DJK Report 2023

Contents

Philosophy

OutlineSustainability Strategies to Support Value Creation

01 Philosophy

47 A Message from the CSuO

02 Contents / Editorial Policy / Tool Map

49 Sustainability

03 Our History of Value Creation

50 Respect for Human Rights

05 About DJK

51 Human Resources

07 Value Creation Process

55 Environment

09 Global Network

59 Roundtable Discussion between Outside Directors

11 Financial and Non-financial Highlights

61 Directors and Audit & Supervisory Board Members
63 Corporate Governance
70 Risk Management

Value Creation Strategies

MissionConnecting People, Connecting Technology
and Enriching the World.

13 A Message from the President & CEO

Data Section

19 A Message from the CFO
21 Materialities

73 Consolidated 11-Year Financial Summary

23 Growth Strategy / Medium-term Business Plan

75 Group Companies

25 Medium-term Business Plan: Strategic Business76 Corporate Data / Investor Information

Investment
27 Business Segments at a Glance

Vision29 Strategy by Business Segment

Next-generation engineering trading firm
Striving to be a business partner that is one step ahead of the times,
and that contributes to the growth of customer businesses and therealization of a sustainable society on a global scale by continuously
providing value with our company’s engineering function as its core.

29 Plant & Energy Business
31 Energy Solutions Business33 Industrial Machinery Business
35 Electronics Business
37 Automotive Business
39 Healthcare Business
41 Aviation & Social Infrastructure Business
43 Overview by Region
45 Special Feature: Transforming into the Nextgeneration Engineering Trading Firm

Value

Editorial Policy

TRUST

GROWTHCONTRIBUTION

We strive to be a company that is rewarding,respects individuals, andallows them to experience growth, while
cooperating with internal and external parties
to align our goals withthe expectations of our
stakeholders and oursocial responsibilities.

We aim to achieve continuous growth throughaggressive investment ingrowth markets andexpansion of businessdomains, while contributing to manufacturing
through our uniqueengineering capabilities.

We contribute to therealization of a sustainable society by actively
tackling important social
issues through management transparency andcontinuous improvementof the quality of thecompany.

The DJK Report is created to provide stakeholders with a deeper
understanding of the DJK Group’s medium- and long-term value
creation. The 2023 edition of the report presents a detailed
explanation of our approach to human resources, a crucial formof capital for the Group, and our initiatives aimed at being thenext-generation engineering trading firm described in our Vision.
We hope that this report assists all our stakeholders to gain abetter understanding of DJK.
Reference Guidelines
International Integrated Reporting Council’s (IIRC) “International
Integrated Reporting Framework,” Ministry of Economy, Trade andIndustry’s “Guidance for Integrated Corporate Disclosure andCompany-Investor Dialogues for Collaborative Value Creation,” etc.
Applicable Period
April 1, 2022 to March 31, 2023 (including some information not covered)

Tool Map
Financial Information

Non-financial Information

Integrated Report (DJK Report)
Securities Report /Quarterly Securities Report

Corporate Governance
ReportConsolidated Financial Results
Newsletter to Shareholders
Financial Results
Briefing Materials

Sustainability Website

Corporate Profile

Applicable Organizations
DAIICHI JITSUGYO CO., LTD. and Japanese and Overseas Group Companies

WebsiteDisclaimer regarding forward-looking statements
Statements made in this annual report with respect to DJK’s forecasts and business targets that are not historical facts, are forward-looking
statements about the future performance of DJK and its consolidated subsidiaries and are based on information currently available. Readers are
cautioned that for a variety of reasons actual results could differ significantly from the projections presented in this report.

01

DAIICHI JITSUGYO CO., LTD.

DJK Report 2023

02

Outline

Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Our History of Value Creation

Evolving Industrial Machinery SupplierFounded in the midst of a postwar reconstruction, we have steadily continued our nonspeculative business of buying and selling machinery, and have achieved growth while
earning trust as a sound company. Supporting core industries in Japan has become thefoundation of our business as a supplier of industrial machinery, and in recent years, ourbusiness domain has expanded to diverse industries. The role we should play in the
future goes beyond the framework of a trading company that only sells products. We
continue to evolve toward becoming the next-generation engineering trading firm that
embodies the concept of a products and integrated solutions business model.

1982

1989

2006

Entry into theelectronics industry

Entry into theaviation industry

Entry into therechargeable battery field

1979

1952

1964

Pioneering the petroleum
and petroleum refining
industry and paper
manufacturing industry

Entry into theautomotive industry

Entry into thepharmaceuticals industry

1959

Entry into theplastics industry

Net sales

1948 1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

Plant & Energy

Industrial Machinery

Automotive

Healthcare

Electronics

Aviation & Social Infrastructure

Energy Solutions

1952

1959

1964

1979

1982

1989

2006

China

1962: Representative office in Taipei, Taiwan
Americas

1968: Representative

office in New York

Asia

2020

(Year)

Expansion ofbusiness domains

1997: Established SHANGHAI YISHI TRADING CO., LTD.
1972: Established local subsidiary(DJA) *New York

2005: Established DAIICHI JITSUGYO ASIA PTE. LTD.

1971: Representative office in Singapore
EuropeEstablishment (1948)–

2015

1970–

(DJKA)

1983: Representative office in London (closed in 2009)1990–

Expansion ofbusiness areas

2008: Established DJK EUROPE GMBH

2010–

Engaged in core industries to build ourbusiness foundation

Establishing a service system andaccelerating industry expansion

Expanding new business models to meetcustomer needs

Expanding domains on the strength ofengineering functions

Established in August 1948 as a trading company specializing inmachinery. Starting with core industries such as shipbuilding, cement,
and oil refining, we steadily built up relationships of trust withbusiness partners and banks to solidify our business foundation. In
the early 1950s, the Company began trading overseas, and in thelatter half of the decade, it entered the plastics industry by beginningto deal in molding and processing machines. By adding a productoriented approach to our customer-oriented sales approach toexpand sales of superior products, we have laid the foundation forsales channels to a wide range of industries. In 1962, we established
the Company’s first overseas representative office in Taipei, Taiwan,
with the cooperation of the local companies with which we traded.
We engaged in the sale of machinery to food factories, which were at
the height of their prosperity at the time.

We expanded our product lineup along with the increase in equipment
demand due to rapid economic growth. In 1970, the Company
established a subsidiary, Daiichi Machinery Service Co., Ltd. (currently
Daiichi Mecha-tech Corporation), to handle everything from equipment
installation to after-sales service. At the same time, the Company began
handling tablet visual inspection machines, printed circuit board
assembly systems, and ground support equipment for airports,
successfully entering the pharmaceutical industry, the electronics
industry, and the aviation industry. Business expanded with the openingof the D.S.T. Center, which provides technical services and training. In
1972, the Company established a local subsidiary in the United States,
mainly engaged in the export of oil drilling equipment. Sales grewthanks to the oil drilling boom in Japan at the time. The focus later
shifted to expanding the sales of Japanese products such as industrial
robots and molding machines.

Since the mid-1990s, the Company has been establishing overseas
bases and local subsidiaries to strengthen its support system for theoverseas expansion of Japanese manufacturers, including those in thehome appliances and digital equipment industries. The first step was
our expansion into Shanghai, China, which was to become a massive
market, in 1997. In 2005, we expanded into Southeast Asia with theestablishment of a local subsidiary in Singapore, and in 2008, wedeveloped our business in Europe with the establishment of a local
subsidiary in Germany. We have steadily captured needs for totalsolutions, establishing a new business model that provides not only
equipment installation but also the process from local factory start-up
to production support. In the late 2000s, the Company entered thenext-generation energy field, which led to solar cells and lithium-ion
batteries. This served as a foothold for the expansion into new
business domains.

The Company began full-fledged efforts in the renewable energy field,
including the construction of its own solar power plants in the early2010s. In addition, our business domains continue to expand more
broadly, with an increase in large-scale projects involving engineering
due to the growing size, complexity, and sophistication of capital
investment projects by manufacturing companies. In each of ourbusinesses, we are expanding our products and integrated solutions
business model, while accelerating our efforts to realize a sustainable
society. We boast 37 overseas bases in 17 countries as of September
30, 2023, and we aim to expand our business relationships, not onlywith Japanese companies but also with foreign companies.

03

DAIICHI JITSUGYO CO., LTD.

DJK Report 2023

04

Outline

Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

About DJKDJK Keywords
Many Years of Experience
as an Industrial
Machinery Supplier
SINCE
1948

75

Foundation

Consolidated net sales

years

6,717

¥

million

53.6(As of September 30, 2023)

37

Number of overseas
employees

1,319 412

Long-term issuer rating(As of September 13, 2023)(Japan Credit Rating
Agency, Ltd. (JCR))(Non-consolidated: 591)

A–

(Stable)Seven Businesses That Meet
Diverse Needs
Aviation & Social
Infrastructure Business

Plant & Energy Business

1.6%

11.2%

Healthcare BusinessNet sales
composition

Automotive Businessby segment(FY2022)

Energy Solutions Business

DAIICHI JITSUGYO CO., LTD.

Supporting
manufacturing as a
general machinerytrading company

Proposing totalsolutions that
capture customerneeds

We make full use of our global network to
uncover valuable products from markets aroundthe world and present flexible proposals. From
general-purpose machinery to custom-madeproducts tailored to meet customer needs, weoffer an extensive range of industrial machineryand equipment for manufacturing.

We contribute to solving customer issues such as
productivity improvement, environmental support,
and cost reduction by providing high-value-added
technological solutions. In addition to our
extensive manufacturing know-how and cuttingedge information, we use optimal services(integrated solutions) to achieve better
production sites for our customers.

Enhance added value through our products andintegrated solutions business model

Unique Engineering
Functions12.0%

Total Coordination

Industrial Machinery Business

15.5%

Establishment

Project

Response toElectronics Businessof new plants

management

diverse needs

31.6%
05

Products%

See p.43 for details

Consolidated:

20.5%

Integrated
Solutions(Based on delivery destination)in 17 countries

7.4%

The Company offers total support to customers engaged in manufacturing, from the coordination of multiple
pieces of equipment to after-sales follow-up after installation, in order to provide proposals that lead tosolutions to problems at production sites. In order to provide optimal solutions, we not only sell equipment(products), but also expand our business to include services (solutions), such as technical support for
product manufacturing and engineering that requires expertise, in order to increase added value.

million

Proportion of net sales
from overseas

Number of Overseas Bases(As of March 31, 2023)

153,674¥

Consolidated operating income

Extensive
Network

Number of employees

Sustainable Growthand Trust

Products and Integrated Solutions
Business Model

DJK Report 2023

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Outline

Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Value Creation Process
The Group has identified materialities to solve social issues and is developing its operations aroundseven businesses based on a growth strategy as a supplier of industrial machinery in Japan andoverseas, leveraging the business foundation it has developed over its more than 70-year history.
Our goal is to“Connect People, Connect Technology and Enrich the World”by creating environmental
and social value through the provision of proposals that make use of advanced technology and services
to meet diversifying needs.

InputsBusiness activities

Outputs

Outcomes

Companywide Management Targets
Human and intellectual capital

VisionNumber of employees (consolidated)
1,319
Number of overseas employees 412
Technical specialists
440

Next-generationengineering trading firmSocial and relationship capital

Establish engineeringfunctions

Extensive
See pp.9-10 for details
networkEngineering organizations
Manufacturing and service subsidiaries

Net sales¥185.0 billion¥8.5 billion

Ordinary income¥8.7 billion

Stable financial baseTotal assets¥152.5 billion
Shareholders’ equity¥63.6 billion
Shareholders’ equity ratio
41.6%

Seven segments

ＲＯＥ

Materialities

Medium-term businessplan MT2024
Business strategies
for growthNon-financial Targets

07

Changes in supply chain

DAIICHI JITSUGYO CO., LTD.

Respect for human rights

Aging infrastructure

Compliance

Realization of a resource-recycling society
Protection of the natural environment

Society
Utilization of advanced IT/AI
Promotion of smart factories
Providing safe & secure products
enhancement

FY2020)⇒ Equivalent to the ratio of female employees
in the Group career track positions
Foreign employees: currently 30.0%⇒ Equivalent to the ratio of foreign employees

Providing well-being and high quality
products development
Healthy work environment
Sustainable ability development
Talent management

Governance
Strengthening internal controls andMid-career recruits: 36.6%

governance⇒ Equivalent to the ratio of mid-career recruits

Risk managementin the Group

Changes in international affairs

Realization of a decarbonized society

Improved safety with social infrastructure

Female employees: currently 2.1%

Corporate governance

Environment

by FY2030 (compared to 1,617.37 t-CO2 inin the Group

Improvement of quality
management

Value to Society

46% reduction in greenhouse gas emissions

Targets for core human resources by FY2031

Strengthening
management basePromotion of diversified
human resources

Environmental issues

10%

Net zero by FY2050

Contribution to healthy,safe and secure lives

Spread of infection¥12.5 billion

10%

See pp.29-42 for details

Contribution toa sustainable earth

Climate change

ＲＯＥ

See p.23 for details

Contribution to sustainable
development of industries

External
Environment¥300.0 billion

Operating income¥5.8 billion(As of March 31, 2023)

Connecting People, Connecting
Technology and Enriching the World.

Net sales

Profit attributable toowners of parent

Financial capital

GROWTHCONTRIBUTION

Products and integrated
solutions

V2030
growth strategy¥200.0 billion

Operating income

Organizational capital

TRUSTMission

Orders received

Customers
Approx. 3,900
Suppliers
Approx. 4,700
Trust gained over many years
Strong partnership

Value

Quantitative targets
under medium-termbusiness plan MT2024

Social contribution and harmony

Natural disasters

Changes in industrial structure

Information and cyber securities

DJK Report 2023

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Outline

Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Global Network
We are pursuing our global strategy through our global four-region network. In July 2023, we opened
two bases in the United States (the Kentucky Office and the Austin Office). We have established a sales
structure that enables us to provide comprehensive support for companies engaged in businessoverseas and respond swiftly to all our customers’local needs through our network of 37 overseas
bases (as of September 30, 2023).

Number ofOverseas Bases37

p.75: Group Companies, p.76: Corporate Data

9

China

4

Europe

Japan

Bases

7 Bases in JapanThe DJK Group
Head Office

Bases

Sales & service bases● Europe● Asia● China● Americas

14

Asia

Osaka, Nagoya, Sendai, Hiroshima,
Fukuoka, Toyama
Technical center

Kawaguchi

Bases

10

Americas

Bases★Technical center

Europe

Asia

China

Americas

Regional headquarters

Regional headquarters

Regional headquarters

Regional headquarters

DJK EUROPE GMBHDAIICHI JITSUGYO ASIA PTE. LTD.

SHANGHAI YISHI TRADING CO., LTD.

DAIICHI JITSUGYO (AMERICA), INC.

Frankfurt, Prague, Budapest, Sofia

Singapore, Kuala Lumpur, Johor Bahru, Penang, Bangkok,

Shanghai, Tianjin, Suzhou, Wuhan, Guangzhou,

Chicago, Houston, Knoxville, Ohio, Kentucky, Austin,

Jakarta, Hanoi, Ho Chi Minh City, Manila, Laguna,Shenzhen, Nansha, Hong Kong, Taipei

Queretaro, Monterrey, Leon, Sao PauloNew Delhi, Bangalore, Ahmedabad, Seoul
Technical center

Bangkok, Hanoi, Laguna,
New Delhi, Seoul
See pp.43-44 for details

09

DAIICHI JITSUGYO CO., LTD.

DJK Report 2023

10

Outline

Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Financial and Non-financial Highlights
Consolidated Financial Highlights
Orders received / Net sales / Operating income

Total assets (Millions of yen) / ROA*1 (%)

Net assets (Millions of yen) / Shareholders’ equity ratio (%)

Net assets per share / Earnings per share (yen)(Millions of yen)244,296

6,013.9

152,535
132,235

183,288

161,987
152,328
161,891
161,476

154,702140,029

7,573

2019

112,561

6,998

148,075

2021

2023

2022

4.4

4.1

4.4

4.3

4.1

Year ended March 31■ ■ Orders received ■ ■ Net sales ■ ■ Operating income

Profit attributable to owners of parent (Millions of yen) /ROE*2 (%)
6,316

2019

2020

2021

2023

2022

4,457

■ ■ Total assets

2019

2020

44.3

2021

Interest-bearing debt (Millions of yen) / DER*3 (times)

Shareholders’ equity ratio

Cash flows (Millions of yen)

2021

7,802

7,850

7,805

7,631

0.17

10.3

9.6

0.16

2020

2021

2019

2020

2021

2022

Earnings per share

32,30923,137178.0

11,141

145.0

2023

130.0

2019

△1,742△3,426

2020

30.1

28.9

660

△409
△910
△1,625 △1,545 △1,535

29.2

28.5

26.3

2021

2022

△4,569

2023

2019

2020

2021

2023

2022

Year ended March 31■ ■ Cash flows from operating activities

DER

130.0

8,940

Year ended March 31■ ■ Interest-bearing debt

ROE

2023

2022

Year ended March 31

5,006

0.13

2023

2019

110.0

6,072

0.15

Year ended March 31■ ■ Profit attributable to owners of parent

444.7

26,782
20,867

2022

501.0

456.4

Dividends per share (yen) / Dividend payout ratio (%)
31,267△924△1,902

2020

418.3

Net assets per share

0.09

2019

2023

2022

5,882

9.3

41.6

591.9

4,521.3

Year ended March 31■ ■ Net assets

ROA

4,754

10.4

10.1

44.8

43.4

40.5

5,023.7
4,274.5

48,446

Year ended March 31

5,363
4,876

45,7105,470.9

6,717

6,866

5,729

2020

153,674

111,486

58,722

53,845

119,958

63,658Year ended March 31■ ■ Dividends per share

Dividend payout ratio■ ■ Cash flows from investing activities*1 ROA (Return On Assets) *2 ROE (Return On Equity) *3 DER (Debt to Equity Ratio)■ ■ Cash flows from financing activities
Cash and equivalents, end of period

Non-financial Highlights
Number of employees (consolidated) /Number of overseas employees (persons)

1,167

1,209

1,229

1,258

Number of graduate recruits /Number of mid-career recruits (persons) (non-consolidated)

Number of technical specialists (consolidated),
including number of overseas employees (persons)

1,319
55

369

193
374

417

397

399

412

23

22

73

20

204

199

206

22

22

2020

2021

2022

2023
Year ended March 31■ ■ Number of employees (consolidated)■ ■ Number of overseas employees

11

DAIICHI JITSUGYO CO., LTD.

2019

2020

2021

2022

46

45

207

8.5

44
13.6

5.9

13

2019

86

43

38
25

440

408

396

387

Education and training expenses*4 (¥1,000/person) /Education and training hours*4 (hours/person) (non-consolidated)

2023

Year ended March 31■ ■ Number of graduate recruits ■ ■ Number of mid-career recruits

2019

2020

2021

2022

2023
Year ended March 31■ ■ Number of technical specialists (consolidated)■ ■ Number of overseas employees

2019

5.4

2020

■ ■ Education and training expenses

2021

2022

9.3

2023

Year ended March 31
Education and training hours*4 Education and training expenses and education and training hours are limited tothose organized by the Personnel Department, but other education and training
programs are also provided by each organization.

DJK Report 2023

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Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

A Message from the President & CEO

We will make a leap forward to be

next-generationengineering trading firm
theby steadily implementing our businessstrategies for growth and strengthening
our management base.

Making a strong start in the first fiscal year of the medium-term business plan MT2024
Exceeding all targets
With your support, DJK celebrated its 75th
anniversary in August 2023. Throughout its history,
DJK has accurately captured customer needs as they
evolved together with the times, growing through thecontinual creation of new value. With all of society
entering a period of great upheaval in the wake of
the COVID-19 pandemic, we have established a new
philosophy, setting forth our mission of “Connecting
People, Connecting Technology and Enriching theWorld,” our vision to be the next-generationengineering trading firm, and our values of Trust,
Growth, and Contribution. We are pursuing ourthree-year medium-term business plan MT2024,
launched in April 2022, under the V2030 growthstrategy, targeting rapid growth and net sales of¥300 billion in the fiscal year ending March 31, 2031.
In the fiscal year ended March 31, 2023, the firstfiscal year of MT2024, we achieved strong resultsthat exceeded both our initial and revised forecasts
against the backdrop of vigorous investment
activities by our customers. Orders received reachedtheir highest level ever, exceeding ¥200 billion, while
net sales increased year-on-year and gross profit andprofit attributable to owners of parent also reachedtheir highest levels ever, all exceeding their targets
for the first fiscal year of the plan. As a result, weachieved return on equity (ROE) of 10.3% comparedto the MT2024 target of 10%. Stable growth is crucial
for us to continue to maintain and improve ROE at

13

DAIICHI JITSUGYO CO., LTD.

Ichiro Uno

Representative Director
President & CEO

10% and above. We will therefore endeavor to boost
the operating income margin and engage in initiatives
such as improving the cash conversion cycle.

Business strategies for growth (1)Strengthen engineering capabilities
that boost added value inthe trading business
Under MT2024, we have established four themes forour business strategies for growth: 1) Strengthening
engineering capabilities, 2) Strategic business
investment, 3) Expansion of business with global
companies, and 4) Progressing digital transformation.
Of these, 1) Strengthening engineering capabilities is
especially important.
Throughout the Company’s 75-year history, ourcore competency has been our trading business,
specializing in machinery sales. We have worked toenhance the value of this trading business through arange of initiatives such as our own after-sales
service and support for our customers’ global
expansion into Europe, the Americas, Asia, andChina, including the accumulation of international
logistics know-how for equipment. However, wemust further enhance our added value to fulfill our
mission of “Connecting People, Connecting
Technology and Enriching the World” and achievesustainable growth. We aim to be a technicallyfocused trading company that goes beyond a
product-only sales model of simply purchasingmachinery from manufacturers and selling it, toestablish a products and integrated solutions
business model. We hope to leverage our

DJK Report 2023

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Outline

Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Interview with the President

engineering capabilities to grow into a business
partner that can provide one-stop support for ourcustomers, right from the very first stage of businessconcept design. As part of this endeavor, weestablished the Engineering Division in April 2023. In
addition to actively recruiting experienced engineers,
we are also revising the personnel system related tocareer development for skilled employees. Goingforward, we aim to coordinate with our Group
companies DAIICHI MECHA-TECH CORPORATION
and DAIICHI ENGINEERING CO., LTD., as well as ouroverseas bases, to form a community of engineers tohandle increasingly large, complex, and sophisticatedprojects. We have already implemented M&A
activities to facilitate stronger engineering
capabilities as the first of our strategic business
investments.

Business strategies for growth (2)Implementing strategic business
investment to facilitate stronger
engineering capabilities
Under MT2024, we will implement strategic business
investment to boost added value in the tradingbusiness. We have classified our business
investments into the following three areas.
1) Core fields, where we will strengthen ourcurrent seven businesses, 2) adjacent fields, which
are extensions of our core field businesses(development of fuel manufacturing equipment toachieve carbon neutrality, entry into fuel supply
chains, entry into the medical equipment
manufacturing business, etc.), and 3) new fields,
where we will create new businesses (including
investment in startup companies, etc.). We haveestablished an investment budget totaling ¥15.0
billion, including ¥5.0 billion over the two years from2023 to 2024 and ¥10.0 billion over the three years
from 2025 to 2027.
We made the first of our strategic business
investments in July 2023, when we acquired theshares of Wave Engineering Corporation, making it aconsolidated subsidiary of DJK. Wave Engineering
Corporation is engaged in the design and productionof petroleum, petrochemical, and chemical plants, aswell as consulting. It specializes in FS*1 and FEED*2
services for basic plant design. DJK has hitherto
participated in plant projects as an EPC contractor*3from the stage after customers have completed
these basic designs. The inclusion of Wave
Engineering in the DJK Group will facilitate our shift
to integrated solutions (selling software rather thanhardware) and the strengthening of our engineering
capabilities. Moreover, integrating Wave Engineering’s

strength in simulation engineering with the Group’s
plant engineering capabilities will enable us toprovide one-stop FS, FEED, and EPC services as thenext-generation engineering trading firm. Goingforward, Wave Engineering will coordinate with thepreviously mentioned Engineering Division and DJKGroup companies to develop aggressive sales,
including initial-stage proposals, not only in the Plant& Energy Business, but also in the Automotive,
Healthcare, Aviation & Social Infrastructure, andother businesses.
We believe that we have made an outstanding
business investment that will lead to stronger
engineering capabilities in our core businesses as
the first of our strategic business investments. We
uphold “solid operation” as DJK’s founding spirit.
Until now, we were not always proactive about
making business investments. We have now
established a business investment system and athree-stage decision gate for the implementation ofstrategic business investments through ourInvestment Council. Decisions on each investment
project are made after it is thoroughly examined andthe Investment Management Reviewing Committee
has determined whether it will effectively benefit the
future of DJK. We have gained substantial know-how
through our investment in Wave Engineering, and wewill further refine our investment decision-making
abilities to implement further business investmentswith prioritization in mind.

