Nikko
Corporate Report
2020
Fiscal year ended March 31, 2020

Future creation that starts from anNikko Group’s Corporate Philosophy

Contents
Table of Contents, Editorial Policy

Corporate slogan
01

VISION & INNOVATION
Nikko Group s Corporate Philosophy

02

Promotion and Spread of Corporate Philosophy

03

History05

Nikko Group in Figures(Financial and Nonﬁnancial Highlights)

07

CEO s Message

09

SUSTANABILITY & ENGAGEMENTLEADERSHIP & GOVERNANCE
Corporate Governance45

Nikko s Governance in Corporate Auditors View

49

Executives

51(Roundtable Discussion by Corporate Auditors)

DATA & HIGHLIGHT
FY 2019 Business Summary and FY 2020 Outlook

53

Financial Indicators of the Past 10 Years

55

Financial Data

57

15

Stock information

60

Promotion of Sustainability

17

Company Overview and Oﬃces and Sites

61

Response to Climate Changes and Business
Opportunities

21

Summary of Subsidiaries

62

Base to Provide Value to Customers

23

Human Resource Development andImprovement in Productivity

27

Nikko s Diversity in Female Employees View

29

STRATEGY
Progress in Medium-Term Management Plan and
Focus Areas

31

Segment Highlights

35

Business Strategies
Asphalt Plant-Related Business

37

Concrete Plant-Related Business

38

Environment- and Conveyor-Related Business

39

Other Businesses

40

CEO s Message

41

Editorial Policy
Nikko Corporate Report 2020 aims to disclose Nikko Group s
medium- and long-term value creation eﬀorts from both ﬁnancial
and nonﬁnancial aspects to all stakeholders including ourshareholders and investors. The Report is edited referring to The
International Integrated Reporting Framework established by theInternational Integrated Reporting Council (IIRC) and the Guidanceon Integrated Disclosure and Dialogues for Joint Value Creation by
the Ministry of Economy, Trade and Industry of Japan.
Target readers：All stakeholders involved in the Nikko Group.
Reporting period：The Report mainly covers FY2019 (April 1, 2019
to March 31, 2020) but also includes information
before and after this period.
Scope of reporting：The Report reports on the Nikko Group
comprising Nikko Co., Ltd. and eight subsidiaries(all of which are consolidated subsidiaries).
Company names： Nikko and the Company refer to Nikko Co., Ltd.
and the Nikko Group and the Group refer to the
Nikko Group including consolidated subsidiaries.
Note on forward-looking information
This Report includes statements on future outlook. We
appreciate your understanding that actual performance may
diﬀer from the Company s projections.

Future creation that starts from anContribute to future society through corporate activities.
Nikko Group Corporate Charter

Value Creation Process(Roundtable Discussion by Female Employees)

VISION & INNOVATIONManagement Philosophy
Adopting a customer-ﬁrst policy, the Nikko Group provides
customers with truly satisfactory products and services, while
continually promoting self-reform aimed at winning broad trustand fulﬁlling our mission as a solutions partner evolving withcustomers.

Company Motto
1. Serve society through business.
1. Work toward prosperity with sincerity and responsibility.
1. Produce appropriate proﬁts through original ideas and improvement eﬀorts.

Code of Conduct
1. Compliance

We shall act according to our conscience, comply with laws, social
norms, and internal rules, shall not commit any wrongdoings, andengage in fair and transparent corporate activities.

2. Provision of better products and services

We shall enhance research and technology development to oﬀer
safe and high-quality products and services to customers.

3. Communication with society

We shall strive to communicate with customers, shareholders,business partners, and local communities, ensure transparency ofmanagement, and fulﬁll accountability.

4. In search of safety, comfort and aﬄuence

We shall strive to give priority to safety, improve workplaceenvironment and labor conditions so that each and every employee
can feel comfort and affluence.

5. Environmental preservation

We shall promote initiatives for environmental preservation andcontribute to creation of a good environment.

6. Elimination of anti-social forces

We shall not have any relationship with antisocial forces andorganizations that pose a threat to the safety and security of civil society.

01 Nikko Corporate Report 2 0 2 0

Nikko Corporate Report 2 0 2 0 02

Promotion and Spread of Corporate Philosophy

VISION & INNOVATION

Nikko DNA being handed down from past to future

2019

Company song Testament for the Future and future creation dance

2018

Corporate slogan

Future creation that starts from anContribute to future society through corporate activities.

Nikko Group Corporate Charter Card
Nikko Group executives and employees always carry the pocket-sized Corporate Charter Card. Nikko Group
Corporate Charter is the collective term for the Company Motto, Corporate Philosophy, and Code of Conduct, and it
deﬁnes the guidelines for executives and employees in carrying out daily business activities. We aim for the Nikko
Group s business activities, underpinned by its Corporate Philosophy, to harmonize with the society and win deep
trust, based on which we will put into practice our corporate slogan Future creation that starts from an(new technologies born and started at nikko create future lifestyle).

Corporate Charter Card
For Group companies in Japan (Japanese)

2007

For Nikko (Shanghai) Construction Machinery Co., Ltd. (Chinese)

Nikko Group Corporate Charter

Established the Nikko Group Corporate Charter
comprising the Corporate Philosophy, Company Motto,
and Code of Conduct with the aim of developing aneﬀective group system and improving corporate value
Company Motto (Thai)

1969

Company Motto

1. Serve society through business.
1. Work toward prosperity with sincerity and responsibility.
1. Produce appropriate profits through original ideas andimprovement efforts.

We explained the Group Corporate Philosophy based on the
Company Motto to all employees of Nikko Asia (Thailand) Co.,
Ltd. established in February 2020 and distributed the Corporate
Charter Card to its employees as well as the employees of theThai manufacturing subsidiary established in June to inculcate
the Corporate Philosophy.

Company song Testament for the Future and future creation dance
1968

Company renamed to Nikko Co., Ltd.
The company was renamed as the main business shifted to
manufacturing of construction machinery such as asphalt plants,
batching plants, and belt conveyors reﬂecting the shift in the leadingrole of civil engineering works from tools to machinery along with thedevelopment in infrastructure technology

1967

Inaugural issue of Company newsletter Tombo was published
A communication tool between the management andemployees as well as between employees

Founding Company Motto

We created the company song “Testament for the Future” as a100th anniversary project.
Based on the theme of future creation, its lyrics convey what we
aspire to be on an up-tempo, J-Pop melody, making it a friendly
company song.
The Future Creation Dance along with the company song waschoreographed byYu Fukuzawa, who has choreographed numbers ofwell-known idol groups. We held a company dance contest to
unveil Future Creation Dance. A number of workplace-based
teams participated in the qualifying round. The ﬁnals washeld at the 100th anniversary celebrations in October 2019.

The winner of the Future Creation Dance Contest

Fortitude and exertion
Thorough consideration and decisive action
●

●

1919

Nikko Tool Manufacturing establishedOriginating from Suzuki Trading, a major trading ﬁrm during the Taisho
era, the company was established with the main business of manufacturing
and sales of hand tools such as shovels and pickaxes.

03 Nikko Corporate Report 2 0 2 0

https://www.nikko-net.co.jp/100th/dance/

Nikko Corporate Report 2 0 2 0 04

History

VISION & INNOVATIONEngaging with social issues for a century andmoving ahead

1919
1946
1961
1945
1960
1984

1985
2011

2012
2020

Start-up era

Postwarreconstruction andbusiness expansion

Transformation into
a construction machinery
manufacturer

Focus on environment-related
business andexpansion into Asia

Making plant products
low carbon and strengthening of
remote maintenanceJapan was booming economically in
the Taisho era in the wake of WorldWar I. Trade grew and various
industries developed. In such asituation, the executives of Suzuki
Trading, a Kobe-based general
trading ﬁrm boasting the top annual
sales in Japan at that time,
established Nihon Kogu Product Co.,
Ltd., which manufactured and soldhardware for construction such as
shovels, spades, and pickaxes inAugust 1919.

The Korean War broke out in 1950
and production of shovels expandedon the back of special procurement.
Reﬂecting robust civil engineering
works, the Company began
manufacturing batching plants in
1956. As road construction
expanded with the beginning of
motorization, the Company
developed an asphalt plant
prototype in 1958. It built thefoundation for transforming itself
from a tool manufacturer to a
construction machinery
manufacturer.

The Company expanded operations
to construction machinery such asasphalt plants and belt conveyors,which are essential for construction
works, and in 1968 changed its
name to Nikko Co., Ltd.
It carried out development of
products in response to the needs ofthe time through technologicalalliances with Boeing of the U.S.,
Benninghoven of Germany, andPhilips of the Netherlands.

In 1998, the Company established theEnvironment Business Department andbegan development of cutting-edge plants
and devices that are environmentallyfriendly based on plant engineering
technology.
In 2001, the Company established Nikko(Shanghai) Construction Machinery Co.,
Ltd. with the aim of making a full-scale
entry into the Chinese market.
Since the development, in 1977, of
recycling plants that reuse asphalt
pavement waste, the Company has beenpromoting recycling of all asphalt.

The Company developed a solid biomass
fuel combustion system that can be used
at asphalt plants in 2012. It focused on
low-carbonization and decarbonization ofplants by commercializing a combustion
burner that can be used with diverse
alternative fuels. The Company worked on
advancement of control and analysis
technologies for enhancing proactive
prevention-type remote maintenance ofcustomer plants and strengthened remotesupport.
In 2020, the Company established Nikko
Asia (Thailand) Co., Ltd. as the base for
expanding into Southeast Asia andaccelerated business expansion in Asia
following the subsidiary in Shanghai.

The ﬁrst shovels by the company

An asphalt plant

Product development at that time

Celebrating the assembly of the ﬁrst plant in Shanghai

Customer Support Center

Response toenvironmental
pollution

Realization ofrecycling-oriented society,development of infrastructurein emerging countries

Transition of social issues

Improvement in laborproductivity of civilengineering works

05 Nikko Corporate Report 2 0 2 0

Development and expansionof land infrastructure(railroad, roads, ports, anddams)

Nikko Corporate Report 2 0 2 0 06

Nikko Group in Figures (Financial and Nonfinancial Highlights)● Net sales/Operating margin(mil. yen)
70,0005.9%

60,00050,00040,000Net sales

Operating margin

6.0%

5.8%

4.8%
34,11035,11432,717● Net income attributable to owners of parent, return on equity (ROE)● Number of consolidated employees, ratio of foreign employees● Number of female employees, number of new-graduate hires (non-consolidated)(mil. yen)
3,000

(people)1,400(people)60

2,000

35,151

31,780Net income attributable to owners of parent

1,896

4.6%

1,340

1,500

30,000

4.9%

1,490

5.2%
4.4%
1,345

1,588

2015

2016

2017

0

2019 (ﬁscal year)

2018

13.8％

1,200

11.7％
803

800

11.7％
797

12.5％
807

838

2017

42

19

17

2015

2016

2017

2018

2019 (ﬁscal year)

0

2015

2016

2017

Net income attributable to owners of parent in FY2019 increased 18.1%,
which is lower than the 35.9% increase in ordinary income. This is due tothe increase in the eﬀective tax rate to 39.6% for FY2019 from 30.4% in
FY2018. ROE came to 5.2%, an improvement of 0.8 ppt from FY2018, as
the Group controlled the decline in net assets to a minimum through active
shareholder returns and a fall in valuation diﬀerence on available-for-salesecurities. In the long term, the Group aims for ROE of 8% or more.

The number of consolidated employees was 838 in FY2019, an increase of
39 in FY2018. Of which, 116 were foreign nationals, up 18, accounting for13.8% of the total. The main reason behind the increase is the new hiringfor Nikko Asia (Thailand) Co., Ltd., a sales company) established in February
2020. In the medium term, the number of foreign employees is expected torise as the Thai manufacturing company, which has been ﬁnalized, will also
contribute to an increase.

● Return on total assets (ROA)● Net income per share, dividends, total return ratio● Average number of annual paid holidays per employee (non-consolidated)● Power usage, output (non-consolidated)(mil. yen)
70,000(yen)
80(days)
14(10,000 kwh)
700

Total assets

60,00050,0003.3%

3.0%
43,18944,976

Net income per share

45,67743,969

60

22.1%

40

20,00020

10,000
2015

2016

2017

2019 (ﬁscal year)

2018

0

Total return ratio

97.6%
34.1%

12

10.3

10.8

10

34.3

30,000

0

47.3%

45.2

40,000

Dividend payout

106.9%

3.5%

3.1%

44,876

ROA

38.7

10

11

12

2015

2016

2017

41.2
35.1

12

2018

40

2019 (ﬁscal year)

10.35

7.4

8

The number of female employees (non-consolidated) was 51 in FY2019, an
increase of 6 from FY2018. The number of new graduate hires(non-consolidated) was 14. It has been on the decrease trend and there
were no women. As stated in the Long-term Basic Policies of theMedium-Term plan, the Group aims to increase the female ratio along withimprovement of productivity through implementation of the work-stylereform.

600
500

6

300

4

200

2

100

0

2015

2016

Power usage (left axis)

2,123
434.7

1,864
425.8

400

6.4

2017

2018

2019 (ﬁscal year)

2019 (ﬁscal year)

2018

Operating margin in FY2019 came to 5.8%, up 1.3 ppt from FY2018. Bybusiness segment, operating margin of the Other Business signiﬁcantly
improved thanks to rapid increases in sales of waterproof boards andmobile plant products and that of the Environment- and Conveyor-Related
Business was also favorable. However, operating margins of BP-related andAP-related businesses were stagnant. In the Medium-Term Management
Plan, the Group aims operating margin of 7.9% in FY2021.

4.4%

14

15

10

0

2019 (ﬁscal year)

2018

45

30

20

200
2016

42

39

40
30

400

2015

51

50

12.3％

799

Number of female employees (non-consolidated)
Number of new-graduate hires (non-consolidated)

600

500

10,000

Number of employees (consolidated)
Ratio of foreign employees

1,000

1,000

20,000

0

ROE

6.6%

2,500

4.5%

VISION & INNOVATION

0

2015

2016

Output (right axis) (mil. yen)
2,500

1,392

1,569

2,000
1,500

1,696
402

2017

1,000

381.1

391.4

500

2018

2019

(ﬁscal year)

0

ROA in FY2019 came to 3.5%, an improvement of 0.5 ppt compared with
FY2018. Total assets used increased 1.7 billion yen compared with FY2018.
The factors behind the increase include a 2.3 billion yen increase in cash
and cash equivalents, a 900 million yen increase in property and equipment
reﬂecting proactive capital investment for the future growth as well as aprogress in the cancellation of strategic shareholdings (a 1.6 billion yen
decline in Investment securities).

As the Group announced to enhance shareholder returns in theMedium-Term Management Plan, dividend payout in FY2019 increased
signiﬁcantly to 40.00 yen per share including the 100th anniversarycommemorative dividend of 20.00 yen per share compared with the 12.00
yen per share in FY2018. Though it did not carry out share buyback, total
return ratio greatly rose to 97.6% from 34.1% in FY2018. We conducted aﬁve-for-one stock split of common shares eﬀective October 1, 2019.

The average number of annual paid holidays per employee was 10.35 days in
FY2019 on a non-consolidated basis. It declined from 10.8 days in FY2018. As
stated in the Long-term Basic Policies of the Medium-Term Management Plan,
the Group has been implementing an initiative to signiﬁcantly raise laborproductivity by improving operating eﬃciency. The Group believes increasing
the number of paid holidays taken by employees is indispensable for
improving employee satisfaction and realizing a good work-life balance.

Power usage in FY2019 came to 3,914,000 kwh, an increase of 103,000
kwh from FY2018.
Of the total, power usage by plants was 3,071,000 kwh, down 37,000 kwh
amid rising output, while power usage by oﬃces increased 140,000 kwh to842,000 kwh. This was mainly because of Techno Center, which wascompleted in September 2018. The Group will continue to implement
initiatives to conserve electricity.

● Trends in capital investment, depreciation and amortization, R&D expenses● Cash conversion cycle● Changes in expenses of ISO activity items (non-consolidated)● Number of patent and design registrations(days)
180(10,000 yen)
14,000(number of registrations)25

Capital investment
R&D expenses(mil. yen)
2,000

Depreciation and amortization

1,889

160

1,483

1,500

140

1,261
1,000

500

115

123

12,000

125

105

877
483

2015

478
271

2016

550

468
291

2017

508

611
379

211
2018

While the impact of capital investment related to the construction ofTechno Center in FY2018 dissipated, it was almost 1.5 billion yen in
FY2019 due to the on-going construction of a new production base forwaterproof boards, whose demand has been increasing, at the Kansai Plant.
The Group has been making capital investment exceeding depreciation andamortization since FY2013. R&D expenses increased almost 170 million yen
from FY2018 and it also reﬂects changes in items for recording expenses.

07 Nikko Corporate Report 2 0 2 0

80

9,194

9,087

9,181

16
15
10
5

4,000

40

0

10,000

20

9,768

9

10

12

2015

2016

2017

2018

2019 (ﬁscal year)

In FY2019, CCC was 125 days, 9 days shorter than FY2018. Inventories
increased more than 600 million yen as work in process and partly-ﬁnishedconstruction. At the same time, notes and accounts receivable-tradedeclined more than 800 million yen under the policy of eliminating bills
whose repayment deadlines exceed 120 days and payables also improved.
In the Medium-Term Management Plan, the Group aims to create cash andcash equivalents of 3.0 billion yen through improvement of CCC, and theGroup was able to make a good start for achieving it.

0

2

0

2,000
2015

2016

2017

2018

2019 (ﬁscal year)

Total expenses of ISO activity items (electricity, water, waste, and paper) in
FY2019 came to 91.81 million yen, up 940,000 yen from FY2018. This is
attributable to a 1.99 million yen increase in electricity charge, which
accounts for a large share of the breakdown. The Group started using a
new electricity company in March 2020 and is expecting savings of about
10 million yen in electricity charges in FY2020. It will continue with eﬀective
utilization of resources.

-5

Designs

391.4
10

7

6,000

60

20
2019 (ﬁscal year)

10,616

8,000

100

227
0

120

134

Patents

2015

0

2016

3

1

2017

2018

2019 (ﬁscal year)

The Group registered 10 patents and 3 designs in FY2019, which were
down by 6 and 4, respectively, from FY2018. From a long-term perspective,
the Group has been verifying the content of patents and the number ofpatent registrations has declined compared with about 35 cases as in
FY2011 and FY2012. However, it considers registering patents and designs
important for diﬀerentiating products and services and improving brandvalue.

Nikko Corporate Report 2 0 2 0 08

CEO’s Message

VISION & INNOVATION

Grow in a medium to long term.
I firmly believe that the passion we put into
the Long-term Basic Policies is something that
all employees canagree and empathize with.
Representative Director
and President

Q.
In the Medium-Term Management Plan
formulated in 2019, we established the Longterm Basic Policies of the Nikko Group for the
first time.
The Long-term Basic Policies have five main
points. We interviewed President Tsuji on theespecially important ones among them.

09 Nikko Corporate Report 2 0 2 0The spread of the novel coronavirus infection profoundly changed the global economy and people’s lives.
What are the impacts on the Nikko Group and what are the business plans in the post-coronavirus era?

On behalf of the Nikko Group, I would like to extend
my deepest condolences to those who lost their lives
to the novel coronavirus infection. I would also like toexpress my heartfelt sympathy to those who contracted
the disease and their families and related parties as wellas those whose daily lives were affected by the spread of
the infection. Furthermore, I would like to pay my respects
and express my gratitude to those who are engaged in
medical service, nursing care, and essential services.
Under such circumstances, the Nikko Group conductedbusiness to fulfill its social responsibilities while giving
priority to safety and security of all stakeholders including
employees.
The fact is that the novel coronavirus has not had any
significant impact on our business performance in FY2020.
There will likely be impact overseas, as Nikko Shanghai
in China suspended its plant operations for a certain
period of time and business promotion in ASEAN also has
stagnated because travels to overseas were banned, but
our current view is that these can be offset by the strong
AP-related business in Japan.
We adopted telecommuting, staggered working hours, andavoidance of 3Cs (closed spaces, crowded places, andclose-contact settings) across all departments following
the declaration of emergency. We took measures both inand outside the company and were able to hold businessnegotiations through online meetings by maintaining
cer tain distance al so with customers using remotemeasures. While the novel coronavirus served as a trigger
for productivity improvement, we plan to maintain thisresults in regular operations (even after the epidemic
subsides). There are about 50 sales persons at the Tokyo
office, and they were able to shift to remote operations
smoothly thanks to the free address system put in place
two years ago.
An example of business efficiency improvement that got
a boost from the novel coronavirus is the increase in
the enrollment ratio of remote maintenance service. As
users more strongly sought to avoid risks, the enrollment
ratio rose to 67% as of the end of August 2020 from
46% as of the end of January 2020. In the Medium-Term
Management Plan, the company has posted its aim to shift
to before-sales service, which will foresee defects of aplant beforehand, and we intend to increase added value
by taking advantage of IT devices including high-sensitivity
sensors and image analysis.
Under such circumstances, the biggest trouble we faced
during the coronavirus pandemic was that we could
not hold training sessions for plant operators. Although
we had held user training sessions users for about 200
people for AP and BP combined every year, it is difficult tohold such sessions this year. As a countermeasure, we are
currently preparing electronic teaching materials including
video contents. These materials can also be used for
employee education and improving skill s of partnercompanies.
I believe that if we take the adverse effects of the novel
coronavirus infection and convert them into opportunities
one by one, the Nikko Group can strengthen its corporate
culture in the medium term.

Nikko Corporate Report 2 0 2 0 10

CEO’s MessageQ.

VISION & INNOVATION

Nikko Group formulated the Long-term Basic Policies towards 2030 along with the MediumTerm Management Plan announced in August 2019. What is the aim of the policies?
numerical goals that can be presented with pride as our
new vision in 10 years and essentially incorporate themessage of improving and growing across the board in themedium to long term.
It cannot be helped if the management policy changes in
the future, as we, the management, and the employees
will be replaced as the time passes. In light of this, I
would like to consolidate the parts that all the employees
can agree upon and empathize, and demonstrate thestance, in terms of the company’s growth, in the Longterm Basic Policies.
These numerical targets are not easy to achieve but I
believe that they are not unattainable. The results for the
first fiscal year (FY2019) were in line with the MediumTerm Management Plan.

Upon marking the milestone of our 100th anniversary inAugust 2019, we considered how we should be spending
the next 100 years. A hundred years from now is certainly
far in the future and it defies imagination. So, with aneye on the coming 10 years, which is a lot closer, we set
forth 50 billion yen in net sales, 50 billion yen in market
capitalization, operating margin of 10%, and ROE of 8%
or more as the KPIs (key performance indicators) of theLong-term Basic Policies for 2030.
The reason why we came to formulate this Long-term
Basic Policies is because up until now, we have managed
business by rewinding (rolling ) three -year M edium Term Management Plans. However, partly as we wereoverly focused on the figures in the near term due tothe changes in the situation, we decided to announce

New Medium-Term Management Plan
Long-term Basic Policies (10-year)

1

Strengthen revenue base in Japan
We aim to improve profitability by boostingproduct appeal by raising the level of alldivisions of sales, service, engineering, andmanufacturing.
(Profit margin of 10%)5

2

Establish overseas sales

Make ROE a KPI

We aim to achieve market capitalization of at least 50.0
billion yen and ROE of at least 8%. We will also aim for adividend payout ratio of 60% or higher and enhance
returns to shareholders.

