The Punch Industry Group’s Network
Group companies

Sales offices

China

UK
Germany

PUNCH INDUSTRY (Dalian) CO., LTD. (Dalian Plant, Chongqing Plant)
PUNCH INDUSTRY (Wafangdian) CO., LTD.
Japan
PUNCH INDUSTRY (Wuxi) CO., LTD.
PUNCH INDUSTRY CO., LTD.
PUNCH INDUSTRY (Dongguan) CO., LTD.
Korea
(Kitakami Plant, Miyako Plant, Hyogo Plant)
PUNCH SPRING (Dalian) CO., LTD.
Pintec Corporation
TurkeyThailandIndia

PUNCH INDUSTRY INDIA PVT. LTD.

Malaysia

TaiwanPhilippines

USA

PUNCH INDUSTRY USA INC.

Vietnam

PUNCH INDUSTRY VIETNAM CO. LTD.
PUNCH INDUSTRY MANUFACTURING VIETNAM CO. LTD.

2021

ANNUAL R E PORTS U P P ORT I N G P ROD U C T MA N U F A C T U RI N G
A ROU N D T H E W ORL D

PUNCH INDUSTRY MALAYSIA SDN. BHD.
PUNCH INDUSTRY SINGAPORE PTE. LTD.

Indonesia

Australia

PT. PUNCH INDUSTRY INDONESIA

Introduction to Company Website and IR e-Magazine
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including Company Overview, Business Overview,
and Investor Relations information.

https://www.punch.co.jp/english/
Inquiries

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E-mail: info-corp@punch.co.jp

Disclaimer Regarding Forward-Looking Statements
This annual report contains forward-looking statements regarding Punch Industry’s future plans,
strategies, and forecasts. Such statements are not based on historical fact, but are expectations,estimates, and forecasts based on information currently available. These expectations, estimates,
and forecasts involve many potential risks and uncertainties, including changes to the economy,
exchange rate variations, changes in the competitive environment, the outcome of current or
future litigation, or the continued usefulness of capital procurement. As a result, actual businessresults may differ materially from these statements. Accordingly, investors are cautioned not toplace undue reliance on forward-looking statements. Punch Industry is not obliged to amendthese forward-looking statements based on new information or future events.

(Japanese language only)

PUNCH INDUSTRY

SingaporeSupporting Product Manufacturing
around the World

Driven by the spirit of innovation, we will continue to develop and propose advanced
technologies in response to customer needs, for the benefit of society.

Management
Principles

Business
FieldsHigh customer satisfaction
Special-order products

Timely andprecise solutions

Abundant lineup of
versatile standard products

Flexible response tocustomized needs

Integrated production
structure

Customer-oriented
sales structure

Broad responsivenesswith 2,000 machines

Finely tailored response andproposal capabilities

Corporate
VisionWe will contribute to social development by embracing the spirit of environmental
consideration and compliance and promoting sound corporate activities that areappreciated by society.

Punch Industry Group’s Strengths

Standard products

We will create a vibrant corporate culture that fulfills people’s dreams, by placing highvalue on vigorous energy and flexible ideas.

We aim to become the leading
brand in the mold and die
components industry and achieve
high profitability by leveraging ourcompetitive advantage as acomprehensive manufacturing andsales company.

Molds and dies are necessary for making automobiles, electronic equipment, and consumer electronics—essential items in our daily
lives—swiftly, uniformly, and in mass quantities. The Punch Industry Group makes the components that constitute such molds and dies.
Deploying strengths amassed over the years—advanced technological capabilities, product quality, and meticulous services—we support
global manufacturing and people’s comfortable lives.

Components for Plastic Molds

Components for Press Dies

Plastic molds are used in the manufacture of many plastic products, such as
the outercasings of smartphones and digital cameras. Each product is madeby heating resin until it melts, injecting the melted resin into a die mounted
on an injection molding machine, and then allowing it to cool and solidify.
The Punch Industry Group manufactures and sells components used inthese molds.

Upper and lower press dies are fitted to a press machine, which moves up
and down. Sheet metal is inserted between the two dies, which are thenpressed together to form a product that takes the same shape as the upperand lower dies. The Punch Industry Group manufactures and sells
components used in these press dies.

These are what the Punch Industry Group makes!

These are what the Punch Industry Group makes!

Sophisticated technologicalprowess
Know-how accumulated since
founding and unceasing
R&D efforts

Key productKey productEjector pins

PunchesEjector pins are used to eject and release themolded body from a mold.

As key components for press dies, punches areused to make holes in and/or engrave designs on
sheet metal. Punch Industry derives its namefrom these products.

Key productKey productCore pins

Holder guide posts

Core pins are used to mold parts.
Core pins shape and engrave the portions of
the part which they penetrate.

Holder guide posts are used to correctly alignthe upper and lower press dies.

Performance Highlights
Net sales(Millions of yen)

36,648(Millions of yen)

(Millions of yen)

41,02540,935

Capital investments

Operating profit/Operating profit ratio
2,843
35,34832,462

1,990
5.4%

6.9%

2,909

2,578
6.3%

2,776

(Millions of yen)

2,989
2,011

1,613
835

5.0%

3/20183/20193/20203/20213/20173/20183/20203/2021

Profit (loss) attributable to owners of parent/
Return on equity (ROE)

Ordinary profit(Millions of yen)

(Millions of yen)

2,731

2,547

1,375
1,676

9.8%

11.8%

3/20183/20193/20203/20213/20173/2018Punch Industry Co., Ltd.

3/20193/2020960

3/20193/20173/20193/2020367

490

3/20183/2021

Sales by Industry

Europe,the United States, etc.

Automobile

Other

5.7%

42.1%

26.4%

41.2%

Inside: 3/2020
Outside: 3/2021

4.0%
3/2020

438

43.5%

27.1%
Japan

477
(3,485)

3/2021

Sales by Region
Southeast Asia
and India

Inside: 3/2020
Outside: 3/2021

38.0%
12.1%

47.6%
3/2021China
01

3/2018

6.8%
4.4%

6.0%

712

3/2017

4.3%

1,788

1,874

3/20173/2019

323

443

452

2.4%
3/2017

R&D expenditure

52.0%

Consumer electronics &precision equipment

12.0%

17.3%

Electronic devices &semiconductors

19.5%
Punch Industry Co., Ltd.

02

CEO MESSAGE

We are seeing definite progressand signs of a turnaround in our management
as we prepare for our next stage of growth.

solidify the foundation for our next growth by making progress

one-of-a-kind products, our daily challenges and ingenuity arein the four priority initiatives (see below).

integral to our competitiveness. Our strength lies in our integrated

In terms of sales, we are focusing on China, where factories

sales and manufacturing system, where sales means carefullyof the world’s leading manufacturers are concentrated, newcollecting important processing criteria, price ranges, and delivery

products and other development projects for customers aredate information from customers, while manufacturing means

emerging, there are many business opportunities, and we areresponding with the best technologies. Leveraging this strength,

enjoying solid growth. We will target steady increases in orders

we will continue meeting the demands and expectations of ourby continuing our focus on R&D, expanding our processing

customers to become their company of choice.

The progress of Value Creation 2020 Plus, our plan to rebuild our business,range, and taking on the challenge of new processing methods.

which had deteriorated amid trade friction between the United States and China,

To prepare for geopolitical risks, however, we will not place

contribution to society. With this in mind, we are promoting

was greatly affected by the spread of COVID-19. Accordingly, orders were sluggish

excessive expectations on China alone; rather, we will continue

working-style reforms to help employees achieve a good work-lifestrengthening our presence in Europe and the Americas andbalance by encouraging them to take paid leave and encouraging

establish a 5-pole sales system.

male employees to take parental leave, and empower women. We

in the first half of the fiscal year, and as in fiscal 2019, we struggled in the second quarter,
recording impairment losses on our domestic operations. Subsequently, orders began
to turn around even as the outlook remained uncertain. For the year, net sales recovered
to just 8.2% below the previous year’s level, and operating income jumped significantly,
up 93.0% year on year.

