Annual Report 2019

Profile
Since its founding in 1932, Kito Corporation has been a leading manufacturer of material handlingequipment, specializing in meeting our customers’ need for lifting, transporting and securing operations.
From basic products such as manual and electric chain hoists, lever hoists, wire rope hoists, andcranes to chain slings and other below-the-hook devices, Kito supplies products that enhancecustomer safety and productivity in a wide range of worksites where heavy objects are handled.
Kito equipment plays vital roles in many different workplaces, from construction sites andindustrial factories to power plants, as well as entertainment facilities and facilities in the agricultural, forestry, and fishery industries.
About this report

CONTENTS
Profile/Kito Management

1

Financial Section

Value Creation at Kito

2

Six-Year Summary/Trends in Stock Price

19

Financial and Non-Financial
Highlights

3Management's Analysis of Financial
Position and Operating Results

20

Message from the President

Consolidated Balance Sheets

24

4

Consolidated Statements of Income

26

Regional Strategy

8

Consolidated Statements ofComprehensive Income

27

Consolidated Statements of Changes in
Net Assets

28

Consolidated Statements of Cash Flows30

Product Development

10

Sustainability
Corporate Governance

14

Stock Information

32

Environment/Society

17

Corporate Profile

33

This report presents Kito Corporation’s management strategies, business performance, relationship with the environment and society, and other information to help
stakeholders better understand the content of Kito’s business operations.
Through our business operations, in the workplaces formaterial handling throughout the world, we will continually
maintain a customer-oriented perspective, and by proposing new ideas and achieving them by providing products
and services, gain the trust of the market, supporting customer safety and the efficient functioning of society.

Disclaimer
These materials are prepared for the purpose of providing
information concerning Kito Corporation’s performance infiscal 2017 ended March 31, 2018, and are not intended tosolicit investment in securities issued by the Company. In
addition, these materials have been compiled based principally on data current as of March 31, 2018. All opinions,forecasts, and other forward-looking statements stated in
the materials reflect the Company’s judgments at the timethese materials were prepared. No guarantees or promises
can be made with regard to the accuracy or completenessof the information, which may be revised at any time without prior notice.

History of Kito
1932	Established The Kito Manufacturing Company in
Omori, Tokyo.
1947	Developed LEVER HOIST, the first device of its
kind in Japan.
1990	Established HARRINGTON HOISTS in the U.S.

1997	Established SIAM KITO in Thailand.
2003	Developed KITO LEVER HOIST LX.
(Gold Prize winner of Good Design Award)
Accepted capital participation from The Carlyle Group.
2005	Completed new factory of
JIANGYIN KITO CRANE in China.

1993	Established KITO CANADA in Canada.
1995	Established JIANGYIN KITO CRANE in China.

2006	Developed KITO CHAIN HOIST CX.
Established KITO EUROPE in Germany.

Kito Management (As of July 1, 2019)

President & CEO

Executive Vice PresidentManaging Director

Managing Director

Chief Executive Officer

Co–Chief Market Officer
KITO Americas, Inc. Chairman

Senior Executive Officer
Chief Quality Officer
Chief Manufacturing Officer
General Manager of Quality
Assurance Division

Senior Executive Officer
Chief Financial Officer
General Manager of Corporate
Management Division
General Manager of Financial
Management Division

Yoshio Kito

Outside Director

Katsumi Nakamura

Edward W. Hunter

Outside Director

Takashi Hirai

2011	KITO INDONESIA in Indonesia.
Established KITO DO BRASIL in Brazil
The Carlyle Group sold its entire holding of KITO
common stock.
2014	Kito Americas purchases all shares of PEERLESS
INDUSTRIAL GROUP of the US.

Tsuneo Yuzurihara

Shigeki Osozawa

Outside Director

Koji Osawa

2016	Dissolving the strategic operational and capitalalliance with Konecranes.
Purchased all shares of PWB Anchor in Australia.
Established Kito Chain Italia.
2018	Released KITO PRO Light Crane System toJapanese market.
Purchased all shares of ERIKKILA of Finland.

Kito Annual Report 20191

Value Creation at Kito

To become the most trusted anti-gravity equipment
manufacturer in the global market

Our Business

Kito material handling equipment products are highly durable and safe, andrespond to the unending needs of our customers at every stage of economic
development. Given the variety of customers and applications, they are notdependent on any one sector or industry. Our products can be seen as bothmature and part of a growth industry, offering reduced size and weight as well
as safety and durability that meets the needs of all industries seeking to handle
heavy products safely and efficiently.

Overseas locations

15
17

countries

companies

2

Kito Annual Report 2019

Overseas sales
in more than

50

countries

Financial and Non-Financial Highlights (As of March 31, 2019)

Sales

Overseas locations

million17locations

61,238(+11.0% YoY)

Number of employees
on a consolidated basis

2,308(up 139 from the previous fiscal year)

Kito was able to capture strong
demand by continually ramping up
production from the beginning of
the fiscal year, achieving record-highsales of ¥61,238 million, up 11.0%
from the previous fiscal year.

Kito operates 17 subsidiaries in 15
countries around the world.
Overseas sales accounted for about
75% of total sales in the Kito Group.

The expansion in our global network
has resulted in an increase inemployees on a consolidated basis.
Non-Japanese employees now
account for more than 60% of total
employees.

Operating income margin

Dividends

Overseas sales agencies

10.5%(up 2.0% YoY)

As we increased production on theback of strong sales, Kito saw
operating income in the fiscal year
ended March 31, 2019 expand a
sharp 36.5% year on year, reachinga new high for the company.

Net assets

26,687
million(up 12.6% YoY)

Net assets increased ¥2,989 million
from the end of the previous consolidated fiscal year, thanks largely to a
¥3,189 million increase in retained
earnings.

consecutive
3
years of dividend

Operating in more thangrowth50countries

Kito paid an annual dividend in the fiscal
year ended March 31, 2019 of ¥44 pershare, equating to a consolidated dividend
payout ratio of 22.1%. Our basic policy is
to pay a stable and sustained dividend
while ensuring sufficient retained earnings
to support future business expansion.

In addition to strong praise for ourservices, Kito’s products have beenrecognized around the world for theirsafety and durability, and as a result
have secured leading market sharesin not only Japan, but also the key
markets of the US and China.

Executive officers withforeign nationalities

Employment ofhandicapped people

executive officers(As of September 2019)

6 of 15

Through the placement of a diverse
lineup of human resources in the best
possible location, Kito is able to quickly understand of the needs of its local
customers and production facilities
and accordingly make effective andtimely management decisions.

6.96%

With the goal of being a company in whichanyone can work, Kito is committed tosystematically and continually improving
the working environment. These efforts
have contributed to the company achieving
an employment rate for handicappedpeople of 6.9%, which is one of the highest
rates in Japan and well above the government’s statutory rate of 2.2%.

Kito Annual Report 20193

Message from the President

Yoshio Kito
President & CEO

4

Kito Annual Report 2019

Aiming to be a globally integrated enterpriseby achieving growth over the medium to long term
Review of Fiscal 2018
The operating environment in fiscal 2018 (ended March 31,2019) remained favorable amid firm demand tied to private
sector capital investment and the development of infrastructure. Thanks to the Company’s ability to capture demand in line with this robust capital investment, fiscal 2018
sales and profit both increased to all-time highs, with sales
up 11% from the previous fiscal year to ¥61.2 billion,
operating income up 36.5% to ¥6.4 billion, ordinary income

in Europe along with collaborative operations of its fourbases in Germany, Italy, Finland, and the Netherlands.
Consolidation of Kito Chain Italia, which manufactures chain
products, contributed to sales in Europe rising a strong
95.9% from fiscal 2017. Kito is also developing its businessin Australia, where sales reached ¥1.9 billion.

Progress in the Mid-Term
Management Plan

up 51.6% to ¥5.7 billion, and net income attributable to

The fiscal year ended March 31, 2019 was the third year inowners of the parent up 43.3% to ¥4.0 billion.

our five-year mid-term management plan. During the year,

By region, sales in Japan improved 19.7% from fiscal

we continued to implement our strategies as we moved

2017, due to firm exports, ongoing demand tied to private

from a “platform enhancement phase” in the first two

sector capital investment, and growing demand for urban

years of the Plan to a “full-growth phase.” In addition to

redevelopment ahead of the 2020 Summer Olympic Gamesestablishing IT infrastructure, visualizing production activi-in Tokyo. Sales in the Americas, centered on the U.S.,

ties and business operations is contributing to enhanced

Canada, and Brazil, expanded 7.1% on increased demand

efficiency in our business, further improving productivity

tied to public investment as well as private sector capitaland the level of our customer service.

expenditures, particularly in the resources and energy fields.

