Strategy

Message from the President

Kayaba will contribute to the sustainable development of
the planet and society as a global leader in vibration andpower control built on our core technology of hydraulics.
First, please let me offer my deepest sympathies to those who have been affected by COVID-19 infections.
I truly hope that they will recover quickly. I’d also like to express my respect and gratitude to the healthcare
professionals who are working their hardest at the front line every day. For our part, Kayaba is making efforts
to prevent the spread of the virus. We quickly and appropriately respond based on the requests of relevant
authorities while giving maximum preference to the safety of our customers, business partners, employees
and their families.

The Changing Business Environment and Our Mission

Issues we’re engaging with as we movetoward further growth
The environment surrounding all manufacturing companies domestic and overseas is becoming more severe,due to factors including the spread of COVID-19 variants and the global semiconductor shortage caused by
U.S.-China trade frictions. In the automotive industry
and in the construction industry, we are seeing thekind of revolutionary change that occurs only once in
100 years, with the promotion of electronic vehicles
and electrification as well as the shift towards automatic operation. Components suppliers are being required
to deliver new value.
Looking at Kayaba’s FY2021 performance under thisenvironment, we had an 18% increase in sales alongwith the recovery of the market from the COVID-19
pandemic. Also, we reorganized unprofitable businesses, in particular reducing fixed costs, and madeimprovements to productivity. Due to these factors, werecorded our highest ever profits. However, material
prices and transport costs are forecast to continue
increasing, and companies will need to adjust production because of component supply issues due tolockdowns. In order to respond to these matters,
further cost improvements and revisions to our production operations will be necessary. We are still facing
challenges, but we are progressing forcefully with all
kinds of improvement initiatives to reinforce our financial base and resolve management issues.
Furthermore, Kayaba is moving forward with environmental, social, and governance (ESG) management.
We are reducing CO2 on a group-wide basis and developing products that will contribute to the sustainable
development of society. Also, to fulfil our corporatesocial responsibility, we are committed to taking preventive measures against nonconforming acts by

07

KAYABA Group Report 2022

strengthening our management system, positioning
awareness of norms and compliance as the foundationof management, and building a corporate culture ofopen, transparent communication.
Value Creation at Kayaba

Towards a safe, prosperous society supported
by our core technology
Kayaba has over 100 years of technology assets. We
have contributed to society by turning hydraulic technology related to vibration and power control into
products, allowing for the design of comfortable,
prosperous towns and cities. And we are making
powerful strides in the development of products built
on the core technologies that Kayaba possesses, which
will lead to the creation of new value compatible withtechnologically innovative transport equipment andindustrial equipment.
The market is seeing a major revolution with electrification and the adoption of electric vehicles. In order to
respond, we are developing high-added-value products
built on our core technology, collecting and analyzingroad surface and driving data, and developing an active
suspension system that can be controlled in real time.
Furthermore, we are aiming to shift from the conventional method of selling each product individually tointelligent hydraulic systems sales. In these ways, weare striving to make Kayaba as a company that offers
the ultimate products to our customers.
Also, we are facing an issue with labor shortages andtraining successors in our manufacturing workplaces.
To resolve this, we have launched an activity called“Ship’30,” which is aimed at further evolving manufacturing workplaces based on the remarkabledevelopment of digital technology in recent years. It
involves the construction of a revolutionary autonomous plant, and aims to make an unmanned, fullyautomated plant a reality by 2030. Ship’30 will be able
to respond flexibly to fluctuations in production, andwill aim to further raise productivity.

Contributing to a prosperous world andpromoting diversity

FY2022 is the final year of the current medium-term
management plan. We will concentrate management
resources on the three business units that are the coreto achieving our plan: AC Operations, HC Operations,and the Special-Purpose Vehicles Division. We will
strive to develop new products for sustained growth,and to revolutionize manufacturing using IoT and AI for
the purpose of strengthening our earnings capacity.
And in addition to lowering costs, we will further
promote ESG management. All of these actions willlead us into our new medium-term management plan
which is set to begin in FY2023.
We will actively incorporate underlying technologies—such as electronic systems controls—andleading-edge technologies into the core technologythat Kayaba possesses, aiming to provide productsthat support the livelihoods of people in places allaround the world while delivering safety, assurance,and comfort. To do that, the Group will come together
and work to build a constantly evolving “trustworthy
brand that contributes to the development of a prosperous society.”

Strategy

Message from the President

Value Creation

Environmental consciousness is growing globally, inparticular towards sustainability and carbon neutrality.
Corporations have a responsibility to conduct measures
for the environment, and are being required to take amore active posture and conduct more impactful
initiatives that ever before.
We have achieved a 50% reduction over 2018 fromthe three aspects of energy generation, energy use,
and the development of products that contribute to
CO2 reductions. And further, we are aiming to achievecarbon neutrality by 2050.
In our efforts for diversity, in FY2022 we have appointed female outside directors and auditors. By
increasing the number of female officers in addition toincreasing the ratio of outside directors and auditors,
we are strengthening our governance and promoting
diversified management.

