ALCONIX CORPORATION
Integrated Report 2023

A LCONI X COR POR AT I ON

Integrated Report 2023

ALCONIX CORPORATION
Sanno Park Tower 12th Floor, 2-11-1 Nagatacho, Chiyoda-ku, Tokyo 100-6112
Phone: +81-3-3596-7400
https://www.alconix.com/en/

00.
SECTION

Introduction

The name ALCONIX is a combination of the first two letters of aluminum (AL), copper (CO), andnickel (NI), plus the letter X, which represents the unknown. It represents our strong determination
to keep challenging ourselves to search for new business possibilities beyond the framework of
non-ferrous metals. We will continue moving forward, venturing into the unknown.

Drawing the Futureof Our Dreams
ALCONIX creates new value and contributes tothe development of society throughthe transactions of non-ferrous metal products.

ALCONIX Integrated Report 2023

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Introduction

The ALCONIX Group’s Goal

One-stop comprehensive solution
provider offering everything fromproduction to wholesale non-ferrous
metal materials, parts, and products

Founding

Number of employees(Consolidated)

Ordinary profit

Transition to the Prime
Market segmentof the Tokyo Stock Exchange

MBO

Overseas sales ratio

Share Capital

ROE

ROIC

1981

3,185

Listing on the First Sectionof the Tokyo Stock Exchange

2010

The ALCONIX Group is a comprehensive organization comprising a trading segment that deals in copper and othernon-ferrous metals and a manufacturing segment that produces niche and highly competitive products. We believethat as these segments develop on their own and build up their respective strengths, they will become even more
powerful in combination. It is this power that will allow us to “draw the future of our dreams.”

2001

2022

¥5,810 million
Trading

Sales
and Distribution
Professionals thatconnect sales and distribution
to consumers
Organization of trading networks
Market development; sales expansion

Manufacturing Function

Organizing businessand trading

60.2%

Collection of information

Added value from making
full use of technology

Business development
and management

Dusseldorf

EuropeAsia

High-precision processing

Risk management

R&D

BeijingShanghai

Seoul

Inspection and measurement

Consolidated Net Sales (Fiscal 2022)
Manufacturing

Guangzhou

Cairo (Overseas Agent)

Africa

Hanoi

North
America

ChicagoShenzhenInvestment and funding¥178,333 million

4.6%

Global Network

Processingand Manufacturing

Logistics

Trading

10.5%

65.5%

Manufacturing

Corporate Division
Trading Function¥8,176 million

TaipeiHong Kong
BangkokJapan
Head Office
Tokyo, Osaka,
Nagoya, Hamamatsu,
Hiroshima

Kuala Lumpur
Singapore

Number of overseas bases

12 offices, 15 locations

39.8%
At a GlanceElectronic and Advanced Materials 23.2%

Aluminum and Copper 37.0%

Equipment and Materials 23.4%

Metal Processing 16.4%

Support the Continuous Growth of Japanese Manufacturing
We have made it our mission to organize our business and trading networks to maximize the value we provide.
Our efforts toward this mission, centered on our three key sectors of “automobiles,” “semiconductors,” and“electronic materials and parts,” will contribute to Japanese manufacturing.

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ALCONIX Integrated Report 2023

Create new value through transactions of
non-ferrous metal products
In 2004, we made full-scale preparations to expand globally and we currently operate across 12 overseas
offices and 15 locations. Thanks to these efforts, we have successfully created a strong network,
primarily in China and other parts of Asia, expanding our business to include transactions withlocal companies and subsidiaries of Japanese companies that have expanded to these areas.

ALCONIX Integrated Report 2023

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Introduction

ALCONIX,
Everywhere

5
1
ます。

Aluminum, copper, minor metals, and rare earths:
These and other non-ferrous metals are used everywherein modern society—smartphones, computers, andautomobiles to name just a few examples.
In keeping with our goal to be a comprehensive solution
provider for non-ferrous metals, we deal with productsthat are at once niche while also playing strong roles inpeople’s lives.

2
1

Aerospace 

In addition to dealing in external aircraft parts, we also

produce parts for aircraft engines that require advanced
technology.

67

Key products and services:
Structural parts, engine parts
Chief operating companies:
OHKAWA CORP., ALCONIX CORP.

2

Construction 

We supply parts for electrical equipment and construction materials necessary for buildings. In addition, we
handle testing equipment to verify building safety.

Key products and services:Electrical equipment parts, construction
materials
Chief operating companies:
HAYASHI METAL CORP., ALCONIX CORP.

3

Environment and Recycling 

Recycling has been a core business since the foundingof the Company, and we continue to strengthen thisbusiness in an effort to develop a circular economy.

3

4

7

Social Value(Circular economy)

Three Key Sectors(Automobiles,
Semiconductors, Electronicmaterials and parts)

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ALCONIX Integrated Report 2023

 ir-Conditioning &A
Climate Control Systems We possess know-how and core technologies
in the air-conditioning sector, built up over years of
trading experience. These factors help us meet the
global demand for air-conditioning, which is on the riseamid the ongoing energy crisis and climate change.

Key products and services:
Heat exchangers, copper tubes for
air conditioners
Chief operating companies:
ALCONIX MITAKA CORPORATION, HEIWAKINZOKU CO., LTD., FUJINE INDUSTRY CO.,LTD., ALCONIX CORP.

Key products and services:
Collection, sorting, and quality improvement forrecyclable materials such as aluminum cans,and aluminum and copper scraps
Chief operating companies:
ALUMINUM & COPPER RECYCLING CENTERCORPORATION, ADVANCED MATERIAL JAPANCORPORATION, ALCONIX CORP.

6

 emidonductors /S
Electronic materials and parts We handle electronic materials and components for use
in smartphones and personal computers, as well as
minor metals and rare earths that comprise thesematerials and components. We also handle battery
materials and parts for semiconductor production
equipment (SPE) and chip mounters, etc.

Key products and services:High-performance materials, battery materials,
radio wave absorbers
Chief operating companies:
ADVANCED MATERIAL JAPAN CORPORATION,
OHKAWA CORPORATION, OHBA SEIKEN CO.,LTD., JUPITER INDUSTRY CO., LTD., SOODE
NAGANO CO., LTD., ALCONIX CORP.

5Automobiles 

We handle core materials and niche parts that contribute to the development of electric vehicles (EVs), fuelcell vehicles (FCVs), and other next-generation vehicles.

Key products and services:
Automobile parts, electrical components,
in-vehicle batteries
Chief operating companies:
FUJI PRESS CO., LTD., TOHOKU CHEMICALINDUSTRIES, LTD., FUJI CARBONMANUFACTURING CO.,SOODE NAGANO CO, LTD, ALCONIX CORP.

4

Plants and Chemicals 

In addition to offering chemical manufacturing andinspection services on a contractual basis, we also workwith inspection equipment used in a variety of factories.

Key products and services:
Non-destructive testing, chemical manufacturing services, inspection services
Chief operating companies:
MARKTEC CORPORATION, ALCONIX CORP.

ALCONIX Integrated Report 2023

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Understanding ALCONIX CORPORATION INTEGRATED REPORT 2023

SECTION00.

“Drawing the Future of Our Dreams”
At the ALCONIX Group, we aim to create our ideal vision of the future—drawing the future of our dreams—
through transactions centered on non-ferrous metals. In this introductory section, we will give you
an overview of what value the Group provides and where the Group provides it in pursuit of this future.

To Be Unique—Now and Onward
SECTION00.

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01.

02.

Introduction

Toward a New Stageof GrowthPast, Present, and Future

1	Drawing the Future of
Our Dreams

8	Message from the CEO

20	A History of Unique Growth
Spurred by M&As

2	The ALCONIX Group’s Goal3

At a Glance

4

ALCONIX, Everywhere10

Message from the COO

14Business Portfolio

16

Building a Business Portfolio

18	The ALCONIX Group’s
Value Creation Process

SECTION

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The Future of Our Dreams

Data Section

36

Message from the CSO

37

Sustainability

62	Financial and Non-Financial
Highlights

39

H: Human Capital

42

E: Environment

45

S: Society

46	Corporate Governance48	Directors and Audit &Supervisory Board Members
52 Special Feature 3:
		A Roundtable Discussion
on Governance60

Investor Relations (IR) Activities

61	Dialogue with Shareholders andInvestors

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SECTIONALCONIX Integrated Report 2023

64	Eleven-Year Summary of
Financial Data
66	Shareholder Informationand Share Price Information
67	Corporate Information
and Organizational Chart

We strive to be a comprehensive solution provider for non-ferrous metals. To reach this goal, the Group has
developed a unique business model that integrates trading and manufacturing. This model has set us apartfrom other companies and spurred growth in a way that only we can achieve. In this section, members of ourmanagement team share their thoughts and present our vision for the future as ALCONIX moves toward its
next stage of growth.

SECTION

The ALCONIX Group has grown from its beginnings as a trading company specializing in non-ferrous metals
to its current form, the culmination of M&As after entering the manufacturing industry. In this section,
we explain the Group’s strength in M&As as an extension of its history, and communicate the Group’s
achievements over its past, the challenges it faces in the present, and its aspirations for the future,under the direction of its medium-term management plan.

01.

Expanding Business through a Unique M&A Strategy

02.

22	Special Feature 1:
ALCONIX’s M&As
26
32

34

Drawing the Future of Our Dreams, Sustainability

Message from the CFO

28	Medium-Term Management PlanOur Businesses

33	Special Feature 2:
Pursuing Groupwide Synergies
Toward a New Stage of Growth
SECTIONSECTIONSECTION

03.

The ALCONIX Group is deeply aware of the importance of sustainability initiatives, setting human capital,
the environment, society, and governance (H-ESG) as material issues (materiality). In this section, we present
sustainability-related achievements, issues, and our views on various initiatives going forward. We place aparticular focus on initiatives aimed at developing human capital, the very source of value creation. The governance section features a roundtable discussion with two of the Company’s outside directors and an outside
expert regarding ALCONIX’s governance as it ventures toward its new stage of growth.

Business Overview

Guidelines Referenced
Integrated Reporting Framework, published by the
IFRS Foundation; Guidance for Collaborative Value
Creation, published by the Ministry of Economy,
Trade and Industry

Positioning of the Integrated Report
The integrated report combines financial and non-financial information to provide
our stakeholders with an overview of how we create sustainable corporate value.

Scope of Reporting
ALCONIX CORPORATION and the ALCONIX Group

Financial Information
ALCONIX corporate website(Investor Relations section)

Non-Financial Information
ALCONIX corporate website(Sustainability section)

Reporting Period
Fiscal 2022 (the period from April 1, 2022 to March
31, 2023). Information on some activities taking
place after March 31, 2023 has also been included.

https://www.alconix.com/en/ir/

https://www.alconix.com/en/
sustainability/

Target Audience
All stakeholders involved with the ALCONIX Group
Precautionary Note Regarding
Forward-Looking Statements
Non-historical statements contained within thisreport are forward-looking statements and plans
based on future forecasts. These forecasts include
factors such as potential risks and contingencies,
and actual results may differ from the forecasts
published in this report.

• Securities Report• Financial Results Material• Medium-term management plan
• Analyst Reports• IR event information

Integrated
Report• Basic Policy for Sustainability,
sustainability promotion system• Human capital(development, promotion ofdiversity and inclusion)• Environment(addressing climate change)• Society (respect for humanrights, contribution to local
communities)• Governance

ALCONIX Integrated Report 2023

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01.

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Toward a New Stageof Growth00.

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02.

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03.

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04.

Toward a New Stage of Growth

M E S S A G E

F R O M

T H E

C E O

Fine-Tune Profitability and Increase Self-Direction and Drive
To take sure steps forward in unsure times, it is essential that we fine-tune profitability and increase self-direction and drive at every level of the Group.

Fine-Tune Profitability
We need to enhance profitability if we are to pursue further growth as a group.
When it comes to enhancing profitability, the focus is often on the “how,” as in “Howdo we generate profit?” or “How can we build a system that will generate profit?”
But, for ALCONIX, I believe our path to greater profitability is less rooted in how to
generate profit, and more in “what” will generate profit, and “where” profit is to befound. Since its second founding, marked by an MBO in 2001, ALCONIX has worked
doggedly to break into new fields and business domains. Throughout these efforts,
we have applied a process of looking from the inside out, which refers to using what
we have learned to date and applying it to each industry, business, and transactionin order to discover issues, understand their meaning, and gain useful insights,
which we can then put toward value creation and higher profitability. We remaincommitted to this process and strive to fine-tune it further.
Note: For more details on ALCONIX’s second founding, please refer to the section titled “Emergence” on page 20.

Increase Self-Direction and Drive

We will help create a sustainable society throughvalue created by trading and manufacturing,drawing the future of our dreams.

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ALCONIX Integrated Report 2023

To increase earnings for the entire Group, it is vital that we maximize the individual
strengths of companies that we have welcomed into the Group and raise their ability to operate independently, whatever the situation. Over the last few years, wehave explored possible avenues to further improve this “self-direction and drive” by
establishing and operating a corporate venture capital (CVC) fund, and by strengthening and expanding our recycling business. We want to put ourselves in a state
where we can better utilize the aforementioned ability to look from the inside out
and invigorate our imaginations. So, with this in mind, we have established the CVC
fund and tasked young members of the Group with seeking out opportunities andopening up ALCONIX to new sectors.
Moreover, as the world shifts from an economy based on mass production andconsumption to a circular economy, I would like to develop our aluminum andcopper recycling business—one of our founding businesses—and expand it toinclude nickel and minor metals.
Another way of thinking about self-propulsion is the ability to continue moving
forward. I believe that we can use this ability to bring together innovation with
self-direction and drive, which will allow us to create the future of our dreams.
A good balance between strengthening profitability, increasing self-direction
and drive, investing in human capital, and ensuring proper governance will bringthe Group prosperity and give it resilience.
We will continue to manage the ALCONIX Group with integrity—integrity toward
society and integrity toward employees—to ensure the Group’s sustainability.
I would like to ask all of our stakeholders for their continued support going forward.


September 2023



Masato Takei

Representative Director, Chairman and CEO

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Toward a New Stage of Growth

the manufacturing industry. I am quite moved when
I think of the sheer scale of growth we have achieved
so far, but I do not want us to stop here—instead, I wantto keep making similar leaps over the next 20 years.
My mission as COO is to create fertile conditions forthe growth of the Company and our people. Higher costs
are an inevitable part of creating these conditions, so weneed to increase our earning power to compensate forthis factor. Knowing this, we will implement the following four measures, which are rooted in the idea ofmanagement mindful of cost of capital. The first of thesemeasures is to continue moving forward with M&As as a
growth driver; the second is to engage in the thoroughmanagement of and investment in Group companies inorder to increase their self direction and drive; the third
is to utilize recycling and other businesses to help realize a sustainable society; and the fourth is to focus moreon corporate venture capital (CVC) and other new development projects as a means to fund new sources ofrevenue 10 to 20 years from now. I believe that these
efforts will lead to the growth of our people as well as tothe enhancement of corporate value.



2. A Review of Fiscal 2022 and Our Business Strategy
Results for Fiscal 2022

HiroshiTeshirogi
Representative Director,
President and COO

We will continue our work toward greater growth andsatisfy our stakeholders, regardless of the uncertainty
that lies ahead.

1. The Future of Our Dreams
ALCONIX Continues to Grow Amid Uncertain Times
ALCONIX was established as a spin-out of Nissho Iwai
Corporation (currently Sojitz Corporation). This was followed by a management buyout (MBO) in 2001—oursecond founding—then being listed as a public company.
Over the course of these landmark events to the presentday, we have continued to grow despite only a handful of
instances where external conditions were in our favor. In
our constant search for a path forward, we incorporated
manufacturing into our business through M&As, which
has allowed us to grow further as a unique corporate
entity. Once more we find ourselves in an era where
the global economy is undergoing dramatic change andthe future is a dense fog, but this is familiar territory for
ALCONIX, and one where we have a long track record ofgrowth. So, as we have done in the past, we will makeconstant efforts, take on challenges, and work toward
greater growth while satisfying our stakeholders.

The Mission to Create Fertile Conditions for the
Growth of the Company and Our People
As I have mentioned, when ALCONIX was born, conditions
were such that we did not know if the Company would exist
from one day to the next, and yet, 20 years later it has
become the ALCONIX Group, with 60 Group companies to
its name. What is more, 37 of these companies are in

In fiscal 2022, we achieved consolidated net sales of¥178,333 million, up ¥22,047 million from the previous
fiscal year, and ordinary profit of ¥8,176 million, down
¥2,833 million. Setting these results aside for the moment,

expectations and achieved record-high results. All things
considered, ordinary profit did not flounder at all—in fact, it
was the second highest in the Company’s history.
We began fiscal 2022 with an initial target for ordinary
profit of ¥9,000 million, realistic when removing the tailwinds experienced in fiscal 2021. In the first quarter, ordinary profit was ¥4,251 million—roughly half of thistarget—thanks to inertia from the previous fiscal year.
However, changing market conditions in the second quarter
led to a gradual decline in demand, causing us to fallbehind schedule in our initial plans. Major factors contributing to this situation were a decline in sales combined witha simultaneous increase in cost of sales. In particular,
China’s zero-COVID policy and the slump in the country’s
real estate market forced customers in the automobile andIT sectors to make periodic adjustments to their productionlevels, affecting sales in our highly profitable manufacturing segment. Selling, general and administrative (SG&A)
expenses and cost of sales also rose due to the acceleration of global inflation and the depreciation of the yen.
Fluctuations in the prices of raw materials have little
impact on the trading segment, but the manufacturing
segment, by contrast, is greatly affected by suchin fiscal 2021 raw material prices soared, market prices
remained high, and demand in our three key sectors ofautomobiles, semiconductors, and electronic materials
and parts stayed strong, despite the lingering COVID-19
pandemic. Thanks to these external factors, we exceeded

fluctuations, and product prices cannot be raised quickly
enough to offset these cost increases. This is especiallytrue for the Group’s manufacturing companies that operate
in industries such as automobile parts, semiconductors,
and home appliances, since the complexity of their respective supply chains means that it takes time to negotiate
prices that will absorb the higher costs. We expect thatthese issues will carry over into fiscal 2023.

Outlook for Fiscal 2023
The future remains difficult to surmise, not only for the industries in which we operate but just about every industry. For
this reason, when crafting our initial plan for fiscal 2023, we
made a careful assessment of the Company of what we
could realistically achieve based on our basic profitability,
taking into account demand across our various businesses. In addition, we excluded any expectations ofmarket tailwinds and other forms of wishful thinking when formulating our plan. As a result, wehave set targets of ¥186,000 million for consolidated net sales and ¥8,200 million forordinary profit. Our target for ordinary
profit is very close to our result for

Note: For more details on ALCONIX’s second founding, please refer to the section titled “Emergence” on page 20.

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ALCONIX Integrated Report 2023

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MESSAGE FROM THE COO
fiscal 2022. This means that, if we reach thistarget, we will once again achieve the secondhighest ordinary profit in the Company’s history andprove that our earning power is on a steady rise. We willthen use this result as a launching point to achieve record
profits again over the next two to three years. Our
medium-term management plans use rolling targets thatare adjusted based on the results of the previous fiscal
year, which keeps our plans in line with rapid twists andturns that take place in the non-ferrous metals industry.
Our most pressing issue is restoring profitability to
the manufacturing segment. Many of the companies thathave joined the Group through M&As are small andmedium-sized companies with net sales of less than ¥10billion. To date, we have focused on capital investment andinvestment in earning power, with the intention of

improving our top line. However, I believe we need to shift
from this offensive approach to a defensive one and focus
on raising the standard of our internal control system andother forms of governance across Group companies. These
investments will help us better support employees in the
Corporate Division, and we will take other steps to build asolid foundation for growth, even in difficult conditions.
We are also promoting ROIC management and efforts
to improve capital efficiency. As part of this work, we arefocused on improving our Groupwide balance sheet. In
fiscal 2022, we introduced a cash management system(CMS), which visualizes financial data from across theentire Group, making it easier to manage bank loans andother forms of interest-bearing debt. The use of this CMS
will help us streamline the Group’s consolidated balance
sheet and improve our shareholders’ equity ratio.


3. Sustainability Management
A Long-Term Management Vision That Repeats
Our Growth Cycle
Much like a garden, for a company to grow, it needs torepeat a growth cycle of sowing seeds, nurturing them,and harvesting what springs up. So far, we have emphasized flexible decision-making that fits with the changes
in the global landscape and market conditions of theday. But now, as these changes evolve to a point where
the future is nigh impossible to predict, people worldwide are becoming increasingly cognizant of sustainability. In response, I believe ALCONIX needs to offer up
a clear direction for its growth over the medium to longterm. To that end, we are hard at work formulating along-term management vision that incorporates theopinions of executives on the front lines, the ones who
hold the future of the Company in their hands.
I believe that this vision will help us move forward withmore concrete efforts to realize a sustainable society, whichshould support our growth at the same time. Guided by thisvision, we will add to our track record of results and repeat
our growth cycle with a view toward the long term. This will
increase our corporate value and do so sustainably.

