The corporate motto of HORIBA is Joy and Fun.
We believe taking interest and pride in the workthat occupies so much of our lives, and in the workplaces
where many of us spend a large part of each day,will increase our satisfaction in life andallow us to enjoy our lives even more.

01

HORIBA Repor t 2021-2022

02

CEO Message

Achieve steady growth by taking
on challenges with “HONMAMON*”technologies and human assets*HONMAMON: HONMAMON is a Japanese word, used especially often in Kyoto, where HORIBA is located. The word describes authenticity and excellence.

2021 was a year in which HORIBA achieved great growth due to the results of our continual investment.
As society changes dramatically, HORIBA’s products and solutions are being recognized by customers
who understand “HONMAMON.”
Based on HORIBA’s exceptional technologies and human assets, we will continue to create new value
and open up unexplored territory.

Realization of growth through balanced management
In 2021, while the world was still affected by the spread of COVID-19, economic activity
gradually recovered in each region thanks in part to the progress of vaccination worldwide.

Atsushi Horiba
Chairman & Group CEO

When we look at economic trends, we see that the automotive industry is undergoing majorchanges in its industrial structure and the foundation of its core technologies. Meanwhile, thesemiconductor and IT industries are booming like never before. In response to these trends insociety, we have striven to make major changes to HORIBA’s automotive business, which has
built an overwhelming presence in the industry. The cost of these efforts has been fully coveredby our brisk business in the semiconductor segment. Sales, operating income, and ordinary
income reached record highs for the fiscal year ended December 2021, and we were able tosecure 14.3% of our operating profit margin. This greatly exceeded the results of not only fiscal
2020 but also 2019.
The world is changing at an unprecedented speed. Even before the spread of COVID-19, I
have argued that it is vital for us to address how to deal with and survive these changes, since
global currents can be expected to change drastically in the future.
HORIBA has achieved growth through balanced management that flexibly leverages
management resources to continually invest in each business division. Also, even in the midst ofchange, HORIBA has taken many measures centered around balanced management strategies.
As you can see from our 2021 results, the entire company has achieved significant growth bycontinually investing in five businesses with different markets, and nurturing each business toadapt to its target market.

03

HORIBA Repor t 2021-2022

04

Going ahead into unexplored territory bychanging our business model.
Currently, the value of our business is expanding from products to solutions, andour business model is changing accordingly. Needless to say, it is important toutilize HORIBA’s strengths in analysis and measurement technology to createhigh-precision products. Meanwhile, another essential value is providing thetechnology to properly handle and analyze samples, which are the target ofanalysis and measurement. In 2021, we established a new head office building
CEO Messagefor HORIBA Techno Service Co., Ltd., which is responsible for HORIBA’s service
business. The purpose of this building is to expand our contract test business,
which is expected to increase in demand in the future. As soon as the new
office building began operations, we were allowed to participate in the project
which analyzed samples of the asteroid “Ryugu” collected by the asteroid
explorer “Hayabusa 2.” By contributing to Japanese national research projects
in this way, we have gained the momentum to expand this business.
In 2022, the construction of the new facility of HORIBA FuelCon GmbH inGermany will at last be complete and it begins operation. We immediately
decided to construct this new facility, where we manufacture fuel cell test
equipment and water electrolysis cell/stack performance evaluation equipment,
in 2019, the year following acquisition. I am convinced that this was the best
timing, since demand related to hydrogen energy has recently increased sharply.
In this way, HORIBA is steadily preparing for future growth. The next step is
not only to run new trains over existing tracks, but also to open up unexplored
areas where the rails have not yet been laid. What we create from thisperspective might be more dynamic than a new railroad or a new train. We
believe that investment from a long-term perspective is vital for competingbravely on a new stage upon which we have never stood, and that thisinvestment should be continued patiently.

05

HORIBA Repor t 2021-2022

06

Invest generously in human assets andpursue “HONMAMON”

hydrogen as a clean energy source to replace fossil fuels. Over the past ten years,

When it comes to investment by companies, hardware aspects such as equipment andrestructuring that took place in the beginning of 2022 was made with the ambitious

buildings, R&D investment, and corporate acquisitions tend to be the focus of attention.

appointment of personnel and R&D investment in mind, in order to build a new

However, I think that the most important investment target is human assets. The recruitment

business model.

when no one was focused on hydrogen, HORIBA had human assets who pursued
hydrogen technology and developed related analyzers. The organizationaland development of excellent human assets center around the R&D investment which
determines the future direction of a company. Also, HORIBA has incorporated newtechnologies by continuing to acquire companies and businesses. I think that the most

CEO Message

important thing about acquisition is how new personnel will demonstrate their abilities as

Take up the challenge and overcome the roughseas of changing tides

members of HORIBA. Fortunately, the companies we have acquired came into our tent

HORIBA has identified three fields to focus on in its Mid- to Long Term Management

because they sympathized with HORIBA’s attitude toward R&D and our corporate culture.

Plan MLMAP 2023. These three fields are: Energy & Environment, which is expected

Since HORIBA invests in them continually, many engineers understand us and continue toto become a huge market in the future, Bio & Healthcare, which is the most important

stand at the forefront with satisfaction.

for humankind, and Materials & Semiconductor where the market environment is very

HORIBA describes the diversity of human assets as stained glass, and is proud of thefavorable, and where we are accelerating business development.

results achieved by various activities such as our “Stained Glass Project,” which promotes

In the unexplored territory of business, a company cannot survive with strategies

diversity. We believe that promoting the diversity of human assets is not just about genderthat are solely focused on the interests of the country or region to which it belongs.

and the recruitment of so-called global human assets, but also about utilizing the uniqueness

HORIBA is expanding globally by taking advantage of overseas acquisitions, andand strengths of individuals. Each person understands their strengths, plays an active role intherefore we have business and technical core locations around the world. Utilizing

the fields where those strengths can be utilized, and becomes a leading expert who canthe technologies and ideas of each location in various parts of the earth, will multiplycompete in the world. HORIBA aims to become a group of “HONMAMON.”value and it will create even further value. We will continue to create such a rich cycle

HORIBA appreciates personnel who take on challenges, even if they fail, rather thanthose who avoid challenges because they are afraid of failure. We evaluate the ideas,of value creation and open up new fields.
Our corporate motto is “Joy and Fun.” If you devote yourself to your work like aprocesses, and enthusiasm that they bring to challenges, and do not judge them only by theirhobby, which you enjoy during your leisure time, you can come up with original ideas

success or failure. Most people will avoid challenges if they are evaluated only on theand discover new worlds. In addition, my “Joy and Fun” is to take on challenges. The

consequences of failure. I encourage HORIBARIANs* to confront issues to which they do not

more difficulties you face, the greater the sense of accomplishment you feel whenalways have an answer, and to find a valuable answer by trial and error, rather than finding

you succeed. We will always take on challenges and steadily overcome the roughthe correct answer to a question by looking to textbooks. Fostering the wisdom and creativity

waves of changing tides. I ask for your continued understanding and support in 2022.

of each individual is the most important factor for development of human assets in acompany. Because customers who understand “HONMAMON” can recognize the value of
HORIBA, we can obtain a high market share in industries that require high-quality products
and services, such as automotive and semiconductors. Human power is important formeeting the expectations of our customers. And HORIBARIANs are human assets, by which
we mean they are not “materials” but “assets.” Needless to say, it takes at least five to ten
years to develop excellent human assets, and we have been generously investing in humanMay 2022

Atsushi Horiba
Chairman & Group CEO

asset development since our founding. For example, the world is currently focusing on*HORIBARIANs: All HORIBA workers are regarded as family and called HORBARIAN as a nickname.

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HORIBA Repor t 2021-2022

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2021-2022

Contents

Editorial Policy

01

Corporate Motto “Joy and Fun”

We create the HORIBA Report to gain the interest of institutional investors who take a long-term perspective, and to03

CEO Message

10

Editorial Policy

We want to provide our stakeholders with a tool to help understand HORIBA.

11

President’s Discussion

That tool is the HORIBA Report.

15

Reorganization to Accelerate
Cross Segment Activities
17
19
20
21
23
24
25

Reportstemming from our growth, and that they take the same long-term perspective as institutional investors.

Regarding our use of the term "human assets"

Change in Revenue Recognition Standard

HORIBA considers employees to be valuable assets andrefers to them as "human assets" in principle.

HORIBA, Ltd. and its domestic consolidated subsidiaries
had formerly recognized revenue mainly on ashipping-date basis. However, starting from fiscal 2016,
HORIBA, Ltd. and its domestic consolidated subsidiaries
changed their revenue recognition method to recognize
revenue on a completion-date-of-installation ordelivery-date basis under the terms and conditions of therelevant contracts. The amounts in or before fiscal 2015
are not retrospectively revised.

Regarding our use of the term “owners”(shareholders)
HORIBA fully recognizes the importance of its
shareholders and frequently refers to them as “owners.”

Regarding our use of HORIBA and HORIBA, Ltd.

27

COO Message

In this HORIBA Report, the HORIBA Group of companies is
described as HORIBA and the parent company as
HORIBA, Ltd.

29

Contributing to Society through
HORIBA-style Management

Market Share in the HORIBA Report

29
31
33
36

HORIBA’s Value Creation Cycle
Helping to Build a Sustainable Society
through our Business
Various Initiatives Focused on Human Assets
HORIBA Approach to Sustainability

37

CFO Message

41

Corporate Governance46

List of Management Members

51

Business Overview — Investors’ Guide
51
53
54
55
56
57

09

Service Lifecycle Management
HORIBA Supports Automotive Development
Mobility Solution Business
Alternative Energy Conversion
Bio Life Science
Optical Smart Sensing
R&D Planning & Technology Innovation

allow them to gain a better understanding of HORIBA. We also believe that HORIBA's stakeholders can obtain benefits

HORIBA’s Five Measurement Businesses
Automotive Segment
Process & Environmental Segment
Medical-Diagnostic Segment
Semiconductors Segment
Scientific Segment

58

Corporate Data

59

Financial Data

Market shares stated in this report are HORIBA’s
estimates as of fiscal 2021.

Disclaimer regarding future plans and forecasts
This HORIBA Report contains certain statements
describing future plans, strategies, and performance
forecasts of HORIBA, Ltd. and its affiliated companies.
These statements reflect forecasts estimated on
management’s assumptions and beliefs based on theinformation available as of April 30, 2022. Actual
performance may differ due to unforeseen circumstancesin the operating environment and other factors.

Regarding the importance and comprehensiveness of information in the HORIBA Report 2021-2022
We have selected financial and non-financial
information that we believe to be of highimportance for inclusion in the HORIBA Report2021-2022.
For more detailed information, please see our
website.
The PDF version of the HORIBA Report2021-2022 is also available through our website.

HORIBA Report 2021-2022

IR
information

Web Link

Widevariety

WebsiteRange ofTargetReaders

HORIBA Report2021-2022

Limited
Summary

CSR
information

Contents

Details and data

Web Link

HORIBA Repor t 2021-202210

Reorganization to Accelerate
Cross Segment Activities
President’s Discussion

Masayuki Adachi(Doctor of Engineering)President, HORIBA, Ltd.

Tetsuro Ii
President and CEO,Commons Asset Management, Inc.

Hitoshi Sueyama

Special Feature

Senior Analyst,
Commons Asset Management, Inc.

To deliver what is essential
to the society in the HORIBA-way
HORIBA has set forth the concept of “cross-segment”

when I joined HORIBA. I was confident that HORIBA as one company canThis is a product of the work of HORIBA FuelCon, which develops anddevelop more value to the world. We already established a solid segment

manufactures devices to evaluate fuel cells and batteries. At the time wesystem by that time, and as a side effect, there were unintentional

acquired FuelCon GmbH in 2018, most of their customers were automotive

barriers in our organization. Therefore, even though I started to promote a

related manufacturing companies. Accordingly, we acquired it as part of“cross-segment” approach right after I assumed the president position, it

our automotive business. However now our customer is shifting to look at

did not take off right away. However, as society has changed, we haveentire energy flow even in the specific industry such as automotive. In the

begun to realize the necessity of going beyond these barriers to respondface of these business opportunities, we do not have time to argue

flexibly. And many HORIBARIANs now have aspirations about theinternally about “which segment should deal with this, since it is not
related to automotive.” It is important to respond immediately to the market

and is using it to expand its business into the newIi: In January 2009, Commons Asset Management, Inc. established its

possibilities of a cross-segment approach.

business fields. Dr. Masayuki Adachi, President of“Commons 30 funds” which feature a “30-Year Perspective,” “Focusing on

Ii: We heard that you formed the Business Incubation Division based on

HORIBA, Ltd., talks to Mr. Tetsuro Ii, (President and CEO,

30 Companies,” and “Dialog-based communication.” And we havethis cross-segment concept. What are your objectives and implications?

Commons Asset Management, Inc.), and Mr. Hitoshi

possessed shares of HORIBA for over 10 years, starting in June of that year.

Sueyama, (Senior Analyst, Commons Asset Management,Inc.) about what cross-segment means, and thecorporate culture of HORIBA that supports across-segment approach.

Before deciding to invest, we interviewed Mr. Horiba, the Chairman and CEOof HORIBA, Ltd. (Chairman and President at that time), and encountered hisstrong passion to business development. Since then, I have had theimpression that Mr. Horiba is the incarnation of entrepreneurial spirit.
Dr. Adachi, since you were appointed President of HORIBA, Ltd. in 2018, we
have kept an eye on how you intend to lead the organization. I believe you
have made several achievements in-line with your “cross-segment” policy.
How specifically did you promote this “cross-segment” approach in theorganization?

Adachi: From the perspective of human asset management, it is to makethem focused to cross-segment activities, isolating from their legacy
tasks. Up until now, some members have been involved in cross-segment
activities while still belonging to a certain segment. I want them to be able
to 100% focus on new business potential by working exclusively on
cross-segment activities. If we can successfully break the walls and if theword cross-segment disappears from the company, it may be said thatmy objective has finally been achieved. In such case, we would share thetechnologies, human assets, and sales networks of each of the fivesegments, and utilize them without any organizational frictions. That is the

expectations with a cross-segment approach that eventually incorporates
all of HORIBA.
Sueyama: The other day, I visited your Biwako Factory HORIBA BIWAKO
E-HARBOR for the first time in 6 years. I saw facilities that had not been
available before, such as the laboratory CELL Ø that supports evaluation
tests of batteries and fuel cells. I have heard in the dialogue as aninvestor that for the past few years, HORIBA has been strengthening its
responses to the shift toward electric vehicles in the automotive industy.
And I could recognize that HORIBA has been carefully preparing for this.
This year, you have announced your concept for reorganization of
HORIBA’s automotive business. What does this reorganization entail, fromyour point of view?

Adachi: When I joined HORIBA in 1985, we did not even have the concept

ideal situation. Cross-segment movements are occurring voluntarily at

Adachi: We are trying to operate globally with three new concepts:of business segmentation. It was an era when various elements of businessoverseas group companies, and I think this is a good trend.

Service Lifecycle Management (SLM), Mobility Solution Business (MSB),

were fused within the organization. From around the middle of the 1990s,
we gradually shifted to a market-oriented organization. It first started inJapan and then to the entire global structure. We can say, it was, and still is,

11

Ii: It seems you can already see certain responses and outcomes from thecross-segment activities.

and Alternative Energy Conversion (AEC).
With SLM, we have started to shift to a business that provides flexible
upgrades as well as the higher value-added maintenance of the engine

a right move which brought us the rapid growth up to now.

Adachi: Indeed. For example, in the hydrogen energy field, which is new

emission measurement equipment and systems which are already owned

Nevertheless, I myself thought it would generate more possibilities, if wefor HORIBA, we have already supplied products to the French market, andby our customers. In the automotive industry, electric vehicles, gasoline

blend our full value of the group without the walls of segments, like we didinquiries are increasing globally, mainly from energy-related companies.

vehicles, and hybrid vehicles will continue to exist together for the time

HORIBA Repor t 2021-2022

12

Reorganization to Accelerate
Cross Segment Activities
Tripartite talkamong Presidents
being. SLM technology supports the development of vehicles equipped

motivated and work vigorously at your company. What are you carefulwith efficient internal combustion engines, and we believe that this is an

about as the president?

area where our customers continue to count on us.
With MSB, we provide engineering consulting services related toautomotive development, and centered at HORIBA MIRA Limited.
Currently, inquiries and orders in the fields of autonomous driving andcyber security for vehicle are increasing. In addition, we can provide
system solutions that contribute to the digitization and efficiency of the

President and CEO,Commons Asset Management, Inc.

Tetsuro Ii

Mr. Ii was in charge of marketing for 10 years in the sales planning department of Yamaichi
Securities. After that, he worked in the bond business for institutional investors. He has been inbusiness for corporations and individuals for about 10 years at Merrill Lynch Japan Securities(currently Mitsubishi UFJ Morgan Stanley Securities), and has been in his current position since
the founding of Commons Asset Management. Since July 2012, he has also served as CIO(Chief Investment Officer).

vehicle development process.

believe that the freedom to think and to act by yourself is inherent in theconcept of “Joy and Fun.” Now, the younger generation has an especiallystrong sense of responsibility to contribute to society for the world, forpeople, and for the earth. Our three major markets, Energy &Environment, Bio & Healthcare, and Materials & Semiconductor, are fields

HORIBA promotes AEC business with hydrogen-based fuel cells andbattery measurement technology. We aim to expand the business fromthe automotive industry to the entire energy industry by responding to
demands for new energy-related measurement for energy generation byco-firing hydrogen and/or ammonia, and from distributed power
generation. This business is led by a leader who hails from the Process &Environmental Segment. We can say it is truly a cross-segment activity.