Building a trustworthy brandIntroduction

Important Issues for the Future

Our Pledge to Our Stakeholders

Representative Director andPresident Executive Officer &Chief Executive Officer

Data

KAYABA Group Report 2022

08

Strategy

FY2020-2022 Medium-Term Management Plan

To Achieve Highly Profitable Structure
The slogan of the FY2020-2022 Medium-Term Management Plan is “Regain Trust, Restore Pride.” Under thatslogan, we are taking preventive measures against nonconforming acts, placing awareness of norms andcompliance at the core of management as part of reforms to our corporate culture, and proceeding with atransformation to achieve a highly profitable structure.
The plan’s first year of FY2020 saw challenging conditions as sales, segment profits and other indicators
declined compared to the previous consolidated fiscal year due to the impact on economic activities in all
countries caused by the spread of COVID-19. In FY2021, we worked to get the plan back on track by thoroughly
executing various policies to establish a highly profitable structure, and spent the year recovering from delays.
In 2022, the final year of the plan, there is increasing uncertainty over the future prospects of the world
economy, which is facing issues such as the lingering pandemic, sharp price increases in raw materials, thesemiconductor shortage, and a deteriorating geopolitical situation. However, we are moving forward withachieving a highly profitable structure while selecting and concentrating on initiatives such as the optimum
distribution of management resources and manufacturing innovation. Undaunted, the Kayaba Group willband together to achieve our goals.

Review of FY2021

Regain Trust, Restore Pride

Trust

Pride

Reforms for a high earnings constitution
Thorough enforcement of safety first, fire prevention
Develop human resources that support management
Respond to social demands (ESG response, SDGs)
Strengthen governance system

Awareness of norms, observance of compliance

Key Initiatives and Main Implementation Details
Key initiatives

09

Main implementation details

Compliance and strengthen governance• Establish Compliance Committee• Complete policies for all prevent measures• Instill corporate culture of awareness of norms (thorough education)

Response to social demand• Thoroughly conduct health management, including infection control measures• Observe respect for human rights (Thoroughly create a comfortable workplace)• Initiatives for carbon neutrality

Human resource development• Optimal reassignment of human resources after group reorganization, carry out rotations• Promote DX by hiring and training digital human resources

Safety first, quality management• Thorough preventive measures against workplace injuries and fires• Continue to reform quality awareness based on quality education for all employees

Stabilize the revenue base

• Concentrate management resources to the three business units of AC Operations, HC
Operations, and the Special-Purpose Vehicles Div.
• Withdraw of unprofitable businesses (Decision to close the Aircraft Components Div.)

Growth strategy• Sales expansion activities to emerging EV manufacturers

KAYABA Group Report 2022

FY2021 Performance Summary

FY2021

Net sales¥328.0 billion¥388. billion

Segment profit¥13.3 billion¥24.7 billion

Operating profit¥18.3 billion¥30.0 billion

Profit before tax¥16.3 billion¥28.8 billion

Profit attributable to owners of the parent¥17.1 billion¥22.5 billion

¥75

¥105

Cash dividends per share

Value Creation

FY2020Strategy

Consolidated Financial Results for FY2021 (IFRS)Introduction

Operating profit was ¥30,001 million (compared with
¥18,297 million in the previous fiscal year), largely due
to an increase in sales to meet recovering demand andthe impact of a reversal of the provision for productwarranties for seismic isolation/mitigation oil dampers,
while profit before tax was ¥28,817 million (comparedwith ¥16,340 million in the previous fiscal year). Also,
profit attributable to owners of the parent was ¥22,549
million (compared with a loss attributable to owners of
the parent of ¥17,087 million in the previous fiscal year),giving us our highest level of profits ever.
The capital adequacy ratio, which at one point had
fallen below 20%, returned to the 30% range, while
the net D/E ratio rapidly improved due to the repayment of interest-bearing liabilities.

FY2020-2022 Medium-Term Management Plan

Looking at the global economy in FY2021, there wasan underlying tone of recovery, with the progress in
COVID-19 vaccinations and policies to resume economic activity in many countries. However, downsides risksmaterialized with the sharp rise in raw material prices,a shortage in semiconductors, and the worsening
Russian invasion into Ukraine. In Japan’s economy, we
saw signs of an economic comeback lagging behind
the world economy, but high resource prices and aweak yen overlapped, making it difficult to predict the
future.
Amidst this environment, the automobile and construction industry markets—which are the main
sources of demand for Kayaba products—both experienced recoveries in demand compared to the previous
consolidated fiscal year.
The Kayaba Group’s sales reached ¥388.4 billion, an
increase of ¥60.3 billion over the previous consolidated
fiscal year.

