DAIKEN GROUP REPORT 2023

DAIKEN CORPORATIONCorporate message

Toward the future exceeding
the functions of yesterday
Since its establishment, the Daiken Group has developed a multitude of
products by capitalizing on limited resources and listening
to our customers’ needs.
Today we have evolved into a company
where our efforts have accrued to provide first rate building materials
and comfortable spaces for our customers.
We will continue to strive towards a sustainable future
where people can enjoy pleasant living spaces and lead spiritually rich lifestyles.
In pursuit of new possibilities, we will transcend the pastby developing innovative functions towards a brighter tomorrow.

Editorial policy
The Daiken Group has issued the Daiken Group Report as an annual integrated report for stakeholders
in order to enhance the understanding of our initiatives for the improvement of medium-term and longterm corporate value based on both financial and nonfinancial indicators. This report specifically shows
the first-year progress of the medium-term management plan GP25 3rd Stage, which is the final step
toward realization of the long-term vision GP25 and introduces our initiatives toward realization of thegrowth strategy based on the pursuit of the resolution of social issues by using sustainability as the key
axis.

1

DAIKEN GROUP REPORT 2023

Sales composition by business and market (Fiscal 2023)
Other

Engineering business

6%

11%

Industrial materials
business
33%

Domestic market

72%

43 %

28%

Net sales

228.8
billion yen

40 %Daiken Group’s Value Creation
Daiken Group’s Goal3

Our Sustainability Goals

5Interview with Top Management

7

Changes in Value Creation

13

Three Businesses Use Strengths

12%223.3 billion yen(Fiscal 2022)
15%
12%

Building materials
businessC O N T E N T S

Global markets
Public and commercial buildings
Industrial materials business
Home renovation market
Domestic new home market

Industrial Materials Business

15

Building Materials Business

17

Engineering Business

19

Process of Creating Value

21

Business Models and Strengths

23

Risks, Opportunities and Materiality

25

Creating Shared Value (CSV)
by Daiken Business

Daiken group in figures (Fiscal 2023)
Operating profit

9.8

billion yen

17.3 billion yen (Fiscal 2022)
ROE

Ordinary profit

13

billion yen

18.7 billion yen (Fiscal 2022)
Dividend

12.9%

10.9% (Fiscal 2022)

110

100 yen (Fiscal 2022)

27.8%

10.3

7.8 billion yen (Fiscal 2022)

Dividend yield

4.8%

59.4

September
1945

Number of employees

3,564

Japan

2,446

Overseas

1,118*As of March 31, 2023

Overseas

12
7 5
bases

bases inLong-Term Vision GP25
33
Progress of the Medium-Term
Management Plan Toward Realizationof the Long-Term Vision
Progress of the Medium-Term

35

Management Plan GP25 3rd Stage37

and Market

billion yen

Production baseJapan

Strategy for Value Creation

Strategies by Business Segment*As of March 31, 2023

*As of March 31, 2023

Foundation

billion yen

Market capitalization

yen per share

Dividend payout ratio

Profit attributableto owners of parent

27

39

Initiatives for Priority Markets
Global Markets

41

Public and Commercial Buildings

45Home Renovation Market

47

Research and Development

49

Environmental Strategies

51

Human Resource Strategies

55

countries*As of March 31, 2023

Data

Company information
DAIKEN CORPORATION and the Daiken Group*Environmental information differs in scope.

Eligible period
Fiscal 2023 (April 1, 2022, to March 31, 2023)*Some sections include information other than theabove fiscal period.

Directors

59

Eleven-Year Financial Summary61

ESG Goals

63

ESG Data

65

Company Information

67

Reference guidelines
l IFRS International Integrated Reporting Frameworkl ISO 26000[Disclaimer regarding future prospects]
The forecasts and estimates in this report are based on information available at the time of the report’s
issuance. Plans and figures depicting the future do not imply a guarantee of actual outcomes.

DAIKEN GROUP REPORT 2023

2

Daiken Group’s Goal
To have a concept in common with all of the Group’s employees and adjust the direction to move forward, the Daiken
Group has established the group corporate philosophy, which consists of the three elements of the Company mission [OurMission], Company vision [Our Vision], and Company values [Our Values]. We aim for the sustainable improvement ofcorporate value by deploying business activities toward the realization of this philosophy.

Group Corporate Philosophy
Company mission

Company vision

Company values

Our Mission

Our Vision

Our Values

We will create a wonderful future

As a company respected bywith our technology, ideas, andeveryone, we will give the highest

passion.

priority to harmonizing an affluent

We pledge the following:l Ensure harmony between theenvironment, society, and people.
l Be careful of safety, security, health,and comfort.
l Courageously accept the challengesof new ideas.
l Promptly respond to changes andopportunities.
l Be sincere at all times.

society with the environment byoffering new value that exceeds
people’s expectations.

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3

DAIKEN GROUP REPORT 2023

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DAIKEN Global Environmental Vision 2050
VisionFor a future full of smile
Daiken Group’s Value Creation

The overall aim of the Daiken Group is to realize a sustainable society towards 2050
by promoting resource recycling, mitigating climate change, and coexisting with nature.
Environment PolicyLong-Term Goals

1 Promotion of resource recycling

1 100% waste recycling– Waste reduction and reuse of resources –By actively taking advantage of properly managed
sustainable forest resources, we can promote forest
circulation and help to realize a circular economy ofsustainable resource circulation throughout society byreusing resources, material recycling, and thermal recycling,rather than disposal.

2

z Promote material recycling and thermal recycling on thepremise of cascade use.
z Zero final disposal of waste in landfills.
z Reduce waste through a series of processes fromprocurement of raw materials to the use and disposal of
products.

2 Net zero greenhouse gas emissions

Mitigation of climate change
We will reduce our own greenhouse gas emissions, as wellas emissions throughout the entire supply chain. Also, byusing sustainable forests and wood resources, we will help
to expand carbon storage and contribute to the maintenanceand circulation of carbon sinks as we work together withsociety to achieve carbon neutrality.

3 Coexistence with nature

Strategy for Value Creationz Promote energy conservation by improving productivity
and efficiency.
z Expand the use of renewable energy.
z Expand the use of wood materials and products that store
carbon.
z Promote reforestation through the active use of materials
from managed forests.
z Contribute to the maintenance and recycling of CO2 sinks
through afforestation.

–Realization of carbon neutrality –the impact on the natural
3 Reduce
environment– Conservation of biodiversity –In consideration of biodiversity, our objective is to coexist
with a sustainable natural environment and preserve
ecosystems by contributing to environmental impact
reduction, conservation, and restoration.

z Zero use of lauan wood.
z Appropriately manage chemical substances and reduce
emissions.
z Promote the effective use of water resources.
z Reduce the use of plastics derived from fossil fuels.

Group Conduct Guidelines
1

Improve customer satisfaction and trust by
anticipating changes in the needs of society andsupply safe, secure, healthy, comfortable, andattractive products, technologies, and services
Compete fairly, transparently, freely, andappropriately

3

Communicate extensively with society and ourshareholders, actively and fairly disclose
information, and enhance the transparency ofcorporate activities

4

Create a safe, dynamic workplace, respecthuman rights and diversity, and recognize thewill of the employees

5

Actively tackle environmental issues throughcorporate activities, we will contribute to theembodiment of a sustainable society that isfriendly to the Earth and people

Positively contribute to society and respect thecultures and customs of each country

7

Maintain high ethical standards and comply withthe laws of each country

8

Always demonstrate the spirit of challenge,
inquiry, and achievement

9

We will improve our abilities, motivate others,
and grow together as a team

10

Top management will implement the corporate
philosophy and code of conduct, disseminate
both throughout the group, and ensure that
employees observe the mission, vision, andvalues of the company

DAIKEN GROUP REPORT 2023

Data

2

6

4

Our Sustainability Goals
Amid the rising importance of responses to the issues surrounding sustainability, such as the social and global
environment problems, to further clarify the image of sustainability that the Daiken Group aims for and enhance ourinitiatives in corporate management, we have revised and evolved the existing CSR basic policy and formulated the
Daiken sustainability basic policy in June 2022. By increasing the linkage between the contribution to the sustainabilityof society and the global environment and the sustainability of our business more than ever, we will aim to form avirtuous cycle and sustainable corporate value improvement.

Daiken Sustainability Basic Policy
The Daiken Group will bring new value and smiles to the faces of our stakeholders, including employees, bycontributing to the development of a prosperous and sustainable society and environment based on thegroup corporate philosophy. Furthermore, we aim to establish a solid management foundation for the longterm growth of the Daiken Group.

❶ Contribute to the development of a sustainable society, global

environment, and the economy

We will continuously review all activities and promote reforms as we contribute to thedevelopment of a prosperous and sustainable society and the global environment, while
improving business sustainability.

❷ Pursue sustainability as a business
The Daiken Group will maintain and even enhance its strength to build value, an essential
driving force for transformation, by maximizing the value of human capital through enhanced
job satisfaction and employee well-being, while strengthening engagement with stakeholders.

❸ Aim to enhance business value in a sustainable manner
The Daiken Group aims to enhance corporate value in a sustainable manner through the two
virtuous cycles of its contribution to a sustainable society, the global environment, and theeconomy and the pursuit of sustainability as a business.

Structure to promote sustainability
To enhance our group-based initiatives for sustainability, we have reorganized the existing CSR committee to thesustainability promotion committee since fiscal 2023.

The Board
Executive Directors Committee
Sustainability Promotion Committee
Deliberations on and approval of policies andimportant items concerning sustainability(CSR and ESG)CSR Promotion Departments
Company-wide promotion of sustainability (CSR
and ESG) and progress report to the committee

Each Department/Group Company

5

DAIKEN GROUP REPORT 2023

Sustainability Promotion Committee
Chairperson: Representative Director, President
Promotion Departments: General Affairs and Human Resources Department, Legal Department,
Quality Assurance Department, Domestic Manufacturing Planning Department, and Global Business
Planning Department
Secretariat: Sustainability Promotion Department and Corporate Planning Department
n Number of committee meetings convened in fiscal 2023: 4 times
n Key deliberation items
l Progress of the ESG goals in the medium-term management planl Response to human rights due diligencel Reports of the degree of penetration of the group corporate philosophy and the employee satisfaction survey
l External evaluation of the integrated report and the production policyl Establishment of the Daiken sustainability basic policyl Revision of the ESG-related policies
l Response to the climate change-related issues

Overall image of “Our Sustainability Goals”

Building a sustainable society
Achieve the vision of thegroup corporate philosophy
Daiken Group’s Value Creation

Contribution to the future filled with smiles
Harmonization of an affluent society
and the environment

Sustainable corporate value
improvement
Pursuit of thegrowthstrategies

Contribution to the resolutionof sustainability issues,
such as social andenvironmental problems

Forming avirtuous cycle
by linking andintegrating ESG
and CSV

Pursuit of sustainability
as a company

Strategy for Value Creation

Contribution to
the realization of asustainable society,the global environment,
and economy

Enhancement of theability to create value
Maximization ofhuman resource value
Forming a firmmanagement foundation

Enhancement of the engagement with stakeholders
Building of the relationship of trust and co-creation activities
Local
community

Research
institutions

Shareholders
and investors

Customers

Users and
consumers

The state andgovernment

Business
partners

Employees

Sustainability (ESG)-related policy system
To deploy initiatives for sustainability issues on a group-wide basis, the Daiken Group has established various policies witha focus on the important themes in each field of ESG.
Field
Sustainability (ESG and CSV)E

PolicyDaiken Sustainability Basic Policy
DAIKEN Global Environmental Vision 2050

Product quality and safety

Basic Policy on Product Safety

Fair transactions

Data

Environment

Daiken Procurement Policy and Daiken CSR Procurement Standards
Cartel and Bid-rigging Prevention Standards
Daiken Diversity Promotion Policy

S

Daiken Workstyle Reform Promotion Policy

Human resource

Daiken Human Resource Development Policy
Daiken Health and Productivity Management
Daiken Occupational Safety and Health Policy

Human rights
Coexistence with local communities

G

Daiken Human Rights Policy
Daiken Social Contribution Activity Policy
Basic Policy on Corporate Governance

Governance

Basic Policy on the Building of the Internal Control System
Compliance Code of Conduct

Details of each policy are described on our sustainability website.

https://www.daiken.jp/sustainability/
DAIKEN GROUP REPORT 2023

6

Representative Director, President

7

DAIKEN GROUP REPORT 2023

Interview with Top Management

first year of the GP25 3rd Stage, which
Q The
marked the conclusion of our long-term visionGP25, has concluded. Could you pleaseelaborate on the main focus of the GP25 3rdStage?

overarching company vision of transitioning from a housingmaterials manufacturer to a comprehensive building materials
enterprise. Since then, we've been executing a medium-term
management plan, dividing the 10-year roadmap into three phases.
The first phase, initiated in fiscal year (FY) 2017, focused ontaking the initial steps toward becoming a comprehensive building
materials company. We worked on strengthening our existing
businesses and laying the groundwork for new ventures as the key
to growth. The second phase, starting in FY 2020, aimed toaccelerate our growth strategies to achieve our company vision.
During this phase, we aggressively pursued growth strategies
overseas, reviewed our domestic business portfolio, and bolstered
our management foundation.
FY 2023 marked the commencement of the GP25 3rd Stage,
the final step after six years of dedicated effort. Over the subsequent
four years of this phase, we are implementing a variety of initiatives
to firmly establish ourselves as a comprehensive building materials

Long-Term Vision GP25

by rising interest rates in Europe and the United States and thechallenges faced by US financial institutions.
In light of these circumstances, we believe one of Daiken
Corporation's strengths lies in our consistent commitment, since
our inception in 1945, to develop businesses that contribute to therealization of a sustainable society. In 1958, we began manufacturing
insulation boards—wood fiberboards using renewable woodmaterials from waste wood chips as the primary material. Used forthe inner parts of tatami mats, this product not only stores carbon
by utilizing wood raw materials but also provides society with heatinsulation, humidity control, cushioning properties, and lightweight
products, enhancing its value. When we first introduced thisproduct, climate change concerns and demands for decarbonization
were not as pronounced as they are today, so we did not emphasize
its carbon storage capacity. However, the concept of utilizing
valuable resources with zero waste had already taken root within
Daiken Corporation and has persisted to this day.
As global markets increasingly prioritize environmental value,
the ideas and technologies developed by Daiken Corporation for
efficient resource utilization now align with societal demands,
forming a solid foundation for exponential growth. When weconceived the GP25 3rd Stage, our guiding principle was to achievesustainable growth while addressing societal challenges throughsustainability, a core strength of our organization. This principle
extends beyond the GP25 3rd Stage because we are committed to

P.33

Progress of the Medium-Term Management Plan

P.35

In summary, the past year was marked by challenges stemmingfrom continuous and significant shifts in the business landscapedue to a variety of different factors. In February 2022, while theconducting our business with a forward-looking perspective andbecause we are convinced that sustainable growth contributes not
only to our own sustainability but also to the betterment of society.
Medium-Term Management Plan GP25 3rd StageP.37

COVID-19 pandemic had yet to end, the Russian invasion of
Ukraine led to soaring prices of raw materials, fuels, and rapid

DAIKEN GROUP REPORT 2023

8

Data

company.

inflation. The business environment remains uncertain, compounded

Strategy for Value Creation

In 2015, we established our long-term vision, GP25, under the

Daiken Group’s Value Creation

Establishing Our Imageas a Comprehensive Building Materials
Company through Strategic Investments
in Sustainable GrowthInterview with Top Management
do you view FY 2023 in light of the market
Q How
trends for the fiscal year?

America significantly contributed to our company's profits as it
stands as the world's largest market for timber housing. The wood
price shock, resulting in price increases for LVL and veneers, saw a

In FY 2023, new housing starts in Japan remained relatively

downward trend in the latter half of FY 2023. Notably, Pacificstable at 861,000, showing no significant decline despite the

Woodtech Corporation (PWT), a US-based company specializing

ongoing COVID-19 crisis. Specifically, while privately owned

in LVL production, transitioned from a consolidated subsidiary to an

housing starts experienced a downward trend during this fiscal

equity method affiliate in August 2022 as it increased its capital for

year, rental housing starts remained robust, and house starts inbusiness expansion. Consequently, the percentage of global sales

subdivisions remained at similar levels to the previous year.

for FY 2023 decreased by four points compared to the previous

Although Japan does not anticipate a significant surge in housing

fiscal year, landing at 28.3%. However, we remain committed tostarts due to its declining population, we aim to increase our market

positioning global markets as a growth driver. Our strategy includes

share by capitalizing on our strengths as a company offering a wide

expanding sales outlets for the Indonesian door business in both

range of environmentally friendly products. This strategic direction

the existing UK market and the broader European market. For MDF,

aligns with the broader societal shift toward sustainable productsa primary product in our industrial materials business, manufactured

that contribute to decarbonization. Conversely, changes inin Malaysia and New Zealand, we successfully passed on costsocieties' perspectives regarding spending time at home, catalyzed

increases to selling prices while executing structural reforms to

by increased teleworking during the COVID-19 pandemic, haveenhance profitability.

driven elevated demand for a variety of products in the homerenovation market. Issues of sound, odor, and humidity, which werepreviously overlooked or not considered seriously, have come tothe forefront. This diversification of user needs is expected tocontinue, representing a lasting trend rather than a temporary
reaction. According to surveys, the domestic home renovation
market is valued at 6–7 trillion yen. We are committed to proposing
superior products and spaces that cater to the evolving demandsof citizens to seize growth opportunities effectively.
Initiatives for Priority Markets: Home Renovation Market

Initiatives for Priority Markets: Global Markets

P.41

Given this dynamic market landscape, FY 2023 posed a seriesof challenges as previously mentioned. We encountered hurdles,
such as sales declines resulting from delayed product deliveries
and order restrictions in the building materials business during thefourth quarter of FY 2022. Additionally, the soaring raw material
prices drove up our costs. Unfortunately, we lagged behind in
implementing cost rationalization measures, cost reduction efforts,
and pass-through in the rise of costs. Consequently, while sales

P.47

reached 228.8 billion yen, marking a 2.4% increase compared to
In the realm of public and commercial buildings, the government

the previous fiscal year, our operating profit declined by 43.2% tohas been at the forefront of promoting timber use since the

9.8 billion yen, and ordinary profit dropped by 30.5% to 13 billion

implementation of the Act on the Promotion of Use of Wood inyen. However, because of extraordinary income resulting from the

Public Buildings in 2010. Initiatives of incorporating timber intochange in PWT's status, profit attributable to the owners of the

public school construction have gained traction. According to theparent company reached 10.3 billion yen, a 31.2% increase from

Ministry of Education, Culture, Sports, Science and Technology,

the previous fiscal year.

over 70% of new public school buildings in FY 2022 utilized timber.

were the challenges encountered in the
Q Whatfirst year of the medium-term management plan

It has been observed that the use of wood in school buildings
alleviates children's stress, enhances concentration, and fosters anbusiness opportunities. Moreover, we have been emphasizing thethat remain unresolved, and how do you intend
to address them? What accomplishments wereachieved in the first year?

utilization of local materials for flooring and wall materials with a

The most significant challenge we face is falling behind in our

focus on local production for local consumption. We have also

efforts to reform our business structure and enhance profitability. In

proposed solutions for creating pleasant spaces using a variety ofthe previous year, we adopted a reactive approach, responding todifferent functional building materials for interior finishing in multiple

immediate challenges at the expense of our long-term strategic

sectors. Additionally, the office building market has witnessed

goals. We must acknowledge that we did not allocate sufficient

continuous growth driven by numerous redevelopment projects inresources to develop new product applications and identify new

Tokyo and Osaka despite concerns about labor shortages.

customers, despite knowing the importance of these endeavors. In

appreciation of local forests and nature. We anticipate that further
encouragement of timber use in construction will create new

Initiatives for Priority Markets: Public and Commercial Buildings

P.45

In the global arena, housing starts experienced a decline in FY
2023 due to rising interest rates. However, in FY 2022, North

9

DAIKEN GROUP REPORT 2023

a rapidly evolving business environment, we must proactively
implement measures even when facing uncertainties.
Consequently, we initiated structural changes in April 2023,
establishing a more flexible and adaptable system to respondpromptly to market dynamics by strengthening our marketing andDaiken Group’s Value Creation

planning functions. We also introduced the Comfort Businessto embrace global markets.

Division to foster an integrated approach to manufacturing, sales,

What sets us apart from our competitors is our unique blend ofand construction, thereby accelerating the implementation of a new

selling industrial and building materials products while actively

business model primarily targeting public and commercial

engaging in construction—a strength of our organization. Bybuildings.

participating in this multifaceted business, encompassing industrial
materials and engineering in non-housing sectors, we consistently

collaborating with other companies have yielded substantial results.

identify markets that continue to thrive despite demographic shifts.

Through a co-creation consortium focused on the future of office

We firmly believe that our strategic direction, as outlined in the long-spaces, we've developed innovative solutions by integrating ourterm vision GP25 since 2015, remains accurate and forward-

sound-absorbing panels with the technologies of partner

thinking.

companies. Another notable initiative is the MINNA NO ECO SAIEN,

While I previously emphasized Daiken Corporation's strength ina vegetable garden system introduced as a new venture within oursustainable ideas and technologies, we promote sustainability

organization. This system enables the cultivation of vegetables inthrough wood materials. For example, DAILOTONE, a material used

open urban spaces, a concept that has gained considerable

in ceilings, is crafted from slag wool, a byproduct of steel production,

traction. It transforms previously unused rooftops into green

and developed to capitalize on the non-combustibility and sound-spaces, contributing to increased greenery in urban areas. Our

absorbing properties of underutilized mineral resources. Japan,

wood culture medium, GLOW EARTH, is also incorporated into thisbeing a volcanic country, possesses abundant volcanic ash thatgarden, further enhancing our environmental footprint. These

often goes unused. We've harnessed this resource, along with theinitiatives are challenging as they extend beyond our traditionalslag wool used in DAILOTONE, to create DAILITE—a material that is

housing domain, involving considerations for public and commercial

not only noncombustible but also serves as an insect repellent,buildings. However, they are instrumental in establishing our identity

antiseptic, and high-strength wall material for residential and office

as a comprehensive building materials company.

settings.

Strategies by Business Segment and Market

P.39

Looking at the global landscape, we recognize an array ofyou elaborate on the rationale behind
Q Could
prioritizing sustainability as a key pillar ofrisks, from geopolitical challenges like the Ukraine conflict to the

management and its impact on Daiken
Corporation's corporate value?

Sustainable Development Goals (SDGs) in response to climate

approximately 780,000 individuals in 2022, while the number ofindividuals engaged in construction work continues to dwindle
because of aging and demographic shifts. In response to thissignificant trend, our strategic shift toward becoming acomprehensive building materials company is not only natural but
essential. We have broadened our business horizons from the newhome market to the home renovation market and from the housing
market to encompassing public and commercial buildings.
Moreover, we have expanded our focus from the domestic market

factors of rising resource and energy prices, inflation, and currency
fluctuations. However, the individual’s growing awareness of thechange and the pursuit of a recycling-oriented society is a growing
trend. While our predecessors laid the groundwork for a uniqueportfolio of eco-friendly products, we consider our commitment toefficient resource utilization, passed down through the generations,as one of our greatest strengths for the years ahead.
As we look ahead to 2035 and beyond, extending beyond thefinal fiscal year of 2026, we have identified three priority areas,
known as material issues, in the formulation of the GP25 3rd Stage.
These include the realization of resource circulation and a recyclingoriented society, the alignment of our offerings with user needs inthe new normal, and the diversification of our human resource base

DAIKEN GROUP REPORT 2023

10

Data

In the domestic market, the population witnessed a decline ofStrategy for Value Creation

On a positive note, our efforts in open innovation andInterview with Top Management
Overview of the Deployment of Daiken Sustainability Transformation (SX)

Reduction of the input of raw wood materials by low-density MDF• Establishment of the technology to make low-density MDF and introduction of it to
the market• Expansion of the sale of the low-density MDF

Reduction of environmental burden in the supply chain• Reduction in the use of water resources in the production processes (4%reduction compared to FY 2022)• Reduction of waste in the production processes(15% reduction in final waste volume disposed of in landfills in the production
bases in Japan and overseas compared FY 2022)

Capturing the opportunity
for sales expansion
Avoidance of the risk of
reduction in sales

Reduction of existingcosts

Long-term perspective (Key measures toward FY 2031 - 2051)• Expansion of flooring substrates by the new wooden boards utilizing domestic
materials (Alternative to tropical natural wood plywood)• Expansion of the sale of MDF using the adhesive derived from post-fossil fuel• Expansion of the sale of the building materials using the decorative surface
materials/paints derived from post-fossil fuel• Capturing alternative demand for plastic molding materials by the use
application development of the insulation board and MDF• Capturing alternative demand for tropical natural wood plywood by the use
application development of the insulation board and MDF• Launch of new wooden board business utilizing domestic materials• Establishment of the production of MDF using the adhesive derived frompost-fossil fuel and the mass-production technology• Development of decorative surface materials/paints derived from post-fossil
fuel and establishment of the product specifications

Promotion of CSR procurement

Avoidance of the risk toincrease costs

Maximization of growth(Maximize growth by trade-on business)

Minimization of risks(Minimization of the expected risks)

Response to sustainability issues

Medium-term perspective (Key measures toward FY 2026)
Contribution to carbon neutrality by utilizing wood resources

Promotion of the use of sustainable timber• Reduction in the use of water resources in the production processes• Reduction of waste in the production processes(2050: Zero final disposal of industrial waste in landfills)• Execution of the CSR survey to the suppliers in Japan and overseas (the execution
rate at 100%) and an improvement approach to the companies that did notachieve the standards• Maintenance of the CSR survey execution rate at 100% and execution of thecontinuous review of survey items

Human rights due diligence• Identification of and response to the risks in the value chain• Continuous execution of the execution process

Review of the business portfolio by introducing internal carbon pricing• Incorporation of it into new investments and the existing business evaluation
processes and setting of the standards for withdrawal of/exit business• Selection/execution of the business to withdraw based on the standards• Improvement of the usage of certified wood
• Expansion of self-managed plantations (Increase by 100% compared to FY 2022)• Reduction of the use of tropical natural wood plywood for flooring substrates(50% reduction in use compared to FY 2022)• Improvement of the usage of certified wood
• Expansion of the self-managed plantations• Reduction in the use of tropical natural wood plywood for flooring substrates (Zerousage in 2050)

Promotion of the recycling of sales products• Establishment of the insulation board collection and recycling scheme• Expansion of the operation of the insulation board collection and recycling schemeby improving the work environment and job satisfaction. These

goals within the Daiken global environment vision 2050 articulated

sustainability goals are outlined in the Daiken sustainability basicin October 2021. These goals include achieving the Three Zeros:

policy. We firmly believe that aligning our efforts with the realization

net-zero greenhouse gas emissions, zero landfill disposal of waste,of a sustainable society, environment, and economy, whileand zero use of natural lauan wood. To drive these initiatives, we

maintaining sustainability as a fundamental aspect of our company,

have established the Sustainability Promotion Committee, which I

will foster a virtuous circle that enhances our corporate value,chair, to oversee and monitor our progress. Particular attention is

ensuring these elements are like interlinked pillars.

directed towards the theme of "coexistence with nature,"

Risks, Opportunities, and Materiality
Our Sustainability Goals

P.25

P.5

As part of our medium- to long-term growth strategy, we haveestablished priority measures and target values for sustainability
challenges. These measures align with both maximizing growthand minimizing risks. We are embarking on a journey of sustainability
transformation (SX) in both the medium and long term. By
categorizing a variety of initiatives related to the environment andbusiness activities through the perspective of SX, and sharing theimplementation roadmap within the organization, we expect toimprove their effectiveness.
Concerning our environmental strategy, we have set long-term

11

DAIKEN GROUP REPORT 2023

encompassing the elimination of natural lauan wood usage. We arecommitted to preventing deforestation while upholding the rights oflocal residents and forestry communities. In parallel, we areenhancing our information disclosure practices in line with therecommendations of the Task Force on Climate-related Financial
Disclosures (TCFD).
In May 2023, we successfully developed technology for
manufacturing MDF using wood-derived adhesives. This innovation
paves the way for the production of MDF exclusively composed ofnatural materials, eliminating the need for adhesives derived fromfossil fuels. Leveraging this technology will enable us to differentiate
our products from competitors, transitioning our company from atechnology creator to one that focuses on product circulation, thus

Daiken Group’s Value Creation

advancing the sustainability of both our organization and society.
Environmental Strategies

Q

cultivation of a corporate culture that embraces this philosophy
over time. As the president, I am personally spearheading the

P.51

promotion of this cycle of information, close scrutiny of ourcorporate philosophy, open dialog, and recognition of employee
achievements that embody our corporate philosophy. I believe thatengaging in meaningful conversations with employees is a pathway
torevitalizing

ourorganization,

particularly

throughtheempowerment of our younger workforce.
Human Resource Strategies

P.55

To establish a robust business foundation capable ofsupporting our medium- to long-term growth, we are leveraging all

In terms of governance, we transitioned into a company with an

our resources, including our people, assets, financial capital, andaudit and supervisory committee in 2021. This move established an

the extensive technological expertise and know-how cultivatedeffective governance framework for fair and transparent

over the years. Given that our strengths, including technologicalmanagement. Our nine-member Board of Directors, including three

prowess, creativity, and know-how, are primarily a product of ourexternal directors, assumes a central role in ensuring this fairness

human resources, our investment in our workforce is paramount.

and transparency. The Board assesses the effectiveness of this

Our immediate priorities involve securing and developing sales

system every year, identifying areas that require attention. The

engineers who play a pivotal role in driving sales within the public

Governance Committee, composed primarily of external directors,

and commercial building market, a strategic focus area. Additionally,

actively participates in addressing these issues. Their role is pivotal

we recognize the significance of global human resources whoin strengthening internal controls and enhancing the governancefacilitate our expansion into international markets, as well as

framework.

research and development (R&D) personnel, indispensable for the

could you please share a message withQ Finally,
our stakeholders?

creation of new value propositions. These are the urgent humanresources-related challenges that demand our attention.

