Toward the Future of Monozukuri

3-7-60 Tarumachi, Kohoku-ku, Yokohama, Kanagawa 222-8560, Japan
Tel: +81-45-543-6800
http://www.yorozu-corp.co.jp/en/

YOROZUINTEGRATEDREPORT
2022

Introduction

Corporate Philosophy

Introduction

Becoming a Byword for Suspensions
Yorozu has earned the trust of domestic and foreign automakers[ Our Purpose ]Our primary mission is to contribute to society by continually striving to delivertechnological innovation and create products that are beneficial to people.

as a premier supplier of suspensions, having honed its technologies
as an auto parts maker with a focus on suspensions.
Leveraging its advanced developmental and technological capabilities,[ Management Stance ]Our basic business creed is to conduct reliable management.

Yorozu will continue to expand globally as a suspension systemmanufacturer with a fully integrated production system,[ Behavioral Guidelines ]from performance development to mass production,

1. Work is the foundation of life.

for suspension parts and peripheral components.

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.

Corporate Vision
With the one and only technologies
and developmental capabilities insuspensions, we deliver solutions tocustomers’ needs and aim to become
a 100-year sustainable and evolving company.
CONTENTS
Introduction
12
68

Corporate Philosophy and Corporate Vision
Message from the President
History of Value Creation
Yorozu at a GlanceManagement Strategy for Sustained Value Creation
10 Value Creation Process
12	Medium-Term Business Plan Yorozu Sustainability Plan 2023
18 Message from the CFOManagement Foundation That Supports Sustained Growth
20 R&D Strategy
22 Messages from Company Employees
24 Human Resource Strategy
26 Environmental Management
30	Board of Directors
31 Corporate Governance		 32	Roundtable Discussion between the President andOutside Directors
39 Compliance Initiatives
40 Risk Management
Data Section
41	Five-Year Summary of Financial and Non-Financial Data
42 Corporate Information

Editorial Policy

Period and Scope of Reporting

This is our fourth integrated report since we first published it in 2019. We see thisreport 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 ourvarious initiatives to realize a sustainable society, as well as the Group’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 todeepen their understanding of the Group. Please visit our official website for the mostrecent information.

• Period: Fiscal 2021 (April 1, 2021–March 31, 2022)(Some information from outside this period is also included.)• Scope: Yorozu Corporation and its Group companies.

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

Guidelines and Entities Referenced• The International Integrated Reporting Framework of the International Integrated Reporting Council (IIRC)• Guidance for Integrated Corporate Disclosure and Company–
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 thetime this report was created. Actual performance may differ significantly from theseprojections due to a variety of factors.

YOROZU INTEGRATED REPORT 2022

1

Introduction
Introduction

Message from the President

Evolving into a Strong,
Competitive Company throughTransition to ESG Management

Perception of the Current Situation and Our
Vision Going Forward
Our business environment continues to remain uncertain and extremely challenging due to a number of factors. These include the prolonged impact of COVID-19,
declining automobile production stemming from semiconductor shortages and logistics disruptions, soaring
prices of resin and steel sheets, and a paradigm shiftof the automotive industry said to occur once every 100
years—as reflected by CASE—as well as a rapidly
growing global momentum toward decarbonization asa measure against global warming. The acceleration of
measures in response to CASE and toward decarbonization marks a major turning point where we may see
a restructuring of the market and, as a result, we aresearching for a way to stay ahead of the fierce competition. In order to benefit from this transition period in theform of new business opportunities, we must strategically step up our pace of evolution, rather than rely on
our conventional measures for improvement. While ourbusiness environment remains unstable, I hope that we
come together as an organization and demonstrate
our solid presence in this age of electrification, without
succumbing to a defense-first mentality.

Progress of Medium-Term Business Plan

Tsutomu
Hiranaka
President and COO
Member of the Board

Aiming to establish a solid presence in the age of electrificationon the strength of our long-cultivated Yorozu brand andproprietary technologies

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YOROZU INTEGRATED REPORT 2022

Reflecting on the Inaugural Year of
Yorozu Sustainability Plan 2023
With respect to our business performance in fiscal 2021,
we were not able to achieve our first-year targets forsales and operating income ratio due to the impact ofthe decline in automobile production. That said, despite
the stagnant growth in physical volume, we were able
to improve our operating income ratio by roughly 5.6
times compared with the previous year by thoroughly
implementing a production system that is adjusted flexibly in line with our customers’ production volume andby continuing to engage in the Companywide Profit
Kaizen Activities to improve profitability. We believe thefact that we were able to turn the substantial net loss
incurred in the past two years into profit is a testament
to the changes and improvements we have made to
our profit structure.
We have been moving forward with our medium-termbusiness plan, Yorozu Sustainability Plan 2023 (YSP2023)(see page 12), since fiscal 2021, a year in which we

worked to establish ways to address various issues andan internal framework. Once YSP2023 got underway,
the first thing I embarked on was organizational reformto speed up management decision-making and act
quickly on decisions made. First, we redefined the objectives of the Board of Directors, the Audit & Supervisory
Committee, the internal management meetings, andother meetings; clarified the themes to be discussed;
and restructured the meetings to ensure efficiency andeffective outcomes. Also, in order to steadily and quickly
implement the decisions made at these meetings, weclassified our various departments into function groups
and our global operations into three regional groups(Japan, the Americas, and Asia), appointed a regional
manager for each region, and clarified responsibilities
and the delegation of authority. Furthermore, in aneffort to address the key issues that may have an
impact on management, we established the newSteering Committee, which I chair as the president ofYorozu and consists mainly of officers in charge, toexamine and determine solutions to said issues. Whileit has only been a year since its establishment, theSteering Committee has already produced positive
results, such as the announcement of the constructionof a new factory in the Tokai region (see page 16) andthe foundation for achieving 100% green power generation at all of our domestic sites by 2024 (see page 28).
Moving ahead, we look to continue utilizing both topdown and bottom-up approaches and incorporating
the views of our employees to be able to explore innovative ideas on resolving our increasingly complex
issues and make decisions with speed.
Initiatives for the Second Year and Beyond
To build and pave the way for Yorozu’s growth strategy
and demonstrate our solid presence in this age of electrification, our initiatives for the second year of YSP2023
and beyond are defined as the 5Gs (see page 13).
Our initiatives comprise four specific themes.
First is the advancement of carbon neutrality acrossall sites in and outside Japan as a measure against
climate change, which is the backbone of our ESG
management.
In addition to switching to the use of green energy
for electricity used at all of our business sites worldwide, we aim to use 100% renewable energy as theheat source for our production lines and achieve carbon neutrality in manufacturing. Climate change is an
YOROZU INTEGRATED REPORT 2022

3

Introduction

issue that threatens our lives and livelihoods today andtomorrow, and as a human being living on this planet
and as a company based in Japan, it is an issue thatmust be addressed. We believe that our efforts to realize a sustainable, decarbonized society in this time ofgreat transition and competition with the possibility formarket restructuring will lead to gaining new business
opportunities. In 2021, we formulated Yorozu Global
Environmental Vision 2040 (see page 26) and set a
goal to become carbon neutral by 2040. Since then,we have been promoting efforts across the organization toward achieving this goal, which include theestablishment of the ESG Office in April 2021 and theCarbon Neutrality Office in April 2022. Yorozu will continue to advance its carbon neutrality initiatives with thestrong determination and resolve that carbon neutrality
will bring about a structural change and with pride as
an industry leader in this area.
The second theme is the realization of a model plantat the new site in the Tokai area, which Yorozu sees asa game changer to strengthen competitiveness andgenerate stable profits.
Through the operation of this new factory, Yorozu
aims to not only become exceptionally competitive but
also to establish a model plant for automotive parts
manufacturers in Japan that consistently delivers newvalue while thoroughly respecting the environment andbeing rooted in local communities.

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YOROZU INTEGRATED REPORT 2022

Introduction

Message from the President

Third is the development of new technologies andmethods that contribute to electrification in society, inwhich we strongly emphasize the importance of protecting the environment, and the fourth theme is ourproactive efforts to expand sales.
With the increasing use of electric vehicles (EVs) and the
additional parts and systems being installed on vehicles
to address the need for automated driving, anti-collision,and other features for added convenience, automobiles
will only continue to get heavier. In light of this situation,
we at Yorozu are working to develop lighter parts to help
reduce CO2 emissions from vehicle use. For example,
in fiscal 2021 we introduced stamping and welding technologies that enable the processing of high-tensile thinsheet materials, which offer significant weight-reduction
benefits, and will unveil a production method that generates significantly less CO2 emissions throughout the
manufacturing process. These measures have increased
the likelihood of achieving our goal of reducing weightby 30% or more compared with fiscal 2017 levels andenabled us to make significant contributions to the CO2
reduction efforts of automakers. In addition, Yorozu has
developed strategies centered on customers, products,
and regions and is actively engaged in activities toexpand sales. A number of our suspension parts havebeen adopted in newly released or soon-to-be released
EVs, such as the Ariya by Nissan Motor Co., Ltd., theSakura and eK X EV, new mini EVs from Nissan MotorCo., Ltd. and Mitsubishi Motors Corporation, the bZ4X
by Toyota Motor Corporation, and the Solterra by
Subaru Corporation. Through the development of fully

carbon-neutral products and highly competitive products incorporating new technologies and methods at
our new factory in the Tokai region, we will devote evenmore efforts to our sales expansion activities with a view
to becoming the preferred choice of Honda Motor Co.,
Ltd., Toyota Motor Corporation, Daihatsu Motor Co.,
Ltd., and Suzuki Motor Corporation in the Tokai region.

Promotion of ESG Management
At Yorozu, we believe that the most essential aspects ofour corporate management going forward are ensuring
stable profits; creating social value through our efforts in
ESG management, which involves harmony with thenatural environment, employee motivation, and robust
governance; and ensuring that all stakeholders are fully
aware of our reason for existence. Based on this belief,
we consider ESG management to be our most important management policy.
As a measure to increase employee motivation, weare conducting employee engagement reforms (seepage 25) in order to establish a workplace where every
individual feels fulfillment in working at Yorozu anddesires to continue working for the duration of theircareer. For instance, in terms of empowering women,
we not only established the appropriate workplaceenvironments and enhanced our existing systems but
also actively conducted awareness-raising seminars
and lectures led by external instructors. As a result of
these measures, over 10% of our management positions are now held by female employees, and in
November 2021 Yorozu became the first company andmanufacturer based in Kanagawa Prefecture to receive
Platinum Eruboshi certification. Further, our efforts topromote diversity go beyond empowering women. At
over 70%, a high number of our male employees takechildcare leave, and we also have a relatively high rateof non-Japanese employees.
With respect to strengthening governance, we willcontinue to strive for sustainable growth and mediumto long-term increases in corporate value by placingemphasis on a high level of governance and constructive dialogues with all investors.
By coexisting with local communities, we will continue to focus more on how we, as an organization, canmake contributions to these communities and createsocial value.

To All Stakeholders
Guided by our Corporate Philosophy—Our primary
mission is to contribute to society by continually striving to deliver technological innovation and create products that are beneficial to people—each employee at
Yorozu has been working day by day to develop andimprove its products as backseat players in the automotive industry by embracing the value, importance,and joy of monozukuri (manufacturing), similar to theway suspensions function in automobiles. The recognition of these efforts by all stakeholders has helped
develop the Yorozu brand into a premier supplier ofsuspensions over the span of 74 years. However, as I
stated earlier, Yorozu is currently in a major transition
period. On the strength of our collective efforts basedon GRIT (guts, resilience, initiative, and tenacity), which
represents our frame of mind for the 5Gs, and our supply of exceptional suspension parts that offer costcompetitiveness as well as the highest levels of safety,
reliability, quality, and comfort, we aim to become a
100-year-old company that will grow continuously andboasts a solid presence in the age of electrification.
Along the path to doing so, we will achieve sustainableimprovements in our corporate value.

President and COO
Member of the Board

YOROZU INTEGRATED REPORT 2022

5

Introduction
Introduction

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

Change in Customers 							
Other
16.5%

Other
15.0%

Toyota Group7.1%
FY1993

FY2021
Honda Group

16.6%
Nissan Group

Nissan Group
83.5%

The Four Defining Periods of Our Business

61.3%

1999

2008

2011–

2019–

Yorozu Survival Plan

Urgent Profit
Improvement Measures

Active Expansion ofOverseas Business

COVID-19 and Measures to
Improve Profitability

The Nissan Revival Plan, which called for a 20% reduction in purchasing costs over a three-year period and the disbanding of affiliated companies, had a major impact on the Company, which was anaffiliated manufacturer of Nissan Motor Co. Ltd. However, weaddressed this issue through the formulation of the Yorozu SurvivalPlan, thereby achieving cost reductions of ¥5.8 billion by streamlining
production, reducing personnel, introducing the Toyota Production
System, and implementing a function-based matrix management
system. To overcome the challenges brought on by the disbandingof affiliates, Yorozu formed a capital alliance with Tower Automotive,
Inc., an automotive parts manufacturer based in the U.S., thereby
becoming a foreign-affiliated company, and expanded its overseas
operations to increase orders for automotive parts from Japanesecompanies other than Nissan Motor.

The global financial crisis triggered by Lehman Brothers’ collapse
had a severe impact on automakers and sparked a rapid appreciation of the Japanese yen, cutting our sales by half and putting ourbusiness at great risk. However, we took urgent measures toimprove profitability, such as closing down a subsidiary in North
America, streamlining our production system, and engaging indrastic cost reductions, based on a policy of “achieving maximum
efficiency with bare minimum cost.” In addition, the Company
implemented reforms to reinforce its management structure,including manufacturing and educational reforms, and relocatedthe R&D functions and related departments to Tochigi Prefecturewith the aim of developing globally competitive products. As aresult, we successfully posted positive earnings with an operating
income of ¥4.8 billion, eclipsing the operating loss of ¥0.7 billion we
had initially forecast.

