NICHIAS Integrated Report2023

Introduction
The NICHIAS Philosophy

CONTENTSNICHIAS contributes to the Earth’s bright future
through our “TATSU-TAMOTSUTM (Insulation andProtection)” technologies.

P.

P.

P.

P.

Our PromiseP.

We will abide by community standards and work together withthe communities we serve.
We will strive for customer satisfaction while never forgetting
a sense of gratitude.
We will believe in mutual trust and continue to grow together.
Basic data of the fiscal year ending March 2023

Consolidated net
sales

238.1
billion yen

Number of
employees

6,445 people(Consolidated)

1,730

people(Non-Consolidated)

Consolidated
operating income

30billion yen

P.

P.

P.

01 > Introduction
03 > History of NICHIAS
05 > Top Message
09 > Financial and Non-Financial Data
11 > NICHIAS Group in Society
13 > Value-Creation Process
15 > Initiatives for Social Issues
eature: Initiatives for Carbon
16 > FNeutrality
and Decarbonization

P.

P.

P.

P.

P.

P.

P.

P.

22 > Our Businesses
25 > Manufacturing of NICHIAS
27 > G: Governance
35 > S: Society
40 > E: Environment
43 > Summary of 11 Years
45 > Global Network
46 > Company Profile/Status of Shares

Editing Policy

Reporting Period

NICHIAS Integrated Report 2023 is issued with a purpose of disclosing the financial and nonfinancial major information and value-creation process in an easy-to-understand manner anddeepening the understanding of stakeholders including customers, clients, shareholders, andinvestors.

From April 1, 2022 to March 31, 2023

Scope of Reporting

Editing and Publishing

Information of the NICHIAS Group, focusing on NICHIAS Corporation and excluding thefollowing items, is reported.
• Data of “rate of paid holidays taken,” “average years of service,” “employment rate ofdisabled people,” “female employment rate,” and “number of employees on temporary
retirement and turnover rate” on P. 10 and data on P. 35-39 “Society” cover only NICHIAS
Corporation.
• Regarding data of “CO2 emissions” and “amount of discharged industrial waste” on P. 10 and
P. 43-44, domestic manufacturing offices of the NICHIAS Group (NICHIAS’ factoriesNote 1,
domestic consolidated manufacturing companyNote 2) are covered for Fiscal Year 2018 andbefore, and domestic and overseas manufacturing officesNote 3 of the NICHIAS Group arecovered for Fiscal Year 2019 and beyond. Data on the pages “Environment” (P. 40-42) coverdomestic manufacturing offices of the NICHIAS Group. In addition, data concerning theEnergy and Industrial Plants Business and the Construction Department of the Building
Materials Business is excluded.

CSR Team, NICHIAS Corporation

Timing of Report Issuance
December 2023 (once a year)

Notes about Future Outlook
The performance, prediction, and future plans of the
NICHIAS Group are stated in this report. They arepresumptions or judgments based on the information
available at the time of publication and may differ
from actual performance and activity results. We
appreciate your understanding.

Note 1) Tsurumi Factory, Ohji Factory, Koriyama Factory, Hashima Factory, Fukuroi Factory, Yuki Factory
Note 2) NICHIAS CERATECH CO., LTD., SAKAI NICHIAS CORPORATION (since FY2022 for Wakayama Factory), KOKUBU INDUSTRY CORPORATION,
TATSUTA INDUSTRY CORPORATION, OHTA KASEI CORPORATION, FUKUSHIMA NICHIAS CORPORATION, METAKOTE INDUSTRY CORPORATION,KIMITSU ROCKWOOL CORPORATION (since FY2016), KUMAMOTO NICHIAS CORPORATION (since FY2019), NISHI-NIPPON NICHIAS CO., LTD. (since FY2019),
NICHIAS MECHATECHNO CO., LTD. (since FY2019), APJ CORPORATION (since FY2022)
Note 3) NICHIAS FGS SDN. BHD., NT RUBBER-SEALS SDN. BHD., PT. NICHIAS ROCKWOOL INDONESIA,
PT. NICHIAS METALWORKS INDONESIA, NICHIAS (THAILAND) CO., LTD., NICHIAS HAIPHONG CO., LTD.,
NAX MFG, S.A. DE C.V., NICHIAS AUTOPARTS EUROPE a.s., SUZHOU NICHIAS SEAL MATERIAL CO.,LTD.,SUZHOU NICHIAS INDUSTRIAL PRODUCTS CO.,LTD., SUZHOU SHUANGYOU AUTOPARTS CO.,LTD.,NICHIAS INDUSTRIAL PRODUCTS PRIVATE LTD.

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NICHIAS Integrated Report 2023

NICHIAS Integrated Report 2023

02

History of NICHIAS

Until now and then, NICHIAS will contribute to the Earth’s

bright future through our “TATSU-TAMOTSUTM” technologies.
From

Establishment and Development of Business

2004

Disseminated thermal insulation technologies to the engineering field.

1950-60s

Thermal insulation materials were expanded to the building material field as the
economy grew rapidly.

1980s

Established a manufacturing factory for manufacturing rubber-metal composite
sealing materials and started business in the automobile market at full scale.

1980s

Developed fluoropolymer products for the semiconductor market.

Rock wool products

2015

1896

1962

Establishment

Listed on the firstsection of Tokyo
Stock Exchange

Acquired the Energy
Conservation Grand Prize

Our business model was valued,
because it takes energy-saving
measures in a comprehensive
manner including diagnosis of heatloss, installation of heat retention
materials, and confirmation ofheat-loss-collection effect.

The products were well received
because they contribute topromoting energy saving of a wide
variety of industrial furnaces, andtheir application is expected to
expand, for example, for fuel cells.

Heat retention maintenance work “Overlapped Heat Retenation method”

2020

2001

Established the NICHIAS Group
Human Rights Policy.

NICHIAS Environmental Charter
Date of establishment

1981

2005

Changed the tradename to NICHIAS

Green
Procurement
Standard
Date ofestablishment

2021
NICHIAS Group Carbon Neutrality
Declaration
NICHIAS Group Health andProductivity Management Declaration

2022

1996

TOMBO mark in around 1924

2018

Acquired the Energy
Conservation Grand PrizeEntered overseas market for
the first time.

Familiar TOMBO mark was trademarked
in 1923. The shape of the “TOMBO mark”
back then was different from that of today.

Recycling through solidification of rockwool mineral fiber cotton (into bricks) inthe manufacturing process won theadmiration.

Rigid urethane foam thermal insulation material FOAMNERT TM TN

1979

Launch of NICHIASTOMBO BRAND

Ministry of Economy, Trade andIndustry
Acquired the Director-General,
Industrial Science, Technology andEnvironment Policy Bureau Prize

It was highly evaluated for notcontaining chlorofluorocarbonderived foaming agents.

High performance thermal insulation material ROSLIMTM Board

1923

2014

Acquired the Excellence, Ozone
Layer Protection and Global
Warming Prevention Award

Established as a pioneer of manufacturers of sealing materials and thermal
insulation materials.

1920s

Contribution to Global Environmental Issues

Global environmental issues, including global warming, are in a serious state requiring globalscale measures such as energy saving.

NICHIAS, which started with manufacturing and sales of sealing materials and thermal insulationmaterials, has expanded its business as the industry grows and established the current fivebusiness structures.

1896

2000s

Declaration of Partnership Building

100th
anniversary

2011

2015

2016

“The NICHIAS
Philosophy”
Date ofestablishment

NKK(NICHIAS Kaizen
Katsudo) started

120th
anniversary

2023

100th
anniversary of
the birth of the
TOMBO
BRAND
Hundred years havepassed since the TOMBO
corporate mark wastrademarked in1923.
Now, it is familiarly known
as the TOMBO BRAND.
It will spread its wings
around the world.

Energy and Industrial Plants BusinessIndustrial Products Business
Advanced Products Business
Autoparts Business
Building Materials Business
1890s
03

1920s

NICHIAS Integrated Report 2023

1950s

1980s

2000s

2010s

Five
businesses
of NICHIAS
For details, see thepages introducing ourbusinesses P. 22-24
2020s
NICHIAS Integrated Report 2023

04

Top Message

Q

The NICHIAS Group grows withthe changes of society andcontributes to the bright futureof the earth with our TATSUTAMOTSUTM technologies.

Katsumi Kametsu

President and Chief Executive Officer

Next, we would like to ask about materiality.
What do you think is essential for the company to survive?

The NICHIAS Group is a manufacturing company, which
manufactures products by using energy. And many types ofresources are used as raw materials. Minimizing environmental
burden related to product manufacturing is essential so that the
NICHIAS Group continues to survive.
So, we set a target that the NICHIAS Group will have virtually
no CO2 emissions by 2050. As a milestone, under the target of
reducing CO2 emissions by 30% compared with Fiscal Year2019 in Fiscal Year 2030, we are taking various measures. The
details are shown on the feature article on P. 16-21. The
measures include a shift to manufacturing method that enables
the reduction of CO2 emissions at the time of productmanufacturing, the development of products that can be
manufactured with low carbon, proactive use of renewableenergies such as sunlight, and reduction of energy loss throughimproving productivity.
And, the limited resources need to be used efficiently. There
are many issues like natural resource depletion, the impact on
the environment at the time of mining, and the impact of plastic
waste on the environment. The NICHIAS Group is committed toQ

What kind of strategies would you apply to grow on a medium-to-long-term basis?

127 years have passed since the establishment of theCompany. However, in the next 10 years, the company will face
rapid social changes that are equivalent to the past 127 years. I
think we are in the middle of an era of change. For the NICHIASGroup to grow on a medium-to-long-term basis, it is vital toaccelerate the speed and enhance the efficiency to be adapted
to the rapid environmental changes and solve environmental
and social issues.
Those thoughts are the basis of the medium-term
management plan, “Shikumi 130,” which was established by
the NICHIAS Group in April 2022. To be specific, in the plan, we
set KPIs for each of the five issues, “increase of profitability,”

Q
Q

First, we would like to ask you about the external environmental recognition.
How do you think environmental issues and social issues affect corporate management?

Since established in 1896, the NICHIAS Group has grown in adown-to-earth and steady manner. We take pride in the factthat NICHIAS, which is known for the products and services
utilizing “TATSU-TAMOTSU (Insulation and Protection)”technologies unique to the Company, is considered“indispensable” and supported by each industry.
In the meantime, as you may know, environment surrounding
corporations has changed significantly these days. For
example, there are issues concerning global environment,
resource depletion, declining birth rate and aging population,and social issues concerning diversity and respect for humanrights. I have a sense of crisis that, under such environment, if

05

NICHIAS Integrated Report 2023

reducing the use of natural resources through using recycledmaterials, developing recyclable products, and taking othermeasures.
It is also crucial to operate the businesses in an efficientmanner. To this end, we will use the management resources
efficiently, considering business selection and focus while
sticking to profitability.
We also recognize that the declining birthrate and aging
population, diversity, and respect for human rights are also
important issues. Securing labor of young generation has
become difficult year by year due to the impact of declining
birthrate and aging population. While promoting reduction of
number of workers by utilizing IT, we try to involve elderly
people in a proactive manner. Regarding diversity and respectfor human rights, we do not tolerate any discrimination, such as
race and sex, based on the idea that human resources are thefoundation of the company. In addition to the prohibition of
unfair labor practices, we ensure safety and sanitation steadily
and aim to realize “a company that is a good place to work andfull of smiles”, which the NICHIAS Group advocates.

 edium-Term Management Plan
M
Sloganwe keep doing the same thing, NICHIAS would not be selected
as a company in a long-term perspective even though we could
survive in the short term.
It is required to tackle those issues proactively to maintainthe position of the NICHIAS Group as an “indispensable”
company after 50 years.
Medium-Term Management Plan
Five-year plan from FY2022 to FY2026“business selection and focus,” “efficient operation,”“environmental responsiveness,” and “strengthening offoundation.” Achievement of “Shikumi 130” leads to themedium-to-long-term growth of the NICHIAS Group.
To achieve those issues, we also need to establish a goodworking environment for employees and improve their job
satisfaction. In addition, the level of satisfaction with the
NICHIAS Group of stakeholders, such as local communities,
clients, investors, and employees’ families, is important.
“NICHIAS Happiness Value Index,” which quantifies andassesses those items, was established in November 2022. For
details, see P. 8.

Creating mechanisms “Sikumi” that respond to change

Shi Shiawase(happiness)

Mechanisms “Sikumi” for thehappiness of our employees andtheir families that support them“a company that is a goodplace to work and full ofsmile”

Ku

Kufu (creative
action)Mechanisms “Sikumi” to devise ways
to solve the issues in a crosssectional manner without being
satisfied with the present state“Forward-looking thinking
and forward-looking
organization”

Mi Mirai (future)

Mechanisms “Sikumi” to aim forsustainable growth while being
adapted to social andenvironmental changes“Creating a bright future”

NICHIAS Integrated Report 2023

06

Top Message

ColumnNICHIAS Happiness Value Index
Q

What is the target of the medium-term management plan, and how does it progress?

Performance record of NICHIAS for evaluating the level of realizing“a company that is a good place to work and full of smile.”

In the medium-term management plan, Shikumi 130, NICHIAS selected the five issues that we consider especially important and set the
specific measures and numerical targets for each of the issues as NPIs, the KPIs of NICHIAS (NICHIAS Performance Indicators).

Challenges of the
NICHIAS Group

Increasing profitability(enhancing the capability to earn)

We established the NICHIAS Happiness Value Index, a mechanism to evaluate the level of realization of “a company that is a goodplace to work and full of smile.” which we set in November 2022.
NICHIAS Happiness Value Index is comprised of the following four elements.

A company that is a good place to work andfull of smile.

 ive important issues that constitute NICHIAS Performance Indicators (NPI)F(quantitative evaluation)[Tree-ring management] Sustainable growthBusiness
selection and
focus

Employees’ satisfaction level (quantitative evaluation)
Environmental
responsiveness

Efficient operation

Level of employees’ happiness (survey evaluation)

Strengthening thefoundation

Level of stakeholders’ satisfaction (survey evaluation)
Business strategies
with an awareness of
portfolio

Operating effectivenessImproving productivity

Effective
distribution of
resources

Digital technology
Utilization andpromotion

Deepening ofbusiness modelCommitment toagility and profit

Operating income
ratio
15% or more

Optimization of
investment

Capital investment
Total amount in five years
60 billion yen* Investment being aware of
ROIC

Human resources
reduction

Total working hours
Target compliance
rate 100%

Promotion of carbon neutrality

Prioritizing safety
Quality improvement

Reduction ofenvironmental burden

InsideOur goal is to acquire 80.0 points out of 100 in Fiscal Year 2026. For details, please see the figure below.

Safe, secure, andstableReduction of thecompany’s emissions

Creation and expansion
Outside of business
opportunities
Environmental-friendly
product development

NICHIAS Performance
Indicators (NPI)

Amount of CO2 emission
Inside reduction-30% (compared with FY2019)

Amount of contribution to
Outside CO2 emission reduction

Evaluation
distribution

30

Zero cases of serious complaint
Rate of industrial accident
occurrence

5.4

Q

FY2022
ActualFY2024
TargetFY2026
Target

2,381

2,400

2,500

451

480

600

13.0

15.0

Net Sales(100 million yen)Overseas net sales(100 million yen)

Operating income
ratio

(%)

12.6

(100 million yen)

101

ROE

(%)

13.1

12.5

13.0

ROIC

(%)

11.3

11.0

12.0

(100 million yen)

374

400

450

(10,000 t)

22.6

19.4

18.7

(1,000 t)

19.1

18.3

17.1

Capital expenditures

EBITDA
CO2 emissions*1
Amount of discharged
industrial waste*1
Amount of contribution
to CO2 emission
reduction(10,000 t)

26.0

42.0

Many of the NICHIAS Group’s products and services realizedby our “TATSU-TAMOTSU (Insulation and Protection)”technologies contribute to measures against global warming.
We are confident that the technologies and knowledge we haveaccumulated can contribute to measures against global
warming.
And, the NICHIAS Group is characterized by businesses thatcover a wide variety of industries, such as chemistry andpetrochemistry, electricity, semiconductor, automobile,
medicine, and architecture, instead of covering only a part of

Efficient operation

the industry. We have the unique function of proposing our“TATSU-TAMOTSU” technologies for customers’ worries ineach industrial field.
Satisfying the needs of customers from this uniquestandpoint and keeping to respond to their requests are the
NICHIAS Group’s role, and this is the way we should be.
We would like to thank our stakeholders for their continued
support and to please look forward to the future of our Group.

FY2022
ResultFY2026
Target69.8 points 100
80 points 100

Work life
management

Healthy management

pointsEmployees’ families

2.1

2.1

Compliance

Shareholders(legal compliance andsocial norms)

2.2

2.1Relationships with

2.0
Human resource systemand compensation

Working environment(mental value)

Employees’ happiness

20

points2.1

Results of FY2022

10.5 points/20.0 points

2.7
Business partners

2.6(investors)(suppliers)

the organization,
superiors, andcolleagues

Understanding of andagreement with the company

5.1

pointsJob satisfaction

Evaluation
distribution

6.0

Human resources(the feeling of achievement, growth, and expectation)*1: NICHIAS Group’s manufacturing offices (including overseas offices)

For the final question, what are the roles and identities of NICHIAS based on the medium-to-longterm perspective?

2.8
3.9

Total amount in five
years: 60 billion yen(rough figure)

20.0

ComplianceBusiness
selection and
focus

5.6

Environmental
responsiveness/30.0 points

4.5

4.1
4.3

22.3 points

Diversity

Numerical targets of the Group and results of FY2022
Targetpoints5.0

NPI

Regarding the numerical target of the medium-term
management plan of the entire NICHIAS Group, approx. 60
billion yen of capital investment is planned by Fiscal Year 2026.
And, for Sales and profit level, 250 billion yen for Sales , 15%
for operating income ratio, 13% for ROE, 12% for ROIC and 45
billion yen for EBITDA are set as targets. We operate the Groupaiming to achieve such targets.
As its environmental targets, NICHIAS has establishedtargets for reducing its CO2 emissions and discharged industrial
waste, helping realize a carbon-neutral society and recyclingoriented society. Concerning the reduction in CO2 emissions
brought about through the use of NICHIAS’ products andservices, we have set numerical targets.
For the results of Fiscal Year 2022, mid-term target of Fiscal
Year 2024, and final target of Fiscal Year 2026, see the table on
the right. We will ensure the medium-to-long-term growththrough steadily achieving those targets.

