Contents
03

09

ProfileCorporate Philosophy and Management Policies

33

Power Electronics Energy

39Power Generation

05

Energy and Environment Businesses

35

Power Electronics Industry

41

Food and Beverage Distribution

07

History of the Energy and Environment Businesses

37

Semiconductors

Message from the Chairman of the Board and CEO

43

Research and Development47

ESG Initiatives
47

Environment

59

Corporate Governance53

Human Resources

69

Compliance57

Sustainable Procurement

71

Risk Management77

Corporate Data

Interview with the President and COO

	Providing Customers the Best Possible
Solutions in the Energy andEnvironment Fields to Achievea Decarbonized Society

17

Overview of Segments

03	
Contributing to the Development of
the SDGs and the Realization ofa Decarbonized Society throughOur Energy and Environment Businesses

13

33

Value Creation Process75

Basic Information75	
Consolidated Financial and
Non-Financial Highlights

Regarding the Fuji Electric Report
Fuji Electric Report is an integrated report that is prepared for the purpose of
facilitating understanding of the Company’s whole corporate activities among its
stakeholders, mainly shareholders and investors, and published after its content has

19

Important issues for Management (Materiality)

been reported to the Company’s Board of Directors.
Fuji Electric places great importance on initiatives aimed at improving sustainability toenhance long-term corporate value and clear communication of its material issues of

About the Front Cover
The front cover of this report reflects Fuji Electric’s
attitude toward growth and enhancing corporate
value over the long term in addition to contributing
to harmony with nature, the development of SDGs
and the creation of a sustainable society, leveraging
technology and business synergies in its energy andenvironment businesses.

ESG (the environment, society, governance).
Note that when preparing this report we referred to the IFRS Foundation’s

21	Promotion of the Energy and Environment Businesses

International Integrated Reporting Framework and the Ministry of Economy, Tradeand Industry’s Guidance for Collaborative Value Creation.

— Realization of Carbon Neutrality —27

Progress of the FY2023 Medium-Term Management Plan

Disclaimer Regarding Forward-Looking Statements
Statements made in this report regarding estimates or projections are forward-looking statements based on the Company’s judgments andassumptions in light of currently available information. Actual results may differ materially from those projected as a result of uncertainties inherent in

31

Financial and Capital Strategies

such judgments and assumptions as well as changes in business operations or other internal or external conditions. Accordingly, the Company gives
no guarantee regarding the reliability of any information contained in these forward-looking statements. Investors are encouraged to also reference
documents submitted by the Company in accordance with the Financial Instruments and Exchange Act of Japan and other disclosure materials.

1

Fuji Electric Report 2023

Fuji Electric Report 2023

2

Profile

Corporate Philosophy and Management Policies
Corporate Philosophy

Fuji Electric’s corporate philosophy hinges on a mission to contribute to prosperity, encourage creativity, and seek
harmony with the environment, while the Company’s management policies are centered on the notion of contributing tosociety through its energy and environment businesses.
By putting this corporate philosophy and management policies into practice based on its Corporate Code of Conduct,
which sets forth guidelines for the conduct of employees, Fuji Electric and its employees, together with customers andbusiness partners, will aim to resolve social and environmental issues, create customer value, develop the SDGs, andcontribute to the creation of a responsible and sustainable society.
Through our energy and environment businesses, we aim to benefit society and become a company of sustainable growth.

We, Fuji Electric, pledge as responsible corporate citizens in a global society tostrengthen our trust with communities, customers and partners.
Contribute toprosperity

SloganEncourage creativity

Seek harmony withthe environment

To be enthusiastic, ambitious and sensitive.

Management Policies
1. Through our innovation in energy and environment technology, we contribute to the creationof a responsible and sustainable society.

Contribute to the creation of a Responsible andSustainable Society

2. Achieve further growth through our global business expansion.
3. Maximize our strengths as a team, respecting employees’ diverse ambition.

Fuji Electric Code of Conduct

Resolution ofSocial andEnvironmental
IssuesCreation ofCustomer Value

In order to practice our corporate philosophy to fulfill social responsibility and act with high ethicalstandards while understanding and complying with relevant laws, regulations, international rules,
and the spirit of such regulations and rules, both domestically and abroad, Fuji Electric and its
employees have defined this code as a foundation for decision-making and behavior.
1. Respect and value all people

6. Respect and value interaction with society

2. Respect and value our customers

7. Make global compliance a top priority

3. Respect and value our business partners

7-1. Thorough compliance

4. Respect and value our shareholders and investors

7-2. Thorough risk management

5. Respect and value the global environment

Corporate Philosophy
Contribute to prosperity

Encourage creativity

8. Top management will thoroughly practice this standard urther information about Fuji Electric Code of Conduct is available at our website.
Fhttps://www.fujielectric.com/company/conduct.html

Seek harmony withthe environment

Brand Statement

Management Policies
Expand Energy and Environment Businesses
Fuji Electric Code of Conduct
3

Fuji Electric Report 2023

Brand Promise

Through our pursuit of innovation in electric and thermal energy technology, we develop
products that maximize energy efficiency and lead to a responsible and sustainable society.

Fuji Electric Report 2023

4

Profile

Energy and Environment Businesses
We will ceaselessly pursue synergies between power semiconductors and power electronics, our core technologies, andcontribute to the creation of a responsible and sustainable society in industrial and social infrastructure fields through thefour businesses of Power Electronics, Semiconductors, Power Generation, and Food and Beverage Distribution.

Clean energy

Stable supply of energy

Energy saving

Automation

Power Electronics
EnergyPower Generation

Energymanagement

Courtesy of PT.SEML

Substation
systems

Industry

Power supply andfacility systems

Factory
automation

Food and Beverage
Distribution

Process
automation

Socialsolutions

System Solutions

Geothermal power generation

Vending machines

Engineering Services

Solar power generation

Store facilities and equipment
Power conditioning
systems

Transformers

Switchgear
Power distribution andUninterruptible
and controlgear
control equipment
power supply systems

Inverters

MotorsServo systems

Controllers

Measuring
instruments

Smartmeters

Semiconductors

Industrial field

Automotive field

Priority SDGs to Be
Addressed throughOur Businesses

5

Fuji Electric Report 2023

Spread of renewableenergy use

Reduction of CO2 emissions
from industrial processes

Building safe and secureurban infrastructure services

Improvement of energy
efﬁciency

Reinforcement of social andindustrial infrastructure

Development of sustainabletransport systems

Efﬁcient use of natural resources
Rigorous management andreduction of emissions ofchemical substances and waste

Reducing society’s CO2
emissions through products
Reducing GHG emissions
during production

Fuji Electric Report 2023

6

Profile

History of the Energy and Environment Businesses
Since its establishment in 1923, Fuji Electric has pursued innovation in energy and environment technologies for 100

We value the technologies, products and relationships of trust with a wide range of customers we have cultivated in
the fields of industrial and social infrastructure to date, and going forward we will continue to respond to the energy
and environmental issues faced by our customers.

years, contributing to clean energy, the stable supply of energy, energy saving, and automation.

Post-war reconstruction to
the high-growth period

Establishment period
Expansion of electricity demand for the modernizationof industry

1923

1930

Clean energy
1924
Began manufacturing
electrical machinery

1960

Environmental measures in the industrial and social infrastructure fields
proceeded against the background of environmental air pollution and otherenvironmental problems

Expansion of energy saving demand due to the oil shock,expansion of automation demand

Expanded demand for electricity stabilization forbuilding electricity and railroad infrastructure andthe development of industry

1950

Entering the era of the environment

From the oil shock to the stable growth period

1970

Stable supply of energy

1936
Built first hydraulic turbine,
4,850 HP Francis turbine
Delivered the first hydraulicturbine to the Uwanoshiro
Power Plant (Tochigi Prefecture)

1966
Began commercial
operation of the Tokai
Nuclear Power Plant(Built nuclear pressure
vessels and otherequipment)

1930
Began manufacturing
mercury-vapor
rectifiers

1964
Delivered the first large capacitytransformer rectifier S-Former

1980

1990

2000

1954
Began manufacturing
ultra-compact magnetic
switches

Uninterruptible
Evolved together
with power
semiconductors

power supply

1998
Delivered 100 kW
phosphoric acid fuel cells

2010
2017
A 140 MW geothermal power Delivered one of Japan’s
plant, the largest single-unit largest geothermal binary
capacity in the world, started equipment (5,050 kW
operation (The Nga Awa
for the Takigami Binary
Purua Geothermal Power
Geothermal Power Plant)
Station in New Zealand)

1974
Commercialized cast resin
power transformers

2022
Released transformers
using natural ester oil

1967
Developed earth-leakage
circuit breakers

Evolved together
with power
semiconductors

1982
Releasedtransistor UPSs

Energy saving

Low-voltage inverter

1959
Began manufacturing
silicon diodes

conditioning
system (PCS)2012
Released PCSs for mega solar power
generation systems (equipped witha new three-level module, the firstcommercialized in the world)

1992
Developed the world’s largest
capacity IGBT UPS

Automation

1976
First in the industry tostart manufacturing
general-purpose
inverters

1989
Released IGBT-equipped inverters

2012
Developed an industrial inverter
equipped with SiC-SBD, a firstin Japan

1975
Began manufacturing bipolartransistors

1988
Began manufacturing
1st-generation IGBTs

2010
Developed a new three-level
converter circuit and a new
three-level power module
2010
Developed SiC
modules1969
Beganmanufacturing
vending machines

1973
Released open showcases
1976
Released hot & cold
vending machines• Fuel cells 100 units or more

• Substation equipment:
Transformers 2,500 units or more
Switchgear 11,000 units or more

• Large capacity rectifiers	Approximately 300 units(approximately 28.1 GW)
Global market share 1st

2016
2021
Released large-capacity
Released large-capacity
UPSs equipped with SiC
UPSs (1,200 kVA)
power semiconductors for (7500WX Series)
the North American market

1984
Released the PLC
MICREX-F Series• Solar power generation (EPC)
26 installations (approximately 0.4 GW)
Japanese market share 2nd•	Cast resin transformers:
100,000 units or more

2014
Released PCSs equipped with SiC

1976
Began manufacturing the
programmable controller (PLC)
FUJILOG Series

Power semiconductor• Hydro power generation
745 units (24.1 GW)
Japanese market share 3rd

Binary 2 units (10 MW)

1979
Delivered Fuji Electric’s first highhead, large capacity pumped storage
power generation facilities (theCheongpyeong Pumped-storage
Power Plant in South Korea)

1966
Released medium- and largecapacity UPSs (200 kVA)

(As of FY2022)• Geothermal power generation
Flash 84 units (approximately 3.6 GW)
Global market share 1st

system (UPS)

Evolved together
with power
semiconductors

2020

1977
Received an order for our first fullscale geothermal power generation
facility (40 MW unit for El Salvador’s
electricity authority)

Power
1925
Began manufacturingtransformers
Delivered our first unit
to a mining company

2010

Delivery track record of
main products*• ED&C components
	Magnetic switches
Japanese market share 1st	Molded-case circuit breakers
Japanese market share 2nd• UPS
Japanese market share top group

2017
Delivered SiC-equipped
main converters for
Shinkansen trains

2011
Released hybrid
heat pump vending
machines• General-purpose inverters
Japanese market share 2nd2016
Began shipping direct water-cooled
power modules for automotive
applications (built-in RC-IGBT)
2018
Began shipping
7th-generation RC-IGBTs
for industrial equipment
2023
Released theSustainable
Vending
MachineSeries• IGBT module
Global market share 3rd• Vending machines
6 million units or more
Japanese market share 1st• Open showcase
700,000 units or more* The market shares are the FY2022 results estimated by Fuji Electric. The market share of geothermal power generation is the result for orders received from 2000 onwards and the market share of solar power generation is the result for
shipments of industrial PCS 500 kW class or higher from the application of FIT in 2012 onwards.

7

Fuji Electric Report 2023

Fuji Electric Report 2023

8

Message from the Chairman of the Board and CEO
Consolidated Earnings (Billions of yen)
Strengthen a proﬁtable structure
through business restructuring

Fuji Electric Report 2023

745.8

703.5

Upon celebrating our 100th
anniversary

9

Further renovation of
Fuji Electric

Establish foundations forsustainable growth1,009.4

689.1

2023 will be a memorable year for Fuji Electric as wecelebrate our 100th anniversary. The Company wasestablished in 1923 through a merger between Furukawa
Electric Co., Ltd. and Siemens AG. Despite encountering
numerous challenges since the time of our founding, it is
my belief that we have reached this milestone of 100 years
thanks to the support of our customers, shareholders,business partners, and the local community, as well as thetireless work of our predecessors. I am deeply appreciative of
the support of all parties involved.
Over these 100 years since our establishment, we havecontinued to hone our energy and environment technologies,
contributing to the resolution of social and environmental
issues and the creation of customer value. Underpinningall of this is our Corporate Philosophy. As responsible
corporate citizens in a global society, we seek to deepen
our relationships of trust by valuing local communities,
customers, and partners with a mission to contribute toprosperity, encourage creativity, and seek harmony withthe environment. This aligns perfectly with the concept of
the Sustainable Development Goals (SDGs), which aim tobring about integrated economic, social, and environmental
improvements, as sought by the international community.
Currently, the realization of a decarbonized society is oneof the challenges that must be addressed on a global scale.
Our strength lies in our ability to provide comprehensive
solutions from the energy supply side to the demand side.
We offer clean energy-related products, world-leading power
semiconductors, and power electronics equipment andsystems equipped with the power semiconductors, together
with engineering services. We can also provide systemsolutions to meet customer demands for stable energy
supply, energy savings, and automation.
Through our pursuit of innovation in electric and thermalenergy technology, we create products that maximize energy
efficiency with a primary focus on our power electronics
and power semiconductor businesses. In doing so, we cancontribute to the development of the SDGs and help bringabout a decarbonized society, thereby ensuring our growth
for the next 100 years.

Promote growthstrategies

759.9

837.8

813.6

810.7

914.9

893.5

(6.3%)(4.4%)(4.8%)

900.6

875.9

910.2

2011

Net Sales

26.4
22.0

33.1

2012

2013

Operating Proﬁt(8.0%)

94.0
80.0

74.8

(1.7%)

2010

1,000.0(9.0%)(8.8%)

88.9(2.9%)

19.3
11.8(8.2%)(4.7%)(2.7%)

15.1
11.9

1,050.0(5.5%)(6.6%)(5.3%)(5.5%)

19.6

39.3
28.0

2014

56.0

44.7
41.0

45.0

37.8

30.6

2015

2016

Proﬁt Attributable to Owners of Parent

2017

Message from the Chairmanof the Board and CEO

Contributing to the Development of the SDGs andthe Realization of a Decarbonized Society throughOur Energy and Environment Businesses

60.0
40.3

42.5

48.6
41.9

58.7

62.5

61.3

55.0

28.8

2018

Operating Proﬁt Ratio

2019

2020

2021

2022

2023

2023

Management Medium-Term
Plan
Management(announced
PlanApril 27)

(FY)

Medium-Term Management Plan targets achieved ahead of schedule
Our five-year Medium-Term Management Plan—Reiwa
Prosperity 2023—which ends in fiscal 2023 started in fiscal
2019 with the aims of achieving prosperity together withsociety through our energy and environment businesses, net
sales of ¥1 trillion, and an operating profit ratio of at least 8%.
The business environment surrounding the Company
has changed significantly since the first year of the plan.
US-China trade friction materialized in fiscal 2019, the
COVID-19 pandemic broke out in fiscal 2020, and Russia
invaded Ukraine in fiscal 2021. Due to these factors, thefuture outlook for the global supply chain has also remained
clouded, including the impacts of soaring material prices anddifficulties in sourcing components.
Despite this challenging environment, in fiscal 2021 weachieved the plan’s operating profit ratio target of 8% orhigher, and then in fiscal 2022 we achieved net sales of ¥1
trillion and posted record-high operating profit and profit. We
also raised shareholder dividends and paid a record-highannual dividend of ¥115 per share, up ¥15 year on year. It
was really pleasing to record net sales in excess of ¥1 trillion
for the first time in the Company’s history—an achievement I
believe would not have been possible without the hard workof every single employee.

Establishment of solid operating foundations through successive
management reforms
Here, I would like to briefly look back at how we managed
to achieve our Medium-Term Management Plan targets one
year ahead of schedule.
In the wake of the 2008 global financial crisis, weembarked on several management reforms and worked
to reinforce our operating foundations. We abolished theholding company system and restructured our organizations
and management framework into a single Fuji Electric. We
also reduced the number of executive officers by two thirds
to 18 in an effort to facilitate prompt decision-making andclarify executive responsibilities. Our core competence isin power electronics technology, or in other words, “ourcore technology to control electricity.” To fully capitalize on
this strength, and in light of market growth potential, we

decided to position our energy and environment businesses
at the very center of our business portfolio. In order to build
a business structure that can generate profits even in theabsence of sales growth, we doubled down on bolstering
our manufacturing capabilities with the aim of improving
the structure of our factories—the source of our profits.
We continuously strived to reduce costs by remodeling
our production technology, promoting in-house production
and automation, establishing a global production system,
reducing inventory assets through supply chain reforms, andestablishing systems for global procurement and centralizedpurchasing. Having reinforced the Company’s footing,from 2013 we started implementing growth strategies andswitched to a more aggressive management approach.

Fuji Electric Report 2023

10

Message from the Chairman of the Board and CEO

operating foundations that we have continued to strengthen
over the past decade or so, the many R&D and plant andequipment investment measures we have undertaken thus
far have coincided well with the demands of the times. For
example, our power semiconductors are contributing to
the rapid growth in electrified vehicles driven by increasing
decarbonization demand, while our comprehensive electricalequipment is being used in data centers against the
backdrop of digitalization. We have steadily tapped thesedemands, which have led to increased orders and sales.

Teamwork is the cornerstone of management
I have long focused on the importance of teamwork. Whileindividual abilities are important, there are limits to what one
person can achieve. My belief is that teamwork is crucial
for the Company to implement changes to its corporate
management and to achieve sustainable growth. The
companywide Pro-7 activities that we launched in 2012 aresymbolic of this belief. We set a goal of lifting the operating
profit ratio from around 2% to 7% and kicked off the
program by calling on employees to conduct a zero-based
review of all kinds of costs to improve profitability. The initialactivities aimed at improving operational efficiency evolved

into measures for enhancing the quality of work, increasing
productivity, and workstyle reforms. These efforts are now
an integral part of our usual operations. Instead of being
confined by traditional ways of working and thinking, teams
come together to think about what must be done and work
together to achieve their objectives. This is now one of ourstrengths, helping us strengthen our operating foundations.
The accumulation of these individual efforts owes to the factthat our employees have come together as a team and I thinkachieving the Medium-Term Management Plan targets aheadof schedule has given our employees enormous confidence.

Prioritizing profits to further improve corporate value
With the aim of generating further growth in profit, at the startof fiscal 2023 we set ourselves the must-reach targets of¥1,050 billion in net sales, ¥94.0 billion in operating profit, a
9.0% operating profit ratio, and ¥62.5 billion in profit. At thesame time, we will soon be formulating the next MediumTerm Management Plan that will begin from fiscal 2024.
We will continue to emphasize profits in our management
approach and use ROIC to monitor the progress ofeach business. On top of that, we will accelerate growthinvestments to boost profitability and make every effort toimprove our cash generation capacity and capital efficiency,
thereby enhancing our corporate value. First, we will aim for amarket capitalization of ¥1 trillion.
As we turn our attention to formulating the next

Medium-Term Management Plan, we are in the processof envisioning where Fuji Electric wants to be in 2030 anddiscussing what must be done over the next three years.
Capital investments in decarbonization in various industries
and social infrastructure fields will gain further momentum up
ahead, presenting us with even more business opportunities.
To steadily capture this market and customer demand, it isimperative that we further enhance synergies between ourbusinesses. To that end, we will endeavor to integrate theoperations of our power electronics and power generation
businesses. We will also respond to the electrification ofmobility without being bound by conventional ways andutilize mainly our power semiconductor resources to drive
further growth.

Addressing high-priority issues (materiality) to ensure sustainable growth
As the world grapples with climate change, the depletionof natural resources, biodiversity, and other environmental
issues, as well as heightened geopolitical risks, we intend toenhance our resilience, clarify items of materiality to ensuresustainable growth, and reinforce our operating foundations
through appropriate information disclosure and dialogue
with stakeholders.
On the topic of the environment, we have set ourselves the
Fiscal 2030 Target as a milestone towards achieving carbon
neutrality by 2050 and the Group as a whole is committed
to limiting the global temperature increase to less than 1.5°C

11Fuji Electric Report 2023

above pre-industrial levels.
Not only are we contributing to reductions in greenhousegas emissions through our mainstay energy and environment
businesses, but we are also ramping up investments in theenvironment at our own production bases and taking steps tocurb emissions across the entire supply chain. Moreover, theidea of transitioning from a linear economy characterized bymass production, mass consumption, and mass waste to amore circular economy has become increasingly important inrecent times. We have started to discuss the issues we need toaddress and will continue to examine the Fiscal 2030 Target.

For companies to achieve growth in the increasingly
unpredictable world, it has become even more important
to strengthen resilience by constantly making preparations
to minimize the impacts of risks pertaining to human rights,
compliance, natural disasters, cyberattacks, and geopoliticalrisks. We have taken steps to centralize risk management
functions and minimize the impacts of risks by having
the executive officers in each business division—who areresponsible for daily monitoring, information gathering, thedevelopment of response measures when risks arise, andthe sharing and communication of problems—collaborate
with specialized departments set up to address eachspecific issue. We are particularly focusing on strengthening
management across the entire Group, including our overseas
subsidiaries, and bolstering supply chain measures from a
BCP perspective in readiness for natural disasters triggeredby climate change.

Message from the Chairmanof the Board and CEO

We adopted a local production for local consumption
policy and acquired human resources, sales channels, andengineering capabilities through M&As and tie-ups with aview to expanding our overseas operations. Furthermore, we
continued to execute growth investments even in challenging
business environments in order to strengthen the powerelectronics and power semiconductor businesses, our main
focus areas. We stepped up R&D to maximize synergies
between these two businesses and invested aggressively insemiconductors to meet customer demand. Building on theManagement that adopts “employee-first” approach
My management motto is “employees first.” I believe that
employee growth leads to prosperity for the Company
and that creating a positive cycle of returning the profits
generated through business activities to employees,
shareholders, and society will enable us to grow sustainably.
To achieve this, it is important that we actively invest in
human capital and create an environment in which ourdiverse workforce can work as a team to unleash theircollective potential. The development of an environmentthat is supportive of employees raising children is also
crucial, which is why we are currently making improvements
to our systems and operations. In the 2023 spring labor
negotiations with the labor union, we fully accepted theunion’s wage and bonus demands for the first time ever. If
our employees have worked hard to achieve results, then I
believe it is important to respond accordingly. In addition,
we are committed to promoting diversity with a particularfocus on the advancement of women, leveraging theextensive experience and skillsets of senior employees, andnurturing talent so that we can maintain and improve ourmanufacturing capabilities in Japan and overseas. Froma medium- to long-term perspective, we are establishingsystems that balance employees’ happiness and job
satisfaction with Company growth, and we will keep creating
the best possible workplace environment by listening to theopinions of employees on the ground to make sure thesesystems are functioning in the way they were designed to.

Returns tostakeholders

Prosperity of
the company

Employees, shareholders,society in general

Employees’ growthManagement Policies

Maximizing our strengths as a team,respecting employees’ diverse ambition
Fuji Electric Code of Conduct

Respect and value all people
Respect
human rights

Promote the activities ofdiverse human resources

Take employees’ health andsafety into consideration

Passing on Fuji Electric’s DNA,“To be enthusiastic, ambitious and sensitive,” to the next generation
I always carry the spirit of our corporate slogan, “To be
enthusiastic, ambitious and sensitive,” and constantly
communicate it to our employees. “Enthusiastic” means
being passionate about developing new technologies andproducts, delivering them to customers to bring them joy,and doing everything we can for the benefit of society.
“Ambitious” means setting lofty goals and not placing any
limits on one’s own potential. It means setting yourself
ambitious goals and sharing them with the team, no matter
how challenging and difficult they may be. And “Sensitive”
means being grateful for our customers, the colleagues wework with, and our families. It is my hope that each andevery employee will continue to inherit and keep in mind Fuji
Electric’s DNA in the future.

So that we remain a company capable of growing
sustainably even in these turbulent times, our teams ofdiverse employees will leverage their collective strengths
to further develop our energy and environment businesses
and contribute to the solving of social and environmental
issues and the creation of customer value. I look forward to
the continued support and understanding of shareholders,investors, and all other stakeholders.
Michihiro Kitazawa
Chairman of the Board and CEO

Fuji Electric Report 2023

12

Interview with the President and COO
made design changes to alternative materials across multiple
divisions. Furthermore, we took steps to raise the selling pricesof our products to align with their high added value. Moreover,due to the nature of our business, sales and profits tend tobe heavily weighted towards the fourth quarter, especially inMarch. Nonetheless, we have been more diligent than ever inanticipating future risks and responding as soon as possible toany deviations from our plans.
Owing to the efforts of every employee in adapting flexibly tothe ever-changing environment and working together as a teamwithout giving up, we could achieve our long-held goal of ¥1
trillion in net sales. We also managed to post record-high net
sales, operating profit, operating profit ratio, and profit.

Interview with
the President and COO

their observations and thoughts. I have also urged everyone tocome together as a team to follow through with the decisions
they make.
We have seen various changes in the past year and I feelthat our near-term responses were more or less effective.
For example, we captured demand firmly by earnestly
addressing customer needs, such as greater demand for
power semiconductors for the electrification of vehicles,
growth in data centers driven by digitalization, and the shortlead-times on ED&C components for machine tools. In
addition, in response to the harsh environment brought about
by mainly soaring material prices and difficulties in procuringcomponents, we have not only strengthened ongoing efforts
to promote multi-sourcing of components, but we have alsoQ2  Having achieved the targets of FY2023 Medium-Term Management Plan ahead ofschedule, what will be the management challenges for fiscal 2023?

Setting the stage in fiscal 2023 for the next Medium-Term Management Plan

Providing Customers the Best Possible Solutionsin the Energy and Environment Fields to Achievea Decarbonized Society
Q1  One year has passed since your appointment as President and COO. What have youachieved so far?

Net sales target of ¥1 trillion in FY2023 Medium-Term Management Plan
achieved ahead of schedule
After assuming the role of President and COO in April 2022,
I said what I would need to do as the person responsible
for business execution was to achieve the targets (net salesof ¥1 trillion and operating profit ratio of at least 8%) of theMedium-Term Management Plan that ends in fiscal 2023 andformulate and execute the next growth strategies over thecourse of two years. Of these tasks, I consider the attainmentof the Medium-Term Management Plan target of ¥1 trillion in
net sales in fiscal 2022, one year ahead of schedule, to be oneof my achievements in the past one year.

13

Fuji Electric Report 2023

As the environment in which we do business is constantly
changing, in order to fully implement the strategies outlinedin the Medium-Term Management Plan, I have continued
to impart to employees the importance of enhancing theiradaptability to both near-term and longer-term changes when
I visit our factories and area operations in Japan, and also ouroverseas sites. With numerous unforeseen events occurring
worldwide and the shift towards new values over the mediumto-long term, I have encouraged each and every employee
to be more receptive to information and changes, and share

Our two missions basically remain the same, but since wehave achieved the current Medium-Term Management Plan
targets ahead of schedule, in fiscal 2023 we will turn ourattention to emphasizing profit in our management approach.
We have therefore set ourselves the must-reach targets ofan operating profit ratio of 9% or higher and profit of ¥62.5
billion. Over the past decade or so we have employed various
means to thoroughly improve operating profit by reviewing
all kinds of operational processes, such as strengthening
our manufacturing capabilities and other management
reforms and launching the companywide Pro-7 activities. In
other words, targeting even higher profit from this point is
not so easy and we are fully aware that the challenges thatlay ahead are quite daunting. Also, from this fiscal year we
intend to start emphasizing profit alongside operating profit
and we will be stricter about inventory controls and project
management, including pre-order screening for systemprojects, in an effort to prevent unnecessary costs. There are
four key points as we transition to the next Medium-Term
Management Plan.
The first is enhancing the earnings power of the PowerElectronics Industry segment. We will look to further
enhance our approach to local design, local production
and local consumption in order to strengthen our businessstructure for low-voltage inverters and other components.
We will also endeavor to improve productivity through parts
standardization.
The second key point is further improving profitability in
the Power Generation and Food and Beverage Distribution
segments. In the Power Generation segment, we willcontinue to work on transforming our portfolio with anemphasis on profitability, primarily by focusing on the
renewable energy business, which is experiencing growth indemand on the back of decarbonization, and strengthening
after-sales businesses to improve the reliability and capacity
utilization rate of facilities. In the Food and Beverage
Distribution segment, we will continue to propose high valueadded products, such as vending machines and eco-friendly
showcases for convenience stores, both of which offer
energy saving and operational improvements. We will also
reorganize manufacturing systems to match business scaleand strengthen our business structure.
The third point is expanding our overseas operations.
Our businesses overseas are still in the development stage,
so our initial goal is to achieve overseas net sales of morethan ¥300 billion. Last fiscal year, we made some flexible
changes to the priority of global product development in
the power electronics business, which resulted in the timely
market launch of some products, but it also gave rise toother challenges, such as a delayed market entry and slow
sales growth of other products. Given that the businessenvironment is changing at a dizzying pace, I believe it willbe crucial that this fiscal year we keep an eye on future
developments and improve the accuracy of our productdevelopment prioritization so that we can bring our global
products to market as planned. On top of this, we will lookto further reap the benefits of the M&As and partnerships
we have hitherto forged in Asia and India. One example ofsuch benefits is how Fuji SMBE in Singapore continues to tap
fervent demand from data centers in the Asian market. We
are gradually building a collaborative framework under which
the local subsidiary takes the lead to gain an understanding

Fuji Electric Report 2023

14

Interview with the President and COO

plan is to boost sales in the power electronics businesspredominantly with low-voltage inverters that can beproduced at lower cost with the use of the same production
platform for multiple models, as well as uninterruptible power
supply systems (UPS) for data centers that offer industryleading capacity. We will aim to expand sales by having all
development, design, manufacturing, and sales divisions
collaborate on a concerted effort to accelerate the cycle ofcreating new products that meet customer needs.
By steadily implementing these initiatives, we hope toachieve the FY2023 Medium-Term Management Plan and set
the stage for the next one.

