Integrated Report2023

For inquiries about this Report:
CSR Promotion Department
Suminoe Textile Co., Ltd.
11-20, Minami-Semba 3-Chome, Chuo-ku,
Osaka 542-8504, Japan
TEL: 06-6251-6817 FAX: 06-6251-6806
E-Mail: csr@sin.suminoe.co.jp
URL: https://suminoe.co.jp/en/

This publication uses
easy-to-read fonts
designed based on the
Universal Design (UD)concept.

Having marked the 140th
anniversary of its founding,the SUMINOE GROUP willchange for the better.

In 2023, the SUMINOE GROUP celebrated the 140th anniversary of its founding.
We strive to set a “new comfort standard” in harmony with the times and the earth to create
delightful lifestyles of the future. To this end, the Group will explore the following “4C” values.

Interior Fittings
Providing comfortable and functional
interior products

Take on challenges for new businessdevelopment based on our advanced
technological capabilities and extensive
customer base as an industry pioneer.

Create new value by maximizing
our unique technologies.

Curtains | rugs and mats | carpets | wallpaper
sliding paper doors | arts and crafts textiles | doncho(plush hand-woven carpets that separate a stage from theauditorium) | dantsu (hand-woven carpets and hooked rugs)

CreateChallenge

Automotive Textiles
Adding higher value to automotive
textilesCeiling materials | seat covering materials
car mats | floor carpets

SUMINOE“4C” Values

Traffic Facilities
Supplying a total line of interior materials
for public transportation facilities
Seat covering materials | seat cushion materials
carpets | floor signage film | curtains

Contribute

Customer

Functional Materials
Offering new functional products that arefriendly to human health and the environment
Fabric-coated heating products | deodorizing filters
floor materials for bathrooms
interior materials for aircraft

1

SUMINOE GROUP Integrated Report 2023

Continue to pursue manufacturing that isfriendly to both people and the earth.

Identify new challenges for further
development, leveraging our ability tosincerely cater to customers and our foresight.

SUMINOE GROUP Integrated Report 2023

2

Group Philosophy

Editorial Policy

VISION —The future we aim for—To set a “new comfort standard” in harmony with the times
and the earth to create delightful lifestyles of the future.

Contents

The objective of publishing this Integrated Report is toGroup Philosophy ...................................................................... 3

inform a broad range of stakeholders of how the SUMINOE

Editorial Policy and Contents .................................................. 4

GROUP creates value in the medium and long term and

SUMINOE GROUP in Numbers................................................ 5

what kind of initiatives the Group promotes to enhance its

Progress in Value Creation....................................................... 7

corporate value.
This report provides financial information, including

MISSION —Our mission to fulfill—management strategies to achieve sustainable growth as

Bring people- and society-friendly spaces to the world throughtechnology and ideas that closely support people's lives.

SUMINOE GROUP, and non-financial information on its

well as a business overview and the performance of thespecific sustainability and ESG initiatives. By disclosing suchinformation in an integrated manner, this report aims tohelp stakeholders deepen their understanding of the Group.

SPIRIT —Values we cherish (Company Motto)—

We pride ourselves as a pioneer in the interior industry and persist in a
spirit of cooperation, sincerity and determination.

Create new value by maximizing our unique technologies.

Customer
Identify new challenges for further development,leveraging our ability to sincerely cater to customers and our foresight.

Contribute
Continue to pursue manufacturing that is friendly to both people and the earth.

Code of Conduct
1. We comply with all laws and ethical business standards, and conduct corporate
activities in an impartial and ethically sound manner.

3

Strategies by Segment: Automotive Textiles andTraffic Facilities (Automotive Textiles)................................ 23

Ministry of Economy, Trade and Industry (METI) of Japan

Strategies by Segment: Automotive Textiles andTraffic Facilities (Traffic Facilities)......................................... 25
Strategies by Segment: Functional Materials ................... 27

Scope of the Report

Topics .......................................................................................... 29

Suminoe Textile Co., Ltd. and its consolidated subsidiaries in

Research and Development Strategies .............................. 31

Japan and overseas

Feature: Response to the Transformation in the
Automotive Industry ............................................................... 33

However, the scope varies according to the items reported.

Message from the Director in Charge of Finance............ 35
Period Covered
Fiscal year 2023 (From June 2022 to May 2023)(Some activities undertaken outside the above period are

ESG Initiatives in Line with the Medium- to
Long-term Management Targets

included.)

Sustainability and ESG Initiatives ......................................... 37

Information Disclosure System

Initiatives to Address Key Sustainability Issues toAchieve Medium- to Long-term Management
Targets ........................................................................................ 39

Financial information

Non-financial information

Integrated Report (book and website)• “Investor Relations”
section of the website• Flash Report of Financial
Results• Business Report(Japanese only)• Sustainability section of
the website• Corporate Governance
Report (Japanese only)

Securities Report (Japanese only)

Disclaimer about Forward-Looking Statements

3. We treat all employees of the Company fairly, act with due respect for their individual
personalities, and place high importance on their health and safety.

are included in this Report, those which are not historicalAmong all the current plans, strategies, and judgments thatfacts represent our forecasts for future performances, etc.

4. We place high priority on maintaining good relationships with all our stakeholders.

These are on the basis of assumptions and judgments based

5. We make proactive contributions to the community, as expected of a good corporate
citizen.

on information currently available for the SUMINOE GROUPSUMINOE GROUP Integrated Report 2023

Toward Identifying the SUMINOE GROUP’s
Materiality (Key Issues) ........................................................... 17

Guidance for Collaborative Value Creation, published by the

2. We contribute to the advancement of the community through the production and saleof high-quality products.

6. We take very seriously the impact of our business activities on the global environment,
and contribute to environmental preservation initiatives.

Value Creation Model............................................................. 15

Strategies by Segment: Interior Fittings............................. 21

VALUE —Basic guidelines for business activities— SUMINOE “4C” Values

CreateValue Creation and Growth Strategies in Line with
the Medium- to Long-term Management Targets

ISO 26000 Guidance on Social Responsibilityby the International Integrated Reporting Council (IIRC)

Take on challenges for new business development based on our advanced technologicalcapabilities and extensive customer base as an industry pioneer.

Medium- to Long-term Management Targets................. 13

Segment Information ............................................................. 19

Referenced Guidelines

International Integrated Reporting Framework, published

Challenge

Message from the President ................................................... 9and may thus contain risks and uncertain factors. Please beadvised, therefore, that the Group’s business results that will
be publicly announced in the future may differ significantly
from the forecasts due to various factors.

Environment .............................................................................. 41
Social ........................................................................................... 47
Governance ............................................................................... 53
Round-Table Discussion among Outside Directors ........ 61
Messages from Outside Corporate Auditors .................... 64
Board of Directors and Corporate Auditors...................... 65
Eleven-year Consolidated Financial Summary ................. 67
Corporate Summary and Investor Relations..................... 69
Supplementary Note
This Reports uses the “SUMINOE GROUP” when referring to our
corporate group, in accord with its new Group Philosophy and theunited Group logo, both of which were announced in June 2023.
However, in some portions related to documents published inJune 2023 and earlier, the “Suminoe Textile Group” is used as
before.
This is an English translation of the release issued in Japanese.
The figures for these financial statements are prepared inaccordance with the accounting principles based on Japanese law.

SUMINOE GROUP Integrated Report 2023

4

SUMINOE GROUP in Numbers* Average figures of Group companies only in Japan

Number of Employees (As of May 31, 2023)

FoundedCapita (As of May 31, 2023)

1883

9,554

Consolidated Group
companies:

million yen

Net sales (Fiscal year 2023)

94,828Interior Fittings

million yen 36,598

Automotive Textiles and Traffic Facilities

54,314

million yen

Functional Materials

3,550

365

2,779

70s

60s

11.7%

0.9%

million yen

50s

Male

Female(Million yen)

5,000

(%)
3.5

3.2

81,713

4,000

2.5

3,118

3,000

40,00020,000

1.4

1.3
1,557

1,000
0

2021

2022

2023

2019

2020

1.5

1,294 1.0

1,049
0.1

0

2020

4,000

3.0

3,000

2,956

2021

1.4

2,000

1,323
1,000

110

2022

0

2023

2019

(%)

(Million yen)

(Million yen)

100,000

25,00080,000750

84,801

88,1510.3

0.3

40,000

320

281

142

0.25

2020

2021

Equity / Equity ratio

2022■Equity

40,00030,58832.5
27,99833.5

28,04433.428,30435,271

32,95633,44834,113

(%)

40

2.0

1.5

20

1.0

2021

10,00002021

SUMINOE GROUP Integrated Report 2023

14,939

2022

2022

2023

0

0

40
20

0.6

0.496
58.5

0.5

51.0

22.4
36.1
2019

0.358
45.1

18.8

18.7

16.6

32.3

26.4

23.9

24.0

2020

2021

2022

2023

0.2
0.1
0

Ratio of female employees*(Times)

(%)

7.0

35

15,923

0.4
0.3

40.5

33.9
9.9

0

33.2
5.0

32.0

32.0

31.8

2020

2021

2022

31.1

15,621

2019

2023

2020

2021

2022

■Depreciation

1.5

3.0

30

0

0

2023

■Capital investment

1.4

1.1

1,000

2020

2021

2022

2023

■Female

12
9

2,677
1,769

2,030

1,979

2,441
1,915

2,229

1,617

■Male

8

6

0

2019

2020

2021

2022

2023

13

13

12

11

3

3

0

2019

2023

15

3,516

3,000

0.5

2019

Number of employees who took childcare leave*(Number of employees)

4,636

4,000

1.0

0.5

12,861

0.566

0.557

6.0
5.2

Depreciation / Capital investment

28,861

10

6.2

5,000

32.7
30

●Inventory turnover(Million yen)

20,0002020

15,6660.7

0.593

10,000

2,000

2019

6.1

●Basic unit(t/¥1 million)

80

2023

0

2020

Return on equity (ROE)

(%)

1.0
0.5

2022

■Overseas

5000

2019

●Equity ratio

32,5820

2023(Million yen)

34.8

15,00020,000

0

2019

6.3

0.50

409

0.2

2021

20,00060,0000.5

030,00083,6691,575

950■Inventories■Total assets

0.75

250

50,000■Net assets(1,000 t)
100

1.5

1.2

Inventories / Inventory turnover

1.00

86,272

2020■Domestic

3.0

0

1,000

87,9751.5
1,211* Group companies in Japan only

60

0(Million yen)

467

19.9%

2.0

1.7

0.5

Net assets / Total assets

0.5

6-10 years

19.5%

Reduction of CO2 emissions in business activities

(%)

2.5

Profit attributable to owners of parent / Ratio of profit attributable to ownersof parent to net sales ■Profit ●Ratio of profit attributable to owners of parent

500

years

11-20 years●Ratio of ordinary income(Million yen)

2.0

1.7

2,000

2019

■Ordinary income

3.0

60,0005●Operating margin(Million yen)

94,82879,702

15.3

21-30 years

15.6%
21.1%

Ordinary income / Ratio of ordinary income to net sales■Operating income

80,000

Averagelength of service*30s

Non-financial Data (for each FY ended May 31)

Net sales
91,5120-5 years

28.2%

million yen

Operating income / Operating margin

98,617

14.8%

40s

34.1%

2.0%

31-40 years

16.7%

years old

Overseas 1,161

41-49 years

0.8% 20s
14.8%

45.7

Financial Data (for each FY ended May 31)

100,000

10s

Average age*

In Japan 1,618

Othermillion yen

62% 38%

0

0

2019

2020

1
2021

2022

2
2023

SUMINOE GROUP Integrated Report 2023

6

Progress in Value Creation

Suminoe Textile was founded by rice dealer Denshichi Murata, who opened the Murata Factory in 1883 in Sumiyoshi
Village, Higashinari-gun, Osaka Prefecture (now Sumiyoshi Ward, Osaka City).
This small factory in a private household was receiving orders for interiors for railway cars and ships, and even for
the Imperial Diet Building, heralding the dawn of Japan’s carpet industry.

1880s

1900s

1930s

1940s

Contribution to Japan’s Modernization
Industrial Revolution
in Japan

Taisho Democracy

1970s

Popularizing Interior Fabrics

in Common Households

1990s

2000s

2020s

Offering One-of-a-Kind Products to Customers around the World

World Depression
World War II

High economic growth
periodPeriod of increasing globalization
Bubble economy
Manifestation of environmental
problems

Collapse of the bubble
economyIT revolution

A declining birthrate
and aging population

Novel coronavirus(COVID-19) pandemic

1930
Suminoe Textile Co., Ltd.
established.
1937
Kawachi Factory established,
where woolen spinning
begins.

1949
Shares listed on the Tokyo,
Osaka, and Kyoto stock
exchanges.
1954
First to introduce to Japan atufting carpet machine fromthe U.S.

1971
Nara Factory (now Nara
Factory of Suminoe TechnoCo., Ltd.) established, andSumiyoshi Factory closed.
1987
Shiga Office established.

1994
T.C.H. Suminoe. Co., Ltd., theCompany’s first overseas
base, established as a joint
venture in Thailand.
1998
Suminoe Textile Group“SUMINOE Environmental
Declaration” and “KKR+A”
announced.

2003
Suminoe Textile of America
Corporation established in the
U.S.
2005
SPM Automotive Textile Co.,
Ltd. established as a joint
venture in China.
2009
Suminoe Teijin Techno Co., Ltd.
established as a joint venture.
2013
Suminoe Techno Co., Ltd. established.

2020
Shares of CPO Co., Ltd. acquired.
2022
Shares of PRETERIOR-TEXTILE Inc.
acquired
Shares of Seki Textile Co., Ltd.
acquired2023
Group Philosophy as well as theGroup’s unified logo and tagline
announced.

History of the SUMINOE GROUP
1883
Murata Factory founded.
Manufacture of handwoven
carpets begins in Sumiyoshi,
Osaka.
1892
The Company’s first patentobtained for carpet
weaving, “Yamato-ori.”

1903
Sumiyoshi Factory withfull-scale weaving facilities
established.
1913
Suminoe Textile Joint-Stock
Company established.
1916
Manufacture of carpets
using power looms begins.

Value Offered by the Group

1891

Winning acclaim for its manufacturing techniques,
the Murata Factory supplied Dantsu hand-woven
carpets to the Imperial Diet Building. We havecontinued to deliver the “red carpet” and otherinterior textiles for the present-day Diet Building.

● Mass production realized byusing power looms

The Company imported technology andpower looms from Germany and the U.K.,
becoming the first in Japan to manufacturemachine-woven moquette.

1899● Manufacture of Japan’s firsthand-woven moquette

The Company received an order to manufacture
the seat covers used in trains of Japan National
Railways, which had conventionally used
imported seat covers. We succeeded in
producing and supplying hand-woven moquetteas a seat covering for the first time in Japan.

SUMINOE GROUP Integrated Report 2023

1931

● Helping widespread use of
carpets in general households

Although carpets had usually been custom-made,high-end products, the Company released aready-made carpet called “Tafton,” which wasaffordably priced for ordinary households.

● Construction of a newpollution-free carpet factory

When pollution problems attracted muchattention, our Nara Factory was newly
constructed. The factory was equipped with
effluent treatment facilities in order to prevent
leakage of hazardous substances discharged
with wastewater.

● Development of a continuous fiber
made from recycled polyester

スミトロン® (SUMITRON), which uses polyester
chips recycled from PET bottles as raw
material by 50% or more, contributes toresource-saving.

1980

1968

● Participating in the automotive
industry in its infancy
Suminoe Textile supplied carpets and seatcovering materials to automobiles assembled
and manufactured in Japan for the U.S.
automakers, Ford Motor Company andGeneral Motors.

2011

1989

1957

● Winning acclaim for Dantsu
carpet-weaving techniques

7

1971

1913

● Producing a 836 m carpet by hand
2

The Homeiden Imperial Palace building is a banquet
hall, the largest of all the Imperial Palace halls. Suminoe
Textile provided for this hall a hand-woven dantsu
carpet of 836 m². Its manufacturing process required
approximately 10,000 weavers, who spent as long as
nine months to complete this masterpiece carpet.

● Production of Japan’s firstcarpet tiles

Suminoe Textile produced carpet tiles that can
express mosaic patterns. It is easy to replace thedamaged carpet tiles with new ones. With
these advantages, these carpet tiles attracted
much attention as an innovative product.

● Development of recycled carpet tiles

We established a framework for repeating therecycling cycle involving the same products for carpet
tiles. These recycled carpet tiles became the first to becertified as Eco Mark products under new standards.

1998● Development of around-the-clock
deodorizing treatment technology

Suminoe Textile developedトリプルフレッシュ®
(TRIPLE FRESH) treatment technology, which candeodorize and decompose substances that cause
sick house syndrome and other malodorous
substances that are generated daily in ourenvironment on a 24-hour basis. This technology
contributes to protection of people’s health.

The past, the present andthe future● Passing on traditional techniques
to future generations
While promoting business reforms, the
SUMINOE GROUP maintains and cultivates
hand-weaving techniques handed down inJapan’s historical industry, thereby making
cultural contribution.

SUMINOE GROUP Integrated Report 2023

8

Message from the President

Maximizing Synergies as the SUMINOE GROUP

Raising the level of our true capabilities toturn external factors into opportunities

Taking on Challenges to Enhance Our Corporate Value on a Global Scale

We have worked on the Medium- to Long-term Management
Targets “SUMINOE GROUP WAY 2022-2024-2027”(hereinafter SGW). However, in terms of profits, we have notattained the targets originally set at the time of the SGW
formation. This is attributable to the prolonged impact of the
COVID-19 pandemic, the Ukraine crisis, a decrease inautomobile production due to the shortage of semiconductors
and other components, and other factors. Looking back to thesituations in recent years, the SUMINOE GROUP’s performance
has tended to be significantly affected by external factors.
Given the predicted emergence of various risks and the
profound transformation in the automotive industry triggeredby the Connected, Autonomous, Shared & Service, and Electric(CASE) revolution, I keenly realize that the Group should raise
the level of its true capabilities. Specifically, it is necessary for us
to grasp the negative impact of the external factors on ourbusiness as early as possible, while maximizing the positive
impact by developing high value-added products, expanding
sales networks and shifting our focus to the growth areas.
Notably, the increasing production of electric vehicles in
response to CASE provides us with a market expansion
opportunity. Amid the major trend toward structuralconversion in the automotive industry, the Group will be able
to significantly expand its market share through an aggressive
approach to automakers in overseas countries, which have amuch higher rate of transition to electric vehicles than that ofJapan. To this end, steady preparations are underway,
including production upgrades in Mexico.
Such efforts to reliably raise the level of the Group’s true
capabilities and bolster its business competitiveness will enable
us to attain the SGW targets of “consolidated net sales at 100
billion yen or more and of an operating margin at 5% or more.”
If we can achieve net sales of 100 billion yen and an operating
margin of 5%, operating income will be 5 billion yen. Then,even if some changes occur due to external factors, we can deal
with them through optimization of our management
resources. We will first aim to attain this level and continue towork for performance improvement.

Teppei Nagata
President
Suminoe Textile Co., Ltd.

From Suminoe Textile Group to
SUMINOE GROUP
As a result of our active pursuit of M&A, we have now growninto a corporate group comprising 30 companies in Japan andoverseas. I believe that maximization of synergies across theGroup will greatly contribute to raising the level of our true
capabilities. To heighten the sense of oneness across the Groupand to establish a system that allows us to generate greatersynergies, in June 2023 we embarked on a new chapter as the“SUMINOE GROUP,” which is used in place of the “Suminoe
Textile Group.” This change is intended to improve the global
recognition of the Group and represents our enthusiasm fortaking on challenges to create further innovation as an industry
pioneer and to open up a new frontier. We have also
formulated the Group Philosophy, which includes its MISSION9SUMINOE GROUP Integrated Report 2023

defined as “Bring people- and society-friendly spaces to theworld through technology and ideas that closely support
people’s lives.” We will work to enhance the corporate value ofthe SUMINOE GROUP, which strives to shape a better future by
fostering innovation while cherishing our tradition of 140
years. Toward realizing our VISION “To set ‘new comfort
standard’ in harmony with the times and the earth to create
delightful lifestyles of the future,” we will promote Group-wide
efforts to grow as an “enterprise that is more willing to take onchallenges than ever before.”To this end, we place emphasis on
developing awareness of all employees. The Group Philosophy
mentioned above was worked out after a series of discussions
mainly involving young and mid-level employees. These
discussions were based on the results of surveys conducted aspart of the Shin Mirai project, specifically, surveys of all Group
employees and interviews with the President and officers. The
Group implemented the “Tsunagu meetings,” in which I myself
participated, to directly exchange views with employees ofvarious age groups, ranging from young to seasoned.
Moreover, we launched “Tsunagu-wa-cation,” an initiative topromote cooperation between departments and between
Group companies to share technologies and ideas.
In the future, we will utilize in-house training and otheropportunities to make the Group Philosophy known to every
member of the Group in order to ensure that it will be reflectedin goals of respective segments, departments and individual
employees. At the same time, we will encourage exchanges
transcending the boundaries of segments and companies,
which will lead to various innovations.

Focusing on reinforcement of IR and efforts
in “sowing the seeds” for the future, always
being conscious of market capitalization
I became the President of Suminoe Textile Co., Ltd. in August2021. Since it was immediately after the Company selected thePrime Market, I was tasked with implementation. Partly
because the Company’s share price declined to 1,461 yen, how
we could increase market capitalization has been the mostimportant business task for me since then. As of July 14, 2023,
the share price has increased to 2,584 yen. However, this task isonly half finished—assuming that the PBR (price book-value
ratio) is 1, we need to increase market capitalization from thecurrent 18 billion yen to the level of 30-40 billion yen. Even so,
we have promoted initiatives step by step to enhance IR
activities. As a result, we satisfied the standard for “average
daily trading value” as of December 31, 2022, the calculationreference date, with only the criteria for “market capitalizationof tradable shares” remaining unsatisfied. The Company ismaking constant efforts to improve the market capitalizationof tradable shares, with the aim of meeting the Continued
Listing Criteria by May 31, 2024.
I also feel that I was able to embody most of what I had inmind, in the past two years. The best example of them is theconstruction of a new synthetic leather factory in Mexico in theautomotive textile business. Mexico is home to many assembly
factories, particularly for car seats designed for North andCentral America. As such, building a new production line there

SUMINOE GROUP Integrated Report 2023

10

Message from the President

is truly effective in reducing supply lead time. The Group is anunusual supplier in the world in that it can offer a total line ofautomotive textiles, such as ceiling materials, seat coverings,
car mats and floor carpets. By taking great advantage of thisfeature, the Group aims to utilize the factory in Mexico tofurther expand the business in North and Central America.
In the Interior Fittings segment, we implemented
strategies to expand the space design business through theacquisition of CPO Co., Ltd. and PRETERIOR-TEXTILE Inc. These
strategies are producing steady results, with these two
subsidiaries now accounting for more than 10% of sales in theInterior Fittings segment. In the Traffic Facilities Business, in July
2022 the Company acquired Seki Textile Co., Ltd. as a subsidiaryso as to establish a more stable production system. We willcapitalize on new market channels possessed by Seki Textile toincrease sales and market share of the Group. In this manner,
we have worked to “sow the seeds” for future growth in eachbusiness segment. Consequently, I feel that the Group was able
to establish a system to embody a new tagline, “Bring
innovation to all kinds of spaces,” which was developed alongwith our new logo.
Meanwhile, as the management leader, I have always
been careful about closely communicating with officers andemployees. To ensure routine communication with officers inparticular, it is important to share information and exchange
opinions with them not only at meetings of the Board of
Directors and the Executive Committee but also on any otheroccasions. For example, I have discussed many times withManaging Director Maruyama, the General Manager of theAutomotive Textiles Business, to work out the process ofrestoring the profitability of our subsidiary in the United States.
The subsidiary is expected to turn into the black by the fiscal
year ending May 2024. As to the measures for improving thefinancial structure, I share the same idea with Managing
Director Usugi, the General Manager of the Administration
Headquarters. Aiming at a D/E ratio of 0.5 times as one
indicator, we will work to strengthen the financial structure.

Significant improvement in operating
income in FY2023
We fell short of the targets set at the beginning of FY2023
because Japanese car manufacturers, our major customers,
reduced automobile production from originally planned, andfor other reasons. However, net sales increased to 94,828
million yen and operating income also increased to 1,294
million yen, achieving a significant improvement in operating
income from the previous fiscal year.
By segment, the Interior Fittings segment posted growthin both sales and income, mainly thanks to a large order for
products adopted by building redevelopment projects, mainlyin the Tokyo metropolitan area. Also, CPO Co., Ltd., which isengaged in designing various retail stores, andPRETERIOR-TEXTILE Inc., which sells interior products,
generated synergy effects together with our existing
businesses. Moreover, our comprehensive proposals forinterior materials and furniture were adopted by large stores,
representing the first step toward market penetration.
In the Automotive Textiles and Traffic Facilities segment,as part of our business structure reforms, we strengthened
coordination between our Mexican subsidiary and North
American subsidiary. Now the US subsidiary’s returning to
profitability has come within sight. In addition, the Group wasable to establish a foothold for expanding the market in the
United States.
In the Functional Materials segment, we completed theconsolidation of factories in China and Vietnam into a single
manufacturing site. Starting from FY2023, the factory in
Vietnam has been operating at full production. As justdescribed, we made advancement in building an optimal
supply system.

Progress in efforts toward the Medium- to
Long-term Management Targets andforecast of financial results for FY2024
We have steadily carried out initiatives specified under the
SGW. Particularly with regard to “Reduce CO2 emissions, anddevelop and distribute products for environmental measures,”we launched ECOS NEO™, which features enhanced
environmental performance. In addition, efforts are being
made to increase sales of ECONIX, a car seat covering material
that uses スミトロン® (SUMITRON) polyester yarn made fromrecycled PET bottles. The Group will continue to contribute to
reducing CO2 emissions through its environmentally friendly
products. We will also strive to reduce environmental impact bycurbing CO2 emissions from the SUMINOE GROUP’s business
operations.
In order to “Improve work efficiency using core systems,”
as the first step, Suminoe Textile Co., Ltd. introduced systems
for receivables/payables management, general accounting
and production management. These systems help speed up
management decision-making and improve inventory
management accuracy through integrated management.
Furthermore, these systems will enable us to swiftly respond toenvironmental changes in the future. In FY2024, we will
expand the application of these systems to subsidiaries, as thesecond step.
As mentioned earlier, the economy has been recovering at
a gradual pace, as represented by a slower-than-expected
recovery in car production by Japanese automakers. For thisreason, for FY2024, the figures for profit targets in the plan set

at the beginning of the fiscal year are lower than those in theplan set at the time of SGW formulation. On the other hand, we
began to see the early results of our efforts in “sowing theseeds” for the future, such as increasing synthetic leather
production in Mexico, strengthening coordination with the US
subsidiary, and expanding the space deign business in theInterior Fittings segment. We therefore plan to post net sales of
99,000 million yen and operating income of 2,600 million yen,
expecting both sales and income growth as compared to
FY2023.

