Integrated Report 2023
April 1, 2022 to March 31, 2023

YAMAZEN CORPORATIONPurpose

Pioneering a new future, with you all

Koji Kishida
Representative Director
President & CEO

Nobody knows what the future will hold 100 years from now–that’s why Yamazen will keep
finding the optimal solutions. By connecting with the latest business “frontline” informationand further refining our “problem-solving skills” and “people skills,” we will continue solving
new challenges to surpass all barriers. Not only everyone involved with Yamazen, but also
everyone who lives beyond, we have and will continue pioneering a new future, with you all.

Yamazen is a specialized trading company that deals in both production equipment that supports
the manufacturing process, such as machine tools, industrial equipment and cutting tools, andconsumer goods that enrich everyday living, such as housing equipment and home products. We

Management Philosophytranscend existing frameworks to create new value around the globe.
Based on the Yamazen Founding Spirit and the Corporate Creed established at Yamazen’s inception,
our Management Philosophy sets forth an approach that we will continue to value and preserve as
the basis of management for sound growth and development into the future.

Management of Fostering Personnel
To make active use of personnel, and to foster independent and virtuous employees“Business relies on manpower.” Manpower is the most valuable asset to a company. We commit to society, the development of
human resources.

Management of Breaking ThroughTo challenge, innovate and create
Times are constantly changing. If we stay in the same place, we will be left behind. We will pave new paths
in response to the changes.

Management of Trust
To respond to needs and expectations and contribute to them
Mutual trust is the underlying business operation which contributes to industrial progress and therealization of an affluent society.

YAMAZEN, INC. (Chicago Office)

INTEGRATED REPORT 2023 01

Lead Feature:
Yamazen’s Values

Framework for
Creating Value

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Data

Core Competence
The Yamazen Group’s greatest asset is its people. To pioneer a new
future, we will make the most of our people and develop independentand virtuous employees (“Yamazen employees”), and work to achievesustainable growth and development while earning the trust of society.
To that end, we have made “Management of Fostering Personnel”
the first element of our Management Philosophy. Embodying thecorporate philosophy of our founder Takeo Yamamoto, we will continue
to develop Yamazen employees, who are the source of our competitive
advantage, and will cherish and pass on our values.

Yamazen employees with a pioneering
spirit and the ability to think while
taking action

Our CorporateDNA
We have established an HR Development Systemthat helps employees better embody our founding
philosophy and create value by challenging themselves
and thinking while taking action in their workplaces.
We also continue to develop Yamazen employees
through various HR management programs. Throughsuch initiatives, our founder’s corporate philosophy
has been passed down to the more than 3,000
people currently in the Yamazen Group.

Our core competence is Yamazen employees with a pioneering spirit and the ability to think while taking action.
These terms have the following meaning.
Pioneering spirit: A mindset of constantly responding to change and taking on the challenge of innovation and creation.
Ability to think while taking action: The ability to think and act on one’s own.
Yamazen employees: Self-reliant human resources who share the Yamazen Group’s unique philosophy, who respondpromptly and flexibly to change, even as unexpected change becomes commonplace, by independently taking onchallenges and putting ideas and actions into practice on site, and who are always of service to customers.

Yamazen employees embodying our corporate DNA

Raising Yamazen’s Presence
Because each Yamazen employee constantly responds to change, thinks and acts on their own, and takes onchallenges for innovation and creation on site, they are able to accurately grasp market and customer needs tocreate lasting value. This kind of value creation, originating from our human resources, is helping to raise Yamazen’s
presence in the market.

02 INTEGRATED REPORT 2023

INTEGRATED REPORT 2023 03

Lead Feature:
Yamazen’s Values

Framework for
Creating Value

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Data

Message from the CEOIn April 2023, Yamazen inaugurated a new management team under Representative Director, President & CEO
Koji Kishida. With the establishment of our Purpose and Corporate Vision for 2030, what strategies will underpin
our pursuit of further growth in a rapidly changing global business environment? This section presents the various
management themes that the Yamazen Group is focusing on, including Mr. Kishida’s resolve upon assuming theoffice of president, the progress of the medium-term management plan, issues to be addressed and the medium- tolong-term management vision.

Continuing to Create Value as a Specialized Trading Company from an On-site Perspective

Koji Kishida
Representative Director
President & CEO

Since joining Yamazen in 1983, I have gained experience insales and management, mainly in the Machine Tools Businessin Japan, the International Business Division and the Production
Equipment Business. I became a corporate officer in 2016 andthen an executive officer in 2018, working in businesses
including overseas machine tools, overseas industrial tools andequipment, and as part of the General Sales H.Q. (in charge ofoverseas business). Furthermore, as a director since 2018, I
have been focusing on ensuring appropriate decision-making
and effective governance for the Yamazen Group. I am
determined to use my domestic and overseas experience toachieve further growth of the Yamazen Group while dealing
sincerely with all of our stakeholders.
    From my earlier days as a regular employee to where I
am right now, my conviction has remained the same—to value
our workplaces. Since those early days, I have carried out myduties with the belief that “My body is always on site, and myheart is always with the employees.” In other words, I consider
it essential for leaders themselves to take action so they can
uncover the hints and valuable insights that can only be gained
at workplaces in order to make appropriate management
decisions. I also have many years of experience working overseas
at Yamazen’s subsidiary in the United States. Serving as presidentof an overseas subsidiary requires finding out how local employees
approach their jobs, and whether strategies formulated inJapan will really be accepted and effective in those situations.
Finding answers to these questions meant that I had to gain a
deep understanding of workplaces together with employees.
   The same holds true in Japan. Getting to know the situation
on site and the issues our customers face is the starting point
for making the Group’s strategies and measures more realistic
and effective.

    Something else I emphasize is the need for Yamazen
to continue to create value as a specialized trading company
through constant innovations in management and business. A
specialized trading company is positioned at the center of animportant chain that connects suppliers, local distributors, andbeyond them, end users. I therefore believe we can create thegreatest value by calmly assessing changing situations andalways thinking of the optimal value we can provide.
    Structural changes in society are progressing so swiftlyand surely that there is not enough time to fully assess andverify the reasons behind them. Yamazen’s business environmentis exactly the same. Rapid advances in information andcommunication technology have made all kinds of information
instantly and easily available to all kinds of people and companies.
As specialized trading companies aim to continue creating
unique value amid this current of rapid change, ironically, we
have entered an era in which harnessing the power of people
is once again an important requirement. In other words, when
there is no longer a difference in the amount or quality of
information available to people, we must go back to the basics
and value our workplaces as we continue to pursue creativity
and originality. I want to clearly convey our position—for
example, in the wholesale business in the domestic distribution
market—and the appeal of such operations to the junioremployees who will be responsible for Yamazen’s future. To
that end, as CEO I will take the lead in communicating our
Purpose and Corporate Vision for 2030 to ensure they firmly
take hold, as well as in promoting the steady progress of our
medium-term management plan CROSSING YAMAZEN 2024.

Yamazen’s Corporate DNA and the “One Yamazen” Mindset
Yamazen has achieved continuous growth because, from its
founding in 1947 to today, all employees have understood the“pioneering spirit of commerce” espoused by our founderTakeo Yamamoto. We call this pioneering spirit of commerce
the “Yamazen Spirit.” However, the path to stable growth has

by no means been smooth. At times, strict navigation has
been necessary as the economy cooled due to factors such as
the energy crisis of the 1970s, the bursting of Japan’s economic
bubble, the 2008 economic crisis and the outbreak of conflicts
around the world. The Yamazen Spirit enabled us to overcome

Based on Yamazen’s Purpose of “Pioneering a new future, with you all,” we will build
an innovative value creation cycle centered on the concept of “crossing.”
04 INTEGRATED REPORT 2023

INTEGRATED REPORT 2023 05

Lead Feature:
Yamazen’s Values

Framework for
Creating Value

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Data

Message from the CEO

these difficulties and establish our place as a major specialized
trading company. I believe this is because our corporate DNAof having respect for taking on challenges has been ingrainedin every employee since our founding.
    I also believe that employee cohesiveness has beena driving force in Yamazen’s development. Yamazen is anindependent company that does not belong to a particular
corporate group, and has a robust corporate culture ofindependence and self-respect. The One Yamazen mindset
permeates the entire Group, including overseas, giving a

sense of unity to management. In addition, all employees
share the idea that when faced with a crisis, we will overcome
it through our solidarity—that is, as One Yamazen. Thanks tothis cohesive strength, we have been able to withstand drasticchanges in the business environment.
    When I joined the Company in the early 1980s, Yamazen
was a mid-sized trading company with sales of around ¥125
billion. Over the past 40 years, we have entered new businessfields and ramped up global expansion, and have achieved
consolidated net sales of more than ¥500 billion.

Establishment of Our Purpose and Corporate Vision for 2030
“Pioneering a New Future, with You All” through a Strong Commitment to Creating Value Together
Looking back over Yamazen’s history, our relationships of trustwith the manufacturers who supply our products and the
distributors who sell them are a major asset. In the production
equipment wholesale business, we supply the products wehandle to regional distributors, who then deliver them tonumerous end users. Each company involved in the distribution
process fulfills its own roles, responsibilities and support
functions to facilitate smooth production activities for the
benefit of end users. This also builds win-win relationships inwhich everyone involved in this process, from suppliers tousers, chooses not to settle for the status quo, but instead
demands new products and services. This creates new value,and positive outcomes for everyone.
    This value creation process cannot be carried out by
Yamazen alone. It is important to maintain a close relationshipwith numerous stakeholders over many years with the grand
ambition of improving productivity at manufacturing sites and,by extension, optimizing industrial society as a whole.
    To advance industrial society together with our stakeholders
based on this approach, we have established our Purpose andCorporate Vision for 2030, which make clear Yamazen’s
significance to society and the kind of company we aim to be.
Together, they serve as the compass for Yamazen’s value
creation process.
    Our Purpose is “Pioneering a new future, with you all.”“With you all” expresses our strong commitment to creating

new value together with our many partners, including suppliers,
regional distributors and users, to contribute to a more
prosperous future for society. Our founder, Takeo Yamamoto,expressed his vision for Yamazen in two parts: “prosperous
coexistence” and “pioneering.” You could say that this Purpose
we have established redefines our founder’s philosophy. For
Yamazen, a company that remains steadfastly oriented toward
the future, I am convinced that there is no message more
befitting than “Pioneering a new future, with you all.”    Our Corporate Vision for 2030 is “Leading worldwide
manufacturing and enriched lives.” This vision sets forth theGroup’s medium- to long-term goal of creating new value
through the integration of its two domains of production
equipment that supports manufacturing and consumer goods
that enrich everyday living.
    Furthermore, we have assessed major trends such as
decarbonization and digitalization, and identified material issues
based on the outlook for the world in 2030. The five material
issues are expanding green business; digitalization to maximize
customer value; realization of sustainable procurement andsupply; realization of a rewarding workplace; and establishmentof a transparent governance system. To resolve these material
issues, we are working on talent management, digitaltransformation (DX), green initiatives and logistics asCompany-wide strategies.

Overview of Purpose/Vision/Strategy/Tactics

Pioneering a new future, with you all

Expanding green
business

VisionLeading worldwide manufacturing and enriched lives

Digitalization to
maximize customervalue

DX strategy

Strategy
Strategies for realizing our
Corporate Vision

Tactics
Strategy-based measures

06 INTEGRATED REPORT 2023

A Good Start in the First Year, with Year-on-Year Increases in Net Sales and Profit Attributable to Owners of Parent
Having established our Purpose and Corporate Vision for 2030,
we organized the initial steps for realizing them into a three-year
medium-term management plan called CROSSING YAMAZEN
2024, which we announced in May 2022. As its title suggests,
the basic policy of the medium-term management plan is tocreate the new value that will be required by the economy andsociety of the next generation by “crossing” Yamazen’s diverse
functions and assets. We have also formulated a close
customer relationship strategy, a transformation strategy and adigital integration strategy as specific sales strategies torealize our Corporate Vision for 2030. We are now proactively
investing management resources in promoting their success.
These strategies encompass an extremely wide range ofmeasures, including increasing customer contact points using
digital technology, providing total solutions that go beyond
product sales, strengthening automation and labor-saving, andDX initiatives aimed at maximizing customer value.
    In FY2022, which was the first year of the mediumterm management plan, consolidated net sales, consolidated
ordinary profit, and profit attributable to owners of parent
increased year on year, giving us a clear indication that we aremaking progress toward the final-year targets.
    While the COVID-19 pandemic continues to subside,
domestic and overseas capital investment and general
consumption have not recovered as expected. The outlook for
the Chinese economy is extremely unclear, primarily due to aslump in real estate investment. In addition, recovery inmarket conditions in the domestic automobile and semiconductor
industries is still weak. Yamazen’s business environment islikely to remain challenging. However, once U.S.-China tensions
ease and the conflict in Ukraine ceases and a healthy state ofglobalization is restored, we expect innovation will likely ramp
up. We intend to ensure that we capture the resulting

Green
initiatives
strategy

Logistics
strategy

Sales strategies for realizing
our Corporate Vision
Close customer
relationship strategy

Transformation
strategy

Digital integration
strategy

Focus areas and key measures

Realization ofCompany-wide
sustainable
Strategies for procurement and supply
the MaterialIssuesRealization of arewarding workplace
Establishment of atransparent
governance system

opportunities. In the second half of FY2023, we are consideringlaying the foundation for various future-oriented initiatives sothey can all come to fruition in the final year of the mediumterm management plan.
    As the foundation for carrying out the medium-term
management plan, we are currently conducting a wide range
of operations under three business models: a wholesale
business that generates stable profits based on relationshipsof trust with business partners; a high-margin engineeringbusiness centered on production equipment; and an assetlight fabless manufacturing business that enables speedy
development.
    First, Yamazen’s origins lie in the wholesale business,
and we must continue to maintain and expand that businessgoing forward. We intend to strengthen the wholesale businessby deepening our ties with distributors and developing a moreadvanced logistics system based on the concept of “crossing”
logistics operations, among other measures.
    The second business model, the engineering business,is an area where we have been an industry pioneer both
domestically and internationally. In the Overseas Production
Equipment Business, we have established Yamazen bases in
multiple countries and regions to deepen relationships withlocal users, and we are able to rollout our business acrossborders. This unique business model is an advantage ouroverseas competitors do not have.
    The third business model is fabless manufacturing in the
Home Products Business. Unknown a few decades ago, theYamazen brand has gained recognition in recent years as aresult of steady product development and sales activities, andnow has a solid market presence. Yamazen Bizcom, our official
online shop for offices and stores that we launched in 2022 as a
new initiative to expand sales channels, is also performing well.

Yamazen’s Business Development

Increase Products and Businesses Based on a
Recurring Transaction Model

Material Issues

PurposeTalentmanagement
strategy

Progress of Medium-Term Management Plan CROSSING YAMAZEN 2024

Fabless manufacturer (home products)

Current business model
Wholesale (machine tools, industrial
solution, tools & engineering)
Wholesale (building materials)
Wholesale (home products)
Engineering (domestic and overseas)
Fabless manufacturer (home products)
Note: “Fabless manufacturer” refers to net sales of private brandhome products and “Wholesale (home products)” refers to
net sales of non-private brand products.

Founding

Options for providing
solutions to social
issues such as thepower purchaseagreement (PPA)
businessEngineering (domestic and overseas)

Wholesale (home products)

Further enhancement ofYamazen’s establishedbusiness model

Wholesale (building materials)(automation, labor saving, etc.)
Wholesale (machine tools, industrial solution, tools & engineering)

Present

INTEGRATED REPORT 2023 07

Lead Feature:
Yamazen’s Values

Framework for
Creating Value

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Data

Message from the CEO

Overseas Expansion and Human Resource Development:
Yamazen’s Growth Drivers
As we continue to implement our strategies for the future,overseas expansion in particular will serve as the driver for
growth. Yamazen has a long history of overseas expansion.
We have established a solid foundation in the United States,
where we have a 60-year history, followed by Taiwan, ASEAN
and China, where we are in our 26th year. Our ASEAN
Regional Headquarters has established bases in sevencountries and has a substantial track record. In Taiwan, ourbusiness has expanded along with the growth of theelectronics, electrical and semiconductor industries. North
America, China, ASEAN and Taiwan are the core regions for
the Yamazen Group’s overseas expansion.
    For the regions we will concentrate on going forward,
we have positioned the markets of India, the Middle East andEastern Europe as our main targets. In the European market,
in addition to selling products, we intend to obtain extensive
data and knowledge to be used for helping to realize adecarbonized society from this environmentally advanced
region. We have high expectations for developing a newmarket in Turkey, our primary focus at present, and we will

expand our business, mainly for machine tools and otherproduction equipment, to ramp up our global expansion. We
are also considering rolling out our Home Products Business
into countries with huge populations such as India andIndonesia, and into the Taiwanese market, where there is alarge base of affluent consumers.
    Implementing our close customer relationship strategy
in global markets is another important theme for our initiatives.
Yamazen has been involved in many joint projects withJapanese companies that are operating overseas. Recently,
we have been expanding transactions with local overseas
companies. Our experience and the trust we have earned overmore than 60 years in the overseas production equipment
market, and the stability provided by our presence in morethan 60 locations are major strengths in the Overseas
Production Equipment Business. To implement the close
customer relationship strategy set forth in the medium-term
management plan on a global level, we will continue to utilize
the skills of local employees to offer close customer support.

Hybrid Sales, Logistics Optimization and Advanced Automation:
The Yamazen Group’s New Initiatives
There is a tendency these days toward using e-commerce foreverything. However, just as no one buys a car or a house
online, I do not foresee a decrease in the importance of
face-to-face negotiations for sales of the high-priced products
Yamazen handles, or for complex automation and systems
projects. Nevertheless, we will use both face-to-face sales andonline sales as appropriate depending on the type of productor service and the needs of distributors and users. In otherwords, we will conduct hybrid sales that incorporate these
two methods for the kind of flexible sales activities that only
Yamazen can offer.
    In addition, our efforts to strengthen and improve thefunctionality of logistics bases have fallen somewhat behindthat of other business initiatives. Logis Shin-Tokyo, our most

08 INTEGRATED REPORT 2023

important base in eastern Japan, began full-scale operation in
January 2023. Having reached this point, our preparations forlogistics are proceeding at a rapid pace. During the mediumterm management plan, we plan to further optimize ourlogistics infrastructure through the operation of a logistics
management system (LMS) and warehouse management
system (WMS) as well as by introducing automated equipment.
    Moreover, it is also important to promote advanced
automation that goes beyond current engineering services.
There is a chronic labor shortage in Japan, and the automation
business is a hot topic. As a trading company with engineering
capabilities, Yamazen has provided optimal solutions to thevarious technical issues of users. However, with the progressof innovation in Japan and overseas, many companies have
now appeared that can handle one-stop services fromequipment selection and installation to peripheral device
manufacturing, operation support and after-sales service.
Therefore, to clearly differentiate ourselves, we need to beable to handle even more advanced automation. Automatinga production line entails a variety of risks, making it dangerous
territory as is not easy to enter without proven capabilities.
To establish this difficult business model and contribute to its
success, we must build a high-level support system. Further
efforts in the advanced automation business are a challengethat Yamazen is uniquely equipped to take on, as a specialized
trading company that has experienced repeated trial and error
in introducing engineering services in Japan and overseas.
With “Enterprising and Daring” as our motto, I want all employees
to feel excited about our business endeavors, with a spirit oftaking on both risks and new fields.

Upgrading Management and Business Promotion Framework
I will also focus on improving governance and other systems
that will underpin an upgrade of our management and businesspromotion framework. Ensuring that our organization runs
properly is vital for resolving issues and achieving goals. We
will set specific targets, strategies and measures, andeffectively deploy our organizational and human resource

capabilities to achieve them. As we move forward with these
initiatives, M&As and capital participation in partner companies
may emerge as options. If such opportunities arise, I will carefully
assess both growth potential and risks, and if taking advantage
of an opportunity will contribute to management, I will personallytake the lead as CEO.

Management of Fostering Personnel: Successors to Yamazen’s Corporate DNA
Developing human resources and utilizing them in the rightplaces is a management theme that holds the key to growth
for the Yamazen Group. Yamazen has long considered humanresources to be its most important management resource,and has cultivated personnel who challenge themselves andthink while taking action and people that we can be proud of.
We have always been conscious of “Management of Fostering
Personnel” to achieve sustainable growth for the Group. In my
opinion, an ideal Yamazen employee is someone who canprovide value to customers or suppliers in the field, who cansecurely maintain that value, and who can handle advanced
management involving national staff in domestic and overseas
markets. For us to exceed ¥600 billion in net sales and aim
even higher toward ¥700 billion and ¥800 billion thereafter, weurgently need to strengthen this approach of “Management ofFostering Personnel.” In addition, to tackle material issues suchas expanding green business and digitalization to maximize

customer value, it will be necessary to acquire, develop andempower diverse human resources. We will decisively localize
management activities by acquiring skilled talent from outside
Yamazen, exchanging personnel with business partners,
establishing various systems to empower women, andstrengthening human resource management across countries
and regions. In addition, we will cherish the Yamazen culturethat has been cultivated since our founding as intellectual
capital and an asset. It is also important that this uniqueculture remains intact and is passed on to the future as our
corporate DNA. To the greatest extent possible, I will go to our
workplaces, both in Japan and overseas, to communicate withas many employees as I can in promoting a series of reforms.
Yamazen will continue to create a work environment thatbrings out the full potential of its employees, conducting
reforms of its human resource development systems andproviding opportunities for on-site training.

To Our Stakeholders
Creating New Economic and Social Value through Synergy with Our “Crossing” Concept
The Yamazen Group has consistently provided employees withpractical experience in the field and has worked to enhance
educational and training programs to raise their abilities. Now
that we have entered a challenging age of uncertainty, we willhone our collective capabilities as an organization by concentrating
and systematizing our strengths. In these uncertain times, weare aware that stable business operations based on a highly
capable organization and the ability to provide services not justonce, but continuously, are the main reasons for Yamazen’s
high evaluation from customers and society.
    The course ahead is also unlikely to be smooth in
Yamazen’s business environment. In a global situation thatchanges day by day, now is the time that our foresight andhuman resources will be put to the test in responding
promptly to the external environment. As such, we need tomaster the major currents of the times rather than being
swept away by them. We will steadily advance various
initiatives for our businesses and organization with the aim ofbolstering the foundation of our existing businesses,

establishing a more advanced management structure, andacquiring new sources of future earnings through effective andstrategic investments with an eye to the future.
    In my communications with Group employees, I
regularly convey the message “Fly higher, fly faster and fly
further.” For the final word, I purposely use “further” insteadof “farther” to convey the two meanings of aiming to achieve
quantitative targets and entering unknown territory.
    The word “crossing” in the name of the medium-term
management plan does not mean exchanges of products andservices among our departments and businesses to supplement
each other’s activities and results. The aim is to create synergy
by combining and making mutual use of our tangible andintangible assets. This will create new business value andmarkets that did not exist before. As the leader of the YamazenGroup, I will further accelerate this “crossing” to open up new
paths for the Group. In doing so, I ask for the continued
understanding and support of our stakeholders.

INTEGRATED REPORT 2023 09

Lead Feature:
Yamazen’s Values

Framework for
Creating Value

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Data

Overview of Yamazen
Yamazen is a specialized trading company that deals in both production equipment that supports the manufacturing process, such as machine tools,

Contents

industrial equipment and cutting tools, and consumer goods that enrich everyday living, such as housing equipment and home products. We transcend
existing frameworks to create new value around the globe.

History of Yamazen History of Innovation and Creativity
Yamazen’s Values Purpose/Management Philosophy
Core Competence

Lead Feature: Yamazen’s Values

Pages 12–13

Yamazen’s Features Yamazenat a Glance
Competitive Advantages and Business Model

Page 1
Pages 2–3

01 Purpose/Management Philosophy
02 Core Competence
04 Message from the CEO

Pages 14–15
Pages 16–17

Framework for Creating Value
with you all

Material Issues

Corporate Vision for 2030

Pages 25–27

Stakeholders
Customers

Overview of Strategies• Realization of a rewarding workplace

Suppliers
Other business
partners
Employees andtheir families
Financial
institutions
Nations and local
communities
Shareholders

10 Overview of Yamazen
12 History of Innovation and Creativity
14 Yamazen at a Glance
16	Yamazen’s Competitive Advantages andBusiness Model
18 Message from the CFO
22 Value Creation Process

Pioneering a new future ompany-wide Strategies
C
for Material Issues• Expansion of green business

Talent management strategy• Digitalization to maximize customervalue

DX strategy•R ealization of sustainable procurement
and supply

Green initiatives strategy

Page 24S ales Strategies for Realizing
Our Corporate Vision ctivities in EachA
Business

We formulated three sales strategies
necessary for building stronger
relationships with business partners,
and incorporated them into thebusiness models of each of ourbusinesses.

Strengthening our stableearnings foundation andobtaining new profit sources

Close customer relationship strategy
Transformation strategy

Logistics strategy• Establishment of a transparent
governance system
Pages 60–71

Interrelationshipwith
Stakeholders

Pages 28–29

Digital integration strategy

Pages 30–41

Pages 44–45

Special Feature: Yamazen’s
Growth Driver—Overseas
Production Equipment
Business
Pages 42–43
Yamazen’s Businesses
Pages 46–58

Net sales

Long-Term Strategy for
Sustainable Growth

Cost of sales
Other SG&A
expenses
Personnel
expenses
Interest
Taxes
Profit essage fromM
the CEO
Pages 04–09

Shareholders’equityROE maintained above the cost of shareholders’ equity

Medium-Term Business
Strategies

Optimize shareholders’equityReduced cost ofshareholders’ equity

Message from

Increased growth rate

the CFO

Pages 18–21• Enhancement of engagement• Further stabilization of wholesale business•E xpansion of cash flow through efforts tosolve material issues• Credit rating with consideration for wholesale
business: R&I A- (stable) / JCR A (stable)• Shareholder returns linked to profit and capital• Reduction of business risks throughefforts to solve material issues

Policy for Improving Corporate Value over the Medium to Long Term

Information Disclosure System

Financial Information

Non-Financial Information

Integrated Report
IR website
Summary of financial results/
Supplementary materials
Securities Report (Japanese only)

Sustainability website
Corporate Governance Report(Japanese only)24	Corporate Vision for 2030 and MaterialIssues26 Material Issue Identification Process
28 Overview of Strategies
30	Company-wide Strategy 1: TalentManagement
34 Company-wide Strategy 2: DX
37	Company-wide Strategy 3: Green
Initiatives
40 Company-wide Strategy 4: Logistics
42	Special Feature: Yamazen’s Growth
Driver—Overseas Production Equipment
Business

Editorial Policy

Cautionary Note Concerning Forward-Looking Statements

This integrated report is targeted at shareholders and otherStatements about the future, including the medium-term management plan andstakeholders, and is intended to create new opportunities

forecasts, in this integrated report are based on the information currently available andfor dialogue by further deepening understanding of theon certain assumptions deemed reasonable by management, and are not intended as

Yamazen Group’s corporate value and medium- to long-term

guarantees by the Company. Actual performance may differ materially from thesegrowth potential. In compiling the report, we referred toprojections due to various reasons. Factors that may impact future prospects include,

the International Integrated Reporting Framework of the

but are not limited to, the economic environment in which the Company operates,

IFRS Foundation and the Guidance for Collaborative Value

competition, laws and regulations, changes in product development and fluctuating

Creation of the Ministry of Economy, Trade and Industry.

exchange rates.

44	Message from the President of General
Sales H.Q.
46 Machine Tools Business (Domestic)
48 Industrial Solution Business (Domestic)
50 Tools & Engineering Business (Domestic)
52	Overseas Production Equipment Business
54 Building Materials Business
56 Home Products Business
58 “Crossing” as a Sales Strategy

The Foundation Supporting
Value Creation
60 Corporate Governance
66 Management Team68	A Conversation with Two Outside Directors

Data
72 11-Year Financial Highlights
74 Non-Financial Highlights
76	Investor Information/Company Overview/
Editor’s Afterword

Scope: FY2022 (April 1, 2022 to March 31, 2023). Some information from after March 2023 is

10 INTEGRATED REPORT 2023

also included.

INTEGRATED REPORT 2023 11

Framework for
Creating Value

Lead Feature:
Yamazen’s Values

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Data

Ever since Takeo Yamamoto, the founder of Yamazen, established Yamazen Tool Manufacturing & Sales Co., Ltd. in May 1947, we have

Establishment of Yamazen
Tool Manufacturing & Sales
Co., Ltd.

Tokyo Branch at time of opening

Takeo Yamamoto at stock listing
on second section of Osaka
Securities Exchange

1947

1957

1962

In-house newsletter ZEUS
NEWS

1965

Entry into the housing
equipment market

Company
established

Nationwide
expansion

Stock listing

Osaka was a charred wasteland
after World War 2, so there wasa great need for work tools, andYamazen Tool Manufacturing &Sales Co., Ltd. was established.

For several years after its founding,
the Company focused on travelingsales, but it opened the Tokyo
Office in 1957, followed in succession
by offices in Nagoya, Fukuoka
and Sapporo. Very quickly it had
established a nationwide presence.