Enhancements in infrastructure have contributed toAmid ongoing concerns over the impact of US-China trade

improved profitability in Asia, while our efforts to expand in

friction, sales in China grew 14.7% from as the Company

Europe, particularly through M&A have produced synergis-

effectively captured demand tied to industrial infrastructure

tic effects and broadened our presence in the market.

investment, including in electric power and railroads, as well

Moreover, M&A has contributed to an expansion as well as

as investment in semiconductors and electric vehicles. On

increased diversity in our product portfolio, especially inthe other hand, despite enhanced demand tied to capital

chains and hoisting equipment. We are also developing ourinvestment, particularly in automobiles, sales in Asia, ex-business in increasingly diverse regions, with the overseas

cluding Japan and China, were down 0.3% from fiscal 2017

sales ratio for the company exceeding 70% in the fiscal

on a decline in demand in South Korea for cranes used inyear ended March 31, 2019.

clean rooms. The Kito brand is gaining increased recognition

Kito Annual Report 20195

Message from the President

Strategies for the Growth Phase

issue for the company. In terms of regional strategies, we
aim to continue expanding our business in the key market

As long as gravity exists, there will always be a need toof China, where our products are gaining market sharehandle heavy objects in the safest manner possible.

amid an increased focus in the country on quality andRecent years have seen an increase in business withsafety. We have continued over the past few years tocustomers operating in the logistics and services industries, including in food-related areas, such as clean rooms
and entertainment. This expanding customer base has
afforded Kito a business structure less susceptible to theups and down of specific sectors or the economic cycles
of individual industries.

with growth accelerated by cooperation between thiscompany, Kito Chain Italia, Van Leusden of the Netherlands,
and Erikkila of Finland, the latter two of which joined thegroup in fiscal 2018.
Turning to product strategies, we are focused on ex-

The fiscal year ending March 31, 2020 will be the fourth

panding our lineup of hoist peripheral products, includingyear in our five-year mid-term management plan. As wemove toward our final goal, we are focused on capturing thedemand of growth industries in a variety of markets andchains and hoisting accessories. We have established afoundation for expanding our product portfolio in theAmericas and intend to leverage this in the acceleration of

expanding our market share, but also on maximizing cash
flow and profit through enhanced efficiency and productivity
as we develop our business to secure not only our mid-term
management plan goals, but also growth moving forward.

expand our presence in Europe, centered on Kito Europe,

global investment in human resources as part of our effort
to further advance product development. Our engineers in
the Americas, Europe, and Japan will work together tobolster product development.
In terms of production, we are launching fundamental

Issues and Strategies for
the Next Fiscal Yearplant reforms from the fiscal year ending March 31, 2020,

Kito is actively developing its overseas business, andbolstering our regional and products strategies is a key

with a focus on bolstering cost competitiveness andenhancing production capacity at the Head Office andFactory in Yamanashi Prefecture.

Growth in the Overseas Markets
Asia 7.7%

Others 3.9%

Americas18.7%

Japan73.6%

FY2000

Sales :¥22.7 Billion
Overseas Sales Ratio
26.4%

6

Kito Annual Report 2019

Others 4.0%

Europe 4.2%

Japan33.7%

Asia 6.4%
China
25.5%

FY2010

Sales :¥28.0 Billion
Overseas Sales Ratio
66.3%

Americas
26.1%

Europe 5.1%

Japan26.3%

Asia 8.6%
China
10.7%

FY2018

Sales :¥61.2 Billion
Overseas Sales Ratio
73.6%

Americas
45.2%

With these strategies in place, Kito targets consolidated

can work freely and building a working environment insales in the fiscal year ending March 31, 2020 of ¥62.8

which a diverse lineup of employees can work together, webillion, with operating profit of ¥6.7 billion, ordinary income

remain committed to creating a company in which everyoneof ¥6.4 billion, and net profit attributable to owners of the

can work comfortably and are systematically and continually

parent of ¥4.3 billion.

working to improve the working environment. As of Sep-

Investment and Shareholder Returns
Kito’s policy for the distribution of management resources is
to maintain the balance of a stable financial base withtember 2019, the Kito ratio of handicapped workers was
6.96%, well above the government’s stipulated 2.2% ratio
and one of the highest rates for any company in Japan.
In terms of the environment, we are working to reduce

continued investment in growth to enhance future profit-

the environmental impact of our products throughout theirability, including the aforementioned production invest-

lifecycle. This starts by ensuring procurement according toments. For shareholder returns, our basic policy is to pay a

our guidelines specifying prohibited materials, and extends

stable and sustained dividend, while ensuring sufficient

to production, product use, and disposal.

retained earnings to support future business expansion.

In regard to corporate governance, Kito is committed to

Our dividends reflect our target of a payout ratio of 20% or

ensuring transparency in corporate management and build-higher on a consolidated bases, and we continue to strive

ing a highly effective governance system so that we canto maintain and improve this level.

achieve medium- to long-term growth and realize our aim

The dividend for the fiscal year ended March 31, 2019,of being a truly global company. To achieve this, three of

was increased by four yen from the initial forecast, resulting

our directors are outside directors, and two of our three

in a year-end dividend of 24 yen per share, which together

auditors are outside auditors. The outside directors havewith the interim dividend of 20 yen per share, makes anextensive experience in manufacturing business models,annual dividend of 44 yen per share. This equates to a

consulting, and finance, while the outside auditors include

consolidated payout ratio 22.1%. Kito targets an increase ina lawyer and a certified public accountant. In addition, ourthe annual dividend per share in the fiscal year ending

overseas subsidiaries are staffed by employees well

March 31, 2020 from ¥44 to ¥48 per share.

versed in the markets, and with six of 15 executive positions occupied by local personnel, Kito is focused on

Focused on the Realization of
Our Corporate Mission
Kito’s corporate mission factors in our philosophy of coexis-

strengthening global governance by taking responsibility
for consolidated performance as well as for each businessin each market.

tence, focusing on “pursuing growth and development as a

As we work to build a highly transparent and soundcompany, with success in this effort leading to the happi-

management system, we will continue to strive to im-ness of the Kito team members and prosperity for all our

prove corporate value for the group as a whole by engag-

stakeholders.” We are actively engaged in CSR activities ining in active dialogue with Japanese and overseas inves-line with this mission. Following a basic policy aimed attors, as well as local communities to gain theircreating a corporate culture in which handicapped people

understanding and trust.

Kito Annual Report 20197

Regional Strategy

Market Conditions and Global Developments
Kito corporation began its overseas business expansion in the 1950s and transitioned to full-scale
global penetration in 1990 with the establishment of a U.S. subsidiary. Today, Kito operates 17
business subsidiaries in 15 countries around the world and the overseas business has grown toaccount for around 75% of group-wide sales. Kito’s products and services have received global
recognition for their safety and durability, and have established positions as top-ranking brands inthe leading markets of Japan, the U.S., and China.

Strong Net Sales Growth Throughout
the Globe
During fiscal 2018, throughout the world extremely robust
demand continued as a whole for the entire year. In theleading markets, infrastructure-related demand drove
results while private sector capital investments also remained solid. Moreover, despite signs of a slowdown in
the Chinese economy, domestic demand and investments, mainly related to electric vehicles, were robust.
The Company continued to expand operating capacity andproduction throughout the year in order to capture thisrobust demand. This stance has also contributed to earnings. Collaboration with the European subsidiary that was

8

Kito Annual Report 2019

newly added to the group enabled the Company to enhance product competitiveness, while a review of thebusiness structure with a focus on Asia helped the Company to raise profitability.
In Japan, against a backdrop of very strong activity ininfrastructure spending, public works projects, redevelopment-related business, particularly focused on city centers,
and private sector capital investments, net sales grewsignificantly by 20% compared with the previous fiscal
year.
In China, despite signs of a slowdown in the overall market and in contrast to the struggles faced by competingcompanies, Kito’s business has remained extremelysteady. The Company’s market share has expanded signifi-of the fiscal year, factories returned to full-capacity andcantly in response to the growing awareness of safety andKito achieved its highest production volumes in history.

quality.

North America also remained strong.

