[ For inquiry concerning our IR activities ]Head Office: 6-11, Miyahara 4-chome, Yodogawa-ku, Osaka 532-0003
T E L : +81-6-6399-5952 FAX: +81-6-6399-5864
U R L : https://www.daitron.co.jp/en/
E-mail : info.ir@daitron.co.jp

Integrated Report 2023

Hard work, prosperous lifestyle
In “hard work,” we put our determination to give our all in our work during working hours.
“Prosperous lifestyle” suggests that payments be increased and employees and shareholders
earn fair returns, as performance improves.
Since 2008, we have been further promoting this idea to better motivate employees by realizing aperformance-based pay system of an industry-leading level.

Philosophy system

Foundation Spirit
Code of Conduct
The writings offounder Zenshiro Takamoto

Management Philosophy

Group Statement▶ Our Company will aim to provide a comfortable and safe work environment, respecting
our employees’ needs for self-esteem and encouraging every individual to achieve theirfullest potential.
▶ Our Company will do its utmost to satisfy its customers, shareholders, and suppliers.
▶ Our Company will strive to maintain a global outlook and continue to conquer
challenges in technological innovations to provide high value-added products for ourcustomers.
▶ Our Company is committed to being a good corporate citizen and actively participatingin those communities where we are represented.

Table of Contents
Chapter 1 Value Creation

Chapter 4 Sustainability

Philosophy system ………………………… 01

Sustainability Management ……………… 35

Greeting ………………………………………… 03

Environmental Initiatives …………………… 37

The Daitron Group History……………… 05

Human Resource Initiatives ……………… 39

Financial and Non-Financial Highlights ……… 07

Health and Safety Initiatives ……………… 41

Our Value Creation Process …………… 09

Quality Initiatives ……………………………… 42

The Source of Our Value Creation ……… 11

Chapter 5 Governance

Chapter 2 Growth Strategy

Corporate Governance …………………… 43• Scope of Reporting
Period Fiscal Year Ended December 31, 2022
(January 1, 2022 to December 31, 2022)

President Message ………………………… 15

Officers Introduction ………………………… 49

Organization Daitron Group

Division Manager-Business Administration Message …… 19

Outside Directors Messages …………… 51

Overview of Medium-Term Business Plan …… 21

Chapter 6 Data Book

Chapter 3 Business Strategy

Financial Summary …………………………… 53

Business Management System and Segment Information …… 27

Company Information/Stock Information …… 55

Strategies by Management Organization …… 29
Product Lines ………………………………… 33

01

Integrated Repor t 2023

• Editorial Policy
The Daitron Group has prepared the Daitron Integrated
Report 2023 to help all stakeholders understand ourefforts to create sustainable value.
In addition to our most recent business results, thisreport describes our management policies and strategies,
including notable case studies. For detailed financial dataand other information, please visit our website.

*Some information from outside of this period is also included.

Grasp markets from a global viewpoint to create and provide values one stepahead of customer needs
This Group Statement expresses our idea of what the Daitron Group should be like.Further, “NEXT ”(NETWORK, ENGINEERING, X[SYNERGY], TRADING) implies our aspiration to create new value as
an engineering trading company leading the electronics industry and capitalizing on its network.

*Caution Regarding Future Outlooks
The forward-looking statements in this integrated report,
including future plan figures and measures, are calculated
based on judgments and assumptions that the Company has
made based on information currently available and that it
believes to be reasonable. Accordingly, actual results may differ
from these forecasts due to various important factors such as
economic conditions in major domestic and overseas markets
and fluctuations in foreign exchange rates.

Integrated Repor t 2023

02

Chapter 1

Value Creation

Greeting

Contributing to future value creation through electronics
Daitron Co., Ltd. (then called Daito Shoji Co., Ltd.) was

business based on medium- to long-term goals and strategies.

established in 1952, starting its journey as a trading company. In

This was such a major change, it could truly be called a “second

1969, the Daitron trademark was registered, and in 1970, we

founding.” Since that time, our Group’s management has been

took several actions toward full-scale manufacturing functionality,

based on our medium-term business plans, and we haveincluding spinning off our technical division. Our unique dual

continued to achieve steady growth.

trading and manufacturer functionalities comprise a truly

Now, 30 years later, we press forward under the 10th

important element of our DNA that has been passed down to theMedium-Term Business Plan (10M). Once again, we face a timepresent and has been refined over the years to become one ofof great change. As technologies such as IoT and AI make great

our major strengths.

strides, society finds itself up against a mountain of issues,

In the 71 years since our founding, we have built a broad

including climate change as well as labor shortages due to theand stable customer base by meeting the needs of all industries

declining birthrate and aging population. Here, we believe thatthrough a wide range of product lines covering the entire

electronics technology will serve as a key technology driving

electronics domain, from electronic devices and components tosolutions to the myriad social and environmental issues the world

manufacturing equipment. As a result, we have built deep andfaces.

complex trust relationships with our customers, who are also our

In 10M, we seize upon these major changes in the businesssuppliers and joint developers. With this, our customer base has

environment and are pressing ahead with the establishment of aevolved into an even stronger “partner base.” This is also a very

new management structure for future change.
First, at the start of 10M, we made changes to the basic

significant source of competitiveness for us.
With regard to the global development of our business, weideas shared by all Group employees. We newly formulated ahave been focused on building overseas networks from an earlylong-term management slogan expressing our vision for thestage, such as becoming the exclusive distributor for advanced

future: “Make a leap forward in the global market as atechnology manufacturers in the U.S. and other countries in thetechnology-based company.”

1950s. This track record and experience have been the basis for

Next, during the 10M period, in order to materialize theour steady overseas expansion, beginning with the establishment

Group’s efforts to solve social and environmental issues, in otherof a U.S. subsidiary in 1986.

words, to work toward sustainability, we identified materiality,

Then, in 1993, around 40 years after the Company’s
founding, we reached a major turning point. It was the dawn of

Chairman and Director

CEO & COO
President, CEO and COO

Isayuki Mae

Shinsuke Tsuchiya

established a system for action, and started full-fledged activities
toward sustainability.

the Internet and personal computers, and there was a great

Today, we recognize that we are entering a period thatsense of anticipation that electronics technology would change

should be positioned as our “third founding.” Going forward, we

the world.

will work to create new value demanded by societies of the future

It was amid this atmosphere of the times that we established abased on our achievements and experience accumulated over

new Management Philosophy with the aim of long-term growth

the 71 years since our founding and our unique electronics

andtechnology.

advancement.

Simultaneously,

as

a

new

form

of

management to pursue this philosophy, we launched the 1st

We ask for your continued support of the Group.

Medium-Term Business Plan (1M), aiming to operate our

03

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04

Chapter 1

Value Creation

The Daitron Group History

In the 71 years since our founding,we have grown alongside the development of theelectronics industry in Japan and around the world2022• Transitioned to the Tokyo Stock Exchange
Prime Market• Locally incorporated a subsidiary in Singapore
2021• Upgraded the Taipei Branch,Taiwan into a
locally-incorporated
subsidiary

Exceeded
50 billion yen
in net sales

Our beginnings in 1952 were as a trading company, and we established a manufacturing subsidiary in 1970
by spinning off our technical division.This was the start of our Group “combined manufacturing and sales
policy” management system that has continued to the present day.
We have established a unique presence in the industry by being an electronics trading company with amanufacturing function, which enables us to meet the needs of our customers in niche fields.
Then, in 2017, for our next stage of growth, we integrated two domestic manufacturing subsidiaries andbegan to create a new revenue base through combined manufacturing and sales as Daitron, achieving rapid
growth alongside the development of the electronics industry.

1998
Upgraded the Malaysian Representative Office to a
locally-incorporated subsidiary

1999
Stock
publicly listed

2006• Listed on the Tokyo Stock Exchange
1st Section• Upgraded the Seoul Branch, Korea into a
locally-incorporated subsidiary

2001
Listed on the Tokyo Stock
Exchange 2nd Section(billion yen)

90

2017
• Integrated two manufacturingsubsidiaries, marking thestart of Daitron Co., Ltd.
• Established Daito-Tec Co., Ltd.

80

70

2008
Locally incorporated a subsidiary in
Bangkok, Thailand
60

2011
Locally incorporated a subsidiary inShenzhen, China

2002
Locally incorporated
subsidiaries inHong Kong and Shanghai,
China

50

40

Exceeded
10 billion yen
in net sales

1986
Locally incorporated a
subsidiary in Oregon, U.S.
30

1970
Spun off the technical division,
established Daito Denshi Kougyou Co., Ltd.

20

1952
Founded10

19521970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

*Bar graph shows net sales over time

■1957
•Moved the head office to Oimatsu-cho, Kita-ku,
Osaka to respond to expanded business.

1950s
1952

•Established Daito Shoji Co., Ltd. in Kita-ku,
Osaka with a capital of 300,000 yen.
•Focused on sales of tape recorders, which
was not common in those days, as a
distributor of Tokyo Telecommunications
Engineering Corporation (now Sony Group
Corporation).

■1954•Moved the head office to Doyama-cho,
Kita-ku, Osaka to respond to expandedbusiness.
•Enhanced the purchasing division for Sonyproducts and started sales of transformers
from TAMURA Corporation and connectors
from Hirose Shokai Co., Ltd. (now Hirose
Electric Co., Ltd.) and Tajimi Electrics Co., Ltd.

Our offices at our founding

05

■1958
•Established the Tokyo Branch in
Hanazono-cho, Shinjuku-ku, Tokyo.

■1959•Started to import and sell wear testing
instruments and measuring instruments, etc.
of U.S.-based Taber Industries as its
Far-Eastern distributor.

1960s
■1969
•Registered the Daitron trademark.

The newly-opened Tokyo Branch

1970s
■1970
•Spun off the technical division, established
Daito Denshi Kougyou Co., Ltd.
■1975
•Opened the Product Control Center inTarumi-cho, Suita-shi, Osaka.

1980s
■1980
•The First Ritto Factory was completed in
Iseochi, Ritto-shi, Shiga.Started the
manufacture of cables and harnesses using
Bendix connectors.

The Product Control Center■1986•Locally incorporated a subsidiary in Oregon, U.S.

■1988
•Changed the trade name from Daito Denshi
Kougyou Co., Ltd. to Daitron Technology Co., Ltd.

1990s
■1991
•The new head office building was completed
in Shima-machi, Chuo-ku, Osaka.
■1993•Established the Management Philosophy.

■1994•Spun off the Electrical Wiring Division andestablished subsidiary Daito Denso Co., Ltd.

Production of Bendix connectors■1998•Changed the trade name to Daito Electron Co.,
Ltd., renovated the Daitron trademark logo
design at the same time.
•Upgraded the Malaysian Representative Office
to a locally-incorporated subsidiary.
•Obtained ISO 9002 certification for ourElectronics Operations Procurement Department(Tokyo and Osaka) and Tama Sales Office.
■1999•Shares made publicly available on theover-the-counter market at the Japan Securities
Dealers Association (securities code: 7609).

2000s■ 2001•Listed on the 2nd Section of the Tokyo Stock Exchange
and the Osaka Securities Exchange, and increased
capital to 2.186 billion yen through a public offering.

Our first day on the Tokyo Stock Exchange■ 2002•Locally incorporated subsidiaries in Hong
Kong and Shanghai, China.

■ 2004•Integrated all the sales offices and Logistics
Center located in Osaka Prefecture into the
new head office building in Miyahara,
Yodogawa-ku, Osaka.

■ 2006•Listed on the 1st Sections of both the Tokyo Stock
Exchange and the Osaka Securities Exchange.
•Upgraded the Seoul Branch, Korea into a
locally-incorporated subsidiary.
■ 2007•Daito Denso Co., Ltd. makes Takawa
Industry Co., Ltd. a subsidiary.
■ 2008•Locally incorporated a subsidiary in
Bangkok, Thailand.

Listing ceremony for the 2nd Section at
TSE Arrows■ 2009•Took over the business for semiconductor
manufacturing equipment from Emtec Co., Ltd.

2010s
■ 2011•Locally incorporated a subsidiary in Shenzhen, China.
■ 2016•Completed Chubu Factory as a core Groupfactory in Ichinomiya-shi, Aichi.
■ 2017•Integrated domestic subsidiaries Daito Denso
Co., Ltd. and Daitron Technology Co., Ltd. andchanged the trade name to Daitron Co., Ltd.
•Made Tanimoto Denso Co., Ltd. a wholly-owned
subsidiary and established Daito-Tec Co., Ltd.

2020s
■ 2021•Daito-Tec Co., Ltd. completed a new factoryin Hiroshima-shi, Hiroshima.
•Upgraded the Taipei Branch, Taiwan into a
locally-incorporated subsidiary.
■ 2022•Transitioned to the Tokyo Stock Exchange
Prime Market.
•Locally incorporated a subsidiary in
Singapore.
■ 2023•Locally incorporated a subsidiary inEindhoven, The Netherlands.

■ 2018•Completed Chubu Second Factory on thepremises of Chubu Factory.

The Chubu Factory
The head office building

Integrated Repor t 2023

Integrated Repor t 2023

06

0

Chapter 1

Value Creation

Financial and Non-Financial Highlights

Financial Information (Consolidated)

Non-Financial Information

Net sales (million yen)

Gross profit (million yen)

100,000

20,000Operating income (million yen)

72,341

61,62160,00059,662

Number of Group
Companies

Worldwide Group
Locations(As of December 31, 2022)(As of April 1, 2023)(As of April 1, 2023)• Japan: 790• Overseas: 152• Japan: 2• Overseas: 10• Sales Offices: 27(Japan: 16, Overseas: 11)• Manufacturing locations: 8(Japan: 7, Overseas: 1)• Representative Offices: 2(Overseas)

Daitron (Non-Consolidated)

Original product ratio

Overseas business ratio(sales base)(sales base)942

17,587

87,63980,000

Number of Employees

Daitron (Consolidated)

8,000

15,00012,81814,281
12,482

57,418

6,051

6,000

11,476

4,196

10,000

4,000

3,546

40,000

12

3,205

37

2,403
5,000

2,000

20,000

0

0
2018

2019

2020

2021

2022

Net income attributable to owners of parent (million yen)
5,000

0
2018

2019

2020

2021

2022

Total assets (million yen)

4,237

63,20258,454
46,24745,75760,0002021

2022

Partner Base

45.0

39.4

41.0

42.8
38.4

41.1

40,00030.0

20,000

15.0

Approx.