Data

Earnings Improvement Activity (Segment Profits)
In FY2021, we aimed for a ¥4.4 billion earnings improvement over FY2019, and we were able to surpass
that target by reaching ¥5.9 billion. Amidst the challenging conditions caused by the COVID-19 pandemic,
we achieved our initial plan through improving productivity by ¥1.6 billion and a ¥2.3 billion result fromwithdrawing and scaling down unprofitable businesses.

In FY2022, we will aim to complete taking in benefits from unachieved fields and attain a ¥7.4 billion
improvement compared to FY2019, which is a target of
the FY2020 medium-term management plan.

Progress

FY2021

FY2022 target

Improve productivity (reduce manufacturing costs)

47%¥1.6 billion¥3.4 billion

Withdrawal or reduction of unprofitable fields

135%¥2.3 billion¥1.7 billion

Reduce variable cost80%

¥0.8 billion¥1.0 billion

Consolidation of production bases, establish optimal production system

71%¥0.5 billion¥0.7 billion

Promote sales expansion

116%¥0.7 billion¥0.6 billion

KAYABA Group Report 2022

10

FY2020-2022 Medium-Term Management Plan

Progress of Measures to Prevent Recurrence of Seismic Isolation/Mitigation Oil Damper Problems
Regarding our most important issue of compliance andgovernance, we established a Compliance Committee
in 2021, and our 67 preventive measure policy items
were all completed as of the end of March 2022.
However, the prevention of nonconforming acts is aconstantly ongoing matter, so we are continuing tocarry on our initiatives and will never let them beforgotten or relegated to the past.
Our progress with exchange work is as shown on
the right.

Progress of Replacement, etc. (As of August 31, 2022)
Replacement, etc. started*1

981 buildings (99.0%)

Replacement, etc. completed*2

970 buildings (97.9%)*1 Includes delivered dampers taken back and readjusted and dampers that will
not be replaced.
*2 The number of buildings where replacement work, etc. has started includes
buildings where replacement or other work has been completed and buildings
where it has been decided not to replace the dampers. It is not the number ofbuildings in the Corrective Measures Completion Report submitted to thespecified administrative agency

FY2022 Basic Policy
Finalize the Medium-Term Management Plan,
Concentrate All Energy on Achieving Targets
FY2022 is the year in which we will complete thecurrent medium-term management plan, so we willachieve the final targets that we have set forth. To
create a foundation for the next medium-term management plan, we will concentrate management resourcesand distribute them among the three business units of
AC Operations, HC Operations, and the SpecialPurpose Vehicles Division, and adopt a product strategy
of contributing to society through developing andproviding high-value-added products. In addition, we
will promote innovative manufacturing that focuses on
automation which makes use of digital technologies

such as AI and IoT and steady cost reductions, andstrive for continuous growth and strengthened earnings capacity.
FY2020-2022 Medium-Term Management Plan Financial Targets
FY2022
Net sales¥390.0 billion

Segment profit¥25.8 billion

Segment profit ratio

6.6%

Equity ratio

37%

In addition to reviewing and evaluating FY2021, we are setting the following as our Basic Policy for FY2022.
Key initiatives

11

Main implementation details

Compliance and strengthen governance• Instill corporate culture of awareness of norms,• Continue group-wide activities to prevent nonconforming acts

Response to social demand• Thoroughly conduct health management, including infection control measures• Observe respect for human rights• Initiatives for carbon neutrality 2050 target: achieve carbon neutrality

High profit structure• Strengthen added-value manufacturing control, KPI Management• Complete reorganization of unprofitable business divisions / plants and offices / products• Promote the global total cost reduction activity• Launch optimization of Group production system• Promote global KPS activities

Human resource development• Optimal reassignment of human resources after group reorganization, carry out rotations• Promote DX by hiring and training digital human resources

Growth strategy• Plan strategy to enter new markets and create new products• Invest management resources in growth fields

Safety first• Thorough preventive measures against workplace injuries and fires (zero workplace
injuries or fires)

Quality management• Reform quality awareness based on quality education

KAYABA Group Report 2022

COLUMN

Products + Human Resources + the Future
Introduction

A New Challenge for Kayaba

Interviewing for a magazine
at Kumagaya Plant

Value Creation• Pursuing safety using technology• Offering living spaces during times ofdisaster

Ukyou Katayama (front right) started providing
his services as an advisor

Rally Project
A rally team managed by theCompany has been launched,with the Motorsports Dept. at
the core. It is working on training
developers and raising motivation
with the aim of new productdevelopment. They are making
preparations to compete as anindependent team in the 2023
Japanese Rally Championship.
• Train engineers who can conduct
development from a vehicle perspective• Increase company employee motivation• New product development

Kayaba’s push to enter the mobile homebusiness was featured in the September
2022 issue of Auto Camper (in Japanese only)

Data

Vibration control technology+ Power control technology

Strategy

FY2020-2022 Medium-Term Management Plan

Mobile Home Research Project
The team formed for this project centers on theSpecial-Purpose Vehicles Division, but also taps
the experience of AC Operations, HC
Operations, and other R&D departments.
It uses Kayaba’s vehicle customization skills
and suspension technology to pursue safe andenjoyable driving, launching work on
offering new value, such as vehicles
that can serve as a living space intimes of disaster.
We are working to achieve our planof exhibiting at the Tokyo Auto Salon
which is scheduled to be held inJanuary of 2023.