Although Europe only accounts for a small part of the

Although the economic conditions for fiscal 2019 pres-Company’s business, Kito’s name recognition in thisent growing uncertainty regarding the future in part due tomarket is gradually progressing. In part due to the result of

the impact of U.S.-China trade friction, except for some

M&As, Kito achieved major growth and successfully

regional outliers, infrastructure-related investments, pri-entered fiscal 2019 with this same level of momentum.

vate sector capital investments, and energy-related invest-

Japan and North America experienced a temporaryments in each of these markets are expected to remain

decline in factory operating rates in part due to the impact

steady.

of the full-scale renewal of its IT infrastructure in Japan
during fiscal 2017. Following this, in fiscal 2018, with thestable operations of the new system from the beginning

Kito Annual Report 20199

Product Development

Expanding Product Lines to Address a Diverse
Range of Needs
As part of its mid-term management plan, Kito has raised the goal of broadening its product and service
fields and aims to achieve a product lineup that further expands the range of options for its customers incountries around the world. Kito thoroughly infuses its product development with the technologies andknowledge it has accumulated over 80 years of manufacturing chain hoists to ensure easy use andmaintenance for its customers, as well as to extend the life of its products. At the same time, the Company
is accelerating global production to address the diverse range of needs that exist around the world.

Kito’s products cover a broad spectrum, from manual andthe desire to efficiently and safely carry out the work ofelectric chain hoists and wire rope hoists, to lever hoists

handling heavy objects. In addition to mining, manufactur-that secure loads, cranes that transport heavy objects

ing, construction, civil engineering, and other heavy indus-

inside factories, and below-the-hook devices, like chain

tries, the Company addresses the needs of a wide range

slings and other hoisting accessories. By providing prod-of industries throughout the world, including those related

ucts with superior safety and durability, the Company

to green energy, food, entertainment, and other integral

addresses all types of demands from industry, including

parts of everyday life.

10 Kito Annual Report 2019

Kito Contributes to the Development of Manufacturing and Social Infrastructure Around the World.
The Company’s products primarily include those installed on the manufacturing lines offactories operated by manufacturers and those used at construction sites and othertemporary work sites. Its products also address private sector capital investments andinfrastructure project demand.
The Company delivered 50 Kito electric chain hoists
and over 60 light crane systems produced by
ERIKKILA, a group company based in Finland, to theassembly line at a new factory operated by a farmmachinery manufacturer. The length of the lightcrane, including the aluminum and steel sections,reaches 800 meters.

One factory to which Kito delivered large bridge
cranes is involved in the manufacture of various
parts made entirely from magnesium alloys. The
three large bridge cranes travel over a set of rails
installed in the floor and are used to replace partmolds and handle maintenance of machinery andequipment.

Floor replacement construction along the Chuo
Expressway Tenryu River Bridge. The floor, which
consist of steel embedded concrete, directly receive
the load of vehicles traveling over the bridge, sonecessarily undergo cracking, rusting, and otherforms of deterioration. Manual chain hoists are used
to adjust the position of the floor transported bylarge cranes.

Kito Annual Report 201911

Product Development

Pursuing Kito Quality

Above: KITO electric chain hoist ER2
rationalizes and reduces labor required
for loading and unloading work. The
ER2 has a long machine life and canfunction in harsh environments.
Right: KITO LEVER HOIST Model L5
has a compact, light, durable frame thatenables heavy-duty use. A proprietary
idling device greatly increases the
speed of work.

SafetyKito produces many of its product parts, including criticalcomponents that affect product safety and durability, at its
Head Office & Factory in Yamanashi. The Company internallyhandles every aspect from product design, development, andpart manufacturing to the assembly of finished products in an
integrated fashion. And by pursuing Kito Quality to the mostminute detail for each and every unit, Kito provides high-quality products to society. The Company has raised the goal ofproviding high-quality products and services to its customers
as the most important issue for management, where Kito
Quality refers to the realization of products that deliver a highlevel of safety, are easy to use, match customer needs, andcontribute to the environment, all while overcoming severe
cost constraints.
Every employee continually strives to establish a framework for the design, production, and sale of Kito Brand products that earn the trust of all. With the aim of raising the levelof quality, the Company is also focused on human resource
education. In addition to educating employees involved in

12 Kito Annual Report 2019

manufacturing, the Company also educates every employee
throughout the world on quality.

Quality Policy
Kito furnishes products and services that satisfy and excite
our customers.

1. In our production and sales operations we put toppriority on elevating the quality and functionality ofour products, striving for ever-higher safety,
durability and operability.
2. We produce well-balanced, superior products thatmeet all social needs, including laws and regulations.
3. Every Kito employee understands his or her roleand responsibilities in making products with heart.

Kito is also involved in the entertainment
industry.
The Company’s products have also recently come into use in areas that are part ofeveryday life, including concerts, stage performances, sports, and aquariums. Safe, reliable products support performances in the entertainment industry around the worldfrom behind the scenes.
Sports arena for one of Japan’s professional basketball teams. The LED screen, audio equipment, andlighting equipment located above center court arehoisted using 22 units of TNER Theatrical Hoiststhat combine both upside down and normal electricchain hoists.

Concert venue being setup in Taiwan. TNER Theatrical Hoists designed specifically for hoisting andinstalling lighting, audio, and other equipment have a
black body that is inconspicuous from the seatingarea and does not interfere with stage performances.

Aquariums are a popular type of entertainment
facility. Electric chain hoists are used to transport
dolphins and killer whales from their tanks. This
work requires detailed considerations, including minimizing swaying and vibration, and using oils thatwill not affect living creatures even if ingested.

Kito Annual Report 201913

Corporate Governance
The Company will, with the aim of achieving sustainable

respect the rights of shareholders and secure equality

growth and improvement of corporate value on a medium-

among them; consider the interests of stakeholders,to long-term basis, make efforts to enhance corporate gov-

including shareholders and cooperate with them in an

ernance based on the belief that the essence of corporate

appropriate manner; disclose corporate information in an

governance lies in increasing the dynamism of manage-

appropriate manner and secure transparency of manage-

ment, by securing the transparency and fairness thereof

ment; strengthen management supervision functions byand making management decisions in a prompt and deci-

separating the execution and management roles of man-sive manner.

agement and by electing outside directors and hold

Kito Corporation is working to establish corporate gover-constructive dialogue with shareholders.

nance in accordance with the following basic concepts:

Corporate Governance Structure

General Meeting of Shareholders
Election· Dismissal

Board of Directors
Auditing

mendations

Internal
Directors
2

External
Directors
3

Internal
Directors
4

External
Directors
3

Election· Dismissal

Election· Dismissal

Board ofCorporate Auditors
Internal
Auditors
1

External
Auditors
2

Auditing

Accounting Auditors
Internal Auditing
Department

Executive Body

Board of Corporate Auditors

Nomination andCompensation Committee Recom-

Election· Dismissal

President & CEO

Advice andGuidance

Functional Division
Headquarters

14 Kito Annual Report 2019

Business Division
Headquarters

Outside Experts

Executive Officers’
Meeting(Lawyers, Tax Accountants, Patent Attorneys, etc.)

Internal Audit DivisionKito Corporation has adopted the Company with a Board ofCompany Auditors system as its governance system under
the Companies Act.
The Board of Directors, comprising seven members (threeof whom are outside directors), and makes decisions onmaterial matters. Kito has also introduced an executive
officer system to provide for the flexible conduct of duties by
separating the decision-making and oversight function frombusiness execution. The Board of Corporate Auditors, as anorganization independent from the Board of Directors, conducts audits of the execution of duties by directors.
In addition, the Nominating and Compensation Committee,
comprising five directors (three of whom are outside directors), has been established as an advisory body to the Boardof Directors. This committee reviews the candidates for
director, auditor, and senior executive officer, and makes
recommendations to the Board of Directors.

Effectiveness Evaluations of the Boardof Directors
Kito conducts an opinion survey of ten directors and auditors, including a five-grade evaluation for each question,with additional space given for free comments. The effectiveness evaluation for the Board of Directors carried out in

Compensation for Directors
Kito positions officers’ compensation as one of the importantmeasures to achieve sustainable growth and an improvement
in medium- and long-term corporate value of the Group.
Remuneration for directors and executive officers shall consistof fixed compensation, annual performance-based compensation, and compensation linked to medium- to long-term performance. Additionally, compensation for directors, excluding
outside directors, and executive officers shall reflect the levelof achievement of consolidated business performance targets
and the level of the individual officer’s contribution to thebusiness performance of the Company. The higher the position and responsibility of an officer, the greater the ratio of theofficer’s performance-based compensation to his/her totalcompensation. The Company ensures the transparency andobjectivity in the compensation of directors and executive
officers by having the Nomination & Compensation Committee, a voluntary committee which a majority of the members
are outside directors, deliberate on compensation for directors
and executive officers and then make its recommendations to
the Board of Directors.
Fixed compensation(base compensation/cash)

The Company determines an appropriate level of basecompensation, comprehensively taking into accountthe size of the Company and the duties of Officers,
referring to external databases, etc.