The People of ALCONIXIn Integrated Report 2022, I stated our intention toemphasize the upgrading of human capital throughcompensation, education, and opportunity, and this will
not change as we pursue medium- to long-term growth.
As COO, I stress the importance of having a work environment that gives people who want to grow the opportunities to do so. My approach is not to “develop human

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ALCONIX Integrated Report 2023

capital” per se, but to set up conditions that give talented
people the opportunity to perform comfortably and freely,
which will allow them to enjoy their work and contributeto the Company while fostering their growth. Of course, arobust system for human capital development is important, but I believe that whether a person achieves growthor not is largely up to the individual. Still, no matter how
motivated a person is when they join a company, they will
not grow if the environment is not right. For this very
reason, improving our work environment must be a toppriority, and to this end, we have launched measures to
upgrade our human capital that are rooted in compensation, education, and opportunity, and have carried out adrastic overhaul of our human resource system.
Regarding compensation, we have reworked our payroll system in light of efforts to boost mid-career hiring
over the past few years, moving away from the senioritybased system so prominent in Japanese companies to asystem that better accommodates a growing range ofworkstyles. In addition to sustainable salary increases inline with the inflation rate, we have designed our humanresource and payroll systems to be more skill and performance based in order to raise motivation among
employees. At the same time, we also believe thatentry-level employees need time to acquire basic
knowledge as a member of society and to gain
experience mediating between suppliers andcustomers; so under our system, these
employees are compensated based on thenumber of years of service to accommodate this learning period.

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04.

Toward a New Stage of Growth

It is my duty to establish conditions
that instill in people the desire toreach a new stage of growth—for the Company and themselves.

As for education, we have calculated the amount of timeand money we spend on training. This allows us to analyze
whether we are providing growth opportunities efficiently
and fairly. In recent years, training time and cost per
employee have increased significantly, and this is a result of
employees pursuing the education opportunities they desire.
Finally, with regard to opportunity, our new humanresource system, which came into effect in July 2023, will
give employees with desire and ability to change positions
and challenge themselves. In addition, the system will alsooffer up support to people who have nursing or childcare
obligations so that they can take advantage of these opportunities as well. These changes will help us create a comfortable work environment that makes work feel rewarding.

Businesses That Harness Our Competitive Edge
to Help Realize a Sustainable Society
As a comprehensive solution provider for non-ferrous
metals and a company that combines trading and manufacturing, ALCONIX has its sights set on the realizationof a sustainable society. One business that embodies ourcommitment to sustainability is our recycling business,
which has been an active part of ALCONIX since its earliest days. The recycling business leverages the strengthof ALCONIX’s unique position, which gives it a combination of mobility, thanks to its small and medium-sizedGroup companies, and creditworthiness, which comeswith being a company listed on the TSE Prime Market
segment. We have grown to become a relatively major
player in the industry, and in February 2023, we took thisone step further by buying approximately 26,500 m2 ofland in Kitakyushu, Fukuoka Prefecture, upon which weare constructing a new recycling center. This will allow
us to handle various grades of non-ferrous recycled raw
materials more than ever before. Although we are currently focusing on aluminum and copper, the ability tohandle other non-ferrous recycled raw materials suchas rare earths and minor metals will not only help
establish a recycling-oriented society but will also help
improve our profitability.


4. To Our Stakeholders“Drawing the Future of Our Dreams”
While Grounded in Reality“Drawing the Future of Our Dreams” is ALCONIX’smotto. It refers to a dream that we can achieve as wellas the future of our stakeholders.
To our employees—our leaders of the future—we will
create an environment that nurtures your desire to grow.
To our shareholders and investors, we hope to meet yourexpectations for the future with growth and steady shareholder returns. To our suppliers and customers, we willcontinue to work with you toward forging win-win relationships. We hope to use the unique characteristics of ourbusiness to make society better as a whole. ALCONIX combines trading and manufacturing to form a corporate entity
like no other, and I believe that there is no limit to the value
it can provide because of this. Therefore, we will remain
steadfast in our efforts to “draw the future of our dreams,”
and by doing so, help create a sustainable society.
As I stated earlier, business conditions remain uncertain, but this is familiar territory for us, and it has neverstopped us from taking on challenges. The future will be
no different as we look to keep growing and carve a pathfor the future. At the same time, we look to all of you foryour continued support.

ALCONIX Integrated Report 2023

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SECTION

00.

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Business Portfolio

02.

SECTIONALCONIX has taken steps to optimize its business portfolio in line with the rapidly changing times. Founded asa trading company specializing in base metals such asaluminum and copper, it has since utilized M&As toenter the manufacturing industry. As a result, ALCONIX
has put itself in a unique position among non-ferrous
metal trading companies in that it possesses both trading and distribution capabilities. We will continue toleverage this unique position to expand our businessand further contribute to the development of society.

Strengths Cultivated inStrength in Networking
Optimal mix of our resources, business infrastructure,know-how, and network

integrated trading
networks BusinessDomains

Connected

Trading

Aluminumand Copper

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ALCONIX Integrated Report 2023

Electronicand Advanced
Materials

Automobiles

Integration of trading
networks amid the shift
to electric vehicles (EVs)

Equipment
and Materials

Electronicmaterials andparts

To further increase earnings anddiversify our business, we added
manufacturing company OHKAWA
CORP. to the Group. Entry into the
manufacturing industry throughM&As gave us an opportunity todevelop a unique portfolio—
one designed to create synergies
between our trading and manufacturing companies.

ServiceStrengths Cultivated in

Manufacturing

Our foundation for adaptability ina fluctuating market

Present

Semiconductors

Non-Ferrous Metals

Air-conditioning &Climate control
systems

Non-ferrous
metal materials

Strength in Technology
Added value (profits) crucial for business expansionof Society through Transactions ofExpand business scope

Trajectory fora Stronger Business ntering theE
Manufacturing
Industry

Shared &Electric

Contribution to the Development

Manufacturing

Trajectory fora Stronger Business

Past

Nextgeneration
mobility

Electronicand Advanced
Materials

Metal
Processing

In 2004, we acquired the Minor
Metals and Rare Earths Division ofChori Co., Ltd. to establish
ADVANCED MATERIAL JAPANCORPORATION. This established a
new specialty for the Company,
which had primarily dealt in basemetals such as aluminum andcopper until that point. This acquisition also served as a launching
point for using M&As as a means
to expand business.

Utilization ofGroup-owned
technologies

Autonomous

Trading ounding Business: AluminumF
and Copper cquiring a Minor
A
Metals Business

Circulareconomies

Identify growth markets

Trajectory for a Stronger BusinessAluminumand Copper

04.

Build Groupwide

Trading

Recycling

Aluminumand Copper

SECTION

Toward a New Stage of Growth

New Domains

Trading

03.

Structural reformand downsizingof non-corebusinesses

in growing markets

Application of production
technology
Promotion of M&As and CVC

Reinvestmentof funds secured
through reforms
toward developmentof new domains

Measuring
devicesIndustrial
machinery

Medicaldevices

FutureALCONIX Integrated Report 2023

15

SECTION

Automobiles

Building a Business Portfolio

Identifying Growth Sectors
and Updating
Our Business Portfolio
Portfolio
Management

Three Key Sectors
Among Our Business
Expansion Efforts

Electronicmaterials andparts

Semiconductors* Acronym for connected, autonomous, shared & service, and electric. CASE vehicles fall into one or more of these categories.

Our Three Key Sectors
Going Forward

Air-conditioning &Climate control systems

Electric power tools

Aircraft

Digital devices

Consumer electronics

Semiconductors, including
semiconductor production
equipment (SPE) andchip mounters

Electronicmaterials and parts

02.

SECTION

03.

SECTION04.

Key Initiatives and Policies (Past and Future)
1.	Appointed a chief strategic officer (CSO) in charge of portfolio management (appointed
April 2022)
2.	Established the Business Strategy Department to implement optimal business portfolio
management (established April 2023)
3. Utilize CVC to establish new businesses
4.	Enhance ALCONIX’s unique Trading × Manufacturing business model and its recycling
business with the goal of building a comprehensive recycling-oriented supply chain for
the entire GroupTO PI C S

HVAC & Refrigeration Businesses and Decarbonization

Copper tubes

Display cases for refrigerated andfrozen items

Automobiles

SECTION* Servitization refers to the transition from product-centric business to service-centric business, under the idea that services add
value to an initial product. As products become increasingly connected to the internet (“the Internet of Things,” or “IoT”)
opportunities to provide IoT-related services will increase, particularly in the manufacturing industry.

The ALCONIX Group’s Key Domains
Railways

01.

The composition of an optimal business portfolio is always changing due to shifts in thebusiness environment and operations. Although our three key sectors mainly target
the mobility industry, digital servitization* is expected to spark a major transformation of
the industry at the structural level, with the development of CASE technology as a primeexample. These changes will likely affect the positioning of these three key sectors. As
we move toward a new stage of growth, we will analyze the risks and opportunities that
affect value creation to determine our path for medium- to long-term growth.

Sale of inventory

Our Business Domains, Centered on Three Key Sectors

SECTION

Toward a New Stage of GrowthNon-ferrous metals are important materials in a wide range of industries, but in business terms, they are also susceptible to changes in external conditions, such as sudden
fluctuations in the market and the increasing diversification and sophistication of customer
needs. This makes it important to keep abreast of these ever-changing developments andselect the most appropriate business at a certain point in time.
Bearing this in mind, we are engaged in a flexible review of our business portfolio toensure the Group can achieve sustainable growth. In a similar vein, we have adopted a
medium-term management plan with rolling targets that we review each year. Throughthis practice, which involves verifying our results, issues, and growth trajectory, we aim to
optimize the business portfolio of the entire Group.
The Group has steadily expanded its business domains and built up growth by adopting
strategies in line with the conditions of the time. As part of this process, we have focused
our energies on three key sectors where we see high potential for growth: automobiles,
semiconductors, and electronic materials and parts. These sectors have been closelyintertwined with ALCONIX ever since its founding, and we are now focused on materials
in the mobility industry, which includes automobiles, as we believe this is an area where
we can make full use of our management resources. The mobility industry is currently
seeing a pronounced shift toward CASE* vehicles. Although competition in the industry is
fierce, it is also an area where we have a high concentration of cutting-edge technology—
so we anticipate high added value and profitability. To this end, we are working toward
increasing profitability by updating our business portfolio centered on these three key
sectors, aiming to accelerate Group growth. In terms of targets, we have set medium- tolong-term targets that include ROIC of 6% or higher and ROE of 12% or higher as we
strive to increase capital efficiency and corporate value.

00.

In recent years, a growing amount of attention has been given to heat pumps as ameans to adapt to*1 and mitigate*2 climate change, and demand for heat pumps as aform of temperature control is on the rise.
In the EU, the rise in demand has been particularly sharp for heat pumps as a heating
solution, since natural gas accounts for power used in heating at a rate approximately
double that of electricity.*3 Research has shown that if approximately 35% of all heating
equipment in Europe were replaced with heat pumps, energy consumption could be
reduced by approximately 36% and CO2 emissions by approximately 28%,*4 making heatpumps an increasingly important contributor to decarbonization and energy security.
Based on these market trends, we are working with a number of Japanese air
conditioner manufacturers to promote the development of HVAC-related businesses.
Specifically, we will support the development of supply chains for each customer that
intends to increase production in Europe, and diversify the items we provide. Throughthese actions, we aim to increase the transaction volume of Group businesses
related to this field above the rate of market growth.
In addition to the developments in Europe, Japan is also expected to make a shift
toward refrigerators and freezers that use CO2 as a refrigerant, which has a smaller
impact on global warming than existing equipment. The ALCONIX Group is committed to maintaining and further developing Japan’s cold chain*5 by handling copper
tubes essential to this transition.
These are some of the strategic steps we will take to develop the Group’s HVACrelated businesses as part of Group CSV management.*6*1 Responding to the various changes in the environment as a result of climate change*2 Taking measures to suppress climate change*3 The Future of Heat Pumps, International Energy Agency (IEA)*4 The Heat Pump Wave: Opportunities and Challenges, the European Commission’s Joint Research Centre*5 A form of logistics which ensures that products requiring temperature control (fresh foods, pharmaceuticals, etc.) are kept at low temperatures during production,transportation, and consumption*6 Creating shared value: A managerial concept in which a company benefits economically through activities to resolve social issues

Three Key Sectors
16

ALCONIX Integrated Report 2023

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17

SECTION

00.

SECTION01.

SECTION

The ALCONIX Group’s Value Creation Process

02.

03.

SECTIONSECTION

04.

Toward a New Stage of Growth

Drawing the Future of Our Dreams through Non-Ferrous Metals
INPUT

BUSINESS MODELSTRATEGYIntellectual CapitalBusiness Model• Knowledge of industry trends
that supports strength in
networking

A Business Model Centered on Trading and Manufacturing• Manufacturing technology thatenables micron-level processing and machining

R&D expenses¥348 million

to ascertain demand

the power of our network

Trading

Manufactured Capital
Manufacturing subsidiaries

37¥5,800 million* In the Manufacturing segment

Human
CapitalHuman Capital
Number of employees(consolidated)

Operate environmentally responsible
businesses for the reduction of carbon
emissions and the reuse of resources

Equipment
and Materials

3,185

Annual education and training
expenses (non-consolidated)

Manufacturing¥13.2 million

2,386 hours

Maximize value throughthe power of our technology

to shape demand

Total assets

Shareholders’ equity• Sales infrastructure cultivatedfrom the Company’s founding
business of trading

Strategy 1

Increase base earning power
through our medium-term
management plan

Strategy 2

Accelerate growth in
three key sectors

Vision*under Medium-Term Management Plan 2023

Automobiles

Our Three Strengths

1

2

3

Financial
structure

Human capital

Governance• Use of plant-derived,
eco-friendly raw materials(cashew resin-based products)

18

ALCONIX Integrated Report 2023

Create new value throughnon-ferrous metal transactions
and contribute to
the development of society
Fiscal 2022

One-stop services covering
everything from production
to distribution of non-ferrous
metal materials, parts, andproducts

P.26–27

P.39–41

P.46–59

Semiconductors

Reinforce internal controls with an emphasis on frameworks for compliance and risk
management

Economic Value

Net sales

178,333 million¥

Ordinary profit¥

8,176 million

Profit attributable to ownersof parent¥
Future-facing market
analysis and development of distribution
channels driven by trading business

5,488 million

EBITDA¥

13,245 million

ROE(based on shareholders’ equity)

10.5%

ROIC
(based on shareholders’ equity)
Production technology
applied to new sectors,
paving the way to gaincustomers in markets

G
GovernanceElectronicmaterials andparts

Natural Capital• Operation of recycling
business, a key business since
the Company’s founding

S
Build stronger ties with stakeholders
and take actions that show respect forhuman rights

Strategy¥54,325 million

Social and Relationship
CapitalBe a comprehensive
solution provider for
non-ferrous metals

Society

Financial Capital¥191,890 million

Corporate Philosophy

Environment

Metal
Processing

OUTCOME

Our Vision

Establish an assignment and training
system that supports the creative activities of a diverse workforce and provide
pleasant and productive workplaces

E

Electronicand Advanced
Materials

Aluminumand Copper

Capital investment*

Total hours of education andtraining (non-consolidated)

H
Human Capital

Create value through

OUTPUT

MATERIALITY ISSUES (MATERIALITY)

4.6%

Earning power per person(based on consolidated EBITDA)

415 million¥

Social Value

Cooperation and collaboration between Group
companies romotion of M&As aimed atPbusiness succession andcontribution to Japanesemanufacturing nhancement of recyclingEbusiness and promotion of acomprehensive recyclingoriented supply chain* For more details regarding ALCONIX’s vision under Medium-Term Management Plan 2023, please refer to the following link.
https://www.alconix.com/en/ir/plan/

Reinvest in management resources

ALCONIX Integrated Report 2023

19

02.

SECTIONSECTION00.

SECTION01.

SECTION

02.

SECTION

03.

SECTION

04.

Past, Present, and Future

Past, Present, and Future
12,000We have successfully expanded our operations thanks to our mix
of businesses in trading and manufacturing. Going forward, we will
pursue collaborative value creation within the Group, targetinga new stage of growth.

8,176 8,200

Ordinary Profit (Million yen)
2000

2000

2001

2002

2003

2004

2010

2004

1981 

1999

2015

2000 

2020

2009

2021

2022

2023

2024

2010 

2020

2026

2022

Establishment

Emergence

Expansion

 eginning as a Trading Company
B
Specialized in Non-Ferrous Metals

 rom a Second FoundingF
via MBO to a Listed Company

 aking Our Strengths Stronger
M
and Becoming a Leader in Minor
Metals and Rare Earths

The company that would become ALCONIX wasestablished as Nissho Iwai Non-Ferrous
Metals Corp., a group company of Nissho Iwai
Corporation. This company would expand its
domestic sales network to include primarily
Tokyo but also greater Osaka and Nagoya andthe Hokuriku region (operations in the
Hokuriku region have since been discontinued).
By increasing sales of aluminum and copper
products, which remain key offerings to thisvery day, Nissho Iwai Non-Ferrous Metals
continued to grow as an organization andcontributed to the growth of manufacturing
in Japan.

Trading
Manufacturing

In 2000, we set out to create new value that was
unique to our organization to coincide with thedeparture from the Group umbrella of the general
trading company that was Nissho Iwai Corporation.
To do so, we expanded our sales network in Japan
to Hamamatsu and Hiroshima, and we also
expanded to overseas markets. In addition, we tried
our hand at mergers and acquisitions (M&As) andacquired a stake in ADVANCED MATERIAL JAPANCORPORATION, a trading company that specializes
in minor metals. Through this acquisition, we wereable to bolster our transactions of minor metals
and form a foundation as an expert in minor metals
and rare earths. In 2005, the company was renamed
as ALCONIX CORPORATION and was listed on the
JASDAQ Securities Exchange in 2006. In 2009, we
decided to expand the scope of our business andbegan conducting M&As in the manufacturingindustry with the goal of further growth. Although
we were conducting M&As in a different industry, wewere not jumping into unfamiliar territory. Instead,
we aimed to use M&As as a means to flesh out
existing businesses and explore new ones in areas
where we already had knowledge.

2004

A History of Unique Growth
Spurred by M&As
Using the strength in networking we havedeveloped through trading, we have
utilized M&As as a driver of profit growth,with the distinction of having neverrecorded an impairment loss associatedwith an acquisition.

ALCONIX Integrated Report 2023

	ADVANCED MATERIAL JAPANCORPORATION (AMJ)
Global procurement and sale of minor
metals and rare earths

Our specialization in minor metals and rareearths has given us unique strengths with theprospect of high profitability. In 2010, we realized this potential when ALCONIX was listed on
the First Section of the Tokyo Stock Exchange
and went on to become an industry leader andwell-known supplier of rare earths and minor
metals in Japan.

 eeing the Results of Our M&A
S
Efforts in the Manufacturing Industry

When we conduct M&As of manufacturing
companies, we place a strong emphasis on
post-merger integration (PMI) and capital
investment. These efforts are gradually
being reflected in our earnings, and the
Manufacturing segment has come to be a key
source of revenue.

2013

			

KEY POINT: The first of many M&As aimed at businessexpansion

2009

20

2010

KEY POINT: Our first overseas M&A			HAYASHI METAL CORP.

			
Primary wholesale distributor of
copper products		OHKAWA CORPORATION			Machine processing of aluminum,
stainless steel, and other metals
KEY POINT: Our first entry into the manufacturing industry

2010

ALCONIX MITAKA CORPORATION

			Sale of nonferrous metals as well as
machined, surface-treated, andoriginal products using these metals

UNIVERTICAL HOLDINGS INC.

Manufacture of plating materials andchemical products

 LUMINUM & COPPERA
RECYCLING CENTERCORPORATION (formerly OSAKA
ALUMI CENTER CORPORATION)

Recycling of aluminum andcopper scrap

2023

2024 (forecast)

2026 (planned)2023 

FUTUREA New Stage of Growth
Achievements in Fiscal 2022
 ecured revenue in Manufacturing segSment, a segment with high added valueEstablished ALCONIX as a leader inJapan’s minor metals businessInitiatives for Fiscal 2023
 rogression of reforms at each GroupP
companyInterweaving the reform outcomes foreach Group company to increase
Groupwide profitabilityEnhancement of existing business,
centering on our three key sectors

2014	INADA COPPER* CENTER

			Recycling of copper scrap
2015

TOKAI YOGYO CO., LTD.

			Manufacture and sale of welding
materials for the repair of molds forautomobile parts		HEIWA KINZOKU CO., LTD.

