President’s Message

Jin-Gi-Kou-Ken: 70 Years of Management
Philosophies Summarized
After its founding in Kumamoto City in 1951, Hirata has continued to create
production systems that support manufacturing in a variety of industrial fields,
but primarily centered on the automotive, semiconductor, and home electronics
sectors. Today, we are the production facility integrator that is most commonlychosen by our customers around the world.
In May 2022, on the occasion of having formulated its new Medium-Term
Management Plan, which is aimed at realizing long-term Group growth, theCompany announced the slogan Jin-Gi-Kou-Ken as its vision. A summarizedversion of the Company’s management philosophies accumulated over the 70year history since its establishment, this means “To make everyone involved in
Hirata content and contribute to society by means of technology.”
Until the Kumamoto Earthquake, I myself did not possess a deep
understanding of social contribution in a true sense. However, after having
witnessed the devastation wrought by the earthquake, which occurred in April
2016, I was heartbroken for my hometown of Kumamoto, which had suffereddamage. I decided to return to the city, where the Company had been founded,with a fervent desire to “encourage Kumamoto.” At the same time, I also told theemployees that “We will take on many projects from all over the world and donate
as much money as possible to Kumamoto as support for reconstruction in theaftermath of the earthquake.” I also told them that protecting their hometown was
their own form of social contribution. Under such circumstances, we were also
affected by the disaster and the environment was harsh, but the desire to donate
as much money as we could to Kumamoto and contribute to the reconstructionof our hometown boosted the morale of all the employees, and sales reacheda record high that fiscal year. It was from this experience with the Kumamoto
earthquake that I learned that, by making everyone involved with Hirata content,
we could also grow significantly as a company.
J i n - G i - K o u - K e n

人技幸献
To make everyone involved in Hirata content andcontribute to society by means of technology

While securing profits in existing
businesses, we will work to expand
business in growth markets, including
the creation of new businesses.

Review of Consolidated Performance for Fiscal Year
Ended March 31, 2022
In the automotive-related equipment business in the year ended March 31, 2022,

Yuichiro Hirata

strong capital investment in next-generation vehicles such as electric vehicles

President(EVs) was seen, backed by global efforts to become carbon neutral. In thesemiconductor-related equipment business, demand for semiconductors increased
due to the full-scale development of fifth-generation (5G) mobile communication
The Noh stage in the entrance hall of theHirata Corporation headquarters embodies
the idea of becoming a “headquarters thatcan convey the traditions of Kumamoto
and Japan to the world.”

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Hirata Integrated Report 2022

systems and the spread of telecommuting, and semiconductor-related capital
investment, such as in silicon wafer transfer equipment, was aggressive. Mainly
as a result of these factors driving performance, net sales for the fiscal year underreview amounted to ¥67,087 million (¥65,255 million for the previous fiscal year),
Hirata Integrated Report 20225Formulation of New Medium-Term Management Plan
(FY2022-FY2024)

Taking into account the expansion of
the EV and semiconductor markets,
we will proactively make management
decisions to expand earnings over themedium to long term.

I believe that the significant increase in demand in the automotive- andsemiconductor-related equipment businesses will continue for about the next
10 years, until the spread of EVs has progressed. In the meantime, we willdevelop businesses that will become the pillars of new businesses alongside
our existing businesses. Based on this, we formulated a new Medium-Term
Management Plan in May 2022 with the aim of achieving long-term Group growthby strengthening technological superiority and profitability, which were issues in
the previous medium-term management plan. We will promote a raft of measures
under the Plan’s four basic policies. Among them, under “business expansion
in growth markets,” we will concentrate management resources on existing

operating profit was ¥3,856 million (¥4,995 million for the previous fiscal year),businesses, such as automotive- and semiconductor-related facilities, which weordinary profit was ¥4,258 million (¥5,176 million for the previous fiscal year), andhave positioned as growth markets. As one of the measures for “strengthening

profit attributable to owners of parent was ¥2,682 million (¥4,075 million for thecompetitiveness as a global company,” we will also thoroughly manage

previous fiscal year).

profitability by utilizing DX.

Note: We are applying the Accounting Standard for Revenue Recognition (Accounting Standards
Board of Japan [ASBJ] Statement No. 29, dated March 31, 2020) from the beginning of thecurrent consolidated fiscal year.

As new management targets, we are aiming for net sales of ¥100 billion andoperating profit of ¥10 billion in FY2024, the Plan’s final fiscal year, the targets thatwere not achieved under the previous medium-term management plan.

Recognition of Business Environment• Basic Policies and Priority Measures

The work involved in creating production equipment is extremely difficult, and theBasicPolicies

1. Business expansion in growth markets
2. Strengthening competitiveness as a global company
3. Strengthening of ESG management initiatives
4. Realization of management in line with new normal era

PriorityMeasures

Thoroughprofitability
management thatutilizes DX

number of competitors is decreasing. Under these circumstances, we are currently
facing what could be said to be the greatest opportunities since our founding in
our main automotive- and semiconductor-related equipment businesses. First, inthe automotive-related equipment business, the EV-related market is burgeoning
engines, EVs have fewer parts, even for the engine alone, making it easier to

FY2021 Results

increase mass production efficiency, so we can expect an improvement in profit
margins. Since our company has traditionally worked with the major European andU.S. automakers as its customers, and we have extensive experience in EV-relatedequipment, I recognize that we are in a leading position in terms of technologicalcapabilities and delivery record. Next, in the semiconductor-related equipment
EVs, to electronic products. In addition to the progress being made with DX andIoT, it is expected that large-scale investments by semiconductor manufacturers
worldwide will increase going forward.

