeing up

In order to survive in this difficult business environment, we also

manufactured at our plants and those with which we have madesignificant growth in demand from data center operators andcapacity in Japan to focus on special-order products, which weneed to shift our focus from “what we can do” to “whatlimited progress with cost reduction.

makers of smartphones and PCs. We expected the market to recoil

anticipate will contribute to our future business. However, wecustomers expect of us.” Here, it is especially important that weWith respect to “Working-style reforms and human resourceand stagnate in fiscal 2019, accordingly, the slump in demand forreported an impairment loss for the second consecutive term at

identify the cause of lost orders. Accordingly, we will concentratedevelopment,” we have introduced a teleworking system before

automobile-related products had a particularly strong impact.

the Vietnam Plant, which we established with the aim ofon “Enhancing customer-focused marketing capabilities.” We will

the COVID-19 spread, leading to considerable changes indispersing our manufacturing risk away from our foothold in

do this by relocating staff from the manufacturing department toemployees’ approaches to their working arrangements. We will

China. In hindsight, we regret that our investment in Vietnam was

the sales department, enhancing education for salespeople, andcontinue our teleworking system in the future because it helps us

stepped up operations at our new plant in Dalian, China, whilea bit hasty. Like the Kitakami Plant in Japan and the Dalian Plant

fostering human resources with a high understanding of productprovide safety and a good work-life balance for employees. We

transferring the production of standard products to the Vietnam

in China, perhaps we should have expanded gradually while

drawings and the ability to propose processing methods.

also started an overseas training system (from Japan to Malaysia

In the previous fiscal year, we enjoyed healthy orders andmade aggressive investments in response. At that time, we

Plant, and we had prepared to incorporate new products into ourmonitoring the situation. This made us rethink how we should

plants in Japan. However, the sudden deterioration in market

make investments that best suit our company.

conditions led to a significant decline in profitability. Also, ouraggressive investments led to increases in fixed and other costs,

New mid-term business plan: VC2020 Plus

With respect to “Establishment of 5-pole sales system,” weand India) to foster global human resources and will continue

will work to capture market growth in Southeast Asia—namely,

providing education from long-term perspectives in order to step

Vietnam and Indonesia—in addition to developing our mainstay

up globalization of our business.

prompting us to report impairment losses in Japan and overseas
to address the significant decline in revenue.

Review of previous mid-term business plan (VC2020)

In light of our business results in fiscal 2019, we consideredrevising our existing mid-term business plan, VC2020, which
was scheduled to end in March 2021. Instead, we formulated atransitional mid-term business plan, Value Creation 2020 Plus

Our objective is to establish a 5-pole sales system under our(VC2020 Plus), covering the two-year period from April 2020 tovision, “The World’s Punch.” With this in mind, we set up a sales

March 2022, which is positioned as a rebuilding period. Under

company in the United States that has begun to show steadythe new plan, we will deepen our responses to the four initiatives

business growth. In Europe, as well, we stepped up collaboration

defined in VC2020—“Establishment of 5-pole sales system,”with agents, leading to an increase in sales and steady progress“Enhance customer-focused marketing capabilities,” “Optimize

toward globalization of our operations.

the global production system and strengthen R&D,” andOn the manufacturing side, collaborations between our sales,“Working-style reforms and human resource development”—in

To our stakeholders
First of all, I always realize I have to build a company that can prevail and generate consistent profits.
This is key to solidifying the stability of the Punch Industry Group and its business operations.
As a background player who supports manufacturing around the world, we will return to the basics of meetingcustomers’ expectations and earning their patronage, while further strengthening efforts to integrate sales,
manufacturing, and product development.
Although we forecast another decline in net sales, we will target a year-on-year increase in profits in fiscal 2020.
We will achieve this through lower depreciation expenses—owing to impairment losses infiscal 2019—as well as the ongoing cost rate reduction effect.
We will continue fulfilling our social responsibilities through initiatives uniqueto the Punch Industry Group while pursuing our vision to become “The World’s Punch”
and contribute to global advancement. We look forward to your long-term support.

03

Punch Industry Co., Ltd.

Punch Industry Co., Ltd.

04

COO MESSAGE
We will optimize the global production system andreinforce R&D by using the strengths ofeach production base to enhance efficiency

We will enhance customer-focused marketing capabilities
to provide convenience to customers and become
their provider of choice

Sales Division

Yasuhiro Sanada

Manufacturing Division

Director, Managing Executive Officer,
Chief Operating Officer (Sales)

Enhancing customer-focused marketing capabilities

related products fell sharply. Meanwhile, we notice that demandfor electronic devices and semiconductors is rising thanks to

Production optimization and risk diversification

Malaysia
We will consolidate production of carbide products for global

One key priority of VC2020 Plus is to enhance customer-

support for 5G communications, and we expect sales to recoverTo optimize the global production system, we are improving

sales. Amid the shift from combustion engine cars to electric

focused marketing capabilities. We relocated staff from thein fiscal 2020. In the medical-related field, we will strive to

productivity by utilizing the strengths of plants in Japan, China,

vehicles, we will enhance our lineup of electric motor products

manufacturing department to sales branches to reinforce ourincrease orders for high-value-added products.

Malaysia, and Vietnam, while promoting product consolidation

and work with our sales subsidiaries and sales agents toand automation/labor saving, and improving the production

increase orders.

proposals to include technical details. By integrating the
manufacturing and sales functions, we will better respond to

Southeast Asia and India

method/process and production efficiency. We will also pursue

customer requests. In addition, we will further enhance technical

In Vietnam and Indonesia, we enjoyed growth in sales ofcapabilities by aiming to deliver finished products rather thanspecial-order products to Japanese companies and achieved

semi-finished products. We will also work to enhance customers’

our yearly targets, although we did not meet our target forawareness of our superior product and service quality and reduce

Singapore. In India, sales of carbide products increased. We

costs by reviewing tools, machining criteria, and work processes.

also started business in India with Japanese electronics

Furthermore, to become our customers’ provider of choice, wemanufacturers, resulting in higher demand for special-order

will improve convenience to customers by enhancing our Web-products, though this was not enough so far to offset theOver the next two years, we will reform our profit structure byitems. Furthermore, we will consider using new methods tobased ordering system for existing standard products andsignificant decline in the automobile-related business.

eliminating inefficiency while improving technical abilities andresume manufacturing semi-finished products.

