Integrated
Report2023
April 1, 2022–March 31, 2023

Nippon Thompson’s Value Creation
Contents

Management Philosophy

A Company Centered on Technology Development
That Contributes to Society
At Nippon Thompson, we have earned the trust of our customers
by focusing on their needs and through the manufacture and sale of

Nippon Thompson’s
Value Creation

Management Philosophy········································ 01
At a Glance ····························································· 03
Products That Contribute to Society············ 05
Value Creation Trajectory·········································07

Value Creation
Strategies

Message from the CEO··········································· 09

Editorial Policy

Value Creation Process·············································13

Nippon Thompson has published our Integrated
Report to inform all stakeholders of our initiatives
to create sustainable social value and improve ourGroup value over the medium to long term. It is ourhope that this report will help you gain a deeper
understanding of our group from both the financial
and nonfinancial perspectives.

important mechanical components, such as bearings and bearing-related

Source of Value Creation········································· 15

equipment. In order to further grow as a global company and have a strong

DX Strategy····························································· 17Intellectual Property (IP) Initiatives ························ 18

presence, we aim to become a company centered on technology development

History of Growth Strategies··································· 19that focuses all of our expertise and passion into solving

Medium-Term Business Plan 2023························· 21

the problems of our customers.

Financial Strategy···················································· 23

Progress in Business
StrategyContribution to society

Business Strategy···················································· 26
Business Strategy (Sales Department)··················· 27
Business Strategy(Technology Development Department)················ 29
Business Strategy (Production Department))········ 31

Problem solving for our customers

Business Overview·················································· 33

Highly efficient management, high-value-added productsManagement for
Sustainable GrowthManagement for
Sustainable Growth
The Environment

now-how

nnovation
Innovative thoughts
and actions

Accumulation and utilization oftechnology and information

Nippon Thompson's

riginality
Product developmentwith ingenious creativity

Management for
Sustainable GrowthSocial Issues—innovation, knowhow and originality—
Management for
Sustainable Growth
Governance

IKO VISION 2030
Collaborating with customers primarily and co-creating value as a technology
development-based company – co-creating a sustainable future –1

Nippon Thompson Co., Ltd. Integrated Report 2023

Material Issues························································ 37

Nippon Thompson Co., Ltd. and consolidated
subsidiaries* In this report, “the Company” refers to Nippon
Thompson on a nonconsolidated basis and “theGroup” refers to the entire consolidated Nippon
Thompson Group.

Contributing to a Recycling-Oriented Society········ 41

Reference Guidelines

Responding to Carbon Neutrality(TCFD Recommendations)······································ 43• International Integrated Reporting Framework by
the International Financial Reporting Standards
Foundation (IFRS)• Guidance for Integrated Corporate Disclosure
and Company-Investor Dialogue for Collaborative Value Creation by the Ministry of Economy,
Trade and Industry (METI)• Environmental Reporting Guidelines 2018 by the
Ministry of the Environment• GRI Sustainability Reporting Standards by the
Global Reporting Initiative

Pursuing Product Quality and Safety······················ 48
Human Capital························································ 49
Supply Chain Management····································· 53

Corporate Governance············································ 55
Message from an Outside Director························· 59
Officers and Skills Matrix········································· 61
Risk Management··················································· 63Compliance····························································· 64

Data

Scope of Reporting

Environmental Initiatives········································· 39

Co-existence with Local Communities
and Social Contribution··········································· 54

brand name is an acronym of the company's core beliefs

with products that are artfully creative and based on advanced technology.

Sustainable Management Promotion····················· 35

Reporting Period
April 1, 2022–March 31, 2023
* In this report, FY means the fiscal year ending/ended March 31.
* The report includes some activities from before aswell as after the reporting period.

Key Financial and Nonfinancial Datafor the Past 11 Years················································ 65
Company Profile and Stock Information··················67

Cautionary Statement Regarding
Forward-Looking Statements
Forward-looking statements in this report, such as
performance forecasts, are based on the Company’s
assessment following information available at thistime, and involve potential risks, uncertainties,
and other factors. Therefore, please note thatchanges in these factors could cause actual results
to differ substantially from those discussed in theforward-looking statements.

Nippon Thompson Co., Ltd. Integrated Report 2023

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NipponThompsonʼs
Value Creation

Nippon Thompson's Value Creation

Value Creation
Strategies

Progressin Business
StrategyManagement
for Sustainable
GrowthManagement for
Sustainable GrowthManagement for
Sustainable GrowthManagement for
Sustainable Growth

The Environment

Social Issues

Governance

Data

At a Glance
Establishment

Operatingprofit1950

9.4

Net Salesbillion yen

68.2

billion yen(Consolidated, fiscal year
ended March 31, 2023)

Nippon Thompson’s Strengths

Equity Ratio
ROE

11.0%

62.6%

Number of
Employees

2,613

Our Group’s products support the convenience andCustomized products
share of total net sales:

comfort of people all over the world, as well as theequipment that in turn makes other precision products.
Trust in high-quality, high-precision products: that is why

Approx.

our customers choose us.
To meet diversifying needs, we offer not only standard(catalog listed) products, but also custom items.
Customized products aligned to customers’ requests
and specifications account for about half of our net sales.

50%

Customized
products

Standard
products

We have created a high-value-added business model

Main Products

by integrating the Sales, Engineering, Production, andManagement Departments so that we can respond quickly

Nippon Thompson Co., Ltd. was the first company in Japan

Needle Roller Bearings

to develop needle roller bearings using in-house technology.
for our progress in the field of linear motion (linear motion
rolling guide series and mechatronics series). We respond

Needle roller bearings are bearings for rotary motion

to diverse needs with a rich product range that utilizes ourthat use needle-shaped thin rollers as rolling elements.

creativity, supporting the advancement of technology.

Compared to ball bearings, they have low sectionalheight and large load capacity.

Machinecomponents
10%

Others

12%

China

18%

Europe10%
Americas
13%

Bearings, etc.

90%

(shapes and sizes).

A rich lineup of world-class productsThis advanced technical knowhow has been the foundation● Net sales
composition
ratio(by product)

and flexibly, even for requests with special form factors

Developing Our Global Supply System
As well as the Gifu factory complex, our main plant,

technological guidance. By combining cutting-edge

the Group’s products are manufactured in Vietnam

machinery with expertise built up in Japan, our overseas

and China. We send engineers from Japan to our

locations can make products of the same quality as thoseoverseas production sites where they provide detailed

made in Japan.

Japan

47%

* Bearings, etc.: Needle roller bearings, linear motion rolling guides,
Mechatronics seriesM achine components: Accessory parts such as system products
incorporating our own products

Gifu factory complex (Japan)

Linear Motion Rolling Guides

Mechatronics Series

The world’s smallest

High precision and compactness

These machine components, derived from rotaryThis precision positioning table combines linear motion

bearings, reduce the friction of linear motion. Theirrolling guides, ball screws, and motors. By using theseapplications range from the everyday usage, in train

products as equipment rather than individual parts,

station platform doors, to cutting-edge semiconductor

we help customers reduce the design and labor hours

manufacturing equipment.

for assembly, while achieving more precision for theirmachinery.

IKO Thompson Vietnam Co., Ltd. (Vietnam)

Global business fields
Through our global sales network, we export
products to 70 countries, supporting virtually every
industry in the world.

● Net sales

Machinecomposition ratio
components(by%region)
10

Others12%

China

Due to our
proprietary small
sizing technology, weachieved the world’s
smallest size: a 1-mm
track rail width!

3

Nippon Thompson Co., Ltd. Integrated Report 2023

The high-precision
XY stage has apositioning accuracyof ±0.5 μm!

brandOverseas share of
total net sales:
More thanBearings,
etc.

50

90% %

18%

Europe10%
Americas
13%

Japan

47%

UBC (Suzhou) Bearing Co., Ltd. (China)

Number of global offices

13 countries
52 business locations(including

28 are overseas

business sites)

4 production sites
48 sales sites
Nippon Thompson Co., Ltd. Integrated Report 2023

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NipponThompsonʼs
Value Creation

Nippon Thompson's Value Creation

Value Creation
Strategies

Progressin Business
StrategyManagement
for Sustainable
GrowthManagement for
Sustainable GrowthManagement for
Sustainable GrowthManagement for
Sustainable Growth

The Environment

Social Issues

Governance

Data

Products That Contribute to Society
Machine Tools

Providing High-Quality Products to a Diverse Range of Industries
The Group provides machine components that aretechnological capabilities, the core of our value creation isindispensable to all industries for customers around thethat we quickly provide high-quality products that meetworld, from equipment for electronics to machine tools

the challenges and requirements of our customers.

Contributes to ultra-high precision and ultra-high rigidity!
Machine tools that require high precision, a high load capacity, and highMachining centersrigidity.
The linear roller way super X is a linear motion rolling guide used inand transportation equipment. Backed by advanced

many machine tools. The rolling element uses a roller that we were the

C-Lube linear roller way
Super X

Application Fields

first in the world to develop.
We continually improve our machine tools, pursuing ever-higher
precision.

Electronics-related Devices and Equipment

Helping to improve machine reliability!
As semiconductors become increasingly miniaturized and more precision
is required, contamination even by nanoscale particles can cause

Crossed roller bearings

Semiconductor manufacturing
equipment (exposure equipment)

irreparable damage. For this reason, semiconductors are manufactured in
special environments, such as high temperature or vacuum environments
and cleanrooms.

Linear roller way Super X ZERO

C-Lube linear way L

The liquid crystal lubricant series is the first product in the world
to contain high-performance liquid crystal lubricants to handle theTransportation Equipment

requirements of customers operating in these special environments. Thislubricant helps to dramatically boost the performance and reliability ofmechanical equipment.

Semiconductor inspection equipment(handlers)Electric vehicle (EV)production lines

Helps reduce the labor hours required
for maintenance and protects the global environment!
The C-Lube linear way is used in various fields such as production

Linear motor tables

lines for electric vehicles (EVs), which have come to the forefront
as the next-generation of vehicles, and train station platform doors

Nano linearthat protect the safety of passengers.
Platform doors

C-Lube linear way H

lubricating oil over a long period.

Liquid crystal lubricant series

While enabling customers’ machinery and equipment to operate
maintenance-free for a long time,

General Industrial Machinery

Helps make machines more compact and lighter!
Crossed roller bearings are widely used in applications that
require a compact form with high rigidity and rotational accuracy,such as wind turbines, industrial robots, and rotating parts in

IKO’s proprietary lubrication component C-Lube has anoil-minimizing construction, providing an optimal amount of

C-Lube also contributes to protecting

Cam followers

Motorcycles

Wind turbines

the global environment.

Humanoid
robotsmedical equipment.

Needle roller cages

Spherical bushings

L-Balls

Super slim-type crossed roller bearings combine outstanding
performance with extreme thinness and small size, helping toCrossed roller bearings

Creating Eco-Products That Help Achieve Carbon Neutrality!

make machines that are more compact and lighter.
Surgical support robots

C-Lube linear ball spline G

The Group has taken a global environment-friendly

weight reduction, and curbing industrial waste byapproach with minimal oil as the key concept. Our

enabling a long life. In this way, they help reduce

proprietary products, including C-Lube, liquid crystal

greenhouse gas (GHG) emissions throughout the

lubricant, and LRX ZERO, have many key attributes,

product lifecycle, providing environmental value that

including reducing environmentally hazardous

contributes to achieving carbon neutrality.

substances, improving energy efficiency throughSuper slim-type crossed roller bearings

5

Nippon Thompson Co., Ltd. Integrated Report 2023

Nippon Thompson Co., Ltd. Integrated Report 2023

6

NipponThompsonʼs
Value Creation

Nippon Thompson's Value Creation

Value Creation
Strategies

Progressin Business
StrategyManagement
for Sustainable
GrowthManagement for
Sustainable GrowthManagement for
Sustainable GrowthManagement for
Sustainable Growth

The Environment

Social Issues

Governance

Data

Value Creation Trajectory
From 1950 Founding and Early Days

From 1970 Growth and Expansion

From 1990 Maturity and Transition

From 2010 Change and Dynamism

Creating value by diversifying needle roller
bearings products

Responding to increasingly complex productrequirements by developing linear motion
rolling guides and the mechatronics series

Beginning full-scale global expansion anddemonstrating value through a stronger
management baseCreating new value through high precision andresponding to customers’ requirements

We started global business expansion by establishing overseas
sales subsidiaries, and strived for business growth by launching
the production and sales of linear motion rolling guides
to increase the scope for using rotary bearings in flat slide
sections.

We made every effort to contribute to the global environment
by acquiring ISO 14001 certification, developing products that
contribute to reducing the negative impact on the environment.
In addition, we established our first overseas production
subsidiary, in Vietnam, to build a global production system.

The Company, established as Daiichi-Kogyo Co., Ltd., selling
bearings and other products, became the first company in Japanto successfully develop needle roller bearings in-house. The
Company name was changed to Nippon Thompson Co., Ltd., and, the corporate brand, was registered as a trademark, laying
the foundation for today’s business activities.

1950 Daiichi-Kogyo Co., Ltd., the predecessor of Nippon
Thompson Co., Ltd., was established.

1971 Established IKO International, Inc. in Illinois, USA.

1956 Began R&D for needle roller bearings.

1972 Established Technological Laboratory in Kamakura, Kanagawa.

1959 Established the Himeji Factory in Himeji, Hyogo, andbegan manufacturing needle roller bearings.

1975 Established Nippon Thompson Europe B.V. in
Rotterdam, the Netherlands.

1963 Changed the company name to Nippon Thompson
Co., Ltd. and registered and trademarked
asthe corporate brand.

1982 Entered into a capital alliance with Daruma
Sangyo Co., Ltd. in Gifu (currently a consolidated
subsidiary: Nippon DIC Co., Ltd. in Nagoya).

1964 Established the Kamakura Factory in Kamakura,
Kanagawa

1985 Established the Technical Center at the Gifu
factory complex.

1968 Stock listed on the First Section of the Tokyo Stock
Exchange and the Osaka Securities Exchange.

1991 Launched the new
as a symbol of theCompany’s management philosophy.
Innovation Know-how & Originality
1997 Acquired ISO 9002 certification for Gifu Factory
3 and Gifu Factory 5 at the Gifu factory complex(subsequently acquired by the First, Second, Sixth andKamakura Factory and acquired ISO 9001 certification).
2001 Acquired ISO 14001 certification for Gifu factorycomplex (also certified in Kamakura site in 2003).
2003 Created our own Green Procurement Standards.
2004 Acquired Gifu Environmentally Conscious Business
Facility Certificate in Gifu factory complex.

1989 Established Mugegawa MFG. Co., Ltd. in Seki, Gifu
(currently the Mugegawa Factory).

2006 Established IKO-Thompson (Shanghai) Ltd. (China).
Established IKO Thompson Vietnam Co., Ltd. in Vietnam.

1969 Established the Gifu factory complex in Mino, Gifu.

1959

1960

NeedlesBegan production of needle
roller bearings incorporating thinneedle-shaped rollers. Catalogs
at that time show items that are
still being manufactured and soldtoday.

Needles

Needle cages forengine connecting rods

1964

A motorcycle with needle cages
for engine connecting rods won
first place in the Isle of Man
Tourist Trophy (TT) motorcycle
race in Great Britain, attracting
much attention.

NeedlesDeveloped crossed roller bearings
that can simultaneously support
loads in all directions with a single
bearing.

1978

1996

LinearLaunched a high-precision linear
motor-driven table in a rigorous
pursuit of compactness.

Introduced linear motion rolling
guides, an evolution of rotary
bearings to linear motion.

Ball recirculating-type linear
motion rolling guide LW

Nano-Linear NT

1982

2002

Mechatronics

1983

LinearLaunched a maintenance-freeseries of linear motion rolling
guides.

2008

LinearIntroduced the world’s firstroller recirculating-type linear
motion rolling guide.

Medium-Term

2014 Established IKO Thompson Asia Co., Ltd. in Thailand.
2015 Established IKO Thompson Korea Co., Ltd. in South Korea.
Established IKO Brasil Serviços Empresariais Eireli In Brazil.
2016 Established IKO Thompson Bearings Canada, Inc. in
Canada.
2017 Acquired two companies engaged in the manufacturing
and sales of bearings in China; UBC (Shanghai)
Precision Bearing Mfg. Co., Ltd. and UBC (Suzhou
Bearing Co., Ltd.)
2021 Formulated the Basic Sustainability Policy.
2022 Transferred shares to the Tokyo Stock Exchange Prime Market.
2023 Formulated

2016

Linear

MX master grade

2019Group Human Rights Policy.
(Billions of yen)
70

Fiscal year ended March
31, 2023 (consolidated)

68.2billion yen

Launched thelinear roller way, which
achieves the ultimate inhigh precision(low fluctuation
specification).

Mechatronics

Launched ultra-compact
ball screw drive tables.

2020

60

50

LinearLaunched the world’s
first liquid crystal
lubrication linear way.

Liquid crystal
lubrication linear way

C-Lube linear way L

Mechatronics product CPT

2012 Launched the Company’s first
Business Plan.

MachineIndustrial
DesignAward

Introduced a modular productincorporating the linear series,
ball screws, and motors.

40

30

Linear20

Micro precision
positioning table TM

Linear roller way LRW

Crossed roller bearings

Mechatronics

We expanded our overseas operations with the aim of becoming
a company with a competitive edge and presence in the global
marketplace. In 2021 we formulated our Basic Sustainability
Policy, and we are working hard to achieve both sustainablegrowth for our Group and social sustainability.

Linear way L

Linear way L is used
for NASA Mars rover.

10

Overseas net sales
Domestic net sales

1950

1950

7

1960
1960

Nippon Thompson Co., Ltd. Integrated Report 2023

1970
1970

19801980

1990
1990

2000
2000

2010
2010

2020
2020

Trends in
2023
Net Sales

Nippon Thompson Co., Ltd. Integrated Report 2023

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NipponThompsonʼs
Value Creation

Value Creation Strategies

Message from the CEO
Providing ourcustomers withhigh-quality products
and delivering returns
to our stakeholders
through corporate
growthShigeki Miyachi
President and CEO

The essence of the value proposition by Nippon Thompson
Nippon Thompson is a company centered on

IKO is an acronym of our three core beliefs—

developing technology, with a history that dates backInnovation, Knowhow and Originality—or providing

73 years. To date, it is the quality of our products that

products that are artfully creative and based on

has supported the Group’s growth and shaped theadvanced technology. Immersing ourselves inessence of the value we provide to our customers.

manufacturing based on these three keywords has led

It is our responsibility to supply unique, high-quality

to the creation of the Group’s high-quality, high-value-

products that are exclusive to the Group and that ouradded products, which continue to receive highcustomers can use them without any worries. Fulfilling

acclaim in industrial circles. The idea that the value

this responsibility is the reason we exist.

of the IKO brand must exceed our customers’ expec-

We provide products under the IKO brand name.

9

Nippon Thompson Co., Ltd. Integrated Report 2023

tations is firmly rooted not only among management

Value Creation
Strategies

Progressin Business
StrategyManagement
for Sustainable
Growthbut also among all Group employees. It is here thatManagement for
Sustainable GrowthManagement for
Sustainable GrowthManagement for
Sustainable Growth

The Environment

Social Issues

GovernanceData

our products.

the strength of the Group can be found. This belief isMoving ahead, we are finding new ways toingrained at all of our production and sales sites, bothcommunicate the value of the IKO brand more

in Japan and overseas. In 2017, the Group establishedwidely. Having more customers use our products andthe Brand Image Improvement Committee, and since

experience their value firsthand will encourage theirthat time, the Committee has continued to find ways

use in customers’ products. This in turn can help ourto improve, across the entire Group, the value of thecustomers to generate technological innovations

brand. One conclusion the Committee has drawn isand improve their value. Ultimately, we aim to helpthat the value of the IKO brand lies in the quality of

improve value throughout the entire industry.

Human capital and organization are the sources of our growth
Improving the value of our employees

opportunities so we can learn from the expertise of

The Group’s human capital is an essential

women, people from other companies, and thosemanagement resource that generates high quality

from overseas. Diversity is also a key theme for theand drives growth. Moreover, to build the foundation

Board of Directors. While last year we appointed afor the future, it is necessary for us to utilize ourfemale outside director to the Board of Directors,

employees’ unique ideas and ability to take action.

we have not yet to appoint an officer from overseas.

As President, I will make every effort to invest theIn this area, I hope to meet the global standards as

management resources and take all necessary actions

quickly as possible.

to improve on the strengths of our employees, and I

In recent years, the expression human capitalwill provide comprehensive support for their growth.

has come to be used more frequently. Rather thanI believe that the growth of employees drives theconsidering investments in human resources as

growth of the Group. For this reason, and to boost

expenses, it is becoming increasingly important toour rate of growth, I intend to invest management

view them as asset investments that enhance theresources in creating an environment that makes

corporate value. Although we too must continue

possible the more rapid growth of every employee.

to invest in people to drive growth, we first need toOver these past few years, we have reinforced

boost our ability to generate earnings in order to

employee motivation and growth, including by

secure enough capital to do this. I believe that thisintroducing new personnel systems. The next

approach will result in a distinctive human capitalchallenge, however, will be to create an organizational

management system.

culture that supports individual growth. To do this,
we must first work to rebuild awareness among
management. I am certain that we already have many

Reinforcing our organization
A strong organization is key to bringing together the

managers who take good care of their employees.

strengths of individual employees and turning them

However, moving forward, it is important that they

into a powerful force.

now think about every employee more than everMoving forward, for the Group to achieve more

before, discuss what is required for them to grow evengrowth, the essential tasks are reinforcing andmore, and look for solutions together. For managers

optimizing our production capacity. In April 2023,

themselves, we must also create a culture andwe implemented a major organizational change insystems that enable employees to make proposals or

our Production Department. Under the leadershipsuggestions to their managers to grow, in addition toof Nobuya Hideshima, the Senior Managing Director

top-down management.

in charge of the Production Department, senior

Moreover, considering human capital, I am strongly

frontline employees repeatedly discussed ideas foraware of the importance of diversity. Organizational

a new production organization and finalized the

management through employees who only haveconcept for an organization that could bring about

experience of their own organization and culturechanges on the production front lines. Mr. Hideshima

is not helpful for fostering new ideas or for speedy

previously served as an outside director of thegrowth. To make changes, we must increase

Company for three years, before being appointed

Nippon Thompson Co., Ltd. Integrated Report 2023

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NipponThompsonʼs
Value Creation

Value Creation Strategies

Progressin Business
StrategyManagement
for Sustainable
GrowthManagement for
Sustainable GrowthManagement for
Sustainable GrowthManagement for
Sustainable Growth

The Environment

Social Issues

Governanceas Senior Managing Director in June 2022. The newteamwork. In the current Medium-Term Business Plan,

our customers and the solid relationship of trust weorganization, because it was based on many frontline

we are working to reinforce a strong management

have built with them. For example, without such solid

still many issues that we

ideas, is full of highly motivated employees. I am

foundation through the One Team IKO concept, where

trust, our customers would be unwilling to listen to

must tackle to achieve ourincredibly grateful to Mr. Hideshima for the excellent

we aim to maximize our organizational strengths—

the one-on-one presentations we are hosting as partlong-term vision, IKO

job he has done.

from the customer’s perspective—that transcendsof the Medium-Term Business Plan. In addition, we

VISION 2030. In addition

departments and organizational boundaries.

