YOROZUYOROZUINTEGRATEDINTEGRATEDREPORTREPORT

3-7-603-7-60
Tarumachi,
Tarumachi,
Kohoku-ku,
Kohoku-ku,
Yokohama,
Yokohama,
Kanagawa
Kanagawa
222-8560,
222-8560,
Japan
Japan

TowardTowardthe
theFuture
FutureofofMonozukuri
Monozukuri

Tel:Tel:+81-45-543-6800+81-45-543-6800
https://www.yorozu-corp.co.jp/en/
https://www.yorozu-corp.co.jp/en/

統合報告書
統合報告書




Becoming a Byword for Suspensions
Yorozu has earned the trust of domestic and foreign automakers as a premier supplier ofsuspensions, having honed its technologies as an auto parts maker with a focus on
suspensions. Leveraging its advanced developmental and technological capabilities,
Yorozu will continue to expand globally as a suspension system manufacturer witha fully integrated production system, from performance development to mass
production, for suspension parts and peripheral components.

Corporate Vision
With the one and only technologies anddevelopmental capabilities in suspensions,
we deliver solutions to customers’ needs andaim to become a 100-year sustainable andevolving company.

Corporate Philosophy[Our Purpose]
Our primary mission is to contribute to society by continually striving to delivertechnological innovation and create products that are beneficial to people.
[Management Stance]
Our basic business creed is to conduct reliable management.
[Behavioral Guidelines]
1. Work is the foundation of life.
2. Trust is the basis of work.
3. Creativity in thought and action is the key to human progress.
4. Safety, quality, and productivity are fundamental to our corporate activities.
5. Risky endeavors are to be avoided while genuine endeavors are to be embraced.

CONTENTS
About Yorozu
2

Message from the President

6

Message from the CFO

8

Yorozu’s Main Products

10

History of Value Creation

12

Value Creation Process

14

Yorozu at a Glance

Yorozu’s Medium- to Long-Term
Outlook46

Materiality (Material Issues)

48

New Initiatives Toward the Next
Medium-Term Business Plan

50

Medium- to Long-Term Vision andRoadmap

Data Section
Yorozu’s Management Foundation
16

Medium-Term Business Plan
Yorozu Sustainability Plan 2023

20

R&D Strategy

24

Human Resources Strategy

31

Environmental Management

36

Board of Directors

37

Corporate Governance

38

Roundtable Discussion between the
President and Outside Directors

44

Compliance Initiatives

45

Risk Management

Editorial Policy
This is our fifth integrated report since we first published it in2019. We see this report as a communication tool for promoting
a better understanding of our corporate value and growth potential, aiming to convey in an easy-to-understand format our various initiatives to realize a sustainable society, as well as theGroup’s management policies, business strategies, and financial
information, to all of our stakeholders, including shareholders,investors, suppliers, local communities, and employees.
The Yorozu Group will endeavor to provide its stakeholders
with better reports to deepen their understanding of the Group.
Please visit our official website for the most recent information.

Yorozu Corporation Website
https://www.yorozu-corp.co.jp/en/

52

Five-Year Summary of Financial and
Non-Financial Data

53

Corporate Information

Period and Scope of Reporting•Period: Fiscal 2022 (April 1, 2022–March 31, 2023) (Someinformation from outside this period is also included.)•Scope: Yorozu Corporation and its Group companies
Guidelines and Entities Referenced•The International Integrated Reporting Framework of
the International Integrated Reporting Council (IIRC)•Guidance for Integrated Corporate Disclosure andCompany–Investor Dialogues for Collaborative Value Creation
Disclaimer Regarding Forward-Looking Statements
This integrated report contains forward-looking statements,
including the Company’s current plans, projections, and strategies, based on information available at the time this report was
created. Actual performance may differ significantly from theseprojections due to a variety of factors.

About Yorozu

About Yorozu

Yorozu’sManagement Foundation

Yorozu’s Medium- to
Long-Term Outlook

Data Section

Message from the President

Reflecting on Fiscal 2022

Achieved Sales and Profit Growth andEstablished Innovative Technologies
That Contribute to the Environment

Pursuing Manufacturing that
Supports the Automotive Industry
in the Era of Electrification

Tsutomu Hiranaka
President and COO
Member of the Board

2

Fiscal 2022 (ended March 31, 2023) marked aperiod where the global surge in inflation, propelledby escalating raw material and logistics expenses,
coupled with monetary tightening measures enacted
by various nations, impacted economic recovery.
Moreover, the production of automobiles, to which
the Yorozu Group’s business is closely related, wassluggish due to semiconductor shortages and otherfactors. As a result, the production volume was on
par with the level of the previous fiscal year.
Amid these circumstances, the Yorozu Group’s commitment to enhancing profitability bore fruit. For fiscal
2022, consolidated sales grew 26.1%, and operating income surged 47.3% year on year, marking
growth in both sales and profit.
During fiscal 2022, the second year of thethree-year medium-term business plan, Yorozu
Sustainability Plan 2023 (YSP2023), initiated in fiscal
2021 (see page 16), we successfully developed
new technologies aimed at reducing CO2 emissions
through life cycle assessment (LCA). YSP2023
prioritizes growth strategies centered on new technologies and methods contributing to the electrification of society and sales expansion. Notably, wedeveloped two patented technologies for the Armwith a New Stamping Structure and the Arm Using
Alternative Materials. These innovations were integrated into new products adopted by Nissan MotorCo., Ltd. and Toyota Motor Corporation for theirlatest electric vehicles (EVs).
In fiscal 2023, the final year of YSP2023, plans
are under way for the launch of the new Tokai base,which has been positioned as a pivotal hub forsales expansion. This facility’s energy requirements
will be met entirely through green energy, including
on-site solar power generation, ensuring zero CO2emissions from even the heat source for boilers usedin the coating facilities. As the entire automotive
industry intensifies its efforts toward decarbonization, we acknowledge that competitive evaluationencompasses not only the product’s quality, cost,and delivery (QCD) but also the processes driving its
creation. With this holistic approach to customers,
we aim to supply products for the numerous EVs intheir pipeline.

The World Yorozu Aims to Create

Contributing to Stakeholders throughSustained Growth
Our Corporate Vision states, “With the one and only
technologies and developmental capabilities in suspensions, we deliver solutions to customers’ needs
and aim to become a 100-year sustainable andevolving company.” In line with this vision, our aim isparticularly focused on contributing to stakeholders
through sustainable growth.
Drawing on the expertise accumulated since ourfounding as a monozukuri company (manufacturer),
we have supplied parts of exceptional quality, recognized for their reliability and safety, to the global
market by creating optimal designs and production
technologies. This stands as our core strength anda testament to the trust we have garnered fromour customers. Moving forward, we will continue
to refine the development of new technologies andmethods, provide the global market with highly competitive suspension components that outperformthe products of others, and meet our customers’
expectations. The phrase “becoming a 100-year-old
company” encapsulates our desire to be a business
entity recognized over the long term by society.
To achieve our vision, it is crucial to effectively
implement the various measures set forth in YSP2023
and solidify our ESG management foundation. This
will lead to consistent performance and serve as thedriving force toward further growth. In this endeavor,
I believe that the role of human capital is of immense
significance. It is crucial that every employee canadeptly respond to global shifts through theirthoughts, actions, and sensibilities. Guided by myleadership, the entire company will unite to addressa wide array of challenges.

YOROZU 2023 Integrated Report3About Yorozu

Long-Term Business Development

As a Driving Force behind the Era ofElectrification
By around 2040, the global automotive industry
is expected to see various countries strengthen
environmental regulations to realize a decarbonizedsociety. This could lead to EVs accounting for half
or more of the automobile market. Moreover, as
Mobility as a Service (MaaS) gains momentum, we
can expect a transition from individual “ownership”
of vehicles to an era of collective “sharing.”
Amid these impending environmental shifts, we
identify opportunities in two key domains: “increasingly sophisticated technological requirements
such as weight reduction and addressing issues ofsound and vibration” and “the growing prevalence of
EV-related components.” These developments open
doors for us to explore new avenues beyond ourestablished domains. Conversely, potential threats
include “the likelihood of a decrease in automotive
production volume” and “changes in the structure of
the automotive industry, such as a shift from vertical
integration to horizontal specialization.”
Even as EVs become more prevalent, automobile
suspensions will remain essential, and the expectations for strength and ride comfort will evolve
to more advanced levels. In addition, given theessential role of experience and a track record in
manufacturing to shape the core performance ofautomobiles, we expect a growing reliance on specialized suspension manufacturers for development
as automakers grapple with the challenges posed
by CASE (connected, autonomous, shared, electric)
technologies.
We contribute to our customers’ vehicle development not just as a manufacturing entity but also
as a participant in upstream processes such as
automakers’ vehicle conceptualization by leveraging
our accumulated data and expertise. Furthermore,guided by the “Yorozu Production Way (YPW),”
which defines our approach and vision for manufacturing, we pursue standardization of all production
equipment, dies, and all procedures to ensure safe
and stable production with uniform quality world-

4

wide. We are dedicated to further enhancing ourstrengths and focusing on technology development,
including ongoing patent acquisitions, to establish
an overwhelming competitive edge. By doing so, we
aim to strengthen our presence as a pivotal player
supporting the automotive industry in the forthcoming era of electrification.

Prospects for the Next Medium-Term Business
Plan

Broadening Management Scope throughEnhanced ESG Management andCreation of a Collaboration System
To enhance corporate value in the advancing electrified society, we aim to strengthen ESG management
while also building a collaboration system encompassing joint development projects to bolster new
technologies and methods that drive growth. By
promoting new initiatives in collaboration with business partners based on our in-house technologicaldevelopment, we will achieve an expansive management approach that is resilient to environmental
changes.
While addressing the aforementioned threats, weare committed to pursuing multiple opportunities byfollowing four Company-wide measures: “Step up
the technology of applying ultra-high-tensile materials (980 MPa),” “Develop new items for automotive
parts,” “Develop new items from new materials,” and“Go into the non-automotive parts business.”
At the core of these endeavors lies the deepening of ESG management. I believe that further
advancing harmony with nature, boosting employee
engagement, and fostering strong governance areindispensable for achieving sustained growth.
In terms of the environment, we completed thetransition to 100% green energy for the electricity
consumption of four domestic facilities (Yorozu
Oita, headquarters, Shonai Yorozu, and Yorozu
Engineering) by fiscal 2022, and will continue toprogressively transition existing global factories togreen energy based on our plan. With a sense of
pride as a leading company in carbon neutrality, weYorozu’sManagement Foundation

will continue to dedicate company-wide efforts
toward this goal.
In our human resources strategy, we have shifted
our focus from “workstyle reform” to “employee
engagement reform.” My goal is for every individual
to experience the desire to work with us for his/her
entire career and feel proud to be a part of our company. While embracing diversity, we will leverage
the talent management system to gain a holistic
view of our human resources portfolio and establish
a human resources strategy that aligns with ourbusiness strategy.
To strengthen governance, we will ensure proper
opportunities for the involvement and advice ofindependent outside directors. We will also aim tofurther enhance the transparency and objectivityof decision-making processes within the Board of
Directors. In fiscal 2022, we assessed the effectiveness of the Board of Directors through an evaluation
by a third-party institution. Moving ahead, we will
identify areas for improvement, consider appropriate
measures, and put them into action.
To All Stakeholders

Toward a 100-Year-Old Company That
Continues to Develop on the Dual
Wheels of Social Contribution and
Growth Strategy
As stated in our Corporate Philosophy, “Our primary
mission is to contribute to society by continually
striving to deliver technological innovation andcreate products that are beneficial to people.” We
have persevered and thrived because of our ability
to contribute to society through manufacturing that
others cannot emulate, and I am confident that we
can continue along this path of sustained growth.
Our commitment remains unwavering—to continue
supporting the automotive industry by providing suspensions of exceptional quality, recognized for theirreliability and safety, throughout the world.
When considering the current landscape, I sense
various uncertainties, such as the rise in geopoliticalrisks, supply-demand tensions for raw materials, andsurging energy prices. However, from a long-term

Yorozu’s Medium- to
Long-Term Outlook

Data Section

perspective, the trend toward the electrification of
automobiles remains unshakable. To build Yorozu’s
growth strategy and demonstrate our solid presence in the age of electrification, we will accelerate
the internally defined “5G (Growth, Green, diGital,
Governance, Grit)” initiatives that we have been promoting since the previous fiscal year. Through a new
growth strategy focused on harnessing the advantages of new technologies and methods toward
sales expansion, we aim to become a 100-year-old
company that will grow continuously. We will also
initiate new endeavors that pave the way for the next
medium-term business plan.
We will further strengthen our investor relations
and communication activities to ensure a better
understanding of our efforts to achieve medium-/long-term, sustained growth and enhance corporate
value for the Yorozu Group. I look forward to hearing
the opinions of our stakeholders as we seek to meetand exceed your expectations.

President and COO
Member of the Board

YOROZU 2023 Integrated Report5About Yorozu

About Yorozu

Yorozu’sManagement Foundation

Yorozu’s Medium- to
Long-Term Outlook

Data Section

Message from the CFO
Profitability enhancement
Invest for growth

Continuing to Grow andIncrease Corporate Value
through Sound Management
Resilient to Changes
Norio Hirano
Executive Vice President
Member of the Board (CFO)

Review of Fiscal 2022 and Progress of
the Medium-Term Business Plan
Fiscal 2022 was a challenging year marked by theongoing impact of semiconductor shortages on
production volumes and the cost increases resulting from the escalation of raw material and logistics expenses triggered by the Russian invasion of
Ukraine. Sales increased by 26.1% to ¥160.5 billion
over the previous fiscal year. However, this sales figure reflects the impact of the depreciating Japanese
yen and soaring prices in the steel market, and theactual production volume remained roughly on parwith the previous fiscal year. Operating income,meanwhile, grew by 47.3% year on year to approximately ¥3.0 billion, owing to our efforts to flexibly
change the production volume in line with demand,
reduce fixed costs, and partially pass the energy cost
hikes on product prices.
The challenging environment we currently face
will pose difficulties in attaining the targets set in our
medium-term business plan, Yorozu Sustainability
Plan 2023 (YSP2023), unveiled in May 2021, including sales of ¥150 billion, an operating income ratio of
5.0%, and a return on equity (ROE) of 8.0%. In fiscal
2023, ending March 31, 2024, we forecast sales of¥160 billion, which factors in the impact of rising steel
prices and the depreciating yen. Excluding these factors, the “net” sales figure is expected to be around¥130 billion. On the other hand, our efforts to engage
in ESG management, ensure stable profits, anddevelop new technologies and methods are proceeding smoothly. Our objectives for achieving carbon
neutrality and weight reduction are progressing asplanned and positively impacting our sales growth.

6

Invest in construction of the new Tokai plant as a base for
expanding sales of products for EVs
Enhance revenue management for each project to improve profit
margins and ensure investment returns
Invest proactively in carbon-neutral environmental initiatives and DX

Cost of capital

Growth in ROE

Provide stable, consistent dividends

Maintain an equity ratio within the range of 40% to 50% as
a manufacturer in the industry requiring initial investment
Ensure financial soundness (raise funds while considering
the debt-equity ratio)Suppress capital costs with consideration for leverageConsistently review cross-shareholdings

Ensure a dividend payout ratio of 35% or more
Determine dividend payout ratio in considerationof performance and dividend levels
Explore shareholder return measures to reward
shareholder support

Toward Attainment of Our ROE Target

Cash AllocationlCash Flow Management
Yorozu strives to strengthen cash flow management
as a financial strategy under YSP2023. In pursuit of
our ROE target, it is important to enhance profitability
and simultaneously improve the total asset turnoverratio. To this end, we will focus on making capital
investments that consider cash flows. In addition toinvestment assessments based on the internal rate of
return (IRR) and the net present value (NPV) of future
cash flows, we will establish a depreciation-to-sales
ratio target and make efficient investments within that
range. By doing so, we aim to reduce depreciation
expenses, control total assets, and improve ROE.

lEnsuring Financial Soundness
Our core products are suspensions, which entail
substantial capital investments due to their significant
size and weight. Furthermore, given that suspensions
are critical for ensuring vehicle safety, maintaining asolid and stable financial foundation is essential for
their consistent supply. Accordingly, we deem it necessary to maintain an equity ratio within the range of
40% to 50%.
In our capital policy, we recognize capital costs,
such as the weighted average cost of capital (WACC)
and shareholder capital costs. We also strive toincrease overall corporate value by enhancing thereturn on capital, including return on invested capital(ROIC) and ROE. For our capital investments, wehave established a target for the depreciation-to-sales
ratio and set limits on general investments and project
investments to ensure control and restraint. Moreover,by prioritizing investment items, we can make investments that align with changing sales patterns.

lEnhancing Profitability
We are striving to strengthen our project revenue
management to boost profits. Enhancing the revenueof individual projects contributes to greater profitability
at each site, ultimately driving improvement in Group
profitability. Moreover, we will expedite the achievement of milestones for each project and enhancecoordination with different departments and sites toachieve target profits and ensure investment returns.
We will also continue to conduct simultaneous engineering activities, in which all departments participating in product development are involved in the design
process from the initial stages, and make use of ourcost consolidation system.