Business strategies for growth (3)Revitalizing human resource
exchange to strengthen global
human resources
The DJK Group does business globally, pivoting on
the four areas of Europe, the Americas, Asia, andChina. Under MT2024, we have established the“expansion of business with global companies” as
one of our growth strategies. In the fiscal year ended
March 31, 2023, we achieved sales of battery
materials production equipment and battery cell
production equipment to major companies in Europe
and the United States in our Energy Solutions
Business, as well as automated assembly machines
for medical equipment manufacturing in the UnitedStates in our Industrial Machinery Business. We
believe that expanding our engineering functions
overseas is vital for our future business expansion
with global companies. This includes developing
competent overseas employees and promoting an
understanding of the function of trading companies.
Until now, we provided practical employee
education and training such as after-sales service in*1 FS: Feasibility Study (the prior examination and consideration of whether a project is feasible)*2 FEED: Front End Engineering Design (basic design carried out after the FS)*3 EPC contractor: A company that undertakes engineering, procurement, and construction for a project

15

DAIICHI JITSUGYO CO., LTD.

each region and country, centered on the regional
headquarters in each area. Japanese employees
assigned to each overseas base would demonstrate
our function as a trading company, mostly to
Japanese companies in the local region. However,there was not always sufficient understanding among
overseas employees regarding the concept of the“next-generation engineering trading firm” to which
the Group aspires. We are therefore currently
engaged in explaining aspects such as DJK’s new
philosophy to employees to raise awareness groupwide. We have also launched a long-term training
program in Japan to enable employees from overseas
bases to experience the day-to-day operations of a
trading company and promote DJK’s values when
they return to their local area. This new training
program is expected to lead to the expansion of ourbusinesses overseas by boosting overseas
employees’ knowledge of manufacturing
technologies. In addition to day-to-day operations,they will gain experience at locations such as
production sites for lithium-ion batteries, for which
demand is growing worldwide. More vigorous humanresource exchange will enable overseas employees
to gain a new understanding of the role of a trading
company. We want them to go beyond the simple
task of selling products across their desks to play an
integral role in solving the problems faced bycustomers. We hope to develop overseas employees
who can promote DJK’s values in their own worlds.

Business strategies for growth (4)Promoting both defensive andaggressive DX
The DJK Digital Transformation Vision sets forth our
vision for progressing digital transformation:“Leveraging digital technologies to radically transformthe ways employees work and communicate, andachieve overwhelming productivity, in line withcreating revolutionary business models to increase
our corporate value.” In April 2023, we establishedthe Digital Innovation Center as a division to oversee
our pursuit of this commitment as a company. We
promote DX from both a defensive and an aggressive
standpoint. Through the use of technologies such as
AI, we will boost internal productivity from adefensive perspective, while aggressively engaging in
the creation of a range of new proposals andservices for customers. Because of the nature of ourbusiness as a trading company, covering numerous
industries and product types, it will be challenging totransition from a system of databases in eachbusiness to a comprehensive group-wide system.
However, we have already commenced theconstruction of a group-wide enterprise resource
planning (ERP) system, aiming to utilize data fromacross the Group as a data-driven company. Securing
human resources is key to achieving this. In addition
to recruiting competent human resources for DX, we
are engaged in internal DX education on issues such

DJK Report 2023

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Outline

Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Interview with the President

as the recent topic of ChatGPT and other generative
AI technologies, including related security issues.

Strengthening management base (1)Strengthening people-based
corporate management while
accurately managing diverse risks
Under MT2024, we have established five themes forstrengthening the management base: 1) Deepening
corporate governance, 2) Strengthening risk
management, 3) Strengthening financial strategies, 4)Strengthening human resources strategies, and 5)
Promotion of sustainability management. In the firstyear of the plan, we steadily implemented various
measures to address these themes.
We are proud to say that we have enhanced our
corporate governance structure to a certain level,
partly due to the knowledge provided by our outside
directors. Moreover, in June 2023, we welcomed theappointment of an outside director withmanagement experience at another company, andwe expect him to provide advice from a newperspective based on his career knowledge andsocial trends.
In April 2023, we established the Integrated Risk
Management Office as part of our efforts tostrengthen risk management. The Integrated Risk
Management Office will centrally manage

17

DAIICHI JITSUGYO CO., LTD.

information on business risks, natural disasters andother risks from the perspective of business
continuity planning (BCP), as well as the increasingly
diverse range of risks due to social changes inhuman resources, labor, and other factors. It will
identify, analyze, evaluate and formulate measures toaddress new risks in Japan and overseas. We have
hitherto focused our efforts on business partner
credit risk and other aspects of business partner
management. However, the increasing scale,complexity, and diversity of projects have meant that
more people are involved in each project, increasing
safety and health risks in particular environments
overseas, as well as risks such as those associatedwith the control of information leaks between thepeople involved. Even a slight lapse in vigilance may
result in massive penalties and the collapse of trust.
Therefore, we will strive to further upgrade our
integrated risk management to ensure that we canmaintain sustainable business activities.
On the theme of strengthening financial strategies,
we have obtained a long-term issuer rating (credit
rating) of “A- (stable)” from Japan Credit Rating
Agency, Ltd. We will endeavor to maintain andenhance our financial soundness, without damaging
our management resources, while also engaging inbusiness investment in growth fields from a longterm perspective. Growth investments are notsustainable without a stable revenue base. This is
one reason why we will strive to maintain an ROE of
10% or above, aiming for further improvement, witha constant awareness of the operating income
margin and the cash conversion cycle, as I describedat the outset.
Regarding our human resources strategies, werevised the personnel system and established asystematic human resources development programin the fiscal year ended March 31, 2023. We also
implemented an awareness survey aimed atstrengthening employee engagement. As a result, wewere pleased to note employees’ generally positive
assessment of personal relationships and enthusiasm
for work, although some employees requested skills
improvement. Going forward, we will engage inmeasures for ability development, focused on longterm personnel development, in tandem with thestrengthening of management. We will also strive toachieve further improvements through reforms in theway we work. Although there is a need for some
employees to attend to shipments on weekends andholidays for customer convenience, we will
implement work-sharing systems to prevent theconcentration of this workload on any employee.

Strengthening management base (2)Contributing to society andpromoting sustainability management
though our core businesses
In the fiscal year ended March 31, 2023, we declared
our support for the recommendations of the Task
Force on Climate-related Financial Disclosures (TCFD)
and calculated our Scope 1 (direct) and Scope 2(indirect) greenhouse gas emissions as part of ourenvironmental management. In April 2023, we went
on to launch the Sustainability Promotion Department
as the secretariat of the Sustainability Committee toengage in internal sustainability promotion activities
and establish methods of evaluating initiatives toaddress the five ESG-related materialities (important
issues) identified by the Group.
In particular, we hope to implement activities
reflecting our initiatives to address “contribution to asustainable earth,” including the “realization of adecarbonized society,” the “realization of a resourcerecycling society,” and “protection of the naturalenvironment,” in our business activities. One example
in recent years is the commencement of construction
work, in July 2023, on surface plant facilities for the
Kashiwazaki Clean Hydrogen/Ammonia Project
implemented by INPEX CORPORATION. This projectis the first in Japan to build an integrated hydrogenand ammonia value chain from production to usage.
Hydrogen and ammonia are forms of clean energythat do not generate CO2 when used. The
technology of Tsubame BHB Co., Ltd., a capitalalliance partner of DJK, has been adopted forammonia production, and DJK will perform the roleof EPC contractor for the ammonia production

equipment. Likewise in July 2023, construction workcommenced on the Genkai Biogas power plant, oneof the largest in Kyushu, to which DJK will supply thegas engine generator and other key equipment. Thispower plant will use the fermentation gas producedby heated cowpats and other livestock manure to
generate electricity equivalent to the amountconsumed annually by approximately 4,500 average
households. It is expected to result in the reductionof approximately 3,700 t of CO2 per year. Ourparticipation in large-scale environmental
contribution projects such as these carries greatsocial significance, and we hope to continue toactively contribute to the environment through ourbusinesses. We aim to expand our horizons toinclude the total coordination of environmental
contribution projects from the initial design stage
onward, utilizing the capabilities of Wave Engineering
Corporation, now part of the DJK Group.

To our stakeholders

Demonstrating our function asa trading company and fulfilling
our social role as we aim fora wellbeing-centered society
In the previous section, I explained some examples
of environmental contribution in our Plant & Energy
Business. This is just one of the DJK Group’sbusinesses. In our Energy Solutions Business, we sella large volume of battery materials production
equipment, as well as battery recycling equipment
and storage battery systems, amid the progressive
worldwide spread of lithium-ion batteries for electricvehicles. We also handle a wide variety of key
equipment that contributes to deplasticization anddecarbonization in our other businesses. The Groupis more than just a supplier that handles machinery,
and we will contribute to the environment andsociety by supporting our customers’ businesses asa vital business partner.
It is thanks to the understanding and cooperationof our customers, business partners, and various
related parties that DJK has been able to continue
and develop its businesses over the last 75 years.
Even as it transforms itself, the Group will continue
to enrich the world through products developed
from cooperation with customers, as it has always
done, playing a key role in the creation of a society
where everyone can feel a sense of wellbeing.
Through publications such as this report, we hope tomake the value of the Group’s trading company
function more widely understood. Based on thisunderstanding, all of the Group’s officers andemployees will strive to fulfill their duties with pride
and a sense of worth. I look forward to yourcontinued support.

DJK Report 2023

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Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

A Message from the CFO

We will accelerate
growth investments
built on a stablerevenue base tofurther enhance
corporate value.

Pushing ahead with investment linked tolong-term growth

Osamu Fukawa

Director, Managing Executive Officer, CFO

In DJK, business management that balances capitalefficiency and profitability, financial soundness, andshareholder returns are positioned as the threepillars of our financial strategy.

Overview of the fiscal year ended
March 31, 2023
In the fiscal year ended March 31, 2023, the first yearof the medium-term business plan MT2024, net sales
increased year-on-year and profit attributable toowners of parent reached a record high. By area, sales
in China fell due to the impact of movement
restrictions during the first half of the fiscal year.
However, sales grew in other areas, primarily Asia, butalso the Americas and Europe, as the Groupdemonstrated the strength of its global structure.
Meanwhile, operating income was flat year-on-year,
mainly due to an increase in variable costs associatedwith the lifting of movement restrictions for COVID-19
and an increase in depreciation and amortization
resulting from the introduction of a non-consolidated
enterprise resource planning (ERP) system. In view ofthe gain on sale of marketable and investment
securities and other one-off extraordinary profit
included in profit attributable to owners of parent, as
well as a recognition of the factors that led to anincrease in selling, general and administrative expenses(SGA expenses), we see it as our challenge to invest in
strengthening our sales force and management
capabilities to boost operating income in the future.
See pp.29-44 for details

19

DAIICHI JITSUGYO CO., LTD.

Initiatives under the medium-termbusiness plan MT2024
We have established strengthening financial strategies
as a way to strengthen the management base under
MT2024. While maintaining a stable financial base, we
aim to reform our earning model through growthinvestments and other measures and improve capitalefficiency. In doing this, we are particularly consciousof three points: profitability, growth, and stability.
Maintaining and improving profitability
In terms of profitability, in the fiscal year ended March
31, 2023, we achieved a return on equity (ROE) of 10.3%,
exceeding our target for the first year of MT2024. To
maintain ROE above the 10% mark, it will be vital for us
to strengthen gross profit and operating income. Until
now, the Group’s management has focused on
preventing any operating loss. Our strength has been in
our mechanisms to manage gross profit for each projectbased on a common format. Under MT2024, as delivery
times become longer due to the increase in large
projects, we will engage in management focus on longterm value in addition to short-term profit; in otherwords, integrated management to enhance profitability
with a consciousness of capital efficiency. Last fiscal year,
we prepared balance sheets for each business divisionand started sharing the cash conversion cycle at monthly
corporate sales meetings for the purpose of discussingbalance sheet optimization and investment strategy ateach division. Going forward, we will implement moresophisticated business management with aconsciousness of return on invested capital (ROIC).

Under MT2024, we will promote strategic business
investment as a key measure to stimulate growth. We
have set an investment budget of ¥15.0 billion over thefive years to the fiscal year ending March 31, 2027,
across three areas: core fields, adjacent fields, and new
fields. In the fiscal year ended March 31, 2023, weestablished and launched our basic policy anddeliberation process for business investment.
Specifically, we collect a list of possible investment
projects from each business division, which is thennarrowed down by the Business Development
Department of the Corporate Strategy Division. The
Investment Management Reviewing Committee, which
I chair, then discusses the investment project
candidates from the long-term perspective ofenhancing corporate value. Finally, the Board of
Directors decides on each investment project. We
made the first of our strategic business investments inJuly 2023, when we acquired the shares of Wave
Engineering Corporation, a company engaged in thedesign and production of petrochemical and other
See pp.25-26 for details
plants, as well as consulting.
Looking ahead, we will endeavor to achieve a moremature business investment system by reviewing past
investment projects and sharing the lessons learned
within the Group, implementing small-scale test trials
of investments based on on-site authorization, andholding in-house training sessions and similar forums. I
feel that we have developed sufficient capabilities forthe quantitative analysis of investments, and we willraise our qualitative analysis capabilities as we
accumulate more experience. We will generatesynergies within the Group through business
investments that go beyond short-term profits andengage in deeper discussions, including the input ofknowledge by outside directors, to enhance corporate
value from a long-term perspective. We hope to
expand our range of investment options, including
recovering the cash payments for upfront investments
through depreciation and amortization.
We are also promoting investments in humanresources and digital transformation (DX) to boost theGroup’s competitive strength. We actively seek torecruit experienced engineers and competent humanresources for DX to strengthen our engineering
capabilities. At the same time, we revised the salarysystem in the fiscal year ended March 31, 2023, raisingsalaries by approximately 6% across the board as partof our efforts to establish rewarding workplaceenvironments. These measures have resulted in a
progressive rise in personnel expenses. However, we
believe that the effectiveness of these investments isdemonstrated by the steady increase in sales and profits
in growth fields such as our Energy Solutions Business.
Regarding investments in DX, we have introduced a
new ERP system for DJK, on a non-consolidated basis
as part of our efforts to promote integrated
management, including balance sheet management.
We are progressively integrating this system with the
ERP systems we have already introduced overseas. We
are also holding numerous study sessions to consider

how to utilize the various forms of generative AI in ourbusinesses in the future.
Maintaining a stable financial base
A stable financial base is a vital prerequisite forpursuing various measures and investments aimed atstrengthening profitability. We have obtained a longterm issuer rating (credit rating) of “A- (stable)” fromJapan Credit Rating Agency, Ltd., and we will work to
manage an appropriate level of shareholders’ equity
while maintaining financial soundness. We aim toachieve a price book-value ratio (PBR) of 1.0 or aboveand boost capital efficiency as part of our managementawareness of the cost of capital and the share price. To
this end, we will maintain an ROE of at least 10%,strengthen initiatives for the disclosure of non-financial
information with a consciousness of boosting theprice-earnings ratio (PER), and engage in more proactive
investor relations activities. In May 2023, we decided to
conduct a 3-for-1 stock split of common shares, aiming
to further expand the range of potential investors andenhance the liquidity of DJK shares.
Shareholder returns
Shareholder returns are among our most importantmanagement policies. For the fiscal year ended March
31, 2023, we paid an annual dividend of ¥178 pershare. We will continue to pay appropriate dividends inline with business performance, based on thecomprehensive consideration of factors such as internal
reserves, growth investments, and the maintenance ofstable dividends. In doing this we will aim for a payout
ratio of 30% of profit attributable to owners of parent.
We will make comprehensive judgments on theacquisition of treasury shares, taking into account ourbusiness performance and market trends.
We will continue to build on the Group’s stablerevenue base to strengthen profitability by promoting a
range of growth investments and engaging in integrated
risk management. This will create a virtuous cycle ofinitiatives with a consciousness of profitability, growth,and stability, leading to the sustainable enhancementof corporate value and shareholder returns.

Financial and capital strategies
Shareholder
returns(Enhance
shareholder
value)

Appropriate balance
to maintain andboost ROE
at
10% or more
Business

investments(Ensure growth)

Improve
capital structure(Strengthen thefinancial base)

DJK Report 2023

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Outline

Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Materialities
In considering the future of our Group on the occasion of establishing a new philosophy, our desire to actively
contribute to the realization of a sustainable society not only through our own growth but also through ourbusiness activities was the underlying factor. Based on this belief, we have examined issues in terms of theirsignificance, both for our stakeholders and for our Group, based on changes in the business environment andsocial trends related to sustainability, and identified materialities (important issues) to enable us to achieve aresolution of these issues.

Process to Identify Materialities
The following steps were taken to identify the materialities that we will focus on in order to maintainsustainable growth. The materialities identified will be reviewed on a regular basis in light of changes in theenvironment and business developments in the Group.
STEP 1

Issue identification

STEP 2

Prioritization

STEP 3

Validation
STEP 4

Materiality
identification

The Board of Managing Directors* and the Board of Directors exchanged opinions on thespecified process, the proposed materialities and the proposed materiality matrix, andconfirmed their appropriateness. Materialities identified are reviewed and approved by the
Board of Directors.
*Currently the Management Committee: Environment (E)Importance to stakeholders: Social and economic (S): Governance (G)Biodiversity conservation

Climate change

Increased social welfare costs

Environmental issues

Economic and educational inequality

Respect for human rights

Gender equality

Compliance
Changes instructure

DAIICHI JITSUGYO CO., LTD.

Note: The symbols ■, ●, and ◉ correspond to each vision (target)

Materialities

Contribution to asustainable earth

Contribution tosustainable
development ofindustries

Contribution to
healthy, safe andsecure lives

Promotion ofdiversified humanresources

Improvement ofquality
management

Vision(targets)■ Realization of adecarbonizedsociety● Realization of a
resource-recycling
society◉ Protection of thenatural environment■ Utilization ofadvanced IT/AI● Promotion of smart
factories◉ Providing safe &secure products■ Improved safetywith social
infrastructureenhancement● Providing well-being
and high quality
products
development■ Healthy work
environment● Sustainable ability
development◉ Talent management■ Strengthening
internal controls
and governance● Risk management◉ Social contribution
and harmony

Contribution throughexpanding sales of
eco-friendly products

Initiatives for thesustainable developmentof industries

Contribution to a safe
and secure society■ Binary power
generation equipment■ Solar power
generation systems■ Electric injection
molding machines■ Electric groundsupport equipment(GSE) for airports■ Glycol recovery
vehicles● Equipment forsolvents recovery
and recycling■ Electronic
component
mounting systems● LOGITO◉ BCP services tomaintain customers’
production◉ Electricity storage
systems

Maintenance andimprovement of
comfortable workplaceenvironments■ Use of lowpollution, fuelefficient businessvehicles■ Encouraging the
spread ofgenerative AI■ Digitalization ofbusiness-related
documents

Contribution to a sustainable earth
Contribution to sustainable development of industries
Contribution to healthy, safe and secure lives
Promotion of diversified human resources
Improvement of quality management

demographic

21

Materialities, targets, and related SDGs

The issues listed in STEP 1 were prioritized in order of importance using a matrix consistingof two axes: importance to stakeholders (vertical axis) and importance to the Group(horizontal axis).

Migration issues

ImportanceFor the Group, engaging in the identified materialities is a way to contribute to achieving the SDGs, promoteeconomic and social development while also supporting a sustainable global environment, and fulfill DJK’s
philosophy in a tangible manner.
To achieve the vision (targets) set for each materiality, the operation of our environmental management
system (EMS) reflects the themes that each business division will focus on to address social issues through its
businesses and the management base themes that support sustainable growth. We have launched a system tomanage these themes in our plan of action. Going forward, we will promote these themes through our uniqueframework linked to each materiality.

We have identified a wide range of issues based on stakeholder perspectives and thebusiness strategies of each segment in our Group, referring to international guidelines suchas SDGs and ISO 26000, and categorized them in terms of environment (E), social andeconomic (S), and governance (G).

Materiality matrix
Most
importantMateriality Initiatives

Addressing
social issues
through businessdevelopmentthat makes themost of DJK’s
strengths

Natural disasters
Spread of infection
Changes in international affairs
Changes in industrial structure
Changes in supply chain
Aging infrastructure
Information and cyber securities

Food shortage crisis

Strengthening of governanceFood waste issue

Risk management

Rural decline and depopulation
Changing values

Importance to the DJK GroupStrengthening
the managementbase to support
sustainablegrowthDigital transformation (DX)

Most
important■ Road cleaningvehicles■ Disaster response
base-function trucks■ Runway snow
removal equipment● Tablet visualinspection
machines andprinters■ Prevention of workrelated accidents● Ensuring safety on
construction
worksites■ Prevention of workrelated accidents■ Promotion of female
advancement■ Promotion ofchildcare leave
utilization by male
employees■ Improving employee
engagement■ Implementation ofstress checks◉ Appropriate
assignment of
human resources◉ Enhanced training
through e-learning◉ Enhanced personnel
system for engineering
human resources◉ Enhanced training foroverseas employees(in Japan)■ Compliance withsecurity tradecontrols■ Thoroughcompliance■ Harassment
prevention■ Ensuring thereliability offinancial reporting● Employee safety
management● Mitigation of trading
accidents● Continuing review
of BCP◉ Various donation
activities◉ Enhanced
information
disclosure

DJK Report 2023

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Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Growth Strategy / Medium-term Business Plan
Qualitative Targets under Medium-term Business Plan MT2024: First-year Achievements and Challenges

V2030 Growth Strategy (Vision2030)
We have achieved steady growth since our founding through solid corporate management. In light of therecent situation where major changes continue to take place in the social and business environment, weare more keenly aware of the need for a fundamental review of corporate operations and strategicplanning from a long-term perspective.
Against this backdrop, we have formulated our V2030 growth strategy for fiscal 2030, based on ourstrong determination to chart a different growth curve than in the past.

Basic Strategies
Aggressive investments

Investments toward business expansion, strengthening,and creation, as well as solutions to social issues

Management focus on long-term value,in addition to short-term profit

Build management base, for medium- to long-term
profitability by improving capital efficiency

Contributing to various stakeholders:Customers, employees, suppliers,
communities, and shareholders

Achieve a sustainable society by addressing ourmaterialities

Shift from product-only sales to products
and integrated solutions business model

Proposals for embedded-services business, andsubscriptions models, etc.

Capturing global growth

Make more business dealings with foreign companies

Promotion of digital transformation

Significantly improve productivity, and creation of
innovative business models

1 Business strategies for growth
Achievements(1) Strengthening engineering

capabilities(2) Strategic business

investment(3) Expansion of businesswith global companies

Quantitative Targets (Consolidated)

300.0

Net sales ¥12.5

billionOperating income ¥billion

ROE

10

%

(4) Progressing digitaltransformation

Challenges

The Engineering Center has enabled partnerships among engineers, aswell as sharing of challenges in projects. The Center also reinforced
on-site responsiveness for large-scale and complex projects.
Established the Engineering Division in April 2023
Solidified the foundation to further strengthen engineering capabilities,
essential for business expansion.
Demand for engineers increased, due to increase in overseas projects
Requirements for our engineering are on the rise
Formulated and started operating our basic policy for business
investments and screening process for possible investments
Internal sharing of lessons from past investments, and fostering
investment-oriented business mindset
Business agreements with foreign companies in Energy Solutions andIndustrial Machinery Businesses
Comprehensive development of overseas employees
Promotion of understanding of trading companies’ functions and overseas
expansion of engi-neering functions
Digital Innovation Center established in April 2023
Accelerate implementation of reform by increasing workforces
Implementation of digital transformation, directly related to sales activities

Investment Strategies
In addition to the seven businesses, we will consider investments from a long-term perspective inadjacent and new fields to expand and strengthen our business, create new markets andbusinesses, and solve social and environmental issues.