Special Feature

Adachi: This is directly connected to the corporate motto “Joy and Fun.” I

Communication, including appropriate reporting, contact, andconsultation, are more important in management. And we require themanagement of our group companies to have such mind-set. HORIBA has
grown through global M&A, and I think what has been important, is how
quickly and accurately we can convey this idea to the newly acquiredcompanies. We strive to develop a relationship in which we canunderstand and respect each other. Not surprisingly, post-acquisition

that will never disappear as long as humankind exists. And I am confident
that our work will contribute to the world. In other words, I think that

there are ups and downs in each business depending on the external

working at HORIBA is well linked to their sense of contribution to society

environment or time period. Nevertheless, we believe that as long as weand helps to increase their motivation.

steadily improve ourselves amidst competition, financial results will follow.

And I think that this desire to do something for the world, for people, andI think that management itself becomes fragile if we make decisions

for the earth also translates into a conviction to do work that is absolutely

about the continuation of business, only from the perspective of whether

useful for society. HORIBA has built a culture of not giving up easily, andor not we can make immediate money.

thinking from a long-term perspective, rather than simply changing

Sueyama: I got the impression that HORIBA could establish a system tointegration takes some time, however this kind of management method,

further support a cross-segment approach through the reorganization ofwhich takes time and effort to ensure thorough permeation of our way of

the automotive business. As you continue to promote this cross-segment

thinking, seems to create a special impression on those outside of Japan.

Ii: Commons Asset Management invests from a long-term perspective.

explanations regarding the business situation and management strategy.

approach globally for the entire group, I think that the management of

The French government once told us that it is impressive that HORIBA

Uncertainty is increasing in society, and we also understand the corporate

The medical business seems to have a slightly different aspect to yourgroup companies becomes more important.

could make ABX (currently Horiba ABX SAS) and Joban Yvon (currently

strategy of remaining flexible in your choices and focus, according to theother four segments, and I sometimes wondered what would happen with

Many companies have struggled with the management of global

Horiba France SAS) with a history of 200 years in operation, keep growing

immediate situation. On the other hand, I think that it is also important to

it in the future. Now, as an investor, I can see that you have properlybusiness, especially during post-acquisition integration. While I havecontinuously for such a long time after the acquisition.

form and manage a portfolio spread across various business domains,

maintained a certain scope of business.

heard from Chairman Horiba before that the integration following
acquisition would take several years, I think HORIBA’s management isworking well. What specific points are you paying attention to?

Ii: The first time I met you, Dr. Adachi, you were still the General Managerof the R&D division, and we talked about the importance of maintaining
the motivation of the engineers in an R&D focused company like HORIBA.

direction based on the immediate situation.

Sueyama: We have been in dialogue with your company for over 10
years. During this time, we have received a wide variety of interesting

and to maintain a balance from a long-term perspective. Some investors
are concerned about the so-called conglomerate discount, which lowers
corporate value due to diversification. But when it comes to portfolio
formation within a solid corporate culture, I believe there is rather aAdachi: I suppose you have seen our medical business accelerate inearnest since the acquisition of ABX in France in 1996. On the other
hand, in the company’s early days, our founder Masao Horiba, Doctor of

Adachi: HORIBA values the balance of control between headquarters andCompanies sometimes happen to stray by losing sight of what research

local management.

and development is for, and the employees in charge eventually conduct

We of course set a monetary threshold to decide whether something

fraudulent acts due to excessive pressure on achieving their numbers.

Adachi: HORIBA’s business has always been directly linked to what could

system that has become a blockbuster product worldwide. Our medical

requires the approval of headquarters or not. However, sometimes it is not

Such a situation significantly lowers the motivation of employees. In

be called the essential part of social activities. In such a form of business,business can perhaps be said to be one of our founding businesses.

sufficient to have a criterion solely on the amount of money involved.

contrast to this, it seems that there are many employees who are highly

conglomerate premium.

Medicine, developed an analyzer that measures human breath for medical
use. This technology evolved into an engine emission measurement

If you have a competitive and solid core technology, you can achievesignificant social contributions and demonstrate your presence. I think

Concept of Automotive business reorganization.

Service Lifecycle
Management

Mature Market

Growing Market

this will lead to good performance as a result.

Dawn of the market

Ii: This has been a very “HORIBA-like” episode, and I think that is due to

Response to vehicle electrification(drive systems, etc.)

your corporate culture.
Our discussion today deepened my understanding of HORIBA’s corporate

Engine Emission measurement

strategy and culture. On behalf of the beneficiaries who fund us, we hope
to continue to talk with you, build better relationships, and help increase

VRES*1 Cyber Security

Mobility Solution
Business

Autonomous driving/ADAS*2

Hitoshi Sueyama

Data science
Model-based development

Alternative
Energy Conversion

Fuel cell batteries
New energy (hydrogen/alternative energy, etc.)

Senior Analyst,
Commons Asset Management, Inc.

After joining Yamaichi Securities, Mr. Sueyama engaged in corporate data analysis (performance
figures, stock prices) at the Economic Research Institute, and investment management ofpension stocks and bonds as an investment advisor. After the closure of Yamaichi Securities, hejoined Fuji Trust & Banking (currently Mizuho Trust & Banking). In addition to working as a fundmanager for foreign stock index management, he has experience in analyst work and planningand management of trust products for individuals. He joined Commons Asset Management in
February 2016.

corporate value as much as possible.
Adachi: Thank you very much. I would like to continue to evolve and enhance
our corporate value without losing any of what makes HORIBA unique.
I sincerely thank you for your continued support.

(Done in March 2022)* 1 VRES: Abbreviation for Vehicle Resilience. Solutions that eliminate threats associated with advanced vehicles* 2 ADAS: Abbreviation for Advanced Driver-Assistance Systems.

13

HORIBA Repor t 2021-2022

14

Reorganization to Accelerate
Cross Segment Activities

Message

Establishment of the Business Incubation Division Within HORIBA
We have established the Business Incubation Division as an organization for proposing solutions that combine HORIBA’s coretechnologies of analysis and measurement to meet the needs of new businesses. It will bring together functions for creating
new businesses in the three fields*1 identified as key markets in our Mid-Long Term Management Plan (MLMAP2023). Thisdivision will supervise the Alternative Energy Conversion Center, Mobility Solution Business Center, Bio/Life Science Center, R&D
Planning Center, and Technology Innovation Center. The Automotive Service Lifecycle Management Center (which is under theSales Division), and the OSS*2 Business Development Division of group company HORIBA STEC Co., Ltd., will also participate inthis area. We aim to create innovative value from the fusion of HORIBA technologies.

Hiroshi Nakamura,
Ph.D.
(Doctor of Engineering)
Corporate Officer (CTO)
General Manager ofBusiness Incubation Division

One of HORIBA’s strengths is that we have many technologies and multiple
business segments. To leverage this strength and spur innovation, we need todevelop technologies and cultivate businesses without becoming trapped within thebounds of existing businesses. The Business Incubation Division brings together thetechnologies and human assets in a cross-organizational manner to create newideas from fusions of different technologies and cultures. It will drive HORIBA
growth by approaching the challenge of business expansion through creation of
new technologies that serve the needs of the market from a new perspective.

*1 Three fields: Energy & Environment, Bio & Healthcare, and Materials & Semiconductors *2 OSS: Optical Smart Sensing

Bio/Life Science Center

Special Feature

Mobility Solution
Business Center

Alternative Energy
Conversion Center

This center accelerates the provision of engineering andconsulting services for automotive development, as well as
system solutions that help improve the efficiency of thevehicle development process. It aims to contribute to mobility
in society and expand our business globally by offering a widearray of solutions ranging from products to engineering.

P. 20

This center will respond to the demand for measurement fromnew energy technologies like hydrogen, based on HORIBA
FuelCon GmbH’s fuel cell and battery measurement
technology. It will also use our existing business network topromote the development of new applications for emerging
markets related to new energy. These promise to offer manypotential business opportunities.
P. 21

This center will further enhance cutting-edge research intomeasurement and analysis at our research facilities. It will also
expand our business into new fields such as product processevaluation and monitoring. In addition, we aim to establish anorganization within HORIBA Advanced Techno Co., Ltd. (ourgroup company handling business related to water quality
measurement), which will work with the center to further
establish HORIBA’s bio/life science segment.
P. 23

R&D Planning Center
Automotive Service Lifecycle Management CenterIn partnership with HORIBA Techno Service Co., Ltd., which handles our service business, this center will actively provide services such as
product updates, maintenance, and preventative maintenance for our installed base of engine exhaust gas measurement systems that areoperating in the market. It will accelerate our transformation into a business that can offer total solutions to the customers who facechallenges, and provide robust support for automotive development.
P. 17

This center facilitates cross-group contributions to thedevelopment of basic technologies and applications. It also
actively takes advantage of opportunities to adopt
technologies and collaborate with others outside the company.
It aims to become a hub to share a wide variety of HORIBA
technologies and know-how, by planting the seeds of future
core technologies that will drive new business.
P. 25

Optical Smart Sensing(OSS)

Optical Smart Sensing integrates the various sensing
technologies that HORIBA maintains on a global scale, anduses it to propose various solutions for the semiconductor
market. We are rolling out new businesses for thesemiconductor market by promoting the use of ourtechnologies across segments.

P. 24

Technology Innovation
CenterThis center pioneers new fields of business by making active
use of IoT and data science. It aims to marshal the technology
and human assets of our group to spur innovations in analysis
and measurement that create and deliver unique value on a
global scale.

P. 25

Simultaneously revolutionize our organization and processes
to increase the speed at which we bring products to market
15

HORIBA Repor t 2021-2022

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Reorganization to Accelerate
Cross Segment Activities

Providing customers with management services
including facility administration

Automotive

Service Lifecycle Management
HORIBA has been an overwhelming presence in the field of engine emissions measurement. As society hammers out policies aimed at reaching carbon

The Core of Our Service Businessneutrality, the automotive industry is faced with making the major shift toward electrification. However, even if all vehicles are eventually electrified, theprocess will take a long time. In the interim, we expect the need to develop new vehicles equipped with internal combustion engines to continue for aSocietal needs

certain period of time. And there is stable demand for equipment such as emission measurement systems in new vehicle development sites.
With this demand in mind, on top of our conventional equipment sales, we plan to actively provide even more services for our installed base of
equipment currently in operation in the market. We will also make proposals to revamp customer systems and add or replace some equipment. In this way,

HORIBA Techno Service Co., Ltd.

Automotive electrification

Service will play an increasingly important role as we move

• Increase investment in development
towards electrification• Demand for vehicles equipped withengines during the transition period

we will help customers solve problems through both sales of equipment and provision of services.

from an era of selling products to one of selling services.
HORIBA Techno Service Co., Ltd. is a group of analysis andSpecial Feature

From equipment sales to equipment management and total planningmeasurement technology engineers. They not only offer
traditional services such as product commissioning,

Product maintenance

Facility maintenanceTotal equipment planning• Services that contribute to stableproduct operation• Keep facilities running at high capacity• Optimize maintenance costs• More efficient testing• Optimize capital expenditure

Products

Focus on features,
performance, andspecifications

businesses like providing remote support, contract analysis,
and subscription-based analytical services.

Remote Support
We remotely monitor the operational status of HORIBA products
owned by customers, detect abnormalities before they lead to
failures, and provide optimal remote support as needed.

Transformation of our businessmodel beginning with our installed
product base

Ensure stableproduct operation

HORIBA Techno Service
Co., Ltd. sustains
the expansion of
our service business

Decreasing budget
for capital investment• Difficulty in updating
aging equipment• Fewer large-scale
maintenance activities

Services

Providing high-quality services
to take advantage of equipment
already in the market

modification, and inspection, but are focusing on new

in the internal combustion
engine sector

From
now onBeforeChallenges for customers

Services• Equipment
management• Improve lab utilization• Improve testing efficiency

Provide robust
support fortransformation of
the automotive
industry

Products

As the development of electric vehicles progresses, governments are
considering new emissions regulations targeting the internal
combustion engine vehicles which remain on the market. The budgetthat automotive manufacturers have for capital investment related tointernal combustion engine vehicles is decreasing. However, they
continue to be subject to emissions regulations and otherrequirements. This will increase the burden on development.

HORIBA
Techno Service
Co., Ltd.

We offer an All in One Plan (AOP) which
provides comprehensive maintenanceand inspection services for HORIBA
products. Our service, AOP Connects,
adds remote monitoring to maintenanceand inspection services.

Installed base of HORIBA products
Focus on features,
performance, andspecifications

Monitoring• Advance failure prediction• Monitoring report

Cloud

Approximately 8,000
MEXA Series
Emission Measurement
Systems Shipped

OptimalSupportOne-way
communication(from 2001 to 2021)

We provide high-quality services, such as equipment maintenanceand inspection, together with HORIBA Techno Service Co., Ltd.
(which handles our service business). This allows customers who
own HORIBA emission measurement systems to use them for longer.
We also offer product support, such as for modifying existing
equipment. And we plan to provide robust support for transformationof the automotive industry by offering solutions aimed at totalcustomer equipment planning.

17

Communication using
gateway terminal SIM

HORIBA has shipped approximately 8,000 emission measurement
systems over the past 20 years, and most of these are still in
operation. The continued need to service this huge number of devices
and systems is the basis for our installed base business.

HORBA Analyzer

Maintenance signal

Number of measurements

Maintenance history

Alarm history

Customer

HORIBA Repor t 2021-2022

18

Reorganization to Accelerate
Cross Segment Activities

Mobility Solution Business

HORIBA Supports Automotive Development

Enhancing provision of solutions for the mobility business

Since the birth of HORIBA’s first MEXA Emission Measurement System in 1964, we haveshipped more than 10,000 units, and it has become a tool supporting engine development
worldwide. The first MEXA-1 was developed by our founder, Masao Horiba, and hiscolleagues by modifying a breath gas analyzer for medical use which boasted ahigh-speed response. It employed Non-dispersive Infrared Absorption Method (NDIR)
technology, and the company produced several units and introduced them to market.
However, only a few were sold at the time. Since then, air pollution caused by automotive
emissions has become a serious problem in developed countries such as the UnitedStates. And improving fuel economy has become a major challenge. Demand has steadilygrown for the MEXA Series as both an emissions analyzer, and an indispensable systemfor developing solutions to these problems. It is used by the national certification
organizations and major automotive manufacturers of numerous countries. We haveshipped more than 8,000 units since the 2000s, and almost all of these are still in service.

The automotive industry is developing next-generation mobility solutions that will lead to societal transformation. And automotive manufacturers are responding tovarious technological demands, such as electrification, connected vehicles, and autonomous driving. The increasingly complex development process is also placing
greater demands on developers. This is heightening demand for high-precision analysis and measurement equipment, as well as measurement solutions that provide
efficiency and labor savings. In addition to our analysis and measurement technologies, HORIBA has the know-how to manufacture and verify prototype vehicles, andboasts a broad network of regulatory and standards-making organizations. We plan to contribute to the future mobility of society by providing solutions that support
vehicle development in new automotive sectors like electrification, autonomous driving, and cybersecurity.

Mobility Solution
Business

Special Feature

MEXA has helped improve fuel economy
In the United States, the Clean Air Act Extension of 1970 introduced strict automotive emissions regulations, and was followed by the adoption of fuel economy
standards based on the CAFE* method in 1978. This jump started worldwide efforts to improve both emission gas purification and fuel economy. MEXA, which cameonto the scene at this time, allowed previously invisible emissions to be seen. Engine development engineers at the time used MEXA to analyze emissions, and control
combustion within the engine. This led to a drastic improvement in vehicle fuel economy.
Fuel economy standards were not revised for a long time thereafter. But in 2007 they were made significantly more stringent. The coinciding rise in fuel prices
during this period also spurred technological innovation in automotive engines. This also increased demand for MEXA, which is vital for engine measurement
technology, and has contributed significantly to the improvement of automotive fuel economy.

Autonomous
driving/ADAS*2

Data Science

Key Fields

From construction of data management
platforms to data utilization

Developing business in anticipation ofregulations for evaluation of vehicles
with autonomous driving/ADAS features

Model-based
Development

VRES*1/Cybersecurity

Providing applications to supportmodel-based development by customers

Developing efficient vehicle evaluation
solutions for cybersecurity andfunctional safety

New Fields*CAFE: Corporate Average Fuel Efficiency. A type of fuel economy regulation that calculates and regulates average fuel consumption (weighted harmonic mean fuel consumption) based on the total number of vehicles
shipped by a manufacturer, rather than by vehicle model.

Improvement in Automotive Fuel Economy in the United States and Number of MEXA Units Shipped*1
Units shipped (left)

Average vehicle fuel consumption (right)

Units

MPG*2

800

Market approach

Solution development

Strengthen technologies

New areas of technology

Regulation

26.00

Advancing innovations
to improve fuel economy

24.00*1 VRES: Vehicle Resilience. Solutions to eliminate threats that accompany increasing vehicle sophistication. *2 ADAS: Advanced Driver-Assistance Systems
22.00
20.00

Increase in shipments of
MEXA in anticipation of revised
fuel economy standards

400

18.00
16.00

HORIBA MIRA Limited business expansion
Since it was established in the UK more than 70 years ago, HORIBA MIRA Limited has been involved in the development of automotive technology. They work on
vehicle development engineering, testing engineering, and lease and management of R&D facilities. The various qualifications, expertise, and experience of theirengineers, and unique testing facilities, allow them to offer valuable solutions for automotive development.

14.00
12.00
0

10.00
1990

91

92

93

94

95

96

97

98

99

2000

01

02

03

04

05

06

07

08

09

10

11

12

Fuel economy standards were applied to passenger cars from 1978, and light trucks from 1979. These standards were made progressively stricter
throughout the early 1980s, and were nearly twice as stringent by 1985. However, the standards were not revised thereafter. The Energy
Independence and Security Act/EISA 6 of 2007 substantially revised fuel economy standards.

13

14

15

16

17

18

19

20

In 2009 and 2010, all Automotive
manufacturers were affected by
the global financial crisis

VRES/Cybersecurity

Autonomous driving/ADAS

We are taking various approaches in the areas ofvehicle cybersecurity and functional safety. HORIBAMIRA Limited has engineers on staff who wereinvolved in the formulation of the ISO26262
functional safety standard for automobiles, giving it
an advantage over competitors in this field.