KEY POINT: A key M&A for our recycling business

		

2016

OHBA SEIKEN CO., LTD.

Japanese Manufacturing
One notable characteristic of ALCONIX’s approach to M&As is its focus on
business succession. A growing issue for small and medium-sized companies
in Japan, particularly those in the manufacturing industry, is a lack of successors that stems from the country’s declining birthrate and aging population.
ALCONIX aims to contribute to Japan’s manufacturing industry through technology succession and by supporting further growth of the industry through
PMI and capital investment for its acquisitions.
Going forward, we intend to enhance Group synergies, create value asa group, and contribute to society.

2017

MARKTEC CORPORATION			Manufacture and sale of nondestructive testing and marking
equipment

FUJI PRESS CO., LTD.

			
Manufacture and sale of precision
stamped parts for automotive
application

			 * Business transfer

			Sale, import, and export of lightmetal, copper, copper alloy, andother non-ferrous metal products

Manufacture of automobile parts andchip mounters

Increasing Group Collaboration to Support

2018

 OHOKU CHEMICALT
INDUSTRIES, LTD.

			Development, manufacture, and saleof cashew resin for use in brakes

2019

 UJI CARBONF
MANUFACTURING CO.

			Development, manufacture, and saleof carbon brushes

		 UJI ALCONIX MEXICO S.A.
F
de C.V.

			
Mexico base for the manufacture of
precision press dies and pressedparts for automobiles

2020

FUJINE INDUSTRY CO., LTD.

			Precision machining of parts for
air-conditioning equipment

2022

JUPITER INDUSTRY CO., LTD.

			Design and production of press molds
for precision connector terminal parts

		SOODE NAGANO CO., LTD.

			Manufacture of press parts forlithium-ion batteries

 KSH Market Expansion
D
Services Japan K.K. (Metal
Products Division)*
European exports of titanium roll					flat products for medical use* Business transfer

ALCONIX Integrated Report 2023

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SECTION

00.

SECTION01.

SECTION

02.

SECTIONALCONIX’s M&As

SPECIALF E AT U R E

SECTION

04.

Past, Present, and Future

An M&A System That
Promotes CSV Management

Mergers and acquisitions (M&As) are a key driverof growth for the ALCONIX Group. In light of this,we have established an M&A system that promotes CSV management,* pursuing social andeconomic value.
While ALCONIX’s advanced technology is
specific to certain sectors, we have contributed
to Japanese manufacturing by ensuring thebusiness succession and subsequent growth ofsmall to medium-sized companies that lacksuccessors and investment capacity, highlighting them as acquisition targets.
To boost profitability, we also promote M&As ofcompanies that can complement the capabilitiesof current Group subsidiaries. This two-pronged
strategy, which emphasizes both business succession-focused M&As and complementary
M&As, aims to create sustainability for ALCONIX.

ALCONIX’s M&A Process

Utilize Our Strength
in Networking,Developed throughTrading

Business expansion for the entire Group
Enhancement of Group synergies
Peak Profitability

01. Due Diligence
We determine acquisition targets based on the Seven Principles of ALCONIX-Style M&A. We placeparticular importance on finding targets that will serve as potential sources for growth due to theircompatibility with the Group’s businesses as well as their manufacturing technology and expertise,
which should bear little risk of becoming obsolete even amid uncertainty moving forward. We also
target several small and medium-sized companies that face problems with succession. When executing such business succession-focused M&As, we take particular care to assess the people involved.
Specifically, we make sure that the management and owner of a target possess certain character
traits that fit well with the Company, as well as a compatible attitude toward craftsmanship.

02. Determining a MatchSocial ValueBusiness
Succession-Focused
M&As

CSV
Create andIncrease
Shared Value

Economic (Corporate) Value

Complementary
M&As

Fulfilling Social Responsibility

 elocation of production sites to Japan to mitigate geopolitical risks
R
Resolution of business succession issues
Cultivation of new businesses related to the Company’s three key sectors* Creating shared value: A managerial concept in which a company benefits economically through activities to resolve social issues

Our Approach to M&As

The Seven
Principles of
ALCONIX-Style M&A03.

1. We select companies with manufacturing technology related to ALCONIX’s business and avoid
extending to unfamiliar business territories
2. We select companies with strengths in niche fields that will not become obsolete.
3. We will not intervene in cases of companies undergoing corporate restructuring and revitalization procedures.
4. We emphasize individual, standalone growth of a target company, and find Group synergies
during the growth process.
5. We survey the target’s machinery and production equipment, and locate the potential for its
next stage of growth.
6. We assess the owner’s integrity, the company’s vision for the future, and the company’s commitments to its vision.
7. We acquire 100% of all shares as a general principle.

An important aspect of discussions with candidates is assessing whether its management willmesh well with the management of ALCONIX. Therefore, we are careful to engage in dialogue thatwill give us a good grasp of the mindset of a target’s management and its shareholders. As part ofthis process, we set up factory tours of the target company as well as opinion exchanges attended
by ALCONIX’s management team and the relevant Group company president. In addition, we invite
the managers and executives of the target company to visit ALCONIX’s Group companies and provide opportunities for them to conduct interviews and see our sites with their own eyes. Our goal is
to dispel any worries or concerns regarding the M&A by enabling members of the target company
to engage with the Group’s president and its executives on an even playing field and inquire openly
about any particulars about the M&A, post-merger integration (PMI),* and other matters.
* Refers to the process implemented after acquiring a company as a consolidated subsidiary, aimed at generating synergies in order tomaximize corporate value.

03. Appropriate PMI to Realize Growth

P.24

We believe that generating inter-Group synergies takes a long time, and we only pursue them after
products or services created from our acquisitions properly align with customer needs. So instead ofimmediately trying to conceive potential synergies post-acquisition, we need to link the business of
the acquired company with ALCONIX’s management resources, while developing the ability for thiscompany to facilitate its own self-direction and drive. Once these steps have been taken and theseeds for synergies begin to show, we can thus move forward accordingly. To that end, we engage in
PMI that involves the development of this self-direction and drive, making capital investments andbuilding an internal control system that will help the acquisition find new customers and maintain or
increase earning power. We navigate any conflicts that can occur between the need to respect theindependence and autonomy of the acquired company and applying Group governance of the company as part of the ALCONIX Group to arrive at a balanced set of trade-offs. We are committed to PMI
that will skillfully combine and control both aspects in order to ease any friction between them.

M&A as a Growth Driver
ALCONIX’s Manufacturing segment consists of manufacturing subsidiaries acquired throughM&As. The segment accounts for 66.6% of EBITDA for the entire Group (averaged over fiscal
2017 to fiscal 2022), accounting for about two-thirds of the entire Group and making the segmenta key source of revenue.
EBITDA / Capital Investment Amount for the Manufacturing Segment

At ALCONIX, we have established our own unique M&A principles that can be applied to practical, real-life situations, as opposed to a series of inflexible rules to be followed as procedure.
From our early projects onward, we have implemented M&As without depending on the support
of financial advisors. This practice has enabled us to build a solid base of expertise. When considering an acquisition, we look for “GNT” companies in line with our M&A principles. We havereframed this term, which actually refers to “Global Niche Top” companies, to refer to companies that show potential to drive “Growth” in our existing businesses, excel in a particular“Niche” field, and possess “Technology” that is not prone to obsolescence.

(Million yen)

10,000
8,000
6,000

1,960

ALCONIX Integrated Report 2023

4,550
8,150

2,000

FY2016

5,000
4,000

3,050

3,000

2,090

2,000

1,250

EBITDA (left scale)

22

4,140

7,130
2,910

3,920

4,000

0

8,660

7,910

7,280

7,230

1,000
FY2017FY2018FY2019FY2020

FY2021

FY20220Capital investment amount (right scale)
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SECTION

02.

03.

SECTION

04.

Past, Present, and Future

ALCONIX’s M&As

M&A Case Study

Appropriate PMI to Realize Growth

PMI to Develop
Self-Direction and
Drive

SECTION

OHKAWA CORPORATIONThe ALCONIX Group places an emphasis on PMI that increases the self-direction and drive of an
acquired company, or the ability of a company to show earning power on its own merit. Using ourbrand of PMI, we intend to establish the self-direction and drive of each Group company while
maximizing Group synergies.

Transforming Our Portfolio, Expanding Our Earnings
Since our founding in 1951, OHKAWA CORPORATION has cultivated high technicalcapabilities and excellent engineers, becoming an all-round player in the field of metalmachining. The parts we manufacture are essential to a wide range of industries, fromtelecommunications equipment to aerospace, and are imbued with the spirit of making
the impossible possible.
The transition to 4G mobile communication standards was a real turning point for thecompany. Telecommunications equipment-related business had been our key source ofrevenue, but this shift caused a gradual decline in business performance. As we dealt
with pressures to reform our profit structure, we found ourselves faced with successor
issues. Just when it seemed we were grasping in the dark for a viable future, we wereintroduced to ALCONIX. At the time, ALCONIX was a specialized trading company wellversed in the industry and the products we handled. Furthermore, we resonated with
their M&A principles, which to supports and respects the integrity, organization, andculture of their acquisitions. With this in mind, we decided to join the ALCONIX Group.
ALCONIX has shown a willingness to utilize the Group’s connections to help us carve apath toward growth, even if there are bumps in the road along the way.
Thanks to their efforts, we took the necessary steps to reform our profit structure,and in fiscal 2022, we achieved net sales of approximately ¥4,800 million, about 1.9
times higher than what we achieved prior to joining the ALCONIX Group. One of themain reasons for this improvement was our newfound ability of making aggressive
capital investments, which were backed by the financial base of a company listed on thePrime Market segment of the Tokyo Stock Exchange. We were also helped greatly by
the Group’s Trading segment, which provided knowledge in the form of industry trends
and sales know-how that we as a manufacturer could not possibly know, as well as
benefits including the ability to inquire about business using the Group’s customer list.
Our main focus currently is semiconductor manufacturing equipment, which was
decided after leveraging the knowledge gained from the Trading segment. Goingforward, we aim for net sales of ¥6,000 million and an increase in added value by
strengthening core businesses and Group collaboration.

Key Aspects of ALCONIX’s PMI
Scope of ALCONIX’s PMI

Points of Consideration

Respect for Management and Culture
After consulting with major shareholders prior to acquisition, we request thatexisting senior management resume
their duties for a few years, and thencontinue in their roles following thisperiod if possible. We also refrain fromseconding ALCONIX employees to workat an acquisition if it can be avoided.

Management• Selection and training of
successors• Coordination of pre-succession
and post-succession strategies

Corporate Culture• Overcoming differences in corporate culture

OHKAWA CORPORATION

Susumu Koike

Emphasis on Providing
Management
Resources
We make active efforts toprovide management
expertise related to capital
investment, accounting
systems, credit management, and otheraspects that will
foster self-direction
and drive.

Management Strategy

IT and Accounting• Transparent operations
management• Handover of business to successor

President and CEO• Implementation of information
security• IT education for employees

People, Goods, and Money• Integration of human resourcesmanagement (HRM) and labor affairs•V isualization of financial data andapplication of cash management
system (CMS)

Corporate Governance• Establishment of a governancesystem on par with TSE Prime
Market segment standards• Maintenance of internal control
systemPost-M&A Capital Investment and Net Sales

Our PMI activities primarily concern the provision of management resources. These activities
support the organic growth of acquired companies using the financial strength of the entire
Group, with capital investment placed on the highest pedestal. Many of our acquisition targets
are small and medium-sized companies, and due to limits on equity capital and access to loans,they tend to think conservatively about capital expenditures, which can cause them to miss out
on growth opportunities. Knowing this, we strive to use our PMI activities to draw out thepotential within the companies we acquire. We conduct M&As with the goal of leveraging thesecompanies to increase the earning power of the Group. Therefore, whenever possible, werequest that management- and executive-level employees continue to serve under the same
conditions and treatment as prior to the acquisition.

Fiscal 2010
Net Sales Ratio

Nov. 2011

May 2016

Mar. 2018

Aircraft engines

 emiconductorS
related business,
etc.

Net Sales¥2,863 million

19%Telecommunications
equipment-related
business

47%

Fiscal 2022
Net Sales Ratio

Mar. 2021

6%
Third
expansion of
Fukushima
Plant

Completion of
Kaminagura
Plant

Secondexpansion of
Kaminagura
Plant

Third
expansion of
Kaminagura
PlantTelecommunications
equipment-related
business

7%

Net Sales¥4,802 millionP roduction equipment,
industrial machinerySemiconductor-

18%

related business,
etc.

65%

Net sales approximately 1.9 times higher than prior to joining the ALCONIX Group24

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00.

SECTION01.

SECTION

Message from the CFO

02.

SECTION

03.

SECTION

04.

Past, Present, and Future
2. Greater Earning Power through ROIC Management
As part of our financial strategy, we are promoting management focused on a strong return on invested capital(ROIC), or ROIC management, which involves improving
profitability and capital efficiency in pursuit of greater
earning power. We have also set specific targets, aiming
for ROIC of at least 6.0% and ROE of at least 12% by
fiscal 2025. Looking at profitability, the Trading segment
will make steady efforts to improve the profitability ofeach individual transaction and find new business, while
the Manufacturing segment will continue working toreflect higher costs in its pricing. In both segments, we
aim to raise our top line in step with the recovery indemand for automobiles, smartphones, and other items.

M E S S A G E
FROM THE CFOOther important measures directed at our new stage of
growth will be leveraging the Group’s synergies and its
corporate venture capital (CVC) to secure profits. We will
also enhance our financial structure to allow for flexible
growth investment. As for capital efficiency, we intend to
reduce our Groupwide swell of cash and deposits byallocating these funds for interest-bearing debt reduction, investments, and other effective purposes. Ourbasic strategy regarding the cost of capital is to compare
ROIC with weighted average cost of capital (WACC). Our
goal is to keep ROIC above WACC. To improve ROIC, we
will continue efforts across the Group to downsize lowprofit businesses and assets.

Basic Principles for Improving Capital Efficiency
Operating profit

Nobuhiko
Takahashi

Targets
Fiscal 2025

ROIC: 6% or higher
ROE: 12% or higher

Director
Executive Officer and CFO• Increase sales• Achieve lower cost of sales ratio
Capital efficiency• Improve working capital turnover• Reduce cash and cash equivalents
1. The First Year Toward a New Stage of Growth
After achieving record profits in fiscal 2021, the ALCONIX
Group stood ready to pursue a new stage of growth at
the beginning of fiscal 2022. We ended the fiscal yearwith consolidated net sales of ¥178,333 million, up 14.1%
year on year, and ordinary profit of ¥8,176 million, down
25.7% year on year. The increase in net sales was largely
due to a rise in market prices for minor metals andnickel, as well as higher sales of plating materials. On
the other hand, the main reasons for the decrease inordinary profit were higher costs at our manufacturingsubsidiaries from rising inflation and a drop in the shipment volume of some of our main products, including
battery materials for smartphones. ALCONIX’s three key
sectors are automobiles, semiconductors, and electronicmaterials. This means that a large proportion of ourbusiness is tied to the automotive and electronics industries and that any trends in these industries have astrong effect on earnings. This effect came into playduring fiscal 2022, when shortages of semiconductors
and other parts in the automotive industry led to cuts to

production throughout the year, and when demand forsmartphones and other IT equipment fell from thesecond quarter onward due to an economic slowdown
and a drop in consumption in China, among other factors. In particular, the second half of the year wasaffected by rising inflation and declining market conditions, making the situation even more challenging. We
expect these somewhat harsh conditions to continue inthe first half of fiscal 2023, but demand for IT-related
equipment in automobiles, smartphones, and otheritems is expected to recover gradually from the startof the second half. Other relevant factors expected to
impact results will be the performance of SOODE
NAGANO CO., LTD., a subsidiary acquired via M&A, andthe effect of price adjustments by our manufacturingsubsidiaries, implemented to compensate for higher
costs. In light of these circumstances, we have set targets for fiscal 2023 of consolidated net sales of ¥186,000
million and ordinary profit of ¥8,200 million, the latter ofwhich is similar to the target set for fiscal 2022.



Investments and M&As for growth
Development of new materials and products
Proactive sharing and use of the Group’s
customer information
Joint activities by Group companies forhigher efficiency
Use of cash management system (CMS) for centralized management of cash at Group companies
Structural reforms of low-profit businesses
Optimization of inventory
3. Role of the CFO

The CFO is a key defensive player in a company and plays
an important role in keeping a group’s financial structure
sound and strong. A strong financial structure provides thefoundation for growth investment while buttressing against
sudden external changes, such as geopolitical risks, whichhave become all the more frequent in recent years.
A strong financial structure also facilitates our efforts
to provide robust shareholder returns while remaining
mindful of the balance between our financial position
and investment for growth. We as a group emphasize
stable dividends in actual amounts instead of payout
ratios and have set a target for DOE of 3.0% or higher.
The denominator when calculating DOE is shareholders’equity, which means that if we record a profit every year,
we can continue to increase dividends. By setting thisDOE target, we send a clear message to our shareholders regarding our approach.
On the other hand, our price-to-book ratio (P/B ratio)sits below 1.0, which is a situation we take seriously.

In response, we will promote ROIC management andappropriate shareholder returns at a steady pace with theintention of improving our corporate value and position in
the eyes of shareholders, investors, and the market.
Another key factor toward improving this position is sustainability, and it is crucial that the entire Group pursues
initiatives to that end. The CFOs of today, myself included,
have to be more than financial experts—we need to havean active hand in sustainability-related tasks, such as
quantifying and disclosing non-financial information. In
the future, I intend to be even more conscientious when it
comes to communicating the Group’s sustainability initiatives to investors and shareholders. I would also like totake any feedback we receive and reflect it in these efforts.
With this in mind, I will continue to embrace every
chance to engage in dialogue with our stakeholders andto maintain a firm balance between offensive and defensive strategies toward the medium- to long-term growthof ALCONIX.

26

ALCONIX Integrated Report 2023

ALCONIX Integrated Report 2023

27

M ID-TE R M M AN A G E ME N T PL AN M I
MID-TE R M M AN A G E ME N T PL A N M
M I D -TER M M ANA G E ME N T PL A N M ID
I D-TERM M ANA G E ME N T PL A N M ID
D -T E RM M ANA G E ME N T PL A N M ID
T E RM M ANA G E ME N T PL A N MID
E R M M ANA G EM E N T PL A N MI D
R M MAN A GEM E N T PL A N MI D
M M AN A GEM EN T PL A N MI D
M MA NA G EM ENT PL A N MI D
M A NA GE M E NT PL A N MI D
A N A GEM ENT PL A N MI DSECTION00.

SECTION01.

SECTION

02.

SECTION

Medium-Term Management Plan

03.

SECTION

04.

Past, Present, and Future

Looking Back:

Initiatives and Policies of the Previous Medium-Term
Management Plan (Fiscal 2022)
Managing Progress—Adoption of a Rolling-Style Medium-Term Management Plan

Review of Fiscal 2022 by Segment

Trading Segment

Segment Profit(Million yen)

P.16

8500

(1,033)

2,416

1,245

(247)

2,032

998

(861)

Results

YoY change (%)

Initial forecast

156.2

178.3

+14.1%

170.0

+8.3

11.0

8.3

–23.8%

9.1–0.7

Ordinary profit

11.0

8.1

–25.7%

9.0–0.8

Profit attributable toowners of parent

7.5

5.4

–26.9%

6.8–1.3

EBITDA

15.1

13.2–12.6%

–

–

ROE

16.9%

10.5%

–6.4%

–

–

ROIC

7.1%

4.6%

–2.4%

–

–

DOE

3.1%

3.0%

–0.1%

–

–

Factors Affecting Ordinary Profit

(0.7)

(1.3)

2

(0.8)

11.0

1

2

3

8.1

3

FY2021

Status of Initiatives to Tackle Core Issues

Results

Net sales1

FY2022

FY2022

 ow number of shipments of metal processed parts forL
smartphones
High number of shipments of metal processed parts forsemiconductor manufacturing equipment
Increase in sales volume for plating materials due to greater
demand in the U.S. and China, as well as higher prices
Decrease in profit year on year due to the negative impactof higher procurement costs on profitability overall

Results vs. Initial
forecast

Operating profit(Billion yen)

3,601

Electronic and Advanced Materials
Aluminum and Copper
Equipment and Materials
Metal Processing

Fiscal 2022

Results

FY2021

 ecrease in gross profit caused by a drop in shipment volume,Da sharp rise in manufacturing costs, and other factors
Inclusion of SG&A expenses of newly acquired companies andhigher expenses related to sales activities due to the easing of
COVID-19 restrictions
 igher SG&A expenses in yen amounts for the Group’s overH
seas bases, stemming from the weak yen and strong dollar

IssuesManagement
benchmarks

Profit targets(Billion yen)

0

(672)

Trading

Fiscal 2021

4,273

Manufacturing Segment

1,171

Fiscal 2022 in Review

Net sales increased 14.1% from the previous fiscal year, to ¥178.3 billion, due to market conditions and the weak yen.
However, ordinary profit decreased 25.7% year on year, to ¥8.1 billion, due to customers reducing production in our three key
sectors of automobiles, semiconductors, and electronic materials and parts; cost of sales increases stemming from higher
material and energy costs; and higher SG&A expenses.

