Integrated Report 2023

Management Philosophy
1. We offer excellent products that drive progress andcreate a better world.
1. We pursue perpetual development and improvement
through creativity and efficiency based on independence
and self-reliance.
1. We promote the well-being of all who join with us, andoffer opportunities to society for greater job satisfaction.

Vision of the Medium-Term Management Plan 2023
Contributing to the future of the earth as a leading supplierin the high nickel alloy and stainless steel markets by
pursuing diversification of products and raw materials

What We Aim to Be in 2030
The number one company for customer satisfaction, which
continuously supplies industrial materials that contribute to the
future of the planet
A company that consistently pursues innovation in its production
processes to achieve a carbon-neutral, resource-circulating society
A company that makes all its employees feel fulfilled and makes its
employees’ families happy
A company with the sound corporate foundation necessary toremain profitable under all conditions

1

Introduction

About Nippon Yakin Kogyo

Value Creation Strategies

Sustainability

Company Data

Table of Contents
1
2

Management Philosophy
Editorial Policy

Introduction
A Society Supported by Stainless Steel
Nippon Yakin Kogyo’s High-performance Alloys

35

Chapter 1: About Nippon Yakin Kogyo
History of Nippon Yakin Kogyo
Current Role of Nippon Yakin Kogyo
Total Production System for Stainless Steel and High-performance Alloys

7911

Chapter 2: Value Creation Strategies
Message from the President
Value Creation Model
Growth Strategy: 100th Year Message for the Future

13
17
19

Chapter 3: Sustainability
Sustainability Policies and Systems
Issues of Materiality: Major Targets, Initiatives and Results
Issue of Materiality 1: Provision of Useful Products for Society
Issue of Materiality 2: Reduction of Global Environmental Impact ThroughBusiness Activities
Issue of Materiality 3: Achievement of Safe and Stable Production
Issue of Materiality 4: Creation of Workplaces Where All Employees Can Work
with Equality and Satisfaction
Issue of Materiality 5: Establishment of Sustainable Partnerships
Issue of Materiality 6: Advancement of Corporate Foundation for Adaptation
to the Social Environment
Round-table Discussion Between Outside Directors

23
25
27
29
33
35
39
41
47

Chapter 4: Company Data
Financial Data, Use in External Evaluations and Indexes
Third-party CO2 Guarantee

49
50

Editorial Policy
To further strengthen communication with
our stakeholders, we have expanded thesustainability reports we have issued since2021 and compiled an Integrated Report.
In this report, we will outline our corporate
vision, business activities, our Medium-Term
Management Plan 2024, which willcommence in the 2024 fiscal year, and ourpolicies and initiatives to increase ourcorporate value, such as our sustainability
activities through which we seek to act inharmony with society and the environment.
We will further expand the information wedisclose in future to provide our
stakeholders with an understanding of ourinitiatives to achieve sustainable growth.

Scope of reporting
Nippon Yakin Kogyo Co., Ltd.
(including activities conducted as the entire
Nippon Yakin Kogyo Group)
Reporting period
From April 2022 to March 2023
(FY2023, including some activities conducted
before and after the period)
Publication
December 2023
Referenced guidelines- International Integrated Reporting Framework,
IFRS Foundation- Guidance for Collaborative Value Creation,
Japanese Ministry of Economy, Trade and Industry- GRI Sustainability Reporting Standards- Environmental Reporting Guidelines 2018,
Japanese Ministry of the Environment

Disclaimer of guarantee about future forecasts
Content pertaining to the future in this integrated report is based on judgments and assumptions based on information
available to Nippon Yakin Kogyo at the time of editing, and risks and uncertain elements are present. Actual outcomessuch as business results may differ from the forecasts written in this report due to various factors.

2

A Society Supported by Stainless SteelCreation of a more
aﬄuent andcomfortable society
through stainless steel
Stainless steel is used in many different fields,
including housing facilities, household appliances,
construction and civil engineering, transportation
machinery, and industrial machinery, due toqualities such as its resistance to corrosion, highformability, and its beauty. For example, in thefood and beverages field, stainless steel
contributes to safe and high quality production. It
is also a prized material for medical devices, which
need to be sterilized and washed, due to its
durability and ease of maintenance. Its longevity
and recyclability provide potential forcontributions to a circular society, and its usage is
expanding.
By providing a reliable supply of a material
that is so essential to people’s daily lives andconstantly working to improve its quality andfunctionality, we are contributing to thedevelopment of a sustainable society.

About stainless steel

An alloy with excellent resistance to corrosion andheat and a beautiful appearance
Stainless steel is an iron alloy that contains at least 10.5%
chromium and has superior corrosion resistance. Its surface
is protected by a passive film consisting of an ultrathin layerof chromium oxides and hydroxides. If this film is damaged,
it regenerates itself through contact with air.
Other excellent qualities of stainless steel include its
durability, strength, formability and suitability for welding.
Almost no degradation of quality occurs during its use,making it a popular choice as a recyclable material.

3

Corrosion resistantHigh strength

Beautifuland sanitary

Resistant tohigh temperatures

High formability

Recyclable

Introduction

About Nippon Yakin Kogyo

Value Creation Strategies

Sustainability

Company Data

4

Nippon Yakin Kogyo’s High-performance Alloys

Achieving excellent functionality
to meet a wide range of needs
Our high-performance alloys have excellent properties including high corrosion resistance, high heat resistanceand limited thermal expansion. As a result, they are widely used, particularly in fields that fabricatecomponents used in advanced technology, such as semiconductors, solar cells and fuel cells.
Utilizing research and development technology that we have accumulated over many years, we meet the needsof our increasingly diverse customer base and continue working to supply products for a fruitful future.

Reducing life cycle costs
Our Super Austenitic Stainless Steel isused in the pier of the taxiway bridge ofRunway D at Tokyo International Airport.
The key structures of the bridge pierrequire durability of at least 100 years,
and due to the use of this material, nomaintenance is required, which has
reduced life cycle costs.

Our Super Austenitic Stainless Steel was
the first material of its kind to be adopted
in Japan for tanks used to hold unrefinedsoy sauce, which is highly salty and prone
to causing corrosion. In the more than 20
years since it was first adopted, it hasremained in good condition.

About high-performance alloys

Stainless steel and other alloys with high performance
The materials we refer to as high-performance alloys are steel or alloys that contain at least 20% nickel. Their mechanical andphysical properties are both superior to stainless steel: they have greater corrosion resistance, heat resistance, strength and soft
magnetism and less thermal expansion. Some materials that contain less than 20% nickel but still achieve superior performance
are also classified as high-performance alloys.

5Introduction

About Nippon Yakin Kogyo

Value Creation Strategies

Sustainability

Company Data

Providing safety and comfort
in people’s daily lives
Our heat-resistant alloy is used as the sheathmaterial for sheathed heaters in appliancessuch as electric ovens and electric kettles,
contributing to greater safety. These heaters
are also widely used as heat sources forfactory facilities and equipment.

Keeping people healthy
Supplements and medications that keeppeople healthy are made from a varietyof pharmaceutical ingredients, which
include strong acids and alkalis. Our
alloys have excellent chemical, corrosionand heat resistance, and are used forpharmaceutical manufacturing
equipment that needs to be protectedfrom contamination such as rust.

Contributing
to environmental conservation
Our corrosion-resistant alloys are used in flue gas
desulfurization equipment, contributing to reductions of
air pollution and acid rain. Materials such as our highnickel heat-resistant alloy are also used in facilities that
produce polycrystalline silicon used in solar panels,
contributing to the building of a carbon-neutral society.

6Chapter1

About Nippon Yakin Kogyo

History of Nippon Yakin Kogyo
Nippon Yakin Kogyo was founded in 1925 and began producing stainless steel in 1935.
Since then, we have become a leading Japanese stainless steel manufacturer, adapting to changes in our businessenvironment, constantly challenging ourselves to create new value, and contributing to society and the environment asa result.

1925 onward:
Founding Period of Nippon Yakin Kogyo

1950 onward:
Establishment of a Mass Production System
for Stainless Steels

HistoricalbackgroundOur response• Economic expansion took place across Japanesesociety as a whole, with the aim of Japan becoming
a global power equivalent to advanced countries in
Europe and North America.
• The expansion of the Japanese economy saw agreater need for domestic stainless steel production.

• As Japan entered a period of rapid economic growth, social
infrastructure was built and citizens’ incomes increased.
• There was a growing need for comfortable and hygienic living
environments. The use of stainless steel expanded to include purposessuch as plumbing, leading to a dramatic increase in demand.

Efforts to build a domestic stainlesssteel industry

The building of a mass production system
and an increase in quality control

We succeeded in building a domestic
industry, not only for stainless steel
production but for smelting of
ferronickel alloys used as raw materials as
well. In doing so, we laid the foundation
for a total production system from raw
materials to products.

In response to the growing need for stainless steel, we
introduced a series of facilities with technology that wasamong the most advanced in the world at the time. This
led not only to an increase in production volumes but also
to meticulously crafted production systems to produce adiverse selection of items with a view to further expansionof applications.

1925

1950

1925 Chuo Rika Kogyo Co., Ltd. established.
Manufactured and sold fire extinguishers

1950 First in Japan to successfully refine stainless steel using theoxygen steel-making process. This was the beginning of themass production of stainless steel.

1928 Renamed Nippon Kako Co., Ltd.
1934 Established Oheyama Nickel Mining Industry Co., Ltd.
Commenced ferronickel smelting in Oheyama on
the Tango Peninsula in Kyoto Prefecture with theaim of establishing a domestic ferronickel industry
Established Kawasaki Field Office (now Kawasaki
Plant) in Kawasaki City in the same year andentered the metal refining industry

1962 Built a 30-ton electric arc furnace using
oxygen steel-making technology.
To meet growing demand, thevolume of the furnace wasincreased to 60 tons in 1968,
increasing productivity.

1935 Manufacture of the first stainless steel productPrevious electric arc furnace

1977 Built the AOD furnace (argon andoxygen decarburization)*1, increasing
the efficiency of production using theoxygen steel-making process. Built
meticulous production systems tohandle various products in response to
the expansion of applications ofstainless steel.
1942 Renamed Nippon Yakin Kogyo Co., Ltd.
1943 Merged with Oheyama Nickel Kogyo Co., Ltd.
(formerly Oheyama Nickel Mining Industry Co., Ltd.)*1 A furnace to refine stainless steel by blowing oxygen andargon gas into molten steel.
*2 A production line that integrates the annealing and picklingline and the skin-pass rolling line for the next process7

Previous AOD

1989 Completed the world’s firstcombined CAP*2 (referred to as
5AP internally).
This equipment is a standout
example of a series of investments
in expanding the production
capacity for processes after the
steel-making process.

No.5 annealing andpickling line

Introduction About Nippon Yakin Kogyo

Value Creation Strategies

Sustainability

Company Data

1990 onward:
Capital Investment to Be More Competitive and Sales Promotionfor High-Performance Alloys• As globalization of economies took place, a series of new stainless steel manufacturers were
established in countries such as China, and global stainless steel production soared. International
competition intensified.
• On the other hand, moves were made to rein in runaway capitalism, sparking global concern aboutsustainability factors such as conservation of the global environment and respect for human rights.

Becoming more internationally competitive and contributing
to a sustainable society
We strengthened our competitive edge by continuing to introduce facilities withworld-leading technology, as well as maintaining and expanding our meticulous
production systems to handle various stainless steel products. Meanwhile, in responseto the growing concern about sustainability, we have been developing and supplying
materials to contribute to a sustainable society and environment.

1990
1996 Started to operate a new hot rolling shop. This was
Japan’s first facility for hot rolling of widematerials*3, enabling mass production ofhigh-performance alloys with superior properties in
addition to stainless steels. This laid the foundation
for the promotion of high-performance alloys that
contribute to higher environmental standards andcarbon neutrality.

Creation ofa Wider Range
of Value2025
over theNext 100 Years
New hot rolling mill2008 Started to operate a new AOD. Introduced
cutting-edge technology to meet growing needs forhigh-performance alloys for purposes such as therenewable energy market and environmental
purifying equipment.
2018 Established joint venture with Nanjing Iron & SteelCo., Ltd.*4 in Nanjing, Jiangsu Province, China. Thishas supplemented our capacity to meet domestic
demand in China and expanded the scope of
production.
2022 Started the operation of the new electric arc furnace(“E furnace”*5). This has improved our energy
efficiency, contributing to decarbonization. We havealso modified our facilities in many ways to improve
our working environment.

New AOD

New electric arc furnace (“E furnace”)*3 A four-foot wide machine, of the same type that was already in use in Japan, was expanded to five feet.
*4 NISCO Nippon Yakin Kogyo Nanjing Co., Ltd.
*5 We call the new electric arc furnace an “E furnace,” which means “Electric arc furnace with high Efficiency, Energy
saving and Environmental improvement.”8

Chapter1

About Nippon Yakin Kogyo

Current Role of Nippon Yakin Kogyo
In the decades since we successfully built a domestic stainless steel industry, we have utilized the technology we haveaccumulated over many years in two main fields, stainless steels and high-performance alloys, supplying our customers
with products that embody the characteristics of their respective types.
We will continue to respond to the diverse needs of customers around the world and provide value to society.

Business details (non-consolidated)
High-performance alloys

Stainless steels(including OEM materials)

42%

57%

High-performance alloys are products withsuperior qualities (corrosion resistance, heat
resistance, etc.) to stainless steels. We beganpromoting high-performance alloys in the
1990s to address changes in the market
environment and needs, and now have oneof the world’s top shares in the market foralloys containing 30% or more nickel.

In our stainless steels business, we utilize
the wealth of technological capabilities
behind around 90 years of results andexperience and operate a system capableof handling meticulous production so thatJIS standard products can be customized tomeet customers’ needs. We now produce
43 types of steel grades (cumulative total
for the three years from FY2021 to
FY2023), each with its own role based on
the characteristics of the material, enablingcustomers to address the diverse, changing
issues in society.

Net sales

Other

177.5

1%

billion yen

Global network

3
1
5 2
9

6
4
7

3
6
5

In Japan
1 Head OfficeOutside Japan
1 Nippon Yakin America, Inc.

2 Kawasaki Plant(4-2 Kojima-cho, Kawasaki-ku, Kawasaki City,
Kanagawa Prefecture)2(1-5-8 Kyobashi, Chuo-ku, Tokyo)

3 Oheyama Plant(413 Aza Suzu, Miyazu City, Kyoto Prefecture)
4 Tokyo Branch
5 Osaka Branch
6 Nagoya Branch
7 Kyushu Branch
8 Hiroshima Branch
9 Niigata Branch

98(Subsidiary in Chicago)

Nippon Yakin Shanghai Co., Ltd.
(Subsidiary in Shanghai)

3

Nippon Yakin Europe Limited

4

Nippon Yakin Asia Pte. Ltd.

(Subsidiary in London)(Subsidiary in Singapore)5

NISCO Nippon Yakin Kogyo
Nanjing Co., Ltd.
(Joint venture in Nanjing)

1 4
2

Major Affiliates
NAS TOA CO., LTD.
NAS STAINLESS STEEL STRIP MFG. CO., LTD.
NAS TRADING CO., LTD.
Clean Metals Co., Ltd.
NAS ENGINEERING CO., LTD.
NAS TEC CO., LTD.
MIYAZU KAIRIKU UNYU CO., LTD.
6 NAS TOA (THAILAND) CO., LTD.

Introduction About Nippon Yakin Kogyo

Value Creation Strategies

Sustainability

Company Data

At a glance (Results for FY2023)
Overall (Consolidated)
EstablishedNet sales

Operating profit

billion yen

billion yen

1925

199.3

Number of employees
in group

Capital investment

R&D cost

peoplebillion yen

billion yen

ROE

Net D/E ratio

Total return ratio

2,091
27.8

%

9.3

0.93

29.3
1.0

25.3

%*1

Stainless steels (non-consolidated)
Sales volume

175,300
tonnes(including OEM materials)

Net sales

101.2
billion yen(including OEM materials)

Number of customizations
for stainless steels produced(types of steel grades)

43(cumulative total for the three years
from FY2021 to FY2023)

High-performance alloys (non-consolidated)
Sales volume

43,600tons

Net sales

75.3
billion yen

Alloys with 30%
or more nickel

One of the world’s
top market shares(According to a study
by Nippon Yakin Kogyo)*1 The total return ratio for FY2023 was calculated with consideration for the total dividends of 200 yen paid in FY2023 and the stock buybacks carried out between
May 10 and June 30, 2023.

