Medium-Term Business Plan YSP2026—To become the “Company of preferred choice” for all stakeholders—

May 24,2024

1. Review of the Previous Medium-TermBusiness PlanYSP2023—Yorozu Sustainability Plan 2023

Agenda2. New Medium-Term Business PlanYSP2026—Yorozu Sustainability Plan 2026
1) What We Aim to Be and Management Policy

2) Performance Targets

3) Basic Policy and Key Strategies

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11. Review of the Previous
Medium-Term Business PlanYSP2023

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2

Financial Summary【Overview】
経営方針
Despiteour efforts on resilient management, external factors prevented us from meeting thetargets for operating income ratio and return on equity (ROE).
・ Sales successfully surpassed the target.
・ Operating income ratio fell short due to significant increase in material, resource, and energy costs.
・ Similarly, ROE was impacted by a net loss resulting from an impairment loss on fixed assets.
Operating Income Ratio

Sales
Initial target for FY2023

150 bil. yen

FY2023 actual

Revised target: 160 bil. yen 181.4 bil. yen

127.3

2021

160.5

2022

Initial target for FY2023

5.0%
Revised target: 2.0%

Initial target for FY2023
FY2023 actual

2.5 %

181.4

2023

1.6%

1.9%

2021

2022

ROE
8.0%
Revised target: Nil
1.6%

2.4%

2021

2022

FY2023 actual

Not achieved

2.5%
2023

2023

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Summary of the Strategies (Results)

ESG
Management

We successfully built and paved the way for our growth strategy by prioritizing ESG management, specificallyfocusing on CN initiatives related to climate change measures, adopting new technologies and methods for
EVs, and strengthening our global sales expansion.
Basic Policy

Review and Analysis

Rating

E: Environmental●Surpassed the targets outlined in CN roadmap with proactive disclosure practices

Good

S: Social●Enhanced employee engagement, acquired Platinum Eruboshi, Kurumin, andHealth & Productivity Management Outstanding Organization certificatesGood

G: Governance●Overcame challenges to meet the listing standards for TSE Prime Market

Fair

DX promotion●Implemented individual improvement consistently

Fair

Stable profits●Increased investments in new model launches●Significant divergence occurred between customers’ required volume and our
production capacity in the Chinese market

Fair

New technologies
and methods●Developed innovative lightweight techs with patented products for sales growth●Commenced “collaboration” in development

Good

Sales expansion●Construction completed and operation started at YSMC*●Received orders for EV parts from a diverse range of customers

Good* YSMC stands for Yorozu Sustainable Manufacturing Center.
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Summary of the Strategies (Issues)

Basic Policy

RatingIssues pending fromYSP2023

Category ofpendingactions

In relation to
the New Medium-Term Plan

Good

Fall behind the position as thefrontrunner in comparison

Strengthen

Maintain our “advantages” and support businessactivities

S: Social

Good

Lack of group-wide measures

Go in-depth

Develop individuals and the organization with avision for future social and business structureG:
Governance

Fair

Delay in strengthening financial
strategies

Go in-depth

Respond to demand from stakeholders

DX promotion

Fair

Delay with Horizontal-DX (H-DX)

Recover

Fair

Delay in responding to market andbusiness changes

Go in-depth

Manage the plants with structural reform in mind

New technologies
and methods

Good

Difficulties in creating unique
technologies and new products

Strengthen

Dare to challenge the possibility of expanding
technologies rather than sticking to in-houseproducts and development

Sales expansion

Good

No significant changes in customer
composition

Strengthen

Strengthen business foundation through sales toa diverse range of customers

ESG Management

E:
Environmental

Stable profits

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Recover through application to YSMC (model
factory)5

2. New Medium-Term Business PlanYSP2026—Yorozu Sustainability Plan 2026

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61) What We Aim to Be andOur Management Policy

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What We Aim to Be
April 2024▼∥

YSP2023

A “Company resilient tochanges” through sales
expansion and stable profits
with new technologies andmethods based on ESG
management
Management reform (E,S, and G)
Build and pave the way
for our growth strategy▼

