2025 Long-Term Vision

GP25

The New Medium-Term Management Plan GP25 3rd Stage (Fiscal 2023-2026)

Progress of the Medium-Term Management Plan
Toward Realization of the Long-Term Vision

Medium-Term Management Plan GP25 2nd Stage (Fiscal 2020-2022)
Accelerate growth to become an all-embracing company for building materials

As the roadmap toward the realization of the long-term vision GP25 that drew how we should be in 2025, the Daiken Group has
set the medium-term management plan in three steps. In the medium-term management plan GP25 2nd Stage that started fromfiscal 2020, we set management goals for both the financial and nonfinancial aspects and developed measures with the policies of I
“Accelerating growth strategies” and II “Enhancement of the management foundation” as key axes.

Basic policy
Based on firm management foundation, pursue the resolution of social issues through our business, thereby
accelerating our growth strategies toward becoming an all-embracing company for building materials.

Medium-Term Management Plan GP25 1st Stage (Fiscal 2017-2019)

I. Accelerating growth strategies

II. Enhancement of the Management Foundation

Domestic: Review of the Business (Market) Portfolio
Global: Business expansion through proactive investments
and entry into new markets

Basic policy

1 Optimize our financial foundation

Daiken Group's Value Creation

The first step toward an all-embracing company for building materials

2 Restructure firm and flexible business infrastructure
3 Practice of ESG Management

Results achieved against management goals(¥100 million)● Endeavor to further strengthen current businesses and develop the foundations for new businesses as the key to growth

Results● Proactively develop environmental-related technologies for ecological materials, energy savings, and domestic woodutilization● Maximize the synergy of manufacturer and engineering to enhance profitability

I. Accelerating growthstrategies● Create a work environment where employees can work with enthusiasm and foster the human resources who will play

important roles in the future

Results achieved against management goals

II. Enhancement ofthe ManagementFoundation(¥100 million)

Net sales

Goals
Fiscal 2019

1,688

1,705

1,829

1,800

55

85

75

57

70

Ordinary profit

5290

87

6870

Profit attributable to owners of parent

3951

5844

43

ROE

9.8%

11.7%

11.7%

7.8%

8%

Dividend payout ratio30.4%

30.1%

30.3%

42.4%

30% or more

4.4%

7.8％

5.3%

5456

78

70

ROE

9.5%

9.1%

10.9%

10%

ROA

5.5%

5.8%

10.5%

7%

Shareholder equity ratio

32.7%

39.4%

41.7%

40%
30% or more

33.4%

32.4%

33.1%

Total domestic CO2 emissions*1

(28%)

(35%)

(36%)

(26%)

Total diversity index*2

+19pt

+19pt

+30pt

+20pt

Shareholder return Dividend payout ratio
E
Nonfinancial S
Indicators
G1

100+4pt

ー+5pt

+10pt

Serious quality accidents and violations
Degree of penetration of the group
corporate philosophy*3*1: Compared to fiscal 2014 *2: Our own indices in which the eight diversity items, such as the female manager ratio, were indexed as compared to fiscal 2019 *3: Our own indices in which employees’
understanding, sharing, and practice of the group corporate philosophy were indexed as compared to fiscal 2018

Achievements and issues
 oward the expansion in the global markets positioned as the growth driver, wood industrial materials business by the■T

two North American companies, which became group companies through M&As in fiscal 2020 significantly led the overall
performance and we achieved all of the management goals excluding net sales, such as the profit goal and financial indices.
 hile expansion in the global markets progressed, construction demand, such as accommodation facilities and commercial■W
facilities, rapidly decreased because of the impact of the COVID-19 crisis in Japan, and we could not achieve the expansion
goal in the public and commercial buildings.
 oward the second half of fiscal 2022, because of the combination of a higher-than-expected increase in orders in Japan■Tand delayed arrival of raw materials caused by the disruption of marine transportation, a delivery delay occurred in part ofthe products in building materials business. We were in the situation where we had no choice but to impose a limitation onorders received and issues remained in the BCP of the entire supply chain.
 s for the nonfinancial goals, in addition to the achievement of the total domestic CO2 reduction goal by utilizing renewable■A
energy linked to business activities, we could significantly surpass and achieve the initial goal concerning the total diversity
index, which is our own index, because of the promotion of taking paternity leave.

Achievements and issues
 s for the management goals, we achieved the goals in terms of net sales and net profit.
■A s for operating profit, we increased profitability over the past three years and achieved the goal for two consecutive years;■A

however, issues had come to the surface in raw material procurement and the ordering and order receiving system, and wecould not achieve the goal in the final fiscal year and issues remained in the business infrastructure.
 e actively made investments, such as M&A to enhance industrial materials business, expansion of the product lineup by■Wlaunching products on a large scale, establishment of the R&D center, and the addition of the biomass boiler, and steadily
executed measures to lead to the next stage of growth.
 egarding shareholder return, we followed the policy of the dividend payout ratio at 30% or more and improved shareholder return.
■R

3 investments toward the expansion in the priority markets

120

4.1%

Trends in Performance toward the Realization of the Long-Term Vision GP25
Net sales(¥100 million)
2,500

Of which net sales in the three priority markets (Share)

Operating profit (Operating profit ratio)

Distribution of the wood material business in North
America (Purchased CIPA and PWT)

2,000

Door production facility expansion and reinforcement for special order items
Launch of a new DAILITE wallmaterial product

Expansion and reinforcement of the production
capacity

Tatami facing production facility expansion and reinforcement

1,500

1,681

1,688555

565

1,705

688

611

（34%）

（33%）

1,992

945

1,012

1,829（47%）

（38%）

（36%）

200（51%）

1,000

2018

GP25 1st Stage29（7.8%）

2019

2020

2021

GP25 2nd Stage

2022 (Fiscal year)

85

55

Enhancement of renovation work in the Tokyo metropolitan
area (Purchased ReformQ Co., Ltd.)
2017

（54%）

（5.1%）

75（4.4%）（3.3%）
0150

100

173

500

Distribution of the apartment renovation business (Purchased PAC SYSTEM Co., Ltd.)

1,208

1,271

（57%）

Distribution of the solid wood flooring business(Purchased T.O FLOORING CO., LTD.)

Home renovation
market2,250

2,2332,024(¥100 million)
250

Data

Enhancement of the MDF supply system (Purchased DSL in New Zealand)

Global Markets

Public andCommercial
Buildings

2,250

Foundation Supporting Value Creation

1,681

Operating profit

173

Operating profit ratio

Efficiency
Financial
Indicators Soundness

Fiscal 20192,23387

Strategy for Value Creation

be the engine of growth● Strengthen governance to enhance corporate value over the medium and long term

Fiscal 2017

1,992

83

Operating profit
Profit attributable to owners of parent● Define diversity is as one of the management strategies, and the ability delivered by a variety of human resources is toResults
Fiscal 2018

2,024

Net sales● Actively introduce management resources to the priority markets of public and commercial buildings and global markets

BenchmarkFiscal 2016

Goals

Fiscal 2020 Fiscal 2021 Fiscal 2022 Fiscal 2022

2016

Benchmark

2017

2018

GP25 1st Stage

57

83（4.1%）

87120（5.3%）（4.4%）

50（3.1%）
2019

2020

2021

2022

02022 Goals (Fiscal year)

GP25 2nd Stage30