Hirata’s Strategies

Medium-Term Management Plan (FY2022–FY2024)

Positioning of the Medium-TermManagement Plan (FY2022–FY2024)
In formulating the current Medium-Term ManagementPlan, we reviewed our Mission Statement andManagement Philosophy, which constitute our founding spirit, and arrived at the idea that the duty of ourGroup is “To make everyone involved in Hirata content
and contribute to society by means of technology”(Jin-Gi-Kou-Ken).

2024
2022
Transformation to competitive
management structure

Basic Policies and Measures Existing businesses are defined as businesses that respond togrowth markets driven by social issues such as reduction ofenvironmental impact and digitalization and other businesses.
In particular, we will focus our resources on the two
growth markets of electric vehicles (EVs) and semiconductors and pursue efficiency improvements in other businesses, such as FPDs and home electronics as continuing
operations.
In addition, we will position the biological genetic
resource business (mainly plant genetic resources) as a business that will present new challenges and will strive to build
an internal structure with a view to commercialization.

 trengthening competitiveness as a globalScompany
To strengthen our management foundation, we will
engage in:

Basic Policy 4

Realization of management in line with
the new-normal era

Positioning of Medium-Term Management Period for Each BusinessResource concentration

Automotive-related equipment (EV related)

Existing businesses × social issues
Reduction of environmental impact digitalization= Growth markets

Semiconductor-related equipment

Existing businesses
FPD-related equipment

Home electronics-related
equipment

Industrial robots

Transfer machines/Automatedwarehouse systems

Medical, chemistry, andphysics devices

Internal combustionrelated equipment

Pursuit of efficiency

Continuing business
Building internal systems toward commercialization

Biological genetic resource business(mainly plant genetic resources)

New business

Under the current Medium-Term Management Plan,
we set the management targets shown on the right.
In fiscal 2022, net sales amounted to ¥78,443 million,
operating profit was ¥5,920 million the operating profit
ratio was 7.5%, ROE was 7.5%, and ROIC was 7.1%,
surpassing cost of capital (WACC), which was 5.5%.

Business that will
present new challenges

Individual Business Measures in Growth Markets

FY2022 Results FY2023 Forecast*FY2024 Plan

Net sales¥78.4 billion¥90 billion¥100 billion

Operating profit¥5.9 billion¥5.4 billion¥10 billion

Operating profit
ratio

7.5%

6.0%

10.0%

ROE

7.5%

–11.0%*As of November 2023

Basic Policy 2

Business expansion in growth markets

Basic Policy 2

Strengthening of ESG management initiatives

Jin-Gi-Kou-Ken

Basic Policy 1

Business expansion in growth markets

Basic Policy 3

人技貢献

Management Targets

As a group, establish management bases
and work to expand business in growth To make everyone involved in Hirata conmarkets while securing profit from exist- tent and contribute to society by means
ing businessesof technology

Based on our Jin-Gi-Kou-Ken concept, we have establishedfour basic policies and measures to resolve social issues
through our business activities over the medium term.
To strengthen our profitability, we will engage in:
Basic Policy 1

Sustainableimprovement
in corporate
value

Basic Policy 3Strengthening competitiveness as a global company
Optimization of development/production systems
within the Group
Global response
Strengthening of cooperation within the GroupBusinessinitiatives

Strengthening of ESG management initiatives
To achieve both business growth and the resolution of social
issues as well as to improve corporate value, we formulated
the Sustainability Basic Policy, identified materiality, andorganized the relationship between our philosophy systemand corporate value. During the time frame of the current
Medium-Term Management Plan, we will formulate a specific road map, such as setting targets for each materiality.

Thorough digitalization-based profitability management system
Please refer to page 38 for details on sustainability management.

Strengthening of product competitivenessStakeholders

For our global response to expand profits in growth markets such as EVs and semiconductors, we will optimize
business collaboration between each business unit andeach Group company to create synergies in terms of orders,development, and production systems.
We will also work on front-loading activities as a businessinitiative to strengthen competitiveness. All departments
will cooperate with each other, and at the initial stage ofthe project they will identify the risks related to the contentof the inquiry and increase profits by planned responses.
We will further strengthen this activity by utilizing
digitalization.

Medium-Term Management
Plan/Business Activities

Materiality (Important Issues)

Sustainability Basic Policy

MissionStatement

Management
Philosophy

Basic Policy 4

Realization of management in line with the new-normal era
EV-related equipment business

Semiconductor-related equipment business(1) Selection of specialized processes(1) Clarification of target areas(2) Development and improvement of key devices
Strengtheningof the batteryfield(3) Strengthening of product appeal throughstandardization(4) Clarification of target customers(5) Active collaboration with outside companies that
does not limit us to in-house resources(2) Introduction of new production control system
Realizationof optimal
productionsystem(3) Increased production capacity
Increased number of manufacturing staff
Expansion of production area
(4) Efforts to adopt EFEM standardization

We will expand the value provided to customers and society by promoting digitalization
for business. This will include CADVR, which imports existing 3D design data as it is andallows users to hold remote meetings while confirming equipment in the VR space, theuse of emulators that virtually verify the CAD data of development systems and industrial
programs, and IoT, whereby we are aiming to digitize, quantify, and visualize every manufacturing process so that plants can be operated continuously for 24 hours.