4

Put work-style reform into practice
We will improve operation efficiency andsignificantly improve labor productivity.
(To centralize office work and utilize IoT and AI.)We, as a manufacturer, aim to establish new
overseas bases to spread Nikko products, which
are the best in the world, in the ASEAN region.
(To double current level of overseas sales from
4.5 billion yen to 9.0 billion yen.)

3

Promote new businesses (M&A)

We will invest management resources in expansionof new businesses and nurture products that will
become new pillars of the industrial andconstruction machinery fields.
(To create 10.0 billion yen in sales from new businesses.)

Setting these ﬁve policy items at the center, we will strengthen corporate governanceand implement business management that is highly transparent and vibrant.

Q.

Of the five key policy items of the Long-term Basic Policies,“Strengthen revenue base in Japan”
appears to be important considering the high domestic sales ratio of Nikko. What are theconcrete initiatives for improving product appeal and increase profitability by raising the level ofall divisions of sales, service, engineering, and manufacturing?

The pivoting foot of our business category is manufacturing,and our business flow consists of the following: sales
people receive orders for the products we manufacture,
which are engineered and designed based on user needs,
the manufactured product is then installed at the site,
and we provide maintenance service, and this is repeated.
However, if there is a bottleneck in any department, or if
any of the department excels than others, the overall flow
will be disrupted. In other words, success (improvement in
profitability) will not be achieved unless all departments growat the same pace.
For this reason, all divisions from sales to manufacturing inJapan have been working to resolve bottlenecks, but thesituations at the departments differ as some need time toachieve it and some can realize it in a short period of time,or some departments can outsource operations while it isdifficult for other departments. For example, people tend to
think that engineering departments require high-level skills.
However, with support from sales, employees with low-levelskills can also handle highly difficult projects.
Among the methods we use in Japan, sales has been able
to carry out activities to improve efficiency including remoteapproaches, and we are building a cloud-based system thatenables sharing of data such as manufacturing and service
information in addition to the sales information.

Q.

“Establish overseas sales”is indispensable for the Nikko Group to grow in the medium to long term.
What are the regions and business domains the company will focus on? Please explain themincluding the aim behind the establishment of sales and manufacturing companies in Thailandthat has already been announced.

Outside of Japan, we have built the foundation for AP
business in China and it is very busy at the moment. The
reason why we established a local subsidiary in Thailand
is because Nikko’s second-hand AP products had the top
market share (brand) there. On February 25, 2020, weestablished a sales and service subsidiary in Thailand andon June 25, we established a manufacturing company.
We are p ro ce e ding with the b usiness pl an o n theassessment that we will be able to capture a certain
level of market share by making a foray into Thailand.
The manufacturing company has started construction of anew plant in Chonburi, Thailand, with the aim of starting
production of new products in October 2021.
First, we will capture market share in Thailand and then
● Nikko(mil. yen)
10,000
8,000

4,000
2,000
0

expand the business throughout the ASEAN region. In
particular, we have a track record of delivering products
to Thailand and Indonesia, and we are also considering
Vietnam and the Philippines. We al so have a trackrecord of sales to Russia but their purchasing power hascome down and recently the business has dwindled.
Nevertheless, Russia is a major power and we believe that
there is potential for expanding business. India is anothercountry which we think will see a large-scale AP demandas its infrastructure develops. We are also eyeing Australia.
We set AP, where our strength lies, as our core businessdomain overseas, but we will also consider expanding
if we find products in our Group that can be expanded
overseas.

s overseas net sales and overseas sales ratio
8.4%

8.3%

9.2%

8.7%

Overseas net sales

9.0%

11.3%

12.1%

12.5%

Ratio of overseas sales

18.0%
9.6%

9,000

6,000

11 Nikko Corporate Report 2 0 2 0

We will actively make capital investment for improving
productivity of manufacturing. In FY2019, we made record
capital investment in manufacturing and achieved reduction in
manhours by switching to cutting-edge facilities.
About 30% of employees in design are also telecommuting
to avoid the 3C situation due to the novel coronavirus andit appears to be functioning satisfactorily. We also have staff
dispatched from design outsourcing companies at our office,and we learned that LINE WORKS and Zoom can let us
communicate while telecommuting. In light of this, we arereviewing the operations because such an approach would
enable us to solicit people with required skills not only
from nearby dispatching services but also from around thecountry or even have people outside Japan handle the design
operations off shore.
Moreover, holding a meeting of sales, manufacturing, andengineering all together was a major event because ofscheduling difficulties until now, but Zoom meetings removed
those restrictions and the number of meetings between
different divisions has increased significantly. The same canbe said about those outside the company.
As we accumulate more and more such cases, it would leadto improving the level from sales to manufacturing in Japanand in turn to improved profitability.

2,262

2,688

2,825

2,980

2,956

2012

2013

2014

2015

2016

3,965

3,838

2017

2018

4,390

2019

3,500

2020
2029 (ﬁscal year)(estimated) (estimated)

Nikko Corporate Report 2 0 2 0 12

CEO’s Message

VISION & INNOVATION

Q.

“ Promote new businesses (M&A) ” aims for creating new products that can become
pillars, with the goal of 1 0 billion yen in 10 years.
Some fields such as the Mobile Plant Business started off smoothly. What are your views regarding
the future (including M&As)?
What is the human resource strategy for expansion of new businesses?

Among new businesses, mobile plants and waterproof
boards of an af filiate have been expanding rapidly.
We consolidated them into the disaster prevention
category of the Nikko Group and will continue to growthem. Shovels and spades are mature products, but welaunched a new product half the weight of conventional
products with the same strength and they have beenused in post-disaster restorations. Scaffolding we use atconstruction sites are also used for disaster prevention
to secure evacuation routes. We had to withdraw fromthe Crime and Disaster Prevention 2020 scheduled inJune 2020 taking into consideration the impact of thenovel coronavirus, but we had even prepared a catalog
of disaster- prevention-related products. We also plan tocreate pages dedicated for the business on our website.
We will also strengthen online sales of these products.
Currently, Nikko does not sell products online directly
to consumers but we are considering introducing it. We
plan to sell products in our regular online sales. We
also want to realize an online remote trade show using
videos and photos and start doing this for meetings ofsales agents such as Nikko’s Tombo-kai (120 companies
in Japan) as early as this year. While o nline sales

business may not become one of the main businesses
in the medium term, we will grow it so that it cangenerate profit. Currently we see several new businesses
with potential of expanding to 1.0 billion yen, but wewould like to find earnings drivers that have even larger
potential.
We have been widely collecting M&A-related information
for the past several years, but we won’t consider it as a
candidate unless it is a business that can be continued,
which is the most important factor in management. A
business that can be continued means a business withwhich we can share the infrastructure we have built so
far including manufacturing and sales. The number ofcompanies that are prospective M&A candidates falls
drastically when we also consider business size thatmatches our stature and their affinity with us, but wewill steadily continue with the process.
Our activities for realizing M&As are project-based. We
don’t have a department dedicated for it. Corporate
planning and business planning work together andcome up with projects. Coming together in an M&A tomutually improve, while sharing management policies
and governance, is the ideal situation that we seek.

Q.

“ Put work-style reform into practice ” is included in the Long-term Basic Policies. What
are the initiatives under it?
When discussing productivity and innovation, it is necessary to promote diversity of theorganization. What are the personnel strategies to promote active participation of foreignand female employees, who are minorities?

We consider “ Put work-style reform into practice” asoperational reforms. Slightly reviewing the existing operations
does not go beyond work-style improvement, and will notconstitute work-style reform. What is important is to createa mechanism to entirely change the content of operations.
It requires eliminating unnecessary assignments as well aschanging the scope of work and creating new assignments.
As I have just mentioned in“ Strengthen revenue base inJapan,”the minimum requirement for starting operational
reforms is to systematically improve efficiency in ourbusiness flow from sales to maintenance. We will share
information and make full use of our internal information
network to pursue it.
At the same time, though we are not averse to diversification

13 Nikko Corporate Report 2 0 2 0of the organization in any way, we would accept it if weare told that we are not making enough efforts regarding it.
So far, we did not find it necessary and we are not yet ina situation like that, but we would like to work on it with apositive attitude.
We have issued acceptance letters to female job seekers but
they ended up not joining, and we are reflecting on whether
it was a line of work that was not attractive to women.
We have some job categories with restrictions on hiring of
women, but at the same time we feel that it is necessary toincrease the opportunities for them to participate actively.
In overseas, Nikko Shanghai in China employs about 100
people and it has a high retention rate. We are also
increasing the hiring of local workers in Thailand (13 people)

and Taiwan. In response to labor shortage, we trained
Vietnamese technical interns in welding and other techniqueat the head office. They were outstanding, and we are
implementing a plan to increase their number and build an
employee dormitory on the Head Office Plant site.
We will never reject diversity. I am interested in theattractiveness created by diversity. I would like to see
innovation, which was conventionally unthinkable, resulting
from the clash of various values with the utilization of diverse
human resources in terms of gender, age, and nationality.
However, we are not seeking a sudden change, but would
rather like to make changes while valuing the corporate
culture and mechanism we have built until now.

Q.

Sustainability of business is required upon
proceeding with the Long-term Basic
Policies.
In which fields of ESG (environment, society,and governance) do you have stronger
awareness of issues upon promoting
strengthening of sustainability?
What are the concrete measures for it?

When a company becomes conscious of sustainability, we
cannot neglect environment (E) in ESG. AP uses heavy oil
and natural gas as heating fuel for manufacturing asphalt
mixture and this emits more than 1 million tons of CO 2 ayear in Japan.
As we drive forward improvement of fuel efficiency of AP,
we have reduced CO 2 emissions, but it doesn’t alter thefact that it emits CO 2 . If we cannot use heavy oil, the fact
is that there is nothing we can do. AP will also eventually
become all-electric, and we are also conducting researchfor using electricity which has low environmental burden.
As for the environment, we are not staying content withenerg y saving, and are maintaining communications
with various businesses through technological study
sessions and information exchange and are also pursuing
independent studies and research. If we cannot solve itin our manufacturing process, we are also considering
proposing systems to reduce environmental burden as
part of our customers’business.

We recognize that E (environment)
is a materiality for Nikko upon
considering sustainability.
We would like to strive tocontribute to solving the social
issue of CO 2 emission reduction by
overcoming this issue.

Nikko Corporate Report 2 0 2 0 14

Value Creation Process

SUSTANABILITY & ENGAGEMENT

We are working to improve values in a sustainable way with an aim
to contribute to creating future society in accordance with the Corporate Philosophy
with diversity of social values and creation of economic values in mind.
OUT
COME

Three social issues on which Nikko Group is working●Climate change and global warming
Asphalt plants use fossil fuel for their operation and emit approximately 1 million tons of greenhousegases a year in Japan. Low-carbonization and decarbonization of plants is a major issue.

Nikko Group s value Process of creation (conceptual diagram)
Social values●Recycling of waste materials and establishment of recycling-oriented society
Improving resource productivity, by recycling of construction and road waste materials due torestrictions on natural resources and for reducing environmental burden, is being sought.
●Intensifying of disasters and early restoration
The ﬁrst step in recovering from intensifying natural disasters suchas typhoons, severe rainstorm, and earthquakes starts
from swift recovery of the damaged plants of the Group.

Civil engineering

Environmental
engineering

Asphalt plants (pp.35-37)
Batching plants (pp.35-36,38)● Recycling plants (pp.35-37)● Remote maintenance (p.24)●

Mixing●Physics

CommunicationengineeringGroup employees(pp.27-30)●

Material
Handling

Solid ﬁnancial baseCore technologies
Original technologies
protected by highentry barriers(pp.41-44)●●

R&D capability formeeting customer
needs (pp.23-24)

●

●

●

Collaboration withsales agents andcontractors
Water and energy

Introduction of recirculating plants forenergy saving (pp.17-18, 21-22)● Introduction of low-carbon anddecarbonized plants (pp.17,21-22)● Noise, safety, anddisaster-prevention measures● Raising compliance awareness (pp.2,47)

Mathematics

Economic values
Making customer companies
more proﬁtable● Strong brand and excellent
reputation (pp.17-20,25-26)● Improved employee
satisfaction (pp.27-30)● Improved shareholder returns(pp.43-44)●

Financial results(pp.7-8,53-59)

ControlTechnology

Trusted by customer
companies as asolutions partner

Partnership with
suppliers (p.24)

Consideration for society
and environment●

Heat
Technology

Biotechnology

Cash ﬂow creation
Improvement in proﬁt margin● Internal reserves for investing in
growth● Shareholder returns●

Electricalengineering(pp.25-26)●

Products and services

Chemistry

IN
PUT

●

Contribution to local economies
by helping develop social
infrastructure (p.20)● Creation of recycling-oriented,
environmentally friendly
society (p.18)● Contribution to eﬀorts to create
comfortable society and improve
quality of life (pp.19-20)● Contribution to productivity
improvement at customer
companies (pp.25-26)● Co-existence with local communities(p.20)
●

OUT
PUT

●

Mechanicalengineering
Systems
and control engineering

MixingHeat
Technology

Technology to mix and Technology to burn or
knead a wide variety
dry materials at highof materials fromtemperaturesliquids to solids

ControlTechnology

Material
Handling

Technology to design
and make the brains ofplants and machinery
using IoT and AI

Technology to convey
and separate any
material, diagonally or
vertically

Source of competitive advantage

Planningand designing

R&D

Procurement
and manufacturing

Construction
work

Value chain(pp.23-24)

Understanding of local
communities (p.20)

Sales
and consultation

MaintenanceCorporate Governance (pp.45-52)

15 Nikko Corporate Report 2 0 2 0

Nikko Corporate Report 2 0 2 0 16

Promotion of Sustainability

SUSTANABILITY & ENGAGEMENT

We identify materiality that will contribute to solving social issues and achieve
continuous growth of business for improvement of corporate value. We
promote continuous implementation of measures to address materiality torespond to the trust of diverse stakeholders and as a guideline for realizing“contribute to creating future society”in the Corporate Philosophy.

Recycling of waste materials and establishment of recycling-oriented society
Improving resource productivity and establishing recycling-oriented society such as recycling of
construction and road waste materials are being sought due to restrictions on natural resources
and for reducing environmental burden.
To advance recycling of asphalt and concrete waste materials, Nikko in 1970s commercializedasphalt plants and concrete plants that can handle resource recycling. Since then, we continued
to improve the products and currently recycled mixture accounts for about 75% of asphalt raw
materials at asphalt plants.
Nikko closely works with customers to improve resource productivity and contributes to further
reduction of environmental burden through product development and maintenance service of highquality recycling plants and crushers.

Materiality for continuous growth(materiality map)

Co-existence withlocal communities( p.20)2

Establishment ofrecycling-oriented
society( p.18)

Response to climate changes( pp.19-20)● Diagram of recycling of concrete and asphalt blocks

Recycled roadbed materials
Recycled aggregates

Social interests

Improvement of
employee satisfaction( pp.25-26)

Crushing and segregation

Response to serious disasters( pp.19-20)

SupplyRecycling-oriented
society development cycle

Crushing plant

Improvement ofcustomer satisfaction( pp,21-24)

Acceptance

Impact on the Nikko Group and its corporate value

Asphalt mixture
manufacturing plant(asphalt plant)

Carrying out

Pavement works
Collection of pavement waste

1

Three social issues on which
the Nikko Group is working● Recycled mixture ratio in manufacturing of asphalt mixture

（%）
85
75
65

Climate change and global warming (seeAsphalt plants use fossil fuel for their operation andemit approximately 1 million tons of greenhouse gases
a year in Japan.
Low-carbonization and decarbonization of plants is amajor issue.

pp.21-22)

55
45

1million tons

Approx.

a year

15
5

1990

1995

2000

2005

2010

2015

2020 (ﬁscal year)

Source: Japan Asphalt Mixture Association

17 Nikko Corporate Report 2 0 2 0

Nikko Corporate Report 2 0 2 0 18

Promotion of Sustainability

3

SUSTANABILITY & ENGAGEMENT

Intensifying of disasters and early restoration

Overall image of business continuity management

The first step in recovering from intensifying natural disasters such as typhoons, severe rainstorm,and earthquakes starts from swift recovery of the damaged plants of the Group.
In recent years, unexpectedly high amount of rainfall is being recorded around the country and weare seeing frequent occurrences of localized, torrential rain damage. With typhoons getting heavier,and large earthquakes such as the Nankai Trough and Tokyo Metropolitan near-field earthquakes
and the resultant tsunamis, and volcanic eruptions being anticipated, the natural disaster risksfacing Japan is moving into a new stage.

● Trend in the amount of reported cumulative damages(bil. yen)
800
700

Disasters in 2018

Disasters in 2016

Five-year average (2014 to 2018)

Disasters in 2015

Disasters in 2019

Disasters in 2017

600

Activity resources

Disaster
Operation activities

Business
disruption
risk(maintenance, sales, purchasing, etc.)

Products and services(facility introduction, maintenance, etc.)

Disasterresistingpower

Protection ofimportantresources,
operations,and services

Business
continuity planscorresponding to
the type ofdisasterContinuous
maintenance ofbusiness
continuity plan
through
implementationof PDCA

Improvement of value we oﬀer
(guarantee of stable supply,
support in disaster, etc.)

Customers and parties involved(installation and maintenancepartner companies, etc.)● Evaluation and review of business continuity activities

500

Self-inspection ofbusiness continuity
activities

400

Internal audit ofbusiness continuity
activities

300
200

Summary of business
continuity activities

1000Business continuity
management (BCM)(personnel, facilities, equipment, etc.)

Earthquake
Wind and ﬂood damage
Cooperating companies
aﬀected by disaster
System failure
Pandemic
Fire
・
・
・
・

Reported civil engineering-related damages

Disasters in 2014

Business activities

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Source: Ministry of Land, Infrastructure, Transport and Tourism

The first step of recovery from a natural disaster starts with the recovery operation of the asphalt
and concrete plants that were damaged. The number of damaged plants (number of sites)
manufactured by Nikko in the past three years (2017 to 2019) has increased only slightly, but
the total number of dispatch records (number of dispatches made from confirmation of disastersituation to full recovery) increased 30%, pointing to disaster-related damages of plants becoming
increasingly large and complex due to intensification of disasters.
● Trend in plants damaged by natural disasters (2017-2019)

Number of sites (parts)

Total dispatch record (sheets)

2017

46

83

2018

53

91

2019

52

107

Introduced business continuity management (BCM) for swift recovery
In order to fulfill our social responsibility as the company holding a major share in Japan in asphalt
and concrete plants, we have formulated and introduced business continuity management in theevent of an emergency taking into account supply chains, affiliates and partner companies. We
guarantee stable supply and engage in multifaceted support, from procurement to maintenance,
during disasters to respond to early restoration of customer plants that were damaged.

Prevention of recurrence and continuous improvement

The secretariat gives instructions to divisions to implement self-inspection of business
continuity activities
The result is reported to the Risk Management Committee and Board of Directors●●

The internal audit team holds internal audit once a year
The secretariat offers information such as recognized issues regarding business
continuity and related rules and regulations
The Risk Management Committee attaches its opinions to the audit results, which thenwill be approved at the Board of Directors Meeting●●

The Risk Management Committee summarize the overall business continuity activities
and reports it to the Board of Directors
The Board of Directors instructs future activity policies and necessary improvements

●

●

●

When the business continuity plan or related rules are violated or unexpected damage
is inflicted
Divisional heads implement measures to prevent recurrence and continuous
improvement and report themCo-existence with local communities
Our Head Office is located in Akashi City, Hyogo Prefecture—the place our factory was located when the company was established.
The Nikko Business Foundation has been offering scholarships that do not require repayment for over 30 years since 1989 todomestic and overseas students enrolled in universities and institutes of technology offering a five-year program specializing intechnology/engineering in Hyogo Prefecture and students from Hyogo● Number of scholarships and grants offered so far
Prefecture studying outside the prefecture.
Furthermore, the Foundation provides research grants to researchers(supervisors and faculty members) who conduct research on technology
Number ofdevelopment in the research laboratories of the universities andNumber of researchscholarships
technology/engineering colleges in Hyogo Prefecture and researchers who
grants awarded
awardedreside in Hyogo Prefecture and work for universities outside the prefecture.
The recipients of these grants are not obligated in any way to join the
Nikko Group or to provide the results of their research to the Group,
cases
cases
and it genuinely incorporates the strong feeling“ to contribute to thedevelopment of the local economy and communities by providing
assistance for human resource development and technologicalinnovations.”

135

190

Improvement of customer satisfaction ( see pp.23-26)
Improvement of employee satisfaction ( see pp.27-30)

19 Nikko Corporate Report 2 0 2 0

Nikko Corporate Report 2 0 2 0 20

Responses to Climate Changes and Business Opportunities

SUSTANABILITY & ENGAGEMENT

The global environment is facing major changes including unseasonable
weather and a rise in sea level due to global warming and deforestation anddesertification due to development. Natural disasters are becoming larger andlarger due to increases in greenhouse gases in the atmosphere,
threatening our society and lives.
Nikko’s asphalt plants also use fossil fuels as an energy source, therefore
reducing greenhouse gas emissions is an urgent challenge to be addressed.
●

Operational improvements (efforts to date)● Biomass fuel (carbon neutral)● Decreasing the water content of mixture materials

Changes in the concentration of CO2 in the atmosphere (FY 2009 - FY 2020)

（ppm）
415

Specific efforts toward reducing carbon emissions and decarbonization in the asphalt mixture manufacturing process

Decreasing the water content of new aggregates andrecycled materials, the raw materials for asphalt mixture,by 1% can reduce CO 2 emissions by 0.8 litters/ton of A
fuel oil equivalent.
● Reducing the number of intermittent operations
As 30 to 60 litters of fuel oil is consumed to preheat
asphalt plants, systematic continuous operation can
reduce CO 2 emissions more effectively.
● Optimizing the manufacturing temperature
Lowering the temperature setting by 10 degrees Celsius
can reduce CO 2 emissions by 0.3 litters/ton.

