Feature: The History of KYB and Its Businesses

KYB’s current businesses have been built on the creativity and tireless technological exploration of thedevelopment people who have followed in the footsteps of founder Shiro Kayaba. As we strengthen
our foundation for further rapid growth, we take a look back at KYB’s progress over more than 80
years and the origin of its monozukuri (Japanese manufacturing expertise).

Our Founding DNA
KYB Began with the Creativity of Its
Founder and His Tireless Pursuit ofTechnology.
A search for the origins of KYB’s advanced technologies andcorporate philosophy leads back to founder and inventor
Shiro Kayaba. At the age of 21, he founded the Kayaba
Research Center (which celebrated its 100th anniversary
on November 19, 2019) and used cutting-edge hydraulictechnology and creativity to invent and develop practicalapplications for takeoff and landing equipment including
for aircraft carriers. The hydraulic buffers (oleo struts) that
he developed for aircraft takeoff and landing equipment
became the basis for KYB’s vibration control technology,1a precursor to automotive shock absorbers and otherproducts. The metal plating of oleo struts on the sliding
components of a Japanese Zero ﬁghter plane discovered on

History

the bottom of Japan’s Seto Inland Sea in 1977 was still
shiny after more than 30 years underwater, demonstrating
the sophistication of KYB’s technologies in the 1940s.
Furthermore, KYB’s hydraulic components for aircraft
control systems greatly improved control that until then had
relied on physical force, thus helping to lessen the burden on
pilots. Kayaba’s hydraulic technology subsequently evolved
into the power control technology2 central to modern
construction machinery and industrial cylinders. Today,
products that use KYB’s core vibration control and power
control technologies account for the majority of sales.
Shiro Kayaba’s spirit of creative development andadvanced technology were the driving force behind KYB’s
establishment and remain part of the Company’s DNA today.
Notes: 1. Technology to absorb and mitigate shock and vibration
2. Technology that transmits and controls a large amount of power with a small
amount of force

An Independent Company with an
Enduring Spirit of Freedom and Creativity
KYB has been an independent company unassociated withany larger corporate group throughout its 84-year history.

Selected List of Kayaba Award Recipients

November 1919

Founder Shiro Kayaba established Kayaba Research Center

January 1927

Kayaba Seisakusho establishedMarch 1935

Kayaba Manufacturing Co., Ltd. established

November 1948

Kayaba Industry Co., Ltd. established

October 1959

Company stock listed on the Tokyo Stock Exchange

Promotes the Development and Commercializationof Product Applications

1975
Kayaba Award established one year after the death of founder
Shiro Kayaba
Development of an embarkation ramp
Development of a compact internal position control valve

1976
Development of an electronic control system (ECS) for linear lockstitching1978

Development of a one-chamber air-type front fork
This product absorbs more shock and delivers better ride quality andhandling stability than a conventional product by combining an air springwith the metal spring in the chamber to generate counterforce. KYB was
first in the world to develop this type of product, which has been
adopted for use in motocross bikes and also in large street motorcycles
with upright front forks.

1979
Development and application of a motorcycle suspension
simulation systemShib ((circa
i1945)
Shiro K
Kayaba06

KYB Group Report 2019

Shiro Kayaba imbued the company he founded with thebasic tenets of vitality, love and creativity. Our independent
perspectives and ideas give us the will to respond ﬂexibly tocustomer issues and contemporary needs. For example, in theautomotive industry we have co-developed and proposed alarge number of products to ensure a safe and comfortableride. Deploying this strong independence, we have acquired
unmatched experience and technologies by collaboratingwith a wide variety of manufacturers.
Shiro Kayaba stated that ultimately, the ability to deliver
quality with exceptional reliability supported by technologicalcapabilities is the result of the cumulative knowledge andefforts of individual employees on the manufacturing ﬂoor. In
other words, it comes from manufacturing skills backed byboundless energy. Our founder believed that the developmentof new technologies was the basis of KYB’s growth, and his
spirit has been the force driving us to become the leader inhydraulic technology. The ambitions of our founder live on in
our Corporate Spirit and Management Vision, and remain thefoundation supporting the KYB Group.

