Yokowoʼs Value Creation

Top Message

Challenge the next stage
by promoting
the new medium-termmanagement plan
GO BEYOND~Challenge the Next Stage~

Takayuki Tokuma
Representative Director,President and Executive Officer
YOKOWO CO., LTD.

Yokowo will drive forward with
its new medium-term management plan,
to ensure that it is a constantly evolving company.
The new medium-term management plan began in fiscal year 2020.
An outline of the new medium-term management plan and the success stories for the next stage
Yokowo will take from here are described below.

Corporate Philosophy
Yokowoʼ s corporate vision is to be “a sustainably
evolving company that accumulates technology tocontribute to society and meet the trust of customers,
and challenges the creation of markets as a whole.
Yokowo is a company united in commitment todiscovering and creating new markets.”

Corporate Mission
To realize a sustainable society, Yokowo will contributeto the evolution of society by responding to the needsof leading companies that are promoting businessstructural innovation and providing high-quality
products based on our core technologies.

The corporate vision and mission were redefined in August
2009, one year after the collapse of Lehman Brothers, as a partof the “Make the Future of Yokowo” project.
Amid the chaos of a global paradigm shift, employees andthe management team brainstormed and distilled views of what
Yokowo and all of us at Yokowo should do and wish to be in
the future based on opinions collected from all employees.
We believe that the reason for Yokowoʼs existence is oursteady contribution to the evolution of society, based on
unwavering commitment even amid a drastically changing
environment, through the improvement of our technologies
and quality and our response to the needs of our world-classcustomers.

As the management environment surrounding Yokowo is

Basic Management Policy
Yokowo has instituted two management policies to realize its
corporate vision. One is the sustainable evolution of business
management and the other is a multi-layered businessstructure.
The sustainable evolution of business management isconstant evolution and moving forward as Yokowo has
advocated in the slogan it has out forward since its inception,“Constantly on the cutting edge.” The measures for realizing
the sustainable evolution of business management are productinnovation (including both product and business structure
innovation), process innovation (the innovation of business
operating systems) and personnel innovation (humanresources innovation).
In other words, these measures aim to substantially change
the business structure, including products, technology andmarkets, and business operating process through the optimal
placement of business sites and the positive introduction of IT.
The diversity of the human resources who operate the above will
expand to ensure the development of highly professional teams.
In line with management innovation (the innovation ofcorporate management and business operations), substantialchanges will be made to how the elements and systems
involved in the above three innovation measures and thesemeasures themselves are managed, in order to accelerate theevolution of business management.
The other management policy of the multi-layered businessstructure aims to enhance the stability of our corporate
management and our companywide earnings structure.
In other words, we aim to improve sustainability.

changing drastically, this management policy aims to establish
a business system capable of responding to these changes bycreating a multi-layered business structure (industry, customers,technologies, supply chains and other layers).
By promoting the sustainable evolution of business
management and a multi-layered business structure, we hope toachieve Minimum 8 (secure at least 8% in sales growth rate,
operating profit margin, and return on equity) in a consistentand stable way.

Environmental Changes and Operating
Results over the most recent 10 Years
Looking back at the 10-year period from the fiscal year ended
March 31, 2011 until the fiscal year ended March 31, 2020,
consolidated net sales doubled from ¥27.9 billion to ¥60.5
billion and the total number of employees in the Yokowo Groupalso doubled, from approximately 4,000 to approximately 8,500.
Operating income increased almost four times its size, from
¥1.3 billion to ¥4.9 billion, and achieved a new record high.
Despite a series of large natural disasters, political andeconomic conflicts in world affairs, an increasingly competitiveenvironment and other severe environmental changes, we havemade dramatic strides as a result of steadily promoting theevolution of business management and a multi-layered
business structure, due to the support of our shareholders andother stakeholders. Just as we were thinking about ouradvance to the next stage, the COVID-19 pandemic occurred.
The spread of this novel COVID-19 starting at the end of2019 has caused economic activity to wither globally.

Corporate Vision

Evolution of Business Management

Multi-layered Business Structure● Multi-layered business structure (industry, customers,● Product innovation

technologies, supply chains and other layers)● Process innovation● Personnel innovation

Global paradigm shift/Establishing a business systemcapable of responding to drastic changes in businessenvironment and competitive environment● Management innovation

Realization of Minimum 8● Sales growth rate
● Operating profit margin● Return on equity

12

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8%
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13Yokowoʼs Value Creation

Due to restrictions on peopleʼs movements and on theirgoing out of their homes that have been imposed bygovernments as well as reductions in demand from markets
and customers, the Yokowo Group faced significant declines
in the operating ratios of its overseas production sites fromFebruary until May 2020. We have been doing our best toprevent the spread of the infection by leveraging collective
Group resources and we have weathered the worst momentsby relocating and setting up production facilities in Japan aswell as through the cooperation of our partner firms. In thismanner, we managed to achieve a recovery to our normal
business activity levels. Currently, we are maintaining stable
operations, while paying close attention to the prevention of
the spread of the infection. At the same time, we arepromoting the enhancement of our BCP framework.

