Strategy Implementation Status - Business Strategies

Business At a Glance
Net sales

10-year net sales and operating income
Net sales (left axis)(billion yen)

Cement Business(Japan)600

255.7
billion yen

400

Operating income (right axis)

60

397.0
412.1
46.1

200

392.7

33.0

385.0

28.5

29.5

408.5

434.8

415.1

237.4
25.5

21.4

16.6

-20

2014

2015

2016

2017

Net sales (left axis)

20182019 2020 2021 2022

Operating income (right axis)

Cement Business(Overseas)

200
150

158.5

137.9

Mineral Resources
Business

100

25.1

30

22.0

19.8

7.1

6.1

2014

2015

2016

93.8

95.9

10
5

2017

Net sales (left axis)

93.5

2018

2019 2020 2021 2022

2023

Operating income (right axis)

(FY)

10

84.2
82.7
81.4
80.1
77.1
75.7
8.0
7.7
8.2
7.1
6.0
5.5
6.0

8.1

8
6
4

20

2

2014

2015

Environmental
Business

100
80

2017

Net sales (left axis)(billion yen)

120

2016

2018

(FY)

73.4

7.4

(billion yen)

77.9

7.6

7.6

90.2
7.4

92.6
6.6

84.4
7.7

78.0
6.4

72.3
6.6

10

77.9

8

5.8

6

40

4

20

2

0

0

2014

2015

92.6

90.3

(billion yen)

Construction
Materials Business

100

2016

Net sales (left axis)

80
60
40

2017

5.4

5.4

2018

2014

2015

2023

Operating income (right axis)(FY)(billion yen)

10
80.8

6.1

74.0

77.0

2016

82.1

81.3

73.0

65.0

8

68.2

6
6.0

4.7

20
0

2019 2020 2021 2022

2017

2018

4.9

4.5

4
3.5

3.4

2019 2020 2021 2022

2.3
2023

2
(FY)

* The "Accounting Standard for Revenue Recognition" (ASBJ Standard No. 29), etc. was applied from FY2022.

42

0

12
74.7

8.4

2023

Operating income (right axis)

103.4

60

2019 2020 2021 2022

FY2023 Achievements

Based on a solid foundation for manufacturing,transportation and supply, our cement business in Japan
reliably provides cement and ready-mixed concrete to users
nationwide. As well as expanding our product lineup that
includes special cements, blended cement and cementbased soil stabilizers, we are building a sales system that canaccurately respond to changes in construction methods andthe diverse needs of users, such as by deploying user meeting
activities for each industry.

In response to cost increases due to soaring coal prices,
we implemented a price increase of 2,000 yen per tonne forshipments from January 2022 and an additional 3,000 yen per
tonne for shipments from October of the same year. Although the
2,000 yen price increase was achieved in the third quarter, thedelay in the progress of implementing the price increase resulted
in net sales of 255.7 billion yen (an increase of 18.2 billion yen
from the previous fiscal year) and an operating loss of 36.9 billion
yen (a decrease of 35.0 billion yen from the previous fiscal year).

P.44

In the overseas cement business, we produce and sellcement at nine plants in the Pacific Rim, including four on thewest coast of the United States, two in China, and one each in
Vietnam, the Philippines, and Papua New Guinea.* In addition,
we are developing a variety of other businesses, including theexport of cement and clinker and trilateral trade, as well as
increasing our handling of bulk materials.

In the U.S. business, although progress was made in passing
on higher costs to customers, effects were felt from sometechnical issues at plants and other factors. A decrease in sales
volume in the China business due to the effect of COVID-19,
a decrease in export volume from the Vietnam business, andhigher clinker import costs for the Philippine business, resulted in
net sales of 297.3 billion yen (an increase of 71.5 billion yen fromthe previous fiscal year) and operating income of 22.0 billion yen(a decrease of 4.0 billion yen from the previous fiscal year).

P.46

In addition to our main businesses of the aggregatesbusiness that handles products for ready-mixed concrete andour mineral products business that handles products for steel
and chemical manufacturers, the Mineral Resources Businessis also engaged in developing our geo-solutions businessthat processes construction soil and contaminated soil, as wellas the sale of new products developed by the group, such asfunctional hollow particles and ultra-pure silicon carbide.

The aggregates business remained strong, especially in
the Kanto and Chubu regions. In addition, price increases
were implemented in response to various cost increases,
such as electric power and fuel costs, and although they had
partial penetration they could not be fully passed on to prices,which resulted in net sales of 82.7 billion yen (an increase of
5.5 billion yen from the previous fiscal year) and operating
income of 5.5 billion yen (a decrease of 0.4 billion yen from theprevious fiscal year).

P.48

In the Environmental Business, our core business is recycling
waste and by-products generated at thermal power plants,
steelmakers and chemicals manufacturers, as well as recycling
materials such as municipal waste incineration residues
and household water and sewage sludge at the request ofmunicipalities. In recent years we have also been developing
the aquatics business via products such as water purificationmaterials, which also contributes to the formation of a circular
economy.