2 Strengthening management baseAchievements

Medium-term Business Plan MT2024
Backcasting from the V2030 growth strategy, we have positioned each three-year period from fiscal
2022 to fiscal 2030 as a period of Creation, Growth, and Advancement, and formulated a mediumterm business plan MT2024 (Creation Phase).
FY2019-FY2021

FY2022-FY2024

FY2025-FY2027

FY2028-FY2030

FACE2021

MT2024

MT2027

MT2030

Build our foundation

Creation

GrowthAdvancement

Orders received
Net sales
Operating income
Ordinary income
Profit attributable to owners of parent
ROE

23

DAIICHI JITSUGYO CO., LTD.

(2) Strengthening risk

(3) Strengthening financial

strategies

MT2024(Millions of yen)

governancemanagement

Next-generation engineering trading firm

Quantitative Targets (Consolidated)(1) Deepening corporate

FY2022 Results

FY2023 Forecasts

FY2023 Targets

FY2024 Targets

244,296
153,674
6,717
7,108
6,316
10.3%

220,000
180,000
7,500
8,000
5,400

180,000
170,000
7,000
7,200
4,800
10.0%

200,000
185,000
8,500
8,700
5,800

(4) Strengthening humanresources strategies(5) Promotion ofsustainability
management

Challenges

Reflect results of questionnaires of the Board of Directors’ effectivenessevaluation on our management system
Outside directors’ further involvement with directors’ individual
evaluations and remunerations
Evaluations for achievements for medium-term business plan (qualitative
targets) were performed by outside directors
Review matters to be discussed at the Board of Directors meeting(allocation of deliberation time)
Integrated Risk Management Office established in April 2023
Identifications, analyses, assessments, and countermeasures of risks
involved with realization of our growth strategies
Proactively address improvement of cash conversion cycle
Reform of earning model by investments in further growth
Executed our personnel system reform, various types of training systems,
and employees’ en-gagement questionnaire
Effectively utilize these system reforms and questionnaire results
Endorsement of TCFD, computation of Scope 1 and 2
Sustainability Promotion Department established in April 2023
Promoting efforts of sustainability and establish assessment methods forachievements

DJK Report 2023

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Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Medium-term Business Plan: Strategic Business Investment
Under the V2030 growth strategy, we have fundamentally revised our management and business strategies todevelop a different growth curve from the previous ones. Our most important strategy is to further strengthen
our trading business through aggressive investments to accelerate growth.
By establishing policies and systems for business investment, we aim to aggressively implement strategic
business investments and achieve the goals of our V2030 growth strategy.

Acquisition of the shares of Wave Engineering
In July 2023, we acquired the shares of Wave
Engineering Corporation, making it a Group
company.
Wave Engineering specializes in FS and FEED
services. Integrating its strength in simulation with
the Group’s plant engineering capabilities will
enable us to participate in plant construction
from the design consideration stage, a hitherto
untapped business domain for DJK. Through thisintegration, the Group will be able to provide
one-stop FS-FEED-EPC services, enabling us tostrengthen our engineering capabilities andprovide new added value to customers.
Recent years have seen an increase inopportunities to consider the use of hydrogenand ammonia as the tide of the times turns
toward carbon neutrality. Through the
involvement of Tsubame BHB Co., Ltd., which ispartly owned by DJK, DJK’s Engineering Divisionand the Group company, DAIICHI ENGINEERINGThe Trading Business: Our Core Competency
Initiatives to continuously
boost our value addition

Highperformanceindustrial
machinery

Our suppliers:
industrial machinery
manufacturers

1

Expansion into
after-sales services

2

Global bases expansion
ahead of our customers’
overseas manufacturing
expansion

3

4
State-of-theart production
technology

5

Customers(manufacturers)

Become a leading
expert in global
logistics specializing
in machinery

Allocation of investing budgets
2023-24

Plant &
EnergyAutomotive

25

DAIICHI JITSUGYO CO., LTD.

Industrial
Machinery2025-27

Ichiro Uno
Representative Director
President & CEO of DJK¥

2.0 billion ¥5.0 billion¥

2.0 billion ¥4.0 billion

Capital injections to power plants withproject financeOverseas expansion of PPA business at
solar power plants
Co-development of biological fuelmanufacturing equipment
Investments in chemical recycling business
Investments with our involvement in fuelsupply chains
Capital injections and M&A to medical
equipment manufacturers
Establishment of OEM businesspurposed manufacturers
M&A of global logistics companies

1.0 billion ¥1.0 billion

New business creation, through LP
capital injections to venture capitals
Capital injections to start-ups withtechnical advantages

Healthcare Aviation & Social
Infrastructure

Decarbonizedsociety

Adjacent
fields3R-Recycling society
Supply chain, social
infrastructure

AI / IoT
Next-generation
communication
Medical, safe andsecured lives

Investments to create social values
and solve social issues

NewfieldsInvestments for new business fields
and business models

Total

Examples of investments under consideration

Business acquisition to reinforce
engineering capabilities
Establishment of demonstration centers
in Japan and overseas
Capital injection, partnering, and M&A
for machinery trading companies andcomponents manufacturers
Establishment of a LOGITO consortium
through capital partnering

Electronics

Investments to strengthen existing
seven segments

FY2022 initiatives
Instituted investment policy and application procedures
Framework formulated: Established the investment implementation taskforce and Investment
Management Reviewing Committee
Reviewed past investments and engaged in in-house sharing of lessons learned
Made efforts to cultivate awareness through in-house study meetings and implemented small-scale test
trials based on on-site authorization
Promoted specific M&A projects*Acquired Wave Engineering Corporation

EnergySolutionsCorefieldsBasic Policy on Business Investment
Boost cooperation with investee companies to expand and strengthen existing businesses and create new
businesses, investing management resources to enhance profitability
Pursue more than capital gains, generating synergies through business operations to enhance corporate value

Kinichi Shibata
Representative Director and Chairman
Wave Engineering Corporation

Domains and Scale of Business Investments

Shorter lead-time
for general-purpose
machines throughstrategic inventories
Support from devisingoverall plans through startof production= Engineering functions +all process management

CO., LTD., we will consider manufacturing
processes and plant design for blue and green
ammonia synthesis, aiming to contribute toachieving a sustainable global environment while
also achieving further growth and enhancing
corporate value for the Group.

¥

5.0 billion ¥10.0 billion¥

DJK Report 2023

26

Outline

Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Business Segments at a Glance

7 Businesses

Plant & Energy
Business

EnergySolutions
Business

Industrial
MachineryBusiness

Electronics
Business

Automotive
Business

Healthcare
Business

Aviation & Social
Infrastructure
Business

Business fields

Petroleum / chemicals
Papermaking / steelmaking
EnergyMaterials
Cells / modules
Solar panels / storage
batteries
Next-generation batteries
and fuel cells

Home appliances /office automation
Food packaging
Medical equipment
Housing equipment
Distribution materials
Growing seedlings

Surface mount technology(SMT)
Microelectronics
Logistics automation
solutions (LOGITO)

Interior and exterior parts
Powertrain
Car electronics / ADAS

Pharmaceuticals
Cosmetics
Food

Aviation
Airports
Defense and disaster
preparedness
Customer support

Major products

Petroleum refinery andpetrochemical plant equipment

Battery materials
production equipment

FA systems

Molding machines

Tablet visual inspection
systems

Steelmaking plant equipment
Papermaking plant equipment
Oil, gas, and geothermal
production facilities

Flexible solar panels
Powder processing
equipment

Electronic component
mounting-related systems(SMT)

Ground support
equipment for aircraft
Ground support
equipment for airports
Equipment used in
airports
Specialized vehicles fordisaster relief
Equipment to reduce
workforce andworkload

Well drilling equipment anddrilling rig packages
Power generation infrastructure
Renewable energy-related
equipment
AI / IoT-related equipment
Environmental protection
facilities
Analysis and measurement
equipment
Chemical plant equipment
Safety monitoring equipment

Storage battery systems
Cell electrodemanufacturing equipment
Battery recycling
equipment
Cell / module assembly
equipment
Fuel cell manufacturing
equipment
Cell / module charge,
discharge inspection
equipment

Injection molding machines
Extrusion machines
Pressure and vacuum
thermoforming machines
Die-casting machines
Metal-processing machines
Ceramics processing
machines
Automated assembly
equipment
Material-handling robot
systems
Coating / surface decorationequipment
3D printing systems forplastic and sand molds

Engineering services

Semiconductor devicerelated systems
Display-related systems
SMT peripheral inspection
equipment and post-process
automation equipment
IoT / software
Coating and dispensing
equipment
CO2 and YAG laser, blue laser
Automation robots

Metal-processing machines
Plastic-processing
machines
Coating / surface
decoration equipment

Capsule visual inspection
systems

Automated assembly
equipment

Blister lines
Sachet packaging lines

Inspection equipment
Module support
equipment

Tablet pressing machines
Vial filling lines
Syringe filling lines
Powder filling lines
Leak inspection machines

IoT-related equipment anddevices

Automatic cell culture
systems

Logistics automationequipment

Other packaging lines

Visual, X-ray, characteristic,
and other inspection
equipment

Filling and packaging
equipment

Tablet ink-jet printing andinspection systems

Ratio to total net sales

11.2%
2022/3

Net sales (Millions of yen)

12.0%

2023/32022/315.5%

2023/32022/331.6%

2023/32022/320.5%

2023/32022/37.4%

2023/32022/31.6%

2023/32022/32023/3

11,881

17,192

19,00418,50919,27523,76652,09848,561

31,98031,45911,18911,435

2,466

2,518

Operating income / loss (Millions of yen)

610

855

696

△ 68

646

642

3,125

3,215

1,238

909

1,161

1,192

△ 79

△ 45

Operating income margin (%)

5.1

5.0

3.7

△ 0.4

3.4

2.7

6.0

6.6

3.9

2.9

10.4

10.4

△ 3.2

△ 1.8

Number of employees

103

128

48

62

200

176

318

339

130

136

170

172

30

29

Note: As this table does not include Other, which is not included in the reportable segments, or adjustments for inter-segment transactions, etc., the figures do not matchthe overall total.

27

DAIICHI JITSUGYO CO., LTD.

DJK Report 2023

28

Outline

Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Strategy by Business Segment

Plant & Energy Business
TOPICS

Business Details
We provide various equipment and advanced technologies in the plant field. In the energy field, we provide
related products for a decarbonized society, with a focus on renewable energy.
We leverage our advanced technology and expertise to provide equipment to the key
industries that support social infrastructure, based on the extensive experience andknowledge we have developed over many years. Through our plant and energy
businesses, we will pioneer the path to a decarbonized society.
We will also contribute to addressing social issues by actively developing our digitaltransformation (DX) business to supplement recent aging equipment and labor shortages.
At the Plant & Energy Business Division, we aim to promote resilient businesses that
achieve sustainable growth and evolution.

Yuji Shika

Executive Officer, General Manager,
Plant & Energy Business Division

Strengths
Solution proposals based on our wealth of experience and knowledge since our founding, and support forcompanies expanding overseas by utilizing our global network
High level of experience in renewable energies, including solar power plant operations and biomass power
plants, and ability to propose equipment
Newly established total solution framework for factory and plant construction, from FS and FEED to EPC andequipment supply
Product lineup that contributes to on-site problem solving and technical succession utilizing DX (AI & IoT) technology

Participating in the Kashiwazaki Clean Hydrogen/Ammonia Project as EPC contractor
The Plant & Energy Business Division provided ammonia
production equipment for the Kashiwazaki Clean Hydrogen/Ammonia Project implemented by INPEX CORPORATION. This
project is the first in Japan to demonstrate an integrated value
chain from the production of blue hydrogen and ammonia fromnatural gas produced in Japan, through the pressurization andinjection of the CO2 byproduct from the manufacturing process
into a depleted gas field reservoir in Japan as a Carbon dioxide
Capture, Utilization and Storage (CCUS) effort, to the use of thehydrogen produced for electricity generation and otherpurposes. It is planned to produce 500t of ammonia per year
under the project, with production scheduled to commence
during FY2025.
Hydrogen production

Gas production

Water

Hydrogen power generation

OxygenPipeline

Natural gas

Minami-Nagaoka
Gas Field

Business Environment

The technology of Tsubame BHB Co., Ltd., with which DJK
has a capital and business agreement, was selected for thisproject. (This technology enables a reduction in environment
impact from the manufacturing process and facilitates lowtemperature, low-pressure, small-scale ammonia synthesis.) We
will utilize DJK’s one-of-a-kind engineering functions toundertake the engi-neering (construction design), procurement,
and construction (EPC) of the ammonia production equipment,
as well as process management services.
Through our participation in the project, the Plant & Energy
Business Division will strive to promote the spread of ammonia
production technology to help realize a decarbonized society.

HydrogenCO2 capture

Gas

Nitrogen

CO2

Positive factors

Negative factors

Actual introduction of DX products (IoT-related) at plants
Revitalization of CCS projects aimed at achieving adecarbonized society, overseas projects for major
engineering companies, and geothermal development
projects
Increasing demand for bioethanol
Rise in projects under the Joint Crediting Mechanism (JCM)
to contribute to reducing greenhouse gas emissions
Increase in business talks on renewable energy

Electricity

Ammonia production

EGR

Suspension of investment plans due to declining
demand for gasoline and basic chemicals
Unstable industries, easily affected by environmental
and economic conditions
Suppression of capital expenditure and maintenancecosts due to a decrease in the demand for paper
Postponement and cancellation of large projects
due to soaring parts, materials, and equipment costs
Shortages and soaring prices for biomass fuels

Ammonia

Petroleum

Higashi-Kashiwazaki Gas Field
Hirai-area

Review of the First Year of MT2024
Business Overview

Initiatives in V2030 and MT2024

29

EnergyPetroleum

Chemicals

Materials

Decarbonization

Ongoing efforts in geothermal development
and binary power generation business using
waste heat
Developing low-carbon projects in Asianmarkets using theJCM system

Energy transition
initiatives for
decarbonization
Active proposals for
smart security andDX (AI & IoT)

Participation in new
products, new processes,
and automation themesin the laboratory throughproactive approach to
the R&D department
Developing foreigncompanies’ customers
targeting Asian markets

Proactive and bold
approach to the biomass fuel businessAccelerating initiatives for bioethanol
and SAF businesses

Developing demand for
low-carbon ammonia
and taking on the challenge of green ammonia
Expansion of developmentof own renewable energy
sources and developmentof rare metal-free storage
batteries

DAIICHI JITSUGYO CO., LTD.

Handled on-site ammonia plants, equipment forbioethanol, and equipment for biogas power
generation to contribute to initiatives to achieve a
decarbonized societyEntered the smart security business using DX
products such as gas leakage monitoring cameras
and vibration sensors for plant maintenanceContinued to participate in projects under the Joint
Crediting Mechanism (JCM) to contribute to
reducing greenhouse gas emissions
Continued partnerships with process licensers topromote the bio-refinery business
Engaged in low-carbon and green ammonia
production projects
Currently expanding our approach to the R&D
department using various equipment; building a
track record for catalyst evaluation equipment in
the chemicals field

Net Sales / Operating Income (Millions of yen)
Net sales

Operating income

20,70017,192

16,10016,900

1,134
846

855

790

FY2022 Targets

FY2022 Results

FY2023 Targets

0

FY2024 Targets

MT2024

DJK Report 2023

30

Outline

Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Strategy by Business Segment

Energy Solutions Business
TOPICS

Business Details
In the rechargeable battery field, we mainly provide lithium-ion battery (LIB) manufacturing-related equipment,
as well as solutions for next-generation energy such as fuel cells, solar power,
and storage batteries.
Amid the global movement toward realizing a decarbonized society, the spread ofin-vehicle batteries and industrial storage batteries is accelerating. At the Energy
Solutions Business Division, we provide a variety of equipment in the rechargeable
battery field to customers around the world, leveraging our global network, engineeringfunctions, and other strengths. We will contribute to our customers’ productmanufacturing and business development, aiming to realize a sustainable society.

Daijiro Kodama

Executive Officer, General Manager,
Energy Solutions Business Division

Covering a wide range of fields from materials to battery manufacturing (upstream to downstream of the
production process)Offering solutions based on a wealth of achievements and experience gained over the years
Partnerships with industry-leading manufacturers in Japan and overseas
Project management by the Engineering Department

Business Environment
Negative factors

Continuing investment in LIBs due to government
policies to promote the shift to EVs in each country
Revitalization of investment due to the U.S. Inflation
Reduction Act
Demand for further speeding up assembly processes

The Energy Solutions Business commenced sales activities as a new segment in April 2021, and we haveprogressively expanded the business amid the trend toward carbon neutrality. Based on an independent survey by
the Energy Business Review (a specialist magazine covering all aspects of trends in the energy industry) published byValleyMedia, Florida, U.S., the activities of the Energy Solutions Business were recognized with selection among the“Top 10 Battery Manufacturing Solutions Companies in APAC - 2023” and featured in the Energy Business Review.
We will continue to contribute to the development of the rechargeable battery industry, aiming for further
business expansion.

DJK: connecting the manufacturing industry with manufacturing
equipment manufacturers

Strengths

Positive factors

Leading supplier of rechargeable battery manufacturing equipment

Price competitiveness of equipment on overseas markets
Rapid expansion of demand, exceeding the
production capacity of equipment manufacturers
Intensifying competition due to entry of
manufacturers from other industries

Today, amid rapid growth in the rechargeable battery market, there isconstant demand within the industry for equipment manufacturers thatprovide highly reliable manufacturing equipment and sound after-sales
service. There are generally many obstacles, however, that prevent
manufacturing companies from finding the optimal manufacturing
equipment manufacturer on the market. DJK acts as an intermediary tofacilitate this task. We boast over seven decades of experience in theindustry, from research and development to giga-scale projects. We
leverage our diverse engineering capabilities and equipment know-how to
procure and supply optimal equipment from around the world.
Using DJK’s global supply chain, we provide highly reliableequipment and after-sales service to customers in a wide range ofregions and environments. We also actively engage with the
manufacturing equipment manufacturers, promoting joint design andfunctional development to ensure the manufacture of high-quality
products for customers.

Review of the First Year of MT2024
Business Overview

Initiatives in V2030 and MT2024

New business
Charging anddischarging equipment

Cell manufacturing
equipment

Material-related
equipment

Promotion of projects
coordinated by theCompany
Cost reduction by
manufacturing at thedelivery location, etc.

Package proposals
to customers
Development of
next-generationequipment andcultivation of
manufacturers

Powder engineeringby the Company
Manufacture ofequipment in a
locally completemanner in collaboration with partnercompanies

31

DAIICHI JITSUGYO CO., LTD.

Engineering
Coordination ofprojects led by theCompany
Launch of overseas
vendors by theEngineering
Department

Sales of materials
related to fuel cells
and LIBs
Development of
all-solid-state battery
manufacturing-related
equipment and cultivation of equipment
manufacturers

Investment was vigorous in Japan and overseas, andthe number of business negotiations increased.
Sales have been in a cyclical lull but orders were
the highest on record
Increased the number of engineering members andstrengthened management capabilities to address
the increasing scale and complexity of projects
Coordinated with the Engineering Division tofurther strengthen our team and engage in thoroughproject management
Engagement with Japanese, European and U.S.
customers progressed smoothly, but there wasinsufficient engagement with the Chinese and South
Korean markets, which dominate the LIB market
The development of differentiated equipment is anurgent task in China and South Korea, which boastof numerous local manufacturers
Promoted the development of new equipment andinitiatives in recycling-related businesses; aim forbusiness development as the division’s new pillar
under MT2024

Net Sales / Operating Income (Millions of yen)
Net sales

Operating income
30,00026,90018,50913,200061

FY2022 Targets

797

879

FY2023 Targets

FY2024 Targets

68

FY2022 Results

MT2024

DJK Report 2023

32

Outline

Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Strategy by Business Segment

Industrial Machinery Business
TOPICS

Business Details
We provide production equipment, raw materials, and other products mainly related to automated assembly
machines and surface treatment in a wide range of fields, including home appliances,
housing equipment, food packaging, medical, motorcycles, and construction machinery.
In addition to our function as a trading company, we are working to strengthen the
additional engineering capabilities we provide in our existing businesses. We aim toboost our presence, expanding and enhancing both existing businesses and new(medical and agricultural) businesses through a balance of aggressive and defensive
initiatives. We will strengthen coordination across the DJK Group’s global sales networkand extend our business areas to expand our business with foreign companies.

Kenji Murabe

Executive Officer, General Manager,
Industrial Machinery Business Division

Strengths

Expanding business with globally developing foreign companies
In the Industrial Machinery Business, we haveestablished a medical department specializing in thesale of equipment for the manufacture of medical
equipment, and we are ramping up sales. Althoughstill in the process of market development, we aremaking steady progress in understanding the market
and building relationships with customers. We alreadyhave some business with foreign companies in North
and Central America concerning manufacturing
equipment for disposable medical equipment(catheters, syringes, dialyzers, blood bags, etc.). Goingforward, we will expand the geographical area of our
medical equipment business beyond North andCentral America as an equipment supply partner toforeign companies doing business around the world.

The number of people suffering from lifestylerelated diseases is expected to increase due to theaging population and changes in diet, and we believethat the trend toward enhancing quality of life (QOL)
will lead to further investment in self-medication kits
and similar products. We are also seeing a rapid risein the need for automation and labor-saving, both inJapan and overseas, as manual tasks such as productassembly become unsustainable due to labor
shortages. We will progressively develop suppliers inJapan and overseas specializing in the medical field
and offer global automation proposals to further
strengthen our medical equipment business.

One Window Total Solution: an organization capable of engineering facilities from upstream to downstream
Proposing environmentally friendly equipment and materials that incorporate our experience in a wide range
of industries and the latest trends (energy-saving diagnostics, detoxification tower equipment, powder coating,marine biodegradable plastics, etc.)
Global sales network with a team of engineers

Business Environment
Positive factors

Negative factors

Rise of eco-friendly products and systems andincreasing recycling needs
Increasing demand for automated, labor-saving,energy-saving equipment due to the decline in theworking population and soaring energy prices
Movement toward domestic manufacturing in Japanand the shift of overseas man-ufacturing plants due
to geopolitical risks

Trend toward reducing disposable plastic products
for deplasticization and decarbonization, anddisparity between countries in the content andscope of environmental restrictions
Rising costs due to soaring energy prices
Longer delivery times for equipment due to labor
shortages, etc.

Review of the First Year of MT2024
Business Overview

Initiatives in V2030 and MT2024

New business
Molding machines

MedicalExtrusion/Injection:
promote efficientsales expansion bymaking full use of DX
Vacuum: strengthen
overseas sales withdemo equipment
and manufacturing
and sales of molded
products

Acquire know-how, products, and commercial rightsthat can be sold turnkey
North and Central America:
capture capital investment
for automated manufacturing by Western medical
device manufacturers
China and Asia: expand
business mainly in sales ofsyringe manufacturing
equipment

33

DAIICHI JITSUGYO CO., LTD.