Contributing to Reductions in Greenhouse Gas Emission
Suppliers

Users

Power companies Power generators

Factories

Decentralization anddecentralized power supplies

Energy supply stabilizationand optimization• Renewable energy(solar, geothermal)• Power distribution equipment• Decentralized power supplies• UPSs• Fuel conversion• Power conditioning systems• Electricity storage systems

Facilities

Energy conservation andautomation• Power electronics equipment
Motors, inverters,
servo controllers,measuring instruments• Semiconductors

Automobiles Railways

Interview with
the President and COO

of what the customer requires and proposes systemsolutions, while Japan provides technical support as needed.
At other locations in Asia too, we will need to switch to thiskind of structure where the local entity takes the lead andJapan provides backup.
The fourth key point is boosting sales of new products.
Internally, we previously aimed to increase new productsales in fiscal 2023 by 50% compared to fiscal 2018, but
after reaching +40% in fiscal 2022, we now plan to raise
the fiscal 2023 target to +70%. Up until now, the growing
uptake of electric vehicles has driven stronger sales of new
semiconductor products year after year. In fiscal 2023 our

Ports

Electrification• Power semiconductors for xEVs
• Electric propulsion systems
for ships• Induction heating systems• Vending machines

Q3  What initiatives will you be implementing to achieve further growthfrom fiscal 2024 onwards?

Giving shape to the next Medium-Term Management Plan
We are currently discussing the next three-year Medium-Term
Management Plan that will kick off in fiscal 2024. For the newplan, we will establish a 2030 vision (goal) for Fuji Electric andlay out our growth strategies with a backcasting approachfrom where Fuji Electric wants to be in 2030, which will alsoalign with a forecasting approach that starts from where weare now. In terms of our future direction, we will maintain thesame policy of contributing to the creation of a responsible andsustainable society in the energy and environment fields, which
we should say is nothing but the reason for our existence.

Targeting further growth by maximizing synergies between divisions
Digital transformation (DX) and green transformation(GX) initiatives are gathering momentum as solutions tochallenges in society, along with the objective of realizing adecarbonized society by 2050. As more emphasis is placedon sustainability initiatives toward 2030, it is critical that we
accurately understand the changing values of our customers
and society and that we make sure no business opportunity
is overlooked during this transitional period.
Our strength lies in having a mix of businesses andtechnologies to seamlessly address customer challenges,
from the energy supply side (suppliers) to the demand side(users). While there are a myriad of growth opportunities
through which we can capitalize on this advantage, we
are intent on positioning our power electronics and power
semiconductor businesses at the core of efforts to createsocial value in line with market changes in the energy andenvironment fields. The key to providing customers withthe most optimal system and solution is to respond to theirneeds in a flexible manner across divisional boundaries.
In this context, in order to quickly capture the needsof customers, in April last year we established a special
cross-divisional department within the Power Electronics
Energy Business Group to coordinate discussions andnegotiations about carbon neutrality projects throughout
the Company. We have received more than 200 inquiries

15

Fuji Electric Report 2023

regarding renewable energy in the power generation businessand regarding grid storage battery systems and distributed
grids in the power electronics business, and as such, ourinitiatives to address the immediate challenges of customers
are beginning to get on the right track.
Meanwhile, the New Products Development Office thatwas set up within the Corporate R&D Headquarters in fiscal
2021 serves as the hub for projects with relatively long leadtimes, such as hydrogen fuel conversion, electrificationon the consumer side, including thermal energy, andthe regulation and optimization of electricity supply anddemand. And our sales, business, and R&D divisions
collaborate with each other to analyze market and customer
trends and drive new product development. The challenge
for us now is how best to align our medium- and long-term
development themes with the Company’s 2030 growthstrategies and how to shape our business portfolio. I believe
all of this will also get on the right track as the potential
projects pass through the product planning review stage.
Of course, it will be really important to keep growing ourcurrent businesses, and as market values shift, we will need
to forecast how the positioning of our products will change
and what new technologies and products will be needed.
To capture that demand, we will roll out on-target measuresand execute investments.

Green transformation
HydrogenDC electricity distribution

Heat related products

Creation of social value through digital transformation
Transition to eco-friendly materials

I want every employee to be able to grasp, and adapt to,changes in society and the market in the lead up to 2030 byleveraging two drivers of innovation, alongside the traditional
approach of “adaptability to change.” The first driver is“Imagination” to envision what the year 2030 might look like,and the other is “Creativity” to think about how such a future
could be created. I would like to see each employee painta picture of the future and, in order to realize it, identify Fuji
Electric’s competitive advantages by engaging in discussions
with not only other employees in the Company, but alsowith customers from various industries. These ideas will be
fed into an action plan, and we will aim to create the future
together as a team.
In addition to considering these business strategy
perspectives, a strategy that connects all of the corporate
divisions laterally is also very important if we are to further
strengthen our operating foundations. In particular, I
believe human resources to be extremely important. With
the aim of setting in motion a virtuous cycle of employee
happiness and the Company’s sustainable growth, we areworking with relevant divisions to explore mechanisms that
contribute to job satisfaction of each employee and fully
maximize the value of our human resources—the sourceof our competitive advantages. In terms of production

Green power

Improved
productivity

and procurement as well, approach to local design, local
production, and local consumption has become more
important and strengthening cooperation across divisions
and regions will be indispensable to this. At the same time,
we will promote DX in an effort to further boost productivity.
Also, it is critical that we align our business strategy and goal
setting with our environmental vision and further reinforce
our risk responsiveness to bolster our resilience to cope with
unexpected changes. I should also add that in order to alignour strategies and tie them together, it is important that we
set targets for management indicators that will contribute toimprovement in corporate value from both financial and nonfinancial perspectives, in addition to establishing KPIs thatcan be shared with employees.
The year 2023 marks the culmination of Fuji Electric’s
century-long history. It is also the year in which we will
earnestly contemplate the Company’s future. We willthoroughly discuss our 2030 vision (where Fuji Electric
wants to be in 2030) and our next three-year MediumTerm Management Plan and aspire to be a company that
continues to achieve growth and is trusted by our customers,
shareholders, business partners, community members, andall other stakeholders.
Shiro Kondo
President and COO

Fuji Electric Report 2023

16

Value Creation Process
Fuji Electric is aiming for both the growth of our business and environmental contributions by taking full advantage ofand sustainable society through the virtuous cycle of returning the profits we earn through our business activities to ourour financial and non-financial capital and promoting our energy and environment businesses and ESG initiatives that

employees, our shareholders, and society.

support these businesses. We aim to enhance sustained corporate value and contribute to the creation of a responsible

Input

Important issues for management

Outcomes(FY2022) *1(Materiality)(FY2022) *1

Manufacturing capital

Promote energy and environment businesses

Intellectual capitalBusiness

Manufacturing bases 49

Clean energy

Stable supplyof energy

Energy saving
Automation

Promotion of the energy and environment businesses (P21-26)
Overview of Segments (P33-42)

Research and Development (P43-46)

Human capital

Target carbon neutrality across the supply chain• Achieve a recycling-oriented society• Achieve a society that is in harmony with nature
Environment (P47-52)

Product sales areas 97 countries

 ajor materials (ferrous, non-ferrous, plastic)M
95 thousand tons

Society (S)E nvironmental investment
Approximately ¥2.5 billion

Energy consumption 980 GWh• Respect for human rights• Active participation of diverse human resources

Sales outside Japan¥292.1 billion

New product sales

1.4 times(compared to FY2018)(Reduction of environmental impact)
Reduction of society’s CO2 emissions by products

49.8 million tons
Greenhouse gas emissions throughout the supply chain

177 million tons

Water recycling rate
Amount of waste sent to landfills

334 thousand tons
20.7%
200 tons(Reference values) FY2023 Medium-Term
Management Plan target
Net sales¥1 trillion

Operating profit(Operating profit ratio)¥80 billion(8.8%)

Profit attributable toowners of parent¥55 billion

Sales outside Japan¥350 billion

Progress of the FY2023 Medium-Term
Management Plan (P27-30)
Research and Development (P43-46)(Reference values) Environmental Vision 2050
Fiscal 2030 Target
Reduction of society’s CO2
Over 59 million tons/year
emissions by products
Greenhouse gas
emissions throughout the
supply chain

67 million tons

Greenhouse gas
emissions during
production

25 million tons

Environment (P47-52)• Create a supply chain that
supports a sustainable society
Sustainable Procurement (P57-58)

Strengthening of human resources
Annual employee awareness surveys (satisfaction with the company) 3.8 pt / 5 pt

Amount of gases handled 84 tons

Ratio of female managers

Japan 3.2%, overseas consolidated

Water intake 9,385 thousand m

Next-generation management

Cumulative total number registeredA mount of chemical substances handled
1,084 tons

Financial capital
Equity ¥517.1 billion
Net interest-bearing debt ¥99.1 billion
Financial and Capital Strategies (P31-32)*1 The figures are on a consolidated basis*2 Patent rights, utility model rights, design rights, and trademark rights*3 Community activities, science and technology promotion, school education promotion,international exchanges and education, and other activities

Fuji Electric Report 2023

26.5%
504
Human
Resources (P53-56)→人財（P53～P56）• Improve effectiveness of corporate governance
Governance (G)Environment (P47-52)

Contribute to the creationof a responsible andsustainable Society

Human Resources (P53-56)3

17¥61.3 billion

Greenhouse gas emissions during productionS ocial contribution expenses*3
Approximately ¥300 million

Natural capital¥88.9 billion

Operating profit• Realize a decarbonized society
Environment (E)Social capital¥1,009.4 billion

Profit attributable to owners of parent

Industrial property rights*2 13,178

E ducation and training expenses
Approximately ¥2.2 billion

Net sales(Operating profit ratio 8.8%)

R&D expenditure ¥36.2 billion

 onsolidated number of employees 27,123
C(Japan 17,392, overseas 9,731)

Growth of our business andcontribution to the environment

Value Creation
Process

Plant and equipment investment ¥84.1 billion

Corporate Governance (P59-68)• Promote compliance
Compliance (P69-70)• Enhance risk management
Risk Management (P71-74)

Strengthening of the financial platform andenhancement of capital efficiency
Free cash flow
ROIC

¥66.7 billion

10%
Financial and Capital Strategies (P31-32)

Reinvestment in our human resources
and business/shareholder returns
Total dividends ¥16.4 billion (FY2022)*1

Fuji Electric Report 2023

18

Important issues for Management (Materiality)

Materiality and Key Issues
Field

Materiality

Expand power electronics andsemiconductor businesses

Fuji Electric has stipulated important management issues (materiality) that must be tackled with priority in order for the company tocontinue to achieve sustained growth.

Businesses

Materiality for Sustained Growth

Realize adecarbonizedsociety

Oversight
ReportChairman of the Board and CEO
President and COO

ERealize arecyclingoriented society

Committees

The materiality is deliberated on by committees comprisedof executive officers and others from business, sales, andcorporate divisions and by the divisions subject to the issues,
and as necessary they are reported and deliberated on in the
Executive Committee and Board of Directors.

• SDGs Promotion Committee• Fuji Electric Compliance Promotion Committee• Health & Safety Promotion Committee• Skills Development Committee• Production Technology Committee• Technology Development Committee• International Standardization Committee

Realize a society
in harmony withnatureRespect forhuman rights

Major Committees Related to Materiality

Business

Materiality

Promote energy and environment businesses

Relevant Major Committees
Production Technology Committee
Technology Development Committee
International Standardization Committee

Environment (E)Realize a decarbonized society
Realize a recycling-oriented society
Realize a society in harmony with nature

SDGs Promotion Committee

Society (S)Respect for human rights
Active participation of diverse human resources
Create a supply chain that supports a sustainable society

SDGs Promotion Committee
Health & Safety Promotion Committee
Skills Development Committee

Governance (G)Improve effectiveness of corporate governance
Promote compliance
Enhance risk management

S

Activeparticipation ofdiverse humanresources

Create a
supply chainthat supportsa sustainable
society

Fuji Electric Compliance Promotion Committee

Improveeffectivenessof corporate
governance

SDGs to Be Addressed through Companywide Activities
By assessing the link between the value created by our energy
and environment businesses (clean energy, stable energy
supply, energy saving, and automation) and contributions
to the accomplishment of the SDGs, Fuji Electric selected
five priority goals. Furthermore, four additional goals were
designated as priorities in relation to the reinforcement of ouroperating foundation to be pursued through overall corporate
activities, making for a total of nine goals.

Reduce greenhouse gas
emissions throughout
the supply chain

Fiscal 2030 targets
Greenhouse gas emissions throughout the
supply chain: reduce by more than 46%(compared to fiscal 2019)

Greenhouse gas emissions throughout the supply chain:increased by 42%(compared to fiscal 2019)

Reduce greenhouse gas
emissions during production

Fiscal 2030 targets
Greenhouse gas emissions during production: reduced by
Greenhouse gas emissions during production: 26% (compared to fiscal 2019)
reduced by more than 46% (compared tofiscal 2019)

Reduce society’s CO2 emissions
by providing energy-saving
products

Fiscal 2030 targets
Reduction of society’s CO2 emissions byproducts: more than 59.0 million tons / year

Reduction of society’s CO2 emissions by products: 49.8
million tons/year

Promote the 3Rs (Reduce, Reuse,
Recycle) throughout the supply
chain• Ratio of waste sent to landfills:
Fiscal 2022 1.2% or less• Water consumption per unit of sales:
Fiscal 2022 1,800 m3 tons/¥100 million
or less• Ratio of waste sent to landfills: 0.5%
• Water consumption per unit of sales: 900 m3/¥100
millionContribution to biodiversity andzero impact on the ecosystemthrough corporate activities• Volatile organic compound (VOC)
emissions: Fiscal 2022 1,694 tons or less• Volatile organic compound (VOC) emissions: 625 tons

SDGs to Be Addressed throughFuji Electric’s Companywide Activities
Priority SDGs to Be Addressed throughEnergy and Environment Businesses

G

Promotecompliance

Enhance risk
management• Implement human rights due
diligence—

Satisfaction with the company:
Maintain 3.5 pt or more out of 5.0 pt• Satisfaction with the company: 3.8 pt

Promote active participation of
female employees• Percentage of women hired:
20% in fiscal 2023
• Number of female employees insupervisory positions: 400 in fiscal 2023

• Percentage of women hired: 21%• Number of female employees in supervisory positions:
316—

Reference
Page(s)Powerelectronics
P33-36
Semiconductors
P37–38Environment
P47–52• Enhance human rights awareness training• Continued implementing harassment prevention
education• Implemented improvement guidance for consolidated
overseas subsidiaries related to respect for human rights

Continued implementation of
employee awareness surveys

Promote active participation ofsenior employees

Relevant SDGs

Important issues for Management(Materiality)

Promotion system

Executive
Committee

Fiscal 2022 Results• Net sales: ¥ 1,009.4 billion(power electronics: ¥617.5 billion,
semiconductors: ¥206.2 billion)• Operating profit: ¥88.9 billion(power electronics: ¥51.8 billion,
semiconductors: ¥32.2 billion)• Operating profit ratio: 8.8%

Board of Directors

The company identified the materiality based on “ongoing
reinforcement of operating foundations,” a key issue in the
FY2023 Medium-Term Management Plan. In addition to thepromotion of the energy and environment businesses set forthin the Management Policies, the main initiatives are organizedbased on the Fuji Electric Code of Conduct (refer to P4).

Targets
Fiscal 2023 Management Plan
• Net sales: ¥1,050.0 billion(power electronics: ¥653 billion,
semiconductors: ¥221 billion)• Operating profit: ¥94 billion(power electronics: ¥56.5 billion,
semiconductors: ¥32.8 billion)• Operating profit ratio: 9.0%

Promote energy
and environment
businesses

Approach to materiality

Field

Key Issues• General employees: Rate of selection of the Selective
Retirement Extension System: 82.1%• Managers: Rate of selection of the Senior Task System:
91.6%

Human
Resources
P53-56

Broaden scope of duties
performed by differently abled
employees

Percentage of differently abled individuals
hired: Statutory employment rate (2.3%)
or moreAdvance workstyle reforms,
promote work-life balance—• Strengthened our support for work-life balance between
work and raising children- Number of male employees taking childcare leave: 43—• Continued to implement self-assessments of CSR
procurement and expanded their targets- Implemented for: 767 companies• Expanded the number of materials procured bypurchasing them from multiple suppliers- Percentage of materials procured by purchasing themfrom multiple suppliers: approximately 70%

Sustainable
Procurement
P57-58—• Continued third-party evaluation of the effectiveness of
the Board of Directors and incorporated this evaluation
into operations• Reduced cross-shareholding- Number of types of listed shares held: 17 at the end of
fiscal 2022 (a decrease of 28 compared to the end of
the previous fiscal year

Corporate
GovernanceP59-68—• Implemented compliance education- Level-specific training: 522 trainees- Job-specific training: 3,104 trainees• Thoroughly implemented the Business Ethics WhistleBlowing Systems- Number of reports: 46

ComplianceP69-70

Improve product quality—

Strengthened the promotion of high-reliability activities

Strengthen business continuity
management—• Revise the business continuity plan of each base• Expand the scope of introduction of disaster prevention
information systems for our customers

Strengthen information security—• Strengthened countermeasures against cyber attacks• Practice fair and equitableprocurement• Practice sustainableprocurement together withbusiness partners

Improve transparency andsupervisory functions ofmanagement

Ensure effective implementationof the Fuji Electric Compliance
Program• Percentage of differently abled individuals hired: 2.95%

RiskManagement
P71-74

Details about ESG material issues are available on our website:
https://www.fujielectric.com/company/csr/material-issues.html

19

Fuji Electric Report 2023

Fuji Electric Report 2023

20

Promotion of the Energy and Environment Businesses— Realization of Carbon Neutrality —The realization of carbon neutrality by 2050 has become a common issue worldwide. Along with the widespread

Fuji Electric has a wide range of products from the supply side to the demand side of energy, and we are contributing to

adoption of clean energy such as solar and wind power, we are required to address the question of how to stably supply“making clean energy mainstream,” “stabilizing the energy supply,” “spreading energy-efficient equipment and systems”

these forms of energy, for which the amount of electricity generated fluctuates depending on the weather, and also toand “improving the electrification rate” to realize carbon neutrality.

adopt energy saving in the utilization of energy and electrification from fossil fuels.

Value Provided by Fuji Electric
Making clean energy mainstream

Spreading energy-efficientequipment and systems

Stabilizing the energy supply

Improving the electrification rate

Courtesy of PT. SEML

Geothermal power

Hydro power

Environmentally friendly
substation equipment

Energy management systems (EMS)

Inverters

MotorsSolar power

Wind power

Uninterruptible power supply
systems (UPS)Power conditioning systems (PCS)

Sustainable vending machines

Electric propulsion systems
for vessels

Semiconductors

We have a broad lineup of clean energy, including geothermal,hydro, solar, and wind power. In recent years, hydrogen has
gained attention as new energy; therefore, we are advancing thedevelopment of products and systems that contribute to building
the hydrogen supply chain.

We contribute to the stable supply and optimization of electricity andthe greater resilience of industrial infrastructure through package
proposals that include product and system supply and maintenance;
for example, the provision of uninterruptible power supply systems(UPSs) to data centers, and the provision of environmentally friendly
substation equipment to power companies. In recent years, wehave expanded the scope of our efforts, including district-integrated
energy operation and stable supply of electricity in Hokkaido andthe remote islands.

We are aiming to promote energy saving in factories, officebuildings, facilities, and other structures through the visualizationof energy saving issues using the measuring and control
technologies we have cultivated over many years, the powerelectronics equipment using highly efficient power semiconductors
manufactured in-house, drive control systems, and also energy
saving proposals based on the effective utilization of thermal energy.

We are utilizing our technological ability, with which we havepursued the miniaturization and higher efficiency of powerelectronics devices, to contribute to improving the electrification ratewith power semiconductors for electrified vehicles (xEVs), electrical
propulsion systems for vessels, onshore power supply systems, andother solutions.

Reduction of CO2 emissions*1 (FY2022 Results)

Reduction of CO2 emissions*1 (FY2022 Results)

Reduction of CO2 emissions*1 (FY2022 Results)

Electrification from fossil fuels

Geothermal power
Approximately 5.5 million t-CO2

Hydro power
Approximately 1.8 million t-CO2

Environmental impact reduction

UPS
Approximately 80 thousand t-CO2

GHG*2
reduction

Solar power
Approximately 1.5 million t-CO2

Environmentally friendly C-GIS(Air insulated switchgear)

Initiatives for New Markets

Promotion of the Energy and Environment Businesses— Realization of Carbon Neutrality —Power semiconductors
for electrified vehicles

Low-voltage inverters
Approximately 26 million t-CO2

MotorsApproximately 290 thousand t-CO2

Vending machines
Approximately 380 thousand t-CO2

Semiconductors
Approximately 5.8 million t-CO2

GHG*2
reduction

Fuji Electric is working on initiatives to open up new markets
related to carbon neutrality.

Case2
Storage battery
system for the
power system

Case1
Power supply forhydrogen production
For details,
refer to P23

Case3
Community energy
management
systemFor details,
refer to P24

For details,
refer to P25

Case4
Onshore power
supply system,
electric propulsion
ship

For details,
refer to P26*1 Reduction of CO2 emissions (fiscal 2022 result) is calculated with the CO2 reduction amount in the case that the products during the operating period shipped in or after fiscal 2009 have operated for one year as the contribution amount.
*2 Greenhouse Gases

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Fuji Electric Report 2023

Fuji Electric Report 2023

22

Promotion of the Energy and Environment Businesses — Realization of Carbon Neutrality —Making clean energy mainstream

Initiatives for New Markets Case1

Stabilizing the energy supply

Initiatives for New Markets Case2

Power Supply for Hydrogen Production

Storage Battery System for the Power System

Case Study: NEDO Development of Technologies for Realizing a Hydrogen Society

Case Study: Hokkaido Minami-Hayakita Substation (Hokkaido Electric Power Network, Inc.)

Utilizing Our Results in the Industrial Field to Offer Power Supply
for Expanding “Green Hydrogen” Production

Contribution to Expanded Introduction of Renewable Energy Power
Generation as Adjustment Capability for the Power System

Production flow for green hydrogen
Renewable energy

Hydrogen production
facility

Hydrogen gas storage
facility

Hydrogen power
generation

Solar power

Water-electrolyzing
apparatus system

Fuji Electric’s large-capacitytransformer rectifier“S-Former”

Large scale use

Small scale use

Fuel cell cars
and buses
Promotion of the Energy and Environment Businesses— Realization of Carbon Neutrality —Wind power

Applications

Factories<Features of the products>• Top class market share globally• Abundant operating results

Minami-Hayakita Substation (Left: exterior view of the building Right: Fuji Electric power conditioning system inside the building)Social issues

Social issues

Hydrogen is gaining more attention as an environmentally friendly
clean energy, and the market is growing rapidly, especiallyoverseas. Hydrogen production facilities utilizing renewable energy

produce hydrogen (green hydrogen) by electrolyzing water using
a water-electrolyzing apparatus system. This process requires astable large capacity direct current power supply.

Provided value

23

Fuji Electric Report 2023

amount of power generation using solar and wind power fluctuates
greatly depending on factors such as the weather and windspeed; therefore, maintaining a constant frequency is an issue,
and storage batteries, among other solutions, are seen as being
effective as “adjustment capability” for demand and supply.

Provided value

Since the 1950s, Fuji Electric has been delivering the largecapacity transformer rectifier S-Former in order to supply power forthe refinement process of non-ferrous metals, such as aluminum,
copper, and zinc, and chemicals such as caustic soda. Our
market share is top class globally, and we are utilizing our unique,outstanding technologies to realize a high level of safety andtrustworthiness.
Currently we are also utilizing these technologies in hydrogenproduction. In 2017, as a part of Development of Technologies for
Realizing a Hydrogen Society by the New Energy and Industrial
Technology Development Organization (NEDO), Asahi Kasei
Engineering Corporation received an order for 10 MW classlarge-scale electrolysis equipment, then amongst the largest in theworld, from Toshiba Energy Systems & Solutions Corporation. Fuji
Electric then received the contract for the design and productionof the power supply system for the electrolysis equipment anddelivered S-Former as the power supply system for the hydrogenproduction process. We are currently advancing the development
Co-creation partner companies and organizations

Power generation using renewable energy, such as solar andwind power, is spreading in a number of regions now. In orderto stably supply electricity, it is necessary to keep the balance ofdemand (amount of electricity consumption) and supply (amountof electric power generation) in the power system constant, and tostabilize the frequency, which is the quality of the electricity. Theof new products with greater capacities, starting with the 40 MWclass and aiming to launch the 100 MW class in the future, forfurther market expansion, especially in the overseas market.

The S-Former Series delivered for the NEDO Development of Technologies for Realizing a
Hydrogen Society (For 10 MW class large-scale water-electrolyzing apparatus system)

Asahi Kasei Corporation, Asahi Kasei Engineering Corporation

Fuji Electric is providing storage battery systems for the powersystem, which contributes to society as the “adjustment capability”
of the power system. Fuji Electric started developing the storage
battery system with the application of system stabilization from the
1990s, and since 2015 we have participated in the Large-Scale
Storage Battery System Demonstration Project jointly implemented
by Hokkaido Electric Power Network, Inc. and Sumitomo ElectricIndustries, Ltd., building up results quickly. We delivered power
conditioning systems (PCSs) and controllers (control panel)comprising the storage battery system using redox flow batteries
and with a power storage capacity amongst the largest in theworld (60 MWh), and currently it is active as the adjustment
capability in Hokkaido’s power system.
From April 2024, the supply-demand adjustment market,
which trades “adjustment capability” using storage batteries will
begin full-scale operation also in Japan. Fuji Electric is intend
to provide storage battery systems to business operators, suchas trading companies, power companies, oil companies, andCo-creation partner companies and organizations

renewable energy companies, to encourage them to enter into
the market, contributing to the further adoption of renewableenergy power generation.
Configuration of the storage battery system
Central Load Dispatching
Center system

Fuji Electric control systems
Dispatchsignals

Frequency

Load power
Charge and discharge dispatches

Redox flow batteries(storage batteries)Power
conversion

Fuji Electric PCSs

Chargeanddischarge

Power system(power transmission grid)

Hokkaido Electric Power Network, Inc., Sumitomo Electric Industries, Ltd.

Fuji Electric Report 2023

24

Promotion of the Energy and Environment Businesses — Realization of Carbon Neutrality —Initiatives for New Markets Case3

Stabilizing the energy supply

Spreading energy-efficientequipment and systems

Improving the electrification rate

Initiatives for New Markets Case4

Community Energy Management System

Onshore Power Supply System, Electric Propulsion Ship

Case Study: The Area in the Vicinity of Shin-Sapporo Station

Case Study: Ministry of Land, Infrastructure, Transport and Tourism, Port and Harbour Decarbonization Promotion Plan

Supporting the Efficient Energy Operation of the District andLeading to Decarbonization and Energy Saving

Advancing the Electrification of Ports and Ships to Contribute to
the Realization of Carbon Neutral Ports

CEMS screen
Onshore power supply system (exterior view)

Ports

Social issues

Social issues

Primarily in redevelopment zones, the adoption of energy saving
is being advanced through the establishment of energy centersand centralized management of the energy supply of a district. For
example, in cold regions, large amounts of energy are consumed
in order to operate the lighting, air conditioning, hot water supply,

melting of snow, and other functions in each facility. For low
carbon and environmentally friendly urban development, the issue
is how to efficiently utilize the energy used in the district such as
electricity and exhaust heat.

Provided value

25

Fuji Electric Report 2023

Japan’s first zero emissions ship, e-Oshima (built by Oshima
Shipbuilding Co., Ltd.)Interest in the decarbonization of ports for the realization of carbon
neutrality by 2050 is growing in countries around the world. Oil
refineries, power generation plants, iron and steel, and chemicalindustries, among others, account for approximately 60% of CO2
emissions in Japan, but most of these are located in coastal areas
and use ports for exports, imports, and transportation. In order tomove from conventional fossil fuels to electrification, and achieve
further decarbonization, the government of Japan has built a
consortium comprised of companies and organizations related toports and ships and is advancing studies toward the realization of“carbon neutral ports.”

Provided value

One method of solving this issue is a community energy
management system (CEMS), a system for efficiently managing theenergy of the whole city. Fuji Electric has participated in a variety ofdemonstration projects, beginning with the 2011 Kitakyushu Smart
Community Creation Project, and it has thus accumulated knowhow regarding the optimal operation of energy in a community.
The Shin-Sapporo Energy Center produces the electricity,
heated water, and cooled water used in the area in the vicinity ofShin-Sapporo Station using power generators (gas cogeneration)and heat source devices, and Fuji Electric has delivered a CEMS
utilizing AI to this location. This system predicts the energy
demand of each of the facilities inside the district, such as
medical facilities, commercial facilities, hotels, and condominium
buildings with high precision, and makes automatic adjustmentsof both the supply side and demand side of energy based on
those predictions, contributing to CO2 reduction of approximately
35% in the district overall (equivalent to the CO2 emissions ofapproximately 1,000 households*).

