Chapter 04

Business Strategies for Growth

Residential Business
FY2022 results
Net sales(consolidated)billion yen

As a result of our policy of “increasing thermal insulation
performance of windows and doors,” centered on vinyl windows,
net sales of vinyl windows were 104% of the previous year’s. In
particular, the sales volume of APW 430 high-performance
triple-glazed vinyl windows was 107% of the previous year’s,
driving the trend toward high thermal insulation products. The
rate of vinyl windows to the total number of windows sold forsingle family homes in Japan is 31%, and the combined rate ofvinyl windows and aluminum-vinyl composite windows is 75%,
indicating a shift toward higher thermal insulation. Net sales of
the three main products in the window and door remodelingbusiness were around 110–120% of the previous year’s, withstrong sales due in part to increased demand driven by
government subsidy programs. In the home builders(prefabrication) sector, contracts for single family homes slowed
down due to soaring material prices, but contracts for multifamily residences stayed firm due to continued low interest
rates. New orders for high thermal insulation composite
windows also contributed to net sales standing at 101% of theprevious year’s figures. In the modular bathroom sector, sales
were 110% of the previous year’s, supported by market share
expansion and demand for remodeling.

Market environment and social issues
Although the number of new housing starts in Japan has been
decreasing year by year, demand for high thermal insulation
window and door products has been increasing due to theestablishment of new higher insulation performance grades
under the Housing Performance Indicator System. In addition,
demand for remodeling of windows and doors is also growing
as a result of government subsidy programs. In terms ofaddressing social issues, in order to realize a carbon-neutral
society by 2050, we will reduce CO2 emissions throughout the
product life cycle, develop recyclable materials, and pursue
product development that makes use of recycled materials. In
addition, to address the problem of vacant houses, we will work
to increase the value of stock housing. In the home builders(prefabrication) sector, we will respond to growing needs for
ZEHs, safety and security, and disaster prevention awareness.

Future strategies
As more attention is paid to the energy-saving performance ofhomes as a means of realizing a carbon-free society, and in
response to the growing demand for vinyl windows, we plan toincrease the rate of high thermal insulation windows to 84% in
FY2023. In terms of product development, we will strengthen
products that offer energy saving and disaster prevention/
mitigation, as well as value proposals and high-value-added
products with advanced functions such as the “M30 Facial
Recognition Automatic Door.” In addition, alongside housing
providers nationwide, we contribute to the creation of quality
homes in the stock housing market through performanceenhancing renovations. In order to meet an increasingly diverse
range of needs, we will also promote collaboration amongproduction, sales, and technologies, and strengthen our productappeal. In the home builder (prefabrication) sector, we will work
to improve business partner and customer satisfaction by evolving
our products, such as aluminum-vinyl composite windows. In themodular bathroom sector, we are working to further evolve
existing bathroom doorway products, as well as products for nonresidential properties and condominium renovations.

Launch of the “Association of Regional Home Builders Engaged in Building High-Performance Homes
with Vinyl Windows”
In August 2022, we launched the “Association of Regional
Home Builders Engaged in Building High-Performance Homes
with Vinyl Windows,” a group of Regional Home Builders acrossJapan that build high-performance homes using the APW vinyl
window series and meet thermal insulation performance
grades 5, 6, or 7. Regional Home Builders that have enrolled in
the association are listed on the official YKK AP website as “APW
Authorized Home Builders,” and the status of their compliancewith the new higher grades is shown. The site is being used tohelp find high thermal insulation-focused builders who use the
APW series of vinyl windows as standard.

Corporate Data

●A wide variety of high thermal insulation windows forhealthy and comfortable living●Disaster prevention and mitigation products with a focus onsafety and security that support the building of earthquakeand typhoon-resistant homes●An enhanced lineup of products for remodeling windows
and doors in the private areas of condominiums and single
family homes●Use of account management to provide business partnerspecific product proposals

Namerikawa Plant (above) and Tohoku Plant (below), where production lines have been
expanded.