YSP2026

Aim to become the “Company ofpreferred choice” for all stakeholders
that supports the age of electrification bytaking an aggressive approach toward
growthMonozukuri reform

Business reform

2040▼

VisionDesire
to be

Aim
to be

Now

2030

March 2027▼

A Company that has earned
the “long-lasting trust” of all
stakeholders by providing “safety,
security, and comfort” of mobility on a
global scale and with best quality

Human talent development

Commit to decarbonization
Implement strategies and strengthen management
and business foundation
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Corporate culture reform

Lead in decarbonization
Build a resilient management/business foundationthat contributes to electrifying the society
8Management Policy
To become the “Company of preferred choice” for all stakeholders that supports
the electrification era by fulfilling the duties and responsibilities as a member ofsociety and taking an aggressive approach toward growth

Economic value

Enhance
corporate value
Maximize
the two values

Social value

Strengthening of ourbusiness foundation

Strengthening of ourmanagement foundation

Growth and profitability

Overall optimization

Integration

S (society and individuals)
G (governance)
Financial strategies

E (environmental)

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92) Performance Targets

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10Performance Targets

Metrics

FY2023 Results

FY2026 Targets

GrowthSales

181.4 billion yen

210.0 billion yen

Profitability

Operating income
ratio

2.5%

4.5%

Efficiency

ROE

–

8.0%

Prerequisite

Exchange rate

140.66 yen

140.00 yen(USD/JPY)

Copyright © YOROZU Corporation113) Basic Policy and Key Strategies

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Basic Policy—To become the “Company of preferred choice” for all stakeholders—
Economic value

Social value

Strengthening of Our Business Foundation

Strengthening of Our Management Foundation

Integration of E (environmental) managementand “growth and profitability”

Overall optimization

1

Creation of new technologies and methods,
and sales expansion

4

S: Society and individuals—improvement of engagement■ Development of new technologies that contribute to decarbonization and creation of new values through collaboration■ Expansion of sales to a diverse range of customers■ Promotion of health and productivity management■ Implementation of DE&I

2 Improvement of profit structure

5 G: Enhancement of governance■ Maximization of profits from new model launches■ Analysis on production site reforms based on customer
production trends in each region■ Strengthening of governance and compliance■ Compliance with appropriate business practices

Monozukuri with our weapon
3 E:—environmental performance

6 Financial strategy■ Continuous efforts for decarbonization in production■ Establishment of a smart factory■ Shareholder return■ Cross-shareholdings

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Strengthening of Our Business Foundation(1) Creation of New Technologies and Methods,
and Sales Expansion■Development of new technologies that contribute to decarbonizationand creation of new values through collaboration■Expansion of sales to a diverse range of customers

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Development of New Technologies That Contribute to Decarbonization
and Creation of New Values Through Collaboration【Strategy 1】 Undertake the challenge of refining our lightweighting technology and expanding the range of our products
The need for uncompromising lightness
and stiffness of suspensions exists
even in the era of electrification

Ultra-hightensile strength
980MPa1180MPa

Application to varied products

New structure

Materials

New stamping
structure

Lighter
Alternative materials
Higher Stamping difficulties
stiffness
Ultimate
designOptimized
structure and method

Resin

AluminumInterior products

Welding of castings andwrought materials

Arm with a newstamping structure

Unibody
structure

DesignUltra-high-tensilematerials

980MPa/1180MPa
Challenge the limit of steel
Different-thickness
structure

780MPa→980MPa

Collar-less

Performance analysis

Different-thickness stamping

Manufacturing
Co-simulation inengineering Optimize

manufacturing process

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BeamLight-weight + cost cut

ArmStamping analysis

Difficulties in stamping
ultra-high tensile materials

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Development of New Technologies That Contribute to Decarbonization
and Creation of New Values Through Collaboration【Strategy 2】 Increase a product’s added value through collaboration
Suspension
memberYorozuSuspension arm

Our expertisein suspension
products
Design/performance analysis
prototype/testing

Full-curlmethodTailoredblank

Business
partners
Material makers

Synergy

Steel makers＋

Core elemental
technology
Press forming/welding
painting/assemblyPart makers ofother industries