In June 2011, Nissan Motor unveiled its mid-term plan, Nissan Power
88, and in response Yorozu immediately established six production
facilities, mainly in emerging countries, over the course of three years
from 2011.
The Company expanded its two existing production sites inboth China and Mexico and increased their production capacity tomaximize returns on investment. In addition, we launched operations of our second production site in Alabama, U.S. in 2015 andof a second plant at one of our production bases in China in 2019,
gaining additional customers in the process, particularly overseas,
and increasing the percentage of our sales abroad.

While some production sites faced operational difficulties for a shortperiod due to the global spread of COVID-19, the situation wasdealt by identifying the degree of risk on our product’s lead time andreviewing and ensuring proper inventory standards. At Yorozu, wehave always encouraged the development of personnel who canmulti-task and promoted the standardization and globalization of
our business. This has led to the establishment of a system thatenables production and delivery processes to be alternatively conducted at other facilities, thereby ensuring the safety of our employees and fulfilling our responsibility of supplying parts.

Nissan Revival Plan

Global Financial Crisis of 2008
The bankruptcy of Lehman Brothers Inc. in the U.S. triggered a
global economic downturn, leading to a drop in consumption anda rapid depreciation of the U.S. dollar due to financial instability
along with a relative appreciation of the Japanese yen. The resulting significant slowdown in the Japanese economy had a massive
impact on the country’s automotive industry as automakers
incurred losses and generated substantially less profits.

Nissan’s Active Overseas Expansion Strategy(Nissan Power 88)

COVID-19 Pandemic

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

1

2

3

4

TopicsFounding
1948 1950

1960

1970

1980

1990

Nissan-affiliate

The number of people infected with the COVID-19 virus, first confirmed in Wuhan, Hubei Province, China, has exceeded 500 million
in total worldwide as of April 2022. Automakers have also been
forced to temporarily suspend operations of plants or adjust production due to the unstable supply of parts and the sluggish global
demand caused by the pandemic.

In June 2011, Nissan Motor introduced a mid-term plan focused on
speeding up growth in global markets, including new markets andsegments, in pursuit of a global market share of 8% and operating
margin of 8%. As one of the measures of this plan, the company
aggressively introduced new models and expanded production
capacity in China, the ASEAN region, Brazil, and North America.

2000
Foreign-affiliate

2010

2020

2030

Independent firm

Technological Achievements
Hydroforming (1998–)

Aluminum Welding (2001–)
A metal forming process inwhich hydraulic pressure isapplied to the inside of pipematerials set in a mold to form
the pipe into the mold’s inner
shape

6

YOROZU INTEGRATED REPORT 2022

While aluminum was previously
considered more difficult toprocess and weld than steel, theoptimization of each process
has significantly reduced thenumber of processing steps aswell as costs.

Full-Curl Method (2004–)
A method of shaping sheet
metal into a three-dimensional
hollow shape. Reduces welding
overlap and welding length byhalf in the upper, lower, andmiddle structures comparedwith conventional methods

Tailor Welded Blanking Technology (2006–)
A technology used to weld
sheet metals of different
thicknesses into a single panel,
which is then press-formed,
eliminating the need forreinforcement previously
requiredHigh-Tensile Strength Materials for Suspension Parts
Although high-tensile strength
materials have lower press
formability, they are able tomaintain the same degree ofstrength as ordinary sheet
metals even when made into
thinner sheets.

Complete Tack Welding and Final Assembly Lines (2019–)
A comprehensive assembly line
made up of a tack welding line
to ensure that the work pieces
are perfectly aligned and aparallel main welding line tocomplete the entire welding
process

YOROZU INTEGRATED REPORT 2022

7

Introduction
Introduction

Yorozu at a Glance
Financial Highlights

Sales

Operating Income¥127.3¥2.1

billionNon-Financial Highlights

ROE

R&D Expenditures

1.6

billion%¥5.3
billionRatio of Women in
Management Positions

12.4

%

Ratio of Non-Japanese
Employees

5.7%

Sales Composition of
the Three Segments

Asia

39.4%

Major Customers

Japan

24.6%

The Americas
Nissan Group*1

Honda Group

Toyota Group*2

Isuzu

Mazda

KubotaVolkswagen

Mercedes-Benz Group

SuzukiFord

GM

UD Trucks

36.0%*1 Including sales to Renault and Mitsubishi*2 Including sales to Hino, Daihatsu, and Subaru

Japan
Sales

¥37.48 billion

1.09 billion

Operating Income ¥The Americas
Sales
Operating Loss

¥46.13 billion¥ 0.91 billion

Asia
Sales

¥50.54 billion

1.60 billion

Operating Income ¥Ratio of Overseas Sales

75.4 %

Number of Employees

5,666

Number of Group Companies
Number of Companies
Number of Countries

21
9* Includes intersegment sales and transfers

8

YOROZU INTEGRATED REPORT 2022

YOROZU INTEGRATED REPORT 2022

9

Management Strategy for Sustained Value Creation
Management Strategy for Sustained Value Creation

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 have developed a value creation process designed to constantly deliver new value tosociety, and we continue to evolve this process 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.

Operatingenvironment

Business modelthat capitalizes on
our strengths

Input

OutputProducts

Aim of becoming carbon
neutral by 2050

Emergence of CASE
Large-scale investments
to address future needs
Strategic alliances
between automakers
Advancement ofworkstyle reform

Realize a safe and reliable
automotive society• High-quality products that
outperform the competition

Financial capital

Stagnant global economy
due to COVID-19
pandemic

Outcome• Development of lighter productsthat reduce CO2 emissions

Sound financial base

Ability to realize
solutions for the
automotive industry

Message from the CFO• Products geared to electricvehiclesHighly evaluatedby customers

Manufacturing capital
Globally standardized
production system

Realization of carbon
neutrality

Fundamental technologies
Stamping
technology

Weldingtechnology

Coatingtechnology

Intellectual capital
Technological development
capabilities that contribute tohigh levels of quality
R&D Strategy

Development of trustand customer base

DNA inmonozukuri(manufacturing)Continuous
enhancement ofdevelopment
capabilities

Human capital
Diverse team of employees
Human Resource Strategy

Diversity• Percentage of women in­management positions

Social and relational capital
A wide range of customers
worldwide
Yorozu at a GlanceIntegrated
production systemand prominent
supply chain

12.4%• Percentage of non-Japaneseemployees
5.7%

Natural capital
Contributions to decarbonization
through business activities
Environmental Management

Technological innovationand improvement(Figures as of March 31, 2022)

10

YOROZU INTEGRATED REPORT 2022

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11

Management Strategy for Sustained Value Creation
Management Strategy for Sustained Value Creation

Medium-Term Business Plan
Yorozu Sustainability Plan 2023

Fiscal 2021 Performance

The business environment surrounding the Company is undergoing immense changes due to the increasingly chaotic state of global affairs, such as the continuous spread of COVID-19 and the conflict between
Russia and Ukraine. In the automotive industry, the path to resolving the issue of semiconductor shortages
remains unclear and recoveries in production have been delayed while the impacts of surging resource
prices and supply chain disruptions are becoming apparent. Even in these circumstances, we are seeing a
rapidly increasing momentum in climate change measures on a global scale, and the automotive industry
is pressing forward with a range of measures toward electrification, such as through the shift to electricvehicles (EVs), with a view to becoming carbon neutral.
Against this backdrop, Yorozu has been moving ahead with reforms to cope with major environmental
changes and to sustain its business based on Yorozu Sustainability Plan 2023 (YSP2023), the current
medium-term business plan, which kicked off in fiscal 2021. A variety of measures must be implemented inorder to realize a carbon-free society and this, we believe, is the issue of highest priority for management.
Therefore, we will strive to enforce even more effective measures toward a sustainable society.
Fiscal 2023 Financial Targets

In fiscal 2021, the global economy showed signs of recovery inEurope, the U.S., and China, but the situation remained unstable in
the latter half of the fiscal year due to the rapid surge of coronavirus
variants and ongoing price hikes.
The production volume of the automotive industry, to which ourbusiness is closely tied, increased year on year in the first half of the
fiscal year but decreased thereafter in the latter six months due tothe semiconductor shortage and the disruption in parts procurement
resulting from the impact of COVID-19. As a result, for the year as awhole automobile production remained nearly on par with the previous fiscal year.
In light of this situation, the Group’s sales climbed 7.1% from theprevious fiscal year owing to higher prices of steel and the weak
Japanese yen. Moreover, by thoroughly implementing a yosedome(consolidation of operations or processes to pursue efficiency) production system in accordance with production volume and reaping
the benefits of fixed cost reductions, operating income grew byroughly 5.6-fold compared with the previous fiscal year. The higher
operating income combined with entries of employment adjustment

subsidies contributed to a year-on-year increase of 57.7% in ordinary
income while net income attributable to owners of parent turned positive after posting a loss in fiscal 2020, improving by ¥7,072 million, to¥876 million in fiscal 2021.
An annual dividend of ¥13 per share was paid, resulting in a
dividend payout ratio of 35.6%.

Consolidated sales (Billions of yen)

/ Operating income ratio (%)
150.0

150.0

127.3

118.9

5.0
2.5
1.6

0.3
2020

2021

(actual)2022(actual)2023(forecast)(FY)(target)Progress of Initiatives under YSP2023

Sales
Consolidated sales

150 bil.

Operating Income Ratio

Capital Efficiency

Consolidated operating income ratio

ROE¥(FY2021 actual 127.3 bil.)

5.0%

8.0%

(FY2021 actual 1.6%)(FY2021 actual 1.6%)

Management Policy

Engage in sound management that is resilient to changes

1

2

ESG Management• Medium- to long-term sustainable growth• Promotion of DX (digital transformation) aimed at changing the corporate culture
E: Engage in earth-friendly monozukuri
S: Create a healthy and engaging
workplace
G: Realize highly transparent
governanceStable Profits• 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
volume3

New Technologies
and Methods• 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 tooling

Key Issues in ESG Management

E
S
G

Engage in earth-friendly monozukuri(manufacturing)
Create a healthy and engaging workplace
Realize a highly transparent governancestructure• Reduce CO2 emissions in the production process with an eye on carbon neutrality• Help to prevent global warming with lightweight products• Secure human resources• Promote workstyle reform and diversity• Foster a culture that respects diversity• Strengthen supervisory functions• Promote higher compliance• Encourage dialogues with shareholders

YOROZU INTEGRATED REPORT 2022

In order to steadily generate results under YSP2023, in the second year and beyond Yorozu will continue to accelerate its efforts,
which are defined as the “5G initiatives,” based on the slogan, “Buildand pave the way for Yorozu’s growth strategy to prove its strong
presence in the electrification era.”

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

5G
Growth Strategy
Green

diGitalGovernanceContribution to a
decarbonized society

Widespread
innovation

Advancement ofcorporate governance

Grit
Guts

Resilience

Initiative

Tenacity

Fiscal 2021 Initiatives and Results and Approach Going Forward
FY2020Market Trends

FY2021

Increased societal need for a decarbonized society

ESG Management

E: Carbon neutrality initiatives• Environmental Vision 2040
• Y-Oita Green Power
S: Reform aimed at improving employee
engagement• Platinum Eruboshi certification
G: Tokyo Stock Exchange Prime Market Section

DX Promotion

Promotion of Yorozu DX

Stable Profits

Announcement of construction of a new plant in
the Tokai region

CF management

New Technologies and Methods
EV products and technologies

Phase

FY2022

FY2023

FY2024COVID-19, semi-conductor shortage, lockdown of China, and Russia–Ukraine conflict

Global Environment

Medium- to long- term
sustainable growth

Please visit the link below for details on YSP2023.
https://www.yorozu-corp.co.jp/wp-content/themes/YOROZU%201.0.3/images/en/investors/YSP2023_E.pdf

12

Fiscal 2021 was a year in which we developed our approach and policies for YSP2023, as well as the mechanisms for achieving its goals. In
August 2021, the Company announced Yorozu Global Environmental
Vision 2040, and in March 2022, Yorozu Oita Corporation, its largest
production facility in Japan, switched to the use of 100% green energy
for electricity. Moreover, in recognition of our numerous efforts to promote the advancement of women, in November 2021 we received thePlatinum Eruboshi certification from the Ministry of Health, Labour andWelfare, becoming the first manufacturing company and the first company based in Kanagawa Prefecture to be recognized with this distinction. Further, in line with our transition to the Prime Market of the Tokyo
Stock Exchange, we will continue to maintain high standards of governance along the road to achieving sustainable growth and medium- tolong-term increases in corporate value.
In order to create new forms of added value and services that enable
us to continue to outperform the competition, we announced the Yorozu
DX Initiatives in August 2021 and are promoting digital transformation(DX) based on this project. In February 2022, the Company announced
the construction of a new plant in the Tokai region, which it deems as aproactive strategy. Yorozu plans to proceed with an array of measures,
including the introduction of the latest production facilities and digitaltechnology as competitive advantages, positioning the plant as a manufacturing site that addresses carbon neutrality and other social issues.