Performancebased compensation(bonus/cash)

The Company calculates the standard annual bonuses
by position, with a range of 25 to 50% of base compensation for each position. Then we determine bonuses for individual Director/Executive Officers within arange of 0 to 200% of standard annual bonus by comprehensively evaluating individual Director/Executive
Officer’s level of achievement of his/her targets andthe level of his/her contribution to the business performance of the Company, using consolidated net sales
and EBITDA (income before income taxes, to which
extraordinary income, interest expenses and depreciation and amortization are added) of the Company as
the evaluation indicators.

December 2018 included the following items:
1.

Structure of the Board of Directors(number of the members, diversity, number and percentage ofoutside directors, etc.)2.

Operations of the Board of Directors(frequency of Board of Directors meetings, information provision,
liveliness of discussions, atmosphere of board meetings, etc.)

3.

Agenda items of the Board of Directors(selection agenda items, timing to propose an agenda item,
deliberation time, nomination and compensation for officers,
and discussions on governance and risks)

4.

Structure that supports the Board of Directors(securing opportunities for directors to obtain information,
training for directors and auditors, collaboration with the internal audit department, etc.)

5.

Questions on the optional committee(Nomination and Compensation Committee)(number of members diversity, atmosphere at meetings, etc.)

While ratings for some items were marginally lower, theresults allowed the sharing of views on issues to beaddressed. More specifically, in terms of the compositionof the Board of Directors, global business development
requires the company to give consideration to nationality,
gender, and expertise in selecting members. Promoting
gender and nationality diversity is considered a key issue

The Company shall calculate the standard annual
amount for each position and grant shares (transfer-restricted) of the Company’s common stock equivalent
to that amount each year. Such shares shall also be
granted to officers at the time of appointment as executive officer or director, etc. to motivate them andMedium- andboost their morale toward improving business perforlong-term permance and increasing corporate value.
formance-based
In both cases, the restriction on transfer shall becompensation
removed at the time of officers’ resignation or retire(share with transment. Thus the compensation system ensures that
fer restriction)
officers assume responsibility for business performance and corporate value for a longer time span. In
the event that an officer resigns or retires from his or
her position within a given period from his or her
appointment or promotion, the Company shall acquire
all such shares without consideration.

for the company moving forward.

Kito Annual Report 201915

Corporate GovernanceStandards for the Appointment of
Executive Officers
The company has appointed three outside directors toensure transparency and soundness in management.

Candidates for Directors
It is a policy of the Company to elect as candidates for its
directors competent persons who are capable of carryingout their duties and responsibilities as directors in line withthe entrustment of the Company’s management by theshareholders. Based on this policy and the points listed
below, the Nominating and Compensation Committee will
be required on a formal basis to recommend candidates forthe position of director to the Board of Directors, where thefinal decision will be made.

plans, and monitor transactions involving conflict of interest
with directors or major shareholders. In the execution of
their duties outside directors hold regular meetings among
themselves and strive to exchange and share informationfrom an objective perspective. In addition, as the principal
members of the Nominating and Compensation Committee, outside directors make recommendations to the Boardof Directors regarding compensation based on evaluationsof the performance of the president, directors, and executive officers, and recommend candidates for director,
auditor, and senior executive officers.
Selection of outside directors, in accordance with separately determined “Standards for the Independence ofOutside Directors,” is based on personality, judgement, andexperience. Recommendations for outside director are made to
the Board of Directors by the Nominating and Compensation

1.

Personality and insightCommittee, in an effort to ensure highly transparent

The candidate will help secure for the Board of Directors thediversity and balance of knowledge, experience and knowhow
necessary to ensure sustainable growth and the enhancement ofcorporate value at the Company over the medium to long term.

management.

2.

Internal Controls

Internal directors are elected from among persons experi-

The Company has developed the “Basic Policy for Con-

enced in business divisions, including sales and manufactur-

struction of Internal Control System” to construct anding, and persons experienced in planning, development andoperate a system that directly monitors and controls wheth-administration divisions. Outside directors are elected fromer all of its business activities are conducted in line with theamong corporate executives and those with deep knowledge

Company’s philosophy to “Deliver Unmatched Satisfactionin the field based on their experience, insight, and expertise.

to Our Customers.” In compliance with the policy, corpo-

Candidates for Corporate Auditors

rate auditors and the Internal Audit Office take the lead in
conducting operational audits as well as the development

Taking into account the importance of audits and the function

and operation of the control system in accordance withof a corporate auditor in the management of the Company,

J-SOX.

as well as a candidate’s personality and insight, the Company’s policy is to appoint competent individuals that are fully

Compliancecapable of carrying out their duties as a corporate auditor.

The Company recognizes that ensuring compliance (obser-

Based on this policy, the Nominating and Compensation

vation of laws and regulations) is the first step toward

Committee will be required on a formal basis to recom-

establishing a reputation among its customers that “KITO is

mend the candidates for the position of corporate auditors

the brand of trust.” The Company has developed the “Com-to the Board of Directors. The final determination will be

pliance Manual” to enhance awareness in each of its

made when the consent of the Board of Corporate Auditors

employees and makes group-wide efforts to have theto present the proposal for the candidate’s appointment tomanual disseminated and known across the entire organiza-

the general shareholders’ meeting has been obtained.

tion. The Company has, as a member of the international

Outside Directors

community, established security export control regulations,and controls its exports in compliance with the regulations

Kito’s outside directors oversee the execution of duties byso that it will not disturb the maintenance of international

directors, offer opinions regarding business policies andpeace and security.

16 Kito Annual Report 2019

Environment/Society
Environment
Kito strives for clean manufacturing with minimum environmental impact in our comprehensive in-house production of
everything from parts to final products. An action principle in

U.S. subsidiary Peerless Industrial Group, Inc.
evaluated highly with award from local state
government for implementing wastewater
treatment systems

our effort to protect the environment is to reduce our carbon

Peerless Industrial Group, the largest chain manufacturer infootprint and prevent pollution in daily operations andNorth America, won the 2018 Industrial Water Quality

throughout the lifecycles of our products through goal direct-

Achievement Award presented by the Central States Water

ed management systems. This is how we contribute to help

Environment Association for its long-standing efforts withbuild a rich, sustainable society in harmony with the earth.

highly rated and effective bio-solid reduction for factory

Our Yamanashi Main Plant in Japan and our plant in Jiang-

wastewater systems.

yin, China achieved international ISO 14001 certification forenvironmental management. At our main plant we promote
production processes that are efficient and have minimal
impact on the environment. This is achieved through improving production equipment and waste procedures and throughthe establishment of in-house regulations for harmful substances and green procurement guidelines.
A good example of our results in this area is the introduction of our powder coating system in the period ended March2018. This system enabled us to successfully cut the use oforganic solvents by 90% compared to the volume in fiscal
2015. One of our main products, the EQ hoist (capacity:
980kg), acquired the EcoLeaf environmental label. Under thisprogram the Japan Environmental Management Association
for Industry (JEMAI) quantifies the environmental impact of agiven product throughout its life cycle, publishes the data andcertifies products considered environment friendly.

Kito Annual Report 201917

Environment/Society
Society
Kito invests significant effort in hiring handicapped people
in the belief that providing employment opportunities

Participation in university-based “science career-path selection support program for juniorand senior high school girls”

serves as a contribution to local communities. Based on

This program aims to increase the number of girls choosing

our policy to “create a corporate culture where the handi-a science-related degree course by removing any doubts

capped work alongside others in a completely natural way,

and anxieties about majoring in science. In accordance withand establish a workplace environment open to people ofthe program’s goals, Kito invited girls from junior and seniordifferent individual personalities, “we are working tohigh schools to its Head Office & Factory to guide them

improve the work environment in a systematic and contin-

through a realistic experience of on-site manufacturing anduous manner.

held a meeting to exchange views with female engineers.

For example, prior to handicapped people joining theCompany, to match personal aptitudes to tasks, we conduct training in multiple workplaces while introducing communication support tools for people with hearing loss,
such as portable alarming devices. In making the Head
Office Factory barrier-free, the Company is also developing
pedestrian zones, removing level differences, installing
automatic doors and toilets, and providing dedicatedparking spaces for handicapped people.
In recognition of such efforts, in September 2017 Kito
received first prize in the Ministry of Health, Labour andWelfare Minister’s Award for providing a positive example
of a disabled-friendly work environment. Kito’s employment rate for handicapped people stood at 6.96% as of
September 2019, greatly exceeding the statutory employment rate of 2.2%.

