Value Creation Story

Business Overview

ESG Activities

Corporate Information

Message from Top Management
The KOITO Group will contribute to materialize
a sustainable society and resolve social issues throughour “Lighting for Your Safety” corporate message.
In April 2022, the Tokyo Stock Exchange has reorganized
its market structure into three new market segments,and KOITO chose the “Prime Market” as a listing market.
Listed companies in this market are required to establish
a high level of sustainabi lity-relat ed systems and promote relevant activities. To meet these expectations andbuild a management system that can respond to changes
in the business climate, KOITO has established its management system to ensure objectivity and transparency.
We are striving to further grow the KOITO Group under a
new management system established in June 2022.
We are al s o wor king to s treng then SD G s and ESG
promotion activities in order to contribute to materialize
a sustainable society. In order to prevent global warming,
we have set the targets of reducing KOITOʼs CO 2 emissions
by 50% in FY 2031, compared to FY 2014, and achievingcarbon neutrality in FY 2051. In addition to accelerating
reductions in CO2 emissions more than ever before, KOITO
has signed up to support the “Task Force on Climate-Related Financial Disclosures” (TCFD) in December 2021.
We will continue to promote various activities which contribute to resolve social issues through our business activities.

Forecast for FY 2023
Although the outlook for global automobile productionis uncertain due to factors such as COVID-19 and semiconductor shortage, it is expected to gradually recover fromthe second half of the ﬁscal year, and the full year production volume is expected to increase from the previous year.
The KOITO Group is planning an increase in net sales
from the previous ﬁscal year due to an increase in automotive production, new orders, and an increase in salesof LED headlamps.
With regard to proﬁts, despite R&D investment for
the future, and capital investment for carbon neutrality
increases, operating income, recurring proﬁt, and proﬁt
attributable to owners of parent are expected to increase
from the previous ﬁscal year due to increase in sales,ongoing improvement and rationalization activities.
The KOITO Group will continue our efforts to improve
proﬁtability to meet the expectations of all stakeholders.
■The KOITO Groupʼs consolidated business results(ten thousand vehicles, million yen)

FY 2021
ResultFY 2022
ResultFY 2023
Plan*1

7,468

7,425

7,850

Net sales

706,376760,719871,000

Operating income

56,70753,43467,000

8.0%

7.0%

7.7%

Recurring proﬁt

61,10760,61369,000Proﬁt attributable to owners of parent

37,612

38,34046,000

Review of FY 2022
In FY 2022, despite the expectation of a recovery fromCOVID-19 pandemic, the domestic and overseas economic recovery was sluggish and the outlook was uncertain
due to the impact of the re-expansion of COVID-19 infections, a shortage of semiconductors, and soaring prices
for resources and raw materials, as well as geopoliticalrisks such as the situation in Ukraine.
Domestic automobile production also remained challenging, due in part to sudden production ﬂuctuations
caused by supply chain disruptions. Domestic production
declined for the third consecutive year, and overseas production also declined for the fourth consecutive year.
KOITOʼs domestic net sales declined from the previousﬁscal year due to a decrease in automobile production.
However, overseas, consolidated net sales increased fromthe previous ﬁscal year due to new orders in North America and Asia, progress in the shift of automobile lamps toLED, and the impact of foreign currency exchange.
With regard to proﬁts, despite the increase in net sales,operating income and recurring proﬁt declined from theprevious ﬁscal year due to an increase in ﬁxed costs
caused by a sudden ﬂuctuation in production, soaring
prices for raw materials and electronic components, andinvestments in new orders and R&D for the future. However, net income attributable to owners of the parent
increased from the previous ﬁscal year due to gains onsales of investment securities and other factors.

8KOITO INTEGRATED REPORT 2022

Global automobile production volume*2

Operating income ratio*1 Announced on April 27, 2022
*2 KOITOʼs estimates based on ﬁgures from Japan Automobile Manufacturers
Association, Marklines and etc.

New Challenge: To Illuminate the WorldThe KOITO Group aims to materialize a sustainable society and resolve social issues as a leading company ofautomotive lighting equipment and will strengthen its
business activities through our “Lighting for Your Safety”
corporate message.
Under our corporate slogan, “New challenge: To illuminate the world,” we will continue to develop the newest
and the best technologies, improve per formance andquality of our products, promote training for employees
to raise their performance and skills, as well as stay true
to our basic stance to adopt the perspective of customers
to supply produc ts and ser vices that will meet theirexpectations. We would greatly appreciate your continued understanding and support.

Chairman and CEO

President and COO

Masahiro
OtakeMichiaki
Kato
KOITO INTEGRATED REPORT 2022

9Value Creation Story

Business Overview

ESG Activities

Corporate Information

Aiming to become a “Global No.1 Supplier,”
we are accelerating various activities.
The automotive industry is seeing accelerated movements toward the realization of a next-generation mobility society,including electriﬁcation and autonomous driving vehicles. We are facing many social issues as well, including climatechange, decarbonization, and growing social inequalities. Companies are required to implement activities related to Sustainable Development Goals (SDGs) throughout their business activities.
During this transformation, the KOITO Group aims to contribute to resolving social issues through its business activities and to achieve medium- to long-term growth by accelerating various initiatives with the goal of becoming a “Global
No.1 Supplier” under the keywords of “World-leading Technologies and Ingenuity,” “Sustainable Growth” and “A Trusted Company.”