Shareholder returns

Streamline the balance sheetl
Investing in Growth Areas that Address Social
Challenges
With the progression of automotive electrification,customers are increasingly seeking improvements
in weight reduction and quietness. At the new Tokaibase scheduled to commence operation at the endof fiscal 2023, we will reinforce equipment for processing thin and lightweight high-tensile materials tomeet these demands. In addition, we are preparing
to achieve carbon neutrality by introducing 100%
green energy. We take a proactive approach toward
investments that enhance our competitiveness andaddress social challenges, such as initiatives for

digital transformation (DX) and carbon neutrality, as
well as investments for developing new technologies
and methods that drive future growth.

Returning Profit to Shareholders
At Yorozu, our basic policy is to return profits toshareholders based mainly on dividend payments
upon ensuring an optimal balance with investments
aimed at realizing financial soundness and growth.
We are targeting a dividend payout ratio of 35% ormore and aim to pay stable and consistent dividends
based on our desire to share with all our shareholders the benefits of medium- to long-term increases
in corporate value. We will continue to consider thebusiness performance and dividend levels when
determining the dividend payout ratio.
For fiscal 2023, we project sales to be on par withthe previous fiscal year. However, the ratio of sales to
Toyota Motor Corporation is expected to exceed 10%
for the first time in our history. While there will be costs
associated with facilitating growth, such as the establishment of the new Tokai base, the development of
new technologies and methods for EVs, and expenses
related to new model launches, all employees areunited in implementing strategies to achieve our goals.
We look forward to your continued support as weembark on the final year of YSP2023.

Executive Vice President
Member of the Board (CFO)

YOROZU 2023 Integrated Report7About Yorozu

About Yorozu

Yorozu’sManagement Foundation

Yorozu’s Medium- to
Long-Term Outlook

Data Section

Yorozu’s Main Products
Our outstanding performance in all aspects of quality, cost, and delivery (QCD) has earned us a high reputation from theworld’s automakers as a reliable supplier of suspensions, for which we have the top-class market share in Japan.
Even in the age of electric vehicles (EVs), suspensions continue to be a vital component, and Yorozu’s efforts in
reducing weight (achieving a 30% reduction compared to fiscal 2018) for improved fuel efficiency contribute to carbon
neutrality.

❸ Rear suspension member

Passenger Vehicle ProductsThis component serves as the framework that consolidates themounting points for elements, such as the rear suspension
links and differential gears. It requires strength and rigidity towithstand various forces from the tires through the mounting
points. By using high-tensile-strength materials, we achieve
lightweight construction.

❶

❷

8

❸
❹

❹ Rear beam❺❺This is the predominant configuration for the rear suspension insmall- and medium-sized passenger vehicles. The twisting
central crossbeam allows independent movement of the left
and right trailing arms, resulting in characteristics similar to
an independent suspension. This component accommodates
various structures, contributing to lightweight construction.

❶ Brake pedal❷ Front suspension member❺ LinkThe brake pedal is a vital safety component that allows thedriver to control the vehicle’s speed through foot operation
alone. It serves as a direct interface with the driver, requiringstrength and rigidity to withstand input from the foot. The levercontributes to reduced vehicle weight through various designs,
including thick plates, pipes, and thin plate welding.

This component serves as the framework that consolidates themounting points for various elements, such as the front suspension links, steering gearbox, and engine. It needs to provide
strength, rigidity, and impact absorption during collisions towithstand the various forces exerted by the tires through themounting points. To meet these requirements, suitable materials are strategically positioned to ensure optimal performance.

Positioned between the tires and the vehicle body, this isa vital safety component that determines the posture of the tire.
It requires strength and rigidity to withstand the various forcesfrom the tires. Through advanced stamping techniques, wehave developed an integrated link structure that balances
strength and rigidity while contributing to lightweight
construction.

YOROZU 2023 Integrated Report9Yorozu’sManagement Foundation

About Yorozu

About Yorozu

Yorozu’s Medium- to
Long-Term Outlook

Data Section

History of Value Creation
Founded as Yorozu Automobile Works in April 1948, the Company has developed its business by specializing insuspensions, mainly in the area of automotive undercarriage mechanisms. As Yorozu has grown alongside theautomotive industry, it has experienced a series of turbulent times over the years, defined by severe changes in
its external business environment arising from the Nissan Revival Plan, the global financial crisis of 2008, and the
COVID-19 pandemic.

However, despite the twists and turns, the Company has overcome a number of crises by promoting reforms andstreamlining measures through the concerted efforts of all employees. Moving ahead, we will continue to enforce
strategies that leverage the resilience, strengths, and advantages that have been fostered through this process ofovercoming hardships to realize our vision of becoming a 100-year-old company.

Founding

1948

1950

1960

1970

1980

1990

2000

Nissan-affiliated2010

Change in Customers
Four Defining Periods of Our Business

External Factors
Countermeasures by Yorozu
TechnologicalAchievements
10

Honda Group
13.8%

Nissan Revival Plan

Global Financial Crisis of 2008

When Nissan Motor formed an alliance with French automaker
Renault, then COO Carlos Ghosn announced the Nissan
Revival Plan as its restructuring plan. It entailed the achievementof ¥1 trillion in cost reductions by fiscal 2002 on a consolidated
basis and a reduction of interest-bearing debt, excluding sales
finance, from ¥1.4 trillion to less than ¥700 billion.

The bankruptcy of Lehman Brothers Inc. in the U.S. triggered a
global economic downturn, which had a massive impact on
Japan’s automotive industry as automakers incurred losses
and posted substantially less profits.

The Nissan Revival Plan, which called for a 20% reduction inpurchasing costs in three years and the disbanding of affiliatedcompanies, compelled us to formulate the Yorozu Survival Plan.

The global financial crisis had a severe impact on automakers
and sparked a rapid appreciation of the Japanese yen, cutting
our sales by half. However, we took measures to improve
profitability based on a policy of “achieving maximum
efficiency with bare minimum cost.”

Hydroforming (1998–)
A metal-forming process
in which hydraulic pressure is applied to theinside of pipe materials
to form the pipe into themold’s inner shape. It
can be made into complex shapes, leading to
improved shape precision and reduced welding time.

Closed down one of the subsidiaries in North America
Streamlined our production system
Drastically reduced costs through urgent profit improvement
activities
Implemented reforms to reinforce the management structure,including monozukuri (manufacturing) and educational reforms
Relocated the R&D functions and related departments to
Tochigi Prefecture to develop globally competitive products
As a result, we successfully
posted positive earnings
with an operating income of¥4.8 billion, eclipsing theoperating loss of ¥0.7 billion
we had initially forecast.

Aluminum Welding (2001–)
While aluminum waspreviously consideredmore difficult to process
and weld than steel, theoptimization of eachprocess has significantly
reduced the number ofprocessing steps as wellas costs.

Toyota Group
8.1%

Full-Curl Method (2004–)
A method of shaping
sheet metal into athree-dimensional
hollow shape.
Reduces welding
overlap and welding
length by half compared with the conventional structure
consisting of upperand lower parts(monaka structure).

Others15.1%
FY2022FY20102008
Urgent Profit Improvement Measures

Cost reductions:
Streamlined production and reduced personnel
Introduced the Toyota Production System
Implemented a function-based matrix management system
These measures enabled us to achieve cost reductions of¥5.8 billion and counteract the disbanding of Nissan’saffiliated companies.
Formed a capital alliance with Tower Automotive, Inc., a U.S.based automotive parts manufacturer to become a foreignaffiliated company
Expanded overseas
operations to increase
orders for automotive
parts from Japanesecompanies other thanNissan Motor

Others15.8%

FY1993

Nissan Group
83.5%

2030

Independent

GM Group
6.3%

Others16.5%

2000
Yorozu Survival Plan

2020

Foreign-affiliatedNissan Group
64.1%

2011
Active Expansion of Overseas BusinessNissan’s Aggressive Overseas Expansion Strategy(Nissan Power 88)
In June 2011, Nissan Motor introduced a mid-term plan inpursuit of a global market share of 8% and operating margin of
8%. As one of its measures, the company actively introduced
new models and expanded production capacity in China, theASEAN region, Brazil, and North America.

In response to the Nissan Power 88 plan, Yorozu pursued
proactive overseas expansion.
Established six production facilities, mainly in emerging
countries, in three years from 2011
Expanded two existing production sites each in China and
Mexico and increased their production capacity to maximize
returns on investment
Launched operations of our second production site in
Alabama, U.S., in 2015
Launched operations of a second plant at one of our
production bases in China in 2019
These measures resulted in gaining additional customers,
particularly overseas,
and increasing thepercentage of oursales abroad.

Tailor Welded Blanking
Technology (2006–)
A technology used to
weld sheet metals ofdifferent thicknesses
into a single panel,
which is then pressformed, eliminating
the need for reinforcement previously
required

Nissan Group
61.1%

Honda Group
15.7%

2019
COVID-19 and Measures to Improve Profitability
COVID-19 Pandemic
Automakers were also forced to temporarily suspend
operations of plants or adjust production due to the unstablesupply of parts and the sluggish global demand caused by
the pandemic.

While some production sites temporarily faced operationaldifficulties due to the global spread of COVID-19, we dealt withthe situation through the following measures.
Identified the degree of risk on our products’ lead time
Reviewed proper inventory standards
Encouraged the development of personnel who can multitask
Promoted the standardization and globalization of ourbusiness, which led to the establishment of a system thatenables production and delivery processes to be alternatively
conducted at other facilities
As a result, we achieved the safety of our employees andfulfilled our
responsibility ofsupplying parts.

High-Tensile-Strength Materials
for Suspension Parts
Although high-tensilestrength materials have lower
press formability, we haveaddressed the issue by
improving design and forming technology. The application of this material has been
expanded to major structuralcomponents such as frames
and arms.

Complete Tack Welding and
Final Assembly Lines (2019–)
A comprehensive assemblyline made up of a tack welding
line to ensure that the workpieces are perfectly aligned
and a parallel main welding
line to complete the entire
welding process

YOROZU 2023 Integrated Report11Yorozu’sManagement Foundation

About Yorozu

About Yorozu

Yorozu’s Medium- to
Long-Term Outlook

Data Section

Value Creation Process
At Yorozu, we aim to continuously evolve as a company that constantly delivers solutions to customers’ needs on
the strengths of our one and only technologies and developmental capabilities in suspensions. To that end, we havedeveloped a value creation process designed to constantly deliver value to society, and we continue to evolve thisprocess by bearing in mind the needs and expectations of society.
By continuing to enhance its value creation capabilities throughout the entire process, Yorozu will strive to realize
sustainable growth and enhance corporate value.

Input

Realization ofa sustainable society

Business model that capitalizes on our strengths

Financial Capital
Net assets:
Owners’ equity:
Equity ratio:

R&D expenditures¥7,201 million
The Yorozu brand as a premiersupplier of suspensions

Ability to realize
solutions for the
automotive
industry

Manufacturing Capital
Production sites in Japan:
5 locations
Production sites overseas:
14 locations

Human Capital

Products

Realize a safe and reliable automotive society

Continuous
enhancement ofdevelopment
capabilities

Proactive
sales
expansion
activities

Fundamental technologies
Stamping
technology
External
sales of diesandequipment

Number of employees(consolidated):
5,726
Ratio of women in managerial
positions:
12.4%
Ratio of non-Japanese employees:
5.5%Social and
Relationship Capital

OutcomeHigh-quality products that outperform thecompetition
Development of lighter products that reduce
CO2 emissions
Products geared to electric vehicles (EVs)¥77,439 million¥63,630 million
45.0%Intellectual Capital

OutputDevelopment oftrust andcustomer baseWeldingtechnology

DNA inmonozukuri(manufacturing)

Developmentoflightweighting
technology

Constructionof the new
Tokai base

Ratio of paid vacation taken:
72.5%
Human resources development through industryacademia collaboration with Tsuruoka National
College of Technology

Integrated
production systemand prominent
supply chain

Social and Relationship Capital

Rear suspension member

Quality awards received from customers:

Technological innovation and improvement

Brake pedal(As of March 31, 2023)

Carbon neutrality by 2050

Stagnant global economy due to COVID-19 pandemic

Emergence of CASE

Large-scale investments
to address future needs

6

Natural Capital
CO2 emissions:
Waste emissions:
Water use:

Purchase rate of green energy
Domestic: 47.6%
Overseas: 10.8%

12

Human Capital

Link

Natural Capital¥160,560 million¥3,088 million–¥2,240 million¥25 (annual)

Improved competitiveness through the adoption of
new technologies and methods
Focus on developing new products with the use of
unique technologies

Rear beam

Trust of customers and otherstakeholders

Operating environment

Consolidated sales:
Operating income:Free cash flow:
Dividend per share (DPS):Intellectual and
Manufacturing Capital
Front suspension
memberCoatingtechnology

Financial Capital

90,060 t-CO2
3,653 tons
1,157,000 m3(As of March 31, 2023)

Strategic alliances
between automakers

Advancement ofworkstyle reform

YOROZU 2023 Integrated Report

13

Yorozu’sManagement Foundation

About Yorozu

About Yorozu

Yorozu’s Medium- to
Long-Term Outlook

Data Section

Yorozu at a Glance
The growing need for investments stemming from the increasing adoption of
automated driving and EVs has prompted the formation of alliances between
automakers. In order to ensure that we maintain existing commercial rights andwin new orders, even in the midst of major changes in the supply chain, we areproactively pursuing sales growth opportunities based on our three axes:
customers, products, and regions.

Japan
Sales

¥

50.89

billionOperating income

¥

2.28

billionThe Americas
Sales

¥

58.25

billionOperating loss

Asia

Japan

35.2%

30.2%

¥

1.15

billion

Asia
Sales

¥

59.25

billion

Sales
Compositionof the Three
Segments

Operating income

¥

1.62

billion* Includes intersegment sales and transfers

The Americas
Financial highlights

Sales

160.5

¥

ROE

billionOperating income

Number of Group companies

3.0

Number of companies

¥

%

7.2

¥

Three Elemental
Technologies Underpinning
the Group’s Innovation
We have continued to develop
new stamping, welding, andcoating technologies that catchthe attention of the industry.

14

billionR&D expenditures

2.4

34.6%

Non-financial highlights

billionRatio of women in
management positions

21
Number of countries
912.4

Number of employees(consolidated)

Ratio ofnon-Japanese employees

5,726

5.5

Stamping Technology
Yorozu has established a stamping technologythat can form 780MPa- and 980MPa-classultra-high-tensile-strength sheet materials,
which are difficult to process, into complex
shapes, thereby achieving lighter products
through the reduction of material thickness.
Moreover, a press machine is used to form
multiple parts into a single component from theinitial stage, instead of welding them together,
thereby streamlining the welding process. We
also engage in developing structural design
and methods that fulfill parts functions.

%%<Major customers>• Nissan Group*1• Volkswagen• Toyota Group*2• Suzuki• Mazda• General Motors• Honda Group• Mercedes-Benz Group• Isuzu• Ford• Kubota*1 Including sales to Renault and Mitsubishi• UD Trucks*2 Including sales to Hino, Daihatsu, and Subaru

Welding Technology
We work together with welding wire andwelding machine manufacturers to develop
products used in general arc welding
processes; laser welding processes, whichenable narrower welding with sufficiently
deep penetration; and plasma welding processes, which do not produce spatter andminimize distortion and electrode wear,
enabling high-quality welding processes tobe performed for long periods of time.
In addition to establishing stable welding technologies for ultra-high-tensilematerials, we are making an all-out effort to reduce CO2 emissions fromwelding processes.

Coating Technology
Cationic coating is a painting processthat uses electrolysis to cause a chemical
reaction. Our ultra-thick cationic coatingoffers even more protection against rustas it is 1.7 times thicker than conventional
coating.
Moving ahead, we will work on new
methods (electrification of heat sources,etc.) to reduce CO2 emissions.

YOROZU 2023 Integrated Report

15

Yorozu’sManagement Foundation

About Yorozu

Yorozu’s Management Foundation

Yorozu’s Medium- to
Long-Term Outlook

Data Section

Medium-Term Business Plan

Yorozu Sustainability Plan 2023
The Yorozu Group has been actively driving reforms to navigate the unpredictable times in line with our medium-termbusiness plan, the Yorozu Sustainability Plan 2023 (YSP2023), launched in fiscal 2021. In fiscal 2023, the final year of
the plan, we will expedite our internally defined “5G” initiatives aimed at building Yorozu’s growth strategy to demonstrate
our strong presence in the electrification era. By tackling various challenges, we seek to contribute to the realization ofa sustainable society.

operational practices aligned with production volume
fluctuations and to suppress fixed costs. Ordinary income
was up 31.0%, due in part to the increase in operating
income, while net income grew 62.3% year on year.
An annual dividend of ¥25 per share was paid, up¥12 from the previous fiscal year, resulting in a dividend
payout ratio of 42.4%.

Consolidated sales (¥ billion)/ Operating income ratio (%)
1.9
1.6

118.8

160.5

127.3

0.3
2020
(actual)2021(actual)2022(actual)(FY)

Fiscal 2023 Financial Targets
Sales

Operating Income Ratio

Capital Efficiency

Consolidated sales

Consolidated operating
income ratio

ROE

¥

150

5.0

bil.