10

Chapter1

About Nippon Yakin Kogyo

Total Production System for Stainless Steeland High-performance Alloys
At our production sites, our Oheyama Plant and our Kawasaki Plant, we have a total production system that covers theentire process from smelting of the raw materials to final production.
We utilize our outstanding production technology and cutting-edge facilities to produce high-quality products.

Ferronickel alloys production process

Anthracite&
limestone

Nickel ore

Dry crashing

StorageMixing andkneading

Pulverized coal
Wet crashing

StorageOre briquette

Smelting

Rotary kiln

Vacuumdehydration
Crashing

Gravityconcentration

Ferronickel
alloys(Intermediate
product)

Oheyama Plant
Supporting the production of high-quality stainlesssteel, starting with raw material production
Our Oheyama Plant is the starting point of our production
process, producing the ferronickel alloys used as the mainmaterial of our stainless steel.
All of the ferronickel alloys that are produced here areused in the downstream processes at our Kawasaki Plant.
The plant uses the Krupp-Renn process, a process used
nowhere else in the world, and continuously refines thisprocess to produce high-quality stainless steel.

Nickel ore is most commonly used as the raw material
for ferronickel alloys globally, but as concern for theenvironment has grown in recent years, we are developing
technology that enables us to reduce our dependency on
this natural resource from overseas, and increase the ratioof scrap materials, called “urban ores”, that are used.
Our Oheyama Plant is located near the
Amanohashidate quasi-national park, and engages in ahigh level of local environmental conservation activities in
the course of its business activities.

Oheyama Plant
413 Aza Suzu, Miyazu City,
Kyoto Prefecture

11

Introduction About Nippon Yakin Kogyo

Value Creation Strategies

Sustainability

Company Data

Stainless steel and high-performance alloy plate & strip production process

Iron scrap
Stainlesssteel scrap
Electric arc furnace
70 tonnes

Ferronickel
alloysArgon oxygen
decarburization(AOD)

Composition
temperature
control station(CTS)

Walking beam
(WB) furnace

Roughing mill Finishing mill
Hot rolling millContinuous annealing andpickling line for hot strips (H-APL)

Pit-type furnace

Cold strip

Cold rolling

Ferrochromium
alloys(Sendzimir 20H Cold
Strip Mill)

Annealing, pickling and levelling for plates

Other alloys
Electric arc furnace Vacuum oxygen
60 tonnes
decarburization(VOD)

Hot strip

Continuous annealing andpickling line for cold strips (C-APL)

Plate

Continuous castingmachine (CCM)
Maximum width: 1600 mm

Kawasaki Plant
The world’s only plant to produce all of thetypes of steel we supply
Our Kawasaki Plant primarily uses recycled materials suchas stainless steel scrap and iron scrap, along with theferronickel alloys produced at our Oheyama Plant, toproduce our stainless steels and high-performance alloys.
There are four main processes in the production ofstainless steel: the steel-making process, the hot rolling
process, the cold rolling process and the plate production
process. Our Kawasaki Plant performs all four processes atthe same site, in a compact configuration unlike almost
any other plant in the world.

High nickel alloys (defined as “high-performancealloys”) are generally produced by a special production
process applying different equipment. On the other hand,
we already developed a unique process to produce the highnickel alloys with equipment to produce stainless steels. Thismeans that Kawasaki Plant is the only plant in the world to
produce both stainless steels and high nickel alloys.
Our Kawasaki Plant is located in the Keihin industrial
area, which is in the vicinity of urban residential areas. The
plant has built a safe and secure production system that
not only complies with environmental laws and regulations
but also coexists with the urban residents around it.
Kawasaki Plant
4-2 Kojima-cho, Kawasaki-ku, Kawasaki
City, Kanagawa Prefecture

12Chapter2

Value Creation Strategies

Message from the President

How to supply stainless steel andhigh-performance alloys withthe high added valuethat is needed in a sustainable era
Hisashi Kubota
President and Representative Director

Confidence and pride in our ongoing
contributions to society
2025 will be Nippon Yakin Kogyo’s 100th anniversary. We
aim to produce materials that will be useful to the next
generation of society and be a good workplace for the
next generation, and I feel that we have made leaps andbounds in the last few years. As I have told our employees
ever since I was appointed as President in 2019, stainlesssteel and high-performance alloys, the materials we
handle, are materials that are useful to society. I ask themto take confidence and pride in the fact that we handle
products like this. In the years to come, we must not only
work steadily toward our aims but promote this attitude
within and outside the company.

Acutely attuned to changes in ourbusiness environment
Japan’s stainless steel industry has become consolidated
among fewer manufacturers due to restructuring of theindustry. By contrast, the capabilities of China’s industry
have grown at a rapid pace over the last 20 years. As aresult, stainless steel has fallen into chronic oversupply,
particularly in East Asia.
Fortunately, I think that the Japanese stainless steel
industry is one that has managed to maintain suitableprices despite soaring costs not only for raw materials
but for energy, labor and resources as a result of global
issues such as the pandemic and Russia’s aggression
against Ukraine. By doing so, Nippon Yakin Kogyo wasable to finish FY2023 with good results. However, theseresults were due partly to inventory appraisal gains so I
do not feel that we should be complacent.
In high-performance alloys, it remained difficult to

13

shift inventory in durable consumer goods areas such as
sheathed heaters and bimetals for household appliances
due to factors such as a decline in housing projects in
the USA, but strong performance was seen in renewableenergy areas such as solar power in China.
However, in terms of our future outlook, we fearthat global supply chain disruptions will impact ourbusiness in various ways, causing issues.

After our 100th anniversary: Creating a vision
for growthWith the future so opaque, what will growth mean for
us as we look toward 2025, the year of our 100th
anniversary, and 2030, a milestone year for carbon
neutrality? What should our finances be like? Whatshould our product structure and overseas sites be like?
We want all of our staff to consider these questions
together, and it was with this in mind that we considered“What we aim to be in 2030” and the Medium-Term
Management Plan that will serve as an action plan.
“What we aim to be in 2030” encompasses“Resilience”, based on the importance of diversity, and“Sustainability”, with a view to sustainable business
operations. Stainless steel is the subject of renewed
hopes as a material suited to the age of sustainability
and SDGs. This has placed a new spotlight on the
carbonless nickel smelting performed at our Oheyama
Plant, and we are aware that there has been asignificant increase in industries that need stainless steel
and high-performance alloys. In Medium-Term
Management Plan 2024, we aim to focus on increasing
the quality of our products, personnel and work
practices in order to meet those needs. With this inmind, we have set “100th year message for the future”

Introduction

About Nippon Yakin Kogyo

as the tagline.
We believe that achieving carbon neutrality andexpanding our production and sales ofhigh-performance alloys are critical issues to which thecompany must dedicate all of its capabilities, andstrategic investments in these areas are the pillar of thisMedium-Term Management Plan.
Reorganizing our product portfolio to ensure
diversity is another important perspective. We have
responded to oversupplies of stainless steel like this in
the past too, utilizing the facility characteristics andtechnology at our Kawasaki Plant to pivot quickly the
production of high-performance alloys and achieve
growth by meeting the needs of a new market. As wework toward “What we aim to be” now, particularly in
Medium-Term Management Plan 2024, I want tocontinuously have an antenna out and be acutely
attuned to the needs of the market.
In addition, we aim to bring about qualitative
growth in our employees and ensure that each of them
lives a rich life. I think that Medium-Term Management
Plan 2024 is a key three years for this.

Meeting domestic and international needs
with a flexible framework
Our Medium-Term Management Plan 2024 has threebasic strategies.
Our first basic strategy is “Seek to meet the needsof increasingly advanced markets by developing andsupplying industrial materials that create new value”.
The water electrolysis market (hydrogen energy) was
identified as a target market for growth. The hydrogenfield requires physical properties suited to varioushydrogen environments. At present, we are outsourcing
measurements for this, but we are preparing to build a
new material evaluation and testing facility forhydrogen environments at our Kawasaki Plant so that
we will be able to do this work internally. Anothertarget we are considering for material supply is thenuclear energy field.
We consider the Indian market our biggest target
area for growth. There is no doubt that India will begin
making the same environmental investments that have
happened in China, and there are already clear signs
that this will happen. However, while we already have arecord of exports to India, it is still unclear whether themarket will become as large or as advanced as China’s.
Our second basic strategy is “Build an efficient

Value Creation Strategies Sustainability

Company Data

production framework to increase our technicaladvantage and adapt to changes”. We believe that themost important thing is to maintain suitable production
capacity for this company while also sufficiently
preparing so that we will not miss out on sales
opportunities, and we will put in place a framework thatallows for expansion of production when necessary.
In particular, China is catching up quickly in thearea of high-performance alloys. We have no choice
but to focus on products that are highly advanced anddifficult to produce, which creates bottlenecks in the
production process. This is not the first time ourproblem has been an inability to supply enoughproducts, not an inability to sell what we haveproduced. We need to clear those bottlenecks andincrease our production capacity for difficult-to-produce
materials, while ensuring that the framework we build
is flexible enough to balance sales and production.
The issue of being unable to produce enough tomeet demand is also a matter of size. We are taking
measures to address this and utilizing the facilities ofNanjing Iron & Steel Co., Ltd., the Chinese partner of our
joint venture, to commercialize high corrosion-resistantand heat-resistant nickel alloy ultra-wide plates that wecannot sufficiently produce at our own mills. We feelthat this will be a major advantage when it comes tomeeting the demand for solar power-related products.
With regards to working toward carbon neutrality,
two major strategies will be employed during thisMedium-term Management Plan period: measures forferronickel alloy production, particularly at our Oheyama
Plant, and changing the fuel at our Kawasaki Plant.
In terms of stainless steel, heavy responsibilities will
fall on us as a supplier. We believe that the need toproperly meet the expectations of distributors and14

Chapter2

Value Creation Strategies

Message from the President

customers in Japan is another reason why a steadysupply of stainless steel is one of our core responsibilities.

Diversifying our raw materials to broaden
the loop of circular societies
In our second basic strategy, we are also working todiversify our raw materials and achieve more sustainableprocurement. Our Oheyama Plant used to mass-importnickel ore from New Caledonia and Indonesia and thenused coal as a reductant to produce ferronickel alloys.
Being able to purchase nickel ore cheaply made us
competitive, but as resource nationalism progressed,
avenues for importing nickel ore became limited andcosts increased, in addition to the growing necessity of a
new material procurement method from a sustainability
perspective. Addressing the use of coal at our Oheyama
Plant has also become an urgent issue in recent years as
a carbon neutrality measure.
With these points in mind, we have beenswitching from ore to recycled materials (urban mining)for our materials. We are working on initiatives such as
recycling of 200 raw materials, managing recycledmaterials and automating ingredient analysis at our
Oheyama Plant. Basically, because recycled materials
contain more nickel than nickel ore, less of them areneeded to produce ferronickel alloys. This means thatusing recycled materials decreases CO2 emissions. Other
measures we are taking to minimize CO2 emissions in
our ferronickel alloy production include switching our

15

energy source from coal to LNG and renewable fuels,and switching the reductant for our nickel ore fromcoal to materials such as waste plastic.
When we consider the global competition forresources that could occur in future, we believe that
our steady work on material procurement andenvironmental measures will give us a competitiveedge. In addition to sourcing scraps globally, we willthoroughly reuse scraps from our own plants, such as
scraps from processing. While we are a manufacturer ofstainless steel and high-performance alloys, we are also
a user of urban mines through our recycling ofmaterials such as nickel. I think that position is arguably
extremely interesting.
In terms of products, we can have a reputation forhaving what people need. In terms of recyclable materials,
we can have a reputation for accepting what people wantto get rid of, or for being environmentally friendly. I want
us to become a company with that kind of positive
reputation and broaden the loop of circular societies.

Expanding our management foundation
through strategic investment in human capital
Our third basic strategy is “Establish a sustainable
management foundation that is resilient to changes inour environment”. For this, we will make strategic
investment in human capital. The Japanese stainlesssteel industry itself is an industry that grew after WorldWar II not only by adopting new technology fromoverseas but by developing personnel whose technicalcapabilities drove growth. We, too, respond toprogressions in society by increasing workers’ pay, as
well as expanding our welfare systems and carrying out
reskilling initiatives.
When it comes to empowerment of women,
however, while women are advancing in operationalroles such as inspection work and facility maintenance,
there are particularly significant hurdles in technical roles
on production sites. We are currently carrying out hardmeasures such as increasing our women’s restrooms andchanging rooms. With regards to night work, I want tocarry out reforms of our working practices that will
alleviate the burden on our male and female personnel
alike, such as introducing automated systems.
Along with reforms of our working practices, theutilization of digital technology is another point that weneed to tackle in future. We have already begun using
AI for purposes such as analysis of operation technology,

Introduction

About Nippon Yakin Kogyo

but only when we have truly achieved digitaltransformation (DX) can we expect to see sustainablegrowth. I think the hurdles are high, but we have to try.
The other human issue we must tackle is providing
opportunities for personal growth and maintaining andincreasing motivation. From this perspective, I think thefirst thing it is important to do is to give opportunities
to young personnel. If the company is in trouble, wewill not be able to find workers. Workplaces will
become fixed and it will not be possible to makeeffective use of transfers. I think it will be important toinvigorate the company so that young people will
choose to work here, and then give them opportunities
to experience various roles.
Incidentally, I worked in personnel affairs for along time, but my first role in this company was in a
department that handled cost calculations for ourplants. After working there for a year and a half, I
worked in sales at our Osaka Branch and production
management at our Kawasaki Plant, and then I worked
in personnel affairs until I got promoted to
management. When I look back now, I realize thatworking in various departments, even for that shorttime, made me who I am today.

Addressing sustainability issues with a senseof urgency
In 2021, after interdepartmental discussions throughout
the company, we identified six sustainability issues ofparticular importance and announced these as issues ofmateriality. Each of these six issues is directly connected
to our Management Philosophy.
When we established “What we aim to be in2030” and our Medium-term Management Plan, weapplied each of these six issues to specific measures andestablished plans for each department and plant totake actions based on these. We have established KPIs
for each department and plant and made it possible tocheck the progress of these.
Fast judgments and clarification of responsibilities
will be important for solving these issues. We believedthat department leaders needed a venue where they
could take the responsibility to speak up, so weestablished the Sustainability Strategy Promotion
Committee with myself as the Chairman. Decisions
made through discussion by this committee are
immediately enacted and specific measures are takenwith a focus on speed.

Value Creation Strategies Sustainability

Company Data

A sustainable business means
happy employees
I believe that in order to build a sustainable business, themost important thing is to earn the trust of our customers.
I think that by providing value to customers and building asustainable business, we make our employees happy, andthat drives society and the economy.
The products we handle are materials that areentrenched in people’s daily lives, provide support inour lives, and have the potential to make major
contributions to the carbonless society we help to build
in future. I want the value of this to be properly
recognized by our customers, I want our employees totake confidence and pride in the fact that they are
involved in such a business, and I want to deliver strong
returns to our shareholders. That is the most important
thing to me.
Behind all this are the progress we have madethrough our struggles in the past. At first, we only
handled stainless steel and our options for procuring
materials were limited, and as a result we were notable to adequately meet our customers’ needs. But wetook one step at a time, tenaciously madeimprovement after improvement, and learned how toprovide the diversity our customers needed, and that is
how our business survived.
There is no doubt in my mind that producing
products from diverse materials, and having diverse people
involved in the thought process of our efforts to sell themwill become more and more important in future. I thinkthat in order to accomplish this, we will also need to
become more diverse and flexible as a company throughinitiatives such as gender equality.
100 years is not our goal. I want to make it a newstart for the next 100 years, refining our unique
technology to provide our stakeholders with new value.

