KAYABA Group Report 2023
April 1, 2022 – March 31, 2023

Contact

World Trade Center Bldg., South Tower 28F,
4-1, Hamamatsu-cho 2-chome,
Minato-ku, Tokyo 105-5128, Japan
Tel. +81-3-3435-3511
Fax. +81-3-3436-6759

What You’ll Find in the KAYABA Group Report

Contents

01	What You’ll Find in the KAYABA Group Report
Reporting Period
FY2022 (April 1, 2022 to March 31, 2023)
Note: Includes some activities andinformation from outside the above reporting
period.
Scope
The report covers KYB Corporation andsubsidiaries and affiliates in Japan andaround the world.
Note: E nvironmental data is for KYB
Corporation (Sagami Plant, Kumagaya
Plant, Gifu North Plant, Gifu South
Plant, Gifu East Plant, and Mie Plant)
unless otherwise annotated.

To our stakeholders
Based on “Our Promise,” which is aimed at accomplishing our Corporate Spirit, we put together the KAYABA Group
Corporate Guiding Principles: a set of specific rules that are to be observed in everyday work and company life. Ourbasic stance toward our efforts to create a better society is indicated by these Principles. They apply to all people whowork at the KAYABA Group, who are required to act in accordance with the Principles.

Forward-Looking Statements
This report includes plans and forecasts asof the issue date, and estimates based on
our business plans and management
policies. Forward-looking statements are
based on information available at the time ofreport preparation, and actual results may
differ depending on changes in relevant
conditions.

To our customers
We will provide our customers withsafe, quality goods and services
through our outstanding technology
and skill to gain their satisfaction andtrust.

To our suppliers
We will commit ourselves to holdtransparent, free and fair competition

To society and environment
We will contribute ourselves to thesociety, as good corporate citizens,
giving the first priority to the safety
and environment and balancing withthe local communities.
Every one of us
We will comply with the laws, respecting mutual personality andindividual person’s sense of value, andtry to make the workplaces full of thecreativity and inclusion.

https://www.kyb.co.jp/english/index.html

Social conventions,
etiquette, morals
Company regulations/ rulesLaws, regulations

Cover Design
The design expresses the shape of our company
as we move into the future by fusing KAYABA’s
core technology with electrification. It symbolizes how we are evolving with the times while
carrying the spirit of our founder and his
enduring drive to “explore technology” inside ourcorporate DNA.

07
09
11

Value Creation
14 Human Resources Strategy
			 14 Human Resource Development
			 16 Health Management
			 19 Health and Safety
20 Monozukuri Strategy
			 20 Technology / Manufacturing
			 23 Quality
			 24 Intellectual Property Activitie
25 Management Strategy
			 25 ESG Management
			 26 Corporate Governance			 33 Internal Control / Compliance			 34 Risk Management
			 35 Environmental Preservation
			 43 Supply Chain Management
Business Strategy

Basic principles for actions

46
47
51
55

Investor Relations
For reports on our IR activities
such as management strategy,
financial affairs, and performance.

SNS (Japanese only)
Products

Message from the CEO
2023 Medium-Term Management Plan
KAYABA’s Significance for the Future

Our Three Mainstay Business Units
Automotive Components Operations
Hydraulic Components Operations
Special-Purpose Vehicles Division
Data

Corporate Website

Ethics, honesty

Strategy

Business Strategy

To our shareholders
We will run the Company with transparent and high-quality management,
striving to achieve the appropriate
result, and enhancing the degree ofmutual understanding and satisfaction
by our shareholders.

to establish the mutual trust and fairdeals.

The Origin of KAYABAKAYABA Products in Daily Life Today
The Year at KAYABA

Value Creation

Our commitment

03
05
05

Strategy

Date of Issue
November 2023

Overview

Overview

KYB Corporation (hereinafter “KAYABA“) has been issuing its Group Report since FY2019. It provides information on our management policies, business strategies, and CSR activities to our shareholders, investors, andall our stakeholders. It serves as an introduction to KAYABA for stakeholders of all kinds. We hope the reportwill help you understand and get excited about KAYABA’s future prospects and our mission: to pave the roadto an affluent future on the foundation of the history that we have built. And we’d be grateful if that inspires
you to support us over the long term. Going forward, we’ll be taking our stakeholders opinions on board in
our efforts to make this report better and easier to understand.
If you want to learn more about who we are and what we do, please check our corporate website, where
you’ll find press releases and a range of other reports including technology and environmental reports.

Data
57
61
63
65
66

KAYABA Performance Highlights
11-Years Financial Summary
KAYABA in Globe
External Evaluations (FY2022)
Company Overview / Stock Information

For reports on our products
which support safety andcomfort in a wide range ofindustries.

Sponsorship (Japanese only)
For reports on motorsports,
including information on
support and sponsorship forvarious races.

01

KAYABA Group Report 2023

KAYABA Group Report 2023

02

Overview

The Origin of KAYABA

A Pioneer in Hydraulic Technology

Overview

104
Years
Since Our Founding

An Ongoing

At the dawn of the 1900s, our founder Shiro Kayaba wrote the first pagein the history of our company when he took an early interest in hydraulics, a then-new technology created in Europe. In 1919, at the age of 21, hefounded the Kayaba Research Center. It invented and made proposals formany high-performance hydraulic products that surpassed even those
produced in Germany and England, racking up 100 patents. The Center
laid a foundation as the pioneer of hydraulic technology in Japan, and it
led to the development of the modern-day KAYABA Group.

Determination

Lateral Cable Hydraulic Control
DeviceSA for Jeeps

SA Applications (1951)

First special-purpose vehicle
product (1953)

Origin of the Hydraulic Cylinder(1958)

Foundation as an Integrated
Hydraulics Manufacturer (1962)

Hydraulic support pillar for mining

Cylinder for Hydraulic Excavators

Data

First SA (1946)

Designed by our founder, this symbol
was inspired by the mystery that isthe birth of our universe, and represents the Company’s foundational
spirit and ideal management style.
The large circle in the middle represents a revolving heavenly body,and the three small circles are newsatellites being born. They stand forthe three values of vitality, love andcreativity. We started using it as ourcompany emblem again in 2022, theyear in which we returned to thebasics.

Business Strategy

Our First Hydraulic Product (1919)

Our Company Emblem Represents
Our Founder’s Values

Value Creation

EpisodeStrategy

Invention of the Hydraulic Damper for Aircraft
In 1935, Shiro Kayaba founded Kayaba Manufacturing Co., Ltd., where he invented
the predecessor to the automotive shock absorber, the hydraulic damper (oleo strut)
for aircraft. This invention set the course for KAYABA’s current hydraulic technology,
which can accurately control machinery that exerts several tons of force and absorb
vibration to the optimum levels.

Shiro Kayaba left behind these messages: “The development of new technology is the foundation forcorporate growth,” “Get deeply involved, and continue
your research without giving up.” Our founder dedicatedhis entire life to inventing and researching. And we carryon his spirit of determination today and into the future.
We encourage it through the Shiro Kayaba Award,
which recognizes those who contribute to technicalstandards and performance, and the Technology
Presentation and Exhibition, which seeks to evolve
technology further.
We believe that workplaces charged with positiveenergy can bring happiness to people all over the world
and deliver monozukuri (manufacturing skill) that contributes to a better society.

The takeoff and landing of fighter planes
presented a difficult issue—one that
could cost human lives. This groundbreaking design was aimed at solving
that problem using entirely remote-controlled hydraulic equipment. At first,
however, the product faced resistance.
Shiro Kayaba repeatedly made a passionate defense of the product, stating “Thisis exactly the ideal device. It’s a unique
way and it’s simply the best way.” In
1926, it became the first braking system
to be installed on an aircraft carrier.

03

KAYABA Group Report 2023

Directly following WWII in the latter halfof 1946, the Company started researchand development on a new productcalled a shock absorber (SA) in collaboration with automobile manufacturers.
The Company would receive an order for
4,000 SA for use in the jeeps of the U.S.
forces. Following that, the growing
popularity of automobiles would cause
the share of the product to expand.

Oil Damper for Railways

In 1951, The Company began development of oil dampeners for railways carsin collaboration with Japanese National
Railways (now the Japan Railways
Group). We have established a strong
customer base with a variety of partners
including automobile manufacturers,
motorcycle makers and construction
machinery companies.

High-Low Type Concrete Mixers

In 1953, the Company began assembling
and mounting the high-low type concrete mixers imported by Fuji BussanCo., Ltd. from CTM in the United States
onto trucks. This was the start of theshift to domestic production of concrete
mixer trucks. In 1959, produc¬tion beganon the ground-breaking “tilting mixer
truck,” which has a drum portion that
could rotate, thereby using gravitational
pull to agitate fresh concrete.

In 1958, the technology for hydraulicsupport pillars for mining entered Japan
from England. By 1964, the product had
taken the industry by storm due to atechnological improvement to thepacking structure, with 4,000 units
produced that year.
The sealing and pipe welding structuretechnologies in hydraulic support pillars
were applied to construction machineryand industrial equipment, leading to thedevelopment of devices. KAYABA
overcame various difficulties to create
our own proprietary sealing technology.

In 1959, we set to work building our
foundation as an integrated hydraulics
manufacturer, starting with full-scale
engagement in hydraulic equipment for
general machinery. KAYABA’s construction machinery products didn’t leak oilfrom the rods and were competitively
priced, putting them in the spotlight for
both construction machinery andindustrial equipment industries.
Since November of 1962, we received
customer orders in rapid succession,
and we set up a mass production
system for cylinders at Gifu Plant.

KAYABA Group Report 2023

04

Overview

KAYABA Products in Daily Life Today

Offering Added Value to Society with Three Mainstay Businesses

AC Operations

p. 47

Our InheritedDNA

As experts in hydraulics, we use various kinds of digital technology to
generate new ideas and businesses as well as improve quality and productivity, and continue creating products that can contribute to the society of
the future.

Agricultural Machinery

Construction
Machineryp. 51

Special-purpose
VehiclesMotorcycle
Components

p. 55

e-Mixer III / Touch panel monitor

Marine Equipment

Spool stroke sensor

Adjustable damping shock absorbers
with proportional solenoid

High voltage cylinder KCH

Business Strategy Special-Purpose
Vehicles Div.

Shock Absorbers for Automobiles

Japan’s first automotive shock absorber. The high voltage cylinder KCH,
which has become the global standard in the hydraulic excavator
industry. Beating the competition to
the first CAE analytical technology(support for design development
through computer use). The development of our environmentally friendly
cement mixer. Time and again,
KAYABA has offered industry-first,
high added value products.
In the near future, KAYABA will
incorporate digital transformation(DX) technology that will change theway we use our over 100 years ofrecords and know-how, evolve
through the use of big data, and accelerate our provision of high added
value products.

Value Creation

Automotive
Components

Strategy

Bringing High Added Valueto Products

Railroad Equipment

HC Operations

Overview

We carry on the spirit of our founder’s restless pursuit of creativity to this day. Our many products based on
our technological prowess support modern life from behind the scenes. Our Automotive Components (AC)Operations supports the vehicles that transport people every day, while Hydraulic Components (HC)Operations helps with the infrastructure our lifestyles need. Along with our Special-Purpose Vehicles Division,these three mainstay businesses will continue contributing to society through offering the products that are
essential to people’s daily lives.

The Year at KAYABA

05

April	Common company name changed to“KAYABA” in Japan
		 Started rally project		 Purchasing Policy Briefing (held online)
May Shiro Kayaba Awards
		Briefing held for smart road monitoring
system technology
		 Financial Results Briefing
June	Annual Shareholders' Meeting
September	Production Technology Block Presentation
October	Compliance Enhancement Month		 National Trade Skill Test & Certification
		Hydraulic & Electronic Technology Block
Presentation

KAYABA Group Report 2023

November	Quality Month		Companywide Small Group Activity
Presentation (Production Division-Related)		 Automobile Technology Block Presentation
December	The Companywide Technology Presentation
		 Development Product Testing Meeting

2023

Data

2022

January	First announcement of mobile home
(Tokyo Auto Salon)
February TCFD approval		 KAYABA Rally Team makes its debut		Companywide Small Group Activity
Presentation (Offices, Sales, Administration
Departments)
March	Certified as FY2022 Health and Productivity
Management Organization 2023

KAYABA Group Report 2023

06

Strategy

Message from the CEO

The Growth Strategy for the 2023 Mid-Term PlanIn FY2023, we will accelerate toward achieving
the targets of our new medium-term
management plan.
we will carry the corporate DNA instilled
by our founder into the future.

Placing first priority on recovering trust,strengthening response to severe changes tothe business environment

Net Sales

Segment Profit(¥ million)(¥ million)

50０,０００412,21440０,０００388,360

381,584

3０,０００431,205

24,713
17,5752０,０００30０,０００

13,32520０,０００

1０,０００10０,０００
０

2018

2019

■

07

KAYABA Group Report 2023

2020

2021

2022

０

(FY)
■

2018

2019

2020

2021

2022

Pursue creativity, contribute to society
on a permanent basis
Companies are being required to make stronger efforts
than ever before to meet their social responsibilities forenvironmental measures, such as developing environmentally friendly products and responding to carbon

2020 mid-term plan: Three years management plan from FY2020 to FY2022
2023 mid-term plan: Three years management plan from FY2023 to FY2025

Corporate Spirit
By providing technologies and products that make people’s lives safe and comfortable,
the KAYABA Group contributes to society
1. We shall follow all rules and face all issues with honesty.
2. We shall build a corporate culture full of vitality, and hold high goals.
3. We shall value kindness and sincerity, cherish nature and care for the environment.
4. We shall constantly pursue creativity to contribute to the prosperity of customers, shareholders, suppliers and society.

Management Vision

25,50022,010

328,037KAYABA’s Mission

In order to be a company that is indispensable to oursociety, quality and trust are essential. This goes beyond
simply the quality of products. It is important to sustain
quality in all aspects, such as by dealing with customers
and inquiries sincerely, making proposals based ontrustworthy technology, and providing reliable monozukuri. We aim to be company that our workers and theirfamilies can be truly proud of, that will make our customers and business partners glad to be part of ourmonozukuri journey, and that is loved by regional communities.
FY2023 is a year in which we will accelerate into thenew medium term. Grounded in our origin of providing
monozukuri that brings happiness, we are determined
to incessantly push our evolution forward, coming
together as a group to deliver monozukuri that satisfies
all our stakeholders.
We humbly ask for your continued support as wemove ahead with our endeavors.

Data

The three years since 2020 saw the spread of COVID-19
infections, a global semiconductor shortage, steep
increases in the prices of energy and materials, andsudden fluctuations to the exchange rate. The future
prospects for the manufacturing industry remain difficult to predict.
In the 2020 medium-term management plan (the2020 mid-term plan), we placed first priority on ourefforts aimed at recovering trust, under the slogan of“Regain Trust, Restore Pride.” As a result, the orders we
received from customers returned to the level of before
the nonconforming acts, serving as proof of the trust
we have won back. We built new relationships of trustwith all of our stakeholders, and our hardworking employees have taken back the pride they feel in theircompany. I’d like to use this opportunity to once again
thank everyone involved in these efforts.
FY2022 was the final year of the 2020 mid-term plan,so we all worked together to make our very best efforts. We focused our energy on issues such as shiftingfrom emphasizing sales to emphasizing profits, revolutionary monozukuri that will support the future, plantand office reorganizations, and the reduction as well as
discontinuation of unprofitable business and products.
As a result, net sales and segment profits both exceeded our targets, achieving record highs.
The fact that we were able to increase profits amidst
a harsh management environment is proof that we haveeffectively strengthened KAYABA’s ability to respond toexternal changes.

Monozukuri that brings happinessBusiness Strategy

A Look Back on the 2020 Mid-Term Plan

Our Promise to Stakeholders

Value Creation

Representative Director,
Chief Executive Officer (CEO)Strategy

Firmly rooted in our origin,

KAYABA’s founder, Shiro Kayaba, set forth the spirit of“creativity, love and vitality” as our basic principle. Thishas been passed down into our current Corporate Spiritof “offering products make people’s lives safe andcomfortable, and contributing to society.” I believe themission we have been entrusted with is to carry the
corporate DNA instilled by our founder into the future.
Under the new medium-term management plan, we
will once again return to our origin point, take measures
to put our Corporate Spirit into practice, and take on thechallenge of creating new value.
In the 2023 medium-term management plan (the2023 mid-term plan), under the slogan of “Take quality
management to new heights,” we will build a strong
foundation aimed at reform as we improve the qualityof human resources, information, products and services, and our work. Human resources are thefoundation of monozukuri. In the 2020 medium term,
while reinforcing the trust that we have built with all our
stakeholders so that it is unshakeable, we will encourage the energy and spirit of challenge in our employeesthat drives them to contribute to the development ofsociety and respond to new social issues, thereby
feeling satisfaction and joy in their work. I believe thatwill lead to further building the KAYABA brand, and tobringing our Corporate Spirit to life.

neutrality. KAYABA is working toward the target of“Reducing CO2 emissions volume by 50% compared to
the 2018 level,” showing our love of nature and constantawareness of contributing to the achievement of asustainable future. Also, major environmental changes
continue to occur, including the emergence of new EV
manufacturers, the acceleration of CASE, the withdrawal of companies from the Russian market.
I believe that the mission of the KAYABA Group is toquickly notice the signs and predict changes in thetimes, put our creative technical ability to good use byresolving issues faced by our customers and by society,and to continue contributing to the development of society on a permanent basis..

Overview

Putting our Corporate Spirit into practiceunder the slogan of “Mastering quality
management,” building a base for reform(FY)

Note: Segment profit is calculated by deducting cost of sales and selling, general andadministrative expenses from net sales.

1.	Human Resource Development:	To develop human resources who have a thorough understanding of our policies and strategies and can accomplish our goals
with passion.
2. Technology and Product Development:	To offer products that gain the admiration, provide comfort and satisfy all of our customers throughout the world.
3. Monozukuri (Japanese Manufacturing Expertise): 	To operate plants filled with the creative inspiration of committed monozukuri, and joy of creating products that satisfy ourcustomers.
4. Management: To be always self-aware of our corporate social responsibilities and to pursue efficient management.

KAYABA Group Report 2023

08

Strategy2023 Medium-Term Management Plan

Mastering Quality Management

2020 mid-term plan: Three years management plan from FY2020 to FY2022
2023 mid-term plan: Three years management plan from FY2023 to FY2025

KAYABA will maintain the identity
it has had since its establishment
even as we seek out new technologies.
We are aiming to be a company
that can provide a great dealof specialized proposals.

The Five Basic Policies▶Growth strategy

Development and launch of electrification
products
New customers / new market entry, create new
business▶Innovative
monozukuri

Innovative manufacturing initiative (Ship’30* p. 21 ):Automated production, transfer, and inspection
Visualization of production site information
through the utilization of AI/IoT▶Constant cost
reduction

Determining the optimal global production areas
in response to changes▶Environmental
Initiatives

Activities related to SDGs and sustainability▶CImproving
capital efficiency, Initiatives for improving PBR (ROE improvement)
and strengthening shareholder returns
strengthening
financial structure

Strategy

by remaining rooted in hydraulics,

Next, let’s turn to innovative monozukuri. Robot
manufacturing and the use of AI have been making
progress, and now we will look to drastically reduce
lead times and raise productivity through the installationof fully automated production lines. Also, we plan toincrease the quality of workplace information throughrendering information visible, and improve quality in themonozukuri process.
With manufacturers in China focusing on cost competitiveness, we will need to make greater efforts thanever before on cost reduction activities.
In our efforts for the environment, we are conducting
joint development with Toyota on the possible practicalapplication of an environmentally friendly hydraulic fluid.
Regarding our other products and production technology, we are engaged in product planning and thedevelopment of monozukuri aimed at the achievementof carbon neutrality, and will contribute to the creationof a sustainable society.

Overview

In the 2023 medium-term management plan (2023 mid-term plan), we will take quality management to newheights while raising quality throughout the entire Group by carrying out the five basic policies, thereby increasing corporate value.
We will strive to win the trust and satisfaction of all our stakeholders.

