The Punch Industry Group’s Network
Group companies

Sales offices

China

Germany

・PUNCH INDUSTRY (Dalian) CO., LTD. (Dalian Plant, Chongqing Plant)
・PUNCH INDUSTRY (Wafangdian) CO., LTD.
Japan
・PUNCH INDUSTRY (Wuxi) CO., LTD.
・PUNCH INDUSTRY CO., LTD.
・PUNCH INDUSTRY (Dongguan) CO., LTD.
Korea
(Kitakami Plant, Miyako Plant, Hyogo Plant)
・PUNCH SPRING (Dalian) CO., LTD.
・
ASCE CO., LTD.
TurkeyThailandTaiwanIndia

・PUNCH INDUSTRY INDIA PVT. LTD.

Malaysia

Philippines

USA

・PUNCH INDUSTRY USA INC.

Vietnam・PUNCH INDUSTRY VIETNAM CO. LTD.
・PUNCH INDUSTRY MANUFACTURING VIETNAM CO. LTD.

・PUNCH INDUSTRY MALAYSIA SDN. BHD.

Singapore

・PUNCH INDUSTRY SINGAPORE PTE. LTD.

Indonesia

Australia

・PT. PUNCH INDUSTRY INDONESIA

2023

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ANNUAL REPORT(Japanese language only)

The Punch Industry website contains various information,
including Company Overview, Business Overview,
and Investor Relations information.

https://www.punch.co.jp/english/

Inquiries

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

Phone: +81-3-5753-3130 Fax: +81-3-5753-3175
E-mail: info-corp@punch.co.jp

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

CEO MESSAGE
Record-high sales in fiscal 2022

determining that maintaining our five-plant system in Japan would be

Company, aiming to relist on the Prime Market, but we are notdifficult given the status of domestic orders, which is taking time topursuing a revival that barely passes the hurdle. We also emphasize

recover from the COVID-19 pandemic.

“management that is conscious of cost of capital and stock price.” To

Regarding our sales strategy, we aim to expand new and existing

but sharp slowdown in fiscal 2023

businesses through increased sales of special-order products in the

Company an awareness of ROIC and WACC, terms that our people arefactory automation (FA) field. In October 2022, ASCE CO., LTD., which

not yet sufficiently aware of when they consider their budgets. With

Having reviewed our mid-term business plan,

designs and manufactures FA equipment, joined the Group. This is a

respect to share price, we have reaffirmed the return of profits tosignificant addition, giving us skills that we did not previously enjoy

shareholders as one of our most important priorities. In January

and allowing us to design and propose distinctive solutions to2023, we disclosed changes to our basic capital policy andcustomers’ automation needs. We are also making good progress inshareholder return policy. In these policies, we have established, asbuilding a supply system, including the development of partner

indicators for determining dividend amounts, a consolidated dividend

factories. As a result, orders are steadily increasing. However, topayout ratio of 30% or higher and a dividend-on-equity (DOE) ratio ofexpand our business in the FA field, where we have been specializing

3% or higher. From a sustainability perspective, in July 2022, wein mold and die components, we need to increase our nameestablished a Sustainability Committee with the participation of allrecognition and our sales activities. That said, we acknowledge that it

executive officers and above. We also launched three task forces, on

will take more time for these efforts to benefit our business

CO2 reduction, waste reduction, and respect for human rights,

performance.

respectively. We are now disclosing numerical targets on our

we will implement VC2024 Revival to solidify
our foundation for future sustainable growth.
Tetsuji Morikubo
Representative Director, President, Chief Executive Officer

With respect to “growth in overseas business,” in China, we will
expand our business domain to include embedded components forindustrial machinery, medical-related equipment, and FA, all of which

corporate website, and we understand the need to produce results
against those targets going forward.
In Japan, we implemented a voluntary retirement campaign,

Following sharp revenue declines due to the U.S.–China trade friction in 2019 and the COVID-19 pandemic in 2020,
the Company posted record-high sales in fiscal 2022. Because of a slowdown in the Chinese market, however, we expect asignificant year-on-year decline in fiscal 2023. To ensure solid performances and sustainable growth in the future, it isimperative that we rebuild our business in Japan, evolve into a comprehensive machine parts company in China, and achievebusiness growth in Southeast Asia, Europe, and the United States.

require high precision, in addition to mold and die components. We

resulting in a major change in our workforce, which had declined fromalso plan to evolve from a mold and die component company to a