Promotion of development of products that
contribute to customers’ CO2 reduction by
adopting LCA approach

HOP

Advance carbon neutrality initiatives across all sites

Three themes for DX• Reduce LT for monozukuri• Smart factory• Indirect work reform

New Tokai plant; the model
plant takes shape

Expand sales
Expand product range for EVs
Contribute to electrification society
Promote development of new technologies and methods
STEP

JUMP
5G

YOROZU INTEGRATED REPORT 2022

13

Management Strategy for Sustained Value Creation
Management Strategy for Sustained Value Creation

Medium-Term Business Plan Yorozu Sustainability Plan 2023

Growth Strategy: New Technologies and Methods Contributing
to Electrification in Society and Sales Expansion
Progress of Lightweight Engineering

External Sales of Dies and Tooling

Automobiles are becoming heavier due to the increasing shift to EVs
and this has sparked greater demand for lighter suspension parts. In
response to this growing demand, under YSP2023, Yorozu aims to
reduce the weight of suspension parts by 30% or more compared withfiscal 2017 levels by developing ultra-lightweight, ultra-high-tensile
suspension parts.
While placing greater emphasis on reinforcing our development
capabilities, we have been working on advanced press-forming andwelding technologies that can process thin, high-tensile-strength
sheets as well as new structures and methods. As a result, we areon track to achieve our weight reduction target of 30% at an earlystage, enabling us to play a major role in our customers' efforts to
reduce CO2 emissions.
Yorozu will continue to develop products and elemental technologies that are tailored to the electrification of vehicles.

YSP2020

YSP2023

Ultra-lightweight, highly rigid suspension structure & design

Achieved

In order to accelerate the transformation of our corporate structure
into one that continues to win out against the competition, we are
aggressively pursuing DX through sweeping business reforms andby establishing a system to realize these reforms. We aim to shorten• F Y2021 Members: 780MPa class high-tensile steel sheet•F Y2022 Arms: New stamping structure and material replacement• F Y2023 Arms: 980MPa class ultra-high-tensile steel sheet

780MPa class steel sheets

15% weight reduction

Weight reduction of

to the younger generation.
While the external sales of production equipment have only justbegun, we will develop a new business that will play a critical role inexpanding the parts business in the medium to long term.

Approach to DX

Development of New Technologies and Methods and Progress toward Our Weight-Reduction Target

Structure and design of light and highly rigid
suspensions

Yorozu Engineering Corporation, a manufacturer of dies and production equipment for the Group, now also engages in the external salesof its products in order to improve competitiveness and technicalcapabilities, nurture a new business through external sales, maintainemployment, and pass down the skills related to dies and equipment

lead times drastically in all operations, gain outstanding competitiveness, and enhance product quality through a transition from analog
to digital processes (A2D), improvement of business efficiency(V-DX), and digital alignment in the phase of business (H-DX).

The World’s Leading Manufacturer
Specializing in Suspensions and Services

15%

H-DX

Significant reduction in lead timeYSP2023–15%

Next medium-term plan onward

FY2022

FY2021

FY2023–26%–23%
Achieved

Weight reductions ofPlanned–30%

Planned• Develop products
for EVs• Nurture underlying
technology

30% or more

Aggressive Approach to Expanding Sales
The growing need for investments stemming from the increasing
adoption of automated driving and EVs has prompted the formationof alliances between automakers, and this trend has precipitatedrestructuring among suppliers. In order to ensure that we maintainexisting commercial rights and win new orders, even in the midst ofmajor changes in the supply chain, we are proactively pursuing sales
growth opportunities based on our three axes: customers, products,
and regions.

Yorozu’s suspension parts for battery-powered EVs have alreadybeen adopted on the vehicles of Nissan Motor Co., Ltd., Mitsubishi
Motors Corporation, Toyota Motor Corporation, Subaru Corporation,and others. Moving forward, in Japan we will utilize the new plant in
the Tokai region as a platform for expanding sales to Honda MotorCo., Ltd., Toyota Motor Corporation, Daihatsu Motor Co., Ltd., andSuzuki Motor Corporation, which all operate in the neighboring area.

Stabilize Earnings by Strengthening Coordination among the Three Axes

Product Axis
• Focus on suspension parts• Launch new lightweight EV products to
expand sales• Expand the sales of production equipment

14

Customer Axis

Region Axis

• Renault, Nissan,
Mitsubishi• Toyota, Honda• Mercedes-Benz, VW•F ocus on key markets—Japan, The Americas,
China

YOROZU INTEGRATED REPORT 2022

Digitally-linked manufacturing work processes
Total Production System

FY2024–

Orders Received and Medium-Term Targets
Battery electric vehicle (BEV) products (Japan)• Nissan Ariya• Toyota bZ4X
• Subaru Solterra
Direction going forward: Pursue sales growth by reinforcing monozukuri(manufacturing) capabilities at the new Tokai plant

Market researchTechnology development

Order

Product design
Prototyping

Process design

Fabrication of diesand equipment

Production

Quality assurance

Shipping

Simultaneous digital transformation

Remarkable improvements inbusiness efficiency

YSP2020
FY2018–FY2020(Horizontal)

Big data

Corporate strategies

V-DX

Human resources andgeneral affairs

Monitoring and analyses

Finance and accounting

Cost management

AI

Procurement

Digitalize each operation

Internal audits

A2D(Vertical)(Analog to digital)

Approach to Life-Cycle Assessment (LCA)
In terms of CO2 emissions reductions, Yorozu announced its goal ofachieving a 50% reduction in Scope 1 and Scope 2 emissions by
2030 compared with 2013 levels and becoming carbon neutral by
2040. To reduce CO2 emissions from our business activities, wehave adopted the life-cycle assessment (LCA) approach.
At Yorozu, we view the response to climate change as an opportunity to further strengthen our competitiveness, rather than as a risk
to our business, and are actively developing products that facilitate
our customers’ efforts to reduce CO2 emissions and tailor to theneeds of the environment, performance, and prices.

Development of New Technologies and Methods
Implementation of Life-Cycle Assessment (LCA)
Cut CO2 emissions in our manufacturing process and advance
product development that contributes to the reduction of our customers’
CO2 emissions
Develop products that fulfill customer preferences and environmental,functional, and pricing requirements

Our involvement in LCA (Life-Cycle Assessment)
Scope 3

Scope 1&2

Scope 3

Steel makers
Materials

In-house
production

Customers
Car running

Suppliers

YorozuCustomers

Emissions reductions

Emissions reductions

RecycleSuspension parts (overseas)• Toyota Frontlander (China)• Nissan Pathfinder (U.S.)
Direction going forward: Aim to expand sales of BEV products

Contribution to
reduction

YOROZU INTEGRATED REPORT 2022

15

Management Strategy for Sustained Value Creation
Management Strategy for Sustained Value Creation

Medium-Term Business Plan Yorozu Sustainability Plan 2023

Promoting Structural Reforms in Response to
Changes in the Business Environment
Under YSP2023, Yorozu declared “shift to optimum production capacity” and “recreate a strong gemba”
as pillars for establishing a stable earnings base that can adapt to changes in the business environment.
As a part of these measures, we will review our production processes and introduce the latest equipment toensure the highest standards of quality, enhance cost competitiveness, and reinforce our manufacturing
capabilities.

Construction of New Plant in the Tokai Region
In February 2022, Yorozu announced the construction of a new plant in
the Tokai region. At this new plant, we will strengthen our manufacturing capabilities by ensuring high levels of quality and cost competitiveness through expansion of in-house stamping work, consolidation of
production, review of process layouts, and introduction of cutting-edge
equipment for ultra-thick coating.
Amid the global demand for decarbonization, CO2 emissions
from parts manufacturing processes are increasingly taken into
account in the selection of parts in the automotive industry. The
Company formulated Yorozu Global Environmental Vision 2040 andhas set its sights on achieving carbon neutrality by 2040. For the

production process at the new Tokai plant, electricity will be generated from renewable energy sources such as solar power, whilegreen power will also be used in processes where fuel is utilized as
the heat source.
We will establish a system that can readily supply products thatare geared toward carbon neutrality and expand orders in the process, while proceeding with measures to enhance our competitiveness and address the issues of society. In so doing, the new Tokai
plant will serve as a model plant for not only Yorozu but also for parts
makers throughout Japan that fulfills the expectations of all stakeholders, including customers, employees, and local residents.

Approach to Reducing Fixed Costs
Under the “stable profits” initiative of YSP2023, the Company isworking to develop a corporate structure that is more resilient to fluctuations in production volume by shedding fixed costs through lesscapital investment and rationalization. In regard to 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,
in which all departments participating in product development are
involved in the design process from the initial stages. Moreover, we
aim to maximize the benefits of our capital investments by closely
examining the content and timing of general investments, such as
renovation and repair of existing plant facilities. Meanwhile, we will
aggressively allocate resources into environmental measures aimed
at realizing carbon neutrality and the future of our new Tokai plant.

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

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

Fixed cost ratio kept

Fixed cost ratio starts

rising169.1

falling

15,451
157.7
118.9

127.3

150.0

13,477150.0

11,216
7,219
3,367

Strengthen Monozukuri Competitiveness
Stay one step ahead inproductivity and quality

2018

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

New Plantin Tokai• Moving closer to customers and suppliers in the Chubu
region and westward
Toyota Motomachi
Daihatsu Shiga
Honda Suzuka
Suzuki Kosai

68 km (56 min.)
78 km (70 min.)
64 km (71 min.)140 km (143 min.)Promote DX
Monozukuri lead time reduction

Smart factory

Indirect operation reform

Production plan / Visual control / Analysis data / Prediction data

Scope 1 and 2
Achieve carbon neutrality

Overview of the new plant
Location:
Wanouchi-cho, Anpachi-gun, Gifu (planned site)
Product:
Automotive suspension parts, others
Site area:
approx. 79,700 sq.m.
Total floor area:
approx. 18,400 sq.m.
Investment amount: approx. 12.0 billion yen
Start of construction: scheduled November 2022
Start of operation: scheduled January 2024

AccessSociety

YOROZU INTEGRATED REPORT 2022

Give full attention to the environment

with solutions to global environmental andsocial issues and attainment of SDGs
Solve issues

2023(target)

2018

(FY)

At Yorozu, we have been committed to strengthening our approachto managing the revenue of each project over its lifetime, such as
through the establishment of the Project Control Department in 2020.
Previously, our revenue management was limited to a process spanning from product development to production preparation. However,
we have expanded our approach to include further upstream processes in the form of planning and advanced development in order toensure that revenue is earned from the start of mass production. At
the same time, through a concerted effort with our internal functions

Demand forthat contributes to the rapid accelerationof electrification

Solutions to various issues
through business activities• Zero CO2 emissions in the production process• Addressing issues from an LCA perspective

Management Function

2019

2020

2021

2022

(forecast)(FY)

and production sites, we will look to achieve our cost-reduction targets and improve revenue.
In addition, we will utilize a cost consolidation system at eachphase of our projects (advanced development, product development,
production preparation, and the start to end of mass production) andcontinue with our cost kaizen (improvement) activities as a part of ourefforts to transition to our new approach of managing the revenue of
projects over their lifetime.

Product development

Production preparation

Start to end of mass production

Co-exist with the community

Contribute to electrification with quality products

Appeal tocustomers

Project profit control period

Production Sites• Provide opportunities to connect with the community• Create employment opportunities• Make joint efforts on environment

Customer technological innovation

Yorozu2022(forecast)Monozukuri Function

Demand fora sustainable society

Wanouchi-cho• Zero-carbon city declaration (March 2022)• Cleanup activities in Gifu to reduce marine
plastic pollution (March 2022)

2021(actual)Advanced development

Aim of the New Tokai Plant• Proximity to major customers• 1.6 km (approx. 5 min. drive) from Anpachi
Smart-Interchange on Meishin Expressway• 5.5 km (approx. 15 min. drive) from GifuHashima Station of the Tokaido Shinkansen• Approximately 27 km (within commuting­distance) from Yorozu Aichi Corporation

2020

Effective Project Revenue Management

Manufacturing in a thoroughly
green environment

Key Features

16

2019

(Cut costs and CO2 emissions)• Expand sales of lightweight products• Contribute to customers by reducing CO2 through products

Marketing and sales base that ensures CS and ES• Move closer to customers in Tokai and Kansai regions• Strengthen monozukuri capabilities• Increase employee engagement

Schedule acceleration
Planning and Development Phase
Advance feasibility studies to the further upstream process
Secure profits from the start of mass production through investment planning in the upstream process and target costing

Life-cycle control
Transition to Mass Production Phase
Life-cycle control until end of production• Life-cycle management of project profits by utilizing cost consolidation
system• Continue cost kaizen activities

A model plant for Japanese parts makers

YOROZU INTEGRATED REPORT 2022

17

Management Strategy for Sustained Value Creation

Reflecting on the Inaugural Year of
Yorozu Sustainability Plan 2023
In fiscal 2021, the first year of Yorozu Sustainability Plan
2023 (hereinafter, “YSP2023”), our new medium-termbusiness plan, sales increased 7.1% from the previous
fiscal year to ¥127.3 billion. However, this sales figurereflects the impact of the depreciating Japanese yen
and soaring prices in the steel market pushing up thesales by approximately ¥9.0 billion, while the actual production volume remained almost at par with the previous fiscal year. Operating income, meanwhile, grew bymore than five-fold year on year to roughly ¥2.1 billion,
owing to a drastic decline in fixed costs and the yosedome (consolidation of operations or processes for efficiency) approach of flexibly changing the production
system, which improved profitability even in environments with sluggish production volume.
During the past year, our highest priority from afinancial perspective has been project profit management (see page 17). The goal is to achieve our profit
target and ensure return on investment by accelerating
project milestone management and strengthening ties
with each department and production base. In fiscal
2021, we engaged in simultaneous engineering
through an all-out effort on the part of each relevant
department from the initial stages of development
and through the use of a cost consolidation system.
While the challenging business environment is likely
to continue, we will remain committed in our efforts toachieve sales of ¥150.0 billion, an operating income
ratio of 5%, and ROE of 8%, the final-year performancetargets of YSP2023.

We will continue to grow andincrease corporate value
through the appropriate
allocation of capital.

Toward the Realization of Our ROE Target
With a view to improving capital efficiency, under
YSP2023 the Company also took one step further todisclose its numerical target for return on equity (ROE).
We aim to achieve our target for ROE by first improving
the profit margin through reductions in fixed costs andextensive project profit management, even in light of abusiness environment characterized by lackluster
production volume.