Co-creation partner companies and organizations

Promotion of the Energy and Environment Businesses— Realization of Carbon Neutrality —The area in the vicinity of Shin-Sapporo Station*T he Survey on the Actual Conditions of Carbon Dioxide Emissions from Residential
Sector conducted by the Ministry of the Environment in FY2019

Manage energy optimally through bidirectional coordination
with the consumer side
Energy sources

Energy centers (Supply side)

Consumer side
Advanceddemandresponse

Electricity

Medical facilities

Reversepower flow

CEMS
Gas

• Demand predictions (Explainable AI)• Optimal operating plan
• Supply and demand bidirectional
operation• Efficiency monitoring (automatic
extraction of efficiency factors)

Heat
Gas
cogeneration

Hokkaido Gas Co., Ltd., Taisei Corporation

Boilers andfreezers

Commercial
facilities

Electricity
and cooled
and heatedwater

HotelsCondominium
buildings

Fuji Electric is participating in various councils on carbon neutral
ports and is promoting studies aimed at the standardization of its
own products and systems.
To date Fuji Electric has been tackling initiatives for carbon
neutral ports and ships, and the electric propulsion system
made by Fuji Electric has been employed in e-Oshima, Japan’s
first fully battery-powered ship. Furthermore, Fuji Electric is the
only manufacturer in Japan to employ a direct current electricity
distribution system, and therefore has achieved downsizing andspace saving in electricity conversion equipment.
In addition, the onshore power supply system of Fuji Electric
is responsible for supplying electricity to ships docked in a port.
When a ship docks in a port, the power generator (diesel engine)
inside the ship is stopped, and the electricity necessary for theship is transmitted from onshore, which can contribute to CO2emissions reduction. Regarding this system, we will launch
new products on the market during fiscal 2023, achieving theindustry’s top class large capacity and small size.
We will contribute to significant decarbonization through the
Co-creation partner companies and organizations

building of carbon neutral ports.
“Electricity conversion equipment using powerelectronics technologies” is our core productOnshore power supply system
Frequency
and voltage
conversion

Electricity can be supplied bidirectionally
between ports and ships
Ship electric propulsion system (illustration)
Electricity conversion
Main
Main
equipment (panel)
propulsion
Storage
propulsion
motor Alternating
Direct battery
devicecurrent
current
Frequency andvoltage conversion

Power conversion allows fora propulsion device (propeller) control

Blue text indicatesequipment
manufactured by
Fuji Electric

Local governments related to ports, shipping and shipbuilding companies

Fuji Electric Report 2023

26

Progress of the FY2023 Medium-Term Management Plan
Following the global financial crisis in 2008, Fuji Electric began restructuring its business towards enhancing profitability so thatit can generate profit even without increasing sales, and worked to recover and strengthen its manufacturing capabilities andundertook various management reforms.
In particular, in our manufacturing innovations, we strengthened the development of human resources by consolidating
our production technology divisions, reduced inventories by carrying out the supply chain reform, as well as promoted
in-house manufacturing, automation and standardization, and cost reductions through global procurement and centralizedpurchasing. Then, with the aim of further expanding business and improving profitability, the Company established production
systems based on local production for local consumption and enhanced cost-competitiveness, as steps to expand overseas
businesses and also from the perspective of BCP.
Under the FY2023 Medium-Term Management Plan, which started in fiscal 2019, we aimed to establish foundations forsustainable growth with net sales of ¥1 trillion and an operating profit ratio of 8% or more, and pursued three key initiatives:promote growth strategies, further improve profitability, and ongoing reinforcement of operating foundation. The Company wasable to achieve the management targets one year ahead of schedule.
Further information about progress of management reforms is available at our website.
https://www.fujielectric.com/ir/library/reports/progress.html
FY2023 Medium-Term Management Plan: Key Issues
Fiscal 2023 Management Targets

Establish Foundations for Sustainable Growth
Further improve profitability• Concentrate resourceson our power electronics
and power semiconductorbusinesses• Expand overseas business• Augment global
manufacturing capabilities¥1 trillion

Operating Profit Ratio

8% or more

Profit Attributable to
Owners of Parent¥55 billion

Financial Indicators
Net Debt-Equity Ratio

Ongoing reinforcement of operating foundations• Ongoing reinforcement of our operating foundations with afocus on the environment, human resources, and governance• Evolution of companywide Pro-7 activities

0.1 times

Equity Ratio

50%

ROA (Return on Assets)

5%

ROE (Return on Equity)

11%

Dividend Payout Ratio

30%* Net debt-equity ratio = net interest-bearing debt ÷ equity*A ssumed exchange rates for fiscal 2023:¥105 to the U.S. dollar, ¥123 to the Euro, ¥16 to the RMB

Consolidated Business Performance Trends(Billions of yen)
Net Sales

1,050.0

1,009.4
914.9

900.6

910.2

875.9

8.2%

8.8%

9.0%

1,000.0
8.0%

Operating Profit

6.6%

Profit Attributable to
Owners of Parent
Operating Profit Ratio

94.0

88.9

5.5%

80.0

74.8

4.7%
60.0
48.6

42.5
40.3
FY2018Results

FY2019Results

FY2020Results

FY2021Results

62.5

61.3

58.7

41.9

28.8

FY2022
Results

FY2023
Management Plan (Target)(Announced on Apr. 27)

FY2023Medium-Term
Management Plan
(Target)Financial Indicators
0.4 times

0.4 times

0.3 times

0.2 times

0.2 times

0.1 times

0.1 times

Equity Ratio

37%

37%

40%

42%

44%

47%

50%

ROA
(Return on Assets)

4%

3%

4%

5%

5%

5%

5%

ROE
(Return on Equity)

12%

8%

11%

13%

12%

12%

11%

Dividend Payout Ratio

28%

40%

29%

24%

27%

—

30%

Net Debt-Equity Ratio

27

55.0

Fuji Electric Report 2023

As for the business environment surrounding the Company, infiscal 2019, we faced market contraction overseas, especiallyin China, due to trade friction between the United States andChina. In fiscal 2020, we continued to minimize investment as
economic activities in Japan and abroad were restricted due tothe effects of the COVID-19 pandemic. In fiscal 2021, changes
in the international political situation further triggered thesoaring material prices and material shortages, and the global
market conditions and supply chains remained unstable.
Meanwhile, the trend for carbon neutrality and digitalization
continued, and demand for electrified vehicles, renewableenergy, energy saving, and digital infrastructure expanded,
which led to the expansion of business opportunities
around our focus areas of power electronics and power
semiconductor businesses.
In response, the Company worked to strengthen the profit
structure for our ED&C components and vending machine
businesses, for which demand decreased significantly, andsource materials from multiple suppliers and multiple regions
to reduce procurement risks, and continued aggressive
growth investment mainly in the power electronics andpower semiconductor businesses, and development of new
global products.
For the expansion of overseas businesses, in India in fiscal
2021, we integrated the management of a major local power
supply manufacturer that we acquired and consolidated infiscal 2019 with Fuji Electric India Private Ltd. By utilizing thetwo local factories and our sales and after-sales service bases
located throughout India, we are working to expand sales bydeveloping new models and producing uninterruptible power
supply systems (UPS) for data centers, power conditioning
systems for solar power generation, inverters, and measuring
instruments. In Thailand, we constructed a switchgear andcontrolgear system factory and an engineering center at Fuji
Electric Manufacturing (Thailand) Co., Ltd. and consolidated
the production functions for electrical switchboards andmolded transformers that had been distributed in multiple
locations across Southeast Asia. We are strengthening the
production and engineering functions in Thailand to expand
sales as one of our core overseas bases.
In fiscal 2022, the trend for carbon neutrality anddigitalization continued, and capital investments in the
manufacturing sector and data centers remained strong.
Meanwhile, the market conditions remained uncertain due toongoing impacts of difficulty in procuring materials and soaring
material prices since fiscal 2021, as well as a rise in power
expenses and sudden fluctuation of exchange rates, and ourPower Electronics Industry segment has been impacted byproduction restrictions due to difficulty in procuring materials.
In such an environment, the Company continued with its
efforts to strengthen measures against material procurement
risks through multiple sourcing, long-term contracts, andprocurement of alternative materials. We also worked on
promoting cost reductions, expanding the sales of new
products, and raising product sales prices. As a result, allsegments achieved increase in sales and profit compared withthe previous fiscal year, renewing the record-high results fornet sales, operating profit, operating profit ratio, and profit, andachieved the FY2023 Medium-Term Management Plan one
year ahead of schedule.
The Power Electronics Energy Business, which improved
performance mainly around its comprehensive electricalequipment business, and the Semiconductors Business, which
improved performance mainly with its power semiconductors
for electrified vehicles, achieved net sales and operating
profit ratio that exceeded the initial assumptions at the time
we formulated the FY2023 Medium-Term Management Plan.
Meanwhile, the Power Electronics Industry, Power Generation,
and Food and Beverage Distribution businesses have not yetachieved the plan, and need to further improve profitability.
Net Sales by Segment(Billions of yen)

60.8
104.4
109.9
137.4

875.9
52.7
76.6
80.4
157.5

910.2
54.7
90.8
78.6

317.5

345.9

324.1

218.0

209.2

-47.5
FY2019Results-46.3
FY2020Results

900.6

1,050.0
60.0
96.0
83.0

1,009.4
59.8
95.3
87.3
206.2

221.0

353.4

378.0

231.0

264.1

275.0

-47.8
FY2021Results-56.7
FY2022
Results-63.0
FY2023
Management Plan
(Target)(Announced on Apr. 27)

178.8

Progress of the FY2023 Medium-Term
Management Plan

Promote growth strategies

Net Sales

Overview of Results for Fiscal 2019 to 2022

Power Electronics Energy
Power Electronics Industry
Semiconductors
Power Generation
Food and Beverage Distribution
OthersElimination and Corporation* FY2019 results and FY2020 results reﬂect the ﬁgures prior to the organizational restructuring conducted in FY2022.

Operating Profit by Segment(Billions of yen)

2.7
3.8
2.3

42.5

2.2
2.5

2.8
3.0
3.1

48.6

74.8
27.1

17.7

9.7

23.8

21.8

16.5

21.2

14.0
-5.3
-4.3
FY2020Results

12.3-4.9
FY2019Results

3.7
4.4
3.6

88.9

3.4
5.0
4.2

94.0

32.8

32.2
24.9

29.5

26.9

27.0

-6.3

-6.7

-7.9

FY2021Results

FY2022
Results

FY2023
Management Plan
(Target)(Announced on Apr. 27)

28%

29%

29%

292.1
24.3
33.1

303.6

254.4

89.4

92.8

Sales outside Japan(Billions of yen)
25%

14.7
19.0

220.9

25%

13.3
16.5

221.9

17.0
20.0

100.5

31.4
34.4

62.6

83.9

124.6

108.2

116.8

145.2

145.0

FY2019Results

FY2020Results

FY2021Results

FY2022
Results

FY2023
Management Plan
(Target)(Announced on Apr. 27)

Asia (except for China)

China

EuropeAmericas

Ratio of Sales outside Japan

Fuji Electric Report 2023

28

Progress of the FY2023 Medium-Term Management Plan

Fiscal 2023 Management Plan

Augmenting Our Manufacturing Capabilities

We will aim to achieve record-high results for net sales,
operating profit, operating profit ratio, and profit for the second
year in a row, with an operating profit ratio of 9% or more.
Our target is to increase net sales to ¥1,050 billion, a yearon-year increase of ¥40.6 billion, mainly by expanding thePower Electronics Energy, Power Electronics Industry, andSemiconductors businesses.
In Asia, despite an increase in sales from the plant systems
projects of the power electronics business, sales are expected
to decline mainly due to a decrease in large-scale power
generation plant projects. Meanwhile, we will aim to increase
our overseas sales to ¥303.6 billion, a year-on-year increase of¥11.5 billion, boosting sales mainly in power semiconductors
for electrified vehicles in China and Europe, as well as in
the power electronics energy and the power generation
businesses for the renewable energy and energy saving
sectors in the Americas.

We are aiming to increase our operating profit to ¥94 billion,a ¥5.1 billion year-on-year increase, to be driven by increasing
sales and production volumes in the Power Electronics
Industry business, as well as improving the profitability, raisingproduct sales prices, and promoting cost reduction measuresin the Power Generation and the Food and Beverage
Distribution businesses. The target for profit attributable toowners of parent is ¥62.5 billion, an increase of ¥1.2 billion
year on year.
Forecasts were revised on July 27, 2023 based on the
consolidated financial results for 1Q.
For details, please refer to the Summary ofConsolidated Financial Results for 1Q FY2023.
https://www.fujielectric.com/ir/box/doc/pdf/
gh2023_07/230727_all.pdf

Plant and Equipment Investment and R&D Expenditures

Plant and Equipment Investment

PowerElectronics

73.7

52.3

Semiconductors

R&D Expenditures*2

Major Details (FY2019-2023)(Billions of yen)
175.4

9.7
5.7

138.0
14.5

7.4

18.4
12.0
62.6

49.7

58.4

Ratio of
Power
Electronics &Semiconductor
78%

75.0

Ratio of
Power
Electronics &Semiconductor
78%

FY2019-2022
FY2019-2023
4-Year Cumulative Results 5-Year Cumulative (Target)
Power Electronics
Semiconductors
Power Generation
Food and Beverage Distribution
CommonPower
Electronics

Semiconductors• Global product development(transformers, switchgears, large-capacity UPSs, products for plants)• Products for the mobility field(electrical equipment for railcars, ship & port systems)• Carbon neutral and environmentally friendly products(storage battery systems, energy management systems)• Promotion of product development using PF design*1• Digital transformation products• Development of 8th-generation IGBTs and 3rd-generation SiC technologies• IGBTs and SiC modules for electrified vehicles• Large-capacity industrial IGBT modules

Building of
manufacturing platform(Digital coordination of SCM and PLM)

Digitization and standardization ofdesigne

Mr

SC

Data collection, analysis, feedback control

s

m
for

Automation, in-house manufacturing, standardization

Supply chain reform activities
Visualization of on-site information

2005

2010

2013

2015

2022

Sophistication of
production technologies

Power Electronics
Semiconductors
Power Generation
Food and Beverage Distribution
Others• Expansion of front-end process (8-inch silicon (Si), silicon carbide (SiC))
production capacity (Yamanashi, Matsumoto, Tsugaru, Malaysia Factories)

Competitiveness

FY2019-2022
FY2019-2023
4-Year Cumulative Results 5-Year Cumulative (Target)s

Ratio of
Power
Electronics &Semiconductor
93%

orm

197.4

Progress of Manufacturing Innovations

ref

291.4

• Construction of switchgear and controlgear system factory andengineering center (Thailand)• Expansion of factory and production models (India)• Construction of an engineering center (Chiba Factory)• Construction of the Plant Systems Center (Tokyo Factory)• Installation of testing equipment for development (Tokyo Factory)• Installation of production equipment for new ED&C components• Installation of production equipment for inverters using PF design*1(Suzuka Factory, Thailand Factory)

Digitalcoordination

159.8

Ratio of
Power
Electronics &Semiconductor
93%

In order to minimize geopolitical risks and impacts of supply
chain disorder, we are strengthening profitability on a global
level by sourcing materials from multiple suppliers andmultiple regions.
The Company implements the self-assessment of CSR
procurement every year in accordance with the Fuji Electric
CSR Procurement Guidelines in order for its business partners
to deepen their understanding of our corporate social
responsibility (CSR) approach and initiatives we would like tohave them comply with and implement while also gaining an
understanding of the status of such efforts.
For details, please refer to “Sustainable Procurement” on
P57-58.

M

227.6

To further improve productivity and cost-competitiveness,
we are working to utilize digital and AI technologies toconnect everything in the production activities, including the
supply chain, with the information data in order to achievea connected smart factory that will enable autonomous
synchronization of production with stability and optimal quality,
cost, and delivery.
In specific, as part of the supply chain management(SCM) reform, we are pursuing automation of the assembly,
inspection, and testing processes, and visualization of factory
management indicators and on-site information by utilizing thedashboard, as well as making attempts at real-time collection
and analysis of on-site information, and feedback control

Strengthening our supply chain management

PL

4.5
6.7
4.2

Advancing digital reforms of our manufacturingthat allows advance prediction and detection of anomalies
and failures. In addition, we are working on the digitization of
product design and process design information, and productlife cycle management (PLM) reform aiming for standardization.
We will build a manufacturing platform to connect these SCM
and PLM axes and link the platform with manufacturing control
and management information to achieve total optimization,
thereby evolving into a connected smart factory.

Major Details (FY2019-2023)(Billions of yen)
5.4
9.5
5.4

In the FY2023 Medium-Term Management Plan, we haveidentified “augmentation of global manufacturing capabilities”
as one of the priority initiatives, and work to further improve
profitability. Based on a local production for local consumption
approach, we are stepping up the development of local leaders
at overseas production sites and advancing autonomous
operations, and strengthening our global operation systemthrough coordination between production bases.

Progress of the FY2023 Medium-Term
Management Plan

We are making continuous plant and equipment investment and R&D investment, mainly for our power electronics andsemiconductors businesses.

Augmenting global manufacturing capabilities

Connected
smart factory
Autonomous
synchronization of
production

Manufacturing
IoT

2023

2025

Human resource development (production engineer training, global human resources development)*1 PF design: Standardized design of major components for the purpose of cutting development periods and reducing procurement and production costs*2 Figures for R&D expenditures are classified by segment according to theme and therefore differ from figures stated in the consolidated financial report.

29

Fuji Electric Report 2023

Fuji Electric Report 2023

30

Financial and Capital Strategies
We will aim to further improve capital efficiency by investingin growth and strengthening the profit structure towards
sustainable enhancement of corporate value

Junichi Arai
Senior Managing Executive Officer
Corporate General Manager, Corporate Management Planning Headquarters

Creating a Financial Platform to Support our Growth Strategies
Fuji Electric has been working to enhance profitability andimprove its financial constitution towards achieving sustainablegrowth since it fell into an operating deficit due to the effectsof the global financial crisis. In fiscal 2010, we have clarified
our business domains as energy and environment, andpromoted a growth strategy of focusing our resources on
power electronics and power semiconductors. We recognizedthat the source of our profits is in manufacturing, and worked
to augment our manufacturing capabilities on a global leveland promote local production for local consumption. The
Company also continued the companywide Pro-7 activities,

which was launched in fiscal 2012, and improved profitability
substantially. In addition, we have been working to improvethe cash conversion cycle (CCC) in all businesses since fiscal
2021 in order to generate operating cash flows to support theexecution of growth investments.
As a result, our financial constitution improved significantly,
and in fiscal 2022, we achieved a record high operating profit
ratio of 8.8% with the net debt-equity ratio and equity ratio
also reaching record highs. Fuji Electric has been issued an
R&I rating of A since fiscal 2021.

217.4
189.4

1.4

Equity Ratio (%)

42%

124.9
37%

0.8

44%

117.0

Net interest-bearing debt
(Billions of yen)

99.1

27%

25%
19%

0.4
0.2

0.2

FY2010Results

FY2012
Results

FY2015Results

FY2018Results

FY2021Results

FY2022
Results

R&I

BBB+

BBB+

BBB+

A-

A

A

JCR

BBB+

BBB+

A-

A

A

A

Changes in Annual Dividends (yen)
115
100
85

80

FY2019Results

FY2020Results

FY2021Results

FY2022
Results

Dividend Payout Ratio (%)

40

29

24

27

Profit Attributable to
Owners of Parent(Billions of yen)

28.8

41.9

58.7

61.3

* Dividend figures reflect the stock consolidation conducted on October 1, 2018

Net Debt-Equity Ratio(times)Ratings

Starting in fiscal 2021, we introduced per-business ROIC
internally as a performance indicator to promote initiatives
to improve investment decisions in view of future profitability
and capital efficiency. By managing per-business ROIC, we
are strengthening our control over our balance sheets andcash flows, making sure, for example, whether the profit andinvested capital are well-balanced for each business.
In the power semiconductors business, where growth isexpected, we are taking measures to minimize investment
and maximize profits. For example, in Malaysia, we converted
the manufacturing facility for magnetic disks into productionlines for 8-in silicon Si power semiconductor. In the Food andBeverage Distribution Business, we are working to improve

profitability by restructuring measures such as integratingproduction bases and relocating personnel, thereby
improving ROIC.
Also, to improve the cash conversion cycle (CCC), we arestrengthening collection of accounts receivable-trade, andreducing inventories by, for example, utilizing the factory
dashboard to visualize inventory assets. At the same time,
we will work to increase profit by reducing non-operating
expenses and extraordinary losses, strengthen our cashgenerating capabilities, and continue to accelerate growthinvestments that will lead to improving profitability. We will aim
to improve capital efficiency while raising the equity ratio.

Financial andCapital Strategies

1.1

We determine the amount of dividends of surplus in light ofthe medium- to long-term business cycle, and aim to pay
stable and continuous dividends by giving comprehensive
consideration of the consolidated business results of therelevant fiscal year, research and development and plantand equipment investment plans for future growth, andbusiness conditions. We will maximize profits by prioritizing
growth investments that will lead to sustainable enhancementof profitability, and will focus on stable and continuous
dividends for shareholder returns and aim for a dividend
payout ratio of 30% as targeted in the FY2023 Medium-Term
Management Plan.
Based on this policy, the annual dividends for fiscal 2022
were declared at ¥115 per share, up ¥15 from fiscal 2021.
We have continued to increase dividends since fiscal 2010,
steadily increasing the amount of dividends.

For Further Improvement of Capital Efficiency

Changes in Net Interest-Bearing Debt, Net Debt-Equity Ratio, Equity Ratio, and Ratings
225.1

Stable and continuous dividends forshareholder returns

Changes in Invested Capital (Equity + Net Interest-Bearing Debt), Profit Attributable to Owners of Parent, ROIC, and ROE

Allocation of Cash Flows with Priority on Balance Around Growth Investment toMaximize Profits
Steadily invest in growth towards sustainableimprovement of corporate value
While our financial constitution improved substantially, we plan
to invest in growth in order to further enhance corporate value,
mainly in the focus areas of power electronics and power
semiconductor businesses, a cumulative total of approximately¥520 billion during fiscal 2019 to fiscal 2023.
Capital for growth investment will be secured by utilizing
funds acquired by improved profitability and by disposing of
our cross-shareholdings, which we are pursuing as measures
to improve governance. We will continue to invest in growth in
the focus areas while taking financial balance into account.

31

Fuji Electric Report 2023

Cash Flow Allocation (Cumulative Plan for FY2019-2023)(Billions of yen)

589.9

557.9

519.2

117.0
140.9

153.6
13%

12%

Operatingcash flows(excluding R&D)
Approx. 550

Incoming cash

10%

Loan repayment, etc.
Shareholder returns
Approx. 69

Growthinvestments
Approx. 520• Plant and equipment
investments
Approx. 330• R&D
Approx. 175• M&A, etc.
Approx. 15

Net interest-bearing debt
(Billions of yen)

77.9

99.1

11%
Disposal of stocks
Approx. 100

Invested capital(Billions of yen)

629.1

616.2

8%
6%
365.6

8%

ROE

10%

ROIC
Equity(Billions of yen)

551.2

517.1
472.9

417.0
58.7

41.9

28.8
FY2019Results

10%12%

FY2020Results

FY2021Results

61.3
FY2022
Results

62.5

Proﬁt Attributable to
Owners of Parent(Billions of yen)

FY2023
Management Plan
(Target)* ROIC = Profit Attributable to Owners of Parent ÷ Average Invested Capital at Beginning and End of Fiscal Year

Outgoing cash

Fuji Electric Report 2023

32

Overview of Segments

Priority Measures

Power Electronics Energy
We will work to expand our business by promoting
the development of competitive products, enhancing
engineering services, and strengthening carbon neutralityrelated proposals.

Masashi Kawano
Managing Executive Officer
Corporate General Manager, Power Electronics Energy Business Group

Basic Information

Ratios of net sales
by subsegment

Net sales in FY2022

264.1 billion yen

ED&C
components

Business
Areas

Energy management

Power distribution andcontrol equipment

Substation equipment,
Energy management systems• Contribution to stable supply of energy through provisionof substation facilities and equipment in compliance withenvironmental regulations• Realization of optimal energy demand and supply control atcustomers’ facilities using energy management systems• Contribution to stable operation of equipment by offering
comprehensive electrical equipment

Expanding and enhancing carbon neutralityrelated businesses
In the carbon neutrality business, for which we expect tosee market growth over the medium to long term, we areseeing increase in inquiries for the introduction of grid storage
batteries to maintain energy supply and demand balance,
and introduction of renewable energy by consumers for selfconsumption. We will strengthen our activities to win orders
in the new markets by combining the know-hows gained
through our own carbon neutrality initiatives with our coreproducts such as energy management systems and powerstabilization systems.

Launch of new global products in the substation
business* Ratios for net sales are calculated based on amounts before elimination and adjustment ofinter-segment transactions.

In the substation business, we plan to increase sales mainly
in overseas markets through new development and market
launch of differentiated products.
For data centers and chemical plants where disasterprevention and environmental regulations are required, we
will launch new products such as natural ester filled global
transformers, and gas insulated switchgear (GIS) that is
downsized substation equipment designed to minimize thegeneration of greenhouse gases.

Market Trends and Business Opportunities

Expanding comprehensive electrical equipment
business for data centers

Ratio of segment’s
net sales

21%
39%

25%

40%

Power supply andfacility systems
Uninterruptible power supply
systems (UPS),
Switchgear and controlgear

SuppliedtoPower companies, Material plants (steel, chemical, etc.),
Data centers, Semiconductor factories, Machine manufacturers

Strengths• Package proposals from a wide range of products and systems
to maintenance services, contributing to stable power supply
and power optimization• Extensive delivery record and engineering experience in stable
power supply and power optimization• Energy-saving expertise developed at Fuji Electric’s factories inJapan and overseas

In an aim to achieve a decarbonized society, demands related to stable supply and optimization of energy are expanding rapidly ona global scale.
Market Trends and Business Opportunities

Energy management

Due to continuing increase in demand to replace aging equipment in the substation business, and also backed by thegovernment’s next-generation energy policy subsidy programs, there is an expanding demand for carbon neutrality-related
equipment, including power conditioning systems for solar and wind power generation and storage systems.

Power supply andfacility systems

We see continued expansion in capital investments by data center (IDC) operators driven by digitalization and the useof 5G. In addition, with expanding investments in new installations and expansions of factories in the cutting-edge
semiconductor field, demand for comprehensive electrical equipment business is increasing on an ongoing basis.

29%

31%

34%

275.0

264.1
231.0
107.5
97.0

9.2%

21.2

-10.5
Net Sales

10.2%

59.2

26.9

-11.8
OperatingproﬁtFY2021 Results

Net Sales

66.2

27.0

-10.3
OperatingproﬁtFY2022 Results

Energy management
Power supply and facility systems
Consolidation adjustments
Operating proﬁt ratio

9.8%
117.4

109.2

83.2
61.3

101.7

Net Sales

OperatingproﬁtFY2023 Management Plan

ED&C components

In fiscal 2022, operating profit ratio rose to 10.2% thanks toexpanded demand for power supply and facility systems fromprojects for data centers and semiconductor manufacturers
in both Japan and overseas, increased demand for ED&C
components from machine manufacturers mainly in Japan,
and benefits of business restructuring including fixed cost
reductions to date.
In fiscal 2023, despite the anticipated decrease indemand for ED&C components, we forecast net sales of¥275.0 billion, up ¥10.9 billion year on year, and operating
profit of ¥27.0 billion remaining at the same level as theprevious fiscal year, with an operating profit ratio of 9.8%,
driven by continued expansion of the comprehensive
electrical equipment business.

Comprehensive Electrical Equipment Business[Business Overview]
Stable supply of energy
Package proposals from system design to installation and maintenance services

Substationequipment

Transformers

UPSs

GIS

Grid Storage Batteries

Power company electricity
distribution networks

In-house power
generation equipment

kWh
Power
wholesalemarketSelf-consignment
systemUsersin otherlocations

Demand prediction
Output prediction
Plan submission

Supplydemand
adjustment
marketkWh

Optimal operation system

Business Performance Trends (Billions of yen)
Ratios of sales
outside Japan

Renewable energy use

Renewableenergyfacilities
owned byusers

Fiscal 2022 Results and Fiscal 2023 Plan

As for our magnetic switches, our core product, we willoffer new products that will address such market needs asincreased compactness, reliability, and increased ease of
wiring, as well as contribute to carbon neutrality through efforts
including energy saving and the use of renewable materials.
Furthermore, we will strengthen our activities focused on
encouraging customers to use Fuji Electric’s specifications forsemiconductor manufacturing equipment, machine tools, anddata centers.

Outline of Carbon Neutrality-Related Business Negotiations

While we anticipate decrease in production and demand of machine manufacturers and sluggish demand due to slowdownof the Chinese market, we expect the market to continue making a mild recovery driven by recovering investment inelectrified vehicles (EVs) and demand for 5G.

ED&C components

Launching of new ED&C components products

Overview of
Segments

Subsegments

Our comprehensive electrical equipment business is receiving
high praise for contribution in shortening the customer’s
construction period and reducing equipment management
personnel. Based on our track record in Japan, we aredeveloping one-stop consultation venues and cultivating local

service personnel overseas, and strengthening our service
system to respond to the increased sales volume for data
centers and semiconductor factories, thereby expanding ourbusiness mainly in South Korea and Southeast Asia.
The data center market is in need for greater capacity.
Our 7500WX Series large-capacity UPS combines one of theindustry’s smallest footprints and highest power conversion
efficiency rating, allowing highly efficient energy saving within
the limited server installation space. In fiscal 2023, we will
release a new, increased capacity line of 2400 kVA to meetthe needs for larger capacity.