Our Pioneering Spirit of Development
Opens the Door to the Future.
Our founder considered the development of new technologies
to be the basis of corporate development. Following his
death, in 1975 we embodied this philosophy in the Kayaba
Award, which is given to employees who make remarkableachievements from acreative perspective in thearea of technologicaldevelopment.
A vane pump now widelyused as a component in
Adjustable damping force
continuously variableshock absorber with aproportional solenoidtransmissions (CVT) for
vehicles received the Kayaba
Award in 2004. The hydraulic pressure from the vane pumpenables smooth gear shifting. An important component that
determines fuel efﬁciency, the vane pump addressed a varietyof needs, including space saving, high efﬁciency, low noiseand low cost, in addition to fundamental performance. We
also completely renovated our production line to install thevane pump inside the transmission, which thoroughly
eliminated contamination.3 As a result of our commitment
to quality, as of 2015 we had achieved cumulative
production of approximately 20 million CVT vane pumps
with zero complaints. The 2017 Kayaba Award went to thedevelopment of an adjustable damping force shock absorberwith an external proportional solenoid. This computercontrolled shock absorber optimizes the attitudeof automobiles. The use of a proportional solenoid as theactuator allows the shock absorbers to control attitude
according to driving conditions eight times faster thanconventional shock absorbers that use a stepping motor.
Note 3. Extraneous material left over from the manufacturing process or caused bywear inside the product.

Adding Greater Value to Products

Use of Composite Technology

Pursuing New Dimensions of Performance

1981

1992

2004

Development of a new suspension for the 82MX model

Development of an unmanned production line for PV shafts

Development of a vane pump for use in CVTs

1983

1996

2006

Development of an automated production line forlarge valves

1986

Development of a high-capacity actively
controlled suspension (HICAS) system
In addition to steering the front two wheels, this system
predicts vehicle behavior based on vehicle speed and steering
angle to improve stability at high speeds. It changes the
position of the front and rear tires according to steering.
Hydraulics have now been replaced with electronics using theknowledge gained from HICAS to develop its successor, arear active steering actuator that uses an electric actuator forthe rear steering rack.

1987
Development of a cut card-type direct jacquard machine

1989
Development of a hydraulic active suspension forpassenger vehicles

Development of a semi-active suspension system
for railroad equipment
This system contributes to a comfortable ride for railroad cars using electronic
control to optimally adjust the damping force of railroad oil dampers according
to car vibration. Highly rated by customers, this system attracted attention as
the world’s first such technology for mass-produced railroad cars.

1999
Development of the KVMG-200H control valve

2000

Development of a lightweight, high-performance front
fork for extreme-performance sports motorcycles
This product brings together several new and outstanding technologies,
including titanium ion plating on the inner tube sliding surface to improve
front fork performance, and the world’s lightest titanium alloy bolts, withsignificant advantages over competing products.

2001
Development of 4KW2 and 4KW3 power steering pump products andassociated production line

2002
Development of diamond-like carbon (DLC) coating
Development of a semi-active system using a proportional
electromagnetic relief valve for railroad equipment

Achievement of sophisticated performance forsuspensions used in extreme-performance sports
motorcycles

2009
Development of the 7K vane pump for use in
CVTs in light and compact automobiles

2010
Development to reduce oil leakage from seals

2017

Development of method for massproducing adjustable damping force
shock absorbers with an external
proportional solenoid
Given the growing market for adjustable damping force
shock absorbers with a proportional solenoid, wedeveloped a method for mass-producing them with asmall, external individual damping control unit (IDC) thatdelivers excellent performance and ease of installation.
We expect the product to be adopted in an increasing
range of vehicle models because of its responsivenessand damping force range are superior to competingproducts and because of its ease of installation.

KYB Group Report 201907

Evolution into aComprehensive Hydraulic
Equipment Manufacturer
From the Automobile Shock AbsorberMarket to the Special-Purpose Vehicle
Market
KYB has always valued joint development with manufacturers.
Shortly after World War II, we started jointly developing
shock absorbers with two Japanese automakers. Japanesecars at that time were not equipped with shock absorbers,
so we researched multiple prototype iterations to improvedriving performance and durability. Our success led toorders for 4,000 shock absorbers for the jeeps of the U.S.
occupation forces in Japan in 1948, and we began full-scale
production of shock absorbers for domestic automobiles.
The products we delivered excelled in functionality, durability,
and cost, so they were fully adopted in domestic passenger
cars in 1955 and our market share grew to over 75%.
We subsequently deployed original technology inautomotive hydraulic equipment in markets for specialpurpose vehicles such as U.S. military trucks and large dump
trucks and concrete mixer trucks used for construction,
which are customized with a wide range of equipment.