Our comprehensive development and engineering facility, ASSURED CAV, is a dedicated testing facility forautonomous vehicles. It boasts both physical roads and virtual environments that can simulate the variety of
scenarios that autonomous vehicles could confront. Here, we can also perform testing related to vehicle control
performance and safety assessment for practical application of autonomous driving technology. This helps reduce
development time and costs by allowing complex simulation tests to be performed in a single location.

A research and development project commissioned by Turkish
automaker Togg also covers the VRES area.

High-speed limit behavior assessment system with
1 km straightaway, and 300 m diameter controllable
communication network.

*1 Number of large-scale MEXA Series units *2 MPG: Miles Per Gallon. Miles (1.6 km) per gallon of fuel (3.79 L)

Leveraging measurement and control technology to contribute to future
automotive development
Emissions measurement equipment measures and controls the engine. Engines generate power, and can be thought of as a tiny industrial plant. HORIBA possesses
the high-level technology that makes this measurement and control possible. To make a vehicle move, you can either utilize the chemical reaction of burning gasoline
or hydrogen within an internal combustion engine, or utilize the electrochemical process of ion exchange to power a motor. Utilization of measurement and control
technology is at the root of both methods.
HORIBA intends to continue supporting automotive development, just as we do now and have in the past.
19

Allows seamless digital simulation and demonstration experiments for practicalapplication of autonomous driving technology (digital twin)

HORIBA Repor t 2021-2022

20

Reorganization to Accelerate
Cross Segment Activities

Using our existing business network to promote
the development of new applications

Modern society relies on fossil fuels to supply the
majority of its primary energy. In order to build acarbon neutral society, it is critical for us to diversify
our primary energy sources and reduce the use offossil fuels. In recent years, research and development
related to energy production using hydrogen andammonia, methanation*, and similar technologies, hasbeen accelerating on a global scale. And themeasurement and analysis applications which help toimplement energy conversion systems in society havebeen gaining attention.
HORIBA has various analysis and measurement
technologies that we expect to be put to use in the newenergy sector. And we believe that there are numerous
business opportunities in this field. We will focus on our
wide range of advanced core technologies, and promote
the development of applications for utilization ofhydrogen and other technologies in the energy industry.
*Methanation: Technology which react with hydrogen and carbon dioxide to
produce methane, the primary component of natural gas. Replacing natural gas
with this synthetic methane is expected to help achieve carbon neutrality.

HORIBA FuelCon GmbH’s efforts
in the hydrogen business

Water electrolysis cell/stack performanceassessment(Evaluate the performance and efficiencyof water electrolysis cells/
stacks used in hydrogen production)

Quantum
cascade lasers

Alternative
EnergyConversionCore
technologies

Existing
business fields

Four-wheel drive test systems(vehicle development)

HORIBA FuelCon
Products

Utilization• Automotive industry• Heavy industry

Sales
network

Energy conversionSpecial Feature

Alternative Energy Conversion(improve internal
combustion engine
performance)

Concentrate resources
towards developing
applications for
new energy industries
such as hydrogen

Contributing to France’s carbon
neutral strategy(improve power
station efficiency)Coretechnologies(component analysis andevaluation of battery materials)

Marcus type high frequency
glow discharge opticalemission spectrometers(hydrogen embrittlement evaluation)*H2Giga: A German project aimed at mass-producing water electrolysis devices and lowering prices

Emissionmeasurement systems

Stack gas analyzers

Raman spectrometers

HORIBA holds a variety of technologies related to the utilization ofhydrogen energy, primarily via HORIBA FuelCon GmbH. The
company, which HORIBA acquired in 2018, has manufacturing anddevelopment locations in Germany. And our new location, HORIBAeHUB, has begun operation in 2022. In addition to utilizing
cutting-edge technology, they have built their own businessnetwork, and participated in the large-scale German national
project, H2Giga*. The company has been quick to pick up on global
trends, and has played a major role in expanding HORIBA’s
hydrogen-related business.

Sales
networka
G enertio nExisting
business fields
Energy related(electricity, gas, oil)

In France, the government is leading the push to build adecarbonized society. They have made active investments towards
energy efficiency, and established the clean hydrogen technology
venture Genvia as a public-private partnership. In November 2021,
French president Emmanuel Macron visited Genvia andannounced that the government would make additional
investments to promote hydrogen energy, including development
investment in Genvia.
HORIBA has a wide range of business operations in France,
and also supplies water electrolysis cell/stack assessment
equipment to Genvia. In July 2021, President Macron even met
with HORIBA Chairman & Group CEO Atsushi Horiba to discusshydrogen-related business.
Going forward, we will continue to help build a decarbonizedsociety in France and throughout the world.

Process measurement
equipment(Control oil refining processes)

President Macron of France and Chairman &Group CEO Atsushi Horiba meet in 2021

21

Water electrolysis cell/stackassessment equipment
supplied to Genvia

HORIBA Repor t 2021-2022

22

Reorganization to Accelerate
Cross Segment Activities

Bio Life Science

Optical Smart Sensing

Providing a wide range of analysis and measurement solutions
from research and development through production

Developing sensing technology for the semiconductor market

Many HORIBA products are employed by research institutions and corporate R&D departments, and the area is one of HORIBA’s fortes. Transferring this strength tothe manufacturing side of the industry is allowing us to expand into new areas of business. One of these is the bio/life science field.
In addition to discovering new candidate substances for use in developing new drugs, we are seeing advancements in the commercialization of new therapeutic
drugs such as antibody drugs. Societal expectations for drug research and development also continue to rise. HORIBA has provided a range of technologies andproducts which can contribute to this kind of research and development. Plus, HORIBA analysis and measurement technology has recently been used for processmonitoring in manufacturing and quality control, where there is increasing demand for sophistication, efficiency, and speed. We aim to establish HORIBA in the field of
bio/life science by expanding our business into new areas like product process evaluation, while marshaling our personnel and technological resources to further
strengthen our specialty of analysis and measurement in cutting-edge research.

Industry R&D departments

Thus far, HORIBA has built its semiconductor market business around the primary products of mass flow controllers and chemical concentration monitors.
Meanwhile, our group possesses a variety of sensing technologies that are useful to semiconductor manufacturing. So, we have established a specialized division
within HORIBA STEC Co., Ltd. (our leading group company in the semiconductor business), to unify the optical businesses that had been scattered across different
segments and regions. We call this Optical Smart Sensing (OSS). We will use HORIBA’s cross-segment technologies and business networks to establish a new pillarof business for the semiconductor market.

Establishing business for the semiconductor market
Mass flow controllers

Research Institutes

60%

Strengthen field of expertise

Industry processes

Industry R&D departments

Grow into new sectors

Bio/life science fieldSpecial Feature

Research institutes

Analysis and measurement in cutting-edge researchIn-line solutions for industrial processesEx.
In-line film thickness
analysis solution

Analysis section
Control section
Optical

X-ray tube components Detector
Base material

23

Apply
membranematerial

Membrane material

Roll direction

PC

There is growing demand in various industries for new
applications that can help to save labor, and can combine
and automate operations, in the production process. By
applying our core technologies for analysis andmeasurement (refined in the scientific segment) toindustrial manufacturing, we can detect defective
products and improve production efficiency in the
manufacturing process. At the same time, we canleverage our engineering capabilities, which are applicable
to a variety of markets, to provide in-line solutions
customized to each customer’s production process.

*HORIBA’s
estimate

Perform highly precise and stablemeasurement of concentrations ofchemicals used in cleaning processes
in semiconductor manufacturing

Bring together HORIBA technologies to enter new fields of business

Working to actively utilize the sensing
technologies HORIBA holds globallyfor applications in thesemiconductor market

Industry processes

Our Bio/Life Science Center brings together human assets andtechnological resources to coordinate efforts in Japan, Europe, and the United States
more closely than ever before, in order to respond to challenges on a global scale

Globalmarket share*

80%*HORIBA’s
estimate

Perform precise control of gas andliquid supply lines insemiconductor manufacturing
processes



Product process evaluation andproduction process monitoring

Chemical concentration monitors

Globalmarket share*




Working todevelop new businesses
for the semiconductor
marketIn-line/processmonitoring

Process gas monitors

Gas monitors

Measurement
equipment used
in a wide range

Establishing a dedicated OSS department
at HORIBA STEC, Co., Ltd.,
our leading company
in the Semiconductor
segment

Contributing
to productivity
improvementsin the semiconductor
manufacturing
processes

Reticle/mask particle
detection systems

of applications from
R&D to quality control

Plasma emission monitors
Endpoint monitors

Spectroscopic ellipsometers
X-ray Analytical Microscopes

HORIBA Repor t 2021-202224

Reorganization to Accelerate
Cross Segment Activities

HORIBA’s measurement technology

R&D Planning & Technology Innovation— A wide range of technologies and their development

Samplehandling

HORIBA’s measurement business

Three fields HORIBA is taking on

Technology for handling samples subject toanalysis and measurement

Energy & Environment
Helping to transform the energy
network toward the realizationof a sustainable society

Mass flow controllers

Blood glucose analyzers

Automotive
Constant volume
samplers

Special Feature

Water quality analysis
and examination
systems

Process &Environmental
Chemicalconcentration monitors*

Liquid analysis

Gas flow control

Technology to measure components
in, or characteristics of, liquids,
such as pH, sodium, acids,
alkalis, and glucose

Technology to measure andinstantly control the flow of fluids

Stack gasanalyzers*

HORIBA’s

core
technologies

MedicalDiagnostics

Raman
spectrometers

Selected basedon amount of sales

Spectroscopic
analysis

Spectroscopic
ellipsometers

Infraredmeasurement

Technology to analyzematerials by using ultraviolet
light, visible light, andnear-infrared light

Technology to analyze
components in gases inreal time

Supporting research in bio/
life science to preserve healthy,safe, and secure lifestyles
Emission measurement
systems*

Particle analysis

ScientificTechnology to measure particles(diameter, number, weight, andcomponents)

Elemental analyzers

Materials & Semiconductor

Fluorescence andabsorbance
spectrometers

Semiconductor

Bio & Healthcare

Air pollution
analyzers*
Nanoparticle-size
distribution
analyzers

Hematology
analyzers

Supporting advanced information
technology that is essential
to achieving new daily lifestyles

Emission measurement
systems*

HORIBA’s measurement technology began with electrochemical pH meters. Since then, we have
expanded the scope of analysis our products offer to include liquids, gases, and solids, while adding
various analytical technologies that make use of infrared rays, X-rays, and the like. Moreover, as theanalysis and measurement needs of the market have changed, HORIBA has provided products born out of ourcore technologies, as well as advanced technologies that meet customer demands for sample handling and data handling.
We will continue to enhance the synergy between our resources to deliver the value of analysis and measurement to our customers.

25

Data
handling
Digitalization technology for analyzing the resultsof analysis and measurement*Products using multiple core technologies

HORIBA Repor t 2021-2022

26

COO
Message

Deepening global management

Build up our unique management style with diversity,
like a stained glass picture
Juichi Saito Executive Vice Chairman & Group COO

HORIBA has always emphasized the sharing of information through direct face-to-face communicationin order to build and maintain a relationship of trust within our group companies around the world.
Under the circumstances posed by COVID-19, the opportunities for direct communications have been
limited for a few years, and the way we operate has changed drastically. In response to thesechallenges, we have appointed Dr. Jai Hakhu as a new HORIBA Ltd. Board Director; he has served as
the head of group companies in the U.S., France, and India, and we are expecting him to help lead our
global business. Furthermore, we are actively appointing non-Japanese employees to the level ofexecutive officer and general manager.
At HORIBA, we express our diverse human assets as a picture of stained-glass, which is

HORIBA has taken further measures to deepen its global management,even under the difficult situation of recent years.

organized by various pieces of glass in different colors, shapes, and sizes to create a beautiful picture.
I am confident that our strength and uniqueness as a picture of stained glass is being realized at the
management level as well.

We will continue to explore various possibilities and create value by utilizing the technology
and sales network assets of our locations around the world.

The strength of our unique management style
HORIBA has expanded its business through M&A, gaining various technologies that complement our
original technologies. To use a metaphor, HORIBA has various toy boxes, which are packed with thevarious technologies and the seeds of business. However, because the centers of excellence for eachbusiness and technology are disseminated around the world, people thought it would be difficult touse anything other than the ones that are available locally (as if the toys in each box belonged to only
one of the brothers or sisters). The “cross-segment” concept publicized in our Mid-Long Term
Management Plan, MLMAP 2023 is similar to sharing all of the toys from all of the toy boxes, so that
all of the brothers and sisters can play with anything from any box and discover new ways to play. By
freely utilizing disseminated assets, such as technologies and business networks, owned by groupcompanies within HORIBA, we will explore various possibilities that create added value. This is what
HORIBARIANs are experiencing through cross-segment activities.
We believe that the uniqueness of our management style makes it possible to promote suchglobal cross-segment activity to generate results, which is a strength of HORIBA. This strength resultsfrom the fact that there is less hierarchy within the organization, creating an organizational structurethat is as flat as possible and expanding the scope of direct influence of management. This describes
HORIBA’s long-standing management style, which I think of as trust-based governance.
My role is to pass along the uniqueness of HORIBA, our corporate culture, through direct
dialogue and actions, and this is what I have been doing for a long time. Currently, the next generationof HORIBARIANs in each country is discussing and defining the HORIBA of the future. I am confident
that they will convey HORIBA’s uniqueness and conviction to current and future HORIBARIANs aroundthe world.

May 2022

Juichi Saito
Executive Vice Chairman & Group COO

27

HORIBA Repor t 2021-2022

28

Contributing to Society through HORIBA-style Management

HORIBA Value Creation Cycle

Helping to Build a Sustainable Society
through our Business

Various Initiatives Spotlighting
Human Assets

HORIBA Approachto Sustainability

HORIBA Value Creation Cycle
HORIBA

Value creation through technology
and diversity of human assets

Socivalu aleCreating social value

Solutions tosocial issues— Contributing to the SDGs*

HORIBA supplies products with analysis and measurement technologies, which provide solutions to social issues.
Technology and human assets support our business.
HORIBA will partner with customers to contribute to building a better society and generating greater social value.

Creating value by expanding business that addresses various
social issues

Priority
MeasureGo!

1

Sample handling
Data handlingCore
technologies

Human
AssetsalSoci evalu(HORIBARIANs)

Measurement
technologies

SDGs related toour three priority
measures

Priority
Measure2

Priority
Measure3

Measurementbusinesses

Solution development*“SDGs” refers to the Sustainable Development Goals unanimously adopted by the United Nations General Assembly in 2015.

Government agencies

Sales/
MarketingCorporate
value

Measurementbusinesses

HORIBAHORIBA

Customers

Field services

Priority
Measure1
Priority
MeasureMLMAP2023

2

Mid - Long Term Management Plan

Priority
Measure3
29

Automotive manufacturers
Automotive component
manufacturers

Manufacturers

HORIBA’s
Customers
Semiconductor
production equipment
manufacturers

Please see the Investor’s Guide
on page 51 for more on Measurementbusiness customers.

Rese

arch

Market Oriented BusinessTo develop analysis and measurement solutions, utilizing HORIBA’s coretechnologies, in the leading three business fields of megatrend
Three fields Energy & Environment, Bio & Healthcare, and Materials & Semiconductor

Small- to medium-sized
hospitals & physiciansin private practice

Solution Provider BeyondLife Cycle Management

Electric powercompanies

institCorp
orat
s valu e
e

ution

e
orat
Corp euval

Universities

To support customers’ businesses from all aspects, from installation to replacement
Hello

HORIBA Core Values

The Next Stage of the Super Dream TeamTo enhance the organizational structure that fosters resilient human assets,
which are the driving force of all business operations

Customersatisfaction
level

Corp
ora
valu tee

HORIBA Repor t 2021-202230

Contributing to Society through HORIBA-style Management

Various Initiatives Spotlighting
Human Assets

Helping to Build a Sustainable Society
through our Business

HORIBA Value Creation Cycle

HORIBA Approachto Sustainability

Helping to Build a Sustainable Society through our BusinessHelping to build a sustainable society

Providing high-precision analysis and measurement, and high-level analytical skills

HORIBA Institute for Mobility and Connectivity2(HIMaC )2

Our energy system was previously unidirectional: from generation, to transmission, to distribution.
Today it is transforming into a bidirectional system. However, conversion of the system will require
research and empirical experiments into technical issues. These issues involve the country’s energy
system, and are too large to be a research theme for a single company. So, it is vital to pull inuniversities and related organizations as collaborators. With these social challenges and the adventof a sustainable sustainable-energy-based society in mind, we decided to support the establishment
of HIMaC2 at the University of California, Irvine in 2018. This research institute aims to achieve
connectivity between power and mobility. Its four laboratories (focused on Automotive Development,
Grid Development, Connected/Autonomous Driving, and Energy-related Materials Research) pursue
research topics that span the fields of mobility and energy.

Hayabusa 2 —Sample Analysis Project—
HORIBA Techno Service Co., Ltd. handles our services business. In 2021, they participated in
the project to analyze samples brought back from the asteroid Ryugu by the asteroid explorer
Hayabusa2.
HORIBA not only possesses the technology to manufacture the world’s leading analysis
and measurement systems, but human assets capable of performing high-precision analysis. In
this project, we used equipment such as HORIBA X-ray fluorescence analyzers to perform
non-destructive, non-contact analysis of the chemical composition of these samples, todetermine the origin and etiology of Ryugu. We found that Ryugu is similar to meteorites rich inorganic carbon, and has a composition most similar to that of the sun. In other words, it is© Akihiro Ikeshita
close to the average element composition of the solar system. In addition, it was discovered tocontain structured water and carbonates, and is thought to hold information about the solar system around the time of its formation. The asteroid
was thus found to be an early celestial object that had previously produced water. By participating in these kinds of projects, HORIBA has helped
to open up a new page in the story of humanity.