In today's rapidly evolving business landscape, marked byheightened uncertainty, stakeholder engagement has assumed

experiences and backgrounds. This includes actively embracing

greater significance than ever before. We recognize the vital role

flexible work styles and fostering a culture of diversity, all of which

played by stakeholder engagement, which involves the transparent

have gained prominence in light of the COVID-19 crisis. We aresharing of our initiatives, gathering diverse opinions, andparticularly proactive in encouraging male employees to avail

incorporating feedback into our management strategies. We areparental leave, promoting gender equality within the organization.

committed to intensifying our efforts to disseminate information

Furthermore, we are harnessing digital technologies to enhanceand engage in ongoing dialogs with stakeholders who offer varied

the quality of our products, optimize employee assignments, andperspectives. This encompasses our sustainable growth strategy

empower our workforce to realize their full potential in creativeand its progress, as well as our sustainability endeavors, which areendeavors.

integral to our organization. We humbly seek the continued support

Permeating

ourcorporatephilosophy

throughout

theof all our stakeholders in our journey forward.

organization is a process that cannot be rushed. It requires the

DAIKEN GROUP REPORT 2023

12

Data

At the same time, we are dedicated to reinforcing ourorganizational strengths by ensuring a workforce of diverse

Strategy for Value Creation

What approach does Daiken Corporation take tostrengthen its human resources foundation, a
critical management resource, and governancein the pursuit of an enhanced managementfoundation?

Changes in Value Creation

1970
WPC

Ever since foundation, The Daiken Group has beendeveloping a wide variety of products to help
customer’s daily life through our technologicalinnovations which always meet social issues andneeds. The Group effectively uses all the strengths
acquired in our history and aims to grow into a
housing material manufacturer that becomes anall-embracing company for building materials andthus creates new value.

Developed a technology to harden
wood veneers by injecting resin into
the grains of the wood called WPC

Flooring
Cabinet

1971

Door

Launched the first housing equipment
Cabinet set and developed from asingle product to an integrated productIntegrated storage furniture

Acoustic products

1945 Foundation
Plywood

Housingequipment
Cladding

1946

Tatami matsSpecial plywood
Developed special plywood forvehicles to which durability
and water resistance were
given by the technologicaldevelopment of adhesives

Insulation board

1973

1982

Door

Acoustic
products

Promoted making
doors fancy andcreated the industry
standard of modern
designImproved theconsistent service
structure forsoundproofing forhousesDAILOTONE

1958
Insulation board
Started manufacturing
Insulation boards, woodfiberboards utilizing lumber
sewing waste, andconstruction demolition timber

Net sales (¥100 million)

2,500

1964

Interior projects

DAILOTONE

1997
DAILITE
Started manufacturing
DAILITE, an inorganic
material using an unused
resource Shirasu (volcanicash) and slag wool

Started manufacturing
DAILOTONE, noncombustible ceiling materials
using slag wool, which is a
byproduct of steel production

2,000

1,500

Trends in net sales, operating profit, andnumber of domestic new housing starts

1,000

Net sales

OperatingprofitNumber of domestic
new housing starts

500

019511951 1952 1953 1954 1955 1956 1957 1958 1959 1961
19711971 1972 1973 1974 1975 1976 1977 1978 1979 1980
19811981 1982 1983 1984 1985 1986
1945 1946 1947 1948 1949 1950
1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970

Foundation

1967

1977

1944

1958

1969

1984

Sanko Kabushiki Kaisha, Ltd., Kureha
Cotton Spinning Co., Ltd., and Daido
Boeki Kaisha, Ltd., merged to form
Daiken Co., Ltd.

1945

Founded Daiken Mokuzai Kogyo Co., Ltd.,at the Inami plant in Toyama acquiring all
the business of the Forestry Department
at Daiken Co., Ltd.

13

Growing

1954

C. Itoh & CO., Marubeni Shoten, Ltd., andKishimoto Shoten, Ltd., have merged toform Sanko Kabushiki Kaisha, Ltd.

History oftheDaikenGroup

Expansion

1941

DAIKEN GROUP REPORT 2023

Established Nagoya plant for
manufacturing special plywood

Built Okayama plant and started
manufacturing insulation board

Changed the company name to DAIKENCORPORATION

Established interior projects department

1970

l Started manufacturing WPC flooring at
the Nagoya plantl Established Toyama plant for
manufacturing special plywood

Expanded insulation board business
Built Takahagi plant

Established an interior projects company,
DAIKEN ENGINEERING CORPORATION

1987

Expanded flooring business
Established Mie Daiken Co., Ltd.
(currently, Mie plant)

1989

l Started manufacturing housing
products, such as doors and stairs, at
the Inami plantl Started manufacturing of cladding at
the Takahagi plant

1994

Established DAIKEN SARAWAK SDN.
BHD. in Malaysia for MDF manufacture

1995

Built interior doors production line at theInami plant

2008

2015

Attractive cabinet
pursuing design

Three-dimensional
high design
flooring

MiSEL

Daiken’s featuresand strengths

Tatami facing
Started manufacturing
Tatami facing that usedmachine-madeJapanese paper andthat was excellent inmaintenanceCapability to develop
building materials withhigh added value andcapability to propose
total plans for interior
spaces2013
hapia

Launched the hapia series
that pursue texture
2007 Discontinued manufacturing of plywood
2002 Withdrew from Bath and Kitchen business

Daiken Group’s Value Creation

Building
materials
business

1996

Veneer/LVL

2004 Transferred the exterior material business

TatamifacingWoody fibers

Industrial
materials
business

1996
MDF

MDF

2021

Started manufacturing MDF
that utilized residual wood
offcuts as the main material

Capabilities to develop
unique industrial
materials

GLOW EARTHDAILITE

2016

Engineering business

2018

GRAVIOCapabilities to perform installation
work by making use of thefunctions of building materials

GRAVIO EDGE

Launched the GRAVIO
series, decorative wallmaterials that wereDAILITE base materials

A non-combustible wall material
with a deep carved design that
produces a high-quality spaceand offers excellent workability

To realize theLong-Term
Vision GP25

2,288

Strategy for Value Creation

Started proposing the woodculture medium GLOW EARTH

Goal of
GP25 3rd 200
Stage
Housing starts(10,000 houses)
Operating profit(¥100 million)

150

100

98
86

50

Data

Medium-Term Management Plan
1st

2nd

19911991 1992 1993 1994 1995 1996 1997 1998 1999 2000
20112011 2012 2013 2014 20152016 2016 2017 2018
20012001 2002 2003 2004 2005 2006 2007 2008 2009 20101987 1988 1989 1990

Selection and Concentration

1996

Implemented Tatami facing and DAILITE
production lines at the Okayama plant

1999

Purchased an interior projects
company, Koukou Sangyo Corporation

2000
Integrated the interior projects
department into DAIKENENGINEERING CORPORATIONNew Challenge

2002

2010

2018

2005

2012

2019

l Alliance with TOTO Ltd. and YKK AP Inc. forremodeling businessl Established DAIKEN Industries (Ningbo)
Corporation
Purchased MDF manufacturer in Malaysia
Established DAIKEN MIRI SDN. BHD.

2009

l Purchased MDF plant in New Zealand andestablished DAIKEN NEW ZEALAND LIMITEDl Integrated flooring business of the Nagoya plantin the Mie plantl Alliance with Panasonic Corporation in production
and procurementl Purchased an interior projects company, Sankei
Corporation
Business and capital alliance with HOKUSHIN Co., Ltd.,for MDF production and supply

2015

Established interior doors manufacturing company PT.
DAIKEN DHARMA INDONESIA in Indonesia

2016

Purchased an apartment renovation company, PAC
SYSTEM Co., Ltd.

3rd

2019 2021
2020 2021 2022 2023 2024 2026
2025

0
(Fiscal year)

Challenge to Achieve the Long-Term Vision GP25l Purchased an MDF manufacturing company in New Zealand
Established DAIKEN SOUTHLAND LIMITEDl Established Daiken R&D centerl Capital and business alliance with ITOCHU Corporationl Purchased a veneer plant, CIPA Lumber Co., Ltd. in Canada and an LVL
plant, Pacific Woodtech Corporation in the U.S.A.
l Purchased a renovation company ReformQ Co., Ltd.
l Purchased T.O FLOORING CO., LTD., that works on solid wood flooring

2020

Started production at Nichinan Daiken Co., Ltd., a company that processes veneers for LVL

2022

l With the capital increase, Pacific Woodtech Corporation, which used to
be a consolidated subsidiary, became an equity method affiliate

DAIKEN GROUP REPORT 2023

14

Three Businesses Use Strengths
Sales composition ration

Industrial Materials Business

Composition ratio

43%

Overview

Major applications

Features and functions

Insulation board

Inner part of a tatami mat

zHeat insulation
zMoisture
conditioning
zCushioning
properties
zLightweight

Wooden fiberboard
using construction
demolition timber for
main raw material andmolded into a board

Insulation board

Effective use of wood materials

Wood chips

VeneerEffective use of mineral materials

I-Joist

Structural material

LVL

LVL

Tatami matszLight resistance
zWater repellent
zMoisture
conditioning
zColor variations

Machine-made Japanese paper

DAILOTONE

For houses

Slag wool

For accommodation

Ceiling materials

zNoncombustibility
zLightweightzSoundabsorbingzWorkability

Mineral fiberboard
molded into a board
using slag wool as a
byproduct of steel
production

For houses

DAILITE

Slag wool and Shirasu

Second place in the
inorganic bearing surface●●●●●●●●●●部門
category
1位

A questionnaire survey for the readers in regard
to their intention to adopt building materials andequipment manufacturers’ products
The November 24, 2022 issue

読者を対象に、建材・設備メーカーの製品採用意向等をアンケート調査
20xx年xx月xx日号

DAIKEN GROUP REPORT 2023

MDF

zDimensional
stability
zHigh strength
zWorkability

Tatami facing made fromstraw twisted machinemade Japanese paper
strings and a resin
coating

15(Substrate of door, storage, andwindow frame)

MDF

Tatami facing

An inorganic material
molded into a board
using an unused
resource, Shirasu(volcanic ash), and slag
wool

Base materials for building
and furniture

Wood fibers

Veneer/LVL
Veneer:Cut from logs
LVL:
A fabricated wood productmanufactured by laminating
veneers all placed parallel inthe fiber direction and gluing
them together

Materials for flooring

zDimensional
stability
zSurfacesmoothness
zWorkability
zWaterresistance

MDF
Wooden fiberboard
using residual wood
offcuts for main raw
material and molded
into a board

Protection board

zNoncombustibility
zLightweightzHigh strength
zWorkability
zMoisturepermeability
zTermite
repellency
zAntiseptic

For officeWall base materials

Base material for house external
walls

Domestic
MDF share

Domestic
insulation
board share(Estimated by ourcompany)(Estimated by ourcompany)

Wall materials

Non-combustible wall material

NetNet
sales
sales

Operatingprofit/Operatingprofit
profitratio
ratio
Operating profit/Operating
Operating profit(¥million)(¥million)

120,000

100,177

97,68180,00076,58914.9

80,692

15.0

3,000

20,000

9.0

Production plants
3.5
1,955

2018 2019 2020 2021 2022 2023 (Fiscal year)0z Dai-tac Corporationz Aizu Daiken Corporationz Nichinan Daiken Co., Ltd.
z Eco Techno Co., Ltd.
z DAIKEN NEW ZEALAND LIMITED (New Zealand)z DAIKEN SOUTHLAND LIMITED (New Zealand)z DAIKEN SARAWAK SDN. BHD. (Malaysia)z DAIKEN MIRI SDN. BHD. (Malaysia)
z CIPA Lumber Co., Ltd. (Canada)

3.3
1.8

2,503

4.6
3,732

6.0
3.0

z Okayama Plant
z Takahagi Plant

1,132

0.0
2018 2019 2020 2021 2022 2023 (Fiscal year)

Net sales in the industrial materials business in fiscal 2023 decreased because of the decreased revenues associated with the exclusion
PWT from consolidation after August 1, 2022, in addition to the impact of CIPA’s decreased revenues due to the decline in the market prices
of wood products in North America, although the sales prices of MDF rose in Japan and overseas and the sales of DAILITE for the domestic
housing market and public and commercial buildings increased.
Regarding operating profit, in addition to the impact of decreased revenues associated with the exclusion of PWT from consolidation, we
proceeded with incorporation of the increases in raw material prices into selling prices; however, we could not fully absorb for the raw
material price increases, and revenues decreased. As a result of the above, net sales amounted to 97.681 billion yen (down 2.5%
year-on-year) and operating profit amounted to 11.764 billion yen (down 21.3% year-on-year).

Daiken Group’s Value Creation

12.0
6,000

Results in fiscal
2023

18.0

12.0

61,84355,35440,0000

21.0

11,76412,0009,000
60,000(%)

14,95615,000100,000

Subsidiaries part of the GroupOperating profit ratio* To evaluate each business segment more appropriately, we changed the method since fiscal 2023 in which costs directly related to the reporting segments among the costs for thegeneral administrative departments, such as the Head Office, have been allocated to each reporting segment, and the costs that are not directly related have been booked as thecompany-wide costs. Figures in fiscal 2022 are written as the figures rearranged after changing the method.

Operating Officer
Division Manager
MDF Division

Executive Officer
Division Manager
Eco Division

The Eco Division manufactures four materials inJapan: insulation boards made from wood, tatami
facing, DAILITE made from minerals, andDAILOTONE. Though insulation boards are now
used mainly as base materials for tatami mats andprotection boards on construction sites, we aredeveloping new applications as an alternative toplastic and plywood because they use recycled
chips and help the environment by fixing carbon fora long period of time. Because the tatami facing thatuses machine-made Japanese paper as the raw
material is highly durable and easy to maintain, we
will strive to strengthen proposals to commercial
and accommodation facilities to use it and actively
promote the special quality of living with tatami matsas well as their tradition and new value. Because

DAILITE not only can be used as a bearing surface
material that supports the strength of wooden
housing but is also noncombustible and workable,
we have developed the louvers and eaves taking
advantage of DAILITE’s properties, and sales are
growing as they are being introduced in public andcommercial buildings. In addition, the ceilingmaterial DAILOTONE is increasingly used not only inbuildings and stores but also in housing because its
sound absorbing property helps improve the soundenvironment inside rooms and has gained
recognition in the COVID-19 crisis. We will continue
to propose new spatial value by taking advantage ofthe strength of having a number of sustainable,
functional materials.

DAIKEN GROUP REPORT 2023

Data

Minoru Endoorder to create a sustainable society and turn it intoa business. In terms of sales and marketing, we will
work on three new challenges—the development of
new applications, development of new customers/
markets, and planning of new businesses—with
courage to prevent MDF from becoming acommodity. In addition, we will strive to secure
excellent human resources at home and abroad anddevelop people with a global mindset who can work
actively overseas by providing training to young
employees. The wooden board business that
includes MDF is a sustainable business as timber
fixes the CO2 it absorbs, is used as a building
material, and is recycled as waste material. We
would like to pursue the stable procurement, quality,
and sale as our contribution to society.

Strategy for Value Creation

Akihito Kawahara

In FY 2023, we were able to improve profits byimplementing structural reform of the plants and bypromoting a cost pass-through as a price leader in
the industry while all variable costs increased
because of the energy problem caused bygeopolitical risks, hikes in the prices of wood
resources, and the marine logistics disruption. We
expect that the economic environment will remain
uncertain in FY 2024. Our businesses will beaffected by cost increases caused by hikes inenergy costs and the price of wood resources. As
the share of renewable energy in global power
generation increases, I think it will be difficult to
procure wood resources. The MDF Business
Division aims to create a cycle of using andprotecting forests by reforesting our plantations in16

Three Businesses Use Strengths

Sales composition ration

Building Materials Business

Composition ratio

40%

Flooring

Door

A flooring of ultimate beauty

Great range of designand variations

CabinetAcoustic products

Storage improvement

Space for enjoying soundInterior door that is highly
functional and easy to use
and can be coordinatedflexibly

A complete lineup of cabinets
equipped with abundantstorage capacity that isspace-saving and offers
other features to fit individual
spaces

A complete lineup to meet thesound environment and soundquality needs of a variety ofvenues, including home theaters,
musical instrument practicerooms, and audio rooms

A flooring for heavy duty
areas

Functional door suitablefor facility applications

Cabinets inspired byconsideration to users

Creating a comfortablesound environment

A complete line of flooring that can beused in heavy duty areas, including thosemade of natural wood resistant to damage,sound-proofing materials, and those that
reduce the impact when a person falls

Interior doors with particularfunctionality for nursing homes,
kindergartens, childcare
facilities, medical facilities, andstoresCabinets mitigate the various
risks to users for comfort
during use

A complete lineup suitable forsound-proofing, echo
reduction, and other specificpurposes

For public spaces and commercial facilities

For houses

A lineup that is particular
about surface texture andthat offers scratch resistance,long-lasting beauty, good
design, high function, andhigh performanceFirst place in the composite
flooring category●●●●●●●●●●部門
1位

A questionnaire survey for the readers in regard totheir intention to adopt building materials andequipment manufacturers’ products
The November 24, 2022 issue

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20xx年xx月xx日号

17

DAIKEN GROUP REPORT 2023

First place in the homeinterior door category●●●●●●●●●●部門

Domestic
flooring share

1位

A questionnaire survey for the readers in regard totheir intention to adopt building materials andequipment manufacturers’ products
The November 24, 2022 issue

読者を対象に、建材・設備メーカーの製品採用意向等をアンケート調査
20xx年xx月xx日号(Estimated by ourcompany)

NetNet
sales
sales

Operatingprofitratio
ratio
Operatingprofit/Operating
profit/Operating profit
Operating profit(¥million)(¥million)

120,000

(%)

6.0

6,000

5.3
100,000

94,93886,85389,48588,69791,90793,000Subsidiaries part of the GroupOperating profit ratio

5.2

5,000
4,598

4,955

3.6

4.6

4.7

5.0

4,317

4,000

60,0003,000

3.0

40,0002,000

2.0

20,000

1,000

4.0

4,076

3,189

Production plants02018 2019 2020 2021 2022 2023 (Fiscal year)

Results in fiscal
2023

0

178

z Inami Plantz Mie Plant

1.0

0.2

0.0
2018 2019 2020 2021 2022 2023 (Fiscal year)

Regarding net sales in the building materials business in fiscal 2023, needs for the improvement of the sound environment, such as
soundproofing and sound insulation, grew on the background of the penetration of new normal lifestyles, such as the rapid increase in
online meetings and teleworking that have become popular, revenues increased in the acoustic products for which we enhanced proposal
activities and as net sales were back on course for recovery from the impact of the decreased sales due to door delivery delays, and alimitation on orders for part of flooring occurred during the fourth quarter consolidated accounting period, revenues increased.
Regarding operating profit, although we could finally pull out of the situation of going into the red until the third quarter consolidated
cumulative accounting period by proceeding with incorporation of the increases in raw material prices, such as plywood, into selling prices
as we revised the list prices from the April 2022 shipment, revenues significantly decreased.
As a result of the above, net sales amounted to 93,000 million yen (up 1.2% year-on-year) and operating profit amounted to 0.178 billion yen(down 95.9% year-on-year).

Daiken Group’s Value Creation

80,000z Daifit Co., Ltd.
z Dai-wood Corporationz Setouchi Kakoh Co., Ltd.
z Toyama Juki Co., Ltd.
z T.O FLOORING CO., LTD.
z DAIKEN Industries (Ningbo) Corporation (China)z DAIKEN (Shanghai) Corporation (China)
z PT. DAIKEN DHARMA INDONESIA (Indonesia)* To evaluate each business segment more appropriately, we changed the method since fiscal 2023 in which costs directly related to the reporting segments among the costs for thegeneral administrative departments, such as the Head Office, have been allocated to each reporting segment, and the costs that are not directly related have been booked as thecompany-wide costs. Figures in fiscal 2022 are written as the figures rearranged after changing the method.

Operating Officer
Division Manager
Administration Division Interior
Products

Operating Officer
Division Manager
Home Furnishings Division

The Home Furnishings Division offers doors,
construction materials, and a variety of case goods.
In FY 2023, the future remained uncertain from theprocurement perspective because of the disruptionof the international supply chain caused by the
COVID-19 pandemic, the prolonged conflict in the
Ukraine, and the disaster that hit wooden board
suppliers along with hikes in resource prices inJapan. Under such circumstances, we actively
worked to find new suppliers after taking the risks
into account and tried to ensure a stable supply ofour products. The strength of the Home Furnishings
Division is that we create new value by assembling
existing members and technologies. For example,
though there are a wide variety of products in the
catalog, we can take custom orders for most of

those products, make adjustments on the order ofmillimeters, and quickly deliver custom-madeproducts. We take advantage of this strength whenrenovating houses that cannot be done withstandard-size products and by providing products
for public and commercial buildings, such as nursing
facilities, kindergartens, and nurseries. As doors andcase goods are something people touch every day,we pay attention to every detail of our products andincorporate the unique features developed from ourexperience and the know-how that we haveaccumulated. We would like to carefullycommunicate the value of our products byexplaining how they contribute to our clients’ efforts
and how they can make lives safe and comfortable.

DAIKEN GROUP REPORT 2023

Data

Masaru Morikawa

flooring base materials, and about 45% of which isdomestic timber. In addition, we have been
manufacturing flooring using local materials fromJapan for seven years. Since we started this effort,
we have manufactured flooring with local materials
from 28 prefectures, and the flooring has been
adopted in 87 properties. The flooring is highly
regarded by our customers because of the use of
local materials.
We will strive to use recycled resources only forbase flooring materials and will consider adopting
resources of biological origin for decorative surface
materials and paints. We will also strive to develop
the flooring business while improving environmental
friendliness by enhancing our efforts to manufacture
flooring with local materials and by contributing to
the increased use of domestic timber.

Strategy for Value Creation

Toshinori Kamimoto

We manufacture flooring, the primary product of
the building materials business, at the five plants ofour group and four partner companies. For publicand commercial buildings, which are the priority
market, we launched a new heave-duty WPC
flooring and reinforced the production process in FY
2023. As a result, stores started introducing the
product, and we were able to expand sales offlooring materials for public and commercial
buildings. We expanded the product lineup for thehome renovation market by bringing the soundproof
flooring material for apartments with high design
quality to the market. As part of the efforts to reduce
the environmental load, we promote the use ofrecycled resources, such as plantation timber anddomestic timber, for base flooring materials.
Materials that use recycled resources now accountfor approximately 85% of the materials used for18

Three Businesses Use Strengths

Sales composition ration

Engineering Business

Composition ratio

11%

Public and commercial properties

Kyoto Station Building (Kyoto)

Kansai University (Osaka)

Hotel Nikko Osaka (Osaka)

Marunouchi North Exit Building (Tokyo)

World Business Garden (Chiba)

Rinku Gate Tower Building (Osaka)

Tokiwa University (Ibaraki)

Sendai International Airport (Miyagi)

Our project

Tokyo Metropolitan Government Building (Tokyo)

Apartment renovation

19

DAIKEN GROUP REPORT 2023

NetNet
sales
sales

Operatingprofitratio
ratio
Operating profit/Operating
profit/Operating profit
Operating profit(¥million)(¥million)

30,00024,75620,000

(%)

1,200

952

1,015

18,063

800
3.2
600

10,000

528

400

912

4.7
613

2.8

2.5

4.0

3.7

508

2018 2019 2020 2021 2022 2023 (Fiscal year)

0

3.0
2.0

200
0

5.0

Daiken Group’s Value Creation

16,458

6.0

5.6

1,000

20,542 20,264

z DAIKEN ENGINEERING CORPORATIONz Koukou Sangyo Corporationz Sankei Corporationz Smileup Corporationz ReformQ Co., Ltd.
z PAC SYSTEM Co., Ltd.
z T.O FLOORING CO., LTD. (construction)

7.0

1,400

21,713

Subsidiaries part of the GroupOperating profit ratio

1.0
0.0
2018 2019 2020 2021 2022 2023 (Fiscal year)

Regarding net sales in the engineering business in fiscal 2023, as the demand for interior projects for office buildings and other facilities
recovered and apartment renovation that we engaged in the Tokyo metropolitan area was favorable, revenues increased.
Regarding operating profit, because construction material prices and labor costs increased, revenues decreased.
As a result of the above, net sales amounted to 24,756 million yen (up 22.2% year-on-year) and operating profit amounted to 0.912 billion
yen (down 4.2% year-on-year).

