YKK AP Integrated Report 2023

2

YKK Group and YKK AP Philosophy
Chapter

Chapter

Chapter

Chapter

Chapter

Chapter

01

02

03

04

05

06

4

Messages from Management
President’s Message

6

Message from the Financial Ofﬁcer

11

Value Creation
Our History of Value Creation

12

The Value Creation Process

14Management Capital as a Base for Value Creation

16

Solving Social Issues through Our Strengths in Monozukuri and Our Products

18

Materiality and the 6th Mid-term Management Plan

20

Foundations Supporting our BusinessCorporate Governance24

Human Rights and Human Resources

29

Compliance

33

Risk Management

34

Environmental Management

36

DX Promotion

41

Business Strategies for Growth
Residential Business

42

Commercial Business

44

Exterior Business46

Industrial Products Business

47

Overseas AP Business48

Initiatives in the Value Chain
50

Initiatives in the Value Chain

Corporate Data
Financial and Non-Financial Data

56

Supported Initiatives and Key External Assessments

58

Company Outline

59

YKK Group Management Structure

Fastening Business

AP Business

Fastening
Equipment Development
Machine Manufacturing

AP
Equipment Development
Machine Manufacturing

Technology & Innovation Center(TIC)

Operating Companies
YKK Philosophy/Management Principle

Since 1934, when YKK founder Tadao
Yoshida began processing and selling
fasteners, the YKK Group has developed
its business by creating new value infasteners through the establishment of an
integrated production system and overseas
expansion. Today, the YKK Group is agroup of companies that share the YKK
philosophy of “Cycle of Goodness” andthe Management Principle, “YKK seeks
corporate value of higher signiﬁcance,”with YKK’s fastening business and YKKAP’s AP business at its core. While sharing
common ideas and philosophies, we areenhancing our business competitivenessthrough management structures that are
best suited to each of our businesses.
YKK AP Integrated Report 2023

3

YKK Group and YKK AP Philosophy
The Philosophy We Cherish

YKK’s founder, Tadao Yoshida made the “Cycle of Goodness” the“AP (Architectural Products)” in our company name embodies

philosophy, and in keeping with the times, Tadahiro Yoshida,

the highest levels of art and technology, two elements that havecentral philosophy of all business activities. Based on thisthe second YKK president and YKK AP’s founder, established theManagement Principle, “YKK seeks corporate value of higher

significance.” These are the shared philosophies of the YKKGroup, which we continue to cherish and pass on to future
generations.

Meanwhile, at YKK AP, the purpose of our existence is that

“We Build a Better Society Through Architectural Products," aPurpose that was formulated on the basis of these philosophies.

the company’s founding ideal of “always continuing to pursue
formed the basis of architectural culture throughout history.” In
addition to the spirit of curiosity and exploration toward art andtechnology that we have always fostered, we are aiming tocreate “Architectural Products” that have value in their time
period, and thereby help build a better society. Our Purpose
expresses these ideals of our employees in words. With thesephilosophies in mind, YKK AP is taking on the challenges
presented by this new era.

YKK Philosophy

Cycle of Goodness®: “No one prospers without rendering benefit to others.”

As an important member of society, a company survives
through coexistence. When the benefits are shared, the value ofthe company’s existence will be recognized by society. Whenpursuing his business, YKK’s founder, Tadao Yoshida was mostconcerned with that aspect, and would find a path leading tomutual prosperity. He believed that using ingenuity andinventiveness in business activities and constantly creating newvalue would lead to the prosperity of clients and business
partners, making it possible to contribute to society. This way of

thinking is referred to as the “Cycle of Goodness,” and has
always served as the foundation of our business activities. We

have inherited this way of thinking and have established this as
the YKK Philosophy.

4

YKK’s founder

Tadao Yoshida (1908–1993)

“YKK seeks corporate value of higher significance.”
PRODUCTSCUSTOMERSSOCIETY

Messages from Management

Management Principle

FAIRNESS

Value Creation

EMPLOYEESTECHNOLOGYMANAGEMENT

Foundations Supporting our BusinessSeeking corporate value of higher significance, YKK will pursue innovative quality in the seven key areas shown above.

The YKK Group’s Management Principle, based on the spirit of

the “Cycle of Goodness,” is to “seek corporate value of higher
significance.” We aspire to become a company that isappreciated by our customers, valued by society, and where all
employees are able to work with pride and pleasure. As ameans to achieve this, we will enhance the quality of ourBusiness Strategies for Growth

products, technology, and management. In putting these into
practice, we always place Fairness at the foundation of all ourbusiness activities. This Management Principle was formulated
in 1994 by Tadahiro Yoshida, then president of YKK and YKK AP.

YKK AP’s founder, Currently Corporate Advisor of YKK and YKK AP

Initiatives in the Value Chain

Tadahiro Yoshida

Purpose

Corporate Data

With a spirit of curiosity and exploration, we develop architectural products of true value that connect people, planet, and the future.

We want to create a better society, while remaining committed to the art and technology that have always been fundamental to architectural culture.

YKK AP’s Purpose expresses our desire to be a company that

contributes to society through our products and services. That is,
to continue to meet the desires of our customers and business
partners with the Architectural Products that form the structuralelements of houses and buildings. In doing so, we continue tobe a company that contributes to customers, business partners,
and society at large. While carrying on the ideals embodied in
the company name "YKK AP," we aspire to remain an integral
and essential part of this ever-changing society.

YKK AP Integrated Report 2023

5

Chapter 01

6

Messages from Management

Messages from Management

President’s Message

Akira Uozu, President Representative Director

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

Developing the “Evolution 2030” vision

Initiatives in the Value Chain

Investment plan
P11

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

Business Strategies for Growth

Unitized CWs
P45

Foundations Supporting our Business

Overseas sales ratio
P56

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

Value Creation

Become a Global Leading Company
Through the Evolution of Architectural Products

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

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

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

YKK AP Integrated Report 2023

7

Chapter 01

Messages from Management

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

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

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

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

The 6th Mid-term Business Plan
P21

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

Expansion of production
capacity for inner windows
P43

DX Promotion
P41
Labor-saving in installation
work
P54

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

YKK AP Integrated Report 2023

Corporate Data

Overseas AP BusinessP48-49implemented price revisions. Operating income was 17.8
billion yen, or 103% of the previous year's level, thanks tostrong growth in the overseas AP business, marking the firsttime in four years that both revenues and profits haveincreased.
Currently, demand for remodeling and renovation is rapidly
increasing due to the “Housing Energy Conservation 2023
Campaign,” a subsidy scheme to strengthen support for energy
conservation in housing through collaboration between three
ministries: the Ministry of Land, Infrastructure, Transport andTourism, the Ministry of Economy, Trade and Industry, and theMinistry of the Environment. Delivery delays have occurred due
to an unexpected surge in order volumes, and we apologize forthe inconvenience caused to our customers and business
partners. Currently, we are tackling the urgent issue of
expanding our production capacity by adding equipment forglass and remodeling products such as inner windows.
Meanwhile, the manufacturing sites are responding to thesudden demand by changing their work schedules, working
overtime, and working on holidays. If this continues, we will not

9Chapter 01

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

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

Targets set in “Evolution 2030”

Net sales on the order of
one trillion yen

Growth of existing businesses(operating income margin 10% or over)New measures
Net sales
508.6 billion yen(operating income margin 3.5%)

Domestic

Net sales
547.9 billion yen(operating income margin 5.0%)

・Wooden windows

・Integrated insulated building envelope solutions

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

Domestic

Overseas

Overseas

FY2022

FY2023 plan

FY2021–FY2024
The 6th Mid-term Management Plan

・Higher thermal insulation performance and higher added

value for commercial builldings windows and curtain walls

・Global CW(unitized CWs, etc.)

Overseas:
300 billion yen*
FY2030 onward

FY2025–FY2028
The 7th Mid-term Management Plan

FY2029–FY2032
The 8th Mid-term Management Plan

*External sales

President Representative Director

Akira Uozu

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

has been engaged in architectural products sales. After

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

the Residential Business Divison, Head of the Sales Division,and Director and Executive Vice President for International
Business, he has been in his current position since April
2023.

10

YKK philosophy —the “Cycle of Goodness”
P4

Open call for new businessthemes and promotion leaders
P32

PurposeP5

Human resources strategy
P31

Messages from Management

Message from the Financial Officer

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

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

Japan

Overseas
Total

Corporate Data

Smart factory
P41

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

Unit: 100 million yen

FY2022 FY2023(Results) (Plan)

Nature of investment

Increasing corporate value through offensive anddefensive investments

Initiatives in the Value Chain

FY2023 Investment Plan (based on orders)Business Strategies for Growth

Rate of sales from overseas
businesses
P56

Director and Executive Vice President, General & Administration

Foundations Supporting our Business

Evolution 2030
P7

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

Value Creation

Maximizing capital efficiency to strengthen
financial base

Increase production capacity and support new products

60

101

Streamlining support

44

64

Digital-related

31

55

Sustainability-related

29

38

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

̶76

Infrastructure development, etc.

36

41

Total

201

378

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

120

63

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

15

61

337

503

Difference from the previous year +166

YKK AP Integrated Report 2023

11

Chapter 02

Value Creation

Our History of Value Creation
The AP business began in 1959, leveraging our knowledge of aluminum materials acquired throughfastener manufacturing. Since then, we have continued to develop and supply products that meet customer
needs in every era and also provide new value.

1957-1989

1990-2004

Architectural products businessbegins

The founding of YKK AP

Widespread adoption of aluminumsashes through mass production

Aluminum extruder installed in 1959

Toward a system that responds toneeds

President’s inaugural press conference in May 1990

Yoshida Shoji Co., Ltd., the company that would eventually become YKK AP,
established in 1957 to undertake the sales and exports of fasteners manufactured
by Yoshida Kogyo K.K. (now YKK). In 1959, the company began aluminum castingand extrusion operations, marking the beginning of YKK Group’s involvement withIn 1990, YKK Architectural Products (abbreviated to YKK AP) was founded out
of its parent company, Yoshida Shoji Co., Ltd., as the core company of the YKKGroup’s architectural products business. The first president, Tadahiro Yoshida(currently a corporate advisor), shifted the company from a mass-production/ mass-

1959 Aluminum casting and extrusion work begin

1990

The company is renamed YKK Architectural Products Inc. (YKK AP)

and sales of interior aluminum
1961 Manufacturearchitectural products begin

1990

EXIMA system sashes for commercial
buildings begin

and sales of aluminum window
1962 Manufacture
sashes begin

2002

The company is renamed YKK AP Inc.

Industries (Singapore) Pte. Ltd.
1976 YKK(now YKK AP Singapore Pte Ltd), established2003

YKK’s Architectural Products Manufacturing Group is integrated into YKK AP Inc. andthe architectural products business of the YKKGroup becomes a fully integrated organizationand sales of vinyl sashes
1983 Manufacture
begin

2003

Sales of SYSTEMA series of system sashes
for non-residential buildings begin

architectural products. In 1966, the company launched sales of the residential
aluminum product “High Sash.” This helped to popularize aluminum sashes,
which, thanks to the ease of processing and mass production, could meet thelarge-volume residential demand of the high economic growth period. Productdevelopment was also greatly expanded.

Our first overseas affiliate,market product-out approach to a market-in system, which sought to respond todiversifying customer needs. In 2003, all architectural products businesses in
the YKK Group were fully consolidated into one. Business expansion continued
overseas and the structure of the company called YKK AP was built.

First overseas plant with an integrated

system, YKK Almico Indonesia
1986 production(now PT YKK AP INDONESIA), established(100 million yen)

6,000

Collapse of the
bubble economy

5,000

Domestic new housing starts

4,000
3,000

High economic growth period

2,000
1,000
0

12

1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993

2011-2022

From sash manufacturer towindow manufacturer

A company committed to
products and manufacturing

Improving Japan’s windows

An ongoing commitment tomonozukuri

The APW 330, launched in 2009The Saitama MADO (window) Plant, which began
operations in 2011

The company set out to transform itself from a sash manufacturer to a window

In 2011, YKK AP’s second president, Hidemitsu Hori, demonstrated our adherence

and began to provide finished window products. The window business brand APW
series was launched, driven by a desire to improve windows in Japan. 2009 saw

manufacturing.” We further promoted the window business through our dedicated“MADO (window) Plant” and awareness-raising activities about vinyl windows,

to monozukuri under the policy of “a company committed to products andthe launch of the APW 330 vinyl window, which helped spread awareness of theseValue Creation

manufacturer. It turned away from its business supplying knockdown style sashes

Messages from Management

2005-2010

expanded our exterior and remodeling product lineup, and strengthened the

products throughout Japan. In 2008, YKK AP Facade Pte. Ltd. was established inengineering capabilities of the commercial products business to expand ourmarket share. We also established a structure to adapt to a drastically changing

Foundations Supporting our BusinessSingapore, marking the group’s definitive move into the facade business.

society, including the reorganization of our overseas affiliates in FY2020.

2005 Proclamation to promote insulating glass for residential windows

2011 Operations begin at the Saitama MADO (window) Plant

2006 The window business brand APW series is launched2012 Sales of the Venato electronic smart door begin

2007 Value Verification Center established2014 products begin

2008 YKK AP Facade PTE. LTD. established2016 YKK AP R&D Center is opened

2009 Sales of APW 330 vinyl windows begin

2020 business operations of overseas affiliated companies into YKK AP

Business Strategies for Growth

Sales of the LUCIAS series of exterior

Reorganized overseas AP business and integrated capital relations andInitiatives in the Value Chainof the YKK Machinery & Engineering Group is transferred and the2021 Part“Machinery & Engineering Department” established

2023-

Corporate Data

Become a Global Leading Company
Through the Evolution of Architectural Products
When Akira Uozu assumed the office of president in 2023, a review was conductedof “how we seek to be in 2030 and how we ought to be,” and the vision "Evolution
2030" put forth the goal of “Become a Global Leading Company Through the
Evolution of Architectural Products.”(10,000 units)
Net sales

Financial Crisis Great East Japan
Earthquake
▼
▼

200

150

100

50

0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (Fiscal year)

YKK AP Integrated Report 2023

13

Chapter 02

Value Creation

PurposeThe Value Creation Process

P5

We Build a Better Society ThroughArchitectural Products

Opportunities and Risks

The 6th Mid-term Business Policy

Providing Social Value through Products

Health and Comfort/Safety and Security■

Climate Change and Disaster
Countermeasures■YKK APʼs
Value Chain

Demographics■

Ecosystem Conservation and Resource
Recycling■

P50-55

Manufacturing and
Logistics

Management
capital

In pursuit of manufacturing anddelivery quality

P16-17

Materiality

Material
Procurement

Financial capital
P20

Human resources to support sustainable growth■Diversity & inclusion■

Fullﬁlling workplace environment

Development and training of human resources tocreate new value

Responsible material
procurement

Respect for human rights■

Co-creation with stakeholders■

Generating innovation■

Products/services which continue to solve social issues“Trust/Reliance” to fulﬁll social responsibility■

Fair business practices■

Resilient business foundation■

Co-existence with the environment

integrated

that unites

Research, Development
and Veriﬁcation

Manufacturing capital

Creating technologies tosupport monozukuri“Monozukuri” to support resolution of social

issues through products and competitivenessservices

sales, andHuman capital■■

High-quality

Social/Relational capital

Natural capitalIntellectual capitalYKK APʼs Business Segments
Residential Business
Overseas AP Business

Commercial Business

Foundations Supporting our BusinessCorporate Governance Human Rights and Human Resources
Environmental Management
DX Promotion

Principles that Support the Value Creation Process

YKK Philosophy ̶ Cycle of Goodness®: “No one prospers without rendering
beneﬁt to others.”

14

P4-5

VisionEvolution 2030

P7

Become a Global Leading Company
Through the Evolution of Architectural Products

Outcomesand Realizing Manufacturing Reform

P21-23[Customers]

Products, solutions and services that meet the demands of society
regarding safety, security, energy conservation, health, easy
installation, disaster prevention, ventilation, and more, based on ashift to high thermal insulation performance and higher added value[Society]

Building mechanisms for generating proﬁts together with business
partners and regions, as well as solving environmental issues
throughout the value chain, such as decarbonization and realizationof a recycling-oriented society[Employees]

A company that is chosen by a wide variety of individuals for its
management that creates jobs, as well as for the growth andfulﬁllment that it offers to each employee with their diverse skills
and experience through the creation of a comfortable work
environment, investment in employees, and opportunities for
growthSales

Product appeal andproposal capability

products andprovided by an

Installation

production system

In pursuit of greater
installation quality

manufacturing,
technology

OutputP18

Product Use

User-friendly andsocial friendly products

Exterior Business

ComplianceNet sales

508.6 billion yen

Operating income

17.8 billion yen
37.8%

Rate of sustainable product sales

Industrial Products Business

P42-49Risk Management

P24-41

Sustainability-related investment (Japan)

2.9 billion yen

Greenhouse gas emissions (Scopes 1 and 2)
Greenhouse gas emissions (Scope 3)

304 kt CO2
1,737 kt CO2

Aluminum: Recycled external products (Japan) *1
Vinyl: Recycled internal products (Japan) *2

27％
28％

Employee engagement (Japan)

49%*1 Ratio of input of recycled materials from the market to the input of aluminum raw materials*2 Rate of internal reuse of internally generated vinyl scraps* Results as of March 31, 2023 or FY2022 unless otherwise noted,
scope of coverage is YKK AP Group (Japan + overseas)

Management Principle: “YKK seeks corporate value of higher signiﬁcance."
CUSTOMERSSOCIETYEMPLOYEESPRODUCTSFAIRNESSTECHNOLOGYMANAGEMENTYKK AP Integrated Report 2023

15

Chapter 02

Value Creation

Management Capital as a Base for Value Creation
YKK takes as its Purpose “We Build a Better Society Through Architectural Products.”

These six types of capital are the source of this cycle of providing value to customers, society, and employees

PurposeP5

through corporate activities that create high quality products and services.

We aim to achieve sustainable growth by strategically investing capital while assessing business
opportunities and risks.

Financial Capital

Financial foundations supporting our businessDespite the overall increase in operating income in FY2022, we will

endeavor to improve profitability through continued price revisions andmanufacturing cost reductions to address surging material prices andrelated issues. To realize our “Evolution 2030” vision, which aims to achieve
net sales on the order of one trillion yen, we plan to allocate businessresources first to information and other management infrastructure that
Equity ratio

57.9 %Net assets: 266.0 billion yen / Total assets: 455.8 billion yen

Human Capital

Evolution 2030
P7

forms the foundation of our corporate activities, and then to facilities andhuman resources. While keeping in mind business indicators and thegrowth rates of individual businesses, we will also continue to pursue
capital efficiency.

Message from the
Financial Officer
P11“Forest Organization” with a shared corporate philosophy
Based on the idea of “autonomy and coexistence,” we work to create

systems and environments in which each and every employee candemonstrate their full potential. The goal is to create a “Forest
Organization,” a company in which every employee has a consciousness of

being a manager, and grows strongly together as a group, like a forest that

12,802
Employees overseas: 4,341

Employees in Japan:

Social and Relational Capitalis made up of individual trees. To improve employee engagement, which isthe source of value creation, we will pursue the design of systems and thedevelopment of a fulfilling and pleasant working environment that enable

Human resources
strategy
P31-32

a diverse range of personnel to play an active role.