30

Evaluation
distribution

Increasing profitability

Strengthening
the foundation

Results of FY2022

Employees’ satisfaction/30.0 points

points(Japan) 0.5 or below(Overseas) 1.2 or below-400,000 t (2026)

24.4 points

Five important issues

System expansion andbottom-up based on 3S(Safe, Secure, and Stable)

Working environment(substantial value)

Results of FY2022

2.6

Local communities(municipalities, schools)

Partnership

Stakeholders’ satisfaction
Evaluation
distribution

20

points

2.6
Business partners(customers)

Results of FY2022

12.6 points/20.0 points

The result of Fiscal Year 2022 was 69.8 points. In particular, we will focus on taking measures for compliance with
Employees’satisfaction andStakeholders’ satisfaction to make improvements. We will continue to make efforts to increase the points of the
NICHIAS Happiness Value Index and further realize a company that is a good place to work and full of smile.
* Content announced in November 2022 was partially reviewed (changes to distribution).

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NICHIAS Integrated Report 2023

NICHIAS Integrated Report 2023

08

Financial and Non-financial Data
Financial data (as of March 31, 2023)

Non-financial data (as of March 31, 2023)

Net Sales
2,155

238.1 billion yen
2,089

1,964

Operating income/operating income ratio
Operating income

2,162

30 billion yen

204
10.5

2020/32021/3

Amount of discharged industrial waste

26.0

263
226

2019/3CO2 emissions

Operating income ratio

2022/3 Fiscal Year Ending March 2023

2019/3

196

12.1

2

12.6%

2021/32022/3 Fiscal Year Ending March 2023

2020/32021/32022/3Fiscal Year Ending March 2023

2020/3* NICHIAS Group’s domestic and overseas manufacturing offices

Shareholder’s equity/Shareholder’s equity ratio
Shareholder’s equity

Shareholder’s equity ratio

172.4 billion yen

1,543
1,168

62.5

61.7

60.7

56.6

Capital expenditures

Rate of industrial accident occurrence

10.1 billion yen

90

0.94

2020/32021/32022/3 Fiscal Year Ending March 2023

Depreciation & amortization

Fiscal Year Ending March 2023

63.9

65.3

71.0%

53.1

0.87

77
0.49

2019/32022/3Rate of paid holidays taken
61.2

114
64.6%

2021/3* NICHIAS Group’s domestic and overseas manufacturing offices

128

1,354

1,263

19,100 t

226,000 t-CO

10.0

9.8

2020/3

22.3

21.9

21.3

21.2

24.4

2019/32020/32021/32022/3 Fiscal Year Ending March 2023

R&D expenses

0.43

0.50

2019/32020/32021/32022/3 Fiscal Year Ending March 2023
* NICHIAS Group’s domestic manufacturing offices, Research Laboratory, Construction
Department (construction and installation work of building materials for plants)

Average years of service

2019/32020/32021/32022/3 Fiscal Year Ending March 2023
* NICHIAS, non-consolidated

Employment rate of disabled people

7.5 billion yen
65

63

58

66

62

61

60

61

5.7 billion yen
15.0

2019/32020/32021/32022/3 Fiscal Year Ending March 2023

2019/32020/32021/32022/3 Fiscal Year Ending March 2023

2019/314.1

14.6

2020/32021/314.9

15.1 years

2022/3 Fiscal Year Ending March 2023

2.1

2019/32.3

2.3

2020/32021/3* NICHIAS, non-consolidated

Interest-bearing debt/interest-bearing debt ratio
Interest-bearing debt

261

interest-bearing debt ratio

261

259

Dividends per share/Dividend on equity (DOE) ratio
Dividends per share

25.9 billion yen

257

12.5

11.8

10.4

15.1

2020/32021/32022/3 Fiscal Year Ending March 2023

2019/3

4.1

2020/34.0

2021/3

3.9

NICHIAS Integrated Report 2023

Number of employees on temporary retirement

16.5

17.7

18.4

25 people

18.7%
18

3.7%

2022/3 Fiscal Year Ending March 2023

* On October 1, 2018, the reverse share split was implemented at a ratio of
one share for every two shares of common shares. Past figures are also
retroactively converted to post-reverse share split figures.

09

2022/3 Fiscal Year Ending March 2023

20

18

9.7%
4.0

2019/3Rate of female employees

2.3%* NICHIAS, non-consolidated

92 yen

86

78

76

68
12.6

Dividend on equity (DOE) ratio

2.3

8

2019/32020/32021/32022/3 Fiscal Year Ending March 2023

* NICHIAS, non-consolidated (Target of calculation was reviewed from fiscal
year ending March 2023 and the figures were revised.)

2019/32020/32021/32022/3 Fiscal Year Ending March 2023
* NICHIAS, non-consolidated

NICHIAS Integrated Report 2023

10

NICHIAS Group in Society

Technologies, products, and services of NICHIAS that solve
social issues
The NICHIAS Group provides products and services to a wide variety of fields including infrastructure that supports social foundationsuch as petrochemistry and electricity, automobiles supporting logistics and transportation of people, buildings and housing
supporting lives, and semiconductor devices that support advanced information technologies.
1

2

For rockets

1 For rockets

Protecting from corrosion

NAFLONTM PFA pressure
resistant hose

METAPLUSTM Multi-Layer Shims
A soundproofing part to be installed onto disc brakepads. Reduces unpleasant noise generated during
braking.

Hoses made of fluoropolymer that are used forrocket launching platform equipment and facilitycontrol lines.

Protecting from fire

For nuclear power plants

Insulating from leaks

Sealing materials for piping

GRASEALTM VORTEXTM GASKET

Wrap-Type Fire-proofing Covering Materials

MAKIBEETM

Sealing material with a spiral-shaped sealing part,which is used for piping and equipment like boilers
and hydrogen gas turbines.

Fire-proofing covering materials used for beams andpillars of steel construction buildings. It also
contributes to laborsaving in construction.
6

Insulating noise & vibration

10 For alkaline water electrolysis plants, 16 thermal power plants

For refrigerated warehouses

For food-manufacturing plants

9 EVs

High-performance brake shim material

For logistics warehouses

45

8 For automobiles,

Fluoropolymer hose

2 For logistics warehouses
3

Protecting cleanliness

11 For buildings

For semiconductor manufacturing factories

Insulating heat

Insulating noise & vibration

Raised-Access Floor Systems

For electronic part factories(of multi-layer ceramic condensers)

3 For refrigerated warehouses
7

For battery factories (of lithium ion batteries)
89

10 For alkaline water electrolysis plants

For automobiles

Insulating heat

Raised-access floor system of double-floor structurewith the office floor. It has superior walking comfort
and creates a comfortable office environment.

Heat insulation work
Construction work for installing heat retention andcold retention materials at such as -20°C largescale refrigerated warehouses.

12 For LNG facilities, 15 ammonia hydrogen storage plants

4 For nuclear power plants
11 For buildings

Insulating heat

Protecting cleanliness

13 For hospitals

All-metal heat retention material, which does not
generate dust and is used for pressure vessels andpiping of atomic furnaces.

12 For LNG facilities

NAFLONTM Multi-lumen tubes
5 For food-manufacturing plants

For waste incineration plants
14 For fuel-transporting vessels

15 For ammonia hydrogen storage plants

Insulating from leaks

Protecting from corrosion

Protecting cleanlinessSealing materials for food

SANICLEANTM GASKET

Industrial Products
Business
Advanced Products
Business

Six technologies of TATSU-TAMOTSU

Insulating heat

Insulating noise & vibration

Protecting from fire

Autoparts Business
Protecting from corrosion

Building Materials
Business
Protecting cleanliness

11

NICHIAS Integrated Report 2023

18 For petrochemical plants

TM

Sealingtechnology
Thermal insulation
technology
Soundproofing
technologies
Fireproof
technology
Corrosion-proof
technology
Clean
technology

Insulating heat

Cold retention work
Construction work for installing heat retention
materials on the piping and tanks of LNG vessels inwhich low-temperature fluid flows.

6 For semiconductor manufacturing factories

Insulating from leaks

Tube made of fluoropolymer with only a diameter ofaround 1 mm, which is used as a part of medical
equipment such as endoscopes that need to be clean.
14 For fuel-transporting vessels

Odor-free and contamination-proof sealing material
used for filling lines in the food manufacturing
process, etc.

16 For thermal power plants

Energy and Industrial
Plants Business

Protecting cleanliness

Medical tube

For housing
13 For hospitals

FOAMNERTTM TN
Polyurethane foam heat retention material used forpiping in which low-temperature fluid flows.

Heat retention materials for nuclear power stations

Metallic heat retention material

Five businesses

Insulating heat

Heat retention material for extremely low temperatures

For EVs

17 For steelmaking plants

NICHIAS OMEGA FLOORTM

Protecting cleanliness

Fluoropolymer tube

17 For steelmaking plants

NAFLONTM PFA-NE TUBE
Fluoropolymer tubes for preventing discharging
phenomena caused by friction while maintaining thecleanness of high-purity chemicals used insemiconductor manufacturing processes.

FINEFLEX BIOTM Blanket
Thermal insulation material used for boiler ceilings
and furnace walls. It contributes to energy saving.

It prevents fluid leakage from pipe joints and supports the safe operation of the
facility.
This technology contributes to energy saving by maintaining the temperature of
the item that is heated (or cooled down) and insulating the heat from outside andhelps reduce CO2 emissions.

7 For battery factories (of lithium ion batteries)

Insulating heat

Thermal insulation material for high temperatures

18 For petrochemical plants
Protecting cleanliness

Heat retention function recovering method

Volatile organic compound concentrator

Soundproofing technologies contribute to quiet and comfortable life throughreducing the noise from factories and vibration sound from automobile brakes.

SOLVENTCLEANTM

Height approx. 4.8 m“Overlapped Heat Retenation method”

It provides materials that protect industrial furnaces, incinerators, and buildings infire from fire to secure safety.

Equipment for absorbing and collecting
gas, including volatile organic compounds(VOC) emitted from factories.

Height of a person
Approx. 1.7 m

In this method, the heat retention performance isrecovered through lap-winding new heat retention
material without removing the deteriorated heatretention material.

The technology prevents corrosion and pollution caused by chemicals. For
example, it plays an active role in the processes of manufacturing semiconductors
and food, which have severe standards for cleaning and sanitizing control.

Industrial dehumidification rotor

It maintains cleanness in processes that tolerate no impurity, such as
semiconductor manufacturing. We pursue cleanliness to the extreme.

This is a dehumidification rotor that generates
ultra-low dew-point air (dry air) that is sent intolithium-ion battery factories.

HONEYCLETM EX-SG

Insulating heat

Insulating from leaks

A truck that can be driven to the customer’s factoryand process gaskets on site. Speedy response is afeature of this service.

NICHIAS Integrated Report 2023

12

Value-Creation Process

Value-Creation Process
Making most of the six resources and five strong points, the NICHIAS Group creates value in various industrial(Insulation and Protection) that have been developed since the establishment.
Corporate philosophy

INPUT
Six resources of
NICHIAS(As of March 31, 2023)

Financial resources
Strong and stable financial base
Shareholder’s equity ratio: 64.6%
Total assets: 266.9 billion yen
Liquidity in hand: 3.0 months

fields and contributes to the realization of a sustainable society with our unique technologies of TATSU-TAMOTSUTMNICHIAS contributes to the Earth’s
bright future through our“Insulation andProtection”technologies.

OUTPUT

VISIONNICHIAS Group businesses

Realization of how it should beManagement Policy

Energy and Industrial Plants Business

See P. 22-24

Five strong points of NICHIAS
Centering on TATSU-TAMOTSUTM, we operate
in combination of various businesses.
We provide products indispensable for the market.
We maintain the largest share in the niche market.
We have a wide network of customers and bases.
We establish a long-term relationship oftrust with customers.

Manufacturing resources
Global and diversified
manufacturing bases
Number of manufacturing bases:
26 in Japan, 14 overseas
Capital expenditures:10.1 billion yen

Cold retention work, sales of sealing materials, andprovision of services such as GASKET KOBOTM

Industrial Products BusinessSix technologies of NICHIAS

Social issues
NICHIAS considers
important

Human resources

Climate changeDepletion of resources,
biodiversity Other
environmental issues
Large-scale disasterDeclining birthrate andaging population
Diversity, respect forhuman rights

Human resources that can play asa member of a team through NKK(NICHIAS Kaizen Katsudo)
Number of employees: 6,445
A company that is a good place towork and full of smile culture
Rate of paid holidays taken: 71.0%
Average years of service:15.1 years

Social and related capital
Relationships of trust withstakeholders and the power of thebrand established in the course of
the 127 years of history
Wide network in close relationshipwith customers
Number of sales bases: 73 in
Japan, 9 overseas
Number of permanent sites: 102
bases
Coexistence with local communities
Number of social contribution
activity cases: 363 in Japan, 70
overseas

Natural capital
Manufacturing aiming forminimization of environmental
burdenAmount of energy used:
75,052 kL (crude oil basis)
Water consumption: 1,107,000m3

13

NICHIAS Integrated Report 2023

Insulating from leaks

Protecting from corrosion

Insulating heat

Protecting cleanliness

Example of economic value

Insulating noise & vibration

Protecting from fire

NICHIAS’ issues
considering social issues

IMPACT

Major SDGs related to value creation

Intellectual resources
Excellent element technology
supporting the six technologies of
TATSU-TAMOTSU
R&D expenses: 5.7 billion yen
Number of R&D personnel: 479
Number of held patents: 392

NICHIAS contributes tothe Earth’s bright future
through our“Insulation andProtection”technologies.

Sales of thermal insulation materials such as
ROSLIMTM Board and filter products such as
SOLVENTCLEANTM

Advanced Products Business
Creation of social effect by the use of various products
and services of NICHIAS Group and that of economic
effect by sales increase

See P. 15

Medium-term management plan

Management strategies to be achieved
in five years from FY2022 to FY2026
E stablishment of mechanisms “Shikumi”
responding to changes in the world, with theaim of realization of a company that is a goodplace to work and full of smileAchievement of the quantitative target of NICHIAS
Performance Indicators (NPI) for promoting theestablishment of mechanisms “Shikumi”
Improvement of NICHIAS Happiness Value Index

Example of social value
Sales of fluoropolymer products such as
NAFLONTM UG TUBE and piping heater products
like ENETHERMOTM PH.

Autoparts BusinessContribution to the realization ofa sustainable society, such ascarbon neutral society

Contribution to the realization ofrecycling-orientated society
Sales of METAKOTETM and other types of cylinder
head gaskets and metallic covers such as INSAL
COVERTM

Contribution to the prevention of
air pollution

Building Materials Business

The major foundation supporting the five businesses evelopment of products with a little burdenDon the environmentEfficient production activity
Reliable quality control system
Thorough environmental management system
Sales activities in line with customers’ needs
Corporate governanceDevelopment and fostering of humanresources

Contribution to stakeholders’human-right protection

Sales and installation of fire-proofing covering
materials like MAKIBEETM and flooring materials forbuildings such as NICHIAS OMEGA FLOORTM

Realization of a friendly andbright company

NICHIAS Integrated Report 2023

14

Initiatives for Social Issues

Feature article

Selection of Social Issues to be Solved and Issues
to be Dealt WithThe world we live in faces various social issues including environmental issues like climate change and humanright issues.
Those social issues are getting serious year by year. As a result, solving and responding to the issues would
be difficult if we did not deal with them as common issues for all humanity.
NICHIAS picked up five social issues that it considers important so as to pay attention to those issues.
Major risks and opportunities for the five social issues were identified, based on which NICHIAS’ issues wereset.
Social issues
NICHIAS considers
important

Climate change

Major risk

 ise of raw materialR
prices, resulting fromthe introduction ofcarbon taxes, etc.
Rise of energy prices

Major opportunity

 xpansion ofEdemands for products
and services related
to decarbonizationand environment
protection

NICHIAS’ issues consideringsocial issues

Development,
manufacturing, and salesof products and services
that promotedecarbonization
Shift from products andmanufacturing methods
that emit large amount ofcarbonDevelopment ofrecyclable products andservices

Depletion of
resources
Biodiversity
Otherenvironmental
issues

Large-scaledisaster

Decliningbirthrate andaging population

Diversity,
respect forhuman rights

 ifficulties in procuringD
raw materials
 tagnation ofS
production activities

 cquisition ofAbusiness opportunities
through developmentof manufacturingmethods not relying
on natural resources

Securing stable provision
by BCP measures

Efficient deployment of
manufacturing bases

 ifficulties in procuringD
raw materials
 tagnation ofS
production activities

 oss of the businessL
opportunities causedby labor shortage
 oss of heldL
technologies

 ccusation fromA
stakeholders becauseof lack of consideration
for diversity andhuman rights

 stablishment ofEa strong businessfoundation byreconstructing
manufacturing bases.

Promotion of smart
factories by digitaltransformation
Strengthening
cooperation in the
NICHIAS Group and withthe supply chainImprovement of
productivity throughdevelopment of work
style reform

Strengthening ofmanagement of overseas
Group bases

 aintenance ofM
competitivenessthrough effective
dissemination oftechnologies

Optimization of logistics

 ecuring of diversifiedS
human resources ealization of workerRfriendly company
cultureEfficient humanresources development
Development of products
and technologies, andeffective dissemination of
manufacturing
technologies
Realization of thecompany that ensures
job satisfaction

Related SDGs

Initiatives for Carbon NeutralityInformation Disclosure Based on the Task Force on Climate-Related
Financial Disclosures (TCFD)NICHIAS Group’s Perspective on Climate Change
Climate change has made an impact around the globe. For
example, enormous disasters increase, and economic activities
stagnate. Under such circumstances, the NICHIAS Group has
contributed to the reduction of CO2 emissions through products
and services with functions such as heat retention, thermal
insulation, and cold retention based on our TATSU-TAMOTSUTM (Insulation and Protection) technologies. The NICHIAS Group considers
that climate change is a huge risk to the bright future of the earth. So, to promote the activities from the two aspects, mitigation of andadaptation to global warming, it established the Carbon Neutrality Declaration in April 2021 with the aim of reducing CO2 emissions by
30% in Fiscal Year 2030 compared with Fiscal Year 2019. In June 2023, the Group agreed with the recommendations of the Task Forceon Climate-related Financial Disclosures (TCFD) to respond to climate change issues more appropriately. Based on therecommendations of TCFD, we will grasp the risks and opportunities of the impact of climate change on business activities, reflect themin the business strategies, promote further decarbonization, and proactively disclose information concerning climate change.