6,800

companies(As of December 31, 2022)

16.0

%

(FY2022)

25.5%(FY2022)• Customers: Approx. 5,000 companies• Suppliers: Approx. 1,800 companies

43,114

2,274 2,171
2,000

2020

60.0

4,000

2,953

2019

Shareholders’ equity/ Total assets (%)

80,000

3,000

2018

1,610

1,000

0

0
2018

2019

2020

2021

2022

Net income per share (yen)
400

2019

2020

2021

2022

Net assets per share (yen)381.78

2,500

2,000
300

0
2018

266.18205.25

1,500

2020

2021

2,342.79
2,023.23
1,784.66
1,691.87
1,530.94

120

2022

55

Ratio of female hires(Women as a share of new hires*)

45.6

80 *

%

(2022 results)* Data for new regular employees(not including contract and part-time employees)

60
50

1,000

100

Daitron (Non-Consolidated)
115

90

60

145.242019

Dividends per share (yen)195.86200

2018

Daitron (Non-Consolidated)

Daitron (Non-Consolidated)

Ratio of childcare leave taken

Ratio of outside officers

56.5

%

60

%

(2022 results)(As of March 30, 2023)• Women: 100%
• Men: 41.2%• Directors: 7 (including 4 outside directors)• Corporate Auditors: 3 (including 2 outside corporate auditors)• Total Officers: 10 (including 6 outside officers)

30
500

0

0
2018

2019

2020

2021

2022

0
2018

2019

2020

2021

2022

2018

2019

2020

2021

2022

*Includes 70th period commemorative dividends of 10 yen

07

Integrated Repor t 2023

Integrated Repor t 2023

08

Chapter 1

Value Creation

Our Value Creation Process

We aim to make a leap forward in the global market
as a technology-based company and create new value
for the world
Surrounding megatrends

Efforts in management

Diversifying technologies(Increasing importance of semiconductor
back-end process)Spreading EV & automated driving
Changing business methods

Evolving cloud computing

Future vision to aim forStrengths and superiority of our business method

Business operation

Combined strengths and superiority
only a trading company
with the manufacturing function can have

Responding to a wide range of electronics
demand of the industry for both electronicequipment & components andmanufacturing equipment[Combined manufacturing and sales strengths][Electronic Equipment &Components Business]

Technology

Sales power (marketing power)

Manufacturing power

Product range (broad product portfolio)

Spreading local 5G and[Overwhelming channel power]

6G systems

Supplier channel

Customer channel[Manufacturing Equipment
Business]

Electronic Components andAssembly
Semiconductors
Embedded Systems
Power Supply Equipment
Image-Related Equipment & Parts
Information Systems, etc.

LSI manufacturing equipment
Electronic Materials
Manufacturing Equipment
Optical device manufacturing
equipment
FPD manufacturing equipment
Energy Device Manufacturing
Equipment, etc.

Long-Term Management Slogan

Make a leap forward in the
global market as atechnology-based company
Materiality (sustainability key issues)

Create the Four Values basedon established managementfoundations!
1 Partner value creation
2 Human resource value creation

Fully spreading automatedequipment
Further changing manufacturing sites

2050 carbon neutrality

3 Social & environmental value creation

Promoting fourbasic strategic
policies*Electronics is one of the key technologies

1

Business structure reform

2

Maximize merger synergy

3

Accelerate growth in focus areas and markets

4

Strategy toward sustained growth[Growth Strategy]

We will drive 10M (the 10th Medium-Term Business Plan),aiming for sustained expansion of
net sales and operating income

4 Economic value creation

Management foundations establishment

Management bases
Foundation Spirit / Code of Conduct[Philosophy
system]Management Philosophy
Group Statement

09

Integrated Repor t 2023

[Strengths]

Combined manufacturing
and sales

Business structurePartner baseHigh profitability

Field capability

See pages 11-12 for details

Our Basic Policy on Corporate Governance[Managementfoundations]

Compliance and Corporate Ethics
Risk management
CSR Basic Policy/Materiality

Integrated Repor t 2023

10

Chapter 1

Value Creation

The Source of Our Value Creation 1 Strengths

As a technology-based company, Daitron Group

Combinedmanufacturing
and sales
Number ofsales offices*

Original productratio

28 16.0

Number of
manufacturinglocations8%(Japan :16; Overseas :12)
* Includes Representative
Offices(Japan : 7; Overseas : 1)

14.0

12.1

11.7

20.3

19.1

18.3

15.8

been particular about being responsive to our customers’ wide
range of needs. Having frequently faced the reality that many needs
cannot be met only by purchasing products from suppliers, we

2021

strengthened our manufacturing capabilities through the establish-

By constantly refining our field capabilities, we aim toment of manufacturing subsidiaries and other measures. As abecome the corporate group with the No. 1 customer

result, Daitron Group has become a corporate group with bothsatisfaction.

manufacturing and trading company functions, and our current
management is based on combined manufacturing and sales
Though the original product ratio, one of the KPIs in our

16.0

growth strategy, is on the decline, net sales are growing. This ispartly due to the remarkable growth in sales of purchased products

Partner baseships make up what we call our “partner
base.” This is one of the major strengths
promotingThrough combined manufacturing andsales management, establishing complex
business relationships

Partnercompanies

Toward comprehensive business fromelectronic equipment and components to
manufacturing equipmentAs
customers

range of fields and domains, from upstream to downstream,High
profitability

20.1

%

Accelerating product development tostrengthen Daitron’s brand power

Integrated Repor t 2023

Manufacturing Equipment
Business

27.8%

Electronic Equipment andComponents Business

72.2

As
suppliers

facturing and sales, we have established afoundation to ensure an overwhelmingly higher
profit ratio compared to general electronic traders.
From the viewpoint of maintaining and

17.5

14.2

12.8

12.4

21.5

20.3

20.0

2018

2019

2020

strengthening its high profitability base, we haveset a goal of securing a gross profit ratio of 20%,and this has generally trended around 20%.

11.4
19.7

20.1

2021

2022

As
development
partners

Gross profit: billion yen

11Component ratio for sales by product segment

By driving management through combined manu-

Gross profit ratio

DaitronDeveloping competitive suppliers(converting customers into suppliers)

enabling total success from upstream todownstream of electronics%

partners. These complex business relation-

combined manufacturing and sales.

cantly expands its base, our Group’s business covers a wide
offering a wide range of business opportunities for the future.

customers, suppliers, and developmentbyfacilities and equipment. As the electronics market signifi-

Daitron’s unique partner basehave many business partners who are

Business structure

The Manufacturing Equipment Business includes
equipment installed on production lines at manufacturers’

includes products installed in and incorporated into various

relationship with their business partners, we

gainedManufacturing Equipment Business.

Equipment and Components Business, on the other hand,due to our longstanding efforts in this area.

haveElectronic Equipment and Components Business and thematerials, optical devices, energy devices, etc. The Electronic

partners are extremely unique and strong

we

Our business structure is broadly divided into two areas: theplants and used to produce semiconductors, electronic

2022

Our Group’s relationships with our businessthat

expertise. We are proud that our field capabilities providing
major reasons why customers prefer us.

Original product net sales: billion yen
Original product ratio (net sales basis): %While many companies have only a single

sales, advanced marketing capability, and a high level ofcustomers with these three functions combined is one of thefrom combined manufacturing and sales.
2020

management, we have cultivated thorough customer-oriented

to provide close
customer orientation, marketing
capability,and high level of expertiseby suppliers despite a certain level of needs, and have graduallyachieve the 25% original product ratio target and expand synergies

2019

In the course of promoting combined manufacturing and sales

decided to develop and manufacture products in areas not covered

amid recent rapid market expansion. We will continue to strive to

2018

Field
capability

exerting great synergy from the integration of these two functions.

11.4

10.4

Starting out as an electronics trading company, we have always

has built highly competitive, unique strengths

Gross profit ratio: %Integrated Repor t 2023

12

Chapter 1

Value Creation

The Source of Our Value Creation 2 Our Business Method

Further developing our own unique business method
as a technology-based electronics company under the
combined manufacturing and sales policy
The Daitron Group is a global corporate group with a total of 11 Group companies
in Japan and overseas. We are centered on Daitron Co., Ltd., which has bothCreates high added-value by combined
manufacturing and sales functions as thecore of the GroupThrough the merger of three companies, Daitron Co., Ltd. has

Provides comprehensive
support from“production” to “use”
in the electronics industry

With our approximately 600

begun to move forward as an organization capable of creating

We support the electronics

major business partners andnew value by integrating the information and expertise of a
trading company and technological development capabilities

industry over a wide range of

5,000 business partners total,

areas with our electronic

mainly consisting of customers

related to electronic equipment and components and manufactur-

equipment and components

in Japan, we currently enjoy

ing equipment. At the core of this Group driving combined
manufacturing and sales, we take the lead in all functions, fromused in diverse business sites
and products as well as various

considerable customer assets.
This large number of accounts

technology development to manufacturing, sales, andmanufacturing equipment

mitigates the impact ofmaintenance, both in Japan and overseas.

required in production.

fluctuations in theperformance of individual
customers and contributes tosecuring stable sales.

trading company and manufacturer functions.
We offer a broad product lineup in the electronics field through its product

Trusted customer assets,a large number ofaccounts

lineup in the two segments of Electronic Equipment and Components and ManuForesight to uncover cutting-edge products and promising markets

facturing Equipment.

Marketing ability based on customer needs

In the trading company function, we have discovered around 1,800 suppliers from all over the world, while we have expanded the number of customers to

Procurement Source

about 5,000 companies both in Japan and overseas. The scale of these two wingsof our business forms the partner base that supports our Group’s stable growth.
In the manufacturing function, we develop and manufacture products lever-Merged with two manufacturing subsidiaries Daitron Co., Ltd. Jan. 2017-

Japanesemanufacturers

we should address.
Through this combined manufacturing and sales management, we continue
a unique history as a technology-based company in the electronics industry.

Japanese market

Europe Group Company

DAITRON (NETHERLANDS) B.V.
Asian Group Company

Asianmanufacturers

CustomerCutting-edge logistics system

Daito-Tec Co., Ltd.
DAITRON INC.

American and European
manufacturers

Product Lines

Domestic Manufacturing Group Company
US Group Company

aging our unique marketing capabilities or jointly develop products with suppliers,
focusing on niche markets that our suppliers do not address and that we believe

Sales Function

Manufacturing & Processing Function

DAITRON (KOREA) CO., LTD.
DAITRON (H.K.) CO., LTD.
DAITRON (SHANGHAI) CO., LTD.

Electronic
Equipment
andComponents
Business
Manufacturing
Equipment
Business

American andEuropean market

Asian market

DAITRON (SHENZHEN) CO., LTD.
DAITRON（TAIWAN）CO., LTD.

Total number ofbusiness partners:
Approx. 1,800 companies(Major business partners: Approx. 200 companies)

13

Integrated Repor t 2023

DAITRON (MALAYSIA) SDN. BHD.
DAITRON (THAILAND) CO., LTD.
DAITRON (SINGAPORE) PTE. LTD.

Total number ofbusiness partners:
Approx. 5,000 companies(Major business partners: Approx. 600 companies)

Integrated Repor t 2023

14

Chapter 2

Growth Strategy

President Message

By mastering electronics as a key
technology for achieving “2050 carbon

President, CEO and COO

Shinsuke
Tsuchiyaneutral,” we will contribute to resolvingsocial and environmental issues

Business environment

Performance trends

The electronics industry is pushing toward mid- to long-term growth trends

15

Double-digit growth in net sales and operating income, marking record highs for two consecutive years

We belong to the electronics industry, which is entering a

as 5G & 6G, which is then analyzed by AI to automatically

We are pressing forward under the 10th Medium-Term Businessin net sales and a 44.2% increase in operating income over theperiod of expansion and growth in the medium to long term.

perform the necessary processing. Beyond this, the Jap-

Plan (10M), which began in fiscal 2021.

previous year, we are gaining momentum toward our long-term

This is despite some concerns in the short term, such as theanese government's Society 5.0 plan for a future society

In fiscal 2021, the first year under 10M, we were able totarget of becoming a company with consolidated sales of 100 bil-lingering global shortage of semiconductors and electronic

envisions a future with smart factories and logistics sites,

achieve record highs in both net sales and operating income bylion yen. We aim to achieve this target as soon as possible and tocomponents, a lull in the shift toward digital technologies

smart cities for public services across entire cities, smart

achieving growth surpassing the residual effects of the COVID-19

sustain high growth in fiscal 2023, the final year of the 10M plan.

accelerated by the COVID-19 pandemic, and semiconductor

homes, and at the individual level, wearable devices. Today,

pandemic.

production entering an adjustment phase in some areas.

amid these diverse efforts to create the future unfold in every

In fiscal 2022, the second year, both the electronic equip-

With respect to the return of profits to shareholders, we
strive to pay stable dividends on an ongoing basis, based on

With the rapid development of cutting-edge ICT-relat-

industry, our Group’s business partners are spread acrossment and components and manufacturing equipment sectors

a payout ratio of 30%. Following on from fiscal 2021, we haveed technologies such as IoT, AI, 5G & 6G, and Big Data, thea wide range of industries, from automobiles and electron-

performed well as demand continued to grow significantly due toincreased the dividend for fiscal 2022 amid a significant increasedemand base in the electronics industry is expanding signifi-

ics to the three commodities (food, pharmaceuticals, andactive capital investment in IoT, AI, 5G & 6G-related fields, despitein sales and profit, and have set the annual dividend per share forcantly. For example, automation (robotics) is advancing in all

cosmetics), construction, logistics, e-commerce, and more.

the impact of the global semiconductor and electronic component

fiscal 2022 at 115 yen (a year-on-year increase of 35 yen). Going

industries as they utilize IoT technology to collect information

These trends are growing in scale and speed with each

shortages. As a result, we were able to achieve record consolidat-

forward, we will continue to consider ways to enhance sharehold-(big data) from sensors mounted on various objects throughpassing year, opening up unprecedented growth opportuni-

ed results in fiscal 2022 for the second consecutive year, both iner returns on an ad hoc basis, including a review of our dividend

high-speed, large-capacity communication networks suchties ahead of our Group.

terms of net sales and operating income. With a 21.1% increase

standards.

Integrated Repor t 2023

Integrated Repor t 2023

16

Chapter 2

Growth Strategy

President Message

Progress of the Medium-Term Business Plan

Management aimed at both securing profits and future investment based on the basic policy of “continued profitable growth”

Driving change in business portfolios through the creation of new businessOur basic policy in 10M is “continued profitable growth.” Here, ourand second (fiscal 2022) years of the 10M plan, with double-digit

In the electronics industry, innovations with technologicalcreation of new businesses centering on four projects:

aims are sustained expansion of net sales and operating income andincreases in both. In addition, the gross profit margin is around thediscontinuity are taking place frequently, and in order tothe Automotive Project and Medical Project launched insecuring 20% gross profit ratio. We are also simultaneously estimat-

20% level, at 19.7% in fiscal 2021 and 20.1% in fiscal 2022. The

ensure future growth, we must respond appropriately

the previous medium-term business plan, and the Battery

ing an annual SGA increase of around 3-5% to proactively promotereason for the margin being slightly below 20% in fiscal 2021 is thatto these changes. To this end, we are working to create

Project (a sub-project of the Automotive Project) andinvestments forming the foundation of sustained growth. In otherthe growth of purchased products exceeded the growth of original

new business and gradually bring about a change to its

the Software Business Project launched in the current

words, our management aims to both secure profits and invest in the

products amid the boom in the overall electronics industry.

business portfolio.

medium-term business plan. The Automotive Project andfuture.