Co-creation relationships based on trust and reliance withstakeholders
We work with all stakeholders, including employees, customers, business

partners, and local communities, to continue being a company that istrusted by the community and loved by society. We provide opportunities

Japan business sites:
Overseas business sites:

195

11 countries/regions

Affiliated companies — Japan: 5 Overseas: 17 (as of August 1, 2023)

for various forms of dialogue and co-creation to improve our workplaces
and operations, as well as the quality of our products. In addition, we areengaged in industry-government-academia-private sector partnership todevelop recycling technologies and mechanisms for vinyl and aluminummaterials.

Information on stakeholder communication is available on our website.
https://www.ykkap.co.jp/company/jp/sustainability/stakeholder/16

Recycling of vinyl andaluminum materials
P38-40Overseas manufacturing sites

Hokkaido Factory

Dalian Factory
Tohoku Plant
Miyagi Ohira Factory

Namerikawa Plant
Toyama Mizuhashi Factory Kurobe Plant
Kurobe Ekko Plant
Toyama Fuchu Factory
Kurobe Ogyu Plant
Okinawa Factory

YKK AP (SUZHOU) CO., LTD.

Tochigi Factory
Saitama Factory
Saitama MADO (Window) Plant
Kanagawa Factory

Shenzhen Factory
YKK AP CO., LTD.

Mie Factory

Rokko MADO (window) Factory

Mysore Factory

Bhoruka Extrusions Private Limited

Manufacturing Capital

Tangerang FactoryPT YKK AP INDONESIA

Yangmei FactoryFoundations Supporting our Business

Dublin Factory
Macon Factory
Texas Factory
Midwest Factory

Yamanashi Factory

Okayama Factory
Kyusyu Plant
Kumamoto Kosa Factory

ERIE ARCHITECTURAL PRODUCTS INC.

Suzhou Factory

Niigata Factory

Hyogo Factory

Shikoku Plant

Lakeshore Factory

DALIAN YKK AP CO., LTD.

Value Creation

Hiroshima Factory

Messages from Management

Manufacturing sites in JapanYKK AP AMERICA INC.

YKK AP TAIWAN CO., LTD.

Integrated production system
P18

Business Strategies for GrowthTechnology capabilities to support an integrated production
system from raw material production to shipping anddeliveryYKK AP manufactures products using integrated production at domestic

and overseas sites, and has established a manufacturing and supply systemrooted in various countries and regions under the basic principle ofSmart factory
P41

working to enhance our technological competitiveness through machineryengineering technology used to develop and manufacture production

equipment for our products. We are also stepping up our efforts in DX
promotion as well as research and development into AI, robotics and other

Initiatives in the Value Chain

24 Overseas: 11
Manufacturing capital investment: 13.8 billion yen
Manufacturing sites — Japan:

manufacturing close to where demand is found. In addition, we aretechnologies for realizing smart factories.

Environmental Management
P36-40Natural Capital

Creating environmental value at all stages of the lifecycle
Aiming to leave a better society/environment for the next generation, weare taking on the challenge of creating new value and achieving zero
Corporate Data

environmental burden, through technical innovation. Along with theconservation and effective use of natural capital, we are working to create

environmental value and solve environmental issues at all stages of the
Evolution 2030
P7

Energy consumption:

161,000 kl

product lifecycle, from research and development to manufacturing,(crude oil equivalent)

Water use: 8.9 million m3

Raw materials — aluminum: 125 kt, vinyl: 22 kt

Intellectual Capital

logistics, installation, use, and disposal. Under the "Evolution 2030" vision,YKK AP aims to reduce its own CO2 emissions by 80% by FY2030 and by

100% by FY2040 (both relative to FY2013), and we will strengthen ourefforts to achieve these goals.

Creating technology through the challenge of solvingsocial issues
Kurobe, YKK AP’s technology headquarters
Home to three technical facilities of the YKK AP R&D Center, the Value
Verification Center, and the Partners Support Studio, Kurobe City in Toyama

Research, development andverification
P50

Prefecture is positioned as YKK AP’s technology headquarters. R&D centers
Global R&D organization: 3 sites
Research and development expenses: 9.3 billion yen
Patents held: 1,418

are also located in Germany and Indonesia to conduct research,development, and verification on a global basis. Furthermore, we are
putting our efforts into strategic management and application of

intellectual assets as well as training and development of employees, withthe aim of improving our competitiveness and brand value through patentapplications and ownership of patent rights.

* Results as of March 31, 2023 or FY2022 unless otherwise noted, scope of coverage is YKK AP Group (Japan + overseas)YKK AP Integrated Report 2023

17

Chapter 02

Value Creation

Solving Social Issues through our Strengths
in Monozukuri and our Products
YKK AP continues to provide value to customers, society, and its employees through high-quality products
and services based on its integrated production system, while proactively addressing social andenvironmental issues.

Integrated Production System
YKK AP’s strength lies in its ”integrated production system”
business model, in which the company itself handles
everything from materials, parts, and production equipment toprocessing and assembly.
The glass used for our vinyl windows and other core products
is procured as raw sheets and processed in-house. In addition,
all manufacturing processes, from smelting the raw metal foraluminum and blending the base materials for vinyl, are carriedout in-house at our domestic and overseas manufacturing sites.
Even the development and manufacture of parts, whichconstitute the backbone of our products, is carried out in-house.
We build on our technological development capabilities,
including elemental technologies, to produce metal and plastic
functional parts such as door rollers, screws, and netting forscreens. We also have various types of test and evaluation
functions, ensuring more reliable quality of parts.

In addition, an in-house division called Machinery andEngineering is responsible for the development andmanufacture of equipment for making our products. We areworking to further enhance our technical competitivenessthrough seamless and rapid collaboration between the
Machinery and Engineering Department, the Research andDevelopment Division, and the Manufacturing Division.
As part of the “Realization of Manufacturing Reform,” in the
6th Mid-term Business Policy, we will also pursue a shift tosmart factories. We are building new city-based, unattended
production lines that do not rely on human labor, making fulluse of robots as well as AI and other digital technologies.
We believe that our insistence on integrated production
enables us to develop technology quickly, control costs
throughout the supply chain, and guarantee reliable quality.

The cornerstone of YKK AP’s monozukuri: the Integrated Production System
Materials
We produce materials
in-house: for aluminum,
this involves everythingfrom melting to extrusionand surface treatment,
and for resin, from raw
material blending to
extrusion.

High-performanceglass
We process our own
high-performance andhigh-functioning double
and triple insulating
glass.

Components

Production equipmentYKK AP produces everything in-house, fromoperating and functional components toscrews and screen netting.

YKK AP has developed its own manufacturing
equipment, production lines, and processcontrol systems, etc., and has deployed them inthe company’s plants in Japan and overseas.

Processing, assembling, packaging
Our APW vinyl window series products are produced in our carefully controlled plants,from preparing the glass to manufacturing the components and assembling the windows,
thereby ensuring high performance.

18

Integrated production
systemP52

The 6th Mid-term Business Policy
P21

DX Promotion
P41

Rate of sustainableproduct sales
P22-23indicator. The social value that YKK AP provides can be
categorized into “energy conservation,” “easy installation,”“disaster prevention/mitigation,” “safety/security,” and “health/hygiene,” and we are engaged in business activities that
contribute to a sustainable society by developing a wide rangeof sustainable products that enhance these types of value.

We are developing products that shorten installation time, do not involve specificskills or hazards, and are safe to install.

APW vinyl windows series

LD series (China)

No-weld installation

Kantan Door Remo series

GPort Pro Series

YRB-A (Taiwan)

ProTek® (U.S.A.)

A window series using vinyl with high thermal
insulation performance for the frame.

A new flame-free sash installation method that
replaces the conventional welding method byfilling with mortar.

A door series that allows new products to
be installed over the existing frame without
breaking the wall.

Initiatives in the Value Chain

A series of aluminum profile thermal insulation
windows with high thermal insulation performancethat can be used in a wide range of areas, fromeastern to northern and western China.

Business Strategies for Growth

Easy installation

We are developing products that can contribute to improving the energy-saving
performance of buildings. We are developing products with thermal insulation
performance that meets the energy-saving standards set by various regions inJapan and overseas.

Foundations Supporting our Business

Energy conservation

Value Creation

The 6th Mid-term Business Policy
P21

As YKK AP pursues sustainability management, it is identifying
issues and developing technologies while staying attuned to
the needs of its various customers in Japan and overseas. The
6th Mid-term Business Policy calls for “Providing Social Value
through Products and Realizing Manufacturing Reform,” andwe have set the “rate of sustainable product sales” as a key

Messages from Management

Products and services to address social issues

We have a lineup of products that
reduce damage to buildings, indoor
environments, and surrounding
environments caused by wind, rain
(water), snow, lightning, and othernatural phenomena.

Corporate Data

Disaster prevention/
mitigation

Carport series with industry-leading snow andwind resistance to prepare for increasingly
severe natural disasters.

Hurricane and explosion-proof products targeted
mainly at commercial facilities in the U.S.A.

Health/Hygiene

Safety/Security
We are committed to developing productswith higher safety performance by
employing functions and technologies
that work effectively against dislocation,
falls, pinching, collisions, abrasions,catching, locking-in, catching fire,criminal activity and more.

High water-tightness sashes developed as acore product for Taiwan, where typhoon damage
is common.

We develop products that contributeto improving the quality of the indoor
environment and creating a hygienic
lifestyle.

Lucias balconies

Balconies with handrails to prevent children
from falling

Natural ventilation windows
(Balance Way)The grid itself is balanced to provide efficientventilation.

YKK AP Integrated Report 2023

19

Chapter 02

Value Creation

Materiality and the 6th Mid-term Management Plan
To drive YKK AP’s sustained growth, we have identified materiality (priority issues) based on our Purpose.

We will promote materiality through the implementation of the 6th Mid-term Management Plan (FY2021FY2024).

Materiality
To drive YKK AP’s sustained growth, we have identified materiality (priority issues) for FY2021 based on our Purpose.

We have established a system for promoting materiality and are further advancing specific initiatives by setting KPIs.

Materiality"Human Resource" to support
sustainable growth“Monozukuri” to support resolution of social
issues through products and competitiveness"Trust/Reliance" to fulfill
social responsibility●Diversity & inclusion●Co-creation with stakeholders●Fair business practices●Fullfilling workplace environment●Generating innovation●Resilient business foundation●Talent attraction and development for value creation●Products/services which continue to solve social issues●Co-existence with the environment●Respect for human rights

Materiality promotion system
We have established a promotion department for each materiality
and are stepping up our initiatives accordingly. Furthermore, the
ESG General Meeting, headed by the President, consists of theEnvironmental Policy Board Committee that takes the lead on
environmental topics, the Brand Management Committee that

Materiality

handles social topics, and the Compliance Committee, whichhandles governance. Each is chaired by the President or an Executive
Vice President. The “Materiality Promotion Working Group,” which
reports directly to the ESG General Meeting, conducts materiality
efforts and manages KPIs in cooperation with the ESG General
Meeting and the promotion department for each materiality.

Promotion departments

Diversity & inclusion

Human Resources Department

Fullfilling workplace environment

Work Style Reform Committee

Talent attraction and development for value creation

CHRO / Human Resources Strategy Office

Respect for human rights

Compliance Committee / Human Resources
Department / Corporate Purchasing Department

Co-creation with stakeholders

Brand Management Committee

Generating innovation

Executive Vice Presidents in charge

Products/services which continue to solve social issues

Business Divisions / Units in charge

Fair business practices

Compliance Committee

Resilient business foundation

CRO / Risk-related committees (5)Co-existence with the environment

Manufacturing Division PJ

Materiality Promotion Working GroupThe approach and process for identifying materiality is described on our website.
https://www.ykkap.co.jp/company/en/sustainability/materiality/

20

ESG General Meeting

Chair: Akira Uozu (President Representative Director)

E

S

G

Environmental Policy Board Committee
Chair: Akira Uozu (President Representative Director)

Brand Management Committee

Chair: Koichi Ebihara (Executive Vice President, Sales & Marketing)<Corporate Governance System>
Oversight Bodies: Board of Directors / Audit & Supervisory
Board / Accounting Auditor

Compliance Committee

Chair: Kosuke Iwabuchi (Director and Executive Vice President,
General & Administration)

Messages from Management

The 6th Mid-term Management PlanThe YKK Group 6th Mid-term Management Vision●Creativity to Realize a Sustainable Society

Value Creation

Technology Oriented Value Creation
Product appeal & proposal capability / Technology & manufacturing capability / Diverse
human assets

Foundations Supporting our Business

The 6th Mid-term Business Policy
Providing Social Value through Products and Realizing Manufacturing Reform
Providing products that meet the demands of society, including safety, security, energy
conservation, easy installation, health, disaster prevention, ventilation, and others●Realization of Manufacturing Reform

Manufacturing reform by enhancing technological capabilities (Machinery andEngineering (KOKI) integration), platforming & smart factorization / Developing
technologies for achieving carbon neutrality

The 6th Mid-term Business Plan

3-ministry subsidy scheme
P43,45

New plant for manufacturingresidential vinyl windows(U.S.A.)P49

FY2021(Results)

FY2022(Results)

FY2023(Plan)FY2024(Plan)Net sales

4,463

5,086

5,479

5,440

Operating income

173

178

276

386

Operating income margin

3.9%

3.5%

5.0%

7.1%

*The FY2024 plan is the mid-term plan developed in FY2021.

The 6th Mid-term Investment Plan

In order to further grow our business both domestically andinternationally, we have drawn up a record-breaking investment
plan for the 6th Mid-term Management Plan. With respect to
Message fromthe Financial Officer
P11

Unit: 100 million yen

FY2021(Results)Japan
New plant for manufacturingresidential vinyl windows(U.S.A.)P49

FY2022(Results)

FY2023(Plan)FY2024(Plan)

300

226

201

378

Overseas

37

135

125

92

Total

264

337

503

392

*Note: Based on orders

Corporate Data

Saitama Factory new building
P45

Unit: 100 million yen

high thermal insulation windows and strengthening of proposals
in the commercial building renovation field in Japan, as well as
significant growth both in Japan and overseas, especially inarchitectural products for commercial buildings in North America.
Operating income was affected by surging material prices andhigher SG&A expenses in Japan, but increased sales and pricerevisions overseas led to an overall increase.
In Japan in FY2023, we will enhance production equipment
for remodeling products and glass, for which demand is
expected to rise due to the three ministry-supported subsidy
scheme. In the commercial business, we will further strengthen
our competitiveness in the Tokyo metropolitan area bycommencing operations at the new Saitama Factory building.
In North America, we will strengthen our production and supply
systems by establishing supply bases for architectural products
for commercial buildings and commencing operations at a newfactory producing vinyl windows for residential use.

Initiatives in the Value Chain

PurposeP5

The 6th Mid-term Management Plan, which began in FY2021,
takes as its core the purpose “We Build a Better Society ThroughArchitectural Products.” The 6th Mid-term Business Policy,“Providing Social Value through Products and Realizing
Manufacturing Reform,” has been developed as a policy tofulfill this purpose.
In FY2022, we achieved net sales of 508.6 billion yen, a record
high for the second year in a row, thanks to the promotion ofBusiness Strategies for Growth●Providing Social Value through Products

capital investment plans, in addition to investments necessary
for business continuity, such as for replacement of aging
equipment and health and safety reasons, we plan to advanceaggressive production expansion and rationalization
investments where the expected returns ensure theinvestment’s rationality.
In FY2023, we plan to invest a record 50.3 billion yen. In
Japan, this will mainly be allocated to increased production,
new product support, and digital-related activities, andoverseas, for construction of a new plant in the U.S.A., with theaim of achieving sustainable business growth and early
generation of investment benefits.

*The FY2024 plan is the mid-term plan developed in FY2021.

YKK AP Integrated Report 2023

21

Chapter 02

Value Creation

The 6th Mid-term Materiality Targets
Materiality

Human resources tosupport sustainablegrowthMonozukuri to support
resolution of social issues
through products andcompetitiveness

Trust/reliance to fulfill
responsibilities to society

22

Initiatives

Diversity & inclusion

Promote an inclusive corporate culture where employees with a diverse range of skills andexperiences respect one another and work together

Establishment of a fulfilling
working environment

Develop a fullfilling workplace environment in which each employee can thrive withmotivation and demonstrate his/her best performance

Development and trainingof human resources to create
new value

Attract, train, and promote next-generation leaders and invest in the necessary talent forsustainable growth

Respect for human rights

As part of corporate social responsibility, give consideration to human rights not only in thecompany itself, but also in the supply chain and other areas associated with the company

Co-creation with stakeholders

Continue to create value through active dialogue with our key stakeholders: customers,society, and employees

Generating innovation

Promote innovation in business concepts and production/business processes from a
medium- to long-term perspective for sustainable growth

Products/services which
continue to solve social issues

Create new value and contribute to the sustainable development of society by taking on thechallenge of solving social issues through our products and services

Fair business practices

Conduct business activities ethically and with integrity by ensuring compliance with laws,
regulations, and social norms under a global governance system

Resilient business foundation

Increase resilience through risk management that enhances management transparency andhonest and fair corporate governance, in addition to responding to unforeseen events

Co-existence with theenvironment

Contribute to reducing environmental impact and mitigating and adapting to climatechange by promoting a decarbonized, recycling-based society and expanding sales ofenvironmentally friendly products

FY2021(Results)

Indicators

Number of women in management positions ◇1

FY2022(Results)

FY2023(Targets)

FY2024(Targets)

Related SDGs

133

140

2.29%

2.32%

2.35%

2.50%

68.6%
(86.4％)

69.7%(87.7％)

70.0%

71.0%

Rate of employees who take childcare leave (men) ◇1

53.2%

73.2%

Over 50%

Over 50%

Employee engagement ◇1

51%

49%

65%

70%

15,71417,08318,50020,0009 (195)29

9 (204)32

9 (213)−9 (222)
−

13

17

24

27

Ratio of menʼs to womenʼs wages (average) ◇1* Parentheses indicate the ratio of menʼs to womenʼs wages for senior section managers

Number of employees who obtained qualifications eligible forpublic qualification incentives (cumulative total of employees) ◇1“Value Creation Academy,” the next-generation leader
development program ◇1● Number of participants *Figures in parentheses indicate cumulative number of participants● Number of corporate officers appointed (cumulative total)

Business Strategies for Growth

Number of employees dispatched by the company to obtain
degrees (PhD, MBA, MOT) ◇1

Foundations Supporting our Business122

Value Creation

113

Rate of persons with disabilities among employees ◇1

Messages from Management

Extent of Coverage◇1: YKK AP (non-consolidated)◇2：YKK AP Group (Japan)◇3：YKK AP Group (Japan and overseas)

Enforcement of the YKK AP Human Rights Policy in business activities in each country/region
Expand and enhance content of human rights and harassment training
Number of companies that we have concluded an agreement withregarding the basic transaction principles (cumulative total) ◇1

821

1,184

1,184

1,184

Number of important suppliers for which CSR surveys havebeen conducted (cumulative total) ◇1

48

1,184

1,184

1,184

Initiatives in the Value Chain

Customers: Expansion of technical proposal and training options for domestic and overseas business partners
Society: Promote activities that link customer feedback to the development and improvement of products and services and the provision of information
Employees: Promote initiatives to gather a wide range of employee ideas and apply them to our business
Establish programs to develop and create innovative human resources● Establish AP innovation programs and systems to accelerate and promote creation of new business● Develop a foundation for fostering an innovative organizational culture and developing innovative human resources

70%

75%

84%

90%

Rate of vinyl window use (For single-family houses) ◇2

31%

31%

35%

40%

38.4％

37.8％

40.6％

39.1％

55
(20)

56
(27)

57
(27)

57
(28)

304 kt CO2

288 kt CO2

275 kt CO2

Rate of sustainable product sales ◇3
Number of sites implementing YKK Global Criteria ofCompliance (YGCC) ◇3*Number in parentheses indicates number of sites where internal audits have been conducted

Corporate Data

Rate of high thermal insulation window use (For single-family houses) ◇2

Expand and enhance content of compliance training● Conduct compliance video training and e-learning for all employees

Strengthen the CRO-led risk management system and speed up the response to emergencies
Review BCP on an all-hazards basis● Responses to infectious diseases, major natural disasters, supply chain interruptions, cyber incidents, etc.
● Recovery and operation through reliable management after the BCP is activatedYKK AP CO2 emissions ◇3
Waste output (Manufacturing sites) ◇3* Figures in parentheses represent units of intensity

Water consumption (Manufacturing sites) ◇3* Figures in parentheses represent units of intensity

325 kt CO2
15.9 kt(3.57 t/100 million yen)

9.8 million m3(2,200 m3/100 million yen)

15.4 kt(3.03 t/100 million yen)

8.9 million m3(1,750 m3/100 million yen)

14.3 kt(2.61 t/100 million yen)

8.6 million m3(1,580 m3/100 million yen)

13.9 kt(2.56 t/100 million yen)

8.5 million m3(1,570 m3/100 million yen)

* Sustainable products are defined as architectural products that contribute to achieving the SDGs by solving priority social issues such as energy conservation, easy-installation, disaster prevention/mitigation, safety/security, and health/hygiene*The FY2024 targets are the mid-term targets developed in FY2021.
YKK AP Integrated Report 2023

23

Chapter 03

Foundations Supporting our BusinessCorporate Governance
Under the philosophy of the “Cycle of Goodness,” we strive to enhance our corporate governance system inan effort to further enrich our corporate value.

