Annual Report
2020
Year Ended March 31, 2020

Live Green&Grow Strong

Tools for living

1Long-term Target

Strong Company
Makita has set itself the goal of contributing to the creation of sustainable society and consolidatinga strong position in the industry worldwide as a global supplier of a comprehensive range of tools forcreating comfortable homes and living environments, including cordless power tools, battery-operated
outdoor power equipment and pneumatic tools.

Management Policy / Quality Policy

1 Makita strives to exist in harmony with society(a company that observes laws and regulations, acts ethically and never allows intervention of the anti-social organizations).

2 Makita values its customers (a market-driven company).
3 Makita is managed in a consistent and proactive manner(a company that strives to exist in perpetuity by adhering to a sound profit structure).

4 Valuing a stalwart corporate culture, Makita encourages each individual to perform
to his or her highest level (a happy company).

Contents2

Editorial PolicyLong-term Target /15 ESG Management: Environment

Report Period

Management Policy / Quality Policy /17 ESG Management: Social

FYE2020 (April 1, 2019 - March 31, 2020)

Contents & Editorial Policy

19 ESG Management: Governance3

Financial & Non-financial Highlights

22 Messages from Outside Directors

Scope of Report

5

Business Overview

23 10-Year Summary

7

Chairman’s Message

25 Message from the Financial Officer

9Interview with the President

26 Consolidated Financial Statements

54 companies: Makita Corporation and
53 Group companies inside and outside
Japan. The report also includes someitems only applicable to Makita
Corporation.

13 Value Creation Process

30 Corporate Overview

2

MAKITA Annual Report 2020

Financial & Non-financial Highlights

Financial*Figures through the fiscal year ended March 31, 2017 are based on U.S. GAAP
and figures from the fiscal year ended March 31, 2018 are based on IFRS.

Revenue

Operating profit & operating profit ratio

492,617

Operating profit

Million yen(Million yen)492,617500,000

400,000

64,046

Operating profit ratio

13.0

Million yen%

Profit attributable to owners of the parent

47,731Million yen(Million yen)(%)

(Million yen)

90,00030.0

60,00020.0

40,000

10.0

20,00064,04660,00047,73113.0
300,000

30,000002016 2017 2018 2019 202002016 2017 2018 2019 2020

(FYE)

0

2016 2017 2018 2019 2020

(FYE)

(FYE)

Although overseas revenue converted into
yen was eroded by currency exchange rates
and there was a decrease in demand for tools
due to COVID-19, we achieved our third
consecutive year of record-breaking revenue,
thanks to the on-going strength of lithium-ion
battery product sales.

Although revenue grew, operating profit
showed an 18.2% year-on-year decrease to¥64,046 million this fiscal year because ofhigher SG&A expenses and deterioration of
the cost-of-sales ratio from foreign exchange
rates and the impact of U.S.-China tariffs.

Income tax expenses came to ¥17,957
million (an effective tax rate of 27.2%) andprofit attributable to owners of the parent
decreased 14.4% year on year to ¥47,731
million this fiscal year.

ROE

R&D costs

Capital expenditures

8.3

11,601%44,409Million yen

(%)
12.0

(Million yen)
12,000Million yen(Million yen)
50,00011,60144,40940,0008,000

8.0

30,0008.3

20,0004,000

4.0

10,000002016 2017 2018 2019 2020

(FYE)

Due to a dip in profit attributable to ownersof the parent, ROE fell to 8.3%, down 1.6
percentage points year on year.

302016 2017 2018 2019 2020

(FYE)

Since Makita is aiming for cordless technology
using lithium-ion batteries in all of our products,
we are aggressively proceeding with
development of cordless products leveraging
battery charging/discharging, as well as
motor technologies.

2016 2017 2018 2019 2020

(FYE)

We are striving to strengthen and expand
production capacity and build and expand
logistics hubs as we work to grow sales ofcordless gardening equipment. As a result,capital expenditures are rising and showeda large year-on-year increase to ¥44,409
million this fiscal year.

Non-financial

Production output

Number of employees

Increasing presence of female employees

28.72

17,090(As of March 31, 2020)

Million units

Female employees

5,556(Million units)

32.00

17,500

28.72

28.00

17,09015,00024.00

12,50020.00

10,000Female managers

002016 2017 2018 2019 20202016 2017 2018 2019 2020

(FYE)

(FYE)

182

Up until the third quarter, our production
volume was trending well. With the spreadof COVID-19, however, production was
impacted by some plants being idled, among
other factors, and units were down 6.1%
year on year to 28.72 million units.

Our number of employees rose 666 versus
the previous fiscal year to 17,090 employees.
While we streamline staffing and dedicate effort
toward operator-less systems at manufacturing
sites, we are also actively hiring and training
new workers as we focus on expanding salesof cordless gardening equipment.

Domestically, female employees have an
average of approximately 17 years of seniority
and are active in a variety of departments.
Overseas, Makita has numerous female
employees in management positions andthese professionals support the Makita
Group’s operations around the world.

CO2 emissions

Water usage

Waste emissions

Makita Corporation

11.6

thou.tCO2 emissions(t)

60,000Overseas production
subsidiaries

53.5

thou.tIntensity per unit of net sales(t/100 mil. yen)

53,549Makita Corporation

102.3
Water usage
(m3)

30

300,000

20

200,000

thou.m3

Overseas production
subsidiaries

272.0

thou.m3

Intensity per unit of net sales(m3/100mil.yen)

271,986

Makita Corporation*

Overseas production
subsidiaries

4,755 19,504t

Waste product emissions
(t)

120

21,00080

14,000

40

7,000

0

0

Intensity per unit of net sales(t/100 mil. yen)

19,50495.2
40,00020,00018.8
11,5942016 2017 2018 2019 2020

6.8

9.0

6.0

102,339
10

100,000

0

0

34.7

4,755

3.0

1.6

3.9
0

t

(FYE)

We are striving to reduce CO2 emissions
through energy-saving activities such as
adopting LED lighting and high-efficiency
equipment. Fiscal year CO2 emissions for
Makita Corporation fell 0.1% to 11,594 tons,
and for overseas production subsidiaries
fell 5.0% to 53,549 tons.

2016 2017 2018 2019 2020

(FYE)

We carry out monthly monitoring of water
usage at business sites and strive to reduceusage. Fiscal year water usage for Makita
Corporation rose 4.8% to 102,339 m3, while
it fell 0.4% to 271,986 m3 at overseas
production subsidiaries.

0

2016 2017 2018 2019 2020

(FYE)

In order to promote waste reduction, we are
striving to thoroughly sort waste and reduce
our final disposal volume of waste. We havecontinuously achieved a final disposal volumeof 0.5% or lower at Makita Corporation*.
*Applicable only to the Head Office, Okazaki Plant, andNisshin Office.

4

MAKITA Annual Report 2020

Business Overview

As a global supplier of a comprehensive range of tools for creating
Makita supports the creation of an afﬂuent society.
Breakdown by Product Category

Share of
Revenue

Power Tools

59.4 %

Gardening
Equipment,
Household andOther Products

22.8 %

Parts, Repairs
and Accessories

17.8 %As a global supplier of a comprehensive range of tools forcreating comfortable homes and living environments, Makita
provides power tools, gardening equipment, and similar
products to support the creation of an afﬂuent society on a
global scale. Being a leading company in the industry, we
strive for an integrated framework covering development,
manufacturing, sales, and after-sales services that deliver
high-quality, appealing products and services that please
our customers.

Power Tools
Makita power tools are used in many settings, such as residential andlarge-building construction sites and factories. Since becoming the ﬁrst
company in Japan to manufacture and sell portable electric planers in
1958, we have dedicated ourselves to daily technological development
to enable better approaches to work that includes drilling, clamping,
cutting, grinding, and more. We are responding to the diverse needs ofcustomers with a robust lineup of products embodying our advanced
technological expertise.

