President’s Message

We will realize sustained corporate valueenhancement through a business strategy
leveraging our unparalleled experience inproduction systems and by further strengthening
ESG management.

Jin-Gi-Kou-Ken: A Slogan Representing 70 Yearsof Philosophy
In May 2022, on the occasion of having formulated its new Medium-Term
Management Plan, the Company announced the slogan Jin-Gi-Kou-Ken as itsvision. Jin-Gi-Kou-Ken expresses that Hirata exists because of its technology, thatits technology exists because of its people (employees), and that Hirata exists
because of the happiness of its employees. I believe that the words “technology,people, and happiness” reflect Hirata’s unique spirit and management foundation created by our predecessors.
For 70 years, we have been managing the Company with the founding desire
to use automation and robot technology to solve problems so that people canwork without physical or mental pain, and with the desire to take care of ouremployees and their families and protect their employment. In other words,
the three words Jin-Gi-Kou (people, technology, and happiness) were createdby successive generations of management and employees. As the fourth word
Ken means “contribute to society,” the slogan Jin-Gi-Kou-Ken means “To makeeveryone involved in Hirata content and contribute to society by means oftechnology.”
When I witnessed the devastation of the Kumamoto Earthquake, which
occurred in April 2016, I decided to return to Kumamoto, the region where theCompany was founded, because I wanted to encourage the people there.
At that time, I sent the following message: “We will acquire much work fromall over the world and donate as much money as possible to Kumamoto.” Toour employees, conveying that protecting the region where the Company was
founded is one of our initiatives for contributing to society. Although we werealso impacted by the disaster and faced difficult conditions, our desire to donate
as much money as possible to Kumamoto and contribute to the reconstructionof our home region raised the morale of all employees. As a result, we achieved
record sales in that fiscal year. Our Management Philosophy states that Hirata“Contributes to Society.” However, it will be difficult to contribute to society
if we do not possess a suitable level of managerial strength. We learned fromthe Kumamoto Earthquake that making everyone involved with Hirata happy
increases the potential for the Company to grow significantly.
In addition to Kumamoto, the Company has bases in Japan and overseas, including Group companies. We conduct business in those regions and respect thoseregions just as we do Kumamoto. The accumulation of this history naturally led
to the creation of the four-word slogan Jin-Gi-Kou-Ken.

2Hirata Integrated Report 2023

Yuichiro Hirata
Representative Director, President

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President’s Message

Review of the First Year of the Medium-Term Management Plan
We will differentiate
ourselves from othercompanies through thesynergistic effects ofour engineering capabilities
and manufacturing capabilities.

The Biggest Opportunities Since the Company’s Founding Are Coming
In the previous report (Integrated Report 2022), we statedthat we recognized the fact that the Company has thegreatest opportunities since its founding, mainly in theautomotive-related equipment business and semiconductorrelated equipment business. As we predicted, demand forequipment at related manufacturers in Japan and overseas
is expanding as EVs (electric vehicles) become more popular. As a result of mass production for EV-related products,
the profitability of our automotive-related equipment
business has also improved. Furthermore, as competition
among automobile manufacturers is intensifying, the needfor each company to establish production systems (production facilities, including production lines) as soon as possible

to realize their strategies has led to the expansion of opportunities for production system integrators like Hirata.
Despite recent fluctuations in demand in the­semiconductor-related equipment business sector, the emergence of applications equipped with AI and 5G technologies
will stimulate the market. Therefore, business opportunities
for the Company are expected to expand in the future.
Although the current outlook is that the order volumes
will be at the highest levels ever, the number of our plants
and engineers is limited. Therefore, I believe that the mostimportant issue to maximize opportunities is to maintain
information coordination and management accuracy toavoid confusion at business sites and avoiding delay risks.

Our Unparalleled Experience in Production Systems Is Our Greatest StrengthWe recognize that our strength lies in our unparalleledexperience in production systems, or in other words, theengineering capabilities and manufacturing capabilities
possessed by our group of engineers. Although that experience may be abstract and difficult to understand, we havea history of building one-off made-to-order products with
our unique business model. When customers manufacture
products, they take steps such as product planning, design,prototyping, production preparation, and mass production.
In line with this, we have been proposing optimal production systems while customers make various requests andhold discussions with us from the product prototype stage
to the production system introduction stage.

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Hirata Integrated Report 2023

In this way, we respond to hundreds of inquiries every
year, both in Japan and overseas. Naturally, we must
maintain confidentiality with our customers, but we often
find that our ideas regarding one customer’s equipment
can also be applied to different products. As our customers’ products change in line with changes in the world, wealso make improvements in accordance with the following
trends. We possess information-related capabilities cultivated through our participation from the product prototype
stage for global customers, and the accumulation of technological expertise that enables us to respond to changes in
the playing field from one project to the next is one of ourstrengths.