Reinforcing initiatives to address
sustainability issues
To show the Company’s attitudes towards sustainability issues
and strengthen initiatives for sustainability, we formulated the
Basic Policy on Sustainability and Related Policies in June 2022,
as well as the SUMINOE GROUP Human Rights Policy in June
2023. We are also planning to establish the Guidelines for
Sustainable Procurement in January 2024. As for human rights,
we work to implement human rights due diligence, which will
help prevent and mitigate the negative impact of theCompany’s business activities on human rights. To promotesustainable procurement, which should be undertaken
throughout the supply chain, preparations are currently under
way to formulate the Group’s procurement policy and suppliercode of conduct.
With regard to environmental initiatives, since theannouncement of “KKR+A (Kenko [Health], Kankyo[Environment], Recycling and Amenity)” in 1998, the SUMINOEGROUP has been actively engaged in environmental
conservation activities, such as interior environment
improvement and utilization of recycled materials as well as
decreasing our impact on the environment. In April 2022, the“Second SUMINOE Environmental Declaration – Under the
Slogan of KKR+A” was formulated. The Group also aims to
reduce CO2 emissions by FY2031 by 35% from the levels of
FY2014. To achieve this target, steady efforts are being madethrough such measures as energy conversion and theintroduction of photovoltaic power generation systems into
the Company’s Nara Factory and a subsidiary in Thailand. As forenvironmentally friendly products, we strive to enhance theirenvironmental performance and expand the product lineups,
aiming to expand sales in the global market. Meanwhile, in
support of the TCFD recommendations, in June 2023 we
introduced a cloud service to calculate Scope 3 greenhouse gas
emissions, in addition to Scope 1 and 2 emissions. In the initial
phase, we calculated GHG emissions from six major Group
companies in Japan. In 2026, we will be able to calculateroughly overall emissions. Based on the results, we will discussspecific measures and disclose information.
As part of further efforts regarding human capital, we
re-established the Group Philosophy and defined the ideal
employee profile for Suminoe Textile Co., Ltd. The Company
supports the three elements that constitute the profile—“autonomy,” “challenging spirit” and “co-creation,” and strives
to establish a work environment where employees can exhibit
their abilities to the fullest. In June 2023, the Company

introduced a “career self-declaration system” to promotepersonnel transfers and other measures for human resource
activation, aiming to strengthen human capital, whichconstitutes a foundation for business growth.
In terms of governance, we promote initiatives to ensure
the effectiveness of the Board of Directors. In 2023, a survey
and analysis were conducted by a third-party organ, and theresults were reported to the Board of Directors. In the future,
the Company plans to select priority issues to be addressed andformulate a policy for responding to these issues. Since it isimportant to utilize valuable opinions of stakeholders insideand outside the Company for its business management, we will
incorporate objective viewpoints of Outside Directors whendiscerning risks and opportunities for the Company’sbusinesses, thereby reinforcing its governance system.

Carving out a new era while always beinga pioneer of the industry
We will continue to promote various initiatives, with thegreatest focus on considering how we can raise the level of
performance and increase the operating margin. I believe that
one of the keys to success is held by the Company’s threewholly owned subsidiaries in North and Central America. Now
that a new factory of our Mexican subsidiary has started
full-scale operation, we will further intensify our efforts tofirmly gain market share in North and Central America in orderto improve corporate value. In parallel, toward businessexpansion, we will foster global human resources while striving
to improve the financial structure and build up the systems andfoundation that enable us to demonstrate our presence in the
global market. Based on the findings and results obtained in
North and Central America, we hope to eventually advance ourbusiness into Europe in earnest. To this end, discussions will beheld as to preparations for “sowing the seeds” to realize thishope.
I myself will clearly show employees the future direction to
go and themes to be addressed and will actively engage inawareness-raising activities to encourage employees towillingly take on challenges and foster motivated employees.
Without being self-complacent about its history of 140 years,
the SUMINOE GROUP will always maintain a pioneering spirit
and strive to carve out a new era.
November 2023

President
Suminoe Textile Co., Ltd.
Teppei Nagata

11

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12

Medium- to Long-term Management Targets

We have identified the “ideal corporate image” for the SUMINOE GROUP in 2027.
To realize the image, the Group has been implementing initiatives in line with its policy.
Now two years have passed since we started to work on the Medium- to Long-term Management Targets “SUMINOEGROUP WAY 2022-2024-2027,” (hereinafter SGW). The SGW defines the ideal corporate image for the Group in 2027 as
the state where the following targets have been accomplished: 1) expand sales and build a foundation for the growth; 2)
improve financial structure; 3) create workplaces for employee happiness; and 4) share the Company’s vision with
employees. All employees of the Group companies are joining forces to achieve these targets by increasing sales of
products that meet social needs and by promoting global management, based on the ESG management that the Grouphas focused on to date.
Establish better business models to globally grow as a company required by society.
Gain sound profits to invest in future growth.
● Strengthen ESG management.
●

Management
policy●Expand sales and build a foundation for the growth. ● Improve financial structure.
● Create workplaces for employee happiness.
● Share the Company’s vision with employees.

Initiatives to address challenges and results: Improve corporate brand value
The Group has strengthened its initiative to “improve corporate brand” as one of the SGW challenges.
■ Formulation of the Group Philosophy
The SUMINOE GROUP has selected corporate branding as a priority challenge to focus on during the SGW target period.
In undertaking initiatives to improve corporate brand value, we recognized anew the necessity for considering thischallenge from a long-term perspective, including the period after the target period. To begin with, we revisited thereason for the existence of the Group and the value that it offers to stakeholders.
We then launched the “Shin Mirai (lit. new future) Project” (see p. 49) in July 2022 and identified the strengths of theGroup and the value it provides. At the same time, we established a new Group Philosophy: VISION (the future we aimfor), MISSION (our mission to fulfill), and VALUE (basic guidelines for business activities) (see p. 3).

●

Targets

Safe and secure work environment
Participation and cultivation ofdiverse human resources● Enhance governance.
● Improve work efficiency using coresystems.
● Improve corporate brand value.

Reduce CO2 emissions, and develop
and distribute products forenvironmental measures.
● Strengthen cost competitiveness.
● Develop highly unique products.
● Expand sales of products with
antibacterial and anti-virus effects.

●●

Challenges

SUMINOE GROUP WAY POLICY
Financial targets●

Investment plan for building a foundation for growth●

Improve D/E ratio.

●

Increase inventory turnover.

●strongly disseminating the meaning of the Company’s existence.
The Group Philosophy mentioned above was stipulated based on the concept that it is necessary not only for the
SGW initiatives but also for long-term improvement of corporate value.

world through technology and ideas that closely support people’s lives,” as stated in the Group Philosophy.

Develop and promote the sale of products for environmental measures.

Improve financial structure.
●chosen by stakeholders who feel empathy with us. To this end, we are aware that we must enhance our brand power by

to “create delightful lifestyles of the future” as an enterprise that “brings people- and society-friendly spaces to the

Expand sales and build a foundation for the growth.
Operating margin: 5% or more

We aim to improve the corporate value of the entire Group on a long-term basis, thereby ensuring that the Group is

We believe that if we can achieve the ideal corporate image for the SUMINOE GROUP in 2027, then we will be able

Ideal corporate image for the SUMINOE GROUP in 2027

Non-financial targets●●

Objective of SUMINOE GROUP branding—for long-term corporate value improvement—

To realize the Group Philosophy, we will continue Group-wide efforts to accomplish the SGW and conduct businessactivities toward achieving sustainable corporate growth and employee happiness.

Effective use of treasury stock

Create workplaces for employee happiness.
●

Create healthier work environment.

●

Cultivate human resources.

●

Effectively use diverse human resources.

■ IR and PR activities
We are enhancing IR and PR activities for stakeholders to develop their deeper understanding of, and empathy with, ourphilosophy and businesses.

Share the Company’s vision with employees.
Consolidated net sales:

79.7 billion yen

93.4 billion yen(Plan at the time of SGW formulation)

FY2021

Consolidated net sales:

Consolidated net sales:
99 billion yen(FY 2024* Plan at the
beginning of the FY)

Consolidated net sales:

FY2023100 billion yen or more

FY2024FY2027

Three-year Consolidated Income and Expenditure Plan
Net sales (left axis)

Operating income (right axis)

Ordinary income (right axis)

100,000
90,00099,00094,82881,713
1,160 1,350
620
FY ended May 2022
(Plan at the time of SGW formulation)

3,300 3,530

2,520 2,730
950

110

281

FY ended May 2022
(Actual results)

1,960

1,2941,575

1,280

2,600 2,700
1,300

320
FY ended May 2023
(Plan at the time of SGW formulation)

FY ended May 2023
(Actual results)

FY ending May 2024
FY ending May 2024
(Plan at the time of SGW formulation) (Plan at the beginning of the FY*)

Major Numerical Targets and Results by Business Segment
Actual results

Net sales
Segment income
Automotive Textiles Net sales
and Traffic Facilities Segment income
Net sales
Functional
Materials
Segment income
Interior Fittings(Million yen)

6,000

93,49090,36086,48080,00070,000

Profit attributable to owners of parent (right axis)

4,000
2,000

IR and PR activities in FY ended May 2023

Publishing sponsored reports toprovide information on a neutral
groundSince the fiscal year ended May 2022, we have continuously published analyst
reports, using the service of Shared Research Inc.

For institutional investors: Holding
financial results briefings andincreasing one-on-one meetings

The Group has conventionally held financial results briefings for analysts andinstitutional investors twice a year at the interim and the end of the year. We arealso willing to meet their requests for one-on-one meetings with them.

For individual investors: Holding
online IR briefings

To raise the level of name recognition and public understanding of the Group, we
held online briefings for individual investors. We will continue to periodicallyorganize such briefings while considering various methods to help them better
recognize and then understand the Group, which will eventually lead to gaining
their empathy with us.

Media advertisement

We placed an advertisement in the nationwide morning edition of the Nikkei
newspaper on Thursday, February 16, 2023, to publicize the SUMINOE GROUP’s
environmental awareness. The Group implements advertising activities not only
through newspapers but also other media that are suitable for the target audience.

Response to media coverage

The Group willingly responds to coverage by newspapers, magazines, web media,
etc.

0(Million yen)Three-year Consolidated Income and Expenditure Plan (Fiscal years ending May 2022 to 2024)
FY ended May 2024
FY ended May 2022
FY ended May 2023

FY ended
May 2021

Plan at the time of
SGW formulation

Actual results

Plan at the time of
SGW formulation

Actual results

31,024579
45,102
2,102
3,130
-87

33,750400
48,980
2,800
3,410
-140

32,811
911
45,005
1,127
3,548
-192

34,430450
51,910
3,590
3,680
150

36,598977
54,314
2,230
3,550
90

Plan at thePlan at the time of
SGW formulation beginning of the FY*

35,120520
54,170
4,170
3,840
190

36,6401,070
58,800
3,630
3,200
-30

* As of July 14, 2023

13

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14

Value Creation and Growth Strategies in Line with the Medium- to Long-term Management Targets
Value Creation Model

Based on its Group Philosophy, the SUMINOE GROUP will create value that contributes to society, thereby helping realize
a sustainable society and enhancing our corporate value.
External
environment

Business Segments and Output

Input (Capital and Strengths)

Value that the Group Offers

Manufacturing capital
Environmental
risk

Shortage ofresourcesand energy

Capital investment 2.44 billion yen
Consolidated manufacturingsubsidiaries in 8 countries
Globally optimized supply system
Equipment dedicated to
producing eco-friendly products
Strong relationship with eachfactory

Consolidated number of
employees: 2,779
Management who exhibit various
specialties to enhance corporate
value
Diverse human resources wellversed in various business fields

R&D expenses: 1.07 billion yen
Number of patents held: 140
Cooperation between
development personnel
Intellectual property creation

Social and related capital

Workingstyle reforms

Customers and suppliers
belonging to different markets
Industry-academia partnership
Historically established trust fromstakeholders
Harmonious coexistence withlocal communities

Natural capital
Informationoriented
society

Sustainable resources, including
those enabled by photovoltaic
power generation, etc.
Total energy consumption
Energy use

Financial capital
Growing publicawareness of
ESG and SDGs

Contribute toresolving social
issues15●

Human capitalIntellectual capital

Aging /
Shrinking labor
force

Interior Fittings p. 21

Total assets: 88,151 million yen
Interest-bearing debt: 21,280
million yen
Equity ratio: 32.7%
Aggressive M&A

Able to propose diverse
solutions, since the Grouphas multiple functions as amanufacturer, wholesaler
and constructor, and alsoable to design andconstruct an entire space

Automotive Textiles p. 23
Able to apply its
technologies related tovarious interior textiles,
such as fabrics, carpets andmats, to other businesssegments● Stability in quality andsupply achieved by strong
supply chain management●

Human resources witha wide variety of skills
Specialist know-how
regarding manufacturing

Capabilities thatform the core of the
SUMINOE GROUP
Design capability that enables
the matching of manufacturingand market needs
Historically established trustTechnology and development capabilities

Change inthe mobility
societySocial value

Traffic Facilities p. 25
Capability to realize highdurability andflame-retardance requiredby textiles used in public
transportation systems● Maintaining a large market
share for more than acentury based on trust
established over a long
history●p. 31

Ability to change in accordancewith market needs

Functional Materials p. 27●

Capability for sales anddevelopment to create new
products required bymarkets, cultivated throughsales activities leveraging a
wealth of functional
materials and functional
processing technologies
that are unique to theGroupMedium- to Long-term Management Targets“SUMINOE GROUP WAY 2022-2024-2027” p. 13
Environmental management pp. 41-46 Group Philosophy p. 3

Technologies and products the Grouphas created based on its fundamental
development philosophy

K: Kenko (Health)

トリプルフレッシュ® (TRIPLE FRESH)
deodorant treatment technology
Antibacterial and anti-virus processing
technologyトリプルフレッシュ®デオ (TRIPLE
FRESH DEO) and クインテック® (QUINTECH)
Automotive carpets with noise-absorbing
and sound insulating properties

K: Kankyo (Environment)
Automotive seat covering material“e.colore®” (eco-loré), which has reduced
the dyeing process
Automotive ceiling materials featuring
greater ease of recycling after use
Plant-derived automotive textiles andinterior materials for traffic facilities
Seat cushion material for train cars
SUMICUBE®, made from raw materials that
emit no poisonous gases when combusted
for disposal
Olefin bathroom flooring that generates no
poisonous gases at the time of combustion

R: Recycling
ECOS® series, eco-friendly carpet tiles under
the horizontal recycling system
Recycled polyester fiber スミトロン®
(SUMITRON)
Nylon yarn recycled from discarded fishing nets

A: Amenity
Smart textiles that contribute to acomfortable life
Fabrics for car trim accent GRACE CORD®,
etc., which enhance originality
Flame-resistant flooring film for signs toindicate priority spaces in trains and buses
Fabric-coated heating products
Tispa® Series deodorizer for home use

Environmental value

pp. 41-46

Reduce environmental impact frombusiness operations

Ideal Corporate ImageMISSION
Ideal state
the SUMINOE GROUP aims for

Reduce environmental impact fromproducts
Reduce the amount of industrial waste
generated
Realize a circular economy
Strengthen environmental management

Value offered to stakeholders
Customers and consumers

brings people- andsociety-friendly spaces to theworld through technology
and ideas that closely

Improve quality of life (QOL)
Reduce environmental impact

Employees

To be an enterprise that

support people’s lives
pp. 51-52

Diversity & inclusion
Promote health management andwork-life balance

Suppliers
Strengthen relationships by building a
responsible supply chain
Improve technological capabilities andmutual growth through transactions

Shareholders and investors

VISIONThe future we wish to shape

Profit returns to shareholders throughenhancement of corporate value
Strengthen partnerships

Local communities
Revitalize the local economy throughemployment and social contribution
activities

To set a “new comfort
standard” in harmony withthe times and the earth tocreate delightful lifestyles

Economic valueof the future

Net sales 94,828 million yen
Profit attributable to owners ofparent 320 million yen
Operating margin 1.4%
ROE 1.1%

Governance, compliance,and risk management pp. 53-60
Basic Policy on Sustainability p. 37

D/E ratio 0.73 times

Enhance the Group’s
capital and strengths

SUMINOE GROUP Integrated Report 2023

SUMINOE GROUP Integrated Report 2023

16

Value Creation and Growth Strategies in Line with the Medium- to Long-term Management Targets
Toward Identifying the SUMINOE GROUP’s Materiality (Key Issues)

Identifying materiality based on key sustainability issues selected from the SGW challenges

Activities in FY2023

In the course of formulating the Medium- to Long-term Management Targets “SUMINOE GROUP WAY 2022-2024-2027”

Identification of key sustainability issues from the SGW challenges and recognition of “risks and opportunities”(hereinafter SGW), the SUMINOE GROUP identified its nine key challenges, taking into account the priority issues specified under

Since January 2023, the CSR Promotion Department has collected information on the identification of materiality. It held two

the Medium-term CSR Plan, while referencing international standards regarding social responsibilities and sustainability. Amid

workshops on materiality identification in February and May, 2023. With outside experts invited as instructors, these workshops

the increasing importance of sustainability, we are going to identify materiality as an extension of the key sustainability issues

were organized for participants from the Corporate Planning Department, the Finance and Accounting Division, and theselected from the SGW challenges. In accordance with the Basic Policy on Sustainability, the Group will identify its materiality

Personnel Department.

based on the results of interviews with and surveys of stakeholders both inside and outside the Company.

The CSR Promotion Committee confirmed that the Company made appropriate responses to the risks and utilized theopportunities regarding the five key sustainability issues that had been selected from the nine SGW challenges in our business activities.

Materiality identification process
STEP1
Understanding and identifying theexternal environment and social issues
Recognizing “risks and opportunities”
regarding key sustainability issues
selected from the SGW challenges

STEP2
Stakeholder engagement(Verification of expectations)

STEP3
Creating a materiality map
Identifying materiality
Approving of the identified
materiality and promoting initiatives

Key sustainability issues selected from the SGW challenges (5 issues marked with a )We identified key sustainability issues that were deemed important for both the Company and stakeholders.

Management
policyAs of the end of September 2023, we had finished Step 1 (see p. 18).

Reduce CO2 emissions, anddevelop and distribute products
for environmental measures.
●
Strengthen cost competitiveness.
●
Develop highly unique products.
●
Expand sales of products with
antibacterial and anti-virus effects.

Targets

Procedures and organization
Procedures

Members incharge ofmateriality
identification*

Descriptions

Experts

Directors
and Officers

Understanding and identifying the external environment and social issues
Grasp social issues based on the international standards regarding social
responsibilities and sustainability indicators (reference indicators: ISO
26000, GRI Standards, etc.).

Executive
Committee

CSR
Promotion
Committee

○

○

○

○

○

○

STEP1 Recognizing “risks and opportunities” regarding key sustainability issues
selected from the SGW challenges
Extract and summarize risks and opportunities that have significant impact
on management strategies, in light of the SUMINOE GROUP Philosophy.

STEP2

STEP3

Stakeholder engagement (verification of expectations)
Extract and summarize risks and opportunities that have significant impact
on management strategies.
Stakeholders refer to employees, labor unions, customers, suppliers,
investors, banks, etc.

○○

Creating a materiality map
Evaluate the importance of the issues based on the two axes: Importance for
the Company’s long-term business activities and importance for stakeholders.
(Global indicators, business segment reports, investor expectations, etc.)○○

Identifying materiality
Prioritize the importance of each evaluated issue so as to identify materiality.
Also draw up plans for measures and indexes to be used in each material issue.

○

○

○

○

Approving of the identified materiality and promoting initiatives
Approve of the materiality after its validity has been verified in light ofmanagement strategies, at meetings of the Executive Committee and theBoard of Directors.

○

○

○

○

○

Challenges

Changes to note in theexternal environment

E
S○* These members comprise representatives of Headquarters & Administration Headquarters—mainly the CSR Promotion Department, the Corporate Planning Department,
the Personnel Department and the Finance and Accounting Division―and division managers of respective business headquarters.

G

High
Degree of importance for stakeholders

Low

17

Key issues

Key sustainability issues selectedfrom the SGW challenges

Safe and secure work environment.
Participation and cultivation ofdiverse human resources.
Enhance governance.
●
Improve work efficiency using coresystems.
Improve corporate brand value.

Recognition of “risks and opportunities”● Risks〇 Opportunities

Related to the environment
Climate change
Recycling-oriented society

Reduction of CO2 emissions,and development anddistribution of products forenvironmental measures● Risks of business damage caused by natural disasters● Increase in costs by observing environmental regulations● Environmental destruction and impact that may arise during production processes
and waste generation〇 Establishment of business strategies through reduction of CO2 emissions〇 Growing need for technologies that facilitate efficient utilization and reuse ofresources, and expansion of related markets

Related to social issues
Decrease in working
population
Diversification of working
stylesVisibility of human capital
Increasing awareness ofhuman rights

Safe and secure work
environment● Occurrence of occupational accidents caused by an inadequacy of occupational
health and safety measures〇 Creation of a safety culture

Participation and cultivationof diverse human resources● Labor shortage due to changes in Japan’s demographic structure● Talent drain because of inability to meet diverse needs● Confusion in the supply chain due to a lack of human rights governance〇 Expansion of opportunities for diverse human resources to display their capabilities〇 Productivity improvement through implementation of working style reforms andhealth management, and creation of innovations through motivation enhancement〇 Corporate activities based on human rights policy in conformity with international
norms

Increasing expectations forthe value of the Company’s
existence for society

Improvement of corporate
brand value● Loss of social credibility due to the pursuit of profit only for the Company〇 Empathy from stakeholders〇 Behavioral changes of management and employees〇 Fostering of a challenging spirit

Related to governance
Changes in laws andregulations
Increased complianceawareness

Enhancement of governance● Loss of credibility due to the occurrence of scandals resulting from malfunction of
governance and internal control● Threat of cyber security● Delay in compliance with laws and regulations〇 Improving credibility of management by securing appropriate business activities
thanks to properly functioning governance〇 Decision-making transparency* Results of initiatives in FY2023 (pp. 39-40)

Tasks in FY2024
We will implement the procedures of Step 2 and Step 3.
Focusing on “individuality” such as business model continuity, we will proceed with the identification of materiality uniqueto the Group.
Degree of importance for the Company’s
long-term business activities

SUMINOE GROUP Integrated Report 2023

High

SUMINOE GROUP Integrated Report 2023

18

Value Creation and Growth Strategies in Line with the Medium- to Long-term Management Targets
Segment Information

Net sales and percentage to total

Interior Fittings

38.6%

36,598million yen

Automotive Textile andTraffic Facilities

57.3%

54,314
million yen

Overview of business resultsfor FY ended May 2023
Although sales of household carpets
were affected by a reactionary decline
after the high demand during the
COVID-19 pandemic, sales ofcommercial carpets increased thanks
to a large order intake. Total net sales
in the Interior Fittings segment
increased also because of the contribution from sales of the space designbusiness due to the adoption ofcomprehensive proposals for interiormaterials and furniture. Sales of wallcoverings also remained firm owing to
the effect of price revisions and otherfactors.

Automotive-related sales increased,backed by a recovery in domestic
automobile production in addition to
the favorable impact of foreignexchange rates. The traffic facilities
business saw a rebound in demandfor products for railway refurbishingworks as well as interior textiles forbuses. Segment income increased,reflecting the gradual spread oftransactions at reasonable prices aswell as the business structural reformat the Company’s subsidiary in the
United States.

3.7%

Trends in business results
Net sales

Segment income■Results(Million yen)
40,00033,30030,00031,02432,811■Plan

36,598 36,640

Functional Materials

3,550
million yen

Ratio of segment income■Results(Million yen)

■Plan

●Results

（％）
3.0

1,200

911

900

977

1,070

●Plan

2.9

2.8
2.7

2.0
600

20,000

472

1.9

579
1.0

0

0
2020

2021

2022

2023

2024

Net sales

0
2020

2021

2022

2023

2024

Segment income■Results ■Plan(Million yen)
60,00054,31454,07558,80040,000■Results

3,630
2,652
2,102

2021

2022

2023

2024

■Results■Plan

3,548 3,550
3,130

3,000

3,200

2021

2022

6.2
6.0

4.9

4.7

4.1

2023

2024

2020

2021

2022

■Results

■Plan

4.0

90

79
-87

-192

-30

3.0

2.6

2.0
1.0
-200

0
2020

2021

2022

2023

2024

2024

（％）

-100

1,000

2023

5.0

0

2,000

●Plan

Ratio of segment income(Million yen)

100

●Results

（％）

0
2020

200

3,928

2024

2.0

Segment income(Million yen)

2023

2.5

1,127

0
2020

2022

4.0

2,230

1,000
0

2021

8.0

2,000

20,000

■Plan

5,000

3,000

2020

Ratio of segment income(Million yen)

4,000

45,102 45,005

4,000

1.4

300

10,000Net sales
Sales of fabric-coated heatingproducts increased because of pricerevisions to cover higher raw material
prices and surging import costs,
despite a decrease in new orders.
Orders for floor materials forbathrooms also remained steady.
Other contributing factors to theincrease in segment income include
the completion of the consolidationof factories in China and Vietnam in
the previous fiscal year.

(For each FY ended May 31)

2.0

0
2020

2021

2022

2023

2024

2020

2021

2022

2023

2024

* The above data for the fiscal year ending May 2024 are the forecast figures for consolidated financial results that were disclosed on July 14, 2023.

19

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20

Value Creation and Growth Strategies in Line with the Medium- to Long-term Management Targets
Strategies by Segment

Interior Fittings
Review and Future Prospects by the Officer in Charge

Business Details
Wholesale of interior textiles for commercial use (in Japan and overseas), interior finishing work (curtains, carpets, wallpaper, plush
hand-woven curtains, hand-woven carpets and hooked rugs, etc.), wholesale of household interior textile products, EC business, store
design and construction (Space Design Business), sales of curtains and other optional items, and production and sales of arts and crafts

Major Products

Against the backdrop of the economic recovery trend,
we achieved both sales and profit growth in FY2023.
We will strengthen the space
Norihisa Murase
design business.
Director
Division Manager
Interior Textile Business Headquarters

Review of FY Ended May 2023 (Results and Future Challenges)
Carpet tiles

AVANCERA FLOOR

Doncho (plush hand-woven curtains that
separate a stage from the auditorium)

Dantsu (high-class hand-woven
carpets and hooked rugs)

Rugs and mats

Curtains

Wallpaper

Fusuma paper (paper for sliding doors)

Nishijin brocade fabricCoin purses and card holders

SWOT Analysis
Strengths

Weaknesses

The appeal of eco-friendly products cultivated through many
years of our efforts to address environmental issues● Sales capabilities taking advantage of the Group’s multiple
functions as a manufacturer, wholesaler, and constructor● System covering from designing of the entire space to final delivery● Capabilities for manufacture and development of traditional
craftwork based on techniques refined for many years● Product development and sales capabilities throughcooperation with other segments●

Low brand awareness due to insufficient public relations● Decreased demand for roll carpets, one of the mainstay
products of this segment● Disadvantageous location and limited accessibility of local
showrooms● Inefficient logistics because of the fact that wallpaper andinterior products are handled by different management
systems at different operation bases●

Opportunities

Reduction in the interior market scale due to the decreased
number of new housing starts, etc.
● Soaring prices of raw materials such as crude oil, and risingenergy and logistics costs● Unstable supply of raw materials due to fewer supply chains● Shortage of certified skilled workers due to aging and decreased
demand● Rising transportation expenses due to a shortage of transportation
drivers●

Companies Engaged in the Business
Suminoe Textile Co., Ltd., SUMINOE Co., Ltd., RUNON CO., LTD., Suminoe Logistics Co., Ltd., TANGO TEXTILE Co., Ltd., Suminoe WorksCo., Ltd., Sewing Hyogo Co., Ltd., CPO Co., Ltd., PRETERIOR-TEXTILE Inc., Kyoto Traditional Art and Craft Factory of Suminoe Textile Co.,
Ltd., Suminoe Techno Co., Ltd.