At the same time, the reinforcement of an entire

Data

On the other hand, there areare also focusing on industry-specific presentations,

to continuing to strengthen

We are also moving ahead with initiatives toand because we have a thorough understanding of

profitability and improve efficiency,

teamwork. For a manufacturing company like ours,

support horizontal teamwork. One example is thethe issues facing customers in particular industries,

we will also reinforce some of ourit is not only essential that all of our production,

Medium-Term Business Plan Top Management

we are able to offer proposals that resonate with ourfinancial strategies, including growthtechnology, sales, and management departments are

Review meeting, where departments share theircustomers.

investments and shareholder returns.

effective, but that there is also horizontal teamwork.

respective frontline issues and explore solutions. By

Without this, we will not be able to fully respond to ourlooking at the issues that other departments face andcustomers’ requirements. There is a thorough internal

then working together to find solutions, the meetings

understanding of the need for this type of widespreadare helping us to learn innovations and apply them inteamwork. Over the past decade or so, we have been

their own departments. As a result, these meetings

We will continue to focus on strengthening

on sustainability-related issues and regularly reports

able to create a culture that places the highest value

are leading to stronger horizontal or widespread

our management structure and attaining moreto the Board. We are also addressing materiality (keyon cross-departmental and cross- organizational

teamwork.

sustainable management to ensure that we canissues) that has been identified as consistent with thesustain strong growth into the future.

Basic Sustainability Policy, and have organized theseorganization requires wide-scale or horizontal

The importance of achieving the current Medium-Term Business Plan and ourlong-term vision beyond this plan
While working to reinforce our human resources

recognize the business domains where we can show

systems and organization, at the IKO Group we are

our strengths, as well as our robust products. This

also taking actions for new growth. Our current

policy signifies our enduring ambition for thoroughGroup-wide initiatives focus on attaining the goals

investigation and research, intensive investment, andof Medium-Term Business Plan 2023: deepening,

the behavioral change that is required to further refine

expanding, and embracing change. This plan was

our strengths.

formulated by backcasting from IKO VISION 2030,

Turning to progress, at the end of the second year

which outlines the Group’s vision for 2030, and ourof this management plan, we have already achieved

basic policy for the plan is improving and co-creating

roughly 70% of our targets. As a result of our work tovalue by deepening, expanding, and embracing

shift to a stronger business structure that is capablechange. The decisive difference between our previousof responding to highly volatile market conditions,plans and the current one is the close involvementin the fiscal year ended March 31, 2023 (the fiscal

in its formulation by the general managers, section

year under review) we had 9.4 billion yen in operating

managers, and mid-level employees who will be

profit and an ROE of 11.0%. In the fiscal year underresponsible for the next generation. Deepening,

review, despite a tough earnings environment

expanding, and embracing change are the actions

compounded by soaring raw material prices andthat will be taken by these senior employees andother factors, we were able to maintain prices withcandidates for these positions in their day-to-day

the cooperation of our customers. We believe this isoperations. Under this plan, we must clearly

due to the strong reputation of the IKO brand among● For further growth toward the realization of IKO VISION 2030
Perspectives we have been strengthening

Perspectives we will further strengthen in the future

Increased efficiency
Enhanced nonfinancial initiatives
and information disclosure

Nippon Thompson Co., Ltd. Integrated Report 2023

Initiatives for sustainable management

Sound corporate governance will be the key tothese initiatives. The Board of Directors, which I

Cash allocation

At the IKO Group, we recognize that our businesses
are built on the support of our wide range ofof whom are outside directors. These three outside

stakeholders. We therefore looked carefully at thedirectors are providing valuable advice based on theirkind of company we want to be for five groups ofdeep insight in their respective areas of expertise.

stakeholders: customers, shareholders, suppliers,

Moreover, in 2022, we welcomed Atsuko Noda onto

employees, and competitors. We then used thethe Board as our first female outside director, and she

desired outcomes as key criteria when formulating ourhas been offering substantial advice and guidance,

Medium-Term Business Plan. Note that we consider

including opinions from her perspective as a femalecompetitors as one of our stakeholders, while wanting

director.

to have the No. 1 competitive advantage in niche

For advancing the initiative for sustainable

markets. Moving forward, we will create strategies

management, based on our Basic Sustainability

to make us even stronger, succeeding even more in

Policy, the Sustainability Committee, which is linked

robust business areas and with outstanding products.

directly to the Board of Directors, holds discussions

Achieving growth from valuing human connections
When looking at our reputation in the capital markets,

importance of human connections.

it is clear that our explanations to investors are not

Throughout our history, I believe we have built agetting the results that we expected. Looking ahead,culture in which employees act with honesty, integrity,

we believe it will be important to ensure that investors

and giving their all for both customers and to theirthoroughly understand the Group’s growth story andwork. The Group’s strengths are our employees andour cash allocations, including our proactive return oforganization, as well as the high quality of products,

profits to shareholders.

that are the result of this genuine corporate culture.
Moving forward, we will strive to achieve

Investing for sustainablegrowthconnections. This is the case for both my role as asustainable growth by maintaining the support of ourcorporate manager and my life outside of work. I

customers through high-quality and high-precision

Strengthening shareholder
returns

strive to be considerate, then think and act in a way

products. I would like to ask all of our stakeholders forthat can benefit others. The One Team IKO concept

their continuing understanding and support.

●

Financialstrategy

into six themes with 16 issues.

mentioned briefly above, has nine directors, three

I always place the most importance on human

Enhanced profitability and added value

11

Value Creation
Strategies●

in our Medium-Term Business Plan embodies the

Nippon Thompson Co., Ltd. Integrated Report 2023

12

NipponThompsonʼs
Value Creation

Value Creation Strategies

Value Creation
Strategies

Progressin Business
StrategyManagement
for Sustainable
GrowthManagement for
Sustainable GrowthManagement for
Sustainable GrowthManagement for
Sustainable Growth

The Environment

Social Issues

Governance

Data

Value Creation Process
Based on the unique strengths we have cultivated over the years, Nippon Thompson will contribute to the development of society throughout the entire value chain.

Management Philosophy: A Company Centered on Technology Development That Contributes to Society
InputsBusiness Model

Financial Capital

We use an integrated system for production, sales,
and technology as we partner with our customers todeliver new value.

Manufacturing Capital

Natural Capital• Energy (fuel and electricity) and water use• Mineral resources

R&D and prototyping strengths
for meeting a wide range of needs

MarketingGeneratingideas based on
customerneeds andmarket trends

Maintenance
Service13

Nippon Thompson Co., Ltd. Integrated Report 2023

Va

lue C

h

ProblemSolving
for Our
Customers

O

Design &Prototyping

Coordinatedhigh-quality
products anda global supply
Purchasingsystemn e - Te a mAchieving the smallest sizein the world

Ability to Improve Value

Innovative thoughts
and actions

Industrial robots

Motorcycles

Aerospace

Medical equipment

High-precision andcompactness

Contributing to social development
through technological innovation
Mechatronics series

nnovation

Machine tools

Linear motion rolling guides

Production&
Logistics

Sales

Semiconductor
manufacturing equipment

Ability to
Deliver
Value

After-sales follow-up andimproved product value

Materiality (Material Issues)
Implement corporate activities
for realizing a prosperous global
environment

Ability to
Understand
Value

n

Social and Relational Capital•T rust and results cultivated by the IKO/UBC
brands•C ollaborative relationships with customers andbusiness partners•F avorable relationship of trust with local
communities

Needle roller bearings

Ability to
Realize Valueai

Human Capital•2
 ,613 global employees with diverse skills andexperience•1
 ,453 employees with national certifications,etc.
•1
 06 R&D personnel

World-class line-up

Research &Development

Planning•G lobal production and logistics centers that enableproduction in optimal locations(Gifu/Kamakura,
Vietnam, and China)• Capital expenditures: 2,504 million yen (FY2023)

Intellectual Capital•P atent rights: 191 domestic and 169 overseas•P rocessing technologies accumulated overmany years (heat treatment technology,
grinding technology, quality control)•R &D centers that promote innovation:
Technical Center/Product Development Center•P rocess design and management knowhowthat enables optimal production

Outcomes

P15 and 16

O(R&D investment in FY2023)

IK• Total equity: 71,541 million yen• Interest-bearing liabilities: 20,504 million yen• Growth investment: 1,526 million yen

Outputs

now-how
Accumulation andutilization of technology
and information

riginality
Product developmentwith ingenious creativity

Delivering value to our customers• Resolving technical issues• Improving the value of customers’ products• Reducing customers’ environmental impact

Helping to build a safer,more secure society
Realizing a society where everyone canhave a meaningful role
Helping to create a prosperous global
environment

P37 and 38

Contribute to technologicalinnovation by leveraging coretechnologies

Contribute to social developmentby providing products society
needs

Provide healthy, safe,
and secure environmentsfor people

Contribute to a society where
diverse people can thrive and be
rewarded for their work

Continuously improve
compliance and governanceNippon Thompson Co., Ltd. Integrated Report 2023

14

NipponThompsonʼs
Value Creation

Value Creation Strategies

Source of Value Creation

Value Creation
Strategies

The “four abilities” of the value chain that collaborate around problem solving for our customers

Realizing Value

We have strengths in practical R&D and productdesign, flexible prototype support, and process
design that we use to meet our customers’ uniqueand specific needs with optimal functionality andcost.

● Solving technical issues by integrating sales,
sales engineering, and development● Providing optimal products and services throughcustomization
Planning

By using detailed
feedback on productissues through after-sales
Maintenancefollow-up with customers,
Service
we improve the value of our
products and link this activity
to the further development of
new products and services.

Strengths/differentiating factors● Detailed support through awell-developed network of direct
sales offices and cooperation withspecialized trading companies● Prompt and sincere response
to customer requirements forproblem solving

nnovation
Innovative thoughts
and actions

O
IK

O

Nippon Thompson Co., Ltd. Integrated Report 2023

Production, Sales, and Engineering
Departments team up to develop amechanism that balances precision and cost

One Team working together to deliver
the best solution for customer issues
When a product defect occurred during development,● R&D, product design, and precision processing
technologies that create high-quality/
high-precision products that accurately meetcustomer requirements
Research &● Production technology that can
Development
flexibly provide value-added
solutions for niche needs for

improving value—to help resolve customers’ issues. The

all of our departments worked together as One Team.

customer in this case is a precision equipment manufacturer

As a result, we were able to complete a sophisticated,

whose products include cutting-edge medical equipment

low-cost positioning mechanism in about six months.

and semiconductor manufacturing equipment. They asked

One point worth noting is that a key factor in the project’s

us to develop a positioning mechanism for genetic testing

success was the involvement of our counterparts fromanalysis equipment that could control moving and stopping

the customer side, who joined with our team and spent a

special products and small-lot

at the stage where samples are first located. Along with

lot of time at our factory.

the need for accuracy to the micron level, there were also

Design &Prototyping

Delivering
Ability to
DeliverValuen e -Te a m

production

Production&
Logistics

Organizational Culture
and Code of ConductSupporting
Value Functions
now-how
Accumulation andutilization of technology
and information

Value

We work with ourpartners to produce
Purchasing
high-quality, highly
reliable products and tobuild a global supply systemthat flexibly responds tofluctuating demand.

Strengths/differentiating factors● Quality control system throughout
our supply chain● Needles: Flexible production
system and extensive inventory
lineup● Linear/Mechatronics:
Customization based on needs andquick delivery

Product developmentwith ingenious creativity

With the success of this project, we proved once again

constraints on cost. This was expected to be difficult.

that to demonstrate value to the customer we used ourTo drive the project, we set up a professional teamvalue creation process, including our comprehensive

made up of a factory manager, a sales manager, as wellstrengths, and to bring together the management

as design and measurement staff from the Mechatronics

resources of our production, sales, and engineering

Development Department. Through frequent visits to thedepartments as well as our corporate culture forcustomer, our sales and sales engineering staff determined

cooperating without barriers between departments are thethat the optimal solution for the customer’s requirements

source of value creation. The customer was grateful to us

would be one that struck the best balance between

for aligning our departments to present the best solution

precision and cost. To achieve this target, we developed afor their demanding requirements for precision and cost,

range of ways to maximize value, including minimizing theand for our continual, thorough technical support.

elements of customization by using a standard product

After that, we were the first to hear about new projects,of our high-precision mechatronics series; setting target

which enabled us to secure more orders. We will continue

costs for major components; and using our entire supply

to develop initiatives to optimize our business portfolio,

chain to ensure that production volume would meetincluding increasing orders for mechatronics products andthe customer’s requirements. In addition, to ensure thecapturing demand in the medical equipment field. For

accuracy needed for stopping, a major technical issue, we

us, this project was a key opportunity to demonstrate ourrepeatedly tested the prototype under varied conditions.

strengths and we will continue to use the close teamwork

By promptly sharing the results with our counterparts

among our departments to resolve customer issues

from the customer side, we worked together to examine

while leveraging the value of our “four abilities,” which are

the specifications for meeting all the cost and precision

backed by advanced technology and knowledge.

requirements. This process enabled us to stay aligned withthe customer as we moved the project forward.

The “four abilities” demonstrated in the project

riginality

The belief in the IKO brand is the driving force for growth15

Toshinao Kimura Managing Director In Charge of Sales Department

the specifications. Throughout the development work,

Ability to
Improve Value

Sales

Data

within one week. We then worked to amend some of

n

Value

Governance“four abilities”—understanding, realizing, delivering, and

lue C
h
Va

ProblemSolving
for Our
Customers

Social Issues

we carried out a detailed assessment to find the causeai

Ability to
UnderstandValue

The Environment

the Group’s unique value creation process based on the

Ability to
Realize Value
MarketingManagement for
Sustainable Growth

The following example illustrates the process of using

Strengths/differentiating factors

Strengths/differentiating factors

Management for
Sustainable Growth

After assessing the challenges of this project, by
working closely as a single team with our customer wecombined our “four abilities” to create a product that
resolved our customers’ issues.

partner companies, quickly and effectively.

We accurately understand the problems andrequirements of our customers, while also
grasping market and technological trends, andwork to create ideas for technologies and services
that will provide future value for our customers.

Management for
Sustainable Growth

for a genetic testing and analysis system

We achieve sustainable value creation by connecting the “value function” of the entire Group, including

Improving

Management
for Sustainable
GrowthA case study in value creation: Developing a positioning mechanism

The value creation of our Group begins with every employee being on “the same page” as our customers.

Understanding Value

Progressin Business
Strategy

Understanding Value

Realizing Value

Delivering Value

Improving Value·C ollaboration among sales, sales
engineering, and development
to propose specifications in linewith customer requirements on
precision and cost·P
 rototype design and cost
construction that balance
precision and cost
· Investigating the cause of quality
defects and resolving them quickly·B uilding a supply chain that canmeet the customer’s required
production volume· Increasing orders by becoming
One Team with the customer
and advising them on new
projects

Nippon Thompson Co., Ltd. Integrated Report 2023

16

Value Creation Strategies

NipponThompsonʼs
Value Creation

DX Strategy

Intellectual Property (IP) Initiatives

Nippon Thompson’s DX Strategy
Office, a company-wide organization headed by

VISION 2030, we believe that for the Group to provide

the President and CEO, and then formulated the DX

new value to the world, we must transform our existingpromotion vision and five strategic themes. To realize

business structures and business models. That is whyeach strategic theme, we launched several projects acrosswe have positioned company change through DX (digital

the Production, Sales, and Engineering Departments.

transformation) that pursues the potential of digital

In collaboration with the DX Promotion Office, we aretechnologies as the core of our Embracing Change theme

currently steadily transforming our business segments.

in our Medium-Term Business Plan.
Specifically, in 2021, we launched the DX Promotion● DX Vision and Strategic Themes

DX promotion
vision● Creating new businesses● Strengthening sales, service, and marketing
abilities● Promoting production automation and autonomy● Changing the profit structure● Improving operational efficiency, changing
attitudes and work styles, and developing humanresources~Co-Creating a Sustainable Future~

The entire IKO Group will become One Team, and byembracing change using digital technology, we will
establish a competitive advantage in the global market
and continue to improve our corporate value.

make new technologies and ideas concrete and to filestrengths as IP and to apply this advantage, it is important

patent applications for them at an early stage. As a result,that all employees have a correct understanding of IP

the number of patent applications filed by the Groupand are able to use this knowledge as a business tool. In

has risen sharply compared with before the start of theparticular, we need to remind our engineers that it is their

Medium-Term Business Plan 2023. The experience that

responsibility to apply for and protect patents for their IP.

many engineers have gained by filing patent applications

They need to remember that patent applications become

has resulted in increased internal awareness of patent

the property of the Company and that IP contributes

rights and a stronger grasp of our technologies.
To develop this initiative further, communication

Medium-Term Business Plan 2023, we are updating the

between engineers and the IP Department is essential.

education on IP that we provide to engineers.

We will therefore promote more collaboration to improve
corporate value as a company centered on technology

Specifically, we hold semiannual IP seminars bydevelopment.

patent attorneys. These seminars cover not only
understanding the creation of IP, but also information● System for Building Our IP Strategy

195

aim of upgrading the IT skills of all employees. In step 2,
we select the human resources who will lead our digital180

define DX human resources not only in terms of digitaltransformation. We not only provide training, but we also

technology, but also in terms of “transformational humangive them practical problem-solving exercises so they can

175

resources” who have a combination of the ability to identify

learn the basic skills of transformational human resources.

essential issues and the ability to help resolve difficult

In Step 3, we aim to develop human resources who canissues. Our varied educational programs are intended totake on more advanced business problem solving.
By continuing these activities, we will grow our teamof employees skilled in DX and leverage DX to acceleratecompany transformation.

60

2

1

Deeping

Fostering a culture ofpromoting DX through selective
development of human resources

After measures
Before measures

Business skills

17

Step

3

Step

2

Digital corehuman
resources

Digital transformation
for human resources
Step

1

Digital applications
for human resources

40

30

170
165

20

160
10

155

2018

2019

2020

2021

2022

2023

FY

0

Nippon Thompson Co., Ltd. Integrated Report 2023

Aftermeasures
BeforemeasuresBusiness skills● Use as material for
decision-making
when formulating
management andbusiness strategies● Acquire rights from
offensive, defensive,and preventive
perspectives

IP
Strategy

Integration of
three strategies
into oneManagement
and Business
Strategy

Support for product andtechnology strategies● Use for analyzing inhouse technologicalstrengths and to set
R&D themes● Acquire rights
strategically tostandardize in-house
technologies

Product andTechnology
StrategyStrengthening Our IP Strategy
We use information on market requirements andtechnological trends which are combined and analyzed
to formulate the Group’s business strategies. In today’s
fast-paced era of technological innovation, analyzing
gauging technological trends. We will work to improve ourpatent analysis in response to competitors and market
needs then continue to file strategic patent applications
so that we can expand our business.

Business skills● Preliminary investigation● Acquiring patent rights● Protecting and using
patent rights

Support for management
and business strategies

Number held
Number of patent applications in Japan
Number of patent applications overseas

patent information is a key part of quickly and accurately
IT skills

IT skills

Promoting DX by upgrading
the IT skillsof all employees

Business transformation andresolving Company-wide issues
developing transformational
human resources

IT skills

Step

Expanding

50

185

0

● DX Human Resources Development Roadmap

Step

Data

compliance and governance. We are also working toto systematically develop our DX human resources. We

3Governanceon technology development. To protect the Group’s

companies to change through DX. That is why we are working

Embracing
ChangeSocial Issues

improve our corporate value as a company centered

190

Step

The Environment

In this way, we are using this education to strengthen

conduct digital education, such as e-learning, with theeducational programs in three steps. In step 1, weManagement for
Sustainable Growthabout infringements of IP rights held by other companies.

Human resources are the driving force that enables

To develop DX human resources, we mainly conduct

Management for
Sustainable Growthuse of intellectual property (IP) so that we can further● Number of Patents Held/
Number of Patent Applications

DX Human Resource Development

develop these human resources.

Management for
Sustainable Growth

We are working to strengthen the Group’s creation andto future business success. For this reason, in the

DX strategic themes

Co-Creating Value as a
"Technology Development-Based Company"

Management
for Sustainable
GrowthDeveloping Intellectual Property: Human Resources

As we work toward the future vision set out in IKO

IKO VISION
2030

Progressin Business
Strategy

Value Creation
Strategies

3J062 Transmission system
3J101 Roller bearing
3J104 Bearings for articles
with linear motion
3J701 Roller bearing
5H641 Linear motor

Patent map (image)Nippon Thompson Co., Ltd. Integrated Report 2023

18

NipponThompsonʼs
Value Creation

Value Creation Strategies

History of Growth Strategies:

Management
for Sustainable
GrowthManagement for
Sustainable GrowthManagement for
Sustainable GrowthManagement for
Sustainable Growth

The Environment

Social Issues

Governance(Billions of yen)

Operating profit

12

11.0
10.0

9

9.0

8

8.0

7

7.0

Plan 2020. Although we started the first year of the plan

and worked on this as a way to reap results. For reachingwith record-high net sales, we were unable to achieve

this goal, we utilized our consolidated subsidiaries IKO

our initial financial targets as a result of the worsening

Thompson Vietnam and UBC (China), which are strategic

trade friction between the US and China as well as

5

platforms that we have been strengthening, as well as thethe COVID-19 pandemic, which required a temporary

4

integrated core ERP system that we deployed. To help

adjustment to production. However, demand now

resolve key cross-departmental issues, we have madecontinues to grow, especially for semiconductor-related

significant progress by strengthening interdepartmental

products, and opportunities for our Group’s growth

6.0

6Three-year average
operatingprofit of

next-generation communication standards (5G) and

5.0
4.0

7billion yen

3
2

3.0

or above

2.0

ROE %
or above

1.0

7

1
0

are becoming even bigger, such as opportunities from

12.0

11

positioned heightening profit awareness as a key phrase,

formation of cross-functional teams.

(%)

ROE

10

the three-year period of the Medium-Term Businessand inter-organizational collaboration, including the

Data● Operating profit / ROE

Past to Present MediumTerm Business Plans

In our Medium-Term Business Plan 2020, we had

0.0
-1.0

-1

MBP20142013

increased demand for automated industrial machinery.

