Business Strategy

Business Strategy

KYB Group Business Overview
KYB provides products to customers in various fields by combining electronic control andsystems technologies that apply its two core technologies for vibration control and power
control. KYB’s business and product segments are divided into Automotive Components
Operations, Hydraulic Components Operations, the Special-Purpose Vehicles Division, theAircraft Components Division, and the System Products and Electronics Components Business.

KYB’s Core Technologies and Businesses
Automobiles
Motorcycles

Vibration
ControlTechnology

Main Businesses

Automotive Components Operations

Electronic
ControlTechnology

HydraulicTechnology

This business primarily develops and supplies a wide variety of products
for automobiles and motorcycles. Leveraging vibration control
technology, it serves market requirements for comfort, safety andmaneuverability in day-to-day driving and motorsports.

Railroad equipment

Automotive

Construction machinery

SystemTechnology

Special-purpose vehicles

Power Control
Technology

Aircraft components
System products

Major Products
Shock absorbers for automobiles: Shock absorbers (original equipment(OE), aftermarket)
Shock absorbers for motorcycles: Front forks, rear cushion units
Hydraulic equipment for automobiles: Vane pumps, vane pumps forcontinuously variable transmissions (CVT), hydraulic power steering systems,
electric power steering (EPS)
Others: Stay dampers, shock absorbers for all-terrain vehicles, free locks

Electronics components

Motorcycles

Net Sales by Business Segment (FY2020)

Segment Profit (Loss) by Business Segment*(FY2020)

Hydraulic Components Operations

Other
Businesses

This business develops and supplies a variety of hydraulic equipment for
construction machinery, industrial vehicles and railroad cars. It also
leverages power control technology to meet the needs of on-site
monozukuri and railroad infrastructure for precision miniaturization,
digitalization and systemization.

billionOther
Businesses¥19.2

Construction
Machinery(¥0.4)

billionNet Sales

HydraulicComponents
Operations¥328.0Automotive
Components
Operations

billion¥111.3billionHydraulicComponents
Operations¥5.5

Segment
Profit (Loss) by
Business Segment¥13.3
billionbillion¥197.5Major Products¥8.2

billionHydraulic equipment for industrial use: Cylinders, valves, pumps,
motors, mini-motion packages (MMP), hydrostatic transmissions (HST)
Others: Dampers for railroad cars, brakes for railroad cars, active
suspension systems for railroad cars, seals

Industrial
VehiclesAutomotive
Components
Operations
billion* Segment profit corresponds to operating profit under JGAAPMarket Share of Major Products Source: KYB data (As of March 31, 2021)

Other Businesses
Special-Purpose Vehicles Division

System Products and Electronics Components BusinessThis business develops and manufactures special-purpose vehicles,
focusing on a lineup of small to large concrete mixer trucks that havethe largest market share in Japan. The excellent mixing, discharging,environmental performance and other features of our products boost
work efficiency.

We are opening up new possibilities for hydraulic technology, such as
auditorium and stage control systems that support theater performances.
In addition to hydraulic technology, we are also focusing on electronic
control technology to develop products such as electronic control units(ECU) for automobiles and other uses.

Aircraft Components Division

Major ProductsThis business supplies flight control systems, landing systems, hydraulicand pneumatic systems and other hydraulic equipment for aircraft. In
the aerospace technology market, which requires outstanding reliability,
we leverage cutting-edge hydraulic technology to support flight safety
and comfort.

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Shock Absorbers for
Automobiles

KYB Group Report 2021

Market Share in Japan

40%

Market Share Globally

14%

Motorcycle
Front Forks

Hydraulic
CylindersMarket Share in Japan

Market Share in Japan

44%

Concrete
Mixer Trucks

25%

Market Share in Japan85%

System products: Equipment for military vessels, seismic isolation andvibration suppression devices, simulators, hydraulic systems, tunnel boringmachines, environmental devices
Special-purpose vehicles: Concrete mixer trucks, granule carriers, specialfunction vehicles
Aircraft components: Steering components, control devices, emergency
equipment
Electronic components, etc.: Electronic devices

KYB Group Report 2021

44

Business Strategy

Product Lineup
We support daily life by providing safety and comfort. The products presented here areused in a broad range of fields.