Whole-atmosphere monthly mean CO2 concentration
CO2 trend

410
405
400
395

Wood tar (by-products of wood gasification power
generation) and waste glycerin (by-products of biodiesel fuel manufacturing) are defined as carbon neutral
since they are plant-based materials. Fuel oil is used as
an auxiliary fuel to stabilize combustion; however, it isalso possible to operate with biomass fuel alone.
●

Use of biomass energy

O2
C

Equipment improvements (efforts to date)

385

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020 (ﬁscal year)

Annual asphalt mixture output volume is approximately 40 million tons in Japan, and approximately 10 liters of fuel oil
equivalent fossil fuels are used to produce 1 ton of asphalt mixtures. CO 2 emissions from this production are estimatedto be 1 million tons. Based on Nikko’s market share in Japan, 70% of these emissions are considered to be from Nikko
plants. In order to realize reduction in CO 2 emissions, Nikko is working in close cooperation with our customers, roadpaving companies, on reducing carbon emissions and decarbonization in our asphalt plants.
Examples of CO 2 emissions by fuelExamples of fuel types
Coking coal
General coal
Crude oil
Gasoline
Jet fuel oil
Kerosene
Light oil
A fuel oil
Liquefied natural gas (LNG)

Emission factor
0.0245 tC/GJ
0.0247 tC/GJ
0.0187 tC/GJ
0.0183 tC/GJ
0.0183 tC/GJ
0.0185 tC/GJ
0.0187 tC/GJ
0.0189 tC/GJ
0.0135 tC/GJ

Per-unit calorific value
28.9 GJ/t
26.6 GJ/t
38. 2 GJ/kl
34.6 GJ/kl
36.7 GJ/kl
36.7 GJ/kl
38. 2 GJ/kl
39.1 GJ/kl
54.5 GJ/t

CO 2 emissions per unit
2.596 kg-CO 2 /kg
2.409 kg-CO 2 /kg
2.619 kg-CO 2 /l
2.322 kg-CO 2 /l
2.463 kg-CO 2 /l
2.489 kg-CO 2 /l
2.619 kg-CO 2 /l
2.710 kg-CO 2 /l
2.698 kg-CO 2 /kg(Reference 1) Ratio of the amount of CO 2 emitted toobtain the same amount of heat from combustion (ratioof emission factors)
Coal (general coal): Natural gas (LNG) = 10 : 7.5 : 5.5(Reference 2) Calculation method of CO2 emissions per unit
Per-unit calorific value (GJ/t, GJ/kl) × emission factor(tC/GJ) × 44/12 = CO 2 emissions per unit (kg-CO 2 /kg,
kg-CO 2 /l)
Sources: created based on the“ Ministerial Ordinanceon Calculation of Greenhouse Gas Emissions from
Business Activities by Specified Emitters”(Ministry of
Economy, Trade and Industry and Ministry of theEnvironment)
Sources: Ministry of the Environment

the dryer’s capacity balance
Using high efficiency combustion burners to optimize
the capacity balance between new aggregate dryers
and recycled materials dryers as heating and drying
equipment can reduce CO 2 emissions by 0 . 5 to 1.0
litters/ton.
● Improving dryer’s thermal efficiency
Increasing dryer’s thermal efficiency by 5% can reduce
CO 2 emissions by 0.5 litters/ton.
● Reusing exhaust gasses from dryers
Reducing exhaust gasses from recycled materials dryers
to new aggregate dryers to recover waste heat can
reduce CO 2 emissions by 1.0 litter.

CO2
Combustion

Organic fuels● Using high efficiency combustion burners and optimizing

Sources: “GOSAT Project”, National Institute for Environmental Studies, Japan

●

0

CO2

390

380

Carbon neutral (zero CO 2 emissions) mechanismCC

Asphalt
plantsMovement of carbon●

Nikko’s waste glycerin combustion burner

Utilizing alternative fuels (current efforts)● City gas

Using city gas as an alternative to A fuel oil can reduce
CO 2 emissions by 23% compared to fuel oil.

Utilizing carbonized fuels generated from garbage (general waste) (verification test in progress)
Nikko is working on reducing carbon emissions anddecarbonization in our asphalt plants by substituting
carbonized fuels generated from general waste with fossil
fuels including fuel oil.
Nikko, together with Kawasaki Heavy Industries, Ltd., is
working on the “ evaluation project of pioneering waste
management systems, etc. in small- and medium-sized
waste management facilities” sponsored by the Ministryof the Environment, under a three-year plan, with FY
2020 being the final year of the project. Nikko developed
carbonized fuel combustion burner in collaboration
with Kawasaki Heavy Industries, Ltd. with the aim ofutilizing carbonized fuels delivered by Kawasaki which
are generated in garbage carbonization facilities, hascompleted in-house combustion tests, and will start
conducting an impact assessment test on the quality of

21 Nikko Corporate Report 2 0 2 0

mixtures to use the burner in asphalt plants from thisfiscal year.
If the garbage carbonized fuel system, developed with
Kawasaki’s excellent technology, become widely usedthroughout Japan, it will be possible to supply fuels to
1,100 asphalt plants operating in various regions.
T h ro u g h m i x e d c o m b u s t i o n w i t h f u e l o i l u s i n g a
carbonized fuel injection burner newly developed incollaboration with Kawasaki Heavy Industries, Ltd., wehope to capture changes in the regulatory environment
including introduction of carbon pricing* in Japan to give
momentum to commercialization.

*Price per ton for carbon emitted. The introduction of a tax oncarbon emissions and emissions trading schemes based on thisprice are being under consideration. It is expected that there will
be a policy effect of increasing carbon productivity by positioning
efforts in combating climate change as an incentive for innovation.

Carbonization furnace constructed by Kawasaki Heavy
Industries, Ltd.,
operating in the facility for manufacturing carbonized fuelfrom municipal waste in Saikai City, Nagasaki Prefecture(materials provided by Kawasaki Heavy Industries, Ltd.)

Powdered carbonized fuelJointly developed carbonized fuel combustion burner
before installation in the plant

Nikko Corporate Report 2 0 2 0 22

Platform for delivering value to customers

SUSTANABILITY & ENGAGEMENT

Nikko Group upholds customer-first policy as our corporate philosophy,
and it is our mission to provide products and services that truly satisfy our customers
while gaining widespread trust from society, and become a solution
partnerthat grows with our customers.
We will continue to contribute to manufacturing and urban development using our unique
technologies backed by four core technologies and new ideas, and to refine our platform fordelivering value to customers to gain the trust of customers and society.

Toward a stronger platform for delivering value
Each of the divisions that make up Nikko’s platform for delivering value, from planning and design to maintenance, isclosely working with the sales sections to strengthen the platform in order to solve issues of our customers.

Toward a stronger platform for delivering value
Challenges to be addressed

Planningand designing

Procurement
and manufacturing

Construction
work

Value chain

R&D

Sales
and consultation

R&D

Planning
anddesigning

MaintenanceLineup that meets
customers needs
including the DASH
series, a leading brandin the industry

Four coretechnologies

ControlTechnology

Heat
Technology

Dairy area

Key business
utilizing ourcore technologies

Environment-Related
Business
Development of the mostadvanced, environmentallyfriendly plants and equipment,
including biomass fuelcombustion systems

Chemistryarea

Construction
area

Procurement

Manufacturing

Construction
work

Asphalt Plant-Related
Business
As a manufacturer withthe highest share in
Japan, we oﬀer adiverse and uniquelineup of plants

23 Nikko Corporate Report 2 0 2 0

Expanding technologies
into other areas

Platform for delivering value

Material
Handling◯Expand low carbon emission functions in
combustion technologies◯Develop applications of the mixing and kneading
technologies we have developed in our concretebusiness to other areas including food andchemistry◯Develop high-sensitivity sensors for monitoring
plants (to detect abnormal values of vibration,
sound, electric current, etc.), control software, andsoftware for big data analysis◎Promote cooperation between industry andacademia (joint research with Tokushima University,
Kyoto University, and Osaka University)◎Joint development with partners in diﬀerent ﬁelds◯Propose suitable products that meet speciﬁcations
requested by customers and respond to meet thedelivery date
◯Make technical proposals to solve problems at
customers plants◎Develop new products that can meet quick delivery
request◎Solve problems in collaboration with sales andmaintenance sections◯Find new suppliers and promote multiple purchases◯Combat price increases and promote cost
reductions◎Work with designing section and promote functionalpurchase◎Understand characteristics of our suppliers andproducts, and promote cost reductions including
overseas procurement◯Improve and succeed manufacturing skills andtechnologies◯Improve quality and productivity, and optimize
manufacturing cost reductions◯Flexibly respond to requests for quick delivery,
special speciﬁcations, and special products◎Ensure unbiased age structure and promote
multi-skilled work through rotation◎Promote capital investment, ensure quality
inspections, and promote easy-to-manufacture design
structures◎Manufacture through warehouse construction andfactory layout restructuring, and expand storage space◎Promote proactive responses to requests for special
projects including outsourcing of the manufacturing
process◯Reduce construction process◯Ensure safety guidance and safe work

◎Promote easy-to-construct structures by having theconstruction divisions participate from the planningand designing stages◎Have in-depth meetings and ensure loss-freeconstruction work by understanding the local
situation in advance◎Provide feedback to the designing section about
structures that take construction safety into
consideration◯With a growing need for non-contact and remote
services due to with Corona (living with COVID-19) ,we need to accommodate remote condition
monitoring and preventive prediction for ourcustomers plants.
◯Shift from after-maintenance to before-maintenance◎Work with the R&D section to improve the accuracyof capability of detecting anomalies in our customers
plants◎Provide remote support through remote maintenanceand wearable terminals which meet non face-to-faceand non-contact needs◎Accumulate experience at the test plants andimprove predictive capabilities◎Drastically review service systems

Energyarea

Concrete
Plant-Related Business

MixingMeasuresFood area

MaintenanceNikko Corporate Report 2 0 2 0 24

Platform for delivering value to customers

SUSTANABILITY & ENGAGEMENT

Customer feedback
Nikko requests our customers to provide us with opinions about their satisfaction with the plants we have delivered and/or areas for improvement to improve our products and services as well as developing new products and services.

Voices from
customers

Voices from
customers

1

2

Kuwana Ascon Kyodokigyotai

Kawagishi Bridge Works Co., Ltd.
(Tsukuba Plant)

We visited Kuwana Ascon Kyodotai in Kuwana City, Mie
Prefecture.
Kuwana City is located in the middle of Nagoya City
and Yokkaichi City, with good access to the city being
provided with the Higashi-Meihan Expressway to thenorth and Isewangan Expressway to the south.
The plant was completely renewed for the first time inalmost 40 years, and in September 2019 the new plant
went into operation.
We talked to Director Misaki.

Q&A
Q: How and why did you plan to renew the plant?
A: In the previous plant, a mixture silo and a heating recycle
unit were added after the AP body was installed in 1978,
but they had deteriorated from aging.
So we have upgraded the pl ant to the l atest
environmentally friendly plant while increasing the capacityof the plant to further contribute to social infrastructure.
In addition, as the plant manufacturers were different foreach equipment, we are glad that we could unify them.
Q: Why have you selected the Nikko’s state-of-the-art plant :VP II this time?
A: The biggest reason is that the new plant fit compactly ona small site.
We planned to build a new plant on the same site where
the previous one was dismantled, but we were worried
whether the new plant would fit in well since we had also
increased capacity.
Adopting Nikko’s plant has allowed us to operate without
drastically changing the line of flow within the plant.
As we were able to minimize the installation area of theAP, we were also able to build the office and aggregate
yard at the same time.
Another good point is that as we went to the exhibition
held by Nikko in Akashi City last year to see the actual
equipment, which gave us a clear picture of rebuilding.
Q: Please tell us some of the difficulties you encounteredduring the rebuilding process.
A: It took almost half a year from the time the previous plant
was dismantled to the time the new plant started its
operation. During that time, we also rebuilt the office and25 Nikko Corporate Report 2 0 2 0

the stockyard at the same time in addition to the AP, so
the process and the scope of work were tight.
We held regular biweekly meeting where all contractors
attended and made fine adjustments to resolve issues
one by one, which led to the renewal of the office asplanned.
Q: What are the points, if any, you were particular about inthe specifications?
A: The first point is an increase in capacity. With the previous
plant, we could not fully take advantage of its favorable
location, with the V material manufacturing capacity of
60t/h, plus a mixture silo.
For the new plant, we have increased its V material
manufacturing capacity and added 2 mixture silos toaccommodate shipments on highways and a variety ofshipments.
The second point is its appearance. Although we could
not use the desired color due to the regulations of
the landscape ordinance, we added a blue line as anaccent color based on the corporate color of Matsuoka
Construction Co., Ltd. and The Nippon Road Co., Ltd.,
under JV.
In addition,“ Yumehama-chan”, the Kuwana City’s official
character, was displayed at the front of the plant to makethe plant beloved by the local community.
Lastly, we installed deodorizing equipment and took
measures against dust by enclosing the entire plant inconsideration of environment to the surroundings.
We will continue the operation of the plant that is rooted
in the local community.

We visited Kawagishi Bridge Works Co., Ltd. (Tsukuba Plant) in
Shimotsuma City, Ibaraki Prefecture.
Shimotsuma City is located in the southwestern part of Ibaraki
Prefecture, about 60km from Tokyo, adjacent to Tsukuba City,
Joso City, and other cities, with an area of approximately 81km 2
and a population of about 46,000. With the Kokai River runningin the east, the Kinu River in the west, and a sand swamp in thecenter, the area is rich in water resources.
The main business of Kawagishi Bridge Works Co., Ltd. is steel
frame business, and the company’s products have been usedin many high-rise buildings and large space structures since its
establishment in 1906.
The company newly constructed the Tsukuba Plant in 1991, andstarted manufacturing precast concrete. Nikko’s batching plant(equipped with 1. 5m 3 double-spindle SF mixer) was adopted
when the Tsukuba Plant was newly constructed, and this time a
new batching plant (DASH-Progress) equipped with a mixer for
high-strength concrete (DASH-Hyper-167) was adopted in a plan
to add another batching plant on the same site.
We talked to Plant Manager Kanbayashi.

New plant mixer (DASH-Hyper-167)

Q&A
Q: What was the main reason for your decision to build
an additional plant?
A : We pl anne d to ad d an ad ditio nal pl ant toaccommodate a wide variety of concrete.
Another factor of the expansion plan was that when
we use two types of concretes with different strengths
in one product, we can use two plants to separate
them to shorten the work process.
Q: What were you particular about in the specificationsof the newly added batching plants?
A: We adopted a DASH-Hyper mixer for the new plant tomix and knead high-strength concrete faster.
In addition, in order to make the best use of thesite, we were particular about utilizing the existingcorrugated silo and installing a switching damper at
the head of the drawer conveyor so that aggregateswere supplied from each inclined conveyor to theexisting and new plants.
We added two cement silos for the new plants, andin order to accommodate a wide variety of products,

we put a divider in each silo to stock a total of fourtypes of cement and admixtures.
Q: How do you feel about using the newly added plant?
A: The mixer is fully capable of mixing and kneading
high-strength concrete, its performance is good, andmixing and kneading time has been shortened.
In addition, we used to hand-wash the mixer, but
automatic washing machine (SWAT) we adopted has
dramatically shortened the work time for cleaning.
As for the plant, sufficient lines of flow and work
space are secured on each floor, and we realize theeasiness of inspection and maintenance.
Q: Do you have any comments or requests for Nikko in
the future?
A: Although the operator started working in the plant only ashort while ago, the plant is easy to use and the control
panel is easy to read and operate, which is very helpful.
In the future, we expect Nikko to develop a plant inwhich anyone can manufacture concrete and perform
maintenance easily.

Nikko Corporate Report 2 0 2 0 26

Human Resource Development and Improvement in Productivity

SUSTANABILITY & ENGAGEMENT

All employees are the most valuable asset for Nikko. We focus our efforts on building anorganization and strengthening our human resources that can quickly respond to all changes
surrounding our business and make a sustained contribution to society.
It is our high-priority management theme
to improve productivity by understanding expectations of employees with different
attributes and values to develop a rewarding work environment.
Employee situation(End of FY 2019)

Development of work environment
Promotion of taking paid leave
Nikko’s goal is to have 10 days of paid leave taken per year, and theactual number of days of paid leave taken in FY 2019 was 10.35 days.

20

Situation at consolidated subsidiaries

Number of employees* 1

Number of temporary employees* 2

Number of employees

838

152

Number of employees* 1 Number of temporary employees* 2

Ratio by segment

Asphalt Plant-Related Business

434

54

51.8%

Concrete Plant-Related Business

214

36

25.5%

Environment- and Conveyor-Related Business

33

8

3.9%

Reportable segment total

681

98

81.3%

Other Business

120

47

14.3%

Entire Company (common)*3

37

7

4.4%

838

152

100.0%*1 Employed employees: employees of Nikko + employees of affiliated companies (including accepted seconded personnel
and excluding seconded personnel)*2 Temporary employees: temporary employees of Nikko + temporary employees of affiliated companies (including part-timeworkers and excluding temporary workers dispatched from agencies)*3 Entire Company (common): employees of the planning division, administrative division, etc.
● Situation at affiliated subsidiaries

Work location

Employees(number of people)

Number of temporary employees

Total
101

Executives(including accepted
seconded personnel andexcluding seconded
personnel)

Nikko Electronics Co., Ltd.

8

86

7

Nikko Machinery Co., Ltd.

6

39

29

74

Tombo Industry Co., Ltd.

6

11

3

20

Nikko Sec Co., Ltd.

6

29

7

42

Nikko Kosan Co., Ltd.

5

8

8

21

Maekawa Kogyosho Co., Ltd.

6

15

4

25

Nikko Baumaschinen GmbH

2

0

0

2

Nikko Asia (Thailand) Co., Ltd.

4

17

0

21

Nikko (Shanghai) Construction Machinery Co., Ltd.

6

105

0

111

49

310

58

417

Total

FemaleMale
470

Company employees

17

Contract employees*4

37

Regional employees

34

Master*5

22Partner employees*7

20

Senior*6

23

Fixed-term employees*8

12

83

Total

559

Total

Year-on-year change

0.0%Year-on-year change

8.4%

Average age

44.1

Average age

44.1

Average years of service

19.8

Average years of service

10.1*4 Contract employees: rehired employees who are post-seniors or post-masters (non-regular employees)* 5 Master: employees rehired after retirement (non-regular employees)*6 Senior: employees who are post-masters with extended employment (non-regular employees)* 7 Partner employees: part-time employees with no fixed term (non-regular employees)* 8 Fixed-term employees: part-time employees whose terms have been renewed (non-regular employees)

27 Nikko Corporate Report 2 0 2 00

N i k ko is s t re n g t h e n i n g o u r ove r t i m e
m a n a ge m e n t w i t h t h e a i m o f i m p ro v i n g
l a b o r p r o d u c t i v i t y, a n d w e r e t u r n t h e
reduced overtime pay to our employees as a
distribution. (Distribution: performance-linked
salary paid in every three months based onbudget achievement)2019 (ﬁscal year)

2018● Changes in overtime hours (all employee base: 1,000 hours)

2017

60
50

30
25

40
30
20

Enriching training programs menus

2017

0
Business Division

20
15

60

5

2018
140

50

4

135

40

3

130

30

2

125

20

1

120

0
0
0
Technology Division Manufacturing Division Administrative Division

In addition to regular in-house training program, Nikko offers e-learning
opportunities for our employees to learn what they want to learn, when
they want to learn it, as well as face-to-face training. Each employee canchoose from a menu of courses tailored to his/her needs, ranging fromprofessional practices and language skills to coaching and leadershiptraining, to utilize these training programs for his/her own development.

2019

0
Entire company● Changes in education spending (million yen)

20
15
10
5
0

● Situation by gender (Nikko Co., Ltd.)

Company employees

10Strengthening overtime management● Situation by segment

Total

Paid leave acquisition rate = Total number of hours acquiredfor paid leave / Total number of hours granted for paid leave

30● Nikko Group (including affiliated subsidiaries)

Segment name

● Changes in paid leave acquisition rate (%)

40

2017

Three pillars in putting work-style reform into practice20182019 (ﬁscal year)

With the aim of improving operating efficiency and labor productivity, Nikko is working on the following three initiatives.
Active use of web conference for the purpose of speedy information sharing and decisionmaking without being bound by time and place
Promoting telework, establishing a decentralized work system, and overcoming challenges
Improving production efficiency by investing in the replacement of manufacturing facilities

Improvement activities: Campaign to improve operating efficiency
We have established an Improvement Activities Committee with the purpose of encouraging and promoting
improvement activities based on the originality and ingenuity of employees to improve operating efficiency.
A consultant (improvement leader) is appointed in each workplace to take charge of setting a theme for thegroup and providing advice on the point to be focused on and methods for improving operations. Specificproposals for improvement with various themes are reported and put into practice each month, including
reduction of working hours and costs, quality improvement, and improving safety.

Motto for improvement activities
1. Improvement is“selecting means and changing methods”
Let’s find out faster and more accurate ways to work!
2. Improvement is not a big change but a small one
No need to try to make a major change in the way you
work! Try it slowly and steadily.
3. Improvement is a fight against practical constraints
Let’s find out what you can do now and do it!

● Number of proposals for improvement and commendations

100

Number of proposals

Number of commendations

80
60
40
20
0

2017

2018

2019 (ﬁscal year)

Proposed improvements are commended and rewarded after going through fair review (by the Review Committee
and Activities Improvement Committee), and shared with all employees. Employees who make outstanding
proposals for improvement throughout the year are invited to participate in improvement training programs tolearn initiatives of other companies to improve their operations and productivity through field trips.

Nikko Corporate Report 2 0 2 0 28

Nikko’s Diversity in Female Employees’View

SUSTANABILITY & ENGAGEMENT

Roundtable Talk of Female Employees
Gender diversity is considered to be a signal indicating a high potential for corporate value creation;
however, the reality in the AP/BP industry is that there has been a deep-rooted perception that this industry is a workplace
for men , and women have been slow to enter the industry.

Four women actively engaging in each section at Nikko
discussed their ideas on breaking the current situation andthe diversity of Nikko.
● Date of the talk: August 7, 2020 ● Location: Conference room at the head oﬃce (Akashi City, Hyogo Prefecture)*The talk session was held in a large conference room under full infection control.

Tachiki: We are working on various
measures to create a workplace wherefemale employees can play an active role,
including increasing the number of newly
graduated female employees, 100%
consumption of childcare leave, andencouraging to take paid leave. Nevertheless, female employees account for only
about 13% of total workforce of thecompany.Currently, we have no female
managers partly due to the low absolute
number of female employees. Today, I would
like to ask you, working in various sections of
our company, about what you usually feel
about work environment where it is easy forfemale employees to play an active role andpromoting gender diversity. First of all, let me
ask you what motivated you to join Nikko, andwhat you are currently doing.
Matsuyama: My ﬁrst job after graduation
was a general clerical work at a ﬁnancial
institution, but I was interested inaccounting as a specialized ﬁeld, so I
changed my job to be on a career trackat Nikko. As I live in Akashi City, I am
glad that I could ﬁnd a company in myhometown that is worth working for. I
didn t know of Nikko when I was astudent. Currently I am in the Financial
Department and responsible for cash
mana g e me nt, en ga gi ng i n co llect i ng
accounts receivable, making payments
to business partners, and calculatingtaxes.

Satsuki Matsuyama

Financial Division, Treasury Section, joined Nikko in2011 (mid-career recruitment) (graduated from Schoolof Human Science and Environment)

Ochi: I was doing research on coal ash
granulation when I was a student andused Nikko s mixer in my experiment. I
had a very good experience with thatmixer, and that was my motivation forjoining Nikko. I am currently in theDevelopment and Sales Department andin charge of developing markets otherthan those for AP and BP, with products
developed by using our four coretechnologies.

29 Nikko Corporate Report 2 0 2 0

Haruo: I wanted to work in design at a
manufacturer, and felt that I could dowhat I wanted to do at Nikko s information session. When I was assigned
to the Design Department, I was toldthat there had been no female
designer, but even when I was inschool, women were in the minority so
it didn t bother me much.
Ning: I was working for a Japanesecompany in Shanghai, but I wanted toacquire more specialized skills in Japan,
and that s why I joined Nikko. Currently I
am working and learning at the Customer
Support Center, aiming at becoming an
AP maintenance representative.