In Japan, we have found it difficult to recover from theare also deploying Punch Academy, our in-house educational

declines in fiscal 2018 and 2019, and in response we launched

Tetsuji Morikubo

Review of fiscal 2020 performance

sector, although we began to see signs of recovery in the second

institution to enhance our education systems.

our Business Planning Project to quickly rebuild our operations(see page 10). In Southeast Asia, we will target increased sales,

Representative Director, President, Chief Executive Officer

Improving employee engagement will provide our greatest

especially in the fast-growing markets of Vietnam and Indonesia.

Fostering sustainable growth

In Europe, we will focus on the automobile- and medical-related

We transitioned into a company with audit and supervisory

sectors, which have been recovering. In the Americas, we willcommittee to strengthen our supervisory function and speed up

step up sales to the medical-related sector, where we have adecision-making. Because some directors still have concurrent

competitive edge.

business execution roles, we will take the next step of separating

On the manufacturing side, we will continue improving our QCD

the business execution and supervisory functions. We believehalf. Sales in China, which fell sharply in the first quarter, were

At the beginning of the period, when we expected conditions to(quality, cost, delivery time) capabilities. We have improved themostly unchanged year on year thanks to strong demand in thethat broadening our horizons through the supervisory

be severe, we first reduced the annual remuneration of executive

skills and awareness of workers in our pre-shipment inspection

electronic device and semiconductor sectors. In Southeast Asia,function—rather than business execution, which can easily leaddirectors by half of the previous year’s level, and we also cut

system, while the rate of complaints is decreasing and ourthe market began to recover in the fourth quarter, but sales in all

to narrow horizons—and engaging in management based on

unnecessary and non-urgent costs to reduce overall expenses.

processing range is expanding. As a result, we have received goodcountries fell below previous-year levels, except for Malaysia,

various risk assumptions, will lead to sustainable growth andMeanwhile, we benefited from declines in depreciation and travel

evaluations from customers for our quality. With regard to costwhere we posted a slight increase in sales. In Europe, theenhanced corporate value over the medium and long terms.

expenses. However, we attribute the year-on-year increase in

and delivery time, it is even more important than ever to modify

Americas, and other regions, we continued facing difficult

From the perspectives of ESG and the SDGs, we have clarified

income to the creative and ingenious efforts of employees toour manufacturing methods to accurately reflect customers’conditions amid a sharp decline in exports to Europe, especially

issues to be addressed to tackle such global challenges as climate

reduce expenses and eliminate failure costs, and we are grateful

manufacturing needs as competition intensifies year by year.

of automobile-related products. Despite differences in the timingchange and decarbonization. Our transition into a new company

for their efforts.

Because our made-to-order production system entails makingof recovery depending on region, China is recovering first,

system will broaden our perspectives in promoting these activities.

Our company is a manufacturing company, and weaccumulate significant technical capabilities across all aspects ofoperations—sales, manufacturing, and management.

followed by the Americas, Europe, and Southeast Asia, withJapan being the slowest.
In terms of factory operations, in Japan we continued facing

Accordingly, we were able to get through this difficult timedifficulties, with temporary suspensions implemented from May

without cutting personnel, which was a great relief. Thanks to a2020 to January 2021, while in China we did not experience any

corporate culture and mindset passed down over the years, we

significant fall in operations. Operations in Malaysia were

have impressive technical capabilities, and these invisible

suspended frequently due to lockdowns, but we shifted to

aspects will ultimately be reflected in enhanced productivity.

alternative production in China and Japan. In Vietnam, we continued

By segment, we reported a year-on-year decline in sales offacing restricted shipments due to a decrease in international air

automobile-related products due to decreases in automobile

traffic, but we were able to minimize delays in customer deliveries

production volume in both Japan and China. However, wethrough flexible collaboration among Group companies.

posted a slight increase in sales related to electronic devices andsemiconductors. In Japan, we saw healthy demand for PCs due
to widespread adoption of teleworking, and in China we enjoyed

Outlook and progress of VC2020 Plus

VC2020 Plus: Pr ior ity initia tives

Specific measures

Establishment of 5-pole sales system

Expand sales channels in Southeast Asia, Europe, and the Americas

Enhance customer-focused marketing
capabilities

Promote reassignment and human resource development to foster salespeople
with rich processing knowledge

Optimize the global production systemand strengthen R&D

Deploy production system that highlights the attributes of each factory;
leverage R&D to reduce man-hours and establish new construction methods

Working-style reforms and humanresource development

Promote the advancement of women, good work-life balance,and global human resource development

To our stakeholders
Since our founding, we have managed to keep abreast of the detailed requests of individual customers

solid demand for 5G-related products. Meanwhile, sales ofIn fiscal 2021, we expect to surpass the performance targets weand challenged ourselves to do things that other companies cannot or will not do. I believe this has enabledconsumer electronics-related products were strong, buoyed by

set when we formulated VC2020 Plus, thanks to the current

us to become a company that our customers need.

global stay-at-home demand. Moreover, we achieved a nearlystrong performances of our medical- and semiconductor-related

30% jump in sales of medical-related products thanks to

products and recovery of the manufacturing industry. While

increased orders for masks in China, syringe containers in

there are concerns about the impact of the shortage ofJapan, and inspection pipettes in Europe.

semiconductors on the automobile industry, we expect

is to deploy our integrated manufacturing and sales system, which is our key strength,

production to recover in the medium and long terms, and we will

to consider and propose solutions to customers’ problems. We aim to always be the first choice

By region, sales in Japan declined due to sluggish automotive

Now, we need to transform ourselves into a company that anticipates and responds to customers’ needs
rather than simply accepting orders because we can fill them.
The mission of Punch Industry Group, as the top brand in the mold and die components business,of our customers and contribute to the realization of a better society.
We look forward to your continued support.
03

Punch Industry Co., Ltd.

Punch Industry Co., Ltd.

04

COO MESSAGE

We will improve both productivity
and operational efficiency
to optimize our global production system.

We will strive to be the first choice of our customers
and contribute to manufacturing around the world.

Sales Division

Yasuhiro Sanada
Director, Managing Executive Officer,
Chief Operating Officer (Sales)

Establishment of 5-pole sales systemincreasing since October 2020, with medical-related sales
surging in the second half and beverage-related sales remaining

Optimizing our global production system

In Malaysia, we are beginning to face challenges with respect
to attracting talent and rising labor costs. Taking advantage of our

Although we have not made enough progress to affect our sales

strong. In March 2021, we achieved the highest monthly sales

Our production system consists of 12 manufacturing bases inplant’s location, however, we hope to establish a system forcomposition ratio, our efforts in each area are progressing steadily.

since our establishment. We will step up use of social media tofour countries. To optimize this system, it is important to ask

expanding sales of special-order carbide products to Southeast

expand our sales channels.

ourselves questions from medium- to long-term perspectives.

Asia in addition to Europe.