Fifteen years after its start in the
cutting tool distribution industry,
the Company listed its stock on
the second section of the Osaka
Securities Exchange (first in theindustry to do so), and on thesecond section of the Tokyo
Stock Exchange the following
year. After focusing on further
improving its management
structure and upgrading its
infrastructure, the Company was
listed on the first section of bothexchanges in 1970, its 23rd year
in business.

1947

1975

Lay the foundation
for postwar recovery

Doterai Ichi held

In the postwar turmoil, the black
market was the center of thebusiness world, but the Company
procured whatever customers
required—mainly work tools to
use in the recovery—in thequantities needed. In doing so,it helped to lay the foundation forthe postwar recovery.

With the Japanese economy still recovering two years after the oil crisisof 1973, employees on the front lines and members of sales offices
contributed ideas and plans, racking their brains to think of ways toovercome the challenges the Company faced. The result was the birth of
Doterai Ichi. Unusually for the time, this was an exhibition and sales
event where you could see, handle and operate products. The event isstill held nationwide today as a business model in which local distributors,
manufacturers and Yamazen collaborate with each other.

1978

social responsibility.
    Going forward, we will continue to innovate and create with our stakeholders as a business that responds swiftly to change while
realizing our Vision of “Leading worldwide manufacturing and enriched lives,” and aiming for sustainable growth.

Advertisementof new visual
identity“LABO” collaborative robot
facility in TFS Div. H.Q.

1988

2012

Start of the “Zeus Plan,” along-term management
plan, and introduction ofvisual identity

2019

Introduction of division H.Q.
structure

The Zeus Plan, a long-term management
plan for reaching a new stage,
started. In 1991, the Company
unveiled a new corporate logo in
conjunction with the introductionof its new visual identity.

1999

Established cross-organizational
Digital Transformation Strategy
Dept., Green Recovery Business
Dept. and TFS Div. H.Q.

To respond to rapidly changing markets and clarify
its business domains by product and service, andprovide integrated solutions and measures to customers
as quickly as possible, Yamazen adopted the division
H.Q. structure to facilitate an agile and fast-moving
business organization.

Yamazen set an investment framework of ¥60
billion targeting the four fields of automation andlabor-saving measures; expansion of green business;wholesaling; and DX during the period from FY2019
to FY2023. It promoted the concept of “Crossing
management” as a way to achieve sustainablegrowth while carrying out initiatives across all
divisions and responding flexibly to change.

Yamazen advanced “Crossing management” byestablishing the Digital Transformation Strategy
Dept. to carry out initiatives across all divisions
and to use data from market events and financial
figures to create new value; the Green Recovery
Business Dept. to maximize value and develop
business strategies as an ESG-oriented company;
and the TFS Div. H.Q. to address needs for automationand labor-saving measures.

Entry into the home
products market

1992

Established the
Takeo Yamamoto
Commemorative
Scholarship Fund“I was not able to study enough,even though I wanted to, and I
used this sense of frustration as aspringboard to master management.
I want as many people as possible
to apply themselves to study.” These
were the words of founder Takeo
Yamamoto, and the scholarship fundwas established in 1992 to honor
his intention.

2022

2021

Focus on hybridized
management, or the concept of“crossing” operations

Full-scale entry into
environmental
businesses

2008

2017

2021

Start of the Green Ball Project

Recognition at the Japan
Resilience Awards

Entry into the corporate PPA
business

The Industrial Systems Administrative
Division established an “Environmental
Team,” and began full-scale sales
expansion of environmental
equipment and devices such as
incinerators and oil mist eliminators.

Yamazen began an environmental business that
aimed to popularize and expand environmentallyfriendly technologies, such as solar panels and
EcoCute, which are expected to have an impact
in the fight against global warming, while also
helping to reduce CO2 emissions.

At the Japan Resilience Awards, a program that
discovers, evaluates and recognizes initiatives todevelop a resilient society for the next generation,
Yamazen’s project to contribute to national resiliencethrough its strengths as a specialized trading
company was recognized, and the Company
received the Best Resilience Award in the Risk
Communication Information category.

Yamazen formed a business alliance with Daigas
Energy Co., Ltd., marking its entry into the corporate
PPA business—in which power generation operators
install solar power generation systems at their own
expense and then sell the electricity generated tocustomers—and launched the joint brand “DayZpower.”This project will contribute to the enhancement ofcorporate environmental value and the overall
reduction of CO2 emissions in society.

Establishment of
Purpose and Vision

Creativity

Innovation

History of Innovation and Creativity

strived for innovation with the aim of producing things that did not previously exist, and creativity in terms of generating value to fulfill our

Formulated Purpose (Pioneeringa new future, with you all)and Vision (Leading worldwide
manufacturing and enrichedlives). Launched new mediumterm management plan
CROSSING YAMAZEN 2024
to realize our Purpose andVision.

Net sales
Main products when the
Company was founded

Second Osaka Doterai Ichi
exhibition and sales event

Presentation of Takeo Yamamoto
Commemorative Scholarship to
first recipient

527,263

DayZpower logo
Resilience Certification
mark

Start of the Green
Ball Project(Millions of yen)

500,000

Operating profit

16,563

Net Sales and Operating Profit■ Net sales (right axis)(Millions of yen)

15,000■400,000

Operating profit (left axis)△

300,000

10,000Oil crisis
5,000 ollapse ofC
Japan’s bubble
economy0

100,000

Global financial crisis

Consolidated

0(5,000)(FY)

19471970 1971

1972

1973 1974 1975

Rapid Development

12 INTEGRATED REPORT 2023

1976

1977

1978

Hard Times andRebuilding

1979

200,000

Global
COVID-19
pandemic

1980

1981

1982

1983 1984

Restoring Conﬁdence

1985 1986 1987

1988

1989

※

1990

1991 1992

Changing the Management
Structure

1993

1994 1995

Corporate Renewal* The closing date of our fiscal year changed from September 20 to March 31
in FY1989. As such, there are two sets of year-end figures for that fiscal year.
(Left) September 21, 1988 to September 20, 1989
(Right) September 21, 1989 to March 31, 1990

1996

1997

1998

1999

2000

2001

2002

2003

Increasing Awarenessof Social Responsibility

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Era of Innovation
INTEGRATED REPORT 2023 13

Lead Feature:
Yamazen’s Values

Yamazen at a Glance

Framework for
Creating Value

Home Products Business), we create new value that will drive the development of industrial society.

Production Equipment Business
Segment profit:¥100,711

Yamazen’s
Business
Development

Business

Sales Composition

Wholesale

Engineering

Industrial Solution Business(Domestic)¥2,341 million (3.4% of net sales)¥88,001

Net sales¥68,031

million16.7%
million

12.9%
FY2022 Consolidated Net Sales

Business
Wholesale

Wholesale

Engineering

millionNet sales¥80,337
Other
Net sales¥5,3171.0%

Wholesale (machine tools, industrial
solution, and tools & equipment)
Founding
The foundation of our business is wholesale operations, which generate stable cash flow
based on recurring transactions with business partners in the fields of production equipment
and consumer goods. In addition, we have also been building up sales and profit in theengineering and consumer goods fabless manufacturing businesses in Japan and overseas.
As a result, we now have three business models—wholesale, engineering, and fablessmanufacturer—and are expanding each one.
Note: “Fabless manufacturer” refers to net sales of private brand home products and “Wholesale (homeproducts)” refers to net sales of non-private brand products.

Major products handled
Material handling equipment; packing/wrapping systems; automatedwarehousing equipment; picking/sorter systems; robot systems; CAD
systems; motor/powertrain systems; hydraulic/pneumatic equipment; various
sensors; labor-saving and automation equipment; compressors; pumps; blast
equipment; painting equipment; welding equipment; power generating
equipment; compact construction machines; prefab housing-relatedmaterials; multilevel parking lots; steel frame processing machines; cleaning
equipment; effluent treatment equipment; dust extracting equipment;
incinerators; volume reduction machines; oil mist collectors; solvent recovery
equipment; floating oil collecting systems; cutting fluid cleaning systems;
deodorization equipment; acoustic absorption/sound-proofing systems;
industrial scrap processors; aids for environmental improvement; aluminum
frames; clean rooms; HVAC equipment; air-conditioning control equipment;
and more

To meet a variety of needs, we handle a wide array of products
necessary at production sites, from hand tools to measuring
equipment. In addition to our online infrastructure and logistics
functions developed over many years, we use our technicalmarketing capabilities to swiftly provide information and products
to customers.

Tools & Engineering
Business (Domestic)

Engineering (domestic and overseas)

Wholesale (building materials)

Engineering¥527,263

Business

Major products handled
Machine tools (machining centers, CNC lathes, CNC grinding machines,
CNC milling machines, electric discharge machines, conventional machine
tools, 3D printers, etc.); metal forming machines; plate processing machines(presses, shirring machines, bending machines, laser cutting machines);
injection molding machines; die-casting CAD/CAM; machine tool accessories(industrial robots, measuring equipment, automation peripheral equipment,machine tool accessories); and more

We provide total support for each stage of business. This includes
support for planning and operation of production sites and thecreation of working environments, including proposals for production
efficiency improvements involving automation and labor-saving
measures to solve labor shortage problems, and solutions for
improving environments at production sites. We also provide
cutting-edge technologies, solutions for business continuity planning(BCP) and offer proposals as a producer of integrated systems for
production sites.

Net sales

Building Materials Business

Fabless manufacturer (home products)

Increase products andbusinesses based onrecurring transactions

million

16.8%

Wholesale (home products)

14 INTEGRATED REPORT 2023

¥88,498

million

19.1%

In this business, we propose new products and systems aimed
at creating housing and societies that are environmentally friendly
and take people into account. We focus on addressing issues suchas the environment, decarbonization, health and barrier-free living.
In addition to the procurement and stable supply of primary andsecondary processing products such as wood processing products
and industrial products, we also propose and sell housing equipment
and materials, and are involved in the remodeling business. We
provide optimal solutions to customers in our role as a highfunctionality trading company.

In collaboration with leading manufacturers inside and outside
Japan, we offer production and processing systems with
cutting-edge hardware and software together with machine tools
for on-site operation, enabling us to respond to customer needs
that change with the times. We enhance productivity, pursue cost
reductions, and combine peripheral equipment, services andinformation to support manufacturing sites that require a highdegree of specialized expertise in Japan and overseas.

Net sales

Business

Major products handled
Kitchen appliances; cooking appliances; bathroom appliances; washbasin
appliances; water boiling equipment; sanitary appliances; air-conditioning
and ventilation equipment; solar power generation equipment; storage
batteries; floor heating, solar thermal water heating equipment; stored-heat
heating systems; plumbing equipment and materials; interior architectural
materials; exterior architectural materials; nursing care equipment; interiormaterials; window frames; exterior materials; foundations; ancillary
construction materials; construction materials; construction equipment;
structural building frames; cutting tool-related equipment; office equipment;
home equipment; IoT equipment; BCP-related equipment; and more

¥13,965 million (4.0% of net sales)

Machine Tools Business(Domestic)

Net sales

Fabless manufacturer Wholesale

Segment profit:

Data

Solution Business, Tools & Engineering Business, Overseas Production Equipment Business, Building Materials Business andHome Products Business

Major products handledHome appliances (fans, heating equipment, cooking equipment, audio-visualequipment, household appliances, etc.); furniture; products for outdoor andleisure; kitchen utensils/daily goods; exterior items; gardening/agriculture
equipment; health-related equipment; sanitary/healthcare goods; industrial
tools; goods for automobiles and motorcycles; disaster preparedness goods;
and more

The Foundation
Supporting Value Creationand consumer goods. Combining the knowledge and expertise of our various segments (Machine Tools Business, Industrial¥4,960 million (4.9% of net sales)

We combine the trading company functions of retail distribution
and logistics with the manufacturer functions of planning anddeveloping private brand products. We handle a wide lineup of
useful products that are familiar in daily life, ranging from electricalappliances, interior/exterior products and leisure items to disaster
preparedness goods.

Medium-TermBusiness Strategies

Yamazen is a unique specialty trading company that has proven itself in Japan and internationally in the fields of production equipment

Consumer Goods Business
Segment profit:

Long-Term Strategy for
Sustainable Growth

millionMajor products handled
Cutting tools; tooling accessories; machine tools accessories; measuring
equipment; grinding tools/diamond tools; hand/plumbing/electric tools;
hydraulic/air pressure tools; welding machines; cutting machines; band
sawing machines; compact machine tools; press-related tools; tool grinding
machines; construction/cargo handling equipment; chemical products; officeautomation/office equipment; home appliances; and more

15.2%
BusinessmillionWholesale

Engineering

Overseas Production
Equipment BusinessWe support reciprocal business between Japan and the restof the world. This includes assistance in overseas relocation ofJapanese and multinational companies; international procurementof products, parts and materials; trilateral transactions; totalplanning of production equipment and systems for factories; andconsulting regarding international transactions. With many yearsof experience and expertise in overseas markets, we aid in thedevelopment of local communities and industries.

Net sales¥96,365
Including
Machine Tools
Net sales: ¥62,715 million
11.9%

million

18.3%

BusinessEngineering

Major products handled
Machining centers; CNC lathes; CNC milling machines; EDMs; 3D printers;
injection molding machines; die-casting machines; machine tool accessories;
NC tooling; auxiliary tools; cutting tools; measuring instruments; measuring
equipment; work tools; material handling equipment; mechatronics equipment;
aids for environmental improvement; and more

Industrial Solution + Tools & Engineering
Net sales: ¥33,650 million
6.4%
INTEGRATED REPORT 2023 15

Framework for
Creating Value

Lead Feature:
Yamazen’s Values

Yamazen’s Competitive Advantages
Yamazen started out as a wholesaler of production equipment, and expanded into the consumer goods business. It has built an extensive
network in Japan and overseas, and has supported the sustainable development of supply chains worldwide and contributed to the

Our human resources in Japan and overseas collect information on user needs directly and indirectly, and use
their specialized knowledge to support the sustainable development of supply chains by partnering with some
3,000 suppliers and more than 5,000 distributors. We are growing steadily through the wholesale business,
which provides a stable foundation, and the volatile yet highly profitable engineering business.

Suppliers(distributors, end users and consumers)

Production equipment
distributors
About

3,000

About

Sales agents ofsuppliers

Consumer goods
manufacturers

1,500

companies

5,000

companies

Domestic
market1

Solid relationships with business partners and significant presence
we have built as a wholesaler based on track record in the industry

2

Flexible business operations with low risk

3
16 INTEGRATED REPORT 2023

Manufacturers offactory equipment,
devices, tools, etc.

• Solid relationships with suppliers and buyers we have nurtured for over 70 years• Global network (16 overseas subsidiaries and 65 business locations in 14 countries/regions as of
October 31, 2023)• Difficult to sell products tosmall-sized companies•L acking marketing functions

Building Materials
Business

Human resources who embody our Management Philosophy•S ales force with the ability to gather information, make proposals, and negotiate tenaciously—embodying
our founder’s ambition• Want to know suppliers that can meet user needs• Want to streamline the purchasing process• Offer product proposals and engineering
services

Yamazen solves issues.
• Provide our wealth of supplier information to
distributors• Support for the purchasing process

16 overseas subsidiaries
and 64 business locations*

Yamazen solves issues.
Offer engineering, after-sale and maintenanceservices

Manufacturer
customers overseas

Want support for not only
sales, but also for the
installation of machinery infactories

ExportYamazen’s employees, who have specialized knowledge, support the growth of customers by accurately perceiving
the needs of suppliers, distributors and end users, and by leveraging its base of approximately 900 suppliers and2,900 distributors cultivated over many years. The result is a system that also leads to revenues for Yamazen.

Suppliers

Distributors

Sub-users

About

900

Want to streamline
processes

companies
Manufacturers of kitchenequipment, air-conditioning
equipment and otherhousing equipment

House builders,renovation
contractors, etc.,
throughout Japan

About

2,900

companies

Building Materials
Business• Difficult to sell products tosmall-sized companies• Lacking marketing functions

Want to provide customers
with a comfortable living
or working environment
Small and large-sizedbuilding materials
stores, lumber dealers,
housing equipment
dealers, plumbing
equipment andmaterials stores, etc.,
throughout Japan

Users
Want a comfortable home

Yamazen solves issues.
Propose solutions thattake into consideration
amendments to laws,
government policies, etc.

Yamazen solves issues.
Ability to understand theneeds of users and provide
products and services
Corporate clientsYamazen solves issues.

Home Products
Business

Yamazen solves issues.
Assume responsibility for job sites,
including designing plans for process
management and construction

General customers•S upport for payment settlement• Marketing targeted at distributors
throughout Japan

Want a comfortable,
low-cost working
environment

Combining both fabless manufacturing and wholesale operations, this business contributes to the performance ofcorporate customers and the lives of consumers with a robust lineup of original private brand products and national
brand products that meet user needs. In recent years, we have focused on increasing recognition of our private
brand products and expanding B2B sales channels.

Suppliers• With minimum invested capital, we can change or expand product categories flexibly and approachvarious markets.
• Promote thorough procurement process based on expected orders

Yamazen solves issues.
Machine Tools Business (Domestic)
Industrial Solution Business(Domestic)Tools & Engineering Business(Domestic)
Overseas Production Equipment
Business

Consumerscompanies

Want products that fit theirneeds* As of October 31, 2023. Figures for the Production Equipment Business only.

Consumer goods
distributors
About

3,300

5,000

companies

Manufacturer
customers in Japan

companies•S upport for payment settlement• Marketing targeted at distributors
throughout Japan

Users

Purchase support
for buyers

3,000

Users
About

Yamazen solves issues.

Distributors

Users

About

600

Want to acquire products useful for daily
life at affordable prices

About

companies

Home Products

Commercial
distribution

companies

In the courseof gathering
information, we
negotiate price andvolume, provide
distribution,
payment
settlement andother functions,and solve
challenges facing
suppliers andbuyers.

Building Materials

Production equipment
manufacturers
About

Distributors
Machine tool sellers, cutting tool
trading companies, etc., throughout
Japan

About

Production Equipment(manufacturers)

Overseas markets

Data

Production Equipment
Businesswill leverage the competitive advantages we have cultivated and the business models we have built to realize our Vision of “Leading

BuyersThe Foundation
Supporting Value Creation

A useful company that solves supply chain problems around the world

supply chain of each business, and use their planning and proposal capabilities to resolve such issues through tenacious negotiations. We

Suppliers

Medium-TermBusiness Strategies

Business Modeldevelopment of industrial society. Yamazen’s people are quick to gather information on the challenges and requests of customers in theworldwide manufacturing and enriched lives.”

Long-Term Strategy for
Sustainable Growth400

companies

Contract manufacturersof furniture, home
appliances, etc.

Home Products
Business
Lacking marketing orplanning functions

Yamazen solves issues.
• Support for payment settlement• Marketing targeted at distributors throughout Japan•P lanning solutions for private brand products that can meet thepotential needs of consumers, and support for outsourcing
development and production as a fabless manufacturer

Want to procure hot-selling
products in an efficient way

General customers

Yamazen solves issues.

DIY home centers,
large retailers ofelectrical appliances,
general merchandise
stores, online shops,
etc.

Help contribute to theperformance of distributors
with our diverse lineup
of products

Yamazen solves issues.
Operate e-commercesites and provide customers
with information andproducts swiftly

Corporate clients

Develop Yamazen private
brand products and supply
them to the market

Want to acquire products useful forbusiness at affordable prices

INTEGRATED REPORT 2023 17

Framework for
Creating Value

Lead Feature:
Yamazen’s Values

Message from the CFO

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Data

A Look Back at Consolidated Results for FY2022, Year One of the Medium-Term Management Plan

Buyers

25%

★★–
★★★

★
StableSuppliers

Mainly domestic
manufacturer network(Manufacturing company)

Operating
Profit Share

Gross Profit
Margin Index

Revenue
Stability
Variable

Feasibility
Share expansion
Share maintenance

Product
Category
Production equipment

Invested Capital
Non-Financial Capital

★★★–
★★★★

★★

Share anddemandexpansion

Fabless
Manufacturer

Director and Executive Officer; CFO & CIO
President of Corporate Administration H.Q.

Building
materials

Domestic

Masamichi YamazoeHome products

Place of Value
Creation
Overseas Domestic Overseas

Engineering
WholesaleWe aim to enhance our earning
capacity and expand the equity
spread through optimal allocationof capital.

Business

Summary of Capital Allocation by Business Model

60%
Domestic sales
network

Personnel

Under 40%(of which 60%
are outside
Japan)

Over 60%(of which 20%
are outside
Japan)

DigitalInventory

Logistics

★★★

★★★

★

Good

★★

Good

★★

Very Good

★★★★★

★★★★★

Good to
Excellent★

★

Excellent★★

★★★

Return on
CapitalFinancial Capital

★★★★

15%

Mainly overseas
manufacturer
network★★
Supporters/
fans

★★★★

Very Good

3%–4%

the satisfaction of stakeholders, who include distributors (customers),

need to maintain sufficient access to funding to be able to makesuppliers and logistics companies, we have carried out various

future large-scale investments.

initiatives, such as Doterai Ichi and, more recently, the Green Ball    To that end, we will maintain a level of equity that allows

Project. By doing so, we have been able to increase and maintain

us to keep an “A” credit rating as the standard of financial soundness.

In operating results for FY2022, net sales were sluggish as we    In terms of our financial condition, we raised the level ofprofit margins through a strong network connected by the power

This fiscal year, we have maintained our A rating from both R&I

entered the second half of the period and fell slightly short of theinventories we hold as a way to optimize logistics functions andof people.

and JCR.

plan, but nevertheless set a new record at ¥527,263 million. Each

address lengthy delivery times for products including machine    However, our business environment is changing rapidly, and   Finally, the key to return on capital is, in a nutshell, an emphasis

level of profit exceeded the targets in the plan, with profit attributable

tools. Consequently, merchandise and finished goods increased

we will need to make reforms to our wholesale business, which ison equity spread. We estimate the equity cost at March 31, 2023

to owners of parent reaching a record ¥12,527 million.

by ¥8,404 million compared with FY2021, days inventory outstanding

the business foundation on which we generate stable cash flow.

to be from 2.99% to 8.87%, but the target spread we have in    The impact of the COVID-19 pandemic was all but gone(DIO) was 6.8 days longer, and the cash conversion cycle (CCC),    With that in mind, we are investing in digital technology

mind is around 7%, a little above the middle of that range. Cost

from the second quarter onward, except in China, where extreme

which had remained negative for the last nine fiscal years, grewand logistics to ensure the sustainability of the volume weof equity parameters are reviewed every three months, and thecountermeasures were partially lifted. However, it is undeniable

4.7 days longer and was positive 1.8 days. This trend is likely tohandle and customer satisfaction (profit)—areas that have been

estimate figures obtained using the capital asset pricing modelthat supply chain disruptions stemming from the pandemic andcontinue for a while, so we expect that working capital will

supported by our employees. The second year of the medium-(CAPM) are shared at Board of Directors meetings.

extended restrictions on face-to-face sales activities have had anremain above the ¥20,000 million level.

term management plan marks the start of the initial investment    To improve the equity spread, it is crucial to maintain andimpact on trade shows and sales promotion.

    However, net cash at the end of FY2022 remained unchanged,

period, and the resulting increase in the depreciation burden instrengthen our earning capability, and thus to continue proper    In addition, geopolitical risks including the prolonged

while equity was ¥122,928 million and the equity ratio was 42.6%,

relation to the pace of revenue expansion will temporarily reduce

allocation of financial and non-financial capital. In addition, we will

Russia-Ukraine conflict, inflation caused by soaring energy prices,maintaining the levels reflected in our current credit rating.

the operating profit margin.

demonstrate our earning capability to investors in the form ofand interest rate and stock price trends in various countries have    Because we have a sufficient risk buffer that allows us to    Even in these circumstances, we can still demonstrate ourbusiness results, carefully explain the process involved in further

led to a decline in the willingness of companies to make capitaldeal with uncertainties, we are responding flexibly to the changes

earning capability, and have positioned basic operating cash flow

increasing that capability, listen to their input, and continue toinvestments. As a result, orders for production equipment andtaking place. We will diligently conduct financial management to

excluding changes in working capital, which is influenced byreflect feedback in management.

related products slowed in Japan and overseas. We recognize

achieve our Corporate Vision for 2030.

short-term factors, as a key indicator.

    We believe that through these activities, we can gain the    Next, I would like to talk about financial soundness. We

understanding and support of investors based on our growthneed to keep supplier creditworthiness at a high level since thedirection and medium- to long-term growth rate, even if there iswholesale business is our financial foundation. In addition, weshort-term revenue volatility.

this as an issue.

Management Indicators of Medium-Term Management Plan and Current Status
Reviewing indicators in the first year of the medium-term
management plan, ROE of 10.6%, basic operating cash flow of¥14,427 million, and an equity ratio of 42.6% were each in linewith the plan.
    We aim to enhance areas such as earning capability, returnon capital and financial soundness. The heart of that effort lies incontinuously strengthening our earning capability.
    Since the wholesale business is our foundation, we need areasonable sales volume to meet the expectations of our suppliers.
In addition, it has always been our belief that profit margins are inproportion to the level of customer satisfaction. In order to gain

18 INTEGRATED REPORT 2023

Business Portfolio Management and Capital Allocation

Medium-Term Management Plan CROSSING YAMAZEN
2024 Announced Figures(Millions of yen)

FY2022 Results(First Year of Plan)

FY2023 Forecast(Announced in
May 2023)

FY2023 Forecast(Revised in
September 2023)

FY2024(Final Year of
Plan)

Business portfolio management will not be based on reportable

we have five business divisions by product type, but all of themsegments for financial accounting, nor on organizational structuresbegan mainly as wholesale businesses.

related to business operations, which I will discuss later, but will    Even now, we consider wholesale as our core businesslargely encompass the wholesale, engineering, and fablessthat creates stable cash flow. To further boost efficiency, maintain

21,000manufacturer categories.

market share and ensure stable earnings, we have made IT

14,000    Yamazen started out as a tool wholesaler, and expanded its

investments, including in core systems and marketing tools, assales channels along with the products it handled, widened its

well as investments in a logistics management system (LMS) andproduct categories, and even expanded its services. Currently,

distribution warehouses. In addition, we are starting to see the

Net sales

527,263550,000

500,000

600,000

Operating profit

16,56315,00010,00021,000Operating profit
margin

3.1%

2.7%

2.0%

3.5%

Ordinary profit

17,28015,00010,000Net income
attributable toowners ofparent12,527

10,0006,700

Return on equity(ROE)
Basic operating
cash flow

14,427

14,50011,00018,000Equity ratio

42.6%

40%–45%40%–45%40%–45%

10.6%

7.9%

5.3%

10.0%

INTEGRATED REPORT 2023 19

Lead Feature:
Yamazen’s Values

Framework for
Creating Value

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Data

Message from the CFO

results of efforts to expand sales channels, which had been made    Lastly, I will talk about the fabless manufacturer category.

    With the mindset of an Osaka merchant, he incorporated

optimization of logistics. We are also proceeding with theup predominantly of manufacturers of automobiles and metal

Similar to engineering, the origins of this business lie in wholesale.

a concept basically equivalent to what it now cost of capital into

reallocation, development and acquisition of human capital toprocessing related products, to different areas such as food

It started by proposing reasonably priced products to home

profit and loss management. He then took the idea further andrespond to the expansion of other business models internally,

processing and the logistics industry. Since the decline in thecenters, and by meeting the expectations of customers, it hasapplied it to on-site operations as the Company’s uniqueand to changes in the human resource supply and demand

working-age population is an issue that is common to every

now grown into a large business that accounts for roughly 10%

management rule,1 and divided it into the two axes of businessbalance externally.

industry, we focused on offering labor-saving equipment earlyof consolidated net sales. As a fabless manufacturer of household

divisions and regions. By further expanding the concept to the    As a result, capital yield has declined from previous levels,on, and I think that gives us an advantage. We call this aspectproducts including electrical appliances, furniture and outdoor

sales representative level, and performing relative comparisons,but we see this as a temporary phenomenon during the“Share maintenance” in the “Feasibility” column of the “Summary

goods, there are a number of items for which we have thewe have sought to enhance profitability2 and increase asset

reallocation of human resources.

of Capital Allocation by Business Model” on page 19, but sharenumber-one share in Japan, such as electric fans. We believe weefficiency,2 even though we are a wholesaler.

expansion is also possible, depending on the field.

have secured a position where we can not only expand our share,    The result is a structure in which working capital is maintained    Other than the core investments mentioned above, we

but also pursue a strategy focused on expanding demand.

at a low level, and while profit levels are low, capital yield is maintained

are able to shift beyond our current industries with relatively little    Although our products are not luxury items, we areat a high level.

capital investment, and can secure revenue by cutting costs.

recognized as a Japanese (brand) manufacturer, and are chosen    This structure has been supported by our human resources    Our engineering services have their origins in the expansion

by customers not only based on price, but because they wantover the years, but we are now carrying out digitalization andof our engineering capabilities to meet the expectations ofpeace of mind. As such, we have been able to pass on the recent

manufacturers and users, and began with providing after-salecost increases to selling prices.

service on behalf of manufacturers in the countries where we    At present, our market in the fabless manufacturer category

first extended our machine tools wholesale business. Our

is mostly centered on Japan, but with personal income levels

services extend beyond installation, servicing and repair. Theyrising in emerging countries, we believe we can establish

now include everything from selection of equipment,

distribution routes and cultivate overseas users.

programming development and test processing to support for    As the name “fabless” implies, we are committed to

The sense that we have fallen behind in the area of business

we will also need to reinforce systems at overseas locations toother applications. Overseas, engineers outnumber sales

production in the optimal location and do not have our own

investment is undeniable. However, rather than loosening oursolidify our first-mover advantage and stay ahead in terms ofrepresentatives and the know-how of those engineers and the

production facilities, so we do not have to invest large amounts

investment criteria and making hasty decisions that will notacquiring human capital. In these circumstances, we are considering

services they provide are a competitive advantage.

of financial capital. Our policy is to strengthen R&D and enhancecontribute to enhancing corporate value, we want to take areviewing where we make growth investments.