EuropeEstablishing 5-pole sales system

optimization, stressing risk diversification.

VietnamThe Vietnam Plant, which started operations in 2016, has been

Roles and tasks of production bases

handed over semi-finished products from China and standard
products from Japan. In 2020, we stopped production ofsemi-finished products and refocused on standard products. We

Japanwill strive to enhance productivity and increase the number ofshifting to high-value-added special-order products. We will also

introducing a Web-based quotation system.

address issues such as reducing spoilage costs.

Due to moves to phase out combustion engines, sales ofAt the Kitakami Plant, we will expand our export volume by

Initiatives to strengthen R&D

automobile connectors, supplied by our Malaysia Plant, arestrengthening our lineup of high-value-added products for

The aim of our R&D is to build a business that responds to

In fiscal 2019, prolonged U.S.-China trade friction restricted

shrinking. In response, we will focus on carbide products tomedicine, beverages, and containers. We will also emphasize

market changes and creates new value that sets us apart fromshipments of electronic parts from Japan to China, significantly

meet growing demand for motors, electronic devices, andcollaboration between the plant and our R&D team, spearheaded

other companies. In addition to autonomous growth, we will

impacting our net sales. In fiscal 2020, we will step up efforts tomedical-related products, where “Punch” excels.

by the Development Headquarters. At the Miyako Plant, we willconsider developing products with academia and otherwork to incorporate square-shaped high-value-added products,

companies. We will accelerate joint product development

overcome the situation and increase sales of electronic parts togenerate steady gross profits.
Japan

The Americas

special-order press products, and special-order FA products. At

between our Japan and China Development Headquarters to

We started trading with one of the world’s largest manufacturers

the Hyogo Plant and Pintec Corporation (a subsidiary), we willfurther cultivate existing businesses, create new businesses,of beverage containers. Currently, our China Plant is handlingenhance our ability to handle standard products and special-

products, and technologies, and improve production.

We obtained orders from new customers in medical-related

these large orders, but we will consider supplying from Japan toorder products.

Accordingly, we will promote awareness of R&D and develop

and other sectors by emphasizing collaboration between ourstrengthen Group responsiveness. Our next challenges will be to

manufacturing and sales departments. However, those orders

provide components with higher complexity and start tradingwere less than the work capacity of our plants. In fiscal 2020, wewith other major makers of beverage containers. We are

At the Dalian Plant, we have positioned high-value-added

have launched a project to increase our business volume in thecultivating new customers monthly while expanding our productproducts and high-precision non-automobile products asmedical-related sector. In the automobile-related sector, we arerange and increasing profits.

human resources.
China

My role as head of manufacturing

strategic offerings. We will improve our technical abilities in the

We need to improve QCD (quality, cost, delivery time) and theworking to boost orders for precision products requiring

medical-, FA-, and hot-runner-related fields, as well as in cold

technical capabilities of employees, the basis of manufacturing.

technical capabilities in the lithium-ion battery field and are

forging and can manufacturing, to expand sales globally.

Specifically, we must do three things: eliminate defects tostarting to see steady results.

Meanwhile, the China Development Headquarters is making

provide better products at reasonable prices, improve our ability

good progress with its R&D, increasing orders from theto deliver products when customers need them, and possess theaerospace sector, a new field. We will strive to raise precision

technical capability to meet all customer requirements. My

levels to bolster sales while reducing costs.

responsibility is to create workplaces where employees are

China
We won large orders for food-, beverage-, and medical-related
products that we had focused on, and also obtained steadyaware of these factors, allowing us to become a long-lived

orders for canning-related products. We reinforced our footholdcompany with sustainable growth.

in the field of hot-runner systems, but sales of automobile-

05

Akira Takanashi
Director, Senior Executive Officer,
Chief Operating Officer (Manufacturing)

Punch Industry Co., Ltd.

FABTECH Chicago in November 2019

Punch Industry Co., Ltd.

06

CFO MESSAGE

Capital Investments/Depreciation

We will quickly normalize our operations by transitioning
into high-value-added businesses thathighlight our strengths

Dividend per Share and Payout Ratio(Millions of yen)

FY2016FY2017FY2018FY2019FY2020(Plan)

Capitalinvestments

2,909

2,776

2,989

2,011

805

Depreciation

1,396

1,597

1,729

1,674

975

Director, Senior Executive Officer,
Chief Financial Officer

FY2016

Finance & Human Resources Strategies
Lower sales and profit

20.8

13.0

Takao Murata

38.1

Payout ratio (%)
Dividend (Yen)

20.5
16.75

16.75

FY2017FY20187.0
2.00

FY20192.00

FY2020(Plan)On January 1, 2018, we implemented a 2-for-1 stock split.
Dividend calculations for each fiscal year assume that the stock split was implemented
at the beginning of fiscal 2016.

Our Malaysia Plant has had steady growth since we acquired

Accordingly, we will limit Groupwide capital investments in fiscal

expectations for new approaches to working-style reforms

it in 2013. However, a government order related to COVID-19

2020 to around ¥800 million. This will be allocated mainly toinitiated by them. We will redefine our strengths and promote

In fiscal 2019, market stagnation due to U.S.-China trade frictionsuspended operations. With this in mind, we reviewed future

China, which is on a recovery trend. In fiscal 2020, depreciation

changes to our corporate culture with an emphasis on branddecreased business volumes across various industries,

plans and found that we had no choice but to write off goodwill

may decline around ¥600 million due to impairment losses ofvalue. At the same time, we will foster employee unity.

including the automobile sector. As a result, price competition

and intangible assets posted at the acquisition. Although thethe previous year, which we expect to fall further to around ¥1

Since 2019, we have engaged in an “Iku Boss campaign” toamong parts manufacturers intensified, reducing net sales

Vietnam Plant started operating smoothly, we were unable tobillion. These decreases will form part of the funds to support

foster managers who care about their subordinates’ private lives

13.6% year on year. Amid this stagnation, we need to establish aship products due to reductions in air-freight flights stemming

the recovery of operating income in fiscal 2020.

