Cover photo: View of Abeno Harukas and surrounding area (City of Osaka)

INTEGRATEDREPORT
2022

Yotai Refractories Co., Ltd.
8-1 Nishikinaka-machi, Kaizuka-shi, Osaka Prefecture 597-0093
TEL : +81-72-430-2100

URL : https://www.yotai.co.jp/en/

CONTENTS

01
02

Corporate Philosophy
How Yotai Creates Value

02 History
04 Yotai Today
06 The Value Creation Process
Head Office building

08 Strengths and Competitiveness10 Financial and Non-financial Highlights

12

Initiatives to Enhance Corporate Value

12 Message from the President
16 The First Medium-term Management Plan
20 Business Strategy
			Sales Department
			Plant Department
			R&D Department
			Engineering Division
			Administrative Department

New uniform (Revamped in June 2021)

30

Initiatives Supporting Improved Corporate Value

30 ESG Management at Yotai
31		E Initiatives Targeting Climate Change
34		S Human Resource Development,
DX Strategy, Initiatives Targeting SDGs
36		G Corporate Governance
40 Compliance		 Risk Management
41 Directors and Officers
42 External Director’s Message

44

Create the Future with
Our Refractories
As a top manufacturer of refractory bricks, YOTAI REFRACTORIES CO., LTD.,
contributes to backbone industries in Japan and worldwide through business centeredon “heat and the environment.”

Corporate
Philosophy

VisionAiming to be a faithful company that contributes to society
by creating new technologies and products

A company that continues to improve its corporate
value in a sustainable manner in harmony with society
Maintain profitability and promote ESG management

Code of
Conduct

1. Compliance with laws and Regulations
2. Ensuring environmental conservation
3. Establishment of safety and health4. Best quality
5. Lowest cost
6. Appropriate delivery time

Data and Corporate Information

44 Financial Review (Consolidated)
46 Key Financial and Non-financial Data
48 Company Profile

Editing Policy

Reporting Period and Companies

YOTAI REFRACTORIES CO., LTD. has published this, its first Integrated Report, to serve as a starting point for constructive dialogue by
conveying information regarding the Company’s business lines and initiatives to enhance corporate value in an accessible manner toinvestors, shareholders and all other stakeholders. This report was edited with reference to several guidelines, including the “Integrated
Reporting Framework” from the Value Reporting Foundation (VRF)*, and the Japan Ministry of Economy, Trade and Industry’s “Guidancefor Integrated Corporate Disclosure and Company-Investor Dialogue for Collaborative Value Creation.” Ultimately, the hope is that thisreport will provide readers with a deeper understanding of Yotai.

Reporting Period: April 1, 2021 to March 31, 2022
Reporting Companies: YOTAI REFRACTORIES CO., LTD. and Group companies* VRF consolidated with the IFRS Foundation on August 1, 2022.

Integrated report 2022

01

How Yotai Creates Value

History

Supporting the advancement of heavy industry through the
manufacture of high-quality refractories, for sustainable growth
regardless of conditions in any specific industry

2022

1997
Shares designated forlisting on 1st Section of
Osaka Stock Exchange

Joint venture company “YINGKOU NEWYOTAI REFRACTORY CO., LTD.”established in China (made a wholly
owned subsidiary in 2005)

Yotai Refractories
Co., Ltd.

Osaka Yogyo
Fire Brick Co., Ltd.

1951

1962

Mitsuishi Plant buit

Yoshinaga Plant built(currently, third branchof the Yoshinaga Plant)

1993

1985
Technical Research Laboratory
established

1938
Hinase Plant built

Company name changed
to “Yotai”

1992
1961
EstablishedMizunami Plant built

Partial contribution

Merger with
Osaka Yogyo
Co., Ltd.

1987

Advanced Materials
Laboratory and
Kaizuka Plant relocated

Sales

1937

Established Okayama Clay Plant built(currently, second branchof the Yoshinaga Plant)

Shares listed on 1st Sectionof Tokyo Stock Exchange

2004

From its earliest beginnings as Acid Phial Manufacturing Company, Yotai would go on to contribute to the advancement of heavy
industry in Japan through the manufacture of high-quality fireproof bricks. Today, Yotai manufactures and sells refractories for awide range of fields, including steel, nonferrous, cement, glass and environmental systems. Unaffected by conditions in any specificindustry, Yotai continues to support basic industries worldwide as the top producer of a comprehensive lineup of refractories.

1936

Moved to Prime Market ofTokyo Stock Exchange

2013

1980
MergerRefractories businessEngineering business

Tokai Refractory
Engineering Co., Ltd.
Acid Phial
Manufacturing
Company

Osaka Yogyo
Co., Ltd.

▲

1894

1907

EstablishedCompany
namechangeKaizuka Plant
built

Great Hanshin-Awaji Earthquake

Osaka Yogyo
Cement Co., Ltd.

Osaka Cement
Co., Ltd.

1963

1994

Company name change

Established from merger with Sumitomo Cement Co., Ltd.

1955-

1987-

Start of mass production of high-quality refractories

Yotai’s predecessor, Osaka Yogyo Fire Brick Co., Ltd., wasestablished to meet growing demand for fireproof bricks
accompanying the rise of Japan’s steel industry. Throughestablishment of new plants, steps were taken to expand
production capacity and develop a structure for the stable supplyof products.

During Japan’s period of advanced economic growth,
growth among steel producers fueled demand for themass production of high-quality, low-priced
refractories. Thanks to technology development andpatents it obtained, Our Company contributed toJapan’s economic growth with the production ofrefractories across a host of application areas.

Pre-World War II, wartime, postwar

1950

1960

Period of advanced economic growth

▲

▲

2011

2020

Great East Japan Earthquake Novel coronavirus pandemic

Sumitomo Osaka
Cement Co., Ltd.

Establishment of Osaka Yogyo Fire Brick Co., Ltd.

Integrated report 2022

Lehmann ShockEstablished

1940

02

2008

1926

1936-

Social changes
and issues

▲

1995

1882

History of Yotai* No separate category for Engineering
Division sales prior to 1996.

1970

2000-

2010-

Restructuring the business foundation
as the newly formed Yotai

Introduction of energy-saving technology inline with changing circumstances in society

In 1987, the Company changed its corporate name to Yotai Refractories
Co., Ltd. To meet rising semiconductor demand spurred by rapid growth
in information technology, Yotai expanded its production of refractories forthe electronic parts sector. In addition, Yotai in 1993 merged with Osaka
Yogyo Co., Ltd. For its traditional refractories, Yotai broadened its
production bases, carried out aggressive rationalization and capital
investment, and achieved even more stable production and improved
productivity, as it took steps to restructure its solid business foundation.

With the adoption of the Kyoto Protocols in 1997 and changing
circumstances across society, the uptake of energy-saving
technologies gained momentum. At Yotai, initiatives here
included the reuse of waste heat from tunnel kilns and a switchfrom heavy oil for fuel to renewable oils. Further, as the changeover from waste incinerator facilities to high-performance heat
treatment furnaces gained prominence, Yotai moved to meet
subsequent demand from these facilities.

1980

1990

2000

Arrival of computerization and information society

2010

Becoming a company that continues toimprove its corporate value in a sustainable
manner in harmony with society
The pressure to address carbon neutrality is on Yotai and its
principal business partners, including the steel and cement
industries. Among other means, Yotai is supporting thebusiness of its customers through the provision of productswith smaller environmental impact. Additionally, we are putting
systems for DX, human capital and other needs in place withan eye to helping make a sustainable society possible.

2020

2030

Sustainability, ESG era

Integrated report 202203How Yotai Creates Value

Yotai Today

Supporting the advancement of varied industries as a leader inrefractories

Fiscal 2022 Performance

Since its establishment in 1936, Yotai, as a refractory manufacturer independent of any particular major steel
producer corporate group, has grown through transactions with customers centered on steel but spanninga host of different fields. Refractories support business advancement in an array of industries. While
capitalizing on its expertise in refractory manufacturing technology built over many years, Yotai continues to
evolve in step with the times, anchored by a sustainable, low-cost structure.

Net sales

Operating profit¥25,912¥4,089millionmillion

ROE

10.0%

Business Overview
Refractories

Engineering

Manufacturing a diverse array of refractories answering needs across a range of industries

Addressing all refractory construction with sincerity and extensive track record for over half a century

Refractories are critical to high-temperature treatments such as melting and baking, two steps in the manufacturing
processes for steel, cement and copper. At Yotai, we manufacture a diverse array of high-quality refractories able tomeet the varying specifications and quality standards of each industry. We also produce refractories for the growth fields
of environmental systems and electronic parts. With a multi-product, small-lot production system as defining trait, Yotai
carefully addresses the needs of a range of industries.

Because refractories are constantly subjected to high temperatures, they experience damage over time. Product life can vary
widely, from a few weeks to about one year in the steel industry, for example, to roughly two to ten years in the nonferrous
industry. Expertise concerning maintenance is thus similarly varied. Yotai’s Engineering Division has an extensive track record
in design spanning more than half a century, earning customers’ definitive trust with sophisticated design and construction
work that foresees needs based on industrial furnace operating conditions through to post-construction maintenance service.

Types of Refractories

What is engineering?
Monolithic refractories

Refractory bricks
The term “Refractory bricks”
refers to refractories that come ina variety of shapes, most notably
blocks or plates. Refractory
bricks are most commonly usedin the field of electronic parts, agrowth industry.

Steel factory/ladle construction“Monolithic refractories”
refers to powder- and claytype refractories. Powdertype products are mixed
with water and poured orsprayed in place onsite. Claytype products are pressed or
patted in place for use.

Construction of monolithic refractories

The repair and upkeep ofrefractories for ladles (vessels
used to transport and pour molten
metal when casting) must occur
on a schedule of just several
days. Since this typically involves
multiple facilities and equipment,
construction operations happen
almost daily.

Monolithic refractories areconstructed using devices
appropriate for various typesof industrial furnaces andmaterials. Yotai has a trackrecord in such construction
spanning a host of industries,
and pays in-depth attention
to customer needs.

Principal industries for sales

Adoption of mechanical construction method
What are refractories?
Manufacturing involving materials such as iron, cement and copper requires
high temperatures, specifically the processes of melting and baking. However,since most facilities are made from metals
like iron or stainless steel, they cannot
Refractories
withstand such high temperatures. Thissituation makes refractories—materials
that endure higher temperatures thanthe materials for melting or baking—Maximum 1800˚Cabsolutely essential.

Steel

CementGlass

Environmental
systems

Electronic parts

Segment performance
In fiscal 2022, ended March 31, 2022,
performance in the refractories business
was lifted mainly by increased demand
from steel makers, resulting in sales andearnings growth.

Integrated report 2022

DesignOverseassupervisory
services

Furnaceconstruction

Segment performance
Segment net sales

Segment profit(Millions of yen)

23,972
20,02922,26019,089(Millions of yen)

5,857

21,176

’19.3

’20.3

’21.3

’22.3

’18.3

4,910

4,787

4,208

’18.3

04

Principal services

Yotai employs the line chase
construction method for rotarykilns used in the manufacture of
cement in an effort to improve
both work efficiency andconstruction precision.

Nonferrous

3,609

’19.3

’20.3

’21.3

’22.3

In fiscal 2022, ended March 31, 2022,
performance in the engineering businessrose mainly atop increased orders
for construction projects from major
customers, resulting in sales and earnings
growth. Segment profit rose to a record
high.

Segment net sales

Segment profit(Millions of yen)

4,188

’18.3

3,902

’19.3

4,394

’20.3

4,465

’21.3

(Millions of yen)

4,735

’22.3

631

634

’18.3

’19.3

699

716

’21.3

’22.3

591

’20.3

Integrated report 202205

How Yotai Creates ValueThe Value Creation Process

Exist in harmony with society and continue to sustainably
enhance value through business activities built on the motto,“Sincere and agile customer service.”

VisionMateriality (Key Issues to Be Addressed)

Corporate Philosophy (Purpose)

Aiming to be a faithful company
that contributes to society by creating
new technologies and products

S: Social• Reliably stable supply of high-quality products• Constant provision of high-quality
technical service• Retention of technological capabilities
for adapting to environmental change• Human resource development and utilization• Promotion of health and productivity management• Social contribution-based regional
revitalization

E: Environment• Governance enhancement• Dialogue with investors and proper
information disclosure• Tighter BCP for responding to crises• Reduction of GHG emissions• Switch to renewable energy• Effective utilization of mineral resources

Source of Value Creation
Utilizable CapitalHigh Quality

Yotai Strengths

Financial Capital

Manufacturing Capital

Our Business Environment
Maturity of the refractory market
Rapid development of technology
Demographic change
Contributing to a sustainable society
Responding to climate change issues(1) Distinctive production equipment• Hinase Plant: 3,000T press, tunnel kiln, basic
castable refractory plant• Yoshinaga Plant Second Branch: 1,500-ton
press and Castable line
• Kaizuka Plant: Shuttle kiln
• Mizunami Plant: 850T press(2) Annual production capacity*• Refractory bricks 71,892t• Monolithic refractories 43,728t

Independent, Not Partof Any Particular Group

Customers

Sales

Business structure not easily
affected by trends in any
specific field• Stable supply of refractories• Improved industrial furnace longevity
and operating cost reductions• Reductions in GHG emissions

Sincere andR&D agile customer Manufacturservice
ing

Community• Job creation• Contribution to ocean and air
preservation

Technical
service(1) R&D expenses: ¥188 million(2) Patent rights: 15

Human Capital

Employees
Thorough Cost
Management

Generation of Products, Services (Output)
Net Sales by Industry (Pct. of sales, non-consolidated)Industry-leading level ofprofitability

Ceramic
industry 1.7%
Chemistry/
3.7%
Lime
Electronic
4.9%
parts

Wide-ranging response
capabilities

Social Capital(1) Volume of key materials used: 107,587MT(2) Water usage: 74,515m3(3) Energy usage: 509,188GJ
Other than the following are as of March 31, 2022
* First half of 2022- Includes production plans and external orders

Shareholders
Steel 43.0%

Nonferrous 8.1%

• Improved medium- to long-term
shareholder value and shareholder
returns• Highly transparent information
disclosure

Environmental
17.6%
systemCement 14.0%

Environmental Capital• Skill improvement andself-actualization• Realization of diverse working styles

Others 1.8%

Glass 5.2%

(1) Partner companies: Approx. 200 companies(2) Robust product lineup: Approx. 50,000 items(3) Expansive client network: Over 300 companies(4) Highly cost-conscious, open corporate culture
with skill-based delegation of jobs

Integrated report 2022

Value to be createdIntellectual Capital(1) No. of employees: 564(2) Personnel system• Adoption of new personnel evaluation system• Promotion of diversity (Employees from China,
India, Vietnam, Brazil, and others)

06

G: GovernanceBusiness Activities(1) Net assets: ¥30,109 million(2) Equity ratio: 77.7%

A company that continues
to improve its corporate value
in a sustainable mannerin harmony with society

Mechanisms Supporting Value Creation
Human resource
strategy

DX strategy

Environmental
management

Corporate
governanceRisk management

Integrated report 202207How Yotai Creates Value

Strengths and Competitiveness

Building trust by growing transactions to diverse fields whererefractories are essential and through extensive cost management

Yotai Strengths

Being independent of any corporate group, to win out against intense competition in a world defined byorder instability, Yotai has grown by taking advantage of long-cultivated technologies to expand transactions
to diverse fields where refractories are essential. Yotai has earned high marks for its extensive costmanagement and strict attention to delivery times.

Competitiveness

1

Ability to meet customer demands with sincerity and speed

Independent fromany particular
corporate group

Thorough costmanagementB usiness structure not easily
effected by any particular fieldWide-ranging response
capabilities

Competitiveness2

Industry-leading profitability

Offering value that merges sales, production, technical services and R&D

To respond to the wide-ranging needs of its customers, Yotai has pursued an optimal production framework that included

The largest value Yotai provides customers is improvements in industrial furnace longevity and operating costs throughincreasing internal production. The commitment to “meet customer demands with sincerity and speed” is integral to

the supply of refractories. Accordingly, divisions responsible for sales, production, technical service and R&D work closely

Yotai’s corporate culture, and we hone our technological and production capabilities, and our cost competitiveness, attogether under the motto of “sincere and agile customer service.” By contributing to operational stability at the production

each of our work sites.

worksites of a host of customers, Yotai aims as a company to continuously improve value in a sustainable manner inharmony with society.

Partnerships with Customers
in an Array of Industries

Low-cost, Prompt Delivery
Production Framework

Yotai Business Activities and Output
Sales

No. of customers

Over

300 companies

Size of product lineup

Approx.

50,000 items

Yotai has a customer base of more than 300
companies. Depending on customer specifications
and needs, orders can be made from the smallest
lot possible – a single product – a responsivenessYotai has used to build up robust partnerships.

Work closely with clients; assess issues, concerns andlatent needs; and provide feedback to each division.

Annual production capacity

115,620t(Refractory bricks + monolithic refractories)

Four unique plants serve as production sites, witheach involved in extensive cost-reduction activities
and efficiency enhancements. An industry leader in
adopting robotics in the production process, Yotai
strives for greater automation and reduced labor.