YKK philosophy —“Cycle of Goodness”
P4

Based on an organizational system in which the Board of Directors serves to make decisions on importantmatters, such as the company’s management policy, and serves an oversight function, while the Audit &Supervisory Board serves as the company’s auditing organization, we have adopted an Operating Officer
System, a framework that helps the company undertake the execution of business and operations.

Chairman of the Board
Chairman Representative Director

Hidemitsu Hori

Message from the Chairman of the Board

Toward a Board of Directors that Appropriately

Assesses Risks and Opportunities and Encourages
Creation and ExplorationYKK AP has established a Board of Directors as a body to oversee
the implementation of strategies and to make corporate
decisions. The Board deliberates and makes decisions on
investment strategies for business expansion and humanresource strategies. To ensure transparency and objectivity, theBoard of Directors includes members from YKK, and external
experts are added to the Audit & Supervisory Board in order toaddress increasingly complex compliance and risk issues. With
regard to important matters, in order to ensure that decisions
can be made through active discussion, the points fordiscussion are clarified at the Management Strategy Council
before being brought to the Board of Directors.
One aspect of materiality emphasizes employee engagement
at manufacturing sites. In general, discussions about work
styles tend to focus on office workers, leaving employees

24

working in plants and factories out of the picture. However, as amanufacturing company, our employees on the shop floor are
our lifeline. I know through my own roundtable discussions
that each of them is a talented individual with outstanding
technical skills and knowledge. We are in the process of
discussing how to provide job satisfaction.
Discussions are also underway on measures to combat
climate change. In order to realize the "contribution to theglobal environment" set forth in President Uozu's "Evolution
2030" vision, we are considering ways to further accelerate fueltransition in Japan, such as switching to carbon neutral
methane and utilizing hydrogen and ammonia, andestablishing recycling technologies for discarded aluminumand vinyl.
It is also important to strengthen the Board itself. Our
company has always emphasized the importance of “continuing
to grow.” However, now that our share of the domestic windowmarket has exceeded 50% and net sales have reached 508.6
billion yen, it is difficult to expect the same growth as in thepast. To achieve our new targets, we need to create new
businesses both domestically and internationally, develop newmarkets, and make a giant leap forward from our current
growth curve.
In the future, large acquisitions and partnerships withforeign companies may also come into consideration. I myself
visit startups in Japan and abroad to explore new business
opportunities, and outside knowledge is indispensable inidentifying risks and opportunities. In light of this, we hope toappoint an outside director who is well versed in overseas
affairs within the next one to two years. Currently, the Board of
Directors is composed entirely of men, and we are considering
the appointment of female directors in order to have morediverse discussions at the Board meetings in the future. We arealso considering the implementation of evaluation of the Boardof Directors, including the methodology.
As Chairman of the company and of the Board, I willcontribute to a new vision for YKK AP.

Dialog with employees
P32

Evolution 2030
P7

Key consolidated
financial data
P56

Directors andBoard of Directors
P27
Materiality
P20

Messages from Management

Corporate Governance System
Shareholders Meeting
Appointment and dismissal
Audit

Two of whom are outside auditors

Appointment and dismissal

Risk-related Committees (5)Research &Development Divisions

Sharing of issues and policies

Instructions and supervisionInternal Audit
Manufacturing and
Supply Divisions

Separation of management and execution(Execution of duties by directors, Operating Officer System)

Administrative Divisions

In addition, we have introduced the Operating Officer System to ensure thefaster execution of business and operations via the separation ofmanagement and execution. While directors dedicate themselves to realize
total optimization, operating officers execute individual businesses andoperations with responsibility and authority, in accordance with the policies
resolved in the Board of Directors meeting.

Initiatives in the Value Chain

Directors comply with the regulations of the Board of Directors and follow
the rules regarding director duties, and appropriately carry out businessbased on the division of duties. They regularly attend compliance training
offered by lawyers, etc., and submit to the company written oaths pledging
to comply with laws and regulations in performing their duties as directors.

Internal Audit Ofﬁce
Overseas Companies

Business Strategies for Growth

Sales Divisions

Operating Ofﬁcers

Delegation of
authority

Foundations Supporting our Business

Investment Committee

Collaboration

Ofﬁcers Meeting

Brand Management Committee

Execution of business and operations

Internal audit instructions

President

Compliance Committee

Environment Committee

Accounting Auditors

Representative Director

Management Strategy Council

Environmental Policy Board Committee

Collaboration

Audit

ReportAudit & Supervisory Board

Appointment and dismissal

Value Creation

Board of Directors

Appointment and dismissal

Supervision

ReportSupervisionYKK Nomination
andCompensation
Committee

Main Committees for Executing Business/Duties

Risk management system
P34

Chair: Kosuke Iwabuchi (Director and Executive Vice President, General &Administration); Members: 15
Number of meetings in FY2022: 2

We work to improve the compliance system of our company and subsidiaries. A compliance director isappointed, and he reports to the directors and audit & supervisory board members regarding thedevelopment of the compliance system and compliance status.

Brand Management Committee

Chair: Koichi Ebihara (Executive Vice President, Sales & Marketing); Members: 26
Number of meetings in FY2022: 5
YKK philosophy —"Cycle of Goodness"
P4

Carbon neutrality
P38-39This committee considers and formulates important policies for our company from a technicalstandpoint. It works to build the Company’s brand, practice corporate activities based on the “Cycle ofGoodness,” and enhance our public outreach.

Investment Committee

Chair: Kimihiko Yamada (Head of Accounting & Finance Department)
Number of meetings in FY2022: 11

The committee reviews and discusses investment economics calculations, costs of capital, free cash flow,
and sets ICPs for promoting carbon neutrality for significant investment projects. By going throughreview in the committee, these can be evaluated more efficiently by the Board of Directors meeting.

Environmental Policy Board Committee

Chair: Akira Uozu (President Representative Director); Members: 11

Number of meetings in FY2022: 1

Environment Committee

Risk-related Committees (5)We have appointed a Chief Risk Management Officer (CRO) to promote YKK AP’s risk management. We
established a Quality Committee, Trade Management Committee, Crisis Management Committee,
Information Security Committee, and Technical Asset Management Committee in order to maintain andenforce regulations.

Corporate Data

Compliance Committee

Corporate compliance system
P33◎Quality Committee

Chair: Yoji Abe (Head of Quality Assurance Division); Members: 7
Number of meetings in FY2022: 4◎Trade Management Committee

Chair: Tetsuya Onodera (Head of International Division)
Number of meetings in FY2022: 3◎Crisis Management Committee

Chair: Osamu Anda (CRO); Members: 16
Number of meetings in FY2022: 3◎Information Security Committee

Chair: Tetsuya Komori (Head of IT Department); Members: 9
Number of meetings in FY2022: 3◎Technical Asset Management Committee

Chair: Toshiyuki Nakaso (Head of Fabrication Technology Department,
Manufacturing Division); Members: 9
Number of meetings in FY2022: 3

Chair: Shunichi Matsuda (Head of Safety & Environment Department); Members: 57
Number of meetings in FY2022: 4
Environmental management
P36-37The Environmental Policy Board Committee was established to develop our environmental policies andstrategies, and to supervise the progress of our environmental measures. Also, the Environmental
Committee promotes the policies of business execution divisions, plans and formulates measures, andsupervises their progress.
*Number of committee members as of June 2023.
YKK AP Integrated Report 2023

25

Chapter 03

Foundations Supporting our BusinessYKK Nomination and Compensation Committee
Members: 5 (including 2 outside directors)
Number of meetings in FY2022: 10

An advisory body established within YKK and independent of YKK AP that deliberates and reports on
the appointment and dismissal of directors, Audit & Supervisory Board members, operating officers,
and executive specialists of YKK and YKK AP, as well as their compensation.

Message from Chair of the Nomination and Compensation Committee

Director
Chairman Representative Director,
YKK Corporation

Masayuki Sarumaru
Enhancing Governance with a Highly Independent
Personnel Structure

The YKK Group has set up the Nomination and Compensation
Committee in YKK as an advisory body, and its members areappointed by resolution of the YKK Board of Directors. Theremay not be many privately held companies that have anomination and compensation committee. However, at thecenter of the YKK Group’s management principle, which was set
forth by Tadahiro Yoshida, the second president of YKK andfounder of YKK AP, is “fairness,” which forms the foundation of
the Value Action Standards. The idea that it is precisely because
the company is privately held that decisions should be madefairly and transparently is deeply ingrained in the Group.
Accordingly, an advisory board of outside experts wasestablished in 1998, and a Nomination and Compensation
Committee was established in 2008. The reason that YKK AP

does not have its own committee is to ensure that the entire
Group is on the same page and that governance is effective.
The Nomination and Compensation Committee consists of atleast three members, including one outside director of YKK,
and currently has five members, two of whom are outside
directors. To ensure independence, persons with executive
responsibility are not included as members. The Nomination
and Compensation Committeedeliberates on the election anddismissal of directors, Audit & Supervisory Board members,
operating officers, and executive specialists, as well as theircompensation, and reports back to the Board of Directors.
Regarding appointments, to ensure that the Board of
Directors can properly fulfill its role, we check the balance ofskills possessed by directors and formulate plans to appoint
appropriate personnel. Discussions are also underway
regarding skills matrices and the promotion of diversity, withthe goal of strengthening the Board’s governance andincreasing its effectiveness. When appointing directors, theNomination and Compensation Committee deliberates andformulates proposals under the basic prerequisite thatcandidates understand and practice the “Cycle of Goodness”
that is the Group's corporate philosophy. The Nomination andCompensation Committee also held repreated discussions of
this spring’s change of president, and formulated a proposal toappoint Akira Uozu to the position.
Compensation, meanwhile, is considered based on the sizeand status of the business, while also referring to industry
standards. In doing so, consideration is also given to changes tothe employee salary system.

Message from a Nomination and Compensation Committee Member

Director (outside director), YKK Corporation
Professor Emeritus, Keio University
Professor Emeritus, Chubu University

Keinosuke Ono

Advancing Discussions on Governance Reform
based on Expertise

I have been involved in research and educational activities andin the administration of academic organizations for 50 years at
two different universities. In addition, through the graduate
school of management (business school) where I worked for 40
years, I have interacted with many business executives. In thiscommittee, I will provide opinions and discuss issues regarding
governance reform in a way that reflects the expertise I haveacquired through my own experience, including on issues suchas increasing the number of outside directors, defining theideal officer skills matrix, and clarifying the criteria fornominating officers and the system for determining theircompensation.

26

Director (outside director), YKK Corporation
Professor, Hitotsubashi University Graduate
SchoolErika Okada

I Hope to Give Advice as a Witness to Proper Process

I want YKK AP to be a company that creates new products andservices with high potential for the future, leading to thecreation of value for buildings. To this end, a long-term growthstrategy will be important. I see my primary role as an outsidecommittee member as being a witness to proper processes fornomination and compensation decisions, and I intend toprovide advice on these matters as needed.

YKK Philosophy —"Cycle of Goodness"
P4
Management Principle
P5

President Representative Director

Chairman of the Board
Chairman Representative Director

Akira Uozu

Hidemitsu Hori

March 1986: Joined company
1996 to 2009: Served in the U.S.A. and China
April 2009: Vice President
April 2016: Executive Vice President
June 2016: Director, Executive Vice President(Current)

Director
CHRO (Chief Human Resources Officer)

July 1985: Joined Yoshida Kogyo K.K. (nowYKK)
April 2009: Executive Chief Engineer
April 2010: Vice President
June 2020: Director, Vice President
April 2021: Director, Senior Vice President
April 2022: Director, Executive Vice President(Current)

March 1981: Joined Yoshida Kogyo K.K. (nowYKK)
April 2009: Vice President
June 2016: Director, Vice President
April 2018: Director, Executive Vice President
October 2021: Director, Executive Vice
President, CHRO
April 2023: Director, CHRO (Current)

Shuichi Mizukami

Kazuo Matsutani

Initiatives in the Value Chain

Kosuke Iwabuchi

Director
Executive Vice President, R&D and Technology

Business Strategies for Growth

March 1981: Joined company
April 2009: Vice President
April 2013: Vice President
April 2017: Executive Vice President
June 2020: Director, Executive Vice President
April 2023: Director, Vice Chairman (Current)

Director
Executive Vice President, General &Administration

Foundations Supporting our Business

Shinichiro Yamaji

Value Creation

March 1985: Joined company
April 2013: Vice President
April 2021: Senior Vice President
June 2021: Director, Senior Vice President
April 2022: Director, Executive Vice President
April 2023: President Representative Director(Current)

March 1981: Joined Yoshida Kogyo K.K. (now
YKK)
1989 to 2006: Served in the U.S.A.
April 2007: Vice President
April 2009: Senior Vice President
June 2009: Director, Senior Vice President
June 2011: President Representative Director
April 2023: Chairman Representative Director(Current)
June 2023: YKK Director (Current)

Director and Vice Chairman

Messages from Management

Directors and Board of Directors (As of June 2023)

Corporate Data

Director

Director

March 1977: Joined Yoshida Kogyo K.K. (nowYKK)
April 2012: Vice President
June 2014: Director, Vice President
April 2016: Director, Executive Vice President
April 2022: Director (Current)

March 1981: Joined Yoshida Kogyo K.K. (nowYKK)
April 2001: YKK Vice President
April 2004: YKK Senior Vice President
June 2004: YKK Director, Senior Vice President
April 2009: YKK Director, Executive Vice
President (until June 2018)
June 2018: Director, Executive Vice President
April 2023: Director (Current)

Fumio Niizeki

Wataru Otani

Director
Chairman, YKK Corporation

Masayuki Sarumaru

March 1975: Joined Yoshida Kogyo K.K. (now
YKK)
1977 to 1994: Served in the U.S.A.
June 1999: YKK Vice President
April 2003: YKK Senior Vice President
June 2008: YKK Director, Executive Vice
President
June 2011: YKK President Representative
Director
April 2017: YKK Vice Chairman Representative
Director
June 2018: YKK Chairman Representative
Director (Current)
June 2020: Director (Current)

Director
Executive Vice President, Manufacturingand Head of Manufacturing Division

Hiroshi Abe

March 1985: Joined company
April 2014: Vice President
April 2021: Senior Vice President
April 2022: Executive Vice President
June 2023: Director, Executive Vice President(Current)

YKK AP Integrated Report 2023

27

Chapter 03

Foundations Supporting our Business

The Board of Directors deliberates and resolves on importantmatters, determines management policies, and supervises theexecution of business operations. Currently, the Board has 10
directors (no more than 10 members), and the main results ofdeliberations in FY2022 are shown on the right. In order topromote active discussions, important matters are discussed at
the Management Strategy Meeting before being brought up at
the Board of Directors’ meeting, external Audit & Supervisory
Board members (outside experts) attend and state theiropinions, and the chairman, president, and Audit & Supervisory
Board members exchange opinions (three times in FY2022).
In order to improve the function of the Board of Directors, weare considering appointing not only Audit & Supervisory Board
members but also outside officers as directors to increase theBoard’s transparency going forward.

Board of Directors Meetings in FY2022
Number of meetings

15 times (including extraordinary meetings)

Average number of agenda
items

8.25

Average time per meeting

3.2 hours

Main agenda items andreporting items

・Matters related to the Shareholders Meeting
・Matters related to directors, operating officers, andexecutive specialists
・Matters related to personnel and organizations
・Matters related to business・Matters related to the disposal and transfer ofimportant assets
・Matters related to subsidiaries and major affiliatedcompanies

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

Chair of the Audit & Supervisory Board
Audit & Supervisory Board Member (outside)

Fuminao Hachiuma

April 1983: Joined Ajinomoto Co., Inc.
June 2013: Executive Officer of same
June 2015: Executive Officer & Vice President ofsame
J-Oil Mills, Inc.
President and Representative Director
June 2016: Representative Director,
President, and CEO of same
April 2022: Director of same (until June 2022)
May 2023: Outside Director, Seven & i Holdings
Co., Ltd. (Current)
June 2023: YKK AP Outside Audit & Supervisory
Board Member (Current)
Outside Director, Subaru Corporation (Current)

Audit & Supervisory Board Member (full-time)

Hisao Miyamura

March 1978: Joined Yoshida Kogyo K.K. (now
YKK)
2002 to 2008: Served in China
April 2008: YKK Vice President (until March
2018)
June 2018: Full-time Audit & Supervisory Board
Member (Current)

The Audit & Supervisory Board, which consists of four Audit &Supervisory Board members, held 14 meetings in FY2022 toaudit the execution of duties by directors from the standpointof legality and propriety. They also attend major meetings suchas the Board of Directors Meeting, express opinions asnecessary, and visit each location to conduct audits in

28

Audit & Supervisory Board Member
YKK Corporation Audit & Supervisory Board
Member (full-time)

Kiyotaka Nagata

March 1979: Joined Yoshida Kogyo K.K. (nowYKK)
April 2008: YKK Vice President
April 2009: YKK Executive Chief Specialist
June 2013: Outside Audit & Supervisory Board
MemberYKK Full-time Audit & Supervisory Board
Member (Current)
June 2016: Audit & Supervisory Board Member(Current)

Audit & Supervisory Board Member (outside)

Mina Sekiguchi

April 1993: Joined Arthur Andersen L.L.P. Dallas
OfficeJune 2022: Managing Partner, Resonancia LLC(Current)
Outside Director, Penta-Ocean Construction Co.,
Ltd. (Current)
July 2022: Outside Director, Trainocate
Holdings, Ltd. (Current)
September 2022: Auditor, Japan Atomic Energy
Agency (Current)
October 2022: Outside Director, EX4Energy, Inc.
(Current)
June 2023: YKK AP Outside Audit & Supervisory
Board Member (Current)

accordance with the audit policy. Two of the Audit & Supervisory
Board members are invited from outside the company. With ahigh level of insight, experience, and expertise in corporate
management, they conduct audits from an objective and fairminded stance.