Initiatives in the Value Chain◎Windows◎Entrance doors/sliding
doors◎Interior doors/partitions◎Window shutters◎Remodeling windows/
doors◎Quake-resistance retrofitting◎Window and door products for home builders(prefabrication)◎Doorways and windows for modular bathrooms

Business Strategies for Growth

The situation in FY2022

The standards for insulation performance in the Housing
Performance Indicator System have been revised, with new
higher grades, 5, 6, and 7, established starting in FY2022. In
response to this, and in light of the demand for more energyefficient housing, we are strengthening our production systemfor vinyl windows as well as promoting the use of high thermal
insulation windows. In August 2022, a new APW 330 non fireresistant vinyl window production line was added to the
Namerikawa Plant (Namerikawa City, Toyama Prefecture), andin September the same year, a APW 430 non fire-resistant vinyl
window production line was added to the Tohoku Plant MADO(Window) Factory (Osaki City, Miyagi Prefecture). Building on a
supply system designed to meet demand in the area, we aremaking further efforts to strengthen our vinyl window
production capacity.

Foundations Supporting our Business

Main products

Our strengths

42

508.6

Promoting high thermal insulation windows and further strengthening vinyl window production
capacity

Value Creation

With a focus on the “APW” window brand, we propose comfortable
lifestyles with entrance doors and window products that offer
enhanced thermal insulation performance and safety. We aim to build
a society that is friendly to both houses and people by providing highperformance window and door products that also meet the needs ofhome builders and residential equipment companies.

Residential BusinessNet sales
196.4 billion yen(105% of the previous
year’s)Messages from Management

Proposing comfortable lifestyles, starting withwindows and doors

Main initiatives

Strengthening production capacity for inner windows in response to the 3-ministry subsidy scheme
Expansion also underway in sales channels and installers
In order to meet the demand for window remodeling under the“Housing Energy Conservation 2023 Campaign,” a subsidy
scheme jointly undertaken by the Ministry of Land,
Infrastructure, Transport and Tourism, the Ministry of Economy,
Trade and Industry, and the Ministry of the Environment to help
achieve carbon neutrality by 2050, we are enhancing our
production capacity for inner windows. By enhancing the
production line through changes in alternating work shifts andincreases in personnel and equipment capacity, production
capacity has increased three-fold. In addition, we have a
dedicated sales representative at each of our sites to promotenational policies, conduct awareness-raising activities, andexpand our sales channels. In addition to expanding thenumber of installers at architectural product distributors andtraining them, we are also expanding our scope to include otherindustries and carpenters, as well as promoting the “creation of
installers” by packaging installation training programs.

Mado Remo - PLAMADO U Inner Window

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Chapter 04

Business Strategies for GrowthCommercial BusinessNet sales(consolidated)billion yen

Commercial BusinessNet sales
134.3 billion yen(117% of the previous year’s)

In the new construction sector, we strengthened our customer
contact points by reinforcing our sales development system,
and in the renovation sector, we stepped up proposals forservice life-extension renovations, especially for non-residential
educational facilities. In addition to real-world proposals at “AZ
five TOKYO” and “PROPOSAL 8th,” we have enhanced our
remote proposals through such methods as LIVE presentations,360-degree VR, and web exhibitions. These efforts resulted instrong orders, and overall net sales in the commercial businesswere 117% of the previous year’s level.

Market environment and social issues

We are focusing on strengthening in the Tokyo metropolitan
area and enhancing remodeling projects. As a measure tostrengthen in the Tokyo metropolitan area, the manufacturing
and supply system for this region will be reorganized at the
new Saitama Factory building, which will start operation in July
2023. We will strive to improve our services by increasing
productivity and further shortening lead times. For sales
measures, we will further strengthen our sales development
system and customer contact points. In terms of productmeasures, we will launch aluminum-vinyl composite windows
in September 2024 and gradually expand them in order toachieve greater levels of high thermal insulation performancein buildings. In addition, we are developing “unitized CWs for
mid-rise buildings” as a high value-added product, and will
work to create, promote, and expand the market byemphasizing quality and labor-saving features. To enhance ourefforts in the renovation sector, we will use various subsidy
schemes to promote the creation of a market for large-scale
remodeling of multi-family residences. Furthermore, based on
our track record of safely and reliably providing large-scale,
highly complex facades and our technical capabilities, we willuse “unitized CWs for super high-rise buildings” as a focal point
for stepping up our domestic and overseas operations, while
also expanding our human resources and manufacturing sites.
In the latter half of the 6th Mid-term Management Plan, we will
promote the establishment of a global supply chain system andinfrastructure, starting with enhancing CW supply in Asia.