Sales of calcium carbonate for desulfurization, gypsum andcoal remained strong. On the other hand, the biomass fuelbusiness, which sells PKS (palm kernel shells), was affected byexchange rate fluctuations, resulting in net sales of 77.9 billion
yen (an increase 5.5 billion yen from the previous fiscal year)
and operating income of 5.8 billion yen (a decrease of 0.7
billion yen from the previous fiscal year).

The Construction Materials Business consists of theconstruction materials business, which manufactures and sells
products including premix products, concrete admixtures, ALC(autoclaved lightweight concrete) and interlocking blocks,
and the construction and civil engineering business which is
involved in ground improvement projects, sales of materials
for shield tunnels, and repair and renovation work for concrete
structures.

Although sales of building materials such as ALC remained
strong, the partial failure to pass on the sharp rise in raw
material prices and delays in various construction orders
resulted in net sales of 68.2 billion yen (an increase of 3.1
billion yen from the previous fiscal year) and operating incomeof 2.3 billion yen (a decrease of 1.1 billion yen from theprevious fiscal year).

0(billion yen)

80.1
6.8

20
15

0.2

6.7

25

40

0

billion yen

20.3

213.2

-40

(billion yen)

225.7
26.0

15.1

80
60

211.6

(FY)

9.3

(billion yen)

68.2

203.4
173.8

100

0

billion yen

182.0

2023

297.3

214.8

50

77.9

0

-36.9

250

billion yen

20

16.2

-200

300

82.7

40

255.7

-1.8

(billion yen)billion yen

406.2

0

-400

297.3

(billion yen)

Business Overview

0

P.50

P.52

* Dalian Onoda Cement Co., Ltd. and Jiangnan-Onoda Cement Co., Ltd. ceased operations in December 2022 and February 2023, respectively.

43

Strategy Implementation Status - Business Strategies

Cement Business (Japan)
We aim to achieve a V-shaped
recovery by generating profits
through optimization of
cement prices.
Naoyuki Kira

Managing Executive Officer,
Senior General Manager of
Cement Business Division

Concrete mixer truck (Harumi Onoda Remicon Co., Ltd.)

Profit projections for FY2023 and priceoptimization initiatives

Inheritance of cement business from
Denka Company Limited

Improving logistics efficiency

The future of the domestic cement businessIn response to the sharp rise in coal prices, in October 2022 we
implemented a second increase to cement prices, following theprevious increase in January, and the increase was accepted byalmost all users. Price increases for cement-based soil stabilizers
also steadily penetrated the market in the same manner as thosefor cement. Although we expect the price of coal to be purchased
this fiscal year to settle down, due to remaining inventory from theprevious fiscal year's contracts in the first half of the year, as well as
higher raw material prices, we expect operating income to improveby 44.2 billion yen to 7.3 billion yen. Learning from these priceincreases, we will consider cement price optimization in the next
Medium-Term Management Plan.

In April of this year, we began purchasing cement
produced at Denka Co., Ltd.’s Omi Plant and selling it
under the Taiheiyo Cement brand. Since the company has
decided to withdraw from the cement business in FY2026,
we plan to take over their business by optimizing the
production and supply system within our group. As the
population of Japan is declining and demand for cement
is not expected to recover significantly in the future, as acompany dedicated to the cement industry, we would liketo consider whether there is anything we can do to help,
with an eye to possible business alliances or acquisitions.

In order to respond to the shortage of drivers under therevision of regulation in 2024. we have begun to develop
systems using digital technology for both domestic marine
and land transportation. Until now, ship and truck allocation
has relied heavily on human experience, and the fact that only
veterans are able to perform the work accurately has becomea challenge. The development of a system for vessel and truck
allocation cannot be achieved overnight and requires repeatedtrial and error to improve its accuracy. However, we will continue
to work diligently to improve logistics efficiency, which will also
lead to labor savings and energy cost reductions.

Cement is an indispensable basic material that supports
infrastructure. While we will continue to produce the cement
needed in Japan as a dedicated manufacturer, we will also fulfill
our social responsibility by accepting waste and by-products
as raw materials and fuel for cement production. In order todo so the business must be profitable in order to survive, andwe recognize that the future sales price policy is the mostimportant challenge for the domestic cement business. We will
also actively work to develop the human resources that support
our business and to develop new applications for stabilizers
that will contribute to national resilience.

