KAYABA Group Report 2022
April 1, 2021 – March 31, 2022

Introduction
Introduction

Corporate Statement

Our Precision, Your Advantage
Becoming a corporate group that delivers total satisfaction to our stakeholders.
Through the provision of products with reliable quality in manufacturing, Kayaba strives to contribute to theadvancement of customers, shareholders, business partners, and society. And with a strong awareness of ourcorporate social responsibility, we plan to raise our corporate value in order to continue being an exemplar thatis trusted by people around the world.
We believe it is our purpose to build a core of value creation. By returning to the spirit of originality that we haveinherited from our founder, we will continue building a history of focusing on a prosperous future for all.

VISION
What the Kayaba brand offers the world

Monozukuri (manufacturing skill) that brings happiness
Kayaba’s aim is to support the development of society through the joy of monozukuri, and make people happier as a result.

MISSION
The mission of the Kayaba brandMonozukuri that goes the extra mile
Kayaba will remain an enterprise that delivers value to clients and markets by making use of
the reliable technical expertise we have built up over the years.
Through our efforts, we provide monozukuri that goes the extra mile to offer our clients new values
and greater satisfaction than they have ever known.

VALUE
Value the Kayaba brand creates

Technology for comfortable living
Value we can feel: Comfortable living, the joy of monozukuri
Value we can use: Reliable quality

The value Kayaba promises to
its end users:
A higher level of comfortable living
through our creative technology
and dedication to productdevelopment.

01

KAYABA Group Report 2022

The value Kayaba promises to
its clients:
Reliable quality that comes fromthinking of end users as our clients.

The value Kayaba promises to
its employees:“The joy of monozukuri” thatcomes from knowing
they are changing the world.

01 Corporate Statement
03 The Origin of Kayaba
05 Kayaba Performance Highlights
06 Kayaba: Driving Toward the Future

Strategy
07 Message from the President
13 Value Creation Process
15 Business Outlook for the Kayaba Group		

17 Automotive Components Operations

		

19 Hydraulic Components Operations

		

21 Special-Purpose Vehicles Division		 22 External Assessments (FY2021)

Strategy

09 FY2020-2022 Medium-Term Management Plan

Reporting Period
FY2021 (April 1, 2021 to March 31, 2022)
Note: Includes some activities and information fromoutside the above reporting period.
Scope
The report covers KYB Corporation and subsidiaries
and affiliates in Japan and around the world.
Note: Environmental data is for KYB Corporation(Sagami Plant, Kumagaya Plant, Gifu North
Plant, Gifu South Plant and Gifu East Plant, and
Mie Plant) unless otherwise annotated.

23 Monozukuri
27 ESG Management		

30 Corporate Governance		

37 Environmental Initiatives

		

42 Social Initiatives

Value Creation

Date of Issue
November 2022

Value Creation

Forward-Looking Statements
This report includes plans and forecasts as of theissue date, and estimates based on our businessplans and management policies. Forward-looking
statements are based on information available at thetime of report preparation, and actual results may
differ depending on changes in relevant conditions.

Data

Company Data
51 Financial Highlights
53 Kayaba in Globe
55 Corporate Information
56 Shareholder Information

Introduction

Introduction

Editorial Policy
The Kayaba Group has issued this integrated reportsince FY2019 to communicate its management
policies, business strategies and CSR activities toshareholders, investors and all other stakeholders.
We hope to create new opportunities for dialogue by
covering business performance, management
strategies and other financial information, as well as
the environment, society, governance (ESG) andother non-financial information in order to inform
readers about our efforts to increase corporate value
over the medium to long term. For a better reading
experience, we will continue to improve the reportbased on stakeholder feedback. We welcome yoursuggestions.

Corporate Statement

Contents

Cover Design
We created the design based on the combined flowof all the kinds of technology that underpin Kayaba’s
core technologies of vibration and power control. It
expresses the spirit in which the Company wasestablished—one of being inspired by the mysteriesof the universe—and our intention to bring our
founder’s the imaginative power and drive to “investigate technology” into the future.

KAYABA Group Report 2022

02

Introduction

The Origin of Kayaba

The Spirit of Originality—
Kayaba’s origin in manufacturing skill,
and the key to creating the future
The history of hydraulics traces back to Europe at the start of the 1900s. The shift from mechanical systems
made from combinations of wires and gears towards hydraulics was progressing, and it entered the stage as agroundbreaking new technology. At that time, Japan was seen as being about 20 years behind large countries
that were more advanced in technology, such as Germany and Britain. Shiro Kayaba (our founder) becameaware of hydraulics from a description in lecture notes for the University of Tokyo’s Arms Manufacture Faculty,
and the technology immediately captured his interest.
“Everything in use is still developing, a legacy from the past. The world continuously seeks that which isnew. The unique ability of humankind to progress lies in its constant search for perfection.” Shiro Kayaba leftthese words behind, and they are the key to our future. Kayaba is returning to our origin as a company rooted
in the craftsmanship of manufacturing in order to contribute to the creation of a prosperous future throughingenuity and constant improvements and the lasting development of society. And from there, we will keep
moving forward.
For details, see “KYB History” on the websitehttps://www.kyb.co.jp/english/company/history.html

1919~

1945~

It started from our founder’screative approach

Entering new fields with creative technologies

In 1919, Shiro Kayaba founded
Kayaba Research Center at the
young age of 21. He invented
and proposed a great deal ofhigh-performance hydraulicproducts that surpassed thosefrom Germany and Britain,
reaching up to 100 patents thatwould support the continuationof the ensuing company. The
DNA of this extraordinary
inventor who contributed tothe development of hydraulictechnology in Japan was thestart of everything that led up
to the present day.

[The origin of Automotive Components (AC) Operations]
Directly following WWII in the latter half of 1946, the Company
started research and development on a new product called a shock
absorber (SA) in collaboration with automobile manufacturers. The
Company would receive an order for 4,000 SA for use in the jeepsof the U.S. forces. Following that, the growing popularity of automobiles would cause the share of the product to expand.
[The origin of Hydraulic Components (HC) Operations]
In 1951, The Company began development of oil dampeners forrailways cars in collaboration with Japanese National Railways (nowthe Japan Railways Group). We have established a strong customer
base with a variety of partners including automobile manufacturers,
motorcycle makers and construction machinery companies.

[The origin of Special-Purpose Vehicles Division]
In 1953, the Company began assembling and mounting the highlow type concrete mixers imported by Fuji Bussan Co., Ltd. from
CTM in the United States onto trucks. This was the start of the shift
to domestic production of concrete mixer trucks. In 1959, production began on the ground-breaking “tilting mixer truck,” which has adrum portion that could rotate, thereby using gravitational pull toagitate fresh concrete.

03

KAYABA Group Report 2022

1990~

During Japan’s prolonged economic
downturn, we actively expanded
overseas, with the goal of becoming“No. 1 Globally.” Further, we implemented a total cost-cutting program
Company-wide, and continued tostrengthen our operations in an effort
to reduce lead time by half. In 2006,
we gathered engineers from overseas
for training to increase their understanding of monozukuri (Japanesemanufacturing expertise), safety, andquality, thereby enhancing humanresource development.
We established the Digital
Transformation Improvement
Department in 2019, and it is utilizing
various digital technologies to support
the creation of new ideas and businesses, as well as to improve quality andproductivity, while building Kayaba’s IT
systems in line with global standards.

Value Creation

1980~

In the 1990s, Japan’s bubble economy
collapsed and the times changed
drastically. Kayaba stated that it wasaiming for a slim and resilient management structure, and focused its
efforts on transforming its businessstructure and strengthening its
financial position.
Harnessing the power of the Group,
we developed new products andcreated new businesses, in addition
to enhancing productivity throughout
our operations by promoting total
productive maintenance (TPM; anapproach that engages all employees
in production maintenance andproduction management) and total
quality control (TQC).

Driving toward further growth

Strategy

In the 1960s, hydraulic excavator
technology was introduced to Japan,
and its history is essentially one withthe history of the evolution of
Kayaba’s hydraulic products. In 1984,
we started production of the“Hydraulic Cylinder KCH,” overcoming
simple but challenging issues such as
stopping leaks, rust, and brakeage. It
would go on to become a flagshipproduct. Starting in the mid-1980s,
Kayaba stayed ahead of our competitors by turning our focus to computerassisted engineering (CAE). The data
accumulated then continues to be
used as big data now with the introduction of digital transformation (DX)technology.

Improvement of management
structure and productivity gains

2000~

Data

2020~
Further evolution through core and digital technologies[The Evolution of AC Operations]
We are moving ahead with the development of products that willcontribute to a decrease in the consumption of electric power
and fuel in an electric vehicle society, such as fully active suspension systems and next-generation hybrid suspension systems
that employ electronic controls and electrification technology.
p. 18, 24
Heritage oforiginality

Introduction

The Origin of Kayaba

High value-added products[The Evolution of HC Operations]
We are working on product development that can contribute to asustainable society, such as adding electronic control functions
that respond to the needs for remote/automatic operation,
increased high efficiency, and improved operability. In addition,
we are expanding load sensing system devices and optimizing
breakdown prediction and predictive maintenance.
p. 20, 25

Into thefuturenality[The Evolution of HC Operations]
We have started accepting orders for e-mixer III, which inaddition to providing the conventional environmental performance, has a touch panel monitor installed which improves
convenience by indicating the state of the drum and the operation condition history while also having a maintenance information
notification function. These features increase ourp. 21
customers’ safety and security.

KAYABA Group Report 2022

04

Introduction

Kayaba Performance Highlights

Financial
Net Sales

Segment Profit(¥ million)(¥ million)

50０,０００393,743

412,21440０,０００3０,０００388,360

381,584

22,949328,037

17,5752０,０００30０,０００
20０,０００

24,71322,01013,325

1０,０００10０,０００
０

2017

2019

2018

2020

2021

(FY)

■

Operating Profit (Loss)

０
(FY)
2019
2017
2020
2018
2021
Note: Segment profit is calculated by deducting cost of sales and selling, general■and administrative expenses from net sales.

Profit (Loss) Attributable to Owners of the Parent(¥ million)(¥ million)

5０,０００8０,０００30,001

20,885

18,2974０,０００0（百万円）■
50０,０００

2018

2020

2021

(61,879)

393,743

412,214

2019

2020

2021

(FY)

388,360

381,584

40０,０００(¥ million)

22,576

17,047

20,826(4,482)(4,999)(6,281)-2０,０００
０(16,386) (13,616)
2017
2018

(21,505)
2019

2020

2017

2019

2018

2018

2019

17,575
13,325

43.7

35.3

33.9

40
1０,００
０

25.9

2020

CF from investing activities

20(32,711)
2021
2021

(FY)

24,713(10,871)0
10０,０００5０,CF００from０ operating activities（百万円）■
3０,０００2017（%）
2０,０００60

24,247

1,146

10,418-8０,０００

22,949Ratio of Equity
Attributable
22,010 to Owners of the Parent

328,037
29,252

2０,
０００
20
０,０００

■
-4０,０００（百万円）

22,549(24,757)-4０,０００(40,298)
2017

Cash Flows (CF)4０,０００30０,０００17,087

0(28,496)-5０,０００

15,202

０

（年度）
(FY)

CF from financing activities

■
０
（百万円）

2017

2018

18.1
2019

2020

2021

（年度）

2017

2018

2019

2020

2021

(FY)

8０,０００30,001
20,885

18,2974０,０００Non-financial
0

40
０
０
-5０,
０,０
０
０
０

0.687
2021

174,115

169,557

154,462
29,252

22,57642,92838,433
17,047
96,944
91,271

10０,０００
20,００００0.740 △40,2980.778
2019
2020
2018

173,288■０,０００
30
（百万円）
2040
０,０
, ００

24,757
Average Number of△Paid
Holidays, Days Actually Taken and-4０,０００
Rate
of Usage△28,496

0.674
2017

2018

20,82632,12333,68924,247

77,934

81,2102020 1,146

10,418
2019

2021

（t）

(Days)

0.800（年度）-8０,０００

0.600

25

■

68.1
2018

12.90

13.32

△61,879
71.7

2019

62.8
2020

20
15
（%）

0.400

60
10

0.200

5

(FY) ０

66.4
2017

40

０

14.01

76.9

(%)

2021

80
（年度）

15.19

60

12.29
40

43.7

2017

20

33.9
2018

35.3

2019

2020
25.9

(FY) ０2021

０Basic units
subsidiaries ■ Overseasc subsidiaries■ KAYABA ■ Domestic△4,482△4,999△10,871
Note: The scope is the six plants of Kayaba,
five domestic△6,281 subsidiaries, and 17
overseas△subsidiaries
16,386 △13,616-20,０００△21,505■ Average number of paid holidays actually taken per employee■■

Number of Employees (Consolidated)

Disabled Employment Rate / Legal Employment Rate of０
Personswith2017
Disabilities
2019
2020
2018
2021

-40,０００2017(Person)
20営業活動によるCF,０００

14,75420182019

投資活動によるCF

15,427

15,439△32,711

2020

2021

（年度）

財務活動による CF

14,718

20

（%）
2.5

2.3

14,4722.2

1０,０００

2.2

2 .0

1.97

2017

2018

■

KAYABA Group Report 2022

2019

2020

2021

(FY)

25
1 .5

66.4
2017

20
Disabled
Employment Rate

（年度）

2.36
2.3

2.11
1.88

1.86

68.1
2018

71.7
2019

（日）
０

Usage rate

18.1

2.0

05

22,5490Total CO2 Emissions: Scope 1 + Scope 2（t）

17,087

15,202

76.9
2020
62.8

2021

Legal Employment Rate of Persons with Disabilities

15.19
14.01
Note: The scope of the paid13.32
vacation anddisabled employee rates is for KYB
12.90
15
12.29
Corporation.