Results in fiscal
2023* To evaluate each business segment more appropriately, we changed the method since fiscal 2023 in which costs directly related to the reporting segments among the costs for thegeneral administrative departments, such as the Head Office, have been allocated to each reporting segment, and the costs that are not directly related have been booked as thecompany-wide costs. Figures in fiscal 2022 are written as the figures rearranged after changing the method.

Operating Officer
Division Manager
Engineering Business Divisioncooperation through business activities for morethan half a century. We will continue to focus on theestablishment of a more robust, optimal installationand construction system. For apartment renovationsin the Tokyo metropolitan area, as renovating
conveniently-located second-hand apartments toincrease their value and live in them has become
popular because of the continued hike in the pricesof new apartments, we have expanded ouroperations with PAC System Co., Ltd., whichbecame a group company in 2016, playing a central
role, to meet these needs. To improve the designand quality as well as the profitability of renovation
projects, we are developing construction methods
and products that help shorten construction periods
and reduce construction noise while cooperatingwith the division in charge of product development.
As the division in charge of the business that is partof the strength of the Daiken Group, a corporategroup that not only manufactures and sells industrial
materials and building materials but also creates
spaces utilizing them, we will strive to further
strengthen our business.

Strategy for Value Creation

Naoto Teraoka

In the engineering business, seven groupcompanies specialize in installation andconstruction. They are mainly involved in threebusinesses: interior projects for offices, homerenovation projects, and apartment renovations in
the Tokyo metropolitan area. For the interior projects
for offices, we have accepted an increased numberof orders for interior finish projects for buildings,
such as ceilings and walls, mainly in the Tokyo
metropolitan area and the Kansai region sinceconstruction projects have resumed and areunderway after the Tokyo Olympic Games. Becauseof the international events to be held in Japan, suchas the World Expo 2025 in Osaka, it is expected thatthe construction industry as a whole will grow at anannual average rate of 1.2% from FY 2023 to FY
2026. While construction is in high demand, theshortage of site supervisors and construction
technicians is a significant issue, so whether we canallocate these workers efficiently is an importantfactor in ensuring profitability. The Daiken Group has
established relationships of trust with many
construction contractors and strengthened

Trends in the number of condominium apartment building stocks in Tokyo

DAIKEN CORPORATION
Engineering business
Expansion of business domains

Building materials business
Product development for renovationl Expand to the development ofconstruction techniques
Provision of the know-how
on installation work andconstruction

Consolidated subsidiaryacquisition

Apartment Secondhand
apartment
owners(In units of
one dwelling Purchase
unit)

Apartment
renovation work

Renovatedapartment

PAC SYSTEM
Co., Ltd.

Sales

Data

Apartment renovation (Purchasing and reselling secondhand apartments)

Apartmentpurchaser(In units of
one dwellingunit)

New dwelling unit starts (10,000 dwelling units)

Accumulated dwelling unit starts (10,000 dwelling units)

8.0
7.0
6.0

250.0
New condominium
apartment building starts
in TokyoOver 500,000 dwelling units

5.0

1,946,000 dwelling units

Accumulated condominium
apartment building starts
in Tokyo

509,000 dwelling units

200.0Over 1,000,000 dwelling units

150.0

1,036,000 dwelling units

4.0
100.0

3.0
2.0

50.0

1.0

Real estate brokers
who are our alliance partners

0.0

0.0

1971

1976

1981

1986

1991

1996

2001

2006

2011

2016

2021 (Year)(Source) Office for Housing Policy, Tokyo Metropolitan Government

DAIKEN GROUP REPORT 2023

20

Process of Creating Value
The Daiken Group aims for the realization of a sustainable society and the creation of economic and social value bycontributing to solving social issues, such as the Sustainable Development Goals (SDGs), through business activities thatmake use of our unique strengths.

Business models andstrengths

Social issues and needs(External environment and trends)

P.23-24

Strength ❹Integrated system
Risks

Engaging in the development,
installation, and construction ofindustrial and building materials

Opportunities

Strength ❸Customer baseMateriality
P.25-26

Financial foundation

Create a new standard withfunctional products

Shareholders’ equity: 74 billion yen
Interest-bearing debts: 29.7 billion yen

Production system
3.9 billion yen
19 bases

Research anddevelopment
R&D center
R&D expenses:

1.7 billion yen

Public andcommercial buildings

Strength ❷Product deployment
capabilities

Source ofvalue creation

Capital investments:
Production base:Global markets

Industrial materials
business

Relationships of trust withprofessional customers

Six capitals

Input

Strength ❶Research anddevelopment
capabilities

Businesses and market
strategies that connect ourstrengths to value creation

Building materials
business

Industrial materials

Home renovation
marketEngineeringbusiness

Domestic newhome market

Strategies by business segment
and market
P.39-40

Pursue the possibilities ofsustainable industrial materials
and a safe, secure, healthy, andcomfortable space

Human resource
Consolidated number of employees:
3,564

Customer baseA wide variety of customers ranging
from the housing and constructionindustries to various manufacturers

Humanresource
strategies
Businessfoundation

Financialstrategies

Governance

Natural resources
Usage of wood materials (1,000 t)
Domestic: 214
Global: 1,391
Total energy input (1,000 GJ)
Domestic: 2,559 Global: 4,633
Water resource input (1,000 m3)
Domestic: 1,838 Global: 927

Sustainability Basic Policy/Group Conduct Guidelines

Input management resources*Fiscal 2023

21

DAIKEN GROUP REPORT 2023

DAIKEN Global Environmental
Vision 2050

Long-Term Vision
GP25

P.4

P.33-34

GP25 3rd Stage (Fiscal 2023-2026)
P.37-38

OutputP.3

Daiken Group’s Value Creation

Medium-Term Management Plan

Goal
Achieve the vision of theGroup Corporate
Philosophy

Materiality• Realization of a Resource-Recycling and Recycle-Oriented Society• User Needs in the New Normal Era• Diverse Human Resource Foundation by Improving Comfort inWorking and Job Satisfaction
P.25-26

OutcomeOffering of products that use strengths

Creation of economic and social value

P.15-20

Industrial materials business
Make full use of wood and mineral resourcesand offer a variety of functional materials

Veneer/LVL

Insulation board

Tatami facing

DAILITEDAILOTONE

P.27-32

01 utilizing wood resources

Contribution to carbon neutrality by

02 Promotion the use of domestic timber
03 Effective utilization of unused resources

Strategy for Value Creation

MDF

Creating Shared Value (CSV) by Daiken Businesses

04 comfortable space

Creating a safe, secure, healthy, andBuilding materials business05 products and techniques

Development of labor saving type

Offer high-performance building materials that form
spaces focusing on safety, peace of mind, health,and comfort

Fiscal 2023

Flooring

Acoustic products

Door

CabinetStairsConstruction materials

Engineering business
Interior construction for public spaces, commercial

Net sales:
228.8 billion yen
Operating profit:
9.8 billion yen
EBITDA*:
16.8 billion yen
Profit attributable to owners of parent:
10.3 billion yen
ROE:
12.9%
Total dividend:
2.8 billion yen
Dividend payout ratio:
27.8%*Operating profit + Depreciation + Depreciation of
goodwill

Datafacilities, and houses to create spaces that optimize

Financial outcomesthe performance of industrial and building materials

Nonfinancial outcomesInterior projects for buildings and offices
Home renovation
Apartment renovation

Amount of carbon fixation by the wood industrial
materials business:
739,000 t-CO2/year
Utilization of domestic timber for flooring
substrates:
45%
Total greenhouse gas emissions in Japan andoverseas (Compared to fiscal 2022):(4.0%)DAIKEN GROUP REPORT 2023

22

Business Models and Strengths
The Daiken Group makes use of the four strengths of (1) research and development capabilities to pursue the possibilities ofsustainable industrial materials and a safe, secure, healthy, and comfortable space; (2) product deployment capabilities tocreate industrial and building materials having various features; (3) a customer base that has long been built with a wide
variety of professional customers; and (4) an integrated system to engage in the development of industrial and building
materials as well as the installation work and construction for creating spaces and is committed to sustainable value creation.
Strength

1

Strength

Research anddevelopment2

Development ofindustrial materials/
Development of building
materials

Production

Provide new functions to increase added value

Realization of high-quality
and stable supply at ourgroup’s plants

Feedback (Markets/customers’ needs)

Strength1

Research anddevelopment
capabilities

Pursue the possibilities of sustainable industrial materials and a safe, secure, healthy,
and comfortable space

Daiken Corporation was founded soon after the war with an eye toward the effective use of timber as
precious resources and the contribution to society through postwar reconstruction.
We conduct research and development based on the two ideas of (1) overcoming weaknesses andextracting the beauty of timber and (2) using timber with zero waste as the technology to effectively
use timber.
As the expansion of applications to something other than timber, we have also proceeded with thetechnological development to apply technology to handle wood fibers and utilize unused mineral
resources.
Furthermore, as the field to make use of materials and technologies we have created, we have been
expanding the applications above into research and development to pursue spaces where people canspend the time safely, securely, healthfully, and comfortably.

Strength

Daiken R&D Center2

Product
deployment
capabilities

Create a new standard with functional products

By utilizing industrial materials that made use of timber, which is a renewable resource, and sustainable resources, such as volcanic ash as an
unused resource, the Daiken Group has the capabilities to create a new standard with our products having the functions that make the spaces
where people spend their daily lives safe, secure, healthy, and comfortable.
With the technology cultivated in special plywood, which is the business at the time of the establishment of the company, we developed
industrial materials that made use of wood and mineral resources and by using these industrial materials as base materials, we have been
expanding into the deployment of building materials with increased added value.
These product deployment capabilities have become our response capabilities, leading to the sustainability of our business.
Product
deployment that
overcomes the
weaknesses ofand extract the
beauty of timber

Building materials business
Flooring
Technological development that will lead tothe promotion of the use of domestic timber

Expand to the flooring
substrates by developing
special MDF

SpecialExpansion from industrial
plywood materials to building materials

Expand to mineral
resources (slag wool)

Expansion toindustrial
materials

23

CabinetConstruction materials

Special MDF for flooring substrates
Decorative surface
materialsBasematerials
Special MDF

Expansion tobuilding
materials

Product
deployment thattakes advantageof the technology
to use timber withzero waste

Door
StairsExpand as the basematerials

DAILOTONE
Ceiling materials Wall materials

Expand to unused
resources (volcanicash)Insulation board
Use application
development that takes
advantage of the featuresof wooden fiberboards

DAIKEN GROUP REPORT 2023

Protection board
Inner part of a tatami mat

Road joint

MDF

Deploy tatami facing thatmakes use of machine-madeJapanese paper

Base materials for building and furniture

Tatami facing

Expand to fiberboards of different
specific gravities

Industrial materials business

Acoustic products

Expand to acoustic products
from the sound-absorbing
board technology

DAILITE
Wall base materials Wall materials
Eaves
Louver materials
Woody fibers
DW fiber
GLOW EARTH
Veneer/LVL
Structural housing materials

4

Nationwide branch and sales office networks
Dedicated sales structure by market and customer

Installation workand construction

Respond to customers’ requests and offer thecreation of more comfortable and secure spaces

Strength3

Daiken Group’s Value Creation

Strength

Sales

Markets and customers

Public spaces

Living spaces

Strength

3

Customerbase

Relationships of trust with professional customers

The Daiken Group has built relationships of trust with a wide variety of professional customers ranging from the housing and constructionindustries to various manufacturers through long standing dealings.
By not only reflecting such needs and information obtained from customers in the initiatives for daily improvements, such as quality andusability, but also feeding back to the development of next industrial and building materials and R&D, we continue to provide new value.

Strategy for Value Creation

Key customers
Business owners, Clients, and General users
Renovationcompany

Developer
General contractor

Design office/
Designer

Building
contractorHome
builder

Housing
manufacturer

Various
manufacturers

Distributor

The Daiken GroupStrength4

Integrated
systemEngaging in the development, installation, and construction of industrial and building
materials

Slag wool

DAILOTONE

Data

Industrial and building materials do not function as is and the installation work and construction are required in order for them to deliver
performance.
Daiken not only sells products, such as industrial and building materials, but is engaged in the installation work, construction, and creation of
spaces in the three domains of interior projects for offi­ce buildings and public facilities, home renovation work, and apartment renovation bycooperating with the group companies engaged in the installation work and construction.
By consistently engaging in the industrial and building materials located in the upstream part as well as the installation work and construction
to create spaces, our entire value chain can provide value.
We link the needs obtained in the installation work and construction sites with the development of labor-friendly type products and techniques.

Engineering business

DAIKEN GROUP REPORT 2023

24

Risks, Opportunities and Materiality
In addition to the risks and opportunities that are likely to have a significant impact on the Daiken Group’s medium- tolong-term management strategies, we have identified materiality as the material issues to preferentially address based onsuch risks and opportunities as the following. In identifying such themes, we made decisions by the Board’s resolutions
through deliberations in various management meetings. We also link materiality to preferentially address the policies in themedium-term management plan and the focused measures and proceed with the initiatives after setting the goals.

Social issues and needs(External environment and trends)

Risks and opportunities

Request for decarbonization
Climate change and global warming
Loss of biodiversity
Forest conservation and regulations over illegal logging

Difficulty in procuring woody resources
Needs for industrial materials using sustainable
wood resources
Needs for shifting to alternative resources

Depletion of/scramble for resources

The Japanese government’s growth strategy

Needs for spaces where the elderly andchildren can spend time with peace of mind
Regional revitalization and compact cities

Green Transformation (GX)
Construction of a housing circulation system toward adecarbonized society
Digital Transformation (DX)Formation of a good housing stock
Resilient urban development andredevelopment projects

National land toughening and improvement of the nextgeneration infrastructure

Recovery in inbound demand

Realization of a tourism-oriented country

New normal as a result of the COVID-19 crisis

Threat of infectious diseases

Disruption of business activities
and supply chains

Threat of natural disasters

Low birthrate and longevity in JapanA decrease in population and a decrease in the numberof households
Depopulation
A decrease in productive-age population
Acceleration of women’s participation in society

Lack of human resources
Expansion of the opportunities where diverse
human resources exercise their abilities
Needs for the development of products and techniques
to supplement the lack of skilled construction workers
A decrease in the number ofdomestic new housing starts
Continuous expansion of demand for the highquality living environment in the global growing
markets

A worldwide increase in population

Surging resource/energy prices

Change in the security environment

Growing geopolitical risk

Request for sustainable management

Management ability that responds to the risks
and opportunities and increases corporate value*Details of the risks associated with businesses are described in the securities report.

25

DAIKEN GROUP REPORT 2023

Processes to identify the risks, opportunities, and materiality
Analysis and organization of external environments
Extraction and organization of risks and opportunities that are likely to have a significant impact on the medium- to long-term management strategies
Evaluation and prioritization based on the degree of importance in terms of management (Our management strategies’ and stakeholders’ expectations)
Identify materiality as the material issues to preferentially address (Deliberations in various management meetings ⇒ The Board)
Formulation and implementation of the specific initiatives for materiality

Daiken Group’s Value Creation

Progress management and a periodic review (Various management meetings ⇒ The Board)

Materiality

Realization of a Resource-Recycling
and Recycle-Oriented Society

Initiatives for materiality

Creating Shared Value (CSV)
by Daiken Businesses

01 by utilizing wood resources

Contribution to carbon neutrality
P.27-28

02 timber

Promotion the use of domestic
Strategy for Value Creation

P.29

03 resources

Effective utilization of unused

User Needs in the New Normal Era

P.30

04 and comfortable space

Creating a safe, secure, healthy,
P.30-32

05 products and techniques

Development of labor saving type
P.32

Data

Diverse Human Resource Foundation
by Improving Comfort in Working
and Job Satisfaction
Environmental Strategy
P.51-54

Human Resource Strategies
P.55-58

DAIKEN GROUP REPORT 2023

26

Creating Shared Value (CSV) by Daiken Business

01 Contribution to carbon neutrality by utilizing wood resources
Initiatives for materiality “Realization of a Resource-Recycling and Recycle-Oriented Society”

By pursuing the use of wood resources for materials, turn the living space
into “The second forest”
Social issues and needs

C Fix and store as carbon

CO2

Forests are the carbon storage that absorbs
and fixes carbon
CO 2

Grow

We conduct business activities to maximize the value

Use

CO 2

CO 2

CO 2

CO 2

Photosynthesis

The cycle to keep Felled trees
Growth protecting andmaking use
of forest

CO 2
CO 2

Industrial materials business

MaturityCO 2

By keep using timber as materials,

CO 2

CO 2

Lamination

Logs

LVL

VeneerNursery tree

Tree planting

Plant

Wood offcuts

Maximize the CO2 absorptive function
by moderately felling trees
CO 2

O2

O2

CO 2

O2

CO 2

O2

CO 2

Base materials

CO 2

O2

O2

Timber fromforest thinning

Wood chips(Virgin)

MDF

Promotion ofgreening andgrowthYoung forest

Amount of carbon storage*
Approx.

Aged forest

626,000 t-CO /year2

Amount of absorption
by photosynthesis

Amount ofabsorption/
emissions

Emissions by breathingBasematerials

Fixed carbon content

Wood chips(Recycled)

Tree age*From the frequently asked questions on the Forestry Agency’s website

Growing forest has the function to absorb more
CO 2 than matured forest. By adequately felling
trees according to the forest growth cycle andnewly planting trees, it will become possible tomaximize the CO 2 absorptive function of a forest.

Insulation board
Amount of carbon storage*

Greening andimprovementof soilApprox.

DW fiber
Woody fibers

Agricultureandhorticulture
27

DAIKEN GROUP REPORT 2023

Tatami mats

GLOW EARTH

113,000 t-CO /year2

Base materials
for house flooring

Daiken Corporation was founded with an eye toward the effective use of timber as precious resources and contribution to society. Since
the foundation of the company, we have refined technologies to overcome the weaknesses of timber and use timber with zero waste anddeveloped industrial and building materials offering a wide variety of functions. Trees function to absorb CO2 during the growth process,to fix it as carbon, and to keep storing it by continuing to use them as materials. Since timber is a renewable resource, it can contribute to
the realization of a sustainable society and carbon neutrality by creating the cycle to appropriately manage and use forests. By pursuing
the sustainable use of wood resources from the three perspectives of (1) use of appropriately managed timber, (2) use of timber to protect
forests, and (3) use of timber with zero waste, we continue to create social and economic value.

Daiken Group’s Value Creation

Daiken’s strengths and value creation

CO2
it becomes possible to keep storing carbonof timber and continue to use as materials for a long time.

Carbon content that forest can store is limited.
By expanding the scenes to use timber as
various materials, it will become possible tostore more carbon while enriching people’s
living spaces.
Strategy for Value Creation

Building materials business

Form “The second forest”
by using timber

Public spaces and living spaces
House
Building

Emitted CO2
is absorbed
by forests
Amount of carbon storage*
Approx.

148,000 t-CO /year

CO2

2

CO2

Flooring

Demolition

Doors, cabinets, stairs,
and construction materials

Waste
incineration

The cycle to continue
to use as materials
for a long time
without burning them

*Fiscal 2023
Calculated in accordance with the method of calculation in the“Guideline for Labeling of the Amount of Carbon Storage Concerning Timber Used in Buildings”
by the Forestry Agency

DAIKEN GROUP REPORT 2023

28

Data

Construction demolition timber

Creating Shared Value (CSV) by Daiken Business02 Promotion of the use of domestic timber

Initiatives for materiality “Realization of a Resource-Recycling and Recycle-Oriented Society”

Social issues and needs

Promote the use of domestic timber with special MDF that offers excellent water
resistance
Daiken’s strengths and value creation ❶The Daiken Group took advantage of the expertise cultivated as the leading flooring
manufacturer and Daiken’s unique MDF technology that offers excellent water
resistance and surface smoothness, proceeded with the development of flooring
substrates combined with domestic timber, and has made many improvements. In
fiscal 2023, while the timber procuring environment has become worse globally andas we strived to stably supply products by reviewing the procurement balance ofplantation timber and domestic timber, the usage rate of domestic timber
decreased to 45%, but we will continuously proceed with product development thatwill draw out the appeal of domestic timber.
Cross-section image offlooring substrates madefrom domestic timber

Utilization of domestic timber
for flooring substrates

Fiscal 2023

(%)
60
50
40
30
20
10
0

Approx.

23

33

2018

2019

47

%

51

11

4
2015

30

41

45

2016

2017

2020

2021

2022

2023

(Fiscal year)

Daiken’s special MDF
Plywood made of domestic timber

Expanding the scenes to utilize domestic timbers with the wood hardening technology
Daiken’s strengths and value creation ❷With Daiken’s unique WPC* technology to harden wood tissues by injecting plastics into and filling the tissues, it has become possible to offer flooringwith excellent surface strength that uses domestic natural wood for decorative surface materials. Because many domestic tree species are soft
materials, low durability in using them as flooring was an issue, but by taking advantage of this technology, we will expand the use of domestic timber
while meeting the needs of using local materials.
*WPC: The abbreviation for Wood Plastics Combination

Results of thecommercialization of local
materials with the WPCtechnology

28

prefectures

WPC flooring

Inject plastic resin into surface woodfor flooring and harden it

By filling plastic resin, it demonstrates
strength against dents and scratches

New use application development of wood materials
Daiken’s strengths and value creation ❸While exploring new possibilities of domestic timber, we developed the soil improvement additive DW fiber made of fibrillated timber offcuts and to which
fulvic acid with plant growth-promoting effects is added and the wood culture medium GLOW EARTH that can create an optimal cultural environment bymaking factor substances that inhibit the growth of plants harmless under the conceived idea of using such domestic timber as wood fibers. These
products realize the resource circulation that wood harvested in a forest becomes the culture medium, helps the growth of the next plants, and returns tothe soil again and deployment to the fields of civil engineering and landscaping as well as the fields of agricultural and horticultural materials leads to newuse application development of domestic timber.
GLOW EARTH

Wood culture medium
GLOW EARTH

29

Use case in a vegetablegardenDAIKEN GROUP REPORT 2023

DW fiber

Soil improvement additive
DW fiberCase of greening a slope surface by
DW fiber

03 Effective utilization of unused resources

Initiatives for materiality “Realization of a Resource-Recycling and Recycle-Oriented Society”

Daiken Group’s Value Creation

Social issues and needs

Expansion of the utilization of unused resources using non-combustible materials
that offer excellent durability
Daiken’s strengths and value creation
Daiken developed DAILITE, the world’s first new industrial material using an unused resource, shirasu (volcanic ash) as the major raw material, which has
the performance that could not be realized with conventional inorganic materials, such as lightweight, high strength, and fireproof, and started selling it in1997. In the beginning, DAILITE was mainly used as a bearing surface material to enhance strength of houses but we now propose to use it as the
non-combustible and well-designed wall materials and louver materials. By finding value in an unused resource and expanding the use applications, we
contribute to the realization of a sustainable society.

A noncombustible construction material made of
DAILITE base material GRAVIO LOUVER

Strategy for Value Creation

A noncombustible wall material with a deep
curved design made of DAILITE base material
GRAVIO EDGE

Shirasu, an unused resource available in thenatural world

04 Creating a safe, secure, healthy, and comfortable space
Initiatives for the fulfillment of materiality, “User Needs in the New Normal Era”

Improvement of the sound environment in living spaces
Social issues and needs

Data

Daiken’s strengths and value creation ❶In pursuing comfort of the living spaces, Daiken has been engaged inacoustic products since the 1980s and faced various sound issues.
Since then, with the accumulation of technologies and know-how for 40
years, we not only develop products having soundproof and soundabsorbing functions but also propose spaces to realize the optimalsound environment. In response to the fact that new issues concerningsound have recently become apparent in offices, stores, and medical
facilities, we expand the product lineup that corresponds to the needsof each facility. Through the resolution of sound issues that significantly
influence comfort, we will realize more comfortable living spaces.

A soundproof room corresponding toplaying a musical instrument

A ceiling material for a soundproof room
OTOTENDAIKEN GROUP REPORT 2023

30

Creating Shared Value (CSV) by Daiken Business
Creating a safe space to live together with the elderly
Social issues and needs

Daiken’s strengths and value creation ❷Based on our ideas and technologies for living spaces proven throughour work, Daiken is committed to manufacturing from the perspective of
all users, including elderly people, their families, and caregivers. In recent
years, we have improved the mechanism that can finely respond to theneeds that vary according to facilities, such as elderly facilities andhouses that are considerate of home care, and have been deploying
comprehensive product lines that are safe and have functionality.
Cases of adopting the building materials
from the OMOIYARI SERIES for the living
spaces where elderly people live

A wide sliding door that can be easily
accessed by a wheelchair

Creating spaces where children can spend the time safely
Social issues and needs

Daiken’s strengths and value creation ❸We thoroughly examined the performance required for the area arounda door in a childcare facility where the risk of injury is particularly highand developed the door dedicated to kindergartens and childcare
facilities, while taking advantage of the expertise in door manufacturing
cultivated from past houses and elderly facilities. We will support a wide
variety of problem solutions required for childcare facilities, such as
improvement of safety and comfort and further reduction in the nurseryteachers’ burden by using Daiken’s unique technologies and diverse
products.

Won the KIDS DESIGN AWARD*Designs to support comfortable raising of children

OMOIYARI KIDS DOOR
A door that is considerate ofchildren’s safety

Ceiling sound absorbing pane KIN TONE

Seismic resistance / Strengthening of disaster prevention
Social issues and needs

Daiken’s strengths and value creation ❹Daiken has contributed to improving the aseismic performance ofJapanese wooden houses through the development of DAILITE, aninorganic bearing surface using mineral fibers and an unused resource,shirasu (volcanic ash) as the major raw materials. By deploying not only
bearing surface materials but also a number of product lineups thatoffer excellent non-combustibility and fireproof property, we have beenpromoting the strengthening of disaster prevention. With our uniquebase materials, we will improve safety of various living spaces, such as
wooden houses and public and commercial buildings.