    By deploying our know-how and capabilities in new markets

communication activities to increase the number of supporters/

careful and patient approach.

    I believe we can fund these growth investments primarily

overseas, or by bringing those advantages back to Japan, we arefans of our products.

    On the other hand, logistics investment is mostly

with cash flow generated during the period of the medium-term

expanding opportunities for value creation.

    What has supported the transition of our business model

progressing according to plan, including the redevelopment ofmanagement plan, in principle. However, this level is meant to    The engineering business is one in which many transactions

is fundamentally the power and ingenuity of our people. Yamazen,large-scale bases in eastern and western Japan. IT investment isindicate that “we will reinvest this much, at minimum,” and for

involve machine tools or other products with high unit prices, andwhich was established by Takeo Yamamoto after he had been

moving at a faster pace than we anticipated when we formulated

business investment, initiatives of a scale that cash flow will notearnings are easily impacted by capital investment trends. From ademobilized following the war, not only had limited financial

the medium-term management plan, and we began operation ofcover are certainly conceivable. In such cases, our policy is to use

global perspective, relocation and dispersion of production sites

capital, but also lacked creditworthiness. Through sheer harda core system in August 2022. We are also looking to makediverse funding methods, which may include debt financing. In

is an ongoing trend. Therefore, we believe we can expect share

work and effort, he convinced business partners to invest in thefurther investments in development of peripheral systems andthat context, we understand the importance of maintaining our

expansion, and our policy is to allocate management resources

Company and built a purchasing and selling network.

marketing tools to strengthen sales capabilities. In addition, as

credit ratings at the current level.

centered on human capital.

1. O perating profit – Working capital × Internal interest rate – Nondeductible items × Tax rate ± Adjustment of corporate expenses, etc.
2. D
 etails are in the chart titled “Breakdown of Stock Price Factors” onpage 20.

Progress of Growth Investments in the Medium-Term Management Plan (Results and Challenges)

our competitors accelerate the development to overseas markets,

Breakdown of Stock Price Factors

Improvementof after-tax
profitImprovementof operating
profit margin

Expansionof quality
sales

Improvementof ROIC
Stock price

PER

Improvement ofbusiness asset
efficiency

ROE

20 INTEGRATED REPORT 2023

Income tax
rate

Order expansion

Reduction of cost of sales
Implementation of structuralreforms

Improvement ofworking capitalturnoverImprovementof CCC
2

PBR

Customer portfolio
improvement

Business efficiency
improvement

Cost
reductions
BPS

Shareholder Return Policy and Current Status

Key Action Items

Early receipt of cash fromtrade receivables
Optimization of trade
payablesAcquisition of advances
received
Reduction of inventories

Improvement of
fixed asset
turnoverInvested capitaladjustment factor

Invested capital (operational side) ÷ Invested capital (procurement side)

Financial leverage

Invested capital (procurement side) ÷ Equity

Improvement ofProfitability

ROIC Improvement Drivers

Improvement of Asset Efficiency

Invested Capitalby Business(Operational Side)We modified our shareholder return policy on August 10, 2023.

volatility, we have changed our shareholder return policy. We will    For a long time, we had determined the dividend amount

set the dividend amount for each period at either a 40% consolidated

for each period based on a consolidated payout ratio target of

payout ratio (a metric of performance-based profit distribution) or30%. However, in this medium-term management plan, we havea 3.5% dividend on equity ratio (DOE) (a metric of stable profit

laid out an even more aggressive approach to business anddistribution), whichever amount is higher, in order to ensure

capital investment, and are pursuing a profit plan that factors instable and regular dividends.

increased depreciation expenses in the initial stages of investment.

    We will also flexibly implement share buybacks based

As a result, if we were to set the dividend amount for each period

on timing and financial condition, to provide additional shareholder

based solely on the consolidated payout ratio, it is possible that

returns and improve capital efficiency. This will depend on the progress

due to the progress of the investment plan or a short-termof the investment plan, stock price trends and the cash situation.

downturn in earnings, we would be unable to pay stable dividends,    Going forward, we will actively promote initiatives toor that shareholder returns would be at an insufficient level infurther enhance our corporate value from the perspective oflight of the level of equity.

stakeholders. We appreciate your continued support.

    Therefore, while we will ensure financial soundness as wehave in the past, and work to curb the impact of short-term profit

INTEGRATED REPORT 2023 21

Lead Feature:
Yamazen’s Values

Value Creation Process
PurposePioneering a new future, with you all

Framework for
Creating Value

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Data

To realize our Corporate Vision for 2030 of “Leading worldwide manufacturing and enriched lives,” we will mobilize our strengths—chiefly theoperating resources we have built and our employees who have a pioneering spirit and the ability to think while taking action—to focus on
expanding our business scale and addressing five material issues. By doing so, we will create further social and economic value and work to
maximize Yamazen’s corporate value.

Management Philosophy

Management of Fostering Personnel Management of Breaking ThroughManagement of Trust

Input
External
Environment

Human CapitalStrengths and Businesses

Pages 30–33

Diverse employees who can respondquickly to change, innovate and create• An organization of diverse individuals who challengethemselves and think while taking action• A system for turning Yamazen’s corporate DNA into
organizational knowledge, and instilling it in all
human resources

Growingdemand for
decarbonization

Financial Capital

Worldwide manufacturing

Vast volume
of customertransaction
data

Pages 18–21

Solid financial foundation and ability
to generate cash flow
• Credit ratings: R&I: A-, JCR: A• Return on equity: 10.6%• Basic operating cash flow: ¥14,427 million• Equity ratio: 42.6%

Advances indigitalizationand smarttechnologies

Intellectual Capital

Changes in
consumer
behavior

Changes inthe domestic
and world
economies

Employees who
have a pioneering
spirit and the ability
to think while
taking action

Medium-Term
Management Plan
(FY2022–FY2024)

Industrial Solution
Business

Large

Suppliers

Overseas Production
Equipment Business

Basic operating

Small andcash flow: ¥18 billion
Note: The above figures are
forecasts for the final
year of the mediumterm management plan.

Corporate Vision
for 2030

Leading
worldwide
manufacturing
and enriched lives

enterprises
Enriched lives worldwide
Consumer Goods

Strongrelationships
with business
partners

Globalcommunitybased sales
systemPages 58, 77

Building Materials
Business
Home Products
Business

Business locations that connect theworld and community-based systems• Broad geographic coverage1  Overseas: 65 business locations in 14 countries/regions  Japan: 53 business locations, 122 logistics sites• Locally based engineering system  Overseas production equipment engineers: Approx.
3301  Yamazen Factory Automation/Systems Integrator
Association: 48 companies1 (total of full andassociate members)
Yamazen Health and Safety Council: 209 companies2  Consumers

Social Value• Improved job satisfaction• Improved supply chain
productivity• Revitalized local
communities• Improved quality of life
• Harmony with thenatural environment

Our own logistics infrastructure and online platforms

Material Issues

Page 25

Pages 37–39

Proactive promotion system/activities
for decarbonization business• Promotion of energy-saving measures• Initiatives for decarbonization• Scope 3 initiatives• Decarbonization support for small and medium-sizedenterprises

22 INTEGRATED REPORT 2023

ROE: 10.0%

Japan andmedium-sized

Pages 42–59• Far-reaching ties with suppliers, buyers and users
around the world• Solid relationships cultivated over many years• Promotion of regional economies through Doterai Ichi

Natural Capital

Operating profit: ¥21 billion

companies inoverseas
Distributors
and others

Close relationships with a wide rangeof suppliers and buyers

Manufacturing Capital

Machine Tools
Business

Tools & Engineering
Business

Organizational knowledge/systems
and brand powerSocial Capital

Economic Value

Net sales: ¥600 billion

Pages 34–36• Know-how to accurately grasp and address customer
needs based on 75 years of customer transaction data
• Our own e-commerce site and core systems• Engineering capabilities• The Yamazen brand

Advancedengineering
capabilities

Production Equipment

Expanding green
business

1. As of October 31, 2023
2. As of October 1, 2023

Digitalization to
maximize customer
value

Realization of sustainableprocurement and supply

Establishment of atransparent governancesystemRealization of a rewarding workplace

INTEGRATED REPORT 2023 23

Lead Feature:
Yamazen’s Values

Framework for
Creating Value

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Data

Strategies to Realize Our Corporate Vision for 2030

Corporate Vision for 2030
and Material Issues

Material Issues* for Realizing Our Corporate Vision for 2030
* Issues for aligning efforts to create both social and economic value

Yamazen and the 2030 World Outlook

To understand our customers’ needs, we envisioned what the world would be like for them in 2030 to help us identify
five material issues we should address. By tacking these material issues, we aim to increase the value we provide to

01

02

03

04

05

Growing demandfor decarbonization

Advances indigitalization andsmart technologies

Changes in
consumer
behavior

Changes in thedomestic andworld economies

More demanding
governancerequirements

Identi­fication of material issues

Identi­fication of material issues

Identi­fication of material issues

Identi­fication of material issues

Identi­fication of material issues

customers and realize our Corporate Vision for 2030 of “Leading worldwide manufacturing and enriched lives.”

Corporate Vision for 2030

Leading worldwide manufacturing and enriched lives

Yamazen has drawn up the following roadmap to realize its Corporate Vision for 2030. As the first step, we are promoting CROSSING
YAMAZEN 2024, our medium-term management plan for the period until 2024, with the aim of establishing a Company-wide base for
improving profitability.

Positioning of the Corporate Vision for 2030

Material Issues

Corporate Vision for 2030

Leading worldwide manufacturing and enriched lives

Corporate Vision for 2030
FY2024

Expanding green
business

Digitalization to
maximize customer
value

Realization ofsustainableprocurement andsupplyEstablishment of atransparent
governance system upport the reduction of•Sgreenhouse gas emissions
throughout the supply chain
 educe the Company’s•Rgreenhouse gas emissions
 ecycle resources and•R
reduce waste

 xpand digital services and•Epromote data utilization to
improve customer value• Utilize data safely and securely

 nsure a supply chain free•Eof human rights, labor andenvironmental issues
 stablish a stable supply•Esystem with considerationfor economic security andother geopolitical risks• Respond to business continuity
risks in the supply chain interms of disasters, accidents,
pandemics, issues related to
products and information
technology, etc.
• Implement quality control ofproducts and services anddisclose related information• Improve disclosure of financial
and non-financial informationand strengthen market dialogue

Net sales: ¥600 billion
Operating profit: ¥21 billion(Operating margin: 3.5%)

2025–2027
FY2022
Net sales: ¥527.2 billion
Operating profit: ¥16.5 billion
PurposePioneering a new future,with you all

VisionLeading worldwide manufacturing andenriched lives(Operating margin: 3.1%)

2022–2024
CROSSING 2024 Logomark̲01

カラー

Talentmanagement
strategy

DX strategy

Strategy
モノクロTo establish a Companywide base for improving
profitability

Green initiatives
Logistics strategy
strategy

Sales strategies for realizing
our Corporate Vision

Strategies for realizing our
Corporate Vision
Close customer
relationshipstrategy

Transformation
strategy

Digitalintegration
strategy

FY2021
Net sales: ¥501.8 billion
Operating profit: ¥17.1 billion

Tactics
Strategy-based measures

Realization of a rewarding
workplace aintain a work environment that•M
encourages the development of
independent and virtuous employees
and cultivates Yamazen-style well-being
 evelop, educate and enhance the•Dabilities of human resources romote diversity and inclusion•P

Management ofFostering
Personnel
To make active use of personnel, and tofoster independent and virtuous employees

Focus areas and key measures

Based on the material issues, we formulated fourCompany-wide strategies.

(Operating margin: 3.4%)

Talent management
strategy

24 INTEGRATED REPORT 2023

• Strengthen corporate
governance system• Formulate risk management
policies and strategies withregard to laws, regulations
and other standards

DX strategy

Green initiatives
strategy

Logistics strategy

INTEGRATED REPORT 2023 25

Framework for
Creating Value

Lead Feature:
Yamazen’s Values

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Data

Strategies to Realize Our Corporate Vision for 2030

Material Issue Identification Process
Corporate Vision for 2030. When identifying these material issues,

factors such as worsening climate change, economic fluctuations

we listened to the expectations and opinions of institutional

in Japan and overseas, Japan’s declining birthrate and aging

investors, business partners and other stakeholders on the topics

population, and advances in digitalization and smart technologies.

they consider important for Yamazen from an ESG perspective, asTo accurately understand the needs of our customers and provide

well as their thoughts on how to resolve those issues throughthem with greater value, we created an outlook for 2030, thenour business activities. We then held thorough, in-depth

identified material issues to be addressed and established our

discussions inside the Company.

Step

2

Step

3

of possible material issues in areas such as our impact on the economy,
environment and society.

Analyze relevance toour business andprioritize each element

Conduct interviews
with external experts
and members ofmanagement

We conducted a survey of dozens of domestic and overseas employees on
the relevance to our business of the possible material issues we identified
in the areas of the environment, society and governance. Based on thisdata, we held multiple discussions to prioritize each element from thestandpoints of their impact as well as related opportunities and risks. We
then singled out proposed material issues.

Based on the proposed material issues, we conducted interviews withexternal experts (including domestic and international institutional investors),
business partners, representatives from banks and securities companies,
and outside directors. We discussed each external expert’s expectations forthe proposed material issues in terms of background, details of initiatives
and order of priority. We also gathered opinions from the perspective of
ESG. We then interviewed members of management at Yamazen to compareand fine-tune both Company-wide and business department policies, including
those related to our foundation for reform, in order to better promote theresolution of these material issues.

Minor

1

Select possible material Using items stipulated in international ESG information disclosure standards
from the Global Reporting Initiative (GRI), the Sustainability Accounting
issuesStandards Board (SASB) and other organizations, we extracted a wide range

None

Step

Impact on Our Business

Material Issue Identification Process

Major

Mapping of Material Issues
Yamazen’s business environment is changing significantly due to

S 8

E

3

Contributing to local
communities and the public

Water intake, wastewaterand biodiversity

E

1

Resource recycling and
waste

E

2

Energy use andmanagement of atmosphericemissions

S 5

Enhancing training andeducation

S 4

Improving the employment
environment

S 10

Customer health and safety
and product labeling/
advertising

S 6

Diversity, equal opportunityand non-discrimination

G 15

Corporate governance andcompliance

S 9

Supply chain management

S 11

Digitalization and data
management

G 12Disclosing economic value

S 7

Respect for the basic rightsof labor

G 13

Preventing corruption

G 14

Preventing anticompetitive
practices

None

Minor

Major

Expectations from Stakeholders
Focusing on the items in the red-bordered section of the map, we identified five material issues: expanding
green business; digitalization to maximize customer value; realization of sustainable procurement and

Map the material issues Based on the interviews with external experts and members of management,

we positioned high-priority items along the two axes of impact on our businessand expectations from stakeholders. Those items include resource recycling
and waste; energy use and management of atmospheric emissions; improving
the employment environment; diversity, equal opportunity and non-discrimination;
supply chain management; digitalization and data management; disclosing
economic value; enhancing training and education; customer health and safety
and product labeling/advertising; and corporate governance and compliance.

Step

4

supply; realization of a rewarding workplace; and establishment of a transparent governance system.

Organization for Promoting the Resolutionof Material Issues

Management Supervision
Board of Directors

Yamazen has established the Sustainability Management Meeting
to further strengthen management-level initiatives for material

Sustainability Management
Meetingissues related to sustainability through its business activities. The

Step

Identify material issues

5

We consolidated the 10 high-priority items listed above into five highly
related categories, and identified our material issues as expanding green
business; digitalization to maximize customer value; realization of sustainableprocurement and supply; realization of a rewarding workplace; and establishmentof a transparent governance system. For each material issue, we have set
targets with a timeframe, determined the details of the initiatives anddepartments in charge, and established a system for promoting them.

Sustainability Management Meeting is chaired by the representative
director and president, and includes representative directors andcorporate officers. It evaluates risks and opportunities related to
the Company’s material issues; formulates action plans; deliberates
on matters related to verification, approval, and information
disclosure spanning the initiatives of each business division; andregularly reports to the Board of Directors.

26 INTEGRATED REPORT 2023

Executive
Management
Meeting

Chair: R epresentative director andpresident
Members: R epresentative directors
and corporate officers
Secretariat: C orporate Planning
Department

Committees

Business divisions/Staff divisions/Affiliated domestic and overseas
companies

Business Execution

INTEGRATED REPORT 2023 27

Lead Feature:
Yamazen’s Values

Framework for
Creating Value

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Data

Strategies to Realize Our Corporate Vision for 2030

Overview of Strategies
1Company-wide Strategies
for the Material Issues

To resolve the material issues identified when drafting
our outlook for 2030 and to align efforts to create
both social and economic value, we will implement
four Company-wide strategies.

Talent Management
We will enhance our human capital byfocusing on developing the independentand virtuous employees who are Yamazen’s
core competence, promoting diversity
and inclusion, and managing humanresource development.
Details on pages 30–33

2

Sales Strategies to Realize
Our Corporate Vision

As the environment in which our business partners
operate changes, so do their needs. Yamazen has
established the sales strategies it needs to further
strengthen relationships with business partners.
Through the following three strategies, we will beable to provide solutions that accurately capture
the needs of our business partners, thus strengthening
our ability to generate cash.

To realize our Corporate Vision for 2030 and increase corporate value over the medium to long term, we will conduct
Group-wide initiatives to resolve material issues, work to reinforce our stable revenue sources and acquire new ones,
and strengthen our ability to generate cash. As the first step toward realizing our Corporate Vision for 2030, we aim toachieve the numerical targets of our medium-term management plan CROSSING YAMAZEN 2024.

3

We will pursue initiatives that align with our businessstrategies, and in so doing we will generate stable
cash flow by strengthening our revenue base fromrecurring transactions, which is Yamazen’s strong
point, invest in maintaining our competitive
advantages, and provide add-on solutions basedon our material issues.
Yamazen’s Business Development

Details for each business on pages 46–57

Fabless manufacturer (home products)
Engineering (domestic and overseas)

Close customer relationship strategy

Wholesale (home products)

We will work to understand the issues faced by customers

Wholesale (building materials)

worldwide from their perspective, and implement

DX
By turning Yamazen’s strengths in individual
sales activities and product development
knowhow into knowledge that can bereadily utilized, we will add to theintellectual capital of our organization,
leading to improved productivity andthe creation of new added value.

measures to resolve these issues and realize a win-win

FoundingGreen Initiatives
Yamazen contributes to the decarbonizationof the entire value chain by promoting
the introduction and operation of energysaving equipment and renewableenergy, and through services such as
visualization of CO2 emissions.

In addition to selling products, we will also provide totalsolutions for issues related to product manufacturing,
engineering and green businesses.

Details on pages 37–39

Logistics
Yamazen will ensure sustainable procurement
and supply lines by reorganizing its domestic
and overseas business bases and strengthening
relationships with business partners,
including local suppliers.

Digital integration strategy
We will strengthen customer contact points utilizing
digital technology, provide new solutions, connect theknowledge obtained to human resources, and create
new added value.

Details on pages 40–41

By carrying out items 1 through 3
on the left, we aim toachieve thenumerical targetsof our medium-term management
plan, which is the first phase of our
Corporate Vision for 2030.

Present

Note: “Fabless manufacturer” refers to net sales of private brand home products and“Wholesale (home products)” refers to net sales of non-private brand products.

Transformation strategy

4

Achieving the Numerical
Targets of the Medium-Term
Management Plan

Wholesale (machine tools, industrial
solution, tools & engineering)

relationship.

Details on pages 34–36

28 INTEGRATED REPORT 2023

Strengthening Our Robust
Revenue Base through theActivities of Each BusinessYamazen has three business models: a wholesale businessthat generates stable profits based on relationships of trustwith business partners; an engineering business with arelatively high profit margin because it sells directly tousers; and an asset-light fabless manufacturing businessthat enables speedy development.
    Yamazen’s origins lie in the wholesale business, andwholesaling is connected to all of our operations in Japan.
We aim to further raise our expertise and establish a moreadvanced logistics system, among other initiatives tostrengthen this business going forward. The engineeringbusiness is an area where Yamazen has been an industry
pioneer both domestically and internationally, primarily in
the Production Equipment Business, and we have asalesforce that is close to local customers as well as
advanced engineering capabilities in multiple countries andregions. We consider this business a growth driver for
Yamazen and will continue to increase our focus on it. The
fabless manufacturer business accounts for around 60% of
net sales in the Home Products Business, and our Yamazenbrand products that meet consumer needs have a solid
market presence. We will work to further raise its
recognition and expand sales channels.

(Millions of yen)

FY2024(Final year of plan)

Net sales

600,000

Operatingprofit21,000
Corporate

Operatingprofit margin

3.5%

Vision for2030

Ordinary profit

21,000

Profitattributable toowners ofparent14,000INTEGRATED REPORT 2023 29

Framework for
Creating Value

Lead Feature:
Yamazen’s Values

Talent Management

A Focus on Cultivating
Independent and Virtuous
Employees with a Pioneering
Spirit and the Ability to Think
While Taking Action

The Foundation
Supporting Value Creation

Data

Steps to 2030
Step 1Developing
human
resources

Diverse Human Resources Challenging Themselves and Thinking While Taking Action

Developing the Environment | CROSSING
YAMAZEN 2024

Step 2Going Deeper and Further | Medium-Term
Management Plan 2027

Evolution | Medium-Term
Step 3 Management Plan 2030

EmployeefriendlinessTransforming talent management topromote diversity

Assemble

Basic Policy

Medium-TermBusiness Strategies

With You All: Diversity & Inclusion

Diversity

1

With you allCompany-wide
StrategyLong-Term Strategy for
Sustainable Growth

For Yamazen to achieve sustainable growth and development amid major changes in society, we must continue generating innovations

Establishing a new in-house expert
qualification system
Integration of career-track and noncareer-track positions

Further expanding the field of value
creation by fully leveraging diversity
and the mindset of our independentand virtuous employees

Improving our ability to respondto change worldwide and create
new value

Becoming an HR development-oriented
company that attracts and combines
knowledge and experience from both
inside and outside the organization

Shifting to the Yamazen-style personcentric job system and assigning the rightpeople to the right jobs at the right pay at
the global level

Reforming the role-based personnel
grading system
Introducing a multi-track HR system
Combining a high level of expertise withmanagement skills

that make an impression on customers. This will require us to make best use of (assemble) our comprehensive strengths, and to provide
opportunities for challenging ourselves and thinking while taking action based on our diverse knowledge and experience. By enhancing
our core competencies in human capital and organizational capital, we will increase corporate value.

Personnel Philosophy and Talent Management Policy Supporting “Management ofFostering Personnel”
The seeds of change can always be found in ourcontact points with the public. To be useful to ourcustomers, we must take the initiative in cultivatingthese various seeds to generate new added value,
which will in turn make an impression. That is why
we believe it is crucial to develop human resources
who can autonomously put the principle of “challenging
themselves and thinking while taking action”—a conceptthat we have stressed since our founding—into practicein the workplace. Based on our Personnel Philosphy
of “Cultivating personnel who challenge themselves
and think while taking action,” and with our talentmanagement policy (revised in 2021) of “Employees
challenging themselves. Thinking while taking action.”at the core of our efforts, we will develop enterprisingand daring human resources who can think forthemselves to accomplish ambitious goals andovercome difficult tasks. We will also foster a
corporate culture that supports this objective.

Personnel
Philosophy
Cultivating personnel who challengethemselves and think while taking action

Talent Management Policy

Recruitment/Development/
Engagement strategy
Core Personnel System

Creating a Foundation for Utilizing Diverse Knowledge and Experience: Abolishing Seniority
To accurately meet the diverse needs that arise from a changing    We will change to job-based talent management thatbusiness environment, we must assemble our diverse knowledge

starts with people and promote diversity and inclusion in a styleand experience to create new value. To realize a comfortable

befitting Yamazen, assigning the right people to the right jobs atwork environment where all employees can work together andthe right pay.

play an active role, we have announced the abolition of seniority.
Talent Management Policy

Basic strategy and policy for HR system/
Evaluation system/Target management
system

Employees challenging
themselves. Thinking
while taking action.

Abolition of Seniority
1

Fundamental reform of senior employee compensation

By completely abolishing factors such as age, length of service
and years of experience in determining compensation andpromotions, and compensating people based on their roles,
achievements and potential, we will provide situations and2

Promotion system for selecting young employees

opportunities for employees to take on larger roles faster andcreate greater added value. In other words, a system for realizing
the growth of both individuals and the Company.

Tackle big goals and difficult tasks head on

Challenge

The ability to think and act on one’s own, and theability to act while thinking

Think and act

Autonomy

Participation of Women in the Workplace3- Manage in a way to develop people who challenge themselves and think while taking action.
- Recognize those who challenged themselves and thought while taking action, but did not quite succeed.
- Recognize those who have succeeded by challenging themselves and thinking while taking action.
- Do not recognize those who did not challenge themselves or think while taking action.

Approach to Human Resource Strategy and Organizational Development Strategy

Integration of career-track and non-career-track positions

Measures for Integration

As part of our work style reforms, we have abolished employee classifications and now assign
roles according to potential and ability so that all employees have the opportunity to challengethemselves and think while taking action in order to achieve results in their respective workplaces.
We will promote the active participation of all employees and link workstyle reforms to innovations
in ways that generate earnings.

PurposeWith you all

Pioneering a new future

Enhancing social value
Increasing economic value

Businessstrategy

Crossing

Handling change

Getting results

5

Diversity

people in management roles and skilled professionals, we canAutonomy
Challenging themselves, andthinking while taking action

Assemble

Employee-friendlinessCorporate culture

30 INTEGRATED REPORT 2023

Provideopportunities
Rewarding work

Realize a rewarding workplace with better cohesion¥37,649

Deep Pool of Core Human Resources(Next-generation Management Personnel)

assign the right people to the right jobs at the right pay throughEnhancing humancapitaljob-based talent management that focuses on people. It also
creates diverse value as employees with diverse knowledge andexperience challenge themselves and think while taking action.

Organizational
development
strategy

Average salary increase
for former regular
employees due tointegration

Introducing a multi-track HR system and combining a high level of expertise with management skills
Establishing a new in-house expert qualifi­cation system

Using the multi-track career and position options for developing

Personnel
strategy

156 employees(out of 502
employees)

Cultivation and Active Participation of Professional Human Resources
4

Developing human resources

Promotions due tointegration

Results

Enhance organizational
capitalMulti-track HR System

Results

From management course to professional course

15 employees

From professional course to management course

8 employees

Number of employees in the professional course

84 employees(70 employees last year)

Professional positions

Management positions
Leaders

262 (Last year: 196),
19 of whom are women(Last year: 7)

Chiefs332 (Last year: 356),
106 of whom are women(Last year: 83)

Coordinators

368 (Last year: 222),
201 of whom are women(Last year: 109)

Stage of employees actively
challenging themselves while
thinking and taking action

Stage of developing thecapacity of employees tochallenge themselves while
thinking and taking action

INTEGRATED REPORT 2023 31

Lead Feature:
Yamazen’s Values

Framework for
Creating Value

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Company-wide Strategy 1

Pioneering a New Future: Developing Human Resources
Step 2

Employeefriendliness

Provide opportunities

Autonomous employees challenging
themselves and thinking while taking action

Pioneering a new future

Developing
human
resources

Developing the Environment | CROSSING
YAMAZEN 2024

Encourage the practice of employees
challenging themselves while thinking andtaking action based on Yamazen’s philosophy
Introduction of the Yamazen-style system of target
management“Policy on Employees Challenging Themselves
While Thinking and Taking Action/Reporting Form”

Going Deeper and Further | Medium-Term
Management Plan 2027

Evolution | Medium-Term
Step 3 Management Plan 2030

Highlights

Transform the organization into
one that is capable of attracting
and unifying people internallyand externally

Establish the Yamazen HR
development system on a
global level

Create a culture capable of autonomously
evolving and growing by transforming
implicit knowledge regarding ways torespond to change into organizational
knowledge on a global level

Foster a culture of thinking and taking
action at the global level to enhance theprofessional ability to respond to change

Talent Management

Communicating Our Talent Management Policy of “Employees Challenging
Themselves. Thinking while Taking Action.” around the World

Steps to 2030
Step 1

Data

Talent Management Reform Project Initiatives at the China Regional Headquarters
Under its Corporate Vision of “Leading worldwide manufacturing

an initiative for promoting diversity. We will continue the global

and enriched lives,” Yamazen does not limit its human resources

rollout of our unique approach to talent management with thedevelopment initiatives to Japan. Assembling our comprehensive

aim of unifying our values and realizing our Purpose of “Pioneeringstrengths around the world will help shift the growth drivers ofa new future, with you all.”Introduction of evaluation standards at the
management level for understanding Yamazen’s
philosophy of thinking and taking action

business expansion into a higher gear.