HORIBA’s Contribution

A research institute for connectivity between power and mobility
In 2018, we decided to support the institute with a view to the arrival ofa sustainable-energy-based society• Elemental analysis with X-ray Analytical Microscopes• Discovered carbonates with Raman spectrometers• Quantitative analysis of carbonates and organics
using Carbon/Sulfur analyzers

Efforts toward carbon neutrality
Establishing an environmentally harmonious energy system social
cooperation program with the University of TokyoOn April 1, 2022, we established a social cooperation course for sustainable energy systems with the School of Engineering at the University of Tokyo. It is
becoming increasingly important to carry out environmental impact assessments with tools such as Life Cycle Assessment (LCA) in order to achieve carbon
neutrality. However, energy consumption at R&D sites is not constant, and has not received much attention until now. This course unites the University ofTokyo’s world-renowned forecasting technology (AI) with HORIBA’s long-cultivated analysis and measurement technology. Researchers use these technologies
to conduct joint research toward the construction of energy management systems that can provide visualization of energy consumption at R&D sites, leading
to optimal utilization of energy. We aim to commercialize the systems developed through joint research and work towards their implementation at R&D
facilities in a wide range of industries.

Activities of HORIBA Advanced Techno, Co., Ltd.
Team

Team

Team

Internal
educational
activities

Activities througheducation

Creating concept
models andworldviews fora splendid future

(2)

(3)

(4)

Launched an
information portalon the company
intranet

HORIBA BIWAKO E-HARBOR(1) • Battery/fuel cell testing• Virtual battery testing(2) • Powertrain testing • Motor testing(3) • Engine testing(4) • Vehicle testing(5) • Central control room

31

(5)

2

Team

3

4

Going paperless
Eliminating all
paper useTeam

5

Promotion of
joyful recycling

Specialteam

Water cycle game
Learn about waterwith Joy and Fun!

Field trials are being conducted at the E-Lab
in the HORIBA BIWAKO E-HARBOR(1)

HORIBA Advanced Techno, Co., Ltd., which conducts water quality measurement-related
business, considered how they could contribute to the SDGs, and launched a project named
Project Colors in 2020. About 30 people, divided into five teams and one special team, holdworkshops and promote activities based on each of the themes below.

Project Colors
1

Developed a special container (cell)to allow advanced handling of sample
materials from Ryugu• Compact integration of the various
elements required for automotive
development tests• Capacity to perform complex
experiments by linking the test
rooms together

Held online
experiences forthe families of
HORIBARIANs

Createda concept video!

You canwatch it here
(Japanese
only)

Estimated theenvironmental
impact of going
paperless

Adopting
a recycling markfor packaging

Createda board gamethrough trial
and error[Pictured from left] Takao Someya, Dean of the School of Engineering at
the University of Tokyo
Atsushi Horiba, HORIBA, Ltd. Chairman & Group CEO

HORIBA Repor t 2021-2022

32

Contributing to Society through HORIBA-style Management

Helping to Build a Sustainable Society
through our Business

HORIBA Value Creation Cycle

Various Initiatives Spotlighting
Human Assets

HORIBA Approachto Sustainability

Various Initiatives Spotlighting Human Assets

Three measures to support the activities
of HORIBARIANs

Basic humanresources
policies

Open and Fair

Point-added policy

HORIBA’s five pillars of omoi*

We ensure that important information
and rules are shared openly so that
there is free communication within thecompany. We provide fair opportunities
for uniquely individual and diverse
human assets to challenge themselves.

HORIBA’s point-added policy doesn’t confer any points
unless an employee takes on challenges, even if they havenot necessarily failed in their endeavors. Points areconferred for taking on challenges. If successful, further
points are conferred. This system supports and recognizes
ambitious human assets, while valuing the start-up mindset.

and skills of HORIBARIANs. Going forward, through unique HORIBA

Two-way communication

We firmly hold and implement the five pillars of omoi, to ensureeach and every employee can personally attain our company mottoof Joy and Fun.
“Omoi” means an emotional feeling, passion, thoughts,
enthusiasm, desire, aspiration, ambition, commitment, mission, andobjective. We encourage our employees to have the following“Omoi,” which is the essence of acting on “Joy and Fun” throughtheir work.

human asset strategies, we are committed to putting our corporate

Information is not conveyed, it is shared. We employ various mechanisms, including global gatherings
where ideas are directly voiced to management and birthday gatherings for employees, to remove thebarriers of position and organization. This helps us to achieve true reciprocal communication.

• To achieve goals and make life memorable by fostering

The Stained Glass Project

HORIBA COLLEGE

The driving force behind business growth is the power of people. As
represented by our BlackJack Project, HORIBA COLLEGE, and Stained

The BlackJack
Project

A

RIB

HO

Glass Project, we have continuously striven to maximize the individuality

motto of “Joy and Fun” into concrete practice, while also building
structures that allow each and every employee to shine.

• To be a part of a collaborative community, at the forefrontof new ideas and creations.

the highest intellectual potential.

• To reach across the globe to expand learning that captures
key business developments, wherever they occur.

• To be proud of sharing what I do and what HORIBA delivers.
• To be helpful to the world and its people.
* The Japanese word omoi is used in English as well, toengender shared values among global employees.

Basic humanresources policies

MeasureMeasureHORIBA COLLEGE

The BlackJack Project

HORIBA COLLEGE

HORIBA launched the BlackJack Project in 1997 with the purpose of changing employee awareness and behavior. To date, more than 12,000 project themes
have been registered. Employees themselves select themes to tackle from many questions and issues, such as improving work efficiency, developing humanassets, and strengthening organizational capabilities. Then they determine how things ought to be, and work toward organizational reform. Every year, wehold BlackJack World Cup to select the best themes of projects from each country. This provides an opportunity to report the results, and the motivations
behind them, to the management team. It also plays an important role in sharing our corporate culture, experience, and knowledge across HORIBA globally.

Three

Keywords

1

This project is intended to boost
awareness and promote lasting
behavioral changes in HORIBARIANs
that will lead to improved productivity
and organizational capabilities. We areusing it to create a corporate culturethat can respond quickly and flexibly tovarious environmental changes.

1

2

3

HORIBA-style
management
systemThree objectivesof BlackJack
activities

Direct communication
between front-line
employees andmanagement

HORIBA COLLEGE allows HORIBARIANs to determine what programs they need, become lecturers themselves, and share their skills and experience
within the company. Each participant asks themself, “What do I need to learn now?” This ensures that know-how continues to be passed on
efficiently and systematically, and builds a foundation for the growth of many HORIBARIANs.

Three

2

Keywords• Performance (results)• Learn (experience, notice, and learn)• Enjoyment (joy and fun)

3

33

3

FUN HOUSE- A training center
you want to visit

Pursue“HONMAMON”

Talk about omoi

Each group company holds a monthly
Progress Review Meeting (PRM), during
which front-line staff report issues,
observations, and results directly to
management. This has gained traction
as one of the best ways for management
to find out what is happening in theworkplace, and plays an important rolein sustaining favorable performance.

1

HORIBA COLLEGE lectures are held at FUN
HOUSE, a special venue that is more than just a
training facility. Located in a valley of abundantnature and greenery, it aims to provide true value,and be a place that employees look forward tovisiting. We offer a program intended to transformparticipant knowledge in a first-class environment
where all five senses are engaged.

2

We learn from and teach one another,based on our policies of talking about
HORIBA and honing our skills. This
allows us to pass on our expertise andknow-how, and experience the pursuitof “HONMAMON.” Finally, we use what
we have learned to continue to take on
new challenges.

3

At HORIBA, we see training as anopportunity for communication. Gettingout of our usual environments, andgathering around a fireplace to share
our omoi, helps us to put Joy and Fun
into practice by allowing each person’s
individual personality and abilities toblossom.

MessageStrengthening our corporate foundations to further increase awareness and improve management
capabilities, so that HORIBA will continue to develop as a strong company in the 21st century

Deputy General Manager,
Blackjack Project Advanced
Management Office2Instead of focusing only on results, weplace importance on the process andintention behind achieving our goals.
The things we gain in the process haveknock-on effects for our business as well.

MessageSumiyo Ishikawa

1This year marks the 25th anniversary of the BlackJack Project. Today it has become established not only at our group companies in Japan, but
throughout the world. And I feel that it embodies the very culture of HORIBA.
We define BlackJack as encompassing all activities that attempt to change our way of doing things or approach them from a different
perspective, not simply the results brought about by those activities. I believe that the improvement in experience, learning, and motivation
obtained through these activities can elicit permanent behavioral changes, and contributes to the development of independent human assets. Plus,many BlackJack activities grow out of issues and points for improvement observed in the workplace. And as one of the best ways to communicate
the realities of the workplace to management, these activities help to strengthen our management capabilities and organizational infrastructure.
Vital organizations are those who are continually engaged in such activities. And the people who participate in these activities know from first-handexperience that the activities themselves are part of the driving force behind HORIBA. Each of our project promotion offices at group companies inJapan, and promoters at our group companies outside of Japan, will continue to support the activities of front-line members engaged in Joy and Fun.

Not “Human Resources” but “Human Assets”
HORIBA considers all employees to be valuable company assets, and refers to them as “human assets.” Not “materials,”
but “wealth.” In order to become first-class human assets who pursue the genuine article and put Joy and Fun into
practice, we learn from and teach one another in a training facility that we are excited to visit. HORIBA COLLEGE is a place

Hitoshi Motokawa
Junior Corporate Officer
Principal, HORIBA COLLEGE

to make each of our omoi a reality. This is where true communication, that transcends the bounds of position andorganization, is born. It allows us to become HORIBARIANs who continue to take on new challenges in a new era. Starting
this spring, as the new Principal of HORIBA COLLEGE, I will work to make it a stage for expanding the HORIBA-style humanasset development that we have built up thus far.

HORIBA Repor t 2021-2022

34

Helping to Build a Sustainable Society
through our BusinessContributing to Society through HORIBA-style Management

HORIBA Value Creation Cycle

Various Initiatives Spotlighting Human Assets

HORIBA Approach to Sustainability

External
evaluation

Various Initiatives Spotlighting
Human Assets

Taking a bidirectional,
company-wide approach tosustainability on all fronts

HORIBA has been selected as a
Semi-Nadeshiko Brand, a title jointly
conferred by the Ministry of Economy, Tradeand Industry and the Tokyo Stock Exchange.
In addition, we were recognized under the2022 Certified Health & Productivity
Management Outstanding Organizations
Recognition Program (White 500), for thesixth year in a row. This is a program jointly
promoted by the Ministry of Economy, Tradeand Industry and Nippon Kenko Kaigi.

With regard to our initiatives to promote
diversity, we received high marks in the
categories of integrating diversity into
corporate strategy, governance,
improvement of company-wide
environments and rules, and change inbehavior and awareness of employees.

Board of Directors

In 2012, HORIBA’s top management issued our
Physical and Mental Health Promotion
Declaration. In recognition of our various
initiatives in pursuit of its goals, we were
included in the 2022 Certified Health &Productivity Management Outstanding
Organizations Recognition Program (White 500).

HORIBA

Sustainability framework
Board of Directors

Sustainability Committee

In 2014, we launched our Stained Glass Project to convey an image of the goal we strive to reach. This project portrays the company as a beautiful stained glass
picture; each employee is a piece of stained glass with a unique color, shape, and size. In 2017, the company launched a diversity promotion unit, the HORIBA Stained
Glass Project Office. This office is responsible for connecting and aligning senior management, worksite employees, and the Human Resources Division to further
enrich the diversity of our human assets. This entails reforming the way we work, and promoting activities in pursuit of more meaningful work in environments
conducive to work. In 2021, the ratio of female employees at HORIBA, Ltd. was 24.8%* of the total workforce, and the ratio of women in leadership positions
equivalent to section chief was 11.5%*. We continue to appoint many female leaders to positions such as department head and executive officer, as well as to the
management ranks of our group companies outside of Japan.

2

Three

1

2

3

Gender diversity

Activities tosupport diverse
human assets

Pursuing meaningful workin environments
conducive to work

Keywords

We have been selected as a Nadeshiko
Brand for three years in a row since 2019.
This came in recognition of HORIBA’s
original initiatives, such as developing
female leaders through communication
between employees and supervisors. In
2022, we were selected as a
Semi-Nadeshiko brand. More and more
women are taking center stage in various
workplaces and projects.

We provide a variety of support to help our
employees flourish. This includes a system torecognize employees who are raising children or
nursing elderly family members, or who are
active in spite of limitations due to disability or
injury. We also continue to hold workshops forsuch members. In addition, our personnel
measures include actively recruiting foreign
employees and facilitating the exchange ofmanagerial level human assets with our groupcompanies outside of Japan.

HORIBA’s strength is that each person shines in their own way, like a piece of stained glass

35• Deliberate on matters discussed inforums such as ESG workshops• Implement initiatives within HORIBA• Held once a quarter, in principle
Approach to Sustainability

The HORIBA Group set forth the HORIBA Corporate
Philosophy under the corporate motto “Joy and Fun.”
It expressed our basic position on improving corporate
value in four areas: business operations, customer
responsiveness, responsibility to shareholders andinvestors, and HORIBARIANs. The HORIBA Corporate
Philosophy is also part of the HORIBA Sustainability Policy.
By conducting business in accordance with this policy, we
aim to increase our corporate value and contribute to therealization of a sustainable society.

Top-down
approach

Taking a bidirectional approachto sustainability
Place for discussion among those engagedin actual work

• Place to learn about trends in sustainability• Share information within the company,
Bottom-up
conduct education, and take practicalaction• Held once a month, in principle

approach

ESG Workshops

3

The telecommuting system (Good Place work
system) that we introduced in 2006 andexpanded to the entire company in 2019, alsocame about due to the activities of the Stained
Glass Project. Moreover, thanks to our continuing
support for improving work-life balance, we
achieved a paid-time-off utilization rate of
65.6%*, and a child care leave utilization rate formale employees of 75%* in 2021.
*Figures are for full-time employees of HORIBA, Ltd.

Maki Moriguchi

Place for discussion among responsible
parties

ESG
Workshops

The Stained Glass Project

Junior Corporate Officer
General Manager,
Stained Glass Project Office

HORIBA• Place to report to directors

MeasureMessage

Hamburger

Semi-Nadeshiko Brand

Sustainability
Committee

1

HORIBA Approachto Sustainability

HORIBA has grown thanks to the strength of its global business and market diversity. Each employee who has been active in theworkplace has supported this growth. I believe that as the pace of social change accelerates, maintaining a culture where
employees can demonstrate their individuality and strengths will lead to future growth.
Front-line employees have been the primary actors in the Stained Glass Project, making proposals to management, andimplementing systems and initiatives. We are working together with management and the human resource department to create astage where leaders full of individuality can overcome the unconscious barriers they have placed on themselves due to personal
attributes and limitations, take on various new challenges, and play an active role in the world.

HORIBA Corporate Philosophy and Code of Ethics
We revised our Code of Ethics in 2021, and reviewed
our Corporate Philosophy in 2022.
The HORIBA Corporate Philosophy spells out
HORIBA’s mission in society, and the Code of Ethics
outlines eight guiding principles for doing business.
These include respect for human rights andenvironmental issues. Both are written in English andform the basis of HORIBA’s approach to sustainability.

HORIBA Corporate Philosophy

Web Link
Click!

Signatory to international initiatives
United Nations Global Compact (UNGC)HORIBA, Ltd. has supported the initiatives of
the United Nations Global Compact since webecame a signatory in 2012 through theagreement of senior management.

Code of Ethics

Web Link
Click!

HORIBA Repor t 2021-2022

36

CFO
Message

HORIBA’s Basic Financial Policy
Basic capital policy
Point

Cash flow

2

Financing and Shareholder return

Businessmanagement

Business operation
based on balanced
management

Masao Okawa

Improve capital efficiency tomaximize corporate value

Stable financial baseContinuous investment
from long-term
perspective

We have obtained an “A” rating from
Rating and Investment Information, Inc.
and “A+” from Japan Credit Rating
Agency, Ltd. for our 5th and 6th
unsecured corporate bonds, based on
our ability to generate stable cash flow.

Flow of cash

Managing Director and General Manager
of Finance and Legal Division

HORIBA continues to invest in long-term growth
while pursuing profitability in existing businesses.
Aiming to increase corporate value by supporting
business transformation

Maintain high ROE

Point

Point

Generating profit
by providing
high-value-added
products
and services globally

Shareholder return
Point

1

3

1

Point

As stated in our Mid-Long Term Management Plan,
MLMAP2023, HORIBA aims to achieve ROE of 10%
or more in 2023. ROE is one of our most importantmanagement metrics.

Results of HORIBA Group – Looking back on the year ended December 31, 2021 –

2

Point

We conduct proactive investment, with which we
expect to lead to future corporate value. Additionally,each group company and each business segment
sets and manages its own capital efficiency targets
to maximize HORIBA’s corporate value.

Link shareholder returnto earnings growth3

We set total return (the combination of dividend
payments and share buybacks) to shareholders as
approximately 30% of consolidated net income. This
payout ratio reflects due consideration given to
ensuring stable management and retaining earnings
as capital for aggressive business development.

Approach to continuous investment

In fiscal 2021, sales increased 37.2 billion yen to 224.3 billion yen (up 19.9% year-on-year). While sales decreased in the
Automotive segment, sales to semiconductor production equipment manufacturers grew, due to factors such as expansion ofcapital expenditures by semiconductor manufacturers. Thus, we saw a large increase in sales in the Semiconductor segment.
Thanks to the increase in sales, operating income increased by 12.3 billion yen (up 62.7% year-on-year) to a total of
32.0 billion yen. Sales, operating income, and ordinary income all set new records, and ROE reached 11.2%.
Based on these results, we decided to provide a dividend of 150 yen per share for fiscal 2021. HORIBA has adopted a policyof setting its total shareholder return ratio, which includes dividends and share buybacks, to about 30% of consolidated net
income.
We intend to pursue profit through existing businesses while continuing to invest in long-term growth. We also aim to support
business transformation and increase corporate value.