Strategies and Measures and Progress Assessment for FY Ended May 2023
Strategies and measures

21

Progress

Strategies and measures

Progress

Expand lineups of environmentally friendly products
and increase sales of these products.

○

Reduce inventory levels.

○

Commercialize and launch anti-virus wallpapers.

○

Strengthen directly operated EC business.

○

Enhance transmission and penetration of our brand image.

○

Simplify delivery.

×

Develop new products for housing.

△

SUMINOE GROUP Integrated Report 2023

interior products, generated synergy effects together with ourexisting businesses. Our comprehensive proposals for interiormaterials and furniture were adopted by large stores, representing
the first step toward market penetration.
As for products, encouraged by further growing
environmental awareness, both sales quantity and market
recognition of ECOS®, eco-friendly carpet tiles under the horizontal
recycling system, greatly improved. Moreover, for generalhousehold use, we launched rugs and mats for pets, such as dogs
and cats. In this manner, we were vigorous in business expansion
into other industries.

Future Prospects (Toward Achieving the SGW 2024)

Threats

Increased demand for carpet tiles due to the addition of“disclosure of CO2 emissions” to evaluation criteria for carpet tile
procurement under the Act on Promoting Green Purchasing● Growing interest in interior materials due to lifestyle changes● Increased demand in overseas markets after the removal ofrestrictions on overseas travel● Improved evaluation of Japanese textiles of traditional arts andcrafts due to consumer preference for high-end products●

In fiscal year ended May 2023, the Interior Fittings segment
achieved both sales and profit growth. This was due primarily to alarge order for products adopted by building redevelopment
projects, mainly in the Tokyo metropolitan area, and renovations ofaccommodation facilities that were resumed in response to therecovery in demand from inbound tourists. The profit growth isattributable to solid performance of RUNON CO., LTD., a subsidiarythat handles wall coverings, which made a revision of productprices in FY2022 because of soaring raw material costs. In the spacedesign business, CPO Co., Ltd., which is engaged in designingvarious retail stores, and PRETERIOR-TEXTILE Inc., which sells

As in FY2023, we will first work to expand sales ofenvironmentally friendly products, centering on ECOS®, and ouroriginal highly functional products. Along with such efforts, wewill strengthen the space design business to offer people- andsociety-friendly spaces that are more comfortable and ensure
greater safety and peace of mind on a one-stop basis.
To improve the profitability, I think it is important todevelop and launch high-grade products, which have still beenin the planning stage until now. We will improve theprofitability by proposing products that differentiate us fromother companies. Primary among them are more luxurious
carpets for general household use, such as hand-made rugs
manufactured by TANGO TEXTILE Co., Ltd., which has a track

Progress

record of delivering products to renowned hotels. Meanwhile,
the prices of raw materials still continue to surge, exceeding the
maximum we can absorb as a manufacturer. By selling products
at reasonable prices, we will maintain our product quality andsecure proper inventory, thereby ensuring profit.
The economy has begun to move forward along with theeasing of behavioral restrictions against COVID-19. The Interior
Fittings segment will keep pace with this positive trend, withdetermination to aggressively expand business both in Japanand abroad. The SUMINOE GROUP commemorated its 140th
anniversary in 2023. I will strive to better operate this businesssegment so that it can play a role in supporting people’s daily
life.

Increasing the recognition of SUMINOE Co., Ltd. through public relations—Measures to enhance transmission and penetration of our brand image

SUMINOE Co., Ltd., which plays a pivotal role in the Interior
Fittings segment, has been working to strengthen PR
activities.
In the fiscal year ended May 2023, the company put atie-up advertisement featuring an interview in anarchitecture journal, with the purpose of improving thebrand image and recognition of SUMINOE Co., Ltd. andECOS®.
The company also actively implements measuresthrough the web. For example, it has been continuing todisseminate information while making effective use of
several building materials databases. SUMINOE also plans toredesign its website after reviewing all the contents from theviewpoint of users. In parallel with such activities, thecompany strives to continuously improveinformation sharing via social media. In sodoing, it aims to widely publicize various
brand products of SUMINOE Co., Ltd. to not
only B-to-B suppliers but also B-to-C end
Website ofusers.
SUMINOE Co., Ltd.
(Japanese only)

SUMINOE GROUP Integrated Report 2023

22

Value Creation and Growth Strategies in Line with the Medium- to Long-term Management Targets
Strategies by Segment

Automotive Textiles and Traffic Facilities (Automotive Textiles)
Review and Future Prospects by the Officer in Charge

Business Details
Development, production and sales of automotive interior products (ceiling materials, seat covering materials, floor carpets,
luggage compartment, car mats, and other interior products in general), automotive exterior textile products (wheel houses,
engine covers, and other textile products). Our products are supplied to all Japanese automobile manufacturers.

Promoting new projects to meet the needs ofa once-in-a-century transformation period
Toshiro Maruyama

Major Products
Ceiling material
Seat covering materials
Seat backSun visor

Managing Director
Division Manager
Automotive Textiles Business Headquarters

Door trim
Luggagecompartment

Review of FY Ended May 2023 (Results and Future Challenges)
Floor carpet
Wheel house

Car matSeat covering materials

Floor carpet

Car mat

SWOT Analysis
Strengths

Weaknesses

Capability for total coordination of automotive interior products
Global manufacturing system that enables stable quality andsupply● Strong global supply chain● Capability for development and proposals of new materials throughintegration of technologies developed in multiple businesses● Capability to adopt to the environment as a manufacturer●●●

Insufficient consolidation of technologies and expertisepossessed by overseas operation sites

Capability to deal with price fluctuations caused by external
factors● Delay in launching the restructuring of the North andCentral American business●Threats

Response to the automotive industry, which is in the age oftransformation represented by CASE and NEVs●

Increased demand for environmentally friendly products●

Increased demand for textile-based products that arelightweight and excel in noise-absorbing performance●

Sluggish sales of Japanese manufacturers in China●

Intensified price competition●

New entry of overseas manufacturers that produce automotive
interior textiles and seat covering materials into the market●

Increasing cost of production due to soaring energy costs

Companies Engaged in the Business
Suminoe Textile Co., Ltd., Suminoe Logistics Co., Ltd., Suminoe Teijin Techno Co., Ltd., Teijin Tecloth Ltd., Owari Seisen Co., Ltd.,
Suminoe Techno Co., Ltd., Suminoe Textile of America Corporation, Bondtex, Inc., Suminoe Textile de Mexico, S.A. de C.V., SPM
Automotive Textile Co., Ltd. Suzhou Suminoe Koide Automotive Accessories Co., Ltd., Suminoe Textile Shanghai Co., Ltd., T.C.H.
Suminoe Co., Ltd., Suminoe Koide (Thailand) Co., Ltd., PT. Sinar Suminoe Indonesia, PT. Suminoe Surya Techno, Suminoe Teijin Techno
Krishna India Pvt. Ltd.

Strategies and Measures and Progress Assessment for FY Ended May 2023
Strategies and measures
Development, sales promotion and effective useof environmentally friendly products
Development of interior materials fornext-generation vehicles
Cost reduction through the optimization ofmaterial procurement
Horizontal development to overseas markets

23

SUMINOE GROUP Integrated Report 2023

Progress

Strategies and measures

Progress○

Development of products, focusing on “new parts” and“production with less man-hours” as key words
Development of fabric materials using new production
methods
Development in accordance with the situations andissues of each global operation site

○

△
△
△

Regarding capital investment, we promoted the developmentof products that are expected to be profitable in the future andactivities to propose these products. In addition, we introduced
machines to develop new technologies in Thailand, China and Mexicoand made preparations for a new factory for synthetic leather
production.
The automotive industry has entered a once-in-a-century periodof transformation, with carmakers accelerating the development ofelectric vehicles toward 2030 while promoting initiatives for ESG and
the SDGs. As part of our efforts to respond to the transformation, we
launched a new fabric development project. Project members
gathered from development, sales and technological departments towork together to create products that add further value toconventional sustainable materials and design items using embossing
and embroidery.

Future Prospects (Toward Achieving the SGW 2024)

Opportunities●

In the fiscal year ended May 2023, the Automotive Textile business
continued to confront extremely harsh conditions, such as theconfusion in supply chains caused by the spread of COVID-19, theshortage of semiconductors, suspended operations by automotive
manufacturers, the impact of the weaker yen on imported materials,
and soaring prices of raw materials and energy due to high crude oil
prices. Under such circumstances, net sales and segment income fellsignificantly below the planned figures. However, by focusing on costsaving, cost reduction and quality improvement measures with theunderstanding and cooperation of the entire automotive industry, wewere able to minimize the impact of inflated raw material prices.
As for profitability improvement of a North American subsidiary,
which was one of our concerns, it is almost certain to achieve
profitability as a result of measures to restructure the production
system and strengthen coordination with a subsidiary in Mexico.

○△

We regard the third year of the SGW as a breakthrough year, in which
we will promote initiatives on four key themes, aiming at winningcustomer trust through our high capabilities for product development
and production proposals.
The first theme is to “further strengthen operation bases in North
and Central America.” At our subsidiary in Mexico, we plan to complete
the construction of a new synthetic leather factory and hold its opening
ceremony within 2023. It is the first time in several years for the Groupto construct a new factory. We will move to the next step throughmanufacturing of products that will trigger a revitalization of struggling
subsidiaries in North and Central America, development of new
products, and expansion of our market share.
The second theme is to “reinforce the fabric business.” We will
promote the adoption of ECONIX*, a seat covering material that utilizes

Progress

スミトロン® (SUMITRON), and sales expansion of decorative fabricmaterials by further strengthening product planning, development andproduction, aiming at increasing orders received for fabric products.
The third is “human resources development.” We will nurture
personnel who can play multiple roles, and we will develop the practicalskills of employees.
The fourth is “specific strategies on a medium- to long-termbasis.” We will design specific strategies tailored to the situations andfeatures of the respective 17 operation sites in Japan and abroad, andwe will visualize a roadmap to the achievement of their businesstargets.
* ECONIX: Fabric using an eco-friendly yarn made from recycled
chips. It is highly durable and excels in stain resistance andprevention of ﬁbrillation by friction.

Applying products of other businesses as automotive textiles—Development of products, focusing on “new parts” and “production with less man-hours” as key words

We have started to promote sales of floor signage film fortrains and buses, which is originally a product of the Traffic
Facilities business, as an interior item that is used to prevent
scratches in a car. First, the film was adopted by Nissan MotorCo., Ltd. as a protection film for the luggage compartment of
SERENA e-POWER (launched in April 2023). Going forward,
we will develop a product making effective use of the film’s
scratch-resistant and decorative properties, with a view toproposing its applications to other components, such as
interior panels, sidestep garnishes, and luggage entry
guards. To expand sales ofsuch film, we will promote it
to automobile manufacturers.
Luggage protection film

SUMINOE GROUP Integrated Report 2023

24

Value Creation and Growth Strategies in Line with the Medium- to Long-term Management Targets
Strategies by Segment

Automotive Textiles and Traffic Facilities (Traffic Facilities)
Review and Future Prospects by the Officer in Charge

Business Details
Production and sales of interior materials mainly for trains and buses (seat coverings, wall materials, curtains, flooring materials, seatcushion materials, etc.) We have supplied our products to a variety of customers. For trains, these customers include JR, private railways
and publicly operated transportation services. Our products have also been used in pickup buses, route buses and sightseeing buses.

Improving performance by expanding sales channels,
viewing post-pandemic recovery in demand as
business opportunities

Sadahiro Seto

Major Products

Operating Officer
Division Manager
Traffic Facilities Business Headquarters

Review of FY Ended May 2023 (Results and Future Challenges)

Moquette (woven velour), curtains

Floor signage film

Carpets

SUMICUBE®, knit fabric

SWOT Analysis
Strengths

Weaknesses

The industry’s top market share percentage
Capability to offer total proposals for interior materials for
public transportation systems● Environmentally friendly products with excellent safety
performance● Technological and development capabilities taking advantage
of possessing the Group’s own factories

Aging facilities of manufacturing factories
Aging human resources● Significant impact of the decline in the traffic industry● Insufficient track records of delivery to overseas customers

●

●

●

●

Opportunities

Threats

Increase in travelers and foreign visitors to Japan in the
post-pandemic era● Increase in users of public transportation facilities owing topractical application of MaaS
● Increased demand for environmentally friendly products● Increased demand for products for EV buses●

Decrease in users of public transportation facilities owing to
declining birthrate and aging population● Decrease in the number of trains/buses owned because of
decreased business trips and reduced rush-hours due to the
spread of teleworking and staggered working hours● Soaring materials prices●

Companies Engaged in the Business
Suminoe Textile Co., Ltd., Marunaka Soei Co., Ltd., Seki Textile Co., Ltd., Teijin Tecloth Ltd., Owari Seisen Co., Ltd., Suminoe Techno Co.,Ltd.

Strategies and Measures and Progress Assessment for FY Ended May 2023
Strategies and measures

25

Progress

Increase order receipts for renovation and replacement work, both of which show signs of recovery.

×

Develop and increase sales of new products.

○

Develop environmentally friendly fabrics.

△

Increase market shares.

○

Propose and receive orders for SUMICUBE® (seat cushion material) with a new tactile impression.

△

SUMINOE GROUP Integrated Report 2023

In the fiscal year ended in May 2023, sales were sluggish in the
Traffic Facilities business since orders received from transportation
operators, who are our customers, remained low due to a lack ofrecovery in demand for updating and maintaining train seats aswell as for new sightseeing buses.
However, I realize that the passenger demand has been on
a recovery trend after the reclassification of COVID-19 under the
Infectious Diseases Control Act to Category V. Although demand
for new sightseeing buses is still low, there is a resurgence inorders received for covering materials for updating andmaintaining train seats and for SUMICUBE® cushion material fortrain cars. We also see recovering demand for route buses andemerging demand for EV buses.
On the occasion of these changes, we recognize that weare in the period of being more responsive to the needs of ourcustomer companies. Making the most of our strong
proposal-making capability and high market share, we strive tooffer proposals that give greater satisfaction to customers andensure a stable supply of products.

Future Prospects (Toward Achieving the SGW 2024)
In 1896, the Company succeeded in manufacturing moquette, apile fabric for seat coverings, as the first of its kind in Japan. Since
then, we have been maintaining the top market share in thearea of seat coverings used in public transportation facilities.
Seat covering materials account for roughly 50% of sales in thisbusiness segment. In July 2022, to maintain and improve ourdevelopment and production system, we acquired Seki Textile
Co., Ltd., which has been functioning as a moquette
manufacturing factory of the SUMINOE GROUP. The Group willcontinue to pursue design and functionality that satisfy
customer needs, aiming to enhance its brand value.
The passenger demand in society as a whole has recovered
only up to around 80% of pre-pandemic levels. To achieve theProgress

SGW in such a situation, we will focus efforts on further
promoting our functional products and enhancing thefunctionality of SUMICUBE® and floor signage film whilebringing their prices down, thereby increasing order intake.
We have worked to strengthen cooperation with otherbusiness segments and apply know-how of the Traffic Facilities
business to other segments. As a result, now we have a goodtrack record at selling products that we had not handled
previously. We will continue to reinforce cooperation with otherbusiness segments to promote sales of seat upholstery materials
for theaters and halls. Through these endeavors, the Group will
increase customer acquisition by leveraging its existingknow-how, which will enable the business to turn around.

Generating synergies through the acquisition of Seki Textile Co., Ltd. as a Group company—Measures to develop and increase sales of new products and to increase market share

In July 2022, Suminoe Textile Co., Ltd. acquired Seki Textile
Co., Ltd. as a Group company, with the expectation of generating synergies between the Company’s stable supply
system and Japan’s leading weaving technology owned by
Seki Textile (see p. 30). With strong capabilities for sellingmoquette not only for trains and buses but also for household furniture, Seki Textile contributes to expanding theGroup’s market share and to improving its competitiveness.
The Company appointed the Director of the Traffic
Facilities Textiles Planning Division of the Traffic Facilities
Textiles Business Department of Suminoe Textile Co., Ltd. asa Director of Seki Textile Co., Ltd. She is the Group’s firstfemale to be internally promoted to a Director, although

until then there had been examples of appointment offemale Outside Directors for the entire Group. Before being
engaged in the Traffic Facilities business, she dealt withgeneral household products in the Interior Fittings segment.
Capitalizing on her experience in production and quality
control she had accumulated in the previous segment, she is
now in charge of management and administration of both
the Company’s Traffic Facilities business and Seki Textile Co.,
Ltd. We will continue to encourage our personnel to utilize
their experience, knowledge and personal connections
cultivated in other business segments for developing andincreasing sales of new products in the Traffic Facilities
business as a whole.

SUMINOE GROUP Integrated Report 2023

26

Value Creation and Growth Strategies in Line with the Medium- to Long-term Management Targets
Strategies by Segment

Functional Materials
Review and Future Prospects by the Officer in Charge

Business Details
Moving beyond its conventional business segments, the Group has been active in advancing into new business fields, handling a wide rangeof products, including textiles, non-textiles, interior materials, household appliances and food. Household appliance business：Development,
production and sales of fabric-coated heating products Functional materials business: Development, production and sales of floor materials
for bathrooms, deodorizing products, interior materials for aircraft, water shielding/thermal insulation sheets, and food products

Striving to enlarge the business scale and improve
profitability while flexibly responding to major
environmental changes

Masaya Fukuoka

Major Products

Operating Officer
Division Manager
Functional Materials Business Headquarters

Electric carpets

Deodorant air filters for air purifier

The Tispa® Series“Real Odor Deodorization
without Disguising with a Scent”“Kakidanomi” supplement
containing persimmon(kaki) polyphenol

Floor materials for bathrooms

Interior materials for aircraft

Roof
tile side* CLOTHCABIN is a
registered trademark of
TEIJIN FRONTIER CO., LTD.

Heatinsulating
property Roof board side

Roofing materials

CLOTHCABIN®

SWOT Analysis
Strengths

Weaknesses

Functional materials and functional treatment technologies
that are unique to the Group● Eco-friendly technology capability● Organizational structure to realize high-quality products andhigh-level development●

OEM business that is vulnerable to demand fluctuations
Household appliances only limited to fiber-coated types of products● Delayed brand penetration● Dispersion of capabilities due to business operations in
multiple fields●●

Opportunities

Threats

Trend toward a decarbonized society, a declining birthrate
and aging population, increasing health and hygieneawareness, and the emergence of new needs due to external
environmental changes, such as digital transformation (DX)● New demand from existing customers in many fields● Discovering overseas demand, with a footing in overseas
affiliates●

Unexpected changes in the external environments caused by apandemic and other events● Market maturity, lowering of product prices, intensified price competition● Changes in consumer trends due to a declining birthrate andaging population and other factors● Changes in situations of the countries where overseas
operation sites are located●Companies Engaged in the Business
Suminoe Textile Co., Ltd., Suminoe Techno Co., Ltd., Suminoe Textile Vietnam Co., Ltd., Suzhou Suminoe Textiles Co., Ltd., Owari SeisenCo., Ltd.

Review of FY Ended May 2023 (Results and Future Challenges)
In the fiscal year ended May 2023, the performance in the Functional
Materials segment exceeded the results for the fiscal year ended May
2022, thanks to robust demand for bathroom floor materials, despite
the negative impact of soaring prices of resources and raw materials,
drastic fluctuations in foreign exchange rates, an increase in importcosts, and other factors.
In the household appliance business, the fiscal year under review
was the first year for our new production system that was establishedafter the consolidation of overseas factories. Beginning in FY2023, thefactory in Vietnam has been in charge of manufacturing fabric-coatedheating products. The factory is making steady preparations for
producing main components in-house, establishing a production
system toward achieving the SGW 2024. Going forward, we will
expand the scope of the business license for the Vietnamese factory,
while strengthening its corporation with its counterparts in Japan and

Future Prospects (Toward Achieving the SGW 2024)
There has been a move toward the normalization of social and economic
activities as represented by the easing of behavioral restrictions and theincrease in inbound tourism demand. On the other hand, future
prospects still remain unpredictable due to the lingering Russa-Ukraine
conflict, financial tightening mainly in Western countries, rising prices ofresources and raw materials, fluctuations in foreign exchange rates, andso forth. It is also expected that people’s sense of value will become
further diversified along with changes in lifestyles and that publicawareness of sustainability will continue to increase.
Although this business segment is susceptible to these trends, wewill strengthen and promote the strategies and measures specified
under the SGW, in order to expand the business while keeping pace withenvironmental changes, with a focus on the six initiatives shown on theright.

Strategies and Measures and Progress Assessment for FY Ended May 2023
Strategies and measures
Consolidate overseas factories of fabric-coated heatingproducts, optimize the production and supply systems forthese products, and strengthen the business capability.
Promote development of new products by using functional
products and processing technologies and increase sales ofthese products.
Develop and increase sales of products made byfunctionally processing technologies, such as deodoranttreatment and anti-virus processing technology.
Maintain and promote appropriate quality management andproduct supply systems in accordance with the JIS Q 9100
quality management standard for the aerospace industry.

27

SUMINOE GROUP Integrated Report 2023

Progress

Strategies and measures

Progress△

Develop new health foods and everyday items using
persimmon polyphenols and other functional natural
substances and expand sales of these products.

△△

Promote new commercialization utilizing smart textiles.

△△

Cooperate with the technology development sections tostrengthen the capability of sales and development.

△○

China, not only to promote the production business but also toundertake a new business with added value. In doing so, we will strive
to improve profitability.
In the functional materials area, demand for bathroom flooringmaterials has remained firm. By improving the operations management of production, inventory and delivery of these materials, we areworking to reinforce the supply system.
In the area of functional processing, although demand for deodorizing filters for air purifiers was slack, initiatives are under way to develop
new demand and products toward attainment of the SGW 2024.
In all areas, we will remain committed to augmenting theabove-stated initiatives toward the SGW 2024, with the awarenessthat we should take on challenges to enhance cost competitiveness toresist environmental changes and our capabilities for promoting
development to advance into a new field.

Progress① Improve cost competitiveness through optimization of business
and work processes, aiming at profit maximization② Promote product development in response to social issues andmarket needs③ Strengthen proposal-based development and sales for a diverse
range of customers④ Develop applications of our unique materials and processing
technologies and expand the scope of applications to other fields⑤ Enhance functions of overseas operation sites to promote a
production business with added-value features⑥ Strengthen cooperation with technology development
divisions to conduct development activities to explore new
fields for the next generation

Optimizing functions of the factory in Vietnam —Measures to consolidate overseas factories of fabric-coatedheating products, optimize the production and supply systems for these products, and strengthen business capability

Suminoe Textile Vietnam Co., Ltd., our production base of fabric-coatedheating products, started processing and assembly of deodorizing filters.
This has enabled us to reduce the physical distance with major customersof deodorizing filters, which will lead to optimization of customer support.
In the fiscal year ending May 2024, the Vietnamese subsidiary will
begin in-house manufacturing of nonwoven fabric, which is used for themain component of electric carpets. In this way, we will improve work
efficiency and increase profitability.

Production line for nonwoven fabricat Suminoe Textile Vietnam Co., Ltd.

SUMINOE GROUP Integrated Report 2023

28

Value Creation and Growth Strategies in Line with the Medium- to Long-term Management Targets
TopicsAutomotive Textiles
and Traffic Facilities

Automotive Textiles
and Traffic Facilities

Resources for the Future—ECOS® carpet
tiles produced by recycling otherwise
discarded carpet tiles into new products

Promoting development and order
receipts of fabric materials using a new
methodGenerating synergies between the market
scale of Suminoe Textile Co., Ltd. and theexisting technologies of Seki Textile Co., Ltd.

Launching a new material for Kuriyama
Pulizia Corporation

The shrinking remaining capacity of landfills is one of theenvironmental problems in need of urgent solutions. It is said
that existing landfills across Japan will be filled to capacity only
within 20 years or so. In 2011, the Group established the
ECOS® Recycle System to recycle used tile carpets, which
previously had to be dumped in landfills, into a backing of
new carpet tiles. This led to the launch of the ECOS® series,
eco-friendly carpet tiles under the horizontal recycling system,
which has achieved a recycled material ratio that is one of thehighest in the world. We also released products featuring“double recycling” that use the Group’s proprietary recycledmaterials for both the backing and the surface pile yarn. To be

In the fabric business, our “point-raised embroidered fabric,” adecorative material that accentuates car seats, was adopted
by Honda Motor Co., Ltd. for the ZR-V (launched in April
2023). We developed this seat covering material with a viewto producing a mixed-color fabric that gives an impression ofa third dimension or depth and that feels soft andcomfortable while providing ample comfort to sink into. To
create a sense of a third dimension like a sofa, we employed a
new decorative expression using embroideries. Originally, ourembroidery technology was used at production sites engaged
in the mat business using sewing machines. As such,
conventionally, the technology had not been much used in
the fabric business, whose strengths lie in dyeing and finishingprocessing technology. In this project, overseas factories of therespective businesses were encouraged to exchange andshare each other’s technologies. Through such activities, theGroup successfully combined technologies of thesebusinesses and enhanced our capability of proposing a total
coordination of automotive textiles, so we were able toembody the development concept of the ZR-V.
Reinforcement of the decorative seat fabric business is
one of our priority strategies for the future. We will promote
this business in order to offer high-quality interior spaces withan excellent texture.

The Traffic Facilities business of Suminoe Textile Co., Ltd. has
been operating as a market leader, based on its track recordand customer trust it has built for more than 100 years. In the
future, it is predicted that its business environment will beaffected by the aging workforce, decrease in the number ofusers of public transportation facilities and decrease in thenumber of trains/buses owned due to post-pandemicchanges as well as the declining birthrate and aging
population, etc. Under these circumstances, in July 2022, theGroup acquired Seki Textile Co., Ltd., which is engaged in
production and sales of jacquard moquette used in seatcoverings for train cars and buses, as a Group company.
The features of Seki Textile include its capability of
one-stop production, from weaving to finish processing. The
company’s joining the Group has enabled us to further
improve production efficiency, leveraging the economies ofscale that Suminoe Textile has as a market leader.
We can also expect cost advantages, such as a decreasein raw material procurement prices. By merging thedevelopment capability of the Company with the production
capability of Seki Textile, the Group will intensify its efforts
for new business and technology development and formarket expansion. In addition, we plan to re-establish themother factory in the Traffic Facilities business and makeactive efforts in maintaining Seki Textile’s looms and taking
over its technologies. At the same time, we will heighten
awareness of manufacturing among employees working in
the Traffic Facilities business.
As SUMINOE GROUP companies engaged in the Traffic
Facilities business, Suminoe Textile Co., Ltd., Seki Textile Co.,
Ltd. and Marunaka Soei Co., Ltd. will work in concert togenerate synergies in order to explore new development.

Kuriyama Pulizia Corporation handles the planning,production and sales of rental products, including mats, mops,
aromatics and other products for rental use. The company has
been active in promoting environmentally friendly products aswell as hygiene- and safety-conscious products. So far, ourunique functional materials, function processing technologies
and environmental technologies offered by the Group’s
Functional Materials segment have earned high recognition
from Kuriyama Pulizia, which has adopted our antibacterial
fabrics for entrance and toilet mats, mop threads, etc. These

Interior Fittings(Automotive Textiles)

more specific, for these products, スミトロン® (SUMITRON),
recycled polyester fiber (developed in 1989), and SEACLE(developed in 2021), recycled fiber made from discarded
fishing nets, are used for the pile yarn on the surface of ECOS®.
In 2020, our Group factory abolished the dyeing process,which accounted for much of its environmental impact, bychanging pile yarn of all the carpet tile products tosolution-dyed yarn. As a result, the factory succeeded in
reducing water usage, electricity usage and wastewater.
Nowadays there are many environmentally friendly
products. In such circumstances, we are pleased that theconcept of ECOS®, which we had developed ahead of othercompanies in the industry, has been highly regarded by major
developers. Most recently, ECOS® was adopted by Mori Building
Co., Ltd. for the Azabudai Hills and Toranomon Hills Station
Tower Project in the metropolitan Tokyo area. In this large-scale
project, ECOS® was installed to cover a total area of 350,000 m2
in the offices on each floor of these buildings. Toward therealization of a sustainable future, we will continue to work
together with customers to realize a sustainable future while
gaining greater customer support for the concept of ECOS®.

