KYB Group Report 2020
(April 1, 2019 - March 31, 2020)

Message from the President

During KYB’s next 100years, we will continue tocreate new value as aleader in hydraulics basedon our spirit of creativity.

Masao Ono
Representative Director,President Executive Officer

Our 100th Anniversary and the First Year of KYB’s Recovery
We will use the occasion of our 100th anniversary to return to the tenets of our founder andcombine the collective strengths of the KYB Group.
In November 2019, we celebrated the major milestone oftirelessly to bring its nonconforming dampers into

the 100th anniversary of Shiro Kayaba’s founding of theconformity as quickly as possible and prevent a recurrence.

Kayaba Research Center. The spirit of vitality, love andWe are also constantly working to foster awareness ofcreativity that Shiro Kayaba made his basic philosophy

compliance. We are sequentially replacing nonconforming

then as manager has been passed down in our current

dampers and conducting other measures to bring them

Corporate Spirit—“By serving technologies and products

into conformity. As of June 30, 2020, we have completed

that make people’s lives safe and comfortable, KYB

approximately 60% of the replacements and aim for fullgroup dedicates to the society”—and contributes to thecompletion by March 31, 2021. In addition, so we do not

growth of KYB today. We consider it our mission torepeat the same mistakes, we will return once again tocontinue providing an unbroken link between our past

the tenets of our founder and combine our collective

and our future.

strengths to complete implementation of our measures toHowever, as we announced in FY2018, thenonconforming acts associated with seismic isolation/

prevent a recurrence.
I want to protect the heritage that has been passed

mitigation oil dampers and improper claims to thedown since our founding so that the KYB Group remains

Ministry of Defense have significantly impaired the trust

attractive to its stakeholders. To achieve this, I will also

we have earned since our founding.

focus on improving the working environment in the belief

The KYB Group made a new start in FY2019, which it
viewed as “the first year of KYB’s recovery,” and worked

that it is crucial for each employee to work with vitality,love and creativity.

New Medium-Term Management Plan and Company Policies
We have developed a three-year management plan to regain trust and restore our pride
with the aim of being a company that is attractive to its stakeholders.
The three years covered by our previous medium-term

corporate structure capable of generating the innovative

management plan were a very difficult period for us, albeit

manufacturing and products that will support us in thewith many positives that give rise to optimism and hope forfuture. Along with pursuing profitable and sustainable

future growth. I hope that KYB Group Report 2020 will servebusinesses, we will focus on creating a workplace whereas a medium to convey our various initiatives to stakeholders.

employees can take pride in work they find worthwhile,

In FY2020, we begin a new three-year medium-termwith a stance of meeting the expectations of customers

management plan that continues to place awareness andand society as the basis of our corporate activities. I intend

practice of compliance at the core of our management as

to change our previous ways of thinking and working in

we aim to transform into a highly profitable structureorder to create new value.

under the slogan “Recovering trust and pride.” In addition

The COVID-19 pandemic continues with no end in sight.

to strengthening governance by spreading awareness andNevertheless, the entire KYB Group will continue tothe practice of compliance, the plan’s basic policy entails

diligently and actively communicate with its stakeholders tomaking a clear shift in emphasis from net sales to highregain their trust as soon as possible.

profitability. In doing so, we will build a robust, sustainable

Thank you for your continued guidance and support.

KYB Group Report 2020

1

KYB’s Heritage“The intellect of humans knows no bounds,
nor does their passion.
Nothing is perfect.
However, the unique ability of humankind toprogress lies in its constant search for perfection.
A top does not fall when it is spinning,
and flowing water remains pure.
I cannot help but think that reflecting on every
aspect of management and improving ingenuity
underpins the ongoing growth of a company.”(The words of founder Shiro Kayaba)

Centenary of the Founding of the Kayaba Research Center
The origins of KYB date back to 1919 at the KayabaResearch Center, which inventor Shiro Kayaba founded at
the young age of 21. Since then, we have continued toimprove our technologies and celebrated our 100thanniversary in November 2019.
“The unique ability of humankind to progress lies in its
constant search for perfection” ― These words left by
Shiro Kayaba have become part of KYB’s heritage ofcontinuing to take on challenges without being satisfied
with the status quo.
Shiro Kayaba was fascinated by hydraulic technology, andone of his numerous inventions was hydraulic buffers (oleostruts) for aircraft in the 1920s, which he developed utilizing
the most advanced hydraulic technology at the time. Oleostruts clearly demonstrate Shiro Kayaba’s philosophy ofdesign in which “simplicity is the best technology.”
Repeated increases in production paved the way for thesubsequent growth of KYB. The technology acquired during
the development of oleo struts was used in the creationof automobile shock absorbers after World War II. In
addition, the hydraulic components for aircraft control
systems that were developed at the same time significantly
improved control, which previously relied on physical force.
This control technology has become the basis of modern
construction machinery and industrial cylinders.
Today, backed by the hydraulic technology-centeredresearch it has accumulated since its founding, KYB has
developed into a comprehensive manufacturer of hydraulicequipment that supplies products and services tomanufacturers around the world. “A top does not fall when
it is spinning, and flowing water remains pure.” We willcontinue to devise and improve products to contribute to
the sustainable development of society.

