Value Creation Story

Message from the President

As a leader in surface modification technologies

We will enrich the Earth for future
generations by supporting people’s daily
lives as a leader in surface modification.
We will take on challenges boldly
without fearing risks and continuetransforming ourselves to realize ourvision.
Kazuichi Satomi
Chairman, President & CEO

We started business in 1928 by purchasing the patent for a rust-proof chemical for steel and a corrosion-proofing method from Parker Rust-Proof Company in the US. For nearly 100 years since then,we have refined our surface modification technologies and maintained our position as a leading
company in this field.
For example, we have been proactive in overseas operations, establishing a subsidiary in Taiwan
in 1965. We now have business sites in 12 countries and regions where we manufacture and sellsurface modification chemicals, process equipment, and toll processing.
Surface modification technologies help save resources and are environmentally friendly. For example, rust prevention technologies, which prevent rust as the synonym of metal corrosion, avoid deterioration in strength and wear of metals and improve their durability. The technologies therefore
significantly extend the service life of goods. Surface modification technologies also help reduceweight by increasing the strength of materials. They are widely used for lowering processing loads
and helping to improve the functions of various goods, such as shortening manufacturing processes
and saving energy.

Current business environment
The Nihon Parkerizing Group has been growing with two core industries: automotive and steel.
However, the automotive industry is witnessing an accelerating shift to EVs as part of the movetoward a carbon-free society. In the steel industry, an industry shakeout is in progress in Japan andother countries, while China and India are catching up at an accelerated rate. It also faces growing
demand for environmentally friendly technologies, such as technologies for reducing hazardous
chemicals.
The business environment has also grown more challenging in other industries. This concern
mainly reflects fluctuations in demand caused by semiconductor shortages, supply chain disruptions, and soaring raw material and energy prices, primarily resulting from COVID-19 and the Russian
invasion of Ukraine. In other words, significant changes never experienced before have occurred in
the last few years. We can say that we have entered the era of VUCA*, where the future is complicated to predict.
For the Nihon Parkerizing Group, which is highly dependent on the automotive and steel industries, a significant threat is the reduction in the number of automotive parts resulting from the acceleration of the shift to EVs. Amid these rapid changes in the business environment, we must keep
meeting new demands by improving and taking action promptly from customers’ perspectives.
As we enter an era of significant change, we believe the greatest risk is not taking any risk. We willview risks as chances and boldly advance business innovations, thus paving the way for furthergrowth.
Because we are in an era of VUCA, we must develop a vision and keep changing ourselves toachieve it.
*VUCA is an acronym for Volatility, Uncertainty, Complexity, and Ambiguity. It refers to unexpected difficulties that cannot be tackled with the commonwisdom.

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Nihon Parkerizing Co., Ltd. Integrated Report 2023

Nihon Parkerizing Co., Ltd. Integrated Report 2023

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Value Creation Story“Vision2030” and the 4th Medium-term Management Plan

Acceleration of sustainability initiatives

At the Nihon Parkerizing Group, we formulated “Vision2030” in 2021, describing what we wanted toWe have recognized that sustainability initiatives are essential for enhancing corporate value andbe like in ten years. There, we set five fundamental strategies for developing new businesses, culti-identifying and addressing critical social issues. In July 2023, we established a Sustainability Com-vating existing markets, accelerating global rollout, enhancing Group governance, and diversifying

mittee. We also checked the progress of carbon neutrality targets and the six key issues (materiality)

human resources, with sustainability-oriented management at the base.

that we have identified. We discussed future action policies, among other agendas, in an attempt to

As our FY2030 targets, we set consolidated net sales at 200 billion yen, operating income to net

integrate business activities with sustainability-oriented management and drive them.

sales ratio at 15%, and ROE at 10% or higher. However, these targets are challenging to achieve only

For “creating a richer society through surface modification technologies,” a particular focus for us,

with existing businesses. We cannot reach them unless we develop an aggressive, bold corporate

we will develop new environmentally friendly products and technologies and new businesses lever-culture of taking on challenges in new business domains without forgetting the spirit of a technology-aging surface modification technologies, such as the medical business. As a leader in surface modi-driven company and mobilizing all available resources of the Group.

fication technologies, we will thus support people’s daily lives and enrich the global environment for

The period of the 4th Medium-term Management Plan (launched in 2022), which we formulated tofuture generations.

pave the way to the attainment of “Vision2030,” is positioned as the period for building the founda-We believe the active participation of diverse human resources is essential for the sustainable

tions for achieving “Vision2030.” The plan is premised on strengthening the research and develop-

growth of the Nihon Parkerizing Group and the creation of innovations. We will maximize the Group’s

ment system, including strengthening R&D to develop new businesses and expanding overseas

strength in terms of human resources by recruiting and developing a diverse workforce. To do this,business and development and sales of environmentally friendly products.

we will create an environment permitting various human resources to work actively and to their fullpotential. At the same time, we will establish systems that enable flexible workstyles and improve ourworkplace environment so that employees find their jobs rewarding and can feel they are achieving
personal development.

Consolidated
net sales
200 billion yenJapan¥63.1billion(53%)

Existing

Overseas¥56 billion(47%)¥119.1billionPresent

Strengthening R&D todevelop new businessesetsm
r ro un-feothers
ons,dronicices, an
lect
ls, eical dev
aicr
t
med
Elecvehicles
ricct
leE
Lateral deployment, reactivating,and expanding overseas

als,

New
¥40 billion

Developmentof newbusinesses
20%

At the Nihon Parkerizing Group, we will strive to ensure highly transparent information disclosure
so that our shareholders, investors, and other stakeholders will better understand our medium tolong-term value creation.

Japan¥100billion

Existing¥160 billion

Shrinkage due to the electrificati
onof vehicles

Overseas¥100billion

Ratio of overseas sales
50% or more

Maintain existing business

Fourth Medium-term Management Plan

Expansion of overseas
business and strengthening of
the global R&D system“Vision2030”

Development and sales ofenvironmentally friendly
products

Among these initiatives, our urgent tasks are the development and sales expansion of chemicals andprocessing technologies for promising fields, such as EVs, electricals/electronics, and medicaldevices. We have already begun constructing a new Central Research Laboratories facility, aiming tocomplete it in 2025. After its completion, this facility will be a world-leading R&D base for surface
modification technologies. For overseas business, we have established technology hubs in Japan,
Thailand, and China under the “Think Globally & Act Locally” policy. We aim for a global technologicalsupport system close to customers and for prompt development of technologies that match local
demands. We will also strengthen the development of global human resources by increasing personnel exchanges in Japan and overseas and recruiting and training local staff.

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Nihon Parkerizing Co., Ltd. Integrated Report 2023

Nihon Parkerizing Co., Ltd. Integrated Report 202320