900 to 700 persons by October 2023. While we are making steadycomprehensive machine parts company. In India, where we have highprogress with management rationalization, it will take some time to

expectations, we have operated a sales base for 10 years, but we aretemporarily reorganize our production system due to the decrease instill perceived as a company that stocks and sells cam units, which

personnel, while our supply system is also unstable. Eliminating thisare die components for the automotive industry. In response, we willproblem by the end of fiscal 2023 and bringing the situation back to

Performance review

Transition from VC2024 to VC2024 Revival

increase the number of Japanese employees, work on raisingnormal are urgent priorities. By utilizing Group factories and partner

awareness, and review our product lineup. In the medium to long

factories while supplementing production through DX andIn fiscal 2022, the Group reported year-on-year sales growth in all

Despite these changing market conditions, the Punch Industry Groupterm, we intend to solidify not only our sales bases but also our

productivity improvements, we will fulfill our responsibility to supply

regions, with consolidated net sales reaching a record-high ¥42.7

aims to remain a behind-the-scenes player that supports

production foundation, including by developing local partner factories.

customers with products. Fully aware of my role, which is to ensure

manufacturing by providing mold and die components to customers

In Europe and the United States, where sales are relatively steady, wethat management rationalization delivers tangible benefits, I intend toremained mostly unchanged with 1% growth. Due in part to the weakin a wide range of industries. We will continue refining the Group’s

will continue cultivating customers through exhibitions and sales

transform the Company. With this in mind, I will lead the way inyen, however, our business recovered from declines caused by thestrength in supplying a wide range of both standard (off-the-shelf)

activities utilizing staff from sales offices or trading companies,

innovating the sources of the Group’s strengths. By steadily pursuing

COVID-19 pandemic. Specifically, we posted 12% year-on-yearand special-order (made-to-order) press die and plastic moldpaying particular attention to deepening cooperation with sales offices

every initiative set forth in VC2024 Revival, we will improve ourgrowth in China, 13% growth in Southeast Asia, and 24% growth incomponents. To this end, in July 2023, we formulated Value Creationin Europe.

business performance and achieve medium- to long-term growth.

Europe, the United States, and other regions. In fiscal 2023, however,2024 Revival (VC2024 Revival), covering two years. The basic

factors affecting our business have changed dramatically. At the end

strategy is to “pursue sustainable profit growth by specializing in the

To our stakeholdersof the second quarter, overall sales declined substantially, with net

high-value-added, special-order products business.”

From a long-term perspective, we will focus on mold and die

billion, up 9% from that of the previous year. Net sales in Japan

We substantially rearranged the priority initiatives set forth incomponents in Japan and plant the seeds for FA and new businesses,

in Southeast Asia down 1% year on year. Despite 15% growth in

VC2024, placing renewed emphasis on “redevelopment of domestic

while overseas we will expand our mold and die component business

Europe, the United States, and other regions, the slowdown in China

business” and “growth in overseas business” while reforming ourby establishing new bases, strengthening our distributor network, andhad a significant impact.

business structure.

pursuing M&As. At present, however, we recognize the urgent need tosales in Japan down 7%, net sales in China down 19%, and net sales

By segment, orders for automobile-related new car molds and diesWith respect to “redevelopment of domestic business,” we willrebuild our supply system in Japan, strengthen sales activities and cut

have been sluggish in both Japan and China. In China, where the shift

start by transferring to our Dalian and Vietnam plants the production

costs in China, and grow our businesses in Southeast Asia, Europe,

to EVs has been particularly vigorous, we see intensifying competitionof many standard products previously manufactured in-house at

and the United States.

and the beginning of a shakeout due to a rapid increase in the number

domestic factories. At the same time, our domestic plants will

To concentrate our management resources on these activities, weof emerging manufacturers. Meanwhile, the electronic devices andleverage their respective strengths to specialize in manufacturing new

shifted our listing from the Prime Market to the Standard Market ofsemiconductor segment stagnated due to stalled demand forspecial-order products and improving technology. Our aims for

the Tokyo Stock Exchange. The market capitalization hurdle forsmartphones, and the consumer electronics market also declined due

growth are to strengthen our earning power in Japan and improverelisting on the Prime Market suddenly jumped to ¥25 billion, whichto the uncertain real estate industry. We expect that China, which had

factory operating rates overseas.

would require our share price to be around 2.5 times the current pricebeen growing at a high rate, will continue experiencing weak growthfor some time.