In terms of business performance for fiscal 2022, net sales
increased from the previous fiscal year due to an increase inorders for automobile-related equipment and the relaxationof restrictions on activities at overseas subsidiaries andaffiliates. In terms of profit, in addition to an increase in netsales, we were able to control outsourcing costs throughthe expansion of in-house production, which resulted in a
profit margin higher than in the previous fiscal year. As aresult, net sales for the fiscal year under review amounted
to ¥78,443 million (up 16.9% year-on-year), operating
profit was ¥5,920 million (up 53.5% year-on-year), ordinary
profit was ¥5,802 million (up 36.3% year-on-year), andprofit attributable to owners of parent was ¥4,269 million(up 59.2% year-on-year).
In fiscal 2022, we launched a new Medium-Term
Management Plan, which includes the four Basic Policies of“Business expansion in growth markets,” “Strengtheningcompetitiveness as a global company,” “Strengthening ofESG management initiatives,” and “Realization of management in line with the new-normal era.”In regard to “Business expansion in growth markets,”
we saw record-high orders for EV-related equipment(¥30,239 million) in the automotive-related equipment
business against the backdrop of global efforts to achievecarbon neutrality. As we started with a high backlog oforders, we plan to increase net sales in the automotiverelated equipment business by 25.4% year-on-year to ¥38
billion in fiscal 2023, and achieve net sales of ¥40 billion
in the automotive-related equipment business segment,
as planned in the Medium-Term Management Plan. The
improvement in the profitability of the automotive-related
equipment business as a whole is a major achievement as aresult of receiving multiple large-scale orders for EV-related
equipment and other factors. Our current challenges are tostrengthen the development of battery-related equipment

and secure production capacity capable of responding to anincrease in orders. Therefore, we are expanding production
space at three of our bases: Shichijo Plant in Kumamoto,
Kanto Plant in Tochigi, and Kansai Plant in Shiga.
In the semiconductor-related equipment business, orders
for wafer transfer machines remained flat year-on-year at¥19,731 million, as the semiconductor market as a wholeentered an inventory adjustment phase worldwide. In order
to expand our wafer transfer machine production capacity,
the entire Group, including our overseas affiliates, is working
together to promote local production. Advancement of procurement and other measures have resulted in shorter leadtimes, lower transportation costs, and avoidance of traderisks. In the medium to long term, semiconductor demand isexpected to increase due to the emergence of generative AI
and other factors. While capturing this demand, we aim toachieve ¥40 billion in net sales in the semiconductor-related
equipment business segment as set forth in the MediumTerm Management Plan.
In terms of “Strengthening competitiveness as a globalcompany,” we are strengthening cooperative relationships
with overseas Group companies. For example, in China, wehave been focusing on the EV-related equipment business
until now. However, we have also entered the semiconductor-related equipment business in China through collaboration within the Group, working to expand our businessareas to include growth markets.
In regard to “Realization of management in line with thenew-normal era,” we are implementing virtual commissioning using an emulator as business digitalization while
promoting VR factory tours, VR assembly processes, andremote observation and maintenance. These efforts have
led to improved work efficiency, and in addition to shortening delivery times, they have been significantly effectivefrom the viewpoint of profitability management.

ESG management Is Indispensable for Sustained Corporate Value Enhancement
With regard to “Strengthening of ESG management
initiatives,” one of the four Basic Policies of the MediumTerm Management Plan, we formulated the Sustainability
Basic Policy and established the Sustainability Promotion
Committee in October 2022 to promote it as a Companywide initiative while linking it with our medium- to longterm management strategies. Full-scale operations of theSustainability Promotion Committee began in fiscal 2023
with internal working groups considering solutions tomaterial issues while incorporating the opinions of outside
directors and external experts.
We continue to build production systems that support
manufacturing in various industrial fields, and we can saythat we have supported the history of manufacturing inJapan and overseas. In the past, through the era of mass
production and mass consumption, we have contributed tothe creation of economically affluent lifestyles. Today, since
the sustainability of the global environment is in jeopardy,
ignoring the need to respond to climate change and environmental issues could also threaten the survival of business.
I think we are in a situation where if the entire supply chain
does not address this issue, companies themselves may cease
to exist.
In addition to quality, price, delivery, and other conditionsas prerequisites for obtaining business opportunities, various requirements, such as commitment to the environment

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President’s Message

and respect for human rights, are needed. We have continued to respond to the needs of our customers in accordance with the times, proposing many solutions, and haveearned their trust. This trust is not only related to our technical skills and the quality that we provide but also related
to our consideration for the environment and respect for

the human rights of all people involved in our business.
ESG management is indispensable as a foundation for thesustainable survival of our business. It is also indispensable
to maintain and improve the trust of our customers andsociety, create opportunities for us to contribute to manufacturing in the next era, and improve our corporate value.