Shock Absorbers for Racing

NUTAHARA Rally Team, sponsored by Kayaba

KAYABA Group Report 2022

12

Strategy

Value Creation Process

Improving Mid- to Long-Term Corporate Value
We are in the midst of the kind of revolution that occurs once every 100 years.
At Kayaba, we are aiming at our 2030 target of contributing to society throughvibration and power control technology with a core of hydraulics. On thefoundation of the Corporate Spirit and the Management Vision, we will maximize
use of the Group’s management resources while generating new value throughinnovative manufacturing craftsmanship.

Kayaba’s businessenvironment• Megatrends
Climate change
DE&I
Globalization
Raw material price increases
Supply chain disorder• Risks
Pandemics
Decline in working population

Input:
Management resources

Output:Improvement of Corporate Value

Manufacturing Capital
Focus on core businesses

p. 23

Production bases:
26 domestic and overseas

p. 53• Opportunities
Revolutionary time in thebusiness environment

Automatic driving, electric vehicles,
low energy consumption vehicles
p. 25Intellectual CapitalIntellectual property

p. 25

Human Capital
Appropriate use of diverse
human resourcesp. 43

Natural disasters
Geopolitical risks

Engagement with innovative
p. 26
manufacturing

Natural Capital
Introduction of renewableand green energy

Response to environmental
p. 39
regulations
Creation of new markets andp. 12
products▼

p. 39

Use of leading-edge technology
such as AI and IoT
Implementation of DX

ESGs, SDGs

Corporate Spirit
By providing technologies and products that make people’s lives safe and comfortable,
the Kayaba Group contributes to society
1. We shall follow all rules and face all issues with honesty.
2. We shall build a corporate culture full of vitality, and hold high goals.
3. We shall value kindness and sincerity, cherish nature and care for the environment.
4. We shall constantly pursue creativity to contribute to the prosperity of customers,
shareholders, suppliers and society.

13

KAYABA Group Report 2022

Kayaba’s target for 2030
Value creation

Leading-Edge
Technologies

Electronic
ControlTechnology

PowercontrolCore Technologies

Strategy

Value Creation Process

Vibration
control

Introduction

SystemTechnology

Elemental
Technologies

To be a corporation that
contributes to society throughvibration and power control
technology with a core of
hydraulics.

Outcome:Offer value to society
Value Creation

Products

Products that contribute to the sustainability of society
p. 24• Next-generation hybrid suspension systems (height adjustment suspensions for automobiles)

p. 24• Electrically powered pumps (Device installed in electric vehicles)

p. 24• Load sensing (Electronic control and hydraulic system for hydraulic excavators)

p. 25• Smart road monitoring (New service that uses DX)

p. 18

Management

Evolution into ESG managementp. 27

Environment

Achievement of a decarbonized society

p. 38

Production

Next-generation innovative plant

p. 26

Technology

Response to electric vehicles and automation trends, new services through theuse of electronic control and hydraulic systems as well as DX

p. 24

Human resources Creation of a place where diverse human resources can work to their potential

p. 43

Data

• Active suspension systems (electronically controlled suspensions for automobiles)

Management Vision
1.	Human Resource Development:	To develop human resources who have a thorough understanding of our policies and strategies and can accomplish our goals with passion.
2. Technology and Product Development:	To offer products that gain the admiration, provide comfort and satisfy all of our customers throughout the world.
3. Monozukuri (Japanese Manufacturing Expertise): 	To operate plants filled with the creative inspiration of committed monozukuri, and joy of creating products that satisfy our customers.
4. Management: To be always self-aware of our corporate social responsibilities and to pursue efficient management.

KAYABA Group Report 2022

14

Strategy

Business Outlook for the Kayaba GroupThe Three Mainstay Businesses
Kayaba’s business and product segments have, up to now, been placed in three classifications: Automotive
Components (AC), Hydraulic Components (HC), and other businesses (including the Special-Purpose Vehicles
Division, Aircraft Components Division, System Products and Electronics Components). However, we plan toselect and concentrate on the three business units of AC, HC, and Special-Purpose Vehicles, and will optimally
distribute management resources among them.
FY2021
Performance

Special-purpose Vehicles

Other Busunesses

Special-Purpose Vehicles

Other Busunesses¥9.2 billion (2.3%)¥4.8 billion (1.2%)¥0.8 billion (2.8%)¥(3.9) billion (ー%)AC Operations

HC Operations¥232.8 billion (60.0%)¥12.4 billion (43.4%)

HC Operations¥141.6 billion (36.5%)

Net Sales¥388.4 billion

Segment Profits*¥24.7 billion

AC Operations¥15.4 billion (53.8%)*Segment profits correspond to operating income in JGAAP.
Note: Other businesses refers to Electronics Components and the Aircraft Components Division

Main Product Lineup

AC Operations
With vibration control technology at
the core, this business unit develops
and offers a wide range of products
primarily for automobiles, motorcycles,
and railway cars. AC Operations’products are at use in many situations where comfort, safety
and maneuverability are required, from secure, comfortable
drives with the family to withstanding the harsh conditions ofmotorsports.