Introduction of evaluation standards forcompetency in understanding the characteristics ofYamazen’s philosophy of thinking and taking action

360-person organization as it has expanded its business, is conducting    The China Regional Headquarters, which has grown into aa talent management reform project that is being led locally.
    The project aims to continue the trend of accelerating our

Measures to Bolster the Foundation for Strengthening Autonomy

growth strategies by having local employees engage in in-depth

At Yamazen, developing human resources is identical to self-satisfaction means at Yamazen, and it becomes a unifying force

development. The voluntary desire to grow—“This is what I wantthat attracts even more people with diverse knowledge andto be” or “This is how I want to improve”—is the engine that leads

experience. We believe that human capital investment for thisto independently challenging oneself and thinking while taking

purpose leads to the sustainable growth and development ofaction. Having the autonomy to be able to grow raises motivation

Yamazen, and will lead to the achievement of our growth strategies.

for work and leads to the creation of innovation. This is what job

Human Resource Development Strategy
Diverse knowledge and experience × Challenging oneself, and thinking while taking action

Individual results

Vision. It also involves formulating and implementing neworganizational and human resources strategies. This is not simply

Plans by division

We held meetings to share and instill Yamazen’s Purpose and

the Purpose and Corporate Vision, their relationship to our Corporate

Corporate Vision among local staff at the ASEAN Regional

Philosophy and other matters, we are conducting various initiatives

Headquarters (covering subsidiaries in Thailand, India, Vietnam,

at each location. Initiatives include exchanging opinions andthe Philippines, Singapore, Malaysia and Indonesia) and the China

holding presentations so that each employee can feel a personal

Regional Headquarters (covering subsidiaries in Shanghai andconnection with the Purpose and Corporate Vision.

Shenzhen). In addition to explaining the background for establishing

Excerpts from Questionnaires after the Meetings
Correspondence courses/e-Learning

Development of next-generation
human resources

Training for new managers

Support for autonomous career building

Yamazen thinking and taking action
philosophy evaluation

Succession pool
Value creation generated frompeople with diverse knowledge
and experience

Support for voluntary
growthSelf-development
infrastructure(Internal recruiting, FA
system, etc.)

Independent andVirtuous Employee
University initiative

Strengthening management
skills in an era of change

SelfIssue-specifictraining to carry development
supportout strategies

How do you personally experience Yamazen’s Purpose of“Pioneering a new future, with you all” in your daily work?

Each business/job typeTechnical training by level

Individual action

Promotion of thedevelopment ofvoluntary multitaskers

Yamazen-style job-based
systemNext-generation
human resource
development

Level-specific training

Customer-focused human resource development
Practical training↑

Individual
thought

Training of independentand virtuous employees

Development of human resources andorganizations through education and training programs

Global/DX/”Crossing” concept combined with human resource development↑

Individual
challenge

Yamazen thinking and taking action
characteristics evaluation↑

Challenge, think and act stage

Individualcompetition

Internal job qualification system↑

Co-working

Abolishment of seniority, assignment of
employees based on value creation ability

Yamazen-style system of target management“Policy on Employees Challenging Themselves While Thinking and Taking Action/
Reporting Form”

Management positions↑

Co-creation

Demonstration stage↑

Co-development

Working as an independent and virtuous
employee
Yamazen-style ranking system

Development stage

Organizational
results

Organizational Development Strategy
Provide opportunities × Assemble

Development of female leader class

Development of human resources andorganizations through HR system reforms
Other personnel systems(Transfer/Promotion/Career development)

Yamazen Group’s Management Philosophy, Purpose and Corporate

Global Rollout of Activities to Promote Understanding of Our Purpose and Corporate Vision

Human Resources Development System: Providing Opportunities

Core personnel systems(Rank/Evaluation/Remuneration)

discussions so that they feel a personal connection with theBased on our Corporate Vision for 2030, what kind ofcompany do you want your company to be?

India: P roducts made by our business partners based on our proposals
meet international standards and are useful to society.

Indonesia: A company that is trusted by customers, gives hope toemployees and desires to create a better tomorrow.

Thailand: Proposing energy-saving products not only helps customers
save on electricity bills, but also contributes to the environment.

Malaysia: A socially responsible and innovative company that prioritizes
the well-being of its employees and customers.

Training to acquire human skills andbuild networks (new to third-year
employees)

Governance that supports, advances and deepens human resource development management

Human Resource Development Management Committee

Introduction of a Yamazen-Style System of Target Management: “Policy on Employees Challenging Themselves While Thinking and Taking Action/
Reporting Form”

Only when every employee at our workplaces freely challenges themselves on the questionsof how they want to approach customers and tackle their work, and then thinks while taking
action, will they generate innovations that make an impression. All employees who are in
direct contact with our customers have a deep, first-hand understanding of the diverse needsof those customers, and therefore know the best way to make them happy. That is why, rather
than using top-down target management, we have created a system that allows employees to set
their own work targets based on Yamazen’s Purpose and Corporate Vision. This system directly
links progress and results to their evaluations.

32 INTEGRATED REPORT 2023

Target Management Survey(Percentage of Positive
Responses)

Results

Did receiving evaluation
feedback lead to greater
motivation for your work?

52%(Last year: 48%)

Were you able to set yourown targets?

78%(Last year: 73%)

Yamazen’s Purpose translated into Thai and Hindi

INTEGRATED REPORT 2023 33

Lead Feature:
Yamazen’s Values

Company-wide
Strategy

2

DX

Framework for
Creating Value

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Data

Implementation Measures
We are conducting measures centered on data and analytics (D&A) at each point in the value chain to enable us to quickly recognize theCreating New Added
Value with Advanced
Technologies

signs and intricacies of the changing needs of suppliers, sales and business partners, and consumers. By further enhancing our decisionmaking and marketing functions based on D&A, we aim to improve our salesforce and create new business models.

Basic Policy and Implementation Measures

Transformation into a Data-Driven Company

Creation of New Business through Data-Based Marketing

Basic Policy

Yamazen views DX as innovation, and has made DX promotion a core measure. We will strengthen customer contact points utilizing
digital technology, provide new solutions, connect the knowledge obtained to human resources, and create new added value. By fully
utilizing digital technology, we will also revamp our business models in response to changes in the business environment with the aimof maximizing customer value.

DX Strategy Promotion Organization• Improve business processes
and the way that data is input
through the introduction of an
integrated core business system• Build a new, data-driven
management infrastructureStandardization andConsolidation of Business
Processes• Introduce integrated corebusiness and logistics systems,
reduce back-office operations
and shift to high-value-added
operations by promoting the useof BPR throughout the Group

Suppliers

YamazenCentralization ofInformation

Deepen Existing Businesses

New Business Creation• Use data to realize close
customer relationship strategy• E nhance sales and productdevelopment capabilities byleveraging new data-driven
management platforms(including AI)• Sequential launch of B2B and
D2C websites is necessary tofurther enhance customer
engagement• Create new business utilizing
data from on-site improvement
activity and facility IoT

Sales/
Business
partners

Consumers

Yamazen has established the Digital Transformation Strategy
Board of Directors

Department within the General Sales H.Q. as a functionalorganization that integrates business and IT systems. We also
arrange for the CEO and CIO to give updates monthly on overallmanagement policies, including the promotion of DX strategies. In

Sustainability Management
Meeting

Executive Management
Meeting
Note: Attended by the CIO

addition, we emphasize sales-side activities (revamping businessmodels using DX), and have adopted a system in which thepresident of the General Sales H.Q. is in charge of the progressof each measure. Digital Transformation Strategy Department

Management Meeting

initiatives are shared with the Management Meeting, Executive

Highlights

Management Meeting and Board of Directors as appropriate toensure the success of DX measures throughout the Group.

DX Strategy(Digital Integration
Strategy)

34 INTEGRATED REPORT 2023

Transformation into a Data-Driven Company

Realize improvements in productivity and in the quality ofdecision-making through the centralization of information andthe standardization and consolidation of business processes.

2

Create a system for contributing to the further strengtheningof sales capabilities, as well as for promoting the deepening ofexisting business and new business creation by enhancing
contact points with customers.

part of efforts to increase the digital literacy of all employees. We

activities into concrete form, and make data-based decisions on

created the course as a way for all employees to acquire knowledge ofmanagement and business strategies. We have three aims for YDP: (1)digital technology and the ability to use the digital tools provided in their

to meet needs going forward for analysis based on data generated

work, as well as to collect better ideas by having employees use thoseinternally and externally; (2) to ensure the confidentiality, integrity andtools. Employees have submitted more than 2,000 ideas for using

availability of databases that have not previously been linked; and (3) todigital tools to resolve business and operational issues. We will analyze

reduce workhours, including for procedures that are currently donethese ideas, and for those with commercial potential, we will begin

manually. We will gradually broaden the scope of data linkage andstudies toward putting them into practice, as well as select DX humananalytical capabilities with the aim of generating business opportunities

resource candidates.

through D&A and establishing a greater competitive advantage for
Yamazen.

Data-Driven Management Platform (YAMAZEN Data Platform)
Data
platforms

Process data
Connect data

(Convert to valuable
information)

Collect anddisplay data

Data analytics platform fordata scientists

Data analytics platform
for all employees

Analyze data andmodel logic

Make datavisualStep 1→Idea sheet
submissions

2,338 items

Step 2

Step 3242 items

15 themes

Step 4

Step 5

Workshopping

1

Creation of New Business throughData-Based Marketing

to provide added value to customers, we held a DX literacy course as

business activities, put information and analysis useful for business

Proof of concept

connect the knowledge obtained to human resources, and create new added value.

To create an organization and culture that is able to use digital technology

available to all employees. The goal is to help employees visualize

AI facilitation

We will strengthen customer contact points utilizing digital technology, provide new solutions,

In July 2023, Yamazen started operation of YDP, a data analysis platform

In-depth theme evaluation

DX Strategy (Digital Integration Strategy)

DX Literacy Course

Theme refinement

Business Divisions

Start of Operation of YAMAZEN Data Platform(YDP) for Data Analysis

Idea sheet analysis

Digital Transformation
Strategy Department

DX literacy course

General Sales H.Q.

Progress as of this report

INTEGRATED REPORT 2023 35

Lead Feature:
Yamazen’s Values

Company-wide Strategy 2DXCompany-wide
Strategy3

Developing Organizations and Human Resources to Promote DX
We believe the keys to implementing our DX strategies, effectively utilizing data, and gaining a competitive advantage for Yamazen will beto steadily promote digitalization (governance) and to develop human resources and management who can generate ideas (digital natives).
Our specific goal is to create a situation where we can democratize and standardize digital technology for all employees, create ways toaddress changes in society and bring together our ideas.

Framework for
Creating Value

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Data

Green Initiatives

Achieving Carbon
Neutrality and Promoting
Environmental Activities

1. Compliance with the Digital Governance Code (DX Certification)

evaluation (DX certification). We will make further refinements by expanding and promoting measures throughout theCompany.

The Yamazen Group regards addressing environmental issues as one of its management priorities. As such, it takes the environment into
consideration in all of its business activities, and strives for the protection and continuous improvement of the environment. With the goal

2. Promotion of PoC and Agile Development
We believe that agility is key to responding to change, and have established an agile approach (methodology) that willallow us to take on new challenges through trial and error. Specifically, we have begun to transform operations at thecitizen developer level (independent promotion of digitalization) through the use of low-code/no-code tools.

of achieving carbon neutrality by FY2050, the Group is working to balance environmental activities and business operations from four
viewpoints: governance; awareness of risks and opportunities; strategies and tactics; and metrics and targets.

Governance

Board of Directors

The chief operating officer responsible for climate change issues is the CEO, with the Sustainability

1. Creation of a Dedicated Organization
On April 1, 2021, we established the Digital Transformation Strategy Department within the General Sales H.Q. as afunctional organization that integrates business and IT systems.

Act

Management Meeting as the managing body. The body was established in April 2023 and confirms
policies, action plans and progress once per year. In addition, practical measures are carried out by the

Sustainability
Management
Meeting

Environmental Committee, which is made up of members from various departments, and meets fourtimes per year to discuss policies and identify issues. The secretariats of this committee are the CSR

2. Raising the Base Level of D&A Skills
Beginning with the Digital Transformation Strategy Department, we have established internal standards and started todevelop DX human resources, including business leaders who will take charge of actual DX promotion, as well as analyst
leaders (citizen data scientists) who will agilely respond to signs of change and take the initiative in promoting action on site.

Promotion Office in the Corporate Administration H.Q. and the Green Recovery Business Department

Environmental
Committee(GRB Department) in the General Sales H.Q., with each providing specific instructions to the departments
under them, and managing progress. We have established a system in which the Board of Directors

CSR Promotion
OfficeGRB
Department

Corporate
Administration
H.Q.

GeneralSales H.Q.

reviews the direction and suitability of activities once per year. In this way, the entire Company works as
3. Collaboration with External Organizations

one to address climate change issues while implementing the PDCA cycle.

With regard to the (collaborative) robot business, which is an alternative to a human labor system and an area where
demand from society is increasing, we have constructed an ecosystem “Yamazen FA/Sler Association” in collaboration
with robot manufacturers and companies with expertise in control programs and AI. We are also developing automationand labor saving solutions for our sales network (customers).

Reduction Target: Aim to Achieve Carbon Neutrality by FY2050

Plan

2.
System for
Promoting DX
Strategy, andSecuring andTraining Digital
Human
Resources

Basic Policy

Check

1.
Establishmentof DX Strategy
Methodology

For the steady development of measures to improve corporate value, we have redefined our business strategy andinvestment management process from the point of view of digital governance, and have undergone an objectiveDo

FY2020 is used as the base year for the Company’s emissions due to limited resources* in accordance with the Greenhouse Gas Protocol.
The targets include some items that are still being aggregated, but we aim to reduce total emissions by 50% by FY2030, and to be effectively
carbon neutral by FY2050. Scope 1 emissions largely consist of gasoline consumption related to sales vehicles. We are making efforts toMetrics and Targets

replace existing hybrid vehicles with EVs. Much of our Scope 2 emissions are accounted for by electricity consumption in offices and logistics

We have set KPIs based on each of our DX strategies, centered on reducing workhours and costs for existing businesses and expanding

sources and installing energy-efficient air-conditioning and lighting. Scope 3 emissions are currently being aggregated, with certain exceptions,new businesses.

but we aim to halve these emissions by FY2030, and be effectively carbon neutral by FY2050. We are also considering offsets such as credits.

(★ marks reflect ratings on a 5-point scale, with 5 stars equaling 100 points.)
DX Strategies

1. Decision-making
based on data

Process
integration

Expand sales

2. Creation of new
business throughmarketing basedon data

Deepening
existing
businessesNewbusinesscreation* We are currently in the process of switching from the market-based method to the location-based method for the calculation of some targets.

Main KPIs and Targets
Cost reductions
from standardization Reduction of indirect costs........................ Approx. ¥1.2 billion
and consolidation of (Compared with FY2017)business processes

bases, and we aim to significantly reduce CO2 emissions in the medium to long term by progressively switching to electricity from renewable

FY2022(By FY2030)

E-business-related transaction amount.... 130% increase
Expand the number of SKUs..................... 130% increase(End of FY2024)

Operating profit margin............................. 3.5%

(End of FY2024)

Emissions☆☆☆☆☆
(Ongoing development)

★ ☆☆☆
★★★★

Category

Number of newservices
Number of new
customers
developed

Number of new service PoCs.................... 10
Number of subscribers.............................. 5,000 companies
Number of service uses............................. 4,000 uses

(End of FY2026)

Investment amount

Investment in new digital technology....... ¥10.0 billion(By FY2024)★ ☆☆☆

Human resources

Data analyst human resources.................. 10 employees(End of FY2024)★ ☆☆☆

Management resources toachieve the above strategies

Interim Target

Final Target

FY2022

FY2030FY20501,400

Reference Gasoline consumptionℓ

942,030

721,974

470,000

0

Reference Hybrid vehicle implementation rate

%

87.0

93.1

50% (EVs)

100% (EVs)Electricity (location-based method/market-based method)

0

t-CO2

5,182 / 5,273

5,302 / 5,194

4,000 / 2,600

0MWh11,34912,004

11,00010,000All categories

t-CO2

Being aggregatedCategory 1

Purchased goods and services1

t-CO2

122,709144,393—

Category 4

Upstream transportation and distribution2

t-CO2

11,000

9,616

—

—

Category 5

Waste generated in operations

t-CO2

14

56

—

—

Category 11

Use of sold products1

181,075——

Total CO2 emissions

t-CO2

255,795

t-CO2

Being aggregatedBeing aggregated 50% (offsets included) ±0% (offsets included)—

Being aggregated 50% (offsets included) ±0% (offsets included)

1. Calculated using the Company’s private brand electrical products as the reference.
2. The activity volume that is the basis for this calculation was changed from a unit of volume to (actual measured) weight. Accordingly, the base year has beenrecalculated based on (estimated) weight.
Countries covered are Japan, China, South Korea, Taiwan, Thailand, Vietnam, the Philippines, Singapore, Malaysia, Indonesia, India, USA, Mexico, Germany and Czech Republic.
Calculation method: In accordance with the Greenhouse Gas Protocol, Scope 1 and Scope 2 emissions are calculated based on actual emissions, and Category 1 andCategory 11 of Scope 3 are calculated only for Company-branded original products.

Reduction Contribution
Category—

36 INTEGRATED REPORT 2023

Elapsed Period

FY20202,253

Reference Power consumption☆☆☆☆☆

Base Year

2,819

Gasoline and gas

Scope 2★★ ☆☆

(Ongoing development)

Unit

t-CO2

Scope 1

Scope 3
Improve profit
marginEmission Source

Emission source

Reductions through GBP App

Unit

t-CO2

Base Year

Elapsed Period

Interim Target

Final Target

FY2020

FY2022

FY2030FY205034,31940,94760,000100,000

INTEGRATED REPORT 2023 37

Lead Feature:
Yamazen’s Values

Framework for
Creating Value

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Data

Company-wide Strategy 3

Green Initiatives

Climate Change Scenario Analysis (Risks and Opportunities)

Strategies in Green Businesses

We have analyzed the Company’s risks and opportunities related to climate change as follows, primarily assessing transition risks using

To minimize risks and maximize business opportunities amid changing climate conditions, we are working strategically and ambitiously

the International Energy Agency scenarios and physical risks using the Intergovernmental Panel on Climate Change’s Representative

toward carbon neutrality in three fields: the development business, sales promotional planning and branding. Given our nature as a trading

Concentration Pathway scenarios.

company, we need to reduce Scope 3 emissions, as the volume of direct emissions is minimal relative to our overall business size. Therefore,
we are focusing on expanding decarbonization activities in cooperation with suppliers and sales partners. Specifically, we are engaged in

Climate Change Risks
Type of Risk

the corporate PPA business as a development business and the Green Ball Project as part of sales promotional planning.

Main Climate-related Risks

Potential Impact on Business• Increased energy procurement and logistics costs

Carbon tax (feed-in tariff)New
regulations
and policies

Transition

Laws related to global warming

Technologies

Replace existing products and services
with low-emission versions

Transition to low-emissions technology

MarketReputation

Changing customer behavior• Increase in stakeholder concerns or
negative feedback from stakeholders•D ecline in consumer trust

PhysicalAcute physical Increased severity of weather eventsrisks(storm and flood damage)• Increased costs due to introduction of carbon pricing(feed-in tariff)• Increased costs associated with introduction of newpolicies aimed at reducing greenhouse gas emissions
and strengthening of laws and regulations• Increased costs when switching sales and delivery
vehicles (replacement) to EVs• Increased development cost of environmentallyfriendly products• Decrease in sales due to delayed adoption of low-carbon,
energy-efficient equipment, and inadequate response• Decreased sales from loss of customers due to delay
in addressing decarbonization• Decreased sales of certain products due to customer
avoidance of products derived from fossil fuels• Decline in corporate value and loss of order opportunities
due to insufficient disclosure of information• Social criticism and loss of trust of long-term investors
due to delay in addressing decarbonization

Timeframe

modal shift (rail, RoRo ships, etc.)

Medium termLong term

Changing temperatures (atmospheric,freshwater and ocean)• Steady implementation of decarbonization and energysaving initiatives• Expansion of environmentally friendly products•S teady implementation of decarbonization and energysaving initiatives
Medium term
• Appropriate disclosure of our initiatives in accordance withLong term
the TCFD recommendations•E xpansion of environmentally friendly products•D ecreased sales and increased costs due to cutoff orsuspension of public, information or transportation
infrastructure•E nsuring business continuity with a business continuity plan(BCP)•D iversification of risks by establishing multiple sales bases,
Short term
suppliers and distribution bases
Medium termLong term•R isk transfer through insurance coverage• Increase in costs due to increased consumption ofenergy for air-conditioning and measures to address
work environments as temperatures rise
• Increase in energy costs•S table procurement and supply through diversification ofmeans of transport

Medium termLong term• Installation of energy-saving equipment such as high-efficiency
air-conditioners for Company facilities and introduction ofrenewable energy facilities•E xpansion of environmentally friendly products• Decrease in sales of winter products

Transition•U se of supportive policy incentives•U se of lower-emission sources ofenergyDevelopment and/or expansion of
low-emission goods and services
Products andservices

PhysicalMarkets• Improved earnings through operational improvementof air-conditioning systems and high-efficiency lighting
equipment• Use of policy incentives such as energy-saving
subsidies• Reduced energy costs due to introduction ofrenewable energy

Access to new markets

Acute physical Increased severity of weather eventsrisks(storm and flood damage)

Timeframe

Response• Achievement of optimal transport by calculating cost anddistance between demand areas and logistics bases
Short term•R
 eduction of number of delivery vehicles through modal
Medium term
shifts (rail, RoRo ships, etc.)
Long term•S trengthening of development and sales of energy-saving
products and technologies
Short term
Medium term•S
 ales of energy-saving products whose energy-saving effectis recognized in energy conservation-related policies•P romotion of corporate PPA business (DayZpower)• Increased revenue through expansion of sales
opportunities for goods with low environmental impact•E xpansion of products covered in the Carbon Neutral
Purchasing Guidebook• Increased revenue from more energy-efficientelectrical appliances and other products with low
environmental impact as needs for energy-saving
home appliances increase•S trengthening of product offerings and solutions in response
to decarbonizing industries• Increased sales of summer products (air-conditioning,
electric fans, etc.)
Development of climate adaptation,
resilience and insurance risk solutions

Branding

Environmental ValueFY2022
Nippon Paper Crecia Co., Ltd.
Kaisei Mill
Started selling electricity
Power generator capacity: 439 kW
Annual power generated: 500,000 kWh
Reduction of annual emissions: 197 t-CO2

Renewable energy/
emissions allowance■ PPA business model, renovationof energy-saving equipment
Development
and in-house power plant• Energy-saving modifications ofcompany power plants provided free ofcharge• Creating our own environmental value!

Business

Sales
Promotional
Planning• Appropriate disclosure in accordancewith the TCFD recommendations• Social return on investment (SROI)• Boost the ESG score!

■ Sales campaign for eco-friendly
equipment• Offset logistics emissions fromoriginal products• Pass on environmental value as anincentive for customers• Make the eco-friendliness of our
products stand out from the crowd!

FY2022
GBP App
Industrial tools & equipment:
214 companies
Building materials: 46 companies
In operation: 260 companies

Initiative 1

Corporate PPA Business: Introduction of DayZpower at a Supplier
Yamazen entered the corporate PPA business in October 2021, when it formed a business alliance with

197 t-CO2 per year. In the future, we will support the renewable energy procurement and decarbonization
Potential Impact on Business•C ost reduction through increased transport efficiency

Energysources■ Publicity through IR, PR andrecruiting• Switch to renewable energy
sources at all global locations asneededrenewable energy electricity, the Kaisai Mill of Nippon Paper Crecia expects to reduce emissions by about

Main Climate-related Opportunities• Use of more efficient production anddistribution processes

Green Recovery Grand Strategy

adopted by the Kaisai Mill of Nippon Paper Crecia Co., Ltd., one of our suppliers. By supplying thisClimate Change Opportunities

Resource
efficiency

RE100

Daigas Energy Co., Ltd. and launched the joint brand DayZpower. In October 2022, DayZpower was

Short term: 1–3 years; Medium term: 3–10 years; Long term: 10–30 years

Type of Opportunity

FY2022First CDP Response
Assessment: C-List■ Reducing CO2 emissions by 50%
by FY2030•G radual replacement of current vehicles with EVs• Criticism of products with large environmental impact•D amage to or loss of Company assets, including
employees, buildings, facilities and equipment

FY2022
Osaka Corporate H.Q.
Buildings 1, 2 and 3
Logis Osaka
Switch to renewableenergyMedium term • E
 nhanced awareness of technological trends and acquisition
Long termof knowledge of installed equipment• Interruption of domestic and overseas supply chains(procurement of goods)

Chronic
physical Risks

Response• Achieve carbon neutrality in Scope 1 and Scope 2 emissions
Medium termby FY2030 and work toward effectively zero CO2 emissions
Long term
throughout the value chain (Scope 1, 2 and 3) by FY2050
through the introduction of renewable energy facilities andby upgrading to energy-saving equipment, etc.
Medium term • R educe travel distance through optimization of delivery
Long termroutes and reduce number of delivery vehicles through• Increased revenues due to sales expansion of disaster
response and recovery-related products• Increased revenues through use of new technologies
and expansion of product demand related to transition
to a decarbonized economy

Short term
Medium term • S trengthening of development capabilities and sales ofprivate brand products for addressing environmental issues•D evelopment and sale of home appliances with low power
consumption•P ublic relations activities with sales partners and users andparticipation in trade shows

Short term
Medium term • S ales of BCP.ERS and other products and services fordisaster prevention•S upply of heat stress prevention products and products forhelping to improve the environment according to demand•S trengthening of product offerings and solutions in response
Short term
to decarbonizing industries• Increased sales of heat stress prevention products and Medium term
products for helping to improve the environment such•E
 xpansion of Green Ball Projectmaterials for air-conditioning•P romotion of PPA model business (DayZpower)• Increased revenues due to sales expansion of disaster
response and recovery-related products

Short term•S
 ales of BCP.ERS and other products and services for
Medium term
disaster prevention, and expansion of product supply
Long term
network to enable quick response to recovery demandof our suppliers, which will also help to curb our Scope 3 emissions in the supply chain.

Initiative 2

Sales Promotional Planning: Green Ball Project
Since FY2008, we have been carrying out the Green Ball Project

Machine Tools Business and Tools & Engineering Business werein order to reduce our impact on the environment by promoting

also added. We have now certified a wider range of environmentallythe popularization of environmentally friendly products. The

friendly products. We also provide a Carbon Neutral Purchasing

contribution to reduction of CO2 emissions in FY2022 was

Guidebook that lists these products to make it easier for users

40,947 t-CO2, as aggregated by our proprietary GBP Protocol

who want to decarbonize to select environmentally friendly

based on the baseline comparison method and programmed

products. As we continue to advance the Green Ball Project, wereduction. The 15-year cumulative reduction is 533,157 t-CO2.

will further promote sales of environmentally friendly products

Furthermore, in July 2022 we partially customized an SaaS CO2

and contribute to the reduction of CO2 emissions throughout thecalculation application (GBP App) used in the cloud service

entire supply chain as a trading company. (Our decarbonization

provided by Zeroboard Inc. to visualize CO2 emissions, andinitiatives in logistics are described on page 41.)

began providing it free of charge to approximately 400 sales
partners that are participating in the Green Ball Project. By helping
partners to visualize both supply chain CO2 emissions, which arealso part of our Scope 3 emissions, and the reduction effect, we
will support their decarbonization efforts. The companies supporting
this project were the suppliers of the Industrial Solution Businessand Building Materials Business. In FY2023, suppliers of the

Yamazen is a member of the GX League.