Automotive

Through the pursuit of technology, KYB is able to offer
automotive components that offer users advanced
maneuverability and drivability. We support comfort, security
and excitement in any driving situation, from a family outing
to a challenging motorsports event.

KYB makes motorcycle components for the highest level ofriding stability by using world-class race-proven technology
designed for extreme speed and safety. We support comfortable
driving and superior maneuverability. Our shock absorbers forsnowmobiles and chairs skis are specially designed to operate
in the snow.

For many years, KYB has worked to meet the needs of construction sites for machinerythat does not break even when used for long periods of time, day and night, and underharsh conditions ranging from extreme colds of -30°C to scorching deserts. We support
construction sites with the world’s highest level of reliability. We develop andmanufacture all of our drivetrain components (control valves, piston pumps, travel
motors, swing motors, cylinders, etc.) in-house, and are also involved in system
proposals for construction machinery.

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KYB Group Report 2021

Agricultural
Machinery

Motorcycles

Construction Machinery

Automotive Components Operations

KYB agricultural machinerycomponents save space and energy
for easier farming.

Industrial Vehicles

Special-Purpose
VehiclesKYB puts its components to work in
forklifts and other industrial vehicles
to provide powerful support for
improved operational efficiency.

KYB special-purpose vehicles support
comfort in all environments. KYB
concrete mixer trucks have the highest
market share in Japan.

Hydraulic Components Operations

Industrial Machinery

Other Businesses

Railroad Equipment

KYB supplies components forindustrial machinery from elevators
to factory equipment to help
accelerate production.

KYB railroad equipment helps achieve
comfortable high-speed travel bybuffering rolls from air pressure when
cornering, passing oncoming trains orentering tunnels.

Marine ProductsSports and Welfare

KYB hydraulic and tension control
technologies make work at sea easier,including for ships operating remotedevices for deep sea exploration, as
well as for transport ships, supply
ships and rescue ships.

KYB uses its core technologies todevelop products for sports andwelfare.

KYB Group Report 2021

46

Business Strategy

Strategy by BusinessTechnological Strategy

Automotive Components Operations

1. Suspension and steering for next-generation vehicles

Business Strategy
Realizing true value: Strengthen, evolution and new initiatives
In Automotive Components Operations, our goal for
FY2022 is to “establish a position as a core supplierby further strengthening existing projects and coretechnologies.” To achieve this goal, our basic strategies are“stabilization of our revenue base,” “innovative monozukuri”
and “creation of high-value-added products.”
To stabilize our revenue base, we are consolidating
and reorganizing our main bases to maximize profits byleveraging optimal production locations in line withcustomer demand. In the commercial market, we are
implementing structural reforms in which production, sales
and technologies are integrated and promoting local
production for local consumption, including making flexible
adjustments and localizing production systems.

For production, we will improve the level of automation
and reduce manufacturing costs by introducing laborsaving operations. We will then successively introduce thesemeasures at domestic and overseas bases, aiming to become
the No. 1 manufacturer in terms of low costs through ourinnovative monozukuri.
Regarding technology, in order to address changes in thesocial environment and customer needs, we will respond to
new markets and new products through EV, CASE1 and
MaaS,2 develop new customers and create high-value-added
products by strengthening our proprietary technologies.
1. Connected cars, autonomous driving, sharing and electrification. This keyword indicates thetrend in the automobile industry.
2. Mobility as a Service. A new concept in the transportation service industry for integrating
various means of transportation into a single service.