Highprecision
weldingtechnique

Inverter

Motor

Transmission

Products with added value for EVs
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Development of New Technologies That Contribute to Decarbonization
and Creation of New Values Through Collaboration【Strategy 3】 Develop innovative products for the emerging OEMs of EVs

Actions for the continuously growing EV market【Development strategy】

EV●Create a product catalog
Evolution of
the existing
technologies

Needs of the emerging EV OEMs

●Improve analysis prediction
accuracy●Reduce the period for
production preparation

Super low cost andsuper speedy development

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Expansion of Sales to a Diverse Range of Customers【Strategy 1】 Expand sales of EV products for major customers
Nissan, Mitsubishi, Renault (Nissan Gr.)

Toyota (Toyota Gr.)Customer

Sales expansion policy

Nissan/Mitsubishi

Deepen partnership with customer

ToyotaEstablish a solid supply system toexpand sales of EV products

Honda

Participate in next generation vehicle
projects with new technologies/methods

Nissan & Honda

Explore new opportunities throughcollaboration with customers (TBD)

YSMC
Y-OitaY-Tochigi

Honda

Japan
G-YBM
W-YBM

U.S.

China

YMEX
YAGM

Consolidated sales composition

Toyota Gr.

Nissan Gr.

YAT
YAA

MexicoToyota Gr.
9% → 15% or more

Nissan Gr.
Toyota Gr.

60%

55％

<Target: Up 6% or more>
FY2023

FY2026
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Expansion of Sales to a Diverse Range of Customers【Strategy 2】 Venture into new business areas“Establish the foundation” for future growthby addressing new business areas beyond the automotive sector

Non-automotive products

External sales of production equipment

Make products for construction machinery
using over 20 mm thick sheet materials(Stamping/welding)

Develop new businesses by enhancing ourcompetitiveness and technologies

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(2) Improvement of Profit Structure■Maximization of profits from new model launches■Analysis on production site reforms based on customer production trends
in each region

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Maximization of Profits from New Model Launches【Strategy 1】 Establish an organizational structure focused on maximizing profits
Enhance CAPDo (C→A →P→Do) cycle through the collective efforts of five departments
M&S/Design/Manufacturing Engineering
Production site/Project Control

・Make use of the cost consolidationMasssystem for lifetime management
productionof project revenue
・Grasp market trends andCheckcustomer needs
・Identify the issues in mass production
projects

・Ensure that the QCDD planis implemented

Advancedevelopment

ActionProduction
preparation

Product
development

Do

Plan

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・Stay ahead of customers’ needs
and work on new technologies,
new methods, and lightweighting
・Consider reflecting added value
to the selling price・Be cost conscious and make
optimal investments in a
project’s upstream stage
・Ensure that feedback frommass production projects is
effectively utilized21

Maximization of Profits from New Model Launches【Strategy 2】 Enhance the development of dies and equipment
Reduce the lead time fordie preparation by 40%

Largely improved
initial quality

Strengthened
die production
control

Maximized
die module
structure

Jidoka concept for next generationassembly lines
In-house control
of welding
distortion

・Clarification of issues and the direction to take・Higher versatility and reusability(for next generation models and beyond)Lead time—from designing to shipping
FY202330% reduction in
FY2026– 40%

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New model investment
Space required
Manufacturing costs
22Analysis on Production Site Reforms Based on Customer Production Trends in Each Region【Strategy】 Rebuild future strategies through careful monitoring of profits earned at each production site
Production load in regions with multiple plants(compared with FY2019)

Japan
FY19

FY23

FY23

Global

China
FY26

FY19

U.S.
FY19

Consider optimization inregions where multiple plants
are located

FY23

FY26

Mexico
FY26

FY19

FY23

FY26

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More than
one plantin theregionPlan/actualandload balancemonitoring

Only oneplant in theregion23

(3) E: Monozukuri with Our Weapon—Environmental Performance■Continuous efforts for decarbonization in production■Establishment of a smart factory

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Continuous Efforts for Decarbonization in Production【Strategy 1】 Accelerate CN targets to maintain our position as the frontrunner
YSP2023

CO2 emissions
reduction target

YorozuSupplier(Scope 2+1 vs. FY2013)