Saitama Factory new building

Established a “Global Curtain Wall Business Division” to enhance cost competitiveness and expand sales
In April 2023, the Global Curtain Wall Business Division wasestablished with the aim of strengthening the curtain wallbusiness in Japan and overseas, taking as its focal point“unitized CWs,” in which glass and panels are integrated andunitized at our plants and factories. Our goal is to acceleratebusiness development by enhancing our expertise in
manufacturing, sales, and engineering, creating global
opportunities for our employees and CDPs for our engineers. As
well as enhancing our operations by horizontally deploying
collaborative know-how, we aim to grow our business by
expanding and optimizing our human resources andmanufacturing sites.
This will serve to strengthen cost competitiveness andexpand sales of unitized CWs in the High Rise Building
Division, which serves the Japanese market, as well as inoverseas companies. In addition to strengthening operations byhorizontally deploying the know-how cultivated in the CW
business, we will expand and optimize our resources, including
human resources, manufacturing sites, and suppliers. We will
first focus on strengthening operations and business growth inJapan and the rest of Asia, with a view to expanding into North
America and Europe in the medium term.

Corporate Data

In the new construction sector, multi-family residences are
expected to decline due to the declining birthrate and aging
population, while non-residential properties are expected to
decline slightly going forward, despite the recovery from the
COVID-19 pandemic. On the other hand, the renovation sector
is expected to remain strong, as the number of stock multifamily residences more than 35 years old and due forrenovation is increasing, while in non-residential properties,
educational facilities will peak in the next 10 years due to theextended service lives of schools. In the field of large-scale,
highly complex facades, demand for “green facades” to produce
green building walls, as well for renovations, is expected toincrease in Japan and other developed countries, while inemerging countries, demand for new construction is expected
to grow as a result of ongoing urbanization. Social issues
include rapid changes in the market due to soaring material
prices, labor shortages due to the aging of skilled workers, andthe need to address carbon neutrality and decarbonization. To
solve these issues, we are working to shorten installation
periods, improve productivity, save labor, and reduce CO 2
emissions over the entire lifecycle of a building.

Future strategies

Initiatives in the Value Chain●Strong product appeal long recognized by users●Sales capabilities provided by a nationwide network andproposal capabilities to make highly complex facades areality●Technical capabilities that enable us to handle high-difficulty
properties and solve problems in building exteriors as thesituation demands●A flexible production system with global manufacturing sites

Business Strategies for Growth◎Commercial windows◎Curtain walls(custom and standard)◎Commercial entrances◎Windows and doors for
multi-family residences◎Remodeling products

Furthermore, solar power generation and the procurement of
renewable energy will enable it to achieve CO2 emissions ofeffectively zero. Moreover, through the use of rainwater, we aim
to make this a factory friendly to both the global environment
and its workers. Other facilities include a rest area, open to the
public as a place for neighborhood residents to relax,
established on part of the site.

Foundations Supporting our Business

The situation in FY2022

We acquired a site adjacent to the Saitama Factory (Misato
Town, Saitama Prefecture) and constructed a new building as amanufacturing site for aluminum architectural products forcommercial buildings. The groundbreaking ceremony was heldin June 2022, the completion ceremony in May 2023, andoperations began in July 2023. Making this the core plant for
our Commercial Business, we then reorganized ourm anuf ac t uring and sup p ly syst e m t o inc re ase ourcompetitiveness in the Tokyo metropolitan area and other areas
in eastern Japan. By consolidating production with more
efficient equipment provided by the Machinery & Engineering
Department, expanding automated processes, and establishingproduction lines linked to data, the new plant will reduce
manufacturing costs by 25% relative to our existing factories. In
addition, through measures including logistics reforms such asunit loading, the lead time from order placement to delivery
will be reduced by 6 to 11 days.
Based on the concept of “a factory fulfilling to work in,” thebuilding will reduce CO2 emissions by 30% through the use ofa high thermal insulation outer skin, windows with excellent
thermal insulation performance and ventilation, dimmerequipped lighting, and high-efficiency air conditioning.

