Head office: Omori Bellport E-5F., 6-22-7 Minami-oi,
Shinagawa-ku Tokyo, 140-0013, Japan
Phone: +81-3-6893-8007 Fax: +81-3-5753-3131
http://www.punch.co.jp/english/

AnnualReport 2016
Annual Report 2016

Supporting product manufacturing around the world

Becoming a global Punch Industry
by leveraging our competitive
advantage as an integrated
manufacturing and sales company

Contents
Section 1: How the Punch Group Creates Value
03 Performance Highlights
05 Our Strengths
07 Business Fields

Integrated
manufacturingsystemCustomerfocused sales
and marketingsystemAdvanced
technologicalcapabilities

11 History
13 The Path to Value Creation
15 Business Model
Section 2: Strategies and Practices to Further Create Valuefor the Punch Group
17 A Message from the PresidentManagement Principles
Driven by the spirit of innovation, we will continue to develop andpropose advanced technologies in response to customer needs,
for the benefit of society.
We will create a vibrant corporate culture that fulfills people’s dreams,
by placing high value on vigorous energy and flexible ideas.
We will contribute to social development by embracing the spirit of

23 A Message from the COO
26 A Message from the CFO
Section 3: The Basis Supporting Value Creation
29 CSR Initiatives
32 Corporate Governance
34 Directors, Audit & Supervisory Board Members,
Honorary Chairman, and Executive Officers

environmental consideration and compliance and promoting soundcorporate activities that are appreciated by society.

Corporate Vision
We aim to become the leading brand in the mold and die components
industry and achieve high profitability by leveraging our competitive
advantage as a comprehensive manufacturing and sales company.

Section 4: Financial and Corporate Information
35 Financial Information
37 Management’s Discussion and Analysis
38 Business Risks
41 Financial Statements
46 Company Profile
47 Investor Information

01 Punch Industry Co., Ltd.

Annual Report 2016

Punch Industry Co., Ltd.

Annual Report 201602

Performance Highlights

Section 1:
How the Punch Group
Creates ValueOur PERFORMANCEHIGHLIGHTS
Section 1: How the Punch Group Creates ValueIn the fiscal year ended March 31, 2016, we reported year-on-yearincreases in revenue and earnings and forged a path for renewed
and foreign exchange factors.

Main Financial Data

36.7

billionNet sales¥

1.9

billionOperating income

＋6.9％

¥

1.6

Asia, etc.

9.1

billionOrdinary income＋15.2％

Japan

42.5

%

＋3.1％

%

Section 3:
The Basis Supporting
Value Creation¥

Sales by Region

Section 2:
Strategies and Practices to Further
Create Value for the Punch Group

growth, despite the impact of the economic slowdown in China

China

1.2

8.9

%

billionProfit attributable to ownersof parent

Return on equity (ROE)＋5.1％–1.2ppt

51.2

Section 4:
Financial and Corporate
Information

¥

48.4

%

%

Net worth ratio

Sales by Industry＋3.3ppt
Other

¥

1.2

billionCapital expenditures

–0.3％

¥

0.3

billionR&D expenses

＋9.6％

73.8

%

Ratio of overseas
employees–0.3ppt

22.5

Automobile%

Consumer electronics &precision equipment

13.1

%

46.5

%

Electronic devices &semiconductors

17.9

%

Note: Percentages and percentage points (ppt) in small type indicate year-on-year changes.

03 Punch Industry Co., Ltd.

Annual Report 2016

Punch Industry Co., Ltd.

Annual Report 201604

Section 1:
How the Punch Group
Creates ValueOur Strength
Our Strengths

The Punch Group is advancing its global operations based on its
integrated manufacturing system covering everything from15,000companies

Approx.

1,800

machines

Customer network of some 15,000 companies

Total number of machines operated by the Group in Japan and overseas■ Customer base of around 6,000 companies in Japan and 8,000 in China■ Wealth of capital equipment, with around 1,800 machines used at domestic and overseas bases■ Diversified portfolio resilient to economic impacts on specific industries■ Building an integrated manufacturing system that handles everything from material procurement to

final product delivery■ Deploying our technological capabilities to respond meticulously to the diverse needs of customers■ Reinforcing manufacturing of high value-added special-order products

64

bases

Production bases

Sales offices

Japan

Japan

4

8

14

Section 4:
Financial and Corporate
Information■ Focus on boosting sales in new fields (food and beverage, and medical sectors)

Overseas

Section 3:
The Basis Supporting
Value Creation

Approx.

Section 2:
Strategies and Practices to Further
Create Value for the Punch Groupmaterial procurement to final product delivery.

Overseas38

64 bases around the world■ Established a locally optimized production system and the customer-focused sales and marketing system■ China: six production bases and 32 sales offices; accounts for 48% of Group sales (higher than Japan)■ Further globalization through five-pole sales system (Japan, China, Southeast Asia & India, Europe, and

the Americas)

05 Punch Industry Co., Ltd.

Annual Report 2016

Punch Industry Co., Ltd.

Annual Report 201606

Section 1:
How the Punch Group
Creates ValueOur Products
Business Fields

Molds and dies are necessary for making automobiles, electronicequipment, and consumer electronics—essential items in our daily

Section 2:
Strategies and Practices to Further
Create Value for the Punch Group

lives—swiftly, uniformly, and in mass quantities. The Punch Groupmakes the components that constitute such molds and dies.

Deploying strengths amassed over 40 years—advanced technologicalcapabilities, product quality, and meticulous services—we support
global manufacturing and people’s comfortable lives.

Section 3:
The Basis Supporting
Value Creation

Components for Plastic Molds
Plastic molds are used in the manufacture of many plastic products, such as the outercasings of smartphones and digital cameras. Each product is made by 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 Group manufactures and sells
components used in these molds.

Key product: Ejector pins

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

Section 4:
Financial and Corporate
Information

These are what the Punch Group makes!

Key product: Core pins
Core pins are used to mold parts. Core pins
shape and engrave the portions of the partwhich they penetrate.

Example of a product made using components
for plastic molds

Mold and die components
Used in many plastic products,

Melted plastic resin is injected into

smartphones and digital cameras

molding machinesuch as the outer casings of

07 Punch Industry Co., Ltd.

Annual Report 2016

Diesa die mounted on an injection

Components
Components are ready after
cooling and solidifying

Products
Components are combined andassembled to make the final productPunch Industry Co., Ltd.

Annual Report 201608

Section 1:
How the Punch Group
Creates ValueOur Products
Business Fields

Section 2:
Strategies and Practices to Further
Create Value for the Punch Group
Section 3:
The Basis Supporting
Value Creation

Components for Press Dies
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 then pressed together to form a
product that takes the same shape as the upper and lower dies. The Punch Group
manufactures and sells components used in these press dies.

Key product: Punches

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

Section 4:
Financial and Corporate
Information

These are what the Punch Group makes!

Key product: Holder guide posts

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

Example of a product made using components
for press dies

Mold and die components
Essential for molds used in theUpper and lower dies are fitted toelectronic devices, and consumer

metal is inserted between the diesmass production of automobiles,
electronics, among others

09 Punch Industry Co., Ltd.

Annual Report 2016Dies
a press machine before sheet

Components

Products

The press machine is activated tofinish the components

Components are combined andassembled to make the productPunch Industry Co., Ltd.

Annual Report 201610

21.1 billion¥

History

Section 1:
How the Punch Group
Creates ValueOur Key Milestone

Overseas sales

in the fiscal year ended
March 2016:

Committed to consistent quality as a manufacturer since ourfoundation, we have achieved sustainable growth while meeting

Foundation

1975

1977

Changed company name to PUNCH
INDUSTRY CO., LTD.

1989

1980

Seizing growth opportunities through technological innovation

1982

Became first in the world to successfully standardize and mass-produce high-speed steel
ejector pins, a kind of plastic mold and die components

At that time, a special alloy steel called die steel was the main material used to makeejector pins. Due to the rapid growth of consumer electronics, especially color TVs,
however, demand for plastic molds increased dramatically, highlighting the growing
need for ejector pins with greater levels of strength, durability, and toughness.
In response, the Company took on the challenge of developing ejector pins fromhigh-speed steel, a high-hardness material used to make hole punches for printed
boards. We enlisted the cooperation of materials trading companies and heat
treatment companies and dispatched employees to university research departments
to enhance their knowledge of metals and heat-treatment technologies. As a result of
these and other considerable efforts, we developed high-speed steel ejector pins
boasting about twice the precision of existing ones and dramatically improved
durability. We became the first in the world to mass-produce these ejector pins, which
we standardized using our own criteria.

1983

Established Kitakami Plant in Kitakami City, Iwate Prefecture, and began nationwide salesof plastic mold components

Although we were a latecomer into the moldand die component market, mass producing
high-speed steel ejector pins led instantly toincreased market shares.

1990

1990

Overseas business expansion through entry into China

1990

Established PUNCH INDUSTRY (Dalian) CO., LTD. in Dalian, Liaoning Province, China

Seeking to further increase our production capabilities, we established a Group
company in Dalian, China to serve as our first overseas production base. It initiallyserved as a base for receiving raw materials from Japan and sending semi-finishedproducts back to Japan. Subsequently, China joined the World Trade Organization(WTO), opened its markets, and grew its economy, with local production of consumer
electronics and automobiles rising as well. This led to an increase in local demand formold and die components, thus we established a sales office in China in 2001 andthen bolstered sales in that nation.

1991

Published comprehensive catalog ofcomponents for plastic molds and press
dies

1995

Established a plant in Dalian Wafangdian,Liaoning Province, China

2003

Spun off plant in Dalian Wafangdian,Liaoning Province, and established
PUNCH INDUSTRY (Wafangdian) CO., LTD.

■	■

Established PUNCH INDUSTRY (Wuxi)
CO., LTD. in Wuxi, Jiangsu Province, China

2004

Established sales office in China

Established PUNCH INDUSTRY (Dongguan)CO., LTD. in Dongguan, Guangdong
Province, China

2002

2006

Commenced sales of mold components
in China

1989

Established subsidiary MIYAKO PUNCH INDUSTRY CO., LTD. (now Miyako Plant) in
Miyako City, Iwate Prefecture, and commenced production of press die components■

Made Pintec Corporation a Group
company■

Established PUNCH INDUSTRY DALIANTAMA SPRING CO., LTD. in Dalian,
Liaoning Province, China (now PUNCHSPRING (Dalian) CO., LTD.)

Utilizing our technological capabilities and trust attained through the manufacture ofplastic mold components, we entered the market for press die components with ourultra-precision, high-durability components.

Important
World Events

1977

1979

11 Punch Industry Co., Ltd.

End of black-and-white TV
broadcasts (full switch tocolor TV broadcasts)
Second oil crisis

Annual Report 2016

1980
1985

Japan takes world No. 1 spot for
automobile production volume
Plaza Accord reached1987

Collapse of share prices on
the New York Stock Exchange(“Black Monday”)

2012

2015

2010

Seizing growth opportunities
through renewed globalization

2010

Established PUNCH INDUSTRY INDIA PVT. LTD.
in Chennai, India

2011

Domestic sales

in the fiscal year ended

March 2016:
Established Hyogo Plant in
Kasai City, Hyogo Prefecture ¥15.6 billion■ Commenced sales of mold components
in India■2012

Formed a capital and business alliance with
PANTHER PRECISION TOOLS SDN. BHD.,
a Malaysian mold and die component maker■ Listed stocks on the Second Section ofTokyo Stock Exchange (TSE)■2001

High-speed steel ejector pins

1991

Section 4:
Financial and Corporate
Information

Commenced operations as KAMBASHOKAI CO., LTD. in Shinagawa Ward,
Tokyo, by founder Yuji Morikubo (currently
honorary chairman) to manufacture
punching pins for printed boards

1983

Section 3:
The Basis Supporting
Value Creation

1975

1975

Section 2:
Strategies and Practices to Further
Create Value for the Punch Groupthe needs of the times. Here is a short history of the Punch Group.

