Integrated Report

2024

ESG Promotion Dept., Corporate Infrastructure Division
2-2-13, Fujinoki, Itami City, Hyogo 664-0847, Japan
Tel: +81-72-789-9126
https://www.toyotires.co.jp/csr/
Publishing date: August 2024** It is English version published.
Japanese version was published in July 2024.

Editorial Notes
Editorial policy

As a key element of engagement with
our stakeholders
It is our stated policy that, being strongly aware that every action in our business is linked to society
and the future, we will seek to fulfill our purpose by solving social issues through our corporate
activities and creating social value.
Last year, we published an integrated report for the first time in order to share our vision of thesociety we are seeking to bring about through our corporate activities, and to provide information on
the initiatives we are undertaking to make that society a reality. We are delighted that so many of our
stakeholders have read the report, which we hope has helped your understanding of the future we areworking toward.
Our workforce, led by the management team, has been exploring what our strengths are anddeveloping our vision of a sustainable society further. We have also received invaluable feedback frommany of our stakeholders who have read the first Integrated Report. Based on the insights gained
through this process, we have made some changes to improve the clarity of our value creation
storytelling in this year’s Integrated Report.
This report will form the basis of our ongoing engagement with our stakeholders, which will
enable us to further enrich society through our corporate activities.

Reporting period:

Guidelines and other references:

From January 2023 to December 2023
* The report contains some informationfrom outside the above period• International Integrated Reporting
Council (IIRC),
The International Integrated Reporting
Framework• Japan’s Ministry of Economy, Trade andIndustry, Guidance for Collaborative Value
Creation 2.0• Global Reporting Initiative,GRI Standards (sustainability reporting
standards)

Scope:
Toyo Tire Corporation and groupcompanies in and outside Japan(consolidated subsidiaries)

Organization names in this report:
Toyo Tire Corporation itself is referred
to as “Toyo Tire Corporation” or “we”
The entire Group is referred to as“Toyo Tire Group,” “the Group” or “we”
Individual companies in the Group arereferred to by their company nameNote on forward-looking statements
This report contains forward-looking
statements concerning future performance.
These statements are not a guarantee of
future performance and involve risks anduncertainties. Please note that factors suchas changes in the operational environment
may cause the actual future performance
to deviate from planned figures.

CONTENTS
Introduction

1

3

Our Philosophy

7

Growth Trajectory9

At a glance

VisionMateriality

17

Value Creation Process

35

Domain Ⅰ

Value creation

71

Financial Summary (11 years)

19

Our Strengths

41

Domain Ⅱ

Foundation for value creation

73

Consolidated Balance Sheets

21

External Environment and
Risks & Opportunities

47

Domain Ⅲ

Risk management75

23

Toyo Tire Materiality

Close-up

Consolidated Statements of Income /Consolidated Statements of Comprehensive Income

76

Consolidated Statements of Cash Flows

57

TNFD

77

Investor Information

58

Human Rights

78

Corporate Data

Top Message

Strategy

11

25

Financial Strategy

28

Medium-Term ’21 Plan Progress

28

Progress on R&D, production andsales strategies

29

Progress on key performance indicators

29

Progress on Digital transformation

30

Progress of Tire Business

33

Progress of Automotive Parts Business

34

Financial Highlights

Message from the President

TOYO TIRE Integrated Report 2024

Data

Governance59

Pursuing sound governance64

Message from the Chairman

Positioning of this report
Financial information

Integrated Report 2024

ESG Promotion Dept., Corporate Infrastructure Division
2-2-13, Fujinoki, Itami City, Hyogo 664-0847, Japan
Tel: +81-72-789-9126
https://www.toyotires.co.jp/csr/
Publishing date: July 2024** It is English version published.
Japanese version was published in August 2024.

65

Messages from the Outside Directors

69

Directors, Audit & Supervisory Board Members
and Corporate Officers

Integrated Report2024

Securities report in JapaneseCorporate website
IR

Corporate Governance reportin JapaneseCorporate website
Sustainability

Comprehensive

Editorial Notes / Contents

Concise1

Non-financial information

TOYO TIRE Integrated Report 20242

Introduction

Our Philosophy
Philosophy (Defined in January 2017)
Company Philosophy

We will endeavor to continuously
improve our products, and create value
for everyone who we work with.

Our Mission

To create excitement and surprise with our products thatexceed customer expectations and enriches society.

The highest-order concept in the
Company philosophy framework
The founding spirit we maintainand pass on to the future
Our promise to society and toourselves

Company
Philosophy

Our Mission

Our Vision

Our Vision
Our goal is to be a company that:- Stays one step ahead of the future through constant technological innovation;- Drives entrepreneurial and creative spirit through a progressive culture; and- Shares in the enjoyment felt by everyone involved in our activities.

The vision of how we want our Company
to be in order to keep our promise tosociety (=our mission)

The principles each of us value that guideour mission and promise and make ourvision a reality

Our Fundamental Values:“The TOYO WAY”

Our Fundamental Values: “The TOYO WAY”
Fairness

Be fair and selfless in one’s actions to benefit society.

Pride

Take pride in one’s self, work and company, and to persevere.

Initiative

Show initiative in all matters, and take ownership of one’s actions.

Appreciation Demonstrate sincere compassion and appreciation for people andsociety.
Solidarity

3

Open Roads Await

Continuously advance creativity and innovation by working
together to mobilize our corporate knowledge and capabilities.

TOYO TIRE Integrated Report 2024

TOYO TIRE Integrated Report 2024

4

Introduction

Our Philosophy

Our Philosophy and Sustainability

Our Philosophy was published in 2017, reviewing the old Philosophy statements we had up until then. This change wasprompted by the issue of data fabrication that came to light in 2015 concerning the seismic isolation rubber business andanti-vibration rubber business. As the Company faced this existential crisis in 2016, the management team responded to theneed to take another, serious look at our social mission and responsibility so that we can reemerge as a company that societyneeds and relies on, and decided, as the first step, to reform the company culture and realign the values shared by all officers
and employees by reviewing and reconstructing our Philosophy.
The guiding principle of the company-wide project was to approach the task not merely from the perspective of
implementing a root-and-branch reform of the organizational culture that led to the problem, but also from the perspective of
how a global business must act and behave. Under this guiding principle, we discussed and debated three key questions:“what values do our colleagues hold as important through work?”; “what values have we come to learn as important in view ofthe scandals we have gone through?”; and “what values do we want to hold on to as important now and in the future?” Thecommon values distilled from the dialogue were put together to formulate our new Philosophy statements.

At work,
what values do ourcolleagues hold asimportant at work?

In view of the scandals,

Now and in the future,what values have we cometo learn as important?

what values do we want tohold on to as important?

Words

Words

When we launched the Medium-Term ’21 Plan, we made clear that our purpose as a company was to make our Philosophy areality, and that the management plan was a means of achieving it.
When we started working on the shift toward sustainability management presented in the Medium-Term ’21 Plan, thisshared understanding provided a basis for our discussions of policies to promote sustainability and of the material issues for
the Company, enabling us to keep to the essence of the ideas contained in the Philosophy statements such as contributing to
the enrichment of society through our business and serving and caring for our stakeholders. One of our key focuses was toensure that the way we viewed and considered was always connected to the Philosophy so that we stayed true to ouruniqueness, and through four months of these discussions, we identified our material issues. We strive to embody our
Philosophy through the efforts to address these material issues.
Our Mission

Material issues

To create excitement and surprise with our products thatexceed customer expectations and enriches society.

❶ Help create a society of sustainable mobility

Our Vision❸ and job satisfaction

Support diverse talent with motivating challenges

Our goal is to be a company that:- Stays one step ahead of the future through constanttechnological innovation;

Words- Drives entrepreneurial and creative spirit through a
progressive culture; and- Shares in the enjoyment felt by everyone involved in
our activities.

Shared philosophy❷ Support the enjoyment of mobility for all

Continue innovating next-generation mobility❹ technology❺ Pursue decarbonization in all corporate activities❻ Promote supply chain sustainability
Ensure the fundamentals of manufacturing: quality❼ and safety→ See p.23-24 for details of material issued.

The Spirit That Underpins Our Company Philosophy
We will endeavor to continuously improve our products, andcreate value for everyone who we work with.
Our Company Philosophy was established by the founding president, Rikimatsu Tomihisa, in September 1950 to serve as aclear statement of his management philosophy. This short statement reflects the noble spirit that he believed business people
should aspire to in a time when Japan’s economy was rising out of the post-war period of rebuilding to a phase of rapid growthdubbed the Japanese economic miracle. However, this spirit that underlies our Company Philosophy is not an outdated ideathat is relevant only to manufacturing in times of material scarcity. Times may have changed and our business environmenttransformed, but the perspectives and insights contained in these words still ring true today. What materials do we use to
make our products? How do we make them? What value do we provide to the customers who pay us? We believe that wemust continue exploring these questions as we respond to the demands of our times and look to the future. The principle
behind the Company Philosophy, that we must sell valuable products at the right prices, is the spring from which our value
creation process flows.
For this reason, we place our Company Philosophy at the top of our Philosophy statements as the spirit that we should
always maintain and pass on into the future as we engage in our work.
[The spirit that underpins our Company Philosophy]
Industry progresses steadily day by day and never rests.
We must understand the importance of our work welland make progress every day.
We must research, create and be ingenious, always
determined that we will be better today than yesterday.
Abundance of high-quality materials may make it easierto produce good products, but they are not always
available, and knowledge and skills vary also fromperson to person.
We must start with the understanding that there are too
many change factors to have stability, and be relentless

5

TOYO TIRE Integrated Report 2024

in our pursuit of improvement in order to produce good,balanced products consistently.
Our motto must be to sell valuable products at the rightprices, and we must above all refrain from seeking to profiteer
to the detriment of people.
Consumers do not just mean customers; the next process atwork is also a consumer.
Everyone in a company is a necessary person. Conversely,
every person has an important responsibility.
Everyone must do their very best at work.

Instilling the Philosophy
Since the Philosophy was defined, we have continuously been implementing a variety of initiatives to raise the awareness andunderstanding of it across our workforce.
In Japan, the Philosophy is incorporated in our internal training program, including case workshops to promote theunderstanding of the importance of embedding visions and strategies that are linked to the Philosophy in workplaces, andgroup-based workshops to share creative ideas to promote the Philosophy within each organization. At our international sites,
the Philosophy is included in the e-learning course on sustainability to raise awareness. The Philosophy statements are framed
and hung on the wall of meeting rooms and visitor reception rooms at each site as a reminder to reflect on at moments ofuncertainty in the course of work and renew our commitment to customers.
Our human resources management system clarifies what is expected of each role at each level and one of the
expectations is “to embody and instill the Philosophy.” By ensuring that the evaluation and career progression of employees
are based not only on their performance in achieving targets but also on their ways of “thinking and acting” through whichthose achievements were made, we nurture a pool of talents that not only understand the Philosophy as knowledge but
embody it in their performance of tasks and running of departments.

VOICE

Comments of sustainability e-learning participants on the Philosophy

America

EuropeAsia

I like our Philosophy, and I agree in
giving the society as much value as
we can give with our product. I
guess is implicit in the idea, and, inmy opinion, honoring the workers or
employees that make the mission
be successful would help to betterown the mission.

Our philosophy will help us to turnToyo into a sustainable company. The
implementation of the philosophy willchange the thinking in the company
and also increase the appreciation of
the company by third parties (society,employees, customers, suppliers).

I like the Toyo Tire Group Fundamental Values:
The Toyo Way. Always treat our company as
our second home by working together as ateam and showing initiatives in all matters. By
supporting each other can create continuity inbusiness and foremost employee loves andenjoy coming to work every day.

TOYO TIRE Integrated Report 2024

6

Introduction

Growth Trajectory

Operations & management

The Toyo Tire Group can trace its roots back to 1945, a time of unprecedented disarray around the end of World War II.
Since then, we have experienced a period of high economic growth and the bubble economy, and we have overcome
recessions, continuously delivering a multitude of values, including “safety,” “the joy of driving” and “a society ofsustainable mobility,” to the world by expanding globally while adapting to the diversifying automobile market.

1945-1970:
Founding and groundwork for growth

1971-2003:
Diversification and globalization

In August 1945, Toyo Rubber Industrial, which was established anddeveloped by Toyo Boseki (currently, Toyobo) in order to develop therubber industry, merged with Hirano Rubber Manufacturing, acompany whose operations Toyo Boseki had invested in andstrengthened, resulting in the establishment of Toyo Tire & RubberCo., Ltd. Both predecessor companies’ main factories had been
severely damaged in air raids and our history started with rebuilding
the devastated business environment. Since our founding we have
kept technology in our sights, and in 1946 we established adepartment to develop elemental technologies, the precursor to theCentral Research Center, as well as the Toyo Institute of Rubber,
Industry and Technology. In 1950, after wartime restrictions werelifted, we began producing rubber products, aiming to make theleap to a general rubber company. In 1952, we launched thelong-awaited RS (Royal Wing Special) Tire. In 1966, while expanding
our sales network, we took thelead in the industry by
establishing Toyo Tire (U.S.A.)
Corp. in the U.S. (currently Toyo
Tire U.S.A. Corp.) and expanded
the scale of our business, riding
the wave of rapid economic
growth.
Former Central Research CenterIn the early 1970s, our diversification andstimulation strategy promoted four businesses:
tires, chemicals, footwear and industrial goods.
Following the oil crisis, during a period in which
we found it extremely difficult to secure raw
materials, we focused on improving ourorganizational structure. In 1979, we entered into
a comprehensive business partnership with Nitto
Tire Co., Ltd. and reorganized our production
bases. We also further expanded our sales
strategy outside Japan by establishing local
subsidiaries in Australia and what was West
Germany. In an effort to strengthen our
technological development we opened theAutomotive Parts Technical Center in 1986 andthe Toyo Technical Center (currently, the Tire
Technical Center) in 2001.

Tire Technical Center

Changes in operating income

Toyo Institute of Rubber, Industry andTechnology

7

Ceremony to celebrate the first shipmentof the year

2004-2015:
Taking on the North American
market and further global expansion

2016-2020:“Second founding” with mobility
business at our core

From 2021:
Embarking on Medium-Term Business
Plan “Mid-Term ’21 Plan” to strengthen
sustainability management

In 2004, Toyo Tire North America
Manufacturing Inc. (TNA) wasestablished in Georgia, U.S.A., as our
first tire production plant outside Japan.
We introduced a new proprietaryproduction method at the plant thatcombines design and high performance,
backed by differentiating technologies.
Under Toyo Tire Holdings of the Americas
Inc., the North American regional
headquarters established in 2008, TNA
has worked hard to constantly expand its
production capacity, and local sales
subsidiaries have been unwavering intheir support of our presence in thelarge-diameter tire category for pickup
trucks and SUVs. During this period, we
also strengthened our global production
and supply system by establishing tire
production bases in China and Malaysia,
and steadily implementing sales
strategies in European countries,
Thailand, and Mexico.

In 2017 we re-established our philosophy. We
introduced a function-based organizationalframework, relocated our headquarters andmoved our technology development and platform
technology development functions to an area
close to our new headquarters. These changes
enabled us to accelerate cooperation, create
solidarity and speed up decision-making. In
2018 we became a new management entitywith mobility at the core of our business, andthe following year we changed our name to
Toyo Tire Corporation. That same year, weestablished a new brand statement, “OpenRoads Await.” In addition to formulating a
growth strategy for our new corporate stage,
we established a North America R&D Centerand a European R&D Center (in Germany). We
also decided to establish a new tire plant in
Serbia to strengthen our development andproduction/supply systems.

In 2021, we announced theMedium-Term ’21 Plan. Under theslogan of “bolstering ability to promptly
and flexibly respond through global
collaboration,” our ideal we are aiming
for, we are implementing businessstrategies to achieve our managementtargets. In April 2021, we established a
Sustainability Committee, chaired by
the president, to strengthen oursustainability management and aim forthe true integration of business andsustainability. We are making steadyprogress despite the COVID-19
pandemic and other changes in thebusiness environment. Operations at
our new Serbia Factory are up andrunning and we are steadily developing
our digital transformation
infrastructure.

TNA, the largest tire plantin the Group

Headquarters (in Itami, Hyogo Prefecture, Japan)

Serbia Factory

Malaysia Plant

Changes in operating income

Starting“Medium-Term ’21 plan”

2011-(millions of yen)

Tripolar production sites system of Japan,
America, and Asia

80,00070,00060,0002004

Established in 1945

50,000Establishing tire production
bases in America

40,00030,00020,00010,000
0

1945

TOYO TIRE Integrated Report 2024

1986

1990

2000

2004

2011

2021

2023

(FY)

TOYO TIRE Integrated Report 2024

8

Introduction

At a glance
The Toyo Tire Group has 14 production bases and 5 R&D centers, and is developing its tire and automotive parts
business globally.
British Columbia (Canada)
Guangzhou (China)

Tire Business
The primary business of the Toyo
Tire Group, which accounts forapproximately 90% of net sales, isthe production and global sale ofautomotive tires for passenger
vehicles, light trucks and SUVs,
and trucks and buses, and otherrelated products. The tire market isprimarily classified into original
equipment tires (global),
replacement tires for the Japanesemarket and replacement tires for
global markets. The replacement
tires for the North American market
in particular accounts for asignificant proportion of our sales.

Number of global bases

California (U.S.A.)

Zhucheng (China)

14 countries 40 bases

Northampton (U.K.)*

Zhangjiagang (China)

Oud Gastel (Netherlands)

Regional headquarters: 3

Willich (Germany)

14

Production bases:

Willich (Germany)

Sales companies, etc.: 22

5R&D Centers:* Some bases have more than one function andtherefore the total number does not match.

Moscow (Russia)
Kentucky (U.S.A.)
Sendai (Japan)

Georgia (U.S.A.)

Miyoshi (Japan)
Kuwana (Japan)
Kuwana (Japan)

Georgia (U.S.A.)
Georgia (U.S.A.)

Itami, Kawanishi(Japan)Automotive Parts
Business

Queretaro (Mexico)

Shanghai(China)Indjija (Serbia)

The Toyo Tire Group leverages its
vibration control technology tosupply products that improveautomotive handling stability andsoundproofing. We are striving toestablish a solid position as asupplier by promptly proposing
products that match the needs ofautomakers.

Consolidated number of
employees

11,267(including temporary employees)

Number of countries inwhich we operate:

More than

100 countries

Ayutthaya
Wangnoi (Thailand)

Main global bases

Collesalvetti (Italy)

Tire business

Tijuana (Mexico)

Sales companies

Perak (Malaysia)
Selangor (Malaysia)

Production bases

Automotive parts business
Sales companies

Production bases

R&D centers

New South Wales (Australia)

Tires and automotive parts* Figures current as of December 2023

Tires

Automotive parts

505,438 million yen

Japan

Other

91.4%

8.6%

47,374 million yen

Percentage of tire production volume(new rubber) by region (FY2023)

Net sales by region (FY2023)

Net sales by business segment (FY2023)

22.1%

13.2%

18%

122,206 million yen

72,817 million yen

Europe 3%

Asia

Japan

Total

Total

552,825552,825

million yen

million yen

North America

64.7%

357,801 million yen
9

TOYO TIRE Integrated Report 2024

Total

249.6

North America

28%

thousand tons

51 %Percentage of tire sales by region (FY2023)
Other(including for
new vehicles in andoutside Japan)

24.7%
Southeast
Asia

North
America

42.3%

5.1%
Europe 10.7%

Japan 17.2 %TOYO TIRE Integrated Report 2024

10

Introduction

Top Message

Top Message

VisionStrategy

Materiality

Close-up

Governance

Data

Message from the President

Further integrating sustainability into our businessstrategies and leveraging our strengths to maximize
economic value and create environmental andsocial value
Takashi Shimizu
Representative Director,
President & CEO

A year spent reflecting on who we are and what we are aiming for
Last year, when we published our first integrated report, I

By evolving and organically integrating these aspects,

indicated that we view the report as a theater stage andreaders can confirm our potential as if we were a single

that the report is an important tool for readers to confirm

living organism.

our potential as a company. In compiling this report, we

We have asked ourselves what added value we offer,

have prepared answers on each page to the fundamental

through what kind of business processes, from what kindquestion, “who are we?” Readers can find information onof social capital. And based on the output of such

our ideals, history, medium- to long-term management

processes, we have examined which social issues we are

strategies, financial situation, capital policy, sustainability

trying to solve and what kind of value we are trying toinitiatives tied to the material issues we have identified,create for society over the medium to long term. We

and our governance structure. There are many different

believe that our ability to demonstrate our value creation

aspects that need to be covered when introducing aprocess, which systematizes these processes, is of greatcompany and communicating its business to the public.

significance in two respects.

Revisiting our business at the core of the value creation process
Firstly, we have reconfirmed the need to align ourraise awareness of the outcomes, we are breaking downbusiness processes, which are lie at the heart of ourthe value creation process at the division level under eachbusiness management activities, with the value creation

organizational function. As part of our philosophy, we

process. Although we do not necessarily have scale

advocate management that is conscious of our social

advantages in the same business domain, we havecontribution, “to create excitement and surprise with ourworked to optimize our business management structure

products that exceed customer expectations and enrichby maximizing our resources. We excel at capitalizing onsociety.”* So, what specific value are we creating forour unique strengths by ensuring that all our functions

society? This is something we need to clarify. More often

powerfully communicate their intentions and appropriately

than not, a business will push ahead to achieve results

collaborate on a single strategy. While our human

without questioning what our true purpose is. However,resource base and technology base support the

we need to remain conscious of such purpose as afulfillment of these functions, we are strengthening ourcompany and strategically promote our business togovernance base and risk management to ensure our

pursue profits from a long-term perspective. We havesound corporate growth. In this respect, we haveembarked on activities to create such a culture within thereconfirmed that we are producing output from such aframework of business promotion, with division general

portfolio that sets us apart from other companies.

managers taking the lead.

Secondly, we feel that our value creation process* Our Mission

provides insights into how to approach our business. To

11

TOYO TIRE Integrated Report 2024

TOYO TIRE Integrated Report 2024

12

Introduction

Top Message

Top Message

VisionStrategy

Materiality

Close-up

Governance

Data

Steady outputs support outcomes
We have turned the halfway point of our five-year

function to meet customer insights, creating our unique

Medium-Term ’21 Plan, which started in 2021. In 2024,

added value to society, and contributing to raising ourwe are making steady progress on the second half of our

profit levels. This year, my mission once again is to leadmedium-term management strategy. In fiscal 2023, wethe company by conscientiously continuing ourachieved record highs in net sales and all profit items. We

meticulous business management from such a customer-

recorded operating income of 60 billion yen, the figure weoriented perspective. I will steadfastly support thewere aiming for in the final year of our medium-term plan,

economic value and output required for the creation ofand our operating income margin was 13.9%, 0.1% shortsocial and environmental value by moving ahead with ourof our medium-term plan target. In addition to thecurrent work, while keeping an eye on our medium-termfavorable impact of the depreciation of the yen and otherplan.

tailwinds, I believe that our pulling together as a company

Our business environment is sensitive to the price of

to tackle the unprecedented difficulties we encountered in

raw materials and foreign exchange rates and so it is2021 and 2022 has paid off, opening the way for theimperative that we optimize other cost-related andresults we achieved in 2023.

operational factors. We will also hone the precision of our

In particular, our market supply strategy for highunique business strategies by focusing on an optimal andvalue-added products, which is devised to meet thehigh-quality product portfolio that meets the market andexpectations of customers and to please them bycustomer demands as well as maximizing thedelivering tires, engages the gears of each organizational

effectiveness of operations at our production bases.

I believe we need to be even more ambitious in raising

Further improving our North American base and raising the quality of othermarkets

structural reform and focusing on our key policy of

product strengths, and we will continue to make solid

pursuing quality, rather than quantity, in our business

investments in this area. We will also work to advance ouractivities. And we are building win-win relationships withcollective technological strength by leveraging thesales partners who share our way of thinking and deliver

In the North American market, we intend to focus onthat combine unique added value, such as ultimatecharacteristics and roles of each of our R&D centers in

products to users. We can see the results of these efforts

capturing trends in the large-diameter tire category anddriving enjoyment and a range of designs, while

Japan, the U.S., and Europe. Furthermore, throughreflected in our business performance from the second

we will continue to deliver attractive tires in a timely

satisfying, at a high level, the basic elements required forproactive and continuous participation in motorsports

half of 2023. Having closed our Silverstone plant inmanner. The global adoption of electronic vehicles (EVs)

EV tires, such as reduced rolling resistance, wear

activities, we will link the knowledge we gain throughMalaysia in 2021, we are now shifting our focus in Asia

has been astonishing, but the momentum is showing

resistance, and quietness, even though such elements

such participation to the improvement of ourfrom the Silverstone brand to Toyo Tires brand products.

signs of temporarily slowing down, which means we need

may contradict each other.

technological prowess and systematically and effectively

As a result, the Toyo Tire brand has steadily establisheddevelop EV-compatible tires in the off-road field.

and improved its presence, resulting in dramaticto keep a close eye on the situation. The trends of

13

products. In Japan and Europe, we are promoting

the level of the technological platforms that support our

We intend to seize this opportunity by strengthening

switching to EVs and the expectation of their role incoordinated functions centered on marketing, which

Our assets include our relationships of trust withrealizing a carbon-neutral society have not changed, andinvolves building good relations with our customers so

suppliers, who understand the appeal and value of ourGenerally speaking, as of 2024, we have raised our

we believe that it is now important to take the initiative forthat we can identify their latent needs and provide

products and support our sales, and our strong customer

competence to a level at which we are more than capable

the future, to ensure our presence in the market.

feedback to the development team. Assuming that ourbase. Going forward, we will continue to maintain ourof meeting the management targets set forth in our

improvements in profitability in Malaysia.

The performance requirements for tires will becomecompetitors are strengthening their large-diameter tire

unique agility, which is one of our strengths, by limiting

medium-term plan. However, we must never forget that

more sophisticated as the load and torque increase withstrategies, we will enhance the leading position in thisfocus areas to our advantage.

we live in a time in which change is the norm. We will

electrification. We are aware that this works to ourcategory in the North American market and capitalize on

advantage, because tires supporting EVs require larger

our unique strengths, namely the trust we have built up

select value-added products in line with the market

diameters. Our strength lies in our ability to offer products

and our agility.

trends in that region and focus on supplying such

TOYO TIRE Integrated Report 2024

In regions other than North America, we strategicallycontinue our efforts to achieve outputs that exceed ourtargets in 2025, the final year of the plan.