Strawberry
seedlings

Additive
manufacturing

Balancing production
system and sales at
Daiichi Jitsugyo
Berries Farm
(Moroyama, Saitama)
Establishment of asystem for cultivationof Japanese varieties
in Mexico

Utilize demo equipment to expand
sales to all DJK
Group customers
Increase presence in
the industry by providing not only
machinery, materials,
and sales, but also
manufacturingservices

Recycling business,handling of environmentally friendly
products, and taking
on the challenge ofmanufacturing[Molding machines]
Business performance was stable. Launched full-scale sales activities
utilizing demo equipment to strengthen sales overseas[Medical]Captured demand for automation at medical facilities to build a trackrecord of business with foreign companies for medical equipment[Strawberry seedlings]
Production systems are now complete. Launched a dedicated sales
team to secure customers and promoted activities encompassing thesale of cultivation systems[Additive manufacturing]Achieved sales of products made by Stratasys, a world-leading
manufacturer of resin-based 3D printers. We aim to expand thebusiness by enhancing our product lineup through collaboration withother new manufacturers[New business]
Continued to present proposals based on the situation to address
heterogeneous and diverse market needs (biodegradable plastics,
recyclable resins, paper products)

Net Sales / Operating Income (Millions of yen)
Net sales

Operating income / loss

23,766
21,90021,70017,600

1,146
1,152

642
551

0

FY2022 Targets

FY2022 Results

FY2023 Targets

FY2024 Targets

MT2024

DJK Report 2023

34

Outline

Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Strategy by Business Segment

Electronics BusinessBusiness Details

TOPICSIn the field of digital electronics-related manufacturing, we mainly provide various types of equipment such as
electronic component mounting lines, semiconductor and LCD module assembly
equipment, and peripheral equipment.
While maintaining our high market share in the electronics industry, we aim to reinvest
the experience and know-how we have developed over many years back into society
and build a base for industrial and technological innovation through equipment sales
and solution proposals, aspiring to realize a fair society. We provide solution proposals
for factory automation, unmanned operation, and systemization. We aim for realizing asustainable society where everyone can continue working, not only in the electronics
industry but also in a wide range of other fields.

Keiji Yamamoto

Executive Officer, General Manager,
Electronics Business Division

Strengths
Providing solutions to reform manufacturing processes with its state-of-the-art technology and experience,
mainly for electronic component mounting-related systems, electronic device systems, and automationequipment
With the global environment for the electronics industry undergoing significant changes, we support ourcustomers’ global expansion, not only by providing equipment but also through our global support system andthe provision of accurate information

Establishing a laboratory to provide advanced technologies to the world
In a rare step for a trading company, we haveestablished a laboratory to assist us in rapidly evolvingfrom the sale of products into a corporate group thatprovides new technologies and construction methods,
creating opportunities and ideas for our customers toconsider factory DX and smart factories as the nextgeneration engineering trading firm. Japan is a stepbehind the rest of the world in the field of factory DX
and smart factories. Moreover, the businessenvironment for industries is undergoing significant
changes such as the use of AI technology, robot
technology, logistics automation, remote monitoringand operation, energy conservation and environmental
measures. To address these changes, we will pursue
research and development, together with tie-ups withoutstanding manufacturers in Japan and overseas, toprovide our customers with new technologies,
processes, and value; not only in response to theircurrent conditions but also in anticipation of possible
changes in the future.
At present, the laboratory is engaged in thefollowing initiatives:(1) Full automation of incoming and outgoing stockof electronic components at production sites(2) Software development to enable predictive
maintenance, task analysis, and environmental
countermeasures through the visualization of
production processes at factories(3) WCS* development for centralized control of
intra-process transportation at factories andwarehouse management at storage yards(4) Development of systems that use AI cameras toanalyze the flow lines of people and objects andverify waste reductions and efficiency
improvements
The laboratory not only creates new value but also
takes on the role of providing the new technologies
created here into the wider world.
In the future, we will establish in-house venturecompanies born from this laboratory, building amechanism to provide opportunities for many young
employees to learn management skills.
*WCS: Warehouse Control System

Business Environment
Positive factors

Negative factors

Increasing need for high-speed mounting
equipment due to even higher functionality in electronic devices
Expanding demand for automation in response to
the decrease in the working population and digitaltransformation (DX)
Expanding government support for thesemiconductor business

Rise of emerging manufacturers in the high-speed
mounting equipment category
Shortage of expert human resources, equipment
manufacturers and products in the factory DX
business
High barriers to entry into the semiconductorbusiness

Review of the First Year of MT2024
Business Overview

Initiatives in V2030 and MT2024

New productsElectronic component
mounting equipment business
Capturing equipment
demand as Chinese companies expand into the South
Asia-Europe region

35

DAIICHI JITSUGYO CO., LTD.

Semiconductorbusiness
Expanding sales of smart
logistics systems fromJapanese mother factories
to overseas factories
Expanding services outside
the electronics industry
through collaboration withother business segments

Increasing the number of
employees in Greater
China and strengthening
the sales expansion system
Expansion of sales rights
for leading production
equipment in China, South
Korea, and Taiwan, andreceipt of orders

Establishment of LOGITO
consortium using thelaboratory**Established in June 2023.

[Electronic component mounting equipment business]
Progressively shifting from product-only sales to a products
and integrated solutions business model; captured a wide
range of orders in Japan, mainly from in-vehicle-related and
EMS companies; successfully captured orders for largescale projects overseas, mainly in China[LOGITO]
Succeeded in obtaining a wide range of business inquiries
and orders through enhanced digital marketing; expanded
the range of manufactures whose products we handle[Semiconductor business]
Demand for package substrates was robust, mainly in
China, Taiwan, and South Korea, but the market weakened
rapidly in the second half
[New products]
Established a laboratory to research and develop cuttingedge, next-generation technologies for manufacturing in
June 2023

Net Sales / Operating Income (Millions of yen)
Net sales

Operating income / loss
61,80053,20052,30048,561

3,215
2,621

2,058
2,200

0

FY2022 Targets

FY2022 Results

FY2023 Targets

FY2024 Targets

MT2024

DJK Report 2023

36

Outline

Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Strategy by Business Segment

Automotive BusinessBusiness Details

TOPICS

We provide plastic material forming equipment, processing machines, assembly and inspection equipment, and otherequipment for the manufacturing processes of automotive body parts, electric powertrains,
and automotive electrical components. In recent years, we have been focusing on reducing
CO2 emissions in the manufacturing process and creating smart factories.
In the Japanese and Americas markets, we are riding the wave of strong sales of EHVs,
following investment in plastic processing machines, electric powertrains, andelectrification products, based on the concept of next-generation mobility. We are also
leading the Japanese market for the giga-casting technology that many OEMs and parts
suppliers aim to introduce. We will start to prepare sales systems for this equipment andrespond to other changes in manufacturing methods with overseas expansion in our sights.

Hajime Fujii

Executive Officer, General Manager,
Automotive Business Division

Strengths
Promotion of highly specialized projects in the fields of vehicle bodies, drives, and devices
Technical support through our extensive experience in engineering, including for capital investment inmachinery, control, assembly, and painting
A track record of transactions on a global scale with OEMs and mega-suppliers leading the automotive
industry
Presence of reliable business partners

Business Environment
Positive factors

Negative factors

Expansion of carbon neutrality-related investment
Expanding investment in electrification products
Expanding demand for power devices due to the
spread of electrification products

Shrinking share of the Chinese market held byJapanese automakers
Delayed expansion into the electrification market
by internal combustion engine manufacturers
High barriers to entry into semiconductor-related
businesses

Addressing the accelerating market for electric vehicles
The automotive industry is undergoing dramatic
structural changes amid the worldwide push forcarbon neutrality. The global share of electric vehicles
is forecast to expand rapidly over the next decade.
This is expected to lead to a rapid expansion indemand for electrification products.
Especially vigorous growth is anticipated in theelectric powertrain field due to the spread of electricvehicles. We have strategically pursued initiatives forvarious next-generation key products based on theconcept of next-generation mobility since the time ofthe previous medium-term business plan FACE2021.
In the motor and inverter fields, in particular, wehave already received orders for production
equipment from major customers, and we haveestablished equipment sales and support systems inadvance of the future launch of full-scale mass
production by automotive parts manufacturers.
Going forward, we will pursue sales based on thetheme of “giga-casting” in the context of demand forcost reductions, shorter manufacturing processes, andmore efficient production of electric vehicles. We will
engage in activities to capture full-turnkey orders,
including for auxiliary equipment for the diecastingmachines that we already sell.
We perceive the automotive industry’s transition to
new production methods associated with carbon
neutrality as a business opportunity, and we willcontinue to support the development of theautomotive industry.

Review of the First Year of MT2024
Business Overview

Initiatives in V2030 and MT2024

Vehicle bodyarea
Flexible vehicle body assembly
process
Initiatives for next-generation vehicle
interior space items
Adaptation to multi-materials for vehicle body weight reduction
Capturing demand for renewal of large
injection molding machines (fromhydraulic to electric) in line with thepromotion of carbon neutrality

37

DAIICHI JITSUGYO CO., LTD.

Driver area
Drive motors: enhance engineeringfunctions in the manufacturing process
Inverters: strengthen proposals for all
inverter processes, including thermal
management
Batteries: initiatives related to batteries manufactured by the automotive
industry
Initiatives for essential products associated with electrification (e.g., electriccompressors and water pumps)

Device area
Autonomous driving: develop commercial products targeting related
products
In-vehicle semiconductors: initiatives insemiconductor front-end processes,
where demand is increasing due toelectrification and autonomous driving
Thermal management: initiatives forthermal management, which will
become important with electrification(in cooperation with the driver area)

Leveraged the advantages of our sales record tocapture investment in carbon neutrality and powerdevices
Orders associated with electric powertrain
investment projects were strong due to customers’high regard for our engineering functions
Succeeded in entering vehicle assembly processes
and are working to expand orders throughproposals using a broader range of potential
manufacturers
Progressively selling China-made conveyors for EV
production lines, but full-scale investment is still in
the future
Continued to develop new partner companies forsemiconductor manufacturing equipment andinspection equipment
Steadily accumulated orders in the market for
in-vehicle power semiconductors and progressing
with the development of the autonomous driving
marketNet Sales / Operating Income (Millions of yen)
Net sales

Operating income / loss

33,20031,45932,80027,000

819

1,223

979

909

0

FY2022 Targets

FY2022 Results

FY2023 Targets

FY2024 Targets

MT2024

DJK Report 2023

38

Outline

Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Strategy by Business Segment

Healthcare BusinessBusiness Details

TOPICSWe are engaged in a range of activities in the healthcare field, from the sale of tablet visual inspection
machines, packaging machines, and other production equipment to production
line engineering and product development.
We make maximum use of the unique know-how we have developed in thepharmaceuticals manufacturing field, as well as advanced technologies such as DX andAI, to pioneer new fields including health foods, cosmetics, and regenerative medicine.
As a global provider of seamless health services, we contribute to human health bysupporting healthcare-related companies around the world to dramatically increase
productivity and quality.
Executive Officer, General Manager,

Katsuhisa Kouzuki Healthcare Business Division
Strengths

Development, manufacturing, sales, and after-sales service are all provided by the DJK Group
Maintained the top share of the tablet visual inspection system industry for more than 40 years
Solid customer base as a basis for development and sales in the healthcare area
Engineering system specializing in equipment (surveys and proposals on everything from the combination ofeach process to operational methods)

Providing IT engineering services to support the achievement of Pharma 4.0
Medical products such as pharmaceuticals, medical
equipment, and regenerative medicine are special
products that affect human life, and their manufactureis stringently regulated.
The International Society for PharmaceuticalEngineering (ISPE) has proposed the idea of Pharma
4.0, the pharmaceutical version of Industry 4.0, to
promote the shift of pharmaceutical manufacturing tosmart factories while maintaining compliance withthese stringent regulations. The reality, however, isthat, hampered by regulation, the digitalization ofpharmaceutical factories is lagging a long way behind
other industries.
In addition to leveraging our expertise in theengineering of production equipment, we haverecently undertaken engineering in the IT domain, toassist our customers in the pharmaceutical industry toachieve Pharma 4.0.
We provide various solutions that combine a highlevel of quality control with improved operation, suchas production data collection systems for thecollection and centralized management of important
product quality data from production equipment, data
integrity systems to digitally achieve data integrity,and biometric security systems to ensure the identityof workers for important tasks.
We leverage the strength of our extensive
knowledge of pharmaceutical production equipment
and related regulations to support the mission ofpharmaceutical companies to deliver safe and securedrugs to patients through IT engineering.

Business Environment
Positive factors

Negative factors

Rising demand for automation resulting from labor
shortages
Increased health consciousness due to higher living
standards
Rising willingness to make investments associatedwith the use of digital technologies and DX
promotion

Stagnant growth in the Japanese pharmaceuticals
market resulting from government policies toreduce drug prices due to the decreasing birthrate
and aging population
Pressure on profits due to the soaring prices ofpharmaceutical ingredients and an increase incompanies curbing capital investment
Downturn in special demand for equipment due tothe alleviation of supply shortages for genericpharmaceuticals© COPA-DATA© Nymi, Inc.

Review of the First Year of MT2024
Business Overview

Initiatives in V2030 and MT2024

Daiichi Jitsugyo
Viswill business
Expansion of inspection target area(other industries/products for otherprocesses)
Utilize inspection information as an
asset and develop new business (AIinspection, etc.)
Overseas market development

39

DAIICHI JITSUGYO CO., LTD.

Engineering
Planning and proposal of production lines that
dramatically improve productivity and quality
Development of business from sales of individual packaging machines to packaging line
coordination through planning and proposalof both sales and maintenance services
Developing new industries, new processes,
and new commercial rights through the application of previous planning and proposals
Expansion of digital platform business throughDX elements
Entry into the field of in-factory logistics

Life sciences
Development of new processes in
the field of regenerative medicine
Investment in equipment and technology development in line withthe proliferation of new modalities
Expansion into European and U.S.
markets[Daiichi Jitsugyo Viswill business]
Launched product development using the dual approach of expanding
inspection target areas and utilizing information assets, achieving greater
clarity on the issues that face us
Pushed ahead with the restructuring of sales networks utilizing both DJK’s
global network and sales agents for overseas market development andsuccessfully captured new project orders in Europe[Engineering]
Received orders for several large projects thanks to the success of ourplanning and proposal activities for packaging processes
Project management is our main issue going forward, as we strive toestablish solid production processes for our project orders[Life sciences]
Development of processes in the field of regenerative medicine progressedsmoothly and there was also an increase in actual projects. Took anotherstep from the development stage toward commercialization
Overseas market development is progressing, mainly in Europe and the U.S.

Net Sales / Operating Income (Millions of yen)
Net sales

Operating income / loss
17,000

11,1001,066

11,43512,300
1,192

1,276

946

0

FY2022 Targets

FY2022 Results

FY2023 Targets

FY2024 Targets

MT2024

DJK Report 2023

40

Outline

Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Strategy by Business Segment

Aviation & Social Infrastructure BusinessBusiness Details

TOPICSIn the aviation and airport field, we mainly provide ground support equipment for aircraft and various related
equipment, and in the disaster preparedness field, we mainly provide specialized
vehicles and various related equipment.
As an important supporter of public infrastructure, including aviation, we promote
innovation in the aviation industry and provide highly efficient, high-value-added
equipment and services. Through the provision of these products and services, we
support people’s safe and secure lives, contribute to the realization of a sustainable
society, and aim to be the only one of its kind.
General Manager, Aviation & Social

Kei Yasuhira Infrastructure Division
Strengths

High recognition in the aviation industry and strong customer baseStrong business partners and their networks
Extensive track record for delivery in government projects
Knowledge accumulated through many years of experience by our in-house service department

Business Environment
Positive factors

Negative factors

Trend toward personnel and labor savings andautomation due to soaring personnel expenses andlabor shortages
Recovery of inbound demand
Investments in decarbonization
Increase in defense budgets

Limited and conservative market; relatively small
market scale as a niche field
Instability of the industry, which is susceptible toexternal factors
Supply chain problems (increasing costs, longer
delivery times)

Transfer belt systems that contribute to reducing workforce and workload in ground support operations
Loading and unloading baggage and cargo onto and
off aircraft can be a difficult task in which a large
number of heavy items are handled manually in ashort period of time in a harsh environment. On theother side of the walls and floors of baggage claim
rooms, ground support staff handle the luggage fromairline flights. In this business, we have continued toengage in various initiatives over many years, aimed atachieving personnel and labor savings and automationof baggage handling.
The transfer belt systems manufactured by Power
Stow of Denmark, part of these initiatives, aremachines that support the work of placing each itemof baggage unloaded from an aircraft on the receiving
conveyer belt.
Each airliner holds several hundred items of checkedbaggage, some of which may weigh over 30 kg.
International flights place an especially high burden
on workers, as it is necessary to handle a high volumeof large and heavy items in a short period of time.
However, this work represents an indispensable
service for airline users.
Transfer belt systems reduce the burden of manual
work, contributing to a reduction in workforce andworkload and an improvement in work efficiency andthe labor environment. Through these systems, we will
support the ground support staff responsible forworking behind the scenes to ensure that passengers
enjoy a comfortable flight.

Review of the First Year of MT2024
Business Overview

Initiatives in V2030 and MT2024

Net Sales / Operating Income (Millions of yen)Orders were brisk due to the resumption of capital
investment by airlines, as the recovery from the
COVID-19 pandemic became clear

New businessAirports and aviation

Disaster preparedness

Customer support (CS)

Aggressive development of
new products such as
workload and workforcereducing, unmanned, andautomated items
Adding high value to existing items and adding new
functions
Provision of high valueadded services

Nationwide expansion ofequipment for general roaduse
Expansion of securityrelated equipment to otherindustries

Investment in failure diagnosis AI systems
Proposal for ground support equipment equippedwith image recognition AI
system and deployment inother specialized vehicles

41

DAIICHI JITSUGYO CO., LTD.

Implementation of feasibility study of wind power
generation and proposal ofsmart energy storage
systemNet sales

4,000

2,800

2,700

Interest in proposals related to workforce andworkload reduction and automation rose markedly
due to the impact of the COVID-19 pandemic
Supply chain problems due to wars and otherfactors resulted in soaring purchasing costs andlonger delivery times

Operating income / loss

2,518

213

42

0

FY2022 Targets

15

45

FY2022 Results

FY2023 Targets

FY2024 Targets

MT2024

DJK Report 2023

42

Outline

Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Overview by Region

China

Kanji Kubota

Asia

Masao Hiwatari (Executive Officer, DAIICHI JITSUGYO CO., LTD.)

Keisuke Nishii (Executive Officer, DAIICHI JITSUGYO CO., LTD.)

Strengthening our initiatives forenvironment-related equipment

Strengthening our system to respond tothe vigorous Indian market

A downturn in real estate markets has sparked aslowdown across the entire economy. This has been
compounded by issues such as personnel
shortages, a deterioration in the employment rate
among young people, soaring personnel expenses,
a slump in consumption, and tighter environmental
regulation. Even in these conditions, somecompanies are achieving earnings growth, and it isimportant that we follow these growing companies.
We will continue to develop into an organization
with engineering capabilities, as we have set forth
under our medium-term business plan MT2024, and we
aim to expand our business with Chinese companies.
We will also work to further expand our businessscale by handling environment-related equipment as
an ESG initiative across all business divisions.

Our performance in the first fiscal year of themedium-term business plan MT2024 was driven byvigorous investment in automotive-related markets.
The Electronics Business also performed strongly
due to an increase in projects to transfer production
away from China.
Business conditions have deteriorated this fiscal
year, impacted by inventory adjustments for
smartphones, PCs, home gaming-related and otherproducts, as well as a sense of uncertainty over the
Chinese economy. However, business remains brisk
in some industries, such as those related toautomobiles and air conditioning. In the Indian
market, especially, we are working to strengthen oursystem to respond to vigorous investment.

Strengthening sales and support throughthe establishment of the US’s Engineering
Department and new bases

President, SHANGHAI YISHI TRADING CO., LTD.
(Senior Executive Officer, DAIICHI JITSUGYO CO., LTD.)

Focus Fields and Initiatives

Managing Director, DAIICHI JITSUGYO ASIA PTE. LTD.

Focus Fields and Initiatives

strengthen efforts to catch up
with companies relocatingproduction bases from China toSouth Asia and Mexico

Electronics:

promote LOGITO related businesses
that match the characteristics ofeach country and strengthen
semiconductor related businesses

Automotive:

cultivate Chinese automotive
parts manufacturers

Industrial Machineryand Automotive:

Industrial Machinery:

expand sales of vacuum
thermoforming machines byeffectively utilizing the TechnicalCenterexpand business with foreign andlocal companies by enhancing
engineering functions

Plant & Energy:

collaborate with local companies,
mainly in Thailand and Vietnam,
under the theme of decarbonization

Plant & Energy:

strengthen sales promotion of
decarbonization and environmentrelated equipment

Healthcare:

cultivate the pharmaceuticalindustry in India and the ASEAN
regionEnergy Solutions:

expand sales of products ofChinese equipment manufacturers
in Europe and Asia

Other:

aim to expand each business inIndia by bolstering personnel and
bases

5,625
18%

30,581
37%

19,10863%(Millions of yen)

1,046
4%

1,218
4%

705
2%

2,067
7%
2,552
8%

3,735
12%

30,121
36%

16,053
53%

7,688
26%

EuropeIraka Aoki

Managing Director, DJK EUROPE GMBH

Further expanding EV- and battery-related
businesses
Europe’s economy has held up well, despite
suffering from the invasion of Ukraine and theenergy crisis. Our Europe subsidiary achieved its
highest-ever profit in the first fiscal year of themedium-term business plan MT2024, substantially
due to growth in the EV- and battery-related
businesses.
The lifting of travel restrictions saw a revitalizationof investment in the European market, as well as anincrease in development themes. Our portfolio
balance is progressively improving and we aim tocontinue to strengthen our system and expand ourbusinesses to achieve the targets set forth underthe medium-term business plan MT2024 and theV2030 growth strategy.

Our core Automotive, Electronics, Energy Solutions,and Plant & Energy businesses all performedsmoothly in the first fiscal year of the medium-termbusiness plan MT2024. In addition, we were able tocapture orders for large-scale coating equipment in
the Industrial Machinery Business in Mexico.
This fiscal year, we will focus on anticipatedcapital investment in areas such as automatedassembly lines for key EV components in the
Automotive Business, large-scale furnace projects
for LIB materials in the Energy Solutions Business,
mounting equipment for in-vehicle components inthe Electronics Business, and automated assemblylines for medical equipment in the Industrial
Machinery Business.

Focus Fields and Initiatives

Energy Solutions:establish a new sales and service
base in Austin, Texas, in the U.S. tobolster customer support and sales
expansion

Energy Solutions:cultivate manufacturers of products
related to anode materials and allsolid-state batteries

Automotive:

establish a new sales office in
Lexington, Kentucky, in the U.S. tobolster customer support and sales
expansion

Aviation & Social
Infrastructure:

cultivate new products to meetthe demand for electrification inJapan

Industrial Machinery:sales of automated machines tomajor global medical equipment
companies are growing rapidly inthe healthcare and pharmaceuticals
field. We will revise our productlineup for the pharmaceuticals field

Automotive:

expand sales of next-generation
component manufacturing
equipment and develop businessproposals to European
automakers

Other:

recruit engineers in Tijuana, Mexico to
expand our business region. We
established the Engineering Department
at our U.S. subsidiary in April 2023

Electronics:

expand into the MENA region andattempt front end engineering
design

60
0%

892
3%

13,701
17%(Millions of yen)

Pie chart / Left: overseas sales and ratio (destination basis) Right: area segment sales and ratio
DAIICHI JITSUGYO CO., LTD.

President, DAIICHI JITSUGYO (AMERICA), INC.

Focus Fields and Initiatives

Electronics:

9
0%

43

Americas

79
1%

9,843
72%

975
7%

1,290
170
10%
1%
1,282
%
9

225
3%

7,942
10%

(Millions of yen)

Plant & Energy Business

Energy Solutions Business

56
1%

97
1%

292
4%

940
12%

6,329
79%
(Millions of yen)

Industrial Machinery BusinessElectronics Business

Automotive Business

Healthcare Business

Aviation & Social Infrastructure Business

DJK Report 2023

44

Outline

Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Special Feature

Transforming into the Next-generation
Engineering Trading Firm

under the umbrella of the Engineering Center. The
Engineering Division gathers together the engineers
previously scattered between each business division toform a group-wide integrated organization of engineers.
It will engage in activities such as the selection andenhancement of resources required to improve theinternal technical infrastructure and carry out business
operations. Moreover, through coordination with thesales divisions, it will provide technical support for theadministration of project orders.