Rapidly Extending Our Acclaimed
Technology into New Markets
After World War II, KYB laid its foundation as a hydraulicequipment manufacturer by expanding into hydraulic oilpresses and hydraulic jacks for automobiles. Due to theircontrollability and functionality, KYB’s hydraulic jacks havebeen used in a wide range of applications including aircraft
maintenance, civil engineering and construction, ship
hatches, and lifting work.
In 1951, we began collaborating with Japan National
Railways (JNR), now Japan Railway (JR), to develop oil
dampers for railroad cars. The equipment we developed,
which was similar in appearance to the shock absorbers
for large four-wheeled vehicles, demonstrated superior
railroad car speed, ride comfort and cost performancecompared with the dampers then in use, which combined
several types of springs. As a result, all JNR railroad cars
built from 1952 onward used the product we developed. Its
use subsequently expanded to JNR’s diesel railroad cars, andto private railroad companies.
In the railroad equipment business, our steering dampers
and pantograph hydraulic shock absorbers have a dominantmarket share. The technologies we have evolved and thestrong and diverse customer base we have built, which
includes major automobile, motorcycle, and construction
machinery manufacturers, have become our strengths.

KYB’s Technologies
KYB works to improve people’s quality of life by solving societal issues through the use of a wide range of technologies that it
has cultivated over many years based on its core technologies, and by combining these technologies with AI, IoT and otherleading-edge digital technologies.

KYB’s Core Technologies
Vibration Control

Elemental Technologies

KYB Group Report 2019

Leading-Edge Technologies

HydraulicElectronic Control

Motorization

AI and IoT

SystemMaterials

Testing and
Evaluation

Sophisticated Simulation

Monozukuri (Japanese manufacturing expertise)

08

Power Control

Digital Technology

Feature: The History of KYB and Its Businesses

KYB’s Advanced Technology for a
Better Future
Precision hydraulic technology is essential for safety,
reliability and comfort. KYB has continued to reﬁne thistechnology since its establishment, leveraging vibration
control to supply shock absorbers for automobiles,
suspensions for motorcycles and power steering; andleveraging power control technology to supply components
such as valves, pumps, hydraulic cylinders, actuators andreservoir modules for construction machinery, industrial
vehicles, railroad cars and aircraft, as well as reservoirs forspace rockets. Few companies worldwide offer this range ofelemental technologies.
Control technology that combines suspension andsteering is key to achieving autonomous driving. KYB is
involved in both of these areas, and has been developing
and using electronic control technology since the late 1960s.
Two of KYB’s key features are its system development
capabilities including software for applications such as
electric power steering and active suspension, and its
in-house production of electronic control modules.

New Technology Initiatives forAutonomous Driving
The use of lane keep assist
systems (LKAS) to support
autonomous driving isincreasing, so we havedeveloped electric power
steering that can be equipped with LKAS to ﬂexibly operatein-vehicle systems.
We have begun developing
electronically controlled pumps
to address needs in operating
agricultural and construction
machinery, for whichautonomous driving is
becoming practical. We are miniaturizing the electronic servo tomeet demand for computerized design and autonomous operationof vehicles in which space for installation is limited.
To support autonomous operation of
construction machinery and application of
IoT, we have also begun developing
electronic control valves for 20-30 ton
excavators. We are miniaturizing theelectronic control portion to allow
installation with no additional spacerequirements.

KYB’s Core Technologies and Businesses
KYB combines system, electronic control and other technologies with its core vibration control and power control technologies tosupply products to customers in a wide variety of ﬁelds.
Automobiles
Motorcycles

Vibration
ControlTechnology

HydraulicTechnology

Railroad equipment

Electronic
ControlTechnology
Power
ControlTechnology

Automotive
Components
Operations

SystemTechnology

Aircraft components
Construction machinery
Special-purpose vehicles
System productsElectronics components

HydraulicComponents
Operations

Other(Special-Purpose Vehicles,
Aircraft Components,
System Products
and Electronics
Components Business)

