Yokowoʼs Value Creation

Top Message

On this occasion of our100th anniversary,challenge the next stage
GO BEYOND~Challenge the Next Stage~
Takayuki Tokuma

Representative Director,President and Executive Officer
YOKOWO CO., LTD.

Yokowo will work towards achieving its new medium-term management
plan, to ensure that it is a constantly evolving company.

Basic Management Policy
On this occasion of our 100th anniversary, we have set forth
Purpose, Vision, and Values as our new corporate philosophy
looking towards the next 100 years (see the page on p. 3).
Yokowo has instituted two management policies to realize thiscorporate philosophy. One is the sustainable evolution of business
management, and the other is a multi-layered business structure.
The sustainable evolution of business management isconstant evolution and moving forward as Yokowo has
advocated in the slogan it has out forward since its inception,“Constantly on the cutting edge.” The measures for realizing
the sustainable evolution of business management are productinnovation (including business model, product and businessstructure innovation), process innovation (the innovation ofbusiness processes) and personnel innovation (human resourcesinnovation). In other words, these measures aim to substantiallychange the business structure, including products, technology
and markets, and business operating process through the optimal
placement of business sites and the proactive introduction of
new production processes, processing technologies and IT. The
diversity of the human resources who operate the above will
expand to ensure the development of highly professional teams.
In line with management innovation (the innovation of
corporate management and business operations), substantialchanges will be made to how the elements and systems involvedin the above three innovation measures and these measures

themselves are managed, in order to accelerate the evolutionof business management. The other management policy of themulti-layered business structure aims to enhance the stabilityof our corporate management and our companywide earnings
structure.
In other words, we aim to improve sustainability. As themanagement environment surrounding Yokowo is changing
drastically, this management policy aims to establish a businesssystem capable of responding to these changes by creating
a multi-layered business structure (industry, customers,technologies, supply chains and other layers).
By promoting the sustainable evolution of business
management and a multi-layered business structure, we hopeto achieve Minimum 8 (secure at least 8% in sales growth rate,operating profit margin, and return on equity) in a consistentand stable way.

Towards Achieving a
New Medium-term Management Plan
Performance in the Fiscal Year Ended March 31,2022, Current Status and Forecasts
The main markets for the Yokowo Group include theautomotive, semiconductor testing, mobile communications
device and advanced medical equipment markets. Thesemarkets are experiencing a dramatic transformation due toThe new medium-term management plan begun in fiscal year 2020 has now entered its final year.
Performance and earnings forecasts, along with our vision for the future are presented below.

Corporate Vision

Celebrating the 100th anniversary ofour founding
September 1 this year marked the 100th anniversary of thecompanyʼs founding. We would like to extend our sincere
gratitude to our customers for their patronage, our shareholders
for their understanding and support, senior management andemployees for their extraordinary efforts, and the families fortheir cooperation. It is thanks to all of you that we have beenable to reach this centennial milestone.
Aspiring since our founding to remain constantly on thecutting edge, we operate in the rapidly advancing worlds
of information, communication and electronic components.
A specialist in antennas, fine connectors, microwave andadvanced device technology, we utilize our core technologies
to offer revolutionary products, principally to the automotive,
semiconductor testing, mobile communication terminals and17

Yokowo 2022 Integrated Reportadvanced medical device markets.
As we look back over our history from our earliest days as
a manufacturer of Spring Bars for watches to where we aretoday, our path has been one of launching new businesses
and withdrawing from businesses, all the while leveraging ourstrengths. 1979 was a particularly significant year in which weembarked on a major restructuring of our business, transforming
ourselves into an electronics company. This was the year of our“second founding.” Since then, we have boldly entered newmarkets and introduced new technologies, while strategicallyretreating from markets where we no longer enjoy a competitive
advantage.
This management principle, now in our very DNA, continues
to this day, as we promote a multi-layered business structure
by continually developing new markets and introducing
new technologies in line with the evolution of our business,technology, and products.

Evolution of Business Management

Multi-layered Business Structure● Multi-layered business structure (industry, customers,● Product innovation

technologies, supply chains and other layers)● Process innovation● Personnel innovation

Global paradigm shift/Establishing a business systemcapable of responding to drastic changes in businessenvironment and competitive environment● Management innovation

Realization of Minimum 8● Sales growth rate
● Operating profit margin● Return on equity

8%
Yokowo 2022 Integrated Report18

Yokowoʼs Value Creation

the widespread adoption of CASE*, MaaS, 5G, AI and IoTtechnologies, and this presents major business opportunities forYokowo.
However, the spread of the global COVID-19 pandemic has
had a major impact on our Company.
Negative impacts included a drop in the number oforders received from customers, a reduction in the capacity
utilization rate of our Companyʼs production bases, andincreased production and distribution costs due to lockdowns,
semiconductor shortages, and continued high costs of rawmaterials and ocean freight. On the other hand, positives
included higher demand for semiconductor inspection resulting
from people staying at home more and working from homealong with a steady demand for testing of high-performancelogic semiconductors even after this demand faded, thus
providing a significant boost to the Company. Further, theforeign exchange market saw rapid depreciation in the yen
towards the end of March 2022, due in part to rising interest
rates in the United States.
As a result, examination of the Companyʼs consolidated
performance in the fiscal year ended March 31, 2022 showsthat sales increased significantly year-on-year (by 11.5%) to66,848 million yen. While operating income fell 9.6% year-onyear to 4,684 million yen due to worsening profits in the Vehicle
Communication Equipment segment, ordinary income rose by
22.7% year-on-year to 6,529 million yen because of profits fromforeign exchange rates in line with the weakening of yen, andprofit attributable to owners of the parent company rose by
22.1% year-on-year to 4,663 million yen. All of these with theexception of operating profit represented record highs for theCompany.
In the current fiscal year ending March 31, 2023, theCOVID-19 pandemic is in general calming, but coupled withthe situation in Russia and Ukraine and the deepening friction
between the United States and China, rapidly rising prices in