（%）
80
(FY)
60

40
10

Introduction

Kayaba: Driving Toward the Future

Introduction

Kayaba Performance Highlights

Strategy

Kayaba: Driving Toward the Future

Published March 16, 2022, in the Nihon Keizai Shimbun (Nationwide edition)

Value Creation

Returning to our origin
in the craftsmanship of manufacturing
to launch forward into the future
In October 2018, we announced nonconforming acts of rewriting performance
inspection results data for some of our seismic isolation/mitigation oil dampers.
We saw the valuable trust that we’d built disappear in just an instant. That was

Datafour years ago. Since then, we’ve focused all our strength on building a corporate
culture of total compliance and open, transparent communication.
We have adopted a common name for the Company to clarify our spirit and origin,which have been rooted in the craftsmanship of manufacturing since our establishment, and for all employees to turn toward the future together. For those reasons,
we proudly restore the name “Kayaba.”
Each employee will return to our origin, extensively share their ideas with eachother while strengthening their understanding, and strive toward a sustainable
future with the spirit of Kayaba’s manufacturing craftsmanship.

KAYABA Group Report 2022

06

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

Value Creation

Monozukuri

Creating Value with Manufacturing CraftsmanshipThe origin of Kayaba traces back to the 1919 establishment of the Kayaba Research Center by our founder
and inventor, Shiro Kayaba. For over 100 years since then, we have continued to refine hydraulic technology.
Featuring advanced technology and high quality, the present-day our shock absorber enjoys a 13% global share.
Further, though efforts for innovative manufacturing using DX and new business creation, the Group will work
together to provide manufacturing craftsmanship that will contribute to finding solutions to various issues suchas environmental/social problems, the promotion of carbon neutrality, and the achievement of the SDG targets.

Technology Development
In their efforts to develop technologies and products,
our research centers, business units, and group companies collaborate to combine vibration control andpower control technologies with all underlying technologies, such as electronic control technology. When
compared with other driving methods such as electric
power or pneumatic pressure, hydraulics can deliver amore powerful output from a small device. They excel
in responsiveness, and are characterized by their easeof control. And even in the current era of rapid technological evolution, we believe that hydraulic technology
will make a valuable contribution to the development ofsociety. Therefore, we are not only further deepening
our core technologies, but also responding to changing
times by adopting cutting-edge technologies such as
AI, IoT, the promotion of DX, and advanced simulations
to promote the systemization of products. We are also
taking on the challenge of developing the next generation of hydraulic equipment that offers both higher
efficiency and better safety, such as automated ICT
construction machinery using electronic control.

Conceptual Diagram of Kayaba’s Technology
Value creation
Automobiles

Railroad

Industrial
vehicleEquipment

Motorcycles

Construction
machinery

Agricultural
machinerySpecial-purpose
vehiclesHydraulicElectronic control
Motorization
SystemMaterials
Testing andevaluation
Monozukuri(Production technology)

SystemTechnology
Elemental
Technologies

Leading-Edge
Technologies

AI/IoT
Advanced simulations
Digital technology

Electronic
ControlTechnology

Vibration
controlPowercontrolCore Technologies

Technology Development System
Kayaba uses its engineering, global production, andsales sections in concert to promote new technology
and value creation while actively engaging in the development of advanced technology aimed at the resolutionof social issues such as energy conservation and the
reduction of materials with environmental loads.
At our Basic Technology R&D Center and Production
Technology R&D Center, we investigate and analyze
long-term environmental changes and the accompanying changes in the needs of society and our customers,
and conduct R&D focused on the ideal for futuretechnologies based on our forecasts and the creationof road maps that clarify the related long-term strategies. In basic research, we are conducting research forthe next generation of businesses and products as wellas underlying technology research, and converting theresults into tangible assets by, for example, developing
an integrated system that combines electronicallycontrolled suspension and electronic power steering
technologies for the self-driving vehicles of the future.

23

KAYABA Group Report 2022

At the same time, the engineering divisions of eachbusiness unit are also improving the performance andlowering the cost of existing products, conducting
original product development, and moving them into
mass production.
In the Engineering Div., we are conducting basic
research, future technology research, and underlying
technology research while using our intellectual property
strategy and digital technology. We then use this research for product development and mass production at
our business units and group companies in a processthat accumulates and upgrades technology on a Groupwide basis. In addition, we are using the technologies
and know-how we have accumulated from our R&D tomove toward the in-house production of manufacturing
equipment and metal molds. Further, seeking to optimize and accelerate our R&D, we are forcefully
engaging in efforts for efficiency and productivity improvements, such as data analysis using AI, in addition
to actively promoting DX throughout the Group.

Kayaba’s Technology Development Process

Control, vibration, information and communications, electrical/electronics, mechanical elements,
sensors, surface treatment, heat treatment, processing, assembly, inspection, automation, etc.
Introduction

Engineering Division(Basic Technology R&D Center/Production Technology R&D Center)
Basic research

Future technology

Elemental technology
research

Intellectual Property
Department
Intellectual property
strategy

CAE* Promotion Department/DX Improvement Department
AI/IoT

Digital technology

Simulation technology

Strategy

Mass production

Product development
Each business units/Group companies*CAE: Computer-Aided Engineering. The use of computer simulations to resolve issues faced by technical departments.

Vibration Control: New EV and Automation Compatible Services Using DX
develop low energy consumption electric pumps that
output only the required pressure and output as well as
highly efficient electric pumps for e-Axle.
e-Axle poses gear lubrication and motor/inverter
cooling challenges. We believe that, through the development of electric pumps that respond to theseissues, we can contribute to the reduction of electricity
and fuel consumption in an EV-base society.

High Safety and Comfort Required by Mobility Shift

Reducing Electricity and Fuel Consumption

Electronic
control
Sens

Think

Act

Pursuing safety and comfort
in the automatic operationand EV era with the advanced
integration of our core technology
and electronic control systems

Active Suspension
SystemNext Generation Hybrid
Suspension System•Pursuit of safe function /ultimate flat ride

•Next generation vehicle
height adjustment +suspension system
デジタル技術•Improve aerodynamic
performancee-AxleTransmission Motor
axle

Inverter

M

Data

In Europe, China, and the ASEAN region, the demandfor EVs and new energy vehicles is growing, spurred
on by governmental policies.
Kayaba offers products such as electric power steering and transmissions as well as CVT vane pumps thatlow fuel consumption needs for automobiles.
Furthermore, we are using the electronic control andelectrification technologies we have fostered toContributing to reducing theelectricity and fuel consumptionof EVs/mobility with an advanced
integration of our core technology
with electronic control andelectrification technologies

Electric Pump
•Providing electric pumps for lubrication/cooling for electricvehicle equipment•Highly efficient pump/motor control technology•Proposals for oil pressure / hydraulic system maintenance•Reduce electric power/ fuel consumption•Improve verticalmovement

製品開発

Electronic control
Suspension for Automobile

Vehicle heightadjusting suspension

KAYABA Group Report 2022

Value Creation

Monozukuri

Initiatives for New Product Development

24

MonozukuriPower Control: Industrial Machinery—Electronic Control and Hydraulic Systems

Remote control, automatic operation, and increased
efficiency of construction machinery

Kayaba’s strength lies in that we are the only manufacturer
with a full lineup of hydraulic products for construction
machinery—valves, pumps, motors, and cylinders—inaddition to handling electronic control systems.
Currently, we are working in such ways as expanding ourlineup of pumps and load sensing devices and developing
electronically controlled hydraulic systems to strengthen
our ability to respond to such customer needs for construction machinery, such as automation, unmanned operation,
increases in efficiency, and improvements in operability.
Further, our newly developed sensors perform detection
and sensing of leaks in hydraulic equipment, and combining
them with DX technology makes breakdown prediction andmaintenance a reality. This means that construction machinery that has Kayaba-made products installed can be used
for a longer time, which in turn contributes to a moresustainable society.

Electronic
control
Sens

The only manufacturer
with possible systemcompatibility

ECU +Hydraulic equipment

Act

Think

Self-driving
Remote control
Hydraulic
System
Pump

Valve

P

A system for supplying the required flow/pressure

Improve operability
Low energy consumption

Load Sensing

Information System

Service

In-house development

Breakdown prediction
Oil leakOily condition
Optimum maintenance detection sensor detection sensor
Condition monitoring

Intellectual Property Strategy
In the Kayaba Group, our R&D departments and intellectual property departments collaborate to actively generateintellectual property and conduct the appropriate protection and usage thereof. These intellectual property
initiatives create growth for our business and increase ourcorporate value.
R&D departments and intellectual property departments
regularly hold an Intellectual Property Strategy Meeting, inwhich they discuss R&D themes from an intellectual
property perspective. In these meetings, the participants
think of every single invention from the results of the R&D
themes and attach them to patent applications. Throughthis procedure, we actively apply for patents, obtain rights,
and protect our original products and technologies.
As a result of these initiatives, we hold the highest
number of patents worldwide that are related to protecting our major products of shock absorbers and hydrauliccylinders.
In recent years, we have been obtaining patents bystrategically generating inventions based on our technology strategies and product concepts. Also, we work toinventory the patent rights we own and to apply forpatents in carefully selected overseas countries. We
obtain and manage patents necessary to protecting the

global competitive edge of our business.
Furthermore, we are working on a new initiative forusing information on intellectual property in research anddevelopment. In order to create the technology of the
future, we analyze and understand technology trends andthe position of Kayaba and the competition using intellectual property information from the early stages of R&D,
pinpoint the strategy for each technology, and incorporatethat into our R&D. Also, we use IP landscaping* to formulate our technology strategy, and for the purpose ofbuilding a patent portfolio for our core technology, we havebeen testing cooperative IP landscaping that links theengineering departments and intellectual property departments of each business unit since 2021.
In initiatives to protect our corporate and productbrands, we are responding with formal legal objections tocounterfeit trademark applications, particularly in China,
and exercising our trademark rights against counterfeit
products such as shock absorbers. In these ways, we areendeavoring to maintain and increase the value of ourcorporate brand.
*IP landscaping: To create proposals for strategies that contribute to intellectual
property management by analyzing intellectual property information.

Ratio of Domestic and Overseas Patents
Retained (As of March 31, 2022)

Number of Related Patents Retained(As of May 12, 2022, based on our own research)

Other 4%

Shock AbsorberHydraulic Cylinder

800

100

Southeast Asia 1%

629

China 8%80

600

America 13%
Europe 5%

2,698

435

Japan 69%
400

０

25

KAYABA Group Report 2022

60

325

40
200

86

134

117

96

Company B
Company D
KayabaCompany A
Company C
Company E

44

36

35

31

30

20
０

Company b
Company d
KayabaCompany aCompany cCompany eProducts Built with the Environment in Mind
Recycling greenery

Pruned Tree Shredder
Truck

Introduction

1.	Substantially improving
the efficiency of pruning
labor and transport
related to roadside trees
2.	Effectively using woodchips for biomass power
generation, soil improvement additives, mulchingmaterial, and more
(applications for woodchips)

Shreddedwood chips

Strategy

We believe that conducting environmentally friendly manufacturing activities is essential, and promote R&D thatincorporates environmental considerations up to the
manufacture of a product. Centering on the Environmental
Regulation Response Group established in FY2020, weare responding to the REACH Regulations* as well as
sharing and seeking out information from all countries
related to social environmental regulations, such as theelimination of Pb.
We are working on products that contribute to renewable energy, energy conservation, and the reduction of
CO2 from the viewpoint of achieving carbon neutrality by
2050.

REACH Regulations： REACH stands for Registration, Evaluation, Authorisation
and Restriction of Chemicals. It is an EU law intended to protect human healthand the environment while fostering competitiveness within the European
chemical industry.

*Innovative Manufacturing for the Next Generation

Self handling innovation plant 2030

Data

Pursuit and evolution of a Kayaba production system with a core of digital technology
Innovative production
processes
Present

Component inventory

Construct a compact, integrated production line that simultaneously completes
manufacturing from processing to assembly→ Automated in ways such as AI/robots that inspect production processes, unmannedInterim inventory

Inspector

Imageinspection

Product inventory

Back to thestarting point

Eliminating inefficient inventory
Eliminating inefficient operations

Innovative equipment
management

Transport

Transport

Component transport

MachineProduct transport

Shipping

Transport

Shipping

Transport

Eliminating inefficient transport

Construct a next-generation TPM system that can respond to upgraded equipment groups→ Analyze all kinds of equipment data in real time, predict and prevent the occurrence ofabnormalities

Analog, manual, and experience → Digital, automation, and AI analysis

Real time centralized
management

Use of DX
Abnormality detection
Quality, equipment breakdown,
production progress→ Places where “things” can’t stop

Prevention

Intelligencegathering/analysis
Education / Human
resource training
TPM of next-generationequipment

KAYABA Group Report 2022

Value Creation

Next-generation Innovation Plant (Concept)

In production process innovation, automated guided
vehicles (AGV), robots, and imaging examination are incorporated into processing to create a highly efficient
production line, allowing for unmanned operation andreduced inventory.
In innovative equipment management, we will set up asystem that conducts real time centralized management of
all kinds of data from equipment in operation while predicting the occurrence of an abnormality before it happensusing AI. And we will completely prevent issues, providing
training for and implementing next-generation total productive management (TPM; an approach that engages all
employees in production maintenance and production
management) that is fitted to upgraded equipment groups.
Through the Ship’30 initiative, we are building a worksite
where processes run flawlessly on highly efficient production lines (through production process innovation) with highreliability (through cutting-edge equipment management),
and aiming to bring our unmanned plant into operation
globally in 2030.