16

Chapter2

Value Creation Strategies

Value Creation Model
Nippon Yakin Kogyo has utilized its total framework from research to sales to supply optimal products to customers.
To achieve further growth of our businesses, we will execute our Medium-Term Management Plan and work on our six
issues of materiality, balancing sustainability of society and the environment with sustainability as a company to achieve
our vision.

Input

Business activity

Financial capital (Consolidated))
Total assets: 222.3 billion yen
Net assets: 79.6 billion yen

Procurement
and acceptanceof materials

Manufactured capital(Consolidated)
Manufacturing bases: 8 locations
Capital investment: 9.3 billion yen

Human capital (Consolidated)
Number of employees: 2,091

Research•Data amassed through yearsof collaborations withcustomers•Product characteristic
evaluation technology
underpinning our track record•Proactive procurement ofrecycled materials•Technical capability to accept
and make effective use of awide range of materials

Utilizing a total framework fromresearch to sales to supply optimal
products to meet market needsIntellectual capital (Consolidated)
R&D staff:
38 people
R&D cost:
1.0 billion yen

Sales
Natural capital (Non-consolidated)
EnergyElectricity:
3,471 TJ
Fuel:2,553 TJ
Water resources: 12,280,000 m3
Recycled materials: 244,000 tonnes
Ore:109,000 tonnes•Solutions proposed to meetvariety of customer needs•Meticulous service throughcollaborations between
research and production
departments

Production•Total production process
utilized to maintain andimprove quality and meetdeadlines•Technical capability to meetvariety of customer needs

GovernanceSocial & relationship capital(Consolidated)Harmony with international
and local communities
Relationships of trustwith business partners

17Management Philosophy
Changes in the external environment,risks and opportunities

Introduction

Medium-Term
Management Plan 2024
Our vision
Contributing to the future of
the earth as a leading supplierin the high nickel alloy andstainless steel markets by
pursuing diversification of
products and raw materials

Balancing sustainability of society
and the environment
with sustainability as a company

Six issues of materiality

About Nippon Yakin Kogyo

Value Creation Strategies Sustainability

Company Data

OutputOutcome

Stainless steel is a material
that is excellent in corrosion
resistance, heat resistance andstrength and is also 100%
recyclable.

The number one
company for customer
satisfaction, which
continuously supplies
industrial materials that
contribute to the
future of the planet

Nippon Yakin Kogyo
manufactures and sells
stainless steels as well as highperformance alloys that aresuperior to stainless steels.

Stainless steels (non-consolidated)
Sales volume: 1,753,000 tonnes
Net sales:
101.2 billion yen(including OEM materials)

High-performance alloys(Non-consolidated)
Sales volume: 43,600 tonnes
Net sales:
75.3 billion yen

A company thatconsistently pursues
innovation in its
production processes toachieve a carbon-neutral,
resource-circulating society

Value to create toachieve what we aim
to be in 2030

A company that makes all
its employees feel fulfilled
and makes its employees’
families happy•Provision of socially useful products•Reduction of global environmental
impact through business activities•Achievement of safe and stableproduction•Creation of workplaces where all
employees can work with equality andsatisfaction•Establishment of sustainable partnerships•Advancement of corporate foundation
for adaptation to the social
environment

Strips

A company with the soundcorporate foundationnecessary to remain
profitable under all
conditions

Plates*All figures are results for FY2023

18

Chapter2

Value Creation Strategies

Growth Strategy: 100th Year Message for the Future
Medium-Term Management Plan 2024* is a three-year plan in which we have established the measures we willcommence and execute from FY2024 to achieve sustainable growth beyond our 100-year anniversary in 2025.
*April 1, 2023 – March 31, 2026

Medium-Term Management Plan 2021
Basic strategies
to customers’
1 Respond
needs and contribute tosociety through theindustrial materials
business, mainly in thefields of environment &energy and infrastructure

strategic capital
2 Makeinvestment and further

improve ourtechnological capabilities
to be more competitive

with the3 Harmonyenvironment andsociety based on a robust
and independent
business foundation

Management
Philosophy

In the solar power and semiconductor-related
equipment fields, growth areas of ours, we utilized
Chinese joint venture NISCO Nippon Yakin Kogyo
Nanjing Co., Ltd. to meet demand, particularly in Asia
Our revenue base for stainless steels is becomingstronger but these materials are increasingly being
imported in the Japanese market

Decided on strategic investments in cold rolling millCommenced “Taking on the Challenge of Carbonless
Nickel Smelting”
Maximizing the effects of investment in the newelectric arc furnace (“E furnace”, operationcommenced 2022) remains an issue
Implemented sustainability initiatives (issued
Sustainability Report, announced carbon neutrality
plan, agreed with TCFD, etc.)

Awareness of business environment
Changes inbusiness environment

19

Results and issues

IssuesLong-term stagnation of Japanese
economy due to declining birthrate
and aging population, increase incosts of labor and goods due toworker shortages

Addressing limitations ofdomestic growth and building
stable business foundations

Conflict between the USA andChina, ongoing COVID-19 risks from
China, disruption of world order due
to Russia’s ongoing aggression
against Ukraine

Identifying the next growthmarkets after China

Commencement of changes inregulations, including tax systems,
and changes in industry and businessstructures with the aim of achieving adecarbonized society

Sales strategies based on changes
in demand structure due totransition to EVs, advancement ofhydrogen society, transition to
renewable energy, etc.

Costs of main utilities (electricity andenergy) remain highAccelerate energy saving anddecarbonization initiatives whileremaining cost-competitive

Anticipatedrisks
1. Imports accounting
for greater share ofdomestic stainlesssteels market
2. Energy costs soaring
and electricity costs
remaining high due
to shortage insupplyIntroduction

About Nippon Yakin Kogyo

Value Creation Strategies Sustainability

Medium-Term Management Plan 2024
April 1, 2023 – March 31, 2026

Company Data

What we aim to be in 2030

Our vision

Contributing to the future of the earth as
a leading supplier in the high nickel alloy andstainless steel markets by pursuing
diversification of products and raw materials
Basic strategies

1
Seek to meet the needs of increasingly advanced markets
by developing and supplying industrial materials that create new value

High technical capabilities
and superior quality,
earning us a reputation forhaving what people need

Initiatives underway toprotect the global
environment2
Build an efficient production framework to increase our technical advantage
and adapt to changes in the market environment

3
Establish a sustainable management foundationthat is resilient to changes in our environment

A workplace where
employees can thrive

Capital investment plan
Strategic investments:

Strengthening of corporate foundation:

11.5 billion yen

5.5 billion yen

Upgrade investments:

Group companies:

9 billion yen

Resilient managementfoundation established

5 billion yen

Targets (FY2026)
Sales ratio of high-performance alloys (non-consolidated):

50 %Long-term managementtargets (rough figures)(by FY2031)
Net assets: 100 billion yen or more
Net D/E: 0.5
Total return ratio: 35% or more

20 billion yen or more
ROE: 10.0 %Total return ratio: 35 %EBITDA:

CO2 reduction (compared to FY2014; non-consolidated):

46 % or more

Aggregate market value:
100 billion yen or more

Backcast from “Our vision”

20Chapter2

Value Creation Strategies

Growth Strategy: 100th Year Message for the Future

Basic strategies
Basic strategy

to meet the needs of increasingly advanced markets
1 Seekby developing and supplying industrial materials that create new value

We aim to supply high-performance alloys to growth fields and areas.
Likewise, for stainless steels, we will strengthen our domestic customer base not only by being cost-competitive but by achieving a total competitive edge
through an understanding of customers’ needs, including quality, delivery times and effective solutions.

Measure 1 : Expansion of product lineup High-performance alloys
Target areas

Target markets

Water electrolysis (hydrogen energy)
Polycrystalline silicon manufacturing plants(solar power generation)
Semiconductor-related equipment
Nuclear power

India/Middle East
Aim to expand sales of flue gas desulfurization (FGD) equipment and sales topolycrystalline silicon manufacturing plants
Also considering establishing local companies

Measures
Build a new material evaluation and testing facility for hydrogen environments
Working on development of materials that can be used in hydrogen environments
Expand the product lineup through the joint venture in China
Expand rolling range and steel grades of existing high-performance alloy products to remaincompetitive in the Chinese market
Considering selling wide range of high-performance alloys in India
Actively considering deploying proprietary technology and utilizing other companies’ facilities
Deepen and broaden alliances and contracting both domestically and overseas to alleviate
bottlenecks in internal production
Development of new alloys
for energy, home appliance, semiconductor, chemical industries, etc.

Numerical targets

Potential locations for hydrogen testing facility(in Kawasaki Plant) Aiming for completion
in FY2025

Sales volume of high-performance alloys: Expand to 1.5x FY2023 volume

Measure 2 : Strengthen customer base and improve revenue streams

Stainless steels

Integrate production and sales operations to share customer QCD issues and resolve them more quickly
Expand sales of cold rolled strips and sheets to distinguish our materials from imports and grow our domain

Basic strategy

an efficient production framework to increase our technical advantage
2 Build
and adapt to changes

Work to build an efficient production system that ensures safety and steady supplies
In addition to working on initiatives for “Taking on the Challenge of Carbonless Nickel Smelting” and building a framework for the sustainablesupply of nickel materials, we aim to increase the ratio of recycled materials we use to become a resource-recycling company that contributes to
the global environment

Measure 1 : Establish a framework to increase production of high-performance alloys andachieve even more superior technology, and pursue greater productivity

Improvement of operations
Improve capability of steel production
processes at Kawasaki Plant
Improve operations of the new electricarc furnace (“E furnace”)
Initiatives to ensure
more consistent quality

21

Capital investment
Introduce high-precision,
high-performance slitter line
Introduce cold rolling mill to
alleviate load on difficult-to-processcoil materials
Perform facility upgrades necessary
for production ofhigh-performance alloy plates
Upgrade aging facilities

Technology development
Improve stability and efficiency of
production process technology anddevelop technology that will
become future revenue bases

High-performance alloys

Stainless steels

Introduction

About Nippon Yakin Kogyo

Measure 2 : Measures for carbon neutrality
Oheyama Plant

Value Creation Strategies Sustainability

Company Data

Refer to page 29 for details

Kawasaki Plant

Expand use of recycled raw materials
Transition from coal to LNG and renewablefuels as energy sources

Maximally utilize capabilities of new electricarc furnace (“E furnace”) to improve
electricity efficiency and process yield
Invest in energy conservation
Fuel transitions
New electric arc furnace (“E furnace”)

Measure 3 : Respond flexibly to diversification and changes in materials to improvesustainable procurement capabilities and maximize
cost-competitiveness of materials

Improve usage rate of recycled materials
Strengthen scrap procurement framework (Agile procurement pricing, further strengthening
relationships with vendors, securing storage space at plants and elsewhere)
Steady procurement of materials based on carbonless nickel smelting plan at Oheyama Plant
Build optimal operational framework through integration of Oheyama Plant and Miyazu
Kairiku Unyu to produce ferronickel alloys more cost-competitive
A scrapyard

Basic strategy

a sustainable management foundation that is resilient to changes in
3 Establish
our environment

Improve cash flow for a robust financial foundation
Create new organizational capabilities as management resources that combine the personnel soft power and digital technology we have amassed thus far

Measure 1 : Establish and execute medium- to long-term investment plan with a view to 2030
Establish and execute plans for human capital investment and strategic facility investment
Secure revenue streams and strengthen our financial foundations with the aim of achieving a credit rating of A and an
aggregate market value of 100 billion yen or more

Measure 2 : Initiatives to utilize DX to improve operational efficiency and organizational capabilities
Measure 3 : Steady execution of environmental measures at our plants and elsewhere

Main capital investment plan
Kawasaki Plant

Strategic investment

Investment in strengtheningof corporate foundation

11.5 billion yen

5.5 billion yen

Upgrade investments

9 billion yen

Group companies

5 billion yen

Total

Oheyama Plant

Entire company

Facility efficiency measures to increase production of high-performance alloys
Upgrade of leveling machinery for plates
Upgrade of welding machinery on hot strip annealing and pickling lines
Measures for carbon neutrality
Upgrade of electrical equipment on annealing and pickling lines
Open research facilities for hydrogen environments

Transition to LNG for kiln fuelUpgrade of drive motors
Open new testing facilities at technical institute
Upgrade of operation management system
Upgrade of cranes at steel melting shop
Upgrade of extra-high-voltage and high-voltage equipment• Upgrade of electrical equipment for cold rolling mill (NAS STAINLESS STEEL STRIP MFG. CO., LTD.)• Upgrade of Kansai processing center building (NAS TRADING CO., LTD.)• Replacement of heat treatment furnace (NAS TOA CO., LTD.)

31 billion yen(based on decisions: cumulative total for 3 years)

22Chapter3

Sustainability

Sustainability Policies and Systems
We have established effective sustainability policies and promotion systems to implement initiatives to achieve asustainable society and make our businesses more useful to society.

Promoting sustainability to achieve our Management Philosophy
Our external environment has changed dramatically: there
has been a greater call for carbon neutrality and uncertainty
has grown in society, to name just two changes. Nippon
Yakin Kogyo upholds the vision of becoming a “resilientcompany” for the creation of a sustainable society.
Accordingly, we are implementing measures to increase
the sustainability of Nippon Yakin Kogyo Group itself.
We have identified issues that need to be tackled in orderto achieve our vision and designated these as materiality.
We use this materiality as the starting point when
discussing and establishing Medium-Term Management
Plans to ensure that the activities we carry out will beeffective and respond to changes in our external
environment. We will also share information about theactivity results and progress as necessary.

Implementation of the management philosophy

Our vision

Become a resilient company
Sharing of information through integrated reports
Incorporation into Medium-Term Management Plan
Process to specify the issues of materiality

STEP 1

STEP 4

Grasp changes in the external environment and conduct
examinations to select issues of materiality
Each department worked to grasp changes in the Company’s businessenvironment and conduct examinations to select issues of materiality basedon the risks and opportunities posed to the Company by external changes.

Discussion by management

STEP 2
Specify the issues of materiality for each department
After making detailed examinations of the issues particularly importantfor society and the Company from among the issues examined in STEP 1,
each department selected the own issues of materiality.

Meeting on sustainability
A meeting was held to enable the directors to develop a sharedrecognition and understanding of the trends affecting the external
environment and society at large, and to discuss what issues the Company
should address as priorities.
Board of Directors
The management team, including outside directors, discussed and agreed
on the issues of materiality in consideration of corporate governance.

STEP 3

STEP 5

Transformation of the departmental issues of materiality into
companywide priorities
The issues of materiality specified by each department were examined totransform them into the companywide issues of materiality.

Specify the issues of materiality
As a result of discussion at the first meeting of the Sustainability Strategy
Promotion Committee, six issues of materiality were specified andapproved by the Board of Directors.

Risks and opportunities
Global environment
Decrease in productivity and risk ofoperational suspension
Increase in cost due to theintroduction of carbon pricing andexpanded capital investment
Expansion of opportunities fortechnological innovation andinvestments toward carbon neutrality
Increase in demand for our productsthat help solve environmental issues
Effective use of green energy

23

Business environment
Surges in materials cost and difficulty of procuring materials
Expanded volatility of domestic demand due to borderless market
Stagnant domestic demand due to continued low economic growth
Promotion of business reform (DX reform), mainly at our plants, by theuse of AI and big data
Enhancement of collaboration with business partners
Enhancement of collaboration with local and international communities
Pioneering of a new market

Working environment
Labor shortages and difficultyof passing skills on toyounger generations
Diversification of humanresources and utilization ofsuch resources
Labor saving throughdigitized operation

Risk

Opportunity

Introduction

About Nippon Yakin Kogyo

Value Creation Strategies

Sustainability Company Data

Sustainability promotion system
this materiality. The committee, as part of top management,
also works together with each department and committee to
implement the company’s sustainability initiatives.
Discussions by the Sustainability Strategy Promotion
Committee are reported to the Board of Directors andfeedback from outside directors is sought before policies
about investment and strategies are decided.