18 Kito Annual Report 2019

Six-Year Summary/Trends in Stock Price(Years ended March 31)

Financial Information
Results of Operations(Consolidated)

Millions of yen

Net sales
Operating income
Operating income ratio (%)
Ordinary income
Net income attributable to ownersof parent
Total assets
Net assets
Shareholders’ equity ratio (%)*1
Return on equity (%)
Number of employees

2014/3

2015/3

2016/32017/3

2018/ 3

2019/ 3

¥41,855
4,006
9.6
4,094

¥49,968
3,395
6.8
3,423

¥55,821
5,221
9.4
4,576

¥51,141
4,208
8.2
3,249

¥55,168
4,698
8.5
3,791

¥61,238
6,413
10.5
5,748

2,361

2,026

2,497

1,897

2,836

4,064

41,10822,003
51.2
12.3
2,094

63,18325,626
38.9
8.9
2,495

60,63926,040
41.2
10.1
2,365

60,137
21,239
33.8
8.4
2,364

61,854
23,697
36.7
13.2
2,169

62,07826,687
41.4
16.8
2,308

¥41,108
22,003
6,425
51.2
0.29
4,056
178
22.8

¥63,183
25,626
21,343
38.9
0.83
3,338
224
14.9

¥60,639
26,04019,281
41.2
0.74
4,502
450
10.0

¥60,137
21,23924,178
33.8
1.14
3,981
397
10.0

¥61,854
23,697
21,449
36.7
0.91
7,044
386
18.2

¥62,078
26,687
18,795
41.4
0.7
3,553
408
8.7

¥806.32
91.25
20.00
21.9
11.6
1.31
1,327

¥936.83
77.52
25.00
32.3
15.7
1.30
(5,064)¥952.43
95.13
28.00
29.4
8.8
0.88
930

¥1,001.60
82.38
28.00
34.0
14.4
1.19
1,839

¥1,114.03
139.52
33.00
23.7
14.2
1.78
4,853

¥1,258.34
199.14
44.00
22.1
8.4
1.32
1,973

Financial Soundness
Total assets
Net assets
Interest-bearing debt
Shareholders’ equity ratio (%)
Debt/equity ratio (Times)
Cash flow from operating activities
Interest paid
Interest coverage ratio (Times)*2
Valuation
Net assets per share (Yen)*3
Net income per share (Yen)
Cash dividends per share (Yen)
Payout ratio (%)*4
Price/earnings ratio (Times)*5
Price book value ratio (Times)*6
Free cash flow (Millions of yen)

Trends in Stock Price
(Yen)
2,500
2,000
1,500
1,000
500
0
2014/3

2014/92015/3

2015/92016/3

2016/92017/32017/92018/3

2018/92019/3*1 Net assets applicable to common stock/total assets × 100*2 Cash flow from operating activities/Interest paid
*3 Net assets applicable to common stock/average outstanding shares*4 Cash dividends/net income (consolidated)*5 Stock price (year-end)/EPS*6 Stock price (year-end)/BPS
Note: E ffective October 1, 2014, Kito conducted a 2-for-1 stock split of its common stock.
Accordingly, the Net assets per share, the Net income per share, the Cash dividends per share, and stock priceof all fiscal years are calculated the same way as after the stock split.

Kito Annual Report 201919

Financial Section
Management’s Analysis of Financial Position and Operating Results
Years ended March 31

Financial Report (All figures presented
on a consolidated basis)

fiscal year), and operating income was ¥6,282 million (anincrease of 35.4%).
• The Americas:
The U.S. economy experienced a growth in demand forresources and private- and public-sector capital expenditure. As a result, net sales in the Americas were ¥ 28,691
million (an increase of 7.1% from the same period of theprevious fiscal year) and operating income was ¥ 1,657
million (an increase of 33.4%).

Net Sales(This page provides information on the Company and its
subsidiaries by geographical segment.)
Net sales in fiscal 2018 (ended March 31, 2019) amounted
to ¥61,238 million, up 11.0% from ¥55,168 million in fiscal
2017. Net sales in Japan totaled ¥29,794 million, up
19.7% from ¥24,886 million in the previous fiscal year,
while net sales overseas amounted to ¥46,119 million, up
10.8% from ¥41,694 million.

• China
In the Chinese market, the Company’s operating environment was strong despite general concerns about a slowdown in the export industry as a result of the impact of trade
friction with the United States. In addition to demand forsemiconductors and EVs in China, by capturing demand forindustrial infrastructure such as electric power and railways,
net sales in China were ¥7,185 million (an increase of 14.7%
from the same period of the previous fiscal year). Operating
income improved to ¥910 million (an increase of 30.9%).

Cost of Sales, Selling, General and Administrative
Expenses
Cost of sales rose ¥3,407 million from the previous fiscal
year, to ¥38,693 million. The ratio to net sales decreased
0.8 percentage points, to 63.2%, from 64.0% in fiscal 2017.
Selling, general and administrative (SG&A) expenses rose¥950 million, to ¥16,132 million, with the ratio to net sales
decreasing to 26.3%, from 27.5% in the previous fiscal year.

• Asia (excluding Japan and China):
Although demand for automobile-related products and otherdemand was high, net sales in Asia (excluding Japan and
China) declined 0.3% from the same period of the previous
fiscal year to ¥4,668 million as a result of a decline indemand for clean room cranes in South Korea. Operating
income improved to ¥472 million (a decrease of 6.2%).

Total research and development (R&D) expenditures during
fiscal 2018 amounted to ¥910 million, comprising ¥820 million in
Japan, ¥21 million in the Americas, and ¥69 million in China.
Research activities focused on maximizing the cost performanceof existing mainstay products, along with basic and appliedresearch through to product development and the renewal ofexisting models with a view to future business expansion.

• Europe:
In addition to capturing increased capital investment
demand across the region as a whole, Kito Chain Italia
S.r.l., which manufactures chain-related products, became
a consolidated subsidiary, resulting in net sales of ¥3,754
million (an increase of 95.9% from the same period of theprevious fiscal year). In terms of earnings, the segment
posted an operating loss of ¥251 million (compared to an
operating loss of ¥104 million in the previous fiscal year).

Segment Information• Japan
In Japan, strong demand for private-sector capital investment continued, mainly for important public investment
related to infrastructure repair and disaster recovery, andexports also remained steady mainly for the United States.
As a result, net sales in Japan were ¥29,794 million (anincrease of 19.7% from the same period of the previous
Net Sales

Selling, General and
Administrative Expenses

Research andDevelopment Expenses(Billions of yen)(Billions of yen)(Billions of yen)

70.0

18.0

60.0
50.0

55.8
49.9

61.2
51.1

55.1

1.0

15.0

15.0

13.4

14.7

15.1

16.1

0.87

0.94

0.75

0.91
0.77

0.79

Mar. 2017

Mar. 2018

12.0

40.0
9.0

0.5

30.0
6.0

20.0

0.25
3.0

10.0
0

0
Mar. 2015

Mar. 2016

20 Kito Annual Report 2019

Mar. 2017

Mar. 2018

Mar. 20190Mar. 2015

Mar. 2016

Mar. 2017

Mar. 2018

Mar. 2019

Mar. 2015

Mar. 2016

Mar. 2019

Outlook for the Fiscal Year Ending March 31, 2020

• Other:
Net sales amounted to ¥1,901 million (a decrease of 7.2%
from the same period of the previous fiscal year), and operating loss was ¥49 million (compared to an operating loss of¥52 million in the previous fiscal year) with a focus on
improving profitability.

The business environment for the Company continued to contain uncertainties over issues such as trade policy trends in the
United States and China, the slowdown of the Chinese economy, and the status of the UK withdrawal from the EU. Despite
these concerns, in the economies of developed economies
strong demand is expected to continue from the previous fiscal year on the back of firm domestic demand. In Japan andNorth America, in addition to infrastructure-related investment
and corporate capital investment, demand is expected toremain strong, and we aim for further growth in both markets.

Operating Income
Operating income amounted to ¥6,413 million, up 36.5% from
¥4,698 million in the previous fiscal year. The operating margin
was 10.5%, up 2 percentage points from 8.5% in fiscal 2017.

Income before Income Taxes

In China, the Company has realized further growth due tothe recognition of product quality, improved market share anddeepening trade with strongly performing industries.

As a result, income before income taxes amounted to¥5,822 million, an increase of ¥2031 million from ¥3,791
million in the previous fiscal year.

In Asia (excluding Japan and China), despite uncertainties in
the Korean economy, the region as a whole is expected to
grow moderately, particularly for automobile-related products.
We will expand our product lineup in areas as such as wire
hoists and new products for light cranes. In addition to
expanding sales, we aim to grow profit further by improving
efficiency in production and the supply chain.