Cement and stabilizers

Business scheme

Ready-mixed concreteGroup ready-mixed
concrete companies

Domestic cement
production and supply sites
Cement plants: 9
Service stations: 106
Clinker production capacity:
17.64 million tonnes
Cement supply: 17.23 million tonnes

44

Our coastal cement tanker, Hokuyumaru

CementDomestic: 49 companies, 91 plants
Ready-mixed concrete supply: 3.88 million m³

Cement and stabilizers

Supply to Group Construction
Materials Business companies
Related material manufacturers: 3
Concrete product manufacturers: 2
Construction companies: 3

Related materials,
concrete products,
construction

Supply todomestic market• Construction businesses• Ready-mixed concrete manufacturers• Concrete product manufacturers

Expanding the range ofapplications and uses of
cement and concreteStrengths

Challenges

Ability to handle, transport, and supply
special products by utilizing the group's
comprehensive strengthLong-term:
Decrease in domestic demand

Short- to medium-term:
Decrease in demand due to a drop in
consumer confidence

Sales volume
Cement: 13.13 million tonnes
Stabilizers: 2.22 million tonnes

45Strategy Implementation Status - Business Strategies

Cement Business (Overseas)

We Will Steadily Achieve Resultsfrom Our Growth Investmentsin the U.S. and Southeast Asia.
Yoshifumi Taura

Director andSenior Executive Officer,
Senior General Manager ofInternational Business Division

Semen Indonesia Group visiting Taiheiyo Cement

Reconstructing the overseas
business portfolio

Profit forecast for FY2024

Carbon neutrality transitionin overseas business

Human resource development
for overseas businessWe have withdrawn from China where we had been
operating cement businesses since the second half of the
1980s, and have progressed the southward shift of ourbusiness portfolio to Southeast Asia. In addition to the capitaland business alliance with Semen Indonesia Group in 2021,
Taiheiyo Cement Philippines, Inc. has started construction of anew production line and plans to begin commercial operationin May 2024. Furthermore, in the U.S., CalPortland Company's
acquisition of the assets of Martin Marietta Materials, Inc.,
including its cement plants, significantly increased its presenceon the west coast of the U.S., particularly in California.

In the current fiscal year, we will steadily make good on theinvestments made under the 23 Medium-Term Management
Plan. Sales in the U.S. will increase by $194 million due to theeffect of asset acquisitions, and sales in China will decrease by$122 million due to the lack of sales from the current term. As
a result, net sales of our overseas subsidiaries, etc. will increaseby 24.7 billion yen to 322.0 billion yen, and operating income
will increase by 6.7 billion yen to 28.7 billion yen. In the U.S.,in addition to continued strong housing demand, we expect
public investment based on the $1.2 trillion infrastructure
investment bill to be implemented in earnest in the future,
which will lead to strong cement demand.

We will promote energy conservation and the use ofblended cement at our overseas production sites, aimed at thesteady transition to carbon neutrality. CalPortland Company
has switched all of its agitator trucks at its ready-mixed concrete
plants in central Los Angeles to natural gas-powered vehicles,
and Nghi Son Cement Corporation in Vietnam plans to installa waste heat recovery power generation system. Regarding
our initiative to shift to blended cement which can reduce CO2
emissions from cement production, CalPortland Company'splan to expand the sale of its limestone cement and our
TAIHEIYO GREEN CEMENT aimed at the Singapore market havereceived high acclaim. We also plan to double the percentageof blended cement exports from Japan to about 10%.

As our overseas business expands, the governance of theoverseas Group companies will be a challenge. In order todevelop human resources with skills in auditing, business
management and operation, it is essential to send employees
abroad to gain experience early in their careers. At the sametime, we believe that as a truly global company, it is necessary
for us to develop the foreign permanent employees within thegroup and instill the Taiheiyo ethic in them. We will continue todiversify our workforce by actively recruiting foreign permanent
employees at our headquarters.

Business scheme
Cement, Clinker

Domestic cement production
and supply sites
Cement plants: 9
Service stations: 106
Clinker production capacity:
17.64 million tonnes
Cement supply: 17.23 million tonnes

Clinker

CementU.S. Cement Business
Cement production andsupply sites
Cement plants: 4
Distribution terminals: 20
Clinker production capacity:
5.28 million tonnes
Cement supply: 4.26 million tonnes

Cement clinker supply
to the Asia-Paciﬁc market

1.9 million tonnes

Total 11.1 million tonnes
Vietnam 4.8 million tonnes
China 1.9 million tonnes
Philippines 1.5 million tonnes
6 other countries 2.9 million tonnes

8.2 million tonnes

Asia-Paciﬁc Cement Business
Cement production and supply sites
Cement plants: 5
Distribution terminal: 6
Clinker production capacity: 6.96 million tonnes
Cement supply: 5.74 million tonnes

0.6 million tonnes

46

Renovation of production line (Taiheiyo Cement Philippines, Inc.)