GovernanceIn the NICHIAS Environmental Charter, the NICHIAS Group declares that taking advantage of its TATSU-TAMOTSU technologies
reduces environmental burden including global warming, and contributes to the realization of a society that grows sustainably. The
Group considers the measures against climate change an important issue, and the Company-wide Environment Committee plays aleading role in promoting the development of products, reducing the environmental burden, and reducing the environmental burden of
manufacturing offices.
Chaired by the President and Chief Executive Officer, the Company-wide Environment Committee is composed of Directors andGeneral managers and is responsible for the analysis of risks and opportunities of issues concerning environmental issues of the
NICHIAS Group, including climate change, planning and promotion of the initiatives, and formulation and management of the progressof the medium-term environmental policies. The Factory Sub-Committee, which is set under the Company-wide Environment
Committee, supervises and instructs manufacturing offices by checking the achievement of decarbonization targets of eachmanufacturing office and discussing the improvement of the performance of the entire NICHIAS Group.
Company-wide Environment Committee meetings are held quarterly and discussed items are reported to the Board of Directors.
Opinions at the Board of Directors meetings are reflected in the environmental measures such as response to climate change.

Risk Management
The NICHIAS Group, assuming Fiscal Year 2030, performs analysis using scenarios with the temperature ranges of 1.5°C and 4°C as
the future temperature rises. Specifically, the Carbon Neutrality Promotion Office assumes each process of the entire supply chain of the
NICHIAS Group to identify the climate change risks, perform the analysis, and respond to the phenomena that may cause a severe
impact. Regarding the progress of the measures against the risk identified in the course of analysis, important risks are recognized at
the quarterly meeting of the Company-wide Environment Committee and discussed at the Board of Directors meeting as needed topromote the measures for avoiding the risks and the activities for reducing the impact when the risk occurs.

Strategy
The NICHIAS Group assumes the status of Fiscal Year 2030 referring to the World Energy Outlook issued by the International Energy
Agency (IEA) and performs the analysis based on the 1.5°C scenario in which the transition to low-carbon society proceeds (NZE
scenario) and 4°C scenario in which climate change progresses. This is how risks and opportunities caused by climate change wereassessed. The impact of the carbon price on CO2 emissions and energy procurement in the 1.5°C scenario is significant. Consequently,
approx. 26 billion yen is expected for the amount imposed on the NICHIAS Group for carbon tax* after implementation of the measures
for reducing the CO2 emissions in 2030, resulting in the possible increase in operation costs.
To deal with this issue, we steadily proceed with the plan for reducing the CO2 emissions to realize carbon neutrality in 2050, whilereflecting the market prices that are generated by the products highly contributing to the environment in the prices of our products andservices.
* The calculation is based on 140 dollars / t-CO2 for developed countries and 25 dollars / t-CO2 for developing countries, which are stated in the information provided
by World Energy Outlook 2022 [1.5°C-in-2030 scenario].

15

NICHIAS Integrated Report 2023

NICHIAS Integrated Report 2023

16

Feature: Initiatives for Carbon Neutrality and Decarbonization
Risks and major measures
Category

Risk

Major measures

Governmental
and legal
regulations

Increase of costs due to change of manufacturing processes, rise incapital investment, and purchase of renewable energy
Increase of costs because carbon tax imposed on suppliers andcosts for response to environment issues are passed on to thetransportation costs
Increase of energy costs used for manufacturing processes of thecompany’s factories due to introduction of carbon tax

Change of business of segments that emit large amount of CO2
Improvement of energy-saving production, introduction of energysaving facilities, conversion of fuel, promotion of renewable energy
Change to stable supply and low-price materials
Consolidation of logistics route, improvement of truck loading ratio,
streamlining by elimination and consolidation of warehouses

Reputation

Delay of measures against climate change (including initiatives for
reducing lifestyle CO2, SBTi, and RE100) may lead to deterioration of
reputation from customers and reduction of orders received.
Investors’ standard for investment would not be met because of thedelay of measures against climate change (including SBTi andRE100) and the negative approach to information disclosure, which
may result in a decline in share price and an increase in financing
costs.

Implementation of proactive measures against climate change so that
reputation from customers and investors improves (including
enhancement of information disclosure)
Development of low-CO2 products that reduce the use of materials at
the stages of production design and process design

Acute

Decrease of sales and generation of recovery costs, costs forrelocation of factories, and costs for additional transportation due tointerruption of supply chain and damage to factories caused by storm
and flood disasters that have become more serious

Strengthening of BCP and establishment of manufacturing facilities
and systems responding to the environment increase opportunities fortaking orders because of decreased costs by improved productivity
and enhanced trust from customers

Transition
Risk(1.5°C)

Physical
Risk(4.0°C)

Indicators and Targets

Chronic

Increase in costs as a result of increased air-conditioning costs anddeterioration of productivity at factories and at factory sites, which is
caused by the increase in temperature during the summer season

Improvement and creation of employee-friendly working environment
realized by automation of operations with the help of robots, etc.

Carbon Neutrality Declaration
The NICHIAS Group declared in April 2021 that CO2 emissions from all business offices will be reduced to practically zero (carbon
neutrality) by 2050.
And, to ensure it achieves this declaration, as a milestone toward 2050, the NICHIAS Group sets the goal of “reducing its CO2
emissions by 30% compared with Fiscal Year 2019 levels by Fiscal Year 2030” and has implemented activities based on the mediumterm target.
To achieve the medium-term target, the NICHIAS Group undertakes three main initiatives: (1) shifting to manufacturing practices thatlead to decarbonization, (2) thorough energy saving in the entire Group, and (3) proactive use of renewable energy.

Approach to achievement of medium-term target
CO2 emissions(t-CO2)FY2019 (standard year)
260,000 t-CO2

FY2022226,000 t-CO2

30

Target line for achieving a 30%
decrease compared with FY2019 in
FY2030: 2.7% reduction/year
Progress

25

Proactive use of renewable energy
Thorough energy saving activities
Decarbonization activities ofhigh-carbon-emitting products

20* Items in bold frames in the table are items that the NICHIAS Group deems to be important as of the Report submission date.

15

Furthermore, the 1.5°C scenario’s risks and opportunities as well as its impact on the business were calculated for each segment of the
NICHIAS Group. The results are as follows. We will take appropriate measures for each impact that was calculated.

5

Risks and opportunities of each business in the “world of 1.5°C” and the countermeasures
Business

Energy and Industrial plants

Industrial products

Advanced products

Auto parts

Building materials

Risk

Decrease of sales as aresult of decrease of existing
oil and petrochemical plants
Decrease of sales because
construction technologies
products for plants using
the new decarbonizationenergy are developed byother companies

For products with high CO2emissions, increase of costs
due to change inmanufacturing processes,
rise in capital investment,
and purchase of renewableenergyDecrease in sales if thebusiness cannot respond to
the shift to semiconductor
manufacturing technologies
advanced throughtechnological innovation

Decrease in product sales
for internal combustion
engines as the share ofelectric vehicles increases
as a result of CN policies ofeach country

For products with high CO2emissions, increase of costs
due to change inmanufacturing processes,
rise in capital investment,
and purchase of renewableenergyFocus on the development
of differentiated new
methods and new products

Promotion of introduction ofprivately owned electrical
power facilities using
renewable energy
Shifting to low-CO2
emissions and energy-saving
manufacturing method

Forward-thinking
development realized byconcentration of resources
by selective investment indevelopment andstrengthening of marketing

Optimization of productionof products for internal
combustion engines by
consolidation of production
processes and bases

Establishment of new
manufacturing methods
Examination on introductionof energy-saving
manufacturing facilities
Shift of manufacturing
energyReview of product lineup of
high-CO2 emissions

Increase of demand forindustrial dehumidification
filter products for lithiumion-battery-manufacturing
equipment, as a result ofshift to electric vehicles

Increase of demand for
power semiconductors due
to diversification of powersources including renewableenergy, electrification, andspread of smart city,
resulting in an increase ofsales for semiconductormanufacturing equipment

Increase of need for newparts for new-generation
vehicles replacing products
for internal combustion
vehicles, resulting in an
increase in sales throughdeveloping and providing
compatible products withnoise/heat insulation andseal functions

Increase in sales due tocommercialization ofenvironment-friendly building
materials because demand
for low-carbon building
materials increases

Strengthening of investment
in development for the
next-generation vehicles todevelop and expand salesof products with noise/heatinsulation and sealing
functionsContinued development ofenvironment-friendly
products
Public relation of energy
saving effect and low-CO2
effect by the adoption ofenvironment-friendly
products

Major
measures

Generation of new sales
opportunities as a result ofcreation of the market forexperiment facilities using
biomass, ammonia,
hydrogen, SAF, CCU, andother low-carbon
technologies

Opportunities

Major
measures

Increase in sales of NICHIAS’
products and services, as aresult of the increased energy
saving demands and theconsequent increase indemand for heat retention
and thermal insulation
products and construction
work
Increase in sales because ofrecovery of maintenancedemand as a result of therestart of nuclear power
generation

Resulting from the increased
need for manufacturing
equipment contributing toenergy saving, NICHIAS’
product sales used for theequipment increase
Increase in sales as a resultof the creation of the market
for facilities using biomass,ammonia, hydrogen, SAF,
CCU, and other low-carbon
technologies

Resulting from the increased
need for semiconductormanufacturing equipment
contributing to energy
saving, Sales of NICHIAS’
products used for theequipment increase

Sales expansion of thermal
diagnosis technology
business
Collaboration with suppliersof SAF, ammonia, etc. andconsumers
Development and launch of
new construction methods
and products

Acquisition of opportunities
by expansion of services
proposing thermal diagnosis
and energy saving
Promotion of developmentof high-performance
dehumidification filters andsecuring of supplying
capacities by capital
investment responding to
the market expansion
Collaboration with suppliersof SAF, ammonia, etc. andconsumers

Development and sales
expansion of energy-saving
products by proactive
investment in development
Establishment of a
production system throughappropriately grasping themarket trend and making
forward-thinking priorinvestment* Items in bold frames in the table are items that the NICHIAS Group deems to be important as of the Report submission date.

17

NICHIAS Integrated Report 2023

FY2030 (target)
182,000 t-CO2

100Predicted CO2 emissions
in FY2030

CO2 emissions
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Results of FY2022
The CO2 emissions of the entire NICHIAS Group in Fiscal Year 2022 were 226,000 t-CO2, a 1.4% reduction compared with Fiscal Year2019, the standard year.
In addition, we started the calculation of the CO2 emissions of the entire value chain in Fiscal Year 2021. While total CO2 emissions of
Scope 1 and 2 in the NICHIAS Group in Fiscal Year 2022 are 226,000 t-CO2, those of Scope 3 are 840,000 t-CO2 in combination of
upstream and downstream activities, accounting for approx. 79% of the overall emissions.

Calculation results of FY2022 CO2 emissions in the supply chain

Upstream

NICHIAS

Downstream

825,000 t

226,000 t

15,000 t

Scope 3 Upstream: Emissions
from other than NICHIAS

Scope 1, 2 Upstream: Emissions
from NICHIAS

Scope 3 Downstream: Emissions
from other than NICHIAS

Scope 1
Direct emissions by the use of fueland gas
108,000 t
Scope 2
Indirect emissions by purchase ofelectricity and heat
118,000 t

 ransportation, distributionT(downstream)
Not coveredNote 1
Processing of sold products 1,000 t
Use of sold products
Under calculation
Disposal of sold products 14,000 t
Leased asset (downstream)
0t
Franchise0t
Investment
0t

Purchased products, raw materials
662,000 t
Capital goods
34,000 t
Fuel-and-energy-related activities
43,000 t
Transportation, logistics (upstream)
77,000 t
Waste generated from business
1,000 tBusiness trips
1,000 tCommune of employees
6,000 tLeased asset (upstream)
1,000 t* Emissions of NICHIAS (Scope 1, 2) are calculated based on the Act on Promotion of Global Warming Countermeasures.
Note 1: Since NICHIAS cannot trace the transportation and distribution (downstream), it is regarded as “not covered”.

Specific activities for carbon neutrality(1) Shift to manufacturing that will lead to decarbonization
NICHIAS sees products that have particularly large amounts of CO2 emissions during the manufacturing process as a major issue
toward achieving carbon neutrality and strives to reduce emissions throughout the company, beyond the boundaries of businessdepartments, research and development departments, and manufacturing departments. While shifting to energies with low CO2
emissions is NICHIAS’ main goal, the Group is also examining methods that lower the amount of carbon. NICHIAS is also developing
and shifting to products that are low in carbon emission through their life cycle.
NICHIAS Integrated Report 2023

18

Feature: Initiatives for Carbon Neutrality and Decarbonization

Development of NICHIAS NOA FLOORTM made of steel wood core

Visualization of energy

Regarding building materials using large amounts of natural resources, NICHIAS
has controlled the excessive use of natural resources by using renewablematerials generated in thermal power plants and paper factories effectively.
Aiming for sustainable buildings, we replaced the core material of theconventional ceramic flooring materials with clipboard to develop the NICHIASNOA FLOOR.
NICHIAS NOA FLOOR was developed considering the environment
throughout its lifecycle with respect to the followings.
(1) Procurement of raw materials: The wooden material used as the core of thisproduct is, in principle, made up of 100% wooden chips molded from waste
wood collected when demolishing buildings. Wood holds 5-kg-CO2 ofabsorbed, accumulated, and solidified CO2 per flooring panel without
discharging it outside.
(Guideline for Labeling of Carbon Stored in Wood Used for Buildings issued
by Forestry Agency)(2) Production: Production method using only electricity(3) Transportation and construction site: Weight was reduced by 36% comparedwith NICHIAS’ conventional ceramic flooring panels. With this effort, theburden on construction workers and CO2 emissions at transportation are
reduced.
As a result, NICHIAS NOA FLOOR could reduce CO2 emitted from theprocesses of raw material procurement to disposal by 25% compared withNICHIAS’ conventional products. And CO2 emissions of approx. 4,000 t-CO2
per year can be reduced at NICHIAS manufacturing offices.

NICHIAS has visualized the power consumption of domestic manufacturing bases to improve the awareness of all theemployees toward energy saving and grasping the energy loss. Visualization of power consumption helps grasp the power
consumption on a real-time basis and the consumption during the night time and at the time facilities stop, which visualizes thepower loss and may reduce the power by taking countermeasures. In the future, we will reduce the electric power cost and saveenergy by using the energy most appropriately.
Whole picture of power-consumption visualization
Company as a whole
NICHIAS NOA FLOOR

By manufacturing
base
Manufacturing
Base
A

NICHIAS
Conventional
product

Department
A,B...

NOA
FLOOR
25%

Reduction

Starting with the marine plastic issues, initiatives for reduction of plastic use and material recycling have been promoted in Japanand overseas. In 2022, the Act on the Promotion of Effective Utilization of Resources was enforced, accelerating the reductionof the use of plastic and recycling of plastic.
Under such circumstances, NICHIAS started the initiatives for recycling fluoropolymer products, our key products. The use ofrecycled materials had not increased for large-scale fluoropolymer (PFA) injection molding processing products forsemiconductor manufacturing equipment from the perspective of securing cleanness. However, as a result of examining therecycled materials, it was confirmed that there would be no problem with the quality of the lining quality if the ratio of therecycled materials was 30%. And, since the amount of CO2 emitted in the course of the recycling process is significantly smaller
than that emitted at the time of manufacturing PFA resin, the raw material, it is confirmed that the use of recycled materials
contributes to Scope 3 reduction of CO2 emissions of NICHIAS and customers.We will promote the effective use of plastic incollaboration with customers.
PFA injecting
item(without recycledmaterials)

PFA injecting
item(including 30% of
recycled materials)

0.0
0.2
0.4
0.6
0.8
■ Raw material Manufacturing ■ Raw material Transportation■ Recycled material Recycling processing

Amount of CO2 reduced by recycling PFA

The amount of CO2 emitted at thetime of recycling PFA is significantly
smaller than that emitted whenmanufacturing new PFA.
1.0
1.2
(kg-CO2eq / kg)* CO2eq: Value converted to theone equivalent to CO2, using
global warming potential (GWP).

Although we have implemented energy saving activities, we re-started the activities with the target of achieving following items one by one.
Use of own energy saving technologies and products
Introduction of various energy saving equipment, update of facilities, shift of fuel
Reduction of energy loss by activities to reduce failure at all manufacturing lines and to improve productivity
Thorough daily energy saving efforts by improved awareness and action of all employees
we re-started the activities with the target of achieving following items one by one. To promote such efforts, in fiscal 2021, NICHIAS
formulated Guidelines for Investing in Energy Saving Facilities. By adopting internal carbon pricing*, NICHIAS promotes investment that
leads to reductions of CO2 emissions.
Thanks to the facilities invested in Fiscal Year 2022, a reduction of approx. 4,000 t-CO2 / year, which is equivalent to approx. 1.5% of
the CO2 emissions in the Fiscal Year 2019, the standard year of the CO2 emission reduction target, is expected in Fiscal Year 2022 andbeyond.

19

NICHIAS Integrated Report 2023

Department
E,F...

Per equipment

Early detection of the gap with the target
Strategic optimization of power consumption(Standardization, demand response)Improvement in awareness of business offices
toward energy saving(Air, air conditioning, lighting, and other shared facilities)
Early detection of the gap with the target election of facilities for the measures forSenergy saving
Analysis of the cause of abnormality
Confirmation of the effect of countermeasuresImplementation of energy saving measures incooperation with facility operation
Analysis of the cause of abnormality
Confirmation of the effect of countermeasures(3) Proactive use of renewable energy
NICHIAS proactively installs solar power generation equipment on the roofs of plant buildings. And, for the domestic bases, where they
have already been installed, it implements activities with the target of reducing approx. 2,000 t-CO2 per year by Fiscal Year 2025.
NICHIAS promotes the purchase of renewable-energy-derived power and green power certificates. Consequently, in Fiscal Year 2022,
the ratio of renewable energy to power consumption increased from 0.5% in Fiscal Year 2021 to 3.0% due to the purchase of solar
power generation equipment and green power certificates.