ECOS® series, eco-friendly carpet tiles under the horizontal recycling system

29

SUMINOE GROUP Integrated Report 2023

New embroidery processing technology
Effects

Embroidery expression that creates bumps and dips on the
fabric surface and gives an impression of a third dimension
Various expressions, including stitching, plane
expression, dot patterns, and overlapping zigzag stitches

Features

Embroidery processing applicable to a thick fabric, andease of assembly
Embroidery threads come in nine colors, enabling color
changes.
Glossy and three-dimensional effects by using modified
cross-section embroidery threads as an aggregate

Interior of the ZR-V

Functional Materials(Traffic Facilities)

products useスミトロン® (SUMITRON) recycled polyester fiberfeaturing antibacterial properties, which has been certified
with the SEK Mark.* In May 2023, Kuriyama Pulizia launched
the new product “Re.EarthMat,” for which the Group’s mat
fabric was employed. “Re.Earth” was so named to convey themessage “Restore the original state of the beautiful earth!” For
its piles, this mat uses ECONYL® nylon produced by Aquafil, an
Italian textile manufacturer, and made of discarded fishingnets, used carpets and recycled waste collected from the textile
industry. The Re.EarthMat features a checkerboard design
created by combining several woven patterns and using red
effectively. This superb design differentiates the mat fromconventional rental mats. The Re.EarthMat was developed andcommercialized through collaboration among Kuriyama
Pulizia Corporation, designers of Suminoe Textile Co., Ltd., andplanners of Suminoe Techno Co., Ltd.
Capitalizing on its organizational structure capable ofrealizing high-quality products and high-level development,
the Functional Materials segment will continue to develop andpropose products that differentiate itself from others, withoutstanding functionality, environmental and safety
performance, and other advantages.
* The certification system of Japan Textile Evaluation Technology
Council (industry’s voluntary standards)

No. 1 factory of Seki Textile Co., Ltd.

Re.EarthMat

SUMINOE GROUP Integrated Report 2023

30

Value Creation and Growth Strategies in Line with the Medium- to Long-term Management Targets
Research and Development Strategies

Fundamental Development Philosophy
Kenko
Kankyo(Health) (Environment) Recycling

R&D Challenges and Progress Assessment for FY Ended May 2023

Amenity

Under its fundamental development philosophy “KKR+A (Kenko [Health], Kankyo [Environment], Recycling and Amenity),” the SUMINOEGROUP has been working on research and development of technology and products that help resolve environmental issues and contribute tosociety while striving to sow seeds for industry-academia collaboration. We will continue our efforts to develop new technologies and productsthat are friendly to people and the environment, based on “KKR+A” and core technologies that the Group has cultivated for many years.

Strategies

Progress

Enhance functionality of bathroom interior products.

○

Basic research using bioplastics

Improve floor signage film.

○

Basic research for extracting beneficial substancesfrom woody biomass△

Smart textiles: Efforts for commercialization ofwater-wetting detection systems and power
generating fibers

Develop and commercialize chemicals for
multifunctional processing.
Develop antibacterial and anti-virus technologies andevaluation techniques.
Develop new products using raw materials derived
from nature.

○

Strategies

Progress△○△Core Technologies
Endeavoring to raise the level of resin
processing technology

Textile and knitting
production technology

Coating technology

Recycled polyester
yarn-making technology

Lamination technology

Functionalization technology

Hard cotton processing technology

Research and Development System
Development Department
Technology
Development Center(research & development)

Development teams of each business segment

Suminoe Techno Co., Ltd.
(technology development)

The Group carries out research and development
based in the Nara Factory, through cooperation
between the Development Department, which
conducts research and development of coretechnologies, and the development teams ofrespective business segments.

Interior Fittings

Automotive Textiles

Traffic Facilities

Functional Materials

R&D expenses

Number of patents■Number of domestic patent applications■Number of patents held

(Million yen)
1,200

1,117
948

984

1,073

800
400

150
120

127

124

132

Comments on Research and Development Strategies by the Officer in Charge of Research and Development

60

254

30

18

14

13

2019

2020

2021 2022 2023
(Each FY ended May 31)

0
2019

2020

2021 2022 2023
(Each FY ended May 31)

10

6

Aiming to resolve social issues, achieve the growth of existing
businesses and create new value
Eiichiro Kimura
Directorthrough innovations
General Manager
Development Department

TopicsEstablishing resin compounding technology that realizes vibration-damping performanceadjustable according to the usage
The “lightweight vibration absorbing foam sheet,” which is adopted for automotive sounddeadening materials, uses a resin with vibration-damping performance. Previously we used only
one type of resin. However, in May 2023, we established a technology that allows us tocompound several types of resins having different vibration-damping properties while retaining
each resin’s properties. Using this technology, flexible adjustments can be made according to
the temperature and frequency ranges of the vibration source, so now we can design a productthat is more suitable to the usage environment. Currently, we are working for the deploymentof new products, including “burupita™,” which makes effective use of this technology.

31

SUMINOE GROUP Integrated Report 2023

Evaluation and measurement instruments to assess three‐dimensional
shape, high strength, thermal resistance, and fire retardancy (examples)

140

135

90

0

One of the Group’s strengths is resin processing technology,
which we have cultivated through our experience in carpet
backing processing.
We are well-versed particularly in olefin resins withhigh safety and environmental performance, which are used
for floor signage film and bathroom interior products. These
products are required to achieve a higher level of
performance and functionality. To develop a resin that canlive up to such requirements, the Group is promoting the
upgrade of various features, such as anti-slip property,
anti-fouling property, high shaping property, fire
retardancy, high strength, and thermal resistance.
By sophisticating our resin processing technology as
well as textile weaving and knitting technologies, we willrealize innovative designs and comfortable functions in avariety of interior textile materials.

The Development Department, which is tasked with R&D activities,
strives to develop new products and facilitate the growth ofexisting businesses, taking advantage of our core technologies andcore facilities.
In the fiscal year ended May 2023, we succeeded indeveloping a technology for customizing vibration-dumping
functions of resins by fusing the design and compounding
technologies related to resins used in automotive carpet backing
with the forming technology of extrusion processing machines.
This customization technology is incorporated into a new product,“burupita™,” a vibration absorption sheet. This technology has
widely expanded the lineup of resin products that the Group canoffer. In the future, we aim to enter into a new market and a new
industrial field.
As for fiber processing technologies, in which the Group isstrong, we are working to create a successor toトリプルフレッシュ®
(TRIPLE FRESH) deodorizing treatment technology through theactive use of nano materials and R&D of original processing
technologies.
It has been more than one year since the Nara Factory
reorganization project was completed. In order to steadily evolve
the Nara Factory into a “manufacturing base that creates a richenvironment,” we will continue to advance waste reduction,
introduction of renewable energy, and other initiatives.

SUMINOE GROUP Integrated Report 2023

32

Value Creation and Growth Strategies in Line with the Medium- to Long-term Management Targets
Feature: Response to the Transformation in the Automotive Industry

Toward System Optimization and Improvementin Technological Capabilities in Response to theTransformation in the Automotive Industry
The automotive industry is on the cusp of a once-in-a-century transformation as represented by the keywords
CASE*1 and MaaS*2. This provides the Group with a great business opportunity. With this recognition, we are
implementing various initiatives. Introduced here are initiatives undertaken in the synthetic leather anddecorative fabric businesses, which are explained by employees of our overseas Group companies.
*1 CASE, the acronym for Connected, Autonomous, Shared & Services, and Electric, is a keyword that indicates the trend in the next-generation automotive industry.
*2 MaaS stands for “Mobility as a Service,” which integrates various forms of transportation into a single, next-generation transportation service.

Synthetic leather business

Decorative fabric business

Striving to optimize the production system, viewing the expansionof the synthetic leather market as a business opportunity

Adding value to materials with excellent technological capability
in order to meet the market needs

Masakazu Aoyama
COO
Suminoe Textile de Mexico,
S.A. de C.V.
Guanajuato, Mexico

33

The trend toward vehicle electrification has accelerated from the viewpoint of environmental conservation.
As in the case of the fuel economy of gasoline-powered cars, the electricity economy of electric vehicles
needs to be improved. There are calls for weight reduction of various products. This also holds true for
automotive seat coverings—nowadays we see an increasing preference for synthetic leather over real leather
because of the former’s lighter weight. In addition, the need for synthetic leather is growing in terms ofanimal welfare. Due to these influencing factors, the synthetic leather market in the United States has
expanded to reach a level of roughly 140 billion yen, as of 2022.
In response to this market expansion, the Group has been promoting the restructuring of the North andCentral American business. In December 2023, a new factory equipped with a synthetic leather production
line will be completed in Mexico, which is home to a concentration of assembly factories of automotive seats.
By establishing a production base in the country, the Group expects to achieve higher efficiency in supplying
our products to manufacturers that are engaged in cutting and sewing car seat components destined for
Mexico as well as for North America. The new factory is designed to handle PU and PVC in view of future
diversification of demand for synthetic leather. We have also worked to develop relevant technologies and a
production environment and to cultivate human resources. We have therefore mostly completed the
preparations for supplying value-added synthetic leather.
At present, import of car parts made in Mexico to North America is largely increasing, reflecting therising import costs from China due to the US-China trade conflict and the necessity for procuring key parts
made in North America as required by the United States-Mexico-Canada Agreement (USMCA). The
production volume also continues strong growth, and thistrend is expected to become stronger. The Group has
conventionally responded to the trend by exporting
synthetic leather products from Japan or China to Mexico.
Going forward, however, these products will be supplied
directly from our new factory in Mexico. We have alreadybeen receiving various inquiries from overseas
automotive
manufacturers.
By
promotingtheoptimization of the production system, the Group aims to
Artist rendering of the new factory in Mexico
bolster the global supply chain.

SUMINOE GROUP Integrated Report 2023

If automated driving further advances in the future, there will be increasing need for vehicle interiors as a
private space, rather than as a space to simply spend time during transportation. For this reason, the market
for new designs is expected to expand in the future. We have offered automotive textiles leveraging one of
our strengths, “total coordination of automotive interior textiles, from ceilings to floors.” To provide
customers a total coordination of automotive textiles with further added value, such as superior comfort anddesign, our decorative fabric technology is becoming increasingly important.
When it comes to seat fabric decoration for automotive interiors, methods of creating patterns, such as

Makoto Konda
Chairman andGeneral Manager
Suminoe Textile Shanghai Co.,Ltd.
Shanghai, China

print processing and embossing, have been the mainstream so far. However, these days this trend ischanging—much importance is placed on the texture of plain fabric, and need is growing for solid-color
fabrics using embroideries, design perforations, and other decorative techniques that add value to thesefabrics. In fact, our Group’s fabric products decorated with embroideries were adopted by Honda Motor Co.,
Ltd. for the ZR-V (Japan and China) and the HR-V (China). To produce these products, my company
introduced embroidery equipment made in Japan into the two factories in China, and it has been managing
raw material procurement, production and sales of these fabrics. Moreover, we are considering a “decorative
combination” of several techniques, for example, combining an embroidery and perforation, as a method tobroaden the range of new design renderings.
In the future, we will continue working to add high value to our mainstay fabric products and synthetic
leather seat covering materials, on which the Group
placesgreateremphasis,

by

using

our

designdevelopment and procurement capabilities as well as
production capability for decorative processing. Throughsuch efforts, we aim to differentiate our products fromothers to expand sales. Especially in the Chinese market,
where automobile production is the largest in the world,
we plan to approach not only Japanese carmakers but
also other various companies.
Japanese-made embroidery equipmentused in China

SUMINOE GROUP Integrated Report 2023

34

Value Creation and Growth Strategies in Line with the Medium- to Long-term Management Targets
Message from the Director in Charge of Financemanagement on a global scale, taking into account the interest
rates and the currency selection, so as to promote an optimal
finance policy.
In fiscal year ending May 2024, we plan to reorganize thelogistics bases in East Japan. By further improving the efficiency
of logistics networks and selling land of a logistics site after its
relocation, we aim to create cash flows.

Aiming at an optimal capital structure
to lead to new growth
Hiroaki Usugi
Managing Director
General Manager, Administration Headquarters
Suminoe Textile Co., Ltd.

■Operating cash flow
■Free cash flow

Changes in Cash FlowsAs the General Manager of the Administration Headquarters, I am
in charge of formulation and execution of financial strategies tomaintain an optimal capital structure, which is necessary to realize
the strategies for growth. My role is also to support the initiatives toimprove competitiveness of each Business Headquarters, such as
reviewing operations and improving efficiency by using
information systems as well as developing educational and othernew systems for human resources development and utilization.

Progress in the Company’s Status of Compliance with theContinued Listing Criteria and the Period of the Plan

Progress in Efforts toward Mediumto Long-term Management Targets

No. oftradablesharesAffected by the external environment, failing toachieve the targets in FY2023
In the fiscal year ended May 2023, the second year of the Medium- to
Long-term Management Targets “SUMINOE GROUP WAY
2022-2024-2027” (hereinafter SGW), although net sales exceeded thetarget figures in the plan, we failed to achieve the targets for operating
income, ordinary income, profit attributable to owners of parent, ROE
and D/E ratio. In the fiscal year ending May 2024, we will accelerate
efforts to “expand sales and build a foundation for growth,” which isone of the SGW targets, and aim to achieve the plan.

Results of the Second Year of the Three-year
Consolidated Income and Expenditure Plan
2022

2023

Plan* Results

2024

Plan* Results Plan*

Net sales (million yen) 86,480 81,713 90,360 94,828 93,490
Operating income(million yen)
Operating margin (%)
Ordinary income(million yen)
Profit attributable to ownersof parent (million yen)
ROE (%)
D/E ratio (times)

1,160

110

2,520

1,294

3,300

1.3

0.1

2.8

1.4

3.5

1,350

950

2,730

1,575

3,530

620

281

1,280

320

1,960

2.2

1.0

4.5

1.1

6.6

0.58

0.67

0.64

0.73

0.56

* Planned figures are as of the disclosure on July 13, 2021.

Efforts to Meet the Criteria for Remaining
ListedContinuously working to improve corporate value tomeet the remaining criterion
In response to the Tokyo Stock Exchange’s revision of the market
segments, we selected the Prime Market. As of June 30, 2021, therecord date of the market transition, the criteria “an average daily
trading value of at least 20 million yen” and “a market capitalizationof tradable shares of at least 10 billion yen” had not been achieved.
However, as a result of the enhanced IR activities and shareholder
returns, the average daily trading value as of December 31, 2022,

35

SUMINOE GROUP Integrated Report 2023

the calculation reference date, reached 47 million yen, satisfying thecriterion. Meanwhile, however, the market capitalization of tradable
shares was 8.07 billion yen as of May 31, 2023, falling short of thetarget. Going forward, in order to satisfy the criteria for remaining
listed by May 31, 2024, we will continue various efforts to improve
corporate value through reinforcement of existing businesses,
capital investment and M&A, to promote proactive IR activities, andto enhance corporate governance.

MarketTradable Average daily
capitalization of
tradable shares share ratio trading value

Listing maintenance
20,00010
20
criteria for the Prime
35％
units
billion yen
million yen
MarketTransition
27,068
5.44
7The Company’s reference
35.2％
units
billion yen
million yen
compliancedatestatus andCalculation 37,631
8.07
47
referenceprogress
48.9％
units
billion yen
million yen*date
Status of complianceand the period of the
Conformed
Confirmed
Confirmed Confirmed
plan described in the
May 31, 2024
initial plan
* This description is based on the notification from the Tokyo Stock Exchange
concerning the state of compliance with the listing maintenance criteria(trading volume standard) for the period January to December 2022.

Cash Flow Management and Investment
Strategies
Creating cash flows by increasing cash from operating
activities and liquidating fixed assets
To proactively make investment to reinforce existing businesses
and expand the business fields, we have established a target of
securing free cash flows of 3 billion yen or more each year. With
particular focus on increasing cash from operating activities, wehave set an operating margin of 5% or higher as a target in the
SGW. Moreover, we will make efforts to keep the level of current
assets, such as trade receivables and inventory, at an appropriate
level and liquidate fixed assets by selling securities and land, etc.
In fiscal year ended May 2023, cash flows increased due toincreased income in the Automotive Textiles and Traffic
Facilities segment. In fiscal year ending May 2024, businessperformance has been on a recovery trend, whereas inventory
has still remained at a high level. However, we will secure cash
flow from operating activities by returning inventory to a more
appropriate level, such as that before the COVID-19 pandemic.
We also significantly reduced the ratio of dollar
denominated debt in response to the increase in U.S. interest
rates. The lower payment of interest is expected to create cashfrom operating activities in fiscal year ending May 2024 andonward. In the future, we will continue to work on cash flow

(Million yen)
6,000

5,901

4,760
4,000

4,365

3,311

4,167
3,413

2,000

1,803
375

0
-2,000

-816
2019

2020

2021

-1,0302022
2023(Each FY ended May 31)

Improving the financial structure by reducing
interest-bearing debt to achieve an optimal capital structure
In improving the financial structure, we attach importance to the
D/E ratio. We have incorporated the improvement plan in the
SGW, aiming at about 0.5 times. The D/E ratio for fiscal year ended
May 2023 was 0.73 times due to a reduction in cash flows fromoperating activities and an increase in interest-bearing debt
resulting from M&A and large investment undertaken since theprevious fiscal year. In conjunction with various measures to create
cash flows, we will make efforts to reduce interest-bearing debt,
aiming for achieving an optimal capital structure.
As an indicator to measure the profitability of capital, we focus
on ROE. In fiscal year ended May 2023, ROE was 1.1% since profit
recovery was on the way. However, for fiscal year ending May 2024,
we aim at ROE of 6.6%, as targeted in the SGW. In fiscal year ending
May 2024, we will accurately grasp the capital costs and carry out
analysis and evaluation regarding the profitability indicators andmarket assessment. We will then establish policies and targets
toward improving diversification of elements of corporate value in
the SGW 2027, and we will implement specific initiatives.

Interest-bearing Debt
and D/E Ratio(Billion yen)
25
22.1
20.1
20
１５
0.72
１０
５
0
2020

20.318.6
0.67■Including lease obligations ●D/E ratio■Excluding lease obligations
20.8
18.9
0.67

23.1
21.2

Aiming at (Times)
１.0
around
0.5 times

0.73

0.75
0.50
0.25
0

2021

2022

2023
2024
(For each FY ended May 31)

M&A and investment for the next generation
With regard to M&A, Seki Textile Co., Ltd. joined the Group as a
subsidiary in the Traffic Facilities business (p. 30). With thisacquisition, we will promote BCP of the Traffic Facilities business,
which holds the top market share, aiming to further increase
incoming orders and expand the business amid recovering demand.
As for capital investment, we launched the construction of a
new synthetic leather production factory at a subsidiary in Mexico tocope with the expansion of the synthetic leather markets in North
and Central America. A total of approximately 3 billion yen will be
invested to establish the new factory, which is slated for completionin December 2023. Regarding investment in restructuring of coresystems, Suminoe Textile Co., Ltd. introduced a receivables/payables
management system, an accounting system, and a production
management system. With these systems, we aim to reduce
maintenance costs, promote rapid decision-making, improve
inventory management accuracy through unified management, andenhance work efficiency. In the fiscal year ending May 2024, thesesystems will be deployed to subsidiaries.
We manage the above-mentioned investment by giving
discretion to each Business Headquarters to facilitate speedy
decision-making while using the payback period method andsetting the hurdle rate for each business at the Board of Directors’
meetings. Basically, internal reserves and cash from operating
activities are used as a source of funds for investment, and if
necessary, funds are raised and allocated to investment projects.

Shareholder Returns
Ensuring stable dividend payment and introducing ashareholder special benefit program
Our basic policy of shareholder returns is to ensure stable dividend
payment to our shareholders and properly allocate the surplus,
taking into consideration the trends in business performance andinvestment for business expansion. Starting from fiscal year ended
May 2022, we introduced a shareholder special benefit program toenhance shareholder returns.
For fiscal year ended May 2023, the Company revised theyear-end dividend from 35 yen to 20 yen per share, to total afull-year dividend of 55 yen, in light of the revisions to the businessperformance forecast. We plan to pay a full-year dividend of 70 yen
for fiscal year ending May 2024.

Changes in Dividends
(Yen)
80
60
40

70
50

20

55

70 (planned)

35

0
2020

2021

2022

2023
2024
(For each FY ended May 31)

Strengthening Communication with
Investors
Enhancing disclosure materials and proactive IR
activities
To raise the level of our recognition and reliability both inside andoutside Japan, we are working to enhance investor relations (IR)activities. Our IR efforts include improving the contents of theintegrated report and various other information disclosurematerials and translation to English thereof, continuous
publication of sponsored reports, and posting the proceedings offinancial results briefings on our corporate website to enhance
information provision for individual investors. In addition, recently
we have held an increasing number of individual meetings withinstitutional investors in every quarter. In this manner, we remain
proactive in promoting constructive dialogue with shareholders
and investors.
Going forward, we will continue to implement IR activities
aimed at an optimal capital structure, which will lead to new
growth and improved corporate value of our Group.

SUMINOE GROUP Integrated Report 2023

36

ESG Initiatives in Line with the Medium- to Long-term Management Targets
Sustainability and ESG Initiatives

ESG
Sustainability Promotion System and Governance and Risk Management
The SUMINOE GROUP holds meetings of the CSR Promotion Committee three times a year, under the corporate
governance and CSR promotion system (see p. 53). Chaired by the Managing Director and Representative Director(General Manager of Administration Headquarters), the Committee deliberates on the activity policies and important
challenges in the CSR and sustainability fields, related risks to be addressed with priority, etc. The results of deliberations
are reported to the CSR & Internal Control Council (Executive Committee) and then approved of at the meeting of theBoard of Directors.

Basic Approach to the Basic Policy on Sustainability and Related Policies
In the course of promoting ESG management, the Group is working to achieve the Medium- to Long-term Management
Targets “SUMINOE GROUP WAY 2022-2024-2027.” Particularly in the fields of CSR and sustainability, we believe that it isimportant to identify key sustainability issues to focus on (see pp. 17-18) and address these issues through its business
operations. With this recognition, we regard the Basic Policy on Sustainability and Related Policies as guidelines forresolving the key sustainability issues and achieving sustainable growth of the Group.

Basic Policy on Sustainability
The Suminoe Textile Group contributes to the realization of a sustainable society by achieving sustainable growththrough sound, transparent management and business activities in harmony with society and the environment whileobserving its Code of Conduct and the Standards of Conduct, both of which are based on the Corporate Philosophy.

Framework of the Basic Policy on Sustainability and Related Policies
Basic Policy on Sustainability

Sustainability-Related Policies
E (Environment)

Second SUMINOE Environmental Declaration

Developing Sustainability-Related Policies
Status of Development in FY2023 and Future PlanSUMINOE GROUP Human Rights Policy(formulated on June 1, 2023)
We at the SUMINOE GROUP believe that respect for humanrights is an important element that forms the foundation
for management in conducting global business operations.
The Company Motto of the SUMINOE GROUP upholds“cooperation,” which represents the spirit of mutual
improvement through the effective use of diverse
personalities of employees. The Group’s Code of Conduct
stipulates due respect for employees’ individual
personalities and high importance of their health and safety.
Under this motto and this code of conduct, we have strived
to ensure a sound working environment where no
employees are harassed or discriminated against because of
their race, beliefs, religion, nationality, physical features, etc.
In addition, on June 1, 2023, we formulated the Group
Philosophy, which lays out our mission: bring people- andsociety-friendly spaces to the world through technology
and ideas that closely support people’s lives. To fulfill thismission, we are aware that it is essential to pay respect not
only to officers and employees of the SUMINOE GROUP but
also to suppliers and other stakeholders and to build
relationships of trust with them all.
We recognize that the Group may have negative
impact on human rights directly or indirectly through its
business activities. With this recognition, we established the
SUMINOE GROUP Human Rights Policy as a basic policy thatclearly displays the Group’s attitude of respecting humanrights of all people engaged in our business activities. In linewith this Policy, we will continuously push forward withinitiatives and fulfill our responsibilities with the aim ofrespecting human rights.

Human Rights Policy*

Health Management Declaration

Health and Safety Policy

Basic Policy on Work-Life Balance

Basic Policy on Human Resource Development

Basic Policy on Sustainable Procurement*

SUMINOE GROUP Human Rights Policy

Basic Policy on Diversity and Inclusion

Basic Policy on Product Safety and Quality*

1. Basic approach

S (Social)

Basic Policy on Sustainable Procurement(preparations are under way for formulation in January 2024)
The SUMINOE GROUP considers that, in order to resolve
environmental and social issues through business
operations, it is indispensable that not only Group
companies but also all members of the entire supply chain
work in collaboration. Currently, preparations are under way
to formulate the Basic Policy on Sustainable Procurement,
which will guide such collaborative efforts.
Concurrently, we are making preparations to create
the Guidelines for Sustainable Procurement as the common
guidelines to be shared throughout the Group’s supply
chain.
Basic Policy on Product Safety and Quality(preparations are under way for formulation in January 2024)
The SUMINOE GROUP is making preparations forformulating the Basic Policy on Product Safety and Quality,
which aims to establish quality management, ensurecompliance with safety standards defined by law, andprovide accurate information on products and services.
Taking advantage of the strengths of manufacturingthat the Group has nurtured since its founding, we will
implement measures toward realizing a sustainable society
and quality improvement in pursuit of operations thatenhance customer satisfaction.
CSR Plan
Focusing on our medium- and long-term “ideal corporate
image,” we have formulated the Medium- to Long-termManagement Targets as well as the 3rd Medium-term CSR Plan(for 2021 to 2024), in which our key CSR issues are identified. To
address these issues, the Group is moving
ahead with various initiatives. As for our CSR
initiatives, the 3rd Medium-term CSR Plan,
and the results of CSR activities in fiscal 2023,
please visit a webpage by scanning the 2D
barcode on the right.

2. Scope of application*As for the policies marked with an asterisk, in FY2023 we made preparations for the formulation.

Since the fiscal year ended May 2022, the Group has worked to develop the Basic Policy on Sustainability and Related
Policies as the guidelines for its sustainability initiatives.
In the G (governance) aspect, the SUMINOE GROUP has established its Code of Conduct and its Standards of Conduct,both of which lay out the basic policy for ensuring full compliance in business activities. The Group has also beenendeavoring to strengthen governance by developing the Basic Policy on Sustainability and Related Policies,
implementing initiatives in line with these policies, as well as checking and evaluating the progress.

37

SUMINOE GROUP Integrated Report 2023

3. Human rights due diligence

SDGs on Which the SUMINOE GROUP Focuses

4. Redress and remedy

The Group has selected the following seven goals fromamong the 17 Sustainable Development Goals (SDGs) as
priority targets on which the Group focuses, in order tohelp resolve social sustainability issues through ourbusiness operations.