At the same time, the business environment

Progressin Business
Strategy

Value Creation
Strategies

2014

MBP2017
2015

2016

2017

MBP2020
2018

2019

2020

MBP2023
2021

2022

2023

2024

FY

surrounding the Group fluctuated enormously during
Medium-Term Business Plan

Medium-Term Business Plan2014

2nd (April 2015 to March 2018)
Change & Challenge

1st (April 2012 to March 2015)

Positioning and
ThemesBasic Policy

Financial
Targets

Formulating our vision,
direction and long-term vision
for the Company•R einforcing the global business structure(manufacturing/sales centers, global
procurement)• Strengthening our financial position• Maximizing the scope and the scale of business
opportunities (improve utilization rates of
production facilities / advanced pricing strategy)• Strengthening organizational capabilities and IT
system sophistication

2014

2015

Net sales

35.9

39.2

44.9

(three-year
average)

40.1
1.1

-0.2

(three-year
average)

3.8
1.6

-0.2%

1.0%

(three-year
average)

5.1%
2.0%

Final year
target

60.0

6.0

Not
available

Outcomes• Sharing and grasping approaches on our
direction and long-term vision• Strengthening the Company’s structure
by resolving financial issues

Achievements andChallenges

19

Establishing a “Highly Profitable
Organization”(1) Establishing a global business structure(3) Strengthening collaboration with partner companies

2013

ROE

Shift to “Offensive
Management”

Challenges• Ability to respond to the external
environment (market conditions / foreign
currency volatility)• Defensive management focused onstrengthening financial position

Nippon Thompson Co., Ltd. Integrated Report 2023

2016

2017

2018

43.6

44.1

55.2
47.7

3.0

1.1

2.6
2.3

2.6%

-0.5%

2.9%
1.7%

2023

Final year
target

60.0

7.0

7% or
above

Outcomes• Capacity expansion of overseas
production center (Vietnam)• Execution of M&A (acquisition of UBC in
China)• Deployment of integrated core ERP
system (SAP)
Challenges• Profitability management (priorities/
asset efficiency)• Ability to implement tactical measures(inter-departmental collaboration)

2019

2020

2021

57.5

47.4

44.3
49.8

4.8

1.3

-0.5
1.9

6.2%

-0.3%

“Value Enhancement,
Value Co-Creation”(2)Developing new products using core technologies• Heightening profit awa reness• Overall optimization /CFT for interdepartmental
collaboration• Focus/efficiency x global expansion

0.4%
2.1%

• Deepening: Explore existing businesses in greater depth• Expanding: Develop new technologies and new segments• Embracing Change: Behavioral change, organizational change, anddigital transformation

Final year
target

70.0

8.0

8% or
above

Outcomes• Profitability improvement through the use of
an integrated core ERP system (SAP)• Transforming HR management system• Strengthening the capabilities of domestic/
overseas production sites• Strengthening interdepartmental collaboration
through crossfunctional teams
Challenges• Securing stable profits (resilience to market
fluctuations)• Sustainable growth from a long-term
perspective (preemptive investment towardsocial change)• Awareness and behavior transformation at theindividual layer2030

4th (April 2021 to March 2024)
Deepening, Expanding,
Embracing Change

3rd (April 2018 to March 2021)
Change &Challenge—Next Stage ACCOMPLISH“Three Challenges of Growth Strategies”
to Achieve Our Long-Term Vision(Billions ofyen)Operatingprofit2020

2017

IKO VISION

Medium-Term Business Plan

Medium-Term Business Plan

2022

2023

62.2

68.2

5.8

9.4

6.7%

11.0%

Set three-year averagetarget to build a
corporate structurethat is more resilient tomarket fluctuations.
Operatingprofit:7 billion
yen orabove

ROE

ROE of7% orabove

Collaborating with customers
primarily and co-creating
value as a technology
development-based
company– co-creating a sustainable future –Net sales
100 billion yen or above
Operating profit
15 billion yen or above
ROE
10% or above
Medium-Term Business Plan 2023 emphasizes steadily
resolving imminent issues, even amid major socialchange, while at the same time firmly proceeding with
our long-term direction and ensuring that forwardlooking tactical measures are also being implemented.
Constantly taking the customer’s point of view, we
will add significant value throughout the IKO Group’s
value chain, including partner companies, to achievesustainable growth and realize our long-term vision,
IKO VISION 2030.

Nippon Thompson Co., Ltd. Integrated Report 2023

20

NipponThompsonʼs
Value Creation

Value Creation Strategies

Value Creation
Strategies

Progressin Business
StrategyManagement
for Sustainable
GrowthManagement for
Sustainable GrowthManagement for
Sustainable GrowthManagement for
Sustainable Growth

The Environment

Social Issues

Governance

Data

Medium-Term Business Plan 2023
Three Basic Policies

Progress

To ensure our growth from a long-term perspective, we

by continuing to explore and address new technologies

are developing tactical measures based on the three basic

and new business segments in response to society

policies: deepening, expanding, and embracing change.

change.

businesses that have been cultivated as our Groupmanagement base through awareness/behavioral change

strengths, to strengthen our resilience to market

at the individual level, organizational capability change,

fluctuations and to secure stable profits.

and digital change in order to implement deepening andExpanding is an initiative to realize sustainable growth

expanding.

● Three basic policies and initiatives in the Medium-Term Business Plan for achieving sustainable growthDriving Force of GrowthBusiness Domain:
New Technology Development

Profit Structure
Changes

Variable Response Capability:
Multi-Product Production

Market Domain:
Global Expansion

Ability to Organize
Human Resources

Three Basic Policies(1)

Deepening

Strengthen the Present:
Exploring Existing
Businesses More Deeply(2)

ExpandingCreating the Future:
Expanding into
New Technologies and
New Segments(3)

Embracing
ChangeRobust Management
Infrastructure–Behavioral Change,
Organizational
Capability Change, Digital Change•D ifferentiation and enhanced added value
through product development basedon both “product out” and “market in”
approaches• Strengthen responsiveness of supply
chain delivery by shortening lead times
and improving productivity• Search for strategic technology alliancepartners for joint development, OEM, etc.
• Initiatives to develop new products andbusinesses (use of accumulated data andknowhow)• Strengthening competitiveness byreformulating the global supply structure• Initiatives to improve the break-evenpoint (per capita productivity and asset
efficiency)• Develop change leaders to promote DX
strategic themes• Promote sustainable management● Well-balanced management that capturessocial changes and continues to create future
value

Strengthen
Resilience toMarketFluctuations“Maximize Earning Capabilities”
Secure Resources for Growthwith Value Focus
Generate Operating CF(Growth Capital)

Segments
Where CoreTechnologies
Are Used

Earn andReinvest inCore Business

Preemptive
Investment forSocial Change“Creating New Value”
Preparing in Advance for
Future Growth
Risk-taking(Growth Investment)

Nippon Thompson Co., Ltd. Integrated Report 2023

(2)

• Enhanced one-on-one
presentations• Developing ultra-highprecision LRX ZERO
• Growing the overseas
sales ratio• Revising prices to realize appropriate profits

Embracing change to management
for enabling both deepening andexpandingLiquid crystal lubricant

Proactive
investment
for growth• Visualization offacility
operation status• Inventory strategy
planning throughdepartmental collaboration• Improved accuracy of demand forecasting• Reduction in lead-time and production leveling

Expanding

New product and business development
through industry-academia collaboration
Development of original new products

Development based on both approaches:
product out and market in
Sales of high-value-added products

Pressed crossed roller bearings

Strengthen targeted global
supply system• High growth markets(semiconductors, new energy, medical field, etc.)• Priority items(small linear motion rolling guides, small needle
bearings, etc.)

To further bolster proposal-based sales, one of our

For the Company to grow over the medium to longstrengths, we significantly enhanced our presentation

term, we are improving the functionality of ourmaterials (one-on-one presentations) specific toproprietary liquid crystal (LC) lubricants andindustries and equipment. We are also widening ourdeveloping unique products in collaboration withrange of high-value-added products to differentiate

our partner companies, such as pressed crossed

ourselves from the competition, including byroller bearings produced using entirely new ideas. In

developing the ultra-high-precision LRX ZERO,these ways, that we are taking on challenges of theincorporating ideas from customer feedback, and ourdevelopment of products which could be new pillars

outstanding technological strengths.

for future earnings.

(3)

Embracing Change

Profit structure reform• Strengthen cost reduction efforts through the useof SAP

While the two strategies of deepening and expanding are inter-connected, there are many differences in the work
processes and the criteria for value judgment between initiatives to deepen existing operations and initiatives to expand
into new operations. For this reason, it is not easy to implement both of these two strategies.
To accomplish our goals, we are conducting initiatives that emphasize “embracing change” in our organizational
capabilities, by “establishing methods and rules” that allow for decisions based on different criteria, and by promoting
specific measures to “create a system for awareness/behavioral reforms.”

21

Deepening

Pursuit of efficiency in bothproduction and sales
Efficiency

Reliability Technology:
Niche Leader

Profitability/Value Added

Embracing change is an initiative to strengthen our

Deepening is an initiative to further explore existing(1)

Human resources and organizational
capacity reform• Organizational change in production departments• DX human resource development / HR system
reformPromotion of sustainable management• Integrated Report (first published in October2022)• Information disclosure based on the TCFD
recommendations

Promotion of DX• Improving business efficiency with RPA• SCM enhancement through process mining

In addition to strengthening ways to reduce costs by using SAP, we began a major reorganization of our Production
Department for production innovation in the medium to long term. We also promote initiatives from an ESG
perspective, including issuing integrated reports and disclosing information based on the TCFD recommendations.
Further, for DX (digital transformation), we are improving efficiency by using RPA and refining supply chain
management through process mining.

Nippon Thompson Co., Ltd. Integrated Report 2023

22

NipponThompsonʼs
Value Creation

Value Creation Strategies

Progressin Business
Strategy

Value Creation
Strategies

Management
for Sustainable
GrowthManagement for
Sustainable GrowthManagement for
Sustainable GrowthManagement for
Sustainable Growth

The Environment

Social Issues

Governance

Data

Financial Strategy
We will work to improve
our P/B ratio by enhancing
capital efficiency
through strengthening
our profitability and by
engaging withcapital markets.
Koji Shimomura Managing Director

industries where demand is expected to be stable

as well as disclosure information to encourage higher

over the medium to long term, such as the medical

expectations for our future growth. In particular, we will

device industry and environmental fields. We will also

strengthen and enhance our growth investments andwork to reduce capital costs by investing in ESG andshareholder returns, aiming to realize a P/B ratio of moreother methods. We will prioritize achieving sustainable

than 1 times, as soon as possible.

efficiency. To achieve this, we will maintain a strong

stable and flexible financing, principally using operating

financial structure with a targeted equity ratio of 60%.

cash flow and liquidity on hand to fund investments

The price-to-book, or P/B, ratio, which represents

for business growth, while considering the option of

our evaluation by the capital markets, has remained atsourcing funds from capital markets, if the investment

a low level, hovering at around 0.6 times. To improve

amount exceeds in-house financing. We aim to maintainour P/B ratio, we will strive not only to improve ROE by

a D/E ratio (interest-bearing liabilities/net assets) of nostrengthening profitability, but also to reduce capital

more than 0.5 times, and will expand and strengthen

costs by stabilizing our performance (mentioned above).

our business through active growth investments, while

We will engage more with shareholders and investors

maintaining financial discipline.

Environmental Awareness
The IKO Group has formulated the three-year

capital investment in Japan and overseas was strong in

(%)
70.0

Medium-Term Business Plan 2023: Deepening, Expanding,

sectors such as semiconductor manufacturing equipment

and Embracing Change that started in April 2021. We haveand other electronics-related devices and equipment.

60.0

As a result, the business performance exceeded ourabove and an ROE of 7% or above on average over thetargets for the second consecutive year, with consolidated

40.0

three-year period of the plan. Our goal is to achieve stablenet sales of 68.2 billion yen, up 9.6% year on year, a record

30.0

and solid corporate value improvements, even when there

high; operating profit of 9.4 billion yen (operating margin

20.0

is an unstable business environment.

of 13.9%) due in part to increases in sales and production

In FY 2023, the second year of our Medium-Termsome activities returned to normal following restrictions

0.47

0.47

59.6

59.1

62.6

(times)
0.5
0.4

58.7

58.4
0.36

0.35

0.3

0.29
0.2
0.1

0.0

ROE of 11.0%.

2019

2020

2021

2022

2023

0.0
FY

Cash Allocations

during the COVID-19 pandemic, there were some negative

Plan are progressing. In FY 2024, the final year of the plan,

factors, such as soaring raw material and energy prices;

we will explore and execute additional growth strategies,

To achieve the financial targets set out in IKO VISION

impact. We also plan to invest in increased production

general inflation mainly due to the situation in Ukraine;

while also considering our long-term vision beyond the2030, we will allocate capital reserve to growth

capacity, including the acquisition of new sites and theas well as sharp exchange rate fluctuations caused bycurrent plan. Our focus is not only meeting our targets

investments that create additional value from a

construction of new plants, in order to invest in themonetary tightening by central banks around the world. In

within the plan, but also achieving our vision for the future.

medium- to long-term perspective.

growth of strategic products that are among our group’s

Basic Financial Policy
In line with our policy of strengthening the financial

sustainable growth in the future by strengthening ourposition, the Group will work to boost profitability toresponse to market fluctuations and social change. To

achieve sustainable growth, improve capital efficiency,

reach this goal, we have formulated IKO VISION 2030,

and increase shareholder returns.

which is intended to achieve consolidated net sales ofUnder an environment where customer requirements

100 billion yen or above, an operating profit of 15 billion

are becoming increasingly sophisticated and diversified,yen or above, and an ROE of 10% or above in FY2031.

our goal is to secure stable profits and achieve

We will continue to push ourselves and transform the IKO
Group in both financial and nonfinancial areas, including

Equity Ratio

approx.

60%

D/E Ratio

no morethan

0.5times

Corporate
Value
Enhancementbalancing investment for growth with financial discipline

ROE

and promoting sustainable management.

10%

or above

As a financial KPI, we have set the target for an ROE of
10% or above, which exceeds the cost of shareholders’equity (8 to 9%), with the aim of strengthening

Sound
Financial
Base

Shareholder
Returns

Nippon Thompson Co., Ltd. Integrated Report 2023

Dividend
Payout Ratio(stable overthe long term)

30%

targetmajor strengths.

In addition to investments in human resource

the Group’s business environment, however, demand from

23

D/E Ratio

10.0

volumes and the effect of the yen’s depreciation; and an
The initiatives included in this Medium-Term Business

Equity Ratio

50.0

set financial targets: operating profit of 7.0 billion yen or

Business Plan, the outlook remained uncertain. WhileFor procuring funds, the Company will strive for

growth by focusing on profitability and improving capitalprofitability and improving capital efficiency. In addition,
the volatility of the Group’s performance is due to thehigh proportion of sales in specific industries, suchas electronics-related devices and equipment. Goingforward, we will focus more on expanding sales indevelopment and R&D to help us to resolve social issues

The primary source of capital reserves for theseand social needs, as well as growth investments in, forinvestments will be operating cash flow and liquidity

instance, DX, M&As, and alliances, we will prioritize(funds) on hand, as well as funds from other financing

investments in sustainability, as well as stable andsources, if necessary. We will also consider the salecontinual shareholder returns.

of cross-held shares in cases where the rationale for

As for capital expenditures, we intend to invest incontinuing to hold them is poor and where the returns

increased production capacity, automation, and labor

are not keeping pace with the capital costs. In addition,savings, as well as in energy conservation leading

we will maintain sound financial positions in order to haveto decarbonization and a reduced environmental

consistent financing.

● Cash Flows (CF) from Operating Activities(Millions of yen)
10,000
8,000
6,000
4,000
2,000
0
-2,000-4,000-6,000-8,000-10,000

CF from Operating Activities

2014

2015

2016

2017

CF from Investing Activities

2018

2019

Free CF

2020

2021

2022

2023

FY

Nippon Thompson Co., Ltd. Integrated Report 2023

24

NipponThompsonʼs
Value Creation

Value Creation Strategies

Progressin Business
Strategy

Value Creation
Strategies

Management
for Sustainable
GrowthManagement for
Sustainable GrowthManagement for
Sustainable GrowthManagement for
Sustainable Growth

The Environment

Social Issues

Governance

Data

Business Strategy
Approach for Inventory Strategy and Capital Turnover Efficiency
Our Group business model ensures a reasonably highfor an inventory turnover of around six months, which we

Our Group’s business is growing worldwide through the supply of machine components that are indispensable to all industries,

profit margin by offering a diverse variety of products

consider to be an appropriate level for the Group.

from electronics-related industries to machine tools and transportation equipment. The core of our value creation is that we

provided through multi-product manufacturing and by

In addition, shortening the cash conversion cycle (CCC)

enabling a flexible supply that includes access to theis essential to strengthen our ability to generate cash flow.

small-lot distributor market, which often large companies

We will strive to improve asset efficiency through better

struggle to access. As a result, the number of months offund management practices, including through accountstock turnover is generally high.

receivables collections, and considering the appropriate

and social demand for sustainability, including the SDGs. We will address potential risks, and continue to pursue new growthinventory levels necessary to respond promptly toopportunities that capitalize on the Group's strengths in order to create sustainable value.

In FY 2023, the value of inventories at overseas
yen as well as higher inventory levels
in demand. As a result, the value of
inventories at the end of the period
increased to 38.1 billion yen, higher
by 4.6 billion yen year over year. On
the other hand, inventory turnover(based on net sales) was 6.3 months,
the same level as at the end of theprevious year, partly due to higher net
sales. Although future inventory levels
will fluctuate over the short term
due to changes in market conditions
and strategic inventory holdings
for each product, we will strive to

9.8
7.7

25,000

7.7

6.3

5.8

5.6

20,000

9.0

8.0

7.4

6.3

6.0

10,000

3.0

5,000

2014

2015 20162017 2018 2019

2020

2021

2022 2023

0.0
FY

Shareholder Returns Policy
The Company positions shareholder returns as one of

excluding treasury shares). The Company will consider

the most important management issues. Our basic policy

implementing this buyback program as necessary to

is to maintain a stable dividend, while comprehensively

execute a flexible capital policy in response to changes

taking into consideration the business performance ofin the business environment, to further enhanceeach fiscal year, the level of retained earnings necessary

shareholder returns, and to improve capital efficiency.

Dividends per Share (yen)is extremely volatile and our
performance fluctuates widely, we
aim to meet the expectations of

20.0

86.9

the medium- to long-term dividend
dividends for the most recent

12.0

five years).
In addition, we decided torepurchase (buy back) our shares

8.0

52.4
41.8

total number of outstanding shares

25

Nippon Thompson Co., Ltd. Integrated Report 2023

0.02014 2015

48.6
31.3

2016 2017 2018 2019 2020

provide attentive services●A multi-product production system that

Strengths Weaknesses
Opportunities Threats

deals with customizationand small-lot requirements●R apid growth ofelectronics-related
markets● I ncreasing needs for miniaturization,high precision, and high functionality
due to more miniaturized semiconductors,
development of the medical industry, etc.
●L arge growth potential in global markets, especiallyin emerging economies● I ncreased demand expected for high-efficiency
bearings for a decarbonized society●R ise of competitors in emerging

countries and intensifying costcompetition●N egative impact of geopolitical risks
on supply chain

Direction of Company-wide Strategies

2021 2022 2023

segment, we will continue with the balanced implementation of expanding and embracing change to respond to medium- andlong-term social changes, with the aim of realizing our vision, IKO VISION 2030.

60.0Internal Challenges andRoom for GrowthTechnology
Development

IKO VISION 2030

40.0

S W

20.0

O T

0.0

External Environment
Changefrom August 2023, up to 2.2 billion
yen or 2,176,700 shares (3.0% of the

anticipates demand trends

Realization of Our Vision

45.9

Target Level: 30%

4.0

and high precision/rigidity

product business modelMedium-Term Business Plan 2023

67.1

payout ratio targets 30% (cumulative●E stablish a stable production and supply system thatEnvironmental Awareness

80.0

73.6

our shareholders by paying a stabledividend each fiscal year, and we set

100.0

85.8

16.0

●P
 roduct technology strengths in both miniaturization

Under Medium-Term Business Plan 2023, in addition to further deepening the strengths developed by each business

Dividend Payout Ratio (%)(Cumulative over the past 5 years)

1297.3●F urther efficiency improvements in the multi-●A sales and marketing network that enables us to

15,0000● I KO brand, trusted for high quality and precision●A corporate culture that values integrity

8.8

30,000inventory optimization. We will aim

As the demand for our products

SWOT Analysis

12.0

35,000other management factors.

At the same time, global society is undergoing a period of historic change, including a digital shift, the evolution of AI and IoT,(Months)

40,000for future business development, andcustomers’ problems in collaboration with external partners, as well as the business units responsible for the value chain.

Inventory Turnover

Inventories(Millions of yen)control excess inventory and promote

The IKO brand is highly credible and trusted due to the accumulation of value creation through our sincere efforts to solve

customer needs.

subsidiaries increased due to the depreciation of thein preparation for a future recovery

provide high-quality products that quickly meet the challenges and demands of our customers.

FY

Collaborating withcustomers first and
Co-Creating Valueas a “Technology
Development-BasedCompany”

Deepening Expanding
Sales

Production
Embracing Change–Co-Creating a Sustainable Future–

Management

Balanced Management to Continue Creating Future Value
Nippon Thompson Co., Ltd. Integrated Report 2023

26

NipponThompsonʼs
Value Creation

Progress in Business Strategy

Business Strategy
Sales
Department

Progressin Business
StrategyManagement
for Sustainable
GrowthManagement for
Sustainable GrowthManagement for
Sustainable GrowthManagement for
Sustainable Growth

The Environment

Social Issues

Governance

Data

Policy and Future Initiatives for Achieving the Long-Term Vision IKO VISION 2030

The source of our value

A Roadmap for Growth

creation is the ability topropose solutions that focus
on customers’ needs.

Ideal
VisionValue Creation
Strategies

We would like to expand ourselves
as the niche leader

To achieve the goals of IKO VISION 2030, we recognize

addition to customer trends in Japan and overseas.

that it is essential to accurately read market trends.

We believe it is critical for us to capture opportunities

The Sales Department has a key role in guiding

and minimize risk by staying ahead of market trends,

companywide growth strategies, so this department

as well as to maintain definite policies for realizing ourhas formulated the “IKO Compass”, a long-term

vision, while adapting to change.

demand forecast model for important products. As
the name suggests, the “IKO Compass” has beenfrom a global perspective

IKO VISION
2030

positioned as the Group’s “compass” that points theand provide a roadmap

IKO Group in the right direction. This direction has

for growth as well.

been shared with not only the Production Department

Toshinao Kimura

but also the Engineering Department and theManagement Department, and each department isdeveloping policies that are in sync with the compass.
In a fast-changing era, it is crucial to promptly

K

O C

I

Managing Director In Charge of Sales Department

Technology

Sales

Production

ompa

ss

Management

communicate company policies from a global
perspective. Therefore, we continually update theEnvironmental Awareness and Issues
The Needle roller bearing series is the legacy of

to develop products while foreseeing market

the IKO brand, and the driving force behind ourtrends.

group's growth as a profit generating source

To achieve carbon-neutrality on a global

since the Company’s establishment. The Linear

scale, there has been a rapid increase inmotion rolling guide series and mechatronics

demand for downsizing machinery andseries are expected to grow significantly in theequipment to reduce CO2 emissions. Therefore,

future as we address technological innovations,

we anticipate customer expectations will growsuch as state-of-the-art semiconductor

more and more in the future for compact

manufacturing equipment and advanced

products, an area in which we specialize.

medical equipment. Our broad, well-balanced

Considering these circumstances, we recognize

product lineup, geared toward sustainable

that the mission of IKO is to align ourselves

growth, is the result of our Sales Department’s

with customers’ requirements for sustainableattentive management of customer feedback,management and expand our customer

which changes over time, as well as our ability

perspective solution proposals across the globe.

“IKO Compass” to immediately share throughout the

The IKO Group has 48 domestic and overseas sales offices(22 in Japan and 26 overseas), and we are closely attuned

27

provide more extensive and attentive support.