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

HC Operations

Construction Machinery

With power control technology at thecore, this business unit develops andoffers various kinds of hydraulic equipment for construction machinery andindustrial vehicles. In addition, it expands the potential of hydraulics to new areas, such as for stage
mechanisms that support theater productions. It deals in compact precision, digitization, and the creation of systems, thereby
providing support at the sites where manufacturing takes place.

We have worked to meet the needs ofconstruction sites for machinery that
does not break even when used forlong periods of time, day and night,
and under harsh conditions, such as
extreme cold or scorching heat. We
develop and manufacture all of ourdrivetrain components (control valves,piston pumps, travel motors, swing
motors, cylinders, etc.) in-house, andare also involved in system proposals
for construction machinery.

Special-Purpose Vehicles Div.

Special-Purpose Vehicles

This business unit develops andmanufactures specially equipped
vehicles, mainly the concrete mixer
trucks for which it enjoys the top
domestic share. The products have alineup that ranges from small to large sizes, and they increase
work efficiency on construction sites with high kneading,discharge, and environmental performance.

Our special-purpose vehicles, whichhave the highest market share in
Japan, support comfort in allenvironments.

Note: Kayaba has been involved in the business of hydraulic equipment for aircraft since our establishment. However, as a result of a comprehensive reexamination of ourbusiness portfolio and in order to strengthen corporate competitiveness through the selection and concentration of management resources, we decided to withdraw fromthe aircraft components business in February 2022. We are in the process of phasing out all operations of the Aircraft Components Division, including repairs.

15

KAYABA Group Report 2022

Agricultural Machinery

Kayaba in Everyday Living

Railroad Equipment

Construction
MachinerySpecial-purpose
VehiclesIntroduction

Automotive
Components

Motorcycle
Components

Motorcycles

Railroad Equipment
Our railroad equipment helps
achieve comfortable high-speed
travel by buffering rolls from airpressure when cornering, passing
oncoming trains or enteringtunnels.

Value Creation

We make motorcycle components
for the highest level of riding
stability by using world-classrace-proven technology designed
for extreme speed and safety. We
support comfortable driving andsuperior maneuverability. Our shock
absorbers for snowmobiles andchairs skis are specially designed tooperate in the snow.

Agricultural Machinery

Industrial Machinery

Marine Products

We provide industrial
vehicles equipment which
improved operational
efficiency for forklifts andother vehicles.

Our agricultural machinerycomponents save spaceand energy for easierfarming.

We supplies components
for industrial machineryfrom elevators to factoryequipment to help accelerate production.

Our hydraulic and tension
control technologies makework at sea easier, including for ships operating
remote devices for deepsea exploration, as well as
for transport ships, supply
ships and rescue ships.

We use our core technology todevelop products used for sports
and social welfare.

Data

Industrial Vehicles

Other: Sports and social welfare
products

Strategy

Kayaba Group’s Business Overview

Marine Equipment

Kayaba is an official sponsor of the Alpine
Skiing National Team of the JAPAN Para-Ski
Federation

KAYABA Group Report 2022

16

Business Outlook for the Kayaba Group

Automotive Components (AC) Operations

Ultra-low velocity valve

CVT vane pumps

Front fork

Active suspension
system for bullet train■ Main Products■ Market Share

Shock absorbers for automobiles:
Shock absorbers (original equipment (OE), aftermarket)

Automobiles Shock Absorbers

Source: Kayaba data (As of March 31, 2022)

Motorcycle Front Forks

Shock absorbers for motorcycles: Front forks, rear cushion units
Hydraulic equipment for automobiles:
Market sharein Japan
Vane pumps, vane pumps for continuously variable transmissions(CVT), hydraulic power steering systems, electric power40%
steering (EPS)World Market sharemarket share in JapanWorld
market share

Market sharein JapanMarket sharein Japan

13% 40%

13%

47%

47%

 thers:O
Shock absorbers for all-terrain vehicles, free locks, dampers for railroadcars, brakes for railroad cars, active suspension systems for railroad cars

Basic strategy

Goal for FY2022• Strengthen: Stabilization of our revenue base
• Evolution: Innovative monozukuri• New initiatives: Creation of high-value-added
products

Establish a position as a core supplier by further
strengthening existing projects and coretechnologies

FY2021 Business Environment and Performance
The underlying tone for the year was one of a recovery
from the spread of COVID-19 infections. However, ourcustomers lowered production as there were sharp
rises in the prices of raw materials and energy as well
as a shortage of semiconductors. Further, there were
issues in logistics triggered by a shortage of containers
and the impact of the worsening situation in Ukraine.
Due in part to these factors, the business environment

for the year remained severe.
While production remains low for OEM components,
sales increased in all areas on the strength of favorable
demand for aftermarket shock absorbers to repair usedcars, a need triggered by destabilization in the new car
market. Also, progress with restraining variable andfixed costs brought segment profits to their highest
level ever.