Investment in R&D

Capital expenditure

Approach to M&A

We believe that continuous R&D
investment is the source of ourcompetitiveness, and accordingly weinvest the equivalent of 10% of our sales
in R&D even during recessions, whenmany companies reduce theirinvestment. This has allowed us toincrease market share when demandhas recovered.

Regardless of short-term declines in
asset efficiency, we invest for the futurefrom a medium- to long-term
perspective. In recent years, we havecontinued to make high-level
investments to continue to respond tochanges in the market environment.

From a long-term perspective, we aremaking friendly acquisitions of entities
that have unique technologies, which
complement, or have potential
synergies with, HORIBA’s technology
portfolio.

Tree of indices of asset efficiency
Dividend payments and total return ratio

Net income and Return on equity (ROE)
Net income attributable to owners of parent (left)

Return on equity (ROE) (right)

Dividend per share (left)%

Million Yen
25,000

15.0

14.3

12.0

11.5
10.2 10.0

9.9
15,000

8.4

9.3

8.9
12,882 12,962

15,481

10,58910,0008,664

150

Change in dividend
policy* in fiscal 2013
and after

120

7.6
13,188

8,999

9.0

90

6.0

60

67

5,000

30

28.2

0

0

2013

2014

2015

2016

2017

2018

2019

2020

2021

35.4

30.0
27.6

27.4

30

28.8

29.7

2020

2021

0

0

2011

2012

2013

2014

2015

2016

2017

2018

2019

* In fiscal 2013, we switched from a non-consolidated dividend payout ratio, which is based on
non-consolidated net income at HORIBA, Ltd., to a total return ratio, which is based on HORIBA’s
consolidated net income.

Cost ofsales

Selling, generaland administrative
expensesWorking capital

Fixed assets

90

New sales channel development

60

30.6

Cost of capital*

Value Driver
Net sales

70

26.8

37

90

40
3.0

Utilization

BudgetingーOperating income

120

85
60

=

130

116

Target 30%
in total
return ratio

150

50

7,396

2011 2012

150

145

HORIBA
Premium Value

Performance
evaluation

Monitoring

New product launch

Examples of activity
targets by segment

7.8

Yen

11.2

16,281

FormulaTotal return ratio (right)(including commemorative dividends and share buybacks)%

21,311

22,31320,000Commemorative dividend (left)

Inventory optimization
Lead time reduction
Early collection of accounts receivable* Cost of capital: Invested capital × In-house rate of cost of capital. We apply a unique benchmark that is based on HORIBA’s WACC and comparable with operating income in connection withour cost of a capital target. Currently, we conduct this evaluation by applying the same rate to all regions and businesses and monitoring degrees of improvement.

HORIBA Repor t 2021-2022

38

CFO
Message

Balanced management and handling changes in the external environment

Region-centric global operations

The environment in which HORIBA operates is changing at an accelerating pace. The automotive industry is diversifying vehicle power trains
in order to decarbonize and achieve carbon neutrality. This has stalled capital investment by automotive manufacturers for internal
combustion engines. Due to this change, automotive sales slowed and we posted a loss in the Automotive segment in 2021. On the other
hand, semiconductor demand has skyrocketed against a background of increasing digital telecommunications and technologicaladvancement. As a result, we were able to post our best-ever sales and operating income in the Semiconductor segment. I believe that these
positive earnings are thanks to our advancement of a balanced management approach between our five business segments, and maintaining
investment even when performance is poor. HORIBA STEC Co., Ltd.’s Aso factory (our primary plant in the Semiconductor segment) was
damaged during the April 2016 Kumamoto earthquake. However, just three months later, we decided to invest in expanding the plant to 1.5
times its former floor space. In this way, we have strengthened our supply capabilities in expectation of future demand.
Thus, HORIBA has quickly detected changes in the external environment and course of events, and taken decisive actions to makevarious long-term investments in response to such changes. We have continuously invested in new fields of technology, such as hydrogenenergy technology. And we aim to turn these investments into profitable businesses. Meanwhile, we are pursuing improved efficiency andprofitability through efforts such as shortening our CCC* based on HORIBA Premium Value. Looking at the situation from a cash flow
perspective, we had a 14.6 billion yen deficit in cash flows from investing activities in 2021, and a 35.2 billion yen surplus in cash flows frombusiness activities. This left us with a 20.6 billion yen surplus in free cash flow, our highest ever. Furthermore, at the end of 2020, we hadcompleted financial arrangements for planned loan repayments in fiscal 2022, large-scale growth investment and M&A from fiscal 2022
onward. Therefore, we had a 4.0 billion yen deficit in cash flows from financing activities in fiscal 2021, primarily for payment of dividends.

HORIBA’s global operations are region-centric and respect the independence of each affiliate. Local CFOs are hired there, andwe build regional organizations rooted in the local area and enable them to operate autonomously. In addition, we hold online
International Controllers’ Meetings every quarter by region, to promote initiatives to link regional affiliates with headquarters. We
have also established financial subsidiaries in the United States, Europe, the United Kingdom, and China. Their goal is to enableefficient financing activities through transfer of funds within the group, and to reduce currency exchange risk.
In recent years, we have been expanding our global activities across segments. More and more, we are planning andexecuting projects that transcend the boundaries of HORIBA operations to date. We will maintain our base focus on segments
and regions, as we continue to stimulate these cross-segment activities. We will also take a more flexible approach to
management systems and provide suitable support for business transformation.

*CCC: Cash Conversion Cycle. The turnover period from accounts payable to collection of accounts receivable. This is an index which measures the efficiency of working capital.

HORIBA’s global matrix management

Global cash management system
United Kingdom

Management functions

Production
and services
Sales

GBP

Plan and executebusiness strategies

Auto

P&E
Medi

EUR

CNY

USD

EuropeChina

Americas

R&D
Regional control

Semi
Scientific

Japan

Asia

Orders by segment

Order backlog by segment

Billion yen

Automotive

Process & Environmental

Semiconductor

Scientific

Medical-Diagnostics
Billion yen

300

150

250

125

200

100

150

75

100

50

50

25

0

Automotive

Process & Environmental

Semiconductor

Scientific

Medical-Diagnostics

2013

2014

2015

2016

2017

2018

2019

2020

2021

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

In 2021, thanks to favorable demand, the amount of orders received in the Semiconductor segment doubled, and company-wide orderbooking reached their highest level ever, at 266.3 billion yen (a 49.6% increase).
Free cash flow
Billion yen

Automotive: Operating income*1

Semiconductor: Operating income*1

P&E, Medical, & Scientific: Operating income*1

Corporate tax payments/returns

Automotive: Capital expenditures*2

Semiconductor: Capital expenditures*2

P&E, Medical, & Scientific: Capital expenditures*2

Other increases or decreases

Free cash flow

45

Decrease in accounts receivable from the previous year, etc.

35
25
15
5
0
-5
-15
-25
-35

Americas

EuropeCommunication with investors

0

2012

Approximately 70% of HORIBA’s sales, and many of ourdevelopment and production facilities are located outside ofJapan. For our group’s primary currencies, we have establishedfinancial subsidiaries to efficiently handle surplus funds within thegroup. They also help reduce risks like those related to currency
exchange. We are constructing independent cash management
systems for each currency region so as to promote sharedservices and cash pooling.

Acquisition of MIRA Ltd. business, etc.

HORIBA conducts IR activities in line with our IR Activities Policy, determined by the Board of Directors in February 2016. It
clearly explains, not only our management policies and conditions, but our corporate culture. By working hard to secure theunderstanding of investors, we hope to earn their continued support as HORIBA fans.
In 2021, we conducted interviews with (a sum total equivalent to) approximately 500 institutional investors and analysts
from 300 companies. Then, in December, we held the HORIBA IR Day - SEMICON Follow-up Meeting, where numerous investors
attended. We also held roughly 60 Top IR dialogs between senior management and investors. We value these opportunities for
direct communication between senior management and investors.
We are pursuing business growth, and have defined Market Oriented Business as one of the key measures in our Mid-Long
Term Management Plan, MLMAP2023. And in HORIBA’s three focus fields of Energy & Environment, Bio & Healthcare, andMaterials & Semiconductor, we are promoting cross-segment operations that go beyond our existing business segments.
HORIBA businesses, which create new value at the intersection of our various core technologies and customer needs, are often
not easy to clearly explain. But we believe it is important to faithfully explain the progress of each in order for investors toproperly understand and evaluate how HORIBA is trying to change.
Going forward, we will pursue even further profitability in existing businesses, while making the necessary investments forcontinued long-term growth. In this way, we aim to sustainably increase our corporate value together with all of our
stakeholders.

Increase in inventories from the previous year, etc.

-45

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Our free cash flow for 2021 was 20.6 billion yen, the highest ever, due to an increase in operating income.

Please see our website for our IR
Activities Policy (Japanese only).

May 2022

Web Link
Click!

*1 Operating income: Amount before depreciation and amortization *2 Capital expenditures: Amount invested in physical fixed assets and intangible assets

39

HORIBA Repor t 2021-2022

40

Corporate Governance

General Meetingof Shareholders

Corporate governance structure diagram

Audit &
Supervisory Board
Members:(Auditors)

Basic Policy on Corporate Governance
Based on the corporate philosophy of “Open and Fair,” HORIBA has pledged to (1) establish an organizational structure that
promptly responds to changes in the business environment, (2) improve its managerial monitoring of performance, and (3) enhanceAppoint/
Dismiss

Appoint/
Dismiss

Nomination Remuneration
Committee
Consult

Reply

time, we are committed to establishing good relationships with all stakeholders, including owners (shareholders), customers,

Directors:

owners, contributing to our sustainable growth and medium-to long-term improvement in corporate value.

Report, etc.

Non-executive directors

17%

Coordinate

Compliance Committee

3

Audit

IMS*2 Promotion Divisions(Quality, Environmental, Safety &Health, Quality of medical equipment,
Business continuity management)

ReportDirectors: 9

Group CEO,Group COO,
President

Initiate/Promote

Assist indecision-making

2022

23 in total*

1

Female members: 2
Non-Japanese: 6

DirectDirect business execution

Operations Committee/
Management Committee,
etc.

33%

Corporate Officers/
Division Managers

ReportStandards-based
auditsReportReportDirector Skills Matrix

ReportReportKnowledge and insight that HORIBA
considers particularly important
Director Name
Technology

Audit

Appoint/Dismiss/Supervise

PromoteBusiness
administration

Internal Auditing

Coordinate

2022

Percentage of non-executive directors
on the Board of Directors

2015

Coordinate

Financial audit

1
Directors: 6

9Number who are nonexecutive & independent
directors: 3 (1 female)

Report2015

Independent auditor

Coordinate

Board of Directors(Directors)

employees, and local communities. In addition to proper information disclosure, we seek to promote constructive dialogue with our

HORIBA has adopted a type of organization defined in the Companies Act as a“Corporation with Audit and Supervisory Board.” Since its founding in 1953,
HORIBA, Ltd. has appointed non-executive directors and audit and supervisoryboard members (outside & independent auditors) based on this organizational
design. The aim of this is to avoid management with an inward-looking bias.
In 2021, the Board met 12 times, had energetic discussions, and madeprompt decisions. HORIBA also introduced a corporate officer system in 1998
which enables smooth and agile execution of operations under the supervisionand guidance of directors.
The Audit and Supervisory Board audits and monitors the work of theBoard of Directors in an objective and appropriate manner. To this end, it
cooperates with independent auditors, internal auditors (from the Group Internal
Audit Office positioned directly under the Executive Vice Chairman & GroupCOO), and non-executive directors.

Appoint/
Dismiss

Audit

compliance-related arrangements. These objectives have the aim of establishing a world-class governance structure. At the same

Corporate governance system

3

Number who are external
auditors: 2 (1 female)

GovernanceThree fields of expertise forMarket Oriented Business as laid out inour Mid-Long Term Management Plan MLMAP2023
Energy &Environment

Materials &Semiconductor

Risk Control Committee

DirectCommission
business executionnutio trol
c
e
n
ex
l co
ss
a
e
n
n
Report, etc. Group CompaniesriInside/OutsideInte
Busof JapanSupport/Guide

Bio &Healthcare

Atsushi Horiba
Juichi Saito

HO

Joy

RIB

AC

orp

ora

te

Masayuki Adachi
Masao Okawa
Takashi Nagano

Op

en

HORIBA, Ltd. Business Execution Divisions

andF

Sustainability Committee

Ph

un

ilos

op

hy/
C

od

an

dF

air

eo

fE

thi

cs

Jai Hakhu
Sawako Takeuchi
Haruyuki Toyama*1 Number of corporate officers*2 IMS: Integrated Management System

Fumihiko Matsuda• This skills matrix summarizes the knowledge, insight, and expertise required of the directors responsible for managing the company. The shaded areas indicate the strengths of each director.
• Governance ensures transparency in management, and targets skills in finance, accounting, and law, which are vital for appropriate disclosure of information to stakeholders.
• All directors have the necessary international management experience required for HORIBA’s global operations.
• We review each item as is appropriate based on the external environment and company situation.

41

HORIBA Repor t 2021-2022

42

Corporate Governance

Main agenda items in
Board of Directors meetings
With appropriate involvement and advice from non-executive
directors, the Board of Directors freely discusses and exchanges
opinions on matters for resolution, reporting, and matters
contributing to the long-term improvement of corporate value.
The progress of matters resolved by the Board of Directors
is reported on a regular basis, and mechanisms are in place bywhich directors can monitor the status of their implementation.

Major matters resolved at and reported to Board of Directors meetings in 2021
• Investment projects• Corporate alliances• Financing• Cross-shareholdings• Decisions on executive personnel
matters and remuneration• Resolution on dividends• Formulation of Code of Ethics• Implementation of the Masao
Horiba Awards• Adapt to stricter export control
regulations• Product quality improvement• Payment of invention rewards• Status of group company management

Matters regularly reported throughout the year
• Progress on matters for resolution
by the Board of Directors• R&D schedules and achievements• Status of sales/production/quality

Board ofDirectors• Organizational restructuring/major personnel changes• Business performance

Relationship with owners (shareholders) and investors
Open general meeting of shareholders
Since our initial stock listing in the second section of the Osaka Securities
Exchange in 1971, HORIBA has held the annual general meeting ofshareholders on a Saturday so that a greater number of owners are able toattend. Afterwards, we host an informal gathering of shareholders withmanagement. In 2020 and 2021, we called upon shareholders to refrainfrom attending the general meeting of shareholders due to the spread of
COVID-19, and also canceled the informal gathering. Instead, we streamed
the meeting online to maintain transparency.

General Meetingof Shareholders

Shareholder Returns Policy

Evaluating the effectiveness of the Board of Directors
From December 2021 to January 2022, we distributed a questionnaire to all eight directors
and to all three audit and supervisory board members concerning the effectiveness of theBoard of Directors. We received responses from all eleven people. The questionnaire
contained questions regarding the three roles and responsibilities of the Board according to
Basic Rule 4 of the Corporate Governance Code. It asked, “Is the board adequately involved
in directing major courses of action,” “Is the board establishing an environment that
supports suitable risk-taking by managerial staff,” and “Is the board properly fulfilling its
roles and responsibilities for supervision of directors and managerial staff.” Most responses
evaluated these matters as “Adequate” or higher. In addition, these members evaluatedmatters discussed by the Board and the composition of the Board (number of members,
diversity in terms of gender and nationality, knowledge, experience, ability, etc.) as
acceptable at present.
These results were analyzed, evaluated, and reported to the Board of Directors for discussion.

Director Remuneration
At HORIBA, director remuneration is aimed at helping to sustainably increase corporate value over thelong term. The remuneration system is linked to shareholder profits, and is designed to provide a levelof remuneration that will attract top managerial talent.
Remuneration for directors consists of base remuneration (regular fixed salary), earnings-based
remuneration linked to the earnings results of each fiscal year, and transfer-restricted
stock-based/post-delivery stock-based compensation linked to medium-to long-term earnings
performance. We set the percentage of each remuneration based on the maximum limits ofremuneration determined by vote at the general meeting of shareholders. In addition, the Board of
Directors determines the amount of remuneration for each director in accordance with their position
and the scope of their role. Remuneration for non-executive directors, however, consists strictly ofbase remuneration (fixed-amount salary), that, given the nature of their assignment, is not linked toearnings performance. Moreover, the 2022 ordinary general meeting of shareholders decided to
introduce a new stock-based remuneration system, in lieu of the stock option system, to allocatetransfer-restricted stock and post-delivery stock.
The process for determining director remuneration involves the General Meeting of Shareholders
approving a total compensation amount for directors, then the Board of Directors deciding on how thisis distributed. We also established the Nomination Remuneration Committee to handle director
remuneration from this fiscal year forward. It consists primarily of independent management members(three non-executive directors, and two internal directors). This allows us to obtain advice from an
independent standpoint to improve objectivity and transparency in the decision-making procedures of
the Board of Directors.

Breakdown of director remuneration(excluding non-executive directors)

Stock options*Base remuneration

7%

22%

HORIBA considers one of our most important tasks to be returning profits toour owners, while still keeping internal reserves sufficient to maintain a stable
management foundation and provide for expansion of our business. Our basic
policy is to make the total return of shareholders, including cash dividends
and buybacks, 30% of consolidated net income. We pay dividends twice ayear. In 2021, we paid an interim dividend of 50 yen per share and a year-end
dividend of 100 yen per share, for a total dividend of 150 yen per share.
Internal reserves will be used as working capital for business expansion,
investment in facilities and R&D, and basic funds to improve our balance
sheet. This will be returned to owners through future business development.