Monozukuri

We have worked to evolve the sites of Kayaba’s manufacturing craftsmanship starting from conveyer belt
manufacturing in the post-WWII period, responding to
widely changing social conditions and flexibly moving frommass production to high-mix low volume production.
Kayaba is still looking toward the next generation. We
have started work on Ship’30, an initiative that will further
evolve manufacturing sites. The Ship’30 initiative is aimed at
the breakthrough achievement of constructing an unmanned plant by 2030—an innovative plant that will be fully
self-sufficient with a foundation of digital technology.
The initiative focuses on two major aspects of innovation:
production process and equipment management. It will
make possible an innovative manufacturing method with acompact production line that perfectly synchronizes processing and assembly. We are aiming to create a plant that
ultimately will not rely on humans at all, and that minimizes
transport, inventory, and work at the manufacturing site with
innovative equipment management using the latest technology yet retaining the basics of equipment maintenance.

26

Value Creation

ESG Management

Creating Value Through ESG Management Promotion
Kayaba sets ESG management as the foundation of its policy development. We are not only responding toenvironmental needs, but also promoting the development of products that contribute to a sustainable society
and connecting the resulting business opportunities to an increase in corporate value. Our ESG Promotion
Office is at the forefront of developing basic environmental, social, and governance policies enacted
throughout the Group. In addition, we are building trust through collecting data on all of our in-house ESG
initiatives and fulfilling our reporting accountability to our stakeholders.

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.

Basic Policy for ESG• With ESG management as the basis for formulating policies, we will establish an overall picture(our values, business model, sustainability, growth potential, etc.) for our value creation cycle.
• We will also reexamine existing initiatives in terms of ESG initiatives and communicate them outside
the Company in order to foster trust.

Sustainability Promotion System
The promotion of ESG management is essential for a
globally operating corporation to continue achieving
sustainable growth. The standard for management is tonot simply pursue profits, but to also contribute tosociety.
At Kayaba, we are also seeking to strengthen our
promotion of initiatives for ESG related to a sustainable
society. To that end, we established the Sustainability
Committee, an organization that oversees the entire
Group, in March 2022. The President serves as theCommittee Chair, and it is composed of the executives
in charge of ESG promotion, the general managers of
production, engineering, sales, accounting, safety,
purchasing, and others as well as the general managers of all business units. Through debating issues
related to sustainability such as policies and management/measures for progress toward achieving targets,
we are aiming to make the Kayaba group a corporate
entity that contributes to society.

27

KAYABA Group Report 2022

Board of Directors /Board of Executive Officers
Report tosuperiors

Approve/supervise
Proposals/
reportSustainability Committee
Chair:All practical business
committees

President

Proposals

Member: ESG Promotion
Executive Office rand
12 other members
Secretariat: ESG Promotion Office

Matters todecideInform inside and outside
the Company

Implementation/
follow up

Participation

All functions anddepartments,
all offices/plants

Outline of Activities
Kayaba’s initiatives

Related SDGs

Environment

Environmental
preservation

Environmental Management
Measures against climate change
Mid- to long-term Policy for Achieving Carbon Neutrality
Environmental Impact by Business Activity

Labor practice

Human Development
Respect for Human Resources
and Diversity work-life balance
Promotion of Health Management
Creating a Safe, Secure Working Environment

Human rights

Respect for Human Rights

Qualityassurance

Quality Management

Fair Business
Practices

Supply Chain Management

SocialStrengthening Our Management Foundation
ESG education and human resource development
External communication to foster trust

Value Creation

Corporate governanceInternal Control and Compliance
Risk Management

Strategy

Corporate
governance

ESG Management

GovernanceIntroduction

Key issue

Initiatives to Strengthen our Foundation
SDGs as part of our ESG education. We are introducing
specific efforts for the SDGs that anyone can easily get
involved with, and provide enlightenment on issues
such as carbon neutrality and diversity. Also, we started an education course (e-learning) entitled “SDG
Basics” for all employees in FY2021. In these ways, weare educating human resources who understand thelinks between their everyday work and the targets of
the SDGs, and have the ability accomplish their social
responsibility in their daily work.

Data

In July 2021, centered on the newly established ESG
Promotion Office, we set out to develop basic environmental, social, and governance policies across theentire Group and promoted the strengthening of thefoundation. In addition, we redesigned existing initiatives into efforts for ESG and actively provided
information inside and outside the Company, thereby
earning trust.
Specifically, we started providing a serialized article
in our in-house company newsletter on ESG and the

In-house Company Newsletter Article Content List (Aug. 2021− Mar. 2022)
We Can Start Right Now with SDGs
Aug. 2021 What are the SDGs

From an article ofin-house newsletter

Kayaba and the ESG Improvement Sect.
ESG Promotion Office was establishedon July 1

Sep. 2021

Let’s reduce carbon dioxide emissions! Efforts for Carbon Neutrality

Oct. 2021

Let’s reduce plastic waste!

Initiatives for Plastic Resource Circulation

Nov.2021

Work in happiness every day!

Reduce overtime and make time to enjoy life

Dec. 2021

Let’s Think about Diversity andUnderstanding!

Efforts to Respect Human Rights

Jan. 2022

What Is Carbon Neutrality?
(Fundamental knowledge)

Kayaba’s efforts

Feb. 2022

Let’s use our limited resources carefully Reducing industrial waste

Mar. 2022

Know the facts
The first step to a peaceful world

Enforcing human rights due diligence

KAYABA Group Report 2022

28

ESG Management

Response to TCFD
We are aware that taking measures against climatechange is one of the most important initiatives in which
the Kayaba Group should engage. During FY2022, wewill adopt the Task Force on Climate-Related Financial
Disclosures (TCFD) framework, planning to further
strengthen our efforts.

Going forward, we will understand the risks andopportunities that accompany climate change based on
TCFD recommendations, incorporate them into business strategies, and actively disclose information,
thereby endeavoring to increase corporate value.

GovernanceRisk Management

The Kayaba Group has established the Sustainability
Committee as an organization that formulates policies concerning management related to a range of environmental,social, and governance issues, including countermeasuresagainst climate change issues.
In addition to beforehand discussions on the policies andstrategies to be determined by the Board of Directors, theSustainability Committee also discusses management,
evaluation, and measures related to the progress of achieving
targets in order to fully demonstrate the supervisory function
and monitoring function that the Board of Directors is intended to accomplish. In FY2021, we discussed numerical targets
related to climate change (CO2 emissions volume*1 decreaseby 50% compared to 2018) and the establishment of anindustry ESG Working Team (one that will promote concrete
action on climate change issues in all business units).

The Kayaba Group has launched a working team to determineand start investigations into the respective risks and opportunities for Automotive Components (AC) Business, HydraulicComponents (HC) Business, and the Special-purpose Vehicles
Division.
Currently, the short-, medium-, and long-term risks andopportunities for each business unit are under analysis. Goingforward, we will commence quantitative analyses, such as theimpact on financial affairs, and release information in line withthe framework for information disclosure that is recommended by the TCFD.

Indicators and Targets
Kayaba has set forth the target of reducing CO2 emissions* by
50% (compared to FY2018) by 2030. We are actively pursuingthis goal in ways such as starting energy conservation activities at each manufacturing plant, introducing renewableenergy through the installation of solar panels, and reducing
the emissions of CO2 in logistics.
Under current circumstances, we have calculated the
Scope 1 and 2 CO2 emissions volume of 28 plants, including
five domestic affiliates and 17 overseas affiliates. Goingforward, we plan to calculate the Scope 1 and 2 as well as the
Scope 3 CO2 emissions volume of all 33 companies of the
Kayaba Group. In addition, we are working to bring the ratio ofrenewable energy use up to 15% by 2025, and construct a
production system with zero CO2 emissions volume.

Strategy
The Kayaba Group has the target of achieving carbon neutrality by 2050. We are working to achieve greenhouse gas output
reduction targets, taking measures to decrease materials withenvironmental load in our products, and developing productswith low CO2 emissions and that conserve energy. Also, we
have started to select and conduct qualitive investigations intorisks to business continuity, such as risks related to the supplyof energy and raw materials due to climate change and risks
due to the changes in consumer needs, as well as the business opportunities that will arise from their impact. Goingforward, we will analyze physical scenarios and transition
scenarios, and incorporate the results into our business strategies and management plans.

* Scope1, 2Targets and Actual Results
Targets
Year ofachievement

Details

FY2021

FY2021

3% reduction of CO2 emissions level (Scope 1 and 2) compared to FY 2020

-11.6%FY2025

Renewable energy usage rate of 15%

0.1%

FY203050% reduction of CO2 aggregate emission (Scope 1 and 2) compared to FY 2018

Numerical target of Kayaba (applicable to Kayaba’s six plants)

29

Actual results

KAYABA Group Report 2022

-16.2%

Value Creation

Corporate GovernanceCorporate Governance Principles
management structure, highly fair and transparent management
oversight centered on the Board of Directors, and continuous
efforts to strengthen and enhance our corporate governancebased on the Corporate Spirit and the following basic policies.

Introduction

In order to fulfill our corporate social responsibility to contributeto society as well as to meet shareholders’ expectations byrealizing sustainable growth and the increase of corporate
value, Kayaba works to ensure a speedy, efficient

Strategy

Basic Policies
1. We shall respect the rights of shareholders, and ensure the equal and fair treatment of all shareholders.
2. 	We shall take the benefits of stakeholders into consideration and endeavor to appropriately cooperate with those stakeholders.
3. 	We shall disclose not only information on compliance with the relevant laws and regulations, but also actively provide
important and/or useful information to stakeholders for their well-informed decision making.
4. 	The Board of Directors shall be cognizant of its fiduciary responsibility and accountability to shareholders, and shall appropriately fulfill its roles and responsibilities in order to promote sustainable and stable corporate growth and increase
corporate value, profitability, and capital efficiency.
5.	We shall engage in constructive dialogue with shareholders, and make efforts to obtain shareholders’ support regarding theCompany’s business policies and also reflect shareholders’ opinions and concerns in the improvement of management.

1. Appointment of female executives (one outside director,
one outside Audit & Supervisory Board member) (As ofJune 23, 2022)
2. Established Sustainability Committee (March 2022)

Value Creation

Efforts to meet shareholders’ expectations by realizing
sustainable growth and the increase of corporate value are as
follows.

Corporate GovernanceInitiatives to Achieve Sustainable Growth and Increase Corporate Value

Corporate Governance Overview and Structure
Kayaba is a company with an Audit & Supervisory Board as
described under the organizational design stipulated by theCompanies Act of Japan, and has a system of corporate
governance in place that centers on the Board of Directors

and Auditors / the Audit & Supervisory Board. Also, we haveadopted the Executive Officer System, seeking to increase
the speed of decision making and optimize corporate
management.
Data

Relationship between engines and organizations
Relationship of committee to engines and organizations

General Meeting of Shareholders
Elect /Dismiss

Advisory Committees(Nomination, Compensation)

Consult

Elect /Dismiss
Consult

Board of Directors

ReportConsult

Regional
Instruction
Representative Director,
Representative
Report President Executive Officer
Officers

Audit &
Supervisory Board

ReportReportApplication

Audit

ReportReportConsult
Approval
Instruction

Instruction
Cooperation

Sustainability Committee
ReportInformationexchange

Risk Management Committee(Board of Directors Subcommittees)(Chair: President)

Audit

Instruction
ReportBoard of Executive Officers
and other management meetings

Instruction

Compliance Committee(Chair: President)

Instruction

Approval
Proposal
Recommendation
Supervision

Responsible head office departments, operational headquarters,
Group companies, branches, representative offices

Audit

Draft
ReportReportReportInstruction

Elect /Dismiss

SurveyInstruction
SurveyAudit firm

Instruction

Audit Department
J-SOX OfficeEvaluation
based on J-SOX Audit

KAYABA Group Report 202230

Corporate Governance

Board of Directors
The Board of Directors comprises ten members, including four
outside directors. In principle, the Board of Directors meetsonce a month. The Board of Directors makes decisions basedon laws, the Articles of Incorporation and Company regulations,and deliberates on policies and other important matters involving management. The Board of Directors also oversees the
management of business operations. In addition, four outside
directors are registered as independent officers.

report on the status of business execution, and the Global
Executive Meeting, where regular reports on business conditions are submitted to those responsible for overseeing
management of the Kayaba Group companies overseas. In
addition, we are working to strengthen Group management
oversight and have established the Operational Review with the
President Meeting, where the president executive officer visits
production sites to review and follow-up on matters related topolicy development and important manufacturing issues.

Board of Executive Officers
The Board of Executive Officers, a body that reports directly
to the Board of Directors, deliberates on important mattersconcerning management from a Company-wide perspective.

Audit & Supervisory Board
The Audit & Supervisory Board comprises four full-time andone part-time Audit & Supervisory Board members, two ofwhom are full-time and one part-time are outside members.
Through audits by outside Audit & Supervisory Board members, we expect to achieve effective management oversightand have concluded that an effective governance system is inplace. In addition, three of the outside Audit & Supervisory
Board members are registered as independent officers.