TOYO TIRE Integrated Report 2024

14

Introduction

Top Message

Internalizing the sustainability cycle amidst bewildering external change

Top Message

VisionStrategy

Materiality

Close-up

GovernanceDataorganization. Human capital, which is inseparable fromcorrections based on the results of assessments, andhuman rights, is a source of value creation for society.

continuously make improvements. We plan to further

The Sustainability Committee, established at the start ofthe past three years. International organizations, states,

Only when people are motivated to fulfill theirenhance the monitoring function of the Sustainability

the Medium-Term ’21 Plan, has been active for three

regions and industries are required to respond to these

responsibilities and take on challenges in a healthy andCommittee from such perspective.

years. A cycle has been established in which activity

issues ever more quickly, with no signs of the turmoil

enthusiastic manner, do they bring returns to thethemes linked to material issues are incorporated into

abating. What risks and opportunities does this create forcompany. We view human capital as an integral part ofachieve the Medium-Term ’21 Plan, we have alreadyeach organizational function’s business plan, and the

Toyo Tire’s business operations? We need to continuously

our business strategy and plan to invest in it based on ourstarted to formulate the next medium-term plan, which

progress of such plans is monitored and managed.

watch such trends and take action from a medium- to

grand design, through which diverse talent with different

will cover the five-year period from 2026. We will continue

Decarbonization and supply chain task forces under the

long-term perspective.

abilities, ideas, and careers will be able to enjoy various

to use this Integrated Report as a basis for constructive

opportunities and thrive.

dialogue with stakeholders in order to further strengthen

jurisdiction of the committee promote their initiatives

At the final Sustainability Committee meeting in fiscal

In parallel with the implementation of strategies toefficiently and effectively while pursuing company-wide

2023, we conducted a rolling inspection of our medium-

optimization, and they have now started to work on

to long-term sustainability targets and plans on whether

effectiveness of our measures when addressing various

been promoting in our current medium-term plan, and tohigher level issues in a more autonomous manner. We

they are effective amidst environmental changes,

sustainability-related ESG issues. We need to establish

ensure the content really does enhance our corporate

believe that we have steadily promoted ESG governance,

including the global situation and trends at otherand manage effective measures for our targets. In othervalue. Thank you so much for your continued trust in andincluding giving advice to the Executive Committee andcompanies, and how such targets and plans are linked towords, it is important to measure effectiveness, makeloyalty to the Toyo Tire Group.

reports at the Board of Directors meetings, and that we

outcomes through our value creation process. We arehave integrated business management and sustainability

currently promoting the integration of business andto some extent as set forth in the Medium-Term ’21 Plan.

sustainability based on the medium- to long-term targets

Meanwhile, numerous economic, social, andWe recognize the importance of ensuring thethe integration of business and sustainability that we havestarting from 2024.

environmental issues have continued to emerge during

Updating both awareness and behavior for enhanced effectivenessOur willingness to address climate change, a big issue onwear and preventing deforestation in the natural rubber

a global scale, has been increasing each year. We aresupply chain are urgent issues for the tire industry. It is

promoting the use of renewable energy, a priority

now also imperative that we take action to ensure themeasure for decarbonization, in line with the medium- tosustainability of the natural capital we have enjoyed in our

long-term plan discussed by the Executive Committee,

business activities thus far. We are working with industry

and we have the CO2 reduction target for 2030 in ourgroups and suppliers to strengthen our response andsight. However, we need to consider more effective

thoroughly manage the impact of our business.

measures in light of the harsh international view of the

In 2023, we conducted a human rights risk

current state of CO2 reductions as well as discussions inassessment of our entire value chain and identified key

Japan and abroad around next-generation energy. We

risks. We are now in the process of implementing action

will officially introduce internal carbon pricing (ICP) thisplans to address these risks, the progress of which will be

year, which we believe will be effective as one of themonitored by the Sustainability Committee. Needless toevaluation standards for decarbonization investments. In

say, companies should respect human rights, not just as

May 2024, we submitted a letter of commitment to obtaina legal obligation, but as a prerequisite for doing businessscience based target (SBT) certification. We plan to set

in society. We need to understand that respect for human

more effective targets for Scope 3 and to apply forrights is a basic assumption for building appropriate

certification this year.

relationships with stakeholders, and the committee is

Reducing the environmental impact of dust from tire

15

TOYO TIRE Integrated Report 2024

working to promote such awareness throughout the

TOYO TIRE Integrated Report 2024

16

Introduction

VisionTop Message

VisionStrategy

Materiality

Close-up

Governance

Data

Value Creation Process
The Toyo Tire Group believes in the importance of organizing and disclosing our corporate philosophy, businessmodel, governance, and business risks and opportunities to help promote a clearer understanding of the type ofcompany we want to be in the future. As part of our value creation process, we have verbalized our six capitals,
and defined the outputs generated through the utilization of these capitals and the outcomes that might impact
stakeholders.

Inputs (FY2023)
Financial capital●

Total assets:

645,480M yen

Our Mission
To create excitement and surprise with
our products that exceed customer
expectations and enriches society.

Business processes

Global production
framework /supply chain

Outputs

Customer baseand marketingby market

Medium-Term’21 Plan
Financial
indicators●

Consolidated operating income: 60.0B yen ／Consolidated operating income margin: 14% or higher●

Percentage of sales from priority products: over 55%

Outcomes●

ROE over Medium-Term ’21 Plan:
12% or higher●

Shareholder returns:
Maintain a dividend payout ratio of 30% or higher

12,729M yen

A highly efficient and accurate tiredevelopment platform

m ent

Pr

od

R&D

Human capital

Technologicalprowess

Diverse human resources that cangenerate high added value●u reDesignability

Number of consolidated employees:

11,267(In Japan 5,606; Outside Japan 5,661)

Social andrelationship capitalPartnerships for value creation●

Consolidated subsidiaries:

14

37 firms

incountries
Firm customer base (distributors)● Universities and other external
research organizations●

Natural capital
Total energy consumption:
7,686.9 thousand GJ● Total volume of raw materials:
549.0 thousand t● Total water discharges:
3,247.6 thousand kl●

17

TOYO TIRE Integrated Report 2024

Enhancing sources of growth
Human resource
base

Financial base

Digitaltransformation
platform

Uniqueproducts
andservices

Medium- to long-term materiality indicators●

R&D expenditure:

oc

pr

●

nd

A technological base that encourages
differentiation through a combination ofbasic performance and design features

h a sin g aIntellectual capital

Coordinatedfunctions[strengths]l a n n in g

34,102M yen
14

Number of production sites:(Japan: 5, International: 9)

tp

Capital expenditure:uc●

P u rc●pply logistics
Su

les
Sa

Production processes that respondflexibly to changing market needs
and demand and supply conditions

Produ
cti
on

Manufactured capitalHumantalentR&D

Decarbonization

Differentiated SUV and CUV products that combine
environmental performance and sophistication●

Innovation to address the shift to electric SUVs andpickup vehicles●

Customer endorsement
Rank 5th on sales share in North America(Medium-Term ’21 Plan challenge)●

Introduction and revision of flexible human resources
systems that adapt to the times

Mobility with reduced impact
on the environment●

Creating diverse learning opportunities●

Actions to improve engagement

Contribution to a carbon-neutral
society by consider the whole life
cycle of products when planning anddeveloping them●

Ratio of sustainable raw materials used in products
2030: 40%●

Scope 1, 2 emissions
2030: 46% reduction vs. 2019 levels,
2050: carbon neutral●

Scope 3 emissions
2030: 20% per tire vs. 2019 levels

A society ofsustainablemobility

The enjoymentof mobility
for all▶Story 1 (See P.36)

The ultimate enjoyment,
excitement, and surprise ofdriving
Satisfied with the quality of life thatmobility brings, the ultimate joy of
connecting society through mobility▶Story 2 (See P.38)

Supplychain

Promoting sustainability (Materiality)
QualityCompany-wide risk management●●

Expanded number of sustainable suppliers
2025: 100% implementation of risk assessments forprimary suppliers●

Established process assurance system●

Traceable individual management to end of market●

Improved user safety awareness

Safety, peace of mind, andcomfortInbuilt safety performance that adapts
to social and mobility changes▶Story 3 (See P.40)

Corporate governanceOur philosophy
TOYO TIRE Integrated Report 2024

18

Introduction

VisionTop Message

VisionStrategy

Materiality

Close-up

Governance

Data

Our Strengths
During the Medium-Term ’21 Plan, we have been working to bolster our ability to promptly and ﬂexibly respond tochanges through global collaboration.

Strong customer base built on advantages gained by
not operating dealerships

Sales
Production Optimal global production and supply system

The Toyo Tire Group does not operate any directly managed dealerships in order to sell our tires, making
dealers our closest customers. We believe it is important not only to understand the actual need for the
products that dealers want to deliver to consumers, but also to elicit and respond to the latent needs ofdealers in terms of what kind of value-added proposals and services they expect from us. Our strengthlies in our ability to accurately link our customers’ needs, which vary widely from market to market, withwhat we can offer, and in our ability to collaborate between small and agile functional organizations, andquickly adapt to information that comes directly from the market. Our North America business strategy
has become an iconic business model for the Group’s tire business.
Our sales function is thoroughly aware of the need to correctly understand Toyo Tire’s position within
the industry as well as our strengths and weaknesses in order to implement productand channel strategies.

Simulation technology(T-MODE)We incorporate design support technology that uses AI into our tire and driving simulations to simulate
aerodynamics and snow traction and accurately analyze tire patterns behavior in detail.

Design support technology(T-MODE)●

Japan-R&D

●

cu

re m

uc

tp

la n nin g

Coordinatedfunctions[strengths]

ent

R&D

P ro

d

Product planning is one of the functions that plays a role in guiding company-wide value
creation. Product planning takes the lead in discussions that overlap between production,
sales, and R&D, and takes on issues requiring collaboration, that tend to be overlooked
due to the specialized and independent nature of each function.
Rather than simply focusing on changes in mobility, market trends and interests, we
strive to create and realize plans to make mobility more fun and interesting while ensuring
the basic performance required of tires. This product planning stance has resulted in our
unique, differentiated products. In particular, our strength lies in our ability to communicate
Kiyohito Hasumi
Corporate Officer and Vicewith sales companies across the world on a daily basis. Such communication enables us
President of Business Headquarters
to identify future trends and come up with product ideas, which we combine with thebasic technology that our R&D function updates in anticipation of trends in the automotive industry and the level of
performance and functionality required of tires, to create actual products.
We believe that products created bearing in mind the various situations in which customers use tires can be sold notjust as consumable items, but as luxury items that help achieve the enjoyment of mobility for all.

North America
business model●

High-performance
products backed bytechnology●●

TOYO TIRE Integrated Report 2024●

NA-R&D●

Marketing
Development of customer-oriented
products

Cooperates with the marketing department in North America,
our core market, to develop customer-oriented products that
respond to preferences●

Europe-R&D●

Advanced materials /next-generation mobility survey
Development of high-performancetechnologies

Focuses on surveys and research for the utilization of
cutting-edge materials to facilitate the developmentof next-generation mobility technologies such as EVs.

Sales channels based on strong relationships of trustwith dealers
Pricing closely adjusted to customer needs

ProductionSales

We centrally manage various data as common assets, and add value by correlating data, and we use machinelearning to enable the acquisition of tire characteristic values in real time.

All R&D functions
Development of high-performancetechnologies (research, development,
evaluation, utilization of big data and AI)

Corporate Officer and Vice
President of Sales Headquarters

Product planning to achieve the enjoyment ofmobility for all

Customers

Marketing(Dealers)

Responsible for all R&D functions and updates
various platform technologies.

19

ro

les
Sa

We strive to develop the ideal rubber material by predicting, creating functions, precisely controlling, andobserving and discovering the properties of the various materials used in tire rubber at the nano-level(1 nano = one billionth of a meter).

pply logistic
Su
s

dp

The automotive industry is currently undergoing major transformations and tiredevelopment is also expected to quickly provide quantitative performance and functions
to support the evolution of mobility. We are developing high-performance, high-quality
products by linking our Nano Balance Technology, a proprietary platform technology forrubber materials, and T-MODE, a tire design platform technology, and we are constantly
Technological
updating such proprietary technology. Our R&D functions in Japan, the U.S. and Europe
prowesseach play a different role in our research and we are combining their results andDesignability
collaborating with sales and production departments to develop highly functional andSatoru Moriya
Corporate Officer and Vicedifferentiated products that meet the needs of each market.
President of R&D Headquarters
The use of artificial intelligence (AI) is becoming indispensable in the development oftechnology, such as T-MODE. We believe that it is essential for engineers to be able to explain the principles behind their designs andprovide evidence to support their convictions, without over-relying on AI. We are working to train and improve the skills of ourengineers so that they can use AI to expand their cognitive skills and capacity.

Material design technology(Nano Balance Technology)

Product planningnc h a sin g a n

R&D

Tatsuo Mitsuhata

Customer baseand marketingby market

P ur

Proprietary technology and tripolar R&D collaboration
between Japan, the U.S. and Europe

Produ
cti
o

We are promoting local production for local consumption in markets where our production bases arelocated, while working to optimize the product mix and level production at each of our plants in order toincrease our flexibility to respond to diversifying customer needs and changes in supply and demand.
These efforts enable us to deliver products to our customers in a timely manner. For example, large-diameter
tires for SUVs and pickup trucks, an area in which we excel, enjoy tremendous support in the North
American market. In order to meet such demand, we are gradually increasing the production capacity at
Masami Miyamori
our U.S. plant and we have also updated facilities at our Japanese plants and set aside capacity at our
Corporate Officer and Vice
Serbia Factory, which opened in 2022, to fulfill supplies to North America.
President of Production
Headquarters
Our strength also lies in the talent that enables us to respond flexibly to production. We are fostering
talent based on the characteristics of each plant and the local conditions. At the same time, the size of the working
Global production
population in Japan is declining and we need to ensure skill and know-how succession, an issue we are addressing
framework /by leveling operations and eliminating dependency on individual efforts or skills in coordination with enterprise
supply chain
resource planning (ERP) and through the introduction of new production systems. These initiatives are undertaken inline with our company-wide efforts toward data-driven management. We believe that leveling operations will also leadto greater diversity at production bases.

(Consumers)

R&D

●

●

Development to respond tomarket needs
Technical feedback from
off-road racing●●

Identification of market needs
Recognition (prestige)
through participation in
off-road races●●

Customer support(fans)
Niche market position

TOYO TIRE Integrated Report 2024

20

Introduction

VisionTop Message

VisionStrategy

Materiality

Close-up

Governance

Data

External Environment and Risks & Opportunities
We are aware of the risks and opportunities posed by the external macro environment in which the Medium-Term’21 Plan was formulated and is being implemented, as well as the changes in the mobility field that are expected
to occur by around 2030. We will work to create value along the entire value chain through our operations,products and services based on this awareness.

Mindset: Home bound,budget-minded, avoiding
person-to-person contact● Behavior: EC/cashless purchases,changes in requested services●

Shift to environmentallycompliant/electricvehiclesAccelerating
decarbonization(transition plan)

Increasing in geopoliticalrisks
Decoupling trend continued,
including competition for leadership
between the U.S. and China● Economic disparities widening due
to COVID-19 also aggravate
populism●

Environment

Increased use ofdriverless transport andalternative transport
services

Measures to prevent
plastic pollution

Products and services

Opportunities to increase demand throughtechnological innovation and uniquenessin our EV response

Products that focus on reducing CO2
emissions and circulating resources
during their lifecycle(passenger/commercial vehicles)

Opportunities to increase demand throughtechnological innovation and uniquenessin our environmental response
Opportunities to increase demand for EVs
for commercial use following thecompulsory shift to non-fossil energy inthe logistics industry in Japan

Prioritization of employee/customer
satisfaction increased● Accelerated trend to align public
interest with economic interests
through customer-producer
collaboration●

Evolution and accelerated
introduction of laborsaving
technology
Digital investment accelerated tomake up for slow growth in worker
headcount● Advanced roles for humans as
quality/quantity of data increased●

21

TOYO TIRE Integrated Report 2024

Greater use of IT(mobility-related data
linking)

Sensing, tire wear diagnoses

Operations

Transition to a circular
economyGrowing interest innatural capital(including increased
monitoring of
deforestation)

Society

Further diversification
to meet individual
needs and convenience

Highly durable (wear resistant)/
maintenance-free tires, airless tires

Opportunities for maintenance-free
support and opportunities in the solutions
business

Risks
Aligning of social &environmental interests witheconomic interests
accelerated

EV-specific/compatible tires

Growing interest in
human capital
Escalating demand toaddress human rights
issuesRisks associated with climate-related
measures

Strengthen
platforms

consumer behavior in the
post-COVID-19 era

Sustainability trends

Opportunities

Human capital management,
health management
Develop technologies to promoteresource circulation and recycling

Risk of not being able to secure a stable
human resource base

Improve energy efficiency andexpand use of renewable energy

Risks associated with environment- andhuman rights-related measures in ouroperations and supply chain

Responsible raw material
procurement and traceability

Risks of failing to ensure quality, including
environmental compliance, throughout thevalue chain
Risks associated with the growing
demand for safety

Risk management

Awareness of the external macro environment(before 2025)
Predicted changes in
the mobility field
Significant changes in(before 2030)

Supplier engagement
Strengthen quality throughout thevalue chain (process assurance,tire safety awareness, individual
management systems in themarket)TOYO TIRE Integrated Report 2024

22

Introduction

VisionTop Message

VisionStrategy

Materiality

Close-up

Governance

Data

Toyo Tire Materiality
We have established our Group material issues, which were decided upon by the Sustainability Committee in June
2021 and then approved by the Executive Committee in July. Along with strategically investing our internal
resources into initiatives related to the material issues, we also use this opportunity to foster a corporate culture
where each employee addresses sustainability issues by connecting materiality to their own duties, as well as
strengthen materiality-focused stakeholder engagement.

Process of identifying material issues
Following the statement in our Medium-Term ’21 Plan that weare going to integrate sustainability into corporate
management, we established a steering committee
comprising the president and the vice presidents of eachheadquarters to start developing sustainability-related policies
and identifying material issues. The work was transferred to
the Sustainability Committee in April 2021, with further
discussions taking place over four months. In the meantime, a
total of 40 division general managers and general managers,
who would be at the heart of the teams handling the task ofdriving and promoting sustainability, also had their own
discussions on the same themes, and the outcome of their
discussions was fed back to the Committee’s discussions.

1

2

Determine the Toyo Tire approachto sustainability

Investigate how sustainability
impacts business opportunities
and social value● Extract key themes to address — based on specificproducts and services, target customers and futuresocial change — in order to realize the Toyo Tire
corporate philosophy● Determine the value created in society throughtheme initiatives and evaluate their priority

3

Material issues

Ⅰ Value creation

DomainUnique value provided tocustomers and society
through our products
and services

1

Help create a society ofsustainable mobility

We will contribute to a society of mobility that achieves
net-zero environmental impact and zero accidents whileproviding efficient transportation by offering uniqueproducts and services.

2

Support the enjoyment ofmobility for all

We see it important to offer creative added value that
supports the diversity of sustainable mobility by meetingthe varied expectations people have for their own
mobility through our unique products and services.

Ⅱ Foundation for value creation

DomainThe base forvalue creation3

Support diverse talent withmotivating challenges and job
satisfaction

We will secure a foundation for diverse talent who
support our company’s business management andcreate high added value in these rapidly changing anduncertain economic and social times.

4

Continue innovatingnext-generation mobility
technology

Domain

Ⅲ Risk management

Responsible businesspractices that protect
the means of value
creation

5

Pursue decarbonization in all
corporate activities

We aim to reduce our environmental impact through our
products and services and decarbonize our entire
manufacturing process and supply chain while leveraging
these measures to increase our cost competitiveness.

6

Promote supply chain
sustainability

We understand that the sustainability of the Company’s
operations, as well as the genuine enjoyment of mobility
we endeavor to provide, depend on a healthy supply
chain. We are therefore committed to addressing
environmental and social issues in the supply chain.

We believe it is vital to engage in technological innovationthat supports the evolution in mobility being demanded inthis new era and make continuous advancements thatmeet the needs of society.

7

Key achievements of fiscal 2023:

Key achievements of fiscal 2023:

Key achievements of fiscal 2023:

Product development based on plan to upgrade fuelefficiency at each model change● Development of differentiated products based on
strategy of unique approach to EVs● Development of truck and bus tires that addressenvironmental and social issues in logistics industry●

Second employee opinion survey and action to
improve organizational culture● Training to empower women and unconscious bias
training to promote diversity and inclusion● Percentage of sustainable raw materials used in
products: 26% (by weight in products produced at theend of 2023)● Industry-academia collaboration (joint research) in andoutside Japan on sustainable raw materials●

Investigate sustainability andbusiness risk

Ensure the fundamentals of
manufacturing: quality and safety

Quality and safety are fundamental to any product orservice. The value our products and services offer will
mean little to society if their quality or safety is in doubt,
as the lessons from our past have taught us. Quality andsafety are therefore our top priority in all of ouroperations.

● Confirm risks in the tire and auto parts industry thathave been identified by international groups, ESG
rating organizations and other bodies, and risks weare aware of through our corporate activities● Determine their potential to hinder achievement ofour corporate philosophy and social value creation,and the status of existing Group efforts, andevaluate their priority

4

23

Identify material issues based on
the results of steps 2 and 3

TOYO TIRE Integrated Report 2024●

CO2 emissions reduction achieved (against 2019):
Scope 1, 2: 35.6%, Scope 3: 1.5%
● Percentage of electricity from renewable sources usedat production sites: 71.1%● Trial of internal carbon pricing (ICP) program (forinvestment decision-making)* Officially introduced in January 2024
● Human rights risk assessment carried out acrossvalue chain.
● Percentage of suppliers assessed for environmental
and social risks: 70% of total transaction amount of
raw materials for tires* 100% of primary suppliers of natural rubber

TOYO TIRE Integrated Report 2024

24

Introduction

Strategy

Top Message

VisionStrategy

Materiality

Close-up

Governance

Data

Financial Strategy
Medium-Term ’21 Plan: Financial policies and targets
In the medium-term business plan, the Medium-Term ’21 Plan,announced in 2021, Toyo Tire Corporation set out its future vision
for three management platforms (digital and IT infrastructure,sustainability management, and organizational and humanresource infrastructure) designed to create value through thesolution of social issues and ultimately generate sustainablecorporate growth. Right now, we are steadily progressing eachmanagement platform and earnestly working to strengthen thefinancial base that underpins these platforms.
We intend to pursue stable management, even when facedwith an uncertain and rapidly changing economic environment bypromoting measures designed to: improve capital efficiency by
scrutinizing our business assets; achieve cash flow-focusedmanagement by strengthening our power to create cash andaccelerating cash cycles; and ensure financial soundness, andbuild a robust financial base that will contribute to improving ourcorporate value through KPI management.
In terms of concrete targets, we have set targets in theMedium-Term ’21 Plan for a consolidated operating income
margin of 14% or more and consolidated operating income of 60
billion yen in fiscal 2025. We have also set a minimum 55% sales

Financial situation

composition ratio for priority products, which is vital for achieving
the aforementioned targets. We are promoting initiatives tomaximize our strengths in order to increase profitability. In fiscal
2023, we achieved consolidated operating income of 76.9 billion
yen, ahead of the target of the Medium-Term ’21 Plan, and ourconsolidated operating income margin was 13.9%.
As a manufacturing company that utilizes machinery,equipment, and other assets to increase earnings, we arefocused on improving our return on assets (ROA). Furthermore,
we set a minimum target for return on equity (ROE) of 12% during
the medium-term plan because we are moving into a newcorporate stage, and clarified our policy for improving capitalefficiency as well as profitability. Each month we review our ROE,
together with our consolidated operating income andconsolidated operating income margin, and hold internal
discussions on ways to achieve our targets. The ROE for fiscal
2023 was 20.2%.
We are determined to improve our own unique corporate
value, which focuses on enhancing quality, by continuously
pursuing these financial policies and targets.

(Millions of yen)

FY2021

FY2022

FY2023

Total assets

531,229598,889

645,480

Equity capital

279,954

320,683

395,199

Cash and cash equivalents at end of the year

53,592

41,60052,798Interest-bearing debt at end of the year

128,784

135,436

102,714

Capital ratio (%)

52.7

53.5

61.2

Payout ratio (%)

28.3

25.7

21.3

Return on equity (ROE) (%)

16.5

16.0

20.2

Total assets / Return on assets (ROA)
Total assets

Earnings per share / Return on equity (ROE)

800
600
400

531.2
11.4

598.9

Stock price

Equity capital
Total assets

ROE
Earnings per share (EPS)= Net profit/total number ofissued shares＝

Net profit margin
Net profit＝

Net sales

Operatingincome margin

Depreciation andamortization ratio

Profitcoverage

Profitability index

Selling, generaland administrative
expense ratio

Total asset (total capital) turnover ratio
Net sales
Total asset (total capital)

Current assets
turnover ratio

Inventory
turnover ratio

Trade
receivables
turnover ratio
Productivity Indicators

Practice of KPI management implemented in each region and location

25

TOYO TIRE Integrated Report 2024

600

15

13.8
9.0

2022

20

10

2023

(FY)

Return on equity (ROE) (right scale)
(%)

40

469.4

450
300

5

150

0

0

268.6

311.5

16.5

16.0

2021

2022

30

20.2

20
10

2023

(FY)

0

Investment and financial strategies

Fixed assets
turnover ratio

CCC/SCCC

Cost of sales
margin

2021

(yen)

ROA

BPS

Price to earnings ratio (PER)= Stock price/EPS= Market capitalization/net profit

0

(%)

645.5

200

Building a strictly-disciplined, robust financial base for enhanced corporate value

Earnings per share

Return on assets (ROA) (right scale)(Billions of yen)

Current
liabilities
turnover ratio

We have established a policy regarding the allocation of capitalwith due consideration of shareholder returns, and formulated thecapital investment plans based on the tandem pursuit ofprofitability and potential growth. When considering capital
investments, we calculate the internal rate of return (IRR) basedon future cash flows and compare it to the most recent weighted
average cost of capital (WACC). As a general rule, management
decisions to invest are made only for projects for which the IRR
exceeds the WACC.
We plan to make capital investments of 194.0 billion yen overthe five years of the Medium-Term ’21 Plan. We intend to use
operating cash flow generated during the period, along withadditional procured funds if necessary, to cover the total amountof capital investment and shareholder returns.
Operating cash flow for fiscal 2023 increased by 86.5 billion
yen due to the accumulation of profit and improvements inworking capital while capital investments amounted to 34.1 billion
yen, including growth investments such as digital-related
investment and investment in a new plant in Serbia. Dividend
payments during the fiscal year amounted to 10.8 billion yen,which were covered within the operating cash flow. In fiscal 2024,

we expect to invest a total of 45.3 billion yen, which includes, inaddition to digital-related investments, new capital investments at
our U.S. plant and in R&D at our Serbia Factory. We will continue
to invest within the scope of our operating cash flow, and remain
disciplined to ensure that our free cash flow is stable and in asurplus.
In addition to the capital ratio and financial leverage, we will
make quarterly fixed-point observations on the turnover ratio oftrade receivables, inventory, trade payables, and others, toproperly manage the balance sheet and cash flow. Whilemaintaining strict financial discipline in that manner, we willconsider investing in strengthening our supply framework forlarge-diameter light truck tires as they harbor strong growthpotential given that light trucks and SUVs, areas in which we
excel, form the bulk of sales in the U.S. market, as well as indeveloping highly unique products that leverage our strengths.
Through these strategies, we will maintain and improve ourcurrent profitability, promote capital optimization, and return
profits to shareholders by increasing dividends in an effort to meetcapital market expectations.