5. Governance system and in-housesystem
6. Education
7. Dialogue with stakeholders
8. Information disclosure* Scan here for thefull Japanese text.
(English text will
be published on
our website incoming May.)SUMINOE GROUP Integrated Report 2023

38

ESG Initiatives in Line with the Medium- to Long-term Management Targets
Initiatives to Address Key Sustainability Issues toward Achieving the Medium- to Long-term Management Targets

ESG
Results for fiscal year ended May 2023
CategoryE

Key sustainability issues selectedfrom the SGW challenges
Reduction of CO2 emissions, and development anddistribution of products for environmental measures(Environment)

Safe and secure work environment

S

Participation and cultivation of diverse humanresources(Social)Improvement of corporate brand value

G(Governance)

Enhancement of governance

Results

Relatedpage① Reduce CO2 emissions in the business activities.

Reduced by 36.9% as compared with FY2021 levels (basic unit), Eco Challenge 2024 target: Reduce by 3% as compared with FY2021,
by FY2024 (basic unit).

P43② Increase volume of contribution to the reduction of CO2 emissions through products.

Shipments of ECOS® series, eco-friendly carpet tiles under the horizontal recycling system (recycled material ratio of 84%):111.2% compared with previous FY-③ Develop and sell environmentally friendly products.

Number of developed products/technologies Interior Fittings: 2, Automotive Textiles:1, Traffic Facilities: 1, Total: 4P45④ Review, transmit, educate and disseminate our human rights policy.

Formulated the SUMINOE GROUP Human Rights Policy (June 2023).

P38⑤ Conduct training for the prevention of harassment.

Conducted training for the prevention of moral harassment (five Group companies in Japan).

P48⑥ Eliminate occupational accidents.

Rate of lost-worktime injuries Result: 1.39

P52

⑦ Acquire “Certified Health & Productivity Management Outstanding Organizations.”

Promoted work-life balance, implemented measures against lifestyle-related diseases, etc., measures against mental health problems,and activities to raise heath improvement awareness.

P51⑧ Teleworking and off-peak commuting system

Introduced regulations on work from home and the staggered working hours system (three Group companies in Japan).

〃⑨ Support for life-work balance (work, childrearing and nursing care)

Rate of employees taking childcare leave Male: 16.7%, female: 100% (Suminoe Textile Co., Ltd. , SUMINOE Co., Ltd.)〃⑩ Paid leave by the hour, flex-time system

Discussed the introduction of an attendance management system.

-⑪ Promote women’s participation.

Ratio of new female graduates hired: 48.7%, ratio of female managers: 5.1% (17 Group companies in Japan)

P51⑫ Employ people with disabilities.

Employment rate of people with disabilities: 1.6% (17 Group companies in Japan)-⑬ Employ foreign workers.

Number of present foreign employees: 24 (including 10 newly hired employees) (17 Group companies in Japan)-⑭ Participation of senior employees

Re-employment rate: 89.4% (17 Group companies in Japan)-⑮ Education for human resources (IT literacy, education for corresponding stages, etc.)

Level-based, role-based, and skill improvement training: 312 participants, correspondence course and language training:
130 participants Total: 442 participants

P48⑯ Career self-declaration system

Instituted the career self-declaration system at Suminoe Textile Co., Ltd. (June 2023).

〃⑰ Job rotation

Implemented personnel transfer within and beyond the department.

-⑱ Review of human resources management and evaluation systems

Instituted systems stated in ⑧ and ⑯.

⑲ Dissemination of corporate philosophy and management policy,
and the progress will be shared.

Launched the “Shin Mirai (lit. new future) Project” for promoting branding and formulated the SUMINOE GROUP Philosophy (June 2023).

P49⑳ Consider the timely disclosure of information and transmit it.

Disclosed information via the web and through the in-house intranet, as required.

-㉑ Communication between departments

Implemented the Tsunagu meeting and Tsunagu-wa-cation.

P50㉒ Contribution in cases of disasters

Domestic sites: 0, overseas sites: 0-㉓ Support and donation for poverty and starvation

Domestic sites: 0, overseas sites: 3-㉔ Restructure the core systems.

A production management system and a receivables/payables management system being introduced in sequence

P58, 60㉕ Promote interactive in-house communication through top management’s frequent
visits to workplaces.

Number of top management visits: eight domestic sites, one overseas site (between October 2022 and July 2023)

P58㉖ Continue to conduct compliance training.

Conducted training for officers and executive employees.
Conducted training for young employees and level-based training offered at every promotion, on such topics as compliance,
work-related laws and regulations, and occupational health and safety.

㉗ Further disseminate “Corporate ethics hotline.”

Continuously announced the whistleblowing contact points for consultation.

-㉘ Strengthen global risk management.

Started full-scale operation of the production management system.
Revised a risk management manual, “Crisis Response Manual on Overseas Assignment.”

P60㉙ BCP action plan

Established in-house emergency contact routes and implemented personal safety confirmation drills.

〃

Measures

Target: 1.0

P48, 51

P48, 61

Regarding the key performance indicators (KPIs) for the key sustainability issues in the SGW challenges, we are planning to establish the KPIs in the course ofidentifying the Group’s materiality (key issues) in the future.

39

SUMINOE GROUP Integrated Report 2023

SUMINOE GROUP Integrated Report 2023

40

ESG Initiatives in Line with the Medium- to Long-term Management Targets

E

Environment

Under the Slogan of KKR+A
Kenko
Kankyo(Health) (Environment) Recycling

Activity Guidelines
Amenity

In carrying out environmental conservation activities
We will positively promote energy-saving, resource-saving, and recycling with a consideration not to contaminate
environment in all of our business activities.
We will try to preserve environment through products’ life cycle from production, sales to disposal by developing

As an industry pioneer, the SUMINOE GROUP has pushed forward with the development and application of advanced technologies thatare friendly to human health and the environment. In 1998, the Group announced “KKR+A (Kenko [Health], Kankyo [Environment],
Recycling and Amenity)” along with the Interior Environment Improvement Declaration. Since then, under its fundamental development
philosophy “KKR+A,” the Group has been working on research and development of technologies and products that are friendly topeople and the environment while promoting interior environment improvement and utilization of recycled materials. The Group also
upholds the Fundamental Environmental Philosophy, to be followed in all aspects of our business operations. We have been positively
tackling environmental preservation activities, including decreasing our impact on the environment, in accordance with the Activity
Guidelines and activity goals. In April 2022, we announced the Second SUMINOE Environmental Declaration, which aims to ensure thatour products will be used by many more people and to promote “KKR+A” around the world through implementation of global strategies.
The entire SUMINOE GROUP will make concerted efforts to accomplish these objectives.

environment-friendly technology and products.
① Development of technology for energy-saving and resource-saving② Development of recycling technology and recycling system③ Development of products and technology to replace materials which would put less load on environment andhave more safety④ Development of product which could improve interior environment and contribute to health and comfort
We will try to live together with community through close communication and all employees will start action from
whatever one can do.
We will try to maintain internal system to promote environmental protection and enhance environmental
consciousness of all employees.

Fundamental Environmental Philosophy
Recently, deterioration of the global environment has rapidly been progressing. It is a mission in common among human beings who liveon Earth to make efforts to preserve and improve the global environment and hand the beautiful earth down to our descendants. With
this recognition, the Suminoe Textile Group will create a comfortable and rich society with the cooperation of all the employees positively
tackling environmental preservation activities.

Environmental Protection Promotion System
The Environmental Promotion Subcommittee was set up within the CSR Promotion Committee. Environmental measures drawn up andfinalized by the subcommittee are implemented in all divisions throughout the Group.
CSR Promotion Committee

Suminoe Textile
Headquarters &Administration Headquarters

Second SUMINOE Environmental Declaration

1

We shall provide healthy and environmentally friendly products.

We will provide safe and secure products to our customers by properly managing chemical substances used in our products based on theGreen Procurement Guidelines regarding legal regulations and restrictions on materials used in products.

2

Executive Committee

CSR & Internal
Control Council

CO2 Visualization
Subcommittee

We shall address the circulating society.

We shall promote the reduction of CO2 emissions.

To play a part in realizing a decarbonized society, we will develop and provide low-carbon products based on the Life Cycle Assessment(LCA) method. LCA is intended to comprehensively and quantitatively evaluate the impact of manufacturing activities on theenvironment while taking into consideration the entire life cycle of products ‒ materials, manufacturing, transportation, use, anddisposal.

41

Environmental
Management WG

Automotive Textile
Business Headquarters

OfficeManagement WG

Traffic Facilities
Business Headquarters
Functional Materials
Business Headquarters
Technical and Production
Engineering Headquarters

Introduction of Environmental Management System
The Nara Factory obtained ISO 14001 certification in fiscal 2001, making it the first among the Group to be awarded certification on
environmental management. To date, five factories in Japan have obtained ISO 14001 certification, and one factory Eco Action 21
certification.

To contribute to the reduction of industrial waste and the recycling of resources in the life cycle of products, we will actively use recycledmaterials as part of our eﬀorts to promote environmental conservation and the eﬃcient use of resources.

4

Environmental
Promotion Subcommittee

We shall work to prevent global warming.

We will promote the eﬀective use of resources by reducing losses of primary materials, auxiliary materials, water, and energy occurring in
the production process. We will also update energy-saving facilities constantly, improve product quality, reduce the weight of products,
simplify packaging and reduce its weight. At the same time, we will strive to increase the eﬃciency of transportation of materials andproducts, material utilization, and waste disposal during manufacturing, thereby promoting resource and energy conservation
throughout the supply chain.

3Interior Fittings
Business Headquarters

Working GroupSUMINOE GROUP Integrated Report 2023

ISO 14001: 2015

Eco Action 21: 2017

Nara Factory, Shiga Factory

Teijin Tecloth Ltd.

Owari Seisen Co., Ltd.:
Head Office Factory, Ishikawa Factory

Japanese Standards Association

Japan Quality
Assurance Organization

Japan Quality Assurance Organization

Registration number

JSAE 235

JQA-EM1519

JQA-EM3114

0009522

Registration date

May 2000

April 2001

March 2003

July 2013

7th renewal completed (July 2023)

5th renewal completed (July 2023)

Screening andregistration agency

Registration renewal 7th renewal completed (May 2021) 7th renewal completed (April 2022)

TANGO TEXTILE Co., Ltd.
Institute for Promoting
Sustainable Societies

SUMINOE GROUP Integrated Report 2023

42

ESG Initiatives in Line with the Medium- to Long-term Management Targets

E

Environment

Initiatives to Address Climate Change Issues
Target for reducing greenhouse gas emissions

Target for reducing greenhouse gas (CO2) emissions*■ Scope1: Direct greenhouse gas (GHG) emissions from the Group’s business operations■ Scope2：Indirect GHG emissions from the use of electricity, heat, etc. supplied by others(Unit: t)

Reduce GHG emissions by
35% from FY2014 (fiscal year

80,000ended May 2014) levels
60,00040,000

0
2014

2021

2031

(Fiscal year)■ As for Scope 3 emissions (Indirect emissions that are generated by othercompanies related to the Group’s business operations, excluding Scopes 1 and2), the calculation is currently under way.
* Per unit of sales

Information disclosure in alignment
with the TCFD recommendations

1. Governance
The Group has established the following governance system. The
Environmental Promotion Subcommittee set up within the CSR
Promotion Committee, which comprises members from respective
business headquarters and departments, draws up a plan formeasures to address environmental challenges as a whole,including climate change issues. The CSR Promotion Committee
deliberates on and finalizes the plan, which is implemented in all

43

SUMINOE GROUP Integrated Report 2023

3. Risk management
With regard to climate change-related risks, the Environmental
Promotion Subcommittee plays a central role in the formulation of
relevant polities and strategies to minimize risks and seize
opportunities, and in management of activity monitoring.
4. Metrics and targets① Eco Challenge 2024
Eco Challenge 2024 covers the three years from FY2022 to 2024
and aims to reduce CO2 emissions by 3% from the levels of FY2021(per unit of sales).

② The Suminoe Textile Group’s Target for Reducing Greenhouse
Gas Emissions
By FY2031 (fiscal year ending May 2031), the Group aims to reduce
CO2 emissions (per unit of sales) resulting from business activities by
35% from the levels of FY2014.
In the Group’s Target for Reducing Greenhouse Gas
Emissions, Scopes 1 and 2 emissions are used as metrics.
As for Scope 3, we started calculation of emissions from thesix major Group companies in Japan. As the first step toward
reducing Scope 3 GHG emissions, we will figure out the actual
situations of these six companies and discuss specific measures.

Examples of climate change-related risks/
opportunities according to the TCFD final report
Category of risks/opportunities
Policy andlegal risks

Major aspects/viewpoints
・Stricter regulations on GHG emissions
・Expanded obligations to disclose information

Analysis of impacts on the Group*1

2°C or lower
4°C
scenario*2 scenario*3

・Replacement of existing products withlower-carbon technology options
Technology risks ・Introduction of new technologies

Transition risks

Risks associatedwith the “transition”
to low-carbon
economyPhysical risks
Risks associatedwith “physical”
changes caused byclimate change

・Changing customer behavior
・Uncertainty in market signals (greater difficultyin forecasting market movements withconventional ways of thinking)・Increased cost of raw materials
・Shifts in consumer preferences
・Stigmatization of the sector that makes less
Reputation risks contribution to low-carbonization
・Increased stakeholder concern or negative
stakeholder feedback
・
Increased severity and number of extreme
Acute risks
weather events such as cyclones and floods
Market risks

Chronic risks

・Decreased demand and revenues due to changes in
the company image perceived by consumers
・Increased measures to address stakeholder feedback
regarding the company’s response to climate change・Decreased capabilities for production and distribution
due to ceased facility operations, interruptions oftransportation means and supply chains, etc.
・Negative impacts on workforce (e.g., health, safety,
absenteeism)
・Increased costs of provisions for damage to facilities

・Changes in precipitation and weather patterns
・Rising mean temperatures
・Rising sea levels

・More efficient production and distribution
processes
・More efficient modes of transportation
・Use of recycling
・Reduced water usage and consumption
・Use of low-carbon energy sources
Energy source
Positive impacts associated with a shift ・Use of new technologies
・Shift toward energy security and decentralized
to low-carbon energy sourcesenergy generation
・Development and/or expansion of low-carbon
goods and services
Products and services
・Development of new products or services
Positive impacts associated with thethrough R&D and innovationneeds of a low-carbon society
・Diversified business activities and a shift inconsumer preferences

・Increased production capacity, resulting in increased
revenues, due to efficient improvements in production
and distribution processes and modes of transportation
・Cost reduction resulting from improved efficiency inresource utilization related to business operation
・Reduced exposure to fossil fuel price increases
・Reduced exposure to GHG emissions and therefore lesssensitivity to changes in social cost of carbon

Resource efficiency

Positive impacts associated withimproved efficiency in resource
utilization

MarketPositive impacts associated withchanges in the market and economy due
to the trend toward a low-carbon society

Resilience
Positive impacts associated withresilience to climate change

Example of potential impacts
・Increased costs for switching to renewable energies
and energy-saving equipment
・Increased costs related to information disclosure
・Write-offs and early retirement of existing assets
・Increased costs for system changes and introduction of
new processes
・Increased workload in business operations, formodification management, etc.
・Shift in consumer preferences and reduced demand,
resulting in decreased revenues
・Increased production costs
・Increased costs for waste treatment

・Increased revenues through satisfying demand for
products that emit fewer GHG emissions
・Better competitive position to reflect shifting consumer
preferences, resulting in increased revenues

・Access to new markets

・Increased revenues through business expansion into
new and emerging markets

・Promotion of renewable energy programs andenergy-saving measures
・Resource substitutes/diversification
・Increased reliability of supply chain・Increased corporate valuation due to resilience toclimate change (resilience plan contents,
establishment of a stable supply chain, diversity ofalternative resources, etc.)*1 The directions of respective arrows indicate that potential business and financial impacts will be ⬆: Very significant: Somewhat significant ➡: Insignificant*2 2°C or lower scenario: A scenario where strict measures, including implementation of bold policies and promotion of technological innovations, are taken to reduce CO2 andother GHG emissions so that the increase in the global average temperature by 2100 is limited to less than 2°C above pre-industrial levels.
*3 4°C scenario: A scenario where the current measures against climate change go unchanged globally so that the average temperature rises around 4°C above pre-industrial
levels. Natural disasters continue to worsen, resulting in an increase in risks such as extreme weather events.
⬆

In July 2022, the Group declared its support for therecommendations from the Task Force on Climate-related Financial
Disclosures (TCFD). We will disclose the Group’s information on
climate change issues in alignment with the TCFD
recommendations.

the core of the Group’s development philosophy is thedevelopment of environmentally friendly products. Efforts todevelop and increase sales of these products will provide us with anopportunity associated with the transition to a decarbonizedsociety. With this recognition, we will further intensify and focus on
these efforts.

We have analyzed impacts that climate change-related risks and opportunities will have on the Group’s business and financial
performance.

Opportunities

20,0002. Strategy
To reduce environmental impact that may arise from our business
operations, we have formulated “Eco Challenge,” a set of goals on
activities regarding environmental issues in general, in line with theMedium- to Long-term Management Targets. For three years fromFY2022 to FY2024, we have worked on “Eco Challenge 2024,”
under the policy of the Medium- to Long-term Management
Targets “SUMINOE GROUP WAY 2022-2024-2027.”
In April 2022, we established the Suminoe Textile Group’s
Target for Reducing Greenhouse Gas Emissions to set up ourlong-term target for reducing greenhouse gas (CO2) emissions. At

Analysis of impacts on the Group based on the TCFD final report

Risks

In accordance with the policy of the Medium- to Long-termManagement Targets “SUMINOE GROUP WAY 2022-2024-2027,”
the Group established its long-term target for reducing
greenhouse gas (CO2) emissions in April 2022.
Specifically, by FY2031 (fiscal year ending May 2031) all theGroup companies will strive to reduce CO2 emissions in businessactivities by 35% from the levels of FY2014 (fiscal year ended
May 2014).
To promote the reduction of CO2 emissions resulting fromour business activities, we will implement concrete measures,
including improving logistics systems, unifying the production
bases, improving energy efficiency, changing fuels used, andpromoting working style reforms. In conjunction with thesemeasures, we will strive to expand sales of environmentallyfriendly products. Through these two approaches, the Groupwill contribute to the realization of a decarbonized society.

departments throughout the Group. The matters deliberated on
and decided by the CSR Promotion Committee are reported to the
CSR & Internal Control Council (Executive Committee) to obtainapproval.
We have also formulated “Eco Challenge,” as a set of goals on
activities regarding environmental issues in general, established inline with the Medium- to Long-term Management Targets. The
Group strives to achieve Eco Challenge goals to reduce
environmental impact from its business operations. Each fiscal year,
the activity results are evaluated and reported via this Report, etc.
In addition, in May 2021 we launched the CO2 Visualization
Subcommittee as an organ tasked with grasping and analyzing theGroup’s overall greenhouse gas emissions and designing strategies
for reducing these emissions.

Initiatives to reduce greenhouse gas emissions
Reducing GHG emissions from business activities
In fiscal year ended May 2022, the Group completed energy
conversion at overseas and domestic bases and reorganization of
two factories of Suminoe Techno Co., Ltd., resulting in improved
efficiency of production and logistics. In fiscal year ended May
2023, we introduced photovoltaic power generation systems intosome overseas production sites to promote renewable energy use.
In this manner, initiatives are under way to reduce greenhouse gas
emissions from business activities.

Contribution by products
Chief among the Group’s environmentally friendly products are the
ECOS® series, eco-friendly carpet tiles under the horizontal
recycling system, and ECONIX, a car seat covering material thatutilizes スミトロン® (SUMITRON) yarn made from recycled chips.
These eco-friendly products have steadily come into widespread
use and continue to penetrate.
By expanding sales of these products and further improving therecycled material ratio, we will enhance the degree of contribution
by our products in reducing greenhouse gas emissions.

SUMINOE GROUP Integrated Report 2023

44

ESG Initiatives in Line with the Medium- to Long-term Management Targets

E

Environment

Eco Challenge 2024
Business activities undertaken by the SUMINOE GROUP are deeply connected to the environment. This holds true to our daily operations,as well as to the entire lifecycle of our products—from product development and design, material procurement, production, sales,
distribution, consumption, disposal and recycling.
The Group is working on assessing and reducing the impact on the environment from all of our business activities and our products
throughout their lifecycle. We are committed to manufacturing environmentally friendly products. One example is active use of recycledmaterials, including polyvinyl chloride powder recycled from used carpet tiles and raw cotton and polyester pellets recycled from PET
bottles. To promote sustainability, we place focus on environmental conservation, and Group-wide efforts are underway to achieve thegoals set under Eco Challenge 2024.

③ 3Rs regarding Waste Material
We are striving to reduce industrial waste generation byminimizing unused materials for our products, by not
manufacturing products that do not pass quality standards, andby using resources effectively.

Changes in amount of industrial waste generated■Amount of industrial waste generated●Basic unit（t）
10,000
8,000

75.4

75.7

80.7

(kg/¥1 million)
100

70.8

65.3

40

4,000
2,000

Eco Challenge 2024

7,434
2019

Work areas

Final numericaltargets

Index

Base FY

FY2023 numericaltargets

FY2023 results

Evaluation

1

Prevention of
global warming

Reduction of CO2 emissions(energy consumption)

Reduce by 3% (basic unit).

2021

2

Resources
conservation

Increase in utilization rate of recycledresources (major factories in Japan*1)

Increase 3%.

2021

Increase by 2%.

Increased by 24.5%.

○

Reduction of industrial waste

Reduce by 3% (basic unit).

2021

Reduce by 2% (basic unit).

Reduced by 19.1%.

3Rs regarding
waste material○

3

Increase in recycling rate

65% or more―

65% or more

39.4%

△

Reduction in rate of waste
disposed of in landfills
Reduction of air pollution(reduction of N2O emissions)
Increase in green purchasing rate
for office supplies (in Japan)

10% or less―

10% or less

36.3%

△

Reduce by 3% (basic unit).

2021

Prevention ofenvironmental pollution
Promotion of5green activities

6

Promotion of LCA assessment for products

8

Reduce by 2% (basic unit). Reduced by 36.9% (basic unit).

Reduce by 2% (basic unit). Reduced by 23.3% (basic unit).

―

95% or more

95% or more―

Perform LCA for 18 items.

*2

7

89.2%

12 items

40 items○○

1 case△Promotion of development of environment-friendly products*2

9 cases―

6 cases

7 cases○

Promotion of biodiversity preservation in business activities

―

―

―

―

―

○: Attained △: Not attained at some factories ×: Not attained
Basic unit: Consolidated sales used as a denominator for calculation
Emission factor: For domestic factories, the amounts of CO2 and N2O emissions are calculated based on an emission factor set in accordance with the law to promote measures against
global warming. For overseas factories, the calculation is based on an emission factor set for each country in the 2006 IPCC Guidelines for National Greenhouse Gas Inventories.
*1 Major factories in Japan: Shiga Factory and Nara Factory Suminoe Techno Co., Ltd., Teijin Tecloth Ltd., and Head Office Factory and Ishikawa Factory Owari Seisen Co., Ltd.
*2 The figures for targets and results are cumulative totals from FY2022 to FY2023.

Results for fiscal 2023
② Resources Conservation
We are actively using recycled resources for product manufacturing to promote savings in resources.

Change in CO2 emissions

Changes in utilization rate of recycled resources(Major factories in Japan)■Domestic

40
20

58.5
22.4

51.0
18.8

●Basic unit

0.566

0.6

0.496

45.1
18.7

40.5
16.6

33.9
9.9
24.0

32.3

26.4

23.9

2019

2020

2021

2022

SUMINOE GROUP Integrated Report 2023

（％）
50
40

0.358

36.1

0

45

■Overseas(t/¥1 million)

80
60

6,192

2022

0
2023 (Fiscal year)

2021

20

36.4

●Rate of waste disposed of in landfills

39.1

42.5

33.6

32.5

32.2

2019

2020

2021

2022

200

3.73

Using locally-grown native species, not nonnative species,
for tree planting●Basic unit
10

328

303

291

277

3.58

3.80

3.56

2.92

8
6
4
2

0
2019

2020

2021

2022

0
2023 (Fiscal year)⑤ Promotion of Green Activities
We are actively promoting purchases of environmentallyfriendly office equipment and supplies to reduce their impact on
the environment throughout their entire life cycle, fromcollection of materials to disposal.

0.4

0.2

0.0
2023 (Fiscal year)

46.4
37.7

37.3

49.9

40.1

30
20
10
0
2019

2020

2021

2022

2023 (Fiscal year)

（％）
100

90
80

85.2

86.2

86.1

2019

2020

2021

⑧ Environmental Activities for Preserving Biodiversity in
Business Operations

2023 (Fiscal year)■N2O emissions

100

railroad vehicles, featuring a backing created by using
ECOS® specifications

Monitoring the situation on biodiversity around factories
and their vicinity(g/¥1 million)3673) ECONIX, a seat covering material that utilizes スミトロン®
(SUMITRON), which is eco-friendly yarn made from recycled
chips4) ECOS-US3000 and ECOS-MD8500 series of carpet tiles for

36.3④ Prevention of Environmental Pollution
Among atmospheric contaminants, nitrous oxide (N2O) is usedhere as an example to explain the situation of air pollution.

Changes in N2O emissions

Promotion of Development of Environment-Friendly Products
1) ECOS NEO™ series of carpet tiles, which achieves a recycledmaterial ratio of 81% by using recycled materials on the pilesurface and the backing2) SORAIRO, a rug made of 50% recycled wool

Activity Policy1）Reduction of impact on biodiversity from business activities

39.4

Changes in green purchasing rate for office supplies (in Japan)① Prevention of Global Warming
We assess the impact of our corporate activities on global
warming based on CO2 emissions.

0.557

5,782

0

○

2 cases

40.8
38.2

300

―

0.593

30

△

3 cases

2020●Recycling rate

（kg）
400

Promotion of development of environment-friendly technologies*2(1,000 t)
100

6,434

Changes in recycling rate and rate of waste disposed of in landfills（％）
50

Activity Goals and Fiscal 2023 Results

4

6,932

0

As a set of goals on environmental activities, we have formulated Eco Challenge 2024, which covers the three years from fiscal 2022 to
2024.

80
60

6,000

⑦ Promotion of Development of Environment-Friendly
Technologies and Products

91.1

89.2

2022

2023 (Fiscal year)0⑥ Promotion of LCA* Assessment for Products
We have conducted in-house LCA assessments for our products
since fiscal 2016. Between fiscal 2022 and 2023, we carried out
LCA assessments for 40 items.
* LCA: Stands for lifecycle assessment. LCA is a method to quantitatively
evaluate the resources used to produce a product at each stage of its
lifecycle—from raw material procurement, manufacturing, distribution anduse to disposal— as well as its load on the environment, and also thepotential environmental impact that the product and resources may have on
the Earth and ecosystems.

Periodically cleaning areas near factories and improving
environmental conditions there by weeding out grass
Checking sustainability when biological resources are usedas product material
Promoting development of products with recycled material
and building a recycling system to manufacture suchproducts
Incorporating activities for biodiversity preservation into an
environmental management system
Promoting new measures that are possible at each factoryfor preservation of biodiversity2）Activities to seek suppliers’ cooperation in reducing impact
on biodiversity across the entire supply chain
Seeking cooperation from suppliers in observing green
purchase guidelines to promote our efforts to preserve
biodiversity
3) Social contribution activities
Supporting groups engaging in forestry preservation
activities
Supporting green charity activities
Activity Results
Each factory has been implementing activities, taking advantageof the regional characteristics.
Factory

Activity

Nara Factory of Suminoe
Textile Co., Ltd.