Also, SGA expenses increased 11.2% year on year in fiscal
Looking at the results to date, we have sustained highgrowth in both net sales and operating income in the first (fiscal 2021)

The Green Facility Department (GFD), which had

Medical Project have already achieved a certain level of2021 and 14.4% year on year in fiscal 2022, partly due to proactive

been a new business cultivated under the previous medi-

success, while we are currently taking actions for the Bat-

investments in human resources and technology development.

um-term business plan, now contributes to profitability as

tery Project and Software Business Project to generatea stable growth business. Currently, we are promoting theresults during the next medium-term business plan.

Basic policy in 10M
Continued profitable growth
Aim at sustained expansion of net
sales & operating income throughmanagement focusing on growthpotential

Continue to push forward withbusiness structure reform to secure
20% gross profit ratio

Estimate an annual SGA increase by around
3-5% to promote investments forming thefoundation of sustained growth (in humanresources, technology development, etc.)

Pursuing three management indicators to achieve both financial stability and high profitability/growth
In pursuit of continued profitable growth, we have set threemanagement indicators as targets within the 10M plan.
For our equity ratio, ROA, and ROE targets ofAccelerated strengthening of original product development capabilities and overseas business development capabilities

50%, 6%, and 12% or more, respectively, these indicators were 41.1%, 7.0%, and 17.5% in fiscal 2022.
By continuing to aim for levels that exceed our targets,

Looking ahead, KPIs that we are emphasizing in promoting

products was relatively low due to higher-than-expected growth in

we will strive to achieve both a stable financial base andcontinued profitable growth over the medium to long term are thepurchased products, but the absolute net sales value grew. In fis-high profitability and growth, promoting management that“original product ratio” and the “overseas business ratio” (both oncal 2023, the final year of the 10M plan, we will continue our efforts

will earn the trust and support of our stakeholders.

a net sales basis).

to achieve this target.

The “original product ratio” was 15.8% in fiscal 2021

The “overseas business ratio” is showing steady growth, atand 16.0% in fiscal 2022, compared to a target of 25%. Due to

23.3% in fiscal 2021 and 25.5% in fiscal 2022, on track to achievea booming electronics industry, the share of net sales for original

our target of 30%. However, we have only set 30% as a milestonealong the way to achieving 50% in the future.
In the pursuit of these two KPIs, i.e. in the accelerated

Target Management Indices of 10M
Striving to reach higher ROA and ROE targets and a similar equity
ratio target versus the previous medium-term business plan
Equity Ratio

ROA

ROE

TargetTargetTarget

50% or more 6% or more 12% or more
Fiscal 2022 results

Fiscal 2022 results

Fiscal 2022 results

41.1%

7.0%

17.5%

Sustainability Management

Aiming to contribute to the realization of a sustainable society through our businesses using electronics technologies

strengthening of original product development capabilities and overseas business development capabilities, we established the GroupIn the spring of 2022, we made steady progress incapital management going forward, we are improving

Business Promotion Department under the direct supervision of thedeveloping a mechanism and structure for sustainability

our environments and various institutions related to work

President on January 1, 2023. This new section is responsible formanagement, including re-examining its sustainability

styles, including the introduction of new performanceGroup sales strategies and business planning. In addition, we havesystem, formulating its approach to sustainability, identify-

evaluations, further promotion of diversity, and systemati-

boldly restructured our organization by placing the section respon-ing materiality (sustainability key issues), and establishingzation of education and training systems.

sible for product development strategy under the direct purview of

the Sustainability Committee.

the President of D&P Company. By doing so, we hope to accelerate

Thereafter, five subcommittee groups based on

In the firm belief that electronics technologies willbe the key technologies for reaching carbon neutrality bymateriality were established under the umbrella of the2050, we will promote sustainability initiatives and con-Sustainability Committee to study the content of activities

tribute to the realization of a broadly sustainable society

a branch and newly-established a local subsidiary in the Nether-and KPIs to be pursued. Looking ahead, we will workthrough our business activities.

lands. By strengthening of these overseas networks, we will makediligently to establish KPIs and announce their progress

further progress in the next medium-term business plan.

as soon as possible.

our management and make more daring decisions.
With regard to overseas expansion, we locally incorporated

We hope you will look forward to our managementof the Daitron Group.

In addition, with the aim of strengthening human17

Integrated Repor t 2023

Integrated Repor t 2023

18

Chapter 2

Growth Strategy

Division Manager-Business Administration Message

To Maximize the Group’s Corporate Value
The Business Administration Division’s mission is to provide

plan that follows thereafter (12M).

we are conducting local surveys toward launching new production

comprehensive support for improving the Group's corporate value

The current core system was developed around oursites (factories) overseas. This site development process always

The Business Administration Division plays an extremely importantcomponents business, based on the concept of how efficiently weincludes withdrawal criteria to prevent the risk of growing losses

supporting role for all aspects of our corporate value. In other

could sell large quantities of high-mix, high-volume components

due to a delayed withdrawal decision.

words, we see the division’s mission as “how we can improve thewhile meeting customer demand. In recent years, however, theMeanwhile, ROA and ROE, which indicate high capitalGroup’s corporate value.”nature of our business has changed from supplying individual

efficiency, have already reached and exceeded their targets ofIn order to fulfill this mission, in the 10th Medium-Termcomponents to providing comprehensive solutions, e.g., system

7.0% and 17.5%, respectively (both targets are for the fiscal year

Business Plan (10M), the Business Administration Division has

projects and large-scale projects in which we are responsible forending December 31, 2022). We will continue to improve capitalbeen taking action under the following three policies: 1. Carrying

the overall construction of the entire facility. In the next core system,

efficiency by simultaneously promoting financial soundness andout functional strategies for business promotion, 2. Enhancing

we will pursue high productivity suited to this business model, whilestrengthening profitability.

corporate governance, and 3. Enhancing Group headquarters

adding a DX perspective that will lead to further business modelThrough the promotion of this financial strategy we intend

functions.

reform. We firmly believe that this will lead to securing and improving

to maximize the corporate value of us, which will lead to enhanced

the competitiveness of the Group over the next 10 to 20 years.

return of profits to shareholders and improved compensation ofPlacing top priority on human resources strategy as a

Hajimu
Mouri

Group employees.

foundation for business promotion

Supporting investment in future growth and measured returns

In the first policy, carrying out functional strategies for businessto shareholders via financial strategy

Accelerating sustainability initiatives for the realization of apromotion, we believe that we must place the greatest emphasis on

Our financial strategy in 10M includes the following three financial

sustainable society through our business activities

human resources strategy. Electronics technologies are essential

indicator targets: an equity ratio of 50% or more, ROA of 6% orIn our second policy, enhancing corporate governance, we aredetermine the appropriateness of each and make adjustments as

for all industries to create innovation going forward, and we

more, and ROE of 12% or more.

making efforts to accelerate sustainability initiatives in particular. In

necessary. Please note that KPIs and other information will not bereleased to the public until after this trial period.

continue to grow rapidly by providing diverse solutions in the midst

The equity ratio, which indicates financial soundness,order to address the mountain of diverse social and environmentalof this trend. In order to ensure sustainable growth while meeting

improved by 2.7 percentage points to 41.1% for the year ended

issues, including climate change, we began by establishing adiverse industry needs going forward, securing and developing a

December 31, 2022 from 38.4% for the year ended December

fundamental structure.

diverse workforce is an absolute requirement.

31, 2021. In addition to the increase in accounts receivable andIn fiscal 2022, we identified materiality (sustainability key

at Daitron Group, which aims to be a technology-based company

Against this backdrop, we are actively promoting

accounts payable due to rapid our performance growth, inventories

issues) and established a Sustainability Committee. Subcommittee

in the electronics industry, recognize that we have a great mission

the empowerment of women and senior human resources,

have tended to expand to ensure we can continue to meet stronggroups were then established for each of the five material issues,

to contribute to the realization of carbon neutrality through ourstrengthening the employment of handicapped people and foreign

customer demand in a timely and accurate manner amid market

and each subcommittee set target KPIs and formulated action

business activities. Going forward, we will fulfill this mission byhuman resources, and expanding mid-career recruitment. In

shortages since two years ago of some electronic components,

plans to achieve these. In fiscal 2023, we plan to conduct activities

actively promoting sustainability management.

particular, the rapidly increasing number of mid-career hires has

including semiconductors. Despite these circumstances, we havebased on these KPIs and action plans, and at the end of thebrought in additional employees with a range of experiences,

secured a healthy level of over 40% and will continue to work

year, we will tally the results and identify areas for improvement tocreating a chemical reaction in each department and generating

to reduce management costs and total assets with the goal ofmany different growth opportunities. Still, we must always cherish

achieving 50%. With respect to assets, we believe we are efficiently

our Daitron DNA and ensure it does not fade away. Whether new

managing inventories based on maintaining appropriate levels

graduates or mid-career hires, we conduct systematic education

rather than excess inventory.

1 Carrying out functional strategies for business promotion
1 Human resources strategy

and training to ensure that all Group employees share our concepts,

At the Group, we are aggressively making growth

our Management Philosophy, our Group Statement, our vision, andinvestments based on a foundation of financial soundness.

2 IT strategy

other elements forming the foundation of our Group’s DNA.

Specifically, we are promoting personnel investments and expanding

3 Financial strategy

networks in Japan and overseas as foundations for growth. Within

4 PR/IR strategy

For securing and improving competitiveness over the medium

personnel investments, we are aggressively investing in both hiring

to long term, IT strategy is an indispensable asset

and development in the aforementioned human resources strategy.

1 Enhancing governance through committee activities

Our core system has already been in place for over a decade, andAs for expanding networks, we are taking particular action to

2 Complying with the Corporate Governance

we plan to begin development of the next core system during thegrow our global business, the key to mid- to long-term growth, by

next medium-term business plan (11M), and to implement andprogressively converting existing bases into local subsidiaries andrealize the benefits of the system during the medium-term businessestablishing new local subsidiaries in Asia and Europe. Furthermore,

Integrated Repor t 2023

It is beyond a shadow of a doubt that electronics
technologies are key for reaching carbon neutrality. That is why we

As we take these actions, we hope to have theunderstanding and support of all of our stakeholders.

Overview of the Business Administration Policy in the 10th Medium-Term Business Plan (10M)

2 Enhancing corporate governancePartial breakdown

Overview ofhumanresources
strategy

Major actions
toward achieving
10M financial
indicator targets• Introducing a new performance evaluation system• Promoting diversity (empowering women and senior human resources,
hiring handicapped and foreign human resources)• Systematizing education and training systems (enhancing education,
including group training for mid-career hires)• Improving environments and systems for new work styles

10M financial indicator targets: Equity ratio of 50% or more, ROA of 6% or more,
ROE of 12% or more
• Reducing management costs• Reducing total assets (with a foundation of enhancing funding commitmentline amounts and strengthening preventive measures to handle emergencies)

Code toward listing on the Prime Market

3 Enhancing Group headquarters functions
1 Enhancing compliance capability with legal systems
2 Supporting Group companies

19

Senior Managing Director
Division Manager-Business
Administration

Major
committee
activities• Compliance Committee• Group Risk Management Committee• Internal Control Committee• Sustainability Committee (established fiscal 2022)

Integrated Repor t 2023

20

Chapter 2

Growth Strategy

Overview of Medium-Term Business Plan 1 Overall Framework1

10M (Fiscal 2021 - 2023)
Basic Strategic Policies

Promote business structure reform!

2

10M (Fiscal 2021 - 2023)
Basic Strategic Policies

Maximize the merger synergy!
Investment strategy for maximized synergy

Manufacturing/
Development“Stability” of business + New “challenge”
KPI for Stability & Challenge Composition ratio by businessBusiness
structurereformContinued
profitable
growth“Profit”（highly profitable makeup）
KPI for Profit

M&S Company

Original product ratio

Globally develop new markets
and customers by three divisions
sharing information andstrategies and cooperating witheach other

Overseas business ratio

10M
Shift to personnel investments forreinforcement of development,
manufacture, and sales organizations andhuman resources both at home and abroad

GlobalOverseas group

History of past 10 years

Future effort

Pursued the three axes of “Stability,” “Profit,” and “Growth”
based on the three KPIs (key performance indicators), or
business structure related indices, aiming for a reform intoa business structure that enables stable and sustained
growth not affected by the business cycle or demand in
the electronics industry including the silicon cycle• To promote business structure reform continuously
pursuing the three KPIs
• To establish an axis of “Challenge” as a “new target tofurther new business creation”

semiconductor

Profit Axis

Composition ratio by business

Original product ratio

5Growth Axis

30%

Electronic
Equipment &Components(sales base)(sales base)2023 target

2023 target

25

%

30

65

Composition ratio by business ……… Sales composition ratio of 5% is set as a new KPI target measuring new business creation(net sales of the Green Facility Department, expanded from efforts through the previous
medium-term business plan [9M], is the main business within the current “new business” category)

Original product ratio ……………… Target of 25% is set after changing tabulation method to include only Group original products
and products developed collaboratively with partner companies(some imported products were classified as “Original Products” in the previous medium-termbusiness plan [9M], but are now excluded)

Overseas business ratio …………… Target of 30% is set, the same as in the previous medium-term business plan (9M)

Integrated Repor t 2023

IoT
(including
sensor related)

5G&6G

data
centerrailroad
vehiclereleated

10M (Fiscal 2021 - 2023)
Basic Strategic Policies

4

medicalenergymarineaerospace(including
battery market)

In 10M, we are more clearly
defining focus areas andmarkets than ever before andconcentrating our management
resources on these. As the
COVID-19 pandemic leads toaccelerated digital transformation (DX), more and moremarket areas are expected tosee growth earlier than
anticipated. We will also assess
these circumstances toaccelerate growth.

Increase power toward sustained growth!