Other Management Committees
We have also established other management committees,
including the Domestic Affiliated Companies Management
Meeting, where functional and business divisions/departments

The members of each of the aforementioned organizations are as follows. (As of June 23, 2022)
Domestic affiliated companies
management
meeting◎

Board of
Executive
Officers
○

○

◎

○

Takaaki Kato

○

○

◎

Member of the Board of Directors,
Executive Vice President Executive Officer

Keisuke Saito

○

○

○

Member of the Board of Directors,
Executive Vice President Executive Officer

Hajime Sato

○

○

○

Director and Senior Managing Executive Officer

Masahiro Kawase

○

○

○

Outside Director

Rokurou Tsuruta

○

○

○

Outside Director

Shuhei Shiozawa

○

○

○

Outside Director

Masakazu Sakata

○

○

○

Outside Director

Akemi Sunaga

○

○

○

Audit & Supervisory Board Member (Full Time)

Hideki Nonoyama◎

Audit & Supervisory Board Member (Full Time)

Osamu Kunihara○

Outside Audit & Supervisory Board Member

Junichi Tanaka○

Outside Audit & Supervisory Board Member

Masahiko Sagara○

Outside Audit & Supervisory Board Member

Junko Watanabe

11 executive officers

−

Name

Board ofDirectors

Director, Chairman

Yasusuke Nakajima

Representative Director, President Executive Officer

Masao Ono

Representative Director, Executive Vice President Executive Officer

Title

○

○
○

Note: ◎ denotes the chairperson

Audit &
Supervisory
Board

○

For details, see “Outside directors andoutside Audit & Supervisory Board Members” on the website
https://www.kyb.co.jp/english/company/governance.html

Evaluation of the Effectiveness of the Board of Directors(1) Evaluation Method
Respondents at the time of evaluation:
11 respondents, comprising seven directors (including three
independent outside directors), four Audit & Supervisory Board
members (including two independent outside Audit &Supervisory Board members)
Survey period: February to March 2022
Methodology:Administration, analysis and evaluation of aself-assessment questionnaire
Key questionnaire items:
I. Composition of the Board of Directors and balance of knowledge and experienceII. Administration of the Board of Directors
III. Discussion topics at meetings of the Board of Directors
IV. Systems supporting the Board of Directors
V. Relationship and dialogue with shareholders

31

KAYABA Group Report 2022

Number of survey questions: 38
Questionnaire method:
Evaluation of the current situation: Evaluate on a scale of 1 to 4
Specific suggestions for improving the current situation: Openended response(2) 2021 Results
Comments and suggestions were submitted regarding thematters to be discussed at Board meetings and the composition of the Board to strengthen its supervisory functions, andthe evaluation results and comments from respondents werereported and shared at a meeting of the Board of Directors.
(3) Future Actions
Based on the results, the Board will continue to discuss bothinternal and external issues in order to further improve its
effectiveness.

Officer Compensation(1) Compensation Structure

Type of compensation

Fixed compensation*1(Basic compensation）

Maximum total compensation

Date of resolution of theGeneral Meeting of
Shareholders

Calculation process

Directors¥30 million per month(¥360 million per year)

June 27, 1997, 75th
Ordinary General Meetingof Shareholders

Consultation with
Compensation
Committee

Audit & Supervisory
Board members¥10 million per month(¥120 million per year)

June 23, 2022, 100th
Ordinary General Meetingof Shareholders―

40% or less and ¥200 million per yearof total compensation (Fixed compensation + Performance-linked
compensation)

June 23, 2022, 100th
Ordinary General Meetingof Shareholders

Consultation with
Compensation
Committee

Within 20,000 shares per year(¥75 million per year)

June 23, 2022, 100th
Ordinary General Meetingof Shareholders

Consultation with
Compensation
Committee

Directors(Excluding outside
directors)*1 The limit on total fixed remuneration for directors does not include salary for employees concurrently serving as directors.
*2. There is an upper limit of 1.0% of profit attributable to owners of the parent in the fiscal year preceding the fiscal year in which performance-linked compensation is paid.

(2) Compensation Decisions
achievement of the indexes that form the basis of its calculation, and is determined by a resolution of the Board of
Directors made upon receiving a report from theCompensation Committee and within the range of the limit for
the total remuneration amount that is determined at theGeneral Meeting of Shareholders.
Fixed remuneration for Audit & Supervisory Board members isdetermined in consultation with Audit & Supervisory Board
members, within the limit on total compensation decided at theGeneral Meeting of Shareholders.

Data

For director compensation, the discretionary Compensation
Committee composed of representative directors and outside
directors verifies the propriety of the criteria for calculating fixedand performance-linked compensation and reports the proprietyof criteria to the Board of Directors.
Fixed compensation for directors is determined by resolutionof the Board of Directors, upon receiving a report from theCompensation Committee, within the limit on total compensation decided at the General Meeting of Shareholders. The
performance-linked compensation of Directors (excluding
outside directors) is in accordance with the level of(3) Calculation and Determination of Performance-Linked Compensation
Performance-linked compensation (bonus) consists of monetary compensation and transfer-restricted stock compensation.
Monetary compensation is limited to 1.0% of profit attributable to owners of the parent in the previous fiscal year.
However, the total amount of remuneration is determined bya resolution of the Board of Directors upon receiving a reportfrom the Compensation Committee based on a predetermined proportional amount (40% of the total amount of thebasic compensation for directors excluding outside directors
and the monetary compensation portion of bonuses, as wellas the maximum amount determined by resolution at theGeneral Meeting of Shareholders [200 million yen per year]) in
accordance with the position of each director, and we thenremunerate to each director.
In stock compensation, the number of shares provided isdetermined by a resolution of the Board of Directors uponreceiving a report from the Compensation Committee basedon the level of achievement of the indicators that are the basis
for calculating performance-linked compensation and thepredetermined number of shares provided in accordance withthe position of each director, and we then provide transfer-restricted stock compensation to each director.
The indicators that are the basis for calculating performance-linked compensation are calculated according to thedegree of achievement of the consolidated earnings forecastin the previous fiscal year along four calculation indicators(amount of segment profit, ratio of segment profit, amount of
profit [loss] attributable to owners of the parent, ratio of profit[loss] attributable to owners of the parent). In a case where
there is a loss attributable to owners of the parent, performance-linked compensation will not be paid.
Regarding decisions on the individual remuneration
amounts of fixed compensation and performance-linked
compensation, our policy is for the Compensation Committee
to inspect the validity of the decisions, report to the Board of
Directors that such validity was found, and to conduct calculations and decisions based on the content of the report.

KAYABA Group Report 2022

Value Creation

Corporate Governance

Performancelinked
compensation(Bonus (stock))directors and Audit & Supervisory Board members only
receive fixed compensation according to their respectiveroles, and in view of their independence do not receive
performance-linked compensation.

Strategy

Performancelinked
compensation(Bonus (monetary))*2

Eligible officers

Introduction

Officer compensation consists of fixed monthly compensation(basic compensation) according to position and responsibilities, and performance-linked compensation (bonus) that varies
depending on the Company’s business results. Outside

32

Corporate GovernanceInternal Control and Compliance
Basic Policy
In order for corporate governance to function effectively, we are promoting a basic policy for our internal
controls system that is based on the Companies Act ofJapan and determined by the Board of Directors.
Particularly in FY2021, we established theCompliance Committee which is chaired by the
President, and enacted a compliance program ofconcrete measures. We are carrying out the program inorder to strengthen and thoroughly instill compliance inthe Kayaba Group.

Key Points for Internal Control

Compliance Promotion• The compliance program was enacted under our compliance system, which is headed up by theCompliance Committee. It is being rolled out and implemented at Group companies, and we are
evaluating and reviewing the results. The issues we uncover now will be used to improve
initiatives in the next fiscal year.

Risk Management Initiative• The Risk Management Committee reports to the Board of Directors, and based on the Risk
Management Rules, it identifies material risks the Group must address and the business units
responsible for managing them, and conducts risk reduction initiatives at each responsible
business unit.

Responding to Internal Reports andImproving the Effectiveness of
the Reporting System• We respond to reports in order to ensure the prevention or early-stage discovery and correctionof non-conforming acts. Moreover, we are making improvements for the purpose of achieving ahighly trustworthy reporting system that allows individuals to report without hesitation.

FY2021 Initiatives
1. Promoting corporate governance at the KayabaGroup1) Compliance Reinforcement Month 	We designated October as ComplianceReinforcement Month, and conducted various
activities to promote heightened complianceawareness among all employees, including
President’s message, call for compliance mottos,
repeated in-house training, Compliance Top
Management Training Course, etc.
2) Compliance retraining	We confirmed the results of the Compliance

Survey that we took during ComplianceReinforcement Month in the previous fiscal year,
and continued to provide re-education.
2. R isk Management Initiatives
Conducted risk-reduction initiatives for 11 key risks
3. R
 esponded to internal reports, made effectiveness
improvements and responded to reported cases,
and supported the responses of Group companies.
Reported regularly to the Compliance Committee.

Basic Policy on Risk Management
At the Kayaba Group, the Risk Management
Committee reports to the Board of Directors, andbased on the Risk Management Rules, it identifies
material risks the Group must address and the business units responsible for managing them, conducts
risk management initiatives at each responsible business unit, and presents quarterly updates to the Boardof Directors.

33

KAYABA Group Report 2022

Also, the Sustainability Committee is in charge of our
response to risks related to climate change. They
conduct initiatives such as uncovering the risks andopportunities presented by climate change in cooperation with the Risk Management Committee.

Internal Control System
Compliance Committee(Chair: President)

Introduction

General Manager,
CSR & Safety Control Division
Group Compliance Promotion Office(Internal Control Department)

Regional Headquarters Compliance Managers
Presidents of Regional Headquarters and Large-scale Domestic Subsidiaries
Instruction/Report

Instruction/ReportCompliance Officers(General Manager, Internal Control Department)
Instruction/ReportCompliance Managers
Presidents of Domestic andOverseasGroup Companies

Instruction/Report

Key Compliance Personnel(Department Managers)

Regional Headquarters
Compliance Officers
Instruction/Report
Instruction/ReportCompliance Managers
Presidents of Affiliated Companies

Instruction/Report

Key Compliance Personnel
at Each Site
Cooperation

Instruction/Report

Regional headquarters
Compliance Officers

Key Compliance Personnel
at Each Site

Cooperation

Cooperation

Person in Charge of Compliance

Person in Charge of Compliance

Person in Charge of Compliance

KayabaSubsidiaries

Regional Headquarters

Affiliated Company

officers. Regional headquarters and large-scale domestic subsidiaries regulate their own companies as wellas their affiliates and subsidiaries, while the Kayaba
regulates itself and subsidiaries other than thosementioned above.

Data

Basic Policy on Information Security
Kayaba works to ensure information security by settingout a Standard Information Security Policy and appointing persons responsible for information security
management in order to strengthen information security
on a global level. Nevertheless, in addition to the increasingly evolved and complex information systems ofrecent years and increased frequency of access fromoutside the Company by employees as a result of
remote work becoming standard, cyberattacks havebecome increasingly complex and diverse, leading toincreased risks associated with information security.
Therefore, we are taking measures to defend against
the latest risks, such as cyberattacks, through self-check
evaluations and evaluations conducted by third parties.

Value Creation

Person in Charge of Compliance

The Compliance Committee conducts activities such as
deliberating on the fiscal year compliance program,which is drafted by the Compliance Promotion Office.
In addition to drafting the program, the secretariat
provides support for to regional headquarter compliance managers and regional headquarter complianceCorporate Governance

Cooperation

Strategy

Instruction/ReportCompliance Managers(General managers of business divisions/departments and functional divisions/departments, and factory managers)*KYB-YS, Takako

Major efforts in FY2021• Established a cybersecurity response organization(KYB-CSIRT)• Conducted routine education and drills for all executives and employees• Conducted self-assessment in accordance with thestandard automobile industry security guideline• Hired third-party security evaluation organization to
conduct vulnerability assessments• Installed the latest security software• Joined the Nippon CSIRT Association (August 2022)

KAYABA Group Report 2022

34

Corporate GovernanceManagement Team (As of June 23, 2022)* Independent Directors and Auditors

Directors

Position

Yasusuke Nakajima

Masao Ono

Takaaki Kato

Representative Director,
Chairman

Representative Director,
and President

Representative Director,
Executive Vice President
Executive Officer

Chief Executive Officer (CEO)In Charge of Global Corporate
Finance (Chief Financial Officer),
North, Central & SouthAmerican Operations andPublic Relations/IR

June 2005

June 2017

June 2015

Keisuke Saito

Hajime Sato

Masahiro Kawase

New

New

Work in Charge

Appointment of
directors

Position

Member of the Board of
Directors, Executive Vice
President Executive Officer

Member of the Board of
Directors, Executive Vice
President Executive Officer

Member of the Board of
Directors, Senior Managing
Executive Officer

Work in Charge

In Charge of ESG Promotion,
China Operations and Seismic
Isolation / Mitigation
Correspondence Operations

In Charge of Sales andSpecial Purpose
Vehicles Division

In Charge of Automotive
Components Operations
and Engineering

June 2011

June 2022

June 2022

Appointment of
directors

Rokurou Tsuruta*

Shuhei Shiozawa*

Masakazu Sakata*

Akemi Sunaga*

Member of the Board of
Directors (Outside)

Member of the Board of
Directors (Outside)

Member of the Board of
Directors (Outside)

Member of the Board of
Directors (Outside)

June 2015

June 2016

June 2020

June 2022

New

Position
Appointment of
directors

35

KAYABA Group Report 2022

Introduction

Audit & Supervisory Board Members

Audit & Supervisory
Board Member

Audit & Supervisory
Board Member(Outside)

Audit & Supervisory
Board Member(Outside)

Osamu Kunihara

Junko Watanabe*

New

New

Audit & Supervisory
Board Member

Audit & Supervisory
Board Member(Outside)

Value Creation

Masahiko Sagara*

Strategy

Junichi Tanaka*

Corporate Governance

Hideki Nonoyama*

Data

Executive Officers
Managing Executive

Takashi Tezuka

In Charge of Quality and Aircraft Components Division, General Manager, Quality Division

Officers

Ryuji Uda

General Manager, Suspension Headquarters, Automotive Components Operations

Minoru Ishikawa

General Manager, CSR & Safety Control Division and General Manager, General Affairs & Human
Resources Division

Ichio Nemoto

General Manager, Hydraulic Components Operations, and General Manager, Gifu South Plant

Takashi Saito

In Charge of European Operations, General Manager, Finance & Accounting Division

Shozo Amano

In Charge of Production, General Manager, Production Division

Masaru Tsuboi

In Charge of China Operations (Deputy), Chairman & President, KYB (China) Investment Co., Ltd.