Manufacturing

Faced with an uncertain future and changes in demand, industry, and the economy, we have adopted a rolling-style threeyear medium-term management plan that is revised annually as a general rule, ensuring that we are always ready to mounta flexible response. At the end of the first year, we will assess performance and any affecting factors, revise the plan for thefollowing year as needed, and announce an updated plan in line with our results.

3,449

 ecrease in sales volume for battery materials due to theDdecline in smartphone demandStrong sales of nickel for electronic parts and semiconductor materials, partly due to higher nickel prices
Increase in sales volume for aluminum rolled products
because of new orders for automobile parts and solid
demand in the construction industry
Decrease in profit year on year due to the negative impactof higher procurement costs on profitability overall

Initiative 1

Initiative 2

Initiative 3

Reinforce Financial Structure

Upgrade Human CapitalStrengthen Governance

P.26–27

P.39–41

P.46–59Introduced a cash management
system (CMS) that enables the
management of cash and deposits
GroupwideEstablished basic principles for
improving capital efficiency witha view toward increasing the P/B
ratio to above 1.0

ClarifiedGroupwide human capital
strategy
Revised human resource and payroll systems to promote diversity
and active participation from junioremployees
Enhanced education and training for
better human capital development

 aintained independence of overM
sight function with a majority of
the Board of Directors comprisingoutside members; increased thenumber of members in the Audit
Department

Transferof cost increases to higher
prices for products and services
In search of new key sources of
profit (new products andcommodities)
Thorough structural reforms of
low-profit businesses roupwide employee job rotationG
aimed at system integration
Improvement of recruitment
capabilities
Improvement of employee engagement and skills

Organizationalchanges to enhanceGroup governanceStrengthening of information
security system
Active use of Group’s internalreporting system

Note: Figures may not align exactly due to rounding adjustments.

28

ALCONIX Integrated Report 2023

ALCONIX Integrated Report 2023

29

M ID-TE R M M AN A G E ME N T PL AN M I
MI D-TE R M M AN A G E ME N T PL A N M
VI S I ON VISIONMI D -T EVISIONR M MA NA G
MI D-T E R M MA NA G E
MI D -T E R M MA N A G E M
M I D -T E R M MA N A GE M E
M I D -T E R M MA N A G E M E N
M I D -T E R M MA N A G E M E NT
M I D -T E R M MA N A G E ME NT P
M I D -T ER M MA N A G E ME NT PL
M I D -T ER M MA N A G E ME N T PL A
MI D -T ER M MA N A G E ME N T PL A N
SECTION00.

SECTION01.

SECTION

02.

SECTION

03.

SECTION

04.

Past, Present, and Future

Medium-Term Management Plan

Looking Forward:

Initiatives and Policies of Medium-Term Management
Plan 2023 (Fiscal 2023 to Fiscal 2025)

Numerical Indicators

Fiscal 2025 targets: Net sales ¥223.0 billion, Ordinary profit ¥12.0 billion, EBITDA ¥16.0 billion, ROE 12.0% or higher
FY2021

Stronger Group Collaboration Toward a New StageWe are working to ramp up collaboration within the Group to evolve further as a comprehensive solution provider for non-ferrous metals. Until now, we have focused on creating synergies through the relationships between Group companies and theHead Office. From now on, however, we will shift toward total Group integration and deepen the relationships between Group
companies, while still maintaining the authority of the Head Office. In 2022, we also began operations of a corporate venture
capital (CVC) fund. We intend to utilize this fund to tackle new needs and explore new materials, which will help expand anddevelop our business domains.
Until now:

From now:

Emphasis on synergies between the
ALCONIX Head Office and Group companies

Group integration and use of CVC

ALCONIX Head Office

CompanyA

CompanyC

Company
B

ALCONIX GroupALCONIX Group

M.H.

30

ALCONIX Integrated Report 2023

FY2025

OutlookYoY change

Plan

Vs. FY2022

Net sales

156.2

178.3

186.0

+7.6

223.0

+44.6

Operating profit

11.0

8.3

8.4

+0.1

12.2

+3.8

Ordinary profit

11.0

8.1

8.2

+0.1

12.0

+3.8

EBITDA

15.1

13.2

12.8

–0.4

16.0

+2.7

ROE

16.9%

10.5%

9.8%

–0.7%

12.0%

–

ROIC

7.1%

4.6%

4.5%

–0.1%

6.3%

–

DOE

3.1%

3.0%

2.9%

–0.1%

3.2%

+0.2%

Notes: 1. ROE: Return on equity (Profit attributable to owners of parent/Shareholders’ equity × 100)
2. ROIC: Return on invested capital (Operating profit after tax/[Interest-bearing debt + Shareholders’ equity] × 100)
3. Effective tax rate: 33%
4. DOE: Dividend on equity ratio (Annual dividends per share/Shareholders’ equity per share × 100)
Shareholders’ equity: Stated capital + Capital surplus + Retained earnings on the consolidated balance sheet

Portfolio
Companies

Equity Policy and Financial Strategy• Promote management that will ensure ROIC exceeds cost of capitalManagement Targets

Message from the Office Chief

Reinforce Financial
Structure

ALCONIX VENTURES invests in seed stage and mid-stage startups in Japan and overseasthat operate in the materials and manufacturing sectors. Since the founding of ALCONIXVENTURES, we have invested in six companies, including a startup developing a new carbon
material and a startup developing next-generation batteries. Within ALCONIXCORPORATION, we have also launched Team Catapult, a CVC project team that functions
across sales divisions and is working to find ways to collaborate with startups. Going forward,
we intend to make full use of our external networks and increase the quality and quantity ofdeal sourcing in an effort to review our portfolio and make a greater return on investments.

• Improve capital efficiency by utilizing surplus assets, reviewing low-profit businesses and their turnaroundplans, and aiming for ROIC of 6% or higher and ROE of 12% or higher
Increase in Earning Power• Continue aggressive growth investment (M&As, CVC funding, capital investment in Group companies,
investment in human capital)

ALCONIX VENTURES CORPORATION works with startup companies trying
to change the world and overcome social issues through innovative technologies and business models in materials and manufacturing, two of the
ALCONIX Group’s specialties. ALCONIX VENTURES offers support with along-term perspective and collaborates with these startups with a view
toward the future.

Office Chief, CVC Management Office,
ALCONIX VENTURES CORPORATION

FY2023Results

Items to Improve under Medium-Term Management Plan 2023

CompanyC

CompanyA

Company
B

Progress of CVC 

CVC Fund

ALCONIX Head Office

FY2022

Results(Billion yen)

• Reduce interest-bearing debt
Shareholder Returns• Provide stable and continuous shareholder returns (maintain DOE of 3.0% or higher)• Treat people as important Company assets for creating value and materiality of the highest order• Invest in human capital Groupwide

Upgrade Human
CapitalStrengthen
Governance• Promote compensation, education, and opportunity
Compensation/Opportunity: Continue to promote active participation of women
Education: Enhance training system
Opportunity: Continue to enhance childcare and nursing care support systems• Strengthen governance at Group companies• Continue to promote compliance education within the GroupALCONIX Integrated Report 2023

31

SECTION

00.

SECTION01.

SECTION

02.

Our Businesses

In the electronic materials and parts industry, which
is dominated by Japanese companies, the Electronicand Advanced Materials Business deals in electronicmaterials for smartphones, tablets, electric vehicles(EVs) and hybrid vehicles, and IT-related equipment,
all of which are growing in demand, as well as compound semiconductors and crystal materials. In
addition, this business also handles minor metals
such as tungsten, molybdenum, and rare earths,
which are essential for the production of the aforementioned items.

End products

Note: The colored areas refer to the Company’s three key sectors.

 ompound semiC
conductors
Electronic materials
Rare earth strips
Rare earth ingots

Materials for
EVs and FCVs

Smartphones,
tablets

Materials for
IT devices

Titanium sponge

Main business
areas

SPECIALF E AT U R E

Japan
North
America
EuropeChina
Asia

Materials forbatteries (forvehicles, IT
devices, etc.)

Aluminum and Copper olled aluminumR
products

The Aluminum and Copper Business is the Group’s
main business and is divided into two segments. The
first segment, “products,” is a long-running businessand a source of stable growth that involves the distribution of a variety of copper and aluminum products
to major manufacturing companies with which theGroup holds distribution rights. The second segment,“raw materials,” handles the distribution of recycled
and renewed non-ferrous metals. The products
segment is expanding with a focus on exports ofrolled aluminum products, copper products, andtitanium roll flat products (commercial pure titanium,
alloys), as well as trilateral and domestic trade. The
raw materials segment deals with aluminum andcopper scrap and ingots of recycled aluminum, allthree of which are seeing an increase in market size,
as well as magnesium ingots and silicon metal.

 luminum alloyA
ingotsEquipment and Materials

Plating materials

The Equipment and Materials Business comprises theGroup’s manufacturing subsidiaries that have joined
the Group through M&As and continues to grow as a
key element for increasing Group revenue. Thisbusiness aims to expand by leveraging synergies with
the Group’s planning and sales capabilities, with aparticular focus overseas.

Welding rods

04.

Enhancing Group Cohesiveness, Pursuing Further Synergy

Copper products

Automobiles(body)

Brass copper rods

Nickel(materials for steel
manufacturing)

Motorcycles(aluminum
frames, etc.)

Aircraft(structural parts)

Japan
China
Asia
EuropeLatin
America

Metal scrap

Hiroaki Inoue
Executive Officer
General Manager, Business Strategy
Department

In April 2023, we established the Business Strategy Department as part of a centralized
system to follow up on our M&A, post-merger integration (PMI), and corporate venture capital(CVC) funding efforts. We, at the department, would like to put an even stronger emphasis on
our approach to M&As and find new acquisition targets that can enliven the Group by filling
any gaps in the manufacturing process not covered by our current business portfolio.
As for CVC, not only is there a dedicated CVC team within the Business Strategy Department,
the Company has also established Team Catapult, a project team that operates across theSales Division. These teams are working to establish new businesses throughout the Group.
In the future, we will share management policies from one Group company to another tobetter unify the Group, and we will also look into KPIs for each business that underscore
capital efficiency.

 itanium roll flatTproducts
Lead frames
Air conditioners(for(copper tubes)
semiconductors)

AluminumcansCarbon brushes
Cashew products
Non-destructive
testing

Automobiles(plating,
friction
modifiers)Steel(marking
equipment)

Construction
materials(plating
materials)

COMMENT

Japan
China
North
America
EuropeAsia

Growing with the Changing Times

The Osaka Branch is notable for handling a wide range of items centered on raw materials, such asores of nickel, tin, rare earths, and minor metals, as well as recycled aluminum ingots and scrap ofthese metals. The branch also handles chemical products. These non-ferrous metals are crucial for
new energy vehicle (NEV) parts and parts for electronics, and as such, we expect demand to growfurther. The Osaka Branch is working around the clock with Group companies to expand the recycling business. At the same time, it is also directing efforts toward diversifying suppliers in light of
the geopolitical supply risks that come with relying on overseas sources for some of our raw materials. Going forward, we will continue to make use of our knowledge of the industry and products toensure the Osaka Branch grows with the changing times.

Fuyuki Ouchi
Executive Officer
Manager, Osaka Branch
General Manager,
Osaka Sales Department

Marking equipment

Semiconductors Power plants
Radio wave
(PWB plating)(non-destructive absorbers
testing)

Metal Processing

 recision fabricatedP
parts

The Metal Processing Business produces processedparts with the superior technical capabilities of someof the nation’s most advanced manufacturing equipment and skilled craftsmanship. These parts are used
as core components in the smartphone, tablet, automobile and aerospace sectors, where they garner an
excellent reputation.

 recision grinding
P
parts

ALCONIX Integrated Report 2023

SECTION

Pursuing Groupwide Synergies Toward
a New Stage of Growth are earthRcompounds

COMMENT

32

03.

Past, Present, and FutureGroup trading productsElectronic andAdvanced Materials

SECTIONHigh-precision
stamped parts

Japan
China
Asia
Automobiles(driving parts,
trial parts)

Smartphones,
tablets

Aircraft(engine parts)

Chip
mounters

Air conditioners(heat exchangers, various parts)

 mbarking on Medium- to Long-Term Initiatives toE
Build New Business Pillars

ALCONIX’s greatest strengths are the Aluminum and Copper Business upon which it was founded,
its long history of handling titanium, and its deep well of professionals who are well-acquainted witheach product and its uses.
In Europe, the push to shift away from natural gas has triggered changes in the business environment
surrounding aluminum, copper, and titanium, which include the electrification of heating equipment and
Hiroyuki Tsuzuki
the start of large-scale hydrogen energy projects. As a result, these changes require aluminum andExecutive Officer
titanium parts handled by the Company are in high demand. Therefore, we have begun a full-scale
General Manager, Aluminum,
Copper & Titanium Division
launch of medium- to long-term initiatives that will make these parts a new pillar of our business.
One notable trait of titanium parts is their high biocompatibility. We are focusing on using this trait
to capture growing demand in the medical sector and other new domains. In terms of the market,
the war in Ukraine has caused the absence of Russian materials, which previously had a large share of the market. We expect the Japanesepresence in the market to grow as a result. Another relevant factor we have taken into account is the development of the medical sector in lightof the aging society, which is a global phenomenon. Looking at all these factors, we have highlighted businesses that show the potential forstable growth, and in 2022, we conducted business transfers to incorporate them into the Company. These transfers are part of the concrete
steps we are taking to make them profitable business pillars in the future.

ALCONIX Integrated Report 2023

33

SECTION

00.

SECTION01.

SECTION

Business Overview

Trading

Electronic and Advanced
Materials
The strengths of the Electronics and Advanced Materials Business arein the products it handles—niche products with a high market share in
the electronics and battery sectors. Profits in fiscal 2022 were affectedconsiderably by customers responding to a drop in demand for IT
equipment by reducing inventories during the second half, causing
profits to decrease year on year. However, we expect performance torecover over the course of fiscal 2023. In addition to this recovery,
demand is growing in the electronics and battery sectors—our primarymarkets—for materials capable of even higher performance. To meetthis demand, and maintain or increase earnings, we will take advantage
of our CVC fund and other means to acquire cutting-edge technology andcreate business opportunities in both materials and manufacturing.

3,601 million

FiscalSegment Profit ¥2022% of Consolidated Ordinary Profit

44.0%

1,171 million

2022% of Consolidated Ordinary Profit

ALCONIX Integrated Report 2023

Risks and Risk Factors• Fluctuations in the raw materials market• Restricted supply due to geopolitical factors

Opportunities• Computerization of EVs and various types ofindustrial machinery with increasingly
sophisticated functions• Greater demand for high-performancematerials in a variety of sectors• Demand for a shift to dual-track procurement
routesExecutive Officer
General Manager, Electronic &Advanced Materials Division• Long track record of transactions with major
non-ferrous metal manufacturers based in Japan• Wealth of experience and abundant supply ofsources in the raw materials business• The widest variety of products within the
Company

The Aluminum and Copper Business, ALCONIX’s founding business,
comprises the products segment, which handles products such ascopper products and rolled aluminum products, and the raw materials
segment, which handles recycled non-ferrous metals and other raw
materials. In fiscal 2022, market prices for non-ferrous metals
remained strong, but profits fell year on year due to prolonged production adjustments among key customers and a rise in the cost of sales.
However, we expect that the demand for our products will improve overtime as production in the automobile and IT industries returns tonormal. We realize that higher costs and the resulting decrease inprofitability are an issue. In response, we are making efforts to offer
added value and are working to expand our resource recycling businessbeyond aluminum and copper to include minor metals and rare earths.

Segment Profit ¥• Large market share in electronics and battery
sectors• Extensive knowledge of products and market
structure, etc.
• The ability to conceptualize businesses in a waythat takes advantage of sales capabilities

Strengths

Aluminum and Copper

FiscalStrengths

Shigeru Kiyama

Overview of Fiscal 2022

34

SECTION

03.

SECTION

04.

Past, Present, and Future

Overview of Fiscal 2022

Trading

02.

14.3%

Risks and Risk Factors• Excess in working capital due to market factors• Intensification of competition in the recycling
businessOpportunities• Greater demand for non-ferrous metals in linewith the shift toward CASE vehicles• Greater demand for non-ferrous metal scrap
due to lower grades of ore and the push toward
decarbonization• Restructuring in the trading industry

Shoju Suto
Executive Officer
General Manager,
Non-Ferrous & Industrial
Materials Division

Strengths

Equipment and Materials• Large market share in niche fields• Advanced inspection and measurement
capabilities thanks to cutting-edge equipment

Overview of Fiscal 2022

Risks and Risk Factors

The Equipment and Materials Business continues to grow and is primed
to become a new pillar of revenue. It consists of manufacturing subsidiaries added to the Group via M&As and mainly handles materials usedin ALCONIX’s three key sectors, as well as equipment and materials
related to the inspection and measurement of parts and products. We
believe that measurement technology is vital for maintenance, repair,and overhaul (MRO), which are central to circular economies. We havebuilt upon this belief and reframed MRO as “measuring and recyclingoriented” and are using this new interpretation as the basis for M&As
to expand the Equipment and Materials Business going forward. Aspart of this effort, subsidiary MARKTEC CORPORATION acquired
KIMMON KOHA CO., LTD., which develops, manufactures, and sells avariety of laser equipment and devices. We anticipate other Group
companies to follow suit in the future.

• Business heavily weighted toward theautomotive industry and susceptible tofluctuations• Market shrinkage due to competing
technologies• Production sites and customers heavily
concentrated in China



Opportunities• Expected synergies with the Metal Processing
Business• Large market share in niche fields, making it
possible to pursue several means to maximizing
profits

Manufacturing

998 million

FiscalSegment Profit ¥2022% of Consolidated Ordinary Profit

12.2%

Metal Processing• Domestic leader in advanced processing technology• Production technology with applications across avariety of industries• Strong potential for collaboration with ALCONIX’s
Trading segment

The Metal Processing Business consists of companies that possess
powerful processing technology related to ALCONIX’s three key sectors,
and is focused on achieving the Company’s goal to become “an integrated company that combines trading and manufacturing capabilities.”
In fiscal 2022, we acquired JUPITER INDUSTRY CO., LTD., which wasintroduced in Integrated Report 2022, followed by the acquisition of
SOODE NAGANO CO., LTD., a manufacturer of mechanical parts forlithium-ion batteries. SOODE NAGANO is positioned to make leaps andbounds in the future as EVs become more widespread. We also expect
the Group to make great strides in its pursuit of comprehensive stamping capabilities through the sharing of technology and know-how
between these Group companies and others that provide stamping
services.

2,416 million

Segment Profit ¥2022% of Consolidated Ordinary Profit

Executive Officer
General Manager,
Business Strategy Department

Strengths

Overview of Fiscal 2022

FiscalHiroaki Inoue

Risks and Risk Factors• Volatile performance due to susceptibility tochanges in key customers and regional trends• Negative impacts caused by geopolitical risks
as well as accompanying disruptions in the
supply chain• Negative impacts caused by the shift away fromlithium-ion battery use in EVs



Opportunities• Increase in orders for lithium-ion batteries due
to a sharp increase in EV sales• Stronger cooperation within the Group related
to technology• Expansion of sales channels by sharing
customer information and sales offices

29.6%

ALCONIX Integrated Report 2023

35

03.

SECTIONSECTIONThe Future of Our Dreams

00.

SECTION01.

SECTION

Sustainability

02.

SECTION

03.

SECTION

04.

The Future of Our Dreams

Framework for Sustainability
Board of Directors
Reporting / Proposal

As CSO, I will formulate an invigorating

Sustainability Committee

strategy that will prepare us for the
future of our dreams and embody

Sustainability Promotion OfficeLong-Term Management Vision Working Group (WG)

Director,
Managing Executive Officer and CSO

The CSO is at once the chief strategy officer, in charge of corporate strategy, andalso the chief sustainability officer, responsible for the promotion of sustainability
initiatives. Upon first glance, giving the title of CSO a dual meaning would appear to
create an element of confusion, but sustainability has now become an integral partof corporate strategy—so, I do not believe this to be the case in any major way.
I believe that a good strategy is something that excites and invigorates. I liken thisto figure skating. A figure skating competition is divided into the short program andthe long program, or free skate. The short program involves fulfilling basic conditions to get a high score and advance to the free skate portion of the competition. If
athletes do not score well enough in the short program, the judges and spectators
miss out on the chance to see the true spirit of the athletes, unfettered by expectations and preconceived notions. In the same way, I think a strategy needs to fulfill
the standard requirements, much like a figure skater’s short program, but it also
should prime people to see the true spirit of a company.
As we grow older, we build up a list of things we have done and things we haveaccomplished. We often risk becoming content with the peace we have found in our daily
lives and keep trying to address issues according to the current state of affairs. To freeourselves from this closed-minded way of thinking, we need to choose excitement overcontentment, challenge the status quo and think of a strategy that will allow us to lean
forward—one that we can embrace wholeheartedly. It is with this latter frame of mind,
as daunting as it may seem at times, that I will formulate an invigorating strategy andtackle sustainability in a way that embodies the true, authentic spirit of ALCONIX.

