KYB Group Business Overview

KYB provides products to customers in various fields by combining electronic control and systems
technologies that apply its two core technologies for vibration control and power control. KYB’s
business and product segments are divided into Automotive Components Operations, HydraulicComponents Operations, the Special-Purpose Vehicles Division, the Aircraft Components Division, andthe System Products and Electronic Components Business.

KYB’s Core Technologies and Businesses
Automobiles
Motorcycles

Vibration
ControlTechnology

Railroad equipment

Electronic
ControlTechnology

HydraulicTechnology

Power
ControlTechnology

Aircraft components
Construction machinery

SystemTechnology

Special-purpose vehicles
System productsElectronics components

Main Businesses
Automotive Components Operations

Ultra-low velocity valves forshock absorbers

6

Air-oil-separate system (AOS) for thefront forks of motocross motorcycles

Hydraulic Components Operations

Control valves

Active suspension systems forrailroad cars

This business primarily develops and supplies a wide variety
of products for automobiles and motorcycles. Leveraging
vibration control technology, it serves market requirements
for comfort, safety and maneuverability in day-to-day driving
and motorsports.

This business develops and supplies a variety of hydraulicequipment for construction machinery, industrial vehicles andrailroad cars. It also leverages vibration control technology tomeet the needs of onsite monozukuri and railroad infrastructure
for precision miniaturization, digitalization and systemization.

Major Products

Major Products

Shock absorbers for automobiles: Shock absorbers (original
equipment (OE), aftermarket)
Shock absorbers for motorcycles: Front forks, rear cushion units
Hydraulic equipment for automobiles: Vane pumps, vane
pumps for continuously variable transmissions (CVT), hydraulicpower steering systems, electric power steering (EPS)
Others: Stay dampers, shock absorbers for all-terrain vehicles,
free locks

Hydraulic equipment for industrial use: Cylinders, valves,
pumps, motors, mini-motion packages (MMP), hydrostatictransmissions (HST)
Others: Dampers for railroad cars, brakes for railroad cars, active
suspension systems for railroad cars, seals

KYB Group Report 2020

Sales Composition by Product for Fiscal 2019 (Consolidated)
Net Sales by Business Segment

Segment Profit by Business Segment*
Other businesses

Other businesses¥24.2 billion¥0.4 billion

Net Sales

Segment Proﬁt by
Business Segment¥381.6 billion
HydraulicComponents
Operations¥125.3 billion¥17.6 billion
Automotive
Components
Operations¥232.1 billion

HydraulicComponents
Operations¥5.5 billion

Automotive
Components
Operations¥11.7 billion* Segment profit corresponds to operating profit under JGAAPMarket Share of Major Products Source: KYB data (As of March 31, 2020)
Shock Absorbers

Motorcycle Front Forks

No. 1 42% No. 3 16%

No. 1 45%

in Japanin the worldin Japan

Hydraulic Cylinders

Concrete Mixer Trucks

No. 1 28%

No. 1 86%

in the worldin Japan

Other businesses (system products, aircraft components, special-purpose vehicles, electronic components, etc.)

Concrete mixer trucks

Actuators for aircraft

Chair ski shock absorbers fordisabled skiing

Floor equipment• Special-Purpose Vehicles DivisionThis business develops and manufactures special-purpose
vehicles, focusing on a lineup of small to large concrete mixer
trucks that have the largest market share in Japan. The
excellent mixing, discharging, environmental performanceand other features of our products boost work efﬁciency.

theater performances. In addition to hydraulic technology,
we are also focusing on electronic control technology todevelop products such as electronic control units (ECU) for
automobiles and other uses.

• Aircraft Components DivisionThis business supplies ﬂight control systems, landing systems,
hydraulic and pneumatic systems and other hydraulic equipment
for aircraft. In the aerospace technology market, which requires
outstanding reliability, we leverage cutting-edge hydraulictechnology to support ﬂight safety and comfort.

System products: Theater equipment, equipment for military
vessels, seismic isolation and vibration suppression devices,simulators, hydraulic systems, tunnel boring machines, andenvironmental devices
Aircraft components business: Devices for take-off andlanding of aircrafts and steering components, control devices,and emergency equipment
Special-purpose vehicles: Concrete mixer trucks, granule
carriers, special-function vehicles
Electronic components, etc.: Electronic devices• System Products and Electronics Components BusinessWe are opening up new possibilities for hydraulic technology,
such as auditorium and stage control systems that support

Major Products

KYB Group Report 20207

Product Lineup
We support daily life by providing safety and comfort. The products presented here are used in a
broad range of fields.

