Chapter 01

Messages from Management

Messages from Management

President’s Message

Akira Uozu, President Representative Director

In March of this year, upon assuming the position of president,
I developed “Evolution 2030,” which sets a global leading
company, as a vision for “how we seek to be in 2030 and how
we ought to be,” and defines how to make that vision a reality.
For the past 12 years since 2011, former president Hori has
pursued monozukuri and achieved sustainable growth under
the policy of being “a company committed to products andmanufacturing.” It is my aim to uphold this policy and become
a global leading company through the evolution ofArchitectural Products.
Specifically, focusing on the three key themes of“contributing to the global environment,” “creating new value
for our customers,” and “prioritizing employee well being and

6

Corporate Data

Developing the “Evolution 2030” vision

Initiatives in the Value Chain

Investment plan
P11

engagement,” we have set out such targets as reducing internal
CO2 emissions by 80% (relative to FY2013), achieving a 100%
recycling rate of aluminum from external suppliers (in Japan),and increasing our overseas sales rate from the current 17% to
30% by FY2030.
In order to provide new customer value, we will also proceedwith the transformation of our business model. One example isthe “Integrated insulated building envelope solutions,” whichstarts with high thermal insulation windows and combines
products with insulating structures for the building envelope,such as walls and roofs, with design, installation methods, andconsulting services. As a high value-added curtain wall (CW) for
commercial buildings, we are also working on development
and proposals of “unitized CWs” for mid-rise buildings, which
contribute to labor savings and shortened installation periods.
Active investment will be essential to achieve these goals.
From FY2023 to FY2030, we expect to make a total of 50 billion
yen in domestic and overseas sustainability-related
investments, and 100 billion yen in overseas investments.
Particularly with respect to overseas investments, we intend to
renew aging facilities, introduce automation equipment, etc.,
and rebuild buildings. The need for mid- to long-term
investment planning in foreign countries is something I
became keenly aware of while actually visiting the areas
concerned.

Business Strategies for Growth

Unitized CWs
P45

Foundations Supporting our Business

Overseas sales ratio
P56

In April of this year, YKK AP transitioned to a new management
structure. Following in the footsteps of the founder and firstpresident Tadahiro Yoshida and the second president Hidemitsu
Hori, I am once again humbled by the great responsibility ofensuring the sustainable growth of the business.
From the time I joined the company in 1985 until FY2021, I
have dedicated myself to the sales of architectural products.
From my experience as a sales representative, I have come tobelieve that our first priority is to solve issues faced by ourbusiness partners and generate profits for them, and that our
products are the means to that end. Since FY2012, I have been
responsible for the window business and have been promoting
vinyl windows nationwide. By continuing to communicate thatvinyl windows, which were not yet widely accepted in themarket, would benefit our business partners and contribute tohomeowners’ healthy and comfortable lives, I laid thefoundation for the current window business. Thereafter, I tookcharge of international business as Executive Vice President in
FY2022 before I assumed the presidency.
As my personal motto, “moving forward” suggests, I havebeen pressing ahead with enthusiasm, placing the highest
priority on providing value to homeowners and our business
partners. As president, I am determined to move the company
onward with even more vigor and strength than before.

Value Creation

Become a Global Leading Company
Through the Evolution of Architectural Products

The Three Policies of Evolution 2030
Become a Global Leading Company
Through the Evolution of Architectural Products
Three Policies
Contribute to the Global Environment
Create mechanisms toward the realization of
decarbonization and a circular society

Create New Value for Our Customers
Higher thermal insulation performance,
higher added value and integrated business services

Prioritize Employee Well-Being and Engagement
Well being management based on the “Cycle of Goodness”

YKK AP Integrated Report 2023

7

Chapter 01

Messages from Management

Messages from Management
Value Creation
Foundations Supporting our BusinessBusiness Strategies for Growth
Initiatives in the Value Chain

In terms of “Prioritize employee well being and engagement,”in accordance with the YKK philosophy of the “Cycle ofGoodness,” we aim to become a company that is chosen by adiverse range of individuals by creating a comfortable work
environment, investing in our employees, providing
opportunities for growth, and running a business cycle thatcreates jobs. As a basic premise for this approach, weestablished the “YKK AP Human Rights Policy” in April.
Although we have been striving to respect human rights inaccordance with the ”YKK Group Human Rights Policy,” thistime, the policy was established independently to reflect ourcompany’s business activities. Furthermore, we would like to lay
the groundword for an environment in which a diverse range of
personnel can play an active role, and raise the proportion ofmanagement positions held by women from the current levelof approximately 6% to the same level as the proportion of
women among our employees.
By steadily implementing these measures, we aim to8

become a leading company with net sales on the order of one
trillion yen. We have set this ambitious number in the hopethat each employee will energize their ideas and activities bybackcasting from there to think “what I can do to make it
happen?”I was also impressed by the fact that when, in the process ofdeveloping the vision, I mentioned specific numerical targets infront of the employees, the relevant departments immediately
moved to explore the possibility of realizing them. Former
president Hori once told me, “A single word from the president
can encourage employees,” and once again I am made aware of
the president's responsibilities and the importance ofpresenting figures.