TOYO TIRE Integrated Report 2024

26

Introduction

Strategy

Top Message

VisionStrategy

Materiality

Close-up

Governance

Data

Medium-Term ’21 Plan Progress
Growth investment
Regarding growth investment, we will promote investment that isessential for ensuring future growth in the medium- to long-term,
namely digital-related investment, market investment andinvestment in new R&D fields.
First, on digital-related investment, we aim to improve
profitability by reorganizing our enterprise resource planning (ERP)system, and seeking to strengthen global data governance by, forinstance, visualizing management resources and risks,
accelerating business processes and improving the quality of ourdecision-making.

Second, in terms of market investment, we will invest
management resources in building user-centric sales andmarketing, including digital marketing, engagement activities
designed to enhance our brand power and promotional activities
to expand sales.
Third, in terms of investment in new R&D fields, we will strive
to establish and commercialize technologies for next-generation
vehicles in order to create forms of sustainable mobility that areworthy of a carbon-neutral society.

Basic policy
The new Toyo Tire Group: Use our new global strategy to maximize corporate value

R&D

Environment and social (ES) investment
We expect to make further sustainability-related investments
going forward in order to promote a shift toward sustainability
management. Regarding decarbonization-related investments inparticular, it can be difficult to incorporate any CO2 reduction
impact into the profit simulation used for verifying profitability anddetermining whether or not to promote regular investment
projects. As a result, those investments may be consideredunsuitable in terms of sustainability management.
With that issue in mind, we introduced internal carbon pricing(ICP) on a trial basis in fiscal 2023. ICP is a good way to visualize

This section explains the progress made on our five-year medium-term business plan that we call Medium-Term’21 Plan. To help address the dramatic changes in our external environment, we are pursuing the plan’s goals by
coordinating R&D, production, sales and other functions on a global scale and demonstrating an ability to adapt
swiftly and ﬂexibly to change.

the impact of reducing CO2 emissions by translating that impact
into a quantifiable monetary value and incorporating that impact
into a quantitative model. We reviewed the performance of our
ICP-based decarbonization investments, and then decided to
introduce ICP as an official evaluation standard from fiscal 2024
based on external ICP price-setting trends. By considering theCO2 reduction impact as a monetary value in investment decisionmaking, we will strive to promote decarbonization-related
investment.

Build a foundation for advancing our global technologicalcompetitivenessProduction

Create a globally balanced supply framework with the launch of
our Serbia Factory

Sales

Expand contact with potential customers, enhance our uniquepresence in the market

New
corporate
stage[Corporate]
Realize effective coordination among R&D, production andsales functions
Establish a management platform to drive our growth strategies andenhance human resources<Corporate>
Strengthen business administration
foundation and support
Transform corporate governanceand compliance structures

Previous
corporatestage(past initiatives)<R&D, Production, Sales>
Strengthen areas of expertise
Demonstrate uniqueness
Shift to a function-based organization

Shareholder returns
In our new corporate stage, we will set policies for capital
investment and shareholder returns in addition to ROE indicators,
and we will pursue both profitability and efficiency in a wellbalanced manner.
As part of this policy, we aim to return at least 30% of profit,
excluding extraordinary profit and loss to reflect the actual
performance of the business, to shareholders as dividends. We
strive to provide long-term, stable returns to shareholders, taking
into overall consideration factors such as the ratio of dividends toshareholders’ equity and the actual amount of dividends.

Regarding specific dividends, we paid an annual dividend of
100 yen per share in fiscal 2023, an increase of 20 yen from theprevious year, and in fiscal 2024, we expect to pay 105 yen per
share. This will be done by adjusting for non-recurring special
gains and losses included in profit attributable to owners of theparent and linking returns to real profit that more closely reflects
actual profit values. We will work to realize a long-term stable
return in a payout ratio of 30% or more, calculated by excluding
special factors, in a way that both provides stability and reflects
business performance.

Progress on R&D, production and sales strategies

R&D
Strengthen our proprietary technology by joining up
the R&D of Japan, the U.S. and Europe to develop
highly preferable and differentiated products that meetenvironmental and other next-generation mobility needs

Production
Build a stable supply base for the North
American market and make the Serbia Factory
highly cost competitive

Sales
Enhancing our approach to strategic models by launchingoriginal products inspired by tailored strategies in North
America, Europe, Japan, and other Asia, and encouraging close
cooperation between our tire and automotive parts businesses

27

TOYO TIRE Integrated Report 2024

• Launched the industry’s first light truck tire for EV

Looking to reduce rolling resistance and improve cruising distances by conducting ourown unique aerodynamic simulations while maintaining the wear resistance anddurability required to support the high torque and increased vehicle weight of EVs• Developed a concept tire made from 90% sustainable materials• Started joint research on sustainable materials with the University of Novi Sad in Serbia• Installed final equipment in the Serbia Factory in December 2023

Actively developing the systems and training to support full production• At our U.S. plant, we are gradually shifting production of low-inch tires to other bases

and upgrading facilities so we can increase production capacity of large-diameter lighttruck tires• As part of our effort to streamline production of automotive parts, we stopped
production at our auto parts plant in the U.S. and transferred production primarily toJapan• Working to consistently strengthen our relationships with local dealers in the North

American market to gather more data on user needs, and leverage our dealer network
to promote sales of high value-added products• Continue to introduce sophisticated products primarily in the light truck tire segment• Focusing on direct digital marketing through social media, while also improving ourpresence and building a quality brand image by participating in motorsports activities
and signing sponsorship agreements with professional sports teams

TOYO TIRE Integrated Report 2024

28

Introduction

Strategy

Progress on key performance indicators

Capital Investment

2023 Results

Our targets

Operating Income 60.0 billion yen

76.9B yen

Operating Margin 14% or over

13.9%

ROE 12% or over

20.2%

Dividend payout ratio* of 30% or over27%

• Create differentiated products by further evolving our proprietary technologies• Effectively utilize the extremely cost-competitive Serbia Factory• Build a future-oriented supply platform through the global development of highly• Consistently develop high value-added products tailored to specific needs• Solidify and extend a dominant position in the large-diameter light truck tire segment

74.8B yen

80

Target income
60.0B yen

40

9.0
6.0

20

3.0

0

0

FY2022

FY20233-year avg.
30%

35%

17%

60

FY2021

Changes in ROE, Dividend payout ratio*

Target income
12.0
margin14% or over27%

76 yenFY2021

20%

16%

Dividend per share

80 yenFY2022

Data

100 yen

34.1B yen
FY202247.3B yen

4,558

5,000
4,000
3,000

3,066

5,054

5,170

2023

2024 (E)

3,546

2,000
1,000
0

2020

2021

2022

We worked hard to expand sales of priority products such as large-diameter light truck tires in the North American market, resulting in
year-on-year increases in unit sales and revenue in fiscal 2023.

FY2021

North America proportion of
total sales (FY2023)

Changes in Percentage of sales frompriority products

Target ROE
12% or over

40

60

Ratio of priority products to total sales
in North America (FY2023)

FY202367%

FY202342%62%

Target41%

Target53%

51%

FY2021

FY202258%

63%% of sales frompriority products
55% or over20
0

Ratio of units sold toNorth America (FY2023)

FY2023(%)
100
80

FY20236,000

FY2023

Dividend Payout
Ratio Policy
30% or over

* Calculated based on actual net income excluding

Net sales (billions of yen)

FY2023 review

37.8B yen

30%

Governance194.0B yen

63%

(%)
15.0

Close-up

Basic strategy

5-year total CAPEX(3-year avg. 30%)

% of sales from priority products 55% or over(Billions of Yen)
100

Materiality

in North America

FY2024-2025

Operating Margin

Strategy

efficient production systems modeled on the Serbia Factory

Achievement and progress of targets (FY2023)

Operating Income

VisionProgress of Tire BusinessWe are accelerating some measures set forth in the Medium-Term ’21 Plan such as the promotion of sales of priority products that offer highadded value and the streamlining of business structures in the automotive parts business. Furthermore, we achieved most of the plan’stargets ahead of schedule in fiscal 2023 thanks in part to a boost from external factors such as foreign exchange rates. Going forward, we
will continue to promote various measures to reach the remaining targets that have not been met, and to further progress the targets thathave already been achieved.

Changes in Operating Income, Margin

Top Message

FY2023

Priority products: Tire product categories that
epitomize Toyo Tire’s strengths and that are vital forachieving our targets for operating income andoperating income margin, such as new products,
core products, and differentiated products

Target58%

In the European market, unit sales declined year on year partly due to the impact of the Russia-Ukraine situation, tighter monetary policies,
and the continued economic slowdown caused by higher prices. In the Japanese market, new vehicle production recovered, but sales of
winter tires were stifled by warm winter weather. As a result, unit sales were flat year on year in fiscal 2023. However, revenue increased
thanks to more prevalent price increases and a higher ratio of priority product sales.

The external environment and future outlook

extraordinary gains/losses

Progress on Digital transformation
We position digital transformation (DX) as a set of initiatives
designed to back up efforts to improve our corporate structure
and to steadily realize the growth strategy laid out in MediumTerm ’21 Plan. Our Digital Transformation Headquarters, which
was established in 2021, promotes digital innovation thatenhances company-wide cross-departmental cooperation. And,the headquarters is made up of designated DX personnel fromeach function who serve as intermediaries for promoting DX. We
are also establishing a framework for DX education together with
the Human Resources Department to increase the number ofpeople with the right mindset and skills to fully comprehend andeffectively utilize precious data.
Regarding the DX initiatives which are divided into threestages and promoted: (1) Strengthening management platforms,(2) Improving profitability and (3) Enhancing value, we are steadily
advancing initiatives in the first stage of strengthening
management platforms, and are now starting to implement the29

TOYO TIRE Integrated Report 2024

second and third phases that will lead to improved profitability
and enhanced value. We are in the process of establishing an
integrated digital strategy that leads to both customer-oriented
manufacturing and highly profitable operational management inorder to support our overall growth strategy.

Regions

Production/Supply

Restructuring systems,
building digital platforms

2023 Light trucks:

76%

15
10

DX
(1) Strengthening
management platforms

Breakdown of new vehicle sales in the U.S. market(million 2012 Light trucks:
units)
49%
20

Growth strategy
R&D

The United States is a major sales region for Toyo Tire Corporationin which the ratio of small trucks to total new vehicle sales remains
comparatively high at roughly 75% of total sales in fiscal 2023. Our
company has a strong presence in the light truck replacement tire
market, where demand is expected to increase in future.

(2) Improving profitability(3) Enhancing value

Data-driven management,
increasing operational
efficiency

Innovating products andservices, enhancing value
we provide

We also expect to see stable tire replacement demand inJapan and Europe, which both boast a high level of automobile
ownership. Regarding new vehicle sales, we are seeing an
increase in SUVs and a tendency toward installing larger diameter
tires in new vehicles. We consider these trends as a great
opportunity for expanding sales in areas in which we excel.
Requirements for tire performance will likely change and growmore sophisticated as the source of powering vehicles diversifies.
Furthermore, the creation of new forms of mobility, such as green
slow mobility, may require unprecedented new tire performance.
Green slow mobility is a small mobility service that uses electricvehicles permitted on public roads that are capable of speeds up
to 20 km/h to help alleviate social issues such as last-milelogistics and an aging population.

502012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Light trucks

Passenger cars

Medium-sized trucks, etc.

TOYO TIRE Integrated Report 2024

30

Introduction

Strategy

Individual measures

R&D• Develop tires with high environmental performance to help
improve the fuel efficiency of automobiles• Develop products that set us apart from other companies by fully

VisionStrategy

Materiality

Close-up

Governance

Data

Production
Blending eco-friendly technologies andsophisticated features
Our goals for EV
Gas-powered cars

• Operate our Serbia Factory at full capacity to ensure timely supply to the European market and stable supply to the North American
market• Increase production at our U.S. plant of large-diameter light truck tires that are expected to witness even higher demand in the North

Environmental
impactAmerican market• Realize optimal global supply systems centered around efforts to establish production systems at the Serbia Factory and expand• Develop technologies and products to handle the low tire noise,

instant torque, and heavier body mass, due to the use of motors
with the spread of EVs

Top Message

production capacity at our U.S. plant

Lower Treadwear

Quiet Ride
Capturing robust
demanddemonstrating our unique commitment to the joy of driving andoffering of design features

Supplying to the U.S.

Joy of driving

DesignLocal production
for local consumption

Local production
for local consumption

Supplying to Europe

Supplying to the U.S.

Sales

Serbian Plant
U.S. Plant• Promote sales activities with a focus on large-diameter tires for

New plant starts production
Supply of low-cost, high-quality tires

Further bolstering supply
capacity

light trucks, in which we have a strong presence, bystrengthening cooperation with national dealers with nationwide
dealership networks

Wide light truck tires• Expand brand recognition and fan bases through direct

marketing that maximizes social media and other digital tools,
and participation in motorsports

Production bases shift
Passenger vehicles tires• Increase our focus on product categories in which we excel inJapan, Asia, and Europe and concentrate on developing
differentiated products

Our Brand

A brand that pursues a degree of excitement and surprise thattranscends expectations and satisfaction with its unique
imaginative sense and technological prowess, and makes
driving ideals a reality. Toyo Tires offers a full product range
from passenger car tires, light truck tires, and truck and bus
tires.

31

TOYO TIRE Integrated Report 2024

A brand that heeds the opinions of car enthusiasts, remains
true to its motto of creating what customers really want, andoffers an exquisite mix of freedom, innovation, and creativity.
Nitto always strives to set trends by anticipating market needs
through in-depth analysis of customer feedback, which leads
to an overwhelming reputation in its own niche market.

Expand capacity at our U.S. plant

Full production at Serbia Factory

We intend to satisfy replacement tire demand for pickup trucks
and SUVs, which is expected to continue to grow going forward,
by increasing production ratios of large-diameter light truck tires
at our U.S. plant.

We will establish a stable production system and promote various
measures to ensure production is kept within the estimated costs.
We will seek to increase market credibility by providing a stablesupply of products to the North American market, shortening leadtimes to swiftly meet European demand and supplying highperformance tires.

TOYO TIRE Integrated Report 2024

32

Introduction

Strategy

Top Message

VisionStrategy

Materiality

Close-up

Governance

Data

Financial Highlights
Progress of Automotive Parts BusinessNet sales

Operating income / Operating income margin
Operating income

Basic strategy• Establish a superior position as a system supplier by organically linking
tires and automotive
parts

50

• Encourage product30

use in next-generation
mobility vehicles andother strategic models(Billions of yen)600

Net sales (billions of yen)
40

37.1

39.0

41.3

47.4

450

10

Engine Mount

Motor Mount

Bush

377.5

343.8

(Billions of yen)
80

552.8

2020

2021

2022

2023

30

53.1

40

150

(%)
40

76.9

60

393.6

300

20

0

497.2

43.0

Operating income margin (right scale)

38.4

36.3

10.2

10.6

44.0
20

13.9

13.5
8.9

20

10

2024 (E)

0

0
2019

2020

2021

2022

2023

0
2019

(FY)

2020

2021

2022

2023

(FY)

FY2023 review
We moved into the black in fiscal 2023, two years ahead of the
fiscal 2025 timeline, by terminating production of auto parts at our
U.S. plant and generally streamlining our business structure,continuing our cost-cutting activities, and passing on fluctuations

in raw materials prices. Going forward, we will be looking to
generate consistent profits and improve profitability by further
rationalizing production systems, reducing costs, and developing
and selling high value-added products.

Profit attributable to owners of parent /Profit attributable to owners of parent margin

Total assets / Return on assets (ROA)

Profit attributable to owners of parent
Profit attributable to owners of parent margin (right scale)(Billions of yen)80

The external environment and future outlook
Automobile production is recovering now that the disruptions in
supply chains and shortages of semiconductors caused by the
COVID-19 pandemic have dissipated. From a medium- to longterm perspective, requirements for automotive parts’ performance
will likely change and grow increasingly sophisticated as vehicle
power sources and mobility modes diversify. The proportion ofbattery electric vehicles (BEVs) is expected to rise in the future,
but demand for hybrid electric vehicles (HEVs) is also proving
strong. While demand for EV motor mounts and other EV-specificparts is increasing, we expect demand for our engine mounts andother main products to remain solid.

Achieve a stable profit in the automotive parts business
Having turned a profit in the automotive parts business earlier
than planned in fiscal 2023, we will strive to ensure stable profits
and generate greater profitability by consistently implementing
improvements under a new streamlined framework anddeveloping high value-added products.

Collaboration with tire businessToyo Tire Corporation is engaged in two businesses that are vital to the mobility sphere,
namely tires and automotive parts. Future performance requirements for tires andautomotive parts will undoubtedly grow more diverse. We will strive to enhance ourtechnological prowess and to develop and propose high value-added products byacquiring additional expertise and information through joint development projects andtechnical exchanges with automakers.
In addition, we will gather timely auto-related information to help anticipate andspeedily develop the advanced technologies that future generations demand. Any
information that we collect will also be shared with the tire business to help develop tires
that satisfy the latest needs and trends.
We remain committed to pioneering the development of a mobility society through ourown unique approach that features close collaboration between our tire and automotive
parts businesses.

33

TOYO TIRE Integrated Report 2024

41.4

40
24.5
20

(%)
40

72.3

60

6.5

11.7

2019

2020

30

48.0

10.5

9.6

2021

2022

13.1

3.4

0

2023

Link between tires and automotive
components[Making an impact on the mobility industry]

10

200

0

0

(FY)

224.5

222.7

47.5

49.5

200

Establishing a competitive
advantage as supplier

52.7

(%)
20

468.7
7.8

320.9

395.2

(%)
80

(yen)

61.2

65

450

50

2019

11.4

645.5
13.8

9.0

15
10

2020

2021

2022

2023

(FY)

0

Return on equity (ROE) (right scale)

(%)
40

600

469.4

300

268.6
13.0

150
161.4

0

20
2021

6.8

53.5

35

2020

445.6

598.9

5

Earnings per share

100

2019

531.2

Earnings per share / Return on equity (ROE)(Billions of yen)
400
280.2

600
400

Capital ratio (right scale)

300(Billions of yen)800

20

Net assets / Capital ratio
Net assets

Return on assets (ROA) (right scale)

Total assets

2022

2023

(FY)

0

2019

311.5

16.5

16.0

2021

2022

30

20.2

20
10

5.3
75.9
2020

0
2023

(FY)

TOYO TIRE Integrated Report 2024

34

Introduction

Materiality

DomainⅠ

Top Message

VisionStrategy

Materiality

Close-up

Governance

Data

Value creation
Our policy

Material issues relating
to value creation

We know that the sustainable future for tire and automotive parts manufacturers will only be ensured once a society ofsustainable mobility has been created. That’s why we are working to help establish a society of sustainable mobility thatboasts less environmental impact, fewer traffic accidents and efficient transportation. In addition to providing thenecessary elements for promoting sustainability, we believe that using our unique products and services to satisfy thevarious features that people expect from superior mobility life will create added value designed to support a diverse mobile
society, so that is what we intend to do.

These material issues illustrate the unique value that the Toyo Tire Group offers in its dedicated mission tosociety and the value that links directly to the Group’s purpose. We believe that the value we create anddeliver through our business activities must contribute to the building of a society of sustainable mobility.

Material issue01

Help create a society of sustainable mobility

Organizational responsibilities (April 2024)
Spearheaded by our R&D Headquarters, we are working together
with product planning, production management, sales planningand digital transformation (DX) functions and promoting
sustainability-related activities based on various themes that
correlate with the aims of our medium-term business plan.
The Technical Committee oversees the overall implementationof those activities and reports progress to the Sustainability
Committee.

Executive Committee

Sustainability Committee
Technical Committee
R&D Headquarters
Business Headquarters● Product Planning Division
Production Headquarters● Production Management Department
Sales Headquarters● Sales Planning Department
Digital Transformation Headquarters

Story 1: Reducing the environmental impact of mobility

Material issue02

35

Support the enjoyment of mobility for all●

Environmental contribution (CO2 emissions reduction): Reducing tire
rolling resistance, improving EV compatibility, saving resources●

Safety: Maintenance-free products, diagnosis of tire wear●

Ultimate enjoyment of driving andsophisticated features

TOYO TIRE Integrated Report 2024

Reducing vehicles’ CO2 emissions is a challenging issue thatneeds to be addressed throughout the supply chain in order toachieve carbon neutrality by 2050. Although the global shift to
EVs is slowing, EVs will remain an effective means oftransportation to reduce emissions in the medium- to long-term,
and the shift is expected to continue. Despite the backlash, we
believe it is important to systematically and effectively pursue
initiatives to reduce CO2 emissions from vehicles.
At Toyo Tire Corporation, our goal is to help reduce CO2
emissions per tire by 20% by 2030 compared to 2019 levels andour functional organizations collaborate to develop products.
Our R&D function strives to consistently update basic
technology over a medium- to long-term span in anticipation of
automotive industry trends and the level of performance andfunctionality required of tires. While engaging in activities toimprove the precision of material compounding and tire design,
we have established an R&D system that can respond at a highlevel to the fuel efficiency performance and EV requirements ofnext-generation vehicles (reduced rolling resistance, larger
diameter tires, quietness, etc.). Material development is one of theapproaches we use to reduce rolling resistance. We use Nano
Balance Technology, our proprietary platform technology forrubber materials, to facilitate more accurate predictions regarding
specific material properties and optimize material structure, andwe are promoting its use in practical development. Our
engineering and production functions are collaborating to support
product development by, for example, improving processing
methods.
Our product planning function plans model changes (rolling) incooperation with our R&D and sales functions, based on our
medium-term product plan. While keeping a close eye on market
trends, we are incorporating upgraded functions andperformance, including fuel-efficiency, that are compatible with
EVs into the development requirements for our priority (core)products. At the same time, we plan to launch differentiatedproducts for EVs.
Through these activities, we will contribute to the creation ofenvironmental value by implementing business strategies thatappropriately respond to the shift to EVs while continuing to
improve the fuel-efficiency of our products.

TOYO TIRE Integrated Report 2024

36

Introduction

Materiality
DomainⅠ

Top Message

VisionStrategy

Materiality

Close-up

Governance

Data

Value creation

Unique aerodynamic simulation technology

Specific examples of improvements in fuel efficiency with each new model release
Developed a fuel-efficient compound using Nano Balance Technology. A new silica dispersing agent was used toreduce rolling resistance and improve wet performance and wear resistance. These features were optimized in highdimensions by distributing the silica more evenly. Furthermore, part of the silica dispersing agent was made using
environmentally friendly and naturally derived sustainable materials.

Rolling resistance reduction rate (INDEX)

s

28%

72

Toyo Tire Corporation indoor drum rolling
resistance testing machine● Tire size:

PROXES Comfort Ⅱs 215/55R17 94V,

100

Released in March 2023 (Japan)

PROXES C1S215/55R17 98W● Rim size: 17X7.0J● Inflation pressure: 210 kPa● Speed: 80 km/h

【Evaluation conditions】
Rolling resistance reduction rate (INDEX)

16%

reduction● Test location:

Toyo Tire Corporation indoor drum rolling
resistance testing machine● Test method: ISO 28580 force method

84● Tire size:

NANOENERGY 3 PLUS 195/65R15 91H,

Released in January 2024 (Japan)

Development of EV tires for pickup trucks & SUVs
In our Sustainability Management Policy, published in 2022, we
set out our unique EV strategy as scenarios for achieving
medium- to long-term value creation.

EV Strategy• Develop technology for electric SUVs and pickups trucks• Develop differentiated products for SUVs and CUVs
according to trends in the North American market

entire vehicle.

● Test location:● Load force: 5.26 KN

NANOENERGY 3 PLUS

* 2 Tires are said to account for approximately 15% of the total aerodynamic drag of an● Test method: ISO 28580 force method

PROXES C1SPROXES CF3

aerodynamic characteristics. Our Mobility Aerodynamics
technology enables us to predict the aerodynamics of an entire
vehicle, taking into account the ground contact, deformation androtation of the tires when driven. We use T-MODE (design support
technology) to design tires that can improve the aerodynamics ofeach vehicle model.