Nippon Yakin Kogyo established the Sustainability Strategy
Promotion Committee, chaired by the president, on
August 1, 2021, with an eye to addressing thesustainability-related issues of materiality across the board.
Our Sustainability Strategy Promotion Committee
identifies issues of materiality related to sustainability andcarries out inter-department evaluations of activities based on

Board of Directors
Reporting

Sustainability Strategy Promotion Committee(chaired by the president)• Formulate companywide policies• Evaluate progress• Examine and decideon measures• Respond to external changes
and give instructions
for improvement• Information on the progressand results• Take actions

Expansion ofsocial needs

Each department & committee** Environmental Committee, Research and Development Committee, Compliance Committee,
Investor Relations Committee, Nippon Yakin Kogyo Group Quality Assurance Committee andExport Trade Control Committee

Main discussions by Sustainability Strategy Promotion Committee
Below are the main topics that were discussed in FY2023.
• Meetings held in FY2023: 9 in total• Main topics:
Date

Main topics

April 11, 2022

• Actions for the introduction of internal carbon pricing (ICP)• Measures for human rights in business

May 12, 2022

• Quantitative evaluation by TCFD of risks and opportunities posed by climate change

July 15, 2022

• Assessment of emissions in supply chain: Scope 3 calculation• Agreement with TCFD

October 11, 2022

• Third-party verifications of environmental data

December 12, 2022

• Policy for creation of Integrated Report 2023

January 10, 2023

• Nippon Yakin Kogyo’s response to Human Capital Visualization Guidelines (Cabinet Secretariat)

March 6, 2023

• Setting of KPIs for materiality

24Chapter3

Sustainability

Issues of Materiality: Major Targets, Initiatives and Results
Nippon Yakin Kogyo identifies issues of materiality from a risks and opportunities perspective based on changes in our
external environment including the global, business and working environments.
For each issue of materiality, we disclose our vision, KPI and results from implementing the measures, and we manage
progress toward achieving these measures.

Issues of materiality
Issue ofMateriality

1

Provision of socially
useful products

Issue ofMateriality

2

Reduction of global
environmental
impact throughbusiness activities

Issue ofMateriality

3

Achievement of safe
and stableproduction

Issue ofMateriality

4

Creation of
workplaces where
all employees canwork with equality
and satisfaction

Our vision
Nippon Yakin Kogyo Group provides stainless steels andhigh-performance alloys that have excellent corrosion andheat resistance, formability and aesthetics. Each of our
products demonstrates high performance when used in eachenvironment. We aim to continuously earn our customers’
trust by providing the industry’s top-level highly functional
materials and high-quality services in terms of quality, duedates, cost, and technologies and solutions.

Global environment issues are becoming increasingly
serious, such as the intensification of natural disasters due
to climate change, depletion of resources and loss of
biodiversity. The Nippon Yakin Kogyo Group has a
responsibility to address these issues as they emerge
because our business activities consume a large amount ofenergy and emit a large amount of CO2. Our Group is
striving to minimize CO2 emissions and realize a sustainableglobal environment by recycling resources and improving
operating technologies.

It is our Group’s responsibility to conduct business activities
safely and provide a steady supply of high quality materials
to society. We are eliminating occupational hazards,
implementing measures to maintain and improve productquality, and updating our equipment for the prevention ofequipment failures. We are thus making improvements inboth tangible and intangible ways.

KPI (Targets/Results for FY2023)
Sales ratio of high-performance alloys (non-consolidated)
Target FY2026: 50%
Results 42.4%

CO2 emissions reduction rate
(Relative to FY2014, non-consolidated)
TargetFY2026: 46% reduction
FY2051: Carbon neutrality

Results 49% reduction

Number of serious occupational accidents (non-consolidated) *Target 0 cases per fiscal year
Results 0 cases per fiscal year

Percentage of women among the new graduate
career-track hires (non-consolidated)
Nippon Yakin Kogyo Group’s products are made possible by
the experience and technology that our employees havedeveloped over the years. Therefore, for the further growth of
our company, it is necessary to create an attractive workplace
where our employees want to continue working. We arehiring and training a diverse workforce and developing anenvironment in which they can play an active role.

Target 20% or more per fiscal year
Results 29%

Rate of employees taking paid holidays (non-consolidated)
Target 70% or more per fiscal year
Results 78%

Issue ofMateriality

5

Establishment ofsustainable
partnerships

Issue ofMateriality

6

Advancement ofcorporate foundation
for adaptation to thesocial environment

For corporate sustainability, companies need to understandwhat their stakeholders expect from them and what they areinterested in. To this end, Nippon Yakin Kogyo Group is
promoting communication with various stakeholders,
including local communities. Through this communication
we aim to help them deepen their understanding of theGroup and to achieve harmony and co-prosperity with themby listening to their opinions.

To support sustainable corporate growth, companies need toestablish a robust management foundation that is resilient tochanges in the social environment. Based on thisrecognition, Nippon Yakin Kogyo is striving to increase
corporate value under an even better governance system sothat the system can continue to deliver stable business bymeeting the changing requests and expectations of the
public based on the background of the continuously
changing social environment.

EBITDA (Consolidated)
Target FY2026: 20 billion yen or more (Consolidated)
Results 33.4 billion yen

ROE (Consolidated)
Target FY2026: 10.0%
Results 27.8%* Serious occupational accidents refer to fatalities and disabling injuries or illnesses of disability grade 1 to 7.

25

Introduction

About Nippon Yakin Kogyo

Value Creation Strategies

Being implemented

Main measures and challenges

Progress

Sustainability Company Data

To be realized in FY2031

To be realized in FY2051

Results of Activities Conducted in FY2023

Build a flexible production system to be able to respond
nimbly to changes in the demand structure

Succeeded in manufacturing the NW276 (UNS N10276) ultra-wide and thick plates as a productto follow on from the 800T, 625 products by using the wide-width rolling equipment possessedby the partner company in our Chinese joint venture

Promote sales in the newly emerging field ofenvironment & energy (Carbon neutrality, renewableenergy, etc.)

Sales ratio of high-performance alloys: 42.4%

Respond to customer needs in an attentive manner

Development of new alloy types: 2 cases

Establish carbonless smelting technology by increasing
the use of recycled materials

Used recycled materials on an experimental basis
Implementing “Taking on the Challenge of Carbonless Nickel Smelting”

Improve operational technology and further reduce perunit energy use

Operation of the new electric arc furnace (“E furnace”)

Foster fuel conversion for carbon neutrality• Shift from heavy oil to LNG

Promoting a stepwise shift from heavy oil to LNG• Shift from LNG to hydrogen, ammonia and synthetic methane
Effective use of green power

Kawasaki Plant purchased a non fossil certificate

Reduce by-products and waste and increase the recycling rate

Recycling of by-products generated from the manufacturing process: 207,000 tonnes

Continue to make strategic investments ona medium- to long-term basis

Kawasaki Plant
Revamped the existing slitter lines
Constructing new slitter lines
Construction of buildings and design and manufacture in progress at a new cold rolling mill

Maintain and improve occupational healthand safety standards

Rate of incident victims who took leave (Frequency rate): 0.66%
Rate of lost-time accidents (Severity rate): 0.00%

Make investments for stable operation

Upgrade of operation management system (continued)

Promote diversity & inclusion

Recruitment of career-track employees to join the company in April 2023: 14, number of womencareer-track employees: 4Rate of employment of people with disabilities: 2.3%
Improvement of workplaces for female staff

Improve the working environment with automationand labor-saving measures

Kawasaki Plant
Improved working environment by the introduction of a new electric arc furnace (“E furnace”)
Decreased operator workload by revamping the existing slitter lines
Introduced various automated equipment at the new slitter and cold rolling mill

Enhance employee welfare facilities

Completed new employee housing condominium
Constructed new office for partner companies at the Kawasaki Plant

Make use of advanced technologies for humanresource development and the transfer of skills toyounger generations

Conducted voluntary improvement activities
Provided e-learning-based training
Provided safety education using VR

Respect human rights across the supply chain

Regularly checked for the purchase of conflict minerals and other materials of concern as partof human rights due diligence

Enhancement of collaboration with business partners

Publicly announced the Declaration of Partnership Building

Maintain relations of trust with local communities

Conducted cleanup activities around Kawasaki and Oheyama Plants
Conducted plant tours for elementary to high school students at Oheyama Plant

Disclose information to and promote dialogue
with stakeholders

Held two IR briefing sessions per year
Dispatched 27 news releases in Japanese (123% relative to FY2022)
Published Sustainability Report 2022 in Japanese

Enhance the financial foundation to ensure business
continuity and foster business development

Net D/E ratio (Consolidated): 0.93 (Target for the final year of the medium-term management
plan: less than 1.0)

Continue to implement measures for legal compliance

Informed employees of the internal reporting system and operated it appropriately
Regular sharing of information through the in-house magazine

Raise employees’ awareness ofsustainability-related measures

Distributed copies of Sustainability Report 2022 to all directors and employees of the Group
Held an in-house briefing session

Enhance corporate governance to meet market needs

Made necessary responses to the revised Corporate Governance Code26

Chapter3

Sustainability

Provision of Useful Products for Society
Issue ofMateriality

1

Nippon Yakin Kogyo Group provides stainless steels and high-performance alloys that have excellent
corrosion and heat resistance, formability and aesthetics. Each of our products demonstrates highperformance when used in each environment. We aim to continuously earn our customers’ trust byproviding top-level high performance materials and high-quality services in terms of quality, duedates, cost, and technologies and solutions.

R&D Department’s efforts to address diversifying needs
Developing high-performance alloys to meetcustomer needs
Nippon Yakin Kogyo develops products that meet a varietyof needs in every process, from receiving orders andmanufacturing to providing follow-up.
In one case, the customer requested a material witheven higher heat resistance than the heat-resistant alloys
such as 800H that are usually used in polycrystalline silicon
manufacturing equipment that is used in solar panels.
In response, we improved the manufacturing processof H38X, a material that has excellent heat resistance but
is difficult to manufacture, and succeeded in
mass-producing it. This enabled equipment manufacturers
to reduce the thickness of their equipment, contributing tocost reductions. In addition, by supplying materials to therapidly expanding field ofsolar power generation,
we are contributing to
the reduction of CO2
emissions on the earth.

Strengthening hydrogen-based technologies
Hydrogen is attracting attention as an environmentallyfriendly energy resource that does not emit CO2.
Hydrogen can be difficult to handle because generally
it causes embrittlement in some metals, but we are
manufacturing stainless steel where we have optimized
alloying elements such as the amount of nickel added. To
evaluate materials in a hydrogen environment, we will
establish a new test facility at our Kawasaki Plant in
FY2025 to collect a variety of data and contribute to therealization of a hydrogen energy-based society.

Addressing diverse needs
for stainless steel
Supporting client development throughtechnological support
We have accumulated many technologies over the years.
For corrosion resistance, a characteristic of stainless steel,
we conduct not only laboratory evaluations but also
long-term atmospheric exposure tests and seawater
immersion tests. We are also focusing on offering
technological support for the welding of high-performancealloys. Without sound welding, the welded area will
become a weak point and the material will not perform as
well as it should. To meet the various needs of ourcustomers, we not only supply materials but also provide avariety of technological support.

27

Development of environmentally friendly nickel
smelting technologies
To realize a sustainable society, it is necessary to reduce CO2
emissions and at the same time promote resource recycling.
Our Oheyama Plant smelts nickel from imported ore, but inrecent years the use of recycled raw materials from “urban
mines” has been expanding, and we are developing nickel
smelting technology tomake full use of a wide
variety of recycled raw
materials. We are also
working on shifting fromcoal to LNG as a fuelsource, and making use ofchemical recycling to reduce
the use of coal by replacing
it with waste plastics.

Introduction

About Nippon Yakin Kogyo

Value Creation Strategies

Sustainability Company Data

Solutions sales based on technical knowledge and experience through communication
Our products have a significant effect on the quality and performance of the
products made by customers. Accordingly, it is essential for us to communicate
appropriately with our customers at the consulting stage, before we receive
orders from them, and subsequently, including the production, delivery andfollow-up stages.
While responding to changes in the market environment including thetrends for globalization and carbon neutrality, we are sincerely working to meet
our customers’ requests from a long-term viewpoint.
For the provision of solutions, we are fostering communication withcustomers mainly through the Material Solutions Sales Department.
We offer advice on material selection based on sample testing and property
confirmation, guidance on processing and welding methods, and proposals thatutilize our database and technical knowledge.
Example of our process for providing solutions(1) Meeting(2) Proposal(3) Selection(4) Ordering,
manufacture,delivery(5) Follow-up(1) Meeting(3) Selection

By communicating with customers, we learn about theirneeds and identify and organize issues. In this process, inaddition to the obvious needs that the customer alreadyunderstands, we may also be able to uncover latent needs
that the customer is unaware of.

The most suitable product for the customer will beselected from those we have proposed based on data,
knowledge and other factors.

(2) Proposal

We exchange specifications with the customer, and then buildand deliver the product according to the customer’s requests,
down to dimensional tolerances and packaging method.

To reach a solution to these issues, we propose a productby utilizing our database and technical knowledge.
Our database includes not only data collected in thelaboratory but also data collected from long-term exposure
tests in atmospheric and seawater environments.
Our solution proposals are supported by both the data inour database, and our experience gained over many years.
The environment in which our products are used isdifferent for each customer, and additional data may becollected as necessary to make our proposals more
effective. In such cases, we may conduct laboratory tests
that simulate the environment in which the product will be
used, laboratory tests using a solution provided by thecustomer or even test samples in a customer’s facility toevaluate their characteristics.

(4) Ordering, manufacture, delivery(5) Follow-up
We not only manufacture products and sell them to ourcustomers, but also strive to follow up with them afterwards.
To ensure that each product fully meets its
performance capabilities, we can provide advice in various
areas including welding and forming processes for thecustomer’s construction process.
In some cases, we accompany customers on
inspection work at their request, or provide comments andsuggestions as a material manufacturer after receiving
information on usage conditions.

28

Chapter3

Issue ofMateriality

2

Sustainability

Reduction of Global Environmental Impact throughBusiness Activities
We believe that as the Nippon Yakin Kogyo Group consumes a lot of energy and generates large
volumes of CO2 emissions through its business activities, we have a responsibility to address theworsening global environmental issues that are occurring. The Nippon Yakin Kogyo Group iscarrying out efforts such as recycling resources and improving our operational technology tominimize our CO2 emissions and, in doing so, achieve a sustainable global environment.

Environmental management
Our approach
We are well aware of the importance of environmental
protection. We promote environmentally friendly businesscomplying with environmental treaties, laws, regulations,etc. In addition, we are proactively implementing
environmental initiatives, including effective use ofresources, saving energy and facilitating green procurement.
Environmental management system
We have the Environmental Committee, chaired by adirector appointed by the president to smoothly progresswith environmental management by Nippon Yakin Kogyo
and the Nippon Yakin Kogyo Group. The Committee
deliberates on and reports the environmental management
plans implemented at our two plants and the issues related
to energy conservation.
Kawasaki and Oheyama Plants have standardized ISO
14001/JIS Q 14001 environmental management systems.