Participating in the Ando Ouyu-Kai, anassociation that works to develop a cherrytree-lined promenade in the area along
the Okazaki River

Shiga Factory of Suminoe
Techno Co., Ltd.

Propagating the Sasayuri lily on thefactory premises

Factory at the head officeof Owari Seisen Co., Ltd.

Helping protect fireflies as a supporting
member of the Ichinomiya Heisei Firefly
Association

SUMINOE GROUP Integrated Report 2023

46

ESG Initiatives in Line with the Medium- to Long-term Management Targets

S

SocialHuman Capital
Human resources strategies to create an ideal organization
SUMINOE GROUP Philosophy (VISION, MISSION, SPIRIT, VALUE）
Basic guidelines for business activities
SUMINOE “4C” Values

Human resources policy

Ideal employee profile*

Autonomy

Review of the personnel system
Optimal assignment of personnel
and human resources activation

Basic Policy on Sustainability and Related Policies

Challenging spirit

Co-creation

Human resources
cultivation and evaluation

Communication
Synergy effects and innovation

Job satisfaction, motivation

人材最適配置、
人材活性化

やりがい、
モチベーション

シナジー効果、イノベーション

Implementing skill improvement training
To promote personal growth of all SUMINOE GROUP
employees, we implement education and training programs
throughout the Group. We provide not only level-based androle-based training but also skill improvement training on
various themes for voluntary participants. The themes selected
for this fiscal year were as follows: “Effective use of Excel andPowerPoint for work efficiency enhancement,” which was
designed to improve work efficiency in day-to-day tasks; “Nikkei
information utilization course” to learn about an efficient
information gathering method using the Nihon Keizai Shimbun
newspaper; and “Leadership improvement to gain more
influence” for middle-level employees. Going forward, we willoffer various themes to improve the skills of employees.

* ●…Implemented in FY2023, ○…To be implemented in FY2024 and onward

47

Category

Details

Theme

Initiatives*

Group Philosophy

Behavioral changes of officers
and employees

Understanding andpenetration of the Group
Philosophy○ Implement training on Group Philosophy.
○ Incorporate the Philosophy into the MISSIONof segments, departments, and individual
employees.

Review of
personnel system

Human resources visualization,
optimal arrangement of personnel,
and human resources activation
Development of a challenging spirit
Realization of diverse working styles

Diversification of working
styles● Regulations on work from home andstaggered work hours systems〇 Career self-declaration system (p. 48)〇 Limited area employee system

Cultivation andevaluation ofhuman resources

Improvement of individual
employees’ skills
Strengthening of leadership capabilities
Cultivation of global human resources
Creation of job satisfaction andmotivation

Development of humanresources with professionaland creative personalities
Fair evaluation andtreatment● Skill Improvement Training (p. 48）● Language training○ Training for enhancing management capability○ Review of the evaluation system

Communication

Sharing of information,
know-how, and challenges
Reinforcement of inter-departmental
cooperation systems
Maximization of synergy effects
Preservation and succession of skills
and development of successors

Activation of “horizontal
relationships”
Information sharing
between officers andemployees● Tsunagu-wa-cation (p. 50)● Tsunagu-meeting (p. 50)● Management by Walking Around (p. 58）

Diversity andinclusion

Acceptance of diversity of humanresources
Respect for individuals and their
participation

Women’s career development
Participation and cultivationof diverse human resources● Promote women’s participation (p. 51)● Promote participation of senior employees

Health Management
Work-life balance

Improvement of employees’
well-being
Improvement of labor productivity

Mental and physicalhealth of employees● Measures against lifestyle-related diseases
and mental health problems● Establishment of contact points for healthcounseling services○ Working Style Reform Action Plan 2023 (p. 52)

SUMINOE GROUP Integrated Report 2023

Autonomy

Persons who can think by themselves and act
autonomously

Challenging Persons who can take on higher roles, without
fear of changing, from diverse perspectives
spiritCo-creation

Persons who can create new value in collaboration
with others, through many dialogues

Initiatives for career development of employees
Establishing the career self-declaration system
Suminoe Textiles Co., Ltd. launched the career self-declaration
system on June 1, 2023. Under this system, employees candeclare to the Company what kind of career path they wish to
pursue on a short- and long-term basis in the future (e.g., jobs
they wish to experience or dare to perform). The system isintended to cultivate autonomous human resources byencouraging employees to think about their future career andto proactively engage in their jobs and to provide employeeswith opportunities to better display their abilities, thereby
improving job satisfaction. Another purpose of the system is tohelp utilize human resources and revitalize the organization by
putting the right person in the right job and by reducing
voluntary turnover due to mismatched assignment. We willcontinue to carry out initiatives for human capital maximization.

Level-based

Role-based

Selective

Collective training
Managers

Mid-career
employees

Management
training
Supervisor
training
Leader training
Training for thirdyear employees

Skillimprovement
training(theme-based)

Selective(for selfdevelopment)

Language training

Ideal employee profile for Suminoe Textile Co., Ltd.

Education system

Correspondence course

Initiatives to realize an ideal organization

Reviewing the ideal employee profile
The SUMINOE GROUP considers human resources to be thesource of sustainable corporate growth and the most important
assets. In this age of uncertainties, it is difficult to predict what
will happen in the future. In this context, Suminoe Textile Co.,
Ltd. strives to achieve sustainable growth of employees and theCompany. As part of its efforts to activate and cultivate humanresources, the Company reviewed the ideal employee profile for
Suminoe Textile. From the fiscal year ended May 2022 to thefiscal year ended May 2023, we conducted interviews with the
President and officers and questionnaire surveys of department
managers. Based on the results of these interviews and surveys,
the Company defined “autonomy,” “challenging spirit” and“co-creation” as the elements of the profile.
Going forward, we will improve our education system andtraining programs with a central focus on “autonomy,”“challenging spirit” and “co-creation” so as to enable individual
employees to improve and exhibit their capabilities. In doing so,
we will nurture human resources who can help us to achieve theMedium- to Long-term Management Targets and appropriately
adapt to future times. We will also place emphasis on educationof managers, who play vital roles in making maximum use of our“people” and “organization.”

OJT instructor training* To be deployed from Suminoe Textile Co., Ltd. to Group companies

Improving skills of employees

Evaluator training

Ideal organization

Review of the ideal employee profile

Young
Training for secondemployees year employees
Training for
new employees

Number of employees taking training

FY2023Training type

Total

Male

FemaleLevel-based, role-based, skill
improvement collective training

312

213

99

Correspondence course,
language training

130

84

46

Measures against harassment
Implementing harassment prevention training
The Group provides training aimed at creating a comfortable
work environment and eliminating harassment. This fiscal year,
moral harassment was selected as the training theme.
Approximately 70% of 1,017 employees working for five Group
companies took part in the training. What is most important for
a company to prevent harassment is to create such a corporate
culture. Based on this idea, the Group will continuously conductanti-harassment training.

SUMINOE GROUP Integrated Report 2023

48

ESG Initiatives in Line with the Medium- to Long-term Management Targets

S

SocialOmnidirectional Communication
The Group has set “omnidirectional communication” as one ofits Medium- to Long-term Management Targets. To achieve thistarget, we plan to disseminate the Group Philosophy andmanagement policy and implement activities to promote
communication between departments.

Based on these strengths and value that the Group offers, we
logo and tagline, looking ahead to the future.
Through about one-year of branding activities, all Group
officers and employees had opportunities to reconsider whatkind of value the Group should provide to society.
By sharing the Group Philosophy with stakeholders andearning their empathy, we aim to enhance our brand value,“Shin Mirai Project” for promoting branding
In July 2022, we launched the Shin Mirai (lit. new future) Project,which will lead to new growth of the Group. To this end, we willcontinue Group-wide efforts to penetrate the SUMINOE GROUP
brand.

which aims to newly formulate the Group Philosophy (VISION,MISSION and VALUE) as the guidelines for
all the SUMINOE GROUP members to

Topicsfollow in conducting business with a senseof unity and oneness, toward enhancing
theGroup’s

medium-to

Unified Group logo

long-term

corporate value.

Project activities

Item implemented

PurposeQuestionnaire surveys of
all Group employees

Identify the Group’s strengths,
weaknesses and unique features

Interviews with the
President and officers

History, strengths, current
challenges, and future outlook

Workshop

Value creation and theconcept of VISION

Meaning of the seahorse markThe new logo was designed based on the previous logo of
Suminoe Textile Co., Ltd. It symbolizes a seahorse proudly
going forward into the future while cherishing tradition.
The four diamonds represent a sparking ocean while
indicating the Group’s “four businesses,” which create
spaces as well as rays of light spreading into the four
quarters of the globe.

Through the project activities, we re-defined the SUMINOEGROUP’s strengths and the value offered by the Group as

Taglinefollows:“Bring innovation to all kinds of spaces”

Strengths of the SUMINOE GROUP
Technology and development capabilities to create newvalue with our foresight

Tsunagu-wa-cation

Tsunagu-meeting

To maximalize synergies of the SUMINOE GROUP
In order to develop our one-of-a-kind technologies andproducts and eventually create social and economic value, we
believe that it is essential to maximize synergies of the entire
SUMINOE GROUP by sharing and coordinating technologies andideas between and among different business segments andGroup companies. This requires us to change the organizational
structure from a conventional “vertical” structure to a structure
focusing on “horizontal relationships.” To this end, we arepromoting initiatives to facilitate “communication between
departments.”
In the fiscal year ended May 2023, we held
“Tsunagu-wa-cation” events respectively for design staff andsales staff in order to promote exchange between Group
companies. As for the “Tsunagu-wa-cation” events for design
staff, around 40 designers participated from each businesssegment, with the objective of gaining inspiration for better
designs and manufacturing practice. These participating
designers exchanged information on their respective businessenvironments and results. They also received input on the latest
trends in overseas interiors through a special seminar, which
inspired them to come up with new design ideas. For sales staff
events, about 30 young employees in their 20s and 30s
participated from the Kanto and Kansai districts. They exchanged
information regarding products handled by each department,
sales methods, customers and the industry. The event provided
participants with an opportunity to deepen their understandingof the SUMINOE GROUP on the theme of “Sales” and consider
sales activities, taking into account cooperation within their own
departments as well as cooperation with other departments.
We are planning to hold “Tsunagu-wa-cation” events forother various departments and job categories, with the aim of
maximizing the SUMINOE GROUP’s synergies.

Two-way communication between officers and employees
As part of its efforts to promote omnidirectional communication,
Suminoe Textile Co., Ltd. held roundtable meetings at which the
President and officers of the Administration Headquarters talked
with employees grouped by age bracket. These meetings, called“Tsunagu-meetings,” are intended to connect (Tsunagu inJapanese) top management and employees through directconversations to exchange thoughts and feelings to ensure that
the SUMINOE GROUP will continue to develop into a better
enterprise in the business environment that is changing rapidly
and significantly.
At these meetings, each age group of employees actively
exchanged opinions with top management. In many cases, theytalked about human resources-related topics, such as domestic
and overseas human resources development, management bymanagers, and an ideal personnel evaluation system that
improves employee motivation. Other various opinions were also
advanced, including the sharing of the Company’s vision,development of new products and technologies, planning ofGroup-wide strategies, and maximization of synergies throughcross-departmental communication. About the advantages anddrawbacks of the Group, top management and employees
engaged in frank exchanges of views face-to-face, and thecontents of conservations were disclosed to and shared with
employees of other age brackets so that all employees were able
to have common recognition.
Going forward, we will summarize the issues identified
through these meetings and discuss measures to address theseissues in order to help create workplaces for employee happinessand build a foundation for growth of the SUMINOE GROUP.

* Definition of the Group’s “Wa-cation”: A means of creating new value byenhancing synergies through communication in an environment that is different
from usual. The Group coined this word by combining the Japanese word “Wa (lit.
a circle),” “work,” and “communication.”

President and officers of the Administration Headquarters
It was significantly meaningful to be able to hear candid
opinions and views from so many employees of each age
bracket. We realized that young employees hoped to work forthe betterment of the Company and for their personal growth.
We also felt that employees in higher age groups were more
knowledgeable about the Company’s advantages anddrawbacks. By seriously considering the views and ways ofthinking of employees in each age group, we will reflect the
input from employees in discussing future measures to be taken.

formulated the Group Philosophy as well as the unified Group

This tagline expresses our determination to advanceforward to accomplish the Group’s mission of bringing
people- and society-friendly spaces to the world throughtechnology and ideas that closely support people’s lives.

Trust established over 140 years of history and track record
A sense of mission to create people- and earth-friendly
lifestyles, starting from interior spaces around us
Value offered by the SUMINOE GROUP
Produce a virtuous cycle of co-creation by co-creating “social
value” with customers and consumers and continuing tomeet social needs.
Create new value through unconventional technologies andproducts by generating interdepartmental synergies, andsupport society by “functional and comfortable space itself.”
Create new value in the field of space creation, taking
advantage of the Group’s unique strengths— technologies,
expertise, trust and relationships with customers—that it has
cultivated, and consequently improve people’s quality of living.

49

SUMINOE GROUP Integrated Report 2023

Tsunagu-wa-cation (exchange event for design staff)
Employees working on the project

Impressions after participating in the
Tsunagu-meetings

Employees
Despite a few opportunities for communication, theTsunagu-meetings allowed us to directly exchange opinionswith officers and talk about what we had in mind. It was a
precious moment for us. We were also able to fully understand
top management’s way of thinking and the Company’s future
direction. We hope that there will be many more opportunities
for this kind of communication in the future.

SUMINOE GROUP Integrated Report 2023

50

ESG Initiatives in Line with the Medium- to Long-term Management Targets

S

SocialDiversity and Inclusion
In keeping with the Basic Policy on Diversity and Inclusion
formulated in June 2022, we carry out initiative to facilitate theacceptance of diversity of human resources and foster respect
for individuals and their participation.

Promoting women’s participation
SUMINOE GROUP’s activities to promote women’s participation
To promote women’s participation, the Group takes a two-axis
approach—encouraging female employees to develop their career(training and appointment) and supporting them in continuing towork (work-life balance). We strive to create a work environment
where both male and female employees can play active roles.

Results of women’s empowerment initiatives
As of the end of May each year

(Group companies in Japan)

Item
Number of new
graduates hired

MaleFemaleRatio of female managers (%)*1
Male-female wage
disparities (%)*2

2022

2023

17

21

19

20

5.3

5.1

All employees

73.0

Regular employees

75.8Part-time employees

68.5

As part of our initiatives to promote women’s participation, theCompany annually dispatches two female managers and two
female manager candidates to participate in women’s empowerment support programs held by an external organization. We
believe that the forum will provide these female employees witha great opportunity to acquire knowledge and skills required towork as managers and heighten their motivation for careerdevelopment. It will also be a good occasion where they cangather information and think about their future visions while
being exposed to more diverse views through exchange withpeers outside the Company. We will implement initiatives tosupport female employees in continuing to enjoy their work.

Health Management
Health management of Suminoe Textile Co., Ltd.
Suminoe Textile Co., Ltd. promotes health management based on
the concept of the Group’s Health Management Declaration.
Going forward, we will conduct Group-wide initiatives tostrengthen health promotion activities and systems for
management and evaluation, along with measures for work-lifebalance.

Health promotion system of Suminoe Textile Co., Ltd.

*1 Percentage of female employees whose positions correspond to section
chief or higher at the Group companies in Japan*2 Data for Suminoe Textile Co., Ltd. only

Health management CEO(President)

Suminoe Textile Co., Ltd. and five Group companies in Japan
analyzed the issues of respective companies. Reflecting theanalysis results, each company established its action plan based on
the Act on Promotion of Women’s Participation and Advancementin the Workplace. The activities and targets specified under theseaction plans are disclosed to the public.*

General Manager of Administration Headquarters* Published in: Database on Promotion of Women’s Participation and Advancementin the Workplace, run by the Ministry of Health, Labour and Welfare

Japan Health
Insurance
Association
External
contact point
for consultation

Departments incharge of promotion
Administration
department ofeach site

Suminoe Textile
Co., Ltd.

Targets

Ratio of employees taking Male: 25 or higher
childcare leave by sex (%)
Female: 100
Increase in No. of female
Increase one
managers
or moreRUNON CO., LTD.
Monthly average overtime
Within 40
hours (h)Results
45
16.7
100

0
8.9

Owari SeisenCo., Ltd.

51

Monthly average overtime
hours (h)SUMINOE GROUP Integrated Report 2023

Within 20

1.4

Target0

2. Use rate of annual paid leave (%)

70

3. Rate of male employees taking
childcare leave (%)

100

Item

Descriptions

Activities in FY2023

Promotion of awork-life balance

Held a life design seminar (on basics of caregiving).
Established regulations on working from homeand staggered working hours system.

Measures against
lifestyle-relateddiseases, etc.

Measures against
mental healthproblems
Raising healthimprovementawareness

Helped employees with expenses for cancer
examinations and complete physical checkups.
Helped employees with flu vaccination expenses.
Recommended seeing a doctor to employees who
were designated by Company doctors, fromamong those required to take a re-check or further
investigation as a result of health checkups.
Implemented stress checkups.
Held medical interviews between employees andCompany doctors.
Provided health counseling by Company doctors(every month).
Held health seminars and distributed videos on
health topics.
Set up points of contact for consultation.

Use rate of annual paid
leave (%)

As of May 31 each year

2022

2023

60.4

59.9

Number of employees who used childcare/family care supporting systems(Group companies in Japan)

As of May 31 each year

Item/sex
Number of employees who
took childcare leave
Number of employees who returned
to work after childcare leave
Number of employees who
took family care leave
Number of employees who
worked from home
Number of employees who
took childcare leave
Number of employees who
worked from home
Number of employees who
reduced working hours

Male
FemaleMale
FemaleMale
FemaleMale
FemaleMale
FemaleMale
FemaleMale
Female

2022

2023

1
13
1
9
0
18

2
13
2
12
0
22
33
21
0
0
0
0
4
1

0
0
0
0

We encourage employees to take childcare leave, as part of ourefforts to develop a corporate culture that embraces diversity andto promote work-life balance aimed at making employees’ workand life fulfilling. Suminoe Textile Co., Ltd. added a provision that
“Of the period of childcare leave, employees shall be regarded ashaving been at work up to 14 working days before returning towork,” effective since June 2023. The Action Plan sets 100% as theGroupwide target for the rate of employees taking childcare leave.
We will apply the provision to Group companies and promote
coordination across the Group, toward attaining this target.

Developing a Safe and Secure Work Environment
Progress in the occupational health and safety initiatives anddeliberation on the causes of occupational accidents andpreventive measures
The Group’s Central Health and Safety Subcommittee holds
meetings three times a year, bringing together persons in charge ofpromoting occupational health and safety at Group companies, toexchange views about prevention of occupational accidents andreport on the activities of each company. In fiscal year ended May
2023, the rate of lost-worktime injuries was 1.39.
In December 2020, an occupational fatal accident occurred at
the Shiga Factory of Suminoe Techno Co. Taking the accident
seriously, we are making Group-wide efforts to promote
occupational health and safety activities.

Activities to prevent occupational accidents at
Suminoe Techno Co., Ltd.

Use of paid leave

Family careleave, etc.

1 year andGender difference in length
Within 2 years 1 monthof continuous service
Suminoe Logistics Ratio of female managers
30 or higher
30.8(%)
Co., Ltd.
Suminoe TechnoCo., Ltd.

Indicator
1. Number of employees who
worked 70 hours overtime amonth(in Group companies in Japan)

Activities implemented by Suminoe Textile Co., Ltd.

55.6
16.7
100

Company
doctors

SUMINOE GROUP working style reform action plan 2023
Period: From June 1 2023 to May 31 2024

Childcare leave, etc.

SUMINOE
Co., Ltd.

Item

Ratio of new female
35 or higher
graduates hired (%)
Ratio of employees taking Male: 25 or higher
childcare leave by sex (%)
Female: 100
Ratio of new female
40 or higher
graduates hired (%)

Personnel
Department

Encouraging male employees to take childcare leave

Formulating the “Working Style Reform Action Plan 2023”
To enable employees to continue to display their best
performance and produce positive results, employee well-being(a state of complete physical, mental and social well-being) is
indispensable. It is therefore absolutely vital to identify factorsthat may negatively affect employee well-being and take
improvement measures. These measures are also importantfrom the perspective of human capital utilization.
In June 2022, the Group formulated the Heath
Management Declaration and the Basic Policy on Work-Life
Balance. As specific initiatives to follow these guidelines, weestablished the Working Style Reform Action Plan 2023
(hereinafter “Action Plan”) dated June 1, 2023, for all the 17
SUMINOE GROUP companies in Japan.
In the future, we will check and evaluate the progress inour efforts toward the Action Plan to implement the PDCA
(plan-do-check-act) process, through which we can improve andcontinue measures. In so doing, the Group will seek to realize
heath management, promote work-life balance, and enhance
its corporate value.

Employees

Numerical targets set in action plans based on the Act on Promotion of Women’sParticipation and Advancement in the Workplace, and activity results FY2023 results

Company

Health and
SafetyCommittee

Work-Life Balance

As part of its activities to prevent occupational accidents, Suminoe
Techno Co., Ltd. conducts hands-on safety training in which
employees experience firsthand the danger of equipment andmachinery. In FY2023, the company held training at the Nara
Factory, using a simulation system that provided employees with arealistic feeling of being caught or pulled into a machine. Many
employees have the opinion that realizing the danger of
equipment firsthand is effective in raising safety awareness ofoperators. For this reason, Suminoe Techno will continue to
conduct such hands-on training with different contents at the Naraor Shiga Factory alternately every year.

Change in the incident rate* of Group companies in Japan
Incident rate
8
6

5.99
4.98

4.52

4
2
0

All Group companies in Japan(Lost-worktime injuries &non-lost worktime injuries)

3.40

3.50

2.00
1.33
1.20

1.20

2018

2019

1.39

Average for the industry(Lost-worktime injuries)
All Group companies in Japan(Lost-worktime injuries)

1.21

1.31

1.02
2020

0.70 1.25
2021
2022 (Fiscal year)

Source: 2022 Workplace Accident Trend Survey, Ministry of Health,Labour and Welfare* Incident rate: Accident frequency, measured as the number of deaths
and injuries caused by industrial accidents per million working hours

SUMINOE GROUP Integrated Report 2023

52

ESG Initiatives in Line with the Medium- to Long-term Management Targets

G

Governance
Board of Corporate Auditors (No. of meetings held in FY2023: 9)
The Board of Corporate Auditors consists of three auditors(including two outside auditors). The Board decides auditing
policies and plans and deliberates on audit reports.

Enhancing Governance
Basic approach
The SUMINOE GROUP believes that the objective of corporate
governance is to secure the soundness and efficiency ofmanagement. In doing so, the Group stives to enhance its
corporate value to continuously return profits to stakeholders.
To secure the soundness and efficiency of management,
we have been appointing outside directors and strengthening
the function of the corporate auditor system. The Board of
Directors functions as a body for making management decisions
in a speedy and agile manner and for overseeing the status ofbusiness execution. The Company has also introduced an
operating officer system, under which operating officers areheld responsible for business execution. In terms of risk
management, we have formulated the Code of Conduct and theStandards of Conduct. By appropriately operating these codes,
we aim to be a company trusted in society.

Governance system
Board of Directors (No. of meetings held in FY2023: 9)
The Board of Directors comprises nine directors (including four
outside directors) and supervises business execution and makes
decisions on important matters.

Nomination and Remuneration Committee (No. of meetings
held in FY2023: 1)
The Nomination and Remuneration Committee is set up as anadvisory body to the Board of Directors. The Committee aims tostrengthen its oversight function by improving transparency andobjectivity in the evaluation and determination processes
concerning the nomination and remuneration of the membersof the Board of Directors, thereby further enhancing thecorporate governance system.
The Committee membership comprises five directors
selected by a resolution of Representative Directors, independent
outside directors and the Board of Directors. The majority of themembership should be outside executives, including
independent outside directors.
Executive Committee/CSR & Internal Control Council
A meeting of the Executive Committee is held every week, inprinciple, to report and deliberate on important management
matters. Matters of particular importance will be reported to theBoard of Directors. CSR-related important matters and evaluationof internal controls concerning financial reports are discussed at a
meeting of the CSR & Internal Control Council. The meeting is
attended by one full-time corporate auditor as an observer.

attendance of independent outside directors.
In July 2019, we set up the Nomination and Remuneration
Committee, which has been functioning as an advisory body to theBoard of Directors.
The Company’s Board of Directors consists of inside Directors who
are well versed in respective business and corporate activities andhave a wide variety of knowledge and experiences and Outside
Directors who are expected to provide advice and monitoring froma broad perspective. As for the selection of Directors, from among
candidates, the Company selects personnel who meet the samerequirements as above, while taking into account the appropriatebalance of the board as a whole, in accordance with the revised
Corporate Governance Code. The Company appointed a female
certified public accountant as an Outside Director in August 2021
and a female executive officer of a different company as an Outside
Director in August 2023. These appointments enabled theCompany to secure diversity, accounting literacy and global
perspectives. We believe that the Company’s Board of Directors
achieves appropriate diversity and a proper balance of knowledge,
experience and skills, making effective use of expertise possessedby respective board members.

Board of Operating Officers (No. of meetings held in
FY2023: 12)
The Board of Operating Officers comprises the President andoperating officers of Suminoe Textile Co., Ltd. and holds its
meetings once a month. At the monthly meeting, the decisions
made by meetings of the Board of Directors or the Executive
Committee are announced, and reports are made on thepresent status of business execution by each operating officer.

Policies and procedures for selecting officers
The Board of Director has not established specific procedures forselection of a CEO.
A CEO candidate is chosen from personnel who are able tocontrol overall management and business operation based on theGroup Philosophy and who have abundant experience andachievements required for contributing to the Group’s sustainablegrowth and to improvement in its corporate value. Such personnel
also must have a high level of ability, broad insights and a superior
personality. The successful candidate will be selected by resolution
after due deliberation at a meeting of the Board of Directors, with

Skill Matrix
Position

Name

Age Sex

TermofSpecialization and experience
Legal
GeneralSales and
Produc- FinanceOverseas
Sustainmanagemarkettion tech- and ac- Risk manbusinessabilityment
ing
nology counting agement

President

Teppei Nagata

66

Male 6 years●

Managing
Director

Hiroaki Usugi

59

Male 3 years●

Managing
Director

ToshiroMaruyama

65

Male 2 years●

Director

Eiichiro Kimura

64

Male 2 years●

Director

Norihisa Murase

62

Male

1 year●Outside Director

Haruo Shimizu

76

Male 7 years●

Outside Director

Kohei Nomura

75

Male 5 years

Outside Director

Yumiko Oida

56

Female2 year(whose tasks include personal
information management)

Outside Director

Yuko Shibuya

54

Female―Central Health and Safety Subcommittee

Full-time
Corporate Auditor

Kiyokazu
Ichikawa

64

Male 3 years

Outside Corporate
Atsuhiro Sonoda
Auditor58

Male 4 years

Outside Corporate
Auditor61

Male 3 years

Corporate Governance and CSR Promotion System

●

●

●

●

●

IT
Digital

●

●

●

●

General meeting of shareholders
Selection/dismissal Selection/dismissal

3 auditors(including 2 outside auditors)

Board of Directors
9 directors

Audit(including 4 outside
directors)

Nomination andRemuneration Committee

Directors

Board ofCorporate Auditors

Selection/dismissalnSelection/dismissal and supervision
tio
era

●

●

●

●

●

●

●

●

●

CSR Promotion System

Co

Cooperation

Audit

ion
rat

Direction andsupervision

Audit

Respective
departments, Head
Office, and Group
companies

CSR & Internal
Control Council
Officer in chargeof complianceCorporate
Ethics Hotline
Consultation
services for overseas
subsidiaries

Compliance & Risk
Management Subcommittee

Personnel (Development and Health) Subcommittee
Environmental Promotion Subcommittee
Product Liability (PL) Subcommittee
Financial Control Committee

Corporate Auditors

Board of
Operating Officers

eopInternal Auditing
Department

CSR Promotion Committee

Representative Directors
Executive Committee

Co

Accounting auditor

op●

Takafumi
Katayama

●

●

●

●

●

●

●

●

●

●

●

●

●

●

* The above is not intended as a complete list of knowledge and experience held by members of the Board of Directors and the Board of Corporate Auditors.
* As of the conclusion of the general meeting of shareholders held in 2023.