KUMAMOTO NICHIAS CORPORATION,
started operation in December 2022

Yuki Factory, started operation in September
2022

NICHIAS (THAILAND) CO., LTD., started operation in
August 2022

Example of initiatives for decarbonization efforts of overseas factories (Malaysia)(2) Thorough energy saving efforts in the entire Group* For Fiscal Year 2022, the price was set 10,500 yen/t-CO2, and for Fiscal Year 2023, 12,500/t-CO2.

Department
C,D...

Reduction of CO2 emissions at
the time of manufacturing:
10kg-CO2 /m2

Initiatives for using PFA renewable materials for semiconductor-manufacturing equipment

Materials after recycling

Manufacturing
Base
B

By department

Amount of reduced CO2 emissions at the time of
manufacturing NICHIAS NOA FLOOR

Materials before recycling

What to do with visualization

NICHIAS FGS SDN. BHD. /NT RUBBER-SEALS SDN. BHD., one of the NICHIAS Group companies in Malaysia mainly
manufactures sealing materials such as industrial gaskets, consuming a large amount of fuel and power in the manufacturing
process.
In line with the activities to reduce CO2 emissions promoted by the NICHIAS Group, this factory makes efforts to reduce CO2
emissions.
Fuel of the furnace for METAKOTETM, a metal gasket for automobiles, was shifted from kerosene to LNG in June 2023, whichis planned to reduce approx. 1,600 t-CO2 per year of CO2. At the end of Fiscal Year 2023, on-site solar power generation with a
total system output of 1,920 kW will start the operation, too. We will keep implementing the decarbonization activities in aproactive manner as a member of the NICHIAS Group.

(1) Introduction of LNG storage facilities(NICHIAS FGS SDN. BHD. METAKOTE No.2 line)(2) Introduction of solar panels(NICHIAS FGS SDN. BHD. 1,280kW)(3) Introduction of solar panels(NT RUBBER-SEALS SDN. BHD. 640kW)NICHIAS Integrated Report 2023

20

Feature: Initiatives for Carbon Neutrality and Decarbonization

 ICHIAS’ Energy Saving Technologies That Contribute to Carbon
N
Neutrality
Based on heat retention and thermal insulation technologies that has been fostered since its establishment and under the theme of“decarbonization starts from energy saving,” the NICHIAS Group has a product lineup that realizes “thorough heat retention” and “highly
effective thermal insulation” on the customers’ site. Customers say they want to know how they should start responding to carbon
neutrality and decarbonization and that it would be easier to deal with the issue if some advice were available.
NICHIAS responds to such opinions with the energy saving diagnosis system ThermofitTM. Thermofit is an energy saving diagnosis
system that performs comprehensive heat loss diagnosis including diagnosis of deterioration of the existing heat retention and thermal
insulation materials. With Thermofit, NICHIAS provides proposals for countermeasures with the use of various heat retention and thermal
insulation materials depending on the circumstances. For some cases of heat retention and thermal insulation materials used for thecountermeasures, our easy detachable ENETHERMOTM is used. In each case, the flow is: Thermal diagnosis of the target, analysis of
the results, proposal of countermeasures, installation, and confirmation of the effect.
While general energy saving diagnosis systems only measure the current status and propose general countermeasures, our Thermofit
supports the entire process, from specific proposal of the countermeasures to confirmation of the effect of installation and improvement.

Our Businesses

Outline of Business NICHIAS’ business supporting the industry with TATSU-TAMOTSUTM technologies
Five businesses responding to different markets take advantage of our TATSU-TAMOTSU (Insulation and Protection) technologies,
support a wide variety of industries such as plants, semiconductors, automobiles, and building materials, and significantly
contribute to the development of society.
Building Materials Business

29,396 million yen

65,242 million yen
12.3%
27.4%
19.6%

Consolidated sales

See P. 38

Thermogram of a non-insulated machine: Surface
temperature approx. 55°C
Thermoforming machine

Autoparts
Business

Industrial Products BusinessThis Business meets the needs of a wide range of industries in Japan and abroad by selling
products born from its “TATSU-TAMOTSU” technologies, such as sealing materials, thermal
insulation material products, fluoropolymer products, and filter products. As well as supporting
the growth of this business, it also plays the role of enhancing existing businesses and creating
new businesses as the mother business throughout the NICHIAS Group.

In the electronics industry, represented by semiconductors and flat panel displays (FPD),NICHIAS’ main customers are semiconductor production equipment manufacturers, peripheraldevice manufacturers, and semiconductor manufacturers, to which NICHIAS supplies
fluoropolymer products, sealing materials, filter products, and thermal insulation materials forequipment and device parts and semiconductor plant facilities.

100 million yen
21.7%

19.0%

Energy and Industrial Plants BusinessOur business areas include the provision of heat retention and cold retention, fire-proofing, andsoundproofing works, and products such as sealing materials and thermal insulation materials
for applications from construction to maintenance of a wide range of plant industries such asenergy-related facilities like oil refineries, petrochemical plants, thermal power stations,
nuclear power plants, and liquefied natural gas stations, as well as steel mills and refrigerated
warehouses.

Advanced Products Business

2,381

NICHIAS provides Thermofit not only for customers but its factories as a decarbonization tool. Currently, thermal diagnosis isperformed at all the bases of the NICHIAS Group. If all of the countermeasures are taken, effect of reduction of more than approx.
1,000 t-CO2 is expected. Here are some examples for the use.
NICHIAS’ diagnosis team carried out a thermal diagnosis because, regarding the thermal molding machine newly installed in the
manufacturing line, a responsible person of a factory said, “Heat retention measures can save energy because a large amount of heat isdischarged from the facility, which makes the surrounding environment hot.” Simulation results showed that 0.9 kWh per molding canbe reduced by the heat retention measures, and 1.9 million yen of energy cost and 26 t-CO2 emissions are expected to be reduced per
year. For diagnosis and installation, we check the specific improvements after setting power meters and thermometers so that the effectof improvements can be measured.
As a result of installing ENETHERMO on the surface of a heat molding machine, it was confirmed that approx. 20% of power
consumption was reduced+C1781:C1788 And, according to the actual measurement data, we also confirmed that there was noproblem in the results of the thermal diagnosis simulation.
Those efforts contribute to a reduction of 33 t of CO2 and approx. 2 million yen of energy costs per year in the business office. In
addition, workers are pleased that heat dissipation prevention also serves as a measure against heat in the working environment.

Energy andIndustrial Plants
Business

Advanced
Industrial
Products Business Products Business

46,750 million yen 45,159 million yen 51,566 million yen

Autoparts BusinessWith sealing materials that protect against leakage from the likes of vapor and liquids aroundengines, thermal insulation parts that protect against heat from engines, and soundproofingand vibration-damping parts that protect against the sound and vibrations of the brakes andon-board parts as the pillars of NICHIAS’ autoparts business, NICHIAS supplies automobile
manufactures and autoparts manufacturers in Japan and overseas.

Building Materials Business
The business is made up of the products sales department, which manufactures and sells
building material products with features such as non-combustible, insulative, fireproof, andsoundproof features for various buildings from housing residences to office buildings andfactories, and the construction department, which handles construction work using NICHIAS’
products.

Energy and Industrial Plants BusinessFeatures of Business

Beforemeasures

Thermogram after installation of ENETHERMO:
Surface temperature approx. 43°C

Provision of heat retention and cold retention, fireproofing, and soundproofing work, as well as products such as
various sealing and thermal insulation materials for a wide variety of plants, including petrochemistry plants andpower stations
Establishment of long-term relationships of trust with customers, from construction to maintenance for the plant
industry
Implementation of unique total support services through development of manufacturing methods and productsin the fields from extremely low to extremely high temperature and provision of insulation contract, installation,and products

Market environmentAftermeasuresOpinions from responsible person of the NICHIAS Group factories
Hidenori Hara, Third Manufacturing Department,
TATSUTA INDUSTRY CORPORATION
Facilities in which ENETHERMO was installed account for approx. 70% of the power
consumption of this factory, showing that the installation of ENETHERMO contributes a lot to
the reduction of power consumption. A worker gave an opinion about improvement of theworking environment “Conditions of heat loss were so improved that we can actually feel the
improvement.” Another worker said “Productivity increased because it led to shortened heatup time.” Installation of ENETHERMO was well received.

21

NICHIAS Integrated Report 2023

Respective customers of petroleum processing, petrochemistry, thermal/nuclear power plants, steel plants, andgas industries proceed with the shift of business structure in response to decarbonization and carbon neutrality.
Under such circumstances, we continue to participate in the maintenance of the existing facilities and provide
differentiated new manufacturing methods and products for capital investment in shift to the new fuels such ashydrogen and ammonia.
We contribute to reduction of environmental burden with our technologies and installation services covering theentire process, which support the infrastructure of society and respond to energy saving.

Segment
Strategy

Provide engineering services covering the entire process that take advantageof the strength of the construction and product sales departments.
Reduce the environmental burden of customers through building
differentiated mechanisms such as the energy saving diagnosis system
Accelerate the development of new manufacturing methods and products
for commercialization in association with carbon neutrality in 2030 and after

Mikio Torizuka

General Manager of Energy
and Industrial Plants Division

Installation contracts of industrial
thermal insulation contributing tocarbon neutrality

Future initiatives
For commercialization associated with carbon neutrality in 2030 and beyond, taking advantage of the strength of the construction department andthe product sales department, we will provide energy saving diagnosis system ThermofitTM and other differentiated construction work and products
using engineering service.
We aim to realize long-term sustainable growth by setting business issues that can contribute to customers’ efforts to reduce environmental burden,
tackling the issues to realize work style reform, and building the mechanisms that help stakeholders of the division work brightly and pleasantly.
NICHIAS Integrated Report 2023

22

Our Businesses

Industrial Products Business

Autoparts BusinessFeatures of BusinessFeatures of Business

It plays a role in creating new businesses, in addition to the improvement of the existing businesses, as themother division for the entire company.
It holds many groups of products, including sealing materials, thermal insulation materials, fluoropolymer
products, and filter products.
It provides parts for factory facilities and products used for various types of equipment for an extensive range ofindustrial fields.

Market environment
In addition to the expected robust demand in the building, medical, food, and chemical plant industries, interest inenergy-saving products (thermal insulation materials), one of our core product fields, is increasing in Japan as wework toward realizing carbon neutrality.
In other countries, growth is expected to continue, particularly in the semiconductor and electronic components
markets. Demand for filter products is expected because of, for example, the spread of environmental regulations
on volatile organic compounds and investment in industrial-dehumidification-related items associated withwidespread electric vehicles.

Segment
Strategy

Maximization of sales opportunities by mixing up products
Formulation of business strategies for each market and proactive investmentin prospective growing markets
Strengthening of cost competitiveness by promotion of activities to reduce
costs
Stable supply of products by multiplying the suppliers of raw materials anddiversifying manufacturing bases

Hiroki Asada

General Manager ofIndustrial Products Division

Energy saving-related products(thermal insulation material)

Advanced Products Business

Segment
Strategy

Creation of differentiated products that catch the needs of the expanding nextgeneration vehicle market in advance
Establishment of production systems adapted to the change in business environment trends
Promotion of initiatives for product development and production improvementthat aim for carbon neutrality

Gasket for air-compressor

Regarding the business of internal combustion engines, against the backdrop of the trend of electrification, a decrease in demand is expected.
However, since the progress of electrification differs according to the energy situation of each region and country and the use of vehicles, we will try
to optimize the production system to meet the demand.
Business for the next-generation vehicles tackles the product development aiming for carbon neutrality using NICHIAS’ TATSU-TAMOTSU(Insulation and Protection) technologies for electric vehicles and fuel cell vehicles, based on the technologies and products, and the trust from
customers that have been accumulated. We will keep contributing to the development of the automobile industry.

Building Materials BusinessFeatures of BusinessFeatures of Business

Division related to electronics with customers such as manufacturers of semiconductor manufacturing
equipment, peripheral equipment, and devices
It provides fluoropolymer products, thermal insulation materials, sealing materials, and filter products to factories
of parts for facilities and equipment as well as semiconductors.
Indispensable business for the industry, which creates new value with differentiation (power of technology,
response, and stability)

Provision of building materials with functions such as incombustibility, thermal insulation, fireproofing, andsoundproofing to various buildings
Products sales department sells eco-friendly, non-combustible calcium silicate boards made of recycledmaterials, as well as rock wool products with excellent soundproofing and fireproofing performance and topclass energy saving benefits.
The construction department installs and sells raised-access floor systems, which realizes under-floor wiring in
office buildings and maintains comfortable space, and wrap-type fire-proofing covering materials made of rockwool, which have excellent design and protects steel structures against fires.

Market environment

Market environment

In the first half of the Fiscal Year 2023, the semiconductor market was expected to enter the phase of adjustment
due to a decrease in the demand for smartphones and PCs as well as reduced investment in semiconductor
memories and strengthening of regulations on export from the US to China. It is assumed that demands will
recover little by little from the latter half of Fiscal Year 2023, and in Fiscal Year 2024, demands stronger than Fiscal
Year 2022 are expected to get back. From the medium-to-long-term perspective, the semiconductor market willgrow due to the spread of IoT, AI, 5G, metaverse, and the accelerating data society.

Establish relationships of trust with customers realized by thorough sales
activity in close relationships with customers
Create differentiated products by technology development that catch the needs
in advance
Avoid opportunity loss by establishing a production system that keeps up withchanges in the market trend

Yukinori Ryuko

General Manager ofAdvanced Products Division

New housing starts are expected to decrease in the future. So, the housing market is in the difficult situation. On
the other hand, regarding the non-housing market, demand for warehouses remains well thanks to the growing
EC market, and store and factory projects show a sign of recovery due to recovery from the coronavirus
pandemic.
In addition, redevelopment in urban areas is expected to grow steadily.

Segment
Strategy
Fluoropolymer tubes forsemiconductor factory facilities

Future initiatives
In the semiconductor market, which grows from the medium-to-long-term perspective, we will be engaged in the business with aim of becoming theindispensable division for customers focusing on the four points. (1) Thoroughly customer-oriented total solution (2) Development of differentiatedproducts and environment-friendly products (compatible with 3R and carbon neutrality) (3) Establishment of a stable production system (quality,
production capacity, manufacturing technology) by making forward-looking business investments in the market that grows from the medium-to-longterm perspective (4) Further strengthening of response to BCP in the supply chain to diversify the production bases and stably procure the partmaterials.
NICHIAS Integrated Report 2023

General Manager ofAutoparts Division

Future initiatives

As the mother division of the entire company, the Industrial Products Division sets the mission of “creating the new businesses” and formulates
business plans and business strategies by dividing the division into four markets: electronic parts, environment, essential (indispensable industry),and industrial infrastructure, to achieve the mission. Positioning the electronic parts, environment, and essentials as the three prospective growthmarkets, we aim to be independent as a division after the business scale expands. In the meantime, we position the industrial infrastructure as thecore business of the division, and therefore, improve the existing market and explore the new growth market at the same time.

23

Market environment

Hironobu Imanaka

In the automobile industry field, response to carbon neutrality proceeds so rapidly that it is said “once-in-a-century
paradigm shift.” It is expected that internal combustion engines (ICE) will decrease, and demand for so-called
next-generation vehicles, such as electric vehicles and fuel cell vehicles, will increase.
And, the request for the shift to carbon neutrality in the production process of autoparts is also accelerated,which means initiatives for the reduction of CO2 become more important.

Future initiatives

Segment
Strategy

It develops and manufactures sealing materials that “TATSU (insulate)” leakage of fluids such as air and liquidaround the engine for automobiles.
It develops and manufactures thermal insulation and heat retention parts that “TATSU (insulate)” and “TAMOTSU(protect)” heat from the area around the engine for automobiles.
It develops and manufactures soundproofing and vibration-damping parts that “TATSU (insulate)” noise andvibration of automobile brake parts and other vehicle parts.
By building a framework that runs from material development right through to design, assessment,
manufacturing, and quality assurance, it meets diverse needs.
It improves production and sales systems that can respond to localization around the globe (a five-group system
consisting of Japan, North and Mid America, Asia, China, and Europe)

Make improvements in profit by reviewing each business with “selection andfocus.”
Increase the share through further expanding the differentiated products for thesteadily growing non-housing market.
Promote the initiatives for carbon neutrality through developing environmentfriendly products and improving manufacturing technologies

Hiroyuki Tomimatsu

General Manager, Building
Materials Division

Wrap-type rock wool fire-proofing
covering materials

Future initiatives
We will accelerate the reduction, elimination, and consolidation of housing-related products, whose profitability became lower due to the shrinking of
the new housing market, to focus on tackling the non-housing market expected to generate profit. Our focus is especially placed on the expansionof share, which is expected to be realized by the introduction of new products of the raised-access floor system.
And, regarding wrap-type fire-proofing covering materials, we will promote various initiatives for increasing the number of products adopted forthe office building projects, in addition to the warehouse projects, for which the products have been adopted frequently. We will also expand theoverseas market, which has made an increasing number of inquiries recently, to increase the revenue.
We keep providing environment-friendly products and contribute to the realization of a sustainable society.
NICHIAS Integrated Report 2023

24

Manufacturing of NICHIAS
Research and development and production systems of the NICHIAS Group that generate products and services
that are the embodiment of the TATSU-TAMOTSUTM technologies.
In collaboration with the business divisions, we are engaged in manufacturing that serves society.

Research & Development

Kiyoshi Sato
General Manager, Research &Development Division

Production system
Message from the General Manager of the Research &Development Division

Message from the General Manager ofthe Engineering Division

Industries have changed rapidly. The recent changes include energy conversion
like carbon neutrality, a shift to the sustainable industry, accelerating thedevelopment of information technologies, and medium-to-long-term expansionof the semiconductor industry that supports those changes. Expansion andsophistication of TATSU-TAMOTSU (Insulation and Protection) technologies are
the methods the NICHIAS Group applies to respond to those changes in atechnical manner.
We did not have all six technologies in our TATSU-TAMOTSU technologies
from the beginning. The six technologies are the outcomes of the research andtechnologies NICHIAS proceeded in response to the request from the time andmarket. Expansion of sophistication of TATSU-TAMOTSU technologies—
sealing, thermal insulation, soundproof, fireproof, corrosion-proof, andcleanness—will continue to be the direction the NICHIAS Group’s research anddevelopment take.
We proceed with the activities to create new products and services bymultiplying the new TATSU-TAMOTSU technologies by the request from themarket.