History
1919
1927
1935
1948
1959

2

Kayaba Research Center founded by Shiro Kayaba
Kayaba Seisakusho establishedKayaba Manufacturing Co., Ltd. established
Kayaba Industry Co., Ltd. established
Listed on the Tokyo Stock Exchange

KYB Group Report 20201973	Overseas headquarters established with the aim offull-scale overseas expansion
1985	Company name in Japanese changed from kanji(Chinese characters) to katakana (Japanesecharacters)
2015 Company name changed to KYB Corporation

A Spirit and Technologies That Pass
On “Vitality, Love and Creativity”
Shiro Kayaba imbued the company he founded with thebasic tenets of vitality, love and creativity. This expresses
his belief that creative ideas are born in a workplace withboundless vitality, and that we can use that power tocontribute to people worldwide. Ever since then, KYB
has taken a perspective and approach unique to anindependent company in order to grow by accumulating
experience and technologies while working with a wide
variety of manufacturers to flexibly respond to customer
issues and contemporary needs.
KYB also passes on Shiro Kayaba’s belief that thedevelopment of new technologies is the basis of corporate
development through the Kayaba Award, which wasestablished in 1975. The award is given to employees whomake remarkable achievements from a creative perspectivein the area of technology development. Technicians grapple
with their chosen themes on a daily basis while addressing
the needs of customers and society with the aim of winning
the award. Our ability to achieve superior quality backed bytechnological expertise is the cumulative work of each of
our employees. Our founder’s aspirations still serve as thebedrock of the KYB Group today and are our driving force
in untiringly taking on new challenges.

“Always look outward toward the world.
Do not fall behind progress.
Lead progress if you can.
And take a philosophical approach.”Continuing to Change as aLeading Company

The metal plating of oleo struts on the sliding components of a Japanese
Zero fighter plane discovered on the bottom of Japan’s Seto Inland Sea
in 1977 was still shiny after more than 30 years underwater,
demonstrating the sophistication of KYB’s technologies.

The original philosophy that Shiro Kayaba espoused has
been passed down as an attitude of going beyond focusing
solely on technological innovation to take a heuristic
approach of trial and error in all aspects and continuing
to explore without giving up.
Examples include our research and development on
our test track that reproduces different road surface
conditions around the world, our production line that
continuously enhances our leading manufacturingexpertise, and our product lineup that consistently
incorporates customer feedback for repeated innovation.
The process of trial and error supports KYB’s uniqueproduct development capabilities.
In turbulent times, KYB will pursue the true essence ofthings from the elevated standpoint of its founder as it
continues to take on the challenge of creating high-valueadded products as an independent company with a focus
on creativity.
KYB Group Report 20203

Distinctively Creative Development That Meets Contemporary Needs
Automobiles

Special-purpose vehicles

Construction machinery

Construction machinery

1948

1952

1972

1984

The cylindrical shock absorberdeveloped by applying themechanism of the hydraulic buffers(oleo struts) for aircraft offeredsuperior performance in terms ofcost, durability, and drivability
compared with the mainstream
products at the time, and waswidely adopted by automobile
manufacturers in Japan, who wereexpanding production. These
products played a part in improvingthe performance of Japanesepassenger vehicles.

The post-World War II boom in
construction required the production
and transportation of high-quality
ready-mixed concrete, and thisproduct’s strong reputation for
its excellent mixing performancehelped KYB grow quickly into a top
manufacturer.

We succeeded in downsizing
the controller at the heart of ahydraulic system to create amore sophisticated, componentbased system. The existing large
and complicated piping wasredesigned. It was hailed as arevolutionary hydraulic valve, andprovided a foothold for KYB toenter the field of industrial-use
hydraulic equipment.