53

SUMINOE GROUP Integrated Report 2023

SUMINOE GROUP Integrated Report 2023

54

ESG Initiatives in Line with the Medium- to Long-term Management Targets

G

GovernanceEvaluation of the effectiveness of the Board of Directors
Results of third-party analysis and matters requiring improvement
The Group analyzed and evaluated the effectiveness of theBoard of Directors, using the following processes, with thecooperation of a third-party organ.
① Prepare a “questionnaire survey regarding theeffectiveness of the Board of Directors,” in light of thepresent conditions of the Group.
② Collect responses to the questionnaire survey from all
directors and corporate auditors.
③ Compile and analyze responses to the survey and create a“report on the survey results regarding the effectivenessof the Board of Directors.”④ Share the report with the Board of Directors, etc.
⑤ Conduct self-evaluation of the Board of Directors andformulate a policy for addressing the identified issues.
⑥ Share the evaluation results and an outline of the policy
among the Board of Directors’ members.
Below are the contents of the “questionnaire survey regarding
the effectiveness of the Board of Directors.”

Closed-ended (multiple-choice) questions① Roles and functions of the Board of Directors② Structure and size of the Board of Directors③ Operation of the Board of Directors④ Coordination with the auditing organs⑤ Relationships with outside directors⑥ Relationships with shareholders and investors⑦ Summing-up

Closed-ended (free form) questions① The Group’s characteristics, strengths and weaknesses andthe reason for the answer (structure, operating methods,
experience, coordination, etc.)

Training for officers
Providing opportunities to acquire and update knowledge
Various training opportunities are offered for directors andcorporate auditors to encourage their self-improvement and help
them acquire and update knowledge necessary for their respective
duties and operations. And directors and corporate auditors havebeen actively participating in such training programs (p. 59).
To address issues pointed out through the aforementioned
evaluation of the Board of Directors, we strive to augment
opportunities for outside directors to better understand the Group.
Specifically, to help them deepen their understanding of the
management strategies and business nature/conditions of theGroup, explanations are provided upon their appointment, andalso opportunities to visit factories/offices and explanations by
responsible directors are provided subsequently as necessary. In
November 2022, outside directors visited the Nara Factory, of
which reorganization was completed in the same year (p. 58). We
plan to utilize such factory/office tours as venues for exchanging
views as to human resources development, sustainability and othermedium- and long-term issues, which had not been fully discussed
at meetings of the Board of Directors.

Status of attendance at Board of Directors’ meetings
As of May 31, 2023

Title

Name

Attendance atboard meetings

President

Teppei Nagata

100% (9/9 times)

Managing Director

Hiroaki Usugi

100% (9/9 times)

Managing Director

Toshiro Maruyama

100% (9/9 times)④ Other opinions and recommendations regarding improving
the Board of Directors’ functions, governance, etc.

Director

Eiichiro Kimura

100% (9/9 times)

Director

Norihisa Murase*1

100% (7/7 times)

The survey results showed that the Board of Directors had abalanced structure and that lively discussions were held at theBoard of Directors’ meetings. Accordingly, we conclude that theeffectiveness of the Board of Directors has been ensured.
On the other hand, the following matters were identified
as the issues to be addressed in the future.

Outside Director

Haruo Shimizu

100% (9/9 times)

Outside Director

Kohei Nomura

100% (9/9 times)

Outside Director

Yumiko Oida

100% (9/9 times)

Outside Director

Yuko Shibuya*2-

Corporate Auditor

Kiyokazu Ichikawa

100% (9/9 times)

Outside Corporate Auditor

Atsuhiro Sonoda

100% (9/9 times)

Outside Corporate Auditor

Takafumi Katayama

100% (9/9 times)② Matters that you think the Board of Directors should
improve or focus on in the future③ Matters that you feel you might have further contributed to
the Board of Directors① Enhance discussions on management strategies from a
medium- and long-term perspective.
② Augment opportunities for outside directors to deepen theirunderstanding of the Company.
③ Enhance reports about the internal control and risk

55

management systems.
In addition, outside directors recommended strengthening
dialogue with shareholders and markets. They also suggested
that additional venues for discussions with outside directors becreated, for example, by holding a reporting session for them.
Any of these issues will be addressed to improve operations of
the Board of Directors in the future. We will also continuously
evaluate the effectiveness of the Board of Directors in order tofurther enhance its functions.

SUMINOE GROUP Integrated Report 2023

*1 Appointed August 2022
*2 Appointed August 2023

Auditing status
Audits by the Board of Corporate Auditors
The Board of Corporate Auditors always seeks to coordinate
with related departments and units in order to further enhancethe effectiveness of audits conducted by the Board of Corporate
Auditors.
The full-time Corporate Auditor reports to outside
corporate auditors on the results of meetings of the Executive
Committee and the Board of Operating Officers, as well asinternal audits, to ensure close information-sharing with outside
corporate auditors.
As for coordination between members of the Board of
Corporate Auditors and the Internal Auditing Department,
corporate auditors hear the auditing status from the Internal
Auditing Department and then follow up on and verify the audit
findings. Also, the Internal Auditing Department members arepresent at business audits by the corporate auditors whennecessary.
As for coordination between members of the Board of
Corporate Auditors and the accounting auditor, the accounting
auditor provides explanations about audit plans to corporate
auditors at the beginning of the fiscal year and holds regularmeetings as to the implementation status of accounting audits
during the fiscal year. As the need arises, a meeting is held withthe attendance of members of the Internal Auditing
Department and the CSR Promotion Department to shareauditing issues mainly regarding internal audit evaluations andto strengthen coordination among participating units. Also,
members of the Board of Corporate Auditors and theaccounting auditor work in close coordination by timely
exchanging information on the accounting processes andopinions regarding audit dates. In addition, corporate auditors
attend the audits performed by the accounting auditor during
and at the end of the fiscal year.
Status of internal auditing
The Internal Auditing Department comprises three members
and is under the direct control of the President, the Executive
Committee, and the CSR & Internal Control Council. Based on
the Internal Audit Regulations and the Internal Audit
Guidelines, the Internal Auditing Department conducts audits toconfirm that the Company and its Group companies in Japanand overseas are performing their duties properly. The
Department also audits the development and operation statusof the systems and processes for internal controls, including theinternal control concerning financial reporting. In fiscal year
ended May 2023, the Department implemented on-site audits
for five consolidated subsidiaries in four countries—the UnitedStates, Mexico, Indonesia and Thailand.
As for internal controls concerning financial reporting, theCompany and 14 consolidated subsidiaries were evaluated fortheir company-wide internal controls, and five consolidated
companies were evaluated for their internal controls of work

processes. The results of these internal audits are reported not
only to the Company’s President and the Executive Committee
but also to corporate auditors, the accounting auditor and the
Financial Control Committee. By raising questions and making
improvement proposals, the Internal Auditing Department
seeks to improve the internal control system. Moreover, theDepartment strives to reinforce mutual coordination with theBoard of Corporate Auditors by such means as holding a liaison
meeting whenever necessary.

Status of attendance at Board of
Corporate Auditors’ meetings

Title

Name

As of May 31, 2023

Attendance atBoard of Corporate
Auditors’ meetings

Full-time Corporate Auditor Kiyokazu Ichikawa

100% (9/9 times)

Outside Corporate Auditor

Atsuhiro Sonoda

100% (9/9 times)

Outside Corporate Auditor Takafumi Katayama

100% (9/9 times)

Supervision and audits by outside officers
Close coordination between the Internal Auditing
Department and the accounting auditor
From viewpoints based on their experience and expertise,outside directors and outside corporate auditors express theiropinions where necessary in order to ensure the validity andappropriateness of the decisions made by the Board of Directors
and to supervise business execution. Outside corporate auditors
proactively obtain information required for audits from aneutral standpoint and share the information with otherauditors so as to enhance the auditing environment.
Outside directors and outside corporate auditors maintainclose coordination with the Internal Auditing Department
members and the accounting auditor. They require theDepartment and the accounting auditor to submit reports asneeded in order to improve supervision and auditing efficiency.
If an inadequacy or deficiency is identified through thesesupervision and auditing activities, the Internal Auditing
Department, which is in charge of internal controls, implements
measures to correct and supervise the inadequacy or deficiency
and evaluates the internal controls.

SUMINOE GROUP Integrated Report 2023

56

ESG Initiatives in Line with the Medium- to Long-term Management Targets

G

Governance

Remuneration for officers
Matters regarding the policy for determining details of
remuneration, etc. of each director
The Company consults the Nomination and Remuneration
Committee and, based on the response from the Committee,
resolves the policy to determine details of remuneration, etc. foreach director as follows:① Policy for determining the amount of the base salary, as
well as the details and the amount or quantity of
non-monetary remuneration, for each individual director
Remuneration, etc. for directors shall be in the amountappropriate in light of their respective duties and the generalstandard and consist of base salary and stock-based
remuneration. Base salary is paid as monthly fixed remunerationin the amount appropriate for each position within the range of
remuneration determined at a general meeting of shareholders.
The purpose of stock-based remuneration is to provide an
incentive for directors to work toward sustainable improvementof the Company’s corporate value and also to promote their
sharing of value with shareholders. In view of this purpose, theamount deemed appropriate within the range of remuneration
determined at the general meeting of shareholders is paid to
directors, excluding outside directors, at a fixed time each year
as remuneration for provision of restricted stock, of which
disposal is not allowed until the directors resign or retire fromthe position of director, etc. of the Company.
② Matters regarding determining details of remuneration,etc. of each director
Based on the above policy, allocation of remuneration for eachindividual and other matters are discussed by the Nomination
and Remuneration Committee, which is an advisory organ of theBoard of Directors established as necessary for the purpose ofenhancing objectivity and transparency in the procedures
related to the appointment of directors and the determinationof their remunerations and consists mainly of independent
outside directors. Based on the report from the Committee,
these matters are discussed and resolved at a meeting of theBoard of Directors in which outside directors and outside
corporate auditors are present.
Matters regarding the policy for determining the amounts
and the calculation method of remuneration, etc. ofcorporate auditors
Remuneration of corporate auditors is determined throughconsultation with the corporate auditors within the range of
remuneration determined at a general meeting of shareholders.

57

SUMINOE GROUP Integrated Report 2023

Total amount of remuneration, etc. for each officer
category, total amount of remuneration, etc. by type, andnumber of eligible officers
Officer category

Director*1

Corporate
Auditor*2

Outsideofficer

Total amount of remuneration,etc. (Millions of yen)

144

15

23

Basic salary

134

15

23

-

-

-

9

-

-

6

1

6

PerformanceTotal amount of based
remuneration, remuneration,etc. by typeetc.
(Millions of yen)Non-monetary
remuneration,etc.
Number of eligible officers*1 Excluding outside directors*2 Excluding outside corporate auditors

Policy for constructive dialogue with shareholders
Holding briefings for investors
To earn an appropriate evaluation from shareholders and otherstakeholders, the Group strives to realize constructive dialogue
with shareholders within the scope and by the means deemed
to be appropriate by the Group, and it provides opportunities todeepen their understanding of the Group’s management
strategies and business environments.
In addition to holding IR briefings for institutional investors
semiannually in Tokyo and Osaka, we visit major shareholders
around the time when financial results are announced to
explain about the financial results and our future initiatives andto hear opinions from these shareholders. For individual
investors, company briefings are held at irregular intervals.
As for the handling of the important facts that have notbeen published, our basic concept is that we should ensure theequality of shareholders. Under this concept, we comply with
the Financial Instruments and Exchange Act and other relevantlaws and regulations, and we conduct thorough information
management, based on the regulations for preventing insider
trading, which is our in-house regulations established to prevent
insider trading.

Cross-shareholding
Reasonable and appropriate holding
The Company implements cross-holding of shares for strategic
purposes, such as to maintain smooth transaction relationships
and strengthen stable and ongoing ties with financial
institutions, when it is deemed to contribute to improving theGroup’s corporate value.
Cross-shareholding cases are reported to the Board of
Directors every six months, where the purpose of cross-holding
is verified by examining such matters as whether the yielded
benefits meet the investment made, whether there are any risks,
and whether the shareholding is economically reasonable andappropriate, based on the status of relationship with the Groupand the governance condition of each partner. The cross-heldshares are sold whenever their purpose of holding disappears.
Regarding the exercise of voting rights, although nouniform standard has been established, we believe that proper
exercise of voting rights will lead to improved corporate value
and sustainable growth of the relevant companies in the medium
to long run. Based on this belief, in principle, we exercise ourvoting rights with regard to all the cross-holding shares bydetermining approval or disapproval of proposals in view of thesituation and business relationships of the relevant companies.
Incidentally, when a company holding shares of theCompany shows its intention to sell the shares, we basicallyagree to it.

Restructuring of the core systems
Restructuring of systems for management ofreceivables/payables and accounting
We have been working on the restructuring of its core systems
throughout the Group, which has been promoted in a top-downmanner since November 2018. To improve efficiency ofoperations while preventing misconduct, we have been
advancing restructuring of various systems so that ourbusinesses can be visualized.
Restructuring of the receivables/payables management
system and the accounting system was included in this initiative.
The purpose is to promote paperless operations through theelimination of forms and to integrate data on balance andparticulars of receivables and payables so that they can be easily
grasped. In October 2022, Suminoe Textile Co., Ltd. andSuminoe Teijin Techno Co., Ltd. introduced a new system. In
September 2023, the new system also came into full-scale
operation at SUMINOE Co., Ltd., RUNON CO., LTD., and Suminoe
Techno Co., Ltd.
Going forward, we will further expand the application ofthese systems throughout the Group. We will also work toenhance functions of these systems by promoting electronic
invoicing, introduction of a cloud service for expense settlement,
and reinforcement of administrative accounting. At the sametime, we will endeavor to prevent misconduct.

Interactive communication through“Management by Walking Around”
Interactive communication between top management andemployees to discuss worksite problems
The Group has been promoting “Management by Walking
Around” since the fiscal year ended May 2018, with the aim ofenabling information-sharing and interactive communication
between top management and employees. In the“management by walking around” approach, directors andoperating officers visit the Group’s offices and factories andexchange opinions with local employees.
In fiscal year ended May 2023, top management visited a
total of nine offices/factories, including the Shiga Factory of
Suminoe Techno Co., Ltd., Suminoe Textile Vietnam Co., Ltd.,and Seki Textile Co., Ltd, which joined the Group in July 2022. As
their worksite problems, local employees pointed out aging
equipment and facilities, aging employees, etc.
In November 2022, a meeting of the Board of Directors
was held at the Nara Factory, whose reorganization project wascompleted in the same year. All directors, including outside
directors, looked around the factory as well as the newly
constructed warehouse and Technology Development Centerbuildings, where they exchanged opinions with employees. An
outside director said: “It was a valuable opportunity to visit anoperation site, not through reference materials but in person. I
had a very meaningful time since I was able to deepen myunderstanding of the SUMINOE GROUP.” As exemplified by thiscomment, many positive opinions were expressed.
The “Management by Walking Around” initiative allows
top management to address problems with a greater sense ofownership through firsthand observation of the work
environment and direct communication with local employees.
We will continuously implement “Management by Walking
Around” in the future.

Top management during “Management by Walking Around”

SUMINOE GROUP Integrated Report 2023

58

ESG Initiatives in Line with the Medium- to Long-term Management Targets

G

Governance

Ensuring Compliance
Basic Policy
Corporate activities in compliance with laws and corporate
ethicsThe Group has formulated its Code of Conduct and its Standardsof Conduct, both of which lay out the basic policy for
implementing compliance management.
In keeping with the basic policy, officers and employees of
the Group strive to ensure that their own ways of thinking andbehavior are always in compliance with laws and corporate
ethics.

Compliance measures
Creating a corporate culture to develop complianceawareness in daily operations
The Group carries out various measures to develop complianceawareness among employees.
For example, in December 2022, we revised theCompliance Guidance and distributed the revised Guidance toall Group employees in Japan. Its English and Chinese versions
were also prepared and distributed to overseas Group
companies.
The Group companies in Japan use the Guidance forcompliance-related lectures, which are continuously delivered
to employees when they enter the company and receive
level-based training. Also, at these companies, an employee
reads the Code of Conduct aloud at the morning assembly.

Compliance training

Initiatives for personal information protection
To notify all employees of the amended Act on the Protection of
Personal Information and to reduce the risk of leakage, we havepublished the Group’s rules concerning handling of personal
information in the Risk Management Manual and theCompliance Guidance so that all Group employees in Japan can
ascertain the rules to follow. At the same time, the Company
held briefings for several Group companies in Japan that handle
a large amount of personal information.
Subsequently, to confirm the management status of
personal information handled by each department and its risk
level, we distributed check sheets for personal information
protection to respective departments and collected thesesheets. If a collected check sheet revealed that the department
carries a high risk, we conducted an on-site inspection of thedepartment and urged it to take improvement measures.
The above initiatives are posted on the in-house intranet tocontinuously remind employees that they should take great carewhen handling personal information. We are also planning tohold a meeting to explain about personal information
protection to new employees, and we will continue to verify thestatus of personal information management in departmentswith a high risk.
Continuously implementing in-house study meetings
The Group has continuously been holding study meetings on laws
and regulations related to business operations to prevent
employees from mistakenly violating laws. This fiscal year, thesestudy meetings were held under the theme of “Subcontract Act”
and “Act against Unjustifiable Premiums and Misleading
Representations,” with the participation of 307 employees in total.

Risk Management
Risk management system
Reporting to the Executive Committee after deliberation by
the committees concerned
The Group has established the following risk management system.
The CSR Promotion Committee, which comprises members fromrespective business headquarters and departments, deliberates onmatters regarding overall risk management activities, such asproactive prevention and emergency response measures against
risks. The Committee then reports the deliberation results to the CSR& Internal Control Council (Executive Committee) to obtain approval.
In implementing internal control, we strive to identify risks,
mainly the risk of material misstatement in financial reports, basedon the risks reported from Suminoe Textile Co., Ltd. and its Group
companies in Japan and overseas. The Financial Control Committee
examines the risk assessment results, which are reported to the CSR& Internal Control Council. Under this system, we have reduced
risks to a certain level. We will henceforth promote theintroduction of information technology (IT) to improve the system
to mitigate each risk even further.

CSR & Internal Control Council(Executive Committee)
Deliberation
and reporting

Approval

CSR Promotion
Committee

Deliberation
and reporting

Approval

Financial Control
Committee

Whistleblowing system
Restructuring of the core systems

Training for officers and for executive employees
We have continuously implemented compliance training withexternal specialists invited as lecturers. In fiscal year ended May
2023, a training session was held for officers on the theme of“Human Rights Issues Associated with Business Activities andthe Responsibility of Management Executives” so thatparticipating officers could learn about the background ofincreased attention to human rights issues and how to copewith these issues. Another training session selected “Toward
Realization of DX—Roadmap and Final Targets” as its theme,
under which officers were lectured about what targets should
be set to promote digital transformation and what initiatives
should be undertaken in the future.
The Company also conducted training sessions for a totalof 49 executive employees who serve as directors of the Group
companies on the themes “How to Read Financial Statements”
and “Significance of Internal Control (Company-wide Internal
Control).”Going forward, we will implement compliance training onthemes selected for each business category.

59

SUMINOE GROUP Integrated Report 2023

Establishing whistleblowing contact points
The Group has established the Corporate Ethics Hotline as acontact point through which officers and employees can submit
a report, should they find incidences of violation of laws andregulations or corporate ethics within their companies.
We added the contents of the system operation regulations
that were revised in 2022 to the Compliance Guidance (inJapanese), which was distributed to all Group employees in Japan.
Through in-house training sessions and by other means, wewill continue to ensure that all employees are notified of thesecontact points.

Consultation services used (number of consultations received)

Contact point for consultation

2022 2023

Corporate Ethics Hotline (in-house contact point)

10

Corporate Ethics Hotline (external contact point)

00Harassment consultation contact point (in-house contact point)

1

8

Harassment consultation contact point (external contact point)

3

9

Total

5

17

Application of the production management system to various
departments (in Japan)
We are working to gradually introduce a production management
system that is specifically tailored to the textile industry to various
departments in Japan. This fiscal year, we have completed defining
the requirements, aiming at starting full-scale operation of thesystem in the sales department of Suminoe Teijin Techno Co., Ltd.
The Group believes that this system will be instrumental inestablishing a structure that integrates production and sales
functions by visualizing three statuses: the order status from sales
to procurement; production status from procurement to sales; andthe inventory status. We will continue to promote the widespreaduse of this production management system, with a view to its
application across the Group.

Strengthening global risk management
Introduction of the production management system (overseas)
We have judged that IT controls are the most effective means forstrengthening internal controls at overseas Group companies. We

have therefore promoted the introduction of a production
management system focusing on inventory management, which
entails particularly large risks, into SPM Automotive Textile Co., Ltd.
Guangzhou in China and PT. Suminoe Surya Techno in Indonesia.
In fiscal year ended May 2023, after we had repeatedly madeadjustments while parallelly running the old and new systems, the
new system was finally brought into full-scale operation. We will
promote the introduction of the system to other Group companies
in the future.

Implementation status of Business Continuity
Plans (BCPs*)
Implementation of personal safety confirmation drills
In the event of a disaster, disseminating information to customers
speedily and accurately is key for us to maintain customer trust as acompany. Based on this idea, the Group has been working toestablish its business continuity plans (BCPs), focusing on collecting
information, such as that on employees’ personal safety anddamage caused by a disaster.
Suminoe Textile Co., Ltd. and SUMINOE Co., Ltd. have held anannual BCP-based emergency drill at their head office buildings. In
the drill, the personal safety of employees is confirmed inaccordance with the in-house emergency contact rules. On
September 1, 2023, these two companies carried out personalsafety confirmation drills, and the emergency headquarters wasable to swiftly confirm the safety of all employees.
Moreover, to ensure prompt response to emergencies atoverseas Group companies, the Crisis Response Manual on
Overseas Assignment, which is included in the Risk Management
Manual, was revised to provide clear and detailed descriptions of
the emergency contact routes and the duties to be performed byrespective persons in charge.
* BCP: Stands for “Business Continuity Plan,” a plan developed to ensurethat a company can continue and/or restore business operations in an
emergency, such as a disaster or an accident.

Intellectual property
Promoting awareness of intellectual property rights
Intellectual property rights include patents, utility model rights,
design rights and trademarks. To protect and utilize intellectual
property rights, employees must obtain an accurate understandingof and deepen their knowledge of intellectual property rights. For
this reason, we provide employees with education about theserights at the time of joining the company. In addition, informationon the patents of other companies is reported at regular technicalmeetings. Every month, we confirm other companies’ patents
associated with the Group’s technologies and communicate theobtained information across the Company. By doing so, we utilize
the information on these patents for technology development in
the future and for preventing the Company from infringing on
patents of other companies.
We will continuously conduct intellectual property educationand information sharing in order to protect and make effective
use of intellectual property rights.

SUMINOE GROUP Integrated Report 2023

60

ESG Initiatives in Line with the Medium- to Long-term Management Targets
Round-Table Discussion among Outside Directors

engaged more deeply in the formulation of the Medium- toefforts to establish and implement a succession plan are only half

Long-term Management Targets “SUMINOE GROUP WAY

done. The Company must define the skills required for a successor

2022-2024-2027” (hereinafter SGW). Next time and onward, I hopeand create a foundation for nurturing personnel who have thesethat we outside directors will be deeply involved in formulatingskills, on a long-term basis.

such targets from the initial stage.

Oida Some have the idea of developing professionals by letting

Oida Regarding information provision in advance of the meeting,

employees accumulate experience in a single business segment.

I would like to request that such information be given to us at an

However, I believe that it is important to broaden employees’

earlier time. Especially for important subjects, I would appreciate it if

perspectives, by having them experience working at a Group

we could have an opportunity to receive prior explanation throughcompany in Japan or overseas when they are in their 40s or so, toan online meeting or other means. In the present situation, it isenable them to obtain skills and knowledge that differ from thosedifficult to say that enough time is secured to well consider suchthey have acquired through their previous work.

subjects before the meeting. To enable us to participate in the

Shimizu With factories located around the world, the Company is

discussions after deepening our understanding of the contents, I

engaged in production and sales on a global scale. At the same

hope some improvements will be made.

time, the Company has been vigorous in conducting overseas

Nomura In terms of understanding of the Company’s businesses,

investment. To comprehensively manage these strategies over a

it was greatly helpful to be able to visit the Nara Factory after its

long period, it is necessary to formulate human resources strategies,

reorganization in fiscal year ended May 2023. In a manufacturing

including a succession plan taking into account aging members ofsetting, what is important is to increase production efficiency while

the Board of Directors.

implementing

theShibuya I think that the key is to have as many successor

aforementioned visit, I realized that the Group factory has a highcandidates as possible. As for qualities and skills, generally there arelevel of safety awareness. I hope that the Company will continue tominimum requirements for successors. However, corporate

offer us opportunities to observe manufacturing sites firsthand.

business strategies will vary according to the times. I recommend

Oida We are given regular opportunities to better understandthe Company having many candidates to create room for selecting

the Group. By actually seeing products and production sites, we canthe right person at the right time. In addition, if the Company has

get a clearer image and engage in discussions in greater detail. I

nurtured diverse candidates, it will be able to establish a Board ofknow that some other companies hold events other than the board

Directors comprising individuals with a broad range of knowledgeof directors’ meetings for exchanging views between the president

and skills.

and outside directors. In many cases, such events are designed to

Nomura In terms of accumulating experience, it may be a good

help both the president and outside directors to comprehend eachidea to have executive employees make a presentation on a

Nomura The Company has devised the ways of providing us withother’s views on various matters, including matters that are difficult

discussion theme at a meeting of the Board of Directors. Although

information in advance of the meetings. I think this indicates thatto discuss when internal officers are present—for example, eachthe number of participating employees should be limited,

the Company wants to ensure that outside directors understand theother’s level of understanding governance and ways of recognizing

candidates for future managers can witness what kind ofcontent of the meetings. This also reflects the Company’s

the business environment and the medium- to long-term strategies.

discussions are being held among officers. After receiving

recognition that if we have deeper understanding, it should lead to

Shibuya It is true that, during the Board of Directors’ meetings,

explanations about the theme, these candidates will work together

more in-depth discussions.

occasionally we only have time to plainly express our ideas.

with directors to answer our questions. Such activities will provide

Shibuya Although I have attended the Board of Directors’

Oida In addition, the Company has secured the diversity ofHowever, at informal sessions other than board meetings, we canthem with an opportunity to build experience and a mindset tomeeting only once, I have an impression that the meeting has an

outside directors by appointing individuals of various age groups

further deepen discussions without being concerned aboutbecome a member of the next management.

open atmosphere that encourages free and vigorous discussions, so

and genders. These members include a manager, lawyer,

reaching a conclusion. It is therefore desirable for the Company tomembers were engaged in very lively exchange of views.

accountant, and other professionals having diverse skills in theirincrease such opportunities in the future.