0.7 million tonnes

Cement, Clinker

Strengths

Overseas business portfolio that incorporates
the Pacific Rim’s growth markets

Challenges

Hedging the risk of a drop in demand on
the U.S. west coast and expansion of theSoutheast Asian business1.0 million tonnes

Southeast Asia
Partner Companies
Countries: 5 Companies: 5
Cement supply: 3.1 million tonnes

Cement andready-mixed concrete

CementCement: 5.3 million tonnes
Ready-mixed concrete: 4.28 million m³

1.4 million tonnes

Cement and ready-mixed
concrete supply to the U.S. market
Cement: total 6.7 million tonnes
Ready-mixed concrete: 4.28 million m³

47

Strategy Implementation Status - Business Strategies

Mineral Resources BusinessWe will build a solid supply chain
through quarry development with aview to the next 100 years.
Kunihiro Ando

Shin-Tsukumi Quarry (panoramic view)

Quarry site Greening (Buko Quarry)

Vice President and Director

Quarry development

Profit forecast for FY2024

Fostering new businesses− functional materials

Medium- to long-term strategy
of mineral resources businessTo ensure the long-term stable supply of limestone, we will
invest 100 billion yen in quarry development over 10 years,
including the period of the 23 Medium-Term Management
Plan. The core of the project is the development of the Yato
area of the Shin-Tsukumi Quarry in Oita, which will secure 100
years’ worth of limestone for the Oita Plant. Our Group currently
owns 13 limestone quarries in Japan, quarrying a total of 38.2
million tonnes of limestone per year. Half of this is used for
cement production and the other half is supplied as aggregatesfor ready-mixed concrete as well as for other industries such as
steel and electric power. We will further strengthen our logistics
sites and transportation systems to build a solid supply chain.

In response to soaring fuel prices, we have passed onhigher production and logistics costs to our sales prices, and in
FY2023 we raised prices to record highs. However, investments
are needed to secure limestone resources from a long-term
perspective in order to ensure a stable supply of high-grade
limestone in the future. We will implement price increases thisfiscal year that exceed those of the previous year, while gaining
users' comprehensive understanding of these factors. We
will also focus on improving profitability of the geo-solutions
business, and forecast net sales of 92.0 billion yen, an increaseof 9.3 billion yen from the previous fiscal year, and operating
income of 7.6 billion yen, an increase of 2.1 billion yen fromthe previous fiscal year.

We are working to develop flexible products that meetuser needs by fully utilizing our accumulated knowledge ofminerals. Functional hollow particles "CellSpheres" are highly
versatile products that can enhance the dielectric properties
and heat resistance of paints and resin-molded parts due totheir high level of hollowness. In addition, we have begun
supplying ultra-pure silicon carbide (SiC) as a material for power
semiconductors. These will require time for user evaluation, but
we will develop them into core businesses in alignment with
our intellectual property strategy.

Limestone is said to be the only natural resource in which
Japan is self-sufficient, but the development of new quarry
areas is essential to ensure stable a supply over the long term.
In addition, we are optimizing our supply network of limestone
for cement production, aggregates for ready-mixed concrete,
and other industries such as steel and electric power inaccordance with the characteristics of the limestone produced
from our 13 quarries in Japan. We recognize biodiversity
initiatives as an important issue and joined the 30by30
Alliance for Biodiversity in July 2023. We will make further
efforts toward being nature positive, including conservation ofrare plants and animals, revegetation of former quarries, andconservation of water resources.

Business scheme
Cement raw material
Raw material: Limestone
Processing: Crushing
Supply volume: 20.2 million tonnes

Limestone

Aggregates for ready-mixed concrete
Raw material: Limestone
Processing: Classiﬁcation, rinsing
Supply volume: 9.8 million tonnes

Limestone Quarries (Japan)
Limestone quarries: 13
Quarry area: 2,835 ha
Quarried volume: 38.2 million tonnes per year

Limestone

High-grade
limestone48

Industrial(steelmaking, etc.)
Raw material: High-grade limestone
Processing: Grinding, calcination
Supply volume: 8.2 million tonnes

Supply to
cement plants

Strengths

The 13 quarries in well-balanced locations
across the country can provide a stable,
long-term supply of high-quality limestone

Challenges

Strengthen synergies with group companies

Cement raw material:20.2 million tonnes(including supply to outside the group)

Supply to users
Aggregates for ready-mixed concrete,etc.:
9.8 million tonnes(including intra-group supply)Supply to users
To steel mills: 3.3 million tonnes(including export: 0.8 million tonnes)
To chemical and paper manufacturers,
etc.:
4.9 million tonnes

49Strategy Implementation Status - Business Strategies

Environmental BusinessParticipation in the Reconstruction Farm initiative(Namie Town, Futaba District, Fukushima Prefecture)

We will expand businesses that
contribute to the circular economy
based on the effective use of waste
and by-products.
Shinji FukamiWe have decided to participate in the large-scale dairy farm
(Reconstruction Farm) initiative in Namie Town, Futaba District,which is being led by the Fukushima Prefectural Dairy Cooperative
Association. The Reconstruction Farm is scheduled to commencebusiness in FY2027 with the aim of not only revitalizing the livestock
and agriculture industries in Namie Town, but also establish new
recycling-based farm operations. By applying the waste and byproduct processing technologies we have cultivated over the years,
we aim to contribute to the Restoration Farm by supporting thedevelopment of technologies to produce liquid fertilizer and compost
through the effective use of cattle manure and to utilize methanegas, a by-product of liquid manure production, and work together
with the local community to achieve sustainable development.

