Message from the President
Review of the 14th Medium-Term
Management Plan

Realizing ESG management
by providing new value thatdelivers excitement to all
stakeholders worldwide

Masanari Yasuda

President and Representative Director

During the three years of our 14th Medium-Term Management
Plan1 (fiscal 2021–2023), we worked on various measures todrive further business growth and build a strong corporate
foundation. We focused on two approaches: “evolution for business growth” from a proactive perspective, and “stronger business operations structure to support evolution” from a protective
perspective. The 14th Medium-Term Management Plan played
an important role as the first medium-term plan on the road toachieving our 2030 Vision.
We found ourselves in an extremely challenging businessenvironment due to the COVID-19 pandemic, which broke out
just before we launched the plan. The resulting parts shortages,
along with soaring energy and resource prices, created major
profitability issues for us. However, rather than being defeated,
we maximized the investment of management resources in areas
essential for growth and prepared for further growth. To acquire
new customers and new commercial rights, we took various initiatives. These included the establishment of a new car seat production subsidiary in Poland as a key site for expanding sales toEuropean automakers, and the establishment of a new division tooversee all processes from sales to production. These efforts are
now leading to steady expansion of commercial rights.
In the next-generation technology field, which will becomea future source of earnings for us, we announced “XR Cabin,”which will transform vehicle interiors. What has been mainly aspace for sitting during transport is being transformed into anext-generation interior space that can generate excitement. XRCabin is showing more concretely the value that the TS TECH
Group is ready to provide for the future of mobility.
At the same time, we have worked to strengthen our business foundation for sustainable growth. This includes governance reforms2 such as transitioning to “a company with an
Audit and Supervisory Committee” structure, and improving thediversity of our Board of Directors. It also includes efforts toidentify the Group’s material issues,3 challenges we will give priority attention.

Looking toward 2030 with the 15th MediumTerm Management Plan

Under the 15th Medium-Term Management Plan4 (fiscal 2024–2026), we seek to turn our preparations into results, and to further address issues of profitability and achieve a rapid recovery.
During the process of drafting this medium-term plan, westarted by clarifying the 2030 Vision, which is one of our objectives. We have had many discussions about what needs to beaccomplished in three years’ time in order to achieve this vision,and how we can quickly rebuild profitability, which is the mainchallenge. As important issues for profitability improvement,
we have identified ways to increase not only profits but also capital efficiency.
2030 Vision Statement

Innovative quality company—Continued creation of new value—
Performance targets for fiscal 2030
OperatingincomeRevenue

700 billion yen

68 billion yen

Operatingmargin

9.7%

ROE

10.0%

In order to resolve these issues and solidify the foundation
for achieving our growth objectives by 2030, we have established nine priority strategies in the categories of growth, regional, and functional under the 15th Medium-Term ManagementPlan, which is based on the management policy of realizing ESGmanagement. In order to fully implement all of these priority
strategies, we have created the Business Strategy Committee.
Comprised of all the company’s directors, including outside
directors, it will manage and oversee implementation progress
for the nine priority strategies. Leveraging thorough discussion
and timely decision-making, we will steadily promote various
measures despite an increasingly uncertain business environment, striving to deliver greater business growth and improved
capital efficiency.

Priority Strategies under the 15th Medium-Term Management Plan
Realizing ESG management

Management policyGrowthstrategies
Regionalstrategies
Functionalstrategies

Priority strategy (1)Securing cabincoordination capacity
Priority strategy (4)V-shaped recovery in North America
Priority strategy (7)Supply chain restructuring

Priority strategy (2)Priority strategy (3)Further growth innew businesses

A higher share of major
customers’ products

Priority strategy (5)Priority strategy (6)Restructuring the China
business strategy

Strategic growth innew businesses in Europe

Priority strategy (8)Priority strategy (9)Enhancing efforts to developenvironmental technologies

Building high efficiency
production structures

1 14th Medium-Term Management Plan
2 Governance reforms
3	Material issues

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4	
15th Medium-Term Management Plan