Messages from Management

Human Rights and Human Resources
Approach to and engagement with human rights

Establishing a Human Rights Working Group topromote internal understanding
Compliance Committee
P33

Initiatives in the Value Chain

In FY2022, the company established a Human Rights Working
Group (WG) as part of the Compliance Committee, and isstrengthening its efforts by integrating the human rights
initiatives from our past business activities into the entire
company. In addition to promoting understanding of thecurrent situation through assessment of new human rights risks
and evaluating their level of importance and severity, fromFY2022 to FY2023, we are conducting video training on“Business and Human Rights” for all employees to raiseawareness of human rights and promote understanding within
the company.

The YKK Group implemented the “YKK Group Whistleblowing
System” in 2006, establishing a system that enables individuals
to consult with/report to consultation desks inside and outside
the company anonymously regarding behavior that violates
laws, work regulations, or internal rules. We are working to
make all users aware of it. In addition, from the perspective ofprotecting whistleblowers, we have prohibited treating
individuals disadvantageously due to their consultation.
By aiming to prevent the occurrence of illegal actions and toaddress them quickly if they do occur in the process ofconducting business activities, the whistleblowing system isintended to serve as a structure for firm compliance. In addition
to establishing a “grievance mechanism” to provide relief tothose involved with the company from human rights violations
arising from corporate activities, etc., we have also established aconsultation desk to address workplace environment, mental
health concerns, and the mental and physical health of ouremployees.
We have also implemented whistleblowing systems atoverseas companies and have established a system for
consultation/notification.

Business Strategies for Growth

In accordance with the “Cycle of Goodness” approach, we
respect the human rights of every individual stakeholder inevery country and region. In FY2023, the YKK AP Human Rights
Policy was formulated in line with the revision of the YKKGroup Human Rights Policy . YKK AP has set out its own Human
Rights Policy Statement that, while sharing the fundamentals of
the YKK Group policy, takes into account the human rights
issues that arise in relation to YKK AP’s business activities.
Accordingly, we will further strengthen our efforts to fulfill our
corporate social responsibility by appealing not only to ouremployees but also our business partners.

Operation of a whistleblowing system and continued
activities to increase employees’ awarenessFoundations Supporting our BusinessYKK Philosophy —"Cycle of Goodness"
P4

Value Creation

Formulation of the YKK AP Human Rights Policy

Corporate DataYKK AP Human Rights Policy

Human rights issues related to business activities

・Values・Prohibition of child and forced labor

・Scope・Commitment to human rights
・Organization and governance・Human rights due diligence
・Human rights education

・Corrections and remedies

・Ensuring transparency/communication

・Maintaining initiatives for respecting human rights

・Prohibition of discrimination, harassment, and abuse・Respect for freedom of association and the right to collective
bargaining

・Understanding of customs and compliance with laws andregulations
・Respect for diversity
・Health and safety
・Hours and wages

The details of YKK AP Human Rights Policy are available on our website.
https://www.ykkap.co.jp/company/jp/sustainability/humanrights/

YKK AP Integrated Report 2023

29

Chapter 03

Foundations Supporting our Business

Promoting Diversity
YKK AP has issued the “Diversity & Inclusion Declaration” with the aim of utilizing the diversity of human resources to create new value
and increase our future competitiveness in the international community.

In particular, as priority issues, we are striving to strengthen the hiring of female employees and support their career development,
as well as to expand and entrench the employment of persons with disabilities.

Creating a work environment for a diverse range of
personnel to play an active role

We are working to create an environment and design systems
that enable a diverse range of personnel to play an active role,such as easing restrictions on dual/secondary employment andintroducing a shortened working hours system. In FY2022, we
also conducted a “Job Satisfaction and Workplace Diversity
Questionnaire” to ascertain the actual situation regardingbalancing work and nursing care. Going forward, we will work
to reduce anxiety over nursing care and improve the ease ofbalancing it with work.

Promoting the active participation of women

The “AP Women’s Career Development Program, a careerdevelopment support program for female employees under the
6th Mid-term Management Plan, provides support for the longterm career development of participants through various
training programs such as career training, internal exchange
meetings, and the operation of a mentor system. In FY2022,
256 people, who were recommended from each workplace as
candidates to be leaders in the future, participated.

Diversity initiatives
Step 1 (Past)

Step 2 (Present)

Step 3 (Future Vision)

Focus on superﬁcial characteristics

Create value

Accept diversity

Management from diversity to value creation

Compliance with laws/rules
Educational
background Labor Standards Act

Hiring of human resources with a variety of career backgrounds; fair evaluation

Age

Act on Stabilization of Employment of Elderly
Persons●

GenderAct on Securing, etc., of Equal Opportunity andTreatment between Men and Women in Employment
Act on Promotion of Womenʼs Participation andAdvancement in the Workplace (2016)

Promotion of the active participation of women; promotion of women for management
positions/section manager-level positions● Management positions: FY2022: 122 → FY2024 targets: 140● Section manager-level positions: FY2021: 447 → FY2024 targets: 500

Nationality

Immigration Control and Refugee Recognition Act(Illegal employment)●

Disabilities

Act on Employment Promotion etc., of Persons
with Disabilities

Workingstyle

Labor Standards Act

Abolition of mandatory retirement age system: Hiring regardless of age, gender, or nationality

Proactive hiring of foreign nationals

Creating opportunities for people with disabilities that leverage their capabilities:
FY2022: 2.32%→ FY2024 targets:2.50%●

Achievement of work-life balance● Encouragement of male employees to take childcare leave: FY2022:73.2%● Encouragement to take paid vacation: FY2022:71.3% → FY2024 targets:80.0%● Total actual working hours / FY2022: 1,974 hours

Voice Comments from AP Women's Career Development Program participant

Product Development, International Business,
Product Research & Development Division

Sari Sasaki

I participated in AP Women's Career Development Program for two years
between 2021 and 2022. Listening to the stories of senior employees
working in management positions while experiencing childbirth andchildcare, as I did, I realized that the important thing is to establish systems
that allow both family and work to run smoothly. Through this experience, I
have been able to think from a higher perspective in terms of how to utilize
limited resources and how to develop human resources as an organization.

30

Equal role
Equal results
Equal treatment

Utilize the characteristics ofindividuals, create new value,and contribute to business

Enhancement of work and life

Voice Comments from an employee who took childcare leave

Nationwide Accounts,
Special Accounts Department

Takayuki Wakana
I took a year of childcare leave after the birth of my second and thirdchildren, a set of twins. I am grateful for the strong support I received
from my workplace, including the creation of a backup framework for theentire organization. I was also impressed by the fact that operations werestreamlined to fill the holes left by my absence, and the organization wasstronger upon my return. I did not feel too rusty after returning to work,and I am now in a role with more responsibility than I had before I tookchildcare leave.

Messages from Management

Human Resources Strategy
We are working to create systems and environments in which each and every employee can demonstrate their full potential.

In FY2023, we have set “efforts to improve employee engagement,” “development and training of human resources to create newvalue,” and “development and retention of innovative human resources” as our priority issues, and by improving our human resource

Salary revisions, allowances for specific duties, andqualifications

Value Creation

system and implementing a human resource strategy, we will realize a pleasant and fulfilling work environment.

Expansion of qualification allowances and support for qualification acquisition
Building and strengthening
the foundation of ourbusiness operations

Qualiﬁcation allowance(Application)*Period of employment(YKK AP)

Matching business strategies
with human resources

Qualiﬁcation
allowance(Retention)(YKK AP)Internal
certiﬁcation system[New](Across YKK AP Group)

Business Strategies for Growth

Incentives to acquire public
qualiﬁcations(Lump-sum payment)

A base for individual
capacity development

Distance learning subsidies(Fully paid)

Initiatives in the Value Chain

Enhancement of training systems

Foundations Supporting our BusinessWe have been working toward an appropriate wage level that iscompetitive in the market, and in FY2022, in light of thegovernment's wage hike policy, yen depreciation, and risingconsumer prices, we revised salaries upward by an average of
3% for general employees and provided all employees with a
special lump-sum payment. In FY2023, in addition to theprovision of specific duty allowances and other benefits under
the newly established internal certification system, we arerevising salaries upward by an average of 6%. In encouraging
the acquisition of qualifications, we are expanding the system
by removing the age limit for eligibility and increasing thequalification allowance.

Corporate Datatraining program for self-development, and subsidize the costfor employees who wish to attend. Moreover, with the abolitionof the mandatory retirement age system and the decision ofwhen to retire being left to the individual, the company
provides “career training” for employees to reflect on their own
careers.

We are enhancing our internal training system to develop
personnel who can contribute to our business and organizationand improve their individual skills. In addition to the “Value
Creation Academy,” which aims to develop the business leadersof the future, level-stratified training for newly appointed
managers, we have established a six-month English language
Diagram of the Training Scheme for FY2023

OFF-JTOJT

Level-stratiﬁed training

Businessskillstraining

Global training

Specialized
training

Job-speciﬁctraining

SD
SelfdevelopmentYKK AP English training

Incentive scheme for acquiring public qualiﬁcations

Improving vocational and monozukuri skills

Distance learning, e-learning, etc.

Improving sales proposal capability

Improving technology and product appeal

Compliance training

Anger management training

Evaluator training

Overseas
trainees

Selection based on business issues

Management training

Cross-industry exchanges (technical and external)

Language (English) study abroad

Global training

MBA/MOTInter-cultural management

EMBA

Graduate school dispatch program

Value Creation Academy

Career training

Supervisor sessions

Regular hires
induction training

Mid-career hires induction training

Business basics training

Womenʼs
Careerleader training design training

Fourth year training
Work report meetings

Womenʼs career development
support program

OJT training for
new section managers
Three-year,
one-person program

General employees

Intentional, systematic, and sustained teaching and development of the abilities
necessary for job performance through work

Management positions

Advanced management
seminarTraining for
new senior section managers

Purpose-speciﬁc training

Selective leader
Indepen development
dence
training

YKK AP Integrated Report 2023

31

Chapter 03

Foundations Supporting our BusinessDialog with employees

We hold “roundtable meetings,” in which the president andother directors engage in direct dialogue with employees, aswell as site visits and interviews, in which employees fromheadquarters and business units gather information on issues
in various regions and workplaces. Employee feedback
obtained through dialogue is being reflected in a variety ofmeasures, including the establishment of a career consultation
desk and the introduction of a “shared mentor system.” In
addition, the YKK Employee Stockholding Association holds a
biannual meeting to report on business results and for
employees to ask questions of the directors.

Graduate school dispatching and MOT/MBA
overseas studies

We view the health of our employees and their families as amanagement issue, and under our “Health Declaration”
adopted in 2018, we have promoted the establishment of ahealthy environment, etc., to reduce lifestyle-related diseases
and control psychological disorders. As such, we have beenrecognized as a “2023 Certified Health & Productivity
Management Outstanding Organization (Large Corporation
Division).”Details of the YKK AP Health Declaration are available on the website.
https://www.ykkap.co.jp/company/en/sustainability/health/32

In order to develop new areas and fields that contribute tosustainable growth, in FY2022, under the leadership of the
CHRO (Chief Human Resources Officer), we held an internal callfor new business themes and the leaders who will be
responsible for promoting them. Employees of all ages
contributed ideas that were not confined to existing businessfields, and three leaders were selected from among them towork toward the commercialization of these ideas. In FY2023,
they will be assigned to the newly established “New Business
Development”, where they will further evolve their proposal
topics and search for new business themes.

their fields of expertise.

Aiming to develop the next generation of business leaders, we
dispatch employees to graduate schools (PhD/master’s
programs) in Japan and overseas and provide support for MOT/
MBA study abroad. Research topics are not limited to ourcurrent business, and we also proactively recommend themesthat will become even more critical in the future, such as
robotics, AI/machine learning, DX, next-generation
environmental response, etc. We aim for diversified ideas as anorganization by helping employees to gain specialized
knowledge and a multifaceted perspective that expand beyond
the framework of the company. We dispatched 14 employees in
FY2022, for a cumulative total of 31 employees.
Further, in addition to recommending the acquisition of
doctorates, etc., we are implementing collaboration between
recipients, with organizations within the company, and with
universities and research institutes, and we operate the “AP PhD
Holder Association” with the aim of further revitalization. In
FY2022, YKK and YKK AP PhD holders held a technical exchange
meeting to share technical information and technical issues in

Health Management

Open call for new business themes and promotion
leaders

Voice Comments from an employee who obtained a PhD

Environment, Energy and Analysis Technology
Group,
Technical Research Division

Yohei Tsukamoto

I received my Ph.D. from the Graduate School of Kobe University, where
I conducted research on methods for predicting the sound insulation
performance of double-glazed windows. Sound insulation testing toevaluate windows’ sound insulation performance can be very costly andtime-consuming. For double-glazed windows with significant soundinsulation effects, I conducted a study based on the theory of doublepanel sound insulation and proposed a practical method for predicting
sound insulation performance. I hope to continue working on internal andexternal architectural acoustics issues and contribute to the creation of
comfortable spaces.

We have also established a health consultation service both
inside and outside the company to promote the maintenanceof employee physical and mental health. Inside the company,
employees can consult with industrial physicians at businesslocations and nurses at health management centers, at any
time. We also work with external organizations to provide
appropriate mental healthcare for employees throughcounseling by e-mail, by phone, and via remote interviews.

Details of Human Rights and Human Resources are presented in our Sustainability Data Book. (in Japanese only)
https://www.ykkap.co.jp/company/jp/sustainability/data/social/Corporate Compliance System and Education

Value Creation

corporate officers, at least two hours of compliance training isprovided to all employees each year. For persons heavily
involved in compliance work, we also provide education in
specialized fields led by the relevant specialized departments
and committees (HR, purchasing, environmental safety
management, trade management, information security,
technical asset management, the environment, etc.).

We have established a Compliance Committee to promote theYKK AP Group corporate compliance system. Divided into fiveunits, this system promotes the compliance activities of YKK AP
and affiliated companies. Each unit is working independently toenhance monitoring, including compliance with rules,
regulations, and guidelines.
In addition to regularly holding compliance training forFoundations Supporting our Business

FY2023 Corporate Compliance System

Messages from Management

Compliance

Board of Directors
Compliance Committee

YGCC Promotion Subcommittee

Secretariat: Compliance Promotion Ofﬁce/
Legal & Intellectual Property Department

Human Rights Working Group

Committee
members

Manufacturing andsupply units

Administrative units

Overseas units

Executive Vice President
in charge/Division head

Executive Vice President incharge/Division head

Executive Vice President incharge/Division head

Executive Vice President incharge/Division head

Chief Supervisor

Chief Supervisor

Chief Supervisor

Chief Supervisor

Chief Supervisor

Promotion Supervisor

Promotion Supervisor

Promotion Supervisor

Promotion Supervisor

Promotion Supervisor

Individual divisions

Product development,
technical research, etc.

Individual factories/
plantsExecutive Vice President in charge/
Division head

Individual branches/Sales ofﬁces
Business divisions under
the presidentʼs management

Operational
divisiondepartments

Headquartersfunctional
divisions

Overseas companies
Initiatives in the Value Chain

Implementing
body

Research &development units

Business Strategies for Growth

Sales units

Individual policy departments

In FY2019, YKK AP introduced the YKK Global Criteria ofCompliance (YGCC), the YKK Group’s compliance standards
based on the YKK Philosophy and ISO 26000, and the adoptionof the YKK Global Criteria of Compliance at major sites in Japanand overseas was completed in FY2021. From FY2022 onward,

we have been promoting the establishment of YGCC operation
while accommodating new business sites.
We regularly carry out YGCC audits such as self-inspection
and internal audits. Standardized monitoring contributes toreduction of on-site workloads by eliminating duplicate
monitoring items.

Corporate Data

Standards for Compliance Activities: “YKK Global
Criteria of Compliance”

YKK Global Criteria of Compliance (YGCC)
Seven Core Themes
Related to ISO 26000(1) Organizational Governance(2) Human Rights(3) Labor Practices(4) Environment(5) Fair Operating Practices(6) Consumer Issues(7) Community Involvement
and Development

Customer Requests
Supplier Code of Conduct

Corporate Activity GuidelinesYKK Group Commonalities(1) Management System

Items Speciﬁc to YKK APʼs Business(3) Working Hours and Wages(5) Environment(6) Fair Business Practices(7) Contract Construction Work・Business Licenses

・Working Hours

・Environmental Management System

・Fair Competition

・Management System

・Social Compliance Policy

・Wages and Beneﬁts

・Energy Consumption and・Anti-Bribery

・Labor Conditions

・Social Compliance Committee(4) Health and Safety

Greenhouse Gas Emissions

・Conﬁdential Information Protection

・Hours and Wages

・Opinions from the Employees

・Health and Safety Management System

・Water Use

・Non-Competition Obligation

・Health and Safety

・Whistle-Blowing System

・Emergency Planning & Fire Safety

・Waste Water Discharge and Efﬂuents・Personal Information

・Environment

・Compliance Violations

・Medical Services

・Waste Management

・Intellectual Property

・Fair Business Practices(2) Labor Conditions

・Sanitation/ Hygiene

・Atmospheric Emissions

・Accounting and Tax Preparation

・Child Labor

・Physical Hazards

・Chemical Management

・Antisocial Forces

・Forced Labor

・Chemical Hazards

・Supplier Management

・Discrimination

・Structural Integrity

・Foreign Trade

・Discipline, Harassment or Abuse

・Dormitory and Canteen

・Subcontracting

・Freedom of Association and Collective Bargaining
・Regular Employment/ Employment Contract

Details of Compliance are presented in our Sustainability Data Book. (in Japanese only)
https://www.ykkap.co.jp/company/jp/sustainability/data/governance/
YKK AP Integrated Report 2023

33

Chapter 03

Foundations Supporting our Business

Risk Management
Strengthening of the risk management system

responsible for individual organizational units (Executive Vice
Presidents and Division Heads) from “Crisis Management
Committee Members” to “Business Continuity Management(BCM) Committee Members.” We will enhance our resilience bystrengthening cooperation between individual divisions andthe Risk Management Committee, preparing a business
continuity plan (BCP) for ordinary circumstances, and ensuringsmooth operations in the event of an emergency.