(FY2022 actual 160.5 bil.)%nMeasures in Fiscal 2022

8.0%

(FY2022 actual 1.9%)(FY2022 actual 2.4%)

2

New Technologies
and Methods

Management Policy

1

ESG Management

Stable Profits• Medium- to long-term sustainable growth• Promotion of DX (digital transformation) aimed at changing the corporate culture• Shift to optimum production capacity• Recreate a strong gemba (frontline
operations)• Strengthen cash flow management• Build a robust corporate structurethat is less affected by production
volume

E: Engage in earth-friendly monozukuri
S: Create a healthy and engaging
workplace
G: Realize highly transparent
governance

5G Initiatives of Yorozu

5G
Growth Strategy
Green

diGitalGovernanceContribution to a
decarbonized society

Widespread
innovation

Advancement ofcorporate governance

Grit
Guts

16

Resilience3• Develop products with high added
value through weight reduction• Propose products for EVs• Engage in proactive sales expansion in
the three axes (customers, products,
and regions)• Expand external sales of production
equipment such as dies and toolingFiscal 2022 Performance

Build and pave the way for Yorozu’s growth strategy toprove its strong presence in the electrification era

Initiative

Tenacity

Progress of Initiatives under YSP2023

In fiscal 2022, the rising costs of raw materials, logistics,
and energy led to a worldwide spike in inflation. Monetary
tightening measures by the respective countries toaddress this issue also impacted economic recovery.
While the production volume of the automotive industry, to which our business is closely tied, is on a gradual
recovery trend, the lingering impact of the semiconductor
shortage and other factors continues to create an uncertain environment.
Against this backdrop, the Group’s sales climbed
26.1% from the previous fiscal year owing to higher steel
prices and yen depreciation. Operating income surged
47.3% year on year due primarily to efforts to enhance

The Yorozu Group implemented a number of measures infiscal 2022, the second year of YSP2023.
The Carbon Neutrality Office, established on April
1, 2022, has played a central role in speeding up ourefforts, successfully transitioning the power consumption of four domestic sites—Yorozu Oita, headquarters,
Shonai Yorozu, and Yorozu Engineering—to 100% green
energy by fiscal 2022. This shift has resulted in a 48%
reduction in CO2 emissions in Japan.

In addition, we secured two patented technologies
for Arm with a New Stamping Structure and Arm Using
Alternative Materials, which help reduce CO2 emissions
through life cycle assessment (LCA), benefiting both society and our customers. Innovative products incorporatingthese patented technologies have been adopted in thelatest electric vehicles (EVs) by Nissan Motor Co., Ltd.
and Toyota Motor Corporation.

nPriority Measures for Fiscal 2023
In fiscal 2023, we will focus on establishing a strong
foothold in the era of electrification by implementing ourstrategy for sustainable growth and strengthening thefoundation that supports our efforts.
First, our priority to lay the foundation for growth is tofurther evolve and strengthen ESG management, which
is a cornerstone of our operations. We are committed
to robust corporate governance by focusing on environmentally conscious factory operations, addressing
social responsibilities such as promoting diversity to drive
our global growth, and upholding transparent and highgovernance standards. This enhanced corporate governance approach contributes to sustainable growth andheightened corporate value.
Next, a key strategic focus is the development of newtechnologies and methods in pursuit of growth as well as
sales expansion. We will accelerate our efforts for new
technologies and methods that will constitute the coreof our growth. In addition, we will undertake numerous
initiatives to showcase our competitive strengths at the
new Tokai base, scheduled to start operation in fiscal
2023, as a strategic base for sales expansion.
Firmly aligning these key initiatives for fiscal 2023
with the upcoming medium-term business plan to beannounced next fiscal year will provide a springboard forenhancing corporate value.

lKey Initiatives for FY2023

Next Medium-term Business Plan (FY2024–FY2026)
Build and pave the way for Yorozu’s growth strategy to prove its strong presence in the electrification era
Foundation for growth
E: Environmental consideration

Carbon neutrality
S: Social responsibility

Diversity
G: Transparency and dialog with stakeholders

Enhanced corporate governance

Strategy for growth

Medium-term
Business PlanYSP2023(Stable profits)

Core of our growth

New technologies and methods,
and sales expansion
Proactive strategy

New base in Tokai

YOROZU 2023 Integrated Report17

Yorozu’sManagement Foundation

About Yorozu

Yorozu’s Medium- to
Long-Term Outlook

Data Section

Yorozu Sustainability Plan 2023
Reducing Weight through the Commercialization of Ultra-High-Tensile-Strength
Materials (980MPa)
In response to the growing need for lighter suspension
parts due to the added weight of EVs, we spent years
developing stamping and welding techniques that utilize
ultra-high-tensile-strength materials to make thinner sheet
products. We have now successfully commercialized
these innovations. A weight reduction of approximately
15% in suspensions set for market release in fiscal 2023
will contribute to a significant decrease of about 41,000
tons in CO2 emissions*. Moving forward, we aim to utilize
these high-performance large stamping machines capableof handling ultra-high-tensile-strength materials in our production facilities to further expand our market presence.

Construction of New Tokai Basel
Plants equipped with large stamping machines ranging
from 1,000 to 3,500 tons
Yorozu Tochigi (YT)
Yorozu Oita (YO)
Yorozu Engineering (YE)

YAT
YAA

G-YBM
W-YBM

Construction of the new Tokai base commenced in
November 2022, and it is currently undergoing preparations to start operations during fiscal 2023. This facility’senergy requirements will be met entirely through green
sources, including on-site solar power generation, ensuring zero CO2 emissions, even from the heat source forboilers used in the painting facilities.
We will also actively engage with the local community

to address various challenges, such as carbon neutralityand disaster response, proactively fostering coexistencewith the region.
By showcasing our environmental initiatives andcommunity collaborations as a competitive edge, we
aim to position our new base as a key hub for boostingsales of products for a wide range of EVs planned by ourcustomers.

lProgress toward operation of new base
YMEX
YAGM

YJAT

* Calculation based on a model lifespan of six years and 200,000 units/
year, at the time of vehicle adoption

YTC

YAI

YAB

Jun. 21, 2022

Oct. 1–2, 2022

Oct. 24, 2022

Nov. 24, 2022

Jan. 2024

Signing
ceremony forincentive
agreement

WanouchiCommunity
Festival

Land purchaseagreement
concluded, anddevelopment
completed

Groundbreaking
ceremony

Planned startof operation

Approach to Reducing Fixed Costs
Under the “stable profits” initiative of YSP2023, the Yorozu
Group is working to develop a corporate structure thatis more resilient to fluctuations in production volume byshedding fixed costs through rationalization and lesscapital investment. Regarding our capital investment plan,
we are verifying and managing our investment portfoliowith an eye on achieving our fixed cost ratio target. We
are working to reduce the amount of project investments,
which account for the majority of our capital investments, by fully embracing the three Rs (reduce, reuse,

and recycle) and simultaneous engineering activities, inwhich all departments participating in product development are involved in the design process from the initialstages. Moreover, we make general investments basedon the content and timing of maintenance of existing plantfacilities.
Meanwhile, we will aggressively allocate resources toaccelerating measures to realize carbon neutrality and our
new Tokai base to achieve future growth.

Change in Fixed Cost Ratio (Target)
Consolidated sales (¥ billion) / Fixed cost ratio (%)

Change in Capital Investment by Region(¥ million) Japan
The Americas
Asia

Location: Wanouchi-cho, Anpachi-gun, Gifu
Product: Automotive suspension parts, others
Site area: approx. 79,700 sq.m.
Total floor area: approx. 18,400 sq.m.
Investment amount: approx. 12 billion yen

Groundbreaking ceremony held in November 2022

lAim for the new Tokai base
Fixed cost ratio kept

Fixed cost ratio starts

risingfalling

20,783Society

169.1

160.5

157.6
118.8

15,451

160.0

127.3

11,216
7,219

2019

2020

2021

2022

2023

(actual)(target)

(FY)

2018

2019

2020

Demand fortechnological
Customer innovation

2021

2022

2023

(actual)(forecast)that contributes to therapid acceleration ofelectrification(FY)

Yorozu18

with solutions to global
environmental and social
issues and attainment of
SDGs

6,997
3,367

2018

Demand fora sustainable
society

Solutions to various
issues throughbusiness activities

Give full attention to the environment

Solveissues• Zero CO2 emissions in the production
process• Addressing issues from an LCA
perspective

Co-exist with the community• Provide opportunities to connect with thecommunity• Create employment opportunities• Make joint efforts on environment

Contribute to electrification withquality products

Strengthen Monozukuri Competitiveness of the New Base
Stay one step ahead inproductivity and quality

Improve distribution efficiency• Moving out from small, leased
property to owned property• Increased production capacity• Improved process layout• Replacement of aging equipment• Expansion of in-house stamping• Installation of state-of-the-art
ultra-thick film coating facility• Moving closer to customers andsuppliers in the Chubu region andwestward
Toyota Motomachi 68 km (56 min.)Daihatsu Shiga
78 km (70 min.)Honda Suzuka
64 km (71 min.)Suzuki Kosai
140 km (143 min.)(Cut costs and CO2 emissions)

New Plantin Tokai• Expand sales of lightweight products

Appeal to• Contribute to customers by reducing CO2
customers

Promote DX

through products

Marketing and sales base that
ensures CS and ES

Monozukuri
lead time reduction• Move closer to customers in Tokai andKansai regions• Strengthen monozukuri capabilities• Increase employee engagement

Production plan / Visual control / Analysis data / Prediction data

A model plant forJapanese parts makers

Scope 1 and 2
Achieve carbon neutrality

Smart factory

Indirect
operation reform

Manufacturing in a thoroughly
green environment

YOROZU 2023 Integrated Report19About Yorozu

Yorozu’s Management Foundation

Yorozu’sManagement Foundation

Yorozu’s Medium- to
Long-Term Outlook

Data Section

R&D Strategy
To achieve a decarbonized society, automakers are ramping up the market release of electric vehicles (EVs). However,
EV weight tends to increase with the inclusion of drive batteries, advancements in noise reduction, and adaptation to
CASE (Connected, Autonomous, Shared, Electric) technologies. This has precipitated the need for the development oflightweight structural components such as suspensions. We view this as an opportunity to enhance ourcompetitiveness and will take action accordingly.

R&D Vision and Policy
To establish a strong presence in the era of electrification,a key focus of our strategy for sustainable growth is thedevelopment of new technologies and methods that maximize our unique capabilities in stamping, welding, andcoating, as well as expanding sales. We are accelerating
our efforts in this direction.
Employing ultra-high-tensile-strength materials (980MPa) allows for thinner suspensions, while we are also
actively pursuing alternative materials. Moreover, the incorporation of an optimal new structure in alignment withthese enhancements not only reduces product weight but
also streamlines manufacturing processes, leading to a
reduction in CO2 emissions.
In fiscal 2022, we launched a new product for Nissan
Motor’s Serena and Toyota Motor’s Prius and Lexus RX.
The products utilize our patented technologies for

780MPa-class ultra-high-tensile-strength steel, thin-profile
sheets, alternative materials, reduced processing, andfewer components.
We will continue our efforts in product development,emphasizing light weight and high rigidity, driven by theprinciples of high quality, affordability, and enhanced productivity as part of the Yorozu Group’s goal of achievingcarbon neutrality by 2040.
lChange in R&D Expenditures (¥ million)
7,391

2019

7,201
5,149

5,335

2020

2021

2022

6,510

2023 (FY)(forecast)

Total Production System and Simultaneous Engineering
Yorozu’s advantage in the development of suspension
parts lies in our distinctive total production system.
Under this system, all processes are planned andconducted in-house, from research and development
to design, production, and product marketing, drawing
on more than 50 years of accumulated experience andextensive data. This provides us with a comprehensive
lTotal Production Systemcompetitive edge.
Since the processes are completed internally, we
can rapidly share information across various processes.
This feedback system allows us to harness the information for subsequent product development and production, resulting in improved productivity and enhanced
competitiveness.

In addition, during the development phase, we implement simultaneous engineering by concurrently engaging
in both product design and production process design.
This involves iterating through cost-minimization simulation
cycles to minimize production costs. Applying the optimal
product and production parameter data obtained from thisprocess in the production preparation phase enables us toefficiently generate highly competitive products and boost
profitability.

lConceptual diagram of simultaneous engineering

Suspension
Member Group

Suspension
Link Group

Pedal Group

Swift, continuous
simultaneous engineering
without organizational
barriers
Design Dept.
Research and Development Dept.
Manufacturing Engineering Dept.
Quality Assurance Dept.
Yorozu Engineering Corporation

A

P

C

D

Toward Enhanced R&D Capabilities
We are actively engaged in three development initiatives
aimed at achieving products that satisfy environmental,
performance, quality, and cost requirements to support
our customers, the automotive makers, in their efforts tolower CO2 emissions and advance EV development.
The first development initiative involves strengthening
our capabilities to propose steel products that reduce
CO2 emissions.
In fiscal 2022, Arm with a New Stamping Structure
and Arm Using Alternative Materials, our patented technologies, were employed in the latest EVs. We are making
efforts to ensure these technologies are adopted in othernew vehicles in fiscal 2023 and beyond.
The second development initiative involves lighterweight products using ultra-high-tensile-strength materials
and thinner sheets.
After years of development for stamping and welding
techniques using thinner 980MPa-class ultra-high-tensilestrength materials, we have successfully translated ourwork into product realization, with a market release set for
fiscal 2023. Going forward, we will leverage our highperformance, large-scale stamping machines at our
production facilities to aim for further market expansion.

The third development initiative concerns meeting therequirements for the quietness of EVs.
The shift toward vehicle electrification has generated
demand for levels of quietness that exceed those required
for traditional internal-combustion engine vehicles. We
will also focus on developing elemental technologies insuch areas as noise and vibration performance, aiming toenhance the distinctive capabilities of EVs.
In addition, we have been aiming to reduce weight byover 30% by fiscal 2023, a goal that has been in placesince fiscal 2018 and outlined in YSP2023. We are well on
our way to achieving this milestone.
The Direction We Are Headingn Strengthen our capabilities to propose steel
products that contribute to the reduction of
CO2 emissions
l Arm with a New Stamping Structurel Arm Using Alternative Materials
l New burring design structurel Multi-material structuren Lighter-weight products using ultra-hightensile-strength materials (980MPa class)n Meet the requirements for the quietness of EVs

lAchievements for reducing product weightYSP2020
FY18–FY20

YSP2023
FY2021–15%–23%
Achieved

20

FY2022

FY2023–26%

Achieved–30%
Planned

YOROZU 2023 Integrated Report21

Yorozu’sManagement Foundation

About Yorozu

Yorozu’s Medium- to
Long-Term Outlook

Data Section

R&D Strategy
Steel Products that Contribute to CO2 Emissions Reduction
Reducing CO2 emissions is an urgent goal in achieving adecarbonized society. Due to their high material density,
steel products often lead to added product weight, consequently raising CO2 emissions when driving a vehicle.
We have engaged in research and development for thesignificant challenge of weight reduction. Our efforts in thisarea have resulted in the development of two patented
technologies: Arm with a New Stamping Structure andArm Using Alternative Materials, both of which contributeto reducing CO2 emissions.

This technology also eliminates the need for welding
equipment and thus lowers costs.
While it is a cost-effective product that meets performance criteria, shaping the curved upper surface is difficult. We effectively utilized multi-step forming simulations
to address this complexity. The new stamping technique
has been patented and ensures consistent quality andproductivity even during mass production.
The technology is being used for Toyota’s Prius andLexus RX, and mass production has commenced.

In EVs running on the electric motor instead of the gasoline engine, the level of noise and vibration is quite different
from conventional engine-powered vehicles. As a result,
there is a need for significant quietness.
In internal-combustion engine vehicles, noise andvibration are generated by the combustion of fuel inside
the engine. In contrast, EVs experience smoother, subtle
motor vibrations, leading to enhanced cabin quietness.
Consequently, previously masked sounds such as tirenoise, wind noise, high-pitched sounds, and subtle vibrations during driving have become more noticeable.

In response to the challenges presented by electrification, we recognize the importance of incorporating highlevels of soundproofing and anti-vibration performance
into our products. We are therefore committed to developing elemental technologies that secure precise control ofnoise and vibration.
Going forward, we will continue to develop technologies that address the unique challenges posed by EVs.

Arm with a New Stamping Structure
Succeeded in forming the product from a single sheet metal, which used to be made by welding component parts
such as pipe materials.

 Weight: Reduced by 11%
 CO2 emissions: Reduced by 2,000 tons*
 International patent number: WO2022/185525 A1

lEVs

Newly developed part(A single sheet metal is stamped and processed)* Estimate based on model life of 6 years, 200,000 units/year

Shaded area: Unmasked noise

Mufflednoise

Sound intensity (dB)Conventional part(Three separate parts are welded)

lInternal-combustion engine vehicles

Sound intensity (dB)

Weightreduction

We will continue our efforts to expand sales of products adopting this innovation to achieve widespreadweight reductions and realize carbon neutrality.

Addressing Demand for Enhanced Quietness in EVs

nArm with a New Stamping Structure
The key aspect of the Arm with a New Stamping
Structure lies in its lightweight design achieved throughsingle-sheet stamping.
In the past, we procured component parts constructed from pipe material and welded three parts
together. With the new structure, we reduced weight byremoving the necessity for welding through the stampingof a single steel sheet.
By adopting this structure, weight is cut by 11%,
reducing approximately 2,000 tons of CO2 emissions
over the model’s lifespan.

sheets results in cost reduction.
This technology has already been adopted in Nissan’s
Serena, and plans are in place to incorporate it into several other models in the future.