【Evaluation conditions】

reduction

PROXES Comfort

The OPEN COUNTRY A/T III EV was designed using Mobility
Aerodynamics (aerodynamic simulation), our proprietary
technology. The tires feature “AEROWING™” sidewall lug design
to reduce wind drag generated while rotating.
Aerodynamic refers to wind drag generated when driving.
Reducing wind drag contributes to improving fuel efficiency and,in the case of EVs, increases the cruising range per charge.
Analyzing the airflow around the tires while driving andoptimizing the tire profile helps reduce the impact*2 on a vehicle’s

100

PROXES CF3 195/65R15 91H● Rim size: 15X6.0● Inflation pressure: 210 kPa● Load force: 4.82 KN● Speed: 80 km/h

resistance. Wear resistance and durability to handle the instanttorque, rapid acceleration, and additional weight, characteristics
of EVs, are also maintained. The tires also meet therequirements for the snowflake mark*1, which is proof of theirsuitability for use year-round on a wide range of EVs.
* 1 Tires that meet the severe snow-grip requirements stipulated by the United Nations
Economic Commission for Europe (UNECE)

Visualization of air flows around vehicles and tires

Story 2: Ultimate driving enjoyment and a diverse range of mobility-related lifestyles
Toyo Tire Corporation’s unique strategy applies the Company’s
core strengths to developing technologies and commercializing
products that offer exquisite design features and the ultimate
enjoyment of driving, while demonstrating high commitment toenvironmental and safety considerations.
We have established a strong business model in North
America in particular by communicating minute detail to local
dealers in order to engage more deeply with discerning
customers seeking the ultimate driving enjoyment, and bycreating a consistent operation that covers all stages from market
research through production and sales to facilitate speedy
product supply. Our North America sales department leverages
the brand recognition and dealer relationships, which are assetsthat have been cultivated in this way, to gain a quick and firm
grasp of the needs and wants of local customers and the
problems they may be experiencing for internal feedback. The
sales department sometimes cooperates with the technicaldepartment and goes out into the field to gather insights oncustomer preferences so that we can develop differentiatedproducts and fuel a virtuous product-development cycle. The
strongest part of this process lies in the effective communication

between the head office in Japan and the overseas sales
companies that transcends the physical distance between them.
Information on local customer feedback and trends is exchanged
constantly through formal settings and on other various
occasions, and reflected in product planning. The whole process
is underpinned by our fundamental shared values andcommitment to supporting a bountiful range of mobility-related
lifestyles through our products while also maintaining basic tire
performance.
Toyo Tire Corporation also participates in what are consideredsome of the world’s toughest international off-road races, such as
the Dakar Rally and BAJA 1000, and we channel the knowledge
gained through these experiences into product development inorder to sharpen our technology and enhance productperformance. We glean particularly useful information from theDakar Rally’s challenging desert and rocky terrain which we use toimprove durability, a factor leading to product reliability.
Thanks to these continued efforts, our Open Country tirebrand has been able to establish a firm position in North
America’s SUV and pickup truck markets.

Based on these scenarios and our medium-term productplan, we developed the OPEN COUNTRY A/T III EV tire for pickup
trucks and SUVs, which we launched in the North American
market in February 2024.
Taking advantage of the features of the OPEN COUNTRY
A/T III, which has been well received in Japan and the North
America, the EV tires offer both a powerful off-road driving
experience and on-road maneuverability and comfort, as well as
an improved cruising range thanks to their reduced rolling

37

TOYO TIRE Integrated Report 2024

TOYO TIRE Integrated Report 2024

38

Introduction

Materiality
DomainⅠ

Top Message

VisionStrategy

Materiality

Close-up

Governance

Data

Value creation

Open Country for diverse driving experiences andlifestyles
Toyo Tire Corporation is pursuing its own marketing activities
centered around the Open Country brand and building new
fanbases in other markets outside of North America as well.
As part of our strategy, we focused on the possibility thatexcellently designed tires can transcend the narrowest conceptsof mobility and earn a place in people’s daily lives as a lifestylefacilitator that can foster a particular worldview and culture. In
some part of Asia, our sales department works together with local
distributors on promotions that effectively employ social media tohighlight the design features of our tires to car users who like tocamp outdoors.
In Japan, we advertise through means other than automobile
magazines, such as outdoor, fishing and fashion related media, toreach car owners who are not particularly interested in tires andencourage them to choose their tires to suit their individual
lifestyles. Our unique approach to the pursuit of ultimate driving
enjoyment is to foster a set of values that inspires customers tochange their tires not because they are worn out as consumables
but because they want to replace their current tires for a more
appealing luxury product. These marketing activities have helped
fuel a growing awareness of the Open Country brand in Japan,
especially among users who seek highly customized products.
Going forward, we intend to use test-drive meets for tire users topromote awareness of the Open Country brand and its essential
pursuit of “functional beauty” that embodies reliable performance.

Story 3: Providing safety for evolving mobility in a changing society
As society changes and mobility technology advances with a wider use of IT and data and development of autonomous vehicles, we are
beginning to see how the mobility landscape is reshaping. We are committed to developing technologies, products and services to provide
safety that meets the needs of the evolving mobility environment.

Supporting safe driving(providing data to ensure driver safety)
Tires are the only components of a vehicle that actually come into
contact with the road surface, and we are developing sensing
technology that can collect various types of information from tires.
The concept we are working to take forward is to create new
added value by turning tires into data acquisition devices. Using
this technology, we developed a software application thatprocesses data inputs from sensors attached to tires to derive thelimits of the required tire performance, uses them to determine
whether the tire force*3 of the running tires is within theperformance range required for the road conditions, and provides
real-time display. We are currently working to improve sensing
accuracy by taking measurements of road surfaces under a rangeof conditions and proving the concept by testing the application
on driving tracks. We will continue developing these technologies
to serve as a part of safety systems required for autonomous
driving.

Maintenance-free airless tires
A likely effect of changes such as self-service gas stations, homecharging of EVs and wider adoption of car sharing is that there
will be fewer opportunities for drivers to get tires serviced byexperts. Also, cars need to be lighter in order to save energy andresources, and tire manufacturers face the challenge of providing
safety in the next generation of mobility without the need to carrya spare tire. We are tackling this challenge by developing airlesstires designed to provide maintenance-free, spare-free solutions.
Our “noair” airless concept tire achieves the level of durability
and maneuverability close to that of pneumatic tires and can be
fitted on passenger vehicles for driving. As part of the path tocommercialization, we are currently trialing the noair tires on
last-mile delivery vehicles. We are paying close attention to thelegislative and regulatory direction regarding the use of airless tires
on public roads while continuing our development work, taking
into consideration potential use cases such as tires for future
mobility vehicles and as a recycling solution.

* 3 Tire force is a term we use to describe the real-life tire performance, as estimatedfrom data inputs from the tire such as air pressure, temperature, identified roadsurface condition, load, wear, and any anomalies detected.

TOPIC

Open Country R/T receives Minkara PARTS OF THE YEAR 2023
Hall of Fame Award (SUV/4X4 tire category)

Operated by LY Corporation, Minkara (short for “Everyone’s Car Life” in Japanese)is one of Japan’s largest specialist automobile social media platforms where carlovers post and discuss various car-related topics.
Minkara aggregates the number of parts user reviews and the scores, andranks parts with the highest support in its PARTS OF THE YEAR survey
announced twice a year in the middle and the end of the year. The Open Country
R/T tire received the PARTS OF THE YEAR 2023 Hall of Fame Award* (SUV/4X4tire category) for the second consecutive year. Users particularly appreciated thetire’s high performance and unique design made for comfortable driving not only
on ordinary roads but also off-road on dirt tracks. Our Open Country A/T EX tirewon third place in the same category.
We never forget that we are a brand that is nurtured by its users anddeveloped together with users, and we remain committed to further increasing thequality of our brand going forward.

4th generation: 2007-

5th generation: 2009

X spoke

1st – 3rd generation: 2006Early type

Pantograph

Giving form
to ideas

Improved
durability

Oval spoke

Y spoke

Reducednoise

6th generation: 2017-

Improved rolling
resistance

Reduced noise
Improved comfort

Airless tire development over the years

Taking road surface measurements using mounted sensors* This award is presented for parts that have garnered unwavering support in PARTS OF THE YEAR rankingsover the past several years.

Application displaying visualization of tire force in a run

39

TOYO TIRE Integrated Report 2024

Golf cart using “noair” tires

TOYO TIRE Integrated Report 2024

40

Introduction

Materiality

DomainⅡ Foundation for value creation

Material issues that
underpin value creation
These material issues are recognized as an important foundation that supports the creation of unique value.
Our focus is to continue to create value that delights our customers and society at large through the offeringof unique products and services. To do that, we need to constantly strengthen the foundation for propellingand promoting the value creation and achieving sustainable development for the Toyo Tire Group.

Top Message

VisionStrategy

Materiality

Close-up

Governance

Data

Human resource base
Our policy
As part of our efforts to build a management foundation to support sustainable growth, we stipulated the development of aframework in the Medium-Term ’21 Plan that would enable diverse human resources to work together organically and play
an active role based on enthusiastic job satisfaction, as well as a training system that upholds individuality, quality and ability.
We conduct flat evaluations based on ability, aptitude and performance, and develop human resource base designed toensure the best mix of human resources to enable diverse talent, regardless of their nationality, gender, age, background orother factors, to grow and flourish, and to get the right people into the right jobs. In terms of human capital investment, we
inject resources into various initiatives with a view to developing talent, promoting diversity and creating healthy working
environments. We aim to help create value through our business by, for example, investing in systems that promote theplanned development of business managers and professional talent in each organizational function, investing in the buildingof office environments and human resource systems that make diverse employees feel comfortable, and creating working
arrangements and tools that help improve employee performance and communication.

Organizational responsibilities (April 2024)
Material issue

03

Material issue

04

Support diverse talent with motivating challenges
and job satisfaction●

Demonstrating ability and fostering motivation (developing talent)●

Securing diverse human resources (promoting diversity)●

Creating healthy working environments (reforming working styles)

Continue innovating next-generation mobility
technology●

41

Enhancing the development of materials and platform technologies forour products for a society of next-generation mobility●

Creating recycling technologies for products and raw materials●

Innovating low-impact alternatives to substances of concern

TOYO TIRE Integrated Report 2024

The Organization & Personnel Committee, which is under thejurisdiction of Executive Committee, discusses and determines
policies and important measures for strengthening the Group’s
human resource base, and the Corporate Headquarters is directly
responsible for supervising the measure execution of thesepolicies. The areas of activity relating to human resources that are
entrusted to the Sustainability Committee are also based on thesepolicies, and the committee will consult with the Organization &Personnel Committee when necessary.

Executive Committee

Organization & Personnel Committee
Consults

Sustainability Committee
Corporate Headquarters● Corporate Infrastructure Division
Human Resources and General Affairs
Department of each site or Group company

Demonstrating ability and fostering motivation (developing talent)
In 2021, we launched a new human resource evaluation system to definea clearer picture of the type of talent required to support sustainablegrowth for the Toyo Tire Group, to clarify company expectations forindividual roles at different levels, and to better motivate talent to achieve
results and pursue personal growth. We are building an integrated
system by promoting well-balanced evaluations with an emphasis on
dialogue, raising remuneration levels, and introducing training programs
that help improve individual capabilities. In April 2023, we clarified our
expectations regarding the ideal human resources profile and expectedroles at our production sites. By conducting employee evaluations andadjusting their treatment based on such expectations, we aim to motivate
employees to perform at a higher level and achieve better results. We
also conduct career-building interviews with each employee andformulate human resource development plans to promote the active
participation of all employees.
Having positioned talent development as the cornerstone of this new
system, we have been focusing on training and development since 2022.
We have added new mandatory training programs on conceptual points
designed to help employees fulfill their expected roles and correctly follow
company philosophy at each level, or to help our employees acquire vital
basic knowledge on digital transformation (DX), ESG, or other subjects.
We have also updated our training for divisional general managers andgeneral managers to help them acquire the necessary qualities and skills
for developing effective management perspectives, managing their own
personal transformations, and displaying leadership on medium- tolong-term issues. Furthermore, as part of our drive to train moremanagement candidates, we are also promoting cross-border training atpartner universities and other planned personnel transfers including

overseas transfer, to help build a firm pool of human resources. Periodic
employee surveys have confirmed that these new personnel evaluation
systems and other relevant measures have indeed helped motivate
employees in the way we expected.

Training held in FY2023 (Toyo Tire Corporation)
By level
Name

Hours to No. ofcomplete participants

Eligibility
New recruits with university degree
or higher
Second-year employees with
university degree or higher

93

27

8

27

Instructor training

Instructors

7.5

24

Training for senior-level
administrative staff

Newly appointed senior-level
administrative staff

11

29

New assistant manager training

New assistant managers

New manager training

New managers

43
36
6

New recruit training
Follow-up training

New general manager training

New general managers

16
16
17.5

New section leader/assistantsupervisor/assistant manager
training

New section leaders/assistantsupervisors/assistant managers

14

34

Evaluator training

Primary evaluators and above

4.5

59

Selective training
Name

Eligibility

Selective training Ⅰ

Selected employees

Selective training Ⅱ

Selected employees

Pre-assignment training(Face to face)Pre-assignment training（e-learning）

Employees being
assigned overseas
Employees being
assigned overseas
Employees being
assigned overseas

Language training

Hours to complete No. of participants
40
48

5
5

3.5

5

6

3

48.6

9

TOYO TIRE Integrated Report 2024

42

Introduction

Materiality
Domain Ⅱ

VisionStrategy

Materiality

Close-up

Governance

Data

Foundation for value creation

Securing diverse human resources (promoting diversity)
Fostering a culture of mutual respect among diverse humanresources and establishing a culture of cooperation andcollaboration are both important for creating unique Toyo Tire
value.
We work together with universities when recruiting new
graduates to ensure we secure diverse human resources, opening
our doors to foreign students studying at Japanese universities
and Japanese students studying at overseas universities, andactively approaching doctoral degree holders. At the same time,
we are actively employing mid-career talent with experience atother companies, who can play an important role in supportingthe company’s growth stage. Meanwhile, we are rehiring humanresources who have turned 60 and are creating mechanisms tofacilitate the active participation of people with disabilities. We
have also built a job evaluation structure that can respond flexibly
to diverse employees’ job and career preferences in both
specified and general employment. In spring 2024, we introduced
evaluation standards that would enable us to treat both humanresources with outstanding management skills or the power todrive management strategy and personnel with specialist
technological expertise or specific skills who have reachedretirement age in the same way as we treat our current managers
and employees under the age of 60. This move was designed to
improve motivation among elder employees and encourage thenurturing of future successors. We expect these new structuresand standards to have a positive internal impact and help
invigorate our organization.
In the five years leading up to 2020, we doubled thepercentage of women at the assistant manager level from 2.03%
to 4.65%. Now, we have set a new goal of raising the ratio of
female assistant managers promoted to manager level or higher
compared to the similar ratio for men to between 80% and 120%in the five years from 2021 to 2025. (End 2020: 70%, three-year
average for 2021 to 2023: 75%).
As part of our quest to empower women, we hosted an eventin March 2023 for general managers and above and female
employees which featured lectures by external experts and apanel discussion. Female employees exchanged opinions inworkshops on any issues they have regarding the Company’s
current policies and work styles, and the Human Resources
Department used that feedback to help compile more effective
future measures. In November 2023, as part of our aim to nurturea corporate culture that embraces diversity more earnestly andfosters innovation, we conducted training sessions on
unconscious bias for executives, where they deepen theirunderstanding through case studies. We are also seeking to
expand our repertoire of e-learning resources and theme-based
training sessions on D&I issues such as LGBT, empowering
women and harassment.
While the Group has a uniform compensation system for men
and women with the same job qualifications and the same level of
responsibility, our analysis shows that the differing ratios of men
and women in management positions affect wage performance.
We will actively promote the development and promotion of
female employees to enable us to ultimately eliminate wage
disparities.

Employee diversity(Toyo Tire Corporation, full-time employees)

Number of employees (Nonconsolidated)
Outside Japan(people)14,00013,132

3,672 (-0.5% y/y)

Total

Under 30
30-50Over 50

By ageBy gender*1

18.0%
60.7%
21.3%

10,500People with disabilities

64 / 2.51% (As of the end of January 2024)

Employees from countries
other than Japan*2

14

Total management
personnel*3867

12,426

7,023

3,500
0

11,524

11,744

Employees
10,500 from countries
6,455
0.6% (-0.1
pt y/y)6,052*2 inother than Japan7,023
5,705
7,000
management

11,267by gender: Refers to data based on the sex assigned at birth. We do not have
*1 Data3,500
6,109
5,971
5,819
5,606
quantitative data on
gender identity
becauseit is difficult5,692
to obtain, but
we aim to

6,455

11,524
5,705

11,744
6,052

create workplaces where all employees can take an equal active part.
0

from countries
other thanJapan: Refers
to data on
foreign (FY)*2 Data on employees2019
2020
2021
2022
2023
nationals as defined in the Nationality Act of Japan.
*3 Including assistant managers

5,661

5,692

5,606

2019

2020

2021

2022

2023

2.5

(FY)

（%）

10.0

6.6

6.7

6.7

6.9

7.2

4.8

5.0

5.6

5.7

6.2

TOYO TIRE Integrated Report 2024

FY2023

Number of
employees

Utilization
rate

Number of
employees

Utilization
rate

Number of
employees

Utilization
rate

Number of
employees

7.9%

10

16.9%

22

35.4%

34

50.5%

51

(6)
100%

10

(7)
100%

3

(12)
100%

7

(38)
100%

12

2019

2020

2021

2022

2023

0

4.8

2019

6.7

6.7

6.9

7.2

6.2
It is importantthat our employees
should feel proud of what they
5.7
5.6
do and are motivated to create value. We have been conducting abi-annual employee awareness survey since 2021 to capture aorganizational
culture. The survey results and2020 snapshot
2021 of our
2022
2023
(FY)
detailed analysis are shared with the Executive Committee andfeedback is provided to each department. Our efforts to create
and implement improvement action plans based on deepreflection are starting to bear fruit as the cycle takes hold. Eachdepartment is encouraged to implement autonomous andproactive initiatives based on their individual strengths and5.0

weaknesses. The Human Resources Department regularly
monitors the progress of each department, and incorporates
common issues into the development of company-wide policies
and system reviews. The 2023 survey pinpointed issues relating
to shift workload in the production department so we set up a
project to promote improvements together with labor andmanagement. Linking our philosophy, systems, events, andcommunication will enable us to form a unique culture andincrease employee job satisfaction.

Joint human resource development program with Doshisha University(FY)

Creating healthy working environments (reforming working styles)
We believe that our unique work styles and working environments
maximize the capabilities and vitality of diverse human resourcesand organizations. Following the transition to class V for the novel
coronavirus in 2023, we decided to use internal transformation to

FY2022

Employee opinion survey
6.6

5.0

the ratio of female employees
women promoted to section manager or higher

0

FY2021

Utilization
rate(No. of employees taking over
one week’s leave)

7.5

5,819

2.5

Male employees

10.0

11,2675,971

5.0

FY2020Female employees

6,109

7.5

5,661

Childcare leave utilization update（%）

12,426

volunteer activities, hospital visits, hospitalization, pregnancy,
infertility treatment, or other reasons. Meanwhile, following
labor-management consultations, our administrative and technicalbases have designated several promotional days a year forencouraging employees to take their annual leave and achieve a
better work-life balance. At the same time, we encourage
employees at production sites to systematically take annual paid
leave in line with the annual production plan. In fiscal 2023, theannual leave utilization rate stood at 64.8%, an increase of sevenpoints over the past three years.
We achieved the targets set out in the action plan formulated
based on Japan’s Act on Advancement of Measures to Support
Raising Next-Generation Children, and received Kurumin
certification from the Minister of Health, Labour and Welfare in
2020. That action plan was subsequently updated in 2024 to help
expand our childcare support systems and improve working
environments. The revision is designed to boost childcare leave
utilization rates to 100% for both men and women by, forinstance, offering paid parental leave to care for a sick child andpossibly expanding the number of eligible paid childcare leavedays.

the ratio of female employees
women promoted to section manager or higher

the ratio of female employees / women promoted tosection manager or higher*3 (Nonconsolidated)
93.8% (-0.5 pts y/y)
6.2% (+0.5 pts y/y)autonomously and independently. We introduced various work
styles with remote work options and renovated our head office
work spaces to satisfy various needs for cooperative, harmonious
or concentrated working environments. Over 90% of employees
who responded to our survey said they were satisfied with the
expansion of work style options and the ability to work freely andautonomously.
Regarding the need to help employees achieve a goodwork-life balance, we seek to improve our understanding of any
changes in our employees' lives caused by different life eventsand to provide ways to help them achieve a healthy work-lifebalance. We have set up various systems that allow employees tofulfill their childcare and nursing care responsibilities, such asmechanisms for taking leave that enable employees toconcentrate on raising children up to two years of age and carefor family members (for families requiring nursing care within thesecond degree of kinship, up to one year). We have also worked
hard to establish systems and nurture a workplace environmentthat are more conducive to men taking childcare leave. In
addition, we have established a system that allows employees toreinstate and use annual paid leave that expired from two years
ago in the event of an injury or illness, childcare or nursing care,

In Japan

7,000

Male
92.8% (-0.3 pts y/y)Female 7.2% (+0.3 pts y/y)

In Japan
Outside Japan
Management
by gender*1 Male(people)Female14,00013,132

43

Top Message

invigorate the Company and drive growth. We did that byenabling employees to flexibly select the work style and theworkplace that best suited them and by creating working
environments that encouraged all employees to tackle their work

In March 2024, we signed a five-year comprehensive partnershipagreement with Doshisha University. The partnership seeks topromote the use of mutual high value-added resources to foster
human resources who can contribute to society and realize
beneficial technologies.
We will promote multi-layered collaboration on multiple
different research themes, develop future technical leaders andaccelerate the implementation of innovative technologies that are

useful to society. We intend to make the most of the learning
opportunities and venues for recurrent employee education thatthe university offers to nurture corporate engineers throughindustry-academia collaboration. At the same time, we will work
together with the university career center to offer businessfocused career advice to students and help them learn how tochoose their future independently and develop their work
attitudes.

TOYO TIRE Integrated Report 2024

44

Introduction

Materiality
Domain領域ⅡⅡTop Message

VisionStrategy

Materiality

Close-up

Governance

Data

Foundation for value creation
価値創出を支える基盤

Platform technologies

TOPIC

Our policy
The Toyo Tire Group believes that the value we provide through our products and services must support the evolution ofmobility required for a new age. We will continue to challenge technological innovation to help build a society that exists inharmony with the environment and supports safe driving.

Organizational responsibilities (April 2024)
R&D Headquarters is responsible for promoting initiatives in this area. The Technical Committee oversees all initiatives and reports progressto the Sustainability Committee.

Developing concept tires made from 90% sustainable
raw materials

In January 2024, the Toyo Tire Corporation developed a concept tire made from 90%
sustainable raw materials. That represents a dramatic increase compared to the previous
highest ratio of sustainable raw materials in our tires of 50%*1.
The concept tire was made from approximately 60% renewable raw materials, including
biomass-derived butadiene rubber, biomass-derived styrene butadiene rubber, rice husk ash
silica, plant-based oil, and biomass-derived polyester fiber, and roughly 30% recycled raw
materials, including the butadiene rubber derived from CO2 that we successfully developed
together with the University of Toyama, rCB, recycled bead wire and recycled steel cord.
Another impressive feature of the tire is its ability to minimize the rolling resistanceco-efficient, which greatly helps reduce GHG emissions throughout the tire lifecycle andimproves the cruise range of EVs. It achieved AAA-equivalent fuel efficiency, the highest levelof rolling resistance in the tire labeling system*2.
Going forward, we will continue to perfect this tire’s technological innovation and press
for early commercialization as a product that can help realize an era of sustainable mobility.

*1 Ratio of sustainable raw materials used in the OPEN COUNTRY M/T-R tire supplied and installed in vehicles
participating in Dakar Rally 2024

Expanding the use of sustainable raw materials*2 A voluntary industry standard established by the Japan Automobile Tyre Manufacturers Association, Inc.: JATMA. Tires

We believe it is our mission as a manufacturing company to help
promote the transition from a society that consumes resources toa society that circulates resources. We conduct research anddevelopment with the aim of increasing the ratio*1 of sustainable
raw materials*2 used in our products to 40% by 2030, and 100%by 2050. That ratio reached 26% at the end of 2023.
By 2025, the Group plans to gradually introduce products
made from recycled raw materials, such as recycled rubber madefrom used tires and recovered carbon black (rCB). Furthermore,
we are developing technologies to increase the use of renewable

Recyclable
rCB
Recycled steel cord
Recycled bead wire

Biomass-derived synthetic rubber
Plant-derived oil
Rice husk ash silica

the end of each year.

*2 Toyo Tire Corporation defines sustainable raw materials as recycled raw materials
and renewable raw materials.

Efforts to reduce TRWP

（％）
100

100

80

％

60
40

0

26

26

26

2021

2022

2023

％

％

％

40
％

2030 target

2050 target

Tire and road wear particles (TRWP) are dust produced by friction
between the tire and the road surface that is a mixture of tire tread
and road paving materials. Since the dust is discharged into theatmosphere, tire manufacturers view the need to reduce TRWP
as a key issue. Any wear on tires does impact safety, comfort andfuel efficiency, so we are always striving to improve wear
resistance through materials development and improved tread
design. For example, we successfully improved wear resistanceby designing an optimal compound polymer nanocomposite(rubber with highly uniform carbon black dispersion). This wasachieved through advanced nanofabrication using Nano BalanceTechnology, our fundamental material design technology.
We also actively participate in industry groups, the Tire
Industry Project (TIP)*3 and JATMA, to conduct research andstudy ways to mitigate the impact of TRWP since there are still
many things about TRWP that have yet to be determined. We willcontinue to contribute to the industry’s efforts in this area, while
also using any knowledge we acquire though these industry-wide
activities to improve our own initiatives on reducing TRWP.

*3 One of the sector projects of the World Business Council for Sustainable Development (WBCSD)

Promote research and development of sustainable raw materials,

aiming for 40% ratio of sustainable raw materials per productby 2030 and 100% by 2050
(based on the weight of those materials in products at the end of each year)

Toyo Tire’s conventional NCP compound(nanofabrication)

Wear-resistant NCP compound(nanofabrication + nano material design)
Highly active wear-resistant carbon

Wear-resistantpolymers

Improved wear resistanceIntellectual property
We pursue technological innovation and product development
designed to realize an environmentally friendly society and an eraof safe mobility. However, we believe that the new technologies
and products we create through these initiatives only truly acquiresocial value when they are delivered into the hands of ourcustomers and put to use. We acquire the intellectual property
rights that underpin the technical support required to enable the45

TOYO TIRE Integrated Report 2024

The concept tire was exhibited at theTOKYO AUTO SALON 2024 as areference
The sidewall design is in the motif of“sustainable” and “electric”*1 The ratio is based on the weight of sustainable raw materials used in products at

Ratio of sustainable raw materials: targets and actual results

20

Renewable

raw materials, such as synthetic rubber made from biopolymer
biomass (biomass-derived butadiene rubber and biomass-derived
styrene butadiene rubber). This would lead to a reduction in theamount of petroleum-derived raw materials used, which have alarge impact on climate change, and help reduce GHG emissions
over the tire lifecycle.

that meet certain values on both rolling resistance and wet-grip performance are defined as “fuel-efficient tires.” Thesystem encourages a clear labeling method (display method) that ensures consumers receive the appropriate
information.

performance bysafe use of the products that result from our research anddevelopment into recycled raw materials, renewable raw
materials, fuel-efficient rubber compounds and other areas. We
believe that these ongoing intellectual property initiatives will help
create value for the future era of mobility, and also secure our own
presence in that arena.