Net Sales*1

Segment Profits*2(¥ million)(¥ million)

３００,０００

243,725

245,807

20,０００232,846

232,101

15,417

197,453

15,０００2００,０００

10,618

11,696
9,806

8,196

1０,０００1００,０００

０

5,０００

2017

2018

2019

2020

2021

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

０

(FY)

2017

2018

2019

2020

2021

■

*1.	As of FY2017, “Royalty income” and “Revenue related to mold compensation,” which were previously recorded in “Other income” in theConsolidated 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.

17

KAYABA Group Report 2022

(FY)

Business Strategy
Introduction

Creation of High-Value-Added Products
It is essential to strengthen original technology compatible with EVs, CASE*1 and MaaS*2 along with theaccelerating shift in this direction. We have positioned thefollowing as our technology strategy for new markets andnew products: “Compatibility with next-generation
platform,” “Strengthening of our core technology(vibration control and power control technologies),”“Practical application of hydraulics,” and “Electric andelectronics / systems compatibility.” Further, we will
create high-value-added products that meet customer
needs such as quiet operation, spaciousness, maneuverability, low vibration, and ride comfort.
*1*2

Value Creation

 onnected cars, autonomous driving, sharing and electrification. This keyword
C
indicates the trend in the automobile industry.
Mobility as a Service. A new concept in the transportation service industry for
integrating various means of transportation into a single service.

Technological Strategy
bility, among other initiatives. See p.24
Also, fusing our vehicle measurement technology
and analysis technology with AI and IoT, we havestarted a “Smart Road Monitoring.” This service supports road maintenance management work by using
dedicated devices installed on vehicles to automaticallycollect information on road conditions and detect
abnormalities. We have completed verifications of thefunctions through trial applications in cooperating
municipalities, and are adjusting the functionality ofthis service to prepare it for release.

Data

Evolving our Core Technology to Offer New Value
In order to respond to a market that is undergoinga major transformation due to electrification and EVs,
Kayaba is developing high-value-added products
centered on our core technology and aiming to offer
the optimum products to our customers.
Our vibration control technology supports transport
equipment such as automobiles and railroads, and they
are required to deliver outstanding safety and comfort.
Therefore, we are collecting data from road surfaces
and running vehicles to advance the development of anactive suspension that makes real-time control a possi-

Smart Road Monitoring
Inspections (High cost, low frequency)

Automatic measurements with regular cars (Low cost, high frequency)

Data analysis

Data collection

Motion measurement

KAYABA

Efficiency

Data provision

Local government

Road repairs

KAYABA Group Report 2022

StrategyInnovative Monozukuri
In order to strengthen competitiveness, we will reduce
processing costs while taking full automation / manpower reductions one step further, and sequentially rollthis initiative out to all plants in Japan and overseas,with a focus on lines for the aftermarket.

Kayaba Group’s Business Overview

Stabilization of Our Revenue Base
We are working on the optimization of production byconsolidating and reorganizing major plants, cost
reduction activities, and structural reform of the aftermarket business.
In advancing with optimized local production, we haveclosed our power steering plant in Europe, and reorganized our shock absorber plants inside the area to shiftconcentration from western Europe to eastern Europe.
And in EPS production, we have withdrawn from domestic manufacture and changed our focus to China.
In CVT vane pumps, we are constructing a globally
optimized production system in addition to reducing
surplus production capacity at our motorcycle plants in
Asia through production reorganization.

18

Business Outlook for the Kayaba Group

Hydraulic Components (HC) Operations

Control valve

Travel motor

Hydraulic cylinder

Integrated HST (Pump and motor)■ Main Products■ Market Share Source: Kayaba data (As of March 31, 2022)

Hydraulic equipment for industrial use:
Cylinders, valves, pumps, motors, mini-motion packages (MMP),
hydrostatic transmissions (HST)

Hydraulic Cylinders

System products:
Equipment for military vessels, seismic isolation and vibration
suppression devices, simulators, hydraulic systems, tunnel boringmachines, environmental devices

World
market share

25%

Basic strategy

Goal for FY2022• Respond to automation and complex needs• Promote cost reduction and local procurement

A business that continues to betrusted by customers with products usedaround the world

FY2021 Business Environment and Performance
Downsides risks are materializing with the sharp rise in
raw material costs, the semiconductor shortage, theconfusion in logistics due to the lack of containers, andthe worsening state of affairs in Ukraine, while highresource prices and a significantly weakened yen arepresenting hurdles. However, demand in theconstruction machinery market is recovering from theeconomic stagnation that was triggered by the spreadof COVID-19 infections, causing an increase in sales.
Segment profits also increased along with the rise insales, and reached a record high level.