Philosophy behind shares held for strategic purposes otherthan pure investment
HORIBA believes that collaboration with other companies is necessary for
us to grow sustainably. Toward that end, we decide what shares to holdbased on comprehensive consideration of matters including businessstrategy, the strengthening of relationships with business partners, and themaintenance of relationships with local communities. Every year, the Boardof Directors confirms whether the amount of shares we hold for strategic
purposes other than pure investment is appropriate. They also consider
whether individual shares are appropriate to hold, by confirming whether
they are fit for purpose, and whether the benefits and risks associated withthem are commensurate with the cost of capital. When we recognize thatshares are inappropriate for retention, we consider taking measures suchas share curtailment.

2021

Anti-takeover measures
HORIBA has not adopted any anti-takeover measures. Our “Basic policy on
the persons to control decision making over the financial and business
policies of HORIBA,” explains our way of thinking concerning the event that
we are faced with a hostile mass acquisition of shares. This basic policy
was announced in our Corporate Governance Report.
Please see our website for more
information about our Corporate
Governance Report.

Web Link
Click!

Constructive dialogue
We make efforts to clearly explain our corporate policy, financial
condition, and corporate culture to our owners and ask for theirunderstanding and continued support as fans of HORIBA. We also strive
to disclose information based on the perspective of fair disclosure, so thatvarious stakeholders have access to the same quality of information.
HORIBA abides by the Basic Policy for Constructive Dialogue with
Shareholders as announced on our website.
Please see our website for
information about our Basic Policy
for Constructive Dialogue with
Shareholders (Japanese only).

Web Link
Click!

Status of IR-related activities

Director Remuneration
RatiosFor analysts and institutional investors(Applies to 5 directors)

Financial results briefing: held four times per year
Visitations and individual interviews (within Japan):about 180 times
Visitations and individual interviews (overseas):
about 120 times

Earnings-based
remuneration

71%* Starting from 2022 we are introducing a new stock-based remuneration
system which distributes transfer-restricted stock and post-delivery stockin lieu of stock options.

For more information on director remuneration,please see our Securities Report (Japanese only).

For individual investors

IR Meeting

Briefings, etc.:

held about two times per year

Web Link
Click!

43

HORIBA Repor t 2021-2022

44

Corporate Governance

List of Management Members(as of April 1, 2022)

Risk Management
Risk Management System — Three Lines Model

Risk Management System

Board of Directors,
Operations Committee
Management Committee,
Global Committee
SubmitThird line
Independent verification
capabilities
Group Internal Audit Office(Internal Audit)

Second line

Monitoring

Risk monitoring capabilities
Management departments such as
the Corporate Control Dept., Finance andAccounting Dept., Legal Affairs Dept.,
and Administration Dept.

First line

Monitoring

Primary risk management
5 segments (business departments)

We have created a risk management system known as the Three Lines Model. The firstline, HORIBA’s five segments (business departments), provides active risk management.
The second line, management division, such as the Corporate Control Dept., Finance andAccounting Dept., Legal Affairs Dept., and Administration Dept., provides risk monitoring
capabilities. And the third line, the Internal Audit and Group Internal Audit offices, provides
independent verification capabilities. Our field departments and management departments
are always aware of the individual business risks both inside and outside Japan. Whenappropriate, they report important matters at the Global Strategy Meeting/Global Budget
Meeting which bring together the Board of Directors, Operations Committee, Management
Committee, and the management of our locations outside of Japan. This ensures that
senior management can make decisions and share information in a timely manner. In
addition, the Internal Audit department periodically monitors the effectiveness of the risk
management system, and the way the field division and management division are handlingrisks, from an independent standpoint. When necessary, it reports its findings to the Boardof Directors.
We also formulated the Basic Rules for Group Risk Management to strengthen our risk
management system. These rules classify risks into the following categories: risks for eachsegment, risks related to business, risks related to development and manufacturing, andrisks related to finance. They also establish the management system for these risks, andthe system of responsibility in the event of a crisis. We have also established the HORIBAGroup Risk Management Committee, which includes our major group companies in Japan.

Risk

Business and Other Risks
To identify critical risks, the field and management departments
selected individual risks for HORIBA, based on the risk items specified
in the HORIBA Group risk management regulations. They scored eachrisk on a three-point scale according to its likelihood of occurrence
and the impact on operations. Then, they created a risk map byorganizing the risk items they had scored. This was then debated andapproved by the HORIBA Risk Control Committee.

HORIBA Risk Map

HORIBA Critical Risks (Risks facing the entire company)
Critical Risk

3

Degree of impact on operations

2

1

0
1

The shaded areas of the risk map shown below (left) indicate therisk items that HORIBA has identified as critical risks.
These critical risks are broadly divided into “risks for eachsegment” and “risks for the entire company.” The risks facing theentire company are listed in the table below. We have also disclosed
these risks in our Securities Report.

2• Risks associated with international activities• Risks posed by changes in performance and financial position
due to acquisitions and alliances• Risk of damage to equipment due to natural disasters,
and subsequent delays in delivery• Risks related to contracts and compliance• Risks related to information security• Risks related to intellectual property rights• Risk of fluctuation in prices of materials• Risk of impairment loss for fixed assets• Risks related to pandemics• Risks related to climate change• Risks related to business and human rights

3

Likelihood of occurrence
Please see our website for more
information about our Securities
Report (Japanese only).

45

Web Link

Board of Directors

Atsushi Horiba

Juichi Saito

Chairman & Group CEO

Executive Vice Chairman & Group COO

In 1971, Atsushi Horiba joined OLSON-HORIBA
Incorporated, a U.S. joint venture of HORIBA, Ltd. In
1977, he returned to HORIBA, Ltd. after received
master’s degree in Electronic Engineering from the
University of California, Irvine Graduate School. He wasappointed President in 1992, and has concurrently
served as Chairman, President and CEO since 2005. In
2018, he was appointed Chairman and Group CEO.
He has been invited to serve as a member ofofficial government committees, including the Ministryof Economy, Trade and Industry’s Industrial Structure
Council and Manufacturing Industry Committee, andthe Cabinet Office’s Advisory Panel on the Modalities ofGovernment and Administration. He also devotes
himself to stimulating industry and the local economy
by serving as Chairman of the Japan Electric
Measuring Instruments Manufacturers’ Association,
President of the Japan Analytical Instruments
Manufacturers’ Association, Vice Chairman of the
Kansai Economic Federation, and Vice Chairman of the
Kyoto Chamber of Commerce and Industry.
He was awarded the L’Ordre National du Mérite
(Officier) in 1998 and the L’Ordre National de la Légion
d’Honneur (Chevalier) in 2010 by the Frenchgovernment, in recognition of his contributions to thedevelopment of science, technology, and industry inFrance. He was also awarded a Doctor Honoris Causa
degree by the University of Montpellier, France in 2015
and received the Order of the Rising Sun, Gold Rays with
Neck Ribbon in 2019 from the Japanese government.

Juichi Saito joined HORIBA, Ltd. in 1982. After a
few years as an electrical engineer gaining
experience designing automotive emission testing
systems, he was transferred to the U.S. where he
was in-charge of sales and service for the
Semiconductor and Automotive sectors. He wasthen assigned to new product planning for the
Scientific and Process & Environmental sectors at
our U.S. headquarters in Irvine. Upon his return toJapan in 1992, he served as General Manager ofAutomotive R&D. In 1998, he moved back to the
U.S. and went on to become President of HORIBA
Instruments Incorporated in 2002. In 2004, hemoved to HORIBA STEC Co., Ltd., where he tookcharge of strengthening the Group’s Semiconductor
segment. In 2010, he returned to HORIBA, Ltd.,
where he was appointed Executive Vice President in2013, and Executive Vice Chairman and Group COO
in 2018. Since 2021, he has also been Chairman ofSupervisory Board of HORIBA Europe Holding SASU
in France.
In addition, he serves as Vice Chairman of both
the Japan Electric Measuring Instruments
Manufactures Association and the Japan Scientific
Instruments Association, and as President of the
Kyoto Scientific Instruments Association.

Masayuki Adachi, Ph.D.
(Doctor of Engineering)President & COO

Masayuki Adachi joined HORIBA, Ltd. in 1985. Heworked to develop new products for the Engine
Measurement Systems Division, before serving as
its R&D Manager, General Manager, and Corporate
Officer. He then moved to the U.S. in 2007 as
President of HORIBA International Corporation (now
HORIBA Instruments Incorporated). There headdressed the difficulties arising from the Global
Financial Crisis in the U.S. After returning to Japan
in 2011, he was appointed General Manager of the
R&D Division, which directs the R&D departments ofeach segment. He joined the board in 2014, andserved as President and Chairman of Supervisory
Board of HORIBA Jobin Yvon SAS (now HORIBAFRANCE SAS). He became Senior Managing
Director in 2016, and has served as President and
COO since 2018.
As Vice President of the Japan Analytic
Instruments Manufacturers’ Association, Chairmanof the Japan Environmental Technology Association,
and Fellow of the Society of Automotive Engineers
International, he has contributed to theadvancement of the science and technology related
to analysis and measurement, and to the promotionof science and technology in general, as well as
industrial and economic development.

Click!

HORIBA Repor t 2021-2022

46

List of Management Members(as of April 1, 2022)

Board of Directors

Masao Okawa

47

Board of Directors (Non-executive)

Takashi Nagano

Managing Director

Director

Masao Okawa joined HORIBA, Ltd. in 2017. Before
joining HORIBA, Ltd., he worked for almost 30
years at the Bank of Japan and served as General
Manager of its Kyoto Branch, Chief Representativeof its Frankfurt Office, and on loan to Harvard Law
School (LL.M.) and the Bank for International
Settlements (Basel, Switzerland). As General
Manager of our Finance and Legal Division, he has
used his knowledge and global experience infinance and governance gained at the Bank ofJapan to build a global financial strategy. This
included improving financing efficiency throughfinancial holding companies outside of Japan, andworking to strengthen compliance and corporate
governance.
He also actively contributes to the vitalizationof economy and industry by serving as a directorof the Kyoto Association of Corporate Executives
and as a director of the Tokyo Scientific
Instruments Association.

Takashi Nagano joined HORIBA, Ltd. in 1985. He
initially engaged in software development for theEngine Measurement Systems Division, before
serving as Manager and General Manager of theEngine Measurement Planning & Development
Department. He then moved to Germany in 2003 as
President of HORIBA Europe GmbH. He wasappointed to Corporate Officer in 2005 and SeniorCorporate Officer in 2006. After returning to Japan
in 2011, he became General Manager of the Sales
Division, which oversees the sales departments ofall segments. He became a Director in 2016 after
serving as CEO of HORIBA Europe GmbH and
President of HORIBA KOREA Ltd. Since 2018, hehas been a member of the GLOBAL AUTOMOTIVEBOARD, which oversees our automotive business. In
this way, he has contributed to the international
automotive industry for many years.
Since June 2022, he has served as chief ofthe Kansai branch of the Society of Automotive
Engineers of Japan, Inc., where he hopes tocontribute to the advancement and development ofscience and technology related to automobiles.

Jai Hakhu, Ph.D.

Sawako Takeuchi, Ph.D.

(Doctor of Engineering)(Doctor of Engineering, Doctor of Economics)

Director

Director (Non-executive), Independent Director

Jai Hakhu built up experience as Vice President at
both Rockwell International Corporation and Varian
Semiconductor Equipment Associates Inc. before
working as Corporate Vice President and General
Manager at Intel Corporation. In 2010, he joined
HORIBA, Ltd. as an Executive Corporate Officer. He
has held a number of important positions in ourgroup companies outside of Japan, including
Chairman and CEO of HORIBA Instruments
Incorporated, President of HORIBA ABX SAS, andChairman of HORIBA India. He has also worked as
President and CEO of R.C. International LLC, a
Chancellors Roundtable Member at the University ofCalifornia, Irvine, and on the Board of Directors at
both Montpellier University of Excellence (MUSE)
and the University of Montpellier (UM). In addition tobroad expertise based on management experienceat global corporations, he has led HORIBA’s
Medical-Diagnostics segment in America, France,and India, and contributed to various aspects of
HORIBA’s global operations.

After completing her doctoral studies at the
University of Paris, Sawako Takeuchi served for six
years as Deputy Director of the Master ofInternational Business Graduate Program at Ecole
Nationale des Ponts et Chaussées, one of the oldest
and most prestigious Grandes Ecoles in France.
After returning to Japan, she worked as Chief
Economist at the Long-Term Credit Bank of Japan,
Research Institute. In 1998, she moved to the
School of Engineering at the University of Tokyo as
an Associate Professor, where she earned two
doctorates in engineering and in economics, andmade research achievements in the fields ofindustrial engineering and urban development.
Later, she was appointed a Visiting Professor at
Kyoto University. In 2011, the Ministry of Foreign
Affairs of Japan requested that she become thePresident of the Japan Cultural Institute in Paris,
where she played a role in cultural diplomacy.
Since 2016, she has been a Non-executive
Director of HORIBA, Ltd. She has also served as a
Visiting Professor at the Yamagata University Faculty ofEngineering, and appointed as an Outside Director of
SAXA Holdings, Inc. She draws on a deep knowledgeof music to teach liberal arts as a Visiting Professor at
the Tokyo College of Music. She has been awarded theOrdre National du Mérite (Chevalier) and Ordre desArts et des Lettres (Chevalier) by the government ofFrance. She also holds a professional license in
Urasenke Sado (Japanese way of tea).

Haruyuki Toyama

Fumihiko Matsuda, Ph.D.
(Doctor of Medicine)

Director (Non-executive), Independent Director

Haruyuki Toyama joined the Bank of Japan in April
1982. He graduated from the University ofCalifornia School of Law (LL.M.) in 1988 andbecame a Visiting Scholar at Harvard Law School in
1989. He served as the Alternate Executive Director
for Japan of the International Monetary Fund (IMF)from 2000, and subsequently held several otherpositions at the Bank of Japan, including General
Manager of the Okayama Branch, Associate
Director-General of the Payment and Settlement
Systems Department, Director-General of the
Financial Markets Department, General Manager for
the Americas, and Director-General of theInternational Department. During his tenure at the
Bank, he was involved in a number of international
activities, including secondments to the U.S. Federal
Reserve Board (FRB) and the European Commission(EC), and serving as a member of the Bank forInternational Settlements (BIS) Committee on
Payments and Market Infrastructure and Markets
Committee. He also served as a lecturer on Financial
Laws at the Graduate School of Hokkaido University.
After leaving the Bank in 2014, he registeredas a lawyer in 2015. In the same year, he became
an Outside Director of Hitachi Construction
Machinery Co. Ltd. He joined the Iwata Godo law
office in 2019 and brings a wealth of knowledge
and experience in the field of international finance.
He has been a Non-executive Director of HORIBA,
Ltd. since 2021.

Director (Non-executive), Independent Director

Professor Fumihiko Matsuda obtained his Ph.D. inmedicine from Kyoto University Graduate School of
Medicine in 1990. After working as an assistantprofessor at the Center for Molecular Biology andGenetics and the Faculty of Medicine at Kyoto
University, he joined the Centre National deGénotypage (CNG) in Evry, France, as the head of gene
identification. He then received a joint appointment as
a professor at the Kyoto University Graduate School of
Medicine in 2003, and divided his activities between
Kyoto and Paris for five years as he pursued his
research in genomic medicine through the end of
2007. In 2008, he became the director of the Center
for Genomic Medicine at the Kyoto University Graduate
School of Medicine, and since 2020, has served as
principal assistant to the president of Kyoto University.
Professor Matsuda has created two spin-off
bio-venture companies, GenoConcierge Kyoto, Inc.
in 2018 and RADDAR-J for Society Inc. in 2020. He
serves as a Director (Chief Advisor) of bothcompanies, contributing to active collaboration
between academia and industry.
He has been a Non-executive Director of
HORIBA, Ltd. since 2021. He also devotes himself
to cultural exchange between Japan and France
through involvement in artistic and culturalactivities. In recognition of his achievements,
contributions, and efforts to date, he received theChevalier de l’Ordre National du Mérite of theFrench Republic in 2021.

HORIBA Repor t 2021-2022

48

List of Management Members(as of April 1, 2022)

Audit & Supervisory Board Members

Corporate Officers

Senior Corporate Officers

Corporate Officers

Hideyuki Koishi

President of HORIBA STEC Co., Ltd. (Japan)

George Gillespie, Ph.D.
(Doctor of Engineering)

Executive Chairman of HORIBA MIRA Limited. (U.K.)
Automotive Board Leader

Hiroo Chihara

President of HORIBA Techno Service Co., Ltd. (Japan)

Dan Horiba

President of HORIBA Advanced Techno Co., Ltd. (Japan)

Hiroshi Nakamura, Ph.D. General Manager of Business Incubation Division(Doctor of Engineering)

49

Atsushi Nakamine

Keiji Yamada

Tomoko Tanabe, M.D.

Audit & Supervisory Board Member(Standing Auditor)

Audit & Supervisory Board Member(Outside & Independent Auditor)

Audit & Supervisory Board Member(Outside & Independent Auditor)

Atsushi Nakamine joined HORIBA, Ltd. in 1978. Heworked in departments related to accounting andcorporate finance, and built up his career at
HORIBA Europe GmbH in Germany. Since 1995, hecarried out various projects to promote new
business development, such as business alliance,
acquisition, corporate foundation. In 2001, hebecame Executive Vice President & COO of ABX
S.A. (now HORIBA ABX SAS (France)). He wasappointed a Corporate Officer of HORIBA, Ltd. in
2002, and in June 2005, became President & CEOof ABX S.A. Then, in 2008, he also became
President of the newly established HORIBA Europe
Holding SASU. After returning to Japan, he served
as General Manager of Group Production
Management and Division Manager of the IT & BPR
Center of HORIBA, Ltd., and has been a Substitute
Audit & Supervisory Board Member since 2018. He
was appointed to serve as an Audit & Supervisory
Board Member in 2020.