1995

Japanese version of Windows 95
released

2001

China joins WTO

1997

Asian currency crisis

2008

Collapse of Lehman Brothers

1999

Mobile phones with cameras launched2009

China becomes world No. 1 forsales volume of new automobiles

2013

Established Chongqing Plant in Chongqing,
China for production and logistics■ PANTHER PRECISION TOOLS SDN. BHD. (now
PUNCH INDUSTRY MALAYSIA SDN. BHD.)
became a Group company■ Established PT. PUNCH INDUSTRYINDONESIA in Jakarta, Indonesia■

2014

Assigned to the First Section of TSE

2015

PUNCH INDUSTRY (Dalian) CO., LTD.
acquired AS9100 certification■ Established PUNCH INDUSTRY
MANUFACTURING VIETNAM CO. LTD. in
Binh Duong Province, Vietnam■

2011

Termination of analog terrestrial TV
broadcasts

Punch Industry Co., Ltd.

Annual Report 201612

Section 1:
How the Punch Group
Creates ValueOur Value Creation
The Path to Value Creation

By leveraging its advanced technological capabilities to support
global manufacturing, the Punch Group will realize sustainable¥7.3

trillion

Mold and die
components
market:¥500 billion

External Factors Affecting
the Punch Group

Integrated production systemand customer-focused sales andmarketing system

Technological capabilities to makespecial-order products according tocustomer needs

Establishment of five-pole sales system

Make the lives of people around theworld more convenient by supplying
them with high value-added products

Overwhelming number of production
machines and processing equipment(approx. 1,800 units)

Improvement of customer service

Help protect the environment by
supplying mold and die components
suited to customers’ eco-friendly
products

Formulated New Mid-term Business Plan,“Value Creation 2020”

Sustainable Growth andValue Creation

The Punch Group’s Core Competences

Need for molds and dies considerablyincreasing, especially in emerging
markets

Customer network of around 15,000
companies in broad-ranging sectors

Promotion of high profitability business withreinforcement of R&D

Foster R&D and personnel development
in Japan and overseas by considering
industry-government-academia
collaboration

Growing demand for high value-added
products such as high-precision andultracompact products

Global network of 64 bases

Reform of working style

Improve employees’ well-being
and achieve sustainablecorporate growth

Numerous fields can be tapped outsideof the Punch Group’s core markets ofautomobiles and electronics

Teams of skilled technicians and an
ongoing R&D-driven commitment totake on challenges

13 Punch Industry Co., Ltd.

Annual Report 2016

Punch Industry Co., Ltd.

Annual Report 2016

Section 4:
Financial and Corporate
Information

Note: Figures are extrapolated from external sources.

Section 3:
The Basis Supporting
Value Creation

Size of world’s mold and die market(2015): ¥7.3 trillion

Section 2:
Strategies and Practices to Further
Create Value for the Punch Group

growth and increased corporate value.

14Section 1:
How the Punch Group
Creates ValueOur Business Model
Business Model

Underpinning Punch Industry over its 40-year history is its integrated

production system. From standard products to special-order products,

Section 2:
Strategies and Practices to Further
Create Value for the Punch Group

we respond meticulously to the diversified needs of customers while
deploying reverse engineering to launch new services.

Process for making
special-order products

Material
procurement

Cuttingwork

Heat
treatment

Grinding
workElectric
discharge
machining

Surfacetreatment

Final
inspection(all products)

Section 3:
The Basis Supporting
Value Creation

ProcessdesignShipment(7–14 days)

Customer

Sales

Production

Customer

Material
procurement

Marketing

We incorporate
customer feedback fromthe manufacturing front
lines into our company.
At the same time, we areworking to establish afive-pole sales system bytapping new markets
that are earmarked for
future growth andresilient to economic
fluctuations.

We are catching up
with the globalization of
manufacturing by
sharing transactionaland other information
with customers who are
expanding theirbusinesses globally.

Cuttingwork

Heat
treatment

Forgingwork

Blankmaterials(stock)Grinding
work

Surfacetreatment

Final
inspection(all products)

Section 4:
Financial and Corporate
Information

Integrated production system

Shipment(usually 3
days)

Process for making
standard products

Deploying state-of-the-art equipment, we develop
and practically apply new technologies andprocesses for incorporation into the production
side. We are creating a new type of manufacturingthat differs from conventional methods.
We are developing products that can seize
overwhelming market shares and cultivating newmarkets while sharing information about
technological advances and changing needs.

Marketing Headquarters

R&D Headquarters
Interdepartmental
collaboration

15 Punch Industry Co., Ltd.

Annual Report 2016

Punch Industry Co., Ltd.

Annual Report 201616

Section 1:
How the Punch Group
Creates Value

Section 2: Strategies and Practices to Further Create Value for the Punch GroupA Message from the President
In 2015, Punch Industry Co., Ltd. celebrated the 40th anniversary of its
founding and the 25th anniversary of its entry into Dalian, China. After

Section 2:
Strategies and Practices to Further
Create Value for the Punch Group

its founding, Mr. Yuji Morikubo built a foundation for business growthand drove the Punch Group forward, and, as honorary chairman, hascontinued to underpin the Group’s development. During its previous
mid-term business plan, entitled “Value Creation 15,” the Group hadthese milestones. To forge a trajectory for further growth, we will
advance to the next stage under our new mid-term business plan,“Value Creation 2020.”

sales of ¥32 billion or higher and operating income of

The Group supplies products to the mold and die¥2 billion or higher. To reach these targets, we tackled

market, which has been growing at around 5–6%

three priority initiatives: globalization, expansion ofannually, with further growth expected in the future.

new markets, and conversion to a high profitability

Against this backdrop, in December 2012, we listed

business model. As a result, we achieved our net sales

our shares on the Second Section of the Tokyo Stocktarget one year ahead of schedule, and we also got

Exchange to enhance our finances and expedite global

close to our operating income target in the final year.

expansion, aiming to become a global Punch Industry

Section 3:
The Basis Supporting
Value Creation

Review of “Value Creation 15”

The final stages of “VC15” saw unanticipatedeconomic slowdown in China. Since December 2015,

we embarked on “Value Creation 15” (“VC15”), ourhowever, the trend has shifted to recovery, and we

mid-term business plan for our next stage of growth.

feel we have achieved overall results conducive to

As consolidated financial targets, we aimed for net

making dramatic progress going forward.

Section 4:
Financial and Corporate
Informationthat contributes to manufacturers. Then, in April 2013,

Performance Results
FY2015Net sales Over ¥32.0 billion
Operating income Over ¥2.0 billion

Net Sales(Billions of yen)
40

34.3
29.4

30

Net Sales

Masaaki Takeda

President,
Representative Director
Chief Executive Officer

25.0

20

10

Net Income*
0

ROE

0.8

250

1.0

0.7

0.7

250

Annual Report 2016

36.7

2.0
2

1.6

1.7

1.2

1.2

FY2012 VS FY2015[Net Sales]
Increase +¥11.7 billion
Annual Rate
13.6%up[Operating Income]
Increase +¥1.2 billion
Annual Rate
41.1%up[Ordinary Income]+¥0.8 billion
Annual Rate
26.6%up
Increase

1[Net Income*]+¥1.0 billion
Annual Rate
80.3%up
Increase

250
0.2
FY2012FY2013

FY2014FY2015

4.3%

9.6%

10.1%

8.9%

*FY2015: Profit attributable to owners of parent

17 Punch Industry Co., Ltd.

3

1.7

1.2
Ordinary
IncomeOperating
IncomeOperating
Income(Billions of yen)

0

[ROE]


＋ 4.6ppt

Lowered by public offering

Punch Industry Co., Ltd.

Annual Report 201618

Section 1:
How the Punch Group
Creates Valueacquired AS9100 certification, the quality management

Improvement of customer services, (3) Promotion of

Outline of “VC2020”

standard for the aerospace industry, and we obtained

high profitability businesses with reinforcement ofWith the “Punch Spirit” foremost in our minds, we will

With respect to “globalization” aimed at building a

Nadcap certification for specialized heat treatment

R&D, and (4) Reform of working style. Over the next

promote the following three reforms to realize thecustomer-focused sales and marketing system, we

process used in the international aerospace industry infive years (fiscal 2016–2020), we will transition

potential of each and every one of the Punch Group’s

strived to expand beyond Japan and China into

March 2016. In these and other ways, we have laid thecarefully from a period of preparation to one of

4,000 employees.

Southeast Asia, India, Europe, and the Americas. In

cornerstones for future business expansion.

reaping results. The “Punch Spirit” will be the driving

2013, PUNCH INDUSTRY MALAYSIA SDN. BHD.

As for “conversion to a high profitability business model,”force to achieve our targets for fiscal 2020.

The first is “reform of mindset.” To this end, we will
fundamentally reassess manufacturing to commission

we have established an R&D system for the entire Punch

production capabilities, increase market shares inGroup, increased sales of high value-added products inSoutheast Asia, and secure our sales channels inJapan, expanded our lineup of strategic products in China,

Europe. We have also made progress in establishing a

and actively broadened our cemented carbide product

The Punch Spirit: instilling ourmanufacturing-related DNA in all
employees

business foundation in India. Amid changes in productbusiness in Southeast Asia. As a result, we have increased

Since our founding in 1975, the cornerstones of ourranging needs. To realize these reforms, we need to

manufacturing industry trends at the global level, we

our involvement in high profitability businesses.

Company’s survival have been the foresight andinstigate “reform of mindset” in each employee so they

fortitude of Yuji Morikubo, our founder and current

can embrace new challenges without relying on thestatus quo.

need to improve customer services and promote

Each of the aforementioned initiatives has delivered

further globalization to deliver swift, accurate

tangible results, but we still have some way to go before

honorary chairman. Especially in these times of

responses. These will continue to be priorities underachieving the ratio of profit to sales on a par withuncertainty, we need to embrace new challenges and“Value Creation 2020” (“VC2020”).

our new plant in Vietnam, scheduled to commence
operations in the fall of 2016. We will also undertake
various reforms going forward, including developing new
businesses and services that reflect customers’ wide-

The second is “reform of system.” Here, we will

not quit even in the face of failure as we concentrate

fundamentally reassess the working styles of alllevels, which we hope to realize in the future. Under

on innovative ideas and passionately bring all projects

departments, including the manufacturing, sales, andstep up marketing in untapped fields and clarify target“VC2020,” we will further emphasize and entrench theto fulfillment—rather than aimlessly adhere toadministration departments. In addition to raisingcustomers in new fields by utilizing our advanced

three priority initiatives of the previous plan as we strive

conventional working styles.

productivity, we will emphasize the reduction of working

technologies. In the process, we have identified various

to build a foundation to fulfill them. To more clearlyAt this time, which could be called our second

hours and introduction of varied working styles, and we

key themes, such as high-precision microprocessing

identify a trajectory for renewed growth, we visualized

foundation toward becoming a global Punch Industry,

will promote human resource system reforms linked toand automation. Meanwhile, advances in such areas as

the Group we want to be in 2020 and decided on

we need to once more return to our origins and instillthese activities.

artificial intelligence (AI), big data, the Internet of things

actions to take through fiscal 2020 to bridge the gap

our manufacturing-related DNA throughout the Group.