Net Sales*1

Segment Profits*2(¥ million)(¥ million)

20,０００180,０００

141,572

140,625
125,321

122,787
120,０００

15,０００111,348

11,304

12,354

11,907

1０,０００5,534

6０,０００

０

6,553

5,０００

2017

2018

2019

2020

■ Hydraulic equipment for industrial use ■ System products

2021■ Others

０

(FY)

2017

2018

2019

2020

2021

■

*1.	As of FY2017, “Royalty income” and “Revenue related to mold compensation,” which were previously recorded in “Other income” in the Consolidated Statements ofIncome, are included in “Net sales.” We are disclosing that Systems Products are included in HC Operations as of FY2021 as a result of a review of segment managementclassification.
*2. Segment profit is calculated by deducting cost of sales and selling, general and administrative expenses from net sales.

19

KAYABA Group Report 2022

(FY)

Business Strategy
Introductionlines and can propose systems for construction machinery manufacturers gives us a major competitiveedge. Further, we are not just responding to needs forthe construction machinery that we currently work on,
but are conducting investigations into new sales opportunities in all markets and regions where we are active.

Maintaining Our Competitive Edge in Systems
Proposals
The powertrain mechanism of construction machinery
such as excavators consists of components including acontrol valve, piston pump, travel motor, swing motor,
and cylinders. The fact that Kayaba is one of the few
manufacturers that manufactures all of these product

Value Creation

with a fusion that brings together Kayaba’s strengths ofhydraulic technology, electric controls, and sensing
technology.
In mini excavators, we are working on load sensing
in order to respond to market needs such as low noise,
low fuel consumption, improved operability, and attachment diversification, as well as the increasingnecessity of environmental compatibility. Load sensing
provides benefits including making simultaneous or
combined operations that depend on operator’s experience easier, conserving energy, and making
electrification and automation possible without affecting the load. For social needs such as SDGs and carbon
neutrality, we are moving forward with efforts for the
next generation, such as the research and developmentof electrified products.

Original Technology that Makes SophisticatedControl a Reality
In response to automation and increasingly complex
needs, we are continuing with the development ofelectronic control models of hydraulic equipment andthe creation of product lineups. Going forward, throughthe upgrading of electronic control systems, we will
strengthen our ability to make proposals in line withtechnological trends such as remote operation, automation, and unmanned operation.
The control valve is likened to the “brain” of a pieceof construction equipment. It controls all types ofactuators (a drive device that converts energy in a
linear or a rotary motion by means of a hydraulic orelectric motor), and smoothly performs movements
such as driving, turning, and extending or detracting
the arm. According to that analogy, the pump would
function like the “heart,” and it is there we will generate new value by making advanced controls possible*Load sensing: A system in which the load sensed by the valve is sent to thepump. The system is able to adapt the flow rate to the pressure required for
operation.

Data

Market Trends and Kayaba Technologies

Medium-Term Management Plan
2023

2020
TrendsComputerization/Introduction of ICT

Excavator

AnalogStrategy

Kayaba Group’s Business Overview

Technological Strategy

Use of IoT and big data

Hydraulic pilot control

Automation, remote work andaddressing environmental issues

Digital ▶ Electromagnetic proportional control

Respond to exhaust gas restrictions
Expand pump lineup
Introduce electronic controls for control valves
Improve maneuverability and durability,
reduce noise and decrease costs

TrendsLower noise and fuel consumption, improved operability,
safety, and ability to respond to multiple operations

Respond to attachment diversification and electrification

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

Develop load sensing system
Expand lineup
Introduce electronic controls

Mini-excavator

KAYABA Group Report 2022

20

Business Outlook for the Kayaba GroupSpecial-Purpose Vehicles Division■ Main Products

Concrete mixer truck

Inside the drum

Concrete pouring chute

Product Lineup■ Market Share

Basic strategy

Concrete mixer trucks, granule carriers,
pruned tree shredder trucks, specialfunction
vehicles, tilting drum mixingmachines

Source: Kayaba data (As of March 31, 2022)

Concrete Mixer Truck• Achieve continuous growth, aim to bea business that makes our employees
feel pride.

Market sharein Japan• Undertake business that is kind to the planet
and to people

86%

Business Strategy
The Special-Purpose Vehicles Division strengthens its
profit structure through the development of high-value-added products for domestic market needs, andaccelerates the research and development of new
products that can contribute to the decarbonization ofsociety as well as next-generation products in collaboration with other business units. Overseas, it isadvancing with the development of the foundation fora special equipment global system through the formulation of new overseas business plans.