GHG / TCFD WG

Collaboration / Reporting / Information sharing

the true, authentic spirit of ALCONIX.
Takumi Suzuki

Instruction / Supervision

Sustainability Management WG
Policy implementation / Promotion

Business execution
Corporate Division

Sales Division

The ALCONIX Group recognizes that environmental issues
such as climate change, social issues such as humanrights, and geopolitical risks as important matters from amanagement perspective and believes that it is its mission
to use its business activities proactively as a means toaddress them. We have therefore established theSustainability Committee with a secretariat, as well as aframework, to address ESG-related issues.

Group companies

The committee consists of five inside directors, including
the CSO who serves as chair, plus a full-time Audit &Supervisory Board member who acts as an observer.
We also work with departments involved in businessexecution to ensure that ESG-related initiatives fit in linewith our business activities.

Core Initiatives of the Sustainability CommitteeCore Initiatives 
1.	Formulation of Groupwide sustainability policies and guidelines for each ESG item
2.	Identification and assessment of sustainability-related risks and opportunities
3.	Creation of guidelines and measures related to climate change and environmental conservation
4.	Creation of guidelines and measures related to improving working environments and increasing
diversity within the Group
5.	Implementation of human rights and environment-related supply chain management, and analysis ofresults
6.	Creation and proposal of recommendations to incorporate sustainability in Group management withconsideration to items 1–5
7.	Dissemination of the Group’s Basic Policy for Sustainability and ESG-themed plans throughout
the Group, and implementation of related training and practical support
8.	Monitoring the progress of ESG-themed projects and the achievement of targets, the identification
and assessment of problematic issues, and the development of improvement measures
9.	Support for external disclosure of ESG-related matters, TCFD scenario analysis, and improvement of
ESG evaluation scores

H

Human
CapitalE

Environment
Materiality

S

SocietyG

Governance10.	Analysis of external inquiries regarding the Company’s business and sustainability initiatives, andinvestigation of future responses to these inquiries

Message from the Sustainability Promotion Office
ALCONIX began as a subsidiary of a major trading company but has since expanded its business domains toinclude manufacturing, and the Company continues to grow under a business model that combines its trading
and manufacturing capabilities. In fact, some treat it as a member of the manufacturing industry, and many saythat there is no company quite like ALCONIX. Currently, the ALCONIX Group comprises 60 Group companies,
each with its own origins, culture, and individual features, covering different businesses and industries at different scales—and each one has its own dream for the future.
These factors make it extremely difficult to promote a sustainability framework that is at once unified while
preserving the individuality of these companies. However, we may be able to resolve this issue over time bydeveloping cooperative ties between these companies, which will bring them together and foster a stronger
sense of trust as well as a feeling of satisfaction in being a member of the ALCONIX Group. Under this approach,
we will move forward as one, charged with creativity, ingenuity, and enthusiasm.

36

ALCONIX Integrated Report 2023

Basic Stance on Sustainability
Our basic philosophy is to “draw the future of our dreams”—to create new value and contribute to the development of society
through transactions of non-ferrous metal products. To make this philosophy a reality, we formulated our Basic Policy for
Sustainability in May 2022.
Base all activities on the guidelines for behavior and the values defined in the ALCONIX corporate philosophy for asustainable “future of our dreams.”
Our diverse workforce is firmly dedicated to taking actions with all stakeholders for solving environmental, social,and governance (ESG) issues.

ALCONIX Integrated Report 2023

37

SECTION

00.

SECTION01.

SECTION

02.

SECTION

Sustainability

03.

SECTION

04.

The Future of Our Dreams

Status of Sustainability Initiatives

H

Initiatives undertaken by the Sustainability Committee in fiscal 2022

Human CapitalFormulated Basic Policy for Sustainability
Identified material issues (materiality) for the ALCONIX GroupConducted regular surveys of non-financial data for each Group base
Held workshops for incorporating sustainability into the operations of each department
Held SDGs training conducted by external experts
Achievements

Future Initiatives

Introduced a new human resource system that featureshigher salaries and integrated job categories
Introduced a support system for balancing professional
duties with caregiving responsibilities
Began calculating greenhouse gas (GHG) emissions at eachdomestic Group base
Began introduction of renewable energy at the Group’s
production bases
Actively promoted the recycling business for non-ferrous
metals throughout the Group urther develop a Groupwide system for non-financial dataFmanagement
Establish a Groupwide system for supply chain managementand due diligenceRectify the low ratio of female managers and the gender
pay gap
Establish a training and education system in line with
ALCONIX’s management strategy
Expand the scope of measurement for the Group’s environmental impact
Enhance dialogue with stakeholders

The ALCONIX Group’s Human Capital—The Source of Value Creation
ALCONIX and Its People
We consider the ALCONIX Group’s ultimate source ofvalue creation to be its people, whether they are partof our trading businesses or manufacturing businesses. Accordingly, we consider the upgrading of
human capital as a material issue (materiality) of thehighest order. As a comprehensive solution provider
for non-ferrous metals, we seek “people who candream and transform their dreams into reality.” Putanother way, we look for those who can sense new
possibilities and make them a reality. In order to recruit,
develop, and retain such people, the Group is making
efforts in line with its corporate philosophy to promote ahuman capital strategy and make investments that will
make work rewarding, pleasant, and healthy.

The People We Seek:“Those Who Can Dream and Transform Their Dreams into Reality”

Rewarding Work(motivation, self-reliance)
A consistenthuman capital strategy
based on the ALCONIX
Group’s values

Pleasant Work(benefits, opportunities, work–life balance)

Healthy Work(mentally and physically healthy, a healthy workplaceand culture)

Values of the ALCONIX Group

Three Keys to Maximizing the Value of Human CapitalE

TO P I C SBusinesses Related to the 3Rs—TOKAI YOGYOTOKAI YOGYO specializes in overlay welding that contributes to the longevity of molds
and equipment by improving durability and resistance to wear and corrosion. The
company manufactures and sells welding materials used for newly designed press
molds, and for the repair of press molds, die-casting molds, and forging molds. As
automobile production makes a global shift toward EVs, TOKAI YOGYO is expected toplay a part by helping create the molds for one-piece molding in aluminum diecasting, a manufacturing process that will support EV production in the future.

1

Coating oil used inprevious processes
collecting at the bottomof a container

2

Automatic supply tankwith an in-house filter
installed on equipment

3
The used coating oil isplaced in the filterequipped tank, which is
automatically supplied toequipment as reused oil.

38

ALCONIX Integrated Report 2023

Businesses Related to the 3Rs—FUJI PRESS
FUJI PRESS manufactures precision stamped parts for automobile powertrains andexcels in high precision and highly advanced processing. In addition, the company isworking diligently to reduce its environmental impact through the 3Rs.
One example directly related to the SDGs involves the coating oil applied to products to protect metal from rust and corrosion, which is removed prior to shipping
and reused. In fiscal 2022, we began using less hazardous, more environmentallyfriendly cleaners and degreasers for this process. In addition, initiatives such as
in-house production of oil tanks with filters, which increase the amount of oil thatcan be reused, enabled the company to reduce its amount of newly purchased reusable oil by 85%, or approximately 2,500 liters, compared with fiscal 2021. In fiscal
2023, the company intends to apply oil filtration to other processes within its factory,
and expects this change to reduce total oil use by a further 4,000 liters.

Basic Stance
We believe that an essential part of increasing corporate value is making sure people with a wide range ofvalues and experiences have a work environment thatallows them to put their abilities on full display.
To create such an environment, under the guidanceof the COO, we have highlighted a policy aimed at
upgrading human capital that centers on three key
themes: compensation, education, and opportunity.
First, we will promote health management, recognizing that employees perform better when they andtheir families have healthy bodies and minds. In addition, we will use dialogues with employees to establish
work environments and systems that make for “pleasant work,” and gives these employees a sense that
ALCONIX is a place where every one of them can demonstrate their unique abilities. More specifically, we
will conduct regular one-on-one meetings with
employees so that they can help us develop better andmore comfortable working conditions. This is a step
we will take in addition to efforts to develop voluntarytraining programs that empower employees toimprove the skills they need to perform their duties.
We also strive to raise salary levels and actively
improve our payroll system in order to attract highly
talented people and make their work more rewarding.

Key #1Compensation
Promote healthmanagement
Promotecomplianceawareness

Hold one-on-one meetingwith employees

Key #2

Education

Develop an educationand training system

Expandwork–life balance
programs

Key #3

Opportunity

ALCONIX Integrated Report 2023

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SECTION

00.

SECTION01.

SECTION

Sustainability

Category

Optimal compensation is a vital part of hiring talented people
and retaining them. In fiscal 2022, we increased base salarylevels across the board in anticipation of price increases due
to inflation and the Company’s medium- to long-term growth.
In fiscal 2023, in addition to raising base salaries again, we aretaking steps to unify pay grades for career-track and clerical
positions and to review and modify the payroll benchmarks for
managerial positions.

Results (Fiscal 2022)

Targets (Fiscal 2025)

All employees

Men: 100 Women: 53.8

Increase to 60.0
for women

Managerial employees

Men: 100 Women: 73.5—

Managerial-track employees Men: 100 Women: 93.3—

Notes: 1. Non-consolidated
2. Ratio of women’s earnings to men’s(the amount women make for every ¥100 that men make)The reason for the pay gap between male and female employees is that the clerical positions of the Group are all filled by
women, whereas almost all managerial positions are filled bymen. In addition to putting clerical and career-track positions
on the same footing, we aim to eliminate this gap by actively
appointing more female managers. Notably, there is no pay gap
between men and women in the same job category.

For an organization to provide opportunities for its employees, it needs to respect their diversity and make it possible
for all of them to thrive. We believe that addressing thewide range of values and needs of each and every
employee will enable us to secure the type of people that
the Group seeks.
To that end, in fiscal 2022 we introduced a support
system for balancing professional duties with caregiving(non-consolidated)

31
FY2019FY2020

FY2021(non-consolidated)

38

36

34

Ratio of Female
Managers

72

63

57

49

FY2018Establish an Education and Training System, Provide Learning Opportunities

FY2022

Female employees
Percentage of female employees (%)

Results (Fiscal 2022)

3.7%

Target (Fiscal 2025)

5.0%

Human Capital Development Program (Non-consolidated)

Disaster prevention seminars

Health Declaration

Personal finance / Financial planning seminars

Health support seminars

Sustainability training

Career planning workshops

SDGs, etc.

Support seminars for balancing professional
duties with caregiving responsibilities

Follow-up training
Entry-level training for new employees

Customized training to support self-directed
career and skill development (external training
courses, online business courses, language
training courses, hands-on training, container
terminal tours, factory tours)

Joint training for junior members

Pre-deployment
languagetraining for
expatriate
personnel

Customized training for mid-level
employees

Guidance for mid-career hires

Training for new managers

Remote education (international
trade practices, accounting andbookkeeping, financial analysis,
language courses, business law,
contract and risk management)

Managerial training

Compliance training (e-learning, group learning)

New employees

Mid-level
employees

Managers

Performance evaluation training

Conversational language classes(English and Chinese)

Self-directed
learning program

Managerial and position-specific program

Prospective
employees

04.

Education and training for prospective employees(Non-consolidated)
Results

FY2021

FY2022

FY2025

Annual education and training expenses¥8.14 million¥10.87 million¥13.2 million¥45.0 million

Total training hours

1,554 hours

1,985 hours

2,386 hours

4,300 hours

We have introduced education and training programs that support self-directed skill improvement and career development sothat each employee can cultivate the ability to “dream andtransform that dream into reality.” To support sustainablegrowth of our employees, we expanded our tiered program in
fiscal 2022 and added more opportunities to learn skills andgain knowledge appropriate to the number of years that they
have been with the Company and their respective role.

The first step toward developing people and an environment that allows them to perform to their full potential is
placing a strong emphasis on their physical and mental
health and the physical and mental health of their families.

In addition, our training system includes a program that willdevelop employees into the type of people the Company seeks.
This system also features a suite of customized training that
includes financial planning seminars, support seminars forbalancing professional duties with caregiving responsibilities,
and health support seminars aimed at making work rewarding,pleasant, and healthy. In the future, we will build upon thissystem to fully maximize the ability of our employees to create
value throughout the Group.

I became a manager in 2018, and sometime after that,
I took maternity and childcare leave. When I returned towork, I went through a period of time in which balancing
my work duties with childcare was a real struggle. In
2022, ALCONIX introduced a support system for people
like me, who need help balancing childcare or nursing
care obligations with work, allowing us to work more
flexibly. I have personally taken advantage of this system,
T.J.
and I have seen male employees take advantage of the
Accounting
childcare leave options as well. I feel that the climate
Department
around workstyles has shifted considerably compared towhen I joined the Company. I expect the work environment to become evenbetter in the future, and as part of the organization, I will be sure to voice
my opinion if I notice any improvements that can be made.

Accordingly, we will promote effective health management
by creating workplaces in which all employees can performtheir duties with enthusiasm and vitality, in line with the
ALCONIX Group Health Declaration.

ALCONIX Group Health Declaration
https://www.alconix.com/en/company/statement/#health-promotion

Health Management Initiatives
Organizational
Structure

Targets

FY2020

responsibilities as part of our ongoing efforts to create awork environment that is comfortable for everyone.
We have also set a goal for fiscal 2025, aiming to increase
the ratio of women in managerial positions to 5.0%.
Our hope is to empower all people to reach their desired
position, regardless of gender, which includes a strong
push to promote training and a corporate culture that supports the career development of women.
CO M M E N T

Number of Female Employees

31

02. Education

ALCONIX Integrated Report 2023

SECTION

Flexible Workstyles

44

40

03.

03. Opportunity

Our Three Keys

Gender Pay Gap

Improve Salary Levels and Other Benefits

Our Three Keys

SECTIONThe Future of Our Dreams

01. Compensation

Our Three Keys

02.

Collaboration with health insurance associations—specific health guidance,
sharing of information regarding health-related issues, etc.
Cooperation with industrial physicians and occupational health nurses—
concrete initiatives aimed at addressing health-related issues, etc.
Addressing issues related to long working hours, mental health concerns,
and infectious disease prevention
Education for managers and regular staff—mental health, exercise, diet, etc.
Involvement in specific health guidance—present opportunities to improve health

Systems andMeasures

Activities targeting the improvement of dietary habits and greater opportunity
for physical exercise
Measures for the maintenance and promotion of women’s health
Identification of issues and the application of practical solutions
Smoking cessation measures

In fiscal 2022, we established ahealth management promotion
system. To get a better grasp of
employee health, we adopted acompany-managed health guidancesystem, under which we provide
tailored feedback and guidance
based on an employee’s checkup
results. In addition, we provide
programs for self-care, such as
mental health training for managers,
online seminars on improving one’s
diet and sleep quality, and strategies for increasing opportunities forphysical activity and exercise.

Measurement of health management effectiveness

ALCONIX Integrated Report 2023

41

SECTION

00.

SECTION

Sustainability

E

ALCONIX’s responses for the CDP Climate Change 2022 Questionnaire (Japanese only) https://www.alconix.com/assets/docs/sustainability/cdp_2022.pdf

Developmental Initiatives in Line with TCFD Recommendations
In recognition of the strong impact climate change bears
upon the ALCONIX Group’s business, we have positioned
climate change as a priority issue for management, analyzed its potential risks and opportunities, and developed
countermeasures accordingly.
In line with the recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD), we performed
a scenario analysis in fiscal 2021 and fully endorsed therecommendations in fiscal 2023. Although our initial scenario analysis focused on the dealings of the Head Office, wewill broaden the scope of this analysis and gain a better
understanding of our environmental impact going forward.
To this end, we will newly include relevant departments inour discussion and analysis to ensure greater measurement
accuracy and to elicit the appropriate countermeasures.
About the TCFD

The TCFD was established by the Financial Stability Board at
the behest of the G20 to encourage companies to disclose
information regarding the impact of climate on theirfinances. In June 2017, the TCFD released its finalized
report, recommending that companies disclose the risks
and opportunities posed by climate change as well as their
response policies.

Finance Dept.
General Affairs & Human
Resources Dept.
Corporate Planning Dept.
Business Strategy Dept.
Risk Management Dept.
Accounting Dept.

Targets of Investigation
Business Scope:
The Group’s three key sectors, with the intention of gradually expanding to all of theGroup’s businesses, which include ALCONIXCORPORATION, overseas businesses, andsubsidiaries
Information Disclosure and Issues:
Disclosure is organized into 11 items in four
categories, in line with TCFD recommendations. Under this framework, we will refine ourfinancial impact assessments andcountermeasures.

Disclosure in Line with TCFD Recommendations
In recognition of the strong potential impact of climatechange upon the ALCONIX Group, a group with global operations, we have positioned climate change as a priority
issue under sustainability management. In today’s international society, conditions are becoming increasingly diverseand complex, and this includes escalating social and environmental issues, one of which is climate change. We
believe that giving these issues the attention they deserveand conducting proactive corporate activities as a resoluteresponse will not only help resolve these issues but also
prompt the Group’s growth. Accordingly, in 2003, we
defined our Environmental Policy as our basic philosophy

ALCONIX Integrated Report 2023

SECTION

03.

SECTION04.

a) Framework for Monitoring Climate-Related Risks and Opportunities
The Sustainability Promotion Office reports to theregarding any activities the committee has considered or
Sustainability Committee regarding specific ESG-relateddeliberated. The Board of Directors weighs the pros andplans and proposed measures, which are then reported tocons of these activities and monitors their progress.
the Management Committee. The Board of Directors then
P.37

Framework for Sustainability
receives reports from the Management Committeeb) Management’s Role in Assessing and Managing Climate-Related Risks and Opportunities
updates on climate-related targets and engages in a full
The Board of Directors has placed the Sustainability
range of decision-making (which includes formulating
Committee, chaired by the CSO, in charge of climatebusiness strategies, among other efforts), instruction, andrelated issues. The committee works with the Sustainability
supervision. The Board of Directors also ensures proper
Promotion Office and the GHG/TCFD Working Group to
implementation of the Company’s PDCA cycle for handlingassess climate-related issues and compile a list of
climate-related issues, with full awareness of
possible countermeasures, which are then reported to the
Supplementary Principle 2.3.1 of Japan’s Corporate
Management Committee and the Board of Directors.
Governance Code.
The Board of Directors accepts reports from thesecommittees regarding climate-related issues as well as

Risk Management

Greenhouse Gases and TCFD Working Group

42

02.

GovernanceNote: This section has been created based on our responses to the CDP questionnaire.

The Sustainability Promotion Office is an inhouse task force established to handle thepractical work of the Sustainability Committee.
This office aims to improve corporate value
through social contribution and by raisingawareness of sustainability-related issues
among the ALCONIX Group’s executives, taking
direction from the Group’s corporate philosophy.

SECTIONThe Future of Our Dreams

Environment

Sustainability Promotion Office01.

underpinning environmental conservation efforts, and in
May 2022, we formulated our Basic Policy for Sustainability
and identified our material issues (materiality), providing afoundation for improving medium- to long-term corporate
value befitting a company listed on the Prime Market
segment of the Tokyo Stock Exchange. In regard to TCFD
recommendations, we conducted a scenario analysis infiscal 2021 and fully endorsed the recommendations in fiscal
2023. We are currently disclosing information in line withthe recommendations, and we will continue to provide
details regarding the financial impact of climate change
and our response going forward.

a) Process by Which Organizations Identify and Assess Risks
Climate-related risks collectively refer to risks related tocurrent and new regulations that target the Group’sbusiness activities, products and services, technology
risks, legal risks, market risks, and a variety of physicalrisks as they pertain to climate. The ALCONIX Group’sbusiness primarily involves the accumulation of a wide
variety of smaller transactions, which makes it difficult tonarrow down the scope of businesses in which we verify
these risks. After repeated investigations, however, we havesettled on risk-related verification concerning transactions
in our three key sectors of automobiles, semiconductors,

and electronic materials and parts. As we work to expand
the scope of risk-related verification from transactions
made through the Head Office to transactions madethroughout the Group, the Sustainability Promotion Officeand the GHG/TCFD Working Group will identify potential
risks and opportunities and assess their financial impact.
Regarding the latest climate change regulations, theSustainability Promotion Office and the GHG/TCFD Working
Group collect and confirm relevant information, such as
international treaties, related laws, ordinances, corporate
governance codes, and disclosure rules.

b) Process by Which Organizations Manage Climate-Related Risks
Committee reports risk identification, assessment, andAs a general rule, the Sustainability Promotion Office andcountermeasures to the Board of Directors for approval.
the GHG/TCFD Working Group are in charge of formulatingclimate change risk response plans. The Sustainabilityc) Position of Climate Change-Related Risks
The Company’s overall risk management is handled by the
Risk Management Committee, with the Risk Management
Department serving as its secretariat. With regard to risk
identification and assessment, any risk considered to havea major potential impact on business is considered to be aserious risk. This designation is assigned based on the
results of risk assessments conducted by ALCONIXCORPORATION, branch offices, and Group companies,

taking into account social conditions and related physicalrisks such as disasters.
Currently, the Risk Management Committee does nothold discussions regarding climate-related risks; however,in the future, it will work with the Sustainability Committee
to conduct comprehensive investigations and discussionsof climate-related risks, treating them as serious risks.