Marketinformation

Reinforcing IKO Mech-unit Business Segment and Adding ValueAs recent labor shortages and supply chain issues

that have a wide range of technologies. We recently

have come under close scrutiny, customers’ needs

introduced the IKO Partner Company Recognition System

also continue to change. Particularly in the FA (factory

to conduct thorough, and independent inspections ofautomation) equipment industry, there has been a rapid

partner companies' technologies. This system ensuresincrease in cases where the design and manufacture ofboth quality and environmental responsiveness. In thiscomplete sets of modules and equipment is outsourced,

way, we will enhance our customers' feeling of security

something that was usually done in-house. As a result, inand provide additional value.

addition to the functionality and performance of bearing
products, requirements are growing to provide specialized
units. Seeing this change as a growth opportunity for
IKO Mech-unit Business, we will grow this segment by

Electronic component

reinforcing our collaboration with partner companies

Reduction in
man-hours

Labor
shortages

inspection equipment

IKO Mech-unit manufacturing
examplesAlongside our partner companies, we use ourmany years of mechatronics technologies tocreate the optimal IKO Mech-unit.

With our legacy as a bearing trading company

to our customers, accurately identifying the needs offounded in 1950, the DNA of our Company has beeneach country, industry and customer, launching strategic

firmly inherited by our current Sales Department. With aproducts that aim to be the niche leader from a global

strong belief in proposal-based sales activities, and theperspective, concentrating resources in key regions andcustomer’s perspective, we have earned a high level ofstrengthening our system by improving direct sales. We

trust by constantly seeking to add value for our customers,

are also strengthening partnerships with highly specialized

not only by selling our own products, but also by providing

trading companies dedicated to specific customers andsales and services for complete sets of products andindustries, while creating a structure that enables us toequipment in collaboration with our alliance partners.

Nippon Thompson Co., Ltd. Integrated Report 2023

Competitive
Information

Group the latest information on our competitors, inAutomated manufacturing line

Features and Strengths

Sales
information

Measures

Unitization of transport(conveyance) mechanisms

LCD manufacturing
equipment

Nippon Thompson Co., Ltd. Integrated Report 2023

28

NipponThompsonʼs
Value Creation

Progress in Business Strategy

Value Creation
Strategies

Progressin Business
StrategyManagement
for Sustainable
GrowthManagement for
Sustainable GrowthManagement for
Sustainable GrowthManagement for
Sustainable Growth

The Environment

Social Issues

Governance

Data

Business Strategy
Technology
Development
Department
Ideal
VisionPolicy and Future Initiatives for Achieving the Long-Term Vision IKO VISION 2030
The source of our value creation is

A Balanced Combination of Market In and Product Out Approaches

the unique and advanced
technological strengths supporting

In the Technology Development Department, ourdeveloping products that combine our expertise in small

the IKO brand. We hope to growinitiatives are aligned with the key missions for new

linear motion rolling guides and linear motors. We areproduct development that more thoroughly meet existingalso focusing on the development of custom products

market needs, strengthen our brand, and create

for customers as well as modular unit products. We

new value.

will strive to differentiate us from other companies by

together with our customers
by creating new value,
combining “market in”
and “product out” approaches.
Shin Kasahara

Managing Director In Charge of Technology

In terms of new product development, we announced

achieving a balance between improvement (market

the LRX ZERO, which achieves ultra-high precision guidein) development that accurately identifies needs andperformance, at the Japan International Machine Tool

issues through dialogue with customers and proposal

Fair last year. With this product, we intend to meet the(product out) development that identifies latent needs

demands of customers, particularly from machine toolthat customers are not yet aware of, with prototypes ofmanufacturers who have been using our linear roller

technology-driven products.

ways for many years. In the mechatronics series, we are

A balanced combination

Environmental Awareness and Issues
Bearings and linear motion rolling guides arecomponents with superior specifications,mechanical components for enabling precisesuch as small size, high functionality, and highand smooth movement. By reducing heataccuracy, and the needs for each application

generation and energy loss caused by friction,

are becoming far more segmented, making

they help improve the performance of all types

the technical issues more diverse and complex.
We aim to meet a wide range of requirementsof machinery and equipment.
As the digital shift accelerates throughout

such as high load capacity, high rigidity, long

the world, next-generation technologies suchlife, low friction, low vibration, low dust

as IoT, AI, and smart factories are developing

generation, environmental temperaturesignificantly, so demand for our products is

resistance, and vacuum resistance. Drawing

expected to grow continuously. In particular,from our expertise in roller guidance andthe miniaturization of semiconductors

small sizing technology, we will continue andand advancements in medical equipment

deepen our R&D to achieve these goals.

have increased the need for bearings andFeatures and Strengths
In the Technology Development Department, we prioritize

Members of our Technology Development Department

our customers' requests and strive to maintain the

not only visit customers directly, but also actively

upmost integrity capabilities in resolving any issues.

communicate with customers by attending exhibitions

Our strong technological capabilities that support theheld throughout the country. We thoroughly examine

development of the IKO brand for top-quality and highly

the issues raised by customers in the course of theseprecise products are the result of the many years ofactivities and develop optimal solutions.

experience and knowhow that we have accumulated by

The Technology Development Department is taking

working closely with the Production Department to fulfill

on the challenge of creating new de facto standards that

our customers’ requirements and overcome obstacles

start with building relationships of trust with customers.

one by one.

Market in

Product out

Pursuit oftangible needs

Pursuit oflatent needs

Meeting with a customer at a private show to
discuss specifications

Using Open Innovation to Deepen Technology
We continue to explore new technologies and newThis lubricant has excellent properties for special appli-

business segments as we work to achieve our long-term

cations such as evaporation and outgas/dust generation.

vision. In addition, we aim to develop new application

It is expected to expand the applicability of bearing

products while not only relying on in-house technologies

mechanisms in electronic components, semiconductor

but also strengthening cooperation with universities,

manufacturing equipment, and more. In this way, we

research institutions, and other companies. A prime

will embrace open innovation as a way of deepening

example is liquid crystal lubricant, which we began jointly

technology and creating value that does not exist

developing with the University of Yamanashi in 2016.

anywhere else in the world.

Open innovation
Research
institution
Private-sectorbusiness
Our company:
Areas of expertise

University

Combining technologies and ideas from inside and outside
the company to create ideas that we could not deliver alone
Linear way with liquid crystal lubricant

29

Nippon Thompson Co., Ltd. Integrated Report 2023

Nippon Thompson Co., Ltd. Integrated Report 2023

30

NipponThompsonʼs
Value Creation

Progress in Business Strategy

Business Strategy

Value Creation
Strategies

Progressin Business
StrategyManagement
for Sustainable
GrowthManagement for
Sustainable GrowthManagement for
Sustainable GrowthManagement for
Sustainable Growth

The Environment

Social Issues

Governance

Data

Achieving Long-Term Vision, IKO VISION 2030:
Policies and Initiatives for the Future

Production
Department
Ideal
VisionCreating an Optimal Global System through Organizational Changes—A System That Can Swiftly
Adapt to Customers’ Expectations

Pride in our manufacturing excellence iswhat drives

This April, the Production Department was reorganized

new technologies and processes, including those related

our value creation.

based on the product series. By integrating theto automation, and is focused on building a strong

We aspire to evolve

management of every process for each product series,

foundation for future growth.

from prototyping to quality and production management,

IKO's unique expertiseproduction sites—in Japan, Vietnam, and China—as wellglobally to create

improve our ‟swift response capability” to promptly,

as to build optimized production systems unique to IKO

accurately, and flexibly reflect customers’ requirements.

while maximizing the features of each region. Going

This is the reason why we also recently established theforward, we will continue to improve our production

Manufacturing Innovation and Production Management.

systems and technological strengths for a quick response

This new department, in addition to planning our future

to customers’ diverse expectations, while improving our

high-quality products.
Nobuya Hideshima
Senior Managing Director
In Charge of
Production Department

Tooru Okajima
Managing Director
Deputy in Charge of
Production Department

Traditionally, the bearing industry wasindustry, as well as to reinforce our “swift

centered on mass production, mainly for the

response capability” to address the fluctuating

automotive industry. However, this is changing

business cycle.

with the recent shift to EVs. With this change,

To establish a sustainable supply chain, it is

we expect steady demand for the needle roller

necessary to have production and purchasing

bearing series in areas that we have beenthat consider the environment and humanfocusing on. We are upgrading our multi-

rights. A healthy, safe, and rewarding work

product manufacturing system to strengthen

environment is another inevitable challenge.

our competitiveness. In the linear motion

We are committed to our mission ofrolling guide series, the main challenge is to“contributing to the global community throughboost supply in response to significant market

local-based manufacturing.”

growth, particularly in the semiconductor

Features and Strengths
Our greatest strength in manufacturing is our quality.

At the same time, in the linear motion rolling guide

It is our thorough commitment to high quality that hasseries, we accept orders for single customized products,

enabled us to gain the trust of our customers. In addition,

including rail lengths in 1-mm increments, enabling aour multi-product response is another source of thedetailed response to our customers’ needs.

Group’s value. To meet customers’ diverse requirements,

The strengths of IKO that support the IKO brand

one of the biggest challenges is assessing how flexibly theare our commitment to high quality and our unique

Production Department can respond.

manufacturing expertise, including equipment

In the series of Needle roller bearings, we havedevelopment, process design, production and inventory

developed a wide range of products through to small-lot

planning, and collaboration with suppliers, which

production and inventory optimization. We quickly

enables us to optimally respond to requirements for aprovide these products to meet customer requirements.

diverse range of products and customization.

Nippon Thompson Co., Ltd. Integrated Report 2023

corporate value.

global production system, is responsible for developing● Strengthening IKO global supply chain
IKO Thompson Vietnam Co.,
Ltd. (Vietnam)

Technology

Production

Environmental Awareness and Issues

31

We will reinforce our integrated initiatives across three

we will reinforce control across the supply chain and

Sales
Gifu factory complex (Japan)

Meeting at IKO Thompson Vietnam Co., Ltd.

UBC (Suzhou) Bearing Co., Ltd. (China)

IKO-GP Committee—Aiming to Develop Human Resources Who Can Support the Foundations of Our
Manufacturing Department
The IKO-GP (Gemba Power) Committee allows

including the chairperson, and is organized into

supervisors at manufacturing sites to collaborate

subcommittees based on the Six Commitments that theon making improvements, while also promoting the

Production Department values. Through thesedevelopment of young employees and strengthening our

subcommittees, members share their expertise andorganization. Site supervisors representing each factory

experience, as they conduct detailed analyses to help

get together for in-depth discussions on shared targets,

resolve issues. In the future, we will also promote

including the Company’s policies and long-term vision. In

interactions with employees from our global offices. By

this way, they are making every effort to take the lead inhaving people from different cultures and backgrounds

uncovering and addressing issues. Through this enhanced

work together to address issues, we are fulfilling our duty

collaboration, we are developing the ability to improveto create new value.
Embodying the IKO brand through innovation,

manufacturing processes not only from a production
perspective but also with a comprehensive understandingknow-how, and originality, we will make steady progressof the entire organization.

on creating a global production system that no othercompany can replicate.

The IKO-GP Committee consists of all supervisors,
Our unique manufacturing is
supported bybroad perspectives andshared values.

Quality

SafetyExceptional quality
Quality does not lie

No production
without safety

5S

A strong organizationis the basefor effective work

Subcommittees based on the Six Commitments

One TeamColleagues based on greetings
with a smile

Equipment

Cost

Valuing every yen,millimeter, gram,and second

Total pursuit ofcomprehensive
equipment efficiency

Nippon Thompson Co., Ltd. Integrated Report 2023

32

NipponThompsonʼs
Value Creation

Progress in Business Strategy

Value Creation
Strategies

Progressin Business
StrategyManagement
for Sustainable
GrowthManagement for
Sustainable GrowthManagement for
Sustainable GrowthManagement for
Sustainable Growth

The Environment

Social Issues

Governance

Data

Business Overview
Demand Overview by Industry
Net Sales
Electronics

18
%
18%%
FY2023
FY2023
FY2023(Billions of yen)
15

12.6

12
9
6

5.7

6.7

3
0

Semiconductor Manufacturing Equipment

Machine Tools

2014

2015

6.7

7.7

9.3

10.4
7.7

• Semiconductor manufacturing
11.9

2016

equipment• FPD manufacturing equipment

8.5• Electronic component

ダミー

Composition
Composition
Composition
Ratio
Ratio
Ratio

Major Applications

mounting machines• Electronic component
2017

2018

2019

2020

2021

2022

2023 FY

inspection equipment

Market Environment
The market for electronics-related industries is growing steadily, not only for devices
such as PCs and smartphones, but also for the recent progress in IoT in home appliances and self-driving vehicles. Demand for semiconductors indispensable for thesedevices is expected to grow even more in the future as they become
increasingly miniaturized, highly integrated, and more power efficient, and progress inthis industry is expected to lead to increased earnings for the Group.

(Billions of yen)5

FY2023
FY2023
FY2023Composition
Composition
Composition
Ratio
Ratio
Ratio

5
5%%
%

4.0

4
3

2.6

3.0

2.8

4.4
3.0

2.6

2.9

3.4

1.8

2
1
0

2014

2015

2016

2017

2018

2019

2020

2021

2022

• Machining centers

Machine tools process components from metal and other materials with high precision• Multi-axis machining centersand efficiency. Demand for our products is expected to increase going forward. The• Latheslatest machining centers, which are capable of precise and complex machining, and• Grinding machines

other technological advances in machine tools have traditionally required high-speed,• Electrical discharge machines

highly rigid, high-precision linear motion rolling guides and needle roller bearings.

2023 FY

Machine Tools

Transportation Equipment(Billions of yen)

2.9

3

2.5
FY2023
FY2023
FY2023Composition

Composition
Composition
Ratio
Ratio
Ratio

3
3%%
%

2.5

2.4

2.5

2.2

2.2

2

1.9

2.1

2.2

• Automobiles• Motorcycles• Railway cars
• Aircraft

1• Platform doors
0Motorcycles

Other Machinery

2014

2015

2016

2017

2018

2019

12.9

13.4

2020

2021

2022

(Billions of yen)
15

FY2023
FY2023
FY2023Composition

Composition
Composition
Ratio
Ratio
Ratio

22
%
22%%

10

11.4

11.1

11.6

10.8

2014

2015

2016

2017

2018

2019

2020

15.0

10.3

2021

2022

(Billions of yen)

Composition
Composition
Ratio
Ratio
Ratio

25.9

25

21.1
20

deployment of platform doors at railway stations.

high load capacity and high rigidity, it is important to have the required technical strengths• Printing machines

and reliability for responding to new initiatives and systemization. Medical devices used to• Construction machinesdiagnose, treat, and prevent diseases have also made significant technological advances in• Textile machines

recent years, and their markets are growing worldwide. As the performance requirements• Measuring instruments

for these products are extremely precise, there is a need for characteristics such as high• Medical equipment

speed, accuracy, rigidity as well as low vibration, and easy maintenance. This demand forhigh quality, high-value-added products is expected to grow.

This category includes the aftermarket segment, with products for domestic and20.5

overseas distributors as well as for repairs and maintenance. Japanese motorcycle

26.7
22.7

20.6

• All industries

21.6

18.0

manufacturers and machine tool manufacturers are now shifting to overseas
production, so deliveries to overseas production sites are also included in this category.
This market segment accounts for approximately 50% of our sales, and continues togrow steadily.

2014

Nippon Thompson Co., Ltd. Integrated Report 2023

the future due to the shift to EVs in preparation for a carbon-neutral society and theMany machines are used on production lines, and in addition to basic capabilities such as2023 FY

15

33

maintain smooth and stable running. Further, steady demand can be expected in• Industrial robots

31.1
30

52
52%%
%

technologies and innovative products. High precision and quality are required to

35.5

35

FY2023
FY2023
FY2023Compositionand economy, comfort, safety, and quietness, and we continue to create unique2023 FY

50

Domestic/Overseas Distributors

10.3

13.3

Many characteristics are required for transportation equipment, including drivability

2015

2016

2017

2018

2019

2020

2021

2022

2023 FY

Nippon Thompson Co., Ltd. Integrated Report 2023
FY2023
FY202334

NipponThompsonʼs
Value Creation

Management for Sustainable Growth

Value Creation
Strategies

Progressin Business
StrategyManagement
for Sustainable
GrowthManagement for
Sustainable GrowthManagement for
Sustainable GrowthManagement for
Sustainable Growth

The Environment

Social Issues

Governance

Data

Sustainable Management Promotion

Sustainability Promotion System
In January 2022, the Group established the Sustainability
Supervision

management throughout the organization, following
regularly, in principle once every half year, mainly todevelop a sustainability promotion system and to review
issues related to each material issue (materiality), with theaim of steadily advancing sustainable management andReportSupervision

ReportEach Department and Group Company

List the issues that are relevant to the Group from among the various social problems

Step

2

Identify highly important issues by mapping the issues listed on the two axes: importance to society and

Step

3

Organize the identified issues of high importance into six material themes by grouping them based on their

Step

4

Reference: SDGs, ESG key issues of global peer companies, and opinions of internal and external stakeholders

importance to the Grouprelationship to the vision of the Company’s management philosophy

Discussion and approval by the Board of Directors of the identified material issues and processes

Group’s
6 MaterialIssuesImportance to the Group

improving our corporate value.

Positioning of Materiality

Identified Material Issues

The Group promotes sustainable management in orderdevelop initiatives in line with our basic sustainability

to achieve both our own sustainable growth and social

policy, based on our management philosophy of being

sustainability through our corporate activities. Whena technology development-oriented company that

promoting sustainable management, we identify material

contributes to society.
Materiality

Management
Philosophy

A Company Centered on Technology
Development that Contributes to Society

Basic Sustainability Policy
Material Issues

6 themes and 16 issues to be addressed

VISION 2030 Medium-Term Business Plan 2023
Nippon Thompson Co., Ltd. Integrated Report 2023

For the identified material issues, we have categorized

We are also implementing specific initiatives to address

them into 16 issues that need to be addressed from thethese issues. We will continuously assess our material

perspectives of investors. We have taken into

issues in light of social and the business environment

consideration the opinions of external consultants.

changes.
Materiality

P37

Group Material Issues(1) Implement corporate activities for realizing aprosperous global environment(2) Contribute to technological innovation byleveraging core technologies(3) Contribute to social development by providing
products society needs(4) Provide healthy, safe, and secure environmentsfor people(5) Contribute to a society where diverse people
can thrive and be rewarded for their work
(6) Continuously improve complianceand governance

16 Issues to Be Addressed(key) issues arising for various social problems, and we

35

1Management
Philosophy

Sustainability Committee
Chairperson: Shigeki Miyachi, President & CEO

our Basic Sustainability Policy. The Committee meets

Step

Board of Directors

Committee. The Committee is chaired by the President
and CEO, and its purpose is to encourage sustainable

Materiality Identification Process

Importance to Society

Basic
Sustainability
PolicyUnder our management philosophy—A Company Centered on Technology Development that Contributes
to Society—the Group aims to achieve both sustainable growth and social sustainability by promoting
corporate activities that are innovative (innovation), based on advanced technology (knowhow), andrich in creativity (originality), which is the essence of the IKO brand philosophy. In addition, throughthe implementation of the Code of Conduct and the IKO Group Materiality—the guidelines for sharedvalues and actions by all officers and employees of the Company and the Group—we will strive to build
a relationship of trust with our stakeholders, improve our corporate value, realize a prosperous global
environment, and develop a sustainable society by providing products society needs.

P37

Achieving
the SDGs

Nippon Thompson Co., Ltd. Integrated Report 2023

36

NipponThompsonʼs
Value Creation

Management for Sustainable Growth

Progressin Business
Strategy

Value Creation
Strategies

Management
for Sustainable
GrowthManagement for
Sustainable GrowthManagement for
Sustainable GrowthManagement for
Sustainable Growth

The Environment

Social Issues

Governance

Data

Material Issues
IKO Group Materiality: 6 Themes
16 Issues to Be Addressed(1)

Environmental considerations
in business activities

Implement corporate
activities for realizing
a prosperous global
environment

Promoting supply chain
management

Contribute to technologicalinnovation by leveraging
core technologies(3)
Contribute to social
development by providing
products society needs(4)
Provide healthy, safe, andsecure environmentsfor people(5)
Contribute to a society
where diverse people canthrive and be rewarded
for their work

(6)
Continuously improve
compliance andgovernance37

Medium-Term Targets for 2030

• Carbon neutrality throughout the entire supply chain•A chieve a high level of accuracy when calculating greenhouse gas
emissions and build a system for collaboration toward carbon
neutrality• Strengthen and help deepen global CSR procurement initiatives• Improve accuracy of calculating supply chain
greenhouse gas emissions• Formulate CSR procurement guidelines• Coordinate CSR procurement policies with partnercompanies• More sophisticated sustainable management linked to adapting toclimate change• Enhance corporate value while responding to climate change• Respond to and disclose achievement of TCFD
recommendations

Promoting open innovation, such • A company that thoroughly refines all technologies related to machineelements and receives requests for technological collaboration fromas industry-academiaaround the world
government collaboration• Continue and strengthen technological collaboration with industry,
academia, and government agencies• Proactively collaborate with external parties with astrong awareness of open innovation• Strengthen alliances with partner companies

Taking on the challenge of newtechnologies and new businessdomains• Accelerating our contribution to technological innovation by globallydeveloping new markets and new business domains• Product development that takes into account regional characteristics and global sales growth (overseas net sales ratio of 60% or
more)• Develop new products with value for solving social issues, such ascarbon neutral components• Strengthen marketing analysis to accurately capture
market trends• Expand sales in overseas markets• Develop better products through better contact withcustomers

Pursuing product quality andsafety• No. 1 product quality in the industry• Global quality control system• Maintenance and improvement of product quality• Maintain and strengthen quality management system• Strengthen quality education for employees• Continue providing regular survey feedback to partnercompanies

Providing flexible and stableproducts• 100% customer delivery satisfaction• Flexible delivery by reducing production lead times• Promotion of automation• Improve productivity by using DX and IoT• Review systems for stable production• Reduce production lead times for target model numbers• Deepen inventory strategy• Maintain good relations and revitalize local communities• Clean up areas in surrounding regions and rivers• Collaborate with neighboring schools to support thedevelopment of the next generation• Participate in and support local activities• Becoming a company that is needed and trusted by contributing to thecommunity and society

Providing products leading
to healthy, safe, and secure
lifestyles• Create and provide high-value-added products leading to healthy,• Manufacturer of key components that create the future for all industries
safe, and secure lifestyles
leading to the realization of healthy, safe, and secure lifestyles• Develop products together with customers, free from preconceived
ideas• Strengthen our offer of high-value-added products
through collaboration with partner companies, etc.
• Provide solutions to customers’ issues

Respecting human rights• Realization of corporate activities as well as co-existence and co-prosperity ensuring full social safety in the global supply chain• Formulate a human rights policy• Instill human rights policies into the supply chain• Conduct human rights due diligence

Strengthening recruitment andemployee training• Instill human rights policies and establish a system for conducting
human rights due diligence in the global supply chain• Acquire talented employees who will be responsible for the future of
the Group• Clarify the Group’s human resource requirements• A group of employees that creates high added value in a challenging way • Human resource development through personnel rotation and• Implement talent management
education, etc., and improve educational opportunities tailored to• Enhance self-development support system
individual preferences and careers

Building a rewarding work
environment• Work environment that realizes an optimal work-life balance• Develop a high degree of employee engagement improving various
systems, etc.

• Develop systems related to diversified work styles• Implement measures to improve employee engagement

Promoting diversity andinclusion (D&I)• Contributing to the development of a sustainable society by ensuring
diversity in human resources, regardless of gender, nationality, career,etc.

• Expand diversity by increasing the ratio of women in management
and supervisory positions, etc.