Value Creation

508.6

Main products

Our strengths

44

New building begins operations at the Saitama Factory, reorganization of the manufacturing andsupply system

FY2022 results

Through the exterior design of office buildings and condominiums,
and by responding to the need for high thermal insulation
performance and added value that contributes to decarbonization, weare helping to shape urban landscapes. Moreover, through businessdevelopment based on business models tailored to individual
countries and regions, we also provide facade systems that are
optimized to meet specific applications and needs.

Messages from Management

Creating beautiful and functional urban spaces

Main initiatives

Installation of a unitized CW in progress

Strengthening proposal capabilities, appeal, and target products to expand the commercial building
renovation market
In the commercial building renovation market, we will create
demand for large-scale remodeling by strengthening proposals
for windows and entrance doors for the growing stock of multifamily residences over 35 years old and due for renovation, as
well as by actively taking advantage of various subsidy schemes.
Meanwhile, we will also sustain and enhance our proposals forservice life-extension renovations for non-residential educational
facilities. In terms of measures to strengthen our products, wewill expand our “APSWORD NEO-LB” aluminum-vinyl composite
windows for low-rise buildings, which use the “GRAF installation
method” exclusively for renovations, in September 2023. This
will be followed from FY2024 onward by the launch of newaluminum-vinyl composite windows that can be used for midand high-rise buildings. In so doing, we aim to promote andintensify the conversion of commercial buildings to highthermal insulation performance in the renovation sector too.

YKK AP Integrated Report 2023

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Chapter 04

Business Strategies for Growth

Proposing spaces that make living more
comfortable

FY2022 results
Net sales(consolidated)

508.6
billion yen

Exterior BusinessNet sales
65.0 billion yen(103% of the previous year’s)

Supporting the industrial sector with aluminum
profilesWe provide high-quality extruded aluminum based on our knowledgeof materials, profile designs, extrusion molding, surface treatment,
processing, etc., and the advanced technology capabilities we havedeveloped in the manufacturing of aluminum building materials.

Value Creation

We will create new value by deploying products that unite “house”
and “garden.” We offer exterior products that allow total coordinationof the premises to suit the customer's lifestyle.

Industrial Products BusinessMessages from Management

Exterior Business◎Balconies◎Carports◎Gates & fences◎Terraces◎Exterior materials

In FY2022, the wall exterior market declined due to a drop in
new housing starts and the impact of soaring material prices,
yen depreciation, as well as rising consumer costs resulting
from increased economic activity and market recovery. However,sales of exterior products such as gates and fences remained
strong due to the strengthening of fully coordinated proposals
including windows and doors and of cityscape proposals
focused on homes built for sale. In addition, demand for foldedplate roof carports, which are designed to resist wind pressure
and snow buildup, expanded to include non-snowy regions,and net sales exceeded market conditions to reach 103% of theprevious year’s level.
The exterior business will continue strengthening its
organization and systems corresponding to sales channels,
based on a policy of “boosting sales by providing fully
coordinated proposals for buildings and exteriors.” In the fieldsof new construction, exterior construction, and remodeling, we
will thoroughly bolster existing sales channels and strengthen
sales. For custom-built residential homes, we will offer valueadded proposals through all-inclusive building and exterior
designs, and for homes built for sale, we will promote proposals
that integrate buildings and exteriors into a unified cityscape.
We will also further strengthen our supply system andproduction site system to expand our business.

◎Components for machinery equipment◎Auto parts◎Architectural components◎Sustainable products

The aluminum extrusion market continued to face challenging
conditions, with the number of new housing starts remaining
weak and the automotive and other industries continuing toexperience difficulties in procuring parts, resulting in a full yearof lower sales than in the previous year. Given these conditions,
we were successful in expanding our sales share, leading to
year-on-year sales growth, especially in our core sector of
construction. Net sales were 122% of the previous year’s level,
due in part to the impact of higher aluminum ingot prices.
With no significant growth in underlying demand forconstruction expected in the future, we aim to expand ourbusiness as the manufacturer of choice through proposals thatlead to the sustainable growth of our business partners. For the
automotive sector, we forecast significant growth in line withthe growing demand for electric vehicles going forward. Since
this is a field that requires advanced technology, we aim forfurther growth by reliably meeting the needs of our customers
alongside our highly specialized engineers and manufacturing
staff. To realize these growth strategies, we will also continue todevelop human resources capable of providing value to ourbusiness partners and society.

