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

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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

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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

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