Note: S hip’30=Self handling innovation plant 2030
Creating an innovative self-handled plant by 2030

Value Creation

Growth Strategy by Area

Member of the Board of Directors, Senior Managing

Representative Director,
and President Chief Operating Officer (COO)

Executive Officer, and Chief Financial Officer (CFO)

Our targets for 2025, the final year of the 2023 midterm plan, are as follows.
We did not establish a numerical target for ROE in theprevious mid-term plan. However, we have set one forthe 2023 mid-term plan for the purpose of improving
capital efficiency. Also, we will aim for a dividend payout
ratio of 30%.
FY2025 target

Net sales¥431.2 billion¥470.0 billion

Segment profit¥25 5 billion¥38.0 billion

Segment profit ratio

5.9%

8.1%

Equity ratio

40.9%

45.0%

Payout ratio

19.4%

30.0%

ROE

16.2%

12.0%

Net sales and segment profit ratio(%)(¥ million)
8,000

7.2

8.1

5.9

6.2

4,312

4,500

4,600

4,700

2022

2023

2024

2025

6,000

10.0
8 .0
6 .0
4.0

4,000

2,000

０

■ AC Operations ■ HC Operations ■ Other(FY)

Segment Profit Margin

Basic Policies
First, let’s look at our growth strategy. Keeping with theglobal trend toward electric drive force and electric
controls already becoming mainstream, we are moving
forward with a system that can propose hydraulicproducts that incorporate electronic control technology.
We will continue to grow by developing the09

KAYABA Group Report 2023

electrification compatible products and systems forwhich we have been conducting R&D for many years, inparticular by expanding to reach international customers
and markets. We plan to become a company which
provides a great deal of proposals on which manufacturers will come to rely.

*

Data

FY2022In the 2023 mid-term plan, we will aim to achievesales of ¥470 billion and a segment profit ratio of 8.1%
by observing the following basic policies and attaining
steady growth while thoroughly conducting quality
management.

Business Strategy

Financial Targets

Our global growth strategy first involves entering theof local suppliers—an issue that all businesses face.
shock absorber market in India. Currently, we are proRegarding other regions in Asia, we plan to develop
ducing products by contracting with our partner
India and Vietnam into motorcycle manufacturing bases,
manufacturers in the country, but we are now planningwhich will secure cost competitiveness. And facing an
to enter the market directly. Also, there is high demandissue that is common among businesses in the ASEAN
in India for products for agricultural machinery, so weregion, we absolutely must insource products andwill begin to conduct sales promotions to uncoverachieve local procurement.
business opportunities for HC Operations.
In the United States, AC Operations is launching
In Europe, the manufacture of our electronically coninitiatives to build KAYABA as a premium brand. HC
trolled suspension IDC* is concentrated in Spain, and we
Operations will move forward with responding to
are responding to the forecast increase in demand. Also,
increasing demand for construction machinery.
we are developing innovative manufacturing lines for saleon the market, and preparing to construct rationalized
IDC：Intelligent damping control
production systems.
In China, we will solidify our
AC Expansion of production
business foundation by introducing
AC Premium aftermarket
capacity for IDC SA
EuropeAmericas
AC Operations to rapidly emerging
HC Local response to demand
Innovative
monozukuriACfor construction equipment
Chinese auto manufacturers. Also,
the joint venture electronic power
steering company we founded in
AC Entry into Chinese manufacturers
FY2017 had been operating at a loss
China
HC/HC
Cost structure that can compete with local suppliers
due to quality issues, but it is now
achieving profitability. While actively
attracting inquiries for IDC, we willbuild a system that has the capacity
AC New Markeat Entry
AC Main motorcycle production baseto manufacture 2.5 million units by
India
ASEAN
HC Expand sales of agricultural
HC/HC In-house production,
the end of 2025. Also, we will mainmachinery products
local procurement
tain our competitiveness by setting
AC: Automotive Components   HC: Hydraulic Components
prices that can compete with those
Global Governance System
We will work to strengthen our governance system
together with plant and office general managers in the
United States, Europe, and China, as well as regional
headquarter executives at head offices. Recognizingthat it serves as the foundation from which we willproceed with our growth strategy, we will place more
focus on the essential task of strengthening governancethan ever before.

KAYABA Group Report 2023

10

Strategy

KAYABA’s Significance for the Future

Continuing to Contribute to Society
through Vibration Control and Power Control

2050

Overview

Amidst the major tides of the times, KAYABA will base its corporate activities on ESG management and create new value that contributes to society through vibration control andpower control. And we will continue to be a company that contributes to a sustainable
Decarbonized societysociety through activities that embody our Corporate Spirit and management vision.
• Net zero CO2 emissions
This fiscal year, we plan to construct a value creation process in addition to establishing our materiality.

• Achieving carbon neutrality

KAYABA’s Initiatives for the Future
Strategy• Contribute to a sustainable society• Complete Ship’30

p. 11• Apply cutting-edge technology such as AI/IoT• Construction and agricultural machinery:full electrification• Prohibition of sales of new gasoline-powered
vehicles• DX through collaborative innovation with existing technology
and new technology p. 22• Reduce GHG emissions volume by 50% (compared to 2018)p. 36~40

2030

Value Creation

EV shift• Switch to autonomous driving, electrification,energy conservation
p. 49, 53, 54• Creation of new markets / new products p. 50, 54• SDG target year
• The 2030 problem (human resource shortage
from decreasing birthrate and aging population)*GHG (Greenhouse Gas)

• Circular economy (recycling economy)

Business Strategy• Construction and agricultural
machinery: electric hydraulic use

Accelerating electrification• Decline of gasoline-powered vehicles• GX League Phase 2(introduction of emissions transactions)• Construction and agricultural machinery:remote control, automation, unmanned
operation

2025

2023 Medium-Term Management Plan

Mastering Quality Management
The Five Basic Policies▶Growth strategy▶Constant cost reduction▶Environmental Initiatives▶CImproving capital efficiency,
strengthening financial structure• A once-in-a-century revolution• Construction and agricultural
machinery: low fuel consumption,
low noise, improved operability• Climate change• Diversity, Equity, and Inclusion(DE&I)• Diverse human resources

p. 14• Conduct initiatives aimed at a manufacturing revolution• Overview of KAYABA’s Environmental initiatives• Responding to environmental regulations• Focus on core business

p. 21

p. 35

Data

▶Innovative monozukuri

CASE, MaaS

p. 9

p. 39

p. 45

• Establish materiality• Rebuild value creation story

2023• ESG、SDGs

Anticipated changes
in society

11

KAYABA Group Report 2023

KAYABA Group Report 2023

12

Value Creation

Human Resources Strategy

Human Resource Development

The KAYABA Group has inherited a corporate DNA formed of its founder’s spirit of determination andmonozukuri, and creates value that endures throughout the ages. We will build a solid managementbase so that we can further refine the technical ability that is indispensable to the world and generatehigh quality products by allowing our diverse human resources to demonstrate their capabilities
without restraint.

Respect for Human Resources and Diversity
We want the diverse human resources who work at the
KAYABA Group to demonstrate their capabilities to the
maximum extent. Therefore, we are building a corporate
culture of openness through a range of initiatives. These
include allowing remote work that takes work-life
Average Number of Paid Holidays, Days Actually Taken
and Usage Rate

Raise personal awareness（%）(days)

20
15

Human Resources Strategy
Human Resource Development
Safety and Health

Manufacturing Strategy
Technology / Manufacturing
QualityIntellectual Property Activities

14.01

13.32

80

16.77

15.19

60

12.29

10

40

5

20

０

2018

2019

2020

Create systems that
employees need and want

2021

■ Average Number of Paid Holidays, Days Actually Taken
■■

2022

Enhance the value offered by individuals and organizations,and increase the value the Company provides to society

０

(FY)

Usage Rate

Improving the Quality of Human Resources
At the KAYABA Group, training human resources sothey can contribute to the achievement of our Corporate
Spirit (norms, vitality, love, creativity) is part of thebasics. To provide them with the necessary attributes,
we have a human resources training program which
consists of eight qualities and two skills. We clarify therequired attributes and achievement standards for eachposition, review the requirements for an executive
promotion based on the attributes, and conduct on-thejob training that incorporates elements that improve theattributes.

Also, we have newly created and are conducting
training that is specifically designed for persons scheduled to serve as general managers of overseas plants
and offices in roles necessary for global management.
The content has been upgraded to improve the qualityof how situations are handled locally. The training incorporates information the general managers need toknow on the local situation and how to handle problems, and involves classroom learning and practicalmanagement education.

Business Strategy

Health Management

62.8

Foster working
conditions that allow
everyone to thrive on the job

Value Creation

into the Future

76.9

71.7

68.1

Draw on the talents ofdiverse human resources

100

84.6

Raise awareness ofworkplace issues

Strategy

25

DNA that Survives

balance into consideration, ending long working hours
such as by promoting annual leaves, developing afoundation to support women’s activity, strengthening
awareness campaigns, and employing disabled people.

Overview

Into the Future
KAYABA’s Value Creation Initiatives

Data

Management Strategy
ESG Management
Corporate GovernanceInternal Control/Compliance

Qualities Required to Make the Corporate Spirit a Reality (Ideal Human Resources)

1

2

3

4

5

Awareness ofcomplianceand ethics

Mutualrespect andteamwork

Ability to carryout social
responsibilities

Customerorientation

Challengeorientation

Risk Management

8

Instruction Task and strategy Improvement
andformulation
andreform ability
abilitytraining ability

Sincerity

Creativity

9

10

Basic
knowledge
and skills

Specialized
knowledge
and skills

Two skills

10 components of training programs (focusing on eight qualities and two skills)

Supply Chain Management
Training Managers ofOverseas Bases

PurposeStrengthen management at
plants and offices, minimize
management risks

KAYABA Group Report 2023

7

Vitality

Eight qualities

Environmental Initiatives

13

6

Honesty

1. S
 ystematic training that combines business knowledge, classroom learning,and on-the-job training
2. P ractical education related to management (on topics such as management
strategy and risk management)
3. P ractical education related to manufacturing quality (workplace improvement
methods, abnormality detection methods)

KAYABA Group Report 2023

14

Value Creation
Human Resources Strategy

Health Management
Initiatives for Diversity in Human Resources
Numerical Targets
Item
Number of female
managers

FY2022

FY2025

１８ employees

２７ employees

６３％More than ８０％

Ratio of paidvacations taken

（%）
3. 0

2 .5

2.2

2.2

2.40

2.3

2.3

2021

2022

Maximize the performance of employees by increasing their health and wellness
Creating a workplace where employees can work in good health both physically and mentally

1.88

1.86

2018

2019

Disabled Employment Rate

2020

(FY)

Legal Employment Rate of Persons with Disabilities

Note: The scope of the paid vacation and disabled employee rates is for KYB
Corporation.

Key Activities(current conditions)

Risk Improvement Activities
Increase number of
non abnormal

Abnormal findings
Decreasein rate ofabnormalfindings

Decreasein sick
leave

Increasein jobsatisfaction

Increasein sleep
sufficiency

Minor abnormal

Health Promotion
Activities

Reduction
in rate ofsmoking

Reduction
in rate ofhigh stress

Good health

Reduction
in rate ofobesityBusiness Strategy

COLUMN

Value Creation

2.36

2.11

2 .0

1.5

2.3

Also, we seek to reduce lost employee worktime due
to sickness by promoting policies related to important
health management matters, such as lifestyle disease
prevention, secondhand smoking prevention, andmental health measures. In recognition of these efforts,
we have been certified a Health and Productivity
Management Organization (large corporation division) in
2023, marking our fourth consecutive year to receive
this honor. We are striving to continue receiving thiscertification, as well as certification as a White 500
company in 2024.
We believe that continuing these policies will raise
employee job satisfaction and raise performance.

Strategy

Disabled Employment Rate / Legal Employment Rate of
Persons with Disabilities

The KAYABA Health Declaration sets forth our belief
that the health of employees and their families is an
important management resource and a source of thecompany’s vitality, and that we shall work to create anenvironment in which each employee can work happily
with sound mind and body in order for the Company toachieve sustained growth.
We believe that creating an environment in which
diverse human resources can work to their best ability
is essential to increasing the value of a corporation.
Taking work-life balance into consideration, we willcontinue to allow remote working, encourage taking
annual leave, and restrict long working hours.

Overview

Among our specific policies for ensuring the diversity of
our human resources, we are currently at the stage ofbuilding a foundation to encourage the active participation of women. In particular, we are seeking to increase
women managers by increasing the number of female
employees in positions where they can become management candidates, providing a robust training
program, conducting activities aimed at obtaining
Kurumin and Eruboshi public certifications in 2023,
raising awareness of women employees regarding
aiming to become managers, and conducting environmental management. Also, we plan to formulate career
paths for women that change their mindsets, and create
training programs for bosses to change the mindsets of
those working with women.
Also, we are promoting the employment of people
with disabilities as we strive to create a symbiotic
society in which everyone can participate through theirjobs, regardless of whether or not they have a disability.
We are moving ahead with initiatives such as improving
the employment environment through the Work
Support Center, complying with laws such as
Handicapped Persons' Employment Promotion Act, andretaining employees with disabilities.

Promoting Health Management

Human Resources + the Future
Outstanding diligent person with disabilities

The WorldSkills
competition is an
event in whichyoung people up
to age 23 meetand compete tofind out who has
Instructing younger employees after two years
the best technicalof competingskills in Japan.
Every year, KAYABA assigns one company technician
to the Human Resources Development Center after
new employee training, and they take on the competition in their second and third years in the company.
They then spend a year training their junior employees,
after which they are assigned to a position in which
they can make use of their technical skills.
We will continue encouraging and training young
employees to take on the WorldSkills competition forthe purpose of increasing their technical skills andcompetency.

An employee of a domestic
group company was selected as
an outstanding diligent personwith a disabilities, and wasawarded the Chairperson’sAward from the Japan
Organization for Employment of
the Elderly, Persons with
Disabilities and Job Seekers.
We will continue our efforts to create an inclusive
environment in which people with or without disabilities
can feel value in their work.

KAYABA Group Report 2023

Expansion of health management policies, collaboration
with related departments, and the participation of employees

Data

15

The WorldSkills competition

Organizational Structure for Promoting Health Management
With the top management
positions tasked with overseeing
heath management, the entity
conducts the sharing of information on health management
issues and ensures the effectiveness and continuance ofinitiatives. This is done in collaboration with the healthmanagement promotion projectin charge of promotion at each
office or plant, the safety education committee, and our groupcompanies.

Responsible for Heath Management(President)
Instruction/Report

Policyexecution

Responsible for Heath Management Promotion(Human resource officer)
Instruction/Report

Heath Management Promotion Project
All functions,departments

Cooperation

Cooperation

HealthSupportCenterHuman
Resources
Planning Dept.

HealthInsurance
Association

Cooperation

Cooperation

ESG Promotion
Department

In charge of promotion at each office or plant
Head Office

Sagami Plant

Kumagaya Plant

Gifu area

Mie plant

Nagano Plant

Occupational
PhysicianCooperation

Safety Education
Committee

Labor Union

Cooperation

In charge ofpromotion
at group
companies

KAYABA Group Report 2023

16

Value Creation
Human Resources Strategy

Health Management Policy

Creating Harassment-Free Workplaces• Making a comfortable working environment: Promote use of the walking course, hold a walking
event, support the continuation of the exercise habit after the event (Such as for healthpromotion in the workplace)Lifestyle disease countermeasures(Collaboration with health insurance measures) • Keep a 100% rate of employees taking regular heath checkups• Increase the ratio of employees taking specific medical examinations (such as for nutrition
education)• Environmental measures: Smoking completely prohibited on the premises (starting in April 2022)• Support for quitting smoking• Education on second-hand smoking prevention(Hold an exhibition on the prevention of second-hand smoking)Mental health

Measures to support mental health

148
126

１５０

99
１００
５０
０

2019

2020

2021

2022

(FY)

■

Initiatives for Health Management
At KAYABA, we place a strong emphasis on proactive
measures for lifestyle disease countermeasures andpreventing second-hand smoke for physical health, aswell as prioritizing mental health measures to support
mental health.
As one of the measures for lifestyle disease countermeasures, we organize walking event where teams of
three members from the same workplace compete
based on their total steps. We also provide support thecontinuation of the exercise habit. Additionally, in efforts
to prevent second-handsmoke, the entire grouphas been invigorated
through achievements
such as being recognized
as a "Niigata Healthpromoting Management
Niigata Health-promoting
Advancing Company."

With our Hopes for Mutual Respect
There are people who require assistance and consideration, yet thatfact is not immediately visible: people with artificial limbs and joints,
internal disorders and chronic illnesses, or women in early stages ofpregnancy. The help symbol was created to make those around themaware, and to make it easier for the person to receive assistance.
We endorse the distribution of the symbol and stickers for the useof priority seating on public transport, and have put up notifications
on the Oedo Line, a Tokyo Metropolitan subway line used by commuters going to the Head Office. The notification features pictures ofa KAYABA sit-ski component product as well as Takeshi Suzuki, apara-Alpine skier and employee of the Company. It also expresses
our thoughts toward providing support for those who require assistance and consideration. We provide in-house human resource
training that covers taking mutually respectful actions for thosewearing the help symbol, such as offering one’s seat or approachingsomeone who appears to be facing difficulties.

KAYABA is an official sponsor of the Alpine
Skiing National Team of the JAPAN Para-Ski
Federation

Data

KAYABA Group Report 2023

190

2００

Peace of Mind + the FutureManagement Advancing Company
Awards Ceremony

17

250

COLUMN

Human Resources + the Future

The KYB Health Insurance Association will continue towork to create an environment in which all employees
can work energetically and in good physical and mental
health.
In FY2022, eight business sites obtained “Health andProductivity Management Organization 2023,” a certification conferred by the Ministry of Economy, Trade andIndustry; the Ministry of Health, Labour and Welfare; andthe Nippon Kenko Kaigi (Japan Health Council).
Furthermore, 11 business sites have obtained certification as "Health Promotion Workplaces" recognized by the
Gifu Federation of Health Insurance Associations.

(case)

Vege-check (a device for checking vegetable intake)

COLUMN

Certified Health and Productivity Management
Organization 2023 in FY2022

Number of whistleblower reports

Business Strategy

Health promotion in the workplace

From an article of in-house newsletter

Value Creation

Nutrition education• Hold mental health education: Promote education by level for the purpose of building positive
mental attitudes• Harassment-free campaigns with the cooperation of each function and business division→ In order to create a workplace where people can do their work with a sense of worth andpurpose, it most important that there is no harassment. Based on that thinking, we added“harassment-free” to the Key Initiatives of the Corporate Policies. This policy is being carriedout in each department and function.

StrategyStages of preventing second-handsmoke

We are actively making efforts to create harassment-free workplaces to avoid situations in which
employees find it difficult to speak out.
We conduct awareness-raising activities such asproviding education to instill mutual respect and publishing articles in the in-house newsletter. Also, we use
the results of our annual stress check employee opinion
survey for statical confirmation. We promptly check up
on the facts regarding matters reported to our harassment consultation hotline and internal reporting hotline,
and strictly deal with confirmed cases. While the number of reports to our internal reporting system grows
each year, this is proof that employee’s knowledge ofthe system and willingness to use it are also growing.
And for our overseas plants and offices, we conductedinvestigations into their systems related to harassment
from July to September of 2022. Based on the resultsof the investigations, we are preparing regulations andeducational materials related to preventing acts ofharassment at our overseas plants and offices. Goingforward, we will periodically conduct such investigations
to understand the situation across the entire group andprovide support.
Through our ongoing efforts to create a comfortable
work environment, we will strive to eliminate the risk ofhuman rights violations in the KAYABA Group.

Overview

Physical healthAdvertisement for the Oedo LineKAYABA Group Report 2023

18

Value Creation

Value Creation

Human Resources Strategy

Monozukuri Strategy

Health and Safety

Technology / Manufacturing
KAYABA’s Monozukuri

Health and Safety Activities
contractors for onsite construction work and various
kinds of inspections. In FY2022, the Committee revised
the manual that brings together information on measures and matters that should be confirmed beforehand
as well as from the start of construction work until its
completion. In these ways, we will continue striving to
reduce work-related injuries.

We are systematically rolling out efforts to construct asafety and health management system. We are driving
forward our efforts to strengthen its foundation byintroducing safety and health management OSHMS and
ISO 45001 protocols.

Value creation
Automobiles

Railroad

Industrial
vehicleEquipment

Motorcycles

Construction
machinery

Agricultural
machinerySpecial-purpose
vehiclesHydraulicElectronic control
Electrification
SystemMaterials
Testing andevaluation
Monozukuri(Production technology)

SystemTechnology
Elemental
Technologies

AI/IoT
Leading-Edge Advanced simulations
Technologies Digital technology

Electronic
ControlTechnology

Vibration
controlPowercontrol

Value Creation

The introduction of the occupational safety and healthmanagement system started in FY2004 at Gifu North
Plant, and as of FY2022, all plants have obtained certification. We will continue working to create a safer
workplace environment where our employees arehealthy and can work with peace of mind.

Conceptual Diagram of KAYABA’s Technology

Strategy

Occupational Safety and Health Management System

Our company has been advancing vibration control andpower control technology for over 100 years. Buildingon that foundation, we are combining AI/IoT, the promotion of DX, and advanced simulations with all of ourcomponent technologies to develop next-generation
hydraulic devices and systems products that feature
both high performance and safety through the use ofelectronic controls.
Technology, global manufacturing, and sales willcontinue working together on new product development that will lead to value creation and thedevelopment of advanced technology aimed at resolving social issues in ways such as conserving energy
and reducing environmental load.