NaturalrubberNatural rubber

Uses NCP technology to achieve a high carbon
dispersion in natural rubber
Helps reduce energy consumption during operation(Used wear-resistant polymer and highly active wear-resistant carbon)

Designed compound with excellent wear resistance
Boasts both low energy consumption and improved
wear resistance21%*

compared to the conventional
M125ZB low-maintenanceribbed tire*Source: Toyo Tire Corporation

image

TOYO TIRE Integrated Report 2024

46

Introduction

Materiality

Domain Ⅲ

Risk management

Material issues relating
to risk management
There are various social responsibilities that we must fulfill as a company and that form the premiseof our business management. These material issues epitomize the solid foundation required to

Top Message

VisionStrategy

Materiality

Close-up

Governance

Data

Decarbonization
Our policy
The impact of climate change is becoming increasingly severe and society’s demands regarding mobility are increasing all thetime. The mobility business lies at the very heart of the Toyo Tire Group operation and, as such, we recognize that addressing
climate change is the most important issue, and one which has the power to greatly influence our growth. For that reason, weare committed to reducing greenhouse gas (GHG) emissions and expanding the use of clean energy in order to achieve thelong-term goals set forth in the Paris Agreement. We also support the Task Force on Climate-related Financial Disclosures(TCFD) recommendations and strive to disclose information based on the TCFD framework in order to stimulate dialogue,
engage stakeholders and promote climate change initiatives.

ensure a sound and healthy environment and enable us to create our own unique value.

Organizational responsibilities (April 2024)

Material issue

05

Pursue decarbonization in all corporate activities●

Responding to climate change risks and opportunities (TCFD)●

Reducing greenhouse gas emissions●

Increasing use of clean energy

The Toyo Tire Sustainability Committee is chaired by the president andmeets four times a year. The committee reports, deliberates and makes
decisions on how to respond to climate-related and other sustainability
issues, and what progress is being made. The Decarbonization Task
Force, which sits under the Sustainability Committee, discusses climaterelated activity plans, targets and KPIs, and the Sustainability Committee
regularly confirms and monitors the status of those activities.
Any climate-related matters that have been debated and approved in
the Sustainability Committee are then reported to or debated in the
Executive Committee and reflected in the formulation or review of ourannual and medium-term business plans. The developments are reported
to the Board of Directors in a timely and appropriate fashion.

Board of Directors
Executive Committee
Sustainability Committee
Decarbonization Task Force
LeaderOfficer in charge of Quality Assurance,
Environment & Safety Headquarters
Participants from R&D, Business, Production

Members and Sales Headquarters
SupportESG Promotion Department, Corporate
Strategy Division, Corporate Administration
Division, Digital Transformation
Headquarters

Climate change risks and opportunities
Material issue

06

Promote supply chain sustainability●

Procuring sustainable natural rubber●

Implementing supplier management and responding to conflict minerals risks●

Promoting efficient logistics

We conducted scenario analysis to ascertain the impact of climate change on the Group’s business activities.

Scenario analysis process
1. Select scenarios touse and understandthe outlook of eachscenario

2. Investigate risks
and opportunities ineach scenario

3. Assess thesignificance of eachrisk and opportunity,
and identify those ofhigh significance4. Calculate the financial
impact of risks expected
to have a large mediumto long-term impact andexplore possible
countermeasures

1. Select scenarios to use and understand the outlook of each scenario
We assessed the impact of risks and opportunities in a baseline scenario (3-4°C scenario) and a transition scenario (1.5°C scenario).
Material issue

07

47

Ensure the fundamentals of manufacturing:
quality and safety●

Improving quality and increasing customer satisfaction●

Promoting improved awareness of tire safety

TOYO TIRE Integrated Report 2024

Baseline scenario(Scenario outlook)• No new political policies or stronger regulations other than what iscurrently envisioned• GHG emissions increase in some areas following economic growth• Extreme heat, heavy rainfall and other natural disasters intensify as
temperatures rise
(Main scenarios referenced)• IEA Stated Polices Scenario (STEPS)• IPCC SSP5-8.5

Transition scenario(Scenario outlook)• New policies and stronger regulations are enacted to curb climatechange• Global GHG emissions decline to net zero by 2050
• Climate change causes sea level rises and changes in weather patterns,
but they remain below those in the baseline scenario(Main scenarios referenced)• IEA Sustainable Development Scenario (SDS)• IEA Net Zero Emission Scenario by 2050 case (NZE)• IPCC SSP1-2.6

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Introduction

Materiality
Domain領域 ⅢⅢ

We identified climate-related risks and opportunities for each scenario and evaluated the significance of risks and opportunities based on theprobability of certain events occurring that could prove to be pertinent factors in each risk and opportunity and the degree of impact on the
expected costs and other factors in our business. Based on the results, we started to calculate the financial impact of risks that are
expected to be significant over the medium to long term, and explore possible countermeasures.

Highly significant risks
Climate-related
eventsScenarioType

Baseline

Chronic Changes inclimate patterns

Impact on business

Strategy

Materiality

Close-up

Governance

Data

PolicyClimate-related events/
financial impact on
business
Introduction of carbon
pricing
Introducing carbon pricing
will boost the cost of CO2
emissions.

• Compromised infrastructure networks• Decreased sales and profits (overall business Medium toslowdown)highFrequent andsevere heavy
rainfall• Transport network disruption, loss of• Decreased sales, worsened profits (revision

Increase andintensification oftropical cyclones• Marine transport delays, accidents• Increased transport costs• Inventory/product damage

Introduction ofcarbon pricing• Increased service prices as costs are passed • Increased distribution costson• Increased costs of R&D and equipment
investment (shift to low-carbon products)• Introduction of carbon border tax• Introduction of environmental taxes to• Worsened profits (tariffs)
auto-related exports• Increased costs for purchasing carbon

commuting options• Flooding of natural rubber plantationsof production plans)• Increased raw material prices (natural rubber)• Fewer rubber plantations due to poor
profitability

decreased natural rubber production

Medium tohighApprox. 0.7 to
9.7 billion yen(Medium-term: 2030)

TOYO TIRE Integrated Report 2024

Calculation method(Minimum)
Volume of natural rubber procurement × Increase innatural rubber prices• The estimated volume of natural rubber
procurement for 2030 is calculated on past trends• The increase in natural rubber prices is calculated
by averaging out the price increase in past monthsof high flooding across the whole year
(Maximum)
Increase in natural rubber procurement cost ×
Percentage increase in natural rubber procurement
volume• The increase in natural rubber procurement cost is
set at the same level as the increase inprocurement cost in years when large-scale
flooding occurred• The percentage increase in natural rubber
procurement volume is the estimated percentage
increase in procurement volume between the year
when large-scale flooding occurred through to theyear 2030• The Toyo Tire Group will continue toreduce CO2 emissions throughefficient energy use in our products
and business activities inside andoutside the organization• Help reduce CO2 emissions bypromoting the procurement of
renewable energy at production sites
using internal carbon pricing (ICP), as
well as fuel conversion and equipment
upgradesCO2 emissions × Carbon tax• CO2 emissions are the company’s target forCO2 emissions in 2030

• The carbon tax is the 2030 carbon tax fordeveloped countries designed to help achieve
the 2050 net zero emissions target announced
by the IEA

Highly significant opportunities
ScenarioType

Transition

MarketMedium tohighChanges in
economy andsocietyCountermeasures• Reduce the amount of natural

rubber used in each tire by seeking
to reduce tire weight while also
paying due attention to reducing
rolling resistance• Continue efforts to increase theusage of sustainable raw materials
and reduce consumption of natural
rubber by gradually introducing
products made from recycled raw
materials such as recycled rubberfrom used tires• Achieve stable natural rubber
procurement by encouraging theentire supply chain to build
solutions to issues faced by natural
rubber production sites(deforestation, infringement of local
residents’ rights)

EnergyImpact on business

Main financial impact

Greater ecoconscious
behavior bystakeholders• Acquisition of new business partners

Expansion of
low-carbon
product market• Greater demand for products to go low

Products/ Increased
services environmental
awareness incustomers

1. Impact of changing climate patterns on the procurement of natural rubber [risk]
Impact amount/impact timing

Shortfall in CO2 reduction target × Carbon tax• The shortfall in CO2 reduction targets is the

Medium tohighMedium tohigh• Increased raw material prices due toCountermeasuresvolume outstanding supposing the Company’s
targeted CO2 volume reduction in 2030 is lower
than expected by 10%• The carbon tax is the 2030 carbon tax fordeveloped countries designed to help achieve
the 2050 net zero emissions target announced
by the IEA• The percentage increase in natural rubber
procurement volume is the estimatedpercentage increase in procurement volume
between the year when large-scale flooding
occurred through to the year 2030

highproduction)• Inventory/product damage (flood damage)〈Financial impact and countermeasures〉

Changes in climate patterns
Changing climate patterns
will generate changes in theareas in which natural
rubber plants can grow, adeterioration in quality andother issues, all of which
could increase the cost ofnatural rubber procurement.

Approx. 0.5 billion yen(Medium-term: 2030)

Approx. 5.7 billion yen(Medium-term: 2030)

credits

Climate-related events/
financial impact on
business

Calculation method(decreased tire production)

Increase in
extreme weather

Market/ Increased raw
reputation material costs

Impact amount/impact timing

SignificanceMedium to• Increased R&D costs (heat-resistant tires)high• Decreased sales (winter tires)
Increasedrawmaterial
prices(naturalrubber)•• Decreased sales (reduced or suspended tire Medium to

Sea level rises

2. Carbon pricing mechanisms [risk]• Migration of natural rubber tree crop zone, • Increased raw material prices (natural rubber)
decline in quality• Increased R&D costs (alternative raw
Medium tomaterials)• Energy supply system instability
highIncreased
demand
for
crude
oil,
naturalgas,
Decreasedsales,
worsened
profits
•
•
etc.

Acute

Main financial impact• Deterioration of roads• Reduced areas of snowfall• Reduced natural rubber harvests• Compromised ports and warehouses

Temperature
rises

49

VisionRisk management
リスクマネジメント

2. Investigate risks and opportunities, 3. Assess significance, and 4. Calculate the financial impact of material risks
and explore countermeasures

Transition

Top Message

through focus on the environment• Increased added value of eco-conscious
products
carbonSignificance• Increased sales and profits (acquisition of
new business partners, increased added
value)• Increased sales and profits (increased added
value)HighHigh• Development and sales of products with low • Increased sales and profits (increased share,
environmental impact

increased added value)

Growth of EVs/
next-generation
vehicles• Greater demand for EV tires, early-stage

Skyrocketing coaland oil prices• Expansion of EV market

development and sales

High• Increased sales and profits (increased added Medium tovalue)high• Increased sales and profits (sales of EV tires)

High

Climate-related metrics• Greenhouse gas (GHG) emissions (Scope 1, 2, 3)→2019-2023 results• GHG emissions intensity→2019-2023 results• Introduction of an internal carbon pricing system
Used to evaluate decarbonization-related projects and otherinvestment initiatives.
Following a trial operation in fiscal 2023, the system wasofficially launched in fiscal 2024 with a set carbon price* of
10,000 yen/ton.
* The appropriateness of the carbon price will be assessed each year and revised if
necessary.

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50

Introduction

Materiality
Domain Ⅲ

VisionStrategy

Materiality

Close-up

Governance

Data

Risk management

Climate-related targets

upgrading fuel efficiency performance each time we change atire model. As of 2023, emissions from PCR had been reduced
due to reduced rolling resistance by 1.5%*1 compared to 2019,
which is a reduction of 94.8 thousand tons-CO2e.

• GHG emissions reduction targets* Decided by the Sustainability Committee in November 2021 and approved by the Executive Committee in December 2021
* Announced on February 15, 2022

* 1 Calculation method: The weighted average RRC for each business year is

calculated from PCR sales and the RRC for each product, and CO2 emissions are
estimated based on JATMA’s Tyre LCCO2 Calculation Guidelines Ver. 3.0.1.

Scope1, 2

GHG emissions: Reduce GHG emission by 46% by 2030 compared to 2019 and aim to achieve carbon neutrality by 2050.

Scope3

GHG emission per unit: Aim to help reduce GHG emissions per tire in 2030 by 20% compared to 2019.

Energy consumed
Energy intensity (right scale)
Energy consumed
Energy intensity is the total amount of energy used within
the organization divided by total sales.
(GJ/millions of yen)(thousand GJ)
8,000.024
7,370.8 7,686.9
7,346.1

One of our milestones is to aim to reduce Scope 1, 2 GHG emissions by 25% by 2025 compared to fiscal 2019

Reducing greenhouse gas (GHG) emissions

6,777.4

6,000.0

Greenhouse gas emissions are seen as a major cause of climatechange so the Toyo Tire Group is working to reduce GHG
emissions through its products and business activities insideand outside the organization.

Scope 1, 2 initiatives
The amount of energy consumed increases in line with increases
in production volume. However, as a means of addressing
Scope 1, 2 emissions, we are seeking to reduce energy
consumption at our production bases by repairing process
pipelines and introducing highly efficient equipment to improveenergy efficiency, and also by encouraging automation andimproving the usage of air-conditioning and lighting. In addition,
we are switching to fuels that emit lower greenhouse gases. We
have reduced CO2 emissions from the Sendai Plant by 500 tons
a year in 2023 by strengthening the insulation of the plant’svulcanizers and pipelines and thereby reducing energy
consumption. Furthermore, we converted the boilers at the
Kuwana Plant to natural gas, reducing CO2 emissions by 1,400
tons. By introducing nitrogen vulcanization and installinginverters on vacuum pumps at tire manufacturing subsidiaries in
China, we have reduced CO2 emissions by 1,600 tons annually.
Meanwhile, our plants in Japan are promoting the use ofelectric forklifts. Purchased electricity at our Japanese plants isbeing replaced by electricity derived from renewable sources in,and the electrification of 17 forklifts in 2023 helped reduce CO2
emissions by 400 tons.

Expanding the use of clean energy
From the second half of 2022, the Toyo Tire Group began
switching electricity purchased primarily at production sites topower derived from renewable sources. By the end of 2023,
100% of the electricity purchased at the Sendai Plant, theKuwana Plant and our tire plant in the United States had been
converted to renewables, along with our administrative andtechnical bases in Japan. We will systematically promote efforts
to achieve a global 90% renewable energy usage ratio by 2030.
That ratio stood at 71.14% at the end of 2023.
We are also actively introducing photovoltaic (PV) power
generation systems for in-house use. The largest PV power
generation system in Serbia (power generation capacity: 8.4 MW)

51

Top Message

TOYO TIRE Integrated Report 2024

was installed on the premises of our Serbia Factory, which
launched operations in 2022. The system’s annual generation of
10,150 MWh of electricity is helping reduce CO2 emission by
7,100 tons a year. By the end of 2023, a large-scale PV power
generation system with a generating capacity of 14.0 MW
installed on a 96,000 square meter rooftop space in our tire plantin Malaysia was fully operational. The system is expected togenerate 19,000MWh and reduce CO2 emissions byapproximately 12,000 tons per year.
Meanwhile in Japan, at the end of 2023, we introduced asolar power generation system at our Corporate Technology
Center. The system generates approximately 419 MWh eachyear, which is more than any other system at any other base inJapan, and is equivalent to approximately 12% of the electricity
used at the Center. The system is expected to reduce CO2
emissions by approximately 128 tons per year.

19.5

18

19.7

17.8

4,000.0

6

0

0

2020

2021

Scope 3 initiatives
The Toyo Tire Group aims to contribute to a 20% reduction in
Scope 3 GHG emissions per tire by 2030 compared to 2019. A
calculation of GHG emissions throughout the Group’s value
chain based on the Japan Automobile Tyre Manufacturers
Association’s (JATMA) Tyre LCCO2 Calculation Guidelines Ver.
3.0.1 revealed that emissions from the Category 11 product use
phase account for at least 80% of overall GHG emitted.
According to the guidelines, fuel-efficient tires can reduce CO2
emissions during use (during vehicle driving) by 95.4 kg CO2e
per tire for passenger car radial (PCR) and 879.0 kg CO2e pertire for truck and bus radial (TBR) compared to standard tires.
Our technical division is working to develop technologies toenhance fuel efficiency of tires by reducing their rolling resistanceand weight. Over the medium to long term, the Group isplanning to enlist the help of the Product Planning Division in

2022

2023 (FY)

2022

2023

Total Scope1 GHG emissions

268.2

265.3

274.5

Total Scope2 GHG emissions(location-based)

284.4

253.6

280.5

Total Scope2 GHG emissions(market-based)

−

−

105.8

Consumption of fuel from
non-renewable energy

4,735.7

Purchased electricity consumption

1,944.2

Consumption of purchased
electricity from renewable energy
sources, consumption equivalent
to procurement of non-fossil
certificates

GHG emissions (Scope 1)

2022
5,130.8
1,923.5

GHG emissions (Scope 2)
GHG emissions intensity (right scale)Emissions intensity is total volume from Scopes 1, 2 divided by total sales.
Scope2 is calculated on a location-based method until 2022 and on
a market-based method from 2023.

2023
5,302.7
2,027.6

0.0

114.2

1,442.5

0.00%

5.94%

71.14%(t-CO2/millions of yen)(thousand t-CO2e)

4

800.0

(thousand GJ)

2021

Purchased steam consumption

2021

600.0

Energy consumed by source

Consumption of fuel from renewableenergy sources (photovoltaics)
Corporate Technology Center(thousand t-CO2e)

12

13.9

2,000.0

Percentage of purchased electricity
with a renewable energy certificate

Tire plant in Malaysia【Scope1, 2】

6,992.9

14.8

2019

Greenhouse Gas (GHG) emissions

400.0
200.0
0

590.9
296.3

535.5

552.6

263.9

268.2

1.57

265.3

380.3

2

274.5

1.40

1.56

3

518.9

1.04

294.6

271.6

284.4

253.6

0.69
105.8

2019

2020

2021

2022

2023

(FY)

1
0

Energy consumption and GHG emissions are third-party verified data.

SBTi*2 initiatives
0.8

0.7

41.1

312.2

315.8

315.4

In May 2024, Toyo Tire Corporation submitted a letter ofcommitment to SBTi stating its intention to seek SBT
certification. We have already set targets for reducing GHG
emissions as the Toyo Tire Group and are currently working toachieve them. We will now strengthen our efforts across theentire supply chain by setting GHG reduction targets for theperiods five to 10 years ahead, that comply with the levels
required by the Paris Agreement*3.
* 2 SBTi: The Science Based Targets Initiative is designed to achieve a goal of limiting
any rise in average global temperatures to 1.5°C.

* 3 Paris Agreement: An international agreement formed at the Conference of theParties to the United Nations Framework Convention on Climate Change held inParis in 2015. The long-term goal of this agreement is to keep any rise in average
global temperatures to well below 2°C compared to pre-industrial levels, and strive
to limit that increase to 1.5°C.

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Introduction

Materiality
Domain Ⅲ

Top Message

VisionStrategy

Close-up

Governance

Data

Risk management

Supply chain

Supplier management
Using guidelines to engage suppliers

Our policy
The Toyo Tire Group has established the Toyo Tire Group Basic Purchasing Policies and seeks to secure appropriate
product quality and price through fair transactions.
We also formulated the Toyo Tire Group CSR Procurement Guidelines and the Sustainable Natural Rubber Procurement
Policy. We work with our suppliers to further promote sustainable procurement that aims to mitigate, prevent and minimize
the negative impact of our corporate activities on the environment and society and to improve our corporate value andcompetitiveness.
We also support sustainable logistics by improving the productivity and efficiency of truck transportation and ensuring
safe cargo handling operations.

Organizational responsibilities (April 2024)
We established the Supply Chain Task Force under the jurisdictionof the Sustainability Committee to discuss activity themes, targets
and KPIs in relation to ESG issues in the supply chain. The
Sustainability Committee regularly confirms and monitors thestatus of these activities.

Executive Committee
Sustainability Committee
Sustainable Supply Chain Task Force
LeaderVice President of Business Headquarters

Members

Procurement Division, Environment & Safety
Division, Quality Assurance Division, SCM
Division

SupportESG Promotion Department, Compliance &Legal Division

Procuring sustainable natural rubber
The securing of a stable natural rubber supply into the future is an
important management issue for a business group like ours thatuses natural rubber as the main raw material. The natural rubber
industry is facing issues relating to deforestation at production
sites and the infringement of local residents’ rights. We recognize
the importance of striving to solve these problems across theentire supply chain from production through consumption.

International cooperation for building a sustainablesupply chain
Toyo Tire Corporation is a member of the Global Platform for
Sustainable Natural Rubber (GPSNR)* launched in 2018 under
the leadership of the Tire Industry Project (TIP), which is part of
the World Business Council for Sustainable Development(WBCSD). As a member, we participate in discussions designed
to solve relevant issues. We are working to prevent deforestation,conserve biodiversity and water resources, uphold human rights
and support local communities, improve the productivity of natural
rubber and make our supply chain more transparent. We also
exchange information with the civil society sector, which includes
NGOs and other groupings that have specialized knowledge ofenvironmental and social issues at natural rubber production
sites.
Our aim going forward is to continue to cooperate withinternational initiatives and stakeholders and to build a sustainable
natural rubber supply chain across our whole value chain.

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Materiality

TOYO TIRE Integrated Report 2024

We have formulated the Toyo Tire Group CSR Procurement
Guidelines and request suppliers to pursue activities inaccordance with these guidelines to help address environmental
and social issues across our entire supply chain. We also appeal
to our suppliers to help convey the purpose and nature of theseguidelines further up the supply chain. The guidelines arereviewed whenever there is change in social demands or thebusiness environment. The guidelines have been published inJapanese, English and Chinese.
To ensure the fair and objective assessment of supply chain
risks, we formed a contract with EcoVadis, a third-party
organization that conducts CSR assessments, and commissioned
sustainability assessments of our suppliers from an environmental
and social perspective from 2022. By the end of 2025, we aim tohave fully audited suppliers accounting for 95% or more of thetotal transaction value of our tire-related raw materials. At the endof 2023, we had finished evaluating suppliers that account for
approximately 70% of that total transaction value, including
natural rubber suppliers.
Going forward, we will promote engagement with suppliers
based on the results of the EcoVadis assessments and work
together to solve supply chain issues.

Fair and transparent transactions
We declared our commitment to free competition and fair tradingin each market in the Toyo Tire Group Code of Conduct. We
conduct our activities in compliance with antimonopoly andsubcontracting law, pursue fair procurement activities, comply
with import and export-related laws and regulations, and ensure
appropriate labeling and product explanations.
For instance, the Group seeks to ensure business activities
are based on fair and free competition by establishing purchasing
regulations that stipulate the thorough implementation of fair andnon-discriminatory business dealings and prohibit thedevelopment of personal interests with suppliers. At Toyo Tire
Corporation, we have established anti-cartel regulations toprevent cartels and bid-rigging activities. In addition, we
continuously perform self-inspections regarding compliance with
subcontracting law and implement e-learning programs on thelaw.

Responding to conflict minerals risks
Conflict minerals response* A platform that seeks to transcend industrial boundaries and ensure that theWith regard to our decarbonization initiatives, we have beensurveying existing suppliers since 2021 and are tackling any
issues that emerge to help reduce the environmental impact ofour supply chain activities.

In Europe and the United States, manufacturers are legallyobliged to conduct due diligence when purchasing conflictminerals (tin, tantalum, tungsten and gold) and cobalt mined inconflict and high risk areas in light of the fact that the money fromsuch purchases may be used to fund local armed groups andpromote corrupt practices, such as human rights infringements,
bribery and money laundering. When procuring minerals and raw

materials mined and manufactured in such areas, the Group’s
policy is to ensure those materials are not linked to human rights
violations, environmental destruction, conflict, or corruption, and
we enlist the cooperation of suppliers to trace back to thesmelters and confirm that the raw materials purchased by theGroup are not linked to any such inhumane acts. We would
request remediation through our suppliers if any such concerns
were to emerge.

production and use of the world’s natural rubber is carried out in a way that is more
conscious of the natural environment and social issues.

Promoting sustainable procurement
Following the guidance provided by GPSNR encouraging tire
manufacturers to incorporate the platform’s Principles of
Sustainable Natural Rubber into their business activities, we
conducted a thorough review of the items related to natural
rubber procurement that were determined as part of our CSR
Procurement Guidelines. Then, from 2021, we strengthened oursystem based on the separate Sustainable Natural Rubber
Procurement Policy. That policy is designed to improve theeffectiveness of initiatives relating to healthy ecosystems, humanrights, communities and other issues. Currently, in addition toconveying this policy to suppliers and asking for their cooperation,
we are promoting activities that ensure traceability and protect theenvironment in accordance with the medium- to long-term action
plan stipulated by our Supply Chain Task Force. In 2023, we
made a donation to an international environmental organization to
help protect forests. We have also set up a dedicated contact
point specifically for the natural rubber supply chain. We received
no reports in 2023.

Efficient logistics
As the shortage of truck drivers grows ever more serious in
Japan, the Ministry of Land, Infrastructure, Transport and Tourism
is developing initiatives to improve the productivity and efficiencyof truck transportation and create more comfortable working
environments.
To promote efficient logistics, Toyo Tire Corporation is
instigating a modal shift to ships and national railways for the
long-distance transportation of goods in Japan dispatched fromour factories. We have already shifted over 50% of transportation
to these new modes, and, ten years from now, we aim to have
reduced long-distance truck transportation to roughly half of 2022
levels. Furthermore, ensuring safer and more efficient cargohandling operations will not only reduce the burden on drivers, butwill also fuel economic growth and create higher levels of job
satisfaction.