(6) Review of human resource allocations

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Hirata Integrated Report 2023

Hirata Integrated Report 2023

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Hirata’s Strategies

Medium-Term Management Plan (FY2022–FY2024)

Basic Policy

1

Business Expansion in Growth Markets

Basic Policy

2Strengthening Competitiveness as a Global Company

We will position EVs (electric vehicles) and semiconductors, which are driven by social issues, as growth businesses
and concentrate our resources on these areas. At the same time, we will seek to improve efficiency in continuing
operations in FPD, home electronics, and other businesses by identifying areas where profitability is expected.

We will strengthen our competitiveness in growth markets as a group by promoting collaboration with Group
companies in Japan and overseas and with partner companies. In addition, we will work to thoroughly manage
profitability using digital technology.

Automotive-related Business—Acquisition of Orders for New EV-Related Processes

Global Response

Strengthening of product appeal through selection of
specialized processes and standardizationWe specialize in EDU assembly lines for EVs, IGBT module
assembly lines, and inverter assembly lines with a proventrack record while promoting efforts for standardizing entire
lines and customer development. In the battery field, which
is a key area of focus, we are promoting the standardizationof entire lines with proven battery module manufacturing
processes, battery pack manufacturing processes, andcharging and discharging systems. Furthermore, we areworking on development and measures to enter thebattery cell manufacturing process field, a new area for theCompany, and are accumulating know-how.
Development and improvement of key devices
We have completed four of the five tasks set forth in
the Medium-Term Management Plan (Improvementof Automated Warehouses, Dual Head Wire Bonding
Machines, AGV Improvements, and Plant Simulation(Software)).

Improve production capacityAs orders grow, we are also addressing production-related
issues such as factory space and human resource shortages.
• Oct. 2023 Kansai Plant (Yasu City, ShigaPrefecture) goes into full-scale operation
In October 2023, we completed the renovation of theKansai Plant, which has been carried out in stages since2021, and launched it into full-scale operation. A new
2,800 m2 assembly building and engineering center havebeen added to improve productivity.
• April 2024 Operations scheduled to start at
the Shichijo Plant (Kikuchi City, KumamotoPrefecture)
The Shichijo Plant is scheduled to start operations inApril 2024 ahead of the initial schedule (operations werescheduled to start in June 2024.).

Optimization of development/production systems
within the GroupWe will reorganize the business portfolios of each site andinvest management resources in areas where high added
value and mass production are expected. Currently, we areconducting training for local employees in order to build
a production system for semiconductor-related equipmentat our China base. Also, we dispatch sales representatives
from domestic branches mainly to East and Southeast Asia
to share know-how on sales activities and order-taking
activities at exhibitions and other events.

Strengthening of cooperation within the Group
Until now, collaboration between each Group company
has been centered on business and sales, but in order togenerate further synergies as a group, we will strengthen
collaboration from the perspective of governance. We arereviewing policies and formulating plans for strengthening
global governance, including those of overseas-relatedcompanies, and discussing the positioning and functions ofeach overseas affiliate within the Group.

Topic
Expansion of System for Collaboration with Overseas Affiliates
The trend toward glocalization* is gaining momentum, with an increasing number of customers, particularly Japanese automotiverelated customers, requesting local procurement for capital investment at their overseas plants. Under such circumstances, we recognize that strengthening our global response capabilities is an initiative that will lead to the strengthening of our competitiveness inthe market. We aim to strengthen the global response capabilities of the Hirata Group and provide an environment where customers
can use equipment with greater peace of mind by conducting activities that meet the requirements of customers for local procurement and establishing a prompt support system for problems after delivery.
* The flow of economic activities rooted in local culture while considering things on a global scale

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Semiconductor-related Equipment Business

Other Automatic Labor-saving Business

Keep up with technological innovation
We are promoting activities to develop equipment that iscompatible with the miniaturization of semiconductors.
Enhance production capacity
In order to shorten the lead time to delivery, we will work
to improve production capacity and ensure the stable procurement of parts and materials through cooperation with
suppliers and promotion of digitalization.
Establish a Group production system for theSemiconductor-related Equipment BusinessWe are also focusing on building a cooperative system with
our overseas affiliates and are strengthening cooperation inother regions, such as Southeast Asia and North America,
in addition to existing affiliates in China and Taiwan.
In order to improve our ability to respond to changes inthe external environment, we plan to review and formulate
the functions and strategies of our overseas bases.