Sales
R&D

Manufacturing

By pursuing the role ofrefractories from a medium- tolong-term perspective, Yotai is
assisting in the ongoing creationof competitive products.

R&D

Sincere and Manuagile customer facturservice
ing

Timely, low-cost production ispositioned as a strength.
Initiatives are also gaining traction
on carbon neutrality and otherareas.

Technical
service
Proposing Solutions to Customer Issues
Through Technical Sales Workforce
Technical sales workforce
17

15

Engineering Services in
Collaboration With External Parties’22.3

No. of external partners ofEngineering Division

Integrated report 2022

40 companies’24.3 (Planned)

Yotai is striving to grow its technical sales workforce, capableof assessing customer concerns and issues to offer highly
detailed service. The aggressive expansion of new high-valueadded products is another policy going forward as Yotai takes
steps to enhance human resource capabilities by developinga training system for its technical sales workforce.

08

Leveraging expertise and technology cultivated formore than half a century, Yotai is playing a role insolving problems customers face.

(People)20

Approx.
’23.3 (Planned)

Technical service

The construction industry today is suffering from a chronic labor
shortage. In addition, under legal reforms scheduled for April
2024, this will also see the application of restrictions capping
labor outside of working hours. Yotai, for its part, has put acooperative structure in place in collaboration with external
partner companies in striving to retain human resources.

1.7%
Chemistry/ Lime 3.7%
Electronic parts 4.9%
Glass 5.2%
Nonferrous 8.1%
Cement 14.0%

OthersCeramic industry

Contributing to operational
stability and lower operating
costs at production worksites inan array of fields

1.8%

Steel

43.0%

Environmental system

17.6%

Net Sales by Industry(Pct. of sales, non-consolidated)

Integrated report 2022

09How Yotai Creates Value

Financial and Non-financial Highlights

Net Sales (millions of yen)

Financial Highlights
For the fiscal year ended March 31, 2022,
the Company reported higher revenue andearnings. Growth was mainly from higher sales
volume for refractories, driven by a recovery
in the steel industry, the Company’s principal
client base. With a target consolidated payout
ratio of 30%, the Company paid a dividend
per share of ¥43.
Financial Review

p.44

Key Financial Data

p.46

26,65423,554

’21.3

’22.3

Operating Profit (millions of yen) /Operating Profit Margin (%)
6,347

6,118

At Yotai, we are promoting the developmentof an ESG-driven management base. Morespecifically, in addition to responding toclimate change and investing in equipmentwith energy conservation and decarbonizationin mind, we are, among other moves, actively
promoting the creation of workplaces where
all employees find it easy to work.

25,912’20.3

Gross Profit (millions of yen)Non-financial Highlights

p.31

Human Resource Development

p.34

Environmental and Society-related Data

p.46

GHG Emissions (t-CO2)

2,921

’20.3

’21.3

’22.3

Energy Usage (GJ)

13,25913,73338,82433,02334,641

’20.3

’21.3

’22.3

509,188

482,076

48,37546,28215.8

15.1

99,190514,473

53,311
14,487

4,960

112,503112,356

Scope1
Scope2

4,089

4,017

Initiatives Targeting Climate Change

Refractory Production Volume (t)

12.4

’20.3

’21.3

’22.3

’20.3

’21.3

’22.3

Dividend per Share (yen) /Payout Ratio (%)

R&D Expenses (millions of yen)

No. of Employees (consolidated) /Pct. Female Employees (consolidated, %)
566

43

167
137

’20.3

50-59

22.7%

40-49

12.6

Integrated report 2022

(non-consolidated/As of March 31, 2022)

Under 30

22.7%

17

16

10

Employee Age Composition

1.3%

13.1
13.5

30.4

’22.3

’22.3

564

537
12.0

’21.3

’21.3

60 and older

188

’20.3

’20.3

27.2%

20.1

’21.3

’22.3

’20.3

’21.3

30-39

26.1%

’22.3

Integrated report 2022

11

Initiatives to Enhance Corporate Value Message from the President

Raise financial and non-financial value, become a company that continues to sustainably improve its valuePartner supporting
advancement acrossa range of industries

Invest in people, products and information to
respond to changes in the environment

Maintain profitability
A company that responds tochanges in the environmentand continues to provide
a stable supply of high-quality
refractories and services

Mitsuo Taguchi

Promote ESG management
A company that incorporates
ESG into its management
and is capable of appropriate
business operations anddecision-making froma long-term perspective

Strengthen management base andrespond to business opportunities and risks

President

Targeting sustained improvement incorporate value, the stable supply of highquality refractories is our social mission.

that assists in solving technological issues across a variety
of fields, we are earning the trust of our stakeholders while
striving to remain an essential company in the eyes of society.

solve corporate management problems requiring immediate
attention and other issues based on a medium- to long-term
perspective.

was thankfully able to launch smoothly without any major
disruptions.
The three-year duration of the plan is designated as a

The Early Days of Yotai

Management base strength and stability are both vital tothis end. Even if we desire to contribute to a more sustainable
society, there is no hope of stable business development

Under the plan, Yotai has defined as its medium-term
vision to become “A company that continues to improve its
corporate value in a sustainable manner in harmony withtime to create a framework for realizing our corporate vision
for Yotai. In line with the four basic policies below, we madeprogress in strengthening our business base for the future.

with a weak and unstable management base. Ultimately, we
would fail to gain the trust of various stakeholders, including
customers, shareholders and employees alike. In that sense,
it is deeply impressed upon me that a manager’s mostimportant mission is first and foremost to ensure a clear

society,” while outlining “maintain profitability” and “promote
ESG management” as concrete measures for achieving this.
Along with working to maintain profitability by continuing tostably supply high-quality refractories and services, we will
allocate the reliable funds gained to the people, products

For the first policy, “Expand sales by improving thequality of products and services,” we developed monolithic
refractories that prioritize the safety of workers onsite, as
well as monolithic refractories that require no drying, and put
in place a system for future sales expansion. While Yotai isdegree of profitability and heighten the sustainability of one’s
own company.

and information necessary to respond to future businessenvironment changes. In parallel, through investment inalready Japan’s top volume producer of Refractory bricks, byexpanding and upgrading the product lineup for monolithic

The refractory manufacturing industry is a largescale energy consumer. At the same time, another industry
characteristic is that profitability is easily influenced by bothraw material prices and the supply-demand environment
for products. To achieve sustainable growth in light of thesecharacteristics, Yotai has positioned itself on the “commodity
field” (refractories business), where demand is fundamentallysolid, and on the “specialty field” (engineering business), where

issues required from an ESG perspective, we are promoting
the development of a management structure capable ofproper business operations and decision-making from a longterm perspective. Doing so will boost our responsiveness tobusiness opportunities and risks, which I am confident will leadto even greater profitability. In pursuing the virtuous cycles thatboth “maintain profitability” and “promote ESG management”
represent, we seek to spur improvements in corporate value.

refractories, where substantial room for sales growth
exists, we will better meet the needs of a broader range ofcustomers.
For the second policy, “Strengthen low-cost and stablesupply system,” in a bid to boost production efficiency, we
introduced this past summer large presses at our principal
Hinase and Yoshinaga plants.
Regarding the third policy, “Develop new sources of

the technological capability to design linings for industrial
furnaces is a must. These form the basis of a hybrid growthstrategy that skillfully balances and strengthens both areas.
By generating new growth drivers, made possible throughFirst Medium-term Management Plan starts
smoothly despite a business environment
dominated by the coronavirus pandemic

In August 2021, Yotai marked its 85th year in business. As
Japan’s economy rebounded to a modest growth trajectory
after riding out the financial crisis of 1927, Yotai predecessor
Osaka Yogyo Fire Brick Co., Ltd. was founded in 1936. The
goal was to help modernize the field by supplying high-quality
refractories essential to the production of steel and cement.
Despite the high dependency of refractory bricks on steel
manufacturers, the Company leveraged its independence fromthe corporate groups of major steel producers as a strength,achieving growth while slowly but steadily building transactions
with customers in a wide range of fields. Beyond steel,these areas included cement, nonferrous and environment(environmental systems). To meet the needs of clients from anarray of industries, and to develop early on an efficient lowvolume, high-mix production system for varied applications,the Company pursued extensive rationalization, automationand energy conservation, all while maintaining high profitability.

Management Policy
As its corporate philosophy, Yotai aims to be a faithfulcompany that creates new technologies and products in
response to the demands of revolutionary times, enhances
customer satisfaction and contributes to society, using ourunique technology and passing on the history and experiencein long-standing refractory manufacturing technologies tothe next generation. Refractories are used in a broad array of
industries, and are in high demand society-wide for supporting
heavy industry in Japan. Yotai’s social mission is two-fold –to build a sustainable, low-cost framework to stably supply
high-quality refractories tailored to client needs, and to designlinings for ideal industrial furnaces. In advancing business andenhancing corporate value through a partner-like presence

12

A company that
continues to improveits corporate value
in a sustainable
manner in harmony
with society

Integrated report 2022

ongoing development investment while maintaining basic cash
flows and profit from these fields, Yotai is seeking to build andstabilize a robust management base resistant to changes inthe business landscape.

The First Medium-term Management
Plan – Aiming for sustainable growth incorporate value
With uncertainty rising, in May 2021, Yotai formulated its First
Medium-term Management Plan in order to address andIn terms of business performance for fiscal 2022, ended
March 31, 2022, the initial year of the First Medium-termManagement Plan, net sales rose 10.0% year on year to¥25,912 million. Operating profit was up 40.0% to ¥4,089
million, while ordinary profit climbed 36.5% over the previous
year to ¥4,123 million. Despite an adverse businessenvironment that forced business activities into submission
because of the coronavirus pandemic, Yotai directors andemployees pooled their knowledge and worked together
to tackle day-to-day operations. As a result, the plan

revenue,” we are responding to the rising global importanceof environmental protection, working currently to develop
refractories with fewer CO2 emissions and adding more
researchers at our Technical Research Laboratory andAdvanced Materials Laboratory to boost development speed.
Lastly, for the fourth policy, “Build a management
framework through the promotion of ESG,” with an eye
to decarbonization, along with promoting greater energy
conservation, we installed solar panels at two of our plants inJapan, with plans afoot for similar adoption at two remaining
plants. We also made steps with respect to DX promotion,
working style reform and health and productivity management.

Integrated report 2022

13

Initiatives to Enhance Corporate Value Message from the President

Strengthening technical service andaddresing high resource and energy prices
as our most pressing concerns

other investments, M&A inclusive, of ¥0.9 billion, for a total of¥5.0 billion in investment over the three-year duration of theFirst Medium-term Management Plan. In a world where thepace of change in the business environment and technologicalin working hours through proactive investments is leading
to a major boost in motivation. With diversity promotion asa basic given, we are training and utilizing talented humanresources able to share our values, creating workplaces that

In looking ahead at the operating environment surrounding
Yotai, while the spread of the novel coronavirus has madefor a situation that is hard to predict, vaccination and othermeasures are making it easier to live with the coronavirus.

innovation is only accelerating, these investments view change
not as a danger but as an opportunity. Accordingly, our policy
to make the effects of those investments materialize earlycan be captured as “face every challenge with boldness, andabove all else, just execute!”
At the same time, we are beefing up our returns toshareholders. From the fiscal year ended March 31, 2022,
we set a new target consolidated payout ratio of 30%. We
also have a policy of flexibly repurchasing our shares, allowing

our employees will feel are worthwhile.
To steadily promote these measures and realize
medium- to long-term improvements in corporate value,
we are also taking steps to strengthen our governancestructure. In February 2021, we established a Nomination andCompensation Advisory Committee, over half the membersof which are independent external directors. In June, we
introduced a remuneration system for Yotai directors andexecutive officers offering transfer-restricted shares, with the

Making safety the highest priority

us to enact capital policies responsive to changes in the
management environment.

Promoting sustainability to contribute tosocial maintenance and advancement

goal of sharing values with our shareholders and enhancing
the desire to mark continuous improvement in corporate
value. In February 2022, eligibility for the same system was
extended to the Employee Stock Ownership Plan. Throughthese measures, we are aligning the management teamcontinuity planning (BCP), driven by a basic policy of putting
safety first above all else. We will strive always to be an
enterprise trusted by the local community, to ensure both anenvironment where work happens with peace of mind andstable employment.

Interest in sustainability has grown in recent years, for asituation that has become unforgiving for the social survival

and workforce along the same vector, pushing forward withachieving our medium- to long-term vision and continuously
improving corporate value, and striving to earn the trust of our

Message to stakeholders

This trend is expected to gradually restore some semblanceof calm to the global economy, as well. In this climate, Yotaiis determined not to miss any chances for growth. To also
ensure that we do not lose sight of our direction, we intend to
firmly sort out the achievements and issues from the first yearof the First Medium-term Management Plan, and will continue
moving quickly to put the initiatives outlined in it into action.
With crude steel production volume expected to swellin line with economic recovery, we will aim to expand salesof new high-value-added products specifically for steel
developed in fiscal 2022. In tandem, by taking advantage
of Yotai’s strength in complete material and construction
package sales, we will highlight the total merit for customers interms of quality, construction time and inventory management,
in a move that will further differentiate Yotai in the marketplace.
To accelerate these types of measures, we also plan tostrengthen technology sales and hire personnel in theEngineering Division as points of contact with customers.
Furthermore, amid global concerns over high resourceand energy prices, in addition to stronger cost competitivenessthanks to adoption of cutting-edge production equipment
and improved production processes, as well as product pricerevisions, we are working to bolster our stockpile system inand outside of Japan to reduce raw material procurement risk.

Aggressive investment to maintainmedium- to long-term profitability
Viewing the future from a long-term perspective, with global
warming, geopolitical risks involving neighboring countries
and other uncertainty more on the rise, there is a needto respond rapidly to changes in business formats andto management issues. Given this context, using digitaltechnology to transform products, services and businessmodels is a necessity. For this reason, we are leveraging
the use of AI, IoT and ICT to promote digital transformation(DX), and further honing the facilities and service efficiency
that are Yotai strengths, in a bid to boost the productivityof existing processes. To realize this, our policy is to invest
aggressively in people, products and information. Specifically,
we anticipate renewal investments of ¥1.4 billion, strategic
investments of ¥2.3 billion, IT investments of ¥0.4 billion and

14

Integrated report 2022

of companies found lacking in their sustainability responses.
For this reason, contributing to society’s maintenance andadvancement, while also fulfilling one’s responsibilities tosociety through business, is a must.
The steel and cement industries, home to Yotai’s principal
customers, are under pressure to move from significant
producers of CO2 emissions to becoming carbon neutral.
Similarly, Yotai, as part of their supply chain, is being asked
to contribute to reducing CO2 emissions. To this end, we
recognize the occurrence of greenhouse gases (GHG) in therefractories business as an important management issue withrespect to climate change, and are promoting the developmentof refractory manufacturing processes that generate less CO2,
while pursuing production, power generation and logistics
with a lighter environmental impact through investments inenergy conservation and decarbonization. From a mediumto long-term perspective, in a bid to reduce CO2 emissions
during two carbon-heavy production processes—drying andsintering—we are making strides in exploring related research
themes, with the notion that replacing current fuel sources
with non-fossil fuel alternatives like ammonia and hydrogen
will be an important step. Related to this, we already disclose
the scenario analysis results of Task Force on Climate-related
Financial Disclosures (TCFD) requested items.
Moreover, as noted earlier, Yotai is promoting business
transformation through aggressive investments. That said,
human resource initiatives are also vital to optimizing theseeffects. Ensuring that employees also understand our policyof pushing ahead with greater rationalization and reductions

stakeholders.

Becoming a partner that evolves its strengths
with the times to support a host of industries
Over a span of 85 years, Yotai since its founding has
supported the advancement of a wide spectrum of
industries—a role that will never change. Guided by the
motto “Sincere and agile customer service,” and with close
coordination between divisions involved in sales, R&D,
manufacturing and technical service, the entire Company
has worked as one to meet customer needs. We efficiently
produce roughly 50,000 products and refractories, resulting
in a capacity to provide optimal quality and price that is astrength no other company can match. Anchored by thisadvantage, it is now critical to hone Yotai further to stay in stepwith the changing times. With the importance of environmental
protection rising, as we advance initiatives toward
decarbonization, we are keeping the stable supply of highquality products as our highest priority, as we move to rapidly
answer client needs, take steps to develop and improve
product quality, and support the sustainable development of ahost of industries and society itself going forward. Additionally,
by offering services that go beyond those of a typical businessdealer, and that integrate both products and construction
work, Yotai is building relationships as a trusted partner.
Approaching business operations and decisionmaking from a long-term perspective is leading to astronger management base, business opportunities andrisk responsiveness. This, in turn, is allowing Yotai throughbusiness to meet its responsibilities to society, while also
contributing to society’s maintenance and advancement.