01

this end, we are still in the process of extending throughout the

Punch Industry Co., Ltd.

In conjunction with this decision, we closed Pintec Corporation, adomestic consolidated subsidiary, in September 2023, after

and the price book-value ratio to be more than 1.0. We have alreadyintroduced ROIC management and will extend it throughout the

Punch Industry Co., Ltd.

02

VC2024 Revival: Updated mid-term business plan
aimed at sustainable future growth

SpecialFeatureAlthough we posted record-high net sales in fiscal 2022, we are facing a

Plant in Japan to level out disparities between order-receiving operations.

rapidly changing world, with rising geopolitical risks, increasing costs of

By resolving various issues to shorten the time required to address

raw materials and resources, and a slow market recovery in Japan, as

quotations and give production instructions after order receipt, we plan

well as a significant economic slowdown in China. In response, weto increase orders while improving customer service. We will begin thisupdated our mid-term business plan in July 2023, renaming it Value

process in limited regions while proceeding with consolidation, including

Creation 2024 Revival (VC2024 Revival). The updated plan, whichthat of branches, in stages.

prioritizes corporate streamlining, is aimed at ensuring sustainable future

manufacturing of standard products to overseas factories. At the samebusiness” and “growth in overseas business.” The word “Revival”

time, we will make our own factories smarter by utilizing factory

signifies our decision to implement difficult reforms, including

automation (FA) to address automation and labor-saving needs. Because

large-scale reorganization, workforce reductions, and liquidation of a

our factories are not mass-production facilities, setting up production

consolidated subsidiary. Specifically, we plan to concentrate on domesticlines is difficult. Nevertheless, the Kitakami Plant is progressively

corporate streamlining, including the closure of Pintec Corporation, as

introducing labor-saving equipment that feeds products to machines forwell as subsequent business restructuring, to lay the foundation forprocessing and collection. Going forward, we will promote automation of

future growth.

manufacturing processes and multi-skilled production systems by

To achieve our goals, we will redevelop our sales system. In addition

Expand sales of special-order productsin the FA field

To redevelop the Group production system, we will transfer

growth and based on two major pillars—“redevelopment of domestic

to reducing our workforce through corporate streamlining, we will

Ke y Me as u r e s of V C2024 Re v iv al

Redevelop sales system

Establish customer center
By resolving customer issues to shorten the time required to address
quotations and give production instructions after order receipt, weplan to speed up our order responses and increase orders while
improving customer service.

increasing the types of processing machines we introduce.
We will also continue developing new technologies and strengthening

restructure our organization to improve the efficiency of order-receiving

R&D with the aims of further evolving the Punch Industry Group, driving

operations. Internal operations, which used to differ from branch to

future revenue and earnings, and improving the Group’s technologicalbranch, have been consolidated into a customer center at the Kitakami

capabilities.

Japan

Corporate streamlining

Consolidate production bases

Redevelop production system

In July 2023, the Company announced and undertook corporate streamlining by encouraging voluntary retirement among employees andliquidating a consolidated subsidiary. We expect the resulting decrease in personnel to improve our gross margin and reduce SG&A expenses. We
believe this corporate streamlining will result in improvements in operating profit of around ¥700 million in fiscal 2023 and around ¥1.2 billion in
fiscal 2024, compared with the situation prior to streamlining.

1. Offering voluntary retirement

The offer targeted employees in all divisions in Japan, with early retirement set for September 30, 2023. A
total of 205 employees accepted the offer. In addition to the prescribed retirement allowance, we gave
those employees a specially calculated allowance, and we also provided outplacement support to those
who desired it.

2. Liquidating consolidated subsidiary

Pintec Corporation, which mainly manufactured and sold PCB mold-related parts, terminated production
on September 30, 2023.

We view the FA market, which continues to expand in Japan, as a
growth field. With this in mind, we will focus on expanding ourbusiness in high-value-added, special-order products by applying
technological capabilities cultivated through our business in
special-order mold and die components.

We will transfer production of standard products, which is
unprofitable in Japan, to our factories in China and Vietnam. This
move will strengthen our price competitiveness for standard products
and enhance the earning power of our domestic stand-alone businesscentered on special-order products.

Use FA to make factories smarter
Using automated guided vehicles (AGVs), robots, and the like, we aim
to automate transportation between processes and in-processinspections while improving overall transportation efficiency. We will
also use IoT technologies to visualize production and improve theefficiency of shipping operations. In addition, we will promote theexpansion of labor-saving equipment.