Supplied toLarge-scale
electricity storage
systemOrganization for Cross-regional Coordination ofTransmission Operators• Rising adoption of self-use solar powersystems by users with aim of achievingcarbon neutrality

Market outlook
Continuously expanding market
Approx.
1.2x• Widespread introduction of renewable energy
generation systems driving introductionof grid storage batteries for maintaining
supply-demand balance• Rapid growth stimulated by subsidy programsMarket outlook
Continuously expanding market
Approx.
3.5x

FY2023

FY2030

FY2022

Data centers

Equipment construction
and services

Semiconductor factories

Trends in Sales for IDC & Semiconductor factories
212

Semiconductors
IDCs overseas
IDCs in Japan

191
165
124

125

FY2019Results

FY2020Results

100

Approx.
1.4x
FY2018Results

FY2022

Monitoring systems

FY2023

FY2030

FY2021Results

FY2022
Results

FY2023
Management Plan

* Growth rates are calculated based on figures in FY2018 as 100* Market outlook based on our forecast

33

Fuji Electric Report 2023

Fuji Electric Report 2023

34

Overview of Segments

Power Electronics Industry
We will strengthen our business constitution by promoting
local design, local production, and local consumption, andwork to expand our overseas businesses by launching new
global products and furthering collaboration.

Hiroshi Tetsutani
Managing Executive Officer
Corporate General Manager, Power Electronics Industry Business Group

Basic Information

Ratios of net sales
by subsegment

Net sales in FY2022

353.4 billion yen
Ratio of segment’s
net sales

33%

Inverters, Motors, Small
capacity power supplies,
Measuring instruments,
Sensors, FA components,
FA systems, Drive control,
Measuring andcontrol systems,
Induction furnaces

IT solutions
ICT-related equipment
and software

19%
Equipment
construction
Electrical equipment
construction,
Air conditioning
equipment construction

Business

Automation systems Areas

51%

20%

SuppliedtoSocial solutions
Drive systems and door
Strengths
systems for railcars,
Systems for ships and ports,
Radiation equipment
and systems

10%* Ratios for net sales are calculated based on amounts before elimination and adjustment ofinter-segment transactions.

• Realization of improved productivity and energy savings throughfactory automation and visualization by combining measuring
instruments and IoT with power electronics application products• Contribution to stable operation of equipment through preventive
maintenance and optimal maintenance operations• Contribution to the safety and security of social infrastructure
through provision of highly reliable products, also in the railway
and ship businesses
Air conditioning and water treatment facilities, Machine manufacturers, Power companies, Material plants (steel, chemical,etc.), Railway companies, Shipbuilding companies, Publicagencies and local government• Early development of power electronics equipped with power
semiconductors• Extensive product lineup tailored to customer applications• Engineering capabilities built up over a substantial delivery
track record

Market Trends and Business Opportunities
In an aim to achieve a decarbonized society, we expect that efforts such as automation and digital transformation (DX) will
accelerate globally, and demands for energy saving and productivity improvement will continue to expand.
Subsegments

Market Trends and Business Opportunities
Energy saving and automation-related demand is expected to remain strong, and it is predicted that Japanese market
conditions will generally upturn and overseas market conditions will see signs of recovery, except for China.

Social solutions

As countries move toward electrification of ships and decarbonization at ports, the market for environmentally friendly
products is growing.

Equipment construction

We anticipate gradual growth in capital investments and public investments.

IT solutions

Digital demand, such as DX and green transformation (GX) is expected to increase in academic, private, and public
sectors.

81.4

71.5

61.1

75.0

73.3

70.7
7.3%

37.9

7.0%

192.1

179.7

OperatingproﬁtFY2021 Results

Net Sales

Fuji Electric Report 2023

29.5
-23.1

OperatingproﬁtFY2022 Results

Social solutions
Automation systems
Equipment construction
Consolidation adjustments
Operating proﬁt ratio

35

7.8%

205.2

-21.3

-28.4

39.5

24.9

23.8

Net Sales

378.0

353.4

324.1

41.1

21%

Net Sales

OperatingproﬁtFY2023 Management Plan

In fiscal 2022, demand, mainly for automation systems andIT solutions grew, leading to increase in sales and profit.
Operating profit ratio fell slightly due to impacts of soaring
material prices and material procurement difficulties mostly inthe automation systems business.
In fiscal 2023, we forecast net sales of ¥378.0 billion,up ¥24.6 billion year on year, and operating profit of ¥29.5
billion, up ¥4.6 billion, with an operating profit ratio of 7.8%,
driven by such factors as high level of order backlog in theautomation systems business and increase in demand, also
in the IT solutions business.

China and the rest of Asia

90%

India

40%

Europe40%

65%

Americas

0%

45%

90%

 xpanding overseas businesses byE
promoting collaboration and global products
In the factory automation business, we will work to increase
sales by engaging in negotiations in China for systems
combining low-voltage inverters, controllers (PLCs), andprogrammable operator interfaces (HMIs) for equipment
to manufacture lithium-ion batteries and semiconductors,
and expanding our sales channels through collaborations in
Europe, the Americas, and India.

Already inmarketTo enter in newmarkets

To expand business domain

Satellite communications

Ship IoT

Fuji Electric’s
cloud serverSOx
scrubbers*

Water level gauge

21%

Differentiated Products for Ships and Ports

FY2026 Targets

Gas analysis

21%

FY2023 Plans

Fuji Electric has the technologies and know-how to provide
comprehensive solutions, from the creation, distribution, andstorage of energy at ports, and electrification of and supplyof electricity for cranes and ships, toward promotion ofcarbon neutrality in the ship and port business. In the current
fiscal year, we will expand the ship and port business byfocusing our efforts in the development of electric propulsion
systems for ships, ship IoT systems, which will allow
automatic data collection and predictive anomaly detectionof equipment, and onshore power supply systems. In the
future, we are also planning to enter into new fields such ascollection systems for CO2 and ammonia.

Water quality meter

Ratios of sales
outside Japan

Rates of Local Production & Local Consumption of
Low-Voltage Inverters by Region

Launch of differentiated products forships and ports

Pressure

Business Performance Trends (Billions of yen)

Enhancing profitability of component products
To enhance profitability and strengthen competitiveness of
our component products, we are strengthening our systemof “local design, local production, and local consumption”
for components at the global level. While we have been
expanding production models, mainly of low-voltage inverters
in India and Europe, in fiscal 2023, we will establish production
systems in the Americas, and increase the rates of local
production and local consumption through a global structureencompassing six areas of the world (Japan, China, Southeast
Asia, India, Europe, and the Americas) toward fiscal 2026.
By applying the platforms to standardize the main
components of our products, we will work towards improving
profitability by increasing productivity, reducing procurement
and production costs, and reducing material inventories.
As for low-voltage inverters, our core component products,
we will be developing new compact models in addition to
the high functionality standard model platforms to increase
the application rates, and to establish a strong businessconstitution by producing these products globally.

In the process automation business, we will cultivate
the local staff and further strengthen our service system toempower the local teams to take lead in expanding the salesof global products, including global induction furnaces andcontrol systems. We will work to expand our business withhigh value-added products such as soft sensors that enableestimation of data related to product quality at semiconductor
factories and other facilities.

Temperature

Fiscal 2022 Results and Fiscal 2023 Plan

Strengthening the automation systems businessconstitution and expanding overseas operations

Overview of
Segments

Automation systems(Factory automation/
process automation)

Priority Measures• Visualization of
measurement data andalarm information• Predictive anomaly
detection of equipmentusing IoT

CO2 collection
systems

Ammoniacollection
systems

Global Products for Process Automation Business
Global induction furnaces

Control systems

Industrial inverters

Onshore power supply
systems

Electric propulsion
systems* Exhaust gas cleaning systems for ships

Launched in FY2020

Supplied to

Launched in FY2022

To be launched in FY2024

Material plants such as steel, chemicals, and cement

IT solutions

Fuji Electric Report 2023

36

Overview of Segments

Priority Measures

Semiconductors
In response to growing demand for power semiconductors
for electrified vehicles, we will continue to invest
aggressively and steadily increase production capacity to
expand sales and profit.

Toru Hosen
Senior Managing Executive Officer
Corporate General Manager, Semiconductors Business Group

Basic Information

Ratios of net sales
by subsegment

Net sales in FY2022

206.2 billion yen
Ratio of segment’s
net sales

Automobile

Industry

49%

51%

20%

* Ratios for net sales are calculated based on amounts before elimination and adjustment ofinter-segment transactions.

Business
Areas

In the industrial and automotive fields, we contribute todownsizing and energy saving of equipment and facilities with
our power semiconductors, which offer electricity conversion
with low loss and high efficiency.

Suppliedto[Industry]
Inverters, Machine tools, Air conditioners, Solar and wind power,
Electric railways[Automobile]
Motor drives for electrified vehicles (full hybrid vehicles, electricvehicles, etc.), Engine control, Brake control

Strengths[Power semiconductors]• High performance devices that greatly improve power
conversion efficiency• Packaging technologies that achieve high heat dissipation andhigh reliability• Product development capabilities of modules that contributeto increasing the efficiency, compactness, and reliability of
power electronics

Growing sales of power semiconductors inthe xEV market

Expanding sales of IGBT modules forrenewable energy applications

Power semiconductors contribute to reducing power loss
and improving driving distance, which are major issues for
xEVs, and as demand grows rapidly, there is a need for everhigher efficiency.
We are continuing to develop products to meet customers’
requirement specifications, including silicon (Si) RC-IGBT*
products, which we developed independently ahead of ourcompetitors, and silicon carbide (SiC) products, which cansignificantly reduce power loss compared to Si products.
By increasing the number of manufacturers and models
adopting our modules in Japan and abroad, we will work to
expand sales beyond the increase of xEV production.
We are also planning to expand our lineup of module
products, and promote the development of compact and thinpackage lineup for light and compact vehicles and new SiC
products for EVs.

We are expanding our product lineup of 7th-generation
IGBT modules, which feature high heat dissipation and highreliability, and increasing sales of products for the renewableenergy in the industrial field.
In the renewable energy field, there is an increasing
demand for higher voltage, higher output, higher efficiency
products that can contribute to downsizing, systemcost reduction, and longer life. We are developing the
8th-generation IGBT modules that offer an output of 10-20%
greater compared to the 7th-generation, as well as large
capacity modules equipped with next-generation SiC.
Going forward, we will continue to capture the strong
demand in these markets to boost sales.

* RC-IGBT integrates two types of semiconductors having different functions (IGBT andfreewheeling diode), laid out alternately in a linear arrangement on a single chip. This
chip structure allows significant reduction of power loss and miniaturization comparedwith conventional products in which two chips are placed separately.

In order to respond to strong demand for power
semiconductors, we anticipate that our cumulative plant andequipment investment for the five years up to fiscal 2023 will
increase from ¥120 billion in our initial plan to over ¥200 billion.
For the manufacturing process (front-end process) of power
semiconductor chips, we are accelerating investments toincrease the production capacity for 8-inch Si wafers andplan to increase production capacity in fiscal 2023 by about
2.8 times the level of fiscal 2019. For SiC products, we arepreparing for the full-scale launch of mass production of 6-inch
wafers in fiscal 2024, and also pursuing the development oftechnologies for mass production of 8-inch wafers.
We are also continuing investments for the assembly
process to increase the production capacity for automotive
and industrial products.

xEV*1 Production Trend & Fuji Electric’s IGBT Sales PlanxEV production
Fuji Electric’s IGBT sales

Market Trends and Business Opportunities

Plan to expand sales beyond
the increase of xEV production

Power semiconductors help save energy thanks to their high levels of conversion efficiency and power control. Demand for thesedevices is rising globally, driven by environmental action aimed at decarbonization and increasing investment in automation in the
manufacturing industry.
Subsegments

Automobile

Production of full hybrid and electric vehicles (EVs), which are Fuji Electric’s targets, is forecasted to grow at an averageannual rate of 44%* from fiscal 2021 to 2023, and the growth rate of sales from IGBTs for electrified vehicles (xEVs) is
expected to exceed that of production.

* Fuji Electric forecast based on research firm forecasts

151
100

236

153

100

Approx. 20%
increase

8-Inch Si Wafer Production Capacity(Front-End Process)
FY2020Results

FY2021Results

FY2022
Results

Overview of
Segments

Industry

305

1,222
229

Market Trends and Business Opportunities
Due to growing demand for energy saving and automation, demand for factory automation equipment, such as inverters
and machine tools, continues to grow, and demand for applications for renewable energy, including solar and wind, hasbeen expanding at an average annual growth rate of 19%* from fiscal 2021 to 2023.

296

Aggressive investments to increase production
capacity for Si and SiC

from FY2023

280

FY2023
Management Plan

236

*1 xEV: the total of full hybrid vehicles and electric vehicles (IGBT-equipped models)* Figures are indicated as indices based on FY2020 results as 100

160
100

124

Fiscal 2022 Results and Fiscal 2023 Plan
Business Performance Trends (Billions of yen)
Ratios of sales
outside Japan

54%

51%

47%

221.0

206.2
178.8
73.1

15.2%

OperatingproﬁtFY2021 Results
Industry

37

Automobile

Magnetic disks

Fuji Electric Report 2023

98.8
32.2

27.1
Net Sales

14.8%

106.0

105.7
6.4

122.2

100.2 15.6%

Net Sales

32.8

OperatingproﬁtFY2022 Results

Net Sales

OperatingproﬁtFY2023 Management Plan

Operating proﬁt ratio

In fiscal 2022, the business was impacted by our exit fromthe magnetic disk operation, cost increase to expand the
production capacity of power semiconductors, and soaring
material prices and energy prices. However, thanks to increasein demand for power semiconductors for electrified vehicles
and industry applications, as well as impacts of foreignexchange , we achieved net sales of ¥206.2 billion, up ¥27.4
billion year on year, operating profit of ¥32.2 billion, up ¥5.1
billion, and operating profit ratio of 15.6%, up 0.4%.
In fiscal 2023, despite the anticipated increase in fixed costs
and adverse foreign exchange impacts, we forecast net salesof ¥221.0 billion, up ¥14.8 billion year on year, and operating
profit of ¥32.8 billion, up ¥0.6 billion, with an operating profit
ratio of 14.8%, driven by increase in sales in the growing xEVs
market.

Plans to Expand Lineup of Power Semiconductor Modules for xEVs
FY2022

FY2023

FY2024Light
vehicles

FY2025

FY2026FY2027 and beyond

For full hybrid vehicles(including plug-in hybrid vehicles)

Expansion of lineup

New IGBT module productsCompact, thin series(under development)

FY2019Results

FY2020Results

FY2021Results

FY2022
Results

FY2025
FY2023
Plan
ManagementPlan* For production capacity (year-end comparison), FY2019 (benchmark year) is assigned
100 for comparison purposes.

6-inch SiC Wafer Production Capacity(Front-End Process)

50x
Approx. 35xCompact
vehiclesExisting IGBT module products

Approx. 4xLargevehiclesApprox. 7x

For EVs

New models

New SiC module
products (underdevelopment)

FY2022
Results

FY2023
Management
Plan

FY2024Plan

FY2025Plan

FY2026Plan* Figures are indicated as multiples of production capacity as of end of FY2022(comparison of capacity at end of each fiscal year)

Fuji Electric Report 2023

38

Overview of Segments

Priority Measures

Power Generation
We will expand our renewable energy,
after-sales, and nuclear power-related businesses,
and increase profitability.

Tadao Horie
Executive Officer
Corporate General Manager, Power Generation Business Group

Basic Information

Composition of
net sales

Net sales in FY2022

87.3 billion yen

RenewableenergyAfter-sales

Ratio of segment’s
net sales

Thermal(including
biomass)

New facilities

8%

Geothermal

Hydro
Nuclearpower

Solar,
wind, etc.

Carbon-free
sectorBusinessAreas

We contribute to the realization of a decarbonized society byproviding a full array of solutions from design and production to
on-site installation, commissioning, and after-sales services forvarious power generation equipment.

SuppliedtoPower generation companies, power companies, municipalities

Strengths• Engineering capabilities across the whole plant• In geothermal power, extensive delivery track record boastingworld’s top market share, and one-stop proposal capabilities
compatible with various heat sources• In hydro power, turbine design and manufacturing technologythat enables efficient power generation, and eco-friendly
differentiated products• In solar and wind power, power storage control technologies
and economic efficiency* Ratios for net sales are calculated based on amounts before elimination and adjustment ofinter-segment transactions.

Market Trends and Business Opportunities
As an initiative to resolve climate change issues, decarbonization is accelerating in the energy markets, and business opportunities
in the renewable energy and nuclear power-related field are increasing.
Market Trends and Business Opportunities

Geothermal power

As investigation and development of new heat sources are in progress on a global level, low-capacity projects, in particular,
are starting to materialize in Japan.

Hydro power

As demand for replacing aged power generation facilities and increasing output continues, pumped-storage hydropower
generation is seen in a new light for its marginal supply capability, regulating power, and absorbability of renewable energy,
and we expect to see demand to upgrade existing power plants for effective utilization.

Solar power andwind power

As part of the initiatives towards carbon neutrality, more companies are replacing the energy they consume in theirbusiness activities with renewable energy, and demand for self-consumption power generation equipment is expanding.

Nuclear powerrelated field

The “Basic Policy for the Realization of Green Transformation (GX),” which was confirmed by the Japanese Cabinet inFebruary 2023, advocates the utilization of nuclear power as a decarbonized power source. This policy will contribute toimproving the energy self-sufficiency rate, and we are expecting increasing demand for decommissioning of facilities as wellas waste treatment from the restart of power stations.

After-sales

There is a rising need for increased reliability of equipment in light of the tight electricity supply-demand balance in Japan,
and expected demand for renewal and upgrade of geothermal power generation equipment overseas.

Ratios of sales
outside Japan

18%

26%

21%

87.3

78.6

83.0

5.1%
4.1%

4.0%

Net Sales

OperatingproﬁtFY2021 Results
Operating proﬁt ratio

39

Fuji Electric Report 2023

4.2

3.6

3.1
Net Sales

OperatingproﬁtFY2022 Results

Net Sales

OperatingproﬁtFY2023 Management Plan

Geothermal power
By handling both the flash method, which is suitable forhigh-temperature heat sources, and binary method, which
can generate power from low-temperature heat sources,
we are maintaining top market share globally with ourstrength of one-stop proposal capabilities in responding todiverse customer needs. Going forward, we will enhance
our activities to win orders in and outside Japan including
the Pacific-rim and Africa, where energy development is inprogress. For ongoing projects, we will maximize profit byestablishing the optimum supply chain for each region andstrictly managing cost fluctuation and other risks.
Hydro power
In addition to responding to S&B* demand of existing power
plants in Japan, we will address the need for modernizationof pumped-storage hydropower generation and contribute to
making the sector a main power source of renewable energy.
With the strong demand for hydro power generation, ourorder backlog has grown around 3.4 times over the last five
years. We will work to establish systems to ensure steady
performance of projects.
* S&B (Scrap and Build): Achieving efficiency by scrapping or eliminating obsolete andinefficient facilities and replacing them with new ones

Solar and wind power
In Japan, more companies and municipalities are
implementing self-consumption power generationequipment and constructing regional microgrids. We will
work to increase successful orders by making optimal
proposals based on customer needs, by combining ourstrengths including power stabilization technology utilizing
storage batteries, and know-how on cooperative operation
with existing power generation equipment that we haveaccumulated at our factories.

Deliveries of Geothermal Power Generation Equipment(As of Sep. 2022)

Fiscal 2022 Results and Fiscal 2023 Plan
Business Performance Trends (Billions of yen)

Expanding orders for renewable energy

In fiscal 2022, we achieved increase in sales and profit
thanks to large-scale geothermal power generation projects,
and achieved net sales of ¥87.3 billion, up ¥8.8 billion year
on year, operating profit of ¥3.6 billion, up ¥0.4 billion, andoperating profit ratio of 4.1%, up 0.1%.
In fiscal 2023, despite decrease in profit year on year due
to decrease in large-scale projects in the previous fiscal
year, we expect to achieve increase in sales by streamlining
our operations and due to differences between projects,
forecasting net sales of ¥83.0 billion, down ¥4.3 billion year
on year, and operating profit of ¥4.2 billion, up ¥0.6 billion,
with an operating profit ratio of 5.1%.

Expanding our nuclear power-related
equipment business
By leveraging the extensive experience we have accumulated
since the construction of Japan’s first nuclear power plant,
and our three core technologies of remote handling of nuclear
fuel and waste, radioactive waste treatment, and nuclear
reactor engineering, we will work to increase successful
orders, including fuel extraction and other decommissioningat Monju, as well as radioactive waste treatment upon
restart of power stations. We will also work aggressively withpartners on innovative next-generation reactor projects toenhance the safety of nuclear power generation.

Expanding our after-sales business
In Japan, we will further expand orders through solutions tominimize risks upon stopping of existing thermal power plants,
and contribute to improving output adjustment capability whencombining thermal power with renewable energy. Overseas,
we will strengthen our proposals for maintenance, upgrades
and output capacity increase based on our strong delivery
track record of geothermal power generation equipment.

Growth of Percentage of Sales of Carbon-Free Sector andAfter-Sales Services
Ratio of Sales of Carbon-Emitting andCarbon-Free Sectors

CarbonEmitting

44%

Ratio of Sales of After-Sales and
New Facilities

24%

27%

New
facilities

CarbonFree

Aftersales

FY2022
Results

56%

49%

76%

73%
56%

FY2019Results

69%

Overview of
Segments

Products

In response to the accelerating tide of decarbonization, we are focusing on renewable energy, carbon-free sector of nuclear
power, and maintenance and upgrade of existing power generation equipment, and promoting the expansion of the after-sales
business to deliver increased efficiency.

FY2023
Management
Plan

31%
FY2019Results

44%

51%

FY2022
Results

FY2023
Management
Plan* Carbon-emitting: thermal (including biomass)

Hydro Power Order Backlog

Approx. 3.4x
Approx. 3.1x

Europe& Africa
11

Americas
26
Japan
10
Asia
Oceania39
FY2018Results

FY2022
Results

FY2023
Management Plan

Ikusaka Hydro Power Plant(Photograph provided by TEPCO
Renewable Power, Incorporated)* Figures are indicated as multiples of orderbacklog as of FY2018

Fuji Electric Report 2023

40

Overview of Segments

Priority Measures

Food and Beverage Distribution
We will enhance profitability by introducing high-valueadded products to the market and promoting cost reduction
and streamlining in order to explore new areas.

Keiichi Asano
Executive Officer
Corporate General Manager, Food and Beverage Distribution Business Group

Basic Information

Ratios of net sales
by subsegment

Net sales in FY2022

95.3 billion yen

Vending machines

Business
Areas

We provide low labor, energy saving vending machines, andshowcases and store systems that contribute to the safe andsecure distribution of ingredients

Supplied

Beverage manufacturers, Restaurant chains,
Convenience stores, Supermarkets, POS manufacturers

Beverage vending machines, toVending machines for foodStrengths
and other goods

Ratio of segment’s
net sales
9%

51%

49%

• Top market share of beverage vending machines in Japan,
China, and Southeast Asia (our estimate)• Extensive lineup of store fixtures and equipment• Energy-saving technologies centered on airflow control andheating/cooling, waterproofing, mechatronics technology

Store
distribution
Store facilities and equipment,
Automatic change dispensers* Ratios for net sales are calculated based on amounts before elimination and adjustment ofinter-segment transactions.

Market Trends and Business Opportunities
As the COVID-19 situation is improving, the food and beverage distribution market continues to recover and we anticipate themarket conditions to be almost the same level as the previous fiscal year. New business opportunities are arising as needs arediversifying to include energy saving, labor saving, and contract-free, non-face-to-face interactions.
Market Trends and Business Opportunities

Vending machines

In Japan, we expect investments for vending machines to be at the same level as the previous year as there is a continuing
demand for IoT services to achieve energy saving and streamlining of operations, and growing needs of customers newly
adopting vending machines resulted from growing sales demand for frozen and other foods.
Overseas, market conditions are recovering with increasing replacement demand in China and diversification of customer
needs for energy saving and eco-friendliness.
Along with an increase in demand for store renovations to meet energy-saving requirements, particularly in convenience
stores, needs are diversifying to include labor saving, food loss reduction, contact-free, non-face-to-face interactions, andsatellite locations.

Store distribution

In the vending machine business in Japan, we will offer
high-value-added vending machines that meet such needs
as energy saving and digital transformation (DX) and enhancethe value we provide to our customers.
For beverage manufacturers, we will offer DX-related
products including sustainable vending machines, which
reduce energy consumption by maximum 20% comparedto our conventional models (85% reduction from 2001), a
dynamic pricing function, which offers the flexibility to change
the price of products depending on demand trends, andvending machine IoT services for beverage manufacturers
and vending machine operators to improve the efficiency of
product replenishment operations.
For customers who are considering new adoption ofvending machines to respond to needs such as contact-free,
non-face-to-face, and 24-hour sales, we will launch upgradedfrozen food vending machines as fiscal 2023 models.
To enhance profitability, in addition to passing on increasedmaterial prices, we will implement a pricing strategy for highvalue-added products. We will also reduce costs by creating
platforms, as well as promote service reform, operational
streamlining, and other rationalization.
For overseas markets, we will promote a selective and

6%

90.8

4%

4%

95.3

96.0

48.7

49.5

49.3
5.2 %

4.6 %
3.3%

41.3

Net Sales

46.5
3.0
OperatingproﬁtFY2021 Results
Vending machines

41

Store distribution

Fuji Electric Report 2023

Net Sales

4.4
OperatingproﬁtFY2022 Results
Operating proﬁt ratio

46.7

Net Sales

5.0

OperatingproﬁtFY2023 Management Plan

In the store distribution business, we will continue to propose
total solutions to meet needs such as energy saving andlabor saving.
For convenience stores, we will offer differentiated functions
and launch high-value-added products, including eco-friendly
showcases, store IoT services, and new counter fixtures.
We are also introducing new coffee machine models forrestaurant chains to expand sales.

Enhancing business constitution throughreorganization of the manufacturing system
We have reorganized our manufacturing system to better
match the business scale, and consolidated the bases
into two global locations in Japan and in China (Dalian).
We will continue to pursue total cost reductions including
cost reduction, improvement of operational efficiency, andimprovement of productivity, in order to further enhance ourbusiness constitution.

Deploy products that meet the needs based oncore technologies

Deploy high-value-added machines

Vending machines

Stores(IoT services)(Restaurants)

High-value-added vending
machines (sustainable series)

Eco-friendly showcases

IoT services(vending machines)

Coffee for restaurants• Ultralow energy
consumption• Two-way
communications• Cashless payments

Temperature-controlled
IT lockers

DFB*
1st Factory

Consolidation(2022)DFB*(Dalian, China)

Sales data
accumulation

Japanese
subsidiary
Integration (2021)

Online payment
Operation
optimization

Mie Factory• Improved efficiency• Dynamic pricing

Counter fixtures

Frozen food vending machines,
goods vending machines

In fiscal 2022, despite deterioration in profit as a result of
allocating allowance for doubtful accounts for our Chinese
subsidiary, we achieved increase in sales and profit thanks tofactors including increase in investment in vending machines
mainly by Japanese beverage manufacturers, more highvalue-added products, and promotion of cost reduction in
the vending machine and store distribution businesses.
In fiscal 2023, we forecast net sales of ¥96.0 billion, up¥0.7 billion year on year, and operating profit of ¥5.0 billion
year, up ¥0.6 billion, with an operating profit ratio of 5.2%,
driven mainly by further deployment and expansion of highvalue-added products in both vending machine and store
distribution businesses.

Reorganization of Manufacturing System> Two bases)(Five bases globally —New fields

Existing fields

Fiscal 2022 Results and Fiscal 2023 Plan
Ratios of sales
outside Japan

Proposing solutions that meet diversifying needs

Deployment of High-Value-Added Products and Development of New Areas

Energy-saving beveragevending machines (overseas)

Business Performance Trends (Billions of yen)focused sales strategy for customers with strong purchasing
power. We will offer differentiated products that meet theneeds, for example, beverage vending machines with energy
saving functions in China, and food vending machines withconveyance functions in Asia.

Overview of
Segments

Subsegments

Deploying high-value-added products andpromoting price strategy in the vending
machine business

IoT services(stores)
Change dispensers

Exports to Southeast
Asian markets
Transferenceof functions(Japan)Overseassubsidiary
Liquidation (2022)

Needs
Energy-saving
Improved efficiency
Two way communication
Contact-free

Needs

Needs

Needs

Energy-saving
Labor-saving
Decarbonization

Improved efficiency
Sales increase
Predictive maintenanceLabor-saving
Low food loss
Energy-saving* DFB: Dalian Fuji Bingshan Vending Machine Co., Ltd.

Core technologies

Airflow
controlHeating/cooling

Structure(durable,waterproof)

Mechatronics(conveyance)

Systems

Fuji Electric Report 2023

42

New Product Net Sales

Research and Development
Basic Policies
We are engaging in R&D initiatives based on the following policies aimed at the creation of new social value using energy andenvironmental technologies.
• Acceleration of technology development for the solution of social
issues such as carbon neutrality and others, and for the creation ofcustomer value through digital transformation• Strengthening the search for research themes and the formulation of
product plans in order to respond to major changes in the external
environment, such as markets and technologies• Creation of competitive advantages through new combinations oftechnologies• Strengthening of research into advanced technologies leading to thenext new products anticipating trends in 2030 and beyond• Promotion of intellectual property portfolio formation and international
standardization activities meeting the requirements of the
globalization of business and new technologies and new products

R&D Expenditures
businesses, and to increase the amount of investment in foodand beverage distribution and power generation businesses
from the previous fiscal year.
(Billions of yen)

2.2
1.5

36.2

37.4

4.0

3.9

2.3
1.7

12.9

Ratio of PowerElectronics &Semiconductor

12.4

Ratio of PowerElectronics &Semiconductor

9.5

9.7

78%

6.5
FY2022
Results

FY2023
Management Plan

Power Electronics Energy
Power Electronics Industry
Semiconductors
Food and Beverage Distribution
Shared by all businesses* New products: Within five years after market launchPower Generation

CustomervaluePower Generation

Clean energy

Power Electronics
Stable energy
supplyEnergy saving

Semiconductors

Food and Beverage
Distribution

Fuji Electric’s Core Technologies

Automation

Mobility electrification

Fuji Electric’s core technologies
Power semiconductors

Power electronics

Measurement andcontrol technology

Heating andcooling technology

Advanced and common fundamental technologies underpinning core technologies
AnalogMaterials andAnalysis

Circuits andSignalprocessing

Breaking andInsulating

DigitalPower
conversion
and EMC*1

AI andMachinelearning

Grid control

Simulation
and CAE*2

Information
systemsetc.