Breakdown by Region
20.4%
43.9%
North America
14.7%
Asia (excluding Japan) 7.9%
Japan

EuropeRevenue by
RegionCentral andSouth America

5.3%

Oceania

5.8%

The Middle East
and Africa

2.0%

Makita operates direct sales bases in approximately 50
countries, allowing us to sell products in some 170 countries.
Our robust sales and after-sales service networks give us
close contact with customers and geographical regions.
Makita’s manufacturing extends beyond the borders of Japan.
On a product unit basis, approximately 90% of our goods are
currently manufactured at overseas factories, including in China,
the U.S., the U.K., Germany, Brazil, Romania, and Thailand.
5

Japan

19 branches
117 sales ofﬁces

Asia

10 companies

Oceania

2 companiescomfortable homes and living environments,

Gardening Equipment, Household and Other Products

Parts, Repairs and Accessories

For users from home gardeners to professionals handling challenging
tasks, Makita’s broad range of gardening equipment supports design
projects shaping nature and enlivening homes. Our efforts in recent
years have also included rolling out cordless gardening equipmentthat is high performance, user friendly, and environmentally conscious.
Furthermore, Makita’s household product line includes radios, lights,
coffee makers, and other items that fulﬁll key roles during outdoor
activities or even times of disaster.

Accessories (including consumable parts such as saw blades andwhetstones) have a signiﬁcant impact on work quality and efﬁciency.
Makita provides a lineup of long-life accessories optimized for worktasks. Additionally, our network of businesses in each part of theworld allows for rapid repairs and parts supply, enabling Makita to
support our customers with speedy and precise services.

27 companies

North America

4 companies

The Middle East
2 companies
and Africa

Central andSouth America

6 companies

Europe*Number of companies current as of March 31, 2020. Japan-only data includes the Isahaya Sales Ofﬁce opened in April 2020.

6

MAKITA Annual Report 2020

Chairman’s Message

Achieving sustainability
by helping resolve
environmental andsocial issues

Chairman, Representative Director

Masahiko Goto

History

7

1915—

1958—

1970—

Created in the ageof electrification

Becoming a power tool maker

Bridging to markets overseas

In the time of economic prosperity during the FirstWorld War, demand for electricity surged. Seizing
the wave of enthusiasm toward the electric industry,
Makita Electric Works was founded as a lighting
equipment, electric motor, and transformer sales
and repair company.

Makita recognized the “development of proprietaryproducts” as a crucial challenge and developed
Japan’s ﬁrst electric planer. After garnering praisefrom construction and civil engineering companies
across Japan, Makita embarked in a new direction
as a manufacturer of power tools.

Makita U.S.A., Inc. was founded as our ﬁrst
overseas subsidiary. Subsequent expansion into
France, the U.K., Australia, and other countries
followed as Makita grew into a global brand throughsales strategies ﬁne-tuned to each market.

Makita set out its shingle in the electric equipment sales
and repair industry

First portable electric planer manufactured in Japan

Demonstration van used for sales promotions in the U.S.

Makita Corporation made its first foray into business in Nagoya
in 1915 as a lighting equipment and electric motor sales andrepair company. In the 105 years since our founding, andcontinuing today, Makita has overcome major shifts in thebusiness environment and achieved growth as a global
supplier of a comprehensive range of tools for creating
comfortable homes and living environments. This
accomplishment has been solely due to the understanding
and cooperation from stakeholders, for which we are
extremely grateful.
In 1958, Makita became the first company in Japan to
manufacture and sell portable electric planers. In the following
year, Makita made the decision to exit the electric motor
business and pivot to become a manufacturer specializing
in power tools. Based on our philosophy of moving “closer
to customers,” we established hubs in each area of Japan
as part of a full-fledged manufacturing and services network.
In 1970, we established our first overseas subsidiary in the
U.S. and proceeded to build out a global network. At present(April 2020), we operate 117 sales and service sites in Japan,
augmented by some 50 overseas sites, while selling products
in approximately 170 countries around the world. Prompt andprecise sales and service activities through a network closelyaligned with markets and customers is the wellspring ofMakita’s global competitiveness. Makita has overseas
manufacturing hubs in China, the U.S., the U.K., Germany,
Brazil, Romania, and Thailand, and approximately 90% of
our manufacturing activities are currently positioned

overseas. This diversified manufacturing base not only allows
us to quickly meet demand in each region, but also helps us
address currency, disaster, geopolitical, and other risks, giving
Makita a corporate structure largely resilient to the external
environment. In 2005, Makita brought to market the world’s
first professional-use electric power tools using lithium-ion
batteries. Since then, we have devoted effort to thedevelopment, manufacture, and sale of cordless products.
Cordless products offer many customer advantages, such as
convenience, ease of use, and improved safety. These
products include Makita’s focused effort in cordless gardening
equipment, which, compared to conventional engine-poweredmodels, offer zero exhaust during use and contribute to
mitigating environmental issues. At the same time, they reduce
physical strain for users and improve the environment aroundworksites, thanks to low noise and low vibration features. Witha core product line of cordless products, Makita will continue
achieving growth by solving social challenges—such asenvironmental issues—while we evolve into a manufacturer ofcordless products including not only power tools but also
gardening equipment.
Makita recognizes the accelerating and worsening issues
affecting the global climate and feels that it is important toresolutely address not only our own corporate sustainability,
but also the sustainability of the earth. By recommending that
customers shift from engine-powered to battery-powered
products, we aim for unending corporate development, while
also contributing to social sustainability going forward.

1991—

2005—

2015—

The rise of Makita

Launch of lithium-ion
battery products

Embarking on another century

Makita renewed its corporate image, aiming tobecome a comprehensive supplier of all types ofhome-related tools, focusing on our core power
tool products, but also encompassing gardening
equipment, woodworking tools, and more.

Launched cordless impact drivers withhigh-energy-density lithium-ion batteries. These
new batteries, which offer long life, lighter weight,
and more compact size, garner focused attention
at exhibitions around the world.

Makita celebrated its 100th anniversary in 2015.
Recognizing the importance of being a robust
company for the next 100 years as well, Makita
will continue its initiatives, including strengthening
cordless gardening equipment, while evolving asa manufacturer of cordless products.

Trade fair showcasing Makita’s new insignia

The batteries cause much fanfare at the 2006 European
Trade Fair for Woodworking & Wood Processing in Nuremberg

Key lineup of cordless gardening equipment

8

MAKITA Annual Report 2020

Interview with the President

Transforming into
a comprehensive provider
of cordless power tools
and equipment

President, Representative Director

Munetoshi Goto

9

Cordless products gaining
a strong following
In FYE 2020, we generated ¥492.6 billion in revenue
for a third consecutive year of record-high earnings.
Sales continued steadily growing for our cordlessproducts in Japan and overseas, including for ourline of gardening equipment that we have been
aggressively marketing.
In power tools, we continued expanding our market
share in Europe and other markets and increasing salesof cordless products in developing countries, notably
in Central and South America. The sales growth isattributable to more customers actually using ourcordless products and recognizing their superior
performance and quality. I believe this is the result of
our efforts to design and offer cordless products thatare high powered and comfortable to use.
In gardening equipment, I believe we still haveroom to improve our technologies and service structure.
In 2019, we progressed with steps to improve our
production capacity, including constructing a factoryin Romania in preparation for growing sales of cordlessgardening equipment. We also expanded our distribution
and service networks in Japan and overseas to further
strengthen our sales activities geared to local customers
and communities.
We broadened the lineup of cordless gardening
equipment, including products offering performance on
par with engine-powered products. To continue growing
sales of cordless gardening equipment, we will have tofurther increase production capacity, develop cordlessgardening equipment that is a compelling alternative
to engine-powered equipment, and create service
structures finely tuned to specific markets.
Although revenue remained strong and we took
concrete measures to position the Company for the
future, our operating profit for the year amounted to

Revenue & Operating Profit

We are laying
the foundation for
long-term business growth¥64.0 billion, a decline of ¥14.3 billion from theprevious fiscal year. The decline was the result of
the deterioration of the cost-of-sales ratio due to theforeign exchange rates and the trade dispute between
the U.S. and China along with higher selling, general,administrative, and other costs. We have been
aggressively advertising our products and increasing
staff to prepare for expansion of business to ensure
we attain greater success in our gardening equipment
business. Although these contributed to a profit decline,
we view them as investments that are essential forbusiness growth. We are also advancing management
strategies and actively installing labor-saving andautomation equipment in our production sites to lay thefoundation for long-term growth for the Company.
The potential impact of the COVID-19 pandemic
on our business performance is a point of concern.
The pandemic reduced our sales and caused us tosuspend factory operations in FYE 2020, and weanticipate the negative impact on business conditions
to continue in FYE 2021.

Tools that protect the environment andoffset labor shortages
Both advanced and developing countries worldwide
are confronting increasingly serious environmental
protection and labor shortage issues.