while also maximizing the performances of their organizations.

strong structure for sales and manufacturing that cultivates newfrom COVID-19. This resulted in a significant drop in sales andindustries and product fields directly linked to sales, while

another impairment loss following that of fiscal 2018.

avoiding the loss of existing customers’ orders.
Unfortunately, operating income has fallen to less than one
third of the previous year’s figure. We recognize this is a result

Financial position

All our executives and managers have made “Iku Boss

Initiatives to improve asset turnover
The fixed asset turnover ratio, which we will try to improve,

Declarations” and are promoting management that emphasizes
the work-life balance of subordinates.
To enhance customer-focused marketing, a priority initiative

increased slightly in fiscal 2019 to 3.64 times, from 3.56 times

defined in VC2020 Plus, we operate an in-house humanof weaknesses in our earnings structure—a high marginal profit

Due to the lower net sales, higher cost ratio, posting ofin fiscal 2018. It had been expected to increase significantly

resources development organization called “Punch Academy”

ratio and high fixed costs of in-house production. To change theimpairment losses, and reversal of deferred tax assets, weowing to impairment losses incurred, but the actual increase

and actively use external resources to enhance sales-related

structure, we could convert fixed costs to variable costs andreported the first net loss since our public listing. The net loss

was slight due to the large decline in net sales.

training. We will step up efforts to foster human resources as anlower the marginal profit ratio. However, by overdoing that, we

also reduced net assets, resulting in a year-end equity ratio of

By contrast, the accounts receivable turnover ratio, which

will outsource everything and become unable to exploit our

45.8%. However, we posted a free cash flow of ¥700 million.

improved significantly in the previous year, declined again to

integrated production system, which is underpinned by

The major drop in operating income put downward pressure

3.38 times, from 3.54 times in fiscal 2018. We collectedurgent task for future overseas business development.

Getting back to normal

exceptional technical capabilities. Instead, we must addresson operating cash flow, which we offset and made positive byaccounts receivable, especially in China, resulting in a major

urgent priorities Groupwide. Specifically, we will further refine

restraining investments and reducing working capital, including

decline in the year-end balance, but this was more than offset byCurrently, it is difficult to return profits to shareholders and use

technical capabilities, increase production of high-value-added

accounts receivable and inventories. We also reduced

the decrease in net sales. The net sales decline also exceededinternal reserves for growth-oriented investments. Nevertheless,items that generate profit, and build a structure whose profit

interest-bearing debt with the aforementioned free cash flow tothat of total assets, causing a slight decrease in the total asset

we will strive to quickly normalize business within themargins are not greatly affected by fluctuations in sales.

repay debt.

turnover ratio to 1.24 times, from 1.28 times in fiscal 2018.

restructuring time frame of VC2020 Plus, to deliver both
corporate growth and shareholder return.

Impairment losses in Japan and overseas

Shareholder return

To this end, we recognize that promoting transformation intoa high-value-added business structure that highlights our

In fiscal 2019, we incurred huge impairment losses of aroundIn fiscal 2019, we considered whether to pay cash dividends in¥3.3 billion. In our domestic business, which was on a growth

light of the significant net loss. However, we decided to continue

As a measure against COVID-19, we accelareted a work-at-homesmooth, and all departments, including manufacturing, sales,

trajectory, we implemented a proactive three-year investment

dividend payments thanks to positive operating income from oursystem, which we had tried out in 2019. Noting that working

and product development, need to work together. Even thestrategy that started in fiscal 2016, resulting in sales growth.

core businesses and positive free cash flow, as well as afrom home not only eases the burden of commuting but also

administrative departments, which I head, must provide strong

However, sales leveled off in fiscal 2018 and declined sharply

reduction in interest-bearing debt, which helped us remain

improves work efficiency, we will continue elements of the

backup in multiple ways, including human resourcesin fiscal 2019. As a result, we could not generate returns

sound financially. We apologize to shareholders for thesystem.

development, financial strategy, and system development.

commensurate with investments and posted impairment losses.

significant reduction in dividends compared with those of fiscal

Although external business conditions have changed

2018.

dramatically, we cannot deny that proactive investments madesince fiscal 2016 have been excessive. A growth strategy isneeded, but we must thoroughly check investment recoverability

07

Working-style reforms and human resources
development

Meanwhile, aiming for comprehensive cost reduction and astronger business foundation, we are steadily advancing

Management will ensure a common awareness of issues andforge ahead to target recovery of our core businesses.

working-style reforms by utilizing IT and robotic technologies atCapital investments and depreciation

manufacturing sites to automate and enhance work efficiency,
and deploying robotic process automation (RPA) and other IT

and profit generation plans before making capital investments.

In fiscal 2019, capital investments amounted to ¥2 billion, andtools to transform operations at the head office and sales

We must also rigorously monitor the progress of returns after

depreciation totaled ¥1.67 billion. Under VC2020 Plus, we willdepartments. By using RPA to increase operational efficiency, weinvesting. As the director in charge of operational management,

improve sales capabilities, attract orders, and minimize

reduced overtime hours and paper use. I am very optimistic

I will oversee business execution with precision.

investments and expenses to restore business in two years.

about the adaptability of younger employees and have great

Punch Industry Co., Ltd.

strengths is an important priority. The journey will not be

Punch Industry Co., Ltd.

08

Review of VC2020 and Start of VC2020 Plus
VC2020

VC2020 Plus—Management Goals and Measures
Priority Initiatives

Since April 2016, the Group has been implementing its mid-term business plan, VC2020 which ends in MarchVC2020 Plus

2021. However, we have been considering a revision of the plan in light of prolonged trade frictions between the
United States and China and the global spread of COVID-19, which have affected our business performance.
To address these changing conditions and our worsening business results as a group, we formulated atransitional mid-term business plan called “VC2020 Plus,” covering the two-year period from April 2020 to March
2022. Under the plan, we will continue and magnify our responses to the four priority initiatives defined in“VC2020.” We have redefined these four initiatives as follows: “Establishment of 5-pole sales system,” “Enhancecustomer-focused marketing capabilities,” “Optimize the global production system and strengthen R&D,” and“Working-style reforms and human resource development.”