The third is “reform of business culture.” Paralleling(IoT), and 3D printers are highlighting the importance

between this vision and the Group we are today. The

Based on this approach, we have clarified three key

top-down efforts to implement the two aforementionedof high-precision, ultra-compact mold and die

four priority initiatives of the current plan are: (1)themes—“Challenge,” “Imaginative & innovative,” andreforms, we will promote bottom-up initiatives to reformcomponents. In this context, we will focus on

Establishment of five-pole sales system (Japan, China,“Open & honest”—so that the “Punch Spirit” returns to

our corporate culture. These efforts will be spearheaded

developing unique products. In January 2015, weSoutheast Asia and India, Europe, and the Americas), (2)the founder’s spirit.

by our various workplaces.

Linkage of Priority Initiatives of “Value Creation”
Value Creation 15
Globalization

Section 4:
Financial and Corporate
Information

European and North American manufacturing industry

Regarding “expansion of new markets,” we strived to

Section 3:
The Basis Supporting
Value Creation

became a Group member, allowing us to enhance our

Section 2:
Strategies and Practices to Further
Create Value for the Punch GroupSpecific results of “VC15” and priority
initiatives of “Value Creation 2020”

What’s Punch Spirit?

Value Creation 2020 “what Punch Group wants itself to be in 2020”
Establishment of
1 five-pole sales system
Improvement of

Establishment of solid sales system inEurope and Americas
Capturing globalized customers
Supported by the customers
Improvement of technical capabilities

Expansion of new markets

2 customer service

Conversion to a highprofitability business model

3 profitability business with

Expansion of high-value-added products
Cost reduction (Manufacturing reform）

4 Reform of working style

Improvement of operational efficiency
Optimal work-life balance
Realization of diversity

Promotion of highreinforcement of R&D

PUNCH SPIRIT = Return to the founder’s spirit =Challenge

Through “Challenge” to unexplored field, achieveself-development and contribute to the society.

Imaginative &Innovative

Exert our “Imaginative and Innovative” powers on
every job and overcome difficulties persistently
toward the realization of our dreams.

Open & Honest

Create “Open and Honest” workplace throughesteeming the individuality and the diversity of
everyone of our team members.

Yuji Morikubo
Founder, Honorary Chairman

PUNCH SPIRIT

19 Punch Industry Co., Ltd.

Annual Report 2016

Punch Industry Co., Ltd.

Annual Report 201620

Section 1:
How the Punch Group
Creates Value

Concept of Value Creation 2020Three Reforms

Reform of System

2 “Working style” “HR system”

Construction of World Five-pole System
Japan, China, Southeast Asia & India,
Europe, Americas

Toward“The World’s Punch”

Reform of Business Culture

3 “Corporate culture”

A message to our stakeholders

first three years, positioned as a period of “investment

We will continue working hard to make all stakeholders—

and run-up,” we will undertake concentrated

including shareholders and other investors, customers,

investments to conduct structural reforms. At the new

business partners, employees, and local communities—

plant in Vietnam, scheduled to commence operations

feel pleased about the existence of the Punch Group, theirin the fall of 2016, we will strive to increase revenues,

investments in the Group, their dealings with the Group,

reduce costs, and lower selling, general, andand their jobs at the Group. To this end, we will raise theadministrative expenses. We expect that progress inmotivation levels of each and every employee, reinforce

these three areas will contribute to the growth of the

our organizational strength, and increase work productivity

Punch Group. We will work earnestly to these ends,

and earnings power. At the same time, we will become anwhich will also be integral to achieving our

indispensable company for the world that demonstrates

management objectives.

its presence in the form of its ability to support theprosperous lifestyles of people around the world. I feel thatmy job is to guide the Group along this path.

production system.” During this time, we will establish

To increase motivation levels within the entire Group,a five-pole sales system, and step up efforts to attract

we need to encourage executive officers, our leaders, tobusiness for special-order products, and generatechange the way they behave. Based on this premise, we

steady income.

reinforced our system of executive officers responsible

a global Punch Industry. Specifically, we will endeavor

Management objectives: growth strategies
divided into two stages

to become a company that supports product

Under “VC2020,” we have set the following

manufacturing around the world by establishing amanagement objectives to be achieved by fiscal 2020:

measures, we feel we can achieve the management

strengthen corporate governance, we fortified thefive-pole sales system centered on Japan, China,

net sales of ¥47 billion or higher, operating income ofobjectives set under the current mid-term business plan.

management supervision and oversight functions of theSoutheast Asia and India, Europe, and the Americas.

¥3.3 billion or higher, and profit attributable to owners of

We have also set an ROE target of 11% by fiscal

Leveraging these three reforms, we will strive to be

for business management. At the same time, seeking to

2020, but this is not a “whatever it takes” target. As

responsibilities—business execution and management

such, we have not devised specific measures at thesupervision and oversight—we will execute highly

fiscal 2020, we have divided the five-year period covered

present time. Over the five-year period of “VC2020,”

reliable business operations.

Full-scale start of Punch Groupnew production system(FY2019–)

Sales

FY2020Net Sales above ¥47.0 billion
Op Income above ¥3.3 billion
Net Income*above ¥2.3 billion
ROE
11.0%

we will emphasize increased income from coreThrough these initiatives, we will improve our ability tobusinesses while focusing on making, selling, andgenerate earnings and grow and thus increase returns toearning, and boosting asset efficiency, which isshareholders.

fundamental to corporate management. Consequently,
we hope to raise ROE.

Section 4:
Financial and Corporate
Information

Board of Directors. By clarifying these respective

In order to transition to a new growth trajectory inparent of ¥2.3 billion or higher.

Sales and Income by Stages

By uniting as a group to implement these various

Section 3:
The Basis Supporting
Value Creation

We have positioned the subsequent two years as aperiod of “full-scale start of Punch Group new

Section 2:
Strategies and Practices to Further
Create Value for the Punch Groupof Mindset
1 Reform“Manufacturing” “Sales”

by the plan (fiscal 2016–2020) into two stages. In the

We look forward to the continued support of all
stakeholders in the future.

Reinforce sales in Japan, Asia,
Europe and the Americas.

Superiority

Reinforce the superiority in special-order products.

Investment and run-up(FY2016–2018)

Production
Group
System

FY2018Net Sales above ¥42.0 billion
Op Income above ¥2.5 billion
Net Income*above ¥1.7 billion
ROE
10.0%
Start up quickly with Vietnam Plant in fall 2016.

Enhance effectiveness of R&D and Reinforce the marketing function.

FY2015Net Sales¥36.7 billion
Op Income¥1.9 billion
Net Income* ¥1.2 billion
ROE
8.9%

21 Punch Industry Co., Ltd.

Annual Report 2016

*Profit attributable to owners of parent

Punch Industry Co., Ltd.

Annual Report 201622

Section 1:
How the Punch Group
Creates ValueA Message from the COO
Under Value Creation 2020, which builds on the

Establishment of five-pole sales systemachievements of Value Creation 15, we will demonstrate

In 2015, the world’s mold and die market had grown
to around ¥7.3 trillion, of which Japan and China
accounted for more than half, followed by large

while focusing on manufacturing high value-added andmarkets in North America and Europe. At present,

special-order products. We will also enter the aerospace

Order from Europe/Americas/Asia
Supplying from optimum production base

Japan and China account for slightly less than half ofindustry and step up sales in food- and medical-related

the Punch Group’s net sales, with the remainder
coming from other regions, mainly Southeast Asia. In

fields. By promoting these initiatives via our five-pole

the next five years, we will establish businesssales system, we will achieve tangible growth.

foundations in Europe and the Americas.
Over the past 26 years of our business development

Europe

China

Japan

AmericasSoutheast
Asia,
India

in China, our dealings with the Chinese operations ofincreased. Based on relationships of trust, we now feelthat customers expect us to set up businessplants, thus shortening delivery lead times and providing

frameworks in Europe and North America. Therefore,

meticulous responses in terms of costs and the like. We

we will take this opportunity to establish such

believe these efforts will lead to increased business forframeworks in those regions, with the aim of attracting

special-order products.

new customers and supplying products to them by

Yasuhiro Sanada

Director
Chief Operating Officer

simply making customers happy in relation to quality,

a company that supports global manufacturing.

delivery, and cost. It also means changing our mindsets

the effectiveness of the global marketing system torenewed growth, a major achievement of “VC15” wasoptimize our production system and strengthen R&D,

our building of a global marketing system underpinned

construct a framework based on close interaction

by both the R&D Headquarters and the Marketing

among Group companies, and firmly entrench the Punch

Headquarters, with the Global Business Planning OfficeGroup’s comprehensive strengths.

serving as a fulcrum. In the next stage, we will increase

Core Strategy of Value Creation 2020
Japan

日本販売5
極体制of
Establishment
Five-pole Sales System
日本
Improvement of
Customer Service
日本

China

Southeast Asia,
India

Europeand actions to create new joyful experiences that we
can share with them. As the first step in this process, weAs the first cornerstone of setting up sales systems inwill carry out reverse engineering to propose solutions

Europe and North America, we established a Global

to customers’ problems. Many companies have lost

Sourcing Department—responsible for optimizing

their original blueprints following corporate

procurement from production facilities to meet orders

restructurings and other such changes, and we thusfrom Europe, North America, and Asia—within thereceive numerous requests from customers wanting

Southeast Asia Group. Centralizing quotation

mold and die components based on the original items.

processes in the Global Sourcing Department andWe decided to address their demands throughallocating procurement to the most suitable“VC2020.” We will launch this initiative through our

production facilities enable us to fully utilize the assets

sales operations in Japan and will expand our effortsof our Japanese, Chinese, Malaysian, and associatedwhile monitoring the situation.

Section 4:
Financial and Corporate
Information

From the perspective of establishing a firm footing for

Improvement of customer service means more thanfiscal 2020. One step at a time, we will work to become

Improvement of customer service

Section 3:
The Basis Supporting
Value Creation

Global sourcing

European and North American customers have

Section 2:
Strategies and Practices to Further
Create Value for the Punch Groupour strengths through proactive capital investments

Improvement of Customer Satisfaction with
Global Sourcing

Americas

Sales flow construction
Global sourcing
Expansion of business with global companies
Reverseengineering
Reconstruction of manufacturing system (standard products & special-order products)

Promotion ofHigh Profitability
Business withReinforcement of R&D

・Starting operations in Vietnam plant・Manufacturing expansion of special parts in Japan and China
・World-wide supplying of mold/die parts

Food-related industry
Aerospace-related industry
Medical-related industry

日本販売5 極体制
Reform of Working Style

23 Punch Industry Co., Ltd.

Enhancement of employee-oriented management and organizational strength
Development of global human resources

Annual Report 2016

Punch Industry Co., Ltd.