SDGs

490,578492,617477,298
80,23178,305
423,623
414,999
64,04664,67662,564

Revenue

2016

Operating Profit

2017

2018

2019

2020

(FYE)

10

MAKITA Annual Report 2020

Interview with the President

Our cordless gardening equipment offer apractical conversion from exhaust-emitting engines toclean-running cordless electric motors that directlyreduces environmental impact and fulfills the United
Nations’ Sustainable Development Goal to “Takeurgent action to combat climate change and its
impacts.” Power tools are essential equipment for
maintaining social infrastructure. In short, people
use our equipment to make society better. We willcontinue raising our status as a contributor to society
and fulfilling our responsibility to help make asustainable society.
The increasing frequency of natural disasters
caused by global warming is highlighting the advantagesof cordless equipment as tools for disaster preparation
and recovery activities. We have designed emergency
supply kits with power sources, lighting, andcommunication devices and are exploring new ways
to make use of the ability of cordless equipment to be
used anytime and anywhere.
Our tools and equipment also offer a range ofsolutions to deal with a shortage of labor. Our products
not only help manufacturers improve production
efficiency and shorten production time, they also
improve safety and increase productivity. We need tostrengthen our service structure to take full advantageof this trend. We are forming a structure to provide
prompt service for maintenance as well as for logistics
and sales support, and we are arranging and improving
our communication channels with customers anddistribution outlets. Our aim is for the system to enable
us to be directly involved in raising productivity at
our customers and to help offset the challenges ofdecreased labor supply. The services we supply
through this system will also contribute to efficientdisaster recovery.

We’re aiming to makeall of our products cordlesswith lithium-ion batteries

11

Customer-oriented management
in all aspects
The 40Vmax series we launched in FYE 2020highlights our latest advance as a manufacturer ofcordless products. The series features a uniquesmart system that enables mutual communication
between tool and battery for optimization of power
supply. By optimizing the power output of both thetool and battery, the smart system extends the amountof time that a tool can be used for continuous
high-load operations while also extending a battery’slife. One of Makita’s major strengths is our ability toharness our vast experience to develop new, uniquesystems that will open new paths for the future. We
plan to continue expanding the 40Vmax series lineup
for the gardening and other fields.
While enhancing our product lines, we are alsoplanning to boost production capacity at our plant in
China in anticipation of growing sales for our cordlessgardening equipment.
We will similarly enhance our sales capabilities.
We continued to improve our logistics structure in
Japan by establishing new distribution warehousesin Aichi, Saitama, and Okayama prefectures. We also
intend to expand or construct new logistics facilities
overseas as our business grows. We will actively
expand and construct service sites mainly in areas ofhigh demand for gardening equipment to make iteasier for customers who have never used our products
to actually experience them.
Our management mission is “Makita is always at
the customer’s side,” and we will continue building
customer and market trust in Makita and increasing
the value of the Makita brand.

Our path as a manufacturer of cordlessproducts for the next century
Our long-term objective is to be the quintessential“strong company.” To achieve this, we must continue
engaging our corporate DNA of staying on top of theneeds of the times and developing business in tune
with our customers. With that mindset, we will boldly
take on new challenges as we lay the foundation forour next 100 years. I believe that maintaining our status
as a company needed by both our customers andsociety is the path that will lead us to our goal.
The first step will be to use our strengths andmake all of our products cordless with lithium-ion
batteries. We must complement this by constructing
a service platform enabling customers using our
products to easily access our services.
Our mindset cannot be to simply continue thebusinesses we have established in the past. We all must
work together with a spirit of eagerly pursuing new
business directions and to raise our technologies,
product attractiveness, and services to new levels.
We plan to invest proactively to open new doors andenhance our capabilities.
We are grateful for the understanding andcooperation of our stakeholders as we take the steps
necessary to deliver the Company to our long-term
objective. We look forward to continuing to evolve andgrow together with our stakeholders.

We will raise
our technologies,
product appeal, andservices to new levels

President, Representative Director

Munetoshi Goto

12

MAKITA Annual Report 2020

Value Creation Process

Striving to solve social challenges
such as environmental issues in order tocontribute to the creation of
Development
sustainable society.

Development●

Leveraging world-class battery
charging/discharging
technologies, and motor
technologies, while promoting
cordless, engine-free products●

Rolling out diverse, multiple
product categories with anindustry-leading lineup

Environmental issues

Production

CSV

Labor shortages●

Using production bases in eight
countries to quickly meet demandin each region●

Prudently addressing currency
fluctuations, disasters,
geopolitical and other risks●

Boosting quality and productivity
through the IoT and robotization

Creating Shared Value

Social challenges

Frequent natural disasters
SDGs

Value Chain

Sales
and
services

ESG
Production

Sales and services

Moving Forward as a Manufacturer ofCordless Products— bringing cordless tools to a whole new level.
Given the significant social issues of frequent natural disasters, labor shortages, andenvironmental problems, including climate change, Makita will continue contributing
to solving these social issues by making all of our products cordless.
Cordless products offer many customer advantages, such as convenience,ease of use, improved safety, zero exhaust, low noise, and low vibration. With
environmental problems being a particularly significant social issue, we believethat our cordless gardening equipment with zero emissions during use will greatly
contribute to addressing these problems.
Makita will continue to evolve into a manufacturer of cordless products
including not only power tools but also gardening equipment and expand into
a company which does not rely only on a single area of business as we aim tobecome a “Strong Company” leveraging the benefits of cordless products tosolve social issues.
13●

Industry-leading sales andservice network●

Prompt, precise sales and services
activities closely aligned withmarkets and customers●

Feedback on products and services
voiced by users across the globe

Advantages of Cordless Products
Higher work efficiency and ease of use from having
no power cords● Helps to reduce work-site accidents from trippingon power cords● Contributes to greater work efficiency in places
where no power outlets are available● Zero exhaust*, lower noise, and lower vibration
when switching from engine-powered models*During equipment operation●

Reducingenvironmental
impacts

Boosting work
efficiency andproductivity

The value Makita delivers

Early recovery
from disasters

StrongCompany
Makita’s goal

Makita has set itself the goal of contributing to the creation ofsustainable society and consolidating a strong position in theindustry worldwide as a global supplier of a comprehensive
range of tools for creating comfortable homes and living
environments, including cordless power tools, battery-operated
outdoor power equipment and pneumatic tools.

Security during
disasters

Supporting SDGs

14

MAKITA Annual Report 2020

ESG Management

Environment
The “Go Green” slogan symbolizes Makita’s commitment
to continually providing new value as a comprehensive
international supplier of tools. We hope to always
remain as a company thatmaintains a steady eye on society,challenging ourselves to create a“sustainable recycling-oriented
society” that harmonizes theenvironment with the economy.

Environmental Audits and environmental education, basedon the requirements of the certiﬁcation.

Preventing Global Warming
Among Makita’s initiatives for improving environmental issues,particular emphasis in recent years is going to activities to help
prevent global warming.

Initiatives in our Business Activities

Environmental Policy
Basic Principles
As a global supplier of power tools used in building
homes and in everyday life, Makita is aiming to conduct awide range of environmental protection activities, inorder to contribute to have sustainable society andconservation of biodiversity.

Policies

Our efforts toward reducing CO2 emissions include
energy-saving activities, such as installing LED lighting
and high-efﬁciency equipment (AC units, compressors,
manufacturing machinery, etc.), as we also carry out awarenessactivities, such as distributing energy-saving promotional
material to employees and making regular patrols checking
energy-saving responses in ofﬁces and plants.
Changes in CO2 emissions
Makita Corporation

Overseas production subsidiaries
Intensity per unit of net sales(t/100 mil. yen)

CO2 emissions(t)1. Enforcement of environmental administrative structure
2. Continuous improvement and pollution prevention
3. Compliance with applicable laws and regulations
4. Establishment and review of objectives and aims
5. Reduction of environmental burden
6. Disclosure

60,00030

53,54940,00018.8

Please see the Company website for the full text of our policies.

11,59420,000

20

10

3.9
0

Environmental Management
Makita has established and operated its own environmental
management system since 1998. Subsequent to that, for the
purpose of leveraging that system as a tool for mitigating
environmental burdens, our Head Ofﬁce and Okazaki Plant
ﬁrst received ISO 14001 certiﬁcation in 2007. In later years,
our Nisshin Ofﬁce and all of overseas production bases
received the certiﬁcation and are now operating environmental
management systems.
We promote the protection of the environment at all ofour business bases and carry out activities, such as Internal
15

2016

2017

2018

2019

2020

0
(FYE)

Initiatives with Our Products
Gardening equipment has conventionally been engine
powered, which had advantages in terms of power and force,but also had the signiﬁcant challenge of exhaust that affects
the environment. With global warming being a particularly
signiﬁcant issue among the many environmental problems
in recent years, Makita is dedicating effort to our cordlessgardening equipment with zero emissions during use. Thisis part of our contribution to addressing global warming andother environmental problems.