Net Sales
Operatingincome¥¥■Full-year
forecast

72 billion¥7.0 billion

Profit attributableto owners of parent¥

5.5 billion

My Desire to“Make Yokowo a Good Company”
Since being appointed as President in 2007, I have constantly
conveyed my desire to make Yokowo a good company to ouremployees. I think that a better company is:■ A company about which customers say, “It was good that wehave conducted business with Yokowo. We will expand ourbusiness relationship with Yokowo.”¥¥¥

we performed business operations for Yokowo. We will work
harder to contribute more.”■ A company about which local communities say, “Iʼm glad

Yokowo is in our town. Iʼd be very happy for my children tojoin Yokowo.”

Net sales (million yen)8,000

80,0007,000

7.4 billion

40,000

9.6 billion

10,0006,000

60,0005,000

50,000

4,000
3,000

30,0002,000

20,0000

1,000
FY ended
March 2020
Performance

FY ended
March 2021
Forecast at
start of term/
Performance

Personal Communication Equipment
Circuit Testing Connectors
Vehicle Communication Equipment

19Yokowo 2022 Integrated Report

Operating income (million yen)

90,00080 billion

6.25 billion■ And most importantly, a company where the employeesof the Yokowo Group think, “I am very satisfied with to beworking for this company. I will work harder to make it aneven better company.”
I think that a company such as that is truly a good company.

■ A company about which contractors say, “It was good that70,000¥

7.2 billion

Ordinaryincome* CASE: An acronym for the new trend in automobiles: Connectivity,Autonomous, Shared, Electric▼ Earnings trends during the period of the
new medium-term management plan

<Fiscal year ending March 31, 2023>■New medium-term
management plancountries around the world are causing a slowdown in the global
economy. Even in Japan, the corporate goods price index rose
sharply due to the weakening of yen and high resource prices,and this also began to spread to consumer prices.
Under such circumstances, each segment is expected toachieve record whole-year highs for both sales and profits asof November 2022. The Circuit Testing Connector segment
has seen a dramatic increase in both sales and profits due toincreased orders and the weakening of yen and is driving overall
company performance, offsetting a slowdown in the Vehicle
Communication Equipment and Personal Communication
Equipment segments. Although a lull in the second half of thefiscal year is expected due to the impact of reduced demand in
the semiconductor market, this is still expected to exceed theperformance targets of the new medium-term management plan.

FY ended
March 2022
Forecast at
start of term/Performance

FY endingMarch 2023
Medium-term
objectives/
Full-year forecast

Operating income
Operating income forecast at startof term/Targets

0To make Yokowo a good company, we should ensure that all
employees of the Yokowo Group, regardless of nationality,
gender and other differences, are content and fulfilled in theirwork, and have a foundation of reliability and trust. Through theevolution of our technology, we will continue to offer quality
products and services to improve customer satisfaction. We willcontribute to local communities which we rely on to ensurethat we are welcomed by these communities, and to bringsatisfaction to our neighbors. As a resident of this world, we willcontribute to solving climate change and other issues to preserve
the natural environment that sustains lives of people around theworld. Based on the above, we have the three top-priority issues:
the environment, local communities and diversity and inclusion.
So that we can accelerate our efforts to address these issues,
we established the SCI (Sustainability & Corporate Integrity)
Promotion H.Q. in April 2022 for integrated promotion, andthis engages in planning through to disclosure and dialog on
performance and other factors. Additionally, the Board ofDirectors decided in October to establish the SustainabilityCommittee. This committee has me, the President, as its chair,
together with a senior managing executive officer and managing
executive officers as members, and we also have independent

outside directors as observers. The progress of discussions aswell as decisions and conclusions are reported to the Boardof Directors on a regular basis and on demand, and whenapproval is required (see the Sustainability Promotion System
page on p. 38).
Additionally, in our efforts towards diversity and inclusion,
we have collected the opinions gathered at focused roundtable discussion meetings that provide a venue for a wide rangeof employees — including female, foreign, veteran and new
employees — and these are reflected in the Companyʼs humanresources system and employee welfare measures. In parallel,
we will continue to conduct employee engagement surveys
and evaluations, aiming to improve the effectiveness of ourmeasures.
The Yokowo Group will continue to enhance our governancesystem, a foundational, basic part of our corporate activities, inorder to achieve Purpose, Vision, and Values in our actions.
Further, so that we can be a Company needed over the next
100 years, we will confront sustainability issues such as climatechange through our business activities, and contribute to thesustainable development of our global society.
In the years to come, we look forward to the ongoingsupport, guidance, and encouragement of our shareholders andother stakeholders.

Yokowo 2022 Integrated Report20