Cash Allocation

Financial Strategy under YSP2023
Cash Flow Management
The Company’s profitability took a massive hit under
the previous medium-term business plan due in part tothe considerable increase in depreciation and otherfixed costs associated with the large decline in production volume. Accordingly, we have adopted “strengthen
cash flow management” as a financial strategy under
YSP2023.

We are taking measures to achieve our YSP2023
targets based on the two pillars of project profit management, mentioned earlier, and the curbing of new
investments. In addition to placing greater focus on our
project profit management, we will continue to shed
fixed costs by reducing and streamlining capital investments. In particular, curbing new investments throughthe generalization and reuse of facilities will not only
streamline our balance sheet but will also allow us torealize the ESG management we are committed toachieving from the perspective of reducing environmental impact.

Norio Hirano
Executive Vice President
Member of the Board (CFO)

Ensuring Financial Soundness
Because suspensions, the core product of Yorozu,
are significant in terms of both weight and volume,
they must be produced at and supplied from a location nearby our customers’ production facilities.
This requires a large amount of capital investment, so
we could very well be regarded as an equipment manufacturer. Therefore, in a sense, we are susceptible tofluctuations in our customers’ production volume.
Moreover, suspensions are an indispensable component of vehicles that underpin such basic functions
as driving, turning, and stopping and have been designated as a vital safety part. Therefore, we have a
responsibility to consistently supply these products
based on a sound and stable financial structure. To thisend, we believe that an equity ratio must be kept at
least in the range of 40% to 50%.
Meanwhile, in terms of funds put toward capital
investments, we will work to maintain our sound financial position by keeping a close eye on the debt-equity

Management Strategy for Sustained Value Creation

Message from the CFO
ratio while also seeking to control the cost of capital byconsidering financial leverage.
Policy on Growth Investments
While suppressing capital investments to the extent
possible, we will actively invest in digital transformation(DX), carbon neutrality, and other areas to enhance ourcompetitiveness and resolve social issues as well as in
the development of new technologies and methods
that contribute to our ongoing growth. More specifically,
we will pursue green energy and aggressively invest in
stamping presses that can be used on ultra-high-tensile
strength steel sheets, which contribute to significant
weight reductions, and in coating facilities that cater tothick film, an area with high customer demand.
Shareholder Returns
At Yorozu, our basic policy on returning profits to shareholders is to strive to enhance returns on the basis of
dividend payments by ensuring an optimal balance withinvestments aimed at realizing financial soundness andgrowth. As for the dividend payout ratio, we declared
a target of 35% in our medium-term business planannounced in March 2015 and since then have maintained this target. Under YSP2023, while targeting adividend payout ratio of 35% or more, we aim to pay
consistent dividends based on our desire to share thebenefits of medium- to long-term increases in corporate value with all of our shareholders.
Although the uncertain conditions surrounding ourbusiness persist, such as the increase in raw material
prices and the impact of the semiconductor shortage
on automobile production, we will all band together inpursuit of our YSP2023 targets.
As we embark on the second year of YSP2023, I
hope you look forward to our continuous growth as anorganization.

Executive Vice President
Member of the Board (CFO)
18

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19

Management Foundation That Supports Sustained Growth

Automobile manufacturers have declared that electric vehicles (EVs) are the foremost priority in their
upcoming vehicle development plans. However, in order to achieve a cruising distance comparable withthat of gasoline-powered vehicles, the vehicle weight tends to increase as the battery load increases,
requiring suspensions and other skeletal and mechanical components to become lighter. For Yorozu,
weight reduction is also a matter of priority that must be addressed to respond to the social issue of
CO2 emissions.
However, we at Yorozu see this situation not as a risk but as an opportunity to further enhance our competitiveness and are actively working to develop environment-friendly, high-performance products thatare reasonably priced by continuing to produce lighter products and reduce CO2 emissions in the product manufacturing process.

Management Foundation That Supports Sustained Growth

R&D Strategy
Strengthening of R&D Capabilities
The development of new EV models has accelerated in recent years,
and based on benchmark results and customer needs, it is clear thatthe issue of noise and vibration control must be addressed alongwith the conventional needs for lighter weight and lower costs.
By strengthening our analysis technology in the digital development phase, we will (1) enhance not only strength and durability but

also the level of accuracy in predicting noise and vibration performance and (2) develop an analysis technology to estimate performance by considering material distortion in stamping and welding
processes in order to develop and release to the market highly efficient
products that fulfill customer needs in a timely manner.

Coordinating with Other Companies (Open Innovation)
The Company is working alongside manufacturers of steel sheet materials and manufacturing equipment to develop practical applications for
its technologies.
Examples of Open Innovation

R&D Vision and Policy
The Company strives to reduce the weight of its suspension parts byenhancing the tensile strength of steel sheet materials, thereby reducing thickness, as well as by replacing steel with aluminum and resinmaterials. We also analyze the suspension parts and other components of vehicles in the world to benchmark performance, cost, weight,
and manufacturing methods to achieve the most optimal design.
In fiscal 2021, the Nissan X-Trail, Nissan Ariya, and Mazda CX-30,
which feature these high-tensile-strength, thinner steel sheet materials, were released to the market, and we are on track to achieve our
YSP2023 weight-reduction target of 30% well ahead of schedule.
Through the development of elemental technology, Yorozu will work
to develop lightweight, highly rigid, price-competitive products for
EVs in the coming years.
We will continue to take various approaches to contribute to acarbon-free society, such as adopting a manufacturing method thatavoids the use of excessive materials and involves fewer processes,

en route to achieving the Group’s goal of realizing carbon neutrality
by 2040.

Yorozu engages in the development of elemental technologies with manufacturers of aluminum and resin materials to develop lightweight hybrid
products that combine such materials with steel sheet components in themost optimal way.

Change in R&D Expenditures(Millions of yen)

7,391
5,149

2019

2020

Yorozu teams up with steel sheet material manufacturers in the developmentof stronger materials that offer exceptional levels of formability, weldability, andcoating performance. We have developed lightweight products by reducing
sheet thickness through the application of high-strength materials.

5,335

2021

Through a collective effort with manufacturers of welding machines and robots,
we develop production equipment, enhance operating efficiency through fullautomation, and improve the quality and traceability of our welding and otherprocesses.

5,600

2022

(forecast)

Fully automated welding line at Yorozu Automotive Alabama, Inc.

(FY)

Examples of Our Product Development Focused on Carbon Neutrality
Reducing CO2 emissions significantly throughout the product life cycle by replacing existing aluminum productswith stamped steel products

Three Elemental Technologies Underpinning the Group’s Innovation
Stamping Technology

Welding Technology

Coating Technology

Yorozu has established a stamping technology that can form 780MPa and 980MPa-classultrahigh-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. Further, by developing structural design and methods that fulfill link functions, we expect toachieve weight reductions of approximately
10% as well as considerable reductions in
CO2 emissions.

We work together with welding wire and welding
machine manufacturers to develop products
used in general arc welding processes; laser
welding processes, which enable narrower
welding with sufficiently deep penetration; andplasma welding processes, which do not produce spatter and minimize distortion andelectrode wear, enabling high-quality welding
processes to be performed for long periodsof time.
In addition to establishing stable welding
technologies for ultra-high-tensile materials,
we are making an all-out effort to reduce
CO2 emissions from welding processes.

With the aim of providing products that areeven more resilient to rust, Yorozu will install
an ultra-thick cationic electrodeposition coating facility at the paint shop of its new Tokai
plant. Cationic coating is a painting processthat uses electrolysis to cause a chemical
reaction, and this ultra-thick cationic coatingoffers even more protection against rust as it is
1.7 times thicker than conventional coating.

Steel has a higher specific gravity than aluminum, which increases
the total weight of the product and, consequently, leads to higher
CO2 emissions when driving. However, aluminum generates considerably more CO2 emissions than steel during the smelting process.

Technological Contributions of Steel Products
Material

For this reason, we are advancing a proposal to replace aluminum,
the material currently used, with steel in order to reduce CO2 emissions over the entire product life cycle, including the manufacturing
process.

CO2 Emissions from Arms Using Aluminum and Steel
1.4
0.3
3.0
Total emissions

Arms using alternative material(aluminum–281,000 tons(–28%)

steel)Key Points ofDevelopment

Adopt steel, which generates less CO2 emissions
during material production

Weight+33% (Aluminum: 1.85 kg

CO2
Emissions

Decrease of 281,000 tons

Steel: 2.46 kg)

Whiledriving444
While driving

Duringmaterial
production

591
564

+147,000 tons(+33%)
During material
production

136
Aluminum arm–428,000 tons(–76%)

Steel arm

Note: Calculated based on a product life cycle of six years and
200,000 units of vehicles per year

20

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21

Management Foundation That Supports Sustained GrowthManagement Foundation That Supports Sustained Growth

Messages from Company Employees
Embracing the importance of addressing ESG issues in management, Yorozu has created a workplace environment where employees with diverse backgrounds can demonstrate their individualities and full potential at work.
This section features messages from our employees who are working on value creation.

Balancing Work and Life Events

Gaining a Sense of Growth in a Flat Working
Environment
I am in charge of procuring parts for the manufacture of Yorozu’s
products. One of the exceptionally important duties in my positionis the selection of suppliers. To fulfill my duty, I request a quotationfrom multiple suppliers and determine which supplier to do business with after comprehensively assessing their price, quality,
delivery time, level of technical support, and other factors. I also
keep in touch with the suppliers in Japan and overseas to gather
as much information as possible to prevent issues concerning
delivery or quantity.
I have always enjoyed the company of people from different
cultures and wanted to make use of my experience studying
abroad and my foreign language skills. As a sophomore in university, I attended an on-campus recruiting event and realized that
Yorozu’s work environment catered to my interests and aspirations, which inspired me to join the Company. Although I was notcompletely confident with my decision up to the first day on thejob, I was relieved to find that my superiors and managers werewilling to help me with the technical terms of the automotive
industry and manners required in Japanese society, and they havealways been supportive until I was able to take on the work myself,
which helped me grow both personally and professionally. While I
still need to improve my knowledge in certain aspects of my work,
the workplace environment makes me feel at ease to seek advice
from superiors beyond my own department. It has helped me
overcome various challenges and concerns. The Company provides a healthy environment for all employees, regardless of age or
nationality, where the views of the young in particular are respected
and everyone is encouraged to speak out openly. By fulfilling myresponsibilities in global purchasing, I hope to contribute to thefurther growth of Yorozu in the years ahead.

Bui Ngoc
Thanh Nguyen
Purchasing
Department

22

YOROZU INTEGRATED REPORT 2022

Yoshio Iino
Quality Assurance
Department

Contributing to Yorozu through My Years of Experience
It is my job to ensure the quality of new products and develop
quality control training programs in Japan and overseas as a contract employee in the Quality Assurance Department. Quality Control, known as QC, entails a variety of controls to ensure that
products meet a certain standard and that improvements are constantly made. It is a vitally important process that serves as the
backbone of production activities in the manufacturing industry.
For this reason, I acquired certifications as a QC Circle trainer
and QC Circle senior trainer at the age of 56 and 59, respectively,from the Union of Japanese Scientists and Engineers, andbecame the vice coordinator of the Tochigi Section of the QC
Circle Kanto Regional Chapter to provide training and support
concerning QC Circle activities to Yorozu and other companies in
Tochigi Prefecture.
Currently, Yorozu is actively hiring non-Japanese personnel,
some of whom are not familiar with the QC method or kaizen(improvement) activities, long practiced in Japan’s manufacturingindustry. Therefore, I believe it is my duty to encourage communication, measure employees' individual abilities, and prepare training programs tailored to each level. The process of adopting QC
to resolve issues while on the job is critical. Trainings must be
provided with care and patience so that the skills employees haveacquired can be effectively applied to work.
My desire to pass on my QC knowledge to the younger generation and the advantage of being able to communicate directlywith Yorozu employees in Japan and overseas are what drive me
to continue working as a contract employee even beyond theage of retirement. I hope that the employees working at Yorozu
value the importance of communication while believing in theirinfinite potential and being proactive rather than reactive in whatever they do.

I belong to Marketing & Sales Department No. 1 doing businesswith automakers around the world. My job involves research onindustry needs and competition based on market trends, strategies to expand sales channels, new business proposals to customers and new customer development (marketing), pricesetting and customer negotiation considering monozukuri (manufacturing) and profitability, sales and profit planning, budget
management, collection of payments, and customer service(sales) contact.
In 2010, I became the first female manager at Yorozu. Since
then, I have taken maternity leave and childcare leave, and currently hold the role of senior manager. As a leader, it is imperative
to have GRIT (guts, resilience, initiatives, and tenacity), one of the“5Gs” declared by the president of Yorozu in 2022, and to becapable of thinking, deciding, and acting to make tomorrow abetter day. As a sales representative, it is also particularly important to listen to and talk to people, and understand and communicate their needs.
At Yorozu, a system for maternity leave and childcare leave isin place along with an encouraging environment. The result of
the systems and the efforts to promote the empowerment of
women are evidenced by the increasing number of female managers, which is a remarkably positive sign. Measures initiallytaken to help women realize their full potential, such as the childcare leave system, have also been extended to include male
employees. Our work environment is gradually becoming one
where women managers are not a rarity. I hope that advancing
these measures will shape an environment where not only
women but all employees are able to feel a sense of pride andaccomplishment in their work.