Environmental management system
President
Sustainability Strategy
Promotion Committee
Environmental Committee
HeadofficeOheyama Plant

Kawasaki Plant

Branchmanagers

Executive General
Plant Manager

Executive General
Plant Manager

Environmental
manager

Environmental
manager

Environmental
Promotion
Committee
Each department
in charge

Affiliatedcompanies

Environmental
Promotion
Committee
Each department
in charge

Environmental policies
We have implemented measures for our plants to achieve
the environmental policies and environmental
management planned by the Environmental Promotion
Committee of the plants.
WEB

We have posted the environmental policies of the plants here.

https://www.nyk.co.jp/en/sustainability/environment.html#environmentManagement

Climate change countermeasures
Our approach
The steel industry is an energy-intensive industry. At
Nippon Yakin Kogyo, we believe that addressing climatechange is a management issue of ours as a member of thesteel industry, and are proactively working for carbon
neutrality to fulfill this social responsibility.
Our CO2 emissions reduction targets
In December 2021, we set a CO2 emissions reduction
target of 46% for FY2031 (Scope 1 + 2, compared to
FY2014), and aim to achieve net zero emissions by FY2051.
In our recently announced Medium-Term Management Plan
2024, we have established a plan to achieve our 46%
Our CO2 emissions reduction targets(Scope 1 + 2, non-consolidated)Accomplish earlyin FY2026

CO2

Baseline year

46%
reduction46%
reduction

2014

2026

2031

Aim fornet zero

2051 (FY)

Scope 1: Direct greenhouse gas emissions from the company
Scope 2: Indirect greenhouse gas emissions due to the use of electricity,heat and steam supplied by other companies to the company

29

reduction target in FY2026, ahead of FY2031. We are also
promoting initiatives to achieve carbon neutrality
throughout the entire Nippon Yakin Kogyo Group.
Roadmap to carbon neutrality
Nippon Yakin Kogyo formulated a roadmap to achievecarbon neutrality by FY2051. We aim to achieve carbon
neutrality through steady work on these measures.
Progress with measures
Nippon Yakin Kogyo has been thoroughly implementing
energy-saving countermeasures in all the businessactivities. We use the devices equipped with inverters andLED lamps at Kawasaki Plant. We also began operating anefficiently energy-saving electric arc furnace (“E furnace”)
in the plant in January 2022. Moreover, in FY2022 we
signed a contract with TEPCO Energy Partner, Incorporated
and began operating a system responding to demandenabling flexible operation according to changes in theelectricity supply-demand balance. In addition, since
FY2023, we have been operating an internal carbon
pricing (ICP) system to set carbon prices and virtuallyconvert our CO2 emissions into monetary costs for capital
investment to reduce our CO2 emissions.

Introduction

About Nippon Yakin Kogyo

Roadmap to carbon neutrality
Measures toward FY2031

Measures toward FY2051

Expanded use of recycled materials and establishment of carbonless operation
technology (Oheyama Plant)

Scope 1

Fuel conversion(Heavy oil to LNG, etc.)

Introduction of a new combustion

system (Synthetic methane andhydrogen combustion technologies)

Reduction of standby fuel consumption by the rationalization of heatingand higher yield/productivity
Saving energy by the use of a newelectric arc furnace and better
operation by the use of EMS control

Sustainability Company Data

Value Creation Strategies

Current CO2 emissions (Scope 1 + 2)
The total amount of CO2 emissions for FY2023 from
Nippon Yakin Kogyo on a non-consolidated basis came to390,000 ton-CO2 including emissions from Kawasaki and
Oheyama Plants. The amount of emissions from the entire
Nippon Yakin Kogyo Group totaled 423,000 ton-CO2. It is
generally recognized that the amount of CO2 emissions
significantly depends on the amount of production.
However, we are aiming at achieving our reduction targets
by steadily decreasing per unit emissions.
CO2 emissions

Scope 2

Use of inverter controllers and updating to highly energy efficient equipment
for energy saving(1,000 tonnes CO2)

Effective use of green power

Consideration for carbon offsetting

4
3.03

600

Reduction of standby power consumption by higher yield,
more energy-saving processes and higher productivity(tonnes CO2/tonne)

44

800

41
2.28

400

768

200

572

3

36
2.10

30 1.92

488

Taking on the challenge of carbonless nickel smelting
At our Oheyama Plant, we produce ferronickel alloy as the
major raw material to produce stainless steels. To achievecarbon neutrality and a resource-circulating society, we arephasing out the conventional nickel smelting process, forwhich we need imported nickel ore and coal, andembracing the challenge of carbonless nickel smelting
based on the use of recycled materials.
We aim to reduce per unit CO2 emissions at Oheyama
Plant by 70% in FY2031 relative to FY2014. We will also
reduce the use of imported ore and coal to establish asustainable system for nickel materials.
1 Energy conversion

For energy resources, enhance the transition from coal to LNG
with renewable fuels

2 Carbon replacement (chemical recycling)

For the reductant of nickel ore, enhance the transition from the useof coal (anthracite) to waste plastic (RPF, etc.)

3 Diversification and extended use of recycled raw materials
Promote a shift from the use of nickel ore to the use of recycledmaterials through the diversification of recycled materials

4 Reduction of byproducts, waste promoting their effective use
Reuse/reduction of byproducts (NASFINESAND)

2014

2019

2020

1.83

411

368

(CCUS and credit trading)

0

32

2021

2022

33

2

1.81

1

390

0

2023 (FY)

CO2 emissions (1,000 tonnes CO2)
Nippon Yakin Kogyo Group (excluding Nippon Yakin Kogyo)
Nippon Yakin Kogyo
Emissions per sales volume of 1 tonne (tonnes CO2/tonne) (non-consolidated)

CO2 emissions from the entire supply chain
In order to grasp the amount of CO2 emissions generated
across the entire supply chain that supports our businessactivities, we are estimating our Scope 3 emissions(non-consolidated) based on the basic guidelines (Ver. 2.5)
for the estimation of greenhouse gas emissions across the
supply chain published by the Ministry of the Environment
and the Ministry of Economy, Trade and Industry.
CO2 emissions from supply chain(1,000 tonnes CO2)
Nippon Yakin Kogyo
Consolidated(non-consolidated)

Scope 1

231

246

Scope 2

158

177

Scope 3

678–

Breakdown 1. Purchased goods and services528–

2. Capital goods

28–

3. Fuel- and energy-related
activities not included in
Scope 1 or Scope 2
4. Upstream transportationand distribution

59

–

41

–

5. Waste generated in operations

21–

6. Business travel

0.2–

7. Employee commuting

0.3–

Scope 3: Indirect emissions other than those included in Scope 1 and Scope
2 emissions (those emitted by other companies but related to theactivities of the company)
Source used for emission factor data: IDEA Ver.3.3, emission factor database to
calculate emission data such as greenhouse gas emitted by organizations acrosstheir supply chains (Ver. 3.2)

30

Chapter3

Issue ofMateriality

Sustainability

2

Reduction of Global Environmental Impact throughBusiness Activities

Risks and opportunities posed by climate change
Our approach
For the creation of a decarbonized society, each country
has announced their respective greenhouse gas emissions
reduction targets. We likewise regard the risks andopportunities posed by climate change as important issues
for our own sustainability. Accordingly, we have analyzed
the risks and opportunities in line with therecommendations made by the Task Force on
Climate-Related Financial Disclosures (TCFD).

The Sustainability Strategy Promotion Committee chairedby the president leads the execution of a plan-do-check-act(PDCA) cycle for the risks and opportunities posed by climatechange, fosters relevant measures for the entire company, andreports the details as necessary to the Board of Directors.
We conducted scenario analysis for the 4°C scenario(the projected outcome if no measures against climatechange are taken) and the 1.5°C scenario (the outcome if
the average temperature increase in this century is limited
to 1.5°C). We predicted the worldwide situation in 2030
based on each of the scenarios and identified the risks andopportunities, and then divided the identified risks intotransition risks and physical risks.
For transition risks we referred to the IEA World
Energy Outlook for future energy supply and demand andcarbon pricing and for physical risks we referred to thehazard maps created by local governments. By using thesematerials, we quantified the impact of the risks on ourbusiness to make impact assessments. Also, each of ourdepartments discussed countermeasures against the risks.
The following table shows the results.
Against this backdrop, in September 2022, Nippon
Yakin Kogyo announced the support for the TCFD’s
recommendations. Going forward, we will conduct moredetailed examinations for the scenario analysis andcontinuously enhance our climate change countermeasureswhile disclosing the related information to the public.

Scenario analysis results
Scenario

Impact assessment item
(Social changes)

Introduction ofcarbon pricing
Policies Laws & Regulations

Impact assessment*

Risks and opportunities

Countermeasures

Increase in the manufacturing cost due tothe additional cost caused by carbon pricing- Capital investment and operational improvement for energy
conservation and carbon neutrality- Fuel conversion to hydrogen, ammonia, synthetic methaneand biofuels- Development of carbonless nickel smelting technologies- Higher electricity/fuel prices- Higher cost of procuring materials,
transportation services, etc.

- Promotion of energy-saving operation (decrease of per unit
energy use)
- Appropriate product pricing in consideration of the cost–

Increase in the amount of capital
investment for CO2 emissions reduction- Investment decisions in consideration of the environmental
impact reduction effect- Appropriate product pricing in consideration of theinvestment cost–

Shrinkage/elimination of demand in fields withlarge CO2 emissions (Flue gas desulfurizers for
low-efficiency coal-fired thermal power plants,
boilers and EGR systems)

4°C

1.5°C

–
Large

Market–Large

Transition risk

Shift to a carbon
neutrality-oriented society
Technology
MarketReputation

–

Large

Tight supply of recycled materials–

Physical risk

Large

Degradation of the working
environment due to risein temperature
Chronic*

31: RisksMore frequent and intense natural disasters(heavy rain, strong winds and storm surges)that cause the suspension of production,
fragmentation of the supply chain and thesuspension of logistic services

Impact of abnormal
weather events on business
Acute: Opportunities – : No or few impacts

New demand in the environment- andenergy-related fields–

Expanded risks of health damage caused by
infectious diseases and heatstroke- Development of environment-friendly products in response tocustomers’ needs- Sale of solutions to meet new demand for hydrogen,renewable energy sources, electric vehicles (EVs), fuel cellvehicles (FCVs), secondary batteries and CCUS
- Diversified use of recycled materials by the introduction of a
new electric arc furnace- Securing of supply sources that offer reasonable prices(Oheyama Plant)- Examination and implementation of natural disastercountermeasures (inspection and enhancement ofequipment, BCP measures, etc.)- Shared use of equipment with other companies throughoutsourced production and others- Effective use of domestic resources and securing of stablesources for logistics, sales and surveys for the establishment
and diversification of the supply chain- Improvement of the working environment and investment
to increase labor productivity- Enhancement of BCPs against infectious diseases andheatstrokeIntroduction

About Nippon Yakin Kogyo

Value Creation Strategies

Sustainability Company Data

Reduction of environmental impact
Preventing air pollution
We regularly monitor the air emissions discharged from ourplants according to the related laws to manage andimprove them. At Oheyama Plant, we combined a wet-typeprecipitator and an electrostatic precipitator to decrease
particulate matter, and are appropriately managing thisequipment. At Kawasaki Plant, we have taken measures
such as applying a burner with low NOx for a furnace andtrying to reduce emissions of nitrogen oxides.
WEB

Final disposal amount of industrial waste (non-consolidated)
Amount (1,000 tonnes/year)

10

9.3

8

We have posted data on our nitrogen oxide emissions here

https://www.nyk.co.jp/en/sustainability/environment.html#environmentLoadReduction

Preventing water pollution
Water used in our production processes is released out ofthe plant after being treated at our wastewater treatment
facilities so as to meet all the regulatory standards relevant
to prevention of water pollution. Water at Kawasaki Plant
is constantly monitored for contaminants (nitrogen,phosphorus, COD).
WEB

Waste generation
Nippon Yakin Kogyo has been suppressing the generationof industrial waste and promoting the recycling of such
waste to reduce the final disposal amount.

6

5.4

5.3

4

3.8

3.8

2021

2022

2.9

2
0

2012

2019

2020

2023 (FY)We have posted data on chemical oxygen demand (COD) of
water released into the environment
by Nippon Yakin Kogyo here

https://www.nyk.co.jp/en/sustainability/environment.html#environmentLoadReduction

Building a recycling-oriented society
Our approach
Stainless steel is 100% recyclable and collectible as
scrap for recycling. We apply the raw materials
reclaimed from “urban mines” to minimize the impact
on climate change and the environment while
supporting the prosperity of society.
Usage rate of recycled materials
We have to choose recycled materials suitable for theprocesses of Kawasaki and Oheyama Plants. Therefore, wedevelop technologies allowing us to more effectively use
them to increase the usage ratio of recycled materials.
Accordingly, we developed a technology resulting in thenickel amount extracted from recycled materials to be
60-70% of the net amount of nickel used at Kawasaki
Plant. This amount of nickel includes ferronickel alloys
supplied by Oheyama Plant. We indeed need to further
develop technologies responding to the probable changes
depending on the coming eras that may alter thecompositions, grades and the shapes of recycled materials.
We will definitely carry on developing our technologies toaddress the probable changes.

Usage rate of recycled materials (in terms of the net
amount of nickel) by Nippon Yakin Kogyo
(%)
80
70
60
50

63

66

71

66

64

2022

2023 (FY)

57
2014

2019

2020

2021

Recycling of water, sludge and dust
As an important resource we recycle water in our
production processes. The recycling rate attained is morethan 70% and more than 90% at Oheyama and Kawasaki
Plants, respectively.
In the stainless steel process, byproducts are
generated including dust from the electric arc furnace andsludge from the pickling process of wastewater treatment.
They contain valuable metals including iron, chromium,nickel, molybdenum and others. We mix these with waterand knead them into briquettes, which are then melted inan electric arc furnace to extract the valuable metals by
separating slag. The extracted metal is collected as
valuable metal to help produce stainless steels.

32

Chapter3

Sustainability

Achievement of Safe and Stable Production
Issue ofMateriality

Conducting our business activities safely and providing a stable supply of high-quality materials is a
responsibility of the Nippon Yakin Kogyo Group. In the Nippon Yakin Kogyo Group, we areworking on initiatives to eliminate occupational accidents as well as maintaining and improving
quality, and updating our equipment for the prevention of equipment failures. We are thus
making improvements in both tangible and intangible ways.

3

Occupational safety and health
Our approach
A number of occupational safety and health activities arecarried out at our production sites in line with theIndustrial Safety and Health Act combined with theindividual rules of the companies. We have introduced an
occupational safety and health management system(OSHMS)* making an effort to take our occupationalsafety and health to the next stage. The OSHMS is asystem to organizationally and systematically comply withthe laws and regulations and manage the implementationof voluntary rules.
By executing a PDCA cycle as a core element of the
OSHMS, we will continue to step up the level of theoccupational safety and health. Thereby, we prevent
occupational accidents along with providing all employeeswith safe and healthy workplaces.
Outline of the PDCA cycle
Plan (P)

Occupational safety
and health policies(to identify risk factors)

Formulation of a planfor occupational safety
and health activities
Respond to an emergency
Do (D)

Check (C)Act (A)

Implementation of theoccupational safety
and health activity plan
Daily inspection andimprovement
System audit

Safety records
The following figures show Nippon Yakin Kogyo’s safety
record. Compared with other industries and the steel
industry overall, our rate of accidents requiring leave(frequency rate) was higher for some fiscal years. However,
we have been able to maintain the rate of lost-time
accidents (severity rate) at a low level for many years. We
have thus been successfully preventing serious accidents
but have not yet reduced the number of minor accidents
to zero. Zero accidents is a challenge that we should meet.
Deeply recognizing the result, we will work to further
improve our safety level for zero accidents.
Frequency rate

Occupational safety
and health targets
and action guidelines

Carry out arisk assessment

and health supervisor, occupational safety and healthmanager, industrial physician and a representative of thelabor union. The committee meets once a month todiscuss and monitor legal issues and works to raise
employees’ awareness of the plant’s annual safety andhealth plan and monthly initiatives.

(%)
5

Incorporationof workers’
opinions
Disclosureof related
information
Systemand roles

4
3
2
1
0

Document
management
Recordmanagement

System review* The occupational safety and health management system (OSHMS) is
designed to prevent labor accidents, promote workers’ health and create
comfortable workplaces to raise the level of on-site safety and health by
setting and implementing a plan-do-check-act cycle, or PDCA cycle, forthe voluntary and continuous management of on-site safety and health.
Since January 2009, Kawasaki Plant has been certified as a JISHAcompliant OSHMS-certified business site (certification no.: 09149) basedon the guidelines set by the Ministry of Health, Labour and Welfare.