We will continue and magnify our responses to the four priority initiatives defined in “VC2020.”

VC2020 Plus

VC2020Specific measures

Establishment of 5-pole sales system

Establishment of 5-pole sales system

Further expanding sales channels in Southeast Asia, Europe and the Americas

Improvement of customer service

Enhance customer-focused marketing
capabilities

Deploying salespersons with rich processing knowledge through transfersfrom manufacturing division and human resource development

Promotion of high profitability
business with reinforcement of R&D

Optimize the global production system andstrengthen R&D

Rearrange production items among the plants, focusing on their characteristics
Curtailment of working-hours and establishment of new construction method through R&D

Reform of working style

Working-style reforms and human resource
development

Promotion of active roles of women, work-life balance, and development of
global human resources

Management Goals
Sales/Profit Trends

Review of “VC2020”(Billions of yen)

Operating Profit Trend

Sales Trend(Billions of yen)

Plan

ResultEstimate(Billions of yen)

Net Income Trend

Plan

ResultEstimate(Billions of yen)

35.3

Sales
Plan

ResultEstimate

Changes in Operating Profit

0.83

Operating
Profit¥3.6 billion decrease¥0.78 billion decrease(FY2015 vs FY2020)

44.5
41.0 42.040.9
39.0
37.0
36.7
36.6
35.3

¥0.62 billion decrease(FY2015 vs FY2020)

47.0
33.1

2.84
1.98 2.001.99

2.20

3.30
2.57
2.50

2.80

0.83

FY2015 FY2016 FY2017 FY2018 FY2019 FY2020

Decrease in sales due to U.S.-China trade
frictions and economic slowdown in Europe
and the Americas, despite increased sales of
special-order products in Vietnam andIndonesia.

2.30
0.62

VC2020 Period
Decrease in operating profit due mainly to
lower sales stemming from market
deterioration, increase in cost ratio due tofalling factory capacity utilization, and theappreciation of the yen, despite progress
made beyond the initial plan until fiscal 2018.

(3.48)FY2015 FY2016 FY2017 FY2018 FY2019 FY2020

VC2020 Period
In fiscal 2019, posted a net loss for the firsttime since its listing, due to impairment losses
at the Vietnam Plant and domestic plants.

Evaluation of Measures(Left) U.S. sales office(Right) Vietnam Plant

Establishment of 5-pole sales system
2016: Established a subsidiary in the Americas
Sales expanded, but then slowed due to trade friction
Expanded into Europe based on the utilization of existing agents
Though cooperation with agents strengthened, sales slowed due
to economic slowdown

Promotion of high profitability business with reinforcement of R&D
2016: Established a new plant in Vietnam
Due to the delay in the establishment of the production system and the declineof market conditions, profits did not grow and impairment loss was recorded
Recorded impairment losses at domestic plants due to worsening market
conditions stemming from prolonged U.S.-China trade friction
Established R&D headquarters in Japan, which developed a Japan-China
two-region structure

Improvement of customer service
Reduced digital engineering business due to sluggish orders
Realized an optimal product supply system through global
sourcing
In focused areas of medical and food/beverage industry,transactions expanded with core customers

09

Punch Industry Co., Ltd.

Cost ratio improvement
Decrease in selling, general and226
administrative expenses

1,200

FY2020(Estimate)

845

Increase in sales

FY2019(Result)

FY2020(Estimate)

FY2021(Plan)

—

5%

9%

ROE

Decrease in sales

722

Cost ratio improvement

1,800

FY2021(Plan)

VC2020 Plus

171

(416)

Increase in selling, general and administrative expenses<Main factors for changes>

1.20

FY2015 FY2016 FY2017 FY2018 FY2019 FY2020

VC2020 Period

2.00
1.78 1.70
1.24 1.401.37 1.50
0.96

(584)

1.13

(3.48)(FY2015 vs FY2020)

835

FY2019(Result)

1.80

0.62

Net Income(Millions of yen)

36.1

33.1
1.20

Over the period of “VC2020 Plus,” positioned
as a rebuilding period until our next mid-termbusiness plan starts in fiscal 2022, we will
aim to return to profitability and restore our
topline growth trend.

SG&A
Relief in depreciation after
impairment losses made in fiscal
2019

Suppression of investment andrecruitment

Decrease in packing andtransportation costs
2.4

Europe, the Americas, and others

China

Tighter cooperation with agents in Europe
Further focus on medical-related industry in
the Americas

Expansion of highly precise medical-related
products
Setting new production line for short-time
deliverySoutheast Asia

Japan

Expansion of special-order products toSoutheast Asia
Cooperation with R&D Headquarters in Japanand China

Increase of sales staff, including transfer frommanufacturing division
Improvement of ordering system forcustomers

Europe, the Americas,
and others

2.0

1.8

1.5

(Billions of yen)

1.6

1.3

16.8

15.7

17.1

14.5

14.3

15.4

FY2019(Result)

FY2020(Estimate)

FY2021(Plan)Southeast Asia
China
Japan

Measures
Measures by Region

Japan

Establishment of
5-pole sales system
Enhance customer-focusedmarketing capabilities

Optimize global production
system and strengthen R&D

Introduced a new personnel system with enhanced transparency and fairness
Established a human resources development organization “Punch Academy”
Introduced various training programs

Cost ratio
Relief in depreciation after
impairment losses made in fiscal
2019

Sales Transition by Regions

Reform of working style
Promoted a variety of working-style reforms, assisting from both institutionaland operational aspects

Sales
Under the assumption that the
impact of the spread of
COVID-19 will continue until
September 2020

Working-style reforms andhuman resource development

China

Southeast Asia, India

EuropeThe Americas

Strengthen regional strategy

Establish sales
structure

Expand customer base

Increase business with global companies; step up medical- and beverage-related sales
Product development based on
customer needs
Improvement of ordering system

Partnerships with customers
in new fields

Optimization of global production systems for standard and special-order products
Promote labor-saving and automated production in Japan and China
Increase medical- and beverage-related production capacity
Increase stabilization and profitability of Vietnam Plant operations
Development of new fields and markets
Looking into business tie-ups and M&As with other companies
Improvement of processing technology for difficult-to-process materials
Continue development in the aerospace field
Promotion of active roles of women and work-life balance/Development of human resources who can be active overseas

Punch Industry Co., Ltd.