Japan
There are improvements in automobile-related products, which

EuropeThese questions include “where to manufacture?” (market,

In Vietnam, we stopped production of semi-finished products

account for 40% of net sales, in August 2020, followed by

We continued receiving large orders from multiple medical device

country, region, and customer base), “what to manufacture?”in January 2020 and restarted to specialize in finished standard

semiconductor-related products and electronic device-related

manufacturers, which we handle at our three plants in Malaysia,(semi-finished products, standard products, special-orderproducts for sale in Japan. We will strive to further reduce

products. Subsequently, we benefited from demand forJapan, and China. These are very difficult products to make, which

products, components for plastic molds, components for press

production costs while considering production of special-order

medical-related products associated with COVID-19 vaccinations

underscores our need to transform ourselves into a company that

dies, and jig and tool-related products), and “how to

products for sale in Southeast Asia.

and were able to secure solid results in the fourth quarter.

anticipates and responds to customers’ needs rather than simply

manufacture?” (distributed production, centralized production,

Meanwhile, we strengthened our marketing capabilities by

accepting orders because we can fill them. Since then, orders for

combined production, unmanned/labor-saving production, andincreasing the accuracy of our fiscal 2021 targets. In addition toautomobile-related products have gradually recovered. We also

general-purpose/multi-skilled production, etc.). Various otheranalyzing lost orders from fiscal 2019, we conducted rigorous

further strengthened our good relationships with agents with ourfactors also need to be considered, such as production costs

analyses to recapture inactive customers, develop new

COVID-19-related customer support. We will further reinforce(securing personnel, rising labor costs, procurement of

Our most important roles as a manufacturer are to pursue

customers, and increase the number of Web-based orders. We

these relationships and focus on electric vehicle-related products,

raw/auxiliary materials), transportation costs, product quality

ongoing improvement activities and human resource

also established a system that allows all analysis data to bewhich are earmarked for increased demand.

(differences in skills and equipment), and supply chain risks. It isdevelopment, generate profit through cost reductions, and createtransferred to sales offices, visualized on sales tools, andSoutheast Asia and India

Raising awareness through human resource
development and small-group activities

important to achieve 100% supply without excesses or shortages

added value through enhanced technical capabilities. Without

managed. We also identified priority customers andIn the second half, our automobile-related businesses in Vietnam,

vis-à-vis market demand and our own objectives, while

individual growth, there can be no corporate growth, andstrengthened efforts to increase order responsiveness.

Singapore, Indonesia, and India all began to turn around, while inanticipating various changes in demand. Therefore, “optimizing

employees who continue to learn are the driving force behind a

Singapore orders from semiconductor users are increasing. Our

our production system” does not mean increasing productivity

company’s sustainable growth. Accordingly, our most important

Following the receipt of large orders for mask-related die

Vietnamese sales company, which previously relied on standard

alone, but rather carefully examining and improving bothtask is to align human resource development with the vectors

components in March, demand rebounded for our

products, as well as our office in India, steadily increased the

productivity and operational efficiency.

(directions) of all employees to harness their combined

medical-related products, including for mass production of coreratio of special-order products. Despite a year of turbulence

In Japan, we are transferring some product manufacturingpins. We greatly improved our technology, as we had nevercaused by COVID-19, we are starting to see signs of recovery.

from the Kitakami Plant to the Hyogo Plant and consolidating

China

worked on such products before. Since December, our monthly
production volume of plating pins for encapsulation molds, oneof our key products, increased two to three times over the

Enhance customer-focused marketing capabilities

strengths.
In addition, we have started small-group activities aimed at

production processes (through multi-skilled labor) at somecreating joy in work (through self-realization and a sense ofplants. At the Kitakami Plant, we have also started to automate

accomplishment), with the aim of fostering a culture in whichsome final inspection processes (3D measurement of multiple

frontline employees can recognize their own challenges, identify

previous fiscal year due to increasing demand for

We are improving customer service, especially in Japan. We areobjects), and we are moving ahead with the automation ofissues, and work on improvements. To date, we have engaged insemiconductors. We arranged to manufacture them at ourmodifying our new ordering system with the aim of reducing

inspection processes that require a large number of repetitive

process-oriented activities to learn improvement methods, but

Kitakami Plant as well. Projects related to semiconductors,

man-hours until order placement. We plan to update the systemtasks.

from fiscal 2021 we will pursue specific initiatives to tackle theelectronic devices, factory automation (FA), and automobiles are

in January 2022 to reflect customer feedback on its

moving forward according to our annual plans, withuser-friendliness. We have also made progress in developing aplant in Wafangdian are fully automated and labor-saving, and weare also working with Punch Academy to further strengthenequipment-related FA products growing significantly. We will

quotation tool for customers. The tool is being field-tested at ourare making progress with automation at the spring plant ineducation on quality control and improvement methods. It is

continue developing technologies to increase orders for newsales offices and is earmarked for release in fiscal 2022. We

Dalian. We have also introduced automation and labor-saving

important to not stop trying due to fear of failure, but to keep

products and mass-produced items.

have also established a system to promote Web-based billing.

processes at our distribution center in Dalian, while at the Daliantrying. Even if we fail, we must face our failure, learn from it, andPlant we have built a rapid production line specializing in quick

apply it to our next challenge. We will continue our small-group
activities to help employees embrace this mindset.

The Americas

05

Manufacturing Division

Akira Takanashi
Director, Senior Executive Officer,
Chief Operating Officer (Manufacturing)

We established an enterprise sales unit to expand our business not

In China, production and inspection of some products at thetwo tasks of “reducing costs” and “eliminating failure costs.” We

Under complete lockdown, we have been working from home for

only with mold and die makers but also with major manufacturers.

delivery products, a line capable of ultrashort delivery processes,

more than one year. To increase our name recognition, we

We will work to win orders for transfer jigs and other precision jigs

and a precision line. As we aim to further increase market share,strengthened our Internet advertising sales promotions,and tools for factory automation. To this end, we will attract new

our immediate issue is how to offset soaring labor costs, so wewill not always be complacent about the current situation as alaunched a website, and attracted new customers by responding

customers and approach the offices and factories of existing

recognize the need to accelerate automation and labor-saving

head of manufacturing. By maintaining our vitality and continuing

to inquiries via the Internet. Sales have been graduallycustomers with whom we have no current business relationship.

even more.

to prosper, we aim to achieve 100 years of longevity.

Punch Industry Co., Ltd.

Growth will stop if we become complacent. For this reason, I

Punch Industry Co., Ltd.

06

CFO MESSAGE

Capital Investments/Depreciation

By delivering sustainable growth and medium- to long-term
improvements in corporate value,
we aim to please all our stakeholders.

Takao Murata

Finance & Human Resources Strategies
Fiscal 2020: Lower sales and higher profit(Millions of yen)

FY2017FY2018FY2019FY2020

FY2021(Plan)

Capitalinvestments

2,776

2,989

2,011

452

900

Depreciation

1,597

1,729

1,674

968

1,000

Director, Senior Executive Officer,
Chief Financial Officer

Financial position and shareholder returns

Payout ratio (%)
Dividend (Yen)

38.1
20.5
16.75

FY201716.75

FY2018

9.1

12.0

2.00

2.00

8.00

FY2019FY2020

FY2021(Plan)On January 1, 2018, we implemented a 2-for-1 stock split.
Dividend calculations for each fiscal year assume that the stock split was implemented
at the beginning of fiscal 2017.
Due to the loss recorded in fiscal 2019, a figure for payout ratio is not provided for that year.

assets caused by past impairment losses, however, the situation

recognize that aggressively taking on this challenge is ouris not normal. When making new investments in the future, webiggest management priority. To implement this strategy, we

Although net sales were down due to the strong impact ofThanks to the success of our efforts to curtail investments, weneed to determine how to balance sales and investments whileplan to move to the investment execution phase in our next

COVID-19, we were able to secure a significant increase ingenerated free cash flow in excess of ¥2.2 billion in fiscal 2020.

monitoring figures in the next mid-term business plan.

mid-term business plan. To avoid repeating the mistakes we

profits. Our performance benefited from a decline in

As our business performance recovers, we plan to allocate theseIn fiscal 2020, the accounts receivable turnover ratio

made in 2016 and 2017, however, we need to meticulously

depreciation—stemming from impairment losses of fixed assets

funds in a well-balanced manner between dividends toworsened slightly to 3.32 times, from 3.38 times in fiscal 2019.