33

2016

2017

2018

2019

2020

All industries
Manufacturing industry
Nippon Yakin Kogyo

2021

2022

2023

(FY)

Steel industry

Severity rate
(%)
0.5
0.4
0.3
0.2
0.1
0.0

Corporate governance system
The plant head serves as the occupational safety andhealth supervisor and appoints an occupational safety andhealth manager (from among department managers) andan industrial physician, whose roles are defined in our
occupational safety and health management rules. Also,
each of the plants has the own occupational safety andhealth committee composed of the occupational safety

2015

2015

2016

2017

2018

2019

All industries
Manufacturing industry
Nippon Yakin Kogyo

2020

2021

2022

Steel industry

2023

(FY)

Introduction

About Nippon Yakin Kogyo

Sustainability Company Data

Value Creation Strategies

Capital investment
Introduction of highly efficient electric arc furnace(“E furnace”)
Significant attention has been paid to electric arc furnaces
in the steel industry in the trend toward a decarbonizedsociety. We began operating a cutting-edge, highly
efficient electric arc furnace in January 2022. The furnace
is covered by an openable and closeable wall to collect
more dust while preventing noise to a significant extent.
Moreover, many of the tasks to be conducted prior tooperations have been automated to substantially decrease
the workload imposed on human operators. In addition,
we introduced the furnace body detachment method forthe replacement of bricks of the furnace. Thereby, thismethod allows the offline
replacement to be madeat any time obeying ourrequired schedule andimproving theenvironment for furnace
maintenance staff.

Revamping and new establishment of slitter lines
We are continuously making strategic capital investment toimprove productivity in the production of ourhigh-performance alloys. We plan to revamp the slitter line
for hot strips and install a new slitter line for cold strips
with an eye to enhancing the finishing equipment at thecold rolling shop. In addition to expanding the production
capacity of that equipment by around 50%, this will
increase the efficiency of the preparatory work and reduce
the workload on the operators in a job requiring extensive
experience and advanced skills with automation.
Introduction of a highly efficient cold rolling mill
In November 2024, we plan to begin operating a new coldrolling mill. In addition to improving production efficiency
and stabilizing quality, this will simplify strip inserting,
reduce the problem-recovery time and enable automationof the rolling conditions, leading to a substantial reduction
in workload. We will additionally upsize the ventilationequipment to improve the working environment.

Quality
Our approach
Nippon Yakin Kogyo produces products that meetcustomer needs and specifications while complying withrelated laws, regulations and standards. As a method for
managing and increasing our product quality, we arecommitted to establishing, implementing, maintaining andconstantly improving our quality management system thatmeets the requirements determined by JIS Q 9001/ISO
9001 and JIS Q 9100.
Quality policy
The quality policy of our Kawasaki Plant, which handles
the final production processes of our products, is posted
on our website.
WEB

https://www.nyk.co.jp/en/sustainability/society.html#quality

Quality assurance system
We have the Nippon Yakin Kogyo Group Quality AssuranceCommittee, chaired by a director appointed by thepresident to continuously improve the Nippon Yakin Kogyo
Group’s quality assurance system. This committee is tasked
with the following roles:• Formulate policies on the improvement of the quality
assurance system• Carry out audits at Group companies’ major production
bases (once a year in principle)• Organize a meeting of Group companies’ employees incharge of quality assurance (once a year)
Quality assurance system
President
Sustainability Strategy
Promotion Committee
Nippon Yakin Kogyo Group Quality Assurance Committee
PlantsKawasaki Plant,
Oheyama Plant

Affiliated companies
NAS TOA CO., LTD.,
NAS STAINLESS STEELSTRIP MFG CO., LTD.,
NAS TRADING CO., LTD.,and others (Eight in total)Standardization activities
To ensure that our products are competitive, we are
actively carrying out standardization activities, registering
our products for standards such as JIS. Major products ofours, including 64, 254N and 354N, have already been
made JIS-compliant.

34

ChapterIssue ofMateriality

3

Sustainability

4

Creation of Workplaces Where All Employees Can
Work with Equality and Satisfaction
We are working to create workplaces where diverse employees, including employees of varying
ages and educational backgrounds, are all respected and can enjoy job satisfaction.

Human rights
Background and our approach
Companies are required to recognize that they may havedirect and/or indirect impacts on human rights throughtheir business activities and take measures to prevent
human rights infringements. To ensure that Nippon Yakin
Kogyo respects and protects the human rights of all its
employees, we have established a code of conduct andanti-harassment regulations to clarify appropriate behavior
in the Company. We also established Nippon Yakin Kogyo
Group Helpline Rules, which stipulate the internal
consulting and reporting systems that must be present topromptly detect and take corrective action against unfair
acts by organizations and individuals within the Group. In
2020, the Japanese government determined the National
Action Plan on Business and Human Rights. Since then,human rights issues, including those in companies’ supply
chains, have been attracting considerable attention.
Nippon Yakin Kogyo is aware of the importance ofaddressing these issues and aims to create an even bettersystem than those mandated by these government rules
through ongoing discussions at meetings of the

Sustainability Strategy Promotion Committee.
* For our measures for supply chain-related human rights, please see page 40.

Prevention of harassment
Nippon Yakin Kogyo has established rules to prohibit
harassment and all other forms of misconduct, including
sexual harassment, abuse of power and harassment ofpregnant employees and employees taking maternity,
paternity, parental or long-term care leave. Workplaceharassment undermines personal dignity and integrity. Such
unfair acts create a hostile work environment and should
never be permitted. We provide employees with education
to prevent harassment and in FY2023, we conducted an
online harassment prevention training seminar for all
managers. We also provide employees with services
providing advice about harassment, including an internal
email-based service and a readily accessible external service.
To protect the victims of harassment, we have also set rules
to safeguard the privacy of anyone who uses the advisory
service and prevent any reprisal against them.

Promotion of diversity, equity and inclusion
Background and our approach
One of Nippon Yakin Kogyo’s action guidelines is “We
respect diversity and differences, and demonstrate ourcomprehensive capabilities with a spirit of harmony.”
According to the results of a survey conducted by the
Ministry of Internal Affairs and Communications, Japan’s
working population has been decreasing since reaching apeak in 2008 and will continue to drop at an acceleratingrate. Against this backdrop, women and older people are
increasingly expected to join the workforce. Also, in linewith the changes of the times, values have become
diversified and a range of flexible work arrangements areneeded. We believe that respecting the diverse
backgrounds and ideas of employees and enabling all
employees to thrive here will help us achieve soundgrowth and are promoting diversity, equity and inclusion in
the workplace accordingly.
Employment of people with disabilities
Nippon Yakin Kogyo also fosters the employment ofpeople with disabilities for the creation of a society where
all people can make valuable contributions. Kawasaki Plant
provides the employees with disabilities with a special

35

office space where they can work in comfort, as well as
dedicated support personnel, giving due consideration totheir individual characteristics.
Promotion of empowerment of women
Nippon Yakin Kogyo is taking on the challenges ofproactively employing women and assigning them to diverse
workplaces and of providing women with workplaces where
they can work in greater comfort. To meet these challenges,
we are implementing the following initiatives.
First, we have set the target of increasing the rate of
women hired in career-track positions to at least 20% of
the total number of candidates in our action plan made inline with the Act on the Promotion of Female Participation
and Career Advancement in the Workplace. Four out of
the 14 career-track employees who joined the company inApril 2023 are women.
We have a total of 12 female production operators asof April 2023. To help them work in greater comfort, wehave introduced electric tools, workbenches and lifters to
reduce the physical load imposed on them. We have also
installed shower rooms and powder rooms for exclusive
use by female employees.

Introduction

About Nippon Yakin Kogyo

Value Creation Strategies

Sustainability Company Data

Voice
What makes working in sales exciting for me is being
able to be out on the front line and be a point of contact
for our customers. For example, when I go on a businesstrip and talk to the customers there, it’s an opportunity
to hear directly about their appreciation of our strengths,
like our high quality and meticulous service, and that’s
fulfilling for me. And I think the source of thosestrengths is the way everyone in the company can
express their opinions freely, regardless of their age or
gender, and the way we work together acrossdepartments when things are difficult. That’s a source of
support for our production, and it’s a quality of thiscompany that I’m proud of.
From July 2023, I will spend a year with theworldstainless* in Belgium. This will be a new challenge
unlike anything I have experienced in the six years I havebeen here thus far. It is more common for women to

hold positions of responsibility in European societies thanin Japanese society. And you only have to look at thesoccer teams representing those countries to see thatpeople from different cultures and roots work toward
the same goal. It’s a place where value is built on
diversity. During my time in this temporary role, I want todevelop an international view based on mutual
acknowledgment and use that to achieve further growthfor both myself and the company.
* The worldstainless (formerly known asISSF) is an international forum of theworld’s major stainless steel producers
and related organizations. The forum
shares opinions and information aboutstainless steel.

Namiko Shibuya

Overseas Sales Department

Data on employees for last three years
Basic information

As ofApr. 1, 2021

As ofApr. 1, 2022

As ofApr. 1, 2023

Turnover rate*
Men

Women

Total

No. of employees (persons)

1,082

98

1,180

Rate (%)

91.7

8.3

–

No. ofemployees

No. of those
who resigned

Turnoverrate

As of Jan. 1, 2020

1,119 people

35 people

3.1%

1,130 people

20 people

1.8%

1,169 people

46 people

3.9%

Average age (years old)

41.4

40.3

41.3

As of Jan. 1, 2021

Term of service (years)

19.1

18.3

19.0

As of Jan. 1, 2022

No. of employees (persons)

1,077

102

1,179

Rate (%)

91.3

8.7

–

Average age (years old)

41.7

40.2

41.6

Term of service (years)

19.6

18.1

19.4

No. of employees (persons)

1,098

105

1,203

Rate (%)

91.3

8.7

–

Average age (years old)

42.5

40.0

42.3

Term of service (years)

19.7

17.9

19.5

Women hired in career-track positions
People hired* The turnover rate was calculated by including retirees (who did not wish
to be reemployed and who were transferred to other Group companies)in addition to those who resigned from the company for their own
reasons.

Rate of employment of people with disabilities
FY

Number of
persons employedRate

FY202119 people

2.0%

FY202219 people

1.9%

FY202322 people

2.3%

Note

FY20190 people

FY20202 people(including 1 mid-career employee)

FY2021

5 people(including 1 mid-career employee)

FY20224 people

FY20234 people

FY20244 people

36

ChapterIssue ofMateriality

3
4

Sustainability

Creation of Workplaces Where All Employees Can
Work with Equality and Satisfaction

Retirement age raised to 65
In April 2023, we raised our retirement age to 65 andtransitioned to a new personnel system.
BackgroundIn the past, employees could receive what we could call fullold-age pension from age 60, and like many other companies,
many of our employees retired at the age of 60. However, thepension is now paid from age 65 and people are living for
longer: we have entered an age of 100-year-olds. Because ofthis, many people want to work past 60, and like othercompanies, we have introduced a reemployment system
under which, as a general rule, all employees who wish towork until age 65 can do so. However, our systems were notfully prepared to handle employees continuing to work past
60 with the same motivation as before under our
reemployment system, and many employees join us
mid-career instead of as new graduates, meaning that in an
increasing number of cases, including those of current
employees, it is not possible to handle employees in a
unilateral way connected to their age.

Based on this, we have revised our entire personnel
system, including discontinuing systems like ourqualification system which were based on years worked
here, and transitioned to system where current effort andresults are rewarded from the time the employee is hired
to the time they turn 65.
Item

Until March 2023

New personnel system

Retirement age

60

65

Reemployment system

Employees can be
reemployed untilage 65 if they wish

Discontinued*

Role structure

Administrative andtechnical roles
Production operators

Career-track roles
Administrative roles
Production operators

Qualification system

Levels 1 to 6

Discontinued

Pension system

Calculated bymultiplying the baserate by a coefficient

Points-based
pension system* The old reemployment system still applies to existing users

Human resource development
Our approach
In recognition of the structural changes in our businessenvironment, we are promoting human resource
development to ensure that Nippon Yakin Kogyo cancelebrate the 100th anniversary of the founding in 2025
and continue to achieve resilient and sustainable growth
beyond that date.
Collective training
We introduced collective training using a remote online
communication system in response to COVID-19. We also
provide face-to-face collective training with measures toprevent infection to facilitate active discussion.
e-learning
We have a system to help career-track employees develop
their abilities. As a part of the system, we provide themwith online video training. We have thus improved theenvironment for learning by providing opportunities tolearn on a daily basis without restriction of when andwhere different from the conventional education style.
Under the system, employees can choose for themselves
the items they wish to learn depending on their job duties.

37

Financial support for capacity building
We provide the financial support to take external training
to encourage career-track employees, manager candidates
and experts in practical operations, to independently
acquire additional skills outside of their jobs. This includes
correspondence courses and book purchases to boost their
management, leadership, and financial skills, accounting
knowledge and increasing their IT literacy.
Development for production operators
For production operators, we clarify the skills necessary forthem to perform their jobs and formulate specificdevelopment plans to help them acquire those skills
through OJT and OFF-JT. We use an evaluation table tocentrally manage their education to help them develop theskills they need.
For new employees, we have a training system called“shop adviser” under which they receive one-on-one
education from senior staff members as OJT from the end of
their three-month collective training to the end of their second
year. Through this system, we hope to better motivate new
employees while also helping them promptly acquire thenecessary skills as they gradually adjust to the workplace.

Introduction

About Nippon Yakin Kogyo

In our safety education, we make effective use of VR
technologies to provide trainees with virtual experiences ofwork hazards in a safe and immersive manner, thereby
preventing accidents and raising their safety awareness.

Hands-on safety training using a VR system

Program for studying at the College ofIndustrial Technology
We have a program allowing employees who have
graduated high school or are equivalently skilled to study
at the College of Industrial Technology to receive a
specialized technical education and become technicalemployees with both an academic and professional
insights. After studying at the College of Industrial
Technology for two years, we expect to see these
employees in a wider range of career-track roles.

Employees who have studied
at the College of Industrial Technology:

16 in total(since 1986, including current students)

Value Creation Strategies

Sustainability Company Data

Voice
I had the opportunity to spend two years studying in
the Electrical and Electronic Engineering Departmentof the College of Industrial Technology from April
2019. I was in my 12th year here at that time andhad already gained a certain amount of knowledge
from sources like my experience on the job, but
re-learning the basics of electricity and electronics at
a college allowed me to connect the practicalknowledge I had gained before with the things I
learned in the classroom in an organized way.
The experience has been useful now that I’mback at the company. For example, in the Electrical
Equipment Maintenance Section, where I work,when a fault occurs in a piece of equipment, weneed to be able to hypothesize about what cause
the fault and how it can be solved, and then verify
that. Before I studied, I searched for the cause basedon the experience I had gained on the job, but now I
also apply my knowledge from my studies, which
has made me more confident in analyzing thecauses of faults.
I’m now in charge of maintenance andimprovement of our hot rolling shop, but I’mworking toward managing the entire plant in future.

Makoto Haramaki

Kawasaki Plant
Facility Management Department
Electrical Equipment
Maintenance Unit,
Electrical Equipment
Maintenance Section

Measures for work-life balance
Our approach
We are implementing measures to help employees
maintain a work-life balance so that they can perform theirduties and achieve job satisfaction while also spendingtime outside the workplace meeting family responsibilities,
participating in their local communities and pursuing
personal goals, thereby leading a healthy and fulfilling life.

Results concerning the major systems and initiatives
SystemResults for FY2023

Childcare leave

10 people

Shorter working hours for childcare

10 people

Long-term nursing care leave

1 people

Shorter working hours forlong-term nursing care

Not usedNursing care leave for children
Rate of paid holidays taken
For the accumulation of paid holidays*

48 people (228 days in total)
78%
109 people (900 days in total)* Employees can accumulate paid holidays not taken before the expirationof the two-year period and use them for specific purposes, such asrecuperation and volunteer activities.

38

Chapter3

Sustainability

Establishment of Sustainable Partnerships
Issue ofMateriality

5

Nippon Yakin Kogyo Group focuses on communication with various stakeholders, including local
communities, to ensure that the company remains sustainable. Through this communication we
aim to help them deepen their understanding of the Group and to achieve harmony andco-prosperity with them by listening to their opinions.