Makita has been making progress in reducing our ﬁnal
disposal volume of waste. From FYE 2007 onward, we havebeen able to hold our ﬁnal disposal volume to 1% of total
waste or lower and from FYE 2015, we have continuously
achieved what we deﬁne as “zero waste, zero emissions”(a ﬁnal disposal volume of 0.5% or lower) at Makita Corporation*.

Leveraging Makita’s accumulated power tool technologies
surrounding batteries and motors, we are accelerating ourtransition “from engine-powered to battery-powered” products
through aggressive development and sales expansion of
products that are cordless, yet basically feel as if they areengine-powered. In doing so, we will continue contributing
to achieving a zero-emission society in the future.

*Applicable only to the Head Ofﬁce, Okazaki Plant, and Nisshin Ofﬁce.

Reduced Use of Chemical Substances

Environmentally Conscious Design

With regard to the EU’s REACH (Registration, Evaluation,
Authorization and Restriction of Chemicals) regulations, since
FYE 2010 we have promoted REACH-compliant component
procurement by investigating, managing, and supplying
information regarding substances of very high concern(SVHC) contained in our products.
We also continually engage in component procurement incompliance with the RoHS Directive (directive on the restrictionof the use of certain hazardous substances in electrical andelectronic equipment) adopted by EU member states.

Makita’s concepts for environmentally conscious products
began with a product assessment in 1992 and was followedby the codiﬁcation of the Makita’s Global Environment Charterin 1993, the year that we kicked off our full-ﬂedged
development of products that take the environment into
consideration.
We have endeavored to improve the energy efﬁciency,
weight, and longevity of products, while also using materials
that are considerate of the environment, as we continue
developing tools that can be recycled.

Makita Zero Waste, Zero Emissions

DUC256
Achieves performance on parwith tools using a 30ml engine,
while being cordless and having
zero exhaust.*

In light of the pressing social issues of depleted energy
resources and availability of waste disposal sites in the future,*During equipment operation

Makita’s Efforts to Reduce Plastic Packaging
Plastics have brought convenience and beneﬁts to our daily life.
On the other hand, there is the problem of plastic waste thatﬂows into the ocean due to improper disposal, causing concern
about environmental pollution on a global scale. In order toprotect the global environment, we need to work on reducing
the use of single use plastics, as seen in the EU, whichannounced a law banning the use of certain types of single
use plastics in June 2019.
Under these circumstances, Makita is committed to the
reduction of single use plastics used to package our
products as “a global supplier of a comprehensive range oftools for creating comfortable homes and living environments”
in order to contribute to have sustainable society andconservation of biodiversity.
We have been working to simplify packaging and, in FYE
2021, we will begin to reduce the use of plastic bags andother plastic materials for packaging our products, and shift tomore environment-friendly materials, including paper.
Examples of single use plastics packaging materials we use

16

MAKITA Annual Report 2020

ESG Management

ocial
Fostering Human Resources

CSR Procurement

What supports our growth is nothing other than the talentsof the people working at Makita: “Don’t be angry, arrogant,panic, mope, or give up.” These are the words of Jujiro
Goto, who along with founder Mosaburo Makita built thiscompany and transformed it into “a power tools corporation.”
Grounded in this personal philosophy of Mr. Goto, we strive
to provide each and every Makita employee with theopportunity to exercise his or her talents.
For training programs, we carry out stratiﬁed training(tailored to match each employee’s career stage),correspondence training, as well as overseas job training
actively offered to young employees to experience local
workplaces through on-the-job training in order to allow our
workers to build up professional skills as we foster humanresources capable of being active on a global stage.
Furthermore, we are striving to cultivate humanresources in each global region, which includes carryingout problem-solving training and manager training to boost
leadership skills at the China plant.

Makita is striving Company-wide to deliver safe, high-quality
products to our customers to ensure that they can enjoy
peace-of-mind when using our tools.
In working to achieve this objective, we pursue strict
adherence to relevant laws and regulations, while working
to build partnerships with our clients based on just, fair,transparent, and sincere transactions. To that end, we
stipulated our commitment to the importance of pursuing
procurement activities that acknowledge social priorities,
such as environmental consideration, respect for humanrights, standing against corruption, and following appropriate
hiring practices, which we codiﬁed in our Basic Policyon Procurement.
One pillar of this effort is our pursuit of responsible
procurement activities, including annual surveys of theenvironmental protection activities of our business partners.

Basic Policy on Procurement
Policy1. Compliance with laws and regulations and social codes
2. Consideration to reducing environmental impacts
3. Provision of fair and equitable transaction opportunities
4. Coexistence and coprosperity based on mutual trust
Please see the Company website for details.

Diversity Promotion
Makita strives to create a workplace that gives diverse
employees a sense of purpose and a secure environment
for their professional activity.

Increasing Presence of Female Employees
At Makita, we believe that it is essential to be a company
that allows all employees to actively work and exercise theirtalents to the maximum degree, regardless of gender. As
such, in our hiring, placement, promotions, and other personnel
17practices, we do not discriminate based on gender and we
strive for equitable treatment of employees.
At present, the Makita Group has more than 180 womenin management positions actively supporting our global
business in many divisions. Going forward, we will continue
ensuring workplaces and environments conducive to thepeace of mind of our employees.

Ensuring Employee-friendly Workplaces
In order to allow diverse employees to pursue their careerwith a sense of purpose, we offer a work environment that
includes a childcare leave system, a childcare reduced
working hours system, as well as other programs as part ofour active efforts to facilitate work-life balance.
There has been steady utilization of the childcare leavesystem we introduced in 1990, even including a goodnumber of employees utilizing the program twice or more.
In FYE 2020, 44 employees (1 male employee) took part in
the program and the return-to-work rate after childcare leave
was 87% (26 of 30 employees).
In 1992, we also introduced a childcare reduced working
hours system, which 48 employees (1 male employee) utilizedin FYE 2020.

Securing Safety and Health of Employees
Makita’s Safety and Health Committee members carryout regular patrols at each of our business sites. The Safety
and Health Committee reports the results of those patrols
and supports improvement measures for safer andhealthier worksites, in order to preemptively prevent
occupational accidents.
Furthermore, in terms of employee health, we provide
inﬂuenza shots in house, while the Okazaki Plant has
distributed Makita cordlesss fan jackets and also set up watercoolers to help deal with hot weather. Through these andother efforts, we are striving to improve the work environment
and ensure the health of employees throughout the Company.

Respect for Human Rights

Hiring of Foreign Employees
Approximately 80% of Makita Group employees are hired
overseas and international students are also hired in Japan.
Additionally, as a company that emphasizes a local, on-sitebusiness philosophy, we have, for many years, placed weighton diverse employees who can localize our business practices.
Evidence of this is in the active contributions of employeeswith foreign nationality, including employees of overseas
subsidiaries having been promoted to corporate ofﬁcer
positions at Makita Corporation.

Guidelines to the Code of Ethics for Makita, which outline
the conduct expected of all Group directors and employees,
clearly recognize “respect for human rights” and stipulate
the importance of respecting all fundamental human rights andprohibiting discrimination and conduct that harms individual
dignity. These Guidelines are regularly and continuallydistributed and explained to Directors and employees in orderto thoroughly ensure respect for human rights.
Furthermore, since we believe that it is important to fulﬁll
our social responsibility for recognizing human rights not justourselves but alongside all of the businesses in our supply
chain, the Guidelines to the Code of Ethics for Makita also
stipulate that working to eliminate child labor and forcedlabor is a selection criteria for suppliers.

18

MAKITA Annual Report 2020

ESG Management

Governance
Basic Philosophy on Corporate Governance
Enhancing functions for management oversight from theperspective of transparency is an essential pursuit for Makita.
Consequently, to enhance our corporate governanceframework, we proactively seek out independent directors forthe purpose of strengthning the functions of our Board of
Directors and Audit & Supervisory Board, while also having an
Internal Audit Division and other measures.