YKK AP has formed five risk committees to enhance the risk
management system and establish a governance system for
emergencies. We have also created regulations for eachcommittee and are operating them accordingly.
In FY2022, with the aim of improving preparedness forincreasingly diversified risks and strengthening our measuresfor business continuity (BC), we changed the persons
FY2023 Risk Management System

Board of Directors/
Management Strategy Council

CRO

Risk Management Ofﬁce

Risk-related Committees (5)Quality Committee

Trade Management Committee

Crisis Management Committee

Information Security Committee

Technical Asset Management CommitteeCore Departments
Quality Assurance Department
Subcommittees/Working Groups (WGs)
Quality Information Integration WG
Digital Product Development andQuality Assessment WG
Risk Assessment Revision WG

Core Departments
International Division
Subcommittees/WGs
Machinery and Engineering Export WG

Core Departments
Risk Management Ofﬁce
Subcommittees/WGs
Safety Conﬁrmation System Development
Subcommittee
Earthquake, Fire, and Flood Prevention Subcommittee
Infection Risk Subcommittee
Public Relations SubcommitteeCore Departments
IT Department
Subcommittees/WGs
IT Subcommittee/Cyber Security Subcommittee
Personal Information Management Subcommittee
Education SubcommitteeCore Departments
Product Research & Development Division
Technical Research Division
Manufacturing Division, Fabrication Technology Department
Subcommittees/WGs
Conﬁdential Information Leak Prevention WG
Drawing Management WG
Critical Technology Management WG
Education Subcommittee

Business Units (5)SalesStrengthening of company-wide, speciﬁc initiatives

Development and Technology

Commercial Business Division
Residential Business Division
Exterior Business Division
Global Curtain Wall Business Division
Special Accounts Department
Industrial Products Department

Manufacturing and Supply

Secretariat

Secretariat

Administration

Secretariat

Secretariat

Product Research & Development Division
Technical Research Division
Quality Assurance Division

Manufacturing Division
Safety & Environment Department
SCM Department

Functional Divisions of Headquarters
Operation Division
New Business DevelopmentYKK AP R&D Center

Factories/Plants

Headquarters Functions(Tokyo/Kurobe)

Divisions/Branches/
Domestic Afﬁliated Companies

BCP initiatives

In preparation for disaster and risk occurring, we haveformulated BCPs at all locations in Japan and overseas. In
addition, for the purpose of prompt implementation of the
BCPs, in FY2022 we reviewed and updated the BusinessContinuity Management (BCM) Regulations. In FY2023, weplan to further instill this along functional axes and on aregional site basis.
We carry out regular disaster drills every year to increase theeffectiveness of the BCPs. In addition, in FY2022, in response tochanges in work styles, such as telecommuting and commuting

Overseas
Secretariat
International Division
Overseas Afﬁliated Companies

Overseas Afﬁliated Companies

directly between home and work sites, the CRO led the
distribution of a “Natural Disaster Risks and Countermeasures”
video via a web-based internal newsletter.
We are also enhancing our ability to quickly identify and addressrisks in procurement. In addition to purchasing materials frommultiple suppliers, understanding and improving the supply
chain, and securing inventories of critical management items incase of emergencies, the research and development, manufacturing,and purchasing divisions work together to set up alternative
sources of supply, and other efforts taking the BCP into account are
conducted from the product development phase.

Measures and initiatives to address risks in procurement

34

Risks

Countermeasures

Weather and disasters (earthquakes, typhoons, cold spells, etc.)

Alternative materials,
multi-company purchasing, inventory

Politics (wars, conﬂicts, economic sanctions)Exclusion from purchasing

Economy (supply-demand balance, exchange rates)

Alternative materials,
multi-company purchasing, inventory

Ethical and legal issues (human rights, the labor environment,
information security, subcontracting support)

Exclusion from purchasing,legal compliance

Supply chain (legal compliance, competitiveness, stable supply)

Inspection, evaluation, restructuring

Initiatives(1) Selection of alternative materials(2) Multi-company purchasing system(3) Inventory measures(4) Cost reductions, sale prices, and other business strategies(5) Conclusion of agreements on the Basic Transaction Principles (7) Implementation of CSR surveys(6) Change of internal systems(rules and regulations, appraisals)(8) Changes in the management system forcontracted and temporary employees(9) Supply chain restructuring(10) Compilation of BCP data

Material procurement
P51

Risk map development and selection of key risks

divisions to address key risks.
Risks that have a significant impact on our business are
positioned as key risk items, and as a result of this review, thethree items of “cyber attacks (information security),” “supply
chain (changes in the economic environment),” and“environmental regulations” were upgraded in risk rank, andspecific measures are now being implemented.

Messages from Management

We assess the risks surrounding the business and create a risk
map according to changes in the environment, the urgency of
response to the risks, and the expected scale of damage. In
FY2022, we reviewed our risk map from the following threeperspectives: (1) reviewing risk items including key risks, (2)clarifying risk levels, and (3) identifying efforts by related

Value Creation

Response to main key risks

Cyber attacks

External environment and potential risks

External environment and potential risks

Initiatives

Initiatives●●(earthquakes, tsunamis, typhoons, torrential rains)

Company secrets and other confidential information may be lost or leaked
due to computer virus infections, unauthorized access, or other causes. In
addition, cyber attacks, outages of telecommunication services, etc., could
bring down information systems and shut down all our businesses.
With the recent progress of DX and the expansion of remote work,
information systems have more network connection points with internaland external parties than in the past. Environmental changes haveheightened the possibility of disruption of business activities due to forced
shutdowns or loss of corporate secrets, etc., caused by malicious external
intrusion into information systems.
Establish and operate an IT-BCP (including at domestic and overseas
affiliated companies)●Implement IT security management measures (cyber security and SIRT
response)●Strengthening response by setting up subcommittees in the Information
Security Committee for specific roles.

Initiatives in the Value Chain

In the event of a disaster, a company-wide BCP task force headed by thepresident is established. BCM Committee members will serve as theheads of BCP task forces for their respective functions, and will oversee,
direct, and generally manage the emergency response.
●The Crisis Management Committee, which oversees the entire company
as an organization to deliberate and decide on policies and measures forbusiness continuity, with the head of each functional unit serving as amember of the BCM Committee, will be responsible for handling thesituation.

(information security)

Business Strategies for Growth

Damage caused by large-scale earthquakes, windstorms, or flooding at ourbusiness sites, or similar damage at our business partners, etc., may lead toslowdowns in our business activities.
Natural disasters may result in the death or injury of employees,
damage to facilities, etc., leading to reduced production capacity, as well as
replacement and restoration costs for equipment, company buildings,
warehouses, and production lines, etc. In addition, there is a risk thatbusiness activities may be hampered by outages to critical infrastructureand disruptions to logistics. These slowdowns may lead to customers andbusiness partners moving to competitors.

Foundations Supporting our BusinessThreat of natural disasters

Corporate Data

Vice President, CRO

Osamu Anda
“We aim to build a resilient organization.”
Materiality
P20

To realize one aspect of materiality, a “Resilient Business
Foundation,” in FY2022, we reviewed and updated our BusinessContinuity Management Regulations for the first time in eight
years. We are aiming to acquire appropriate business continuity
capabilities for major contingencies, with the goal of promptly
implementing an initial response and BCP on an all-hazards
basis, including in the event of major natural disasters, severingof the supply chain, cyber accidents, spread of infectious
diseases, etc.
I believe that in the implementation of risk management
activities, it is important to secure the human resources toperform the work. Going forward, we are planning to strengthen
both operational and physical aspects of the BCM
implementation framework in each country and region,
including the implementation of education and training
programs for all employees, and the provision of centralized
information. In addition, in order to develop human resources
with a high sensitivity to risk, we have established a team,consisting mainly of young employees, which will take an activerole in addressing risk. We will further strengthen our
foundation by enhancing our efforts made during ordinary
circumstances.

Details of Risk Management Resources are presented in our Sustainability Data Book. (in Japanese only)
https://www.ykkap.co.jp/company/jp/sustainability/data/governance/
YKK AP Integrated Report 2023

35

Foundations Supporting our Business

Chapter 03

Environmental Management
Environmental initiatives
YKK Group has established the “YKK Group Environmental
Vision 2050,” which maps out the long-term orientation of ourenvironmental initiatives. Under this policy, YKK AP has
established its vision for 2050 of “achieving zero environmental
impact in our business activities throughout the entire productlifecycle.”
In the Mid-term Environmental Policy for FY2021 to FY2024,
we have set environmental targets for the entire value chain
with the aim of resolving and contributing to the resolution of
the environmental issues of “climate change,” “resource
recycling,” “water,” and “biodiversity,” and are working toachieve them.
As the structure for promoting these activities, the “YKK AP
Environmental Policy Board Committee,” chaired by thepresident, formulates and approves environmental policy andstrategy from a management perspective. Under that policy, the“YKK AP Environmental Committee” incorporates theenvironmental policy into sales, research & development,
manufacturing, management, and overseas divisions.
In addition, to confirm the progress of these environmental
policies and environmental compliance, we conduct annualinternal environment audits. We have also acquired ISO 14001
certification at all locations in Japan and at eleven locations
overseas, and are continually working to increase the level ofenvironmental management. In April 2023, we were certified
as an “Eco-First Company” by the Minister of the Environment
in recognition of our position as an environmentally progressive
company in the industry.

YKK AP Environmental Management Policy (FY2021 to FY2024)

Creating environmental value at every stage of the lifecycle: Toward a brighter future for nature and humanity
With the intention to make a better society and environment for the next generation,YKK AP will take on the challenge of creating new value and achieving zero environmental burden, through technical innovation.
●

We will strive to contribute to resolving environmental issues throughout the value chain and reducing the environmental burden.

●

We will address climate change, resource recycling, water, and biodiversity as environmental issues.

●

We will create new environmental value with an eye toward the future, on a foundation of diverse human resources

The history of YKK AP’s environmental activities and future vision for 2050

1990

1995

2000

2005

2010

2015

The 5th Mid-term Environmental Management Policy

The 6th Mid-term Environmental Management Policy(Year)

Long-term goals

Low-carbon, resource recycling,
coexistence with nature

Simultaneous pursuit of businessgrowth and the environment

Achievement ofa sustainable society

・Establishment of the YKK AP・Creation of a sustainable society

・Development/promotion ofCreating environmental value at allstages of the lifecycle

・Increasing the level of eco-products; ・Increased contribution to the

Achievement of “zero environmental
burden” throughout the entire
lifecycle in business activities

・Establishment of the environmental ・Continued reduction of the・Global activities to reduce the[YKK Group Environmental
Pledge (1994)]

・Response to/compliance withenvironmental laws and regulations
management structure

・ISO 14001 certiﬁcation (the ﬁrst

certiﬁed in YKK AP: M&E Center(1998))

Response to recyclingoriented society
Environmental Committee
eco-products

through products and monozukuri
improving societal recognition(outside awards)

・Enhancement/visualization ofenvironmental burden (energy
conservation, 3Rs, chemical agents)
energy policy; utilization of naturalenergy・Environmental communication andeducation

・Creation of an environmental

management system

・Social Environment Report (since

2005)

36

2030･･･2050

Response tosustainable society

Observance ofcompliance

Response tosustainable society

2020

・Strengthening of communication

inside and outside the company

reduction of CO2

environmental burden

・Environmental activities witheveryone participating

Decarbonization, circulation,
coexistence・Achievement of zero CO2

throughout the lifecycle in products
and monozukuri

・Use of renewable/recyclable

materials

・Expansion of coexistence withnature and the community

[Environmental Issues] Research, Development,
and Veriﬁcation●

Material
Procurement

Development of products as measures against climate change● Scope 3: Reduction of CO2 emissions by 20%

Climatechange

Water

Installation[People]Product Use

Contribution of a 149% reductionof CO2 through high thermal
insulation products (relative to FY2020)● Scopes 1 + 2: Reduction of CO2 emissions by 36%● Achievement of zero-CO2 model factories●

Customers● Aluminum: 39% recycling rate for external products● Utilization of outside company
Vinyl windows (APW scrap): 100% internal recycling rate
scrap from vinyl windows● Reduction of waste emissions by 32%(relative to FY2016)● Reduction of packaging materials●

Showrooms linked
to the community

Society

Education of thenext generation● Contribution to the
local community●

Development of products as measures against damage from windstorm and ﬂooding● Reduction of total water usage by 32%

Foundations Supporting our Business

●

Sales

Value Creation●

Resource recycling

Manufacturingand Logistics

Messages from Management

FY2024 environmental targets (relative to FY2013)

Employees●

Biodiversity●

Achievement of hexavalent chromium-free products● Achievement of factories that are in harmony with local nature

Environmental
activities with everyone
participating

Business Strategies for Growth

Disclosure of information under the TCFD recommendations
YKK AP has endorsed the Task Force on Climate-related Financial Disclosures (TCFD) since FY2019.

In relation to both climate-related risks and opportunities, we conduct scenario analysis of the impact on our business and finances andreflect the results in our management strategies.

Initiatives in the Value Chain

GovernanceCorporate DataYKK AP has a Board of Directors as the decision-making and oversight body for important matters such as management policy, an Audit &Supervisory Board as the company’s auditing organization, and an Operating Officer System to help the company promote the execution ofbusiness and operations.
In particular, sustainability issues are addressed by the “ESG General Meeting,” chaired by the president, which conducts cross-functional
activities by formulating policies from a company-wide perspective and rolling them out to related divisions and domestic and overseas
group companies.
The Environmental Policy Board Committee, which is chaired by the president and has jurisdiction over the environmental area within the
ESG General Meeting, formulates and approves environmental policies and strategies, including on climate change, from a management
perspective, and monitors their progress. The “Environment Committee” rolls out these environmental policies and strategies to ourmanufacturing and sales sites in Japan and overseas, and confirms how they are being implemented through mutual internal environment
audits.
In line with TCFD recommendations, we are identifying and assessing the significant risks and opportunities that the issue of climate change
poses to YKK AP.
Type
Transition risks

Strategy
Physical risks

Opportunities

Financial impact on YKK AP

Reputation

Loss of corporate value due to delay in responding to public demands, such as carbon neutrality

UrgentIncreased damage from natural disasters, supply chain fragmentation

MarketChronic
Products/
Services

Increased costs due to energy resource depletion

Reduced earnings due to higher average temperatures causing higher air conditioning costs at
company plants and higher raw material prices
Restrictions on business activities due to water shortages caused by reduced rainfall
Increased demand for high thermal insulation products

Increased demand for carbon-free and recycled-resource products (e.g., recycled aluminum)

Risk management

Risks related to the business as a whole are assessed and reviewed once a year, prioritized by “size of loss” and “frequency of occurrence,” andeach risk is managed by the relevant committee. Climate change-related risks (natural disasters, environmental regulations, etc.) are also
identified as key risks and incorporated into the management process, with policies developed and monitored on a global basis by theEnvironment Committee and the Crisis Management Committee.

Indicators andtargets

In order to achieve carbon neutrality, we have set medium- and long-term goals certified by Science Based Targets initiative (SBTi) andformulated an environmental action plan to achieve them in conjunction with our mid-term business plan. Progress is disclosed in the
Integrated Report and Environmental Report.

YKK AP Integrated Report 2023

37

Chapter 03

Foundations Supporting our Business

Taking on the challenge of carbon neutrality
We have set our own greenhouse gas reduction target for
FY2030 at 50% below the FY2013 level. In February 2021, thistarget was certified by the international organization Science
Based Targets initiative (SBTi). Under the “Evolution 2030”
vision, YKK AP aims to reduce its emissions by 80% by FY2030
and by 100% by FY2040, and we will strengthen our efforts toachieve these goals ahead of the certified schedule.
In FY2021, we launched the “Carbon Neutral Project” with an

Scope 1 and 2 initiatives
We are working to reduce the amount of fuel used in our
manufacturing processes. In addition to improving theefficiency and energy-conservation performance of our
production facilities, we are electrifying our heat source
equipment and switching from liquid fuels to natural gas.
Furthermore, we are using existing technologies to develop anddemonstrate the use of hydrogen, ammonia, and othersubstances in our gas burners.
As such, we are working on both energy saving and energy
creation. In terms of energy creation efforts, we are working to
introduce solar power generation (installed on rooftops, fields
etc., at seven plants and factories in both domestic andoverseas), hydroelectric power generation (using the power ofwater flowing through pipes), biomass power generation andboilers (using wood waste produced during manufacturing forin-house consumption), and wind power generation (using
exhaust wind inside factories). We have tripled our investment
in renewable energy relative to FY2020 levels and are stepping
up our efforts accordingly.
In order to measure our progress in reducing CO2 emissions,
we established a database to visualize CO 2 emissions byidentifying the energy consumption of each piece of equipment
at the manufacturing stage. In product development, we haveintroduced the “Environmentally Friendly Design Evaluation
Sheet,” which relates CO 2 emissions to evaluation criteria
during design and development.

Scope 3 initiatives
Scope 3 emissions account for the majority of the CO 2
emissions associated with YKK AP’s business activities acrossthe supply chain as a whole. Of these, emissions from the38

executive vice president as project leader. A carbon neutral
technology roadmap has been developed, and six working
groups, with young engineers participating, are developing
technologies to achieve decarbonization.
Furthermore, by reducing the energy used for heating andcooling through the popularization of high thermal insulation
products, we will contribute to carbon neutrality not only for ourown company but also for society as a whole.

procurement of materials used in the manufacture of products
account for 80% of the total. In particular, the procurement(mining, refining, and overseas transportation) of aluminum
ingots used for aluminum products and other products has asignificant impact, and increasing the utilization rate of recycledmaterials (re-used raw materials such as aluminum scrap
recovered from the market) will have the greatest impact
toward achieving carbon neutrality.
All aluminum scraps generated in the manufacturing process
are reused, and we have already achieved an internal recycling
rate of 100%. We also aim to achieve a 100% recycling rate formarket-obtained aluminum scrap generated outside thecompany. In September 2023, an aluminum recycling furnace
will start operation at the Shikoku Plant, and we plan to install
the same equipment at other manufacturing sites in the future.
In addition, we will work toward technical progress inaluminum recycling through co-creation between industry,
government, academia, and the private sector. We are involved,
as the lead company, in the “Creation of a Toyama Resource
Recycling Society Model,” an industry-academia fusion hub
concept project to revitalize aluminum-related industries inToyama Prefecture, led by the University of Toyama.
In regard to logistics, we have introduced double-trailer
trucks for transportation over land, increasing the amount ofcargo transported at once by 1.8 times the previous level. By
introducing “trunk line relay transportation,” which includes
consolidating transportation routes and improving loadability
by combining partial loads, “secondary delivery,” which includes
joint delivery and alternate-day delivery, and “modal shift,”which includes using railroad containers, we are making
ongoing efforts to reduce CO2 emissions.