Automobiles are equipped with suspensions, which improvecomfort and steering stability, and the shock absorber is thepart that absorbs vehicle chassis vibration.
Featuring superior technology, KYB shock absorbers are
the preferred choice of many automobile manufacturers
worldwide, and we have achieved high market share. In
addition, we recommend replacement within five years of
initial registration or at 70,000 kilometers (43,495 miles) as
deterioration will occur due to mileage and aging. This
commercial demand for replacements is a major business
opportunity for KYB.
Driving, turning and stopping are the basic functions ofan automobile, and the steering system handles turning.
Hydraulic power steering (PS), which uses hydraulic force to

KYB Technologies Capable of Responding to the Evolution of Automobiles
Internal combustion engine(ICE) vehicles

HVs/PHVs

ZEVs

Gasoline-fueled vehicles

Hybrid vehicles

Electric vehicles/fuel cell vehicles

Suspension

Basic Strategy

Tire
Brake

Establish a position as a core supplierby further strengthening existing
projects and core technologies

Evolution:
Innovative monozukuri
New initiatives:
Creation of high-value-added products

Tire
Brake

Steering

Corner module(In-wheel suspension/Motor)

Steering
Battery

strengthen its core technologies such as vibration control
and power control. We will also promote modularization,
electronic control and system support for main products
while applying our hydraulic technologies in various ways.

(Millions of yen)

Meeting Market Needs by Strengthening Core Technologies

15,000300,000
243,725

245,807

232,101

11,043
197,453

200,000

ICE vehicles

11,696
10,61810,0009,806

100,000

5,000

2018

2019

2020

0
(FY)

Main products

Strengthening
core technologies

Shock absorber

Modularization/electronic
control

Electronic
control system

Power steering

HydraulicElectric

Vane pump

Vane

Electrical and electronic (EE)/system support

2016

2017

2018

2019

2020

(FY)

Notes: 1.	As of FY2017, “Royalty income” and “Revenue related to mold compensation,” which were previously recorded in “Other income” in the Consolidated Statements of Income, are included in“Net sales.”
2. Segment profit is calculated by deducting cost of sales and selling, general and administrative expenses from net sales.

KYB Group Report 2021

ZEVs

Respond to
next-generation platforms

Application of
hydraulic technologies

2017

HVs/PHVs

New vehicles

Market needs: Silent operation, space, performance,
low vibration and comfort

Technological strategy

8,196

47

Motor
InvertereAxle

In the automotive market, needs for features such as silent
operation, space, performance, low vibration and comfort
will grow even more in the future, and parts manufacturers
are improving their technologies to meet these needs. KYB
is working to support next-generation platforms as part ofits technology strategy. In addition, KYB will further

Segment Profit2(Millions of yen)

2016

Battery

KYB technologies that stand the test of time

■ Shock absorbers for automobiles ■ Shock absorbers for motorcycles■ Hydraulic equipment for automobiles ■ Others0

New vehicles

2. Response to automotive market needs

Net Sales1

231,025

Suspension

EngineTransmission
Drive shaft

Goal for FY2022

Strengthen:Stabilization of our revenue basereduce the effort needed to turn the wheels, is indispensable
for safe driving as it enables a quick response to danger.
Electric power steering (EPS), which is powered by a battery,
can improve fuel efficiency compared with PS, which is
powered by the engine.
Even if the shift from conventional gasoline-fueledvehicles to hybrid vehicles with two or more power sources
or to ZEVs continues, there will still be a need for suspension
systems and steering. As KYB’s proprietary technologies
evolve further, business opportunities will expand as well. In
addition, we will collaborate and form alliances withcompanies for technologies that we do not possess to
become an even stronger supplier.

CornermoduleElectric

Evolve main productsCore technologies: Vibration control and power control

KYB Group Report 2021

48

Business Strategy
Strategy by BusinessTechnological Strategy

Hydraulic Components Operations

Proprietary technologies enable advanced control

Business Strategy
Securing a competitive advantage through system proposals
In Hydraulic Components Operations, our goal for FY2022 is
to be a “business that continues to be trusted by customers
with products used around the world.” To achieve this goal,
our basic strategy is to “respond to automation and complex
needs” through the development of electronic control andload-sensing products and medium and large pumps. As ameasure to strengthen our competitiveness, our strategy is to“promote cost reduction and local procurement.”
In our Hydraulic Components Operations, we handle
hydraulic equipment for industrial use, mainly for construction
machinery, as well as other hydraulic equipment. The

drivetrain system of construction machinery, such as
excavators, consists of parts including control valves, piston
pumps, travel motors, swing motors, and cylinders, andKYB is one of the few manufacturers that produces allof these products. The fact that we can make systems
proposals to construction machinery manufacturers is amajor competitive advantage.
In addition, the overall trend in the markets we serve is
expansion in growth areas, so we will promote strategies foreach region according to its development stage and develop
low-cost models.