KYB Group Report 201909

Global Expansion
Creating Production and Sales BasesWorldwide
Another KYB strength complementing its hydraulictechnology portfolio is its global network of production
and sales bases. Quick to expand overseas, KYB formulated
a long-term Management Vision in 1966 with the goal of
becoming a comprehensive global hydraulic equipment
manufacturer. In 1973, we moved to accelerate operations
outside of Japan by establishing overseas headquarters to
respond to international expansion among customers andimprove the product export ratio. Centered on shock
absorbers, the KYB brand gained popularity overseas as aresult, and in 1981 our export ratio exceeded 10.1% andthe value of exports exceeded ¥10 billion.
In 2002, we established a wholly-owned subsidiary,
KYB Industrial Machinery (Zhenjiang) Ltd. (KIMZ) as a
production and sales base for automobile shock absorbers
in Jiangsu Province, China. In 2004, we established KYB
Hydraulics Industry (Zhenjiang) Ltd. in Jiangsu Province
as our ﬁrst overseas production base for HydraulicComponents Operations. In the same year, we alsoestablished KYB Technical Center (Thailand) Co., Ltd. fortechnology development in Thailand. Thus we created a
global development network spanning the four regionsof Japan, the United States, Europe and Asia, enabling
development that meets the unique needs of local markets.

Manufacturing the Best-Designed,
Highest-Quality Products Worldwide
KYB has the third largest4
share of the global
automobile shock absorbermarket. Currently, we have
38 production bases, ﬁve
research and development
The Developmental Experimentbases, and 35 sales bases
Center test trackin 23 countries. We provide
products, technologies and services in the United States andEurope, and in the leading emerging economies of Brazil,
Russia, India and China, as well as other emerging countries
such as Vietnam, Indonesia, South Africa, Turkey andArgentina.
Moreover, we established the Developmental ExperimentCenter in Gifu Prefecture in 2011 to create high-quality
products that meet the needs of the regions we serve. On
its expansive site, we have built a large-scale test track that
reproduces road surface conditions around the world,allowing simulations and road tests with actual vehicles todevelop better products.
We will continue to challenge the status quo by pressing
forward with the creation of high-value-added products toachieve stable sales and increase proﬁtability unaffected bymarket ﬂuctuations.
Note 4. Source: KYB data (As of March 2019)

Key Milestones Overseas

1974

1987

1996

2002

Sales subsidiary established in
the United States

Shock absorber manufacturingsubsidiary established in the
United States

Joint venture establishedin Spain to manufacture
hydraulic components
for automobiles

Automobile shock absorber
manufacturing subsidiaryestablished in China

Chicago Ofﬁce established in 1972,and sales subsidiary KYB Corporationof America following feasibility studyof entering the U.S. market.

10

KYB Group Report 2019

Kayaba Industries established as a
production base for shock absorbers
in response to the rapid appreciationof the yen and the entry of Japanese
automobile manufacturers into theUnited States.

First production and sales baseestablished in Europe for vane
pumps for power steering through a
joint venture with ArvinMeritor, Inc..

Wholly-owned subsidiary KIMZ
established as a production and sales
base for automobile shock absorbers.
Mass production started in 2004.

Feature: The History of KYB and Its Businesses

The KYB Group by the Numbers
Net Sales by Geographic Region and Overseas Sales Ratio(Millions of yen)(%)

500,000

60

54.9

51.9

54.6

53.5

400,000

393,743
370,327355,32055.2
412,214355,31650

40

300,000
30
200,000
20
100,000

10

0

0
2014

2015

2016

2017

2018

(FY)

IFRS*

■ Japan■ Europe■ America ■ China■ Southeast Asia

■ Others (All left scale)

Overseas sales ratio (Right scale)* International Financial Reporting Standards

Market Share of Major Products
Shock Absorbers

No. 1 40%in Japan

Motorcycle Front Forks

No. 3 15%in the world

Hydraulic Cylinders

No. 1 31%in the world

No. 1 51%in Japan

Concrete Mixer Trucks

No. 1 83%
in Japan

Source: KYB data (As of March 31, 2019)

KYB Group Report 201911

KYB Group Business Activities■ Business Overview
Since its establishment, KYB Corporation has offered a variety of products with hydraulic technology
at their core based on a spirit of creative development. We will continue evolving to deepen the trustand support we have gained from customers around the world through product development that
integrates technologies including vibration control, power control, systems, and electronic control.
Net Sales by Business Segment

Segment Profit by Business Segment*
Other*

Other¥25.8 billion¥0.3 billion

Segment Proﬁt by
Business Segment

Net Sales¥412.2 billion¥22.0 billion

HydraulicComponents
Operations

Automotive
Components
Operations¥140.6 billion¥245.8 billion* “Other” includes special-purpose vehicles, hydraulic equipment for aircraft,system products and electronics components not included in the other tworeportable segments.