Income Taxes
Income taxes increased ¥774 million from the previous fiscal year, to ¥1,619 million. The ratio of income taxes toincome before income taxes was 27.8%.

Net Income Attributable to Owners of Parent
As a result, net income attributable to owners of the parent
company increased ¥1,228 million, or 43.3%, to ¥4,064 million.

To respond to globally increasing demand, we will begin toreform production lines to ensure even greater efficiency inmanufacturing at the Head Office & Factory in Yamanashi,
where an increase in production continues. In addition, we
will promote the transfer of production to the United Statesand Asia, establish a global production and supply system,
and improve the supply chain.

Dividend Policy
Kito Corporation’s basic shareholder returns goal is to maintain a consolidated dividend payout ratio of 20%. In determining its basic policy on profit distribution, the Company
takes into consideration such factors as paying an appropriate return to shareholders in consideration of performanceand the need for sufficient internal reserves to strengthen
its operations and pursue future business growth and development. For fiscal 2018, Kito Corporation declared an annual dividend of ¥44 per share, comprising an interim dividendof ¥20 per share and a year-end dividend of ¥24 per share,
which represented a dividend payout ratio of 22.1%.

Operating Income
Operating Income Ratio

Net Income Attributable to
Owners of Parent(Billions of yen)
7.0

6.4

6.0

5.2

5.0

4.2

4.0
3.0
2.0

3.3

9.4

6.8

8.2

Cash Dividends per Share

(%)(Billions of yen)

(Yen)

21.0

5.0

50

18.0

4.0

4.0

44
40

15.0

4.6
10.5
8.5

12.0
9.0

3.0

2.4
2.0

2.0

33

30

2.8

25

28

28

Mar. 2016

Mar. 2017

20

1.8

6.0

1.0

3.0

0

0
Mar. 2015

As a result, for the fiscal year ending March 31, 2020, theCompany is forecasting consolidated net sales of ¥62,800 million, with operating income of ¥6,700 million, ordinary incomeof ¥6,400 million, and net income attributable to owners of
the parent company of ¥4,300 million. The foreign currency
exchange rate assumption for these forecasts is
US$1=¥110.0.

Mar. 2016

L Operating Income

Mar. 2017

Mar. 2018

Mar. 2019

P Operating Income Ratio

1.0

10

0

0
Mar. 2015

Mar. 2016

Mar. 2017

Mar. 2018

Mar. 2019

Mar. 2015

Mar. 2018

Mar. 2019

Note: Effective October 1, 2014, Kito conducted a2-for-1 stock split of its common stock.
Accordingly, the Cash dividends per share of all
fiscal years are calculated the same way as after
the stock split.

Kito Annual Report 201921

Financial Section
Management’s Analysis of Financial Position and Operating Results‌Financial Position

compared to the previous fiscal year. The main factors
were ¥1,304 million in payments for the acquisition ofproperty and equipment; ¥328 million in proceeds fromthe sales of property and equipment; and ¥195 million in
payments of stocks of subsidiaries and affiliates.

Assets, Liabilities, and Net Assets
Total assets amounted to ¥62,078 million, an increase of¥224 million compared to the end of the previous fiscal
year. The main factors were a ¥2,102 million decrease in
cash and deposits; a ¥1,140 million increase in notes andaccounts receivable–trade; and a ¥2,664 million decrease
in merchandise and finished goods.
Total liabilities amounted to ¥35,391 million, a decreaseof ¥2,766 million compared to the end of the previous fiscal year. The main factors were a ¥1,337 million increasein short-term loans payable; a ¥539 million increase inaccrued expenses; and a ¥3,768 million decrease in longterm loans payable.
Net assets amounted to ¥26,687 million, an increase of¥2,989 million compared to the end of the previous fiscal
year. The main factor was a ¥3,189 million increase inretained earnings. As a result, the Company’s shareholders’ equity ratio increased to 41.4%.
Return on equity increased 3.6 percentage points from
13.2% at the end of the previous fiscal year to 16.8% asof March 31, 2019.

Net cash used in financing activities amounted to¥4,279 million, an increase in cash used of ¥1,196 million
compared to the previous fiscal year. The main factors
were ¥1,033 million in changes in short term loans and¥4,806 million in repayments of long-term loans payable.
As a result of these activities, as of March 31, 2019,
cash and cash equivalents stood at ¥8,504 million, adecrease of ¥2,265 million from March 31, 2018.

‌Risk Factors
Risk factors that have the potential to affect the Kito
Group’s operating performance and financial position are
as follows.
Trends in Economic Conditions and the Operating
Environment

Capital expenditure totaled ¥1,321 million in fiscal 2018.
The Group spent ¥617 million of this in Japan, mainly on
renewal of power distribution equipment. Depreciation
and amortization amounted to ¥2,470 million.

Demand for the Group’s products is substantially affectedby changes in economic conditions, including capital
investment. Not only in Japan, but also in the Americas
and Asia, including China, where the Group generates considerable sales, trends in the operating environment havethe potential to impact the Group’s operating performanceand financial position.

Cash Flows

The Kito Group’s Sales Structure

Net cash provided by operating activities amounted to¥3,553 million, a decrease of ¥3,490 million compared tothe previous fiscal year. The main factors were ¥5,822 million in income before income taxes; ¥2,470 million in
depreciation and amortization; and an increase in changes
in inventories of ¥1,949 million.

Although Kito sells certain of its specialty and other products directly to end users, it is dependent on sales agentsfor the marketing and sale of its other products and provides these agents with commissions and other incentive
payments. The Kito Group has maintained fruitful andcooperative ties with sales agencies for many years, and,
thereby, has created sales and service networks covering
many countries. Kito understands the customer base

Capital Expenditure and Depreciation

Net cash used in investing activities amounted to¥1,580 million, a decrease in cash used of ¥610 million
Working Capital*
Current Ratio

Total Net Assets
Shareholders’ Equity Ratio

Interest-Bearing Debt
Debt/Equity Ratio(Billions of yen)

(%)(Billions of yen)

(%)(Billions of yen)

25.0

300

30.0

60

25.0

48

20.0

36

15.0

23.3

22.5

20.0
15.0

236

249

17.9
189

20.3

20.3

240

24.0

209

200

180

18.0

120

12.0

5.0

60

6.0

0

0
Mar. 2016

Mar. 2017

Mar. 2018

L Working Capital P Current Ratio* Current assets minus current liabilities

22 Kito Annual Report 2019

Mar. 2019

26.7

26.0
41.2

10.0

Mar. 2015

25.6

38.9

21.2
33.8

23.6

36.7

41.4

0
Mar. 2015

Mar. 2016

L Total Net Assets

Mar. 2017

Mar. 2018

24

10.0

12

5.0

0

0

Mar. 2019

P Shareholders’ Equity Ratio(Times)
1.5

24.1
21.3

19.2

1.14

21.4
18.7
0.91

0.83

1.2
0.9

0.7
0.6

0.74

0.3
0
Mar. 2015

Mar. 2016

Mar. 2017

L Interest-Bearing Debt

Mar. 2018

Mar. 2019

P Debt/Equity Ratio

event that sales in these regions stagnate, the potential
exists for the Group’s financial position and operating performance to be negatively affected.

using its products, which comprises a range of companies
in many industries. The Kito Group is confident in its ability
to build and maintain positive relationships with theseagents. However, since the Company’s sales are highly
dependent on the marketing activities of its agents, in theevent that relationships with these agents deteriorate or
there are difficulties in maintaining ongoing ties, the potential exists for the Group’s financial position and operating
performance to be negatively affected. Please note, however, that, during fiscal 2018, there were no sales agentsthat accounted for more than 10% of the Group’s consolidated net sales.

The Impact of Factors such as Foreign Currency
Exchange Rates

While the principal production centers of the Kito Groupare located in Japan, in recent years, sales in overseas
markets have expanded. Since the Group includes overseas subsidiaries with sales and assets denominated inforeign currencies, the potential exists for fluctuations inforeign currency values to have a major impact on theGroup’s performance and financial condition. In addition,
the potential also exists for fluctuations in foreign currency
rates to have an effect on the prices of materials that theGroup procures from overseas. Other risks are identified
as follows. Other risks are identified as follows.