Overview

Under our Health and Safety Policy, we have established and operate a Health and Safety Committee at all
workplaces. The Committees discuss countermeasuresagainst health issues or work-related injuries as well as
prevention, and provide the related information toemployees. Also, they provide the information necessary to obtain the cooperation of many independent

Creating a Safe, Secure Working Environment
Core Technologies

KAYABA Group is striving to create a safe, secure
working environment.
Number of work-related injuries (per month)Technology Development System(case)
2０

The Basic Technology R&D Center and Production
Technology R&D Center are at the core of our AI, digitaltechnology, and intellectual property strategies. They
conduct basic research, future technology research, andcomponent technology research. And, we are

１５

9.4
１０

7.2
５

6.9

０

2019

■ Domestic■ Overseas

4.1
2020

6.3

5.7
2021

4.5

(FY)

2022

KAYABA’s technology development process

KAYABA Group Report 2023

Data

19

constructing a system to accumulate and increase thelevel of technology throughout the Group with ourprocess which circulates these research results back to
the product development and mass production atbusiness units and group companies.

6.0

Control, vibration, information and communications, electrical/electronics, mechanical elements,
sensors, surface treatment, heat treatment, processing, assembly, inspection, automation, etc.

Plant Fire Prevention Activity
This activity is positioned as important because while it
not only stops the negative impacts of fires on all
stakeholders, it more crucially can protect the safety of
our employees. We strive to prevent fires not only byinspecting and maintaining the legally required fire
protection equipment, but through continuous inspections and evaluations. And we examine manufacturing
facilities with particularly high fire risks by using aninspection check sheet. Also, we plan for suitable
operation and maintenance by conducting regular fire
prevention patrols. In order to raise employees’ awareness toward fire prevention, the first working day ofeach month is designated as “Fire Prevention Day,” onwhich all employees get involved in fire prevention
activities.

Business Strategy

With the of slogan “Safety is the top priority,” the
KAYABA Group works as one to achieve zero occupational accidents. Also, our Corporate Guiding Principles
state that we will always think about safety first andengage, with all employees participating, in activities
aimed at prevention of industrial accidents and occupational diseases and the creation of an
accident-and-risk-free work environment.
In 2018, we established the Global Safety Promotion
Committee, which promote its activities under the
direct control of the President. The Environment &Safety Committee, which is chaired by the Director in
charge of CSR and safety, discusses policies related tosafety in the KAYABA Group. In these ways, theEngineering Division(Basic Technology R&D Center/Production Technology R&D Center)

Annual number of fires (cumulative total)

Basic research(case)

Future technology

Elemental technology
research

25

Collaboration with CAE* Promotion Department andDigital Transformation Improvement Division

20

11

11

AI/IoT

15

9

8

０

2019

■ Domestic■ OverseasIntellectual property
strategy

Simulation technology

10

10
5

Digital technology

Intellectual Property
Department

10

11
5

2020

2021

2022

Mass production

Product development(FY)

Each business units/Group companies*CAE: Computer-Aided Engineering. The use of computer simulations to resolve issues faced by technical departments.

KAYABA Group Report 2023

20

Value Creation
Monozukuri Strategy

technologies, based on the roadmap for electrification
and autonomous driving. We are also making active
efforts aimed at optimization and to improving productivity, such as using AI to conduct data analysis.
The Engineering Departments of each Business Unit
are working on improving the performance and lowering
the costs of existing products, and on developing andlaunching mass production for new products.

COLUMN

Overview

n research and development, we are examining andanalyzing long-term environmental changes and theaccompanying changes in social and customer needs,
and developing a roadmap for our long-range strategy toachieve the ideal future technologies. Looking at basic
research, for example, we are developing electronic
control devices and devices compatible with electrification as well as systems that combine those

TPM Overseas
At overseas plants, the activity promotion team is taking the lead in providing basic TPM education and practical work
operations for the purpose of reducing losses due to mechanical breakdowns and improving productivity.

Innovative Monozukuri: A manufacturing site with an unbroken workflow

Component
inventory
Component
depot

Product
inventory
Inspector

Existing line example
Personnel required:
seven Inventory: 10 days’ worth

Transport

Procurement

Transport

Transport

Transport

Shipping

External Server

Control center

Concept examples

Image inspection

Personnel required:one Inventory: One day’s worth

Abnormality prediction
AGV*
Procurement

Component transport

Machines

AGV
Product transport

Shipping

Quality / equipment breakdown /production progress
A workplace wherenothing stops

AGV: Automated Guided Vehicle

21

KAYABA Group Report 2023

KIMZ (China)

KWT (China)

KMT (Taiwan)

KST (Thailand)

KYBT (Thailand)

KMV (Vietnam)

KHMI (Indonesia)

KMSI (India)

KAC (U.S.A.)KMEX (Mexico)

KMB (Brazil)

KAYABA’s DX initiatives are targeting revolutionary ways
of working that use digital technology; the creation of
new ideas and businesses in the fields of technology,
quality, and monozukuri; and improvements in quality
and productivity.
In 2019, in order to transform the way a range of jobs
were being done at KAYABA, we constructed the KYBIoT Platform, which became the foundation on which
we perform data collection, analysis, and visualization.
In manufacturing, we predict failures in the production equipment at plants and improve productivity byoperating our Equipment Predictive Maintenance
System and Equipment Data Collection and Analysis
System. These have become central to the Ship’30
next-generation revolutionary new plant initiative, andwill support the future production system of KAYABA.
In technology, we are planning a transformation thatwill bring about innovation through fusing KAYABA’s
core competence of hydraulics with digital technology.
In human resources, we seek “digital human assetsthat have both the technical skills to use digital technology and business transformation skills.” We have an
in-house education curriculum in place that covers
topics from the basics of IT and DX to practical use of
AI. We have also started training management humanresources who will use digital technology to bring abouta business transformation.

In FY2023, we established the Digital Transformation
Improvement Div., a new organizational body thatbrings together our in-house digital engineers. The
KAYABA Group will work together to move forward withdigitalization in all business domains, train and assign
our human resources so they can support the strengthsof our management strategy and business strategy as
well as become achievement drivers, and contribute to
management.

Data

Processing/assembly line connection

Component
depot

KMCZ (Czech Republic)

Our DX Initiatives

Assembly line
Interiminventory

KAMS (Spain)

Business Strategy

Processing line

KYBSE (Spain)

Value Creation

Present

constructing a system for next-generation TPM (Total
Product Maintenance) that can handle the control ofsuch equipment. Also, we believe that this revolution
requires improving the quality of people who can master the latest, most advanced equipment, and we mustlay a foundation starting with basic machine training foreach and every employee.
Our activities in 2023 and onward involve investigations
into a KAYABA Production System with a core of digitaltechnology, clarifying our 2030 vision for each Business
Unit and plant after its evolution, developing technology
to address issues, and building production lines.

Strategy

KAYABA is working on our Ship’30 project, which is
aimed at achieving the next generation of monozukuri.
We are stiving to create an unmanned plant that runs
on digital technology. Our concept is to achieve continuous integrated production from machining to assemblyin an unbroken workflow of items within the plant.
Through this revolutionary production process, we aim
to achieve the minimization of transport, inventory, andwork operations.
We are also reforming equipment control by automating the work of people through using inspections AI andcollaborative robots. Simultaneously, we are

The KAYABA Group contributes to society
by providing technologies and productsthat make life safe and comfortable.
DX through co-creation of existing technology and new technology
DX through co-creationof existing technology
and new technology

Technology
Analysis andevaluation

Monozukuri

KAYABA’s
total strength
Quality

Utilizationof AI

Iot-Platform

Production
Improvement

KAYABA Group Report 2023

22

Value Creation
Monozukuri Strategy

QualityIntellectual Property Activities

Initiatives for Quality Management

Intellectual Property Strategy
The KAYABA Group shall:
1. Address quality improvement with honesty driven by
the belief that quality is the basis for business.
2. Deliver safe and secure products in compliance withpromises to customers as well as with laws andregulations.

*Bad News 1st: Quickly report when any abnormality occurs

Quality Management Diagram

Development/ design
Good quality
designCustomerrequestRequestedspecifications

Production
technology
Good quality
requirements

Manufacturing/ inspections
Good quality
work

Customersatisfaction
Follow standard
work practices andmake productsthat guarantee
good quality

Ratio of domestic and overseas patents retained(As of March 31, 2023)

Product

Southeast Asia 1%

Other 5%China 10%
America 12%

Reciprocal cooperation, communication, Bad News 1st

Europe 5%

Feedback and evaluations, revisions

Number of related patents retained(current as of May 18, 2023, based on our company’s information)

Shock AbsorberHydraulic Cylinder

800

100

600

2,698

Japan 67%

patents*IP landscaping: To create proposals for strategies that contribute to intellectual
property management by analyzing intellectual property information.

567

84

Business Strategy

Guarantee the design
quality if the product ismade following
the establishedrequirements

Guarantee that the product willmeet the required performance
if it is made following the design

Value Creation

High quality work
Product creation

In recent years, in addition to these defensive intellectual property activities, we have been undertaking
new initiatives. In product development, we are creating
inventions using a framework to give us a competitive
advantage, and moving ahead with activities to build aportfolio based on our development strategy. Also, inorder to contribute to solving social issues and generate
new value for future growth, we are working on the IP
landscape* from the planning stage and using intellectual property information for the purpose of increasing
corporate value.
Further, we are working to protect and increase the valueof our brand through actions that protect our corporate andproduct brands. We respond to imitation trademark applications, particularly in China, in ways such as making formal
objections, and exercise our trademark rights against
counterfeit products such as shock absorbers.

Strategymeasures and improvements, creating a cyclical process. And to improve daily communication, we areaiming to create an open workplace in which our employees know they can ask for consultations at any timeand for any reason.

At the KAYABA Group, research and development
divisions and intellectual property divisions cooperate toactively create intellectual property, in ways such as
regularly holding the Intellectual Property Strategy
Meeting. We conduct intellectual property activities
aimed at the growth of business and improvement ofcorporate value by appropriately safeguarding andapplying in-house products and technologies.
The results of research and development themes arechecked thoroughly so that any possible inventions will
not be overlooked. As a result of actively filing forpatents and acquiring rights, we hold the world’s highest number of patents related to protecting ourmainstay products of shock absorbers and hydrauliccylinders. The strength of the KAYABA Group’s technicaland intellectual property capabilities is recognized andhas been highly evaluated, with the patents we haveacquired winning awards for inventions.

Overview

At the KAYABA Group, “quality management” refers to
striving to improve quality in all our business processes
in order to deliver products and services that clients canrely on and that bring them satisfaction.
Quality education for all employees sets the foundation, and since the previous fiscal year we have been
conducting quality awareness reforms so as to stay
conscious of monozukuri from the customer’s point ofview in all business processes. We recognize that it iscritical to make daily improvements by incorporating aquality management mindset into each individual’swork.
We take a “Bad News 1st”* stance that calls for theimmediate report of quality defects and concerns, andfeedback is given to the reporter after we take

80

452
60

333

400

37
40

151

200

132

94

０ KAYABA
Company B
Company D
Company A
Company C
Company E

36

32

31

30

20
０ KAYABA

Company b
Company dCompany aCompany cCompany e

Quality Assurance System

Step

Details

Prior and model
development

DR*0 evaluation
meeting

Order development

DR1 evaluation
meeting

Mass-production
development andproduction preparations

Quality Safety Audit
DR2 evaluation
meeting

Mass production
Initial flow management
Quality Safety Audit

Development quality

product’s entire lifecycle. We do this with what we callthe “three-stage evaluation” for the development of
products, technology, and production methods. It covers
everything from the product planning stage to fixing
defects after shipping mass-produced products andmanaging modifications. The system works with several
kinds of production set-ups, ensuring product quality.
Goal of the Three Steps
Implementation of commercialization (Description and evaluation ofdevelopment quality)

Quality of production Implementation of mass production (Description and evaluation of
start
development quality)
Mass-production
quality

Implementation of achieving quality requirements (Demonstrationand evaluation of start quality)

Bad News 1st
Execute (until the reporter receives feedback)
When abnormalities arise: Stop, Call, Wait

COLUMN

Patented Inventions Useful for Society
Patented Inventions
Useful for Society
To encourage andpromote invention in all
regions, we submit
invention patents every
year to the Chubu
Regional Invention
Four award-winning KAYABA inventors
Awards, which is
conducted for the purpose of contributing to theadvancement of science, technology, and industry.
FY2022, the inventor of the patent (patent number
JP6637255) that protects the key technology for
performance improvements and cost reductions for the
KCFL1-5 lift cylinder for forklifts won the Gifu Prefecture
Governor's Award.

Data

From the viewpoint of detecting defects and their causes
before they occur, the Quality Div. carries out internal
audits to which all plants are subject in order to check thequality assurance system. We work to improve quality
daily by detecting and making improvements to issues in
the quality system.
We are working to achieve high productivity across theTrademark Registration with an Awarenessof Branding
As part of Japan’s Ministry of Land, Infrastructure,
Transport and Tourism's Smart City Model Project,which is based on the science and technology policy"Society 5.0," our development of a road maintenancemanagement task support service is underway. Awareof the importance of branding for
our Smart Road Monitoring,which is under development,
we registered trademarks in
November of 2022 for “Smart
Road Monitoring,” “SUMADO”
in Japan.

Check the workplace, products, and data to confirm that there are no quality problems and that production andshipping are safe, including the manufacturing process.
* DR: Development & Research

23

KAYABA Group Report 2023

KAYABA Group Report 2023

24

Value Creation

Management Strategy

ESG Management

Corporate Governance

Basic Policy for ESG
providing technologies and products that make people’s
lives safe and comfortable, the KAYABA Group contributes
to society.” To achieve that mission, we are returning to thespirit of originality that has been passed on since ourestablishment and moving forward to an affluent future.

• With ESG management as the basis for formulating policies, we will establish an overall picture(our values, business model, sustainability, growth potential, etc.) for our value creation cycle.
• We will also reexamine existing initiatives in terms of ESG initiatives and communicate them outside
the Company in order to foster trust.

Approve/supervise

Sustainability Committee

Corporate Governance Structure
Relatedcommittees
Proposals

Implementation/
follow up

Participation

Functional
departments,
Operations and plants

KAYABA is a company with an Audit & Supervisory
Board as described under the organizational design
stipulated by the Companies Act of Japan, and has asystem of corporate governance in place that centerson the Board of Directors and Auditors / the Audit &Relationship between engines and organizations
Relationship of committee to engines and organizations

Decision

General Meeting of Shareholders

Internal and public
information disclosure

Elect/Dismiss

Advisory Committees(Nomination, Compensation)

Consult• Training when being promoted

Board of Directors

ReportReportApplication

Audit

ReportReport

取締役会／執行役員会

Cooperation

Report

委員長：社長
委員：ESG推進統轄役員
デジタル技術事業本部長
他
事務局：ESG推進部

提案・
報告(Board of Directors Subcommittees)

Report参画

Board of Executive Officers
and other management meetings

各機能部門、各事業／工場

Instruction

Compliance Committee(Chair: President)

Instruction

Instruction

Approval
Proposal
Recommendation
Supervision

SurveyInstruction
SurveyResponsible head office departments, operational headquarters,
Group companies, branches, representative offices

Audit

Draft
ReportReportReport

提案
展開・
フォロー

Audit

Instruction

各種実務委員会

Informationexchange

Risk Management Committee(Chair: President)

承認・監督

サステナビリティ委員会

Consult
Approval
Instruction

Instruction

Sustainability Committee
上申・報告Elect /Dismiss

Audit &
Supervisory Board

ReportRegional
Instruction Representative Director,
Representativeand President
ReportOfficers
Chief Operating Officer

Audit firm

Instruction

Audit Department
J-SOX OfficeEvaluation
based on J-SOX Audit

決定事項

社内外への発信
Articles serialized
in the monthly
in-house company
newsletter

Board of Directors
Incorporation and Company regulations, and deliberates
The Board of Directors comprises eight members,on policies and other important matters involving man各機関と組織との関係
including four external directors. In principle, the Board ofagement. The Board of Directors also
oversees the
委員会と各機関、組織との関係
Directors meets once a month. The Board of Directors
management of business operations. In addition, four
株主総会external directors are registered as independent officers.
makes decisions based on laws, the Articles of
選解任

諮問委員会
（指名・報酬）25

Elect/Dismiss
Consult

Data

Education for
promotingunderstanding• Corporate website• Providing information on the in-house intranet

Supervisory Board. Also, we have adopted the
Executive Officer System, seeking to increase thespeed of decision making and optimize corporate
management

Business Strategy

Chair:
President
Member: ESG Promotion
Executive Officer,
Operation’s General
Managers, andother members
Secretariat: ESG Promotion Dept.

Proposals/
reportValue Creation

Report tosuperiors

Efforts Towards Internal ESG Initiatives

Awarenessbuilding activities

Strategy

Board of Directors /Board of Executive Officers

Consult

We believe it is important for each employee to makeindependent efforts to promote ESG management.
Led by the ESG Promotion Office, which was established in July 2021, we publish a monthly related serial in
the in-house company newsletter to raise awareness. In
FY2022, it featured examples of specific initiatives within
the KAYABA Group.
Also, we conduct training in SDGs, ESG, and corporate
management when promoting an employee, providing
education on the management and leadership practices
required for ESG management.

Based on our Corporate Spirit and the following basic
policies, we will strengthening corporate governanceand respond to the expectations of all our shareholders
through the achievement of continuous growth and theimprovement of corporate value.

Basic Policies
1. We shall respect the rights of shareholders, and ensure the equal and fair treatment of all shareholders.
2. 	We shall take the benefits of stakeholders into consideration and endeavor to appropriately cooperate with those stakeholders.
3. 	We shall disclose not only information on compliance with the relevant laws and regulations, but also actively provide
important and/or useful information to stakeholders for their well-informed decision making.
4. 	The Board of Directors shall be cognizant of its fiduciary responsibility and accountability to shareholders, and shall appropriately fulfill its roles and responsibilities in order to promote sustainable and stable corporate growth and increase
corporate value, profitability, and capital efficiency.
5.	We shall engage in constructive dialogue with shareholders, and make efforts to obtain shareholders’ support regarding theCompany’s business policies and also reflect shareholders’ opinions and concerns in the improvement of management.

ESG Promotive Structure
It is imperative that we promote the strengthening of ourinitiatives for ESG related to creating a sustainable society.
Therefore, in March 2022, we established theSustainability Committee as an organization that coordinates for the entire company. It deliberates on the
progress of management and measures of policies andtargets related to sustainability, after which it provides
opinions and reports to the Board of Directors.
Also, it cooperates with all kinds of working committees
and functional divisions/departments in planning policies
and initiatives, and strives to support and follow up on theactivities of each division/department. Each supervising
division/department deliberates with the expert committee
and others on topics such as which matters they should
engage in and activity planning regarding individual sustainability themes, and promotes those initiatives incooperation with the related divisions/departments.

To fulfil our corporate social responsibility of contributing to society, KAYABA is building a quick and efficientmanagement system with our Board of Directors
leading the way. Furthermore, we are pursuing a highly
fair and transparent management supervisory function.

Overview

At the KAYABA Group, we formulate policies based on
ESG management. We conduct activities to solve environmental and social issues, and are working to contribute to
the achievement of a sustainable society.
Our Corporate Spirit sets forth the following: “ByCorporate Governance Principles

諮問
報告

地域統轄

監査

取締役会

答申

KAYABA Group Report 2023

選解任

指示

監督

代表取締役

報告
申請
報告

報告

選解任

監査役会

KAYABA Group Report 2023

26

Value Creation
Management Strategy

Audit & Supervisory Board
The Audit & Supervisory Board comprises four full-timeand one part-time Audit & Supervisory Board member.
Two full-time Audit & Supervisory Board members and

The members of each of the aforementioned organizations are as follows. (As of June 23, 2023)
Title

Name

Board of
Executive
Officers

Domestic
AffiliatedCompanies
Management
Meeting

Audit &
Supervisory
Board

Representative Director, Chairman

Yasusuke Nakajima

◎

○

○

Representative Director, Chief Executive Officer (CEO)Masao Ono○○○

Representative Director, and President Chief Operating Officer (COO) Masahiro Kawase

○

◎

◎

Member of the Board of Directors, Senior Managing Executive
Officer Chief Financial Officer (CFO)

Takashi Saito

○

○

○

Member of the Board of Directors (External)

Shuhei Shiozawa

○

○

○

Member of the Board of Directors (External)

Masakazu Sakata

○

○

○

Member of the Board of Directors (External)

Akemi Sunaga

○

○

○

Member of the Board of Directors (External)

Chizuko Tsuruta

○

○

○

Audit & Supervisory Board Member (Full Time)

Hideki Nonoyama◎

Audit & Supervisory Board Member (Full Time)

Osamu Kunihara○

Audit & Supervisory Board Member (Full Time)(Outside)

Junichi Tanaka○

Audit & Supervisory Board Member (Full Time)(Outside)

Masahiko Sagara○

Audit & Supervisory Board Member (Outside)

Junko Watanabe○

14 executive officers

－

○

○

For details, see “Outside directors andoutside Audit & Supervisory Board Members” on the website

Officer Compensation(1) Compensation Structure

27

KAYABA Group Report 2023

Directors¥30 million per month(¥360 million per year)

June 27, 1997, 75th
Ordinary General Meetingof Shareholders

Consultation with
Compensation
Committee

Audit & Supervisory
Board members¥10 million per month(¥120 million per year)

June 23, 2022, 100th
Ordinary General Meetingof Shareholders―

40% or less and ¥200 million per yearof total compensation (Fixed compensation + Performance-linked
compensation)

June 23, 2022, 100th
Ordinary General Meetingof Shareholders

Consultation with
Compensation
Committee

Within 20,000 shares per year(¥75 million per year)

June 23, 2022, 100th
Ordinary General Meetingof Shareholders

Consultation with
Compensation
Committee

Directors(Excluding external
directors)*1 The limit on total fixed remuneration for directors does not include salary for employees concurrently serving as directors.
*2. There is an upper limit of 1.0% of profit attributable to owners of the parent in the fiscal year preceding the fiscal year in which performance-linked compensation is paid.