Structure of the Engineering Division
Engineering Division

Engineering Center

DAIICHI MECHA-TECH
CORPORATIONDAIICHI ENGINEERING
CO., LTD.

Officer in Charge
Director, Managing Executive Officer
Executive Officer
General Manager of the Engineering Division

Supervising General Manager

Yasushi Marumoto Managing Executive Officer
Director,

Strengthening engineering functions is our most important theme as we strive to achieve our vision to
become the next-generation engineering trading firm.
In April 2023, we established the Engineering Division to handle the increase in overseas projects andmeet even higher technical demands.
We will collaborate with engineers, promote information sharing and skill enhancement, andaccelerate our efforts to bolster the engineering team and upgrade infrastructure to strengthen our
on-site responsiveness.

Boosting our Project Management Capacity and Strengthening our Engineering Functions
Until now, we have mainly engaged in providing
technical services incidental to the sale of machinery,ranging, for example, from the coordination of multiple
units of equipment to post-installation after-sales
service. These achievements have been highly
regarded, and we have been involved in theestablishment of production sites as our customers
expand overseas. Many of our engineers now support
production bases both in Japan and overseas.
In recent years, with the increasing scale, complexity,
and sophistication of projects, we have augmented ourtechnical resources to meet the needs of ourcustomers and boosted our project management
capacity, including health and safety management. We
also focus on technical support for manufacturing,

engineering requiring specialized knowledge, improving
the yield of production lines, and other solution
proposals linked to resolving production site issues, as
we strive to strengthen our engineering functions.
In an increasing number of cases, the technicaladvice and recommendations that we actively provide
to our suppliers and partner companies enable themto gain hints for their product and technicaldevelopment. We firmly believe that raising our total
coordination capacity for technical support by
structuring production lines with the optimal
combination of equipment to function to the highest
level while also achieving energy savings, will alsoenable us to strengthen our own engineering functions.

The Engineering Division: an Integrated Organization of Engineers
We established the Engineering Center in April 2021,
providing all process management, from customers’consideration of the introduction of equipment toproduction support to the procurement, delivery,
installation, and stable operation of this equipment.
Through these activities, we have succeeded in
capturing orders for an increasing number of projects
in the Energy Solutions Business and Industrial
Machinery Business, with many of our engineers

45

DAIICHI JITSUGYO CO., LTD.

participating in projects in Japan and overseas. In areas
such as lithium-ion battery manufacturing processes
and automotive painting lines, especially, close
examination by our engineers and their expert
judgment has enabled us to implement risk
management, including work safety and legal andregulatory compliance, supporting orders.
In April 2023, we established the Engineering
Division as an operating unit for technical services

Engineering 1st
Department

Engineering 2nd
Department

Sales Engineering
Department

Customer Service
Department

Project Planning
Department

Engineering

Recruiting Highly Specialized Human Resources and Constructing Training Systems Adaptable to Diverse Business Fields
We have gathered the engineers who were previously
scattered between the various business divisions toestablish a team of approximately 70 engineers, atpresent, as an integrated organization of engineers toprovide technical services. Going forward, we plan tofurther boost human resources for immediate
deployment, with the Engineering Division taking aleading role in recruitment, in coordination with eachbusiness division. We plan to utilize our existing
personal networks to secure outstanding talent,
actively recruiting engineers closely familiar with major
engineering firms and each industry.
Regarding training, we will structure a curriculumthat is flexible enough to adapt to a range of different
business fields, with a focus on passing on andcontinuing technical expertise. We also face the urgent
tasks of introducing a personnel evaluation system toaccurately evaluate our engineers, enabling them tomake full use of their abilities, and creating
mechanisms that enable our engineers to map out adiverse range of career paths in line with theiraptitudes. We have already started discussing thesetasks with the relevant divisions.

Number of Engineers by Area of Specialization
Mechanical:

24

Electrical:

15

Construction:

15

CS:

12

Other:

17

Strengthening Cooperation with Group Companies in Japan and Overseas to Provide Our One-of-a-kind Technical Services Globally
Going forward, the Engineering Division will leadstronger cooperation with DAIICHI MECHA-TECH andDAIICHI ENGINEERING under the umbrella of theEngineering Center. We will build mechanisms toenable complementarity between these organizations
based on the various characteristics of each. This will
include the recruitment and training of humanresources. We will also actively engage in humanresource exchange and other initiatives between
Group companies and endeavor to boost the standardof engineering capacity across the entire DJK Group.
Wave Engineering Corporation joined the Group in July
2023. We aim to integrate Wave Engineering’s
outstanding strength in simulation engineering with theGroup’s plant engineering capabilities. We expect thisto lead to stronger engineering capabilities.
Meanwhile, overseas, we have hired many local
engineers in China and Southeast Asia and are alreadyproviding technical services. Going forward, theEngineering Division will coordinate with engineers
belonging to the overseas bases of Group companies
to provide one-of-a-kind technical services. In Europe
and the United States, specifically, we will address theincrease in production of lithium-ion batteries
associated with the trend toward electric vehicles todevelop this business as a focus area.
As an integrator, our engineering capabilities take adifferent approach to those of a conventional
engineering company or EPC contractor. These
capabilities, in combination with the trading company
function that we have developed over DJK’s 75-year
history, will enable us to connect people andtechnologies, advancing toward our goal to become
the next-generation engineering trading firm that
contributes to manufacturing around the world.

DJK Report 2023

46

Outline

Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

A Message from the CSuO

We will work together asa team, promoting
sustainability management
to enhance corporate
value and raising DJK’svalue to society.
Yuji Funawatari Managing Executive Officer & CSuO
Director

In April 2023, DJK established the Sustainability
Committee and the Sustainability Promotion
Department. Mr. Funawatari, the Chief Sustainability
Officer (CSuO), provided insights into thecircumstances behind this move and DJK’s future
initiatives.

Background to the establishment of the Sustainability
Committee and the Sustainability Promotion Department
I was appointed as CSuO and the officer responsible
for the Administration Division in April 2023. Ever
since joining DJK in 1987, I had been working inIndustrial Machinery and other business divisions.
After overseas postings in Europe and Singapore, I
returned to Japan in April 2021, when I became theofficer responsible for the Aviation & Social
Infrastructure Division, as well as Asia and Europe.
In April 2022, the DJK Group set forth a new
philosophy and the V2030 growth strategy, which
form the basis for the medium-term business plan
MT2024 we are currently pursuing. A large range ofsustainability-related issues became evident throughthe formulation of these measures. A sustainability
taskforce was set up within the Corporate Strategy
Division, and I was put in charge of it. In thiscapacity, I have endeavored to build a foundation forsustainability management at DJK.
The sustainability taskforce later transitioned into
the Sustainability Promotion Committee, with theaim of establishing the central position ofsustainability management within DJK. The

47

DAIICHI JITSUGYO CO., LTD.

committee held regular biannual meetings toformulate our Basic Philosophy on Sustainability,
declare our support for the recommendations of the
Task Force on Climate-related Financial Disclosures(TCFD), and build a new framework, unique to DJK,
that links the environmental management system(EMS) with materialities (important issues). These
efforts have been lauded by an external EMS
reviewing body. We also formulated internal
recommendations for the establishment of theIntegrated Risk Management Office and rules forstrategic business investment from the standpoint ofsustainability. After establishing the foundations forsustainability management from diverse
perspectives such as these, the Sustainability
Promotion Committee was renamed theSustainability Committee in 2023, and theSustainability Promotion Department wasestablished to promote specific initiatives as theSee p.49 for details
committee secretariat.

The importance of on-site responsivenessAt the annual meeting of division general managers
held in June 2023, I explained my duties as“responsible for the promotion of sustainability
management.” I can say with confidence that while
the DJK Group’s business activities over its 75-year
history have not been unsustainable, I am acutely
aware of the social trend in recent years toward agreater focus on aspects such as the environment,

human rights, and governance. This includes therequirement for due diligence at the front line ofsales. I believe that our systematic organization andenunciation of the Group’s sustainability
management will provide a boost for our businesses
at each site. Unless our business divisions areconvinced of the importance of sustainability
management, the process of implementing
initiatives to address the Group’s materialities mayplace an undue burden on on-site operations. I
believe it is my role, as someone closely familiar withthese operations over many years, to explain theGroup’s vision to each business division accurately
and methodically. As stated in our Basic Philosophy
on Sustainability, in pursuing businesses that are
responsive to various sites around the world,
enhancing corporate value, and pursuing sustained
and profitable growth — in other words, throughDJK’s sustainability management — we will practicemanagement that encompasses ESG, aiming forprofitable growth. I stress the importance of our own
mindset (reforming awareness) to contribute tosociety through businesses adapted to the era,
generate profits, and survive as a trading company
for the new era. Practicing sustainability
management based on an understanding of on-site
operations and enhancing corporate value to meetthe expectations of our stakeholders. I see these as
our two key themes.

Initiatives for the future
One of the priority themes for the activities of the
Sustainability Committee and the Sustainability
Promotion Department going forward is thepromotion of efforts for sustainability and theestablishment of assessment methods forachievements. As part of our awareness-raising
activities, I visit our sites in Japan and overseas,holding briefings where I review the Group’s history,
philosophy, and function as a trading company. At
the same time, we are in the process of building
systems to evaluate the progress and achievements
of initiatives to address the Group’s materialities.
We will establish and disclose target KPIs, carry out
monitoring with reference to external evaluations,
implement internal initiatives, and progress to thenext action. By steadily following this PDCA cycle, I
believe that we can further deepen the Group’s
sustainability management.
Since declaring our support for the TCFD
recommendations in August 2022, we have been
calculating and disclosing our Scope 1 (direct) and
Scope 2 (indirect) greenhouse gas emissions. At
present, our TCFD working group (WG) is engaged
in establishing methods for the analysis andevaluation of risks and opportunities. The WG
includes members from the Plant & Energy Business
Division, which has experience in biomass power

plants and other projects that contribute to theenvironment, and we are endeavoring to build aframework to integrate and boost the knowledge ofthe corporate and business divisions as we pursue
these initiatives. Sustainability also encompasses
diverse fields, such as the establishment of our
Human Rights Policy. Our most important initiative inthis context is the coordination of the Administration
Division and the Corporate Strategy Division inhuman capital management.

Creating a new history built on people
I just mentioned the need to reform employees’
mindsets. Based on our recognition that DJK also has
to change itself to accomplish this, we established asystematic human resources development programand implemented an engagement survey in the fiscal
year ended March 31, 2023. The results of thissurvey revealed a highly positive assessment
regarding the corporate environment, which enables
employees to exercise discretion and autonomy inperforming their duties. However, there were also
requests for DJK to support career advancement andupskilling. The results of the survey analysis wereexplained in detail to the management of thebusiness and corporate divisions and reflected ininitiatives in each division. We plan to conduct
regular surveys in the future to check the progress ofthese initiatives. We have also established a systemfor employees to self-assess their own desired careerplans, and we are considering the introduction of asystem of tailor-made training suited to each
employee’s life plan. Moreover, until now, our work
as a trading company has tended to be constrainedby time due to the need to respond to customers.
We have requested the general managers ofbusiness divisions and others to reform theirmindset, revising work processes and utilizing digitaltechnology with a focus on productivity rather than“working by the clock.” We will also create
comfortable working environments adapted to life
events such as marriage, birth, and nursing, with theadvancement of women in mind. Meanwhile,
expanding overseas businesses is essential for the
future growth of the Group. The Group alreadyboasts a multi-national workforce, but at present,
our global human resources largely compriseengineers. Going forward, we will develop
businesspeople capable of expanding ourbusinesses on the global market, including withforeign companies. Measures such as long-term
training and human resources exchange will enable
our employees to acquire more know-how
concerning our trading company function. We willcontinue to reform our mindset and take on new
challenges as we pursue sustainability management,
increasing DJK’s value to society.

DJK Report 2023

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Outline

Sustainability

Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Respect for Human Rights

Basic Philosophy on Sustainability
The DJK Group has declared as part of its philosophy “Connecting People, Connecting Technology and
Enriching the World,” and, as a trading firm that will lead the new era, is pursuing businesses that are
responsive to various sites around the world. We will enhance corporate value by strengthening ourmanagement base and actively addressing key issues in the environment, society, and governance throughour business activities. The DJK Group will pursue sustained and profitable growth while fulfilling its
corporate social responsibilities and aim for advancement alongside our stakeholders.

We believe that engaging in business activities with respect for human rights throughout the supply chain —not only those of our own employees but also the employees of our suppliers — is the foundation on which we
can realize our philosophy of Enriching the World. Based on this belief, we have recently established the DJK
Group Human Rights Policy.

DJK Group Human Rights Policy
Recognizing that respect for human rights is one of the essential elements of the DJK Group’s global businessactivities, our policy is as set out below.
Basic Policy on Human Rights

Sustainability Promotion System
The Sustainability Promotion Committee (currently the Sustainability Committee) was established in April 2022
for the purpose of maintaining DJK’s sustainable growth. The committee deliberates on sustainability-related
matters, including climate change. It is chaired by the Representative Director, President & CEO, and the
Director, Managing Executive Officer, Chief Sustainability Officer (CSuO) serves as the officer in charge. The
committee regularly monitors in-house initiatives and engages in the deliberation and consideration of future
initiatives. The contents of its deliberations are reported to the Board of Directors. The evaluation ofsustainability initiatives incorporates opinions from the perspectives of outside directors. In April 2023, we went
on to establish the Sustainability Promotion Department which, under the leadership of the CSuO, serves as thesecretariat for the Sustainability Committee, accelerating sustainability initiatives across the entire Group.

Prohibition of Discrimination
Under no circumstances shall the DJK Group discriminate on the basis of gender, ethnicity, place ofbirth, nationality, religion, ideology, age, physical disability, or other personal characteristics.
Prohibition of Harassment
The DJK Group shall not tolerate any form of harassment, including power harassment and sexual
harassment.
Protection of Privacy
The DJK Group shall strictly manage the personal information of its officers and employees, andshall not use it for any purpose other than that for which it was originally intended.
Workplace Safety

Board of Directors

The DJK Group shall strive to maintain a safe and hygienic working environment and comply withall laws and regulations concerning occupational health and safety.
Compliance with Labor-related Laws

Representative Director,
President & CEO

The DJK Group shall comply with labor-related laws and endeavor to maintain a healthy working
environment that is attractive and welcoming for all who work there. Management shall not impose
any work that requires excessive labor or compel employees to work overtime.

Director, Managing Executive Officer,
CSuO

Sustainability Committee

Elimination of Forced Labor and Child Labor
Under no circumstances shall the DJK Group tolerate forced labor or child labor.

Corporate divisions

Freedom of Association and Right to Collective Bargaining
The DJK Group is committed to respecting the freedom of association and the right to collective

Business divisions

Sustainability Promotion Department

bargaining in order to achieve an equitable working environment and to ensure both the well-beingof employees and the sustainable growth of the DJK Group.

Bases in Japan and overseas

Initiatives for the Respect of Human Rights

Initiatives of the Sustainability Committee (Content of Discussions)
Formulation of the basic philosophy on sustainability
and revision of the environmental policy
Matters related to risk management
Promotion efforts using the environmental
management system (EMS)
Targets to address materialities

49

DAIICHI JITSUGYO CO., LTD.

Monitoring of initiatives related to climate change
Sustainability promotion, including Group companies
Consideration of response to ESG-related laws atoverseas bases
Formulation of the Human Rights Policy

See our website for details(1) Scope of Application (2) International Norms and Compliance with Laws and Regulations(3) Implementation of Human Rights Due Diligence (4) Remedial Measures(5) Education and Raising Awareness (6) Dialogue with Stakeholders(7) Information Disclosure (8) Promotion System

DJK Report 2023

50

Outline

Human Resources

Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Approach to Human Resource Training and the Enhancement of Internal Environments
Approach to Human Resource Training
Develop human resources and build organizations possessing both the flexibility and strength to adapt
to changes in the environment
Approach to the Enhancement of Internal Environments
Aim to deepen and enhance recruitment, education and training, and internal systems, pivoting on highlevel expertise, autonomy, diversity, health and productivity management

Approach to Human Resource Training

Human Resources Development Program

As we strive to achieve our V2030 growth strategy, we have established “a company full of good work partners”
as our vision for human resources development. We have defined our image of these human resources asfollows, and reflected this definition in various personnel-related measures.
RESILIENCE: The mental flexibility to turn business experience into an opportunity for self-transformation
FAITH: Respect for cooperation in work and the ability to build mutual trust
PROFESSION: Contribution to all stakeholders

We will develop human resources who can connect people through their positive attitude, connect
technology through their thorough knowledge, and enrich the world through their devoted actions.

DJK’s Human Resources Development Committee, composed of members elected from all the business divisions, the Engineering Division,and the Administration & Accounting Divisions, meets four times each year.
The President & CEO and the Senior Managing Executive Officer, who are the Representative Directors, also participate in committee
meetings. Through the vigorous exchange of opinions with committee members, they have established a systematic human resources
development program based on business strategies.
We have also implemented overseas human resources development committees linked to four overseas areas: the Americas, Europe,Asia, and China. We are working to share DJK’s philosophy with our overseas employees and expand business with foreign companies. Just
as we provide opportunities for our Japanese employees to gain experience through overseas postings, we are also creating opportunities
for overseas employees to work at posts in Japan and other bases. We are progressively building systems to revitalize human resources
mobility within the Group, aiming to deepen intercultural understanding by promoting diversity and expand our businesses in each region.

Human Resources Strategies

Human Capital Management
We approach human resources development with a long-term perspective, aiming to invest in our humancapital while also achieving the sustained enhancement of corporate value. We endeavor to impart to each of
our employees the aspiration to be a businessperson who can think independently and involve those aroundthem to bring ideas to reality.
Through human capital management, we will transform the growth of our employees into a growth engine for
DJK by connecting it with the enhancement of our basic business strength and employee motivation for work.
We will return these benefits to our stakeholders through higher corporate value.
Enhancing DJK’s basic business strength

For new employees, we will implement safety education from the training stage, covering the items necessary when delivering equipment, while formid-career recruits, we will focus on the recruitment of personnel with advanced qualifications, thereby enhancing our expertise, to achieve our aimof being the next-generation engineering trading firm.

Boosting employee motivation for work and growth

In its seven business domains, DJK does business across a wide range of markets and industries. Our customers and suppliers are highly diverse, anddeepening our understanding of this diversity provides us with earning power. With the aim of promoting diversity, we are progressively creating
environments to empower women and taking a more multi-faceted approach to our recruitment activities. We are promoting a higher proportion of
women in core positions and the recruitment of foreign personnel and mid-career recruits.

Developing the management capabilities of potential senior managers

We are promoting a more diverse range of practical experience for the purpose of developing potential senior managers. By systematically deploying
personnel to DJK’s affiliates in Japan and overseas, we are progressively developing human resources with management sense.

Expected Results

Personnel Investment

Specific Measures

Related Indicators / KPIs

For NEWCOMER
Learning business basics
Sharing corporate philosophy and history

Implement group training for recent recruits
Raise motivation to learn through fee sub-sidies
Pay support and allowances for the acquisi-tion of public qualifications

DJK WAY basic education
Common education: Group training by level
Individual education: Implement subscription education

Attendance rates for various group training
sessions
Attendance rates for subscription education

For MID-LEVEL
Learning business applications
Cultivating the autonomy of mid-level personnel

Implement training by positions group for mid-level personnel
Raise motivation to learn through fee subsidies
Pay support and allowances for the acquisition of public
qualifications

Education in line with career design
Common education: Group training by positions group
Individual education: Implement subscription education
to improve skills

Attendance rates for various grouptraining sessions
Attendance rates for subscription
education

Next-generation engineering trading firm
Strengthen high-level expertise

Diversify graduate and mid-career recruit-ment activities
Enhance health and safety education for construction
Pay support and allowances for the acquisi-tion of
public qualifications

Strengthen recruitment of new science and engineering graduates
Education for work supervisors and construction supervisors
Expand the range of technical public qualifications eligible for support

Proportion of science graduatesand mid-career recruits
Participation rate in various
education ses-sions

Diversity promotion Intercultural understanding
Earning power in the global market

Diversify graduate and mid-career
recruitment activities
Revise the salary system bypositions group and level

Strengthen recruitment of womenand foreign personnel
Promote the use of the positionsgroup switching system

Proportion of women among corehuman resources
Gender pay gap
Proportion of foreigners among recruits

Improve employee engagement
Promote employee health

Promote various work style reform
measuresCover the expense of Group
insurance premiums

Ensure an appropriate amount of overtime
Promote the utilization of paid leave
Employee engagement surveys

Overtime hours by division
Paid leave utilization rate
Results of engagement surveys

Improve the risk management abilities of senior
managers and potential senior managers
Continually deepen quality management

Select promising mid-level personnel
Create opportunities for personnel
changes to achieve greater versatility

Experience in both business divisions andAdministration & Accounting Division
Create management opportunities ataffiliated companies in Japan and overseas

Manage the careers of potential senior
managers based on a skill matrix

51

DAIICHI JITSUGYO CO., LTD.

Business
Strategies

Enhancing DJK’s
basic businessstrength

We launched the operation of DJK’s new personnel system in the fiscal year ended March 31, 2022. Unlike the previous membership-stylepersonnel system, the new system clearly defines the roles associated with each duty. Based on the main themes of developing humanresources to lead the next generation and enhancing job satisfaction, the new system established the professional positions group (P positions)and the technical positions group (T positions), in addition to the management positions group (M positions: former management positions)beyond the career track positions group, allowing employees to choose the positions group that best suits their individual needs.
We verify the effectiveness of measures under our human resources strategies by summarizing the opinions of employees throughengagement surveys and individual interviews by the Personnel Department, based on employees’ self-assessment reports. This input isthen used to amend measures and formulate new measures, creating a cycle of improvement. In the engagement survey implemented in
March 2023, we found that some employees indicated a shortage of medium-term educational measures. We have therefore improved thesystem to enable employees to discuss their long-term career path at self-assessment interviews. We are also promoting internal discussion
aimed at more autonomous career-building.
We established our General Employers Action Plan as interim targets in April 2023, which will be linked to various measures based onhuman capital management. We are pursuing the following targets under MT2024.
Target 1 Ratio of female employees in career track positions: 10% Recruit female new graduates into career track positions

FY2023 result: 5 females out of a total of 22

Target 2 Paid leave utilization rate: 70% Childcare leave utilization rate among male employees: 100% Share the status of paid leave utilization

FY2023 result: 59.7%

Target 3 Create rewarding workplace environments

FY2023 result: Shared with all divisions

Share the results of engagement surveys and improvement measures throughout DJK

History of our human resources strategies

October

April
Established special leave for the purpose of childcare
Created our unique system of childcare leave at the time of childbirth,
encouraging expectant fathers to utilize childcare leave
Abolished age-based pay, revised the starting salary, and raised salaries
Applied a salary table by role to all employees, based on the philosophyof the new personnel system
Revised the employee rehiring system
Improved the treatment of rehired employees from 60 to 65 years of age
through the creation of roles and levels and the payment of salaries
based on evaluation

Commenced subscription education
Adopted a company-sponsored system of self-selection education
adapted to our busy employees’ ambitions to learn
Renamed the Human Resources Development Committee
The committee discusses various education measures throughthe participation of members from all divisions, based on humancapital management2023

an employee
March Implemented
engagement survey

April New philosophy; V2030; personnel strategy taskforce; MT2024

2022

Boost employee
motivation for workand growth2021
Ensuring long-termvalue-focusedmanagement

2019

April Launched the new personnel system

Established the management positions group (M positions), theprofessional positions group (P positions), and the technicalpositions group (T positions)January Launched the Group insurance program

Established and launched the Group insurance program, subsidized
by DJK, with the aim of protecting employees and promoting theirhealthApril Revised the evaluation system

Achieved greater fairness through the launch of a cloud-based target management system and relativeevaluation at each level companywide, as well as the creation of an evaluation of the utilization of abilities
DJK Report 2023

52

Outline

Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Human Resources

Employee Engagement

ColumnAiming to Connect the DJK Group Through Our Philosophy

Purposes of engagement surveys

We have implemented an employee survey on engagement for the purposes of strengthening our humanresources strategies (human capital investment, employee development and education, improving working
environments, etc.) and promoting sustainability management.