• Promote women’s activities, including better childcare
support• Actively assign foreign nationals and mid-career hires tocore human resources

Improving internal controls andensuring compliance• A system where all employees have a deep understanding of the
purpose of risk management, compliance, information security, etc.,
and are able to put these into practice successfully• Develop a system so that all employees understand the purpose ofrisk management, compliance, information security, etc., and arecapable of practicing these successfully• Improve the content of all committee discussions• Strengthen employee education, dissemination, andself-assessment• Strengthen cybersecurity

Continuously improving
corporate governance• Highly fair and transparent management through the Group’s strong
governance system• Strong governance system in the Group• Improve effectiveness of the Board of Directors, such as
ensuring diversity• Strengthen Group governance, including qualitative
improvement of Board of Directors’ deliberations

Enhancing information
disclosure and communication
with stakeholders• Maintaining good relationships with stakeholders by ensuring transparent disclosure of information• Ensure transparent information disclosure and build good relationships with stakeholders• Enhance voluntary, timely and appropriate information
disclosure• Strengthen IR activities, including heightenedcommunication with investors• Implement stakeholder engagement (dialogues)

Nippon Thompson Co., Ltd. Integrated Report 2023

Specific SDGs

•C
 ontinue and strengthen energy conservation•D evelop specific action plans to achieve medium-termtargets• Improve accuracy of calculating greenhouse gas
emissions of Group subsidiaries• Carbon neutrality throughout the entire GroupCo-existence with local
communities

business opera-

Action Plan•R
 educe actual greenhouse gas emissions fromtions by 50% or more from the baseline year

Adapting to climate change(2)Long-Term Targets for 2050 (Vision)

Nippon Thompson Co., Ltd. Integrated Report 2023

38

Management for Sustainable Growth

NipponThompsonʼs
Value Creation

The Environment

Value Creation
Strategies

Environmental Initiatives

Management
for Sustainable
GrowthManagement for
Sustainable GrowthManagement for
Sustainable GrowthManagement for
Sustainable Growth

The Environment

Social Issues

Governance

Data

Environmental Plan and Progress in FY2023

As a company centered on technology developmentthat contributes to society, we will boldly take onenvironmental challenges and aim to realize aprosperous global environment through the creationof high-quality products
Nobuya Hideshima

Senior Managing Director, Chief Environmental Management Officer

Basic Approach
Recognizing that the preservation of the global

environment-friendly development approach with minimal

environment is an important issue common to all

oil as the key concept. As part of our corporate social

humankind, the Group has been working to help resolve

responsibility, we will continue to take environmentallysocial issues, for instance by providing products where

friendly corporate actions, reduce our environmental

the C-Lube Linear Way is included as part of IKO’s

impact, and contribute to creating a sustainable,

proprietary advanced technologies, based on a global

prosperous global environment.

As shown in the table below, the Group’s initiatives tocentered on saving and creating energy, while we work to

reduce our negative environmental impact in fiscal 2023

communicate this information as a company centered onwere focused on two perspectives that are in line withtechnology development that contributes to society. As

identified material issues: environmental considerations

well, we are taking the lead in stimulating activities thatduring business operations and responding to

reduce environmental impact across society.

Countermeasures for global warming and climate change
As "a technology development-based company" that contributes to society, we will continue to design anddevelop products and services that reduce the load on the environment throughout their lifecycle. We have a

As a result, in FY 2023 we achieved both our quantitative

climate change.
From a short-term perspective, we set targets

and qualitative targets for all items listed. Moving forward,

consistent with those set by the industry associationsin addition to continuing and strengthening our initiatives,that we belong to. For the medium to long term, we have

we will promote our medium- to long-term initiatives

set ambitious targets consistent with the 1.5°C to 2°C

and accelerate developments aimed at achieving

climate change scenario. In addition, our initiatives arecarbon neutrality.

Issues to Be
Addressed

Environmental
considerations
during business
operations

Environmental Policy
1

Progressin Business
Strategy

Climate change
response

Targets for FY2023

Actual Results for FY2023

Degree ofAchievement

Reduce unit energy consumption by more than
1.0% every year (Nippon Thompson only)

3.5% reduction year on year

Achieved

Achieve a recycling rate of at least 96%
in FY2031

Recycling rate: 96.8%

Achieved

Reduce final disposal volume by 92% in FY2026
compared with FY2001

Final disposal amount: 98.7% reduction

Achieved

Formulate environmental impact reduction
measures based on use of renewable energy

Implement on-site PPA
in the Mugegawa area(launched in April 2023)

Achieved

Response to TCFD recommendations
and disclosure

Create a disclosure report in line with
TCFD recommendations and post it on the
Company’s website

Achieved

clear understanding of how our business activities impact the environment and are implementing climate change
countermeasures with the aim of achieving a completely carbon neutral supply chain.
2

We have assessed the impact of our business activities on biodiversity and are promoting environmental protection
activities in collaboration with each country and region with the aim of achieving a society that can coexist with nature.
3

4

environmental management under our Environmental Policy
since 1998. In April 2023, to prepare for strengthening

resources such as raw materials and water, while also minimizing waste.

environmental management in the future, we revised theReducing substances that are hazardous to the environment

content of our Environmental Policy and reorganized this into

Environmental compliance
We are complying with laws, ordinances, agreements, and other requirements related to environmental conservation,
and are proactively cooperating with measures that have been implemented in each country and region. We alsoestablish our own management standards as needed to further environmental conservation efforts.
Improving environmental performance
In addition to establishing environmental goals for achieving this policy, we organize an environmental management
system and engage in continuous environmental conservation activities. We endeavor to improve the environmental
performance of the IKO Group based on this review.

7

Promoting environmental communication
By making this policy clearly understood throughout the IKO Group, we will improve the awareness and knowledge of
employees about the environment. We will also proactively disclose information about the environment to all stakeholders
via positive communication in order to deepen mutual understanding and to maintain and strengthen trust.

39

with local communities, the Group has been promoting

We are thoroughly implementing Reduce, Reuse, and Recycle efforts through our business activities to minimize input

We are properly managing and reducing substances that are hazardous to humans and ecosystems throughout our

6

Recognizing the importance of co-existence and co-prosperity

Contributing to a recycling-oriented society

entire supply chain.
5

Environmental Management System

Conservation of biodiversity

Nippon Thompson Co., Ltd. Integrated Report 2023

Environmental Management Organization Chart
Board of Directors

Environmental Committee

seven items that clarify the objectives. In addition, by extending
our organization for environmental management, which waspreviously limited to Nippon Thompson, to cover affiliatedChairperson: Nobuya Hideshima, Senior Managing
Director, Chief Environmental Management Officer

companies, including non-consolidated companies, so thatthe entire IKO Group becomes One Team. In this way, we will
strengthen our system so that we can work toward resolving
environmental issues based on a common understanding.
The Environmental Committee, chaired by the executive
director in charge of the Production Department, handles
environmental management. Held more than once
semiannually, the Committee sets the Group’s annual

Sales and Management
Department Environmental
Committee

Production and Engineering
Department Environmental
Committee

Chief Environmental
Officer: Toshinao Kimura,Managing Director

Chief Environmental
Officer: Toru Okajima,Managing Director

environmental issues and monitors the progress ofenvironmental management initiatives. The details of theCommittee meetings are reported to the Board of Directors
as they are held, and the Board of Directors supervises andgives advice on the details.

Affiliatedcompanies(sales)Sales andManagement
Department

Production
andEngineering
Department

Affiliatedcompanies(production)

Nippon Thompson Co., Ltd. Integrated Report 2023

40

Management for Sustainable Growth

NipponThompsonʼs
Value Creation

The Environment

Value Creation
Strategies

Progressin Business
StrategyManagement
for Sustainable
GrowthManagement for
Sustainable GrowthManagement for
Sustainable GrowthManagement for
Sustainable Growth

The Environment

Social Issues

Governance

Data

Contributing to a Recycling-Oriented Society
Initiatives to Reduce Waste

Initiatives for Water Conservation

To help build a recycling-oriented society, the Group is

for transportation. Furthermore, we are implementing

The Gifu factory complex, the Group’s main domestic

water that decreases due to evaporation. In addition,

working to reduce the waste we generate and to improve

initiatives to minimize waste, such as reducing the use

production center, is next to the Nagara River, one of

we are promoting initiatives with plans to further reduce

recycling rates based on the principles of reduce, reuse,of plastic containers in factory cafeterias, discontinuing

the three clearest rivers in Japan, and we consider thewater consumption, including replacing hot water boilers

and recycle. The main waste materials generated fromthe use of plastic containers for beverages, employing

management of water resources to be essential for

and water-cooled cooling towers with air-cooled versions.

our business operations are scrap metals (grinding

options to decrease cushioning materials by reviewing

environmental conservation.

sludge), waste oil, sludge, grinding wheels, and waste

our packaging materials, and promoting paperlessplastic. Our medium- to long-term target for waste

Although our domestic production centers are located

In a part of Group’s business operations, we use a large

in regions with ample water supply, we are committed

environments by transitioning to digital technologies.

amount of water. We use both city water and well waterto further reducing our water consumption by reusing

We believe that the Group’s social role in building aas our intake sources, and the main applications involve

water. Additionally, we will continue implementing

generation reduction is to achieve a recycling rate of 96%
or higher by fiscal 2031 and a 92% reduction in final

recycling-oriented society is extremely important, and wethe use of fluid for grinding and cooling water usedstrict measures to maintain water quality and control

disposal by fiscal 2026. Our main initiatives to help reach

will contribute to creating a sustainable society throughduring production. However, for these applications, wewastewater temperature in compliance with all applicablethese targets are compressing scrap metals (grinding

our initiatives from a variety of perspectives.

use a circulating system, and our facilities are designed

laws and regulations.

to minimize water use, replenishing only the amount ofsludge) and reusing packaging materials in special boxes● Water Consumption (5 years)● Breakdown by Waste Type(thousand m3)

General waste(paper waste, etc.) 174

Sludge 111

Soot (dust) 40

200

150

Glass andceramics waste 97

Waste oil 884
100

FY 2023(Unit: tonnes)

50

Scrap metal 1,764

Waste plastics 34
Wood waste 44* The above are the totals from domestic production centers (Gifu and Kamakura areas).

Recycling rate (%)

4,000

100

96

3,000
2,500

92

88

1,500
1,000

84

500

Nippon Thompson Co., Ltd. Integrated Report 2023

2020

2021

2022

2022

2023

(FY)

is that substances subject to notification under the PRTR

to our customers will contribute to the improvement of

Law are strictly controlled and reported annually to

the global environment, the Group has been promoting

local governments.

green procurement since 2003. We have established the● Changes in PRTR Law Reporting(emissions and transfers to the atmosphere)

together with our suppliers. Prohibited substances are
restricted for intentional use under international laws
and regulations, including the RoHS II Directive andthe TSCA regulation, the European and US hazardous
regulated threshold value, a guarantee is required so thatthe concentration is less than that value. We believe it isimportant to have a clear understanding of the substances
we use and their regulated concentrations. Therefore, weare happy to provide information on these substances

2019

2021

Believing that providing environmentally friendly products

substance control laws, respectively. Where there is a

2,000

41

2020

Green Procurement Standard and have been working

3,500

0

2019

*T
 he above water consumption are the totals from domestic production centers (Gifu and Kamakura areas)
and IKO Thompson Vietnam Co., Ltd.

Reducing Environmentally Hazardous Substances● Waste Generation Trends and Recycling Rate
Amount of waste generated (t)02023 (FY)80

upon request from our customers.
One example of our hazardous substance management

Main
FY
Substance nameapplications 2019

(kg)

FY
2020

FY
2021

FY
2022

FY
2023

14

19

13

27

27

Methylene bis
Packing(4, 1-phenylene) cushioning
diisocyanatematerial

0

0

0

6

6

1, 2, 4-trimethylbenzene

Fuel

5

0

0

0

0

Inorganic
cyanidecompoundHeat
treatment
agent

198

188

0

0

0

Methylnaphthalene

Fuel* These are the totals from domestic production centers(Gifu and Kamakura areas).

Nippon Thompson Co., Ltd. Integrated Report 2023

42

Management for Sustainable Growth

NipponThompsonʼs
Value Creation

The Environment

Responding to Carbon Neutrality (TCFD Recommendations)Risk

corporate initiatives to achieve both sustainable growthrisks and opportunities, as well as their financial impact,

and social sustainability. As we recognize responding

as we implement countermeasures to improve theto climate change as an important management issue,

sustainability of our business. At the same time, we will

we established the Sustainability Committee in January

continue to improve the content of disclosure related

2022. In January 2023, we announced our endorsement

to governance, strategy, risk management, as well asof the Task Force on Climate-related Financial Disclosuresindicators and targets.

「 TCFD Consortium 」ロゴマーク(TCFD) recommendations. After releasing an information
disclosure report based on the TCFD recommendations inJune 2023, we joined the TCFD Consortium to reinforce

2019.09.10

GovernanceCommittee that includes inside directors with theinformation is then reported to the Board of Directors

President and CEO as the Chairperson. This committee

at least once every half year, and the Board of Directors

holds meetings at least twice a year, with the Corporate

oversees and gives guidance on the state of progress on

Planning Department and Personnel and General

the medium- and long-term targets as well as on risks

Affairs Department as the Secretariat. The Committee

and opportunities related to sustainable issues for theis responsible for developing fundamental policies onwhole Group. The Group has positioned initiatives for thesustainability which cover climate-related issues. They

environment, such as measures for combatting climate

also establish systems to promote sustainability, identify

change, as important issues for sustainable management,risks and opportunities in the medium and long term,

and are working under this promotion system toformulate and review material issues, and regularly assess

strengthen the actions taken by each department.

● Governance System Diagram on
Climate-Related Issues

Chairperson:

Chairperson:

Risk Management Committee

Shigeki Miyachi

Koji Shimomura

Corporate Planning Department /Personnel and General Affairs Department /Sales Engineering Department /EMS Environmental Secretariat

Corporate Planning Department /Personnel and General Affairs Department

Legal Department /Corporate Planning Department /Personnel and General Affairs Department /Accounting Department
Information System Department

Secretariat:

Secretariat:

Risks and opportunities where climate change issues

opportunities), and analysis of physical changes caused

impact Company Group business was assessed accordingby disasters, etc. (physical risks/opportunities) wereto the following steps by referencing each risk/opportunity

also conducted using the 1.5°C to 2°C scenario anditem indicated in the TCFD recommendations. Analysis

4°C scenario.

Step 1
Identifying and evaluating risks
and opportunities

43

Step 2
Defining scenarios

Nippon Thompson Co., Ltd. Integrated Report 2023

Step 3
Assessing financial impact

Financial
ImpactMeasures- Implementing renewable energy- Implementing energy-saving equipment

Mediumterm

MediumPopularization ofrenewable energy

Increased costs for electricity due to risingshort-term power generation costs

Short tomediumterm- Construction of solar power stations atinternal/external sites, and formulating/
implementing introduction plans
Medium- Realizing 100% renewable energy use at eachbusiness site through various means basedon “Additionality”

Changes incustomerdemandDecreased demand for carbon
negative businessMediumterm

Major- Shifting to products that contribute to low
carbon emissions- Working to achieve longer product life
- Improving the response level to meet
diversifying demands

Slow response to
climate change

Reduced sales in the European and US
markets due to insufficient climate change
measures and information disclosure

Short tomediumterm

Major- Implementing proper climate change
measures and enhancing
information disclosure

Lower employee productivity due toworsening work environment

Long term

Major- Adding break rooms and installing spot
air conditioners

Higher electricity costs due to increased
use of air conditioning in heat treatment /surface treatment processes

Medium tolong term

Medium -Implementing energy-saving air conditioners

Lower production capacity resulting fromdisaster impact at company manufacturingbases (Production bases in Vietnam
and China)

Medium tolong term

Major- Formulating and continuous review of BCP
at factories

Lower capacity utilization resulting fromdisaster impact to major suppliers

Medium tolong term

Major- Expanding suppliers- Formulating and continuous review of BCP ateach supplier

Increased costs for factory transfer(Production bases in Vietnam and China)

Medium tolong term

Major- Promoting investment in disaster mitigation

Intensification of
extreme weather

Lowered production capacity caused bydamage to company production bases due
to flooding, and higher costs for handlingdamaged equipment (Production basesin Japan)Medium tolong term

Major- Regularly confirming hazard maps andreviewing the BCP- Promoting investment in disaster mitigation

Valuation ofunused resources

Reduction of slow-moving inventory andcosts for handling waste by reuse of rail
mill ends

Short tomediumterm

Medium

- Improving the accuracy of demand forecasting- Reviewing operations for improving reuse rate

Reduced CO2
emissions

Reduced burden from carbon tax

Medium tolong term

Major- Implementing renewable energy- Implementing energy-saving equipment

EnergysourcePopularization ofrenewable energy

Reduced costs for purchasing electricity
by reducing power generation costs from along-term perspective

Long term

Medium- Procuring renewable energy throughvarious methods

Products
andservices- Increasing demand for low-friction,
Contribution toward
durable bearings
transitioning to a
- Increasing demand for “the oildecarbonized society
minimum” products

Mediumterm

Major- Improving accuracy of demand predictions for
efficient production, and shortening delivery
dates by improving production lead time
- Developing “the oil-minimum” products

Major- Strengthening production capabilities bycollaborating with partner companies- Strengthening global production system
including construction of new factories

Technology

Chronic

Rising sea levels

Resource
efficiency

Resilience

Examining measures

Time Axis

Increased investment in latest equipment- Considering investment through implementing
ICP (Internal Carbon Pricing)

Promotion ofelectrification- Developing new Mechatronics series andincreasing demand- Increasing demand for bearings due toincreased drive components

Short tomediumterm

Expansion of the
EV and storage
battery markets

Increased demand for linear motion rolling
guides and liquid crystal lubricants

Short tomediumterm

Major- Enhancing production capacity to meet future
demand growth- Establishing organization system allowing for
further production innovation

Expansion of
products compatible
with the BCP

Increase in demand for company products
as disaster mitigation devices

Medium tolong term

Major- Pursuing high-rigidity and quality

MarketStep 4

Impact on Business

Implementationof low carbon
equipmentof policy and market trend transitions (transition risks/

Analysis Process

Data- Purchasing low carbon materials and parts
Medium - Developing new low-carbon materials
through collaboration with suppliers

AcuteSecretariat:

Strategy

GovernanceMedium tolong termManaging Director

Nobuya Hideshima

Social Issues

Rising costs for raw materials due to carbon
tax implementation

Chairperson:

President and CEO

Senior Managing Director

The Environment

tax rate

Supervision
Sustainability Committee

Management for
Sustainable Growth

MediumAveragetemperaturerise

Opportunities

Environmental Committee

Management for
Sustainable GrowthLong term

Board of Directors
ReportManagement for
Sustainable Growth

Increased burden from carbon tax

Reputation

Physical risk

the progress made in implementing these policies. The

Management
for Sustainable
GrowthCarbon tax

MarketIn January 2022, the Group established the Sustainability

FactorPolicies and implementation /Regulations Increase in carbon

Transition Risk

our initiatives. Moving forward, we will carefully examine

Progressin Business
Strategy

Impact and Measures for Risks and Opportunities

Basic Approach
The Group is promoting sustainable management throughValue Creation
Strategies* Assumed period Short term: Up to 1 year / Medium term: 1 to 7 years / Long term: 7 to 27 years* Financial impact assessments of risks and opportunities were conducted according to qualitative and quantitative impact on sales or profit based on
published reports and advice from experts, etc., and then categorized as either Major, Medium, or Minor.

Nippon Thompson Co., Ltd. Integrated Report 2023

44

Management for Sustainable Growth

NipponThompsonʼs
Value Creation

The Environment(Transition Risk: Carbon tax implementation /Calculation of financial impact Increase in carbon tax rate)
Risk Contents
Regarding the transition risks and opportunities

emissions for FY2031 are reduced 50% compared toassociated with transitioning to meet the 1.5°C targets,

FY2019. Calculation results for (1) indicated an expected

we analyzed the carbon tax, as it is projected to havecost burden of about 339 million yen for FY2031 andthe most significant impact. Our analysis based on “IEA

about 197 million yen for (2). Moreover, no carbon tax

WEO2022 Net Zero Emissions by 2050 Scenario.”

burden is expected if initiatives for achieving FY2051(1) When Company standalone emissions for FY2031
are assumed to be the same as FY2023 (without CO₂
reduction measures), and (2) When Company standalone*A ccording to EA NZE, Carbon tax unit price: $140/t-CO2 in 2030,$250/t-CO2 in 2050
* 1 dollar = 130 yen

FY2031

When CO₂ reduction targets
are metReduction amount

FY2051CO₂ emissions

Financial impact

CO₂ emissions

Financial impact

18,632 t-CO₂

Approx. 339 million yen

18,632 t-CO₂

Approx. 605 million yen

10,852 t-CO₂

Approx. 197 million yen

0 t-CO₂0 million yen-(142 million yen)-(605 million yen)

Progressin Business
StrategyManagement
for Sustainable
GrowthManagement for
Sustainable GrowthManagement for
Sustainable GrowthManagement for
Sustainable Growth

The Environment

Social Issues

Governance

Data

Example (2): Virtual PPA Service (Off-site PPA)In May 2023, we concluded a virtual PPA (powerin the Company’s Scope 2 greenhouse gas emissions ofpurchase agreement) with Clean Energy Connect, Inc.

around 2.1% for fiscal 2023, ensuring that 100% of theto become the first company in the domestic bearing

electricity used at all our domestic sales offices will beindustry to purchase renewable energy. Power generation

sourced from renewable energy.

began in July 2023, and as a result we expect a reduction
Virtual PPA Service Contract(Provision of long-term environmental value)

Non-FITsolar power plant

carbon neutral targets are implemented.

We calculated financial impact using two patterns:

No measures for reducing CO₂

Value Creation
Strategies(

Developed, owned,
and operatedby CEC

Sale ofelectricity
to the market)

Wholesale
electricity
market(JEPX)

Electricity
retailer

Nippon Thompson

Electricity
supply(standard
electricity)

Risk Management
Process for identifying and assessing climate-related risks

Risk Response

The Sustainability Committee holds discussions to

President and CEO, as well as the full-time auditor. The

identify and assess the risks and their impact on theCommittee is responsible for establishing a management

Transition risks include the implementation of a neweffect of increasing the number of net new facilities forcompany’s sustainable activities in relation to climate

system to prevent, identify, correct, and prevent the

carbon tax and an increase in the carbon tax rate. In

renewable energy. We will therefore continue to consider

change. These discussions are based on “IKO Group

recurrence of any risks related to business management,

response, the Group is purchasing renewable energy

renewable energy with a focus on methods that have highMateriality,” and the Committee provides a report toincluding climate change risks. It is also responsible forgenerated from solar power. When it comes topotential for additionality. While we work to decrease our

the Board of Directors at least once every six months.

determining policies for responding to risks when theypurchasing renewable energy, we believe it is importantcompany’s CO2 emissions, we will also help promote theAlso, we have established a Risk Management

occur. Additionally, we have implemented a robust risk

to use the perspective of “Additionality,” which has theuse of renewable energy in society.

Committee consisting of Executive Directors, including

management system.

Process for managing climate-related risks

Example (1): On-site PPA
We implemented an on-site PPA (power purchase

The power generated at both sites was used in-house,agreement) for solar power generated on the roofs of ourand we expect a reduction in the Company’s Scope 2

production centers in Japan: Gokurakuji area Factory 2

greenhouse gas emissions of around 2.3% for FY 2023.