For a company’s sustainable growth, the most importantelement is building a stronger foundation for its businessactivities, particularly in terms of safety, quality, humanresource development and financial position. Of these,
the safe operation of facilities is recognized as a social
responsibility.
At Yotai, we make ongoing investments in business

As I stated at the outset, no company can hope to contributeto society’s sustainability if it cannot first establish its own.
When the bubble economy started to collapse in 1991 in
Japan, this triggered a massive economic retreat that inevitably
led to a great deal of pain from large-scale downsizing of
personnel and greater business selectivity and focus.
Yet even in this situation, Yotai, putting employment first,
did not cut any personnel, limiting itself to rationalization facility
investment as it rode out the worst of it. Fortunately, the two
positions Yotai staked out—the “commodity field” (refractories
business) and the “specialty field” (engineering business),grew steadily. Consequently, Yotai’s financial base has finallystabilized over the last several years, resulting in a situation
where investments for future growth are now possible.
Of course, just like the coronavirus pandemic, it ispossible that another unpredictable crisis will emerge in the
future. At Yotai, we have cultivated the knowledge necessary
to bring our employees together to overcome any such crisisand to clear a pathway forward ourselves to a sustainable
future.
Going forward, we hope to pass on to the younger
generation the importance of continuing to hold a riskaware mindset every day, and to never lose hope but to staypassionate in continuing to take on challenges.
From here on as well, Yotai is aiming to unite its directors,
officers and employees, all with a sense of urgency andownership, to improve corporate value. To our stakeholders, I
ask for your continued care, understanding and warm supportof Yotai as we move forward.
Integrated report 2022

15

Initiatives to Enhance Corporate Value The First Medium-term Management Plan

Maintaining profitability and pursuing the promotion of ESG
management as a company striving to continuously enhance
corporate value in a sustainable manner in harmony with society
We have positioned the First Medium-term Management Plan (from fiscal 2022 to fiscal 2024) as a time forcreating the structure necessary to realize our vision for Yotai as a company. While moving to maintain highprofitability and financial soundness, we are investing in people, products, information and other areas todevelop a management base that supports sustainable growth.

Driven by the necessity to develop a solid andsustainable management structure, the First Mediumterm Management Plan was formulated after clarifying
our target vision for Yotai as “a company that continues
to improve its corporate value in a sustainable manner inharmony with society.”
Although growth in refractory demand remains firm,
the number of furnace construction companies that
support refractory sales is declining. Meanwhile, labor
shortages and other concerns tied to a decline in theworking-age population have already started to emerge.
In addition, the uptake of AI, IoT and other technologies

Approach to Business Portfolio

is advancing rapidly even in the refractory industry, with
future corporate value thought to be highly influenced
by how skillfully these technologies can be deployed.
Further, from the rise in environmental awareness andinterest in sustainability, as a key corner in the supply
chain of industrial fields using high temperatures, Yotaiis also being asked to respond quickly in moving tobecome carbon neutral. Under the First Medium-termManagement Plan, Yotai is creating needed structure in
aiming to be a company capable of responding to boththese changes in the environment and social demands.

While Yotai has business dealings across a broad range
of industries, these are classified into three fields—“stable
growth fields,” “core growth fields” and “development
fields”—based on the Company’s market position and thefuture market environment. KPIs for business promotion are
set for each field.
Stable growth fields (steel)Expand sales and improve profitability as an important stable revenue source
KPI

Maintain profitability

Promote ESG management

1

2

3

4

Expand sales by improving thequality of products and services

Strengthen low-cost andstable supply system

Develop new sources of revenue

Build a management framework
through the promotion of ESG

Products

Raw material procurement

Development system

Environment (E)Develop differentiated products that surpass
other companies

Strengthen raw material and energy
procurement capabilities

Strengthen the next-generation productdevelopment system by restructuring the
R&D system

Developm manufacturing processes that emit
less carbon dioxide
Capital investment in energy conservationand decarbonization

Rationalization and Efficiency

External cooperation

Aggressive investment in rationalization
facilities
Optimal personnel allocation
Promotion of DX

New product development based ontechnology exchange with customers

Technical sales
Strengthen technical service framework

Customer service
Careful response to customers by expanding
sales bases

Social (S)Improve employee dynamism, organizational
vitality and productivity through promotion ofhealth and productivity management

Governance (G)Governance system reform and enhancementof effectivenessRobust information disclosure and dialogue withstakeholders

SteelCore growth fields

Core growth fields (cement, nonferrous, environment)

CementAggressively expand sales and improve profitability by capitalizing on
cultivated strengths
KPI

Basic Policy

Sales growth rate (FY21 to FY24): +10%

Stable growth fields

Sales volume

Backdrop to Formulation of the First Medium-term Management Plan

Development
fieldsSales growth rate (FY21 to FY24): +10%

Nonferrous
Environment

Electronic
parts

Development fields (electronic parts)
Move forward with building foundations as a future growth business
KPI

Profitability

Sales growth rate (FY21 to FY24): +30%

Numerical Targets
In terms of targets for fiscal 2024, the plan’s final year, while demand related to steel is expected to remain firm, are frozen
due to a number of points of uncertainty. These include, most prominently, high costs for raw materials and transportation,
coupled with currency market volatility, stemming from the novel coronavirus pandemic and problems in Ukraine.
FY2021 results

FY2022 results

FY2024 targets

Net sales (Millions of yen)

23,55425,91226,000Operating profit (Millions of yen)

2,921

4,089

3,500

ROE

6.6%

10.0%

8.0%

Positioning of the First Medium-term Management Plan in Medium- to Long-term Strategy(Sales and Profit)

First Medium-term Management Plan (FY2022-FY2024)

Second Medium-term Management Plan (FY2025-FY2027)

Period for creating the structure for realizing vision as a company

Period of accelerated growth by reaping benefits from investment

Today

Gain revenue from stable growth fields and core growth fields
Invest in people, products and information
Build foundations to support sustainable growth
Study measures to achieve carbon neutrality

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Integrated report 2022

Development fields

Stable growth fields
Core growth fields
Earn revenue from stable and core growth fields, as well as
development fields
Continued investment in people, products and information,and further strengthening of management foundation
Specify the direction of measures for achieving carbon neutrality

Integrated report 2022

17

Initiatives to Enhance Corporate Value The First Medium-term Management Plan

Specific initiatives in the First Medium-term Management Plan

Expand Sales by Improving the Quality of Products and Services

Develop New Sources of Revenue

In a maturing market, Yotai is expanding its sales of new high-value-added products to spur sales growth and improve
profitability. In steel and in cement, respectively, Yotai has finished development of precision-made, highly corrosionresistant refractories and bricks useable under harsh conditions, both of which have earned high marks from customers.
Yotai is also focused on the development of monolithic refractories and unfired bricks that lead to lower CO2
emissions. To expand sales of these new products, we are reinforcing our technical sales staff and hiring personnel in theEngineering Division, while pushing ahead with proactive human resource recruitment.
Expand sales through product, sales and technology integration
Expanded sales of new high-value-added products•Steel: Highly corrosion-resistant refractories (magnesia chrome andchromia refractories)•Cement: Bricks for burning zones•All fields: Monolithic refractories, unfired bricks

Diversification of industrial furnace inspection methods	Introduction of inspection technology through adoption ofdrones, residual measurement devices, etc.
	Deepening of transactions with customers throughadvanced inspection method utilization
	Rollout of inspection technology to electric furnace manufacturers

Strengthen technical sales, hire more Engineering Division personnel•Development of new customers and maintenance of existingcustomers by strengthening proposal-based sales through technicalservice personnel•Expand orders for engineering business, where demand is growing•Capture refractory sales via the engineering business Detailed sales support, including base augmentation•Increase sales staff mobility through expansion of domestic andoverseas sales offices•Identify customer needs and propose new products through regularcustomer visits•Strengthen customer response capabilities by introducing sales
support systems

Recruitment and development of personnel to support sales growth Improving employee skills through training•Improved talent management via skill improvement program
creation and implementation•Revision and implementation of personnel evaluation systemthrough development of human resource training programs

Initiatives in the manufacturing process Initiatives in logistics processes

Establish a stable and sustainable raw material procurement system•Risk diversification by securing diverse procurement routes, mainly
in China•Stable and low-cost procurement through the use of Chinese subsidiary
Orders
Deliveries
Quality confirmation

Raw material
producers

Chinese subsidiary(YINGKOU NEW YOTAI)•Pursuit of transportation efficiency

 Company-wide initiatives•Core system adoption, improved business efficiency through theuse of advanced ICT, such as RPA and AI-OCR

Overseas expansion

	Develop a training system for technical service personnel
	Medium- and long-term R&D theme initiatives
	Speed up development by enhancing new productdevelopment-related equipment
	Study introduction of surface modification equipment for
products for electronic parts	New product development based on technologicalexchange with customers

	Deepen existing business partners in fields where Yotai has
strengths, particularly in steel, cement and electronic parts	Offer proposals for stable furnace operation and longer
maintenance periods that highlight product differentiation
	Develop flexible sales activities for business partners by
establishing overseas sales offices	Develop new agencies offering mobility
	Strengthen sales through SV services in the Engineering
Division

Basic technology
Fusion of materials and processes
Material design
Materialdevelopment

Process design
Processdevelopment*

In the manufacturing process, along with making continued strides in cost-reduction programs, Yotai introduced new
facilities at each plant designed to enhance quality and production efficiency. In logistics processes, the pursuit is ofgreater transportation efficiency.
In terms of building a stable and sustainable raw material procurement system, for principal procurement in China,
direct trade is centered on the efforts of local subsidiary YINGKOU NEW YOTAI REFRACTORY CO., LTD. From thestandpoint of mitigating risk, we are making progress in both diversifying procurement areas and procuring via trading
companies, and putting effort into stockpiling resources domestically.

•Continuous cost-reduction activities (plant automation and efficiency
improvement, optimal staffing)•Quality improvement and production efficiency improvement
through introduction of a large high-pressure presses•Vertical start-up of newly introduced equipment Initiatives in logistics
processes

Structural reform of the R&D system

Staff growth through recruitment•Aggressive hiring, staffing in growth areas•Diversification of recruiting methods (mid-career hires, appointmentof external personnel, adoption of scouting-type recruitment)

Strengthen Low-cost and Stable Supply System

Strengthen cost reduction and production system

Yotai is making progress in the structural reform of the R&D system, with the purpose of generating highly competitive
products on a continuous basis. In addition to its own independent product development, Yotai has begun developing
new products based on technology exchanges with customers and external partners.
Where overseas development is concerned, once the coronavirus pandemic has passed, our sights are set on sales
expansion. For furnace construction overseas, Yotai sends out its own supervisors (SVs). Together with the high quality of
Yotai refractories and the ability to handle detailed construction work management, awareness will grow of the merit thisoffers for reducing total costs, specifically in terms of stable furnace operation and less frequent maintenance.

Pricenegotiation/
Cooperation

Maintain 2 procurement routes

Dedicated
support staff

Yotai domestic
plantsMaterial
evaluation

Process analysis
Analysistechnology
development

Technology
development

Precision
processing
Large plate
Complexation
Environmental
response

Nonferrous

CementEnvironment

Glass

Electronic
parts

Build a Management Framework Through the Promotion of ESG
Yotai is incorporating ESG into management in a bid to strengthen its management foundation. With respect to environment(E), we are promoting the development of manufacturing processes with lower CO2 emissions, as well as monolithic
refractories and unfired bricks. Where society (S) is concerned, we are advancing work style reforms and taking steps toboost motivation through more attentive employee treatment. For governance (G), several specific initiatives are alreadyunderway. In February 2021, we established the Nomination and Compensation Advisory Committee. June that same year
saw the introduction of a remuneration system offering transfer-restricted shares to directors and executive officers; accessto this system was extended to the Employee Stock Ownership Plan in February 2022.

E Environment

S Social

G GovernanceIntroduction of electric vehicles

	Promotion of work style reform and better motivation
through more attentive employee treatment

	Decision-making and implementation of management
strategies that contribute to sustainable enhancement
in corporate value	Reduction of CO2 emissions through adoption of new
power generation facilities

	Promotion of development of monolithic refractories
and Unfired bricks*

Image of procurement costs

Steel*Mixing and tempering, shaping, sintering, processing	Development of manufacturing processes with low
CO2 emissions
Information
sharing

Business developmentin each field* Refractories with no sintering process and low CO2 emissions

	Utilization of the working hour management system and developmentof working environments for achieving work-life balance	Consolidation and utilization of personnel information andimproved talent management	Building the foundation to become an excellent healthoriented management corporation
	Contribution to regional revitalization through cooperation
with local communities

Raw material producers

	Establishment of Nomination and Compensation
Advisory Committee	Introduction of remuneration system offering transferrestricted shares	Compliance with the Revised Corporate Governance
Code

Trading company
Yotai

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Integrated report 2022

Via trading company

Direct trade

Integrated report 2022

19

Initiatives to Enhance Corporate Value Business Strategy

Sales
Department

Yotai’s sales departments closely engage with customers across a broad
range of industries.
At times, these departments serve to identify latent needs that
customers may not recognize themselves, sharing these requirements withother relevant departments.
We will further strengthen this structure, and in turn secure more orders.

Further strengthen structure and capture demand through aggressive sales
activities leveraging strengths in material and construction integration

Yorisada Matsumoto
Director; General Manager,
Tokyo Branch

Sales department characteristics and roles

Future outlook

Taking advantage of its strength as an independent company, Yotai has business dealings
with customers across a host of industries. In addition to steel, these industries encompass,
among others, nonferrous, cement, environmental systems and electronic parts, with Yotai
boasting high market share in many of these industries. Accordingly, the industry-spanningknowledge of Yotai’s sales force, which avoids favoring any particular industry alone, is amajor strength. Similarly, when proposing to clients, the ability to provide a range of proposal
options, including results from other business fields, is another unrivaled advantage.
Sales departments occupy an important position in connecting Yotai to customers.
Along with capturing orders by accurately conveying the excellence of Yotai products tocustomers, sales departments work to enable relationships of trust to develop by identifying
customers’ latent needs and quickly connecting them to departments responsible for
production plants and R&D. Because refractories are products that directly affect operational
stability inside customer production activities, gaining customer trust is essential to obtaining
orders. Similarly, in sales of new products, beginning from prototypes, persistent sales
activities are critical to eventually winning orders through meticulous improvements thatreflect use conditions. As sources of information inside Yotai, sales departments act toaccurately convey client needs to departments responsible for production plants, R&D andother areas.
As customer requirements grow increasingly sophisticated and diverse, stronger
sales capabilities are vital to Yotai’s sustainable growth, making human resource training
indispensable. By sharing knowledge of industry and refractory trends through online
educational content presented by staff with specialist knowledge from every department,along with on-the-job training (OJT), we are training human resources capable of generating
solutions from a technological perspective to issues customers face.

Expanding sales of new high-value-added products is one of the key points defined in theMedium-term Management Plan for achieving sales expansion and boosting profitability in amaturing market. To realize this, we are developing and expanding sales of new monolithic
refractories, products in high need in the steel field, home to Yotai’s principal customers.
Elsewhere, in connection to carbon neutral measures, the construction of new plants
and remodeling of existing furnaces is anticipated in every field. In the steel field, electric
furnace-based production methods are gaining attention thanks to CO2 emissions roughly
75 percent lower compared to blast furnace-based production. Consequently, growth isexpected in demand for refractories for electric furnaces going forward. For its part, Yotai
will focus on decisive steps to tackle demand by capitalizing on relationships built to datewith electric furnace manufacturers, together with aggressive sales activities that leverage
its strength in integrated materials and construction work. We also plan to establish a sales
base in Japan’s Hokkaido region while the First Medium-term Management Plan is active.
Additionally, market surveys are being planned with a view to establishing bases overseas.
Against the backdrop of more companies opting to outsource all parts of their process,from design and furnace construction to maintenance, due to human resource shortages
and other issues, inquiries for projects related to these areas are growing. Leveraging Yotai’s
well-honed design capabilities, beyond strengthening coordination with vendors tasked
with furnace construction, by training up technicians in-house, we are decisively taking on
vigorous demand. In bringing this all to fruition, we are aiming for ¥30.0 billion in orders
received for the fiscal year ending March 31, 2024.

Achievements in the first year of the Medium-term Management Plan
Orders in fiscal 2022, ended March 31, 2022, stood at ¥28.0 billion, compared to initialprojections of ¥23.9 billion. Along with the restart of economic activities, amid a recovery
in demand for refractories for steel as well as the nonferrous, environmental systems, andelectronic parts industries, we conducted careful sales activities that connected solidly
to orders. Brisk orders from automobile and automotive-related special steel industries,
coupled with sales activities leveraging our strength in integrated materials and construction
work targeting plant developers in the environmental systems field, led to orders for new
projects. Furthermore, in addition to hiring new graduates, we made progress in mid-careers
hires as we bolstered our sales force ahead of greater service expansion.

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Integrated report 2022

Achievements in the first year of the Medium-term Management Plan

Future outlook and targets

	Higher sales atop aggressive sales activities leveraging
strength in integrated materials and construction work	Sales structure enhancement in Japan’s Hokkaido andKyushu regions
	Enhancement of structures by hiring new graduatesand mid-career professionals

	Decisively tackle demand reflective of trends in carbon
neutrality in each field	Schedule a survey of market conditions ahead of baseestablishment overseas	Target for orders received of ¥30.0 billion for the fiscal
year ending March 31, 2024

Integrated report 2022

21

Initiatives to Enhance Corporate Value Business Strategy

Plant
Department
Hinase Plant
Yoshinaga Plant
Kaizuka Plant
Mizunami Plant

The greatest mission of Yotai’s production plant departments is the stableand efficient manufacture of high-quality refractories. Each of Yotai’sfour production sites leverages unique characteristics and strengths tometiculously meet diverse, multi-sector needs.
In addition to ongoing cost-reduction initiatives, each site is marking
progress in responding to carbon neutrality and in BCP countermeasures
tailored to plant location and facilities.