10

Technology Development and R&D

Iku Boss Promotion

The Punch Industry Group proactively engages in technology development and R&D, the source of value creation fora manufacturing company.

R&D and Marketing Creating New Value
The Punch Industry Group’s R&D bases in Japan and China work with each other to develop new construction methods and products. In Japan, theGroup faces a drastically changing business environment due to advances in digitization and electrification, and transformation of business models. In
response, we established the Development Headquarters in 2019. In addition to engaging in marketing with a focus on new businesses and products,
its role is to develop technologies aimed at facilitating such marketing efforts, as well as conduct R&D and pursue future-oriented growth strategies.

Digital Engineering Service

Digital x Manufacturing

In collaboration with Hazama Ando Corporation, we succeeded in scanning themetal ornaments of Nagoya Castle’s Honmaru Goten Palace and converting thescans into 3D data. In the field of cultural properties and historical buildings, there
are moves to replicate whole buildings and their ornaments into digital data forsafekeeping. The metal ornaments attached to Japanese shrines, temples, andcastles have very fine designs,
Metal ornamentand it is difficult to record theirdetails in photographs. With
conventional 3D scanners, it ishard to properly scan black or
glossy items that do not reflect
light well. However, we
succeeded in converting the
Photograph of original
3D modelexquisite designs into digital databy selecting the right device,adjusting the amount of light andshooting mode, and performing acomplex rendering process(adding information, such as color
and texture, to the 3D data) using
Keribori (dot-engraving) portion
more than 700 types of materials.

As a challenge to develop a new manufacturing process, wecreated an “apple” under the theme of “Digital x Manufacturing.”
This enabled us to measure the actual object, convert it into 3D
data, and use the data for in-house processing. As a result, weestablished an in-house integrated production technology covering
everything from actual object measurement to processing.

Human Resources Strategy
Human resources are the foundation of business activities. Invigorating our human resources and encouraging personal
growth are the biggest driving forces behind the Punch Industry Group’s progress and the enhancement of corporate value.
We strive to develop our human resources and promote work-style reform based on this philosophy.

Human Resources Development
Seeking to foster human resources brimming with the Punch Spirit and pass on our skills, cultivatedover many years, to future generations, we established a human resources development
organization called “Punch Academy” in 2017. Through the Academy, we conduct a diverse range ofeducational courses, such as new employee training, stratified training, and manufacturing training
for sales staff. To help pass on skills, veteran employees removed from frontline manufacturing
embrace a new mission, serving as instructors to engage in human resource development.

Since 2019, we have engaged in a campaign
aiming to foster “IkuBoss” managers who canmaximize the performances of theirorganizations while caring about the private
lives of their subordinates. “Iku Boss” is acoined term that combines “ikuji” (Japanesefor “raising children”) and “boss.” All of our
executives andmanagers have made“Iku Boss Declarations”
and are working to
improve theirorganizations
accordingly.

Childcare and Family Care Support

Promoting the Advancement of Women

We revised our system to make it easier formen to take paternity leave, and in 2019 threemale employees took such leave. In addition,
we expanded the scope of our accumulated
paid leave system to include leave forchildcare and family care purposes. We also
produced a handbook that explains thesystems andapplications that areavailable and matters to
be considered bysuperiors and colleagues
when employees takechildbirth or childcare
leave.

On the basis of our belief that the active
participation of women is essential for thesustainable development of a company, we
encourage women to pursue diverse careers
and life plans. The Punch Women’s Forum(PWF), established in 2018, holds meetings
that cross the boundaries of occupations andbusiness establishments. It has achieved
various successes, including extending theperiod of short working hour system.

Reform of Corporate Culture
We are taking various measures to reform our corporate culture as we seek to become acompany in which each employee plays a leading role. In 2019, for example, we
participated in regional events as volunteers at each domestic factory, and held in-house
photo exhibitions at head office to improve communication between employees.
Volunteer activities at Kitakami Geto Kogen Hill Climb

ESG
The Punch Industry Group considers ESG (environmental, social, and governance) issues to be important management
priority and is working to address them.

Environmental Measures
The Punch Industry Group’s environmental commitment is to contribute to the advancement of society through the manufacture ofenvironmentally friendly products. As part of this, products that comply with environmental laws, such as the Restriction of Hazardous
Substances (RoHS) Directive, are displayed in our catalog with an environmentally friendly mark. In addition, we are making continual
improvements by acquiring environmental management system certification, while providing regular educational opportunities to raise
the environmental awareness of our employees.

SDGs
To fulfill its responsibilities as a member of society, the Punch Industry Group has long beenworking to solve issues set forth in the SDGs at each of Group companies. Among the 17
SDGs, in 2020 we will select six that are particularly closely related to our business aspriorities common to the Group, and we will strive to resolve them.

Groupwide No Tobacco Day
The World Health Organization (WHO) has set
aside May 31 each year as “World No TobaccoDay.” On that day, each Group company
determines and carries out activities to help
people quit smoking with the aim of building atobacco-free society.

Donation Class Established at
Vocational Training School
Since 2003, the Punch Industry Group in China
has been donating equipment to and hiring
graduates from a local vocational school. In
2015, we established a “Donation Class” ofaround 120 students to educate them about
metalworking and drafting. We also set up ascholarship system at the school in 2016.

Solar Panels Installed
Our Malaysia Plant installed around 450 solar
panels on the roof of its facility in 2018. Solarenergy generated from the panels covers partof the electricity used in the plant, and surplus
electricity is sold to local power companies.

Work-Style Reform
We aim to realize a work style that raises the synergistic benefits of work and private life. In Japan, we offer a variety of working environments and styles.
For example, we introduced an hourly paid leave system and a telecommuting system. As a proactive adopter of IT technology, we have made our offices
more paperless and deployed robotic process automation (RPA) technology to streamline and automate business processes. Taking advantage of recent
measures to prevent COVID-19 infections, we stepped up efforts to improve the infrastructures of employees’ offices and homes.

11

Punch Industry Co., Ltd.

Punch Industry Co., Ltd.