Specific initiatives• Introduced and expanded large container transportation by

Japan Freight Railway Company for shipments from Sendai
Logistics Center and Kuwana Logistics Center, and introduced
coastal vessel transportation using shipping containers from the
Kuwana Logistics Center• Installed safety fences in warehouses at our Sendai and
Kuwana Logistics Centers following a risk assessment (toprevent tire racks from toppling or items from falling in the eventof an earthquake)• Installed monitoring cameras at logistics centers in each plantand distribution centers in Japan to ensure safe operation;
installed monitoring cameras to ensure safe forklift operation

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Introduction

Materiality
Domain領域 ⅢⅢ

Top Message

VisionStrategy

Materiality

Close-up

Governance

Data

Risk management
リスクマネジメント

Quality

Increasing customer satisfaction
Improving quality and customer satisfaction

Our policy
Our principle for manufacturing is to provide high-quality and safe products and services that are useful to society, and westate our basic policy for product quality and code of conduct in the Toyo Tire Group Global Product Safety Policy. The
policy clearly states that product safety and global environmental protection must be taken into consideration throughout
the value chain, from the product planning, development and design stages to production, sales, use and after-use.
We operate a quality management system based on IATF 16949 (or ISO 9001 at some production sites) predominantly
at our production bases, and take measures against risk.
—ISO 9001 certification (as of the end of March 2024)
Production bases: 13 sites (3 Toyo Tire Corporation sites*, 10 affiliated company sites)
Sales bases (affiliated companies): 2 sites* The Kuwana Plant has independently acquired certification at two sites: its tire production plant and automobile parts plant.

—IATF 16949 certification (as of the end of March 2024)
Production bases: 9 sites (3 Toyo Tire Corporation sites, 6 affiliated company sites)

As a manufacturer, we understand that our products and services
link us to both our customers and society, and we are working to
improve quality throughout the entire value chain. Our production
bases are constantly searching for ways to maintain and improve
product quality while our technical service departments
continuously investigate product satisfaction levels in the market
and relay customer requests as feedback to our design andproduction bases. Our Customer Relations Department analyzes
the opinions and inquiries received from customers on a day-today basis and makes recommendations to the relevant
departments in order to improve our products and services. Other
workplaces also strive to provide services and improve the qualityof our operations from a customer perspective. Such activities
reflect the spirit of our Company Philosophy of continuously
improving our products and creating value for everyone who wework with.

For more than 50 years, the Group has continuously held
quality control (QC) circle activities to proactively raise quality
control standards using employee insight from the frontlines. QC
circle activities began at production sites and have now spread tosales divisions, with about 300 circles currently running within theGroup. In each circle, members pool their experience andknowledge in order to solve problems, and work to improve
quality by grasping the current conditions, setting goals,
developing action plans, and analyzing issues. Each year, we run
a Toyo Tire QC Circle Convention, at which circle representatives
from Japan and overseas come together to learn from each otherby giving presentations on not only quality improvement initiatives
but also their day-to-day efforts to eliminate workplace waste andloss. Moving forward, we will continue supporting QC circle
activities to further improve worksite autonomy and customer
satisfaction.

Visualizing manufacturing quality using manufacturing execution systems (MES)
Organizational responsibilities (April 2024)
Quality Assurance, Environment & Safety Headquarters is
responsible for promoting initiatives in this area, and reports
progress to the Sustainability Committee.

Executive Committee

Sustainability Committee
Quality Assurance Committee
Quality Assurance, Environment & Safety
Headquarters● Quality Assurance Division
Quality assurance departments ofmanufacturing subsidiaries
R&D Headquarters● Technology Development Division
Sales Headquarters● Americas Business Development Division● Original Equipment Sales Division● Europe, Africa & Middle East Sales Division● Asia & Oceania Sales Division

throughout the Group to ensure we comply with the increasingly
complex quality-related regulations in each country.
Our tire and automotive parts businesses each hold annual
Global Quality Management Committee (Global QMC) meetings,
bringing together quality assurance managers and relevant
representatives from manufacturing bases worldwide to share anddiscuss each site’s initiatives related to product quality,
improvement of quality assurance systems for production, andquality-related demand of our business partners.
In addition, at the four tire
testing and evaluation sites in Japan,
we test our tires in compliance with
ISO/IEC 17025 (general
requirements for the competence oftesting and calibration laboratories)
since our initial certification in 2013,and have been working to improve
test accuracy and reliability tocontinue conducting tests inaccordance with standard
requirements.

Group sales companies

Example Efforts to Meet Quality Standards

Improving product quality
Meeting the quality standards of each country
In the face of factors such as greater climate change risks,many countries are rapidly introducing new regulations related
to the environmental performance and quality of vehicles topromote higher fuel efficiency and reduce the CO2 emissions.
We are working to strengthen our response to quality standards• Collecting information locally• Making recommendations by participating in industry
groups• Exchanging opinions with regulatory institutions• Sharing information on the latest legal and regulatory
trends• Giving presentations on legal and regulatory matters

The Toyo Tire Group aims to build a quality assurance system thatcan predict and prevent issues from occurring in the
manufacturing process. We have introduced automatic measuring
instruments into the tire manufacturing process, and arelaunching a system that digitally collects and visualizes qualityand production-related information from production equipment.
This will ensure quality in each manufacturing process, and makeit possible to analyze and monitor collected data to detectchanges in process trends. At the Serbia Factory, MES will be put
into operation in the second half of 2024 and expanded to thequality area. Analyzing the results, we are working to introduce
MES at other production bases, as well as foster data-centrictalent and corporate culture.

Improving service quality at sales companies
The Group’s tire sales subsidiaries are striving to improve the job
skills of tire technicians and the level of service provided by sales
associates and front office staff. Sales companies provide jobspecific training to sales associates and front office staff to equipthem with the awareness required to convey product value tocustomers clearly and correctly on a day-to-day basis and todevelop the skills required for their respective roles.
We also hold a Truck and Bus Tire Servicing Contest fortechnicians, at which technicians selected from all over Japan
compete with each other to demonstrate their skills. The primary

goal of the contest is to improve the skills and service level oftechnicians responsible for exchanging tires, performing
inspections, and providing after-sales services. This contest
illustrates to staff how their own
jobs contribute to the safety of
our customers, which in turn
fosters a sense of duty andmotivation toward their work.

Tire safety awareness activities
We believe that one of our most important duties is to help drivers
learn how to use tires appropriately. Using our proprietary driving
simulator, we offer a workshop for driver to experience thedifference between worn and new tires when breaking on wet
roads or getting a puncture, and maneuverability under different
tire pressures. During the 2023 spring and autumn National Traffic
Safety Campaigns, we ran a workshop in collaboration with thepolice station nearest the venue. Approximately 4,200 people

have taken part in the workshop over the five-year period startingin 2019. We confirmed the effectiveness of the workshop with
97% of post-workshop
questionnaire respondents
indicating that their awareness oftire safety has increased.

A participant using the driving
simulator

55

TOYO TIRE Integrated Report 2024

TOYO TIRE Integrated Report 2024

56

Introduction

Close-up

Taskforce on Nature-related Financial Disclosures (TNFD)

VisionStrategy

Materiality

Close-up

Governance

Data

Human Rights

Our policy

Our policy

In 2023, the Taskforce on Nature-related Financial Disclosures (TNFD) published version 1.0 of its recommendations andthe Science Based Targets Network (SBTN) published version 1.0 of its guidance for setting Science Based Targets for
Nature (SBTs for Nature). These two documents clarify the role of companies in avoiding, reducing and restoring the impactof their business activities on nature, increasing the demand on companies to take initiatives and disclose information. As acompany that relies on natural capital in our business, we developed a long-term roadmap in 2023 that recognizes natureand natural capital. Going forward, we will implement initiatives at each phase in accordance with the roadmap and we will
gradually disclose information in line with the TNFD recommendations.

The Global Human Rights & Labor Policy introduced in January 2019 sets out our clear commitment that, as our businessglobalizes and our stakeholders diversify, the Toyo Tire Group strives to carry out its business in a way that respects thehuman rights of everyone involved in our corporate activities, including those in our workplaces, at our suppliers, and within
the communities where we operate, contributing to creating an inclusive society.
We also engage with our suppliers to ensure that they understand our policy and encourage them to work with us to
fulfill our common corporate responsibility to uphold human rights.

* Taskforce on Nature-related Financial Disclosure* Science Based Targets for Nature

Organizational responsibilities (April 2024)

Phase1
Assess current status
2023〜2025

Phase2
Minimize impact

Phase3Create positive impact

〜2030

〜2050

Water Resources● Track basic data
● Assess risks● Set targets for high-risk sites● Reduce water withdrawal andminimize wastewater impact at
high-risk sites● Include water requirements insupplier contracts

WASH*3● Identify WASH issues at ourbases, watersheds, and supply
chains● Improve problem areas● Include WASH requirements insupplier contract

Biodiversity● Identify dependencies andimpacts● Assess risks and opportunities● Minimize impact at high-risk
sites

Governance andCommunication● Increase knowledge on natural
capital (water and biodiversity)● Strengthen internal governance● Enhance stakeholder
communication* 3 Water, sanitation and hygiene

Address issues atwatersheds throughcollaboration withstakeholders●Entire Group ●Outside Japan ●Suppliers

In 2023, we implemented Phase 1 (assess current status) with respect to water resources, which are essential to our business activities.

Water risk assessment• Assessment indicators:

Of the two Aqueduct water resource risk assessment indicators,
Water Stress and Water Depletion, Toyo Tire Corporation uses
Water Depletion to conduct its risk assessments because that isa more pertinent representation of the water resource situation in
the basin.
Water Depletion ＝Total water consumption in the basin*4
Volume of usable water in the basin*5*4 Water consumption: The amount of water withdrawn that cannot be reused*5 Volume of usable water = Volume of water resources in the basin – Volume of water
consumption from the basin• Assessed areas: 12 areas where the Group has manufacturing
bases• Assessment period: April 2023
• Assessment results

One high risk area in China (Zhucheng City). One medium-highrisk area in Thailand. All the other areas were low risk.

Water risk targets and indicators
Targets:• Reduce water withdrawal by 10% compared to 2023 levels by
2030 at our bases in China which have been assessed as highrisk in terms of water depletion by Aqueduct.
• Manage factors affecting increases and decreases in water
withdrawal and continue to assess risks.
• Enhance data collection on water discharge volume and quality
and continue to assess risks.
TOYO TIRE Integrated Report 2024

The Corporate Headquarters takes the lead in driving activities and holding discussions relating to the promotion of human rights, as well as
maintaining a robust system for preventing human rights violations in day-to-day operations. Human rights-related activities are subject to
the Sustainability Committee’s oversight through progress reporting, review and approval.

Human rights due diligence

Addressing nature-related risks and opportunities

57

Top Message

Reducing water risks
The Group mainly uses municipal or other public and private
water supply facilities as well as groundwater for our boiler
equipment and parts processing facilities, the cooling ofproduction parts, cooling towers and welfare facilitates at our
manufacturing bases. For water withdrawal and discharge, we areworking on proper water-resource management throughout theGroup using efforts such as improving equipment to reuse water
as much as possible in each production process.
As a result of our efforts over a five-year period (2019–2023)
to reduce water withdrawal at our bases in Japan by 10%
compared to 2018 levels, we reduced our water withdrawal in2023 by 19%, thereby achieving our target. Moving ahead, we
will follow the long-term roadmap and continue working on ourtargets of reducing water withdrawals at high-risk sites as well as
minimizing wastewater impacts. We will maintain appropriate
water usage at major domestic and overseas bases other thanhigh-risk bases by managing changes in water withdrawals perunit of production.

In 2023, we identified and assessed which human rights risks are
relevant throughout all of our Group business activities and the
supply chain, then went further to identify which risks are themost important for us to take action on. In order to ensure
objectivity, this process was conducted with the help of external
experts in business and human rights.

Identifying important risks
1. Identifying human rights risks
We identified relevant human rights risks by surveying each of ourdivision headquarters to understand the business characteristics
that are linked to risks, and comparing these with risks consideredinherent to our industry based on reports and recommendations ofprominent international institutions and organizations, as well as
actual cases of risk that have manifested within the industry.
2. Assessing the significance of human rights risks
The identified relevant human rights risks were scored by severity(the level of harm should an incident occur) and likelihood (the easeof manifestation within the Group). The significance of each risk wasthen assessed, with more weight given to severity in accordancewith the UN Guiding Principles on Business and Human Rights.
3. Identifying important human rights risks
The relevant human rights risks were assessed according to thetype of rights holders (those who have the human rights that are
at risk of being adversely impacted), which led to identification ofimportant risks.

Prevention & mitigation measures for Identified
important risks
To prevent and mitigate these important risks, we will both
continue and strengthen our existing measures while constructing
and enhancing management schemes.

Rights holders

Important risks

Group
Lack of health & safety at
employees,
workplaces
job applicants Forced/compulsory or childlaborPower harassment or
discrimination
Discrimination against
candidates in hiring interviews
Long working hours,
excessively strenuous work
Manufacturing Lack of workplace health &contractors,
safety at manufacturing sites
distributors
Forced/compulsory or childlabor, long working hours,
excessively strenuous work at
manufacturing sites
Raw material Forced/compulsory or child
suppliers
labor at raw material
production sites

Prevention & mitigation measures
Strengthen occupational health &safety management
Discover any current forced/
compulsory or child labor, build
systems to eliminate
Enhance training on preventing
harassment and discrimination
Review materials for employees incharge of interviews
Strengthen efforts to secure necessary
personnel and improve productivity
Accelerate efficient logistics initiatives(distributors)
Strengthen manufacturing contractor/
distributor management scheme

Enhance sustainable procurement
Strengthen raw material suppliermanagement scheme
Enhance surveying of smelters about
Sales partners, Indirect complicity in wars ofconsumers,
aggression through sourcing of parts potentially using conflict minerals
indigenous
conflict minerals and otherand other local materials
communities Indirect complicity in conflict
Strengthen sales partner management
through sales practices
schemeAdverse impact on local
Further improve wastewatercommunities through production management, noise control
or disposal of our products
Accelerate initiatives based on quality
Infringement on consumer
management system operation
health and safety throughdefective products

Raising awareness of respect for human rights
We work continuously to raise awareness of the company’s responsibility
to respect human rights through e-learning sessions on our Corporate
Code of Conduct as well as level-specific and other training. We also
participate in human rights awareness activities at every region where ourbusiness sites are located, and strive to respect the human rights ofeveryone related to our business operations, including those at our
suppliers and within the communities where we operate.
On Human Rights Day, the President of Toyo Tire Corporation sends
a message to all Group employees, stressing the importance of having afoundation of deeply diverse talent to generate value through ourbusiness, and of demonstrating sincerity with all stakeholders.

Grievance mechanism
The Toyo Tire Group has established an internal reporting system for all compliance issues, including human rights. When consulted or a report
is received, we conduct an internal investigation as needed and take corrective action. There were no cases of human rights violations in 2023.

TOYO TIRE Integrated Report 2024

58

Introduction

GovernancePursuing sound governanceEngage in corporate management that meets societal needs and has
a lasting positive reputation for value● Instill a healthy corporate culture and business practices

Top Message

VisionStrategy

shareholders, and to hear reports on the status of businessexecution. Outside directors attend Board meetings, where they
actively exchange opinions, and monitor and supervise
management. The Board of Directors also receives regular reports
on important management risks debated in the Executive
Committee and the Sustainability Committee, supervises risk

Materiality

Close-up

GovernanceDatamanagement and assesses its effectiveness.
The Nomination & Compensation Committee, which acts as
an advisory body to the Board of Directors, met twice in fiscal
2023 to discuss executive candidates, executive compensation
policies, and the amount of executive compensation, and to give
advice, recommendations, and reports to the Board of Directors.

●

Challenge

Governance structure (As of March 27, 2024)
General Meeting of Shareholders (annually)

Deepening understanding of our corporate philosophy among
executives and employees● Regular dialogue with shareholders and investors● Improving awareness of the Toyo Tire Group Charter of Corporate
Behavior and Code of Conduct

Audit & Supervisory Board (once a month in principle)●

Initiatives

Members: 5 Audit & Supervisory Board members(including 3 outside members)

Board of Directors (monthly)
Members: 8 directors (including 4 outside directors)

Nomination & Compensation Committee (twice a year)
Members: 6 directors(including 4 outside directors)

Executive Committee (twice a month)
Special committees

Our policy

We practice the ideals set forth in our Company Philosophy, Mission, Vision, and Fundamental Values, which together make up
our philosophy framework. In order to meet the expectations of our stakeholders and improve our corporate value, we seek to ensure
management transparency and efficiency, work to maintain and build appropriate management systems, and endeavor to further
strengthen our corporate governance, internal control systems, and compliance.
As part of our efforts to strengthen compliance, which we consider to be the essential element that embodies our philosophy, weestablished the Toyo Tire Group Charter of Corporate Behavior as a set of common principles to help all Group companies conduct
sincere business activities. We also formulated the Toyo Tire Group Code of Conduct to assist all executives and employees in
implementing the Charter of Corporate Behavior, and seek to instill that code across the whole Group. The Charter of Corporate
Behavior and the Code of Conduct are reviewed when appropriate and any necessary revisions are resolved upon by the Board of
Directors.

59

TOYO TIRE Integrated Report 2024

Deliberates important issues related to R&D (strengthening of our core competence
technologies, that are our platform technology and leading technology, to realize theGroup’s management vision and medium-term business plans, as well as important
issues relating to technology in general

Conducts discussions and examinations to promote, enhance and strengthen compliancewithin the Group

Quality Assurance Committee (quarterly)

Crisis Management Committee (quarterly)

Establishes our policies and measures to promote and operate Group-wide quality
assurance system. Discuss countermeasures if a serious quality issue arises toimplement policies, measures and responses for each department, primarily
centered around the quality assurance departments

Deliberates the planning of measures and management against crisis

The Toyo Tire Group practices the principles of Japan’s Corporate Governance Code in an appropriate fashion to ensure
effective corporate governance. We seek to ensure the rights and equal treatment of shareholders and to appropriately
cooperate and engage in dialogue with our other stakeholders. We strive to make appropriate information disclosure andensure transparency to help achieve those aims. The Board of Directors is accountable to the Company’s shareholders
and, as such, strives to appropriately execute its roles and responsibilities in order to enhance profitability and capitalefficiency and, by extension, achieve the Company’s sustainable growth and increase corporate value over the medium tolong term.

Our corporate governance system consists of the Board of
Directors, which is responsible for decision-making andsupervisory functions, and, under that, the Nomination &Compensation Committee, which acts as an advisory body to theBoard of Directors on personnel affairs, compensation and othermatters pertaining to directors.
We also have an Executive Committee that makes decisions
on business execution, various special committees that deliberateand consult on individual fields, and an Audit & Supervisory

Technology Committee (monthly)

Discusses important matters related to the sustainability across the Group as well as
policies and strategies for strengthening and promoting sustainability management

Compliance Committee (quarterly)Sound governance

Governance structure

Sustainability Committee (quarterly)

Board, a body that audits the Board of Directors and theexecution of directors’ duties. This system enables all thesefunctions to be fully exercised.
The Board of Directors meets, in principle, once a month tosupervise the execution of duties by directors and decide
important matters, including the appointment of the representative
director and executive directors, determination of basic
management policies, approval of important investment plans,
determination or approval of the convening of general meetings ofshareholders, agenda items to be presented and the proposals
and documents to be submitted (including financial statements
and supplementary statements) at the general meeting of

Organization & Personnel Committee (quarterly)

Investment & Credit Committee (twice a month)

Deliberates important issues related human resources

Deliberates investments and credit related to business activities

Governance overview• Organizational format

Company with an
Audit & Supervisory
Board• Directors

8• (female directors:

1)• (outside directors: 4)• Audit & Supervisory
Board members• (outside members

53)• Independent officers(including Audit &Supervisory Board
members)7• Number of Board of
Directors’ meetings(FY2023)

17• Attendance of outside
directors at Board
meetings (FY2023)

100%

Appropriate composition of Board of Directors
In our medium-term business plan, we have set the goal ofbolstering our ability to flexibly respond to changes, and we areworking to achieve this goal through the coordination of all ourfunctions on a global scale. In our value creation processes too,
we recognize that our strength lies in inter-functional collaborationin business processes, and plan to achieve outputs andoutcomes through our business activities. We believe that the
governance structure to achieve such outputs and outcomesrequires members of the Board of Directors to have knowledge
and experience of “corporate management,” “finance andaccounting,” and “legal and risk management.” We have therefore
positioned these areas of expertise as core qualities for ensuring
the effectiveness of management oversight and decision-making
functions. Moreover, in order to deepen discussions on growthstrategies, we have worked to ensure that the Board of Directors
is well balanced overall, by appointing one or more persons withexpert knowledge and experience in the areas of “sales andmarketing,” “research and development,” “manufacturing andquality assurance,” “experience outside Japan,” “digitaltransformation,” and “sustainability.”→ See p.70 for details of skill matrix.

Assessing the effectiveness of the Board
As part of our effort to promote sustainable growth and improve corporate value in the medium to long term, we have been conducting anannual analysis and assessment of the operation, composition and activities of the Board of Directors since 2017, with the aim of improving
the Board’s functionality. In order to ensure fairness, we use a third-party body to aggregate and evaluate survey results.

TOYO TIRE Integrated Report 2024

60

Introduction

Governance

The main changes made this year are the assessment criteria. In previous years, the key focus areas were the composition and operation of
the Board and the substantiveness of the discussions at Board meetings. This year, we have added questions related to sustainability, a newperspective required to ensure sound corporate governance.

Overview of assessment
Assessment
subject

Self-assessment by directors and auditors, withthird-party evaluation

Methodology

Questionnaire (18 questions)

Questionnaire
designFive-point scale scoring with comment field foreach question

Assessment
criteria① Composition and operation of Board of Directors→ Board size, composition, operational status, quality of
information provided, etc.
② Management strategy & management planning→ Discussions during the development stage, decision-making on
strategic directions, level of contribution, etc.
③ Risk management→ Oversight of management, sustainability actions based on risks
and opportunities, etc.
④ Overall assessment

Assessment process
Previous Aroundyear December
This year

VisionStrategy

Materiality

Close-up

Governance

Data

Engaging in dialogue with shareholders and investors
Toyo Tire Corporation holds an annual general meeting ofshareholders, and quarterly financial results briefings. Top
management conveys its opinions on performance trends,
business environments and future outlook for the Group to
institutional investors and securities analysts when we announce
interim and full-year business results. In addition to these
activities, we also seek to promote understanding of Groupstrategy by creating multiple opportunities for the company
president and other senior executives to engage in a dialogue on
the issues that interest institutional investors and securities
analysts, and providing quarterly opportunities (individualinterviews) for investors to communicate and ask questions of IR
staff. We also respond proactively to dialogue requests frominstitutional investors around the world either in the form ofindividual interviews or conferences. In 2023, senior executives
engaged with investors through small meetings on 10 occasions(89 attendees from 82 institutions) and IR staff handled 348
interviews for shareholders and investors from 231 institutions.
Our Shareholder Relations (SR) staff continues to engage indialogue with shareholders, including institutional investors inJapan, focusing on topics such as our governance structure andsustainability initiatives. Opinions and requests obtained throughsuch dialogue are promptly fed back to the company, leading to
improvements, such as the enhancement of disclosed
information.

Progress in governance
Review Review assessment methodology

Early
February

Survey Survey directors and auditors

Early
March

Analysis

Late
March

Report to Board of Directors and consider
Reportnext course of action

Aggregation and feedback of evaluation
results by third-party body

We have been strengthening our corporate governance system
on an ongoing basis. We will continue reviewing our governancearrangements based on the results of the annual effectivenessassessments and take the necessary measures to improve theeffectiveness of the Board of Directors.

Governance system

Overview of FY2023 assessment results andnext course of action
Most of the assessment results have been positive, andimprovements have been made in areas where issues were raisedin the last year, which suggest that the Board of Directors as awhole is functioning effectively. The third-party evaluation has also
confirmed that our Board of Directors is functioning properly ingeneral, and that it is structured in a way that assures effectiveness.
Among the assessment criteria, management supervision was
once again highly evaluated. Since improvements have also been
made to issues, we believe that the effectiveness of the Board of
Directors as a whole has been ensured.
Improving the quality and timing of information provision toensure time to review information before meetings is an ongoingissue. While we received positive feedback on the quality of theinformation we provide in response to the improvements we madeto optimize the volume of information, we believe that further
improvements are necessary, including further enhancements to
information. With regard to the timing of information provision,
although we make sure we distribute materials in advance, we willconsider distributing materials even earlier and will review themechanism we use to provide information, so that we can provide it
as quickly as possible and ensure Board members have sufficient
time to consider important matters before meetings.
With regard to the newly added questions on sustainability
initiatives, our current initiatives and stance were positively
evaluated, to some extent. However, we recognize the need tointegrate initiatives for a number of topics into our business andinstill them throughout the organization. We will expand
opportunities for deliberation at Board meetings and consider
appropriate responses while keeping a close eye on trends aroundthe world.

61

Top Message

TOYO TIRE Integrated Report 2024

• Chairperson of the Board of
Directors appointed(separation of chair from CEO)• Nomination & Compensation
Committee established as avoluntary advisory body to theBoard of Directors, with external
officers being the majority• Independent outside directors
increased (from 2 to 3, making
up over 1/3 of the Board)• Executive reporting enhanced(more discussions from mediumto long-term perspective)• Rules of the Board of Directors
revised (transfer of powers)• Independent outside directors
increased (from 3 to 4)• Set female directors

Management/executive

2017• Mid-Term Plan ’17 drawn up• Business transfers and other“select and focus” strategies
pursued2018• Capital and business alliance
formed with Mitsubishi
Corporation

Company-wide risk management system
Our policy
We will manage any risks that might affect the Group’s business activities on a company-wide basis through our basic
approach set out in the Risk Management Policy and Risk Management Rules. We will thus strive to promote sustainablegrowth, uphold our corporate value and fulfil our responsibilities to our stakeholders.