Hinase Plant

Tadashi Taniguchi
Director; Manager,
Hinase Plant

Yoshinaga Plant

Largest class of refractory brick production capacity in Japan
Ongoing facility rationalization and building

Manufacture of high-value-added refractories from specialized in-house production
Stably supplying users and achieving high profitability through domestic in-house production

Features of the Hinase Plant

Features of the Yoshinaga Plant

Users of Yotai products include many steel and cement makers as customers, with theCompany boasting the top level of refractory brick production volume in Japan. Among Yotai
plants, the Hinase Plant has the longest history, launching its first operations as a production
site in 1938. Home to two tunnel kilns used for alkaline bricks, the plant possesses the largest
level of production capacity for refractory bricks in Japan. It is also involved in the productionof large clay-made and high alumina-made bricks used primarily by glass manufacturers. For
raw material procurement, while maintaining close ties with a China-based subsidiary, theplant works to reduce costs through automation, as well as stable supply of products.

Together with production of refractories offering high added value, the Yoshinaga Plant
retains the industry’s top level of profitability through its detailed response to the needsof domestic customers. Along with a number of manual presses, the plant is cultivatinga highly skilled labor force, developing a production system that makes the supply of inhouse products for small-lot refractory orders possible. Yotai’s pursuit of internal production
at its own production sites has won it high marks for allowing the stable supply of products
unaffected by country risk, leading to a high number of repeat orders.

Achievements in the first year of the Medium-term Management PlanThe Yoshinaga Plant has expertise in high-value-added products for the field ofenvironmental systems, which use a high ratio of monolithic refractories compared to otherindustrial furnaces. In collaboration with the Engineering Division, the plant capitalizes on
its strengths in material and construction integration to provide high-quality products andservices. Similarly, through ties with the Technical Research Laboratory, the Yoshinaga Plant
develops new products tailored to customer needs and operating conditions, enhances
its responsiveness around quality improvement, and advances operations that take fulladvantage of Yotai’s comprehensive capabilities, notably its strength in bringing together
departments responsible for development, manufacturing, engineering and sales.

Main achievements in the fiscal year ended March 31, 2022 were the installation of alarge press and aggressive investments in BCP countermeasures. In March 2022, theplant installed a 3,000-ton press, enabling it to handle a wider array of products. Alongwith realizing improved quality, this move is contributing to more efficient production.
Other actions included rationalization and upgrades, as well as investment in BCP
countermeasures. These countermeasures were implemented mainly in preparation forincreasingly severe natural disasters.

Future outlook
To firmly address demand in the steel field, Yotai is opting to augment manufacturing lines
for basic castable refractories. This move will make further bolstering of production capacity
and less needed labor possible. Additionally, we are building warehousing for raw materials
to stably secure such materials from overseas.
In terms of initiatives for decarbonization and carbon neutrality, Yotai is pursuing the
adoption of solar power generation systems, shifting to electric vehicles (EVs) for industrial
and company vehicles, and converting to LED for all plant lighting companywide.

Achievements in the first year of the Medium-term Management Plan	3,000-ton press installation and construction start	Rationalization and upgrade investment
	Investment in BCP countermeasures

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Integrated report 2022

Koji Matsumoto
Executive Officer, Plant
Manager, Yoshinaga Plant

Strengthens in high-value-added products for the environmental systems field

Human resource retention and training in the production plant departments
As at other production sites, human resource retention and training are pressing issues for
the Yoshinaga Plant, as well. Along with vigorous recruitment of local graduates, we work
tirelessly to deepen communication between employees, with labor and management joining
forces in striving forward to achieve targets. The installation of cutting-edge equipment,
coupled with employee motivation and ingenuity, meanwhile, is leading to improvement inlabor productivity. Among the emerging results linking to improved business performance,
production volume per employee for March 2022 was at a record high.

Future outlook and targets

Achievements in the first year of the Medium-term Management Plan

Future outlook and targets

	Take optimal advantage of 3,000-ton press, capture
demand in every field	Establish augmented production system throughexpanded manufacturing lines for alkaline monolithic
refractories (scheduled completion – July 2023)
	Reductions in GHG emissions and adoption of energysaving equipment in push toward carbon neutrality

	Productivity enhancement, adoption of 1,500-ton
press for high-grade production (operational from
August 2022)
	Solar power generation system installation
	Recruitment activities built on medium- to longterm perspectives, stronger labor-management trust
directly contributing to enhanced productivity

	Contribute to improved profitability, centered on
monolithic refractories
	Extend and upgrade line of high-value-added products
for environmental systems, glass and other fields
	Ongoing switch to EVs for industrial and company
vehiclesIntegrated report 2022

23

Initiatives to Enhance Corporate Value Business Strategy

Plant
Department
Hinase Plant
Yoshinaga Plant
Kaizuka Plant
Mizunami Plant

Kaizuka Plant

Naoyuki Nishimura
Plant Manager, Kaizuka Plant

Mizunami Plant

Specializing in refractories for sintering of electronic parts andproducts for overseas markets

Development of a flexible, compact kiln-based system for multiproduct, small lot production

Features of the Kaizuka Plant

Features of the Mizunami Plant

The Kaizuka Plant primarily manufactures refractories for sintering related to electronic parts and semiconductors.
Another important trait is that roughly half of the plant’s products are destined for markets outside of Japan. To
meet both technological innovation in the industry and global price competition, we are actively installing new
facilities and remodeling existing ones.

The ability to produce a variety of products for both refractory bricks and monolithic refractories
is a feature of the Mizunami Plant. The plant possesses both a compact kiln and a tunnel kiln
compatible with a wide range of firing temperatures, making efficient, small-lot, multi-productproduction possible. From an energy conservation standpoint as well, as an alternative to theindustrial gas previously used in the drying process, the plant now reuses heat emitted from thetunnel kiln, contributing to lower cost and a reduced environmental burden.
To mitigate China-related risk, in fiscal 2022, we secured roughly 5,000MT* in storage
space for raw materials.

The growing field of new ceramics
Across the board, electronic part and semiconductor-related companies are planning new capital investment
in anticipation of medium- to long-term growth in demand and life after the coronavirus pandemic. Electronicparts, in particular, is a field where market expansion is expected. Because the Kaizuka Plant is smaller in scalethan Yotai’s other three plants, achieving greater production system efficiency is essential to decisively translating
growth in demand into orders. For this reason, we upgrade and expand plant facilities and reevaluate facility layout
as needed. As part of the facility layout, we have new design plans for warehouses which, when completed, will
enable the systematic import and stockpiling of raw materials, while leading to more efficient production.

Creating globally competitive products
For products earmarked for overseas markets, measures that seek to lower costs through greater production line
efficiency are becoming more important. For the kiln at the Kaizuka Plant, with capital investments that foresaw
demand growth having been made, sufficient firing capacity is already in place. Going forward, in departments
responsible for molding, a front-end process, we are seeking to enhance efficiency even further primarily throughfacility automation.

Striving to be a plant that puts decarbonization technology into practiceStarting with technology to conserve energy, the Kaizuka Plant has worked to boost burning efficiency andmore fully automate its production lines. As a large-scale environmental investment, the plant installed solar
power generation equipment in February 2022. As of August, it confirmed that the equipment had generated
significantly more power than initially projected, contributing greatly to the plant’s energy-saving activities.
Going forward, we are setting measures to further boost burning efficiency, the adoption of storage
batteries and the development of non-fossil fuel technology as priority issues as the Kaizuka Plant strives tobecome a plant that puts decarbonization technology into practice.

24

Yasuo Kawamori
Special Executive Officer; Plant
Manager, Mizunami Plant*MT: Measurement Ton

Outlook for refractories for sintering of electronic parts
Influenced by social trends toward decarbonization, the widespread uptake of electric vehicles(EVs) is expected to occur rapidly in the coming years. With demand rising for refractories
used in the sintering of lithium raw materials found in EV batteries, the Mizunami Plant isfocusing on the production of products for manufacturers of kilns for related products. Together
with the rollout of 5G and similar infrastructure, demand is growing with advancements incommunications equipment, including onboard AI and automation compatibility. Efforts toboost productivity at the plant thus remain ongoing.

Rationale for receipt of business transfer from Shibata Ceramic Raw Materials Co., Ltd.
In October 2022, Yotai received transfer of the refractory materials manufacturing business of
Shibata Ceramic Raw Materials Co., Ltd., in a step designed to move some raw materials inhouse and assist in the development of a flexible production system. The composite materials
manufactured by Shibata Ceramic Raw Materials—cordierite and mullite—are indispensablefor production of refractories used in the sintering of electronic parts. At the same time, since
product demand is still small from a global standpoint, with production practically nonexistentelsewhere, these composites have high scarcity value. In short, Shibata Ceramic Raw Materials’
technology and facilities are expected to translate into improved competitiveness for Yotai.

Achievements in the first year of the Medium-term Management Plan

Future outlook and targets

Achievements in the first year of the Medium-term Management Plan

Future outlook and targets	Rationalization of X-Series manufacturing equipment
	Introduction of 750kW-class solar power generationequipment	Automation of auxiliary equipment for 1,500-ton press	Automation and efficiency enhancement of molding
process peripheral equipment
	Construction of warehousing for stockpiling of raw
materials

	Greater dimension measurement work efficiency fromadoption of 3-D measurement devices
	Secured storage space for raw materials	Decision to receive transfer of business from Shibata
Ceramic Raw Materials Co., Ltd.

	Business diversification through manufacture of raw
materials
	Meet increase in production of refractories for sintering
raw materials for lithium-ion batteries (LiB)	Achieve high-efficiency operation of 850-ton press

Integrated report 2022

Integrated report 2022

25

Initiatives to Enhance Corporate Value Business Strategy

R&D
Department

Kazunari Imai
Executive Officer; General
Manager, Quality Assurance
Department, Advanced
Materials Laboratory, TechnicalResearch Laboratory

The refractory industry is also facing calls to respond to the shift tocarbon neutrality. Accordingly, Yotai R&D departments are focusing on
the development of high-value-added products that meet this demand.
Further, we are striving to hire more technical service staff andstrengthen their training in working to meet customer needs.

Focus on development of low-carbon emission refractories in the push for carbon neutrality
Bolster initiatives for obtaining patents for related products

Industrial furnace design and construction demand continues to expand
Promotion of initiatives for medium- to long-term human resource training and passing on Yotai technology

Roles of the Advanced Materials Laboratory and Technical Research Laboratory

Engineering Division roles and strengths

Yotai’s R&D departments are broadly responsible for R&D operations and technical service operations. As technicalservice operations, departments are involved daily in business consultations with customers, dispatch technicians tosites for inspection and management of actual furnaces, and assess needs. For R&D operations, departments engage
in new product development and product improvement based on the assessed needs.
Two unique features of Yotai R&D departments are fundamental capabilities in each field, cultivated throughdealings with customers across an array of industry sectors, and adaptability beyond any individual field. Yotai products
are used in a host of different environments. This allows R&D departments to take advantage in development of
insight accumulated in these fields in everything from material quality selection to design, construction and provision ofservices like maintenance. Accordingly, Yotai can deliver distinctive products in the fields of steel, nonferrous, cement,
environmental systems, glass and sintering materials for electronic parts.
More recently, the refractory industry has also faced calls to better respond to the shift to carbon neutrality.
At Yotai, this has seen initiatives for reducing fossil fuel use in kilns and drying furnaces and a transition to non-fossil
fuel alternatives. Specifically, we are developing manufacturing processes and products that avoid firing processes
altogether, and have begun development of refractory-related technologies responsive to the change in fuel.
Initiatives also focus on fostering technicians, where R&D departments sponsor technical study sessions andprovide support for other in-house departments, as well.

Refractories are used in an array of industry sectors, with specifications and needs varying
widely. The Engineering Division has amassed years of expertise in construction drawings
and in the form of technology calculation software. The division’s biggest strength, though,is in joining with customers to create facilities, offering carefully considered proposals
encompassing efficient designs through to repair and maintenance work.
For maintenance and improvement construction after industrial furnaces begin
operating, construction and manufacturing departments consistently coordinate to respond
appropriately.

Status of development of new refractories
In fiscal 2022, ended March 31, 2022, the biggest success during the inaugural year of the First Medium-termManagement Plan was submission of a patent application for non-sintered refractories developed for compatibility withcarbon neutrality. If Yotai can obtain rights to so-called “unfired refractories,” this is expected to spur possession oftechnologies across a wide range of areas. The refractory market is by no means large, and technological innovation in
the industry is difficult to attain. Nevertheless, Yotai is taking aggressive action to develop next-generation refractories
that can answer societal changes and obtain patents as part of its intellectual property strategy.

Future outlook
Yotai R&D departments are continuing their work to develop cutting-edge non-sintered and monolithic refractories. With
demand projected for refractories with highly insulating properties that help save energy, Yotai is eagerly engaged in thedevelopment of new products. In moving R&D forward, we are also paying close attention to trends in new refractoryrelated technologies compatible with technological advancements in step with carbon neutrality.

26

Engineering
Division

Yotai’s strength in material and construction integration rests in partwith the Engineering Division.
Once limited to a plant department, the division became an
independent organization to meet customers’ diverse needs. Since
then, Yotai has honed the division’s response capabilities in industrial
furnace construction, including furnace design.

Motokatsu Kume
Executive Officer
General manager, Engineering
Division

Fiscal 2022 Results
Yotai closed out the inaugural year of the First Medium-term Management Plan with noserious accidents. Orders steadily accrued for new projects, with orders for existing projects
also continuing with no losses. As a result, division sales and profits for the fiscal year ended
March 31, 2022 rose to record highs. We also made capital investments linked to further
cost reductions. Specifically, in addition to adopting 3D-CAD and line chase machineryfor kiln brick construction, we made progress in improving existing facilities, and createdsystems capable of meeting diverse customer needs faster.

Future outlook
While continuing to prioritize commitments to “ensure safety,” “maintain and improve
construction quality” and “adhere to construction timelines,” we will focus on sustained
human resource training and passing on Yotai technology. With the construction industry
also subject to caps on overtime work due to legal revisions set to apply from April 2024,
Yotai is striving to retain human resources in collaboration with cooperating companies.
Elsewhere, we established the Engineering Division’s Kaizuka branch to make theprovision of detailed services possible. Along with dividing employees into finer grainedgroups, we are also boosting service efficiency and creating educational systems.
We have set ¥4.5 billion as a sales target for the final year of the First Medium-termManagement Plan, a figure that incorporates order activity for large-scale projects from next
fiscal year and beyond.

Achievements in the first year of the Medium-term Management Plan

Future outlook and targets

Achievements in the first year of the Medium-term Management Plan

Future outlook and targets	Completed submission of application for a patent for
non-sintered refractories for shift to carbon neutrality	Development of distinctive monolithic refractory
products
	Hiring and training of technical service staff	Initiatives targeting basic research and patentacquisition for non-sintered refractories
	Hiring of technical service staff
	Development of new products and technologies aheadof business environment changes	Achieved record sales and profits from solid effort on
new projects
	Capital investment linked to addressing even broader
needs and reducing costs
	Adhered to “putting safety first above all else” as abasic policy	Human resource retention in response to the work
style reform in April 2024	Recruitment activities, development of educational
systems for enabling human resource training andpassing on Yotai technology	Fiscal 2024 sales target of ¥4.5 billion

Integrated report 2022

Integrated report 2022

27

Initiatives to Enhance Corporate Value Business Strategy

Administrative
Department

In fiscal 2022, ended March 31, 2022, the formulation of its first mediumterm management plan allowed Yotai to make progress in sorting throughkey issues to be addressed immediately and those based on a mediumto long-term perspective, and enabled departments to create systems andtackle concrete initiatives.
In aiming to be a partner supporting the development of customers ina vast array of industries, we are promoting interdepartmental collaborationand measures to retain and train our human resources.

Preparing environments where management and worksites can takeaction together, and focusing on innovation and rollout of new systems
Role of Head Office General Affairs Division

Shinichiro Takebayashi
Managing Director, General
Manager, General Affairs
Department, Head Office

Refractory manufacturing and construction is a niche field that requires complex technology. The efficient productionof over 50,000 items and small-lot refractories, and their reliable delivery, is enabled through collaboration between
departments responsible for sales, production plants, engineering and R&D. The role of the Head Office General Affairs
Division is to provide support allowing all the various departments to operate smoothly, taking a holistic view of theentire Company while spurring system innovation and creating required mechanisms, as well as allocating funding
companywide. This, in turn, serves to underpin improvement in Yotai’s corporate value. In enacting the First Medium-termManagement Plan, the division provided support for the management team and staff responsible for worksites to shareand think through issues, and be empowered to act, while also sorting out approaches to fund allocation, including capital
investment and shareholder returns.