ALCONIX Integrated Report 2023

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SECTION

00.

SECTION01.

SECTION

02.

Sustainabilitya) Process for Identifying Short-, Medium-, and Long-Term Climate-Related Risks and Opportunities
Investigation Status of Short-, Medium-, and Long-Term Risks and Opportunities 
climate-related issues to remain consistent with the timeThe Sustainability Promotion Office, the GHG/TCFD
line of Medium-Term Management Plan 2023, announced
Working Group, related departments, and affiliated compain May 2023.
nies will discuss risks and opportunities pertaining toRoad Map

Calculated Scope 1 and 2 greenhousegas emissions at each domestic base

Fiscal 2023–Fiscal 2024
Begin calculating Scope 3 greenhouse gas emissions

Fiscal 2025

Set new emissions reduction targets

SECTION

04.

Improve accuracy of scenario analysis (based on the TCFD framework) and reflect results in our business strategyb) Scope 1, 2, and 3 Greenhouse Gas Emissionsc) Targets Used to Manage Climate-Related Risks and Opportunities, and Performance in Meeting Targets(15 companies in total), excluding overseas bases and facBasic ESG data is collected based on version 1.1 of thetories. Moreover, Scope 3 emissions have not yet been
self-check table of environmental impacts provided in thecalculated. However, we are working to expand data collecMinistry of the Environment’s 2017 version of the Ecotion beyond the three key sectors that comprise the majorAction 21 Guidelines. This data is then used to help solidify
ity of our business, which involves collecting overseas data,
Group policies for climate change countermeasures and toto begin calculations of Scope 3 emissions, and to improve
perform self-checks on the Group’s environmental impact.
the accuracy of our scenario analysis.
Currently, the scope of this data includes ALCONIX’s Head
Office, branch offices, and domestic Group companies
Breakdown of Efforts Toward Achieving Carbon Neutrality (100 = 18,284 t-CO2)100
Scope 1

Calculate Scope 1 and 2 greenhouse gas emissions at overseas bases
Began introduction of renewable energy

03.

The Future of Our Dreams

Strategy

Fiscal 2022 and Prior Fiscal Years

SECTION

Fiscal 2022

3,803 t-CO2

Scope 1 + Scope 2 emissions:
18,284 t-CO2

Expand decarbonization-related
businesses

18,284 t-CO

2

Process for Identifying Risks and Opportunities with a Significant Financial Impact on the Organization 
In the future, we will expand the scope of our scenario
When conducting a scenario analysis, the Sustainability
analysis beyond the three key sectors that comprise thePromotion Office and the GHG/TCFD Working Group, withmajority of our business while also increasing accuracy.
the support of relevant departments within the Head Office,identify serious climate change-related risks and opportunities, assess their impact, and investigate possible
countermeasures.

0

FY2022Emissionsb) Impact of Climate-Related Risks and Opportunities on Business, Strategic, and Financial Plansc) Resilience of Strategies after Considering Multiple Climate-Related Scenarios
reveal any climate-related issues that would bear signifiRepresentatives from the aforementioned relevant departcant financial impact.
ments took part when considering business opportunities
in fiscal 2022. Our scenario analysis, which focused on
For more details regarding our scenario analysis based ontransactions within our three key sectors, confirmed thethe TCFD framework, please refer to the following link.
growth potential and resilience of our business and did nothttps://www.alconix.com/en/sustainability/environment/

Indicators and Targetsa) Indicators Used to Assess Climate-Related Risks and Opportunities
effective greenhouse gas emissions are currently under
Our management strategy is heavily weighted toward
consideration, such as the introduction rate of renewable
M&As, and as such, this approach could potentially lead toenergy, the investment amount for energy-saving equiperratic increases in greenhouse gas emissions produced byment, and net sales for businesses that contribute to
the Group.
decarbonization.
Therefore, the possibility of additional relevant KPIs thatwill aid us in increasing our corporate value and reducing

The ALCONIX Group aims to achievecarbon neutrality by actively promoting energy conservation and introducing renewable energy throughoperational improvements, capital
investment, and expanding its procurement network.

Scope 2

14,481 t-CO2

Energyconservation

Reductions

Introduction ofrenewable energy(to facilities)

Introduction ofrenewable energy(to market)

Offsetting

Notes: 1. The total of Scope 1 and Scope 2 emissions is 17,369 t-CO2 when excluding consolidated subsidiaries that joined the Groupin fiscal 2022.
2. The total of 18,284 t-CO2 for Scope 1 and Scope 2 emissions is represented by 100 on the left scale.

S

Society

Formulating Human Rights Policies
We are making preparations to implement human rights
due diligence in our supply chain in the future. We aretaking guidance from outside experts as we work to formulate and release policies regarding human rights,

anti-bribery, and sustainable procurement, and to identify
risks of human rights violations, lower these risks, anddevelop relief mechanisms.

Dialogues with Stakeholders
As a corporate group that continues to grow on a global
scale, the ALCONIX Group has made it its mission to contribute to the development of international society and theglobal economy. As part of this mission, the Group strives
to coexist and prosper with stakeholders while building andstrengthening relationships of trust. In particular, theGroup aims to build these relationships with its employees
by raising awareness of human rights issues and otherGroupwide activities.


Stakeholder Engagement

P.60

Group Companies and Their Local Contributions
https://www.alconix.com/en/sustainability/society/group/

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00.

SECTION01.

SECTION

02.

Corporate Governance

SECTION

03.

04.

SECTIONThe Future of Our Dreams

Governance System (as of June 21, 2023)
Basic Approach to Corporate Governance

General Meeting of Shareholders

ALCONIX recognizes the medium- to long-term enhancement of corporate value as its most important management issue
and makes efforts to strengthen its management structure as it endeavors to draw the future of our dreams.
We comply with all laws, regulations and corporate ethics, operate in a highly fair and transparent manner, and strive to bean honest and reliable corporate group.

Nomination and Remuneration
Advisory Committee

Advisory /ReportingBoard of Directors (Directors)

Environment in Which All Group Officers and Employees
Can Have Confidence in Their Future

Reports

 ompliance CommitteeCRisk Management Committee
Information Management andSecurity Committee

Sustainability Committee

Toshiya Imagawa
Director,
Managing Executive Officer and CCO

In 2021, the year of my appointment as
executive officer in charge of internal
control, I addressed the corporate governance issues faced by ALCONIX and
its Group companies. In 2022, with thecooperation of the Company’s
Corporate Division, I pressed ahead
with the development of new systems toresolve the identified issues. We began
by establishing a global internal reporting system with multilingual support
while simultaneously creating theimprovement efforts led by the
Corporate Division. Its main tasks are tosort out matters for improvement byorder of priority and to manage knowledge sharing for the development ofeffective control systems.
In addition to financial indicatorssuch as the verification of manufacturing costs and budget progress management, we will further promote theuse of IT to improve the Group’s internal control system through the digitization of non-financial indicators thatpertain to the supply chain, the organization of various regulations, risk management, and other areas, striving toensure data transparency. By strengthening the Group’s corporate governance system through the improvementof various indicators, including internal
control, we will take the lead in further
increasing corporate value so that all
officers and employees can have confidence in their future.

Instruction / Reports

Instruction / OversightManagement Committee
Instruction / Oversight
Reports

Instruction /Oversight

Reports

Executive Committee
Instruction

 orporate Division
CSales Division

Satoshi Kitajima
General Manager,
Internal Compliance Office46

ALCONIX Integrated Report 2023

Accounting audits
Internal control
system audits

Reports

 omestic Group companies
DOverseas Group companies

Internal audits

Audit Department

Business execution

Coordinate /Discuss

Initiatives to Strengthen Corporate Governance
Point-01

Strengthen Internal Control

Point-02

Increase Board Effectivenss

Appointment of a Managing Executive in Charge ofRestructuring of the Board in 2022 to Include aInternal Control in 2021

Majority of Outside Directors

With the increase in companies joining the Group throughM&As, we appointed a managing executive in charge of internal control (currently the CCO) in 2021 from the perspectiveof strengthening internal control throughout the Group. The
CCO works closely with the Audit & Supervisory Board andAudit Department to develop and implement the Group’s
internal control systems.

The majority of the Board of Directors is composed of independent outside directors and outside Audit & Supervisory Board
members. In addition, we strive to ensure diversity by having adiverse Board of Directors with different backgrounds andabilities that align with the expertise and experience required
for the Group. We are working to strengthen the Board’s supervision of business execution and improve its effectiveness.

MESSAGE
Promoting Stronger Groupwide Corporate Governance as We Entera New Stage of GrowthRole of the Internal Control Office
As a body that operates under the chief compliance officer (CCO), the Internal Control Office maintains
transparency of the development and operation of Groupwide systems, prepares draft reports for discussion at meetings of the Internal Control Committee, and supports the Company’s business strategies.
In fiscal 2022, an assessment survey was conducted on the maturity of the Company’s internal control
systems among members of the corporate divisions of the Head Office and Group companies. The results
revealed disparities in maturity levels among Group companies. In particular, maturity level ratings forsustainability and overall risk scored low, highlighting areas that need to be addressed and improved in the
future. To that end, we will promote the formulation of policies and initiatives, led by the Corporate Division,
to raise the entire Group’s internal control system to an even higher standard.

Coordinates /Reports

Coordinates /Reports

Business operations

ALCONIX Group Compliance Handbook
in seven languages and distributing it to
all Group officers and employees worldwide. In addition, we used e-learning to
expand our education and training programs so that we can continue ourefforts to foster and promote compliance awareness into the future. To support such reforms, the Internal Control
Committee, Risk Management
Committee, Information Management
and Security Committee, andCompliance Committee ramped up their
discussions and enhanced their systems
for reporting to the Board of Directors
and the Audit & Supervisory Board.
The Internal Control Office wasestablished in October 2022. Operating
separately from the Audit Department,
which monitors the internal control
system, the Internal Control Officemaintains the transparency of the current state of the Groupwide internal
control and supports associatedAudit &
Supervisory Board

Appointment / Dismissal

Representative Director CEO / COO

Internal Control Committee

From Stability to Certitude: Creating an Internal Control

AuditsAppointment /Dismissal

Accounting Auditor

Delegates

Reports

MESSAGE FROM THE CCO

Appointment /Dismissal

Appointment / Dismissal

Decision-making

Yuzo Yasui
Executive Officer
General Manager of the Business
Management Department

The Business Management Department was established in April 2023 with the aimof strengthening the development of corporate governance systems throughout theGroup. These efforts will begin with the development of operational rules andregulations that reflect the current state of each Group company in Japan andoverseas, and the establishment of a Groupwide shared document and data management platform. Starting with the management of regulations and the full-scale
introduction of the revised Electronic Book Preservation Act, our goal is to develop
an information platform that will be incorporated into the Group’s sustainability
initiatives. There are still many challenges on the road to achieving our ultimate
goal for the platform, but we are working to expeditiously overcome thesechallenges.

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00.

SECTION01.

SECTION

02.

Directors and Audit & Supervisory Board Members (as of June 21, 2023)

SECTION

03.

SECTION

04.

The Future of Our Dreams

08

11
12

10

07

01

06

09

13
04

03

02
05

01

02

03

04

05

06

07

08

09

10

11

12

13

MasatoTakei

HiroshiTeshirogi

TakumiSuzukiToshiya
Imagawa

Nobuhiko
Takahashi

Masao
HisadaYukinoKikumaToshiya
TsugamiYukikoImazu

Junichi
Kitagaki

ShigeoOgi

KimikoOga

Ryoko
TakedaRepresentative
Director, Chairman
and CEO

Representative
Director,
President and COO

Director, Managing
Executive Officer
and CSO

Director, Managing
Executive Officer
and CCO

Director, Executive
Officer and CFO

Outside Director

Outside Director

Outside Director

Outside Director

Full-Time Audit &Supervisory Board
MemberOutside Audit &Supervisory Board
Member (part-time)

Outside Audit &Supervisory Board
Member (part-time)

Outside Audit &Supervisory Board
Member (part-time)

Corporate andbusinessmanagement

Skill Matrix

Main Areas of Expertise

Sales andmarketingInternational andglobal experience
Finance,accounting,and tax
Legal affairs andcompliance
Governance andrisk management
Human resouce
management
Manufacturing

48

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00.

SECTION01.

SECTION

Corporate Governance

Company with an Audit & Supervisory Board
Executive function
Management Committee:
Representative director:
Five internal
CEO/COO
directors

Board ofDirectors
Supervision

Instruction /Oversight

Appointment /Dismissal

Dual leadership system
Decision-making
function

Reports

Attended by full-time
Audit & Supervisory
Board members acting
as observers

The Company emphasizes prompt decision-making in order toimplement M&As and investments in a flexible manner. With
this focus on decision-making in mind, the Board of Directors
has opted for a Company with an Audit & Supervisory Board
organizational design. We believe that the appointment ofoutside directors who can advise management from an objective and comprehensive standpoint and who have a wealth ofexperience and broad and deep insight enables accurate andprompt decision-making that incorporates external perspectives. In addition, to ensure the independence of its supervisory
function, the Company has appointed outside Audit &Supervisory Board members with expertise in law, accounting,and business, who supervise and monitor the Board of
Directors in a transparent and appropriate manner.

Composition of the Board of Directors
Chairperson
Composition
Meetings heldin fiscal 2022

Main role andauthority

Masato Takei
Representative Director, Chairman and CEO
Ratio of outside officers

Nine directors (four outside directors)

FY2012

FY2022

29%

54%

Once a year, we conduct a survey of all directors and Audit& Supervisory Board members who are members of
the Board of Directors to identify issues related to theeffectiveness of the Board of Directors, which are thenevaluated and analyzed. The evaluation of the effectivenessof the Board of Directors for fiscal 2021 confirms that thecomposition and operating procedures of the Board of

04.

Ratio of female officers

0%

31%

• Formulate management policies and plans• Appoint and dismiss senior management• Make other important operational decisions while supervising execution of the
management team’s duties

Ratio of officers withcorporate management
experience

29%

46%

Note: The execution of business operations that do not require decisions by the Board of
Directors is delegated to executive officers and other senior management members inaccordance with internal regulations.

Main topics covered in the fiscal 2022 survey(1) Supervision and monitoring of operations based on the basic policy on the establishment of Groupwide internal control systems→ Improvements were made in fiscal 2022 by adopting a new Board resolution on the Basic Policy
for the Establishment and Implementation of Internal Control Systems and by regularly sharing
the results of monitoring and verification of the operational status of said policy with the Boardof Directors and the Audit & Supervisory Board.

(2) Sufficient collaboration between Directors and Audit & Supervisory Board members
and the Audit Department

 ontents of discussions at BoardC
meetings
The Board’s monitoring function
The provision of training opportunities
for Board members and Audit &Supervisory Board members
Officers’ individual efforts→ Improvements were made in fiscal 2022 by increasing the number of personnel in the Audit
Department and by establishing a system for reporting to the Audit & Supervisory Board, led by
the officer in charge of internal control, full-time Audit & Supervisory Board members, and the
Audit & Supervisory Board Member Office.

Issues identified based on the results of the fiscal 2022 survey to be addressed in fiscal 2023

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ALCONIX Integrated Report 2023

SECTION

Directors are appropriate. Some issues included the content of deliberations and support systems that are in place.
The evaluations were generally positive and confirmed that
there was active discussion and deliberation taking placeat meetings. Therefore, the Board of Directors has been
deemed effective in its role.

Issues identified in the fiscal 2021 Board of Directors’ effectiveness evaluation survey andprogress of efforts to resolve themNote: Four Audit & Supervisory Board members (including three outside members) attend
meetings as observers.

(1) Deepening discussions of preconditions necessary for strategy and management planning sufficient for enhancing corporate value
over the medium to long term(2) Proactive involvement in the development and application of succession plans for the CEO and other officers(3) Sufficient discussions to improve sustainability efforts(4) Provision of training opportunities for officers

Note: The term "officers" includes directors and Audit &Supervisory Board members.

Supporting Outside Officers to Stimulate Discussions at Board Meetings

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03.

Evaluation of the Effectiveness of the Board of Directors

Organizational Design and Governance System

Audit &
Supervisory Board

SECTIONThe Future of Our Dreams

Board of Directors

Supervisory function

02.

Agenda and Discussion Items for Board of Directors Meetings in Fiscal 2022

Visits to Group Companies by Outside Officers

Category

Since fiscal 2020, outside officers (outside directors and outside Audit & Supervisory Board members) have been conducting regular on-site visits to Group companies. The visits are
aimed at stimulating discussions at Board meetings andstrengthening the Board of Directors’ supervisory function bypromoting operational understanding among outside officers.
The officers are given a tour of the manufacturing subsidiary’s
factory, after which they attend a question-and-answer session
held by the president and representatives of the Group company. Social gatherings are also held with frontline employees
to ensure good communication with Group personnel. We havereceived comments from outside officers that these visits havemade it easier to understand product details and manufacturing processes brought up at Board meetings. Since fiscal 2022,
we have also held business introductions led by our Head
Office’s Corporate and Sales divisions to promote a better
understanding of our operations as a whole. We will continue
to strengthen our support system for outside officers with aview to realizing an effective corporate governance system.

Overall Management

Main items of discussion
 ormulation of Medium-Term Management
F
Plan 2023
 eports pertaining to dialogue with institutionalR
investors

Appointment of officers and executive officers
Approval of accounts

Review of cross-shareholdings
Matters Related to Internal
Control and Corporate
Governance

Sustainability

Establishment and application of internal control
Reporting on the activities of the Audit Department
 eporting on the activities of the Risk Management
R
Committee

 genda for the Ordinary General Meeting ofA
Shareholders

 eporting on the activities of the Sustainability
R
Promotion OfficeReviews of CDP reporting

Health management efforts
Investment Activities pproval of share transfer agreement with SOODE
A
NAGANO CO., LTD.
 pproval of business transfer
A
agreement with DKSH Market Expansion Services
Japan K.K.

Others valuation of the effectiveness of the Board ofE
Directors

Financial plan for the fiscal yearCompany directors’ and officers’ liability insurance
The Group’s ESG rating
Reports on CVC activities pproval of the purchase of real estate for the conA
struction of a recycling facility in Kitakyushu City,
Fukuoka PrefectureMonthly budget performance reports

The Board of Directors’ schedule for the year

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02.

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03.

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04.

The Future of Our Dreams

SPECIALF E AT U R E

Toward a New Stage of Growth—
The Group’s Vision and Issues to Address

The ALCONIX Group is currently working to bolster Group governance as it moves toward a new stage of growth.
We have invited Kumi Fujisawa, chairperson of the Institute for International Socio-Economic Studies (IISE), to sit down fora roundtable discussion with outside directors Yukiko Imazu and Masao Hisada, where they talked about ALCONIX’s strengths
as a business and the issues it faces as it moves toward a new stage of growth.

A Unique Business Model
That Can Support the Continued
Growth of Japanese ManufacturingA

R O U N D T A B L E

D I S C U S S I O N

on G over na nce

Yukiko Imazu

Outside Director (left)

Masao Hisada

Outside Director (center)

Kumi Fujisawa
Outside Expert (right)

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ALCONIX Integrated Report 2023

Hisada: The ALCONIX Group began asa spin-out of the Non-Ferrous Metals
Department of Nissho Iwai Corporation,
which is now Sojitz Corporation.
Although the Group began as a specialized trading company, it has since madeuse of M&As to acquire manufacturing
companies and achieve a unique form ofgrowth. ALCONIX mainly acquires small
and medium-sized companies with succession issues, looking for top-notch
companies that can generate future
profits because they jibe well with
ALCONIX’s trading capability or because
they can synergize with other Group
companies. I think this is an effective
strategy. The Company also has aunique approach to post-merger integration (PMI). With a conventional M&A,
the acquiring company dispatches a
new president and finance department
from its head office to work at theacquired company. ALCONIX is different
in that it is careful to respect the management style of the company it
acquires in a variety of ways, one ofwhich is to have the company president
continue in their role. ALCONIX also
puts a great deal of effort into thegrowth of its acquisitions and supports
them so that they can increase profitson their own. As a result, each Group
company has grown steadily andbecome a key source of Group revenue,
an achievement worthy of praise.