Outline of the survey results

DJK’s corporate environment received a highly positive evaluation in terms of respect for employees’ opinions
and enabling employees to exercise discretion and autonomy in performing their duties. Aspects such as our
initiatives to reduce overtime, the deployment of an appropriate number of employees, and human resources
development from a long-term perspective received a low evaluation.
These results clearly indicate that, while employees are engaging in their work with a sense of worth, thelarge amount of discretion they are given places them under a high burden, and long-term companywide efforts
should be made to address this issue.
Regular employees (working in Japan) and part-time employees

Survey subjects
Number of respondents / number of subjects

506/565 (respondence rate: 89.6%)

Item

Grade

Average score among all survey subjects

Employee satisfaction rating

A

3.75

01_Company attractiveness

B

3.31

02_Targets and directions

B

3.45

03_Interpersonal relationships

B

3.72

04_Labor environment

B

3.48

05_Career outlook

B

3.26

06_Evaluation and pay

B

3.34

07_Work attractiveness

B

3.62

08_Skills and deployment

B

3.13

09_Mental and physical health

B

3.19

+

+
+
+

Key human resources-related indicators (non-consolidated)
FY2019FY2020

FY2021

FY2022

Number of employees
MaleFemale

508
369
139

524
389
135

558
421
137

591
441
150

Average length of service (years)
Male
Female

12.3
13.0
10.3

12.9
13.7
10.1

12.6
12.9
11.5

12.7
13.4
10.3

Paid leave utilization rate* (%)
Number of employees taking childcare leave
Number of employees working shorter hours

56.0
9
3

49.9
8
7

56.8
10
6

59.7
15
12

Ratio of employees returning to work after childcare leave (%)
Number of employees taking nursing care leave
Job turnover rate (%)

100
0
6.0

100
0
2.7

83.3
0
3.9

85.7
0
4.3

Average training hours per employee*2 (hours)

8.5

13.6

5.4

9.3

*1 Paid leave utilization rate = number of days of paid leave taken ÷ number of days of paid leave granted × 100.
*2 Figures are limited to those organized by the Personnel Department, but other education and training programs are also provided by each organization.

DAIICHI JITSUGYO CO., LTD.

Senior Executive Officer,
General Manager of Corporate Strategy Division

Toward a Greater Recognition of Our Philosophy at Overseas Bases

We disclosed the results of the survey to employees and held briefings for each division general manager andtraining for corporate officers. By continuing to implement measures for improvement, we aim to enhance
working environments to bring about better job satisfaction and business results.

53

Zenichiro Minami

ColumnConclusion

1

In the process of formulating the V2030 growth strategy launched in April 2022,
we reviewed DJK’s founding spirit and corporate principles, preserving this“philosophy in the early days” as our foundation as we began considering our
new philosophy, based on our aspiration to evolve to meet the demands of thisera of profound transformation. We clarified our mission, vision, and values,summarizing them in our philosophy, so that our social responsibility as amember of society is clearly reflected in the meaning of our work, and so that
DJK will continue to be a company that society can depend on. This includes
management with an awareness of contributing to the global environment,
well-being, and human rights, at the same time as business growth. After V2030
was established, we spent around one-and-a-half years implementing
information sessions at each division, each base in Japan and overseas, andeach Group company, to spread an understanding of the new philosophy,
based on the idea that it is the most important that all employees of the DJK
Group fully understand it. These activities were intended not only to facilitate
understanding of the background to the formulation of our new philosophy andthe hopes and aspirations embodied in it, which are difficult to convey inwriting, but also to encourage employees to put it into practice. Our questionand-answer sessions brought a greater sense of clarity to DJK’s orientation
toward growth, and we gained the empathy and support of many employees.
Going forward, our efforts to spread this philosophy will go beyond
information sessions to include measures such as multilingual support and thedisplay of posters at each base. In addition, by actively providing information on
initiatives to achieve our philosophy through integrated reports, briefings forinvestors, and other forums, we aim to win the support of all our stakeholders
and connect the DJK Group through our philosophy common to all employees.

I joined DJK EUROPE GMBH in 2011 as a sales engineer. I was assigned to the
Prague Branch, where I now serve as Branch Manager. I had DJK’s philosophy
and the V2030 growth strategy explained to me when I visited the DJK
headquarters in May 2023, and this increased my desire to share the approachbehind this philosophy, and the working style based on it, with all my staff at
the Prague Branch. I was happily surprised to find that my request that thisphilosophy should be shared with all staff across Europe was also accepted
immediately.
A workshop on DJK’s philosophy and V2030 growth strategy was held in
Bulgaria in late June. Until now, we had little understanding of DJK’s mission,
vision, and the difference between the two. At the workshop, however,outstanding examples were used to explain the philosophy, with anemphasis on practical aspects. This link between theory and practiceenriched our under-standing, indicating how we should apply DJK’s
philosophy in everyday operations. As the saying goes, “practice makes
perfect.” I really felt that practice is key, and will bring us success.
In Europe, we work in small groups in different offices, composed ofdifferent genders, workplace positions, and ages. This diversity leads to thecreation of ideas and a broad range of opinions. We are “One Group, One
Team, One DJK,” and this gives form to our mission and vision. Through thisworkshop, I gained an understanding of just how important DJK’s
philosophy is for all employees. I strongly feel that forums like this should
be provided for all officers and employees in the DJK Group.

Jan Vacek
Prague Branch Manager,
DJK EUROPE GMBH

DJK Report 2023

54

Outline

Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Environment

Approach to the Environment

As a highly respected industry partner, the DJK Group’s goal is to contribute to the development of a highly innovative global society
In accordance with its Basic Philosophy on Sustainability, the DJK Group will contribute to a sustainable,enriched world.
To accomplish our corporate philosophy, “Connecting People, Connecting Technology and Enriching theWorld,” we are committed to resolving customers’ environmental issues through our business activities bycapitalizing on our engineering functions. The DJK Group aspires to always be a valued partner for its
stakeholders.
We operate an environmental management system (EMS) established based on the environmental policy
and strive to continuously improve it.
We handle products that help protect and improve the global environment and contribute to themitigation of climate change through our business activities.
We recognize the importance of biodiversity, as well as the importance of forests, water, and otherlimited resources, and strive to reflect this recognition in our business activities.
We comply with applicable environmental laws, regulations, and accords in Japan and interna-tionally in
conducting business activities.
We provide continuous education to help all directors, executive officers, and employees of the DJK
Group deepen their understanding and awareness of environmental management.

System for Promoting the Environmental Management System
Since January 2004, we have operated an environmental management system (EMS) based on ISO14001 to
systematically promote the reduction of environmental impact.
We have designated the Representative Director, President & CEO as the top management and the General
Manager of the Administration Division as the person in charge of environmental management. Based on ourenvironmental policy, the EMS Promotion Committee plays a central role in implementing the PDCA cycle andmaking continuous improvements. Through this system, we are accelerating our initiatives to address climatechange in terms of both risks and opportunities.
EMS promotion
organizational chart

Top Management: Representative Director, President & CEO
Environmental Management Officer: Senior Executive Officer,

General Manager of Administration Division

Strategy
We have identified contribution to a sustainable
earth as one of our materialities and we have set thetarget of realization of a decarbonized society. In
addition to setting reduction rate targets for our own
Scope 1 and 2 emissions, we have launchedinitiatives through our businesses, such as engaging
in decarbonization as part of our investment
strategies under the V2030 growth strategy.
Specifically, these include initiatives such as ourinvestment in a biomass power generation company
in Tahara City, Aichi Prefecture, promoting the
introduction of binary power generation equipment,
and our investment in a company with ammonia
production technology that reduces environmental
impact.
Governance
The Sustainability Committee engages in deliberationand consideration concerning sustainability-related
initiatives, including initiatives to address climatechange. The Sustainability Promotion Department,
which serves as the committee’s secretariat, plays acentral role in promoting these initiatives.

Metrics and targets
At DJK, we target carbon neutrality, with net zero
greenhouse gas (GHG) emissions by FY2050, taking
FY2020 as our reference year. By FY2030, we aim to
reduce GHG emissions by 46% compared to FY2020.
We will work toward achieving these targets,
reducing Scope 1 emissions by replacing our
gasoline-fueled business vehicles with hybrid
vehicles, as well as considering the introduction ofEVs, and reducing Scope 2 emissions throughinitiatives such as switching to electric power fromrenewable energy and introducing energy-saving
equipment.
Scope1

Scope2

See p.49: Sustainability Promotion System for details

We have formed a cross-divisional working group
to consider scenario analysis, as this requires
comprehensive efforts based on the dual
perspectives of sales and finance.
Risk management
The Risk Management Committee performs a central
role in DJK’s risk management, and also considers
sustainability-related risks among its agenda items.
However, climate change risk and other importantrisks that should be addressed as a priority aremonitored by the Sustainability Committee. To
implement effective and efficient risk management,
the Risk Management Committee manages climate(t-CO2)

1,617

1,617

619

559

998

1,058

FY2020

FY2021*We are currently calculating emissions for FY2022(t-CO2)

1,617

46%

reduction comparedto FY2020

743
0
FY2020

FY2030FY2050*Scope 1: Direct GHG emissions from the business itself (the combustion of fuel,industrial processes)
Scope 2: Indirect GHG emissions associated with the use of electricity, heat, or
steam provided by another company
DJK and its consolidated subsidiaries in Japan and overseas have been included in
the calculation of emissions, but small bases with a limited effect on overall
emissions have been excluded. The estimated emissions from the personal use ofvehicles by local staff at overseas subsidiaries have been excluded from thecalculation of Scope 1 and Scope 2 emissions.

Main environment-related initiatives

EMS Promotion Committee
Chairperson of EMS Promotion Committee: General Manager of Sustainability Promotion Departmentchange risk, together with other risks, in line with
DJK’s strategies, based on the Risk Management
Regulations.

March Launched the solar power generation business

June

DJK Kasama Solar Power Plant(approx. 1.78 million kWh/year)

EMS Promotion OfficeApril

EMS Internal Auditors

Began handling binary power generation equipment

Signed a capital and business agreement with Tsubame BHB

April

Commercialized an on-site ammonia synthesis system
Promoted the spread of low-environmental-impact ammonia technology

Established the office of CSuO
Launched the Sustainability
Promotion Department

December Identified materialities

EMS Promotion Committee Members
EMS promotion committee members
from the divisions and branches

Initiatives to Address Climate Change
Addressing the TCFD Recommendations
We pursue sustained and profitable growth by actively addressing key issues in the environment, society, andgovernance through our business activities.
Climate change brings both risks and opportunities to DJK’s businesses. We declared our support for therecommendations of the Task Force on Climate-related
Financial Disclosures (TCFD) in August 2022, we havecommenced analysis and consideration in line with the recommendations, and we are progressively disclosing
information based on them.

55

DAIICHI JITSUGYO CO., LTD.

2013

2014

2019

2021

August Selected for a “Joint Crediting Mechanism(JCM) Model Project” by the Ministry of
the Environment and the Global
Environment Centre Foundation (GEC)
March DJK Iida Solar Power Plant(approx. 1.10 million kWh/year)

2022

2023

March Invested in Tahara Bio-power LLC
Stable supply of electrical power sourced from renewable energy

April

Established the Sustainability Promotion Committee
Renamed the Sustainability Committee in April 2023

August Endorsed the TCFD recommendations
Joined the TCFD Consortium

Establishing the TCFD Analysis Working GroupWe have launched the TCFD Analysis Working Group as a subcommittee
under the Sustainability Committee. The working group identifies the risks
and opportunities of climate change, examines and discusses their impact on
DJK’s businesses from short-term, medium-term, and long-term perspectives.
We will endeavor to manage these risks and opportunities appropriately,
respond to climate change, and promote our business strategies.
DJK Report 2023

56

Outline

Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Environment

Initiatives to Improve Plant Security

Efforts to Reduce Environmental Impact
Promoting Wider Use of Eco-friendly Products
Among all the types of industrial machinery we handle, we are strengthening our efforts to expand sales of
products that contribute to resource recycling, resource conservation, and reduction of workload and workforce inour customers’ product manufacturing. The variety of environmentally friendly products has been increasing year by
year, and in recent years, many of them have become useful for social infrastructure. The Group considers theprovision of products and services to be a contribution to society through business, and will continue to expand therange of products it handles, recognizing that environmental friendliness is the most important issue in business.

Business areas for environment-related products
Aviation and airport-related facilities

Small-scale wind turbines

Solar power plants
Electronic component factories

Binary power plants

Medical supplies factories
Semiconductor factories
Molding and processing factories

Berries Farm (strawberry seedling factories)
Painting factories
Biomass power plants

On-site ammonia supply systems
Automobile and parts factories

Lithium-ion battery factories

Business areas for environment-related products (inside factories)

Gas leak monitoring systems

Air conditioning and power rooms

Molding and processing

Plastic sorting equipment

Clean rooms

LOGITO logistics automation solutions
LOGITO logistics automation solutions

Water treatment and boiler rooms

LOGITO logistics automation solutions

Contributing to the Sustainable Development of Industries through LOGITO
Under the brand name LOGITO, we provide logistics automation solutions to achieve automatic operations andlabor-savings at manufacturing sites, factories, and logistics warehouses, aiming to resolve the issue of thedecline in the working population for manufacturing.
In addition to the knowledge and experience we have acquired over many years as a general machinerytrading company, our engineers, who possess extensive on-site experience, are able to propose the optimal
equipment from a diverse lineup in Japan and overseas to realize free designs with high cost-performance forour customers. We provide one-stop solutions,
Order/
On-siteLayoutEquipment
After-sales
construction/from factory analysis, layout proposals, andanalysisconcept
selection
supportdeliveryequipment selection to construction work andafter-sales service.
LOGITO will not only assist customers to
Design custom smart logistics
continue and expand their businesses: by
One-stop logistics automation solutions
from current status analysis, layout proposals, andpromoting workforce and workload reductions at
equipment selection to construction work andafter-sales maintenancemanufacturing sites, factories, and other facilities,
it will also contribute to the sustained developmentof industry in numerous ways such as improving
productivity, efficiency, quality, labor welfare, andeco-friendliness.

Initiatives for a Resource-recycling Society

Stocking and classification
Component mounting, assembly, and inspection

At DJK, we are working to establish smart factories and security, effectively
utilizing technology such as cameras and sensors to address social issues suchas aging plant facilities and labor shortages. As part of this effort, we havelaunched sales of gas leak monitoring systems manufactured by Konica Minolta,
Inc. Safety countermeasures against gas leaks are of the utmost importance, assuch leaks can cause fires and explosions.
Using this camera for gas leak inspections, previously carried out using gas
detectors, makes it easy to identify the source of leaks and determine any
abnormalities, even in elevated locations. The camera enables the visualizationof hydrocarbon gases and is available in two models: a handy type thatfacilitates everyday inspections and a fixed type that enables automated monitoring around the clock, 365 days a year. It also enables the visualization ofpools and pockets of gas from volatile solvents at worksites, assisting in the
improvement of work environments and the prevention of accidents. From thisperspective, we will work to promote the camera’s utilization, not only for plant
equipment but also for fuel depots, tankers, and various manufacturing sites.
We will also contribute to reducing environmental impact by monitoring the
diffusion of greenhouse gases (such as methane) into the atmosphere.

Packing and shipping

We strive to realize a resource-recycling society, one of our targets for a sustainable earth, by offering plastic
sorting equipment manufactured by Panasonic Production Engineering
Co., Ltd. Until now, sorting PS, PP, and ABS (types of plastic resin)* wasa costly and time-consuming process, requiring the exchange ofequipment for each plastic type. By contrast, this new equipment
features a technology enabling the simultaneous sorting of threeplastic types with high purity and high handling volume (500–700kg/h). The air nozzle used in sorting can also be customized to meeteach customer’s recycling needs, making the equipment easier to use.
We will further promote the reuse of recycled plastics (plastic resins)by spreading the use of this technology and equipment.
*Polyethylene (PS), polypropylene (PP) and acrylonitrile butadiene styrene (ABS)57

DAIICHI JITSUGYO CO., LTD.

DJK Report 2023

58

Outline

Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Roundtable Discussion between Outside Directors

From diverse perspectives, we will contribute to management transparency
and enhance the corporate governance function up another level.
From the left:

Kazuo Nakayama

Yoshikazu Sakamoto

Namika Yamada

Outside Director

Outside Director

Outside Directorof Directors had resolved on them, the Board of Directors
promptly began to receive progress reports. I also think thatwith the establishment of the Integrated Risk Management
Office, systems are being put in place for the continuing companywide sharing of risk-related information, boosting themonitoring function.
Nakayama: I took office as outside director in June 2023. I
worked for 35 years at a general trading company, and I’ve
subsequently engaged with a wide range of different
industries and businesses. My impression of DJK at the time
was of a group of machinery specialists, but I feel that its
business range has expanded and become moresophisticated since then. Trading companies continue tochange in response to the needs of the world around them.
DJK has survived through 75 years of history, and I feel that it
has the power to fully transform itself in line with the times.
As an engineering trading firm, I think it will continue toaddress changes in market needs head-on and provide new
businesses that the world needs. Risk management, from acomplete range of perspectives, is essential for it toaccomplish this. I hope to utilize the experience I have gained
from my long corporate career to perform a useful role asoutside director.

Aiming for further development

Evaluating DJK
Sakamoto: I took office as outside director in 2015. I comefrom the standpoint of a tax accountant, but I use myprevious experience at the Regional Taxation Bureau, where I
met many corporate managers, to make a broad range ofrecommendations aimed at strengthening governance. The
opinions of the outside directors are earnestly received at
DJK, and I feel that our governance structure has improved toa certain degree.
Ever since I took office, I have seen a stronger corporate
management structure as the highest priority issue when
making recommendations. In the past, there was a strong
tendency to focus on sales, and this resulted in a lack of
corporate governance in some areas, such as crisis
management. The establishment of the GovernanceCommittee in October 2020 and the Integrated Risk
Management Office in April 2023 has helped to enhance ourcorporate management functions. Meanwhile, the V2030
growth strategy, DJK’s long-term vision, and the medium-termbusiness plan MT2024 were also formulated to clarify anddisseminate our management policy and vision. We alsoestablished a new philosophy, making it familiar to all

59

DAIICHI JITSUGYO CO., LTD.

employees, and focused our efforts on enhancing IR and PR
activities, promoting DX, and investing in human resources.
Through these comprehensive initiatives, I feel that we havemanaged to establish a structure that will serve as thefoundation for strategic business development.
Yamada: It was June 2020 when I was appointed outside
director of DJK. This was during the COVID-19 pandemic, andI participated in meetings of the Board of Directors andalmost all other forums online. However, I was able to receive
corporate information through close coordination, including
participation in corporate sales meetings and other forums,
without compromising my independence. Therefore, I neverfelt that I lacked any of the corporate information that formed
the basis for discussions by the Board of Directors. Efforts
toward the establishment of the Governance Committee
began immediately after I took office. All of the internal andoutside directors were able to participate in close discussions
regarding what kind of committee it should be, which I foundextremely meaningful.
DJK earnestly addresses recommendations by the outside
directors. For example, when I pointed out that continuing
progress reports were needed regarding risk management forbusiness projects and other proposals, even after the Board

Sakamoto: At present, DJK has disclosed the long-term
quantitative and qualitative targets established under theV2030 growth strategy and is pursuing its medium-termbusiness plan MT2024 as a way to achieve these targets. In
this context, I feel that we must not only maintain DJK’s
appeal, in terms of aspects such as its capacity for prompt
problem-solving through solidarity and cooperation, but also
develop these qualities further. Specifically, as expressed inour strategy of shifting from product-only sales to a products
and integrated solutions business model, we are not overly
focused on our existing commercial rights and products.
Rather, we have established a business investment budget ofaround ¥15.0 billion over the next five years to develop newmarkets and businesses. We have also announced initiatives
for decarbonization and are promoting efforts to bring aboutsustained growth.
Looking ahead, with projects tending to grow progressively
larger and longer-term, I believe that we must steadily engage
in project risk management and manage profits on a projectby-project basis.
Yamada: Entities such as the Integrated Risk Management
Office have already been established, and now we need todeepen the discussion about what to do in them. When
promoting new initiatives, I feel that, in addition to top-down
communication, we should be aware of creating frameworks
based on the opinions of employees. For example, I am
currently the only female director. It is a fact that the numberof female executive officers and managers presents an issue
for DJK. I think this is partly due to the current scarcity ofwomen managers and other role models in Japan’s maledominated trading company sector. The creation of concretemechanisms in the Sustainability Committee to reflect theopinions of female employees will be a key issue going
forward, as we promote human resources diversity.
Sakamoto: In the past, DJK has implemented employee
satisfaction surveys to improve employees’ working

environments and raise awareness. Based on the results ofthese surveys, we have revised employee education andrecruitment methods, established a childcare support
program and other systems, and revised the salary system forengineers and other professionals. Further efforts are needed
to promote DJK’s human resources strategies and diversity
initiatives in the context of society-wide labor shortages.
Nakayama: I believe that the problem of ensuring aworkforce while maintaining a balance between the labor
environment and pay is one common to Japanese companies
in general, as are efforts to secure diversity, including theempowerment of women. Regarding the promotion of
women in particular, from my own experience, I doubt thatmale managers and others always evaluate men and women
on a fair playing field. To turn these great cogwheels towardchange, perhaps we need to consider a wider array ofmeasures, such as training initiatives to eliminate unconscious
bias, preferential treatment for women and other so-calledaffirmative action measures.

Role as outside directors
Yamada: I hope to make use of my experience as an
attorney: for example, by expressing opinions on risks andother facets of various projects, including strategic business
investment, from a third-person perspective. To that end, I
need the ability to deliberately refrain from “reading theroom,” as it were. I believe in the importance of adopting a
stance where I clearly and methodically present my doubts
and opinions.
At the same time, it is vital for DJK to carefully anddeliberately sift through the management issues it faces andleverage its management resources to address these issues. I
believe that this approach will lead to the steady
improvement of governance and, by extension, enhance DJK’ssocial value.
Nakayama: I believe that our essential and most importantrole as outside directors is to help maintain the transparencyof business decisions and the decision-making process. If
managers have to provide outsiders who have little
knowledge of their company with a clear and concise
explanation of the reason for promoting each measure andthe kind of benefits expected from it, answer unexpected
questions, and repeat this process over and over, it will resultin greater management transparency. I think that enhancing
management transparency in this way is our raison d’etre as
outside directors. To perform this role, we need the ability to
see through the explanations provided by the Company. This
comes from our past experience and knowledge. I feel that it
is crucial for us to be “benevolent strangers.”
Sakamoto: To avoid risks, I consciously adopt a questioning
attitude toward information presented by the Company byasking, “Are we sure about that?” I think that Director
Nakayama made a very important point regarding thetransparency of the business decision-making process. I feelthat our con-sultations with the management team andothers through the Governance Committee make a great
contribution here. As the committee’s chairperson, whileaware of my role as a facilitator, I hope to reflect the opinions
of internal and outside directors and others to enhance thefunction of the committee and DJK’s governance.