Annual Report 201624

Section 1:
How the Punch Group
Creates ValueA Message from the CFO
we will increase our ability to produce special-orderTo achieve comprehensively high profitability, we needproducts, invest in R&D and capital equipment, andto cut costs, disperse risks, and prioritize high value-

obtain relevant certifications to expand our dealings withadded products and services. For the Punch Group,companies in other sectors earmarked for future growth.

which owns around 1,800 machines, to fundamentally

Over the next five years, we will also solidify our incomechange its earnings structure over the next five years, it

foundation to achieve operating profit ratio and ROE

must work progressively with a greater sense of speed

targets befitting a global corporation. To this end, we willthan that shown under “VC15.” To this end, we havemove to the forefront of technological advances anddivided our initiatives into two stages.

evolving needs as we strive to develop new products that

The first stage, covering the three years to the end of
fiscal 2018, is positioned as an “investment and run-up”

By “establishment of five-pole sales system,”(2) Establish optimal procurement by transfer of“improvement of customer service,” and “promotion of

production items in China, and (3) Use the launch of thehigh profitability business with reinforcement of R&D,” weVietnam plant to reduce of manufacturing cost in Japan.

will steadily achieve our targets. To this end, it is essential

We have positioned the second stage, from fiscal

to energize our organization by reforming our working

2019 to fiscal 2020, as a period of “full-scale start ofstyle. In so doing, we will change the mindset and actions

Punch Group new production system.” During thisof each and every one of our 4,000 employees while

time, we will implement the following initiatives:

simultaneously reforming our human resource system.

(1) Reinforcement of production capacity of the

Seeking greater organizational strength, we will raise

Vietnam plant, (2) Transfer of production items inmotivation levels to bolster work productivity andJapan, and (3) Reinforcement of production capability

earnings power, which will benefit stakeholders in various

for special-order products in Japan.

ways. We will seek to use our ability to support theprosperous lifestyles of people around the world.

Promotion of High Profitability Business
Full-scale start of Punch Group3
new production system(FY2019–)

2

Japan plants

China plants

Japan plants

Japan plants
Japan logistics bases

1Vietnam plant

3

1

1

Commencement of operation of theVietnam plant
Transfer of production items from China
to Vietnam

2

Transfer of production items between
China plants
Reinforcement of production capability forspecial-order products in China plants

3

Supplying low-cost, semi-finishedproducts from Vietnam plant to Japan
plants[Objectives]

Reduction of manufacturing cost of standard
products (Japan)
Reinforcement of production capability forspecial-order products; improvement of
profitability (China)

25 Punch Industry Co., Ltd.

Annual Report 2016that deliver maximum effect. I believe this is
my mission.

1
Vietnam plant

Stepping up equipment improvements in
Vietnam plant to start supplying somefinished products to Japan plantsof production items among
2 Transfer
Japan plantsof production capability
3 Reinforcement
for special-order products in Japan plants[Objectives]

Further reduction of manufacturing cost of
standard products (Japan)
Increasing processing time for special-orderproducts (Japan)
Reinforcement of production capability forspecial-order products; improvement of
profitability (Japan)

Takao Murata

Director
Chief Financial Officer

Fiscal 2015 results

In addition to the Chinese yuan, we have many

During the year, signs of an economic slowdown intransactions in multiple foreign currencies, including

China emerged, raising concerns about the impact at

the Malaysian ringgit, Indian rupee, and Indonesian

home. However, economic recovery in Japan andrupiah, which are difficult to hedge the risk of, and theSoutheast Asia, as well as efforts within China tovolume of such foreign-currency transactions is

minimize the decline, allowed us to come close totrending upwards. Going forward, we will prioritize theachieving our initial net sales and operating income

use of local currencies for transactions within thetargets, which I feel represents a good performance.

Group, and each of our operations will use its own

That said, a sudden devaluation in the Chinese yuan,

nation’s currency. Beyond minimizing risk, we will poolwhich had risen continuously in value over many years,

foreign-currency denominated transactions, which

led to valuation losses (foreign exchange losses) on

could be affected by foreign exchange market

U.S. dollar-denominated intercompany loans of

movements, at our head office, then implement

Chinese subsidiaries, causing ordinary income and net

various hedging measures, including the use ofincome to fall short of our targets. Although income

exchange marry, forward exchange contracts, andincreased over the previous year, we must takeoptions trading.

seriously the fact that we did not meet our targets. We
had no inclination about the yuan’s devaluation and

Outlook for fiscal 2016

were late to take proper action. As chief financial

Under our new mid-term business plan, “VC2020,” in

officer, I deeply regret this. Since then, we have started

fiscal 2016, we will increase sales of high value-added

hedging against the yuan, and we are now fully

products, which are largely impervious to economic

hedged through options trading, so we will not be

fluctuations, in Japan and China, and broaden ourcaught flat-footed again.

operations in other regions, thus substantially

Section 4:
Financial and Corporate
Information

the Vietnam plant, currently under construction,2

information—I will focus on devising strategies

cultivating new markets.

Reform of working style(FY2016–2018)

resources—people, goods, money, andseize overwhelming market shares and continue

following initiatives: (1) Commencement of operation of

Investment and run-up

Through the smooth flows of our business

Section 3:
The Basis Supporting
Value Creation

period. During this time, we will implement theAt our various production bases in Japan and China,

Section 2:
Strategies and Practices to Further
Create Value for the Punch Group

Promotion of high profitability businesswith reinforcement of R&D

expanding the scope of our operations. Due to the

Punch Industry Co., Ltd.

Annual Report 201626

Section 1:
How the Punch Group
Creates Value

with the commencement of operations at the Vietnam

China, which account for around half of the Punch

Plant, which was constructed in 2015, we will reduceGroup’s net sales, are expected to be less than thethe costs of existing products by shifting part of ourprevious year’s results in yen terms. As forward-looking

Japanese and Chinese production to Vietnam. We will

investments to build a high profitability businessthen utilize our freed-up capacity in Japan and China

foundation, we plan to invest around ¥2.6 billion in theto reinforce manufacturing of new high value-added

Vietnam Plant and in R&D. Through these activities, we

products identified through R&D investments such as

forecast slight year-on-year increases in both net sales

special-order products, thus boosting gross profit. We

and operating income.

will also invest in R&D and capital equipment, obtainrelevant certifications, and deploy other methods toInvestments and fund raising under“VC2020”

reduce our exposure to changing economic
conditions, and expand our dealings with companies
in other sectors earmarked for future growth. By taking

such as automation to increase production efficiency

such measures, we plan to fully recover ourand in R&D to cultivate new markets and domains.

investments during the period of “VC2020.”
Regarding our capital strategy, we aim to build an

total capital investments of approximately ¥14 billion,

optimal capital structure that can reap the benefits ofincluding around ¥1.0 billion in the Vietnam Plant andleveraging to a certain extent while securing a soundaround ¥1.5 billion in R&D, with depreciation

financial base. To raise funds for these investments, ourexpenses to be in the ¥7.0 billion range. We havepolicy is to use our own capital and complement thispositioned the next five years as a “period ofwith external borrowings. To do this, we will strengthen

aggression” driven by future-oriented investments.

initiatives with two main focuses. First, we will increase

Through these investments, we will expedite theprofitability by both reducing costs and boosting

reorganization of our global production system andorders for high value-added products, and second, we

dramatically change our cost structure. In conjunction

will enhance capital efficiency by increasing the total

Measures to Increase ROE under Value Creation 2020

Net sales×a difficult challenge, but we will respond by reducing

While my title is CFO, internally, I serve as general

working capital and emphasizing self-financing while

manager of the Administration Headquarters, so I

paying maximum attention to collecting tradeoversee not only financial matters but also overall

receivables, especially in China and India.

administration. Through the smooth flows of our

To increase return on equity (ROE), we need tobusiness resources—people, goods, money, andboost “financial leverage” in addition to “profitability”

information—I will focus on devising strategies thatand the “asset turnover ratio.” We could increase ROE

deliver maximum effect. I believe this is my mission.

by borrowing more for share buybacks to boost

A key strategic priority in this regard is to energize ourfinancial leverage, however, doing so could potentiallyhuman resources. Reflecting the words, “A company isweaken our financial position and dampen our ability

only as good as its people,” a business can neverto increase corporate growth over the medium andfunction unless its people work, irrespective of thelong terms, thus failing the expectations ofbusiness infrastructure established or funding

shareholders who have owned our shares for a long

methods employed.

time. If surplus funds are generated due to increased

To realize sustainable increase of corporate value

Net Income

Future business priorities from a CFO’s
perspective

Net sales
Total assets

×

Total assets
Stockholders’ equity

initiatives:to shareholders and thus further raise ROE.

(1) Increase satisfaction and motivation levels of
employees

Stance on shareholder returns andshareholder composition(2) Support employees’ skills development so eachindividual can fully excel in the workplace

dividend payments, with share buybacks and the likeThe ratio of profit
to salesTotal assets turnover

Financial leverageplaying a complementary role. Over the next five years,
we will continue paying stable dividends backed byincreases in earnings and dividend amounts. Our plan

New Mid-term Business Plan “Value Creation 2020”is to raise our consolidated payout ratio incrementallyto 30% from the current level of 20%.
As for shareholder composition, we have a policy ofOperating
Profit Ratio[Basic Policy for Dividend]

Assets Effectiveness

Dividend
Payout Ratio

In addition to the stable and continuous dividends, targeting 30% as a consolidated payout ratio basedon the performance.

27 Punch Industry Co., Ltd.

Annual Report 2016

To this end, we will carry out the three following

capital efficiency, we will of course return such funds

Our shareholder return policy centers mainly on

Section 4:
Financial and Corporate
Information

Over the five-year period of “VC2020,” we will makeinvestments, increasing our total asset turnover will be

asset turnover. While we are making large-scale

Section 3:
The Basis Supporting
Value Creation

At present, we are extremely driven to invest in areas

ROE =Section 2:
Strategies and Practices to Further
Create Value for the Punch Groupdevaluation of the Chinese yuan, however, sales in(3) Change working styles to achieve optimal work-lifebalance

In addition, we will promote diversity by increasing
opportunities for women to excel and actively
recruiting foreign nationals. Through these initiatives,
we will create a company in which all employees canwork energetically with high aspirations. As a result,
we will meet the expectations of all stakeholders,
including customers, shareholders and other investors.

not having cross-shareholdings. By increasing thenumber of individual shareholders who own ourshares over the long term, we hope to broaden ourbase of true Punch Industry fans and thus achieve astable shareholder composition.

Punch Industry Co., Ltd.

Annual Report 201628

CSR Initiatives

Section 1:
How the Punch Group
Creates Value

Section 3: The Basis Supporting Value Creation

Business
Partners

CSR Initiative Highlights

The Punch Group pursues CSR-oriented
management that continually supports

Punch Group
Stakeholders

Local
Environment

Employees

Local Communities

2016 National Sports Festival
Punch Industry was an official supporter of the 2016 National Sports Festival

Local
Communities(Sports Festival Iwate).
We actively engaged in initiatives to enliven the festival.

Employees

Section 2:
Strategies and Practices to Further
Create Value for the Punch Group

manufacturing worldwide.

Shareholders
and Other
Investors[Punch Industry’s involvement]
Participated in rehearsal events for soft
tennis and badminton as volunteers

The history of the Punch Group is one of always seizing new challenges and relentlessly exerting ourParticipated in Iwate Flower Campaign

imaginative and innovative powers to overcome those challenges. As global circumstances become

Participated in Challenge Day 2016

increasingly uncertain, each and every employee must strongly embrace the spirit of our founder and act
accordingly to contribute significantly to customers and society. This is the major motivating force driving the

Punch Industry is providing support toSports Festival Iwate.

Group forward and fostering the personal growth and job satisfaction of people working for the Group.