31

DAIKEN GROUP REPORT 2023

Number of households installing
DAILITE (cumulative) *Estimated by our company

1,050,000

Approx.

(As of the end of March 2023)

1,000,000

Approx.

(As of the end of March 2022)

DAILITE MSExpansion of the antiviral products
Social issues and needs

Daiken Group’s Value Creation

Daiken’s strengths and value creation ❺We focused on the antiviral function in the wake of the outbreak of thenovel influenza in 2009 and started working on its development in 2011.
In the following year, we put the function to practical use as the antiviralfunction BIOTASK* ahead of the industry. We respond to the needs in
the COVID-19 crisis, expand the product variations having the antiviralfunction, and proceed with the initiatives aimed at reviewing theantivirus mechanism and contributing to the reduction of the threat ofvirus.

A product having the antiviral function*BIOTASK: Our unique name for the antiviral function (our registered trademark)Microorganism measurement room in the
R&D Center

Creation of communication spaces filled with greenery
Social issues and needs

Strategy for Value Creation

Daiken’s strengths and value creation ❻We started promoting the new vegetable garden system from April
2023. This system enable people to grow vegetables easily on roof ofbuildings by using our product, GLOW EARTH. GLOW EARTH is awood culture medium made in Japan, it is lighter than soil, not easy to
get hands dirty, and it can be disposed as combustible waste. We will
aim to create open-communication spaces filled with greenery bypromoting this system.
Roof vegetable garden (Image)

Wood culture medium GLOW EARTH

05 Development of labor saving type products and techniques
05 Initiatives for the fulfillment of materiality, “User Needs in the New Normal Era”

Contributing to the anti-seismic ceiling by developing the labor-saving construction
techniqueSocial issues and needs
Data

Daiken’s strengths and value creation
To particularly respond to the needs of making the ceilings of large
public buildings anti-seismic after the Great East Japan Earthquake,
Daiken developed a unique ceiling construction technique that makes it
possible to make the ceiling anti-seismic while saving construction time
and work. With this construction technique, we reduced theconstruction time and labor by approx. 25% compared to making theconventional ceiling anti-seismic. We also developed a ceiling system
exclusively for hallways, which will become the evacuation route at thetime of disaster.
We will aim to further realize the saving construction time and work for
not only ceilings but also building materials for renovation from theperspective of a new construction technique.

Rate of reduction of construction
time and labor compared tomaking the conventional ceiling
anti-seismic: *Estimated by our company

Approx.

25%
Our own anti-seismic ceiling construction
technique

DAIKEN GROUP REPORT 2023

32

Long-Term Vision GP25
In 2015, for the 70th anniversary of the foundation of the company, the Daiken Group formulated the long-term vision GP25
(Grow/Glow Plan 25) aimed for 2025, 10 years after 2015.
In the long-term vision GP25, growing from housing materials to an all-embracing company for building materials throughthe further enhancement and expansion of current businesses and the expansion of the new market was upheld as our
vision (company vision). As the roadmap toward the realization of the long-term vision, the Daiken Group set the mediumterm management plan in three steps and been deploying business activities.

20 25

Long-Term Vision

GP25

Grow/Glow Plan 25

Grow

Glow

The Group will work totransform into an enterprisethat meets the expectationsof customers and markets
while contributing to a better
society.

The Group will work to
become an enterprise thatpeople rate highly for its
attractive working
environment and as a place
where employees can work
positively andenthusiastically.

Significance of existence and ambitions
Contribute to the building of a sustainable society by efficiently using limited resources
Enrich peoples’ minds by creating more comfortable and secure spaces

How we should be in 2025
Contribute to a recycling-oriented society through the development and spread of industrial materials utilizing
sustainable resources, such as timber, in global markets
Create safe, secure, healthy, and comfortable spaces for everyone by proposing solutions that capture the userneeds in the new normal era
A mechanism to support challenges is established, a culture that admires challenges is nourished, andchallenges to new business domains is progressing
Realize the workplace environment where diverse human resources can comfortably work in fulfilling roles andimpartial and transparent management supports the sustainable growth and the improvement of medium- tolong-term corporate value

Business domains, markets, and sectors targeting
Long-Term Vision GP25

Toward becoming
an all-embracing
company forbuilding materials

From the current image as a housing materials manufacturer to the following:
zSupply building materials and industrial materials for building materials as well as
construction
zExpand business areas from housing to public and commercial buildings, and industrial
materials
zExpand into global markets

Industrial materials business
Building materials businessEngineering businessNew business

Markets and sectors

Becoming asustainable society

Creating theenvironment thatenriches people’s lives

Business domains

Housing market
Public and commercial buildings

GlobalIndustrial materials

Domestic

New markets

Update of the long-term vision GP25
In formulating the medium-term management plan GP25 3rd Stage, we have updated how we should be in 2025
based on the change in business environment and reconfirmation of materiality in and after 2025.

33

DAIKEN GROUP REPORT 2023

The medium-term management plan toward realization of the long-term vision

Toward the realization of

the Long-Term Vision GP25 in 2025
Daiken Group’s Value Creation

Fiscal 2023 to fiscal 2026

GP25 3rd Stage

Establish the image of an all-embracing company
for building materials
Execute the growth strategy based on the pursuit of theresolution of social issues using sustainability as the key axisof management and establish the image of an all-embracing
company for building materials

Fiscal 2020 to fiscal 2022:

GP25 2nd Stage

Accelerate growth to become an all-embracing company
for building materials

Fiscal 2017 to fiscal 2019:

GP25 1st Stage

The first step toward an all-embracing company
for building materials

Strategy for Value Creation

Growth trajectory targeted in the Long-Term Vision GP25
While a decrease in domestic new housing starts is expected in the future, we will aim at expanding the global market,
public and commercial buildings, and the home renovation market that we position as the priority markets, in addition to
the increase in our share in the new home market. By proactively investing our management resources in these priority
markets, we will proceed with the reform to become a company that will keep growing even in the situation of decreased
domestic new housing starts.

To become a company that will keep growing even in thesituation of decreased domestic new housing starts(100 million yen/10,000 homes)(¥100 million)
3,000

300

To achieve the Long-Term Vision GP 25

Net sales (100 million yen) on the right axis
Operating profit (100 million yen) on the left axis

Goals
2,500

Domestic new housing starts (10,000 houses) on the left axis
250

2,500

2,288

2,000

200

1,681

92

100

1,000

98
86

50

500

55
Medium-Term Management Plan
1st

2nd

3rd

0

20
26

20
23

20
22

20
21

20
20

20
19

20
18

20
17

20
16

20
11

20
06

20
01

19
96

19
91

19
86

19
81

0

(Fiscal year)

DAIKEN GROUP REPORT 2023

34

Data

1,500

150

Progress of the Medium-Term Management Plan Toward Realization of
the Long-Term Vision
In the medium-term management plan GP25 1st Stage (fiscal 2017 to 2019) that started from fiscal 2017, we started working on thefurther enhancement of current businesses and the development of the foundations for new businesses as the key to growth in order totake the first step toward an all-embracing company for building materials. GP25 2nd Stage (fiscal 2020 to 2022) that started from fiscal
2020 was positioned as the step to accelerate the growth strategy toward an all-embracing company for building materials, and we
proceeded with the execution of proactive investments with a focus on the global market, the review of the domestic business portfolio,
and the enhancement of the management foundation.

Medium-Term Management Plan GP25 1st Stage (Fiscal 2017-2019)
The first step toward an all-embracing company for building materials
Basic policy
zEndeavor to further strengthen current businesses and develop the foundations for new businesses as the key to growthzProactively develop environmental-related technologies for ecological materials, energy savings, and domestic wood utilizationzActively introduce management resources to the priority markets of public and commercial buildings and global markets
zMaximize the synergy of manufacturer and engineering to enhance profitability
zCreate a work environment where employees can work with enthusiasm and foster the human resources who will play important roles in
the futurezDefine diversity is as one of the management strategies, and the ability delivered by a variety of human resources is to be the engine of
growthzStrengthen governance to enhance corporate value over the medium and long term

Results achieved against management goals(¥100 million)

BenchmarkFiscal 2016
Net sales

Results
Fiscal 2018

Fiscal 2017

Goals
Fiscal 2019

Fiscal 2019

1,681

1,688

1,705

1,829

1,800

Operating profit

55

85

75

57

70

Ordinary profit

52

90

87

68

70

Profit attributable to owners of parent

39

51

58

44

43

ROE

9.8%

11.7%

11.7%

7.8%

8%

Dividend payout ratio

30.4%

30.1%

30.3%

42.4%

30% or more

Achievements and issues
As for the management goals, we achieved the goals in terms of net sales and net profit.
As for operating profit, we increased profitability over the past three years and achieved the goal for two consecutive years; however, issues
had come to the surface in raw material procurement and the ordering and order receiving system, and we could not achieve the goal in the
final fiscal year and issues remained in the business infrastructure.
We actively made investments, such as M&A to enhance industrial materials business, expansion of the product lineup by launching products
on a large scale, establishment of the R&D center, and the addition of the biomass boiler, and steadily executed measures to lead to the nextstage of growth.
Regarding shareholder return, we followed the policy of the dividend payout ratio at 30% or more and improved shareholder return.

3 investments toward the expansion in the priority markets

Enhancement of the MDF supply system (Purchased DSL in New Zealand)

Global markets

Distribution of the wood material business in North
America (Purchased CIPA and PWT)
Door production facility expansion and reinforcement for special order items
Launch of a new DAILITE wallmaterial productPublic andcommercial
buildings

Expansion and reinforcement of the
production capacity

Tatami facing production facility expansion and reinforcement
Distribution of the solid wood flooring business(Purchased T.O FLOORING CO., LTD.)
Distribution of the apartment renovation business (Purchased PAC SYSTEM Co., Ltd.)

Home renovation
marketEnhancement of renovation work in the Tokyo
metropolitan area (Purchased ReformQ Co., Ltd.)
2017

2018

GP25 1st Stage35

DAIKEN GROUP REPORT 2023

2019

2020

2021

GP25 2nd Stage

2022(Fiscal year)2025 Long-Term Vision

Medium-Term Management Plan GP25 3rd Stage

GP25(Fiscal 2023-2026)

Medium-Term Management Plan GP25 2nd Stage (Fiscal 2020-2022)
Accelerate growth to become an all-embracing company for building materials
Basic policy

I. Accelerating growth strategies

Daiken Group’s Value Creation

Based on firm management foundation, pursue the resolution of social issues through our business,thereby accelerating our growth strategies toward becoming an all-embracing company for building materials.
II. Enhancement of the management foundation
1 Optimize our financial foundation

Domestic: Review of the Business (Market) Portfolio
Global:	Business expansion through proactive
investments and entry into new markets

2 Restructure firm and flexible business infrastructure
3 Practice of ESG Management

Results achieved against management goals(¥100 million)

Results
Fiscal 2021

Fiscal 2022

Fiscal 2022

2,024

1,992

2,233

2,250

83

87

173

120

4.1%

4.4%

7.8%

5.3%

Net sales
I. Accelerating
growthstrategies

Operating profit
Operating profit ratio
Profit attributable to owners of parent
ROE

Efficiency
Financial
indicators
II. Enhancementof themanagementfoundation

Soundness
Shareholder
return
E
S
G

54

56

78

70

9.5%

9.1%

10.9%

10%

ROA

5.5%

5.8%

10.5%

7%

Shareholder equity ratio

32.7%

39.4%

41.7%

40%

Dividend payout ratio

33.4%

32.4%

33.1%

30% or more

Total domestic CO2 emissions*1

(28%)

(35%)

(36%)

(26%)

Total diversity index*2
Serious quality accidents andviolations
Degree of penetration of thegroup corporate philosophy*3

+19pt

+19pt

+30pt

+20pt

1

1

0

0

+4pt

—

+5pt

+10pt

Strategy for Value Creation

Nonfinancial
indicators

Goals

Fiscal 2020

*1: Compared to fiscal 2014
*2: Our own indices in which the eight diversity items, such as the female manager ratio, were indexed as compared to fiscal 2019
*3: Our own indices in which employees’ understanding, sharing, and practice of the group corporate philosophy were indexed as compared to fiscal 2018

Achievements and issues
Toward the expansion in the global markets positioned as the growth driver, wood industrial materials business by the two North Americancompanies, which became group companies through M&As in fiscal 2020 significantly led the overall performance and we achieved all of the
management goals excluding net sales, such as the profit goal and financial indices.
While expansion in the global markets progressed, construction demand, such as accommodation facilities and commercial facilities, rapidly
decreased because of the impact of the COVID-19 crisis in Japan, and we could not achieve the expansion goal in the public and commercial
buildings.
Toward the second half of fiscal 2022, because of the combination of a higher-than-expected increase in orders in Japan and delayed arrival of
raw materials caused by the disruption of marine transportation, a delivery delay occurred in part of the products in building materials business.
We were in the situation where we had no choice but to impose a limitation on orders received and issues remained in the BCP of the entire
supply chain.
As for the nonfinancial goals, in addition to the achievement of the total domestic CO2 reduction goal by utilizing renewable energy linked tobusiness activities, we could significantly surpass and achieve the initial goal concerning the total diversity index, which is our own index, becauseof the promotion of taking paternity leave.

Trends in performance toward the realization of theLong-Term Vision GP25

Net sales(¥100 million)
2,500

Of which net sales in thethree priority markets (Share)

Operating profit (Operating profit ratio)(¥100 million)
250

2,250

2,233

1,500

1,705

1,688

1,681

565

555

688

611

(34%)

(33%)

2,024

1,992

945

1,012

1,829
(47%)

(38%)

(36%)

200

1,208

1,271

(54%)

(57%)

150

(51%)

1,000

100

173

(7.8%)
500

85

55(5.1%)

75

2016

Benchmark(4.1%)

12087(5.3%)(4.4%)

50(3.1%)(3.3%)
057(4.4%)

83

2017

2018

GP25 1st Stage

2019

2020

2021

2022

2022 Goals (Fiscal year)

0

GP25 2nd StageDAIKEN GROUP REPORT 2023

36

Data

2,000

Progress of the Medium-Term Management Plan GP25 3rd Stage
Basic policy
I. Execution of the growth strategy ~Key to the resolution of social issues (CSV)~
Contribution to a recycling-oriented society
Accelerate the development of industrial materials using wood resources and waste where recycling is managed and thedeployment to the global market through utilization development

Satisfaction of user needs in the new normal era
For user needs that seek for further improved safety, security, health, and comfort in all kinds of spaces, enhance our solution
proposal capabilities that take advantage of having diverse products (industrial materials and building materials), the spatial
evaluation and analytical functions, and the construction function

II. Enhancement of the management foundation with sustainability as the key axis
Business foundation

Human resource foundation
zCreating the workplace environment and culture where diverse humanresources can be active
zHuman resource development that supports the growth and can
respond to changes
zEstablishment of the system and mechanism that admire and support
challenges
zBuilding of the balanced human resource foundation

zSimultaneous pursuit of the reduction of environmental burden andrisk management in the supply chain
zRestructure firm and flexible business infrastructure
zOptimization of the business portfolio (Selection and concentration)zEnsuring quality, which is the source of provided value
zOffensive/defensive digital strategy
zBuilding of an efficient and optimal logistics system

Financial foundation

GovernancezAggressive investments for growthzBuilding of the solid financial foundation that supports growthzImpartial and highly transparent management that supports the
improvement of corporate value
zImprovement of the stakeholder engagement by enhancing thedissemination of information and improving dialogues

Summary of the strategies of the Medium-Term Management Plan GP25 3rd Stage*If excluding the decrease in sales by 21.2 billion yen associated with the change in PWT in the United States

Domestic new homemarketIndustrial materials

Composition
ratio
Marketenvironment

Sales by business➡
➡

Industrial materials business+13.8 billion yen+7.2 billion yen

34 → 32%

15 → 16%

10 → 15%

9 → 11%32 → 27%

Gradually decreasing trend indomestic new housing starts

Distribution of secondhand
housing and revitalization of
condominium renovations

Changes in how an office space should be

New/alternative utilization
development(From plywood and plastics
to wood fiberboard)

The U.S.A.:
Medium- to long term stablehousing demand

Redevelopment project
Recovery in inbound demand

Building materials business

Expansion of the products that save
construction time and work[+25 billion yen]*➡
➡

Engineering business+13.2 billion yen

Capacity expansion

Industrial materials business: MDF
Structural reform and capacity expansion
Improvement of the ratio of the products with high added value

Industrial materials business in Japan

Building materials business

Acquisition of alternative demand, capacity expansion, and development of new materials

Supply expansion to Europe and Asia

Optimization of the logistics system
Business foundation

Southeast Asia: Recovery/growth

Consideration of the introduction of
new products using the sales channels

Proposals of the improvement of thethermal environment

Expansion of condominium
Expansion of the interiorrenovations in the Tokyo
projects in the redevelopment
metropolitan area
projects
Engineering business+12 billion yen[+15.6 billion yen]*

Industrial materials business in North America

An increase in share by functional products that correspond to the needs of users in the newnormal era
Corresponding to remote work, improvement of the sound environment, and antiviral functions

Building materials business

37

➡

➡

➡

+6.9 billion yen+3.8 billion yen

Enhancementof themanagementfoundation-5.6 billion yen+5.1 billion yen

Penetration of working at home and remote work

Execution of thegrowth strategy

Growth driver[+47.8 billion yen]*➡

Sales bymarket➡

➡

Sales: 223.3 → 250 billion yen (+26.6 billion yen)➡

Securing of the revenue base (An increase in the share of new housing, shifting to housing stock and non-housing, and material utilization development)

Global markets➡

MarketDomestic market
Home renovation
Public and commercial
marketbuildings

Enhancement of cooperation in the group and optimization of the production system

Operational efficiency and productivity improvement using digital technology and restructuring of the core system
Pursuit of the sustainability of raw materials / Initiatives for eliminating the use of lauan wood (tropical natural wood)
Reduction of greenhouse gas emissions in the supply chain
Promotion of diversity and flexible work styles

Human resource
foundation

Optimization of the sales structure and personnel (Shift to the prioritized markets) / Prioritized market enhancement program

Financial foundation

Investments in growth and foundation enhancement, financial soundness, and cash flow allocation that optimizes the improvement of shareholder return

DAIKEN GROUP REPORT 2023

Management goals(¥100 million)

GP25 2nd Stage
Fiscal 2022
results
Net sales
Domestic market
Global markets

GP25 3rd Stage
Fiscal 2023 results

Fiscal 2024 forecast

Fiscal 2026 goals

2,233

2,288

2,350

2,500

1,512

1,641

1,800

1,835

721

646

550

665

Operating profit

173

98

80

150

Operating profit ratio

7.8%

4.3%

3.4%

6%

78

103

60

100

Fiscal 2023 results

Fiscal 2024 forecast

12.9%

7.1%

Profit attributable to owners of parent

Daiken Group’s Value Creation

I. Execution of the growth strategy

II. Enhancement of the management foundation
Financial indicators
GP25 2nd Stage
Fiscal 2022
results

GP25 3rd Stage
Fiscal 2026 goals

Capitalefficiency

ROE

10.9%

ROIC

11.1%

6.1%

-

8% or moreFinancialsoundness

Shareholder equity ratio

41.7%

45.0%

-

40% or more

0.37 times

0.36 times-

0.5 times or less

Dividend payout ratio

33.1%

27.8%

52.1%

35%

DOE (Dividend on equity ratio)

3.6%

3.6%

3.7%

3.5%

Nonfinancial indicators
GP25 2nd Stage

GP25 3rd Stage

Fiscal 2022 results
E

(36%)

(4.0%)(10%)

Total diversity index+30pt+18.3pt+30pt

Serious quality incident/violation*3

Employee satisfaction*4
G

Fiscal 2026 goals

Total greenhouse gas emissions in Japanand overseas*1*2

S

Fiscal 2023 results

Serious compliance violations*3

Strategy for Value Creation

Shareholder
returnD/E ratio

10% or more

0

0

0

54.6pt54.4pt

60pt

0

1

0

*1: Fiscal 2022 results included the total emissions in Japan and overseas (Scope 1+2) compared to fiscal 2014. Fiscal 2023 results and fiscal 2026 goals included the total emissions in Japan and overseas (Scope 1+2) compared to fiscal 2022.
*2: Our own indices in which diversity-related items, such as the female manager ratio, were indexed. Fiscal 2022 results were compared to fiscal 2019 and fiscal 2023 results and fiscal 2026 goals were compared to fiscal 2022. Seven items concerning the
calculation method have been reset as the Diversity Composite Index 3rd Stage in the medium-term management plan GP25 3rd Stage in FY 2023.
*3: During the medium-term management plan period*4: Our own indices in which employees’ actual feeling for satisfaction / job satisfaction in the workplace were indexed

Achievements and issues in fiscal 2023

DAIKEN GROUP REPORT 2023

38

Data

 Net sales reached a record high due to the MDF sales price revision and the recovery in demand for interior projects and as we
posted an extraordinary gain associated with the change in equity of the subsidiary, profit attributable to owners of parent hit a record
high as well.
 On the other hand, operating profit, decreased because we could not fully absorb the increase of raw materials cost, even though we
passed on costs to selling price.
 Although we made some progress in the development of the new product through co-creation with other companies and the launchof the vegetable garden system, we were forced to take follow-up action and defensive action against an increase in costs frombeginning to end. It caused a delay in new action, such as the development of new applications for materials, new customers and new
promotions.
 Regarding the progress of nonfinancial goals, our affiliate company, Sankei Corporation, has committed serious compliance violation
and received administrative punishment from Osaka Prefecture due to the violation of the Construction Industry Act in theirconstruction management operation in interior project. We take this issue seriously, we will enhance the checking system and provide
a thorough compliance education to all DAIKEN Group member to avoid same issue occurring again.

Strategies by Business Segment and Market
Strategies by business segment and progress
Sales results by business and goals
Other

Engineering business(¥100 million)
2,500

,500

Industrial materials
business
85

133

174

335

2,000

202

247

270

1,500

919

930

2,288

2,233
110

(11%)

(9%)

272

(41%)

(40%)

11%)

395

Compared with fiscal 2022 results(13%)

Engineering business

(12%)

363

15%)

2,500

2,350

665

27%)

Building materials
business

1,040
1,076

(42%)

Building materials business(46%)+13.2 billion yen(+65%)+12 billion yen(+13%)

1,000

16%)

Industrial materials business
500

808

1,001

976

(45%)

(43%)

32%)

0

2026 (Fiscal year)
Goals

830

1,040

+3.8 billion yen(+4%)[+25 billion yen]*

(42%)

(35%)

[+32%]* If excluding the decrease in sales by 21.2 billion yen associated with thechange in PWT in the United States

2022
Results

2023
Results

GP25 2nd Stage

2024
Forecast

2026
Goals

(Fiscal year)

GP25 3rd Stage

Strategies by business segment

Industrial materials businessl Contribute to the resolution of social issues in the global markets through the development of industrial materials that use sustainable
resources and the sales expansionl Execution of the business structural reform toward the profitability improvement

Value creation

Utilization development that will expand the possibility of industrial materials
and acquisition of alternative demand from the perspective of sustainabilityEnhancement of the appeal of and sales expansion of the products for
public and commercial buildings, such as noncombustible products andmaterials for tatami matsWith the capital increase aimed at expanding business, PWT, which used to
be a consolidated subsidiary, became an equity method affiliate
Promotion of the business structural reforms in the four group MDF plants
Promotion of the development of environment-conscious MDF
Promotion of the new application development of wood materials, such as
insulation boards and MDF
Sales expansion of non-combustible decorative materials made of DAILITE
base material, including louver materials and eaves

Building materials businessl Expansion of the functional building materials that meet the user needs in the new normal era and enhancement of the proposal capabilities
l Improvement of profitability by improving productivity using digital technology and operational efficiency

Value creation

Promotion of the development of functional building materials that create“Safe, secure, healthy, and comfortable spaces for everyone”
Enhancement of the solution proposals that use functional building
materials through the performance measurement and evaluation of spaces,such as the sound environment and thermal environment

Release of the products that give consideration to the aspect of goodhygiene and the products that are ahead of design trends
Enhancement of the proposals of acoustic products that marked 40th
anniversary since the business commencement
Review of the structure of some product series in terms of the BCP and for
efficiency by reducing product numbers
Enhancement of procurement management with a focus on raw woodmaterials, such as the launch of the new supplier

Engineering businessl Pursuit of the synergy between the products in the industrial materials and building materials businesses and the construction functionl Expansion of the construction areas that meet the spatial needs in the new normal era

Value creation

To provide new spatial value by improving the sound and thermal
environments that take advantage of the group’s product appeal, we willproceed with the expansion of the construction areas and the improvementof our technological capabilities and enhance our integrated order-taking
system for industrial materials and construction
Support for the development of construction techniques and productdevelopment incorporating the short construction period and saving
construction time and work by using our construction network

39

DAIKEN GROUP REPORT 2023

Expansion of the sale of and increased profitability of apartment renovation
business in the Tokyo metropolitan area
Expansion of orders for interior projects by resuming various redevelopment
projects with a focus on the large metropolitan areas
Expansion of orders for soundproofing and orders from kindergartens andchildcare facilities in order to increase profitability

Strategies by market and progress

Global markets(¥100 million)
2,500

Public and commercial buildingsHome renovation market

2,000

646

721

1,500

281

224

(12%)

(9%)

1,000

Domestic
market325(15%)

Domestic
market

1,512

756

(34%)

240

272

341

(15%)

2022
Results

2,000

850

(36%)

2024
Forecast

2023
Resultsyen
Public1,500
and commercial
919 +13.8 billion
930
(41%)
buildings(40%)(+61%)

1,835

Industrial materials

395

1,000

(16%)

(73%)

(77%)

(33%)

GP25 2nd Stage

Domestic
market

2,500

2,350

85

174

335
(13%)

270
(12%)

* If excluding the decrease in sales by 21.2 billion yen associated with thechange in PWT in the United States

(11%)

1,800

752

133
(-8%)
247 yen]*[+15.6 billion
202
(11%)
(9%)
[+31%]
110

Industrial materials
business+7.2 billion yen(+36%)+6.9 billion yen
Home renovation market
500

808

(32%)

1,001
(45%)

Domestic new homemarket2026 (Fiscal year)
Goals

0

2022
Results(+21%)
976(43%)+5.1 billion yen

1,040
(42%)

1,076
(46%)

Domestic
market+32.2 billion
yen(+21%)

830

(42%)

(35%)

(+7%)
2023
Results

2024
Forecast

2026
Goals

GP25 3rd Stage

GlobalStrategies by market

Global markets
Accelerate the further exploration of the global
markets through penetration of industrial material
and building material products that use sustainable
resources

Public and commercial buildings
Growth acceleration by expanding and improving
functional building materials that meet user needs inthe new normal era and by enhancing proposal
capabilities

Industrial materialsn Timely MDF selling price pass-through in response to soaring costs
n Implementation of the market survey toward the deployment of new wood industrial materials for the
North American market
n Expansion of the Indonesian plant-made door sales channels in the European market
n Promotion of the initiatives toward the stable procurement of wood materials
n Promotion of the development of new products through co-creation with other companies and new
proposal methodsn Acquisition of touch points with customers utilizing digital tools, inside sales, proposal meetings, etc.
n Enhancement of the proposals by functional products, such as noncombustible, acoustic products,
tatami materials, and flooring using local materials
n Expansion of orders for interior projects for office buildings etc.
n Planning of well-being working environments and spaces that pursue workers’ health and comfort
n Expansion and reinforcement of manufacturing facilities associated with the expansion of adoption ofwood culture medium GLOW EARTH for the agriculture and horticulture markets
n Launch of the vegetable garden system business in which vegetables can be easily grown on the roofof buildingsn Expansion of the handling of new products (plywood made of plantation timber, LVS, etc.)