12

Corporate GovernanceTo continue being an entity that is highly regarded by society,

2. Audit & Supervisory Board and its members

the Punch Industry Group will further improve the transparency and soundness of management

The Audit & Supervisory Board is composed of four members(including two external members). The Audit & Supervisory Board
monitors the Company’s governance practices and implementation
status, and conducts an audit of daily activities, including theexecution of duties by the directors. The external members areattorneys, and are responsible for monitoring management practices
from the perspective of compliance. In addition, the Audit &Supervisory Board coordinates with the internal audit division to verify
whether each department within the Company carries out businessexecution in accordance with internal regulations and applies
appropriate accounting procedures.

by reinforcing corporate governance and maintaining rigorous compliance.
Initiatives to Strengthen Corporate Governance
3/20143/20153/20163/20173/20183/2019President

2013- Masaaki Takeda

Charman of the Board of Directors

President serves concurrently as Chairman

2016- External director serves as Chairman

External Director(s)2013- 1 person

2016- 2 persons

3/20202019- Tetsuji Morikubo

Advisory Committee, etc.

2015- Nomination & Remuneration Advisory Committee* Formulation of policy for nomination and dismissal of management executives* Planning for and monitoring of successor
Since public listing:
Risk and Compliance Committee

Risk Management

2015- Name changed to the Risk Management Committee

Basic Policy

2. Appropriately cooperating with all the stakeholders
including shareholders
3. Ensuring transparency by appropriate information disclosure
4. Supervising business execution by the Board of Directors
5. Engaging in constructive dialogue with shareholders

General Meeting of Shareholders
Appoint/Dismiss

Accounting
AuditorAccounting
audit

Business
execution

Punch Industry sets the Nomination & Remuneration Advisory
Committee, composed of all external officers and directors who oversee
management, as an advisory body of the Board of Directors to clarify
basic policies and standards and enhance fairness and transparency of

1. Securing shareholders’ rights and equality

The Punch Industry Group makes dedicated efforts to enhance corporate
governance practices to comply with laws and sincerely fulfill the
corporate social responsibility, to ensure the soundness and transparencyof management, to protect the interests of all shareholders, customers,
and other stakeholders, and to continuously increase the corporate value,
under the following concepts:

Monitoring/supervisory

3. Nomination & Remuneration Advisory Committee

Appoint/Dismiss

Determine proposal
for appointment
and dismissal

Audit &
Supervisory Board

Appoint/Dismiss
Audit

Members: 4 (including 2
external members)

Auditing
OfficeCoordinate

Members:6 (including 2
external directors)
Chairman: External director

Appoint/Dismiss
Supervise

Audit

Corporate Audit
OfficeBoard of Directors

ReportIssue instructions/Report

Executive Board

Issue instructions/Report

CEOInternal audit/
Internal control support

COO/Sales
COO/Manufacturing
CFO

Issue instructions

ReportInquire/Report

Nomination &Remuneration
Advisory Committee

4. Risk Management Committee
The Risk Management Committee, consisting of executive officers,
general managers, the chief of the Corporate Strategy Planning Office,the managing directors of the main group companies, and the chief of
the Corporate Audit Office, works to establish, maintain, and improve theCompany’s risk management and legal compliance systems.

5. Remuneration of Board Members, etc.
The total amount of the remuneration of directors and Audit &Supervisory Board members is approved by the General Meeting of
Shareholders. The Board of Directors decides the specific amount of
remuneration for each director upon the examination of appropriatenessat the Nomination & Remuneration Advisory Committee, and the Audit &Supervisory Board decides the specific amount of remuneration for each
Audit & Supervisory Board member.

Compliance/Risk Management
The Company has established the internal audit division that reports
directly to the president and chief executive officer, which conducts
regular audits regarding the state of compliance with laws andregulations, the Articles of Incorporation, and internal rules andregulations. The Company has also set up the Punch Hotline, an internalreporting system for reporting and consultations if compliance-related
issues are discovered. Adhering to a set of rules on whistleblowing, we
strive to uphold internal controls and improve the system of in-housechecks and balances. Compliance education is carried out via new
employee and rank-based training to ensure that all employees engage
in appropriate and fair business activities. Compliance education is also

regularly provided to all officers and employees via e-learning.
Furthermore, the Company stipulates its basic policy and system for
managing risks involved in operations in the Risk Management
Guidelines and strives to deal appropriately with risk by enhancing thissystem. The Risk Management Committee met four times during fiscal
2019 to confirm the status of internal reporting and deliberate on issues
and measures related to promotion of risk management across theGroup, accurately understanding and evaluating risks, and implementing
appropriate control. The Board of Directors regularly receives reports
about the results of the Committee’s activities.

Issue instructions/Report

Messages from External Directors
RiskManagement
Committee

Issue
instructions/
ReportMonitoring

Operating Division/Administration Division/Group companies

1. Board of Directors & Business Execution Structure
Punch Industry is a company with an Audit & Supervisory Board. The
Company has strengthened its executive officer system to separate themonitoring/supervision of management by the Board of Directors
and executive functions of management and to enable prompt
decision-making by management. We abolished titled positions for
directors except for the chairman, and have adopted a system of
selecting the president and titled executive officers from among theexecutive officers.

the decision-making process when nominating and dismissing directors
and executive officers and determining their remuneration.

The Board of Directors is composed of six directors (including two
external directors), and it holds regular meetings monthly andextraordinary meetings when necessary. The Executive Board,
composed of all executive officers, convenes once a month as thedecision-making body for business execution. The Board engages indeliberation and makes decisions related to execution of business,
including matters legitimately delegated by the Board of Directors.

Yukiko Mitsuhashi

Kazuyoshi Tsunoda

External Director

External Director

Our values are changing significantly in the midst of the so-called “newnormal.” We seem to be moving away from long working hours and amale-dominated corporate society while we reevaluate our family lives
as people avoid going out. Against this backdrop, I think we will see a
growing emphasis on ESG in the future with a real sense of necessity.
Fiscal 2019 was the first year that the Company incurred a net loss
since it became a listed company. In order to recover, I believe it isnecessary to create an environment in which individuals can freely
demonstrate their abilities and pursue the ways of a company soughtby society. We will further enhance our corporate value throughpersonnel system reforms, encouragement of active roles for women,
and SDGs initiatives.

