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 toproducing eco-friendly products
Strong relationship with eachfactory

Consolidated number ofemployees: 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 capitalInformationorientedsociety

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 theSUMINOE 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 longhistory●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 theGroup

Medium- 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 thatemit no poisonous gases when combusted
for disposal
Olefin bathroom flooring that generates nopoisonous 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 comfortstandard” 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 underSince 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. Amidworkshops 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 issuesRecognizing “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 withantibacterial and anti-virus effects.

Targets

Procedures and organization
Procedures

Members incharge ofmateriality
identification*

Descriptions

Experts

Directorsand 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.).

ExecutiveCommittee

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 environmentES○* 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.

GHigh
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 workenvironment● 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 ofgovernance 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

HighSUMINOE GROUP Integrated Report 2023

18