Our strengths●Fully coordinated proposal capability for buildings andexteriors●Creating markets through proposal-based products for
comfort in buildings and exteriors and garden space●Ensuring ease of selection through the development of a
product system for luxury, mid-range, and regular producttypes

Market environment and social issues
The wall exterior market has been particularly sluggish due to a
decline in new housing starts and rising construction costs
resulting from soaring material prices, and the effects of theserising material prices have been reflected in surging commodity
prices and reduced budgets for building exteriors. Responding
to social issues requires product development and production
systems for a carbon-neutral society, product development that
supports disaster prevention and mitigation and easy
installation, and assurance of sustainable product quality.

Our strengths●Integrated production from casting, extrusion to surface
treatment at four manufacturing sites in Japan●Ownership of large 14-inch (6,500 tons) and 10-inch (4,000tons) extruders

Market environment and social issues
In terms of demand in the construction sector, we forecast thatconditions will remain difficult due to the significant impact of
the sluggish growth in new housing starts. Demand in theautomotive sector is expected to recover as the shortage ofsemiconductors moves toward resolution, although there is asense of uncertainty due to the impact of the global politicalsituation. Social issues include the need to reduce greenhousegas emissions in aluminum production and raw material
procurement in order to realize a carbon neutral society by
2050, and to address the high dependence on overseas
resources, the price and supply of which are heavily influenced
by global conditions.

Corporate Data

FY2022 Business overview and future strategies

Initiatives in the Value Chain

Main products

Business Strategies for Growth

FY2022 Business overview and future strategies

Foundations Supporting our Business

Main products

Main initiatives
Opening of new exterior exhibition space
The YKK AP Exterior Exhibition Hall was opened in August 2022
in the YKK60 Building (Sumida-ku, Tokyo). The permanent
exhibition features a lineup of exterior products such as gates,
fences, carports, and so on, presented on a full-size building,allowing professional users such as exterior sales andinstallation companies to see the actual products and learn
about their structures, functions, and other key selling points.
As such, it serves as a base for making proposals to professional
users.

YKK AP Exterior Exhibition Hall46

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Chapter 04

Business Strategies for Growth

Overseas AP Business
Overseas AP BusinessNet sales
115.8 billion yen(145% of the previous
year’s)

Net sales(consolidated)

508.6
billion yen

Sales of commercial architectural products in the U.S.A. werestrong on the East Coast, and efforts were undertaken tostrengthen our services in the Midwest and West. To support
increased sales of residential architectural products we havebegun construction of a new plant with an integrated
production system, which is scheduled to start operation in
January 2024. In terms of domestic demand in China, sales
increased due to the development of new customers throughthe introduction of mid-price range housing market products
and the expansion of remodeling channels. In Taiwan, sales
were strong in the luxury residence market, and efforts werealso made to develop the central and southern areas. In
Indonesia, sales increased due to the development of newchannels and the introduction of new products. In India, sales
also increased significantly due to the strengthening of the
supply system for profiles, reaching a record high. As a result of
these efforts, the overseas AP business as a whole achieved anincrease in both revenues and profits, and the proportion of net
sales accounted for by overseas sales grew from 14% to 17%.

“NEXSTA”“IWIN-S”

Future strategies
In order to further expand our business, we will strengthen
both our product appeal and our manufacturing and supply
system by introducing new products in our existing businesses.
By expanding sales channels/areas in conjunction with this, we
aim to achieve stable growth. In addition, we will proactively
and flexibly develop new businesses and new markets.
Meanwhile, in terms of the overseas AP business as a whole, wewill advance the development of human resources to support
the business and strengthen our response to sustainability
issues. We will also further strengthen cooperation between
related divisions in Japan and overseas companies, and work to
evolve a business model appropriate to each country andregion in terms of sales, products, manufacturing/supply, andmanagement administration. By combining the collective
wisdom of all our divisions, both in Japan and overseas, and by
speeding up the execution of our business, we will grow theoverseas AP business into the core business of YKK AP.