Hikaru Matsuda
Marketing & Sales
Department

Mitsuru Yamada
Design Department

Promoting Widespread Use of Childcare Leave
I am a team leader overseeing testing and jigs in a departmentthat evaluates the test results of suspension parts. My main
duties include research on the trends of testing devices, purchasing, installation, and the operation of such devices, as well
as discussions on their implementation for addressing the various needs of customers. Combining the latest devices with ourwealth of experience and know-how in testing, I strive to provide
safe and reliable products by incorporating accurate test results
into our customers’ and Yorozu’s design and production technologies in a timely manner.
I have been with Yorozu for 23 years and am now a father ofthree children. When my youngest child was born, I took two
weeks of childcare leave. Since my workplace had been fully
informed and prepared, my superiors and colleagues were very
supportive about my leave. As those with child-rearing experience should know, there’s hardly any time to sleep in the first few
months after a baby is born because of the crying at night, feeding, and changing diapers, not to mention the attention that theolder children need. My wife and I were able to keep ourselves
physically and mentally healthy during that time thanks to thechildcare leave, and therefore, I would definitely encourage any
soon-to-be parents to do the same.
In order to make it easier for employees to take childcare
leave, I hope the Company will consider establishing a systemthat allows work to be seamlessly followed while the employee isaway and a culture of understanding in the workplace to ensure
a smooth return to work. I also hope that those planning to takechildcare leave are able to do so without stress and that they canbe financially supported to take around six months of leave until
the situation settles down at home.

YOROZU INTEGRATED REPORT 2022

23

Management Foundation That Supports Sustained Growth

At Yorozu, we believe in the importance of developing human resources who can flexibly adapt to changes
in the business environment and continue to contribute to the betterment of society. By promoting diversity
along with the development of talented individuals, the Company strives to create a corporate culture inwhich each individual is able to demonstrate their full potential.

Based on the belief that the promotion of diversity, including

respect for diversity. Going forward, we will continue togender and nationality, leads to better corporate results, theactively embrace diversity as a management strategy toGroup recruits and develops its employees with the utmost

achieve sustainable growth.

Advancement of Female Employees
women into leadership roles at eachbusiness site in Japan so that all sites
have at least one female manager by
fiscal 2026.

In fiscal 2021, Yorozu took one step further in workstyle reform

necessary steps to increase employee engagement based onwith measures aimed at enabling employees to gain a greater

the belief that enhancing productivity and creativity will lead tosense of fulfillment in their work. We took a variety of actions tobetter business performance and become the source of ourturn Yorozu into a company that each and every employee

sustainable corporate growth.

Fulfillment of Systems
Clearer System for Target-Setting and Evaluation (KPI System)
We believe that in order to maintain a high level of job satisfaction, aproper system must be in place to give 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 we revised our management evaluation system.

The first step involved the adoption of key performance indicators(KPIs) based on YSP2023 by all members of management. Throughthis approach, we will work to ensure that all management staff are able
to gain a sense of connection between their work and management
policies and thereby enhance their job satisfaction.

Employee Proposal Program
Under YSP2023, Yorozu is now promoting digital transformation (DX)as the foundation for its approach to ESG management. In October
2021, we asked all employees worldwide to share their ideas on DX
and energy conservation to foster a sense of inclusion in ESG management. Every participant was rewarded with a prize in appreciation

Opportunities for Non-Japanese Employees and People with Disabilities
In addition to recruiting foreign students in Japan, Yorozu directly
hires employees from Thailand and Vietnam and currently employs
about 30 highly skilled individuals from various countries, such as
China, Sri Lanka, Malaysia, Russia, and the U.S. Upon joining theCompany, these employees receive Japanese language lessons andsupport through regular interviews to help them stay on the job.

Enhancing Employee Engagement

wants to work at and feels proud to be a part of. We will take

Promoting Diversity

Yorozu has worked to improve its environment, enhance its systems,
and hold seminars to create a workplace where women can work morevigorously. These efforts were recognized in November 2021 when wewere awarded Platinum Eruboshi certification. As a result, we became
the first company based in Kanagawa Prefecture and the first manufacturing company in Japan to receive this certification. In March 2022,
the Company established the Diversity Steering Committee with theaim of increasing the percentage of diversity in management positions at its headquarters to 30% by fiscal 2030 and advancing moreManagement Foundation That Supports Sustained Growth

Human Resource Strategyof their efforts, in addition to the presentation of the Chairman’s
Award and separate honors for the best ideas. Going forward, we
will actively engage in ESG management through the collective
efforts of all employees.

Widespread Shift to Teleworking

We also work actively to create employment opportunities forpeople with disabilities and offer a variety of jobs so they can play anactive role. In order to promote employment in local communities,
Shonai Yorozu Corporation holds plant tours for neighboring companies and support centers to instill a deeper understanding of andinterest in the experience of working with people with disabilities.

Yorozu has expanded the scope of its teleworking personnel in
response to the spread of COVID-19 to achieve the goal of having
50% of office employees work from home. This is to follow the business continuity plan (BCP) and also to make effective use of officespace, secure highly skilled talents, and improve employee retention.
We introduced a remote work system in July 2022 and will continue

Service Corporation. We have created a workplace environment
where employees with a wealth of experience and knowledge canstay on board, which has been well received as proven by the continuous employment rate of 100% for employees aged 60 and overin fiscal 2021.

Improving the Workplace Environment

to promote flexible work arrangements. Aiming for a greater sense offulfillment in work, we will promote new workstyles centered onremote work and a range of measures, such as limitations on transfers to locations away from family, support for childcare, family nursing care, and medical treatments, that allow employees to balance
their career with life at home.

Participation of Senior EmployeesWith the objective of enriching the professional lives of senior
employees by ensuring a range of opportunities tailored to theirneeds 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

Yorozu issued its Health Management Declaration in Octoberand Industry and the Nippon Kenko

2019, and as a result of efforts to create a healthy and rewarding

Kaigi for the second straight year.

Excellent Enterprise of Health & Productivity Management under
the large enterprise category by the Ministry of Economy, Trade

In May 2021, Yorozu revamped the office of its headquarters in conjunction with the switch to a free-address system. This makeover was
led by a select group of young employees who shared their views
about the type of office they hoped to work in, which resulted in astylish new layout. The free-address system has helped to streamline
various aspects of our workplace environment, contributing to more
active communication between departments, cost saving, improved
productivity, and a healthier environment.

Encouraging Male Employees to Take Childcare Leave

Promoting Health and Productivity Management

workplace based on this declaration, it was recognized as an

Free-Address Office

At Yorozu, we support work-life balance by encouraging male
employees to take childcare leave, and as a result, 71.4% of male
employees took the leave in fiscal 2021. In addition to taking advantage of the Child Care and Family Care Leave Law revised in April
2022, we are working to increase understanding in the workplace byposting articles in the Company magazine about fathers who havetaken childcare leave and sharing the experiences and benefits oftaking the leave at management training sessions.

Change in Percentage of Male Employees Taking Childcare Leave
(%)

71.4

33.3
15.4
2019

24

YOROZU INTEGRATED REPORT 2022

Government target
30.0%
Nationwide average
12.6%

2020

2021

YOROZU INTEGRATED REPORT 2022

(FY)

25

Management Foundation That Supports Sustained Growth

Environmental Philosophy

Response to TCFD Recommendations

We will appreciate the bounty of nature as we pursue growth in harmony with
the natural environment.

Climate change, which poses a significant threat to global soci-risks and opportunities presented by climate change in accor-

ety, the economy, and the environment, has been intensifying

dance with the framework of the TCFD and strengthen its infor-

year after year, presenting significant obstacles to our businessmation disclosure from the perspectives of governance, strategy,

activities. Since the formulation of its Environmental Policy inrisk management, and metrics and targets.

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 andprosperous living for all people around the world.
 limate change:
C
Work to become carbon neutral by 2040
Resource recycling:	Make the most effective use of our limited resources forsustainable circulation

2009, the Group has been working to address climate change
and other environmental issues along the path to realizing asustainable society through business activities.
The Group will assess the financial impact of the business

Four Perspectives on Disclosure Based on the TCFD Recommendations
Perspectives

Pressing Forward withEnvironmental Management towarda Sustainable Society

26

YOROZU INTEGRATED REPORT 2022

Relevant information

Governance

Strategy

A common awareness exists around the world that carbon neutrality is a matter of urgency
that concerns everything on the planet. Therefore, any delays to act on the issue would posea risk to our business, and we must work to realize our goals as quickly as possible. Yorozu
Global Environmental Vision 2040 was launched in 2021 to ensure the sustainable existenceof Yorozu’s entire supply chain. Electric vehicles (EVs) have become commonplace in EU andother parts of the world, and we are also seeing this trend in Japan, particularly with hybrid
vehicles (HVs). As improved fuel efficiency and cruising distance call for lighter components,
there is a greater 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 andmanufacturing methods to produce lighter components is the core of our business strategy.

Yorozu Sustainability Plan 2023 (YSP2023)
Medium-Term Business Plan
https://www.yorozu-corp.co.jp/wp-content/
themes/YOROZU%201.0.3/images/en/
investors/YSP2023_E.pdf

Risks associated with environmental issues are managed under our EMS structure. Climatechange is regarded as a Companywide risk and tackled throughout the organization. We areconducting a scenario analysis taking future uncertainties into account, which we plan to disclose.
Yorozu focuses on the following three approaches to tackle the risks and opportunities
associated with climate change.

Executive Vice President (EVP)
General Manager of ESG Office
General Manager of Carbon Neutrality Office
General Manager of Internal Auditing Office
there are a number of global issues that must be addressed by companies, including the prolonged impact of COVID-19, the semiconductor shortage, and soaring prices and energy bills.
In particular, as a responsible member of the automotive industry,
our commitment to carbon neutrality must be passed on to the next
generation, thereby ensuring a society in which people can live withpeace of mind and contributing to the development of automobiles
and other forms of mobility that enable the future generations tomove freely.
Our carbon neutrality initiatives are based on the four measures:
energy conservation, adoption of renewable energy, procurement ofgreen energy, and fuel conversion. On the basis of the Corporate
Vision formulated in 2021, we are procuring green energy, developing plans for the installation of solar power generators in Japan andoverseas, pursuing carbon neutrality at our new plant in Gifu Prefecture, and taking other measures toward becoming a forerunner in theindustry. We have shifted our environmental efforts into high gear
through the establishment of the Carbon Neutrality Office in April
2022 and the assignment of personnel from our engineering departments to ensure timely responses to the needs of our stakeholders.

Status of response

Yorozu’s environmental management activities are carried out under an ISO 14001 environmental management system (hereinafter, the “EMS”) headed by the president of the Company.
The Management Meeting identifies requirements for the EMS, examines and formulates
Corporate Governance Structure
policies in response to medium- to long-term issues, shares information on business risks andhttps://www.yorozu-corp.co.jp/en/csr/
opportunities associated with climate change and decides on the necessary measures, andgovernance/corporate-governance/
reports the details of these activities to the Board of Directors for approval.
Meanwhile, Yorozu sees climate change as a groupwide risk and will implement measuresacross the entire organization under the supervision of the Board of Directors.

Hiroshi Kume

In Japan, environmental conservation efforts have undoubtedly grownin line with the development of industries and Yorozu has been committed to preventing pollution through wastewater treatment, as wellas control of noise and vibration and conserving energy, to ensurecompliance with the relevant laws and regulations. By the mid-2000s,
when the Kyoto Protocol came into effect, we established the Yorozu
Group Charter of Corporate Behavior to identify environmental conservation measures as a matter of priority. Since then, in addition to
obtaining ISO 14001 certification—the international standard for environmental management systems—at each of our operating bases, wehave enhanced our environmental efforts by undergoing external
audits. With the adoption of the Sustainable Development Goals(SDGs) and the Paris Agreement in 2015, and ESG investment
becoming mainstream over the years, the trend has turned from conventional environmental conservation to environmental management.
At Yorozu, our Environmental Philosophy states, “We will appreciate the bounty of nature as we pursue growth in harmony with thenatural environment.” Guided by this philosophy, Yorozu Global Environmental Vision 2040 and the Environmental Policy have been
established to share the Yorozu Group's overall approach to theenvironment. As stated in our Environmental Philosophy, we believethat a healthy planet leads to a stable social infrastructure providing
the foundation for corporate activities. In addition to climate change,

Management Foundation That Supports Sustained Growth

Environmental Management

1. Pursuing carbon neutrality throughout production processes[Risk: Laws and regulations] Taxes imposed on CO2 emissions would increase expendituresand put a damper on profits.
[Opportunity: Energy sources] In-house electricity (solar power) generation would curb costs
while energy prices surge due to energy security issues.

Riskmanagement

2. Reducing CO2 emissions from vehicles by using lighter components[Risk: Technologies] The weight of automotive components has a significant influence on
CO2 emissions from vehicles. Therefore, delays in lightweight engineering may pose a threat
to our business continuity.
[Opportunities: Products] The products we develop and manufacture are mainly suspension Internal Control Systemparts, which are also indispensable to EVs. Therefore, the development of lighter compohttps://www.yorozu-corp.co.jp/en/csr/
nents will play a key role in improving fuel efficiency and cruising distance in the future.
governance/internal-control/
3. Reducing risks associated with intensifying storms and torrential rains[Risk: Legal matters] Heavy rainfall from typhoons and guerrilla rainstorms can cause theleakage of untreated factory wastewater, polluting nearby rivers and oceans.
[Opportunity: Resilience] 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 conduct daily drills and are prepared to respond to thesituation in a timely manner.
The Carbon Neutral Roadmap serves as an all-encompassing strategy to manage such risks
and opportunities and realize our Corporate Vision at an early stage.
With respect to our supply chain, the Company revised and announced its Green Procurement
Guidelines in June 2022. We plan to engage in interactive dialogues based on ongoingsurveys on suppliers’ energy performance. Furthermore, we will actively share our initiatives
with the suppliers to develop a relationship aimed at mutual achievement of carbon neutrality.
We believe that the risks and opportunities in above “1. Pursuing carbon neutrality throughout
production processes” can be applied to supplier management.