Section 3:
The Basis Supporting
Value Creation

Human resources embodying the “Punch Spirit”

With a constant sense of curiosity, we will continue tackling challenges that most people regard as

We have personnel who practice the “Punch Spirit,” strongly supported by Company frameworks andAs a corporate sponsor of the Kitakami City Preparation Committee for Sports Festival Iwate, in Marchbacked by a sound corporate culture. The “Punch Spirit” is instilled in the thoughts of human resources

2016, Punch Industry donated five models of the Wanko Brothers (the official mascots for the festival)

who work with vigor and enthusiasm in the Group, and also represents our commitment to them.

to Kitakami City, Iwate Prefecture. We arevery proud of these gifts, which we madeFostering human resources who support sustainable growthusing aluminum based on our own CAD, CAM(1) Meticulous rank-specific training to support employee development
		and cutting technologies.

We conduct 10 rank-specific training courses—from new employees to top management—according

With the aim of invigorating Sports

to what stage employees are at in their careers. By supporting the development of employees via

Festival Iwate, the models have been put on

training in their day-to-day activities and reinforcing intercompany ties between them, we are raising

display at the front entrance of the main

our organizational strength.

government building of Kitakami City Hall.

(2) Encouraging employees to embrace challenges as professionals
		

professionals in each workplace by encouraging them to hand down core technologies to the next
generation of employees, obtain various qualifications, and acquire specialist knowledge and skills in

Local Communities

Regional environmental initiatives
As part of our social contribution activities, we carry out regular

the sales and staffing departments.

cleanup activities in the areas surrounding our manufacturing plants.

(3) Language education with a view to global business advancement

In Miyako district, where one of our plants is located, we provided a

As we strive to advance globally, we support personal development learning in multiple languages for

portion of the grounds around our plant for the construction of

all employees, not just overseas workers.

temporary housing for victims of the Great East Japan Earthquake.

Topic: Overseas training system

The access road to the site requires regular maintenance to prevent
vegetation from interfering with traffic. For this reason, Punch

The Group implements six-month training programs at its overseas

Industry employees from Miyako district regularly mow the accessbases. Trainees are solicited in-house from various departments—
manufacturing, sales, and administration—and are educatedthrough practical work experience in foreign countries.
Training in India

29 Punch Industry Co., Ltd.

Aluminum models of the Wanko Brothers on display at
the main government building of Kitakami City Hall

We encourage employees to become true professionals by elevating their talents, skills, andspecialties to higher levels. This is the driving force of the Group. We will concentrate on fostering		Section 4:
Financial and Corporate
Information

We will have open and honest discussions without concern for hierarchical or organizational differences.

Donated five aluminum models of the Wanko Brothers made by Punch Industry
to Kitakami City, Iwate Prefecture

too difficult. Together with our colleagues, we will meet our targets through imagination and innovation.

Annual Report 2016

Volunteers removing vegetation by the road to make access totemporary housing easierroad and undertake ground-leveling work on the road shoulder. As
members of the local community, our employees are united in theirefforts to foster local beautification.

Punch Industry Co., Ltd.

Annual Report 201630

Section 1:
How the Punch Group
Creates Value

Corporate GovernanceTo continue being an entity that is highly regarded by society, the Punch Group

Shareholders and Other Investors

IR activities

will further improve the transparency and soundness of management by reinforcing
corporate governance and maintaining rigorous compliance.

Section 2:
Strategies and Practices to Further
Create Value for the Punch Group

Company briefings for individual investors and participation in IR events
To help more individual investors understand our business, we engage in a variety of IR events.
In the fiscal year ended March 31, 2016, we participated in the Nikkei IR Fair 2015, as we havedone annually since our public listing. We also started holding briefings about the Company in Iwate

Basic Policy
The Punch Industry Group makes dedicated efforts to

Prefecture, which we had planned for some time.

1. Securing shareholders’ rights and equality

enhance corporate governance practices to comply with

2. Appropriately cooperating with all the stakeholders
including shareholders

laws and sincerely fulfill the corporate social responsibility,
to ensure the soundness and transparency of management,

3. Ensuring transparency by appropriate information
disclosure

to protect the interests of all shareholders, customers andSection 3:
The Basis Supporting
Value Creation

4. Supervising business execution by the Board of Directors

other stakeholders, and to continuously increase the5. Engaging in constructive dialogue with shareholders

corporate value, under the following concepts:

General Meeting of Shareholders
Appoint/Dismiss

Nikkei IR Fair 2015

Company briefing in Morioka City, Iwate Prefecture

Monitoring/supervisory

Appoint/Dismiss

Determine proposal for
appointment anddismissal
Accounting

Audit &
Supervisory Board

Auditor

Coordinate

Issue instructions, Report

Inquire,ReportNomination andRemuneration
Advisory
Committee

Select/Dismiss

President

Section 4:
Financial and Corporate
Information

Internal Audit
OfficeBoard of Directors

Auditing
OfficeCoordinate

Coordinate

Audit

Appoint/Dismiss

Business Partners
Accounting audit

Quality-enhancement initiatives

Internal audit
ReportPUNCH INDUSTRY (Dalian) obtains AS9100 and Nadcap certifications
In January 2015, PUNCH INDUSTRY (Dalian) CO., LTD. acquired AS9100 certification, the quality
management standard for the aerospace industry, and in March 2016, it obtained Nadcap certification
for specialized heat treatment process used in the international aerospace industry.

Appoint/Dismiss/Supervise, Report

Internal Control OfficeBusiness
execution

Risk Management
Committee

In line with its accelerated global expansion, the Punch Group will strive to enter the aerospace

Issue instructions,
Reportproduct quality with the aim of delivering better products and services to our customers.

NadcapOperating sections
Departments

Groupcompanies

1. Board of Directors & Execution Structure

members (including two external members). The council monitors

Punch Industry’s Board of Directors, composed of a small number ofthe company’s governance practices and implementation status,

members, five directors (including two external directors), is poisedand conducts an audit of daily activities, including the execution offor prompt decision-making. The company holds the executive

duties by the directors. The external members are certified

board as a decision-making body of the business execution, underattorneys, and are responsible for monitoring management

the executive officer system, aiming to separate the monitoring/practices from the perspective of compliance.

supervisory of the Board of Directors and executive functions of theAS9100Chief Executive Officer(CEO)
Issue instructions, Report

Internal control
supportindustry, earmarked for future market growth. At the same time, we will work to further improve

Executive Board

In addition, Punch Industry sets Auditing Office and allocatesmanagement, and to define responsibilities and authority.

dedicated staff to ensure the smooth audit engagement.

2. Executive Board

4. Nomination & Remuneration Advisory Committee

The Executive Board, composed of all executive officers, determines

Punch Industry sets the non-statutory “Nomination and Remuneration

matters prescribed in resolutions/decision-making authority standards

Advisory Committee” as an advisory body of the Board of Directors

including important decisions on execution of business based on

centering on the external directors and the external auditors in order toauthority legitimately bestowed upon it by the Board of Directors.

clarify basic policies and standards, and enhance fairness andtransparency of decision-making process, for determining on the

The Punch Group’s CSR website:
http://www.punch.co.jp/english/approach/society.html

31 Punch Industry Co., Ltd.

Annual Report 2016

3. Audit & Supervisory Board and its members

nomination and remuneration of directors and executive officers, and for

Audit & Supervisory Board is presently in place, composed of four

determining on the nomination of Audit & Supervisory Board Members.

Punch Industry Co., Ltd.

Annual Report 2016

32

6. Remuneration of Board Members, etc.

Composed of Directors, Full-time Audit & Supervisory Board

The method of deciding on the remuneration of directors andMembers, Executive officers, Chief of the Internal Audit Office,auditors is approved by unanimous resolution of all members of thethe Risk Management Committee oversees the development,

General Meeting of Shareholders. The Board of Directors decides

maintenance and improvement of risk management and legal

the specific amount of remuneration for each director upon thecompliance frameworks, and implements employee training

examination of appropriateness at Nomination and Remunerationand education.

Advisory Committee, and the Audit & Supervisory Board decides the

Directors

Honorary Chairman

Section 2:
Strategies and Practices to Further
Create Value for the Punch Group

5. Risk Management Committee

specific amount of remuneration for each auditor.

Compliance/Risk Management

Takao Murata

Yuji Morikubo

Susumu Sugita

Ryoichi Ando

Yoriatsu Matsue

Makoto Kume

Akira Takanashi

Hiroshi Fujisawa

Hirohisa Morikubo

Tetsuji Morikubo

Hideki Kinumatsu

Masaaki Takeda

Yasuhiro Sanada

Shigeru Yokoyama

Yukiko Mitsuhashi

Chief Executive Officer

Recognizing that rigorous compliance is absolutely essential

Chief Financial Officer

Founder, Honorary Chairman

a framework that ensures the thorough dissemination ofdissemination of the code, all officers and employees arecompliance information throughout the entire Group throughaware that their conduct must comply with laws andthe implementation of ongoing employee education

regulations and meet the highest ethical standards.

programs and training. Risk Management Guidelines containWe develop internal regulations governing risk

provisions to be implemented in the event of an unforeseen
occurrence that could impact our operations.

system comprehensively identifies and assesses management

External Director

Section 3:
The Basis Supporting
Value Creation

The Committee identifies and assesses risks, while serving asestablished a code of corporate ethics. Through extensive

management, as well as a risk management system. The

Chief Operating Officer

We have established a Risk Management Committee.

for improving corporate value, the Punch Group has

Section 1:
How the Punch Group
Creates Value

Directors, Audit & Supervisory Board Members,
Honorary Chairman, and Executive Officers (As of June 22, 2016)

External Director

and business risks that may affect our operations.

Section 4:
Financial and Corporate
Information

Audit & Supervisory Board Membersof effectively realizing system reforms, and I certainly want tohelp bring about such reforms within the Group.
Recently, prior to my appointment as an external director,
I had the opportunity to talk at length with Masaaki Takeda,
the president, and other members of our management team.
I sensed that everyone has a strong awareness of corporate
governance, including Shigeru Yokoyama, who is already an

Message froman External Director

external director, and I believe the Board of Directors has aculture which allows for frank discussions. By adding one

Yukiko Mitsuhashi
External Director

discussions and ensuring legal compliance in management, I

Before becoming an attorney, I spent eight years working

corporate clients both in Japan and overseas with inter-in a corporation. I fully understand that a company’s day-to-

company business dealings. My job is essentially to

day management and growth are based on the day-to-day

properly analyze risks and effectively apportion such risks

efforts of individual employees. I am the only female director

among the parties involved. As a company engaged inat Punch Industry, and given the need for the dynamic

full-scale overseas business development, addressing risks

engagement of all citizens, we must become a company inbecomes more and more important, in my opinion. Throughwhich all employees feel fulfilled and take pride in their

discussions at Board of Directors’ meetings, I will seek towork. Another key mission is to not neglect the Group’s

support the further globalization of the Group from an

initiatives aimed at achieving working style reform. I believe

objective standpoint.

these initiatives will definitely lead to increased corporate

In addition, corporate governance is one of my specialist

External Audit & Supervisory
Board Member

Executive Officers

I feel very humbled to be appointed as an external director,
and I will strive to meet the expectations of all stakeholders

reflect social perspectives. Now, we have reached the stage

while learning all I can about the Group’s business.
Punch Industry’s corporate governance website:
http://www.punch.co.jp/english/companyinfo/governance.html

Annual Report 2016

External Audit & Supervisory
Board Member

value over the medium and long terms.

reforming its systems and energizing its discussions to

33 Punch Industry Co., Ltd.

Full-time Audit & Supervisory
Board MemberGroup’s growth potential from an outside perspective.

corporate legal affairs. To date, I have assisted numerous

fields. At long last, corporate governance in Japan is

Full-time Audit & Supervisory
Board Member

more external director, in addition to lending a new voice towould like to help the Board of Directors maximize theThis year is my 17th year working as an attorney handling

Norio Kitsui

Punch Industry Co., Ltd.