Evolution 2030
P7
Products and services toaddress social issues
P19

Messages from Management

Lifecycle of YKK AP products and CO2 emissions

UpstreamYKK AP

Research & Development,
Manufacturing, and Sales

Logistics

Value Creation

Raw materials andSmelting and components
Logistics
reﬁning
EnergyDownstream

Installation Use

Resource
extraction

Reclamation and reuse

Scope 3

Scope 1, Scope 2

Raw materials
Business partners

Collection

Scope 3

Used at YKK AP
Fuel (Scope 1)
Electricity (Scope 2)Distributors
Customers

Contributions to CO2 reductions through high thermal insulation products sold in Japan

In the supply chain as a whole, procurement of materials (refining, etc.) under Scope 3
accounts for a large proportion of emissions, and aluminum materials account for a large
proportion of these

Sales of high thermal insulation products can be said to contribute to CO2 reductions insociety as a whole(kt CO2)

2,100

Logistics, installation, disposal, etc.
Capital goods
Iron 3%

Stainless steel 1%
Wood 1%Glass 4%

Scope 3Composition:84％

Purchasedmaterials
1,566

vs FY2020
185%

900
800

vs FY2020
149％

700
vs FY2020
117％

600
500

Aluminum
87%

864

400
548

300

Scope 2
230
Composition:11%
Scope 198
Composition:5%
CO2 emissions in FY2021(Japan + overseas)vs FY2020
127％

Proportion of CO2 emissions
from purchased materials

200

594

2020

2021

CO2 emissions
from the average
household per year.
Equivalent to
250,000 households*
Calculated as 2.74 tons
per household.
From the Ministry of theEnvironmentʼs “Statistical
Survey of CO2 Emissions
from the Household
Sector” (2021)

468

100

0

Aluminum, also known as “electricity
in a can,” requires a large amount ofelectricity for electrolysis to refine it fromraw materials such as bauxite. However,
because aluminum can be remelted using
only a small amount of energy, aluminum
recycling plays a very important role in
reducing CO2 emissions.

696

Corporate Data

Vinyl 4%

(kt CO2)

Initiatives in the Value Chain

Breakdown of YKK AP’s CO2 emissions (FY2021)

Business Strategies for Growth

Increased
contributions

Contributions to CO2
reductions throughhigh thermal insulation
products

Contributions
to reductions*Scopes 1, 2, 3: From the conceptual schema of the GHG Protocol, a global calculation standard*Contributions to reductions:Windows themselves do not directly generate greenhouse gases, but contribute to reductions in energy used for
air-conditioning
Contributions to reductions themselves are not included in Scope 3

Zero impact

Emissions

Recycling

Foundations Supporting our Business

Disposal

2022

2023
(Plan)

2024 (Fiscal year)(Plan)*Applicable products (equivalent to sustainable products)
Vinyl windows: APW 430, APW 330, PLAMADO H
Composite windows: APSWORD, APW 410
Vinyl inner windows: Mado Remo - PLAMADO U Inner Window
Thermal insulation doors: InnoBest, Venato D30, Kantan Door Remo, Concord S30
Commercial building thermal insulation windows: EXIMA 37, EXIMA 77, APSWORD
NEO-LB*Conventional products[New construction] Aluminum windows + insulating glass, aluminum doors[Remodeling] Aluminum windows + single glass*The FY2024 plan is the mid-term plan developed in FY2021.

YKK AP Integrated Report 2023

39

Chapter 03

Foundations Supporting our Business

Taking on the challenge of a circular economy
Installation of RPF production equipment andexpansion of operations

Our company is promoting 3R activities * 1 (reduce, reuse,recycle waste, etc.). In FY2021, we installed RPF (Refuse derived
paper and plastics densified fuel) production equipment at the
Kurobe Ekko Plant. In the past, waste plastics such as film andlaminate, as well as used paper, were used as raw materials, butfrom FY2022, the range of waste used will be expanded toinclude wood waste, thereby promoting the conversion of waste
into valuable resources. We reduced the total amount of waste
product in Japan and overseas in FY2022 by approximately
25% relative to FY2016.

Toward improved vinyl recycling rates
We are also actively engaged in recycling the vinyl produced
during the manufacturing process for vinyl windows and afteruse. We have installed crushing and sorting equipment at eachof our vinyl window manufacturing sites, and by reusing thematerials as raw materials for vinyl profiles and gaskets*2 forinsulating glass, our internal recycling rate improved to 28% in
FY2022.
We are working with industry and academia to build anindustry-wide system to collect and recycle vinyl windows in themarket, including participation in the “Reviewing Committee
for Recycling of Used Vinyl Windows,” (Vinyl Environmental
Council, etc.), which was established in 2019.

Industrial waste recycling rate (manufacturing sites)
100％

100

100

100

100

100

100

97

98

99

99

99

99

99

91

91

91

91

86

80％
70％

89

To minimize CO2 emissions throughout the supply chain, wedeveloped the ”Environmentally Friendly Design Guidelines” in
FY2022.
Five items that contribute significantly to CO 2 reduction
during the product lifecycle are “visualization of CO2 emissions,”“standardization of packaging materials,” “visualization ofenvironmentally hazardous substances,” “ease of disassemblyand separation,” and “environmentally friendly design
guidelines and evaluation methods.” These items indicate YKKAP’s approach and policy regarding environmental considerations,and efforts are underway to evaluate and improve its products.

Extent of Coverag:YKK AP Group (Japan and overseas)

(kt)

25

20

20.5

Recycling

19.3

Landﬁll

18.3

16.9

15

76
YKK AP Group (Japan)
YKK AP Group (Japan and overseas)YKK AP Group (overseas)

60％

15.4

15.9

15.4

2020

2021

2022 (Fiscal year)

10

5

50％

2016

2017

2018

2019

2020

2021

2022 (Fiscal year)*1 3Rs: Reduce, Reuse, Recycle*2 Parts used to fit glass into sashes

Details of Environmental Management are presented in our Environmental Report. (in Japanese only)
https://www.ykkap.co.jp/company/jp/sustainability/environment/report2023/

40

Implementation of guidelines for environmentallyfriendly design

Waste output (manufacturing sites)

99

90％

RPF production equipment (Kurobe Ekko Plant)

0

2016

2017

2018

2019

Developing and disseminating digital technology
for smart factories

virtual factories and other fundamental reforms. Specifically, we
are introducing digital technologies such as IoT devices, 5G,
and AI to create engineering and supply chains in virtual space
for the purpose of digital twinning, as well as training global
personnel capable of implementing change.
In addition to basic research on drones, 3D printers, and AI
image analysis, the Digital Strategy Department is also
developing plans and conducting trials for operational use,which is expected to be applied in various fields such as sales,development, and manufacturing. Hands-on digital experience
events are being held to spread awareness of these initiatives
within the company.

RobotsEquipment

Product design

Equipment designand development

Virtual factory

Feedback ofsimulation results

Design /Development Simulation

Digital twinAI

XR

Processes

Operators
AI

XR

Initiatives in the Value Chain

Data models

Design / Development

Business Strategies for Growth

IoT devices

Foundations Supporting our Business

Smart factory

Value CreationYKK AP is promoting smart factories to increase its competitivenessin the global market, and is working to improve the operational
availability of its equipment through digital transformation(DX). In addition, through DX, we aim to increase productivity
by improving efficiency in all departments, including sales,development, manufacturing, and administration, and areworking to achieve transformation into a company with “thespeed and flexibility to respond to changes.”
In order to strengthen research and development in thedigital field, YKK AP Technologies Lab (NA) Inc. was establishedin June 2022 to undertake research and development on

Messages from Management

DX Promotion

Fabrication technology
Factory layout

Individual
manufacturing process

Real-time interlinking ofacquired data

Data collection

Platform

Plant design
Process simulations
Data analysis

Data use

Corporate Data

Hands-on digital experience events

Hands-on digital experience events for employees are held todeepen their understanding of digital technology, generate
ideas for business applications, and develop digital humanresources capable of driving DX.
In FY2022, events were held both at real-world venues (twolocations), where participants could operate and experience
actual equipment, and on the web (at a Metaverse venue),
where remote participation was possible. Going forward, weplan to hold these events at locations around the country. We
will continue to work toward the realization of DX while creating
an environment in which employees are able to make use ofdigital technology.

Employees try their hand at operating a drone at an event

Events were also held at a Metaverse venue

YKK AP Integrated Report 2023

41

Chapter 04

Business Strategies for Growth

Residential Business
Proposing comfortable lifestyles, starting withwindows and doors

FY2022 results
Net sales(consolidated)

With a focus on the “APW” window brand, we propose comfortable
lifestyles with entrance doors and window products that offer
enhanced thermal insulation performance and safety. We aim to build
a society that is friendly to both houses and people by providing highperformance window and door products that also meet the needs ofhome builders and residential equipment companies.

billion yen

Main products

The situation in FY2022◎Windows◎Entrance doors/sliding
doors◎Interior doors/partitions◎Window shutters◎Remodeling windows/
doors◎Quake-resistance retrofitting◎Window and door products for home builders(prefabrication)◎Doorways and windows for modular bathrooms

As a result of our policy of “increasing thermal insulation
performance of windows and doors,” centered on vinyl windows,
net sales of vinyl windows were 104% of the previous year’s. In
particular, the sales volume of APW 430 high-performance
triple-glazed vinyl windows was 107% of the previous year’s,
driving the trend toward high thermal insulation products. The
rate of vinyl windows to the total number of windows sold forsingle family homes in Japan is 31%, and the combined rate ofvinyl windows and aluminum-vinyl composite windows is 75%,
indicating a shift toward higher thermal insulation. Net sales of
the three main products in the window and door remodelingbusiness were around 110–120% of the previous year’s, withstrong sales due in part to increased demand driven by
government subsidy programs. In the home builders(prefabrication) sector, contracts for single family homes slowed
down due to soaring material prices, but contracts for multifamily residences stayed firm due to continued low interest
rates. New orders for high thermal insulation composite
windows also contributed to net sales standing at 101% of theprevious year’s figures. In the modular bathroom sector, sales
were 110% of the previous year’s, supported by market share
expansion and demand for remodeling.

Our strengths●A wide variety of high thermal insulation windows forhealthy and comfortable living●Disaster prevention and mitigation products with a focus onsafety and security that support the building of earthquakeand typhoon-resistant homes●An enhanced lineup of products for remodeling windows
and doors in the private areas of condominiums and single
family homes●Use of account management to provide business partnerspecific product proposals

Market environment and social issues
Although the number of new housing starts in Japan has been
decreasing year by year, demand for high thermal insulation
window and door products has been increasing due to theestablishment of new higher insulation performance grades
under the Housing Performance Indicator System. In addition,
demand for remodeling of windows and doors is also growing
as a result of government subsidy programs. In terms ofaddressing social issues, in order to realize a carbon-neutral
society by 2050, we will reduce CO2 emissions throughout the
product life cycle, develop recyclable materials, and pursue
product development that makes use of recycled materials. In
addition, to address the problem of vacant houses, we will work
to increase the value of stock housing. In the home builders(prefabrication) sector, we will respond to growing needs for
ZEHs, safety and security, and disaster prevention awareness.

42

508.6

Residential BusinessNet sales
196.4 billion yen(105% of the previous
year’s)Future strategies
As more attention is paid to the energy-saving performance ofhomes as a means of realizing a carbon-free society, and in
response to the growing demand for vinyl windows, we plan toincrease the rate of high thermal insulation windows to 84% in
FY2023. In terms of product development, we will strengthen
products that offer energy saving and disaster prevention/
mitigation, as well as value proposals and high-value-added
products with advanced functions such as the “M30 Facial
Recognition Automatic Door.” In addition, alongside housing
providers nationwide, we contribute to the creation of quality
homes in the stock housing market through performanceenhancing renovations. In order to meet an increasingly diverse
range of needs, we will also promote collaboration amongproduction, sales, and technologies, and strengthen our productappeal. In the home builder (prefabrication) sector, we will work
to improve business partner and customer satisfaction by evolving
our products, such as aluminum-vinyl composite windows. In themodular bathroom sector, we are working to further evolve
existing bathroom doorway products, as well as products for nonresidential properties and condominium renovations.

Messages from Management

Main initiatives
Promoting high thermal insulation windows and further strengthening vinyl window production
capacity

Value Creation
Foundations Supporting our Business

The standards for insulation performance in the Housing
Performance Indicator System have been revised, with new
higher grades, 5, 6, and 7, established starting in FY2022. In
response to this, and in light of the demand for more energyefficient housing, we are strengthening our production systemfor vinyl windows as well as promoting the use of high thermal
insulation windows. In August 2022, a new APW 330 non fireresistant vinyl window production line was added to the
Namerikawa Plant (Namerikawa City, Toyama Prefecture), andin September the same year, a APW 430 non fire-resistant vinyl
window production line was added to the Tohoku Plant MADO(Window) Factory (Osaki City, Miyagi Prefecture). Building on a
supply system designed to meet demand in the area, we aremaking further efforts to strengthen our vinyl window
production capacity.

Namerikawa Plant (above) and Tohoku Plant (below), where production lines have been
expanded.

Business Strategies for Growth

Launch of the “Association of Regional Home Builders Engaged in Building High-Performance Homes
with Vinyl Windows”

Initiatives in the Value Chain

In August 2022, we launched the “Association of Regional
Home Builders Engaged in Building High-Performance Homes
with Vinyl Windows,” a group of Regional Home Builders acrossJapan that build high-performance homes using the APW vinyl
window series and meet thermal insulation performance
grades 5, 6, or 7. Regional Home Builders that have enrolled in
the association are listed on the official YKK AP website as “APW
Authorized Home Builders,” and the status of their compliancewith the new higher grades is shown. The site is being used tohelp find high thermal insulation-focused builders who use the
APW series of vinyl windows as standard.

Corporate Data

Strengthening production capacity for inner windows in response to the 3-ministry subsidy scheme
Expansion also underway in sales channels and installers
In order to meet the demand for window remodeling under the“Housing Energy Conservation 2023 Campaign,” a subsidy
scheme jointly undertaken by the Ministry of Land,
Infrastructure, Transport and Tourism, the Ministry of Economy,
Trade and Industry, and the Ministry of the Environment to help
achieve carbon neutrality by 2050, we are enhancing our
production capacity for inner windows. By enhancing the
production line through changes in alternating work shifts andincreases in personnel and equipment capacity, production
capacity has increased three-fold. In addition, we have a
dedicated sales representative at each of our sites to promotenational policies, conduct awareness-raising activities, andexpand our sales channels. In addition to expanding thenumber of installers at architectural product distributors andtraining them, we are also expanding our scope to include otherindustries and carpenters, as well as promoting the “creation of
installers” by packaging installation training programs.

Mado Remo - PLAMADO U Inner Window

YKK AP Integrated Report 2023

43

Chapter 04

Business Strategies for GrowthCommercial Business
Creating beautiful and functional urban spaces

FY2022 results

Through the exterior design of office buildings and condominiums,
and by responding to the need for high thermal insulation
performance and added value that contributes to decarbonization, weare helping to shape urban landscapes. Moreover, through businessdevelopment based on business models tailored to individual
countries and regions, we also provide facade systems that are
optimized to meet specific applications and needs.

508.6
billion yen

Commercial BusinessNet sales
134.3 billion yen(117% of the previous year’s)

Main products

The situation in FY2022◎Commercial windows◎Curtain walls(custom and standard)◎Commercial entrances◎Windows and doors for
multi-family residences◎Remodeling products

In the new construction sector, we strengthened our customer
contact points by reinforcing our sales development system,
and in the renovation sector, we stepped up proposals forservice life-extension renovations, especially for non-residential
educational facilities. In addition to real-world proposals at “AZ
five TOKYO” and “PROPOSAL 8th,” we have enhanced our
remote proposals through such methods as LIVE presentations,360-degree VR, and web exhibitions. These efforts resulted instrong orders, and overall net sales in the commercial businesswere 117% of the previous year’s level.

Our strengths●Strong product appeal long recognized by users●Sales capabilities provided by a nationwide network andproposal capabilities to make highly complex facades areality●Technical capabilities that enable us to handle high-difficulty
properties and solve problems in building exteriors as thesituation demands●A flexible production system with global manufacturing sites

Market environment and social issues
In the new construction sector, multi-family residences are
expected to decline due to the declining birthrate and aging
population, while non-residential properties are expected to
decline slightly going forward, despite the recovery from the
COVID-19 pandemic. On the other hand, the renovation sector
is expected to remain strong, as the number of stock multifamily residences more than 35 years old and due forrenovation is increasing, while in non-residential properties,
educational facilities will peak in the next 10 years due to theextended service lives of schools. In the field of large-scale,
highly complex facades, demand for “green facades” to produce
green building walls, as well for renovations, is expected toincrease in Japan and other developed countries, while inemerging countries, demand for new construction is expected
to grow as a result of ongoing urbanization. Social issues
include rapid changes in the market due to soaring material
prices, labor shortages due to the aging of skilled workers, andthe need to address carbon neutrality and decarbonization. To
solve these issues, we are working to shorten installation
periods, improve productivity, save labor, and reduce CO 2
emissions over the entire lifecycle of a building.

44

Net sales(consolidated)

Future strategies
We are focusing on strengthening in the Tokyo metropolitan
area and enhancing remodeling projects. As a measure tostrengthen in the Tokyo metropolitan area, the manufacturing
and supply system for this region will be reorganized at the
new Saitama Factory building, which will start operation in July
2023. We will strive to improve our services by increasing
productivity and further shortening lead times. For sales
measures, we will further strengthen our sales development
system and customer contact points. In terms of productmeasures, we will launch aluminum-vinyl composite windows
in September 2024 and gradually expand them in order toachieve greater levels of high thermal insulation performancein buildings. In addition, we are developing “unitized CWs for
mid-rise buildings” as a high value-added product, and will
work to create, promote, and expand the market byemphasizing quality and labor-saving features. To enhance ourefforts in the renovation sector, we will use various subsidy
schemes to promote the creation of a market for large-scale
remodeling of multi-family residences. Furthermore, based on
our track record of safely and reliably providing large-scale,
highly complex facades and our technical capabilities, we willuse “unitized CWs for super high-rise buildings” as a focal point
for stepping up our domestic and overseas operations, while
also expanding our human resources and manufacturing sites.
In the latter half of the 6th Mid-term Management Plan, we will
promote the establishment of a global supply chain system andinfrastructure, starting with enhancing CW supply in Asia.

Messages from Management

Main initiatives
New building begins operations at the Saitama Factory, reorganization of the manufacturing andsupply system
Furthermore, solar power generation and the procurement of
renewable energy will enable it to achieve CO2 emissions ofeffectively zero. Moreover, through the use of rainwater, we aim
to make this a factory friendly to both the global environment
and its workers. Other facilities include a rest area, open to the
public as a place for neighborhood residents to relax,
established on part of the site.