DJK Report 2023

60

Outline

Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Directors and Audit & Supervisory Board Members (As of June 22, 2023)
5

Osamu Fukawa
April 1992
April 2019
April 2020
April 2021
June 2021

April 2022

7

11

10

5

3

4

6

7

8

9

June 2015
1

1

Ichiro Uno
April 1982
April 2013
April 2014

June 2016
April 2017
April 2022

Representative Director, President & CEO

2

Ryuichi Ninomiya
April 1984
April 2011

Joined the Company
Executive Officer, General Manager, Osaka
Business Div., and Osaka Branch Manager
Executive Officer of the Company,
President of DAIICHI JITSUGYO(AMERICA), INC.
Managing Director of the Company
Representative Director, President & CEO
Representative Director, President & CEO(to present)

April 2015
April 2019
June 2019
April 2022
April 2023

Masatoshi Ueno
April 1985
April 2013
June 2019
April 2022
April 2023

Director, Managing Executive Officer

Joined the Company
Executive Officer, General Manager,
Electronics Business Div.
Managing Director
Director, Managing Executive Officer
Director, Managing Executive Officer & CDO(to present)

4

Representative Director,
Senior Managing Executive Officer

Joined the Company
Executive Officer, General Manager, Nagoya
Business Div., and Nagoya Branch Manager
Executive Officer of the Company, Managing
Director of DAIICHI JITSUGYO ASIA PTE. LTD.
Executive Officer, Nagoya Branch Manager of
the Company
Managing Director, Nagoya Branch Manager
Director, Managing Executive Officer,
Nagoya Branch Manager
Representative Director, Senior Managing
Executive Officer (to present)

April 1980
April 2006
June 2008

April 2012
April 2014
June 2015
June 2020
March 2021

11 Toshihiko Matsumiya

April 1987

April 1971
July 1972
October 1979

April 1990
April 2019
April 2021

April 2022

DAIICHI JITSUGYO CO., LTD.

Joined New Japan Securities Co., Ltd.
(current Mizuho Securities Co., Ltd.)
Joined the Company
Executive Officer, General Manager, Plant &Energy Business Div.
Managing Executive Officer, Osaka BranchManager, and General Manager, Plant &Energy Business Div.
Managing Director, Managing Executive
Officer, Osaka Branch Manager, and General
Manager, Plant & Energy Business Div.
Director, Managing Executive Officer, Osaka
Branch Manager (to present)

March 1983
July 1991
October 2011
June 2012
June 2020

Outside Director

Joined MITSUI & CO., LTD.
General Manager, Planning & Administrative
Division
C.A.O, Asia Pacific Business Unit and S.V.P,
Mitsui & Co. (Asia Pacific) Pte. Ltd. (inSingapore)
Managing Officer, General Manager, FoodBusiness Unit
Executive Managing Officer, General Manager,
Food Business Unit
Representative Director, Executive Vice
President, JA MITSUI LEASING, LTD.
Adviser
Outside Director, ISEKI & CO., LTD.
(to present)
Director of the Company (to present)

Yasushi Marumoto Director, Managing Executive Officer

June 2021

61

Joined Tokyo Regional Taxation Bureau
Ishida Tax and Accounting Office
Registered as a tax accountant
Established Yoshikazu Sakamoto Tax
Accountant Office (current Sakamoto, Koyama& Numazawa Tax and Accounting Office)(to present)
Director of the Company (to present)

Kazuo Nakayama

June 2023

3

Outside Director

2

9

6

Outside Audit &Supervisory Board Member

Joined Pioneer Corporation
Joined Ryutsu-Giken Co., Ltd.
Joined Deloitte Haskins & Sells(current Deloitte Touche Tohmatsu LLC)
Registered as a certified public accountant
Partner of Tohmatsu & Co.
(current Deloitte Touche Tohmatsu LLC)
Established Toshihiko Matsumiya Certified
Public Accountancy Office (to present)
Audit & Supervisory Board Member of theCompany (to present)
Outside Audit & Supervisory Board Member,KDDI CORPORATION (to present)

Yuji Funawatari
April 1987
April 2017

Joined the Company
Executive Officer, General Manager,
Administration & Accounting Div.
Executive Officer, General Manager,
Accounting Div.
Managing Executive Officer, CFO, andGeneral Manager, Accounting Div.
Managing Director, Managing Executive
Officer, CFO, and General Manager,
Accounting Div.
Director, Managing Executive Officer, CFO, andGeneral Manager, Accounting Div. (to present)

Yoshikazu Sakamoto

April 1975
July 2010
September 201012

Director, Managing Executive Officer

April 2019

April 2021
April 2023
June 2023

8

Director, Managing Executive Officer

Joined the Company
Executive Officer, General Manager,
Pharma Business Div.
Executive Officer of the Company,
Managing Director of DAIICHI JITSUGYO ASIA
PTE. LTD.
Managing Executive Officer of the Company
Managing Executive Officer & CSuO
Director, Managing Executive Officer & CSuO
(to present)

Namika Yamada

December 2018
January 2019
May 2019

June 2019
June 2020
January 2021

Registered as an attorney at law
Joined Kowa Law Office
Supporting Member, Compliance Team,
Ministry of Education, Culture, Sports, Scienceand Technology (to present)Compliance Hotline Contact Person, All Japan
Judo Federation (to present)
Director of the Company (to present)
Joined Yamada Ozaki Law Office (to present)

10 Akihiro Kawai
April 1984
June 2020

Full-time Audit & Supervisory Board Member

Joined the Company
Full-time Audit & Supervisory Board Member(to present)

12 Mitsuyoshi Koyama
April 1981
September 2015

June 2016
December 2022
January 2023

Outside Director

Outside Audit &Supervisory Board Member

Joined Tokyo Regional Taxation Bureau
Registered as a tax accountant
Established Mitsuyoshi Koyama Tax
Accountants Office (current Sakamoto,
Koyama & Numazawa Tax and Accounting
Office) (to present)
Audit & Supervisory Board Member of theCompany (to present)
Outside Auditor, Hotel Management
International K. K. (to present)
External Audit & Supervisory Board Member,
Itoki Corporation

DJK Report 2023

62

Outline

Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Corporate Governance
Overview of the Company’s Corporate Governance
Board of Directors

Basic Corporate Governance Policy
From the perspective of reinforcing our corporate capabilities to survive global competition, we place highpriority on promoting accurate and speedy business decision-making, while at the same time, enhancing ourmanagement oversight function to ensure the transparency of our business.

Transition to Stronger Corporate Governance
At DJK, we are working to strengthen corporate governance by ensuring the diversity of the Board of Directors
while also making the Board progressively more effective through measures such as effectiveness evaluation andthe establishment of the Governance Committee.
Directors
Initiatives and Events

2009

Number of Directors

OutsideDirectorFemale Outside
Directors
Proportion of
Outside Directors

Introduction of a system of stock-based remuneration(abolition of retirement bonuses)
Until 2010: 14 (all internal)

0%

2011

Transition to the executive officer system
Reduction in the number of directors (14Corporate governance system

General Meeting of Shareholders

2016: 8 (6 internal, 2 outside)

2016

Increased the number of outside directors to 2
Appointment of a female outside director
Commenced evaluation of the effectiveness of the Boardof Directors

2018

Revision of Japan’s Corporate Governance Code• Efforts to establish an advisory committee on
nomination and remuneration, etc.

2020

Established the Governance Committee
Increased the number of outside directors to 3
Increased the number of female directors to 2

2021

Revision of Japan’s Corporate Governance Code
• Initiatives to ensure the diversity of core humanresources, address sustainability issues, etc.
Introduced a system of stock-based remuneration withtransfer restrictions

2022

Introduced the employment-type executive officer system
Strengthened the performance-linkage of directors’
bonuses

17%

Appointment / Dismissal

Governance Committee(Nomination / Remuneration)

Internal Committee Outside Committee
Members: 2
Members: 3

25%

AdviceAppointment / Dismissal

Board of Directors
Internal
Directors: 6

OutsideDirectorss: 3

Appointment / Dismissal

Audit Audit & Supervisory Board
Full-time Audit &Supervisory Board
Member: 1

Outside Audit &Supervisory Board
Members: 3

Cooperation

2015

Decision-making / Oversight

Consultation

2015: 6 (5 internal, 1 outside)

The Company has concluded an auditing agreementwith the certified public accounting firm Deloitte
Touche Tohmatsu LLC to act as its independent
auditor. In addition to providing accounting auditing
services in a fair and unbiased manner, the auditing
firm provides advice on accounting matters as
appropriate.
As for the internal audit system of which thecentral organ is the Internal Audit Division, the job
execution of employees is checked and assessed as
to whether it is in accordance with laws andregulations and the Articles of Incorporation, as wellas with the basic internal control policy and thecode of conduct.

The Company uses an Audit & Supervisory Board
system comprised of three Audit & Supervisory
Board members, two of whom are outside Audit &Supervisory Board members. Audit & Supervisory
Board members attend every Board of Directors
meeting. In addition, the Full-time Audit &0%

Appointment of 1 outside director
Addressed Japan’s Corporate Governance Code• Established DJK’s policy on cross-shareholdings, etc.

Independent Auditor and the Internal Audit System

Audit & Supervisory Board

2011: 6 (all internal)

6)Supervisory Board member attends other importantinternal meetings to monitor the business execution
performance of directors from an objective
perspective. Audit & Supervisory Board members
work to ensure the effective implementation of theaudit by receiving reports on and explanations of
the audit plan and results from independent auditor;
exchanging opinions on the areas to be covered by
the audit, the audit methods, and the audit results;
sharing information; and taking other measures.

The Board of Directors comprises nine directors(including three outside directors). The board meetsonce a month in principle and holds extraordinary
meetings whenever necessary. The board
determines basic business policies and otherimportant matters through vigorous exchanges of
opinions while also fulfilling its function as anoversight body for business execution.
Moreover, in an effort to further enhance its
corporate value, the Company has adopted theexecutive officer system to conduct flexible andefficient business operations by separating thebusiness decision making and supervising functions,from the business execution function. The Company
dispatches certain executive officers to be in chargeof its consolidated subsidiaries in Japan andoverseas and to manage their business execution.

Independent
Auditor

Audit
Cooperation

Business Execution

2020: 9 (6 internal, 3 outside)

33%

Appointment

Audit

Representative Director,
President & CEO

Cooperation

Internal Audit Div.

Internal Committees

Sustainability Committee
Risk Management Committee, etc.

Management Committee

Business Divisions, Subsidiaries(in Japan and Overseas)
Corporate Divisions

2023: 9 (6 internal, 3 outside)

Internal Audit

33%

63

DAIICHI JITSUGYO CO., LTD.

DJK Report 2023

64

Outline

Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Corporate GovernanceReason for Appointment of Outside Officers
Name
Yoshikazu
Sakamoto

OutsideDirectors

Outside Audit& Supervisory
Board
Members

NamikaYamadaGovernance Committee

Reason for Appointment
Yoshikazu Sakamoto has acquired extensive expert knowledge and insight into finance, banking, tax
affairs, and so forth through many years of service at the Regional Taxation Bureau. He chairs theGovernance Committee, established in 2020, helping the committee enhance the governance structureof the Group as a whole and providing appropriate advice and oversight to improve the quality ofCompany management. He has been appointed as an outside director.
As an attorney, Namika Yamada has extensive knowledge of corporate law. Given the Compa-ny’scurrent business situation, increased global management means that legal perspectives are even more
important, and she provides flexible and appropriate advice and guidance on compliance and othermatters based on such perspectives. She has been appointed an outside director based on expectations
that her advice will continue to enhance corporate governance.

Kazuo
Nakayama

In addition to having management experience at other companies, Kazuo Nakayama is well-versed inoverseas business and has a wealth of knowledge of a wide variety of domestic and overseas industries.
From an objective perspective based on such management experience and knowledge of otherindustries, he is expected to provide useful advice and guidance to the Group’s businesses. By
participating in the Governance Committee, he is also expected to con-tribute to strengthening theoverall governance structure of the Group and improving the quality of the Company. He has been
appointed an outside director based on these expectations.

ToshihikoMatsumiya

As a certified public accountant, Toshihiko Matsumiya is knowledgeable about finance and accounting
and has broad experience and insight, and we believe he is qualified as an outside Audit & Supervisory
Board member.

Mitsuyoshi
KoyamaAs a public tax accountant, we believe Mitsuyoshi Koyama can utilize his extensive knowledge of financeand accounting in our audit system, and is qualified to carry out his duties as an out-side Audit &Supervisory Board member.

Skill Matrix of Directors
Experience, Knowledge, etc.
Name

Position

Corporate Knowledge ofFinance
Legal affairs
management the industry, International
Sustainability
andand riskand corporate sales, andand ESGperspective
accounting management
strategymarketing

Attributes

Other

Gender Independence

Ichiro Uno

Male

RyuichiNinomiya

Representative Director,
Senior Managing
Executive Officer

Male

Ueno

Director,
Managing
Executive Officer

*1

Male

YasushiMarumoto

Director,
Managing
Executive Officer

Male

Osamu
FukawaDirector,
Managing
Executive Officer

Male

Yuji
Funawatari

Director,
Managing
Executive Officer

MaleYoshikazu
Sakamoto

Director

Male

NamikaYamadaDirectorFemaleKazuo
Nakayama

Director*2Male*1 Technology, IT, and DX*2 Knowledge of other industries

65

DAIICHI JITSUGYO CO., LTD.

Chairperson: Outside Director (Outside Directors: 3 / Representative Director, President & CEO /Composition

Representative Director, Senior Managing Executive Officer)

Year ended March 31, 2023
Number of meetings held:
Year ended March 31, 2023
Matters deliberated:

Six meetings (April, June, September, and December 2022, February and March 2023)
Officers’ remuneration (fixed remuneration, non-monetary remuneration), directors’ bonuses, directors’
terms of office, director candidates, skill matrix

Evaluating the Effectiveness of the Board of Directors
With regard to the effectiveness of the Board of Directors, the Board confirmed that efforts were being made to
improve issues identified in the previous fiscal year’s effectiveness evaluation and the effectiveness of its
response during the current fiscal year. The following initiatives were taken in the fiscal year ended March 31,
2023 based on the issues identified in the Board of Directors’ effectiveness evaluation results for the year ended
March 31, 2022. The Board will continue to work continuously to resolve issues.
State of initiatives to address issues identified in the previous fiscal year
Issue

Initiatives for the fiscal year ended March 31, 2023

Appointment of outside directors withcorporate management experience

Appointed an outside director with corporate management experience to enhance the diversityof the composition of the Board of Directors.

Strengthening of collaboration between theInternal Audit Division and outside directors

Established a system of regular reporting by the Internal Audit Division to the Board of Directors
to further strengthen internal controls.

Establish opportunities for discussions
throughout the year and ongoing discussions

Currently engaged in efforts to enhance corporate value over the medium to long term.

Questions for questionnaires (16 in total)

Representative
Director, President& CEO

Masatoshi

The Governance Committee was established on October 1, 2020, and has been operated as a voluntary
advisory body to the Board of Directors to deliberate on matters related to the nomi-nation and remunerationof top management (directors with representative authority) and directors, as well as other governance matters,
and to report and make proposals to the Board of Directors, with the aim of enhancing corporate value by
utilizing the knowledge and advice of outside directors, ensuring transparency and fairness, and strengthening
governance. The composition and activities of the committee are outlined below.

Issues and actions to be taken in the future

Composition of the Board of Directors (2 questions)Management of the Board of Directors (6 questions)

Ensure further diversity in the composition of the Board of Directors
Promote discussion aimed at enhancing corporate value over the medium to long term

Agenda of the Board of Directors (3 questions)
System to support the Board of Directors (5 questions)

Ensure sufficient time for consideration of meeting materials in advance ofmeetings of the Board of Directors (review the criteria for submission)

Officers’ Remuneration
Policy on Determining the Amount or Calculation
Method for the Amount of Remuneration for Officers
The Company has established a policy regarding thedetermination of the amount or calculation method
for the amount of remuneration for officers, which
encourages medium- to long-term growth ofbusiness performance and corporate value. The
remuneration system is commensurate with theduties of each officer.
The Governance Committee, upon consultationfrom the Board of Directors, deliberates and advises
the Board on remuneration for individual directors
other than outside directors. The Board of Directors
deliberates on the advice from the GovernanceCommittee and determines the amounts ofremuneration.
Remuneration for the Company’s officers is
composed of fixed remuneration, performance-linked
remuneration, non-monetary remuneration, etc. The
relative proportions of each form of remuneration for
executive directors and the amounts of remuneration

are determined by the Board of Directors based oncomparison and verification with the composition of
remuneration at other companies of a similar scalein the same industry and the remuneration paid
previously, as well as consultation and advice fromthe Governance Committee, from the perspective ofensuring objectivity and appropriateness.
Remuneration for Audit & Supervisory Board
members and outside directors, in light of the
independence of their positions, consists of fixed
remuneration only. Decisions on the amounts ofremuneration are made within the extent of the total
amounts passed in resolutions of the General
Meeting of Shareholders.

Overview of the Remuneration System for
Directors (Excluding Outside Directors)
DJK aims to further strengthen corporate governanceunder our medium-term business plan MT2024,
launched in FY2022. As part of this plan, we havereviewed our remuneration system for officers as
DJK Report 2023

66

Outline

Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Corporate Governanceshown under “outline of each remuneration” in orderto further enhance corporate value over the medium
to long term.
Based on the resolution adopted by the Ordinary
General Meeting of Shareholders held on June 23,
2022, the Company has decided to change theamount of remuneration, etc. for directors from amonthly amount to a yearly amount, and within theamount of such remuneration, directors other thanoutside directors will be paid a bonus in the form of
performance-linked remuneration in addition to fixed
remuneration, determined comprehensively taking
into account trends in the level of remuneration andthe number of directors, as well as future prospects,
so as not to exceed ¥450 million per year.

Non-monetary remuneration, etc.
We have adopted a system of stock-based
remuneration with transfer restrictions, which isdesigned to pay a yearly fixed amountcommensurate with the role of each director and to
lift the restriction on transfer at the time of his/her
retirement from office.
Amount paid to each director = total performance-linked remuneration (Bonus A)*1
×

Total coefficients by position*1 Calculation method for total amount of performance-linked remuneration (Bonus A): Totalamount of performance-linked remuneration (Bonus A) = ¥89.76 million x (degree ofachievement of consolidated operating income against the annual target x 75% + degreeof achievement of profit attributable to owners of parent against the annual target x 25%)
Calculated as 130% if the achievement with regard to the annual target exceeds 130%.
*2 Coefficient of each director’s position

Outline of Each Remuneration

Position

Fixed remuneration
A monthly fixed amount of remunerationcommensurate with the clarified roles andresponsibilities of each position is paid in cash.
Performance-linked remuneration
There are two kinds of bonuses to be paid: bonus
linked to the Company’s business results indicators(hereinafter, “bonus A”) and bonus linked toindicators, etc. contributing to the achievement of
the medium-term business plan (hereinafter, “bonusB”). Bonus A is paid in cash based on the degree ofachievement of the consolidated performancetargets, and bonus B is paid in cash according to thedegree of achievement of the indicators, etc.
contributing to the achievement of the medium-termbusiness plan. The amounts vary within the range of
0% to 130% of the base amount.
Method for calculating performance-linked
remuneration (Bonus A)
Performance indicators for performance-linked
remuneration (Bonus A) are consolidated operating
income and profit attributable to owners of parent.
Consolidated operating income was selected as aperformance indicator because it was judged
appropriate as an evaluation indicator that properlyreflects the profits generated by the Group’s corebusiness, and profit attributable to owners of parent
was selected as a performance indicator because it
provides the results of investments aimed at growthand funds for shareholder returns, and because it
was judged appropriate as an indicator from theperspective of being responsible for the Group’s
ultimate performance.

Coefficient of each director’s position*2

Coefficient No. of directors

Representative Director,
President & CEO
Representative Director, Senior
Managing Executive Officer
Director, Managing
Executive Officer

Maximum

100

1¥29,318,000

74

1¥21,695,000

56

4¥16,418,000

Proportion of each remuneration by type (estimate)
Fixed remuneration

60%

Performance-linked
remuneration30%

Non-monetary
remuneration

10%

DJK’s policy is to hold shares of other companies
only when we judge that such shareholdings
contribute to the medium- to long-term improvementof DJK’s corporate value, taking into account
whether they are necessary for the purpose ofbusiness expansion, business creation, maintenanceand strengthening of cooperative structures, andbusiness operations. If we judge that the rationalityof shareholding cannot be verified, the shares are
sold after taking into consideration the situation of
the cross-shareholding partner. The Board of
Directors confirms the status of cross-shareholdings
each quarter and decides whether to continue or
reduce the shareholdings after verifying the purpose,
medium- to long-term economic rationality, andwhether there is a benefit commensurate withcapital cost. In the fiscal year ended March 31, 2023,
DJK sold out seven stocks and reduced two stocks.

Changes in the number of cross-shareholdings andthe amount recorded on the balance sheet
Number of cross-shareholdings

Total amount recorded on balance sheet (millions of yen)

58

54

48

7,819

7,735

8,013

FY2020

FY2021

FY2022

Internal Control System
DJK has established a “Basic Internal Control Policy” to ensure that the directors perform their duties incompliance with laws and regulations and DJK’s articles of incorporation, and to ensure the appropriateness of
our operations as a corporation.
From the perspective of further strengthening corporate governance, the directors endeavor to build an
effective internal control system and establish a structure for companywide legal com-pliance, while Audit &Supervisory Board members audit the effectiveness and functioning of the internal control system. If and whennecessary, Audit & Supervisory Board members must provide advice or recommend improvements to directors.

(Assuming 100% achievement of targets for performance-linked remuneration)

Incentive curve for performance-linked remuneration
Payout rate

130%2) System to store and manage information on business execution by directors

100%
Percentage
achievementof targets

0%

Basic Internal Control Policy

1) System to ensure that directors comply with laws and regulations and Articles of Incorporation in
the execution of their business duties

100%

130%

Total remuneration by type (millions of yen)

4) System to ensure that directors carry out job execution effectively6) System to ensure the fairness of operations of the corporate group comprising the parent company
and its subsidiaries

Officerclassification

Total remuneration(millions of yen)

Director

406

233

143

29

6

Audit & Supervisory
Board Member

22

22

—

—

1

Outside Director

17

17

—

—

3

Outside Audit &Supervisory Board Member

10

10

—

—

2

Performance-linked remuneration Non-monetary remuneration, etc.

3) System providing rules to manage possible losses and other matters of the Company and its
subsidiaries

5) System for ensuring that directors, executive officers, and employees execute their business duties
in accordance with laws and regulations and the Articles of Incorporation*Performance-linked remuneration is reflected in bonuses.

Total remuneration, total remuneration by type, and number of applicable officers for each officer classification

Fixed remuneration

Cross-shareholdings

Number of applicableofficers7) System for requesting staff to aid Audit & Supervisory Board members and ensuring the independence of those staff members from the influence of directors and the effectiveness of
instructions given to such assisting staff
8) System for directors, executive officers, and employees of the Company and its subsidiaries toreport to Audit & Supervisory Board members of the Company, system for making other reports to
Audit & Supervisory Board members, and system to ensure effective audit of Audit & Supervisory
Board members*Bonuses paid to six directors based on a resolution made at the 99th Ordinary General Meeting of Shareholders held on June 23, 2022, are not included.

67

DAIICHI JITSUGYO CO., LTD.

DJK Report 2023

68

Outline

Corporate GovernanceValue Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Risk Management

Compliance
As the basis of the compliance system, we are working to ensure that the Code of Conduct is thoroughly
understood within the Company. We have established the Internal Audit Division under the direct control ofrepresentative directors and formulated internal audit regulations. While promoting the establishment,
maintenance, and improvement of the internal control system, we are also working to develop and maintain thecompliance system, and conduct audits and training in each internal department as necessary.
We have established an internal reporting system, operated based on our internal reporting regulation, as aninternal reporting system for reporting violations of laws and regulations and other compliance-related facts,
under which the General Manager of the Internal Audit Division is the direct recipient of information.

Compliance Initiatives at Group Companies
Domestic affiliated companies (Daiichi Mecha-tech Corporation and Daiichi Jitsugyo Viswill Co., Ltd.) haveestablished their own code of conduct based on our code. The Daiichi Jitsugyo Code of Conduct is appliedmutatis mutandis at overseas associated companies, and is translated into the local language of each region.
We will build and maintain appropriate and global compliance systems at our regional headquarters in
Europe, the Americas, China, and Asia in order to strengthen compliance at overseas associated companies as
they expand their business further.

Code of Conduct
The Daiichi Jitsugyo Code of Conduct is divided into the following five categories. We are committed to fulfilling
our social responsibility as a company and to contributing to society.