Home renovation market
Expand and improve functional building materials thatmeet the user needs in the new normal era andestablish and penetrate the construction techniquemodels that meet demand for the condominium
renovation construction, such as the short
construction period, saving construction time andwork, and waste reductionn Development of the products that stylishly produce spaces and are ahead of design trends
n Expansion of the apartment renovation and renovation work in the Tokyo metropolitan arean Enhancement of the renovation proposals from the lifestyle perspective that utilize the website andshowrooms
n Introduction of manufacturing facilities for flooring exclusively for renovations and launching products

Domestic new home market
Development of differentiated products that promptly
meet user needs and an increase in the share byenhancing proposals in order to minimize the impact ofshrinking of the market Improvement of the efficient
proposals and order-taking system that effectively uses
digital technology

(Fisc

Data

Domestic

Exploration of new markets and new areas bydeveloping new industrial materials with theadvantages of sustainability and environmental
burden reduction

1,040

Strategy for Value Creation

0

(15%)

Domestic 400
market (17%)

(72%)

(68%)

500

1,641

363

(10%)

262

199

310

(13%)

(12%)

(10%)

665

(27%)

Building materials
business

2,288-5.6 billion
yen
Global markets2,233

(23%)

(28%)

(32%)

2,500

550

Engineering business(¥100 million)
Comparedwith fiscal 2022 results
2,500

2,350

2,288

2,233

Other

Industrial materials

Domestic new home market

Daiken Group’s Value Creation

Sales results by market and goals

n Enhancement of the proposals for products and spaces corresponding to the change in user needs
n Enhancement of the ability to disseminate information utilizing digital tools
n Sales expansion of DAILOTONE healthy and comfortable ceiling materials by the proposals from theperspective of functionality
n Recovery from the impact of door delivery delays and a limitation on part of the orders for flooring

DAIKEN GROUP REPORT 2023

40

Initiatives for Priority Markets

Global Markets
In addition to the sales of MDF produced in Malaysia and New Zealand, the industrial materials business in the global markets expands
the sales by the North American wood materials with a focus on the veneers and LVL produced in Canada and the USA. The building
materials business has been deploying interior doors in China, which has a huge market size, and Indonesia, where housing demand
expansion is expected.

Global markets: Trends in net sales

1000(¥100 million)
800

Industrial materials business

Building materials business
+5

+496

0

Engineering businessOther+26 721 (64)
(5)

0

(4)

665

646 (137)

600

+9

0

+30 550

400

200

+3

+71

+15 192

0

102
0
2016
Results

2019
Results

BenchmarkGP25 1st Stage

2022
Results

2024 2026 (Fiscal year)
Forecast Goals

2023
Results

GP25 2nd Stage

GP25 3rd Stage

Overseas bases/Sales breakdown by overseas region[Salesbreakdown by
region][Salesbreakdown
byoverseas
overseasregion]7%VeneerOther

CIPA Lumber Co., Ltd. (CIPA)

Other
13%
%

Oceania
Oceania %7

13(Canada/from 2019)

Fiscal 2023

Southeast
Asia
Southeast
%

20

Asia
%

20

64.6

North

Fiscal 2023 America
60North%America

64.6

billion yen

60%billion yen

DAIKEN (Shanghai) Corporation(China)Doors, flooring, and construction materials

LVL

DAIKEN Industries (Ningbo) Corporation

Pacific Woodtech Corporation (PWT)(China/from 2002)(The U.S.A./from 2019)*The company, which used to be a consolidated subsidiary,
became an equity method affiliate in August 2022.

MDF

DAIKEN SARAWAK SDN. BHD. (DSK)(Malaysia/from 1994)
Singapore
BranchMDF

Indonesia
officeDAIKEN MIRI SDN. BHD. (DMR)(Malaysia/from 2005)

Door

Sales office

PT. DAIKEN DHARMA INDONESIA(Indonesia/from 2015)41

DAIKEN GROUP REPORT 2023

Production base
MDF

MDF

DAIKEN SOUTHLAND LIMITED (DSL)DAIKEN NEW ZEALAND LIMITED (DNZ)(New Zealand/from 2018)(New Zealand/from 2009)

Industrial materials
business
Building materials
businessDevelopment by MDF
Product characteristics
With the system of four plants in the two countries of Malaysia and New Zealand, we are engaged in the production of MDF for which wood
offcuts from timber are effectively used. By taking advantage of tree species and the characteristics of the production lines and cooperation,
we will promote the distribution of products having new value and the further expansion of the sales channels in global markets.
New ZealandTree species: Hardwood

Tree species: Softwood

Brown-colored MDF that effectively uses wood offcuts from the plywood/lumber
plants in Malaysia. It is used for the flooring substrates that require excellent
water resistance and dimensional stability.

White-colored MDF that uses plantation Pinus radiata timber in New Zealand. It is
used for the base materials for furniture and building materials that require
lightness and smooth surface.

Characteristics

Characteristics

DSK is a mother plant for MDF, which produces high valueadded special MDF, etc. They are in the two-plant system with
DMR after M&A in 2005. They developed MDF that uses 100%plantation acacia timber and proceed with the distribution of new
applications.

MDF that is globally recognized with the CUSTOMWOOD brand. In
addition to the product development that corresponds to thecustomer needs, such as ultra-lightweight MDF, DNZ and DSL
take advantage of their respective characteristics of the
production lines and optimize their production items.

Daiken Group’s Value Creation

Malaysia

Production base
DAIKEN SARAWAK SDN. BHD. (DSK)DAIKEN NEW ZEALAND LIMITED (DNZ)

Global41%

23%
MDF sales
breakdown
by region
Domestic

DAIKEN MIRI SDN. BHD. (DMR)

59%

Oceania(Fiscal 2023)

1976 → Purchased the company inFebruary 2009
Production capacity: 107,000 m3/year
Acquired certificate: JIS A 5905, FSC CoCCARB, and EPA TSCA Title VI
Foundation:

10%

DAIKEN SOUTHLAND LIMITED (DSL)The U.S.A.

*Including the portion
consumed by our company

8%

September 1996 → Purchased thecompany in February 2005
Production capacity: 110,000 m3/year
Acquired certificate: JIS A 5905, PEFC CoCCARB, and EPA TSCA Title VI

November 1993 → Purchased thecompany in April 2018
Production capacity: 195,000 m3/year
Acquired certificate: JIS A 5905, FSC CoCCARB, and EPA TSCA Title VI

Foundation:

Tree planting activity in Malaysia

Strategy for Value Creation

Asia

Foundation:
May 1994
Production capacity: 120,000 m3/year
Acquired certificate: JIS A 5905, PEFC CoCCARB, and EPA TSCA Title VI

Foundation:(ha)[Cumulative afforestation area in Sarawak, Malaysia]

2006

2011

First afforestation
area

Second afforestation
area

2016

Third afforestation
area

2021

2023
(Fiscal year)

Future development❶ Profitability improvement by optimizing
the production system❷ Enhancement of the new use
application development/proposals❸ Further pursuit of the sustainability of
raw materials

By optimizing production items that take advantage of the characteristics of the respective bases,
improve profitability.
Enhance the new use application development and proposals that correspond to the demand as thealternative materials to plywood and plastics.
In addition to the expansion of their afforestation sites and improvement of the certified material ratio, pursue
sustainability of raw materials by developing new technologies.

DAIKEN GROUP REPORT 2023

42

Data

10,000
Toward the realization of stableprocurement of wood materials, we
8,000
started acacia tree planting in
6,000
Sarawak, Malaysia, in 2002, and thecumulative afforestation area is 9,800
4,000
ha or more. DSK aims to increase the2,000plantation timber ratio in the woodmaterials used for MDF to 100% by
02003
fiscal 2026, strives to enhance the plantation timber growth
management, and proceeds with the expansion ofafforestation sites.

Initiatives for Priority Markets Global Markets
Expansion with wood materials in North America
With the acquisition of CIPA, which is a veneer plant in Canada, and PWT, which is an LVL plant in the United States, in June 2019, we
officially started to expand into the American market, which is the world’s largest wooden housing market. In August 2022, PWT
acquired the housing structural material manufacturing business with a focus on the business of manufacturing and selling LVL fromLouisiana Pacific, and the size of the business expanded significantly. With the capital increase aimed at acquiring the business, PWT,
which used to be a consolidated subsidiary, became an equity method affiliate but they will continue enhancing the cooperation with
CIPA and further expand the North American wood industrial materials business by taking advantage of the Daiken Group’s
technological capabilities cultivated in Japan and proceeding with the deployment of more value-added products on the basis of LVL
manufacturing/sales networks expanded throughout the United States.
Veneer

CIPA Lumber Co., Ltd. (CIPA)

Foundation:
April 1968 → Purchased the company in June 2019
Location:
Canada (Delta, British Columbia)
Business lineup: Veneer manufacturing and sales

LVL

Pacific Woodtech Corporation (PWT)

January 1998 → Purchased the company in June 2019
→ Became an equity method affiliate in August 2022
Location:
The U.S.A. (Burlington, Washington)
Business lineup: Structural LVL and I-Joist manufacturing and sales
Foundation:

Significance of group structure
While shrinking of the new housing market in Japan is expected, expand into the global market, which is positioned
as the prioritized market in the long-term vision.

❶ Expansion in the global market

Expand into the North American market, which is the world’s largest wooden housing market supplying about
twice as many houses as Japan and the growing market where population is expected to increase by 2 million ormore annually.
❸ Pursuit of synergy that takes advantage Further expand by deploying the business model expanded by infusing technology in industrial materials andof the capabilities to develop industrial increasing added value in the North American market. In addition, aim for the new use application development by
capturing the market with a focus on industrial materials.
materials❷ Expansion into the world’s largest
wooden housing market

The world’s largest wooden housing market
The number of housing starts in the most recent
fiscal 2023 in the United States, which is theworld’s largest wooden housing market, was about
1.55 million, and the number decreased from theprevious fiscal year from the impact of housing
prices remaining high and the policy interest rate
DAIKENNEW ZEALAND
LIMITEDincrease,but the market
size is still about 1.8 times
largerthan that of Japan. Regarding the future
生産能力：210,000㎡/年
marketon
theCoC
background of the lack of
取得認定：JIS Atrends,
5905、
FSC
housing stock after the bankruptcy of Lehman
CARB, EPA TSCA Title 5Ⅵ
Brothers and an increase in the home ownershiprate among millennials, in addition to the mediumto long-term population increase due to theimmigration policy, steady housing demand is
expected.

Trends in housing starts in the United States and Japan
Fiscal year (April to March) total

220
200
180
160
140
120
100
80
60
40

The U.S./10,000 houses

Japan/10,000 houses

155

86.1
(Fiscal year)
91

96

19

01

19

20

11

06

21

16

20

20

20

20

23

20

Expansion in the global market with a focus on the North American wood industrial materials business(¥100 million)

1,000

Net sales in the global market

Net sales in the North American woodindustrial materials business

The global market’s sales composition ratio

The North American wood industrial materials
business’ sales composition ratio
32

30

28

800

25

23
20

600

20

18

16
15

400

11
6

200

102
0

7
110

2016

Benchmark

43

(%)

35

DAIKEN GROUP REPORT 2023

2017

8

7
123
2018

GP25 1st Stage

365
192
2019

170
2020

13
463

721

646
440

260
2021

GP25 2nd Stage

2022

10
365

5

0
2023 (Fiscal year)

GP25 3rd Stage

Business flow
CIPA: Veneer manufacturing flow

Daiken Group’s Value Creation

Stock of timber

PWT: LVL manufacturing flow

Cutting

Peeling the bark
DryingPacking
VeneerStorage

Shipment

Heat treatment

Shipment

Laminating/thermal
compression
Strategy for Value Creation

Major applications

I-Joistrafters

I-Joist

Structural LVL for homes

LVL header

Antiseptic LVL installed in the wood deck

LVL beams

I-joist installed as the joist
in a home

New use application development/development of high value-added products

Future development❶ Enhancement of the cooperation
between CIPA and PWT

Make an investment in CIPA toward the expansion and reinforcement of the veneer production capacity andincrease the supply quantity to PWT, which expanded the LVL production scale.

❷ CIPA’s profitability improvement

By proceeding with stable procurement of raw wood and improving production efficiency, further improve
profitability.

❸ Expansion into new products

Utilize the sales channels and local networks for veneer and LVL and proceed with the consideration of
expansion into new products where synergy can be expected.

DAIKEN GROUP REPORT 2023

44

Data

In addition to regular LVL to be used for posts of houses, etc. and I-Joist, which is a composite material of OSB and LVL, we introduced LVL as new
products to address new needs by increasing added value, such as billet beams, which is high-strength LVL made by further laminating LVL to enhancestrength, and treated, which is antiseptic LVL processed to make it hard to decay, and proceed with sales expansion.

Initiatives for Priority Markets

Public and Commercial Buildings
We take advantage of our unique technologies and expertise in safety, durability, non-combustibility, as well as the provision of acomfortable sound environment that we have cultivated as a housing material manufacturer in order to proceed with proposals forspaces by product series that offer the functions required by each public facility and commercial building.

Proposals for spaces with the product series by facility and function

Acoustic
products
Sound
absorbingCeiling materials
NonAseismicSound
combustibility performance Lightweight absorbingSound
insulation

Arrange sound vibrations andprovide a comfortable soundenvironment according to thefacility characteristics

Moistureconditioning

Ceiling with aseismic performance and moisture
conditioning that realizes a safe, secure, andcomfortable space

An anti-seismic ceiling construction
techniqueExamination room

A ceiling system exclusively for hallways

Sound absorbing and moisture
conditioning ceiling material

Kindergartens and childcare facilities Karaoke room

Improvementof the soundenvironment
in offices

Kindergartensand childcare
facilities

Commercial
facilities

With the building
materials that focus on sound control, such as ceilingmaterials that suppress sound vibrations and soundproof
doors with a high level of sound insulation, we realize thesound environment in offices suitable for new ways of working.

Schools andeducational
facilities
Public facilities
Offices

The 40th anniversary of acoustic product businessOur acoustic product business marked its 40th anniversary in
April 2022. At first, we started with proposals of soundproof
products for houses and by taking advantage of thetechnologies and know-how on sound cultivated in the past,
we now conduct proposal activities for potential sound issues
in public and commercial buildings.
On the occasion of the 40th anniversary, we expanded andimproved content on sound on our website and are actively
deploying promotions toward the further expansion in publicand commercial buildings.

Elderly facilities

Medicalfacilities
Accommodation
facilities

Door
Safetyhapia public

Durability

Easy maintenance

Doors that pursue safetyand durability according
to use scenes

Proposals of spaces
made with antiviralbuilding materials
We respond to the risingneeds of the antiviral functionand expand the productlineup that enables the
proposals for the entire space.

45

DAIKEN GROUP REPORT 2023

Doors for public and commercial facilities

OMOIYARI Series

Doors for kindergartens andchildcare facilities

Doors for elderly facilities

Public and commercial buildings: Trends in net sales(¥100 million)
400

Industrial materials business

Building materials businessEngineering business

350
300

+36

250

224

+8

+5

281

+3

+14

+5

Other

+2

363

310

+7

200

Daiken Group’s Value Creation

150
100
50
0

2022
Results

2023
Results

GP25 2nd Stage

Wall materials
Noncombustibility Workability

DesignNon-combustible and well-designed
walls that decorate spaces

2024
Forecast

2026 (Fiscal year)
Goals

GP25 3rd Stage

Enhancement of the
distribution of
non-combustible
products
We realize spaces having a unified
design with non-combustible
products, such as walls, ceilings,
eaves, and louver materials.

Strategy for Value Creation

Tatamimats

Non-combustible wall material

Easy maintenanceDurability

Water
repellent

Color variations

Tatami mats madefrom washi paper havea great range of design
and are best suited for
Accommodation facilities
modern spaces

Designed wall materials

Flooring
ScratchresistanceSound
insulation

Commercial facilities

Promoting the use of domestic or local materials

SafetyFlooring that produces wood spaces while utilizing local materials

We proactively use domestic timber, such as Japanese cedar and cypress,
which were difficult to use in public and commercial buildings, in a wide
range of parts, such as flooring and wall materials, by using our unique
technologies.

Data

Sheet decorative flooringthat can be used in heavy duty areas

WPC soundproofing flooringthat can be used in heavy duty areas

Participation in point 0, a co-creation consortium with other companies
While demand for offices changes with the current diversification of work styles,
we have been participating in point 0 since 2021, which operates a co-creation
consortium with other companies, with a view to enhancing proposal capabilities
in public and commercial building. At a co-working space point 0 marunouchi,
we have been working on a demonstration experiment toward the proposal of anew office, such as an improvement proposal of the comfortable soundenvironment, using wood in interior finishing of the office.

Co-working space

Demonstration experiment touse wood in interior finishing

Case of the introduction of soundenvironment improvement

DAIKEN GROUP REPORT 2023

46

Initiatives for Priority Markets

Home Renovation Market
We have built a system where the entire group can meet a wide variety of needs for renovation through a great range of
product lineups for renovation as follows: (1) Proposals for spaces in the TDY Collaboration Showroom, (2) cooperation withthe engineering business that handles construction, and (3) product development and manufacturing from the perspectiveof the construction site. By further enhancing cooperation in the group and promptly responding to the changes of thetimes and market needs, we will expand in the entire home renovation market.

Integrated system by the Daiken Group’s cooperation

Labor-saving type products that realize renovation in a short time

Pr oduc t
Product
Adhesive flooring

Ceiling material that can be installed on theexisting cloth

functions andhapia line frame

totally
space

Proposals that correspond to the changes in lifestyles and new trends
Regarding renovated properties, the trend-conscious spatial taste is favored andthere are growing needs of wanting to realize more convenient and comfortable
spaces according to new lifestyles, such as the popularization of working at
home due to the coexistence with COVID-19 and the increase in time to be spentat home. In response to such market needs, we enhanced the development of
products that stylishly produce spaces based on the popular black color aswell as the products that secure a workspace with the labor-saving techniqueand correspond to the improvement of sound problems, such as soundleakage and reverberation.

Installation of a teleworking space Improvement of sound problems

Production
The build-to-order systemfor ordering specific sizes
that can finely respondto customer needs

Realization of a stylish space

Development
The sound-proofing type was added to the sheet decorative
flooring where the stereoscopic effect won popularity

Development of products that are easy

Newly developed the MDF base material from the aspects of environmental friendlinessand stable procurement

such as saving construction

We added materials exclusively for apartment renovations to the lineup that won popularity
from the market as flooring with a three-dimensional designand excellent functionality and launched it in October 2022.
The MDF base material that we newly developed is used as
the base material for this product from the perspective ofenvironmental friendliness and stable procurement. We
contribute to sustainability and proceed with the proposals
as the high design sheet decorative flooring, which no othercompanies have, for the apartment renovation market
Realized three-dimensional finishing(Patented)
where higher quality and distinctive spaces are favored.

47

DAIKEN GROUP REPORT 2023

to renovate from the perspectiveof the construction site,
time and labor

Home renovation market: Trends in net sales
Industrial materials business
Building materials businessEngineering business
Other(¥100 million)
400
350

+2

325

+19

+7

+16

400

395

(0)

(0)

(4)

300

341

+34

250
200

Daiken Group’s Value Creation

150
100
50
0

2022
Results

2023
Results

GP25 2nd Stage

2024
Forecast

2026 (Fiscal year)
Goals

GP25 3rd Stage

Enhancement of renovation proposals by thethree-company alliance with TOTO and YKK AP
With a view to enhancing proposals for spaces for remodeling and providing comfortable andsatisfactory living spaces that are beyond customer expectations, TOTO, Daiken, and YKK AP(hereinafter referred to as “TDY”) formed the business alliance in product planning anddevelopment, as well as the sales support system in 2002. Following the change in the
consumption trend from things (products) to events (ways of living), we have proposed the value of
new life in line with the times, such as shifting to proposals with lifestyles as the starting point,
instead of products being the starting point.

lineuplineup withdesign to

TDY Collaboration Showroom

coordinate a

A one-stop proposal for a space

TDY Sapporo

TDY Kanazawa

TDY Hiroshima

TDY Tokyo

by the TDY alliance that customers
can easily imagine the value

Strategy for Value Creation

ProposalCollaboration showrooms jointly operated by the threecompanies of TDY have been deployed in eight sites in Japan.
By having customers look, touch, and feel the three companies’
products, they can develop the image of living and choose
products with satisfaction.

TDY Nagoya
TDY Fukuoka
TDY Takamatsu

TDY Osaka

Established the Online Renovation Consultation Center

Installation workand construction
Provide a completed spacethat maximally brings out
product value

The Daiken Group’s construction system in the home renovation market
Renovationl Smileup Corporationl ReformQ Co., Ltd.

Apartment renovationl PAC SYSTEM
Co., Ltd.
Our project

DAIKEN GROUP REPORT 2023

48

Data

❶ A moderator will have an interview
We established the Online Renovation
with a customer based on theConsultation Center in which exclusive
consultation content input at thetime of making a reservation.
staff from the three companies of TDY
widely respond online to the problems
CustomerModerator
ZOOM
and concerns in proceeding withcompany’s consulting staff
renovation in October 2022. They not ❷ Each
will explain about products andmakea proposal according to the
only introduce products that are
consultation content.
optimal for renovation but also
Consulting staff
respond to a wide variety of problems
YKK APTOTO
DAIKENfor customers to be able to proceed to
the next step of renovation with peaceof mind, such as how to proceed withthe renovation, introduction of
The image diagram of the Online Renovation Consultation
contractors, and other factors.
CenterResearch and Development
The Daiken Group has positioned development of industrial materials using sustainable resources, such as timber, and technologicaldevelopment to create safe, secure, healthy, and comfortable spaces centering on the R&D center as the priority themes and has beenproceeding with research and development aimed at creating new shared value that will lead to the resolution of social issues andexpansion into new technologies and new businesses for the next generation. In addition, to speed up the far-sighted research anddevelopment and expand the domains, we proactively put effort into the co-creation activities with various stakeholders.

Policyl Development of new technology for the resolution of social issues, business expansion by aggressively using
co-creation (open innovation), and the creation of new business toward the new generationl Nourishment of a culture that admires and supports challenges by creating a mechanism to be able to challenge new
business areas

Future full of smile

Expansion into
new technologies
and new businesses
for the next generation

Creating new sharedvalue that will lead tothe resolution ofsocial issues

Industrial
materials

Building
materials

Spatialenvironment Assayevaluation

Intellectual property
strategyIntellectual property strategy tolead the development areas linked
to the management strategy andto secure differentiation and acompetitive advantage

er
mb
i
t
es
[Pr
as
i
uch spacs,[P oritize
s
e
d the
rio
ble
ourc
r iti
me 1]
le res
orta
b
f
a
zed
n
i
Develop
m
a
t
co
them
ment of industri materials that use sus
andale 2] Dlthy,aehevelopm,, secureent of techno
logies that create safe
R&D investment

Human resource
development

Aggressive investment ofmanagement resources toaccelerate the efforts

Companies and manufacturers
zExpansion of business domains bytechnology exchanges
zCreation of joint development themes andmatching between the technological seeds
and needs

Development of human resources
to keep opening up the futurewith technologies, ideas, andpassionR&D that embodies the mission
in the group corporate philosophy

Students and recruitment
zWork experience through internships
zInteractions with the generation that willbear the future

Customers and suppliers
zDeepening their understanding of our
products and quality
zEnhancement of the relationship of
trust

49

DAIKEN GROUP REPORT 2023

Idea

Technology

Passion

Daiken R&D center

Universities and research
institutions
zJoint development andcomprehensive alliance

Local communityzA company that is loved by the local
community
zCooperation with a municipality

Within the company

Co-creation
activities

Stakeholders

zEnhancement of cooperation, sharing ofissues, and discussions of development
themeszAcquisition of a way of thinking necessary forcapability development as well as researchand development

Development of technologies

1

Prioritized
theme

2

We put effort into the development of technologies for industrial materials andbuilding materials that effectively use timber with no waste. As a challenge in a
new field, we have been proceeding with the development of technology to utilize
cellulose nanofibers (CNF) that are fibrillated timber at the nano-level. CNF has
the characteristics that wood fibers used for the wooden fiberboard do not have,
which leads to the new approach to the environmentally friendly new use application.
In addition, as a new challenge in the existing business, we have beenproceeding with the initiatives toward the establishment of the production
technology for the ultimate environment conscious MDF (medium density
fiberboard) for which adhesives using the raw materials for petrochemical
products are not be used at all. This time, we succeeded at MDF prototype
manufacturing using the adhesive made of
the wood-derived component, which is thefirst step.
We will enhance the initiatives for researchand development that will contribute toenvironmental friendliness and the SDGs
with a focus on the technologies for theeffectively use and recycling of wood
resources.