Deputy Managing

Tomoki Takaoka

General Manager, Purchasing & Logistics Division and General Manager, Corporate Planning Division

Executive Officers

Minoru Tamai

General Manager, Sagami Plant, Hydraulic Components Operations

Toshimichi Izeki

Deputy General Manager, Engineering Division, General Manager, Basic Technology R&D Center andCurator, KYB Museum

Shinichi Sugioka

General Manager, Motorcycle Headquarters, Automotive Components Operations, and President,
KYB Motorcycle Suspension Co., Ltd.

KAYABA Group Report 2022

36

Value Creation

Environmental Initiatives

Environmental Management
Basic Policy
To prevent climate change and achieve a sustainable
society, Kayaba creates products that are safe forpeople and the environment, and actively conducts
environmental preservation initiatives.
In order to strengthen our efforts toward helping toachieve the SDGs and carbon neutrality, which is a
SloganProtect the Green Earthand Create Environmentally
Friendly Products

global target, we established the ESG Promotion Officein FY2021 to further enhance our environmental initiatives. Also, we established the CN Promotion Office,which specializes in responding to carbon neutrality
and further enhancing our efforts aimed at achieving it.

Basic Environmental Policies
The Kayaba Group creates user- and earth-friendly products. We actively promote
environmental conservation activities as an important tool for evaluating management.
1.	Develop and build up production and corporate activities based on recycling to
reduce impacts on the environment.
2.	Strive to ensure long-term and sustainable operations throughout the entire
Kayaba Group.
3.	Work to promote relationships with local communities and contribute to society
as a good corporate citizen.
4.	Clarify the role of each employee and encourage the participation of all employees.

Environment & Safety Management System
We are systematically expanding ourenvironmental preservation efforts. We
adopted the international standard ISO
14001 for environmental management
and established the Environment &Safety Committee with the Directors incharge of the environment and safety
serving as its leaders. We are working
with a unified purpose on our efforts
for environmental preservation andsafety under the system shown in thechart on the right. Also, we monitor
and revise our initiatives by conducting
environmental and safety audits.

President
Sustainability Committee
Executive Officer in chargeof Environment & Safety

Respective business units*

Environment & Safety
Committee
Chairman:
Executive Officer in charge ofEnvironment & Safety

Subcommittees
Environment Preservation Subcommittee
Energy-saving Plant Subcommittee
Safety and Health Subcommittee

Plant General Manager

Overall Safety Supervisor

Environment Supervisory
Officer

Safety and HealthCommittee

Environment Supervisory
Committee

Subcommittees

Subcommittees*Implemented ISO 14001 at each business units.

ISO 14001 Certification Acquisition (As of April 2022)
Japan

Overseas

Gifu North Plant(Including KYB Kanayama Co., Ltd.)North America

KYB Americas Corporation、Takako America Co., INC.

BrazilKYB Manufacturing do Brasil Fabricante de Autopecas S.A.

Spain

KYB Suspensions Europe, S.A.U.、KYB Advanced Manufacturing Spain,
S.A.U.

Czech

KYB Manufacturing Czech, s.r.o.

ThailandKYB (Thailand) Co., Ltd.、KYB Steering (Thailand) Co., Ltd.

Indonesia

PT. Kayaba Indonesia

Malaysia

KYB-UMW Malaysia Sdn. Bhd.

Takako Industries, Inc. (Shiga Plant)

China YB Industrial Machinery (Zhenjiang) Ltd.、K
Changzhou KYB Leadrun Vibration
Reduction Technology Co., Ltd.、
Wuxi KYB Top Absorber Co., Ltd.

KYB-YS Co., Ltd. (Head Office Plant)

TaiwanKYB Manufacturing Taiwan Co., Ltd.

KYB Trondule Co., Ltd.

VietnamKYB Manufacturing Vietnam Co., Ltd.、
Takako Vietnam Co., Ltd.

Gifu South Plant(Including Gifu East Plant, Production
Technology R&D Center, Machine Tools
Center, KYB Motorcycle Suspension Co., Ltd.)
Sagami Plant(Including the Basic Technology R&D Center)
Kumagaya Plant

37

KAYABA Group Report 2022

Environmental Conservation Efforts
emissions volume, and amount of all waste matter
showed an increase over 2020, but when compared to2019, we have maintained a steady reduction andimproved the output level. While we achieved ourtarget for the amount of energy consumed on a global
evaluation, but Kayaba did not reach its target due tofactors such as the absorption merger of a domestic
affiliate. 2022 is the final year of the medium-term
management plan, in which we will strengthen ourenergy conservation initiatives aimed at achieving thetarget.

Introduction
Strategy

Kayaba is working to conserve energy and reduce
waste matter under the medium-term management
plan (three years) that was launched in 2020. In 2021,
we added new targets for CO2 emissions volume(output level) reductions as a countermeasure against
climate change. Amidst the ongoing COVID-19 pandemic, there was a temporary decrease (worsening of
output level) in the aggregate amount of energy consumed and CO2 emissions. However, with the world
trending toward a recovery in demand, the amount ofenergy consumed (crude oil equivalent volume), CO2

Mid- to long-term Policy for Achieving Carbon Neutrality (CO2 Emissions Volume Reduction)
Set up cogeneration renewal / private solar power generation
Various energy conservation activities, energy changeover (electrification)

CO2
emissionsvolumePrivate power
generation(renewableenergy)50% decrease
compared to2018

Scope1
Direct emissions from the combustionof gas and other fuelsGreenelectric
power

CO2
emissionsvolume

2021

2022

2025

Achievements in FY2021• Installed solar power generation equipment• Optimized hours of operation for cogeneration power
equipment• Updated and improved use of highly efficient compressor• Optimized hours of operation for chiller(cooler circulation system)• Thermally insulated heat treatment equipment for plating• Installed heat insulation in steam piping, removed waste piping

2030

Carbonneutrality

2050

Data

2018

Value Creation

Environmental Initiatives

Renewable energy usage rate 15%
Scope2
Indirect emissions from electricity(fossil fuel)• Installed energy saving welding machines and dust collectors• Reduced air and steam supply loss (such as by repairing leaks)• Installed energy saving equipment to match repairs andupgrades• Reduced standby electric power consumption• Installed LED lighting and motion sensors• Improved shipping efficiency, employed consolidated shipping,
reduction of number of shipments

Creating a System with Minimum Energy Use and Waste Matter
Currently underway–2030 (Mid-term goals)

2050 (Ultimate goal)• Attention to environmental concerns,
such as the amount of energy consumed and CO2 emissions• Use of low CO2 emission energy,
conducting initiatives to prevent climatechange• Promotion of a range of policies
through visualizing energy• Energy and environmental maintenancebuilt on ESG thinking and that shows
our awareness of the need to achieve asustainable society and environment• Achieve renewable energy usage rateof 15% by 2025
• Energy reduction: continue 1% annual
reductions• Cut CO2 emissions volume by 50%• Continue to reduce industrial waste andimprove recycling rate
• Promote the visualization of energy
though the use of IT• Achieve carbon neutrality• Visualize and manage energy consumption though the use of IT• Minimize industrial waste and achieve ahigh recycling rate

KAYABA Group Report 2022

38

Environmental Initiatives

Performance Report on FY2021 Initiatives○: Target achieved

GlobalKayaba(Kayaba, five domestic companies, 17 overseas companies)

Theme
CO2 emission volume
CO2 emission volume
Climateper basic unitchangecounterEnergy consumption
measures Energy consumption
per basic unit
General waste
General waste perbasic unit
Reduction Metal scrap
of industri- Metal scrap per basic
al wasteunit
Industrial waste
Industrial waste perbasic unit
Recycling rate
Recycling
Final disposal volume

Numerical
targetFY 2021
achievements

×: Target not achieved(six plants)

Numerical
targetEvaluation

FY 2021
achievements

Evaluation(Ref.) 256,583 tCO2 or less

284,456 tCO2

ー(Ref.) 75,596 tCO2 or less

81,210 tCO2ー0.755 tCO2/¥ million or less

0.687 tCO2/¥ million○

0.501 tCO2/¥ million or less

0.457 tCO2/¥ million○

158,374 kl or less

155,249 kl○

47,945 kl or less

46,612 kl○

0.386 kl/¥ million or less

0.375 kl/¥ million○

0.258 kl/¥ million or less0.262 kl/¥ million

×(Ref.) 4,181 t or less

3,512 tー(Ref.) 532 t or less

343 t

ー

0.010 t/¥ million or less0.008 t/¥ million○

0.003 t/¥ million or less0.002 t/¥ million○(Ref.) 41,735 t or less

38,549 tー(Ref.) 19,422 t or less

18,358 tー0.102 t/¥ million or less0.094 t/¥ million○

0.105 t/¥ million or less

0.105 t /¥ million○(Ref.) 19,839 t or less

19,371 tー(Ref.) 3,255 t or less

2,809 tー

0.048 t/¥ million or less0.047 t/¥ million○

0.018 t/¥ million or less0.016 t/¥ million○ーー

92.5 % or more
3.22 % or more

92.9%
3.16 %

○
○

–
–

–
–

Major Initiatives planned for FY 2022
Climate change countermeasures (energy conservation, low CO2)
Switch to high-efficiency lighting such as LED and LVD, incorporate
new cogeneration sources, eliminate air leaks, reduce the amount of
air used in plants, initiative to decrease loads with high-efficiency air
conditioning and equipment temperatures, promote the installationof solar power generation equipment, and more

Measures to reduce waste matter (environmental conservation)
Reduce paint residue volumes with bioprocessing, install equipmentthat reduces the volume of waste processed, convert waste tovaluable materials and promote recycling activities

Note:	Energy refers to the total of crude oil conversion, such as electricity and fuel. Regarding the decrease of industrial waste, the calculations exclude valuable materials(recycling or reuse) generated by initiatives to promote recycling.
	Output level are calculated based on Kayaba’s regulations, which take shipping into account.
Reference: At the present time, the numerical target for the aggregate volume of emissions has not been set, and we are undergoing investigations related to setting the targets.

Product Compatibility with Environmental Regulations
Regulations and requirements such as the REACH
requirements, the ELV directive*1 and the RoHS directive*2 are being greatly tightened every year. Kayaba is
identifying the trends of these regulations and endeavoring to incorporate them into its technology
development plan.
Also, in addition to responding to regulations on

chemical substances, we are conducting initiatives fora low-carbon society and designing products withrecycling in mind.
ELV directive: A directive that came into effect in the EU in October 2000 to
reduce environmental impact caused by end-of-life vehicles.
*2 R
 oHS directive: A directive that came into effect in the EU in July 2006 that
restricts the use of specific hazardous substances found in electrical andelectronic products.
*1 

Examples of Environmental Initiatives
Introduction of solar power generation system (Adoption of renewable energy)
We had installed solar panels on the roof of Gifu North Plant’s cation coating building. Installationof solar panels (system capacity: approx. 160 kW) contributes to CO2 emissions reduction. It cuts
the current annual CO2 emissions of approximately 75 tons per year or approximately 40,000 L ofoil equivalent.
Plan to Purchase Carbon Neutral City Gas (Adoption of green energy)
Carbon neutral city gas reduces CO2 emission volume by turning the CO2 generated from theprocesses of natural gas extraction through to combustion into CO2 credit* or carbon offsetting.
We have an agreement with Toho Gas Co., Ltd., involving carbon neutral city gas, and it is contributing to our CO2 reductions.
*CO2 credit: These certificates are issued by an inspections organization that confirms the effects of environmental conservation projects in places all around on CO2
reductions, and can offset emissions volumes in the production and transport of gas.

39

KAYABA Group Report 2022

Environment Data
Introduction

Environmental Impact by Business Activity
We use a range of resources, including energy, water,
and chemical substances. We are making effective useof limited resources, taking into account climatechange countermeasures, and moving ahead withenergy conservation activities as well as reduction
activities for the emission of materials such as waste
matter and CO2.

Production Activities
Development/Design■Raw materials
・Steel, cast and forged materials 185,320t[ー]■Used energy (Crude oil equivalent)・Green electricity

・Electricity from fossil fuel sources 26,198kL[106,245kL]

・Fuel, gas, steam[41,437kL]

20,403kL■Chemical substances (PRTR law target substances)

274t■Water (water supply)[ー]

1,571,109kL [3,027,216kL]
Recycling inside Company

21,865t[62,155t]■Emission into atmosphere

Production

・CO2

81,210tCO2[284,456tCO2]

・Nox

35.5t

[ー]

・Sox

2.01t

[ー]

Distribution• Development of technologies andproducts that are environmentallyfriendly as a result of recycling,energy saving and safety, etc.
• Promotion of green procurement• Promotion of modal shift• Scrap (Effective utilization in the KYB Group)• Deteriorated solution for chrome plating• Water used for rinsing in chrome plating process, etc.

Production process■Amount of waste (Including reuse)

Procurement

・Dust■Water (drainage)

0.27t

[ー]

1,187,931kL[1,910,752kL]

Recycling outside Company• Metal scrap • Waste oil • Waste plastic• Grinding powder • Waste thinner • Paper, cardboard, etc.