1) Code of conduct for business partners, etc. 2) Code of conduct for investors3) Code of conduct for society 4) Code of conduct to create a better corporate culture5) Code of conduct as a member of an organization

Policy on Constructive Dialogue with Shareholders
Directors and executive officers, including the Representative Director, President & CEO, actively participate inbusiness results briefing meetings and other dialogues with investors, and conduct IR activities that emphasize
fairness, accuracy, and continuity in management strategies, business strategies, and financial information, as
well as good two-way communication.
The department in charge of IR plays a leading role in exchanging opinions with the Account-ing Division,
Administration Division, and Corporate Strategy Division to determine policies for IR activities.
We strive to promote investment opportunities and disclose information by holding business results briefing
meetings, etc. with the attendance of Representative Director, President & CEO and other members of the
management team and publishing business reports and integrated reports.

Information Disclosure
To enhance the transparency of its business, the Company proactively discloses information on a timely basis
mainly through the Corporate Communication Department. In addition, as one of its IR activities, the Company
holds business results briefing meetings to report on and explain business conditions and the future direction of
the DJK Group to shareholders and investors. At the same time, we promptly and appropriately disclose
management information via our corporate website and other forms of communication.

Our Understanding of Risk
We have established our V2030 growth strategy setting forth basic strategies such as aggressive investment, theshift from product-only sales to products and integrated solutions business model, capturing global growth, andthe promotion of digital transformation (DX). In this context, we have identified the creation of new businesses
as a key strategy. To accomplish this, it is vital that we make full use of a diverse range of methods to createbusinesses. In addition to conventional trading (buying and selling activities), these include methods such as
business investment, trading that incorporates the provision of solutions, and cross-border business utilizing ouroverseas and domestic networks. These entail an increase in the scale and complexity of transactions and arise in DJK’s business risks. Moreover, establishing an integrated management function covering the wide rangeof risks faced by DJK has become a crucial issue for our business activities today.

Risk Management System
We have established the Risk Management Committee and we are engaged in constructing an enterprise risk
management system to identify and narrow down risks, determine the order of priority, implement subsequent
activities and the PDCA cycle to address these risks, report to the Board of Directors and determine policies, aswell as supervise efforts to spread knowledge, compliance, and awareness among officers and employees.
In April 2023, we established the Integrated Risk Management Office as the core division that will drive thisenterprise risk management system. The aims of the Integrated Risk Management Office include:

1) Involvement in deliberations concerning various business transactions and important proposals for the
purposes of examination and monitoring in line with DJK’s risks
2) Raising the standard of risk management through communication with business divisions
3) Establishing methods for the integrated management of the wide range of potential risks faced by DJK
as a whole
4) Integrating the specialized risk management capabilities in each field both within and outside DJK toboost risk resilience and competitive strength; promoting activities to increase capacity to generate
corporate value, etc.

Management of Business Risks
Until now, our system for managing business risks comprised deliberations based on the clear separation of
application and approval processes, with corporate divisions, the officer in charge, and the Board of Directors
approving trading and business investment applications by each business division in accordance with the rules
on internal controls and various other rules.
For facilitating complex, large-scale projects, however, it is vital to consider the appropriate terms, conditions,and forms of transactions. Therefore, we have changed the system to enable corporate divisions and theEngineering Division to take the lead, participating from the initial stage of project planning to optimize theterms, conditions, and forms of transactions, before the application is submitted and examined. Under the new
system, these divisions also work together to implement the project after the project contract is signed.

Enterprise Risk Management (ERM) System
See our website for details

Securities Report: https://www.djk.co.jp/ir/securities.html (in Japanese)
Corporate Governance Report (Corporate Governance page): https://www.djk.co.jp/en/ir/governance.html

69

DAIICHI JITSUGYO CO., LTD.

Our previous risk management approach mainly consisted of examining matters submitted in advance for any
risks and minimizing these risks, or handling any risks that had begun to emerge.
Going forward, for the purpose of managing various potential risks as well the Company will face, we will
strengthen our efforts to achieve a new risk management approach aimed at establishing more proactive,
predictive, and systematic methods for the autonomous identification of risks companywide (across all divisions
including management and corporate divisions) and, among these, the identification and handling of key risks
for DJK.

DJK Report 2023

70

Outline

Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Risk Management

Business Risks
Business Risks

Impact on the Company

Measures to Address Specific Impacts

Risk of Change in
the Macroeconomic
Environment

Around the world, protectionism is becoming prevalent, growth is slowing in China and emerging
economies, and there are concerns over a global economic slowdown and the emergence of
global geopolitical risks due to the impact of the conflict between the United States and China.
Accordingly, the stagnation of economic activities in these regions may cause the DJK Group’s
performance to deteriorate. In particular, we recognize that the restructuring of the supply chain,
which has been heavily reliant on China, and political trends in the United States and politicaland economic conflicts in any region that could affect our investments are highly significant risks
to our business performance.

We have established a system for promptly obtaining and deploying information through close communication with ourGroup companies in each overseas country, which we have strengthened coordination with as we expand our overseas
business through our global four axes network. The Company is also structured to minimize the risk of performance
deterioration by taking advantage of the agility of its business portfolio to shift business promptly and to provide maximum
support to business partners in politically unstable or economically slowing regions.

Risk of Increased
Proportion ofOverseas Sales

We expect the ratio of overseas sales to total sales to continue to increase as we steadily
implement our medium-term business plan. Therefore, a possibility exists whereby theinternational financial environment, tax systems, exchange rate trends, trends in crude oil andraw material prices, shipping cost trends, and capital investment trends for customers’
production bases could affect the business results of the DJK Group. In addition, DJK’s overseas
business activities are exposed to the risk of unexpected changes in political systems or
economic environments, and social disturbances based on legal and regulatory changes.

We strive to minimize the risk of a decline in earnings by leveraging the Group’s global network and relationships with awide range of business partners to promptly grasp information and trends and select the most appropriate form oftransaction.

Risk Related toInterest Rates andthe Procurement ofFunds

Although we aim to flexibly and stably procure working capital and reduce interest costs, there
is no guarantee that we will be able to procure funds on favorable terms in a timely manner inthe event of instability in the financial markets or a downgrade in the credit rating assigned by arating agency due to deterioration in the Group’s creditworthiness, which may limit our businessactivities. Therefore, should the balance of the DJK Group’s financial income and expenses deteriorate because of the trend in net sales or in interest rates, it could negatively impact the DJK
Group’s business results and financial position. In addition, if substantial turmoil occurs in major
financial markets in Japan or overseas, financing costs could increase.

We will strive to continue good relationships with financial institutions and build and deepen relationships withinstitutional investors through timely dialogue, as well as diversify our funding sources. We also strive to flexibly and stably
procure working capital and reduce funding and interest costs through our contingency funding policy and throughmaintaining or improving our credit rating by maintaining a favorable financial condition.

IT Systems Risk

DJK strives to heighten security, perform computer system data backups and other measures inorder to protect systems and data. However, in the event systems or communications networks
suffer a significant outage on account of natural disasters, computer virus infection, unauthorizedaccess, constraints to power supply, major power outage, malfunction, trouble or other reason,business operations, chiefly order management for customers and vendors, may be hindered,incurring great cost or causing serious damage to the reputation of the DJK Group, with thepotential of exerting a negative impact on performance and financial position.

As one of our business continuity measures, we use data centers or cloud services with sufficient security to protect oursystems and data, and we have introduced monitoring systems for computers and other end devices used by our
employees to prevent computer viruses and unau-thorized access. In response to the impact on business activities causedby the failure of power and telecommunications infrastructure, the Group has established an emergency response plan toquickly move to a safe area and take measures to minimize the period of business interruption.

As the Group expands its range of services and the size of business transactions grows, we
anticipate that as accidents occur in tandem with an increase in large-scale plant projects, thiswill lead to increased legal responsibility and incurring expenses, and a decline in market value
as technology becomes obsolete.

We are working to improve our market responsiveness and competitiveness to avoid risks and capture business
opportunities by hiring engineers with sufficient skills, developing a personnel evaluation system for them, andstrengthening the legal and administrative units involved in concluding contracts.

The Group’s business performance and financial position could be affected by contractual liabilities and expenses incurred due to the discovery of defects and other problems following theinspection of delivered equipment for remote launching, test operations, acceptanceinspections, etc., which have increased in recent years.

We will further accumulate the know-how we have gathered to date and promptly verify best practices, as well as avoid
risks by strengthening the functions of our legal and administrative units.

Credit Risk

As of the end of the consolidated fiscal year under review, the total notes and accounts receivable-trade of the Group amounted to ¥45,242 million, or 29.7% of total assets. As a result, theGroup is exposed to the risk of losses on account of the credit of its business partners
worsening or their businesses failing. The Group’s business results and financial position may beaffected in the event that the business partner experiences a liquidity crisis or a chain reaction
bankruptcy due to a deterioration in the business environment, or a specific major debtor
experiences business problems which lead to an inability to recover the extended credit.

DJK acts in accordance with its rules regarding authority to approve transactions and risk management, setting maximum
credit and transaction amounts in its required transaction approval procedures, requires collateral or guarantees dependingon the credit rating of the debtor, and puts in place risk hedges, such as the factoring or securitization of debt.

Risks in Long-term
Strategies and theMedium-term
Business Plan

The growth strategy and medium-term business plan that began in fiscal 2022 cover the medium
to long term, and the potential period of risk is also the medium to long term. In addition, if thebusiness-related investments and other investments that we are actively promoting do not
produce sufficient effects, the Group’s performance and financial position may be affected.

We are working to minimize risk by improving our ability to consider investments, centered on the corporate strategy unit,
which is strengthening its functions. Once an investment is made, we will analyze progress based on periodic verification,
consider and decide whether or not to change the investment, and disclose the results promptly.

Risk of DisasterThe occurrence of disasters such as earthquakes, typhoons, fires, and infectious disease
outbreaks could cause damage to the Group’s offices, factories, directors, executive officers andemployees, and other related assets, which could hinder sales and production activities, and any
serious damage could affect the Group’s performance and financial position. Furthermore,should one of the DJK Group’s major business partners suffer substantial damages from adisaster, the suspension of the business and production activities of the business partner could
have a negative effect on the performance of the DJK Group.

In addition to formulating a basic business continuity plan, the Company has prepared a risk management manual fordisasters, introduced a safety confirmation system, and conducted dis-aster drills and other measures.

We recognize that the various risks outlined in the TCFD’s recommendations will have a significant impact not only on our Group, but also on our supply chain. In addition to the direct andfinancial impact of increased tax burdens, technical problems with the products and goods we
handle, reduced demand in the market, and the resulting decline in corporate reputation could
be factors that worsen the performance and financial position of our Group.

We have established an organization that specializes in handling climate change issues, and we are actively working torealize a decarbonized society and address environmental issues by setting scenarios, calculating impact amounts, andconducting ongoing monitoring, as well as providing environmentally friendly products and services to our customers,
manufacturing companies, in the supply chain in which we are positioned.
In addition to issues related to climate change, factors such as demand and the principle of competition in our businessdomains are changing due to changes in various standards related to environmental destruction, human rights, diversity,and other matters, as well as markets. We are aware that any delay in our response to these changes may affect thebusiness results of the DJK Group, and we are engaged in formulating corporate standards that conform to the various
supply chain due diligence measures implemented by global companies.

Business
Development Risk

Sustainabilityrelated Risks

71

DAIICHI JITSUGYO CO., LTD.

DJK Report 2023

72

Outline

Value Creation Strategies

Sustainability Strategies to Support Value Creation

Data Section

Consolidated 11-Year Financial Summary Year Ended March 31
Millions of yen

Thousands of
U.S. Dollars(Note 1)Millions of yen

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2023

¥128,229¥122,102¥143,361¥124,177¥154,120¥185,686¥161,891¥161,476¥140,029¥148,075¥153,674$ 1,150,859

16,71017,36318,922

18,164

20,47622,362

24,26923,93821,457

24,13826,671

199,739

4,590

4,074

4,341

3,886

5,844

6,394

7,573

6,998

5,729

6,866

6,717

50,307

Net income attributable to owners of parent*

3,051

2,459

2,897

2,637

3,338

4,730

4,457

4,876

4,754

5,363

6,316

47,303Comprehensive income

4,485

3,430

4,482

1,480

3,781

5,391

3,759

3,890

6,764

5,944

7,237

54,201

Overseas sales*2

67,441

61,38778,61057,96576,09675,70780,76975,78465,586

79,11282,367

616,844China

18,78016,803

19,215

19,335

16,231

21,94031,40728,287

23,20737,71930,581

229,025

Asia

40,05930,36137,05625,57537,40236,53932,12432,99823,86825,10830,121

225,580

Americas

6,035

8,068

11,116

9,437

13,244

13,593

14,333

8,575

14,897

11,88813,701

102,609

Europe

2,289

1,527

3,946

2,174

8,799

3,379

2,815

3,044

3,459

4,368

7,942

59,477

Other

276

4,626

7,276

1,443

418

254

87

2,877

152

27

20

151

316

352

874

847

850

805

774

890

883

774

1,033

7,737

1,065

1,052

4,050

968

937

525

387

1,166

1,050

720

837

6,270

¥ 81,478¥ 81,443¥ 91,835¥ 94,767¥116,681¥102,379¥112,561¥111,486¥119,958¥132,235¥152,535$ 1,142,329

Working capital

20,322

21,93522,67023,372

25,63628,49532,49735,00838,95043,72948,767365,215Interest-bearing debt

7,486

8,809

11,035

10,711

9,289

8,409

7,802

7,850

7,805

7,631

5,882

44,051

Total equity

29,01331,19735,31036,006

38,794

43,19445,71048,446

53,84558,722

63,658476,732

For the year:
Net sales¥

Gross profit
Operating income
1

Depreciation and amortization
Capital expenditures
At year-end:
Total assets¥

Per share of common stock (in yen and U.S. dollars)*3:
Net income

¥

¥

57.97

¥

46.45

¥

54.46

¥

49.24

¥

62.47

¥ 443.97¥ 418.31¥ 456.38¥ 444.70¥ 501.02¥ 591.91$

4.43

Cash dividends

15.00

18.00

16.00

17.00

95.0(19.0)

105.0(21.0)

110.0(22.0)

130.0(26.0)

130.0(26.0)

145.0(29.0)

178.0(35.6)

1.33(0.27)

Shareholders’ equity

545.78586.85659.44669.51

726.61

4,042.28

4,274.47

4,521.29

5,023.70

5,470.86

6,013.95

45.04

Number of shares of common stock outstanding (in thousands)*3 *4

52,88153,00253,40053,65253,24010,656

10,655

10,692

10,691

10,70910,558—

Number of employees

1,043

1,069

1,080

1,064

1,097

1,134

1,167

1,209

1,229

1,258

1,319

—

Gross profit margin

13.0

14.2

13.2

14.6

13.3

12.0

15.0

14.8

15.3

16.3

17.4

—

Operating income margin

3.6

3.3

3.0

3.1

3.8

3.4

4.7

4.3

4.1

4.6

4.4

—

Return on sales

2.4

2.0

2.0

2.1

2.2

2.5

2.8

3.0

3.4

3.6

4.1

—

Return on assets

3.7

3.0

3.3

2.8

3.2

4.3

4.1

4.4

4.1

4.3

4.4

—

Return on equity

11.2

8.2

8.7

7.4

9.0

11.6

10.1

10.4

9.3

9.6

10.3

—

Asset turnover (times)

1.55

1.50

1.65

1.33

1.46

1.69

1.51

1.44

1.21

1.17

1.08

—

Current ratio

139.8

145.4

143.4

142.1

134.1

151.2

149.7

156.4

161.0

161.3

156.4

—

Equity ratio

35.4

38.2

38.3

37.9

33.2

42.1

40.5

43.4

44.8

44.3

41.6

—

Debt-to-equity ratio

0.26

0.28

0.31

0.30

0.24

0.20

0.17

0.16

0.15

0.13

0.09

—

Other statistics:

Key ratios (%):

Notes 1. U.S. Dollar figures have been converted from Japanese yen, for convenience only, at the rate of ¥133.53 to U.S. $1.
2. Minority interests in equity has been excluded from equity when key ratio is calculated.
3. Shares have been restated, as appropriate, to reflect a one-for-five reverse stock split effected on October 1, 2017.
4. Treasury stock is excluded from the total number of shares issued.

73

DAIICHI JITSUGYO CO., LTD.

DJK Report 2023

74

Outline

Group Companies
Location

Business details

Consolidated subsidiaries
Kawaguchi, Saitama

Repair, manufacturing, and sales of various
types of industrial machinery

Suita, Osaka

Development, manufacturing, and sales ofvisual inspection devices

WAVE ENGINEERING CORPORATION

Saitama City, Saitama

Design and production of various types ofequipment and parts for petrochemical,
fertilizer, and other plants, and consulting

DAIICHI JITSUGYO (AMERICA), INC.

Chicago, USA

Sales of various types of industrial machinery

DJK GLOBAL MEXICO, S.A. DE C.V.

Queretaro, Mexico

Sales of various types of industrial machinery

DJK EUROPE GMBH

Frankfurt, Germany

Sales of various types of industrial machinery

DAIICHI JITSUGYO VISWILL CO., LTD.

DC ENERGY GMBH

Frankfurt, Germany

Sales of lithium-ion battery manufacturing equipment

SHANGHAI YISHI TRADING CO., LTD.

Shanghai, China

Sales of various types of industrial machinery

DAIICHI JITSUGYO (HONG KONG) LIMITED

Hong Kong, China

Sales of various types of industrial machinery

DAIICHI JITSUGYO (GUANGZHOU) TRADING CO., LTD.

Guangzhou, China

Sales of various types of industrial machinery

Common Stock (As of March 31, 2023)

Company Name: DAIICHI JITSUGYO CO., LTD.

Stock Information*

Headquarters:

Ochanomizu Sola City,

Authorized:

32,000,000 shares

4-6 Kandasurugadai, Chiyoda-ku, Tokyo

Issued:11,086,400 shares

Date of Establishment: August 12, 1948
Paid-in Capital:¥5,105 million

Securities Code: 8059

Overseas Branches: Seoul

UH Partners 2, Inc.

Domestic Subsidiaries:

The Master Trust Bank of Japan, Ltd.

5

7.54

Number of Employees: Non-consolidated: 591 Consolidated: 1,319

UH Partners 3, Inc.

686

6.50

MIZUHO BANK, LTD.

511

4.84

SUMITOMO MITSUI BANKING CORPORATION

511

4.84

Directors and Audit & Supervisory Board Members (As of June 22, 2023)

Construction contractor*Senior Managing Executive Officer Ryuichi Ninomiya

DAI-ICHI JITSUGYO (MALAYSIA) SDN. BHD.

Kuala Lumpur, Malaysia

Sales of various types of industrial machinery

New Delhi, India

Sales of various types of industrial machinery
Sales of various types of industrial machinery

FLOW DYNAMICS CO., LTD.

Chiyoda-ku, Tokyo

Manufacturing and sales of various types ofindustrial machinery

DJK KOHSAN CO., LTD.

Chiyoda-ku, Tokyo

Sales of various types of industrial machinery

DAIICHI ENGINEERING CO., LTD.

Chiyoda-ku, Tokyo

Provision of environment-related equipment engineeringand sales of processing units in various industries

Sao Paulo, Brazil

Sales of various types of industrial machinery

DJK (TAIWAN) CORP.

Taipei, Taiwan

Sales of various types of industrial machinery

DAIICHI MECHA-TECH (SHANGHAI) CORPORATION

Shanghai, China

Repair and manufacturing of various typesof industrial machinery

DJK FACTORY SOLUTIONS(PHILIPPINES), INC.

Laguna, Philippines

Sales and purchases of trial machines and parts
Maintenance of parts for use in assembly systems

DAIICHI JITSUGYO DO BRASIL
COMERCIO DE MAQUINAS LTDA.

Equity-method affiliate
ASANO LABORATORIES CO., LTD.

Aichi-gun, Aichi

Manufacturing and sales of plastics
vacuum forming machines

Non-equity method affiliate
SULZER DAIICHI K. K.

75

DAIICHI JITSUGYO CO., LTD.

Ichiro Uno

Director, Managing Executive Officer Masatoshi Ueno
Director, Managing Executive Officer Yasushi Marumoto
Director, Managing Executive Officer Osamu Fukawa

Chiyoda-ku, Tokyo

Import and sales of pumps, agitators and mixers,
and related equipment for industrial applications*1 Percentages of total shares issued are calculated based on the total numberof shares issued excluding 528 thousand shares of treasury stock.

Distribution of Ownership among Shareholders
Individuals andOthers*2

Financial
Institutions

22.3%
3,570 persons /2,471 thousand shares

32.7%

21 persons /3,628 thousand shares

Director, Managing Executive Officer Yuji Funawatari
Outside Director

Yoshikazu Sakamoto

Outside Director

Namika Yamada

Outside Director

Kazuo Nakayama

Full-time Audit & Supervisory Board Member Akihiro Kawai

Non-consolidated subsidiaries

8.97

796

Bangkok, Thailand

Hanoi, Vietnam

948

HIKARI TSUSHIN, K. K.

DAIICHI PROJECT SERVICE CO., LTD.

Sales of various types of industrial machinery

9.59

Consolidated Subsidiaries: 17*President & CEO

Jakarta, Indonesia

1,013(Trust Account)

Sales of various types of industrial machinery

PT. DJK INDONESIA

Number of Shares Held (% of total)*1(Thousand shares)

Shareholder Name

Overseas Subsidiaries: 19

Bangkok, Thailand

Sales of various types of industrial machinery

3,771*Pursuant to the stock split (3-for-1 stock split) executed on October 1, 2023, thetotal number of authorized shares became 96,000,000 shares and the total
number of issued shares became 33,259,200 shares.

Major Shareholders

DAIICHI JITSUGYO (THAILAND) CO., LTD.

Makati, Philippines

100 shares

Branches & Offices:Osaka, Nagoya, Tohoku (Sendai),
Hiroshima, Fukuoka, Toyama

Sales of various types of industrial machinery

DAIICHI JITSUGYO (PHILIPPINES), INC.

Number of Shares per Unit:
Number of Shareholders:

Stock Exchange Listing: Tokyo Stock Exchange, Prime Market

Singapore

DAIICHI JITSUGYO INDIA PVT. LTD.

Data Section

Corporate Data (As of March 31, 2023)

DAIICHI JITSUGYO ASIA PTE. LTD.

DAIICHI JITSUGYO (VIETNAM) CO., LTD.

Sustainability Strategies to Support Value Creation

Corporate Data / Investor Information(As of September 30, 2023)

DAIICHI MECHA-TECH CORPORATION

Value Creation Strategies

Outside Audit & Supervisory Board Member Toshihiko Matsumiya
Outside Audit & Supervisory Board Member Mitsuyoshi Koyama

Foreign
Institutions
and Individuals

11.7%
105 persons /1,293 thousand shares

Issued11,086 thousand

Securities
Companies

0.6%

21 persons /64 thousand shares

Other
Domestic
Companies

32.7%

54 persons / 3,631 thousand shares
Managing Executive Officer

Masahiko Mizumoto

Managing Executive Officer

Daisuke Ozono

Managing Executive Officer

Shigehiro Aoyama

Managing Executive Officer

Shinji Otsuki

Managing Executive Officer

Shoichiro Okada

Senior Executive Officer

Zenichiro Minami

Senior Executive Officer

Kanji Kubota

Senior Executive Officer

Takahiro Toyoizumi

Executive Officer

Masao Hiwatari

Executive Officer

Daijiro Kodama

Executive Officer

Yuji Shika

Executive Officer

Katsuhisa Kouzuki

Executive Officer

Keisuke Nishii

Executive Officer

Keiji Yamamoto

Executive Officer

Kenji Murabe

Executive Officer

Hajime Fujii

Executive Officer

Kazuya Fukunaga*2 “Individuals and Others” includes 528 thousand shares of treasury stock (4.8%).

Information on DJK’s corporate website
Visit our website to learn more about our business activities and information on IR and sustainability, and to view our past news releases.

https://www.djk.co.jp/en/*: Representative Director

DJK Report 2023

76

Ochanomizu Sola City, 4–6 Kandasurugadai, Chiyodaku, Tokyo 101-8222, Japan
TEL : +81-3-6370-8600 FAX : +81-3-6370-8601
https://www.djk.co.jp/en/

2024. 01