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Automotive

Motorcycles

Construction Machinery

KYB makes automotive components thatgive users the drivability they want inany situation, from a family outing to achallenging motorsports event.

KYB makes motorcycle components forthe highest level of riding stability andsuperior maneuverability by using raceproven technology designed for extreme
speed and safety.

KYB construction machinery components
are widely incorporated in equipment used
at construction sites under severe conditions.

Industrial Vehicles

Agricultural Machinery

Industrial Machinery

KYB puts its components to work in
forklifts and other industrial vehicles toprovide powerful support for improved
operational efficiency.

KYB agricultural machinery components
save space and energy for easier farming.

KYB supplies components for industrial
machinery from elevators to factoryequipment to help accelerate production.

KYB Group Report 2020

KYB Group Business Overview

Railroad Equipment

Special-Purpose Vehicles

Theater Equipment andEquipment for Theater
Construction

KYB railroad equipment helps achieve
comfortable high-speed travel bybuffering rolls from air pressure when
cornering, passing oncoming trains orentering tunnels.

KYB special-purpose vehicles support
comfort in all environments. KYB concrete
mixer trucks have the highest market sharein Japan.

KYB technology supports theatrical
productions by providing rigging, acoustic
reflectors and other essential equipment
for performance venues.

Marine ProductsSports and Welfare

Aircraft Components

KYB hydraulic and tension control
technologies make work at sea easier,including for ships operating remotedevices for deep sea exploration, as well
as for transport ships, supply ships andrescue ships.

KYB uses its core technologies to develop
products for sports and welfare.

KYB provides a wide range of aircraftcomponents that meet the strict reliability
requirements of the aerospace technology
market, including components for flightcontrol and landing, and for hydraulic andpneumatic systems.

KYB Group Report 2020

9

KYB’s Manufacturing

KYB’s Technology Development
We incorporate cutting-edge technologies centered on hydraulic vibration control and power
control to continue taking on the challenges facing the next generation.
The origin of KYB is the Kayaba Research Center, which wasestablished by the inventor Shiro Kayaba in 1919. Since thefounding of the center, we have spent a century refining
hydraulic and other technologies. Our shock absorbers haveearned a strong reputation among customers worldwide for
their advanced technology and high quality, achieving market
shares of about 40% in Japan and about 15% globally.
A major feature of hydraulic pressure is the ease with which
it produces a larger output than electric, pneumatic or otherdriving methods. The ease of control due to its superior
responsiveness is another reason for its wide use. For example,
an automobile shock absorber that absorbs impact from theroad surface is a good example of the use of the viscosity of oil
to exert an appropriate damping force, and hydraulic pressure
is considered the best system for construction machinery
because of the large output required.

KYB has created a variety of hydraulic products in combination
with other technologies such as electronic control, centeringon the two core technologies of hydraulic vibration control
and power control. Even with today’s rapidly advancing
technologies, we have confidence in the meaningful
contribution that hydraulic technology can make to thedevelopment of society. In response to changing times, wetherefore utilize cutting-edge technologies such as AI, IoT andadvanced simulations to further evolve our core technologies,
while promoting the electronic control and systemization ofequipment to address changing social conditions and customer
needs for environmental protection, safety and comfort. In
doing so, we are taking on the challenge of developing thenext generation of hydraulic equipment.

KYB’s Technologies
KYB’s CoreTechnologies
Vibration control

Elemental Technologies

Power control

Leading-Edge Technologies

HydraulicElectronic control

Motorization

AI and IoT

SystemMaterials

Testing andevaluation

Sophisticated simulation

Monozukuri (Japanese manufacturing expertise)

Digital technology

Products That Utilize Our Original Technologies

Vane pump for CVT in light andcompact automobiles
This vane pump for the hydraulic power source in thecontinuously variable transmission (CVT) that is used
exclusively in light and compact vehicles achieves
low cost and a smaller footprint while maintaining
performance equal to existing products. Despite theconflict between cost reduction and miniaturization,
we succeeded in achieving both by integratingproduction, technology and sales from the initialstages of development. As a result, KYB received a
Global Special Award from JATCO Ltd. in July 2019.
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KYB Group Report 2020

Prosmooth™ (sliding parts for shock absorbers)

Double hydraulic stop (DHS) suspension

Prosmooth™ is a newly developed series of sliding
parts for shock absorbers that deliver the next level ofboth luxurious “magic carpet ride” comfort with finevibration control and line trace performance forcornering with a slight steering stroke. It has received ahigh evaluation from experts and has been adopted bya number of automobile manufacturers. In June 2018,
Prosmooth™ received a Toyota Project Award in theEngineering Division from Toyota Motor Corporation.