Keiji Yamada joined the Ministry of Home Affairs(now the Ministry of Internal Affairs andCommunications) in 1977. He retired after serving
as Director of the Cabinet Legislation Bureau,
Director of the Kyoto Prefecture General Affairs
Department, and Vice Governor of Kyoto Prefecture.
He served four terms as Governor of Kyoto
Prefecture starting in 2002 and four terms as
President of the National Governors’ Associationfrom 2011. He has been a Professor at the
Department of Interdisciplinary Studies in Law and
Policy, Faculty of Law, and Advisor to the President(now Special Advisor to the President) at Kyoto
Sangyo University since 2018. He became amember of the Board of Directors in 2021.
In 2020, he was appointed an Audit &Supervisory Board Member of HORIBA, Ltd. He also
serves as an outside director at Kawasaki Kisen
Kaisha, Ltd., TOSE CO., LTD., and Nitto
Pharmaceutical Holdings, Ltd.
He is the President of the Kyoto Culture
Foundation, which engages in financing andenlightenment activities related to the protection ofcultural properties. It aims to foster more abundantcreation and development of Kyoto culture, which
has long been at the core of Japanese culture.

Dr. Tanabe graduated from the Kyoto Prefectural
University of Medicine (KPUM) in 1996. She thenmoved to the U.S. after completing a one-year
internal medicine internship at the University
Hospital. During her 12-year stay in the U.S., she
engaged in clinical medicine and medical education
at the Perelman School of Medicine of the
University of Pennsylvania, and taught at the
University of California San Diego School of
Medicine. Upon her return to Japan in 2008, shejoined the Shinyukai Medical Group where she was
first put in charge of women’s health at Oike Clinic.
She became a member of the board at Shinyukai
Holdings in 2010, and in 2018, became thepresident of the Kyoto Medical Club. She is also
currently a Visiting Professor in the Departments ofPhysiology and Integrated Physiology at the Kyoto
Prefectural University of Medicine (KPUM). Dr.
Tanabe was appointed an Audit and Supervisoryboard member of HORIBA, Ltd. in 2020.
Dr. Tanabe believes strongly in a holistic
approach to clinical medicine, primarily focusing on
preventive medicine and continuity of care. She also
has a keen interest in promoting the careers offemale physicians and researchers. In 2010, she
was one of the five founding members of the Centerfor the Promotion of Gender Equality at the Kyoto
Prefectural School of Medicine.

Toshiya Higashino

President & COO of HORIBA Instruments Incorporated (U.S.)

Yasuo Yamashita

General Manager of General Administration Division

Tadao Nakamura

Director of HORIBA INSTRUMENTS (SHANGHAI) CO., LTD.
Chief Director of HORIBA (China) Trading Co., Ltd.
Chief Director & President of HORIBA Technology (Suzhou) Co., LTD.

Hiroyuki Urabe

Director of Sales at HORIBA Europe GmbH (Germany)

Arnaud Pradel

General Manager of HORIBA ABX SAS (France)

Dale Poole

Executive Vice President of HORIBA Instruments Incorporated (U.S.)

Akio Kinoshita, Ph.D.
(Doctor of Engineering)Technology Officer for Automotive Board
Deputy General Manager of Business Incubation Division

Rajeev Gautam, Ph.D.

President of HORIBA India Private Limited (India)(Doctor of Bio-Technology)

Junior Corporate Officers

Stuart Knight

President of HORIBA UK Ltd.

Laurent Fullana

President of HORIBA FRANCE SAS

Yuko Kimura

Chief Director & President of HORIBA INSTRUMENTS (SHANGHAI) CO., LTD.
Director & President of HORIBA (China) Trading Co., Ltd.

Hitoshi Motokawa

General Manager, Finance and Legal Division Responsible for Financial Control

Narihiro Oku

Responsible for Medical Business Division and Medical Advanced R&D

Hideyuki Nishibun

General Manager of Global Business Strategy Division at
HORIBA Techno Service Co., Ltd. (Japan)

Masashi Nishimura

Corporate Officer at HORIBA Advanced Techno Co., Ltd. (Japan)

Tsukasa Satake

Responsible for Analytical Instruments Research & Development Division,
Tokyo based

Kentaro Nishikata, Ph.D.

General Manager of Analytical Instruments Research & Development Division
Deputy General Manager of Business Incubation Division(Doctor of Engineering)

Maki Moriguchi

Deputy General Manager of General Administration Division,and General Manager of Executive Secretariat
General Manager, Stained Glass Project Office

HORIBA Repor t 2021-2022

50

Process &Environmental

Automotive
Segment

MedicalDiagnostic

Segment

HORIBA’s

Semiconductor

ScientificSegment

Segment

Segment

Five

Measurement
Businesses

Major products andmarket share of each
(Note: Market share for each product is
HORIBA’s estimate.)

Emission measurement systems

Stack gas analyzers

Hematology analyzers

Mass flow controllers

Raman spectrometers

Global market
share

Sales composition
ratio

Market sharein Japan

Sales composition
ratio

Global market
share

Sales composition
ratio

Global market
share

Sales composition
ratio

Global market
share

Sales composition
ratio

80%

40%

50%

36%

7%

67%

60%

86%

30%

21%

Driveline test systems

H-1 series of industrial water quality analyzers

Chemical concentration monitors

pH meters

Global market
share

Sales composition
ratio

Market sharein Japan

Share ofsegment sales(For all water
quality analyzers)(For all water
quality analyzers)

Global market
share

Sales composition
ratio

Market sharein Japan

Sales composition
ratio

15%

6%

30%

35%

80%

11%

50%

9%

• Battery test systems• Onboard emission
measurement systems• Vehicle development
engineering• Water quality analysis and examination systems• Engine test systems• Testing engineering• Environmental radiation meters• Brake test systems• Lease and managementof R&D facilities• Process measurement equipment• Fuel cell test systems

Major customers

Product applications

Major risks andopportunities• Air pollution analyzers

Automotive manufacturers
Automotive component manufacturers
Government agencies

Electric power companies
Government agencies
Manufacturers

Development of new gasoline, diesel,and Electrified powertrains
Certification and quality control of completed vehicles
Inspection of in-use vehicles
Changes in emission regulations
Capital spending and R&D investments by
the automotive industry

P. 53
51

• Hematology and CRP analyzers• Automotive emission analyzers• Hematology analyzers• Immunology analyzers• Clinical chemistry analyzers• Blood glucose analyzers• Reticle/mask particle detection systems• Residual gas analyzers• Water quality analysis• Fluorescence spectroscopy/
and examination systems fluorescence lifetime
spectroscopy• Particle-size distribution
analyzers• Vaporizers• X-ray fluorescenceanalyzers• Coagulation/Hemostasis• Optical components;
spectrometers and detectors• Gratings• Elemental analyzers

Medical testing centers
Small-to medium-sized hospitals
Physicians in private practice

Semiconductor production equipment manufacturers
Semiconductor device makers

Manufacturers/Research institutions
Universities/Government agencies
Electric power companies

Measurement of drinking water, wastewater,and gaseous emissions
Monitoring of production process
Research and development

Diagnostic testing
Medical checkup

Controlling flow of gases and liquids, monitoringcleaning fluid concentrations in semiconductor
manufacturing processes
Quality control inspections of semiconductors
and LCDs

Research and development
Product quality testing
Criminal forensics

Changes in environmental regulations
by government agencies
Developments in energy efficiency improvement
at factories and power generation plants

Changes in total healthcare
expenditures caused by changes in
population and other factors
Changes in medical insurance systems
in different countries

Capital spending of semiconductor manufacturers
and others in association with fluctuating demand
for semiconductors
Production trends of manufacturers ofsemiconductor production equipment

Changes in R&D budgets at government agencies,
universities, and research institutions
Changes in R&D spending and capital spending for
production in the private sector

P. 54

P. 55

P. 56

P. 57
HORIBA Repor t 2021-2022

52

Business overview



Process & Environmental

Automotive Segment

Segment
Providing powerful support for the optimizationof vehicle testing and acceleration of
automotive development

We supply a broad range of analysis and measurement instruments for analyzing
air pollution, water quality, and soil quality. HORIBA products play an importantrole in many industries. They enable the measurement of gases and themonitoring of industrial wastewater in energy and heavy chemical industries likeelectric power, steel, and petrochemicals. They also allow for purified water
management for medical and semiconductor use, and the monitoring and controlof water quality in the food, and cosmetics sectors. In essence, the analysis andmeasurement technology we provide helps to preserve the global environment,
and leads technological innovation in support of public safety, security, andhealth. This is how we are helping to achieve a sustainable society.

*HORIBA’s estimate

Sales by business
ECT*2 business

Japan
28%

Americas 11%

14%

2021
Net sales

61.2
billion yen

Emission business60%

MCT*1 business
26%

Europe
35%

Asia
26%

*1 Mechatronics (MCT): measurement instruments for vehicles *2 Engineering Consultancy & Testing

Operating income(billion yen)

120.0

120.0
Planned value set in the Mid-Long Term Management Plan
MLMAP2023, announced in August 2019

15.0

12.0

Operating income plan
80.0

73.3
64.2 62.2
49.5
40.0

55.0

43.2
5.8
4.4

7.6

79.6

81.0

10.0

63.9 61.2

7.7
6.4

4.4

4.2

5.0

3.5
2.4
-0

0

12

53

13

14

15

16

17

New investment by automotive manufacturers and other businesses in the internal
combustion engine sector was sluggish, and sales of our emission measurement
systems decreased. This resulted in declining revenues and operating losses.
Meanwhile, in anticipation of the upcoming Euro 7 emissions regulation to be
adopted by the EU, we introduced a new product to the market that uses our
proprietary gas analysis technology, IRLAM™. In addition, our group has preparedevaluation and measurement solution technology geared towards batteries, fuelcells, and water electrolysis for hydrogen production. We are also developing
products and applications to support development and testing requirements in thefields of electrified vehicles and energy. We have established ASSURED CAV, an
integrated engineering and development facility that provides comprehensive
support for connected and autonomous vehicles in all stages, from design throughtesting of actual vehicles. We continue to research and develop new products andservices that meet the needs of next-generation mobility development.

 

Net Sales and operating income
Net sales (billion yen)

18

19

20

21

2023

Sales by business

Sales by region

Stack gas analysis
36%

Other
12%

Americas 11%

Japan
51%

Europe 13%

2021
Net sales

20.2
billion yen

Water quality
35%

Air pollution
17%

Launching OBS-ONE-XL, On-board
emission measurement systemthat uses our IRLAM* technology
The Real Driving Emissions (RDE) test, which measures emissions while driving, isgaining widespread recognition as a way to more effectively control automotive
emissions. This product is used in on-road emissions tests, and utilizes the Infrared
Laser Absorption Modulation (IRLAM™*) technology, that we developed andsuccessfully commercialized. It can measure the greenhouse gas nitrous oxide(N2O), as well as ammonia (NH3), which canbe a source of PM2.5 particles. It also
leverages the characteristics of IRLAM
technology to provide high reliability amidst
the high and low temperatures, changes in
air pressure, and chassis vibrations present
during on-road driving tests.

Asia
25%

 

Net sales (billion yen)

Operating income(billion yen)

30.0

28.0
2.8

2.0
1.6
14.7

16.4

19.3 19.5
16.7

16.7 17.4

20.2
1.9

2.0

2.0

1.7

1.6

1.5

13.7

18.3

1.6

1.2

10.0

1.0

1.0

0

*IRLAM is a trademark or registered trademark of
HORIBA, Ltd. in Japan and other countries

On-board emission measurement
system OBS-ONE-XL

3.0

Operating income plan
Planned value set in the Mid-Long Term Management Plan
MLMAP2023, announced in August 2019
20.0

0

12

13

14

15

16

17

• Demand related to environmental regulation
remained strong• Accelerating expansion of global water quality
measurement business
Vigorous demand related to environmental regulations led to increased sales ofstack gas analyzers in Asia. Strong demand from manufacturing processes inindustries such as electronics, and water quality measurement for handlingenvironmental regulations, also led to increased sales and profits.
Meanwhile, we launched laser gas analyzers for the gas measurement sector
which utilize our proprietary gas analysis technology IRLAM, and infrared
thermometers that help increase manufacturing process efficiency in steel andsemiconductor production. In the water quality measurement segment, we
accelerated our water quality measurement business and began selling a TOC
monitor which measures Total Organic Carbon to comply with environmental
regulations.

Net Sales and operating income

0(Planned)

2021 results• Sluggish new capital expenditures for development ofinternal combustion engines• Accelerating efforts to support powertrain diversification

Sales by region

HORIBA helps monitor global environmental preservation,and production and quality management processes

HORIBA’s automotive Emission Measurement Systems (EMS) hold a global market
share of 80%*. HORIBA provides manufacturer R&D and quality control units withcomplete testing and measurement solutions. These include test systems forengines, chassis, powertrains, brakes, catalytic converters, batteries, and fuelcells, as well as water electrolysis cell/stack assessment equipment. We are also
actively developing our Engineering Consultancy & Testing (ECT) business, which
supports development of next-generation mobility technologies for applications
such as electrified vehicles, autonomous driving, functional safety, and cybersecurity.

2021 results


18

19

20

21

Launching a new TOC monitor productTotal Organic Carbon is one of the leading
indicators of water quality. Its analysis isbecoming more important each year, not only inthe environmental sector, but in the
manufacturing processes of many industries. In
September 2019, HORIBA purchased the water
quality analysis startup company TOCADERO
Analytics (now HORIBA Tocadero). We havelaunched new products based on theirhigh-temperature catalyst-free combustion
technology that can flexibly handle a wide rangeof TOC analysis. We are expanding our lineup ofwater quality meters to contribute to a widearray of fields, including petrochemicals,
automotive, energy, paper production, and food.

On-line TOC Analyzer
Model T1

2023

(Planned)

HORIBA Repor t 2021-2022

54

Business overview



Medical-Diagnostic Segment

Semiconductor Segment


Contributing to healthy lives throughin-vitro diagnostic systemsContributing to yield enhancement and technology innovationin semiconductor manufacturing processes withHORIBA’s flow control and measurement technologies

HORIBA provides instruments and reagents (consumables) for blood sample
testing to the global market for in-vitro diagnostic (IVD) systems. Our businessmodel for this segment is based on recurring revenues generated from sales ofreagents. We aim to ensure stable earnings by expanding our installed base of
medical diagnostic instruments. In particular, HORIBA’s strength lies in small andmedium-sized hematology analyzers for point of care testing (POCT)* in private
clinics and hospital operating rooms, as well as small-to medium-sized hospitals
and testing centers.

Mass flow controllers, used in the manufacturing process (front-end) of devices
such as semiconductors, are a major product in the Semiconductor segment. Our
mass flow controllers boast leading global market share*, thanks largely to ourcutting-edge flow control technology which contributes to enhanced yield andminiaturization in the semiconductor manufacturing process. We intend to provide
solutions for responding to technological advances in semiconductor manufacturing
processes, while supplying measurement equipment such as chemical
concentration monitors and reticle/mask particle detection systems. This will allow
us to establish an important position in the growing semiconductor industry.

*Point of Care Testing (POCT): A general term for testing performed at locations close to patients, such asprivate practitioner offices, diagnostic clinics, hospital wings, and outpatient clinics.

*HORIBA’s estimate

2021 results
Sales by business
Immunology
7%

Sales by region
Other 3%

Japan 20%

Americas 23%

2021
Net sales

25.8
billion yen

Clinical chemistry,
Blood glucose
23%

Hematology
67%

Asia
22%

Europe35%

Net Sales and operating income
Operating income(billion yen)
8.0
40.0

40.0
Planned value set in the Mid-Long Term Management Plan
MLMAP2023, announced in August 2019
Operating income plan

26.8 27.0 27.4 26.5
20.0

25.1

26.0 25.3

22.4

2.4
10.0

6.0

25.8
21.0

2.4

2.4

4.0

4.0

2.8
1.9

0

-0.4

55

Chemicalconcentration
monitors
11%

15

16

17

18

19

20

-1.0

21

2023

(Planned)• Increase in capital expenditures by semiconductor
manufacturers due to growing demand forsemiconductors

Sales by region

Gas analyzers 1%
Reticle/mask
particle detection
systems etc.
2%Europe6%

Americas 11%

Japan
31%

2021
Net sales

87.0
billion yen 

Net sales (billion yen)

Began sales of small electrode typeglucose analyzer for animals
In 2022, we began selling a blood glucose analyzer that we developed for the
animal market, where demand has been growing in recent years.
This product can easily obtain an accurate measurement of blood glucose froma single drop of whole blood. It also operates on the same measurement principle
used to test human blood in clinical laboratories, allowing it to provide stable data.
Veterinary care providers can show objective numerical results as they explain theirdiagnosis, helping to provide greater peace of mind to owners.

30.0

28.0
100.0

25.0

87.0
80.0

77.0
15.6

60.0

35.3

0

24.1
4.8

28.9

9.4

6.4

38.8

10.7

9.6

17.7

56.9
47.1

14.0

15.0

10.0
Operatingincome plan

Planned value set in the Mid-Long Term Management Plan
MLMAP2023, announced in August 2019

2.2
12

20.0

17.0

57.7
53.3

40.0

Antsense Duo VET small
electrode type glucose
analyzer for animals

Operating income(billion yen)

120.0

17.8

5.0

0

13

As demand for semiconductors has increased, semiconductor manufacturers haveincreased their capital expenditure. This has significantly increased our sales tosemiconductor equipment manufacturers, leading to higher sales and profits. In themeantime, we have begun sales of pressure-type mass flow controllers,
reticle/mask particle detection systems to meet the growing inspection needs ofthe exposure process, and dissolved oxygen meters which can manage dissolved
oxygen in a variety of chemical solutions. In addition, we continued to invest in joint
research with universities and research institutions as part of our efforts to expand
the range of underlying technologies.