To respond to automation and complex needs, we arecontinuing to develop electronically controlled models forhydraulic equipment and adding them to our lineup.
The “brain” of construction machinery is the control
valve, which regulates various actuators (drive devices thatconvert energy into translational or rotational motion via
hydraulic or electric motors) and enables smooth operations
such as traveling, turning, and the flexing and stretching of
mechanical arms. Combining electronic controls with KYB’s
specialty hydraulic technologies and fusing them with thepump, which is the “heart,” enables advanced control andcreates new added value.

As for mini excavators, we are working on load-sensing*pumps to meet market needs for lower noise and fuelconsumption, improved operability, and diversification of
attachments. We will also address the growing need for
responding to environmental issues. The advantages of aload-sensing system include simultaneous or combined
operation, which previously relied on operator experience aswell as energy savings, and digitalization and automationthat is able to handle a variety of loads without issue.
* Load sensing: A system in which the load sensed by the valve is sent to the pump. The system
is able to adapt the flow rate to the pressure required for operation.

Market Trends and KYB Technologies
Medium-Term Management Plan

2020

2025

TrendsBasic Strategy

Computerization/Introduction of ICT

Goal for FY2022

Respond to automationand complex needs

AnalogA business that continues to betrusted by customers with products
used around the world

Promote cost reduction
and local procurement

Use of IoT and big data

Hydraulic pilot control

Automation, remote work and addressing
environmental issues

Digital   Electromagnetic proportional control

Excavator
Respond to exhaust gas restrictions
Expand pump lineup
Introduce electronic controls for control valves

Net Sales1■ Hydraulic equipment for industrial use■ Others(Millions of yen)

(Millions of yen)

150,000

15,000140,625
125,321

122,787

11,304111,348

100,000

Improve maneuverability and durability,
reduce noise and decrease costs

Segment Profit2

96,327

Trends11,907Lower noise and fuel consumption, improved operability,
safety, and ability to respond to multiple operations

Respond to attachment diversification and use of electric motors(addressing environmental issues)

10,000

6,634
5,534

50,0005,502

Mini-excavator

5,000

Respond to exhaust gas restrictions
Transition to a load load-sensing

0

2016

2017

2018

2019

2020

0
(FY)

2016

2017

2018

2019

2020

Develop load sensing system
Expand lineup
Introduce electronic controls(FY)

Notes: 1.	As of FY2017, “Royalty income” and “Revenue related to mold compensation,” which were previously recorded in “Other income” in the Consolidated Statements of Income, are included in“Net sales.”
2. Segment profit is calculated by deducting cost of sales and selling, general and administrative expenses from net sales.

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KYB Group Report 2021

KYB Group Report 2021

50

Business Strategy

Contributing to Social Issues
through Our Business
Other Businesses (System Products, Special-Purpose

Approaches to ICT and IoT in Hydraulic Equipment

Vehicles, Aircraft Components Division)

Support for ICT and IoT in Hydraulic Equipment
In recent years, computerized operation using ICT and monitoring functions using IoT have increased in the construction industry.
Combining traditional hydraulic equipment with advanced electronic equipment requires overcoming challenges in terms of cost,
durability and systemization, but we are continuing our development initiatives, mainly in sensing technology.

Strategy by Business
System Products and Electronics
Components Businesses

e-Mixer Computer Controlled Concrete
Mixer Truck

In July 2021, Kayaba System Machinery Co., Ltd., a subsidiary,
was absorbed into KYB Corporation. Under the slogan“Let’s become a trusted company once again,” we will
focus on promptly bringing seismic isolation/mitigation
oil dampers into conformity. We will also strengthen
governance and build a system that will be recognizedby third parties as appropriate.