examine the effectiveness, future prospects, and risks of eachin fiscal 2019 and 2020—as well as from the inevitable decrease

shareholders, investments in growth, and reinforcement of ourThis was due to lower sales in Japan, where collections areinvestment, and make appropriate decisions before making

in travel expenses due to COVID-19 and social insurance

financial base.

faster, and higher sales in China, where collections take longer,

aggressive investments, rather than blindly pursuing

so we need to continue to focus on collections, especially ininvestments alone.

premium reductions and exemptions by the Chinese andIn recent years, we have been unable to maintain our previous

Malaysian governments. Groupwide efforts to reduce costs anddividend policy due to a significant drop in profits caused by

China. The total asset turnover ratio improved slightly to 1.29

Although we are currently engaged in cost reduction activities

expenses were also successful, leading to an increase in profits.

impairment losses. We will first target a dividend payout ratio oftimes, from 1.24 times in fiscal 2019, due to contraction of total

under our Business Planning Project, it is crucial that we shift to

In particular, our Business Planning Project, implemented at

20% through recovery in earnings, then raise that ratio to 30%

assets stemming from the decrease in fixed assets. In Japan,

high-value-added products at the same time, instead of simply

domestic plants, began to show positive results, such as a

to normalize dividend levels. In fiscal 2019 and 2020, we weremoreover, we use cash conversion cycle (CCC) as a

reducing costs to generate profits. We aim to generate highsignificant reduction in failure costs associated with defects andunable to pay dividends from retained earnings—instead paying

performance indicator to maximize capital efficiency.

levels of profit by combining efficiency and cost reductions withcustomer complaints. At our domestic plants, we did not cut any

from our capital surplus—and we regret the discomfort causedsalaries during the period of declining capacity utilization, but

to shareholders. Our goal is to begin paying dividends frominstead asked employees to take temporary leave supplemented

retained earnings as soon as possible.

the difficult situation.

Impairment loss in Japan again in fiscal 2020high added value, including by introducing robotic process

Management issues and future approach

automation in indirect operations, while refining our technicalcapabilities.

We have been closely monitoring the Group’s net cash since its

by employment adjustment subsidies. As a result, we overcame

As more people emphasize the importance of a sustainable

Future impact of reduced investments

listing in 2012. At the end of fiscal 2012, our net cash totaled

society, evidenced by the SDGs and various ESG activities,–¥7.2 billion, prompting external parties to draw attention to ourcompanies must adopt a management approach that prioritizes

Our capital investments in recent years have fluctuatedweak financial base. For this reason, we have been working to

the happiness of all stakeholders. The Company engages indramatically, from ¥3 billion in fiscal 2018 to ¥2 billion in fiscal

improve and strengthen our financial position as our top priority.

various efforts to benefit the environment and society. TheseIn the second quarter, when sales were at their lowest, we2019 and ¥450 million in fiscal 2020. Particularly in Japan,

As a result, our net cash improved significantly to –¥900 million

include energy saving measures, going paperless, work style

determined that we could not expect sufficient future cash flowwhere even the slightest investment may result in an immediateat the end of fiscal 2020, and we are on track to be virtuallyreforms, human resource development, and promoting active

and recorded an impairment loss on the Hyogo Plant andimpairment loss, we must limit our investments to the minimum

debt-free by fiscal 2021.

roles of women. So far, however, these have been individual,

company-wide shared assets. In the end, the COVID-19

necessary level. As a result, depreciation in fiscal 2020 totaled

However, this improvement is simply a by-product of ourpandemic was the deciding factor, but we now recognize that the¥970 million, down ¥700 million year on year. In fiscal 2021, we

unfortunate inability to make sufficient forward-looking steps asactivities under the objective of “sustainability” and link them toroot cause, as in fiscal 2019, was the aggressive capital

expect to make around ¥900 million in capital investments,

our sales declined. In the past, strengthening our financial basethe enhancement of corporate value. Due to the increasing

investments we made in the past. By contrast, China quickly

mainly for replacement of aging facilities in China, andhas been our most important management priority. Now,

importance of disclosing such non-financial information, in

recovered from the effects of COVID-19 and has been

depreciation to be around ¥1 billion.

however, we are more concerned with finding the “next step” foraddition to financial information, creating a system for suchgrowth to improve our corporate value in the future. We

disclosure is my key task.

performing well since the second quarter. Our facilities there are

Although investment reductions have not had a significant

now operating at close to full capacity, so the aggressive

negative impact on business continuity at this stage, the fact isinvestments we have made to increase production capacity havethat we have not been able to plant seeds for the future. Our top

been successful.

priority is to recover our business performance as soon as

In Vietnam, where we recorded an impairment loss in fiscal

possible so we can establish a solid growth strategy and make2019 resulting in a fixed asset book value of zero, our operations

increased proactive investments to implement that strategy.

However, we were unable to greatly increase sales due to a
decline in orders from Japan. Nevertheless, our plant there has a
lot of room for growth, and we will make it more profitable.

Improving asset turnover
Despite the decline in net sales, the fixed asset turnover ratio
improved significantly to 4.50 times, from 3.64 times in fiscal
2019. Due to the significant decrease in the balance of fixed

Punch Industry Co., Ltd.

disconnected activities. Our next task is to organize these

Net Cash (FY2012–2020)(Millions of yen)

6,000
4,000
2,000
0

have been stable, and profitability has improved significantly.

07

Dividend per Share and Payout Ratio

Cash and deposits-2,000-2,108-4,000-3,853-6,000-8,000-10,000-7,212FY2012-3,526-2,561-905-3,499-3,065FY2018FY2019Interest-bearing debt
Net cash-6,216FY2013

FY2014FY2015FY2016FY2017

FY2020Punch Industry Co., Ltd.

08

VC2020Plus

Specia l Fe a tureP r og r e s s of VC 2 0 2 0 Pl us

Working-style reforms and human resource
development

Priority Initiatives
The Punch Industry Group has completed the first year of Value Creation 2020 Plus (VC2020 Plus), its mid-term business plan covering the two-year
period from April 2020 to March 2022. Under the plan, the Group is united in an effort to rebuild its business, which has deteriorated with the growing
impact of trade friction between the United States and China. Although the start of the plan coincided with the worldwide outbreak of COVID-19, in fiscal
2020 we made new inroads and good progress in all four priority initiatives outlined in the plan: “Establishment of 5-pole sales system,” “Enhancecustomer-focused marketing capabilities,” “Optimize the global production system and strengthen R&D,” and “Working-style reforms and human resource
development.” We look forward to making further progress in fiscal 2021.