▼

▼

40％

(actual）▼

Toward 2030

YSP2026

19％

2040

2030

March 2027

▼

▼

∥

April 2024

May 2021

60％

100％

Scope３Collaboration with suppliers (based on their action plans)Material purchase
Scope2All domestic sites

Electricity

YSMC

Collaboration with Wanouchi town

Green power
Solar generation

Overseas sites

Scope1

CustomerFuelYSMC becoming CN

Existing sites adopting diverse fuels New fuels

Scope３

Lightweight product development + acceleration of EV product order receipt
Product use

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Continuous Efforts for Decarbonization in Production【Strategy 2】 Promote decarbonization in Scope 2 (electricity) and Scope 1 (fuels)YSP2023（Actual）

YSP2026（Target）

Toward 2030
（Target）

19%

40％

60％

19%

39%

57%

Scope1(Fuels)

-

1%

3%

Japan

Scope2

63%

100%

←

The Americas

Scope2

21%

36%

72%

Asia

Scope2

9%

32%

46%

Reduction
Scope
2+1
Scope2Global(Electricity)

PolicyPromotion mainly in Japan

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Shift to overseas

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Establishment of a Smart Factory【Strategy】 Realization of a model factory at YSMC
DX
Concept

H-DX

Drastic reduction of lead time

(Horizontal)

Collaboration with digital technology to optimize monozukuri process
Total Production System

Outstanding efficiency
in operations

Market survey
Technologicaldevelopment

Order
receipt

Product design
Prototyping
Testing

ProcesssettingDie &equipment
fabrication

Production

Qualityassurance

Shipment

Digital simultaneous process

Big Data ⇒ Visualization & Analysis ⇒ AI
Management
Planning

V-DX (Vertical)

HR & General
Affairs

Finance &Accounting

Cost
Management

Digital transformation in each segment

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Purchasing

Internal Audit

A2D (Analog to Digital)
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Establishment of a Smart Factory【Strategy】 Realization of a model factory at YSMCMarch 2027▼▼▼

YSP2023

H-DX (Horizontal)

IoT/Sensing
Team 1 【Pre-production reform】

A2D (Analog to Digital)

Monozukuri lead time
reduction

Centralized control of costand schedule system setup

Team 2 【Factory reform】

Smart factory
Team 3 【Back office reform】

Indirect work reform

A2D (Analog to Digital)
IoT to see facility status
Digitally controlled factory

A2D (Analog to Digital)
Efficiency in operations
through digitalization∥

April 2024

April 2021

YSP2026

Accumulation of big data/Deep learning

Visualization/AI analysis and projection
Centralized control ofdevelopment data

Realized at YSMCProfit control
Development time control

Centralized "updates" on- production readiness- actual production, and- company management

Centralized control ofplant data
Internal information sharing anddecision making

Communication flow
Database standardization

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It provides clear visibility
for rapid decision
formulation andexecution.

28

Strengthening of Our Business Foundation(4) S: Society and Individuals—Improvement of Engagement■Promotion of health and productivity management■Implementation of DE&I

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29

Improvement of engagement
Company of choice, where everyone feels“I want to continue working at this company” and ”I’m happy to work here”

Improvement of Engagement

Empowerment
Health andproductivity
management

Fostering

DE&I

Hiring
Corporate philosophy and culture

Management and HR strategies

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Promotion of Health and Productivity Management【Strategy】 Create a healthy and engaging workplace

Fostering a healthy and engaging workplace thatempowers every member of Yorozu Group

Employeeengagement reform

Support for healthpromotion

Vibrant workplace
for allWork system

Health awareness promotion

Communication channels

Sense of accomplishment

Lifestyle disease prevention

Stress reduction measures

Enrichment in life

Early detection and treatment

Supportive work environment

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Implementation of DE&I
【Strategy】 Establish a work environment where everyone can fully demonstrate their potential

Yorozu’s DE&I
STEP
１

Building a diversity strategy

STEP
２

Advancing a diversified way of work

Improvement in
the rate of male
employees taking
childcare leave

Diversity
STEP
３
EquityInclusion

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(5) G: Enhancement of Governance■Strengthening of governance and compliance■Compliance with appropriate business practices

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33

Strengthening of Governance and Compliance

CSR Activity

Board of Directors
ReportDepartments(Outside Directors,
Nominating and Compensation Committee)

SuperviseRisk, Compliance, Human Rights DD Committee, etc.