Annual Report 201634

Section 1:
How the Punch Group
Creates Value

Section 4: Financial and Corporate Information

Financial Information(Millions of yen)

Net sales

3/20133/20143/20153/2016

Ordinary Income

Net Income*

25,041

29,43634,39236,755(Millions of yen)

(Millions of yen)
1,500

1,600

1,200

1,200

900

707

1,161

1,724

1,986

Ordinary income

822

1,047

1,617

1,666

Net income*

213

720

1,188

1,249

34.30

99.58

130.91112.94800

600

Total assets

20,57324,471

29,62327,337400

300

Net assets

5,726

9,362

14,205

13,9990

Net assets per share (yen)800.87

1,043.83

1,283.75

1,264.64

Return on equity (ROE) (%)

4.3

9.6

10.1

8.9

27.8

38.2

47.9

51.2

Earnings per share (yen)Net worth ratio (%)

3/20133/20143/201503/20163/20133/2014Return on Equity (ROE)

Total Assets/Net Assets(%)(Millions of yen)
35,00012

28,000Net cash provided by operating activities

1,690

1,194

1,805

3,187

Net cash used in investing activities(1,773)(1,252)(1,180)(1,159)Net cash provided by (used in) financing activities

(41)

(370)

1,013

(1,901)

921,000Free cash flow

(82)

(57)

624

2,028

6

14,000

3

7,000*Fiscal year ended March 31, 2016: Profit attributable to owners of parent

0

3/20133/20143/201503/2016

Total Assets

3/20133/2014

Net Sales

Operating Income

Net Worth Ratio

Net Assets per Share(Millions of yen)

(Millions of yen)

(%)

(Yen)

40,0002,000

60

30,0001,500

453/2016

Net Assets

Section 4:
Financial and Corporate
Information

15

3/2015

Section 3:
The Basis Supporting
Value Creation

Operating income

Section 2:
Strategies and Practices to Further
Create Value for the Punch Group

2,000

3/20153/20163/20153/2016

1,500

1,200

900
20,000

1,000

30
600

10,0000500

3/20133/201435 Punch Industry Co., Ltd.

3/20153/2016

Annual Report 2016015

3/20133/20143/20153/20160300

3/20133/20143/20153/20160

3/20133/2014

Punch Industry Co., Ltd.

Annual Report 201636

Section 1:
How the Punch Group
Creates ValueManagement’s Discussion and Analysis

Business Risks

Performance Overview

under review. In other regions, performance was robust in

The following statements contain important issues with regard to the outlook of the Punch Group’s business andIn the fiscal year ended March 31, 2016, the global

Europe, the Americas, and Thailand as well. As a result,

Singapore and Vietnam, and sales were favorable inoverall, despite some signs of weakness. In the UnitedStates, economic recovery was anticipated to continue,

overseas sales amounted to ¥21,118 million.

Operating income rose 15.2% year on year, to ¥1,986

watching. Meanwhile, the European economy continued

million, due to an improvement in the cost of sales ratio

to recover moderately, although the impact of such factors

resulting from improved plant operations and profit growth

as the unemployment rate, price trends, and geopoliticalresulting from higher sales, despite an increase in selling,risks must be kept in mind. While stable growth was

general and administrative expenses stemming fromanticipated in China, there were risks of a downswing due

research and development investments and other factors.

to trends in real estate prices and financial markets, among

Profit attributable to owners of parent grew 5.1% year on
year, to ¥1,249 million, mainly due to a refund of income

recovery trend amid ongoing improvement in theemployment and income situation, although the impact ofrising uncertainty in overseas economies and fluctuations
in financial and capital markets should be considered.
Under these circumstances, the Punch Group continued

taxes following application of the preferential tax system at
PUNCH INDUSTRY (Dalian) CO., LTD.

Financial Position
At March 31, 2016, total assets amounted to ¥27,337

1 Trends in customers’ industries

4 Undeveloped and new business fields

The Punch Group does business with more than 10,000

In addition to its existing business supplying components

customers at home and abroad, and we believe that ourfor plastic molds and press dies, the Punch Group has set

customer structure, which does not depend on any specificits future growth strategies focusing on undeveloped

customer group, is well-balanced. Our major customers’

businesses in fields where it can leverage its coreindustries encompass a wide range of products, including

strengths. However, if these efforts do not progress as

automobiles, electronic devices, semiconductors,

anticipated due to changes in the economic situation,

consumer electronics, and precision equipment. It istrends in related technological innovations, ortherefore probable that market trends, price structures,developments by our competitors, the Punch Group’sand intensifying competition in these industries willbusiness performance may be affected.

determine trends in production and capital expenditure,and may impact the Punch Group’s business performance.

5 Business risks in China
The Punch Group has been engaged in business activities

to set globalization, expansion of new markets, andmillion, down ¥2,286 million from a year earlier. This was

2 Competition

conversion to a high profitability business model as its

primarily due to a decrease in notes and accounts

three priority initiatives in the final fiscal year of its mid-term

receivable.

The components for molds and dies that the Punch Group

withdrawal or major employment adjustment in an

manufactures face competition in such areas asenvironment that is different from Japan’s in terms oftechnology, price, and delivery. For standard products, webusiness practices and employment systems. Our businessare concentrating on reducing manufacturing costs toin China now represents an important foundation of theenhance our competitive edge. For special-order products,

Punch Group’s consolidated operating income. Although

we are differentiating ourselves from our competitors by

we anticipate stable business expansion in the future inbuilding an integrated production system backed byline with economic growth and amicable labor–advanced technological skills and by creating a customer-

management relations, any major changes to this businessfocused sales and market system. However, if theseenvironment, including political unrest, mounting anti-

business strategies do not work according to plan, or weJapanese sentiment, removal orders due to urban

encounter unexpected developments from ourdevelopment policies, or higher labor costs, among others,

competitors, or such developments occur to a greater

could affect the Punch Group’s business performance.

Total liabilities stood at ¥13,338 million, down ¥2,080

Group engaged in efforts such as expanding sales inmillion from a year earlier. This was mainly due to amarkets in Southeast Asia, India, Europe, and the Americas,

decrease in loans payable.

enhancing activities to attract orders in new businesses inJapan and China, and reducing manufacturing costs.

Net assets decreased ¥205 million from a year earlier, to¥13,999 million. This was primarily due to an increase in

In Japan, strong performance in the automobile andretained earnings stemming from higher profit attributableconsumer electronics sectors combined with growth in theto owners of parent and a decrease in foreign currency

food and beverage sector led to a year-on-year rise intranslation adjustments.

sales. In China, we were able to secure a year-on-yearincrease in sales on a cumulative basis, driven by
automobiles, consumer electronics, and precision

Cash Flows

degree than we anticipated, this could impact the Punch

equipment, although a slowdown in economic growth

Cash and cash equivalents at fiscal year-end totaled

became apparent in electronic devices and¥3,235 million, down ¥66 million from a year earlier.

semiconductors from the third quarter of the fiscal year

in China since 1990, and to date has never faced a

For the fiscal year under review, net cash provided byGroup’s business performance.

6 Business Risks in Southeast Asia andOther Regions

operating activities amounted to ¥3,187 million. Factors

3 Purchase of principal raw materials

We have expanded our business in Southeast Asianboosting cash flows included ¥1,656 million in income

The Punch Group depends on a specific trading company

markets since the conversion of PUNCH INDUSTRY

before income taxes and minority interests, ¥1,432 million

and manufacturers for a large part of its purchases of

MALAYSIA SDN. BHD. to a wholly owned subsidiary inin depreciation and amortization, and a ¥463 million

principal raw materials such as steel and carbides. While

August 2013. We are also making efforts to develop

Consolidated net sales increased 6.9% year on year, todecrease in notes and accounts receivable, offsetting a

we have built a stable supply system with these suppliers,

business in India, Europe, and the Americas. However,¥36,755 million.

¥440 million decrease in accounts payable and accrued

any change in the management strategies, significant

the Group’s performance could be affected if there are

expenses and ¥401 million in income taxes paid.

revisions to trade terms and conditions, or performance

any major changes in the business environment due tofluctuations in these suppliers could impact the Punch

local political unrest, tightening of regulations, changes inGroup’s business performance.

economic conditions, uncertainty over currencies, orunder review.

Revenue

Sales in Japan increased year on year, to ¥15,637 million,
reflecting strong performance in the automobile andNet cash used in investing activities totaled ¥1,159

consumer electronics sectors in addition to growth in the

million. Main factors included ¥1,001 million in purchase offood and beverage sector.

property, plant and equipment.

Overseas sales grew year on year on a cumulative basis,

Section 4:
Financial and Corporate
Information

business plan, “Value Creation 15,” launched in 2013. The

Section 3:
The Basis Supporting
Value Creation

oil prices, and the exchange rate of the dollar all bear

The Japanese economy continued to show a moderatereliance should not be placed on these or any other projections made by the Group.

Earnings

although the impact of factors such as interest rates, crude

other factors.

statements in this report are based on the judgments made by the Punch Group as of June 22, 2016. Undue
Section 2:
Strategies and Practices to Further
Create Value for the Punch Groupeconomy was expected to continue its moderate recovery

operations, and may have a material effect on the decisions of investors. Please note that such forward-looking

other factors.

Net cash used in financing activities was ¥1,901 million.

driven by automobiles, consumer electronics, andThis was mainly due to a ¥922 million decrease in short-

precision equipment. On the other hand, electronic

term loans payable, ¥687 million in repayment of long-term

devices and semiconductors brought to light the economicloans payable, and ¥304 million in cash dividends paid.

slowdown in China from the third quarter of the fiscal year

37 Punch Industry Co., Ltd.

Annual Report 2016

Punch Industry Co., Ltd.

Annual Report 201638

Section 1:
How the Punch Group
Creates Value

While we believe that the goodwill generated in thewake of the consolidation of PUNCH MALAYSIA
appropriately reflects its future earnings capacity, any
by substantial changes in management or the businessenvironment could impact the Punch Group’s businessperformance due to a loss from goodwill impairment.

The Punch Group has lowered its dependence on

The Punch Group holds a number of noncurrent assets,
including production facilities, to meet a wide variety ofcustomer needs. By applying the “Accounting Standards
for Impairment of Fixed Assets” to these noncurrent
assets, we endeavor to ensure that these assets remainsound by testing for impairment. However, depending on
the profit and loss or cash flow situation of the Company’s

7 Collection of receivables
The Punch Group does business with more than 10,000
customers at home and abroad and conducts thoroughcredit management with each of our customers. However,plants and offices and Group companies, these assets
could have an impact on the Punch Group’s operating
results and financial position.

In preparing its consolidated financial statements, thecentralized control system from its Tokyo Logistics Centercompanies, and an overnight shipping system has been
implemented except for deliveries to some regions.
However, if any problems occur at TLC, or if the delivery
service is interrupted by a natural disaster or some othercalamity, this could have an impact on the Punch Group’sbusiness performance.