Short term: 1–3 years; Medium term: 3–10 years; Long term: 10–30 years

38 INTEGRATED REPORT 2023

INTEGRATED REPORT 2023 39

Lead Feature:
Yamazen’s Values

Company-wide
Strategy

4

Framework for
Creating Value

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Data

Logistics
First Phase: “Crossing” Logistics Operations between Divisions (2022–2024)

Enhancing Service Capabilities
and Providing New Value with
Interoperability and IoT

The Group aims to be a transportation and delivery platform(Higashiosaka-shi) in January 2025 as a general logistics base,business for specific industries in logistics by 2030. As the firstand introduce the latest material handling equipment to savephase, we are implementing measures based on the concept oflabor in warehouse work. In addition, we will establish and“crossing” logistics operations between divisions from 2022

coordinate small warehouses with area delivery functions. This

through 2024. Through shared cross-divisional use of our 122

includes local depots: Okayama Depot in Okayama-shi (opened

production equipment-related logistics, home products-related

in January 2023), Hokuriku Depot in Kanazawa-shi and Sendai

logistics and building materials depot locations nationwide,

Depot in Sendai-shi (scheduled to open in FY2023). Furthermore,divisions will be able to share each other’s strengths while also

we are beginning to utilize modal shifts (use of rail transportation

For a trading company, improving and expanding logistical functions is a priority management issue. Amid calls to solve issues such as

focusing on DX of logistics functions and reduction of environmental

and coastal shipping) from the perspective of addressing thethe impending 2024 Problem (see below) and reduction of environmental impact, we have launched a cross-divisional program based on

impact. First, by developing and introducing our own logistics

impending 2024 Problem and decarbonization. Through these

the concept of “crossing” logistics operations and an initiative to upgrade logistics efficiency and service capabilities through DX of

management system (LMS) and warehouse management

initiatives as well as measures such as our transition to renewable

logistics functions. We will also pursue the establishment of a next-generation distribution system that includes cooperation between

system (WMS), we have made cross-divisional distributionenergy sources for electric power in warehouses and thegeneral logistics bases and decentralized depots, as well as joint pickup and delivery.

operations possible through system linkage of multiple divisions.

introduction of paper cushioning materials and cardboard pallets

Logis Shin-Tokyo (Kitamoto-shi) also went into full-scale operation

made from recycled paper, we will work to combat climate change.

Basic Policy

Improved Efficiency of Logistics Business and Contribution to Sustainability

in January 2023. We plan to open Shin Logis Osaka

The role of logistics as well as related efficiency demands are increasing dramatically, driven by rapid changes in consumption behavior,Highlights

such as e-commerce and delivery services, rising fuel and labor costs, and advances in IT, notably AI. Even in the logistics business, there
is a marked trend toward automation and labor-saving in areas such as material handling and delivery instructions using IoT, from warehouse
work to transportation and delivery. In addition, the rethinking of long-distance transportation methods due to restrictions on the working
hours of drivers (the 2024 Problem), the push to reduce CO2 emissions related to warehouse work and transportation and delivery, as
well as BCP measures for disasters, are fueling a strong need to build a sustainable logistics network.
    Based on these medium- to long-term trends, the Group has formulated a three-term, nine-year logistics strategy by backcastingfrom the Corporate Vision for 2030, and is actively investing management resources in promoting this strategy.

Enhancement of Services by Introducing LMS and WMS
We introduced LMS and WMS at two locations, one of which was Logis Shin-Tokyo, a production equipment logistics base, in January
2023. The systems were also introduced at Logis Fukuoka, which is also a building materials logistics base (May) and Logis Ashikaga, ahome products logistics base (August). We plan to introduce these systems at logistics bases nationwide within the next three years,
and will cut distribution costs and enhance the level of distribution services we provide to customers by sharing the use of our assets,
which were previously operated separately, division-by-division. These initiatives are based on the concept of “crossing” logistics

Aiming to Become a Transportation and Delivery Platform for Specific Industries
Home appliance/furniture/household goods industry
Manufacturers, wholesalers and online retailers

1. Reduce transportation anddelivery emissions

2. Reduce emissions fromenergy use at bases
3. Reduce waste produced anduse of consumables

Home Products

Second Phase: Making Yamazen Logistics Profitable(2025–2027)
Obtain permits for warehousing business and consigned
freight forwarding business, develop a system thatenables manufacturers, distributors and otherwholesalers in the industry to contract transportationand delivery services

We plan to open Shin Logis Osaka as a strategic logistics base for delivering products handled by the Industrial Solution Business and1. Operation of LMS
2. Operation of Logis Shin-Tokyo
3. Enhance talent

automation and labor-saving measures. It will also leverage its geographical advantage of being located in the same area as collection

LMS

TMS

Warehouse Management System

Transport Management System

Production Equipment

Building Materials

Manufacturers, wholesalers and online retailers

40 INTEGRATED REPORT 2023

terminals of major shipping companies to reduce logistics costs and enhance the level of logistics services it provides to customers.

Modal Shift

Cardboard Pallets and Paper-based Cushioning Materials• RoRo ships

We are switching from conventional wooden pallets to recyclable
reinforced cardboard pallets, and changing the cushioning materials
used as packaging from plastic materials to papermaterials one after the other. We are promoting theuse of FSC® certified logistics materials.

Began using for transport of goods between our warehouses in
Kyushu and Kanto in June 2023.
⇒ Truck transport of 1,100 km per trip is reduced to 156 km, achieving
a reduction of approximately 450 kg-CO2 per delivery (a 40% CO2
reduction compared with previous mode)• JR freight lines
Tools/equipment/hardware industry
Manufacturers, wholesalers and online retailers

Housing equipment/air-conditioning/building materials industry    With state-of-the-art material handling equipment, Shin Logis Osaka will conduct efficient in-warehouse logistics through extensive

We are also focusing on initiatives for sustainable green logistics.

WMS

5. Curb Scope 3 emissions

Tool & Engineering Business to western Japan, with the aim of beginning full-scale operation in January 2025.

Modal Shift (RoRo Ships, JR Freight Lines), Cardboard Pallets and Paper-based Cushioning Materials

Logistics Management System

4. Identify the extent of andcontrol commuting emissions

Establishment of Shin Logis Osaka, a Strategic Logistics Base in Western JapanFirst Phase: “Crossing” Logistics Operations between
Divisions (2022–2024)
Divisions share use of the more than 100 production
equipment-related logistics, home products-related
logistics and building materials depot locations nationwide,and utilize each other’s strengths

Yamazen Logistics

1. Obtain permits and licenses
2. Develop new logistics bases
3. Logistics sales

operations (between divisions).

Third Phase: Establish Industry-Specific Joint Transportation
and Delivery System (2028–2030)
Develop a platform that can handle joint transportationand delivery operations, while establishing a position
for unifying transportation and delivery in specificindustries, including sorting, packing and bundling,
joint delivery, and pre-order shipping
1. Operation of new logistics bases
2. Transportation and delivery utilizing AI
3. Automatic handling of cargo

Use increased by approximately 1.4 times to 766 trains in FY2022
from 553 in previous year.

⇒ Achieved a reduction of approximately 428 t-CO2

Switch to Electricity Generated from Renewable Energy Sources
In November 2022, Logis Osaka (scheduled to be renamed Logis Daito) switched to “D-Green RE100” offered by Osaka Gas. This is aplan for electricity generated from renewable energy sources that comes with information on non-fossil fuel certification. As a result, thefacility has been able to reduce emissions by approximately 167 t-CO2 annually (compared with fossil-fuel energy sources).
INTEGRATED REPORT 2023 41

Lead Feature:
Yamazen’s Values

Framework for
Creating Value

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Data

Yamazen’s Advantages 1
Broad Global Network

Cross-border Strategy Case Study• Coverage of a wide area, with 64 offices in 14 countries and regions outside Japan (approximately 330 engineers out of an
overseas workforce of approximately 1,200)*• One of the largest global networks among trading companies specializing in production equipment, built since 1963, and a businesswith high barriers to entry

Providing Value to Customers through Advanced Localization and Global Network Capabilities
The flow of manufacturing has been changing worldwide as a result of geopolitical risks and pandemic-related supply chain
disruptions. In response to these trends, the Overseas Production Equipment Business has developed a cross-border
strategy to provide support for overseas expansion, not just to Japanese companies but also to local companies in other* As of October 31, 2023. Figures for the Overseas Production Equipment Business only.

countries. Below, we present a case study in which our human resources leveraged locally built relationships of trust, ouradvanced engineering capabilities and global network to generate new business.
YAMAZEN EUROPE GmbHGermany

YAMAZEN (KOREA) LIMITEDYAMAZEN, INC.
PLUSTECH INC.

SOUZEN TRADING (SHENZHEN) CO., LTD.
YAMAZEN (SHENZHEN) TRADING CO., LTD.

Czech Republic

YAMAZEN VIETNAM CO., LTD.
YAMAZEN MACHINERY & TOOLSINDIA PRIVATE LTD.

I

U.S.A.

South Korea
Japan

China

YAMAZEN SHANGHAI TRADING CO., LTD.
TaiwanIndia
Thailand Vietnam

YAMAZEN (THAILAND) CO., LTD.
YAMAZEN (MALAYSIA) SDN. BHD.

Indonesia

the presentation, Mr. Chen and two employees dispatched from

Mr. S that his current employer, the Mexican branch ofJapan, Mr. Morii and Mr. Nishibori, spoke passionately about the

YAMAZEN MEXICANA
S.A. DE C.V.

that Mr. S thought very highly of the machine tools Yamazen
handles from Manufacturer X and was considering using them to

YAMAZEN MACHINERY &TOOLS PHILIPPINES INC.

further improve production efficiency at Company A. However,the Mexican branch was under the jurisdiction of the head office

PT. YAMAZEN INDONESIAin China and did not have the authority to purchase machinery

China Regional Headquarters
Taiwan Regional Headquarters
YAMAZEN Corp. Direct Operationand equipment for Company A. Mr. Chen at Yamazen directly
contacted the head office of Company A in China, with which hehad not previously done business, and set up an opportunity toSpecial Feature:strengths and advantages offered by Yamazen’s global reach.

purchase of machine tools. At the same time, Mr. Chen learned

MexicoYAMAZEN (SINGAPORE) PTE. LTD.

YAMAZEN CORPORATION Head Office
North American Regional Headquarters
ASEAN Regional Headquarters

speak face-to-face with the purchasing manager. On the day ofsubsidiary in China, was informed by long-time customer

China-based Company A, was considering a new large-scale

YAMAZEN CO., LTD.

Philippines

Malaysia
Singaporen July 2022, Mr. Chen, a local employee at a Yamazen

One of our major growth drivers is the Overseas Production Equipment Business.

Yamazen’s
Growth Driver

Selling Points
1. Track record of Yamazen’s subsidiary in Mexico andhistory of handling products manufactured by Company X
2. E
 ngineering capabilities of Yamazen’s subsidiary in
Mexico (number of engineers and other factors)
3. C hinese-speaking ability of the manager and person in
charge at Yamazen’s subsidiary in Mexico, facilitatingsmooth communication

Three members of our subsidiary in China speak passionately about the benefits ofYamazen’s global capabilities in doing business.

We aim to further expand the scale of this business by leveraging the broad androbust global network we have built over more than 60 years and our engineering
capabilities, with Yamazen employees maintaining close ties to each location.

We have outstanding
engineering capabilities
in Mexico!

Leave it to us!

Overseas Production Equipment BusinessYamazen’s Advantages 2
Ability to Support Users’ Global Strategies with Locally Based Engineering Capabilities• Direct provision of high-value-added products and services to Japanese corporate and local users and strong relationships oftrust created through a salesforce with close ties to each location and advanced engineering capabilities*• Strong relationships of trust with users that enable us to support their global investment strategies, leading to further businessdevelopment* Advanced engineering capabilities: Yamazen’s engineers provide one-stop design, installation, testing, after-sales service and maintenance in line with user needs to offer
total support for manufacturing.

Country A

Japanese corporate user

When users relocate or establish a new production
base in a different country, Yamazen can provide
support in both countries.

Local users

Yamazen’s Head Office and overseas subsidiaries
have systems for regularly sharing information tomeet user needs in a variety of ways.

YamazenCentralization of local and Head Office information
under the security export control system as
stipulated by the Foreign Exchange and Foreign
Trade Act

42 INTEGRATED REPORT 2023

Country B

Local users

Japanese corporate user

YamazenYamazenin Japan

Relationships of trust built through a salesforce
with close local ties and meticulous engineering
by national employeesAfter a lively discussion, Company A’s purchasing manager

branch of Company A, where Mr. S works. Installation work wascame to realize the benefits of Yamazen’s global capabilities

conducted under harsh conditions with temperatures exceedingin doing business. Later, following extended negotiations,

40°C, but cooperation among engineers from Yamazen’s subsidiary

Yamazen was able to make a large-scale delivery of machine

in Mexico and engineers dispatched from China, with eachtools manufactured by Company X that it handles to the Mexican

communicating in several languages, led to a successful conclusion.

This project is the result of the efforts of Yamazen’s employees, who challenge themselves
and think while taking action, leveraging our unique global network and advanced localization
capabilities. We will continue enhancing the advantages of the Overseas Production Equipment
Business with the aim of further expanding its scale.
See pages 52–53 for details of the growth strategy of the Overseas Production Equipment Business.

INTEGRATED REPORT 2023 43

Lead Feature:
Yamazen’s Values

Framework for
Creating Value

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Data

Message from the President of General Sales H.Q.

44 INTEGRATED REPORT 2023

In addition to Company-wide strategies to address material
issues, we have set three sales strategies to realize our
Corporate Vision for 2030: a close customer relationship strategy,
a transformation strategy and a digital integration strategy.
    The close customer relationship strategy entails ramping
up direct contact with the manufacturers and general consumers
who are the end users of our products and increasing our
expertise in order to gain a deeper insight into customer
needs, which will lead to increased sales. This will encouragesales personnel to make a full paradigm shift from product-out
to market-in thinking. We are converting the know-how ofindividual sales personnel into knowledge that can be readily
utilized and strengthening marketing and remote sales
promotion in order to further enhance sales capabilities. We
are also clarifying targets by industry and honing our expertise
to make proposals strategically through both physical anddigital channels.
    Overseas, we will localize management through local
employee training and broaden the scope of our business bytargeting local as well as Japanese companies.
    The transformation strategy aims to increase profits
through a major transformation from our current businessstructure into a new earnings structure. Rather than simply
purchasing and selling products, this involves ramping up
original product development, engineering services, green
business and logistics systems for a transformation into anorganization capable of providing total solutions. Furthermore,
instead of simply building upon existing businesses, we will
also launch businesses with recurring billing and other new
earnings structures.
    The digital integration strategy aims to use digitaltechnology to both increase customer contact points andintegrate them with the new solutions we provide, as well as

General Sales H.Q. Policies and Roles

Purpose

VisionPioneering a new future,with you all

Material Issues

Leading worldwide manufacturing
and enriched lives

Expanding green
business

Company-wide strategies for material issues
Talentmanagement
strategy

DX strategy

Greeninitiatives
strategy

Realization of sustainableprocurement and supply

Strategy
Strategies forrealizing our
Corporate Vision

Digitalization to
maximize customer
value

Logistics
strategy

Sales strategies for realizing our Corporate Vision
Close customer
relationshipstrategy

Transformation
strategy

Realization of arewarding workplace

Digital integration
strategy

Establishment of atransparent
governance system

General Sales H.Q.

Tactics

Logistics
Planning
Dept.

Strategy-based
measures

Construction
Security
Supervision Export Control
Dept.
Dept.

Corporate
Marketing
Dept.

Sales
Statistics
Dept.

Digital
GreenTransformation Recovery
Strategy Dept. Business
Dept.

Crossing
Business divisions
Focus areas and key measures

Home Products Business

The General Sales H.Q. has taken on the mission of addressing
the material issues Yamazen has identified in order to create
both social and economic value, and thus to realize our
Corporate Vision for 2030. In doing so, our role is to act as alink between Yamazen’s sales strategies—its close customer
relationship strategy, transformation strategy and digital
integration strategy—and the focus areas and key measures ofeach business division to augment our overall capabilities by“crossing” operations between business divisions.
    We have established specialized departments topromote the Company-wide strategies for digital transformation(DX), green initiatives and logistics, and work together witheach division to provide support for realizing our Corporate
Vision for 2030. Currently, the General Sales H.Q. consists of
the Logistics Planning Department, Construction Supervision
Department, Security Export Control Department, Corporate
Marketing Department, Business Statistics Department,
Digital Transformation Strategy Department and Green
Recovery Business Department, each of which handles key
items that link the Company-wide strategies to the measuresof each business division.
    The above support system will help to further strengthen
our wholesale business, which provides recurring revenue,
and to create businesses that provide solutions to issues inengineering, fabless manufacturing, new businesses andother domains. As a result, we will further strengthen theearnings base that Yamazen has been building since its founding
and generate stable cash flow. My role is to maintain an
overall view of the entire Company’s sales organization to
optimally allocate management resources among the businessdivisions and various headquarters in order to maximize
Yamazen’s comprehensive strengths (products, services andfunctions) based on the concept of “crossing.”

Overview of Sales Strategies to Realize
Our Corporate Vision for 2030

In the first year of CROSSING YAMAZEN 2024, net sales
reached a record high, and we were able to steadily lay thegroundwork for Company-wide strategies to address ourmaterial issues based on the three sales strategies. To expand
green business under the close customer relationshipstrategy, now that COVID-related restrictions have been
eased, we held Yamazen-sponsored Decarbonization Solutions
Exhibitions at 13 locations throughout Japan to stimulate
demand among small and medium-sized manufacturers thatare lagging behind in decarbonization initiatives. Many users
facing difficulties reducing CO2 emissions at their companies
attended the exhibitions. In addition to offering packaged
products that will help save energy in factories, we held
seminars covering case studies of our diagnostic services forsaving energy and subsidies for installing various types ofenergy-saving equipment. We received over 160 inquiries.
    In addition, as a new business, we have begun developing
a service platform to support small and medium-sized
manufacturers in digitalization to improve productivity,
technology (business) succession, and new sales channel
development. This comprehensive posting platform includes
a cloud-based service to visualize operations that are managedby hand on paper or using Excel at small and medium-sized
manufacturers, and a service that matches companies seeking
a particular technology with manufacturers that have it. Thisnew business arose from our ambition to promote digitalization
among small and medium-sized manufacturers by providing
the services they require at a low price, leading to productivity
improvements that will help to revitalize Japanese manufacturing.
It is our first subscription-based cloud service, and we hope tomake a wide-ranging contribution by helping to resolve social
issues in manufacturing. This service embodies all three of oursales strategies—close customer relationship, transformationand digital integration—and has enabled us to build a solid
foundation for the future.
    Meanwhile, in addition to changes in the flow of
information due to digitalization, other trends in the externalbusiness environment include the automobile industry’s shift
to electric vehicles, rising needs for automation and laborsaving measures due to Japan’s declining working population,

Building Materials BusinessMission and Role of the General
Sales H.Q.

Achievements and Issues in Year One
of CROSSING YAMAZEN 2024

Tools & Engineering Business

Representative Director and Executive Officer
President of General Sales H.Q.

Industrial Solution Business

Kimihisa Sasaki

and efforts to achieve carbon neutrality. Developing theadvanced expertise required to address these environmental
changes is an issue.
    In response, we divided the Industrial Tools & Equipment
Division H.Q. into the Industrial Solution Division H.Q. and theTool & Engineering Division H.Q. in April 2023 to increase
specialization and establish an organization capable ofpromptly meeting increasingly diverse and sophisticatedcustomer needs. We will clarify the management resources
held by each business division, invest based on the growthstrategies of each one after determining their profitability andfuture potential as specialized businesses, and speedily
implement key measures.

Machine Tools BusinessWe will strengthen our earning
capabilities together with our
independent and virtuous
employees, who have a pioneering
spirit and the ability to think
while taking action.

with the real-world capabilities of individuals, which is along-standing Yamazen strength. We have websites for selling
products, such as the e-commerce site Yamazen Bizcom,
which was launched in May 2022 by the Home Products
Division H.Q., and the next-generation B2B website underdevelopment by the Industrial Solution Division H.Q. and theTool & Engineering Division H.Q., as well as a website forselling services (under development as a new business). We
intend to analyze the transaction data we obtain from thesewebsites for use in developing new products, and to improvethe efficiency and sophistication of marketing by utilizing theknowledge gained from the data. We are concurrently building
our own data platform for large-volume data analysis.

6 regional H.Q.s in Japan
Osaka, Tokyo, Kitakanto/Tohoku, Nagoya, Kyushu,
Hiroshima

TFS Div. H.Q.
4 regional H.Q.s overseas
North America, Taiwan, China, ASEAN

Production Equipment Business

Consumer Goods Business

INTEGRATED REPORT 2023 45

Lead Feature:
Yamazen’s Values

Framework for
Creating Value

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Data

Machine Tools Business (Domestic)

Growth Strategy toward 2030

We will strengthen and expand

drastic changes, including slowing growth for parts for automobile internal combustion

the Yamazen ecosystem* to be

We will conduct data-driven sales

more useful to customers.
Katsuhiko Namari

ecosystem businesses, andsatisfaction by deploying its engineering capabilities to make high-value-added proposals. In

Executive Officer
President of Machine Tools Division H.Q.

make high-value-added proposals.

sales system, we will improve internal efficiency and productivity throughout the customer

with the previous year). We aim to achieve continued growth as a robust
revenue base and growth driver for all of Yamazen’s businesses.

Net Sales

Envisioned Development of the Business(Millions of yen)
120,000

105,768

Engineering
88,39960,007

addition, by enhancing our customer data collection infrastructure and building a data-driven
value chain.

Main Policies
Close customer relationship strategy
Grow together with users, manufacturers
and business partners to pioneer newvalue centered on the improvement ofuser satisfaction. The Machine Tools
Business will lead the growth of theentire ecosystem by providing highvalue-added solutions for customer
issues.
Transformation strategy
Aim to break away from the conventionalmodel of low-added-value sales of
products, and shift to high-added-value
sales that combine products andservices into sets that solve customer
issues.

88,49878,21460,000supply and demand, and the need to address sustainability. Yamazen will transition to abusiness model that directly captures rapidly changing user needs, and work to improve user

Net sales for FY2022 grew steadily to ¥88.4 billion (a 13.1% increase compared

90,000engines, rapid expansion of demand for electric vehicle parts, abrupt changes in semiconductor

activities, accelerate and expand* Refers to the business ecosystem of groups that share the same interests as Yamazen’s Machine Tools Division
H.Q. This is an integrated group of users, manufacturers, business partners, system integrators and others.

Key Point

The current market environment of the Machine Tools Business requires adaptation to

Key Measures

Qualitative Objectives

Improve user satisfaction• Enhancement of the content of solutions for user
issues• Support of distributors for creating user proposals• Proposal of diverse machine tool layouts that aresuited to customer needs
Shift to engineering trading company• Proposal of machine tool-based systems
combining robots and peripheral equipment

Expand green product lineup• Expansion of lineup of green products that help
customers achieve decarbonization• Increased orders for green products

Customer data collection platform• Enhanced content on the “zenassist+” portal site
for comprehensive manufacturing support• Establishment of an information-gathering
infrastructure using a service sales platform• Strengthening of internal data infrastructure

Build a data-driven sales system• Strengthening of the foundation for the sharing ofsales knowledge• Optimization of behavior management

30,000Wholesale (machine tools, industrial
solution, and tools & engineering)0
FY2018FY2019FY2020

FY2021

FY2022

Founding

Present

Due to orders received in the previous fiscal year for machine tools for semiconductor manufacturing equipment, processing machinerycomponents, and other applications, net sales for FY2022 increased 13.1% year on year to ¥88.4 billion. In the Machine Tools Business,

Digital integration strategy
Utilize internal digital data and customer
operation data from new services toimprove internal efficiency as well as
to enhance productivity across ourcustomers’ value chains.

wholesale operations are our revenue base and generate stable cash flow, and engineering operations serve as a growth driver. In FY2023,
we will ramp up proposals of solutions to meet needs at production sites.
• No inventory; substantial cash flow despite a low profit margin (wholesale business)

Strengths• High profitability from adding engineering capabilities through direct sales to factories (engineering business)• Unique, highly specialized value-added sales• Close relationships with leading manufacturers in a wide range of product fields• Expansion of the market for electrification-related parts, such as batteries, motors and inverters, due to the shift to electric vehicles

Opportunities• Strong need for automation and labor-saving measures due to a labor shortage• Global trend toward carbon neutrality• Growth in new product technologies, such as 3D printers and IoT• Lower value of information provided by trading companies as digitalization closes the gap between manufacturers and users

Risks• Change in power balance due to reorganization of manufacturers (improved bargaining power for sellers)• Decrease in metal processing related to internal combustion engine manufacturing due to the shift to electric vehicles

Highlight

Exhibition at the 35th Manufacturing World JapanAt Manufacturing World Japan 2023, held at Tokyo Big Sight inJune 2023, we partnered in an exhibit with three manufacturers:
Brother Industries, Ltd., Sanwa Robotics Co., Ltd., and HILLTOP
Corporation. In a narrow space of just 4 meters by 3 meters, anautomated robot carried a workpiece from a stocker to a 5-axis
multi-face machining center to demonstrate machining of amulti-face finished product using one-chuck processing.* By
proposing this state-of-the-art automated processing system
for finished parts, which automatically generates processing
programs from product CAD data, we will help users improvetheir productivity to deal with Japan’s labor shortage.

• Intensified competition due to the rise of price-competitive Asian manufacturers, particularly those from China* Processing in which the workpiece remains in place after setting it. Eliminating the need to change the setup enables high accuracy.

46 INTEGRATED REPORT 2023

INTEGRATED REPORT 2023 47

Lead Feature:
Yamazen’s Values

Framework for
Creating Value

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Data

Industrial Solution Business (Domestic)

Growth Strategy toward 2030

We solve customer problems
with our advanced engineering
capabilities, solid distribution
base and products with aunique appeal.

Digitalization and other recent technological innovations are enabling users and producers to

As users and producers converge,

Katsuhiko Takamatsu

exchange business information through direct communication, significantly changing theirprevious relationship. As a trading company, we have the functions required by both parties.

we will visualize information as it

We can promptly understand their needs and required tasks in order to facilitate smoothchanges to provide a variety ofcommunication for introducing equipment, and work to resolve on-site issues. In addition,

solutions.

reduce and offset CO2 emissions, and carry out other measures to achieve carbon neutrality.

we aim to introduce equipment with high energy efficiency, promote renewable energy,

Corporate Officer
President of Industrial Solution Division H.Q.

Net sales for FY2022 were ¥88.0 billion. We aim to increase sales by providing

Main Policies

Key Measures

total solutions to pressing customer issues such as the labor shortage, decarbonization

Key Pointand digitalization.
Net Sales

Close customer relationship strategy
Achieve win-win relationships byworking with distributors to better
understand the needs of users andoffer solutions.

Envisioned Development of the Business(Millions of yen)

Strengthen expertise

Acquire engineering skills

Support green business

Visualization of operations related to reducing CO2
emissions at business sites, and establishment ofa system for proposing and implementing reduction
plans

Strengthen product development

Provision of private brand and exclusive products to offer
new value by adding functionality and reducing costs

Next-generation B2B catalog website

Launch of a new website for connecting with users
and main customers, and start of new businesses

Build a data-driven sales system

Construction of a system that utilizes digital data for
optimal proposals without relying on individual
salespeople for user and product knowledge

Consolidate standard
and non-standard operations

Reallocation of human resources through division oflabor and automation of business systems

Tools & Engineering

176,265
162,962150,000

160,416

168,338

Engineering

141,885

Transformation strategy
Be capable of providing total solutions
for engineering, green business andother issues distributors and users
face, rather than simply selling products.

100,000

88,00150,000Wholesale (machine tools, industrial
solution, and tools & engineering)0
FY2018FY2019FY2020

FY2021

FY2022
Founding

Present

Industrial Solution Business + Tools & Engineering Business

Sales of material handling equipment, mechatronics equipment and other products grew steadily, and net sales for FY2022 were ¥88.0
billion. In the Industrial Solution Business, wholesale operations are our revenue base and generate stable cash flow, and engineering
operations serve as a growth driver. In FY2023, we will ramp up proposals of solutions to meet needs at production sites.

Strengths• Close relationships with leading manufacturers in a wide range of product fields• Ability to meet the needs of a wide range of mid-level, small and medium-sized, and regional users through our network ofmachine tool wholesalers• Brick-and-mortar platform that matches the needs of users and manufacturers (Doterai Ichi and other exhibitions)• Network of various construction companies and system integrators• Strong need for automation at manufacturing sites due to a labor shortage

Opportunities• Global trend toward carbon neutrality• Growing need for use of digital technology in supply chains and engineering chains• Growing need for DX and automation in the logistics industry due to the 2024 Problem• Lower value of information provided by trading companies as digitalization closes the gap between manufacturers and users

Risks• Rise of e-commerce platforms that encroach on the commercial sphere of machine tool wholesalers• Decrease in metal processing for internal combustion engine manufacturing due to a shift to electric vehicles

Digital integration strategy
Improve productivity throughout thevalue chain by digitalizing both ourown services through our new
website and the operations of ourdistributors.

Highlight

Specialized training and assignment of expert
human resources to increase the specializationof solutions
Systematic organization and development of installation,
construction, system integration, processing andmaintenance functions to provide products withextra added value

Industrial Solution

200,000

Qualitative Objectives

Enhancing Our Proposals and Technical Support for Automation

We are working to enhance our technical support and willplace special emphasis on proposing automation systems
such as “eve auto,” an automated transport system that canbe introduced quickly and operated outdoors. We arestrengthening our engineering and other capabilities topropose the optimal automation equipment. We will offer
innovative solutions to address Japan’s aging population andlabor shortage, which are issues facing the manufacturingindustry, and help our customers succeed in global competition.
Logis-Tech Tokyo Innovation Expo 2022

• Lack of successors and business succession issues at small and medium-sized enterprises

48 INTEGRATED REPORT 2023

INTEGRATED REPORT 2023 49

Lead Feature:
Yamazen’s Values

Framework for
Creating Value

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Data

Tools & Engineering Business (Domestic)
We will strengthen our expertise,product appeal and distributionfunctions, and achieve a digitaltransformation both in the realworld and on online to establish
ourselves as number one in reliability
in our fields of specialty.