For the sustainable management of a manufacturer, a flexible production
system that can deal with the change of business environment is expected. Asa measure to realize such management, we try to establish smart factories.
We aim for highly efficient factories that flexibly respond to variations of
production and respond to a decrease in the working population by automating
the production line as much as possible. Mechanization of operations will help
people concentrate on works that require a high level of skill or creativity thatcan be done only by people, which will lead to people-friendly factory buildings.
In smart factories, energy efficiency improves by visualization. Consequently,
they are effective in promotion of carbon neutrality.
As another measure, we focus on improvement activities led by people on
the site. Improvements lead not only to cutting costs but also to creating anenvironment in which people can work without stress and a sense ofsatisfaction is fostered. And those efforts lead to human resources
development.
This is how we strengthen the capability to respond to changes and keep
contributing to society with manufacturing.

Main Initiatives
Here are representative activities of the development of our
TATSU-TAMOTSU technologies, the basic technologies of
NICHIAS.
Contribution to carbon neutrality
Thermal insulation and cold retention technologies directly meetthe needs of carbon neutrality by saving energy. We (1) improve
the performance and user-friendliness of thermal insulation andcold retention materials and (2) develop thermal diagnosis
technologies that visualize the necessity of thermal insulationand cold retention.
Contribution to the shift to renewable energy
As a means to store and transport energy, energy carriers suchas liquefied hydrogen and ammonia have attracted attention.
This is where cold retention technologies play an active role. We
proceed with research and development to expand the cold
retention technologies and thermophysical property measuring
technologies, which have been accumulated for years, to thecryogenic range.

General Manager,
Engineering Division

Main Initiatives
Contribution to development of information
communication technologies
As 5G/6G communication devices and millimeter-wave radar
spread and develop, fluororesin, which has less transmission
loss even at higher frequencies, has attracted attention as amaterial for circuit boards. We accelerate research anddevelopment by dealing with various issues to apply fluororesin
to circuit boards.

Hamamatsu Research Laboratory/Hamamatsu Technical Center (left)
Tsurumi Research Laboratory/Advanced analytical equipment at Tsurumi TechnicalCenter (right)

Future Challenges and Outlook
Electrification of power has been accelerated rapidly in theautomobile industry. Conventional internal combustion engines
have been a power source that works well with TATSUTAMOTSU technologies in terms of sealing technology andthermal insulation technology. Electrification is, in other words, acrustal movement that changes this composition. The NICHIASGroup seeks the new answer by multiplying “TATSUTAMOTSU” technologies by electrification.
And, regarding the products that emit a large amount ofcarbon at the time of manufacturing, we proceed with researchand development to improve the manufacturing methods.
Thanks to those efforts, we could remove coke in the processof rock wool manufacturing. We try to provide thermal insulation

Satoshi Tanabe

In the medium-term plan, the following four important policies
are being addressed.
The first policy is “creation of a safe and secure workplace.”
Aiming to secure the quality trusted by customers and realizing
the factory that gives reassurance to employees and community
people, we tackle to improve safety and environment proactively.
Focus is also placed on the update and improvement of
dilapidated buildings and facilities and measures for disasterprevention.
The second is “far-sighted securing of production resources.”
We are committed to securing buildings, facilities, supply chains,and human resources that bear the future to respond to thechange of the business flexibly. In terms of buildings, we deal
with relocation and reconstruction of the manufacturing bases.
The third is “promotion of decarbonization.” In the domestic
manufacturing bases, we proactively installed solar panels.
According to the medium-term plan, 7,000 t/year of CO2
emission reduction is planned to be achieved. And, withdecarbonization in mind, we also reconstruct the business andconvert and improve manufacturing methods.
The fourth is “evolution of manufacturing.” We makeproactive efforts to automate processes, digitalize theinformation flow, and introduce AI so we can respond to adecrease in the working population in Japan and changes inbusiness in a proactive manner. In addition, we aim to further
enhance the capability of improvement on the production site
and further improve working productivity through NKK (NICHIAS
Kaizen Katsudo).

Yuki Factory office building (top)Yuki Factory NOA Floor production line(bottom)

Tsurumi Factory automatedwelding machine

Future Challenges and Outlook
and refractory materials needed for energy saving, safety, andreassurance with low emissions of carbon.
Digital transformation of research and development as well as
human resources development are also important issues.
Consolidating the research and development information by using
the information-management and sharing tools, we try to
streamline the process. We also pay attention to Materials
Informatics *(MI), which has made considerable progress thesedays, and examine how to use it in a NICHIAS Group’s way. Even
though it is an excellent information tool, it is people who use it.
We continue to provide technical human resources in the NICHIASGroup by carefully educating them at the research laboratory toprovide products and services that help people in society.

Many changes are expected to be made in the future society,such as acceleration of electrification of vehicles with the idea
of carbon neutrality, energy conversion, an increase of disasterrisks caused by climate change, difficulty in securing supply
chain due to unstable world affairs, and shortage of labor due
to a decrease in working population. Against this backdrop,
there are many issues for the production system. We try torealize smart factories by responding to changes in thebusiness environment, making efforts for decarbonization, andfurther incorporating digital transformation and AI. One of theindispensable elements is securing and development of humanresources. We would like to proactively employ experienced
people to secure human resources specialized in production

technologies and digital technologies, establish the humanresources education system, and secure and develop thehuman resources that bear the next generation.
In collaboration with each of the related divisions and all the
manufacturing bases, we aim for “human- and earth-friendly
manufacturing.”* Utilizing digital technologies for developing materials.

25

NICHIAS Integrated Report 2023

NICHIAS Integrated Report 2023

26

G: Governance
The NICHIAS Group strives to improve the transparency, fairness, and efficiency of its businessand increase its corporate value over the long term in a stable manner by strengthening corporate
governance.

Nomination Committee

Corporate GovernanceCorporate governance is an important issue that supports the foundations of the NICHIAS Group. Throughout the entire Group,
NICHIAS builds and strengthens its governance framework that increases the transparency, fairness, and efficiency of the decisionmaking process of top management including the Board of Directors.

Corporate governance system chart
General Shareholders’ Meeting
Appointment/Dismissal
Audit

Submission

Appointment/Dismissal,
Supervision

Instruction

Directors (Execution of duties)

Proposal,ReportingAppointment/Dismissal

Audit

Accounting
AuditorReporting
ReportingManagement Meeting (Consiteration ofimportant matters)

Policy, Planning, Instruction, Approval

Cooperation

Report, Improvement Request

President and CEO
Reporting/
Submission

Reporting
Cooperation

Board of Auditors

Appointment/Dismissal,
Supervision

Nomination
Committee
Compensation
Committee

Remuneration Committee

Appointment/Dismissal

Board of Directors

The Nomination Committee was set up as an advisory body to the Board of Directors to ensure the objectivity and validity of the process
for deciding potential directors. The Nomination Committee is made up of members that include Outside directors and Outside auditors.
In fiscal 2022, the committee was held once where it selected potential directors.
Members as of June 29, 2023
Chair: Katsumi Kametsu (President and Chief Executive Officer)
Members: Tsukasa Yamamoto (Representative Director), Yoichi Eto (Outside Director), Yoshito Hirabayashi (Outside Director), Mitsuru
Nose (Audit & Supervisory Board Member), Isao Iwabuchi (Outside Auditor)

Cooperation

Report/provision of opinion
Report/provision of
opinionThe Remuneration Committee, which is made up of members that include outside directors and corporate auditors, was set up as anadvisory body to the Board of Directors to ensure the objectivity and validity of decisions regarding the remuneration of directors andincrease the effectiveness of corporate governance. In Fiscal Year 2022, the Remuneration Committee meeting was held once, withactive discussions regarding the remuneration system and remuneration levels for directors.
Members as of June 29, 2023
Chair: Katsumi Kametsu (President and Chief Executive Officer)
Members: Tsukasa Yamamoto (Representative Director), Yoko Wachi (Outside Director), Hiroaki Seki (Audit & Supervisory Board
Member), Sachiko Murase (Outside Auditor), Nobuhiko Takano (Outside Auditor)

Activity status of Board of Directors and Appointment Committee/Remuneration Committee in this fiscal year

Rulemaking and revisionCouncilCapital Investment
Committee
Development Investment
Committee
Asset Investment
Committee

Compliance
Committee

Internal
Control
Audit Room

Audit

Audit

Divisions, Group Companies

In Board of Directors meetings, the following items are discussed and deliberated, focusing mainly on building materials business:
Improvement of profitability, effective operation, response to the environment, strengthening of infrastructure, and other measures basedon the five-year medium-term management plan Shikumi 130, whose initial year is fiscal year ending March 2023; and selection andfocus of the businesses. And, the progress of specific investment cases, response to climate change, response to cyber security, andother issues are also monitored periodically.
In Appointment Committee/Remuneration Committee meetings, the following are the main issues that are mainly discussed carefully:
The selection of candidates for Directors and Executive Officers, the career and performance record of the candidates, the compositionof the entire Board of Directors, term of office of each Director, and other issues; and for determination of the remuneration,
performance, evaluation, etc. of each Director and Executive Officer.
Following are the records of attendance at Board of Director meetings and Appointment/Remuneration Committee meetings.
Name

Attendance status
Board of Directors

Nomination Committee

Remuneration Committee

Katsumi Kametsu

100% (14/14 meetings)

100% (1/1 meeting)100% (1/1 meeting)

The Board of Directors decides the direction of the Group’s corporate strategy and makes important decisions from a medium-to-longterm perspective. Regular Board of Directions meetings are held, in principle, once a month. Ad hoc Board of Directors meetings arealso held as and when necessary. In Fiscal Year 2022, 14 meetings were held (excluding resolutions in writing). The Board of Directors ismade up of directors with various knowledge, experience, and abilities. The Board of Directors is run in such a way as to make fair andsound decisions through open and active discussions.
See P. 29

Tsukasa Yamamoto

100% (14/14 meetings)

100% (1/1 meeting)100% (1/1 meeting)

Shoichi Yonezawa

100% (14/14 meetings)——

Satoshi Tanabe

100% (14/14 meetings)——

Kiyoshi Sato

100% (14/14 meetings)——

Yukinori Ryuko

90% (9/10 meetings)——

Yoichi Eto (outside)

100% (14/14 meetings)

100% (1/1 meeting)—Yoshito Hirabayashi (outside)

100% (14/14 meetings)

100% (1/1 meeting)—Yoko Wachi (outside)

100% (14/14 meetings)

Junichi Nakasone

100% (14/14 meetings)

Hiroaki Seki

100% (14/14 meetings)

Isao Iwabuchi (outside)

86% (12/14 meetings)

Sachiko Murase (outside)

100% (14/14 meetings)—

100% (1/1 meeting)Nobuhiko Takano (outside)

100% (14/14 meetings)—

100% (1/1 meeting)

NICHIAS is a company with a board of the company’s auditors. The
Board of Auditors consists of five auditors (two Audit & Supervisory
Board Members and three Outside Auditors). The Board of Auditors
plays a part in corporate governance by executing the audit activities
following the audit policies and the plan set by the Board of Auditors.
In addition to holding monthly regular Board of Auditors meetings, theBoard of Auditors has extraordinary Board of Auditors meetings topass a resolution of, discuss, and report the critical issues concerning
the audit. Auditors attend Board of Directors meetings, Management
Meetings, and other important meetings and exchange opinions with
the Representative Director and Directors regularly to provide views
on management from a fair and neutral standpoint proactively.

Name

Position

Status of attendance to
Board of Auditors
meetings (time)

Junichi Nakasone

Audit &
Supervisory
Board Member

12/12

Hiroaki Seki

Audit &
Supervisory
Board Member

12/12

Isao Iwabuchi

Outside Auditor

10/12

Sachiko Murase

Outside Auditor

12/12

Nobuhiko Takano

Outside Auditor

12/12

AuditorBoard of Auditors

Director

Board of Directors—

100% (1/1 meeting)100% (1/1 meeting)——100% (1/1 meeting)

0% (0/1 meeting)—*1 Parenthesized figures indicate the number of attendance/number of meetings while in the post.
*2 Regarding the number of the Board of Directors meetings held, meetings of resolutions in writing based on Article 370 of Companies Act are excluded.

27

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28

G: GovernanceManagement Meetings

Workability Assessment of Board of Directors

To ensure prompt decision-making, Management Meetings deliberate business management matters for which the authority isdelegated by the Board of Directors. Management Meetings are, in principle, held once a week, and are attended by directors, full-time
auditor(s), and executive officers & division managers. In fiscal 2022, a total of 47 Management Meetings were held. The Management
Meetings are run in such a way that attendees can engage in open and active discussions. Decisions made at the Management Meetingare reported to the Board of Directors.

In Board of Directors meetings, the workability of the Board of Directors is analyzed and assessed every year based on the selfassessment of each Director. Following is the outline of the Board of Directors workability assessment.
(1) Analysis, assessment method
Following is the outline of the analysis and assessment methods.
1) Carry out a survey concerning the composition and operation status of the Board of Directors, targeting all the Directors (nine).
2) Submit the survey results to Outside Directors and Board of Auditors.
3) Finalize the assessment of the workability of the Board of Auditors based on the survey results and opinions of The Board of
Outside Directors and Auditors after discussing the matter at the Board of Auditors meeting.
(2) Outline of assessment items
Following is the outline of assessment items. Each question is rated on a one-to-five scale accompanied by a comment section.
Additional explanations or opinions shall be stated in this section as needed.
1) Composition of Board of Directors
2) Roles and duties of Board of Directors3) Operation and deliberation of Board of Directors
4) Job responsibility of Board of Directors
5) Arbitrary advisory meeting, etc.
(3) Outline of assessment results
In the Board of Directors meeting held in June 2022, the workability of the Board of Directors was analyzed and assessed based on the
results of the above survey. As a result, it was confirmed that the workability of the Board of Directors as a whole is sufficiently secured.

Skill matrix of the Board of Directors* (As of June 29, 2023)
Specialty, strategy
Name

Corporate
management,
strategy

Position

Katsumi Kametsu
Tsukasa Yamamoto

Finance,accounting

Legal affairs,
compliance

Sales, marketing

Manufacturing,development

President and Chief Executive
Officer
Representative Director

Satoshi Tanabe

Director

Kiyoshi Sato

Director

Compliance
Yukinori Ryuko

Director

Yoichi Eto

Outside Director

Yoshito Hirabayashi

Outside Director

Yoko Wachi

Outside Director

In running the company and as a member of society, the NICHIAS Group engages in compliance efforts based on social norms andcommon sense, as well as complying with laws and regulations and the Articles of Incorporation, in order to build good relationships
with its many stakeholders.
The activities of the NICHIAS Group’s Compliance Committee are based on the monthly Head Office Committee meetings andquarterly Branch Committee meetings that are held by each business office and Group company.
The NICHIAS Group formulates the NICHIAS Group Compliance Policy, which shows a “basic attitude concerning compliance, which
all stakeholders of the NICHIAS Group are required to observe,” such as conformity to changes of social conditions and revision of law
revisions, awareness-raising activities toward violations, and response to the report made to the contact for whistle-blowing.

* The above skill matrix only states the fields that are especially expected instead of all the expertise and experiences.

Compliance Framework Based on Worksite

Officer Remuneration
At NICHIAS, the Board of Directors decides the details of officer remuneration. An outline of this is as follows:a The remuneration of NICHIAS’ Directors consists of fixed financial remuneration and stock-based remuneration to provide incentives.
However, regarding the remuneration of Outside Directors, considering their job responsibilities, only fixed remuneration shall be paid.
b The amount of the fixed remuneration shall be set within 32 million yen per month. Stock-based remuneration shall be in the form ofshares subject to a certain period of restricted transfer, with an annual amount not exceeding 100 million yen, which is to be
calculated separately from the fixed remuneration, and a maximum number of shares not exceeding 40,000 per year.
c The remuneration of each Director is based on the standard amount according to the position of the Director, with the specific amountdecided after discussions at the Remuneration Committee meeting with attendance of Outside Directors and Outside Auditors, andconsultation with the Board of Directors as to the outcome of the discussions at the Remuneration Committee meeting, taking into
account the factors such as business performance and importance of duties and responsibilities of each director.
d Each of the total amount of the fixed remuneration and stock-based remuneration of all the Directors shall be determined within arange of the maximum limit specified by the resolution at the general meeting of shareholders.

The table below shows the total amount of remuneration, etc. for each officer category and the total amount of
remuneration, etc. by type, as well as the number of applicable officers*
Category

Total amount of remuneration, etc.

Total amount of remuneration, etc.
by typeFixed remuneration

Branch Compliance Committees are organized at each business office and group company in Japan and overseas to facilitate
compliance, and efforts are taken in a proactive spirit, such as formulating and educating everyone on unique action guidelines that
address the issues of each workplace.
To promote compliance from a Group-wide perspective, NICHIAS has established, as a specialized organization, a Compliance
Section under its Corporate Administration Division.
In addition to planning and implementing specific measures in line with NICHIAS’ Compliance Activities Policy, the Compliance
Section ascertains the state of compliance at each workplace, makes suggestions and gives advice on issues, and deals with feedback
and matters sent to the compliance counters (whistleblower hotline) in a fair and honest manner.
Also, in 2022, from the perspective of measuring compliance at a specific point in time, a survey of all employees is carried out
roughly every three years to ascertain compliance throughout the NICHIAS Group to see if there are any compliance-related issues.
Compliance Framework Chart

Board of Directors

Board of Auditors

President and CEO
Assignment

Compliance Committee
Head Office Committee

Chairman (Director in charge compliance)

Number of officers covered

Office (Compliance Section)

Directors (excluding Outside Directors)

275 million yen

275 million yen

9 people

Auditors (excluding Outside Auditors)

44 million yen

44 million yen

2 people

Outside Director

39 million yen

39 million yen

3 people

Outside Auditor

19 million yen

19 million yen

3 people

Branch Committee
Head Office

BranchLaboratories

Factories

Subsidiaries* The number of people that receive the compensation, the total amount of compensation, etc., include those for three directors who retired due to termination of the term as of theconclusion of the 206th General Meeting of Shareholders held on June 29, 2022.

29

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NICHIAS Integrated Report 2023

30

G: Governance
Educational Efforts to Increase Compliance Awareness through Continuous Communication of Information

Business Continuity Planning (BCP) Measures

To foster a greater understanding and practice of compliance, information is posted regularly on the Compliance Portal Site on NICHIAS’
in-house intranet platform.
The Compliance Portal Site contains contents to understand the essence of compliance through occasional activities, related topics,
and real-life examples. These efforts are led by the Compliance Support Committee of each business office and Group company andmade known to all employees.
In Fiscal Year 2022, on the theme of “Eradicating Power Harassment,” NICHIAS implemented case studies using four-panel comics
to provide training by way of an internal instructor at each business office and each Group company to spark a greater understanding of
power harassment (workplace bullying) to foster a workplace environment based on sound communication where harassment does notoccur.
The NICHIAS Group has also engaged in various other compliance-related educational activities such as encouraging the submissionof compliance slogans and implementing e-learning programs for all employees.