Scrap

Recycling company

Related company

Data

Environmental Accounting
The amounts of investment and cost were calculated with reference to the Environmental Accounting Guidelines,
2005, provided by the Ministry of the Environment.
FY2021 Results(Millions of yen)

Cost type(1)-1Pollution prevention cost(1) Businessarea cost(1)-2 Global environmental
conservation-cost(1)-3 Resource circulation cost

Major contents
Air pollution and water pollution prevention activities
Maintenance and inspection of pollution prevention facilities
Analysis and measurement of atmosphere and water quality
Energy conversion
Energy-saving activities (Investments, etc.)
Recycling of plant waste
Reduction of industrial waste(2) Upstream/downstream cost(3) Management activity cost(4) R&D cost(5) Social activity cost

Maintenance and management of ISO 14001, etc.
Monitoring of environmental impact and employee education
Environmentally friendly product development
Lightweight products and products containing less hazardous
chemical substances
Support of non-profit environmental protection
Afforestation and maintenance of scenery around plants(6) Environmental remediation cost(7) Other cost

Value Creation[7,567kL]

OUTPUT

Environmental Initiatives

11kL

Strategy

INPUT

Because there are concerns regarding the levels of
danger and toxicity of chemical materials, we are conducting risk assessments and taking the appropriate
safety measures to the greatest extent possible. Also,
we are responding to the newest round of revisions tothe chemical substance regulations of the Industrial
Safety and Health Act, which are scheduled for FY2023.

Internal environmental conservation
Welfare conservation

Subtotal
Grand total

Invested
amount

Cost

65.5

213.8

8.3

13.6

0.0

231.6

0.0

0.0

0.0

109.2

64.7

119.8

0.0

4.7

0.0

0.0

9.7

0.0

148.2

692.9
841.0

Note: Classification and Definition of Environmental Conservation Costs
	Invested amount: Expense for the purpose of environmental conservation during the target period with effect that continues for a number of terms and running cost for
those periods. Cost: Cost or loss generated from expenditure of finances/services for the purpose of environmental conservation.

KAYABA Group Report 2022

40

Environmental Initiatives

CO2 Emissions(tCO2)

Category

Description
Direct emissions from company-owned and controlled resources(Fuel combustion, industrial processes)
Indirect emissions from the use of electricity, heat and steam
supplied by other companies
Indirect emissions other than Scope 1 and 2 (Other company’s
emissions related to the activities of the company) Total of thefollowing 2 to 7 categories
Expansion of production equipment (If construction was done overmultiple years, it is accounted for in the last year when construction was completed)
Upstream emissions of purchased fuels (Extraction, production,etc)

Scope 1
Scope 2
Scope 3*2

2 Capital Goods

Fuel- and EnergyRelated Activities
Not Included in Scope 1 Upstream emissions of purchased electricity ((extraction, production,and transportation of fuels consumed in the generation of electricity, etc.)
or Scope 2
Upstream Transportation Logistics*3 of procurement, side-holding, and shipping
4（t）(Shippers own)
and Distribution
150,０００ valuable
Waste Generated inTransportation and disposal of waste materials (excluding
5
0.200
materials) other than the company’s own
Operations

3

6 Business Travel

Business travel of employees

7 Employee Commuting

Transportation of employees

Domestic
Overseassubsidiaries subsidiaries*1

Kayaba39,162

4,496

44,05887,71642,04829,193

125,498

196,739

52,03921,206

17,36390,60818,395

8,028

353

26,777

10,320802

2,572

13,694

7,133

5,280

304

12,717908

Calculated in

6,885

100,０００

Total

0.221

2,524
724
6,059

7,793
（t）

0.236

0.250

4,712

0.212
12,754

19,989327

314

01,364
.200

1,150

1,066

8,274

0.150

45,79744,058*1. Includes North America (KAC, TAC), Spain (KYBSE, KAMS) and the Czech Republic (KMCZ). Other positions are46,315
under calculation
39,4510.100*2. The output level used for calculations was determined in reference to the “Emission output level database for calculating the greenhouse gas emissions of an organization
5０,０００6,473
5,333
via its supply chain (Ver. 3.2)” of Japan’s Ministry of the Environment
4,496
4,345
*3. Logistics: Shipping, loading/unloading, storage
0.050
40,144
39,47339,16236,386０

Environment-related Data■
■ KAYABA

CO2 Emissions: Scope 1
0.236

0.221

0.200

2020

０

(FY)

2021

Basic unit (all bases)

CO2 Emissions: Scope 2（t）
150,０００

2019

2018

■ Domestic subsidiaries ■ Overseas subsidiaries

0.212

（t）

（t）

0.250

300,０００

（t）

0.542

0.52

0.600

0.475

0.474
0.200

100,０００0.150

46,31545,797

6,473

5,333

5０,０００40,144０■■ KAYABA

2019

2018

■ Domestic affiliates

Energy Consumption

0.100

4,496

4,345

39,16236,386
2020

(FY)

2021

■ Overseas affiliates

０

０

（kL）

（kL）

300,０００

0.500

3,０００

0.415
0.375

0.400

20０,０００0.300

90,656

91,64322,324

21,04010０,０００50,995０

18,55648,92320192018

79,7040.200

21,363

0.100

2021

(FY)

Water Usage

０

０

1,280

1,636

1,355
750

159

132

1,669
1,357

０

2018

■ ■ ■ Water supply

2019

2018

27,77829,1930.200

41,5482020

42,048
2021

(FY)

1,910
1,650

1,479

2019

2018

2020

2021

(FY)

Waste Emissions: Industrial waste
（t）

1,０００

51,799125,498

1,０００

30,０００17856,800

1,946

4,０００

2,０００

33,100

2,０００

（km3）

3,０００

36,455

115,011

46,61242,877
2020

87,273

128,318

Energy Consumption for Transportation

（kL）

0.394

41

10０,０００0.050

Basic unit (all bases)

0.353

0.400

126,973

44,05839,451

39,473200,０００

1,046
836

143

119

1,562
1,426

2019
■ ■ ■ Wastewater

KAYABA Group Report 2022

1,301
155

547
103

1,571

12,840
14,114611
112

10,０００

2021

(FY)

5,483
０

11,492

12,085

5,272

1,188

1,288
2020

20,０００

2018

2019

4,649

3,740

4,846

2,681

3,052

3,164

2020

2021

(FY)

０

Value Creation

Social Initiatives

Basic Policy
are to be observed in everyday work and company life
as the Kayaba Group’s Corporate Guiding Principles.
Our basic stance toward efforts to create a better
society is indicated by these Principles. They apply toall people who work at the Kayaba Group, who are
required to act in accordance with the Principles.

Supply Chain• We will acknowledge that we have social responsibilities to our supply chain as well. We will
oppose forced labor and child labor in any form in the supply chain and implement the non-use
of conflict minerals.
• We will aim to create products that are friendly to the earth and people and work hard in our
procurement that takes the environment into consideration.
• We expect our suppliers to share the values expressed in this clause.

Participation in Activities of Industry
Associations and Other Related
Organizations• We will join and be active in industry associations and other related organizations solely for the
purpose of promoting and familiarizing technology related to our products and services, as wellas contributing to the sound development of the industry.

Value Creation• Pursuant to international standards and the laws and regulations of each country, we will
respect the fundamental rights of labor, such as workers’ freedom of association, right toorganize and right to bargain collectively.

Strategy

Respect for Workers’ Rights

Social Initiatives

Respect for Human Rights• We will respect the dignity of all individuals and respect human rights that are internationallyrecognized and, additionally, we will not be involved in violations of human rights. In the unlikely
event it is found or likely that our business activities, products or services may cause violationsof human rights, we will forthwith take an appropriate measure against it.
• We will absolutely not tolerate any discriminatory acts on the grounds of race, gender, sexual
orientation, nationality, religion, age or physical or mental disabilities or illnesses.
• We will not practice forced labor and child labor in any form whatsoever.

Introduction

In order to put the SDGs into practice and raise corporate value, Kayaba believes it is essential to create aplace where human rights and workers’ rights areupheld—one that has a comfortable environment where
diverse human resources can work energetically.
Based on “Our Promise” aimed at accomplishing our
Corporate Spirit, we put together 26 specific rules that• We will not have any relationships whatsoever with forces, associations and illegal organizations
that threaten the safety and order of society. We will take a resolute stance as an organization
No Involvement with Antisocial Forces
against improper or illegal demands from those forces, etc. and we will not provide them withany benefit whatsoever.

Preservation of Natural Environment• We will recognize that we are dependent upon rich and varied nature and make efforts to create
products that are friendly to the earth and people in our domestic and overseas business activities.
• We will actively promote preservation of natural environment by identifying environmental
conservation activities as one of the important indicators for the evaluation of management andundertaking global warming countermeasures, energy conservation promotion, recycling ofresources, waste reduction and proper management of chemical substances.

Health and Safety• We will always think safety first and engage, with all employees participating, in activities
aimed at prevention of industrial accidents and occupational diseases and the creation of an
accident-and-risk-free work environment.
• We will prepare a clean and hygienic work environment through thorough tidiness, order,
cleanliness, sanitation and training.

Creation of Comfortable Working
Environment• We will value a way of working that takes the diversity of our employees into consideration andstrive to create lively workplaces.
• We will strive to create a vibrant and comfortable workplace where we care for each otherwhile giving consideration to physical and mental health, respect each persons’ point of view
and position, and allow free and open exchange of opinions.
• We will absolutely not tolerate acts that worsen the working environment and cause mental
and physical pain beyond the proper scope of operations.

Enhancing Workplace Capabilities
through Education and Skills
Development• As “human resources” that support the sustainable growth of the Kayaba Group operating its
business globally, each one of us will proactively increase our own abilities through diverse
education and training and we will build strong workplace capabilities at every workplace.

Data

Contribution to Society• We will promote coexistence and cooperation with local communities, proactively engage in suchactivities as volunteer activities and conducting local events, and contribute to the developmentof local communities as “good corporate citizens.”• We will respect local communities’ history, culture and customs, and support non-commercial
aspects such as culture and arts in order to contribute to development of a sustainable society.

Kayaba Group Corporate Guiding Principles (excerpt)

KAYABA Group Report 2022

42

Social Initiatives

Human Resource Initiatives
Respect for Human Resources and Diversity
The Kayaba Group regards the diversity of humanresources as an important factor for realizing soundoperations. Accordingly, we aim to build a corporate
culture that accepts and respects diverse values,
cultures, and customs, while featuring open communication and maintaining flexibility in management
strategies and product development.
Specifically, we are training human resources who
can uphold our Corporate Spirit, employing diverse
human resources, and positioning the right employee
in the right position. Also, we are strengthening themanagement foundation and awareness campaigns forhelping women thrive in the workplace. We haveincreased the number of female employees in positions which provide opportunities for promotion, with aview to raising the number of female managers(achieved the target in FY2021). Going forward, theCompany plans to help women set their career paths—
in this way raising their awareness of opportunities andtheir possible futures—and create training programs forsupervisors to raise their awareness of issues

impacting women in the workplace. Kayaba has alsoestablished special organizations that employ people
with disabilities and is actively engaging in related
activities.
To maintain an environment where employees canwork energetically, we are helping employees maintaina healthy work-life balance, continuing remote working,encouraging employees to take annual paid leave, andreducing long working hours.

Raise personal awareness

Raise awareness ofworkplace issues

Draw on the talents ofdiverse human resources

Foster working
conditions that allow
everyone to thrive on the job

Create systems that
employees need and want

Enhance the value offered by individuals and organizations,and increase the value the Company provides to society

Efforts to Promote the Employment of People with Disabilities
Kayaba is making efforts to employ people with disabilities based on the following targets.
Target
1. CSR: Realization of a symbiotic society	Contribute to the realization of a symbiotic society in whichanyone can participate in society through their work inproportion to aspiration and ability, regardless of handicap

2. Diversity	Build a corporate culture and make workplace environment
improvements so that diverse employees can work energetically, with handicaps being a non-factor

3. Compliance	Observe laws and regulations, such as the Act on the
Promotion of the Employment of Persons with Disabilities

In September 2019, Kayaba established the Work
Support Center as an organization to promote theemployment of persons with disabilities. It cooperates
with all departments in the Company, government andmunicipal offices, schools, and all kinds of organizations to promote the employment of people withdisabilities and works on initiatives to stabilize theretention rate.

43

KAYABA Group Report 2022   1. Actively accepts internships in cooperation with special
support schools and employment support organizations
and challenge training, and regularly exchanges information and conducts hearings   2. Advice and guidance to settle in after employment withthe help of an in-house coaching staff.
   3. Enlightenment regarding diversity for persons with nodisabilities in sites where people with disabilities work,
and improvement and maintenance of the working
environment

As a result of these efforts, the employment rate ofpersons with disabilities improved to 2.36% at the endof March 2022, up from 1.88% at the end of March 2019and exceeding the legally stipulated employment rate of 2.3%.
Kayaba will continue our initiatives
aimed at improving the employment rate of persons withdisabilities and providing workplaces where people with and without
disabilities can feel satisfaction in
their work.
Certificated of thanks from
Gifu Prefectural Kamo Special
Needs School

Human Resource Development
improvement measures can be incorporated intoon-the-job training, which is important for complementing human resource development systems.
Kayaba recognizes that training managers of overseas bases is vital for ensuring the sustainable growthof global operations. Therefore, we provide them withexperience in departments that are essential for managing their workplaces over the medium term, helping
them develop the qualities they need through training,
and then assign them to leadership positions when thetime is right.