“

ALCONIX acquries top-notch companies expected togenerate profit, but its managment and business execution
sides both acknowledge that internal control is an issue.
Masao Hisada
Outside Director, Chair of the Nomination and Remuneration Advisory Committee
Appointed outside director in June 2019; currently in fifth year of service

However, as the number of Group companies increases every year, internal
control has become an issue, and thishas been acknowledged by both the
management and business execution
sides of the Company. In response, theCompany has introduced a cash management system, which it is using tointegrate its finances, but I think thedetermining factors going forward will
be how it proceeds with overall governance and how its people, who work at
ALCONIX, interact with one another andmake it strong. I also hope that ALCONIX
can use its Trading segment, which has
a global reach, to encourage international growth for its Group companies.

”

Imazu: I am a lawyer by trade, so until I
became an outside director with
ALCONIX, I had very little knowledge of
non-ferrous metals, so I started learning
about the business as a first step.
ALCONIX’s very name sums theCompany up well. It is a combination of
the first two letters of aluminum, “AL,”copper, “CO,” and nickel, “NI.” This is followed by an “X,” which symbolizes infinite possibilities and signifies theCompany’s forward-facing attitude. Thisis fitting because outside of ALCONIX, I
have never heard of a company in the
trading industry acquiring companies in
a completely different industry—manufacturing—and then employing a

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SECTIONAR O U N D T A B L E

business model that combines these two
industries. I think the concept is truly
special. Additionally, as part of the training for outside directors, we were given
the chance to tour the production sites of
the Company’s manufacturing subsidiaries, which gave us a glimpse of skilledcraftsmanship in action. This is whattruly lies at the heart of ALCONIX’s
efforts to support Japanese manufacturing, and made it clear that ALCONIX isdoing its part to ensure that the phrase“made in Japan” maintains its prestige.
Fujisawa: I also find the idea of a trading company growing by acquiring manufacturing companies to be highly
intriguing. I imagine the significance of
having manufacturers as part of its
portfolio came about organically as
ALCONIX conducted M&As and became
more concerned with glocalization andalso as a natural extension of its corephilosophy. As for support for the continued growth of Japanese manufacturing, this is a nationwide issue that needs
to be addressed. Recent globalization
has made it possible to obtain advanced,
up-to-date knowledge and ideas acrossHisada: As it stands, ALCONIX has a
handful of overseas subsidiaries, themain example being UNIVERTICALHOLDINGS INC., and bases in China
belonging to its domestic subsidiaries.
I believe that one of the points ALCONIX
will need to consider is how will its
Trading segment pursue overseas
expansion going forward.

The Importance of Being a Proud
Member of the Group
Hisada: Earlier, I mentioned internal
control across the Group as a future

To improve governance throughout the Group,
it is important that each employee feel proud to bepart of the ALCONIX Group.
Yukiko Imazu
Outside Director
Appointed outside director in June 2022; currently in second year of service”

issue, and we have been putting a lotof effort toward improving it over the
past few years. In addition to establishing a chief compliance officer,
increasing personnel in the Corporate
Division, and creating a compliancemanual, we have built a new system toraise the level of internal audits starting in fiscal 2023. Going forward,
ALCONIX will need to disseminate thissystem—and its effectiveness—throughout the Group. My concern isthat many of the new companies theGroup acquires are small andmedium-sized enterprises, so it takes
years before they can be truly integrated into the Group, in terms of theirculture, governance, and organizational structure. It is important thatthe Head Office take control of thisprocess, and that we as outside directors keep an eye on this process.
Imazu: I believe the ALCONIX Head
Office understands its mission toestablish governance worthy of acompany listed on the Prime Market
segment of the TSE, and is working toestablish frameworks and promote initiatives to achieve this mission. But it
cannot approach governance of theGroup as if it were governance of its
own head office—the number of companies are too numerous, and each one
is tied to its specific area of operation.
It will need to raise its standard of governance, but do so gradually, and amore sophisticated form of Group governance will likely take some time to
implement fully.
Fujisawa: Besides the structural
aspects of governance, another important factor is figuring out how to makeemployees of Group companies awarethat they, in fact, are part of a single
group. If ALCONIX plans to become amore international group in the future,
it needs to ensure effective governance, which means that it needs tofind a clear way to communicate toits employees, share its values, andbuild trust.

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02.

SECTION

03.

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04.

The Future of Our Dreams

D I S C U S S I O Nnational borders. However, it is said thatthe strength in Japanese manufacturinglies in the meticulous craftsmanshippassed down over its long history and inits unique culture, despite digitalizationand standardization in the industry. I
believe a trading company—an intermediary in the global market—that has its
own manufacturers, which supports thecontinuous growth of Japanese manufacturing, is not only unique but also
extremely valuable.

“00.

of the people within a company. After
Board meetings, we do receive reports
from Group companies, but I want to
get a better feel for what the people ofthese companies think through faceto-face communication. Both theBoard of Directors and the Audit &Supervisory Board are working actively
to promote reforms that will makethese companies better. We strive tocontribute to the further growth of the
ALCONIX Group by being mindful of
external perspectives.

“

As the scarcity of resources becomes a major global issue,
I believe that the business strategies and operations of
the ALCONIX Group have the potential to becomea model for the world.

Kumi Fujisawa”

Economic commentator, businessperson, and chairperson of the Institute for International Socio-Economic
Studies (IISE). After graduating from Osaka City University and working for several investment fund management companies, Ms. Fujisawa founded Japan’s first investment trust evaluation company. In 2000, she
co-founded Think Tank SophiaBank and has served as a representative of the institution for 23 years. In
2007, she was selected as one of the Young Global Leaders by the World Economic Forum. She currently
serves as chairperson of the NEC Group’s IISE and as an outside director for several listed companies.

Imazu: As Ms. Fujisawa points out, it
is important for each Group company
employee to feel proud of being part of
the ALCONIX Group. This will not only
improve performance but prevent any
misconduct-related issues at work.
Fujisawa: I have served as an outside
director at a number of companies
and feel that many Japanesecompanies are content to follow
formal standards such as Japan’s
Corporate Governance Code and end
things there. Why not instead use thecode as a springboard to examine how
to direct a company’s growth, how tocontribute to society, and how to establish more sophisticated governancefreely from diverse perspectives. For
this to take place, I and otheroutside directors need to better
understand the true spirit of the codeand utilize it to better communicate to
the world how great and valuable
these companies are.


Using Communication to Becomea Company the World Truly Needs
Hisada: Beyond more sophisticatedgovernance, the greater goal is toincrease corporate value. I believe thefirst step in getting the employees tovalue the ALCONIX Group is for the
Board of Directors to have a fullthroated exchange of opinions, basedon outside expectations, to determine
the true value of ALCONIX in a waythat we can communicate.
Imazu: I think one of the roles of an
outside director is to be the voice ofthe stakeholders. That means we needto listen to and understand the voices

Fujisawa: This discussion has taught
me a great deal about the ALCONIX
Group’s stalwart efforts to achieve new
growth. I think that its business modelis extremely valuable since it supports
the Japanese manufacturing industry
in pursuit of this growth. Furthermore,
non-ferrous metals and otherresources are becoming increasingly
scarce, so determining where to mine
the resources, from where to importthem, and where to reuse them haveall become major issues on a global
scale. The business strategies andoperations at the heart of ALCONIX
can serve as a model for the world.
From this perspective, I hope that
ALCONIX can communicate its efforts
far and wide. I would like to see it
weave its aspirations and the role itplays in society into a clear story thatanyone can understand, and I also
hope it will communicate its social
impact with quantifiable numbers.
Finally, as a request, I want theCompany to go beyond its dialogues
with shareholders and investors
and to deepen its engagement with
NGOs and other parts of civil society,and become more involved with thelocal communities where many small
and medium-sized manufacturers are
based. I think it would be a wonderfulthing if people would hold ALCONIX up
as a company that the world truly
needs.

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SECTION01.

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02.

Corporate Governance
Officer Remuneration System

Audit & Supervisory Board

Basic Principles for Remuneration (Excluding Outside Directors)

Chairperson

Composition

Internal Audit & Supervisory Board members: One member (full-time)
Outside Audit & Supervisory Board members: Three members

Meetings heldin fiscal 202213

· Formulates policies and audit plans for Audit & Supervisory
Board members· Attends Board of Directors meetings and other important
Main role and meetings, inspects important documents and reports from
authority
directors and employees, and conducts on-site inspections ofGroup companies to audit directors’ execution of duties· Verifies correspondence between audit results and audits
performed by the Accounting Auditor

The Audit & Supervisory Board consists of four members,
three of whom are outside Audit & Supervisory Board

members. The Audit & Supervisory Board fulfills its functionof monitoring management based on the audit standards andaudit plan determined by the Audit & Supervisory Board itself.
Under these standards and the audit plan, the board confirms
the execution of duties of directors by attending important
meetings of corporate bodies such as the Board of Directors
and the Management Committee and through other methods
that include checking reports, gathering feedback from directors and employees, inspecting important documents forapproval, and conducting on-site inspections of Group companies. In an effort to improve audit accuracy, the Audit &Supervisory Board works with the Accounting Auditor and the
Audit Department, exchanging opinions, sharing information,and coordinating activities as needed.

Activities of the Audit & Supervisory Board Member OfficeIn April 2022, we established the Audit & Supervisory Board Member Office as an organization to assist the Audit & Supervisory
Board with overall auditing duties. The office works to increase opportunities for the Audit Department and the Accounting
Auditor to share audit results with the Audit & Supervisory Board, as well as engage in regular communication under the premise that building up these collaborative ties will increase the effectiveness and efficiency of audits conducted by Audit &Supervisory Board members.

Advisory Bodies
Nomination and Remuneration Advisory Committee
Chairperson

Masao Hisada (Outside Director)

Composition

Internal directors: One member (full-time)
Outside directors: Two members

Meetings held in
fiscal 2022

9

Main role andauthority·D etermines policies and procedures for selecting directors andAudit & Supervisory Board members· Determines draft proposals for appointments and dismissals· Determines draft proposals for executive officer and other senior
management candidates· Determines remuneration policies for directors and Audit &Supervisory Board members· Determines draft proposals for remuneration for directors andAudit & Supervisory Board members· Determines individual remuneration for directors and executive
officers

The Nomination and Remuneration Advisory Committee isan advisory body to the Board of Directors composed of one
internal director, one outside director, and one outside
Audit & Supervisory Board member, with an outside
member serving as chair. The committee deliberates onmatters that include succession plans for the chief executive officer; the nomination of directors, executive officers,
and other management positions involving business execution; and remuneration. In fiscal 2022, the committee’s
primary task was a review of the fundamental remuneration scheme for directors. In fiscal 2023, the committee
plans to review the Company’s succession plans and otherpolicies for selecting directors and officer candidates.

Appointment and Dismissal of Directors
In line with the selection criteria for candidates for the Board of Directors, internal candidates must have a wide range of knowledge and a wealth of experience related to ALCONIX business management, while outside candidates must meet Tokyo Stock
Exchange requirements for independent officers and possess practical, objective perspectives and deep insight that meet the criteria for determining independence as defined by ALCONIX. Regarding the appointment and dismissal of directors and the nomination of director candidates, the Nomination and Remuneration Advisory Committee makes an overall evaluation of candidates withthe potential for executing duties appropriately as a director who satisfy requirements in terms of the knowledge, experience, capabilities, and accomplishments required for each position, with recommendations forwarded to the Board of Directors for resolution.

Judgment criteria for determining the independence of outside directors and Audit & Supervisory Board members (Corporate Governance Report)
https://www.alconix.com/assets/docs/company/20230630CG.pdf (Japanese only)

56

ALCONIX Integrated Report 2023

03.

SECTION

04.

The Future of Our Dreams

Audit System
Masahiko Nishimura (Full-Time Audit & Supervisory Board Member)(Replaced as Full-Time Audit & Supervisory Board Member by
Junichi Kitagaki at the conclusion of the 42nd Ordinary General
Meeting of Shareholders)

SECTION

Remuneration as a Means to Support Sustainable Value
Creation for the Group1) Remuneration is set at a level that provides a healthy degreeof motivation to promote sustainable growth and corporate
value creation over the medium to long term.
2) Performance-linked remuneration is granted fairly andequitably and is determined via a quantitative evaluation
based on financial performance, and a qualitative evaluation
based on the recipient’s efforts to address issues in accordance with the Company’s medium- to long-term strategy,
the extent of decision-making regarding the appropriate
allocation of management resources from a medium- tolong-term perspective, and the extent of decision-making
regarding investments (M&As, capital investments, etc.)
based on appropriate risk-taking. This method ensures that
the Group’s management is aware of their responsibility forthe operating results for each fiscal year.

3) Continuous long-term incentives linked to medium- to longterm performance of the Group are granted with the goal of
creating sustainable corporate value.
4) The Group promotes long-term stock ownership while such
remuneration serves to ensure that its recipient, i.e., a director, maintains a shared interest with other shareholders.
Ensuring Objective and Transparent Remuneration Decisions
1) The policy for determining remuneration, as well asamounts paid to individual directors is deliberated upon by
the Nomination and Remuneration Advisory Committee, of
which the majority is outside officers.
2) We ensure that remuneration is set at an appropriate levelby referencing survey data from external research organizations, making objective verifications, such as comparing
levels with other companies in the same industry or of thesame size, and taking into consideration the characteristicsof the Group’s business.

Remuneration System
Remuneration for directors (excluding outside directors)
comprises fixed remuneration and performance-linked remuneration, which is provided as monetary remuneration (Board
Benefit Trust), performance-linked stock remuneration, in
which Company stock is provided in light of sustainable creationof corporate value, and restricted stock remuneration, which is
aimed at maintaining a sense of shared value with shareholders
through the continued holding of Company stock.
1) Composition of Fixed Remuneration
Supervisor salary: Fixed remuneration is granted, taking into
account a director’s supervisory function (uniform for all) andthe degree of responsibility placed upon representatives (representative directors only).
Executive salary: Fixed remuneration is granted according to a
director’s position (payment for executive duties) plus fixed
remuneration according to the role that C-suite executives playin business execution, when applicable.
2) Composition of Performance-Linked Remuneration
In addition to fixed remuneration, performance-linked remuneration is granted as a percentage of the executive salary
granted for executive duties, ranging from 0–100%.

The amount for each director is determined by the degree towhich the Group achieved its consolidated ordinary profit andROE targets for the fiscal year, both of which are key indicatorsfrom a management perspective, and by qualitative contributions
by the individual director. This method clarifies responsibility
toward operating results for each fiscal year.
3) Composition of Stock-Based Remuneration
Board Benefit Trust (BBT): 16%
Restricted stock remuneration (RS): 8%
Remuneration Amounts for Directors and Audit &Supervisory Board Members for Fiscal 2022
Officer classification
Directors(Outside directors)
Audit & Supervisory
Board members(Outside members)
Total(Outside officers)

Total
remuneration amount(million yen)

Total remuneration amount by type (million yen)Fixed
remuneration

Performancelinked
remuneration

Non-monetary
remuneration

Number ofapplicableofficers

377

201

151

24

9

(34)

(34)

(—)

(—)

(4)

49

49

(—)

(—)

4

(27)

(27)

(—)

(—)

(3)

426

250

151

24

13

(61)

(61)

(—)

(—)

(7)

Note: The amount paid to directors includes the remuneration for executive officers who
also serve as directors.

Basic Policy for Determining Remuneration for Outside Directors
Remuneration for outside directors performing their supervisory function independent of business execution is limited to
fixed remuneration (supervisor salary). This amount is set
after comparison with companies in the same industry or of
the same size as ALCONIX. The Nomination and Remuneration
Advisory Committee deliberates over the remuneration
amount for outside directors and then drafts a proposal for a
total amount within the limit approved at the Ordinary General

Meeting of Shareholders. This proposal is submitted to theBoard of Directors for approval. (As a general rule, remuneration of outside directors does not change, regardless of thenumber of years they have served. However, the chair of theNomination and Remuneration Advisory Committee and its
members receive a separate payment for committee
membership.)

ALCONIX Integrated Report 2023

57

SECTION

00.

SECTION01.

SECTION

02.

Corporate Governancebusiness execution, capital policy, corporate organization,
strategic risks, and other matters requiring resolutions orreports by the Board of Directors.

Executive Committee
The Executive Committee consists of five internal directors
who concurrently serve as executive officers, seven otherexecutive officers (including the general manager of the
Osaka branch), the general manager of the Nagoya branch,and one full-time Audit & Supervisory Board member who

participates as an observer. The committee holds regularmonthly meetings, and extraordinary meetings as necessary, to discuss important matters related to businessexecution.

Executive Division Committees (As of June 30, 2023)
Chair and frequency of meetings

Chair:
Chairman and CEO, President and
COO
Frequency of meetings: 4 times a year

Chair:
Managing Director and CCO
Frequency of meetings: 5 times a year

Risk Management
Committee

Chair:
Managing Director and CSO
Frequency of meetings: 12 times a year

Sustainability Committee

Frequency of meetings: 4 times a year

Chair:
Managing Director and CSO
Frequency of meetings: 4 times a year

Subcommittee

Credit Risk Subcommittee

Specific roleImproves operational effectiveness and efficiency
Ensures compliance with accounting standards and reliability of financial
reportingComplies with laws, regulations and management principles, including
various codes of conduct reflecting those principles
Complies with company rules and regulations
Maintains company assets
 ormulates basic compliance policies and action plans
FCompiles the ALCONIX Group Compliance ManualDevelops a contingency plan for responding to compliance violations
and crises with the potential of significantly impacting the Company’sbusiness operations
Designs and maintains internal reporting systems
 anages risks related to business partners
M
Manages risks associated with country-specific credit risks where business partners are located, country risks, and risks associated with wars
and civil unrest (including the formulation of plans linked to business
continuity plans [BCPs])
Conducts analysis and management of risks associated with foreign
currencies, commodity price volatility, stock and other securities’ prices(including cross-shareholdings), and market transaction price volatility*
including interest rates
 anages risks associated with Security Export Control as well as perM
sonal information management-related laws and regulations

Chair:
President and COO

The ALCONIX Group handles non-ferrous metals in a wide
range of fields utilizing a business model that integrates
trading and manufacturing. This presents a variety of risks.
The Risk Management Committee, chaired by the CSO,
meets once a month to identify risks and issues for theentire Group and discusses countermeasures. Under thisMarket Risk Subcommittee* Market transaction price volatility is not the same as other risks that are included withinmarket transaction price volatility.

Information Management
and Security Committee iscusses matters related to information management and security
DDiscusses matters related to information system improvements
Discusses matters related to cybersecurity
 ormulates Companywide sustainability policies and guidelines for eachF
ESG topic
Identifies and verifies sustainability risks and opportunities
Develops guidelines and measures to address climate change and protect
the environment
Develops guidelines and measures to enhance the labor environment andimprove diversity within the Company
Conducts supply chain management and analyzes outcomes from theperspectives of human rights and the environment
Formulates and proposes recommendations to reflect sustainability inGroup management based on the above points

Business Succession
Subcommittee
Export Control and Protection of
Personal Information Subcommittee

ALCONIX Integrated Report 2023

committee are subcommittees that discuss topics related
to a specific risk category assigned to them. Going forward,
the committee will continue to build up collaborative ties
with related departments in order to serve as a central
point of understanding and analysis of Groupwide risks,with the aim of addressing these risks swiftly.

Main discussion topics

Department in charge

Number of meetings
per year (scheduled)• Risks related to business partners

Risk Management
Department

12 (monthly)• Country-specific credit risks of business partners’ home countries(includes country risks)

Risk Management
Department

4• Risks caused by fluctuating transaction prices in the market

Finance Department,
Accounting Department

4• Foreign exchange risks, risks related to fluctuations in the prices ofgoods, risks related to stock prices and other securities (including
cross-shareholdings)

Risk Management
Department

4• Risks related to interest rates

Finance Department

4• Risks related to earthquakes, typhoons, fires, and other disasters;risks related to infectious diseases

General Affairs & Human
Resources Department

2• Country risks, BCP measures, risks related to war, civil war, andother conflicts

Risk Management
Department2• Security Export Control• Risk management related to laws and regulations concerning
management of personal information

Risk Management
Department

1 or more

Compliance
Compliance Promotion System and Global Internal Reporting System
ALCONIX has established a Compliance Committee chairedby the executive officer in charge of internal control. Basedon the basic policy and implementation plan formulated by
the committee, the Company has released the ALCONIX
Group Code of Conduct and the Declaration of Harassment
Prevention as well as distributed a Compliance Handbook. In
addition to these efforts, which aim to minimize risk of violations, personnel in charge of managing departments at the
Head Office and Group companies have worked together todevelop systems and conduct training to promote compliance.
The Group has also introduced a global internal reporting system (the Internal Compliance Hotline) for use by all

executives and employees working in Japan and overseas,with the goal of prevention and early detection of legal
violations and misconduct. In addition to the Internal
Compliance Hotline, we have set up an External
Compliance Hotline. We ensure anonymity and neutrality
when receiving reports and work diligently to protect whistleblowers, prohibiting any detrimental activity toward them.
Cases of particular importance are reported to the Boardof Directors and the Audit & Supervisory Board by theCompliance Committee. In fiscal 2022, there were 11 cases
reported via the internal reporting system.