(2) Compensation Decisions

For director compensation, the discretionary Compensation
Committee composed of representative directors andexternal directors verifies the propriety of the criteria for
calculating fixed and performance-linked compensation andreports the propriety of criteria to the Board of Directors.
Fixed compensation for directors is determined byresolution of the Board of Directors, upon receiving a reportfrom the Compensation Committee, within the limit on
total compensation decided at the General Meeting of
Shareholders. The performance-linked compensation of
Directors (excluding external directors) is in accordancewith the level of achievement of the indexes that form thebasis of its calculation, and is determined by a resolution of
the Board of Directors made upon receiving a report fromthe Compensation Committee and within the range of thelimit for the total remuneration amount that is determinedat the General Meeting of Shareholders.
Fixed remuneration for Audit & Supervisory Board members is determined in consultation with Audit & Supervisory
Board members, within the limit on total compensation
decided at the General Meeting of Shareholders.

(3) Calculation and Determination of Performance-Linked Compensation

https://www.kyb.co.jp/english/company/governance.html

Officer compensation consists of fixed monthly compensation (basic compensation) according to position
and responsibilities, and performance-linked compensation (bonus) that varies depending on the Company’sbusiness results. Outside directors and Audit &Calculation Process

Supervisory Board members only receive fixed compensation according to their respective roles, and inview of their independence do not receive performance-linked compensation.

Performance-linked compensation consists of monetarycompensation and restricted stock compensation.
The total amount of monetary compensation shall bewithin the range of the total compensation limit determinedat the General Meeting of Shareholders, and shall not
exceed 1.0% of the profit attributable to owners of theparent in the fiscal year (evaluation period) preceding the
fiscal year in which performance-linked compensation ispaid, and up to 40% of the total amount of base remuneration and the monetary compensation portion of
performance-linked compensation for Directors (excluding
External Directors), and the decision is made by the Boardof Directors upon receiving a report from theCompensation Committee. Then, based upon the pre-determined prorated amount that corresponds to each Director's
official position, the Board of Directors receives theCompensation Committee report and determines theamount to be paid to each Director, and each Director ispaid in a lump sum after the end of the evaluation period.
In stock compensation, the number of shares provided isdetermined by a resolution of the Board of Directors within
the maximum number and total amount of compensation
limits resolved by the General Meeting of Shareholders,
upon receiving a report from the Compensation Committee
based on the level of achievement of the indicators that are
the basis for calculating performance-linked compensation

during the evaluation period and the predetermined numberof shares provided in accordance with the position of each
Director, and the Company’s common stock is presented ina lump sum after the end of the evaluation period.
The indicators that are the basis for calculating performance-linked compensation are four calculation indicators(amount of segment profit, ratio of segment profit, amountof profit (loss) attributable to owners of the parent, ratio of
profit (loss) attributable to owners of the parent), and theamount or number of performance-linked compensation
will be calculated based on the achievement of the consolidated performance forecast during the evaluation period. Ina case where there is a loss attributable to owners of theparent, performance-linked compensation will not be paid.
Regarding Directors (excluding External Directors), theapproximate ratio of each type of compensation whenachieving a 100% performance index shall be fixed compensation : performance-linked compensation :performance-linked stock compensation of 6:3:1.
Regarding decisions on the individual remuneration
amounts of fixed compensation and performance-linked
compensation, our policy is for the Compensation
Committee to inspect the validity of the decisions, report to
the Board of Directors that such validity was found, and to
conduct calculations and decisions based on the content of
the report.

KAYABA Group Report 2023

Data

Note: ◎ denotes the chairperson

Performancelinked
compensation(Bonus (stock))

Date of Resolution of theGeneral Meeting of
Shareholders

Business Strategy

Board ofDirectors

Performancelinked
compensation(Bonus (monetary))*2

Maximum Total Compensation

Value Creation

Regional Executive Officer
Overseas sales account for the greater part of our total
sales, and the importance of overseas plants and offices is growing. We have established regional
headquarters in the United States, China, and Europe,and supervisory duties are delegated to theRepresentative Directors for each region from thecurrently serving Directors. We work to strengthen
governance by a system in which each regional headquarters and its affiliates report on performance andimportant issues to the Regional Representative
Director every month, and the Regional Representative
Director reports on the progress situation to the
President once every three months.

Fixed compensation(Basic compensation) *1

Eligible Officers

Strategy

Other Management Committees
We have also established other management committees, including the Domestic Affiliated Companies
Management Meeting, where functional and businessdivisions/departments report on the status of businessexecution, and the Operational Review with the
President Meeting, where the president executive
officer visits production sites to review and follow-up on
matters related to policy development and important
manufacturing issues. These meetings aim to strengthen Group management oversight.

Type of Compensation

Overview

one part-time Audit & Supervisory Board member areoutside members. Through audits by outside Audit &Supervisory Board members, we expect to achieveeffective management oversight and have concluded
that an effective governance system is in place. In
addition, three of the outside Audit & Supervisory Board
members are registered as independent officers.

Board of Executive Officers
The Board of Executive Officers, a body that reports
directly to the Board of Directors, deliberates on important matters concerning management from a
Company-wide perspective.

28

Value Creation
Management Strategy

Management Team (As of June 23, 2023)* Independent Directors and Auditors

Overview

Directors

Audit & Supervisory Board Members

Strategy

Yasusuke Nakajima

Masao Ono

Masahiro Kawase

Takashi Saito

Hideki Nonoyama

Junichi Tanaka*

Masahiko Sagara*

Audit & Supervisory
Board Member

Audit & Supervisory
Board Member(Outside)

Audit & Supervisory
Board Member(Outside)

Osamu Kunihara

Junko Watanabe*

Audit & Supervisory
Board Member

Audit & Supervisory
Board Member(Outside)New

Representative Director,
Chairman

Representative Director,
and President Chief
Operating Officer (COO)

Member of the Board of
Directors, Senior Managing
Executive Officer, Chief
Financial Officer (CFO)

Value Creation

Representative Director,
Chief Executive Officer(CEO)

In Charge of European
Operations, Global
Corporate Finance, CSR,
Public Relations/IR
General Manager, CSR &Safety Control Division
Appointment
of directors

June 2005

June 2017

June 2015

June 2023

Business Strategy

Executive Officers

Masakazu Sakata*

Akemi Sunaga*

Chizuko Tsuruta*

Minoru Ishikawa

In Charge of Automotive Components Operations, China Operations; General Manager, Automotive
Components Operations, and Suspension Headquarters

Ichio Nemoto

In Charge of Special Purpose Vehicles Division
General Manager, Hydraulic Components Operations, and Special Purpose Vehicles Division

Takashi Tezuka

In Charge of Quality; General Manager, Quality Division

Ryuji Uda

In Charge of North, Central & South American Operations; President, KYB Americas Corporation

Shozo Amano

In Charge of Production, Purchasing & Logistics; General Manager, Production Division

Masaru Tsuboi

In Charge of Safety Control & Environment

Tomoki Takaoka

In Charge of Global Corporate Planning, Domestic Affiliated Companies, TQM Promotion and ESG
Promotion; General Manager, Corporate Planning Division, and General Affairs & Human Resources Division

Manabu Akasaka

General Manager, Finance & Accounting Division

Minoru Tamai

General Manager, Nagano Plant, Hydraulic Components Operations

Toshimichi Izeki

In Charge of Aircraft Components Division; General Manager, Sagami Plant, Hydraulic Components
Operations

Shinichi Sugioka

In Charge of Cybersecurity Measures; General Manager, Motorcycle Headquarters, Automotive
Components Operations, Digital Transformation Improvement Division, and President, KYB Motorcycle
Suspension Co., Ltd.

Kenji Yazaki

General Manager, Mobility Devices Headquarters, Automotive Components Operations

Atsushi Fujii

In Charge of Engineering; General Manager, Engineering Division, Basic Technology R&D Center, andCurator, KAYABA Museum

Atsushi Okubo

In Charge of Sales; General Manager, Sales Division

New

Member of the Board of
Directors (External)
Appointment
of directors

June 2016

Member of the Board of
Directors (External)
June 2020

Member of the Board of
Directors (External)
June 2022

Member of the Board of
Directors (External)

Managing
Executive Officer

June 2023

Deputy Managing
Executive Officers

29

KAYABA Group Report 2023

KAYABA Group Report 2023

Data

Shuhei Shiozawa*

Senior Managing
Executive Officer

30

Value Creation
Management Strategy

An External Director’s Perspective

I’d like to use my experience withand taxation specialist, and the perspective

reforms and corporate information disclosureof diversity, it’s about supervisingin the banking and leisure industries

all kinds of business decisions to make sure

to assist with management decisions.

Overview

From my perspective as an accounting

everything feels right.

KAYABA Group Report 2023

Expectations for the Company
This is one example, but the development of the mobile
home was featured on television. The idea and technological skill to use hydraulics to expand the top andsides of the interior space seems like something only
KAYABA would create. One thing I’d really like to hear isa woman’s perspective on what would make them feellike they’d like to ride in the vehicle, and on the ease ofusing the interior space.

My Impression of KAYABA
I went to observe both Sagami and Gifu Plants. When I
saw how each and every employee was striving daily to
improve their technical ability, and making steady efforts
to respond to the high-level, detailed requests from thecustomers, I was really moved.
Also, at the test course, I rode in and compared carsthat were equipped with shock absorbers and thosethat were not equipped with them. Even though I am
not deeply knowledgeable about automobile mechanics, the difference was immediately obvious. I strongly
felt that I’d like more general consumers to be aware of
the value of this wonderful product.
Excellent Points
I believe that the Company’s greatest strength is theirsincere attitude toward monozukuri that extends fromthe management and carries through to the generalemployees.
They have heated discussions on technology andquality even at meetings of the Directors, and I sense
they have great pride in their technical abilities. When it

comes to compliance, the upper management ensuresthat the major issues of the past are not forgotten, andthoroughly enforces that everyone in the entire Group
always acts with an awareness of compliance norms. I
am convinced that this is one of the reasons that they
could rapidly recover their performance.
The medium-term management plan has set forth theslogan of “Mastering quality management.” I feel thatrather than being satisfied with the present condition,
the management is extremely serious about pursuingeven higher levels of quality.
Points for Improvement
KAYABA is a global company, yet there are few womenand foreign nationals among the management, and I
think that will gradually become an issue. Also, promoting candidates to management from a wide range ofhuman resources with different social experiences andthose who are well-versed in systems and DX will leadto KAYABA becoming a stronger, more robust company.
Currently, human resources with strong technicalcapabilities are coming together across the Group to
make serious efforts for monozukuri, but I believe evenbetter monozukuri will be attainable by including theopinions of those human resources with their diverse
viewpoints and values.

Data

31

Points for Improvement
I think one issue involves training women managers,which is an issue for many companies. The environment
presents difficulties in achieving a good work-life balance for women, who have complex life events, andthere are many women who underestimate their own
abilities. In order to increase the ratio of women managers, it is important to deliberately set up an environmentof management training. I think it’s necessary tostrengthen networks of women colleagues and devise
a system that allows for easy consultations and otherways to stop isolation within the organization.
Also, active engagement with workstyle reforms iscritical. With the continuance of online meetings thatcan be held at any time or place, providing talented
women employees with experience and building theirself-confidence through constructing a system in which
employees dealing with limitations can actively contribute to the organization will likely lead to encouraging
growth. I believe this will result in motivation not only
for women but people of all genders, increase theircapabilities, and by extension favorably influence corporate earnings.

My Role as an Outside Auditor
The governance that listed companies are required bysociety to have in place has a lot of the same parts,
regardless of the type of industry or corporate scale.
I don’t have particularly specialized knowledge, so
it’s difficult for me to make a comment from the aspects of technology or quality. However, I have a fairdeal of experience with business management, so I’dhope to focus my efforts on making management
decisions that are highly evaluated by as many stakeholders as possible.
When I was working at a bank, I handled various
reforms related to diversity, human resources training,and public relations strategies. In the leisure industry, I
dealt with service improvements from the customer’s
point of view and the strengthening of corporate information disclosure. I believe I can use these experiences
to strengthen governance in a broad sense.

Business Strategy

Excellent Points
I had heard that the Company overcame a period ofchallenging ordeals, and when I attended important
meetings such as the management meeting, I understood why the Company can overcomes obstacles in ashort time. They were extremely serious about

questioning and identifying every issue, and I could tellthat the upper management and the other executives
were sincerely engaged. And I felt that, currently, ourefforts towards compliance are second to none in any
company.

Value Creation

My Impression of KAYABA
I took on the office of External Director in June 2022
amidst the COVID-19 pandemic, so I wasn’t able ofobserve every workplace. However, when I inspected
the plants in Sagami and Gifu, I was amazed to see
everyone there using several technologies and working
with passion. From the way that everyone looked like askilled craftsperson, I was able to perceive that many
people started working for the Company because they
are motorcycle and automobile enthusiasts. I was
overwhelmed by their enthusiasm when I received an
explanation about the technology, and I caught a
glimpse of the spirit of monozukuri that’s been here
ever since the establishment.

Junko Watanabe
Audit & Supervisory Board Member (Outside)

Strategy

My Role as an External Director
I’ve been involved in financial auditing for listed companies ever since I passed the exam for a public certified
public accountant and joined an auditing firm. In 1994, I
registered as a licensed tax accountant and started myown practice. In addition to financial auditing, I’ve been
engaged in business across a wide range of fields, suchas taxation procedures and management consulting.
In my capacity as External Director, I first conduct an
examination to see if there are any issues from myperspective as a specialist in accounting and taxation.
And from the perspective of diversity, I examine business decisions in each management field to make sureeverything feels right. In particular, we are seeing
growing social calls for an increase in women’s active
participation. In this environment, I believe it is necessary to oversee all kinds of management decisions tocheck if they are being made in a way that feels rightfrom a woman’s perspective.

Akemi Sunaga
Member of the Board of Directors (External)

Expectations for the Company
I look forward to KAYABA promoting, more widely andacross all of society, the appeal of its products andcorporate mindset of focusing intently on quality.
I was not very aware of KAYABA’s products until I
took on this position, and many people I know haveheard the Company’s name, but don’t know much about
its products. Although it is a B2B company, I believethat releasing information with the stance of a B2C
company will lead to an increase the number of
KAYABA enthusiasts, ensure performance, and increase
corporate value.

KAYABA Group Report 2023

32

Value Creation
Management Strategy

Internal Control and Compliance

Risk Management

Basic Policy

Basic Policy
For details, see “Internal controls” of the “Corporate Governance
System”on the website
https://www.kyb.co.jp/english/company/governance.html

Key Activities• The compliance program was enacted under our compliance • We designated October as Compliance Reinforcement
system, which is headed up by the Compliance Committee.
Month, and conducted various activities to promote
It is being rolled out and implemented at Group companies,
heightened compliance awareness among all employees,
and we are evaluating and reviewing the results. The issues
including President’s message, call for compliance
we uncover now will be used to improve initiatives in themottos, repeated in-house training, Compliance Top
next fiscal year.
Management Training Course, etc.
• Conduct training that reflects the issues identified in the
results of the last fiscal year’s compliance questionnaire• Conducted risk-reduction initiatives for nine key risks

Responding toWhistleblower andImproving theEffectiveness of the
Whistleblowing System• We respond to reports in order to ensure the prevention or • Use a more highly confidential external contact point forearly-stage discovery and correction of nonconforming acts.
internal reporting. Respond to internal reports, makeMoreover, we are making improvements for the purpose ofeffectiveness improvements and respond to reported
achieving a highly trustworthy whistleblowing system thatcases, and support the responses of Group companies.
allows individuals to report without hesitation.
Report regularly to the Compliance Committee.

Internal Control System

General Manager,
CSR & Safety Control Division
Group Compliance Promotion Office(Internal Control Department)

In times when a large-scale disaster occurs, our firstpriority in any situation is to put human lives first. So thateach and every person concerned correctly understands
disaster response countermeasures and takes action, we
are working on our business continuity plan for the
purpose of quickly conducting initial activities while
supporting customers, business partners, and the regional community and keeping injuries to people and damage
to objects at a minimum, in addition to quickly restoringproduction. In particular, with the increasing frequency ofearthquakes, we are strengthening natural disaster
reduction measures across all departments and includinggroup companies in preparations for a major earthquake,such as fixing equipment in place.
Also, we held the first assembly drills in the past threefiscal years at eight plants. The purpose was to consider
situations that might occur in an earthquake while eachindividual thought about them and acquired the knowledge necessary to making an initial response. In addition,
they also came up with ways to strengthen cooperation
with related divisions/departments.

We are collecting the things we became aware ofthrough the drills as important matters that can be usedin emergencies. In addition, we are further increasing ourability to face the issues that confront us through various
drills, such as quickly checking on the safety of employees. In responding to procurement, we will conduct
improvement activities with business partners from theviewpoints of “disaster reduction, inventory, and replacements,” and aim to restore production at an early stage.

Business Strategy

Compliance Committee(Chair: President)

Responding to Business Continuity

Value Creation

Risk Management
Initiative• The Risk Management Committee reports to the Board of
Directors, and based on the Risk Management Rules, it
identifies material risks the Group must address and thebusiness units responsible for managing them, andconducts risk reduction initiatives at each responsible
business unit.

presents quarterly updates to the Board of Directors.
Also, the Sustainability Committee is in charge of our
response to risks related to climate change. They conduct initiatives such as uncovering the risks andopportunities presented by climate change in cooperation with the Risk Management Committee.

Strategy

Compliance Promotion

Major Initiatives

At the KAYABA Group, the Risk Management
Committee reports to the Board of Directors, and basedon the Risk Management Rules, it identifies material
risks the Group must address and the business units
responsible for managing them, conducts risk management initiatives at each responsible business unit, andOverview

In order for corporate governance to function effectively,
we are promoting a basic policy for our internal controls
system that is based on the Companies Act of Japanand determined by the Board of Directors.

Assembly drill for earthquakes

Regional Headquarters Compliance Managers
Presidents of Regional Headquarters and Large-scale Domestic Subsidiaries
Instruction/Report

Instruction/Report

Instruction/ReportCompliance Managers(General managers of business divisions/departments and functional divisions/departments, and factory managers)
Instruction/Report

Key Compliance Personnel(Department Managers)
Cooperation

Instruction/ReportCompliance Managers
Presidents of Domestic andOverseasGroup Companies

Cooperation

Instruction/ReportCompliance Managers
Presidents of Affiliated Companies
Instruction/Report

Regional headquarters
Compliance Officers
Cooperation

Key Compliance Personnel
at Each Site
Cooperation

Person in Charge of Compliance

Person in Charge of Compliance

Person in Charge of Compliance

Person in Charge of Compliance

KayabaSubsidiaries

Regional Headquarters

Affiliated Company

The Compliance Committee conducts activities such as
deliberating on the fiscal year compliance program,which is drafted by the Compliance Promotion Office. In
addition to drafting the program, the secretariat provides
support for to regional headquarter compliance managers

33

Information Security
Instruction/Report

Instruction/Report

Key Compliance Personnel
at Each Site

*TakakoRegional Headquarters
Compliance Officers

KAYABA Group Report 2023

and regional headquarter compliance officers. Regional
headquarters and large-scale domestic subsidiaries
regulate their own companies as well as their affiliates
and subsidiaries, while the KAYABA regulates itself andsubsidiaries other than those mentioned above.