The e-Mixer is an environmentally friendly concrete mixer
that achieves lower noise, exhaust and fuel consumption
through application of our unique hydraulic technology and
ECU. Using sensors to detect the level of the load, computer
control optimizes the flow rate of the hydraulic equipment,
thereby reducing engine revolutions to about half thoseneeded by a conventional manual mixer. We havesignificantly enhanced operability by continuously making
improvements, and the e-Mixer’s functions meet the needsof users.
The initial model e-Mixer that was launched in 2004
was upgraded to the e-Mixer II in 2011. We are currently
incorporating further advances to develop the e-Mixer III,
which will be easier to use and offer enhanced safety
features.

Special-Purpose Vehicles Division
In Japan, we are working to strengthen our profit structure
by developing high-value-added products that are friendly
to the environment and to people and that meet market
needs. Overseas, we will establish the foundation for a
global network for special-purpose vehicles by formulating
and implementing new business plans.

Launch of Hydraulic Cylinder Compatible with ICT(Stroke Sensing Cylinders for ICT Construction Equipment Machinery)
We have launched a cylinder with a stroke sensing function as a
product for computerized construction equipment. In the caseof an external sensor, there is a risk of damage due to contact
with soil or other substances. However, a built-in sensor that isinterchangeable with standard cylinders can prevent damage.
For ease of use and high accuracy, the stroke sensing cylinders
support controller area network (CAN) communication andutilize absolute output (absolute position detection).

Development of Monitoring System for Hydraulic Cylinders and Other Equipment
We are developing a cylinder failure detection system as a
product for monitoring systems utilizing IoT. A fully wirelesssensor mounted on the cylinder monitors the inside of thecylinder and reports malfunctions. KYB has continued to makeadvances in its hydraulic cylinders to improve their durability.
Moreover, by providing advance notice of the inevitable
deterioration of consumable items or accidental failures, thissystem minimizes the suspension of operations and reduces
parts replacement costs, thus contributing to the maintenance
operations of construction machinery manufacturers.
The product is in
the evaluation stage
Relief valve
as a subsystem thatprovides data to the
Wireless sensor
hydraulic cylinders
Seal housingof construction
Sensor holder
machines.

Aircraft Components Division
We aim to improve profitability by strengthening compliance,
putting safety first and promoting quality management.
We will work to reduce losses associated with disruptionsin production, review our production system and costs,
and reorganize the business.

Remote control operation near the discharge chute

Net Sales1

Segment Profit (Loss)(Millions of yen)

(Millions of yen)

30,00027,964

27,231

24,163
1,000

947

1,028

19,23620,000

500
297

346

2018

2019

10,000
0

0

2016

2017

2018

2019

2020

-500
(FY)

CAN communication(SAE J1939)
Terminals used aspressure andtemperature sensors

Receiver• Judgment
function• Communication
function

Personal area
network (PAN)
communication

System developed by KYBInternal
communication

Construction
machineECU

Construction
machine network
communicationequipmentLine for CAN communication(SAE J1939)

Construction
machine system

Joint Development of a Next-Generation Modular EV Platform

1,500
25,782

Wireless sensor(for cylinder
mounting)

(372)

2016

2017

2020

(FY)

KYB has entered into a strategic partnership with REE
Automotive of Israel, a company with advanced EV platform
technologies, to develop suspension capabilities for future EV
platforms. Our suspension technologies will contributesignificantly to improving the performance of REE Automotive’s
next-generation EV platform, providing cost-effective, scalable
solutions in e-mobility.
The new platform features a high degree of design freedom
and is expected to enable innovations in EV design, with all
drivetrain components, including steering, braking, suspension
and electric motor, integrated into the wheel. Through thispartnership, we will promote the development of a suspension

subsystem that supports the needs of tomorrow’s mobility
ecosystem to revolutionize methods of transporting people,
goods and services.

Notes: 1.	As of FY2017, “Royalty income” and “Revenue related to mold compensation,” which were previously recorded in “Other income” in the Consolidated Statements of Income, are included in“Net sales.”
2. Segment profit is calculated by deducting cost of sales and selling, general and administrative expenses from net sales.

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KYB Group Report 2021

KYB Group Report 2021

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