Organizational responsibilities (April 2024)
Executive Committee
Crisis Management Committee

Special Committees

Risk Management Secretariat

2019(General Affairs Dept., Corporate Infrastructure Division,
Corporate Administration Dept., Corporate Administration Division)• Trade name changed• Growth strategy developed
based on capital and businessalliance

Each Headquarters / Subsidiaries

2020

Risk management initiatives
2021• Mid-Term Plan ’21 drawn up• Sustainability Committee
established2022• Sustainability management
policy made public2023

The risks that are expected to have an impact on the Group’sbusiness activities are managed by the organization function or
meeting body responsible for each risk. We recognize that, as theGroup’s business activities and supply chain expand globally, awide variety of risks become more intricately linked and complex.
For that reason, in 2023, we decided to restructure our companywide risk management system to enable us to position risks thatwould have a significant impact on management if they were tooccur or materialize as “significant risks,” and prioritize the formingof concentrated and strategic measures to counter these risks.
For example, the Corporate Headquarters identifies risks
associated with climate change and human rights risks in all ourbusiness activities, including our supply chain, and assesses theirsignificance, formulates countermeasures in cooperation with
relevant divisions and reports on such activities to the
Sustainability Committee. The Crisis Management Committee,
which oversees company-wide risk management, investigates andconfirms the effectiveness of the risk management activities
conducted by various special committees and organizational
functions within the Company, including any measures taken tocounter the above-mentioned type of ESG risks, on a quarterly
basis. The Crisis Management Committee regularly reports theresults of its investigations to the Executive Committee and theBoard of Directors.
Material risks will be reviewed when deemed necessary in lightof changes in the external environment and the Group’s businessenvironment.
Significant risks• Risk of wind, snow or water-

related disaster• Risk of earthquake, volcanic
eruption or tsunami• Risk of supply chain disruption• Risk of information system
failure• Risk of infectious disease• Risk of contingent liability related to
product compensation• Risk of changes in the consumer
market• Risk of changes in the competitiveenvironment• Risk of climate change• Human rights risks in the supply chain

TOYO TIRE Integrated Report 2024

62

Introduction

GovernanceTop Message

VisionStrategy

Materiality

Close-up

Governance

Data

Message from the Chairman
Compliance

Board of Directors’ role inadding a medium- to long-term
perspective

Our policy
We ensure that all executives and employees within the Group prioritize compliance in their day-to-day operations.

Organizational responsibilities

Report/Consult

Instruct/Order

ReportReportCompliance Officer (CO)Instruct/Order

CCO: Investigates, gives instructions and orders (including thesuspension of operations and shipments, etc.) and makessuggestions on compliance matters for the entire Group
CO: Investigates, gives instructions and orders (including suspensionof operations and shipments, etc.) and makes suggestions oncompliance matters in their department
CL: Assists COs and reports to department managers and COs upon
becoming aware of a compliance incident when promoting
compliance activities in the workplace

Consultation Counter to Comply
Antimonopoly Law

ReportCompliance
Leader (CL)Instruct/Order

Internal Reporting System
Reporting Hotline

ReportHarassment Hotline

Report/Consult

Whistle-blowing/Consult

Employees

Instilling the Group Charter of Corporate Behavior andCode of Conduct
We instill awareness in each and every Group employee and work
to strengthen compliance by creating the Global Code of Conduct
Handbook (available in ten languages: Japanese, English, Russian,German, Italian, Chinese, Thai, Malay, Portuguese and Serbian) as
a guide for putting the Toyo Tire Group Charter of Corporate

Behavior and the Toyo Tire Group Code of Conduct in practice.
In Japan, we conduct read-along training sessions for all
executives and employees, including Group companies, of theCode of Conduct Handbook or the Supplementary Reader withfamiliar and specific examples for manufacturing or sales sites.
Upon completing the training, each participant submits a written
pledge to promote compliance.

Conducting compliance awareness surveys

Whistleblowing system

We conduct annual compliance awareness surveys to ascertain
the degree of compliance-related awareness among employees
and aid our future endeavors.

The Toyo Tire Group has been operating a whistleblowing systemsince 2006. As part of the system, we have established a hotline
mechanism for employees to directly report or seek advice oncompliance matters and other concerns that they fear could
develop into a crisis event. The hotline can be accessed throughmultiple channels and accepts anonymous reporting from both
inside and outside the company so that necessary information
can be conveyed easily and smoothly to governance bodies. To
detect and solve harassment incidents in the workplace at an
early stage, we have set up harassment advice desks for
employees and assigned counselors at each of our business sites
in Japan. We have also set up a customer service center andweb-based inquiry form for consumers, local communities, andother members of the general public.

2023 compliance awareness survey results
Implementing activities to promote compliance

Made one or more attempts to raise complianceawareness over the past year

Response rate

89.9%(2022: 89.4%)

94%(2022: 94%)

Degree of compliance awareness and understanding

Understand what compliance means* Toyo Tire compliance: Instead of simply adhering to laws andregulations, we must comply with laws, regulations and internal
rules, and be guided in our actions by a keen sense of ethics.

89%(2022: 88%)

Degree of embedding of compliance

Remain conscious of compliance when
conducting own work activities

63

Report/Consult

ReportHeads oforganizational units

Outside specialized body

We set up the Compliance Committee as one of the special committees under the jurisdiction of the Executive Committee to consult andinvestigate ways to promote compliance. The Chief Compliance Officer (CCO), compliance officers (CO) and compliance leaders (CL) play a
key role in promoting compliance under our compliance officer system.
The Compliance Committee, chaired by the CCO
The Compliance Department provides support at all stages so that the system functions properly and effectively.
appointed by the Board of Directors, meets quarterly inCompliance Committee
principle, and reports the results of its discussions
Board of Directors
Audit &
Chair: CCO (Compliance & Legal Division Manager)
twice a year to the Executive Committee, which isSupervisory
Members: COs
President & CEO
Director
Board Member
Observers: Directors and Audit & Supervisory Board
supervised by the Board of Directors. The status ofmembers
Secretariat: Compliance Dept.
activities to promote compliance is also reported to theReportAppoint
ReportReportAppoint
Board of Directors as appropriate.
Chief Compliance Officer (CCO)

TOYO TIRE Integrated Report 2024

94%

(2022: 94%)

Yasuhiro Yamada
Chairman of the Board

The fiscal 2023 annual results far exceeded the initial plan, withboth net sales and operating income hitting record highs. These
results were the output of our value creation process, which was
generated by our officers and employees following the rightstrategy and working to the best of their ability to implement it.
The higher level of operating cash flow resulting from thisachievement will generate future investments into the Company’s
growth and higher investor returns, and it is proof that our earning
power is growing.
I define the Board of Directors as a body that oversees andadvises the Company by applying the unique perspectives andabilities of its members and, ultimately, acts as a manager tasked
with generating long-term value for shareholders and stakeholders
to make the Company globally competitive. It often seems almost
inevitable that companies, under pressures from the capital andconsumer markets and faced with the need to meet the level ofdiscipline as high as that required in the US and Europe, become
obsessed with annual results. In order to avoid a myopic focus onshort-term results in visible aspects, the Board of Directors is
required to assume the role of being the force that guides theCompany to create value from a medium- to long-term
perspective. To fulfill this function, the Board must do more thansimply taking the outward form required by the code. It must
embody within it an intrinsic culture that can be formed only when
it runs on two wheels working together: the quality of outside
directors and their sense of responsibility on one side, and thecommitment of the executive officers on the other.
All of our outside directors are unafraid to voice their opinions
while respecting the sincerity of the executives’ argument. The
executives on the other hand have built a positive attitude, willingto take on board the comments and advice of outside directors
and make further improvements. In other words, we are beginningto see cooperative dynamics emerge from uncompromising
discussions and meaningful interactions between the outside
directors and executives at board meetings. These meetings truly
are our monthly sword fights. It may still be work in progress, but I
can really see that our Board of Directors is beginning to develop
a robust culture and am proud of this achievement.
In addition to agenda items to discuss, the Board of Directors
has made executive reporting a regular feature, where members
are able to share issues on the factory floor as well as ideas forpotential future technologies, and review plans and reasonings forlaunching value-added products in different markets. Business
management and executive reporting also focus regularly onother themes around issues and policies that are important in themedium to long term, such as digital transformation, human rights
and decarbonization. Our outside directors have a wealth ofexpert knowledge and experience in different fields and do nothesitate to offer substantial and constructive comments, providing
deep insights and panoramic perspectives. It takes aconsiderable amount of energy for the executive members to facesuch questioning, but in terms of governance, this is a healthy
exercise that prevents the Company’s management frombecoming complacent or oblivious to the common sense of theoutside world.
In order to enable these uncompromising interactions to takeplace and suggestions and ideas gained from them to beincorporated into operations, the effectiveness of the Board of
Directors must be guaranteed. Although the evaluation of board
effectiveness tends to become all about improving indicatorscores, I believe that the more important point is whether or not
the management of the Company is based on identifying issues inboard discussions and making improvements. It is only natural foran asymmetry of information to exist between outside directors
and executive members. In order to enable discussions to takeplace on an equal footing, the executive side is working to fill theinformation gap and will proactively continue this effort andimprove the quality of information.
The next year is the final year of Medium-Term ’21 Plan. In
order to raise our baseline performance level, it is important not to
obsess over external factors, whether good or bad, and focus on
how we manage internal challenges. In the meantime, theexecutives have already started reviewing and drafting the outlineof the next medium-term plan. The Board of Directors will, as amanager that oversees and advises the Company and generates
long-term value, also be involved in the development of the plan
as a responsible manager with a good understanding of theCompany’s medium-term issues, advising on the appropriatenessof policies, strategies and resource allocations as required. I willcontinue doing my best to improve the quality of the Company’s
governance in order to increase its corporate value.

TOYO TIRE Integrated Report 2024

64

Introduction

GovernanceTop Message

VisionStrategy

Materiality

Close-up

Governance

Data

Messages from the Outside Directors

In fiscal 2023, we achieved the business plan with the highest
profit ever, albeit, we must admit, with the help of some external
factors. The purpose of a business plan is to set out a clear andunambiguous policy direction that shows what the company
wants to be and to put forward the technology development,
production capacity and sales strategy needed to achieve thevision while looking squarely at the company’s actual ability. In ourcase, however, the correlation between the target figures and theactual ability seems rather tenuous, which means it is not veryclear how we managed to achieve these figures.
A company blindly chasing numbers can lose sight of whattruly matters as the social conditions change around it, so I hopethat the next medium-term plan will include a more concrete setof figures based on a clear vision as well as a thorough analysis of
the actual state of the Company, and that a business strategy will
be developed to achieve those targets.
Firstly, a key consideration in technology development is thelinking of elemental technologies to technologies forcommercialization. For a manufacturer, everything starts from a
medium- to long-term development road map that interlock thetwo together and a product strategy that makes the best use of
the technological seeds we have.
The role of technology development is to contribute to the
future of the company while addressing today’s challenges. Those
who are engaged in this mission must have a mindset thatenables them to pursue the quest to the end. In the developmentof elemental technologies, in particular, it is not good to be too
preoccupied with getting results in the individual tasks in front of
you if that means you just give up when you fail. What the people
working in development need is stubborn perseverance and thedetermination to keep trying no matter what. For the
management, the most important thing is to allow the R&D teams
to keep on dreaming, and this requires patience and commitment.
It is often the case that a technology that does not seem
immediately useful may still sow many seeds of othertechnologies in the development process. It is the companies thatkeep trying until these seeds grow, blossom and bear fruits thatfind new paths to success and win out. I believe that theconviction and commitment to see the process through will give
the Company flexibility to respond to the future we are yet to see.

65

TOYO TIRE Integrated Report 2024

Honest planning, strategic
investment, and stubborn
determination

Lead toward the future byasking questions

Ken Morita

Atsushi Takeda

Outside Director

Outside Director

The same principle applies to production, where the key is tohave a production plan based on the reality of the actual
production capacity. Instead of simply using the estimatedmaximum plant capacity, the plan must take honest account ofpossible negative factors that may occur; otherwise, targets may
be missed, and that can affect the morale of frontline workers. In
manufacturing, every problem, from material supplies and facility
maintenance to changeover losses and the number and standardof operators, translates straight to the output. Therefore, the mostimportant prerequisite is to consider all risk factors and develop a
production plan that allows sufficient leeway.
Another issue I would like to highlight is system development
for digital transformation, to which the Company has been
spending a considerable amount of money and time. As timegoes by, however, approach to these things change, and so does
the world in which we operate. Rather than aiming to create aperfect system at the first go, it may be necessary to accept acompromise and be willing to improve the system while using it.
The key is to complete a system that is simple, uncomplicatedand flexible without delay. One of the basic rules of management
is not to waste resources such as time and money, and byfollowing this rule and setting up a system quickly, the team will
get a sense of achievement and be able to enjoy the result, which
will energize the organization.
In everything from the core functions such as technology,
production and sales to more novel requirements of our times
such as digital transformation and ESG, it is critically importantthat the Company draws up implementation plans that are basedon its management philosophy and vision and yet rooted firmly inreality, and choose where to invest the resources it has earned
from a medium- to long-term perspective. I look forward to seeing
the quality of the Company’s management continue to improve.

Some say that the good fiscal 2023 results came with the help offavorable external factors, but my take is more positive; other thanexchange gains, even those helpful factors such material
procurement costs and sea freight and other delivery costs wereobtained through careful negotiations with our suppliers and were
therefore the fruit of the Company’s own efforts. Also, themarketing strategy that saw an expansion of channels in the
North American market and increase in high value-added productsales contributed significantly to the results. These low-key but
persistent efforts all added up to offset the increased start-up
costs of the Serbia Factory and the unstable operations of the
U.S. plant. I believe, therefore, that the best ever performance wehave recorded in the Company’s history has been won by thecollective strength of the Company.
We have already achieved most of the Medium-Term ’21
Plan’s quantitative targets ahead of schedule, but slip-ups happen
when the going looks easy. It is important to tighten our grip on
the reins at this point.
I think the crucial period is from this summer until autumn
2025, when the Medium-Term ’21 Plan reaches the end of theroad. It is essential that the Sales Division in particular take a goodlook at the market conditions and review the overall productportfolio, including the lineup of models on offer and optimal
pricing, and devise a marketing strategy that strikes a goodoverall balance.
Production sites also need to adjust their operations in
response to fluctuating demands. The Serbia Factory is operating
more stably now with better training on the factory floor, but many
obstacles remain before it can start a vertical take-off toward
full-scale operation. For the Sales Division, it is more important
than ever to monitor the operating levels of production sites
constantly and draw up sales policy and sales plans that takeaccount of the supply and demand balance constantly. To do this,good communication throughout the value chain along the corefunctions of production, sales and R&D is essential. I would like to
see the digital transformation system currently in development
implemented and fully leveraged to enable the use of real-time
information for this purpose.
Another key is to decide what leads our next medium-termbusiness plan. What should be our goals in a tumultuous period

for the automotive industry as it goes through a majortransformation? How should we be involved in the lifestylechanges that will come with the expansion and embedding of car
sharing and autonomous driving, and the creation of newcityscapes and downtown revitalization they will bring? These aresome of the questions we need to answer. For example, oursensing technology and airless tire technology may be able toaddress some of the challenges. For this to happen, the R&D
Division needs to have a wider perspective that takes in possible
future business models as it develops the seeds of newtechnologies and, most importantly, have a vision to match suchseeds with societal needs. Think, for example, what sort of worldis possible with our airless tire technology? How can wecontribute to the society of the future through our core business?
This way of thinking is what sustainability is about.
We changed our company name in 2019, which marked ourtransition from a rubber product manufacturer to a tire
manufacturer. Depending on how we proceed, we may well needto explore new ways of contributing to society through our tirebusiness. We may, if our future vision calls for it, also need to look
to collaborating with other companies or partnering with the
public sector or academia. In order to explore these possibilities,
we need people who can rise above the daily demands of work,
look at the big picture from a wider perspective and bring a fresh
outlook to business concept development. In order to ensure
future competitiveness, a good recruitment strategy is crucial.
Attracting talent is a challenge not only for us but for thewhole manufacturing sector. I believe that the key is tocommunicate our way of working and our belief in what we do,
not just attractive terms and conditions.
The Company’s executive members and outside directors areengaging in highly active discussions at board meetings, skillfully
facilitated by the chairperson, on a wide range of topics fromimmediate financial results to medium- to long-term issues. I am
committed to playing my part in the sustainable growth of theCompany through my role on the Board of Directors as well as byvisiting the frontline workplaces that support our business
operations.

TOYO TIRE Integrated Report 2024

66

Introduction

GovernanceI believe the record high corporate performance achieved in fiscal
2023 resulted from the steady establishment of efficiency-oriented
measures stipulated in the Medium-Term ’21 Plan, but it also
undoubtedly benefited from what you might call tailwind
assistance in the form of declining ocean freight rates and a
depreciating Japanese currency. I would like to see the Company
maintain and improve its earning power while continuously
increasing resilience in the face of change so that it can still enjoy
a steady increase in profits when any tailwinds turn into
headwinds.
One essential factor here is a high degree of sensitivity to risk.
Company-related risks are becoming increasingly diverse andfrequent. In addition to geopolitical factors and climate change,
the inherent dangers from cyber risks and other risk areas havegrown rapidly more intense in recent years. The impact of theserisks on companies operating on the global stage isimmeasurable, so I think management needs to be conscious ofthese risks at all times and work hard to control them without evertaking their eyes off the ball. Having introduced a stronger risk
management system, the Toyo Tire Group now needs not only toidentify important risks in a timely manner, but also to analyzeeach risk in detail from multiple perspectives and determine how
best to manage it. For instance, the Group’s business strategy
involves concentrating management resources in specific areas
both in terms of products and geographical regions. That is oneof the Group’s strengths, but it comes with its own risks.
Furthermore, certification issues have taken center stage in the
manufacturing industry in Japan in recent years. The impact of
reputational risk on a company’s brand value can be enormous.
Yes, it is important to manage any crisis that might arise whenrisks surface, but it is equally important for the entire organization,
including the Board of Directors, to discuss ways of preventing
those business risks and explore the best direction to be taken interms of risk management.
The current management challenge for the Group is tostabilize its two main production bases in the United States andEurope. Capacity utilization at the main U.S. plant needs to be
improved. Full production systems are scheduled to be up andrunning at the Serbia Factory within the current business year.
However, the plant needs to be able to respond more flexibly to

67

TOYO TIRE Integrated Report 2024

Top Message

VisionStrategy

Materiality

Close-up

Governance

Data

Build Your Own Foundation:
A Critical Juncture

Building up strengths to getleverage for future value
creation

Michio Yoneda

Yukiko Araki

Outside Director

Outside Director

demand fluctuation due to various environmental changes byrevising its enterprise resource planning (ERP) and organicallylinking business functions, such as production, sales, andinventory. In other words, it needs to promote data-driven
management.
Digital technology is not a panacea and should not be treatedas such. Before systemizing a business process, you have to takestock of the process itself. Don’t rely too much on external
experts, but do the business process reengineering (BPR)
yourselves because you are the ones that understand yourbusiness the best. The Toyo Tire Group, like many othercompanies, have to deal with a lack of IT-savvy human resources.
The Board of Directors must supervise the execution of digitaltransformation (DX) initiatives, including cost aspects, and decide
for itself whether it is possible to build a particular system thatincorporates the Group’s policies and needs or not, rather thanleaving it up to consulting companies and IT systems vendors.
Meanwhile, looking at the financial base, the Group has madesome progress over the past few years on improving earning
power, which is the main premise of the medium-term plan, andachieved a high level of return on equity (ROE). The capital
adequacy ratio is currently sitting above 60%, which could beconsidered ideal, but the price to book value ratio (PBR) is lagging
behind. The market is probably assessing the sustainability ofthese earnings and financial strengths. In that sense, the Group’scommitment to effective growth investment and expansion ofshareholder returns are important financial strategies.
Our debates in the Board of Directors have always been
vigorous, and I feel that the Board’s business execution
capabilities have also improved. To further enhance theeffectiveness of the Board, I believe it is necessary to stimulateeven more debate of medium- to long-term issues and further
strengthen the Board’s supervisory function. I believe the role ofan outside director is to serve as both a management supervisor
and a catalyst for astute action. If we outside directors fulfill these
designated roles, we can create effective chemical reactions that
help propel Toyo Tire management to even greater heights andachievements.

In 2023, a number of factors such as the weakening of yen and adrop in ocean freight rates helped to boost our profitability, but wecan also attribute the positive results to the embedding of the
management policy to actively pursue profits, which has enabled
us to leverage our strengths. Although we are already building up
profits in 2024, there are many uncertainties facing us in theexternal environment. In order to further bolster our strengths, wemust differentiate ourselves against our competitors in key
markets outside North America, and generate profits throughbusiness strategies that reflect the TOYO TIRE culture andidentity.
In terms of production and supply, the key to supporting thebusiness strategies will be how we utilize the Serbia Factory,
which came into operation in 2022. In the tire business, which is
our core business, production technologies are the criticalfoundation, which are so important that one might say that the tirebusiness is a process industry. For this reason, I believe that it will
become important for the Company to make production
technologies more efficient and advanced so that more value canbe added to products to meet the needs and expectations ofdifferent markets and to roll out the latest technologies available atthe Serbia Factory strategically on a global scale. We will need toreview our strategies for investing into production facilities andtechnological development toward the next medium-term plan.
We must also bear in mind that society is rightly calling on
companies to make efforts to reduce the environmental impact of
their business activities, and that we need to include a long-term
perspective of environmental value creation in our decisionmaking. As the global competition heats up, however, some mayview this from a short-term outlook and fear that actions andinvestments that look to the future may impact revenues
negatively. Adverse factors such as the politically motivatedbacklash against ESG and, in the automotive industry, the slowing
down of policies to accelerate EV adoption may also complicate
medium-to-long-term management decision-making.
However, these factors do not change the medium-to-longterm trend that requires businesses to be responsible for and play
an active role in the environmental conservation and climate
action. It is important that we do not allow the vagaries of fashion
to sway us, and instead run our business with a firm focus on the

big picture, always considering how we as a manufacturer create
value for society through our products, services and technologies.
Naturally, any environmental value we create will be underpinnedby the unique added value we can offer such as the joy of driving
and comfort. Technological development work is what secures
our values and outlook as a company, and I feel that we can bemuch more open to the outside world about the work we do, notonly regarding the current product development pipeline but also
our diverse initiatives to sow and nurture the seeds of the future.
I would like to see the management team to present a clear
vision of a sustainable mobility that the Company is trying toachieve, share this future vision across the workforce, and leadfrom the front on this journey. I strongly believe that employees will
feel motivated and fulfilled if they can tangibly feel that the work
they do make a positive contribution to society.
With a view to increasing corporate value, I would like to see
the Company redouble its public relations efforts, proactively
communicating to our broad range of external stakeholders on
our visions, goals and day-to-day achievements. It is often said
that Japanese companies in general, not just our Company, arepoor at appealing to the outside world compared to companies inother countries, but the metrics by which stakeholders assesscompanies are changing. Good disclosure practices enable fairassessments and can also lead to opportunities to collaborate
with companies from other industries as well as academic
institutions that share the same vision and aspirations to createsocial value together.
As a director, I am committed to playing my part in the
Company’s growth and its endeavor to make a sustainable
society a reality through its business.

TOYO TIRE Integrated Report 2024

68

Introduction

GovernanceTop Message

VisionStrategy

Materiality

Close-up

Governance

Data

Directors, Audit & Supervisory Board Members and Corporate Officers
Directors

Apr. 1973
Dec. 2003

Apr. 1983

Number of shares of the Company held

Number of shares of the Company held

032,192Joined Mitsubishi Corporation
Director, Hokuetsu Paper Mills, Ltd. (currently, Hokuetsu
Corporation)
General Manager, Paper & Packaging Dept., Mitsubishi
Corporation
Senior Vice President; Division COO, Living Essential
Products Division, Mitsubishi Corporation
Adviser (full-time), Toyo Tire Corporation
Director, Chairman of the Board (current position)

Mar. 2014
Jul. 2015

Joined Toyo Tire Corporation
President, Toyo Tire Holdings of Americas Inc.
Division General Manager, Tire Planning Division, Toyo Tire
Corporation
Corporate Officer; Division General Manager, Tire Planning
Division, Tire Business Group Headquarters; General
Manager, Europe Business Unit
Senior Corporate Officer; Division General Manager, Tire
Planning Division, Tire Business Group Headquarters;
General Manager, North America Business Unit
Representative Director, President & CEO (current position)

Director, Corporate Officer

Director, Corporate Officer

Tatsuo Mitsuhata

Satoru Moriya(Date of birth: December 13, 1964)(Date of birth: December 23, 1965)

Number of shares of the Company held

Number of shares of the Company held

Career summary, positions, assignment and significant concurrent positions

Career summary, positions, assignment and significant concurrent positions

14,062

Jan. 2019
Mar. 2019

Career summary, positions, assignment and significant concurrent positions(Date of birth: April 2, 1961)

Nov. 2015

Jan. 2017

Career summary, positions, assignment and significant concurrent positions(Date of birth: April 8, 1958)

Apr. 1985
Apr. 2010
Jan. 2013

Jan. 2016

Number of shares of the Company held

Takashi Shimizu

Apr. 1983
Jun. 2007

Apr. 1988
Jan. 2012
Jul. 2014(Date of birth: December 13, 1960)

Number of shares of the Company held

Yasuhiro Yamada(Date of birth: June 14, 1949)

Career summary, positions, assignment and significant concurrent positions

Apr. 2018
Mar. 2019

Yukiko Araki

Representative Director, President & CEO

Career summary, positions, assignment and significant concurrent positions

Apr. 2015

Outside Director

Michio Yoneda

Director, Chairman of the Board

5,073

Apr. 2013

Outside Director

Joined Toyo Tire Corporation
President, Toyo Tire U.S.A. Corp.
General Manager, Europe Business Unit, Tire BusinessGroup Headquarters, Toyo Tire Corporation
Corporate Officer; Division General Manager, Tire Planning
Division, Tire Business Group Headquarters
Corporate Officer; Vice President, North American Business
Development DivisionCorporate Officer; Vice President, Sales Headquarters
Director; Corporate Officer; Vice President, Sales
Headquarters (current position)

Mar. 2020

Joined Bank of Japan
President & CEO, Osaka Securities Exchange Co., Ltd.
(currently, Osaka Exchange, Inc.)
Director & Representative Executive Officer, Group COO,
Japan Exchange Group, Inc.
Special Advisor (part-time), Toyo Tire Corporation
Outside Director, Asahi Broadcasting Group Holdings
Corporation (current position)
Outside Corporate Auditor, Sumitomo Chemical Company,
Limited (current position)
Outside Director, Toyo Tire Corporation (current position)

Significant
concurrent
positions

Outside Director, Asahi Broadcasting Group Holdings
Corporation; Outside Corporate Auditor, Sumitomo Chemical
Company, Limited

Jan. 2013
Dec. 2016
Jun. 2018
Jun. 2018

0Jul. 2006

Jul. 2008
Dec. 2012

Apr. 2018

Dec. 2020
Mar. 2021
Mar. 2023
Jun. 2023
Significant
concurrent
positions

Joined Japan’s Ministry of International Trade and Industry(currently, Ministry of Economy, Trade and Industry)
Director, Tourism Economy and International Affairs Division,
Policy Bureau of Japan’s Ministry of Land, Infrastructure andTransport (currently, Ministry of Land, Infrastructure, Transport
and Tourism)
Deputy Governor, Yamagata Prefecture
Joined Hitachi, Ltd.; General Manager, CSR Division, Legaland Communications Group; Member, Environmental
Strategy Office
Corporate Officer; Executive General Manager, Sustainability
Promotion Division, Government & External Relations Group,
Hitachi, Ltd.
Outside Director, Fuji Pharma Co., Ltd. (current position)
Outside Director, Nakanishi Inc. (current position)
Outside Director, Toyo Tire Corporation (current position)
Outside Director, Hirose Electric Co., Ltd. (current position)
Outside Director, Fuji Pharma Co., Ltd.; Outside Director,
Nakanishi Inc.; Outside Director, Hirose Electric Co., Ltd.