As part of our working-style reforms, we are striving to shorten total
working hours, including by encouraging all employees to take paid
leave and encouraging male employees to take parental leave. In fiscal
2020, working hours naturally decreased due to temporary suspensions
at domestic plants. As sales increase, however, it will become more andmore important for employees to maintain a healthy work-life balance.
In human resource development, we aim to build a system that canconstantly produce “human resources who can formulate strategies”
and “human resources who can execute strategies.” In addition to the

Measures by Region
China

Japan
Establishment of
5-pole sales system

Southeast Asia, India

EuropeThe Americas

Strengthen regional strategy

Establish sales
structure

Expand customer base

Increase business with global companies; step up medical- and beverage-related sales

Enhance customer-focusedmarketing capabilities

Optimize the global production
system and strengthen R&D

Working-style reforms andhuman resource development

Product development based on
customer needs
Improvement of ordering system

Partnerships with customers
in new fields

Optimization of global production systems for standard and special-order products
Promote labor-saving and automated production in Japan and China
Increase medical- and beverage-related production capacity
Increase stabilization and profitability of Vietnam Plant operations
Development of new fields and markets
Looking into business tie-ups and M&As with other companies
Improvement of processing technology for difficult-to-process materials
Continue development in the aerospace field

Promotion of active roles of women and work-life balance/Development of human resources who can be active overseas

Establishment of 5-pole sales system
During the year, we dissolved the Marketing Office for Europe and theAmericas, which had been supporting our U.S. sales companies andEuropean distributors, based on the recognition that we have establisheda solid sales framework in Europe and the Americas and have moved to
the next stage of development. In the United States, we are striving to
attract increased orders for medical and beverage-related products bystepping up developmental collaboration with the Kitakami Plant. We arealso working to increase our profile by opening a new website and usingsocial networking platforms to attract new customers. In Europe, we won
new large orders from multiple medical-related manufacturers and built
strong relationships with distributors. Our next challenge is to establish
the capacity to fill these orders within our current production system.

09

Punch Industry Co., Ltd.

Manufacturing

Through the know-how and technological prowess we have cultivatedsince our founding, as well as our integrated production structure andcustomer-oriented sales structure, we have a wide range of offerings,
from standard to special-order products, together with meticulous
support and consulting capabilities, which together represent ourstrengths. We got off to a good start with reassigning our manufacturing
department personnel to the sales office, which was aimed at reinforcing
our proposals to include technical details. This has enabled such
personnel to discuss process-related matters on the spot. In addition to
our branch offices, we have assigned sales representatives to Niigata

Optimize the global production systemand strengthen R&D
At the Punch Industry Group, we broadly divide R&D into “research anddevelopment” and “technology development.” In “research anddevelopment,” we are working with industry, academia, and government
to create new value, differentiate ourselves from our competitors, andsolve our customers’ problems, and we are also developing newmaterials with new levels of performance. In “technology development,”
we are pushing the boundaries to make previously impossible
processing methods possible, embracing creativity to make existingprocessing methods more efficient, and pursuing ways to further reduce
costs that will help us increase sales and generate profits.
In China, meanwhile, we are actively cooperating with users on new
product development through joint resolution of technical issues.

Business Planning Project: Japan

In Japan, which has been greatly affected by COVID-19, we launched
our “Business Planning Project” in 2021 to build a strong
management structure that can withstand changes in the external
environment. The aim of this initiative is to increase corporate value
over the medium and long terms by creating a system that cansustainably generate profits, rather than downsizing based on
short-term reductions in fixed costs. Core elements of the project
include restructuring sales strategies, reducing costs, andeliminating failure costs. Some of these efforts have already beeneffective in the short term, evidenced by the Company’s recent
improvement in performance.
Upon reflection, we realized that market prices have deviated from
our initial assumptions since fiscal 2019, resulting in more intense
price competition, and our delayed responses have led to a decline inour domestic performance. For this reason, we are going back tobasics by reviewing our data collection methods to grasp current
realities and implementing a high-speed PDCA (plan-do-check-act)
cycle on a monthly basis to develop strategies based on that data.
We believe we now have a strategy in place that is highly achievable,
and in fiscal 2021 we will clarify the roles and responsibilities ofinternal and external employees within each sales office and work toincrease the volume of our activities.
We will also expand our product analysis guidance service at eachsales office. This will enable us to visualize individual cost reduction
issues and help us optimize our production facilities. In addition to

Sales

Enhance customer-focused marketing capabilities

and Kumamoto in order to increase the volume of activities andimplement a community-based approach. These efforts have been wellreceived.
We will continue emphasizing QCD (quality, cost, delivery). (Here,“quality” means improving the quality of both sales and products as partof customer service; “cost” means realizing optimal prices that meetcustomer needs; and “delivery” means deploying logistics effectively todeliver products quickly.) In addition to further developing new products
based on customer needs and actively proposing process
improvements, we are stepping up efforts to become the first choice forcustomers by pursuing simplicity through web-based ordering.

PICK UPefforts of Punch Academy, our in-house educational development
organization, we will clarify the image of the human resources we seek
and start education on manufacturing and quality for all employees. Our
aim is to build a systematic human resource development program. We
will also accelerate diversity in various ways. These include eliminating
the perception of gender roles in the workplace, raising awareness byproviding various opportunities irrespective of gender, engaging in our“Iku Boss campaign” to foster managers who care about theirsubordinates’ private lives, and promoting the advancement of women in
the workplace. At the same time, we will make systematic efforts todevelop global human resources and next-generation managers in
preparation for further globalization of the Group.

increasing sales of standard products, we have been successful inattracting orders for special-order products, and we believe there islarge potential for growth in a wide range of areas. Always
emphasizing customer convenience, we believe our mission is tocreate a new ordering system that our customers can use withminimal effort.
We are pursuing initiatives to reduce manufacturing andprocurement costs and eliminate failure costs—key factors inmaintaining price competitiveness. For example, we have unified our
feedback system for defective products identified when semi-finishedproducts manufactured in our Chinese plants are processed into
finished products in Japan. In this way, we are improving quality
throughout the Group and eliminating failure costs. Semi-finishedproducts are used in large quantities and are expected to be highly
effective. In the field of manufacturing, however, there are manythings to learn from our challenges and failures. Our goal is toeliminate the cost of failures while making the most of ourchallenges. Although we still have room for improvement, we aremaking good progress in reducing our defect rate.
We are also looking to develop services that utilize 3D scanners.
Here, we are considering a service that will help customers solve
their problems by measuring molded plastic and metal products
produced by the dies and quantifying any differences between those
products and the design specifications.

Collect data

Increase order rate

Resurrect dormant targets

Launch major offensive

Analyze
Plan/verify strategy

Analyze reasons for order loss
Select targets

Analyze reasons for dormancy
Set goals for each sales office

Select targets
Organize

Reduce costs

Increase quotation accuracy

Improve quality

Restructure purchasing system

Analyze flow/setup

Standardize quotation
process

Enhance mechanisms
and technical capabilities

Form networkof strategic business partners

Handling multiple units;
improve operating rate

Improve quotation follow-up

Eliminate failure costs

Develop new business partners

Punch Industry Co., Ltd.

10

Technology Development and R&D
The Punch Industry Group proactively engages in technology development and R&D, the source of value creation fora manufacturing company.

R&D and Marketing Creating New Value
The Punch Industry Group’s R&D bases in Japan and China work with each other to develop new construction methods and products. Our businessenvironment is undergoing remarkable changes due to advances in digitalization and electrification, as well as business model innovations. In thiscontext, our aim is to stay close to the market in order to understand new needs and create new value, as well as new businesses and products forthe next generation.

Obtained Patent for Coating Selection Process

3D Service Initiatives

A coating is a film that is applied to the surfaces of punches and other mold anddie components to improve their durability and releasability. The complexity andsophistication of products processed by molds and dies have grown in recent
years, and molds and dies are being subjected to increasingly high loads whenprocessed, pushing up demand for coatings. Meanwhile, many coating
manufacturers have developed and released many kinds of coating films,
making customers confused due tolack of materials and comparative
data to help them select the best
coatings for their machining
requirements.
In response, we have developed aprogram to select the most suitablecoating from our offerings, which
cover more than 150 types, according
to press speed, material to bepunched, and other processing
conditions of customers. The
program has made it possible toTitle of invention: Diagram information
quantify the selection of coatings,
generator, assisting device for selecting
coating agent for mold and die
which was previously based oncomponents, diagram information
generation method, and assisting method
experience. In January 2021, weand program of selecting coating agent
obtained a patent for this technology.
for mold and die components

3D services are those that utilize the measurement technology
of 3D scanners. Such technologies are effective for measuring
shapes and are particularly effective in measuring the complex
shapes of molds and dies, which are indispensable for
manufacturing. The Company utilizes these measurement
technologies to connect the measured data with technology toverify the shape, theory, conditions, and other aspects of the
manufacturing process. In this way, we are working to develop
services that will help shorten development lead times andimprove the quality of manufacturing for customers who use
our mold and die components.
We aim to further contribute to Japan’s manufacturing by
combining the experience and measurement technologies wehave cultivated over many years in the mold and die industry.