*1 EMC: Electromagnetic Compatibility

43

Fuji Electric Report 2023

*2 CAE: Computer Aided Engineering

Others
Semiconductors
Powerelectronics

Semiconductors

Approx.
53％

Powerelectronics

FY2018Results

Semiconductors

Approx.
70％

FY2022
Results

Powerelectronics

Approx.
75％

FY2023
Management Plan

TOPICS

themes centered on issues related to green transformation(GX), such as hydrogen generation and utilization technology,
CO2 separation and recovery technology, or next-generation
waste heat recovery and applied technology to contribute tocarbon neutrality.
Moreover, we ascertain and analyze future concepts ofcustomers and collaborating partners and closely monitor
the trends of cutting-edge technologies to imagine the social
issues from 2030 onwards and determine the development
themes we should tackle.

Medium- to long-term
development themes

Future concepts ofcustomers andcollaborating partners

CO2 separation and recovery technology
Hydrogen generation and utilization technology
Distributed power management systems
and equipment
Environmentally friendly substation equipment
Smart factories
Next-generation waste heat recovery andapplied technology

Backcast

Social issues of the future2030 to 2050

Power electronics equipment forelectriﬁed vehicles

Cutting-edge
technologies ofthe future

SiC devices for electriﬁed vehicles
Next-generation wide-band gap devices
Total management at stores
etc.

Aiming to upgrade electricity supply and demand predictions, a social
collaboration research department has been opened in the University of TokyoIn April 2023, Fuji Electric and the Collaborative Research
Organization for Comprehensive Energy Sciences at the
University of Tokyo opened “Realization of Electric Systems
Innovation,” a social collaboration research department withthe objective of joint research to contribute to expanded
adoption of renewable energy.
With electricity, it is necessary to constantly match theamount of power generation to the amount of consumption.
In order to expand the introduction of renewable energy suchas solar and wind power, adjustments to achieve equilibrium
between electricity supply and demand are essential.
In order to solve this issue, we will develop a technology
to predict the amount of renewable energy power generationand the market prices of renewable energy with highprecision using AI. This technology will be obtained by
combining the outstanding insights of the University of Tokyo
concerning electricity supply and demand predictions withthe experience in storage battery systems for the power

Research andDevelopment

Energy saving

Stable energy supply

Energy creation

cooling technology cultivated in our industry-leading vending
machines. These core technologies are supported by both
analog and digital advanced technologies and common
fundamental technologies, including power conversion and
EMC*1, and AI and machine learning.

Others* Expressed as a multiple based on the FY2018 new product net sales

For the sustained growth of Fuji Electric, we will match
market needs related to energy and the environment to thebusiness and technology mix of Fuji Electric, with the aim ofcreating new business opportunities and social value using
our products.
The New Products Development Office established in
FY2021 is the hub for initiatives to plan and promote newdevelopment themes based on analyses of market andcustomer trends from medium- to long-term perspectives.
In FY2022, we planned and promoted development

Automation

Fuji Electric has four core technologies, centered on power
semiconductors with the industry’s top-of-the-line power
conversion efficiency and power electronics to convert
and utilize electric power freely and without waste, as wellas measurement and control technology, which supports
industrial automation and energy saving, and heating andOthersMedium- to Long-Term R&D Initiatives

79%

6.9

Approx. 1.4x

Regarding the net sales of new products*, which are
positioned as the most important KPI for R&D, the FY2022
result grew by approximately 1.4 times compared to
FY2018. Power semiconductors for electrified vehicles
drove this growth in particular.
In FY2023, we will work to further expand sales of new
products, especially for power electronics, aiming for 1.7
times compared to FY2018.

Business and technology mix

As part of the growth strategy in the FY2023 Medium-Term
Management Plan, we have invested approximately 80%
of our R&D expenditure in our power electronics andsemiconductor businesses.
The FY2022 result was ¥36.2 billion, and we allocated
78% of that amount to the fields of power electronics andsemiconductors. In power electronics, we focused our effortson the development of global products including substationequipment and automation monitoring control systems andthe development of products for the mobility field including
electrified vehicles (xEVs) and ships. In semiconductors,
we expanded the series of RC-IGBT modules for xEVs andevolved silicon carbide (SiC) technologies.
Also in FY2023, we plan to continue priority development
investment in power electronics and semiconductor

Approx. 1.7x

system* and community energy management systems*
that Fuji Electric has been working on to date. Throughthe provision of Fuji Electric products that have applied theoutcomes of those predictions, we will aim for expanded
adoption of renewable energy.
* For details, refer to “Promotion of the Energy and Environment Businesses” on
P24 and P25

Facility energy
management
systemCommunity energy
management
systemVirtual power plant (VPP)

Fuji Electric Report 2023

44

Research and Development

Intellectual Property Strategy
Fuji Electric has positioned intellectual property as animportant management resource, and it will secure thecompetitive advantage of Fuji Electric through the strategicacquisition and utilization of intellectual property rights, most

(3) Portfolio management of intellectual property for strengthening our business platform
notably patent rights and design rights, and is strengthening
initiatives concerning the international standards withwhich compliance is required in the markets for each of our
products aiming for expanded global sales.

Initiatives concerning intellectual property rights
In order to maintain and strengthen our business competitiveness through intellectual property rights, the business division, the R&D
division, and the intellectual property division collaborate closely to take initiatives in three phases: searching for businesses andtechnologies, R&D, and strengthening our business platform.

Phase(1) Searching for businesses
and technologies(2) R&D(3) Strengthening
our business platform

Intellectual
property
activities• Searching for new businesses andpotential customers and partners• Searching for new development themes• Sharing of the competitive axes andapplication strategies• Invention proposals and acquisitionof rights• Intellectual property portfolio
management(1) Utilization of intellectual property information analyses for searching for businesses and technologies

Initiatives concerning international standards

When searching for new businesses and new technologies
focused on opportunities for major social transformations suchas carbon neutrality and digital transformation, we increase theeffectiveness of our measures by utilizing the IP landscape.*
By analyzing patents and research papers, we not only
produce corroboration and counterevidence with respect to
new technologies but also ascertain the future needs of ourcustomers in order to promote initiatives utilizing them in thedevelopment of competitive new products.
Furthermore, in the case that collaboration in businessexpansion of new domains becomes necessary, we analyze
the patents held by our company and the partner candidate
companies (see the figure on the right) in order to clarify
the development history and accumulation of each of thetechnologies and realize the extraction of partner candidates

Fuji Electric is strengthening its initiatives concerninginternational standards. Company-wide committees witheach Corporate General Manager as the committee members
decide the policies and strategies, we establish working
groups for each business field based on those policies andstrategies, and we systematically advance the acquisition ofcertification according to international standards for each of
our products.
Furthermore, we are promoting active involvement
in international standardization institutions such as theInternational Electrotechnical Commission (IEC) in orderto ensure that we can exercise leadership in rule-making
activities pertaining to energy creation, energy saving andthat will lead to win-win relationships.
* IP landscape: Analyzing information concerning intellectual property to ascertain
technology trends and the competitive environment

Partner extraction using patent technology comparisonsTechnology ﬁeld
Technology A
Technology B…
Technology ﬁelds in which
both parties are strong
Technology X
Technology Y

Technology ﬁelds in which the parties
can complement each other
Our company

Partner company
Number of patents held

TOPICS(2) Strengthening of intellectual property rights linked to R&D

TOPICSthe markets of the products subject to development withthe business, R&D, and intellectual property divisions, we
promote activities to build a patent network linked to R&D.

Building the patent networks of the large capacity uninterruptible power
supply systems (UPSs) for data centers

In the power electronics business, we are promoting a comprehensive
electrical equipment business, and UPSs, the core product, havebecome the differentiating element in the growing business for data
centers (IDCs) in particular.
With large capacity UPSs for IDCs, downsizing to increase the numberof installed servers and the shortening of downtime in order to enhance theavailability are the main competitive axes. The UPS7500WX Series employs“front maintenance” and “unit structure.” The level of difficulty of combining
these is high due to the need for internal cooling; therefore, many ideas,
or in other words intellectual property, are incorporated in order to achievethis. Through the Invention Discovery Meeting shared by the R&D divisionand the intellectual property division, we extract and systematicallyorganize everything from the design concept to the flow channel of thecooling air, component layout and wiring route which embody the designconcept, in order to quickly file patent applications without any omissions.

Fuji Electric Report 2023

UPS7500WX Series

Front maintenance
Save further space using themechanisms of top exhaust and front
maintenance, and other methods

Unit structure
Reduction of
man-hours forthe wiring andother aspects

Number of patents and utility models held
Japan
Overseas

8,000Japan:
Carefully
selected
Overseas:
Built up

6,000

4,000

2,000

0

2017

2018

2019

2020

2021

2022

(fiscal year)

other growth domains of Fuji Electric centered on the powerelectronics and power semiconductors fields. A Fuji Electric
employee is in the position of the Japanese representative
member of the Conformity Assessment Board (CAB), a
top-ranked committee in the IEC, and is contributing toenhancement of the effectiveness of the certification systemof the IEC.
In FY2022, we newly established the Global Business
Strategy Office, which leads standard certification andrule-making activities, and we are accelerating initiatives forbusiness expansion concerning carbon neutrality and DX in
the power electronics business.

Acquisition of security certification in the development lifecycle

The Tokyo Factory and the Suzuka Factory, the flagship factories of thepower electronics business, have acquired certification for the international
standard IEC62443-4-1.*1 Going forward, both factories will develop new
products including inverters and controllers (PLC) that enhance security
functions, among others, and they are aiming to launch them on the market
by about FY2024.
We acquired the certification of IEC62443-4-1 based on the first CB
certification scheme*2 in Japan. Adopting this scheme enables us toefficiently acquire standards certifications in more than 50 countries;
therefore, we will utilize it going forward as well.
*1 IEC62443-4-1: The international standard which specifies the requirements for the development of
secure products used in industrial automation and control systems*2 CB certification scheme: A system for mutually approving the test results for electrical equipment
internationally. The scheme is operated based on the IEC System for Conformity Assessment
Schemes for Electrotechnical Equipment and Components (IECEE). Institutions in more than 50
countries participate in it, and the issued CB certificates and other documents are accepted in thecertification systems operated by the certification institutions that are members.

Research andDevelopment

Regarding intellectual property generated through R&D,
we aim for strategic acquisition of rights to ensure that we
can continue expanding profit through differentiation in ourbusiness activities. After sharing the “competitive axes” in45

Regarding the intellectual property rights held, we arecontinuously carrying out maintenance taking into accountchanges in business conditions, including the addition of
application countries in conjunction with the progress of
our overseas businesses, and the waiver of patents held inresponse to competitive axis changes and product lifecycles.
Regarding the number of patents held by Fuji Electric,
we carefully select the patents in Japan in order to raise thecost-effectiveness of the intellectual property rights in ourbusinesses, and we file about 1,000 new applications every
year to maximize our opportunities for the acquisition of rights.
On the other hand, we are building up our foreign patents inorder to be able to respond to the expansion of our overseas
businesses, globally strengthen our rights, and reduce the riskof intellectual property disputes.

IEC 62443-4-1 CB certificate(Left: Suzuka Factory Right: Tokyo Factory)

UPS7500WX
manufactured by
Fuji Electric
Maintenance space is not necessary
between the main unit and the wall
UPS
manufactured byanother company
Maintenance space is necessary between
the main unit and the wall

Fuji Electric Report 2023

46

Environment

The World Aimed for in Environmental Vision 2050
Through our initiative toward Environmental Vision 2050,
we will promote contribution to carbon neutrality andaim to achieve zero emissions.

In addition to the environmental contribution made by ourbusiness, Fuji Electric quantifies its environmental impact
based on the amount of energy and resources used at allof our production bases in Japan and overseas. Throughour initiatives in Environmental Vision 2050, we aim to
maximize our environmental contribution and minimize ourenvironmental impact through our supply chain.

Toward 2050
• We aim to contribute to carbon neutrality by increasing the supply of equipment that produces clean energy and by innovating energy saving technologies.
• We aim to achieve zero emissions by working to reduce environmental impact throughout the supply chain.

Takashi Obinata
Executive Officer
Corporate General Manager, Production & Procurement Group

Overall Picture of Environmental Contribution and Impact of the Business (Fiscal 2022)

Fuji Electric Report 2023

OUTPUT• Clean energy

Contribution tocarbon neutrality• Stable supply of energy• Energy saving

Customer

Contributions to CO2 emissions
reduction in society through products
49.8 million t-CO2

Minimize CO2 emissions from customer
use and expand products that contributeto CO2 reduction of society
Example: Higher efficiency ofsemiconductors reduces power loss of
products in which they are embedded andcontributes to reduction of CO2 emissions

Target: All production bases in Japan and overseas

Environmental Vision 2050

Supplier

We aim to achieve a “Decarbonized Society,” “Recycling-Oriented Society,”and “Society in Harmony with Nature” by expanding use of Fuji Electric’s
innovative clean energy technology and energy-saving products.
Achieve a Decarbonized Society

Target carbon neutrality across the supply chain

Achieve a Recycling-Oriented
Society

Promote green supply chains and 3R activities toreduce environmental impact to zero

Achieve a Society inHarmony with Nature

Aim for zero influence on the ecosystem bycorporate activities contributing to biodiversity

Main materials
Iron

70,000 tons

Nonferrous metals

18,000 tons

Plastic

7,000 tons

Amount of energy use

980 GWh

Purchased power
417 GWh(of which 24 GWh is renewable energy)
Fuel

563 GWh

Gases*2 volume handled

84 tons

Water intake

Fiscal 2030 Target
We aim to achieve the following goals in order to limit the temperaturerise to 1.5°C above pre-industrial levels.
Greenhouse gas emissions throughout the supply chain (Scope 1+2+3):
Reduction of over 46% (compared to FY2019)

Procurementof materials

Business activity
Solar power
generation
2.4 GWh

984,000 m3

Industrial water

4,345,000 m3

Groundwater

4,056,000 m3

Chemical substances*3
volume handled

1,084 tons

CO2

2,300,000 t-CO2*1(Scope3-C1)

Atmosphericemissions of

334,000 t-CO2

CO2297,000 t-CO2

Gases*2

37,000 t-CO2(Scope1+2)

9,385,000 m3

Tap water

Atmospheric emissions of

Water recycling
2,453,000 m3

Wastewater

9,385,000 m3

Sewage system

1,969,000 m3

Rivers and other waterways

7,416,000 m3

Chemical substances*3919 tons

Emission and transfer*4
721 tons(of which 514 tons are emitted to the atmosphere)

Greenhouse gas emissions during production (Scope 1+2):
Reduction of over 46% (compared to FY2019)*

Recycling

46 tonsOn-site removal

153 tons

Waste

Contributions to CO2 emissions reduction in society through our products:* Reduction rate from FY2013: 54%
GHG

Water

Resources

Chemical substances

Logistics

Plastic

2,000 tons

Other*5

12,000 tons

Aim for zero environmental impact fromemission of greenhouse gas, waste,water, and chemical substances

Recycling
28,300 tons

30,000 tons

Scrap metal 16,000 tons

Over 59 million tons/year

Achieving
zero emissions

ESG Initiatives

47

1. Offering products and technologies that contribute to the global
environmental protection
2. Reduction of environmental burden throughout product life cycles
3. Reduction of environmental burden in business activities
4. Compliance with laws, regulations and standards
5. Establishment of environment management systems andcontinuous improvements of the systems
6. Improvement of employees’ environmental awareness andsocial contribution
7. Promotion of communication

Environmental Impact*1 SBT: Science-based GHG emissions reduction target to achieve the 1.5°C target*2 CDP: An international environmental NGO that researches, evaluates, and discloses
environmental initiatives

INPUT

Fuji Electric Basic Environmental Protection Policy

Environmental Contribution

In recent years, nature and human society have been greatly
affected by frequent torrential rainfall caused by climatechange, as well as record heat and cold waves. Addressing
this issue will not only require decarbonization, but also
accelerating the transition to a circular economy and therealization of nature positivity (nature revitalization). Therefore,
the role of companies in solving environmental issues is
becoming increasingly important.
Based on the “Fuji Electric Basic Environmental Protection
Policy,” the Company has positioned global environmental
protection as an important issue for management and in
2019, we formulated our “Environmental Vision 2050,” theframework for the Company to become carbon neutral
and achieve zero environmental impact from a long-term
perspective. In March 2022, our fiscal 2030 greenhouse gas(GHG) emissions reduction target was revised to “reduce
GHG gas emissions by over 46% from the fiscal 2019
level,” consistent with “limiting the temperature rise to 1.5°C
above pre-industrial levels.” This goal has acquired SBT*1
certification in December 2022.
In fiscal 2022, we incorporated measures to achieve
the Fiscal 2030 Target for reduction of GHG emissions
during production into an action plan, calculated theamount of necessary investments and expenses, andbegan materializing the plan. In response to TCFD
recommendations, we also conducted an analysis ofopportunities and risks and disclosed details of our riskrelated considerations.
Future issues include materializing a plan to achieve a
recycling-oriented society and a society in harmony withnature. As such, with the aim of achieving zero emissions
by 2050, we will consider a new Fiscal 2030 Target fromthe perspective of generating zero environmental impact
throughout the entire supply chain.
For the fourth consecutive year, the CDP*2 certified
Fuji Electric as an “A List Company,” a company of thehighest rank, with excellent climate change initiatives andinformation disclosure. We will continue to contribute to
the realization of a sustainable society, taking advantageof the technologies we have cultivated in the energy andenvironment fields.

The World Aimed for in
Environmental Vision
2050

Landfill
200 tons

Atmospheric emissions of
CO2

16,000 t-CO2(Scope3-C4+C9)*1 Covers all purchased materials, parts, and outsourced services*2 HFCs, PFCs, SF6, NF3*3 Substances subject to PRTR Law*4 Emissions: into the air, water, and soil
Transfer: as waste and to the sewage system*5 Sludge, wood or paper waste, waste oil, waste acid or alkali, etc.
*6 Covers seven product groups that account for 80% or more of
the total emissions of all products in use

Customer

Atmospheric emissions ofCO2

173.9 million t-CO2*6(Scope3-C11)

Fuji Electric Report 2023

48

Environment

Initiatives to Achieve a Decarbonized Society
Contributions to CO2 emissions reductions in society through our products

Fiscal 2022 Results and Progress
Environmental Vision
Fiscal 2030 indicators
Supply chain GHG emissions(Scope 1+2+3) (million tons)

GHG emissions during production(Scope 1+2) (thousand tons)

Contributions to CO2 emissions
reduction in society throughproducts (million tons)

FY2021

FY2022

FY2023

FY2030ResultTargetResultMeasures

TargetTarget

180

181

177
<Achieved>• Increase percentage of 7th-generation IGBTs• Expand sales of automotive modules

72 or less67 or less

334
<Achieved>• Implement production process as analternate to SF6• Upgrade to high-efficiency equipment• Start purchasing renewable energy electricity(Japan)380 or less

250 or less

• Cumulative increase in power electronics
products and biomass power generation

50.0 or more 59.0 or more

364

45.4

400 or less45.0 or more

49.8
<Achieved>

Initiatives toward 2030
Supply chain GHG emissions (Scope 1+2+3) reduction
Fuji Electric calculates GHG emissions generated in its
supply chain in accordance with the GHG Protocol, aninternational standard. GHG emissions for the entire supply
chain (Scope 1+2+3) in fiscal 2022 were 177 million tons.
CO2 (Scope 3 Category 11) emitted during the use of the
product accounts for 98% of the total, and approximately
60% of this is coal-fired EPC (a business form in which
engineering, procurement, and construction are undertaken
in an integrated manner) projects for the power generation
business. The Company does not expect to ship any coalfired EPC projects without CO2 capture equipment after fiscal
2023. Therefore, the target for fiscal 2023 is a 60% reduction
to 72 million tons.
Many of our products contribute to the reduction of CO2
emissions of society by saving energy through activation.
We are working to reduce not only our own CO2 emissions(Scope 1+2+3), but also those of society by contributing to
the reduction of CO2 emissions through the supply of our
products.

Overview

Expand installation of solar
power generation equipment at
the Company’s production bases

Plan underway at a total of 15 basesin Japan and overseas, with the aim ofextracting results in fiscal 2024

Promote upgrade to highefficiency equipment

Replace production facilities, airconditioning, and lighting equipmentwith latest models

Purchase renewable energy

Increase purchase of renewableenergyFuji Electric Report 2023

<Start reviewing the scope of reduction contribution>

Main Non-target Businesses (as of fiscal 2022)

Segment

Main Contributing Products and Contribution Amounts

Power Electronics
26.4

Low-voltage inverters (25.8), Rotating machines (0.3)
FA components (0.1),
Power supply and facility systems (0.1)

Semiconductors
5.8

Industrial modules and discrete (5.8)

Power Generation
16.5

Thermal (biomass, etc.) andgeothermal power generation (13.1)
Hydro power generation (1.8),
Solar power generation, etc. (1.6)

Food and Beverage
Distribution
1.1

Vending machines (0.4)
Store facilities and equipment (0.7)[Scope 3 Category 11] Emissions* and main products (fiscal 2022)• Power Electronics
10 million tons (low-voltage inverter, drive control, etc.)• Semiconductors
53 million tons
• Power Generation
110 million tons (coal-fired EPC, etc.)• Food and Beverage Distribution 1 million tons (store distribution, etc.)

In fiscal 2023, we have started reviewing the scope of
products subject to the reduction contribution amount. We
plan to raise the composition ratio of target products byclarifying the concept of the amount of contribution andreviewing the target product groups, as well as revising the
Fiscal 2030 Target if necessary.

* Emission volume: annual number of shipments × lifetime emissions

180

177

125
Scope 3(during use of122
the product)
Scope 3(except when
the product is in use)
Scope 1+2

177

174

53

(Unit: Billion yen)

58

72

67

70

66

Net sales ofcontributing
products

50.5

122.8

21.7

43.2

Total

238.2

2019
Result2021
Result2022
Result2023
Target2030 (ﬁscal)
TargetTotal net sales

617.5

206.2

87.3

95.3 1,009.4

36.5

45.4

49.8

50.0

59.0

Composition ratio

8%

60%

25%

45%

In addition to the above measures, we aim to increase
the percentage of renewable energy among company-wide
electricity consumption* (6.2% in fiscal 2022) to 40% by
fiscal 2030 by increasing the amount of purchased renewableenergy in the future.
* Electricity consumption: Electricity purchased + solar power generated internally

Trends in GHG Emissions during Production
Emissions (thousand tons)

Scope2

Sales Composition Ratio of Contributing Products (Fiscal 2022)
Food andPower
SemiconPower
Beverage
Electronics ductors Generation
Distribution

Contributions to CO2 Emissions Reduction in Society throughProducts (million tons)

SBT target-4.2%/year ower Electronics: Energy management, Substation system,P
Switchboards, Equipment installation, IT solutions, etc.
All segments: On-site repairs and other service-related
matters, etc.

Net sales(Billion yen)

1,009.4

450

910.2

900.6

360

90

330

230
210

Scope 1
Fuel

100

Scope 1
Gases

120

100
2019
Result60
2021
Result190

Increase in
sales

380

100
40
2022
Result2023
Target-46%

170
Effects ofmeasures250

2030 (ﬁscal)
TargetTOPICS

24%

Off-site renewable energy supply model

Customers are increasingly requesting for stable procurementof renewable energy over the long term. Fuji Electric offers avariety of products that are indispensable for the stable supplyof energy. By leveraging this advantage to install renewableenergy generation equipment at customers’ facilities andconnect power producers with our customers, we offer on-site
PPAs* that allow customers to procure stable renewableenergy over the long term.
However, the space available for installation on thecustomer’s site is limited. As such, off-site PPAs are expected
to grow significantly in the future. An off-site PPA is a structurein which renewable energy generation facilities are installed
on remote sites and the electricity generated at such sites issent to customers via the power transmission and distribution
network. Fuji Electric will contribute to the stable supply of
renewable energy in the future by providing the products
required for the off-site renewable energy supply model,such as renewable energy generation facilities, substationequipment, storage battery systems, and supply and demand
management systems, in cooperation with off-site PPA
operators to meet customer needs.
Power producers

Electricity
marketGeneral electricutility companies

Renewable energy
generation facilities 1(Solar power)

Renewable energy
generation facilities 2(Hydro power)

Renewable energy
generation facilities 3(Wind power)

Consumer

Factory A

Power consignment
through the grid
Supply and demand
management system(Balance control between
power generation and demand)

ESG Initiatives

49

MeasuresMain Contributing Products and Contribution Amounts(Fiscal 2022)(Unit: million tons)

Supply Chain GHG Emissions and Reductions (million tons)

GHG emissions reduction during production (Scope 1+2)
We plan to increase production in our semiconductor andpower electronics businesses by 2030. Based on theassumption of such production increase, we are working
to achieve our goal of reducing GHG emissions during
production (over 46% reduction compared to fiscal 2019).
Major measures are as follows.

Fuji Electric aims to contribute to the achievement of carbon
neutrality together with our customers through our energy andenvironmental businesses. The indicator is the contributions
to CO2 emissions reduction in society through our products,
which we began calculating in fiscal 2009. The difference inpower consumption between cases where existing products
continue to operate and cases where products with superior
environmental performance are implemented to replacethem is converted into CO2 equivalent figures. For products
shipped in and after fiscal 2009 during their operation period,
the amount of CO2 reduction of the product operated for
one year is calculated as the amount of contribution. We
intend to increase our contribution amount by increasing thesales weight of new products that maximize the reduction of
power loss in addition to increasing sales of equipment thatgenerates clean energy.

Shared storage
battery

Factory B

Ofﬁce* PPA: Power Purchase Agreement

Fuji Electric Report 2023

50

Environment

Initiatives to Achieve a Recycling-Oriented Society and a Society in Harmony with Nature

Approach to Disclose Information in Accordance with TCFD Recommendations

Fiscal 2022 Results and Progress

ResultTargetResult

Key measures and activities

TargetRatio of waste sent to landfills*1
1.0 (%)

2.3

1.2 or less

0.5
<Achieved>• Establishment of a disposal method for inorganic
sludge from semiconductors at Fuji Electric(Malaysia) Sdn. Bhd.

1.0 or less

Water consumption per unit of sales
1.8 or less*2 (1,000 m3/100 million yen)

1.1

1.8 or less

0.9
<Achieved>•D iscontinuation of production of magnetic disks
at Fuji Electric (Malaysia) Sdn. Bhd.

1.8 or lessSince declaring support for the Task Force on Climate-related
Financial Disclosures (TCFD) recommendations in June 2020,
we have reflecting the results of our analysis of risks andopportunities arising from climate change in our businessstrategies and have updated our disclosures in line with TCFD
recommendations. In March 2022, the Company disclosed
significant risks and opportunities as well as adaptation
measures. Of these risks, we recognize that the risks with

Volatile organic compound emissions
1,694 or less*2 (t)617

1,694 or less

625
<Achieved>• Operation of solvent recovery equipment at
Shenzhen plant

1,694 or lessSignificant Risks and Opportunities Identified by Fuji Electric and Adaptive Measures to Be Taken

Reduction of waste, water, and chemical substance emissions during production
FY2030 Target

FY2021*1 Ratio of waste sent to landfills: Waste sent to landfills ÷ Total waste

FY2022

FY2023Risks*2 Target value is the value of the base fiscal year (to be reviewed in fiscal 2023).

• Delays in procurement of parts

Initiatives toward 2030
In recent years, there has been a growing demand for acircular economy in which resources are used in a cyclicalmanner. Therefore, Fuji Electric intends to reinforce its
initiative to achieve zero emissions by 2050. Traditionally, thefocus has been on reducing the amount of waste generated
during production and sent to landfill and reducing theamount of water consumption. In addition to our existing
activities, we will take initiatives to shift to a highly recyclable
product model, including a review of design, with the aimof creating products that do not generate environmental
impact throughout their entire lifecycle. Specifically, we
will establish new goals in fiscal 2023 from a medium- tolong-term perspective, and incorporate measures into theplan. Ultimately, we aim to minimize the burden on nature by
reducing the amount of waste generated during the life cycle
and sent to landfill as well as the discharge of wastewaterand chemical substances generated during production tonear zero, thereby achieving a recycling-oriented society anda society in harmony with nature.
<Issues to be addressed to reduce waste sent to landfill>

To reduce the amount of waste sent to landfill to less than
1.0% on a stable basis, overseas bases are an issue. In fiscal
2023, we will clarify issues regarding overseas bases where
the ratio of waste sent to landfill remains high and initiate
countermeasures.

In Japan, the new plastics law (Act on Promotion of Resource
Circulation for Plastics) came into effect in April 2022.
The purpose of this law is to promote resource recyclingin the sales channels of plastics, from product design towaste disposal. Therefore, we recognize the importanceof expanding waste plastic management and reduction
activities not only during production but throughout theentire supply chain. As such, we have begun to study thetrue state of emissions outside of production and identify
countermeasures to deal with such emissions.