Country Risk

The Kito Group conducts business in many countries
around the world in addition to Japan, including in theAmericas, China and other parts of Asia, and Europe.
These foreign countries and regions encompass different
economic, social, and political factors than those in Japan.
Accordingly, there is a possibility for unforeseeable situations to occur, due not only to foreign currency exchangerisk, but risks arising from trade friction and other economic factors, social risks such as labor problems caused bydifferences in culture or customs, or endemic illnesses,
and risks related to international politics such as war andterrorism, as well as unexpected risks in building relationships with trading partners due to differences in businesspractices. Should these risks become manifest, there
could be an impact from such factors as productivity
decline in the manufacturing process or suspension ofsales activities, with the possibility of a negative effect on
the Group’s business results or financial condition.

• Competition • Product defects• Impact attributable to the procurement of principal raw
materials and components, etc.

Percentage of Overseas Sales

The ratio of the Group’s overseas sales to consolidated net
sales was 73.6%. Dependence for sales on the Americas
and the Asian region, including China, is high, with 45.2%
of sales made in the Americas and 19.2% in Asia. In the
ROA

Capital Expenditure Depreciation

Free Cash Flow*(%)(Billions of yen)(Billions of yen)

7

2.5

2.0
1.8

2.0

5

4.1

4
3

4.6

1.5

3.2

2.1
1.7

1.4
1.3

0

1.3

Mar. 2016

Mar. 2017

Mar. 2018

Mar. 2019

0.9

1.9

1.8

0
-2.0
-4.0

0
Mar. 2015

4.8

2.0

1.6

0.5

1

6.0
4.0

1.0

3.2

2

2.4

2.2

6.5

6

-6.0
Mar. 2015

Mar. 2016

Mar. 2017

Mar. 2018

L Capital Expenditure L Depreciation

Mar. 2019-5.0
Mar. 2015

Mar. 2016

Mar. 2017

Mar. 2018

Mar. 2019* Cash flow from operating activities + Cash flow frominvesting activities

Kito Annual Report 201923

Financial Section
Consolidated Balance Sheets
As of March 31

Millions of yen
2018

2019

¥10,780¥ 8,678

11,447

12,587

10,673

13,337

1,748

1,231

3,081

3,356

1,287

1,396

(Assets)
Current assets
Cash and deposits
Notes and accounts receivable—trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Other current assets
Allowance for doubtful receivables   Total current assets
Fixed assets
Property and equipment   Buildings and structures   Accumulated depreciation    Buildings and structures (net)   Machinery, equipment, and vehicles   Accumulated depreciation    Machinery, equipment, and vehicles (net)  Land   Construction in progress  Others   Accumulated depreciation   Others (net)    Total property and equipment
Intangible assets  Goodwill  Software   Other intangible assets   Total intangible assets
Investments and other assets
Investment securities
Deferred tax assets
Net defined benefit assets
Other investments and other assets    Total investments and other assets    Total fixed assets     Total assets

24 Kito Annual Report 2019

(43)

(63)

38,97540,524

10,833

11,003(6,359)(6,618)

4,473

4,385

18,403

19,111(13,579)(14,445)

4,823

4,666

1,497

1,444

284

372

6,264

6,383

(5,795)(5,968)469

415

11,54911,283

1,926

1,650

1,705

1,261

3,209

3,180

6,841

6,093

1,312

801

1,727

1,805

81

173

1,366

1,396

4,488

4,176

22,87921,554¥61,854¥62,078Millions of yen
2018

2019

¥ 6,143¥ 6,483

1,506

2,844

4,212

3,988

2,949

3,488

795

1,065

803

843

(Liabilities)
Current liabilities
Notes and accounts payable—trade
Short-term loans payable
Current portion of long-term debts payable within one year
Accrued expenses
Income taxes payable
Provision for bonuses for employees
Provision for product warranties
Provision for sales returns
Other current liabilities   Total current liabilities
Long-term liabilities
Long-term loans payable
Provision for directors’ retirement benefits
Net defined benefit liabilities
Deferred tax liabilities
Other long-term liabilities   Total long-term liabilities   Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock   Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on other available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans   Total accumulated other comprehensive income
Subscription rights to shares
Non-controlling interests   Total net assets     Total liabilities and net assets

33

85

290

308

1,880

1,074

18,61620,183

15,731

11,962

211

221

2,407

1,996

1,087

924

103

102

19,541

15,20738,15735,391

3,976

3,976

5,210

5,214

18,674

21,863(5,749)(5,725)

22,111

25,328

0

0

106

52

724

552

(228)

(242)

602

362

48

50

935

945

23,697

26,687¥61,854¥62,078

Kito Annual Report 201925

Financial Section
Consolidated Statements of Income
Years ended March 31

Millions of yen
2018

2019

Net sales¥55,168¥61,238

Cost of sales
Gross profit
Selling, general, and administrative expenses
Selling expense
General and administrative expense   Total selling, general, and administrative expenses
Operating income
Non-operating income
Interest income
Rents received
Proceeds from the sales of scrap
Other   Total non-operating income
Non-operating expenses
Interest expense
Equity in losses of affiliates
Foreign exchange losses
Other   Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of fixed assets
Gain on sales from liquidation of subsidiaties   Total extraordinary income
Extraordinary loss
Loss on sale of fixed assets
Loss on retirement of fixed assets

35,286

38,693

19,881

22,545

11,44012,033

3,742

4,098

15,182

16,132

4,698

6,413

29

42

31

27

Impairment loss   Total extraordinary loss
Income before income taxes
Income taxes – current
Income taxes – deferred
Income taxes (current and deferred)
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of parent

26 Kito Annual Report 2019

52

50

90

123

204

245

395

406

245

147

212

132

257

224

1,111

910

3,791

5,748

—

170

—

24

—

195

—

45

—

35

—

39

—

121

3,791

5,822

1,124

1,976

(278)

(357)

845

1,619

2,945

4,203

109

138

2,836

4,064

Consolidated Statements of Comprehensive Income
Years ended March 31

Millions of yen

Net income
Other comprehensive income
Valuation difference on other available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Share of other comprehensive income of entities accounted for using equity method   Total other comprehensive income
Comprehensive income(Comprehensive income attributable to)
Owners of the parent
Non-controlling interests

2018

2019

¥2,945¥4,203

(0)

(0)

72

(53)

(160)

(264)

122

22

74

(28)

109

(324)

¥3,054¥3,878

2,908

3,786

146

92

Kito Annual Report 201927

Financial Section
Consolidated Statements of Changes in Net Assets
Years ended March 31

Shareholders’ equity

Capital stock

Capital surplus Retained earnings

Treasury stock

Total shareholders’equity¥(5,816)¥19,814

Fiscal year ended March 31, 2018
(April 1, 2017 to March 31, 2018)
Balance as of the beginning of the period¥3,976¥5,226¥16,427

Changes during the period
Dividends from surplus

(589)

(589)

Net income attributable to owners of parent

2,836

2,836

Purchase of treasury stock(16)

Disposal of treasury stock

(0)

(0)

67

51
—

Change in the scope of consolidation Adjusted in retained earnings due to
US tax reform Changes of items other thanshareholders’ equity during the period(net)    Total changes during the period   Balance as of the end of the period

—

—

(16)

2,246

67

2,297

¥3,976¥5,210¥18,674¥(5,749)¥22,111

Shareholders’ equity

Capital stock

Capital surplus Retained earnings

Treasury stock

Total shareholders’equity¥(5,749)¥22,111

Fiscal year ended March 31, 2019
(April 1, 2018 to March 31, 2019)
Balance as of the beginning of the period¥3,976¥5,210¥18,674

Changes during the period
Dividends from surplus

(775)

(775)

Net income attributable to owners of parent

4,064

4,064

Purchase of treasury stock3

Disposal of treasury stock
Change in the scope of consolidation Adjusted in retained earnings due to
US tax reform Changes of items other thanshareholders’ equity during the period(net)    Total changes during the period   Balance as of the end of the period

28 Kito Annual Report 2019

(0)

(0)

23

27

(148)

(148)

48

48

—

3

3,189

23

3,216

¥3,976¥5,214¥21,863¥(5,725)¥25,328

Millions of yen
Accumulated other comprehensive income
Valuationdifference onother availablefor-sale securities

Deferred gains
or losseson hedges

Foreign currencytranslation
adjustment

Remeasurementsof defined
benefit plans

Total accumulated
othercomprehensive
incomeStockacquisitionrights to shares

Non-controllinginterests

Total net assets

¥0

¥ 33

¥847

¥(351)

¥529

¥45

¥850

¥21,239
(589)
2,836
(0)
51
—
—

(0)

72

(122)

122

72

2

84

160

(0)

72

(122)

122

72

2

84

2,457

¥0

¥106

¥724

¥(228)

¥602

¥48

¥935

¥23,697

Millions of yen
Accumulated other comprehensive income
Valuationdifference onother availablefor-sale securities