Metrics andtargets

As medium- to long-term goals to combat climate change, we have declared to aim for a
Please refer to page 41 for details on the
50% reduction of Scope 1 and Scope 2 emissions by 2030, compared with 2013 levels, aswell as our challenge to realize carbon neutrality by 2040. We have established environmental Group’s Scope 1 and Scope 2 emissions.
targets as short-term goals and are tracking the progress of our strategies.

YOROZU INTEGRATED REPORT 2022

27

Management Foundation That Supports Sustained GrowthManagement Foundation That Supports Sustained Growth

Environmental Management

Initiatives at Domestic Operating Bases

Our Approach to Carbon Neutrality
In Yorozu Global Environmental Vision 2040, we have set forthdrawn up a plan to convert to 100% green energy at all of its

the ambitious goal of realizing carbon neutrality by 2040.

plants in Japan. Plans are also under way to install solar

To extend the activities across the entire organization,

power generation facilities at overseas sites. Moreover, we are

Yorozu established the ESG Office in April 2021 and thelooking into the possibility of achieving carbon neutrality at the

Carbon Neutrality Office in April 2022. To deal with the

new Tokai plant as well as our existing plants by completely

increases in CO2 emissions linked with production volume, we

eliminating CO2 emissions from fuel combustion (Scope 1) inare taking measures to improve the production process by

the painting process.

engaging in (1) energy conservation, (2) adoption of renewable

Carbon neutrality is a risk mitigation measure that shouldenergy, (3) procurement of green energy, and (4) fuel conver-be addressed not only within the Company, but throughoutsion. These measures will help us achieve the goal of reducing

the entire supply chain. Therefore, among the categories of

CO2 emissions by 50% from the 2013 level by 2030 and elim-

Scope 3 emissions, we will work to grasp the amount of CO2

inating them completely by 2040, which would not be possible

emitted by suppliers and from on-market products, and workwithout improvements in the production process. As a result ofon measures to help reduce emissions that have greater

carbon neutrality measures taken in advance, Yorozu Oita

impacts. We are also working on enhancing the accuracy ofCorporation has already switched to the complete use ofour data and establishing quantitative targets for our initia-

green energy in fiscal 2021 (March 2022) and will introduce

tives going forward.

solar power generation in fiscal 2022. In addition, Yorozu has

Yorozu Oita Corporation, the Company’s largest production

switch to 100% green energy at all of our six bases in Japansite in Japan, transitioned to full green energy consumption in

by fiscal 2024. The adoption of green energy throughout ourMarch 2022 through a partnership with the green energy

domestic network is expected to reduce CO2 emissions byprovider, afterFIT Co., Ltd. During fiscal 2023, the company

11,000 tons each year.

also plans to install solar power generators in parking lots

Through these measures, we anticipate an 80% reduction

and vacant spaces of its premises to utilize the produced

in CO2 emissions at our operating bases in Japan by fiscal

electricity. These moves are expected to reduce Yorozu

2024, compared with 2013 levels, achieving the Company-

Oita’s CO2 emissions by approximately 4,700 tons a year.

wide reduction target of 50% well ahead of fiscal 2030.

Moreover, we will expand this to four other operating basesin Japan (three production sites and Group headquarters) andEstimated Effect on CO2 Emissions
Number of operating bases

Adoption of green energy

Yearly reductions in
CO2 emissions

By FY2022

4/6

60%

7,020 tBy FY2024

6/6

100%

11,000 t

Fiscal year

2024 Target
Reduction in CO2 Emissions
at Domestic Sites

80% Achieved

Initiatives at Overseas Operating Bases
In terms of its overseas network, Yorozu has installed solar
power generators in Thailand. We will keep going green at

Roadmap to Carbon Neutrality
2021

2022

2024

2030

2040

other overseas sites in a manner that aligns with the decarbonization policies of each country.

PolicyEnvironmental Philosophy

Structure

ESG Office (April 2021)

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

Upstream

CO2 emissions
reduction
Scope 3
Material
procurement
Scope 2

YorozuMassive solar panels installed at Guangzhou Yorozu Bao Mit Automotive Co.,
Ltd. (G-YBM)

Electricity

Collaboration with suppliers

TOPIC

Four domestic sites using
green energy*1

7% reduction*2

All domestic sites using
green energy*1

50% reduction*2

New Tokai plant using
green energy*1
Overseas sites using green energy*1

100% reduction*2

Scope 1

Downstream

Fuel
Scope 3
Product use*1 By introducing solar power generation*2 CO2 emissions reductions compared with 201328

YOROZU INTEGRATED REPORT 2022

New Tokai plant

Existing locations

Carbon-neutral fuel and heat sources

Carbon Neutrality for fuel / heat source

Develop products that help reduce customers’ CO2 emissions

Yorozu Tochigi Corporation actively takes partin the Watarase Retarding Basin Willow andCanada Goldenrod Removal Operation led by
Oyama City, Tochigi Prefecture. In honor of ourcontributions, in fiscal 2021 we received a letterof appreciation from the mayor of Oyama as an organization that
supports the preservation of the Watarase wetlands for the fourthyear in a row. It is important to take part in these activities because
they give us an opportunity to actually feel the bounty of nature
mentioned in our Environmental Philosophy. We believe that ourapproach to climate change and resource recycling, as declaredin Yorozu Global Environmental Vision 2040, will ultimately play a
critical role in preserving and protecting our natural environment.
As part of our environmental initiatives, we will continue to engage
in such efforts to preserve and protect the natural environment,
and contribute to the conservation of biodiversity.
As a new voluntary initiative, in fiscal 2022 Yorozu held outdoor
cleanup activities at its operating bases in Japan during Environment
Environmental
Initiatives

Month to coincide with the campaign UMIGOMI (Ocean Waste) Zero
Week Spring 2022, jointly held by the Ministry of the Environment and
The Nippon Foundation. It is widely known that plastics, deeply
embedded in our lives, flow into the ocean causing harm and sometimes deadly damage to marine lives. It is also estimated that by 2050,
there could be more plastic in the sea than marine animals by weight.
Through this cleanup activity, we hope to foster environmental awareness in as many employees as possible, and we will continue toengage in environmental preservation activities to coexist harmoniously with society.

YOROZU INTEGRATED REPORT 2022

29

Management Foundation That Supports Sustained Growth

Corporate Governance(as of June 27, 2022)

Management Foundation That Supports Sustained Growth

Board of Directors

Basic Stance
The Yorozu Group will fulfill its social responsibilities as a good
corporate citizen through strict compliance with relevant laws
and regulations. Understanding the need to enhance corporate
value with open and transparent corporate activities, thereby
earning the trust of our stakeholders, the Group remains
committed to reinforcing corporate governance through its
1

2

3

4

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 take action 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.

Corporate Governance Structure

General Meeting of Shareholders
Appointment / Dismissal

Appointment / Dismissal

Audit / Supervision

Board of Directors

6

7

8

Consultation

9
Audit

ReportReportAudit & Supervisory
Committee

ReportOpinionSubmission

Consultation
OpinionSubmission

Compensation
Committee

Audit

3

4

5

Chieko Ogawa

Masashi Oshita

Hiroshi Moriya

Satoshi Miura

Chiaki Tsuji

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)
Attorney6

Tsutomu Hiranaka
President
Member of the Board (COO)

30

7

8

9

Akihiko Shido

Ken Shido

Norio Hirano

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

Executive Vice President
Member of the Board (CFO)

YOROZU INTEGRATED REPORT 2022

Instruction

Accounting Auditor

Assistance /ReportCooperation

Audit

Cooperation

Instruction
ReportManagement Meeting2

Cooperation

Nominating
Committee

Chairman / Vice Chairman / President

1

Appointment / Dismissal

Internal Auditing Function Group

ReportAudit

Corporate Strategy &ESG Function Group

Finance &Management Function Group

Business Management &DX Function Group

Manufacturing Function Group

Marketing & Sales Function Group

Production Equipment Engineering
Function Group<Operating Departments*>* A cross functional organization consisting of seven function groups (Corporate Strategy & ESG Function Group, Finance & Management Function Group,
Business Management & DX Function Group, Manufacturing Function Group, Marketing & Sales 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).

Overview of Corporate Governance
Type of organizational design

Company with an Audit &Supervisory Committee

Number of directors who are not members of
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 INTEGRATED REPORT 2022

31

Management Foundation That Supports Sustained Growth

the opportunity to engage in such themes at venues
other than Board of Directors’ meetings, such as atmanagement meetings.

Promotion of Awareness of ESG
Management

Tsutomu Hiranaka
President and COO
Member of the Board

Chiaki Tsuji

Chieko Ogawa

Outside Director

Outside Director

In light of the uncertain business environment, corporate governance has become an increasingly
important issue for the sustainable growth of a company. At Yorozu, we have been working to establish
a highly transparent and objective corporate governance structure. President Hiranaka sat down withoutside directors Chiaki Tsuji and Chieko Ogawa to facilitate a roundtable discussion on the theme ofcorporate governance and ESG management at Yorozu.

Effectiveness of Corporate Governance
Hiranaka Yorozu has been particularly active in strengthening its corporate governance in recent years. What isyour assessment of these efforts?
Tsuji
I have served as an outside director since2017, and at the time of my appointment, materials for
the Board of Directors’ meetings were not always provided in advance and the duration of these meetings
were very inconsistent. Today, however, the meetings are
conducted efficiently and allow each member to feel
comfortable speaking out, so I believe they have become
remarkably effective. The diversity of external members
has also increased, as the Board now consists of members with experience working at the Ministry of Economy,
Trade and Industry and auto parts manufacturers and as
certified public accountants.
Ogawa The efficiency of the Board meetings has certainly improved, but so has the atmosphere. At the beginning, the interactive discussions that now take place at
the meetings were simply one-directional speeches by an
32

YOROZU INTEGRATED REPORT 2022

executive while other members listened. However, theincrease in the number of outside directors has gradually
helped foster a culture in which each member feels atease speaking out. Based on my view as chairperson of
the Compensation Committee, the method of determining compensation has also improved. While a compensation system has always been in place, the establishmentof evaluation standards and key performance indicators
in recent years has led to considerable improvements intransparency.
Hiranaka We have also been covering topics related
to technology raised by the Board members. What isyour take on this matter?
Tsuji
We would like to see more lectures of thiskind as they not only deepen our knowledge of theCompany’s technological capabilities and competitive
advantages but also enhance the motivation of themembers in the departments giving these lectures.
Ogawa While the theme this time was technology
and technological development, I hope the lectures will
extend to other fields as well. I would also appreciate

Hiranaka The Company sees ESG management as
the issue of highest priority under YSP2023. How would
you assess the environmental and social initiatives wehave been promoting through our business activities?
Tsuji
With the world rapidly working toward carbon neutrality, I believe the Company’s ability to develop
lighter weight products has been amazing. This is anarea where the Company can fully demonstrate thetechnological capabilities it has cultivated to date. It
appears that new technologies will be released to markets, and I hope the Company aggressively allocates
funds to the development of technologies as well as toinitiatives and compensation that enhance employee
motivation.
Ogawa As Outside Director Tsuji stated, we haveseen tremendous progress in our environmental efforts
in recent years. From a social aspect, we have noticed
female employees taking on a more prominent role
within the organization. At Yorozu, more than 10% ofmanagement positions are held by women and womenaccount for over 20% of director roles, which are bothwell above the industry average. In addition, the ratio ofmale employees taking childcare leave is more than
70%. These results are a testament to the framework
the Company has quickly built for promoting women
into leaders and to its proactive efforts to create aworkplace environment that enables all employees torealize sound work–life balance.
Hiranaka As you both mentioned, we pride ourselves
on being a leader in the industry in terms of carbonneutrality measures. Led by our new plant in the Tokai
region, we will actively seek to achieve 100% use ofrenewable energy, not only for the electricity used atplants but also for the heat source used on productionlines. If materialized, it will become the industry’s firstcarbon-neutral plant. Moreover, as set forth in thebasic policy of our medium-term business plan, we will
work to realize even greater results in our pursuit oflighter automotive components over the next two
years. Meanwhile, we were recognized for our efforts inpromoting the advancement of women by becoming

Management Foundation That Supports Sustained GrowthRoundtable Discussion between
the President and Outside Directors
the first company based in Kanagawa Prefecture andthe first manufacturing company to receive Platinum
Eruboshi certification. In addition to promoting more
prominent roles for women, we have a relatively highpercentage of non-Japanese employees and of male
employees who take childcare leave. To enhance corporate performance, we will make further efforts topromote diversity.

Toward Improvements in Corporate Value
Hiranaka Finally, please share your thoughts on how you
as outside directors can help us increase our corporate
value.
Tsuji
The significance of outside directors is theirability to look at things from an external point of view.
While the past Board of Directors’ meetings had been
held rather as a formality, some have commented that
our active participation has fostered a culture in which
views can be expressed freely, both within the Company
and to senior management. We are delighted to havecontributed to the revitalization of these discussions. I
will do whatever I can to help provide even more value toall stakeholders by continuing to be actively involved in
Board of Directors’ meetings while drawing on my experience as an outside director at other companies and as
an attorney in Japan and Germany.
Ogawa I will work to support management in theirformulation of financial plans and assessment of feasibility by utilizing my experience as a certified public
accountant and tax accountant. As chairperson of theCompensation Committee, it is my responsibility to further clarify and improve the compensation system. To
this end, I would like to work more closely with management to identify issues and lead discussions on theways to resolve them. Through these efforts, I will fulfill
my role and dedicate myself to enhancing Yorozu’s
corporate value.
Hiranaka I am grateful for the positive opinions you
have shared with us today. Although we still have many
challenges to overcome, we are definitely taking steps in
the right direction. I look forward to continuing to receive
candid yet valuable opinions based on mutual trust fromthe both of you as we strive to achieve sustainablegrowth. Thank you for your time today.