Expanding production capacity, enhancing ourability to respond to demand
In FY2022, net sales reached 508.6 billion yen, a record highfor the second consecutive year, with significant growth both inJapan and overseas. In response to soaring material prices,which have been a major issue in Japan, we have steadily

Human rights and humanresourcesP29-32YKK philosophy —"Cycle of Goodness"
P4

Overseas AP BusinessP48-49

Expansion of production
capacity for inner windows
P43

The 6th Mid-term Business Plan
P21

DX Promotion
P41
Labor-saving in installation
work
P54

implemented price revisions. Operating income was 17.8
billion yen, or 103% of the previous year's level, thanks tostrong growth in the overseas AP business, marking the firsttime in four years that both revenues and profits haveincreased.
Currently, demand for remodeling and renovation is rapidly
increasing due to the “Housing Energy Conservation 2023
Campaign,” a subsidy scheme to strengthen support for energy
conservation in housing through collaboration between three
ministries: the Ministry of Land, Infrastructure, Transport andTourism, the Ministry of Economy, Trade and Industry, and theMinistry of the Environment. Delivery delays have occurred due
to an unexpected surge in order volumes, and we apologize forthe inconvenience caused to our customers and business
partners. Currently, we are tackling the urgent issue of
expanding our production capacity by adding equipment forglass and remodeling products such as inner windows.
Meanwhile, the manufacturing sites are responding to thesudden demand by changing their work schedules, working
overtime, and working on holidays. If this continues, we will not

be able to avoid a decline in employee engagement. In
addition to promoting labor savings through automationequipment, we will take every possible measure, including
outsourcing assembly operations, to meet demand while
creating an environment in which employees can work
comfortably and feel fulfilled.
Looking to FY2023 and beyond, further material price hikes
are expected due to such factors as increased demand formaterials in China. There may also be steep rises in electricity
prices and labor shortages in the logistics and constructionindustries. We will assess the situation and take measures asappropriate. To address the labor shortage in the logistics
industry, which has been called the “2024 problem,” we have aplan to stock products in locations close to where they areneeded and transport them to sites in a state close to that offinished products. Internally, we will focus on training engineers
while increasing the number of mid-career hires in order toacquire talented engineers in design and installation
management.

YKK AP Integrated Report 2023

Corporate Data

Fostering an organizational culture in which adiverse range of employees can thrive

9Chapter 01

Messages from Management

Message from the Financial Officer

YKK philosophy —the “Cycle of Goodness”
P4

Building a foundation for growththrough mid- to long-term
strategic investment

Open call for new businessthemes and promotion leaders
P32

PurposeP5

Maximizing capital efficiency to strengthen
financial baseTargets set in “Evolution 2030”(operating income margin 10% or over)New measures
Net sales
508.6 billion yen(operating income margin 3.5%)(operating income margin 5.0%)

・Wooden windows

・Integrated insulated building envelope solutions

Domestic:
700 billion yen*・Coordinated garden exterior products・Strengthening the sales of interior architectural products

Domestic

Overseas

Overseas

FY2022

FY2023 plan

FY2021–FY2024
The 6th Mid-term Management Plan

・Higher thermal insulation performance and higher added

value for commercial builldings windows and curtain walls

・Global CW(unitized CWs, etc.)

Overseas:
300 billion yen*
FY2030 onward

FY2025–FY2028
The 7th Mid-term Management Plan

FY2029–FY2032
The 8th Mid-term Management Plan

*External sales

Rate of sales from overseas
businesses
P56

Akira Uozu

Joined YKK AP in 1985. Since joining the company, he

has been engaged in architectural products sales. After

serving as Vice President and General Manager of the Sales
Division’s Window Business Planning Department, Head of

the Residential Business Divison, Head of the Sales Division,
Business, he has been in his current position since April
2023.