%

%

21

computingrelatedOverseas business ratio%

Manufacturing &Inspection
Equipment(including robots
and automatedequipment)

automotive

communication

Main focus areas and markets

Stability andChallenge Axis

(sales base)Define focus areas and markets to accelerate growth!
industrial
equipment

Three KPIs for business structure reform

2023 targetNewbusiness3

10M (Fiscal 2021 - 2023)
Basic Strategic Policies

9M
Priority to capital investments including
maintenance and reinforcement of
manufacture and development locations
focusing on Chubu Factory as the Group’s
core manufacturing site
Such investments settled in 9M

Maximized synergy“Growth”（increase in trade）
KPI for Growth

Sales /Marketing

D&P Company

Launched Daitron Co., Ltd. in January
2017 as a result of integrating threecompanies (the Company and two
domestic manufacturing subsidiaries),with the aim of integrating
manufacturing and sales functions on
the global level.
As efforts to integrate manufacturing
and sales are still in progress, we willcontinue to aim to maximize thesynergy effects of the integration in
the 10th Medium-Term Business Plan
(10M). In doing so, we intend topromote an investment strategy
centered on human resource
development in 10M.

Increase marketing
power!

1 Reinforcement and steady

Increasemanufacturing power!

3 Reinforcement of

Increase new businesscreation power!

5 Development of

Increase the powerof corporate divisions!

6 Reform of businessgrowth of domestic businessproduction system

2 Growth of overseas

business
4 Reinforcement of original

product businessContinued
on next
page

new businesssupport function

Integrated Repor t 2023

22

Chapter 2

Growth Strategy

Overview of Medium-Term Business Plan 2 Specific Strategy

Increase marketing power!

Increase manufacturing power!

One of the strengths of the Daitron Group having developed as an engineering trading company is the marketing power since its
formation. We will aim for further growth in proposal power by newly capitalizing on DX in business support and technical support forcustomers, continuously placing importance on community-based sales, which is our forte. As for our location deployment, we aremaking steady progress to establish locations and expand our overseas business, a key element of our growth strategy for the future.

We are actively working to enhance our original product business on the foundation formed by our production system, centered on our
Chubu Factory, and our technology development system. In terms of production, we are strengthening our partnership with the new
Daito-Tec Co., Ltd. factory in the pursuit of efficiency and profitability under the slogan of “all factories profitable” Meanwhile, in terms ofdevelopment, we are making steady progress in preparations for focusing development on standard products to be rolled out worldwide.

1

3

Reinforcement and steady growth of domestic business

2

Reinforcement of production system

Further strengthening and deepeningof relations with focus customers• Strengthening of customer base: Response focusing on customers expected to grow and expand• Deepening of relations with customers: By deployment of “All-Daitron” products

System strengthening focusing on
Chubu Factory• Concentrated production mainly of products requiring advanced technologies and high quality(continuously from 9M)• Construction of cooperation system with Daito-Tec Co., Ltd.

Further strengthening of "locally based sales
activities" and new development in promising areas• Personnel reinforcement at and promotion to sales offices of promising locations• Examination of establishment of new locations in promising areas (such as
Hokkaido and Shikoku)

Promotion of multifaceted
cost-reduction measures• Pursuit of profitability by factory/product/business & partnership with the new Daito-Tec Co., Ltd.
factory• Continuous cost-reduction activities through promotion of “standardization”

Strengthening of
earnings structure• Expansion of OEM business• Strengthening of online sales (agency operations)

Growth of overseas businessSelection of focus customers/
markets to deepen/develop,
and working more actively on them

• Image business related in Southeast Asia
• Electronic merchandise related in China• OLED market related in Korea• Electronic parts business related in Europe and U.S.A., etc

Expanding overseas network

4

Strengthening of systems centering on Chubu Factory technical divisions

Sales location

Manufacturing location• Examination of establishing new satellite offices in U.S.A. and China• Making main Southeast Asian locations subsidiaries• Examination of manufacturing location in Southeast Asia
(candidate: Vietnam)

Locally incorporating a subsidiary in Singapore
Examining local incorporation of Hanoi and Manila Representative Offices

Reinforcement of original product business

More emphasis on product/
technology development• Strengthening of development of standard products for the global market,
suitable for mass production/planned production• Promotion of development for achieving challenges by segment

Electronic
Components
business

Examination toward the next medium-termbusiness plan

• Newly establishing locations in the EU• Expansion of original products in collaboration with partner companies

Locally incorporating a subsidiary in The Netherlands

Development and Production systems
in Chubu Factory

Domestic and global location deployment

China (Shanghai)
The Netherlands (Eindhoven)

Thailand (Bangkok)

U.S.A. (Oregon)
U.S.A. (Nebraska)

Taiwan (Taipei)
Philippines (Manila)
China (Hong Kong)
Vietnam (Hanoi)
Malaysia(Kuala Lumpur)
Singapore

Overseas location(including subsidiaries)

Malaysia (Penang)

Domestic network
expansion
Sales office
Sales office +Tama
Logistic Center Matsumoto
Kanazawa
Factories
NonoichiKyoto
Kameoka
Kobe
Hiroshima
Fukuoka

In preparation/under investigation*

Circled areas are under examination for establishing new locations

Kumamoto

23

Integrated Repor t 2023

Example of electronic components businessoriginal productChubu First FactorySouth Korea (Seoul)

China (Shenzhen)(under investigation) India

Component: underwater connectors
Image: successor of Kirari NINJA, IoT sensor
Power supply: Inverter transless UPS, next power supply development

Osaka

Chubu Second Factoryunderwater connector

Kirari-NINJA-DS

IoT sensor

Inverter tranceless UPS

Sendai
Utsunomiya
Ibaraki
Kunitachi
Tokyo
Yokohama
Shizuoka
NagoyaIchinomiya (core factory)
Hashima
Ritto

Electronic equipment & components
production site (in First Factory)

Manufacturing equipment production
site (in Second Factory)Integrated Repor t 2023

24

Chapter 2

Growth Strategy

Overview of Medium-Term Business Plan 2 Specific Strategy

Increase new business creation power!

Increase the power of corporate divisions!

Based on our successes in the previous medium-term business plan (9M), we are further strengthening our efforts to create new
businesses going forward. By identifying areas with growth potential and concentrating management resources on these, we arelaunching new business that will provide a new revenue base. Since the 10M period, we have launched battery and software projects
and accelerated efforts to create new business by strengthening market research and sales promotion activities by subcommittees.

Recognizing that a strong management base to support sustainable growth is essential, we are pushing forward with reforming thebusiness support function. In strengthening human resource capabilities, we are systematizing and reviewing our education and training
system as needed, with the aim of creating a corporate group in which a diverse range of human resources actively demonstrate theirabilities. In enhancing corporate governance, we are also building and enhancing our sustainability management promotion system.

56

Development of new business

Reform of business support function
Strengthening human resource capabilities: Seek revitalization of the organization through diversity

Promote cultivation of and groundwork for new business which is expected to provide a new revenue base
Projects currently going forward

Target sales size
Toward creation of
5 to 10 billion yen
business

Automotive Project

Aim at new market creation by developmentof products and technologies responding toaccelerated electrification and automatization of automobiles

Medical Project

Target area

Battery ProjectMarkets andmerchandise notworked on before

Software Business Project

Aim at integration of hardware and software
business through the acquisition of software
technologies and skills in the areas related
to the hardware devices and equipment
handled by the Group: Started during the 9M period: Newly launched from the 10M period

Results from the Green Facility Department (GFD), a new business success case in the previous medium-term business plan (9M)
The Group, having noticed the growthpotential of the power equipment related
market, launched the Green Facility
Department (GFD) in January 2015 andestablished a “one-stop solution” system
for not only selling uninterruptible power
supply (UPS) as a single item but also
providing consistent services for UPS
systems from system design to work
management, startup work, andmaintenance after introduction.
As a result, it has beensuccessfully transformed into growthbusiness demonstrating a steadily
expanding in both sales and profit, withall changes affected by orders for large
projects.

Review of personnel
evaluation system• Stable operation of merit rating systemand penetration of requirement
definition document by rank
• Job performance evaluation(introduction of revised target
management cards), promotion
system, etc.

Diversity employment
and empowerment

Enhancement of humanresources development• Systematic hiring of new
graduates (including foreign
human resources) andmid-career employees• Empowerment of foreign,senior, and handicappedhuman resources• Systematic education andtraining to develop world-classhuman resources• Enhancement of developmentof female managers• Enhancement of career-path
systemResponse to
the COVID-19
era and working
practices reforms• Institutional design for diverse
work styles eyeing the post
COVID-19 era (introduction ofstaggered work andwork-from-home systems)

Main training and education programs
New employee training (at employment, 3-month intermediate follow-up, 6-month follow-up)

The GFD one-stop solution system

Young employee training (at their 3rd to 4th years)

Establishment of “one-stop solution” system in power supply system related market

Training by rank (General Manager class, Section Manager class, and Assistant Manager class)
New manager training

Sales ofUPS systems

Introduction
consulting &system design

UPS(single-phase/
three-phase)

Related products(peripheral board,storage cell, PDU, rack)etc.

Female manager training

Regular maintenanceManagement course change follow-up training

Emergency response

Career design training

etc.

Features of
UPS system

GFD Net sales /Orders changeWorkmanagement &start-up work

Maintenance• High reliability as adopted by world's data centers• Playing active parts in power protection of important IT devices• Greatly useful in HPC (high performance computing) protection• Playing active parts in industrial machinery assembly and marine use

New employees training (2019)

Voluntary training
Business Administration Division educational program (internal e-learning)
Personal development (such as correspondence course, e-learning, TOEIC internal test)

Employment
data(most recent
3 years)2020

16 (new graduates), 25 (mid-career hires)

2021

25 (new graduates), 30 (mid-career hires)

2022

20 (new graduates), 50 (mid-career hires)

9,225

Strengthening corporate divisions: Building foundations eyeing the next era

Net sales (million yen)Orders (million yen)

6,181
Jan. 2015
GFD newly
established

3,685

443
397 4392014

427 590
2015
8M

2016

5,394
3,974
2,481
3,312
2,070

3,360

1,994
1,154
2017

1,670
1,326

2018

2019
9M

2020

2021

IT strategy

Financing strategy

PR strategy

Governance

Sustainability Management

Development ofroad map toward
the next core system

Total assets
compression andmanagement
cost reduction

Increasing
recognition ofDaitron brand

Furtherstrengthening ofcorporate
governance

Building andstrengthening of
the sustainability
promotion system

2022

10M

EATON UPS

*From fiscal 2022, figures are calculated based on application of the Accounting Standard for Revenue Recognition

25

Integrated Repor t 2023

Integrated Repor t 2023

26

Chapter 3

Business Strategy

Business Management System and Segment Information

We operate our two product segments through threeorganizations: two companies and one division.
We operate two product segments: the Electronic Equipment and Components Business and the Manufacturing Equipment
Business. Business operation is comprised of three organizations: M&S Company, which handles domestic sales and marketing,
D&P Company, which handles domestic manufacturing, and Global Business Division. All three of these organizations provide
comprehensive support across the two product segments mentioned above (see figure right). By taking a comprehensive approach,
we are able to provide our clients with solutions that enhance the expertise emphasized by individual organizations, such as marketing, technology, and global development capabilities.

1 Status by Product Segment

Segment Information

Component ratio for sales by product segment

Electronic Equipment and Components

Electronic Components & Assembly Products

26.7%

Other Electronic Equipment and Components

87,639Overseas business

Overseas business

25.2%

29.7%

Component
ratio
for sales

5,443

6,269
6,000
4,000

3,167

3,050

3,728

4,323
3,405

3,894

Power Supply Equipment(Including Green Facilities) (million yen)
8,000

7,315
5,609

5,396

3,349
4,000

3,491

3,901

Net sales (million yen)
80,00060,00040,00061,64552,472
41,544
44,164
41,8332,000

2018 2019 2020 2021 2022

Image-Related
Equipment & Parts (million yen)
18,761
16,776
13,29012,895
12,7870

2,0002018 2019 2020 2021 2022

Information Systems (million yen)
3,000

0

2018 2019 2020 2021 2022

Other Electronic Equipment
and Components (million yen)
1,500

2,627
2,305

2,317

2,201

1,333

2,422

2,000

0

20,0002018 2019 2020 2021 2022

24,36725,000

978
804

889

0

4,000

976
15,00015,141

17,78015,3552,221

Integrated Repor t 2023

0

2018 2019 2020 2021 2022

0

2018 2019 2020 2021 2022

0

3,501

3,947

3,844
3,188

3,000

0

25,00022,04620,000

1,627

2,000

12,136

11,73910,000
1,000

0

5,000

2018 2019 2020 2021 2022

Segment operating income (million yen)2018 2019 2020 2021 2022

Segment operating income (million yen)
2,000

1,368
1,123

1,121
1,000

0

1,818

1,500

870 886

1,150

1,237

976
600

500
500

2018 2019 2020 2021 2022

16,68016,57415,0001,000

2018 2019 2020 2021 2022

Net sales (million yen)

1,000

1,166

5,000

2018 2019 2020 2021 2022

3,362

3,000

10,000

5,000

4,000

3,180

2,000
500

Net sales (million yen)

1,500

20,856

10,0001,000

2018 2019 2020 2021 2022

Segment operating income (million yen)

Manufacturing
Equipment (million yen)

20,0001,000

51.9 %

18.4 %

6,000

3,028

Domestic
sales
business* Segment operating income
composition ratio calculated using
the simple sum of the threesegments’ operating income(6,123 million yen)Overseas business

6,000

2022

Segment
operatingincomecomposition
ratio*

70.3 %

Domestic manufacturing business

8,000

Embedded System (million yen)

2,000

5,000

Domestic
sales
business

Domestic manufacturingbusiness

Domestic sales business

Semiconductors (million yen)

4,000

27

2 Status by Business Segment

6.4 %10,0000

Manufacturing Equipment Business

Power Supply Equipment (Including Green Facilities)

21.4 %

15,000Electronic Equipment and Components

4.5 %

6.2%

Image-Related Equipment & Parts

20,000Global Business Division

Domestic
manufacturingbusiness

Embedded System

million yen

2.8 %

0

D&P Company

2022

7.2%

2022

Information Systems

19,07620,00016,052
15,28914,601
15,000M&S Company

Semiconductors

1.5 %

23,435

Overseas

Manufacturing Equipment Business27.8 %

25,000

Manufacturing

Segment Information

Manufacturing Equipment BusinessElectronic Components &Assembly Products (million yen)

Sales/marketing02018 2019 2020 2021 2022

0358

2018 2019 2020 2021 2022

Integrated Repor t 2023

28

Chapter 3

Business Strategy

Strategies by Management Organization

M&S Company

D&P Company

We will use the drastically changing
business environment as an opportunity tocultivate new customers and businesses under
the slogan of “Shifting to the Offensive.”As the company responsible for Daitron Group’s
technology development and manufacturing,
we will maximize productivity and strengthen
the development of original products.