KAYABA works to ensure information security by settingout a Standard Information Security Policy and appointing persons responsible for information security
management in order to strengthen information security on a global level. Nevertheless, there are rapid
increases in cyberterrorism which reflect geopoliticalrisks such as the ongoing Russian invasion of the
Ukraine as well as ransomware cyberattacks by criminalgroups seeking forced payments. Furthermore, risks
related to information security due to the introductionof new digital technology are also growing.
We are seeking to quickly respond to new threats andcontinually reduce risks by strengthening regulations forthe entire KAYABA Group and taking cyber risk countermeasures with a focus on KAYABA-CSIRT.

Data

Compliance Officers(General Manager, Internal Control Department)

Major efforts in FY2022•S tandardization of cybersecurity response organization(KAYABA-CSIRT) activities•C onducted routine education and drills for all executives and employees•C onducted self-assessment in accordance with thestandard automobile industry security guideline•H ired third-party security evaluation organization to
conduct vulnerability assessments• Installed the latest security software•C onducted cyber BCP drill

KAYABA Group Report 2023

34

Value Creation
Management Strategy

Environmental Preservation
Overview of KAYABA’s Environmental Initiatives

FY2022 Activity Achievements
Environmental Vision

1.

Environmental Vision

Develop
products that
contribute toenvironmental
preservation

Environmentally Friendly Products
Environmentally Conscious Monozukuri
Environmentally Conscious Human Resources

3.

Manage and prevent
environmental risks,
promote continuous
improvements

Develop environmentallyfriendly products that cancontribute to society

Five Initiativesof KAYABA’ s
Environmental
Vision4

Environmental
preservation activities• Develop products,
including electric, that
contribute to reducing
CO2 emissions volume• Develop products for acircular economy

Develop products that
contribute to environmental
preservation

Preservation of the naturalenvironment, preservationof biodiversity
Carry out SDGs

2

Reduce environmental
burden of products
Reduce CO2 emissions volumeof all products, from theprocurement of materials
to design, use anddisposal/recycling

3• CO2 emissions reduction targets (Scope 1, Scope 2)2025 emission volume for the KAYABA Group: 195,671 tCO2
2030 emission volume for the KAYABA Group: 138,577 tCO2 (50% reduction compared to 2018)
2050 carbon neutrality(t)０■ KAYABA

35• Reduce CO2 emissions
volume throughmaterials substitutions
and changing material
processing methods• Materials that can berecycled• Reduce CO2 emissions
volume in transport• Reduce CO2 emissions
volume of business
partners

4.

Environmental
preservation
activities

2018

2019

2020

■ Domestic Subsidiaries

KAYABA Group Report 2023

2021

2022

77,26668,4372023■ Overseas Subsidiaries

2024

2025

2026

68,571
21,53848,4682027

Expand lineup of road sensing devices
Develop fluid leak sensors and fluid condition monitoring sensors

Reduction of CO2
in lifecycle

Map CO2 emissions volume

Calculate Scope 3 emissions volume

Reduction of CO2 emissions
from raw materials

Change blast furnace material to electric furnace material
Increase resin recycling ratio

Cooperation withbusiness partners

Share information on carbon
neutrality initiatives

Release carbon neutrality information for business partners on the Internet

Reduction of CO2 in corporate
activities

Use EVs for all company-owned cars (Spain)
Promotion of web meetings
Promotion of remote work

Promotion of energy Energy conservation initiatives
conservationaccording to the six rules
initiatives
Improve productivity, reduce
defect ratio

Promotion of LED use: CO2 reduction volume of 634 tCO2 (KAYABA Group)
Reduce steam loss: CO2 reduction volume of 143 tCO2 (Gifu South Plant)

Promote capital
investments inenergy conservation

Development of production
Start installation work on cogeneration system (Gifu North Plant)
technology that reduces CO2
Installation of a high-voltage transformer: CO2 emissions reduction volume
emissions volumeof 54 tCO2
Electrification, energy conserva- Installation of a high-efficiency compressor: CO2 emissions reductiontion, optimization, use ofvolume of 24 tCO2
inverters

Introduction ofrenewable energy

Introduction of photovoltaic
power generation system

Renewable energy introduction ratio: 7.5% (KAYABA Group)
Introduction of photovoltaic power generation equipment (Japan, Thailand,
Malaysia, Indonesia, Spain): CO2 emissions reduction volume of 1,695 tCO2

Promotion of
resource circulation

Reduction of waster mattervolumeVolume reduction by using dehydrators: waste matter reduction of 80%(Gifu North Plant)
Use of plating wastewater treatment equipment: waste matter reduction of
80% (KMS)
Consider using OBP pallets

Offset through CO2
absorption

Increase the volume of CO2
absorption through planting
trees

Tree-planting activities (Thailand, Indonesia, Malaysia)

Efforts to preserve
biodiversity

Manage and reduce the volume Install water circulation system (Malaysia)
of water used and drainage

2028

2029

2030

(FY)

Note: The scope includes six KAYABA plants, seven domestic
subsidiaries, and 18 overseas subsidiaries.

High-voltage transformer High-efficiency compressor

ThailandIndonesia

Malaysia

Malaysia

Use Chipping Vehicle for Pruned Start experimental studies on composting wood chips
Branches for organic farming

5.

96,82230,412

Optimum maintenance andbreakdown prediction using
sensors (HC)Thailand• Industrial waste
reduction target
2025: 3% reduction(compared to 2022)

31,542Start experimental studies on composting wood chips

Japan• Energy conservation
target2025: 3% reduction(compared to 2022)

300,０００

10０,０００

Use Chipping Vehicle for Pruned
Branches for organic farming

Data

Promote reductions ofdischarges in manufacturing
activities (CO2, waste
matter) and resource
circulation

115,557

Develop products for Develop biodegradable hydraulic Provide biodegradable hydraulic fluid dampers for racing use
a circular economy
fluid (AC)Hold exhibitions at race tracks

Cogeneration system

Reduce environmental
burden in monozukuri

200,０００

Launch sales of e-mixer III

Business Strategy• Promote and actively
participate in environmental preservation
activities and social
contribution activities• All employees get
involved in SDGs

1

Environmental
managements

Reduceenvironmental
burden inmonozukuri

FY2022 Achievements
Consider expansion of product lineup that meets the required functionality
Develop next-generation MCU (motor and ECU)

Value Creation

5• Observe environmental laws
• Prevent environmental accidents• Zero use of prohibited
substances• Respond to CDP and TCFD
• Sustainability Committee• Environmental safety inspections

Reduceenvironmental
burden of
products

Specific Activities

Strategy

2.

Initiative

Develop products
Product developmentthat contribute to the for e-Axle (AC)reduction of CO2
e-mixer (Special-purpose
emissions volume
Vehicles)(electric products)

Overview

Our Corporate Spirit proclaims our love for nature and intent to protect the environment. In line with this, we are
stiving for carbon neutrality with a focus on the global environment in 2050. Also, we are contributing to the creationof a sustainable society in which both global environmental preservation and economic growth can coexist.

Environmental
management

In-house education
and awarenessIn-house education andawareness
Human resources training

Awareness activities
Start ESG education by employee position
Provide ESG information through the in-house corporate newsletter

Actively disclose
environmental
information

Regularly update homepage
Reply to CDP

Add sustainability page to website
CDP score: B on climate change, C on water security

Introduce environObtainment of ISO 14001
mental management certification

100% of domestic companies and 88% of overseas subsidiaries

Legal complianceand prevention ofenvironmental
accidents

Management and reduction ofenvironmentally hazardous
substances

Zero prohibited substance use

Environmental safety audits

Confirm the environmental activities of plants through environmental safety
audits on 37 global plants

KAYABA Group Report 2023

36

Value Creation
Management Strategy

Response to TCFD

GovernanceRisk category

Specific Risk

PhysicalAt Gifu District Plants, we are continuing toconduct annual initiatives aimed at flood prevention on the site and increased ease of draining.
Also, we are promoting disaster preparations
such as creating a manual on moving proceduresin the case of rising river water levels.

Transition

Tightening of
regulations
concerning
Regulation
greenhouse gas
emission
reductions

Amidst the accelerating trend toward electricvehicles in the automobile industry, the required
shock absorber specs are diversifying along with thediversification of customers, and low weight isrequired as vehicles equipped with batteries increase
in weight. Also, we forecast that demand fornoise-reduced (silent) shock absorber will increase.
There is a risk that we will not survive in the market
if we do not meet these needs.

We are responding through our technology
strategy, which includes compatibility with thenext-generation platform, strengthening our coretechnologies of vibration control and power
control.

Opportunity category

Product/service

Specific opportunity

Report to superiors

Supervise

Risk Management

Approve/Instruction

Sustainability Committee

ReportCooperation

Instruction

ReportReportSupervise

Board of Executive Officers
and other management meetings
ReportInstruction

Risk Management Committee(Board of Directors Subcommittee)

Instruction

Business ESG Working TeamSupervise
Instruction

代表取締役 社長
Responsible head office departments, operational headquarters,
Group companies, branches, representative offices

SurveyInstruction

Safety Control &Environment Dept.
Environment &safety inspections

Strategy
KAYABA sets ESG management as the foundation of its policy development. We are not only responding to environmental needs, but also promoting the development of products that contribute to a sustainable society andconnecting the resulting opportunities to an increase in corporate value. Also, we are promoting all kinds of in-houseinitiatives related to the environment, society, and governance, led by the ESG Promotion Department.

37

KAYABA Group Report 2023

Divi-sion apply the TCFD-recommended scenario analyses in conducting climate change risk investigations ineach Business ESG Working Team, which promotes
business responses to climate change issues, discusses with the Sustainability Committee, and reports to theBoard of Directors.
At present, each Business Unit is starting analyses on
the impact levels of short, medium, and long-term risks
and opportunities.

Data

The Risk Management Committee, a subcommittee of
the Board of Directors, responds to risks facing theentire Group by determining the risks that necessitate
com-panywide measures and assigning responsible
depart-ments. All responsible departments conduct risk
man-agement activities and report every quarter to theBoard of Directors.
Regarding risks related to climate change, Automotive
Components (AC) Operations, Hydraulic Components(HC) Operations, and the Special-purpose Vehicles

Report(Chair: President)(Secretariat: ESG Promotion Dept.)

The medium term will be one of a transition
from engine vehicles (motive power) to electricvehicles (motive power), and we forecast thatoffering products suitable for electrification inthis period of changeover will create long-term
prospects. Also, we are aiming to achievedifferentiation by increasing the added value of
products, obtain a position of superiority, anddeliver monozukuri that satisfies consumers.

Relationship of committee
to engines and organizations

Report to superiors

Representative Director,
President Chief Operating Officer Report

Approve/Instruction

Initiative/countermeasure

We forecast that the automobile market will havefurther demand for quiet operation and ride comfort.
We have the opportunity to expand our business bystrengthening our core technologies of vibration
control and power control and achieving compatibility
with the next-generation platform.
With the enforcement of carbon tax, there is apossibility of an accelerating modal shift (a change
from freight transportation by road to freighttransportation by rail), and this presents an opportunity for expansion in the railway damper business.

Business Strategy

Increased sales
caused by
growth in
demand for
products andservices

Relationship between
engines and organizations

Board of Directors

Effort/countermeasure

In July 2010, there were concentrated severe
Intensification of rainfalls in the Tokai region of Japan. The rivers near anatural disasters KAYABA plant overflowed, causing water damage.
Emergency
caused by
The risk of damage from flooding is growing as
climate change global climate change is causing large typhoons,higher tides, and other concerns.

Value Creation

The Board of Directors receives the reports andopinions of the Sustainability Committee and supervises the process, and passes resolutions as necessary.
Also, matters related to climate change or environmental preservation that impact performance are monitored
in the Domestic Affiliated Companies Management
Meeting, where functional and business divisions/departments report on the status of business execution, and by the environment & safety inspections thatare conducted by the Safety Control & Environment
Department.
The following is a chart of our organization related tosustainability.

Strategy

The KAYABA Group promotes a range of initiatives
aimed at contributing to the creation of a sustainable
society. In March of 2022, we established theSustainability Committee with the ESG Promotion
Department acting as the secretariat and the President
as the Chair. The Committee holds debates and discussions on our sustainability initiatives, and reports orpresents opinions to the Board of Directors once every
three months.
Under the jurisdiction of the Sustainability
Committee, each headquarters establishes an ESG
working group which identifies risks and opportunities
related to climate change, investigates countermeasures, and reports to the Sustainability Committee.
Also, the Sustainability Committee, which deals withclimate change risks, and the Risk Management
Committee, which manages risk across the entire
Group, collaborate on initiatives.

products, and developing products that conserve energy and have low CO2 emissions. We are using the
scenario analysis presented below to evaluate theimpact level of risks related to climate change and thebusiness opportunities to which they will give rise, andincorporating that analysis into our business strategy
and management plan.

Overview

The KAYABA Group, recognizing climate change as an important issue that it must engage with, has endorsed theTask Force on Climate-Related Financial Disclosures (TCFD) in February 2023. We are working to grasp the risks andopportunities presented by climate change based on TCFD recommendations, reflect them in our strategies, actively
disclose information, and thereby increase our corporate value.

Climate Change
The Company’s environmental management slogan is“Protect the Green Earth and Create Environmentally
Friendly Products,” under which we are aiming toachieve carbon neutrality by 2050 through reducing ourgreenhouse gas emissions volume, decreasing the useof substances with environmental burdens in our

Metrics and Targets
The KAYABA Group uses the following metrics for the production base of the Company and its subsidiaries regarding
climate change described in the above-mentioned strategies. The targets and actual results for the relevant indices are
as follows.
Index
CO2 emissions volume intensity(Scope 1, 2)

Fiscal year

TargetNumerical target

FY2022 (Actual results)
Results
Evaluation

2022

0.604 tCO2/million yen

CO2 total emissions volume(Scope 1, 2)

2030

138,578 tCO2

2050

0 tCO2 Carbon newtral

Renewable energy adoption rate

2025

15％

0.526 tCO2/million yen
224,365 tCO2
7.7％

Accomplish(Initiative ongoing)(Initiative ongoing)(Initiative ongoing)

KAYABA Group Report 2023

38

Value Creation
Management Strategy

COLUMN

Efforts for Carbon Neutrality
Subcommittee every month, where members share
information on the issues faced at their location and theprogress of their activities. This platform serves as anopportunity for meeting members to review and refine
the action plans at their plant or office. Through thesecollaborative efforts, the group is coming together as
one to promote the creation of a positive environment
for our activities.

President, Executive Officer
Sustainability Committee
Executive Officer in chargeof Environment & Safety

Plant General Manager

Chairman:
Executive Officer in charge ofEnvironment & Safety

Subcommittees

Environment Supervisory
Officer

Safety and HealthCommittee

Environment Supervisory
Committee

Subcommittees

Subcommittees*Implemented ISO 14001 at each business units.

Product Compatibility with Environmental Regulations*1 R
 EACH Regulations: REACH stands for Registration, Evaluation, Authorisation
and Restriction of Chemicals. It is an EU law intended to protect human healthand the environment while fostering competitiveness within the European
chemical industry.
*2 E
 LV Directive: A directive that came into effect in the EU in October 2000 to
reduce environmental impact caused by end-of-life vehicles.
*3 R
 oHS Directive: A directive that came into effect in the EU in July 2006 that
restricts the use of specific hazardous substances found in electrical andelectronic products.

Drinking water,near-drinking water,industrial water:
Approximately
400 tons per day
Dining hall, garden,
evaporation, etc.
(boiler, manufacturing
processes, etc.)

Industrial wastewater
Circulate as deionized water
Chromium wastewater
treatment equipment

Water
containing
chromium
Return to pure water by putting throughan ion exchanger
Deionized
water

KAYABA Group Report 2023

Householddrainagetreatment area

Householddrainage:
250 tons per day

Oily wastewater
treatment equipment
Flotation processing(a type of wastewater treatment
for oily water)
Processing
method that
separates oil byincreasing air
pressure todissolve waterIon
exchanger

Wastewater: Contaminated water after use
Drainage: Taking water off of the premises*Water Pollution Prevention Act: This law sets forth stipulations on liabilities for damages in order to prevent the pollution of public
water bodies and underground water by regulations on water discharged from plants and other facilities into public water bodies aswell as domestic discharge countermeasures.

Installation of a Wastewater Reuse System (KMSB)KAYABA’s Malaysian subsidiary KYB-UMW Malaysia
Sdn. Bhd. (KMSB) has installed a system that purifies
wastewater with a UMW-developed membrane filter.
The new system can purify water to the standard levelfor drinking five times faster than conventionally, at a
rate of 100m3 per day. The resulting water is used forthe plumbing and the water curtain on the coating line,
helping with insulation and the prevention of dust
scattering.

Wastewater converted into RO water

39

Domestic wastewater,such astoilet use
Water-purification tank(equipment that processes
water until it is clean)

Data

Legal frameworks such as the REACH Regulation, theELV Directive, and the RoHS Directive are showing clear
trend of being tightened every year. KAYABA is responding by incorporating this into our technology
development plan.
Also, in addition to responding to regulations on
chemical substances, we are conducting initiatives for a
low-carbon society and designing products with recycling in mind.

On the site of Gifu North Plant

Business Strategy

Environment Preservation Subcommittee
Energy-saving Plant Subcommittee
Safety and Health Subcommittee

Overall Safety Supervisor

Water volume:
Approximately
2,900 tons
per day

Value Creation

Environment & Safety
Committee

Respective business units*

At Gifu North Plant, there are two mager processing systems: household wastewater
for treating domestic wastewater such as toilet water, and plant wastewater fortreating water used in the manufacturing process (chromium wastewater treatment,
oily wastewater treatment).
We need to remove oil and impurities contained in water that is used for washingproducts/components in the manufacturing process and after coating. Managing pH is
critical, because it also includes alkaline and acidic chemicals.
At the plant, we not only observe the Water Pollution Prevention Act, but havevoluntarily adopted effluent standards stricter than the legal requirements. We takeperiodic measurements based on measurement control points so as to avoid exceeding the standards.

River

We are systematically expanding ourenvironmental preservation efforts.
We adopted the international standard
ISO 14001 for environmental management and established theEnvironment & Safety Committeewith the Directors in charge of theenvironment and safety serving as its
leaders. We are working with a unified
purpose on our efforts for environmental preservation and safety under
the system shown in the chart on theright. Also, we monitor and revise ourinitiatives by conducting environmental and safety audits.

Management of Wastewater Drainage (Gifu North Plant)

Strategy

Environment & Safety Management System

Examples of Environmental Initiatives
Overview

The CN Promotion Office is actively working towards
achieving our CO2 emissions volume target by promoting activities across all plants, offices, and sales
companies. In the planning of our CN activities, we
provide guidelines and examples of initiatives, facilitating the development of action plans tailored to thecircumstances of each plant, office, and country.
Additionally, we conduct an Energy-saving Plant*UMW: Major automobile corporation in Malaysia (KMSB is our joint
venture with the company.)

KAYABA Group Report 2023

40

Value Creation
Management Strategy

COLUMN

Resource Circulation and Consideration of Environmental Burden

Production Activities
Development/Design■Raw materials
・Steel, cast and forged materials 181,176t[ー]■Used energy (Crude oil equivalent)・Green electricity[3,023kL]・Electricity from fossil fuel sources 33,642kL[97,748kL]

・Fuel, gas, steam[27,678kL]

13,159kL■Chemical substances (PRTR law target substances)

197t■Water (water supply)[ー]

1,424,510kL [2,601,433kL]■Amount of waste (Including reuse)

22,604t[61,691t]

Procurement■Emission into atmosphere

Production

・CO2

31,541tCO2[224,365tCO2]

Distribution• Development of technologies andproducts that are environmentallyfriendly as a result of recycling,energy saving and safety, etc.
• Promotion of green procurement• Promotion of modal shift

・Nox

15.0t

[ー]

・Sox

1.30t

[ー]

・Dust

0.30t

[ー]

1,267,922kL[2,148,888kL]■Water (drainage)

Volume reduction using dehydrators* (Gifu North Plant)
Every month, we hold the Environmental Preservation
Specialist Committee, comprised of the person in
charge at each plant and domestic affiliate, and engage
in activities to reduce waste. We worked to reduce
disposal weight under the theme of “waste matter
reduction” and reduced the weight of our final disposal
as an activity related to environmental preservation.
We collect liquid with impurities and oil content,

Impurities/oil and grease component

Recycling inside Company• Scrap (Effective utilization in the KYB Group)• Deteriorated solution for chrome plating• Water used for rinsing in chrome plating process, etc.

Production process

Dehydrator

Recycling outside Company• Metal scrap • Waste oil • Waste plastic• Grinding powder • Waste thinner • Paper, cardboard, etc.

*Volume reduction: To lower the weight of waste matter by removing
water and oil that has been mixed with sludge in the coating and grinding
processes

Common name:dewatered cake

Recycling company

Common name:dewatered cake(Contents of thecollection box after
dehydration)

Related company

Business Strategy

Scrap

including the drainage (washing water, degreasingcleanser) that is generated during production processes, and evaporate them using dehydrators. Evaporation
reduces the water portion included in the drainage,
allowing for an 80% cut in waste matter.