Engine noise
Masked noise

Wind
noise

Road noise

Mufflednoise

Engine noise
Noise that becomes noticeable
Wind
noise
Road noise
Motor
noise
モーター音

nArm Using Alternative Materials
The key point of Arm Using Alternative Materials is toachieve steel arms with the same rigidity as forged aluminum arms.
Substituting steel for aluminum as the material can
substantially reduce CO2 emissions during material production, potentially reducing emissions by approximately
28,000 tons over the model’s lifespan.
Despite the challenges posed by stamping due tovehicle layout requirements, we used our patented structural technology to create a steel product shape that
ensures the same level of rigidity as forged aluminumproducts.
Our new design not only considers stamping formability but also prioritizes die mold durability, ensuring stable quality and productivity even during mass production.
Meanwhile, using readily available, cost-effective steellDifferences in parts installed in internal-combustion engine vehicles versus EVs

Extraweight on
vehicles

Arm Using Alternative Materials
Rigidity

By replacing aluminum parts with steel, rigidity has increased while reducing CO2 emissions in the steel
making process.
Conventional part
(Aluminum forging part) CO2 emissions: Reduced by 28,100 tons*
 International patent number: WO2022/070248 A1

22

Newly developed part
(Welded part with unique new structure)

Frequency (Hz)Frequency (Hz)Internal-combustion
engine vehicles
 Engine Fuel tank
 MufflerEVs
 Motor Battery Controller

Functions required of parts for EVs
n Lighter in weight arising from heavier vehicle
weightn Improved quietness arising from changes insound and vibration specific to EVs•Tire noise•Wind noise•High pitch squealing•Micro-vibration while driving, etc.

* Estimate based on model life of 6 years, 200,000 units/year

YOROZU 2023 Integrated Report

23

Yorozu’sManagement Foundation

About Yorozu

Yorozu’s Management Foundation

Yorozu’s Medium- to
Long-Term Outlook

Data Section

Human Resources Strategy
The purpose of our Corporate Philosophy states, “Our primary mission is to contribute to society by continually striving
to deliver technological innovation and create products that are beneficial to people.” Guided by this purpose, we haveestablished a clear policy regarding the development of human resources, our most important management resource.
Based on the belief that individuals are valuable assets, we aim to nurture the continued growth of our employees andadvance the Yorozu Group through dual approaches. One is to foster job satisfaction and enhance each employee’s
abilities toward self-realization. The other is to provide the opportunity for employees to showcase the results of theireducation.
In formulating our medium-term business plan, we aligned our human resources strategy with our management
strategy to drive digital transformation (DX) and enhance productivity. We are implementing specific measures based on
the recognition that acting swiftly in this regard is of paramount importance.

Recruitment Strategy
To prevail in the rapidly evolving global environment, gain
a competitive advantage, and achieve sustained growthand medium- to long-term corporate value, we recognize
the importance of bolstering our organizational capabilities by embracing diverse experiences and knowledge.

In order to achieve this objective, we actively pursue
recruitment of mid-career individuals. As a result, the rateof mid-career employees in managerial positions stands at
39.5% as of March 2023.

Education Policy
Yorozu’s Human Resources Strategy
We aim to realize our vision, “With the one and only technologies and developmental capabilities in suspensions,
we deliver solutions to customers’ needs and aim tobecome a 100-year sustainable and evolving company.”
Accordingly, our human resources strategy involves
strengthening efforts to enhance employee engagement
so that each person is highly motivated, proactively
embraces challenges, and continues to transform ourcorporate culture.

Moreover, we aspire to create a healthy and engaging
workplace and a company that every employee wants towork at and feels proud to be a part of.
To achieve both individual and organizational growth,
we have identified three core initiatives as the pillars of ourstrategy: secure human resources, promote employee
engagement reform and diversity, and foster a culture that
respects diversity.

Our Purpose
Our primary mission is to contribute to society by continually striving to deliver technological innovation and create
products that are beneficial to people.
Corporate Vision
With the one and only technologies and developmental capabilities in suspensions, we deliver solutions to customers’
needs and aim to become a 100-year sustainable and evolving company.
Create a healthy and engaging workplace24

The purpose of education is to nurture individuals (Yorozu
Person) who bring value to the organization and support
employees in achieving self-fulfillment. We consider a
Yorozu Person to be an employee who, with a strong
sense of ethics, continues to proactively recognize challenges, engage in problem-solving, and actively pursue
learning and growth. We also believe it is crucial to create
an environment that enhances employee engagement by
sharing career plans and providing education programswith a medium- to long-term perspective.

Common training

General training

The Human Resources Department provides position-based educational opportunities for
employees and paths to obtain the skills necessary for becoming a “Yorozu Person.”

Improvements
in global
responsivenessBased on career paths, the Human Resources Department works with other departments
and sites to implement training with the objective of enhancing employees’ business
English skills and their ability to communicate with people from different cultures while
utilizing an overseas trainee system to improve openness to foreign cultures.

Secure human resources

1. Implement the acquisition, retention, development, and placement of self-driven talent to maximize
their capabilities
2. Leverage a talent management system to place the optimal person in the optimal position within
the Yorozu Group at the right time
3. Enhance employee well-being and engagement

Professional training

Each department or site allows employees to systematically obtain necessary specialized skills based ona classification system for new, novice, intermediate, and advanced employee education programs.
Employees can work on enhancing their own skills by proactively taking advantage of e-learning and distancelearning programs.


Promote employee
engagement reform anddiversity

4. Evolve the Diversity Steering Committee, led by the President
5. Consider and implement systems that allow for flexible work arrangements tailored to individual
circumstances and needs
6. Promote inclusive recruitment, hiring, and development practices that respect diversity, including
gender, disability, age, LGBTQ+, and more

Other technical training
and qualificationacquisition

Employees have opportunities to obtain advanced technical skills and qualifications through education
systems designed for learning the skills necessary for work and obtaining qualifications.


Foster a culture that
respects diversity

7. Ensure psychological safety in the workplace
8. Promote continuous and voluntary skill development, including reskilling

YOROZU 2023 Integrated Report25About Yorozu

Yorozu’sManagement Foundation

Yorozu’s Medium- to
Long-Term Outlook

Data Section

Human Resources Strategy
Promoting Diversity
Based on the belief that the promotion of diversity,
including but not limited to gender and nationality, leads
to better corporate performance, the Yorozu Group

Employee Engagement Reform
recruits, places, and develops its employees with theutmost respect for diversity.

nAdvancement of Female Employees
Yorozu has continuously worked to
improve its environment, enhance its
systems, and hold seminars to createa workplace where women can work
more vigorously. These efforts wererecognized in November 2021 when
we were awarded Platinum Eruboshi certification. As aresult, we became the first company based in Kanagawa
Prefecture and the first manufacturing company in Japanto receive this certification. In March 2022, the Company

established the Diversity Steering Committee headed by
the president with the aim of increasing the percentage
of diversity in management positions at its headquarters
to 30% by fiscal 2030. The percentage stood at 22.2%
at the end of fiscal 2022. In domestic locations where
the promotion of female managers has lagged, we are
actively working toward the goal of appointing at least
one female manager by fiscal 2026. In April 2023, one
female employee was appointed to a managerial positionat Yorozu Oita.

nProactive Hiring of Foreign Nationals
In addition to recruiting foreign students in Japan, Yorozu
directly hires employees from Thailand and Vietnam andcurrently employs 25 highly skilled individuals also fromcountries, such as China, Sri Lanka, Malaysia, Russia,

plant tours for neighboring companies and disability
support centers to instill a deeper understanding of andinterest in the experience of working with people withdisabilities.

nParticipation of Senior EmployeesWith the objective of enriching the professional lives ofsenior employees by ensuring a range of opportunities
tailored to their needs and abilities, Yorozu increased
employment options in April 2017. Employees aged 60
to 65 can work either as managerial contract employees,
senior or emeritus experts, or part-time employees, while

those aged 65 to 70 can work at our Group company
Yorozu Service Corporation. We have created a workplaceenvironment where employees with a wealth of experienceand knowledge can stay on board, which has been wellreceived as proven by the continuous employment rate of
100% for employees aged 60 and over in fiscal 2021.

nEncouraging Male Employees to Take Childcare Leave
At Yorozu, we support work-life balance by encouraging
male employees to take childcare leave, and as a result,
40% of male employees on average took the leave
between fiscal 2020 and fiscal 2022. In addition to taking
advantage of the Child Care and Family Care Leave Lawrevised in April 2022, we are working to increase anunderstanding in the workplace by posting articles in the

26of. We will take necessary steps to increase employee
engagement based on the belief that enhancing productivity and creativity will lead to better business performance and become the source of our sustainablecorporate growth.

nClearer System for Target-Setting and Evaluation (KPI System)
We believe that in order to maintain a high level ofjob satisfaction, a proper system must be in place togive our employees the opportunities to take on challenging tasks, foster the willingness to go above andbeyond their assigned tasks, and build trust in management. Based on this belief, in fiscal 2022 werevised our manager evaluation system and adopted

key performance indicators (KPIs) based on YSP2023,
which all manager position holders are required to set.
Through this approach, we will work to ensure that all
management staff are able to gain a sense of connection between their work and management policies andthereby enhance their job satisfaction.

nEnhancing the Work Environment
and the U.S. Upon joining the Company, these employees receive Japanese language lessons and support
through regular interviews to help them stay on the job.

nOpportunities for People with Disabilities
We also work actively to create employment opportunities for people with disabilities and offer a variety ofjobs so they can play an active role. In order to promote
employment in local communities, Shonai Yorozu holds

Since 2017, Yorozu has implemented a workstyle reform.
In fiscal 2021, we took one step further with measures
aimed at enabling employees to gain a greater senseof fulfillment in their work. We took a variety of actions
to turn Yorozu into a company that each and every
employee wants to work at and feels proud to be a part

Company magazine about fathers who
have taken childcare leave and sharing
the experiences and benefits of taking
the leave at management training sessions. In recognition of such efforts, wewere granted the “Kurumin” certificationin June 2023.

While we have consistently aligned our talent placementwith our management strategy to help our employees
demonstrate their full potential, we introduced a newtalent management system in fiscal 2023 to better understand our human capital and enhance its value. Moving
forward, we will create a human resources strategy thataligns with our management strategy by selecting thetalents needed for our human capital portfolio based oncompetencies and experiences. In cases where we needto supplement our workforce, we will implement reskilling
efforts and consider external hiring.

nWidespread Shift to Teleworking
Yorozu regards remote work, which accelerated due tothe spread of COVID-19, as a standard mode of work.
As such, we aim to have 50% of office employees workfrom home and have achieved this goal. With a perspective that considers not only the business continuity plan
(BCP) but also the efficient utilization of office space,securing top-tier talent, and improving retention, we haveadopted a hybrid approach that combines office-based

work with telework without reverting to our previous work
arrangements. To address one of the challenges posedby teleworking—a potential lack of communication—weare leveraging a team chat app and facilitating continuous one-on-one meetings and record-keeping between
supervisors and team members. We will continue toexplore new ways of working while addressing teleworking challenges revealed through employee surveys.

nFree-Seating Office
In May 2021, we implemented office layout improvements at our Yokohama headquarters, transitioning to afree-seating system. This system has led to streamlining
in various aspects, including 2S (sorting and setting inorder), increased and more robust communication acrossdepartmental boundaries, cost reduction, enhanced
productivity, and improvements in the workplaceenvironment.

The adoption of the free-seating office extends
beyond our headquarters to encompass administrative
departments in our factories. In July 2022, we introduced a flexible seating arrangement at our Yorozu Oita
office, resulting in a notable reduction in desk numbers,
increased meeting space, and enhanced communication
facilitated by the closer proximity of different departments. We intend to replicate this approach at our otherdomestic locations.

YOROZU 2023 Integrated Report27About Yorozu

Yorozu’sManagement Foundation

Yorozu’s Medium- to
Long-Term Outlook

Data Section

Human Resources Strategy
Human Rights in the Supply ChainnPromoting Health and Productivity Management
In line with the workstyle reform implemented in 2017,
Yorozu issued its Health Management Declaration in
October 2019. As a result of efforts to create a healthy
and rewarding workplace based on this declaration, it
was recognized as an Excellent Enterprise of Health &Productivity Management under the large enterprise category for the third straight year from 2021. In 2023, we
obtained certification for the entire Group, including theheadquarters and six domestic locations.
<Health and productivity management activities>l Create a motivating workplacel Promote health enhancement and prevention oflifestyle-related diseasesl Advance mental health measuresl Encourage to quit smoking
l Enhance health educationl Support the balance between work and medical
treatment

In fiscal 2023, we are expanding our initiatives fromthe previous year with plans to introduce a health app,enhance post-health-check-up measures, provide healthinformation and consultation support for employees onoverseas assignments, provide mental health education,and hold seminars for the elderly. These enhancements
in our health and productivity management initiatives
play a pivotal role in addressing health-related concernsand enhancing the performance of each employee. We
will continue to promote healthand productivity management
aimed at ensuring that all Group
employees can work healthily,energetically, and sustainably.
For more information on our health and productivitymanagement, please visit the following webpage (in Japanese).
https://www.yorozu-corp.co.jp/share/uploads/2023/03/
kenkou.pdf

Human Rights Policy
The Yorozu Group upholds various international norms
related to human rights and explicitly states its commitment to respecting human rights and diversity in its CSR
policy to protect the human rights of all stakeholders. To
further strengthen our initiatives, we established a new
Human Rights Policy, which was approved during theManagement Meeting held in June 2023.
For more information on our Human Rights Policy, please visit
the following webpage (in Japanese).
https://www.yorozu-corp.co.jp/share/uploads/2023/07/
jinken.pdf

nHuman Rights Policy Overview
This policy represents the highest-level directive concerning human rights in the Yorozu Group’s business activities
that must be upheld by every Group employee. The policy
explicitly defines the scope of application and emphasizes

our commitment to engage in dialogues and consultations
with stakeholders concerning human rights due diligence.
We will continue efforts to mitigate the risk of human rights
violations.

lDue Diligence Process

lOrganization: Human Rights Due Diligence Committee

1. Prepare and disseminate
human rights policies
2. Identify the company’s
potential risk
3. Take relief measures
4. Identify and evaluate
impacts
5. Take corrective action
6. Prevent and mitigate
7. Track and observe
8. Disclose information*In accordance with OECD Due Diligence GuidancePresident
Officer in charge of ESG, Officer in charge of HR
Secretariat
Function Group Chairman, Regional Department HeadlMonitoring System
Board of Directors
ReportOversight

Human Rights Due Diligence Committee

28

The Group strives to build relationships of trust withall of its business partners through adherence to laws
and regulations, respect for the global environment andhuman rights, and procurement activities that stress theimportance of fairness and transparency. As part of these
efforts, we established the Yorozu Green Procurement
Guidelines in 2015, in which we asked our suppliers
and subcontractors to cooperate with our environmental
conservation efforts. In 2022, we revised these guidelines to reflect Yorozu Global Environmental Vision 2040,
announced in 2021. The same year, Yorozu establishedthe new Yorozu Sustainability Guidelines, in the belief
that we must develop our business while identifying andresponding to changes to the planet and in society, andemphasizing the importance of sustainability and social
trust. Based on these guidelines, we request cooperation from all business partners. We also conduct humanrights due diligence based on the Human Rights Policy
formulated in June 2023. To confirm compliance with theguidelines and the status of human rights due diligence,
we will continue to comprehensively assess the suppliers’ activities relating to legal compliance, environmental
considerations, respect for human rights, and occupational health and safety using a sustainable procurement
check sheet.

“My Declaration of Human Rights”
On May 12, 2023, Yorozu pledged its support for “My
Declaration of Human Rights,” promoted by Japan’s
Ministry of Justice. “My Declaration of Human Rights” isan initiative aimed at achieving a society where everyone respects humanrights by declaring theircommitment to taking
actions that respecthuman rights, whether
as a company, organization, or individual.
For more information on “My Declaration of Human Rights,”
please visit the following webpage.
https://www.jinken-library.jp/my-jinken/company_
detail.php?p=MDAwMDAwNzMzMQInternal Training and Development
Our efforts to prevent human rights violations require us
to demonstrate appropriate consideration for all stakeholders involved in our business activities. We believethat every employee needs to have a correct understanding and a strong awareness to effectively implement thiscommitment. To this end, the Yorozu Group conducts
annual training sessions for executives and managers toprevent all forms of harassment. In March 2023, we conducted training on sexual orientation and gender identity(SOGI) harassment prevention. To ensure that the resultsof the training are not temporary, we have placed posters
in all domestic Group locations, creating an environment
where employees are constantly aware of their actions
and strive to prevent harassment. Through ongoing education and training, we will continue our efforts to ensurethat each employee understands the importance ofrespecting human rights in business.

YOROZU 2023 Integrated Report29About Yorozu

Yorozu’sManagement Foundation

Yorozu’s Medium- to
Long-Term Outlook

Data Section

Environmental Management
Messages from Company Employees
Under our ESG management, we have created an environment where diverse employees can thrive while showcasing
their individuality. Here, we present messages from employees taking steps to be the source of value creation.