M&S Company President,
Senior Managing Executive Officer

D&P Company President,
Managing Executive Officer

Shinji Ikutani

Tsuneto Chihara

Our business environment is undergoing rapid and drastic

Second, in terms of sales development, we will

D&P Company is an internal company responsible for technology

Second, on the manufacturing side, we have focused on effortschanges. Torrents of technological innovation have led tomaximize our strengths in our combined manufacturing anddevelopment and manufacturing. It was created in 2017 through theunder the banner of expansion of production capacity at all factories.

frequent technological disruption. In order to survive and thrive,

sales approach. These strengths are area sales (i.e., communi-

integration of our development and manufacturing divisions with GroupFor example, we are engaged in reorganization and consolidation at

we must constantly adapt to this technological innovation.

ty-based sales) and specialized sales (i.e., sales based on

manufacturing subsidiaries. Therefore, the D&P Company has accumu-

factories according to their characteristics, such as mass production

technical capabilities).

lated an extremely broad range of technologies and expertise, and we

mainly for standard products and high-mix low-volume production

Our internal M&S (Marketing & Sales) Company focuseson the domestic market, developing products addressing a

Third, with respect to cultivating new business, we are

believe that their organic and efficient integration will enable us to create

mainly for customized products. Furthermore, we are promoting

wide range of technologies demanded by customer companies

working to generate new earnings by promoting cross-division-

extremely competitive and high-value-added technologies and products.

production outsourcing and collaboration among factories to maximize

by leveraging the marketing capabilities it has cultivated to date.

al projects. Steady progress in automotive, medical, battery,In our efforts over these past five years, we have made steady prepara-

productivity for the entire Group. In addition, we are taking steps

software, and other projects has led to sales expansion.

tions for the leaps forward that are ahead. We will continue to pushforward to secure and expand manufacturing space to enhance produc-forward with optimizing the three functions of technology development,tion capacity.

In fiscal 2023, we will proactively capture new customer

We firmly believe that the biggest reason for our contin-

needs, using the drastically changing business environment as
an opportunity under the slogan of “Shifting to the Offensive.”ued growth, even in the face of the COVID-19 pandemic thatforced us to limit face-to-face sales, is the relationships of trustFirst, on the technology development side, we have establisheden cooperation with M&S Company and the Global Business Division. In

customer cultivation, we will act to further deepen relationships

we have steadily built up with our clients since our founding. As

the Product Development Division directly under my purview as

the domestic market, we will work closely with M&S Company towith existing customers and enhance new customer cultivation.

President of M&S Company, I believe it is my mission to pass

President of D&P Company. This department was established to help

develop the more advanced technologies and products that customers

Our work to develop “All-Daitron” products has served as aon our history and traditions to the next generation, and I will

the Group achieve its goal of a 25% original product ratio (based on net

require with greater precision to their needs. In addition, since thehighly-successful system to this end. We will continue to active-

continue to take a hands-on approach to the next stage ofsales). This will further strengthen the sharing of marketing and technol-

development of highly competitive original products is key to cultivating

ly cultivate new customers by offering a wide range of products

development by practicing field orientation and visiting theogy information, etc., and accelerate the development of original

overseas markets, we believe it is essential to strengthen cooperation

to all types of customers through collaboration across sales

various sites where we do business.

products. In addition, we have begun to work on the new technologicalwith the Global Business Division Furthermore, we at D&P Company

fields of software development and system design, and we will strength-

have launched full-fledged market expansion through starting up

en the recruitment and training of engineers connected to these areas toprojects in focus market areas like vehicles and defense, where we evenbuild structures for each.

sell directly to customers.

Going forward, I will continue my work to ensure ourdepartments and by providing high-value-added original
products (developed and manufactured by the D&P Company)

M&S activities exceed the expectations of our stakeholders.

in niche areas not covered by our suppliers.

Basic Strategic Policies for 2023

1

Cultivating customers
Using “All-Daitron” product deployment as afoundation to:

Further deepen relationships withexisting customers
Enhance cultivation of new
customers*What is “All-Daitron?”

Offering a wide range of products
as Daitron Group through cooperation
across sales departments

29

Third, on the sales and marketing side, we will further strength-

manufacturing, and sales and marketing.

Our specific actions are as follows. First, with respect toIntegrated Repor t 2023

Basic Strategic Policies for 2023

2

Sales development
Sales development maximally utilizing
our strengths in combined manufacturing and sales
Area sales
Community-basedsales

Specialized sales
Sales basedon technicalcapabilities

3

New business cultivation
Promoting (cross-divisional) projects• Automotive• Medical• Battery• Software, etc.

1

Technology development
To achieve our goal of a 25% original product ratio:

2

Manufacturing
To aim “all factories profitable:”

Newly established the ProductDevelopment Division

Organization/consolidation by
factory characteristic
Production outsourcing/collaboration between factories

Initiatives in new technological fields

Securing/expanding manufacturing
space(under the direct purview of the D&P
Company President)
Accelerating original productdevelopment• Software development• Display design
Hiring related engineers and enhancing
development

To enhance our production capacity:

3

Sales and marketing
Strengthening collaboration with M&S
Company and the Global Business Division[Domestic market](Collaboration with M&S Company)
Meeting demands for advanced technologies
and products[Overseas market](Collaboration with the Global
Business Division)
Promoting precise development of original
productsand products

Full-scale development of unique focus
markets (vehicles/defense)

Integrated Repor t 2023

30

Chapter 3

Business Strategy

Strategies by Management Organization

Overseas location deployment

Global Business Division

In order to achieve an overseas business ratioof 50% or more as early as possible,
we will promote business expansion to meet awide range of global needs.

Overseas

14

Europe1Asialocation

locations11

1 Seoul (Korea)

2 Shanghai (China)

Akio Tanaka

4 Hong Kong (China)

tions with M&S Company).

8 Oregon (USA)
9 Nebraska (USA)

Sales location

7 Taipei (Taiwan)

Hanoi (Vietnam)

ductors, electricity, and electronics. These are expanding not only inlocations

11 Eindhoven(The Netherlands)

3 Shenzhen (China)

exports of commercial products from our main domestic suppliers (transac-

2locations

Division Manager - Global Business Division,
Corporate Officer

Major focus areas for the Group include the markets related to semicon-

North America

Taipei (Taiwan) / Oregon (USA) / Seoul (Korea) / Shanghai,
Shenzhen, Hong Kong (China) / Bangkok (Thailand) / Kuala
Lumpur, Penang (Malaysia) / Singapore / Eindhoven (TheNetherlands)

Manila (Philippines)

5 Bangkok (Thailand)
Penang (Malaysia)

Manufacturing factories

developed countries but also in developing countries all over the world, andSecond is system improvement. We will strengthen our systems

this expansion trend is expected to continue going forward. Under thesefrom three perspectives: global human resources, overseas locations, andcircumstances, we firmly believe that it is the mission of the Group, aninternal collaboration systems. For global human resources, we will hire andManila (Philippines) /Hanoi (Vietnam)

organization oriented toward being a technology-based company, totrain local human resources in a way mindful of diversity, cultivate

Daitron Group (Overseas): 10 companies

actively expand our business to meet global needs, not only those withincandidates for executive positions, and so on. As for overseas locations, weJapan’s borders.

will actively promote the establishment of new locations in growth markets.

At the moment, we have set a short-term target of 30% for the

In fiscal 2022, we locally incorporated our Singapore branch, and in fiscal

overseas business ratio, which is one of our important KPIs. Looking ahead,2023, we have established a new locally incorporated subsidiary in The

however, we would like to aim for 50% or more and build a global manage-

Netherlands. Both of these began operations in fiscal 2023. Going forward,

ment foundation capable of maintaining this level. Specifically, we will work

we intend to consider locally incorporating our Hanoi (Vietnam) and Manila

to shape the type of commercial offerings and systems we should utilize,(Philippines) Representative Offices. With regard to internal collaboration

meaning product portfolio reform and system improvement.

systems, we will strengthen collaboration (personnel exchange, marketing

10 Singapore

6 Kuala Lumpur(Malaysia)

Nebraska (USA)

Representative Offices

1

2

3

4

5

7

8

9

10

11

6

information sharing, etc.) with M&S Company and D&P Company.

Let me first discuss product portfolio reform.
The Manufacturing Equipment Business currently accounts for the majority

We currently conducts our overseas business across 14 overseasof the sales mix in our overseas business. Therefore, we are working tolocations with employees in more than 10 countries. I recognize that it is mypivot to a more stable profit structure by continuing efforts to increase sales

responsibility to create environments in which all employees can maximize

in the Electronic Equipment and Components Business. As part of these

their abilities based on mutual trust and respect for diversity.
It is my hope that you will look forward to our work as the Groupefforts, we are working to expand our lineup of original products (developed
and manufactured by D&P Company) for overseas markets and to increase

takes on future challenges in doing business overseas.

Overseas net sales and overseas business ratio over time

Basic Strategic Policies for 2023
Overseas net sales (million yen)1

Product portfolio reform
Reforming profit structure

Growing net sales of the Electronic Equipment
and Components Business to rectify a sales
composition where over a majority is held by
the Manufacturing Equipment Business

Enhancing the lineup of original
products for overseas

System improvement
18.0

Global human resources• Diversity-minded hiring and training of local
human resources• Cultivating local candidates for executive
positions• Building workplace environments withmutual respect for diversity(Collaboration with D&P Company)

Overseas locations

Expanding exports of products frommajor domestic suppliers• Proactively establishing locations in growthmarkets (Singapore, The Netherlands, etc.)• Locally incorporating Representative Offices(Collaboration with M&S Company)

31

2

Integrated Repor t 2023

Overseas business ratio (net sales basis, %)Internal collaboration systems

19.5
16.5

15.8

27.1

21.2

20.5

23.3

16.3

22,380• Collaborating (personnel exchange,marketing information sharing, etc.) with
M&S Company and D&P Company

16,846

16,713
12,665

11,744

10,056
6,283

6,382

6,814

7,310

2013

2014

2015

2016

25.5

2017

2018

2019

2020

2021

2022

Integrated Repor t 2023

32

Chapter 3

Business Strategy

Product Lines

Electronic Equipment & Components Market

Daitron original productsElectronic Components & Assembly Products

etc.

underwater connectors

wires & harnesses

spin cleaner

chip sorting machines

fully automatic wafer tape mounters

single wafer washing systemwafer edge grinding machine

one surface wafer polishing machine

aging equipment

scribing/breaking equipment

automatic visual inspection system
DAVI Seriesorganic EL evaluation systemcover glass processing equipment

imaging inspection equipment

electrode sheet inspection
equipment

electrode coating & drying furnace

electrolyte leak inspection
equipment

Electronic Materials Manufacturing Equipment[Major Applications]• silicon wafer• quartz wafer• compound wafer• optical fiber/optical lens
• oxide wafer• hard disk negative• SiC wafer• sapphire wafer

Analog ICs

Gallium nitride (GaN),
silicon carbide (SiC)etc.

imaging IC/LED, optical elements

embedded system

Optical Device Manufacturing Equipment[Major Applications][Major Products]
embedded system• measuring equipment • image processing equipment• semiconductor-related equipment• machine control equipment• IoT (infrastructure, production site, deep learning)• medical-related equipment• information communication equipment• automotive equipment • robot control relatedetc.

• LD (red, green, blue, short-wave length,
long-wave length)• LED (red, blue, purple)etc.

industrial custom PCs

display systems

embedded single-board computers

FPD Manufacturing Equipment

Power Supply Equipment[Major Products]
switching power supply, uninterruptible power supply (UPS),transformer, battery pack• measuring equipment• semiconductor-related equipment• medical-related equipment• automotive equipment • IoT-related equipment• audiovisual equipment• information communication equipment• server related • analyses-related equipment• other FA equipment
etc.

[Major Applications]• LCD panel• LCD panel color filter• touch panel• organic EL• EL backlight• cover glass• optical film

switching power supply

Lithium-ion battery

etc.

uninterruptible power supply (UPS)

Energy Device Manufacturing Equipment

Image-Related Equipment & Parts[Major Products]
CMOS camera, lens, light, image processing equipment,
software• semiconductor-related equipment• robot• electronic parts production facility• medical-related equipment• automotive equipment• automated logistics, carrier device• IoT-related equipment• other FA equipment
etc.

[Major Applications]• lithium ion battery• solar battery• all-solid-state battery• fuel cell

image-related equipments

CMOS cameras

etc.

vessel engine interior automatic
photographing equipment “Kirari NINJA-DS”

Other manufacturing equipment

Information Systems[Major Applications]• medical• automotive• automation, labor saving• communication device• MEMS device• environmental, clean products

etc.

etc.

video/audio conferencing systems

Integrated Repor t 2023

Daitron original products

etc.

connectors

Semiconductors

33

Electronic components
manufacturing equipment

LSI manufacturing equipment• LSI, mask, oxide device• ceramic device• compound communication device• power device• sensor device[Major Products]
analog IC, high-frequency IC, power discrete, image IC,
optical devices• general industrial equipment• semiconductor manufacturing equipment• measuring equipment• OA equipment & household appliances• image-related equipment • medical-related equipment• information communication equipment• IoT-related equipment (infrastructure, production sites)• automobile related equipment
etc.

[Major Products]
video transmission system, authentication devices(RFID, IC card, vein authentication)• settlement terminal market• security market• authentication system market• network equipment• image information system• medical-related equipment

Semiconductor/
FPD manufacturing equipment[Major Applications][Major Products]
connector, harness, PCB assembly, wiring• general industrial equipment• semiconductor manufacturing equipment• medical-related equipment• automotive equipment• measuring equipment• information communication equipment• image-related equipment• IoT-related equipment

Manufacturing Equipment Market

Web conferencing devices

contactless IC card systems

Integrated Repor t 2023

34

Chapter 4

Sustainability

Sustainability Management

Sustainability
System Chart

Foundation Spirit / Code of Conduct

Management Philosophy
Sustainability
Materiality

CSR Basic Policy

Our Basic Policy on Corporate GovernanceMateriality (sustainability key issues)

1-> See page 43

We established the Management Philosophy in 1993, whichspells out our responsibilities for corporate ethics, global
environment and social contribution, not to mention compliancewith laws and regulations. Our sustainability is organized in thismanagement philosophy and its origins, the "Founding Spirit"and "Code of Conduct" at the top. In addition, we decided tocontinuingly pursue the "Basic CSR Policy" established in 2011,
and specified “Materiality” in February 2022.
As the basis of the sustainability system, we positioned thecorporate governance system that governs all our activities andhave established the "Basic Policy on Corporate Governance".