Kohka Ning

Service Planning Department, Customer Support Center,joined Nikko in 2020 (mid-career recruitment) (graduatedfrom Department of Japanese Language)

Tachiki: When do you ﬁnd it worthwhileat work, and when do you ﬁnd it hard?
Matsuyama: Working in ﬁnance issomething like struggling with numericalnumbers, and I feel great when thenumbers that didn t match up just matchup perfectly (laugh). I am really thrilled by
the process of one thing taking shapethrough consultation with the teammembers or when we have what we haveaimed for, such as introduction of new
systems and preparation of ﬁnancial
statements. On the other hand, I
sometimes feel rushed every threemonths as Nikko uses a quarterly
settlement system.
Ochi: The Financial Department has agorgeous image with many female
employees (laugh).
Matsuyama: The ratio of men to womenis about half, so it is a diverse department
in Nikko. When I joined Nikko, there were
few female employees and we wereencouraged to wear uniforms for clerical
workers, with which I felt a bit
uncomfortable, but now we are no longer

asked to wear uniforms and I feel that theorganization has become more unbiased.
Ochi: The real pleasure in working insales is that we are told by our customers
who use the products we have delivered,
The product is a real help! Thank you.
There are very few female salespeople, so
our customers can easily remember us,
but on the other hand, we may give them
the impression that we are unreliable, so I
try to be as conﬁdent as possible when
dealing with customers.
Haruo: W h e n d e s i g n i n g , w e o f t e n
struggle between speciﬁcations ourcustomers desire and manufacturing
constraints, but when I witness theinstallation of the plant that I was
involved in designing and conﬁrm its
operation, I feel that my hard work has
paid oﬀ. Our working hours tend to belonger as the number of requests fordesign increases, and I think we haveto come up with some solutions.
Ning: I am learning to provide services
to our AP customers at the Customer
Support Center. I am working hard to be
familiar with wiring diagrams andmechanisms of the control panel. I
provided support in Chinese forresponding to inquiries about the ALBO
control panel which is exported to
Nikko Shanghai.
Tachiki: How do you think about Nikko swork environment from the perspective of
female employees?
Ning: The good point for me is that there
is a clinic on site, so I can consult a doctor
when I don t feel well. This is very helpful
in terms of health care. I also like theprogram which allows employees to takepaid leave in a planned way.
Matsuyama: I feel that the workplace hasa homey atmosphere and very
comfortable to work. On the other hand,
my previous workplace was a ﬁnancial
institution where many female employees
work, so the support system for female
employees was well established. I want
the company to listen more to the female
employees, since a workplace wherefemale employees can work comfortably
is also a workplace where everyone canwork comfortably.

Ochi: For example, childcare leave
program is in place to allow not only
female employees but also male
employees to take this leave, but I hear
the number of childcare leave actuallytaken by male employees is extremelys mall. I hope t he c ompany will t ak emeasures to ensure that many male
employees can take childcare leave,
regardless of gender.
Haruo: There are overwhelmingly fewer
female employees in my workplace and atﬁrst, I felt other employees were treating
me very carefully, but now I think we havemade a lot of progress in mutual
understanding (laugh). I think that we, aminority, need to speak out more.
Ochi: I think that there is a big diﬀerence
between men and women in terms ofmuscular strength, but otherwise there
is no diﬀerence in ability, so I want to try
to actively express my opinion. I m surethat if we, female employees, can feel
motivated to work, junior employees
will follow us.

Haruo: A company that takes care oflife stages of individual employees isvery nice (laugh). The number ofpeople who think that they are thecompany-ﬁrst people like our parents
is decreasing, and in most cases
couples work together, so if you canchallenge yourself in a company thattakes care of individual situations of
employees, you will be able to work
for a long time. I feel a bit sad if thecompany believes that female
employees would quit when they get
married or have a baby. It is ideal thatboth men and women can demonstrate
their abilities at work regardless ofgender while sharing household chores
at home.

Mitsuki Haruo

Design Department, Design Section III, joined Nikko in2014 (graduated from Department of Mechanical
Systems Engineering)

Saori Ochi

Development and Sales Department, West Japan Sales
Section, Development and Sales Group, joined Nikko in 2008
(graduated from Department of Urban Systems Engineering)

Matsuyama: I think one of the reasons
why female employees leave thecompany is the relocation of theirpartners. If your partner is forced torelocate, you tend to have a choice
between your partner moving out alone
or you quitting your job. As our company
has oﬃces all over Japan, I think thatallowing female employees to choose
their work locations or to continue
working remotely will have signiﬁcanteﬀect on retaining female employees.
Tachiki: We recognize the importance ofthe support programs to increase thenumber of female employees, but there
seems to be more things we can do interms of their operation.
Matsuyama: Our company oﬀers a choice
between global and area positions, but itwould be nice to have a more ﬂexible
system instead of regulating theavailability of relocation based on thetype of job. Both men and women haveperiods when they are easy to accept
relocation and when they want to avoid it
if possible, and I think if there is a system
where individual employees can tackle
the challenge of accepting relocation
when they want depending on their own
situations, the number of female students
applying to join Nikko will increase.

Tachiki: If the system has become onethat is based on men s perspective, itneeds to be improved. I would like to ask
you about skill development support
which is necessary for female employees
to play more active role.
Matsuyama: T o b e h o n e s t , I c a n n o t
have a clear picture of what skills I
should acquire since I cannot ﬁnd arole model within the company. I think
it will be helpful if I have an
opportunity to hear about thehardships of senior female employees
who are in managerial positions atother companies.
Ning: Since I m still inexperienced, I m
too busy learning specialized skills on
maintenance. But in the future, I hope
to play an active role in Nikko Shanghai
by making use of my experience inJapan. In Shanghai, women are taking
an active role in society and I feel that
there is less gender distinction in theworkplace there than in Japan. It is niceif there is a system where I can consult
with senior employees of the samegender.
Haruo: From a woman s point of view, I
feel a bit uncomfortable with theleadership like follow me and transfer ofskills such as apprenticeship. As I expectthat we can build a team which is more
open and provides a sense of unity, I wantto put into practice what I am feeling now
when I become a manager.
Ochi: Female employees tend to stay in acertain specialty ﬁeld for a long period oftime, but I want to experience a variety ofjobs. I imagine that if I become a manager inthe future, diverse experience will help me.
Tachiki: We have an excellent training
program for new managers, but I feel that
we need to provide systematic support topeople who will become managers in the
future. Lastly, can you give us some advice
on providing information to junior female
employees to increase the number offemale employees?
Matsuyama: Since our job does not have agorgeous image, it is not easy to appeal tofemale students, but how about actively
sending out a message like There is an
excellent company in our hometown
Akashi mainly to women in Akashi City.
Ochi: The prevailing recognition is thatworking in the ﬁelds such as
manufacturing and maintenance may be
diﬃcult for female employees as there has
been no experience of accepting female
employees in the worksite, but I thinksome women want to do welding work,
so why not recruit men and womenequally for all positions.
Haruo: I agree. There are no women s
restrooms or changing rooms indepartments where no female employees
have been employed so far, but they may
be properly equipped once the company
decides to hire women.
Ochi: There is a shiny women s restrooms in the manufacturing site! This
may appeal to women (laugh).
Ning: The number of female operators isincreasing at our customers plants, butsometimes I ﬁnd no women s restrooms
at the plant site I visit.
Ochi: I also have an experience that I
didn t have a place to change into
working clothes. The current situation of
our industry is that we are lagging behindin women s advancement. I want Nikko
to lead the transformation in the industry
as a leading company.
Tachiki: Thank you for your unique andinstructive suggestions. We are also
considering setting up workshops forfemale students and active disseminationof information through SNS. We will ask
for your cooperation in implementing
these initiatives. Thank you very much foryour time today.

Facilitator: Yuki Tachiki

General Aﬀairs Department (Joined Nikko in 2013)

Nikko Corporate Report 2 0 2 0 30

Progress in the Medium-Term Management Plan and Focus Areas

STRATEGY

The first year of the Medium-termManagement Plan showed results indeveloping new markets whileleaving some challenges

Performance summary for FY 2019: New areas were strong while leaving challenges to be
overcome in the AP-related business

For FY 2019, the first year of the Medium-Term Management Plan (FY 2019 - FY 2021), consolidated
net sales were 35. 2 billion yen and operating income was 2 .1 billion yen, slightly below ourtarget (35.7 billion yen for net sales and 2 . 3 billion yen for operating income). Certain results
were achieved, including a sharp growth in the mobile plant business, mainly in new business ofmobile crushers and waterproof boards while leaving some challenges to be overcome including
improvement in margin for the AP-related business.
In our Medium-Term Management Plan, Nikko pledged to return profits to shareholders with dividend
payout ratio of at least 60%, and in FY 2019 we paid out dividends of 40 yen (FY 2018: 12 yen)including a 100th anniversary dividend of 20 yen, with dividend payout ratio of 97.6%.
For FY 2020, although there are uncertainties about macro environment including impact of
COVID-19, the impact of COVID-19 pandemic on our business has been minimal, and we will steadily
implement measures to achieve consolidated net sales of 36.5 billion yen (up 4% from FY 2019) andoperating income of 2.2 billion yen (up 7%).
Although the 100th anniversary dividend of 20 yen will no longer be paid, we plan to maintain adividend of 30 yen and continue to provide shareholders returns with total return ratio of 84.2%,
together with share buyback of up to 400 million yen (up to 800,000 shares).
We expect that management reform in line with the Long-term Basic Policies will also proceedsmoothly. We are further improving all sections in sales, services, technology, and manufacturing withthe aim of strengthening revenue base in Japan, and in overseas market we set up a local sales andservices office in Thailand in February and a manufacturing company in June 2020.

Numerical targets were not met due to the low growth in the AP-related business. Operating
income for the AP-related business was 1.12 billion yen and could not meet the company’s targetof 1.57 billion yen. Plant sales grew significantly by 34.5% due to an increase in order backlog at
the end of FY 2018 while sales of well-selling maintenance service business were down by 8.1%
compared to FY 2018. The total of VP series and MBC, which mainly use new types of recycledmaterials, accounted for 50% of total shipments, and sales of two recycle crushing plants, a newarea, were also recorded.
Other business contributed positively to the FY 2019 results. Operating income was 1.02 billion
yen, which was above the company’s initial plan of 510 million yen. Sales of mobile plant
products, a new area, grew by 449% compared to FY 2018, and sales of waterproof boards
also grew by 305%. Sales of temporary construction materials also increased by 12% over FY
2018, driven by strong performance for well-selling rentals, and sales of crushers at our subsidiary
Maekawa Kogyosho Co., Ltd. also showed steady growth of 5%. Operating margin of otherbusiness improved significantly from 10.7% to 17.5%.
Operating income of the BP-related business and environment- and conveyor-related business also
grew slightly above the company’s plan.

FY 2020 business outlook: Measures to improve margin are planned for the AP-related business
For FY 2020, we expect consolidated net sales of 36.5 billion yen (up 4% from FY 2019) andoperating income of 2.2 billion yen (up 7%). Net sales are in line with our target for the second
year of the Medium-Term Management Plan in numerical comparison and operating income isshort by 400 million yen. The shortfall in operating income is attributable to the low growth in
the AP-related business (short by 540 million yen compared to the Medium-Term ManagementPlan), and we will continue to improve our profitability through measures such as brushing up thecrushing plants and upgrading the version of the VP series, which has high added value. Comparedto the Medium-Term Management Plan, operating income is slightly below the plan for the BPRelated business, almost in line with the plan for the environment- and conveyor-related business,and significantly above the plan for the other business.

Overseas business: Nikko Shanghai remained steady and other overseas businesses also grew in FY 2019
● Medium-Term Management Plan/Net Sales and Operating Income Plans(million yen)
60,00050,000Previous Medium-Term
Management Plan

Operating income (right axis)

Net sales (left axis)
Operating margin

FY 2019-20
results and forecast(million yen)
6,000

Numerical Plan forthe MediumTerm Management Plan
7.9%

7.0%
6.0%

6.0%

5.9%
4.8%

40,00034,11032,073

4.5%
35,15135,11432,71730,70730,000

6.4%

6.0%

5.8%

7.1%

36,50035,7004,000

38,00036,50031,780

5,000

3,000

New business: Mobile plant business and waterproof boards made a significant contribution
3,000

2,600
2,249
1,944

1,832

20,000

2,103

1,629

2,053

2,200

2,300
2,000

1,427

10,000

0

1,000

2013

31 Nikko Corporate Report 2 0 2 0

2014

2015

2016

2017

2018

2019
2020
2019
(results) (estimated) (plan)

2020(plan)

2021(plan)In FY 2019, overseas net sales were 4.4 billion yen (up 14% from the FY 2018) and net sales ratio
was 12.5%. We changed the fiscal year end of overseas subsidiaries from the end of December tothe end of March, whose impact has been minimal.
In FY 2019, Nikko Shanghai posted net sales of 3.6 billion yen (up 4% from the FY 2018) andother overseas businesses 750 million yen (up 103%). Sales of 22 APs in Nikko Shanghai werecharacterized by an increase in sales of larger-sized plants, as demonstrated by the fact that sales
of NBD400 exceeded those of NBD320, and an increase in sales of recycling systems to 9 units (5units in FY 2018). The overwhelming majority of sales were conducted in the coastal areas (77%),
followed by in the central area (14%) and in the western area (9%).
For FY 2020, although demand for AP in China is expected to be strong due to a recovery ininfrastructure investment, we forecast sales may not meet the initial budget, considering impact of
the suspension of operations at Nikko Shanghai due to the COVID-19 pandemic.

0(ﬁscal year)

In FY 2019, new business grew significantly to achieve results that outperformed expectations in
the Medium-Term Management Plan, with mobile plant business (mainly mobile crushers) postingsales of 500 million yen (90 million yen in FY 2018) and sales of 830 million yen in waterproof
boards (210 million yen in FY 2018). The market share of mobile crushers grew to 13% and thedemand for waterproof boards, manufactured and sold by our subsidiary Nikko Machinery Co., Ltd.,
has increased sharply partly due to disasters caused by the climate change in the past few years.
We have revised up our sales forecast for the mobile plant business in FY 2020 to 830 million yen
from 700 million yen in the Medium-Term Management Plan. The market share of mobile crushers
is expected to be 20%, and we will start selling mobiscreen series.
We saw a special demand for waterproof boards of just under 300 million yen in FY 2019 and net
sales of standard waterproof boards were 400 million yen, and for FY 2020, we expect net salesof standard waterproof boards alone to be 600 million yen. With production at the new Kansai
plant being getting on track, we are aiming at further growth in the future.

Nikko Corporate Report 2 0 2 0 32

Progress in the Medium-Term Management Plan and Focus Areas

STRATEGY

Established a local sales and services
office in Thailand to expand businessthroughout ASEANTOPIC 1

TOPIC 2

Crushing-related businessdeveloping in various
aspects

Under the Long-Term Basic Plan, Nikko aims at achieving overseas sales of 9 billion yen in FY 2029 (FY 2019: 4.4 billion yen). In addition to China (Nikko Shanghai), we intend to expand our business throughout ASEAN with local sales andservices office in Thailand, which boasts the largest market share in the used AP
business, as a core center. In Thailand, where we see a large market potential,
we set up a local sales and services office in February and a manufacturing company in June 2020.

The crushing-related business posted total net sales of just under 1.2 billion yen in FY
2019, doubling from FY 2018. Although“ crushing”has not yet become a core technology that can diﬀerentiate us from our competitors, we are working on it from various aspects and expect it to be a new area of business for the Nikko Group.
In particular, since key users of the crushing plants are the same road paving companies as AP which has the largest market share, we believe that we can expect signiﬁcant synergy eﬀects including provision of maintenance services at the same time.

Summary of Nikko NilKhosol Co., Ltd.

Crushing-related business with huge potential for expansion

Nikko NilKhosol Co., Ltd. is a local sales and services office in Thailand with a capital of 120 million baht, of which 70% is owned by Nikko and 30% by NilKhosol. NilKhosol, our joint venture
partner, has been our local contractor for the export of APs for about 5 years. Nikko NilKhosol will
be located in the Chonburi Industrial Park, southeast of Bangkok, where a new factory will be constructed.
The area of a new factory is 40,542m , larger than Nikko Shanghai’s approximately 30,000m , andproduction capacity is planned to be 30 APs (20 to 25 for Nikko Shanghai) and 900 tons of industrial machinery per year. The amount of total investment is 1.2 billion yen, and the new factoryis scheduled to start operations in October 2021. In Thailand, we plan to achieve net sales of 1.7
billion yen in FY 2024 (300 million yen in FY 2019), and aim to turn into the black in FY 2021.
22“ Crushing“ is one type of mechanical separation operation for breaking solids into small pieces, andapplications and types of crushing are different depending on the type and size of the solids to be
crushed, and the type of crusher such as mobile or stationary. Until now, our subsidiary Maekawa Kogyosho Co., Ltd. has manufactured and sold mainly stationary crushers; however, sales have been low.
In the future, we plan to expand our crushing-related business into various areas and users in
our new mobile plant business, including mobile crushers (other business), crushing plants in the
AP-related business, and small unit crushers in the environment- and conveyor-related business
whose commercialization has been completed. In FY 2019, net sales were 230 million yen for
crushing plants, 460 million yen for stationary crushers (Maekawa Kogyosho Co., Ltd.), and 500
million yen for mobile crushers.

Business development in Thailand, landscape of competition and Nikko’s
strength and challenges
We plan to develop five types of business in Thailand. In addition to the current new plants, wewill sell used plants and offer plant replacement, parts sales, and maintenance services.
In the new AP market in Thailand, there are European, Chinese, and South Korean competitors.
Although the local selling price of Nikko products will be set approximately 30% higher thanthose of competitors, we believe that we will be able to gain a certain market share due to thequality (stable operation) and low overall running costs. Since we have sales and manufacturing
facilities in Thailand, we will be able to supply parts quickly with enhanced maintenance systems.
On the other hand, as the market for new products in Thailand is not large enough, it is important for us to expand our business to the ASEAN countries.

Summary of local sales and services officein Thailand
Company Overview●●●●

Date to be established June 25, 2020
Name

Nikko NilKhosol Co.,Ltd.

Location

Pinthong Industrial Park Phase 4,

Capital

120 million baht●

Business description Chonburi Province, Kingdom of Thailand●

Investment ratios

Manufacture and sale ofasphalt plants and industrial machinery

70% by Nikko Co., Ltd. and 30% by Nilkhosol

CEO MD President Yosuke Yamamoto

Factory overview
Site area

40,542m2●

Total investment

Approximately 350 million baht●

Production capacity●

Start of construction●●

Factory area

work (provisional)

33 Nikko Corporate Report 2 0 2 05,078m2(approximately 1.2 billion yen)

30 asphalt plants and 900 tons of industrial machinery per year
September 2020

Crushing plant

Stationary crushers

Mobile crushers

Small unit crushers

Mobile plant business plans sales of 1.3 billion yen in FY 2021.
For FY 2020, we expect net sales of 470 million yen for crushing plants, 320 million yen for stationary crushers (Maekawa Kogyosho Co., Ltd.), 830 million yen for mobile crushers (mobile plantbusiness), and about 20 million yen for small unit crushers.
The core product of mobile crushers in the mobile plant business is the Kleemann product characterized by high crushing performance and low fuel consumption with a hybrid drive, and astylish design. The best-selling product is a jaw crusher. We introduced impact crushers in FY
2019 and we will expand our product menu to promote sales of products in the future including
impact crushers, cone crushers, and mobiscreen.
In addition to further promoting our sales activities in the core areas of crushed stone- and demolition and recycling-related businesses, we will expand our business by adding sales activities
and methods to our own new customers.
We also plan to start activities of selling parts to and receiving more orders for maintenanceworks from customers to which we have delivered our products. Furthermore, we plan to expand
inventory of parts that allow us to support the stable operation of products we have delivered,and enhance our maintenance service programs, with our eyes focused on the growth in FY 2021
and beyond.
Although we cannot currently expect profitability in the crusher-related business except for the
one for Maekawa Kogyosho Co., Ltd., our mobile plant business is getting on track toward turning
into the black in FY 2021. For the crushing plant business, we expect an improvement in profitability in the future due to increased sales in maintenance services and sales expansion of small
unit crushers which have no other competitive product.

Exterior of Nikko NilKhosol Co.,Ltd.

Nikko Corporate Report 2 0 2 0 34

Segment Highlights

STRATEGY

In FY 2019, our core AP-related business accounted for 49.8%,
BP-related business accounted for 26.1%, environment- and conveyor-related business accounted
for 7.5%, and other business accounted for 16.6% of total revenue of the Nikko Group.
In FY 2019, other business grew significantly including new mobile plants and waterproof boards.
Business description

AP Plant-Related
Business

FY 2019 business breakdown

Main products: ●Asphalt plants ●Recycling plants ●Mixture silos●Electronic control devices, plant management system

Net sales and operating income by segment (margin)
Net sales
Operating income
Operating income (margin)(million yen)
30,000
Exports
4.3%

Nikko
Shanghai
20.5%

25,000
Plant sales
28.2%

Maintenance service
47.0%

20,0007.8%

16,580BP Plant-Related
Business

VP Ⅱ
New mid-sized AP with recycling
unit at the center

Main products: ●Concrete plants ●Compact concrete plants ●Concrete pumps●Electronic control devices, plant management system●Concrete manufacturing plant facilities, etc.