Growth Strategy toward 2030

In light of the issues facing the manufacturing industry—a labor shortage, rising energy
prices and structural changes in the industry itself—we aim to increase customer trust

We will rebuild our distribution

Shinji Sakamotoby enhancing the functions that underpin distribution, including reorganizing logistics andcreating a next-generation B2B website. We also help resolve customer problems bybusiness infrastructure to deploy

developing products with market value and providing customer support through technicalour expertise and help improve

marketing. We will conduct M&As for the required functions and in the commercial spheres

supply chain productivity.

businesses. We will utilize the data we collect from digitalizing these activities to

we need for our growth strategies, with the aim of generating synergy with existing
continuously create added value through new products and services.

Corporate Officer
President of Tools & Engineering Division H.Q.

Net sales for FY2022 were ¥80.3 billion. We aim to receive repeat orders by accurately
Key Point

Main Policies

Key Measures

Qualitative Objectives

Strengthen expertise

Differentiation in the cutting, accessory and measuring tool
categories from strengthening our distribution and sales
capabilities and enhancing technical marketing

grasping customer needs and to expand market share by strengthening our technicalmarketing capabilities for machine tools and adjacent areas.

Net Sales

Close customer relationship strategy
Achieve win-win relationships byworking with distributors to better
understand the needs of users andoffer solutions.

Envisioned Development of the Business(Millions of yen)

Next-generation B2B catalog Launch of a new website for connecting with users andmain customers, and start of new businesses
websiteTools & Engineering

200,000

Industrial Solution

176,265
162,962150,000

160,416

168,338

Engineering

141,885

Transformation strategy
Be capable of providing total solutions
for engineering, green business andother issues distributors and users
face, rather than simply selling products.

100,000

80,33750,000Wholesale (machine tools, industrial
solution, and tools & engineering)0
FY2018FY2019FY2020

FY2021

FY2022
Founding

Present

Industrial Solution Business + Tools & Engineering BusinessAlthough sales of auxiliary tools and cutting tools were impacted by a decline in factory capacity utilization rates in the automobile
industry and other factors, net sales for FY2022 increased year on year to ¥80.3 billion. Our tool wholesale operations, which were thefounding business of the Company, generate stable cash flow, and our engineering operations serve as a growth driver. In FY2023, we

Digital integration strategy
Improve productivity throughout thevalue chain by digitalizing both ourown services through our new
website and the operations of ourdistributors.

will strive to differentiate ourselves by increasing our expertise in our major categories (cutting, accessory and measuring tools).

Strengths• Expert salesforce that perceives users’ latent needs• Close relationships with leading manufacturers in a wide range of product fields• Ability to meet the needs of a wide range of mid-level, small and medium-sized, and regional users through our network ofmachine tool wholesalers• Brick-and-mortar platform that matches the needs of users and manufacturers (Doterai Ichi and other exhibitions)• Strong need for automation at manufacturing sites due to a labor shortage

Opportunities• Global trend toward carbon neutrality• Rising demand for use of digital technologies in areas such as e-commerce, EDI and traceability management• Market expansion for electrification-related parts such as batteries, motors and inverters due to a shift to electric vehicles• Lower value of information provided by trading companies as digitalization closes the gap between manufacturers and users

Risks• Decrease in metal processing for internal combustion engine manufacturing due to a shift to electric vehicles

Highlight

Increase logistics efficiency

Construction of a logistics system closely linked to customers
through the reorganization of logistics in the Kansai region
and the opening of satellite Logis depots nationwide

Strengthen productdevelopment

Development of new manufacturing partners in the fields of
cutting, accessory and measuring tools, and of private brandproducts that contribute to decarbonization and productivity
improvement in the industrial equipment category

Commercialize a recyclingoriented business

Creation of a recycling-oriented business through expansion
to include eco-friendly recycling and maintenance in addition
to product sales

Build a data-driven sales
systemConstruction of a system that utilizes digital data for optimal
proposals without relying on individual salespeople for
product knowledge

Consolidate standard andnon-standard operations

Reallocation of human resources through division of laborand automation of business systems

Solving Customer Problems with Our Technical Sales Capabilities

We started hiring technical sales staff in July 2020 and havestationed five members in Osaka, Nagoya, Tokyo, Kitakanto
and Kyushu. We are leveraging our knowledge gained at
manufacturing sites and from manufacturers and partneringwith distributors and manufacturers to strengthen processing
improvements, product proposals and other customer services.
We will also participate in product development of machine
tool peripheral equipment, create private brand products
from the user’s perspective, and help to improve productivity
and reduce costs.

• Lack of successors and business succession issues at small and medium-sized enterprises

50 INTEGRATED REPORT 2023

INTEGRATED REPORT 2023 51

Lead Feature:
Yamazen’s Values

Framework for
Creating Value

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Data

Overseas Production Equipment Business
Growth Strategy toward 2030

Based on the idea of “made with
Yamazen,” we will accelerate
worldwide manufacturing that has
been supported by the strength of
the “made in Japan” brand.

As a total solutions provider that is
one of the world’s largest trading

Kinya Nakada
Officer
Vice President of General Sales H.Q.
(in Charge of Overseas Business)

Overseas net sales for FY2022 were ¥96.3 billion (a 4.4% increase compared with theprevious year). We aim to establish a foundation for medium- to long-term growth byproactively expanding our global network and stepping up efforts to develop new markets
and new businesses for production equipment that contributes to manufacturing worldwide.

Key Point

Envisioned Development of the Business

Net Sales(Millions of yen)
100,000

92,312

88,64296,36562,71563,84860,00040,00033,65020,000

new regions and businesses to build avalue chain that supports manufacturing
worldwide.

to after-sales maintenance, and a cross-border strategy that leverages the strong relationships

Main Policies

Close customer relationship strategy
Build specialized systems for key
industries from a global perspective
and gain an in-depth understandingof customer needs from local sales
activities in the field to provide
optimal proposals and products.

0
FY2018FY2019FY2020

FY2021

FY2022

Overseas Production Equipment
Overseas Production Solutions Business + Tools & Engineering Business

Founding

Present

Despite a slump in orders and sales of processing equipment for the electronics manufacturing services (EMS) industry, demand formachine tools, cutting tools and auxiliary tools used in fields such as electric vehicles, healthcare, aircraft and semiconductors remained
steady, and overseas net sales of production equipment in FY2022 increased 4.4% year on year to ¥96.3 billion. In FY2023, althoughmarket conditions have entered a correction phase, we will further enhance the engineering capabilities that are a Yamazen strength,
geographically expand and reorganize our target markets, conduct borderless sales activities and move into growth industries and fields.

dizzying pace. We will contribute to diversifying manufacturing worldwide as one of theworld’s largest trading companies for production equipment and technologies. In doing so,

Transformation strategy
Resolve a wide range of issues bymaking full use of various goods(products) for automation andenergy-saving measures together
with engineering (services) covering
all areas from upstream to downstream(total solutions).

63,165risks, our external environment is becoming more complex and continues to change at acompanies for production equipment
and technologies, we will boldly takeon the challenge of expanding intoEngineering

80,000With factors such as the accelerating trend toward decarbonization and rising geopolitical

Digital integration strategy
Identify the target customers, products
and appropriate timing for marketing
activities based on customer behavior
history, external information, etc.,
and improve salesforce productivity
through the use of digital data.

we will make full use of our advantages including a user-based sales system that enables us
to meet needs in each region through our growing global network, engineering capabilities
in which numerous highly skilled engineers provide one-stop support from product proposalsof trust we have cultivated with users.

Key Measures

Qualitative Objectives

Promote localization ofmanagement• Localization of sales, engineering, management, andinformation management business functions in Taiwan,
Shanghai, Shenzhen, Thailand, India and the United States• Expansion of the training system, and establishment offair labor and remuneration systems• Enhancement of local export management system
operations for security exports• Expansion: Development of new areas based on potential
for the future (offices in Europe also function as bases for
Conduct geographic expansion the collection of front-line information)and restructuring of target• Restructuring: Relocation of overseas bases (review as
appropriate for profitability and salesforce productivity)
markets• Formation and effective utilization of a global marketingteam• Development of markets in the electric vehicle, healthcare,aircraft, semiconductors and next-generation digital
Diversify markets and business devices industries• Deeper cultivation of the automation market by proposing
types
solutions that include the use of robots• Development of products that meet diverse needs• Creation of opportunities for collaboration with overseas
manufacturers to strengthen ties
Further enhance cooperation• Generation of green business opportunities by collaboratingwith manufacturers
with related manufacturers to reduce environmental
impact at customer sites• Overseas business experience and know-how accumulated over more than 60 years

Strengths• A one-stop support system from sales to engineering and support (world-class track record)• Numerous overseas bases with showroom functions (16 subsidiaries in 14 countries outside Japan and 64 business locations*)• Superior technical proposals and sales capabilities that can handle the applications required by users• Changes in the flow of global manufacturing due to de-risking

Opportunities• Rising needs for automation and labor-saving measures due to chronic labor shortages• Changes in needs from the selling of products to the selling of services, and the need for advanced engineering capabilities• Capturing M&A needs arising from changes in the business environment such as business portfolio reorganization

Risks• Country risk of product supply disruption due to inflation, political instability, conflict or other reasons• Growth of local overseas dealers that make use of their geographical advantage and financial strength• Decrease in metal processing that arises due to changes in the automobile market caused by the shift to electric vehicles• Decline in the value and competitive advantage of the “made in Japan” brand due to improving quality of overseas
manufacturers

Highlight Yamazen Engineers Active at Sites Worldwide
Yamazen has stationed engineers at all of its overseas locations
to offer a broad range of technical services such as application
proposals and technical consultation and guidance in addition
to installation work and after-sales service. Yamazen’s engineers
stay in close touch with customers on-site at all times (anddid so even during the pandemic) and work tirelessly to further
improve our services and technical capabilities.
    These engineering capabilities are our foremost strength
for advancing our idea of “made with Yamazen.”* As of October 31, 2023. Figures for the Production Equipment Business only.

52 INTEGRATED REPORT 2023

INTEGRATED REPORT 2023 53

Framework for
Creating Value

Lead Feature:
Yamazen’s Values

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Data

Building Materials BusinessIn the current market environment of the Building Materials Business, although the number

Growth Strategy toward 2030of new housing starts is decreasing, demand for non-residential business and renovation

We contribute to enriched lifestyles

business is increasing substantially. Needs are also rising among companies of all sizes for

We will ramp up business activities

society.

that accurately capture theIn addition, we are focusing on ramping up our ZePlus business in the housing sector, which

public’s needs for eco-friendly

offers the next step beyond ZEH (net zero energy house) in anticipation of mandatory

products and services.

proposals in the non-residential sector based on upgrading air-conditioning equipment,

Kazuhiko Torigoe

previous year).
Envisioned Development of the Business

80,00068,03160,05458,96558,741Main Policies
Close customer relationship strategy
Secure resources for the coresales business through theestablishment of a sales support
system, and strengthen relationships
with customers based on priority
areas.

(Millions of yen)

60,000Engineering

62,169Transformation strategy
Build a system that, through thestrengthening of engineering
capabilities and the developmentof original products and services,
will enables us to make optimal
proposals that combine products
and services.

Wholesale (building materials)
40,00020,0000FY2018FY2019FY2020

FY2021

FY2022

Founding

compliance with energy-saving standards set to take effect in 2025, and energy-saving

proposals that combine sales of products and services.

Net sales for FY2022 were ¥68.0 billion (a 9.4% increase compared with the

Net Sales

Project at companies to support visualization of their activities to prevent global warming.

which is a Yamazen specialty. We aim to be a leading company, capable of offering optimal

Executive Officer
President of Building Materials Division H.Q.

Key Point

the introduction of eco-friendly products and services. We are promoting our Green Balland the realization of a sustainable

Present

In the housing sector, we focused on marketing activities for high-value-added products that meet steady demand for renovation anddecarbonization. In the non-residential sector, in response to corporate demand for cost-cutting measures in the face of rising utility costs,
we stepped up proposals for facility renovations employing new energy equipment such as for solar power generation. Net sales for FY2022
increased 9.4% year on year to ¥68.0 billion. The Building Materials Business generates stable cash flow through its wholesale operations,which are its revenue base, and also conducts engineering operations centered on the Yamazen Health and Safety Council, whose

Digital integration strategy
Conduct efficient sales activities
based on past sales results aswell as on data related to pastactions and decisions. Use
insights gained from data
analysis to create new business.

members all have strong construction capabilities. Initiatives in FY2023 will include expanding new energy sales for decarbonization and

Key Measures

Qualitative Objectives

Implement strategies by segment
Classify all customers into segments, and use data to propose
sales strategies and to make proposals with high added
value

Categorization of all customers
into segments to conduct optimal
proposal activities for each segment
through data analysis

Strengthen the sales support system
Strengthen the sales support system through theenhancement of in-sales construction monitoring and costestimation capabilities

Construction of a system thatenables our sales staff to dedicate
themselves to sales activities

Enhance total support functions
Enhance total support functions, including planning anddesign, cost estimates, construction management, various
applications/permits, after-sales maintenance, etc.

Ability to be of further use to
our stakeholders through theenhancement of engineering
capabilities

Create added value services
Through internal “crossing,” discover new businesscombinations to produce services with added value thatdifferentiate us from the competition

Establishment of a development
system, and provision of products
and services with high added value

Strengthen information communication capabilities
Strengthen our ability to communicate information, suchas promoting the use of grants and subsidies, how to
respond to legal amendments, etc.

Ensure employees have proposal
skills that allow for a prompt
response and that produce a highlevel of customer satisfaction

Implement the PDCA cycle through the use of data
Identify key points from the vast amount of data we possess
to improve productivity and increase profitability, as wellas implement the PDCA cycle

Ability to provide services andproposals ahead of our competitors
as the next steps become clear

proposing and selling high-value-added products.

Strengths• Nationwide proposal sales system through the appropriate placement of sales bases and engineers in compliance with theConstruction Business Act• Top-class distribution functions in Japan for housing equipment, air-conditioning equipment and smart energy equipment• Construction network through the Yamazen Health and Safety Council, an organization led by the Company• Organizational sales capabilities through builders covering a wide area, a business promotion team that specializes in massretailers, and field sales

Opportunities• Concrete initiatives aimed at helping companies become carbon neutral• Increased demand for replacing existing equipment with energy-saving equipment due to soaring electricity costs• Acceleration of review of residential performance due to start of mandatory compliance with energy-saving standards for
new homes• Changes in the competitive environment due to review of various trading partners resulting from supply shortages

Risks• Decrease in new home construction due to the declining birthrate, aging population and rising mortgage rates• Difficulties in product supply and soaring material prices due to infectious diseases, geopolitical risks and the depreciation of the yen• Postponement of active capital investment due to uncertainties such as high raw material prices and a labor shortage• Restrained purchasing related to housing, renovations and durable consumer goods due to soaring consumer prices anddeclining wages

54 INTEGRATED REPORT 2023

Highlight

Support for Raising Yamazen’s Presence through Decarbonization

The Smart Energy Promotion Department, which provides total support for
captive solar power generation, makes useful proposals for both reducing
electric power costs in response to rising energy prices and contributing to
the environment. The number of companies with which we have tie-ups has
been growing recently due to new initiatives including collaboration withfinancial institutions, proposals for sets incorporating industrial storage
batteries (mainly reused ones) and support for small and medium-sizedenterprises in obtaining Science-Based Targets certification. We are breaking
new ground in the decarbonization business as a trading company together
with our business partners.

INTEGRATED REPORT 2023 55

Lead Feature:
Yamazen’s Values

Framework for
Creating Value

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Data

Home Products Business

Growth Strategy toward 2030

sector is expected to intensify due to diversifying consumer needs, changes in consumer

We provide value and reasonablypurchasing channels and the entry of volume retailers and other new players.

priced products to all customers,

We will work to accurately grasp    To develop new corporate customers, we will expand the Yamazen Bizcom e-commerce

both in the B2C and B2B markets.

diversifying customer needs,site with a focus on making it a mainstay of our business. To rebuild our logistics system, webuild a delivery system andthe location and scale of bases, and automate material handling operations. We will also

strengthen Yamazen’s original

build a system to accurately grasp customer and consumer needs as part of our digital

Director and Executive Officer
President of Home Products Division H.Q.

private brand products.

private brand products and offering an extensive product lineup.

Net Sales

Envisioned Development of the Business(Millions of yen)

Note: “Fabless manufacturer” refers to net sales of private brand home
products and “Wholesale (home products)” refers to net sales of
non-private brand products.

120,000

103,379
90,00087,095

104,866

100,711Main Policies

Key Measures

Close customer relationship strategy
Sales channels: Maximize LTV*
by building medium- to longterm customer contact points,
with a focus on the Company’s
e-commerce platform in new
channels.

Transformation strategy
Logistics: Significantly expand
sales, and build rapid delivery
platforms and systems throughefficient logistics throughout Japan.

Wholesale (home products)
60,00030,0000FY2019FY2020

FY2021

FY2022integration strategy, and work to expand sales by developing and deploying Yamazen’s original

Qualitative Objectives

Develop new channels and the e-commerce site
Yamazen Bizcom
Focus on expanding the website

Promotion of the e-commerce site
Yamazen Bizcom as one of thepillars of our business

Develop new customers (small and medium-sizedenterprises, educational corporations, etc.)
Recruit dedicated staff, and develop new customers

Promotion of sales to small to
medium-sized enterprises as wellas to educational corporations

Enhance logistics infrastructure (warehouse expansion
and introduction of systems)
Invest in logistics functions and systems that can handle
the quantity of sales expected 10 years from now

Strengthening of our logistics sites,
material handling, etc., and establishmentof efficient logistics structures andsystems

Establish the Marketing Office
Recruit marketing personnel to utilize internal andexternal data

Shift to marketing, productdevelopment, sales promotion
activities, etc., that utilize data

Brand building
Convey internally and externally the value provided by
the Home Products BusinessExamination of building Yamazen
original brands

Fabless manufacturer

87,521FY2018will introduce our own warehouse management system (WMS) at all logistics bases, reconsider

Naonori Nakayama

Net sales for FY2022 were ¥100.7 billion (a decrease of 4.0% compared withthe previous year). We will develop new products and strengthen the Yamazenbrand and e-commerce site to establish the presence demanded by ourcustomers.

Key Point

In the market environment of the Home Products Business, competition in the e-commerce

Founding

Present

Although sales of Yamazen brand products remained steady, willingness to purchase durable consumer goods declined due to rising
prices of raw materials, electricity and gas, and product price hikes due to yen depreciation. Net sales for FY2022 decreased 4.0% year

Digital integration strategy
Product development: Accurately
understand the needs of customers
and consumers, and continue toprovide optimal products tomarkets through digitalization of
all transactions across channels.

on year to ¥100.7 billion. The Home Products Business is a major growth driver for Yamazen. In FY2023, we will develop new productsthat capture consumer needs, strengthen the penetration of the Yamazen brand and expand our e-commerce site (Yamazen Bizcom).

Strengths• A leading lineup in the home products category• Diverse sales channels, such as volume retailers, home centers, mail order and e-commerce (own websites andmarketplace websites)• Ability to make diverse proposals through the handling of both private brand products and national brand products• Agile product development system that meets the needs of consumers• Expansion of the D2C market as a result of product selection and information provision through social media and apps

Opportunities• Expansion of opportunities for product development due to the diversification of consumer needs• Expansion of corporate e-commerce purchasing demand in response to labor shortages and business streamlining (B2B)• Expansion of e-commerce purchase demand in the elderly demographic (B2C)

Risks• Decline in consumer demand due to a shrinking population in Japan and increased interest in saving money and the sharing
economy socio-economic system• Pressure on earnings due to sudden exchange rate fluctuations (depreciation of the yen), increasing resource prices andsoaring logistics costs• Changes in existing consumer purchasing channels due to technological innovation• Reputational risk due to human rights and environmental issues within supply chains

56 INTEGRATED REPORT 2023

* Lifetime value (LTV) indicates the profit that can be earned from a customer over the course of a lifetime.

Highlight

Raising Brand Recognition with TV Commercials and Website Renewal

To increase awareness of the Yamazen brand, we
produced TV commercials for our washable circulator
fan. The illustrations by popular manga artist Sensha
Yoshida attracted attention to the product. In addition
to the commercials, we also renewed our brandwebsite, Yamazen Book, and focused on communicatingwith customers through social media in an effort toimprove brand value and acquire new customers.
Washable circulator fan series commercial “A face you
can wash”

Brand website

INTEGRATED REPORT 2023 57

Framework for
Creating Value

Lead Feature:
Yamazen’s Values

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Data“Crossing” as a Sales Strategy

Case 1

TFS Div. H.Q.

Case 2

Proposing Total Solutions for Production Sites

Doterai Ichi

A brick-and-mortar platform for the revitalization of regional economies
years, establishing it as a brick-and-mortar platform for revitalizing
regional economies. It has been well received as an event wherevisitors can purchase everything from machine tools to household
appliances at special prices. In FY2022, 494 distributors and3,726 manufacturers participated in the event.

The Total Factory Solutions Division Headquarters (hereinafter,“TFS Div. H.Q.”), is an embodiment of the concept of “crossing.”
It partners with domestic Group companies, domestic businessdivisions and overseas regional headquarters, and proposes
total solutions for production sites, including in areas related toautomation. In addition, we have launched the Yamazen Factory
Automation/Systems Integrator Association, an external

network consisting mainly of systems integrators from outside
the Company. We propose systems that are suited to a variety
of uses, and work to resolve our customers’ problems. In orderto strengthen our approach to the product industry (food, medical
and cosmetics) and the logistics industry as areas of focus, wehave put together a dedicated team and are cultivating newcustomers.

Doterai Ichi is an exhibition and sales event for which Yamazen
acts as the central administrative body. It is sponsored by local
distributors and held in cooperation with manufacturers. Under
this framework (a collaboration between Yamazen, distributors
and manufacturers), Doterai Ichi’s history spans more than 40

Positioning of the TFS Div. H.Q.

Role of the TFS Div. H.Q.

History of Doterai Ichi

The TFS Div. H.Q. handles the role of promoting “crossing” from its
position at the center of three groups: the external network of the
Yamazen Factory Automation/Systems Integrator Association, domestic
Group companies, and overseas regional headquarters.

· The TFS Div. H.Q. will work to integrate Yamazen’s functions and proactively
invest in human resources and M&As in order to strengthen thosefunctions, including in the areas of sales and technology.
·B y collaborating with the Engineering Support Department, Group
companies, and the Yamazen Factory Automation/Systems Integrator
Association, we will utilize our engineering capabilities in the wholesale
business, making full use of its sales channels. In doing so, we will
improve Yamazen’s business results.

The first Doterai Ichi was held at the Nishinihon Yamazen
Logistics Center located in Higashiosaka-shi in April 1975. At
that time, the exhibition and sales event was a rare opportunity
to see, handle and operate products, and became a major
topic of discussion in the industry. The following year, the 76
Osaka Doterai Ichi was held at the same venue, with “Osaka”

incorporated into the event name, and orders totaled ¥1.0
billion. In October of that same year, the Autumn Osaka
Doterai Ichi event was held at the Osaka Trade Fair Center(known then as Asashiobashi), and orders totaled ¥2.3 billion.
This Osaka event helped spread awareness of Doterai Ichi
throughout Japan.

1976

2023

Yamazen Factory Automation/
Systems Integrator Association
29 full member (systems integrator) companies
19 associate member (manufacturing) companies

3 Group companies
under the TFS Div. H.Q.
Alliance partners
1 company/
1 corporation

Engineering (domestic and overseas)
Machine Tools
Division H.Q.

Industrial Solution
Division H.Q.

TFS Div. H.Q.

Building Materials
Division H.Q.

Overseas regional H.Q.

Tools &Engineering
Division H.Q.

Founding

Present

View of 76 Osaka Doterai Ichi (held in 1976)

Highlights

Feedback

Participation by Women

Doterai Ichi: Message from a Distributor

We proactively rotate the jobs of female employees based on our belief that empowering women and enhancing their expertise will
strengthen the organization. This practice will lead to the development of new career plans for our female employees, including theappointment of business section managers, transfers from sales positions as well as assignments of new employees in FY2023 to
the Engineering Support Department, and transfers from staff support positions to the Sales Promotion Office.

“Doterai Ichi is aunique and excellent
business model.”Establishing Our Position in Automation
On June 10, 2023, Yamazen conducted a survey on automation andlabor-saving measures, targeting 1,043 respondents throughout Japan
involved in the manufacturing industry; the food, medical and cosmetics
industry; primary industry; the construction industry; and the logistics
industry. In response to Japan’s labor shortage and aging workforce,industries are trying to improve the working environment in factories
and raise the efficiency of their operations through automation andlabor-saving measures. According to the survey results, however,approximately 70% of respondents implementing automation andlabor-saving measures were not satisfied with the initiatives they hadtaken, and as many as 60% had a progress rate toward their targets of
30% or lower. By proactively developing total consulting services forautomation and labor-saving measures at the TFS Div. H.Q., we aim toraise operational efficiency in each industry.

58 INTEGRATED REPORT 2023

Shoichi Nishikawa
Example of Yamazen’s Automation and Labor-Saving Measures

Representative Director and President
NISHIKAWA SANGYO CO., LTD.

Mishima Factory, FANCL Biken Corporation
Automated system for manufacturing a series of age-specificsupplements
We introduced an automated system
for the packaging line of the customer’sseries of age-specific supplementsthat contain ingredients carefully
selected for each age group and gender.
 ee the video at the following link
S
(Japanese only) for details.
https://youtu.be/JYfaBC9eUik

NISHIKAWA SANGYO has been participating as a machine tool
distributor since the first Doterai Ichi. It was during the recessionthat followed the energy crisis in the 1970s, and when I heardthat Yamazen’s founder Takeo Yamamoto was setting up an
exhibition and sales event, I decided to participate to takeadvantage of his ingenious idea.
    At the venue, manufacturers, distributors and Yamazeninteract face-to-face, providing the opportunity to not just see
but also handle and operate products that will be useful to

View of Osaka Doterai Ichi (held in 2023)

users, which is not usually possible at other exhibitions. It is
like a market (ichi) where you can actually take orders, and I
think it is an outstanding and very interesting business modelfor our industry. Mr. Yamamoto’s words left an impression onme: “Now, even unknown manufacturers who are doing theirbest to succeed can become top-ranked if they sell well in themarket and their numbers go up. Doterai Ichi is a place thatoffers manufacturers that opportunity.” For manufacturers, it isan excellent place to promote awareness of the products they
have worked so hard to develop, pick up hints for productdevelopment from customers and get inspiration from othercompanies, which can lead to their growth. My company alsouses it as a valuable opportunity to learn sales techniques.
Although employees feel pressure to get orders, success indoing so is hard to come by. At NISHIKAWA SANGYO, weshare the same ambition as manufacturers and Yamazen, andwant to continue seeking out new formats for Doterai Ichi that
respond flexibly to the changing times without losing theessence of this unique and excellent business model.

INTEGRATED REPORT 2023 59

Lead Feature:
Yamazen’s Values

Framework for
Creating Value

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Data

Corporate Governance(1) Board of Directors

Basic Approach to Corporate GovernanceYamazen’s management places the highest importance on enhancing

structure for ensuring risk management and legal compliance as

fairness and transparency in corporate management, as well aswell as further gaining the trust of stakeholders, including

on maintaining and improving the corporate management structure

shareholders, and for achieving sustainable growth and enhancing

to ensure that it is capable of appropriately responding to a changing

corporate value. (As of September 30, 2023)

Meetings in FY2022:

13

The Board of Directors meets on a monthly basis in order to make

The Company has appointed Deloitte Touche Tohmatsu LLC to perform

decisions on important management matters and supervise theaccounting audits pursuant to the Companies Act; audits of financial

execution of business. In order to ensure the effectiveness of thestatements pursuant to the Financial Instruments and Exchange Act;

Board of Directors supervisory functions, as a rule, more than one-

audits of the internal control system; and quarterly reviews.

third of directors are independent outside directors. The number of
directors as of September 30, 2023 (including directors who arebusiness environment in a timely manner. Determined to become

Audit and Supervisory Committee members) was 10, of which foura corporate entity that is trusted, supported and looked uponfavorably by a broad spectrum of society, Yamazen and its Group
companies have established the Sustainability Management
Meeting and various other committees, formulated the YamazenGroup Corporate Activity Charter, and built a corporate governance or further details, please refer to the Securities Report and the Corporate
F
Governance Report.
Securities Reporthttps://www.yamazen.co.jp/archives/001/yuuhou_77_20230630.pdf (Japanese only)
Corporate Governance Reporthttps://www2.jpx.co.jp/disc/80510/140120230531590007.pdf (Japanese only)

Overview of Corporate Governance StructureWith the aim of strengthening the Board of Directors supervisory

Committee consisting of three directors who are Audit andfunctions and speeding up the decision-making process, theSupervisory Committee members (two of whom are outside

Company has adopted a company with an Audit and Supervisory

directors) works to audit and supervise the execution of duties

Committee structure. Under this structure, an Audit and Supervisoryby the Board of Directors.

were outside directors, with two of those four being Audit and

The Company has established a corporate officer system to enhanceSupervisory Committee members.

the flexibility of management by separating roles and responsibilities
into the areas of “management supervision (monitoring)” and “businessexecution (management).” With the aim of strengthening its earning

Chair: Yuji Nagao, Director and Chairman
Main topics for consideration include:• Investments for the sustainable growth of the Group (logistics
facilities, DX/system-related investments, new businesses, etc.)• Strengthening the governance structure by reorganizing various
committees• Initiatives to promote sustainability• Necessity of holding or disposing of cross-shareholdings• Review of business portfolio• Confirmation of progress of important measures related to themedium-term management plancapability and productivity, the Company has also established an officer
structure as its unique system for senior management.
(Overview of Corporate Officer and Officer Structure)
Corporate officers: Officers nominated by the Board of Directors
to serve for a one-year period and tasked with executing thecore business of the Company. Corporate officers are mainly incharge of core business operations, but as members of the
Executive Management Meeting and the Sustainability
Management Meeting they are also involved in the overallmanagement of the Company.