Cattle manure

Feed

Reconstruction FarmElectric power
Site area: approx. 25 hasupplyRaw milk production:
13,000 tonnes per year
Number of dairy cows kept:1,300

Feed crop
Liquid fertilizer
and compost

Methanefermentation

Liquid fertilizer andcompost production

Digestive fluids
and solids

Managing Executive Officer

Profit forecast for FY2024

Maximization of environmental businessusing cement kilns

Cultivation of businesses that are not affectedby cement production

Value creation compatible
with carbon neutrality

This fiscal year, in addition to properly reflecting foreignexchange fluctuations and higher transportation costs in our
prices, we are focusing on increasing the volume of wastes
processed as alternative fuels such as waste plastic and wasteoil, in response to the soaring price of coal. The current fossil
fuel substitution rate in cement production is approximately
30%, and we are studying specific measures to increase thisrate to 50% by 2030. In addition, sales of gypsum and otherproducts that are less dependent on kilns are expected toremain strong, and we forecast net sales of 81.0 billion yen,
an increase of 3.1 billion yen from the previous fiscal year, andoperating income of 6.9 billion yen, an increase of 1.1 billion
yen from the previous fiscal year.

The cement industry’s greatest feature is that it produces andsupplies to society cement with stable quality without emitting
dioxins or generating waste. At the same time, it uses waste andby-products as alternative raw materials and fuels in extremely
efficient kilns with an energy efficiency of over 80%. In addition
to various industrial wastes and by-products, our Environmental
Business can also make effective use of municipal waste andincineration residue. In addition, agreements have been signed
between all of our plants and local governments to facilitate
waste disposal in the event of a natural disaster. In the future
we will continue to be a key player in the circular economy.

While fulfilling the role of a venous industry that effectively
uses waste and by-products, we are cultivating businesses
that are not affected by cement production volumes. We are
expanding the recycling of vehicle lithium-ion batteries thatapplies the cement production process, developing technology
to recover phosphorus from dehydrated sewage sludge
separation liquid, working on reconstruction farms, and working
on the early commercialization of technology to reduce thevolume of contaminated soil and other materials containing
radioactive substances. In addition, because automobile
shredder residue, which is considered a difficult waste to disposeof, can be easily separated into metals and plastics using our
proprietary low-temperature embrittlement technology, we will
expand it as a business that contributes to the circular economy.

We aim to contribute to the circular economy and make asteady transition to carbon neutrality by 2050, by effectively
utilizing waste and by-products as alternative raw materials andfuels for cement. The goal is to fully utilize our plants which arelocated in a well-balanced manner throughout the country, andtransition finance and government support in collaboration
with governments, municipalities and leading companies inorder to create CCS and CCU decarbonization hubs for the CO2that is separated and captured in each region, as well as theadvancement of waste treatment to meet the characteristics andneeds of each region.

Business scheme
Handled by Mineral
Resources Business

Steel industry

Various waste

Industrial-use
limestone

Local communities

To power plants:
0.72 million tonnes

Various waste:
Total 0.66 million tonnes• Municipal waste
0.02 million tonnes• Municipal waste incineration
residue:
0.25 million tonnes• Household water, sewage
sludge, etc.: 0.39 million tonnes

3 companies, 12 steel mills
Steel production by-products• Blast furnace slag, etc.: 1.8 million tonnes

Coal-ﬁred
thermal power plants
90 power plants
Coal-ﬁred thermal waste and by-products• Coal ash: 2.03 million tonnes• Gypsum: 0.63 million tonnes

50

Blast furnace slag,
etc.

Coal ash,gypsumDomestic
cement production
and supply sites
Waste and by-products processed:
7.27 million tonnes

Strengths

Cement production process that boasts
world-leading use of alternative raw
materials and fuels

Challenges

Cultivation of businesses that are notaffected by cement production

Variousindustrial
waste andby-products

Other industry sectors
Various industrial waste
and by-products
Total 2.15 million tonnes

51

Strategy Implementation Status - Business Strategies

Construction Materials BusinessWe aim to realize appropriate pricing
and develop products and construction
methods that contribute to labor saving
and reducing labor demand.
Isao Matsui

Ground improvement project for road construction (Onoda Chemico Co., Ltd.)

Thermalbarrier ILB and blocks for guiding visually impaired persons (Taiheiyo Precast
Concrete Industry Co., Ltd.)Managing Executive Officer

Profit forecast for FY2024

Development of labor-saving and labor-demand
reducing products and construction methods

Overseas deployment

Initiatives to reduce environmental impact

We will continue to pursue the realization of appropriate
prices for building materials and construction and civilengineering projects, not to mention passing on increases in
raw material and fuel prices. In addition, as labor shortages atconstruction and production sites are becoming more serious,
as a pressing issue we are working on the development of
products and construction methods that are effective in saving
labor and reducing labor demand, which will lead to shorter
construction periods and lower costs. As a result, we forecast net
sales of 77.0 billion yen, an increase of 8.8 billion yen from theprevious fiscal year, and operating income of 3.2 billion yen, an
increase of 0.9 billion yen from the previous fiscal year.