The “Risk Management Committee” clarifies thethree years via risk assessment. Risks that need to beorientation for controlling risks based on the risk

monitored and newly recognized risks are clarified based(operating since November 2021) and in the Mugegawa

assessment results conducted every year according toon the current status of risk measures. The probability ofarea (operating since April 2023) at the Gifu factory complex.

the “Risk Management Regulations,” and determines

risk occurrence, impact of the risk on corporate value, andwhich departments or organization (committee, meeting

the response status to the risks are assessed using four

body, etc.) need to respond for each identified risk

levels, and we then identify the priority risks that need toitem including climate change risks for implementing

be addressed.

risk responses. Major revisions are carried out every

Process for integrating climate-related risks into corporate risk management

Gokurakuji area Factory 2

45

Nippon Thompson Co., Ltd. Integrated Report 2023

Mugegawa area

Principally, the “Risk Management Committee” holds

risk management including climate change risks,meetings every six months, report contents on theand discussion contents are reported to the Board

response status for each risk item are assessed,of Directors.

important decisions are made on organization-wide

Nippon Thompson Co., Ltd. Integrated Report 2023

46

Management for Sustainable Growth

The Environment

NipponThompsonʼs
Value Creation

Social Issues

Value Creation
Strategies

Progressin Business
StrategyManagement
for Sustainable
GrowthManagement for
Sustainable GrowthManagement for
Sustainable GrowthManagement for
Sustainable Growth

The Environment

Social Issues

Governance

Data

Pursuing Product Quality and Safety
Metrics and Targets

Basic Approach

The Company Group calculates greenhouse gas

the entire IKO Group. Emissions of CO2 are calculated

emissions based on GHG Protocol standards for assessing

using the Asuene CO2 emissions visualization cloudand controlling the impact of climate-related issues on

by Asuene Inc. During FY 2023, calculations weremanagement. Currently, targets for reducing greenhouse

performed for overseas offices. These calculations

gas are for NIPPON THOMPSON alone, and the goal is towere not made in the previous fiscal year. For Scope

achieve at least a 50% reduction by FY2031 compared

3 emissions, calculations were performed for all target

to the benchmark emissions in FY2019 (Scope 1, 2) of

categories except for Category 9, which we are currently

21,704 t-CO2, and we are working to achieve this.

preparing. From now, in addition to improving theaccuracy of our calculations, we will work harder toSince FY 2022, the Environmental Committee hastaken the lead in calculating greenhouse gas (GHG)

reduce emissions throughout the supply chain with theemissions over the whole supply chain, which includes

goal of achieving carbon neutrality by FY 2051.

The Group is known for its commitment for delivering

policy for quality and will maintain and improve highquality, which has been ingrained in all of our employees

quality standards by repeatedly making optimal overallthroughout our long history. We strongly believe in

improvements without being content with just the statuscontinuing to produce products that our customers

quo, and provide products that customers can use safely

trust and are satisfied with. The Group has set theand comfortably.

Quality
PolicyWe are committed to quality first, and every one of us will use our creativity and ingenuity to create
products that satisfy our customers. We will make improvements to ensure that these actions remain
effective.

● Greenhouse Gas Emissions in FY2023

Scope 3

Scope 1. 2

Scope 1
0.9%

Scope 2
7.9%

FY2023
Scope 3
91.2%

Scope 1

Scope 2Category 1

Category 2

Category 3

Category 4

Category 5

Category 6

Category 7

Category 11

Quality Control System and Initiatives
Quality Control System
We believe that the high quality and precision of ourCategory 12

Total emissions
360,000 t-CO2

products is a major reason why customers choose the IKO* Other categories are not subject to the calculation.

Breakdown of major sites

Scope 1, 2

(t-CO₂)

NipponThompsonITVUBC Suzhou

18,632

11,483

1,170

ITV: IKO Thompson Vietnam Co., Ltd.
UBC Suzhou: UBC (Suzhou) Bearing Co., Ltd.

Future Plans
Group will add consolidated companies to our Scope 1 andto lead our activities who are familiar with GX (green

2 targets, quickly set Scope 3 targets, and steadily movetransformation) and have excellent environmental

forward with initiatives aimed at reducing all emissions.

literacy. This should reinforce our actions to reduce our

We are also planning to create an environment for active

environmental impact. For one example, we have begun

investments, aiming to reduce the environmental impact,acquiring an external qualification (GX Certification) using

as well as to acquire external certification. At the same time,

Skillup Green, an employee development service offeredin order to protect biodiversity, we will not only enhance

by SKILLUP AI, Ltd.

our understanding, but we also evaluate the impact of

We will work to improve the content of our information

our business operations on biodiversity. We will also makedisclosure based on the TCFD recommendations andprogress in preparing to disclose information in accordance

strive to distribute information as quickly as possible

with the Taskforce on Nature-related Financial Disclosures

to further improve our information disclosure into the(TNFD) recommendations. Further, for protecting water

future, in addition to improving the accuracy of our CO2

resources, we will set quantitative targets as early as

calculations.

possible and promote ways to reduce our water use.

47

We believe it is important to develop human resources

Nippon Thompson Co., Ltd. Integrated Report 2023

Collaboration

Nippon Thompson
Co., Ltd.

departments in Japan and is expanding this to overseas
production plants to maintain and improve the highquality of the entire Group. To provide attentive support
under our unified quality policy, we have established andare operating a quality assurance system and quality
improvement system at all sites.

Quality Control Initiatives

Collaboration

Quality Control
Department

brand. The Group has developed a quality system for our

Global Expansion
IKO Thompson
Vietnam Co., Ltd.

UBC (Suzhou)
Bearing Co., Ltd.

Quality Control
Department

Quality Control
Department

and are working to strengthen our quality control systemthroughout the entire supply chain.

For efficient quality assurance and to improve customer
satisfaction, the Group has obtained ISO 9001 certification,

For reducing our greenhouse gas (GHG) emissions, theShin Kasahara, Managing Director and Quality Assurance Officer

an international management system standard, at the
Gifu and Kamakura areas, as well as at IKO Thompson
Vietnam Co., Ltd. and UBC (Suzhou) Bearing Co., Ltd.
As part of our quality control for production, we have

Creating Quality to Improve
Customer Satisfaction
Quality is an extremely important element of our products,

introduced an inspector system. The person in charge

which is the core of the IKO brand. We will continueof each department assigns inspection assistants, who

to maintain and improve quality within the Group andare certified as inspectors, from among experienced

further strengthen our supply chain management to build

employees and who have knowledge and skills related

an optimal overall quality control system.

to inspections in that certification category. We are also

In addition to product quality, our quality of service,

working to maintain and improve the level of quality forsuch as our ability to respond to and make proposals to

in-house processes by conducting regular internal audits

customers, is also one of our strengths. We value every

once a year as well as ad hoc internal audits.

type of quality through our products and will further

In addition, once a year, we evaluate our suppliers instrengthen our customer-oriented quality so that theterms of quality, cost, and delivery. We provide feedback tosuperiority of the IKO brand can be communicated more

our suppliers on the results of these periodic evaluations,widely and effectively.

Nippon Thompson Co., Ltd. Integrated Report 2023

48

Management for Sustainable Growth

NipponThompsonʼs
Value Creation

Social Issues

Progressin Business
Strategy

Value Creation
Strategies

Management
for Sustainable
GrowthManagement for
Sustainable GrowthManagement for
Sustainable GrowthManagement for
Sustainable Growth

The Environment

Social Issues

Governance

Data

Human Capital Active Roles and Are Rewarded for Their Work

Realizing a Society Where Diverse Human Resources Can Play

Message from an Executive Officer

Our Approach to Human Resources Strategy
Based on these strengths, we will focus on aspects such

Guided by our management philosophy—A Company

Aiming to be an organization
whose DNA of integrity supports a bold
and challenging spirit
Hiroyasu Fukumasu

Centered on Technology Development That Contributes

as recruiting, developing human resources, improving

to Society—we believe that helping to resolve social

the education system establishing fair compensation andissues faced by society and our customers will lead to theevaluation systems, and creating a comfortable working

sustainable improvement of our corporate value. For thisenvironment. These efforts aim to encourage employees toreason, it is essential that we continue to be a company

take on challenges, support their independent growth, andthat is trusted and is relied upon both by society and ourenhance their engagement. Guided by being “a group of

customers. So, we position the sincerity and seriousness

employees who have a bold and challenging spirit” as theof our corporate culture and human resources (humanpillar of our human resource strategy, we aim to enhancecapital) as the source of our value creation.

corporate value by further improving our human capital.

Executive Officer, General Manager of Personnel and General Affairs Dept.

Values We Cherish
The value we have maintained since our founding is that

Human Capital Management in the Future

has consistently valued our people, which is reflected in

While we are making steady progress toward our vision,

our high retention rate. By providing a workplace where

we feel that we are still only halfway there. Specifically,

employees can work with a sense of security, we have built

since each part of the HR management strategy tends

a corporate culture of integrity, which is our strength. Thatto be individually optimized, we need to firmly integrate

integrity has earned us our customers’ trust, supportingHR management and have more sophisticated talent

our business for many years. Amid mounting uncertainty,

management. To do that, we are now in the process

however, a bold and challenging spirit to bring new valueof introducing an integrated HR management system,

into society is critical, and in our recent HR management

and we plan to implement skill development andstrategies, we have worked that aim idea in mind.

engagement programs for individual employees. In

The most notable initiative has been the transformation of
To carry out the project, we initially began a thoroughWe believe that increasing the value of human resources

dialogue with our employees. This gave us a sense of how

is vital for improving corporate value. We will continue

our employees really saw the Company and what they

to focus on human capital management with the aim ofthought we should be doing. Based on these insights, we

becoming a group of employees who have a bold andcould then set a direction to aim for. The concept of thechallenging spirit, based on our core DNA of integrity.

overhauled the customs of the seniority-based system,
challenging ourselves to instead foster a culture thatemphasizes a willingness to take on challenges anddiversity.
Two years have passed since we transitioned to our
new HR personnel system. During that time, we havequickly rolled out a series of programs to support thewillingness to take on challenges and diversity, suchas training sessions, interviews, childcare support, andsystems to support flexible working. This transformationis steadily yielding results. Certainly, many young
employees have taken up management positions, as have49

direction for the next-generation HR Department.
The source of our value creation is human resources.

effectively take on responsibilities and to get results. We

Nippon Thompson Co., Ltd. Integrated Report 2023

Desired type of employee
HiringResults and compensation
Healthmanagement/Occupational
health and safety

Human resource
development

Initiatives
D&I

with the introduction of this system, we plan to improve
the strategic role of the HR Department and establish a

A group of employees
who have a bold and challenging spirit

Corporate culture that is sincere with integrity,
supported by a group of employees

addition, by optimizing our HR management operations

the HR personnel system that we implemented in 2021.

new HR personnel system we developed as a result is to

Resolving problems for society and customers

next generation.

a company depends on its people. Our management

Embracing Challenges in Our HR
Management Strategy

Creating Future Value

many female employees. We are fostering leaders for theWork satisfaction
engagement

HiringHuman Resource Development

As a company that positions human capital as a source of

The Group believes that the trust and support of society

value creation, we see hiring activities as a priority issue atand customers through the sincerity and integrity of ourthe core of our human resources strategy. Our hiring policy

employees is the source of value creation, and that it isfocuses on recruiting new graduates, and aims to develop

important to develop human resources that encourage athem over the medium-to long term. This approachspirit of challenge based on these principles.

allows us to benefit from our high retention rate which is

As part of a specific policy, we are focusing on

one of our strengths. When hiring, we place importanceon-the-job training, which is one of the pillars of ouron finding candidates who meet our requirements anddevelopment system. Our corporate culture is built on an

who empathize with our philosophy. In the selection

approach where every member of the workplace is cared

process, through a range of channels and by creating theto educate and support each employee individually.

motivation among candidates to join us, we continue to
steadily hire human resources even amid intensifying

In addition, we are striving to develop leaders throughoffsite training based on varied job levels with thecompetition for employees. We are also focusing on hiring
career professionals with the aim of diversifying our HR
portfolio from the viewpoint of driving innovation. We
carry out these activities in a systematic way so that we
can maintain a certain ratio of mid-career hires. Goingforward, we will continue to acquire the employees whowill be responsible for the future of the Company.

Indicators

FY2021

FY2022

FY2023

Percentage of employees
receiving training by job
level (%)

11.9

10.0

13.6

Training cost per person(thousands of yen)

16

20

29

Nippon Thompson Co., Ltd. Integrated Report 2023

50

Management for Sustainable Growth

NipponThompsonʼs
Value Creation

Social Issues

Progressin Business
StrategyManagement
for Sustainable
GrowthManagement for
Sustainable GrowthManagement for
Sustainable GrowthManagement for
Sustainable Growth

The Environment

Social Issues

GovernanceDataintention of implementing HR strategies. We are also

subsidies, in cooperation with labor unions, with whichchildcare leave to balance work and childcare by working

adverse effects on the health of all people participating

conducting practical training for every department. In

we maintain a good relationship, in order to increase theclosely with their departments and the HR Department toin our business activities through the participation of all

addition, we will reinforce the development of the nextlevel of employee satisfaction. In addition, we are working

address their individual concerns, as much as possible.

employees in health and safety programs.

generation of management executives through training

to improve employee engagement by fostering individualfor senior managers and others.

growth and realizing career plans through interviews

with strengthening childcare support, aim to ensureof “safety first” and are engaged in health and safety

based on a self-assessment system and a target

diversity in our human resources, including appointing

programs that maintain safe, comfortable workplaces

management system.

women to core personnel positions, with thethat enable employees to work with enthusiasm andfollowing targets.

vigor. Specifically, we are working to prevent accidents

We are also prioritizing and supporting self-developmentof employees from the viewpoint of their autonomy. We
have an incentive system in place for local qualifications,Through these initiatives, we have been able to

All members of the Group are aware of the importance

We will continue these activities and, in combination[Target 1] Steadily increase the percentage of womenby holding regular factory safety patrols, by conducting

among all full–time recruits to 20% or more.

risk assessments, and distributing information at safety

and we also support our employees in obtaining national

maintain our low employee turnover rate for many years

qualifications. These include technical skill tests. Everyand have been able to develop human resources fromyear, a significant number of our employees successfully

a medium- to long-term perspective. We will examine

obtains qualifications. With the improvement of

current systems and approaches to continue supporting

management positions and above by 1.5

addition, we are working to raise awareness of accident

employee skills through these activities, we aim to further

our employees’ sense of security.

times or more compared with March 2022

prevention by displaying accident-free records (number

by the end of March 2025.

of days) at every workplace within the worksite.

Also, for HR development, the Group has accepted
many technical trainees from IKO Thompson Vietnam Co.,
Ltd., and we are promoting skill exchanges. We position
this training as a way to contribute to the developmentof employees who will be responsible for the economic
growth of their region. Additionally it helps in cultivatinginternationally-minded employees through diverse
experience. This is an area that we will continue to focus
on in the future.

● Number of national qualifications held(people)1,500

Percentage of
employees leaving for
personal reasons (%)
Turnover rate within
three yearsof employment (%)

FY20211.0
11.1

FY2022

1.1
13.5

2.4

The Group promotes diversity and inclusion (D&I) to

1,421
1,390

including gender and other diversity and skills, and we0

and career advancement to all employees regardless ofgender, age, nationality, work experience, etc.
The Company, as a manufacturer, especially in themachinery industry, tends to have a high percentage of

0

2021

2022

2023 (FY)* Some employees hold multiple certifications.

Work Satisfaction and Engagement
We believe that the execution of our human resource
strategy requires human resource development frommale employees. To address this situation we have taken
steps in recent years to increase our percentage of female
employees. One of the measures is organizing company
information sessions exclusively for women. As a result,the percentage of females among all employees andamong core personnel has steadily increased.
From a career development viewpoint, we focus on

Indicators

Percentage of female new graduates hired
Percentage of female employees
Percentage of female supervisors
Percentage of female managers

30

10styles, providing fair opportunities for skill development
1,200

(%)
40

Moreover, to respond to the diversified needs of society,own career goals in harmony with their respective work

promoting additional safety activities.

● Percentage of various female employees

can work on their own initiative with a sense of fulfillment.

develop employees by supporting them guided by theirhealth and safety of all employees. We will work towards

by the end of March 2030.

FY2031.

20

be an important issue. Accordingly, we will work to
1,300

monitoring long working hours, we will prioritize thetimes or more compared with March 2022

taking childcare leave to 85% or more by

strive to create an environment where every employee

we consider securing diversity in human resources tomanagement positions and above by 5

[Target 4] Increase the percentage of male employees

4.9

Diversity and Inclusion (D&I)

By establishing a mental health consultation desk and[Target 3] Increase the number of women in

FY2023boost corporate value from multiple perspectives,
1,453

1,400

Indicatorsand health committee meetings and council meetings. In[Target 2] Increase the number of women inboost quality and provide high-value-added products.

2021

2022

2023

FY

● Percentage of male employees taking childcare leave(%)
60

FY2021

FY2022

FY2023

Annual paid leave taken
(%)

64.5

62.8

68.0

Average monthly
overtime hours

4:22

10:55

13:15

Occupational accident
frequency rate

2.584

0.739

1.195

Occupational accident
severity rate

0.006

0.001

0.001

Note: Frequency and severity of occupational accidents do notinclude employees hired from outside the Company (temporary
employees).

Results and Compensation System
With the intent to effectively respond to responsibilities

40

and to get results, our HR personnel system is designed
to ensure alignment between internal qualifications,20

evaluations, and treatment. In this way, we are working to

0
2021

2022

2023

FY

nurture ambition and engagement among our employees.
For evaluations, we have introduced a goal management

Health Management /Occupational Health and Safety

and evaluation system that uses KPIs and competencies

We see our human capital as a source of value creation,

purpose of these interviews is to increase engagement by

and especially as a manufacturing company with many

promoting acceptance of feedback and evaluation, as well

Percentage of male employees taking childcare leaveas the evaluation criteria. Goals are established at the
beginning of the fiscal year, and evaluation feedback
interviews are concluded at the end of the fiscal year. The

a medium- to long-term perspective and that an

preventing “mommy” career tracks by providing childcare

employees engaged in production, and we consider

as creating communication opportunities in the workplace.

environment where employees can work with a sense of

support while working closely with employees as muchsafeguarding the health and safety of our employees

By conducting periodic interviews and evaluator training,

security is essential to achieving this goal.

as possible to foster a sense of security. We have set up

to be one of the highest priorities for corporate

we work to ensure that the system is working correctly. We

systems based on this perspective, and our childcare

management. Therefore, we aim to harmonize ourwill continue to build systems that encourage employees

consider benefits to be an important issue. So, we focus

leave and shorter working hours for childcare exceed thebusiness activities with employee health and safety

to have a bold and challenging spirit, as we strive toon improving programs, such as housing and meal

legal requirements. We also support employees who takebased on the principle of minimizing physical hazards andmaximize the value of our human capital.

To foster a sense of security among employees, we

51

Value Creation
Strategies

Nippon Thompson Co., Ltd. Integrated Report 2023

Nippon Thompson Co., Ltd. Integrated Report 2023

52

Management for Sustainable Growth

NipponThompsonʼs
Value Creation

Social Issues

Supply Chain Management

As our business grows globally, we believe that in orderthe Group but also our entire supply chain must taketo earn the trust of the international community, not only

responsible actions to meet the demands of society.

●We will procure fairly and optimally from suppliers with competitive prices, focusing on quality, cost, andon-time delivery.
●We will comply with all laws and regulations and conduct fair transactions.
●We will promote green procurement as we conduct procurement that considers the global environment.
●We will build a supply chain that will develop sustainably and fulfill our social responsibilities through our
corporate activities.

to fulfill its legal responsibilities, but also to fulfill its social

CSR Procurement Promotion System

responsibilities as a member of society through corporate
activities, in other words, CSR initiatives. Since FY1999,
ment-friendly corporate activities as a corporate social
responsibility, to reduce our environmental loads, andcontribute to creating a rich global environment.” In 2003,

Management for
Sustainable Growth

The Environment

Social Issues

Governance

Data

Basic Approach
The Group intends to be a company that is needed andcapital by good corporate citizenship, as defined in ourtrusted by communities by contributing, through our

Code of Conduct.

corporate activities, to the creation of a safe and securesociety in all regions. We believe that this will not only
improve our brand image, but will also lead to increasing
the Group’s corporate value as we enhance our human

Please refer to the Company’s website (below) for the
Code of Conduct.

https://www.ikont.co.jp/eg/sustainability/
management-promo.html

The entire Group, not only domestic but also overseas

to local communities in Japan and other countries throughsites, has been deeply involved in community activities. In

various initiatives over the years, including making

addition to organizing local cleanup drives and participating

donations at overseas locations. In this way, we have built

in neighborhood events, we have also been contributing

strong relationships with local communities.

Production Procurement Dept.

we established the Green Procurement Implementation
In July 2022, we formulated the IKO Group Supplier CSR

Management for
Sustainable Growth

Our One Team
Procurement Project*

our basic philosophy has been “to accomplish environ-Standards to promote green procurement.

Management for
Sustainable Growth

Specific Initiatives

CSR Procurement Initiatives
It is essential for a company to grow sustainably not only

Management
for Sustainable
GrowthCo-existence with Local Communities andSocial Contribution

Basic Approach

Basic
Procurement
PolicyProgressin Business
Strategy

Value Creation
Strategies

Suppliers

Procurement Guidelines to achieve our social responsibility

Sales & Marketing
Administration Dept.

more broadly, including the consideration of human rights
and labor issues as well as environmental issues.

Gifu factory complex

Donations in Vietnam

Introducing the Company atneighborhood events

Tree planting activities in the UnitedStatesCompany tours for children of
employees

Going forward, to improve the effectiveness of theguidelines, we will work closely with our suppliers to

Dialogue with Our Stakeholders

Corporate Planning Dept.

promote the use of the guidelines and strengthen our
initiatives.
For details on the IKO Group Supplier CSR Procurement
Guidelines, please see the Company’s website.
https://www.ikont.co.jp/pdf/csrguideline20220719.pdf*A Company-wide cross-functional organization consisting of the
Production Procurement Dept., the Sales & Marketing Administration
Dept, the Gifu factory complex, and the Corporate Planning Dept.

(in Japanese)

53

Since the Company conducts business globally, we believe

Group Human Rights Policy , clarifying our approach tothat respecting human rights based on international

respecting basic human rights, including the prohibition

standards is the foundation for sustainability management,of forced labor and child labor. Moreover, we are asking

and we have been promoting awareness of the respect forour suppliers to agree to the IKO Group Supplier CSR

human rights, as we state in our Code of Conduct.

Procurement Policy Guidelines, which complies with our
Human Rights Policy, and we are ramping up respect for

to respect human rights has been increasing sharply, andhuman rights throughout the entire supply chain.

we recognize that we are required to take the initiative

Through these activities, we aim to promote respect for

to respect human rights not only in our own company

human rights for all stakeholders related to our businessbut also in our supply chain. With this perspective in

activities in cooperation with various stakeholders

mind, in February 2023 the Company formulated the IKO

including business partners.

Nippon Thompson Co., Ltd. Integrated Report 2023

the Group but also our entire supply chain must takeearn the trust of the international community, not only

responsible actions to meet the demands of society.