(2) Audit and Supervisory Committee

Meetings in FY2022:

13

Election/Dismissal

Cooperation(2) Audit andSupervisory
Committee

OutsideInsideElection/Dismissal(1) Board of Directors
Consultation

Audit/
Supervision(3) Nominating andRemuneration Committee

Reporting
Chair

Instruction(Excluding Audit and Supervisory
Committee members)(Of which, 2 outside directors)(4) Accounting Auditor

Reporting

Cooperation

Internal Audit Dept.

Instruction

ReportingDiscussion ofand reportingon importantmatters

Internal Control Committee

Reporting

ReportingSelection/
Dismissal/
Supervision(6) Executive Management Meeting3

In accordance with the management policy and management objectives

The Nominating and Remuneration Committee deliberates on matters

important matters related to business execution (excluding thoserelated to the nomination and remuneration of directors and others,

resolved by the Board of Directors), and is attended by representativeand submits reports to the Board of Directors. The committee is

directors and corporate officers.

internal resolution of committee members who are independent
outside directors. This is not a legally mandated committee.

(7) Sustainability Management Meeting
This body evaluates various risks and opportunities related to theCompany’s material issues, formulates action plans, verifies initiativesof each business division across the Group and deliberates on mattersconcerning approval and information disclosure. It is attended by

Cooperation(7) Sustainability
Management Meeting(8) Management
Meeting

Reporting• Compliance Committee• Risk Management Committee• Security Export Control Committee• Disclosure Committee• Investment and Loan Committee• Environment Committee

Internal audit

etc.
Reporting

60 INTEGRATED REPORT 2023

and its own auditing activities.

Board of Directors, of which a majority of directors are independent

Representative
director and president

ReportingAccounting audit

officers (including four also serving as directors) and 19 officers.

through attendance at monthly meetings of the Board of Directors

outside directors. The chairperson of the committee is selected by(6) Executive
Management Meeting

Instruction

assigned. As of September 30, 2023, there were 11 corporate

and appropriateness of decisions and management judgments

made up of at least three directors, selected by a resolution of the(5) Business
Execution Framework

Internal audit

Meeting and are responsible for executing the duties they arelegality of execution of duties by directors as well as the reasonablenessof the Company, this body deliberates on and determines basic andDirectors (Audit and Supervisory Committee members) (Of which, 2 outside directors)
Cooperation

Management Meeting to serve for a one-year period. Together

The Audit and Supervisory Committee audits and supervises the(3) Nominating and Remuneration Committee Meetings in FY2022:

Chair

Directors

Chairgeographical areas or specialist fields nominated by the Executive
with corporate officers, they make up members of the Management

General Meeting of Shareholders

Management Supervision(5) Business Execution Framework

Officers: Officers with a high level of insight or expertise in specific

Governance Structure

Election/Dismissal(4) Accounting Auditor

Instruction

Instruction

Business divisions
Staff divisions
Affiliated domestic and overseas companies

Chair: Yoshinori Tsuda, Audit and Supervisory Committee Member
Main topics for consideration include:• Selection of candidates for the next president/CEO• Policy for determining the amount of director remuneration and its
calculation method

representative directors and corporate officers.

(8) Management Meeting
This meeting is held on a monthly basis for the submission of reports
related to business execution and as a forum for exchanging informationand other activities. It is attended by representative directors, corporate
officers, officers and full-time Audit and Supervisory Committee
members.

INTEGRATED REPORT 2023 61

Lead Feature:
Yamazen’s Values

an important management issue. As such, the basic policy on
remuneration for directors (excluding directors who are Audit andSupervisory Committee members; the same shall apply hereinafter)
is to establish a remuneration system that promotes awarenessof the need to contribute to increasing corporate value andFixed Remuneration

The Company has appointed four outside directors. This includes· Regular remuneration (monetary remuneration)

two directors who are Audit and Supervisory Committee members.

The above consists of basic remuneration, representative
remuneration, director remuneration, and remuneration related toReason for Appointment

duties, with reference levels for each position set out in the Internal

Atsuko Suzuki possesses abundant experience andRegulations for Directors. Regular remuneration is paid at a set

improving business performance from both a short-term

broad insight into strategic CSR/ESG development

time each month.

perspective and over the medium to long term.
    Remuneration for directors consists of an appropriate
combination of a set amount of fixed remuneration and performancelinked remuneration based on business results and other factors.
In this way, the Company aims to secure competent personnel,
generate an incentive to improve corporate value and build aremuneration system that promotes further increases in

aimed at bolstering a company’s social standing, namely
in the form of experience promoting diversity,

Performance-linked Remuneration
Performance-linked remuneration consists of bonuses (monetary
remuneration), which are short-term incentives that vary based

AtsukoSuzuki    Performance-linked remuneration is not paid to outside
directors.
    Remuneration for directors is decided in accordance with
the Policy on Determining Director’s Remuneration and otherrelated policies. The Board of Directors takes operating results,
the scale of business and various other factors into accountand share-based remuneration (non-monetary remuneration),with the Company’s business operations and further
enhancing the corporate governance of the Group.

the Company to be paid after retirement as director.
    The indicator for performance-linked remuneration isbased on levels at competitors and other factors. In the eventthat the reference value for consolidated ordinary profit is achieved,
fixed remuneration would be 60%–70% and performance-linked
remuneration would be 30%–40% (with monetary remunerationaccounting for approximately 80% and non-monetary remunerationaccounting for approximately 20%).

can be ensured is created, with reference to various standards
concerning independence, such as regulations of the Tokyo Stock
Exchange. After comprehensive consideration of each person’s
experience, expertise, character, insight and other attributes,
individuals are selected based on their ability to communicate
and behave appropriately in ways that enhance supervisory
functions and oversight of the Company’s management.

Coordination between Supervisory and Audit
Functions of Outside Directors and Internal Audits,
Audits by the Audit and Supervisory Committee
and Accounting Audits, and Role of Internal Control
Departments(who are Audit and Supervisory Committee members) receive

representative director and president at anotherexplanations in advance regarding Board of Directors resolutions

directors to overall management.

company, in addition to his wide-ranging knowledge· Bonuses (monetary remuneration)

Hirohiko
Sumidaand further enhance the corporate governance of
the Group.

are used to acquire shares of the Company through a trust, with

Yoshinori Tsuda possesses expertise and a commitment

shares of the Company and the monetary equivalent to shares ofthis trust to directors based on consolidated ordinary profit as set

overall management of the Company will improveand supervisory functions of the Board of Directors,

Under this remuneration system, funds contributed by the Company

the Company converted at the market price, and granted throughof IT. His pertinent advice on matters concerning thethe effectiveness of the decision-making process· Share-based remuneration (non-monetary remuneration)

to professional ethics formed as a certified public
YoshinoriTsuda

accountant, and a wealth of experience as an outside
auditor at other companies. Based on this, he provides

out in the Performance-linked Bonuses and Share Benefit

suitable advice on ensuring the appropriateness ofRegulations for Directors and Other Officers.

financial statements and auditing in general.

Naoko
Nakatsukasa
Total Amount of Remuneration by Type (Millions of Yen)
Performance-linked Remunerationand other important matters to be reported. They also receive
reports on the content of the Management Meeting and otherimportant meetings attended by full-time Audit and Supervisory
Committee members, and fulfill their supervisory and audit
functions by exchanging information and opinions with accounting
auditors and members of the Internal Audit Department.
    In order to ensure appropriate communication and behavior,
the Company has established the Corporate Planning Department
as a contact point for outside directors to promote the appropriate
and timely exchange of information based on a full understandingof resolutions by the Board of Directors and reports on importantmatters. Moreover, the Company provides detailed explanationsin advance of Board of Directors resolutions and reported matters,
and promotes collaboration with relevant departments, as

Naoko Nakatsukasa possesses expertise and a commitment

Total Amount of Remuneration (FY2022)

Directors (excluding Audit
and Supervisory Committee
members)

During the selection process, a pool of candidates whose independence

At Audit and Supervisory Committee meetings, outside directors

to professional ethics formed as an attorney-at-law

Total Amount of
Remuneration(Millions of Yen)

Criteria and Policy Regarding Independence fromthe Company When Appointing Outside Directors

experience gained through his service as aupon retirement.

Directors and Other Officers

Data

power, and enables the measurement of the contribution of    As a rule, share-based remuneration is paid to directors

Fixed Remuneration

The Foundation
Supporting Value Creation

Hirohiko Sumida possesses keen insight and abundant

paid at a set time each year.

performance-linked remuneration. The proportions of each are set

Medium-TermBusiness Strategies

consolidated ordinary profit. It is used to evaluate the Group’s earning

Internal Regulations for Directors. This type of remuneration is

Remuneration for directors consists of fixed remuneration andof the Board of Directors offers an independent
business execution, helping to link CSR activities

basis according to consolidated ordinary profit as set out in the

Composition of Remuneration for Directors andOther Officers

at other companies. Her proactive advice at meetings
perspective separate from management involved in

The amount of bonuses determined on a number-of-months-payable

when determining remuneration.

formulating CSR policy and promoting ESG strategy

on business performance for each fiscal year and other factors,
which is a medium- to long-term incentive, such as shares ofcorporate value.

Long-Term Strategy for
Sustainable Growth

Corporate Governance Function and Roles Fulfilled by Outside Directors

Basic Policy on Remuneration for Directors and Other Officers
The Company believes that further increasing corporate value isFramework for
Creating Valueand a wealth of experience as an outside director

necessary. Furthermore, the Audit and Supervisory Committee
works, as necessary, with the Corporate Administration H.Q. toenhance the effectiveness of audit and supervisory functions.

and outside auditor at other companies. Based on
this, she provides valuable advice and appropriate
audits and supervision of discussions at meetings of

Number of Eligible
Directors andOther Officers

Regular Remuneration(Monetary
Remuneration)

Bonuses(Monetary
Remuneration)

Share-based
Remuneration(Non-monetary
Remuneration)

389

257

105

26

6

25

25

—

—

1

28

28

—

—

5

the Board of Directors.

Note: Excluding outside directors

Directors (Audit andSupervisory Committee
members)
Note: Excluding outside directors

Outside directors

62 INTEGRATED REPORT 2023

INTEGRATED REPORT 2023 63

Lead Feature:
Yamazen’s Values

Initiatives to Enhance the Effectiveness of the Board of Directors
Evaluation Method
As a means of enhancing the effectiveness of the Board of Directors,
the Company has implemented an annual questionnaire survey ofthe effectiveness of the Board of Directors since 2017, andconducts an analysis and evaluation of the results. In addition,priority issues are determined based on the results of thequestionnaire survey, and countermeasures are formulated andimplemented with the aim of improving the effectiveness of theBoard of Directors. The Board of Directors plans to continue to
implement self-assessments of members going forward in orderto enhance its functions. The main process is as follows.

Check

Act

Considercountermeasuresand set a
timeframe

Implement
countermeasures

Evaluate
effectiveness ofcountermeasures

Analyze,evaluate andrecognize issues

Evaluation Results
In March 2023, the Company gathered and analyzed the resultsof the questionnaire survey on the effectiveness of the Board of
Directors for FY2022. The main items were as follows.
• Functions and roles of the Board of Directors; compositionand scale of the Board of Directors; operation of the Board of
Directors; collaboration with auditing bodies; communication
with management team; and relationships with shareholders
and investors    Based on analysis of the results of the questionnaire

Data

Addressing Business Risks
executed to counter these risks is evaluated by the Board ofissues it has identified. Of these, the main risks that are considered

Directors. In this way, the Group works to preclude the•E xchange of opinions concerning medium- to long-term

to have a potentially material impact on investment decisions are

occurrence of risks and to respond appropriately when risks

management strategies that will contribute to sustainable

shown below. The Group has established the necessary risk

emerge.

growth and the enhancement of corporate value

management systems, and conducts ongoing reviews of risks.

•S ecuring sufficient preparation time to consider matters

Whether or not appropriate policies have been formulated andscheduled to be discussed at future meetings of the Boardof Directors

Main Risks and Countermeasures

Status of Measures to Address Issues Recognized in
the Previous Fiscal Year

Issues RecognizedMeasuresApproach to shareholders(including institutional andindividual investors) anddissemination of information

Issue integrated reports, and holdinformational briefings and one-onone meetings between the CFO

Formulation and implementationof training plans for directors
and other officers

Major Risk Category
Risk Subcategory

Risk Details

Measures to Address Riska. C
 hanges in businessconditions• Significant changes in demand caused by trends in corporate
attitudes toward capital investments and personal consumption• Pursue specialization to address diverse needs• Open up new markets by accelerating overseas expansion

b. Country risk

• Soaring procurement and distribution costs, as well as
delays in supply of products, arising from the situation in
Russia and Ukraine and other political/social situations• Obtain appropriate information on country riskc. F oreign exchange rate
volatility• Major foreign exchange gains or losses caused by significant
fluctuations in foreign exchange rates, and declines in sales
caused by customers refraining from purchasing products
handled by the Company• Implement forward exchange contracts and other measures
for import/export transactions denominated in foreign
currencies(1) Risks associated with business environment, etc.

(2) Risks associated with operation of the businessand institutional investors as appropriatea. R esponse to new businessmodels• Expected results are not realized from investment in thebusiness• I mplement measures based on business investment framework

FY2022: Implemented web-based
training for directors and other officers

b. Securing and developing
talent• Difficulty in obtaining competent talent due to the declining
birthrate, aging population and shrinking workforce•D raw up and execute strategies based on personnel management
policy• Promote diversity, beginning with the participation of womenin the workplacec. Credit• Lines of credit to business partners both in Japan andoverseas as a result of various marketing activities• Default, etc., by business partners occurring as a result of
unforeseen circumstances• I mplement credit management based on internal management
regulations

d. Product liability, etc.

• Significant costs following the occurrence of major recalls
or product liability issues, and impairment of corporate
brand value• Set out quality management regulations and establish the
Quality Management and Product Liability Subcommittee• Take out product liability insurance• Establish the Crisis Management Committee as a framework
for implementing measures in times of emergency

e. Information systems andinformation security risks• Leakage, falsification or loss of personal or corporate
information as a result of unauthorized access or otherincidents• Loss of opportunities and social trust due to systemsrelated suspension of operations• Formulation of information system management regulations
and information security regulations• Strengthen information security and put backup systems
in place• Implement regular employee educationa. Compliance•P unishment by regulatory authorities, impairment of corporate
brand value and loss of social trust in the event of violationsof public regulations• Infringement of public regulations in Japan and overseas
as a result of the enactment of new regulations and otherdevelopments• Establish the Internal Control Committee and the Compliance
Committee• Formulate and follow the Yamazen Group Corporate Activity
Charterb. Share price fluctuations• Changes in share price based on fluctuations in market
price of stocks held
• Impairment of Group’s pension asset value caused bystock market slump• Review all shareholdings on a regular basis to confirm thereasonableness of maintaining or reducing holdingsc. Impairment losses on
non-current assets• Recognition of necessary impairment losses arising fromtrends in the economic environment and a decline ineconomic value• Implement measures based on capital investment frameworkd. Natural disasters, epidemics,etc.

• Damage arising from large-scale natural disasters or
pandemics• Delays in product delivery due to supply chain disruptions• Promote countermeasures such as business continuity
planning (BCP)• Support the introduction of BCP throughout the supply
chain (for small and medium-sized enterprises)• Implement initiatives to address change through the Crisis
Management Committee and other organizations

e. Climate change risk

• Physical risks related to natural disasters• Sales opportunity losses due to strengthening of laws andregulations or supply chain regulations• Decline in social trust due to insufficient engagement withsocial issues• Promote global adoption of energy saving equipment• Enter the renewable energy business by establishing theGreen Recovery Business (GRB) Dept.

Holding meetings to exchange
opinions on medium- to longterm management strategies
that contribute to sustainablegrowth and increased
corporate value

FY2022: Regularly held meetings to
exchange opinions

survey and related deliberations by the Board of Directors, theeffectiveness of the Board of Directors was analyzed. It wasdeemed to be fulfilling its roles and meeting expectations
appropriately, and to be ensuring its own effectiveness.
    Moreover, based on the results of the questionnaire(3) Other risks

survey, the following items were recognized as priority issues
going forward.

Basic Approach to Internal Control Systems and Status of Implementation
The Company considers internal control and compliance as importantvoluntary and ongoing CSR activities are indispensable for any

management issues, especially given today’s businesscorporate entity that aspires to be trusted, supported, and lookedenvironment, which is underscored by increasing globalization

upon favorably by a broad spectrum of society, the Company has

and complexity. To achieve greater fairness and transparency inestablished a Compliance Committee to develop specific and effective

corporate management, Yamazen has established an Internalmeasures to fully promote understanding of various compliance-

Control Committee. In addition, based on the belief that active,

related policies.

For details of the status of implementation of various measures, see the Corporate Governance Report.
Corporate website: https://www.yamazen.co.jp/english/ir/governance.html
Corporate Governance Report: https://www2.jpx.co.jp/disc/80510/140120230531590007.pdf (Japanese only)

64 INTEGRATED REPORT 2023

The Foundation
Supporting Value Creation

The Group recognizes a variety of risks in addressing the material

the following measures with the aim of improving effectiveness.

Do

Medium-TermBusiness Strategies

individual investors) and dissemination of informationon the effectiveness of the Board of Directors, we have implemented

PlanLong-Term Strategy for
Sustainable Growth• Approach to shareholders (including institutional andIn response to issues recognized in previous questionnaire surveys

Implementation Process

Framework for
Creating ValueINTEGRATED REPORT 2023 65

Lead Feature:
Yamazen’s Values

Framework for
Creating Value

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Data

Management Team
Directors (As of June 27, 2023)

Yuji Nagao

Apr. 1977
Joined the Company
Apr. 2011	Vice President; Vice President of Housing
Equipment & Materials Division H.Q.
Apr. 2012	Vice President; Vice President of Building
Materials Division H.Q.; General Manager incharge of Higashi Nippon Region
Apr. 2013	Senior Vice President; President of Building
Materials Division H.Q.; General Manager incharge of Nishi Nippon Region
Apr. 2014	Senior Vice President; President of Building
Materials Division H.Q.
Jun. 2014	Director and Senior Vice President
Apr. 2015	Managing Director and Senior Vice President
Apr. 2016	Director and Executive Officer; President of
Production Equipment
Apr. 2017	Representative Director, President & CEO
Apr. 2023	Director and Chairman (to present)

Director and Chairman

Apr. 1983
Joined the Company
Apr. 2016	Corporate Officer; Vice President of Machine
Tools Division H.Q. (in charge of overseas
business); General Manager of International
Department and President of YAMAZEN(KOREA) LTD.
Oct. 2016	Corporate Officer; Vice President of Machine
Tools Division H.Q. (in charge of overseas
business); President of YAMAZEN (KOREA) LTD.
Apr. 2018	Executive Officer; President of Production
Equipment Business H.Q.
Jun. 2018	Director and Executive Officer
Apr. 2020	Director and Executive Officer; Vice President ofGeneral Sales H.Q. (in charge of overseas
business); General Manager of the International
Department, Machine Tools Division H.Q.
Apr. 2021	Director and Executive Officer; Vice President ofGeneral Sales H.Q. (in charge of overseas
business); President of Total Factory Solutions
Division H.Q.; General Manager of the International
Department, Machine Tools Division H.Q.
Oct. 2021	Director and Executive Officer; Vice President ofGeneral Sales H.Q. (in charge of overseas business)
Apr. 2022	Director and Executive Officer; Vice President ofGeneral Sales H.Q. (in charge of overseas business)
Apr. 2023	Representative Director, President & CEO(to present)

Koji Kishida

Representative Director,
President & CEO

Apr. 1980	Joined the Company
Apr. 2013	Vice President; Vice President of Osaka
Regional H.Q.
Apr. 2015
Senior Vice President
Apr. 2016
Corporate Officer
Apr. 2017	Executive Officer; President of Osaka
Regional H.Q.
Jun. 2017	Director and Executive Officer
Apr. 2018	Director and Executive Officer; President of
Osaka Regional H.Q.
Jun. 2019	Resigned as Director
Executive Officer
Apr. 2020	Executive Officer; President of General Sales
H.Q. (to present)
Jun. 2020	Director
Apr. 2021	Representative Director (to present)

Kimihisa Sasaki

Masamichi Yamazoe

Representative Director andExecutive Officer

Apr. 1982	Joined the Company
Apr. 2015	Vice President; General Manager of Legal &Credit Department of Administration H.Q.
Apr. 2016	Corporate Officer; General Manager ofInternational Administration Department of
Administration H.Q.
Apr. 2017	Corporate Officer; Vice President of
Administration H.Q.; General Manager ofInternational Administration Department
Nov. 2017	Corporate Officer; President of Administration
H.Q.
Apr. 2018	Executive Officer; CFO
Jun. 2018	Director and Executive Officer
Apr. 2020	Director and Executive Officer; CIO; President ofCorporate Planning H.Q.; CFO; President of
Administration H.Q.
Oct. 2021	Director and Executive Officer; President ofCorporate Administration H.Q. (to present)

Director and Executive Officer;
CIO & CFO

Apr. 1986	Joined Matsushita Electric Industrial Co., Ltd.
(currently Panasonic Holdings Corporation)
Apr. 2008	Director and Manager of the CSR Office(resigned in December 2014)
Apr. 2010	Outside Director and Auditor, Nara Women’s
University (resigned in December 2012)
Jan. 2015	Joined Asahi Breweries, Ltd.
Apr. 2015	Manager of the Social Environment Department
Oct. 2015	Manager of the Sustainability Promotion Section,
Olympic/Paralympic Promotion Headquarters(concurrent)
Apr. 2017	Director and General Manager of the CSR
Division of Asahi Group Holdings, Ltd.
May 2019	Resigned from Asahi Breweries, Ltd.
Jun. 2020	Outside Director of the Company (to present)

Atsuko Suzuki

Hirohiko Sumida

Outside Director

Outside Director

Apr. 1981	Joined the Company
Apr. 2014	Vice President; General Manager of Tokyo
Administration Department of Administration H.Q.
Apr. 2017	Corporate Officer; Vice President of Administration
H.Q. (stationed in Tokyo); General Manager ofTokyo Administration Department
Oct. 2017	Corporate Officer; Vice President of Administration
H.Q.; General
Manager of Human Resources Department
Apr. 2019	Corporate Officer; Vice President of Administration H.Q.
Jun. 2019	Director (Audit and Supervisory Committee
Member) (to present)

Satoshi Murai

Apr. 1995	Joined Chuo Audit Corporation (Renamed
Misuzu Audit Corporation in September 2006)
Apr. 1998	Registered as Certified Public Accountant
Jul. 2007	Resigned from Misuzu Audit Corporation
Aug. 2007	Representative Director and Partner of ASUKA
Consulting INC. (to present)
Representative of Yoshinori TSUDA CPA Office(to present)
Jun. 2013	Outside Audit and Supervisory Committee
Member of the Company
Jun. 2016	Outside Director (Audit and Supervisory
Committee Member) (to present)

Yoshinori Tsuda

Director(Full-time Audit andSupervisory Committee
Member)Apr. 1987	Joined the Company
Apr. 2015	Vice President; General Manager of Sales
Division, Home Products Division H.Q.
Apr. 2016	Corporate Officer; Vice President of Home
Products Division H.Q.; General Manager ofSales Division
Oct. 2017	Corporate Officer; Vice President of Home
Products Division H.Q. (in charge of sales);General Manager of Sales Division 2
Apr. 2018	Corporate Officer; President of Home Products
Division H.Q.
Apr. 2021	Executive Officer; President of Home Products
Division H.Q. (to present)
Jun. 2022	Director (to present)

Feb. 1991	Joined Mitsubishi Corporation
Jan. 2003	General Manager of Strategic IT Planning andSolution Business Unit, Living Essentials Group
Apr. 2008	CIO of Living Essentials GroupFeb. 2011	Joined Toyo Kohan Co., Ltd.
Apr. 2011	Executive Officer; Chief and General Manager of
President’s Office
Apr. 2012	Executive Officer; Chief of Strategic Planning
Division; General Manager of Business
Development Department
Jun. 2012	Director
Apr. 2013	Director and Executive Officer; Chief of Strategic
Planning DivisionJun. 2014	Representative Director and President
Jun. 2014	Corporate Officer of Toyo Seikan Group Holdings, Ltd.
Jun. 2018	Director, Toyo Kohan Co., Ltd. (resigned in
March 2022)
Jun. 2018	Executive Vice President and Director, Toyo
Seikan Group Holdings, Ltd. (resigned inJune 2022)
Jun. 2022	Outside Director of the Company (to present)

Outside Director(Audit and Supervisory
Committee Member)

Apr. 1994	Graduated from the Supreme Court Legal Training
and Research Institute
Registered with Osaka Bar Association
Joined Chuo Sogo Law Office, P.C. (currently
Chuo Sogo Law Office, P.C.) (to present)
Apr. 2006	Registered as attorney in the state of New York
Apr. 2008	Part-time lecturer at the Graduate School of Law,
Kyoto University
Jun. 2021	Outside Director (Audit and Supervisory
Committee Member) (to present)

Naonori Nakayama

Naoko Nakatsukasa

Director and Executive Officer

Outside Director(Audit and Supervisory
Committee Member)

Skill Matrix
Skills (Knowledge, Experience, Capabilities, Etc.)
Position

Name

GeneralManagement

Sales andMarketingGlobalDirector and Chairman

Yuji Nagao

〇

〇

〇

Representative Director,
President & CEO

Koji Kishida

〇

〇

〇

Representative Director

Kimihisa Sasaki〇

Director

Masamichi Yamazoe〇

Director

Naonori Nakayama〇

Legal and Risk
Management〇〇

Skills (Knowledge, Experience, Capabilities, Etc.)

Personnel and
Human Resource
Development

ESG andSustainability

〇

〇

〇
〇

Note: The skill matrix does not represent all of the knowledge of each director.

66 INTEGRATED REPORT 2023

Finance andAccounting

〇

〇

〇

〇

Position

Name

Outside Director

Atsuko Suzuki

Outside Director

Hirohiko Sumida

Director
Full-time Audit andSupervisory Committee
MemberOutside Director
Audit and Supervisory
Committee Member
Outside Director
Audit and Supervisory
Committee Member

Satoshi Murai

GeneralManagement

Sales andMarketingGlobalLegal and Risk
Management

Personnel and
Human Resource
Development〇〇〇

ESG andSustainability

〇

〇
〇

〇

〇

Yoshinori Tsuda
Naoko Nakatuskasa

Finance andAccounting

〇

〇

〇
〇

INTEGRATED REPORT 2023 67

Lead Feature:
Yamazen’s Values

Framework for
Creating Value

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Data

A Conversation with Two Outside Directors
shareholders, investors and local communities. From my many
years working in the field of sustainability, I am aware that
intangibles such as society, the environment, quality andsafety have, in their own way, also come to be regarded as
stakeholders. It is true that a thorough customer orientation
gives the Group an advantage over industry peers, but beyond
that, I think it is necessary to add new value—in other words,
to add something extra to customer-oriented initiatives.
Yamazoe: Both of you have alluded to Yamazen’s close
customer relationship strategy, which I believe has played ahuge role in supporting our growth. However, I also feel that it

Atsuko Suzuki
Outside Director

×

Masamichi Yamazoe
Director and Executive Officer;
CIO & CFO
President of Corporate
Administration H.Q.

×

Hirohiko Sumida
Outside Director

To further expand growth businesses, the Company must determine
and make sizeable investments for the future.
Improving management fairness and transparency to build and maintain a business management system that can respondpromptly to changes in the business environment is a key management theme for the Yamazen Group. As such, the Grouphas been working continuously to achieve more sophisticated corporate governance. The Board of Directors, which plays
the core role in governance, is composed of six internal directors and four outside directors, and it strives to improve theeffectiveness of the governance system and make prompt and appropriate decisions through free and open discussions. In
the following discussion, Masamichi Yamazoe and outside directors Atsuko Suzuki and Hirohiko Sumida engaged in a candid
exchange of opinions on the Yamazen Group’s governance, business execution and issues for the future.