While one of the goals of governance is to keep a company runningsmoothly and thereby increase revenue, achieving efficient
operations is not an easy task. Although we conducted follow-up
actions to enhance efficiency in fiscal 2019, they did not lead to asignificant improvement in profit. In fiscal 2020, I will contribute toenhancing our corporate value by significantly increasing thenumber of on-site inspections to better understand the problem. At
the same time, I will review the evaluation methods for new projects
and investments to improve efficiency, while promoting
organizational and management transparency.

Punch Industry’s corporate governance website

13

Punch Industry Co., Ltd.

https://www.punch.co.jp/english/companyinfo/governance.html

Punch Industry Co., Ltd.

14

Honorary Chairman, Directors, and Audit & Supervisory Board Members (As of June 25, 2020)

Reasons for Appointment of Directors and Audit & Supervisory Board Members and Meeting Attendance
Independent
director

Directors

Name

Reason for appointment

Tetsuji Morikubo

Mr. Morikubo formerly held major positions in the Company and the Punch Industry Group in China. He
was also responsible for the Punch Industry Group in Malaysia, where he oversaw our business inSoutheast Asia and contributed greatly to its improved performance. Since becoming a director of theCompany in June 2018, Mr. Morikubo has overseen the entire business of the Punch Industry Group, witha focus on management and business development strategies. He became a representative director in
June 2019 and president and CEO in November. As a top executive of the Punch Industry Group, he has
worked hard to improve corporate value. We have therefore deemed it suitable to appoint him as a chief
executive officer to swiftly rebuild management and drive the further growth of the Group, in light of its
deteriorating performance due to sluggish market conditions since the middle of fiscal 2018, as well as
the recent COVID-19 pandemic.

Attended 14 of 14
Board of Directors
meetings

Yasuhiro Sanada

Mr. Sanada has served as a director of the Company for eight years since June 2012. Using his businessexperience at the Company and the Punch Industry Group in China, he has led the Punch Industry Group’s
global expansion as a top executive. Since 2019, he has overseen the Group’s operations with a focus on
cultivating new demand and attracting business orders amid ongoing sluggish market conditions. In lightof his experience and track record, we have deemed it suitable to appoint him as a director to “Enhancecustomer-focused marketing capabilities,” a priority initiative defined in VC2020 Plus, the Group’s new
mid-term business plan.

Attended 13 of 14
Board of Directors
meetings

Akira Takanashi

In addition to many years of experience in the manufacturing department, Mr. Takanashi served as chairmanof the Punch Industry Group in China. In that role, he oversaw all of the Group’s operations—not only
manufacturing but also sales and administration—and achieved significant improvements in its businessperformance. After becoming director in June 2018, Mr. Takanashi was responsible for overseeing the Group's
domestic operations and assisting the CEO and COO. Since 2019, he has been a powerful force in improving
the Group’s manufacturing capabilities and product quality as head of manufacturing. We have deemed it
suitable to appoint him as a director to “Optimize the global production system and strengthen R&D,” a priority
initiative defined in VC2020 Plus.

Attended 13 of 14
Board of Directors
meetings

Mr. Murata has served as a director for eight years since June 2012. Utilizing many years of experienceand insights in finance and accounting, he has overseen the Group’s administration department. In
addition to centrally managing the Group’s human, material, and financial resources, he has promoted
working-style reforms. We have deemed it suitable to appoint him as a director to rebuild the Group’s
financial structure, which deteriorated in the previous fiscal year, as well as to promote as a responsible
person “Working-style reforms and human resource development” which props up our business, a priority
initiative defined in VC2020 Plus.

Attended 14 of 14
Board of Directors
meetings

Takao Murata

Honorary Chairman

Attendance at Board of
Directors and Audit &Supervisory Board
meetings in FY2019

Yuji Morikubo
Founder, Honorary Chairman

Directors

Tetsuji Morikubo

Yasuhiro Sanada

Akira Takanashi

Takao Murata

Chief Executive Officer

Chief Operating Officer(Sales)Chief Operating Officer(Manufacturing)

Chief Financial Officer

Ms. Mitsuhashi has extensive knowledge in general legal affairs as a lawyer as well as experience as an

Yukiko Mitsuhashi external director at another company in addition to work experience in a business corporation. We havetherefore deemed it suitable to appoint her as an external director capable of realizing proactive(External)

governance. In addition, Ms. Mitsuhashi has provided appropriate advice regarding our efforts to promote
diversity from her perspective as a woman.

Attended 14 of 14
Board of Directors
meetings

Yukiko Mitsuhashi

Kazuyoshi Tsunoda

External Director

External Director

Mr. Tsunoda has management experience as an executive officer and experience in auditing as a director

Kazuyoshi Tsunoda (responsible for auditing) and corporate auditor in addition to extensive experience and knowledge inmanufacturing at a business corporation. He takes on important roles for the Company such as monitoring(External)
business execution and providing appropriate advice on key management decisions. We have therefore
deemed it suitable to appoint him as an external director.

Audit & Supervisory Board Members

15

Attended 14 of 14
Board of Directors
meetings

Norio Kitsui

Mr. Kitsui has been a full-time Audit & Supervisory Board member for nine years since June 2011. He has
fulfilled his duties as an Audit & Supervisory Board member with a high degree of expertise backed bymany years of experience in finance and accounting. We have therefore deemed it suitable to appoint him
as an Audit & Supervisory Board member.

Attended 14 of 14
Board of Directors
meetings and 16 of 16
Audit & Supervisory
Board meetings

Susumu Sugita

Mr. Sugita has been a full-time Audit & Supervisory Board member for five years since June 2015. Before
assuming that position, he served as director and gained a wealth of knowledge about the Group’sbusiness. We have therefore deemed it suitable to appoint him as an Audit & Supervisory Board member
to perform effective auditing work by utilizing his experience.

Attended 13 of 14
Board of Directors
meetings and 15 of 16
Audit & Supervisory
Board meetings

Ryoichi Ando
(External)

On the basis of his many years of experience and fair judgements with knowledge as a lawyer, Mr. Ando
has helped ensure the objectivity and neutrality of the Group’s management. We have therefore deemed it
suitable to appoint him as an external Audit & Supervisory Board member.