Exports
0.1%
Concrete
pumps
3.1%

Nikko Shanghai
0.5%

16,434

1,253
2016(million yen)
16,00014,000

1,348
2017

963
2018

10,000

Plant sales
54.9%

6.3%

18,400

72.0％

1,118
2019

1,170

2020 (ﬁscal year)(estimated)

Net sales
Operating income
Operating income (margin)
10.8%

8.4%
9,356

Nikko share

10.7%

12,000

Maintenanceservice41.4%

17,518

Nikko share

10,0000

VP Ⅲ
New small-sized AP with recycling
unit at the center

17,1796.4%

15,0005,000
MBD
New mid-sized AP with recycling
unit at the center (hi-end model)

5.9%

7.6%

Market share (based on Nikko s survey)

9,521
7,893

8,000

8.3%

8.5%

9,158

9,400

31.2％

6,000
4,000
2,000

DASH-Hyper mixer
Mixer for ultra-strong concrete,with improved ease of maintenance

Environmentand ConveyorRelated Business

Cyber AdvanceNew control panel thatcan be operated from a tablet device

0

DASH-H275RAⅤ TRIU
Ultra-strong concrete plants

Main products: ●Belt conveyors, conveyors for facilities, beverage container recycling plants●Soil remediation plant, plastic recycling plant

Environmental
products
10.7%

Conveyor
service
3.5%

1,006
2016

5,000

3,000

Other BusinessSuper modular conveyor
Simple sealed-type conveyor
using steel plate frames that ensureshigher safety

Choiwaru-no-jaw
A small unit crusher that integrates
processes from feeding to discharge

Main products: ●Pipe scaﬀoldings, steel gangplanks, pipe supports ●Temporary aluminum staircases●Shovels, spades ●Small-sized concrete mixers, mortar mixers ●Sluices, waterproof boards, crushers●Real estate leasing, construction machinery product leasing ●Sales of housing renovation

Other
16.2%

MOBILE

Mobile crushers
Fuel-eﬃcient hybrid crushers

35 Nikko Corporate Report 2 0 2 0Roll breaker
Crusher with excellent maintenance cost,noise and vibration control, and particle size setting

Waterproof board
Waterproof boards, which are eﬀective
against water damage (internal ﬂooding)caused by global warning

Mobileplants
8.7%

Hand
tools
11.2%

7.8%

15.0%

2,775

2,647

369
2016

308
2017

2020 (ﬁscal year)(estimated)

21.3%

21.1%

2,634

2,700

7,000

417
2018

10.0%

10.3%

4,000

2019

Portable conveyor(Nikko share)

62％

570
2020 (ﬁscal year)(estimated)

4,133

4,480

17.5%

17.7%

5,840

6,000

10.7%

6,000
5,000

562

Net sales
Operating income
Operating income (margin)

8,000

Waterproof
boards,ﬂoodgates
23.0%

2019

800

3,931

(million yen)
9,000

Temporary
construction
materials
28.9%

2018

761

2,000

0

Crushers Nikko7.9% developed
products
4.2%

666

Net sales
Operating income
Operating income (margin)

13.9%

1,000

Modular belt conveyor
Conveyor using pipe frames
whose lengths can be adjusted inincrements of 10cm

2017

(million yen)
6,000

4,000

Conveyor products
80.8%

1,015

4,677

Mobile crushers(Nikko share)

13％

3,000
2,000
1,000
0

417
2016

462
2017

502
2018

1,020

2019

1,060
2020 (ﬁscal year)(estimated)

Nikko Corporate Report 2 0 2 0 36

Business Strategies

STRATEGY

For Continuous Growth
Asphalt PlantRelated Business

Focus on improvement of plant margin in Japan,
and launch Nikko Thailand in overseas

Concrete PlantRelated Business

SWOT of AP-related business

Strength

Weakness

Weaknesses and issues

Opportunity

Business opportunity

Weak price negotiation ability; diﬀerentiation of crushingplant products

Tomomi Nakayama

Rising AP productivity thanks to work style reform by users,
increasing environmental needs such as progress in use ofgas as fuel for existing APs and application of carbonized fuelThreatSWOT of BP-related business

Strengths and diﬀerentiation

Overwhelming AP share in Japan; oﬀering maintenance forthe entire plant at customers including crushing plants

Director
Manager of BP SalesManagement Department

Customers needs for precast concrete hasadvanced; also focusing on environmental-issue
related initiatives

Executive Oﬃcer
Sales Division
Manager, Industrial
Machinery SalesManagement Department

Morie Okaaki

15.4％

3
2
1 1

1
0

2

Threat

2016

2017

1

1

2018

2019（ﬁscal year）▲

FY2020 outlook●Dynamic share of APs shipped

AP demand (left axis)
Domestic AP market share (right axis)（％）
100(units)
100
90

78％

74％

80

70％

70％

60

40

45

55％

49
39

43

40

60
40
20
0

30
20
10
0

2015 2016 2017 2018 2019 （ﬁscal year）

37 Nikko Corporate Report 2 0 2 0

Contribution to sustainable society

▲

50

80

AP demand in Japan in FY2020 is expected to be 46 units, roughly
unchanged, of which Nikko expects to ship 32 units with dynamic share of
70%. Of the 14 main APs, three are planned to be VP (no MBD), accountingfor 21% of total. We plan to upgrade the version of VP to improve
proﬁtability, and will increase sales primarily of VP III and IV. Overseas net
sales are expected to decline 20% compared with a year earlier. Net sales of
Nikko Shanghai are likely to decline 18% on year and those in the ASEAN
regions are also expected to decline. Following the establishment of the sales
company in February 2020, Nikko Thailand established a manufacturing
company in June and is expected to grow in the future.
Going forward, the trend of switching the fuel of APs from heavy oil to gas is
expected to spread from the metropolitan areas to suburban cities. Suburban
cities are home to 800 of the total 1,050 APs and the potential for Nikko is
considered to be large. In the future, we will be able to use carbonized fuelgenerated in waste incineration facilities, currently under joint developmentwith Kawasaki Heavy Industries, Ltd., for APs, and reduce fuel costs at
customers as well as CO2 emissions. This is expected to create demand forswitching to Nikko s new burners and we will link the solution to a social
issue to our business expansion.

●Sales volume ratio of cement secondary product plants

（％）
18
16

14.0

13.8

Medium-Term Management Plan KPI, etc.

1．Raise dynamic share of BP units from 40% to 50% (FY 2021)
2．Contribute to sustainable society

Strategies for achieving KPIs

10

1．DASH brand concrete plant with high performance in mixing, PR for Nikko smaintenance structure, diﬀerentiation with development of new high-performancemixer model, and approach to concrete plants for secondary products
2 ．E x p a n d s a l e s o f m o b i l e B P s , w h i c h a r e s u i t a b l e f o r u s e i ndisaster-stricken areas

8

14

13.3

13.6

13.6

12

FY2019 results

Compared with BP demand of 74 units in Japan in FY2019 (up 25% from
FY2018), Nikko shipped 32 units (up 28%). Dynamic share of 43.2% (up0.8 ppt from FY2018). Repeat demand grew signiﬁcantly. Plants forprecast concrete declined ﬁve units but those for construction materials
were strong. The performance of the BP-related business was roughly inline with the ﬁgures of the Medium-Term Management Plan.

6
4
2
0

2015

2016

2017

2018

2019 (ﬁscal year)

Source: Cement Handbook 2020 by Japan Cement
Association●Dynamic share of BPs shipped

（％）
50
46
45

42

40
35

43

38

32

30
25
20

2015

2016

2017

2018

FY2020 outlook

We expect BP demand in FY2020 to be unchanged. However, there are clear
diﬀerence between regions and we will strive to increase our market shareprimarily in western Japan, where demand is expected to be strong. We will
expand sales in the precast concrete industry, where demand is expected
due to work-style reform and i-construction. As there have been frequent
occurrences of natural disasters in recent years, we are introducing mobile
BPs, which can be operated in disaster-struck areas, in the market and we willcontinue to strive to expand their sales. In FY2020, net sales of the BP-related
business are expected to increase 3% and operating income to increase 5%.

Contribution to sustainable society▲

70

Compared with AP demand of 49 units in Japan in FY2019 (up 23% from
FY2018), Nikko shipped 27 (down 4%), which is translated to dynamic share of
55% (down 15 ppt from FY2018). Of the 10 main APs, strategic products VP
and MBD accounted for ﬁve (50%) and there also were two crushing plants.
Overseas net sales grew 14% compared with FY2018. Net sales at Nikko
Shanghai increased 5% and those in Taiwan and Russia also increased.

Threats and risks

Decrease and consolidation of ready-mixed concreate plants
in operation and competitors restrengthening of business

▲

2015

1

FY2019 results

2

▲

2

Business opportunity▲

4

Opportunity

▲

37.5％

Weaknesses and issues

▲

30％

▲

28.6％

Strategies for achieving KPIs

1．Raise the combined share of MBD and VP, our new AP models thatmainly produce recycled mixtures, to more than 50% of the overall
domestic plant sales (50% in FY2019)2．
Expand sales of recycled mixture crushing plants (two units sold in FY2019)
3．Reduce environmental burden through sales expansion of energy-saving
products and equipment and develop remote shipping system andautomated shipping system

50％

5
4

▲

(units)6

1．Increase operating margin to 9.5% in FY2021 (6.4% in FY2019)
2．Contribute to sustainable society

Weakness

Introduction of precast concrete in construction materials
and environmental measures for returned concrete andsludge water treatment.

Threats and risks

Medium-Term Management Plan KPI, etc.

Number of MBD units
Number of VP units
Combined sales share

Strengths and diﬀerentiation

Relatively high ﬁxed cost ratio, and margin when taking overanother company

Reduction of public works budget and development ofsimilar models by competitors●Sales ratio of strategic AP products

Strength

Coordination between manufacture and sales; strong
in-house maintenance service structure2019 (ﬁscal year)

The ready-mixed concrete industry has been slow in dealing with returned
concrete and sludge water treatment, which is a serious environmental issue
faced by the industry. Returned concrete eventually becomes industrial waste
and leads to capacity issues at ﬁnal disposal sites. We believe it is necessary
to revise JIS. At the same time, we will propose reuse of collected aggregates
and the reuse of returned concrete and dewatered and hardened sludge cakeusing small mobile crushers. We also aim to solve social issues and expand
our business at the same time through measures such as reducing the ratio ofreturned concrete by taking advantage of IT and AI technologies. We will also
expand the sales of mobile BPs suitable for use in disaster-struck areas andnetwork-type control panels that realize manpower saving.

Nikko Corporate Report 2 0 2 0 38

Business Strategies

STRATEGY

その他事業

Business Division
Manager, Industrial
Machinery Sales
Department▲

Medium-Term Management Plan KPI, etc.

1．Conveyor business: up 8% in net sales and up 5% in margin (comparedwith the growth rate in FY2018)
2．Contribution to sustainable society: increase the sales volume ofbeverage bottle separator crusher facilities to 15 units in theenvironment-related business (three times the result for FY2018)

Tokuhiro Mitsumune

Other Businesses

Mobile crushers and waterproof boards in the
Mobile Plant Business have grown

Executive Oﬃcer
Business Division
Manager, Mobile Plant
Business Department

Medium-Term Management Plan KPI, etc.

Mobile plant business-related net sales: 1.3 billion yen in FY2021 (90million yen in FY2018)

Strategies for achieving KPIs▲

Plan to maintain high margin, expectations on
newly introduced small-sized unit-type crushers▲

Environment- andConveyor-Related
Business

Takeshi Sone●●▲

Strategies for achieving KPIs●

1．The conveyor business will focus on reviewing the sales routes andnarrowing down of the industries of end-product manufacturers, towhich conveyance products are sold. Lower the cost of mainstay
products and bring out a new model with improved safety in FY 2020.
2．Environment-related business will focus on replacement demand fromexisting users with products supplied more than 10 years ago (120targeted companies).

▲

FY2019 results

In FY2019, net sales of the other business rose 25% from FY2018 to 5.84
billion-yen, operating income rose 103% to 1.02 billion yen with operating
margin of 17.5%. The result was favorable compared with the Medium-Term
Management Plan, which had goals of 4.9 billion yen in net sales and 510
million yen in operating income. By individual product, sales of mobile plants
increased 449% to 500 million yen, those of waterproof boards increased
305% to 830 million yen, those of temporary construction materials rose
11.5% driven by strong performance of highly proﬁtable rental products, andthose of crushers were also solid, up by 4.7%. Operating income registered
growth signiﬁcantly exceeding that of net sales as sales of highly proﬁtablewaterproof boards and crushers increased.

▲

FY2019 results●Net sales of environmental products andconveyor-related products

Environmental products
Conveyor-related products

3,000
2,359 2,340
2,339

2,500
2,125

2,019

FY2020 outlook

▲

2,000

1,572

1,500
1,000
628
500

2015

2016

2017

296

2018

2019 (ﬁscal year)(units)
10
9

9

9

8
7
6

6

5

5

5

4
3
2
1
0

2015

2016

39 Nikko Corporate Report 2 0 2 0

2017

2018

2019（ﬁscal year）

Contribution to sustainable society: small unit crushers▲●Sales unit of environmental products by ﬁscal year

We developed and introduced Choiwaru-no-jaw, a small-unit crusher
combining feeding, crushing, and discharge. We would like to make it apillar of our environment-related products and will develop it into a
crusher series and grow them as crusher-related products in a new ﬁeld.
This small unit crusher is unlike any products by other companies: it isinstalled with a jaw crusher manufactured by Maekawa Kogyosho Co.,
Ltd., which has supplied more than 1,700 units in Japan, combined withsuper modular conveyor technology, and assembled at our plant(suggested retail price: 15 million yen). It is expected to be used forcrushing slag, metallic silicon, ceramic, pottery, rare metal, lime coke, andlimestone, and we see major potential for ready-mixed concrete, forwhich we have an established track record in BP, in the medium term.
There are about 3,000 ready-mixed concrete plants in Japan and disposalof returned concrete (residual ready-mixed concrete) from construction
sites has become a serious environmental issue. Currently, pieces ofreturned concrete are too large for being fed to small unit crushers and
we are selling and proposing dedicated frames for making returned
concrete small and then crush them. In this manner, small unit crushers
are aimed at solving a social issue and is expected to be a product that
contributes to the business performance of the Nikko Group.

(units)
140
120

119

120

110

100

100

100

FY2020 outlook

80
60
40
20
0

2015

2016

2017

2018

2019 (ﬁscal year)

Source: Japan Construction Equipment
Manufacturers Association●Net sales of waterproof boards(million yen)
1,000

826
800

310

316

200

0

2015

2016

203

215

2017

2018

Contribution to sustainable society
Demand for waterproof boards is increasing owing to climate change

Demand for the waterproof boards oﬀered by subsidiary Nikko Machinery Co.,
Ltd. has been rapidly rising for about one year due to heavy rain damages
resulting from climate change. 60% of the waterproof boards are for major shutter
manufacturers and Nikko Machinery sells the remaining 40%. Until now, people
had used sandbags to prevent rainwater from entering to cope with ﬂood damage
from typhoons but sandbags alone became insuﬃcient and recently they began
using waterproof boards. Waterproof boards are roughly divided into three types
and about 80% of sales in FY2019 came from panel type products, 3 to 5% fromhatch used for subways, and the remaining from sliding waterproof boards.
We have increased the production capacity of waterproof boards by two
to threefold since March 2020. Production capacity of panel-typewaterproof boards was increased to 150 to 170 sheets a month byintroducing a new cutting machine at the Noda Plant. The completion of
the Kansai Plant would further boost the capacity to 320 to 360 sheets
per month in total. This enables sales of waterproof board worth 1.0 to
1.2 billion yen, though it also depends on panel installation companies.

600

400

In FY2020, net sales of the other business are expected to grow by 3% year
on year to 6.0 billion yen and operating income is expected to increase by 4%
to 1.06 billion yen with an anticipated operating margin of 17.7%. Amongindividual products, sales of mobile plants are expected to be 830 million
yen, which is above the medium-term goal, but the domestic demand formobile crushers is ﬂat and we plan to raise the unit-based market share ofmobile crushers to 20% compared with 13% in FY2019. The plan forwaterproof boards is 900 million yen and this reﬂects our anticipation that
there will be no repeat of the special demand seen in FY2018 for sliding
waterproof boards (280 million yen). Sales of temporary construction
materials would be diﬃcult due to the impact of the novel coronavirus
especially for rental products and we are expecting them to decline.
▲

0

435

165

In FY2020, we will reduce costs and expect sales volume of a newconveyor model, whose delivery time has been further shortened, toincrease 17%, and we also plan to revise the selling price in tune with thecurrent freight status. However, capital investment in plants, etc. is
expected to be postponed or reduced in scale due to the impact of thenovel coronavirus, and sales of mass production conveyors are expected
to decline. Sales of environment-related products are expected toincrease compared with the previous ﬁscal year, as we expect alarge-scale project related to railroad. Operating income of the businessis expected to slightly increase on year.

●Demand for mobile crushers▲(million yen)

In FY2019, the number of mass production conveyors among theconveyor-related products was unchanged but their margin increased 3%.
This is primarily due to the price increase in mass production conveyors.
By contrast, environment-related products had low sales, down 32%
compared with FY2018, as there was no sales of large-scale plants.
Nevertheless, we have high expectations on sales of our new product
Petris (PET bottle separator) in the future. Operating income of the overallbusiness rose 35% compared with FY2018 and margin was up 21.3%
thanks to contribution of the conveyor-related products.

Enhance sales ability, build service structure
Build backup structure for administrative structure
Develop mobile center function2019 (ﬁscal year)

The number of companies manufacturing waterproof boards is estimated tobe more than 20 but they are mainly small sized (except for the two major
shutter manufacturers). Climate change is an important social issue andsolution is expected to involve decarbonization, etc. in the long term, and webelieve that the role of waterproof boards manufactured by us is signiﬁcant.

Nikko Corporate Report 2 0 2 0 40

CFO’s Message

STRATEGY

We will leverage the stable financial
foundation to proactively makeinvestments in international and new
business fields and strive to further
enhance shareholder returns.

Managing Director andGeneral Manager of Financial Division

Hiroshi Fujii

Born on January 16, 1959
April 1982

Department, Taiyo-Kobe Bank Limited

April 2009 Manager of Kansai Corporate Solution Sales
June 2011
June 2011
June 2013
June 2015

June 2018
June 2018
April 2020

An appropriate financial strategy (capital productivity and capital policy) is important for
the Nikko Group to fulfill the Long-term Basic Policies and ensure continuous growth.
We interviewed Managing Director Hiroshi Fujii, who is also General Manager ofFinancial Division and in charge of IR/SR, on the important points in financial strategy.

First of all, what is your role as CFO of the Nikko Group?

● Free cash flow and balance of cash and cash equivalents

Free cash ﬂow (left axis)

12,622

8,000

4,000

9,630

8,506

6,078

873

1,000

4,748

8,000

696

5

6,000
4,000

1,705

1,102

2,000
315

-1,000-2,00010,00010,300

3,200
1,503

14,00012,000

6,618

3,000

0

8,796

7,839

2,000

41 Nikko Corporate Report 2 0 2 012,575

12,110

7,000

5,000

Operating cash flow increased more than 4.0 billion yen, a significant improvement, to 3.8 billion yen in FY2019
from -0.2 billion yen in FY2018. Using also these as resources, we considerably raised dividends from 12.00 yen
per share to 40.00 yen per share including the 100th anniversary dividend of 20.00 yen per share, achieving total
return ratio of almost 100%. In spite of this, cash and cash equivalents increased to 12.5 billion yen at the end of
FY2019 from 10.3 billion yen at the end of FY2018. This was partly due to the selling of strategic shareholding
shares and an improvement in cash conversion cycle (CCC).

Term-end balance of cash and cash equivalents (right axis) (million yen)
16,000

9,000

6,000

Could you please summarize the financial review for FY2019 and financial outlook for
FY2020?

Department, SMBC Consulting Co., Ltd.
Director, Nikko Co., Ltd.
Manager of Financial Department, Nikko Co., Ltd.
Manager of Financial Department andInformation Center in-charge, Nikko Co., Ltd.
Manager of Financial Department andLegal Affairs and Information Centerin-charge, Nikko Co., Ltd.
Managing Director of Nikko Co., Ltd. (current)
General Manager of Financial Division of
Nikko Co., Ltd.
General Manager of Financial Division and
Security Export Control in-charge, Nikko
Co., Ltd. (current)

We had been stressing the importance of early cash collection through improvement of operating funds, primarily
to sales employees, since 2018 and its results are gradually showing. Until now, we took a lot more than a year
to make receivables into cash after procuring materials upon receiving orders and acceptance inspection, as AP isfree of customer credit risks. In that, the time taken till fund collection for large-scale AP projects exceeding 500
million yen per project had become even longer.
We have now made it mandatory for customers to pay a third of the total order amount in advance at the time ofreceiving the AP order as a rule, and we are accelerating conversion into cash also by shortening the repayment
deadlines of notes receivable. In FY2020, we are expecting at least 500 million yen in added cash flows fromreceipt of down payments alone. We plan to use 85% of net income attributable to owners of parent forshareholders in shareholder returns of dividends and share buyback, and the equity ratio is expected to be almost
unchanged at the end of FY2020 (66.3% as of the end of FY2019).

(million yen)
10,000What I keep in my mind, as CFO, is to maintain a stable financial foundation so that we are always ready tomake large-scale investments. I also consider further enhancement of shareholder returns as important, andI would like to implement financial strategies so as to avoid dividend cut (although dividend payout linked tobusiness performance is the Group’s basic policy).

Joined Taiyo-Kobe Bank Limited(current Sumitomo Mitsui Banking Corporation)

June 2003 Manager of Tsukiji Corporate Sales

0-1,239

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019 (ﬁscal year)

Nikko Corporate Report 2 0 2 0 42

CFO’s Message

STRATEGY

How do you review and evaluate financial strategies till now with respect to the changes in thebalance sheet over past 10 years split into two five-year periods (from the end of FY2009 to theend of FY2014 and from the end of FY2014 to the end of FY2019)?
Also, Integrated Report 2019 described a plan to liquidate the assets lying dormant on the balance
sheet into cash and enhance shareholder returns along with growth investment.
Is the Group smoothly implementing the plan to generate cash of about 2.0 billion yen throughselling of strategic shareholding shares and about 3.0 billion through improvement of CCC?
Looking back at the consolidated business performance for the respective five-year periods, net sales were 23.8
billion yen with operating income 260 million yen in FY2009, net sales were 30.7 billion yen with operating
income 1.8 billion yen in FY2014, and net sales were 35.1 billion yen with operating income 2.05 billion yen in
FY2019, meaning we have achieved steady growth. Non-current assets significantly increased in this process to 4.6
billion yen as of the end of FY2014 and 7.8 billion yen as of the end of FY2019. This is because depreciation andamortization exceeded capital investment every year since FY2013.
Before FY2012, the Japanese markets for AP and BP were matured and there were no new markets for growthin sight, so, to be honest, we could not be positive about making capital investment. However, road pavement
and infrastructure investment recovered as the Fundamental Plan for National Resilience was launched after the
replacement of the Democratic Party of Japan administration, and major earthquakes and other disasters occurred.
The Group also increased its capital investment along with this.
Equity ratio stayed roughly the same: 67.1% as of the end of FY2009, 66.3% as of the end FY2014, and 66.3%
as of the end of FY2019; but net cash increased significantly from 3.6 billion yen to 7.2 billion yen, to 10.8 billion
yen. Despite making capital investment exceeding depreciation and amortization, our financial strength improved.
Other assets declined 4.6 billion yen compared with the peak, as we sold foreign subsidiaries Benninghoven andShangtui Chutian Construction Machinery and some of strategic shareholding shares.
Regarding cash creation mentioned in Nikko Report 2019, selling some strategic shareholding shares generated
720 million yen in FY2019 and shortening CCC by 10 days created 900 million yen for a total of 1.6 billion yen.
Cash creation in the first fiscal year of the medium-term plan went smoothly, but improvement of CCC will become
more important given that selling strategic shareholding shares will likely decline to about 200 million yen a year.
● Balance Sheet Trends(million yen)

Cash and cash equivalents
Accounts receivable-trade
Inventories
Non-current assets
Other assets
Notes and accounts payable-trade
Interest-bearing debts
Other liabilities
Net assets
Total assets 45,677
Total assets 41,964
7,033
12,622
1,787
9,345 6,782
Total assets 34,613
6,667
9,486

3,753
3,097
4,527

3,425
3,933 23,236
11,102

2009

2,192

11,045

5,145

5,269
4,632 27,845
11,673

2014

6,564

11,611
6,645● Cash Conversion Cycle(days)
180
160
140
120

115

134

123

125

105

100
80

30,293

7,793
7,006

2019 (End of FY)

60
40
20
0

2015

2016

2017

2018

2019 (ﬁscal year)

Upon promoting Long-term Basic Policies, how do you plan to steer the financial strategies?
In particular, what is your view on fund allocation to investment for growth in“ Establish overseas sales”
and“Promote new businesses”?
Based on this, what is your image of the optimum capital structure taking into consideration
the manifestation of risks in the future?
Further, how do you plan to achieve 8% in ROE (capital cost, total asset turnover, financial leverage, etc.)
and what is the shareholder and stakeholder return policy in the long term?
I believe that 10.0 to 15.0 billion yen needs to be distributed to growth investment (to achieve net sales of 50.0
billion yen in FY2029). Of this amount, 3.0 to 4.0 billion yen is for the international business and the remainder
is for new businesses including M&As. In international investment, we plan to invest about 1.2 billion yen in
Thailand as we had already announced, and it is essential that sales in Southeast Asia including Thailand growas planned in order to achieve overseas net sales of 9.0 billion yen, which is the long-term goal. We continue toproactively consider M&As with the aim of fresh net sales of 10.0 billion yen, and I believe it would require 5.0

43 Nikko Corporate Report 2 0 2 0

to 10.0 billion yen in investment. In terms of timing, we need to do it within four and a half years from now forachieving 10.0 billion yen in FY2029. The amount excluding the above two items is the investment in existingand new investment in Japan.
Achievement of 8% in ROE requires net income attributable to owners of parent of 2.5 billion yen and 4.0
billion yen in operating income if equity, which is the denominator, is roughly unchanged at above 30.0 billion
yen. The difference with the operating income forecast of 2.3 billion yen for FY2020 is 1.7 billion yen , of which,we plan to achieve 1.2 billion yen through new investment with 8% operating margin of 15.0 billion yen andthe remaining 0.5 billion yen by improving margin of the AP-related business in Japan. We don’t think it would
affect the financial soundness even if total assets in use is 60.0 billion yen with equity of 30.0 billion yen. I
believe that utilizing interest-bearing debts is also important for growth.
The total return ratio in FY2020 will be 84% and we will strive to maintain dividend increase without slashingthem in the medium to long term.
● Operating margin and ROE

（％）
8.0
6.0

4.4

4.0
2.0

1.6

0

0.5

-2.0

-8.0
-10.0

1.2

2.1

1.6

-0.4
-1.2

-4.0
-6.0

2.4

-6.6
-8.9

2.3

1.1 0.8 1.3

1.0 0.7-0.2

2.1

1.1 0.7

-0.4

- 2.1

1.1
0.5

2.0
2.0

2.2

3.6 3.4

ROE

Operating margin

7.0

6.0
4.8

6.6
4.8

5.9

5.8

6.0

4.6 4.9

4.4
3.6

5.2

0.5

All-time highNet sales

38.3 billion yen (Mar. 1993)

Operating income

2.7 billion yen (Nov. 1990)

ROE (post 1994 capital increase)

6.6% (Mar. 2016)

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 (ﬁscal year)

You are not only serving as CFO but also in charge of IR / SR activities.
What are the points that you have come to realize through your interactions with institutional
investors over the past several years?
How have you been giving feedback on those points to the management?