Creating an Environment Where Efforts Are Rewarded
I help create personnel systems in the Human Resources
Department, proposing new systems such as for teleworking and remote working. Another example is the talentmanagement system called “kaonavi” to enhance humancapital management.
I joined Yorozu as a mid-career female manager.
During the job interview, I felt that my achievements were
evaluated without being influenced by age or gender. Also,
the roles and responsibilities assigned to me upon joining
were clearly defined. Consequently, I encountered minimal
challenges after becoming part of the Yorozu team. I consider my joining Yorozu as a fortunate opportunity in thecontext of promoting diversity.
In April this year, I was promoted to the general manager of the Human Resources Department, and when I
received the news of the promotion, I honestly questioned
whether I was the right person for the role. However,during a conversation with President Hiranaka, I received
guidance on the importance of building a track record ofsuccessful experiences and the unwavering rewards ofhard work. Once I realized that my own efforts had been

acknowledged and valued, I began to view thepromotion as a chance
I shouldn’t miss. I also
wanted to reciprocate thekindness shown to me
at Yorozu for respecting
my opinions and creating
an environment where I
could fully concentrateon my work.
Hiromi Kurata
Disclosure of human
Shukan (General Manager),
capital information
Human Resources Department
became mandatory thisfiscal year. Various initiatives, including job-based employment, the development of self-driven personnel, reskilling,
and well-being, have taken center stage. With a focus onaligning the human capital strategy with Yorozu’s management strategy, I aspire to continue developing an improved
personnel system that benefits our employees and thecompany alike.

Environmental Philosophy
We will appreciate the bounty of nature as we pursue growth in harmony
with the natural environment.
Yorozu Global Environmental Vision 2040
The Yorozu Group is fully committed to taking actions to solve environmental
issues with the aim of contributing to healthy and prosperous living for
all people around the world.
l Climate change: Work to become carbon neutral by 2040
l Resource recycling: Make the most effective use of our limited
resources for sustainable circulation

Pressing Forwardwith Environmental
Management Towarda Sustainable Society
Hiroshi Kume
Executive Vice President (EVP)
General Manager of ESG Office
General Manager of Carbon Neutrality Office
General Manager of Internal Auditing Office

Taking Parental Leave during the COVID-19 Pandemic
I work in the Quality Assurance Department, where I am
responsible for quality control plans for new parts andquality checks prior to mass production. My responsibilities encompass a wide range of tasks, from creating
quality control planning documents to assessing massproduction management methods for new parts.
I was initially drawn to Yorozu by a poster for the
Nissan GTR I adore, which I saw at a job fair on my university campus. Attending Yorozu’s orientation session furtherpiqued my interest when
I learned that Yorozu isa global company with
two locations in myhome country, China.
I realized that I could
engage with various
manufacturers in theautomotive industry that
I was interested in andfully utilize my abilities.
After joining the comYou Ruipany, I initially faced
Quality Assurance Department

30

some challenges with the Japanese language. I struggledwith terminology, internal jargon in katakana, and abbreviations, and it took some time to fully understand my job.
Fortunately, with the support and guidance from my superiors and colleagues, both professionally and personally, I
was able to gradually overcome these hurdles and adapt.
In 2021, I took parental leave when my second childwas born. It was during the COVID-19 pandemic, so we
couldn’t return to China or receive support from our parents. However, since I had prepared a parental leave planin advance for the smooth handover of my duties, I had
no concerns about work during that period. My wife and I
shared childcare and household responsibilities during myleave. I also had time for activities like reading, so my days
were very fulfilling. When China’s entry restrictions were
finally lifted, I sent my wife and children back to China andreturned to work. Despite changes in job responsibilities
and organizational structure made during my absence,
which presented certain challenges, I managed to adapt
successfully with the support and assistance of my supervisors and colleagues.

The environmental conservation efforts of the Yorozu
Group have evolved in line with the developmentof the automotive industry and the accompanying
expansion of our business. In the early 2000s, wepositioned environmental conservation as a matterof priority, incorporating it into the Yorozu Group
Charter of Corporate Behavior. Since then, in addition to obtaining ISO 14001 certification—the international standard for environmental management
systems—at each of our operating bases, we have
implemented a plan-do-check-act (PDCA) cycle tocontinuously improve our environmental practices.
Through external audits and ongoing certification,
we have worked to elevate our environmental
standards. With the adoption of the Sustainable
Development Goals (SDGs) and the Paris Agreementin 2015 and ESG investment becoming mainstream
over the years, the focus has shifted from environmental conservation to environmental management.
In particular, as a responsible member of theautomotive industry, our commitment to carbon

neutrality must be passed on to the next generation.
We believe it is the shared duty of the entire automotive industry, including our Group, to ensure the continuation of a society in which people can live withpeace of mind and contribute to the development of
automobiles and other forms of mobility that enable
future generations to move freely.
The Group’s carbon neutrality initiatives are
based on four measures: energy conservation,
adoption of renewable energy, procurement ofgreen energy, and fuel conversion. Guided by our
Corporate Vision formulated in 2021, we are procuring green energy and installing solar power
generators in Japan and overseas. Moreover, weare dedicated to achieving 100% carbon neutrality at the new Tokai base, aiming for it to serve asa model factory for parts manufacturers in Japan.
To accelerate these efforts, the ESG Office andCarbon Neutrality Office are taking the lead in driving
Company-wide carbon neutrality initiatives.

YOROZU 2023 Integrated Report31Yorozu’sManagement Foundation

About Yorozu

Yorozu’s Medium- to
Long-Term Outlook

Data Section

Environmental Management
Response to TCFD Recommendations
Climate change, which poses a significant threat to global
society, the economy, and the environment, has been
intensifying year after year, presenting significant obstacles to our business activities. Since the formulation of its
Environmental Policy in 2009, the Group has looked ahead
and has been working to address climate change andother environmental issues along the path to realizing asustainable society through business activities.
The Group assesses the impact of the business risks
and opportunities presented by climate change in accordance with the framework of the TCFD and discloses
information from the four perspectives of “governance,”“strategy,” “risk management,” and “metrics and targets”
as well as its scenario analysis.

Status of response

GovernanceAs part of the medium-term business plan, Yorozu Sustainability Plan 2023 (YSP2023), we have adopted
ESG management as a key strategy. We have also formulated the Yorozu Global Environmental Vision
2040 and made a formal commitment to achieving carbon neutrality by 2040 through a resolution
passed at our Board of Directors’ meeting. In addition, the Management Meeting plays a vital role insharing information about climate change-related business risks and opportunities. This body decides on
the necessary measures to address these issues and presents detailed reports to the Board of Directors
for their approval.
Moreover, the President holds the utmost responsibility and authority for addressing climate change
issues and ensuring the effectiveness of environmental management efforts, including those for climatechange. The officer in charge of ESG, appointed by the President, is responsible for promoting environmental management, including climate change-related issues. This officer provides regular progress
reports to the Management Meeting and Board of Directors. Decisions regarding management matters
are made following deliberations and based on the judgment of the President.

Strategy

Riskmanagement

A common awareness exists around the world that carbon neutrality is a matter of urgency that concerns everything on the planet. Therefore, any delays in acting on the issue would increase the risk toour business, and we must work to realize our goals as quickly as possible.
As specific risks over the medium to long term, we foresee potential financial impacts stemming fromclimate change-related regulatory changes and tax reforms. Also, advancements in weight reduction
technologies aimed at lowering the weight of our products, which can affect the CO2 emissions fromvehicle operation, may impact orders received. Nevertheless, we view these challenges as major
business opportunities that we are proactively and eagerly pursuing. Further, in the short and medium
term, we recognize the possibility of increased natural disasters due to climate change, which could leadto pollution in rivers and other areas. We believe that by promptly and appropriately addressing theseissues, we can effectively mitigate the associated risks.
The world is seeing a growing trend for EVs, and the same can be said of Japan, particularly with hybrid
vehicles (HVs). As improved fuel efficiency and cruising distance call for lighter components, there is agreater need than ever to reduce the weight of the parts we develop and manufacture. For this reason,
the adoption of new materials and R&D in new technologies and manufacturing methods to produce
lighter components is the core of our business strategy.
The Yorozu Group has assessed the impacts arising from climate change under both future scenarios of
1.5°C and 4°C temperature rises. We will incorporate the risks that have particularly significant impacts
into our future management strategy. (See page 33 for an analysis of the scenarios.)
We are addressing environmental issues by leveraging our environmental management framework andintegrating risk management into our environmental management structure, with the President leading
the way. To address short-, medium-, and long-term risks, we have developed strategies to minimize
their impacts and integrated them into Company-wide operational plans.
Yorozu focuses on the following three approaches to tackle the risks and opportunities associated withclimate change.
1. Pursuing carbon neutrality throughout the production process[Risk: Laws and regulations] (Medium/long term) Taxes imposed on CO2 emissions would increase
expenditures and put a damper on profits.
[Opportunity: Energy sources] (Short/medium term) In-house electricity (solar power) generation would
curb costs while energy prices surge due to energy security issues.
2. Reducing CO2 emissions from vehicles by using lighter components[Risk: Technologies] (Medium/long term) The weight of automotive components has a significant
influence on CO2 emissions from vehicles on the road. Therefore, delays in lightweight engineering
may pose a threat to our business continuity.
[Opportunities: Products] (Short to long term) The products we develop and manufacture are mainlysuspension parts, which are also indispensable to EVs. Therefore, the development of lighter components will play a key role in improving fuel efficiency and cruising distance in the future.
3. Reducing risks associated with intensifying storms and torrential rains[Risk: Legal matters] (Short/medium term) Heavy rainfall from typhoons and torrential downpours cancause the leakage of untreated factory wastewater, polluting nearby rivers and oceans.
[Opportunity: Resilience] (Short/medium term) Wastewater is treated on-site and maintained within
regulatory limits, building trust with local communities. To minimize the impact on nearby communities
in the event of an emergency, we regularly conduct drills and are prepared to respond to the situation
in a timely manner.
These plans and initiatives are decided upon following reporting to and approval from top management.
Their details are then disseminated throughout the Company, and they are linked to the operational plansor environmental activity plans of each department.

32

Status of response

Relevant information

Metrics andtargets

In terms of pursuing carbon neutrality throughout the production process, we aim to achieve carbon
neutrality by 2040 and a 50% reduction in Scope 1 and 2 emissions by 2030 compared to 2013 levels.
To reduce CO2 emissions from vehicles using lighter components, we aim to reduce weight by 30% ormore compared with fiscal 2018 levels by developing technology for ultra-lightweight, ultra-high-tensilestrength suspensions.

Please refer to pages 35 and 52
for details on the Group’s Scope 1
and 2 emissions.

nStrategy: Scenario Analysis
1) Assumed environment
We have analyzed scenarios for both 1.5°C and 4°C global temperature rises in the future by considering the timings when decarbonization trends in society become clearer and when physical risks become more pronounced. Given our commitment to achieving carbon
neutrality by 2040, we believe it is appropriate to focus on the latter half of the 2030s leading up to 2040 for conducting this analysis.
Scenarios (condition in
the latter half of the 2030s
for the two scenarios)nFour Perspectives on Disclosure Based on the TCFD Recommendations
Perspectives

Perspectives

Relevant information

Corporate Governance Structure
https://www.yorozu-corp.co.jp/
en/csr/governance/
corporate-governance/

1.5°C

Risks

Assumed environment

Transition risks(Impact: High) Globally, policies and regulations aimed at a decarbonized society are strengthened and effectively
enforced. As a result, companies face increased manufacturing costs through compliance efforts or carbon taxes.

Physical risks(Impact: Low) Physical risks are maintained at a low level and remain consistent.

Transition risks(Impact: Low) New policies and regulations are slow to be introduced, leading to a continued increase in CO2emissions. As a result, the manufacturing costs for companies remain largely unchanged from the current level,
and transition risks are low.

Physical risks(Impact: High) Due to significant changes in weather conditions and the global environment, large-scaledisasters increase worldwide. As a result, there is a risk of substantial operational disruptions becominga regular occurrence, not only for the Company but also in our supply chain.

4°C2) Risk materiality assessment

Yorozu Sustainability Plan 2023
(YSP2023) Medium-Term BusinessPlan
https://www.yorozu-corp.co.jp/
wp-content/themes/YOROZU%20
1.0.3/images/en/investors/
YSP2023_E.pdf

Potential risks

Business
impactCarbon pricing(policy)

The implementation and strengthening of
CO2 emissions taxation by various governments result in increased manufacturingcosts and a deterioration of financial metrics.

MediumStrengthening of
decarbonization
policies

Stringent regulations on fossil fuels lead toprice hikes and scarcity, resulting inincreased operational costs.

Medium

Rapid shift tozero-emission
vehicles (ZEVs)(market)If we fail to respond promptly to a rapid
increase in demand for ZEVs such as EVs
and FCVs due to rising fossil fuel costs
driven by various regulations, we may missout on business opportunities.

Medium• Analyze industry trends and demand effectively and promote
lightweight technology to expand sales.

Proliferation of
decarbonization
technologies(market)Failure to keep up with the development of
new materials and lightweight solutions for
emerging mobility options such as EVs could
result in losing favor with key customers.

High• Can mitigate risks effectively by closely monitoring market
trends and continuously improving development capabilities.

Investorbehavior(reputation)

If the decarbonization of products (includingin the entire supply chain, such as formaterials) lags behind, shareholders may
leave.

High• Can mitigate risks by continuously developing corporate
capabilities, such as unique product development expertiseand manufacturing technology, over the long term.

Temperature rise(chronic)

Rising temperature inside factories anddeterioration of the working environment may
make it difficult to recruit workers (regionswith high temperatures).

MediumExtreme weather(acute)Intense rainfall from typhoons and storms
can lead to supply chain disruptions,suspension of customer operations,decreased production, and an increase inequipment failures due to water leaks.

Transition risks(1.5°C)

Physical risks(4°C)
Internal Control System
https://www.yorozu-corp.co.jp/en/
csr/governance/internal-control/High

Risk mitigation and opportunities•A chieve carbon neutrality for Scope 1 and 2 emissions by
2040 (avoid taxation).
•C ollaborate throughout the supply chain to minimize cost
increases.
•P rocure renewable energy (solar power generation facilities,
green energy sourcing) and enhance logistics efficiency, etc.

• Improve work environment.
• Take steps to improve employee satisfaction (ES)(become a people-friendly company).
• Continue to promote the concept of “local production for
local consumption” and collaborate with customers andsuppliers to reduce long-distance transportation whilestrengthening cooperation within the local automotive
industry (both customers and suppliers).
• Enhance business continuity planning (BCP) capabilities
within the supply chain.

3) Results of analysis
Impact on
Yorozu’sbusiness

The analysis of the potential impact on our business in the latter half of the 2030s under scenarios of 1.5°C and 4°C temperature
increases suggests that for items where the impact is significant, appropriate risk mitigation measures can avoid adverse effects and areeven likely to create opportunities.
As a strategy for the future, we believe it is important to ensure the achievement of the following two points:• Realize carbon neutrality by 2040
• Effectively advance lightweight technology for our products to enable flexible adaptation to changing mobility trends

Future initiatives• Conduct further in-depth, quantitative analyses, establish long-term CO2 reduction targets based on this data, and implement anddisclose initiatives.
• Engage in dialogues with investors and other stakeholders regarding initiatives and connect this with further analysis and disclosure.

YOROZU 2023 Integrated Report

33

Yorozu’sManagement Foundation

About Yorozu

Yorozu’s Medium- to
Long-Term Outlook

Data Section

Environmental Management
Our Approach to Carbon Neutrality

will achieve 100% carbon neutrality from the outset byusing green energy as its heat source. In addition, we will

In Yorozu Global Environmental Vision 2040, we have set
forth the ambitious goal of realizing carbon neutrality by
2040. (See chart below.)
To extend the activities across the entire organization,
Yorozu established the ESG Office in April 2021 and theCarbon Neutrality Office in April 2022. As CO2 emissions
linked with business growth and production volume prominently increase, we are making efforts to improve the production process by engaging in (1) energy conservation,(2) adoption of renewable energy, (3) procurement of green
energy, and (4) fuel conversion.

To reduce CO2 emissions from fuel combustion(Scope 1), we advance decarbonization and low-carbon
efforts by electrifying the coating process and converting it
to liquefied natural gas (LNG).
Carbon neutrality is a risk mitigation measure thatshould be addressed not only within the Company but
throughout the entire supply chain. Therefore, among
the categories of Scope 3 emissions, we are working tograsp the amount of CO2 emitted by suppliers and fromon-market products, and on measures to help reduce
emissions that have greater impacts.

lRoadmap to Carbon Neutrality
FY2021

FY2022

PolicyEnvironmental
Philosophy

Structure

ESG Office (established April 2021)

FY2023

FY2024FY2040

FY2030

Yorozu Global Environmental Vision 2040 (August 2021); Endorsed recommendations of TCFD (September 2021)
Carbon Neutrality Office (established April 2022)

Upstream
Manufacturing process at Yorozu
Downstream

Scope 2

Number ofoperating bases

Adoption of green
energyBy FY2022

4 / 6 bases

60%

7,020 tBy FY2024

6 / 6 bases

100%

11,000 t

Yearly reductions in
CO2 emissions

Based on the policy of starting with what is feasible, weare exploring the potential for the installation of solar
power generators and the adoption of green energy at all
our facilities by considering the varying local policies andthe situation of power supply. We have already installed
solar power facilities at one location in Thailand andcompleted installation at one of our Chinese facilities in

Collaboration with suppliers
Four domestic sites
using green energy*1

Scope 2All domestic sites
using green energy*1

50%

80% Achieved

fiscal 2022. We are also in the final stages of preparations
to introduce solar power facilities at another location in
Thailand and one in the United States in fiscal 2023. Our
plan is to continue advancing the adoption of solar powerand green energy aligned with local policies, electricity
conditions, and other factors, with a focus on acceleratingthese efforts where possible.