Overview of the Corporate
Governance Structure
Based on its regulations, the Board of Directors decides onmatters stipulated in laws, regulations, and Makita’s Articles
of Incorporation, in addition to important management
matters such as management policies, business plans, signing
important contracts, establishing subsidiaries, and the like.
Of the 13 Directors, two are Independent Outside Directors.
The Independent Outside Directors possess rich experienceand abundant knowledge of corporate management andappropriately fulﬁll their role of strengthening corporate

governance by providing timely advice and other assistance.
Additionally, Makita has hired several Directors with abundantbusiness experience at overseas sites, which adds diversity
to the Company.
The Audit & Supervisory Board audits the execution ofduties by the Board of Directors. This Audit & Supervisory
Board stipulates audit policies and division of duties, while
each member conducts audits following said policies anddivision of duties. The Audit & Supervisory Board consists offour Audit & Supervisory Board Members, three of whom are
Independent Outside Members, including one who serves ina full-time capacity. This system allows the two standing Audit &Supervisory Board Members to audit the execution of duties byDirectors at all times. Of the four Audit & Supervisory Board
Members, two have considerable knowledge of ﬁnance andaccounting, while one has a comparable level of knowledge oflegal matters. They also share information by receiving, as
needed, audit reports and other reports from the Accounting
Auditor and the Internal Audit Division. With the objective of
helping audits by the Audit & Supervisory Board proceedsmoothly, Makita established the Audit & Supervisory Board
Staff Ofﬁce, where dedicated personnel support the work of
the Audit & Supervisory Board.

The following is a schematic diagram of the Makita Group’s corporate governance structure
General Meeting of Shareholders
Appointment / Dismissal

Appointment / Dismissal

Board of Directors
13 Directors including
2 Outside Directors

Audit & Supervisory Board
4 Members including
3 Outside Members

Audit

Appointment / Dismissal /Supervision

Collaboration

Support
Audit

Audit & Supervisory Board
Staff Ofﬁce

ReportChairmanPresident

Corporate
Ofﬁcer

Disclosure Committee

ReportInternal Audit DivisionCorporate Ofﬁcer,
General Manager of
Administration
Headquarters

Audit
Corporate Divisions/Group Companies

19

Financial Statements Audit
Internal Control Audit

Appointment /Dismissal

Accounting Auditor

Makita introduced a Corporate Ofﬁcer system in June2009 to facilitate proper implementation of the Group strategy
and strengthen our business execution structure. As such,
Makita strives to engage in ﬂexible and efﬁcient business
operations, while enhancing corporate value.
Accounting audits are carried out by KPMG AZSA LLC.
KPMG AZSA LLC and engagement partners have no interestin the Company which must be disclosed pursuant to theprovisions of the Japanese Certiﬁed Public Accountants Act.

Status of Internal Audits
As an independent organization in charge of the Group’s
internal audits, the Internal Audit Division is staffed bymore than 10 personnel and conducts the internal audits
necessary to maintain the soundness of Makita’s management.
Results of audits are reported to the Audit & Supervisory
Board and to management personnel. Furthermore, wehave built a framework for making timely and appropriate
revisions when inadequacies in the internal control system
are discovered through internal audits.

Status of Outside Directors and Outside Audit & Supervisory Board Members
The Company provided notice on the following ﬁve Directors/Audit & Supervisory Board Members to the Tokyo Stock Exchange
and Nagoya Stock Exchange as being independent directors appointed by the Company, in accordance with the rules andregulations of each exchange.

Classiﬁcation

Name

Reason for appointment

Attendance at Boardof Directors meetings

Attendance at Audit& Supervisory Board
meetings

Akiyoshi Morita

Mr. Akiyoshi Morita has amassed an intimate knowledge of corporate
management through many years of participating in the management of
Toyota Motor Corporation and Aichi Steel Corporation, a core companyof the Toyota Group. Currently, he offers valuable opinions from a broad
perspective on Makita’s management. The Company judges Mr. Morita
to have no conﬂicts of interest with Makita or Makita’s management team,
as well as no risk of conﬂict of interest arising with ordinary shareholders.

83%(10 of 12 meetings)ーMasahiro Sugino

Mr. Masahiro Sugino has an intimate knowledge of corporate
management through many years of involvement in running INAX
Corporation and LIXIL Group Corporation. Currently, he offers valuable
opinions from a broad perspective on Makita’s management. The
Company judges Mr. Sugino to have no conﬂicts of interest with Makita
or Makita’s management team, as well as no risk of conﬂict of interest
arising with ordinary shareholders.

92%(11 of 12 meetings)ーAkira Kodama

Mr. Akira Kodama has many years of experience at ﬁnancial institutions,in addition to his professional knowledge of ﬁnance. He offers valuable
opinions based on his perspective as an experienced professional.
The Company judges Mr. Kodama to have no conﬂicts of interest with
Makita or Makita’s management team, as well as no risk of conﬂict ofinterest arising with ordinary shareholders.

92%(11 of 12 meetings)

93%(13 of 14 meetings)

Fusahiro Yamamoto

Mr. Fusahiro Yamamoto has amassed abundant experience over many
years with corporate accounting audits in his capacity as a certiﬁed
public accountant in Japan and the U.S. He offers valuable opinions
based on his perspective as an experienced professional. The Company
judges Mr. Yamamoto to have no conﬂicts of interest with Makita or
Makita’s management team, as well as no risk of conﬂict of interest
arising with ordinary shareholders.

100%(12 of 12 meetings)

100%(14 of 14 meetings)

Shoji Inoue

Mr. Shoji Inoue has professional knowledge and abundant experience
as an attorney. He offers valuable opinions based on his perspective as
an experienced professional. The Company judges Mr. Inoue to haveno conﬂicts of interest with Makita or Makita’s management team, as
well as no risk of conﬂict of interest arising with ordinary shareholders.

100%(12 of 12 meetings)

100%(14 of 14 meetings)

Director

Audit &
Supervisory
Board
MemberNote: Attendance at Board of Directors and Audit & Supervisory Board meetings covers the period through the end of March 2020.

20

MAKITA Annual Report 2020

ESG Management

Policy on the Determination of
Remuneration for Directors
The Company pays monthly compensation to Directors basedon their positions and other factors within the maximum total
amount of monthly compensation, which was approved bya resolution passed at the General Meeting of Shareholders.
The bonuses are to be paid to Directors (excluding Outside
Directors), and are linked to consolidated business results withthe aim of enhancing their motivation for improvement ofbusiness results of Makita.
The restricted shares compensation are introduced to
Directors (excluding Outside Directors) with the aim ofsharing the risks and beneﬁts of stock price ﬂuctuations withshareholders to a greater extent and further enhancing theirmotivation to contribute to improving the stock price andthe corporate value of the Company.
Full amount of the compensation to Audit & Supervisory
Board Members is ﬁxed so that the independence of the Audit& Supervisory Board Members from the management can be
secured and the speciﬁc amount for each Audit & Supervisory
Board Member is decided through discussions among Audit &Supervisory Board Members.
Total Amounts of Compensation and Bonus to Directors andAudit & Supervisory Board Members(ﬁscal year ended March 31, 2020)
unit: million yen
Total amounts of each type of Compensation
Total amounts ofCompensation

Director
Audit &
Supervisory
Board Member

Basecompensation Bonuses

Stockoption*Restricted
SharesCompensation*

359

122

195

10

32

41

41

―

―

―

Note: Amounts of stock options and restricted shares compensation are the amounts
recorded as expenses in the ﬁscal year ended March 31, 2020. Note that stock options
were abolished by a resolution at the General Meeting of Shareholders in June 2019.

Risk Management
In accordance with Makita’s system for internal control basedon the Companies Act, Makita strives for risk management andendeavors to be a company that is resilient toward crises. The
Disclosure Committee, which identiﬁes and investigates risks in
the Group’s business activities, holds annual meetings attended
by the representative Directors, Directors in charge, standing
Audit & Supervisory Board Members, and General Managersof the Internal Audit Division and respective departments of
the Company. Matters that are deemed possible risk factors
are disclosed on Makita’s website.
Each Director exercises authority and takes responsibility
for implementing the Group-wide risk management framework
21

in his or her own division, and also reports to the Board of
Directors and Audit & Supervisory Board when a situation
occurs that is material to business management. Also, in eachdivision, regulations and guidelines are stipulated and followed
in order to carry out risk management necessary for quality
control, disaster prevention, capital utilization, and the like.
Amidst concern in recent years over the occurrence ofmajor earthquakes and other natural disasters, Makita
recognizes that being able to respond to disasters is a
critical issue. Makita has formed a Fire & Disaster Prevention
Committee comprised of directors and the heads of relevant
divisions and has formulated disaster prevention regulations
with this committee at the center. These disaster prevention
regulations and other measures, which are reviewed regularly,
deﬁne steps for disaster prevention, emergency response
measures, and disaster recovery efforts. Similarly, theseregulations and measures outline a business continuity plan
(BCP) for times of disaster. The target organizations andscope of this plan are also reviewed as necessary.