Stakeholder engagement
Communication with local communities:
social contribution activities
Nippon Yakin Kogyo, under the leadership of Kawasaki
and Oheyama Plants and in cooperation with the relatedGroup companies, communicates with local residents to
help them deepen their understanding of the Company
and to contribute to the creation of a safe andcomfortable living environment and the revitalization of
local communities.

Clean-up activity for the Amanohashidate sandbar
A total of around 40 employees, including the head of the
Plant, participate in the activity to clean up the
Amanohashidate sandbar, which is regarded as one ofJapan’s three most scenic views, every spring and fall forthe beautification and protection of the scenic beauty.

Kawasaki Plant
Clean-ups of nearby roads
Employees of Kawasaki Plant conduct a clean-up activity
on the sidewalks of the Itsukushima Bridge [overpass] andTonomachi Yakosen near the Plant twice a month.

Oheyama Plant
Plant tours
Tours of the plant are offered not only to business partners
but to local elementary to high school students. 72 people
toured the plant in FY2023, where they were given a brief
overview of the plant’s business activities and learned
about its decarbonization efforts using recycled materials
and its environmental initiatives.

39

Communication with shareholders and investors
To further increase Nippon Yakin Kogyo’s corporate value,
we make sure to provide shareholders and investors withpertinent information in a timely manner by issuing
documents such as year-end reports and interim reports at
the end of the second quarter. We also hold twice-yearly
briefing sessions for institutional investors, attended by ourpresident, to provide explanations about our financial
results and management plans.
In 2019, as a new initiative, we invited individual
shareholders to take a tour of Kawasaki Plant. We havesuspended this initiative due to COVID-19 but plan toresume it after a four-year suspension in FY2024.

Introduction

About Nippon Yakin Kogyo

Value Creation Strategies

Sustainability Company Data

Procurement
Our approach
The movement for responsible mineral procurement inglobal society not only includes measures against conflictminerals; it has rapidly expanded to all mineralprocurement, including human rights due diligence andaddressing ESG risks in supply chains. As a result, thescope of minerals, risks and regions is growing.
Additionally, with moves such as the establishment of
the National Action Plan on Business and Human Rights invarious countries in Europe and North America, companies
are increasingly obligated to perform human rights due
diligence in their supply chains. Based on this, there is a
growing call from stakeholders for companies to perform
human rights due diligence and address ESG risks
throughout their supply chains.
Like other companies, we are working to achieve
responsible mineral procurement, paying attention to
movements in government policy and industries in various
countries and working together with various departments
to strengthen our initiatives.
Management of conflict minerals
We have established the Conflict Minerals Management
Rules (hereinafter, “the Rules”) for the management of
so-called Conflict Minerals (i.e., gold, tin, tantalum,
tungsten, and other minerals themselves, or alloying
materials containing such minerals). We obtain the CRT(Cobalt Reporting Template) and CMRT (Conflict Minerals
Reporting Template) from raw material suppliers via trading
companies, and otherwise collect and confirm informationon conflict minerals, which we retain for seven years.
At Nippon Yakin Kogyo, the Export Trade Control
Committee deals with issues related to conflict minerals.
The Export Trade Control Committee checks theCompany’s responses to conflict minerals, which are also
examined through internal auditing, and reports the detailsof its activities at the Management Meeting.

Human rights due diligence, etc.
across the supply chain
Our rules and regulations incorporate mechanisms such asystem to gather information from business partners about
raw materials, secondary materials and other supplies
connected to countries and regions requiring human rights
due diligence, such as procurement from the Xinjiang
Uyghur Autonomous Region or companies involved inforced labor by Uyghurs.
The Japanese government recently issued its Guidelines
on Respecting Human Rights in Responsible Supply Chains,
and Nippon Yakin Kogyo will continue exploring appropriate
initiatives to ensure that human rights are upheld.
We are also taking appropriate individual measures toaddress calls to handle ESG risks, including working toachieve carbon neutrality.
Declaration of Partnership Building
Nippon Yakin Kogyo has agreed to the statements by theCouncil on Promoting Partnership Building for Cultivating
the Future, comprising the Chairman of the JapaneseBusiness Federation, the Chairman of the Japan Chamberof Commerce and Industry, the President of the JapaneseTrade Union Confederation and relevant ministers (Cabinet
Office, Ministry of Economy, Trade and Industry, Ministry of
Health, Labour and Welfare, Ministry of Agriculture,
Forestry and Fisheries, Ministry of Land, Infrastructure,
Transport and Tourism), and announced its own
Declaration of Partnership Building in June 2022.
To build new partnerships with the business partners
in our supply chain, we will form alliances beyond factors
such as our existing business relationships and the scale ofour business with the aim of achieving mutual prosperity
for Nippon Yakin Kogyo and its business partners. These
partnerships will also include support such as business
continuity assistance in cases such as disasters and advice
from the perspective of work practice reforms.
We also uphold suitable practices for trading with
subcontractors (Development Standards based on the Act
on the Promotion of Subcontracting Small andMedium-sized Enterprises), actively and continuously work
to correct trade and business practices that prevent thebuilding of partnerships with business partners, and work
to build a sustainable society and a resilient company
under our management philosophy of “We promote thewell-being of all who join with us”.

Oheyama Plant An ore yard

40

ChapterIssue ofMateriality

3

Sustainability

6

Advancement of Corporate Foundation for
Adaptation to the Social Environment
In order for a company to grow sustainably and continuously increase its value from a medium- to long-term
perspective, it is essential to create a system to help management make prompt and appropriate decisions,while providing suitable monitoring and advice. Nippon Yakin Kogyo is striving to bring about evolution in its
corporate foundation under an even better governance system that will facilitate smooth business operations
and meet the changing demands and expectations of the public as the social environment continues to change.

Corporate governanceOur approach
Our management philosophy states our commitment to“offer excellent products that drive progress and create abetter world.” We are working to do this in our businessactivities to meet the expectations and earn the trust of all our
stakeholders, including shareholders and business partners,
and increase our corporate value. To grow sustainably andincrease our corporate value in the medium to long term, it isessential that we pursue effective corporate governance. We
are conscious that enhancing our corporate governancethrough timely and appropriate disclosure of information andthorough compliance is critical for ensuring the soundness ofour business management and further increasing ourcredibility as a company, and we take measures accordingly.

system to increase the efficiency and speed of businessexecution while clarifying the related responsibilities androles. We presently have 14 executive officers.
Furthermore, as an optional advisory organization for
the Board of Directors, we have the Nomination andCompensation Committee, which is chaired by the president
and composed of four members who serve as outside
directors of the Company. This committee deliberates thefollowing issues in a fair and transparent manner and reports
to the Board as appropriate: important issues related to theappointment and compensation of directors and officers
including those related to the nomination of candidates for
director and auditor positions; dismissal of directors;
appointment and dismissal of executive officers; andcompensation paid to directors and executive officers.
Nippon Yakin Kogyo also appoints auditors to ensure theappropriate auditing of the directors’ fulfillment of theirduties. Presently, our Audit & Supervisory Board is composedof four members (two full-time auditors and two outside
auditors). Auditors attend the important meetings such as theBoard of Directors and check important final decisions toaudit the execution of duties by the directors. We also havethe Internal Control Office under the direct control of thepresident, which carries out internal audits on the executionof business by the entire Group.

Corporate governance system
For our Board of Directors to wholly fulfill the management
supervisory role and respond promptly to changes in the
management environment, the number of directors is set atnine. Moreover, in order to ensure the transparency andobjectivity of our business management by incorporating the
viewpoints of third parties in decisions made by the Board,
we have been appointing outside directors since June 2013,and presently have four outside directors.
Nippon Yakin Kogyo has introduced the executive officer

General meeting of shareholders
Appointment/dismissal

Appointment/dismissal

Appointment/dismissal

Reporting(Advisory board)

Board of Directors

Nomination andCompensation Committee

Audit & Supervisory Board
Auditing

Accounting auditor

Auditors
Cooperation

Decision and supervision

Auditing

Auditing

Business execution

Internal reporting system
Cooperation

Management Meeting*1

Helpline

President
Compliance Committee

Managing Executive
Officer Meeting*2(Internal audit staff)

ReportingInternal Control Office(Contact points)

Internal Control Evaluation
Team for Financial Reporting

Internal auditing

Promotion- Full-time auditors- General Manager of theInternal Control Office- General manager of theGeneral Affairs Dept.
- External contact point
Law firm*3

Head office departments, other bases, and affiliated companies*1 Management Meeting: Held weekly in principle with the participation of the directors who also serve as executive officers, and full-time auditors.
*2 Managing Executive Officer Meeting: Held with the participation of directors who also serve as executive officers. Members of the Audit & Supervisory Board
examine the meeting materials and participate as necessary or receive explanations from the related departments.
*3 LPC Hoshikawa Law Office41

Introduction

About Nippon Yakin Kogyo

Value Creation Strategies

Sustainability Company Data

The Board of Directors and the Audit & Supervisory Board
Evaluation of the Board of Directors’ effectivenessWe are conscious that ensuring the effectiveness of thecorporate governance is essential for growing sustainably
and increasing corporate value in the medium to long term.
To this end, we have been evaluating the effectiveness of
the Board of Directors since FY2017 by checking the results
and progress of our corporate governance measures andidentifying issues to be resolved in future.
For the evaluation, we send a questionnaire survey toeach member of the Board of Directors and of the Audit &Supervisory Board, asking them to perform a self-evaluation
by answering the questions. Then, under the leadership ofoutside directors, the answers are analyzed, evaluated anddiscussed by the Board of Directors.
In the evaluation for FY2023, the evaluators praised
Nippon Yakin Kogyo for our initiatives to tackle ESG issues,
such as our commencement of measures against climatechange based on the TCFD and our issuing of Sustainability
Report 2022 in September 2022. In terms of enhancementof deliberations by the Board of Directors, the evaluators
praised Nippon Yakin Kogyo for actions such as our ongoing
discussion and deliberation about the Medium-Term
Management Plan 2024 (FY2024-FY2026) over multiple
meetings of the Board of Directors. In consideration of thedetails of other answers, it was concluded that theeffectiveness of the Board of Directors was well maintained.
In FY2024, we will establish procedures for theappointment of directors and Audit & Supervisory Board
members and work to ensure fairness and transparency inthese processes. We will also continue to implement
measures to address ESG issues. We will also examine how
to improve the Board of Directors’ effectiveness evaluation
framework and the evaluation method.

WEB

We have posted data on our effectiveness evaluation here
(only in Japanese)

https://www.nyk.co.jp/sustainability/governance/result.html

Director compensation system
The compensation paid to our directors is composed of (1)basic salary; (2) stocks of the Company; and (3) bonuses for
directors/officers. However, to ensure their independence
from management as well as their objectivity, outside
directors and Audit & Supervisory Board members are paid
only a basic salary (1).
1) Basic salary
The amount is set by job rank and is paid at a fixed amountin cash on a monthly basis.
2) Medium- to long-term incentive (stocks of the Company)
Restricted stock units are distributed to directors excluding
outside directors in the amount equivalent to 10% of theirbasic salary at a certain timing each year.
3) Short-term incentive (bonuses for directors/officers)
A bonus is paid to directors according to their individual
performance.
Decision process
Total amount of basic salary and bonus paid: The Board of
Directors makes a resolution in reference to the report made by the
Nomination and Compensation Committee, which is mainlycomposed of independent outside directors.
Amount paid to each director: Decided by the president, beingcommissioned by the Board of Directors and based on the deliberation
report made by the Nomination and Compensation Committee.
Total amount paid in the form of stocks: Decided by the Boardof Directors in reference to the deliberation report made by the
Nomination and Compensation Committee.
Specific amount paid to each director: Decided by the president
in the form of a certain ratio to their basic salary.
Basic salary to be paid to individual auditors: Decided bythemselves in reference to the deliberation report made by the
Nomination and Compensation Committee.

Total amount paid in compensation, etc. in FY2023
Total payment amount by category (millions of yen)

CategoryNo.
of targeted persons(persons)

Total
payment amount(millions of yen)

Basic salary

Performance-linked
compensation(bonus)Non-monetarycompensation(restricted stock units)

Directors(outside directors)

11
(4)

295
(27)

149
(27)

134
(–)

12
(–)

Audit & Supervisory
Board members(outside auditors)

4
(2)

38
(12)

38
(12)

–
(–)

–
(–)

Notes
1. The total payment amount includes the payments made to two directors who resigned during the fiscal year.
2. As performance-linked compensation, the Company pays a bonus to directors excluding outside directors. For the calculation of the amount to be paid, theconsolidated operating profit is referred to as it is one of the targets listed in the medium-term management plan. In addition, the total amount of dividends paid
to shareholders and others is taken into consideration in deciding whether or not to pay a bonus to directors and in determining the total payment amount. Ourconsolidated operating profit target for the fiscal year was 9 billion yen or more. The final figure was 29.256 billion yen.
3. As non-monetary compensation, the Company distributes restricted stock units (RSUs) to directors excluding outside directors.

42

Chapter3

Issue ofMateriality

Sustainability

Advancement of Corporate Foundation for
Adaptation to the Social Environment

6Compliance
Our approach
We established the Compliance Committee to make surethat all directors, managers and employees are aware ofcorporate ethics and the importance of complying with laws
and regulations. The Committee deliberates
compliance-related policies and monitors compliance withthe policies in cooperation with the related departments.
We have also posted our declaration on compliance on our
website to inform the public of our commitment tocontinuously enhancing our compliance awareness.

Compliance activities
Our Compliance Committee shares information about thecompliance education plans throughout the fiscal year andhow they are implemented as well as compliance-relatedcases and measures across the Group. The secretariat of theCommittee supports the activities by providing information
to committee members and employees through channels
such as our intranet, giving them necessary warnings andhelping them to increase their compliance awareness.

https://www.nyk.co.jp/en/sustainability/governance/compliance.html

Internal reporting system (Helpline)
Nippon Yakin Kogyo Group has established Nippon Yakin
Kogyo Group Helpline Rules for its internal reporting
system. Employees at Group companies can seek advice
from and make reports to the contact points set up by
Nippon Yakin Kogyo if they detect any acts in our businesspractices that constitute or may constitute a violation oflaws, regulations or the Company’s code of conduct. Several
employees make reports or seek advice each year, and to
make the system function more effectively, we arecontinuously raising awareness of the importance of internalreporting and whistleblower protection through channels
such as our in-house magazine.

WEB

Internal control
We have established a code of conduct to show what isrequired of all of our directors, managers and employees
to conduct our corporate activities appropriately andcomply with laws, regulations and social norms both inJapan and abroad. Our Compliance Committee, headed by
one of our full-time directors, has also established a system
to prevent legal noncompliance and any acts that mightlead to noncompliance.
WEB

We have posted data on our action guidelines and codeof conduct here

https://www.nyk.co.jp/en/sustainability/governance/guidelines.html

Internal reporting system: Nippon Yakin Kogyo Group Helpline
Group employees*1, temporary workers*1 and directors and managers

Business partners*1

Reporting and consultation(anonymous use is possible)

External
contact point
Law firm*2

Cooperation
Investigation

Compliance Committee’s investigation team

Examinationof the measures

Reporting and proposal

Audit & Supervisory Board*1 Including employees who have resigned from their jobs within the past one year
*2 LPC Hoshikawa Law Office

43

President

Implementationof the measures

Alleged perpetrator,
manager of the dept. or company

Internal contact point 2
Head of the Internal Control Office or Headof the General Affairs Dept. (Head office)(Including punishment based on the working rules)

Internal contact
point 1
Full-time auditor

Corrective and reoccurrence prevention measures

Contact
point

Notification

Introduction

About Nippon Yakin Kogyo

Value Creation Strategies

Sustainability Company Data

Risk management
Our approach
Nippon Yakin Kogyo Group defines risks as factors that
could hinder Group companies from implementing theirbasic management policies (management philosophy, action
guidelines and code of conduct) and management plans(business policies, medium-term management plans andbudgets). We are working to ensure the corporatesoundness and sustainability of the Group by accurately
ascertaining risks to our business management, establishinga system to appropriately manage risks, and implementingthat system in an effective manner.
Management system
With the above principles in mind, Nippon Yakin Kogyo
Group has established Nippon Yakin Kogyo Group Risk
Management Rules. Our president serves as the risk
management supervisor, and a Risk Manager role isallocated to the director in charge of each division,
chairpersons of the permanent committees, and the
managers of relevant departments. Under their leadership,
we implement the following risk management process: (1)Identify risks; (2) Analyze and evaluate the risks and decideon countermeasures; and (3) Formulate and carry out plans
to implement the measures. Specific risk management
activities are discussed at meetings such as Management
Meetings and meetings of the Sustainability Strategy
Promotion Committee, after which they are implemented inour everyday business activities. Permanent committees suchas the Compliance, Environmental, Quality Assurance andExport Trade Control Committees also conduct activities todeal with particular risks. We also monitor each Group
department to check their risk awareness and responses.
Our findings are reviewed by the Internal Control Office andapplied in Group-wide working group activities.
Emergency response system
We are working to minimize the risks posed to us throughrisk management. However, we are still subject to certain
inherent and residual risks, and in the event that any suchrisks or other unexpected risks do materialize, we will
implement our emergency response system as planned in
preparation against such risks. We are thus appropriately
managing risks by formulating a plan to collect andcommunicate information, launch an emergency responseorganization, and set emergency response measures.