Achievements in the first year of the Medium-term Management Plan
From fiscal 2022, we opted to have the heads of business sites offer monthly progress reports to the Board of Directors,
with the goal of making plan progress more visible and promoting information sharing. This move enabled all key decisionmakers to have a grasp on frontline operations, and is felt to have led to an even smoother start in the first fiscal yearof the plan. Under the First Medium-term Management Plan, we intend to make investments for sustainable growth inpeople, products and information totaling ¥5.0 billion. In the inaugural year of the plan, fiscal 2022, these investments
came to ¥0.9 billion. In the push for solid completion of the medium-term plan, we are sharing issues and progress, andthe accuracy of target achievement, across the entire Company.
With respect to human resource training and the creation of comfortable workplaces where diverse humanresources can thrive, we revamped our personnel evaluation system, which began operating from April 2022. In adopting
this system, together with training seminars for evaluators and those under evaluation, we introduced a new personnel
system. We are also moving to deepen dialogue with employees and improve engagement. Furthermore, guided by
the belief that employees are capital in their own right, we promote health and productivity management activities andthe health maintenance of every individual. Accordingly, we are building the foundations needed to aim for health andproductivity management certification (large enterprise category) by Japan’s Ministry of Economy, Trade and Industry in
the fiscal year ending March 31, 2024.
To raise corporate value over the medium to long term, the management team, employees and shareholders mustcome together in a shared posture to achieve results. To this end, we followed up the introduction in June 2021 of a
remuneration system (RS) offering transfer-restricted shares to directors and executive officers by extending access tothis system to employees in February 2022. Since this is another new initiative, we are continuing to hold explanatory
meetings for employees to spread awareness of this option.
In working to strengthen dialogue with shareholders, in addition to continuing to conduct financial result briefings,
for the first time we also implemented Shareholder Relations (SR) activities, including individual meetings with institutional
investors, to further deepen understanding of Yotai’s business strategies.
As for ESG-oriented initiatives, Yotai received certification of its conformity with a tax system to promote
investments for carbon neutrality and application of a tax system to promote human resource securement, both fromJapan’s Ministry of Economy, Industry and Trade.

Approaches to fund allocation
At a glance, Yotai may appear to have ample cash and deposits on hand. However, given the need for investments in

28

Integrated report 2022

virtually every area going forward, effective utilization of capital is essential.
In order to grow sustainably as the market matures, while maximizing earnings from existing businesses, Yotai
must invest in people, products and information to capture future earnings and strengthen management foundations. The
refractory business is a highly socially essential enterprise that supports heavy industry in Japan, making the promotionof BCP a social duty. In particular, the securement and stockpiling of raw materials is a lifeline for the refractory business.
Where the purchase and stockpiling of raw materials is concerned, each production plant is charged with flexibly deciding
upon and systematically securing raw materials. The role of administrative departments is to provide the capital support
making rapid purchases depending on market conditions possible. Because raw materials for refractories are largely
sourced from China, we maintain close ties with our local subsidiary and strive to accurately assess local information.
While keeping a close watch on trends in the international community and currency exchange markets, we are working to
reduce costs and diversify risk, even as we search for opportunities to procure from new raw material supply makers.
Because our main clients, the steel and cement industries, are facing calls to decarbonize, we imagine thatpressure will mount for Yotai, as a supplier, to reduce its own CO2 emissions, increasing the likelihood of pressure to makemajor investments for achieving decarbonization.
Given this perspective, along with maintaining financial soundness, we intend to secure and effectively allocate
funds for sustainable growth going forward.

Future outlook
With “dynamic use of diverse human resources” and “creation of comfortable workplaces” as keywords, we plan topursue measures designed to right-size working hours, promote health and productivity management and achieve careeradvancement for women. In solving labor shortages and promoting work style reforms, we are also practicing aggressive
career recruitment. For the fiscal year ending March 31, 2023, we set a recruitment target of 25 individuals, a record high.
In terms of DX for boosting productivity, as a result of utilizing AI-OCR and RPA, previously adopted on a trial basis,
we reduced working hours by 1,888 hours (in a year) for the March 2022 fiscal year compared to the previous fiscal year,
and expect to reduce the same (also for one year) by 2,926 hours through continued utilization of these technologies.
Additionally, we are scheduled to install a new mission-critical system (known as “Mikumo”) in October 2023, from which
we expect to reduce working hours by 68,851 hours (in a year) and strengthen information security.
To enhance shareholder returns, in addition to a target consolidated payout ratio of 30%, we also plan to flexibly
buyback treasury stock. This notwithstanding, we will continue to study options for arriving where we should be withrespect to shareholder returns.

Achievements in the first year of the Medium-term Management Plan

Future outlook and targets

	Introduction of RS for employees, in a follow-up to RS for directors
and executive officers
	Sharing of medium-term management plan progress and issues by
each business department head to energize the Board of Directors
	Certification of conformity with tax system for promoting
investments for carbon neutrality and application of tax system forpromoting securement of human resources	For shareholder returns, plans for a consolidated
payout ratio target of 30%, flexible buyback oftreasury stock	Plans for record-setting human resource recruitment
	Adoption and operational launch of a new missioncritical system

Integrated report 2022

29

Initiatives Supporting Improved Corporate Value ESG Management at Yotai — Environment

Environment

ESG management at Yotai

Initiatives Targeting Climate Change

Guided by requirements stated in the Corporate Governance Code,Yotai has defined a basic policy on sustainability that further promotes
initiatives in this area, coupled with establishment of a Sustainability

Management system

Committee as a crosscutting organization functioning companywide.

The Sustainability Committee is the main body responsible
for promoting Yotai initiatives to address problems related
to climate change. In terms of process, the Sustainability
Promotion Division drafts action plans for climate-relatedrisks and opportunities. Following deliberation and review
by the Sustainability Committee, these plans are reported
to and deliberated twice yearly by the Full-time Directors
Meeting, and reported once annually to the Board of
Directors. The Board of Directors is responsible for setting
goals for climate change-related initiatives and monitoringof the status of progress each year.
The Sustainability Committee studies climaterelated risks and opportunities, reporting its findings to

Yotai has also specified important issues (materiality) to prioritize
addressing companywide, aiming for sustainable growth throughthese initiatives.

Basic policy on sustainability
As its corporate philosophy, the Yotai Group “aims to be a faithful company that creates new technologies andproducts in response to the demands of revolutionary times, enhances customer satisfaction and contributes
to society, using our unique technology and passing on the history and experience in long-standing refractory
manufacturing technologies to the next generation.” Together with striving to resolve social issues by putting
this philosophy into practice, Yotai will push ahead going forward with initiatives for delivering its own
sustainable growth.

Important issues (materiality) to prioritizeHigh quality

S: Social• Reliably stable supply of high-quality products• Constant provision of high-quality technical service• Retention of technological capabilities for adapting
to environmental change
P.16 – “The First Medium-term Management Plan”

E: Environment• Human resource development and utilization• Promotion of health and productivity management• Social contribution-based regional revitalization

Corporate
Philosophy

P.31 – “Initiatives Targeting Climate Change”

P.34 – “Human Resource Development,
DX Strategy, Initiatives Targeting SDGs”

G: Governance• Governance enhancement• Dialogue with investors and proper information
disclosure• Tighter BCP for responding to crises
P.36 – “Corporate Governance”

Processes for specifying materiality

30

Identify issues with reference to social concerns, the business environment anditems requested by stakeholders

Process 2:	Selection of priority
issuesSelect priority issues for Yotai

Process 3:	Specification ofimportant issues

Specify important issues through final resolution and approval by the Board of
Directors following preliminary deliberations by the Sustainability Committee andthe Full-time Directors Meetings

Integrated report 2022

Board of Directors

Criteria for deciding relative importance ofclimate-related risks compared to other risks
1.	Identification of risks and opportunities consideredto impact materiality as defined by Yotai
2.	Evaluation of importance of response measures
based on the degree of impact of the identified risk
or opportunity on stakeholders
3.	Study from quantitative and qualitative perspectives
to determine relative importance of climate-related
risk

ReportInstruct/Approve

Full-time Directors Meeting
ReportSustainability
Committee

InstructCompany President(Chair, Sustainability Committee)
ReportInstruct

InstructSustainability Committee members
Instruct

ReportSustainability Promotion Division
ReportInstruct Instruct

ReportSubcommittees (Cost Down Meeting, Plant Meeting, Development Meeting, Materials Meeting)Sales Dpt

• Reduction of GHG emissions• Switch to renewable energy• Effective utilization of mineral resources

Process 1:	Issue identification

the Board of Directors following deliberation by the Fulltime Directors Meeting. After receiving reports on climaterelated risks and opportunities, the Board of Directors
ultimately specifies and evaluates climate-related risk forthe entire Company, exploring options while paying close
attention to the regulatory environment.
With respect to environment-related facilities,building renovations and other initiatives, the Cost Down
Meeting, a meeting body that studies the cost side and
GHG emissions Scope 1+2 impact of such changes,
brings together and communicates with key personnel
from worksites, and also collaborates with Sustainability
Committee members from each business site.

Manufacturing Division Research labs

Engineering Division

Short-, medium- and long-term climate change risks and opportunities
We conceptualized and conducted scenario analysis of
the impact of climate change on Yotai along three timeaxes—short term (one to three years), medium term
(through to 2030) and long term (from 2030 onward).
For risks triggered by climate change, these are divided
into those associated with transitioning to a low-carbon

society (transition risks) and those having a physical effect(physical risks). We identified those categories of risk
and opportunities likely to have high impact in scenarios
in which global average temperature rises by 2 and 4
degrees Celsius, respectively, compared to prior to theIndustrial Revolution.

P. 32 – “Likely impact of climate-related risks and opportunities on organization’s businesses, strategies and financial planning”

Scenario analysis process
1.	Identification of risks andopportunities

Selection of anticipated risks and opportunities caused by climate change

2.	Specification of important risks
and opportunities

Specification of categories of previously identified risks and opportunities thought to have thelarger impact on Yotai

3.	Scenario building

Organize the results of analysis of previously specified important risks and opportunities into a
logic tree, evaluate qualitative impact on business
Establish 2 and 4 degrees Celsius scenarios, analyze anticipated effects for each scenario

4.	Specification of response

Specify Yotai’s response by scenario to the previously evaluated effects

Integrated report 2022

31

Initiatives Supporting Improved Corporate Value ESG Management at Yotai — Environment

Environment
Likely impact of climate-related risks and opportunities on organization’s businesses, strategies and financial planning

Established scenarios

A rating of risk importance revealed 20 risk and opportunity items. Of these, nine listed in the chart below are considered to
be of “major” importance.

From the study of results of analysis of in-house
scenarios, by devising countermeasures, such as
investment in energy conservation, energy-saving
conversions and expanded sales of refractories forelectric furnaces, this will heighten the resilience of Yotai	Chart of potential risks and opportunities, degree of impact, response measures and timelines for items rated as “major”
risk importance(Degree of impact:– No impact)

Major

Growth in fuel prices is directly linked to increases in manufacturing costs, a
direct expense. However, there is concern that manufacturing costs could rise
if the levy on renewable energy power generation based on the electricity feedin tariff in step with the widespread uptake of renewable energy going forward.

	Switch to renewable energy	Further per-unit reductions in fuel andelectricity

Long term	Shift costs to sales prices after
observing impact on the entire supply
chainLong term

Technology

Transition to
low-emission
technology

Major

There is a risk that profits could decline due to increased depreciation costs
stemming from impairment losses and the acquisition of new equipment
due to the upgrade of existing facilities and equipment in transitioning to low
emissions technology. Similarly, there is a risk that profits could decrease
due to higher R&D expenses accompanying the switch over to low emissions
technology. Additionally, Yotai uses fossil fuels such as crude oil and LNG in
the manufacture of refractories, as well as recycled fuel. Price volatility forfuels like crude oil and LNG in the transition to low emissions technology could
potentially affect business performance.

	Research and development of lowemissions products
	Sales volume expansion of lowemissions products

Mediumterm

MarketEnvironmental
regulations in eachcountry

Major

Raw materials for refractories are sourced from China. China has also pledged
to become carbon neutral in 2060, with domestic environmental regulations in
China predicted to intensify going forward. High raw material prices that result
from a decrease in supply volume are viewed as an ongoing risk.

	Discovery of new sources for purchaseof raw materials

Long term

Reputation

Changes in
consumerpreferences

Major

The entry of countries with low carbon price rates or those with moredeveloped countermeasures to climate change into the refractory market,
increased demand for unfired bricks and monolithic refractories, and a
decline in refractory brick production volume are all predicted going forward.
Furthermore, sales are expected to decline and logistics costs likely toincrease in line with calls for low-carbon recycled refractories and low-carbon
distribution.

	Sales volume expansion from shift toelectric furnaces

Mediumterm

Chronic

Rise in averagetemperatures

Major

Labor productivity is predicted to decline among manufacturing worksite
employees due to rising temperatures.

	Improved labor environment throughcapital investment

Long term

Greater frequency
and seriousness ofabnormal weather
patterns (torrential
rains, flooding,etc.)

Policy/regulation

Changes inenergy mix

Products and services

Changes in
consumerpreferences

Response measure

Timeline(1) Scenario with significant transition risk (2˚C scenario)

Large	Investments in energy conservation,
switch to renewable energy and switch
to carbon-free energy
Long term	Per-unit reductions in fuel and electricity
	Installation of storage batteries

4˚C

In this scenario, “(1) Carbon-neutral society,” stringent restrictions
are placed on GHG emissions and social systems move to mitigate
climate change(2) Scenario with significant physical risk (4˚C scenario)
In this scenario, “(2) Society enormously impacted by climate change,”society must adapt to the physical effects of confronting threats fromnature itself

Low-risk society

Society enormously impacted
by climate change

Physical risks

Small

Large

Process for distinguishing and evaluating climate-related risks and opportunities
At Yotai’s four domestic plants (Hinase Plant, Yoshinaga
Plant, Kaizuka Plant and Mizunami Plant), along with risks
and opportunities deliberated by both the Sustainability
Committee and the Full-time Directors Meeting, we
specify and rate risks and opportunities inherent to thebusiness activity level of each plant. Results are reported
to the Board of Directors for further deliberation andresolutions.
In discussing the rating of risks and opportunities,
the Sustainability Promotion Division evaluates from theperspective of stakeholder needs and social trends,
as well as importance to Yotai businesses. Following
deliberation by the Sustainability Committee and the Fulltime Directors Meeting, the results are reported to theBoard of Directors.
For specified risks and opportunities, theSustainability Promotion Office first drafts an action
plan, which is then reviewed and examined by the
Sustainability Committee and approved by the Board of
Directors. The approved action plans are implemented ateach business site. Monitoring of the progress status ofgoals and targets for climate change-related initiatives isconducted annually by the Board of Directors.
To integrate management of climate change risks
and comprehensive organizational risks, Yotai conducts
risk management through several bodies, including theInternal Audit Division, Compliance Supervision Divisionand the Sustainability Committee. Mechanisms are inplace through which each department reports regularly
to the Full-time Directors Meeting, and through which themeeting discusses the management of company-widerisk, including climate change.

Indicators and targets
Yotai has defined GHG emissions Scope 1+2, alongwith the percentage of renewable energy accounting forelectricity used in business activities, as two indicators in
its management of climate-related risks and opportunities.

As targets for fiscal 2031, Yotai has set a 30% reduction
in GHG emissions Scope 1+2, and aims to raise its
renewable energy percentage to 30%, both compared to2015 figures.

	FY2015 to FY2022 Scope 1+2 companywide GHG emissions t-CO2 conversion total(t-CO2)

52,25654,03853,491

55,46851,98953,311
46,282Major

Hindered operations and increased restoration costs predicted from damage
to manufacturing bases and supply chain disruptions caused by more frequent
large-scale typhoons, torrential rains and other weather.

	Production site dispersal in response to
BCPLong term

Major

Given strengths in the manufacture and sale of refractories for electric
furnaces, the replacement of blast furnace products with low carbon,
recyclable steel materials, coupled with anticipated growth in the scale ofdemand for such materials in the future, could lead to opportunities to expand
product sales. Low-carbon refractory bricks, unfired bricks and monolithic
refractories will contribute significantly to the scale of this market.

	Expanded sales of refractories forelectric furnaces

Mediumterm

Integrated report 2022

Harshest society
Combination of andCarbon-neutral society
Transition risk

Major

The international community is moving forward rapidly with initiatives to drive
decarbonization. Failure to meet ensuing social demands could run the risk oflower sales
Conversely, if more stringent targets are established in response to thesedemands, this could require more countermeasures than those for currently
established targets at the 2˚C standard. This, in turn, will entail expenses
for new countermeasures. Yotai is establishing GHG reduction targets forfiscal 2031, and pushing ahead with introduction of solar power and otherrenewable energy. While reductions in future energy costs from the installationof such facilities will emerge, financial risk will rise during facility adoption.

Carbon emission
targets/policies ineach country
Strongermandatory
emissions
reporting

2˚C

Small

Importance
rating	Investments in energy conservation,
switch to renewable energy and switch
to carbon-free energy
Long term	Per-unit reductions in fuel and electricity
	Installation of storage batteries

Broadcategory

Major

Molded products have drying and firing processes that use fuel oil, LNG andelectricity. Molded products are classified as either fired or unfired products;
fired products have a firing process that consumes a substantial amountof energy. Various policies currently being explored for adoption to combat
climate change, including carbon taxes and higher energy conservation
standards, will require significant additional costs.

