03

YUASA INTEGRATED REPORT 2023

Starting Point for Creation of New Value

Corporate Philosophy and Our History
Our journey from our founding to our expansion of sales bases

Corporate Philosophy
Honesty and
TrustEnterprise andInnovation

Regard forthe Individual

Corporate Philosophy
https://www.yuasa.co.jp/en/corporate/philosophy/

1666
FoundedShokuro Yuasa, our founder,
launched a charcoal trading business
in Kyoto

1919
Established

After developing business bases (Tokyo,
Osaka, and Kyoto prefectures), a factory(Yuasa Iron Works) and expanding
overseas (Wuhan in China), establishedYuasa Shichizaemon Shoten in 1919 andproceeded to modernize

1674

Expanded to Edo(Tokyo)Opened an Edo outlet in
Hongoku-cho, Nihonbashi
after years of hardshippeddling wares from Kyoto

1972

1961

Steps to open multiple
outlets

Established sales base inJapan

Established branch in Nagoya, starting
steps to open multiple outlets, in addition
to full-scale expansion overseas withestablishment of representative offices in
Canada and the United States

Opened Naha sales office in Okinawa
Prefecture, completing a domestic network
extending from Hokkaido to Okinawa.
New company building in Odenma-cho,
Nihonbashi in Tokyo completed in 1975

Yuasa Iron Works (Sakai in Osaka Prefecture)established in 1909 to produce Western
hardware in Japan

Shokuro Yuasa,
our founderFormer head office building in Odenma-cho, Nihonbashi (until 2014)

Origins of innovation:
switch from charcoal trading to wholesale of metal
implements five years after founding

Premises of a Sumiya (a charcoal dealer), from which
YUASA TRADING evolved, located in what was formerly
the Toriabura-cho neighborhood of the Nihonbashi
district of Edo (Tokyo), which is now the Odenma-cho
neighborhood of Nihonbashi, and is where YUASATRADING’s head office used to be located.

Shokuro Yuasa, our founder, launched a charcoal trading business dealing
with swordsmiths in Kyoto. When the Sengoku Period (an era of civil war
in Japan) ended and Kyoto thrived as a city of commerce, Shokuro Yuasa
spotted the potential for metal implements such as scissors and knives, andswitched from charcoal trading to being a wholesaler of metal implements in
1671, just five years after founding his business.
Our founder’s decision to look to the future was YUASA TRADING’s firstinnovation and forms the foundation for the transformation that continues today.

Former head office site lasted for 288 years

The site of YUASA TRADING’s former head office in
Odenma-cho, Nihonbashi had been owned since thethird generation of the family in 1726. Despite being
destroyed several times in the great fires of Edo, thebusiness quickly recovered due to the immense trustand support of its business partners. In the Great Kanto
Earthquake of September 1, 1923, the company building
and the warehouse were completely destroyed by fire, but
a temporary store was completed on September 24 withthe assistance of business partners, which is said to havemade a strong impression on the victims of the disaster.

04

YUASA INTEGRATED REPORT 2023

Starting Point for Creation of New Value

Corporate Philosophy and Our History

2023

2026

Current Status of
YUASA TRADING GroupFY2022 Results
Net sales

Ordinary
profitROE

Total
payoutratio

15.382 billion

10.8 ％(includes share buybacks)

31 sites 23 sites in 10 countries
23 companies
12 companies
Overseas

Group companies in Japan

Group companies overseas

20 billion
11.8％
At least 33.0％

¥

¥

67.0％

600 billion¥[¥504.806 billion]▎YUASA TRADING Group Network (as of March 31, 2023)
Domestic

YUASA VISION 360 (Long-term Vision)
FY2025 Plan

523.875 billion¥(360th anniversary of the company’s founding)▎Share of Total Sales

Held by Each
Segment[¥576 billion]

Other

4.7％

Energy Division

3.8％

Construction
Machines Division

7.2％

Building Supplies &Exterior Division

10.2％

Net sales*

504.806 billion¥(FY2022)*After revenue recognition* Net sales figures in brackets are after
revenue recognition.