Value Creation

34kL

OUTPUT

Examples of Environmental Initiatives

Strategy

INPUT

corporate activities, we are conducting risk assessments and taking the appropriate safety measures to
the greatest extent possible regarding the levels of
danger and toxicity of chemical materials. Also, we areplanning to respond to the newest round of revisions tothe chemical substance regulations of the Industrial
Safety and Health Act through spreading knowledge
within the company and conducting inspections.

Overview

The raw materials and water that KAYABA uses in its
manufacturing activities are limited resources.
Therefore, the Company is promoting resource circulation at its own facilities. For example, 267 tons of scrap
material is reused within the Group every year, and thechrome wastewater treatment facility in our platingprocess reuses 56,070 kiloliters of water.
In order to limit the environmental burden caused by

Note: [ ] refers to the KAYABA Group (KAYABA, seven domestic subsidiaries, and 18 overseas subsidiaries).

Reduction of Specially-controlled Industrial Waste

Environmental Accounting
The amounts of investment and cost were calculated with reference to the Environmental Accounting Guidelines,
2005, provided by the Ministry of the Environment.2005, provided by the Ministry of the Environment.
FY2022 Results (Six KAYABA plants)
Cost Type(1)-2 Global environmental conservation-cost(1)-3 Resource circulation cost

Major Contents
Air pollution and water pollution prevention activities
Maintenance and inspection of pollution prevention facilities
Analysis and measurement of atmosphere and water quality
Energy conversion
Energy-saving activities (Investments, etc.)
Recycling of plant waste
Reduction of industrial waste(2) Upstream/downstream cost(3) Management activity cost(4) R&D cost(5) Social activity cost

Maintenance and management of ISO 14001, etc.
Monitoring of environmental impact and employee education
Environmentally friendly product development
Lightweight products and products containing less hazardous
chemical substances
Support of non-profit environmental protection
Afforestation and maintenance of scenery around plants(6) Environmental remediation cost(7) Other cost

Internal environmental conservation
Welfare conservation

Subtotal
Grand total

Cost

88.5

208.7

0.0

29.6

0.0

226.7

0.0

0.0

0.0

119.7

0.1

121.1

0.0

3.9

0.0

0.0

0.0

24.5

88.6

734.2

Data

(1)-1Pollution prevention cost(1) Businessarea cost(Millions of yen)

Invested
AmountPlating equipment is used on inner tubes for motorcycle
front forks to give them a pleasing appearance, makethem resistant to rusting, and improve their sliding
properties. We have reduced the equipment’s use of
specially-controlled industrial waste by 80%.
Electrolysis wastewater is produced in the process of
washing raw materials prior to plating. The wastewater
could not be treated within the plant because theprocess uses a chelating
agent,* so it had to bedischarged as specially-controlled industrial waste.
However, we have now
installed wastewater treatment equipment that makes
it possible to treat the wateron the premises.

Wastewater treatment equipment* Chelating agent: A substance that bonds (limits actions that hindercleaning) metal ions (foreign matter) contained in water or dirt

Inner tube

822.8

Note: Classification and Definition of Environmental Conservation Costs
	Invested amount: Expense for the purpose of environmental conservation during the target period with effect that continues for a number of terms and running cost for
those periods. Cost: Cost or loss generated from expenditure of finances/services for the purpose of environmental conservation.

41

KAYABA Group Report 2023

KAYABA Group Report 2023

42

Value Creation
Management Strategy

Supply Chain Management
Basic Policy

Initiatives to Prevent Human Rights Violations in the Supply Chain

For policy details, see “Supply information” on the website
https://www.kyb.co.jp/english/company/supply_information.html

Based on the UK Modern Slavery Act of 2015, we areworking to prevent slave labor and human trafficking in
the KAYABA Group’s business activities as well as its
supply chain.
We confirm the establishment of education on funda-mental knowledge related to the UK Modern Slavery
Act and check human rights awareness and human rights
regulations. We conducted inspections on KAYABA’s 580
first-tier domestic suppliers from the end of FY2021 to
the start of FY2022. We found that 190 companies
answered to the effect that their awareness of humanrights had improved (compared to FY2017). This showsthe effectiveness of our awareness campaigns.
Based on the inspection results, we are working tocreate and distribute materials to business partners withan inadequate understanding, in addition to shared materials aimed at raising awareness, to further increase theirunderstanding.
The CSR & Safety Control Div. is at the center of ourwide-ranging, specialized initiatives to promote CSR. It
prevents human rights violations, forced labor and childlabor in the KAYABA Group. Also, it raises awareness ofsocial responsibility in the supply chain and clearlystipulates corporate guiding principles opposing forcedlabor and child labor across the supply chain.
Going forward, while understanding the situation at
our business partners, we will cooperate with therelevant departments in continuing education andawareness activities related to preventing human rights
violations and slave labor.

Strategy

Supply Basic Policy
1.	Supply activities with the aim of mutual existence
and prosperity with customers
2. Legal compliance3. Quality first
4. Safety and health, human rights and labor
5. Continuous cost price reduction activities
6. Scheduled delivery
7. Care for the natural environment
8. Construction of global supply systems
9. Crisis management
10. Management of confidential information
11. Prevention of corruption

Overview

We will further make demonstrable increases to the
responsibilities of the companies in our supply chain in
conducting efforts to uphold human rights, prevent childlabor and forced labor, procure minerals responsibly,and achieve carbon neutrality. KAYABA will further
strengthen its 11-item supply policy, fulfil our corporatesocial responsibility together with the business partners
who are important to the manufacture of our products,
and promote the creation of a sustainable society.

recognizing and commending partners who demonstrate notable contributions and cooperation (such as
submission rates of survey request materials as well as
technical and development capabilities).
For our new business partners, in addition to QCD interms of risk response, we conduct a comprehensive
evaluation based on the management situation, theresults of system audits by the quality department/
division, and whether or not the subject has obtained
ISO9001, IATF16949, and ISO14001 certification, andmake a judgement on the advisability of the transaction.
On the other hand, for current major business partners,
we conduct evaluations on their management situation
by means of their annual business partner evaluation
records.

Responding to Responsible Mineral Provision
To avoid inadvertently providing funds to armed groups
responsible for human rights violations, the KAYABAGroup annually conducts an investigation with thecooperation of its business partners, summarizes theresults and reports to customers that request suchinformation, in accordance with the Dodd-Frank Act.*
Also, we quickly respond to customer inquiries after
the report.

* The Dodd-Frank Act is a U.S. financial regulatory act that aims to indirectly cut off trade in mineral resources mined in the Democratic Republic of the Congo and nineneighboring countries because of concerns that these mineral resources are the source of funding for armed groups that are responsible for environmental destruction andhuman rights violations.
Target minerals: tin, tantalum, tungsten, gold
* The target suppliers are selected based on IMDS (International Material Data System) information.

COLUMN

Purchasing Policy Briefing

About Keneikai

We hold the Purchasing Policy Briefing once every year.
However, it was not held in 2020 due to the spread of
COVID-19 infections, and the only option in the following
years was to hold the meeting online. In July 2023, thebriefing was held in a face-to-face format for the first timein four years.
At the briefing, 211 people from 196 companies attended. We held a commendation ceremony to award sevenexcellent business partners in FY2022. The meetingprovided a venue for us to further the understanding of
KAYABA’s various policies aiming for coexistence andmutual prosperity as well as our initiatives for ESG management, as well as reconfirm our mutual trust.

Keneikai is an activity organized by our business partners that evolved
out of the KAYABA-led Theme Research Society. It started its activities
in 2020, and conducts whole-group activities such as holding ageneral meeting, workshops for managers, and observation tours ofplants. Also, members from among 73 companies come together at
the Keneikai Briefing / Kickoff Meeting held every year in April to start
improvement activities and event planning based on common themes
in which teams jointly take part.
Continuing from the previous fiscal year, the themes for FY2023 are
improvements to the BCP and quality. The BCP section consists ofthree teams with members from 24 companies, and the quality section
consists for two teams from 17 companies, making a total of 41
companies providing members who engage in improvement activities.

KAYABA Group Report 2023

FY2023 Purchasing Policy Briefing

Data

COLUMN43

In these inspections, we employ the questionnaire
issued by the Responsible Minerals Initiative (RMI: anorganization that is promoting the responsible procurement of minerals). It was distributed to 226 companies,*
and the response rate to the questionnaire in FY2022
was 85%.

Business Strategy

KAYABA holds the Purchasing Policy Briefing for the
management positions of our business partners in orderfor them to develop a better understanding of ourcorporate policies, procurement policies, quality policies, and initiatives for carbon neutrality.
We are moving ahead with responsible CSR procurement through sharing information with business
partners on issues and targets such as improvement
activities for optimizing procurement for the region anddecreasing costs for logistics and inventory.
We also strive to increase mutual trust and build
part-nerships aiming for coexistence and mutual prosperity with business partners. This is vital in ensuringthat they align with KAYABA's expectations for quality(Q), cost (C), and delivery time (D), which includes

Value Creation

Building Relationships with Suppliers

FY2023 Keneikai Briefing and Kick-off Meeting

KAYABA Group Report 2023

44

Business Strategy

Our Three Mainstay Business UnitsKAYABA Provides Value for the Future
Through its Business Activities

AC Operations

KAYABA works to create value through concentrating its management resources on the three
Business Units of Automotive Components (AC) Operations, Hydraulic Components (HC)Operations, and the Special-Purpose Vehicles Division.

■ Market Share

Overview

With vibration control technology at the core, this business unit develops and offers a wide range of products
primarily for automobiles, motorcycles, and railway cars.
AC Operations’ products are at use in many situations
where comfort, safety and maneuverability are required,from secure, comfortable drives with the family towithstanding the harsh conditions of motorsports.

Source: KAYABA data (As of March 31, 2023)
Automobiles Shock Absorbers

Market sharein JapanWorldmarket share

38%

13%

■ Main machines that use KAYABA products
Automotive

Motorcycles
Market sharein Japan■ Others 0.8%

38%

Railroad Equipment

Motorcycle Front ForksWorld
market share

Market sharein Japan

13%

48%Strategy■ Others 1.3%

■ Special-Purpose Vehicles 2.1%

■ System products 0.9%
■ Hydraulic equipment forindustrial use 30.2%

Special-Purpose
Vehicles Div.

With power control technology at the core, this business
unit develops and offers various kinds of hydraulicequipment for construction machinery and industrial
vehicles. In addition, it expands the potential of hydraulics
to new areas, such as for stage mechanisms that support
theater productions. It deals in compact precision,
digitization, and the creation of systems, thereby providing support at the sites where manufacturing takes place.

HC Operations

32.0%

Net Sales■ Market Share

Source: KAYABA data (As of March 31, 2023)
Hydraulic cylinders for construction
machinery (by excavator machine mass)World
market shareWorldmarket share

More than 10t

Less than 10t

22%

40%

Business Strategy■M ain machines that use KAYABA products

AC Operations

64.6%

Value Creation

HC Operations

2 .1 %

Construction Machinery

Industrial Vehicles

Agricultural Machinery

Marine Products■ Shock absorbers
for automobiles 46.9%■ Shock absorbers for motorcycles 10.6%■ Hydraulic equipment for automobiles 4.9%
■ Others 2.2%

Special-Purpose Vehicles Div.
This business unit develops and manufactures speciallyequipped vehicles, mainly the concrete mixer trucks forwhich it enjoys the top domestic share. The products havea lineup that ranges from small to large sizes, and they
increase work efficiency on construction sites with highkneading, discharge, and environmental performance.

Our Inherited

DNA

Data

Application of Technology
Sports and social welfare
products
We use our core technology todevelop products used for sports
and social welfare.
Chair Ski■M ain machines that use KAYABA products
Special-Purpose Vehicles■ Market Share

Source: KAYABA data (As of March 31, 2023)
Concrete Mixer Truck

Market sharein Japan85%

Note: K
 AYABA has been involved in the business of hydraulic equipment for aircraft since our establishment. However, as a result of a comprehensive reexamination of ourbusiness portfolio and in order to strengthen corporate competitiveness through the selection and concentration of management resources, we decided to withdraw fromthe aircraft components business in February 2022. We are in the process of phasing out all operations of the Aircraft Components Division, including repairs.

45

KAYABA Group Report 2023

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46

Business Strategy

Automotive Components (AC) Operations

Overview

Delivering Environmental Compatibility,
Ride Comfort, and Excitement
With Original Development Capabilities

Risks and Business Opportunities in the New
Medium-Term Management Plan

1. Raise each person’s awareness of norms and work
style reforms
2. Engage in quality assurance aimed at OwnProcess Completion
3. Unceasingly raise productivity on the foundation
of KPS/Ship'30
4. Technological development that makes customers
choose KAYABA

Minoru Ishikawa

General Manager,
Automotive Components Operations,
Senior Managing Executive Officer

Vane pumps for CVT

KADS for motorcycles

Active suspension systemfor bullet train*KADS: KYB Actimatic Damper SystemTM■ Main Products SA for automobiles
SA for motorcycles

Shock absorbers (original equipment, aftermarket), suspention systems
Front forks (FF), rear cushion units (RCU)

Hydraulic equipments Vane pumps, vane pumps for continuously variable transmissions (CVT), hydraulic power steering systems,
for automobiles
electric power steering (EPS)
Stay damper, SA for all-terrain vehicles, free locks, railroad equipments (dampers, brakes, suspension systems)

Othersissues while taking on the challenge of achieving monozukuri that ends defect losses and reduces waste.
We are striving for wide-ranging productivity improvements through Ship'30 and AI/DX. Some of our
production lines are already producing productivity
improvement results through the installation of image
inspection AI and robot transportation, and we are aiming
to expand installation of this technology globally in 2025.
We will increase our human resources with automation-related production technology skills andpost-installation equipment management skills.
Furthermore, in addition to conducting regional sales
promotions and acquiring new customers, including local
companies in anticipation of future growth, we aim toquickly complete development of high-value-added
products such as electronically controlled suspensions,
SBW*1 systems, and electric pumps for e-Axle*2 and thenmove into the mass production phase.

Providing systems for all electric / hydraulic mechanisms

Electronic
control

Sens

Think

ECU +
Hydraulic equipment

Act

Electrification
Autonomous
Actuator
Damper Steering

Accurate and high-quality movement
Improve maneuverability quality
Energy conservation
Combine electric powerand hydraulics

Cooperative control systems
SystemSafetyComfortUser-friendliness

Reaction force actuator

Steering actuator

Electronically controlledsuspensions*1 Steer-by-wire (SBW): A steering system for the era of automatic driving that connects an automobile’s tires and steering wheel with an electrical signal in a constant exchangeof steering information and reaction force from the road surface.
*2 e-Axle: A unit that integrates the travel motor, inverter, and transaxle (speed reduction mechanism).

Net Sales

Segment Profits(¥ million)(¥ million)

4００,０００

25,０００３００,０００“From environmental responsibility to the excitement of motorsports,
we will continue our initiatives and efforts to remainboth a pioneer and a specialist in our fields.”

SAs

Data

Due to a lagging market recovery in some sectors of
our product fields and sharp rises in raw material prices,
we were pressed to deal with increases in fixed andvariable costs. However, there were signs of positivechanges, and we had a year-on-year increase in sales
and profits.

There is a range of risk factors in the environment aroundus, including climate change, energy, human resources, andgeopolitics. In the automobile industry, emerging forces
are growing rapidly with the acceleration of the trend
towards electric vehicles, and it is highly likely that thiswill redraw the lines of the conventional power structure.
As we face sharp rises in inflation, raw material costs,
energy costs and labor expenses amidst an increasingly
unstable international situation, we are seeking to be acompany that customers choose regardless of which
unforeseen circumstances occur. In the 2023 mid-term
plan, we will provide basic education on TQM to all
employees and further its application by each individualon the business level, which will lead to the improved
performance of the organization. And we are working on
the stability and increase of quality at the product andprocessing level, the elimination of user complaints, andintensive improvements at plants dealing with quality

KADS* for snow mobile

Business Strategy

In the final year of the 2020 mid-term plan, we focused
our efforts on the following four points in AC
Operations.

FF/RCU for motocrossValue Creation

Looking Back on FY2022

Single piston-type electric power
steering for offroad vehicles

Strategy

As an independent manufacturer, we take pride in our strength of conducting unique development together
with our customers.
We promptly conduct driving trials and test prototype models with the latest testing equipment at the test
course in our Developmental Center, which expands the potential of our ideas. Another strength is the synergistic effect generated through the accumulation of know-how that includes knowledge from our global
development system and other Business Units (HC Operations and the Special-Purpose Vehicles Division).
We get involved in world-class motorsports races, where we can further increase our technological capabilities
through conducting developments that play a part in winning the championship.

Adjustable damping SA withproportional solenoid

278,511245,807

232,101

18,681

20,０００15,417

232,846
197,453

15,０００2００,０００

11,691
9,680

8,195

1０,０００1００,０００

０

5,０００

2018

2019

2020

2021

2022

■ Shock absorbers for automobiles ■ Shock absorbers for motorcycles■ Hydraulic equipment for automobiles ■ Others

０

(FY)

2018

2019

2020

2021

2022

(FY)

■

Notes: 1. A s a result of the review of segment management classification, railroad equipment that was previously categorized under the “HC Operation” is disclosed as part of
the “AC Operations” from FY2022.
2. Segment profit is calculated by deducting cost of sales and selling, general and administrative expenses from net sales.

47

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48

Business Strategy

Automotive Components (AC) Operations

Evolving Core Technologies to Offer New Value

The major ingredient in the composition of the hydraulicfluid used in shock absorbers is petroleum-derived baseoil. In the event of a leak, there are concerns over theenvironmental impact as oil does not easily break downin nature. Also, there are cases in which it is burned as
an auxiliary combustion agent after disposal, causing
CO2 emissions.
KAYABA has eliminated the useof oil derivatives though conducting technological development on
hydraulic fluid for many years,
developing a fluid that has a low
environmental load by using

Fully Active Suspension System

Data analysis
Data collection

Inverter

Municipally managed road

Passengers don’t feel the movement

Steering

Think

*2

49

Taking on the JRCA Japanese Rally Championship

VerticalDamperOffer the ultimate in safety and comfort
Damper Steeringwithcooperative control that restrains
horizontal and vertical motion*1

Horizontal

Flat position

Emergency avoidanceSteering system

Cooperative
ControlA panel that was exhibited at the Tokyo Camping Car Show

Data

Actuator installed in the front of thevehicleCooperative Steering System / Control Suspension System

Operation
supportconcept car for the future at the Tokyo Camping Car
Show held in July of 2023, and was featured in various
media outlets.

Business Strategy

Fully active suspension systems provide the ultimate inride comfort—so much so that you might forget thatyou are riding in a vehicle.
This ultimate high-performance
product allows the user to freely
control its characteristics as it employs electronic control over thepressure generated by an electric
pump. However, it has conventionally
only been installed in some premiumclass vehicles.
We installed this technology in a
mobile home for the first time anywhere. It was announced as a

Feedback

M

Cooperative
Controlnaturally derived base oil.
We provide shock absorbers containing this hydraulicfluid for Toyota Motors’ carbon neutrality initiative of thehydrogen engine-equipped
Corolla, working as acompany that cooperates intheir carbon neutrality
activities. We held exhibitions on the technology
behind this hydraulic fluid in
Toyota’s lounges located at
super endurance racing
venues.
At the Toyota lounge

Data transfer

Local government

Developing an Environmentally Friendly Next-Generation Hydraulic Fluid

Value Creation

Transmission Motor
axle

Smart Road Monitoring

COLUMN

Strategy

In order to respond to a greatly changing marketplacewith the shift toward EVs, CASE*1, and MaaS*2, we aredeveloping high-added-value products—such as semi
active, fully active, and height adjustment suspensions—based on our company’s core technologies.
Our vibration control technology supports transportmachinery such as automobiles and railways, and isrequired to provide a high degree of safety and comfort.
With the progress of electrification and automation, thefocus is switching from drivers to passengers. There isemphasis on the need for “having fun while travelling,”
and greater comfort than ever before is required.
Therefore, we are collecting and analyzing road surface
and vehicle movement data, and developing semi active
and fully active suspensions that make control in realtime a reality. Steering systems restrain horizontal
motion, while suspensions restrain vertical motion, andbeing able to coordinate them is growing in importance.
Electric pumps for e-Axle are required to have cost
performance, variations by function ande-Axleoutput, small size, high efficiency andoptimized balance. In order to achievethese, we will reduce electricity and fuelconsumption in EVs by expanding ourline-up of products by function and output and developing next-generation MCUs (motor and ECU).