What the institutional investors requested in their interactions was to make investment for growth. As Nikko
Shanghai in China demonstrated, AP has realized a high market share and created profits in a high-end field.
Given this fact, it is clear that there is potential in other foreign markets for selling AP with Nikko’s technology,
and we should make investments with a sense of urgency—this is what they pointed out. Based on this, weannounced the establishment of thesales base and manufacturing baseof Nikko Thailand in a short periodof time.
Another point made by investors is
why we cannot improve profitability
even th ou gh we have a 7 0 % AP
market share in Japan. This is linked
to the low margin of the core APrelated business and it is difficult
to ask customers to raise price forthe same plant, so I have told theinvestors that we would try various
m ea ns to rais e p rices . H oweve r,even if we win an order for VP (also
for the purpose of building a trackrecord) at a price that is cost plusalpha, there were many money-losing
cases where we could not build themat the planned cost. Going forward,
we will strive not to repeat the same
mistakes in VP manufacturing andboost margin. The management has
full understanding of the content
of the dialogues with institutional
investors.

Nikko Corporate Report 2 0 2 0 44

LEADERSHIP
GOVERNANCE
LEADERSHIP&&
GOVERNANCE

Corporate Governance

Governance structure and decision-making bodies

Reasons for appointing outside directors and outside officers

Nikko positions corporate governance as “ the management governance function for maximizing corporate
value for our shareholders and other stakeholders.” Under the Executive Officer system built upon the
Board of Directors and the Board of Corporate Auditors, we endeavor to clarify management accountability,
speed up business execution, increase the transparency of management decision-making, and strengthen
compliance in order to ensure sound business management.
The Company’s decisions based on the situation of sites are made in an appropriate manner by humanresources who understand and are capable of putting into practice the Nikko Group’s Management
Philosophy. The term of Directors is set as one year to clarify management responsibility, and we haveintroduced the executive officer system to separate the execution and supervision of duties.

Outside officers

Reasons for appointment

Achievements

Outside (Independent)
Director

Nagahara has a high-level track recordin corporate legal af fairs from thespecialist perspec tive as a law yer
and possesses deep insight. He wasa p p ointe d to t h e p ositio n o n t h eexpectation that he would contributeto corporate governance leveraging his
specialist knowledge from a neutral
position.

He attended all of the 13 Board of
Directors Meetings (100% attendancerate) held in the fiscal year underreview and made comments regardingd elib eratio ns as n e cess a r y fro m alawyer’s perspective.

Outside (Independent)
Director

Yu a s a wa s a p p o i nte d o n t h eexpectation that he can reflect his
abundant knowledge and experience,of being engaged many years incorporate management as a directorof an operating company, in Nikko’s
management, and monitor andsu p er vise d ut y exe cutio n fro m a n
independent and objective standpoint.

He attended all of the 13 Board of
Directors Meetings (100% attendancerate) held in the fiscal year underreview and made comments regarding
deliberations as necessary from theperspective of a corporate manager
with broad experience.

Outside Corporate Auditor

Sadakari was appointed on the expectationthat he can reflect his abundant experience,in overall corporate management andbroad knowledge gained in his engagement
in corporate management over many years
at financial institutions and an operatingcompany, in supervising and providing
instructions regarding the legalit y ofmanagement execution from an objective
and neutral standpoint.

Si n ce his a p p o i nt m e nt o n Ju n e 19 ,2019, he attended all of the 10 Boardof Directors Meetings (100% attendancerate) and all of the 9 meetings of the
B oard of Co rp o rate Au dito rs (10 0 %attendance rate) held in the fiscal year
u n d e r re v i e w a n d m a d e co m m e n t s
regarding deliberations as necessary fromthe perspective of corporate manager
with broad experience.

Ota was appointed on expectations that
he can reflect his abundant experience,i n o v e r a l l m a n a g e m e n t a n d b ro a dknowledge gained in his engagement incorporate management over many years
at an operating company, in supervisingand providing instructions regarding thelegality of management execution froman objective and neutral standpoint.

Since his appointment on June 19, 2019,he attended 9 out of the 10 Board of
Directors Meetings (90% attendance rate)
and 8 of the 9 meetings of the Board of
Corporate Auditors (88.9% attendance rate)
held in the fiscal year under review andmade comments regarding deliberations asnecessary from the perspective of corporate
manager with broad experience.

Fukui has been demonstrating highperformance as Certified Public
Accountant and also has deep insightin corporate management, and he
was appointed on the expectationthat he would supervise and provide
instru c tio ns regarding th e legalit yof management execution from an
objective and neutral standpoint.

Since his appointment on June 19, 2019,he attended 9 out of the 10 Board of
Directors Meetings (90% attendance rate)
and 8 out of the 9 meetings of the Boardof Corporate Auditors (88.9% attendancerate) held in the fiscal year underreview and made comments regarding
deliberations as necessary from theexpert perspective of a Certified Public
Accountant.

Noriaki Nagahara● Nikko’s organization and internal control relationship diagram

Ordinary General Shareholders Meeting
Appoint/Dismiss

Appoint/Dismiss

Board of Corporate Auditors
Corporate Auditors
Audit

Audit

Cooperation

Board of Directors Meeting
Directors

Appoint/Dismiss

Accounting Auditor(auditing ﬁrm)

Supervision Appoint/Dismiss

Accounting audit

Tsutomu Yuasa

Cooperation

Cooperation

Representative Director
and PresidentInternal Control Oﬃce
Internal Audit Oﬃce

Various committees
Internal committeeof executives
Directors
and Executive Oﬃcers

Shigeru Sadakari

Various divisions

The main decision-making bodies and the number of their meetings in FY2019 are as follows.

Board of Directors

8 Directors (including 2 Outside Directors) + 4 Corporate
Auditors (including 3 Outside Corporate Auditors)
Chair: Masaru Tsuji (Representative Director and President)

13 meetings

Board of Corporate
Auditors

4 Corporate Auditors Directors(including 3 Outside Corporate Auditors)
Chair: Nobutaka Yasuda (Full-time Corporate Auditor)

10 meetings

Internal Committeeof Executives

6 in-house Directors + 1
Senior Audit & Supervisory Board Member + 5 Executive Officers+ Managers of Internal Control Office and Internal Audit Office
Chair: Masaru Tsuji (Representative Director and President)

24 meetings

Other meetingsand various
committees

45 Nikko Corporate Report 2 0 2 0

Outside (Independent)
Corporate Auditor

Naoki Ota

President and Outside Officers Meeting

Reward and Punishment Committee (Head: Masao Natori)

Subsidiary Management Strategy Liaison Committee

Company-wide Promotion Selection Committee

Compliance Committee (Head: Hiroshi Fujii)(Head: Masao Natori)

Risk Management Committee (Head: Hiroshi Fujii)

Safety and Health Committee (Head: Masao Natori)

Finance Committee (Head: Hiroshi Fujii)

Improvement Activity Committee (Head: Kazuhiro Yamada)Development Technology Committee (Head: Masaru Tsuji)

Tombo-kai Vitalization Committee (Head: Morie Okaaki)

Export Trade Control Committee (Head: Masaru Tsuji)

Product Commercialization Committee of each business

Personnel System Committee (Head: Masao Natori)(Head: General Manager of each business division)

Outside (Independent)
Corporate Auditor

Tsuyoshi Fukui

Nikko Corporate Report 2 0 2 0 46

Corporate Governance

LEADERSHIP & GOVERNANCE

Development of internal control system

Evaluation of effectiveness of Board of Directors

The basic idea of the internal control system is to develop rules as well as to flexibly plan and implement
employee training, and ensure its effectiveness, which has priority. In accordance with the basic policy
regarding internal control, the Group reorganized the Audit Office into the Internal Audit Office to strengthen
audit structure, formulated the compliance rules and basic risk management rules, and established theCompliance Committee and Risk Management Committee.
Subsequently, it divided the Internal Audit Office to the Internal Control Office and Internal Audit Office toclearly separate promotion of internal controls and evaluation function. The Nikko Group will continue toimprove the structure to raise the effectiveness of the internal control system.

The Group conducts a questionnaire survey of its eight Directors and four Corporate Auditors, who compose
the Board of Directors, to verify how the Board of Directors contributes to effective functioning of corporate
governance, to identify issues, and make improvements.

Evaluation items

Development of risk management structure
Risk factors surrounding the management include changes in market environment, product price fluctuations,exchange rate fluctuation, environment, and other regulations regarding products, protection of intellectual
properties, capital investment, and impacts of disasters, wars, terror attacks, strikes, etc. To swiftly copewith these risks, Nikko established the basic risk management rules. The Risk Management Committee
comprehensively recognizes, evaluates, and analyzes risks faced by Nikko and the Nikko Group, deliberates
issues and countermeasures, and reports them to President.
The Company also receives advices and guidance and proposals for improvement from experts including its
corporate lawyers and tax accountants.

2. Composition of Board of Directors (3 questions)5. Provision of information, training (3 questions)

3. Operation of Board of Directors (5 questions)

6. Other (free description)

It was found that the Board of Directors was operating appropriately overall — it was implementing
management aimed at improving corporate values and having essential discussions upon decision making.
The evaluation score improved from the previous evaluation. Regarding enhancement of discussions at theBoard of Directors meetings, it confirmed that it was exchanging opinions freely and constructively regarding
Nikko’s medium to long term issues, which also reflected the sufficient discussions held regarding the longterm vision and new Medium-Term Management Plan.
Two main issues to be addressed were identified— one being the necessity to develop corporate information
data for achieving the long-term vision and to further deepen the discussions to improve corporate values
based on data regarding the quality of discussions, and another being the need to enhance the opportunities
for training, by external experts, of newly appointed Directors to fulfill their duties regarding information andtraining.
Nikko’s Board of Directors has confirmed that the Group will strengthen initiatives to improve its
effectiveness so as to cope with changes in business and management environment.

Officers’remuneration primarily consists of cash, and the 155th Ordinary General Shareholders’Meeting in2018 approved the allotment of shares with restriction on transfer as share-based compensation and theCompany has been offering part of officers’ remuneration in its own shares. The Officers’ Remuneration
Regulations stipulates the concrete scope of payment depending on rank, and remunerations are paid basedon the stipulation.
The Company will further improve transparency of its remuneration system so as to contribute to continuous
improvement in corporate governance and corporate value and shall pursue reforms to the remuneration
system so as to switch from one based on rank to an incentive-type system.

Key points of the revision of remuneration system (in operation from FY2020)
the share allotment basis from value ofshares to number of shares
If the shares are allotted based on the value of shares,
the number of shares to be allotted declines as thestock price rises, a design wherein the incentive
factor did not fully function. We believe that changing
the basis of allotment to the number of shares anddeciding the number of shares to be allotted every
year will improve the incentive effect as the businessperformance improves and the stock price rises.

4. Quality of discussions at Board of Directors Meetings (6 questions)

Overview of analysis and evaluation results

Officers’remuneration● Changed

1. Overall evaluation of Board of Directors (8 questions)● Strengthening

the link between officers’ bonus
and management indicators
We believe that the incentive for improving businessp er fo rmance an d achieving management pl ans
would increase as we introduce officers’ bonus
calculation standard of (i) evaluation of achievementof consolidated net income and (ii) evaluation ofachievement of management plan and decide theamount of markup based on rate of achievement
based on the evaluation.

● Status of reducing strategically-held shares● Dialogues with shareholders and investors

The Board of Directors annually examines whether or not
to continue holding strategically-held shares and facilitates
the gradual sales of the shares if it determines that
there is no rationale to keep holding them. To make thisdecision, the Board looks into the purpose of holding theshares, their risks, Nikko’s relationship with the issuers,
and capital cost.
In the last three years, we sold a total of 19 issues at
a total value of 1.32 billion yen. We aim to further sellshares worth approximately 600 million yen in the next
three years.

We p ositi o n t h e b u ild i n g o f lo n g- te rm , t rusti n g
relationships with our shareholders and investors as animportant management issue. We proactively work on
improving constructive dialogues through the appropriate
information disclosure in both Japanese and English andregular information dissemination by our management
staf f. T h e o pinio ns of o u r Japan ese an d overseas
shareholders and investors we have learned throughmeetings with them are reported to the Board of Directors
and shared with relevant sections to reflect them in ourmanagement decisions and reports for investors.

● Status of reducing strategically-held shares (In million yen)

● Shareholder/investor dialogues

FY2017●Total remuneration amount by officer rank

Officer ranks
Directors

Total amount of
remuneration(million yen)

Total amount of all types of remuneration (million yen)Fixed compensation Performance-linked
compensation

Retirement
allowance

Number ofentitled officers(people)

154

128

25

−

6

(excluding Outside Corporate Auditors)

20

18

2

−

1

Outside officers

27

25

2

−

5

(excluding Outside Directors)

Corporate Auditors

47 Nikko Corporate Report 2 0 2 0FY2018FY2018FY2019FY2019Number of
eventsNumber ofparticipants

Number of
eventsNumber ofparticipants

Financial Results
Briefing Sessions

4

58

4

69

Event types

Number ofshares sold

7 (5)

6 (1)

6 (2)

Amount sold

405

194

720

Individual meetings

12

15

23

28

Book value

221

106

272

Small groupmeetings by Nikko

1

6

2

8

448

Ordinary General
Shareholders’ Meeting1

43/713

1

53/791Gain on sales

184

88

( ) denotes the number of shares that have been completely sold off.

(attendance in person/attendance in writing)Nikko Corporate Report 2 0 2 0 48

Nikko’s Governance in Corporate Auditors’ View

LEADERSHIP & GOVERNANCE

Corporate Auditors Roundtable Talk
We interviewed the four Corporate Auditors, who audit the Boardof Directors supervising execution of business and are the last
bastion of Nikko Group, on independence and eﬀectiveness of theBoard of Directors, improvement of internal control and audit
activities, and Corporate Philosophy and internal control.

important to have them gain experiencein their career paths and increase female
human resources who are management
candidates.
If the Company has yet to develop a
support system for them, I would like it toreview it.
Ota: This is my actual feeling based on
my experience of working in
manufacturing outside Japan for long: it isimportant to succeed in the businessupon understanding the climate andculture of the country where the company
made a foray into. The first step in that is
to accept diversity.

Shigeru Sadakari(Outside Corporate Auditor)●

Naoki Ota

(Outside Corporate Auditor)(Outside Corporate Auditor)

Nobutaka Yasuda(Full-time Corporate Auditor)

Date of the talk: August 6, 2020 ● Location: Conference room at the head oﬃce (Akashi City, Hyogo Prefecture)*The talk session was held in a large conference room under full infection control.

Board of Directors
independence and eﬀectivenessYasuda: Today, we, the three Outside
Corporate Auditors and myself, Yasuda,would like to discuss Nikko s governanceand internal control. Nikko is a Company
with Board of Corporate Auditors. Whatdo you think of Nikko s governanceformat from the Outside Corporate
Auditor s view?
Sadakari: T h e v i e w p o i n t s r e g a r d i n gmonitoring of duty execution are
different between Directors andCorporate Auditors. Regarding thequality of audit, I feel that the
double-layer structure of Board of
Directors and Board of Corporate
Auditors is effective. In the future, there
will be room for reconsideration if thesize of the company expands andbusiness structure becomes broader.
Fukui: I work with various companies
because of my job as a Certified
Public Accountant, and a great
majority of directors also serve as
executive officers and bear the responsibilities for both acceleration
and braking. In a board of directors
where a majority of the directors also
serve as executive officers, thecorporate auditors and the board ofcorporate auditors, which apply thebrakes, play a significant role.
Ota: At Nikko, I feel that the Directors,
who are professionals in executing theirduties, and the Corporate Auditors, whomonitor and supervise the Directors
job execution, are functioning well andthe Board of Directors Meetings haveactive discussions and are operated at agood pace.

49 Nikko Corporate Report 2 0 2 0Tsuyoshi Fukui

Yasuda: In recent years, other companies
are increasingly establishing nominationand compensation committees, which are
optional, and are having outside oﬃcers
involved to improve independence of theboard of directors. We are also
considering introducing such a committee
and what are your thoughts about this?

Fukui: I am paying attention to whether
the president embodies the control
environment, which is the core element ofinternal control. Unless the top creates anatmosphere that conveys the importanceof a highly transparent and soundoperation, eﬀectiveness cannot be
guaranteed.

Sadakari: For a nomination and compensation committee to function, it isnecessary to oﬀer personnel information
regarding executive candidates tooutside oﬃcers, and improve thetransparency of the evaluation system,
which is the premise for deciding
co m p ens at i o n . Es t a b l i s h m e n t o f t h ecommittee could accelerate developmentof such a system, so it requires morediscussions.

Sadakari: In the previous ﬁscal year,
President Tsuji and we, three Outside
Corporate Auditors, were newly
appointed and the discussions might nothave had enough depth. This year, we are
two years into our jobs and I am hopingthat our discussions will go deeper.

Fukui: Five outside oﬃcers attend Nikko s
Board of Directors Meeting and their ratio
is above 40%. If internal promotion is thepremise, all executive candidates will
come under strict scrutiny from outside
and Nikko has established a culture thatfacilitate outside oﬃcers to voice theiropinions. At the same time, I feel that weneed to devise ways to have thestakeholders understand the actual
situation.
Yasuda: Nikko has been striving toproactively bring out the opinions ofoutside oﬃcers through regular meetingsof the president and the ﬁve outsideoﬃcers. How do you feel about this, after
having attending the meetings so far?
Ota: When I look at a company, I place
importance on the humanity of therepresentative director. In that sense,
having opportunities to closely exchange
opinions with the president is very
valuable.

Yasuda: In addition to independence, theBoard of Directors also requires diversity. I
recognize that Nikko is not satisﬁed withthe current situation either, and that it isnecessary for the Company to move on to
the next step. What are your views on this?
Fukui: Diversity is indispensable in adecision-making body. Diversity is
ﬂexibility, and the best management
judgment is possible only when you
multiply the superior qualities of eachmember. The Company has madeprogress in diversity in terms of skills, andI am expecting that it will work on
ensuring diversity such as gender,
nationality, and age from a medium- tolong-term perspective.
Sadakari: Nikko has built a track record in
China and has made its foray into
Thailand. It is necessary for the Company
to develop overseas markets further for
its growth. The Company needs good
local managers in order to maintain asense of togetherness with local
employees working in these countries.
Appointment of women also should not
be merely for satisfying the quota. It is

Yasuda: Thank you for pointing them out.
Nikko carries out a self-evaluationquestionnaire survey to improve theeffectiveness of the Board of Directors.
Please share your opinions regarding
ensuring the effectiveness.
Ota: The core element of the effectiveness of the Board of Directors iswhether or not the process for making
management decision is managed well. A
third-party committee is installed at anorganization where misconduct occurredand it scrutinizes the content of thedeliberations leading to the resolution. I
make conscious efforts to take part indeliberations from the perspective ofwhether or not they can withstand anafter-the-fact verification.
Sadakari: In verification of evaluation
results, it should not be limited towhether or not the score improved fromlast time, instead it is necessary toconfirm the countermeasures taken
regarding the identified issues. I would
like to deepen the discussions at the
President and Outside Officers Meetingscheduled in September.
Fukui: I am afraid that my understanding
may not be deep enough given the factthat this is my first year, but at the sametime I feel that I was probably able toevaluate from a fresh perspective. There
are fewer restraints on outside officers, so
I feel that we can make contributions toimproving the effectiveness by answering
the questionnaire without holding back.

Improvement of internal control
and audit activities
Yasuda: Thank you for your opinions. We
are looking forward to your honest views
regarding the issues identified in the
self-evaluation questionnaire survey at thenext President and Outside Officers
Meeting. Next, I would like to ask about
the role of auditors expected by theshareholders and other stakeholders.
Sadakari: Corporate Auditors assume
defensive governance, and I feel that thecorporate culture of Nikko is good at
defense but has an issue in decisiverisk-taking. I would like to express my
opinions also regarding whether theCompany is making decisive management
judgment from the perspective ofleveraging sound ﬁnancial strength for
future growth.
Ota: The greatest advantage of Outside
Corporate Auditors is that we know thecases of other companies. It would
probably be diﬃcult for internal oﬃcers
alone to be certain whether or not theaudit function is sound. If we can relativize
the audit activities and functions of Nikko
based on our experience at othercompanies till now, we can identify the
weaknesses and issues.
Fukui: I believe that we can fulﬁll soundaudit functions by combining the internal
information, of which Full-time Corporate
Auditor Yasuda has full knowledge, with
the insights from other companies thethree of us with varying careers have.
Yasuda: As a long time employee of Nikko,
I mainly worked in sales departments and I
am conﬁdent about my understanding ofrisks unique to the Company. I ﬁrmly keep inmind that I am expected by the stakeholders to ensure transparency andobjectivity of the management by clearlyreporting everything, including negative
information, to outside oﬃcers who haverestrictions on collecting internal
information. What is your view regarding thethree-pillar audit at Nikko?
Fukui: Full-time Corporate Auditor Yasuda
works side-by-side with the internal audit
divisions and I feel there are no issues interms of information cooperation andcommunication. There are ﬁve or moremeetings every year, where the Accounting Auditor reports to Corporate
Auditors, and we conﬁrm the valuable
information and opinions gained fromon-side audit.
Sadakari: I also agree that the collaboration between internal audit
divisions and Accounting Auditor isfunctioning. If anything, I feel that theInternal Audit Oﬃce and Internal Control
Oﬃce have limited human resources.
Workplaces and positions where humanresources well-versed in internal audit andinternal control can demonstrate theirabilities have been expanding, so I would
also like younger employees to gain
experience in these divisions.
Yasuda: Thank you for your valuable
opinions. After Shanghai, Nikko
established a sales and maintenancesubsidiary and manufacturing subsidiary in
Bangkok. We need to strengthen internal
control and internal audit of overseas
subsidiaries and we are considering
asking Outside Corporate Auditors tocarry out visiting audit of overseas
subsidiaries. What kind of perspectives
are important?