Smart factory
P41

Our capital investment plan for FY2023 is 50.3 billion yen. In
order to make the most of this capital investment, the largest in
our history, I believe it is also important to standardize ouroperations and improve our information infrastructure. By
harnessing centralized data, and applying it to the deploymentof smart factories and the improvement of services forcustomers, we will further step up the pace of growth. I believe

Unit: 100 million yen

FY2022 FY2023(Results) (Plan)

Nature of investment

Increasing corporate value through offensive anddefensive investments

President Representative Director

and Director and Executive Vice President for International

FY2023 Investment Plan (based on orders)Japan

Overseas
Total

Corporate Data

Evolution 2030
P7

that the centralization of information will also expedite DX andenable swift offensive investment. This enhanced business
management infrastructure will also allow for the speedy
launch of new businesses.
Meanwhile, the standardization of operations and thedevelopment of an information infrastructure will also make
operations more visible, which will strengthen internal controls
and at the same time help maintain the corporate brand.
As a manufacturer, it is essential for us to invest not only inequipment but also in the people who make that equipment
function. By investing in equipment and human resources anddeveloping the infrastructure in parallel, we will encourage
further growth in corporate value. “We will develop a long-term
investment plan by backcasting, also assuming that we will stop
investing if we do not see a return, and make decisions basedon data while conducting repeated empirical testing.” With thisapproach, we aim to become a company with net sales of one
trillion yen, as indicated in “Evolution 2030.” We also place
great importance on environmental issues, and we expect tomake cumulative sustainability-related investments of 50
billion yen over the eight-year period from 2023 to 2030 toachieve our goal of becoming carbon neutral by 2040, among
others.

Initiatives in the Value Chain

Domestic

Net sales
547.9 billion yen

Kosuke Iwabuchi

Business Strategies for Growth

Net sales on the order of
one trillion yen

Growth of existing businesses

Director and Executive Vice President, General & Administration

Foundations Supporting our Business

Human resources strategy
P31

For YKK AP to continue to grow, it must respond flexibly to thechanging times through appropriate investment and cash flow
management. When making decisions about whether or not toinvest large amounts of capital, we place importance on the
returns that can be obtained over the medium to long term.
Therefore, we are focusing on return on assets (ROA) as afinancial indicator, with an indicator of 6–7% (3.5% in FY2022).
We conduct constant reviews to ensure that we are making
investments that will lead to sustainable increases in corporate
value.
Profitability as a percentage of net sales is an importantfactor in improving ROA. As such, we require the managers ofeach business to consciously improve their operating income
margins. We will subdivide each business into smaller
segments to increase their respective earning power. We willset KPIs to achieve an operating income margin of 5% for all
businesses first, and in the future, an operating income marginof 10% for the entire company.
As strategic investments that anticipate future growth, we arealso mindful of the growth rate of each individual field. Overthe last decade or so, we have increased our domestic market
share by investing aggressively in our window business. Goingforward, we will invest capital in areas such as exteriors andinteriors, where there is significant room for expansion.
In addition, under our vision “Evolution 2030,” we aim toincrease the proportion of our sales generated from overseas
business from 17% to 30%. To achieve this goal, we envision a
scenario in which Japan first takes the lead in encouraging
independence, followed by each company growing throughtheir own unique strategies that take regional characteristics
into account.

Value Creation

I believe that our greatest strength lies in the character of ouremployees. We are a group of people who can act in accordancewith the “Cycle of Goodness” philosophy — that is, the spirit ofrendering benefit to others. This is demonstrated by the factthat our Purpose, ”We Build a Better Society Through Architectural
Products,” developed by our employees in 2021, shares a common
foundation with the “Cycle of Goodness.” As mentioned at the
beginning of this section, I have been able to improve our resultsby solving the issues of our business partners. I am of the firm
belief that the “Cycle of Goodness” provides us with a competitive
advantage.
Accordingly, human resource development is one of our key

priorities. To enable employees to feel fulfilled and fully
demonstrate their abilities, in addition to the aforementioned
labor-saving measures at work sites, we are proactively
reviewing our salary structure and expanding position andqualification allowances.
Efforts to develop human resources across departments havealso begun, led by the Chief Human Resources Officer (CHRO),
a position established in 2021. We invite ideas for new
businesses from within the company, and employees who comeup with innovative and promising ideas are asked to work on
the actual launch of the business.
The next stage is “Evolution.” Together with our diverse
workforce, we will move forward to become a global leading
company.

Messages from ManagementYKK AP’s strength lies in its people.
Pursuing evolution under the philosophy of the“Cycle of Goodness”

Increase production capacity and support new products

60

101

Streamlining support

44

64

Digital-related

31

55

Sustainability-related

29

38

YKK AP 30 Building, Architectural Products Technology Center (provisional name), etc.

̶76

Infrastructure development, etc.

36

41

Total

201

378

U.S.A.: Increase production capacity, streamlining support, etc.

120

63

Indonesia, India, etc.: Increase production capacity, streamlining support. etc.

15

61

337

503

Difference from the previous year +166

10

YKK AP Integrated Report 2023

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