Growth strategy
for semiconductorrelated equipment
business

Initiatives for newbusinesses• Management Targets

on a global basis. Compared with vehicles powered by internal combustion

business there is a shortage of semiconductors, from automobiles, including

Growth strategy
for EV-related
equipment
business

P18 Medium-Term
Management Plan
P28 Financial/Capital
Strategies

Final year of Medium-Term
Management Plan (FY2024)

Net sales

67.0 billion yen

100 billion yen

Operating profit

3.8 billion yen

10.0 billion yen

Operating profit ratio

5.7%

10.0%

ROE*

5.1%

11.0%

Secure Target ROIC that exceeds the cost of capital (WACC)
and improve capital efficiency* ROE assumed as (Increase in retained earnings for each fiscal year) = (Profit attributable to ownersof parent) - (Dividend payment [Note: dividend payout ratio 20%])

In fact, in FY2021 we received large-scale orders for equipment related
to both EVs and internal combustion engine-powered vehicles, and orders forsemiconductors were also strong. The current fiscal year is also starting withrecord-high orders.
In contrast, up until now our company has maintained a strong sense ofputting the customer first, and if there was a problem with a customer, we tended
to respond even if the profit was low. From a management perspective, I now
believe it is necessary for us to narrow down projects and business areas fromthe perspective of efficiency and profitability, and make decisions to concentrate
management resources to expand earnings over the long term.

6Hirata Integrated Report 2022

Adding “Made by Hirata” Products forLong-Term Growth
The strength of our group undoubtedly lies in our overwhelming experience withproduction equipment. We are handling hundreds of large and small productionlines every year for customers in 40 countries around the world. In the case ofEVs, we fully understand the on-site needs of our customers, for example bypossessing a thorough knowledge of the differences between customers in
Europe, North America, and China, and always make the most suitable proposals.

Hirata Integrated Report 2022

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A large assembly line with a total length of several hundred meters also requires alarge-scale team-up, and engineers, who account for about 70% of all employees,
are involved.
This group of engineers is the source of our company’s strength, but the factthat we have manufacturing functions in-house is also a factor that sets us apartfrom other companies. We are more than just an engineering company, as we

We solve customer issues throughthe synergistic effects of ourengineering capabilities andmanufacturing capabilities.

use the know-how we have acquired through actual production and manufacturing
activities to make proposals that lead to solving our customers’ problems. Throughthe synergistic effects of our capabilities in engineering and manufacturing, wehave achieved integrated production, from development and design to start-up andmaintenance, and earned the trust of our customers.
While leveraging these strengths in our existing businesses, we are also
focusing on efforts to increase new earnings pillars. Specific examples include theplant genetic resource business, which under the Medium-Term Management Plan
is positioned as one that will present new challenges, and the Hirata ECO electric

12 Value Creation Processof Value
14 Sources
Creationseries, which reduces the environmental impact of air equipment in customers’

are familiar with the needs of our customers, so this kind of shift to electrification

factories. Our company is a facility manufacturer, and thus our basic policy isis possible.

to ultimately hand over the products we make to our customers. In addition, in

As we enter the new normal era, I expect that the shift to remote and online

the years to come, we will strive to evolve from a made-to-order business andoperations, which has taken root due to the COVID-19 pandemic, will accelerate.

improve profitability by increasing the ratio of products and services that we have

Before the pandemic, I used to travel overseas frequently, but now my work isdeveloped in-house and thus are, so to speak, “Made by Hirata.”

mainly via the Metaverse (a virtual space built on the internet). Under the current
management in line with the new normal era, we are implementing virtual

Naturally, employees are included in "everyone involved in Hirata" in Jin-Gi-KouKen. For our employees to work with pride and remain content, we will value in-commissioning using an emulator as business DX while promoting VR factory

house manufacturing as we aim for further growth and scale expansion.

tours, VR assembly processes, remote attendance and maintenance. Not only
enabling the achievement of shortened delivery times that will lead to improved
work efficiency, these initiatives can also be expected to be effective from theIdentification of Materiality and Promotion ofESG Management
The two other basic policies under the new Medium-Term Management are

16 Materiality

viewpoint of profitability management.

To All Our Stakeholders

the “strengthening of ESG management initiatives" and the “realization ofmanagement in line with the new normal era.”
To further promote ESG management, we had identified materiality consisting

Our business itself will continue to create value over the medium to long term, andwe will continue to actively and continuously contribute to our stakeholders andof four themes and 10 areas as our key issues for FY2021. During the period

local communities. Recognizing the significance and mission of social existence,of the Medium-Term Management Plan, we will formulate specific action plans

we also recognize that continuing to be an organization that “brings out the best

based on the materiality (important issues) and contribute to solving social issues

in every person” will remain an important factor in further improving our corporate

under the leadership of our Sustainability Promotion Committee.

value.

One of the issues on which we place importance is human capital, which is

In the years to come, we will continue to deepen mutual communication withalso specified in our materiality. I believe that it is a management issue to improve

all of our stakeholders, and all officers and employees will work together as one as

employee engagement by creating environments in which each employee canwe aim for sustainable growth.

make the most of their expertise and individuality and feel more joy. To this end,
I will proactively encourage efforts to strategically secure human resources,

In anticipation of your ongoing support, I would like to take this opportunity toconvey my heartfelt appreciation.

strengthen human resource development, and promote Diversity & Inclusion.
As part of our response to climate change, it is also important to contribute toachieving carbon neutrality by means of our products and services. For example,
instead of the air equipment used in customers’ factories, a significant reduction
in running costs as well as electricity usage and CO2 emissions can be achievedby installing an all-electric transfer system, consisting of the Hirata ECO electricseries. As I mentioned earlier, our engineers possess a wealth of experience and8

Hirata Integrated Report 2022

Yuichiro Hirata
Representative Director, President

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