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Message from the President

Promoting further business growth andhigher corporate value

Among the priority strategies of the 15th Medium-Term Management Plan, our three growth strategies are particularly important. These are “securing cabin coordination capacity,” “furthergrowth in new businesses,” and “a higher share of major customers’ products.”
For the first growth strategy, “securing cabin coordination
capacity,” we are working on the creation of new technologies5
by accelerating research into how people will spend their time innext-generation vehicles, a joint development with other industries and start-up companies, and the training of personnel with
software expertise who can prepare complex proposals for vehicle interiors. In order to bring our developed technologies tomarket as quickly as possible, we will work with our customers in
the advanced development procedures, so that our technologies can be adopted for new mass-produced vehicles. At thesame time, by working on the development of highly efficientmass production technology6 adapted to new construction andmaterials, we will build a manufacturing system that can provide
our new product technologies at competitive prices.
For the second growth strategy, “further growth in newbusinesses,”7 we are working on sales activities with the goal ofensuring new business sales account for 30% of consolidated
revenue by 2030. During the 14th Medium-Term Management
Plan period, our seats were adopted in August 2022 for the Spacia Base model released by Suzuki Motor Corporation, and wewere also able to steadily increase sales to automobile and motorcycle manufacturers in Europe and the United States. In order to increase this momentum under the 15th Medium-Term
Management Plan, we will make the most of technologies thathave been well received by customers, and aim to acquire commercial rights for variant models of these products. We will also
develop strategic sales activities by strengthening cooperation
between each segment and functional division, in an effort led
by the New Business Management Division.

customers’ products,”8 with a focus on the Honda Group. Currently, our products are used for approximately 60% of the seatsin vehicles sold by Honda, and our goal is to increase this shareto over 70% by 2030. To achieve this, we must secure orders forexisting commercial rights and expand sales through new commercial rights. We will work to improve customer satisfaction bycreating attractive products, create products jointly with customers from the early development stage, and conduct orderdevelopment activities by ensuring collaboration across oursegments and functional divisions and taking advantage of regional characteristics. We will also work to further increase ourshare of sales by winning more orders for seat components.
This will be done by enhancing development of next-generation
standard seat frames and other components, and then striving
to acquire commercial rights for the seats themselves.
Regional and functional strategies make up the remaining
priority strategies. In terms of regional strategies, we will work
to improve profitability in North America, China, and Europe tostrengthen our corporate competitiveness. With our functionalstrategies, we will pursue further business growth by working tostrengthen the foundations that support our higher-level strategies. These include “supply chain restructuring,” “enhancing
efforts to develop environmental technologies,” and “building
high efficiency production structures.”Through proactive growth-related investments based onthese priority strategies, we will also address the challenge ofimproving capital efficiency. In addition to increasing profitability, we will optimize our capital structure through not only
growth-related investments but also proactive shareholder returns in order to move to a cash level that is appropriate for ourbusiness scale. During the 15th Medium-Term Management Planperiod, the shareholder return policy calls for steady distribution of returns regardless of business performance. We plan toreturn approximately 50 billion yen to shareholders over three
years through regular dividend increases and flexible acquisition of treasury stock. The aim is to achieve a dividend on equity
ratio (DOE)* of 3.5% or more by the end of the 15th Medium-TermManagement Plan period. We aim to enhance corporate value
by driving sustainable business growth with growth-related investments, and by optimizing our capital structure9 based onenhanced shareholder returns, in order to reach a price-to-bookratio (PBR) above 1, as soon as possible.
* Dividend on equity ratio (DOE) = Total dividends / Shareholders’ equity (Equityattributable to owners of parent)

Remaining “A company sincerely
appreciated by all”
Seat production plant in Poland for European automakers

Along with these sales expansion measures, we will also
pursue the third growth strategy, “a higher share of major

In recent years, it has become increasingly important for companies to address social issues in order to help build a sustainable world. Under the TS TECH Philosophy, which requires us tobe a company dedicated to realizing people’s potential and onethat is sincerely appreciated by all, we have been working to

5 Creation of new technologies

6 Development of highly efficient mass production technology

9	
Optimizing capital structure

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In closing

Given the increasingly uncertain business environment, continuing to operate our business just as we have in the past wouldmean losing the ability not only to maintain the status quo butalso to create new value, even if we still maintained a solid management foundation. Therefore, it is essential to invest the necessary management resources based on timely decision-making,in order to blaze new trails to future business growth. This means
departing from established practices and sometimes moving
away from the past. During the period of the 15th Medium-Term
Management Plan, we will not relax our reform efforts, but instead strive to become a company sincerely appreciated by all
our stakeholders. I hope you are looking forward to this bold future, and I appreciate your continued support.