Overseas sites using green energy*1

100%

12%
reduction*2

reduction*2
New Tokai base

Fuel
Scope 3
Product use

Scope 3

Carbon neutrality for fuel/heat source

Existing locations

Carbon neutrality for fuel/heat source

Develop products that help reduce customers’ CO2 emissions

Yorozu Oita, our largest production site in Japan, transitioned to full green energy consumption on March 1, 2022
through a partnership with the green energy provider,
afterFIT Co., Ltd., reducing annual CO2 emissions by
5,180 tons. During fiscal 2023, the Company also plans
to install solar power generators in parking lots and vacant
spaces of its premises and utilize the produced electricity.
Three other sites have already switched to 100% green
energy and a total of six bases in Japan will complete theswitch by fiscal 2024. The adoption of green energy at thesix bases is expected to reduce CO2 emissions by 11,700
tons each year.
Through these measures, we anticipate an 80% reduction in CO2 emissions at our operating bases in Japanby fiscal 2024, compared with 2013 levels, achieving theCompany-wide reduction target of 50% well ahead of
fiscal 2030.
For Scope 1 fuel emissions, the new Tokai base

FY2020

FY2021

FY2022

Domestic

3,886

3,542

2,984

3,066

3,574

Overseas

22,09922,967

16,72815,267

16,291

Total

25,98526,50919,712

18,333

19,865

Domestic

16,53913,762

11,52012,2806,387

Overseas87,453

93,946

65,911

59,18963,808

Total

103,992

107,708

77,431

71,46970,195Purchased goods and services

510,995

482,757

340,518

351,238

449,251

cat. 2

Capital goods

53,74739,82929,41912,091

24,070cat. 3

Fuel- and energy-related activities

6,926

7,489

5,741

5,185

5,681

cat. 5

Waste generated in operations

3,189

2,177

1,559

1,733

1,919

cat. 6

Business travelcat. 7

Employee commuting

227

228

233

209

235

4,022

3,782

4,029

4,272

4,200

cat. 9cat. 11

Downstream transportation and distribution

—

6,344

5,263

5,424

5,048

Use of sold products

—

—

—

4,003,488

3,896,637

cat. 12End-of-life treatment of sold products

1,290

1,341

1,159

1,242

1,175

—

—

—

4,384,882

4,388,216

Total

Initiatives at Domestic Operating Bases

FY2019cat. 1

reduction*2

New Tokai baseusing green energy*1

7%
reduction*22024 Target
Reduction in CO2 emissions atdomestic sites

Initiatives at Overseas Operating Bases

Scope 1

*1 Including solar power generation*2 CO2 emissions reductions compared with 201334

Fiscal year

FY2018

Electricity

Scope 1lEstimated Effect on CO2 Emissions

lCO2 Emissions Data (t-CO2)

CO2 emissions reduction
Scope 3
Material
procurement

advance low-carbon initiatives for our existing bases bytransitioning to LNG for fuel consumption.

Environmental Topic
In fiscal 2023, our domestic facilities again conducted voluntary external beautification activities as part of Environmental Month events, coinciding with the“UMIGOMI Zero Week” (an initiative to eliminate marine debris) for spring 2023
sponsored by the Ministry of the Environment and the Nippon Foundation.
The Yokohama headquarters organized a cleanup along the nearby Tsurumi
River. Fifteen volunteer employees and their families, who empathized with theprogram, collected about 5 kg of litter. These environmental conservation efforts
reflect our commitment to coexist with society.

YOROZU 2023 Integrated Report

35Yorozu’sManagement Foundation

About Yorozu

Yorozu’s Management Foundation

Board of Directors

Yorozu’s Medium- to
Long-Term Outlook

Data Section

Corporate Governance(as of June 28, 2023)

Basic Stance1

2

The Yorozu Group will fulfill its social responsibilities asa good corporate citizen through strict compliance with
relevant laws and regulations. Understanding the needto enhance corporate value with fair and transparent
corporate activities, thereby earning the trust of our stakeholders, the Group remains committed to reinforcing

43

corporate governance through its organizational design,
establishment of a governance framework that includes
internal control systems, and application of its Corporate
Philosophy across the Group, driven by the will to takeaction under the Yorozu Group Charter of Corporate
Behavior and the Yorozu Code of Conduct.

5

Our Corporate Governance Structure
As of the 70th Ordinary General Meeting of Shareholders
held on June 10, 2015, Yorozu switched from a Company
with a Board of Corporate Auditors to a Company with an

Audit & Supervisory Committee, the majority of which consists of outside directors, thereby strengthening corporate
governance and audit and supervisory functions.

lCorporate Governance Structure

General Meeting of Shareholders
Appointment /Dismissal

Appointment /Dismissal
Audit / Supervision

Board of Directors

ReportAppointment /Dismissal

Audit &
Supervisory Committee

Cooperation

Accounting Auditor

Opinion Submission

Nominating
Committee

Consultation
Audit

6

7

8

ReportConsultation

ReportOpinion Submission

9Compensation
Committee

Chairman / Vice Chairman / President

Audit

Cooperation

Audit

Cooperation

Instruction
ReportManagement Meeting
Instruction

Assistance /ReportInternal Auditing Function Group
Audit

ReportCorporate Strategy &ESG Function GroupAccounting Function GroupYPW Function GroupManagement &DX Function Group

Manufacturing
Function Group

Marketing & Sales
Function Group

Purchasing & ProjectControl Function Group

Production Equipment
Engineering Function Group

1

2

3

4

5

Chieko Ogawa

Masashi Oshita

Hiroshi Moriya

Satoshi Miura

Chiaki Tsuji<Operating Departments (Function Groups*)>

Outside Director(Member of Audit &Supervisory Committee)(Independent Officer)
CPA

Outside Director(Independent Officer)

Outside Director(Independent Officer)

Member of the Board(Full-Time Audit &Supervisory Committee
Member)Outside Director(Member of Audit &Supervisory Committee)(Independent Officer)
Attorney*A cross functional organization consisting of nine function groups (Corporate Strategy & ESG Function Group, Accounting Function Group, YPWFunction Group, Management & DX Function Group, Manufacturing Function Group, Marketing & Sales Function Group, Purchasing & Project Control
Function Group, Production Equipment Engineering Function Group, and Internal Auditing Function Group) to oversee each site based on the three
regions (Japan, the Americas, and Asia).

lOverview of Corporate Governance

36

6

7

8

9

Tsutomu Hiranaka

Akihiko Shido

Ken Shido

Norio Hirano

President
Member of the Board (COO)

ChairmanMember of the Board (CEO)Vice Chairman
Member of the Board

Executive Vice President
Member of the Board (CFO)Type of organizational design

Company with an
Audit & Supervisory
Committee

Number of directors who are not membersof the Audit & Supervisory Committee(Number of independent outside directors)

6 (2)Number of members of the Audit &Supervisory Committee(Number of independent outside directors)

3 (2)Total number of directors(Number of independent outside directors)

9 (4)Ratio of independent outside directors

44.4%

Ratio of female directors

22.2%

Term of directors who are not members of
the Audit & Supervisory Committee

1 yearTerm of directors who are members of the
Audit & Supervisory Committee

2 years

Adoption of executive officer system
Accounting auditor

Yes
Ernst & Young
ShinNihon LLC

YOROZU 2023 Integrated Report37About Yorozu

Roundtable Discussion between
the President and Outside Directors

Masashi Oshita

Tsutomu Hiranaka

Hiroshi Moriya

Outside Director(Independent Officer)

President (COO)
Member of the Board

Outside Director(Independent Officer)

In light of the rapidly changing times, the role played by Yorozu’s Board of Directors is becoming increasingly crucial
for the sustained growth of the Company. President Tsutomu Hiranaka sat down with Outside Directors Masashi
Oshita and Hiroshi Moriya to facilitate a discussion on enhancing the effectiveness of the Board of Directors.

Effectiveness of the Board of Directors
Hiranaka: In fiscal 2022, we conducted our first-everthird-party assessment of the effectiveness of the Boardof Directors. I would like to hear your impressions of theresults.
Oshita: Enhancing the effectiveness of corporate governance is paramount for securing a company’s sustained
growth. As outside directors, we have made numerous
requests to the Company’s executive team to ensure theBoard of Directors operates at its full potential. I mustcommend their diligent response, and personally, I believe
it has reached a notably high standard. Until fiscal 2021,
effectiveness assessments relied on self-evaluations fromthe nine directors, and these ratings have consistently
shown improvement over the years. The decision made by
President Hiranaka to enlist a third-party organization for
the assessment was an excellent idea. While the overall
assessment affirms satisfactory performance, it has also
pinpointed areas in need of refinement.
Moriya: The decision to entrust the assessment of theBoard of Directors’ effectiveness to a third-party organization has produced noteworthy results, ensuring transpar-

38

ency and objectivity in the assessment results. It has also
allowed us to recognize the position of Yorozu’s Board incomparison to other companies. This, in turn, has raised
the awareness of each director, and I believe it can further
enhance the effectiveness of the Board. I personally feelthat an environment where outside directors can freely
express their opinions and internal directors genuinely
listen is the most crucial aspect of effectiveness. In thisregard, Yorozu’s Board of Directors has met the benchmark.
Hiranaka: I’m relieved to hear that. I share the same perspective as both of you. Discussions within the Board of
Directors have been moving in a positive direction, withconstructive opinions and requests based on the expertiseand experience of our outside directors, and with dissenting views when necessary. Through such lively discussions, I believe we are building stronger relationships oftrust with all our outside directors.

Internalizing ESG Management
Hiranaka: We have positioned ESG management as a
top priority in our medium-term business plan, placing significant emphasis on environmental and social initiatives in

Yorozu’sManagement Foundation

our business activities. How do you assess these efforts?
Oshita: The automotive industry is in the midst of significant transformations, with a pressing need for carbon
neutrality from an environmental perspective. Yorozu has
responded proactively to these challenges by swiftly transitioning to green energy sources at its production facilities
worldwide, consistently making progress. Notably, the new
Tokai base has implemented a range of initiatives, including the complete adoption of green energy to achieve
100% carbon neutrality, which is highly commendable.
Additionally, Yorozu has displayed innovation in areas suchas weight reduction and noise control to align with thegrowing trend toward electric vehicles (EVs). It would bea notable achievement if Yorozu could establish itself as apremier provider of EV suspensions, becoming a byword
for EV suspension systems.
Moriya: ESG is a global trend, and it’s true that mostcompanies publicly express positive initiatives in thisregard. However, I often wonder about the actual implementation. Nevertheless, even in such a context, I sensethat Yorozu, under President Hiranaka’s leadership, istaking a grounded approach by committing to achieving
goals and consistently delivering results. Looking ahead,
one area for improvement is how Yorozu can expand
ESG initiatives globally, as they currently seem to be predominantly Japan-centric. I believe it would be worth theeffort to focus on decarbonization at overseas production
facilities and enhance talent management with multinational directors and executives to ensure consistency on
a global scale.
Hiranaka: I take pride in our commitment to achievingcarbon neutrality and consider us to be a frontrunner inthis regard. We have successfully transitioned to 100%
green energy at five locations, both in Japan and overseas. As Mr. Oshita mentioned, our new Tokai base will
be carbon neutral from its launch, primarily using green
energy for its heat sources. Moving forward, we aim to
manufacture products using new technologies and methods conducive to reducing CO2 emissions in environmentally conscious factories. This will enable us to further
enhance the added value we offer.
In terms of social responsibility, we have formulated
our Human Rights Policy separate from the Yorozu
Group Charter of Corporate Behavior and Yorozu Codeof Conduct to further promote our human rights due
diligence activities. We will regularly report the progressto the Board of Directors to further advance responsible
corporate behavior.

Enhancing Corporate Value
Hiranaka: I believe that human capital is the most signif-

Yorozu’s Medium- to
Long-Term Outlook

Data Section

icant management asset for achieving sustained growth.
How do you feel about our approach in this area?
Oshita: There’s no doubt that people are the wellspring ofcorporate value. In recent years, a social issue has arisen
where an increasing number of mid-career, young workers
are leaving companies. I have heard that Yorozu actively
engages in initiatives that focus on boosting individual
employee motivation through personalized interviews andother means. Yorozu is well-regarded for its high proportion of female managers and a high rate of male employees taking parental leave. Alongside efforts to create acomfortable work environment for women and maintainan open organizational atmosphere, I encourage you toredouble your efforts in recruiting and nurturing top talent.
There have also been discussions about disclosing information related to human capital, and I believe that Yorozu
should prepare for such disclosures in the near future.
Moriya: The Yorozu management team has a solid understanding of the concept that people are human capital,
and investing in human capital can drive growth andenhance corporate value. The Company has implemented
various initiatives to enhance employee engagement.
However, it’s essential to truly grasp what employees
expect from the Company, their trust in the organization,
their enthusiasm, and other aspects. I wonder if it might
be beneficial to have third-party assessments to evaluate
the engagement of employees, both in Japan and overseas, to gain a more comprehensive perspective.
Hiranaka: In fact, in fiscal 2023, we have plans to
conduct an engagement survey through a third-party
organization. I, like both of you, strongly recognize theimportance of human capital management. I often use thephrase “employee engagement reform,” where my goal isfor every individual to experience the desire to work with
us for his/her entire career and feel proud to be a part ofour company. As a result, we became the first in Japan’s
manufacturing industry to receive Platinum Eruboshi certification for companies that actively promote women’s
participation. We also obtained the Kurumin certification
as a company that supports child-rearing. As Mr. Moriya
suggested, we have introduced a new talent management
system in fiscal 2023. This system enables us to interact
with each employee, understand our human resources
portfolio, and develop a human resources strategy alignedwith our management strategy to further enhance corporate value.
Thank you all for the insightful contributions from yourunique perspectives today. I encourage you to continue
sharing your opinions with a critical eye based on mutual
trust, as your input is invaluable in our pursuit of sustained
growth.

YOROZU 2023 Integrated Report39About Yorozu

Yorozu’sManagement Foundation

Yorozu’s Medium- to
Long-Term Outlook

Data Section

Corporate Governance
List of Directors’ Skills

Audits and Supervision

We are striving to enhance our governance structure andto implement management that emphasizes sustainability
in order to respond to a changing global environment,
beat the competition, and achieve both sustainable growthand increased corporate value in the medium to long term.
We believe that the Board of Directors possesses thequalifications needed to achieve these initiatives.

In selecting directors, we give consideration to a balanced board room, including those who can demonstrate
their strengths across a wide range of business areas,
those who are suited to business management, and those
who have international experience. We also prepare andpublish a skills matrix that lists each director’s knowledge,
experience, abilities, etc.
Directors’ main knowledge and areas of expertise

Name

Position

OutsideIndependent

GenderGlobalLegal,
Manufacturing
Finance
Automotive
Compliance,(Production, Sales andManagement
andIndustry
CSR, andProcurement, Marketing
Accounting
Governanceand Quality)

Akihiko Shido

Chairman, Member of the Board
(CEO)

Male

●

●

●

Ken Shido

Vice Chairman, Member of the
Board

Male

●

●

●

Tsutomu Hiranaka

President, Member of the Board
(COO)

Male

●

●

Norio Hirano

Executive Vice President, Memberof the Board (CFO)

Male

●

Masashi Oshita

Outside Director

OutsideDirector

Male

Hiroshi Moriya

Outside Director

OutsideDirector

Satoshi Miura

Member of the Board (Full-Time
Audit & Supervisory Committee
Member)Chiaki Tsuji

Outside Director (Member of Audit& Supervisory Committee)

Chieko Ogawa

Outside Director (Member of Audit& Supervisory Committee)

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

Male

●

●

●

●

Male

●

●

●

●

OutsideDirectorFemale●●●OutsideDirectorFemale

●

●

●

●

●

●

●

As a supervising body, the Board of Directors meets regularly once every three months and convenes extraordinary
meetings as necessary to determine general management
policies, legal matters, and other important topics in management. It also monitors the execution of duties by the
directors and executive officers.
The Board of Directors comprises nine members(including four outside directors), an appropriate size fora Company with an Audit & Supervisory Committee that
ensures the operability of the Board of Directors and theeffectiveness of the Audit & Supervisory Committee.
In the appointment of directors, the Company seeks
individuals who can leverage their advantages across multiple fields and in business management to ensure diversity
and well-balanced knowledge, experience, and abilities
in the boardroom. Candidates for directors (who are not
Audit & Supervisory Committee members) are determinedby the Board of Directors based on the screening resultsof the Nominating Committee and are appointed at theGeneral Meeting of Shareholders.
Directors who are members of the Audit & Supervisory
Committee hold regular and extraordinary meetings of
the Committee; attend Board meetings, the monthly
Management Meeting, and the Global Management
Committee, among other important meetings; and periodically meet with representative directors. The Committee
comprises three members (including two outside directors)

appointed at the General Meeting of Shareholders.
It receives appropriate and timely reports from directors,
officers, the accounting auditor, auditing departments, andother relevant personnel, and necessary information isshared to improve the quality and efficiency of the audits.
In accordance with laws and regulations, theCompany’s accounting auditor, Ernst & Young ShinNihon
LLC, has put a mechanism in place to restrict the termsof engagement in the Company’s audit accounting; fiveaccounting terms for chief functional employees andseven terms for functional employees.
The Internal Auditing Office has been established tomaintain effective internal control activities and supervisory
functions. The Audit & Supervisory Committee investigates
the Company’s operations and financial assets and conducts other auditing duties in cooperation with the internal
auditing departments while sharing information on annual
auditing plans and monthly audit reports through its full-time
Audit & Supervisory Committee Member at regular intervals
as well as at quarterly meetings attended by all Audit &Supervisory Committee Members and representatives fromthe internal auditing departments. The internal auditing
departments also attend the quarterly hearing reviews conducted by the accounting auditor to improve efficiency inauditing. The Internal Auditing Office exchanges opinions withthe accounting auditor on audit plans, the state of audits, andaudit results, which are reflected in internal control activities.