Value Creation
Foundations Supporting our BusinessBusiness Strategies for Growth

We acquired a site adjacent to the Saitama Factory (Misato
Town, Saitama Prefecture) and constructed a new building as amanufacturing site for aluminum architectural products forcommercial buildings. The groundbreaking ceremony was heldin June 2022, the completion ceremony in May 2023, andoperations began in July 2023. Making this the core plant for
our Commercial Business, we then reorganized ourm a n ufact ur i ng and sup p l y sy st em to i n c re a se o u rcompetitiveness in the Tokyo metropolitan area and other areas
in eastern Japan. By consolidating production with more
efficient equipment provided by the Machinery & Engineering
Department, expanding automated processes, and establishingproduction lines linked to data, the new plant will reduce
manufacturing costs by 25% relative to our existing factories. In
addition, through measures including logistics reforms such asunit loading, the lead time from order placement to delivery
will be reduced by 6 to 11 days.
Based on the concept of “a factory fulfilling to work in,” thebuilding will reduce CO2 emissions by 30% through the use ofa high thermal insulation outer skin, windows with excellent
thermal insulation performance and ventilation, dimmerequipped lighting, and high-efficiency air conditioning.

Saitama Factory new building

horizontally deploying the know-how cultivated in the CW
business, we will expand and optimize our resources, including
human resources, manufacturing sites, and suppliers. We will
first focus on strengthening operations and business growth inJapan and the rest of Asia, with a view to expanding into North
America and Europe in the medium term.

Corporate DataIn April 2023, the Global Curtain Wall Business Division wasestablished with the aim of strengthening the curtain wallbusiness in Japan and overseas, taking as its focal point“unitized CWs,” in which glass and panels are integrated andunitized at our plants and factories. Our goal is to acceleratebusiness development by enhancing our expertise in
manufacturing, sales, and engineering, creating global
opportunities for our employees and CDPs for our engineers. As
well as enhancing our operations by horizontally deploying
collaborative know-how, we aim to grow our business by
expanding and optimizing our human resources andmanufacturing sites.
This will serve to strengthen cost competitiveness andexpand sales of unitized CWs in the High Rise Building
Division, which serves the Japanese market, as well as inoverseas companies. In addition to strengthening operations by

Initiatives in the Value Chain

Established a “Global Curtain Wall Business Division” to enhance cost competitiveness and expand sales

Installation of a unitized CW in progress

Strengthening proposal capabilities, appeal, and target products to expand the commercial building
renovation market
In the commercial building renovation market, we will create
demand for large-scale remodeling by strengthening proposals
for windows and entrance doors for the growing stock of multifamily residences over 35 years old and due for renovation, as
well as by actively taking advantage of various subsidy schemes.
Meanwhile, we will also sustain and enhance our proposals forservice life-extension renovations for non-residential educational
facilities. In terms of measures to strengthen our products, wewill expand our “APSWORD NEO-LB” aluminum-vinyl composite
windows for low-rise buildings, which use the “GRAF installation
method” exclusively for renovations, in September 2023. This
will be followed from FY2024 onward by the launch of newaluminum-vinyl composite windows that can be used for midand high-rise buildings. In so doing, we aim to promote andintensify the conversion of commercial buildings to highthermal insulation performance in the renovation sector too.

YKK AP Integrated Report 2023

45

Chapter 04

Business Strategies for Growth

Exterior Business
Proposing spaces that make living more
comfortable

We will create new value by deploying products that unite “house”
and “garden.” We offer exterior products that allow total coordinationof the premises to suit the customer's lifestyle.

FY2022 results
Net sales(consolidated)

508.6
billion yen

Exterior BusinessNet sales
65.0 billion yen(103% of the previous year’s)

Main products

FY2022 Business overview and future strategies◎Balconies◎Carports◎Gates & fences◎Terraces◎Exterior materials

In FY2022, the wall exterior market declined due to a drop in
new housing starts and the impact of soaring material prices,
yen depreciation, as well as rising consumer costs resulting
from increased economic activity and market recovery. However,sales of exterior products such as gates and fences remained
strong due to the strengthening of fully coordinated proposals
including windows and doors and of cityscape proposals
focused on homes built for sale. In addition, demand for foldedplate roof carports, which are designed to resist wind pressure
and snow buildup, expanded to include non-snowy regions,and net sales exceeded market conditions to reach 103% of theprevious year’s level.
The exterior business will continue strengthening its
organization and systems corresponding to sales channels,
based on a policy of “boosting sales by providing fully
coordinated proposals for buildings and exteriors.” In the fieldsof new construction, exterior construction, and remodeling, we
will thoroughly bolster existing sales channels and strengthen
sales. For custom-built residential homes, we will offer valueadded proposals through all-inclusive building and exterior
designs, and for homes built for sale, we will promote proposals
that integrate buildings and exteriors into a unified cityscape.
We will also further strengthen our supply system andproduction site system to expand our business.

Our strengths●Fully coordinated proposal capability for buildings andexteriors●Creating markets through proposal-based products for
comfort in buildings and exteriors and garden space●Ensuring ease of selection through the development of a
product system for luxury, mid-range, and regular producttypes

Market environment and social issues
The wall exterior market has been particularly sluggish due to a
decline in new housing starts and rising construction costs
resulting from soaring material prices, and the effects of theserising material prices have been reflected in surging commodity
prices and reduced budgets for building exteriors. Responding
to social issues requires product development and production
systems for a carbon-neutral society, product development that
supports disaster prevention and mitigation and easy
installation, and assurance of sustainable product quality.

Main initiatives
Opening of new exterior exhibition space
The YKK AP Exterior Exhibition Hall was opened in August 2022
in the YKK60 Building (Sumida-ku, Tokyo). The permanent
exhibition features a lineup of exterior products such as gates,
fences, carports, and so on, presented on a full-size building,allowing professional users such as exterior sales andinstallation companies to see the actual products and learn
about their structures, functions, and other key selling points.
As such, it serves as a base for making proposals to professional
users.

YKK AP Exterior Exhibition Hall46

Messages from Management

Industrial Products BusinessSupporting the industrial sector with aluminum
profilesValue Creation

We provide high-quality extruded aluminum based on our knowledgeof materials, profile designs, extrusion molding, surface treatment,
processing, etc., and the advanced technology capabilities we havedeveloped in the manufacturing of aluminum building materials.

The aluminum extrusion market continued to face challenging
conditions, with the number of new housing starts remaining
weak and the automotive and other industries continuing toexperience difficulties in procuring parts, resulting in a full yearof lower sales than in the previous year. Given these conditions,
we were successful in expanding our sales share, leading to
year-on-year sales growth, especially in our core sector of
construction. Net sales were 122% of the previous year’s level,
due in part to the impact of higher aluminum ingot prices.
With no significant growth in underlying demand forconstruction expected in the future, we aim to expand ourbusiness as the manufacturer of choice through proposals thatlead to the sustainable growth of our business partners. For the
automotive sector, we forecast significant growth in line withthe growing demand for electric vehicles going forward. Since
this is a field that requires advanced technology, we aim forfurther growth by reliably meeting the needs of our customers
alongside our highly specialized engineers and manufacturing
staff. To realize these growth strategies, we will also continue todevelop human resources capable of providing value to ourbusiness partners and society.

Our strengths●Integrated production from casting, extrusion to surface
treatment at four manufacturing sites in Japan●Ownership of large 14-inch (6,500 tons) and 10-inch (4,000tons) extruders

Market environment and social issues

Corporate Data

In terms of demand in the construction sector, we forecast thatconditions will remain difficult due to the significant impact of
the sluggish growth in new housing starts. Demand in theautomotive sector is expected to recover as the shortage ofsemiconductors moves toward resolution, although there is asense of uncertainty due to the impact of the global politicalsituation. Social issues include the need to reduce greenhousegas emissions in aluminum production and raw material
procurement in order to realize a carbon neutral society by
2050, and to address the high dependence on overseas
resources, the price and supply of which are heavily influenced
by global conditions.

Initiatives in the Value Chain◎Components for machinery equipment◎Auto parts◎Architectural components◎Sustainable products

Business Strategies for Growth

FY2022 Business overview and future strategies

Foundations Supporting our Business

Main products

YKK AP Integrated Report 2023

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Chapter 04

Business Strategies for Growth

Overseas AP Business
Operating businesses rooted in individual
countries and regions

The requirements for architectural products such as windows, doors,and curtain walls differ from country to country and region to region
due to varying climates, cultures, and other factors. Since establishing
our first overseas company in Singapore in 1976, we have expanded
our business to 11 countries and regions, meeting the needs of eachthrough locally based business operations.

Overseas AP BusinessNet sales
115.8 billion yen(145% of the previous
year’s)

Net sales(consolidated)

508.6
billion yen

Our strengths

The situation in FY2022●Global operations in 11 countries and regions, primarily inNorth America, China, and Asia
●Product development tailored to the climate and culture of
the countries and regions in which we operate, combinedwith local manufacturing and sales systems●A system for providing technical and manufacturing support
from Japan

Sales of commercial architectural products in the U.S.A. werestrong on the East Coast, and efforts were undertaken tostrengthen our services in the Midwest and West. To support
increased sales of residential architectural products we havebegun construction of a new plant with an integrated
production system, which is scheduled to start operation in
January 2024. In terms of domestic demand in China, sales
increased due to the development of new customers throughthe introduction of mid-price range housing market products
and the expansion of remodeling channels. In Taiwan, sales
were strong in the luxury residence market, and efforts werealso made to develop the central and southern areas. In
Indonesia, sales increased due to the development of newchannels and the introduction of new products. In India, sales
also increased significantly due to the strengthening of the
supply system for profiles, reaching a record high. As a result of
these efforts, the overseas AP business as a whole achieved anincrease in both revenues and profits, and the proportion of net
sales accounted for by overseas sales grew from 14% to 17%.

Market environment and social issues
Growth in the North American commercial building market isslowing, and new housing starts continue to weaken due togovernment interest rate hikes and other factors. However, theChinese real estate market (luxury market) is recovering due toeasing of regulations, a measure to break out of the prolonged
recession in housing. Taiwan’s housing market is shrinking, but
Indonesia’s has remained strong.
In terms of addressing social issues, we will contribute to the
reduction of CO2 emissions through high thermal insulation
products such as StyleView® in the U.S.A. and the LD Series in
China. In addition, we will help mitigate against wind and flood
damage through high water-tightness and disaster prevention/
mitigation products such as the YRB Series in Taiwan, NEXSTA in
Indonesia, and IWIN-S in India. In addition, our easy-installation
products will help address shrinking labor forces, and our
ventilation products will help create healthy and comfortableliving spaces.

“NEXSTA”

48

FY2022 results“IWIN-S”

Future strategies
In order to further expand our business, we will strengthen
both our product appeal and our manufacturing and supply
system by introducing new products in our existing businesses.
By expanding sales channels/areas in conjunction with this, we
aim to achieve stable growth. In addition, we will proactively
and flexibly develop new businesses and new markets.
Meanwhile, in terms of the overseas AP business as a whole, wewill advance the development of human resources to support
the business and strengthen our response to sustainability
issues. We will also further strengthen cooperation between
related divisions in Japan and overseas companies, and work to
evolve a business model appropriate to each country andregion in terms of sales, products, manufacturing/supply, andmanagement administration. By combining the collective
wisdom of all our divisions, both in Japan and overseas, and by
speeding up the execution of our business, we will grow theoverseas AP business into the core business of YKK AP.

Messages from Management

Main initiatives
Construction of a new plant for residential vinyl windows in the U.S.A. Productivity to grow to 212%of the previous level
warehousing and shipment processes, will also be carried out
to create an environment that is friendly to workers. YKK AP’s
manufacturing functions in Macon, which are currently
dispersed over two locations, are scheduled to be transferred to
the new plant after it begins operations in January 2024.

Value Creation
Foundations Supporting our BusinessBusiness Strategies for Growth

YKK AP AMERICA INC. is building a new plant for residential
vinyl windows on a site it acquired in Macon-Bibb County,
Georgia. The purpose of this construction is to increase sales ofresidential vinyl windows in its sales area of six southern statesin the U.S.A. to strengthen production and supply capabilities,
and build a production and supply system with a competitivemarket advantage, thereby establishing an integrated
production system from vinyl materials to assembly.
Automation technology, which has been adopted in Japan for
the APW Line for the production of vinyl windows, will be rolled
out in the new plant to increase productivity to 212% of theprevious level. What is more, the building also reduces CO 2
emissions by improving energy efficiency through naturallighting and thermal insulation of its roofs and walls. In
addition, we are considering the phased introduction of energy
creation technologies in order to achieve carbon neutrality.
Automation and manpower reduction for work involving heavyloads within the production line, as well as during theConceptual diagram of YKK AP AMERICA INC.’s new plant

Strengthening the presence of showrooms in each location to create business opportunities

Kaohsiung

JakartaAtlantaCorporate Data

Bangkok

Initiatives in the Value Chain

We are expanding showrooms around the world as bases for
introducing our products to a wider audience. In FY2022, werenovated our showrooms in Bangkok (Thailand), Kaohsiung(Taiwan), and Jakarta (Indonesia), and in FY2023, we renovatedour showroom in Atlanta (U.S.A.). In Indonesia, YKK AP
Experience Studio, a showroom for end-users, primarily custombuilt home owners, opened in December 2022, attached to the
Jakarta sales office, which was relocated to central Jakarta. It
has six exhibition spaces, including a water-tightness
performance experience area. By creating further business
opportunities, we will contribute to increasing the value ofbuildings in many different regions.

Completion of the CapitaSpring super high-rise facility in Singapore
CapitaSpring, a large-scale, super high-rise mixed-use facility inthe heart of Singapore, with an exterior built by YKK AP FACADE
PTE. LTD., was completed in February 2022. The 280-meterhigh, 51-story building has an striking facade that weaves
organic curved shapes and greenery from plantings into thestraight, inorganic exterior surfaces. In addition, by creating
green spaces throughout the building, it has obtained a
Platinum rating, the highest level of the BCA Green Mark, whichis the leading environmental performance index for buildingsin Singapore. Design, procurement,
installation, and quality control took
place during the COVID-19 pandemic,
when there was a shortage of personnel
on site and government mandated
safety control measures had to bemet.

YKK AP Integrated Report 2023

49

Chapter 05

Initiatives in the Value Chain

Initiatives in the Value ChainYKK AP operates from a perspective of sustainability, based on the YKK philosophy of the “Cycle of

YKK Philosophy
Cycle of Goodness
P4

By creating added value in each of our monozukuri activities and proactively addressing various issues in

PurposeP5

Goodness,” and the company’s Purpose.

the infrastructure that supports these activities, we hope to contribute to solving social issues and achieving
the SDGs, and to be a company that builds a better society through our business.

Research, Development and Verification
Three technical facilities and the Central Testing
Center Laboratory

YKK AP has also strengthened its global research anddevelopment system. In addition to Japan, R&D centers havebeen established in Germany and Indonesia to conduct
research and studies in different regions: Japan for warmer
regions, Germany for colder regions, and Indonesia for hot andhumid regions. This information is compiled and shared todevelop products optimally suited to each region.
At the YKK AP R&D Center (Germany), we investigate andresearch innovative European technology in the fields of energy
conservation architecture and building materials, and promotehigh added-value in windows and doors through functionalparts, thermal insulation of windows and doors, and frames andglass, etc.
At the YKK AP R&D Center (Indonesia), we conduct
investigations, research, and development related to energy
conserving construction methods and windows and doors
suited to hot-humid regions, as well as research on passive
design (the design of comfortable living environments thatutilize natural energy). As part of a joint industry-governmentacademia research project on “energy-conserving multi-family
residences for middle-income residents,” we are measuring theeffectiveness of using windows and entrance doors that provide

Three technology facilities

Global R&D organization

The YKK AP R&D Center, Value Verification Center, and Partners
Support Studio, all located in Kurobe City, Toyama Prefecture,
are responsible for the cycle of development, evaluation andverification, technical proposals, and information communicationthat form the foundation of YKK AP’s monozukuri process. TheYKK AP R&D Center is a center of technology and expertise
which develops high-quality products. The Value Verification
Center conducts “user verification” using consumer monitorsand “field verification” that reproduces the natural environment.
Finally, the Partners Support Studio presents proposals aimed
at addressing the issues of professional users, based on our
technology. Furthermore, the Central Testing Laboratory, a JNLA
testing laboratory that meets international standards, reinforces
our product quality assurance system through rigorous testing.

Global R&D organization

Value Verification Center

Product evaluation and verification●Verification from users’ perspectives●Field verification●Analysis & simulation

Partners Support Studio
Quality, technology,
and engineering proposals●Issues and requests fromprofessional users

Germany (Wuppertal)

Surveys and research on advanced
European window technology●●

YKK AP R&D Center

Creation of technological information and product development●Accumulation and aggregation of findings and data
●Joint research toward solving issues

50

Investigation/research on innovative
European technology
Research on advanced technology
aimed at high added value

Indonesia (Tangerang)

Japan (Kurobe)

Research and summary of climate andculture, construction conditions, andstandards●Passive design research for hot andhumid areas, research on windows
and doors●

Research and development of
windows for hot and humid areas●

Intellectual Capital
P17

In-depth technology capabilities at
the Technology Headquarters

Co-creation of advanced themes
Research and development of coretechnologies, materials, manufacturing,products, and installation methods●Collaboration with the Value Verification
Center and the Partners Support Studio●Integration and sharing of the results ofeach Center●Messages from Management

Materials Procurement
Procurement Policy and CSR Procurement

Value Creation

The YKK Group has a procurement policy consisting oforganizational governance and human rights. In order to
conduct CSR procurement based on this policy, we haveestablished a set of “Basic Transaction Principles” that explicitly
stipulate compliance with laws and regulations and fairtransactions. By FY2022, we had concluded agreements with
1,184 major business partners, achieving our FY2024 target for
the number of agreements in place. In addition, in FY2022, we
conducted a CSR questionnaire at all of our business partners
with whom we have concluded agreements to confirm thestatus of their initiatives. Going forward, we will administer thequestionnaire to our major business partners and those that
handle particularly important materials and parts.
YKK AP also conducts “green procurement,” which involves
prioritizing the purchase of environmentally friendly materials
in accordance with the “YKK AP Basic Policy on Green
Procurement.”

Foundations Supporting our BusinessBusiness Strategies for GrowthPartnership Building Declaration“WIDE VIEW SLIDING” product for wide openings (NEXSTA series)

Technical Research Division, established in FY2023, is
responsible for technology, research, and development from a
global perspective. It is working on technology, research, anddevelopment for new technologies and new materials,
including the development of recycling technology to achieve a
100% aluminum recycling rate and the development of organic
materials to become carbon neutral. It is also striving toadvance our technologies in existing areas, such as building
technologies for ultra-high thermal insulation glass. Moreover,through joint research with external research institutions,
efforts are underway to promote the development andexchange of human resources.

CSR Procurement Promotion Goals(Companies)

Number of companies that have agreed
to the Basic Principles of Procurement(cumulative total)

Number of companies for which CSR
surveys have been conducted(cumulative total)
1,184

1,200

Corporate Data

Technical Research Division initiatives

Initiatives in the Value Chain

effective ventilation. In October 2022, we launched "WIDE VIEWSLIDING" in the NEXSTA series for luxury custom-built homes tomeet the need for products for wide openings. Taking
advantage of our knowledge of technological development inJapan in areas such as design and component structure, we
ensure the necessary performance required in the areas where
our products are used.