3

4

5

Ability to carryout social
responsibilities

Customerorientation

Challengeorientation

6

7

Sincerity

8

Instruction Task and strategy Improvement
andformulation
andreform ability
abilitytraining ability

Creativity

9

10

Basic
knowledge
and skills

Specialized
knowledge
and skills

Two skills

Eight qualities
10 components of training programs (focusing on eight qualities and two skills)

Training Managers ofOverseas Bases

PurposeTraining to instill
the necessary qualities(Candidates for management
positions outside Japan)

Value Creation

2
Mutualrespect andteamwork

VitalitySocial Initiatives

1
Awareness ofcomplianceand ethics

HonestyStrategy

Qualities Required to Make the Corporate Spirit a Reality (Ideal Human Resources)

Introduction

Kayaba has redesigned its human resource training
programs to ensure that employees have the qualities
necessary to help realize the ideas behind the
Corporate Spirit (honesty, vitality, love and creativity).
We have been working to improve these programs
while recognizing that transparency in employee evaluations and promotions is one of the most important
aspects of human resource development. For thisreason, we have made clear the necessary qualities
and achievement levels for every job level and reviewed the requirements for management promotions
based on this. We are also exploring ways that

1. Skill development training → Select and train candidates
2. Training rotation → Formulate plans for training rotation and follow-up
3. Assignment of candidates → Set and deploy criteria for assignments

Data

Creating Harassment-Free Workplaces
Workplaces where there is no harassment are an
essential foundation for maintaining and improving thephysical and mental health of employees while promoting human resource development.
To avoid a situation where it is difficult to raise one’s
voice within the Company, we are placing emphasis on
harassment prevention (freedom from harassment),
and actively conducting education and awarenessactivities to promote mutual respect.
Specifically, Kayaba integrates anti-harassment
education into new training programs such as those on
listening skills and equality under the law, conducts
evaluations on a trial basis, and publishes anti-harassment articles in our internal newsletter. We also survey
the extent of reported cases of harassment throughstress assessments, which employees receive every
year. Also, the Company promptly responds to cases
reported to the harassment helpline and the whistleblower hotline, taking strict disciplinary action after
confirming the facts.

From an article of in-house newsletter

KAYABA Group Report 2022

44

Social Initiatives

Health Management
Health Declaration
Kayaba sees the health of employees and their families as an important management resource and a source ofcorporate vitality, and is working to achieve sustainable growth through the creation of an environment in which
all employees can work in good health both physically and mentally.
We are committed to actively supporting employees who are engaged in health promotion activities and topromoting organizational measures for health promotion in order to live up to our Corporate Spirit by “building a
corporate culture full of vitality and holding high goals.”
November 1, 2019

Masao Ono

Representative Director
and President Executive Officer
KYB Corporation

Health Management
Maximize the performance of employees by increasing their health and wellness
Creating a workplace where employees can work in good health both physically and mentally

Key Activities(current conditions)

Risk Improvement Activities
Abnormal findings
Decreasein rate ofabnormalfindings

Decreasein sick
leave
Minor abnormal

Good health

Increase number of
non abnormal

Increasein jobsatisfaction

Increasein sleep
sufficiency

Health Promotion
Activities

Reduction
in rate ofhigh stress

Expansion of health management policies, collaboration
with related departments, and the participation of employees

45

KAYABA Group Report 2022

Reduction
in rate ofobesity

Reduction
in rate ofsmokingOrganizational Structure for Promoting Health Management
Responsible for Heath Management(President)

Introduction

Instruction/Report

Policyexecution

Responsible for Heath Management Promotion(Human resource officer)
Instruction/Report

Heath Management Promotion Project
All functions,departments

Cooperation

HealthSupportCenterCooperation

Human
Resources
Planning Dept.

HealthInsurance
Association

Cooperation

Sagami Plant

Gifu area

ESG Promotion
OfficeKumagaya Plant

Mie plant

Labor Union

Cooperation

In charge of promotion at each office or plant
Head Office

Occupational
PhysicianCooperation

Safety Education
Committee

Cooperation

StrategyWith the top management
ranks positioned as responsible
for heath management, theentity conducts the sharing of
information on health management issues and ensures theeffectiveness and continuanceof initiatives while cooperatingwith the health management
promotion project in charge ofpromotion at each office orplant, the safety educationcommittee, and our groupcompanies.

In charge ofpromotion
at group
companies

Health index

PhysicalWe are aiming to continuously
maintain and promote physicaland mental health, maximize
performance through the
improvement of employee
health, and create an environment in which employees canwork happily and comfortably.

Decrease inabsenteeism
due to sickness

2019

2020

2021

Rate of diabetes

41.4%

44.2%

54.1%

45.2% ▶

40%

Rate of obesity

29.1%

29.2%

32.8%

30.5% ▶

30%

Rate of smoking

34.9%

35.3%

34.2%

32.3% ▶

30%

Rate of sleep
sufficiency

48.2%

61.4%

67.2%

67.2% ▶

70%

Job satisfaction

58.3%

55.3%

58.0%

58.0% ▶

60%

Rate of use of yearlypaid vacation

68.1%

71.7%

62.8%

76.9% ▶

80%

Data

MentalImprovement ofa lively workplace(employee engagement)

2023
Target2018*Health index covers KYB Corporation

Health Management Policy
Physical health• Making a comfortable working environment: Promote use of the walking course, hold a walking
event, support the continuation of the exercise habit after the event
Lifestyle disease countermeasures(Collaboration with health insurance measures) • Keep a 100% rate of employees taking regular heath checkups• Increase the ratio of employees taking specific medical examinations
Stages of preventing second-handsmoke• Environmental measures: Smoking completely prohibited on the premises (starting in April 2022)• Support for quitting smoking• Education on second-hand smoking prevention(Hold an exhibition on the prevention of second-hand smoking）

Mental health

Measures to support mental health• Hold mental health education: Promote education by level for the purpose of building positive
mental attitudes• Harassment-free campaigns with the cooperation of each function and business division→ In order to create a workplace where people can do their work with a sense of worth andpurpose, it most important that there is no harassment. Based on that thinking, we added“harassment-free” to the Key Initiatives of the Corporate Policies. This policy is being carriedout in each department and function.

KAYABA Group Report 2022

Value Creation

Social Initiatives

Health Issues and Kayaba’s Index

46

Social Initiatives

Safety Activities
Creating a Safe, Secure Working Environment
With the of slogan “Safety is the top priority,” theKayaba Group works as one to achieve zero occupational accidents. Also, our Corporate Guiding Principles
state that we will always think about safety first andengage, with all employees participating, in activities
aimed at prevention of industrial accidents and occupational diseases and the creation of an
accident-and-risk-free work environment.
The Global Safety Promotion Committee, which ischaired by Kayaba’s president, works to revitalize
activities. The Environment & Safety Committee, which
is chaired by the executive officer in charge of CSR andsafety, discusses safety measures related to the

Kayaba Group. In these ways,
we are promoting safety andsecurity in the working environment.
Regarding fires at our plants,
we periodically reexamine thefire prevention system andidentify equipment that poses
any risk of a fire. Also, we hold aFire Prevention Day in which weraise the awareness of all employees and work to reduceand prevent risks.

Fire prevention poster

OSHMS/ISO 45001 Certification Acquisition (As of April 2022)
In order to systematically implement initiatives to build
an occupational health and safety management systemand strengthen its foundation, we are introducing andpromoting certification in OSHMS and ISO 45001.*
In introducing our health and safety management
system, the Gifu North Plant was first to obtain certification in FY2004, and in FY2022, we are working

toward the certification of one new location. We will
make practical use of the system and push forwardwith efforts to achieve a higher level of safety thanever before.
* ISO 45001: An occupational safety and health management system (OSHMS)
standard issued in 2018 by the International Organization forStandardization (ISO).

Bases with Certification (As of April 2021)
Japan (OSHMS)
Gifu North Plant
Gifu South Plant(Including Gifu East Plant, Production Technology R&D Center, Machine Tools Center, KYB Motorcycle Suspension Co., Ltd.)
Sagami Plant(Including the Basic Technology R&D Center)
Kumagaya Plant
Takako Industries, Inc. (Shiga Plant)
KYB Kanayama Co., Ltd.
KYB-YS Co., Ltd.
KYB Trondule Co., Ltd.
Overseas (ISO 45001 Certification)
North America
MexicoBrazilSpain
Czech
ThailandIndonesia
Malaysia
India
China
TaiwanVietnam47

KYB Americas Corporation / Takako America Co., INC.
KYB Mexico S.A. de C.V.
KYB Manufacturing do Brasil Fabricante de Autopecas S.A.
KYB Suspensions Europe, S.A.U. / KYB Advanced Manufacturing Spain, S.A.U.
KYB Manufacturing Czech, s.r.o. / KYB CHITA Manufacturing Europe,s.r.o.
KYB (Thailand) Co., Ltd. / KYB Steering (Thailand) Co., Ltd.
PT. Kayaba Indonesia / PT. KYB Hydraulics Manufacturing Indonesia
KYB-UMW Malaysia Sdn. Bhd.
KYB Mmotorcycle Suspension India Pvt. Ltd.
KYB Industrial Machinery (Zhenjiang) Ltd. / Changzhou KYB Leadrun Vibration Reduction Technology Co., Ltd. /Wuxi KYB Top Absorber Co., Ltd.
KYB Manufacturing Taiwan Co., Ltd.
KYB Manufacturing Vietnam Co., Ltd. / Takako Vietnam Co., Ltd.

KAYABA Group Report 2022

Quality Management
Introduction

Basic Policy
To prevent a recurrence of quality-related misconduct,
Kayaba will continue to foster and establish an awareness of compliance as the prerequisite for andfoundation of quality management.

The Kayaba Group shall:
1. Address quality improvement with honesty driven by
the belief that quality is the basis for business.
2. Deliver safe and secure products in compliance withpromises to customers as well as with laws andregulations.
Strategy

Quality Assurance System

Prior and model
development

Details

DR*0 evaluation
meeting
DR1 evaluation
meeting

Mass-production
development andproduction preparations

Quality Safety Audit

Development quality

Implementation of commercialization (Description and evaluation ofdevelopment quality)

Start quality

Implementation of mass production (Description and evaluation ofdevelopment quality)

Mass-production
quality

Implementation of achieving quality requirements (Demonstration andevaluation of start quality)

DR2 evaluation
meeting

Mass production
Initial flow management
Quality Safety Audit

Goal of the three steps

Data

Order development

Bad News First
Execute (until the reporter receives feedback)
When abnormalities arise: Stop, Call, Wait

Evaluate manufacturing site, manufactured products and data to confirm that mass-production quality is
problem-free and that reliable production and shipment are possible.
* DR: Development & Research

Quality Management Initiatives
Kayaba is strengthening its quality audit system tothoroughly prevent quality-related misconduct, andaiming to create a corporate culture of open
communication.
• Revision of the Bad News 1st Initiative regulations(November 2021)• Establishment of the Bad News 1st Initiative implementation guidelines (November 2021)

Value Creation

Step

to defect reduction and change management after
mass production and shipment. At our production
bases, we take a variety of quality improvement measures under the leadership of base managers and plant
managers, and we are working to promote the unerring
operation of our three-step evaluation system.
Furthermore, to ensure the quality of mass-produced
products, we also follow this system for single, smalllot orders and when production is transferred toanother production base.

Social Initiatives

We have built, and now operate, an ISO 9001-compliant quality assurance system that emphasizes thequality of work processes as well as the quality of
products and services. We strive each day to make
improvements in all aspects of quality.
At Kayaba, we implement what is called a “threestep evaluation system” for the development andmass production of products, the development oftechnologies, manufacturing methods, and so on. We
make every effort to achieve high quality throughout
the product life cycle, from the product planning stage,

We are increasing workplace communication by
conveying information on “Bad News” or concerns
related to quality, then taking steps and improving
based on the information and launching initiatives toproperly deal with the matters, then providing feedback
to the reporter in the form of reports and replies.

KAYABA Group Report 2022

48

Social Initiatives

Supply Chain Management
Basic Policy
Kayaba conducts ESG management so as to continuously develop our business through manufacturing
craftsmanship and contribute to the realization of anaffluent society as a corporation that has earned thetrust of the global community.
Going forward, we will further increase the responsibilities of the companies in our supply chain to conduct
efforts to uphold human rights, the prevention of childlabor and forced labor, responsible mineralprocurement, and carbon neutrality. We naturally build
partnerships with important suppliers, and also carryout our social responsibility while thoroughly enforcing
our basic policy in procurement and striving to contribute to the realization of a sustainable society.
For policy details, see “Supply information” on the website
https://www.kyb.co.jp/english/company/supply_information.html

Building Relationships with Suppliers
We hold a Purchasing Policy Briefing for the management ranks at our suppliers’ companies. At thismeeting, we provided them with a stronger understanding of our corporate, purchasing, and quality
policies. We also awarded excellent suppliers who havecontributed greatly to QCD* through the issues andtargets that Kayaba and our suppliers share. This madethe briefing a venue for sharing valuable information inaiming for coexistence and mutual prosperity.
Kayaba is ensuring two-way communication between us and our suppliers based on a relationship ofmutual trust.

Examples of Our Efforts
Carbon Neutral Initiatives
The Japanese government’s “2050 Carbon Neutral
Declaration” and the Glasgow Climate Accord at COP26
have accelerated efforts to achieve carbon neutrality.
Kayaba holds briefing sessions on carbon neutrality
to its suppliers and shares with them Kayaba’s approachto carbon neutrality and its goals, and asks them towork toward these goals.

* QCD: Quality, Cost, Delivery

Responding to Responsible Mineral Provision
To avoid inadvertently providing funds to armed groups
responsible for human rights violations, the Kayaba
Group annually conducts an investigation with thecooperation of its suppliers, summarizes the results
and reports to customers that request such information, in accordance with the Dodd-Frank Act.*In these inspections, we employ the questionnaire
issued by the Responsible Minerals Initiative (RMI; anorganization that is promoting the responsible procurement of minerals).