10,843Apr. 1989
Nov. 2014
Apr. 2015
Jan. 2017
Feb. 2018
Jan. 2019Feb. 2020
Mar. 2021

Joined Toyo Tire Corporation
General Manager, O.E. Tire Development Dept.
General Manager, O.E. Tire Development Dept.; General
Manager, O.E. Tire Technical Service Dept.
Division General Manager, R&D Division No. 1
Corporate Officer; Division General Manager, R&D Division
No. 1, R&D Headquarters
Corporate Officer; Division General Manager, Technology
Development Division, R&D Headquarters; Division General
Manager, Product Development DivisionCorporate Officer; Vice President, R&D Headquarters
Director; Corporate Officer; Vice President, R&D
Headquarters (current position)

Audit & Supervisory Board Members

Corporate Officers

Standing Audit & Supervisory Board Member

President & CEO

Takashi Shimizu*

Corporate Officer

Masami Miyamori

Executive Corporate Officer

Tomoshige Mizutani

Corporate Officer

Yoji Imura

Senior Corporate Officer

Masayuki Kanai

Corporate Officer

Kenta Kuribayashi

Corporate Officer

Tatsuo Mitsuhata*

Corporate Officer

Yuji Miyazaki

Mitsunobu Kohno

Standing Audit & Supervisory Board Member

Satoshi Takashina

Audit & Supervisory Board Member

Tomoyuki Matsuba

Audit & Supervisory Board Member

Yasuhiro Kitao

Corporate Officer

Satoru Moriya*

Corporate Officer

Tamotsu Mizutani

Tsukasa Takahashi

Corporate Officer

Kiyohito Hasumi

Corporate Officer

Ichiro Shima

Corporate Officer

Hideaki Takahashi

Corporate Officer

Junichi Uda

Corporate Officer

Hiroshi Nobuzawa

Corporate Officer

Haruhiko Kitagawa

Audit & Supervisory Board Member* Indicates post held concurrently with that ofTomoyuki Matsuba, Yasuhiro Kitao and Tsukasa Takahashi are outside auditors.

director

Skill matrix
Outside Director

Outside Director

Ken Morita

Atsushi Takeda(Date of birth: October 24, 1948)(Date of birth: February 27, 1947)

Number of shares of the Company held

Number of shares of the Company held0

Career summary, positions, assignment and significant concurrent positions

Apr. 1971

May 1970
Jun. 2002
Apr. 2006

Oct. 2000
Apr. 2006
Jun. 2009
Jun. 2012
Nov. 2015

69

0

Career summary, positions, assignment and significant concurrent positions
Joined Matsushita Electric Industrial Co., Ltd. (currently,
Panasonic Holdings Corporation)
Representative Director and President, Matsushita Plasma
Display Co., Ltd.
Senior Vice President, Panasonic AVC Networks Company(currently, Panasonic Connect Co., Ltd.), Matsushita ElectricIndustrial Co., Ltd.
Representative Director and Senior Managing Executive
Officer, Panasonic Corporation (currently, Panasonic Holdings
Corporation)
Advisor, Panasonic Corporation (currently, PanasonicHoldings Corporation)
Outside Director, the Company (current position)

TOYO TIRE Integrated Report 2024

〇 Major skill / ● Other skill

Jun. 2014
Mar. 2016

Joined Nippon Steel Corporation
Director, Nippon Steel Corporation
President and Representative Director, Nippon Steel Coated
Sheet Corporation
Director and Advisor, Nippon Steel Coated Sheet
Corporation
Outside Director, Toyo Tire Corporation (current position)

Nomination

Area able to exhibit particular expertise

OutsideandResearch Manufacturing Finance
Legal
Experience
Corporate Sales andDigitalandand quality
andand risk
outsideSustainability Compensation
management marketingtransformation
development assurance accounting management
Japan
Committee

Name

Officer category

Yasuhiro Yamada

Director, Chairman of the
Board

〇

●

Takashi Shimizu

Representative Director,
President & CEO〇〇

Tatsuo Mitsuhata

Director, Corporate
Officer●〇

Satoru Moriya

Director, Corporate
Officer●●

Ken Morita

Director●〇

Atsushi Takeda

Director●〇

Michio Yoneda

Director●〇

Yukiko Araki

Director

●

●

●

●

〇

●

●

●

〇

●

〇

●

〇

〇

〇

〇

●

〇

●

●
●

●
●

●

●

●

●
●

〇

●

TOYO TIRE Integrated Report 2024

70

Data

Introduction

Top Message

VisionStrategy

Materiality

Close-up

Governance

Data

Financial
Summary (11 years)
編集にあたって
FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022

FY2023

Net sales

370,218

393,782

407,789

381,635

404,999393,220

377,457

343,764

393,647

497,213552,825

Gross profit

115,810

132,911

153,500

136,267

136,982

134,169

130,822

123,239

161,041

197,976

216,511

Selling, general and administrative expenses

78,56985,401

90,11986,952

91,674

91,77992,374

86,911

107,960

153,930

139,612

Operating income

37,24047,51063,381

49,31545,30842,39038,44736,32853,08044,04676,899Profit (loss) attributable to owners of parent

11,596

31,2401,674(12,260)

15,476

10,55324,482

11,682

41,35047,956

72,273

Capital expenditure

28,99940,711

48,33823,93022,381

29,722

42,633

26,96737,76647,303

34,102

Depreciation and amortization

19,511

21,85824,82824,85625,53825,79525,16221,005

21,46826,74830,772

Net cash provided by (used in) operating activities

41,55837,78941,30538,865

13,43019,063

11,22953,796

34,465

15,17286,503

Net cash provided by (used in) investing activities(22,504)(30,122)(46,009)(13,785)(10,633)(28,428)(38,271)(27,856)(37,538)(16,712)(14,661)

Net cash provided by (used in) financing activities(5,095)(12,680)

19,051(31,317)(13,513)

12,82920,732(12,638)

11,697(16,231)(62,894)

Total assets

433,327

481,966

522,937

491,088473,876

469,377

468,746445,579

531,229598,889

645,480

Total liabilities

291,817297,327

347,572

345,466

310,061

312,130

244,237

222,885

251,073

277,974

250,281Interest-bearing debt

129,849

131,780

162,035

132,930

119,963

137,327

118,545

110,578

128,784

135,436

102,714

Net assets

141,510

184,638

175,364

145,621

163,815

157,251

224,509

222,694

280,155

320,915395,199

3,793

4,062

3,513

4,043

4,735

4,511

1,747

1,918

201

231

－

137,716

180,576

171,851

141,578

159,079

152,739

222,761

220,776

279,954

320,683

395,19945.65

245.9713.19(96.54)121.8783.11

161.41

75.89

268.62311.51

469.42

12

45

45

45

45

45

45

45

76

80

100

542.15

1,421.84

1,353.19

1,114.82

1,252.66

1,202.75

1,447.23

1,434.23

1,818.60

2,083.00

2,566.76

Operating income margin

10.06

12.07

15.54

12.92

11.19

10.78

10.19

10.57

13.48

8.86

13.91

Gross profit margin

31.28

33.75

37.64

35.71

33.82

34.12

34.66

35.85

40.91

39.82

39.16

Selling, general and administrative expenses margin (%)

21.22

21.69

22.10

22.78

22.64

23.34

24.47

25.28

27.43

30.96

25.25

Return on equity (ROE) (%)

9.60

19.63

0.95

(7.82)

10.30

6.77

13.04

5.27

16.52

15.97

20.19

Return on assets (ROA) (%)

9.72

10.17

11.31

8.70

8.33

8.14

7.81

6.76

11.45

9.03

13.83

Capital ratio

31.78

37.47

32.86

28.83

33.57

32.54

47.52

49.55

52.70

53.55

61.23

Debt / equity ratio (Times)

0.94

0.73

0.94

0.94

0.75

0.90

0.53

0.50

0.46

0.42

0.26

Payout ratio

26.29

18.29

341.26

－

36.92

54.15

27.88

59.30

28.29

25.68

21.30

Year-end consolidated financial position (millions of yen)

Year-end consolidated financial position (millions of yen)

Non-controlling interests
Equity capital
Data per share (yen)Earnings per share (EPS)
Cash dividends per share (annual)
Net assets per share (BPS)
Financial ratio (%)

71

TOYO TIRE Integrated Report 2024

TOYO TIRE Integrated Report 2024

72

Introduction

Data

Top Message

VisionStrategy

Materiality

Close-up

Governance

Data

Consolidated
Balance Sheets
編集にあたってMillions of yen

Previous fiscal year
(As of December 31, 2022)

Previous fiscal year
(As of December 31, 2022)

AssetsCurrent fiscal year
(As of December 31, 2023)

Liabilities
Current liabilities

Current assets
Cash and deposits

41,601

52,879Notes and accounts payable – trade42,57738,262

Notes and accounts receivable – trade109,468

107,794

Commercial papers

43,000－

Merchandise and finished goods

78,31577,465

Short-term loans payable

24,78011,653Work in process

5,091

5,060

Accounts payable – other

31,22532,527

Raw materials and supplies

29,477

24,536

Income taxes payable

11,816

18,783

Other

25,95231,504

Provision for directors’ bonuses

110

85

(328)

(269)

Allowance for doubtful accounts
Total current assets

289,579

298,972

Fixed assets
Property, plant and equipment

Provision for product compensation

4,820

456

－

1,997

Other

32,71639,055

Total current liabilities

191,048

142,822

Provision for loss on liquidation of subsidiaries and associates

140,461

150,674

Non-current liabilities

Accumulated depreciation(58,960)(63,878)

Bonds payable

10,00025,000

Buildings and structures, net

81,50186,796Long-term loans payable

51,36645,992

Buildings and structures

380,917407,350

Provision for directors’ retirement benefits

10

6

Accumulated depreciation(264,069)(280,329)

Provision for environmental measures

86

86

Machinery, equipment and vehicles, net

Machinery, equipment and vehicles

116,847

127,020

Provision for product compensation

1,380

928

Tools, furniture and fixtures

73,48778,975

Provision for loss on litigation

1,340

1,432

Accumulated depreciation(63,610)(65,417)Retirement benefit liability

3,523

3,524

9,876

13,557

Deferred tax liabilities

10,478

8,138

17,972

17,862

Other

8,740

22,351

1,445

1,434

(1,001)(938)

Tools, furniture and fixtures, net
Land
Lease assets
Accumulated depreciation

Total non-current liabilities
Total liabilities

86,926

107,459

277,974

250,281

Net assets

Lease assets, net

443

496

Right-of-use assets

13,25630,694

Shareholders’ equity

Accumulated depreciation(5,273)(9,549)Common stock

55,93555,935Right of use assets, net

7,983

21,145

Capital surplus

54,341

54,197

159,837

221,333

(132)

(120)

269,981

331,344

12,743

6,812

Construction in progress

30,426

19,911Retained earnings

Total property, plant and equipment

265,051

286,790

Treasury stock
Total shareholders’ equity

Intangible assets
Software
Other
Total intangible assets

8,144

15,515

384

287

8,529

15,802

Investment securities

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges

58

103

32,35945,170Remeasurements of defined benefit plans

5,541

11,767

Total accumulated other comprehensive income

50,702

63,854Foreign currency translation adjustments

Investments and other assets
27,20417,750Long-term loans receivable

142

118

Retirement benefit asset

1,993

10,936

Non-controlling interests

Deferred tax assets

2,847

7,601

Total net assets

Other

3,643

7,610

Allowance for doubtful accounts

(102)

(102)

35,72943,915309,310

346,508

598,889

645,480

Total investments and other assets
Total fixed assets
Total assets

73

Millions of yen

Current fiscal year
(As of December 31, 2023)

TOYO TIRE Integrated Report 2024

Total liabilities and net assets

231－

320,915395,199598,889

645,480

TOYO TIRE Integrated Report 2024

74

Introduction

Data

Consolidated Statements of Income
Millions of yen
Previous fiscal year

Consolidated Statements ofComprehensive Income
Millions of yen
Previous fiscal year

Current fiscal year

(From January 1, 2022 (From January 1, 2023
to December 31, 2022) to December 31, 2023)

497,213552,825

ProfitCost of sales

299,237

336,314Gross profit

197,976

216,511

Other comprehensive
income153,930

139,612

Operating income

44,04676,899Interest income

523

883

Dividends income

1,084

868

Foreign exchange gains

7,736

8,620

199

－

Non-operating income

Equity in earnings ofaffiliates
Other

1,741

1,866

Total non-operating
income11,286

12,239Non-operating expenses
Interest expenses

1,278

1,068

Deferred gains or losses
on hedges
Foreign currencytranslation adjustment

51,03586,047

Owners of the parent

32－

Total extraordinary
incomeComprehensive income

Non-controlling interests

Gain on sale of sharesof subsidiaries andassociates

18,583

15,106Extraordinary losses

12,706

Decrease (increase) in
retirement benefit asset

4,476

(151)

Interest and dividend
income(1,608)(1,752)

Interest expenses

1,278

1,068

Foreign exchange losses(gains)(4,438)(5,998)Equity in losses (earnings)
of affiliates

(199)

30

Loss (gain) on sale ofnon-current assets

(299)

－

Loss (gain) on sale ofinvestment securities(18,245)(15,106)

Loss (gain) on sale ofshares of subsidiaries andassociates

(32)

－

Loss on retirement of
non-current assets

395

620

Impairment losses

736

85,352(Comprehensive income
attributable to)15,106(4)

53,977

3,090

18,252(390)

13,166

4,297

Gain on sale ofinvestment securities

45

Increase (decrease) in
retirement benefit liability

6,020

Total non-operating
expenses－

30,772

Total other comprehensive
income30

299

26,7486,226

119

53,94685,425

30

(72)

6,135

119

Purchase of intangible
assets(3,360)(8,039)Purchase of investments
in securities

(16)

(14)

Proceeds from sale andredemption of investment
securities

21,623

15,998Proceeds from sale ofshares of subsidiaries andassociates

86

－

1,849

(61)

(16,712)(14,661)

Net increase (decrease) inshort-term loans payable

7,159(4,401)

Net increase (decrease) incommercial papers

16,000(43,000)

2,051

Proceeds from long-term
debt

10,400

400

－

2,166

Payments of long-term
debt(32,562)(15,905)456

230

Purchase of repayment oflease obligations(4,023)(3,926)

Provision for loss on
litigation

1,340

－

Proceeds from issuanceof bonds－

15,000Decrease (increase) innotes and accounts
receivable-trade(17,887)

7,484

Loss on liquidation ofsubsidiaries andassociates
Loss on productcompensation－

Impairment losses

736

2,051

Decrease (increase) ininventories(23,794)

11,909Loss on liquidation ofsubsidiaries andassociates

－

2,166

Increase (decrease) innotes and accounts
payable-trade

7,573(4,999)456

230

Other, net(9,172)(10,141)

1,340－

Subtotal

33,563

114,265

1,528

1,820

58

－

Interest and dividends
income received

2,994

5,069

Interest expense paid

(1,292)(1,187)

Profit before income taxes

66,62496,084

Income taxes - current

20,452

31,292

Payments of productcompensation(3,086)(4,705)

Income taxes - deferred(1,783)(7,394)

Income taxes paid

(16,067)(24,407)527

717

15,17286,503

Total income taxes

18,66823,898

Income taxes refunded

Profit47,95672,1860(87)

Net cash provided by(used in) operating activities

47,956

72,273

Profit attributable to ownersof parent

TOYO TIRE Integrated Report 2024

Other, net
Net cash provided by(used in) investing activities
Cash flows from financing
activities

Cash dividends paid

7

Loss attributable tonon-controlling interests(From January 1, 2022 (From January 1, 2023
to December 31, 2022) to December 31, 2023)

Proceeds from saleof property, plant andequipment

Loss on sale ofinvestment securities

Total extraordinary losses

Current fiscal year

(22,664)

620

Loss on COVID-19

Millions of yen
Previous fiscal year

(43,030)

395

Provision for loss on
litigation

Data

Purchase of property,
plant and equipment

Loss on retirement of
non-current assets

Loss on productcompensation

GovernanceCash flows from investing
activities

Depreciation andamortization

48

1,991

Gain on sale ofnon-current assets

20,912

Cash flows from operating
activities
96,084

Share of othercomprehensive income ofassociates accounted forusing equity method－

Extraordinary income

75

Close-up(From January 1, 2022 (From January 1, 2023
to December 31, 2022) to December 31, 2023)

66,624(5,930)Materiality

Current fiscal year

Income before incometaxes(1,309)3,018

Ordinary income(13,706)

72,186Strategy

Millions of yen
Previous fiscal year

Current fiscal year

Remeasurements ofdefined benefit plans, netof tax

Other

Loss in earnings of affiliates

75

Valuation difference
on available-for-salesecurities

47,956

VisionConsolidated Statements of Cash Flows(From January 1, 2022 (From January 1, 2023
to December 31, 2022) to December 31, 2023)

Net sales

Selling, general andadministrative expenses

Top Message(13,228)(10,768)

Payments from changes
in investments in capitalof subsidiaries that do not
result in change in scopeof consolidation

－

(313)

Other, net

2222

Net cash providedby (used in) financing
activities(16,231)(62,894)

Effect of exchange rate on
cash and cash equivalents

5,779

2,249

Net increase (decrease) incash and cash equivalents(11,992)

11,197

Cash and cash equivalents
at beginning of the year

53,592

41,600Cash and cash equivalents
at end of the year

41,60052,798TOYO TIRE Integrated Report 2024

76

Introduction

Data

Top Message

Investor Information

Corporate Data

Stock information (As of December 31, 2023)

Overview

VisionStrategy

Materiality

154,111,029

Number of shareholders:

28,225

Stock exchange listing:Tokyo Stock Exchange
Mitsubishi UFJ Trust andBanking Corporation

Independent auditor:

KPMG AZSA LLC

Fiscal year:

January 1 – December 31

Annual general meeting ofshareholders:March

Number ofshares held
(thousand shares)

Shareholding
ratio
(%)

Mitsubishi Corporation

30,82220.01

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

22,745

14.77

Custody Bank of Japan, Ltd.
(Trust Account)

10,6006.88

Bridgestone Corporation

5,000

3.24

Toyota Motor Corporation

4,774

3.10

JP MORGAN CHASE BANK 385632

4,748

3.08

CEP LUXーORBIS SICAV

3,446

2.23

Shareholder

Consolidated subsidiaries

Unit: thousands of shares unless otherwise indicatedShareholder register administrator
and account management institution
for special account:

STATE STREET BANK AND TRUSTCOMPANY 505223

2,928

BBH（LUX） FOR FIDELITY
FUNDSーJAPAN ADVANTAGE POOL

1,947

1.26

THE BANK OF NEW YORK MELLON
140044

1,879

1.22

Japanese financial
instrument firms
4,711
3.06%

Japanese financial
institutions
43,27828.08%

Foreign corporations
and others
45,56729.57%

154,111

Japanese individuals
and other investors(including treasury stock)
15,203
9.86%

Less than 5,000 shares
9,096
5.90%

Less than
50,000 shares
4,227
2.74%

154,111

Changes (Reduction) of Strategic shareholdings
Balance sheet amount (Millions of yen)
Listed, unlisted
Deemed shareholdings
Percentage of consolidated net assets (including deemed shareholdings) (%)
Number of issues (Security titles)

24.5

13.5
49

57,969Year-end dividends

120
100

100
76

80
60
45
40

56

(105)

20

20

2020

2021

2022

15,42842,541TOYO TIRE Integrated Report 2024

U.S.A

11,267 (consolidated, including temporary employees)* As of December 31, 2023

TOYO TIRE U. S. A. CORP.

U.S.A

Headquarters

2-2-13 Fujinoki, Itami City, Hyogo 664-0847, Japan
Phone: +81-72-789-9100

NITTO TIRE U. S. A. INC.

U.S.A

PlantsSendai Plant / Kuwana Plant, others

TOYO TIRE NORTH AMERICAOE SALES LLC

U.S.A

Lines ofbusiness[Tire Business] Tires (for passenger vehicles, lighttrucks, trucks & buses)[Automotive Parts Business] Automotive anti-vibration
rubberTOYO TIRE NORTH AMERICA MANUFACTURING INC.

U.S.A

TOYO AUTOMOTIVE PARTS (USA), INC.

U.S.A

TMM (USA), INC.

U.S.A

TOYO TIRE CANADA INC.

CanadaAddress

Headquarters

2-2-13 Fujinoki, Itami City, Hyogo 664-0847

Central & South America

19F Shinagawa Seaside Park Tower, 4-12-4
Higashishinagawa, Shinagawa-ku, Tokyo
140-0002

NT MEXICO S. DE R. L. DE C. V.

MexicoTokyo Office

TOYO AUTOMOTIVE PARTS
DE MEXICO, S. A. DE C. V.

MexicoNagoya Office

3 Syogayama, Uchikoshi-cho, Miyoshi City,
Aichi 470-0213

EuropeHiroshima Office

13-20 Hikari machi 1-chome, Higashi-Ku,
Hiroshima City, Hiroshima 732-0052

Sendai Plant

3-5-1 Fukiage, Iwanuma City, Miyagi
989-2484

Kuwana Plant

2400 Oaza Nakagami, Toin-cho, Inabe-gun,Mie 511-0294

Hyogo Manufacturing
Complex

1183 Rokubuichi, Inami-cho, Kako-gun,
Hyogo 675-1112

Corporate Technology Center 3-10-1 Yato, Kawanishi, Hyogo 666-0131
Tire Technical Center

2-2-13 Fujinoki, Itami City, Hyogo 664-0847

Automotive Parts TechnicalCenter

3 Syogayama, Uchikoshi-cho, Miyoshi City,
Aichi 470-0213

Miyazaki Tire Proving Ground2318 Kawakita, Tsuno-cho, Koyu-gun,Miyazaki 889-1201

Saroma Tire Proving GroundNishitomi, Saroma-cho, Tokoro-gun,
Hokkaido 093-0504

Consolidated subsidiaries

21,05543,456

15,914

TOYO TIRE HOLDINGS OF
EUROPE GMBH

Germany

TOYO TIRE DEUTSCHLAND GMBH

Germany

TOYO TYRE (UK) LTD.

U.K.

TOYO TIRE BENELUX B. V.

Netherlands

TOYO TIRE ITALIA S. P. A.

Italy

TOYO TIRE RUS LLC

RussiaTOYO TIRE SERBIA D. O. O.

SerbiaOceania
TOYO TYRE AUSTRALIA PTY LTD

Australia

Asia
SILVERSTONE BERHAD

Malaysia

38,122

2020

47,85025,3312021

SILVERSTONE MARKETING SDN BHD

Malaysia

SILVERSTONE POLYMER INDUSTRIES SDN BHD

Malaysia

TOYO TYRE MALAYSIA SDN BHD

Malaysia

TOYO TYRE SALES AND MARKETING MALAYSIA SDN.BHD.

Malaysia

Toyo Tire Japan Co., Ltd.

2-2-13 Fujinoki, Itami City, Hyogo 664-0847

25,905

Toyo Tires Logistics Co., Ltd.

2-2-13 Fujinoki, Itami City, Hyogo 664-0847

Orient Machinery Co., Ltd.

2-3-6 Fujinoki, Itami City, Hyogo 664-0847

Toyo Chemical Industrial
Products Co., Ltd.

1183 Rokubuichi, Inami-cho, Kako-gun,
Hyogo 675-1112

Fukushima Rubber Co., Ltd.

28 Aza Domae, Miyashiro, Fukushima City,
Fukushima 960-0116

TOYO TIRE (THAILAND) CO., LTD.

ThailandAyabe Toyo Rubber Co., Ltd.

115 Kuri-cho, Sawa, Ayabe City, Kyoto
623-0222

TOYO TIRE (SHANGHAI) CO., LTD.

China

Toyo Tire Refine Corporation

2-2-13 Fujinoki, Itami City, Hyogo 664-0847

TOYO TIRE ZHANGJIAGANG CO., LTD.

China

TOYO TIRE (ZHUCHENG) CO., LTD.

China

TOYO AUTOMOTIVE PARTS (GUANGZHOU) CO., LTD

China

16,1062022

Category
Numberof issues(Security titles)

20
2023

2024

(forecast)

(FY)

2023

(FY)

2019

2020

2021

2022

2023

Listed

28

28

18

13

12

Unlisted

38

38

37

36

34

Total

66

66

55

49

46

42,187

37,77047,49924,983

15,764

354

352

350

347

342

15,42815,914

21,055

18,12525,905

①＋②

18.9%

17.1%

17.0%

7.8%

4.1%

①＋②＋③

25.8%

24.2%

24.5%

13.5%

10.6%

① Listed
Balancesheet amount ② Unlisted(Millions of yen) ③ D eemedshareholdings

Address

42,01180

Percentage ofconsolidated
net assets

77

54,036

2019

(50)
30

46

18,125

(55)

25

20
0

80

50

TOYO TIRE HOLDINGS OF AMERICAS INC.

68,905Interim dividends(yen)Country

North America

Number of
employees

10.6

55

Changes in dividends per share

August 1, 1945

OfficeLess than 10,000 shares
1,957
1.27%

66

Data

Network in Japan

50,000 shares or more
138,83190.09%

66

Established

45,35229.43%

Unit: thousands of shares unless otherwise indicated24.2

Toyo Tire Corporation

Other Japanese
corporations

Breakdown by number of shares held

25.8

Trade namePaid-in capital 55,935 million yen

1.90*The shareholding ratio is calculated excluding treasury stock (142,724 shares).

Governance

Global network

Breakdown by shareholder type
Total number of issued shares:

Close-up

TOYO RUBBER CHEMICAL PRODUCTS (THAILAND) LIMITED Thailand

TOYO TIRE Integrated Report 2024

78