Focusing on areas where profitability is expected
We conduct development and production while identifying
areas with high added value and high profitability potential,
such as conveyor equipment and medical and scientificequipment.
In the field of medical and scientific equipment, in collaboration with SONIRE Therapeutics Inc., we are jointly
developing a high-intensity focused ultrasound cancer
treatment device for clinical trials for patients with unresectable pancreatic cancer and have started human clinical
trials. In the future, we will promote the development ofequipment for mass production.
To create new businesses and expand business domains,
we are working to verify business possibilities and establish
a research and development system.
With regard to M&A and collaboration, we are actively
gathering and examining information and are promoting
initiatives such as partial collaboration.

Hirata Integrated Report 2023

Business Initiatives
Thorough digitalization-based profitabilitymanagement system
To strengthen the profitability management system for eachproject using digital technology, we are promoting front-loading
activities that put a load on the initial design stage and advancework ahead of schedule. During the planning phase, departments work together across the board to ensure they are awareof scheduling, workload, procurement planning, and cost
control and to clarify the level of development difficulty andthe risk of technical problems. In addition, collaboration tools
and 3D emulators can be utilized to improve the efficiency of
information sharing and enable early verification. Through these
initiatives, we aim to curb unnecessary costs, shorten deliverytimes, improve quality, and reduce projects with low profitability.

Strengthening of product competitivenessIn order to strengthen our competitiveness as a global company, we recognize that it is important to be able to respondto changes in the market, and we are advancing various
initiatives from the perspectives of costs, delivery times, production capacity, quality, flexibility, and other factors.
We strive to differentiate ourselves by working closelywith our customers to solve their problems, repeatedly
developing and improving our products and making uniqueproposals. Furthermore, by promoting initiatives for collaboration with partner companies and making effective
use of external resources, we aim to supplement the shortage of technology and production capacity and increase thevalue we provide to customers.

Topic
Establishment of Profit-oriented Behaviors
As stated in our Management Philosophy with the words “Hirata Makes Its Customers Successful,” we are working on ensuring quality
and meeting delivery deadlines for customers as top priorities. On the other hand, in terms of costs, although we have been focusing
on cost reduction activities, there were issues with the awareness of profitability for each project. In order to secure stable profit margins
for individual projects, we will strengthen and improve profitability management processes and risk management systems for individualprojects. By preventing delays in drawing output and an increase in the rate of revision, we will reduce unnecessary costs, such asincreases in design costs. By doing so, we aim to improve the profit margin of the Company as a whole.

Hirata Integrated Report 202323Hirata’s Strategies

Medium-Term Management Plan (FY2022–FY2024)

Basic Policy

4

Realization of Management in Line with the New-Normal Era

Looking ahead to the next era, we will promote value chain transformation using digitaltechnology, aiming to expand the value we provide to our customers and other stakeholders,and create new value.

Promoting Value Chain Reform through the Use of Emulators
By collaborating with Rockwell Automation and introducing
the company’s Emulate3D engineering software, weare advancing operational improvements focusing ondesigners through virtual commissioning. It is effectivefor shortening the waiting time for problems such as
insufficient debugging time due to delays in the previous
process and interference problems caused by the actualmachine. Specifically, in the value chain process centered on
design work, program debugging can be performed before
assembly and electrical work are completed, enabling asignificant reduction in the debugging period for actualequipment. Currently, we are expanding the application
business fields and increasing the number of usage results.

Improving Customer Value
Design reviews using VR(in the engineering anddesign phases)

3D simulation(in the design andcommissioning phases)

Previously, design reviews were conductedin 2D, but by reproducing the equipmenton the metaverse using VR and exchanging
opinions while grasping the actual sizeand distance, it is possible to uncover
the potential needs of the customer’sequipment and reduce the waste ofrework and modification during the actualequipment observation.

For equipment that is difficult to see theinternal structure from the outside, byusing an emulator after design, creatinga video that reproduces the actual
movement in 3D, and using it for meetings
with customers, it becomes easier tounderstand the structure and check fordefects.

Virtual commissioning
Through virtual commissioning, faults
with equipment can be detected before
checking actual operation during the fieldinstallation. It prevents problems at thesite and reduces the inspection process by40%. It contributes to the early start-upof the customer’s plant by shortening thework time.

Comments from employees of the department that promotes digital engineering
It has been about four years since we started working as members of the Digital Engineering
Promotion Division, and we are pleased that the results of our efforts are beginning to be visible
both internally and externally. Currently, in parallel with the improvement of QCD in the existingvalue chain, we are also providing consulting services related to value chain reform of production
equipment using Emulate3D according to the customer’s wishes. Value chain reform throughdigital technology is an important theme for the manufacturing industry, and the Hirata Groupaims to lead the industry.

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