Company faces systemic risks from foreign currency
fluctuations in the Chinese yuan, Indian rupee, Malaysian

An increase in the number of transactions in foreign
currencies is expected in line with the Company’s
accelerated global business development. The Company
will protect its financial structure against foreign currency
fluctuations by managing the risk associated with foreignexchange, including marrying exchange credits and debts
for each currency, forward foreign exchange contracts, etc.
Chinese subsidiaries have foreign exchange risks forloans payable as some debts are in foreign currencies. The
these currencies, and reduces the risk by taking

The Punch Group’s sales management system andproduction management system form the basis of its
business, and we believe that these systems operate withadequate stability and security. However, unpredictable
events including natural disasters, failures in systemcountermeasures such as forward foreign exchange
contracts to address short-term fluctuations.

Punch Group’s performance.

The Punch Group’s ratios of interest-bearing debt to totallarge volumes of customer information through electronic
media and print media. If information leaks were to occur
due to a failure of management or problems with theinformation system, etc., the Punch Group would face aserious loss of credibility, which would impact its
business performance.

39 Punch Industry Co., Ltd.

Annual Report 2016

financial institutions contain financial covenants, and in theevent of any infringement of these covenants, theCompany could be required to repay the relevant loans,which could affect the Punch Group’s financial position.

14 Human resources
The Punch Group has placed its emphasis on securing anddeveloping capable human resources, and has
implemented a range of personnel measures based on its
personnel system with the aim of bolstering employee
motivation and morale towards improving businessperformance. The Punch Group also recruits highly
capable, talented personnel when necessary.
However, if these measures fail to function effectively, or
the required personnel cannot be secured in time due tothe situation in the human resources market, the Punch
Group’s performance could be affected.

are required due to amendments to the relevant laws
and regulations, the Punch Group’s performance could
be affected.
Measures to deal with soil contamination by volatileorganic compounds at the site of the former Kanegasaki
Plant have proceeded steadily thus far. However, if an
unexpected situation arises, or significant changes are
made to the laws and regulations associated withenvironmental policies, the Punch Group’s performance
could be affected.

17 Disasters
In addition to its headquarters, the Punch Group has four
manufacturing sites, one distribution center, and 14 sales
offices in Japan; six manufacturing sites and 32 sales
offices in China; two manufacturing sites and five sales
offices in Southeast Asia; and one sales office in India. If
natural disasters, such as earthquakes and typhoons, or
accidents including fires, occur, or if serious failures in the
supply of electricity or in the telecommunications
infrastructure occur due to unexpected problems at
power generating facilities, etc., or if wars or acts ofterrorism, etc., take place in the areas where thesebusiness operations are located, the Group’s businessperformance could be affected.

(Consolidated)

March 31, 2015

Balance of interestbearing debt
(Thousands of yen)

Total assets(Thousands of yen)

Dependence oninterest-bearing debt(%)

15 Lawsuits and other actions
conceivable that the Group, through the course of

assets are shown below.

10,000 customers in Japan and overseas, and manages

and if the fund procurement costs increase amid the risingin production facilities and waste treatment methods

maintain and protect its intellectual property rights, it iscausing system failures could affect the Punch Group’s

The Punch Group conducts transactions with more thanand therefore difficult to execute our investment plans,

unexpected environmental problems occur, or changes

While the Punch Group exerts its utmost efforts tohardware, software, or networks, or computer viruses

10 Management of customer information

procure funds due to changes in the financial environment,

actively address environmental issues. However, if

However, significant foreign exchange fluctuations
exceeding the Company’s assumptions could impact the

13 Interest-bearing debt

business performance.

Under these circumstances, if we find it impossible toby overseas Group companies, into Japanese yen.

Company monitors the medium- to long-term trends in

9 Information systems

policy is to continue to invest aggressively.

Principles” and “Environmental Actions Guideline” toSection 4:
Financial and Corporate
Information(hereinafter, “TLC”), outsourced to external logistics

our interest-bearing debt may increase in the future, as our

The Company’s commitment-line contracts with major

ringgit, and others, when converting the currencies, used

For domestic distribution, the Company operates a

its own funds by reducing its working capital. However,

The Punch Group has established its “Environment

Section 3:
The Basis Supporting
Value Creation

deterioration in management conditions or other factors

8 Domestic logistics systemprofits by bolstering its earning capacity and to generate

performance and financial position could be affected.

12 Fluctuations in foreign exchange rates

performance and financial position could be affected.

reducing interest-bearing debt through efforts to secure

trend in market interest rates, the Punch Group’s

if it becomes difficult to collect receivables due to a
at any of our customers, the Punch Group’s businessinterest-bearing debt, relatively speaking, as a result of

16 Environmental measures

Section 2:
Strategies and Practices to Further
Create Value for the Punch Group

deterioration in the profitability of this subsidiary caused

11 Noncurrent assets

March 31, 2016

7,155,937

5,429,894

29,623,834

27,337,639

24.2

19.9

Notes: 1. Balance of interest-bearing debt is the total of short-term loans
payable, current portion of long-term loans payable, long-term loans
payable, accounts payable (installments), and long-term accounts
payable (installments).
2. Dependence on interest-bearing debt is the balance of interestbearing debt divided by total assets x 100.

conducting business overseas, may become embroiled ina lawsuit concerning intellectual property rights due todifferences in legal systems between countries.
Although the Punch Group has taken all possible
precautions to ensure the quality of its products, if a
lawsuit were brought to claim damage from a serious
accident due to product failure or complaints, the Groupmay incur huge costs involving heavy compensation
payments.
In addition to the above, if a material lawsuit werebrought against its business operations, the Punch Group’s performance could be affected.

Punch Industry Co., Ltd.

Annual Report 201640

Section 1:
How the Punch Group
Creates Value

Consolidated Balance Sheets
PUNCH INDUSTRY CO., LTD. and Consolidated Subsidiaries
March 31, 2015 and 2016

Thousands of
U.S. dollars

Millions of yen

3/20163/20153/20163/20153/20163/2016¥ 4,098¥ 3,860$ 34,257

4,174

3,062

27,177

LIABILITIES AND NET ASSETS

Current assets:

Current liabilities:¥ 3,302¥ 3,235$ 28,718

Notes and accounts receivable—trade

11,613

10,614

94,201

Short-term loans payable

Merchandise and finished goods

2,107

1,879

16,679Current portion of long-term loans payable

675

488

4,334

516

464

4,122

Income taxes payable

238

209

1,860

1,368

1,377

12,222

Provision for bonuses

326

251

2,229

Cash and deposits

Work in process
Raw materials and supplies
Deferred tax assets

239

216

1,922

(104)

(163)

(1,454)

19,36917,875

158,640

Total current assets
Property plant and equipment:
Buildings and structures
Machinery, equipment and vehicles

5,188

5,156

45,758

13,684

13,721

121,772

1,829

16,238

835

824

7,319

Construction in progress

132

109

976

3

3

29

21,664

21,644

192,091(13,495)(13,948)(123,784)

8,168

7,696

68,307

Goodwill

879

602

5,343

Deferred tax assets

120

191

1,704

1,178

1,012

8,985

(93)

(41)

(365)

2,085

1,765

15,667

Tools, furniture and fixtures

Others
Accumulated depreciation
Property, plant and equipment, net
Investments and other assets:

OthersAllowance for doubtful accounts
Total investments and other assets

Total current liabilities

41 Punch Industry Co., Ltd.

¥ 29,623

Annual Report 2016

¥ 27,337$ 242,613

445

3,958

2,385

21,166

12,312

10,451

92,752

15,923Long-term liabilities:
Long-term loans payable

2,306

1,794

Net defined benefit liability

523

859

7,625

Others

275

233

2,073

3,105

2,886

25,620Capital stock

2,897

2,897

25,716

Capital surplus

2,626

2,626

23,311Retained earnings

6,155

7,061

62,671

11,67912,586111,699

Total long-term liabilities

Net assets:
Shareholders’ equity:

Total shareholders’ equity:

Accumulated other comprehensive income:1——

Foreign currency translation adjustments

2,489

1,598

14,189Remeasurements of defined benefit plans

28

(196)

(1,745)

2,520

1,402

12,4445

10

97

14,205

13,999124,241¥29,623¥27,337$242,613

Valuation difference on available-for-sale securities

Total accumulated other comprehensive income
Non-controlling interests
Total net assets

Total assets

440
2,685

Total liabilities and net assets

Punch Industry Co., Ltd.

Annual Report 2016

Section 4:
Financial and Corporate
Information

1,818

Land

OthersSection 3:
The Basis Supporting
Value Creation

OthersAllowance for doubtful accounts

Notes and accounts payable—trade

Section 2:
Strategies and Practices to Further
Create Value for the Punch GroupASSETS

Thousands of
U.S. dollars

Millions of yen

42Consolidated Statements of Changes in Net Assets

PUNCH INDUSTRY CO., LTD. and Consolidated Subsidiaries
For the years ended March 31, 2015 and 2016

Thousands of
U.S. dollars

Millions of yen

3/20163/2016

Net sales¥34,392¥36,755$326,197

Cost of sales

25,03026,577

235,867

9,361

10,17890,330

7,637

8,191

72,696

1,986

17,364

Selling, general and administrative expenses
Operating income

1,724

Operating income (expenses):
Interest income

14

30

274

Dividend income

8

3

27

32

31

276

Interest expenses

(111)

(91)

(813)

Foreign exchange losses

—

(293)

(2,602)

Soil contamination expenses

(35)

—

—

7

4

36

Gain on sales of noncurrent assets
Gain on sales of investment securities

—

3

29

Loss on sales and retirement of noncurrent assets

(12)

(17)

(159)

Other, net

(15)

(0)

(4)

Total

(112)

(330)

(2,936)

Income before income taxes

1,656

1,612

14,698

480

450

3,994

Refund of income taxes

(0)

(83)

(738)

Deferred

(51)

44

394

Total

428

411

3,650

1,183

1,244

11,047

Current

ProfitLoss attributable to non-controlling interests
Profit attributable to owners of parent

(4)

(4)

(39)

¥ 1,188¥ 1,249$ 11,086

Consolidated Statements of Comprehensive Income
PUNCH INDUSTRY CO., LTD. and Consolidated Subsidiaries
For the years ended March 31, 2015 and 2016

3/20163/2016¥ 1,183¥ 1,244$11,047

0

(1)

(17)

Foreign currency translation adjustments

1,058

(875)

(7,768)Remeasurements of defined benefit plans

76

(225)

(1,997)

1,135(1,102)(9,783)3/2015
ProfitOther comprehensive income:
Valuation difference on available-for-sale securities

Total other comprehensive income
Comprehensive income¥2,319¥142$ 1,264¥2,322¥136$ 1,216

5

49

Capitalstock

CapitalsurplusRetainedearnings

Total
shareholders’equityValuationdifferenceonavailablefor-salesecurities¥1,571¥1,300¥5,096¥ 7,968

¥ 1

72

72

72

2,652

2,652

Cumulative effects
of changes inaccounting policies
Issuance of newshares

1,326

1,326

Total
Foreignaccumulated
Noncurrency Remeasurementsofdefinedothertranslation benefit plans comprehensive controllinginterests
adjustments
income¥1,432¥ (47)¥1,385¥ 9

Total
net assets¥ 9,362

Dividends fromsurplus

(201)

(201)

(201)

Profit attributableto owners of parent

1,188

1,188

1,188

Net other changes of
items during the period
Balance at
March 31, 2015

2,897

2,626

0

1,057

76

1,134

(3)

1,131

1

2,489

28

2,520

5

14,205

6,155

11,679Cumulative effects
of changes inaccounting policies

(38)

(38)

(38)

Dividends fromsurplus

(304)

(304)

(304)