Industrial Equipment &Tools Division

15.3％

Machine Tools Division

23.5％

Housing, Air & Fluidic
Control Systems Division

35.3％

05

YUASA INTEGRATED REPORT 2023

Starting Point for Creation of New Value

Message from the President
Completing YUASA VISION 360,
Which Has Our Corporate
Philosophies as the Starting Point

Hiroyuki Tamura

Representative Director,
President & CEO▎

The Three Corporate Philosophies That
Connect
Our History to the Future

The YUASA TRADING Group has implemented three-year,
Medium-term Management Plans since 2017. These plans,
entitled Growing Together, are part of our long-term vision,
YUASA VISION 360 that extends to 2026, the 360th anniversaryof our founding. The third Medium-term Management Plan,
Growing Together 2026, was launched in 2023 and represents
the harvesting (reaping) stage of YUASA VISION 360.
Discussion for this third Medium-term Management
Plan began with the idea of putting our three long-standing
corporate philosophies of Honesty and Trust, Enterpriseand Innovation, and Regard for the Individual at the centerof the plan. Looking at all three mid-term management
plans together and sorting out the Group’s strengths andchallenges, the more I think about it, the more I am convincedthat these three philosophies must remain as they are.
Through the Honesty and Trust that we have cultivatedover the years, the Group has built a strong integrated
network of some 6,000 major suppliers and 20,000 major
sales partners. In addition, the philosophy of Enterpriseand Innovation is necessary for the promotion of TSUNAGU
innovation, which is the basis of our latest Medium-termManagement Plan (see the figure on the right). Previously,
we took product out or market in approaches, with the
manufacturing side playing the leading role, but the Groupis now promoting a business transformation to a market out
approach, in which the market serves in the leading role.
To achieve this transformation, it is essential that we beenterprising in catching wind of what consumers and society
need as soon as possible and be innovative in developing
products and services in cooperation with manufacturers
based on that information.
Regard for the Individual must also be a pillar for ourGroup.
Recent changes in the social environment havediversified means of communication, with telecommuting
and online conferencing becoming prevalent. We believethat strong human ties and networks are the source ofour competitiveness. While flexibly employing the latest
technologies, we intend to develop our business by placing
importance on face-to-face communication with our business
partners. I believe that communication connecting people
and thoughts eventually leads to respect for the individualand contributes to enhanced customer satisfaction andemployee prosperity.
These three core philosophies have shaped our history
to date and represent the Group’s strengths, and I havereaffirmed my determination that it is my responsibility topass them into the future.
■TSUNAGU Innovation Model

P.16

YUASA TRADING Group Markets

Manufacturing

Home building

Social issues
PeopleEnvironmentbuilding

Town building

Solutions
Information

Goods

Data

Money

Technology

By connecting (TSUNAGU) various things such as people, goods, money,
information, data, and technology, solve social issues and expand both “single
item business” and “integrated product-service”●●Establish a business model with a market out approach

06

YUASA INTEGRATED REPORT 2023

Starting Point for Creation of New Value

Message from the President▎Recap of Growing Together 2023

Facing Challenges and Aiming for Further Growth
For the previous Medium-term Management Plan, Growing
Together 2023, targets of ¥545.0 billion* for consolidated
net sales and ¥16.4 billion for consolidated ordinary profit
were set, but these targets were revised downward to ¥510.0
billion* and ¥14.5 billion due to the COVID-19 pandemic.
Although both net sales and net profit exceeded the revised
targets for FY2022 (April 1, 2022-March 31, 2023), they fell
short of the original targets for net sales, ordinary profit, andgrowth investments.
In terms of growth strategies, the Eco & Energy Solution
Business (currently Green Business) showed particular
growth. In recent years, carbon neutrality has become amajor theme globally; our Group was an early pioneer intackling this issue and has implemented carbon neutrality
into our various business models. In Japan, we are alreadyachieving significant results with a carbon-neutral proposal
using our original energy visualization system (YES-net) and acomposite proposal that encompasses solar power generation,
storage batteries, and Vehicle-to-Home (V2H). P.35 In overseas,
we have held seminars on carbon neutrality under the Joint
Crediting Mechanism (JCM), a bilateral carbon credit system
for reducing greenhouse gases in developing countries. Theseseminars were held in Thailand, Vietnam, Indonesia, thePhilippines, Mexico, and Malaysia, to great success. We intend
to continue to actively expand our domestically cultivatedexpertise in environmental solutions to overseas markets.
Our Robot (AI) & IoT Business (currently Digital Business)is performing well. The population decline in Japan due
to an aged population with fewer children is expected tocause ongoing labor shortages in various industries suchas the upcoming 2024 truck driver shortage for the logistics
industry. In the industrial field, the Group is developing

automation and labor-saving businesses that utilize AI, IoT,
and other technologies. In the future, we intend to takethese automation and labor-saving solutions from the
manufacturing field and expand and deploy them in theareas of home building and town building.
On the other hand, our biggest challenge is our Overseas
Business. As I will explain in more detail later, I believethat our Overseas Business has great growth potential
depending on how we think about turning challenges intostrengths. We would like to expand our Overseas Business bydemonstrating our total coordination skills similar to thoseof our businesses in Japan, instead of developing specificdivisions as we have done in the past.