Attended 14 of 14
Board of Directors
meetings and 16 of 16
Audit & Supervisory
Board meetings

Yoriatsu Matsue(External)

On the basis of his keen insights and excellent track record in corporate legal affairs as a lawyer, Mr.
Matsue has helped ensure the objectivity and neutrality of the Group’s management. We have therefore
deemed it suitable to appoint him as an external Audit & Supervisory Board member.

Attended 14 of 14
Board of Directors
meetings and 16 of 16
Audit & Supervisory
Board meetings

Punch Industry Co., Ltd.

Audit & Supervisory Board Members

Norio Kitsui

Susumu Sugita

Ryoichi Ando

Yoriatsu Matsue

Full-time Audit & Supervisory
Board Member

Full-time Audit & Supervisory
Board Member

External Audit & Supervisory
Board Member

External Audit & Supervisory
Board Member

Punch Industry Co., Ltd.

16

5-Year Financial and Non-Financial Highlights
Financial information

Company Profile (As of March 31, 2020)

3/20163/20173/20183/20193/2020Net sales

36,75536,64841,02540,93535,348Gross profit

10,178

10,191

11,658

11,472

Selling, general and administrative expenses

8,191

8,201

8,814

R&D expenditure

306

323

Operating profit

1,986

Ordinary profit

1,666

Capital investments

Company name

PUNCH INDUSTRY CO., LTD.

Business

Manufacture and sale of mold and die components

Established

1975

Main banks

9,187

Capital2,897.73 million yen

8,893

8,351

Number of employees

4,020 (consolidated)

367

443

438

Head office

1,990

2,843

2,578

835

1,874

2,731

2,547

712

Omori Bellport E-5F.,
6-22-7 Minami-oi,
Shinagawa-ku, Tokyo

MUFG Bank, Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation
Sumitomo Mitsui Trust Bank, Limited
Resona Bank, Limited

1,292

2,909

2,776

2,989

2,011

Depreciation

1,432

1,396

1,597

1,729

1,674

Profit (loss) attributable to owners of parent

1,249

1,375

1,788

960

(3,485)

Net cash provided by operating activities

3,187

1,785

3,393

3,185

2,490

Net cash used in investing activities(1,159)(2,770)(2,335)(3,253)(1,788)

Free cash flow

2,028

(985)

1,058

(68)

701

Net cash provided by (used in) financing activities(1,901)

1,199

(738)

74

(772)

Fiscal Year (Millions of yen)

Cash flows (Millions of yen)

At year-end (Millions of yen)

Investor Information (As of March 31, 2020)
Stock Information
Total number of shares authorized

80,000,000

Total number of shares issued

22,122,400

Number of shareholders

5,287

Breakdownof
Shareholders

Total assets

27,33729,451

32,56031,15525,576

Stock exchange listingFirst Section, Tokyo Stock Exchange

Net assets

13,99914,176

16,174

15,734

11,747

Security code

6165

Cash and cash equivalents

3,235

3,269

3,689

3,516

3,366

Interest-bearing debt

5,429

6,857

6,332

7,079

6,455

Shareholders’ equity

12,586

13,59815,096

15,50011,913

Number of shares per trading unit

100

Transfer agent

Sumitomo Mitsui Trust Bank, Limited

Accounting auditor

PricewaterhouseCoopers Aarata LLC

112.94

62.49

81.61

43.92

(160.01)

1,264.64

646.25736.64721.49536.64

Cash dividends*

25.0

13.0

16.75

16.75

2.00

Dividend payout ratio (%)

22.1

20.8

20.5

38.1

―

Net assets*

Key indicesForeign companies

Note: “Individuals and others” includes treasury stock.

Stock Prices and Trading Volumes
Number ofshares held

Percentage ofshares held (%)

27.7

27.8

28.4

28.0

26.0

MT Kosan Co., Ltd.

3,804,900

17.45

Operating profit margin (%)

5.4

5.4

6.9

6.3

2.4

2,415,800

11.08

Return on equity (ROE) (%)

8.9

9.8

11.8

6.0

―

CACEIS BANK S. A., GERMANY BRANCH - CUSTOMERACCOUNT

Return on assets (ROA) (%)

4.4

4.8

5.8

3.0

―

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

1,319,300

6.05

Net worth ratio (%)

51.2

48.1

49.6

50.4

45.8

879,430

4.03

Price-to-earnings ratio (times)

6.79

9.26

14.09

12.93

―

Punch Industry Employees’ Stock Ownership
SchemeOverseas sales ratio (%)

57.5

56.6

58.2

59.0

58.8

Yuji Morikubo

663,000

3.04

Tetsuji Morikubo

663,000

3.04

Michiko Kamba

431,000

1.98

Japan Trustee Service Bank, Ltd. (trust account 5)359,000

1.65

Japan Trustee Service Bank, Ltd. (trust account)

284,700

1.31

THE BANK OF NEW YORK 134088

270,800

1.24

3/20173/20183/20193/2020

Number of employees (persons)

3,836

3,959

4,298

4,282

4,020

Overseas employee ratio (%)

73.8

74.1

75.6

75.2

73.6

Ratio of females among new graduates hired (non-consolidated) (%)

33.3

52.6

42.1

47.8

44.0

* On January 1, 2018, the Company implemented a 2-for-1 split of shares of common stock. Figures in the above table are calculated on the assumption that the stock
split was implemented at the beginning of the fiscal year ended March 2017.

17

Major Shareholders (Top 10)

Gross profit margin (%)

3/2016

Punch Industry Co., Ltd.

2,896,200

Securities companies

Name

Non-financial information

10,760,763

Financial institutions
Other domestic companies

Per share information (yen)Net income (loss)*

48.64%
13.09%
3,981,300 18.00%
4,200,274 18.99%
283,863
1.28%

Individuals and others

Trading volume (right axis)(Yen)(Thousand shares)

800

4,000

600

3,000

400

2,000

200

1,000

0

Note: Treasury stock (312,806 shares) is excluded from calculations of “Percentage of shares held.”

12/
2018

4/
2019

8/
2019

12/
2019

3/
2020

0

Punch Industry Co., Ltd.

18