Solar Panels Installed
In 2018, our Malaysia Plant installed around 450 solar panels on the roof of its facility, with an annual CO2
reduction effect of 142 tons. Solar energy generated from the panels covers part of the electricity used in theplant, and surplus electricity is sold to local power companies.

S ocialPunch Family Salon

Skills Contest
Every year, we hold a skills contest to improve the technical abilitiesof our employees. In 2020, the fifth year of the competition, arecord-high 400 contestants from Japan and China competed in two
categories—technology and creativity—demonstrating their highlevels of skill and originality.

Gold Prize (Technology Category)Gold Prize (Creativity Category)Groupwide No Tobacco Day
The World Health Organization (WHO) has set aside May 31 eachyear as “World No Tobacco Day.” On that day, Group companies
engage in their own independent activities to help people quit
smoking with the aim of building a tobacco-free society.

Since 2020, we have been holding a web-based social event called
Punch Family Salon for employees (both men and women) on
maternity or childcare leave. The aim of the program is to ease
employees’ anxiety they feel during leave of absence through chats
and consultation, allowing a smoother return to work. It provides ameaningful forum in which experienced mothers and fathers give
advice on balancing workand childcare, andparticipants exchange
information on utilizing theCompany's regulations onchildcare.

Providing Opportunities to Learn
The Company offers workplace tours and internships to students
attending local schools to provide them with opportunities to learn
about the community and to consider their own career paths throughlearning.

Measures complex-shaped parts and calculates the optimal dimensions
for customers’ production needs

ESG
The Punch Group considers ESG (environmental, social, and governance) and the SDGs to be important management
priorities and is working to address them. Of the 17 SDGs, the entire Group is working on seven goals that are particularly
relevant to our business, including those already being implemented by individual Group companies.

E nvironment
Going Paperless
In addition to digitizing internal applications, reports, and other paper documents, some departments haveintroduced wireless LANs and laptop computers to enable mobile work on the floor. We have also stopped
distributing meeting documents and other materials in paper form. Since 2019, moreover, we have introduced atool for linking fax machines and multifunction devices at our domestic branches, to digitize and streamlineorder forms received from customers by fax. This has enabled us to reduce the number of printed documents bymore than 30% across all domestic branches.

11

Punch Industry Co., Ltd.

Promoting the Advancement of Women—Message from the President
We believe that the active participation of women has a significant impact on corporate culture and is essential forthe sustainable development of the Company. Promoting the advancement of women will inevitably lead to
institutional reforms and business improvements related to employment, which in turn will bring about majorchanges in work styles for both women and men. It will also help us develop a corporate culture that embraces
diversity.
Under Value Creation 2020 Plus, our mid-term business plan, we have cited “Work-style reforms and human resource development” as apriority initiative. One of our most important challenges here is to accelerate efforts to promote the advancement of women, support thediversification of women’s career and life plans, and proactively develop environments that emphasize a good work-life balance.
So far, we have introduced a self-reporting system for career planning called “My Job Plan” and revised our regulations on childcare andnursing care. As a result, the number of male employees taking childcare leave jumped to 20 in 2020, up from three in the previous year. We
feel that awareness of work-life balance is gradually improving.

Punch Industry Co., Ltd.

12

Corporate Governance
The Company made a transition from a company with audit & supervisory board to a company with audit andsupervisory committee, by resolution of the Annual General Meeting of Shareholders held on June 23, 2021, for the
purpose of further enhancing the supervisory function of the Board of Directors and speeding up managerial
decision-making.
Initiatives to Strengthen Corporate Governance
3/20133/20143/20153/20163/20173/20183/20193/20203/2021President

2013- Masaaki Takeda

Chairperson of the Board of Directors

President serves concurrently as Chairperson

2016- External director serves as Chairperson

Independent External Director(s)2013- 1 person

2016- 2 persons

Advisory Committee, etc.

3/2022

2019- Tetsuji Morikubo

3. Nomination & Remuneration Advisory Committee* Formulation of policy for nomination and dismissal of management executives* Planning for and monitoring of successor
Since public listing:
Risk and Compliance Committee

Management Organization, etc.

2012- Company with audit & supervisory board

2015- Name changed to the Risk Management Committee

Basic Policy

2021- Company with audit
and supervisory committee

1. Securing shareholders’ rights and equality

The Punch Industry Group makes dedicated efforts to enhance corporate
governance practices to comply with laws and sincerely fulfill the
corporate social responsibility, to ensure the soundness and transparencyof management, to protect the interests of all shareholders, customers,
and other stakeholders, and to continuously increase the corporate value,
under the following concepts:

2. Appropriately cooperating with all the stakeholders
including shareholders
3. Ensuring transparency by appropriate information disclosure
4. Supervising business execution by the Board of Directors
5. Engaging in constructive dialogue with shareholders

General Meeting of Shareholders
Appoint/Dismiss

Monitoring/supervisory

Accounting
AuditorAppoint/Dismiss

Determine
proposal
for appointment
and dismissal

Audit
and Supervisory
Committee
Directors

Coordinate
Accounting
audit

Appoint/Dismiss

Issue
instructions/
ReportAudit/
Supervise

Audit

Business
execution

Inquire/Report(Chairperson: External director)(excluding Audit and Supervisory
Committee Members)

Auditing
OfficeAppoint/
Dismiss
SuperviseIssue instructions/Report

Corporate Audit
OfficeBoard of Directors
Directors(Audit and Supervisory
Committee Members)

Internal audit/
Internal control support

Executive Board
COO/Sales
COO/Manufacturing
CFO
Executive Officer

Issue instructions

Nomination &Remuneration
Advisory
Committee

Issue
instructions/
ReportIssue
instructions/
ReportReportRisk
Management
Committee
Monitoring

Operating Division/Administration Division/Group companies
1. Board of Directors & Business Execution Structure
The Board of Directors is composed of 10 Directors (including three
Directors who are Audit and Supervisory Committee Members), four ofwhom are External Directors (including two External Directors who are
Audit and Supervisory Committee Members). An independent External
Director serves as the Chairperson of the Board of Directors, and morethan one-third of the Directors are independent External Directors, toenhance the supervisory function. The Board of Directors makes
decisions on basic management policies, matters stipulated by laws and
13

Punch Industry Co., Ltd.

The Nomination & Remuneration Advisory Committee, composed of allExternal Directors and Directors in charge of management, has been
established as an advisory body of the Board of Directors to clarify basic
policies and standards and enhance fairness and transparency of thedecision-making process when nominating and dismissing Directors andExecutive Officers, and when determining remuneration for Directors(excluding Directors who are Audit and Supervisory Committee
Members) and Executive Officers.

4. Risk Management Committee
The Risk Management Committee, consisting of Executive Officers, theGeneral Manager of the Business Administration Department, persons incharge of major affiliates, and the General Manager of the Corporate
Audit Office, works to prevent the occurrence of risks and minimize
damage by establishing a risk management system.

5. Remuneration of Board Members, etc.
The total amount of the remuneration of Directors is approved by theGeneral Meeting of Shareholders. The Board of Directors decides the
specific amount of remuneration for each Director (excluding Directors
who are Audit and Supervisory Committee Members) upon theexamination of appropriateness at the Nomination & Remuneration
Advisory Committee. The Audit and Supervisory Committee decides the
specific amount of remuneration for each Director who is an Audit andSupervisory Committee Member.