We see fulfilling its responsibility to supply products to its customers as a critical company appraisal standard and implementing various
BCP measures, such as for its production facilities, buildings, and raw materials, as a countermeasure to minimize the impact of apotential large-scale natural disaster or an infectious diseases on the company’s production. (For details, see Stable Distribution of
Products & Services on P. 38.)

Information Security
NICHIAS acknowledges the importance of information assets in its corporate activities, understands the risks relating to information
security, and engages in measures against such risks. The basis of the measures is thorough compliance with the information security
rules in the Group, establishment of the governance structure, and continuous review of the system measures. And, NICHIAS endeavors
to understand the trends of cyber attacks that become more advanced and intricate each year and to promote and improve thepreparation for the threat from outside.

Intellectual Property Strategy
We proactively promote the acquisition of the rights of new technologies created by research and development. When a new product goesto market, the NICHIAS Group respects the intellectual property rights of others, conducts the appropriate surveys to check that there are
no infringements of rights, and responds appropriately.
In Fiscal Year 2022, we tried to strengthen the capabilities to respond to the operations related to intellectual properties by reviewing thestructure of the intellectual-property-related departments and making a shift from a section system to a department-and-section system.

Fair Competition and Transactions

FY2022 Compliance Slogan
The Grand Prix winner poster
Compliance awareness using four-panel comics

Establishment of a Compliance Report and Consultation System
To facilitate reports and consultations regarding compliance, a compliance hotline was set up on the NICHIAS website in addition to thegeneral compliance hotline (NICHIAS Group Corporate Ethics Hotline), an external hotline (contact point at a law firm), internal hotlines(compliance officer and labor union hotline), and each compliance counter (whistleblower hotline) at the contact points for handling“important management matters” (auditor hotline). With a more transparent compliance framework in place, NICHIAS strives to operate
its business in a compliance-orientated manner. A comment box has also been set up at each workplace, making it easier for
employees to speak out.
Reports received by the compliance counters are checked at the Compliance Committee by sufficiently investigating the truth behindreports and interviewing those concerned to resolve any compliance issues. In the case of reports for which the whistleblower clearlystates their name, the outcome of the action taken as a result of the investigation will, without fail, be fed back to the whistleblower.
Even in the case of an anonymous report, the facts will be investigated if the department where the incident occurred is identified andaction is taken to resolve the problem. We also hold internal training programs.
There were 76 whistleblower reports in fiscal 2022. Appropriate action was taken for each report.

Communication with stakeholders
Investor Relations Activities

Furthermore, to minimize diversifying risks, the NICHIAS Group works to enhance and strengthen its risk management by assigning
specialized departments to deal with risks in each field.

The NICHIAS Group recognizes the importance of taking opinionsfrom all its shareholders and investors seriously and making
effective use of them in its management. Therefore, it hasestablished an IR team to serve as a department in charge ofenhancing communication with shareholders and investors fromthe perspective of fair disclosure.
For example, in addition to holding financial results briefings foranalysts and institutional investors, factory study tours, andcompany briefings for individual investors, the NICHIAS Groupalso conducts daily meetings and participates in conferences
sponsored by brokerage companies, as well as visiting institutional
investors overseas. The opinions acquired from such exchanges
with analysts and institutional investors lead to in-house feedback
from the people in charge of IR at Management Meetings, etc.,
and are useful in improving management and business activities.
NICHIAS will continue its efforts to strengthen its communication
with shareholders and investors both inside and outside Japan,
as well as forming a broad spectrum of shareholders.

Internal Control Assessment

IR Efforts during the Coronavirus Pandemic

We have established a system to identify the risks that influence the overall management activities of the entire NICHIAS Group and todeal with the risks, and have built a mechanism to assess them. To clarify fairness and independence, NICHIAS set up an internal
control Audit Section under the direct control of the president to systematically implement internal auditing of the NICHIAS Group basedon the Regulations on Internal Audit.
In Fiscal Year 2022, some audits were switched to remote-based ones. Internal audit was carried out for six bases of NICHIAS and12 bases of the Group companies. We have confirmed that the management conditions in each of these business units are excellent.
We also drafted and submitted an “Internal Control Report” determining that the internal controls concerning financial reporting of the
NICHIAS Group were effective.

In order to ensure timely and appropriate communication with analysts and institutional investors, the NICHIAS Group holds
financial results briefings upon the announcement of end-of-term and second-quarter-term financial results. In Fiscal Year 2022, theGroup held financial results briefings online from the perspective of preventing the spread of the novel coronavirus, in which it
explained management policies, management strategies, the outline of its business operations, and financial information, as well as
provide opportunities for executives and investors to meet and talk.
In Fiscal Year 2022, factory visits and overseas IR meetings were canceled. Although it was very difficult to communicate faceto-face with investors, we continued to hold IR meetings daily using online conferencing and conference call systems. As a result,
we held 141 meetings in total in Fiscal Year 2022.
NICHIAS will continue to enthusiastically engage in dialogues regarding not only financial information, but such non-financial
information as the environment, society, governance, etc.

Risk Management

31

The NICHIAS Group focuses its efforts on training programs on the Act on Prohibition of Private Monopolization and Maintenance of Fair
Trade, the Act against Delay in Payment of Subcontract Proceeds, etc. to Subcontractors, and the Unfair Competition Prevention Act.
Each year, it incorporates training about these laws into its educational curriculum for new employees and newly appointed managers.
In Fiscal Year 2022, the NICHIAS Group conducted face-to-face training by the level of seniority, explaining laws and regulations indetail and precautions to prevent violations, as well as checking that the law is familiar to everyone in NICHIAS and that its staff complies
with laws and regulations. In addition, NICHIAS also organized e-learning training for the officers and employees of the Company. During
this training, matters that staff members need to be careful of were explained using specific case studies as the subject of the training
material.
And, NICHIAS announced the Declaration of Partnership Building and has made proactive efforts to comply with desirable tradepractices with subcontracting businesses. Through those activities, the NICHIAS Group ensures fair competition and transactions.

NICHIAS Integrated Report 2023

A scene of an IR meeting

NICHIAS Integrated Report 2023

32

G: Governance

List of Officers(As of June 29, 2023)

Director

Auditor

Katsumi Kametsu

President and Chief Executive Officer
Mar-85 Joined NICHIAS
Jun-13 Executive Officer of NICHIAS
Jun-16 Director Executive Officer of NICHIAS
Jun-19	Director & Managing Executive Officer of
NICHIAS
Jun-22	President and Chief Executive Officer of
NICHIAS (current position)

Kiyoshi Sato

Director Executive Officer
Jun-03 Joined NICHIAS
Jun-16 Executive Officer of NICHIAS
Apr-18	General Manager of Research &Development Division of NICHIAS (current
position)Jun-21	Director Executive Officer of NICHIAS(current position)

Tsukasa Yamamoto
Representative Director,
Senior Executive Officer

Mar-86 Joined NICHIAS
Jun-18 Executive Officer of NICHIAS
Jun-21 Director Executive Officer of NICHIAS
Jun-22	Representative Director, Senior Executive
Officer of NICHIAS (current position)
June of the same year	Responsible for internal control, compliance,
CSR, accounting (current position)

Satoshi Tanabe

Director & Managing Executive Officer
Apr-89 Joined NICHIAS
Jun-13 Executive Officer of NICHIAS
Apr-14	General Manger of Engineering Division(current position)
Jun-19 Director Executive Officer of NICHIAS
Jun-21	Director & Managing Executive Officer of
NICHIAS (current position)

Yukinori Ryuko

Director Executive Officer

Hiroaki Seki

Audit & Supervisory Board Member
Mar-80 Joined NICHIAS
Jun-15 Executive Officer of NICHIAS
Jun-20	Audit & Supervisory Board Member of
NICHIAS (current position)

Mar-86 Joined NICHIAS
Jun-23	Audit & Supervisory Board Member of
NICHIAS (current position)

Sachiko Murase

Nobuhiko Takano

Apr-95 Joined NICHIHA CORPORATION
Sep-08 Registered as attorney (current position)
Nov-15	BUNKYODO GROUP HOLDINGS CO., LTD.
External Auditor (current position)
Sep-18	Joined Kudanzakaue Law Office (current
position)Jun-19 Outside Auditor of NICHIAS (current position)
Jun-20	Outside Director, Maxell Holdings
Corporation (current Maxell, Ltd.) (current
position)

Apr-75	Employed at Fukuoka Regional Taxation
BureauJul-16	Head of Kumamoto Regional Taxation Bureau
Aug-17	Registered as accountant (current position)
August of the same year	President, Nobuhiko Takano Accountant
Office (current position)
Mar-18	Outside Director of TOAGOSEI CO., LTD.
	(Auditor, etc. Committee member) (current
position)Jun-20	Outside Auditor of NICHIAS (current position)

Outside Auditor

Sep-88 Joined NICHIAS
Jun-17 Executive Officer of NICHIAS
Jun-21	General Manager of Advanced Products
Division (current position)
Jun-22	Director Executive Officer of NICHIAS(current position)

Mitsuru Nose

Isao Iwabuchi

Audit & Supervisory Board Member

Outside Auditor

Apr-68	Joined Yawata Iron & Steel Co., Ltd. (current
NIPPON STEEL CORPORATION.)
Oct-03	Managing Director, Furukawa Sky
Corporation (current UACJ Corporation)
Jun-05	Representative Director, Senior Executive
Officer of the company
Apr-06	Representative Director and Vice Presidentof the company
Jun-16	Outside Auditor of NICHIAS (current
position)

Outside Auditor

Message from an Outside Director

Yoichi Eto

Yoshito Hirabayashi

Yoko Wachi

Apr-78 Registered as attorney (current position)
Apr-10	President of Daiichi Tokyo Bar Association,
Vice President of Japan Federation of Bar
Associations
Jun-11 Outside Auditor of NICHIAS
Jun-15	Outside Director of NICHIAS (current position)

Apr-68 Joined Seiko Epson Corporation
Apr-87	Director, General Manager of Factory in U.K.
of Technofer Ltd.
Nov-93	President and Representative of TechnoferLtd.
Jun-08 Outside Auditor of NICHIAS
Apr-13	Chairman & Director of Technofer Ltd.
(current position)
Jun-16	Outside Director of NICHIAS (current position)

Apr-89	Registered as attorney (current position)
April of the same year
Joined Kajitani Law Office (current position)
Jun-15 Outside Auditor of NICHIAS
Jun-19	Outside Director of NICHIAS (current position)
Jun-23	Outside Director of S.T. CORPORATION(current position)

Outside Director

33

NICHIAS Integrated Report 2023

Outside Director

Outside Director

Safety measures for factories are important issues for NICHIAS, which isengaged in the manufacturing business. In Board of Directors meetings,
participants discuss the causes of accidents that occurred on the site offactories in Japan and overseas and measures for preventing theaccidents regularly. The Board of Directors has tried to take measures toprevent accidents permanently on worksites, where more than 1,000
cases of near-miss accidents occurred four years ago.
There had been officers’ meetings that patrol the factories several
times a year. However, such meetings were cancelled due to the impactof the spread of the novel coronavirus. Despite the cancellation, I had astrong impression that explanation was very clear, because thedocuments prepared for the discussion were so well-considered that itwas easy to understand the state of the worksite.
Issues concerning governance provoked a lively argument, which
made me think we do not have enough time for the Board of Directors
meetings. I think such animated discussions that encourage participants
to express their opinions without hesitation have a great impact on thegovernance of the entire company.
Many opinions on compliance have been released from factories andother worksites. I think necessary measures are taken.
I have an experience as Factory Manager. So, I always try to express
my opinions, taking advantage of that experience. Following are roles I

would like to play in terms ofenvironment, safety, and quality.
Opinions on technicalmeasuresOpinions on important mattersin daily communication
A sense of unity in theworkplace and one-on-one
communication with young
members to maintain theirmental conditions
Since global circumstanceschange rapidly, there is no suchthing as a stable management
Outside Director
environment.
In a world that is experiencing radical changes in the automobile fieldin terms of semiconductors, etc., I would like to connect thedetermination of each time with the medium-to-long-term outlook
appropriately so as to make the most of our unique characteristics of“TATSU-TAMOTSU” technologies.

Yoshito Hirabayashi

NICHIAS Integrated Report 2023

34

S: Society
The Nichias Group not only carries out corporate social responsibility (CSR) efforts within theGroup but also contributes to society by providing products and services that are reliable, safe,and useful for its customers.

Health Management Status
To maintain healthy conditions, NICHIAS supports influenza
vaccination in cooperation with the NICHIAS Health Insurance
Association, hold sports events, and support optional physician
visits at the time of health checkup to encourage and support
employees 35 or older to have a comprehensive medical
examination.
And, we set the target concerning the health conditions andlifestyle habits for the entire company to tackle healthmanagement.

Message from the General Manager of Corporate
Administration Division
What the NICHIAS Group is aiming for is a company that is a good place to workand full of smile.
The objective of the Corporate Administration Division in the medium-term
management plan is “to provide the environment where employees think they feelno stress in working, feel a sense of satisfaction, and think they are pleased thatthey work there.” If every aspect of the working environment is prepared, theemployees “feel no stress in working,” and they improve themselves and satisfy
their self-actualization needs to feel “a sense of satisfaction,” they will look backand think they are “really pleased that they worked in NICHIAS Group” in the
future. This idea will improve the engagement.
People are indispensable for a company. We value people (employees) who
are the source of creation. Under the idea of “human resource,” we consider
people as resources and foster them in an established environment to draw out
their potential capacity to the full and enhance the value of human resources.
Through enhancing our human resources, which are our infinite assets, we try
to sustainably increase corporate value.

Ratio of visit to secondary inspection
Ratio of people with remarks at the primary inspection

100

100

100

(%)
120

100

100

100
80
60
40

23.7

22.2

23.2

22.3

22.4

FY2018FY2019FY2020

FY2021

FY202220
0

Mental Healthcare

Hironori Matate
General Manager of Corporate
Administration Division

Putting importance on mental health as well, NICHIAS concluded the industrial-doctor contract with a psychologist. Interviews are set
regularly for those who do not feel well, and we continue to interview them even after they return to work. We also support their superior
as needed.
And, mental-health education is always included in the in-house training for new employees and new managers, improving theawareness toward line care and self-care.
Stress checks were conducted for approximately 5,300 people in the 25 NICHIAS Group companies. Group analysis is also carriedout. Group analysis is also carried out. This is how NICHIAS tries to create a more pleasant workplace.

Improvement of Employees’ Health Literacy
We consider that employees need to acquire correct knowledge about health to maintain their mental and physical health themselves. A
column written by the industrial doctor to raise employees’ awareness toward health is on Tombo no wa, the Group’s journal, which
serves as a tool to improve health literacy.

Human resources
The NICHIAS Group considers human resources to be the greatest asset to improve the corporate value sustainably and promote theestablishment of an in-house environment where diversified human resources gather, everyone works with peace of mind, and each
person can play an active role.
Regarding the diversification of human resources, we set the recruitment objective to raise the ratio of full-time female employees
and, with a medium-to-long-term perspective, examine the development program for the candidates for management employees.
For the establishment of the working environment, while trying to keep the work-life balance to control the long working hours andencourage employees to take paid holidays, we try to support the performance of each one of the employees through promoting thehealth program targeting not only the employees but also their family.

Indicators and targets concerning human resources
Item

FY2020

FY2021

FY2022

FY2026 target

Ratio of full-time female employees

17.7%

18.4%

18.7%

25.0% or more

Rate of paid holidays taken

63.9%

65.3%

71.0%

70.0% or more

12.3 hours

14.8 hours

13.8 hours

Within 15.0 hours

Average overtime work per month

Status of health checkup

Employees’ Safety
Safety and Sanitation Efforts
The NICHIAS Group implements health and safety activities as a team to prevent industrial accidents. In Fiscal Year 2022, we focusedon “fall” and “roll over” in addition to “being caught,” which may cause serious accidents at all the manufacturing factories, identified therisks, carried out the risk assessment, and tried to reduce the risks through essential/engineered measures.
In Fiscal Year 2023, we will establish the mechanisms for self-sustaining management of chemicals and aim to create a workplace
where each employee can work safely with a sense of security.

Basic Safety and Sanitation Policy ith the strong leadership from the top and involvement of all the employees, NICHIAS facilitates proactive health and safetyW
efforts and aim to embed a “safety first” attitude.
NICHIAS creates pleasant work environments to ensure the well-being of everyone.

Fiscal Year 2023 Health and Safety Slogan“Point and call before operations! Secure the safety of the workplace. OK!”

35

Promotion of Healthy Management

Promoting Work-Life Balance

NICHIAS Group Health and Productivity Management Declaration

Promoting the Taking of Paid Holidays

The NICHIAS Group regards the health and safety of its employees as the basis of its corporate activities and believes that because
each member of staff’s physical and mental health is in good shape, the NICHIAS Group is a company full of smiles where its staff canwork enthusiastically.
Based on those policies, the Group established the NICHIAS Group Health and Productivity Management Declaration in April 2021
to manage the health of employees.
In the Declaration, three items: health of the workplace, physical health, and mental health, are positioned as the prioritizedmeasures.

As part of efforts to create workplaces where employees can work with peace of mind, NICHIAS actively promotes the taking of paid
holidays. By having employees establish an annual plan for taking paid holidays beforehand, NICHIAS increases awareness aroundtaking holidays and creates workplaces where it is easier for staff to take them.
See P. 10

NICHIAS Integrated Report 2023

Introduction of a Remote Work System
NICHIAS started the operation of the revised work-from-home system in June 2023. While the previous system only covered theemployees who are pregnant, child-raising, or nursing, the revised system does not limit the target employees. A work-from-homesystem is now an option for work style. In the future, while flexibly adopting the opinions of employees who work from home, we will
make improvements to the system so that the performance of the employees will further be enhanced.