Continue strengthening R&D

Management numerical targets

P-Bas ® (new processing method)
Strengthen our aerospace-related businessOur management targets under VC2024 Revival are net sales of ¥38.5 billion orSales/Operating profit (Billions of yen)higher, operating profit of ¥2.15 billion or higher, and net income of ¥800 million or
higher in fiscal 2024. These figures are significantly lower than the targets set forth

Sales

in VC2024 (net sales of ¥50 billion, operating profit of ¥5 billion, and net income ofOperating profit¥4 billion). Nevertheless, we are strongly committed to exceeding all targets at the

42.7
2.4

38.2
1.1

1.3
-0.9

FY2022(Actual)

38.5
2.15
0.8

very minimum. In fiscal 2023, we will report an extraordinary loss associated withour corporate streamlining and the continuation of high prices of raw materials andresources since the previous fiscal year. Accordingly, we forecast a year-on-year
decline in revenues and earnings and expect to post a net loss. In fiscal 2024,

Capital expenditure: ¥3.0 billion
Depreciation: ¥2.0 billion

however, we look forward to solidly improving profitability despite mostly

FY2023(Forecast)income of ¥800 million or higher. Although the times call for patience, we plan to

FY2024(Plan)

VC2024 Revival

unchanged net sales, forecasting operating profit of ¥2.15 billion or higher and net

Overseas

Net income

ChinaSoutheast Asia
Europe, the United States,and others

Enhance FA, establish sales offices

Refocus on the Indian market, establish sales bases

Acquire new customers

make capital expenditures of ¥3 billion over two years (the same level as that of
VC2024) as investments for the future.

03

Punch Industry Co., Ltd.

Punch Industry Co., Ltd.

04

Technology Development and R&D

Sustainability

The Punch Industry Group proactively engages in technology development and R&D,
the sources of value creation for a manufacturing company.
R&D and Marketing Creating New Value
The Punch Industry Group’s R&D bases in Japan and China work together to develop new manufacturing methods and products.
Our business environment is undergoing remarkable changes due to advances in digitalization and electrification,
as well as business model innovations. In this context, our aim is to stay close to the market to understand new needs andcreate new value, as well as new businesses and products for the next generation.

Aerospace-related initiatives
Technical partnership agreement with Dymon Co., Ltd., which istackling the challenge of lunar exploration
In May 2023, we signed a technical partnership agreement with Dymon
Co., Ltd., a robotics and space technology development venture, the firstprivate company in the world to tackle the challenge of lunar exploration.
We are participating in Dymon’s lunar exploration initiative called ProjectYAOKI. It will use Punch Industry’s 3D Measurement technology to ensure
the accuracy between the design of the YAOKI lunar rover and the actual
body, and verify the hypothesized clearance (gap) between the rover’s
storage case and main body during transportation.
The aim of the project is to transport YAOKI, a lunar rover developed by
Dymon, to the moon’s surface. YAOKI will drive around the lunar surface
and obtain close-up image data to secure resources and build a base forhuman activities, including living quarters. Housed in a special storage
case, YAOKI will be transported to themoon by a lunar module, and after
landing, it will pop out of the case andstart exploring the lunar surface. The
role of Punch Industry is to measure
the shape of YAOKI to ensure that theclearance (gap) between its storage
case and main body is properly packed
to enable the rover to withstand
YAOKI lunar rover
vibration during transportation.
Joint research agreement with JAXA
In August 2023, we signed a joint research agreement with the Japan
Aerospace Exploration Agency (JAXA).
Under the agreement, we will engage in joint research into
manufacturing processes using Punch Industry’s P-Bas® metal-bonding
technology for making parts with complex shapes that are difficult to cut
and process, such as those for rocket engines.
Research overview(1) Obtain bonding conditions for heat-resistant alloys
We aim to establish optimal conditions for bonding heat-resistantalloys, including heating and pressurization time, temperature, andpressure, and evaluate the bonding strength through tests and othermeans.
(2) Study bonding process with minimal distortion
Because P-Bas® has a one-way pressure direction, it is necessary toaddress the problem of misalignment and distortion caused bypressure. To minimize such distortion, we will make trial joints using
several types of bonding fixtures and evaluate the bonded surface bymeasuring the shape.
05

Punch Industry Co., Ltd.