Transition risk
Physical risks
Opportunities- Modest impact,

Potential risk/opportunity

Smaller category

Carbon tax/
carbon price32– Major impact,

Degree of impact

Acute

Type

Risk/opportunity categorybusinesses with respect to future risks. For the harshestsocial scenario, a combination of scenarios 1 and 2,
risk can be reduced by amalgamating countermeasures
separately devised for each scenario.

FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

48,375

FY2022

Japan business sites only, including 5.5 gas

Integrated report 2022

33

Initiatives Supporting Improved Corporate Value ESG Management at Yotai — Social

SocialImprovement of Organizational Vitality and Productivity

Schedule for investment in people, products, information and other areas...Preparation time window

Promoting human resource development and work style reform
With respect to human resource development, we plan to improve talentmanagement. Initiatives are taking place to revise personnel evaluations aswell as to create and implement skill improvement programs. Efforts arealso underway to improve motivation via attentive treatment of employees.
For work style reform, we are promoting the creation of an environment
where employees can feel comfortable working in a drive to achieve worklife balance. Furthermore, where health and productivity management
is concerned, we will enact seminars and other trainings to be certified
by Japan’s Ministry of Economy, Trade and Industry as a health andproductivity management enterprise by the second half of fiscal 2024,
ending March 31, 2024.

Fiscal 2022

Fiscal 2023...Start of operations
Fiscal 2024

First half Second half First half Second half First half Second half

PeopleRecruitment

A discussion between Director Shinobu Akiyoshi and female
regular employees

Training

Aggressive career human resource recruitment
Adoption of scouting-style recruitment approaches
Personnel evaluation system revision and implementation
Skill improvement programs creation and implementation
Working hour management system utilization

Management

Personnel information consolidation and utilization
Promotion of health and productivity management

Products

Examples of Social (S) initiative

Human rights......Compliance consulting help desk establishment and education
Diversity......Implementation of employee discussions led by a female external director
Creation of comfortable workplaces......Personnel evaluation system reform and introductionof sustainable growth-style remuneration system
Promotion of health and productivity management......Holding of health and productivity
management seminars
For sustainable growth......More aggressive approach to employment of new hires

Adoption of large high-pressure presses Installation of presses 1,500 tons and over
Adoption of organization analysis systems
Building of a new employee dormitory in December 2020

Equipment for new productdevelopment

Adoption of property evaluation equipment
Study introduction of surface modification equipment for electronic part products

Diversification of industrial furnace inspection methods Adoption of industrial furnace inspection drones
Lowering of CO2 emissions

Installation of solar panels
Adoption of electric vehicles and electric forklift trucks

Information
Promoting the recruitment of non-Japanese human resources

DX strategy
At Yotai, DX is about creating innovation using digital technology to adapt to environmental changes. Said innovations
would include revolutionizing operating styles to gain new customers, and supply chain and value chain sophistication forbusiness expansion. For these reasons, we will ready the DX system and solidly implement it under specific initiatives anddefinitive investment plans.
What is DX at Yotai?

Specific measures

DX promotion

Improve business efficiency through the use of advanced ICT,such as RPA and AI-OCR
Improve customer response capabilities via introduction of sales
support systems
Work style reform through working hour management system
adoption
Promotion of talent management through personnel management
system adoption
Organizational capacity improvement through systemization ofmanual work in the Engineering Division
Improve operational efficiency and productivity via mission-criticalsystem renovation

Other areas

Innovation by using digital technology to adapt toenvironmental changes

Mission-critical system renovation
Digitalization via the latest ICTWhat will be realized through DX?
Revolutionized operating styles to gain new customers

Development of information base, innovation creation via datautilization

Supply chain and value chain sophistication for businessexpansionDevelopment of a comfortable environment for employees via IT
equipment and systems.

M&A investment in related fields

Initiatives targeting SDGs

	DX promotion system map
President
Managing Director, General Manager,
General Affairs Division(in charge of promotion)

All departments

Management Planning Office
Operational reform promotion

34

Integrated report 2022

Carry out through the organizational
apparatus of each plantand sales branch officeInformation Systems Office
In charge of Secretariat
and IT-related matters

Support for eelgrass area restoration plan

Blood donation activities

Entered support agreement with the Town of Hinase
fisheries cooperative association for plan to restore“eelgrass” seaweed that fosters rich fishing grounds

Our promotion of blood drives for nearly 40 years
was recognized and received a commendation fromJapan’s Minister of Health, Labour and Welfare

Clothing support for refugees and disastersurvivors
Donated of 262 outfits

Integrated report 2022

35

Initiatives Supporting Improved Corporate Value ESG Management at Yotai — Corporate Governance

Governance
Building a Highly Transparent, Effective Governance Structure

Initiatives for a more robust governance structure

Overview of Yotai’s governance structure
Rationale for adoption of current structure
In parallel with aims to achieve faster decision-making
by Directors and energize the Board of Directors, we areworking to encourage mutual management supervision
by Directors, including External Directors, as wellas thorough compliance. In addition, we are striving
for more robust functionality for Corporate Auditors,
including External Auditors, in order to maintain andenhance management soundness.

to shift to a structure that emphasizes the supervisory
functions of the Board of Directors, the Board is seeking
to strengthen business execution functions through theintroduction of an executive officer system.
Yotai has chosen to be a company with a board ofcorporate auditors. This configuration results in a highly
objective and fair management structure supervised andmonitored by the Board of Directors and the Board of
Corporate Auditors.

Board of Directors, Board of Corporate Auditors
Yotai’s Board of Directors is comprised of six members– President Mitsuo Taguchi, who serves as Board Chair,
Shinichiro Takebayashi, Tadashi Taniguchi, Yorisada
Matsumoto, Hiroshi Itano (External Director) and Shinobu
Akiyoshi (External Director). The Board meets at least
once monthly. Along with determining matters definedin basic management policies, laws and regulations,as well as articles of incorporation, the Board decides
on important management-related matters, while also
monitoring the status of business execution. In addition
to electing Independent External Directors and preparing

Nomination and Compensation Advisory Committee
Yotai has established the Nomination and Compensation
Advisory Committee, with Independent External
Directors comprising over half the membership, as anadvisory body to the Board of Directors. The Committee
is entrusted with ensuring the fairness, transparency andobjectivity of procedures pertaining to the nomination ofand compensation for Directors and Corporate Auditors.
The three-person committee is chaired by President
Mitsuo Taguchi, with External Directors Hiroshi Itano andShinobu Akiyoshi as the remaining members.

	Corporate governance and internal control structure (as of June 28, 2022)
General Meeting of Shareholders

Nomination andCompensation
Advisory Committee Advise/ReportElect/Dismiss

Elect/Dismiss
Audit (equivalency)

Board of Corporate Auditors

Board of Directors
6 Directors(4 Internal Directors)(2 External Directors)

5 Corporate Auditors(2 Internal Corporate Auditors)(3 External Corporate Auditors)

Audit/ReportElect/Dismiss/Monitor

ReportReportReportInstruct

Audit Office

ReportReportEffectiveness evaluation of the Board of Directors
Each year, Yotai conducts an analysis and evaluation of theoverall effectiveness of the Board of Directors. In fiscal 2022,
analysis and evaluation of the Board’s overall effectivenesswas based on the results of signed questionnaires submitted
by all Directors and Corporate Auditors. In addition to thereporting of evaluation results to the Board of Directors,
Yotai confirmed both the status of improvements versus
the previous year’s evaluation and future issues to address.
As a result, the Board of Directors was evaluated as having
retained its effectiveness. Based on the results of theeffectiveness evaluation and various input from each Director
and Corporate Auditor, Yotai will take steps to further enhance
the functionality of the Board of Directors going forward.
Director and Corporate Auditor training
Yotai provides ongoing opportunities for Directors andCorporate Auditors to acquire the knowledge and otherskills necessary to fulfill their roles and responsibilities, witha basic policy of covering all necessary support, including
bearing any related expenses. In fiscal 2022, Yotai held
seminars led by external organizations for all Directors,
Corporate Auditors and Executive Officers, centered on
the themes of “responding to TCFD” and “insider trader
regulations.” For External Directors and Corporate Auditors,
we establish opportunities, as needed, for observing plants
and other sites, and for heightening understanding of
Yotai businesses. Meanwhile, newly appointed Directors

take part in seminars and other events held by externalorganizations to further deepen understanding of their roleand responsibilities.
Constructive dialogue with stakeholders
Yotai recognizes dialogue with stakeholders as essential tosustainable growth and improving its corporate value over the
medium to long term. To this end, the Head Office General
Affairs Department serves as a point of contact for fielding
requests from shareholders and all other stakeholders. In
particular, certain Directors and other officers are assigned
to answer requests for individual meetings and telephoneinterviews with shareholders and institutional investors.
Ensuring the diversity of core human resources
In the push for sustainable growth, Yotai is aggressively
pursuing new and mid-career employee hires regardless ofsex, nationality or age. At the same time, we are putting anenvironment in place for creating comfortable workplaces.
To ensure diversity, we are vigorously hiring on mid-career
professionals as core human resources. The First Mediumterm Management Plan (FY2022-FY2024) is targeting a totalof 25 mid-career hires, with sights on raising the percentageof mid-career hires in management positions.
For the recruitment of women into management positions,by fiscal 2027, the action plan for Yotai on a non-consolidated
basis calls for (1) an employment rate of 20% or higher for womenin the new graduate general employment pool, (2) the hiring ofat least one woman into a management position, compared to 0
currently in place, as we put an employment environment in place
where all employees can thrive regardless of sex.
On a similar note, our policy is to pursue aggressive
recruitment and hiring of foreign national employees into
management positions as well.

	Enhancements and changes in corporate governance
2019

2020

2021

2022

(1 person)
Audit/Report

Executive Officers
ReportBoard of Directors
Figure in ( ) is number of External Directors

Operations audit

Full-time Directors Meeting

Audit

Audit/Report

President

Auditing company
Accounting auditor

Accounting audit

Elect/Dismiss

Full-time Directors Meeting
Chaired by President Mitsuo Taguchi, the 16 members
comprising the Full-time Directors Meeting gather at least
once monthly to deliberate management planning andoperational execution from a variety of perspectives.

Subject to accounting audit

Board of Corporate Auditors
Figure in ( ) is number of External Corporate Auditors

5 (1)

6 (2)

6 (2, 1 woman)

5 (3 External Directors)

Instruct/Monitor

All business divisions, subsidiaries

36

Composition

Adoption of remuneration system offering transfer-restricted sharesFiscal year ended March 31, 2022
Number of times held

Board of Directors

4 Internal Directors, 2 External Directors

15 times

Board of Corporate Auditors

2 Internal Corporate Auditors, 3 External Corporate Auditors

13 times

Nomination and Compensation Advisory Committee

1 Internal Director, 2 External Directors

2 times

Integrated report 2022

Establishment of Nomination and Compensation Advisory Committee

Director and other officer compensation

	Composition of major meetings and times held
Meeting nameVoluntary committee

Introduction of Executive Officer system
Other

June 2018 revised CG CodeFull compliance

Compliance with June 2021 revised CG CodeBoard of Directors effectiveness evaluation enactment

Integrated report 2022

37

Initiatives Supporting Improved Corporate Value ESG Management at Yotai — Corporate Governance

GovernanceInternal control systems and risk management structure

Corporate Auditors

Director

Mitsuo TaguchiInternal

Independent
officer

Name

Internal/
external	Composition of Board of Directors/Board of Corporate Auditors, skill matrix
Sex

Rank and responsibilities within Yotai

Sales

Skill
Audits
Personnel/ Finance/ Legal/risk (operations/
Labor accounting management accounting)

ESG

ITsystems

President

Male Chair, Nomination and Compensation Advisory Committee
Managing Director; General Manager, Head

Shinichiro Takebayashi Internal

Male Office General Affairs Department

Tadashi Taniguchi

Male Director; Manager, Hinase Plant

Internal

Management Technology/
R&D

Yorisada Matsumoto Internal

Male Director; General Manager, Tokyo Branch

Hiroshi Itano

External

Male Member, Nomination and Compensation Advisory Committee

Shinobu Akiyoshi

External

Female Member, Nomination and Compensation Advisory Committee

Takashi Umezawa

Internal

Male Full-time Corporate Auditor

Tadaharu Tani

Internal

Male Corporate Auditor

Shinichi Inoue

External

Male External Corporate Auditor

Yasuo Fujiwara

External

Male External Corporate Auditor

Kazuhide Urata

External

Male External Corporate Auditor

External Director
External Director

2. System for storage and management of information pertaining to execution of duties by Directors(1) For information below pertaining to the execution of duties by Directors, such information is stored and managed in line with the law and internal regulations.
1. Minutes from the General Meeting of Shareholders 2. Minutes from meetings of the Board of Directors 3. Minutes from the Full-time Directors Meeting 4. Other information(2) Yotai maintains such information so that it is readily viewable by Directors and Corporate Auditors.
3. Regulations and other systems for managing the risk of losses for Yotai and its subsidiaries(1) Based on the current status of regulations regarding the risk management system, the Group maintains a risk management system that clarifies responsibilities and authority.
(2) The Group clarifies acute and latent risks, and rates the impact such risks pose to management.
(3) For risks believed to pose a significant impact for Yotai Group management, the Group maintains a monitoring system and a system for minimizing losses caused by risks that materialize.
(4) The identification and evaluation of risks to the Yotai Group are periodically reviewed.

Compensation for Directors and officers
At a meeting of the Board of Directors on May 13, 2021,
Yotai outlined a decision-making policy with regard to details
concerning compensation for individual Directors.
For the remuneration of Yotai Directors, the Company
has opted for a remuneration system linked to shareholder
profits, allowing it to function amply as an incentive for sustained
improvement in corporate value. When making decisions
regarding the remuneration of individual Directors, the basic
policy is to set such at a standard appropriate in light of the
Director’s specific duties and responsibilities. Specifically,
Director remuneration consists of basic compensation as fixed
remuneration, performance-based compensation, and nonmonetary remuneration.
For the policy for determining the amount of individualcompensation with respect to basic compensation (monetary
remuneration), the basic compensation of Yotai Directors
is decided based on a fixed monthly remuneration andcomprehensive consideration of other factors such as rank,
assigned duties, number of years in the position, performancein each business term, and balance with respect to employee
salaries.
Performance-based compensation is designed to heighten
awareness of the need to improve performance each fiscal

year. It consists of cash compensation reflecting performance,
the amount of which is calculated based fundamentally on total
dividends and ordinary profit each fiscal year, and is paid asa bonus given at a set time annually. For the fiscal year underreview, performance-based compensation totaled ¥29 million.
Non-monetary remuneration involves the offering oftransfer-restricted shares, and is granted as an incentive toencourage sustained improvement in corporate value, as well as
to further promote shared interest with Yotai shareholders. Yotai
Directors (excluding External Directors) are given monetary claims
granting transfer-restricted shares, for a total amount capped at¥50 million per year; Yotai can issue or dispose of up to 100,000
shares of common stock annually (however, in the event of a splitof Yotai shares of common stock (including the gratis allotmentof such shares) or a stock merger, depending on the split ormerger ratio, the total number of such shares is adjusted withina rationale scope, as needed). These claims are dispensed at a
set time annually. For the fiscal year under review, the Company
paid non-monetary remuneration totaling ¥10 million in monetaryclaims treated as contributed assets, and allotted 7,879 shares.
As warranted, this system is reviewed upon request fromthe Nomination and Compensation Advisory Committee.

	Total Remuneration for Fiscal 2022
Total compensation by type (Thousands of yen)

Director/Officer

Total compensation(Thousands of yen)

Basic compensation

Directors (excl. External Directors)

155,184

116,719

27,93010,5344Corporate Auditors (excl. External Corporate Auditors)

17,517

17,517——2

External Directors

11,967

10,497

1,470

—

3

External Corporate Auditors

11,46011,460——3

Performance-based compensation Non-monetary remuneration

Eligible Director/Officer(Persons)

Notes: 1. Total compensation for Directors does not include the employee salary paid to Directors serving concurrently in key personnel roles.
2. Total compensation for Directors includes a provision for bonuses of directors of ¥29 million for the fiscal year under review.
3. Total compensation for External Directors includes amounts paid to one External Director who retired at the conclusion of the 123rd Ordinary General Meeting of Shareholders held on June 24, 2021.

Integrated report 2022

reviewing the status of their current systems to achieve ongoing
improvements, with the goal of building a more effective internal
control systems going forward.

1. System for ensuring the Directors and key personnel of Yotai and its subsidiaries execute duties in conformance with the law and the Articles of Incorporation(1)	Yotai has defined a corporate philosophy, code of conduct and ethical guidelines, extensively spreads awareness of these among all Yotai Group Directors, officers and employees, and complies with laws
and internal regulations in line with its basic rules regarding compliance.
(2)	Based on internal audit regulations, the Internal Audit Office collaborates with Corporate Auditors and others to conduct internal audits for examining whether the Yotai Group is in conformance with laws
and internal regulations.
(3)	The Yotai Group seeks to prevent situations in which the execution of duties by Directors and key personnel is in violation of laws, the Articles of Incorporation or internal regulations, or are lacking inlegitimacy; the Group also fulfills its social responsibility as a corporation by ensuring the reliability of financial reporting and providing appropriate information. Together with monitoring regulations
designed to contribute to the maintenance and improvement of the Group’s social trust, Yotai strives to discover and correct wrongdoing as early as possible.