HydraulicComponents
Operations

Automotive
Components
Operations¥11.9 billion¥9.8 billion* Segment proﬁt corresponds to operating proﬁt in JGAAP.

Main Businesses
Automotive Components Operations

Ultra-low velocity valves forshock absorbers

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

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

Hydraulic Components Operations

Control valves

Active suspension systems forrailroad cars

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

Major Products
Shock absorbers for automobiles: Shock absorbers (original
equipment (OE), aftermarket)
Shock absorbers for motorcycles: Front forks, rear cushion units
Hydraulic equipment for automobiles: Vane pumps, vane
pumps for continuously variable transmissions (CVT), hydraulicpower steering systems, electric power steering (EPS)
Others: Stay dampers, shock absorbers for all-terrain vehicles,
free locks
12

KYB Group Report 2019

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

Net Sales by Business Segment and Segment Profit Margin1(Millions of yen)(%)

500,000

20

400,000

320,082

300,000

352,710337,158

370,327

393,743355,320412,21415355,316

305,752

252,02010200,000

7.5
6.4

5.2

3.4

100,000

5.8

5.2

4.9

4.2

5.3

5

1.5
0

0
2009

2010

2011

2012

2013

2014

2015

JGAAP 2

■ Automotive Components Operations

2016

2017

2018

(FY)

IFRS3

■ Hydraulic Components Operations■ Other (All left scale)

Segment proﬁt margin (Right scale)Notes: 1. Before FY2014 segment proﬁt margin was presented as operating proﬁt margin under JGAAP.
2. Japanese Generally Accepted Accounting Principles
3. International Financial Reporting Standards

Other

Concrete mixer trucks

Actuators for aircraft• Special-Purpose Vehicles DivisionThis business develops and manufactures special-purpose
vehicles, focusing on a lineup of small to large concrete mixer
trucks that have the largest market share in Japan. The
excellent mixing, discharging, environmental performanceand other features of our products boost work efﬁciency.
• Aircraft Components DivisionThis business supplies ﬂight control systems, landing
systems, hydraulic and pneumatic systems and otherhydraulic equipment for aircraft. In the aerospacetechnology market, which requires outstanding reliability,
we leverage cutting-edge hydraulic technology to support
ﬂight safety and comfort.

Chair ski shock absorbers fordisabled skiing

Floor equipment• System Products and Electronics Components BusinessWe are opening up new possibilities for hydraulic technology,
such as auditorium and stage control systems that support
theater performances. In addition to hydraulic technology,
we are also focusing on electronic control technology todevelop products such as electronic control units (ECU) for
automobiles and other uses.

Major Products
Special-purpose vehicles: Concrete mixer trucks, granularmaterial carriers, special-function vehicles
Hydraulic equipment for aircraft: Actuators, valves, wheels,brakesSystem products and electronics components, etc.: Auditoriumand stage control systems, ECU, mobile communication devices
KYB Group Report 201913

■ Product Lineup
KYB products support monozukuri (Japanese manufacturing expertise) in a broad range of fields. The
products presented here support daily life by providing safety and comfort in a variety of situations.

14

Automotive

Motorcycles

Railroad Equipment

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

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

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

Aircraft Components

Construction Machinery

Industrial Vehicles

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

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

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

KYB Group Report 2019

KYB Group Business Activities

Agricultural Machinery

Industrial Machinery

Special-Purpose Vehicles

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

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

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

Theater Equipment andEquipment for Theater
Construction

Marine ProductsSports and Welfare

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

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

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

KYB Group Report 201915

■ Business Strategy Overview
FY2017–2019 Medium-Term Management Plan ProgressIFRS
FY2017 Actual

FY2018 Actual

FY2019 Forecast

FY2019 Target(As of May 2019)(Announced May 2017)

Net Sales¥393.7 billion¥412.2 billion¥410.0 billion¥398.0 billion

Segment Profit*¥22.9 billion¥22.0 billion¥20.6 billion¥26.0 billion(Segment Profit Margin)

5.8%

5.3%

5.0%

6.5%

ROE

8.8%

―

8.4%

10.0%

*Segment proﬁt corresponds to operating proﬁt in JGAAP.