51

Fuji Electric Report 2023

• Cost increases due to wind and flood damage
countermeasures in response to frequent
extreme weather events

4˚C

678

2.3

1.1

151

229

Japan

Overseas• Deterioration in profit due to procurement
difficulties and cost increases• Promotion of parts standardization and unification• Expanded use of recycled materials in products

Development
and Design• Delays in technology development to meet
decarbonization requirements• Increased demand for technologies needed topromote decarbonization

Manufacturing• Cost increases associated with decarbonizationof production facilities (plant and equipment
investment and other costs, purchase ofrenewable electricity)

1.5˚C

0.5
24

2019
Result• Promote multi-sourcing• Support for decarbonization of key suppliers• Accelerate R&D of new technologies related todecarbonization, release them to the market ina timely manner, and reduce their costs• Expand parts recycling through collaboration
with customers and recycling companies• Strengthen reduction of greenhouse gas
emission at production facilities• Respond to increased demand by increasing
production capacity [Semiconductors]• Shift resources to renewable energy business[Power generation]

Suppliers

654

115

Adaptation Measures• Promote multi-sourcing of parts (identify
parts with high procurement risk due to thedisasters, and diversify risks)• Reinforce wind and flood protection measures
for factory buildings in Japan and overseas
located mainly in bay areas and areas coveredby hazard maps

• Delays in outdoor construction and service work
• Delays in product delivery due to the disruptionof logistics network and influence to production

Amount of waste sent to landfill (t)345Opportunities• Increased demand resulting from active
investment in business continuity plan (BCP)
measures by customers

29
2021
Result122
2022
Result• Promotion of “local production for local
consumption” (inventory reduction, logistics cost
reduction, tax saving)

Logistics(fiscal year)

Customers andMarkets

Ratio of waste sent to landfill (%)• Loss of business opportunities due to lack ofsupport for 100% usage of renewable energy
during production• Decrease in demand for thermal power
generation• Increased demand for renewable energy andenergy-saving products• Increased demand for renewal of thermal power
generation services due to changes in fuel types
for thermal power generation and the spread of
CCS and CCUS

Significant Risks Identified by Fuji Electric, Adaptive Measures and Financial Impact
Water Consumption and Water Consumption per Unit ofSales during Production

1.5

Frequent
extreme weather
events (4°C)

1.1
0.9

13,3982019
ResultWater consumption (1,000 m3)

9,751

9,385

2021
Result2022
ResultRisk Identification

Adaptive Measures and Financial Impact

Flooding risk at production bases
Target: All 44 production bases in Japan and overseas
Result: 6 bases (3 domestic and 3 overseas) are at risk
• R isk assessment was conducted by Tokio Marine dR Co., Ltd. and was
scrutinized internally• F or bases with a flood hazard of 0.5 m or more confirmed by official
hazard information and bases without any hazard information, we haveassessed them as “at risk of flooding” when flooding risk is consideredhigh due to topographical conditions and other factors.

• At production bases at risk of flooding, we will formulate flooding countermeasures
to minimize damage and review BCPs
• Even at bases that are considered low-risk, we will promote flood
countermeasures as necessary• We will take initiatives to stabilize the supply of parts in the event of a natural
disaster by establishing a supply system from multiple bases while identifying
flooding risks in the supply chain

ESG Initiatives<Compliance with the New Plastics Law>

Amount of Waste Sent to Landfill within Japan and Overseas

especially great impact on our business are (1) suspension of
production activities due to flooding and other damage causedby frequent extreme weather events under the “4°C” scenarioand (2) increased environmental investments and expenses
to reduce GHG emissions in production activities underthe “1.5°C” scenario. Therefore, we identified the specificimpact of these two risks and examined and calculated thecountermeasures and financial effects.

<Reference Materials>• Japan: Web-Based Flood Simulation Search System at an Arbitrary Point (Ministryof Land, Infrastructure, Transport and Tourism), Hazard maps (each municipality)• Overseas: Aqueduct Water Risk Atlas (WRI)(fiscal year)

Water consumption per unit of sales (1,000 m3/100 million yen)

Increased
environmental
investments andexpenses (1.5°C)

Estimate environmental investments and expenses required to achieve
the Fiscal 2030 Target (GHG reduction in production activities: over 46%
reduction from fiscal 2019 levels)• Install solar power generation equipment within the Company’s factory• Upgrade facilities (production facilities, air conditioning, lighting, etc.)• Purchase electricity and credits derived from renewable energy sources

Total environmental investments and expenses associated with reducing GHG
emissions during production• Fiscal 2022: Approximately 2.5 billion yen• F iscal 2023-2030 (cumulative total): Approximately 13 billion yen(including the risk of higher purchase unit prices for renewable energy and credits)* This financial impact should be reviewed in the event of a revision of the business plan or suddenchanges in the environment.

Please refer to our website for detailed disclosure requirements of the TCFD recommendations on Governance, Strategy, Risk
Management, and Metrics and Targets.
https://www.fujielectric.com/company/csr/global_environment/management_02_03.html

Fuji Electric Report 2023

52

Human Resources
We will promote further revitalization and training of
human resources to achieve a virtuous cycle of employee
happiness and sustainable growth of the Company.

Takeshi Kadoshima
Managing Executive Officer
General Manager, Human Resources and General Affairs Office

those with science and engineering backgrounds. Our project
members actively established points of contact with female
students in an effort to increase the number of women we hire.
As a result, we reached our target ratio of females hired (20%)
as new employees for the sixth year in a row since 2018.

In addition, to increase the number of female employees insupervisory positions, we actively promote two major initiatives:
implementing intensive training and reinstatement support for
ambitious female employees and establishing a workplaceenvironment that is pleasant for female employees to work insuch as providing support for balancing home and work.

To respond to the workforce composition, which is aging due
to the declining birthrate and aging population, it is becoming
increasingly important to promote the active participation ofsenior employees.
Considering the long life span of our products and thetime it takes to acquire skills, which are characteristic of ourbusiness, senior employees have a wide field of activity andare a valuable asset to the Company.
We are achieving both peace of mind for employees aswell as business continuity through the development of asystem that enables employees to work actively even after
the age of 60.
Ever since we introduced our Selective Retirement
Extension System for general employees in fiscal 2000, we
have strived to improve the user friendliness of the system
while establishing it, and our employees use the system toselect their retirement age from the range between 60 and 65
years old in accordance with their life plan. We also introduced
our Senior Task System for managers in fiscal 2020, whichenables senior employees aged 60 and over to receive thesame treatment as younger employees depending on thedetails of their work and their performance. This system isintended to boost the motivation of our senior employees.
In addition, to enable employees of age 65 or over tocontinue to contribute by demonstrating their advanced
skills and knowledge until they are up to 75 years old, weestablished the Employment Guidelines for Employees over
65, which are used to promote the active participation ofsenior employees.

Main Initiatives

Selection Rate of the Selective Retirement Extension System

Ratio of Female Employees, Ratio of Females Hired,
Ratio of Female Managers, and Number of Female Employees
in Supervisory Positions (Japan)
2020 (end of 2021 (end of 2022 (end of
fiscal year) fiscal year) fiscal year)
Ratio of female employees

One of Fuji Electric’s management policies is to “maximize
our strengths as a team, respecting employees’ diverse
ambition,” and the Fuji Electric Code of Conduct states that
we will respect and value all people. We consider respectfor human rights, health and safety, and the protection of
our employees’ health to be the foundation of our businessactivities and actively invest in people to encourage activities,
training, and suitable assignment of human resources, whichbecome the core of our efforts to achieve the sustainablegrowth of our business.
In terms of promoting human resource measures, weconsider it important to achieve a virtuous cycle of employee

happiness and sustainable growth of the Company. We will
also continue striving to reinforce our operating foundations,such as by pursuing initiatives aimed at respecting humanrights, which is essential in building a sustainable corporate
structure, encouraging the active participation of diverse
human resources, enhancing initiatives aimed at revitalizing
senior employees and securing personnel in line with theCompany’s workforce composition, aiming to significantly
improve our business efficiency, promoting workstyle reforms
that facilitate work-life balance, and promoting other initiatives
to address various issues in a timely manner.

Respect for Human Rights
agreed upon human rights as well as the relationshipbetween corporate activities and human rights. In addition,
based on our belief that running a pleasant workplace where
human rights are respected is a key source of corporate
competitiveness, we provide all of our employees in Japan
with ongoing training aimed at preventing harassment.
*H uman rights due diligence
Efforts to recognize, prevent, and deal with the risk of human rights violation risks inadvance

Status of Human Rights and Labor Assessments

We promote diversity in order to develop the company throughthe creation of new value with diverse human resources.
Among our diversity initiatives, we place particular emphasis
on stepping up measures to promote the active participation

53

Fuji Electric Report 2023

13.3%

13.6%

—

Ratio of females hired*

22%

20%

21%

20%

Ratio of female managers*2

2.5%

2.8%

3.2%

3.0%

No. of female employees insupervisory positions*3

266

295

316

400

1

Data collected from the Company and its six subsidiaries in Japan that adopt the same personnel system*1 Graduates from universities or technical colleges *2 Managerial positions or above*3 Team leaders or above

Ratio of Female Employees, Ratio of Female Managers(Overseas, as of end of fiscal 2022)
Overseas consolidated(Reference) Consolidated
Japanese and overseas

Ratio of female hired

41.1%

27.7%

Ratio of female managers

26.5%

9.4%

Training forfemale managers

Provide training for female managers to acquire the skills
required to participate in management

Cultivation of priority
career targets

Education and training for female employees to advance theircareers. Support to challenge upper-level positions throughlectures to improve basic skills and practical exercises forproblem solving

Year of
Implementation

Fiscal 2022 (conducted every other year)

Sister system

Cross-departmental mentorship with senior female employees
as advisors

Implementation
TargetEach operating site and Japanese and overseas consolidated
subsidiaries• Operating sites: 21 sites• Subsidiaries: 21 Japanese, 42 overseas

Project to recruit
women with scienceand engineering
backgrounds

Initiatives to recruit female employees with science andengineering backgrounds through seminars that provide
first-hand accounts of female employees with science andengineering backgrounds who are successful in the workplace.

Results

Provided guidance to one Japanese and 10 overseas sites to improveon items that had not been achieved
Main points of improvement:• Planning and implementation of education on human rights• Perform periodic health checkups• Consideration for working hours, etc.

Promoting Active Participation of Diverse Human Resources
Promoting the active participation of
female employees

13.2%

2023 (end of
fiscal year)(Target)of women. We have established fiscal 2023 targets of a ratioof females hired of 20% and ratio of female employees insupervisory positions of 3%, and we are implementing various
measures to promote female employees’ success to achievethese targets.
We have set up a project aimed at hiring women, especially

TOPICSFY2020

FY2021

FY2022

General employees:
Selective retirement
extension system

84.6%

82.5%

82.1%

Managers:
Senior task system

86.6%

96.8%

91.6%

Promoting the active participation of differently
abled people
The Company established Fuji Electric Frontier in 1994 as
ESG Initiatives

Based on the United Nations Guiding Principles on Businessand Human Rights, we are working to establish a sustainablecorporate structure that is never involved in or complicit inhuman rights violations. Based on our Policy for Human
Rights of the Employees, we implement human rights
and labor assessments as a part of our human rights due
diligence* targeting our operating sites and consolidated
subsidiaries both in Japan and overseas.
Fiscal 2022 was the first year in which we implemented
human rights and labor assessments once in two years—
instead of once in three years as was our conventional
approach—and we have also revised the details by switching
to a self-assessment that complies with the latest international
standards. We provide guidance for improvement toconsolidated subsidiaries that have been identified to require
remediation. We also strived to flesh out our human rights
awareness-raising training related to the responsibility ofcompanies to respect human rights. More specifically, we
implement training that deepens the understanding of ourteam leaders and managers of our approach internationally

Promoting the active participation ofsenior employees

Implementation of training for female managers

The Company is also working to reinforce skill development
for female employees after their promotion to managerial
positions. We conduct training for female managers withthe aim of equipping them with the necessary knowledge toparticipate in management to enable them to further advanceto the next level.
In fiscal 2022, various programs aimed at enhancing
managerial perspectives and expanding horizons were
implemented, including leadership development throughself-analysis and training to gain insight into the future to set

specific scenarios and goals. The training was attended by 30
participants, who commented that it was a good opportunity
for them to reflect on their own careers, to discover thesignificance of their own existence as well as the mission in
their future social lives, and to acquire ideas that will be usefulin their actual work. It was an occasion for them to experiencechange of mind as managers.
We will continue to improve the environment for female
employees so they can acquire the skills required to participate
in management.

Fuji Electric Report 2023

54

Human Resourcesa special-purpose subsidiary under the Act on Employment
Promotion etc. of Persons with Disabilities. By increasing thehiring of differently abled people and expanding their scopeof duties, this company is gradually expanding its bases andcurrently has 14 bases at every one of our major operatingsites, through which efforts are underway to promote theactive participation of differently abled people.
The major duties covered by the company include internal
document delivery work and cleaning work as well as
manufacturing support and light-duty work at each operating
site, and the company is actively working on expanding thescope of duties to focus more on manufacturing support andlight-duty work.
As of June of 2023, 442 differently abled people wereregistered, and the employment ratio of such people was
3.02%, well above the statutory employment rate (2.3%). We
will continue striving to hire about 20 differently abled people
per year as we secure and expand duties available to themand work on achieving stable employment.

Workstyle reforms
As part of our Company-wide Pro-7 Activities, we promote
initiatives based on two perspectives: workstyle reforms
aimed at improving work efficiency and quality as well as theachievement of work-life balance.
Regarding workstyle reforms, we started promoting
company-wide initiatives in fiscal 2017, including reducing
long working hours, encouraging the use of vacation time,and striving to achieve a well-balanced workstyle, mainly
by implementing steady awareness-raising and visualizing
the actual working hours by utilizing IT. From the viewpointof employee needs and productivity improvement, we havealso been gradually expanding the users of our diverse
work systems for promoting flexibility of working hours andlocations, and we are increasing the user friendliness of thesesystems. In addition, rules have been established to provide
allowance to employees who have achieved workstyles
with a high time value, with the aim of changing employees’
awareness toward improving productivity.
To help facilitate work-life balance, we have also set up
various systems that support life at work and at home,including vacation systems for childcare and family care,
reduced working hour systems, and vacation time when aspouse is transferred within Japan and overseas.
From fiscal 2022 onward, we will promote a free address
system at the workplace, mainly in the head office area,
and are also working to reform the workplace environment,
including minimizing paper documents and enhancing meetingbooths utilizing active space.
We are implementing initiatives for workstyle reforms, both interms of the workstyle system and the workplace environment.
FY2018FY2022Average overtime hours permonth

24.4 hours

20.8 hours

Average number of paid vacation
days acquired annually

14.5 days

18.5 days

Work from home/satellite office(total number of users)

2,397

147,251

107(including 6 male)(percentage of maleutilizing childcare
leave 3.1%)

131(including 43 male)(percentage of maleutilizing childcare
leave 21.1%)

Childcare leave system(total number of users)

Initiatives to Cultivate Human Resources
In the Fuji Electric Code of Conduct, we have expressed
our commitment to reinforce human resource cultivation toachieve the development of each individual employee aswell as the collective strength of the team. We are enhancing
the cultivation of human resources who can demonstratestrong leadership and a high level of expertise by bolstering
employee skill development and strengthening our investment
in education.

55

Fuji Electric Report 2023

Employee Communication
Employee awareness surveys
In order to understand employee awareness in a timely
manner, the Company conducts an annual employee
awareness survey consisting of a total of 95 questions forJapanese and overseas consolidated subsidiaries to makefixed-point observations on overall employee awareness,
including satisfaction toward the Company, the workplace,and their jobs. The results of the survey are reported at the
Executive Committee, and the results of the analysis foreach organization are provided to general managers andrepresentatives of subsidiaries for use in improving theirrespective issues.
The results of the annual employee awareness surveys
to date have been directly utilized for various humanresources measures, including the implementation of training
to strengthen management skills of middle managers,
the enhancement of the target management system andexpansion of education and training to support employee
career development, and a review of the employee treatment

system to evaluate the improvement and streamlining efforts ofskilled employees.
In addition, the results of the annual employee awarenesssurveys are used as an indicator of our human capital
initiatives. The goal is not to boost the indicator, but tomaintain at least 3.5 pt with the aim of identifying issues
and risks early in the trend analysis and taking appropriate
countermeasures.
Average Responses to Representative Questions Indicating
Overall Satisfaction toward the Company
TargetFiscal 2021
results

Fiscal 2022
results

Maintain a level of 3.5 pt or higher,a level that can be evaluated as sound

3.8 pt3.8 pt* The scope of the survey covers domestic and overseas consolidated subsidiaries
excluding the Company and Fuji Furukawa Engineering & Construction Co. Ltd.
* Average of responses to the representative question “I am satisfied with working for Fuji
Electric” indicating overall satisfaction toward the Company (5 point scale from 1 to 5
pt, with higher scores indicating a more positive stance)and discussing the following and other details with executive
officers on an annual basis: trainee selection details, theimplementation status of training rotations, and who has
undergone selective training.
Stocking Up on Potential Future Executive Ofﬁcers
29*1

GeneralManagerclass
400

Selected(20-30)Manager
class
1,600

Selected(40-50)Team
Leaderclass
3,400

Selected(80-90)

Cumulative number ofregistrations*2

106
Cumulative number ofregistrations*2

155
Cumulative number ofregistrations*2

ESG Initiatives

We are also taking active measures to foster future
management candidates who will lead our sustainable growth.
Our human resource development covers three main areas.
The first is carefully selecting young trainees, the second iseffective OJT (on-the-job training) based on a training plan,and the third is participation in selective training. In fiscal 2021,
to complement our future management candidate training
system, we launched our Line Successor Planning System
in an effort to achieve systematic line manager training. By
combining these two systems, we are striving to connect
posts that require succession training to individual training,
thereby achieving more effective management-candidate
training. We also strive to work out the details by sharing

As the world undergoes significant changes due to the rapid
spread of AI, IoT, and other advanced digital transformation
technologies, we are actively working to cultivate digital
human resources to solve challenges and create new value
through the use of digital technologies. We provide training
to enhance DX literacy not only for engineers responsible
for service development, but also for factory and production
divisions, as well as sales and service divisions that facecustomers. In addition, in order to adapt to rapid changes

in society and achieve sustainable growth, it is essential to
improve the productivity of internal operations through theuse of digital technology, and we widely promote educationfrom the perspective of reskilling. Since fiscal 2021, a totalof more than 7,000 people have received training under theCompany’s initiative to cultivate digital human resources.
We will continue to cultivate human resources that adapt
to changes in society and business needs, and aim forsustainable growth through an improved workplace for
employees and improved productivity.

Personnel Registered as
Next Generation Management

Fostering next-generation management

Cultivating human resources adaptable tochange: Cultivating digital human resources

243

504

*1 Number of registered next-generation management human resources*2 Cumulative number of registrations is cumulative from fiscal 2017 to fiscal 2022

Fuji Electric Report 2023

56

Sustainable Procurement
Basic Policies

CSR Audit Personnel Cultivation Initiatives

The Fuji Electric Code of Conduct states that Fuji Electric,along with its business partners, “will promote procurement
activities aimed at creating a supply chain that supportsa sustainable society.” We endeavor to ensure fair andequitable transactions that comply with laws and regulationsin Japan and overseas, and we engage in procurement
activities that are compatible with the sustainability of theenvironment, society, and governance.
In addition, by freely engaging in transactions with all
our business partners that are based on fair and equitablecompetition, we strive to build better partnerships,
deepen mutual understanding, and maintain and improvecooperative relationships.

Fuji Electric Procurement Policy
https://www.fujielectric.com/company/procurement.html

Sustainable Procurement Activities with Business Partners
Every year, the Company implements the self-assessment of
CSR procurement in accordance with the Fuji Electric CSR
Procurement Guidelines for its business partners in Japanand overseas to deepen their understanding of our corporatesocial responsibility (CSR) approach and initiatives we would
like to have them comply with and implement while also
gaining an understanding of the status of such efforts.

Subjects in the Fuji Electric CSR Procurement Guidelines
1. H uman Rights andLabor

4. Fair Trade and Ethics

7. B usiness Continuity
Plan

2. Health and Safety

5. Quality and Safety

8. E stablishment ofManagement Systems

3. Environment

6. Information Security

9. Social Contribution

C
19 companies
(2%)

767
companies inA
650 companies
total
(85%)

57

Fuji Electric Report 2023

In order to avoid risks associated with single-sourcing, theCompany has individually evaluated the risks associatedwith approximately 200,000 materials that we continuously
procure and is striving to achieve multi-sourcing*1 for materials
that have risk ratings of D and E. As a result, approximately
70% of its procured material items have been sourced frommultiple vendors thus far. We will continue to examine items forwhich multi-sourcing has not yet been achieved, and further
reinforce measures such as concluding long-term contracts
and stocking up on non-substitutable items. In recent years,
procurement risks due to country risks (including lockdown,
natural disasters, and conflicts) have been increasing, andin addition to conventional multi-sourcing, we will also avoid
procurement risk by increasing the number of countries fromwhich materials can be purchased*2 in the future.

Fiscal 2021

Fiscal 2022

Business partners

673

748

767

Japan

572

646

658

Overseas

101

102

109

* IPO: International Procurement OfficeBusiness
Collaborative
partner survey measures

Improvement

Check• Select companies for
self-assessment• Present example
initiatives by Fuji Electricand other companies• Interviews andon-site observation(once a year oras necessary)

Number of Companies that Conducted the Self-Assessment

Ratings
RatingB
98 companies(13%)

Efforts aimed at purchasing from multiple suppliers

The business partner considers CSR as an organizational challenge andtakes specific actions.

B

The business partner considers CSR as an organizational challenge and isplanning specific actions.

C

The business partner considers CSR as an organizational challenge.

DThe business partner should consider CSR as an organizational challenge
and should work on improvements.

*1 Multi-sourcing refers to a system in which materials are procured from multiple
business partners.
*2 To establish a system that allows procurement from multiple manufacturing countries(domestic + overseas, multiple overseas, and the like).

Procured Material Risk Rating Definitions

DescriptionA

ESG Initiatives

Fiscal 2022 Assessment Results by Rating(After Conducting Interviews)

CSR audit personnel cultivation training

Responding to natural disaster risks

Fiscal 2020

• Establish improvement
activities* RBA: Responsible Business Alliance. A non-profit organization comprised ofcompanies committed to CSR in the global supply chain

Contributing to Business Continuity through Stable Procurement

The Company has introduced a disaster prevention information
system that makes it possible to identify domestic business
partners located in regions for which emergency warnings
have been issued due to earthquakes or weather conditions.
In fiscal 2022, we expanded the registration of secondary
business partners, resulting in approximately 9,900 basesof primary and secondary business partners registered toour disaster prevention information system. In addition, withregard to overseas business partners, we have establisheda system to collect information on disasters throughoverseas IPOs*. As a result, we were able to quickly confirm
the situation when natural disasters (mainly earthquakes)
occurred, thereby swiftly identifying any risks on the
Company’s production activities. We will continue to strive tomore effectively visualize supply chain risks and expand thenumber of registered business partners.

PDCA for the Self-Assessment of CSR Procurement• Implement the
self-assessment of
CSR procurement

group members will also cultivate CSR audit personnel within
the procurement divisions by utilizing the know-how obtained
through the implementation of CSR audits.

By identifying, assessing, and addressing supply chain risks, we aim to build stable material procurement and production
systems over the medium and long terms.

Fuji Electric CSR Procurement Guidelines
https://www.fujielectric.com/company/box/doc/procurement/pdf/guideline_csr_e.pdf

In fiscal 2022, of about 6,000 primary business partners intotal, we implemented our assessment for 767 major business
partners, which accounted for the top 80% of our purchasing
results during the three-year period from fiscal 2019 to fiscal
2021. The survey found that seven business partners wererated D, which means they needed to work on improving their
CSR efforts. We made sure that these partners were interviewed
so they would have a deeper understanding of CSR initiatives
and make CSR efforts as an organizational issue.
In fiscal 2023, we will continue to implement assessments
and initiatives to expand educational opportunities forour business partners, and promote the penetration andstrengthening of CSR in our supply chain. We will also
proceed with initiatives to conduct CSR audits of ourbusiness partners with the aim of enhancing and maintaining
the effectiveness of CSR procurement.

In order to support our business partners in improving
their CSR initiatives, we believe it is important for our own
employees involved in procurement to understand the CSR
issues in the supply chain, and therefore provide employee
training on CSR procurement.
In fiscal 2022, we conducted CSR audit personnel
cultivation training for the purpose of visiting business
partners to conduct audits and on-site verification of
their CSR initiatives. The training was attended by sevenparticipants from procurement divisions and otherdepartments, and included practical training such as lectureson RBA* audit standards and auditing methods, which are
the basis of the Fuji Electric CSR Procurement Guidelines, aswell as examples of common nonconformities.
In fiscal 2023, a working group led by those who havecompleted the training will work to develop auditing tools andconduct on-site CSR audits of business partners. The working

Risk

Low

Conceptual image of the disaster prevention information system(when an earthquake occurs)

High

A
B
C
D
E

Multi-sourcing complete (ordering complete)Multi-sourcing preparation complete (ordering possible)
Material evaluation complete
Candidate selection complete / not yet evaluatedSpecified customer, no alternative, discontinued,
alternative unknown

Fuji Electric Report 2023

58

Corporate Governance
Basic Policies

Nomination and Remuneration Committee

In strengthening our corporate governance, our basic policies are to protect shareholder rights and ensure their equal treatment,cooperate appropriately with non-shareholder stakeholders, ensure proper information disclosure and transparency, execute theduties of the Board of Directors, and engage in dialogue with shareholders.

Fuji Electric has established the Nomination and Remuneration
Committee as the advisory body for the Board of Directors
in order to enhance the Company’s corporate governanceby reinforcing the fairness, transparency, and objectivity ofprocedures concerning the nomination of and remuneration for
Directors and Audit & Supervisory Board Members.

Corporate Governance Framework
Fuji Electric’s corporate governance framework consistsof the Board of Directors, which performs the functions ofmanagement supervision and making important decisions,and the Audit & Supervisory Board Members and the
Audit & Supervisory Board, which are in charge of the
management audit function, and the framework guarantees
objectivity and neutrality.
The Company actively appoints Outside Directors
and Audit & Supervisory Board Members that satisfy therequirements for independence, endeavors to strengthen
management supervisory and auditing functions, and has
established the Nomination and Remuneration Committee
comprising a majority of Outside Directors as an advisory
body to the Board of Directors.

In addition, in order to clarify the roles of management andexecution, we have introduced an executive officer system toclarify the responsibilities of each business and streamline theexecution of duties. In order to continue strengthening ouroperating platform as a company with sustainable growth,in fiscal 2022 we appointed a Chairman of the Board and
CEO and President and COO. We are endeavoring to build
an effective corporate governance framework by establishing
the Executive Committee, which discusses and reports onimportant matters related to management as an advisory
body to the Chairman of the Board and CEO and President
and COO, as well as other committees tasked with planningand promoting key business strategy issues and key external
issues, such as legal compliance.

Corporate Governance Framework (As of June 27, 2023)

Outside Directors and Audit & Supervisory
Board Members Ratio

General Meeting of Shareholders
Appointment/Dismissal

Board of Directors

Audit & Supervisory Board

Comprising 10 Directors(including 4 Outside Directors)

Comprising 5 Audit &Supervisory Board Members(including 3 Outside Audit &Supervisory Board Members)

Consultation/
Recommendations

Audit

Oversight
ReportNomination andRemuneration Committee

Appointment/
Dismissal

Appointment/Dismissal

Outside Audit &Supervisory
Board Members
3 people

Standing Directors
6 people
7 people/
15 people

Accounting Auditors
Cooperation

46.7%

Outside Directors
4 people

Standing Audit &Supervisory Board Members
2 people

Audit

Female Directors and Audit &Supervisory Board Members Ratio

Chairman of the Board and CEO
Executive Committee

Female Directors
1 personPresident and COO

Male Audit &Supervisory Board
Members
4 people2 people/
15 people

Committees*

Female Audit &Supervisory Board
Members
1 person

13.3%
Internal Auditing Divisions* Committees[Key issues for Fuji Electricfrom an SDGs perspective]• SDGs Promotion Committee

Fuji Electric Compliance Regulations
Fuji Electric Compliance Program
Business Ethics Whistle-Blowing Systems
Fuji Electric Risk Management Rules[Legal compliance andother key external issues]• Fuji Electric Compliance Promotion Committee• Health & Safety Promotion Committee

Fuji Electric Rules for Prevention of Insider Trading
Fuji Electric Group Contingency
Plan for Emergency Situations
Auditor Liaison Committee etc.

Nomination and Remuneration Committee
Membership Composition (Outside Directors
and Audit & Supervisory Board Members) Ratio[Key business strategy issues]• Skills Development Committee• Production Technology Committee• Technology Development Committee• International Standardization Committee

4 people/
6 people

Standing
Directors
2 people

Progress of reforms for improving the effectiveness of corporate governance2003 onward Introduction of Outside Directors
and Audit & Supervisory Board
Members

59

Fuji Electric Report 2023

2011 Transition to a business company system> 18 people
Number of Executive Officers 53 people —2012 Appointment of a female Outside Audit& Supervisory Board Member

The Committee Chairman
Outside Director Toshihito Tamba
Committee Members
Outside Directors Yukari Tominaga, Yukihiro Tachifuji, Tomonari Yashiro
Standing Directors Michihiro Kitazawa, Shiro Kondo

Appointment of Directors and Audit & Supervisory Board Members
Candidates for Directors and Audit & Supervisory Board Members are decided by taking into account such factors as the overallbalance of qualifications and experience on the Board of Directors, and other viewpoints such as diversity.
Standing Directors

Persons with the qualifications, experience, and other attributes required to execute the Company’s management policies are appointed.

Outside Directors

Persons equipped with the insight and experience required to make multilateral business decisions who also have an understanding of
Fuji Electric’s management are appointed, including corporate managers and experts in academic fields deeply related to our business.

Standing Audit &Supervisory Board Members

Persons familiar with the Company’s operations in general who also possess expert knowledge and experience are appointed.

Outside Audit & Supervisory
Board Members

Persons equipped with the expert knowledge and experience required to undertake audits who also have an understanding of Fuji
Electric’s management are appointed, including corporate managers, persons with experience as a standing auditor of a listedcompany, and legal experts.