usiness Transformation in Growing Together▎B2026
Initiatives to Enhance Profitability and Growth
Potential
For Growing Together 2026, we are promoting the TSUNAGU
innovation model to solve social issues by connecting
people, goods, money, information, data, and technology,
expanding the Group’s strengths into growth markets underthe business banners of Overseas, Green, and Digital. The
quantitative targets for FY2025 are consolidated net sales of¥600 billion* and consolidated ordinary profit of ¥20 billion.
To achieve these targets, we are engaged in a business
transformation, are developing our existing business partner
network, and are expanding our business domains both
domestically and internationally.
Two major pillars of the Group’s business transformation
efforts are improving profitability and growth.
For profitability, we are developing new products withnew and novel products through TSUNAGU innovation tosolve social issues faced by our business partners as well as

increase the Group’s profitability. We have introduced morethan 20 TSUNAGU solutions to the world since the previous
Medium-term Management Plan. We were able to achieve
this because of the Growing Strategy Division, which wasestablished in April 2020 to promote growth businesses
across sales divisions. The Group’s strength of leveraging
total coordination skills has led to the creation of new, novel
value-added solutions. Some of these solutions are patentpending, which is unusual for a trading company.
With respect to how to accelerate this, I believe thatthe ideal situation is for our Group’s sales representatives
to take the lead in identifying market trends and work
together with the Growing Strategy Division to create
TSUNAGU innovations. Such efforts have been gradually
coming to fruition since the second half of the previous
Medium-term Management Plan, and we hope to add many
examples into the future. We have also changed our thinking
about recruiting. In the past, we hired mostly experienced
salespeople, but we are now hiring people with different
kinds of occupational backgrounds to join us. Because theneeds of the market are diversifying, so is the content of ourwork. We would therefore like to have people with a varietyof backgrounds join our company to share their wisdom andpromote TSUNAGU innovation by absorbing new needs from

*Before revenue recognition

07

YUASA INTEGRATED REPORT 2023

Starting Point for Creation of New Value

Message from the President

the frontlines.
Next, with regard to growth potential, we will promotenine growth strategies by dividing them into three segments
to be promoted across the company and six target markets
and challenge areas to be promoted by specific businessareas/organizations (see figure on the right). P.17, 31
The original growth strategies were promoted by all
divisions in order to gather a wide range of information andexplore business opportunities. Because a certain levelof information was gathered in the first two Medium-termManagement Plans, Growing Together 2020 and Growing
Together 2023, the three years of the final Medium-termManagement Plan, Growing Together 2026, have been
divided into two categories, areas to focus on across theentire company (the same as in the past) and leadingorganizations or areas that will spearhead business efforts.

■Growth Strategy Specifics

P.31

Core Businesses

Strategies for expanding our core businesses
Overseas

Green (Eco & Energy Solution)
Digital (Robot [AI] & IoT)

Businesses
promoted bywhole company

Resilience & Security
New Distribution
SharingLong-term Care & Medical
Food Equipment

Target markets
and challengeareas promoted
on an area ororganizational
basis

Agriculture Process

New Businesses

Aiming for new growth by leveraging our strengths

Our growth strategy is to expand our core businesses
but also to spin new products and services cultivated in ourcore businesses into new markets. In FY2025, we plan toachieve significant growth, with total sales of ¥286 billion, or
approximately 48% of total sales, coming from our growthstrategies.

Development of Interactive and Cross-Industry
Platforms
In terms of market development, we will develop new andgrowing markets created through TSUNAGU innovation using
an interactive and cross-industry platform. This will be done
both domestically and internationally.
Specifically, having understood market needs, we willcommunicate those needs to our suppliers and work withthem to plan and develop products and services, and provide
them to the market (interactive platform).
When it is difficult for a single supplier to create a producton its own, we will create new added value by connecting
the technologies and skills of different suppliers in different
industries (cross-industry platform) and supply it to our sales
partners. Organic linking of these technologies will support
the invigoration of our Group network and help expand ourbusiness both domestically and internationally. P.18
To date, some of the Group’s overseas offices havecarried on their operation within the business scope of thespecific divisions. For example, if the Machine Tools Division
has offices in Thailand or Indonesia, these offices would
only sell machine tools. Looking to the future, we will locate
multiple divisions in our local subsidiary in Thailand todemonstrate our total coordination skills there as a “miniYUASA.” Furthermore, we will expand such efforts horizontallyto other countries such as India.
Our overseas markets have great potential, but at thesame time, we face fierce competition from foreign-affiliatedand locally capitalized companies. I hope that our young
employees in particular will be aware of this situation andchoose to step in and boldly take on the challenge.