The above chart is not an exhaustive account of all skills, experience, capabilities, other knowledge or accomplishments possessed by the individual Directors and Corporate Auditors listed.

38

The Board of Directors had defined the basic policy below
regarding development of the Company’s internal control
systems. Based on this policy, Yotai and its subsidiaries work
to ensure the suitableness of their operations, while constantly

4. System for ensuring efficient execution of duties by Directors of Yotai and its subsidiaries(1)	The Board of Directors, based on Board rules and the operating guidelines of the Full-time Directors Meeting, strives to enhance management efficiency without injuring the soundness of the Company itself.
(2)	The Board of Directors decides management targets based on management policies, and spreads awareness extensively to key personnel through the Management Meeting, consisting of Directors andpersonnel in charge of each department and division.
(3)	The Board of Directors, in principle, meets at least once monthly. In conducting efficient management, the Board evaluates goal achievement status and works to review management driven by rapid
decision-making.
(4)	In parallel with the election of Independent External Directors and preparing to shift to a system that emphasizes the supervisory functions of the Board of Directors, Yotai is introducing an Executive Officer
system in a bid to strengthen operational execution functions.
(5)	Yotai has established the Nomination and Compensation Advisory Committee, with Independent External Directors comprising over half the membership, as an advisory body to the Board of Directors. The
Committee is entrusted with ensuring the fairness, transparency and objectivity of procedures pertaining to the nomination of and compensation for Directors and Corporate Auditors.
5. System related to reporting to Yotai of matters pertaining to the execution of duties by Directors of subsidiaries
Yotai’s operating manuals for its Production Meeting and Management Meeting mandate the periodic reporting of subsidiary operating results, financial condition and other important information to the Company.
6. Matters related to key personnel requested to assist Corporate Auditors in performance of their duties
Key personnel to assist Corporate Auditors in the performance of their duties are allocated as needed upon request by the Corporate Auditors, with personnel chosen based on specialized skills for the task.
7. Matters related to ensuring independence from Directors of the aforementioned key personnel and efficacy of instructions given to such personnel
The appointment, transfer, period of assistance and other decision-making matters regarding personnel authority pertaining to key personnel assisting the Corporate Auditors requires the prior consent of the
Corporate Auditors to ensure independence from the Directors.
8. System for reporting by Directors and key personnel to the Corporate Auditors and system for prohibiting mistreatment of reporters(1)	Directors and key personnel are to immediately report, upon discovery, any events that could have a significant or dramatic impact on Yotai Group management, or any such matters conveyed to themfrom outside the Company, to the Corporate Auditors.
(2) Upon request from the Corporate Auditors, Directors and key personnel are to report, without delay, on any matters pertaining to the status of execution of their duties.
(3) In accordance with internal reporting regulation, any retaliatory behavior against a reporter is prohibited.
9. Matters related to policy pertaining to advance payment of expenses arising from execution of duties by Corporate Auditors, reimbursement procedures and other expenses arising from said
execution of duties and treatment of debt
When requested by Corporate Auditors to pay in advance for expenses arising from the execution of their duties, following deliberation by the relevant department or division, the requested expenses or debts
are dealt with immediately, with the exception of cases in which these are recognized as unnecessary.
10. System for ensuring the effective conduct of other audits by Corporate Auditors(1) The Corporate Auditors meet regularly with the President to exchange opinions and information.
(2) The Corporate Auditors have access to all important management-related information, and consistently monitor management.
(3) The Corporate Auditors have the authority to directly request reexamination based on the results of internal audits reported by any division or department.
11. Basic approach to and status of other preparations for dealing with anti-social forces(1)	Eliminating anti-social forces from civil society is both necessary and important from a corporate social responsibility perspective. Accordingly, as stipulated in its ethical guidelines and basic regulations
on compliance, the Yotai Group has no relationships whatsoever with anti-social forces and promotes compliance management.
(2)	As an integrated response department, the Company has installed personnel responsible for preventing inappropriate requests at the Head Office General Affairs Department. These staff members work in
partnership with police and other external specialists to respond firmly to inappropriate requests from anti-social forces.

Policy regarding cross-shareholding
Yotai views the maintenance and development of relationships oftrust and collaborative relationships cultivated with a wide rangeof business partners through business activities over the years
as extremely important, from the perspective of both sustainablegrowth and medium- to long-term improvement in corporate
value. Yotai will pursue such shareholding whenever it is deemed
to maintain or strengthen transactional relationships with thebusiness partners, enhance the profitability of both companies,
or when doing so will contribute to improvement in Yotai’s own
corporate value. Each year, Yotai considers each individual

shareholding qualitatively to determine whether it contributes
to improvement in the Company’s corporate value, andquantitatively to determine if it is commensurate with capital cost.
After a comprehensive determination is made, stocks deemed tooffer little significance in holding further are sold off, while paying
close attention to the market impact of doing so. In reviewing
shareholding significance, the first evaluation is made by the Fulltime Directors Meeting, with final decisions on the suitability ofcross-shareholding made by the Board of Directors in light of thisinitial determination.

Integrated report 2022

39

Initiatives Supporting Improved Corporate Value Compliance and Risk Management/ Directors and Officers

Compliance
Basic Compliance Rules
Yotai’s “Basic Compliance Rules” define compliance as adherence
to laws and regulations (including administrative notices andguidelines), internal rules, and our corporate philosophy, andserve as our basic management policy. Employees shall not only
faithfully observe laws and regulations, but shall also be fully
aware of our corporate philosophy and code of conduct, and shallperform their duties with common sense and responsibility as
members of society.

Promotion System
In order to ensure that all employees are fully aware of their
responsibilities, the Director in charge of the General Affairs
Department serves as the promotion officer, with the head of eachbusiness site designated as the person in charge of promotion.
The department in charge of promotion is the Head Office General
Affairs Division.
All Directors, officers and employees work constantly
and diligently to improve compliance awareness. An internal

Directors and Officers
compliance consulting helpline has also been established to better
enable business execution based on a compliance mindset.

Director

Training Program
As needed, we strive to raise awareness of compliance and provide
correct knowledge by posting notices in our internal newsletter andon our website, as well as holding training sessions.

Internal Reporting System
We have established an “Internal Reporting System” for reportingto the Company the details of violations of internal rules, laws
and regulations, and other violations of corporate ethics in theworkplace. The Compliance Control Department is the internal
contact point for reporting compliance violations, with an external
consultation organization as the external contact point forreporting violations.
The General Manager of the Compliance Control Office is theofficer in charge of the Head Office General Affairs Division. The memberof the Compliance Control Department is appointed and composed by
the General Manager of the Compliance Control Department.

Mitsuo Taguchi

Shinichiro Takebayashi

Tadashi Taniguchi

Yorisada Matsumoto

Hiroshi Itano

Shinobu Akiyoshi

Takashi Umezawa

Tadaharu Tani

Shinichi Inoue

Yasuo Fujiwara

Kazuhide Urata

President

Managing Director
General Manager, General Affairs
Department, Head OfficeDirector
Manager, Hinase Plant

Risk Management
Risk Management Regulations

Information Security Management Structure

The Company has established “Risk Management Regulations”
regarding the development of a management system to preventthe occurrence of risks, and to respond to any risks that may
occur at the Company. Risks are the following factors that may
impede the performance of operations.
1. Compliance-related matters
2. Financial reporting-related matters
3. Information system-related matters
4. Research activity-related matters
5. Business procedure-related matters
6. Environment-related matters
7. Disasters, incidents and other related matter
8. Other matters related to the Company’s business

The Information Security Management Committee has been
established as an umbrella organization for information security.
The committee promotes thorough information security basedon the Information Security Policy and oversees the overall
information security of the entire Company, including theestablishment of decision criteria for matters not stipulated in the
Information Security Policy.
The committee is chaired by the Director in charge ofthe Head Office General Affairs Division, and the information
management manager appointed by the chairperson checks thestatus of information security as necessary.

Risk Management Committee
The Risk Management Committee works closely with eachdepartment to develop a comprehensive system for theCompany’s risk management. The committee consists of thefollowing members. The committee is convened at least once a
year by the chairperson.
Chairperson: Director of Head Office General Affairs Division
Committee members: Heads of each division (Head Office(department), offices, branch offices, business divisions, plants)

Information Security Management
The Company has defined “Information Security Management
Regulations” designed to ensure the Company’s businessactivities occur normally and smoothly, and to prevent incidents
involving employees, by properly safeguarding information from
customers, business partners and others handled in the courseof business, as well as the Company’s own information assets
and employee data, from threats of every kind. These regulations
are supervised by the Head Office General Affairs Division, withresponsibility designed to the Director in charge of the Head Office
General Affairs Division.

40

Integrated report 2022

Director
General Manager, Tokyo Branch

External Director

External Director

Corporate Auditors

Initiatives for Personal Information Protection
We have established “Personal Information Management Rules” toprevent unauthorized acquisition, use and disclosure of personal
information, as well as other illegal activities involving personal
information.
The personal information protection manager is the General
Manager of the Head Office General Affairs Division. In addition,
an audit manager appointed by the President periodically inspects
whether personal information is being handled properly in the
Company and how these rules are being applied. An audit reportis prepared on the results of the inspection, which is reported to
the President.

Corporate Auditor (Full-time)

Corporate Auditor

External Corporate Auditor

Response to COVID-19
In our response to COVID-19, we prioritize the protection ofhuman life, including employees and their families, customers
and related parties, and neighboring communities, and strive toprevent the spread of infection and ensure business continuity.
In addition, basic measures to prevent the spread of infection
are thoroughly implemented, such as wearing gapless masks,
washing and disinfecting hands, frequent ventilation of offices, andprohibiting conversation when eating and drinking.

External Corporate Auditor

External Corporate Auditor

Integrated report 2022

41

Initiatives Supporting Improved Corporate Value External Director’s Message

Connecting a vision for the Company’s futureand in-depth discussion of management risks
to continued possibilities for Yotai

Board of Directors creating a consciousness among
every Director to take responsibility and speak up
Instead of an atmosphere that stifles debate, Yotai’s
Board of Directors is a place where even I can actively
speak about things that I notice. The Board listens toand earnestly considers what I and the other External
Directors have to say. In terms of the Board’s proceedings,
previously, each Director would speak at the end after all of
the agenda items were explained. Now, however, the Board
has switched to an approach where each Director offers
an opinion after every individual agenda item. This has
made it easier to speak up and led to much livelier Board
discussions.

Selection and training of future Director candidates
through discussions by the Board of Directors
In recent years, Yotai has put systems in place byenacting a range of measures in step with Japan’s
Corporate Governance Code, including the introductionof an Executive Officer system and establishment of a
Nomination and Compensation Advisory Committee,
efficacy evaluations of the Board of Directors, and adoptionof a remuneration system offering transfer-restricted shares.
If I were to give one point for improvement, I would liketo see more robust discussions from the point of view ofshareholders.
Although at present we have been asking for all generalmanager-class personnel to attend meetings of the Boardof Directors and provide presentations on specific themes,
my feeling is that there is still little in-depth discussion ofthis request. Having difficult discussions will energize Board
discussions, and will raise the consciousness of thosegeneral manager-class personnel giving presentations. It will
also help to encourage the growth of future managers. On
the Board side, too, this will prove useful in selecting future
candidates for Director. In better grasping both the thinking
and disposition of employees through Board discussions,

Profile42

Hiroshi Itano

Shinobu Akiyoshi

External Director

External Director

Yotai can achieve a greater number of Director candidates,
while making the appointment of the best suited Directors
possible.

Rising need for discussions from a medium- to longterm perspective
With social uncertainty today on the rise, exploring
management risks from a medium- to long-term
perspective is also an important theme. Because Yotai is acompany that supports Japan’s core industries, continuing
to stably supply refractories must remain its social mission
into the future. But since the prices of raw materials andtransportation costs are surging higher, and there is highreliance on China for the procurement of raw materials forrefractories, the level of importance of risk management formeeting Yotai’s supply responsibilities is climbing.
Additionally, I think we need to discuss the kindof company that Yotai hopes to be in the future from a
medium- to long-term perspective. Now that economic
activity has resumed, the outlook is that firm demand forrefractories will continue, particularly for sectors like steel,
nonferrous, environmental systems and electronic parts. But
since Japan’s economy is maturing, demand for refractories
can be expected to gradually diminish over the long term.
Yotai’s continued survival will hinge on tackling new businesschallenges to expand its business portfolio. Because it hasabundant funds available, Yotai can buy both technology
and time through M&A activity. That said, the Company
needs to lay out concretely the future vision it is aiming forin order to do M&A effectively. With the First Medium-termManagement Plan already running through the March 2024
term, this kind of discussion will be critical when formulating
the Second Medium-term Management Plan.
As Yotai moves toward the goal of being a partner
supporting Japan’s core industries, I hope to contribute to
the Company taking on the bold challenges that will enable
it to develop even further.

Joined Nomura Computer Systems Co., Ltd. (now Nomura Research Institute, Ltd.) in 1980. In 2015, became Representative Director and Senior Executive
Managing Director in charge of NRI’s Corporate Administration, Risk management, Compliance and Health and Productivity Management. Named a Director of NRI
in 2017, and selected as Outside Director for Data Applications Company, Ltd. (current). Became a Director of FIXER Inc. in 2018. In 2020, named External Directorof Yotai Refractories Co., Ltd. (current). Currently an Outside Director for Yamashin-Filter Corp.

Integrated report 2022

Wide expectations for showcasing Yotai’spresence as an enterprise supporting Japan’score industries by fulfilling its responsibilities
to society

Board of Directors where highly transparent discussion
happenAt meetings of the Board of Directors, from my standpoint as
an attorney, I have committed myself to offering objective andappropriate opinions and advice, mainly from a legal perspective,
related to the Company’s corporate governance, compliance,
M&A activity, and other areas. I really feel as though Yotai’s Boardof Directors is a place where every person’s words are heard andthoughtfully considered, and where highly transparent discussions
take place.
At Board meetings, whenever an agenda item is unclear,or questions arise as to the specific effects or risks that it could
entail, each Director examines it and offers input from their own
specialized perspective. Any item not amply examined becomes
homework for the Director to consider further, which they thenreport back on in detail at the next meeting.
Going forward, the issue that arguably needs more scrutiny
is the Company’s approach to cross-shareholding. While Yotai
has already developed a framework for examining whether crossshareholding contributes to enhancement of corporate value andreviews the system itself, cross-shareholding is something that I
think should be recognized as an ongoing issue to address.

Real sense of creating comfortable workplaces throughdialogue with female employees
From my position as a female External Director, the goal of muchof my action has been to further energize initiatives designed toensure diversity, including career advancement for women. As
part of this, Yotai has established spaces for me to dialogue withfemale employees in the general employment pool who are to rise
into management positions in the near future, and I’ve been able
to hear candid opinions from them regarding their awareness ofand requests with respect to work styles and other issues. Noneof the employees felt that a gender gap existed in the workplace,or expressed any unease in rising into management positions,and instead felt that Yotai has created a comfortable environment
to work in. That said, since there are currently no women in

Profilemanagement, I was left with the impression that perhaps they
had no specific image of the role or difficulties faced by female
managers. Continuing to drive initiatives for the advancement of
women can be the impetus for considering the kinds of systems
necessary for turning points in our life cycle, and is expected tolead to initiatives for ensuring diversity.

Evaluation of contribution of decarbonization investments
to improving medium- to long-term corporate value
During the past several years, beyond financial information alone,
more attention has been turning to non-financial information,such as initiatives addressing the environment, society itself andgovernance (ESG), when it comes to evaluating a company.
Yotai is taking a variety of steps to answer social concernsand expectations of this kind. In particular, the Company has
established a Sustainability Committee, chaired by the President,
which seeks to put a framework in place for studying andpromoting initiatives of this kind. Above all, guided by recognition
that initiatives for moving to carbon neutrality are a key issue,
Yotai is investing aggressively in areas like decarbonization. I
think this investment can be construed as contributing greatly to
improving corporate value over the medium to long term. Many
employees also take part in the CSR activities Yotai carries out
as a company, so there’s a real sense of how deeply the idea ofsocial contribution runs in every employee.
Yotai is an enterprise with a history of supporting theadvancement of Japan’s core industries by leveraging its
strengths built over the years in manufacturing technology andknowhow, and its high market share in various sectors. This,in turn, has contributed to the advancement of our own lives.
In April of this year, Yotai moved to the TSE’s Prime market,
which has brought attention to Yotai as a company and raised
expectations for it even higher. Going forward, I expect that Yotai
will not only continue to be a leader in the advancement of coreindustries, but will showcase its presence as a leading company
in refractories, while also contributing to society as a wholethrough its proactive ESG-related initiatives.