In the Construction Materials Business, which manufacturesand sells products that include premix products, concrete
products and ALC (autoclaved lightweight concrete), we
consider responding to labor shortages at construction sites asa key issue, and are working together with our related groupcompanies to develop products and construction methods thatare effective in saving labor and reducing labor demand. In
the construction and civil engineering business, which carriesout ground improvement projects, repair and renovation of
concrete structures and seismic reinforcement work, we areproposing labor-saving and labor demand-reducing solutions
that combine materials and construction methods to addressincreasingly serious labor shortages, and introducing digitaltechnology to construction work sites.

In Southeast Asia, which is experiencing remarkableeconomic development, the performance requirements forconstruction materials are increasing rapidly, and we expectthat our group's products and construction methods, with
their high technological capabilities, will provide significant
business opportunities. In Indonesia, in particular, there areplans to relocate the capital to the eastern part of Kalimantan in
2024, and as there are many peat bogs in the relocation area,significant demand for stabilizers and ground improvement
projects is expected. We will consider the overseas expansion of
the ground improvement business while maximizing the effectsof the capital and business alliance with Semen Indonesia
Group.

In addition to maintenance and repair services to ensure
the continued safe use of existing concrete buildings andstructures, we are also working on the manufacture of productswith reducing environmental impact in mind. A familiar productis paving blocks, which are often used in locations such as
sidewalks because of their heat shielding, water permeability
and water retention properties. We will also cooperate in the
research and development of CCU technology to utilize in the
production of concrete products the CO2 that is generated andcaptured during cement production, with the aim for a steadytransition to carbon neutrality by 2050.

Business scheme
Supply to related material manufacturers
Group companies
SupplyRelated material manufacturers: 3
Product shipment volume: 0.21 million tonnes

Cement:0.06 million tonnes

Supply to concrete product manufacturers

Materials forconstruction andcivil engineering
projects

Concrete product manufacturers: 2
Product shipment volume: 0.31 million tonnes

Cement plants: 9
Service stations: 106
Clinker production capacity:
17.64 million tonnes
Cement supply: 17.23 million tonnes

52

Cement and stabilizers:
0.27 million tonnes

Development and sales expansion ofdiverse products and construction methods
through synergy with group companies

Challenges

Addressing labor shortages and the aging
workforce at construction sites

Concrete Products

Cement:0.06 million tonnes

Domestic
cement production
and supply sites

Strengths

Supply to domestic market
Supply toconstruction companies
Ground improvement companies,
repair and renovation companies: 3
Cement and stabilizer consumption:
0.27 million tonnes

Ground improvement projects
Repair and renovation projects

Shipped and used volume:
0.79 million tonnes
Main products• Premix products• Concrete admixtures• ALC (autoclaved lightweight concrete)• Interlocking blocks

53

Strategy Implementation Status - Business Strategies

Research and Development
Key Strategies for FY2024(1) Delivering carbon neutrality

We will support theefine infrastructure technologies andoverseassustainable development (2) Rexpandof our group through(3) B uilding circular economies and contributing
our research andto global environmental preservation
development capabilities
reation of innovative materials andtechnologies
and intellectual property (4) Cfuture-oriented
strategy.
• Technology development to achieve the 2030 targets• Development of innovative technologies related to CCUS

• Cement: Maintain and improve quality, cost reductions• Concrete: Enhance functionality and expand applications• Stabilizer/insolubilizing agent: Business expansion• Develop combustion and de-chlorination technologies• Research and development on biodiversity protection• Functional materials• Utilization of AI and the IoT to boost productivity andreduce labor demand

Takayoshi Okamura54(5) Strengthening the research anddevelopment system

Managing Executive Officer• Promoting early commercialization by strengthening
cooperation with business divisions and groupcompanies, etc.
• Conduct ‘market in’ based theme exploration

Direction and role of the Research andDevelopment Department

Major R&D initiatives and results

In the Research and Development Department, the Central
Research Laboratory, the Intellectual Property Department and theCarbon-Neutral Technology Development Project Team work in unisonand conduct activities in collaboration with the business divisions.
With the sustainable development of the group in mind, we areprogressing research and development on technological development
aimed at the resolution of social issues such as delivering carbon
neutrality and building a recycling-based society, and on R&D
strategies to contribute to the group’s sustainable growth.
Among our five key strategies, the first is delivering carbon
neutrality, which is the most important issue for the cement
industry, and we are progressing the establishment of innovativetechnologies aimed at this goal and development to achieve social
implementation. In addition, in order to maintain and develop"Taiheiyo quality," we are pursuing the further refinement of ourinfrastructure technologies and working to advance our recycling
resource utilization technologies to contribute to the establishmentof a circular economy and conservation of the global environment.
We are also focusing on the development of innovative functional
materials and the creation of future-oriented technologies. We havestrengthened our R&D system by accepting specialist engineers fromgroup companies as researchers, and we are also focusing on ‘market
in’ based theme exploration.
In addition, we are prioritizing themes that can contribute to ourbusiness as soon as possible, and have established an "Overseas
Technical Team" to respond to the strong overseas demand for
cement, and have strengthened our research and development ofcarbon neutrality related materials in addition to cement, concreteand stabilizers for overseas markets.
In conjunction with this research and development, we will
promote our intellectual property strategy to enhance the brandvalue and competitiveness of the Taiheiyo Cement Group andsupport the group’s aim to become an outstanding leading
company with our technological capabilities.