Now Is the Time for Adding Something Extra
to Customer-Oriented Initiatives

development in the Home Products Business. I strongly feelthat Yamazen’s free and open-minded corporate culture has led
to its rapid progress.

Yamazoe: Ms. Suzuki and Mr. Sumida, both of you are outside
directors of Yamazen, and I look forward to hearing your candid

Suzuki: I feel exactly the same. Since Yamazen is a trading

opinions on the Company’s governance and management strategies.

company specializing in machinery, I used to have an image ofa rigid company that was focused on hardware. However, after

Sumida: I have been involved in corporate management forbecoming an outside director and meeting the management

many years, so I would like to offer my opinion from ateam and many employees, I realized my preconceptions weremanager’s perspective. I believe that Yamazen’s greatest

mistaken. I have come to understand that Yamazen conducts

strength is its ability to maintain stable profits by successfully

its business with a high degree of flexibility to stay in closeretaining customers. Aside from an outstanding ability to maketouch with customers. Moreover, the customer-oriented

proposals, the strong relationships with manufacturers andapproach of employees is deeply rooted, and they arebusiness partners built by your predecessors since thecommitted to ensuring that customers are happy. I was

Company’s founding are another major factor. I was also

impressed that customer happiness is at the core ofsurprised by the scale of sales and profitability of the Home

management decisions, even for those related to governance

Products Business as a fabless manufacturer. Yamazen has

and medium-term management strategies. However,been taking the customer’s perspective to provide a diverse

demands have been growing in recent years for management

range of products and services, and the independent approachand business administration that is conscious not just of

it has cultivated in doing so is bearing fruit in new productcustomers, but also of a wide range of stakeholders including

68 INTEGRATED REPORT 2023

is not enough to simply recognize that customer value equals

capital efficiency in our management decisions. I believe we

corporate value. For example, further improving corporate

must put greater effort into conducting operations in tune withvalue will be difficult unless we give more consideration to

the times.

Stronger Promotion of “Employees
Challenging Themselves. Thinking while
Taking Action” to Use Yamazen’s Corporate
DNA of Taking on Challenges to Develop
New Businesses

steadily grew. You could say that Yamazen is now confronting

Yamazoe: Listening to both of you highlighted the importanceSuzuki: Further expansion of growth businesses may alsoof putting the customer first as well as the need for initiatives

require reform of the organizational culture. Yamazen has

with something extra. As an executive officer, I will strive tocontinued to grow with trading of production equipment as its

manage while respecting our diverse stakeholders. Next, I

core business. At present, the Production Equipment Businesswould like to know what you think about Yamazen’s growth

exceeds other businesses in terms of investment amounts

strategies and the investments going forward that will

and agenda items at Board meetings, partly because it isunderpin them.

larger in scale than the Building Materials Business and thethe same sort of difficulties that general trading companies
were facing then. By valuing the customer’s perspective andformulating and executing strategic investments with that inmind, the next path to growth will become apparent.

Home Products Business. I would say that the culture here
Suzuki: My impression is that the content of discussions atemphasizes production equipment. However, pursuing theBoard of Directors meetings has changed considerably in thepotential of growth businesses is an important duty forthree years since I became an outside director. Directors havemanagers. I believe that Yamazen should emphasize allocating

become more aware of capital policy and shareholder value,

management resources to the Home Products Business toand spend more time discussing those topics. Reporting has

take advantage of its current growth potential, while displaying

become more thorough on the status and results of initiatives

the flexibility and agility that is unique to a trading company tofor investor relations, which you are in change of, Mr. Yamazoe.

further maximize profits.

On the other hand, there is still little reporting or discussion on
future strategies and growth investments, which will be an

Sumida: It is also important for a manager to support theissue going forward. For a number of fiscal years, theendeavors of each department and employee. Everyone feels

investment amount allocated in the business plan has notfear when taking on something new. Providing support as an

been fully spent, and I think we need more discussion oforganization for taking on bold challenges and giving

growth investments.

opportunities to try again in the event of failure will help tobuild a diverse portfolio and to develop the next generation of

Sumida: I have many years of experience at a general trading

revenue sources. Throughout a history of more than 75 years,

company, and the 1990s were turbulent times for such companies,

Yamazen has pioneered new business fields and markets. It

when their business models changed substantially. As lower

has set forth a Personnel Philosophy of “Cultivating personnel

commissions became the norm in the trading business, general

who challenge themselves and think while taking action,” andtrading companies tried to evolve into business investment

now, its Purpose is “Pioneering a new future, with you all.” I

companies. More projects began to come to the in-house

would like to see this corporate DNA of taking on challenges

organization that conducts preliminary screening of investments,

put to greater use in developing businesses.

and as investment projects took shape, companies’ profits

INTEGRATED REPORT 2023 69

Lead Feature:
Yamazen’s Values

Entering Emerging Countries and New Fields
in Search of Non-Organic Growth

Framework for
Creating Value

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value CreationData

the key will be not just to sell individual pieces of equipment,

Sumida: Concept-based business development also leads

fabless manufacturer. Our ability to keep having successes likebut to provide them as a turnkey system1 that also includes

to the creation of added value. Controlling every part of athis will be crucial for our growth strategies.

additional services. I believe that Yamazen will further increasebusiness from upstream to downstream allows you to capture

Yamazoe: The issue of investment for the future is exactly as

its profitability if it combines the knowledge it has cultivated

all the profits generated in each process, and to build a next-

you both have pointed out. Going forward, we will thoroughlywith AI, which has been evolving rapidly in recent years, for ageneration business model that covers the entire productdiscuss such investments, not only at Board of Directors

rollout to emerging countries that require turnkey systems.

lifecycle. I think Yamazen will need to aggressively pursue thatkind of expansion in the future.

meetings but also at forums for exchanging opinions that wewill hold three or four times a year. In addition, Yamazen has

Suzuki: I think the core issue in Yamazen’s overseas strategy

traditionally established the infrastructure for business by

is moving away from organic growth. Since Yamazen is a

Yamazoe: From that perspective, the success of the Home

launching new departments, but in the future, we should

global company with 64 overseas locations, I think it needs to

Products Business was a major turning point for the Yamazen

consider increasing options for M&As to “buy the time”

empower its overseas subsidiaries to create new businessGroup. At first, we only sold products we had purchased, butneeded to develop the necessary functions. What is your viewconcepts. Specifically, going forward more Japanesesince it was not profitable, we decided to manufacture themof Yamazen’s growth investments, particularly in the area ofindustries will enter countries and regions such as Indonesia

ourselves. Through an ongoing process of trial and error, weoverseas expansion?

and Bangladesh, where GDP per capita is low but thedeveloped and improved our products, and reached a point

demographic dividend is large. I think Yamazen also has thewhere we were able to maintain a certain profit margin as a2

Sumida: The fact that Yamazen is establishing a profit-generating

potential to proactively invest its management resources tosystem centered on North America is a one of the greattake on challenges in fields such as healthcare and environmental

achievements of the past few years. For future developments,

technology. Providing high added value through the turnkey

it will be important from the perspective of Group earnings toapproach Mr. Sumida mentioned is an initiative in whichtake on the challenge of cultivating markets in regions where

Yamazen can fully demonstrate its resourcefulness as afurther economic development is expected, such as the

trading company.

Further Deepening “Management ofFostering Personnel”

network is immeasurable. Moreover, although we are a trading
company and do not own manufacturing facilities, we havesecured profits by adding engineering capabilities for production

Yamazoe: To further accelerate the creation of high-value-added

equipment and fabless manufacturing operations in the Home

Yamazoe: Yamazen is now focusing on developing local staff

products and services and the expansion of investment for the

Products Business. That is undoubtedly due to the power ofoverseas, including through talent management projects infuture, it is essential to further strengthen human capital, which

our people. In other words, Yamazen’s strength lies in its

collaboration between the headquarters in Japan and regional

is our greatest management resource and the source of ourhuman resources. Our policy is to increase investment

headquarters, with the aim of localization in the true sense ofdifferentiation. One part of our Management Philosophy isin human resources to further enhance Yamazen’s uniquethe word. We are also considering a transfer of substantial“Management of fostering personnel,” and we have been

dynamism and link it with the creation of new ideas.

authority so that each base can operate autonomously. As forstriving to develop what we call “Yamazen employees ” whoturnkey products, they would allow us to secure a set grosswork autonomously and proactively. What is your evaluation of

Suzuki: Human resource development also requires fosteringprofit margin. Hearing your opinions has reminded me of the

Yamazen’s efforts to develop its human resources?

a culture that respects challenges and tolerates failure.

Middle East, North Africa, and South America. In those cases,

3

need to further ramp up these initiatives.
1. A type of order for production equipment in which the seller undertakes theentire process from planning to full operation according to the customer’s
request2. Conditions in which the working-age population (aged 15 to 64) is substantiallylarger than the non-working-age population (aged 14 or younger and 65 or older)

Forbidding someone to fail when trying something new will
Sumida: Yamazen’s numerous employees who are proactive in

only discourage them. Establishing flexible systems is important.

their work are a highly praiseworthy result of its human

For instance, if there is an investment project worth several

resource development measures. On the other hand, given

million yen in an emerging country, delegate authority to thethat the number of new investment project proposals is still

person who initiated it and leave its implementation to theminsufficient, I am concerned that the corporate culture ofafter approval by the officer in charge.

“challenging themselves and thinking while taking action”

Becoming a Corporate Group That Provides
Optimal Solutions to Various Social Issues

promising business that targets seniors—these kinds of conceptbased corporate activities will become more necessary than ever.

Suzuki: Addressing social issues will be an important management

Yamazoe: Yamazen has conducted joint development of clothing

theme going forward. Many managers are starting to sense itsthat helps workers to reduce their workload, and a project tourgency because their companies cannot hope for sustainablepromote sales of fire alarms that detect carbon monoxide,

growth unless they resolve various issues such as depopulation

among other initiatives. We have also been involved from ain Japan and abnormal weather worldwide. They cannot expect

relatively early stage in the Green Ball Project and a power

medium- to long-term growth from simply searching for theirpurchase agreement (PPA) model business, both of which help

next business if it originates from existing technology. Initiatives

to reduce environmental impact. Nevertheless, looking at

must include collaborating with companies that conduct

Yamazen overall, our focus is still on machinery and equipment

advanced R&D, such as development of new systems forsales, and we have not yet developed a business based on alabor-saving and automation of production processes andclear concept like you mentioned, Ms. Suzuki. We realize that

reducing environmental impact. For example, establishing a newit is an urgent task for us to delve deeper into how to utilize

company specializing in environmental technology or acquiring aour knowledge and knowhow to help resolve social issues.

70 INTEGRATED REPORT 2023

may be weakening. The general trading company I used to work

Yamazoe: I think that our meetings among Company officers

for had an in-house venture system under the company’s direct

to exchange opinions help us pass down a corporate culture

control that solicited new project ideas once every two months.

that values a spirit of challenge and to develop the human

I applied several times, and looking back, I think that measure

resources responsible for Yamazen’s future. Those meetings

helped create an open-minded corporate culture by increasing

always include free discussion, so we can frankly discuss

motivation and having a ripple effect on other employees. I hopematters such as Yamazen’s medium- to long-term strategies,that Yamazen will also be proactive in creating mechanisms toportfolio reform and the state of Group governance. I will

motivate employees, in addition to reorganizing the personnel

utilize the valuable opinions and suggestions I have received

system and improving the training system.

from both of you today, as well the passion you have expressed
for Yamazen, in management going forward.

Yamazoe: The executive team at Yamazen shares anunderstanding about creating the kind of mechanisms you
suggest to promote human resource development. The role
human resources play in building a robust wholesale business3. Self-reliant human resources who share the Yamazen Group’s uniquephilosophy, who respond promptly and flexibly to change, even as
unexpected change becomes commonplace, by independently taking onchallenges and putting ideas and actions into practice on site, and who arealways of service to customers.

INTEGRATED REPORT 2023 71

Lead Feature:
Yamazen’s Values

Framework for
Creating Value

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Data

11-Year Financial Highlights(Millions of yen)

Medium-Term Management Plan

FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY202267th term

68th term

69th term

70th term

71st term

72nd term

73rd term

74th term

75th term

76th term

77th term

VISTA - 3S

Amazing Act 2015

ONEXT YAMAZEN 2018

CY 2024

CROSSING YAMAZEN 2021

Consolidated operating results
Net sales

370,338

395,249

435,803447,774

447,698

497,963526,364

472,191

434,744

501,872

527,263

Gross profit

47,03150,20856,08157,542

57,906

63,516

69,62663,301

62,67272,73878,279Operating profit

9,756

9,562

13,13013,258

13,113

15,383

17,997

12,091

11,234

17,133

16,563

Ordinary profit

10,351

9,838

13,33013,503

12,931

15,152

17,85911,895

11,20917,093

17,280

Profit attributable to owners of parent

6,249

5,515

5,851

9,192

8,518

10,205

12,184

8,088

7,572

12,023

12,527

Basic operating cash flow1

6,152

7,569

10,209

9,702

8,664

12,267

14,378

9,054

11,623

12,052

14,427

Consolidated cash flows
Cash flows from operating activities

10,027

9,677

12,575

10,465

8,248

8,001

9,306

13,39913,566

7,054

7,765

Cash flows from investing activities

143

(373)

422

1,534

(213)

2,223

(965)

(1,866)(3,911)(2,766)(3,297)

Cash flows from financing activities(5,005)(3,995)(5,260)(4,149)(5,324)(5,948)(5,808)(6,382)(5,062)967(5,177)

Free cash flow

10,171

9,304

12,997

11,9998,034

10,224

8,340

11,533

9,654

4,288

4,468

Total assets

160,178

179,088

200,301

208,404

219,598

246,923

245,595

230,320

245,937

282,654

288,888

Equity51,39355,78564,962

67,27475,43584,36892,77095,056

107,155

112,741

122,928

3,450

2,516

267

5,784

5,671

5,521

5,119

4,974

4,768

14,681

14,162(27,324)(34,593)(46,531)(47,541)(50,687)(55,154)(58,670)(63,411)(69,709)(66,472)(66,966)

Net assets per share (yen)3

547.93594.75692.59717.25804.25891.87980.691,007.30

1,135.52

1,268.98

1,383.65

Earnings per share (yen)

3

66.63

58.80

62.38

98.01

90.82

107.79128.80

85.60

80.25

133.74141.00

Dividends per share (yen)

15.00

15.00

20.00

30.00

30.00

32.50

36.00

30.00

20.00

35.00

40.00

Consolidated dividend payout ratio (%)

22.5

25.5

32.1

30.6

33.0

30.2

28.0

35.1

24.9

26.2

28.4

Dividend on equity ratio (DOE) (%)

3.0

2.6

3.1

4.3

3.9

3.8

3.8

3.0

1.9

2.9

3.0

Return on assets (ROA) (%)

6.5

5.8

7.0

6.6

6.0

6.5

7.3

5.0

4.7

6.5

6.0

Return on equity (ROE) (%)

13.2

10.3

9.7

13.9

11.9

12.8

13.8

8.6

7.5

10.9

10.6

Equity ratio (%)

32.1

31.2

32.4

32.3

34.4

34.2

37.8

41.3

43.6

39.9

42.6

Net debt-to-equity ratio (DER) (times)

(0.5)

(0.6)

(0.7)

(0.7)

(0.7)

(0.7)

(0.6)

(0.7)

(0.7)

(0.6)

(0.5)

Working capital

9,590

7,805

5,932

4,732

4,825

9,115

14,507

9,791

7,819

13,377

20,411

Quick ratio (%)

109.4

112.8

114.2

118.8

121.0

115.7

124.5

132.2

135.9

128.9

130.3

Days sales outstanding (DSO) (days)

85.6

81.9

80.1

79.2

81.4

77.1

76.0

79.8

79.5

70.4

68.2

Days inventory outstanding (DIO) (days)

19.1

19.0

19.0

20.2

20.9

23.2

25.4

26.0

25.8

26.5

33.3

Days payable outstanding (DPO) (days)

104.5

103.7

104.3

106.1

109.9

105.7

103.5

107.3

110.0

99.8

99.8

0.2

(2.7)

(5.2)

(6.7)

(7.6)

(5.4)

(2.1)

(1.5)

(4.7)

(2.9)

1.8

Consolidated financial position

Interest-bearing liabilities
Net interest-bearing liabilities

2

Per-share information

Financial indicators

Cash conversion cycle (CCC) (days)

1. This indicator is calculated by deducting the change in working capital, etc., from cash flows from operating activities.
2. This amount is calculated by deducting cash and cash equivalents from interest-bearing liabilities, including lease liabilities.
3. This amount is calculated by deducting the number of treasury shares from the number of issued shares.

72 INTEGRATED REPORT 2023

INTEGRATED REPORT 2023 73

Framework for
Creating Value

Lead Feature:
Yamazen’s Values

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Data

Non-Financial Highlights
Item

Graph

FY2022Unit

FY2020Power consumption

kWh11,349,175

CO2 emissions (Scope 1)

t-CO2

2,819

2,411

2,253

Graph

1

CO2 emissions (Scope 2) location-based

t-CO2

5,182

5,181

5,302

Graph

1

CO2 emissions (Scope 2) market-based

t-CO2

5,273

5,493

5,194

Graph

1

1,112,485

952,166

863,975

14,10015,907

9,616

171

197

184

Vehicle fuel consumption
CO2 emissions arising from logistics operations
Amount of waste produced

Number of Green Ball Project participants/
Tons of emissions reduced

Number of employees (consolidated)

kℓ
t-CO2
t
Number of
Projects participants
t-CO2

Tons ofemissions
reducedPeopleTotal

Number of employees (non-consolidated)

Average years of service

PeopleYears

FY2021689

11,779,372 12,004,746

682
40,701
3,157

3,215

1,736

1,712

1,737

3,157

3,215

3,000

40,94734,319

400

20
2,000

2

5,273
5,182

5,000

2,819

Graph

5,493
5,181
2,411

5,194
5,302

0
FY2020

10

1,000

2,253

0

3

20,000200

FY2021CO2 emissions(Scope 1)CO2 emissions (Scope 2)
location-based

CO2 emissions(Scope 2) market-based

CO2 emissions arisingfrom logistics operations

FY20210

0

0
FY2020

FY2022

FY2020

FY2022

FY2021

FY2022

Number of participants

Number of consolidated employees

Tons of emissions reduced

Percentage of non-Japanese employees

Graph

グラフ
Graph

13.8

14.0

Graph

Male

15.6

15.8

16.0

Female

9.0

9.6

9.9

Percentage of Women among Core human
Resources (Next-generation Management)

Number of New Graduates Hired/
Number of Career-path Hires

Number of Employees Taking
Parental Leave(%)(People)(People)
60

%

33.3

33.9

34.4

Total

91

59

58

Male

51

39

40

Female

40

20

18

Total

15

19

51

Male

12

18

32

Female

3

1

19

59.7

61.0

62.0

Total

46

52

55

Male

3

6

12

Female

43

46

43

%

100.0

92.0

96.7

People

113

121

125

Total

11

10

10

Outside4

4

4Female222People

2,631

2,401

3,545

Remuneration for directors (excluding directors who
Millions
are Audit and Supervisory Committee members and outsideof yendirectors)

313

320

389

%

Remuneration for directors who are Audit andSupervisory Committee members (excluding

Millionsof yen24

27

25

Remuneration for outside directors

Millionsof yen23

26

28

outside directors)

3,149

13.5

Percentage of non-Japanese employees

Number of employees receiving compliancetraining

40,701
9,616

33.9

30

40,00010,000

33.3
4,000

Total

2.27

People655

600

14,100

1

682

40
34.4

566

2.33

Number of directors

689
15,907

(%)

541

2.21

Percentage of employees returning fromparental leave
Cumulative number of students assisted by
the Takeo Yamamoto Scholarship Fund

5,000

554

%

People(People)60,000FemalePercentage of persons with disabilities

Number of employees taking parental leave(t-CO 2)

800

1,171

4.13

Percentage of paid leave taken(Projects)

20,000

1,171

3.57

People(t-CO 2)

1,182

3.23

Number of career-path hires

3

Male

%

PeopleGraph

Number of Consolidated Employees/
Percentage of Non-Japanese Employees

40,947

3,149

2

Number of Green Ball Project Participants/
Tons of Emissions Reduced

655

Percentage of women among core humanresources (next-generation management)

Number of new graduates hired

Graph

Graph

CO2 Emissions

15,000Graph34,319

1

Graph

4

4

6

5

100

6

91

Graph

3

3.57

40

60

3.23

Graph

46

4.13

4

59

40

5

0

0
FY2020

FY2021

FY2022

51

12

39

18

FY2021

Number of new graduates hired
Number of career-path hires

Graph

6

Highlight

19

20

32

0

43

19
1

15
3
FY2020

46

18

20

20

43

51

2

Graph

58

40

5

55

52

80

40

FY2022
Male
Male

FemaleFemale3

6

FY2020

FY2021

Male

12
FY2022

FemaleRamping up Initiatives for Occupational Safety and Health

The Construction Supervision Department in the General Sales H.Q. provides advice on decisions about
contracts, assists in creating safety documentation such as work ledgers, and supports engineers throughassistance from qualified personnel. In FY2022, the department published a guidebook for salespeople on
proper compliance with the Construction Business Act and the Industrial Safety and Health Act, and held
three in-house seminars using this guidebook. A total of 1,503 employees attended, as we work to improve
employees’ knowledge of occupational safety and health. The guidebook has also been useful at safety
conferences held by the Yamazen Health and Safety Council, which is composed of our partner companies.

Highlight

Certification as a Health & Productivity Management
Outstanding Organization for 2023

We announced the Yamazen Health Management Declaration and were selected for the 2023 Health & Productivity
Management Outstanding Organizations Recognitions Program sponsored by Japan’s Ministry of Economy,
Trade and Industry and the Nippon Kenko Kaigi. Promoting initiatives that contribute to improving physical andmental health within the Company will raise productivity by enhancing the performance of each employee,leading to an increase in corporate value.
Yamazen Health Management Promotion System
https://www.yamazen.co.jp/english/sustainability/society/work-realization.html#section_04

74 INTEGRATED REPORT 2023

INTEGRATED REPORT 2023 75

Lead Feature:
Yamazen’s Values

Framework for
Creating Value

Long-Term Strategy for
Sustainable Growth

Medium-TermBusiness Strategies

The Foundation
Supporting Value Creation

Data

Investor Information/Company Overview/Editor’s Afterword
Share Information (As of March 31, 2023)

Company Overview

Total number of shares authorized

200,000,000 shares

Total number of issued shares

95,305,435 shares
5,846

Number of shareholders

Number ofPercentage ofshares held
shares held
(thousand shares)(%)

Shareholder nameYamazen Business Partners Shareholders’
Association
The Master Trust Bank of Japan, Ltd. (Trust
Account)
Tokyo Yamazen Business Partners Shareholders’
Association

YAMAZEN CORPORATION

EstablishedMay 30, 1947
¥7,909 million(as of March 31, 2023)

Osaka Corporate 2-3-16 Itachibori, Nishi-ku,
Headquarters Osaka 550-8660
Headquarters

8,658

9.72%

7,989

8.97%

Fiscal year

From April 1 to March 31 of the following year

6,387

7.17%

Stock exchangeTokyo Stock Exchange Prime Market

Yamazen Employees’ Investment Association

3,339

3.75%

Sales offices■ Financial institutions ............... 20,289 thousand shares
21.28%

Nagoya Yamazen Business Partners
Shareholders’ Association

2,407

2.70%

Osaka, Tokyo, Kita Kanto/Tohoku (Saitama), Nagoya,
Kyushu (Fukuoka), Hiroshima, and other locations
Domestic: 53 locations
Overseas: 16 local subsidiaries (65 locations)■ Other domestic corporations... 17,149 thousand shares
17.99%

Mizuho Bank, Ltd.

2,290

2.57%

■ Foreign corporations, etc..........17,012 thousand shares
17.85%

Resona Bank, Limited

2,146

2.41%

■ Securities companies .................. 655 thousand shares
0.68%

Custody Bank of Japan, Ltd. (Trust Account)

1,760

1.97%

1,612

1.81%

1,422

1.59%

■ Individual/Other...................... 33,916 thousand shares
35.61%■ Treasury shares........................ 6,281 thousand shares
6.59%

Hiroshima Yamazen Business Partners
Shareholders’ Association
Kyushu Yamazen Business Partners
Shareholders’ Association

Fiscal year

From April 1 to March 31 of the following year

Record date for dividendsof surplus

March 31
(September 30 for interim dividends)

Annual General Meetingof Shareholders

Late June

Number of shares per unit 100

Taiyo Seimei Shinagawa Building,Tokyo Corporate
2-16-2 Konan, Minato-ku, Tokyo
Headquarters
108-8217

Main banks

Mizuho Bank, Ltd.; Resona Bank, Limited; Sumitomo
Mitsui Banking Corporation; MUFG Bank, Ltd.; Mizuho
Trust & Banking Co., Ltd.

Number of
employees

3,215 (consolidated)(As of March 31, 2023)

Global Network

Domestic Network(Excluding Domestic Group Companies)

Notes:
1. The Company owns 6,281,972 treasury shares, but these have been excluded from thelist of major shareholders. The 6,281,972 treasury shares do not include 180,000 shares
held by the Board Benefit Trust (BBT).
2.The percentage of shares held is calculated after excluding 6,281,972 treasury shares.
3. The number of shares shown omits units of less than 1,000 shares.

Other Shareholder Information

Notification method

Notification is provided in electronic form
through publication on the corporate website.
(https://www.yamazen.co.jp/) (Japanese only)
However, in cases when it is not possible touse electronic notification, notification shallbe made in the Nihon Keizai Shimbun.

Administrator of theregister of shareholders

Mizuho Trust & Banking Co., Ltd.
1-3-3 Marunouchi, Chiyoda-ku, Tokyo

North
America
1 country
17 offices

Europe2 countries
2 officesAsia
10 countries/
regions
44 offices

Japan
53 branch
offices

Hokkaido/
Tohoku4 branchofficesChubu
13 branch
offices

Latin
America
1 country
2 offices

Chugoku/
Shikoku
7 branchofficesKinki
8 branchofficesKanto
14 branch
offices

Kyushu7 branchofficesTokyo Stock Exchange Prime Market

IR Activities

Name

Share capital

Distribution of Shares by Shareholder Type

Stock exchange

Major Shareholders

Domestic Group Companies (Including Non-consolidated Subsidiaries) or details of our IR activities, please see our “Report on the Progress of Dialogue with Shareholders and Investors.”
F
https://www.yamazen.co.jp/ir/dialogue.html (Japanese only)

Overview of Dialogue with Institutional Investors in FY2022
Main persons handling dialogue withshareholders and institutional investors

CEO: Two financial results briefings (second-quarter and year-end financial results), CFO:
Informational briefing (third quarter); Representative of IR & PR Department: One-on-one
meetings (33 during the year)

Main topics of dialogue and matters ofinterest to shareholders

Yamazen’s business model, market environment, growth investment fields, awareness of theissue of PBR falling below 1.0, capital policy (shareholder return policy), etc.

• YAMAZEN LOGISTICS CO., LTD.

• TOHO INDUSTRIAL CO., LTD.

• PROCUEbyNET CORPORATION• YAMAZEN CREATE CO., LTD.

• ISHIHARA-GIKEN CO., LTD.

• NIHON BUTSURYU SHINBUN CO., LTD.

• OGAKI MACHINE&TOOLS CO., LTD.

• TRAVEL TOPIA INC.
Note: As of October 31, 2023

At a Board of Directors meeting held in May 2023, a discussion was held based on shareholder and investor feedback and concerns obtained
from IR activities during FY2022.

Editor’s Afterword

Stock PriceThis is Yamazen’s second integrated report. In preparing it, 11 staff members from the Corporate Marketing Department,

Stock price (yen)2,000Trading volume (shares)
8,000,000

1,500

6,000,000

1,000

4,000,000

500

2,000,000

Finance and Accounting Department and Corporate Planning Department gathered to discuss Yamazen’s equity story—its
strengths, the sources of its profits, and the drivers of its growth going forward—with a focus on whether the information
was written from an investor’s perspective, which was a point raised in a review of the first report. At times, issues were
so deep-rooted that they seemed unsolvable, and members took a break from discussion to investigate them in greater
depth. However, it was also a meaningful experience for us as “independent and virtuous employees” of Yamazen, enabling
us to reconsider its value to society as a company. A company is a living thing. Therefore, it evolves by quickly sensing andadapting to changes in the times and economic environment, sometimes resulting in a new “species” in the form of abusiness. We believe that Yamazen is still in this process of evolution, and you can look forward to great things ahead.

0
Apr. 2013

0Apr. 201476 INTEGRATED REPORT 2023

Apr. 2015

Apr. 2016

Apr. 2017

Apr. 2018

Apr. 2019

Apr. 2020

Apr. 2021

Apr. 2022

Hayato Hirata, Manager of IR & PR Department

INTEGRATED REPORT 2023 77