* Each Director’s term of office is one year so that we maintain the management framework capable of making clear the responsibilities of management in each fiscal year and of responding quickly to changes in thebusiness environment.

Fuji Electric judges the applicable candidate to be fully independent from the Company when he/she does not fall under any of
the conditions listed below, in addition to the criteria for independence stipulated by domestic financial exchanges, including theTokyo Stock Exchange.
(1) Major shareholder
A major shareholder of the Company (who owns 10% or more of the voting
rights) or its executor of business.

business of these institutions that is indispensable for the Company’s
funding and on which the Company depends to the extent that it isirreplaceable.

(2) Major business partner
A business partner (consultants such as lawyers, certified public
accountants, and tax accountants, as well as consulting firms such as law
firms, audit firms, and tax firms) or a person executing its business whosetransactions with the Company exceed 2% of the annual consolidated net
sales of the Company or the other entity in the past three fiscal years.

(4) Accounting Auditor
A certified public accountant who belongs to an auditing firm that serves
as the Accounting Auditor of the Company or an employee of or any otherperson belonging to such auditing firm.

66.7%
Outside Directors
4 people(Including thecommittee chairman)

2003 Pure holding company system

Nomination and Remuneration Committee (Fiscal 2023)

ESG Initiatives

Corporate Philosophy
Fuji Electric Code of Conduct
Fuji Electric Job Authority Rules
Fuji Electric Compliance Promotion Committee(1) Policy on the composition of the Board of Directors(2) Policies and criteria regarding the appointment or dismissal of Directors, thePresident and Chairman of the Board of Directors, and Audit & Supervisory
Board Members(3) Appointment or dismissal of Directors, the President and Chairman of theBoard of Directors, and Audit & Supervisory Board Members(4) Matters regarding the formulation and implementation of a succession plan for
the President and Chairman of the Board of Directors(5) Policies and criteria regarding the remuneration of Directors and Audit &Supervisory Board Members(6) Details of remuneration for Directors and Audit & Supervisory Board Members

Independence Criteria for Outside Directors and Audit & Supervisory Board Members
Male Directors
9 people

Major Regulations and Committees Comprising Internal Control Systems

Matters for Consultation

The committee comprises at least three Directors as
members, the majority of which are elected from among theCompany’s Outside Directors. The chairman is elected fromamong the Outside Directors that sit on the committee as
members.
The Nomination and Remuneration Committee met threetimes in fiscal 2022 to discuss and confirm the current
systems, criteria, and approaches regarding advisory matters,
as well as to deliberate on and report to the Board of Directors
the content to be reported to the Board of Directors by the
Nomination and Remuneration Committee concerning content
such as the appointment and remuneration of Directors andAudit & Supervisory Board Members.

Speeding up the management decision-making
2022 Appointment of a female Outside Director

2019 E stablishment of the Nomination and
2021 Disclosure of the Directors’ skill matrix
Remuneration Committee
2019 onward Commencement of Board of Directors effectiveness evaluation(3) Major lender, etc.
A financial institution, other major creditor, or a person executing the(5) Donee
A person executing the business of an organization which receives adonation exceeding 10 million yen per year that is greater than 2% of its
annual income from the Company for the past three fiscal years.

Fuji Electric Report 2023

60

Corporate Governance

List of Officers (As of June 27, 2023)
Directors
Regarding the insight and experience required for the Board of Directors of Fuji Electric, in light of the Management Policies ofFuji Electric, including “contribute to the creation of a sustainable society through our energy and environment businesses,” andour business characteristics, we have defined the seven fields of “business management,” “finance and accounting,” “global
business,” “environment and society,” “R&D, technology, manufacturing, and DX,” “corporate governance, legal matters, and risks”
and “marketing and industry.”

Directors

Audit & Supervisory Board Members
Yoshio Okuno

Junichi MatsumotoStanding Audit & Supervisory Board Member
Chairman of the Audit & Supervisory Board

Standing Audit & Supervisory Board Member

Tetsuo Hiramatsu

Hirohiko Takaoka

Outside Audit & Supervisory Board Member
Senior Advisor, Chuo-Nittochi Co., Ltd.

Outside Audit & Supervisory Board Member

Areas Expected to Director by the Company
Business
Management

Finance andAccounting

GlobalBusiness

Environment
and Society

R&D,
Technology,
Manufacturing,and DX

Corporate
Governance,
Legal Matters,
and RisksMarketing andIndustry

Michihiro Kitazawa
Representative Director
Chairman of the Board andCEO (Chief Executive Officer)
Nomination and Remuneration Committee member

Yuko Katsuta
Outside Audit & Supervisory Board Member
Partner, ITN Partners

Shiro Kondo
Representative Director
President and COO (Chief Operating Officer)
President
In charge of Corporate R&D
Nomination and Remuneration Committee member

Toshihito Tamba
Outside Director
Nomination and Remuneration Committee chairman
Executive Adviser, Tokyo Century Corporation

Yukari Tominaga
Outside Director
Nomination and Remuneration Committee member
External Director, MORINAGA MILK INDUSTRY
CO., LTD.
Outside Director, Yashima & Co., Ltd.
Outside Director, SB Technology Corp.

Executive Officers
Position

Name

President Executive Officer

Shiro Kondo

Chief Operating Officer; In charge of Corporate R&D

Senior Managing Executive Officer

Michio Abe

In charge of Production & Procurement and Power Generation Business

Senior Managing Executive Officer

Masatsugu Tomotaka

In charge of Power Electronics Sales, Power Electronics Energy Business,
Power Electronics Industry Business, and Fuji Electric FA Components & Systems Co., Ltd.

Senior Managing Executive Officer

Junichi Arai

Corporate General Manager, Corporate Management Planning Headquarters; General Manager,
Export Administration Office; In charge of compliance management

Senior Managing Executive Officer

Toru Hosen

Corporate General Manager, Semiconductors Business Group

Yukihiro Tachifuji
Outside Director
Nomination and Remuneration Committee member
Advisor, Mitsubishi Paper Mills Limited

Tomonari Yashiro

Division

Outside Director
Nomination and Remuneration Committee member
Professor, Kochi University of Technology
Specially-appointed Professor, Tokyo City University

Managing Executive Officer

Takeshi Kadoshima

General Manager, Human Resources and General Affairs Office; In charge of crisis management

Managing Executive Officer

Masashi Kawano

Corporate General Manager, Power Electronics Energy Business Group

Michio Abe

Managing Executive Officer

Hiroshi Tetsutani

Corporate General Manager, Power Electronics Industry Business GroupManaging Executive Officer

Yoshitada Miyoshi

General Manager, President’s Office; In charge of SDGs Promotion, and Public Relations and IR

Director
Senior Managing Executive Officer
In charge of Production & Procurement and Power
Generation Business

Executive Officer

Kenji Goto

Deputy Corporate General Manager, Power Electronics Energy Business Group

Director
Senior Managing Executive Officer
Corporate General Manager,
Corporate Management Planning Headquarters
General Manager, Export Administration Office
In charge of compliance management

Executive Officer

Masahiro Morimoto

President and Representative Director, Fuji Electric FA Components & Systems Co., Ltd.

Executive Officer

Tadao Horie

Corporate General Manager, Power Generation Business Group

Executive Officer

Masato Miyake

General Manager, Legal Office, Corporate Management Planning Headquarters

Executive Officer

Keiichi Asano

Corporate General Manager, Food & Beverage Distribution Business Group

Executive Officer

Takashi Obinata

Corporate General Manager, Production & Procurement Group

Executive Officer

Hiroshi Ishii

Corporate General Manager, Power Electronics Sales GroupESG Initiatives

Junichi Arai

Toru Hosen
Director
Senior Managing Executive Officer
Corporate General Manager, Semiconductors
Business Group

Hiroshi Tetsutani
Director
Managing Executive Officer
Corporate General Manager, Power Electronics
Industry Business Group61

Fuji Electric Report 2023

Fuji Electric Report 2023

62

Corporate Governance

Activities of Outside Directors and Audit & Supervisory Board Members in Fiscal 2022

Remuneration for Directors and Audit & Supervisory Board Members

To strengthen our management supervisory and auditing functions, and to ensure the validity and appropriateness of ourimportant decisions, the Directors and Audit & Supervisory Board Members play the proper roles as stated below.

Process of determining remuneration

Outside Directors

Name

Status of Attendance at Board of
Directors Meetings(Meetings Attended/Meetings Held)
Status of Attendance at Nomination
and Remuneration Committee(Meetings Attended/Meetings Held)

Main Activities

13/13
3/3

[Board of Directors]
Mr. Tamba offered opinions as necessary on all areas of Fuji Electric’s management, including on the following
matters, based on his professional standpoint and considerable insight as a manager of listed companies.
• Formulation of a business plan taking into account changes in the market environment• Appropriate ways to carry out IR activities[Nomination and Remuneration Committee]
As the committee chairman, Mr. Tamba led the supervisory function in appointment of candidates for Directors andAudit & Supervisory Board Members of the Company and the process of determining remunerations for Directors
and Audit & Supervisory Board Members from an objective and neutral standpoint.

Toshihito Tamba

13/13
3/3

Naoomi Tachikawa

Yoshitsugu Hayashi

Yukari Tominaga[Board of Directors]
Mr. Tachikawa offered opinions as necessary on all areas of Fuji Electric’s management, including on the following
matters, based on his professional standpoint and considerable insight as a manager of listed companies.
• Managing the progress of management plans• Managing the progress of large-scale orders[Nomination and Remuneration Committee]
Mr. Tachikawa carried out the supervisory function in appointment of candidates for Directors and Audit &Supervisory Board Members and the process of determining remunerations for Directors and Audit & Supervisory
Board Members from an objective and neutral standpoint.

13/13
3/3

[Board of Directors]
Mr. Hayashi offered opinions as necessary on all areas of Fuji Electric’s management, including on the following
matters, based on his professional standpoint and considerable insight about the environment, transportation, andurban sustainable development fields that are closely related to the Company’s management policies.
• Initiatives to achieve decarbonization• How to expand the overseas businesses[Nomination and Remuneration Committee]
Mr. Hayashi carried out the supervisory function in appointment of candidates for Directors and Audit & Supervisory
Board Members and the process of determining remunerations for Directors and Audit & Supervisory Board
Members from an objective and neutral standpoint.

9/10
–/–

[Board of Directors]
Ms. Tominaga offered opinions as necessary on all areas of Fuji Electric’s management, including on the following
matters, based on her abundant experience and considerable insight pertaining to corporate management.
• How to promote the active participation of diverse human resources• Initiatives for expansion of the IT solutions business* Ms. Yukari Tominaga was newly appointed a Director as of the conclusion of the 146th Ordinary General Meeting of Shareholders held on June 28, 2022; therefore, the above Board of Directors attendance status covers themeetings of the Board of Directors held on or after her appointment.

Name

Main Activities

13/13
8/8

Hirohiko Takaoka

13/13
8/8

[Board of Directors]
Mr. Takaoka confirmed and offered opinions as necessary concerning agenda items and the status of Fuji Electric’s
business activities based on his extensive experience and considerable insight as an experienced Full-time Audit &Supervisory Board Member and any other type of executive of listed companies.
[Audit & Supervisory Board]
Mr. Takaoka confirmed and offered opinions on the legal compliance of the overall business activities of Fuji Electric.

Yuko Katsuta

13/13
8/8

[Board of Directors]
Ms. Katsuta confirmed and offered opinions as necessary concerning agenda items and the status of Fuji Electric’s
business activities based on her expert knowledge as an attorney.
[Audit & Supervisory Board]
Ms. Katsuta confirmed and offered opinions on the legal compliance of the overall business activities of Fuji Electric.

Fuji Electric Report 2023

We have established a remuneration system andremuneration levels that are deemed appropriate for theirrespective duties and in accordance with shareholder
mandates, giving due consideration to the aims of securingand maintaining competent personnel and providing
incentives for the improvement of business performance.
We routinely verify that the system and levels areappropriate or whether they need reviewing in light of changes
in the operating environment or objective external data.

Classification

Remuneration System

Standing Directors

The amount of performance-linked remuneration for Standing Directors is based on the payment level that pushes up the
proportion of performance-linked remuneration when there is a rise in the consolidated ratio of operating profit to net sales,
which is set as a critical target in a medium-term management plan. The previous year’s consolidated performance (e.g., net
sales, operating profit, profit, and dividends) is taken into account to make the final decision. The consolidated operating profit
ratio for fiscal 2022 was 8.8%, and performance-linked remuneration accounted for about 56% of the remuneration.
Base Remuneration
Base remuneration is a predetermined amount that is paid monthly at a certain time according to their position. A portion of thebase remuneration is contributed to the director shareholding association to share the economic interests of shareholders andas an incentive to make management aware of share value.
Performance-Linked Remuneration
Performance-linked remuneration is paid annually at a certain time only in instances in which dividends are paid to allshareholders from retained earnings. The total amount of performance-linked remuneration shall be within 1.0% ofconsolidated profit for the fiscal year prior to the date of payment in order to make the link with consolidated results for eachfiscal year more clearly.

Standing Audit & Supervisory Board Members
Outside Directors and Audit &Supervisory Board Members

A predetermined amount is paid monthly at a certain time according to their position as base remuneration. Stocks in the
Company may be acquired at their own discretion.

Remuneration by Classification (Fiscal 2022)
Remuneration by Type (Millions of Yen)

Total Remuneration(Millions of Yen)

Base Remuneration

Performance-Linked Remuneration

Standing Directors

753

311

441

8

Standing Audit & Supervisory Board Members

59

59

—

2

Outside Directors and Audit & Supervisory
Board Members

70

70

—

7

Classification

Number of Recipients

Amount of Contributions to the Director Shareholding
Association (Millions of Yen)

Shares of the Company Acquired(Hundreds of Shares)

Directors

27

51

Audit & Supervisory Board Members

6

10
ESG Initiatives

63

Policy regarding decisions on remuneration

Classification-Based Remuneration System

Classification[Board of Directors]
Mr. Hiramatsu confirmed and offered opinions as necessary concerning agenda items and the status ofFuji Electric’s business activities based on his extensive experience and considerable insight as a manager
at financial institutions.
[Audit & Supervisory Board]
Mr. Hiramatsu confirmed and offered opinions on the legal compliance of the overall business activities ofFuji Electric.

Tetsuo Hiramatsu

General Meeting of Shareholders and with reference to thedetails of the committee’s report.

Amount of Contributions to Director Shareholding Association and Shares of the Company Acquired (Fiscal 2022)

Outside Audit & Supervisory Board Members
Status of Attendance at Board of
Directors Meetings(Meetings Attended/Meetings Held)
Status of Attendance at Audit &Supervisory Board Meetings(Meetings Attended/Meetings Held)

The Nomination and Remuneration Committee discusses
policies and criteria concerning remuneration as well as thedetails of remuneration. The Nomination and Remuneration
Committee discusses the validity of the policies, criteria, andlevels of remuneration in light of changes in the operating
environment, objective external data, and other matters andthen reports to the Directors, and then the Board of Directors
resolves on the policy for the final decisions respecting thedetails of the committee’s report.
The actual decision on remuneration amounts for individual
Directors is left to the discretion of Representative Director
Michihiro Kitazawa, but within the limit resolved at theTraining Policy for Directors and Audit & Supervisory Board Members
Before taking office, Standing Directors and Audit &Supervisory Board Members undergo compliance training,which also encompasses legal and taxation matters. They
are also provided opportunities after taking office to acquirenecessary knowledge on an ongoing basis.
Before taking office, Outside Directors and Audit &Supervisory Board Members are briefed on the state of
the Company and the roles they are expected to perform.
After taking office, they have the chance to deepen theirunderstanding of the Company through presentations on
the strategies for business, R&D, and other operations,inspections of business bases, and other ways.

Outside Directors and Audit & Supervisory Board
Members receiving an explanation of the R&D strategy

Fuji Electric Report 2023

64

Corporate GovernanceEvaluation of Effectiveness of the Board of Directors

Internal Control System

We conduct the evaluation of the effectiveness of the Boardof Directors with the use of a third-party survey once a year
in order to verify whether the Board of Directors is properly
fulfilling its expected roles and functions and to facilitate
further improvements thereof. Furthermore, in order todeeply examine the survey results, individual interviews of
the Directors and Audit & Supervisory Board Members wereWith the aim of complying with laws and regulations,managing the risk of loss, and securing the efficiency of theexecution of duties, the Fuji Electric Board of Directors has
determined basic policies concerning the establishment of
an internal control system as stipulated in the Companies
Act of Japan, and the Company discloses those policies.
Fuji Electric discloses information on the implementation of
its internal control system, thereby taking steps to respondpromptly and accurately to the demands placed upon the
Company by society.

implemented by the internal Board of Directors secretariat
in fiscal 2022. Through all of these processes, we earned
mostly positive assessments, thereby assuring the overall
effectiveness of the Board of Directors.
The results of the surveys and interviews are discussed
and reported in the Board of Directors, and issues that
require improvement are shared with everyone.

Method of Evaluation of Effectiveness of the Board of Directors
Implementation ofan anonymous survey
by a third party(A survey of all the Directors
and Audit & Supervisory Board
Members)

Implementation of individualinterviews by the internal
Directors secretariat(A survey of all the Directors
and Audit & Supervisory Board
Members)

Identification of issues basedon third party survey result
reports and advice andindividual interview results

Board of Directors analyzes,
discusses, andassesses the findings

Main question categories(1) Board of Directors make-up, administration, discussions, and monitoring functions(2) Support structure and training for Directors and Audit & Supervisory Board Members(3) Dialogue with shareholders(4) Initiatives implemented by Directors and Audit & Supervisory Board Members themselves

The main initiatives in fiscal 2022 and the policies for initiatives in fiscal 2023 with respect to the major issues identified in fiscal
2021 are as follows.

Main Initiatives with Respect to the Major Issues Identified in the Effectiveness Evaluation of the Board of Directors
Major Issues Identified in the Fiscal
2021 Effectiveness Evaluation

Major Opinions of the Outside Directors andAudit & Supervisory Board Members

Discussion of important mediumand long-term issues

Major Issues Identified in the Fiscal
2022 Effectiveness Evaluation

65

Implemented R&D strategy presentations for
Outside Directors and Audit & Supervisory
Board Members
Reported in the Board of Directors on thestatus of IR activities as well as opinions,requests and other feedback from analysts
and institutional investors• Enhancement of disclosure of initiatives and results pertaining to
SDGs promotion• Organization of the approach to external disclosure with respect toclimate change risk
• Explanation of the relationship between Fuji Electric’s business andsocial contribution• Formulation of a human resources strategy and the setting of goals(overseas, management, female active participation, and others)• Organization of the approach with respect to consideration of theintroduction of reskilling, profit returns, the equity ratio and capital
investment

Based on regulations and other systems pertaining tomanaging the risk of loss, Fuji Electric has developed an
appropriate risk management system in order to manage
business risks in a coordinated, systematic manner. In regard
to specific cross-sectional risks, the Company determines
departments to put in charge of each risk, thereby
establishing a risk management system.

Audit & Supervisory Board Members and Internal Audits
Strengthening collaboration between audit functions
Fuji Electric ensures the effectiveness of its audit functions
by reinforcing collaboration between statutory audit functions(Audit & Supervisory Board Members, Accounting Auditors)

and internal audit functions (Internal Audit Office). We willcontinue to strengthen this collaboration going forward, with aparticular focus on project management for large-scale projects,
compliance audits, and audits at overseas subsidiaries.

Main Initiatives for Strengthening Collaboration
Fuji Electric

Key matters shared by Auditor Liaison
Committee (once yearly)

Internal audit functions

Audit & Supervisory Board
Accounting Auditors

Audit & Supervisory
Board Members

Internal Audit Ofﬁce

Information shared between Audit &Supervisory Board Members andthe Internal Audit Ofﬁce (once monthly)Group Auditor Committee (every quarter)

Information shared by Auditor Liaison
Committee (once monthly)

Subsidiary, which is a large company under the Companies Act

Statutory audit functions

Accounting Auditors

Internal audit functions

Audit & Supervisory
Board Members

Internal Audit Ofﬁce• Continuous revision of the R&D roadmap based on our business andtechnology mix• Management of product development and target values back castfrom the CO2 reduction target• Implementation of meetings between top management andinstitutional investors• Consideration of IR activities for individual investors

Policies for Major Initiatives in FY2023

Reporting and discussion ofimportant medium- andlong-term issues

We will continue to work on enhancing opportunities for reporting and discussing medium- and long-term issues that
contribute to the enhancement of corporate value, such as the establishment of human resources strategy, financial
strategy, and non-financial indicators.

Enhancement of the reporting
required for supervising important
decisions and business execution

We will continue to work on enhancing opportunities for reporting and discussing the status of business execution of eachdivision, for example, the plan for and progress of semiconductor investment, the overview of major subsidiaries.

Fuji Electric Report 2023

Risk management system(For the details refer to P71 “Risk Management")

Audits by the Audit & Supervisory Board Members
Audit & Supervisory Board Members conduct audits inaccordance with the audit policies and duties assigned andin compliance with the standards for audits established by
the Audit & Supervisory Board. They report the details andresults of their audits to the Audit & Supervisory Board.
In fiscal 2022, the Audit & Supervisory Board convened
eight times in total. Every meeting was attended by allof the Company’s Audit & Supervisory Board Members.
During the meetings, the Audit & Supervisory Board mainly
reviewed audit policies and plans, the appropriateness ofauditing methods and results of the Accounting Auditors,
and undertook an assessment of the Accounting Auditors.

ESG Initiatives

Report on dialogue withinstitutional investors

Based on systems for ensuring that Directors and employees

Statutory audit functions

Major Initiatives in FY2022
Each segment’s business plans and strategies,
major issues of the SDGs Promotion
Committee, personnel measures and otherissues discussed in the Board of Directors

Enhancement of information
provision and exchange of opinions
on our business and products[Main systems based on the internal control system]
Compliance system (For the details refer to P69 “Compliance")

perform their duties in a manner that is compliant with laws
and the articles of incorporation, Fuji Electric has establishedand promotes a compliance system in order to secure thetransparency and soundness of business execution.

It also reported on and reviewed important matters that theStanding Audit & Supervisory Board Members communicatedto the Outside Audit & Supervisory Board Members.
Main tasks• Attending and offering opinions at meetings of the Board of
Directors, the Executive Committee, the Compliance Promotion
Committee, and other important committees• Reviewing documents pertaining to important resolutions• Receiving explanations on the status of operational execution
from Directors and internal auditing divisions• Investigating the status of operations and assets at Fuji Electricitself, its consolidated subsidiaries in Japan and overseas, andcompanies undertaking M&As (done remotely as necessary)

Fuji Electric Report 2023

66

Corporate GovernanceInternal audits

Regarding issues pointed out, we confirm the state of progress
every quarter and implement follow-up audits as required.
In fiscal 2022, utilizing remote auditing, we conducted
audits at 44 bases, or about 40% of the audit sites. No risks orinadequacies with the potential to seriously affect management
were discovered.

As a general rule, every second year the internal auditing
divisions as bodies directly under the President performthe following audits on Fuji Electric’s business divisions
and subsidiaries so as to comprehensively cover the entire
organization in accordance with the Internal Auditing Rules.
Type of Audit

Main Tasks

Organizational management

Evaluating the appropriateness of management and administration(development of regulations, approval procedures, performance management, etc.)

Risk management

Evaluating the effectiveness of risk management systems and risk response

Compliance

Checking for compliance with laws and regulations based on the Fuji Electric Compliance Programand confirming legal complianceBusiness execution

Evaluating the appropriateness, efficiency, and effectiveness of business execution(booking of sales and purchases, investments, cash flow, etc.)

Accounting

Evaluating the appropriateness of cost accounting and the soundness of assets and liabilities

Dialogue with Shareholders and Investors
Basic policies

Major initiatives in fiscal 2022

We disclose information in accordance with various laws andregulations. Even if we are not required to do so by law, we
also strive to disclose corporate information thought to havea significant impact on investment decisions in a timely, fair,and equitable manner, so that we might earn the trust of ourshareholders and investors and ensure they have a proper
understanding of the Company.

We handled more media coverage on conference calls or
online, provided more elaborate information than ever todisclose at the IR briefings, and published more detailed
IR information on our website in order to ensure that ourshareholders and investors have a clearer understanding of ourbusiness environment, business strategy, and ESG initiatives.

Overview of the Main Initiatives in Fiscal 2022
EventsBriefings
Full-year financial
results briefings
Management plan
presentations

Apr

Policy on Cross-Shareholding
Fuji Electric holds listed shares as a matter of policyin order to maintain and strengthen relations with its
investee companies. Our basic policy is to reduce crossshareholdings. Even in cases where we recognize a certain
rationality in holding these cross-shareholdings, we will
reduce them while paying attention to the impact onmanagement and business.
Based on the above policy, we have reduced the numberof different listed stocks we held from 102 as of the end of
fiscal 2018 to 17 as of the end of fiscal 2022.
The Board of Directors periodically evaluates the rationalityof shareholding in light of whether it is necessary to maintainand strengthen relations with the investee companies and of
the comparison of capital cost and return. The details of thereview are disclosed.
The voting rights that come with cross-shareholding are
exercised after considering all relevant factors, including
whether the proposed action will help the issuing company
to establish an appropriate corporate governance frameworkand to increase its medium- to long-term corporate value,
and what impact the action will have on Fuji Electric. We also
have dialogue regarding the details of the proposal, among
others, with the issuing company as necessary.

Number of Cross-Shareholdings and Balance Sheet Value
Number of types of listed shares

Balance sheet value of listed stocks (Billions of yen)

102

79

105.0

98.0

82.6
17

End of FY2018

67

Fuji Electric Report 2023

End of FY2019

May

First quarter
Financial results presentation

Jun

Reports forthe shareholders

Jul

Aug

Reports forthe shareholders

Second quarter
Financial results presentation

Sep

Fuji Electric Report

Opinions of analysts and institutional investors
We actively engage in dialogue with analysts and institutional
investors, and the information shared at briefings and theprincipal feedback and requests we receive during private

Oct

ESG Meeting

Third quarter
Financial results presentation

Nov

Dec

Jan

Reports forthe shareholders

Feb

Mar

Reports forthe shareholders

meetings are shared with the executive officers and Board of
Directors, so that we discuss them as management issues.
The main opinions and requests received from analysts andinstitutional investors in fiscal 2022 are as follows.

Opinions on management and business

Opinions on topics for information disclosure• Clarify the goals, strategies and measures of the next Medium-Term
Management Plan
• Clarify long-term growth strategy and direction• Promote measures to improve low-profit businesses• Clarify and promote issues, strategies, and measures in overseas
businesses expansion• Promote human resources strategies and human capital investment linked
to management strategies• Ensure human resources cultivation for the appointment of internal female
directors and the diversity of the Board of Directors• Further reduce cross-shareholdings• Take specific measures for further expansion strategies for the powerelectronics business and profitability improvement for the automation business• Specific medium- and long-term business strategies for semiconductors• State of progress of the expansion of the renewable energy and after-sales
business of the power generation plants• The direction and sales expansion strategies of the overseas food andbeverage distribution business• Take initiatives for the achievement of the Environmental Vision 2050 Target
and present business strategies and plans consistent with the Environmental
Vision Fiscal 2030 Target• Enhancement of information disclosure concerning executive remuneration

End of FY2020

End of FY2021

Awards Related to IR
The 2022 IR Award
Fuji Electric has won the 2022 Best IR Award of the Japan Investor
Relations Association as a company that deeply understands the purposeof and actively tackles IR and has achieved outstanding results, such as ahigh level of support from market players.

ESG Initiatives

99.8

Business strategy
presentations

Factory tour programs for shareholders(Tokyo Factory, Mie Factory)

74

45

100.4

Publications

General Meetingof Shareholders

Awards for our IR site
In recognition of the ease of use and abundance of the information on the
Fuji Electric IR site, among other factors, the site has won the gold prizein the Gomez IR Site Overall Rankings from Morningstar Japan KK (for thethird consecutive year) and the Internet IR Commendation Award 2022
from Daiwa Investor Relations Co., Ltd. (for the fourth consecutive year).

End of FY2022

Fuji Electric Report 2023

68

ComplianceFuji Electric Business Ethics Whistle-Blowing
Systems

Basic Policies
The Fuji Electric Code of Conduct states that Fuji Electric must
“make global compliance a top priority.” In addition, we havedefined the Fuji Electric Compliance Regulations, a guideline forcompliance, under the supervision of the Board of Directors.
We also globally promote compliance through the Fuji Electric
Compliance Program and the Fuji Electric Business Ethics WhistleBlowing Systems.

Fuji Electric Compliance Regulations
Board of Directors

Executive Committee
Report once a year

Fuji Electric
Compliance Promotion Committee

Promotion System(Meetings held once every six months)

The Fuji Electric Compliance Promotion Committee is headed by
our President and COO as its Chairman, and it consists of control
chiefs (managers of businesses and corporate department heads)
responsible for regulating laws and acts, with Standing Audit &Supervisory Board Members and outside experts (attorneys) as
observers. The Committee meets twice per year to deliberate on
the implementation status of the Fuji Electric Compliance Program
and the Fuji Electric Business Ethics Whistle-Blowing Systems
as well as the plan for implementing the Fuji Electric Compliance
Program and then reports to the Board of Directors once per year.
In the event of a compliance infraction, there is a system in place totake any necessary measures such as fact-finding investigations,corrective actions, recurrence prevention measures, internalpunishments, and internal and external disclosure.

* Committee composition
Committee chairman: President and COO
Committee members:	Managers of businesses andcorporate department heads
Observers:	Standing Audit & Supervisory Board
Members and external lawyers

Fuji ElectricBusiness Ethics
Whistle-Blowing Systems

Fuji Electric
Compliance Program* In-house secretariats and externallawyers receive whistle-blowing reports.