① Governance② Compliance③ Risk management

 Effectiveness of the BOD
 Communication withshareholders

 Basic Policy on Internal Control(Design and operational
effectiveness of the system)
 Human rights due diligence Appropriate business practices

 Top eight risks

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34

Strengthening of Governance and Compliance【Strategy】 Ensure effectiveness of the BOD and foster better communication with shareholders

1

Proactive involvement of Outside Directors

2

Evaluation of the BOD from an outsider’s perspective andformulation of plans aimed at enhancing effectiveness

Enhanceeffectivenessof the BOD

Communication
withshareholders

3Composition of the BOD based on the growth strategy

1Enhancement of IR and SR

2

Resuming the plant tour for shareholders
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Strengthening of Governance and Compliance【Strategy】 Promote human rights due diligence
Human rights due diligence process*Compliant with OECD Due Diligence Guidance① Formulation/disclosure of Human Rights Policy② Remedy③ Monitoring④ Identification of potential risks⑤ Identification and assessmentof impacts⑥ Corrective action⑦ Prevention/mitigation

To be addressed
not only in ourown company but
also in the entire
supply chain⑧ Information disclosure

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Compliance with Appropriate Business Practices【Strategy】 Ensure fair pricing practices
Maintain competitiveness and ensure sustainable growth of the entire supply chain
through fair pricing

Customer Review prices for appropriate selling priceSwiftly pass on the costs reflecting the market
conditions and labor/social costs to the price Review prices for appropriate purchasing
・Comply with laws and regulations
・Discuss with suppliers on a regular basis

 Invest in securing talentand the measures forshojinka (manpower saving),
DX, and carbon neutrality
 Propose and supply
competitive products

Supplier
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(6) Financial Strategy■Shareholder return■Cross-shareholdings

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38

Basic Idea and Key Strategies
We strive to drive sustainable growth and enhance our corporate value through effective allocation of ourmanagement resources by improving our ability to generate cash flow and heightening capital efficiency.

Improved profitability
Investment for growth

Heightened capitalefficiency
Slimmed balance sheet

Increase in

PBR

Shareholder return
Stable and sustainabledividend payment

YSP2026 Targets
Higher profitability

Operating income ratio

4.5％

Higher capital efficiency

ROE

8.0％

Shareholder return

Dividend payout ratio

35% or above

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39

Shareholder Return【Strategy】 Return policy in appreciation of shareholders’ support
 Dividend policy
To maintain a dividend per share of at least 31 yen, aiming for a dividend payout ratio of 35% or higher

 Share repurchases
To buy back our own shares agilely and appropriately, considering other investment targets, the level ofcash on hand and bank deposit, business performance, etc.
Dividend per share (yen)Dividend per share
Consolidated dividend payout ratio

53

51

20.1%

2013

ActualForecast

59

58

46

26
10.2%

271.5%

35.5% 35.4%

25

51.6%

25

13

30

31
72.0%

13
35.6% 42.4%

2014

2015

2016

2017

2018

2019

2020

2021

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2022

2023

2024

2025

2026
40

Cross-Shareholdings【Strategy】 Set a reduction target for cross-held shares Cross-shareholding policy• We will hold the shares only for the purpose of strengthening the ties with our suppliers
and only if it is considered necessary for the operation of our business and is expected
to contribute to enhancing our corporate value.

• The significance of cross-shareholding will be comprehensively assessed from theperspectives of feasibility, profitability, and holding risks. Should any of such shares lose
its significance as cross-held shares, we will consider disposing of such shares.

 Reduction target
Quantitative value

Reduce by 10% within the current medium-term plan(based on market value as of the end of March 2024)
Funds acquired through selling of the cross-held shares will beappropriated to buy back our own shares.
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41

—To become the “Company of preferred choice” for all stakeholders—

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42

Copyright © YOROZU Corporation