YOROZU INTEGRATED REPORT 2022

33

Management Foundation That Supports Sustained GrowthManagement Foundation That Supports Sustained Growth

Corporate Governance

Steps to Reinforce Corporate Governance

List of Directors’ Skills
We are striving to enhance our governance structure and to

In selecting directors, we give consideration to a balanced

implement management that emphasizes sustainability in orderboard room, including those who can demonstrate their

to respond to a changing global environment, beat the compe-

strengths across a wide range of business areas, those whotition, and achieve both sustainable growth and increased cor-are suited to business management, and those who have inter-

porate value in the medium to long term. We believe that thenational experience. We also prepare and publish a skills matrix

Board of Directors possesses the qualifications needed tothat lists each director’s knowledge, experience, abilities, etc.

achieve these initiatives.

Position

2018

2020

• Changed the number of directors from 21 to
10 or fewer for directors who are notmembers of the Audit & Supervisory
Committee and to five or fewer for directors
who are members of the Committee• Added one outside director so that theoutside directors make up at least one-thirdof the Board of Directors• Added one outside director to make theoutside directors account for more than 40%
of all directors• Revised and disclosed the Corporate
Governance Guidelines• Revised the director compensation system andintroduced a restricted stock compensation
system• Switched to a Company with an Audit &Supervisory Committee
Directors’ main knowledge and areas of expertise

Name

2015

OutsideIndependent

GenderAkihiko Shido

Chairman, Member ofthe Board (CEO)Male

Ken Shido

Vice Chairman,
Member of the Board

Male

Tsutomu
Hiranaka

President, Member ofthe Board (COO)

Male

Norio Hirano

Executive Vice
President, Member ofthe Board (CFO)

Male

Masashi Oshita Outside Director

OutsideDirector

Male

Hiroshi Moriya

Outside Director

OutsideDirector

Male

Satoshi Miura

Member of the Board(Full-Time Audit &Supervisory Committee
Member)Chieko Ogawa

Outside Director(Member of Audit &Supervisory Committee)

OutsideDirectorFemaleChiaki Tsuji

Outside Director(Member of Audit &Supervisory Committee)

OutsideDirectorFemaleGlobalAutomotive
industry

Manufacturing
Legal,­Compliance, Finance and (Production,
Management
CSR, andAccounting Procurement,
Governanceand Quality)

Sales andMarketing• Appointed two women as outside directors
who are members of the Audit & Supervisory
Committee• Established the voluntary Nominating
Committee and Compensation Committee
where outside directors form a majority• Established the Independent Advisory
Committee as an advisory body for the
Board of Directors• Created and disclosed the Corporate
Governance Guidelines• Began evaluation of effectiveness of theBoard of Directors

Audits and Supervision

Male

Summary of Discussions at Board of Directors’ Meetings in Fiscal 2021
A total of 14 Board of Directors’ meetings were held in fiscal 2021. The main agenda (excerpt) for each meeting was as follows:

As a supervising body, the Board of Directors meets regularly

The Committee comprises three members (including two outside

once every three months and convenes extraordinary meet-

directors) appointed at the General Meeting of Shareholders.

ings as necessary to determine general management poli-

It receives appropriate and timely reports from directors, officers,

cies, legal matters, and other important topics in management.

the accounting auditor, auditing departments, and other relevant

It also monitors the execution of duties by the directors andpersonnel, and necessary information is shared to improve theexecutive officers.

quality and efficiency of the audits.

The Board of Directors comprises nine members (including

In accordance with laws and regulations, the Company’s

four outside directors), an appropriate size for a Company

accounting auditor, Ernst & Young ShinNihon LLC, has put awith an Audit & Supervisory Committee that ensures themechanism in place to restrict the terms of engagement in

operability of the Board of Directors and the effectiveness of

the Company’s audit accounting; five accounting terms for

the Audit & Supervisory Committee.

chief functional employees and seven terms for functional

In the appointment of directors, the Company seeks indi-

employees.

viduals who can leverage their advantages across multiple

The Internal Auditing Office has been established to main-

Meeting 1

Improvements to internal risk controls

Meeting 8

Tokyo Stock Exchange Prime Market selection

fields and in business management to ensure diversity andtain effective internal control activities and supervisory func-

Meeting 2

New medium-term business plan

Meeting 9Compliance with the Corporate Governance Codewell-balanced knowledge, experience, and abilities in thetions. The Audit & Supervisory Committee strives to improve

Meeting 3

Revision of regulations on directors’ compensation
and bonuses

Meeting 10

Consolidated sales forecast for the fiscal year ended
March 31, 2022 and revisions thereto

boardroom. Candidates for directors (who are not Audit &efficiency in auditing and investigating the Company’s opera-

Introduction of a restricted stock compensation
Meeting 11
system for employees

tions and financial assets in cooperation with the Internal

Meeting 4

Board efficacy analysis and aggregate assessment
results

Supervisory Committee members) are determined by the
Board of Directors based on the screening results of the

Auditing Office by sharing annual auditing plans and monthly

Meeting 5Entering into a liability limitation agreement with
non-executive directors

Meeting 12

77th General Shareholders Meeting andvirtual meeting

Nominating Committee and are appointed at the General

audit reports and by having the Internal Auditing Office attend

Meeting 6

State of strategically held sharesthe quarterly hearing reviews conducted by the accounting

Meeting 7

Dividend forecast for the fiscal year ended March 31,
2022

Implementation of a survey to evaluate the Board of
Directors’ efficacy

Meeting of Shareholders.

Meeting 13

Meeting 14 Progress report on the new Tokai site

Directors who are members of the Audit & Supervisory

auditor. The Internal Auditing Office exchanges opinions with

Committee hold regular and extraordinary meetings of thethe accounting auditor on audit plans, the state of audits, andCommittee; attend Board meetings, the monthly Management

audit results, which are reflected in internal control activities.

Meeting, and the Global Management Committee, among
others; and periodically meet with representative directors.
34

YOROZU INTEGRATED REPORT 2022

YOROZU INTEGRATED REPORT 2022

35

Management Foundation That Supports Sustained Growth

Execution of Duties

Management Foundation That Supports Sustained Growth

Corporate GovernanceNominating Committee and Compensation Committee

The Company has introduced an executive officer system togroups (the Corporate Strategy & ESG Function Group, Finance

The Nominating Committee and Compensation Committee

The Nominating Committee proposes candidates for director

clarify the responsibilities and areas of authority in business exe-

& Management Function Group, Business Management & DX

have been established, each with independent outside directors

nomination at the General Meeting of Shareholders and dis-

cution. The Management Meeting is held monthly to ensure theFunction Group, Manufacturing Function Group, Marketing

forming the majority, with the objective of advancing corporate

cusses the process of training the candidates for key manage-Company‘s swift response to sudden changes in the business& Sales Function Group, Production Equipment Engineering

governance through greater transparency and objectivity in thement positions. The Compensation Committee reviews theenvironment.

Function Group, and Internal Auditing Function Group), anddecision-making process of the Board of Directors, while ensur-

director compensation system and makes suggestions. Yorozu

each site into one of three regions (Japan, the Americas,

ing opportunities for independent directors to be involved inperiodically evaluates the effectiveness of both committees.

and Asia).

deciding on the nomination and compensation of directors.

With a view to maximizing efficiency groupwide, the Company
has separated twenty-one functional axes into seven function

Outside Directors
Yorozu has appointed outside directors to ensure fairness

Company’s criteria for independence, have the approval of at

and transparency while strengthening the oversight function

least one current independent director or independent mem-of the Board of Directors. Currently, independent outside

ber of the Audit & Supervisory Committee, and fulfill otherdirectors account for more than 40% of the Board. To berequirements in accordance with the Corporate Governancequalified as a candidate, professional knowledge and experi-

Guidelines can be nominated. Final candidates are selectedence in corporate management, legal affairs, governmentby the Board of Directors based on recommendations of theadministration, and accounting, among other fields, areNominating Committee and are then elected at the General

required. From among candidates who excel in terms of per-Meeting of Shareholders.

Committee

Inside directors

Outside directors

Chairperson

Nominating Committee

3

4

Masashi Oshita (outside director)

Compensation Committee

3

4

Chieko Ogawa (outside director)

Evaluation of Effectiveness of Board of Directors
Once a year, Yorozu interviews directors and conducts a sur-For details of the effectiveness of the Board of Directors in fiscal
2021, please visit the web page (Japanese only) below.
https://www.nikkei.com/nkd/disclosure/tdnr/dko8ft/

vey on operations and the effectiveness of the Board of
Directors to identify any issues and increase the effectivenessof corporate governance.

sonality and general knowledge, only those who meet theName

Reason for appointment

Concurrently held positions

Attendance at Board of
Directors’ meetings(April 2021 to March 2022)

Masashi Oshita

36

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 toserve as an outside director based on these reasons and our expectationthat he will continue to fulfill these roles.
Although Mr. Oshita has not engaged in corporate management in any
other capacity, we believe him to be capable of performing the duties of an
outside director for the above reasons.

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.

Chiaki Tsuji

Since assuming the roles of outside director and member of the Audit &Supervisory Committee in June 2017, Chiaki Tsuji has provided objective
and straightforward opinions based on her expert knowledge andextensive experience acquired over the course of her career as a lawyer inJapan and Germany.
Ms. Tsuji is fully qualified to serve as both outside director and member ofthe Audit & Supervisory Committee based on her expert knowledge andexperience and 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.
Although Ms. Tsuji has not engaged in corporate management in any othercapacity, we believe her to be capable of performing the duties of an
outside director and a member of the Audit & Supervisory Committee forthe above reasons.

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 based on her expert knowledge and extensive
experience acquired over the course of her career as a CPA in Japan andthe United States. Ms. Ogawa is fully qualified to serve as both outside
director and member of the Audit & Supervisory Committee based on her
expert knowledge and experience and our expectation that she willcontinue to provide opinions and advice that will be of value to the Group’s
management supervisory and audit functions.
Although Ms. Ogawa has not engaged in corporate management in any
other capacity, we believe her to be capable of performing the duties of an
outside director and a member of the Audit & Supervisory Committee forthe above reasons.

YOROZU INTEGRATED REPORT 2022

Vice Chairman and Executive Managing Director ofJapan Auto Parts Industries Association (JAPIA)
Director of Japan Automobile Research Institute (JARI)
Director of Japan Society for the Promotion of
Machine Industry

Director Compensation System
In fiscal 2020, as a replacement for stock options, we introduced restricted stock compensation to provide medium- tolong-term incentives while at the same time revising the pro-

14 out of 14 meetings (100%)

portion of performance-linked compensation.
Total value of compensation by type (Millions of yen)
Director category

Chairman of Marelli Corporation
Outside Director of SNT Corporation
Member of Saitama Prefectural Personnel
Commission

Outside Director of Takara Leben Co., Ltd.
Outside Auditor of Moriroku Holdings Company, Ltd.

For details on the director compensation system, please refer to ourconvocation notice below (page 12).
https://www.yorozu-corp.co.jp/share/uploads/2020/06/E2019SYOUSYUUTUUTI1.pdf

14 out of 14 meetings (100%)

14 out of 14 meetings (100%)

Total value ofcompensation(Millions of yen)Fixed compensation
Cash
Basic
compensation

Performance-linked compensation
Non-monetarycompensation

Bonus

Non-monetarycompensation

Cash bonus

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

242

112

59

48

22

–

4

Directors (Audit & Supervisory Committee
members) (excluding outside directors)

19

19

–

–

–

–

2

Outside directors

25

25

–

–

–

–

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 number of “Directors (Audit & Supervisory Board members) (excluding outside directors)” above includes one director (Audit & Supervisory Board
member) who retired at the conclusion of the 76th Ordinary General Meeting of Shareholders held on June 29, 2021.

Internal Control System
The Company’s Board of Directors has adopted and disChief Audit Commissioner of Toda City

14 out of 14 meetings (100%)

closed a basic policy for the development of an internal con-

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

trol system, as stipulated in the Companies Act. The Boardof Directors reviews the operation of this internal control­system on an annual basis.
YOROZU INTEGRATED REPORT 2022

37

Management Foundation That Supports Sustained GrowthManagement Foundation That Supports Sustained GrowthCompliance Initiatives

Corporate GovernanceInitiatives to Further Strengthen CSR
The Company maintains its basic stance to advance fair and transparent corporate activities with astrong sense of ethics and strict adherence to laws and regulations. Grounded in this philosophy,
we recognized the need to increase our corporate value by fulfilling our social responsibility as a good
corporate citizen and ­earning the trust of our stakeholders, in addition to abiding by relevant laws andordinances. ­Accordingly, in December 2005 we established the Yorozu Group Charter of Corporate
Behavior and the Yorozu Code of ­Conduct, which we use as guidelines for our day-to-day operations.

Promotion of CSR along the Supply Chain

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

Antimonopoly Act Initiatives
The Group strictly complies with the Antimonopoly Act (com-other milestones, we also provide company-wide training for

petition law) as well as other laws and regulations governing

all employees. This training provides not only basic lessons on

business transactions. We ensure all employees are thoroughly

harassment but also a deep understanding of precautions

conversant with our Antimonopoly Act Compliance Manual,and response measures to create a healthier work environ-

receive training on a regular basis, and perform their daily work

ment that ensures physical and psychological safety.

The Group strives to build relationships of trust with all of its

The same year, Yorozu established the new Yorozu Sus-

business partners through adherence to laws and regula-tainability Guidelines, in the belief that we must develop ourtions, respect for the global environment and human rights,

business while identifying and responding to changes to the

In addition to mental health training, we also conduct

and procurement activities that stress the importance of fair-planet and in society, and emphasizing the importance ofannual training for officers and managers in Japan and over-ness and transparency.

sustainability and social trust. Based on these guidelines, weseas on the prevention of harassment in all its forms, including

request cooperation from all suppliers and subcontractors.

power harassment, of which the obligation to prevent was

As part of these efforts, we established the Yorozu Greenin a sincere and fair manner.