Also, we are fusing our vehicle measurement technology and analysis technology with AI and IoT to provide“Smart Road Monitoring.” This service will support roadmaintenance management work by using dedicateddevices installed on vehicles to automatically collectinformation on road conditions and detect abnormalities. The Basic Technology R&D Center is leading theadjustment of the functionality of this service to prepare it for release.
To secure a position as a supplier in the EV shift witha background in high technology, we will provide
high-value-added products that meet customer needs
such as quiet operation, spaciousness, maneuverability,
low vibration, and ride comfort.

Overview

The Value AC Operations Offers

Control suspension system

In April 2022, we launched the
KAYABA Rally Team as a project
activity. The team competed in the
JRCA Japanese Rally Championshipthat got underway in February 2023.
The team members were assembled
through open in-house recruiting. They
are gaining experience with the races
while developing their skills as engineers and mechanics and building
their awareness of product development that wins championships.

 onnected cars, autonomous driving, sharing and electrification. This keyword indicates the trend in the automobile industry.
CMobility as a Service. A new concept in the transportation service industry for integrating various means of transportation into a single service.

KAYABA Group Report 2023

KAYABA Group Report 2023

50

Business Strategy

Hydraulic Components (HC) Operations

Overview

A History of Setting Industry Standards
Seeking New Possibilities with Hydraulics

Risks and Business Opportunities in the New
Medium-Term Management Plan

“Using the vast amount of industry data
and know-how that has been passed down to us,
we will create new added value with a focus on automation.”

Integrated HST (Pump and motor)

MMP

Leak detection cylinders

Large stern crane■ Main Products Hydraulic equipment
for industrial use

Cylinders, valves, pumps, motors, mini-motion packages (MMP), hydrostatic transmissions (HST), seal

Auditorium and stage control systems, tunnel boring machines

OthersThere is a growing societal demand for decarbonizationand energy conservation, and we will respond by focusing on creating new added value, centered aroundautomation and electrification compatibility, as well as
the development of leading products in the next term.
The long-term forecast in demand for mini excavators in
the U.S. market remains firm, so we are working on the
production capacity to meet that demand while conducting sales promotions in the forestry industry. Also, we plan
to enter the Indian market, which is forecast to see expanding need for agricultural machinery products.
Flexibly evolving our production system so that it can
respond to the demand fluctuations of the times isimportant. It is also critical to build production systems
and reform ways of working through the visualization of
production information using IoT, AI and DX. In particular,
we are aiming to achieve tremendous productivity improvements and safe manufacturing workplaces throughthe automation of transport, assembly and component
processing in material handling.
Also, we are focusing on the human resources aspectwith education by position and continuous humanresources training through the Small Group Activity,
making efforts to improve the quality of products throughimproving the quality of work, and making TQM take roota second time.
Providing systems for all hydraulic mechanisms

Electronic
control
Sens

Hydraulic
System
PUMP

Ichio Nemoto

51

KAYABA Group Report 2023

VALVE

P

Service

Segment Profits(¥ million)

200,０００

20,０００141,572
125,321

137,876

15,０００111,348０In-house development
Breakdown prediction
Oil leakOily condition
Optimum maintenancedetection sensor detection sensor
Condition monitoring

12,354

11,836

1０,０００100,０００

Load Sensing

Information System

Net Sales

140,625

A system for supplying the required flow/pressure

Improve operability
Low energy consumption(¥ million)

150,０００Act

Self-driving
Remote control

7,507
5,531

5,501

2019

2020

5,０００

5０,０００General Manager,
Hydraulic Components Operations,
Senior Managing Executive Officer

Think

ECU +
Hydraulic equipment

Data

The risks identified include the impact of rising interest
rates in the United States, declining demand in thelargest construction machinery market of China, thedrawing out of the Russia-Ukraine conflict, the impact
of sudden fluctuations in the exchange rate on performance, growing inflation, the shortage of humanresources becoming more serious, and the expansionof costs for responding to environmental concerns.
The unstable market environment is not forecasted tochange in the medium term of 2023. However, we willcontinue to secure sales and profits by maintaining theearnings structure in our existing businesses whilesafeguarding our market share. Additionally, we will strive
to gain our customers' understanding regarding thenecessity of passing on the increased costs, stemmingfrom factors such as the notably sharp rise in steel prices
and energy expenses for lighting and heating in FY2022.

Hydraulic cylinders

Business Strategy

Segment profits were ¥7.5 billion, or a ¥4.3 billion
decline compared to the level recorded in the previous
consolidated fiscal year, due to the impact of factors
including a decline in manufacturing caused by downward revisions to customers’ production schedules in
response to falling demand in China and tightness inthe supply of semiconductors, as well as increases invariable costs related to manufacturing caused by sharp
rises in raw material and energy costs.
While the business environment was challenging, webegan to see positive signs, such as expanding ourlineup of load sensing products, particularly electronic
control valves for mini excavators, and the start of trial
manufacturing for a hydraulics monitoring system thatcan detect signs of a breakdown in hydraulic components and the machine in which they are installed,
leading to breakdown prevention.

Travel motor/ Swing motor

Value Creation

Looking Back on FY2022

Piston pump

Strategy

KAYABA has been a pioneer in devices that have led Japan’s hydraulics technology since hydraulic excavators
first entered Japan in the 1960s. We believe a major strength for the Company lies in how it continues to
evolve while passing on vast amounts of data and know-how.
In construction machinery, our product quality and efficient manufacturing processes have been fine-tuned
with feedback from many years of market performance. Also, we contribute to shorting lead time and energy
conservation in the machines that incorporate our products through proposing optimal systems made possible from our development, design, and manufacture of all hydraulic devices, such as pumps, control valves,motors, and cylinders.

Control valve

2018

2019

2020

2021

■ Hydraulic equipment for industrial use ■ System products2022■ Others

０

(FY)

2018

2021

2022

(FY)

■

Notes: 1. A s a result of the review of segment management classification, systems products that was previously categorized under the “Special-Purpose Vehicles Division” isdisclosed as part of the “HC Operations” from FY2021.
2.	As a result of the review of segment management classification, railroad equipment that was previously categorized under the “HC Operation” is disclosed as part of
the “AC Operations” from FY2022.
3. Segment profit is calculated by deducting cost of sales and selling, general and administrative expenses from net sales.

KAYABA Group Report 2023

52

Business Strategy

Hydraulic Components (AC) Operations

2020

Computerization/Introduction of ICT

Excavator

AnalogExpand pump lineup
Introduce electronic controls for control valves
Improve maneuverability and durability,
reduce noise and decrease costs

TrendsLower noise and fuel consumption, improved operability,
safety, and ability to respond to multiple operations

Respond to attachment diversification and electrification

Respond to exhaust gas restrictions
Transition to a load load-sensing

Develop load sensing system
Expand lineup
Introduce electronic controls

Mini-excavator

COLUMN

Swing motor
Piston pumpSelf-driving
Improved operability/ workability
Energy and space saving

Control valve

Travel, swing

Motor

Hydraulics

Sending out
hydraulic fluid

CylinderReciprocating
motionHydraulics

Motor

Hydraulics

Sending out
hydraulic fluid

Valve

Hydraulics

Sending out
hydraulic fluid

Travel, swing

CylinderHydraulics

Reciprocating
motionValve

Hydraulics

Sending out
hydraulic fluid

Pump

Pump

Fuel

Hydraulicmotor

Short-range wirelesscommunication

Battery

53

KAYABA Group Report 2023

Construction
machine ECU

Receiver・Judgment function
・Communication
function

Power generationand supply equipment
Device sensing expansion / data connection(including mother machine)⇒ Necessary to build optimized control technology
for electrically powered hydraulic systems

We transferred the conventional systems that detectleaks in hydraulic cylinders with sensors and systems
that monitor the condition of the fluid to the productdevelopment stage. They monitor cylinder leaks and thecondition of the fluid within the system, and predict andprovide warnings on the deterioration of consumable
goods and the occurrence of breakdowns in hydraulicequipment. This product contributes to effective maintenance work for construction machines and equipment
manufacturers and users by defending against unexpected operation suspensions in construction machinesor equipment and minimizing lost time spent exchanging components and the impactof the costs for replacements.

Fluid condition
monitoring sensor

Kayaba’s technologies

Kayaba’s technologies

EngineTowards a replacement
for hydraulic electric
devices⇒ Strengthen technology
exchanges withcustomers andinformation collection
activities(Also make progresswith development ofelectric items)

Leak Detection System that Uses IoT to
Monitor the Condition of Hydraulic Fluid

Data

Travel motor

Against a backdrop of market trends toward automation
and unmanned operations, in products for hydraulicexcavators, we completed development on an electromagnetic proportional control valve for mini excavators(three-ton to six-ton class). It is KAYABA’s first electronic
control product, and we have launched its mass production. The fluid path is the same as the current model,
and we have achieved compatibility with electronic
controls using proportional solenoid.
Also, we launched mass production of improved
models of travel motors for seven- to eight-ton classmini excavators as part of the lineup of our mainstay
MAG series (travel motors equipped with reduction
gears). With this low-cost model, we are responding torequests for price reductions in the market by reducing
the number of components while ensuring maneuverability and durability.

Business Strategy

CylinderValue Creation

Full electrification

Digital ▶ Electromagnetic proportional control

Respond to exhaust gas restrictions*1 Actuators: A drive device that converts energy in a linear or a rotary motion bymeans of a hydraulic or electric motor.
*2 Load sensing: A system in which the load sensed by the valve is sent to thepump. The system is able to adapt the flow rate to the pressure required for
operation.

Electro-hydraulization

Automation, remote work andaddressing environmental issues

Use of IoT and big data

Hydraulic pilot control

New Products in FY2022
Present

2023

TrendsStrategy

Our unique technology makes possible systems
proposals and high-level control
KAYABA is one of the few manufacturers of all components in the power train mechanisms of construction
machinery, such as control valves, piston pumps, travel
motors, swing motors, and cylinders. This affords us
the great competitive advantage of being able topropose systems to construction machinery manufacturers. And we’re engaging in the latest technologicaltrends of remote control, automation, and unmanned
operations through developing an electronic control
system with all types of actuators*1 that minimize
energy consumption by moving efficiently and smoothly at the will of operators from a combination ofelectronic controls for hydraulic pumps and control
valves with sensing technology.
We are expanding our product lineup of pumps andload sensing devices*2 to match various sizes of construction machinery and offering them to customers
around the world.
In sensor development, we are working to combine
sensors that detect leaks and monitor the condition of
the fluid in hydraulic devices with DX technology,

Medium-Term Management Plan

Market Trends and KAYABA Technologies

Overview

offering optimal maintenance. And we are responding
to market needs such as low fuel consumption, low
noise, improved maneuverability, and the diversificationof attachments to ensure that construction machinery
equipped with KAYABA products can be used for alonger time. Also, by endeavoring to lower CO2 emissions through conserving energy in the production
process, we are contributing to a sustainable society.
In leading edge technologies such as electronic
controls and electrification technology, we can apply theknowledge and technology of products for the automobile market to HC Operations, which gives KAYABA an
advantage that no other company has. Going forward,
we will work to create new added value on the basis of
our electronics and hydraulic technologies, such asenvironmental compatibility, performance improvements, information collection features, failure detection,
optimization of the maintenance cycle, and condition
monitoring systems, and respond to social demands
such as engaging in the SDGs and efforts for carbon
neutrality.

The Value HC Operations Offers

Electromagnetic proportional
control valve

Seven-ton class travel motor

Leak Detection Cylinders

Construction machine
network communicationequipment

KAYABA Group Report 2023

54

Business Strategy

Special-Purpose Vehicles Division

Overview

A History of Creating Products that Meet
Customer Needs with Hydraulic andCustomization Technology

Concrete mixer trucks

Granule carriers

Pruned tree shredder trucks

Tilting drum mixing machines

We offer new added value by visiting customers and creating products that respond to their various needs.
KAYABA’s concrete mixer trucks are equipped with specialized hydraulic equipment that we make, which
contributes to the stable operation of the product. By making it possible to provide a stable supply of the fresh
concrete that is critical to construction work, they support urban development and infrastructure construction.
Also, they play an important role that impacts repair work in times of disaster, and we are proud that our
product contributes to the safe and comfortable lives of people.

Net Sales

Segment Profits(¥ million)(¥ million)

1,2００

12,０００

9,109

8,602

8,270

9,161

9,221

896

A concept model of a mobile
home

2018

2019

2020

2021

2022

Ichio Nemoto

55

KAYABA Group Report 2023

2018

2019

2020

2021

2022

(FY)

■

■

Notes: 1. A s a result of the review of segment management classification, systems products that was previously categorized under the “Special-Purpose Vehicles Division” isdisclosed as part of the “HC Operations” from FY2021.
2. Segment profit is calculated by deducting cost of sales and selling, general and administrative expenses from net sales.

COLUMN

Using Wood Chips
The Wood Chip Transporter with Shredder has conventionally been used for the maintenance of roadside trees.
However, recent calls to respond to environmental issues
have increased the value of its use, because its mobility
means it can process wood from mountain forest thinning, while the generated wood chips can be used tocondition soil.
Further, it is possible to promote composting by using
the generated chips as secondary material for organic
compost and mixing with the tilting drum mixing machines, and their use as woody biofuel by creating pellets
is attracting attention. We are actively expanding so thatKAYABA’s technology can be applied in the field ofenvironmental business.

“We are aiming to be the leading mixer manufacturer
by strengthening after service and launching
high-value-added products.”

General Manager,
Special Purpose Vehicles Division,
Senior Managing Executive Officer

０

(FY)

e-Mixer, an environmentally friendly concrete
mixer truck
In response to demands for environmental considerationthat have been rising over the years, we create our
e-mixer electronically controlled concrete mixer truck in
2004.The drum that stirs fresh concrete is conventionallyturned by the engine, but the e-mixer uses a dedicatedelectronically controlled hydraulic pump and motor that
automatic controls the optimum engine speed. Keeping
fuel consumption low contributes to reducing CO2
emissions. Also, the electronic controls reduce noise byhalf when it is operating (hearing comparison).
We have continued to make improvements after thetruck went on sale, and in 2023 we released the latest
model, e-Mixer III. In addition to being installed with a
new type of ECU, it has a touch panel monitor near thedriver’s seat that makes it easy for the operator to beaware of the conditions of the mixer truck, further
increasing convenience.
Low fuel consumption (yearly)

CO2 emissions reduction (yearly)

Approximately 240 L per truck

Approximately 630 kg of CO2 per truck

Data

We have identified a drop in demand due to a tapering
off of demand for fresh concrete and cement and thetermination of business by our partners in the supply
chain as causes of potential risks.

559

6００

Business Strategy

Risks and Business Opportunities in the New
Medium-Term Management Plan

０803

Value Creation

The business environment for the year saw a range ofnegative factors, with truck manufacturers’ chassis
supply stagnating due to the impact of the semiconductor shortage, and production schedules needing to bechanged as necessary. However, we worked on a
flexible production system so that we could send evenone more concrete mixer truck to our many customers.
Sales increased as a result, but segment profits declined due to increases in raw material prices.

The use of EV trucks is a matter that we must engage
in going forward. In order to advance technology development and human resource training, we newly
established the Electric Drive Development Sect.
During FY2022, we were able to take steps towardmedium-term growth. We completed development on
our e-Mixer III, which latest model with a reduced
environmental burden and that features low noise andlow fuel consumption, and made sales. Also, we announced the concept model of a mobile homedeveloped with the cooperation of AC and HC
Operations. Seeking future growth, we will commercialize the mobile home and conduct sales promotions forexisting products, such as ourtilting drum mixing machines
and Wood Chip Transporter
with Shredder, which respondto social demands such as the
SGDs and carbon neutrality

948

737

6,０００

Looking Back on FY2022

Strategy■ Main Products Special-purpose Vehicles Concrete mixer trucks, granule carriers, pruned tree shredder trucks, specialfunction vehicles

Jun Katsuki

Deputy General Manager,
Special Purpose Vehicles
Division

Thinned wood

Using wood chips forconditioning soil and biofuel

Note: equivalent to 1.2 barrels

KAYABA Group Report 2023

56

Data

KAYABA Performance Highlights

Financial
Overview

Net sales for the KAYABA Group were ¥431.2 billion, a ¥42.8 billion increase over the previous fiscal year.
Operating profit was ¥32.5 billion (compared with ¥30 billion in the previous fiscal year), while profit before tax ¥31.8
billion (compared with ¥28.8 billion in the previous fiscal year). Also, profit attributable to owners of the parent was¥27.2 billion (compared with a profit attributable to owners of the parent of ¥22.5 billion in the previous fiscal year).

Segment Profit

Depreciation and Amortization

R&D Expenses(¥ million)(¥ million)(¥ million)

60０,０００

4０,０００3０,０００1０,０００50０,０００412,21440０,０００431,205

3０,０００388,360

381,584
328,037

24,71322,01030０,０００8,０００20,61525,5002０,０００18,634

17,581

18,314

18,652

6,312
5,368

6,０００

5,767

6,110

17,5752０,０００13,325

4,０００

20０,０００

1０,０００1０,０００

2018

2019

2020

2021

2022

(FY)

０

2018

2019

2020

2021

2022

(FY)

０

2018

2019

2020

2021

2022

(FY)

０

2018

2019

2020

2021

426,635

434,187

2020

2021

2022

Value Creation

2,０００

10０,００００6,750Strategy

Net Sales(¥ million)(FY)

Note: Segment profit is calculated by deducting cost of sales and selling, generaland administrative expenses from net sales.

Profit (loss) before tax(¥ million)

5０,０００5０,０００30,001

Total Assets(¥ million)(¥ million)
60０,０００

4０,０００32,547

28,817

18,29725,０００Cash Flows (CF)31,77022,576

16,34025,０００2０,０００17,047０

0-25,０００(28,496)(29,510)(40,298)

2018

2019

2021

2022

(FY)

-5０,０００

2018

2019

2021

2022

(FY)

(13,616)

446,836

20０,０００(20,180)(21,505)-4０,０００410,454(13,517)

10０,０００(32,711)2020

441,074

30０,０００(10,871)(6,281)(41,419)2020

50０,０００

2018

2019

CF from operating activities

2020

2021

CF from investing activities

2022

(FY)

０

2018

2019

2022

(FY)

Data

-5０,０００-2０,０００

23,914

1,146(4,999)-25,０００

20,82624,24740０,０００

10,4180

Business Strategy

Operating Profit (Loss)(¥ million)

CF from financing activities

Profit (Loss) Attributable to Owners of the Parent

Capital Expenditures

Total Equity(¥ million)(¥ million)(¥ million)

Ratio of equity attributable to owners of the parent(%)

8０,０００3０,０００25０,０００60

25,34523,3474０,０００17,08722,549191,036

20０,０００27,210155,643

2０,０００13,322

0

14,58815０,０００

14,59540.9

160,91440

116,726

25.9

79,81510０,０００

20

1０,０００(24,757)

35.3

33.9

18.1

-4０,０００

5０,０００(61,879)-8０,０００

57

2018

2019

KAYABA Group Report 2023

2020

2021

2022

(FY)

０

2018

2019

2020

2021

2022

(FY)

０

2018

2019

2020

2021

2022

(FY)

０

2018

2019

2020

2021

2022

(FY)

KAYABA Group Report 2023

58

Data
KAYABA Performance Highlights

CO2 Emissions

Non-financial

Energy Consumption（kL）

300,０００

0.500

3,０００

0.382

0.361

1,946

0.301

20０,０００

2,０００

1,910

68,61367,54861,583

61,762

29,708 tCO2

59,721 tCO2

Scope 2

51,392 tCO2

27,403 tCO2

85,849 tCO2

164,644 tCO2

Scope 3Category 1

Purchased Goods and Services

828,110 tCO2

370,035 tCO2

834,797 tCO2

2,032,943 tCO2

Category 2

Capital Goods

16,836 tCO2

10,920 tCO2

24,299 tCO2

52,055 tCO2

Category 3

Fuel- and Energy-Related Activities
Not Included in Scope 1 or Scope 2

24,318 tCO2

5,895 tCO2

15,022 tCO2

45,236 tCO2

Category 4

Upstream Transportation andDistribution

4,491 tCO2

9,121 tCO2

56,223 tCO2

69,835 tCO2

Category 5

Waste Generated in Operations

1,964 tCO2

2,618 tCO2

14,330 tCO2

18,911 tCO2

Category 6

Business Travel

734 tCO2271 tCO2

1,897 tCO2

2,901 tCO2

Category 7

Employee Commuting

3,497 tCO2

3,327 tCO2

10,452 tCO2

17,276 tCO2

Category 8

Upstream Leased Assets

2,745 tCO2

1,950 tCO2

731 tCO2

5,426 tCO2

Category 9

Downstream transportation andDistribution

315 tCO2

55 tCO2

0 tCO2370 tCO2

Category 10

Processing of Sold Productsー

Category 11

Use of sold products

275,616 tCO2

0 tCO20 tCO2

275,616 tCO2

Category 12

End-of-Life Treatment of Sold Products

16,889 tCO2

0 tCO20 tCO2

16,889 tCO2

Category 13

Downstream Leased Assets

Category 14

Franchises

ー

ー

ー

ー

Category 15

Investments

ー

ー

ー

ー

1,479

1,０００

21,11948,92450,993
０

2018

2020

2019

21,451

18,63442,877

19,852
46,836

46,613
2021

2022

0.100

(FY)