Major stakeholders

Respect for Human Rights throughout the Entire Supply Chain

In recent years, the importance of corporate initiatives

As our business grows globally, we believe that toCustomers

Major channels of dialogue●Daily sales activities (all year) ●Exhibitions, private shows (occasionally) ●Factory tours (asneeded) ●Agency general meetings (once a year) ●Technical seminars, exchange meetings (asneeded) ●Website (all year)

Shareholders and investors●General Meeting of Shareholders (once a year) ●Presentation meeting for financial results (twicea year) ●IR/SR meetings (about 100 meetings a year) ●Various publications (securities, integrated,and business reports, etc.) ●Website (all year)

Business partners●Purchasing policy briefings (once a year) ●Purchase partner quality and environmental audits (asneeded) ●Green purchasing surveys (as needed) ●CSR purchasing guidelines compliance surveys(as needed)

Employees●Personnel evaluations and MBO interviews (four times a year) ●Self-report interviews (once peryear) ● Stress check diagnosis (once a year) ●Labor and management consultations (as needed)● Internal newsletter (as needed) ●Various consultation desks (as needed)

Local communities●Neighborhood cleanup drives (about twice a year at numerous sites in Japan and overseas)●Donations to nearby organizations (at numerous sites in Japan and overseas, as needed)●Facilitating company visits by students, business briefing events (as needed) ●Facilitating factory
tours for local residents (as needed)

Nippon Thompson Co., Ltd. Integrated Report 2023

54

Management for Sustainable Growth

NipponThompsonʼs
Value Creation

GovernanceValue Creation
Strategies

Progressin Business
StrategyManagement
for Sustainable
GrowthManagement for
Sustainable GrowthManagement for
Sustainable GrowthManagement for
Sustainable Growth

The Environment

Social Issues

Governance

Data

Corporate GovernanceCorporate Governance Structure

Basic Approach
We believe that our priorities for business are facilitating

customers’ requirements as we help to protect the global

prompt and effective decision making, enhancing theenvironment. Based on this policy, we will enhancesupervision of business execution, ensuring compliancecorporate governance.

Organization

Board of Directors

Audit & Supervisory Board

Nomination and Compensation
Advisory Committee

Management Committee

Composition

9 members (6 internal + 3
external)* Chaired by the president
and CEO

4 members (1 internal + 3
external)* Chaired by the full-time
Audit & Supervisory Board
member

4 members (1 internal + 3 external)* Chaired by outside director

6 members (6 internal)* Chaired by the president
and CEO

Objectives

Ensuring efficient execution Monitoring and supervisingof duties by directors
management

Deliberate and report on mattersrelated to nomination andcompensation as a voluntary advisory
body to the Board of Directors

Prompt managementof decision-making andbusiness execution• Decisions on importantmanagement matters• Supervision of businessexecution• Checks on businessexecution• Reporting on the status ofinternal audits, etc.

Matters related to nomination andcompensation of directors and Audit& Supervisory Board members, etc.

Confirmation of progressagainst targets and forsolutions to issues, etc.

12 times

3 times

38 times

and increasing management transparency to achievesustainable growth, and improving corporate value

Please refer to the Company’s website below for theover the medium to long term. For these tasks, we are

Basic Policy on Corporate Governance.

guided by a basic management policy of continuing todevelop together with society by promoting corporate

https://www.ikont.co.jp/ir/business/pdf/

activities in consideration of our social mission while

governancepolicy20151110.pdf (in Japanese)

Main Discussion
Items

pursing the development of technologies that meet

Number of Meetings
18 times
Held (FY2023)

Corporate Governance System
The Company has a corporate structure with an audit &an external perspective and strengthen the supervisory

supervisory board. Under this structure (details follow),function for directors. We adopted this structure towhile promoting swift management decisions andfully exercise our monitoring and supervisory role for

execution of duties, the Company has appointed threemanagement through audits by the Audit & Supervisory

outside directors to provide advice on management from

Board.

• In June 2022, the Board of Directors made progress in diversifying membership with the addition of a new female outside director who has extensive
experience and achievements in international corporate management.
• In the Nomination and Compensation Advisory Committee, it is necessary the majority of four committee members and the committee chairperson is tobe outside director. This requirement ensures the committee's independence and objectivity.

Improving Corporate Governance2015

General Meeting of Shareholders
Appointment/Dismissal

PolicyFormulation
Appointment/Dismissal

ReportAppointment/Dismissal
ReportNomination
Appointment Board of Directors/Directors
and Compensation/Advice
Advisory Committee

Audit

ReportImproving the
Objectivity ofManagement
DecisionsAudit &
Supervisory
Board(Members)

ReportReportRisk Management
Committee
Compliance
Committee

ReportPresident and CEO

Sustainability
Committee

Internal Audit Dept.

Supervision

ReportManagement Committee/Executive Directors

Information Security
Committee

Cooperation/ReportAccounting Audit

Environment
Committee
ReportReportLegal Dept.

55

Cooperation/ReportNippon Thompson Co., Ltd. Integrated Report 2023

Maintenance/Operation

Departments

Audit/Assessment

Accounting Auditor

Report2023• Established Basic Policy on Corporate Governance• Formulated handling and management standards forcross-shareholdings• Increased number of outside directors(appointment of several independent outside
directors)• Assessed effectiveness of the Board of Directors• Established Nomination and Compensation Advisory
Committee• Increased the number of outside directors (more than
1/3 independent non-executive directors)• Established Sustainability
Committee

Increasing
Diversity of
the Board of
Directors• Appointment of afemale Director

Assessing the Effectiveness of the Board of Directors
We annually evaluate the Board of Directors to ensurein the medium to long term. The evaluation relies on

its effectiveness and enhance its ability to achieve

questionnaires and interviews, and the Board of Directors

sustainable growth and improve corporate value

discusses the results.

Evaluation and Analysis Methods• Conducted evaluation questionnaires for all directors and Audit & Supervisory Board members• Individual interviews with each officer by the president and CEO, who chairs the Board of Directors

Summary of Evaluation Results for
FY2023• Confirmation that the Board of Directors as a whole is effective• The environment fosters free and open comments from external officers, creating a healthy and relaxedatmosphere for lively discussions.

Improvements from Previous Year

• Enhanced discussions to attain the goals of the Medium-Term Business Plan
• Ensured diversity of the Board of Directors by appointing female outside directors

Future Challenges• Improving the way meetings are conducted to revitalize the deliberations of the Board of Directors• Formulation and operation of succession plans for CEO, etc.

Internal
External• Formulated policy for determining the details of
directors’ compensation, etc.
• Formulated Basic Sustainability Policy• Formulated the IKO Group
Human Rights Policy

Nippon Thompson Co., Ltd. Integrated Report 2023

56

Management for Sustainable Growth

NipponThompsonʼs
Value Creation

GovernanceValue Creation
Strategies

Progressin Business
StrategyManagement
for Sustainable
GrowthApproach to Nominations
The Company's policy is to appoint directors based ona well-rounded Board of Directors with a balance of

their excellent character, insight, ability and high ethicalknowledge, experience and ability.
For a skills matrix listing the knowledge, experience,

The aim is to select individuals who can enhance theand abilities of the directors, please refer to the main

medium- to long-term corporate value of the Group andexpertise and experience in the list of officers on page 61.

earn the trust of stakeholders. This approach ensures

Policies and Procedures for Appointing and Dismissing Directors at the Nomination
and Compensation Advisory Committee
The president and CEO appoints directors by proposing

by the Board of Directors and appointed at the Generalcandidates who are vetted by the Nomination andMeeting of Shareholders. In addition, the selection ofCompensation Advisory Committee. This committee is an

executive directors is resolved at meetings of the Board of

auxiliary advisory body of the Board of Directors. After the

Directors.

committee's approval, the candidates are then approved

Succession Planning

The Environment

Social Issues

Governance

Data

The Group, consisting of the Company and 14 Group

Department conducts internal audits of the Company

companies (including eight consolidated subsidiaries andand its affiliates, and then provides regular reports on

six nonconsolidated subsidiaries), manufactures and sells

the audit results to the President and CEO, the Board ofbearings and other products in Japan and around the world.

Directors, and members of the Audit & Supervisory Board.

Based on the Regulations on Division of Duties, etc., theDecisions concerning important matters at affiliateddivisions under the control of the Company are given thecompanies are reported to the Company, the parent

authority and responsibility to manage affiliated companies,

company, in advance. These decisions are thoroughly

and they cooperate with related divisions to provide

reviewed and approved either by the Management

guidance and the full implementation of internal controls forCommittee or the Board of Directors to ensure thethe affiliated companies that they are in charge of.

appropriateness of business operations at affiliated

The officers of affiliated companies are appointed

companies.

by the Company’s directors or senior employees, etc.,

Further, for ensuring effective and smooth execution of

to successfully execute and supervise their businessbusiness operations at affiliated companies, the Company

operations. By reporting and discussing businesshas established the Affiliated Company Management

operations with affiliated companies, we ensure

Regulations to clarify the management system andsuccessful business execution by sharing information andoperation methods of affiliated companies.

(2) Retirement criteria and procedures

Cross-Shareholdings

The appointment of the president is decided by the

The Nomination and Compensation Advisory

Board of Directors based on the succession plan and after

Committee discusses and formulates the succession plan

receiving a report from the Nomination andfor the president. They take into consideration factors

Compensation Advisory Committee.

such as experience, ability, personality and other qualities,(3) Dismissal Criteria and Procedures

The Company has established internal standards

based on the company's management philosophy andDismissal of the president is decided by the Board ofstrategy. The committee then reports to the Board of

Directors when it becomes difficult for the president to

Directors as needed.

execute his/her duties.

directors.
Please refer to the Corporate Governance Reportshareholder returns. The goal is to motivate the directors

posted on the Company’s website for the detailed

to improve the Group's performance and increase theinformation on the policy for determining compensation,

corporate value in the medium to long term. Additionally,

etc., for each director (including an explanation of thethe compensation for individual directors is determinedmonetary and stock compensation systems, as well asbased on their responsibilities and achievements. Guided

performance-based compensation and the process forby this fundamental policy, the compensation of thedetermining Directors’ compensation).

that are determined to have little significance for ourand the Board of Directors annually examines the need,holdings and will work to reduce the number of shares

rationality, and other factors for retaining the holdings

held.

The Board of Directors annually reviews every

relationships with customers and suppliers and ensuring

shareholding from both qualitative and quantitativethat supply chains function well.
The quantitative verification relates to, for example,

perspectives.
The qualitative verification is related to businessstrategies, such as maintaining smooth business
Balance Sheet Amountbasic compensation is also paid to the Company’s outside

related transactions, exceed the cost of capital.

(Issues)(Millions of yen)
10,00053
52

Qualitative
Verification

51

https://www.ikont.co.jp/ir/business/pdf/
cgreport20230627.pdf (in Japanese)

50
49

8,000

48
47

Compensation System for Executive Directors

46

Bonuses

Stock-based Compensation

Monetary compensation

Monetary compensation

Stock-based compensation

43
42

Fixed/Variable

Fixed compensation

Variable compensation (linked
to short-term performance)

Variable compensation (linked
to medium- to long-term
performance)

Target Ratio (%)

65

20

15

6,000

OverallJudgment

44

41
4,000
0

Quantitative
Verification

45

Basic Compensation

Nippon Thompson Co., Ltd. Integrated Report 2023

whether the earnings from shareholdings, including

Number of Stocks Held

Company’s executive directors includes basic compensation, bonuses, and stock-based compensation, andAs a result, the Company will consider selling sharesshareholdings is to maintain stable business relationships,

Verifying the Rationality for Holding Shares

Basic Policy
system of directors with business performance andfor cross-shareholdings. The main purpose of cross-investment targets, among various criteria.

after comprehensively considering their stability as

Executive Compensation
The Company's basic policy is to align the compensation

Holding Policy

Reduction Target

for the President

57

Management for
Sustainable Growthcollaborate with them when necessary. The Internal Audit(1) Formulation and operation of a succession plan

Cash/StockManagement for
Sustainable GrowthGroup GovernanceApproach to the Composition of the Board of Directors

standards rather than their gender, age, nationality, etc.

Management for
Sustainable Growth

Continue Holding

Rationality
No rationality

40

2019

2020

2021

2022 2023

0
FY

Nippon Thompson Co., Ltd. Integrated Report 2023

58

Management for Sustainable Growth

NipponThompsonʼs
Value Creation

GovernanceValue Creation
Strategies

Progressin Business
StrategyManagement
for Sustainable
GrowthManagement for
Sustainable GrowthManagement for
Sustainable GrowthManagement for
Sustainable Growth

The Environment

Social Issues

Governance

Data

Message from an Outside Director
and embracing change—we are moving forward with

Working from a global viewpoint

embracing change for management, to enable both

It has now been one year since I joined Nippon Thompson

March 31, 2023, we are making steady progress toward

The Board of Directors as a platform
for frank and open discussion

achieving the three-year average financial targets

Under the excellent facilitation of President Miyachi as

for operating profit and ROE that are outlined in the

the Chair, the Company’s Board of Directors holds frankMedium-Term Business Plan. This information isand open discussions. The Board also works to ensure

regularly reported to the Board of Directors, and I amthat outside officers can be better informed throughalways deeply impressed by the easy-to-understand,visits to production sites inside and outside of Japan, as

high-quality reporting, which visualizes the progress ofwell as through participation in the Innovation Fair, where

initiatives and the recognition of the challenges for the

up-and-coming engineers showcase their R&D projects,

future.

for example. President Miyachi is a corporate manager

as an outside director. After working as a cabin attendant
for a global airline, I became the CEO of the Japanesesubsidiary of a costume jewelry brand. In my 11 years at
the airline, I encountered a wide range of values, cultures,and mindsets through my communication with people ofdiverse nationalities, and I believe that this experience has
shaped who I am today. Afterwards, I moved into business
management. However, this process has been difficult.
While witnessing unpredictable changes in the businessenvironment caused by the Great East Japan Earthquake
and the COVID-19 pandemic, we were somehow able
to weather the storm. Facing these difficulties, however
presented a good opportunity for me to improve my set ofskills. Moreover, through my experiences as a manager, I
have always felt the importance of people. Through theseexperiences, I have also come to realize the importance ofdiversity. I feel that my experience is one of myessential assets.
Using my skills and coming from a unique perspective,
I am participating in the management of Nippon
Thompson as an outside director. Even before I joined thecompany, I was aware that it is a highly respected bearing
manufacturer in the industry, both in Japan and overseas.
It is known for producing high-quality, high-value-added
products with exceptional technical strengths. However,there are some significant differences from the industries
that I have previously worked in, and I recognize that it
is my role to provide advice from a completely different
perspective than the internal directors. Further, as theCompany seeks to accelerate worldwide business growthand become a company that can earn widespread trust
across the globe, I believe that my advice, which comesfrom my career experience and unique viewpoint, can beutilized in management. Also, the importance that theCompany places on people is something that correlates

I will support the healthy growthof Nippon Thompson andcontribute to the promotion of D&I
from a global viewpoint and myperspective as a female director.

Atsuko Noda
Outside Director

with my own experience and values, and where I canhave empathy with others.

The potential of Nippon Thompson andchallenges for the future
We are currently working towards the goals outlinedin the Medium-Term Business Plan 2023 (fiscal year
ending March 31, 2024), the theme of which is value
improvement and value co-creation. Based on thethree basic policies for the plan—deepening, expanding,59

Nippon Thompson Co., Ltd. Integrated Report 2023

deepening and expanding. As of the fiscal year ended

Employees at Nippon Thompson often use the phraseof outstanding character, and at the Board of Directors

One Team. While organizations tend to be viewed

meetings, we can see his strong will and strict approach to

as top-down structures, but our corporate culture isachieving the targets of the Medium-Term Business Plan.

one of openness between departments and in-depth

While sometimes the discussions can get heated, I believe

cross-departmental teamwork, and in this sense, One

that under the President’s leadership we are able to haveTeam is the ideal term. As I mentioned earlier, there is ain-depth discussions, in the limited time that is available.

corporate culture of placing importance on people in the

As an outside director, I strive to fulfill my responsibility

Company. Our low employee turnover rate is the result ofof supervising the corporate management of the

our approach to creating a sincere corporate culture andmanagement team and to offer advice for ensuring the

rewarding work environments.

healthy progress of growth strategies and the medium-On the other hand, I believe there are two challenges

to long-term improvement of our corporate value. I willthat the Company needs to tackle. First, we mustalso not hesitate to ask even basic questions at

proactively promote our strengths. In one sense, Nippon

Board meetings.

Thompson is a group of engineers with excellent
technological abilities, while our management philosophy
is to become a company centered on technology

Promoting D&I at Nippon Thompson

development that contributes to society. While this is

Diverse human resources provide a strong foundation foradmirable, I believe that we must also communicate

innovation. I hope to contribute to business growth andthe outstanding nature of our company more actively

sustainable management by promoting D&I (diversity andto external parties. Surprisingly, for example, it is notinclusion) as an outside director of the Company.

generally known that our products are utilized in NASA’s

While we are making steady progress with ourMars rovers and state-of-the-art surgical robots. It is very

Medium-Term Business Plan, as I mentioned, in orderunfortunate that we are not effectively showcasing ourfor us to achieve more growth globally, it is essential thattechnological strengths.

we secure a diverse range of employees regardless of

The second challenge is diversity. In particular, there

gender, nationality, career history, and age, for example.

are still many hurdles for the Company to overcome

As part of our initiatives to address material issues, wefor having more active roles for female employees. The

are seeing a steady rise in the percentage of women

Company is aware of this challenge, and the promotion

being hired, as well as the percentage of women inof diversity and inclusion (D&I) is now one of the IKO

management and supervisory roles. Moving forward,

Group’s six material themes: “Contribute to a society

I will continue to focus on fair assessments, effective

where diverse people can thrive and be rewarded for

promotions, and the selection of female employees

their work.” Specific action plans have been put together,for positions as officers. With equal wages and otherand I have high expectations for their success. I believesystems in place for both male and female employees,that these two challenges are interrelated. By proactively

I believe that Nippon Thompson is a company thatshowcasing our strengths, we can communicate thehas a comfortable environment for women to work in.

potential of our technologies and bearing products to

Looking ahead, I will prioritize making a strong appeal toa wider range of stakeholders. In addition, increasing

strengthen our corporate culture which includes encour-

opportunities for women to play more active roles can be

aging participation by woman. I am also committed toanother major selling point for the Company externally.

further promoting D&I.

Nippon Thompson Co., Ltd. Integrated Report 2023

60

Management for Sustainable Growth

NipponThompsonʼs
Value Creation

Governance

Officers and Skills Matrix

Progressin Business
Strategy

Value Creation
Strategies

Position

Career summary, positions,
responsibilities, and significant
concurrent positions

Period of service
Number of shares held

Shigeki Miyachi
President & CEO

Management for
Sustainable GrowthManagement for
Sustainable GrowthManagement for
Sustainable Growth

The Environment

Social Issues

GovernanceData(as of June 27, 2023)

Directors

NameManagement
for Sustainable
GrowthAudit & Supervisory Board Members

Nobuya Hideshima Toshinao Kimura
Senior Managing
Director

Koji Shimomura

Tooru Okajima

Shin Kasahara

Youichi Takei

Satoshi Saito

Atsuko Noda

Nobuhiro Matsumoto

Full-time Audit & Supervisory Outside Audit & Supervisory
Board Member
Board Member

Outside Audit & Supervisory
Board Member

Outside Audit & Supervisory
Board Member

Managing Director

Managing Director

Managing Director

Managing Director

Outside Director

Outside Director

Outside Director

Taketo Nasu

Kazuhiko Kimura Kazuhisa Hayashida

Apr. 1979
Joined The
Tokai Bank, Limited(currently MUFG
Bank, Ltd.)
Oct. 2008
Joined the Company
Jan. 2009
General Manager ofCorporate Planning
Dept.
June 2010
Managing Director
and General Manager
of Corporate Planning
Dept.
June 2012
President & CEO(current position)

Apr. 1978
Joined Yamaha
Motor Co., Ltd.
Mar. 2013
Director & Managing
Executive Officer
June 2017
Outside Director of
Fujibo Holdings, Inc.
June 2018
Outside Directorof ShinMaywa
Industries, Ltd.
June 2019
Outside Director of
the Company
June 2022
Senior Managing
Director of theCompany, in chargeof Production Dept.
and Legal Dept.
(current position)

Apr. 1981
Joined the Company
June 2010
Director and General
Manager of Sales &Marketing Headquarters
Apr. 2015
Director and Senior
Executive Officer,
Chairman of IKO
International, Inc., andChairman of Nippon
Thompson Europe B.V.
Apr. 2018
Managing Director,
deputy in charge of
Production Dept., andGeneral Manager ofGifu factory complex
Apr. 2022
Managing Director, incharge of Sales Dept.
and Sales Engineering
Dept., and deputy incharge of Corporate
Business Development
Dept. and Products
Development Center(current position)

Apr. 1981
Joined the Company
June 2012
Director and General
Manager of WesternJapan Regional Office
Apr. 2018
Managing Director, incharge of Sales Dept.
and Sales Engineering
Dept.
Apr. 2022
Managing Director, incharge of Corporate
Planning Dept.,
Personnel andGeneral Affairs
Dept., Accounting
Dept., Logistics
Operations Dept.
and Secretary Dept.,
deputy in charge ofCorporate Business
Development
Dept., and General
Manager of Export
Administration Dept.
(current position)

Apr. 1984
Joined The Tokai Bank,
Limited (currently
MUFG Bank, Ltd.)
June 2013
Joined the Company
July 2013
General Manager ofCorporate Planning
Dept.
June 2015
Director and Executive
Officer, in charge of
Accounting Dept.,
Logistics Operations
Dept. and Secretary
Dept., and General
Manager of Corporate
Planning Dept.
Apr. 2018
Managing Director, incharge of Accounting
Dept., Information
System Dept., Logistics
Operations Dept. andSecretary Dept.
Apr. 2022
Managing Director, incharge of Information
System Dept. and DX
Promotion, deputy incharge of Production
Dept., and General
Manager of Gifu
factory complex(current position)

Apr. 1984
Joined the Company
June 2016
Director andExecutive Officer, andGeneral Manager ofTechnical Center
Apr. 2022
Managing
Director, in charge ofCorporate Business
Development Dept.,
Quality Assurance
Dept., Products
Development Center,
Technical Center, UBC(Shanghai) Precision
Bearing MFG. Co., Ltd.
and UBC (Suzhou)
Bearing Co., Ltd., andGeneral Manager
of Technical Center(current position)

Apr. 1993
Registered as attorney(Dai-Ichi Tokyo Bar
Association)
Apr. 2000
Partner of Meitetsu
Law Offices (current
position)
June 2003
Outside Audit &Supervisory Board
Member of theCompany
June 2006
Outside Audit &Supervisory Board
Member of Yamakin(Japan) Co., Ltd.
(current position)
June 2013
Outside Director of
the Company
June 2020
Outside Directorof Daio Paper
Corporation (current
position)Jan. 2022
Audit & Supervisory
Board Member of
Nippon Export andInvestment Insurance(current position)

Apr. 1982
Joined The Tokai Bank,
Limited (currently
MUFG Bank, Ltd.)
Apr. 2005
Professor of School ofManagement (current
position)
June 2007
Outside Audit &Supervisory Board
Member of theCompany
June 2016
Outside Director

Apr. 1983
Joined Japan Airlines
Co., Ltd.
Apr. 1991
Purser
Sept. 1994
Established Henkel& Grosse Japan
Representative Office,Japan Representative
Dec. 2002
Representative
Director & CEO of
Grosse Japan Inc.
June 2022
Outside Director of
the Company