Development of technologies thatcreate safe, secure, healthy, andcomfortable spaces

Daiken Group’s Value Creation

Development of industrial materials
that use sustainable resources,
such as timber

Prioritizedtheme

In addition to the pursuit of the possibilities of industrial materials, we have beenproceeding with research and development to give a new function to industrial
and building materials. We grasp the spatial environment based on the assay
evaluation technology, delve into it from the perspectives of the temperature,humidity, and sound environment that are essential when people spend time
comfortably, and at the same time, we conduct assay evaluations toward making
responses to harmful substances, such as asbestos and formaldehyde.
While further saving of energy in buildings is required toward the realization of adecarbonized society, we also have been focusing on research projects
concerning temperature and humidity to simultaneously pursue the
comfortableness of livelihood and the reduction of consumption energy by thefunctions of industrial and building
materials.
While performance that people require forspatial environment changes with times, byalways thinking what performance will benecessary in the future and proceeding withtechnology development of functionalbuilding materials, we will realize thecreation of a safe, secure, healthy, andcomfortable space.
Thermal image measurement

Prototype MDF that used awood-derived adhesive

The R&D Center works on Ecology and Improvements in the Quality of Space in four sectors and promotes R&D that will contribute to a sustainable society.

Industrial
materials

Further improvement of theexisting industrial materials
and development ofindustrial materials that will
become a key to capturing
new markets

Building
materials

Development of new secureand safe building materials
that will be needed by society
in the futurel High functionality of the wooden boards and inorganic boardsl Technology development to use unused resourcesl Wood building material utilization development in the new fieldl R&D of industrial materials for new markets other than building materialsl Development of environment-conscious building materialsl Development of high functional paints and painting technologyl Development of new construction technique for building materialsl Adding a high value to wood building materials

Development of spaces andSpatialbuilding materials that will
environment realize a comfortable life

Assay and analyses of spaces andevaluation building materials using thel Development of energy-saving and indoor environment improvement technologies
l Analysis by simulation of the thermal, humidity, and cross-ventilation environment

l Measurement of air quality
l Building materials’ heat generation testl Sound insulation performance evaluationl Asbestos analysis

Strategy for Value Creation

R&D theme

Various measurements andexpertise cultivated in R&D

Organizational structure toward the enhancement of intellectual property strategies andinvestment of management resources

Trends in the R&D costs, Right holder scores, and Number of patents owned
Development division(¥million)

1,800

R&D center

1,200Intellectual property
department

900

1,430

0

R&D expenses

1,477

1,551

1,592

1,587

100

112

124

291

308

318

2016

2017

2018

Benchmark1st(1 patent)

550
500

1,491
163

1,717

177

191

450
400

149

600
300

Right holder score (Indexed)

1,452

1,500

Next-generation businessdevelopment department* Right holder score: One of the indices toevaluate the value of the entire patentgroup owned. The right graph shows
values by indexing fiscal 2016, which isthe benchmark, as 100 to indicate thechanges over the years. Created by using
Patent Result Co., Ltd.’s Biz Cruncher.

Number of patents owned

132

339

361

2019

2020

390

2021

2nd

401

427

350
300

2022

250

2023 (Fiscal year)

3rd

DAIKEN GROUP REPORT 2023

50

Data

In starting the medium-term plan GP25 3rd Stage in April 2022, we newly established the development division toward the acceleration of the initiatives for new businesses
and by placing the R&D center, which is the core of technology development, the next-generation business development department, which is responsible for crystallizationof new businesses toward the next generation, and the intellectual property department, which executes intellectual property strategies to make business and development
strategies more effective, under the division, we enhanced our organizational structure. In fiscal 2023, various technological challenges were conducted under the new
structure and a new technological bud came out. To make the research and development capabilities, which are the sources of the Daiken Group’s strength, robust, we
proactively continue to invest management resources and lead to the medium- to long-term corporate value improvement.

Environmental Strategies
Initiatives toward the realization of the Daiken Global Environment Vision 2050
In October 2021, we formulated the Daiken global environment vision 2050, in which the Daiken Group’s attitude for the long-term initiatives, policies, and goals for environmental issues are established. We aim to contribute to the realization of a sustainable society from thethree perspectives of the promoting resource recycling, mitigating climate change, and coexisting with nature and will put effort into theresolution of social issues, such as environmental issues.

DAIKEN Global Environmental Vision 2050
VisionFor a future full of smile
The overall aim of the Daiken Group is to realize a sustainable society towards 2050
by promoting resource recycling, mitigating climate change, and coexisting with nature.
Policy and the long-term goals upheld in the Global Environment Vision 2050
Environment PolicyLong-Term Goals

1

Promotion of resource recycling

2

Mitigation of climate change

3

Coexistence with nature– Waste reduction and reuse of resources –– Realization of carbon neutrality –100% waste recycling
Net zero greenhouse gas
emissions
Reduce the impact on thenatural environment– Conservation of biodiversity –Structure to promote environment management
President
Sustainability Promotion Committee

QEMS Manager

 Chairperson: Representative Director, President Secretariat: Sustainability Promotion Department andCorporate Planning Department

Secretariat: Quality Assurance Department
and Sustainability Promotion Department
QEMS Internal Audit Team(Key agendas concerning environment in fiscal 2023)
 Progress of the medium-term management plan’s
ESG goals (environment) Response to the climate change-related issues

Each department/Group company
QEMS Manager* QEMS: Quality and Environment
Management System

ISO 14001 certificate acquisition status (As of the end of March 2023)(1) The percentage of the offices that acquired the certificate in all offices inJapan: 90.8% (Based on the consolidated number of employees)(2) The percentage of the offices that acquired the certificate in all overseas
offices: 71.2% (Based on the consolidated number of employees)

44 offices and plants at 9 companies

5 offices and plants at 5 companies

51

DAIKEN GROUP REPORT 2023

1

Promotion of resource recycling
Reduction of final disposal of waste in landfills
Trends in final disposal of waste in landfills(1,000 t)

250

Amount of recycled resources*
Amount of simple incineration
Final volume disposed of in landfill

Amount generated

210.5

Amount generated

200

176.2

Recycling
93%

150

Recycling
92%

20
Simple incineration

Simple incineration

1%

11.8
0

Final volume disposedof in landfill 6%

Fiscal 2022

1%

11.8

Final volume disposedof in landfill 7%

Fiscal 2023

10.0

Final volume
disposedof in landfill
15% reduction
compared tofiscal 2022

Fiscal 2026 Goals*Amount of recycled resources = Valuable + Use for materials + Use for heat2

Daiken Group’s Value Creation

The Daiken Group aims to realize a recycling-oriented society and puts effort
into recycling waste, such as reusing the defectives generated in the
manufacturing process as product raw materials to the extent possible, andusing those as fuel for production, if not suitable for raw material itself. In fiscal
2023, we promoted initiatives to increase the use of waste for materials in
addition to the use as fuel for production by stably operating biomass boilers.
On the other hand, the final waste volume disposed of in landfill that is set as
one of the medium-term management plan’s ESG goals (goal in fiscal 2026:
15% reduction compared to fiscal 2022) went sideways from the results in theprevious fiscal year and as a result, there is an issue left unsolved. Toward theachievement of the goal, we will put effort into the further consideration andexecution of the recycling measures.

Mitigation of climate change

Initiatives for the reduction of greenhouse gas emissions linked to the business activities

2

162.7

160

151.2

(1,000 t-CO2)

180
140

145.1

162.7
80.2

120
160

151.2
69.8

80
120

93.9

80.2
82.5

91.1

69.8
81.4

100
60
80
40

99.3

93.9

91.1

20
0

2018
Results

2018
Results

2019
Results

82.5

2020
Results

2019
Results

81.4

2021
Results

2020
Results

10% reduction
compared
136.1 to25% reduction
compared tofiscal 2022

fiscal 2022

113.4

Overseas
136.1
65.0
80.1

113.4

Overseas
Japan

20
60
0
40

compared to

65.0
145.1

100
140
99.3

compared tofiscal 2022 gas emissions
fiscal 2022
Greenhouse(Scope 1+2)

2022
Results

2021
Results

2022
Results

80.1
2023
Results

To achieve net zero
greenhouse gas
emissions

Reduction image
in the future

Japan

2023
Results

Strategy for Value Creation

As milestones toward the realization of carbon neutrality upheld in the Daiken global environment vision 2050, the Daiken Group has set the greenhousegas emission reduction goals by fiscal 2026 and by fiscal 2031. Regarding the goal by fiscal 2026, 10% reduction (Scope 1+2) compared to fiscal 2022
and 6% reduction (Scope 3) compared to fiscal 2022 have been upheld as one of the medium-term management plan’s ESG goals In the goal by fiscal
2031, 25% reduction (Scope 1+2) compared to fiscal 2022 and 13.5% reduction (Scope 3) compared to fiscal 2022 have been upheld, and we obtained
the certification of the Science Based Targets initiative, which is an international initiative, in June 2023 as the goal was science-backed Well Below 2°C,
which is consistent with the levels required by the Paris Agreement. In fiscal 2023, with the impact of the rationalization of the production bases and thefluctuation of the electric power supplier’s emission factor, in addition to the utilization of renewable energy, energy-saving activities, and promotion of theinitiatives
for productivity improvement, Scope 1+2 was 4% reduction compared to fiscal 2022, and Scope 3 was 3.7% reduction compared to fiscal(1,000 t-CO )180 We will continue the initiatives for the reduction aimed2022.
at realizing carbon
neutrality.
10% reduction
25%
reduction

2026
Goals

2031
Goals

2026
Goals

(To realize carbon neutrality)

achieve
2051To(Fiscal
year) net zero
Goals greenhouse gas
emissions

Reduction image
in the future(To realize carbon neutrality)

2031
Goals

2051 (Fiscal year)
Goals

Note 1: Overseas group bases’
3,500emissions have been combined since fiscal 2021 results.
Note 2: For the values in and after fiscal 2022, the reviewed calculation method has been used as we obtained the SBT certification. In addition, values exclude Pacific Woodtech
Corporation’s results as the company became an equity method affiliate from a consolidated subsidiary in August 2022.
3,000
3,500

Greenhouse gas emissions (Scope 3)(1,000 t-CO2)

6% reduction

13.5% reduction

reduction
1,991.1 6%1,942.8

13.5% reduction
compared
1,787.8 to

2,500
3,000

compared tofiscal 2022

2,000t-CO2)(1,0002,066.8

compared tofiscal 2022

1,500 1,763.8
2,000

2,066.8

1,000
1,500 1,763.8

1,991.1

fiscal 2022

1,942.8

1,787.8

500
1,000
0
2021
500 Results

Data

2,500

compared tofiscal 2022

To achieve net zero
greenhouse gas
emissions

Reduction image
in the future2022
Results

2023
Results

2026
Goals

2031
Goals

Note 1: Combined figures of the emissions in Japan and overseas(To realize carbon neutrality)

achieveyear) net zero
2051To(Fiscal
Goals greenhouse gas
emissions

Reduction image
in the future(To realize carbon neutrality)

0 Note 2: For the values in and after fiscal 2022, the reviewed calculation method has been used as we obtained the SBT certification. In addition,

2021 values
2022
2026 Corporation’s results as
2031
2051 (Fiscal year)
exclude2023
Pacific Woodtech
the company became an equity method affiliate from a consolidated
subsidiary in
Results
Results
Results
Goals
Goals
Goals

August 2022.

(%)
Futureinitiatives toward reduction
100l Pursuit of the productivity improvement and efficiency in production
bases
(%)
l
E xpansion of the use of renewableenergyand20
consideration
19 of 17
21
100
21
22
purchasing
green
electricity
22
80

22

21

21

20

19

17

Other

l Consideration of the introduction of internalcarbon pricing for
MDF
investment
MDF decisions
Plantation timber (Imported)18
l Considerationof fuel conversion basedon technology
development,
19
Domestic
timberOther
price trends, and negative emissions Lauan(collection
and storage of CO2)
wood (Imported)
MDF
18
19
Plantation timber

MDF

Plantation
DAIKENtimber
GROUP(Imported)
REPORT 2023
Domestic timber

52

22

20

3,000

0

2018
Results

2019
Results

2020
Results

2021
Results(1,000 t-CO2)

2,500

2022
Results

2023
Results

2026
Goals

6% reduction

2,000

2,066.8

1,991.1
3,000

1,500 1,763.8

31,942.8(1,000 t-CO2)

2051 (Fiscal year)
Goals

compared tofiscal 2022

Coexistencewith nature
1,787.8
6% reduction

2,500

13.5% reduction

compared tocompared to2022
fiscal 2022 of lauan wood
Initiatives fiscal
towardzero usage
2,000

1,000

2,066.8

1,991.1 1,942.8
For the purpose of the reduction of the risks of stabletimber procurement and currency exchange fluctuations, in addition to the reduction of
1,787.8
1,763.8
environmental burden, we1,500
have been proceeding with the switch from natural lauan wood (tropical natural wood) to plantation timber, MDF, andTo achieve net zero
domestic timber to be used for flooring substrates produced by the Daiken Group. In fiscal 2023, regarding the floors for apartments for which greenhouse
lauan
gas
500
plywood base materials areused, we introduced a new product of the MDF basematerial;
however,
becausethelaunchwasinthesecondhalfof the1,000
emissions
Reduction image
fiscal year, it will be in and after fiscal 2024 when the new product will be reflected in the figures as the reduction effect. While the timber procurement(Tonetrealizecarbon neutrality)
To achieve
zero
in the futureenvironment worsens on a500
global scale, as we strived for stable supply of products by reviewing the procurement balance between plantation
timberandgreenhousegas
0(Fiscal
year)
2021
2022
2023
2026
2031
2051
emissions
image
domestic timber, the usage of domestic timber resulted in a decrease to 45%. The timber Reduction
procurement
environment continues to be in a toughsituation
Results
Results
Results
Goals
Goals
Goals
(To
realize carbon neutrality)
in thecompared
futurebut toward the achievement 0of the usage of lauan wood for flooring substrates to reduce by 50%
to fiscal 2022, which was set as one of the
2021
2022
2023
2026
2031
2051 (Fiscal year)
medium-term management plan’sgoals, andzero use Goalsof lauan wood beyondGoals
the ESG goal, which is upheld in the Daiken global
ResultsESGResults
Results
Goalsenvironment vision
2050, we will further put effort into the development of technologies while optimizing the balance among plantation timber, MDF, and domestic timber
and their stable procurement.

Ratio of flooring substrates
(%)
100

Other

Other

22

21

21

22

20

21

21

19

19

20

17

17

18

18
MDF
19

MDF

MDF timber (Imported)
Plantation

MDF
19

Domestic
timbertimber (Imported)
Plantation
Lauan wood (Imported)

Domestic timber
Lauan wood (Imported)

80

23
32
60

23

40
43

27

20

20

Plantation timber
16(Imported)
20
Pursue the sustainable useof base materials toward
the stable supply of products

Active use of domestic timber

40

24
4

Plantation timber
16(Imported)

27

28

32

28

20

30

41

34

47

51 Domestic timber
45

Pursue thesustainableuse
To achieve
theglobal towardof baseDaikenmaterials
environment
the stable vision
supply2050of products

11

Active use of domestic timber
20

28

30

24

51 Domestic timber

Reduction of the use of lauan
47wood

26

34

41

23

21

19

17

15

2017

2018

2019

2020

2021

11

16

(To realize carbon neutrality)

2031
Goals

13.5% reduction

compared tofiscal 2022

Environmental Strategy
3,500

40

26

greenhouse gas
emissions

Reduction image
in the future0

To achieve the zerouse of lauan wood
in
2050
To
achieve the45

15
Lauan wood (Imported)
Lauan wood (Imported)
15
7

2015

2016

2022

2023
Results

Daikenglobal2051 (Fiscal year)
environment
vision 2050

2026
Goals

Response to TCFD

Under
the Daiken
globalenvironment
Reductionof theuse oflauanwood vision 2050, which indicates the long-term direction of the initiatives for the environment, the Daiken Group expressed
achievethatthe zeroan agreement on the recommendation by the TCFD (Task Force on Climate-related Financial Disclosures) in October 2021. WeTo
acknowledge
are one of the 15
important management issues that lead to the risks and opportunities
inand wood
17 change,1519 such as climate
21 responses,
23 environmental
usebusinessof lauanLauanwood
disclose information on governance, strategies, risk management, andindicesand(Imported)
goals, which are the disclosure items recommended by the TCFD.

2017

2018

2019

2020

2021

15
Governance

2022

53

DAIKEN GROUP REPORT 2023

7

2023

In the sustainability promotion committee in which the representative director and presidentisResults
the chairperson, we identify important climate change-related risks and opportunities,
disseminate them to each department and group company, and appropriately conduct
management. Regarding risks, as we established the risk and compliance management
committee (hereinafter referred as the “RCM committee”) in which the deputy president andexecutive officer is the chairperson and disseminate them to each department and groupcompany, the sustainability promotion committee is responsible for the responses to theclimate change-related risks and opportunities and has been proceeding with the responses
by cooperating with the RCM committee. These results are regularly reported to the Board.
From now on, through the continuous promotion of the Daiken global environment vision 2050,
we will analyze the risks and opportunities to be brought to the Daiken Group’s businesses
and value chains by climate change, as well as the financial impacts associated with them,incorporate them into the management strategies, and disclose information.

in 2050

Lauan wood (Imported)

2026Promotion structure
Goals

2051 (Fiscal year)

The Board

ReportingResponSustainability
sible forTCFD Promotion Committee
Chairperson: Representative Director,
President
Secretariat: Sustainability Promotion
Department and Corporate Planning
Department

Risk and ComplianceManagement Committee(RCM Committee)
Chairperson: Deputy President Executive
Officer
Secretariat: Corporate Planning Department
and Legal Department

Cooperate each other in regard to the risks

Sustainability promotion
department
Promotion departments

Departments responsible for risks
Department responsible for legal affairs

Each department/Group company

Strategy
We grasped the risks and opportunities related to the Daiken Group’s businesses in regard to the climate change and organized important risks andopportunities. We organized them based on the results of the risks that had been sorted out, evaluated, and responded by the RCM committee. In fiscal
2023, we referred to the 2°C (1.5°C) scenario and the 4°C scenario based on the TCFD recommendation and conducted our group’s business activities
and impact evaluations. We will apply the results of scenario analyses and lead to the formulation of countermeasures and development of plans.
Preconditions of scenario analysesl Short term: Fiscal 2026 (Final fiscal year of GP25) l Medium term: Fiscal 2031 (Fiscal year of the SBT goal)l Long term: Fiscal 2051 (Fiscal year of the Daiken global environment vision 2050 goals)

2 Scopel Domestic market (Physical risks are for domestic production bases)

3 Overview of the scenario setting
The scenario to be able to suppress the earth’s average temperature rise to 2°C

The earth’s average temperature rise will be 4°C compared to the level before the*Major external scenarios referred: RCP2.6, IEA WEO, etc.

*Major external scenarios referred: RCP8.5, IEA WEO, etc.

Industrial Revolution as the policies, regulations, and social initiatives toward the
The 2°C (1.5°C) compared to the level before the Industrial Revolution as the introduction of
The 4°C
reduction of CO2 emissions will not progress. The scenario where the impact of(1.5°C) policies and regulations, as well as market changes, rapidly progress toward carscenario
climate change, such as a disaster, will become extensive.
scenario bon neutrality in 2050.

4 Impact

Large: 5 billion yen or more, Medium: 500 million yen or more and less than 5 billion yen, and Small: less than 500 million yen

Daiken Group’s Value Creation

1 Assumed period

Risks and opportunities of the climate change
Classification
Policy/Regulation
Transition
risks

Market(Changes incustomerrequests)

Item

Scenarioz Difficulty in obtaining wood chips (product raw materials and fuels) by promoting biomass
power generationz An increase in procurement costs due to the timber price hike (Regulations for tree
trimming etc.)
z An increase in costs due to traceability of products and materials and responses to life
cyclesz Procurement risks and an increase in costs due to the shift to environmentally friendly raw
materials and materials

Time
axis

Large

z Sales expansion by newly developing and commercializing
environmentally friendly products
Medium z Capital investments using subsidies
z Pursuit of the productivity improvement and efficiency inproduction basesz Enhancement of the BCP measures for production and sales
bases
z Responses made by insurance for damage caused by naturalLarge
disastersz Enhancement of the BCP measures for suppliers andlogistics warehouses

An increase in
the averagetemperaturez Damage on and shutdown of production and sales bases due to natural disasters anddelays in member procurement, shipment, and delivery due to disruption of the logistics
networkz Delays in goods deliveries due to suppliers and logistics warehouses being affected bynatural disasters

4˚C
Short
term
- longterm

z An increase in the cooling costz Appeal to customers by recycling raw materials (Improvement of corporate value)

Resource
efficiency

z Appeal to customers by increasing the usage of recycled materials (Improvement ofcorporate value)

Small z Promotion of the operation to suppress power consumption
z Improvement of corporate value by enhancing the system forresource circulation and expansion of environmentally friendly
products
Large
z Improvement of corporate value by enhancing the system forresource circulation and expansion of environmentally friendly
productsz A decrease in costs by efficient transportationz Optimization of transportation by using digital technology

z An increase in demand due to the establishment of the production processes that do notemit greenhouse gases

Opportunities

2˚C (1.5˚C)z Formation of the markets for and expansion of demand for energy-saving products andenvironmentally friendly products (New wood industrial materials etc.)
Products,
services, andmarkets

Resilience

Strategy for Value Creation

Physical risk

Countermeasurez Expansion of suppliers (New supplier acquisition)z Sales expansion by newly developing and commercializing
environmentally friendly productsz Conversion to the materials with less market fluctuationsz Responses to certified materials, carbon footprint, etc.
z Sales expansion by newly developing and commercializing
environmentally friendly products

2˚C (1.5˚C)Energy saving/ z An increase in costs associated with the responses for decarbonization of the existing
Decarbonizaproduction facilities (Capital investments etc.)tionz Expansion of the use of renewable energy and an increase in the cost to introduce theregulations
green electricity certificate
Frequent
occurrence ofa typhoon/
Heavy rain

Impactz Sales increase due to the mitigation of climate change and expansion of the sale ofadaptive products (expansion of the sale of timber products from the perspective of carbon
storage)z Improvement of corporate value by newly developing and commercializing environmentallyfriendly products by taking advantage of our strengths of the technologies to use timberz Improvement of the reliability of the supply chain by revitalizing investments for BCP
measuresMedium z Pursuit of the productivity improvement and efficiency inproduction basesz Shift to renewable energy, fuel conversion, etc.
z Enhancement of the responses to zero destruction of nature
Large z Enhancement of the change from petroleum-derived tonature-derived
Small

z Review of the product design criteria based on circular
economy, carbon footprint, etc.

Largez Expansion of the environmentally friendly productsz Appeal of the technology to use timber

Small z Enhancement of the BCP measures

Risk management

Indices and goals
We have set Mitigation of climate change – Realization of carbon neutrality – as a pillar in the environment policy of the Daiken global environment vision
2050 and aim for net zero greenhouse gas emissions as a long-term goal toward 2050. Toward the reduction of greenhouse gases that have asignificant impact on climate change, we used backcasting from how we should be in 2050 and set and proactively put effort into the fiscal 2026 goals
in the ESG goals of the medium-term management plan GP25 3rd Stage. In addition, we have set the reduction plan and goals in fiscal 2031 as themedium-term goal and have been certified by the SBT initiative in June 2023.
Fiscal 2026
goals
(Goal of GP25 3rd Stage)

Gross emissions in Japan andGreen- overseas (Scope 1+2)
house
gas Gross emissions in Japan andoverseas (Scope 3)

10% reduction (Ascompared to fiscal 2022)
6% reduction (Ascompared to fiscal 2022)

Fiscal 2031
goals
(SBT Goals)

Gross emissions in Japan andGreen- overseas (Scope 1+2)
house
gas Gross emissions in Japan andoverseas (Scope 3)

25% reduction (Ascompared to fiscal 2022)
13.5% reduction (Ascompared to fiscal 2022)

DAIKEN GROUP REPORT 2023

54

Data

Climate change is one of the important external risks and we acknowledge that it is the risk to be addressed by the entire company. We enhance theeffectiveness by the sustainability promotion committee and the RCM committee cooperating with each other and proceeding with it in the environment
management system and the company-wide risk management system. We will put effort into the improvement of processes to further evaluate theclimate change-related risks.

Human Resource Strategies
Based on the group corporate philosophy and its practice system, the Daiken Group has upheld the development of autonomous humanresources that support the growth and can respond to changes (human resource development policy) and the pursuit of an organizationin which human resources fully exercise their abilities, mutually inspire each other, and grow/challenge (internal environmental
improvement policy) as the policies and has been promoting the initiatives from the perspectives of the promotion of diversity, workstylereform, human resource development, health and productivity management, and challenge-oriented corporate culture. By continuously
deploying the measures from five perspectives, we will lead to producing the favorable cycle, maximizing humanresource value by improving individual performance, and improving the entire group’s corporate value.
l Institutionalization and establishmentof flexible work stylesl Promotion of labor saving andautomationl Pursuit of a sense of satisfaction andjob satisfaction

Improvement ofcorporate
value
Workstyle reforml Promotion of playing a role
without being bound by age
and genderl Support for achieving abalance between work andpersonal constraint, such as
child rearing, nursing care,and medical treatment

Promotion ofdiversityl Improvement of support for theemployees’ career designl Development of the human resource
development plan and improvementof the education program based on
the planMaximizationof human
resource value

Human resource
development

Healthmanagement

Priority measures and goals in the Medium-Term
Management Plan GP25 3rd Stage
Theme

Priority measures
Total diversity index 3rd Stage

Promotion of diversity

The ratio of female employees hired (Newgraduate nationwide course)
The female full-time employee ratio
The percentage of male employees taking
childcare leave (Three-year average)
The female manager ratio
Long-term care seminar attendance rate

Promotion of healthmanagement

Promotion of workstylereformDiversity training attendance rate (Managers)
The degree of attainment of the employment
rate of persons with disabilities
Personnel composition by age (Difference bygeneration)
The rate of receiving health promotion allowance
Health score (Exercise, rest, and nutrition)
Presenteeism loss rate
Total work time reduction rate
Rate of taking annual paid leave
Employee satisfaction

Reinforcing humanresources development

Enhancement of theoccupational safety andhealthEnhancement of thegovernance system

Job separation rate within three years
Young employees’ career plan training attendance
rate
Attendance rate for the prioritized market
enhancement program
Attendance rate for training for management staff
training program
Serious disasterFiscal 2026 goals/KPIs+30 pt (As compared to fiscal
2022)
50%
20%
50%
2%

l Operation of the internal venture system
to solicit new business ideas from
employeesl Operation of the suggestion system tosolicit operational improvement ideas at
the manufacturing basesl Introduction of the Femtech program thatapproaches health issues specific to womenl Payment of the health promotion allowance fornonsmokers

Toward the realization of management strategies
and improvement of corporate value
Improvement of the proposal capabilities
for public and commercial buildings(An increase in sales engineers)

An increase in humanresources assigned
overseas

100%
100%

Improvement of laborproductivity

Within the difference of 10 pt
80%

Improvement of added value

20 pt
25%
3% reduction (As compared tofiscal 2022)
70%
60 pt
Within 15%
100%

Improvement of the effect ofinvestments in education(Reduction of the investments inre-education)

50%
80%
0
100%

Female executive ratio (Director)
Degree of penetration of the group corporate
philosophy

60 points or more

DAIKEN GROUP REPORT 2023

An increase inadded value
per employee(An increase inoperating profit per
employee)

Reduction of welfare expenses

Maintenance and improvementof the plant operating ratio

Reduction of
the manufacturingcosts and selling,
general, andadministrative
expenses

10% or more

Initiatives toward the preservation and promotion of mental andphysical health

Based on the idea that our employees’ health is the essential foundation for the group’s sustainable growth and development, we try to
improve every employee’s awareness of health and have started the initiatives toward the preservation and improvement of mental andphysical health. In 2021, we formulated the Daiken health management policy and have been putting effort into the improvement of healthmeasures for both aspects of mind and body since then, such as the payment of the health promotion allowance, quit smoking challenge toencourage our employees to quit smoking, the distribution of health videos, the introduction of the Femtech program that approaches thehealth issues specific to women, such as menstruation/PMS, consultations on fertility treatment, and the implementation of a walking event
led by the company. In March 2023, we were certified as the Health & Productivity Management Outstanding Organizations (Large-Scale
Company Category) selected by the Ministry of Economy, Trade and Industry and Nippon Kenko Kaigi for the second straight year. We willcontinuously put effort into setting indices to measure the effects of measures and actively providing support and create a virtuous cycle ofthe productivity improvement and company growth.