Initiatives to Address Materiality That Has Evolved through a New Framework
In order to evolve our efforts to address our materiality,
which is organized into four themes and 10 items, we haveestablished a structure that consists of the Sustainability
Promotion Committee, its subordinate organizations, andthe working groups that carry out cross-organizational
activities for each theme. With the establishment of theSustainability Promotion Committee and working groups,
we are now able to discuss issues from a medium- to longterm perspective looking at the entire Company, and theframework of indicators (KPIs) and quantitative targets is
gradually beginning to emerge. In addition, we can expect
Hirata’s original measures and plans to be developed bycreating an activity plan using a bottom-up approach, notjust a top-down approach. By establishing a medium- tolong-term timeline and goals and formulating an action
plan through backcasting, rather than being bound by
conventional methods, we have identified not only risks
and opportunities in the process of getting there but also
several issues in the execution phase, such as the limitationsof the current structure and organizational system andresource allocation, which we intend to resolve one by one.
One of the materiality issues that I place importance onis the theme related to human capital. I believe that it is an
important management issue to improve employee engagement by creating an environment in which each employee
can make the most of their expertise and individuality,
and in which each employee can feel more satisfaction
and joy when it comes to their work. I appreciate thatorders have been stable recently. However, at Hirata, oursystem engineers are the biggest cornerstone that leads
to the success of each job that we handle for customers.
Having a large number of system engineers with extensive
experience makes it possible to proceed with large projects
without delay. It takes time to develop such skills though,so it is necessary to strategically secure and develop humanresources who will become the next generation of leaders.
Furthermore, the increased workload on each engineer,

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the influential role still required of middle management,
and other constraints on “Brings Out The Best In Every
Person,” part of our Management Philosophy, are far fromfew, and the increased workload on employees and the riskof impact on production management are also recognized
as issues. Therefore, I believe it is extremely important tobring out the best in every person through means such as
strengthening human resource development and promoting diversity, equity, and inclusion (DEI).
Additionally, as a response to climate change, contributing to carbon neutrality through our products and services
is also an important theme. For example, installing an allelectric transport system consisting of the Hirata Eco electric series instead of the air equipment used at a customer’splant can significantly reduce electricity consumption andCO2 emissions, as well as running costs. Since our engineers
are deeply knowledgeable about the needs of our customers, I believe that they can propose optimal systems basedon customers’ issues.
Also, strengthening governance is an important theme
for sustained corporate value enhancement. As a measure
aimed to achieve this, we transitioned to a Company with
an Audit and Supervisory Committee organization structurein June 2023. The purpose of this transition is to strengthen
the supervisory function of the Board of Directors and further strengthen the oversight system by appointing Audit
and Supervisory Committee members who are responsible
for auditing the execution of duties by directors as members of the Board of Directors. We will continue to further
enhance our corporate governance. By contributing to theenvironment, addressing social issues through the promotion of human rights and DEI, and further advancing corporate governance, we aim to achieve sustainable corporate
growth from the perspective of achieving both corporate
growth through business activities and resolvingsocial issues.

To All Our Stakeholders
In addition to being the prefecture where our Company
was founded, Kumamoto is also the region ruled by Kato
Kiyomasa, a famous military commander. He contributed
greatly to the creation of a prosperous country that
continues to the present day. Contributions include theconstruction of Kumamoto Castle, considered one of thethree premier castles in Japan, the development of industrial
infrastructure, such as civil engineering and a flood control,
and the cultivation of human resources and a rich culture.
Kato Kiyomasa, a person of high integrity, has been highly
respected by residents of Kumamoto prefecture to date.
In August 2023, we unveiled FLAGNOID Kiyomasa,*a robot created out of respect and gratitude for KatoKiyomasa. We produced and broadcast/distribute acommercial featuring an animated version of FLAGNOID
Kiyomasa. In particular, I would like to provide opportunities for young people to learn about the Company, and toraise awareness about him throughout the world.
* “FLAGNOID” is a word coined byHirata. “FLAG” expresses boththe Blue Flag Iris, a plant loved byLord Kiyomasa, and the raising of
his battle banner in Kumamoto.
"NOID" means “humanoidrobot.”

It is said that Kiyomasa always told the people aroundhim when he was building his country that it was “for thesake of the future,” and that many of the measures at thattime were long-term initiatives with a focus on the future.
As many of these measures still serve as the foundationof Kumamoto’s industry and culture, I believe they weretruly sustainable initiatives. I believe this is what leads tothe creation of a sustainable nation, an approach that leads
to the sustainability management that the Company andmany other companies are focusing on.
We are developing business with customers all overthe world in collaboration with our domestic and overseas bases, centered on Kumamoto, the region where
the Company was founded. I would like to learn from
Kiyomasa’s foresight and continue to engage in management that considers the future, that is, management that
contributes to the realization of a sustainable society.
In order to achieve this, we will continue to deepen
communication with all stakeholders and work toward thesustainable growth of the Company. I look forward to yourcontinued understanding and support of the Company.

Yuichiro Hirata
Representative Director, President

For more information on FLAGNOID Kiyomasa, please visit the website below.
https://www.hirata.co.jp/flagnoid-special/ (Japanese only)

We will deepen mutualcommunication with stakeholders
around the world and aim
to achieve sustainable growthby having all Group
companies work together.

Hirata Integrated Report 20237