Compliance Consultation and Reporting System
Domestic and Overseas Group Companies

ALCONIX (non-consolidated)

Reporting ALCONIX Internal Compliance Hotline

Reporting(1) Internal Compliance Hotline(2) External Compliance Feedback
Hotline (outsourced toan external organization)

Reporting(anonymous)

Feedback

Legal &
ComplianceDepartment

Reporting(anonymous)
Reporting(anonymous)(3) Full-time Audit &Supervisory Board
member

General Affairs& HumanResources
Department

Feedback

Consulting party

58

04.

Basic Policy

The Management Committee meets once a month,attended by five internal directors and one full-time Audit& Supervisory Board member as an observer, to conductadvance deliberations on important matters related toCompliance Committee

SECTION

Risk Management

Management Committee

Internal Control Committee

03.

The Future of Our Dreams

Executive System

Committee name

SECTION(2) External Compliance Feedback
Hotline (outsourced toan external organization)(Legal & ComplianceDepartment, General Affairs &Human Resources Department)

Provision ofcompliance report

Reporting ofcase responses(3) Full-time Audit &Supervisory Board
member(1) Group companies’ Internal
Compliance Hotline

Feedback

Reporting(anonymous)

Feedback

Reporting(anonymous)

Feedback

Branch Compliance Hotline
Reporting(anonymous)

Feedback

Reporting(anonymous)

Feedback

Consulting party

ALCONIX Integrated Report 2023

59

SECTION

00.

SECTION01.

SECTION

02.

Corporate Governance

SECTION

04.

Dialogue with Shareholders and Investors

Main IR Activities in Fiscal 2022

· Launched updated homepage and IR site
· Released analyst report produced by Shared Research Inc.
· Produced video of presentation detailing the Company’squarterly results online with English dubbing

TO P I C S

03.

The Future of Our Dreams

Investor Relations (IR) Activities

G

SECTION· Conducted quarterly one-on-one meetings with institutional investors· Held online briefings for individual investors· Produced video detailing Medium-Term Management Plan
2023

Improving Communication
We release on-demand videos of briefing sessions so that viewers can see
members of management convey the Company’s goals and policies.
Note: English versions are available for a selection of briefings.

IR Activities
https://www.alconix.com/en/ir/

Video of the CSO and CFO discussing
Medium-Term Management Plan 2023

We recognize the importance of constructive dialogue withshareholders and investors, both in Japan and overseas,
as a means to achieve sustainable growth and increase
corporate value over the medium to long term. We are
therefore committed to maintaining prompt and fair disclosure and active engagement with shareholders and investors.

Types of engagement:

The Corporate Communications Department, which is incharge of investor relations, compiles opinions and suggestions received by shareholders and investors andpromptly reports them to management. Officers in chargeof engagement with shareholders and investors submit
regular reports to the Board of Directors.

For institutional investors and analysts
Quarterly financial briefings via online video, one-on-one meetings with institutional investors, shareholder relations meetings with persons responsible for exercising voting rights

	For individuals
In-person investor briefings, online investor briefings
Senior executives in charge:

CEO, COO, CSO, CFO

Number of engagement sessions: Number of sessions with institutional investors and analysts (fiscal 2022): 51

Overview of Engagement and Activities
Domestic / Overseas

Portfolio Management Style

Investment Style
ValueStakeholder Engagement

Domestic

As a public company, ALCONIX engages in the proper management of important Group information and strives to maintain andimprove the trust of investors and other stakeholders through fair, impartial, accurate, and prompt information disclosure.
Partner (Stakeholder)60

Approach

Main methods of engagement

 ctions conducted in good faith and in accordance with theA
ALCONIX Officers’ Compliance Manual and ALCONIX’s
Environmental Policy
Corporate website, online inquiry form (response via email)Integrated report (to provide financial and non-financial
information)

Business Partners

We strive to raise customer satisfaction andgain trust by providing products and services
that help society through fair transactions.

Employees

We focus on providing employees with compensation, education, and opportunity andwork to create an environment that is both
comfortable and rewarding for every one of theGroup’s employees, in order to develop people
who can put forward creative solutions andstep up to become sources of value creation
for the Company.

 ompany intranet, integrated report, employee engagement surveyCOne-on-one meetings with employees and training seminars(conducted by the General Affairs & Human Resources Department)Employee relations meetings and career guidance meetings(attended by management)Self-directed support for the SDGs

Local Communities

We realize the importance of social responsibility, and we aim to coexist with local communities
and engage in social contribution activities as apositive member of these communities.

 olunteer activities with employees
VSupport for athletesFactory tours and hands-on manufacturing experiences

Shareholders(Investors)

We strive to enhance profitability while preserving stability, and to maintain a soundfinancial structure. In addition, we disclose
information in a timely and appropriatemanner to ensure a high level of transparency.

 orporate website
CIntegrated reportOrdinary General Meeting of Shareholders
Shareholder newsletters
Financial reports
Financial results briefing videos
Investor briefing sessions

Governments andAuthorities

In addition to complying with domestic andinternational laws and regulations and fulfilling
tax obligations, we collaborate with government
agencies and local governments to propose andpromote a variety of projects.

 ctivities conducted through industry organizations
AParticipation in various councils and other organizations withingovernment offices

ALCONIX Integrated Report 2023

82.4%

Active

84.3%

96.1%

Overseas

Passive

15.7%

Growth5.9%

Income

7.8%

3.9%

Index3.9%

Over 80% with domestic
institutional investors
 anagement will continue toMenhance active dialogue.

Over 90% of investors practiceactive portfolio management.
The
majority of institutional
investors expect the Company toimprove its corporate value overthe medium to long term.

Over 80% of investors practicevalue investing.
It is important to improvethe effectiveness of dialogue.

Main Topics of Discussion1) M&As (potential synergies with recently acquiredcompanies, acquisition criteria, PMI, strength in
networking, goodwill, etc.)
2) Foreign exchange and market prices for metals (future
strategies and prospects in line with external factors)
3) Analysis of profit increase/decrease factors4) Status of cost pass-through5) Recycling business6) Measures to improve P/B ratio in order to raise it
above 1.0
7) ESG (response to climate change, management of
human capital, etc.)

Improvements in IR Activities Based on Shareholder Dialogue· Enhanced disclosure (change in format of financial results briefing materials, disclosure in English, etc.)· Published policy concerning cost of capital and capital efficiency in the medium-term management plan
· Disclosed analysis of factors affecting ordinary profit in full-year financial results briefing materials

ALCONIX Integrated Report 2023

61

SECTION

00.

SECTION01.

SECTION

02.

SECTION

03.

SECTION

Data Section

Data Section

Financial Highlights

Non-Financial Highlights

Net Sales

Ordinary Profit(Million yen)

(Million yen)

300,000

12,000257,437

240,000

232,242

214,987
156,286

178,333
6,000(t-CO2)20,00011,009

6,254

5,416

17,865

16,568

(MWh)

(kl)

36,0001,600
29,32927,00010,000120,000

18,0005,000

60,0009,000

FY2018FY2019FY2020

FY2021

FY20220

FY2018FY2019FY2020

FY20210

FY2022

10.5

9.8

10

4,000

3,200

7,507

2,400

5,488
4,009

2,417

1,600

3,617

7.4
4.3
FY20183.1

3.6

FY2019FY20207.1
4.6
FY2021

FY2022FY2018FY2019FY2020

FY20210

FY2022

ROE

Dividends Per Share, DOE, and Dividend Payout Ratio(Yen)(Yen)(%)

60

282.5445240
182.4030

143.25

37.0
29.3
25.1

80

15

0

0

2,821

2,931

170

159

FY2018FY2019FY2020

FY2021

31,007
1,550

1,498

1,505

320

FY2021

1,450
354
FY2018FY2019FY2020

FY2021

FY2022

1,400

Renewable energy use (left scale)
Non-renewable energy use (left scale)Fossil fuel use (right scale)
Scope: Domestic bases of ALCONIX CORPORATION and ALCONIX Group companies

Average Length of Employment and Age of Employees(non-consolidated)(Years)

12

11.7

11.6

11.8

11.5

(Age)

60
10.3

43.9

43.1

43.7

43.7

240

9

160

6

30

80

3

15

0

0

42.8

190

174

FY20201,496 1,500

1,445

FY2022FY2018FY2019FY2020

Average length of employment (left scale)

FY2021

FY202245

0

Average age (right scale)42

FY2022Rate of Taking Annual Paid Leave

Number of New Graduate and Mid-Career Hires(%)(Number of employees)

80
66.4

69.3

65.2

70.7

32

29

76.8

29.6 30

60

24

20

40

16

10

20

8

42

39

18.4

2.6
FY2019405452113.60FY201829,930Total employees (non-consolidated) (right scale)

Net Income Per Share
320

0

0

(Number of employees)
3,185

Total employees (consolidated) (left scale)Note: Figures for ROIC and ROE are based on shareholders’ equity.

155.20

FY2022

800

2,000
0

2,552

142

2,860
5

FY2021

Human Capital

6,000
11.8

FY2020(Number of employees)

8,000

15

FY2019

Scope:	Domestic bases of ALCONIX CORPORATION and ALCONIX Group
companies
Note:	Total energy use is calculated by aggregating power consumption (MWh)and fuel use (crude oil equivalent) (kl).

(Million yen)

16.9

FY2018CO2 emissions (left scale)
Total energy use (right scale)

(%)

20

28,588

163,775

155,427

157,434

29,198

1,472

3,000

Profit Attributable to Owners of Parent

160

16,492(GJ)

240,000

184,434
180,000

158,958

5,718

ROIC / ROE

ROIC

17,34818,28415,0008,176

Note: The revised Accounting Standard for Revenue Recognition has been applied tofigures from fiscal 2021 onward. The figure for fiscal 2020 has been adjusted
according to the revised accounting standard. Figures prior to fiscal 2020 follow
the previous accounting standard prior to the revision.

0Power Consumption and Fuel Use Resulting from Business
Activities (crude oil equivalent)

105,687

60,0000

CO2 Emissions and Total Energy Consumption from
Business Activities

9,000

180,000
120,000

04.

FY20182.9
FY2019Dividends per share (left scale)
Dividend payout ratio (right scale)

3.1

2.8
FY2020

FY2021

DOE (right scale)

3.0
FY202200

FY2018FY2019FY2020

FY2021

FY2022

0

13

12
6
4

8

1
FY2018

8

8

8
6

9

3

3

2
FY2019Number of new graduate hires
Number of mid-career hires

FY202011

7
6

FY2021

4
2
FY2022(Of whom are women)(Of whom are women)

Note: Figures are based on shareholders’ equity.

62

ALCONIX Integrated Report 2023

ALCONIX Integrated Report 2023

63

SECTION

00.

SECTION

01.

02.

SECTION

03.

SECTION

Data Section

SECTION

04.

Data Section

Eleven-Year Summary of Financial Data
Operating Results(million yen)

FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022

164,769

183,749

201,543

201,755

201,948247,931

257,437

232,242

214,987

156,286

178,333

Operating profit

3,286

3,484

4,584

3,792

4,168

7,323

6,257

5,176

5,621

11,0208,393

Ordinary profit

2,892

3,600

5,205

4,281

4,352

7,939

6,254

5,416

5,718

11,009

8,176

Profit attributable to owners of parent

1,430

3,144

3,505

4,977

3,083

5,336

4,009

3,617

2,860

7,507

5,488

Total assets

70,38285,664

89,848111,570

113,647

130,197

143,851

134,463

147,917

176,437

191,890

Net assets

15,81821,36826,951

31,323

34,11938,626

39,673

41,27743,37257,331

63,047

Shareholders’ equity

14,932

17,664

20,79425,26027,85332,63335,16638,32038,64650,431

54,325Interest-bearing debt*2

26,92629,91330,13038,611

38,09146,05358,40851,64859,122

61,79971,824

Cash flows from operating activities

7,056

1,992

550

10,630

140

2,849

5,279

9,091

4,098

(3,329)226

Cash flows from investing activities(9,376)(2,428)(105)(5,188)(1,524)(5,166)(10,770)(3,171)(2,472)(3,257)(7,045)

Cash flows from financing activities

2,589

1,414

(1,445)2,112(1,019)

3,900

9,625

(7,993)

2,849

5,760

5,896

Free cash flow

(2,320)

(436)

445

5,441

(1,383)(2,317)(5,490)

5,919

1,626

(6,586)(6,818)Net income per share

56.29

123.69137.38193.54119.66206.56155.20143.25113.60282.54

182.40Net assets per share

603.74819.11

1,026.91

1,155.66

1,255.62

1,423.87

1,489.59

1,578.62

1,709.55

1,889.53

2,075.25

Dividends per share*3

15

16.25

20

22

22

32

39

42

42

52

54

Dividend payout ratio (%)

26.6

13.1

14.6

11.4

18.4

15.5

25.1

29.3

37.0

18.4

29.6

ROE

9.9

19.3

18.2

21.6

11.6

17.6

11.8

9.8

7.4

16.9

10.5

Net sales*1

Financial Position(million yen)

Cash Flows(million yen)

Per Share Information(yen)

Financial Indicators
(%)

—

—

—

—

—

6.8

4.3

3.1

3.6

7.1

4.6

Shareholders’ equity ratio

21.8

24.3

29.3

26.7

28.5

28.3

26.3

30.1

28.9

32.2

32.6

Net debt-to-equity ratio

1.03

0.82

0.67

0.63

0.66

0.75

0.95

0.71

0.77

0.64

0.72

ROIC

*1 The revised Accounting Standard for Revenue Recognition has been applied to figures from fiscal 2021 onward.
*2 Interest-bearing debt = Short-term borrowings + Commercial paper + Current portion of long-term borrowings + Current portion of bonds payable + Bonds payable + Long-term borrowings*3 Dividends per share figures reflect stock splits conducted in fiscal 2014 and fiscal 2017.

Operating Profit to Net Sales Ratio / EBITDA to Net Sales Ratio(%)

Interest-Bearing Debt / Net Debt-to-Equity Ratio(Million yen)

12(Times)80,00071,8249.7
960,000

7.1

7.4

6
3.6

3.8

2.4

2.2

FY2018FY201930Operating profit to net sales ratio

4.7

4.6
2.6
FY202040,00058,40851,6481.0

59,1220.8
0 .7

20,00061,799FY2022

EBITDA to net sales ratio

0

FY2018FY20190.7
0.5

Interest-bearing debt (left scale)

FY2020

FY2021

FY2022

16.4%

Export transactions

e of net sa
lescentagPere of segment
ntag
pro
rce
fit
e
P

19.5%

1.5
Domestictransactions

29.6%

35.0%
Import transactions

FY2021Net Sales and Profit Ratio by Segment for Fiscal 2022

2.0

1.0
0.6

ALCONIX Group Net Sales Ratio by Segment Transaction
for Fiscal 2022

21.9%

0

23.4%

23.2%

44.0%

12.2%
14.3%

Net debt-to-equity ratio (right scale)

37.0%

Overseas transactions(local and trilateral)

23.6%

Electronic and Advanced Materials
Equipment and Materials

Aluminum and Copper
Metal Processing

Note: Some amounts may not match due to the rounding of figures.

64

ALCONIX Integrated Report 2023

ALCONIX Integrated Report 2023

65

SECTION

00.

SECTION01.

SECTION

02.

SECTION

03.

Data Section
Corporate Information (As of March 31, 2023)

Status of Shares
Prime Market segment of the Tokyo Stock Exchange

Securities Code 

3036

Total Number of Outstanding Shares 

31,012,500

Number of Shareholders 31,421

Shareholder by Investor Type

Company Profile(Number of shares)

Issue Name
Financial
institutions
8,293,400(26.74%)

Shares oftreasury stock
777,207(2.51%)
Individual
investors,
other10,539,004(33.98%)

Securities firms
921,911(2.97%)

Major Shareholders

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

3,239

10.72

BBH FOR FIDELITY LOW-PRICED STOCK FUND

2,363

7.82

Custody Bank of Japan, Ltd. (Trust Account)

2,046

6.77

Kobe Steel, Ltd.

1,000

3.31

FUJI CORPORATION

948

Mizuho Bank, Ltd.

Other entities
4,536,495(14.63%)

Overseas entities(including 21,237
overseas individuals)
5,944,483(19.17%)

Number of shares Shareholding
held (Shares)
ratio (%)

Name of shareholder

Group Companies

ALCONIX CORPORATIONHead Office	Sanno Park Tower 12th Floor, 2-11-1
Nagatacho, Chiyoda-ku, Tokyo
100-6112

Domestic ADVANCED MATERIAL JAPAN CORPORATION

Date of
Establishment

July 1, 1981

	ALUMINUM & COPPER RECYCLING
CENTER CORPORATION

Capital¥5,810.2 million

Number of
Employees

3,185 (Consolidated)

MARKTEC CORPORATION

2.62

Settlement Date

March 31

Sumitomo Mitsui Trust Bank, Limited

595

1.97

Held in June

MUFG Bank, Ltd.

520

1.72

RE FUND 107-CLIENT AC

454

1.50

Ordinary General
Meeting of
Shareholders

Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.

429

1.42

80,0003,000

60,000

Representative
Directors

4,000

1,000

20,000Share price (left scale)Market capitalization (right scale)

March
2015

March
2016

Notes: 1. The adjusted closing price and market capitalization are monthly averages.
2. The adjusted closing price has been adjusted to reflect stock splits implemented in previous years.

March
2017

March
2018

March
2019

March
2020

March
2021

March
2022

March
2023

0

Audit & Supervisory Board
Member Office

40,000

Audit & Supervisory Board

2,000

March
2014

FUJI PRESS CO., LTD.
FUJINE INDUSTRY CO., LTD.
JUPITER INDUSTRY CO., LTD.
SOODE NAGANO CO., LTD.

UNIVERTICAL HOLDINGS INC.
FUJI ALCONIX Mexico S.A. de C.V.

Sustainability Promotion
OfficeAudit Dept.

Internal Control OfficeAluminum, Copper &Titanium Div.

Non-Ferrous &Industrial Materials Div.

Business Strategy Dept.
Business Management
Dept.
Corporate
Communications Dept.

Aluminum &Copper Products Dept.
Project
Development Dept.
Titanium &New Materials Dept.

Corporate Sector
Corporate Planning Dept.

March
2013

OHBA SEIKEN CO., LTD.

ALCONIX CASTLE METALS AND CHEMICALS SDN. BHD.

Officer in Charge ofInternal Control
Board of Directors(Million yen)

Shareholders(Yen)March
2012

OHKAWA CORPORATION

Overseas HONG KONG ANDEX ELECTRONIC MATERIAL CO., LTD.

Sustainability Committee

Share Price Information

March
2011

FUJI CARBON MANUFACTURING CO.

Organizational Chart (As of April 1, 2023)

Notes: 1. Treasury stock (777,207 shares) has been excluded when calculating shareholding ratios.
2. Shareholding ratios are rounded to the second decimal place.

March
2010

TOHOKU CHEMICAL INDUSTRIES, LTD.

Import/export and domestic sales ofType ofBusiness	non-ferrous metal products andresources, including minor metals andrare earths

792

March
2009

ALCONIX MITAKA CORPORATIONTOKAI YOGYO CO., LTD.

3.14

March
2008

(corporate website).

HAYASHI METAL CORP.

AC METALS CORPORATION

Mizuho Bank, Ltd., MUFG Bank, Ltd.,
Sumitomo Mitsui Trust Bank, Limited

March
2007

ALCONIX VENTURES CORPORATION

Please scan
the QR code below
for more details

HEIWA KINZOKU CO., LTD.

Financial
Institutions

004.

Data Section

Shareholder Information (As of March 31, 2023)
Stock Exchange Listing 

SECTION

Electronic & Advanced
Materials Div.

Hamamatsu Office
Hiroshima Office

Industrial Materials
Dept.
Non-Ferrous
Materials Dept.
Electronic Materials
Dept. 1
Electronic Materials
Dept. 2

General Affairs &Human Resources Dept.

Osaka Branch

Osaka Sales Dept.

Risk Management Dept.

Nagoya Branch

Nagoya Sales Dept.

Legal & Compliance Dept.
Information System Dept.
Finance Dept.
Accounting Dept.

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67