Apr. 1987
Joined The Tokai Bank,
Limited (currently
MUFG Bank, Ltd.)
June 2013
Executive
Officer, The Bank ofTokyo-Mitsubishi UFJ,
Ltd. (currently MUFG
Bank, Ltd.)
June 2017
Director (Member ofthe Audit & Supervisory Committee) of
The Bank of TokyoMitsubishi UFJ, Ltd.
June 2019
Corporate Auditorof Mitsubishi UFJ
Morgan Stanley
Securities Co., Ltd.
June 2019
Member of theBoard of Directors(Member of the
Audit & Supervisory
Committee) of
Mitsubishi UFJ
Securities Holdings
Co., Ltd.
June 2023
Full-time Audit &Supervisory Board
Member of theCompany (current
position)

Apr. 1996
Registered as
attorney (DaiIchi Tokyo Bar
Association)
Jan. 2001
Attorney admitted to
the New York State
Bar, USA
Apr. 2009
Partner, Blakemore& Mitsuki (current
position)
June 2013
Outside Audit &Supervisory Board
Member of theCompany

Apr. 1976
Joined The
Tokai Bank, Limited(currently MUFG
Bank, Ltd.)
Sept. 2004
Executive Officer of
UFJ Bank Limited(currently MUFG
Bank, Ltd.)
Apr. 2012Managing Executive
Officer of Aioi Nissay
Dowa Insurance Co.,Ltd.
June 2015
External Auditor of
The Chukyo Bank, Ltd.
June 2017
Outside Audit &Supervisory Board
Member of theCompany (current
position)
Oct. 2022
External Director(Member of the
Audit & Supervisory
Committee) of The
Chukyo Bank, Ltd.
(current position)

Apr. 1997
Joined Tokyo Electron
Ltd.
Feb. 2014
Opened Kazuhisa
Hayashida CPA Officeas President (current
position)
June 2017
Outside Audit &Supervisory Board
Member of BlueMeme Inc. (current
position)
Dec. 2017
Audit & Supervisory
Board Member of
OpenModels Inc.
(current position)
June 2019
Outside Audit &Supervisory Board
Member of theCompany
July 2020
Outside Audit &Supervisory Board
Member of
Manabi-aid Co., Ltd.
(current position)
July 2021
Director (part-time
Audit & Supervisory
Committee member)of DN HOLDINGS CO.,LTD. (current position)

13 years

4 years

13 years

11 years

8 years

7 years

10 years

7 years

1 year

New Appointment

10 years

6 years

4 years

121,772 shares

3,525 shares

25,696 shares

60,540 shares

38,831 shares

20,562 shares

-

-

-

-

-

-

-

18/18 times

18/18 times

18/18 times

18/18 times

18/18 times

18/18 times

18/18 times

18/18 times

13/13 times-

18/18 times

18/18 times

18/18 times-

12/12 times

12/12 times

12/12 times

Rate of attendance at meetings
Attendance at Board of Directors’
meetings
Attendance at Audit & Supervisory
Board Meetings

Affiliated committees
Nomination andCompensation Advisory Committee●● (Chairperson)

●

●

●

●

Expertise and experience
Corporate management●

Manufacturing, technology, anddevelopment
Sales and marketing●

Finance and accounting●

Compliance and risk management

●

●

●

●

●
●

●

●
Senior Executive Officers

Executive Officers

Nippon Thompson Co., Ltd. Integrated Report 2023

Takahiro Nakano
Kenji Yokoyama
Tadayoshi Ariga
Shuichi Tezuka
Yasushi Nakajima
Hiroaki Tago

■
■

●
●

●

●

●

●

Global business

61

●

●

●

Personnel and human resources
development

Executive Officers

●

●
●

●

●

■

■

●

■

■

■

■

■

■

●

●
General Manager of Sales & Marketing Administration Dept.
General Manager of Linear Series Manufacturing Dept.
Chairman of UBC (Shanghai) Precision Bearing Manufacturing Co., Ltd.
Overall Manager of Eastern Japan Regional Office
President of Nippon DIC Co., Ltd.
General Manager of Overseas Sales Dept. I■

Executive Officers

Satoshi Sato
Toyohisa Ishihara
Mikihito Hosono
Atsushi Tsuchimochi
Hiroyasu Fukumasu
Akihiko Hattori

General Manager of Needle Manufacturing Dept.
General Manager of Production Innovation Dept.
General Manager of Corporate Planning Dept.
President of IKO Thompson Vietnam Co., Ltd.
General Manager of Personnel and General Affairs Dept.
Overall Manager of Central Japan Regional Office and General Manager of Central Regional Office

Nippon Thompson Co., Ltd. Integrated Report 2023

62

Management for Sustainable Growth

NipponThompsonʼs
Value Creation

GovernanceValue Creation
Strategies

Progressin Business
StrategyManagement
for Sustainable
GrowthManagement for
Sustainable GrowthManagement for
Sustainable GrowthManagement for
Sustainable Growth

The Environment

Social Issues

Governance

Data

Risk Management
Basic Approach

manage the security of the Group’s information assets

sophisticated cyberattacks.

(information and the systems, equipment, media, and

The Group provides effective responses to risks that could

management in order to fulfill our social responsibility

Given this digital environment, we consider it an

facilities that handle this information). Accordingly,

impede business as an important management issue.

to our customers, business partners, shareholders, local

important management issue in fulfilling our social

the Company has established information security

We also secure the trust of society as we promote risk

communities, employees, and all other stakeholders.

responsibility to accurately identify and address risks

management regulations, and we are developing andrelated to information management and to effectively

operating an information security management system.

Risk Management System
The Group has developed a risk management system in linewith our risk management guidelines, as the occurrenceof risks could impact corporate management. The Risk
Management Committee chaired by Koji Shimomura, theManaging Director, consists of executive directors including
the President and CEO, as well as the full-time Audit &Supervisory Board member. The Committee is responsible
for creating risk management policies and ensuring thatrisk reduction measures are effectively implemented
across the organization. Additionally each department
carries out risk inspections and internal audits to enforce
controls. In addition, the Company will quickly determine apolicy for dealing with any risks identified through control
activities as well as any new risks that appear.
The Risk Management Committee meets twice a year
typically, and receives reports on the risk items identified
through annual risk assessments conducted by departments
and organizations. The committee then makes criticaldecisions on the most effective ways to manage theserisks. The contents of deliberations are reported to the

Information Security Management System
Risk Management System

The Group has developed a system to ensure that theBoard of Directors
Supervision

ReportRisk Management Committee(Chairperson: Koji Shimomura,Managing Director)
Response
instruction

ReportInternal Audit Dept.

Response department(each jurisdiction)
Response organization(committee)
Monitoring
and guidance

ReportAudit/
Assessment

Subsidiaries and affiliates

Disaster Risk Response: BCP Initiatives
We have formulated business continuity basic regulations

situations. To improve the effectiveness of the safety

for the safety of our employees, etc., as well as to protect

confirmation system for employees, etc., the Company isassets and to maintain and quickly resume importantbuilding a system to prepare for disasters, for example, bybusiness operations. We have also formulated a businessconducting periodic safety response drills.

continuity plan (BCP) to ensure preparedness for

Furthermore, in response to the global outbreak ofpotential damage and facilitate recovery in the event of

COVID-19, we ensured uninterrupted production anda disaster. Additionally we are enhancing our systems tomaintained our product supply system by implementing

better handle such situations.

strict measures to prevent the spread of infections at our

In addition to disaster drills, a safety confirmation

domestic and overseas production sites. This included asystem has been introduced to quickly and efficiently

COVID-19 response meeting with department managers,

gauge the safety and circumstances of employees inas well as the President and CEO, to formulate andthe event of a disaster or emergency, such as a major

discuss policies for addressing the pandemic. We will

earthquake. The safety information obtained through thiscontinue to consider other measures to quickly andsystem can be used to implement our BCP in emergency

effectively reduce risks.

Information Security
Basic Approach

The Chief Information Security Officer has established

Security Officer: Koji Shimomura, Managing Director),

the Basic Policy on Information Security, for establishing

which consists of executives directors including theinformation security management, and we thoroughly

President and CEO as well as the full-time Audit &educate and inform directors, employees, and others

Supervisory Board member, oversees the entire

about the need for continuous improvement and theorganization and effectively manages information

importance of meeting legal and regulatory requirements.

Compliance
Recognizing the importance of compliance, the Group

ensure compliance with laws, regulations, the articles ofhas established and is operating a code of conduct

incorporation, social norms, and other requirements, andand compliance management regulations as theto fulfill our social responsibilities.

standards of conduct for directors and employees, etc., toCompliance Promotion System
The Compliance Committee (Chairperson: Koji

and inform directors and employees of the code of

Shimomura, Managing Director), which consists ofconduct and other internal regulations. The Company

executive directors including the President and CEO as

has also established and is currently operating an internal

well as the full-time Audit & Supervisory Board member,

reporting desk. The Internal Audit Department audits

oversees the entire organization to thoroughly educate

effectiveness of the compliance system.

Antibribery and Anticorruption Initiatives
The Group’s Compliance Handbook clearly states theand during other opportunities.

prohibition of bribery and other forms of corruption.

In the self-inspections conducted in FY2023, based on

In addition, based on our compliance management

compliance management regulations, no violations wereregulations, self-inspections are conducted twice a year

reported, and the same was true for the audits conducted

at all departments, and ongoing education is provided

by the Internal Audit Department.

through new employee training, job grade-based training,

Internal Reporting System
The Group has established a hotline, also known as aand prohibiting the mistreatment of whistleblowers. Any

whistleblowing system, to serve as a contact point for

conduct in violation of laws and regulations is subject toreporting potentially illegal or inappropriate actions. The

disciplinary action as outlined in our internal rules.

purpose of this hotline is to detect and address theseIn FY2023, we received a total of 15 reports: 13 wereactions at an early stage. We have an internal reporting

submitted to the internal reporting desk and 2 weredesk and an external reporting desk.

submitted to the external reporting desk. Both reports

Anonymous reporting is also an option, and theWhile advances in information processing and network

information, both internally and externally, also brings

Company diligently follows regulations regarding

technology are progressing quickly, the ease of managing

increasing risks. These risks include information leaks,

compliance, which include maintaining confidentiality

Nippon Thompson Co., Ltd. Integrated Report 2023

security.

Information Security Committee (Chief Information

Basic Approach

Board of Directors for supervision and advice.

63

falsifications, and destruction caused by increasingly

were handled in cooperation with the related departments
fairly and faithfully.

Nippon Thompson Co., Ltd. Integrated Report 2023

64

NipponThompsonʼs
Value Creation

Data

Progressin Business
Strategy

Value Creation
Strategies

Management
for Sustainable
GrowthManagement for
Sustainable GrowthManagement for
Sustainable GrowthManagement for
Sustainable Growth

The Environment

Social Issues

Governance

Key Financial and Nonfinancial Data for the Past 11 Years

Data(Unit: millions of yen)

FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022

FY2023

Profit and Loss
Net sales

35,962

39,25944,972

43,664

44,13055,22857,57047,457

Operating profit
EBITDA
Profit attributable to owners of parent

44,34262,284

68,260

1,185

(251)

3,877

3,018

1,145

2,649

4,883

1,341

(559)

5,898

9,459

4,726

3,654

7,504

5,144

3,625

5,657

8,748

5,202

4,211

11,53414,002

(124)

568

2,966

1,569

(291)

1,678

3,718

(185)

215

4,134

7,469

Total assets* 1

84,34386,891

93,411

89,197

99,627

98,493

101,468

98,118100,946

107,078

114,347

Net assets

53,16756,121

61,09958,05658,60559,66660,19557,43959,42563,974

71,662

Cash flows from operating activities

(352)

9,051

7,690

2,521

4,981

6,043

5,158

(2,497)

5,658

10,265

6,398

Cash flows from investing activities(2,768)(1,595)(2,443)(4,908)(5,376)(1,379)(5,061)(6,188)(3,007)(2,100)(2,702)

Free cash flows(3,121)

7,456

5,247

(2,386)

(394)

4,663

96

(8,686)

2,650

8,165

3,696

Cash flows from financing activities(1,561)(3,562)(1,856)(1,944)

7,126(6,696)(1,047)

4,618

(412)

(6,442)(3,351)

Capital expenditures

2,028

2,127

2,427

6,150

2,627

2,535

5,248

5,455

2,752

2,019

2,504

Depreciation and amortization

3,048

2,636

2,584

2,272

2,596

3,094

3,297

3,800

3,833

3,885

3,423

683

785

778

903

990

1,036

1,148

1,305

1,266

1,324

1,526

(1.70)

7.82

40.71

21.64

(4.04)

23.35

51.95

(2.59)

3.02

58.27

104.92

9.0

10.0

11.0

13.0

13.0

13.0

15.0

12.5

8.0

13.0

19.0

3.3

(0.6)

8.6

6.9

2.6

4.8

8.5

2.8

(1.3)

9.5

13.9

ROA (return on assets) (%)

(0.1)

0.7

3.2

1.8

(0.3)

1.7

3.7

(0.2)

0.2

3.9

6.5

ROE (return on equity) (%)

Financial Position

Cash Flows

Capital Expenditures, etc.

Research and development expenses
Per Share Indicators
Earnings per share (EPS) (yen)Dividend per share (yen)Financial Indicators
Operating profit to net sales (%)

(0.2)

1.0

5.1

2.6

(0.5)

2.9

6.2

(0.3)

0.4

6.7

11.0

ROIC (return on invested capital) (%)

1.0

(0.2)

3.1

2.7

0.9

2.3

4.2

1.1

(0.4)

4.7

7.1

Equity ratio (%)

63.0

64.6

65.4

65.0

58.4

60.1

59.1

58.4

58.7

59.6

62.6

Dividend payout ratio (%)

-

127.9

27.0

60.1

-

55.7

28.9

-

264.9

22.3

18.1

11.6

9.8

7.7

7.7

7.4

5.6

5.8

8.0

8.8

6.3

6.3

Number of employees (people)

1,275

1,451

1,750

1,750

1,919

2,232

2,448

2,232

2,456

2,688

2,613

Ratio of female employees (%)*2

6.8

7.0

7.8

8.6

9.7

11.7

11.3

11.5

11.9

12.3

12.8

17,356

16,993

26,30927,42927,24930,84831,75030,58023,89433,24232,129

Electricity consumption (MWh)30,08633,382

41,74644,071

44,02350,37457,99554,29744,45864,36561,731

Water consumption (1,000 m3)

110

104

124

142

134

146

165

145

134

162

160

2,578

3,067

3,437

2,952

2,972

3,114

3,507

3,015

2,135

2,995

3,147

130

91

113

94

27

26

216

206

12

32

33

Inventory turnover (Months)
Nonfinancial Data

Greenhouse gas emissions (t-CO2)*3*3

Waste emissions (tonnes)
Amount of PRTR substances emissions/transfers (kg)* 1 Guided by the Partial Amendments to Accounting Standard for Tax Effect Accounting, the consolidated balance sheets as of the end of FY2018 were reclassified.
* 2 Percentage of female employees of Nippon Thompson on a nonconsolidated basis, as of January 1 for each fiscal year
* 3 Data from FY2019 onward have been revised by reviewing calculation standards and expanding the scope of calculation.
Operating Profit / Operating Profit to Net Sales
Operating profit

ROE (Return on Equity)

Operating profit (%)
to net sales
15

(%)
12

8,000

12

10

6,000

9

(Millions of yen)
10,000

4,000

6

65

6
2

0

0

0

-2,000

-3
FY

-2

2019

2020

2021

2022

2023

Nippon Thompson Co., Ltd. Integrated Report 2023

2019

2020

2021

2022

2023

FY

Profit attributable to owners of parent increased
80.7% over the previous fiscal year to a newrecord high. ROE improved 4.3 percentage
points over the previous fiscal year to 11.0%.

(t-CO2/million yen)
0.8
0.6

20,000(people)(MWh)80,0002,750

Number of employees
Percentage of female employees

60,00040,000

0

2019

2020

2021

2022

2023

The Company’s basic policy is to maintainstable dividends. In FY2023, we increased
both earnings and profits, then issued adividend of 19 yen per share, an increase of
6 yen over the previous fiscal year.

FY

0.2

2019

2020

2021

2022

2023

0.0

FY

Nippon Thompson Co., Ltd. (Japan)

ITV (Vietnam)

UBC Suzhou (China)

OthersIn FY2023, production increased over the previous fiscal
year. As well, due to initiatives for boosting production
efficiency and introducing energy conservation andrenewable energy, both greenhouse gas emissions andemissions per unit of net sales decreased from theprevious fiscal year to 32,129 t-CO2 and 0.47 t-CO2/
million yen.

(%)
13

2,500

12

2,250

11

2,000
0

10
0

0.4

10,00050Number of Employees and Percentage of Female Employees

Electricity Consumption

Unit net sales

30,000

10

4

3

Greenhouse Gas Emissions（t-CO2）

15

8

2,000

In FY2023, operating profit was 9,459 million yen, andthe operating profit margin improved by 4.4 percentage
points from the previous fiscal year to 13.9%, partly due
to increased earnings, higher production, and the effectof the yen’s depreciation on exchange rates.

Dividend per Share
(Yen)
20

20,000
0

2019

2020

2021

2022

2023

FY

As with greenhouse gas emissions, theimplementation of production efficiency
measures, energy conservation practices andrenewable energy sources led to a 4.1% reduction
in electricity consumption compared to theprevious fiscal year to 61,731 MWh.

2019

2020

2021

2022

2023

FY

We have increased the number of female employees byimplementing targeted recruitment initiatives, such as holding
company information sessions exclusively for women. As aresult, the percentage of female employees has increased by
0.5 point compared to the previous fiscal year.

Nippon Thompson Co., Ltd. Integrated Report 2023

66

NipponThompsonʼs
Value Creation

Data

Company Profile and Stock Information (as of March 31, 2023)
291,000,000 shares

Trade name

Total outstanding shares

72,557,513 shares

Trademark(excluding 943,912 treasury shares)

EstablishedFebruary 10, 1950

Corporate
headquarters

19-19 Takanawa 2-chome Minato-ku, Tokyo
108-8586, Japan

Representative

Shigeki Miyachi, President and CEO

13,547 shareholders

Stock exchange listing

Prime Market, Tokyo
Stock Exchange

Nippon Thompson Co., Ltd.

Capital

Number of shares Holdings ratio
owned
(%)
(thousand shares)

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

6,939

9.56

Nippon Thompson Business Partners
Shareholders’ Association

5,460

7.52

Custody Bank of Japan, Ltd. (Trust Account)

5,222

7.19

Nippon Life Insurance Company

4,262

5.87

Nachi-Fujikoshi Corp.

2,008

2.76

Nippon Thompson Employees Shareholders’
Association

1,827

2.51

MUFG Bank, Ltd.

1,612

2.22

DFA Intl Small Cap Value Portfolio

1,420

1.95

Trust & Custody Services Bank, Ltd., as trustee forMizuho Bank, Ltd., Retirement Benefit Trust Accountreentrusted by Custody Bank of Japan, Ltd.

1,305

1.79

HSBC Bank PLC A/C M and G (ACS)

1,088

Securities:
1,907 thousand shares(2.6%)

Treasury shares:
943 thousand shares(1.3%)

Overseas shareholders:
14,036 thousand shares(19.1%)

Individuals and others:
20,564 thousand shares(27.9%)

9,761 thousand shares(13.3%)

Illinois
California(Los Angeles)

Texas

New Jersey

Data

UBC Precision Bearing Manufacturing Co., Ltd.

Germany(Düsseldorf)

UBC (Suzhou) Bearing Co., Ltd.

(Regensburg: Germany)

Sales subsidiary headquarters
Sales subsidiaries branch offices

Vietnam

Shenyang

Xian

Qingdao
Changshu

ShanghaiNingboShenzhen
Guangzhou
ThailandIKO Brasil Serviços Empresariais Eireli

IKO Thompson Asia Co., Ltd.

BrazilSales subsidiaries sales offices

Beijing
Wuhan

IKO Thompson Vietnam Co., Ltd.

IKO International, Inc.

South Korea

IKO-Thompson (Shanghai) Ltd.

Spain

Georgia

Sales subsidiaries offices
Production subsidiaries

TohokuSales offices

1.49

Nagaoka

Branch offices
Production sites

Kanazawa

Sales subsidiaries

Central Regional
Shiga
Hiroshima

FY2020U.K.
FranceCorporate headquarters

FY2021

FY2022

KyushuFY2023

61.6%

46.6%

82.1%

69.4%

76.3%

Industry weighted stock price average(machinery)

83.5%

72.0%

113.3%

104.8%

108.6%

Gifu

AkashiToyotaWestern Regional

Kumamoto

MatsumotoHamamatsu

Kita-Kanto
Utsunomiya
HitachiHeadquarters
Eastern Regional
Kamakura
Minami-Kanto
Nishi-Tokyo

Nippon DIC Co., Ltd.
(Aichi: Nagoya)

Participation in External Initiatives and Third-Party Evaluations and Certifications

Share price(yen)

Trading volume(thousand shares)
30,000,000

1,000

24,000,000

800

18,000,000

600

12,000,000

400

6,000,000

200

0

0

Nippon Thompson Co., Ltd. Integrated Report 2023

Governance

Financial institutions:
26,288 thousand shares(35.8%)
Other domestic corporations:

Stock Price and Trading Volume

67

Social Issues

Japan

Nippon Thompson stock price2016

The Environment

The Netherlands

IKO Thompson Bearings Canada, Inc.

(Silicon Valley: California)

Total Shareholder Return (TSR)

2015Management for
Sustainable Growth

IKO Thompson Korea Co., Ltd.

CanadaNotes: 1. The Company holds 943,912 shares (1.28%) of treasury shares.
2. Holdings ratio is calculated after deducting treasury shares (943,912 shares).

2014

Management for
Sustainable Growth

Nippon Thompson Europe B.V.

9,533,170,390 (Yen)

Major Shareholders and Number of Shares Owned

FY2019Management for
Sustainable Growth

Overseas

Number of employees 2,613 (Group total) 1,000 (Nonconsolidated)

Name of shareholder

Management
for Sustainable
GrowthGroup Network

Total authorized shares

Number of shareholders

Progressin Business
Strategy

Value Creation
Strategies

2017

2018

2019

2020

2021

2022

2023

FY

The Group has endorsed the recommendations of the Task Forceon Climate-related Financial Disclosure (TCFD), joined the TCFD
Consortium, signed the United Nations Global Compact, and joined the「 TCFD Consortium 」ロゴマーク

2019. 09. 10

Global Compact Network Japan.
The Company was selected as a constituent of the FTSE Blossom Japan
Sector Relative Index, an index of Japanese companies actively engaged
in ESG.
In addition, IKO International, Inc. in the US received a "Bronze" rating
in a supplier survey conducted by EcoVadis.
The Company has obtained ISO certification, the international
management system standards for environmental protection andquality assurance.
ISO 14001: Gifu area, Kamakura area, IKO Thompson Vietnam Co., Ltd.
ISO 9001: Gifu area, Kamakura area, IKO Thompson Vietnam Co., Ltd.,UBC (Suzhou) Bearing Co., Ltd.

Nippon Thompson Co., Ltd. Integrated Report 2023

68

19-19 Takanawa 2-chome Minato-ku,
Tokyo 108-8586, Japan
https://www.ikont.co.jp/eg/
December 2023