Oida That’s right. Partly because many of us have served as

respective fields.

outside directors of the Company for a long time, we can makeShimizu I have been engaged in overseas business at anrecommendations based on our understanding of the Company as

automotive parts manufacturer for nearly 60 years. Taking

well as our own experiences. Internal officers, including theadvantage of this background, I can make many suggestions to the

President, who chairs the board meeting, always seriously listen toCompany, which attentively listens to these suggestions.

recommendations from outside directors. As such, unreserved

Nomura I dare say about the issues with the Board of Directors,

discussions take place at meetings of the Board of Directors.

there may be room for enhancing its function to ensure that a

Shimizu Since we can obtain accurate answers to every question,board meeting will not be just a “venue for approval” but be a

Shimizu As pointed out when the effectiveness evaluation was

swings, the Company runs relatively stable businesses with a firm

I presume that careful preparations are made for board meetings.

“venue for discussion.” For example, I regret that we could havemade for fiscal year ended May 2023, I think that the Company’sbase of operations. On the other hand, I think there is a limit toHaruo Shimizu

Yumiko Oida

Kohei Nomura

Yuko Shibuya

Outside Director

Outside Director

Outside Director

Outside Director

Enhancing the Effectiveness ofGovernance to Achieve Further
Improvement of Corporate Value
How would you evaluate
the Company’s governance system
and management?

61

SUMINOE GROUP Integrated Report 2023

thoroughly

safe

operation.

Through

What do you think will be
the future challenges for
the Company?

What do you expect of
the Company in the future?

Shibuya My impression is that although the Interior Fittings andAutomotive Textile businesses tend to be vulnerable to economic

SUMINOE GROUP Integrated Report 2023

62

ESG Initiatives in Line with the Medium- to Long-term Management Targets

ESG Initiatives in Line with the Medium- to Long-term Management Targets

Round-Table Discussion among Outside Directors

Messages from Outside Corporate Auditors

expanding its market share in Japan. I expect to see further

and contributing to society. I thus hope that the Company will moredevelopment of overseas businesses, on which the Company has

widely demonstrate the fact that it is fulfilling its social

already focused its efforts. In addition, I hope that overseas

responsibilities.

Performing audits to safeguard investor interests fromthe standpoint of a financial expert

businesses will be utilized for human resources development. WhenI was transferred to a company in a foreign country, I keenly realizedthat I had to take on greater duties and responsibilities on my own
than I did in Japan. I believe that experience in working overseas
offers a great opportunity for personal growth of employees.
Nomura There may be examples of young employees who are

What kind of initiatives would
you like to work on toward further
enhancement of corporate value?

successfully working in Japan after having improved their businessskills through experience in working at an overseas Group
company.

Shibuya I’m sure that the Group is built on a solid foundation andShimizu Well, the reverse situation is also conceivable. We canhas excellent products and human resources. In order for the Group

Atsuhiro Sonoda

imagine that employees of an overseas Group company come toto continue to produce products that are conducive to society,

Outside Corporate Auditor

Japan. While accumulating working experience in our country, they

human capital, particularly its “diversity,” is the essential element.

will learn about the Group’s spirit, which will be brought into theirSince we don’t know where growth opportunities lie in the future, I

countries when they return home. In June 2023, a new Group

believe it is extremely important to hire and secure diverse human

Philosophy and logo were formulated. Taking this opportunity, theresources to seize such opportunities.

Group’s spirit, along with its new Philosophy and logo, should be

Oida At present, the greatest challenge for the Company is to

known to all Group employees not only in Japan but also in overseas

achieve “a market capitalization of tradable shares of at least 10

countries.

billion yen” to meet the continued listing criteria for the Prime

Oida As measures to prevent the loss of opportunity due toMarket. I strongly recommend the Company to focus its efforts on

shortages of qualified personnel, I can cite M&A, let alone in-house

M&A initiatives as its growth opportunities in order to increasehuman resources development. I recommend the Company toinvestor expectations for the Company. As a certified public

continue to proactively conduct M&A when required for its

accountant, I will make financial suggestions.

businesses.

Shimizu The Company’s subsidiary in the United States, Suminoe

Shibuya To attract superior human resources, it is important to

Textile of America Corporation (STA), has been in the red for many

enhance name recognition. As compared with B-to-C companies,

years. However, it has finally become almost certain to achieve

B-to-B enterprises, including the Company, tend to be less known toprofitability. After visiting STA for an on-site inspection, I had an

the general public. For this reason, we should disseminate theimpression that its deficits may be caused by inaccurate cost

Group Philosophy and other various kinds of information to outsideaccounting. If income is stabilized, external impact due tothe Company. I think that such initiatives will also be instrumental influctuations in foreign exchange rates or other factors can be

securing human resources and revitalizing the Company.

absorbed to some extent. Although its cost management has now

Shimizu I agree. Young employees these days will be highly

been improved, I will continue to pay close attention to the U.S

motivated to work if they see the Company resolving social issues

subsidiary to prevent it from returning to the same state.
Nomura Needless to say, single-year income is important, andprofitable management should be continued. On the other hand, I
would like to emphasize the importance of having long-term
perspectives. The SGW targets have been established for the
purpose of the Company’s growth. With this in mind, all of top
management and all employees should take action. Together withother outside directors, I will strive to help the Company make rightbusiness decisions for sustainable growth while always being awareof this fiscal year’s objectives in working toward the SGW.

63

SUMINOE GROUP Integrated Report 2023

Ever since I joined Takashimaya Co., Ltd., I have experienced various duties, primarily
in the accounting and financial fields. In February 2023, I obtained a tax accountant
license. I understand that my roles are to check the legitimacy of decisions made by
the Company, to bring out the strengths of each business to improve management,
and to monitor whether investor interests are realized or not.
Since the Company has many Group companies in Japan and overseas, one of its
crucial challenges is to establish a governance system at each Group company. I
believe that it is vital that Group auditors share governance-related issues of eachcompany and hold discussions to find radical solutions in terms of Group governanceat their liaison meetings, held several times a year. These auditors should also work toincrease opportunities to provide advice from the investor’s perspective.
Meanwhile, considering overseas business expansion aimed at further growth, it isindispensable to secure human resources with higher skills regarding global
strategies. Much of the Group’s income derives from the United States and ASEAN
countries. In this sense, I consider it important to find and appoint appropriate
individuals who can advance opinions about management from a global perspective,
from among local executives of major overseas Group companies. Since I myself
frequently make contact with investors, I will contribute to the Company as an“activist auditor” to improve shareholder value from the viewpoint of investors.

Contributing to further improvement in transparency,
capitalizing on my expertise cultivated throughtextiles-related businesses

Takafumi Katayama
Outside Corporate Auditor

For many years, I have been engaged in trading of fiber raw materials and textile
products at Marubeni Corporation while overseeing sales strategy formation,
governance improvement and internal control of Marubeni Group companies. I havealso conducted business management as President of a major Marubeni Group
company. As an independent outside auditor, I believe that I can be actively involved
in better management and administration of the Company.
The Company secures sufficient coordination between the full-time corporate
auditor and the accounting auditor, as I can see them exchanging candid views andsharing information. Currently, I am working in coordination with the Internal
Auditing Department via the full-time corporate auditor. Going forward, I hope I will
be able to have more opportunities to talk with the Department members. I can fully
appreciate the appropriateness of the Board members’ business execution. I think,however, if outside directors have a deeper understanding of the Company’s
activities, it will lead to more constructive discussions at board meetings. I would also
like to point out an issue regarding the development status of governance policies ofrespective Group companies in Japan and aboard. It is important to establish agovernance policy at a certain level or above that is applicable across the Group while
respecting the autonomy of each company.
To enhance the Company’s corporate value, I will continue endeavoring tofurther increase the effectiveness of governance and ensure full compliance with laws
and regulations. Moreover, I will work to improve transparency so that the Company
will grow as an enterprise that earns greater respect in society.

SUMINOE GROUP Integrated Report 2023

64

Board of Directors and Corporate Auditors

Directors

Teppei Nagata
President

As of August 30, 2023

April 1980
Joined the Company.
August 2012
Operating Officer
General Manager, Functional Materials
Business Headquarters
November 2016
General Manager, Corporate Planning
Department
General Manager, CSR Promotion Department
August 2017
Director
Senior Operating Officer
August 2019
General Manager, Interior Fittings Business
Headquarters
President and Representative Director,
SUMINOE Co., Ltd.
August 2021
President and Representative Director (present)
Chairman and Representative Director,
SUMINOE Co., Ltd.

Reason for appointment: Mr. Nagata has been responsible for promoting
CSR, organizing management plans, and conducting IR activities. He also
served as the president of a Group company that is a mainstay of the Interior
Fittings segment and has a wealth of experience in working in the Functional
Materials segment.

Hiroaki Usugi
Managing Director
Representative Director

April 1986
Joined the Company.
August 2010
General Manager, Accounting Division
August 2017
General Manager, Purchasing Department
Operating Officer
August 2019
Senior Operating Officer (present)
Deputy General Manager, Administration
Headquarters
January 2020
General Manager, Corporate Planning
Department (present)
August 2020
Director
August 2021
Managing Director and Representative
Director (present)
General Manager, Administration
Headquarters (present)

Reason for appointment: As the General Manager of the Accounting
Division, Mr. Usugi was in charge of accounting as a whole. He has abundantbusiness experience in the field of accounting.

Toshiro Maruyama
Managing Director

April 1981
Joined the Company.
August 2013
Operating Officer
February 2017
Department Manager, Automotive Textile
Business Headquarters
August 2017
Senior Operating Officer (present)
August 2021
Director
General Manager, Automotive Textiles
Business Headquarters (present)
President and Representative Director,
Suminoe Teijin Techno Co., Ltd. (present)CEO, Suminoe Textile of America Corporation(present)
Chairman, SPM Automotive Textile Co., Ltd.
(present)
CEO, T.C.H. Suminoe Co., Ltd. (present)
August 2023
Managing Director (present)

Reason for appointment: Mr. Maruyama has held important positions atdomestic and overseas sites in the Automotive Textiles business. Currently heis overseeing the entire business as the General Manager, leveraging his
extensive experience in the Automotive Textiles business.

65

SUMINOE GROUP Integrated Report 2023

Auditors

April 1977
Opened Nishikawa & Nomura Law Office (nowNomura & Partners). (present)
June 2015
Outside Director, MKSystem Corporation(present)
September 2015
Outside Auditor, JTEC Corporation (present)
June 2016
Outside Director, Audit and Supervisory
Committee Member, ALINCO INCORPORATED(present)
August 2018
Outside Director of the Company (present)

April 1982
Joined the Company.
August 2013
Operating Officer
August 2018
Representative Director, Suminoe Techno Co.,
Ltd. (present)
General Manager, Development Department(present)
August 2019
Senior Operating Officer (present)
August 2021
Director (present)

Eiichiro Kimura

Kohei Nomura

Kiyokazu Ichikawa

Director

Outside Director

Full-time Corporate
AuditorIndependent Director
Reason for appointment: Mr. Kimura has been appointed as General
Manager of the Development Department and as Representative Director ofa Group company that plays a pivotal role in the department. He has been in
charge of all aspects of technology and production. He has plenty of businessexperience in the fields of production technology and technologicaldevelopment.

Norihisa Murase
Director

April 1983
Joined the Company.
June 2007
Manager, Sales Department, Kinki Block,
SUMINOE Co., Ltd.
July 2007
General Manager, Kinki Block, SUMINOE Co.,Ltd.
August 2020
Operating Officer
August 2021
Senior Operating Officer (present)
Deputy General Manager, Interior Fittings
Business Headquarters
President and Representative Director,
SUMINOE Co., Ltd. (present)
Department Manager, Sales Department,
SUMINOE Co., Ltd.
August 2022
Director (present)
General Manager, Interior Fittings Business
Headquarters (present)

Reason for appointment: Mr. Murase has been serving as President andRepresentative Director of a Group company that is at the core of the Interior
Fittings segment. He has extensive business experience in this businesssegment.

Haruo Shimizu
Outside Director
Independent Director

February 1970
Joined Daikin Mfg. Co., Ltd. (current Exedy
Corporation)
June 1994
Director, Daikin Mfg. Co., Ltd.
June 2006
President and Chief Executive Officer, Exedy
Corporation
April 2015
Chairman, Exedy Corporation
June 2016
Corporate Advisor, Exedy Corporation
Outside Director (in charge of Audit
Committee), Bando Chemical Industries, Ltd.
(present)
August 2016
Outside Director, Suminoe Textile Co., Ltd.
(present)
June 2019
Outside Director, Ashimori Industry Co., Ltd.
(present)

Expected roles: As CEO of Exedy Corporation, Mr. Shimizu has developed awealth of experience and broad insight. We hope that he will capitalize on
these assets to give us valuable opinions and suggestions that will contributeto further improvement of the Company’s corporate governance.

Expected roles: Mr. Nomura has extensive legal knowledge that he has
accumulated for many years as a lawyer. He is expected to appropriately
perform his duties as our outside director from an objective standpoint,
making effective use of his excellent insight and wide-ranging experiencebased on his achievements as an outside director and auditor of othercompanies.

Yumiko Oida

October 1994
Joined Asahi & Co. (now KPMG AZSA LLC).
April 1998
Registered as a certified public accountant.
August 2008
Director, BRAIN Co., Ltd. (present)
November 2008
Registered as a licensed tax accountant.
June 2019
Outside Director, Audit and Supervisory
Committee Member, SHOEI CORPORATION(present)
June 2020
Outside Director, COTA CO., LTD.
August 2021
Outside Director of the Company (present)

Outside Director

April 1982
Joined the Company.
February 2004
General Manager in charge of Production in
Nara
September 2013
Director, T.C.H Suminoe Co., Ltd.
August 2018
Operating Officer
EVP, Suminoe Textile of America Corporation
January 2020
General manager, Quality Assurance
Department
Manager, Technical Center
August 2020
Full-time Corporate Auditor (present)

Reason for appointment: Mr. Ichikawa has many years of experience inproduction management at the Group’s flagship factory. He has also ample
knowledge acquired through his experience in managing and supervisingmajor overseas Group companies.

Atsuhiro Sonoda
Outside Corporate
AuditorIndependent Director

As of August 30, 2023

April 1988
Joined Takashimaya Co., Ltd.
March 2009
Transferred to Takashimaya Space Create Co., Ltd.
March 2011
Deputy Department Manager, General Affairs
Department, Takashimaya Space Create Co., Ltd.
March 2016
Manager of Accounting, Accounting Department,
Takashimaya Space Create Co., Ltd.
September 2016
Assistant Manager of Finance, Financial Department,
Planning Division, Takashimaya Co., Ltd.
October 2018
Manager of Finance, Financial Department,
Planning Division, Takashimaya Co., Ltd.
March 2019
Deputy Manager, Financial Department, Planning
Division, Takashimaya Co., Ltd.
August 2019
Outside Corporate Auditor of the Company (present)
February 2023
Registered as a licensed tax accountant
March 2023
Operating Officer and Manager, Financial Department,
Planning Division, Takashimaya Co., Ltd. (present)

Expected roles: As a certified public accountant and a licensed tax accountant, Ms. Oida has built up abundant knowledge and expertise in accounting
and tax affairs for many years. Based on her experience in managing othercompanies and her wide-ranging insight, she is expected to contribute tofurther enhancement of the Company’s corporate governance.

Expected roles: Mr. Sonoda has professional expertise and abundant
experience in corporate management that he has developed while working
in the fields of general affairs as well as accounting and financial affairs. We
expect that he will capitalize on his background for reinforcement of theCompany’s auditing system.

April 1992
Joined Takashimaya Co., Ltd.
February 2013
General Manager, Luxury Brand Business,
Jewelry and Watch Division, Merchandising
Headquarters, Takashimaya Co., Ltd.
March 2015
General Manager, New Business Development
Group, Sales and Business Operation
Department, Headquarters, Takashimaya Co.,Ltd.
March 2018
General Manager, Sales Operation andMerchandising, Takashimaya Singapore Ltd.
March 2020
Director, General Manager, Sales Operationand Merchandising, Takashimaya Singapore
Ltd.
March 2023
Operating Officer , Deputy General Manager,
Merchandising Headquarters, Takashimaya
Co., Ltd.(present)
August 2023
Outside Director of the Company (present)

May 1991
Joined Marubeni Corporation.
April 2013
Deputy General Manager, Fashion Apparel
Department No2, Marubeni Corporation
April 2014
General Manager, Functional Materials
Department, Marubeni Corporation
April 2017
General Manager, Functional Textile
Department, Marubeni Corporation
June 2020
President and Representative Director,
Marubeni Intex Co., Ltd. (present)
August 2020
Outside Corporate Auditor of the Company(present)

Yuko Shibuya
Outside Director

Expected roles: We expect that Ms. Shibuya will help the Company further
improve its corporate governance, based on a vast amount of experience she
has accumulated while serving as an executive officer at Takashimaya Co.,Ltd.

Takafumi Katayama
Outside Corporate
Auditor

Expected roles: What we expect of Mr. Katayama is to help reinforce theCompany’s auditing system, drawing on his rich experience and insights that
he has cultivated at Marubeni Corporation regarding the textiles business.

SUMINOE GROUP Integrated Report 2023

66

Eleven-year Consolidated Financial Summary

Each FY ended May 31

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

Net sales (Million yen)

81,873

88,21991,182

97,52996,03897,872

98,61791,51279,702

81,713

94,828Operating income (Million yen)

1,921

2,809

3,101

2,553

1,297

2,247

3,118

1,557

1,049

110

1,294

2.3

3.2

3.4

2.6

1.4

2.3

3.2

1.7

1.3

0.1

1.4

Ordinary income (Million yen)

2,291

3,401

3,729

2,883

1,364

2,358

2,956

1,323

1,211

950

1,575

Profit attributable to owners of parent (Million yen)

1,045

1,968

1,815

245

26

1,083

467

142

409

281

320

EBITDA (Million yen)

3,224

4,449

4,964

4,447

2,917

3,973

4,888

3,588

3,028

2,026

3,524

Cash flows from operating activities (Million yen)

3,837

4,479

3,701

1,453

983

3,519

4,760

5,901

4,167

375

1,803

Cash flows from investing activities (Million yen)

-1,676-1,221-1,231-3,211-2,170-244-1,448-1,536-754-1,191-2,834

Free cash flow (Million yen)

2,160

3,257

2,470

-1,757-1,186

3,274

3,311

4,365

3,413

-816

-1,030Cash flows from financing activities (Million yen)

-2,048-895-2,756

119

354

-843

-4,964-1,702-3,174-2,074-52

Total assets (Million yen)

79,90185,841

90,12686,87890,254

92,182

87,97586,272

83,66984,801

88,151

Interest-bearing debts (Million yen)

15,483

15,501

15,134

16,95918,946

19,396

18,54820,184

18,68918,99921,280Shareholders’ equity (Million yen)

19,597

21,552

22,86022,614

22,111

22,664

20,56018,641

18,87819,711

19,458

24.5

25.1

25.4

26.0

24.5

24.6

23.4

21.6

22.6

23.2

22.1

Profit per share (EPS) (Yen)

13.85

26.09

24.07

3.25

3.50

143.66

65.36

21.88

64.84

44.44

50.55

Book-value per share (Yen)

385.46409.77466.15441.61441.23

4,515.26

4,469.04

4,438.11

4,438.67

4,470.49

4,549.75

5

6

6

7

7

―

70

50

35

70

55

36.1

23.0

24.9

215.4

―

48.7

107.1

228.5

54.0

157.5

108.8

Ratio of profit to equity (ROE) (%)

3.8

6.6

5.5

0.7

0.1

3.2

1.4

0.5

1.5

1.0

1.1

Capital expenditure*2 (Million yen)

1,571

1,502

1,422

820

2,722

1,171

1,617

3,516

2,677

4,636

2,441

Depreciation (Million yen)

1,302

1,640

1,862

1,893

1,620

1,725

1,769

2,030

1,979

1,915

2,229

R&D expenses (Million yen)

405

371

380

348

289

268

254

1,117

948

984

1,073

2,401

2,554

2,604

2,786

2,830

2,850

2,899

2,822

2,724

2,640

2,779

Operating results

Operating margin (%)

Cash flows

Financial position

Shareholders’ equity ratio (%)
Per share data*1

Annual dividend per share (Yen)
Payout ratio (%)
Other data

Number of employees*1 The Company consolidated its common shares at a ratio of 10 shares to 1 share, effective December 1, 2017. Considering the impact of the share consolidation, the value of the annual dividend
per share for the fiscal year ended in May 2018 is omitted.
*2 Capital expenditure for the fiscal year ended May 2020 and later includes not only property, plant and equipment, intangible assets, and investments but also an increase in leased assets owing
to the application of IFRS 16 “Leases.”67

SUMINOE GROUP Integrated Report 2023

SUMINOE GROUP Integrated Report 2023

68

Corporate Summary and Investor Relations

Operation Sites of the SUMINOE GROUP

Group companies in Japan (head offices)❶ Suminoe Textile Co., Ltd. (Osaka City)❷ SUMINOE Co., Ltd. (Osaka City)

Overseas Group companies

Planning and sales of interior products, mainly carpets and curtains❸ RUNON CO., LTD. (Tokyo)

China

Planning and sales of interior products, mainly wallpapers❶ SPM Automotive Textile Co., Ltd. Guangzhou❹ Suminoe Logistics Co., Ltd. (Ikoma-gun, Nara Prefecture)❷ Suzhou Suminoe Koide Automotive Accessories Co., Ltd.

Product storage, handling, processing, and delivery❸ Suzhou Suminoe Textiles Co., Ltd.

❺ Suminoe Works Co., Ltd. (Tokyo)❹ Suminoe Textile Shanghai Co., Ltd.

Installation of interior products

India❻ Kansai Laboratory Co., Ltd. (Matsubara City, Osaka Prefecture)

1112❺ Suminoe Teijin Techno Krishna India Pvt. Ltd.

Testing and inspection services❼ Suminoe Teijin Techno Co., Ltd. (Osaka City)

2 3 4

Vietnam❻ Suminoe Textile Vietnam Co., Ltd.

5

1

6

Thailand

Production and sales of automotive textiles, mainly seat covering materials❽ Marunaka Souei Co., Ltd. (Osaka City)
Wholesale of traffic facility textiles

13❾ Suminoe Techno Co., Ltd.

7
8

❼ Suminoe Koide (Thailand) Co., Ltd.
❽ T.C.H. Suminoe Co., Ltd.

Production and processing of carpets, continuous fiber spinning (including recycling),
and production and processing of needle punch carpets
Shiga Factory (Koka City, Shiga Prefecture)
Nara Factory (Ikoma-gun, Nara Prefecture)

Offices/Factories of Suminoe Textile Co., Ltd.
1 Head Office (Osaka City)■

Indonesia

10 TANGO TEXTILE Co., Ltd. (Kyotango City, Kyoto Prefecture)●

2 Tokyo Branch (Tokyo)■❾ PT. Sinar Suminoe Indonesia

9 10

10 PT. Suminoe Surya Techno●

Production and sales of plush hand-woven curtains, hand-woven carpets and hooked rugs, and other rugs

11 Teijin Tecloth Ltd. (Inazawa City, Aichi Prefecture)●

3 Nara Factory (Ikoma-gun, Nara Prefecture)■

Production and sales of automotive seat covering materials, chair upholstery fabrics, and clothing textiles

4 Shiga Factory (Koka City, Shiga Prefecture)■

United States
11 Suminoe Textile of America Corporation●
1
2 Bondtex, Inc.
●

5 Kyoto Traditional Art and Craft Factory (Kyoto City)■

Mexico13 Suminoe Textile de Mexico, S.A. de C.V.
●

9 Hiroshima Sales Office (Hiroshima City)■

6 East Tokyo Sales Office (Wako City, Saitama Prefecture)■
7 West Tokyo Sales Office (Isehara City, Kanagawa Prefecture)■
8 Nagoya Sales Office (Nagoya City, Aichi Prefecture)
■

5

❾ 4

❶
❷
❼
❽
14
16

Automotive Textiles

Traffic Facilities

Functional Materials

9

Arts and Crafts Textiles

1

6

17
●
12
●
11
●

13 Sewing Hyogo Co., Ltd. (Tamba City, Hyogo Prefecture)●

Sewing and processing of fabric products

12
●

10
●
13
●

Dyeing and finishing of automotive seat covering materials and interior fabrics
Head Office (Ichinomiya City, Aichi Prefecture)
Ishikawa Factory (Nomi City, Ishikawa Prefecture)

14 INTEC CO., LTD. (Osaka City)●

10 Fukuoka Sales Office (Fukuoka City)■

10Interior Fittings

12 Owari Seisen Co., Ltd.
●

15 2
❸❺●

Development, design and sales of test equipment and measuring instruments

15 CPO Co., Ltd. (Tokyo)●

Interior design, construction and supervision,
manufacture and sale of custom-made furniture

16 PRETERIOR-TEXTILE Inc. (Osaka City)●❻

Interior finish work and sales of interior options❹❾
3

17 Seki Textile Co., Ltd. (Seki City, Gifu Prefecture)●

Production and sales of automotive textiles and traffic facilities textiles

8

7

Sales offices of each business segment●Interior Fittings●Automotive Textiles●Traffic Facilities●Functional Materials●SUMINOE SHOWROOM

Corporate Summary (As of May 31, 2023)

69

Shareholder Distribution

Company Name

Suminoe Textile Co., Ltd.

Fiscal year end

May 31 each year

Head Office

11-20, Minami-Semba 3-Chome, Chuo-ku,
Osaka 542-8504, Japan

Annual General Meetingof Shareholders

Late August each year

Founded1883

Share unit number

100 shares

Incorporated

December 25, 1913
Suminoe Textile Joint-Stock Company

Stock listings
MarketTokyo Stock Exchange, Prime

Securities code

3501

Shareholder registryadministrator

Mizuho Trust & Banking Co., Ltd.

Accounting auditor

KPMG AZSA LLC

OrganizationalchangeDecember 26, 1930
Suminoe Textile Co., Ltd.

Capital¥9,554,000,000

Number of
employees

260 (Consolidated group companies: 2,779)

URL

https://suminoe.co.jp/en/

Number of
consolidated
subsidiaries

29

Number ofequity-method
affiliates

2

SUMINOE GROUP Integrated Report 2023

Individuals and others

50.93%

Major Shareholders
Financial institutions

17.76%

Financial instruments
business operators

0.48%

Other corporations

28.20%
Foreign investors(individuals)

0.02%

Foreign investors(excluding individuals)

2.61%

Stock Information
Authorized shares

30,000,000

Issued shares

7,682,162

Number of shareholders

8,645

Name

Number of shares Percentage of total(Thousands) shares outstanding (%)

Takashimaya Company, Limited

924

14.58

Nippon Life Insurance Company

476

7.52

Marubeni Corporation

366

5.78

Hayashi Telempu Holdings Corporation

233

3.67

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

221

3.50

The Master Trust Bank of Japan, Ltd. (as trustee
for Retirement Benefit Trust of UNITIKA LTD.)

178

2.82

Suminoe Textile Employee’s Association

162

2.56

Suminoe Textile Kyoeikai

159

2.52

Toray Industries, Inc.

129

2.05

Meiji Yasuda Life Insurance Company

115

1.82

*1. Fractions of less than 1,000 were disregarded in the numbers of shares held.
*2. Suminoe Textile Co., Ltd. has treasury stock (1,338,540 shares) but is not includedin the above list of major shareholders.
Treasury stock is excluded from the calculation of the percentages of share ownership.
SUMINOE GROUP Integrated Report 2023

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