Ota: Most of human resources
dispatched from manufacturers headoﬃces to local subsidiaries are fromsales or manufacturing ﬁelds and are
inexperienced in ﬁnance and accounting, and there are many cases
where they could not identify accounting fraud at local subsidiaries. It is
important that we learn from pastwrongdoings and scandals, and for
expats to report whatever they foundstrange to the internal audit division or
corporate auditors of the head oﬃce
early on.
Fukui: Internal control of overseas
subsidiaries is vulnerable. It is necessarythat the internal audit division, accounting
auditor, and board of corporate auditors
closely work together on the assumptionthat the head oﬃce s control would notreach there. The Company should
thoroughly audit them even if it incurs acertain cost.

Corporate Philosophy andinternal control
Yasuda: Nikko s Corporate Charterstipulates the Code of Conduct, which calls
for all oﬃcers and employees to win deep
trust of all stakeholders and fulﬁll social
responsibilities. What are your thoughts on
instilling the Corporate Philosophy andimprovement of internal control?
Sadakari: I think the Corporate Chartershowcases the wisdom of the predecessors at Nikko and it is in a good
shape. What is important is whether or
not it incorporates the spirit that fraudcannot be tolerated for the Company tobe recognized by the society.
Fukui: Actions of autonomous individuals
build social trust for the Nikko Group andthere is a strong tie between instilling the
Corporate Philosophy and improvement ineﬀectiveness of internal control.
Ota: When you are asked to choose
between proﬁt and compliance, it isimportant to have a corporate culture thatclearly answers compliance. At many
companies that caused scandals, there
were excessive pressure to pursue proﬁt,
so we should learn from the scandals ofother companies and focus on instilling
Nikko s unique Corporate Philosophy and
Code of Conduct.
Yasuda: W e h a d O u t s i d e C o r p o r a t e
Auditors discuss Nikko s governanceand internal control. Many issues
pointed out in the discussions would nothave been identiﬁed from an internal
perspective alone and we have learned
a lot. We will continue to encourage theexecutive side, implement strict audit
and supervision, and respond to the
responsibility placed on us by the
stakeholders. Thank you for yourcooperation today.

Nikko Corporate Report 2 0 2 0 50

Executives

LEADERSHIP & GOVERNANCE

Directors

Corporate Auditors

Takahisa Nishikawa

Masaru Tsuji

Born on March 31, 1959

Born on June 4, 1960

April 1982
June 2007
June 2008
June 2011
June 2012

September 1987 Joined Nikko Co., Ltd.
June 2007 Executive Officer, Nikko Co., Ltd.
June 2008 Director, Nikko Co., Ltd.
June 2011 Managing Director, Nikko Co., Ltd.
April 2015 General Manager of Business Division andTokyo Head Office, Nikko Co., Ltd.
June 2015 Senior Managing Director, Nikko Co., Ltd.
April 2016 General Manager of Business Division, Nikko
Co., Ltd.
April 2019 Representative Director and President, Nikko
Co., Ltd. (current)
April 2019 Internal Control in-charge and General Manager
of Technology Division, Nikko Co., Ltd. (current)

June 2012
April 2019
April 2019

Joined Nikko Co., Ltd.
Executive Officer, Nikko Co., Ltd.
Director, Nikko Co., Ltd.
Managing Director, Nikko Co., Ltd.
Representative Director and President, Nikko
Co., Ltd.
Internal Control in-charge and General
Manager of Technology Division, Nikko Co.,
Ltd.
Representative Director and Chairman, Nikko
Co., Ltd. (current)
Affiliates in-charge and General Manager of
Manufacturing Division, Nikko Co., Ltd. (current)

Shareholding in the Company: 109,500 shares

Shigeru Sadakari

Naoki Ota

Born on September 22, 1957

Born on March 1, 1955

April 1980

April 1979 Joined Nittoseiko Co., Ltd.
February 2009 Representative Director and President, Wacoh
Corporation
March 2011 Director, Nittoseiko Co., Ltd.
March 2013 Director and Manager of Fasteners Business
Department, Nittoseiko Co., Ltd.
March 2016 Full-time Auditor, Nittoseiko Co., Ltd. (current)(Outside Corporate Auditor)

April 2010
May 2011
April 2013
June 2015
June 2016

Shareholding in the Company: 91,500 shares(Outside/Independent Corporate Auditor)

Joined Taiyo-Kobe Bank Limited(current Sumitomo Mitsui Banking Corporation)
Executive Officer and Manager of Internal
Audit Department, Sumitomo Mitsui Banking
Corporation
Managing Executive Officer, The Minato Bank, Ltd.
Senior Representative Managing Director andSenior Managing Executive Officer, The Minato
Bank, Ltd.
Representative Director and Vice President,
Kobe Tochi Tatemono Co., Ltd.
Representative Director and President, Kobe
Maintenance of Building Co., Ltd. (current)<Important concurrent position>
Full-time Auditor, Nittoseiko Co., Ltd.
Shareholding in the Company: None

Shareholding in the Company: None

Hiroyuki Sakurai

Hiroshi Fujii

Born on September 27, 1961

Born on January 16, 1959

April 1985
June 2007
June 2008
June 2013

April 1982

June 2015
June 2015

April 2016

April 2018
June 2018

Joined Nikko Co., Ltd.
Executive Officer, Nikko Co., Ltd.
Director, Nikko Co., Ltd.
Manager of Corporate Planning Department andGeneral Affairs Department, Nikko Co., Ltd.
Managing Director of Nikko Co., Ltd. (current)
Deputy General Manager of Business Division(in charge of overseas), Manager of International
Business Department, and General Manager ofOperations Division, Nikko Co., Ltd.
Deputy General Manager of Business Division,
Manager of International Business Department, andCorporate Planning and General Affairs in-charge,
Nikko Co., Ltd.
Corporate Planning and General Affairs in-charge,
Nikko Co., Ltd.
General Manager of Corporate Planning Division,
Nikko Co., Ltd. (current)<Important concurrent position>
Chairman, Nikko (Shanghai) Construction MachineryCo., Ltd.
Shareholding in the Company: 78,000 shares

June 2003
April 2009
June 2011
June 2011
June 2013
June 2015
June 2018
June 2018
April 2020

Tsuyoshi Fukui

Nobutaka Yasuda

Born on July 24, 1965

Born on September 27, 1959

October 1991

April 1982
June 2011
January 2012
June 2013
April 2014
April 2016
June 2016
June 2019(Outside/Independent Corporate Auditor)

Joined Taiyo-Kobe Bank Limited(current Sumitomo Mitsui Banking Corporation)
Manager of Tsukiji Corporate Sales Department,
Taiyo-Kobe Bank Limited
Manager of Kansai Corporate Solution Sales
Department, SMBC Consulting Co., Ltd.
Director, Nikko Co., Ltd.
Manager of Financial Department, Nikko Co., Ltd.
Manager of Financial Department and Information
Center in-charge, Nikko Co., Ltd.
Manager of Financial Department and Legal Affairs
and Information Center in-charge, Nikko Co., Ltd.
Managing Director of Nikko Co., Ltd. (current)
General Manager of Financial Division of Nikko Co., Ltd.
General Manager of Financial Division and Security
Export Control in-charge, Nikko Co., Ltd. (current)

August 1995
April 2018

(full-time)

Joined the Kobe Office ofCentury Audit Corporation(currently Ernst & Young ShinNihon LLC).
Certified as Certified Public Accountant ofJapan.
Joined the Kobe Office of RSM Seiwa (current).

Shareholding in the Company: None

Joined Nikko Co., Ltd.
Executive Officer, Nikko Co., Ltd.
Manager of Batching Plant (BP) Business
Department, Nikko Co., Ltd.
Manager of Business Planning Department,
Nikko Co., Ltd.
General Manager of the Tokyo Head Office andManager of Business Planning Department
Internal Control in-charge
Corporate Auditors
Standing Corporate Auditor, Nikko Co., Ltd. (fulltime) (current)
Shareholding in the Company: 37,000 shares<Important concurrent position>
Representative Director and President, Nikko Kosan
Co., Ltd.
Representative Director, Nikko Baumaschinen GmbH
Shareholding in the Company: 53,500 shares

Executive Officer

Toshifumi Kinugasa
Born on October 26, 1960
April 1984
June 2007
October 2008
April 2010
June 2012
June 2012
April 2013
April 2019

Joined Nikko Co., Ltd.
Executive Officer, Nikko Co., Ltd.
Manager of Engineering Department, Nikko Co., Ltd.
Manager of Design Department, Technology
Division, Nikko Co., Ltd.
Director, Nikko Co., Ltd. (current)
General Manager of Manufacturing Division andHead Office Factory Manager, Nikko Co., Ltd.
General Manager of Manufacturing Division, Nikko
Co., Ltd.
Director of Techno Center, Nikko Co., Ltd. (current)<Important concurrent position>
Representative Director and President, Tombo Industry
Co., Ltd.
Shareholding in the Company: 63,000 shares

Tsutomu Yuasa(Outside/ Independent Director)

Born on June 27, 1946
April 1970
April 2002
July 2002
July 2005
July 2008
July 2014
June 2016

Joined Matsushita Electric Industrial Co., Ltd.
(currently Panasonic Corporation)
Joined Rock Field Co., Ltd.
Director, Rock Field Co., Ltd.
Managing Director, Rock Field Co., Ltd.
Senior Representative Managing Director, RockField Co., Ltd.
Vice-Chairman of the Board of Directors, RockField Co., Ltd.
Outside Director, Nikko Co., Ltd. (current)

Shareholding in the Company: 5,000 shares

Noriaki Nagahara(Outside/Independent Director)

Born on July 18, 1951
April 1984
October 1988
January 2007
June 2007
June 2015

Certified as an attorney andjoined Harada Law OfficeSucceeded Harada Law Office
Established Kobe Jugobankan Law Firm andbecame Director (current)
Outside Corporate Auditor, Nikko Co., Ltd.
Outside Director, Nikko Co., Ltd. (current)<Important concurrent position>
Director, Kobe Jugobankan Law Firm
Shareholding in the Company: None

Tomomi Nakayama

Minoru Tanaka,

Masao Natori,
Executive Officer

Executive Officer

Born on December 18, 1960

Born on May 22, 1961

Born on November 2, 1963

April 1981 Joined Nikko Co., Ltd.
October 2007 Branch Manager of Tohoku Branch, Nikko Co., Ltd.
April 2010 Director of Tokyo Service Center, Nikko Co., Ltd.
January 2011 Director of Tokyo Service Center,
Leader of Planning Group, and Leader of Parts
Group, Nikko Co., Ltd.
June 2012 Executive Officer and Manager of Service Planning
Department, Nikko Co., Ltd.
Executive Officer and Manager of Service Planning
Department, Director of Customer Support Center,and Leader of Solution Team, Nikko Co., Ltd.
April 2013 Executive Officer and Manager of Service Planning
Department, and Director of Customer Support
Center, Nikko Co., Ltd.
April 2018 Executive Officer and Manager of Service Planning
Department, Nikko Co., Ltd.
June 2019 Senior Executive Officer and Manager of Service
Planning Department, Nikko Co., Ltd. (current)

April 1984
November 2007
June 2008
April 2010

April 1986
April 2004
January 2007
April 2009

Takeshi Sone,

Kazuhiro Yamada,Senior Executive Officer

April 2012
June 2012
April 2016
June 2019
March 2020

Joined Nikko Co., Ltd.
Director of R&D Center, Nikko Co., Ltd.
Executive Officer and Director of R&D Center, Nikko Co., Ltd.
Executive Officer and Manager of Engineering
Department, Nikko Co., Ltd.
Manager of Engineering Department and Manager of
Cost Management Department, Nikko Co., Ltd.
Executive Officer, Deputy General Manager ofTechnology Division, and Manager of Technology
Department, Nikko Co., Ltd.
Executive Officer, Manager of Corporate Planning
Department, Manager of General Affairs Department, andManager of Cost Management Department, Nikko Co., Ltd.
Executive Officer, Manager of General Affairs
Department, and Manager of Cost Management
Department, Nikko Co., Ltd.
Executive Officer, Manager of Corporate Planning
Department, Manager of General Affairs Department, andManager of Cost Management Department, Nikko Co., Ltd. (current)

Morie Okaaki,

April 2010

July 2013
April 2016

June 2016

April 2017

Born on January 10, 1963
April 1982
January 2011
April 2013
July 2013
June 2015
June 2015
April 2016
April 2018

April 2019

June 2019

Joined Nikko Co., Ltd.
Branch Manager of Chubu Branch, Nikko Co., Ltd.
Manager of AP Sales Department, Tokyo Head Office,Nikko Co., Ltd.
Manager of Asphalt Plant Sales Management Department,
Tokyo Head Office, Nikko Co., Ltd.
Executive Officer, Nikko Co., Ltd. (current)Manager of Business Planning Department, Business
Division and Manager of Asphalt Plant Sales Management
Department, Tokyo Head Office, Nikko Co., Ltd.
Manager of Business Planning Department, Business Division,
Manager of Asphalt Plant Sales Management Department,
and Director of AP Technology Center, Nikko Co., Ltd.
Manager of Business Planning Department, Business
Division, Manager of Asphalt Plant Sales Management
Department, Director of AP Technology Center, andManager of Mobile Plant Business Department, Nikko Co., Ltd.
General Manager of Business Division, Manager ofBusiness Planning Department, and Manager of Asphalt
Plant Sales Management Department, Nikko Co., Ltd.
(current)
Director, Nikko Co., Ltd. (current)

Executive Officer

April 2019

Joined Nikko Co., Ltd.
Manager of Kitakanto Sales Office, Nikko Co., Ltd.
Manager of BP Business Department, Nikko Co., Ltd.
Manager of BP Business Department and Business
Expansion Promotion Team, Nikko Co., Ltd.
Manager of BP Business Department, andConveyance & Environmental Business Department,
Special Environment Sales Section, Conveyance Sales
Department, Nikko Co., Ltd.
Manager of BP Sales Management Department, Nikko Co., Ltd.
Manager of BP Sales Management Department, Manager
of Industrial Machinery Sales Management Department,
and Director of Industrial Machinery Technology Center,
Nikko Co., Ltd.
Executive Officer, Manager of BP Sales Management
Department, Manager of Industrial Machinery SalesManagement Department, and Director of Industrial
Machinery Technology Center, Nikko Co., Ltd.
Executive Officer, Manager of Industrial Machinery SalesManagement Department, and Director of Industrial
Machinery Technology Center, Nikko Co., Ltd.
Executive Officer and Manager of Industrial Machinery
Sales Management Department, Nikko Co., Ltd. (current)

Executive Officer

Born on February 25, 1970

Born on December 16, 1970

April 1990 Joined Nikko Co., Ltd.
June 2012 Director of Tokyo Service Center, Nikko Co., Ltd.
October 2013 Director of Tokyo Service Center andDirector of Wangan Service Station, Nikko Co., Ltd.
April 2015 Deputy Manager of Service Planning Department
and Director of TSC Center, Nikko Co., Ltd.
April 2016 Branch Manager of Chubu Branch, Nikko Co., Ltd.
April 2018 Branch Manager of Kanto Branch, Nikko Co., Ltd.
April 2019 Branch Manager of Kanto Branch and Manager ofMobile Plant Business Department, Nikko Co., Ltd.
June 2019 Executive Officer, Branch Manager of Kanto Branch,and Manager of Mobile Plant Business Department,
Nikko Co., Ltd. (current)

April 1995
April 2008
April 2008
April 2019

Joined Nikko Co., Ltd.
Promoted to managerial position in Business Development Promotion Office, Nikko, Co., Ltd.
(Transfer) Representative Director and President, Maekawa Kogyosho Co., Ltd.
Manufacturing Division Head Office Factory Manager, Nikko Co., Ltd., and Representative Director and President,
Maekawa Kogyosho Co., Ltd.
October 2019 Manufacturing Division Head Office Factory Manager, General Manager of Manufacturing Technology Office,Nikko Co., Ltd., and Representative Director and President, Maekawa Kogyosho Co., Ltd.
April 2020 Manufacturing Division Head Office Factory Manager, General Manager of Manufacturing Technology Office andQuality Assurance Office, Nikko Co., Ltd., and Representative Director and President, Maekawa Kogyosho Co., Ltd.
June2020 Executive Officer, Manufacturing Division Head Office Factory Manager, General Manager of Manufacturing
Technology Office and Quality Assurance Office, Nikko Co., Ltd., and Representative Director and President,
Maekawa Kogyosho Co., Ltd. (current)

Shareholding in the Company: 32,760 shares

51 Nikko Corporate Report 2 0 2 0

Nikko Corporate Report 2 0 2 0 52

FY 2019 Business Summary and FY 2020 Outlook

DATA & HIGHLIGHT

In FY 2019, the global economy continued to face risks
surrounding the overseas economic conditions including USChina trade war and the Brexit from the EU. In Japan, thedomestic economy as a whole also remained uncertain
partly due to the consumption tax hike on October 1. Amid
deteriorating business confidence, the COVID-19 pandemic
that occurred toward the end of fiscal year completelychanged the economic picture both domestically andinternationally. As a result, the domestic economy marked
even worsened negative growth for the January-March
period. At this point, the end of COVID-19 pandemic is not
yet in sight.
Under these circumstances, the impact of COVID-19 on theconstruction-related industry which is closely related to the
Nikko Group was relatively minor, supported partly by ample
order backlog. We expect that the impact of COVID-19
on the construction-related industry to remain small in the
future; however, we will monitor the future investment trendof our customers more closely than ever before.
In August 2019, Nikko formulated and announced the
New Medium-Term Management Plan (for FY 2019 - 21).
In formulating the New Medium-Term Management Plan,
we first envisioned what the Nikko Group should be in 10
years (our vision) and then set numerical targets that need
to be achieved in the first three years. Specifically, we aim
to increase net sales by about 50% from the current levelto 50 billion yen in 10 years. To achieve this goal, we aim
for net sales of 38 billion yen, and operating income of 3
billion yen in FY 2021. Net sales results for the first year
and the forecast for the second year of the Medium-Term
Management Plan are likely to be close to the targets in
the Plan while operating income will fall slightly short ofachieving our targets in the Plan. The entire staff will work
as one on various measures to increase profitability.
Asphalt plant (AP)-related business, our mainstay, posted a
6.6% increase in net sales over the previous year. Domestic
product sales increased significantly by 34.5% over theprevious year partly due to order backlog while maintenanceservice sales decreased by 8.1%. As for overseas, exports
increased by 5 8 . 5% and net sales in Nikko Shanghai
increased by 8.0% compared to the previous year. On theother hand, growth in net sales in the ASEAN market, which

we position as a strategic market, was sluggish. Please
note that Nikko has changed the method of consolidating
our two overseas subsidiaries including Nikko Shanghai byprovisionally closing their accounts on March 31, which isthe consolidated closing date, from the first quarter of FY
2019. The impact of this change was an increase in net
sales by 43 million yen and a decrease in operating income
by 79 million yen.
Concrete plant (BP)-related business marked a 16 .0 %increase in net sales over the previous year. Both plant
products and maintenance services showed a steadyincrease in net sales by 31.9% and 2.9%, respectively. New
orders received marked a positive growth of an increase of
12.3% in FY 2019, partly due to a high order backlog at the
beginning of the period. The demand for disaster restoration
in western Japan, active investment by the precast concrete
industry, and an increase in demand due to the extensionof the Hokuriku Shinkansen Line, etc. supported the growth.
Domestic ready-mixed concrete prices generally remained
strong.
Environment- and conveyor-related business marked a 5.1%
decrease in net sales over the previous year, of which
environmental product sales decreased by 31.9% with nolarge-scale projects, and conveyor product sales remained
almost unchanged. Operating income increased significantly
by 34.7% over the previous year partly due to an increasein conveyor product prices and a decrease in large-sizedenvironmental products.
In other business, net sales increased strongly by 24.9%. By
product, mobile plant product sales increased by 448.9%,
waterproof board sales increased by 304.7%, temporary
construction material sales increased by 11.5%, and crusher
sales increased by 4.7% compared to the previous year.
Operating income also doubled, posting a 103.2% increase,
due to strong growth in sales of high-margin products.
The result was a 3.3% decrease in new orders received to33.915 billion yen, a 10.6% increase in net sales to 35.151
billion yen, a 43.9% increase in operating income to 2.053
billion yen, and a 18.1% increase in net profit attributable tothe parent to 1.588 billion yen, all compared to the previous
year. Net sales were virtually unchanged with cut-off error
factors of 1.333 billion yen due to COVID-19.

● Net sales by segment● Operating income and operating margin

AP-Related Business
Environment- and Conveyor-Related Business(million yen)
40,00035,00030,00025,00020,00015,00010,000

4,292

4,301

4,133

4,480

BP-Related Business
Other Businesses

5,840

6,000

3,931 4,677 2,634 2,700
2,647
1,944
2,775
4,058
2,853
10,267
9,158 9,400
4,008 2,085 8,577
9,356 9,521
7,893
8,287
2,521 5,889
4,495 2,289

4,719

13,303 15,054 17,258 15,071 17,252 16,580 17,179 16,434 17,518 18,400(million yen)
4,000

3,000

6.0%
4.4%

2,500
2,000

2.2%

4.8%

1,832

5.8%

6.0%

2,103

2,053

2,200

1,427

1,186

0

541

In FY 2020, m a ny u n ce r t a i n t i e s l i n ge r i n t h e gl o b a leconomy due to the COVID-19 pandemic; however, theconstruction-related industry, a key business area for ourgroup, is expected to be driven by solid construction
investment from the government and businesses as
various projects will continue to be carried out. In China,
our major market, Nikko Shanghai is expected to post
about 20% decrease in net sales due to the impact of
COVID-19, and ASEAN markets are also expected to beaffected by COVID-19 and currency depreciation. But still,
we see China as a market where we can take advantageof the technologies we have developed over the years inJapan, as environmental regulations have been tightened
further and recycled mixtures are starting to be used
more widely there. In the ASEAN region, a local sales andservices office was established in Thailand in February

2020, and we will continue to focus our efforts there as
we can expect to reduce costs by having a new factory in
the future.
For the full fiscal year, we expect consolidated net salesof 36.5 billion yen, up 3.8% year on year, consolidated
operating income of 2.2 billion yen, up 7.1%, and a 18.7%
increase in consolidated net income attributable to ownersof parent to 1. 85 billion yen. In addition, the special
dividend from Maeda Road Construction Co., Ltd. will havethe effect of 350 million yen in non-operating income.
Order backlog at the beginning of the period will be
12.219 billion yen, a decrease by 9.1%, year on year.
We plan to pay out dividend of 30 yen per share for thefull year and continue to enhance shareholders returns
with total return ratio of 8 4 . 2%, together with sharebuyback of up to 400 million yen.

Outlook for Each Segment
In FY 2020, for the AP-related business, we expect net
sales to grow by 5.0% year on year to 18.4 billion yen
and operating income to increase by 4.6% to 1.17 billion
yen. For the BP-related business, we expect net sales togrow by 2.6% year on year to 9.4 billion yen, andoperating income to increase by 5.1% to 800 million yen.
We plan to increase revenues and profits in all fourbusinesses. For the environment- and conveyor-related
business, net sales are forecasted to rise 2.5% year on year
to 2.7 billion yen and operating income to rise 1.4% to 570
million yen, and for other business, net sales are forecasted
to rise 2.7% to 6 billion yen and operating income to rise
3.9% to 1.06 billion yen.