Profit attributableto owners of parent

1,249

1,249

1,249

Net other changes of
items during the period
Balance at
March 31, 2016

¥2,897¥2,626¥7,061¥12,586

(1)

(891)

(225)

(1,118)

5(1,112)¥—¥1,598¥(196)¥1,402¥10¥13,999

Thousands of U.S. dollars

Shareholders’ equity

Balance at
March 31, 2015

Thousands of
U.S. dollars

Millions of yen

Balance at
March 31, 2014

Accumulated other comprehensive income

Section 4:
Financial and Corporate
Information

Income taxes:

Millions of yen

Shareholders’ equity

Section 3:
The Basis Supporting
Value Creation

Gain on sales of scraps

PUNCH INDUSTRY CO., LTD. and Consolidated Subsidiaries
For the years ended March 31, 2015 and 2016

Section 2:
Strategies and Practices to Further
Create Value for the Punch Group

3/2015Gross profit

Section 1:
How the Punch Group
Creates Value

Consolidated Statements of Income

Accumulated other comprehensive income
Total
shareholders’equityCapitalstock

CapitalsurplusRetainedearnings$25,716$23,311$54,625 $103,653

Valuationdifferenceonavailablefor-salesecurities
$17

Total
Foreignaccumulated
Noncurrency Remeasurementsofdefinedothertranslation benefit plans comprehensive controllinginterests
adjustments
incomeTotal
net assets$22,097$126,068$

252$22,366$49

Cumulative effects
of changes inaccounting policies

(341)

(341)

(341)

Dividends fromsurplus(2,700)(2,700)(2,700)

Profit attributableto owners of parent

11,086

11,086

11,086

Net other changes of
items during the period
Balance at
March 31, 2016

$25,716$23,311$62,671 $111,699(17)(7,908)(1,997)(9,922)

49(9,873)$—$14,189$(1,745)$12,444$97$124,241

Comprehensive income attributable to:
Owners of the parent
Non-controlling interests

43 Punch Industry Co., Ltd.

Annual Report 2016

(3)

Punch Industry Co., Ltd.

Annual Report 201644

Company Profile (As of March 31, 2016)

PUNCH INDUSTRY CO., LTD. and Consolidated Subsidiaries
For the years ended March 31, 2015 and 2016

Thousands of
U.S. dollars

Millions of yen

3/20163/20153/2016¥ 1,612¥ 1,656$ 14,698

Company name

PUNCH INDUSTRY CO., LTD.

Established1975

Capital2,897.73 million yen

Number of employees

3,836 (consolidated)

Head office

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

Business

Manufacture and sale of mold and die components

Main banks

The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation
Sumitomo Mitsui Trust Bank, Limited
Resona Bank, Limited

Adjustments for:
1,316

1,432

12,716

Amortization of goodwill

97

89

791

Increase in net defined benefit liability

12

11

102

Increase in provision for bonuses

80

5

49

Increase (decrease) in allowance for doubtful accounts

(25)

17

157

Increase (decrease) in soil contamination expenses

(260)

—

—
(301)

Depreciation and amortization

(22)

(33)

111

91

813

Foreign exchange losses

430

337

2,997

4

13

122

Loss on sales and retirement of noncurrent assets
Decrease (increase) in notes and accounts receivable—trade(1,142)

463

4,111

Decrease (increase) in inventories

(356)

109

970

Increase in notes and accounts payable—trade

182

45

406

Increase (decrease) in accounts payable—other and accrued
expenses

679

(440)

(3,911)Others, net
Subtotal(154)(1,367)

3,645

32,355

21

33

301

Interest expenses paid

(105)

(90)

(804)

Income taxes paid

(392)

(401)

(3,563)

1,805

3,187

28,288Net cash provided by operating activities
Cash flows from investing activities:

21

—

—

Purchase of property, plant and equipment(1,129)(1,001)(8,884)

Proceeds from sales of investment securities

—

5

50

Net decrease in time deposits

14

14

131

Purchase of intangible assets

(109)

(125)

(1,117)

Payments of long-term loans receivable

(41)

(37)

(331)

Proceeds from sales of property, plant and equipment

Collection of long-term loans receivable

46

41

372

Others, net

18

(57)

(507)

(1,180)(1,159)(10,287)

Net decrease in short-term loans payable

(743)

(922)

(8,185)

Proceeds from long-term loans payable

900

12

115

Repayment of long-term loans payable(1,341)(687)(6,102)

Proceeds from issuance of common stock

2,639

—

—

Cash dividends paid

(201)

(304)

(2,700)

Others, net

(238)

(0)

(6)

1,013

(1,901)(16,878)

157

(193)

(1,715)

1,795

(66)

(592)

Net cash used in investing activities
Cash flows from financing activities:

Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

45 Punch Industry Co., Ltd.

Annual Report 2016

1,506

3,302

29,310¥ 3,302¥ 3,235$ 28,718

IR e-Magazine
Please subscribe to our e-Magazine using thisQR code or URL. (Japanese language only)

Click onInvestor Relations

Top page

Investor Relations

The Punch Industry website contains various information,
including Company Overview, Business Overview,
and Investor Relations information.

http://www.punch.co.jp/english/

We provide business results, press releases,
and other IR-related information via e-mail.

https://fofa.jp/punch/a.p/102/(Japanese language only)

PUNCH INDUSTRY CO., LTD.
PUNCH INDUSTRY CO., LTD.
Omori Bellport E-5F., 6-22-7 Minami-oi,
Shinagawa-ku Tokyo
Phone: +81-3-6893-8007

Kitakami Plant
21-26-17 Murasakino, Kitakami City,
Iwate Prefecture
Phone: +81-197-68-3087

Hyogo Plant
922-202, Aza-Higashihata, Tsuneyoshi-cho,Kasai City, Hyogo Prefecture
Phone: +81-790-47-8077

Section 4:
Financial and Corporate
Information

Interest and dividends income received

(440)
2,281

Company Website

Section 3:
The Basis Supporting
Value Creation

Interest and dividends income
Interest expenses

Introduction to Company Website and IR e-Magazine

Section 2:
Strategies and Practices to Further
Create Value for the Punch Group

Cash flows from operating activities:
Income before income taxes and minority interests

Section 1:
How the Punch Group
Creates Value

Consolidated Statements of Cash Flows

Miyako Plant
29-1 Daiichi-chiwari, Matsuyama,
Miyako City, Iwate Prefecture
Phone: +81-193-62-8007

Group Companies
Pintec Corporation
2-2-26, Zao-Matsugaoka, Yamagata City,
Yamagata Prefecture
Phone: +81-23-688-1770
PUNCH INDUSTRY (Dalian) CO., LTD.
No. 5 Jinzhou Street, Dalian Economy
and Technology Development Zone,
Liaoning Province, People’s Republic of China
Phone: +86-411-8761-3087
PUNCH INDUSTRY (Wafangdian) CO., LTD.
No. 153 North Gongji Street, Dalian
Wafangdian, Liaoning Province, People’s
Republic of China
Phone: +86-411-8550-8785
PUNCH INDUSTRY (Wuxi) CO., LTD.
No. 11 Chunhui West Road, Xishan
Economic Development Zone, Wuxi
Jiangsu Province, People’s Republic of China
Phone: +86-510-8826-6287

PUNCH INDUSTRY (Dongguan) CO., LTD.
No. 5 Yong ji Road, Yongtou Village,
Chang’an Town, Dongguan, Guangdong
Province, People’s Republic of China
Phone: +86-769-8507-0387
PUNCH SPRING (Dalian) CO., LTD.
No. 3 Xingcheng Road, Dalian Economy
and Technology Development Zone,
Liaoning Province, People’s Republic of China
PUNCH INDUSTRY INDIA PVT. LTD.
No:97/A-1, SIDCO Nagar,
4th Street Villivakkam Chennai 600049 India
TEL：+91-44-42699644
PUNCH INDUSTRY MALAYSIA SDN. BHD.
Nagasari Industrial Park No.3061
Jalan Nagasari1 Prai Industry Zone
Prai Penang 13600 Malaysia
TEL：+60-4-3984826

PUNCH INDUSTRY SINGAPORE PTE. LTD.
33 Ubi Avenue3 #06-10
Vertex Lobby B 408868 Singapore
TEL：+65-6533-4151
PUNCH INDUSTRY VIETNAM CO. LTD.
8th Floor. PTS Office Building 118
Huynh Tan Phat Street., Tan Thuan Tay
ward, District7 HCMC Vietnam
TEL：+84-8-38720087
PUNCH INDUSTRY MANUFACTURING
VIETNAM CO. LTD.
B_6E1_CN, My Phuoc 3 Industrial Park,
Thoi Hoa ward, Ben Cat Town,
Binh Duong Province, Vietnam
TEL：＋84-650-3-803-100
PT. PUNCH INDUSTRY INDONESIA
Komplek Griya Inti Sentosa Jl.
Griya Agung No.3,
Sunter Agung Jakarta 14350 Indonesia
TEL：+62-21-641-0730

Punch Industry Co., Ltd.

Annual Report 201646

Section 1:
How the Punch Group
Creates Value

Investor Information (As of March 31, 2016)
Stock Information

40,000,000

Total number of shares issued

11,061,200

Number of shareholders

4,766

Stock exchange listingFirst Section, Tokyo Stock Exchange

Security code

6165

Number of shares per trading
unit

100

Transfer agent

Sumitomo Mitsui Trust Bank

Accounting auditor

PricewaterhouseCoopers Aarata LLC

Section 2:
Strategies and Practices to Further
Create Value for the Punch Group

Total number of authorizedsharesBreakdownof
Shareholders

7,022,018 63.48%

Individuals and others

Other domestic companies 1,270,900 11.49%

2.08%
156,482
1.41%
2,382,200 21.54%

Foreign companies

229,600

Securities companies

Section 3:
The Basis Supporting
Value Creation

Financial institutions

Note: On July 1, 2016, PricewaterhouseCoopers Aarata changed its name toPricewaterhouseCoopers Aarata LLC.

Major Shareholders (Top 10)

Stock Prices and Trading Volumes
Percentage ofshares held (%)

MT Kosan Co., Ltd.

1,090,000

9.85

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

1,082,300

9.78

Yuji Morikubo

822,000

7.43

Tetsuji Morikubo

650,000

5.88

Punch Industry Employees’ Stock
Ownership Scheme

565,700

5.11

Nomura Trust and Banking Co., Ltd.
(trust account)272,300

2.46

Michiko Kamba

231,000

2.09

204,400

1.85

Kenji Sugimoto

155,400

1.40

Hirohisa Morikubo

128,000

1.16

Japan Trustee Services Bank, Ltd.

(trust account)

Trading volume (right axis)

(Yen)
2,000

(Thousand shares)
4,000

1,500

3,000

1,000

2,000

500

1,000

Section 4:
Financial and Corporate
Information

Number ofshares held

Name

0

0

12/
2014

4/
2015

8/
2015

12/
2015

3/
2016

Inquiries
IR & PR Division, General Affairs Department PUNCH INDUSTRY CO., LTD.
Omori Bellport E-5F., 6-22-7 Minami-oi, Shinagawa-ku Tokyo, 140-0013
Phone: +81-3-5753-3130

Fax: +81-3-5753-3131

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 historicalfact, 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 business results may differ materially from these statements. Accordingly, investors
are cautioned not to place undue reliance on forward-looking statements. Punch Industry is not obliged to amend these forward-looking statements based on new
information or future events.

47 Punch Industry Co., Ltd.

Annual Report 2016

Punch Industry Co., Ltd.

Annual Report 2016

48