This high-pressure cylinder forconstruction machinery with a new
structure was developed to achieve
the world’s highest quality. The
seal, which was developed inhouse, maintains the high level of
airtightness and durability required
for the high-pressure, high-speed
operation characteristic ofconstruction machinery. Ongoing
improvements have been made tothis mainstay product, and thelatest model is KCH-7.

System products

Railroad equipment

Motorcycles

Automobiles

1989

1996

2002

2004

The differential settlement
modification system utilizes theelectronics technology we havebeen involved with since the 1970s.
The system automatically measuressettlement at approximately 800
locations in a building to correct
its inclination by jacking up thepillars. It is used to support KansaiInternational Airport, where theground is soft.

KYB developed the world’s firstelectronically controlled railway
suspension system for massproduced vehicles, consisting ofa control unit, acceleration sensor
and semi-active damper. Evenat high speeds, it controls swaycaused when trains cross paths
and wind pressure when enteringtunnels, earning a positive evaluation
for its riding comfort and stability.

KYB developed the world’s lightest
high-performance front fork,
introducing many new technologies,
materials and structures that
dramatically improve operability,with optimal damping force toachieve a riding experience thatoffers both performance andcomfort. The product has been
adopted by several motorcycle
manufacturers to meet theneeds of extreme-performancesports motorcycles.

We developed this vane pump foruse in CVTs in response to thesuccess of our vane pump for power
steering. It meets demands for spacesaving, high efficiency, low noiseand low cost, and we thoroughly
eliminated contamination
throughout the production line.

Standard (twin-tube)
shock absorbers

Differential settlement
modification system

4KYB Group Report 2020

Hi-Lo* concrete
mixer truck* Brand name derived from “High Quality,
Low Cost,” which was used as a slogan.

Semi-active suspension system

Multilayer valve/
MS valve

Lightweight, high-performance
front fork for extreme-performancesports motorcycles

KCH high-pressure cylinder forconstruction machinery

Vane pump for continuously
variable transmissions (CVTs)

Contents
Message from the PresidentCorporate Spirit (What KYB Aims to Be)
By serving technologies and productsthat make people’s lives safe andcomfortable, KYB group dedicates tothe society.
1. We shall follow all rules and face all issues with honesty.
2. W e shall build a corporate culture full of vitality,and hold high goals.
3. W e shall value sincerity, cherish nature and care forthe environment.
4. W
 e shall constantly pursue creativity to contribute to
the prosperity of customers, shareholders, suppliers
and society.

Inside front cover

KYB’s Heritage

2KYB Group Business Overview

6KYB’s Manufacturing

10

Previous Management Plans

14

Overview by Segment

16

Contributing to Social Issues through Our Business

19

Progress of Measures to Prevent Reoccurrence ofSeismic Isolation/Mitigation Oil Damper Problems

20

Stakeholder Communications

21

Quality Management24

Supply Chain Management

25

Human Resources Management

26

Environmental Management

30

Corporate Governance

35

Internal Control and Compliance

39

Management Team

41

Risk Information

42

Financial and Non-Financial Highlights

44

Global Network

46

Corporate Information/Shareholder Information

47

Editorial Policy

Corporate Statement

Our Precision,Your Advantage
In moving ahead with its business, KYB willcontinue to offer reliable quality to its end users
and clients. We believe this not only results in an“advantage” to our stakeholders, but also lets ouremployees feel that they are changing the world
for the better through the quality they help create.
The wish to give our employees the “advantage”
of the joy of monozukuri is incorporated in ourcorporate statement.

The KYB Group has issued this integrated report since FY2019 tocommunicate its management policies, business strategies andCSR activities to shareholders, investors and all other stakeholders.
We hope to create new opportunities for dialogue by coveringbusiness performance, management strategies and other financial
information, as well as the environment, society, governance (ESG)
and other non-financial information in order to inform readers
about our efforts to increase corporate value over the medium tolong term. For a better reading experience, we will continue toimprove the report based on stakeholder feedback. We welcome
your suggestions.
Reporting Period
FY2019 (April 1, 2019 to March 31, 2020)(Includes efforts that are outside the above reporting period)

ScopeThe report covers KYB Corporation and subsidiaries and affiliates
in Japan and around the world. Environmental data is for KYB
Corporation (Sagami Plant, Kumagaya Plant, Gifu North Plant,Gifu South Plant and Gifu East Plant) unless otherwise annotated.
Date of Issue
November 2020
Forward-Looking Statements
This report includes plans and forecasts as of the issue date, andestimates based on our business plans and management policies.
Forward-looking statements are based on information available
at the time of report preparation, and actual results may differ
depending on changes in relevant conditions.
KYB Group Report 20205