DHS suspension shock absorbers generate highdamping force throughout the full suspension travel.
It features improved riding comfort during normal
driving and high running performance on roughroads, and has been adopted in many models by
numerous manufacturers. In June 2018, it received a
Supplier Award from Groupe PSA.

KYB’s Technology Development System
We aim to generate new value, with the Basic Technology R&D Center and the Production
Technology R&D Center at the core.
KYB conducts research and development of its highly original
and advanced technologies with the Basic Technology R&D
Center and the Production Technology R&D Center at the core.
These R&D centers handle basic research and development ofelemental technologies, while the technical departments ofeach business develop new products and make improvements toexisting products in areas such as performance or cost reductions.
In addition, the R&D centers and technical departments of eachbusiness and Group company work together to conduct projects
across divisions. Moreover, for smooth, timely and efficient
continuity from R&D to manufacturing, we consider futuretechnologies based on long-term environmental changes andresearch, analysis and forecasting of the associated social andcustomer needs. We have established and implemented thisapproach as the roadmap for a sustainable growth strategy.

At the same time, we are reviewing our existing system for R&D
and commercialization, and have started initiatives to respond to
the new era. Engineers at our representative offices in Europe(Europe Technical Center) collect the most up-to-date informationfrom around the world so we can identify technological trends
and incorporate them in our R&D. In addition, we established a
new Digital Transformation (DX) Improvement Department in2019 to promote and cultivate digital technologies such as AI andIoT throughout the Company. By building an IoT platform,
improving productivity and quality, conducting manufacturing
using AI, developing products and rolling out new services, theKYB Group aims to provide products that customers can use withan even greater sense of reliability.

Technology Development Structure
Control, vibration, information and communications, electrical/electronics, mechanical elements,
sensors, surface treatment, heat treatment, processing, assembly, inspection, automation, etc.
Basic Technology R&D Center/Production Technology R&D Center
Basic research

Future technology
research

Intellectual Property
Department

Elemental technology
research

Intellectual property
strategy

CAE1 Promotion Department/DX Improvement Department
AI and IoT

Digital technology

Simulation technology

Product development

Mass production
Businesses/Group companies

The original R&D conducted at the Basic Technology R&D Center and the Production Technology R&D Center is carried out efficiently using the latest digital and simulation
technologies under a multi-faceted intellectual property strategy. The businesses and Group companies conduct product development and mass production, fully utilizing
the R&D done at the laboratories to deliver products to customers with appeal in every aspect of QCD2 that other companies cannot match.
The process from R&D to product development and mass production does not proceed in only one direction. Through regular feedback, all employees share informationand continue to update our products.
1. CAE: Computer Aided Engineering. The use of computer simulations to resolve issues faced by technical departments.
2. QCD: Quality, cost and delivery

Developmental Experiment Center
The Developmental Experiment Center is an extensive in-house facility on a scale rarely
seen among independent manufacturers. The site is approximately 595,000 m2 andincludes a large-scale test track consisting of three types of road—straight,
mountainous and circular—that reproduces different road surface conditions aroundthe world. In addition to anticipating needs and taking the lead in conducting
independent road tests of items including suspensions, steering devices and electronic
devices for automobiles and motorcycles, we can also collect data on differences due tospecification changes for evaluation jointly with customers. These and other capabilities
have earned the Developmental Experiment Center a positive review as it enables us tofine-tune actual vehicles on-site. By expediting developmental experiments, we canshorten the development period and conduct development more efficiently.

Developmental Experiment Center(Kamo-gun, Gifu Prefecture)

KYB Group Report 2020

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KYB’s Production Technologies
We will leverage the manufacturing expertise we have honed over many years and integrate
it with digital technologies to further raise its level.
KYB develops and mass produces items in a wide range offields including automobiles, motorcycles, construction
machinery, railroad equipment, special-purpose vehicles andaircraft components. Factors such as size, quantity, cost andquality control are different for each product field, requiring
separate handling, and manufacturing must also be responsive
to social changes in the global situation, the economy andother conditions. Under these circumstances, KYB has been
responding to customer requests by developing production
line, processing and assembly technologies tailored to eachproduct field.
More specifically, we started manufacturing shock absorbers,
which are a mainstay product, in an era of low variety, highvolume production (to 1998), then transitioned to simplification

Gifu North Plantof the production line through product standardization (20002005), the creation of a line optimized for production volume
and product characteristics (2006-2011) and a compact linethat handles changes in number of units produced and producttypes (2012 to present).
Going forward, we will promote innovative manufacturing
utilizing digital technologies such as AI and IoT and integrate
it into our existing manufacturing (processing/assembly)
technologies to further raise the level of our technologies.
As one aspect of our innovative manufacturing, we aim tocreate the world’s most advanced factory for producing shock
absorbers. Based on the roadmap shown in the figure below,
we will proceed steadily toward a fully automated production
system in the future.