Compliance/Risk Management
The Company recognizes that thorough compliance is essential for
improving corporate value, and has established the Punch Industry’s
code of corporate ethics, according to which all officers and employees
are required to act in compliance with laws and regulations, and to act
with high ethical standards. The Company has also set up the Punch
Hotline, an internal reporting system for reporting and consultations if
compliance-related issues are discovered. We strive to uphold internal
controls and improve the system of in-house checks and balances.

Compliance education is carried out via new employee and rank-based
training to ensure that all employees engage in appropriate and fairbusiness activities. Compliance education and training is also regularly
provided to all officers and employees. Furthermore, the Company has
established internal regulations regarding risk management and a risk
management system, and has developed a system to comprehensively
recognize and evaluate management and business risks that may affectmanagement, to prevent the occurrence of risks and minimize damage.

Messages from External Directors

ReportCEO

Issue instructions/Report

The Audit and Supervisory Committee is composed of three Directors(including two External Directors) who attend meetings of the Board of
Directors and other important meetings and express their opinions, asnecessary, on the status of business execution by Directors (excluding
Directors who are Audit and Supervisory Committee Members) and
important decisions. In addition, the Audit and Supervisory Committee
conducts rigorous audits through hearings and reports from Directors(excluding Directors who are Audit and Supervisory Committee
Members), Executive Officers, and others.

2021- 4 persons

2015- Nomination & Remuneration Advisory Committee

Risk Management

2. Audit and Supervisory Committee/Audit and Supervisory Committee Members

regulations, and other important matters related to management. The
Board of Directors holds regular meetings monthly, as well as
extraordinary meetings and meetings for exchange of opinions by themembers of the Board of Directors when necessary. As thedecision-making body for business execution, the Executive Board,
composed of all Executive Officers, engages in deliberation and makes
decisions related to execution of business, including matters legitimately
delegated by the Board of Directors.

Yukiko Mitsuhashi

Naruhiko Takatsuji

External Director

External Director

After several years of discussions and study sessions at theBoard of Directors, we have made the transition to a company
with audit and supervisory committee. This will strengthen thecharacter of the Board of Directors as a monitoring board
rather than a management board, and will enable it to take amore objective view of management. We have already had anExternal Director chairing our Board of Directors since 2016,
and believe that this will have a similar effect. We will continue
to make every effort to improve our corporate value by leaving
behind the precedents and ties of the executive department,
and actively evaluating measures that are the most desirable atthe current time.
Punch Industry’s corporate governance website

The external environment surrounding the machinery industry
has been difficult over the past three years, with U.S.-China
trade friction starting from the summer of 2018 and the
COVID-19 pandemic from the beginning of 2020. However,since the summer of 2020, demand in the machinery industry
has started to expand, mainly in China, and has entered a
stage of renewed growth. As an analyst, I have been involved
from an outside perspective. I will continue to reflect on theneeds of the outside world, and make every effort to makePunch Industry a better company that can improve corporate
value for everyone, both inside and outside the Company.

https://www.punch.co.jp/english/companyinfo/governance.html

Punch Industry Co., Ltd.

14

Honorary Chairman, Directors, and Executive Officers (As of June 23, 2021)
Reasons for Appointment of Directors and Meeting Attendance
Name

Directors
Directors (Audit and Supervisory Committee Members)

15

Reason for appointment

Independent
director

Tetsuji Morikubo

Since becoming a director of the Company in June 2018, Mr. Morikubo has overseen the entire businessof the Punch Industry Group, with a focus on management and business development strategies. He
became president and CEO in November 2019. As a top executive of the Punch Industry Group, Mr.
Morikubo has worked hard to improve corporate value, utilizing his business experience in the Company
and the Punch Industry Group’s operations in China and Southeast Asia. We have therefore deemed it
suitable to appoint him as the chief executive officer to accelerate rebuilding management and drive thefurther growth of the Group, in light of its deteriorating performance due to sluggish market conditions
since the middle of fiscal 2018, as well as the recent COVID-19 pandemic.

Yasuhiro Sanada

After becoming a director of the Company in June 2012, Mr. Sanada has led the Punch Industry Group’s
global expansion as a top executive, utilizing his business experience in the Company and the Punch
Industry Group’s operations in China. Since 2019, he has overseen the Group’s operations with a focus on
cultivating new demand and attracting business orders amid ongoing sluggish market conditions. In lightof his experience and track record, we have deemed it suitable to appoint him as a director to “Enhancecustomer-focused marketing capabilities,” a priority initiative defined in VC2020 Plus, the Group’s
mid-term business plan.

Attended 18 of 18
Board of Directors
meetings

Akira Takanashi

Since becoming a director of the Company in June 2018, Mr. Takanashi has been a powerful force inimproving the Group’s manufacturing capabilities and product quality as head of manufacturing, utilizing his
business experience in the Company and the Punch Industry Group’s operations in China. We have therefore
deemed it suitable to appoint him as a director to take charge of cost reductions and quality reforms at ourdomestic and overseas production bases.

Attended 17 of 18
Board of Directors
meetings

Takao Murata

Mr. Murata has served as a director since June 2012. Utilizing many years of experience and insights infinance and accounting, he has overseen the Group’s administration department. In addition to centrally
managing the Group’s human, material, financial, and information resources, he has promoted
working-style and corporate governance reforms. We have therefore deemed it suitable to appoint him asa director to take charge of maintaining a sound financial structure while promoting further working-stylereforms, governance reforms, and human resource development.

Attended 18 of 18
Board of Directors
meetings

Susumu Sugita

After overseeing the sales, manufacturing, and product development divisions of the Company as a director
for six years from June 2010, Mr. Sugita has been a full-time Audit & Supervisory Board member for six
years since June 2015. During this time, he has utilized his deep knowledge of the Group’s business toperform auditing duties. Due to our transition to a company with audit and supervisory committee, we have
deemed it suitable to appoint him as a director to take charge of the president’s special mission ofstrengthening cooperation between the Audit and Supervisory Committee and the internal audit division.

Attended 17 of 18
Board of Directors
meetings

Yukiko Mitsuhashi(External)

In addition to work experience at a business corporation, Ms. Mitsuhashi has extensive knowledge in
general legal affairs as a lawyer, as well as experience as an external director at another company. She
has also provided appropriate advice regarding our efforts to promote diversity management from her
perspective as a woman, and we have deemed it suitable to appoint her as an external director who willrealize “proactive” governance. As the chairperson of the Board of Directors, we expect Ms. Mitsuhashi tofoster stimulated discussions at Board of Directors meetings, and as a member of the Nomination &Remuneration Advisory Committee, we expect her to provide objective and highly transparent opinions on
the selection of officer candidates and their remuneration levels.

Attended 18 of 18
Board of Directors
meetings

Directors

Yuji Morikubo

Tetsuji Morikubo

Yasuhiro Sanada

Akira Takanashi

Founder, Honorary Chairman

Chief Executive Officer

Chief Operating Officer(Sales)Chief Operating Officer(Manufacturing)

Attended 18 of 18
Board of Directors
meetings

Mr. Takatsuji has a high level of insight into corporate finance and corporate governance, extensive
experience in corporate IR and as an analyst at securities companies, and broad knowledge of external
Naruhiko Takatsuji conditions, including trends in the Company’s industry. We have therefore deemed it suitable to appoint
him as an external director who can improve the corporate value of the Company. In addition to providing(External)
appropriate advice on the Company’s management strategies, we expect Mr. Takatsuji, as a member of theNomination & Remuneration Advisory Committee, to provide objective and highly transparent opinions on
the selection of officer candidates and their remuneration levels.