NICHIAS Integrated Report 2023

36

S: Society

Respecting Human Rights

Providing Safe and Reliable Products

NICHIAS Group Human Rights Policy

Efforts Toward Quality Our Customers Can Rely On

The NICHIAS Group refers to international human rights standards such as the International Bill of Human Rights, the ILO Declaration on
Fundamental Principles and Rights at Work, and the Guiding Principles on Business and Human Rights, and promotes universal humanrights. In February 2020, the NICHIAS Group Human Rights Policy was established.
NICHIAS Corporation sees the following as particularly important human rights issues: (1) eliminating discrimination (eliminating
discrimination based on race, age, gender, nationality, creed, etc., promoting diversity, and eradicating harassment), (2) prohibiting improperlabor (prohibiting forced labor and child labor in all regions and managing labor with an emphasis on work-life balance), (3) safety andsanitation (maintaining and improving the provision of safe and reliable products as well as safety and sanitation in the workplace andconsidering the manufacturing process’ impact on the environment). By also educating each workplace and its employees through various
training and so on, NICHIAS Corporation will continue its efforts to embed the idea of respecting human rights among all staff.

To continuously provide products that its customers can use safely and with peace of mind, NICHIAS Corporation has systems toreview each stage of the production process from planning and designing products right up to their disposal.
The Development, Design, Engineering, Manufacturing, Products Sales, Quality Assurance, Environment, and Safety departments
combine their various expertise and thoroughly review product quality, safety, and reliability, as well as the appropriateness of the
production process.

Quality Management System

Diversity Initiatives

The NICHIAS Group has created its own quality management system that combines ISO 9001 with its system cultivated over its 127year history, and promotes quality assurance activities for a wide range of projects and diverse product groups. Additionally, many
manufacturing offices, including factories in Japan and overseas, as well as subsidiaries, have acquired ISO9001 certificates. Also,
officially approved products have a specialized organization that manages their compatibility.

Promoting the Hiring of Persons With Disabilities

Stable Distribution of Products & Services

NICHIAS recruits people with disabilities at its business offices all over Japan. We implement initiatives for creating an environment
where people with disabilities can work for a long time with peace of mind through receiving apprentices from special-needs schools,
supporting them after joining the company and communicating with supporting organizations. People with disabilities are engaged in
office work, general affairs, and light-duty work not only in the Tokyo Head Office but also in the branches, offices, and factories
throughout Japan. As of March 2023, NICHIAS’ employment rate of persons with disabilities is 2.3%.
See P. 10

The NICHIAS Group provides products and services that are indispensable to a wide range of industries.
Therefore, Business Continuity Planning (BCP) measures for continuously undertaking business activities without interruption to the
supply of products and services is an extremely important management issue.
NICHIAS endeavors to secure product and service supplies by assessing, for example, the degree of impact on customers from theinterruption of product supplies caused by natural disasters, etc.; the degree of importance of products in the market; and the possibilityof replacements even with different companies’ products. It is also very important to ensure the safety of employees, who are the key
supporters of NICHIAS’ corporate activities. The NICHIAS Group formulates and implements BCP measures on the basis of these two
key points.

Development and Training of Staff
Training Staff to Resolve Problems andAccomplish Challenges
NICHIAS Group has implemented the Group-wide
improvements initiative, NKK ( NICHIAS Kaizen Katsudo(Improvement Activities)), since 2015 to embed making
improvements as a company culture not only in the
production departments but also in the entire workplaceand balance employee satisfaction and improvements to
productivity.
This initiative establishes “Attempt,” “Nurture,” and“Gratitude” as its three principles, and encourages theactive participation of NICHIAS employees. By continuing
to implement this initiative, NKK has become the “culture”
of the NICHIAS Group and contributes to achieving
NICHIAS’ vision of being “a good place to work and full ofsmile.”At present, NKK involves approximately 737 teams
with approx. 6,300 members from Japan and overseas.
NKK is an extremely useful initiative in training personnel
who can identify problems on their own and think andresolve problems by themselves.

Securing of provision of products and services
Regarding procurement of raw materials, we carry out a “CSR Procurement Survey” every year to explore the activity status of clients.
Through checking the results, we grasp each supply chain’s state of BCP measures and ask for improvement as needed. In Fiscal Year
2022, it was confirmed that there was no problem with the state of BCP measures.

(people)
8,000

6,000

4,963

4,957

5,379

5,884

6,258

4,000

2,000

0

Securing of employees’ safety
To provide products and services stably, securing the safety of employees who support the business activities is important. NICHIAS
has introduced a safety confirmation system to confirm the safety of the employees without delay. And, training is conducted regularly toensure that the system operates for sure in case of emergency.

Energy Saving Diagnosis System Thermofit™
2018

2019

2020

2021

2022 (FY)

Changes in the number of NKK participants

Thermofit™ is a service that can “visualize, make recognizable, and make possible to take countermeasures” the issues
concerning the heat loss from plant facilities all by itself.
It contributes to the achievement of carbon neutrality in society through, with the use of thermography, etc., visualizing (makevisible) the heat loss from plant facilities, calculating (make recognizable) the present state of heat loss and reduced CO2
emissions and amount acquired by energy saving as a result of the countermeasures, and formulating the measures andinstalling the equipment (make possible to take countermeasures).

Diagnosis map before updating heat retention

About NKK
Results of the improvement activities
achieved in the course of NKK are
announced in the annual world
convention. However, it was canceledin Fiscal Year 2020 because of the
spread of the novel coronavirus. In
Fiscal Years 2021 and 2022, although
it was not possible to hold the eventwith each team coming together inperson, by adopting a remote-style
event where attendees could watch
videos of the presentations, it waspossible to hold a world convention
where NICHIAS employees shared
their efforts just as they had always
done.
In addition, the NKK initiative ispartly promoted by producing posters
modeling the Gold Prize winner team,
the best team at the world convention.

37

NICHIAS Integrated Report 2023

Factory
facilities

Factory
facilities

FY2022 NKK world convention

Factory
facilities

FY2022 NKK domestic block convention

Piping, etc.

Example of “visible” (heat loss can be seen)
Systemname

Design value of existing construction(at the time of new construction)

CO2
Heat loss
emissions[kWh/year] (t/year)

Heat loss[kWh/year]

Current statePredicted amount after installation Predicatedamount to be
CO2
CO2
Performance Heat loss
reducedemissionsemissionsranking[kWh/year] (t/year)(yen/year)(t/year)

Reduction
CO2
emissions(t/year)To AAAline
To YYYTo XXX

Poster modeled after a Gold Prize winner teamat the NKK world convention

Example of “recognizable” (calculating the amount of CO2 emission reduction and amountacquired by energy saving)
Commemorative photos taken at the convention

Example of “possible to take countermeasures” (formulation of
measures and installation)

NICHIAS Integrated Report 2023

38

E: Environment
Social Contribution Activities at Each BaseThe NICHIAS Group has many production and sales bases all over the world. Each business office strives for harmony between its
employees and the local community and engages in various initiatives to prosper together.
In Fiscal Year 2022, 425 cases of activities and initiatives were implemented by 74 business offices.

Crab Egg Release activity

The NICHIAS Group engages in efforts to reduce the Group’s impact on the environment andprovides products and services that mitigate its customers’ impact on the environment, thereby
contributing to society’s conservation of the environment.

Participation in autumn festival of Tatsuta Shrine

THAI NICHIAS INTERNATIONAL CO., LTD. (Thailand)
THAI NICHIAS INTERNATIONAL
CO., LTD. conducted a Crab Egg
Release activity, in which theybrushed off eggs from crabs,
collected them, and went offshoreby boat to release them into theocean. This helps fishermen who
capture and sell crabs in the local
community. While being careful notto get hurt by crab claws, adults andA scene in the Crab Egg Releasechildren enjoyed the activity.

TATSUTA INDUSTRY CORPORATION
The autumn festival of Tatsuta Shrine
was held for the first time in three
years. A total of twelve employees of
TATSUTA INDUSTRY CORPORATION
participated in carrying the mikoshi(portable sacred shrine). Community
exchange events that had beensuspended due to the coronavirus
pandemic are gradually resuming,and this was a good opportunity to
TATSUTA INDUSTRY CORPORATION
deepen friendships with theemployees carrying the mikoshi
residents. We will keep conducting
such community-based activities.

activity

Junior high school students experienced
the workplace

Collection of plastic bottle caps
NAX MFG, S.A.DE C.V. (Mexico)
NAX MFG, S.A.DE C.V. hascollected plastic bottle caps as partof CSR activities since 2021. While
our CSR activities were notprogressing as expected due to thecoronavirus pandemic, we havebeen steadily implementing CSR
activities that we can do internally.
Proceeds from the sales ofcollected plastic bottle caps are
donated to children suffering fromcancer. We will continue the CSR
activities with all employees.

NICHIAS CERATECH CO., LTD.
NICHIAS CERATECH CO., LTD.
received a request from a junior highschool in Iizuna Town, where ourhead office Mure and Omotecho
factories are located, to provide awork experience project for juniorhigh school students. Through theexperience of creating an article on
recruiting new graduates, weWork Experience
provided an opportunity for the
students to think about working andtheir future career choices. We contribute to the local
community by taking part in developing children who will leadthe next generation.

NICHIAS Environmental Charter
The NICHIAS Group has contributed to reducing various environmental burdens, such as the prevention of
global warming and air pollution, through developing heat retention and thermal insulation materials and filter
products in the five business fields utilizing our six “TATSU-TAMOTSU (Insulation and Protection)”technologies.
And, in April 2001, to make the environmental improvement activities company-wide, the NICHIAS Groupestablished the NICHIAS Environmental Charter and Environmental Action Guidelines that have become its
environmental policies. In April 2017, the content was revised per society’s needs for the environment.
In compliance with the NICHIAS Environmental Charter, each department makes efforts to implement
continuous activities to reduce the environmental burden. For example, business departments will develop
products that further reduce the environmental burden, administration departments will establish the system
and implement environmental education to make the activities company-wide, and manufacturing
departments will improve the environment inside and outside the business offices and reduce energy
consumption and amount of discharged waste.

NICHIAS Environmental Charter

NICHIAS Group Environmental Structure
NICHIAS Corporation has set up a NICHIAS Group Environmental Committee to apply the NICHIAS Environmental Charter & Environmental
Action Guidelines to specific activities and implement them. This committee is made up of the three sub-committees of Products,
Management, and Factories.
Products Sub-Committee examines products and manufacturing methods that contribute to decarbonization and the recycling ofresources and discusses matters related to the implementation of the environmental assessments and management of chemical substances,such as the selection of chemical substances prohibited from and the status of use of alternatives to hazardous chemical substances.
Administration Sub-Committee discusses energy saving of offices and waste discharged from the offices. Factory Sub-Committee checks thestatus of compliance with environmental laws and regulations and discusses activities to save energy and resources.
Collection of plastic bottle caps

Support for Area Affected by Disasters

NICHIASNICHIAS, to support the area affected by disasters, provided
donations via the Japan Red Cross for torrential rains in August2022 and the earthquake in Turkey and Syria.

NICHIAS’ Products with Environment-friendly Design
Since Fiscal Year 2021, the NICHIAS Group has mandated the Group companies to carry out a product environmental assessment whendeveloping new products and changing the design.
In the product environmental assessment, two points, “risk” and “environment-friendliness,” are assessed. The purpose of “risk”
assessment is to comply with environmental regulations and minimize the impact on the surrounding environment of the manufacturing
office. We identify the environmental issues that would prevent the launch of new products if not resolved, such as green procurement of
raw materials and use/disposal of them at the time of production and the customers’, and make improvements as needed.
In the meantime, “environment-friendliness” assesses the product with a sheet indicating what efforts can make the productenvironment-friendly in each stage of the product life cycle. As a result of the assessment, it turned out that 39% of the products that went
through the assessment fall into the category of being environment-friendly, which reduces waste and CO2 emissions through reviewing the
product functions and manufacturing method.

Assessment point of products with environment-friendly design
Examples of CSR activities of overseas business offices
Company nameCountry

Process
Activity

Procurement of raw
materials

Description
Recycled raw material usage ratio
Reduction of use of natural mineral
The place where the raw material, which serves as the main component, was acquired
Reduction of product weightNon-use of NICHIAS restricted substances

SDGs

PT. NICHIAS SUNIJAYA

Indonesia

Donation of 1,000 mangroves and tree-planting activity

PT. NICHIAS ROCKWOOL INDONESIA

Indonesia

Donation to KIKC industrial park on the occasion of the earthquake in Indonesia

PT. NICHIAS METALWORKS INDONESIA

Indonesia

Provision of metal scrap to neighboring areas

NICHIAS FGS SDN. BHD.

Malaysia

Donation of construction panels to schools, religious facilities, etc.

NT RUBBER-SEALS SDN. BHD.

Malaysia

Donation of cat food to a shelter for cats

NICHIAS SOUTHEAST ASIA SDN. BHD.

Malaysia

Visit to a nursing home and donation of food

NICHIAS SINGAPORE PTE. LTD.

Singapore

Donation to a nursing home

NICHIAS HAIPHONG CO., LTD.

Vietnam

Visit to an orphanage and holding of a sports event

NICHIAS’ environment-related products

NICHIAS (THAILAND) CO., LTD.

ThailandParticipation in a blood donation event hosted by an industrial park

THAI NICHIAS INTERNATIONAL CO., LTD.

ThailandDonation of shopping vouchers and rice to ethnic minority

The NICHIAS Group defines the products and services that help society and customers reduce the environmental burden throughsaving energy, preventing noise, etc. as “NICHIAS environment-related products.”

THAI-NICHIAS ENGINEERING CO., LTD.

ThailandDonation to neighbors

SUZHOU SHUANGYOU AUTOPARTS CO.,LTD.

China

Donation to neighbors

NICHIAS AUTOPARTS EUROPE a.s.

Czech

Support for a wine event in a local town, Mikulov

NAX MFG, S.A.DE C.V.

MexicoDonation of fluorescent lights

Manufacturing
process

Yield rate
Environmental-protection property
Air, water quality, noise, vibration, odor
Energy reduction rate
Water consumption reduction rate
Waste reduction rate

Distribution

Transportability of the product (weight, reduction of dimension)

At the time of use by
the customer

Energy-saving property
Environmental protection property
Air, water quality, noise, vibration, odor
Product life

Disposing
OthersRecycling after the use of the productEnvironment-friendliness of the installation method
Use of recycled resources for packaging materials
Other things considered for environment-friendliness

FY2022
Sales (non-consolidated)
and ratio of NICHIAS
environment-related
products

Revenue

68.7 billion yen
Environmentrelated products

FY2022
Ratio by item
of NICHIAS
environmentrelated
products

Odor prevention
4.1%

Vibration reduction
4.0%

Air pollution prevention
4.1%

Waste reduction
0.6%

Noise reduction
19.1%

Energy saving
68.1%

36.0%

39

NICHIAS Integrated Report 2023

NICHIAS Integrated Report 2023

40

E: Environment

Environment Management System

Environmental Performance

The NICHIAS Group will be committed to various environmental issues and aim for the realization of environmental management basedon the Environment Charter and Carbon Neutrality Declaration.
Among the NICHIAS Group companies, NICHIAS’ factories and major companies in Japan and overseas acquired ISO14001 andhave strengthened the initiatives for reducing the environmental burden to establish a sustainable society.
For the ISO14001 certification statuses, see https://www.nichias.co.jp/sustainability/environmental_efforts/environment_policy

The NICHIAS Group grasps the amount of energy, chemicals, water resources, and other substances used in the business activities aswell as CO2 emissions and discharged industrial waste; sets specific targets to reduce them; and implements the PDCA cycle to reduce
the environmental burden.

Environmental risk management

EnergyInitiatives for Management of Chemical Included in Products
The NICHIAS Group continues the initiatives for thorough compliance with chemical regulations in each stage of the product, fromdevelopment design, procurement, and manufacturing to sales.
In Fiscal Year 2022, updating of the Database for Management of Chemicals Included in Products was completed. Using thisdatabase, we build the mechanisms that enable us to respond to the Safety Data Sheet (SDS), which has been issued, product labels,
and regulations on chemicals, and provide customers with information about chemicals included in products.

Environment Patrol* From this fiscal year, the data of APJ and SAKAI NICHIAS CORPORATION (Wakayama Factory) are added.

INPUT
Type
Electricity
Petroleum-based fuelGaseous fuelCoke

Case Pointed out by Outside
In Fiscal Year 2022, regarding the noise, dust, and foul odor discharged from the manufacturing office, there was one case pointed out
for all the Group companies. The NICHIAS Group announced this case and countermeasures to and share the information with theentire Group and make sure that the same case will not occur again. In addition, we have formulated an Environment-related Risk Map
at each manufacturing office and make efforts to prevent the occurrence and reoccurrence through implementing activities to check inadvance the facilities and operations that caused or may cause complaints and informing members in the workplace of the results in theenvironment month. And, the state of our response to what was pointed out and improvement measures are reported to andcommunicated with the related local governments and residents in the neighboring area of the business office.

Activities for Raising Awareness toward Environment
In Fiscal Year 2022, the NICHIAS Group continued to issue the Health and Safety Journal, the monthly in-house newspaper, todisseminate information about the health and safety environment in and out of the company to all employees. In addition, an
environment e-learning program is implemented in August every year to raise employees’ awareness of the environment.

Environment Audit Structure
In the manufacturing offices, environmental reviews are executed by the following three: (1) internal audits in the manufacturing office, (2)audits by the environment departments of the Head Office, and (3) audits by an outside organization. In Fiscal Year 2022, also, in thecourse of continued activities for ISO14001 integrated certification for the factories, we conducted a mutual internal audit with otherbusiness offices.
As a result of the audit cases, there was no serious violation of law although there was noise that exceeds a certain level at theproperty line.

Consumption
178,460,000kwh
8,000kL
8,400,000m3
9,000tEmissions
155,000t-CO2

CO2

Air pollutant
Type
Sulfur oxides
Nitrogen oxide
Dust

Emissions
11.4t
67.5t
11.3t

*1 The calculation covers the NICHIAS Group’s domestic manufacturing offices.
*2 The calculation covers only NICHIAS’ factories. (Calculation covering the entire Group is under examination.)