(1) Delivering of carbon neutrality and a circular
economyDelivering carbon neutrality
National resilience
Creation of a recycling-based society

CementBusiness(Domestic)

Environmental
Business

Maintain and improve cement quality
Cost reduction andenvironmental impact reduction

CementBusiness(Overseas)

Carbon neutrality

Reﬁning infrastructuretechnologies
Deployment overseas

Technology developmentthat contributes to overseas businessexpansion under the Glocal Strategy

Creation of
innovative materials andfuture-oriented technologies

MineralResources
Business
Discovering possibilityof our mineral resources

Building circular economies
and contributing to global
environmental preservation
Strengthening
the research anddevelopment system

Central ResearchLaboratory
Intellectual Property
Department(2) Prioritizing themes that can quickly contribute to
the business

Further advancement of recycled resources
utilization technology
Development of biodiversity protection technologies

Construction
Materials
Business
Synergies within the group
Developing new business areas
towards creation

Group
Companies

Carbon Neutral
Business development support thatTechnology Development contributes to the business expansionof group companies
Project Team(3) New business development and future-oriented
technologies

We are progressing the development of CCUS technology,of which the innovative technology of the C2SP Kiln as a key
pillar, with the aim of delivering carbon neutrality in 2050. On
the other hand, in order to achieve the 2030 Interim Target of
reducings specific CO2 emissions by 20% or more throughout
the supply chain, we are working to revise specifications toenable a reduction in the amount of clinker in ordinary cement,
and we are also considering new type of blended cement. We
have also developed CO2-absorbing/cured CARBOFIX cementand “CARBOCATCH”, an efficient system to fix CO2 into fresh
concrete. In addition, we aim to expand the use of combustible
waste as fossil fuel substitutes by promoting the advancementof burner combustion technology, etc., in order to deliver
carbon neutrality and fulfil our role as a key player in thecircular economy.

In order to meet the strong overseas demand for cement,
we are focusing on the development of cement that meets
local needs. We are resolutely supporting development by our
US subsidiary, CalPortland Company, of new types of blended
cement that utilize limestone and natural pozzolans, and the
supply of these cements to the market has already begun. We
are also working to demonstrate and disseminate the quality
and performance of TAIHEIYO GREEN CEMENT, a fly ash-based
blended cement that we are exporting to Singapore, and to
standardize it in Singapore, while building up a track record of
applications of low-heat cement to large concrete structures. We
will prioritize research and development that will contribute to
the expansion of our business, including overseas business.

We are promoting the development of functional materials
for the generation of new profits. In particular, “CellSpheres”,
which are functional hollow particles, and “Nanolitia” cathodematerials for lithium-ion batteries, are innovative materials
that we expect to expand as a core business in the future,
and we have already secured intellectual property rights andestablished stable production technologies in Japan andoverseas. We are also focusing on technological developmentthat will lead to innovation of production processes, such as
3D laser measurement technology for cement plant facilities
utilizing AI/IoT, and “PreSLump AI”, a system that uses AI toinstantly and accurately predict the slump of concrete after
mixing.

Trial laying of interlocking blocks manufactured with CARBOFIX cement

Transmission electron microscope (TEM) image of "CellSpheres" functional
hollow particles

Monitor display of the post-mix slump prediction system “PreSLump AI”

Interlocking blocks manufactured with CARBOFIX cement were laid in a parking lot to
confirm their applicability as paving blocks. Technology development is in progress tofurther expand their CO2 reduction effect.

A revolutionary material that achieves both a hollowness ratio of 75% or higher in the
microscopic range of 1 to 10 μm particle size. It has excellent heat insulation and low
dielectric properties, and is being developed for applications including in the electronicmaterials field.

Using AI-based image recognition, slump can be predicted instantly and with highaccuracy from images of the concrete mix inside the mixer. Sales by Pacific Systems
Corporation began in April 2023.

55

Strategy Implementation Status - Business Strategies

Intellectual Property
Aiming to improve brand value and strengthen competitivenessthrough "offensive" and "defensive" intellectual property strategies.

Fundamental Intellectual Property Policy
We are promoting activities that support the sustainablegrowth of the Group based on our fundamental policy ofboosting the competitiveness and brand value of the Taiheiyo
Cement Group via business-oriented intellectual property
activities. We have defined three key policy initiatives ofbuilding an inventory of intellectual property rights with a view
to future businesses, deepening and expanding information
analysis based on intellectual property, and strengthening theintellectual property capabilities of the entire Group.