* The Dodd-Frank Act is a U.S. financial regulatory act that aims to indirectly cut off trade in mineral resources mined in the Democratic Republic of the Congo and nineneighboring countries because of concerns that these mineral resources are the source of funding for armed groups that are responsible for environmental destruction andhuman rights violations.
Target minerals: tin, tantalum, tungsten, gold

Initiatives to Prevent Human Rights Violations in the Supply Chain
In accordance with the U.K. Modern Slavery Act 2015,
we annually release a statement on the Kayaba Group’sbusiness activities and initiatives to prevent slave laborand human trafficking in our supply chain, including theabovementioned conflict mineral measures. We will

49

KAYABA Group Report 2022

carry on with our awareness-raising activities on prohibiting human rights violations and slave labor incooperation with the relevant departments while
understanding the progress of our business partners
with their efforts.

COLUMN

Products + Human Resources + the Future
Introduction

Our Challenge—providing technology support
that draws out full potential

Strategy

Evolving Technology

Value Creation

Social Initiatives

Kayaba takes pride in our added-value products

Chair ski model diagram(early development)

Shock absorber forchair ski (present)

Data

Kayaba employee Takeshi Suzuki is an Olympic
athlete who competes in Para Alpine sit ski
events at the Games as a representative ofJapan. He has competed at Paralympics in
Torino, Vancouver (bronze medal), Sochi (goldand bronze medals), Pyeongchang, and mostrecently took on the 2022 Beijing Paralympics.
While he didn’t obtain a medal at the BeijingGames, he placed fifth in the super combined
and slalom, and placed eighth in the downhill,
receiving a prize for each.
In sit skis, shock absorbers are used to mitigate the shock that the rider feels when skiing,
and also as a medium to transmit the operating
motions of the athlete to the ski board. We takepart in anticipated development projects with ourtechnological abilities that have been forged insuch heated competitions as the world’s leading
motorcycle races and support Japanese athletes.
We’ve been building our record of achievements
since we began conducting development for the
Nagano Paralympics.
Currently, participating countries are focusing
on shock absorber development, with the difference between victory or defeat hanging in thebalance. We are continuing to pour our energy
into improving sit ski performance by repeatedly
conducing a cycle of development, evaluations
by skiers, and improvements in cooperation with
Mr. Suzuki and other athletes.
Kayaba will continue to support the field ofsports for people with disabilities in the hopes
that, through the activities of world-class athletes, they will be inspired to participate in sports
and to take on great challenges.

Shock absorberfor chair ski< Profile of Takeshi Suzuki >• Competitive event Alpine skiing(Sitting: Sit ski)• Date of Birth: May 1, 1988
• Age: 34• Place of origin: Inawashiro-machi,
Fukushima, Japan•Joined Kayaba: 2015
Adjust damper until just before run

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

KAYABA Group Report 2022

50

Data

Financial Highlights

FY

2011

2012

2013

Accounting standards applied

JGAAP

JGAAP

JGAAP

337,158

305,752

352,710———

Operating profit (loss)

21,538

10,473

18,170

Profit (loss) before tax [Income (loss) before income taxes
and minority interests]

21,76012,994

21,032

Profit (loss) attributable to owners of the parent [Net income (loss)]

13,898

7,789

12,761

Capital expenditures

27,17339,21529,908Depreciation and amortization

13,50814,554

17,294R&D expenses

4,035

5,468

6,917

Cash flows from operating activities

17,39918,98428,788Cash flows from investing activities(20,000)(36,125)(36,078)

Cash flows from financing activities(3,455)

8,529

5,709

Cash and cash equivalents at end of period

42,01035,215

38,132

Total assets

301,349

327,912361,083

Interest-bearing debt*2

80,51895,33888,813

Total equity [Total net assets]

102,762

116,435

153,997

Basic earnings per share [Net income (loss) per share]*3 (Yen)

62.87

35.24

55.25

Cash dividends per share applicable to the year*3 (Yen)

9.00

8.00

9.00

Return on equity attributable to owners of the parent[Return on equity] (ROE; %)

14.8

7.3

9.7

Ratio of equity attributable to owners of the parent [Equity ratio] (%)

33.2

34.5

41.2

P/E ratio (Times)

8.0

13.1

7.9

11,97512,306

13,033

Net sales
Segment profit*1

Number of employees*1: Segment profit is calculated by deducting cost of sales and selling, general and administrative expenses from net sales.
*2: Interest-bearing debt = Short-term borrowings + Current portion of long-term borrowings + Current lease obligations + Corporate bonds + Long-term debt +Non-current lease obligations + Guarantee deposits received (Corporate bonds have been added since FY2021)*3: The Company carried out 1-for-10 reverse stock split on the effective date of October 1, 2017.
Notes: 1. KYB Corporation and Consolidated Subsidiaries
2. *JGAAP51

KAYABA Group Report 2022

(Millions of yen)

2019

2020

2021

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

370,327355,320355,316

393,743

412,214

381,584

328,037

388,360

15,506

17,58818,62422,94922,01017,575

13,32524,713

14,461

4,327

19,247

20,885(28,496)(40,298)

18,29730,001

14,892

2,825

18,852

20,881(29,510)(41,419)

16,34028,817

8,036(3,161)

14,544

15,202(24,757)(61,879)

17,65823,90030,087

21,30020,578

20,95625,34523,347

13,322

14,58815,191

17,075

15,922

16,98817,581

20,615

18,634

18,3148,910*

7,760

7,621

8,102

6,750

6,312

5,368

5,767

22,335

19,95831,15329,252

17,047(4,999)20,82624,247(30,658)(20,320)(21,337)(16,386)(13,616)(21,505)(6,281)(10,871)(555)(3,395)(969)(4,482)

10,41822,576

1,146(32,711)30,51025,29633,98842,70256,09250,42368,70052,118387,877

359,002381,326

412,493441,074

410,454426,635

434,187

92,44891,68593,563

94,641

108,634

154,608

160,278

124,874

175,256

153,381

169,771

186,651

155,643

79,815

116,726

160,91431.45(12.37)56.93

595.09(969.18)(2,422.53)

668.95854.96

12.00

11.00

12.00

150.00

0.00

0.00

75.00

105.00

5.1

(2.0)

9.3

8.8

(15.0)(55.4)

18.5

17.1

43.6

41.3

43.1

43.7

33.9

18.1

25.9

35.3

14.0

—

10.2

8.5

—

—

4.5

3.5

13,732

13,796

14,35014,754

15,427

15,43914,71814,472KAYABA Group Report 2022

52

Data

2018

Value Creation

2017

Strategy

2016

Introduction

2015

Financial Highlights

2014

Data

Kayaba in Globe (As of October 1, 2022)

23 Countries, 42 Companies
Regional Headquarters
Production Base
R&D Base
Sales Office / Other Services

EuropeAsia

7 companies in 12 countries

7 companies in 18 countries

KYB Europe GmbHKYB Industrial Machinery (Zhenjiang) Ltd.

KYB Europe GmbH (Dusseldorf Branch)

Wuxi KYB Top Absorber Co., Ltd.

KYB France
KYB Iberia
KYB Italy
KYB Poland		KYB (China) Investment Co., Ltd.

KYB Europe GmbH (Navarra Branch)

Changzhou KYB Leadrun Vibration Reduction
	  Technology Co., Ltd.
Hubei Henglong & KYB Automobile Electric	  Steering System Co., Ltd.

KYB Romania

CHITA KYB Manufacturing (Zhenjiang) Co., Ltd.

KYB Turkey

KYB Manufacturing Taiwan Co., Ltd.

KYB UKKYB Steering (Thailand) Co., Ltd.

KYB Ukraine

KYB (Thailand) Co., Ltd.

KYB Suspensions Europe, S.A.U.

KYB Manufacturing Vietnam Co., Ltd.

KYB Advanced Manufacturing Spain, S.A.U.

Takako Vietnam Co., Ltd.

KYB Manufacturing Czech s.r.o.

PT. KYB Hydraulics Manufacturing Indonesia

KYB CHITA Manufacturing Europe s.r.o.

PT. Kayaba Indonesia

LLC KYB Eurasia

PT. Chita Indonesia

KYB Eurasia Vladivostok
KYB Middle East FZEKYB-UMW Malaysia Sdn. Bhd.
KYB Motorcycle Suspension India Pvt. Ltd.
KYB-Conmat Pvt. Ltd.
KYB Asian Pacific Corp. Ltd.
KYB Asian Pacific Corp. Ltd., Amata Nakorn Branch
KYB Corporation Chennai Branch

53

KAYABA Group Report 2022

Introduction

America
6 companies in 3 countries
KYB Americas Corporation (Indiana)		

KYB Americas Corporation (Greenwood)			

KYB Americas Corporation (Chicago)
Strategy

Takako America Co., INC.
KYB Mexico S.A. de C.V.
KYB Manufacturing do Brasil Fabricante de		  Autopecas S.A.
KYB International America, Inc.
Comercial de Autopecas KYB do Brasil Ltda.

Value Creation

11 companies in 1 country
KYB Corporation (Kayaba)● Kumagaya Plant● Hiroshima● Fukuoka● Sagami Plant● KYB Trondule Co., Ltd.

● Gifu North Plant● KYB-YS Co., Ltd.

● Gifu South Plant● KYB Kanayama Co., Ltd.

● Gifu East Plant● KYB Motorcycle Suspension Co., Ltd.

● Mie Plant● KYB-CS Co., Ltd.

● Basic Technology R&D Center● Takako Industries, Inc.

● Production Technology R&D Center● Kensiyuu Co., Ltd.

● Machine Tools Center● Japan Analysts Co., Ltd.

● Developmental Center● KYB Logistics Co., Ltd.

● South kanto● Chikuyo Seiki Kogyo Co., Ltd.

● Nagoya● Osaka

KAYABA Group Report 2022

54

Data

Kayaba in Globe

Japan

Data

Corporate Information (As of March 31, 2022)

Company NameKYB Corporation

Date of Establishment

March 10, 1935

Fiscal Year

April 1 to March 31

Paid-in Capital¥27,647.6 million

Head OfficeWorld Trade Center Bldg.,
South Tower 28F,
4-1, Hamamatsu-cho 2-chome,
Minato-ku, Tokyo 105- 5128, Japan
Tel: +81-3-3435-3511
Fax: +81-3-3436-6759

Number of Employees 14,472 (Consolidated basis)
Securities Traded

Prime Market of Tokyo Stock Exchange

Corporate Website

Informarion related to theCompany, including corporate
information, investor information,
product information, etc.

55

https://www.kyb.co.jp/english/index.html

Investor Relations

Products

Sponsorship (Japanese only)

For reports on our IR activities
such as management strategy,
financial affairs, and performance.

For reports on our products which
support safety and comfort in awide range of industries.

For reports on motorsports,
including information on supportand sponsorship for various races.

KAYABA Group Report 2022

Data

Shareholder Information (As of March 31, 2022)

Common stock : 25,748,431
Class A preferred stock : 125

Number of
Shareholders

Common stock : 14,555
Class A preferred stock : 8

Transfer Agentand Registrar

Mizuho Trust & Banking Co., Ltd.
3-3, Marunouchi 1-chome, Chiyoda-ku,
Tokyo 100-8241, Japan

Composition of Shareholders (Common Stock)
Treasury shares
206 thousand (1%)
Foreign companies
3,349 thousand (13%)

25,748thousand shares

Other domestic
companies

Introduction

Common Stock
IssuedFinancial institutions

9,323 thousand (36%)

5,433 thousand (21%)
Individuals and others
7,437 thousand (29%)

Major Shareholders
Shareholding(Thousands)

The Master Trust Bank of Japan (Trust Account)

3,088,200

Strategy

Name

Percent of Total
Shares Issued (%)

12.1

1,965,417

7.7

Custody Bank of Japan, Ltd. (Trust Account)

1,139,300

4.5

Meiji Yasuda Life Insurance Company

1,004,650 [15]3.9Suppliers’stock ownership

923,400

3.6

Hitachi Construction Machinery Co., Ltd.

892,000

3.5

Trust & Custody Services Bank, Ltd. as trustee for Mizuho Bank, Ltd. Retirement
Benefit Trust Account re-entrusted by Mizuho Trust and Banking Co., Ltd.

611,500

2.4

Ogaki Kyoritsu Bank, Ltd.

591,433 [10]2.3Mizuho Bank, Ltd.

490,519 [35]1.9

Employee Stock Ownership

430,565

1.7

Value Creation

Toyota Motor Corporation

Notes: 1. The percent of total shares issued is calculated after the deduction of own shares (206,351 shares).
2. [ ] is the number of Class A preferred shares■ Trading volume (Shares)

Stock price (¥)

800,000,000

6,000

600,000,000

4,000

400,000,000

2,000

200,000,000

０

2017

2018

2019

2020

2021

High (¥)

7,380

5,660

3,695

3,350

4,180

Low (¥)

4,705

2,312

1,712

1,692

2,563

At year-end (¥)

5,050

2,718

2,069

3,020

2,975

(FY)

Shareholder Information

8,000

0

Note: The Company carried out 1-for-10 reverse stock split on the effective date of October 1, 2017. Numbers for the prior fiscal years are as recorded after the reverse stock split.

KAYABA Group Report 2022

56

Data

Corporate Information

Monthly Stock Price Range (Tokyo Stock Exchange)

Contact

World Trade Center Bldg., South Tower 28F,
4-1, Hamamatsu-cho 2-chome,
Minato-ku, Tokyo 105-5128, Japan
Tel. +81-3-3435-3511
Fax. +81-3-3436-6759