Information security
Nippon Yakin Kogyo uses various sales and technicalinformation it has retained, including information received
from customers, to distinguish itself from competitors andremain a competitive edge. This information is a source ofour corporate value and needs to be managed stringently
while it is used.
We are also conscious of the need for appropriate
management to protect personal information and prevent
insider trading according to the relevant laws.
With background like this in mind, Nippon Yakin Kogyo
has built systems and mechanisms to prevent incidents suchas information leaks and cyber attacks and ensure
information security, focusing on the following three points.
Firstly, we establish frameworks that enable theprotection and appropriate management of information to
be stipulated and effectively enforced as internal rules.
Information security assessments are conducted to identify
risks and establish and execute countermeasures. Regularbriefings are also held to increase employees’ awareness ofthe need for and importance of information security.
Secondly, to protect information systems such as ouroperational applications and email systems, and our data,from cyber attacks, we have created redundancy inprotective mechanisms, such as our mechanisms for
detecting and removing anomalies, to ensure protection
against threats. Protective mechanisms with uniform
specifications have been introduced throughout the Group.
Thirdly, the status of our information security
management is shared with our managers, focusing on
points such as the external environment, risks andcountermeasures, and education and training, andcompany-wide consensus is sought for various measures sothat they are implemented effectively.
Management of intellectual property
Nippon Yakin Kogyo has acquired around 140 patents inJapan to maintain the technological superiority inhigh-performance alloys, and we also have a range ofpatent rights outside Japan, including in China.

44

ChapterIssue ofMateriality

3

Sustainability

6

Advancement of Corporate Foundation for
Adaptation to the Social Environment

List of Directors
Directors

Hisashi Kubota

Shingo Kobayashi

President and Representative Director

Representative Director andSenior Managing Executive Officer

Board of Directors meeting participation rate:
100% (15/15 times)

In charge of the Finance & Accounting,
Human Resources andGeneral Affairs Departments
Board of Directors meeting participation rate:
93% (14/15 times)

Shigemi Urata

Hiroshi Toyoda

Director and Senior Managing Executive Officer
Executive General Manager of the
Corporate Marketing Division

Director and Managing Executive Officer
General Manager of the Corporate
Planning Department

In charge of the Corporate Marketing Division(Sales Planning Dept., Material Solutions Sales
Dept.), six branches engaging in sales activities,
the Overseas Sales Department,
and overseas subsidiaries

In charge of the Corporate Planning,
Investor Relations and Public Relations,and IT Systems Department

Board of Directors meeting participation rate:
100% (12/12 times)

Board of Directors meeting participation rate:
100% (12/12 times)

Hisashi Yamada
Director and Managing Executive Officer
Executive General Plant Manager
of Kawasaki Plant
In charge of the Kawasaki Plant
Board of Directors meeting participation rate:
100% (12/12 times)

Outside directors

Takashi Michibayashi

Kenji Tani

Outside Director

Outside Director

Board of Directors meeting participation rate:
100% (15/15 times)

Daiki Aluminium Industry Co., Ltd.
Outside Director
Board of Directors meeting participation rate:
100% (15/15 times)

Taizo Suga

Naomi Eto

Outside Director

Outside Director

Board of Directors meeting participation rate:
100% (15/15 times)

Morinaga & Co., Ltd.
Outside Director
The Nisshin OilliO Group, Ltd.
Outside Director
Board of Directors meeting participation rate:
100% (12/12 times)

45

Introduction

About Nippon Yakin Kogyo

Value Creation Strategies

Sustainability Company Data

Audit & Supervisory Board Members

Yasuhiro Kiuchi

Toshihiro Onodera

Audit & Supervisory Board Member(Full time)

Audit & Supervisory Board Member(Full time)

Board of Directors meeting participation rate:
100% (15/15 times)
Audit & Supervisory Board meeting
participation rate: 100% (18/18 times)

Board of Directors meeting participation rate:- (Newly appointed)
Audit & Supervisory Board meeting
participation rate: - (Newly appointed)

Yasuji Kawabata

Tetsuo Hoshiya

Outside Audit & Supervisory Board Member

Outside Audit & Supervisory Board Member

Board of Directors meeting participation rate:
100% (15/15 times)
Audit & Supervisory Board meeting
participation rate: 100% (18/18 times)

Yakiniku Sakai Holdings Inc.
Outside Director
Board of Directors meeting participation rate:
100% (15/15 times)
Audit & Supervisory Board meeting
participation rate: 100% (18/18 times)

Skill matrix of Board of Directors
equipment and R&D; 4) financial, accounting and personnel
affairs; 5) global issues; and 6) IT and risk management. Our
Board of Directors comprises members with the following skills.

Nippon Yakin Kogyo categorizes the skills required of thedirectors into those for 1) corporate management; 2) sales (inand outside Japan) and marketing; 3) manufacturing,Role

Corporate
management

Sales(Japan andoverseas) /MarketingPresident and Representative Director●●

Representative Director andSenior Managing Executive Officer
Director and Senior Managing
Executive Officer
Director and Managing
Executive Officer
Director and Managing
Executive Officer●

Takashi Michibayashi

Outside Director●

Kenji Tani

Outside Director●

Taizo Suga

Outside Director●●

Naomi Eto

Outside Director●●

Audit & Supervisory Board Member(Full time)
Audit & Supervisory Board Member(Full time)
Outside Audit &Supervisory Board Member
Outside Audit &Supervisory Board Member●

Name
Hisashi Kubota
Shingo Kobayashi
Shigemi Urata
Hiroshi Toyoda
Hisashi Yamada

Yasuhiro Kiuchi
Toshihiro Onodera
Yasuji Kawabata
Tetsuo Hoshiya●

Manufacturing /Equipment /
R&D

●
●
●

●

●

●

●

●
●

●

●
●

●

●

IT /
Risk
management

●

●

●
●

Global issues

●

●

●

Finance /Accounting /
HR

●

●
●
●

●

●
●

●
●

●

46

Chapter3

Sustainability

Round-Table Discussion Between Outside Directors

We will provide an outside perspective to assist in strengthening
governance with a view to new growth of Nippon Yakin Kogyo

Kenji Tani

Taizo Suga

Outside Director

Outside Director

Naomi Eto

Takashi
Michibayashi

Outside Director

Outside Director

Evaluation of the Board of
Directors’ effectivenessMichibayashi: When I was first
appointed as an outside director in
2016, the Corporate Governance
Code had just been established theprevious year. In the six years since,
our governance has been steadily
improving, and I think the level itreached by the time of our latest
effectiveness evaluation is almost
completely satisfactory. A remaining
issue is the process for appointing
senior management. Sufficient
discussion is needed about the current
state of this process and how to solve
the issues.
Tani: There’s an active exchange of
opinions at Board of Directors
meetings, and there are sometimes
blunt comments from the outside
directors. I think we can be very
pleased with the way the
management always accepts that
feedback in good faith and takes the47

appropriate measures. There are also
other venues for free discussion
besides Board of Directors meetings,
such as meetings with the directors incharge or with Audit & Supervisory
Board members, and I think that boththe quality and the quantity of
information being input is excellent.

workplaces and everyone has apositive attitude. In terms of theeffectiveness evaluation, like Mr. Tani,
I can see that the directors are keen
to thoroughly take in outside
directors’ feedback and actively
improve the company.

Suga: In my case, when there’s
something I want to know orsomething I’m concerned about, I ask
not only directors but those on the
ground as well, and everyone always
gives me the information I need,despite how busy they are. From agovernance perspective, the Board of
Directors sufficiently performs all thenecessary functions, and is managing
the company effectively.

Involvement in establishmentof the medium-term
management plan

Eto: I was appointed in June 2022,
and in the around two months since,
I have meticulously toured thecompany, including production sites.
It was clear to me that there is plentyof transparency in the company’sMichibayashi: The foundation for
Nippon Yakin Kogyo’s growth wascompleted in ‘Medium-Term
Management Plan 2018’. The
confidence gained then was reflectedin ‘Medium-Term Management Plan
2021’, which led to solid results. In the‘Medium-Term Management Plan
2024’, which was based on thoseresults, the company is carrying out
capital investment and research anddevelopment for the next stage of
growth, and is working to strengthen
and broaden the foundation of ourIntroduction

business. I think it’s an excellent planthat everyone in the company will beable to work on together withconfidence.
Tani: I think there was a high degreeof transparency in the process forestablishing the plan. First, thecompany announced the policy thatwould be followed in theestablishment of the plan, a series of
discussions were held with eachdepartment and interim reports weremade to the Board of Directors eachtime. A considerable number of thequantitative targets in Medium-Term
Management Plan 2021 wereachieved early, but instead of
becoming complacent, the company
kept deliberating about what wasneeded from a qualitative
perspective. Issues that remained arebeing properly addressed in the next
plan. I think this in itself is deservingof high praise.
Suga: The six issues of materiality
disclosed in the Sustainability Report
are linked to company-wide policies tofacilitate specific actions by eachdepartment. The whole organization is
working together to resolve theseissues and I think the mechanisms forcarrying out PDCA cycles are effective.
Eto: My personal impression is that,based on the results up to theprevious fiscal year, I felt that thecompany could have aimed a little
higher in the new medium-term
management plan, but I understandthat the targets set in this plan reflect
the company’s resolve to generate
profits regardless of market
conditions. In future, to strengthen
the Group’s management andfacilitate personnel training, I think thecompany needs to not only focus on
numerical results but also strengthen
the elements that are foundational tothe company’s management andfollow up on that work.

About Nippon Yakin Kogyo

Value Creation Strategies

Toward our vision for 2030
Michibayashi: The company’s vision
for 2030 was presented after a seriesof discussions, including discussions
about quantitative targets. In terms ofwhat specific measures will involve, I
think this will be a matter for the nextplan onwards, but I think it isimportant that this medium-term
management plan indicated the
waypoints that the company will aim
for in the medium to long term,
including critical management indexes
such as the scale of net assets.
Eto: I asked for a medium-term
management plan that would be clear
to people outside the company too.
When it comes to the need to reach a
PBR of 1.0 in the prime market, it isimportant to explain our policies andinitiatives for improvement in a way
people outside the company canunderstand and give them a story they
can understand. A concern I have isthat we have only one base for
producing stainless steels andhigh-performance alloys. This could
become an issue when we consider
future growth.
Suga: Improving productivity will beessential in order for the company tosurvive and develop. This might be
an issue that needs to be worked on
throughout the company, both head
office and our plants, including
utilizing tools like AI and digitaltechnology. My other concern isabout expansion. Collaborations withother companies could be anotherway to expand our business. In orderto do that, it will also be importantto secure and train personnel who
will be able to take on challenges in
new areas. I think the company
needs to approach this with a
combination of management
strategies and human resources
strategies: for example, it should
establish a benefits and evaluation

Sustainability Company Datasystem and assign clear missions in
the company’s operations.
Tani: With regards to the framework
mentioned in the medium-term
management plan, in which
high-performance alloys will be
expanded while stainless steels
continue to provide an income base,establishing a specific frameworkencompassing both production andsales will also be an issue.
Additionally, the company is currently
working on a carbonless nickel
smelting project. This is an extremely
critical project as it is related to CO2
reduction. I would like to see thatcompleted ahead of schedule if
possible. Another issue is the
adoption of DX. I feel that thecompany is quite behind in this area.
How will the company implementcompany-wide DX strategies that
include production sites andmanagement departments? Now thatstrategic investment in hard element
has tailed off, I want to see strategic
investment in soft elements. I plan tomonitor and follow up on thesepoints with an outside perspective.
Michibayashi: In terms of enhancing
human capital, the company needs tomake their personnel into humanassets in the true sense of the word. I
think this is important for a smaller
steel producer manufacturer like
Nippon Yakin Kogyo. The company
has already focused on using
self-improvement activities to develop
personnel who think and act
autonomously instead of just doing
the work they are told to do. The
company needs to incorporate those
employees’ opinions into their
management more. In order to do
this, I think it is important to get all of
the company’s employees to read our
Sustainability Report and Integrated
Report and be conscious of the factthat they are building the company’s
future.

48

Chapter

4

Company Data

Financial Data
FY2019FY2020

FY2021

FY2022

FY2023

143,740

136,373

112,482

148,925

199,324

Operating profit (millions of yen)

9,443

7,838

6,145

13,96629,256

Operating profit margin (%)

6.57

5.75

5.46

9.38

14.68

Ordinary profit (millions of yen)

8,178

6,342

4,990

12,807

27,738

Profit attributable to owners of parent (millions of yen)

7,686

5,325

3,764

8,471

19,703

Net assets (millions of yen)

47,94051,131

55,127

62,16979,619Total assets (millions of yen)

150,115

158,568

161,230

187,494

222,294

Cash flows from operating activities (millions of yen)

9,172

7,979

11,182

(697)

3,649

Cash flows from investment activities (millions of yen)

(6,207)(5,511)(6,776)(15,656)(13,035)

Cash flows from financing activities (millions of yen)

(2,417)

8,692(7,995)15,0498,530

Capital investment (millions of yen)

4,854

5,028

12,083

12,636

9,289

Return on Equity (ROE) (%)

17.1

10.8

7.1

14.4

27.8

Earnings per share (EPS) (yen)497.02350.09247.85561.25

1,316.79

Dividend per share (DPS) (yen)

6.0

33.0

45.0

120.0

200.0

3,099.68

3,368.36

3,629.02

4,121.13

5,324.80

Profit & Loss Statement and Balance Sheet(Consolidated)
Net sales (millions of yen)

Other financial data (Consolidated)

Book-value per share (BPS) (yen)(Note) On October 1, 2019, we consolidated 10 stocks into one stock.
We calculated the BPS and EPS based on the assumption that the stock consolidation was carried out at the beginning of FY2018.

Use in External Evaluations and Indexes (As of September 2023)

49

Introduction

About Nippon Yakin Kogyo

Value Creation Strategies

Sustainability Company Data

Third-Party CO2 Guarantee

50Corporate Profile
Company name: Nippon Yakin Kogyo Co., Ltd.
Establishment: August 22, 1925
Head office location: 1-5-8 Kyobashi, Chuo-ku, Tokyo 104-8365 Japan
Business details: Manufacture and sale of stainless steels, heat-resistant alloys and high nickel alloy steel sheets,
plates and strips (in coil form) and forgings and processed products
as well as the manufacture of ferronickel alloys
Capital: 24,300,910,790 yen (As of March 31, 2023)
Representative: Hisashi Kubota, President and Representative Director
Number of employees: 1,156 (non-consolidated), 2,091 (consolidated) (As of March 31, 2023)
Net sales: 177,529 million yen (non-consolidated), 199,324 million yen (consolidated) (FY2023)

Contact Information
Corporate Planning Department, Nippon Yakin Kogyo Co., Ltd.
1-5-8 Kyobashi, Chuo-ku, Tokyo 104-8365 Japan
Tel: +81-3-3273-3612 Fax: +81-3-3273-3618
https://www.nyk.co.jp/en/