55

An increasein sales in thethree priority
markets

90%/year

Plant mutual safety diagnosis execution rate

Healthmanagement

Challenge-oriented
corporate culturePromotion ofdiversity

Goal management by our unique indices toward the steady promotion ofdiversity
Total diversity index 3rd stagebalanced way, we have set the total diversity index from the medium-The ratio of newly graduated female full-time employees hired(graduates from university/graduate school)
Goal: 50%

term management plan GP25 2nd stage in which the eight diversity
items were indexed as our own indices and manage the goals. From

The degree of attainmentof the employment rateof persons with disabilities

fiscal 2023, we newly added newly graduated females hired, managers’
diversity training attendance rate, and long-term care seminar

120%
100%

The female full-time employee ratio
Goal: 20%

Goal: 100%

attendance rate to the indices and have been promoting the initiatives as
the total diversity index 3rd stage. The total index in fiscal 2023 resulted
in surpassing the goal value and certain results were recognized for theLong-term care seminar
attendance rate
at the age of 40
Goal: 90%

diversity-related initiatives, such as the introduction of the Femtech
program.
* ”The percentage of male employees taking childcare leave” in the total diversity
index is calculated based on the three-year total value to measure the progression
rate over the years.

Managers’ diversity training
attendance rate

The female manager ratio

Goal: 100%

Goal: 2.0%

Fiscal 2022 Results

WorkstylereformThe percentage ofmale employees taking
childcare leave
Goal: 50%

0%Results in Fiscal 2023

Daiken Group’s Value Creation

To steadily promote the initiatives for the promotion of diversity in a

Fiscal 2026 Goals

Deployed the measures to facilitate the active roles of female employees

abilities, we link the diversity promotion and the workstyle reform and have been integrally promoting the initiatives, such as the formulation of the policy and system,
refreshing awareness, and education and training for upskilling. Particularly in recent years, with a view to further improving corporate value in the medium- to long-term, we
have been deploying a number of measures to facilitate the active roles of female employees. As a result, the percentage of newly graduated females hired, which wasapproximately 8% in fiscal 2011, increased to approximately 46.9% on average of eight years after formulating GP25, and the ratio of female employees has been increasing
year after year. These initiatives lead not only to the active roles of female employees but also to the building of the foundation for the workstyle reform and for employees whowill be in various life events to more flexibly work with enthusiasm. We will proceed with the creation of workplaces where diverse human resources can maximally utilize their

Strategy for Value Creation

As shift to more flexible work styles without being bound by the conventional ideas is necessary in order for human resources who have diverse values to fully exercise theirabilities from the medium- to long-term perspective.

Trends in the ratio of newly graduated females hired and the ratio of female employees hired(%)
60

The ratio of newly graduated females hired (Graduate from university/graduate school)
The ratio of newly graduated females hired (Overall)*
48.3
The female employee ratio
The female full-time employee ratio

50
40

35.9

28.6

30
20
10
0

18.7
12.4
8.3

26.9

50.0
37.5

53.3

50.0

50.0

42.4
34.0

34.0

30.3

26.1

22.9
21.7
24.9
20.0
21.7 16.0
17.4
17.8
15.9
15.0
14.5
13.7
13.1

52.8

48.3
32.6

29.0

20.3

30.2
24.5

18.4

18.9

19.5

20.2
15.2

16.3

17.4

19.4

20.0

13.4

14.5

18.5

12.8
2016

2017

2018

2019

2020

2021

2022

2023

2026 (Fiscal year)
Goals

24.2

23.6

21.9

4.5
2011

2012

2013

2014

2015

* Fiscal 2011-2015 include the four plants in Japan absorbed in April 2015

Established the workstyle reform promotion officeWorkstyle reform promotion policy

40

Policy/System

30

Started automatic PC shutdown

10

Refreshingawareness

Workstyle reform declaration

Total diversity index goal setting
Trial of working at home
Harassment prevention workshop for department heads

Ikuboss declarations

Full-time work at home

Staggered working hours system

Diversity exchange meeting

Diversity management
training

Harassment prevention training0Upskilling

GP25 3rd Stage

Comeback system*

Diversity promotion policy
Introduced the hourly paid leave system

20

GP25 2nd Stage

Data

50

GP25 1st Stage

Formulation of GP25

Past
60 key initiatives

Diversity management training
Female exchange meeting~Deployed it to the contract employees~Deployed it by job typeCommunication exchange meeting

Next-generation sales recommendation project
Training for female leader candidates

Support of the
combination

Three-way meeting at the timeof maternity leave and childcare leave

Explanation meeting for the system to support the combinationof work and childcare
Seminar to support the combination of work and childcare
Seminar to support the combination of work and long-term care

*Comeback System: A common name for the system to reemploy voluntarily retired persons as full-time employees

DAIKEN GROUP REPORT 2023

56

Human Resource Strategies
Human resource
development
Challenge-oriented
corporate culture

Realization of the growth strategy and development of human resource
for the next generation

Believing that cultivating autonomy in our employees is a key for our further growth and persistent corporate value improvement, we have provided
various training opportunities for our employees to acquire the skills or knowledge needed for each service year, rank, and job type. From the mediumterm management plan GP25 3rd Stage, we newly established the skill enhancement training and have been enhancing capabilities required for eachrank. Moreover, to develop human resources who can be active in the three markets that are positioned as priority markets toward the realization of thelong-term vision, we will proactively invest in human resource development with a focus on the priority market enhancement program. Furthermore,
toward the realization of the challenges to new business domains and the creation of values that exceed the expectations, we believe that the attitude
and action to challenge new things are essential and put effort into the improvement of various systems that admire and support challenges. In theinternal venture system to solicit business ideas from employees, commercialization of the vegetable garden system selected as the first case was
decided, and its full-fledged proposals has started in April 2023.

Three pillars of the Daiken Human Resource Development Policy
1. Provision of learning opportunities

Active provision of learning and growth opportunities to meet the expectations of stakeholders through business and contributeto society

2. Support for career development

Support for career development from the medium- to long-term perspective that respects individuality

3. Revitalization of OJT and formationof a culture of learning independently

Nourishment of an organizational culture to continue refining themselves and can grow together by motivating surrounding
peopleKey training system

Training by rank

Department
head class

Senior management candidate
development training
Training for new department heads

By job type and theme

Skill enhancement training

Sales

Manufacturing

GlobalTheme

Personal
development

Enhancement of business skills
for each rank

Department head candidate
development training

Responsible
person class

Training for those promoted

Presentation

Career plan training

Logical thinking(Basic problem resolution version)

Follow-up training
after joining the company
New employee orientation

Business communication

Enhancement of thedevelopment/ following-up
of young employees

Training for
those in the
middle level
young rank in
Basics ofmanufacturing
sales skill
Follow-up
enhancement
training for
young
manufacturing
employees

Language education

Application Manufacturingof sales skill leader classenhancement
training

Problem resolution (Practical version)

Correspondence education

Leadership (Cross-industrial exchange)

Management school

Middle level
team leader
class

Evaluator training

OJT leaders / Mid-career employees /Appointment as full-time employees / Start-up

Training for new managers

Leader candidate training
for female employees

Prioritized market
enhancement
programCoaching
Ability to make decisions

Compliance training

Managerial
position classAccounting

Pre-overseas assignment training

Finance

Implementation of the employee satisfaction survey
We set the employee satisfaction survey as our own index in the medium-term
ESG plan from fiscal 2020 and have been managing the goals. In addition, wequantify the degree of feeling job satisfaction through the annual survey and by
grasping the employees’ view of work and the anxiety factors concerning work,
we make use of them for the creation of rewarding workplaces and aim at
improving satisfaction for all workplaces. While the employee satisfaction
survey in fiscal 2023 was 54.4%, down 0.2 points from the previous fiscal year,
the degree of feeling job satisfaction was 51%, up 4.0 points from the previous
fiscal year. We analyze the survey results from various angles, such as work
contents, the amount of work, and personal relationships at workplaces, reflect
them in the future human resource strategy and measures, and aim to improve
both indices.

57

DAIKEN GROUP REPORT 2023

Employee satisfaction and the degree of feeling job satisfaction
(%)
60

55.4

Employee satisfaction
Degree of feeling job
satisfaction

56.7

55

52.0
50

45

54.6

51.6
47.0
2020

2021

2022

54.4
51.0

2023(Fiscal year)

Initiatives toward the penetration of the group corporate philosophy

Initiatives in fiscal 2023
Based on the results of the survey on the degree of penetration of the group corporate philosophy implemented to the group’s employees, we deploy thepenetration measures from the three perspectives of transmission, sharing, and evaluation. By continuously following the philosophy penetration cycle oftransmission, sharing, and evaluation, we promote the penetration of the philosophy in daily operations, regularly monitor the degree of penetration, andreview for further effective measures.

Daiken Group’s Value Creation

While globalization and diversification of human resources progress, in order to realize the further growth as a company, it has become important toshare the common mission, company vision to aim for, and values to cherish with all employees and adjust the direction to move forward. So, our groupaims at improving sustainable corporate value and enhancing management based on the philosophy, evolved the past management philosophy in April
2017, and established the group corporate philosophy. To particularly realize the growth strategies as specified in the long-term vision and medium-term
management plan, it is essential for all the group’s employees to practice and put the vision upheld in the group corporate philosophy, such astechnology, ideas, and passion, new challenges, and agile action that captures changes and opportunities, into action. Based on such thoughts, we set
the degree of penetration of the group corporate philosophy as an important theme from the perspective of ESG since fiscal 2020 and have beenproceeding with the initiatives to improve the degrees of penetration and practice.

Transmission(1) Continuous transmission by the top management(2) Publishing the cases of practicing philosophy in the company magazine
We covered the unique initiatives by thedepartments that carried out operations while
viewing the group corporate philosophy as the thingthat is familiar to them in the company magazine
from various perspectives. By transmitting the goodcases of practicing philosophy to all group
employees, we promote their understanding andSpecial feature page in theenhance their awareness.

Transmission by the top
managementcompany magazine

Transmission

Information provision to refreshawareness

Philosophy
penetration
cycle
Evaluation

Setting of the place to admire andcommend how they are practicing
philosophy

Strategy for Value Creation

The president transmits his thoughts on thecorporate philosophy as a message in thecompany-wide department head meeting andvideo streaming on the anniversary of foundation.
Toward the formation of a culture to always have
our technology, ideas, and passion upheld in thephilosophy and to challenge, the top management
is committed to initiatively set them into action.

Sharing

Setting of the place to think
about and discuss philosophy

Evaluation

Sharing

For the purposes of facilitating understanding of the group corporate philosophy
and nourishing a culture where practicing philosophy will be admired, we
implemented the Daiken Awards to collect and commend the cases ofpracticing philosophy in daily operations since fiscal 2020. In fiscal 2023, we
implemented it by dividing into the themes of the overall category, theworkplace creation category, and the
manufacturing category and a total of 30
teams participated. Regarding the
manufacturing category, we held the casepresentation competition and 13 teams
participated from home and abroad and madea presentation on their activity content andAwarding ceremony
connection with philosophy and shared it.

For the purposes of becoming aware of the group corporate philosophy andcreating an opportunity to review one’s action, we have been holding thephilosophy sharing workshop in training by rank, which is for the young andmiddle level employees as well as new managers, since fiscal 2019. In theworkshop, check the group corporate philosophy and group conduct
guidelines from one’s daily operations,discuss and share the state of practicing
philosophy, and facilitate the improvement ofaction. In fiscal 2023, 99 employees
attended the workshop.
In-house training

Data

Implementation of the survey on the degree of penetration of the group corporate philosophy
Trends in the scores of the degree of penetration of the group corporate philosophy

60

52 pt

56 pt

57 pt

60 pt

pointsor moreFiscal 2018
Results

Fiscal 2020
Results

Fiscal 2022
Results

Fiscal 2023
Results

Fiscal 2026
Goals

We implemented the survey on the degree of penetration of the group corporate
philosophy once in two years since fiscal 2018, but to more diligently understandthe changes in the employees’ awareness and consider and implement thepenetration measures to respond to such changes, we have changed to
implement it once a year since fiscal 2023.
The score in fiscal 2023 was 60 points, up 3 points from the previous year andcleared 60 points or more, which is the goal in fiscal 2026, the final fiscal year of
the medium-term management plan GP 25 3rd Stage. In particular, it was
assumed that the deployment of the penetration measures in units of department
through the department head policy book significantly contributed, and we will
promote the initiatives toward the further improvement of the degree ofpenetration, such as the continuation of the penetration activities per department,
and the enhancement of the transmission and sharing of good cases.
DAIKEN GROUP REPORT 2023

58

Data

Directors(As of June 23, 2023)

Director (Except for the director who is an Audit and Supervisory Committee member)

Masanori Okuda

Koshin Nomura

Representative Director, President

Representative Director, Senior Managing Executive Officer

Governance Attendance at the Board: 15/15 (100%)
 Number of shares owned: 55,060

 Attendance at the Board: 10/10 (100%)
 Number of shares owned: 10,230

Apr. 1974 Joined the Company
Apr. 2007 Executive Officer
General Manager of Tobu Juken Sales Control
Apr. 2008 Senior Executive Officer
General Manager of Juken Sales Control and General Manager of Tobu Sales Control
June 2008 Director, Senior Executive Officer
Apr. 2009 Director, Managing Executive Officer
Tokyo Representative and General Manager of Juken Sales Control
Apr. 2010 General Manager of Juken Sales
June 2011 General Manager of Sales, Manager of New Development Sales, and General Manager of the Tokyo
OfficeApr. 2012 Director, Senior Managing Executive Officer
General Manager of the Tokyo Office
June 2013 Representative Director, Senior Managing Director, and Senior Managing Executive Officer
Oct. 2013 General Manager of Procurement Innovation and General Manager of the Tokyo Office
Apr. 2014 Representative Director, Representative President and Executive Officer
June 2018 Representative Director, President (present)

Apr. 1983
Apr. 2006
Apr. 2011
Apr. 2013
Apr. 2015

Joined the Company
Manager of DAIKEN Industries (Ningbo) Corporation
Manager of Building Products Development Department of the Company
Division Manager of Interior Products
Executive Officer
Deputy General Manager of Products Head Office and Division Manager of Building Products
Apr. 2016 Deputy General Manager of Products Head Office and Department Manager of New Business
Development
Apr. 2017 Senior Executive Officer
Manager of Finance and Accounting
Apr. 2018 Manager of Corporate Planning Department
Apr. 2019 General Manager of General Development and IT · Logistics
Apr. 2020 Managing Executive Officer
General Manager of Domestic Manufacturing
Apr. 2021 General Manager of Domestic Manufacturing and Division Manager of Home Furnishings
Apr. 2022 Responsible for Domestic Business and New Domestic Business
General Manager of the Tokyo Office (present)
June 2022 Representative Director, Managing Executive Officer
Apr. 2023 Representative Director, Senior Managing Executive Officer (present)
Responsible for information management and public relations on information (present)
June 2023 Responsible for the information systems (present)

Takeshi Nagata

Masatoshi Maki

Director, Senior Managing Executive Officer

Director Attendance at the Board: 10/10 (100%)
 Number of shares owned: 12,100

 Attendance at the Board: 9/10 (90%)
 Number of shares owned: 0

Apr. 1985 Joined ITOCHU Corporation
Jan. 2006 Acting Manager of Wood Material and Building Material Department and Chief of Wood Building
Materials Section
Feb. 2009 Senior Executive Director of DAIKEN NEW ZEALAND LIMITED (Stationed in Christchurch)
June 2012 PT. ITOCHU Indonesia (Stationed in Jakarta)
Apr. 2014 Acting Manager of Wood Products & Materials Department of ITOCHU Corporation
July 2014 Acting Manager of Wood Products & Materials Department, and Planning and Administration
Department, ICT, General Products & Realty Company
Apr. 2015 Deputy General Manager of Overseas Business Group of the company
Mar. 2017 Retired from ITOCHU Corporation
Apr. 2017 Executive Officer of the Company
General Manager of Overseas Business Group and Department Manager of Overseas Business
Planning
June 2017 Outside Director of HOKUSHIN Co., Ltd. (present)
Apr. 2019 Senior Executive Officer of the Company
General Manager of Overseas Business
Apr. 2020 Deputy General Manager of Overseas Business Headquarters and General Manager of MDF
Business Division
Apr. 2021 General Manager of Overseas Business, Manager of Asia Business Department, and Manager ofNorth America Business Department
Apr. 2022 Managing Executive Officer
Responsible for Overseas Business and New Overseas BusinessBusiness Manager of North America Business Department (present)
June 2022 Director, Managing Executive Officer
Apr. 2023 Director, Senior Managing Executive Officer (present)

Apr. 1987
Apr. 2000
Apr. 2005
Apr. 2006
Apr. 2009
Apr. 2011
Apr. 2013

Joined ITOCHU Corporation
Chief of Construction Section 2 of Construction & Realty Department
Acting Manager of Construction & Realty Department
Acting Manager of Construction & Realty Department No. 1
General Manager of Construction & Realty Department No. 2
Director of China Construction & Realty Division (Stationed in Shanghai), ITOCHU SHANGHAI LTD.
Director of China ICT, General Products & Realty Group (Stationed in Shanghai), ITOCHUSHANGHAI LTD.
Apr. 2014 Deputy Chief Operating Officer of Construction, Realty & Financial Business Division
Apr. 2015 Deputy Chief Operating Officer of Construction, Realty & Logistics Division
Apr. 2016 Chief Operating Officer of Construction, Realty & Logistics Business Division
Apr. 2019 Executive Officer (present) Chief Operating Officer of Construction & Real Estate Division
Apr. 2022 President of General Products & Realty Company (present)
June 2022 Director of the Company (present)

Overview of various organizations (As of June 23, 2023)
n Organization form
The Board

9

OutsideTotal:
thecompany: (of which one is3

female)Governance Committee
Withinthecompany:
Withinthecompany:

6

Chairperson of the Board
Representative Director, President

Masanori Okuda

59

DAIKEN GROUP REPORT 2023

Audit and Supervisory Committee

Outsidethecompany:

Total: 4

Withinthecompany:

13Outsidethecompany:

3

Chairperson of the GovernanceCommittee
Outside Director

Shingo Ishizaki

Total: 52

Governance

Governance Committee Members* Attendance at the Board and the Audit and Supervisory Committee isthe status in fiscal 2023.
* The number of shares owned is the number as of the end of March2023.

Director who is an Audit and Supervisory Committee member

Tomoaki Iinuma

Director, Audit and Supervisory Committee Member (Full-time)

Director, Audit and Supervisory Committee Member (Full-time) Attendance at the Board: 15/15 (100%)
 Attendance at the Audit and Supervisory Committee: 14/14(100%)
 Number of shares owned: 15,210

 Number of shares owned: 7,321

Apr. 1980
Apr. 2011
Apr. 2012
Apr. 2013

Joined the Company
Executive Officer
Senior Executive Officer Manager of General Affairs and HR and Manager of the Secretarial Office
Managing Executive Officer Manager of Management Planning Department and Manager of theSecretarial Office
June 2013 Director, Managing Executive Officer
Apr. 2014 Manager of Management Planning Department, Manager of the New Business Development Office,and Manager of the Secretarial Office
Apr. 2015 Manager of Finance and Accounting
Apr. 2017 Director, Senior Managing Executive Officer
June 2017 Representative Director, Senior Managing Director, and Senior Managing Executive Officer
June 2018 Representative Director, Senior Managing Executive Officer
June 2019 Audit & Supervisory Board Member
June 2021 Director, Audit and Supervisory Committee Member (full-time) (present)

Apr. 1983 Joined the Company
Apr. 2008 Head of Design InstituteApr. 2013 Deputy Division Manager of Home Furnishings and Manager of Building
Products Development Department
Apr. 2014 Division Manager of Home Furnishings and Manager of Building
Products Development Department
Apr. 2015 Factory Manager of Inami Plant
Apr. 2016 Executive Officer
Division Manager of Building Products and Factory Manager of Inami Plant
Oct. 2016 Division Manager of Building Products, Factory Manager of Inami Plant, and Manager of Design
Department
Apr. 2018 Senior Executive Officer
Manager of General Affairs and HR
Apr. 2020 Managing Executive Officer
Manager of General Affairs and General Manager of HR and IT · Logistics
Apr. 2021 General Manager of Administration
Apr. 2023 Senior Advisor of Administration (present)
June 2023 Director, Audit and Supervisory Committee Member (full-time) (present)

Shingo Ishizaki

Yuko Asami

Independent

Independent

Outside Director, Audit and Supervisory Committee Member
GovernanceOutside Director, Audit and Supervisory Committee Member
GovernanceCommittee Chairperson

Kiyoshi Mukohara
Outside Director, Audit and Supervisory Committee Member
Independent Attendance at the Board: 14/15 (93%)
 Attendance at the Audit and Supervisory Committee: 13/14(93%)
 Number of shares owned: 0
Apr. 2000
Feb. 2002
Apr. 2003
Apr. 2008
Feb. 2010

Full-time instructor, Faculty of Economics, Gakushuin University
Member of performance report project, Accounting Standards Board of Japan
Assistant Professor, Faculty of Economics, Gakushuin University
Professor, Faculty of Economics, Gakushuin University (present)
Member of the Evaluation Committee for the Incorporated Administrative Agency (independentadministrative institution), Ministry of Finance Acting chairman of the working group of theOrganization for Small and Medium Enterprises and Regional Innovation of the same committee
Feb. 2012 Temporary member of the Business Accounting Council, Financial Services Agency
Apr. 2012 Member of the advisory committee of economics, subcommittee of the establishment of theuniversity, council of the establishment of the university and incorporated educational institution,
Ministry of Education, Culture, Sports, Science and Technology
Apr. 2014 Vice President, Gakushuin University
June 2018 Outside Audit & Supervisory Board Member of the Company
Apr. 2019 Chairperson and Professor, Graduate School of Management, Gakushuin University (present)
June 2019 Member of the Certified Public Accountants and Auditing Oversight Board, Financial Services
Agency (present)
Member of Corporate Accounting Standards Advisory Council, Financial Accounting Standards
Foundation (present)
Dec. 2019 Japan Society for the Promotion of Science, Member of the Committee on Grants-in-Aid for
Scientific ResearchJan. 2020 Examiner of Certified Public Tax Accountant Examination, National Tax Agency
Sep. 2020 Auditor of Ibaraki University (present)
June 2021 Outside Director, Audit and Supervisory Committee Member of the Company (present)
Dec. 2022 Outside Director, Audit and Supervisory Committee Member of SPRIX Inc. (present)
June 2023 Temporary member of the Business Accounting Council, Financial Services Agency (present)
Councilor of the Japan Industrial Management & Accounting Institute (present)

Strategy for Value Creation

 Attendance at the Board: 15/15 (100%)
 Attendance at the Audit and Supervisory Committee: 14/14(100%)
 Number of shares owned: 0
Apr. 1979 Joined Yamaichi Securities Co., Ltd.
Apr. 1998 Joined Merrill Lynch Japan Securities Co., Ltd. (present BofA Securities Japan Co., Ltd.)
July 2001 Joined UFJ Capital Markets Securities Co., Ltd. (present Mitsubishi UFJ Morgan Stanley Securities
Co., Ltd.)
Oct. 2004 Joined Mizuho Securities Co., Ltd.
Executive Manager of Investment Banking Group
Apr. 2009 Managing Executive Officer and Kansai Investment Banking Group Leader
Apr. 2010 Managing Executive Officer and Kansai and Western Japan Investment Banking Group Leader
June 2015 Special Adviser of Sekisui House, Ltd.
Special Adviser of Sekisui Plastics Co., Ltd.
Apr. 2018 President and Representative Director of SI.Management Co., Ltd. (present)
June 2019 Outside Audit & Supervisory Board Member of the Company
June 2020 Outside Director of the Company
Apr. 2021 Adviser of Asahi Broadcasting Group Holdings Corporation (present)
June 2021 Outside Director, Audit and Supervisory Committee Member of the Company (present)

Daiken Group’s Value Creation

Takashi Terubayashi

Governance Attendance at the Board: 15/15 (100%)
 Attendance at the Audit and Supervisory Committee: 13/14(93%)
 Number of shares owned: 0NameShingoIshizaki

Yuko
Asami

Kiyoshi
Mukohara

Reasons for appointment
Mr. Shingo Ishizaki has been engaged in investment bank operationsat securities companies for many years, and possesses abundantfinancial expertise acquired through the said experience. Expected
to play supervisory and advisory roles for the execution of duties bydirectors, from a specialized perspective based on the said
expertise, especially in financial accounting, thereby contributing to
the increased governance of our company.
Ms. Yuko Asami is a professor at the Faculty of Economics,
Gakushuin University, and has served as a committee member for
the Ministry of Finance, the Financial Services Agency, and otherorganizations demonstrating adequate expertise in finance andaccounting. Expected to play supervisory and advisory roles for the
execution of duties by directors from a specialized perspective
based on the said expertise, especially in corporate accounting,thereby contributing to the increased governance of our company.
Has no experience of engagement in corporate management otherthan serving as an outside director but is considered capable ofproperly executing the duties of an outside director for the reasons
above.
Mr. Kiyoshi Mukohara has been engaged in the management offinancial institutions for many years and possesses abundant financial
and managerial expertise acquired through the said experience.
Expected to play supervisory and advisory roles for the execution ofduties by directors from a specialized perspective based on the said
expertise, especially in corporate management, thereby contributing to
the increased governance of our company.