Execution of Duties
Summary of Discussions at Board of Directors’ Meetings in Fiscal 2022
A total of 15 Board of Directors’ meetings were held in fiscal 2022. The main agenda (excerpt) for each meeting was as follows.
Meeting 1

Shareholder relations (SR) implementation report for 2022

Meeting 2

Opinion of the Audit & Supervisory Committee regarding the
proposal for the election of directors who are not the said
committee members

Meeting 3

Audit report of the Audit & Supervisory Committee

Meeting 4

Evaluation report on the effectiveness of the Board of
Directors

Meeting 5

Appointment of Independent Advisory Board members

Meeting 6

Directors’ compensation and bonuses

Meeting 7

Company-wide risks based on the Basic Policy on Internal
Control Risks

Meeting 840

Launch of a quality expert committee

The Company has introduced an executive officer system
to clarify the responsibilities and areas of authority in business execution. The Management Meeting is held monthly
to ensure the Company’s swift response to suddenchanges in the business environment.
With a view to maximizing efficiency groupwide, theCompany has separated 21 functional axes into ninefunction groups (Corporate Strategy & ESG Function

Meeting 9

Basic policy on internal control risks

Meeting 10

Evaluation of the effectiveness of the Board of Directors(discussion on third-party analysis and assessment)

Meeting 11

Outlook and policy for halving carbon emissions by 2030

Meeting 12

Initiatives for driving digital transformation (DX) businessreformMeeting 13

Consolidated financial results for third quarter of fiscal 2022
and full-year outlook

Outside Directors

Meeting 14

Appointment and dismissal of officers of vice president level
and above and revision of directors’ compensation

Meeting 15

Extension of delegation of executive duties to outside
directors (quality expert committee)

Yorozu has appointed outside directors to ensure fairness and transparency while strengthening the oversightfunction of the Board of Directors. Currently, independent
outside directors account for more than 40% of the Board.
To be qualified as a candidate, professional knowledge
and experience in corporate management, legal affairs,
government administration, and accounting, among otherfields, are required. From among candidates who excel interms of personality and general knowledge, only thoseGroup, Accounting Function Group, YPW Function
Group, Management & DX Function Group, Manufacturing
Function Group, Marketing & Sales Function Group,
Purchasing & Project Control Function Group, Production
Equipment Engineering Function Group, and Internal
Auditing Function Group), and each site into one of three
regions (Japan, the Americas, and Asia).

who meet the Company’s criteria for independence, havethe approval of at least one current independent director or independent member of the Audit & Supervisory
Committee, and fulfill other requirements in accordancewith the Corporate Governance Guidelines can be nominated. Final candidates are selected by the Board of
Directors based on recommendations of the Nominating
Committee and are then elected at the General Meeting of
Shareholders.

YOROZU 2023 Integrated Report41

Yorozu’sManagement Foundation

About Yorozu

Yorozu’s Medium- to
Long-Term Outlook

Data Section

Corporate GovernanceName

Reason for appointment

Concurrently held positions

Attendance at Board of
Directors’ meetings(April 2022 to March 2023)

Masashi Oshita

Since assuming the role of outside director in June 2018, Masashi Oshita
has provided oversight to the Company’s management from an
independent and neutral position. He provides valuable advice based on
his extensive experience and knowledge acquired during his tenure with
the Ministry of Economy, Trade and Industry. Mr. Oshita is fully qualified
to serve as an outside director based on these reasons and our
expectation that he will continue to fulfill these roles.
He also serves as the chairperson of the Nominating Committee and amember of the Compensation Committee.

•V ice Chairman and Executive
Managing Director of Japan Auto
Parts Industries Association (JAPIA)•D irector of Japan Automobile
Research Institute (JARI)•D irector of Japan Society for the
Promotion of Machine Industry•C hairperson of Japan Auto Parts
Industries Corporate Pension Fund

15 out of 15 meetings(100%)

nEvaluation

Hiroshi Moriya

Since assuming the role of outside director in June 2020, Hiroshi Moriya
has provided oversight to the Company’s management from an
independent and neutral position. He has been involved in the automotive
industry for many years and provides valuable advice based on his
extensive experience and knowledge acquired as a senior executive of a
global corporation. Mr. Moriya is fully qualified to serve as an outside
director based on these reasons and our expectation that he will continue
to fulfill these roles.
He also serves as a member of the Nominating Committee and theCompensation Committee.

•D irector of Marelli Holdings
Co., Ltd.
•O
 utside Director of SNT
Corporation

15 out of 15 meetings(100%)

Chiaki Tsuji

Since assuming the roles of outside director and member of the Audit &Supervisory Committee in June 2017, Chiaki Tsuji has provided opinions
and advice based on extensive experience acquired over the course ofher career as a lawyer in Japan and Germany. Ms. Tsuji is fully qualified
to serve as both outside director and member of the Audit & Supervisory
Committee based on our expectation that she will continue to provide
opinions and advice that will be of value to the Group’s management
supervisory and audit functions.
She also serves as a member of the Nominating Committee and theCompensation Committee.

•O utside Director of MIRARTHHOLDINGS, Inc.
•E
 xternal Audit and Supervisory
Board Member of Moriroku
Holdings, Inc.

15 out of 15 meetings(100%)

Chieko Ogawa

Since assuming the roles of outside director and member of the Audit &Supervisory Committee in June 2017, Chieko Ogawa has provided
objective opinions and advice based on her expert knowledge andextensive experience acquired over the course of her career as a CPA in
Japan and the United States. Ms. Ogawa is fully qualified to serve as
both outside director and member of the Audit & Supervisory Committee
based on our expectation that she will continue to provide opinions andadvice that will be of value to the Group’s management supervisory andaudit functions.
She also serves as a member of the Nominating Committee and thechairperson of the Compensation Committee.

•R epresentative Audit
Commissioner of Toda City,
Saitama•O utside Audit & Supervisory Board
Member of Seven Bank, Ltd.

15 out of 15 meetings(100%)

1) The Board of Directors consists of a sufficient proportion of independent outside directors who can provide
constructive feedback to management and raise objections when necessary.
2) The roles expected of the Board of Directors are clearly
defined, and director appointments are made based on
the qualifications and skill matrix required to fulfill theseroles effectively.
3) The executive compensation system is aligned with
the Company’s management strategy and is effectively
designed to be tied to business performance.
4) The Group is promoting various forward-looking initiatives, including carbon neutrality, to achieve a sustainable society through business activities. The Board of

42

nChallenges for Fiscal 2023
We will enhance discussions of development plans for
future executives such as the CEO, officer training, andthe composition of a diverse Board of Directors. To facilitate this, we will ensure the advance distribution andexplanation of relevant materials, conduct hearings withdirectors, and implement other necessary measures for
improvement.

For more information on the effectiveness of Board of
Directors for fiscal 2022, please visit the following webpage(in Japanese).
https://www.yorozu-corp.co.jp/share/uploads/2023/07/
0629_CG.pdf

Director Compensation SystemFor more information on the director compensation system,
please refer to our convocation notice below (page 40) (inJapanese).
https://www.yorozu-corp.co.jp/share/uploads/2023/05/
te_08835011023061.pdf

In fiscal 2020, as a replacement for stock options, we introduced restricted stock compensation to provide mediumto long-term incentives while at the same time revising the
proportion of performance-linked compensation.

Nominating Committee and Compensation Committee
The Nominating Committee and Compensation
Committee have been established, each with independent
outside directors forming the majority, with the objectiveof advancing corporate governance through greater transparency and objectivity in the decision-making processof the Board of Directors, while ensuring opportunities forindependent directors to be involved in the deliberation of
the nomination and compensation of directors.
The Nominating Committee proposes candidates
for director nomination at the General Meeting of
Shareholders and discusses the process of training
the candidates for key management positions. The

Directors also engages in meaningful discussions andregularly monitors progress in addressing sustainability
challenges.
5) In response to the inadequacy of deliberation time
for the Board of Directors identified in fiscal 2021, theschedule, operational methods, and presentation materials were revised, resulting in sufficient time allocation in
fiscal 2022.

business strategy, (3) corporate ethics and risk management, (4) performance monitoring and evaluation of executives and their compensation, and (5) matters related todialogues with shareholders and other stakeholders.
A summary of the survey follows.

Total value of compensation by type (¥ million)

Compensation Committee reviews the director compensation system and makes suggestions. Yorozu periodicallyevaluates the effectiveness of both committees.
lCorporate Governance Overview
Committee

Insidedirectors

Outsidedirectors

Chairperson

Nominating
Committee

34Masashi Oshita(Outside director)

Compensation
Committee

34

Chieko Ogawa(Outside director)

Director category

Total value ofcompensation(¥ million)

Cash
Basic
compensation

Bonus

Non-monetarycompensation

Cash bonus

Non-monetarycompensation

Number of
directors
coveredDirectors excluding Audit &Supervisory Committee members(Outside directors)

293
(13)

129
(13)

89
(—)

42
(—)

32
(—)

—
(—)

7
(2)

Directors who are Audit &Supervisory Committee members(Outside directors)

33
(13)

33
(13)

—
(—)

—
(—)

—
(—)

—
(—)

3
(2)

Total

326
(26)

163
(26)

89
(—)

42
(—)

32
(—)

—
(—)

10
(4)

Notes:
1. Performance-linked compensation consists of monetary compensation and restricted stock compensation.
2. Non-monetary compensation consists of restricted stock compensation.
3. The total value of directors’ compensation does not include the employee salary of directors who concurrently serve as employees.
4. The figure for “Number of directors covered” above includes one director who retired at the conclusion of the 77th Ordinary General Meeting of Shareholders held on June 27, 2022.

Evaluation of Effectiveness of Board of Directors

Internal Control System

Once a year, Yorozu conducts a survey on operations andthe effectiveness of the Board of Directors to identify any
issues and increase the effectiveness of corporate governance. For fiscal 2022, we entrusted a third-party organization with conducting an analysis and assessment of the

The Company’s Board of Directors has adopted and disclosed a basic policy for the development of an internal
control system, as stipulated in the Companies Act. The
Board of Directors reviews the operation of this internal
control system on an annual basis.

effectiveness of the Board of Directors. This approach was
aimed at enhancing transparency and objectivity by incorporating an external perspective through a survey. The
survey covered five main areas: (1) composition andoperation of the Board of Directors, (2) management andPerformance-linked compensation

Fixed compensationFor more information on the internal control system, please
visit the web page below.
https://www.yorozu-corp.co.jp/en/csr/governance/internal-control/

YOROZU 2023 Integrated Report43About Yorozu

Yorozu’s Management Foundation

Yorozu’sManagement Foundation

Yorozu’s Medium- to
Long-Term Outlook

Data Section

Compliance Initiatives
The Group recognizes the importance of compliance with laws, regulations, and social norms in all business activities
carried out by its directors and employees to achieve fair and appropriate management, and strives to promotecompliance.

Initiatives for Promoting Compliance
The Yorozu Group is dedicated to promoting compliance through regular training sessions. We also provide
an opportunity to learn about compliance during new
employee training to foster a deeper understanding ofcompliance. In fiscal 2022, the participation rate for ethics
and compliance training reached 65.5%.
The Group strictly complies with the Antimonopoly Act(competition law) as well as other laws and regulations
governing business transactions. We ensure all employees are thoroughly conversant with our Antimonopoly Act

Compliance Manual, receive training on a regular basis,and perform their daily work in a sincere and fair manner.
In fiscal 2022, we conducted a survey on awareness
related to the Antimonopoly Act and Subcontract Act for
employees at headquarters and management personnel
worldwide to assess their understanding and provide
follow-up support. The participation rate was 85.7%.
We will continue to develop training programs thatalign with our practical needs while considering the external environment.

Meetings and Board of Directors’ meetings.
In fiscal 2022, the Come Forward for Help Line
received 23 inquiries. Of these, there were 20 cases
involving opinions, consultations, and improvement suggestions, one related to mental health, one concerning

harassment, and one involving an internal rule violation.
We addressed these inquiries by conducting investigations
and fact-checking as needed to improve the workplaceenvironment. There were no inquiries related to legal violations, and no disciplinary actions were taken.

Risk Management
To deal with major risks that could adversely affect our stakeholders, we identify risks every year before they materialize
and become threats. The identified major risks are evaluated in terms of brand and monetary damage and personal
injury, based on severity and frequency of occurrence in the risk assessment matrix. Risks considered to be “high” by
the Management Meeting and the Board of Directors are monitored by the General Affairs Department and risk aversion
measures are taken groupwide.

Information Security
Elimination of Antisocial Forces
The Yorozu Code of Conduct declares that all Group
directors and employees must take a firm stance against
antisocial activities and reject inappropriate requests or
actions to fund any antisocial forces. Our strict compliancewith the Yorozu Code of Conduct allows no relationshipwhatsoever with antisocial forces. The General Affairs
Department is responsible for preventing any contact
with such forces by gathering information and issuing

warnings. A system is in place so that the General Affairs
Department receives immediate reports on any suspectedconnections with antisocial forces, such as an inappropriate demand to a director or an employee. The department
cooperates with the police and other law enforcement
agencies to swiftly shut down any connection with antisocial forces.

In order to properly protect its information assets andtake the appropriate information security measures,
the Company has established the Information Security
Committee and the Technology Leak Prevention
Committee, in addition to formulating the Information
Security Control Policy and ensuring compliance thereof,
formulating and implementing countermeasures, and providing the necessary training. We protect our customers

and suppliers as well as internal data from such threats
as errors, accidents, damage from disasters, and criminal
acts by clarifying the method to handle information basedon risks and the level of importance.
The Company complies with relevant laws, regulations,and other rules and continuously improves its control system, which is well-coordinated with changes in the business environment.

Business Continuity Plan (BCP)
Avoidance of Conflict Minerals
The Group always considers the impact of its procurement
activities on local communities. We work closely with suppliers to avoid raw materials that may have a social impact
such as infringements of human rights and environmental

damage, including conflict minerals from the Democratic
Republic of the Congo and countries nearby, which are asource of funds for the region’s armed insurgents.

Internal Reporting System (Come Forward for Help Line), Supplier Consultation andReporting Desk
The Group has set up the Come Forward for Help Line asa means for frontline employees to quickly and accurately
report important compliance matters to senior management. To encourage everyone to take advantage of thissystem and provide information, we have set rules to protect the users and people seeking consultation. The Come
Forward for Help Line is available not only to Group companies in Japan and overseas, but also to the local community, suppliers, supply chain workers, and others outside the Company. It also affords means to facilitate direct
reporting to and consultation with the outside directors. In

44April 2022, we put in place an external consultation service available in three languages to ensure the anonymityof whistleblowers
and greater flexibility in information
gathering to identify
risk sources. The
セクハラ
メンタル
パワハラ
contents of reports
社内ルール違反
法令違反
and consultations
are also reported at
A card spreading awareness of the Come
Forward for Help Line
the Management

Yorozu has formulated a business continuity plan (BCP)
to ensure the uninterrupted performance of the corebusinesses and to fulfill our social responsibilities as anenterprise in the event of unforeseen incidents and natural
disasters. To ensure a stable supply structure for customers, we have designated our headquarters as a control
tower and have taken steps to prevent fires and accidents
at plants that provide production equipment essential toproduct delivery.
Disasters and accidents could render our suppliers
incapable of manufacturing and delivering products,
which could halt our production and thereby cause ourcustomers’ production lines to stop. To avoid such consequences, we regularly update the database of our die
assets used for key products in Japan so that we canquickly switch to alternative production locations. We
are well prepared with information on the type of presses
required at the alternative plants to ensure a stable supplyof stamping products.
To prevent the halting of our production lines due toaging facilities, we inspect the stamping presses withvibration gauges, oil degradation meters, and ultrasoundmeters to quantify the degree of deterioration. We areworking on a thorough follow-up process when conducting statutory inspections and a preventive maintenancesystem based on IoT technology.
Additionally, the Company has set up an emergency
communication plan, increased the resilience of its IT
systems, stockpiled food and supplies, and distributed apocket guide for emergencies to employees. Our efforts
are also focused on disaster prevention training andregular drills.

Disaster drill at Yorozu Global Technical Center (YGTC)YOROZU 2023 Integrated Report45

Yorozu’sManagement Foundation

About Yorozu

Yorozu’s Medium- to Long-Term Outlook

Yorozu’s Medium- to
Long-Term Outlook

Data Section

Materiality (Material Issues)

Yorozu identified its materiality through a five-step process that involves reviewing and selecting social issues anddetermining the significance of their impact.
STEP

1

Uncover all material issues(materiality)

Identify and select key material issues

STEP

2

Measure the significance ofmaterial issues

Determine the significance of selected key issues from the viewpoint of their impact on stakeholders
and on medium- to long-term increases in corporate value

STEP

3

Determine the order of priority ofmaterial issues

Set the order of priority of material issues in accordance with management strategies, etc.