Classification
Cost for pollution prevention
Cost inside theCost for protection of global
business area
environment
Cost for resource cycling
Cost for management activities
Total

41

NICHIAS Integrated Report 2023

(million yen)Amount
67
467
63
205
802

Cost for environment protection(manufacturing factory of NICHIAS/FY2022)
Classification
Cost for pollution prevention
Cost inside theCost for protection of global
business area
environment
Cost for resource cycling
Cost for management activities
Total(million yen)Amount206

Emissions
490,000m3

Substance subject to PRTR
Substance nameEmissionsToluene158.0tXylene1.1t

Water pollutant
Type
Suspended solids (SS)

Emissions
19.2t

Ethylene
GlycolMonoethyl
Ether

1.5t

Industrial waste
Type
Industrial waste

Emissions
11,197t

Formaldehyde
Triethylamine
Phenol

2.0t
1.1t
3.1t

Initiatives for efficient use of energy

FY2022 results

16% reduction

Initiatives for reduction of unnecessary
substances and industrial waste

FY2022 results

Amount of discharged industrial waste
Target: 30% reduction compared with FY2019 in FY2030

25% reduction

Transition of crude oil equivalent energy consumption and production unit

Transition of amount of discharged unnecessary substances and industrial waste(NICHIAS Group’s domestic manufacturing offices)(NICHIAS Group’s domestic manufacturing offices)

Amount of use (kL)(kL)
100,000

Production unit (kL/million yen)Landfill Intermediate process recycling
Production unit
(kL/million yen)
100

100
91

83
70

60,00080

87,39076,50882,968100

15,0005,376
40

20,000

0

2019

2020

2021

2022
(Fiscal Year)98

20,00075,05240,000

(%)
110

5,565
60

Selling as valuables(t)
25,00010,000

22
220
74
522

* Act on the Assessment of Releases of Specified
Chemical Substances in the Environment and thePromotion of Management Improvement*1 Waste discharged from the NICHIAS Group, including those sold as valuables.
*2 Intermediate treatment recycling excluding permanent disposal (landfill), selling waste as valuables, and in-house recycling are defined as “recycling”.

80,000Capital investment concerning environmental protection(NICHIAS Group’s domestic manufacturing offices/FY2022) Discharged water
Type
Discharged water

53
2,387tThe NICHIAS Group established the Carbon Neutrality Declaration in April 2021. Setting the medium-term environmental target of
reducing the CO2 emissions and amount of discharged industrial waste by 30% compared with Fiscal Year 2019 by Fiscal Year 2030,
we have implemented the activities since Fiscal Year 2022.
Regarding energy use, crude oil equivalent energy consumption in Fiscal Year 2022 was reduced by 14% compared with Fiscal Year2019 thanks to the updates to energy-saving equipment on each site, improvement of production efficiency, and promotion of energy
saving activities. And, crude oil equivalent energy consumption production unit was reduced by 16% compared with Fiscal Year 2021.
Regarding industrial waste, although emissions increased in some business offices due to an increase in production, emissions in
Fiscal Year 2022 were reduced by 25% compared with those in Fiscal Year 2019 because of the improvement of yield rate on each site
and the promotion of reduction of industrial waste (i.e., selling waste as valuables). And, discharged industrial waste production unit was
reduced by 35% compared with Fiscal Year 2019. 58% of the unnecessary substances of the NICHIAS Group*1 are recycled*2.
The NICHIAS Group continues the proactive reduction activities to realize carbon neutrality and circular economy.

Target: 1% reduction compared with FY2021.

Amount invested in environment protection facilities*1 in the business activities is 8.02 million yen, accounting for 7.9% of the amount of
capital investment of the entire Group. It was an 182-million-yen increase YoY due to investments made for reducing CO2 emissions,
including installation of solar panel generation systems and updates to energy-saving equipment. The NICHIAS Group will continue toinstall solar power generation systems, adopt energy-saving equipment, and take other proactive measures to reduce CO2 emissions.
And, environment protection costs*2, which include operation costs, maintenance costs, and labor costs of environment
preservation-related equipment, was 5.22 million yen, a 77-million-yen decrease YoY.

Substances subject to PRTR*
Type total
Consumption

Record of Energy Use and Discharge of Unnecessary Substances and Industrial Waste

Crude oil equivalent energy consumption production unit

Environmental Accounting

Water resource
Quantity of water intake
Type
Clean water
251,000m3
Industrial water
635,000m3
Underground water
221,000m3

OUTPUT
CO2
Type

With the purpose of coexisting with the local communities, the NICHIAS Group has implemented environmental patrol since 1990. In
this activity, employees patrol the area around the business office to check the four points, that are, “beauty of the view,” “air (dust,odor),” “noise and vibration,” and “discharged water” according to the characteristics of the business office. In Fiscal Year 2022, thepatrol was conducted 89 times by the entire Group, and 219 cases pointed out were improved. We continue this activity to reduce theenvironmental risk, if only a little, by doing what we can.

* All the data on this page refers to the NICHIAS Group’s domestic manufacturing offices.

20

5,000

0

0

9,569

2019

5,180
5,303

100

92

90

5,865
5,154
6,410

65
4,370

7,926

8,482

2020

2021

80
70
60
50
40

6,857
2022
(Fiscal Year)

30
20

NICHIAS Integrated Report 2023

42

Summary of 11 Years
Financial data (as of March 31, 2023)(Unit)

Financial Information
Net Sales(million yen)(of which, overseas net sales)(million yen)

Cost of sales
Selling, general and administrative
expenses
Operating income
Profit attributable to owners of theparentCapital expenditures
Depreciation & amortization(million yen)

R&D expenses
Net cash provided by (used in) operating
activities
Net cash provided by (used in) investing
activities
Free cash flow
Net cash provided by (used in)financting activities
Total assets
Interest-bearing debt

(million yen)

Shareholder’s equity(million yen)

Financial indicator
Return on sales (ROS)(%)

Return on equity (ROE)(%)

Shareholder’s equity ratio(%)

Dividend on equity (DOE) ratio(%)

Return on invested capital (ROIC) ratio(%)

EBITDAFY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022(million yen)

137,008
15,451
107,486

147,118
20,815
115,251

158,939
25,776
124,529

170,430
30,381
131,271

180,363
29,300135,346

197,495
34,464
149,545

215,495
38,579164,869

208,876
35,958160,719

196,372
33,574150,307216,236
40,304
162,856

238,116
45,145
180,107(million yen)

20,10721,65022,91924,05425,416

26,592

27,996

27,73026,448

27,11528,055(million yen)

9,414

10,216

11,49015,104

19,60021,357

22,62920,427

19,616

26,26429,954(million yen)

5,936

6,317

7,532

6,669

13,40914,956

15,861

14,674

10,71522,034

21,398(million yen)(million yen)

6,537
3,260
5,189

8,299
3,802
5,545

2,788
4,659
5,602

4,287
4,598
5,460

9,775
3,969
5,446

12,772
4,800
5,692

12,816
5,760
5,976

8,978
6,274
6,132

7,703
6,536
6,168

11,3556,616
6,110

10,0697,454
5,715(million yen)

11,076

4,636

8,571

13,424

24,79818,122

15,83320,094

18,68325,07318,650(million yen)

7,240

8,807

4,115

4,443

10,617

14,37011,818

9,036

6,799

5,523

8,651

(million yen)

3,835

4,170

4,456

8,981

14,181

3,751

4,014

11,057

11,884

19,550

9,998(million yen)

3,185

4,254

1,556

3,717

4,965

6,221

4,197

5,667

5,469

5,881

6,368

(million yen)

135,401
36,28961,291

141,31133,82567,276

156,234
33,83078,132

154,922
25,84084,879

175,999
23,976
97,367

197,839
23,818109,195

206,426
26,065
116,786

208,076
26,077
126,297

219,602
25,861
135,429

246,924
25,652
154,286

266,907
25,892
172,359

6.9
10.3
45.3
2.7
6.5
127

6.9
9.8
47.6
2.8
6.4
140

7.2
10.4
50.0
2.8
7.1
162

8.9
8.2
54.8
3.3
6.0
197

10.9
14.7
55.3
3.8
11.6
236

10.8
14.5
55.2
3.9
11.8
262

10.5
14.0
56.6
4.0
11.5
284

9.8
12.1
60.7

4.1
9.9
267

10.0
8.2
61.7
4.0
6.8
262

12.1
15.2
62.5
3.9
12.9
329

12.6
13.1
64.6
3.7
11.3
374

99.6
26
26.1
1,027.49

105.8
30
28.4
1,126.21

125.7
34
27.1
1,294.73

103.8
42
40.5
1,279.10

200.8
52
25.9
1,436.01

222.7
60
26.9
1,629.24

238.7
68
28.5
1,760.51

221.2
76
34.4
1,903.93

161.5
78
48.3
2,041.63

332.2
86
25.9
2,325.95

322.6
92
28.5
2,598.45

11.1
1.1

12.5
1.2

11.0
1.1

13.0
1.1

11.1
1.6

12.1
1.7

9.2
1.2

9.1
1.1

17.4
1.4

7.6
1.1

8.2
1.0

555
694

662
828

693
867

673
894

1,119
1,518

1,352
1,834

2,192
1,486

2,024
1,373

2,810
1,906

2,527
1,714

2,661
1,804

(100 million yen)

Data per share Note 1
Net income per share (EPS)(JPY)

Dividend(JPY)

Dividend payout ratio (consolidated)(%)

Book value per share (BPS)(JPY)

Other financial information
Price-to-earnings ratio(times)Price-book value ratio(times)Stock information
Share price at fiscal year end(JPY)Market capitalization Note 2(100 million yen)

* Partial Amendments to Accounting Standards for Tax Effect Accounting, etc., have been applied since the beginning of Fiscal Year 2018.
* Accounting Standards for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020), etc. have been applied since the beginning of Fiscal Year 2021.

Note 1 As of October 1, 2018, the reverse share split is implemented at a ratio of one share for every two shares of common shares.
Past figures are also retroactively converted to post-reverse share split figures.
Note 2 Market capitalization is calculated including the owned shares.

Non-financial data (as of March 31, 2023)(Unit)

Work-style-related
Number of employees(people)Number of NKK participants Note 3(people)Environment-related
CO2 emissions Note 4
Amount of industrial waste discharge(t-CO2)
Note 4(t)

FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022

4,665
-

4,813
-

5,062
-

5,155
2,582

5,523
4,114

5,784
4,333

6,036
4,963

6,260
4,957

6,337
5,379

6,402
5,884

6,445
6,258

157,366
8,631

164,145
9,740

170,289
10,448180,382
10,687

184,720
13,074

179,940
11,159187,135
12,578259,613
21,239223,240
21,326244,461
21,858225,960
19,147Note 3 NKK (NICHIAS Kaizen Katsudo) conventions have been held since Fiscal Year 2015.
Note 4 Data of CO2 emissions and that of industrial waste before Fiscal Year 2018 cover domestic manufacturing bases of the NICHIAS Group. For Fiscal Year2019 and after, overseas manufacturing bases of the NICHIAS Group are covered.

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44

Global Network

Company Profile/Status of Stock (as of March 31, 2023)

List of Major Domestic Bases

Corporate Profile

Head Office
Sales bases [37 bases]
Hokkaido OfficeSapporo Sales
OfficeSendai OfficeKitakami Sales
OfficeFukushima
Sales OfficeTokyo BranchKashima OfficeChiba OfficeYokohama
OfficeKanagawa
OfficeHitachi Sales
OfficeUtsunomiya
Sales OfficeTakasaki Sales
OfficeNiigata Sales
OfficeYamanashi
Sales OfficeNagoya Branch
Wakasa OfficeShizuoka OfficeHamamatsu
OfficeToyota OfficeYokkaichi OfficeToyama Sales
OfficeResearch Laboratories [2 bases]

Main Group companies [23 companies]

Osaka Branch
Tsurumi Research Laboratory
Keiji OfficeHamamatsu Research Laboratory
Himeji OfficeSakai Sales
Factories [5 bases]
OfficeTsurumi Factory
Fukuroi FactoryKobe Sales
Ohji Factory
Yuki Factory
OfficeHashima
Okayama Office
FactoryHiroshima
OfficeTokuyama
OfficeUbe Sales
OfficeSikoku Sales
OfficeKyushu Branch
Nagasaki OfficeKumamoto
OfficeKitakyushu
Sales OfficeOita Sales
Office ICHIAS CERATECH CO., LTD.
N
SAKAI NICHIAS CORPORATIONKOKUBU INDUSTRY CORPORATIONTOKYO MATERIALS CORPORATIONTATSUTA INDUSTRY CORPORATIONOHTA KASEI CORPORATIONNICHIAS MECHATECHNO CO., LTD.
NICHIAS KANTO SALES CORPORATIONNISHI-NIPPON NICHIAS CO., LTD.
HAMAASU CORPORATIONNIPPON THERMAL ENGINEERINGCORPORATIONNICHIAS ENGINEERING SERVICECORPORATIONINOCRETE CO., LTD.
NICHIAS KYUSHU SALES CO., LTD.
FUKUSHIMA NICHIAS CORPORATIONKUMAMOTO NICHIAS CORPORATIONMETAKOTE INDUSTRY CORPORATIONAPJ CORPORATION
N&A TECH CORPORATIONNIPPON ROCKWOOL CORPORATIONKIMITSU ROCKWOOL CORPORATIONNICHIAS CEMCRETE CORPORATIONNICHIAS KYOSHIN CORPORATION

Company nameNICHIAS Corporation

Number of shares and shareholders

Company namein English
Establishment

NICHIAS Corporation

Total number of issuable shares

120,000,000 shares

April 9, 1896

Total number of Issued sharesNote

67,811,917 shares

Capital fund

12,128 million yen

Majorbusinesses

Energy and Industrial plants, industrial
products, advanced products, autoparts,
building materials
6,445 people (consolidated)/1,730 people(non-consolidated)
1-6-1, Hatchobori, Chuo-ku, Tokyo
104-8555, JapanTokyo Branch (Chuo-ku, Tokyo)
Nagoya Branch (Minami-ku, Nagoya City)
Osaka Branch (Chuo-ku, Osaka City)
Kyushu Branch (Chuo-ku, Fukuoka City)
Tsurumi Factory (Tsurumi-ku, Yokohama
City)
Ohji Factory (Kitakatsuragi-gun, Nara)
Hashima Factory (Hashima City, Gifu)
Fukuroi Factory (Fukuroi City, Shizuoka)
Yuki Factory (Shimotsuma City, Ibaraki)
Tsurumi Research Laboratory (Tsurumiku, Yokomaha City)
Hamamatsu Research Laboratory (Kitaku, Hamamatsu City)
42 companies

Number of
employees
Head Office
BranchFactory

Research
Laboratory
Consolidated
companies
Equity method
affiliate

List of Major Overseas Bases

Status of Stock

2 companies

About the cover photo

12,907 people

Number of shareholders(Note) Among the shares, 1,480 shares are held by the Company as owned shares.

Major shareholders
Number ofshares held
(1,000shares)Stockownership
ratio
(%)

The Master Trust Bank of Japan, Ltd.
(Account in trust)

8,743

13.18

Custody Bank of Japan, Ltd.
(Account in trust)

5,833

8.79

NICHIAS holding company

5,688

8.58

Sumitomo Mitsui Banking Corporation

2,097

3.16

Mizuho Trust & Banking Co., Ltd.
Employee pension trust Mizuho Bank,
Ltd. account, re-trust trustee Custody
Bank of Japan, Ltd.

2,090

3.15

Sumitomo Mitsui Trust Bank, Limited

1,557

2.35

Sumitomo Life Insurance Company

1,437

2.17

Nippon Life Insurance Company

1,259

1.90

Toyota Motor Corporation

1,237

1.87

NICHIAS Own Share Investment Group

1,048

1.58

Shareholder name(Note) Stock ownership ratio is calculated after deducting owned shares (1,480
shares).

Status of holder distribution

Sales companies [6 countries/9 bases]

Manufacturing companies [7 countries/12 bases]

Indonesia

Indonesia

PT. NICHIAS SUNIJAYAMalaysia
NICHIAS SOUTHEAST ASIA SDN. BHD.

Singapore
NICHIAS SINGAPORE PTE. LTD

VietnamNICHIAS VIETNAM CO., LTD

ThailandNICHIAS (THAILAND) CO., LTD.
THAI NICHIAS INTERNATIONAL CO., LTD.

China
NICHIAS (SHANGHAI) TRADING CO., LTD.
NICHIAS (SHANGHAI) TRADING CO., LTD. GUANGZHOU BRANCHNICHIAS (SHANGHAI) AUTOPARTS TRADING CO.,LTD.

NICHIAS FGS SDN. BHD.
NT RUBBER-SEALS SDN. BHD.

VietnamNICHIAS HAIPHONG CO., LTD.

China
SUZHOU NICHIAS INDUSTRIAL PRODUCTS CO., LTD
SUZHOU NICHIAS SEAL MATERIAL CO., LTD
SHANGHAI XINGSHENG GASKET CO., LTD
SUZHOU SHUANGYOU AUTOPARTS CO., LTD

India
NICHIAS INDUSTRIAL PRODUCTS PRIVATE LTD.

Czech

Construction company [1 country/1 base]Thailand
THAI-NICHIAS ENGINEERING CO., LTD.

NICHIAS AUTOPARTS EUROPE a.s.

MexicoNAX MFG, S. A. DE C. V.

Financial institute

23.6%

39.4%
26,691,000 shares

16,070,000 shares
Foreign corporation

PT. NICHIAS ROCKWOOL INDONESIA
PT. NICHIAS METALWORKS INDONESIA

Malaysia

Individual and other (Note)

NICHIAS has used the dragonfly (or tombo as it is known inJapanese), which symbolizes Japan, as its symbol mark for many
years.
Dragonfly-themed photographs are solicited from the NICHIASGroup’s employees to include them in the Integrated Reports.
Seventy-two people applied in 2023. The cover photo, which
was inspired by “harmony with nature” won the best prize.

25.7%

Issued share

67,811,000
shares17,401,000 shares

Securities firm

General corporation

1.2%
799,000 shares

10.1%
6,850,000 shares(Note) “Individual and others” includes 1,480 owned shares.

Comment by the photographer
I was both happy and surprised when I was informed that thephoto I had taken was selected for the cover of the Integrated
Report.
During the days of the coronavirus, not allowed to go out freely, I
was looking around the garden and spotted a dragonfly resting
its wings. This is a shot I took while hoping for it to “stay there fora while” when pressing the shutter button.
FUKUSHIMA NICHIAS CORPORATION Nobuo Abe

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NICHIAS Integrated Report 2023

NICHIAS Integrated Report 2023

46

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Tel. 03-4413-1194 (CSR Team Secretariat)
https://www.nichias.co.jp/en
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