Registered as an attorney with the Osaka Bar Association in December 2008. Joined Doujima Sougou Law Office in January 2009. Named a partner at Doujima
Sougou Law Office in January 2018 (current). Named regular delegate of the Osaka Bar Association in 2018. In 2019, retired as regular delegate of the Osaka
Bar Association. From November 2020, began working as consultant for specified Nonprofit organization Hikosen, and became member of the Living Environment
Dispute Conciliation Committee for the City of Ashiya. Japan. In 2021, registered as an Employment Environment Improvement Expert (Class 1). Named External
Director of Yotai Refractories Co., Ltd. in 2021 (current).

Integrated report 2022

43

Data and Corporate Information Financial Review (Consolidated)

Fiscal 2022 Financial Review
Dividend Policy

Operating results	Net sales rose 10.0% year on year, boosted by increased sales volume for refractories due to a rebound in the steel industry,
the principal source of Yotai business transactions
	Despite higher prices for raw materials and fuel, ordinary profit climbed 36.5% year on year, reflecting growth in production andshipment volume	Higher revenues and earnings in the engineering business, mainly atop increased orders for large-scale construction projects.
Segment profit rose to a record highFinancial Analysis

	Analysis of change in operating profit

Net sales for the consolidated fiscal year
under review rose ¥2,357 million year on
year, to ¥25,912 million. Higher sales volume
for refractories, driven by increased demand
from steel manufacturers, was the main
factor behind this growth.
Operating profit rose ¥1,168 million year
on year (operating profit to net sales ratio of
15.8%), to ¥4,089 million. Factors driving
profit growth included increased domestic
sales volume for refractories, sales pricerelated factors, and a smaller burden for fixed
cost due to higher production volume, all ofwhich offset factors such as rising prices for
raw materials and fuel.

Reduction in
fixed-cost burden Increased profit
Sales price-related from increased from engineeringbusiness
production volume
factors

Increase in domestic
refractory sales volume+¥1,584 million+¥169 million +¥63 million +¥17 million¥4,089millionRise in cost for
raw materials,
fuel and unit pricefor purchased goods

Increase in selling,
general andadministrative expenses-¥372 million-¥293 million¥2,921
millionProfit growth of ¥1,168 million

FY2021

FY2022

Performance by Segment
Organizationally, Yotai is fundamentally composed of the refractories business and the engineering business. The
Company devises comprehensive domestic and overseas strategies and conducts business activities for each businessindividually. Accordingly, Yotai categorizes “refractories” and “engineering” as its reporting segments.

materials and supplies, finished products, notes and accounts
receivable - trade, and electronically recorded monetaryclaims, and came despite a decrease in cash and deposits.
Liabilities amounted to ¥8,640 million, an increase of¥2,276 million from a year earlier. This increase was mainly
due to unpaid expenses, including accounts payable - trade,electronically recorded obligations, and income taxes payable.
As a result, the capital adequacy ratio as of March 31,
2022 was 77.7%. While this was down 4.3 percentage points
from 82.0% at the previous fiscal year-end, the Company’s
financial position is still deemed to be in good shape overall.

The speed of technological change and advancement in theindustry is dramatic, making investment in the upgrade andstreamlining of production facilities extremely important. In
principle, the capital necessary to do so is allocated frominternal reserves.
In terms of policy with respect to dividends, backed
by a fundamental commitment to the continued paymentof a stable dividend, our basic policy is to strengthen the
Company’s financial structure, while building and augmenting
internal reserves and paying a dividend commensurate withearnings.
Guided by this approach, under the First Mediumterm Management Plan (FY2022 to FY2024), in parallelwith allocations to promote strategic investments, upgrade
investments, IT investments and others to develop amanagement base to support sustainable growth, we arereinforcing fund allocation to shareholder returns. Regarding
such returns, we intend to continue payment of a stabledividend, with a target consolidated payout ratio of 30%,
while flexibly purchasing treasury shares.
In terms of year-end dividends from retained earnings
for fiscal 2022 (ended March 31, 2022), we paid a dividend
per share of ¥27, after accounting for a comprehensive
range of factors, including financial condition and businessperformance. Combined with an interim dividend per share of¥16, the full-year dividend was ¥43 per share, or ¥26 higher
than in the previous fiscal year.

Cash Flows
Cash and cash equivalents as of March 31, 2022 stood at¥8,537 million, a decline of ¥2,853 million year on year, as
profit before income taxes and an increase in trade payables
were offset by growth in inventories from increases in raw
materials and ingredients, an increase in trade receivables,
and cash used for the purchase of treasury shares (¥1,499
million).
	Cash flows
FY2021

Financial Position
Refractories Segment
Net sales for the segment rose
10.9% year on year to ¥21,176
million, with segment profit up
36.0% to ¥4,910 million for thesame period. Growth came atop
increased demand from steel
manufacturers.

	Refractories Segment – Net sales and segment profit
Net sales

Segment profit
23,972

20,029(Millions of yen)

22,26019,089(Millions of yen)

Total assets as of March 31, 2022 stood at ¥38,750 million,
an increase of ¥3,353 million from the previous consolidated
fiscal year-end. This growth mainly reflected increases in raw

4,910

4,787

Integrated report 2022

421

Cash flows from investing activities(1,202)(1,208)Cash flows from financing activities(418)(2,111)

Effect of exchange rate changes oncash and cash equivalents

2

45

Change in cash and cash equivalents

3,184(2,853)

Cash and cash equivalents, end of term

11,3908,537

Cement12,60910,610Nonferrous

’20.3

’21.3

’22.3

’18.3

’19.3

’20.3

’21.3

4,195

11,152

11,263(Millions of yen)

(Millions of yen)

4,044

3,953

2,646

3,614

2,344

3,027

2,010

1,992

2,100

’20.3

’21.3

’22.3

’22.3

	Engineering Segment– Net sales and segment profit
Net sales’18.3

Segment profit(Millions of yen)

4,188

4,394

4,465

(Millions of yen)

4,735
631

3,902

634

699

’19.3

’21.3

’22.3

Environment

’18.3

’19.3

’20.3

’21.3

3,931

3,720

’22.3

’18.3

’19.3

Electronic parts(Millions of yen)

716

591

’20.3

4,164

4,376

(Millions of yen)

4,565

1,257
1,050

1,096

1,019

1,002

FY2022 Actual

FY2023 Outlook

Steel
CementNonferrous
Environment

’18.3

44

4,803

	Sales performance (non-consolidated) by industry sector and outlook
Steel

3,609

8,809

Engineering Segment
Net sales for the segment rose
6.1% year on year to ¥4,735 million,
with segment profit up 2.5% to arecord high of ¥716 million. Growth
was spurred by an increase inorders for large-scale construction
projects.

Cash flows from operating activities(Millions of yen)

’19.3

FY2022

5,857

21,176
4,208

’18.3

(Millions of yen)

’19.3

’20.3

’21.3

’22.3

’18.3

’19.3

’20.3

’21.3

’22.3

’18.3

’19.3

’20.3

’21.3

’22.3

’18.3

’19.3

’20.3

’21.3

’22.3

Electronic parts

Integrated report 2022

45

Data and Corporate Information Key Financial and Non-financial Data

Key Financial Data
2012.32013.32014.32015.32016.32017.32018.32019.32020.32021.32022.3

Net sales

21,716

20,357

20,107

21,123

21,46522,23624,217

27,87526,65423,55425,912

Cost of sales

18,045

16,822

17,095

17,78718,002

18,182

18,527

20,587

20,535

18,594

19,565Gross profit

3,671

3,535

3,011

3,336

3,462

4,054

5,690

7,287

6,118

4,960

6,347

Operating profit

1,556

1,441

884

1,179

1,309

1,913

3,559

5,134

4,017

2,921

4,089

Ordinary profit

1,627

1,554

1,043

1,346

1,396

2,013

3,663

5,224

4,134

3,021

4,123

Profit attributable to owners of parent

895

852

793

924

936

1,374

2,625

3,610

2,794

1,845

2,966

R&D expenses

158

147

149

167

156

138

124

134

137

167

188

Cash flows from operating activities

465

2,512

903

1,580

693

3,070

(1,759)

3,048

5,413

4,803

421

Cash flows from investing activities

(426)

(470)

(370)

(466)

(658)

(527)

(778)

(943)

(1,111)(1,202)(1,208)Cash flows from financing activities(437)(1,096)

(354)

(244)

(248)

(234)

(229)

(317)

(398)

(418)

(2,111)

Net assets

15,34516,30517,02918,00018,31919,72822,16325,104

27,23429,03230,109Total assets

21,81921,926

22,74324,55824,163

26,432

29,33634,18634,44335,39638,750

39.94

38.03

35.54

42.03

42.61

62.53

119.44164.29127.1784.59

141.28

Consolidated Fiscal Year (Millions of yen)

Consolidated Fiscal Year-end (Millions of yen)

Per-share indicators (Yen)
Basic earnings per share
Dividends per share (annual)

10.00

10.00

9.00

10.00

10.00

10.00

12.00

15.00

16.00

17.00

43.00

Net assets per share

684.57727.46774.38818.64

833.34897.581,008.43

1,142.27

1,239.17

1,332.86

1,460.90

7.2

7.1

4.4

5.6

6.1

8.6

14.7

18.4

15.1

12.4

15.8

Financial Indicators
Operating profit margin (%)
ROE (return on equity) (%)

6.0

5.4

4.8

5.3

5.2

7.2

12.5

15.3

10.7

6.6

10.0

Capital adequacy ratio (%)

70.3

74.4

74.9

73.3

75.8

74.6

75.5

73.4

79.1

82.0

77.7

PER (Price-earnings ratio) (Times)

9.24

7.81

8.61

9.30

6.81

6.06

6.68

3.11

4.95

12.14

8.91

Share price (Year-end closing price) (Yen)

369

297

306

391

290

379

798

511

630

1,027

1,259

Payout ratio (%)

25.0

26.3

25.2

23.8

23.5

16.0

10.1

9.1

12.6

20.1

30.4

Net sales per employee (Millions of yen)

34.44

32.44

33.37

36.86

37.72

38.84

42.98

50.82

48.16

42.71

47.07

2019.32020.32021.32022.3

Non-financial Data
2018.32018.3

Environment

2019.32020.32021.32022.3SocialRefractory Production Volume (t)122,538

122,017112,356

99,190112,503

Working hours *1 (hours/year)

GHG Emissions (t-CO2)

55,46851,98953,311

46,282

48,375Age brackets Under 30 years old

100

97

40,69437,18738,82433,02334,64130-39 years old

120

112

120

134

Scope 1
Scope 2
Energy Usage (GJ)Electricity Usage (MWh)Water Usage (m³)

2,238

2,178

2,064

2,171

99

98

108

119

118

124

135

128

129

14,774

14,801

14,487

13,25913,73340-49 years old

589,606

547,177

514,473

482,076

509,188

50-59 years

72

71

85

95

108

23,97060 years or older

3

3

4

5

6

2

Days of paid leave taken * (days/year)

14

15

15

15

15

No. of care leave claimants

0

1

0

0

0

Disabled employment rate (%)

1.92

1.91

2.13

2.13

1.95

1

0

0

0

0

1

1

0

1

1

Childcare leave reinstatement rate (%)

100

100

—

100

100

No. of education/training days *3

10

10

12

15

20

25,26089,35925,472
79,785

25,10277,857

22,944
77,16474,515SocialNo. of employees [consolidated]

2,293

556

541

566

537

564

415

417

442

444

475

Pct. female employees (%)

8.9

9.4

12.0

13.5

13.1

No. of managers

72

69

69

75

73

No. of female managers

0

0

0

0

0

15.23

15.23

14.67

15.29

14.64

Health and Safety
No. of fatalities (cases)

0

0

0

0

0

No. of accidents (cases)

15

9

9

10

10

No. of claimants for mental health leave

1

0

0

0

0

[non-consolidated]

Average years of continuous employment Males (years)
Average years of continuous employment Females (years)

11.59

10.59

8.53

8.40

8.79

Turnover rate 3 years after employment (%)

38.5

31.6

25.0

20.0

15.0

Voluntary retirement rate (%)

8.2

3.4

2.3

2.5

3.8

No. of childcare leave claimants Males
Females*1: Skilled laborers only. Scheduled working hours are 1,940 hours *2: Skilled laborers only. Union member average *3: Sponsored by Head Office46

Integrated report 2022

Integrated report 2022

47

Data and Corporate Information Company Profile (As of March 31, 2022)

Corporate Overview

Share Information

List of Business Locations

Corporate nameYotai Refractories Co., Ltd.

Total no. of authorized shares

70,000,000 shares

Establishment

August 1936

Total no. of outstanding shares

25,587,421 shares

Representative

Mitsuo Taguchi

Shareholders

2,295

Head office location 8-1 Nishikinaka-machi, Kaizuka-shi, Osaka
Prefecture 597-0093
No. of employees

564

Paid-in capital

2,654 million yen

Business
description

Manufacturing and sales of refractories/ newceramics, and related engineering businesses

Market listing

Prime market, Tokyo Stock Exchange

Securities code

5357

Director/Officer Composition(as of June 23, 2022)
President

Mitsuo Taguchi

Managing Director
General Manager, Head Office Shinichiro Takebayashi
General Affairs Department
Director
Manager, Hinase Plant

Tadashi Taniguchi

Major Shareholders

Head Office

8-1 Nishikinaka-machi, Kaizuka-shi, Osaka Prefecture 597-0093

Sales Offices
Head Office Sales Division

8-1 Nishikinaka-machi, Kaizuka-shi, Osaka Prefecture 597-0093

Tokyo Branch

1-1-1 Koraku, Bunkyo-ku , Tokyo (TK-CENTRAL 6th Floor) 112-0004

Kyushu Branch

4-6 Konya-cho, Kokurakita-ku, Kitakyushu-shi, Fukuoka Prefecture(Kitakyushu Dai-ichi Bldg., 7th floor) 802-0081

Nagoya Branch2103-1 Oda-cho, Mizunami-shi, Gifu Prefecture 509-6112

Okayama Branch2601 Hinase, Hinase-cho, Bizen-shi, Okayama Prefecture 701-3204

No. of shares
owned

Shareholding
ratio (%)

Sumitomo Osaka Cement Co., Ltd.

3,589

17.42

The Master Trust Bank of Japan, Ltd.
(Trust account)

1,614

7.83

Sunshine D Investment Partnership
Executive Partner
UGS Asset Management Inc.

1,110

5.38

Challenge No.2 Investment Partnership
Executive Partner
Capital Management Ltd.

1,000

4.85

Hinase Plant

2601 Hinase, Hinase-cho, Bizen-shi, Okayama Prefecture 701-3204

The Chugoku Bank, Ltd.

908

4.40

Yoshinaga Plant

1250 Minamikata, Yoshinaga-cho, Bizen-shi, Okayama Prefecture 709-0223

The Tachibana Securities Co., Ltd.

846

4.10

Capital Gallery Co., Ltd.

800

3.88

Kaizuka Plant

8-1 Nishikinaka-machi, Kaizuka-shi, Osaka Prefecture 597-0093

Sanei Kosan Co., Ltd.

750

3.64

Sunshine G Investment Partnership
Executive Partner
UGS Asset Management Inc.

Mizunami Plant

2103-1 Oda-cho, Mizunami-shi, Gifu Prefecture 509-6112

564

2.73

Custody Bank of Japan, Ltd. (Trust account)

534

2.59

Shareholder name(thousand shares)(Note)	The shareholding ratio is calculated after a deduction of 4,977 thousand shares of treasury
stock.

Plants

R&D Division
Advanced Materials Laboratory

8-1 Nishikinaka-machi, Kaizuka-shi, Osaka Prefecture 597-0093

Shareholder Memo

Technical Research Laboratory

2601 Hinase, Hinase-cho, Bizen-shi, Okayama Prefecture 701-3204

Fiscal year

April 1st to March 31st of the next year

Engineering Division

Confirmation date forshareholder eligibility to receive
year-end dividends

March 31st

Engineering Division

Confirmation date forshareholder eligibility to receive
interim dividends

September 30th

Overseas Base

Ordinary general meeting ofshareholders

June each year

Director
General Manager, Tokyo
BranchYorisada Matsumoto

External Director

Hiroshi Itano

External Director

Shinobu Akiyoshi

Corporate Auditor (Full-time)

Takashi Umezawa

Corporate Auditor

Tadaharu Tani

External Corporate Auditor

Shinichi Inoue

Account management institution
Mitsubishi UFJ Trust and Banking
for shareholder registry
Corporation
administrator special accountExternal Corporate Auditor

Yasuo Fujiwara

Announcement method

Will be announced electronically

External Corporate Auditor

Kazuhide Urata

Announcement URL

https://www.yotai.co.jp/ir/j_annual.html

YINGKOU NEW YOTAI REFRACTORIES CO., LTD.

2601 Hinase, Hinase-cho, Bizen-shi, Okayama Prefecture 701-3204

Qian jia village, Nan lou economy development area, Dashiqiao-city, Liaoning
Province, China

Website Guide
Please visit the website for the latest information on Yotai

https://www.yotai.co.jp/en/

However, in the event that an accident or other unavoidable factor prevents
electronic announcement, announcements will instead be made via The
Nihon Keizai Shimbun.

48

Integrated report 2022

Integrated report 2022

49