STEP

4

Devise a materiality matrix

Compose a materiality matrix with importance to stakeholders on one axis and importance tothe Yorozu Group on the other

STEP

5

Obtain internal approval

Deliberate and decide on material issues at the Management Meeting and Board of
Directors’ meetings

Most important

Materiality Identification Process

lThe Yorozu Group's Material Issues

Importance (interest) to stakeholders

Yorozu has identified five material issues (materiality) that must be addressed through its business activities. As we seek
solutions to such issues, we will continue to provide value to society in a sustainable manner.
Moreover, in order to promote sustainability initiatives across the entire Group, we are proactively engaging in ESG
management and establishing key themes related to environmental (E), social (S), and governance (G) factors.

•Respect for human rights (harassment)•Supply chain management (conflict mineralinvestigation and supplier survey)•Environmental conservation (water resources)•Coexistence with the local community•Ensuring biodiversity

Priority issues•Reduce CO2 emissions from the production process•Mitigate impact on global warming by reducing theweight of our products•Promote workstyle reform and diversity•Build a culture that respects diversity•Strengthen supervisory functions•Promote stronger compliance•Have a productive dialogue with shareholders•Ensure stable profits (improve PBR)
•Introduce new technologies and methods

Key issues•Data tampering•Aging facilities•International taxation•Large-scale disasters(stable product supply)•Information security•Exchange rate fluctuations

Most important
Importance to (impact on) Yorozu

lMateriality and Risks/Opportunities
Materiality

Risks related to materiality

Opportunities related to materiality

Initiatives•Increased customers andenhanced competitiveness due tostable quality and price•Corporate structure resilient
to fluctuations in customers’
production volume<Revenue expansion><Sustainable growth>•Adjust manufacturing costs, reduce costs, negotiate pricewith customers, make multiple purchases•Increase profits and sales, reduce fixed costs, rationalize
operations, reduce costs, pursue external sales of
production equipment•Enhance investment profitability assessment and project
revenue management•Reduce capital investment further through the adoption of
new technologies and methods

KPIs•Sales•Operating income ratio•ROE•PBR, share price•Improvement in total asset turnover ratio•Equipment utilization rate
•Reduction of fixed costs

Relevant SDGs

Business

Stable profits(operating income
ratio, ROE)

Pages 6–7
Message from the CFO•Rising raw material costs•Impact from customer sales trends•Manufacturer responsibility•International situation•Exchange rate fluctuations

Business/
environment

New technologies
and methods

Pages 16–19
Medium-Term Business
Plan
Pages 20–23
R&D Strategy•Delay in product development using advanced
technology and materials•Decreased competitiveness due to a delay indifferentiation from competitors•Expanded revenue opportunities
through product differentiation•Increased customers andenhanced competitiveness due tostable quality and price•Strengthen proposals for steel products contributing to
CO2 emissions reduction•Develop lightweight technology through ultra-high-tensilestrength steel (980MPa) products•Address sound and vibration performance required for EVs•Weight reduction•Reduction of CO2 emissions through weight
reduction•Number of patent applications

Environment

Reduction of CO2
emissions (carbon
neutrality)

Pages 31–35
Environmental
Management
Pages 20–23
R&D Strategy•Deterioration of corporate image and trust due
to delayed response to environmentally friendly
products•Increasing environmental investment costs•Climate change•Expanded revenue opportunities
through products compatible
with carbon neutrality (such as
lightweight products)•Enhancement of corporate value•Strengthen proposals for products contributing to CO2emissions reduction•Undertake efforts to reduce CO2 emissions in the
production process (energy-saving activities, sourcing
renewable/zero-carbon electricity, etc.)•Disclose information in accordance with the TCFD

•2030: CO2 emissions reduction by 50% (compared
to 2013 levels);
2040: Achieve carbon neutrality (progress inemissions reduction)•Continuing ISO certification•Zero environmental accidents

SocialGovernance46

Disclosure in the
integrated reportCreation of ahealthy, motivating
workplace

Practice of highly
transparent
governance

Pages 24–29
Human Resources
Strategy

Pages 37–43
Corporate Governance•Insufficient management of employee safety
and health•Decreased productivity•Loss of opportunity to secure excellent talentand high turnover rate

•Higher productivity•Retention•Innovation, corporate value creation•Securing excellent talent•Promote labor safety and health•Promote health and productivity management•Advance diversity•Create a comfortable work environment•Number of industrial accidents•Employee satisfaction and turnover rate•Mental health checks•Percentage of male employees taking parental leave•Percentage of paid leave taken•Remote work rate
•Rate of participation in training•Employment rate of people with disabilities•Diversity and ratio of females in managerial positions•Downturn in business activities due tocompliance violations•Erosion of social trust•Decline in corporate value•Establishment of a stable
management foundation throughimproved decision-making
transparency•Gaining the trust of stakeholders•Strengthen corporate governance framework•Conduct fair business activities•Implement compliance training•Operate the Risk Compliance Committee•Engage in SR activities•Attendance rate at Board of Directors meetings•Attendance rate at Audit & Supervisory Committee
meetings•Analysis and survey evaluating the effectiveness of
the Board of Directors•Number of whistleblowing reports/disputes•Types and number of disciplinary actions•Hours of compliance training completed

YOROZU 2023 Integrated Report47

About Yorozu

Yorozu’s Medium- to Long-Term Outlook

Yorozu’sManagement Foundation

Yorozu’s Medium- to
Long-Term Outlook

Data Section

New Initiatives Toward the Next
Medium-Term Business Plan
To further accelerate our efforts in new technologies and methods as laid out in YSP2023,
we are launching new initiatives aimed at the next medium-term business plan.

How We Foresee the Evolving Automotive Landscape Worldwide
The global automotive industry is currently undergoing a
once-in-a-century transformation. More stringent environmental laws and regulations in various countries aimed atachieving a carbon-neutral society are expected to resultin electric vehicles (EVs) accounting for at least half of theautomobile market by around 2040. Furthermore, with

New car demand(ICEs and HEVs
remaining mainstream;further shift to EVs)

Up to around 2030

the advancement of Mobility as a Service (MaaS)*, it isanticipated that automobiles will transition from individual“ownership” to an era of collective “sharing.”* The concept of services that enhance the convenience of people’s mobility by combining various information and communication technologies
across all modes of public transportation and servicesNew
car demand(EV share above
50%)

Development of New Technologies and Methods
in Response to Environmental Changes
To address threats and seize as many opportunities as
possible, we have identified four key themes and are committed to building a collaboration system encompassing

joint development projects based on self-developed
technology.

Step up the technology ofapplying ultra-hightensile-strength materials(980MPa)

Develop new items forautomotive parts

Develop new items fromnew materials

Go into non-automotive
parts business

Up to around 2040

Opportunities and Threats
For Yorozu, opportunities lie in the increasing sophistication of technological requirements, such as weight
reduction and sound and vibration issues, as well as thegrowing demand for EV-related components. This provides us with opportunities to expand into areas beyond
the expertise we have gained so far.

On the other hand, threats include the potential fora future decrease in automobile production volumes andthe transformation of the automotive industry structurefrom traditional vertical integration to a more horizontallysegmented model.

Opportunities

Threats

 Increasingly advanced requirements
for EV technology (weight, sound,vibration)

 Decrease in automobile production
volumes Growing demand for EV-related
components

48 Structural changes in the automotive
industry (from vertical integration tohorizontal segmentation)

YOROZU 2023 Integrated Report49

Yorozu’s Medium- to
Long-Term Outlook

Yorozu’sManagement Foundation

About Yorozu

Yorozu’s Medium- to Long-Term Outlook

Medium- to Long-Term Vision andRoadmap

Next Medium-Term Business Plan

2021–2023
Yorozu Sustainability Plan 2023

Supporting the Transforming
Automotive Industry and Aiming for
the Next Phase of Growth

We established a more sustainable business foundation by focusing on ESG
management, including carbon neutrality
initiatives for climate change mitigation, thedevelopment of new technologies andmethods for EVs, and global sales expansion efforts. To strengthen our presence inthe era of electrification, we initiated various activities, such as the construction of
the new Tokai base, marking the first suchdevelopment in over half a century inJapan.

2018–2020
Yorozu Spiral-up Plan 2020

The Yorozu Group has been steadily advancing together withstakeholders toward the vision of developing the Yorozu brandinto a premier supplier of suspensions along with the times.
The automotive industry is currently experiencing a profoundtransformation. Building upon the extensive integration of ESG
management within our medium-term business plan, YSP2023,
our eyes are now set on the next phase of growth in the forthcoming
medium-term business plan.

Yorozu Spiral-up Plan

Yorozu Success Plan

2000–2002
Yorozu Survival Plan
Amid significant changes in the businessenvironment driven by the Nissan RevivalPlan, we were forced to make tough decisions to survive, including the closure of
Fukushima Yorozu, and personnel reductions through an early retirement incentive
program. However, through the collective
efforts of the Group, we prevailed andachieved our cost reduction target of¥5.8 billion.

Significant changes in the business environment, including escalating U.S.-China
trade tensions, a substantial decrease inproduction volumes among major customers, and the widespread impact of the
COVID-19 pandemic, led to declines in
consolidated sales and operating income
ratio. Despite this, we increased profitability by enhancing profit and cost management per project and reducing capital
investment, enabling the establishment of arobust foundation.

2015–2017

2003–2014
During this period, we established bases in
the U.S., China, Mexico, and other regions,significantly increasing our overseas sales
ratio. Through Company-wide efforts, wegrew and evolved into a global company.

Data Section

Under this plan, we sought to enhance thevalue of the Yorozu brand in the global
market. Despite challenges such as declining sales due to a strong yen and decreasing customer orders in emerging markets,
we executed key initiatives to strengthen
profitability, including the operation of
unmanned production lines.

To enhance corporate value in the advancing era of electrification, we aim tostrengthen ESG management while alsobuilding a collaboration system encompassing joint development projects tobolster new technologies and methods thatdrive growth. By advancing new initiatives
in collaboration with partners based on our
in-house technological development andincreasing sales, we aim for an expansive
management approach that is resilient toenvironmental changes.

(¥ million)

200,000

150,000

Sales

100,000

50,000

2000

50

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022 (FY)

YOROZU 2023 Integrated Report51

Yorozu’sManagement Foundation

About Yorozu

Data Section

Five-Year Summary of Financial and
Non-Financial Data

Corporate Information

FY2019FY2020

FY2021

FY2022Financial Data(¥ million)(as of March 31, 2023)

Company name: Yorozu Corporation
Address:
3-7-60 Tarumachi, Kohoku-ku, Yokohama,
Kanagawa, JapanFoundation:
April 1, 1948
Capital:¥6,200 million

Business activities: Development, design, production, and sale ofauto parts, agricultural machinery parts, andmanufacturing equipment
Employees(consolidated):
5,726

Yorozu’s Global Network

Profit / Loss statements (fiscal years)
Sales

169,111

157,680

118,863

127,316

160,560

Cost of sales

149,295

141,331

106,626

113,015

143,384

Gross margin

19,816

16,34912,237

14,301

17,175

SG&A expenses

14,52514,142

11,85912,204

14,087

Operating income

5,290

2,206

377

2,096

3,088

Non-operating income

796

594

1,715

991

687

Non-operating expenses

864

2,030

643

802

782

Ordinary income

5,222

770

1,449

2,284

2,992

Extraordinary gains

288

73

279

194

78

Extraordinary losses

2,650

11,760

6,011

98

183

Net income (loss) attributable to owners of parent

Data Section

Company Overview

Yorozu Corporation and Consolidated Subsidiaries
FY2018

Yorozu’s Medium- to
Long-Term Outlook

402(12,933)(6,195)

876

1,422

Cash flows from operating activities

17,603

10,824

13,21814,914

2,924

Cash flows from investing activities(13,807)(9,584)(7,048)(4,536)(5,164)

Cash flows from financing activities

1,103(7,718)

3,775(13,816)(4,819)Cash and cash equivalents, end of period

24,97019,01929,25927,14622,287

Net assets

92,31074,55065,73870,37877,439Total assets

168,097

139,700

134,723

133,992

141,511

16.94(544.05)(259.07)

36.55

59.00

3,182.74

2,507.05

2,229.87

2,374.88

2,635.58

Sales baseDomestic and overseas bases

5

4

3
18

10

2

1

17
14 15 16

Cash flows (fiscal years)

19

6

11 9

7

12

8
13

20

Financial condition (fiscal year-ends)

Per-share information
Net income (loss) per share (¥)
Net assets per share (¥)
Other Financial Data
Operating income ratio

3.1%

1.4%

0.3%

1.6%

1.9%

Return on equity (ROE)

0.5%(19.1)%(11.0)%

1.6%

2.4%

Return on assets (ROA)

3.0%

0.5%

1.1%

1.7%

2.2%

Equity ratio

45.0%

42.7%

39.6%

42.6%

45.0%

Dividend payout ratio

271.5%

—

—

35.6%

42.4%

Capital investments

15,451

11,216

7,219

3,367

6,997

Depreciation

12,075

12,522

10,246

8,903

9,880

R&D expenditures

8,179

7,391

5,149

5,335

7,201

R&D expenditures to sales ratio

4.8%

4.7%

4.3%

4.2%

4.5%

Non-Financial Data

Name
Yorozu Tochigi Corporation
Yorozu Oita Corporation
Yorozu Aichi Corporation
Shonai Yorozu Corporation

5 Yorozu Engineering Corporation

Location
Oyama, Tochigi Prefecture
Nakatsu, Oita Prefecture
Nagoya, Aichi Prefecture
Tsuruoka, Yamagata Prefecture
Mikawa, Higashi-Tagawa, Yamagata
Prefecture

6 Yorozu Service Corporation

Yokohama, Kanagawa Prefecture

7 Yorozu America Corporation
8 Yorozu Automotive Tennessee, Inc.
9 Yorozu Automotive Alabama, Inc.
10 Yorozu Automotive North America, Inc.

Morrison, Tennessee, U.S.A.
Morrison, Tennessee, U.S.A.
Jasper, Alabama, U.S.A.
Battle Creek, Michigan, U.S.A.
San Francisco de los Romo,
Aguascalientes, Mexico

11 Yorozu Mexicana S.A. de C.V.
Yorozu Automotive Guanajuato de Mexico, S.A.
12
de C.V.
13 Yorozu Automotiva do Brasil Ltda.
14 Yorozu (Thailand) Co., Ltd.
15 Y-Ogura Automotive (Thailand) Co., Ltd.

Capital or investment amount
Main business
100 million Japanese yen
100 million Japanese yen
Manufacture and sale of auto parts
100 million Japanese yen
100 million Japanese yen
Manufacture and sale of dies and
100 million Japanese yen
equipment
Insurance services, money
10 million Japanese yen
lending, temporary staffing, service
contracting, etc.
192 million U.S. dollars
A holding company in the U.S.A.
95 million U.S. dollars
Manufacture and sale of auto parts
100 million U.S. dollars
20 million U.S. dollars
Leasing of plant buildings
754 million Mexican pesos

Apaseo el Grande, Guanajuato, Mexico 1,853 million Mexican pesos
Resende, Rio de Janeiro, Brazil
Rayong, Thailand
Rayong, Thailand

250 million Brazilian real
1,800 million Thai baht
1,383 million Thai baht

Manufacture and sale of auto parts

Manufacture and sale of dies andequipment

16 Yorozu Engineering Systems (Thailand) Co., Ltd. Rayong, Thailand

65 million Thai baht

17 Guangzhou Yorozu Bao Mit Automotive Co., Ltd. Guangzhou, Guangdong, China
18 Wuhan Yorozu Bao Mit Automotive Co., Ltd.
Wuhan, Hubei, China
19 Yorozu JBM Automotive Tamil Nadu Pvt. Ltd.
Tamil Nadu, India
20 PT. Yorozu Automotive Indonesia
Karawang, West Java, Indonesia

189 million Chinese yuan
276 million Chinese yuan
Manufacture and sale of auto parts
4,000 million Indian rupees
770 billion Indonesian rupiah

Scope 1

25,98526,50919,712

18,333

19,865

Scope 2103,992

107,708

77,431

71,46970,195

Websites

Waste emissions (tons)

5,040

3,200

3,326

3,150

3,653

Investor Relations

CSR

Environmental Preservation

Water use (1,000 m3)

1,324

1,309

1,086

1,057

1,157

https://www.yorozu-corp.co.jp/en/investors/

https://www.yorozu-corp.co.jp/en/csr/

https://www.yorozu-corp.co.jp/en/csr/eco/

Number of employees (consolidated)

6,597

6,475

6,162

5,666

5,726

Ratio of non-Japanese employees

4.59%

6.57%

6.25%

5.70%

5.49%

The IR section has information about management policies, strategies for medium-termbusiness plans, financial results, and FAQs.

The CSR section introduces Yorozu’s CSR
policy, occupational safety and health initiatives,and environmental preservation activities forrealizing a sustainable society.

Ratio of women in management positions

5.95%

8.05%

10.90%

12.35%

12.35%

This section introduces Yorozu’s environmental
conservation initiatives and efforts to its stakeholders, which include its Environmental
Philosophy and vision as well as CSR activities
and ISO certifications obtained by Group
companies around the world.

Ratio of paid vacation taken

80.1%

84.2%

50.8%

66.70%

72.50%

0

0

0

0

0

CO2 emissions (t-CO2)

Number of accidents that led to lost working days

52

1
2
3
4

Inquiries regarding IR information
Yorozu Corporation Accounting Department 3-7-60 Tarumachi, Kohoku-ku, Yokohama, Kanagawa 222-8560, Japan

YOROZU 2023 Integrated Report53