Strengthening the presence of showrooms in each location to create business opportunities
We are expanding showrooms around the world as bases for
introducing our products to a wider audience. In FY2022, werenovated our showrooms in Bangkok (Thailand), Kaohsiung(Taiwan), and Jakarta (Indonesia), and in FY2023, we renovatedour showroom in Atlanta (U.S.A.). In Indonesia, YKK AP
Experience Studio, a showroom for end-users, primarily custombuilt home owners, opened in December 2022, attached to the
Jakarta sales office, which was relocated to central Jakarta. It
has six exhibition spaces, including a water-tightness
performance experience area. By creating further business
opportunities, we will contribute to increasing the value ofbuildings in many different regions.

Bangkok

Kaohsiung

JakartaAtlantaCorporate Data

Growth in the North American commercial building market isslowing, and new housing starts continue to weaken due togovernment interest rate hikes and other factors. However, theChinese real estate market (luxury market) is recovering due toeasing of regulations, a measure to break out of the prolonged
recession in housing. Taiwan’s housing market is shrinking, but
Indonesia’s has remained strong.
In terms of addressing social issues, we will contribute to the
reduction of CO2 emissions through high thermal insulation
products such as StyleView® in the U.S.A. and the LD Series in
China. In addition, we will help mitigate against wind and flood
damage through high water-tightness and disaster prevention/
mitigation products such as the YRB Series in Taiwan, NEXSTA in
Indonesia, and IWIN-S in India. In addition, our easy-installation
products will help address shrinking labor forces, and our
ventilation products will help create healthy and comfortableliving spaces.

Conceptual diagram of YKK AP AMERICA INC.’s new plant

Initiatives in the Value Chain●Global operations in 11 countries and regions, primarily inNorth America, China, and Asia
●Product development tailored to the climate and culture of
the countries and regions in which we operate, combinedwith local manufacturing and sales systems●A system for providing technical and manufacturing support
from Japan

warehousing and shipment processes, will also be carried out
to create an environment that is friendly to workers. YKK AP’s
manufacturing functions in Macon, which are currently
dispersed over two locations, are scheduled to be transferred to
the new plant after it begins operations in January 2024.

Business Strategies for Growth

The situation in FY2022

YKK AP AMERICA INC. is building a new plant for residential
vinyl windows on a site it acquired in Macon-Bibb County,
Georgia. The purpose of this construction is to increase sales ofresidential vinyl windows in its sales area of six southern statesin the U.S.A. to strengthen production and supply capabilities,
and build a production and supply system with a competitivemarket advantage, thereby establishing an integrated
production system from vinyl materials to assembly.
Automation technology, which has been adopted in Japan for
the APW Line for the production of vinyl windows, will be rolled
out in the new plant to increase productivity to 212% of theprevious level. What is more, the building also reduces CO 2
emissions by improving energy efficiency through naturallighting and thermal insulation of its roofs and walls. In
addition, we are considering the phased introduction of energy
creation technologies in order to achieve carbon neutrality.
Automation and manpower reduction for work involving heavyloads within the production line, as well as during theFoundations Supporting our Business

Our strengths

Market environment and social issues

48

Construction of a new plant for residential vinyl windows in the U.S.A. Productivity to grow to 212%of the previous level

FY2022 results

Value Creation

The requirements for architectural products such as windows, doors,and curtain walls differ from country to country and region to region
due to varying climates, cultures, and other factors. Since establishing
our first overseas company in Singapore in 1976, we have expanded
our business to 11 countries and regions, meeting the needs of eachthrough locally based business operations.

Messages from Management

Operating businesses rooted in individual
countries and regions

Main initiatives

Completion of the CapitaSpring super high-rise facility in Singapore
CapitaSpring, a large-scale, super high-rise mixed-use facility inthe heart of Singapore, with an exterior built by YKK AP FACADE
PTE. LTD., was completed in February 2022. The 280-meterhigh, 51-story building has an striking facade that weaves
organic curved shapes and greenery from plantings into thestraight, inorganic exterior surfaces. In addition, by creating
green spaces throughout the building, it has obtained a
Platinum rating, the highest level of the BCA Green Mark, whichis the leading environmental performance index for buildingsin Singapore. Design, procurement,
installation, and quality control took
place during the COVID-19 pandemic,
when there was a shortage of personnel
on site and government mandated
safety control measures had to bemet.

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