Asia 52%

Mass flow controllers
86%

20.0

0

14

Sales by business

1.3
0.1

13

2021 results

Net Sales and operating income

2.0

1.8

1.7

12

Increased sales of clinical chemistry analyzers and reagents in the Americas,
alongside growing sales of hematology analyzers, led to increased revenue andprofits. Meanwhile, we strove to expand our business for our core hematology
analyzers and POCT test equipment products on the global market. And we aredeveloping new products to expand our product lineup for private clinics, hospitals,
and testing centers. We also began to supply some OEM equipment to Siemens
Healthcare Diagnostics Inc. In addition, we have responded to the growing demandfor performance and accuracy in testing equipment sparked by the spread of
infectious diseases, by researching and developing new POCT test equipment thatenables highly sensitive, rapid diagnosis.

 

Net sales (billion yen)

30.0

• Increased sales of hematology analyzers, clinicalchemistry analyzers, and reagents• Promoted the development of new products with theaim of expanding our business in the global market
for our core products

14

15

16

17

18

19

20

21

2023

Next-generation inspection platform to meet a variety of needs

Began sales of our PD Xpadion
Reticle/mask particle detection system
Our PD Xpadion Reticle/mask particle detection
system quickly measures the foreign matterstuck to reticles* and blanks used in thelithography process. We have built up a trackrecord of close to 40 years since the debut of
our first particle detection system (PD) in 1984.
The PD Xpadion offers significant improvements
in operability while maintaining high uptime andlong-term stability. Plus, its enhanced
automation capabilities support automating ofcustomer production processes, and help toachieve the goal of a smart factory.
*Patterns, pellicles, glass surfaces

Began sales of our PD Xpadion
Reticle/mask particle detection system(Planned)

HORIBA Repor t 2021-2022

56

Corporate Data

Business overview

Scientific Segment

Corporate informationSupporting HORIBA’s core technologies andpioneering cutting-edge fields
HORIBA’s analysis technology began with research and development that lead to Japan’s
first glass electrode pH meter, and has expanded to include gas analysis using infrared
light, elemental analysis using X-rays, and Raman spectroscopy and Fluorescence
spectroscopy using optical technology. These contribute to R&D activities at the frontlineof scientific technology and help explore the unknown frontiers of science. HORIBA’s
analyzers are used for foreign object examination and active ingredient analysis forpharmaceuticals and foods, defect analysis for electronic components, as well as
analysis in wide fields such as forensic science and archaeological surveys. Plus, the
Scientific segment develops basic measurement methods and core technologies foranalytical instruments, which play key roles in providing new technologies to HORIBA’s
four other business segments.

2021 results
Sales by business
Other 4%

Water quality 8%
Particlecharacterization
11%

Japan 22%

Americas 30%

Molecular &microanalysis
32%

2021
Net sales

29.9
billion yen

Optical components
29%

Elemental analysis
16%

Europe
21%

Asia
27%

Net sales (billion yen)

Operating income(billion yen)

40.0

4.0
Operating income plan
Planned value set in the Mid-Long Term Management Plan
MLMAP2023, announced in August 2019

30.0

25.6

27.0

25.7 26.1

27.7 27.1 26.8

3.5
29.9

35.0

3.0

20.4

Revenue increased thanks to increased sales of optical modules for thesemiconductor market, and increased sales of analysis and measurement
equipment due to the gradual recovery of corporate investment in R&D. However,
the increase in R&D expenses led to a decrease in profits. Meanwhile, we jointly
developed an analytical system that combines Shimadzu Corporation’s
high-performance liquid chromatographs with HORIBA’s Raman spectrometers.
And we began selling specialized software to connect the two instruments. We
have also developed new products for X-ray micro-analysis and analysis of oxygen,nitrogen, and hydrogen in solids. These instruments contribute to efficientmeasurements during research and development of various advanced materials,
quality control, and manufacturing processes.

1.2
10.0

1.0

0.9

0.9

0.4

0.2

As a result of our collaboration with Shimadzu Corporation, which began in August
2020, we have launched an integrated system that is the first of its kind in theworld*. Combining Shimadzu’s LC separation technology with HORIBA’s Raman
visualization technology not only significantly increases measurement accuracy andefficiency, but is expected to offer new measurement value by detecting unknown
components. This technology combines the strengths of both companies, and willcontribute to the development of various fields such as, materials, environment, newenergy, and life sciences which includes medical and health care.

14

15

16

17

18

Incorporated

January 26, 1953

Transfer agent

Sumitomo Mitsui Trust Bank, Limited

Net sales

224,314 million yen (Consolidated) Fiscal 2021

Independent auditor KPMG AZSA LLC

Paid-in capital

12,011 million yen (Consolidated) As of December 31, 2021

Stock listings

Tokyo Stock Exchange, Prime Market
Securities Code: 6856

As of December 31, 2021

Shares (Thousands)

Percentage* (%)

The Master Trust Bank of Japan, Ltd.

4,930

11.68

Custody Bank of Japan, Ltd.

2,409

5.71

National Mutual Insurance Federation of Agricultural Cooperatives

1,682

3.99

BBH (LUX) FOR FIDELITY FUNDS - SUSTAINABLE WATER AND WASTE POOL

1,282

3.04

Atsushi Horiba

1,073

2.54

THE BANK OF NEW YORK MELLON 140044

1,024

2.43

STATE STREET BANK AND TRUST COMPANY 510312

925

2.19

The Kyoto Chuo Shinkin Bank

830

1.97

The Bank of Kyoto, Ltd.

828

1.96

HORIBA Raku-Raku Kai

812

1.93

* Percentages of shares are calculated by deducting our own shares (335,502 shares).

Stock Price Trend (Closing price each day)Yen
30,000Yen
12,00010,00020,0008,000

15,000

6,000

10,000Qualitative Analysis

Other companies

2.3%

Financial institutions,
Securities
companies

1.4%

Number ofshareholders

7,090

4,000

5,000

2,000

0

0

Individual investors / other

91.7%
2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Other companies

Individual investors /
other

6.3%

18.3%

Foreigninvestors

39.7%

2017

2018

2019

2020

2021

Cumulative

Cumulative

Cumulative

Cumulative

Cumulative

HORIBA

127.7%

87.8%

142.7%

120.7%

136.6%TOPIX (including dividends)

119.7%

98.4%

113.4%

118.8%

131.2%

Investment period

Raman Spectrometer

LiquidChromatographForeign investors 4.6%

HORIBA (right)

TSR* Index

Control, analysis,
and data management

013

Held in March

Number of shares

42,532,752

0.7

0

12

Annual Meetingof Shareholders

Nikkei Stock Average (Nikkei 225) (left)

Separation and Collection

0.9

October 17, 1945

25,0001.9

1.3

Founded



2.0

1.9

December 31, annually

Name of shareholder

22.9
20.0

Fiscal closing date

Major shareholders (Top 10)

Released LC-Raman System jointly developed
by HORIBA and Shimadzu Corporation

Net Sales and operating income

2 Miyanohigashi, Kisshoin, Minami-ku, Kyoto 601-8510 Japan

Number of employees 8,205 (Consolidated) As of December 31, 2021

• Expanded sales of high value-added products• Gradual recovery of corporate R&D investment

Sales by region

Head Office

19

20

21

2023

(Planned)

Dedicated LiChRa™ Software*According to research by both companies (As of June 2021)*Total Shareholders’ Return: Total return on investment that combines capital gains and dividends

Financial institutions,
Securities companies

35.7%*The LiChRa and LC-Raman system logos are trademarks of HORIBA, Ltd. and Shimadzu Corporation.

57

HORIBA Repor t 2021-2022

58

Financial Data

Financial Data Eleven-year summary
Net sales by segment

Accounts receivable (AR) and AR turnover (days)

Million Yen
240,000

The fiscal year ended December 31,
2021 saw the first sales increase inthree periods. This was primarily due
to the continued high level of capital
investment by semiconductor
manufacturers.

Accounts receivable (left)

224,314210,570
200,000

195,399
170,898 170,093

160,000

153,065
138,136

120,000

123,456 117,609
22,04080,00040,00024,694

20,406
17,861

26,832
23,48522,40014,55813,70914,711

38,67843,23049,524

2011

2012

2013

2014

Million Yen

140

60,00050,00040,00025,187
26,564

16,754

16,75364,251

62,20773,360

2015

2016

2017

17,43326,01225,335

19,361

19,500125

117

52,246 54,771

116

116

125

47,41160,152 59,111 59,121

115

79,65639,37559,87753,724 112

2019

90

37,52060

18,337

20,217

Process &Environmental

20,00040

63,913

61,249Automotive

10,000

20

2020

2021

2012

2013

2014

2015

2016

2017

2018

2020

2019

R&D expenses (left)

Return on equity (ROE) (right)

%
15.0

14.3

12.0

11.5
10.2

9.9
15,000

7.8

10.0

11.2

16,2818.9

8.4

12,882

12,962

15,481

10,58910,0008,664

12,000

9.3

9.0

7.6

9,000

3.0

0

2013

2014

2015

2016

2017

2018

2019

15,594

8.1

8.3

7.2

12.0

10.0

15,000

7.6

Operating cash flow

Investing cash flow

32,25328,287

15,076
11,455
6,965

809

14,77015,871

4.0

0

2011

35,268

2012

2013

2014

2015

2016

15,120

2017

2018

2019

2020

-7,891-8,111-10,427

7,534
6,110

7,680

0

0

-15,872-20,000

9,619

4,146

2011

3,743

6,816

2012

4,279

2013

10,440

8,794
7,240

4,905

2014

2015

2016

2017

2018

Return on assets (right)

2019

2020

2021

Net income per share (left)

18,236315,133

300,000

265,920

Yen

6,000

600

150,000

277,368
10.0

100,000

5.0

8.0

6.4
5.2

5.3

5.9

6.1

5.5

5.2

400

200

50,000

2.0

2,700
2,133
205

4.0

3,826

386

300

6.0

4.1
-30,000

505

12.0

8.2

6.1 153,836
144,649-14,016 -14,662

529
500

328,068

231,032 239,657
207,335
189,269

Net assets per share (right)

Yen

14.0

20,605-11,029 -12,367

12,496
12,834

10,239

6,000

3,000

16.0

250,000-13,167

2021

Depreciation and amortization

11,639

9,000

2.0

%

8,506

-9,8752020

2019

Net income per share and net assets per share

Million Yen
400,000

200,000-6,1452018

15,16512,0002021

350,000

5,444

1,580

2017

371,585

26,638
14,271

2016

Free cash flow

19,53620,0002015

11,001
6.0

Total assets (left)

30,000-10,000

2014

7.4

7.1

40,0000

2013

16,309Total assets and return on assets (ROA)
Million Yen

5,504

2012

Capital expenditures
Million Yen
18,000

8.0

3,000

2021

2020

Cash flows

6,954

0

0

4,670

0

10,00020

16,710

6,000

7,396

13,395

10,000

6.0

8,999

2012

7.2

60

13,796

12,933
7.8 11,986 12,341

10,774 7.8
10,09280

35,717

28,101

7,882

13,188

5,000

2011

10,06034,83813,911

8.6

8.1

83

40

2011

%

15,18397

40,289Ratio of R&D expenses to net sales (right)

Million Yen
18,00015,00022,31320,00075

100Capital expenditures and depreciation and amortization

16,254
21,311

81

45,573 87
86
80

53,11449,251
98

20,0002021

R&D expenses and R&D expenses to net sales

25,00026,2880

2011

81
33,08530,00030,000Million Yen

85
76

80

MedicalDiagnostics

Net income attributable to owners of parent (left)

50,00040,00050,87325,882

81,042120

55,13951,613

100

108

102

Inventory turnover (right)
Days

107

0

2018

120

21,035

Net income and return on equity (ROE)

For the fiscal year ended December 31,
2021, we pushed ahead withinvestments in areas positioned as
drivers of medium- to long-term
growth, including the construction of a
new location in China, and a new plantin Germany. During this period, there
was a year-on-year increase inoperating cash flow, mainly due to theincrease in revenue, and free cash flow
amounted to a positive 20.6 billion yen.

Days

56,96727,447

16,465

Semiconductor

Inventories (left)

70,00060,00087,00447,191

38,82828,93455,001

57,785

AR turnover (right)

Million Yen

187,080
26,82553,30035,38627,037

27,17026,11725,73825,627

22,91324,15327,05927,754

Scientific

29,958200,2410

We saw net income attributable toowners of parent increase for the firsttime in three periods for the fiscal
year ended December 31, 2021.
This was due to factors such as theincrease in operating income
accompanying the increase inrevenue. This resulted in an ROE of
11.2%.

Inventories and inventory turnover (days)

2,346

2,929 3,078
306

3,149

3,565

5,000

4,827

4,053

4,000

4,217
367

3,000

312

308

250

2,000

213
175

100

1,000

-30,642-40,000

0

2011

59

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

0

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

0

0

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

HORIBA Repor t 2021-2022

60

Financial Data

Financial Data Eleven-year summary

HORIBA, Ltd. and consolidated subsidiaries

2011.122012.122013.122014.122015.122016.122017.122018.122019.122020.122021.12

Profit and Loss
Net sales(Million Yen)

Operating costs and expenses(Million Yen)

Operating income(Million Yen)

Ratio of operating income to net sales
Net income attributable to owners of parent
Ratio of net income attributable to owners of parent(%)(Million Yen)(%)

123,456
108,549
14,906
12.1
8,664
7.0

117,609
105,857
11,751
10.0
7,396
6.3

138,136
124,402
13,733
9.9
8,999
6.5

153,065
135,851
17,214
11.2
10,5896.9

170,898
151,526
19,372
11.3
12,8827.5

170,093
151,593
18,49910.9
12,962
7.6

195,399
168,565
26,834
13.7
16,281
8.3

210,570
181,731
28,83813.7
22,31310.6

200,241
179,325
20,916
10.4
15,481
7.7

187,080
167,385
19,694
10.5
13,1887.0

224,314
192,267
32,046
14.3
21,311

144,649
18,35890,232
62.4

153,836
18,08399,24864.5

189,269
24,577
114,20960.3

207,335
28,412
123,92459.8

231,032
45,227
129,58156.1

239,657
47,153
132,65455.4

265,920
42,496150,282
56.5

277,368
44,516
161,36258.2

315,133
73,889170,95354.3

328,068
80,376
177,96454.3

371,585
83,717
203,68854.8

6,954-6,145809
855

13,395-7,891
5,504-3,304

15,076-8,111
6,965
2,324

11,455-9,875
1,580-273

14,770-30,642-15,872
12,843

15,871-10,427
5,444-451

28,287-13,167
15,120-9,044

19,536-11,029
8,506-3,24026,638-12,367
14,271
19,21532,253-14,016
18,236843

35,268-14,662
20,605-4,045

4,670
4,146
10,060
8.1

7,882
3,743
10,092
8.6

7,680
4,279
10,7747.8

11,001
4,905
11,986
7.8

16,3096,110
12,341
7.2

13,796
6,816
12,933
7.6

11,6397,534
13,911
7.1

10,2397,240
15,183
7.2

12,834
8,794
16,254
8.1

15,1659,619
15,594
8.3

12,496
10,44016,7107.4

204.882,133.44
40.00

174.872,346.45
50.00

212.76
2,699.88
60.00

250.282,928.82
67.00

305.73
3,078.40
70.00

307.74
3,148.70
85.00

386.303,565.00
116.00529.24
3,826.44
145.00367.094,053.30
130.00312.584,217.45
90.00

505.05
4,827.06
150.00

9.9
6.1
19.5
30.5
60.3

7.8
5.0
28.6
37.5
61.1

8.4
5.2
28.2
48.9
64.9

8.9
5.3
26.8
38.5
69.0

10.2
5.9
22.9
35.1
69.3

10.0
5.5
27.6
46.7
66.8

11.5
6.4
30.0
53.8
66.7

14.3
8.2
27.4
50.7
68.7

9.3
5.2
35.4
46.4
69.0

7.6
4.1
28.8
52.3
69.2

11.2
6.1
29.7
333.1
70.4

5,448
56.6

5,530
57.0

5,787
57.9

5,965
58.4

6,831
62.3

7,149
62.0

7,399
61.6

7,943
62.3

8,288
62.5

8,269
62.4

8,205
62.8

9.5

Financial Position
Total assets(Million Yen)

Liabilities with interest(Million Yen)

Shareholders’ equity(Million Yen)

Shareholders' equity ratio(%)

Cash Flows
Cash flows from operating activities(Million Yen)

Cash flows from investing activities(Million Yen)

Free cash flow

(Million Yen)

Cash flows from financing activities(Million Yen)

Investments, etc.
Capital expenditures(Million Yen)

Depreciation and amortization(Million Yen)

R&D expenses(Million Yen)

R&D expenses to net sales(%)

Per Share Information
Net income(Yen)

Net assets(Yen)

Dividend(Yen)

Other Indicators
Return on equity (ROE)(%)

Return on assets (ROA)(%)

Consolidated dividend payout ratio(%)

Nonconsolidated dividend payout ratio(%)

Overseas sales ratio(%)

Human Assets
Number of employees
Ratio of employees outside of Japan(Employees)(%)

Notes: The monetary amounts shown are rounded down to the nearest million yen.
1. HORIBA, Ltd. and its domestic consolidated subsidiaries had formerly recognized revenue mainly on a shipping basis. However, starting from fiscal 2016, HORIBA, Ltd. and its domestic consolidated subsidiaries changed
their revenue recognition method to recognize revenue on a completion-date-of-installation or delivery-date basis under the terms and conditions of the relevant contracts. The amounts in or before fiscal 2015 are notretrospectively revised.
2. As of beginning of the fiscal year 2019, HORIBA, Ltd. and its consolidated subsidiaries apply the Partial Amendments to Accounting Standards for Tax Effect Accounting (ASBJ Statement No. 28, February 16, 2018).
The amounts in or before fiscal 2017 are not retrospectively revised.

61

HORIBA Repor t 2021-2022

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