In keeping with the YKK Philosophy, Management Principle,
and Purpose, we are strengthening our partnerships with
suppliers and business operators in the supply chain with theaim of fulfilling our social responsibilities. In June 2022, wedrew up and announced the “Partnership Building Declaration”
with the aim of building relationships of co-existence andmutual prosperity.

1,184

1,184

1,000
821

800
600
400
200
0

32

58

48 48

2019

2020

2021

2022

2023
(Targets)

2024 (Fiscal year)(Targets)

Details of the YKK Group Procurement Policy, YKK AP Basic Policy on Green Procurement, and the Partnership Building Declaration are presented on the website.
https://www.ykkap.co.jp/company/en/sustainability/procurement/

YKK AP Integrated Report 2023

51

Chapter 05

Initiatives in the Value Chain

Manufacturing and Logistics
Integrated production system
Upholding the spirit of YKK founder Tadao Yoshida, who laid thefoundation for the company’s integrated production system,YKK AP has integrated all monozukuri processes at its own
manufacturing sites in Japan and overseas.
Currently, we are working to further enhance our technologicalcompetitiveness through seamless and rapid collaboration
between our development and manufacturing departments
and Machinery and Engineering Department, which is responsible
for the development and manufacture of specialized equipment
to make our products. In addition, we are rolling out technology
developed in Japan to overseas markets, as shown by the
introduction of the labor-saving APW line, a vinyl window
manufacturing line used in Japan, to the residential vinyl
windows plant being built at YKK AP AMERICA INC. Goingforward, we will pursue a shift to smart factories and aim to
improve productivity through DX.

52

Health and safety
Another important issue is to create a safe and healthy
workplace for employees involved in manufacturing. We are
creating a stress-free and fulfilling workplace by installing airconditioning equipment and air-conditioned clothing tocombat heat, and improving the environment of the cafeterias
and restrooms. To enhance safety, we also continue to conduct
regular equipment and machinery safety audits every three
years to ensure the intrinsic safety of our equipment. In
addition, since FY2021, we have been identifying andimproving “shortcut behaviors” and “troublesome tasks” in theworkplace in order to eliminate all unsafe practices. Starting in
FY2023, we will provide training to workplace leaders toincorporate hazard prediction into their training, further
strengthening safety awareness.

Integrated production system
P18
YKK Philosophy,
Management Principle,
PurposeP4-5

Smart factory
P41

Saitama MADO (Window) Plant

Logistics

Sales

Messages from Management

BtoC and BtoB activities
For end-user customers and professional users, we provide
information on safe, secure, healthy, and comfortable
homebuilding through our showrooms and web content.
Furthermore, since 2002, we have maintained a businessalliance in the remodeling field, the “TDY Alliance,” with TOTO
Ltd. and DAIKEN Corporation. Information on remodeling isdelivered through 13 collaborative showrooms nationwide,
fairs and events, as well as a joint website.

Value Creation
Foundations Supporting our Business

SE (Sales Engineers)
One of our greatest strengths in terms of proposal capability is
our sales engineers (SE), who make technical proposals
together with sales representatives. Our 49 sales engineers
belong to the Product Development, Residential Business
Department in Product Research & Development Division, andare located at 10 sites in Japan. Our proposals are based on our
knowledge of housing as a whole, and are designed not only
for new construction but also for the revitalization of the market
for stock housing. We also provide information to help address
the requests and problems of professional users, tailored to thecharacteristics of individual regions, such as verifying the valueof shutters in snowy areas.

Business Strategies for Growth

The so-called “2024 problem” will arise in April 2024, when an
overtime limit for truck drivers will be imposed. YKK AP began
developing new pallets in FY2016 to improve delivery
efficiency. In FY2019, we endorsed the “White Logistics”
campaign initiated by the Ministry of Land, Infrastructure,
Transport and Tourism, aiming to promote logistics efficiency
and productivity improvement to realize sustainable logistics.
Specifically, we have introduced a “unit load” system that
efficiently transports cargo in units such as pallets andcontainers, enabling efficient loading and unloading that does
not rely on driver experience and intuition. In addition, Y-Caps,a proprietary system designed to efficiently load pallets onto
truck beds, identifies the optimal combination of products andpallets to improve truck loading efficiency and enable optimal
dispatch management. Moreover, in order to reduce work hours
associated with various logistics processes, we are pursuingsustainable logistics through joint transportation with othercompanies, thereby reducing drivers’ time commitment.

Initiatives in the Value Chain
Corporate Data

Unit loading facilitated by the introduction of the proprietary Y-Caps system

Shutter side pressure verification using reproduced snowfall

Details of customer satisfaction initiatives are presented in our Sustainability Databook. (in Japanese only)
https://www.ykkap.co.jp/company/jp/sustainability/data/social/YKK AP Integrated Report 2023

53

Chapter 05

Initiatives in the Value Chain

Installation
FE (Field Engineers) and the FTC
The Field Technical Center (FTC), located in Fabrication
Technology Department in the Manufacturing Division,
provides technical support to enhance the competitiveness of
distributors, who serve a variety of functions in the completionof building homes, as well as providing training and guidanceon assembly and delivery to ensure product quality. Assigned to
the FTC are 39 FEs, engineers who are active on the front lines
of installation sites, working at 14 locations nationwide.
Currently, the FTC is expanding its educational programs forFEs, responding to requests for improvement from installationsites, and supporting sales expansion by enhancing installation
training for remodeling products, thereby contributing to theimprovement of our product appeal and technology capabilities.

Internal FE installation training

Co-creation to improve installation quality in Japanand overseas
In 2013, YKK AP established the “Installation Skills Training
Academy” in collaboration with the “YKK AP Group Installation
Cooperative,” which consists of sash and curtain wall installation
specialists with advanced installation skills, in an effort totransfer skills and develop human resources. The academy
trains installation technicians for a minimum of six years, and acumulative total of 311 young technicians have participated in
the program as of FY2022. Overseas, we have establishedinstallation training centers and conducted installation training
in China, Taiwan, and Indonesia to support the improvement oflocal installation technicians’ skills.

On-site installation training in Taiwan

Labor-saving in installation work
With the aging of installation technicians and the increasing
workload at construction sites, the FTC is also working to savelabor in installation through the development and operation of
installation jigs. The “Folded Plate Lifting Roller” provides
support for lifting folded plates, the material used for roofing
carports. Other new developments include a “diamond cutter
dust collection cover” that improves safety and the working
environment for installation technicians with its superior dust
collection performance, and a “simple hand crane” that assistsin the loading and unloading of trucks.

54

Installation using the “diamond cutter dust collection cover” (top right)

Messages from Management

Product Use
Providing information to customers

Value Creation

In accordance with its Product Safety Basic Policy, YKK AP iscommitted to providing information to ensure that customers
can use its products safely and with peace of mind. In addition
to paper manuals, QR codes are printed on product labels sothat customers can easily access usage, care, and traceability
information.
In addition, the official YKK AP app “AP Poke Navi” offers push
delivery and provision of information on how to use and carefor products, as well as on preparing for disasters such as
typhoons and heavy rain.

Foundations Supporting our Business

Providing support information through the “AP Poke Navi” appBusiness Strategies for Growth

QR Code on a product label

Initiatives in the Value Chain
Corporate Data

Note: “QR Code” is a registered trademark of Denso Wave Incorporated.

Maintenance support
To ensure long and safe use of our products, we aim to improve
the quality and consistency of our maintenance support. The
Maintenance Business Development Department in Residential
Business Division takes the lead in sharing information with theMaintenance Centers in each region. Further, we launched theYKK AP Certified Maintenance Technician Association to certify
installation technicians with superior skills, and by having themjoin the association, we are strengthening our maintenancesupport capabilities through technical training and otherprograms. In addition, we are working on the maintenance ofelectric equipment using digital tools.

Maintenance of electric equipment using digital tools*No. of Certified Technicians: 541 (as of June 1, 2023)

YKK AP Integrated Report 2023

55

Chapter 06

Corporate Data

Financial and Non-Financial Data
Key Consolidated Financial Data
FY2020

FY2021

FY2022

FY2023

FY2024402.8 billion yen

446.3 billion yen

508.6 billion yen

547.9 billion yen

544.0 billion yen

Japan353.2 billion yen

388.6 billion yen

425.7 billion yen

458.4 billion yen

459.9 billion yen

Overseas66.2 billion yen

79.7 billion yen

115.8 billion yen

116.8 billion yen

107.9 billion yen

13 %

14 %

17 %

17 %

16 %

20.9 billion yen

17.3 billion yen

17.8 billion yen

27.6 billion yen

38.6 billion yen

5.2 %

3.9 %

3.5 %

5.0 %

7.1 %

Net sales (consolidated)

Overseas ratio

Operating income
Operating income margin

Profit and loss

Financial status

Financial indicators

Cash flow

Capital investments/
R&D expenses(Plan)(Plan)FY2020

FY2021

FY2022

Ordinary income

23.0 billion yen

18.6 billion yen

21.3 billion yen

Net income attributable to owners of parent
company

21.3 billion yen

11.1 billion yen

15.2 billion yen

Comprehensive income

48.3 billion yen

19.7 billion yen

27.6 billion yen

Net assets

225.1 billion yen

241.8 billion yen

266.0 billion yen

Total assets

389.7 billion yen

426.5 billion yen

455.8 billion yen

Return on assets (ROA)

5.5 ％

2.7 ％

3.5 ％

Equity ratio

56.9 ％

56.2 ％

57.9 ％

Return on equity (ROE)

9.6 ％

4.8 ％

6.1 ％

Cash flow from operating activities

29.6 billion yen

26.9 billion yen

32.3 billion yen

Cash flow from investing activities△3.8 billion yen△19.8 billion yen△22.8 billion yen

Cash flow from financing activities△9.6 billion yen△5.4 billion yen△4.9 billion yen

Ending balance of cash and cash
equivalents

27.2 billion yen

31.7 billion yen

37.6 billion yen

Capital investments

14.8 billion yen

20.6 billion yen

29.6 billion yen

R&D expenses

8.0 billion yen

9.0 billion yen

9.3 billion yen*Transactions with parties inside the Group have been offset in net sales (consolidated).
*The overseas ratio is the proportion of overseas sales out of net sales to external customers.
*The FY2024 plan is the mid-term plan developed in FY2021.
*Return on assets (ROA) for FY2020 is calculated based on total assets at the end of the fiscal year, as this was the first year of consolidation.
*Return on equity (ROE) for FY2020 is calculated based on ending equity capital, as this was the first year of consolidation.
*Figures have not been audited by a certified accountant or audit firm.
*The consolidated financial data for profit and loss, financial status, financial indicators, and cash flow have been reviewed by an audit firm since FY2021.

56

Details of Financial Data are presented in our Sustainability Data Book. (in Japanese only)
https://www.ykkap.co.jp/company/jp/sustainability/data/basic-information/

FY2020

FY2021

FY2022

Men 74 ％ Women 26 ％

4,328

4,158

4,341

Men

43.7 years old

43.8 years old

44.2 years old

Women

41.0 years old

41.4 years old

41.8 years old

Number of
employees

110

113

122

Ratio

5.9 ％

5.8 ％

6.2 ％

Men

64.2 ％

53.2 ％

73.2 ％

Women

93.6 ％

97.5 ％

96.6 ％

Employment rate of persons with disabilities(average for each fiscal year) ◇1

2.35 ％

2.29 ％

2.32 ％

Rate of mid-career hires ◇1

20.0 ％

43.2 ％

43.3 ％

Rate of employees who take paid leave ◇1

60.9 ％

67.1 ％

71.3 ％vs FY2020

100 ％

117 ％

127 ％

Quantity

468 kt CO2

548 kt CO2

594 kt CO2

New construction 75 ％New construction 77 ％New construction 76 ％Remodeling 25 ％Remodeling 23 ％Remodeling 24 ％New construction 76 ％New construction 70 ％New construction 69 ％Remodeling 24 ％Remodeling 30 ％Remodeling 31 ％

29 ％

31 ％

31 ％

200 sites

201 sites

195 sites

11 countries/regions

11 countries/regions

11 countries/regionsJapan

24 sites

24 sites

24 sites

Overseas

11 sites

11 sites

11 sites

Overseas

Average age ◇1

Number of women in management
positions ◇1

Rate of employees who takechildcare leave ◇1

Contributions to CO2 reductions throughhigh thermal insulation products ◇2

Residential
Ratio of new constructions toremodeling projects ◇2 *1
Commercial

Rate of vinyl window use ◇2 *2

Number of locations ◇3

Manufacturing locations ◇3

Extent of Coverage◇1: YKK AP (non-consolidated)◇2：YKK AP Group (Japan)◇3：YKK AP Group (Japan and overseas)

Japan
Overseas

Corporate Data

Men 74 ％ Women 26 ％Ratio of men to
women (Japan)

Initiatives in the Value Chain

Men 74 ％ Women 26 ％Number of employees ◇3

Business Strategies for Growth12,802

Foundations Supporting our Business

12,630

Value Creation

12,389Japan

Messages from Management

Key Non-Financial Data

*1 Based on net sales*2 Rate of vinyl window use in sales for single family homes

YKK AP Integrated Report 2023

57

Chapter 06

Corporate Data

Supported Initiatives and Key External Assessments
Supported Groups and Initiatives◆United Nations Global Compact/UNGC◆Task Force on Climate-related Financial◆SBTi/Science Based Targets initiative◆Minister of the◆Japan Climate Initiative/JCI◆Partnership Building Declaration

May 2021

Environment-certified“Eco-First Company”(Ministry of the Environment)
April 2023

Disclosures/TCFD(Financial Stability Board) May 2019

June 2022

February 2021

(Conference for the Promotion of Building Partnerships
for the Future) June 2022

Major Awards (awards received as a corporation)◆KDLB 2022 Environmental Stewards Award(Keep Dublin Laurens Beautiful Organization)YKK AP AMERICA INC. Dublin Factory
June 2022◆Maintained certification as a Gold product safetycompanies(Ministry of Economy, Trade and Industry)
January 2023

◆The 11th Green Social Contribution Award(Organization for Landscape and Urban GreenInfrastructure)
Manufacturing Department, Tohoku Plant, March 2023

◆Digital Popular Brand

Platinum Award 2018–2022(INFOBRAND)
Received the Digital Popular Brand Award for fiveconsecutive years
PT YKK AP INDONESIA, January 2023

◆Top 10 Aluminium Products

Manufacturers in India 2023(“Industry Outlook” business magazine)
Bhoruka Extrusions Private Limited, February 2023

Major Awards (awards received for products)◆Good Design Award 2022

(Japan Institute of Design Promotion)“famitto” interior door series
October 2022

◆16th Kids Design Award(NPO Kids Design Association)
August 2022
Designs to contribute to the safety and security
from children●Western-Style Blind “Outer Shade”●“Lucias Fence” and "Simpleo Fence” block-built, high blindfold type
●Promotion of natural (Cross-opening) ventilation through the installation of inner
windows for school facilities
Designs to support comfortable raising of children●“famitto” interior door series◆Most Desirable Architectural Products and Equipment

Manufacturers Ranking 2022 (Nikkei Architecture)
Residential Window Sash: 1st Place for the 12th consecutive year
●Residential Entrance Door: 1st Place for the 7th consecutive year
●Commercial Building Aluminum Sash and Curtain Wall: 1st
Place for the 18th consecutive year
November 24, 2022 issue●◆Manufacturer of the most desirable architectural

products and facilities for use in an ideal home
(Taiwan Architectural Aesthetics Culture and Economy
Association; an incorporated association/ National Chengchi
University College of Commerce Public Opinion and Market
Research Center)
Window Sash Category: 1st Place for the 11th consecutive year YKK AP TAIWAN CO., LTD
November 2022
◆2022 BLT Built Design Awards(3C AWARDS)YKK AP AMERICA INC., “YWW 60 XT”
November 2022
◆Desirable Architectural Products Brand Award(China Real Estate Association)
Window Category: Selected for the 12th consecutive time,YKK AP CO., LTD
March 2023

58

Messages from Management

Company Outline
YKK AP Inc.
1, Kanda Izumi-cho, Chiyoda-ku, Tokyo, 101-0024, Japan
14.0 billion yen
July 22, 1957
March 31 of every year

Affiliated Companies

Domestic Affiliated Companies

Overseas Affiliated Companies

YKK AP Okinawa Inc.
Pros Inc.
Iwabuchi Inc.
YKK AP Ruxy Inc.
Nitto Inc.

YKK AP AMERICA INC.
ERIE ARCHITECTURAL PRODUCTS INC.
ERIE ARCHITECTURAL PRODUCTS USA, INC.
YKK AP (CHINA) INVESTMENT CO., LTD.
DALIAN YKK AP CO., LTD.
YKK AP CO.,LTD.
YKK AP (SUZHOU) CO., LTD.
YKK AP HONG KONG LIMITEDYKK AP TAIWAN CO., LTD.
PT YKK AP INDONESIAYKK AP MYS SDN. BHD.
YKK AP (THAILAND) CO.,LTD.
Bhoruka Extrusions Private Limited
YKK AP FACADE PTE. LTD.
YKK AP SINGAPORE PTE LTDYKK AP FACADE VIETNAM COMPANY LIMITEDYKK AP Technologies Lab (NA) Inc.

Japan Sash Manufacturers Association
Japan Building Openings Association
Japan Construction Material & Housing
Equipment Industries Federation
Association of Living Amenity
Japan Federation of Housing Organizations

Wooden Home Builders Association of Japan
Japan International Association for the Industry of Buildingand Housing
Japan - China Association for Building and Housing Industry
Japan Aluminium Association, etc.

Extent of Coverage

YKK AP Inc./YKK AP Domestic Affiliated Companies/YKK AP Overseas Affiliated Companies

Period Covered

FY2022(April 1, 2022 – March 31, 2023)

stakeholders to our initiatives to be a company that makes society abetter place through its business activities, with the YKK AP Purpose,“We Build a Better Society Through Architectural Products,” at its

core. The report communicates YKK APʼs value creation story in an

Note: Some of the information included in this report isfrom outside of the period covered.

easy-to-understand manner and provides a comprehensive
summary of financial and non-financial information, including thevalues we offer to society and the strategies and businessfoundations that enable us to realize these values. Going forward,
we will continue to reflect your opinions and ideas in our efforts tocreate a more comprehensive Integrated Report that will provide
you with a better understanding of our company.

Corporate Data

We produced the YKK AP Integrated Report 2023 to introduce our

Initiatives in the Value ChainYKK AP Integrated Report 2023

Business Strategies for Growth

Editorial Note

Foundations Supporting our Business

Memberships

Value Creation

Corporate Name
Headquarters Address
CapitalFoundation
Accounting Period

Date of Publication

November 2023

Inquiries

YKK AP Inc. Corporate Communications Office
1, Kanda Izumi-cho, Chiyoda-ku, Tokyo,
101-0024, Japan
Phone: +81-3-3864-2321
http://www.ykkap.co.jp/

YKK AP Integrated Report 2023

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* F H 2 3 - 2 0 7 - 1 *NO XAAAF-H23-207-1