FY2021 Business Environment and Performance
The Special-Purpose Vehicles Division focuses on concrete mixer trucks, and shipping was reduced moving
into second half of the fiscal year due to the impact of
the shortage of semiconductors. Yet with the recovery

from the impact of the spread of COVID-19 infections in
the previous year, sales increased 10.5% over theprevious fiscal year. However, segment profits declined
due to the sharp rise in the steel material market.

Net Sales*1

Segment Profits*2(¥ million)(¥ million)

1,2００

12,０００

9,559

9,109

8,602

8,270

9,161

896
737

2017

2018

803

6００

6,０００

０

701

948

2017

2018

■

2019

2020

2021

０

(FY)
■

2019

2020

2021

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

21

KAYABA Group Report 2022

(FY)

External Assessments (FY2021)
Awards List

April 2021

Name of award/certification

Technical Development Award

Japan Fluid Power System
Society

Development of “ASTRIC,” fully active
suspension system for railways

KayabaQuality Excellence Award

General Motors

Fifth Consecutive YearKYBT (Thailand)

S Class, Businesses withexcellent energy conservation

Agency for Natural Resources
and Energy

Installation and enhancement of anenvironmental maintenance system

KayabaQCDS Best Performance Award
Regional Quality Award

Jatco

KayabaQCDS A Rank Award

JATCO (Guangzhou)
Automatic Transmission

KIMZ (China)

QCDS Best Performance Award
Regional Quality Award

Jatco (Thailand)

Received award every year since theestablishment of JTL (eighth time)

Superior Product Quality Award

Nissan Motor

Manufacture of camshaft bracket installed
KYB-YSin engine

Global Supplier Award

Bosch

Fourth time

TakakoFY2021 SQEP* Platinum Level

Caterpillar

Yearly quality maintenance, on-time
delivery rate

KIMZ (China)

Excellent Technology Award

Aisin

An external proportional solenoid
adjustable damping force shock absorber

KayabaGreen Industry (level 3)

Thailand Ministry of Industry

Awarded to companies that have extensively introduced environmental
management systems

KYBT (Thailand)

Top Performance Award

Bosch Rexroth

Mobility-related Component
Prize in the Super Monozukuri
Component Awards

Nikkan Kogyo Shimbun

An external proportional solenoid
adjustable damping force shock absorber

KayabaGifu Inventors Exhibition Gifu
Textile Association President
Award

Gifu Inventors Association

Patent No. 6788395 (Invention involving
the Mini-Motion Package)

KayabaAI & Robot Committee Special
Award

Mobile Computing Promotion
Consortium

Development of Smart Road Monitoring

KayabaQuality Excellence Award

Caterpillar

Improvement of the quality of hydraulicexcavator components

KYB-YS

Excellent Quality Award

Sumitomo Heavy Industries(Tangshan)

FY2021 SQEP Gold Level

Caterpillar

Excellent Supplier

Sany Heavy Industry

KIMZ (China)

Excellent Supply Award

Hitachi Construction
Machinery (China)

KIMZ (China)

2021VA-VE&COST KAIZENYAMAHA MOTOR VIETNAM

Cost reductions by shifting to domestic
production of inner tube IH

KMV (Vietnam)

Level A

Toyota Co-operation Club

Safety activity (Third consecutive year)

KYBT (Thailand)

Safety best practice

Toyota Daihatsu Engineeringand Manufacturing

Safety activity (Third consecutive year)

KYBT (Thailand)

Best Supportive Award

BSH

Quick response including QCD (Third
consecutive year)

KMSB(Malaysia)

February 2022

March 2022

TAC (America)

Data

January 2022

KST (Thailand)

Value Creation

December 2021

Kayaba, KMS

KIMZ (China)
Yearly quality maintenance, on-time
delivery rate

Kayaba*SQEP: Supplier Quality Excellence Program
Note: KMS: KYB Motorcycle Suspension Co., Ltd., KYBT: KYB (Thailand) Co., Ltd., KIMZ: KYB Industrial Machinery (Zhenjiang) Ltd., KST: KYB Steering (Thailand) Co., Ltd., KYBT:KYB (Thailand) Co., Ltd., TAC: Takako America Co., Inc., KMV: KYB Manufacturing Vietnam Co., Ltd., KMSB: KYB-UMW Malaysia Sdn. Bhd.

Technical Development
Award (Jun. 2021)

QCDS Best PerformanceAward, Regional Quality
Award (Jul. 2021)

QCDS A Rank Award(Jul. 2021)

Green Industry (level 3)(Oct. 2021)

Top Performance Award(Oct. 2021)

Quality Excellence Award(Nov. 2021)

KAYABA Group Report 2022

Strategy

Yamaha Motor

Kayaba Group’s Business Overview

November 2021

AwardedTechnology Development Award

August 2021

October 2021

Notes
Development of KADS, an electronicallycontrolled suspension system for
motorcycles

June 2021

July 2021

Awards side

Introduction

Year and month22