Fuji Electric has established the Fuji Electric Compliance
Program to cover four aspects related to compliance withJapanese and overseas laws by both the Company and
its Group companies in Japan and overseas. Throughreviews and revisions made by the Fuji Electric Compliance
Promotion Committee, we conduct activities while also
actively acquiring external certifications and disclosing
information externally in order to verify the effectiveness of
our activities from an external perspective.

Fuji Electric Report 2023

Establishment, revision, abolition, anddissemination of internal rules
Daily monitoring of the status ofcompliance with laws and internal rules

Compliance education
We promote wide-ranging and systematic complianceeducation through level-specific and job-specific grouptraining, online training, e-learning programs and webdelivered training, as well as by displaying posters internallyand distributing pamphlets.

Fiscal 2022 Compliance Education Results (examples)
Training
category

Levelspecific

Auditing by third parties

Compliance education

Jobspecific

Participants

Details

Newly appointed executives(Japan)14

Building a legal compliance system

Newly appointed managers

108Compliance with major laws

New employees

258

Overview of our Fuji Electric
Compliance Program and Business
Ethics Whistle-Blowing Systems
Building a legal compliance system

Overseas base executives

142

Sales and administrative
division employees

2,488Overseas sales company
employees

616

Compliance with major laws
Bribery prevention and competition
laws

As a result of implementation of the Fuji Electric Compliance
Program and the Business Ethics Whistle-Blowing Systems,
in fiscal 2022 there were no compliance infractions with thepotential to seriously impact the management of Fuji Electric.

Bribery prevention
With the article “Make global compliance a top priority” statedin the Fuji Electric our Corporate Code of Conduct, we havedeclared our commitment to bribery and corruption prevention,
and we have disclosed the Fuji Electric Anti-Bribery Policy aspart of the Fuji Electric Code of Conduct. Under this policy,
we endeavor to prevent bribery throughout the supply chain,such as by ensuring that no Fuji Electric employee (including
dispatch employees) ever engages in bribery or any act that
could arouse the suspicion of bribery and by requesting that
all of our stakeholders—including suppliers and other business
partners—strive to prevent bribery.
We have also established the Fuji Electric Anti-Bribery
Guidelines as a set of rules for Fuji Electric employees(including dispatch employees) to help them prevent bribery
during their daily business, and we endeavor to prevent
bribery through the execution of the Fuji Electric Compliance
Program. Any employee who is involved in bribery will be

subject to strict disciplinary actions based on our work rules.
In fiscal 2022, there were no incidents of employees being
subject to disciplinary actions due to the violation of our antibribery rules, and no fines, surcharges, or settlements related
to bribery were incurred.

Prevention of competition law infractions
In an effort to prevent the violation of competition laws, wehave established and appropriately revise daily businessrules, including our Antimonopoly Act Compliance Manualand Foreign Competition Law Compliance Manual. We
also perform daily monitoring by confirming quotations
and estimates via a comprehensive bidding information
management system and extensive record-keeping. In
addition, our internal auditing divisions perform auditsin accordance with auditing guidelines, and we conduct
extensive level-specific and job-specific training. Any employee
who is involved in the violation of competition laws will be
subject to strict disciplinary actions based on our work rules.
In fiscal 2022, there were no incidents of executives or
employees being subject to disciplinary actions due to theviolation of the competition laws, and no fines, surcharges, orsettlements related to competition laws were incurred.

ESG Initiatives

Fuji Electric Compliance Program

69

Partner Hotline
The Partner Hotline handles reports from external
stakeholders, including business partners. It is thoroughly
promoted among them through posts on the website andbriefing sessions for business partners.

Results of Promotion

Fuji Electric Compliance Program• Anti-corruption andcompetition laws
• Labor and human rights• Product safety and theenvironment• Taxation and accounting• Information security• Export management

Business Ethics Helpline
The Business Ethics Helpline handles reports fromour executives and employees in Japan and overseas(including retirees and dispatch employees). It isthoroughly promoted among employees throughpublications in the Company magazine and the intranet.

Partner Hotline
https://www.fujielectric.com/company/procurement/partnerhotline.html

Status of Promotion

A total of 54 categories
of Japanese and foreign
target laws
(Examples below)

To promote self-purification actions by preventing infractionsof laws and regulations and ensuring early detection, we haveintroduced and are operating the Fuji Electric Business Ethics
Whistle-Blowing Systems. Under these systems, internaland external parties can report real or suspected violationsof laws, regulations, or internal rules in business execution—
including matters related to bribery and corruption—to
the President and COO of Fuji Electric via whistle-blowing
contact points (in-house contact points and external lawyers).
(Anonymous reporting is also possible.)
In fiscal 2022, there were 46 reports from Japan andabroad (17 cases of harassment, 16 cases related to labor,
3 cases related to accounting, and 10 other cases), and 10of these were infractions (2 cases of harassment, 3 cases
related to labor, 1 case related to accounting, and 4 othercases).
Regarding our response to the reports, we work
meticulously to protect whistle-blowers by keeping
their personal information confidential and prohibiting
disadvantageous treatment and retaliatory or discriminatory
acts on the grounds of whistle-blowing. In addition,
we take all necessary steps to resolve issues raised bywhistle-blowers, including fact-finding investigations,corrective actions, recurrence prevention measures, anddisciplinary actions. We also provide the details of our
response to the whistle-blowers themselves as feedback.
(We also strive to indirectly provide feedback through theabove measures in the case of anonymous whistle-blowing.)
In addition, due to the enforcement of the revised
Whistleblower Protection Act on June 1, 2022, we
significantly strengthened our protection of whistle-blowers
by expanding the coverage of the protection to encompass
all Fuji Electric executives and employees, including retirees.

Fuji Electric Anti-Bribery Policy
https://www.fujielectric.com/company/box/doc/Anti-Bribery%20Policy.pdf

Fuji Electric Report 2023

70

Risk Management
Basic Policies
Based on the Fuji Electric Risk Management Rules, theCompany manages risks in a coordinated, systematicmanner. We practice appropriate management and counter
various risks that could affect Fuji Electric’s management in

Major Risks
order to prevent risks from materializing (crisis situations),
thereby minimizing the impact on management in the eventthat risks do materialize.

Risk Management System
The Company’s business divisions and affiliated companies
are responsible for managing risks related to their businessactivities as a part of their business duty, developing
appropriate risk management systems, and implementing risk
countermeasures.
Significant risks, such as those related to business plans
and large-scale investments, are reported at the Executive
Committee as appropriate to facilitate the sharing of
information. We also have manuals in place to ensure thatrisks are steadily managed. We provide training in handlingeach type of risk and inform the whole Company about ourefforts to manage risks through company magazines andother appropriate means.
The internal auditing divisions conduct regular audits tocheck whether each business division and affiliated company
identifies and evaluates risks based on the Fuji Electric Risk
Management Rules, defines countermeasure policies, andproperly builds and operates management systems.

Board ofDirectors

Audit

Audit &
Supervisory
Board

Oversight and Report

Cooperation

Risk Details

Management Strategy
Business Strategy
Business Environment• We concentrate our management resources on business that is expected to grow and pursue
capital investment and R&D investment accordingly. Regarding semiconductor capital investment
in particular, we make investment decisions based on our volume and price negotiations withcustomers, and regarding R&D investment, we emphasize factors that include consistency withour business strategy, and we promote fundamental and advanced technology R&D to support our
future based on our roadmap. Be that as it may, the semiconductor field has a short product cycle,
fluctuations in the product supply-demand balance, and fierce competition, and there is still a risk ofnot being able to recover investments.
• We consider the protection of the global environment to be an important management issue, and wecontinuously communicate our efforts to achieve a more sustainable society through our business,
including declaring our support for the TCFD and establishing our Environmental Vision 2050.
However, if our coal-fired thermal power business becomes the subject of increased criticism dueto the strengthening of environmental regulations or initiative evaluations by ESG evaluation bodies,
there is still a risk of this impacting Fuji Electric’s reputation.

Corporate
Governance• By constantly striving to improve our management transparency and auditing functions, we work on
strengthening our corporate governance, but there are still risks, such as our management falling
into disorder as a result of our corporate governance failing to function when internal control andother inadequacies occur due to unforeseen situations.

Business
Reorganizations,
Alliances, andWithdrawals• We strive to strengthen our competitiveness by collaborating with third parties, thereby building
good relationships with them as we share our corporate philosophy, etc. and endeavor to achieve
close communication, but there is still a risk of us not being able to achieve sufficient results due todifferences in systems and cultures.

Orders, Marketing,and Sales Promotion• We work on avoiding opportunity loss as we strive to keep costs down and reduce our total
expenses in order to minimize the impact of Japanese and overseas market trends on our results,
but there is still a risk of the market environment worsening, the product supply-demand balance
suddenly fluctuating, competition becoming fiercer, and the price level falling significantly as a resultof the above.
• For large plant projects, we strive to improve the accuracy of our quotations when we receive
orders and strengthen our project management after orders are received in order to ensure theappropriate level of profit, but there is still a risk of our profitability worsening as a result of unforeseen
specification changes after orders are received, process delays, natural disasters, etc.

Development and
DesignEngineering• We focus on R&D aimed at creating competitive components and systems as well as R&D thatprovides higher value solutions to customers by combining underlying technologies, but there is stilla risk of us failing to market our products at the right time due to us losing our superiority to othercompanies as a result of rapid technological progress or failing to achieve development as planned.

Procurement• We deploy various means, including product swaps, to deal with the risk of the prices of raw
materials soaring, but there is still a risk of the prices of raw materials, etc. significantly rising due toyen depreciation, demand increases, and similar factors.

Production &Manufacturing
Shipping &Distribution
Installation & Delivery
Services• We constantly strive to understand the latest volume trends while building production management
systems that are optimal for responding to volume fluctuations, but there is still a risk of excessive or
deficient inventory if there are delays in responding to changes in volume trends due to unforeseen
situations.
• We strive to promote community-based manufacturing, global procurement, but there is still a risk ofdelivery delays and similar problems due to the distribution network being disrupted by limitations on
the movement of goods and people.

Cooperation

Executive Committee

Cooperation
ReportReportEach Committee

Each Group and Each Ofﬁce(General Manager)

Internal
Auditing
Divisions

Audit

ReportAudit

Divisions, Area Operations, Factories,
Subsidiaries

as soon as possible. Hence, we have guidelines in placeon preparations for possible emergencies, an emergency
contact network, and setting up an emergency task force.

Risk Management Process
When annual budgets are formulated, the Company’s businessdivisions and affiliated companies gain an understanding ofand evaluate risks related to their business activities.
Policies and countermeasures in response to risks(aversion, mitigation, relocation, retention, and so forth)
are considered based on their impact on management
and frequency of occurrence, and each division appoints a
person in charge of policy and countermeasure execution.
We also conduct mid-year progress checks at the endof the second quarter of each fiscal year to carry out
fiscal year evaluations of risk countermeasures and thecountermeasures for the next year.

Annual Risk Management Process
Plan
Understand andevaluate risks

Do

ActionConsider policies andcountermeasures toaddress risks

Improve and implement
risk countermeasures

Check
Conduct mid-year
progress checks• Results of education drills• Organizational changes, personnel
reassignments• Revision of laws, regulations, etc.
• Applying experiences of addressing risks

Audits by Internal Auditing Divisions(Management system and operational status)

71

Fuji Electric Report 2023

Fuji Electric Report 2023

ESG Initiatives

Risk Items

Accounting
Auditor

Emergency response
If an emergency arises due to a large-scale disaster or
any other serious cause, we need to act to prevent thesituation from becoming any worse and resolve the situation

The current major risks that could impact Fuji Electric’s results or financial situation are shown below.

72

Risk Management

C L O S E
Risk Items
Quality Assurance

Human Resourcesand Labor

Finance andAccounting

Risk Details• We have developed a quality control system, we strive to ensure a high level of quality, and we havethe necessary insurance, but there is still a risk of quality problems due to unforeseen situations
impacting our results.
• We actively educate and train our employees and are expanding our mid-career hiring to ensurethat we have outstanding personnel, but there is still a risk of us not being able to secure or train thenecessary personnel.
• We constantly verify the optimal mix of corporate bonds, commercial paper, and short-term andlong-term borrowings, thereby striving to ensure that flexible, stable funding is possible, but there is
still a risk of our interest rate burden with respect to interest-bearing debt increasing due to interest
rates rising more than expected.
• We strive to enhance our collection of trade receivables by trying to strengthen our credit
management, but there is still a risk of not being able to recover debt due to the cash flows of ourbusiness partners worsening as a result of economic stagnation and similar factors.

U P !

Efforts to improve quality
Promoting quality assurance activities

Political andSocioeconomic
TrendsTrends ofShareholders andOther Investors

procurement sections and for our IT sections. Furthermore,by the Corporate General Manager of the Production &we implement education and training based on the formulated

Procurement Group and consists of Corporate General Managers

BCPs and we are working to strengthen our business continuityof Business Groups—we strive to improve our production

capabilities by regularly evaluating the effectiveness of the BCPs

technologies and quality throughout the Company.

and their management system in order to make improvements.

The High Reliability Working Group, a subordinate organization

External Attacks• We implement currency exchange contracts according to certain standards, but there is still a risk of
exchange rates to the yen fluctuating.
• To prepare for unexpected risks, we are trying to decentralize our production and sales bases,
but there is still a risk of our results being impacted by changes in overseas laws and regulations,political factors, social disorder, and similar issues.
• We strive to deepen everyone’s understanding of the Company’s management by emphasizing
active disclosure and communication with our shareholders and institutional investors while
also disclosing honest, accurate information, but there is still a risk of votes against executiveappointment agenda items, etc. due to differences between the intentions of investors andshareholders on the one hand and the Company’s management on the other.
• We strive to “strengthen our business continuity capabilities,” by setting up a specialized crisis
management division involved in spearheading fire safety and disaster-preparedness activities andformulating the business continuity plans (BCPs), but there is still a risk of damage to production
facilities, operations being suspended, product shipping delays, or similar problems due to largescale disasters and accidents.
• To respond to cyber-security threats, we implement attack monitoring and control, enhance our
defense and detection systems, and continuously strengthen our ability to respond through cyberdrills and similar measures, but there is still a risk of us losing the trust of society in cases where oursystems fail to function due to attacks from outside (cyberterrorism, etc.) and lead to problems suchas information leakage.

In fiscal 2022, we built a mechanism enabling us to share theof the Production Technology Committee, aims to achieve a

BCPs of each base throughout the company, in order to ascertain

stable, uniform level of quality by formulating a High Reliability

the BCPs companywide in a timely manner and strengthen the

Activities Policy every year and then applying it to business

management system. Based on the identified issues, we aredivisions and factories to promote activities. Every year, theworking to further strengthen education and training.

working group identifies all the serious complaints received andFuji Electric has also been positively evaluated for its active

continually conducts recurrence prevention diagnosis to reassessbusiness continuity efforts, and we have therefore acquired

the effectiveness of recurrence prevention measures. The

Resilience certification.

working group also promptly reports any serious quality problem
Technology Committee members, and other stakeholders inaccordance with the rules and regulations to share which risks
are involved and quickly promote countermeasures.

Positively evaluated for active
business continuity efforts,
leading to the acquisition of
Resilience certification

At our factories, we are also working on further improving
the accuracy, reliability, and speed of our quality control by
information, and traceability, expanding the range of equipment

Efforts to maintain andstrengthen information security

for which we can digitize or automate tests and inspections, andTo properly manage as confidential information all asset value

phasing in statistical quality control.

such as management, commercial and technical information

utilizing the IoT to promote the visualization of production, quality

Furthermore, as activities to increase the quality soundness,and personal information held by Fuji Electric, the Company has

in addition to the internal auditing we normally conduct, we areredeveloped and rolled out policies and regulations related to

implementing initiatives that have employees of different bases

information security based on the National Institute of Standards

mutually diagnose the health of our quality control system.

and Technology (NIST) Cybersecurity Framework.

In addition to diagnoses of whether the quality data satisfies

Furthermore, we have also established management

external required specifications and whether there are any

systems at Fuji Electric as well as Group companies in Japanproblems with the quality data creation process, since fiscal

and overseas, and we provide regular training to all of our2022 they have been mutually diagnosing the systems for theemployees, manage access to operating sites and offices,

selection, evaluation, and auditing of our business partners.

implement Internet device and computer security measures,

The realizations obtained through these activities are sharedand conduct annual inspections regarding the status of efforts

throughout the company to connect to instructional activities,

taken by each workplace.

such as efforts to promote a mindset leading to increased quality

In addition, to respond to increasingly diversified andsoundness, and they are reflected in the quality management

sophisticated cyber-security threats, we endeavor to strengthen

system and manuals in an effort to further reduce risk.

our computer security incident response team and security

Product quality assurance
https://www.fujielectric.com/company/csr/with_customer/
quality.html

operation center (CSIRT/SOC), our monitoring of signs and

ESG Initiatives

Natural Disasters andAccidents• We strive to ensure compliance with laws through our Fuji Electric Compliance Promotion Committee
and have developed compliance systems that include our compliance program and internal whistleblowing systems, but there is still a risk of society’s trust in us or our results being impacted if
violations of laws and regulations occur.
• We are building systems to quickly handle necessary processes in preparation for lawsuits andother legal disputes (including fact-finding investigations, corrective actions, recurrence prevention
measures, internal disciplinary actions, and disclosure), but there is still a risk of us being ordered to
pay an unforeseen, large amount of compensation.
• We strive to effectively protect intellectual property rights and develop products and technologies
that respect the rights of other companies, but there is still a risk of disputes that could impact our
results.

and we have also formulated Company-wide BCPs for ourUnder its Production Technology Committee—which is headed

that has arisen to the President and COO, the Production
Legal Affairs andEthicsarea operations, which serve as contact points with customers,

information related to new cyber attacks, and our informationsystem defense and attack monitoring functions.
At our bases as well, we strive to improve our information

Responding to natural disasters and accidents(BCP efforts)

security countermeasures based on the requirements of ourbusiness partners, related industry organization guidelines,
market trends, and other factors, and in businesses for which

In order to resume and continue the important businesses

public certification of information security management iswithin the required time even when unforeseen situations suchrequired, three departments and two subsidiaries of Fuji Electricas large-scale natural disasters and accidents occur, we haveCo., Ltd. have acquired information security management

formulated business continuity plans (BCPs), and are making

system (ISMS) certification. Furthermore, concerning personalefforts companywide for continuous improvement, based on theinformation protection, Fuji Electric Co., Ltd. and four of its

Fuji Electric Business Continuity Management (BCM) Rules.

subsidiaries have been granted the Privacy Mark.

We have formulated BCPs at the head office, factories, and73

Fuji Electric Report 2023

Fuji Electric Report 2023

74

Consolidated Financial and Non-Financial Highlights
Financial Highlights
Millions of yen

Fiscal year

Operating Results
Net sales
Japan
Overseas
Operating profit
Profit attributable to owners of parent
R&D and Capital Investment
R&D expenditures
Plant and equipment investment*2
Depreciation and amortization*3
Cash Flows
Cash flows from operating activities
Cash flows from investing activities
Free cash flow
Cash flows from financing activities
Financial Position
Total assets*4
Total net assets
EquityNet interest-bearing debt
Interest-bearing debt
Financial Indicators
Ratio of operating profit to net sales (%)
Ratio of overseas sales to net sales (%)
ROE (Return on equity) (%)
ROA (Return on assets) (%)*4
Equity ratio (%)*4
Net debt-equity ratio (times)*5
Debt-equity ratio (times)*6
Per Share Data*7
ProfitNet assets
Cash dividends
Dividend payout ratio (%)

Thousands of
U.S. dollars*1

2014

2015

2016

2017

2018

2019

2020

2021*92022*92022*9810,678605,763
204,915
39,31627,978813,550
597,757
215,793
45,00630,644

837,765
632,723
205,042
44,70940,978893,451
674,744
218,707
55,962
37,763914,915
682,503
232,41259,97240,267

900,604
679,719
220,885
42,51528,793875,927654,020
221,907
48,59541,926910,226
655,821
254,405
74,83558,6601,009,447
717,390
292,057
88,882
61,3487,589,829
5,393,910
2,195,918
668,287
461,265

35,02329,041
33,61535,94927,65029,72334,91027,14929,44535,62026,46530,151

33,66943,33830,90634,457
48,20832,31933,56235,89036,19433,75659,32039,96936,216
84,14745,938272,304
632,690
345,401

51,459(22,750)
28,708(33,828)

48,450(19,410)29,040(31,566)

58,185
9,748
67,934(56,083)

53,146(14,550)
38,596(46,887)

54,949(21,448)
33,501(38,174)

46,087(27,621)
18,466
16,917

26,931
23,47750,408(39,520)

76,809(22,350)
54,458(42,894)

116,163(49,498)
66,665(77,193)

873,412(372,171)
501,241(580,401)

904,522319,636
290,339
194,579
226,474

845,378
260,980
230,399
189,374
220,213886,663
323,863291,215
141,578
183,465914,744366,546
330,635
130,177
163,507952,659
392,061
352,921
124,850
153,985

996,827
406,002
365,619
153,617217,364

1,051,952
461,254
416,996
140,872
216,205

1,117,112
523,729472,900
117,041
208,391

1,181,552
572,068
517,091
99,107183,2738,883,850
4,301,267
3,887,907
745,171
1,377,994

4.8
25.3
10.8
3.3
32.1
0.7
0.8

5.5
26.5
11.8
3.5
27.3
0.8
1.0

5.3
24.5
15.7
4.7
32.8
0.5
0.6

6.3
24.5
12.1
4.2
36.1
0.4
0.5

6.6
25.4
11.8
4.3
37.0
0.4
0.4

4.7
24.5
8.0
3.0
36.7
0.4
0.6

5.5
25.3
10.7
4.1
39.6
0.3
0.5

8.2
27.9
13.2
5.4
42.3
0.2
0.4

8.8
28.9
12.4
5.3
43.8
0.2
0.4

—
—
—
—
—
—
—

195.802,031.97
45.00
23.0

214.481,612.59
50.00
23.3

286.82
2,038.40
55.00
19.2

264.342,314.50
70.00
26.5

281.892,470.65
80.00
28.4

201.572,559.60
80.00
39.7

293.52
2,919.34
85.00
29.0

410.683,310.80
100.0024.3

429.503,620.23
115.00
26.8

2014

2015

2016

2017

2018

2019

2020

2021

2022

25,74017,814
7,926

26,50817,635
8,873

26,503
17,716
8,787

27,00917,7049,305

27,416
17,647
9,769

27,96017,681
10,27927,593
17,647
9,946

26,757
17,493
9,264

27,123
17,392
9,731

—
—
—

53.8

51.9

46.7

48.4

52.1

45.1

43.7

36.4

33.4

—

1,043

1,598

2,230

2,579

3,162

3,651

4,127

4,544

4,979

—

Yen

U.S. dollars*1

3.229
27.2200.865—

Non-Financial Highlights
Fiscal year

Employees
Japan
Overseas*1 The U.S. dollar amounts represent the arithmetic results of translating yen into dollars at ¥133 = U.S. $1, the approximate exchange rate at March 31, 2023.
*2 Plant and equipment investment is the total of investment in tangible fixed assets, including acquisition amounts for lease contracts.
*3 Depreciation and amortization expense is the total of the depreciation of tangible fixed assets and amortization of intangible assets.
*4 Effective April 1, 2018, the Company have adopted “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No. 28, revised on February 16, 2018).
As such, major management indicators in consolidated accounting period as of March 31, 2018 have been adjusted to retroactively apply said accounting standards.
*5 Net debt-equity ratio is the ratio of net interest-bearing debt (interest-bearing debt + lease obligations – cash and cash equivalents) to equity.
*6 Debt-equity ratio is the ratio of interest-bearing debt to equity.

Detailed financial information is available on our website.
https://www.fujielectric.com/ir/library/financial_results/index.html

75

Fuji Electric Report 2023

Basic
Information

Total greenhouse gas emissions fromproduction activities (10,000 t-CO2)
Reductions in CO2 emissions throughproducts (10,000 t-CO2)*82022*7 Effective October 1, 2018, the Company conducted an 1-for-5 common stock consolidation. Amounts for profit per share and net assets per share have been calculated assuming thatthe stock consolidation took place on April 1, 2014. The amount of dividend ¥48 per share for the year ended March 31, 2019 is total of the interim dividend of ¥8 per share and theyear-end dividend of ¥40 per share. Since the Company conducted an 1-for-5 common stock consolidation effective October 1, 2018, the interim dividend of ¥8 does not reflect stock
consolidation effect and the annual dividend of ¥40 reflects stock consolidation effect. If the stock consolidation effect is also considered to the interim dividend per share, the interim
dividend of ¥8 per share without the effect is equivalent to ¥40 per share with the stock consolidation effect. Accordingly, the annual dividend for fiscal 2018 amounted to ¥80 per share,including adjusted interim dividend of ¥40 per share and year-end dividend ¥40 per share.
*8 The contributions to CO2 emission reductions refers to CO2 emission reductions from products shipped in and after fiscal 2009 that were in operation for a year. Calculated based on the
Ministry of Economy, Trade and Industry’s Guideline for Quantifying Greenhouse Gas Emission Reduction Contribution.
*9 From the beginning of the fiscal year ending March 31, 2022, the company applied the “Accounting Standard for Revenue Recognition” (Accounting Standard Board of Japan (“ASBJ”)
statement No. 29 issued on March 31, 2020), etc. The figures for the current fiscal year in the “Consolidated Financial Highlights” reflect the application of the accounting standards.

Fuji Electric Report 2023

76

Corporate Data
Company Information (As of March 31, 2023)

Fuji Electric website (information related to IR and ESG)

Company Name

FUJI ELECTRIC CO., LTD.

Established

August 29, 1923

Consolidated Subsidiary

70 (Japan 21, Overseas 49)

Equity Method Affiliate

4

Head Office

1-1, Tanabeshinden, Kawasaki-ku, Kawasaki-shi, Kanagawa 210-9530, Japan

Head Office Business Address

Gate City Ohsaki, East Tower, 11-2, Osaki 1-chome, Shinagawa-ku, Tokyo 141-0032, Japan

Capital Stock¥47.6 billion

Employees (Consolidated)

27,123 (Japan 17,392, Overseas 9,731)

Net Sales (Consolidated)¥1,009.4 billion (Year ended March 31, 2023)

Stock Code6504
If you would like to obtain information related to IR,
please refer to the IR (Investor Relations) site.

IR (Investor Relations)
https://www.fujielectric.com/ir/

Stock Information (As of March 31, 2023)
Issued and Outstanding Shares

149,296,991

Number of Shareholders

42,522

If you would like to obtain information related to ESG,
please refer to the ESG (Environmental, social, andgovernance) site.
ESG (Environmental, social, and governance)
https://www.fujielectric.com/company/csr/index.html

External Evaluation

Major Shareholders
Number of shares (1,000s)

Voting rights (%)

The Master Trust Bank of Japan, Ltd. (Trust Account)

Shareholders’ name26,591

18.62

Custody Bank of Japan, Ltd. (Trust Account)

18,958

13.27

Asahi Mutual Life Insurance Company

3,955

2.77

National Mutual Insurance Federation of Agricultural Cooperatives

3,059

2.14

FANUC CORPORATION

2,684

1.88

STATE STREET BANK AND TRUST COMPANY 505025

2,221

1.55

FURUKAWA CO., LTD.

2,205

1.54

STATE STREET BANK AND TRUST COMPANY 505001

2,165

1.52

STATE STREET BANK WEST CLIENT – TREATY 505234

2,159

1.51

Fujitsu Limited

1,827

1.28

Notes: 1. Treasury stock of 6,462,999 shares is excluded from the above list of top 10 shareholders.
		 2. The ratio of shareholding is calculated by deducting the number of treasury stock from the total number of shares outstanding based on the provisions of the Ordinance for
Enforcement of the Companies Act.

Fuji Electric has been selected as a component of the following
socially responsible investment (SRI) indexes, as a company
with outstanding CSR performance.

In recognition of the efforts to address climate change and theinformation disclosure, the Company has been selected for
four consecutive years for the CDP A-List, the world’s mostprestigious list in the environmental field.

The incorporation of Fuji Electric Co., Ltd. into the MSCI Index and use of the MSCI logo,
trademark, service mark or index name do not mean sponsorship, recommendation or
promotion of Fuji Electric Co., Ltd. by MSCI or its affiliated companies. The MSCI Index isthe exclusive property of MSCI, and its name and logo are a trademark or service markof MSCI or its affiliated companies.

We have received the following awards and certification inrecognition of our outstanding initiatives to promote diversity.

Share Distribution by Shareholder TypeType

Number of shareholders

Number of shares

Holding (%)

149

66,738,514

44.70

462

9,301,380

6.23

Foreign corporations

802

51,075,528

34.21

Individuals and others

41,10922,181,569

14.86

Total

42,522

149,296,991

100.00Acquired Kurumin
certification as a company
that supports child-rearing(Ministry of Health, Labourand Welfare)Acquired highest rank of
Eruboshi certification basedon the Act on Promotionof Women’s Participation
and Advancement in the
Workplace (Ministry of Health,Labour and Welfare)

Basic
Information

Financial institutions/Securities firms
Other corporations in Japan

Selected as one of the “Diversity Management
Selection 100” firms that have achieved resultsin improving productivity by utilizing a diverse
workforce and creating innovation (Ministry of
Economy, Trade, and Industry)

Note: “Individuals and others” includes treasury stock.

77

Fuji Electric Report 2023

Fuji Electric Report 2023

78

This mark symbolizes
the commitment of Fuji Electric
to environmental protection

Based on the universal design (UD) concept,
we have adopted fonts that are easy to read (and difficult to misread)by more and more people.

Gate City Ohsaki, East Tower,
11-2, Osaki 1-chome, Shinagawa-ku, Tokyo 141-0032, Japan
Contacts: Public Relations and IR Dept., President’s Office
TEL: +81-3-5435-7111 https://www.fujielectric.com

00A9-E-0002e Published in Japan 2023.9