—

Minoru Kawano

Mr. Kawano has many years of experience in finance and accounting at his previous job and at theCompany, as well as four years of experience as the head of the internal audit division. He therefore has a
deep knowledge of finance and accounting, internal auditing, internal control, risk management, and thelike, in addition to a solid understanding of the Company’s business. Accordingly, we have deemed it
suitable to appoint him as an Audit and Supervisory Committee member to perform the Committee’s duties.

—

Yoriatsu Matsue(External)

Mr. Matsue has served as an external Audit & Supervisory Board member for nine years since his
appointment in June 2012. Based on his many years of experience and knowledge as a lawyer, he has
made fair judgments and thus contributed to the objectivity and neutrality of the Company’s management.
We have therefore deemed it suitable to appoint him as an external Audit and Supervisory Committee
member. In addition to performing his duties as an Audit and Supervisory Committee member, we expect
Mr. Matsue, as a member of the Nomination & Remuneration Advisory Committee, to provide objective andhighly transparent opinions on the selection of officer candidates and their remuneration levels.

Attended 18 of 18
Board of Directors
meetings and 16 of 16
Audit & Supervisory
Board meetings

Tomoo Suzuki(External)

Mr. Suzuki has been involved in financial and accounting operations for many years at a businesscompany, and has also served as an auditor for eight years at another company. Based on his extensive
knowledge of finance and accounting and his auditing experience, we have deemed it suitable to appoint
him as an external Audit and Supervisory Committee member to perform the Committee’s duties. In
addition to performing his duties as an Audit and Supervisory Committee member, we expect Mr. Suzuki,
as a member of the Nomination & Remuneration Advisory Committee, to provide objective and highly
transparent opinions on the selection of officer candidates and their remuneration levels.

—

Punch Industry Co., Ltd.

Honorary Chairman
Attendance at Board of
Directors and Audit &Supervisory Board
meetings in FY2020

Takao Murata

Susumu Sugita

Yukiko Mitsuhashi

Naruhiko Takatsuji

Chief Financial Officer

Director

External Director

External Director

Minoru Kawano

Yoriatsu Matsue

Tomoo Suzuki

Director (Audit and Supervisory
Committee Member)

External Director (Audit andSupervisory Committee Member)

External Director (Audit andSupervisory Committee Member)

Hideki Kinumatsu

Joji Kawasaki

Executive Officers

Hirohisa Morikubo

Tomoki Katamura

Punch Industry Co., Ltd.

16

Company Profile (As of March 31, 2021)

5-Year Financial and Non-Financial Highlights
Financial information

3/20173/20183/20193/20203/2021

Net sales

36,64841,02540,93535,348Gross profit

10,191

11,658

11,472

Selling, general and administrative expenses

8,201

8,814

323

367

Company name

PUNCH INDUSTRY CO., LTD.

Business

Manufacture and sale of mold and die components

32,462

Established

1975

Main banks

9,187

9,086

Capital2,897.73 million yen

8,893

8,351

7,473

Number of employees

4,006 (consolidated)

443

438

490

Head office

Omori Bellport E-5F.,
6-22-7 Minami-oi,
Shinagawa-ku, Tokyo

MUFG Bank, Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation
Sumitomo Mitsui Trust Bank, Limited
Resona Bank, Limited

Fiscal Year (Millions of yen)

R&D expenditure
Operating profit

1,990

2,843

2,578

835

1,613

Ordinary profit

1,874

2,731

2,547

712

1,676

Capital investments

2,909

2,776

2,989

2,011

452

Depreciation

1,396

1,597

1,729

1,674

968

Profit (loss) attributable to owners of parent

1,375

1,788

960

(3,485)477

Net cash provided by operating activities

1,785

3,393

3,185

2,490

2,942

Net cash used in investing activities(2,770)(2,335)(3,253)(1,788)(670)

Free cash flow

(985)

1,058

(68)

701

2,272

Net cash provided by (used in) financing activities

1,199

(738)

74

(772)

(1,684)

Investor Information (As of March 31, 2021)

Cash flows (Millions of yen)

At year-end (Millions of yen)

Stock Information
Total number of shares authorized

80,000,000

Total number of shares issued

22,122,400

Number of shareholders

4,947

Breakdownof
Shareholders

Total assets

29,451

32,56031,15525,576

24,702

Stock exchange listingFirst Section, Tokyo Stock Exchange

Net assets

14,176

16,174

15,734

11,747

12,436

Security code

6165

Cash and cash equivalents

3,269

3,689

3,516

3,366

3,962

Interest-bearing debt

6,857

6,332

7,079

6,455

4,997

Shareholders’ equity

13,59815,096

15,50011,913

12,355

Number of shares per trading unit
Transfer agent
Accounting auditor

100
Sumitomo Mitsui Trust Bank, Limited
PricewaterhouseCoopers Aarata LLC

62.49

81.61

43.92

(160.01)

21.90

Net assets*

646.25736.64721.49536.64568.26

Cash dividends*

13.0

16.75

16.75

2.00

2.00

Dividend payout ratio (%)

20.8

20.5

38.1

―

9.1

Key indices

Name

Number ofshares held

Percentage ofshares held (%)

27.8

28.4

28.0

26.0

28.0

MT Kosan Co., Ltd.

3,804,900

17.44

Operating profit margin (%)

5.4

6.9

6.3

2.4

5.0

11.06

9.8

11.8

6.0

―

2,412,400

Return on equity (ROE) (%)

4.0

CACEIS BANK S. A., GERMANY BRANCH - CUSTOMERACCOUNT

Return on assets (ROA) (%)

4.8

5.8

3.0

―

1.9

Master Trust Bank of Japan, Ltd. (trust account)

1,103,700

5.06

Net worth ratio (%)

48.1

49.6

50.4

45.8

50.2

4.20

9.26

14.09

12.93

―

915,924

Price-to-earnings ratio (times)

27.76

Punch Industry Employees’ Stock Ownership
SchemeOverseas sales ratio (%)

56.6

58.2

59.0

58.8

62.0

Yuji Morikubo

663,000

3.04

Tetsuji Morikubo

663,000

3.04

Custody Bank of Japan, Ltd. (trust account)

524,900

2.41

Michiko Kamba

431,000

1.98

Non-financial information

3/20173/20183/20193/20203/2021

Number of employees (persons)

3,959

4,298

4,282

4,020

4,006

Overseas employee ratio (%)

74.1

75.6

75.2

73.6

74.3

THE BANK OF NEW YORK 134088

420,000

1.92

Ratio of females among new graduates hired (non-consolidated) (%)

52.6

42.1

47.8

44.0

26.3

Custody Bank of Japan, Ltd. (trust account 5)

270,300

1.24

Punch Industry Co., Ltd.

2,939,400

Other domestic companies

3,996,400

Foreign companies

4,522,972

Securities companies

331,366

46.70%
13.29%
18.06%
20.45%
1.50%

Stock Prices and Trading Volumes

Gross profit margin (%)* On January 1, 2018, the Company implemented a 2-for-1 split of shares of common stock. Figures in the above table are calculated on the assumption that the stock
split was implemented at the beginning of the fiscal year ended March 2017.

17

Major Shareholders (Top 10)

10,332,262

Financial institutions

Note: “Individuals and others” includes treasury stock.

Per share information (Yen)
Net income (loss)*

Individuals and others

Note: Treasury stock (303,406 shares) is excluded from calculations of “Percentage of shares held.”

Trading volume (right axis)(Yen)(Thousand shares)

800

4,000

600

3,000

400

2,000

200

1,000

0

12/
2019

4/
2020

8/
2020

12/
2020

3/
2021

0

Punch Industry Co., Ltd.

18