Compliance
Makita holds a philosophy of “striving to exist in harmony withsociety,” which is a uniform approach affecting our Management
Policy / Quality Policy. As such, we thoroughly ensure that
directors and employees comply with legal, regulatory, andethical principles. Makita’s Code of Ethics and Guidelines to theCode of Ethics for Makita, which outline the conduct expectedof Group directors and employees, stipulate the importance of
ethical conduct, avoiding conﬂicts of interest, complying with
relevant laws and social standards, properly disclosing
information, respecting human rights, restricting gifts andincentives, prohibiting bribes, and prohibiting unfair business
transactions. Directors and employees are provided with regular
information and on-going training about Makita’s Code of Ethics
and Guidelines to the Code of Ethics for Makita. In order to instill
an awareness of the importance of compliance, employees are
given an Ethical Compliance Survey, while new hires and newly
appointed managers are provided with compliance training.
In order to minimize, preempt, and if necessary, quickly
discover and resolve, conduct in violation of the Code of Ethics,
Makita has established regulations regarding a Corporate
Ethics Helpline (Internal Reporting) with provisions for acceptinginternal as well as external reports. Thorough measures aretaken in these regulations to protect whistleblowers so that they
do not incur any disadvantage for reporting to the Corporate
Ethics Helpline. Furthermore, the framework allows anonymous
whistleblower reports. If necessary, the content of reports is
also shared within the Company, and steps are taken in orderto remedy and prevent recurrence of the matter in question.

Messages from
Outside Directors

Outside Director

Akiyoshi Morita

Appointed to the position of Makita Outside Director in June 2013,
Outside Director Mr. Morita has amassed impressive knowledge ofcorporate management through many years of participating in
the management of Toyota Motor Corporation and Aichi SteelCorporation, a core company of the Toyota Group.

Outside Director

Masahiro Sugino

Appointed to the position of Makita Outside Director in June 2015,
Outside Director Mr. Sugino has intimate knowledge of corporate
management through many years of involvement running
LIXIL Group Corporation, including INAX Corporation.

Q. What is your assessment of the Board of Directors and the Company’s governance?
Morita On the Board of Directors, Audit & Supervisory
Board Members and Outside Directors draw on their ﬁeldsof expertise to actively voice questions and receive clear
responses. Even compared to the time around 2013, when
I became a Makita Outside Director, there has been aboost in efﬁcacy as discussions have become livelier andcontributions are being made with a shared sense of objectives
by all members.

Sugino Operations of the Board of Directors are being
appropriately carried out from the perspectives of open inquiry,
availability of speaking opportunities, and transparency ofpolicies and the process followed for management decision
making. Additionally, based on major Company policies,
management is entrusted to the executive judgment anddiscretion of personnel responsible for each division and I
sense the soundness of the corporate culture in the stanceof responsible parties who engage in their work with vigor.

Q. What are the responsibilities and roles of an Outside Director?
Morita It is my responsibility to leverage my experienceand provide copious, knowledgeable recommendations as
the Company tackles operating challenges. Since Makita isdeveloping its business on a global scale, I think my responsibility
as an Outside Directors is to support continued growth as a
global corporation by paying particular attention to geopoliticalrisks in each country.

Sugino In a company where overseas sales compriseapproximately 80% of total sales, ensuring compliance at
our myriad overseas subsidiaries is a crucial issue. By
strengthening the management and audit frameworks forpreventing misconduct at sales and production sites around theworld, I am committed to making continued recommendations
to mitigate risks.

Q. What expectations do you have for Makita going forward?
Morita I expect Makita to achieve further leaps of growthby strengthening business (such as expanding sales andenhancing the lineup in the current focus area of cordlessgardening equipment), while also contributing to solvingsocial issues, such as environmental challenges.

Sugino Makita’s quality, product development ability, andworldwide service network are superb. My hope is for Makita
to thoroughly continue customer-focused initiatives, strengthen
the cordless gardening equipment business through active
investment, boost recognition of the brand, and contribute to
global environmental preservation.

22

MAKITA Annual Report 2020

10-Year Summary
Makita Corporation and subsidiaries for the years ended March 31

U.S. GAAP

2011

2012

2013

2014

2015

2016

Net sales¥ 272,630¥ 295,711¥ 309,630¥ 383,207¥ 414,718¥ 423,623

Domestic

46,06553,17556,55566,01967,74068,445

Overseas226,565

242,536

253,075

317,188346,978

355,178

Operating income

41,90948,51645,36654,914

71,90564,676

Income before income taxes

42,73046,96345,691

56,974

68,394

61,492

Net income attributable to
Makita Corporation

29,90532,49731,07638,45345,307

41,615

8,622¥ 38,364¥ 41,686¥ 35,894¥ 34,188(19,334)(4,500)(15,414)(20,084)(20,096)(6,573)

283

4,122

22,95021,602

15,79827,615(7,355)(12,707)(10,650)(7,365)(12,017)(18,719)

9,742¥ 13,481¥ 11,481¥ 11,417¥ 12,124¥ 11,769

Depreciation and amortization

7,557

7,237

7,542

8,622

8,619

9,284

R&D cost

7,283

7,603

8,396

8,720

9,117

9,593

¥ 372,507¥ 383,256¥ 440,974¥ 519,121¥ 575,328¥ 558,024

Net working capital

219,270

223,045

266,950

310,750

358,245362,675

Total Makita Corporation
shareholders’ equity

307,149

321,253

373,543435,934

486,021479,752

887

2,363

1,703

4,163

5,030

2,225

¥ 108.54¥ 118.39¥ 114.46¥ 141.65¥ 166.89¥ 153.30

1,114.8

1,183.2

1,375.9

1,605.8

1,790.3

1,767.3

66.0

72.0

69.0

91.0

118.0

101.0

15.4%

16.4%

14.7%

14.3%

17.3%

15.3%

ROE

9.9%

10.3%

8.9%

9.5%

9.8%

8.6%

ROA

Net cash provided byoperating activities¥ 19,617

Net cash used in investing activities
Free cash flows
Net cash used in financing activities
Capital expenditures

Total assets

Interest-bearing debt¥¥

Per share amounts
Earning per share (basic)
Net income attributable
to Makita Corporationcommon shareholders
Total Makita Corporation
shareholders’ equity per share
Cash dividends applicable to theyear per share

Other data
Ratio of operating income to net sales

8.3%

8.6%

7.5%

8.0%

8.3%

7.3%

Total Makita Corporation shareholders’equity ratio to total assets

82.5%

83.8%

84.7%

84.0%

84.5%

86.0%

Average number of shares outstanding

275,518,548

274,489,367

271,496,178

271,481,657

271,472,428

271,468,232

Number of shares issued excluding
treasury stock

275,515,398

271,501,036

271,491,854

271,475,252

271,469,736

271,466,522

12,054

12,563

12,68012,804

13,835

14,784

Employees

Notes: 1. Earning per share (basic) Net income attributable to Makita Corporation common shareholders and profit attributable to owners of the parent per share (basic) is computed
based on the average number of shares outstanding during the term.
2. Figures are rounded up/down to the nearest million yen.