Procurement Guidelines in 2015, in which we asked ourMoreover, in order to confirm compliance with the guide-

codified in law in 2020. As well as providing training for new

suppliers and subcontractors to cooperate with our envi-

lines, we are using a sustainable procurement check sheet tomanagers and employees upon joining the Company and atronmental conservation efforts. In 2022, we revised thesecomprehensively assess the suppliers’ activities relating to legal

guidelines to reflect Yorozu Global Environmental Visioncompliance, environmental considerations, respect for human

2040, announced in 2021.

rights, and occupational health and safety on an annual basis.

Respect for Human Rights
Development of Sustainability Guidelines
The Group supports various international human rights standards, such as the Universal Declaration of Human Rights, andputs into practice its respect for human rights and diversity as
stated clearly in the CSR Policy. In June 2022, we establishedthe Sustainability Guidelines to fulfill our responsibilities andaccelerate human rights promotion activities throughout the
supply chain from fiscal 2022.

Internal Training and Development

Sustainability Guidelines
Items related to human rights and labor
Respect for human rights

Discrimination

Child labor

Slave labor

Wages

Working hours

Work environment

Dialogue and consultation
with employees

Motivation

Internal compliance training

Elimination of Antisocial Forces
The Yorozu Code of Conduct declares that all Group directors

information and issuing warnings. A system is in place so thatand employees must take a firm stance against antisocial

the General Affairs Department receives immediate reports on

activities and reject inappropriate requests or actions to fundany suspected connections with antisocial forces, such as anany antisocial forces. Our strict compliance with the Yorozu

inappropriate demand to a director or an employee. The

Code of Conduct allows no relationship whatsoever with anti-

department cooperates with the police and other law enforce-social forces. The General Affairs Department is responsible

ment agencies to swiftly shut down any connection with anti-

for preventing any contact with such forces by gatheringsocial forces.

Avoidance of Conflict Minerals
The Group always considers the impact of its procurement

including conflict minerals from the Democratic Republic of theactivities on local communities. We work closely with suppliers

Congo and countries nearby, which are a source of funds forto avoid raw materials that may have a social impact such as

the region’s armed insurgents.

infringements of human rights and environmental damage,

Employee Surveys
Each year, the Group conducts a survey to ascertain the levelof satisfaction of its employees with their working environment,Internal Reporting System (Come Forward for Help Line), Supplier Consultation and Reporting Desk

relations with co-workers, and relations with the Company, as

The Group has set up the Come Forward for Help Line as alocal community, suppliers, supply chain workers, and others

well as to determine whether any human rights violations ormeans for frontline employees to quickly and accurately

outside the Company. It also affords means to facilitate direct

other issues have occurred, and takes measures if required.

report important compliance matters to senior management.

reporting to and consultation with the outside directors. In

To encourage everyone to take advantage of this system andApril 2022, we put in place an external consultation service

provide information, we have set rules to protect the users

available in three languages to ensure the anonymity of whis-and people seeking consultation.

tleblowers and greater flexibility in information gathering to

For more information on our CSR activities, please visit the page below.
https://www.yorozu-corp.co.jp/csr/

The Come Forward for Help Line is available not only toGroup companies in Japan and overseas, but also to the38

YOROZU INTEGRATED REPORT 2022

identify risk sources. The contents of reports and consultations are also reported at the Management Meetings.
YOROZU INTEGRATED REPORT 2022

39

Data Section

Risk Management

Five-Year Summary of Financial and
Non-Financial Data

To deal with major risks that could adversely affect our stakeholders, we identify risks on a yearly basis
before they materialize and become threats. The identified major risks are evaluated in terms of brandand 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.

Yorozu Corporation and Consolidated Subsidiaries

Data Section

Management Foundation That Supports Sustained Growth(Millions of yen)

FY2017FY2018FY2019FY2020

FY2021

Financial Data
Profit / Loss statements (fiscal years)

Information Security

Sales

171,536

169,111

157,680

118,863

127,316

Cost of sales

151,587

149,295

141,331

106,626

113,015Gross margin

19,94919,816

16,34912,237

14,301

In order to properly protect its information assets and takeour customers and suppliers as well as internal data from

SG&A expenses

13,91914,52514,142

11,85912,204the appropriate information security measures, the Company

such threats as errors, accidents, damage, and criminal acts

Operating income

6,029

5,290

2,206

377

2,096

has established the Information Security Committee and theby clarifying the method to handle information based on risks

Non-operating income

857

796

594

1,715

991

Technology Leak Prevention Committee, in addition to for-and severity. The Company complies with relevant laws, reg-

Non-operating expenses

1,239

864

2,030

643

802

mulating the Information Security Control Policy and ensuring

ulations, and other rules and continuously improves its con-Ordinary income

5,648

5,222

770

1,449

2,284

compliance thereof, formulating and implementing counter-trol system, which is well-coordinated with changes in the

Extraordinary gains

55

288

73

279

194

measures, and providing the necessary training. We protect

business environment.

Extraordinary losses
Net income (loss) attributable toowners of parent

321

2,650

11,760

6,011

98

2,717

402

(12,933)(6,195)876

Cash flows (fiscal years)

Business Continuity Plan (BCP)
Yorozu has formulated a business continuity plan (BCP) totype of presses required at the alternative plants to ensure aensure the uninterrupted performance of the core businesses

stable supply of stamping products.

Cash flows from operating activities

9,421

17,603

10,824

13,21814,914

Cash flows from investing activities(20,814)(13,807)(9,584)(7,048)(4,536)

Cash flows from financing activities

6,875

1,103

(7,718)

3,775(13,816)

20,882

24,97019,01929,25927,146

Financial condition (fiscal year-ends)

and to fulfill our social responsibilities as an enterprise in the

To prevent the halting of our production lines due to aging

event of unforeseen incidents and natural disasters. To ensure

facilities, we inspect the stamping presses with vibrationa stable supply structure for customers, we have designatedgauges, oil degradation meters, and ultrasound meters to

our headquarters as a control tower and have taken steps toquantify the degree of deterioration. We are working on a

prevent fires and accidents at plants that provide production

thorough follow-up process when conducting statutory

Net income (loss) per share (¥)

equipment essential to product delivery.

inspections and a preventive maintenance system based on

Net assets per share (¥)

Disasters and accidents could render our suppliers incapa-

Net assets

97,01592,31074,55065,73870,378

Total assets

175,083

168,097

139,700

134,723

133,992

114.31

16.94(544.05)(259.07)36.55

3,359.44

3,182.74

2,507.05

2,229.87

2,374.88

Operating income ratio

3.5%

3.1%

1.4%

0.3%

1.6%

Return on equity (ROE)

3.4%

0.5%

(19.1)%(11.0)%

1.6%

Return on assets (ROA)

3.3%

3.0%

0.5%

1.1%

1.7%

Equity ratio

45.6%

45.0%

42.7%

39.6%

42.6%

Dividend payout ratio

51.6%

271.5%

–

–

35.6%

Capital investments

20,013

15,451

11,216

7,219

3,367

Depreciation

11,915

12,075

12,522

10,246

8,903

R&D expenditures

9,435

8,179

7,391

5,149

5,335

R&D expenditures to sales ratio

5.5%

4.8%

4.7%

4.3%

4.2%

CO2 emissions (t-CO2)

136,550

129,977

134,217

97,14389,789Waste emissions (tons)

8,324

5,040

3,200

3,326

3,150

Water use (1,000 m )

1,372

1,324

1,309

1,086

1,057

Number of employees (consolidated)

6,590

6,597

6,475

6,162

5,666

Ratio of non-Japanese employees

3.92%

4.59%

6.57%

6.25%

5.70%

Ratio of women in management positions

3.85%

5.95%

8.05%

10.90%

12.35%

Ratio of paid vacation taken

66.2%

80.1%

84.2%

50.8%

66.70%

0

0

0

0

0

Per-share information

IoT technology.

ble of manufacturing and delivering products, which could halt

Additionally, the Company has set up an emergency com-

our production and thereby cause our customers’ production

munication plan, increased the resilience of its IT systems,

lines to stop. To avoid such consequences, we regularly

stockpiled food and supplies, and distributed a pocket guide

update the database of our die assets used for key products

for emergencies to employees. Our efforts are also focusedin Japan so that we can quickly switch to alternative produc-on disaster prevention training and regular drills.

tion locations. We are well prepared with information on the

Cash and cash equivalents, end of period

Other Financial Data

Non-Financial Data

3

Disaster drill at Yorozu Global Technical Center (YGTC)

Number of accidents that led to lost working days

40

YOROZU INTEGRATED REPORT 2022

YOROZU INTEGRATED REPORT 2022

41

Data Section
Yorozu’s Global Network(as of March 31, 2022)

Data Section

Corporate Information
Company Overview
Company name:

Yorozu Corporation

Business activities:	Development, design, production, andAddress:	3-7-60 Tarumachi, Kohoku-ku,

sale of auto parts, agricultural machinery­Yokohama, Kanagawa, Japan

parts, and manufacturing equipment

Foundation:

April 1, 1948

Employees

Capital:¥6,200 million(consolidated):

5

4

3

5,666

18

10

2

1

17

Stock Information

14 15 16

Major Shareholders
19

Stock exchange listing:	Tokyo Stock Exchange

Number ofshares held

Ownership
ratio (%)

City Index Eleventh Co., Ltd

2,370

9.87

The Master Trust Bank of Japan, Ltd.

1,784

7.43

BBH FOR FIDELITY PURITAN TR:
FIDELITY SR INTRINSICOPPORTUNITIES FUND

1,600

6.66

Name of shareholder

Prime Market (As of April 4, 2022)
Securities code:

7294

Authorized shares:

64,000,000

Transfer agent & office:	Mitsubishi UFJ Trust and Banking
Corporation
1-4-5 Marunouchi, Chiyoda-ku,
Tokyo, Japan
Number of shareholders: 23,525

Breakdown of Shareholders by Investor Type
Financial­institutions, etc.
19.25%

Financial instruments
business operators
0.96%
Treasury stock
4.14%
Total number ofissued shares

Individuals, other25.27%

25,055,636

Foreign companies, etc.
16.40%

Shido Holdings Co., Ltd.

883

3.68

JFE Steel Corporation

843

3.51

Mizuho Bank, Ltd.

842

3.51

The Bank of Yokohama Ltd.

842

3.51

Suzuki Motor Corporation

800

3.33

Mitsubishi UFJ Trust and Banking
Corporation

682

2.84

STATE STREET BANK AND TRUSTCOMPANY 505224

625

2.60

* The Company owns 1,037k treasury shares. The ownership ratio has been
calculated by deducting these shares from the total number of issued andoutstanding shares.

Other companies
33.98%

Volume (shares)

Share price (¥)

8,000,000 9,000,000

5,000,000
4,000,000
3,000,000
2,000,000

2,000

7,000,000
6,000,000

1,600

5,000,000
1,200

4,000,000
3,000,000

0

8

20

13

Name

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

Capital or investment
amount
100 million Japanese yen
100 million Japanese yen
100 million Japanese yen
100 million Japanese yen

1
2
3
4

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

5

Yorozu Engineering Corporation

6

Yorozu Service Corporation

Yokohama, Kanagawa Prefecture

10 million Japanese yen

7
8
9
10

Yorozu America Corporation
Yorozu Automotive Tennessee, Inc.
Yorozu Automotive Alabama, Inc.
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

192 million U.S. dollars
95 million U.S. dollars
100 million U.S. dollars
20 million U.S. dollars

11 Yorozu Mexicana S.A. de C.V.
12
13
14
15
17
18
19
20

100 million Japanese yen

Main business
Manufacture and sale ofauto parts
Manufacture and sale ofdies and equipment
Insurance services, money
lending, temporary staffing,
service contracting, etc.
A holding company in U.S.A
Manufacture and sale ofauto parts
Leasing of plant buildings

754 million Mexican pesos

Yorozu Automotive Guanajuato de Mexico, S.A.
de C.V.
Yorozu Automotiva do Brasil Ltda.
Yorozu (Thailand) Co., Ltd.
Y-Ogura Automotive (Thailand) Co., Ltd.

Apaseo el Grande, Guanajuato, Mexico 1,853 million Mexican pesos Manufacture and sale ofauto parts
Resende, Rio de Janeiro, Brazil
250 million Brazilian real
Rayong, Thailand
1,800 million Thai baht
Rayong, Thailand
1,383 million Thai baht
Manufacture and sale ofYorozu Engineering Systems (Thailand) Co., Ltd. Rayong, Thailand
65 million Thai baht
dies and equipment
Guangzhou Yorozu Bao Mit Automotive Co., Ltd. Guangzhou, Guangdong, China
189 million Chinese yuan
Wuhan Yorozu Bao Mit Automotive Co., Ltd.
Wuhan, Hubei, China
276 million Chinese yuan
Manufacture and sale ofYorozu JBM Automotive Tamil Nadu Pvt. Ltd.
Tamil Nadu, India
4,000 million Indian rupees auto parts
PT. Yorozu Automotive Indonesia
Karawang, West Java, Indonesia
770 billion Indonesian rupiah

800

WebsiteInvestor Relations

CSR

Environmental Preservation

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

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

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

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
for realizing a sustainable society.

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.

2,000,000
400

1,000,000 1,000,000
0

7

12

2,400

7,000,000 8,000,000
6,000,000

11 9

Sales baseProduction base

16

Trend in Share Price

6

2018
Jun.

2018
Sep.

2018
Dec.

2019
Mar.

2019
Jun.

2019
Sep.

2019
Dec.

2020
Mar.

2020
Jun.

2020
Sep.

2020
Dec.

2021
Mar.

2021
Jun.

2021
Sep.

2021
Dec.

2022
Mar.

0

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

42

YOROZU INTEGRATED REPORT 2022

YOROZU INTEGRATED REPORT 2022

43