Our intellectual property strategy aims to improve our brand value and strengthen ourcompetitiveness through “defensive” measures to acquire intellectual property rights and manage therisk of infringing on third-party rights, and “offensive” measures to proactively deploy our intellectual
property to our business. In particular, we are working on the development of our own "C2SP Kiln,"
which will be the world’s first kiln that enables the separation and capture of CO2 directly from thecement production process, with the aim of it becoming the global standard model, and also position
it as an important pillar of our intellectual property strategy.

Takayoshi Okamura
Managing Executive Officer

Intellectual Property Management
Intellectual Property Management System

Securing intellectual property rights

IP Consulting

In order to maintain and secure our business areas in the
future, we are promoting the construction of a patent portfolio
while also using means to protect the secrecy of our know-how.
The development of the "Carbon Neutral Strategy 2050" hasstimulated the development of related technologies and patentapplications in the relevant fields have increased rapidly. At
the same time, we are promoting patent applications related
to innovative materials and future-oriented technologies, inaddition to our cement and concrete infrastructure technologies
related to national resilience and recycling technologies
related to the formation of a circular economy. Overseas, we areproactively progressing with patent and trademark applicationsin the Southeast Asian countries where we are expanding ourbusiness. We are also focusing on brand building throughtrademarks, and have registered several trademark rights thatare mainly related to carbon neutrality. As of March 31, 2023,
we held 276 trademarks in Japan and 147 trademarks overseas,
an increase of 8 from the end of the previous fiscal year.

We are developing IP landscape activities thatcomprehensively analyze various types of information,
mainly patent information, and utilize it for R&D and businessdevelopment. We use IP landscapes primarily in the explorationof applications for developed technologies, the quantification of
the value of patents, and the consideration of the directionalityof development. Quantitative visualization of the distributionof patent clusters for developed technologies is used in thedetermination of the feasibility of technologies and products.
For example, the figure below displays the frequency offunctional material patent clusters as a topographic map with
contour lines and color tones (from blue increasing to yellow
at the peaks), with our technologies indicated by and priortechnologies by . This shows that our technology forms ahigh-density area that does not overlap with prior technologies,
making it a differentiating technology and a high barrier toentry (which prevents later entrants).

We are conducting various training programs to improve
the intellectual property literacy of the group's employees. We
also regularly review our education system and are promoting
education at each job level according to years of experienceand expertise. As an incentive related to intellectual property,
we have awards for employees who have created outstanding
inventions, discovered infringements or made otherachievements, in addition to rewarding inventors for filing
patents and other applications.
Our in-house training program includes sessions for newly
hired employees, basic training for employees who have little
experience dealing with intellectual property, patent description
training for young inventors, and training for newly appointed
managers, each of which are held annually, as well as patent
research skills training which is held regularly. We are also
incorporating training by external organizations such as theJapan Intellectual Property Association, to ensure that trainees
acquire knowledge appropriate to their level and expertise.

Tripartite intellectual property action promotion system

Patent application ratio by technical field (FY2023)

Example of analysis of functional material patent clusters

I n-house attendance at intellectual property training
sessions (FY2023)
(Unit: Persons)Carbon neutrality

Management

National resilience

29%

24%

Area of prior technology

Intellectual Property Rights Management CommitteeIntellectual Property
Strategy
Meetings

Intellectual
Property
Department

Research andDevelopment
Department

Business
divisions

1,500

1,357

1,000
1,142

Group Companies
Group Intellectual Property Promotion Committee Meetings

1,451

1,511

1,596

1,235

1,273

1,335

0

2019

216
2020

Total

50

41

91

46

9

55

12
108

13

63

25
171

Area of our technology
1,726

1,439

Building barriers to entry

500
215

Total

Taiheiyo
Group
CementCorporation Companies

Non-consolidated

In Japan
Overseas

2,000

External Training

15%

Number of patents held (Patents)

Patent Description Training

Circular economy
formation

32%
Intellectual Property
Promotion Committee
Meetings

Training Content
Basic Training

Innovative materials
and future-oriented technologies

56

Boosting awareness of intellectual property

We have established "Rules for Handling Intellectual Property
Rights" to encourage permanent employees to create inventions
and to promote the acquisition and use of intellectual property
rights. We have also established and are implementing "Taiheiyo
Cement Group Intellectual Property Management Guidelines" tocontribute to the reduction of intellectual property risks and theutilization of intellectual property throughout the group.
The Intellectual Property Department has established an"Intellectual Property Strategy Meeting" with the Research andDevelopment Department, which is at the core of invention creation,
to deliberate on applications and rights acquisition, and "Intellectual
Property Promotion Committee Meetings" with business divisions
and major group companies to promote intellectual property activities
according to their needs. In addition, the Intellectual Property Rights
Management Committee (chaired by the officer in charge of theIntellectual Property Department), which is attended by the managers
at business sites of relevant divisions, deliberates on the awarding of
performance rewards and company-wide intellectual property activities.

238
2021

261
2022

287
2023

(FY)

Recipients of the FY2023 Outstanding Invention Awards

57