23

Yen in millions

Yen in millions

2017

2018

IFRS

2018

2019

2020

¥ 414,999¥ 477,298

Revenue¥ 477,298¥ 490,578¥ 492,617

74,381

82,575

Domestic

82,575

92,129100,697

340,618

394,723

Overseas394,723

398,449

391,920

62,564

79,762

Operating profit

80,23178,30564,04664,73879,678

Profit before income taxes

79,86579,91966,00844,78254,755

Profit attributable to owners of the parent

54,94355,75047,73133,294

Net cash provided by operating activities¥ 34,191¥ 23,155¥ 57,310(5,015)(14,811)

Net cash used in investing activities(15,708)(15,329)(30,506)

58,33618,483

Free cash flows

18,483

7,826

26,804(9,495)(17,743)

Net cash used in financing activities(17,743)(8,231)(22,931)

14,149

Capital expenditures¥ 15,045¥ 23,867¥ 44,409

Depreciation and amortization

10,783

11,271

12,058R&D cost

10,924

11,258

11,601¥ 654,841¥ 680,250¥ 674,564¥ 63,351¥ 13,222

¥

¥

8,943

9,917

10,13910,894¥ 597,249¥ 651,031

374,297

415,979

Net working capital

398,355

402,335

575,748

502,170

551,939

Equity attributable to owners of the parent

554,046

572,748571,275

6,597

3,544

3,544

11,96019,737

Yen

Total assets

Interest-bearing debt

Per share amounts

201.70

Profit attributable toowners of the parent per share (basic)

1,849.9

2,033.2

Equity attributable to ownersof the parent per share

100.0

61.0

¥ 164.96¥

Cash dividends applicable to theyear per share

Yen¥ 202.39¥ 205.37¥ 175.80

2,040.9

2,109.8

2,104.0

61.0

62.0

53.0

Other data

15.1%

16.7%

Ratio of operating profit to revenue

16.8%

16.0%

13.0%

9.1%

10.4%

ROE

10.4%

9.9%

8.3%

7.8%

8.8%

ROA

8.8%

8.4%

7.0%

84.6%

84.2%

84.7%

Ratio of equity attributable toowners of the parent to total assets

84.1%

84.8%

271,463,676

271,465,951

Average number of shares outstanding

271,465,951

271,467,574

271,502,528

271,460,572

271,467,928

Number of shares issued excluding
treasury stock

271,467,928

271,467,057

271,516,990

15,344

16,137

16,137

16,42417,090

Employees

3. The Company implemented a two-for-one common stock split, effective April 1, 2017. Figures for Earning per share (basic) Net income attributable to Makita Corporation common shareholders,
total Makita Corporation shareholders’ equity per share, average number of shares outstanding, and number of shares issued excluding treasury stock are calculated based on the assumptionthat the relevant stock split was carried out for prior years as well. Regarding cash dividends applicable to the year per share, actual dividend amounts before the relevant stock split are stated.

24

MAKITA Annual Report 2020

Message from the Financial Officer

Pursuing investments for growth
while maintaining a robust
ﬁnancial footing
Director,Corporate Officer
General Manager of Administration Headquarters

Yukihiro Otsu

Basic Policy
Makita’s basic financial policy is to maintain a robust financial
structure able to withstand unexpected changes in the businessenvironment, including foreign currency risks and geopolitical risks.
Thoroughly pursuing this policy brings us considerable strength,
allowing us to carry out necessary investments appropriately timed,
while continuing measures for improving customer satisfaction, evenin times of adversity. We believe that, in order to consistently be astrong company, it is important not to rely on debt as much as
possible during times of normal business operations. One example
is the current concern over deteriorating economic conditions due
to effects of COVID-19. Despite the circumstances, Makita is able
to operate stably, thanks to our financial footing. As risk mitigation
measures, we are working to optimize asset allocation throughequity increases at subsidiaries, as well as loans and profit sharing.

Financial Condition
With regard to assets at the conclusion of the fiscal year ended March
31, 2020, adoption of the new IFRS 16 leases regulation resulted
in an increase in “property, plant and equipment, at cost.” However,
we faced asset losses at overseas sites due to a strong yen when
making currency conversions. Decreases in “other financial assets”
and “trade receivables and other receivables” brought a
5,686-million-yen year-on-year dip in total assets to 674,564 million
yen. With regard to liabilities, although adoption of the IFRS 16 leases
regulation led to an increase in “other financial liabilities,” a decreasein “trade payables and other payables” and “borrowings” brought a
4,212 million yen year-on-year dip in total liabilities to 98,816 million
yen. Total equity fell 1,474 million yen year-on-year to 575,748 million
yen. The main factor behind this was fluctuations in “exchange
differences on converting equity of foreign operations” included in
the “other components of equity.” Total equity attributable toowners of the parent showed a similar decrease; however, the ratio

25

of equity attributable to owners of the parent increased 0.5 points
year on year to 84.7%.

Investment Strategies
Makita is currently carrying out aggressive investments in order tofurther grow as a manufacturer of cordless products, including not
only power tools but also gardening equipment. Capital expendituresin the fiscal year ended March 31, 2020 came to 44,409 million yen, arecord high for the second year in a row. Where production isconcerned, we expanded and enhanced our Romania plant. On thesales front, we are implementing investments for logistics hubs insideand outside Japan—building new facilities and expanding andenhancing existing facilities—while also increasing and strengthening
personnel. Additionally, we are channeling effort toward PR activities,
including advertising campaigns and events in each country. Ourassessment is that we have successfully made progress in building aplatform for expanding sales of cordless gardening equipment.
In the fiscal year ending March 31, 2021, we will continue making
investments to further grow as a manufacturer of cordless products.
In addition to expanding and enhancing our China plants, we areplanning initiatives for logistics hubs (building new facilities andexpanding and enhancing existing facilities) in regions across theglobe, as we increasingly handle more large-size products.

Returns to Shareholders
Makita's basic policy on the distribution of profits is to maintain aconsolidated dividend payout ratio of 30% or greater, with a lower
limit on annual cash dividends of 10 yen per share. Following thispolicy, we paid a 53-yen annual dividend in the period. Going forward,
we will continue striving to meet shareholder expectations and improve
Makita’s corporate value.

MAKITA Annual Report 2020

Consolidated Financial Statements
Makita Corporation and subsidiaries as of March 31, 2019 and 2020

Consolidated Statement of Financial Position

Yen in millions

2019

ASSETS

2020

Current assets:
Cash and cash equivalents
Trade receivables and other receivables
Inventories
Other financial assets
Other current assets
Total current assets¥ 146,512
79,450219,938
37,8289,401
493,129¥ 143,439
69,599214,560
25,235
7,633
460,466¥ 112,441
8,039
43,566
9,541
9,342
4,192
187,121¥ 146,649
8,749
38,551
9,511
6,932
3,706
214,098¥ 680,250¥ 674,564

Non-current assets:
Property, plant and equipment, at cost
Goodwill and intangible assets
Other financial assets
Net defined retirement benefit assets
Deferred income taxes
Other non-current assets
Total non-current assets
Total assets

LIABILITIES AND EQUITY

2019

2020

Liabilities

Current liabilities:
Trade payables and other payables
Borrowings
Other financial liabilities
Income taxes payable
Provisions
Other current liabilities
Total current liabilities¥ 38,904
11,799
220
7,153
3,040
29,67890,794¥ 34,959
7,997
2,468
3,757
2,931
27,264
79,376¥¥

Non-current liabilities:
Retirement benefit liabilities
Other financial liabilities
Provisions
Deferred income taxes
Other non-current liabilities
Total non-current liabilities

3,231
256
1,293
7,236
218
12,234

3,138
9,894
1,248
4,952
208
19,440¥ 103,028¥ 98,816

Total equity attributable to owners of the parent
Non-controlling interest¥ 23,805
45,571
508,622(11,681)
6,431
572,748
4,474¥ 23,805
45,531
540,063(11,554)(26,570)
571,275
4,473

Total equity¥ 577,222¥ 575,748

Total liabilities and equity¥ 680,250¥ 674,564

Total liabilities
EquityCommon stock
Additional paid-in capital
Retained earnings
Treasury stock, at cost
Other components of equity

26

MAKITA Annual Report 2020

Consolidated Financial Statements
Makita Corporation and subsidiaries for the years ended March 31, 2019 and 2020

Consolidated Statements of Proﬁt or Loss

Yen in millions

2020

2019
Revenue¥ 490,578¥ 492,617

Cost of sales(313,356)
177,222(98,917)78,3052,680(1,066)
79,919(23,728)
56,191(323,776)
168,841(104,795)
64,0462,558(596)
66,008(17,957)
48,051¥ 55,750
441¥ 47,731
320

Gross profit
Selling, general, administrative and others, net
Operating profit
Financial income
Financial expenses
Profit before income taxes
Income tax expenses
ProfitProfit attributable to:
Owners of the parent
Non-controlling interests
Profit attributable to owners of the parent per share
Profit attributable to owners of the parent per share (basic)
Profit attributable to owners of the parent per share (diluted)

Yen¥ 205.37
205.34¥ 175.80
ーConsolidated Statements of Comprehensive Income

Yen in millions

2020

2019

¥ 56,191

Profit¥ 48,051

Other comprehensive income (loss), net of tax
Items that will not be reclassiﬁed to proﬁt (loss)