Basic Strategy for FY2019
FY2019 is the ﬁnal year of the FY2017–2019 Medium-Term
Management Plan. Positive outcomes during the ﬁrst two
years of the plan include the launch of value-added
products for automobiles, and preparations for the transfer
and consolidation of the manufacture of products forconstruction equipment are nearly complete. On the other
hand, issues that remain include delays in the restructuringof unproﬁtable businesses, and delays in production tomeet growing demand, especially for hydraulic equipment
for construction machinery. In addition, improper acts in theseismic isolation/mitigation oil damper business have caused
great concern and inconvenience for all those involved.

Given these circumstances, in FY2019 the Group’s toppriority is to thoroughly inculcate a corporate culture ofcompliance and safety ﬁrst, while focusing on bringing our
seismic isolation/mitigation oil dampers into compliancewith regulatory standards. In addition, we will move ahead
with reorganization by making decisions about pending
matters including withdrawing from unproﬁtable businesses
and closing production bases, and will develop competitive
new products and promote innovative monozukuri.
Reforms will be challenging, but seeing them through will
strengthen our earnings structure.

Vision for the Next Medium-Term Management Plan
In the next medium-term management plan, we will focus on
stabilizing our revenue base and generating sustained growth.
Key initiatives to maximize earnings will be closing unproﬁtable
Current situation

production bases and implementing global restructuring inorder to selectively focus on further improving the proﬁtabilityof businesses in which we are highly competitive.

High proﬁtability

Vision for the next medium-term management plan

Shock absorbers(Aftermarket)

Railroadcars
Railroadcars

Construction
machineryBusiness environment= Market share × Market growth rate

Unfavorable
business environment

Shock absorbers(Aftermarket)

Construction machinery

Motorcycles

CVT

Favorablebusiness environment

EPS
CVT

AircraftSpecial-purpose
vehicles

Shock absorbers(Original equipment)

Aircraft

Motorcycles
Shock absorbers(Original equipment)

EPS

Source: Meeting Materials for FY2018, May 17, 2019

16

KYB Group Report 2019

Low proﬁtability

KYB Group Business Activities

Medium-Term Strategy
For long-term growth, map out plan for integrating and reorganizing production bases andcompanies to match geographical shifts in customer demand, and for developing andpromoting sales of value-added products

Progress and Future Initiatives

Auttomotive
Automotive
Components
Operations

Fundamental structural reforms are progressing, with geographic and business integration including thereorganization of our operations in Europe and the consolidation of production bases in the motorcycle
business. We also expect China to be a growing market for the EPS business and have launched a joint
venture there to improve proﬁtability.
We will stabilize our revenue base by globally unifying shock absorber speciﬁcations for mass
markets, and are planning to start doing the same for aftermarket products to expand sales. In
addition, we will use IoT and AI to accelerate the launch of innovative product lines in Japan andoverseas, gradually increasing the level of automation with the ultimate goal of eliminating processing
costs though fully automated operations.
We will also work to generate sustained growth through further rollouts of the high-value-added
products we are already mass-producing to increase orders, and by expanding product orders andpromoting sales of products for the growing sport utility vehicle, electric vehicle and pickup truck markets.

Medium-Term Strategy
Ensure stable sales and profit that are unaffected by market fluctuations
Maintain base in excavators while promoting sales in growth markets in which we were
not fully active

Progress and Future Initiatives

HydraulicComponents
Operations

Building a system that is resilient to market ﬂuctuations is a key initiative for the HydraulicComponents segment, which has therefore been transferring production of control valves for
medium-sized excavators to create an integrated line. Integrating casting, machining and assemblylines will improve productivity, and integrating production and development bases will reduce
development time and further improve product capabilities. In addition, we will consolidate theproduction of motor products to establish a system that can handle high demand.
In the mini and ultra-large excavator markets, where demand is forecast to remain stable, we
expect to maintain high market share by expanding production capacity.
In addition, to generate sustained growth, we will conduct sales promotion activities for products
for the railroad, agricultural machinery, skid-steer loader (SSL) and compact track loader (CTL) andother non-construction machinery markets.

Progress and Future Initiatives

Other

In the Special-Purpose Vehicle Division, we will leverage our solid domestic market share to strengthen
after-sales service and service part sales in Japan while further expanding business overseas.
In the Aircraft Components Division, we will focus on quickly resolving the issue of inappropriate
claims in connection with defense equipment and improve proﬁtability by reviewing conventional
channels for expanding private sector demand and by streamlining the public sector business.
In the System Products and Electronics Components Business, we will focus on preventing therecurrence of improper acts regarding seismic isolation/mitigation oil dampers and on manufacturing
replacement parts.

KYB Group Report 201917