● Equity and equity ratio● Free cash ﬂow

Equity(million yen)
50,00070.4％

Equity ratio
69.2％

45,000
66.6％
65.3％

64.9％

30,00025,000

66.4％
66.1％

23,117 23,289

24,353

26,167

27,845 28,528

67.2％

64.7％
29,089 30,286

4,748

5,000
4,000

30,414 30,293

3,000

20,000

3,200

2,000

1,503
873

1,000

15,0000

10,0000(million yen)
6,000

66.3％

1,705
696

1,102
315

-5

-1,0005,000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (ﬁscal year)(estimated)

yen in waterproof boards to purchase land and buildings
for the Kansai factory. Investments and other assets
decreased by 1.196 billion yen, which was attributable tothe active sales of cross-held shares.
T h e n et result of t h e a b ove wa s a re ma rka b leimprovement in free cash flow (FCF) of 3.2 billion yen (FY
2018: -1.239 billion yen). The balance of cash and cash
equivalents at the end of FY 2019 was 12.575 billion yen(FY 2018: 10.3 billion yen).

FY 2020 Estimated Profit and Loss

35,0001,000

0Current assets increased by 2.03 6 billion yen on thebalance sheet at the end of FY 2019 compared to theprevious year. Cash and cash equivalents increased by
2.275 billion yen and inventories increased by 619 million
yen while accounts receivable was 829 million yen.
Property and equipment increased by 855 million yen.
This was due to capital investment of 1.483 billion yen
including investment of 660 million yen in AP- and BPrelated businesses to upgrade production facilities forlabor saving and efficiency improvement, and 229 million

40,000

4.5%
1,944

1,629

Operating margin

5.9% 6.0%

2,249

1,500

500

53 Nikko Corporate Report 2 0 2 0

7.0%

3,500

5,000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (ﬁscal year)(estimated)

Operating income

Financial Situation and Free Cash Flow2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 (ﬁscal year)-2,000-1,2392010 2011 2012 2013 2014 2015 2016 2017 2018 2019 (ﬁscal year)

Nikko Corporate Report 2 0 2 0 54

Financial Indicators of the Past 10 Years

Key results

Segment
results

Net salesby business

Operatingincome(loss)

OrdersFinancial
position

Dividends

Capitalinvestment,
etc.

2011

2012

2013

2014

2015

2016

2017

2018

2019(fiscal year)(million yen)

23,80324,55327,08732,07330,707

34,11032,71735,114

31,78035,151

Cost of sales(million yen)

17,976

18,59020,17523,736

22,68325,825

24,131

26,301

23,48525,512Gross proﬁt(million yen)

5,827

5,962

6,911

8,337

8,024

8,285

8,586

8,812

8,295

9,639

Selling, general and administrative expenses (million yen)

5,356

5,420

5,725

6,087

6,192

6,655

6,641

6,708

6,868

7,585

Operating income(million yen)

470

541

1,186

2,249

1,832

1,629

1,944

2,103

1,427

2,053

Ordinary income(million yen)

812

621

1,108

1,982

1,582

1,648

1,993

2,239

1,576

2,142

Net income before income taxes(million yen)

817

542

1,228

1,987

1,800

2,940

1,878

2,299

1,933

2,440

Net income attributable to owners of parent (million yen)

461

122

881

888

1,348

1,896

1,340

1,490

1,345

1,588

10.99

2.92

21.01

21.18

32.17

45.24

34.3

38.7

35.1

41.2

Number of consolidated subsidiaries

9

9

8

8

8

8

8

8

8

9

Number of aﬃliates accounted for using equity method

1

2

2

2

1

ー

ー

ー

ー

ー

(yen)

Operating margin

（％）

2.0

2.2

4.4

7.0

6.0

4.8

5.9

6.0

4.5

5.8

ROA

（％）

1.4

0.3

2.4

2.2

3.2

4.4

3.0

3.3

3.1

3.5

ROE

（％）

2.0

0.5

3.6

3.4

4.8

6.6

4.6

4.9

4.4

5.2

Japan

(million yen)

21,16922,464

24,82329,403

27,881

31,13029,761

31,14827,941

30,761

Overseas(million yen)

2,633

2,088

2,263

2,669

2,825

2,980

2,956

3,965

3,838

4,390

China

(million yen)

1,892

1,812

1,752

1,684

2,072

2,220

2,026

3,389

3,357

3,637

Other

(million yen)

740

276

510

984

753

760

930

576

481

1,083

Ratio of net sales outside Japan

（％）

11.1

8.5

8.4

8.3

9.2

8.7

9.0

11.3

12.1

12.5

Asphalt Plant-Related Business(million yen)

13,75013,303

15,054

17,25815,071

17,252

16,58017,17916,434

17,518Concrete Plant-Related Business(million yen)

4,840

4,719

5,889

8,577

8,287

10,267

9,356

9,521

7,893

9,158

Environment- and Conveyor-Related Business (million yen)

1,911

2,521

2,085

1,944

2,853

2,289

2,647

3,931

2,775

2,634

Other Businesses(million yen)

3,301

4,008

4,058

4,292

4,495

4,301

4,133

4,480

4,677

5,840

Asphalt Plant-Related Business(million yen)

1,354

896

1,492

2,125

1,214

1,234

1,253

1,348

963

1,118

Concrete Plant-Related Business(million yen)

△ 156

△ 39

317

678

712

878

1,006

1,015

666

761

Environment- and Conveyor-Related Business (million yen)

203

530

250

166

527

337

369

308

417

562

Other Businesses(million yen)Amount after elimination oftransactions between segments

△2

△7

59

388

451

277

417

462

502

1,020

(million yen)

△ 193

ー

ー

ー

ー

ー

ー

ー

ー

ー

Corporate expenses(million yen)

△ 734

△ 838

△ 933

△ 1,109△ 1,074△ 1,097△ 1,102△ 1,031△ 1,122△ 1,409

Total new orders received(million yen)

22,743

26,16926,56433,91534,50033,284

34,13433,61635,10333,915

Total order backlog(million yen)

4,316

5,933

5,410

7,246

11,03910,212

11,62910,132

13,454

12,219Total assets(million yen)

32,85834,98937,27840,34841,964

43,18944,97644,87643,96945,677

Equity(million yen)

23,11723,28924,353

26,167

27,84528,52829,08930,28630,41430,293

Interest-bearing debts(million yen)

2,948

2,840

2,849

2,212

2,206

2,362

1,987

1,799

1,718

1,787

Equity ratio

（％）

70.4

66.6

65.3

64.9

66.4

66.1

64.7

67.2

69.2

66.3

Net assets per share(yen)

550.87555.16580.88624.23664.35680.71

749.27791.16793.76780.68Dividend per share

(yen)

6

6

7

7

9

10

11

12

12

40

(million yen)

251

251

293

293

376

418

426

458

459

1,550

Dividend payout ratio

（％）

54.6

205.4

33.3

33.1

27.9

22.0

31.9

30.8

34.2

97.6

Dividend on equity

（％）

1.1

1.1

1.2

1.1

1.4

1.5

1.5

1.5

1.5

5.1

Capital investment(million yen)

492

292

335

844

815

877

1,261

550

1,889

1,483

Depreciation and amortization(million yen)

486

432

389

392

419

483

478

468

508

611

R&D expenses(million yen)

211

239

256

295

276

227

271

291

211

379

（％）

0.89

0.97

0.95

0.92

0.90

0.67

0.83

0.83

0.66

1.08

Total dividend

R&D expenses to net sales

Cash ﬂows

2010
Net sales

Net income per share

Proﬁtability

DATA & HIGHLIGHT

Cash ﬂow from operating activities(million yen)

890

574

2,457

2,641

1,001

△ 1,040

5,064

274

△ 218

3,839

Cash ﬂow from investing activities(million yen)

△ 895

299

△ 954

△ 936

△ 305

2,142

△ 316

41

△ 1,021△ 639

Free cash ﬂow(million yen)

△5

873

1,503

1,705

696

1,102

4,748

315

△ 1,239

3,200

Term-end balance of cash and cash equivalents (million yen)

6,078

6,618

7,839

8,506

8,796

9,630

12,622

12,11010,30012,57555 Nikko Corporate Report 2 0 2 0

Nikko Corporate Report 2 0 2 0 56

Financial Data

DATA & HIGHLIGHT

Consolidated Balance Sheets
Assets(million yen)

2018

2019(fiscal year)

Current assets

Liabilities

2018

Consolidated Statements of Income

2019(fiscal year)

Current liabilities(million yen)

2018

2019

Net sales

31,78035,151

Cash and cash equivalents

10,347

12,622

Notes and accounts payable-trade

2,270

2,430

Cost of sales

23,48525,512

Notes and accounts receivable-trade

10,731

9,902

Electronically recorded obligations

938

1,176

Gross proﬁt

8,295

9,639

Electronically recorded monetary claims

1,628

1,709

Accounts payable-factoring

2,391

3,427

Selling, general and administrative expenses

6,868

7,585

Merchandise and ﬁnished goods

1,190

935

Short-term loans payable

1,532

1,548

Operating income

1,427

2,053

Work in process and partly-ﬁnished construction

3,903

4,473

Income taxes payable

421

627

Non-operating income

Raw materials and supplies

933

1,237

Accounts payable-other

630

538

Interest income

Consumption taxes receivable

209−

Provision for bonuses

412

415

Dividends income

Other business

453

560

Provision for directors' bonuses

52

65

Allowance for doubtful accounts

△7

△14

Provision for loss on order received

35

54

29,39031,426

2,095

2,260

10,781

12,545

Total current assets

Total current liabilities

Non-current assets
Property and equipment
Buildings and structures (net)
Machinery, equipment and vehicles (net)Other business

2

2

157

139

Insurance income

731

Other business

75

63

243

236

40

46

Total non-operating income
Non-operating expenses
Interest expenses

Long-term liabilities

3,216

3,495

Long-term loans payable

186

239

609

817

Deferred tax liabilities

98

5

Loss on sales of securities

3−

Loss on disposal of non-current assets

2

22

361

353

Provision for directors' retirement beneﬁts

135

145

Foreign exchange losses

7

36

2,216

2,472

Retirement beneﬁt-related liabilities

2,010

2,089

Compensation for damage

30

24

Lease assets (net)

−

2

342

358

Right-of-use assets (net)

−

68

2,773

2,838

Construction in progress

102

152

13,554

15,383

6,507

7,362

Other business

418

431

Total intangible assets

418

431

Tools, furniture and ﬁxtures (net)Land

Total property, plant and equipment

Other businessTotal non-current liabilities
Total liabilities

Other businessTotal non-operating expenses
Ordinary income

8

18

93

147

1,576

2,142

Extraordinary income

409

468

Gain on sales of non-current assets-

23

Insurance proceeds from disaster

-

53

409

545

100 anniversary program cost−

119

Loss on sales of investment securities−

19

Loss on valuation of investment securities−

76

Loss on disaster

8−

Gain on sales of investment securities

Intangible assets

Investments and other assets

Net assets

2018

2019(fiscal year)

Total extraordinary income

Shareholders' equity

Extraordinary loss

Investment securities

5,976

4,341

Capital stock

9,197

9,197

Investments in capital

11

11

Capital surplus

7,808

7,918

6

12

Retained earnings

12,04912,632

576

953

△576

△420

Other business

1,234

1,287

28,47829,328

Allowance for doubtful accounts

△152

△150

Accumulated other comprehensive income

Total investments and other assets

7,652

6,456

Valuation diﬀerence on available-for-sale securities

14,57814,250Foreign currency translation adjustment

163

55

43,96945,677

Accumulated retirement beneﬁt-related adjustment

△238

△235

Total accumulated other comprehensive income

1,935

939

Income taxes-current

651

969

−

25

Income taxes-deferred

△63

△117

Total net assets

30,41430,293

Total income taxes

587

852

Total liabilities and net assets

43,96945,677

Net income

1,345

1,588

Net income attributable to owners of parent

1,345

1,588

Long-term loans receivable
Deferred tax assets

Total non-current assets
Total assets(fiscal year)

Treasury stock
Total shareholders equity

Non-controlling interests

Loss on valuation of investments in capital

2,010

1,119

Impairment loss
Total extraordinary loss
Net income before income taxes

44

−

-

32

53

247

1,933

2,440

Consolidated Statements of Comprehensive Income(million yen)

2018

2019

1,345

1,588

Valuation diﬀerence on available-for-sale securities

△638

△891

Foreign currency translation adjustment

△125

△108

Net income(fiscal year)

Other comprehensive income

Retirement beneﬁt-related adjustment
Total other comprehensive income
Comprehensive income

26

3

△737

△996

607

592

607

592

−

0

(Breakdown)Comprehensive income attributable to owners of the parent
Comprehensive income attributable to non-controlling interests

57 Nikko Corporate Report 2 0 2 0

Nikko Corporate Report 2 0 2 0 58

Financial Data

Stock Information

Consolidated Statements of Cash Flows(million yen)

2018

2019

Cash ﬂow from operating activities
Net income before income taxes

1,933

2,440

Depreciation and amortization

508

611

Impairment loss−

32

Increase (decrease) in allowance for doubtful accounts

7

5

Increase (decrease) in retirement beneﬁt-related adjustment

1682

Increase (decrease) in provision for directors' retirement beneﬁts

14

10

△159

△141

40

46

Interest and dividends income
Interest expenses
Foreign exchange losses (gains)

△1

15

△405

△373

44

−

Loss (gain) on sales of property, plant and equipment−△23

Decrease (increase) in notes and accounts receivable-trade

95

686

△991

△687

△1,008

1,317

−

△53

Loss (gain) on sales and valuation of investment securities
Loss on valuation of investments in capital

Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable-trade
Insurance proceeds from disaster
Other business

73

491

Subtotal

168

4,460

Interest and dividends income received

160

141

Interest expenses paid

△39

△46

−

53

Income taxes paid

△507

△769

Cash ﬂow from operating activities

△218

3,839

△47

△47

Proceeds from insurance income from disaster

DATA & HIGHLIGHT

Major shareholders (top 10)

Stock overview (as of March 31, 2020)

Nikko Trading-Partner Shareholding Association

548

13.70

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

173

4.33

State of issuance Total number of shares authorized for issuance:
150,000,000
Total number of outstanding shares:
40,000,000

Nikko Employees' Shareholding Association

170

4.27

Japan Trustee Services Bank, Ltd. (trust account)

143

3.57

Nikko Co., Ltd.

122

3.07

Sumitomo Mitsui Banking Corporation

120

3.00

Number of share units 100

Nippon Life Insurance Company

85

2.13

Yasumitsu Shigeta

85

2.13

Sumitomo Life Insurance Company

74

1.86

The Hyakujushi Bank, Ltd.

68

1.70

Stock listing

Tokyo Stock Exchange (ﬁrst section)

TSE code

6306(including 1,229,230 treasury shares)

Number of shareholders 7,812
Transfer Agent

Fiscal year

Mitsubishi UFJ Trust and Banking
Corporation
4-5, Marunouchi 1-chome, Chiyoda-ku,
Tokyo 100-8212
From April 1 to March 31

Proceeds from withdrawal of time deposits
Purchase of investment securities
Proceeds from sales and redemption of investment securities

47

47

△11

△11

(Notes) Numbers of shares are rounded down to the nearest 10,000 shares.
● Composition of shareholder types（％）

Ordinary General
June
Shareholders Meeting

39.18

Registration deadline for interim dividend payment : September 30

36.07

834

772
△1,393

Payments of loans receivable△1△8Collection of loans receivable02● Share prices and trading volume in the past 10 years (July 2010 - July 2020)● Stock performance

Other business

5−△1,021△639

Net increase (decrease) in short-term loans payable

83

45

Proceeds from long-term loans payable−

Repayment of long-term loans payable

Cash ﬂows from investing activitie

1 year (3/31/19-3/31/20)

＋27％

TOPIX

−12％

100

Machinery index−13％(Notes) 1. TOPIX: Tokyo Stock Price Index
2. Machinery index: TSE ﬁrst section

△112

△36

Purchase of treasury stock△0△0

Proceeds from stock issuance to non-controlling shareholders−

25

Repayments of ﬁnance lease obligations−△0

Cash dividends paid

△496

△1,002

Cash ﬂows from ﬁnancing activities

△526

△868

Eﬀect of exchange rate changes on cash and cash equivalents

Period held
Nikko

Cash ﬂows from ﬁnancing activities

△43

△55

Net increase (decrease) in cash and cash equivalents△1,8102,275

Cash and cash equivalents at beginning of year

12,11010,300Cash and cash equivalents at end of year

10,30012,575

38.43

39.36

29.25

30.64

29.75

0.97

0.92
16.47

0.42
16.6

46.9

28.03

1.24
1.02
18.43
13.91
18.51 4.54 5.75
9.65
9.23
6.82 3.07
0.68 7.99
4.3
4.21
2018
2015
2016
2017
2019 (ﬁscal year)
Individuals and others
Financial institutions
Financial instruments business operators
Other domestic corporations
Foreign corporations, etc.
Treasury stocks△1,849Purchase of property, plant and equipment and intangible assets

37.6

Registration deadline for year-end dividend payment : March 31

Cash ﬂows from investing activities
Payments into time deposits

Number of shares Shareholding
held (in 10,000)
ratio (%)

Name

（年度）

3 years (3/31/17-3/31/20)

＋51％
−7％
−14％

Nikko share price

Nikko trading volume (yen)
1,000

5 years (3/31/15-3/31/20)

＋38％
−9％
−13％

800

600

400

200
300

(10,000 shares)

2010/759 Nikko Corporate Report 2 0 2 0

2011/7

2012/7

2013/7

2014/7

2015/7

2016/72017/7

2018/7

2019/72020/70

Nikko Corporate Report 2 0 2 0 60

Company Overview and Offices and Sites

Summary of Subsidiaries

DATA & HIGHLIGHT

Company Overview (as of March 31, 2020)
Nikko Electronics Co., Ltd.
Japanese name

日工株式会社

English name

Nikko Co.,Ltd

Head officeaddress

1013-1, Eigashima, Okubo-cho, Akashi,
Hyogo Prefecture 674-8585

Tel.

+81-78-947-3131

Representative

Representative Director and President
Masaru Tsuji

Established

August 13, 1919

Capital9,197 million yen (as of March 31, 2020)

Number of employees(consolidated)

838 (as of March 31, 2020)

Number of factories

11 (including 1 overseas)

BP-Related
26%

Business segments

Asphalt Plant-Related, Concrete Plant-Related,
Environment- and Conveyor-Related, Other*AP: Asphalt plant
BP: (Concrete) batching plant● Net sales breakdown by business segment (FY 2019)

Other business
17%

Environmentand
ConveyorRelated
7%

Manufacture and sale of control systems,
covering processes from circuit designing to
manufacturing of control panels,
switchboards and monitoring panels.

Nikko Machinery Co., Ltd.
35,151 million yen

APRelated
50%

Manufacture and sale of construction
equipment and ﬂooding preventive
equipment, including ﬂoodgates andwaterproof boards.

Nikko Sec Co., Ltd.
Manufacture and sale of temporary
equipment and machinery for construction
work, material handling machines, andcomputer-related equipment.

Service centers/stations
Tokyo service center
Akashi service centerTokyo mobile center
Morioka service station
Wangan service station
Hokuriku service station
Akashi service station
Okayama service station

Factories
Head oﬃce factoryTokyo factory
Sec head oﬃce factory
Machinery head oﬃce factory
Fukusaki factory
Satte factory
Kakogawa factory
Nikko Electronics head oﬃce factory
Maekawa Kogyosho head oﬃce factory
Nikko Shanghai head oﬃce factory
Machinery Kansai factory

Nikko Shanghai
head oﬃce factory

Number of individuals
concurrently holding
position at parent

Number of
employees

Percentage of sales to
Nikko in FY 2019

8

4

93

81.3%

Net sales(million yen)

FY2017FY2018FY2019

1,765

1,765

2,124

Number of
Directors

Number of individuals
concurrently holding
position at parent

Number of
employees

Percentage of sales to
Nikko in FY 2019

6

4

68

35.8%

Net sales(million yen)

FY2017FY2018FY2019

1,510

1,519

1,692

6

3

36

0.1%

Net sales(million yen)

FY2017FY2018722

Number of
Directors

Number of individuals
concurrently holding
position at parent

688
Number of
employees

Percentage of sales to
Nikko in FY 2019

6

4

14

0.4%

Net sales(million yen)

FY2017FY2018415

Number of
Directors

Number of individuals
concurrently holding
position at parent

439
Number of
employees

Percentage of sales to
Nikko in FY 2019

6

5

19

1.5%

Net sales(million yen)

FY2017FY2018Services related to housing renovation,
property insurance agency, life insurance
agent and real estate.

323

Number of
Directors

Number of individuals
concurrently holding
position at parent

471
Number of
employees

Percentage of sales to
Nikko in FY 2019

5

3

16

32.1%

Nikko (Shanghai) Construction
Machinery Co., Ltd.

Net sales(million yen)Group companies
Nikko Electronics Co., Ltd.
Nikko Machinery Co., Ltd.
Nikko Sec Co., Ltd.
Tombo Industry Co., Ltd.
Maekawa Kogyosho Co., Ltd.
Nikko Kosan Co., Ltd.
Nikko (Shanghai) Construction Machinery Co., Ltd.
Nikko Baumaschinen GmbH
Nikko Asia (Thailand) Co.,Ltd.

Number of
Directors

Percentage of sales to
Nikko in FY 2019

Manufacture and sale of crushingplant/equipment, grinders, etc.

Akashi head oﬃce
Hokkaido branch
Tohoku branch
Hoku-shinetsu branch
Kanto branch
Chubu branch
Osaka branchChu-shikoku branch
Kyushu branch
Okinawa branch
Yokohama sales oﬃce
Shikoku sales oﬃce
Minami-kyushu sales oﬃce
Taipei branch

FY20191,727

Number of
employees

Maekawa Kogyosho Co., Ltd.

Branches and sales oﬃces

FY2018

1,669

Number of individuals
concurrently holding
position at parent

Manufacture and sale of soil farming tools
and gardening supplies, including shovels
and scoops, and concrete mixers for mixing
and kneading.

Ochanomizu, Tokyo

FY2017

1,795

Number of
Directors

Tombo Industry Co., Ltd.

Business Division

Net sales(million yen)

Nikko Kosan Co., Ltd.

Manufacture and sale of asphalt/recycling
plants and anti-pollution devices.

61 Nikko Corporate Report 2 0 2 0660

FY2019466

FY2019471

FY2017FY2018FY2019

3,299

3,468

3,756

Number of
Directors

Number of individuals
concurrently holding
position at parent

Number of
employees

Percentage of sales to
Nikko in FY 2019

6

4

105

3.2%

Taipei branch

Nikko Asia (Thailand) Co.,Ltd.

FY2019Number of Directors

Number of individuals
concurrently holding
position at parent

Number of employees

4

3

17

Nikko Corporate Report 2 0 2 0 62

Future creation that starts from an

For inquiries about this report, please contact:

IR Team, Financial Division, Nikko Co., Ltd.
1013-1, Eigashima, Okubo-cho, Akashi, Hyogo Prefecture 674-8585
Tel: +81-78-947-3141
Email：IR-nikko@nikko-net.co.jp
September 2020