Each material issue and SDGs

Daitron's Idea of
Sustainability

We at Daitron Group work to improve our own corporate value to provide a variety of value for theelectronics and other industries as well as the entire society beyond by promoting management
putting emphasis on a long-term perspective, starting with the Management Philosophy, GroupStatement, and the Long-Term Vision, which sets out the corporate image we aim for.
Daitron Group, seeking to continuously promote its business activities directly connected
to sustainability as a public instrument, has recently identified our key issues as Materiality, in addition to the Basic CSR
Policy. Through aggressive business activities based on the healthy and strong management foundations, we are working
toward creation of the five items of value ("Five Values") : partner value, human value, social value, environmental value,and economic value, determined to contribute toward the accomplishment of the SDGs (sustainable development goals) .
In May 2022, we established the Sustainability Committee to pursue action on material issues and other sustainability
initiatives.

Materiality (sustainability key issues)2

Primary Efforts and Focus Themes

We at Daitron Group believe that the pursuit of the five material issues identified as its Materiality will lead us to contribute to the

In pursuit of the five material issues toward further progress, the directions of the efforts are defined based on the Primary Efforts

accomplishment of many goals included in the SDGs. By more deeply involving ourselves in the accomplishment of more goals inand Focus Themes, and by setting representative KPIs in each issue in the following step to objectively assess the progress of thethe course of promoting the sustainability management, we will multilaterally contribute to the realization of a sustainable society.

efforts at Materiality which will lead us to the next step.

To promote a human resource strategy
making much of diversity to contributeto the innovation creation of the industry

To work for the creation of diverse partner*
value as an engineering trading company
with the manufacturing function

Category

Materiality

Partner value
creation

To work for the creation of diverse partner
value as an engineering trading company
with the manufacturing function

Primary efforts and Focus theme●	Reinforcement of manufacturing function (= enhancement of technological, developmental, and manufacturing

technological capabilities)●	Reinforcement of trading function (= enhancement of marketing power, partner base, and sales capabilities)●	Development of new markets and new customers (= creation of sustainable new partner value)●	Contribution to the introduction of ICT and automation across industry to support improvements in productivity

and efficiency

Partner*value creation

To contribute to the creation ofsocial and environmental value,
making full use of most-advanced
electronics technologies

Social &environmental
value creation

Human resource
value creation

Human resource
value creation

MaterialityofDaitron Group(key issues)

Managementfoundations
establishment

Economic
value creation

To continuingly work to createhigh added value one step ahead for
maximized economic value

To build healthy and strong management foundations
as the bases for creating the Five Values

To promote a human resource strategy
making much of diversity to contribute to theinnovation creation of the industry

Social &environmental
value creation

To contribute to the creation of social andenvironmental value, making full use of
most-advanced electronics technologies

Economic value
creation

To continuingly work to create high added
value one step ahead for maximized
economic value

Managementfoundations
establishment

To build healthy and strong managementfoundations as the bases for creating
the Five Values●	Diversity-minded adoption and utilization of human resources●	Establishment of personnel and education/training systems which lead diversity to innovation●	Respect for human rights of all employees, and support for the realization of society respectful of human rights●	Creation of a satisfying workplace (safe work environment, work-style reform, and career-path system)●	C ontribution to ICT infrastructure, air, sea and land infrastructure, and the energy industry to support theconvenient, safe and secure lives of people●	C ontribution to environmental load reduction through provision of electronics technologies to a wide areaof industry●	C ontinuous devotion to the development of high added value products and services toward creation ofvalue one step ahead●	P romotion of business offering more comprehensive solution as the basics for the above purpose●	C ontribution to not only the Group's own improved earnings but also industry-wide maximized economic

value through the development and distribution of high added value products and services● R einforcement of corporate governance, compliance, and risk management systems●	S ecuring of sound financial bases (improved equity ratio and reduced management costs)●	E nhancement of the BCP (business continuity plan) and supply chain management●	T horough reinforcement of environmental management systems and quality management systems

CSR Basic Policy
Environmental Policy

Safety and Health Policy

Based on our Environmental Philosophy, we will promote, and continuously improve, environmental
management system activities in accordance with the Action Guidelines to reduce environmental
impacts of our business operations ranging from design, manufacture, and sales of products torelated services and achieve harmony with the global environment.

We will seek to provide employees with safe and sanitary working environments for the
purpose of minimizing occupational injuries and diseases, and improving the retention
rate and morale of employees in addition to the quality of products and services.

Quality Policy

We will observe the highest level of business ethics to fulfill its social responsibility andachieve success in the market.

We will establish an effective quality management system for the purpose of providing products
and services meeting the expectations and needs of customers.

Human Rights Policy
We will assist in the realization of a society in which respect is given to human rights. In orderfor that, we are determined to exert efforts to fulfill the responsibility for respecting human rights
while making contributions to society through business activities.
* About “Partner”
The term “partner” refers to both “customer” and “supplier.” The Group is promoting the building of deeper and more multiple relationships of trust with its
partners and the strengthening of its partner base, with its best customers becoming its most important suppliers (and vice versa).

35

Integrated Repor t 2023

Labor Policy

Business Ethics

Social Contribution
In 2001, the late Mr. Zenshiro Takamoto, the Company's founder, established theDaitron Welfare Foundation to sponsor handicapped employment supporting institutions,etc. as well as research organizations studying how to help the handicapped participate
in society and improve their lives. The Company is actively supporting these social action
activities in sympathy with them including contributions to this Foundation.

We will respect the human rights of all employees and treat them with respect of their dignity in amanner to win international understanding.

Integrated Repor t 2023

36

Chapter 4

Sustainability

Environmental Initiatives■ Sustainable Procurement

Environmental Policy

1 Green procurement

Environmental Philosophy

Based on the recognition that creating a people-friendly and earth-friendly environment is one of our top priority
issues, we will contribute to global environment protection by reducing environmental burdens through development,
production, and sales of every product and related service.

Environmental Policy

Based on our Environmental Philosophy, we will promote, and continuously improve, environmental management
system activities in accordance with the Action Guidelines shown below to reduce environmental impacts of ourbusiness operations ranging from design, manufacture, and sales of products to related services and achieve
harmony with the global environment.

Environmental Protection

In accordance with our basic environmental policy, we have acquired ISO 14001 certification and established anenvironmental management system to prevent environmental pollution, promote energy conservation, reduce waste,
implement recycling, conduct green procurement, and promote the management of chemical substances found in
products.

■ Environmental Management System

Supp l i e rCommunication ofrequests,
survey guidance

Procurement ofconforming goods

DaitronContributing to a greener supply chain by developing andsupplying products through green procurement

Custom e r

2 Responsible mineral sourcing

With the aim of resolving environmental issues through our businessactivities, we have established and maintains and operates anenvironmental management system with our Environmental Policy at its
core, while adding fair and objective inspections and evaluations by an
external inspection organization (ISO 14001).
We conduct internal audits every year to ensure that theenvironmental management system is operated appropriately andefficiently based on the PDCA cycle, and that continuous improvements
are made.
In addition, to ensure that all employees always act in anenvironmentally conscious manner, we have established and rigorously
enforce the Action Guidelines. These guidelines establish a numberof important actions, including compliance with environmental laws
and regulations in all processes from design and manufacturing toprocurement and sales of materials, as well as promotion of educational
activities including those related to the environment.We believe that it
is our social responsibility to proactively address environmental issues,
protect the environment while balancing socio-economic needs, andcontribute to the creation of a sustainable society.

In material procurement, we strive to select suppliers that are appropriate not only in terms of the environment but also in terms ofhuman rights and other aspects. For example, there is a global concern that the mineral resources mined in the Democratic Republicof the Congo and its neighboring countries are providing a source of funds to armed groups causing human rights abuses andenvironmental destruction. Global supply chain traceability investigations have been conducted by U.S. listed companies and others
since 2013 to confirm whether or not their supply chains contain such conflict minerals. We are actively cooperating with theseinvestigations as a member of supply chains.

Environmental target-setting
and action plan creation
Continuous improvement
through the PDCA cycle

Rectifying
non-conformity
and making
improvements

A

P
Environmental
PolicyD

Education/training
andaction/management

C
Inspection/evaluation,
management review■ Status of Environmental Education and Training Programs
To promote efforts for global environmental protection through all of our business activities,
including product development, production, sales, and service provision, we conduct
environmental education and training to ensure that all employees understand ourEnvironmental Policy and act based on this policy in the performance of their duties.
For example, twice a year, M&S Company provides a curriculum on matters such as
the environment, quality, and related regulations in its training programs for new graduate
and mid-career hires, as well as for employees who have been transferred.
Environmental bulletin board■ Initiatives for Environmental Burden Reduction■ Acquisition of ISO14001
Of our locations, those listedon the right have obtained
ISO 14001 certification, theinternational standard forenvironmental management
systems. These locations are
regularly audited by an external
assessment organization
to ensure these systems’
effectiveness is maintained.

Based on our Environmental Philosophy and Environmental
Policy, we have prepared the Green Procurement Guidelines andare promoting green procurement activities for all materials andequipment we procure. The purpose of this policy is to provide
customers with environmentally-friendly products and goods and tocontribute to global environmental protection based on a recycling
society. It does this by setting forth standards for procurement fromour suppliers, ensuring compliance with laws, regulations, and otherrequests agreed upon by the Company, and making them awareof the need to reduce their environmental burden. Our requests
for suppliers cover all processes, from material procurement
to manufacturing and delivery, such as indicating prohibited
substances and preventing their attachment, mixing, or misuse;minimizing packaging, wrapping materials, cushioning materials,
etc. during shipment; and ensuring traceability management.
These guidelines were first published on January 1, 2017, andhave been revised periodically since then.

● Head Office

Scope ofISO 14001
certification
applicability(as of December 2022)● M&S Company: Acquired at a total of 16 places of business● D&P Company

Equipment Business Operation: Kameoka Factory, Chubu Factory,
Chubu Factory Kanazawa Office, Tama Factory
Parts business Operation: Wire Harnesses Factory, Specialized
Equipment Factory, Equipment Factory, Component Business Division● Global Business Division

We believe that reducing the environmental burden of ourbusiness activities is a major corporate responsibility. As
part of our efforts to reduce environmental burden, we
are working to reduce CO2 emissions by switching to LED
lighting, hybrid vehicles for sales and company vehicles, andhigh-efficiency air conditioning equipment, and to reduce
waste by reusing packaging materials and separating
recyclable resources such as metals and cardboard. At
present, efforts are still based on individual standards foreach business unit, but we hope to establish standards,
set KPIs and targets, and disclose progress as soon as
possible as a Company-wide effort.

Head Office

Chubu Factory

37

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38

Chapter 4

Sustainability

Human Resource Initiatives■ Diversity & Inclusion

Human Rights Policy / Labor Policy

Based on our Human Rights Policy and Labor Policy, and in the interest of strengthening our competitiveness as an organization, weare advancing a human resources strategy that emphasizes diversity.

Human Rights Policy
We will assist in the realization of a society in which respect is given to human rights. In order for that, we aredetermined to exert efforts to fulfill the responsibility for respecting human rights while making contributions tosociety through business activities.

Labor Policy
We will respect the human rights of all employees and treat them with respect of their dignity in a manner to wininternational understanding.

■ Efforts to Revitalize the Organization Through Diversity
In order to create a corporate group in which employees can choose a variety of work styles according to their own circumstances,
we have set strengthening human capabilities as a main issue in our 10th Medium-Term Business Plan (10M), and are focusing
on efforts to revitalize the organization through diversity. Specifically, these efforts range from reviewing the underlying personnel
evaluation system to developing a human resources education and development system and workplace environment that empowers
diverse human resources (for details, see page 26).
In this area, we have a particular focus on work styles as a prerequisite for supporting diversity. With the aim of work style reform,
we have launched the Workplace Reform Project to provide systems enabling people to enjoy rewarding work and an efficient working
environment without time or place restrictions. As of fiscal 2022, the project is currently in Phase 2, a two-year implementation phasefollowing its one-year study phase in fiscal 2021. In this project, three subcommittees—the Human Resources System Subcommittee,
the IT, Operations, and Infrastructure Subcommittee, and the Workplace Environment Subcommittee, are primarily engaged in
activities on the following topics.

Major activities in the Workplace Reform Project
Subcommittee nameWorking group name

Major activity topics● Formulating and implementing action plans to obtain Kurumin certification

Childcare and Long-Term Care● D etailed system design for extending the applicable period for shortening working hours● Establishing initiatives/operational methods to encourage male employees to take paternity leave● Activities to promote awareness of systems related to long-term care

Human
Resources
SystemSubcommittee

Recruitment of Handicapped
Human Resources
Work Systems
Long Working Hours●	E stablishing a system enabling recruitment activities using the same scheme as that for new

graduates and mid-career hires

Paperless●	F ormulating and disseminating detailed operational plans for staggered work and work fromhome (revision of work rules)●	E xamining possible measures against overtime work in excess of 45 hours with department

managers where this overtime occurred●	I ncreasing data transfer speed between locations●	S upporting wireless communication at places of business●	E xamining introduction of electronic seals●	E xamining the creation of PDF versions of core business system forms

Visualization of Work●	S upporting work visualization through tools

Digitization of Manuals
and Stored Forms●	D igitizing and sharing customer-specific work manuals●	E xploring digitization of stored paper forms and review of storage methods●	V erifying seven proposals for consideration and introducing mechanisms for proposal actions

Workplace
Environment
Subcommittee

39

Integrated Repor t 2023

―

45.6

56.5

16.7

4.1

2 Diversity employment and empowerment
We recognize that a strong management foundation is essential for sustainable growth, and that the core of this foundation is ourhuman resource base. With this in mind, we are taking actions to revitalize the organization by securing diversity in our humanresources. Specifically, we are encouraging the employment of foreign human resources and experienced workers, and focusing on
empowering senior and handicapped human resources. The specific results of our efforts in this area are to be disclosed as we build
up a steady track record.

●	V isiting offices and factories to raise awareness●	E ncouraging utilization of VPN connections on smartphones

IT, Operations,and Infrastructure
Subcommittee

Women as a share of new hires
Ratio of childcare leave taken
Our goal is to create an environment that empowers all employees,(men + women)(regular employees)
regardless of gender and whether or not they are raising children or caring
for family members, and to create an environment in which employees
can balance work and childcare. To this end, we have identified issues weare facing, formulated targets and concrete action plans, and are taking%%
Breakdown
actions accordingly.
Men: 41.2%
The following are our results for fiscal 2022 in this area. First, in terms
Women: 100%of recruitment, women accounted for nearly half of all new hires (regular
employees) at 45.6%.
Next, with regard to balancing work and childcare, the ratio ofRatio of women
Ratio of women
employees taking childcare leave (men + women) is 56.5%. By gender,in career-track positions
in management positions
the ratio is 100% for women, while men were less than half, at 41.2%. We(regular employees)(regular employees)
will continue our work to increase the ratio of men taking childcare leave.
Furthermore, in terms of promoting women the ratio of women in
career-track positions (regular employees) is 16.7% (versus 11.0% as
of March 31, 2021), and the ratio of women in management positions%%(regular employees) is 4.1% (versus 4.1% as of March 31, 2021). We had
set a target of increasing the ratio of women in career-track positions toat least 15% by March 31, 2026, but exceeded this level by the end of
March 31, 2022. Going forward, we will continue with support measures* All figures above are fiscal 2022 results
to improve these figures, such as follow-up training for career-trackfor Daitron (non-consolidated)courses. However, the ratio of women in management positions remains
unchanged from when our most recent plan was initially formulated, despite setting a target of 10% or more by March 31, 2026. We will
be proactive in management training and other support measures to achieve this target.