New Medium-term Management Plan
The impact of the COVID-19 forced us to make large
modifications as we formulated the new medium-term
management plan for the three-year period covering from the83rd fiscal term (the fiscal year ending March 31, 2021) tothe 85th fiscal term (the fiscal year ending March 31, 2023).
Yokowoʼs main markets, namely the automotive,
semiconductor testing, mobile communication terminals, andadvanced medical device markets, were in the midst of thegreatest transformation with the growth and expansion ofCASE*, MaaS, 5G (5th generation mobile communicationsystems), AI and IoT. However, these markets are greatlyaffected by COVID-19.
It has impacted us in many ways, including steep declines andslumps in demand in some markets and special demand inothers, with demand changing both drastically in the short term
and gradually over the long term, but one thing is certain. The
best option is not simply following a trajectory by extrapolating
the trend before the spread of the infection. We will need strong
commitment to adapt to the “new normal” that is the with- andthe post-COVID-19 world.
In addition, to reach and continue to be at the global
forefront, we must identify change more effectively than
before and promptly respond to it. However, continuing toenhance our strengths and create new value while developing
greater harmony with all people, goods, the environment andothers related to the Group is also an essential part of theevolution of business management that is the goal of theYokowo Group. We have discussed the actions we should taketo achieve the above, and have collected this in the new
medium-term management plan.
* CASE: An acronym for the new trend in automobiles:
Connectivity, Autonomous, Shared, Electric14Yokowo 2020 Integrated Report

Toward the 100th anniversary of our founding in September
2022, the title of the new medium-term management plan is“Go Beyond: Challenge the Next Stage”, to evoke our belief
that our goal is to transcend the present situation and advanceto the next stage.
The outline of the plan is as follows.

1. Promote management innovation company-wide■ Realize business operations that are directly linked to theneeds of our customers■ Strengthen our capabilities to manage manufacturing

proficiencies and integrate responsibilities for businessincome and expenditures and the authorities for achieving
the income and expenditure plans■ Realize the visualization of profit performance by productand improve capital efficiency

2. Product innovatoin that transforms the risks ofchanges in industries and markets into opportunities
for business■ Revitalize our business structure through sustained effort todevelop new markets and introduce new technologies andthrough strategic withdrawals from unprofitable businesses

3. Strengthen systems that
support product innovation

Moreover, we are determined to drive forward initiatives in thefollowing three areas as measures to be enacted over a period
longer than the period of the medium-term management plan.

1. Basic researchCentering on micro precision processing technology andmicrowave (high frequency) technology, the core strengths of
the Yokowo Group, we will work to invest in and enhance thesystem for basic research, a key driver of long-term growth.

2. Digital transformation (DX)By improving productivity and efficiency at each site fordevelopment, procurement, production and marketing, we willpromptly provide value to customers. Moreover, we aim tocontinue to improve the speed of management decision-making
and our responsiveness to change by reinforcing real-timecooperation between these sites and the headquarters.

3. The SDGs
We will work on the three top-priority issues of the environment,
local communities and diversity and inclusion, which have been
extracted through a materiality identification process and aim toachieve KPIs set for each measure (for details, please see P.20 toP.22 of this report.)■ Intellectual property strategy■ Establish elemental technologies■ Strengthen cooperation between the business divisionʼstechnologies and research and development (includingexternal networks)4. Evolve process innovation tomeet customer expectations■ Develop product innovation based on the new 5S* principle

using AI and other advanced technologies in all businessprocesses* Simple, Slim, Small, Short and Smooth

By steadily promoting the corporate priorities above, we aim toensure the achievement of the medium-term basic managerial
objectives and consolidated performance objectives.

Medium-term Basic Managerial Objectives
Stable realization of Minimum 8

By steadily and vigorously pushing ahead toward these goals,
we will establish resilient strength that does not waver during
upheaval and that enables appropriate and prompt responses
to successive and drastic changes. We will strive to collaborate
with our stakeholders in our efforts to create new value.

My Desire to“Make Yokowo a Good Company”
Since being appointed as President in 2007, I have constantlyconveyed my desire to make Yokowo a good company to ouremployees in and outside Japan. As I wrote in the section
about materiality, I think that a better company is:■ A company about which customers say, “It was good that

we have conducted business with Yokowo. We will expandour business relationship with Yokowo.”■ A company about which contractors say, “It was good that

Consolidated Performance Objectives
in the New Medium-term Management Plan
(Fiscal year ending March 31, 2023)

Consolidated net sales: ¥ 72 billion
Operating income:Ordinary income:¥ 7.2 billion (operating margin: 10%)
¥ 7 billion

we performed business operations for Yokowo. We will work
harder to contribute more.”■ And most importantly, a company where the employees of

the Yokowo Group think, “I am very satisfied with to beworking for this company. I will work harder to make it aneven better company.”

I think that a company such as that is truly a good company.
To make Yokowo a good company, we should ensure thatthe officers and employees of the Yokowo Group in andoutside Japan, regardless of nationality, gender and other
differences, are content and fulfilled in their work, and have afoundation of reliability and trust.
Through the evolution of our technology, we will continue
to offer quality products and services to improve customer
satisfaction. We will contribute to local communities which werely on to ensure that we are welcomed by them and to bringsatisfactions to our neighbors. As a resident of this world, wewill contribute to solve climate change and other issues topreserve the natural environment that sustains lives of people
around the world, including our stakeholders. Based on theabove, we have the three top-priority issues: the environment,
local communities and diversity and inclusion.
One mission of the Yokowo Group is to operate our businessand make a profit as a group engaging in commercial
businesses. We recognize that now, it is not simply the volumeof profits generated from our growth potential and theprofitability of our business that is strongly demanded, but also
the quality of the profits that should reflect equal, fair andproper business operations, and together, the results of abusiness operated in this way should lead to social contribution.
While working to achieve the new medium-term management
plan and the long-term measures, we hope to become a goodcompany for our shareholders and investors by increasing boththe volume and quality of profits, expanding profit distribution
and by improving our quality and dignity as a company.
We offer our appreciation to all of our stakeholders and lookforward to your continued understanding and support in the future.

Profit attributable to owners of parent: ¥ 5 billion

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