Energyconsumption ■ KAYABA ■ Domestic subsidiaries■■ Overseas subsidiaries

０

０

2018

2020

2019

2021

Basic units

Water Usage

Industrial waste: Volume treated by contractors
（t）

4,０００

300,０００

（kg）
60.0

54.1

52.1

48.5

48.2
1,355

1,280

1,046

159
132
1,669

1,０００

1,357

Water
supply■Wastewater

2018

547
155
103
1,571

1,562
1,426

2019

1,288
2020

149
112

99

10０,０００

3,347
(FY)

■ KAYABA ■ Domestic subsidiaries ■ Overseas subsidiaries■ KAYABA ■ Domestic subsidiaries ■ Overseas subsidiaries

０

2018

Industrial
waste■

Number of Employees

2,809

3,692

3,321

2,750

2019

2020

4,478

5,052

2,809

2,761
2022

■ KAYABA ■ Domestic subsidiaries■ Overseas subsidiaries(FY)○: Target achieved ×: Target not achieved

Global (KAYABA, seven domestic subsidiaries,
18 overseas subsidiaries)

Theme

０

Basic units

OSHMS/ISO 45001 Certification Acquisition (As of March 31, 2023)

Climatechangecountermeasures

20,０００15,427

15,43915,０００14,71814,472Six KAYABA Plants:

13,9201０,０００100%

Global:100%

ISO14001 Certification Acquisition (As of March 31, 2023)

０

2018

2019

2020

2021

2022

(FY)

100%

Global:88%

Numerical
targetFY 2022
achievements

Numerical
target(Ref.) 78,774 tCO2 or less(Ref.) 236,265 tCO2 or less

224,365 tCO2ー

CO2 emission volume perbasic unit

0.604 tCO2/¥ million or less 0.526 tCO2/¥ million○

FY 2022
achievements

Evaluation

77,266 tCO2ー0.444 tCO2/¥ million or less 0.407 tCO2/¥ million○

Energy consumption(Ref.) 134,496 kl or less

128,450 kl

ー(Ref.) 47,456 kl or less

46,836 kl

ーEnergy consumption per
basic unit

0.351 kl/¥ million or less0.301 kl/¥ million○

0.256 kl/¥ million or less0.247 kl/¥ million○

General waste(Ref.) 3,246 t or less

2,653 tー(Ref.) 527 t or less

347 t

ー

General waste per basic
unit

8.46 t/¥ million or less6.23 kg/¥ million○

2.84 kg/¥ million or less1.82 kg/¥ million○(Ref.) 40,140 t or less

40,459 tー(Ref.) 18,739 t or less

19,105 tー

105 kg/¥ million or less

95 kg/¥ million○

101 kg/¥ million or less

101 kg/¥ million○

Industrial waste(Ref.) 21,105 t or less

18,506 tー(Ref.) 3,222 t or less

2,513 tーIndustrial waste per basic
unit

55.0 kg/¥ million or less43.4 kg/¥ million○

17.4 kg/¥ million or less14.5 kg/¥ million○(Ref.) 438 t or less

405 t

ー

Plastic waste matter
Recycling

KAYABA (six plants)

Evaluation

CO2 emission volume

Reductionof industri- Metal scrap
al waste
Metal scrap per basic unit

5,０００

Six KAYABA Plants:

0 tCO2

Materials cited for calculations
Scope 1: M anual for the Calculation and Reporting of Greenhouse Gas Emissions and GHG Protocol, Ministry of the Environment
Scope 2: E mission Factors by Electric Utility Operator (used to calculate emissions volumes of greenhouse gas by designated emitters), Ministry of the Environment andMinistry of Economy, Trade and Industry; IEA Emission factors 2021; and Ministry of Ecology and Environment of People’s Republic of China (China plants) (In cases
where the market standard was unclear, a location basis was substituted.)
Scope 3, Category 1:	Environmental Impact Factors with Consideration for the Global Supply Chain, announced by Incorporated Administrative Agency the National
Institute for Environmental Studies, and use of basic units based on the results of domestic calculations at overseas plants
Scope 3, Categories 2 to 15:	Basic Guidelines on Accounting for Greenhouse Gas Emissions Throughout the Supply Chain, announced by the Ministry of the Environment andMinistry of Economy, Trade and Industry. Category 10 is under investigation, Categories 11 and 12 are applicable to the mixer trucks in our Specialpurpose Vehicles Division, and Category 14 and 15 are not applicable.

10.0

2021

0 tCO2The coverage of Scope 1, 2, and 3 contains six KAYABA Plants and the Company’s affiliates (seven domestic subsidiaries, 18 overseas subsidiaries) for the entire KAYABAGroup’s performance in 2022. The calculation method for each Scope is in conformity with the guidelines released by Japan’s Ministry of the Environment, and the method foroverseas plants is essentially the same. However, Scope 2 uses the market standards for CO2 emissions factors.

20.0

5,199

1,268
2022

40.0

10,693

30.0

1,425

2021

11,69811,001

762

611

1,188

13,8520 tCO2

Recycling rate

ー

ー

ー

95.3% 以上

88.5%

×Final disposal volume

ー

ー

ー

3.1% or less

2.6%

○

Data

０

143
119

12,70520０,０００

1,028

836

750

50.0

43.4

1,301

0 tCO2ーBusiness Strategy

（km3）

178
1,636

(FY)

2022

ー

ー

Value Creation

22,4022,０００

4,139 tCO2

0.200

10０,０００3,０００25,874 tCO2

1,778

1,650

0.300

72,495

Direct Emissions
Indirect Emissions from the Use of Electricity(Market Standard)

0.400

0.347

0.331

Total

Strategy（kL）

Domestic subsidiaries Overseas subsidiaries(seven companies)(18 companies)

Scope 1

Energy Consumption for Transportation（kL）

KAYABA(six plants)

CO2 emission category

Overview

The volume of energy used in the product manufacturing phase in the KAYABA Group was 128,450 kL in crude oilconversion (a year-on-year decrease of 5.3%), with a basic unit of 0.301 kL/million yen (a year-on-year decrease of13%). Regarding industrial waste, we worked to reduce the volume of waste matter and promote in-house recycling,
bringing emission volumes (the volume treated by contractors) to 18,506 tons (a year-on-year decrease of 2.5%), witha basic unit of 43.4kg/hundred million yen (10.5% compared to the previous fiscal year).

Note: Energyrefers to the total of crude oil conversion, such as electricity and fuel. Regarding the decrease of industrial waste, the calculations exclude valuable materials(recycling or reuse) generated by initiatives to promote recycling.
Output level are calculated based on KAYABA’s regulations, which take shipping into account.
Reference: At the present time, the numerical target for the aggregate volume of emissions has not been set, and we are undergoing investigations related to setting thetargets.

59

KAYABA Group Report 2023

KAYABA Group Report 2023

60

Data

11-Years Financial Summary(Millions of yen)

2015

2016

2017

2018

2019

2020

2021

2022

Accounting standards applied

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

305,752

352,710370,327355,320355,316

393,743

412,214

381,584

328,037

388,360

431,205——

15,506

17,58818,62422,94922,01017,575

13,32524,71325,500Operating profit (loss)

10,473

18,17014,461

4,327

19,247

20,885(28,496)(40,298)

18,29730,00132,547

Profit (loss) before tax [Income (loss) before income taxes

12,994

21,032

14,892

2,825

18,852

20,881(29,510)(41,419)

16,34028,817

31,7707,789

12,761

8,036(3,161)

14,544

15,202(24,757)(61,879)

17,08722,54927,210Capital expenditures

39,21529,90830,087

21,30020,578

20,95625,34523,347

13,322

14,588

14,595

Depreciation and amortization

14,554

17,294

15,191

17,075

15,922

16,98817,581

20,615

18,634

18,314

18,652R&D expenses

5,468

6,917

8,910*

7,760

7,621

8,102

6,750

6,312

5,368

5,767

6,110

Cash flows from operating activities

18,98428,78822,335

19,95831,15329,252

17,047(4,999)20,82624,247

23,914

Cash flows from investing activities(36,125)(36,078)(30,658)(20,320)(21,337)(16,386)(13,616)(21,505)(6,281)(10,871)(13,517)

Cash flows from financing activities

8,529

5,709

(555)

(3,395)(969)(4,482)(10,418)

22,576

1,146(32,711)(20,180)

Cash and cash equivalents at end of period

35,215

38,13230,51025,29633,98842,70256,09250,42368,70052,11843,585

Total assets

327,912361,083

387,877

359,002381,326

412,493441,074

410,454426,635

434,187446,836

Interest-bearing debt*2

95,33888,81392,44891,68593,563

94,641

108,634

154,608

160,278

124,874

114,706

Total equity [Total net assets]

116,435

153,997

175,256

153,381

169,771

186,651

155,643

79,815

116,726

160,914

191,036

Basic earnings per share [Net income (loss) per share]*3 (Yen)

35.24

55.25

31.45

(12.37)56.93

595.09(969.18)(2,422.53)

668.95854.96

1,028.40

Cash dividends per share applicable to the year*3 (Yen)

8.00

9.00

12.00

11.00

12.00

150.00

0.00

0.00

75.00

105.00200.00Return on equity attributable to owners of the parent[Return on equity] (ROE; %)

7.3

9.7

5.1

(2.0)

9.3

8.8

(15.0)(55.4)

18.5

17.1

16.2

Ratio of equity attributable to owners of the parent [Equity ratio] (%)

34.5

41.2

43.6

41.3

43.1

43.7

33.9

18.1

25.9

35.3

40.9

P/E ratio (Times)

13.1

7.9

14.0

—

10.2

8.5

—

—

4.5

3.5

3.9

12,306

13,033

13,732

13,796

14,35014,754

15,427

15,43914,71814,472

13,920Net sales
Segment profit*1

Profit (loss) attributable to owners of the parent [Net income (loss)]

Business Strategy

2014

Value Creation

2013
JGAAP

Strategy

2012
JGAAP

Overview

FY

Data

Number of employees*1: Segment profit is calculated by deducting cost of sales and selling, general and administrative expenses from net sales.
*2: Interest-bearing debt = Short-term borrowings + Current portion of long-term borrowings + Current lease obligations + Corporate bonds + Long-term debt +Non-current lease obligations + Guarantee deposits received (Corporate bonds have been added since FY2021)*3: The Company carried out 1-for-10 reverse stock split on the effective date of October 1, 2017.
Notes: 1. KYB Corporation and Consolidated Subsidiaries
2. *JGAAP61

KAYABA Group Report 2023

KAYABA Group Report 2023

62

Data

KAYABA in Globe(As of October 1, 2023)

Overview

23 Countries, 41 Companies

America

6 companies in 3 countries

Regional Headquarters
Production BaseKYB Americas Corporation (Indiana)
KYB Americas Corporation (Greenwood)

R&D Base
Sales Office / Other Services

KYB Americas Corporation (Chicago)
Takako America Co., INC.

		 Environmental data target
		 Companies/Plants

KYB Mexico S.A. de C.V.
Strategy

KYB Mexico S.A. de C.V. Mexico City Branch
KYB Manufacturing do Brasil Fabricante deAutopecas S.A.
KYB International America, Inc.
Comercial de Autopecas KYB do Brasil Ltda.

Value Creation

Europe7 companies in 12 countries
KYB Europe GmbHKYB Europe GmbH (Navarra Branch)KYB France

Business Strategy

KYB Iberia
KYB Italy
KYB Poland
KYB Romania
KYB Turkey

Asia

18 companies in 7 countries

KYB UKKYB (China) Investment Co., Ltd.
KYB Industrial Machinery (Zhenjiang) Ltd.

KYB UkraineKYB Suspensions Europe, S.A.U.
KYB Advanced Manufacturing Spain, S.A.U.
KYB Manufacturing Czech s.r.o.
LLC KYB Eurasia
KYB Middle East FZE		Hubei Henglong & KYB Automobile ElectricSteering System Co., Ltd.
CHITA KYB Manufacturing (Zhenjiang) Co., Ltd.
KYB Manufacturing Taiwan Co., Ltd.
KYB Steering (Thailand) Co., Ltd.
KYB (Thailand) Co., Ltd.
KYB Manufacturing Vietnam Co., Ltd.
Takako Vietnam Co., Ltd.
PT. KYB Hydraulics Manufacturing Indonesia
PT. Kayaba Indonesia
PT. Chita Indonesia
KYB-UMW Malaysia Sdn. Bhd.
KYB Motorcycle Suspension India Pvt. Ltd.
KYB-Conmat Pvt. Ltd.
KYB Asian Pacific Corp. Ltd.
KYB Asian Pacific Corp. Ltd.
Amata Nakorn BranchJapan

10 companies in 1 country
KYB Corporation (KAYABA)
Kumagaya Plant

Data

KYB CHITA Manufacturing Europe s.r.o.

Wuxi KYB Top Absorber Co., Ltd.
Changzhou KYB Leadrun Vibration Reduction		Technology Co., Ltd.

KYB Nagaoka Co., Ltd.
KYB Kanayama Co., Ltd.

Sagami Plant

KYB Motorcycle Suspension Co., Ltd.

Gifu North Plant

KYB-CS Co., Ltd.

Gifu South Plant

Takako Industries, Inc.

Gifu East Plant

Kensiyuu Co., Ltd.

Mie Plant

Japan Analysts Co., Ltd.

Nagano Plant

KYB Logistics Co., Ltd.

Basic Technology R&D Center

Chikuyo Seiki Kogyo Co., Ltd.

Products Technology R&D Center
Machine Tools Center
Developmental Center
NagoyaOsaka
Hiroshima
Fukuoka

KYB Corporation Chennai Branch

63

KAYABA Group Report 2023

KAYABA Group Report 2023

64

Data

External Assessments

Corporate Information(FY2022)(As of March 31, 2023)

https://www.kyb.co.jp

Awards List

June 2022

July 2022

Awards Side
Thai government

Audit passed for safety, health, environment, and plant management

KST (Thailand)

Superior Product Quality Award

Nissan Motor

Manufacture of camshaft bracket installed inengine, two consecutive years

KYB-YSQCDS Best Performance Award
Regional Quality Award

JATCO

Two consecutive years

KAYABA,
Kanayama

QCDS A Rank Award

JATCO (Guangzhou) andJATCO (Suzhou)

Two consecutive years

KCI (China)Award for Effort to Deliver Zero
Defective Products (for the sixth
consecutive month)

Mazda Motor

Regional Special Award and Quality
Award

JATCO (Thailand(

Received award every year since theestablishment of JTL (eighth time)

KST (Thailand)

Best Improvement on Working Capitaland Fixed Asset Management

PT. Astra Otoparts Tbk.

Recognition for working capital improvements and outstanding fixed asset
management

PT.KYBI(Indonesia)

Logistics Performance Award

Daihatsu Motor

Evaluations on the efforts to improvelogistics

KST (Thailand)Service Parts Supplier Award

Mitsubishi Motor

Evaluations of quality and delivery

KST (Thailand)

KAYABA

UMW GroupGroup Award, Company AwardKMSB (Malaysia)

Best Profit Ratio Award

UMW Group2021 Award, Past Three Years AwardKMSB (Malaysia)

Chairman's Award

UMW Group

Annual champion

KMSB (Malaysia)

Gifu Inventors Exhibition

Patent related to swing valve

KAYABA

Chairman’s Award from the Gifu
Prefecture Labor Standards
Association

Gifu Prefecture Labor
Standards Association

Recognition of KAYABA’s health andsafety activities in the Gifu district

KAYABA

Non-citizens who have made prominent
Zhenjiang People’s Friendship Envoy Zhenjiang People’s External contributions to Zhenjiang’s economic andKCI (China)
Award
Friendship Associationsocial development, philanthropic work, or
the promotion of friendly relations overseas
Gifu Governor’s Award

December 2022

SER (Certified)Caterpillar

January 2023

Selected as a Good Partnership
Company

Automobile Business
Association of Japan

March 2023

KAYABA, KIMZ
(China)Number of Employees 13,920 (Consolidated basis)
Securities Traded

Prime Market of Tokyo Stock Exchange

Shareholder Information(As of March 31, 2023)

Major Shareholders
Percent of
Total
SharesIssued (%)

Common Stock
IssuedCommon stock : 25,748,431
Class A preferred stock : 125

Name

Shareholding(Thousands)

Number of
Shareholders

Common stock : 13,482
Class A preferred stock : 8

The Master Trust Bank of Japan(Trust Account)

2,818,600

11.0Transfer Agentand Registrar

Mizuho Trust & Banking Co., Ltd.
3-3, Marunouchi 1-chome, Chiyoda-ku,
Tokyo 100-8241, Japan

Toyota Motor Corporation

1,965,417

7.7

Custody Bank of Japan, Ltd.
(Trust Account)

1,031,300

4.0

Meiji Yasuda Life Insurance
Company

1,004,650［15］3.9Composition of Shareholders (Common Stock)
Treasury shares
199 thousand (1%)
Foreign companies
4,362 thousand (17%)

Other domestic
companies

25,748thousand shares

Financial institutions

8,617 thousand (33%)

5,822 thousand (23%)
Individuals and others
6,748 thousand (26%)

Suppliers’stock ownership

984,200

3.9

Hitachi Construction MachineryCo., Ltd.

892,000

3.5

Trust & Custody Services Bank,
Ltd. as trustee for Mizuho Bank,
Ltd. Retirement Benefit Trust
Account re-entrusted by Mizuho
Trust and Banking Co., Ltd.

611,500

2.4

Ogaki Kyoritsu Bank, Ltd.

591,433［10］2.3Mizuho Bank, Ltd.

490,519［35］1.9

Employee Stock Ownership

486,365

1.9

Notes: 1. The percent of total shares issued is calculated after the deduction of own
shares (206,351 shares).
2. [ ] is the number of Class A preferred shares

KAYABA

Monthly Stock Price Range (Tokyo Stock Exchange)

Sany Group

Golden Supplier Award

SunwardKAYABA, KIMZ
(China)Best Partner Award

Qianjiang Motorcycle

CO2 Reduction Early Achievement of2025 Target

Toyota Daihatsu Engineering Early achievement of exceeding cumulaand Manufacturing
tive CO2 reduction targets

KYBT (Thailand)

Safety Activity 2022 Level A

Toyota Co-operation ClubKYBT (Thailand)First-time award

Fourth consecutive years¥27,647.6 million■ Trading volume (Shares)

Stock price (¥)
6,000

600,000,000

4,000

400,000,000

2,000

200,000,000

Data

February 2023

Efforts in the development of shock
absorbers for sit skis as well as providing
aid and technology support for disabled
persons

KAYABAKAYABA, KIMZ
(China)Best Service Award

Paid-in CapitalBusiness Strategy

Minister of Education, Culture, Sports,
Science and Technology Award (GoldAward)

November 2022

April 1 to March 31

Value Creation

Best Innovation Award

Chubu Regional Invention
Patent for forklift lift cylinderAwardsFiscal Year

Head OfficeWorld Trade Center Bldg.,
South Tower 28F,
4-1, Hamamatsu-cho 2-chome,
Minato-ku, Tokyo 105- 5128, Japan
Tel: +81-3-3435-3511
Fax: +81-3-3436-6759

AwardedGreen Star Award

September 2022

October 2022

Notes

Date of Establishment March 10, 1935

Strategy

August 2022

Name of Award/CertificationKYB Corporation

Overview

Year and Month

Company Name

KWT (Taiwan)

Note: K
 CI: KYB (China) Investment Co., Ltd., KIMZ: KYB Industrial Machinery (Zhenjiang) Ltd., KWT: Wuxi KYB Top Absorber Co., Ltd., KST: KYB Steering (Thailand) Co., Ltd.,KYBT: KYB (Thailand) Co., Ltd., KMSB: KYB-UMW Malaysia Sdn. Bhd., PT.KYBI: PT. Kayaba Indonesia

０Best Improvement on
Working Capital and Fixed
Asset Management(2022.08)

65

Logistics PerformanceAward (2022.09)

KAYABA Group Report 2023

Zhenjiang People’s
Friendship Envoy Award(2022.10)

Selected as a Good
Partnership Company(2023.01)

CO2 Reduction Early
Achievement of 2025
Target Award (2023.03)

CDP’s score for targetingclimate change was raiseda rank to “B.”(2022)

2018

2019

2020

2021

High (¥)

5,660

3,695

3,350

4,180

4,110

Low (¥)

2,312

1,712

1,692

2,563

2,729

At year-end (¥)

2,718

2,069

3,020

2,975

4,020

(FY)

2022

0

KAYABA Group Report 2023

66