DAIKEN GROUP REPORT 2023

Data

Apr. 1975 Joined The Sumitomo Trust and Banking Company, Limited (present Sumitomo Mitsui Trust Bank,
Limited)June 2006 Director and Managing Executive Officer
June 2008 Representative Director and Senior Managing Executive Officer
Apr. 2011 Representative Director and Deputy President Executive Officer
Representative Director and Deputy President of SUMITOMO MITSUI TRUST HOLDINGS, INC.
Apr. 2012 Representative Director, Deputy Chairman of Sumitomo Mitsui Trust Bank, Limited
Representative Director of SUMITOMO MITSUI TRUST HOLDINGS, INC.
Apr. 2015 Corporate Advisor of Sumitomo Mitsui Trust Bank, Limited
June 2015 Retired from Director of SUMITOMO MITSUI TRUST HOLDINGS, INC.
June 2016 Outside Audit & Supervisory Board Member of Rengo Co., Ltd.
Apr. 2018 Executive Advisor of Sumitomo Mitsui Trust Bank, Limited
Mar. 2019 Advisor of Sumitomo Mitsui Trust Research Institute Co., Ltd. (present)
June 2020 Outside Audit & Supervisory Board Member of the Company
June 2021 Outside Director, Audit and Supervisory Committee Member of the Company (present)

Reasons for appointment of the Outside Director

60

Data

Eleven-Year Financial Summary(¥million)

12,000

Profit attributable to owners of parent
ROE (Return on equity)

10,000

8,000

9.8

6,000

7.0

7.0

2,546

2,736

4,000

3.8
2,000

0

3,988

1,318

(¥million)

Fiscal 2013

Fiscal 2014

Fiscal 2015

Net sales

158,153

180,392

168,833

Fiscal 2016
168,141

Cost of sales

119,121

137,693

131,657

127,452

Gross profit

39,031

42,69937,17540,689Selling, general, and administrative expenses

34,327

39,12133,72235,102

Operating profit

4,703

3,577

3,452

5,586

Ordinary profit

5,669

5,025

4,648

5,281

Profit before income taxes

2,373

4,617

1,373

6,875

Profit attributable to owners of parent

1,318

2,546

2,736

3,988

ROE (Return on equity)

3.8%

7.0%

7.0%

9.8%

ROA (Return on assets)

4.4%

3.8%

3.4%

4.0%

Gross profit margin

24.7%

23.7%

22.0%

24.2%

Selling, general, and administrative expenses ratio

21.7%

21.7%

20.0%

20.9%

Operating profit ratio

3.0%

2.0%

2.0%

3.3%

Ordinary profit ratio

3.6%

2.8%

2.8%

3.1%

Cash flows from operating activities

2,624

9,663

9,299

6,016

Cash flows from investing activities(2,033)(5,168)(4,072)(5,972)

Cash flows from financing activities

224(1,054)(2,635)(5,486)

591

4,494

5,227

43

4,036

3,274

3,206

3,508

Depreciation

4,107

3,990

4,093

4,068

R&D expenses

1,453

1,342

1,349

1,430

Total assets

131,618

135,890

135,596130,315

Net assets

39,87041,41944,984

43,833

Shareholder equity

36,00237,15440,57340,789

Shareholder equity ratio

27.4%

27.3%

29.9%

31.3%

Interest-bearing debts

34,506

34,59934,20431,438

Free cash flows
Capital investments

D/E ratio (times)

0.96

0.93

0.84

0.77

ROIC (Return on invested capital)

4.0%

3.0%

3.1%

5.1%

After-tax operating profit

2,918

2,219

2,223

3,741

Working capital

12,96313,005

7,303

12,745

Fixed assets

59,59660,13964,59260,980Invested capital

72,56073,144

71,89573,726

1,434.53

1,480.47

1,669.47

1,692.28

Earnings per share (EPS) (¥)

52.53

101.46111.70164.67

Dividend per share (¥)

37.50

37.50

37.50

50.00

Dividend payout ratio

71.4%

37.0%

33.6%

30.4%

DOE (Dividend on equity ratio)

2.7%

2.6%

2.4%

3.0%

Total dividend

941

941

914

1,210

32,24935,26032,93137,842

3,194

3,141

3,191

3,060

Book value per share (BPS) (¥)

Market capitalization
Employees (Consolidated) (Persons)(Note) 1. The company consolidated shares at a rate of one share per five as of October 1, 2016. The past figures were also consolidated retrospectively for ease of comparison. 2. For more information
3. Free cash flows = Cash flows from operating activities + Cash flows from investing activities 4. Debt-equity ratio = Interest-bearing debts / shareholder equity (times) 5. DOE (Dividend on

61

DAIKEN GROUP REPORT 2023

(%)
15.0

12.9
12.5

11.7

10.9
9.5

9.1

10.0

7.8
7.5

10,325
7,872
5,132

5,895

5,447

Daiken Group’s Value Creation

11.7

5.0

5,620

4,402

2.5

0

Fiscal 2017

Fiscal 2018

168,841
125,201

Fiscal 2021

Fiscal 2022

Fiscal 2023

202,481

199,210

223,377

228,826

151,442

148,328

160,210

170,399

43,67351,03850,881

63,16758,42737,94042,653

42,10245,80548,570Fiscal 2019

Fiscal 2020

170,581

182,962

127,946

139,289

43,64042,63535,10835,116
7,519

5,733

8,384

8,779

17,361

9,856

9,033

8,760

6,838

9,108

9,935

18,72513,008

7,247

8,342

7,301

8,871

10,97018,264

18,522

5,132

5,895

4,402

5,447

5,620

7,872

10,325

11.7%

11.7%

7.8%

9.5%

9.1%

10.9%

12.9%

6.9%

6.4%

4.5%

5.5%

5.8%

10.5%

7.0%

25.8%

25.0%

23.9%

25.2%

25.5%

28.3%

25.5%

20.8%

20.6%

20.7%

21.1%

21.1%

20.5%

21.2%

5.1%

4.4%

3.1%

4.1%

4.4%

7.8%

4.3%

5.4%

5.1%

3.7%

4.5%

5.0%

8.4%

5.7%

10,566

9,158

10,052

16,807

12,254

16,834(107)(4,201)(2,711)(15,079)(17,863)(910)(6,636)575(6,734)(6,342)

11,165

1,468(11,369)(10,737)

247

6,364

6,447

(5,027)(1,056)

11,344

10,198

468

4,757

3,081

6,586

5,490

3,697

2,864

3,924

3,506

3,768

4,134

5,079

5,563

5,546

5,192

1,477

1,551

1,592

1,491

1,452

1,587

1,717

132,171

140,776

160,158

170,638

172,553

183,391

185,797

49,08656,97961,741

62,97576,771

90,56392,31846,61454,24458,90455,77868,04376,487

83,523

35.3%

38.5%

36.8%

32.7%

39.4%

41.7%

45.0%

26,33821,95230,78443,87635,50828,50029,700

0.40

0.52

0.79

0.52

0.37

0.36

6.6%

4.6%

5.5%

5.5%

11.1%

6.1%

5,891

5,202

3,979

5,820

6,094

12,052

6,842

15,101

16,837

18,776

22,771

26,17327,72033,302

59,76063,54068,52882,61284,752

81,07778,552

74,862

79,22687,305

105,383

110,926

108,798

111,854

1,933.99

2,250.58

2,264.10

2,142.99

2,612.54

2,935.31

3,203.58

212.96244.60174.55209.32215.83302.18396.10

64.00

74.00

74.00

70.00

70.00

100.00110.00

30.1%

30.3%

42.4%

33.4%

32.4%

33.1%

27.8%

3.5%

3.5%

3.4%

3.2%

2.9%

3.6%

3.6%

1,542

1,783

1,925

1,821

1,823

2,605

2,867

49,67560,54556,03944,14357,40256,59759,443

3,071

3,073

3,287

3,807

3,852

3,965

3,564

Data

0.57
7.9%

Strategy for Value Creation

8,532

about our financial statements, please refer to our securities report posted on our website. https://www.daiken.jp/ir/
equity ratio) = Annual dividend amount / Average shareholder equity at the beginning and end of the period x 100 (%)

DAIKEN GROUP REPORT 2023

62

Data

ESG Goals
We integrated the past medium-term ESG plan and the medium-term management plan in fiscal 2023 and set the important themes towork on from the perspective of ESG and goal values as the ESG goals.

ESG goals (Fiscal 2023-2026)
Field

Theme
Promotion of recycle and conversion of waste
into valuables

E
Environment

Goal (Fiscal 2026)
Reduction of the final waste landfilling treatment amount (production departments in Japan and overseas)

15% reduction (Ascompared to fiscal 2022)

Total greenhouse gas emissions in Japan and overseas (Scope1+2)

10% reduction (Ascompared to fiscal 2022)
6% reduction (As comparedto fiscal 2022)

Greenhouse gas emissions reduction*1

Total greenhouse gas emissions in Japan and overseas (Scope3)

Promotion of the use of renewable energy

Renewable energy utilization ratio

Japan: 50% or more
Overseas: 40% or more

Expansion of the amount of carbon storage byusing timber

Amount of carbon storage by the wood industrial materials business (MDF andinsulation board)

1,100,000 t-CO2 /year

Procure wood in a biodiversity friendly way

Lauan usage rate in flooring substrates

50% reduction (Ascompared to fiscal 2022)

Appropriate management and reduction ofchemical substances

Release/transfer amount of the substances subject to the PRTR law

70% reduction (Ascompared to fiscal 2022)

Promote the effective use of water resources

Water resource input (Group production bases in Japan and overseas)

4% reduction (As comparedto fiscal 2022)

Reduction of the use of plastics derived fromfossil fuels

Reduction of the use of plastic containers and packaging

4% reduction (As comparedto fiscal 2022)

Strengthen environmental risk management

Number of environmental accidents and violations at home and abroad (Thosewith administrative guidance and penal charge)

0

Enhancement of the quality control structure*1

Number of accidents caused by design in the new product developed
Manufacturing and product audit implementation cover rate
Product safety and quality improvement education execution rate

0
100%
100%

Promotion of CSR procurement

The rate of the CSR survey implementation

100%

Ensuring fair competition and transactions

Serious violations of the Anti-Monopoly Act and Subcontract Act
Planning and holding of the enlightenment activities by division and job type0
20 times/year

Total diversity index 3rd Stage*2

S

SocialPromotion of diversity*1+30 pt (As compared tofiscal 2022)
The ratio of female employees hired (New graduate nationwide course)
50%
The female full-time employee ratio
20%
The percentage of male employees taking childcare leave (Three-year average)
50%
The female manager ratio
2%Long-term care seminar attendance rate
90%/year
Diversity training attendance rate (Managers)
100%
The degree of attainment of the employment rate of persons with disabilities
100%
Personnel composition by age (Difference by generation)
Within the difference of
10 pt

Promotion of health and productivity
management

The rate of receiving health promotion allowance
Health score (Exercise, rest, and nutrition)
Presenteeism loss rate

80%
20 pt
25%

Total work time reduction rate
Rate of taking annual paid leave
Employee satisfaction*3

3% reduction (As comparedto fiscal 2022)
70%
60 pt

Reinforcing human resources development

Job separation rate within three years
Young employees’ career plan training attendance rate
Attendance rate for the priority market enhancement program
Attendance rate for training for management staff training program

Within 15%
100%
50%
80%

Enhancement of the occupational safety andhealthSerious disaster
Plant mutual safety diagnosis execution rate

0100%

Human rights promotion activities

Human rights enlightenment training attendance rate
Supervisor harassment training attendance rate

100%
100%

Promotion of workstyle reform*1

Social contribution activities by cooperating with Holding of the event planned by cooperating with local communities (Each group
1 times/year
production bases)
local communities
Enhancement of the governance system

G

Improvement of a dialog with stakeholders

Governance

Strict compliance*1

63

DAIKEN GROUP REPORT 2023

Female executive ratio (Director)
Degree of penetration of the group corporate philosophy*4

10% or more
60 points or more

Establishment of the index for the engagement with customers and business
partners and the method, and setting of the goal
Degree of empathy for our philosophy and activities by customers
Holding of the policy explanation meeting for suppliers
Number of page views on our IR site

Implementation in fiscal
2023
90%
1 times/year
200% (As compared tofiscal 2022)

Serious compliance violations

0

Compliance consciousness degree*5+5 pt (As compared tofiscal 2022)

Results

Comments from the Manager of theManagement Strategy Division responsible
for the Sustainability Promotion Department

Daiken Group’s Value Creation

Fiscal 2023: Progress status
0.4% reduction
4.0% reduction
Energy-saving activities, productivity improvement, and other events had an impact
3.7% reduction
Change in the sales mix and rationalization of the production bases had an impact

Katsuhisa Morino
Managing Executive Officer

Japan: 49%
Overseas: 39%
739,400 t-CO2 /year Decreased from the impact of the fluctuation of the MDF production
volume2.7% increase
27.3% reduction
substances

Reduced because of the discontinuation of the products that used the target

2.4% reduction Reduced because of the introduction of the seal water collection equipment
and an increase in the recycling amount
4.7% reduction

Fluctuation of the production volume had an impact

084% Implemented by expanding the survey scope0
27 times+18.3 pt
52.8%
19.4%
42.7%
1.9%
68.6%
43.7%
113% The employment rate of persons with disabilities: 2.6%
Difference of 6.0 points
76.4%
16.4 pt
28.1% Started approaching the health issues specific to women
0.94% reduction

Reduced because of the increase in paid leave taken and other factors

62.8%
54.4 pt
15.9%
100%
58%
75%

100%
100%
A total of 87 events held in 18 bases among 19 bases at home and abroad
11.1%
60 pt

The index on the left was set
The index on the left was set
135.7% Continuously implemented the expansion of the website content
One case (Violation of the Construction Industry Act in the construction management operation
concerning the interior project by our affiliated company)(1.29 pt)

Data0Japan: 100%
Overseas: Canceled because of the impact of COVID-19

Strategy for Value Creation

0
100%
100%

The Daiken Group aims to contribute to thedevelopment of an affluent society and environment thatlead to a better future through business and thus intends toachieve long-term growth under the Daiken sustainability
basic policy. In the medium-term management plan GP25
3rd Stage launched in FY 2023, the basic policy is toenhance the management foundation by positioning
sustainability as a key pillar of management while
implementing a growth strategy (CSV) that helps resolve
social issues. Especially for the important items related to
ESG, we set the management index and the goals toachieve by FY 2026 as ESG goals. In addition, theenvironmental objectives of ESG goals are positioned as
milestones in the Daiken global environment vision 2050,
which sets the long-term direction of the environmental
initiatives.
As for the achievements in FY 2023, in theenvironmental aspect, we fell behind in working on the rateof utilization of lauan wood for base flooring materials andthe amount of carbon stored in the wood materials businessdue to the delay in product development and the decrease
in MDF production caused by the streamlining of the
production bases; however, we got a good start toward theachievement of the goals for reducing water resources byintroducing equipment and emissions and the transfer of
PRTR substances by discontinuing products that use PRTR
substances. In the social aspect, we worked to introduce
the proper approaches to female-specific health problems
and implement diversity management training to maximize
the value of human resources while making sure that we
educate employees by continuously providing training on
the improvements of product safety and quality and fairtrade. On the other hand, from the governance aspect, amajor compliance violation was identified. We take it very
seriously as a matter to reflect on and will make group-wide
efforts to prevent repeat violations by providing a morethorough compliance education program.
We will carefully analyze our progress in the first year of
the medium-term management plan, implement theappropriate measures, and maintain the focus on thecomprehensive initiative for business activities and ESG
activities with the aim of realizing the group corporate
philosophy and achieving a sustainable society by doing so.
*1: Set as the non-financial management goals in the medium-term management plan
*2: Our own indices in which diversity-related items, such as the female manager ratio, were indexed. Total
Diversity Index 3rd Stage is used in and after fiscal 2023 and items related to the method of calculation are
reviewed and reset*3: Our own index based on the survey using the employees’ sense of satisfaction and pleasant workplaces as
evaluation axes
*4: Our own indices in which employees’ understanding, sharing, and practice of the group corporate philosophy
were indexed*5: Own indices to measure employees’ compliance consciousness degree from the perspectives of legal
compliance, a sense of ethics, structure, and corporate culture

DAIKEN GROUP REPORT 2023

64

Data

ESG Data

E Environment(Fiscal year)

Total energy input

Scope

Unit

2019

2020

2021

Group production basesin Japan

1,000 GJ
(Heat
quantityequivalent)

2,874

2,914

2,667

2,711

2,559
4,633
(4,552)

Group production basesin overseas
Group production basesin Japan

Percentage of renewable energy

Group production basesin overseas
Group production basesin JapanGroup production basesin overseas

Quantity ofwater intake

Discharge of drainage

Group production basesin JapanGroup production basesin overseas

-

-

5,032

50

50

50

50

49
38
(39)
1,838

%

-

-

36

37
(39)

1,943

1,865

1,799

1,859

-

-

754

973

927

-

-

2,553

2,832

2,765

1,455

1,381

1,331

1,408

1,356

-

-

367

362

335

-

-

1,698

1,770

1,691

48.6

47.5

43.7

47.1

45.8

-

-

126.5

163.4

130.4

1,000 m3

1,000 m3

Group production bases
Group production basesin JapanGroup production basesin overseas

Amount generated
Waste(Production
bases)

Percentage of final
volume disposed of in
landfill

Emissions/Transfer
volumeNumber of environmental accidents andviolations

-

-

170.2

210.5

176.2

7.6

7.2

5.9

5.8

5.6

-

-

5.1

5.6

7.1

-

-

5.3

5.6

6.7

%

Group production bases
Group production basesin Japan

t

17

16

8

7

5

Group production basesin Japan

Case

0

0

0

0

0

Scope 1
(Direct emissions)

-

-

73.5

73.7
(73.5)

70.0★
(70.0)

Scope 2
(Indirect emissions)

-

-

89.2

87.9
(77.6)

78.7★
(75.1)--

1,763.8

2,212.9(2,066.8)

2,045.7(1,991.1)

Scope 1+2 Total

-

-

162.7

161.5
(151.2)148.7★
(145.1)

Scope 1+2+3 Total--

1,926.5

2,374.5(2,217.9)

2,194.4(2,136.2)

PRTR

Greenhousegas emissions

1,000 tGroup production bases
Group production basesin JapanGroup production basesin overseas

2023

5,210
(4,980)Group production bases

Effective use ofwater resources

2022

Group consolidation

Scope 3 Total

1,000 t-CO2* Values in ( ) are the values to which the revision of the calculation method associated with the obtaining of the SBT certification and the exclusion of the results of Pacific Woodtech Corporation, which became an equity
method affiliate from a consolidated subsidiary in August 2022 were reflected.
* Values with the ★ mark obtained third-party certification* Scope 3 conforms to the Basic Guidelines on Accounting for Greenhouse Gas Emissions throughout the Supply Chain by the Ministry of Environment and Ministry of Economy, Trade and Industry. Also, excluding someof the bases and activities with small emissions and a small impact on the entire supply chain’s emissions.

Greenhouse gas emissions composition ratio in fiscal 2023 (Group consolidation)

Scope1 3%
Scope3
Other categories(Categories 2, 3, 5, 6, 7, 9, and 11)

Scope3Category 12
End-of-life treatmentof sold products

Scope3Category 10
Processing ofsold products

Scope3

6%

10%
17

%

12%

Scope2 4%

Scope1 Sco
pe2

Total emissions
in fiscal 2023

Scope3 93%

2,194.4
1,000 t-CO 2

Scope3Category 4
Upstream transportationand distribution

Category 1
Purchased goods andservices

Sco

65

DAIKEN GROUP REPORT 2023

pe

3

48%

S Social

Number of employees(Fiscal year)

Unit

2019

2020

2021

2022

2023

3,287

3,807

3,852

3,965

3,564

Group consolidation

Persons

2,268

2,411

2,449

2,461

2,446

Global

1,019

1,396

1,403

1,504

1,118

Average age

41.6

41.6

41.6

41.9

42.1

38.6

38.8

38.8

39.2

39.5

42.4

42.4

42.4

42.8

43.0

17.7

17.5

17.6

17.7

17.7

11.6

11.6

11.4

11.7

12.1

19.3

19.2

19.4

19.6

19.5

2.2

1.9

1.3

2.3

2.6

20.2

21.9

23.6

24.2

24.5

20.3

34.0

29.0

32.6

30.2

1.04

1.23

1.62

1.63

1.90

12

28

17

37

30

7

20

7

24

16

5

8

10

13

14

%

100

100

100

100

100

Non-consolidated

%

2.03

1.95

1.96

2.14

2.61

Non-consolidated

%

53.9

64.9

65.8

61.4

62.8

100

100

100

98

84

Number of employees (Consolidated)
Domestic

Age

FemaleMale
Average length of service

Non-consolidated

FemaleYear

Male

Daiken Group’s Value Creation

Scope

Voluntary job separation ratio
Voluntary job separation ratio (Full-time
employees)

Non-consolidated%

Non-consolidated%

Women’s active participation
The female employee ratio
The ratio of female employees hired
The female manager ratio (positions
equivalent to section chief or higher)

Childcare leave
Number of employees taking childcare leave
Male

Persons
Non-consolidated

FemaleStrategy for Value Creation

The rate of returning to work from childcare
leave

Employment of the persons with disabilities
The employment rate of persons withdisabilities

Annual paid leave
Acquisition of paid holidays**Our company allows hourly annual paid leave, and the acquisition of paid holidays includes hourly leave

CSR procurement
CSR procurement survey execution rate

Group consolidation*%*Results of the group consolidation in Japan before fiscal 2022. Results of the group consolidation by combining Japan and overseas from fiscal 2023

Occupational safety
The Rate of lostworktime injuries

Employees
Contractor

Plant mutual safety diagnosis execution rate
Workplace fatality

Employees
Contractor

Group production
bases in Japan

Non-consolidated

-

1.23

0

1.65

2.46

1.24

-

-

-

-

-

4.98

%

100

100

100

-*

100

0

0

0

0

0

0

0

0

0

0

54.6

54.4

Persons*Although diagnosis by visiting the plants was suspended due to the COVID-19 pandemic, online information sharing by the safety supervisor was enhanced

Employee satisfaction
Employee satisfaction*1

Group consolidation in
Japan*2

-

pt

55.4

56.7

*1. Employee satisfaction: Our own index based on the survey using the employees’ sense of satisfaction and pleasant workplaces as evaluation axes
*2. Except for T.O FLOORING Co., Ltd.

G Governance

Number of directors
Number of outside directors(Fiscal year)

Scope

Unit

Non-consolidated

Persons

2019

2020

2021

2022

2023

9

7

8

9

9

2

2

3

3

3

*The number of persons are the figures as of the end of June in each fiscal year

Status of the board convened
Number of the audit & supervisory board
convened

Non-consolidated

Attendance rate of outside directors

Times

15

13

12

13

15

%

100

100

100

100

98

Total/
persons

863

1,337

1,471

3,951

2,107

Case

6

14

8

12

15

Compliance
Number of participants in compliancetraining
Number of whistle-blowing

Group consolidation inJapan

More detailed information is published on our website.

https://www.daiken.jp/sustainability/esgdata.html
DAIKEN GROUP REPORT 2023

66

Data

Director composition

Data

Company Information(As of March 31, 2023)

Japan

Yubari Plant, T.O FLOORING CO., LTD.
Inami Plant

Daifit Co., Ltd.

TDY Sapporo
Nichinan Daiken Co., Ltd.

Takahagi Plant

Daiken R&D CenterTokyo Office

Okayama Plant

Aizu Daiken Corporation

Toyama Juki Co., Ltd.
Eco Techno Co., Ltd.
TDY Kanazawa
Koukou Sangyo Corporation
Sankei Corporation

TDY Tokyo
PAC SYSTEM Co., Ltd.

Dai-tac Corporation
TDY Nagoya
TDY Osaka
Setouchi Kakoh Co., Ltd.

ReformQ Co., Ltd.

TDY Hiroshima

T.O FLOORING CO., LTD.
TDY Takamatsu
Mie Plant

TDY Fukuoka

Dai-wood Corporation

Operational Headquarters
Osaka office
DAIKEN ENGINEERING CORPORATION
Smileup Corporation

Subsidiaries part of
the Group

Production
base

Industrial materials
business

Building materials
businessEngineering business

TDY Collaboration Showroom
You can see products from three TDY companies in the same place: Daiken’s floorings, interior building materials suchas doors, TOTO’s kitchens and bathrooms, and YKK AP’s windows and exteriors.

67

DAIKEN GROUP REPORT 2023

Company NameDAIKEN CORPORATION

Registered Head Office

Operational Headquarters
3-2-4 Nakanoshima, Kita-ku, Osaka, Japan
Osaka office

September 26, 1945
15.3 billion yen

Stock exchange
listings

The Prime Market of the Tokyo Stock Exchange

Security code

7905

Setting day

March 31

General Meetingof Shareholders

JuneTokyo Office

3-12-8 Sotokanda, Chiyoda-ku, Tokyo, Japan

Major Sales Offices

Sapporo, Sendai, Tokyo, Saitama, Niigata,
Nagoya, Kanazawa, Osaka, Hiroshima,
Takamatsu, Fukuoka, and Singapore
Inami Plant (Nanto City, Toyama Prefecture)
Okayama Plant (Okayama City)
Takahagi Plant (Takahagi City, Ibaraki Prefecture)
Mie Plant (Tsu City)

Production Plants

Daiken Group’s Value Creation

Founding
Capital Stock

1-1 Inami, Nanto City, Toyama, Japan

Overseas
DAIKEN (Shanghai) Corporation (China)

Pacific Woodtech Corporation (USA)*An equity method affiliate

CIPA Lumber Co., Ltd.
(Canada)Strategy for Value Creation

DAIKEN Industries (Ningbo)
Corporation (China)
Singapore Branch
DAIKEN MIRI SDN. BHD.
(Malaysia)

Indonesia office

Data

DAIKEN SARAWAK SDN. BHD.
(Malaysia)

PT. DAIKEN DHARMA INDONESIA(Indonesia)

DAIKEN SOUTHLAND LIMITED(New Zealand)

DAIKEN NEW ZEALAND LIMITED(New Zealand)

DAIKEN GROUP REPORT 2023

68

DAIKEN CORPORATIONHead Office
14F Nakanoshima Festival Tower West,3-2-4 Nakanoshima, Kita-ku, Osaka 530-8210
https://www.daiken-ad.com/en/

Published in December 2023
[175-19] IR2023.09 WI/SI (P17.1-07)