ASCe, which designs and manufactures
FA equipment, joins Punch Industry GroupIn October 2022, the Company acquired all shares in ASCE CO., LTD.,
which designs and manufactures FA equipment, and ASCe joined theGroup. This addition will enable us to accelerate efforts to expand sales of
special-order products in the FA field and use FA to make our own
factories smarter, which are key measures in our mid-term business plan.
With respect to expanding sales of special-order products in the FA
field, we will increase efforts in four steps (see chart below). To date, wehave manufactured precision components, precision jigs and tools, andassembled precision components by applying technological capabilities
cultivated through our business in special-order mold and die components
and heeding the various requests of customers. With the addition of ASCe,however, we can now offer more complex and sophisticated products thatincorporate equipment similar to that used in production lines. To
strengthen our system for expanding sales, we launched an FA businesspromotion project in Japan. We are also promoting the formulation ofsales strategies while establishing ties
with FA partner factories. To make ourfactories smarter, we will improve work
efficiency by developing, designing, andintroducing automated guided vehicles(AGVs), robots, and other equipment toautomate transportation between
processes and in-process inspections.
Collaborative robot assembled by ASCe

STEP 1

Precision components,
precision jigs and tools

STEP 2Assembled precision components

STEP 3

Simplified powered equipment

STEP 4

Production line equipment

Thanks to the addition of ASCe,
we can now provide equipment

Industrial ODM/EMS Expo (Japan)

September 2023: FABTECH 2023 (Chicago, U.S.A.)
October 2023:

In July 2022, we established the Sustainability Committee to strengthen ourefforts to create a sustainable society. The committee is chaired by the
Representative Director and President, and includes executive directors andexecutive officers. It is charged with formulating basic policies onsustainability, identifying material issues, setting activity plans and targets for
all material issues, and managing their progress. It also deliberates mattersrelated to the disclosure of information on its activities, gives operational
instructions, and regularly submits reports and proposals to the Board of
Directors.
Under the committee are three task forces—domestic and internationalcross-departmental teams—that focus on CO2 reduction, waste reduction, andrespect for human rights, respectively. They are responsible for managing the
progress of all tasks and the practicalities of addressing all material issues.

Family Day
We conduct factory tours for children and families of employees. The
purpose of the tours is to let children and their families experience thejoys and challenges of work by seeing their mothers and fathers working,which they could not normally do. By helping them learn about theirparents’ workplace, we hope to increase the number of Punch Industry
supporters.

Fakuma 2023
(International Trade Fair for Plastics Processing) (Germany)

Board of Directors
Report/propose

Instruct/supervise

Sustainability Committee
Chairperson: Representative Director and President
Members: Executive directors and executive officers

CO2 Reduction
Task Force

Waste Reduction
Task Force

Task Forceon Respectfor Human Rights

Various divisions

Culture Reform Committee
We have established a Culture Reform Committee at every site and aredeveloping various initiatives to reform our corporate culture. These
committees plan and coordinate various events that contribute to society
and revitalize internal communication. For example, they spearhead theCompany’s in-house recycling activities, including the eco-cap campaign
to collect plastic bottle caps and the flowering campaign to decorate
workplaces with flowers, as well as food drives, in which food items arecollected from employees and donated to local social welfareorganizations. We also collect donations for the Red Feather campaign at
shopping centers.

Food drives

To dateParticipation in exhibitions in 2023
June 2023:

Sustainability Committee established

Red Feather campaign

Family Day events (Kitakami Plant, Malaysia Plant)

Solar power panels
Certification for promoting childcare andwomen’s participation and advancement
In November 2022, we received Kurumin
certification from the Ministry of Health, Labourand Welfare in recognition of our high-level
efforts to help employees balance their work andchildcare duties. This certification recognizes theCompany’s efforts to promote understanding at
every workplace, as well as its progress inencouraging employees, regardless of gender, totake parental leave and annual paid leave. We
also received Eruboshi (Level 3) certification in
July 2021.

In July 2023, we installed solar panels on the roof of our Vietnam Plant.
The panels are expected to generate around 30% of the electricity used atthat plant and reduce around 415 tons of CO2 emissions per year.
Prior to the Vietnam Plant, the Group installed solar panels on the roofof its Malaysia Plant in 2018. Those panels have reduced around 130 tonsof CO2 emissions per year and are also used as a source of electricity
within the plant, with any surplus power sold to local power companies.

Solar panels(Vietnam Plant)
Punch Industry Co., Ltd.

06