●	V isualizing degree of achievement for the legally mandated employment rate in each division●	E stablishing a work environment for working from home

IT Infrastructure
and Communications

1 Empowering womenfound to be effective❶Use of car sharing/rental❷Converting to satellite offices through integrated use of our locations in the Tokyo
metropolitan area
❸Using satellite offices outside the Tokyo metropolitan area
❹Increasing individual Web conferencing booths❺Printing sales materials at other internal locations❻Developing work using fax communication❼Using individual booths provided by public transportation■ Health Management
We aim to maximize the vitality of the organization and ultimately maximize
corporate value by working to maintain and improve the health of all officers
and employees in accordance with its Management Philosophy.
The basic system for health management where we have begun
efforts is collaborative health, an efficient and effective path toward better
health for employees and their families. As a basis for this, we are striving
to understand health issues in terms of both mental and physical health(by accumulating health-related data on all employees), aiming for a 100%
regular health checkup rate and a 100% stress checkup rate. In addition,in cooperation with industrial physicians, we have established a dedicatedconsultation service (all via a third-party organization, ensuring privacy) for
general health, mental health counseling, and harassment. In addition, as
an effort toward better health and work styles for our employees, we haveintroduced a self-reporting system. Once a year, employees are asked toreport directly to their company on the quantity and quality of work they are
currently responsible for, interpersonal relationships in the workplace, anytransfer requests they may have, skill development, and opinions about thecompany. These items are then promptly and appropriately addressed.

Cooperation with health insurance associations
and industrial physicians
Launched development of a systemfor collaborative health

Daitron● General health● Mental health counseling● Harassment, etc.

Establishing consultation service(via a third-party organization)

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Chapter 4

Safety and Health Initiatives

Quality Initiatives

Safety and Health Policy

Quality Policy

We will seek to provide employees with safe and sanitary working environments for the purpose of minimizing occupational injuries

We will establish an effective quality management system for the purpose of providing products and services

and diseases, and improving the retention rate and morale of employees in addition to the quality of products and services.

meeting the expectations and needs of customers.

■ Safety and Health Management System
We recognize that providing our
employees with a safe and sanitary
work environment is our responsibility
as a company and one of the mostimportant issues in management.
From this perspective, under the
Safety and Health Policy, Safety and
Health Committees play a central
role in studying and implementing
measures to prevent occupational
accidents, as well as conducting
surveys and deliberations on importantmatters to this end.
These Safety and HealthCommittees are set up at all of ourplaces of business with at least 50
workers, holding regular monthly
meetings. Committees consist ofequal numbers of members fromthe management and labor side.
In addition, we have establishedthe Safety and Health Committee
Liaison Committee as a Group-wideorganization to identify management
items related to occupationalsafety and health. This liaison
committee encourages actions toensure compliance with laws andregulations and to improve the working
environment.

■ Quality Management System
Safety and Health Committee Liaison Committee
Group-wide organization comprised of safety and health managers

Safety and Health Committees
Location-based organizations (at places of business with at least 50 regular workers)

General Safety and Health Manager
Safety managers

Labor representative

Health managers

Labor representative

Industrial physicians

Labor representative

Management side

Labor side

Safety and health promoters
Selected by location (at places of business with 10 to 49 workers at any time)Continuous improvement
through the PDCA cycle
Rectifying
non-conformity
andmakingimprovements

A

P
Quality
PolicyD

Education/training
andwork cycles

C
Customer satisfaction analysis
and management review

In order to establish an effective quality
management system, comply with laws andregulations, and ensure the achievement ofquality standards, we obtained ISO 9001
certification, the international standard for
quality management systems, in April 1998,
and have been periodically audited by an
external assessment organization since then.
In addition, the Specialized Equipment Factory
within the parts business has acquired
certification under JISQ 9100 (for aerospace),a quality management system standard withadditional requirements specific to aviation,
space, and defense.

● M&S Company

Scope ofISO 9001
certification
applicability(as of December 2022)• Quality and Environment Promotion Office• Tama Sales Office, Tokyo Electronics Sales Office,Nagoya Electronics Sales Office, Osaka Electronics Sales Office,Tokyo Machinery Sales Office, Osaka Machinery Sales Office• Purchasing Section: Tokyo Center, Osaka Center● D&P Company• Equipment business: Kameoka Factory, Chubu Factory,
Chubu Factory Kanazawa Office, Tama Factory• Parts business: Wire Harnesses Factory, Specialized Equipment Factory*,
Equipment Factory, Component Business Division* Has also acquired JISQ 9100 certification (for aerospace)■ Promoting Comprehensive Quality Management Based on the 4Ms and QCD

Site Patrols

In order to ensure the optimum
level of quality demanded by ourcustomers, we must ensure that thevarious quality control tasks occurring
at production sites are properly
executed. At our production sites,
we promote comprehensive quality
management through a combinationof quality management based on the
4Ms and production management
based on QCD, as shown in the figureon the right.

4M-based quality management

Man

Assigning human resources
with the right skills

MachineIntroducing optimal machineryand equipment

Material

Procuring the needed amount ofmaterials as they are needed

MethodEstablishing optimal
working methods

QCD-based production
management

Quality
Managing quality

Cost
Managing costs

DeliveryManaging delivery (time)

Promoting comprehensive
quality management

Each location’s Safety and Health Committee (sites with 50 or more
employees) or its Safety and Health Promoter (sites with less than 50
employees) conducts site patrols to ensure safety and health at eachlocation. These patrols simultaneously serve to identify and reportchallenges toward minimizing future occupational accident risk to head
office divisions.

Integrated Repor t 2023

Quality target-setting
and action plan creation

We recognize that one of our major missions is to contribute to society
and our customers through relentless efforts to improve the quality ofour products. To this end, we are working on our quality management
system to ensure our quality standards always exceed our customers'
expectations.
As with our environmental management system, we conduct
internal audits every year to ensure that the quality management systemis operated appropriately and efficiently based on the PDCA cycle, andthat continuous improvements are made.
We also focus on activities to familiarize all employees with our
Quality Policy and to raise awareness about being proactive with regard
to our quality management system.

■ Acquisition of ISO 9001 and JISQ 9100

■ Site Patrols

41

Sustainability

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42

Chapter 5

GovernanceCorporate Governance

Our Basic Policy on Corporate Governance

Outline of Important Organizations in the Corporate Governance Structure

Amid this rapidly changing business environment surrounding corporations with the increasing globalization of theworld economy, for corporate health and sustainable growth we are aware that improving the management systemand enhancing corporate governance from the shareholders-oriented standpoint are among the most important
challenges for us.
The key elements of our corporate governance principles include building good relationships of trust with all the
stakeholders, ensuring timely and proper information disclosure and management transparency for shareholders, andfollowing effective and healthy operating procedures, all of which are based on the Management Philosophy.

1 Board of Directors

5 Sustainability Committee

In principle, the Board of Directors meets once a month on a regular basis,and extraordinary meetings are held as necessary when important mattersarise. Participants of Board meetings are fully informed and act in goodfaith and with due diligence in the best interests of the Company and its
shareholders. In addition, the Company’s Board of Directors always keeps
abreast of business conditions at the group level and makes prompt decisions
on medium- and long-term management issues and important matters tomaximize the Group's corporate value, including to strengthen the Group’s
comprehensive capabilities and further reinforce the entire Group’s corporate
governance.

We established the Sustainability Committee to address materiality (keyissues) surrounding the Group's sustainability and to promote and oversee
activities aimed at the sustainable growth of society and the Group’s businessactivities and the enhancement of corporate value over the medium to longterm. This committee examines specific measures to address materiality, setstarget indicators, supports and monitors activities to achieve targets, andreports and makes recommendations to the Board of Directors on the resultsof these examinations and the progress of activities.

6 Compliance Committee
We established the Compliance Committee to build a compliance systemrooted in high ethical standards, centered on compliance with relevant
external laws and regulations as well as internal rules of the Company, and tostrengthen internal governance and promote compliance activities for the soundand smooth corporate management of the Group. In addition, for the purposeof preventing the occurrence and expansion of internal misconduct, we haveestablished the Daitron Group Compliance Hotline, an internal reporting andconsultation service. We have assigned a third-party organization as theinformation provider for this service in an effort to detect violations of laws andregulations and to uncover potential violations before they occur.

2 Board of Corporate Auditors

Compliance andCorporate Ethics

Timely Disclosure andInformation Management

Risk Management

We established the Compliance
Committee to formulate basic
compliance policies and manuals
that provide for the codes of
ethics focusing on compliancewith external relevant laws andregulations as well as internal
rules of the Company. With thissystem implemented we arestrengthening internal governanceand promoting complianceactivities for sound and smooth
operation of the whole Group.

We have created the Information
Disclosure Committee for securing
timely and appropriate disclosureof important corporate information
while keeping it true, complete andaccurate, which system has madepossible a fair and quick decisionon when and what information
should be disclosed. We also have
set up the information security
rules and personal information
protection rules for thoroughgoing
information management.

We regard risk management as a matter of extremely highpriority in business administration and have established the
Risk Management Committee, which is designed to work
together with the Compliance Committee for the purpose of
improved corporate value and reliability. Their mission is toprevent diverse possible risks that could seriously affect ourbusiness administration, to quickly and properly cope witheach situation so that it would not damage the stakeholders'interests, and consequently to conserve management
resources. Under this system administrators in charge ofcarrying out these activities are designated from each section,
who are required to report promptly on the occurrence of any
important issue concerning risk management.

The Company’s Board of Corporate Auditors currently consists of three
Corporate Auditors, including two outside Corporate Auditors, and inprinciple meets once a month to receive reports on important mattersrelated to auditing, and to discuss and make resolutions on the same. In
addition, Corporate Auditors attend meetings of the Board of Directors andother important meetings to audit and supervise the status of Directors'
performance of their duties, and exchange opinions with the internal audit
department and financial auditor to improve audit functions.

Group Corporate Auditor Liaison Committee

7 Group Risk Management Committee

The Group Corporate Auditor Liaison Committee, consisting of Corporate
Auditors (including Outside Corporate Auditors) of the Company and its
subsidiaries, meets regularly to exchange information and opinions on
audits of Group companies in accordance with audit policies, thereby
establishing a system handling corporate governance of the entire Group.

We regard risk management as a matter of extremely high priority in businessadministration and have established the Risk Management Committee for the
purpose of improved corporate value and reliability. Its mission is to prevent
diverse possible risks that could seriously affect our business administration, toquickly and properly cope with each situation so that it would not damage thestakeholders’ interests, and consequently to conserve management resources.
Under this system administrators in charge of carrying out these activities aredesignated from each section, and are required to report promptly on theoccurrence of any important issue concerning risk management.

3 Nominating Committee
We established the Nominating Committee as a voluntary advisory body to theBoard of Directors for the purpose of deliberating and proposing to the Boardof Directors related to the nomination and dismissal of officer candidates.

8 Information Disclosure Committee

4 Remuneration Committee

Corporate Governance Structure

Inside officers

Outside officers

General Meeting of Shareholders
Appointment/dismissal

3

4

5

7
8
9

Remuneration Committee

Sustainability Committee

Compliance Committee

Requestforadvice1

Board of Directors

Board of Corporate Auditors

9 Internal Control Committee
The Internal Control Committee operates, maintains, and evaluates internal
control over financial reporting, and reports the results of internal control
evaluations and other information to the President, CEO and COO in a timely
manner, including when financial results are announced.

Coordination

Response

Organizational Memberships (◎ indicates the chairperson, while ○ indicates members)

ReportPosition

President, CEO and COO

ReportCoordination

President and Corporate Officer
Audit OfficeGroup Risk Management Committee
Information Disclosure Committee

Audit 2

We established the Remuneration Committee as a voluntary advisory bodyto the Board of Directors for the purpose of deliberating and proposing to theBoard of Directors on matters related to remuneration structure and system
policies for officers.

Appointment/dismissal

Financial Auditor

6

Nominating Committee

Appointment/dismissal

We have created the Information Disclosure Committee for securing timely
and appropriate disclosure of important corporate information while keeping it
true, complete, and accurate. This system has made possible a fair and quick
decision on when and what information should be disclosed. We also perform
practical inspections to ensure that there are no omissions in disclosure
content.

Board of Corporate Officers
Internal audit

Internal Control Committee
Financial
audit

Business execution divisions

Name

Board ofDirectors

Board ofCorporate
Auditors

Group Corporate
Auditor Liaison
Committee

Nominating
Committee

Remuneration
Committee

Sustainability
Committee

Compliance
Committee

○

○

◎

◎

○

○

○

Chairman and Director

Isayuki Mae◎○

President, CEO and COO

Shinsuke Tsuchiya○○

Senior Managing Director

Hajimu Mouri○

Director (Outside)

Yasutoshi Kimura○

Director (Outside)

Toru Wada

Director (Outside)

Akihiko Imaya

○

○

○
◎

○

○

○

◎

○

○

Director (Outside)

Kazutoshi Hosoya

Standing Corporate Auditor

Minoru Ujihara◎◎

Corporate Auditor (Outside)

Noriko Kitajima○○

Corporate Auditor (Outside)

Satoshi Nakayama

○

○

○
○

○

○

Scope of audit by the Board of Corporate Auditors

43

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44

Chapter 5

GovernanceCorporate Governance■ Effectiveness Evaluation of the Board of Directors■ Director Skill Matrix

As part of its efforts to strengthen corporate governance, the Company conducts evaluations of the effectiveness of its Board of Directors.