(87)

201

(7,889)(2,509)(7,976)(2,308)(12,623)(30,328)

Total of items that may be reclassified to profit (loss)(12,623)(30,328)

Total other comprehensive income (loss), net of tax(20,599)(32,636)¥ 35,592¥ 15,415¥ 35,286¥ 15,271

306

144

Remeasurement of defined benefit plans
Equity financial goods measured at fair value through other comprehensive loss
Total of items that will not be reclassified to proﬁt (loss)
Items that may be reclassiﬁed to proﬁt or loss
Exchange differences on translating foreign operations

Comprehensive income
Comprehensive income attributable to:
Owners of the parent
Non-controlling interests

27

Consolidated Statement of Changes in Equity

Yen in millions

Equity attributable to owners of the parent

Balance at April 1, 2018

Additional
paid-in capital

Retainedearnings

Treasury stock

Other componentsof equity

Total¥ 23,805¥ 45,531¥ 469,232¥ (11,617)¥ 27,095¥ 554,046

ーー

Dividends paid

55,750ー

Disposal of treasury stock0

Share-based
payment transaction

56,191(20,464)(20,464)(135)(20,599)(20,464)

35,286306

35,592(16,560)(225)(16,785)

(4)

(4)

(4)

0

0

0

40

40

ー

ー

(60)

(60)

40

Transfer from othercomponents of equity
to retained earnings

200

Other increaseor decrease¥ 4,393 ¥ 558,439
441(16,560)

Purchase of treasury stock

Total equity

55,75055,750

Profit for the period
Other comprehensive
incomeComprehensive income

Non-Controllinginterest

Common stock

(200)
(60)

Total amounts oftransactions with owners

ー40(16,360)(64)

Balance at March 31, 2019

¥ 23,805¥ 45,571¥ 508,622¥ (11,681)

(200)
¥

(16,584)

6,431 ¥ 572,748(225)(16,809)¥ 4,474 ¥ 577,222

Yen in millions
Equity attributable to owners of the parent

Balance at April 1, 2019

Common stock

Additional
paid-in capital

Retainedearnings

Treasury stock¥ 23,805¥ 45,571¥ 508,622¥ (11,681)

¥

ー

ー

Dividends paid

47,731ーTotal equity¥ 4,474 ¥ 577,222

47,731

320

48,051(32,460)(32,460)(176)(32,636)(32,460)

15,271

144

15,415(16,831)(145)(16,976)(16,831)

Purchase of treasury stock

Non-Controllinginterest

Total

6,431 ¥ 572,748

47,731

Profit for the period
Other comprehensive
incomeComprehensive income

Other componentsof equity

(2)

(2)

(2)

Disposal of treasury stock

(13)

61

48

48

Share-based
payment transaction

(27)

68

41

41

(541)

ー

ー

Transfer from othercomponents of equity
to retained earnings

541

Total amounts oftransactions with owners

ー

(40)

(16,290)

127

(541)

(16,744)

Balance at March 31, 2020

¥ 23,805¥ 45,531¥ 540,063¥ (11,554)¥ (26,570)¥ 571,275(145)(16,889)¥ 4,473 ¥ 575,748

28

MAKITA Annual Report 2020

Consolidated Financial Statements
Makita Corporation and subsidiaries for the years ended March 31, 2019 and 2020

Consolidated Statements of Cash Flows

Yen in millions

2019

2020

¥ 56,191
11,271
23,728(1,614)113(2,085)(30,455)
2,581
395(8,990)(4,487)¥ 48,051
14,34917,957(1,962)(808)
4,396(9,148)(1,499)
586
741
3,538

Subtotal

46,64876,201Dividends received

643
2,004
(47)
(26,093)
23,155

712
1,488
(431)
(20,660)
57,310(23,867)382(12,745)
5,634(31,902)47,758(589)(15,329)(44,409)
2,574(4,000)7,641(33,534)
40,960262(30,506)

8,704(4)(16,560)(36)(335)(8,231)(3,461)
46(16,831)(2,537)(148)(22,931)

Effect of exchange rate changes on cash and cash equivalents(403)(6,946)

Net change in cash and cash equivalents(808)(3,073)

147,320

146,512¥ 146,512¥ 143,439

Cash ﬂows from operating activities:
Proﬁt
Depreciation and amortization
Income tax expenses
Financial expenses (income)Loss (gain) on sales and retirement of property, plant and equipment
Decrease (increase) in trade receivables and other receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables and other payables
Increase in retirement beneﬁt assets and liabilities
Decrease (increase) in guarantee deposits
Other

Interest received
Interest paid
Income taxes paid
Cash ﬂows from operating activities
Cash ﬂows from investing activities:
Purchase of non-current assets
Proceeds from sales of non-current assets
Purchase of investments
Proceeds from sales and redemption of investments
Payments into time deposits
Proceeds from withdrawal of time deposits
Other
Cash ﬂows from investing activities
Cash ﬂows from ﬁnancing activities:
Net increase (decrease) in short-term borrowings
Purchase and sales of treasury stock, net
Cash dividends paid
Repayment of lease liabilities
Other
Cash ﬂows from ﬁnancing activities

Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year

29

MAKITA Annual Report 2020

Corporate Overview (As of March 31, 2020)

Corporate Data
Corporate Name

Makita Corporation

Head Ofﬁce

3-11-8, Sumiyoshi-cho, Anjo, Aichi 446-8502, Japan

Paid-in Capital

24,205,610 thousand yen

Director

Total number of sharesauthorized

992,000,000 shares

Total number of shares
outstanding

280,017,520 shares(Including treasury stock 8,500,530 shares)

The number ofshareholders

10,836 shareholders

Breakdown by type of shareholder

Chairman*

Masahiko Goto

President*

Munetoshi Goto

Director, Managing
Corporate Ofﬁcer

Tadayoshi Torii

Director,
Corporate Ofﬁcer

Stock Information

Number of shares (1,000 shares) 280,018
Foreign institutions
and individuals
106,350 (38.0%)

Financial institutions
104,038 (37.2%)

General Manager of Production Headquarters

Other domestic companies
30,939 (11.0%)

Individuals and others
30,190 (10.8%)

Treasury stock
8,501 (3.0%)

Hisayoshi Niwa
General Manager of Quality Headquarters

Shinichiro Tomita

The number of shareholders 10,836

General Manager of Purchasing Headquarters

Individuals and others 9,828 (90.7%)

Tetsuhisa Kaneko
General Manager of Research andDevelopment Headquarters

Tomoyuki Ota
Assistant General Manager of Research andDevelopment Headquarters

Foreign institutions and individuals 630 (5.8%)
Other domestic companies 280 (2.6%)
Financial institutions 97 (0.9%)

Treasury stock 1 (0.0%)

Takashi Tsuchiya
General Manager of Domestic Sales
Headquarters

Major shareholders

Masaki Yoshida

Number ofshares held
(1,000 shares)

Ratio ofshareholding(%)

Assistant General Manager of Production
Headquarters

Name

Takashi Omote

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

21,623

7.96

Japan Trustee Services Bank, Ltd.
(Trust account)

11,362

4.18

Maruwa, Ltd.

8,638

3.18

MUFG Bank, Ltd.

8,426

3.10

Japan Trustee Services Bank, Ltd.
(Trust account 9)

7,217

2.65

The Bank of New York Mellon
as Depositary Bank for DR Holders

6,549

2.41

Makita Cooperation Companies’
Investment Association

6,442

2.37

Sumitomo Mitsui Banking Corporation

5,800

2.13

Certiﬁed Public Accountant

JPMorgan Chase Bank 385151

5,626

2.07

Shoji Inoue

State Street Bank and Trust
Company 505001

5,440

2.00

General Manager of International Sales
Headquarters

Yukihiro Otsu
General Manager of Administration Headquarters

Outside Director

Akiyoshi Morita
Masahiro Sugino
Advisor of LIXIL Corporation*Denotes representative directors

Audit & Supervisory Board Members
Standing Audit &Supervisory
Board Member

Audit & Supervisory
Board Member

Mitsuhiko Wakayama
Akira Kodama
Fusahiro Yamamoto

Attorney at Law
Note: Messrs. Akira Kodama, Fusahiro Yamamoto and Shoji Inoue are Outside Audit &Supervisory Board Members.

Note: The shareholding ratio is calculated based on the total number of shares issued asof the end of the ﬁscal period (excluding 8,500,530 shares of treasury stock).

30

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