Gifu East Plant

Sagami Plant

Innovative Manufacturing Roadmap
Phase 1

Phase 2Phase 3

Final Phase

Fully automated line

AI/IoT technologies shown in red

Autonomous driving/Optimizing control ★

30% decrease inprocessing cost

AI control ★

Value★ IoT Cloud/Communication control

Tech. Items★ IoT remote control★ Defect detection (AI)★ IoT equipment predictive control (AI)★ IoT monitoring control
Overseas expansion
Domestic expansion
Development of innovative line

★ Robot control
Development line (BM)BM personnel rate -35%

BM personnel rate -70%

Development line (BM)12KYB Group Report 2020

Full automation

KYB’s Manufacturing

Outlook
We aim to help resolve social issues through greater competitiveness and innovative manufacturing.
As an independent company, KYB has been conducting its own
R&D and improving its technical and product development
capabilities through interactions with customers around theworld. We have applied and developed core technologies toenter diverse fields including automobiles, construction
machinery, industrial machinery, special-purpose vehicles,
railroad equipment and aircraft components. In addition to
the technologies we have accumulated and our many years ofexperience and expertise, we have continued to respond todifficult requests from our customers with a can-do attitude anda sense of pride. These factors have made KYB what it is today.
We have raised four issues to be addressed in the future:promotion of electrification/electronic control and system
support; utilization of digital technology (AI/IoT) and big dataprocessing; realization of innovative manufacturing; andfurther improvement of competitiveness.

We will also more explicitly address social issues. Amid calls forenvironmental protection and clamor over the labor shortage inJapan, we are aware of the major role KYB has to play. For
example, we believe we can make a contribution in areas suchas dealing with the environmental aspects of the REACH
regulations,* pursuing higher efficiency through electronic
control for energy conservation and safety, and working towardautomatic operation of construction machinery.
The KYB Group’s global development network currently spansthe five regions of Japan, the United States, Europe, China
and ASEAN. However, to succeed in these volatile times, weare searching for more efficient development methods andreconsidering the appropriateness of our organizational structure.
In addition, we will place a greater emphasis on cultivating
engineers who can respond flexibly to changes as we continue
working to create the hydraulic technologies of the future.

* Regulations that came into effect in the EU in June 2007 with regard to registration, evaluation, authorization and restrictions on chemicals

Main Presentations and Lectures at Academic Conferences in FY2019
The Future of Smart Road Monitoring

Second SmartCity Technology Forum

Case Study of Use of CAE for Prediction of ElectricPower Steering Characteristics

NewtonWorks Corporation
Nonlinear Analysis Forum 2019

Anisotropy Analysis of Pierced Hole Shapes on Thin
Steel Pipes

The 2019 Japanese Spring Conference for theTechnology of Plasticity

Development of a Single-Joint Detachable Modular
Hydraulic Robot

The 37th Annual Conference of the Robotics
Society of Japan

Design and Experimental Verification of a High Force
Density Tubular Permanent Magnet Linear Motor for
Aerospace Application

Smart Road Monitoring
Patrol record

Analysis ofdeterioration level

Detection of potholes, grooves anduneven road surfaces

AEROTECH EUROPE

Diagnosis of road surface deteriorationfrom road patrol data

Engineer Education Programs

Participation in the National Skills Competition

At KYB, it is important that engineers are involved not only intheoretical work, but also in trial and error in actual situations andwith actual products. That is why our engineer education is focusedon developing human resources who can act independently in othertechnical fields. We have 50 unique engineer education programstaught by employees. To respond flexibly to diversifying social andcustomer needs, we are developing engineers with skills in a variety
of fields beyond hydraulics, mechanics and vibration, such as
electronics and language education. We are also involved in industryacademia collaboration with several universities in Japan and overseas,and engineers from research institutes and universities from around theworld visit our Company and engage in engineer exchanges.

As part of its training for young skilled workers, KYB participatesin the “Manual Turning” section of the National Skills
Competition held by the Ministry of Health, Labour and Welfare
and the Japan Vocational Ability Development Association. In
2019, KYB won its first award for “Fighting Spirit.” We willcontinue to take advantage of this opportunity to develop
skilled workers with processing skills, judgment, critical thinking
and perseverance.

Main Fields ofEngineering
Education
Programs• Mathematics/Physics/
Quality assurance• Statistics• Material strength• Hydraulics• Shared fields• Mechanics and vibration• Electronics• Production technology

The 57th
National Skills
Competition

KYB Group Report 202013