Moreover, the KOITO Group will contribute to materialize a safe and secured next-generation mobility society
through promoting development of communication
lamps and smart infrastructures based on our lighting
and sensing technologies.

World-leading Technologies and Ingenuity

The KOITO Group has aggressively invested in future
growth-oriented areas, including capital investment andR&D investment, based on the management resources it
has cultivated over the years. Although the current business climate is uncertain, we will aim to achieve sustainable grow th for the Group as a whole by promoting
growth investment, including digital transformation (DX)and carbon neutrality, and improving competitiveness inareas such as operational efﬁciency, productivity, andadded value creation, in order to quickly bring attractive
technologies and products to market and contribute tosociety.

The KOITO Group has created technologies and products
which have always pione ere d each generation andmarket, and developed its businesses by responding tocustomer needs to materialize a safe, reliable society oftransportation founded in our “innovative ideas and decisive action” corporate policy.
Technical capabilities are source of the KOITO Groupʼscompetitiveness. Therefore, we have established a global
network in all ﬁve major regions of the world, centered
upon KOITO Technical Center. In September 2022, weplan to open a Technical Center in GUANGZHOU KOITOto expand new orders and strengthen our competitiveness in China.
We are working to expand sales of LED headlamps andAdaptive Driving Beam (ADB) headlamps in order to contribute to the reduction of trafﬁc accidents by providing
products that contribute to ensuring the visibility of night
drivers. Following the enactment of legislation in the U.S.
in February 2022, ADBʼs adoption ratio is expected toexpand in medium- to long-term. In response to these
expectations, the KOITO Group is striving to enhance
product variations and lowering prices. In addition, weare taking on challenges of developing sensing technologies that are essential for autonomous driving and are
responsible for surrounding detection. We are aiming tolaunch these technologies to the LiDAR market in 2023.

R&D Network in Five Major Regions of the WorldGUANGZHOU KOITO
Technical Center

In recent years due to the accelerated transition to electric vehicles , higher qualit y has become even more
important as automotive parts become more advancedand complex. The KOITO Group streng thens on-site
capabilities and investigates the true causes of defects
through information sharing about any problems or chal-Sustainable Growth

KOITO recognizes that human resource development iscrucial to achieving sustainable growth. Based on theidea that “manufacturing is human development” andthat employees are the driving force behind corporate
growth, with the keyword of “communication and collaboration,” we encourage every employee to share theirknowledge, experience, ﬁndings, and problem awarenessthrough various means to build energetic work sites
where every member can work on tackling problems.
We strive to enhance work-life balance, promote diversity, expand human resource development programs andr e b uil d s y s t e m a t i c hum a n r e s o ur c e d e v e l o p m e n tachievement evaluations in an effort to ensure every employee can experience their growth and become motivated to take on new challenges.

lenges discovered, mutual understanding of pre- andpost-processes, and assurance of each product with thegoal of achieving a level of quality chosen by customers
through the quality and trust of being global No. 1.
In terms of the environmental activities, in order to contribute to materialize a carbon-free society, we aim toachieve carbon neutrality by 2050. To this end, we arepromoting measures to reduce CO 2 emissions and environmentally hazardous substances, and promote recycle
resources. Through these ef for ts, we are expanding“Eco-friendly Manufacturing for People and the Earth”
globally.
In December 2021, KOITO has signed up to support the“Task Force on Climate-Related Financial Disclosures”(TCFD), established by the Financial Stability Board in2015. Recognizing climate change as one of our key management issues, to enhance climate-related information
disclosures based on TCFD recommendations, we are collecting and analyzing the data we need and reﬂecting itin our business activities.
Throughout these activities, the KOITO Group will continue to strive to be a company trusted by all stakeholders.
July 2022

The KOITO Group will also strive to strengthen its supply
chain, including production and logistics, to prevent disruptions to its product supplies even in the face of global
supply network disruptions. At the same time, the Groupis striving to achieve sustainable growth throughout thesupply chain by promoting procurement activities thatincorporate SDGs perspectives, such as strengthening
disaster mitigation systems, environmental conservation,
respecting human rights, and complying with laws andregulations.

THAI KOITO
Technical Center

A Trusted Company
KCZ
Technical Section

KOITO
MANUFACTURING
Technical Center

NAL
Technical Center

To ensure thorough compliance with laws and regulations, social conventions, corporate ethics and internal
rules, the KOITO Group is striving to raise complianceawareness in each and ever y employee and fur therstrengthen our corporate foundation.

10

KOITO INTEGRATED REPORT 2022

KOITO INTEGRATED REPORT 202211