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Human rights are respected

p. 46

14	
Every employee can demonstrate their individual personality and play anactive role8

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11 Initiatives across the entire supply chain
12	
TS TECH Philosophy

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8	
A higher share of major customers’ products

In fiscal 2022, we launched an employee engagement survey to serve as an indicator of progress in the effort to furtherdevelop individual employee strengths and to encouragechallenge-taking. We have set this indicator as a material issue
KPI and are working on various measures with the aim of achieving the highest rating of AAA by 2030. I believe that building a
relationship of trust between the company and its employees
and ensuring that everyone works with a sense of purpose will
increase the productivity of the TS TECH Group and become adriving force for creating new value. To achieve this goal, we will
create human resource development programs along with thenecessary workplace environments. This means striving to create workplaces where the human rights of each individual arerespected,13 and every employee can demonstrate their individual personality and play an active role.14 This will extend tovarious areas including personnel evaluation and compensation, employee welfare benefits, training, and workplace environments.
We will remain “A company sincerely appreciated by all,”which includes not only employees but also all other stakeholders. In addition to achieving the targets of the 15th Medium-Term
Management Plan and the 2030 Vision, the Group will also strive
to achieve sustainable growth together with society in the years
that follow.

10 Achieve carbon neutrality

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7	
Further growth in new businesses

promote growth for both our company and the broader society.
Our mission is to engage in corporate activities that also help
resolve social issues. Each of the material issues we are addressing is linked to the UN Sustainable Development Goals, and weare accelerating our efforts to help achieve these SDGs.
In particular, as a company that provides components forvehicles that emit CO₂, we see the response to climate change
as one of our most important management issues. In order tohelp achieve carbon neutrality,10 we are working on a variety ofmeasures in each operational area, including production andproduct development, with the goal of reducing the Group’s CO₂
emissions from business activities to net zero by 2050. Furthermore, in order to further reduce CO₂ emissions going forward,
we need to take initiatives not only internally but across theentire supply chain,11 which means the cooperation of our business partners is essential. While it would be easy to just issue
CO₂ emissions reduction requests to suppliers, we believe that
this alone would not lead to significant reductions. Instead, it isimportant for the Group to demonstrate leadership, and to work
together with business partners on efforts such as sharing
methods for calculating CO₂ emissions along with specific methods for emissions reduction. Accordingly, we will carry out relevant activities that are both effective and appropriate to the sizeand capabilities of our individual business partners.
To avoid a situation where initiatives to address these social
issues become merely token efforts, we understand that employees and executives must fully understand the importance of
these initiatives and be able to implement them independently.
We believe that the TS TECH Philosophy12 will be the key todeepening this understanding, as it communicates the fundamental reasons why the Group exists, and its value to society.
One of the principles set out in the TS TECH Philosophy is
being “A company dedicated to realizing people’s potential.” Thismeans we must nurture and value employees, who work hard
every day for their own sake and for the sake of the company.
They are treated not just as human resources, but as valued human beings. Another principle in our philosophy is being “Acompany sincerely appreciated by all.” This means we must
share positive outcomes with employees and all other stakeholders affected by the Group's corporate activities and build
relationships of trust with them.
Accordingly, we must ensure that we remain a company
that is valued and appreciated by everyone. With more than
15,000 employees worldwide, the TS TECH Group understands
that it can only become stronger if every person fully understands this corporate philosophy and puts it into practice, without exception. We ask every employee to carefully consider andunderstand the TS TECH Philosophy, and then put it into practice, so the Group can grow as a result. To make this a reality, I
will share my thoughts and promote a corporate culture thatencourages challenge-taking.

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