Deferred gains
or losseson hedges

Foreign currencytranslation
adjustment

Remeasurementsof defined
benefit plans

Total accumulated
othercomprehensive
incomeStockacquisitionrights to shares

Non-controllinginterests

Total net assets

¥0

¥106

¥724

¥(228)

¥602

¥48

¥935

¥23,697
(775)
4,064
(0)
27
(148)
48

(0)

(53)

(172)

(13)

(239)

2

10

(226)

(0)

(53)

(172)

(13)

(239)

2

10

2,989

¥0

¥ 52

¥552

¥(242)

¥362

¥50

¥945

¥26,687

Kito Annual Report 201929

Financial Section
Consolidated Statements of Cash Flows
Years ended March 31

Millions of yen
2018

2019

¥3,791¥5,822

2,116

2,470

Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Impairment loss
Depreciation of goodwill
Changes in allowance for doubtful receivables
Changes in reserve for bonuses for employees
Changes in reserve for retirement benefits for officers
Changes in net defined benefit liabilities
Interest and dividends income
Interest expense
Equity in earnings of affiliates
Loss on the retirement of noncurrent assets
Gain on sales of noncurrent assets
Changes in trade receivables
Changes in inventories
Changes in accounts receivable
Changes in prepaid expense
Changes in trade payables
Changes in accrued expenses
Changes in advances received
Others  Subtotal
Cash received from interest and dividends
Interest paid
Income taxes paid
Net cash provided by operating activities

30 Kito Annual Report 2019

—

39

327

317

(17)

21

138

45

21

9

86

(413)

(29)

(42)

395

406

245

147

17

35

(5)

(124)

(441)

(921)

(445)

(1,949)

(36)

(0)

13

(95)

732

141

717

491

354

(554)

91

(380)

8,073

5,464

29

63

(386)

(408)

(672)

(1,565)

7,044

3,553

Millions of yen

Cash flows from investing activities
Payments for the acquisition of property and equipment
Proceeds from the sales of property and equipment
Payments for the acquisition of intangible assets
Changes in fixed deposits
Payments of stocks of subsidiaries and affiliates
Payments for investments in capital of subsidiaries and affiliates
Proceeds from the collection of guarantee money deposited
Changes in investments and other assets
OthersNet cash used in investing activities
Cash flows from financing activities
Changes in short term loans
Proceeds from long-term loans payable
Repayments of long-term loans payable
Cash dividends paid by parent company
Cash dividends paid for non-controlling interests
OthersNet cash used in financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Increase (decrease) in cash and cash equivilents resulting from a change in the scope of
consolidation
Cash and cash equivalents at the end of the year

2018

2019

¥ (1,030)¥ (1,304)

27

328

(380)

(111)

(1)

(168)

(498)

(195)

(178)

—

16

37

(134)

(47)

(10)
(2,191)(118)(1,580)¥ (5,179)¥ 1,033

6,723

450

(3,779)(4,806)

(588)

(774)

(96)

(81)

(163)

(100)

(3,083)(4,279)

(59)

(67)

1,710

(2,373)

9,059

10,769—108

10,7698,504

Kito Annual Report 201931

Stock Information
Stock Code6409

Total Number of Shares Issued 27,048,200

Date of Listing

August 9, 2007

Trading Unit of Shares

100

Stock Exchange Listing

Tokyo Stock Exchange, First Section

Number of Shareholders

Transfer Agent andAdministrator ofSpecial Account

Sumitomo Mitsui Trust Bank, Limited
1-4-1, Marunouchi, Chiyoda-ku, Tokyo

4,762, excluding one treasury
stockholder

Major Shareholders (top 10) (As of March 31, 2019)

Shareholders’ Composition by Category (As of March 31, 2019)
Number Percentageof shares of ownership (%)(shares)Name of shareholders

MISAKI ENGAGEMENT MASTER FUND

1,880,300

9.21

The Master Trust Bank of Japan, Ltd. (Trust Account) 1,566,100

7.67

Japan Trustee Services Bank, Ltd. (Trust Account)

1,301,700

6.38

Japan Trustee Services Bank, Ltd. (Trust Account 9)   953,100

4.67

GOVERNMENT OF NORWAY  767,202

3.76

YK Capital Co., Ltd.

  740,000

3.62

Sumitomo Mitsui Banking Corporation  670,400

3.28

GOLDMAN, SACHS & CO REG  527,100

2.58

Trust & Custody Services Bank, Ltd.( Securities
Investment Trust Account)  451,100

2.21

GOLDMAN SACHS INTERNATIONAL  445,600

2.18

Financial Institutions
26.11%
Individuals, etc.
40.75%

Securities Firms
1.16%
Other
Corporations
4.73%
Foreign-AffiliatedCorporations andForeigners
27.25%

Notes: 1. S hare ownership percentages were calculated after the deduction of treasury
shares (6,631,768 shares).
2. T he names of shareholders have been adjusted to those shown on the
Company’s Shareholder Registry which is maintained by the Administrator of
Shareholder Registry as of the end of fiscal 2017.

Trends in Kito’s Stock Price
Stock Price (Yen)
3,000
2,500
2,000
1,500
1,000
500
0
Trading Volume (Thousands of shares)
4,500

3,000

1,500

0
2015/4

2015/732 Kito Annual Report 20192015/10

2016/1

2016/4

2016/7

2016/102017/1

2017/42017/72017/10

2018/1

2018/42018/7

2018/10

2019/1

Corporate Profile

Company Name

KITO CORPORATION

Established

July 1944 (started Nov. 1932)

Head Office & Factory

2000, Tsuijiarai, Showa-cho,
Nakakoma-gun,
Yamanashi 409-3853, Japan

Number of Employees(March 31, 2019)

Consolidated: 2,308
Non-consolidated: 677

Capital¥3,976 million

Net Sales

Consolidated: ¥61,238 million
Non-consolidated: ¥29,794 million

Tokyo Head Office

President & CEO

SHINJUKU NS Building 9F,
2-4-1, Nishi-Shinjuku, Shinjuku-ku,
Tokyo 163-0809, JAPAN
Tel: +81-3-5908-0155(March 31, 2019)

Yoshio Kito

Principal Offices and Factories (As of July 1, 2019)
L Domestic Offices/Factories and Bases of Subsidiaries
Name of Business Office

L Bases of Overseas Subsidiaries

Location

Company NameCountry

Head Office & Factory

Showa-cho, Nakakoma-gun, Yamanashi

KITO Americas, Inc.

U.S.A.

Tokyo Head Office

Shinjuku-ku, Tokyo

Harrington Hoists, Inc.

U.S.A.

Sapporo Office

Sapporo, Hokkaido

PEERLESS INDUSTRIAL GROUP, INC.

U.S.A.

Sendai OfficeSendai, Miyagi

Peerless Chain Co., Inc.

U.S.A.

Shin’etsu OfficeNiigata, Niigata

KITO CANADA INC.

CanadaKita Kanto OfficeOta, Gunma

Yokohama Office

Yokohama, Kanagawa

KITO DO BRASIL COMÉRCIO DE TALHASE GUINDASTES LTDA.

BrazilNagoya Sales Group

Nagoya, Aichi

Kito Europe GmbHGermany

Shizuoka OfficeHamamatsu, Shizuoka

Kito Chain Italia S.r.l.

Italy

Hokuriku OfficeToyama, Toyama

Van Leusden B.V.

Netherlands

Osaka Sales Group

Moriguchi, OsakaJIANGYIN KITO CRANE CO., LTD.

China

Chubu and Shikoku Office

Okayama, Okayama

KITO HOISTS & CRANES (SHANGHAI) CO., LTD.

China

Fukuoka Office

Fukuoka, Fukuoka

KITO TAIWAN CO., LTD.

TaiwanKashiwa, Chiba

KITO KOREA CO., LTD.

Korea

SIAM KITO CO., LTD.

Thailand

SUKIT BUSINESS CO., LTD.

ThailandPT. KITO INDONESIA

Indonesia

KITO HOISTS & CRANES ASIA PTE. LTD.

Singapore

ARMSEL MHE PVT. LTD.

India

Kito Australia Pty. Ltd.

Australia

Anchor Nominees Pty. Ltd.

Australia

PWB Anchor Ltd.

Australia

ERIKKILA OY

Finland

SCC Japan Godo Kaisha

Kito Annual Report 201933

KITO CORPORATIONSHINJUKU NS Building 9F, 2-4-1, Nishi-Shinjuku,
Shinjuku-ku, Tokyo 163-0809, JAPANhttps://kito.com

Printed in Japan