08

YUASA INTEGRATED REPORT 2023

Starting Point for Creation of New Value

Message from the President▎

Three Measures to Support Our BusinessTransformation

Foster a Corporate Culture in Which TSUNAGU
Innovation Has Become the Norm

Growing Together 2026 sets out three pillars that will support
our business transformation: Corporate Culture Reform, DX
Promotion, and Sustainability Promotion.
Management, including myself, in this rapidlychanging world feel a strong sense of urgency about how
we can connect the history of the company to the future.
Conversely, certain parts of the company are reluctant toaccept change because of previous successes—I believe thismust be changed. I have therefore positioned Corporate
Culture Reform first and foremost in the new Medium-termManagement Plan.
■Overall Picture of Corporate Culture Reform
Accelerate business transformation
Create a culture that normalizes
TSUNAGU innovation
Increase employee
engagement
Increase employee
work satisfaction
・Talent cultivation
・Reform of various
personnel systems

Increase employee
ease of work
・Diversity
・Workstyle reform

Develop an environment that can maximize
TSUNAGU innovation

Governance, compliance, and risk management(the base of corporate culture)

P.44

As a concrete measure toward reforming corporate
culture, we have been holding roundtable meetings around
Japan with employees to ensure they all clearly understandthe new Medium-term Management Plan. At these meetings,
I personally explain how the company is changing and why itmust do so.
Another measure is YUASA PRIDE, a project for personnel
reforms from March 2023 in which all employees are
participating. We have also decided to construct a newheadquarters as a measure to create an environmentthat facilitates changes under the banner keywords of“Total Coordination Skills,” “Challenging Spirit,” and“Communication.” By bringing together all the Group
companies scattered throughout the Tokyo metropolitan
area into one location, we intend to further enhance our total
coordination skills by stimulating communication among
Group employees.

Strengthening Our Management Foundations
through the Promotion of DX and Sustainability

In terms of promoting digital transformation (DX), we arebuilding a data utilization infrastructure to address the issue ofdata siloing that has been present within the Group. In order
for all employees to understand the importance of building
data and the critical importance of that data to the Groupin the future, we will conduct DX training for all employees,
including myself and other management-level staff.

For the promotion of sustainability, we have poured all ofour beliefs into our October 2021 Sustainability Declaration.
We are also working on action plans according to themateriality (key issues) in each of our businesses. In terms ofdiversity promotion, a female Outside Audit & Supervisory
Board member was appointed in June 2023, bringing thenumber of female directors to two. We also intend to improve
corporate governance by utilizing diverse perspectives,
including those of corporate executives and those withmanagement experience.

▎To Our Stakeholders

Maximizing Corporate ValueThe Group has positioned the stable return of profits toshareholders as one of its most important management
policies, and we are continuing to aim for a total payout
ratio of 33% or higher. In FY2022, the total payout ratio toshareholders return was a high, at 67.0%, partly due to abuyback of treasury shares. Moreover, from FY2023, we haveset a dividend on equity (DOE) of at least 3.5% as a new
indicator.
We will continue to maximize corporate value by
proactively disclosing information and conducting IR activities
to further improve our stock price, as well as aggressively
invest in our growth strategy, DX, and other business areas. We
look forward to your continued support.

09

YUASA INTEGRATED REPORT 2023

Starting Point for Creation of New Value

Value Creation Process

We are aiming to improve corporate value both in terms of economic (financial) value and social and environmental value through TSUNAGU innovation.

Starting Point for
Creation of New Value

Corporate Philosophy
Honesty and
TrustEnterprise andInnovation

Business Model

Business model with a market out approach

Solve social issues in the market through TSUNAGU innovation
P.16< Markets >< Our Business Segments >YUASA TRADING Group’s
Competitiveness and
its Resources
Sound financial foundations
and aggressive investment ingrowth areas

P.21

The biggest network of its kindin the industry

P.18

A corporate culture thatencourages employees to takeon challenges

Core Businesses P.25-30

Machine
Tools
Division

Industrial
Equipment& Tools
Division

Construction
Machines
Division

Housing,
Air & Fluidic
Control
Systems
Division

Building
Supplies& Exterior
DivisionHome
building

Townbuilding

Environmentbuilding

Platforms for unleashing TSUNAGU innovation
P.18

P.44

Value Creation Foundation

Total coordination skills of theGroup as a whole

P.16

Manufacturing

Energy,Consumer
Products& TimberDivision

DX Promotion
P.40

Sustainability Promotion

Harmony with
the Global
Environment

Business Activities
for Service with
Good Products

P.23

Managementthat Respects
HumanityStrengthen
Governance
P.51

Contributing to a Sustainable Society andMaximizing Corporate Value

Regard for the
Individual

ImprovingSocial Value

Creating Prosperous,

Humanitarian Societies

Improving
Environmental
Value
Reducing

Environmental Impact

Improving
Economic(Financial) Value

Economic Development