Specialization/Experience
Position

Name

Corporate
management

Finance/accounting

Overseasbusiness

Legal affairs/
Risk management

Personnel/
HR development

R&D

Sales

Chairman and Director

Isayuki Mae

●

●

●

President, CEO and COO

Shinsuke Tsuchiya

●

●

●

Senior Managing Director

Hajimu Mouri

Outside Director

Yasutoshi Kimura

Outside Director

Toru Wada

Outside Director

Akihiko Imaya●●

Outside Director

Kazutoshi Hosoya

●

●

●
●

●

●

Overview of Effectiveness Evaluation
In December 2022, the Company's Board of Directors conducted a self-evaluation using the Board of Directors Effectiveness Evaluation
Questionnaire for all Directors and Corporate Auditors, including outside officers (nine Directors and Corporate Auditors in total). Based on theaggregated results, an analysis was conducted and awarenesses were shared about the current status of the Company's Board of Directors, andfuture initiatives to enhance the Board’s effectiveness were discussed.

Overview of Evaluation Results and Future Initiatives●

Based on the aggregated results and analysis of the responses to the Board of Directors Effectiveness Evaluation Questionnaire (38 items in total),
it was determined that the effectiveness of the Company's Board of Directors has been adequately secured. In addition, as for the initiatives fromthe previous fiscal year’s effectiveness evaluation:● Enhancing discussions to ensure gender, nationality, and other diversity in the composition of the Board of Directors● Enhancing training opportunities for individual Directors and Corporate Auditors and improving their knowledge of the Company,
It was decided to retain these as initiatives for further improvement of the effectiveness of the Board of Directors since sufficient improvement
could not be claimed as of the evaluation despite ongoing discussions.

●*The above table does not show all skills possessed by each individual.

Future Action■ Outside Officers
Our company have four Outside Directors and two Outside Corporate Auditors. The Outside Directors and Outside Corporate
Auditors meet the criteria for independence set forth by the Tokyo Stock Exchange, and the Company designates all of its Outside
Directors and all of its Outside Corporate Auditors as independent directors and corporate auditors.

Outside Director

Yasutoshi Kimura

Outside Director

Toru Wada

Outside Director

Akihiko Imaya
Outside Director

Kazutoshi Hosoya

Outside Corporate Auditor

Noriko Kitajima

Outside Corporate Auditor

Satoshi Nakayama

Yasutoshi Kimura has extensive experience and highly professional knowledge as a certified public accountant and tax accountant,and the Company believes that he will be able to provide beneficial opinions about the Company’s management, and has
therefore appointed him as an Outside Director. Note that as of December 31, 2022, he holds 6,000 shares of Company stock.
However, the Company has judged that there are no concerns of conflict of interest with him. He also serves as head of theKimura CPA Office and Outside Director (Audit Committee Member) of sinops Inc. However, there are no particular relationships
between the Company and either of these organizations.
Toru Wada has extensive experience and highly professional knowledge about corporate legal affairs as a certified public
accountant, and the Company believes that he will be able to provide beneficial opinions about the Company’s management, andhas therefore appointed him as an Outside Director. Note that as of December 31, 2022, he holds 1,000 shares of Company
stock. However, the Company has judged that there are no concerns of conflict of interest with him. He also serves as Joint
Partner of Phoenix Law Offices and Outside Corporate Auditor of OUG Holdings Inc. However, there are no particular relationships
between the Company and either of these organizations.
Akihiko Imaya has extensive experience and advanced knowledge in corporate management from his past experience as amanager of a group of companies operating globally, and the Company believes that he will be able to provide beneficial opinions
about the Company's management, and has therefore appointed him as an Outside Director.
Kazutoshi Hosoya has advanced professional knowledge in manufacturing from his many years as a manager of a global
manufacturer in a business field similar to that of the Company’s, and the Company believes that he will be able to accurately
assess the management environment and industry trends of the Group and provide useful opinions and suggestions, and has
therefore appointed him as an Outside Director.
Noriko Kitajima has highly professional knowledge about corporate legal affairs and other topics as an attorney at law, and theCompany has determined she has the ability to provide meaningful checks and balances on the Company's decision-making,and has therefore appointed her as an Outside Corporate Auditor. She also serves as Joint Partner of Phoenix Law Offices,
Outside Director (Audit Committee Member) of SANKYO KASEI CORPORATION, and Outside Audit & Supervisory Board Memberof Daiei Kankyo Co., Ltd. However, there are no particular relationships between the Company and either of these organizations.
Satoshi Nakayama has highly professional knowledge about finance and accounting as a certified public accountant, and theCompany has determined that he has the ability to provide meaningful checks and balances on the Company’s decision-making,and has therefore appointed him as an Outside Corporate Auditor. He also serves as head of Satoshi Nakayama CPA Office andRepresentative of Kyo-Risshi Audit Corporation. However, there are no particular relationships between the Company and eitherof these organizations.

Status of Attendance at 2022 Meetings of the Board of Directors and Board of Corporate Auditors
Yasutoshi Kimura

Toru Wada

Akihiko Imaya

Kazutoshi Hosoya*1

Shunsaku Yagi*2

Noriko Kitajima

Satoshi Nakayama*1

Board of Directors(17 meetings)

16

15

17

－

17

17

－

Board of Corporate
Auditors (14 meetings)

－

－

－

－

14

14

－

Based on the results of the effectiveness evaluation, the Company's Board of Directors will discuss and consider the initiatives listed in the
Overview of Evaluation Results and Future Initiatives, and will proceed with efforts to further improve the effectiveness of the Board of Directors.
We will continue to evaluate the effectiveness of the Board of Directors and analyze the results annually to continue said effectiveness andstrengthen corporate governance.

■ Director and Corporate Auditor Training
The Company encourages Directors to participate in external seminars for the purpose of self-development, etc. and to build
personal networks outside our organization. The Company bears the costs of such seminars in accordance with internal regulations.
In addition, for the purpose of training Directors, Corporate Auditors, and senior management, the Company has a policy of inviting
outside lecturers to address the annual Group Joint Board of Officers and Group Corporate Auditor Liaison Meeting.

Initiatives to Strengthen Governance2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
• Introduced the Corporate Officer system• Appointed the first Outside Corporate Auditor• Formulated the Compliance Manual• Established the Risk Management Committee• Formulated the Basic Policy on Internal Control Systems• Formulated the CSR Basic Policy• Disclosed our approach to the Basic Policy on Corporate Governance• Appointed the first Outside Director• Abolished the retirement benefit system for officers• Established the Compliance Committee• Formulated the Compliance Code of Conduct• Disclosed the Company Initiatives for the Corporate Governance Code• Increased the number of Outside Directors to two• Established the position of lead independent Outside Director• Established the Nominating Committee and Remuneration Committee as voluntary advisory bodies• Appointed Outside Directors as chairpersons of the Nominating Committee and Remuneration Committee• Conducted the first effectiveness evaluation of the Board of
Directors (conducted every year thereafter)• Resolved to discontinue takeover defense measures• Increased the number of Outside Directors to three• Disclosed the Skill Matrix• Established the Sustainability Committee• Increased the number of
Outside Directors to four

*1 Took office March 2023
*2 Resigned from office March 2023

45

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Chapter 5

GovernanceCorporate Governance■ Officer Remuneration■ Compliance with the Corporate Governance Code

The Company's Board of Directors, at a meeting held on February 12, 2021, resolved to adopt a policy regarding the determination of
the details of individual Director remuneration. The Remuneration Committee was consulted in advance on the details of the resolution
to be adopted by the Board of Directors and delivered its report to the Board of Directors.
The Board of Directors has also confirmed that the method of determining the details of remuneration for individual Directors
for the current fiscal year and the details of remuneration determined are consistent with the aforementioned determination policy
and that the report from the Remuneration Committee has been respected. Therefore, it has determined that the remuneration for
individual directors for the current fiscal year is consistent with the determination policy.
The Company's basic policy is to set an appropriate level of remuneration for each Director based on his or her duties in acompensation linked to shareholder benefit so as to sufficiently function as an incentive for the sustainable improvement of corporate
value. Here, the Board of Directors is given the authority to determine the amount of remuneration for the Company’s officers and thepolicy regarding the determination of the method of calculation thereof.
The remuneration of officers consists of base remuneration as fixed remuneration and bonuses as performance-linked
remuneration, taking into consideration that they are responsible for improving business performance in each fiscal year and for
improving corporate value over the medium to long term.

Details of General Shareholders Resolutions on Officer Remuneration
The maximum amount of remuneration for Directors is 500,000,000 yen per year (not including employee salary portions) as resolved at theExtraordinary General Meeting of Shareholders held on September 20, 1991. The number of Directors as of the close of this General Meeting of
Shareholders was 13. The maximum amount of remuneration for Corporate Auditors is 50,000,000 yen per year as resolved at the Annual General
Meeting of Shareholders held on March 31, 1999. The number of Corporate Auditors as of the close of this General Meeting of Shareholders
was 2. The Company resolved to abolish the retirement benefit system for officers as of the conclusion of the 56th Annual General Meeting of
Shareholders held on March 28, 2008, and to pay retirement benefits to Directors and Corporate Auditors who continue to hold office after theconclusion of said meeting at the time of their respective retirements, corresponding to the lengths of their periods of service until the system’s
abolishment.

Total Remuneration by Officer Category, Total Remuneration by Type, and Number of Eligible Officers
Officer Category

Total Remuneration(thousand yen)

Total Remuneration by Type (thousand yen)Fixed Remuneration

Performance-Linked
Remuneration

Retirement Benefits

Non-Financial
Remuneration

Number of Eligible
Officers

Directors(excluding Outside Directors)

184,660

108,240

76,420－－3

Corporate Auditors(excluding Outside Corporate Auditors)

16,76010,680

6,080

－

－

1

Outside officers

46,40034,80011,600－－5(Note) The above performance-linked remuneration shows the amount of officers' bonuses for fiscal 2022.

■ Cross-Shareholdings
It is the Company's policy to hold shares of partner companies when it is judged that said holdings assist the Company in achieving
objectives such as maintaining and strengthening business relationships and creating synergies in order to improve its corporate value
over the medium to long term, and to sell shares that fall out of the scope of this policy.
In addition, the Company shall provide specific explanations regarding such information as the purpose of cross-shareholdings.
The Board of Directors regularly reviews the status of transactions, risk/return assessments, and eligibility of major crossshareholdings, and examines whether to maintain or sell said holdings.
With respect to the exercise of voting rights for cross-shareholdings, the Company does not provide unconditional agreement
to all proposals by the company in question, but decides whether to exercise its voting rights in approval or disapproval based onwhether or not it is deemed to contribute to the improvement of the Company's corporate value.

47

Integrated Repor t 2023

With regard to the following Corporate Governance Code items for which we are not in compliance, we have disclosed four reasonsfor non-compliance and will continue to examine the optimal corporate governance for the Company.

Supplementary Principle 3-1-3: Full Disclosure
We have established a Sustainability Committee chaired by the President, CEO and COO to identify the Company’s key issues (materiality) for
the realization of a future sustainable society and to steadily promote initiatives toward this end, and are currently discussing specific activities
and notable KPIs. We will disclose the progress of these initiatives at a future date. With regard to disclosure of investments in human capital andintellectual property, etc., and disclosure based on a framework equivalent to the TCFD in climate change-related matters, we will collect andanalyze the necessary data through the activities of the Sustainability Committee, and make every effort to disclose such data after evaluation.

Supplementary Principle 4-1-2: Roles and Responsibilities of the Board (1)The business environment in the electronics industry surrounding the Company is changing very rapidly, making it difficult to set specific sales andprofit targets in our medium-term business plan. For this reason, we only announce single-year sales and profit targets, but we set and announce
target indicators (ROE, original product sales ratio, etc.) in our medium-term business plan. In addition, we also disclose our business and strategic
policies and measures for implementing our medium-term business plan, and the progress of these policies and measures are disclosed in ourbusiness reports, Investors Guides (which will be replaced by Integrated Reports from fiscal 2023), and on our website, as well as at financial
results briefings and other meetings. If these are not achieved, we will analyze the causes and the status of our responses and explain these toshareholders, and reflect the results of the analysis in our management plans for the next and subsequent fiscal years.

Supplementary Principle 4-2-1: Roles and Responsibilities of the Board (2)All remuneration for the Company’s Directors and Corporate Officers is paid in cash and consists of monthly compensation as fixed compensationand officers’ bonuses as performance-linked compensation. In addition, although the Company has not introduced remuneration using its own
shares, it has introduced an officer stock ownership plan, which we believe fulfills certain functions as an incentive to improve business performance,increase corporate value, and raise the share price of the Company. The amount of remuneration is determined by the Board of Directors based on
the results of deliberations by the Remuneration Committee, taking into consideration the Company's business performance, business details, andeconomic conditions, within the maximum amount of remuneration for Directors as resolved at the General Meeting of Shareholders.

Principle 4-11: Preconditions for Board and Kansayaku (Auditor) Board Effectiveness
The Company's Board of Directors consists of individuals with professional expertise and abundant experience in the fields of management,
finance and accounting, marketing, personnel and human resource development, legal affairs and risk management, and research anddevelopment. In addition, we have appointed Directors with overseas work and management experience, and our understanding is that theBoard of Directors is composed in a way that is both diverse and appropriately sized to effectively fulfill the roles and responsibilities of a boardof directors. At this time, the Company has not appointed any female Directors and is aware that this is an issue to be addressed in the future. In
addition, the Company has appointed attorneys at law, certified public accountants, and other professionals as its Corporate Auditors, who haveappropriate knowledge of financial, accounting, and legal matters. Each Director engages in active discussions at Board of Directors meetings,
and the Board functions effectively.

■ Basic Approach to and Status of Internal Control System
Basic Policy and Status of Internal Control System
The Group's basic policy for strengthening corporate governance is as follows.
● Building good relationships of trust with all the stakeholders● Ensuring transparent and sound management● Appropriate risk management● Timely and proper information disclosure

Status of Internal Control System
We have established and are operating an internal control system as a framework and process for the control of business operations in order toensure sound and efficient corporate management based on the above basic policy, and in particular, we recognize the following items as our top
priorities and are working to address these.
●F ormation of an organization and culture for the prevention of misconduct and compliance with laws and regulations, and the maintenance of
their effectiveness● Establishment of a system to reasonably identify, evaluate, and appropriately manage foreseeable risks in corporate management●F ormation of an organization and culture for ensuring the reliability of business reports and disclosure information, and the maintenance of theireffectivenessThrough these efforts, we have established and are operating an internal control system in order to fulfill the responsibility and trust we havetoward our stakeholders with regard to social responsibility for corporate behavior and social requirements on corporate ethics.

Integrated Repor t 2023

48

Chapter 5

Governance

Officer Introduction（2023年4月1日現在）

Director

Chairman and Director

President, CEO and COO

Senior Managing Director

Outside Director

Outside Director

Outside Director

Outside Director

Isayuki Mae

Shinsuke Tsuchiya

Hajimu Mouri

Yasutoshi Kimura

Toru Wada

Akihiko Imaya

Kazutoshi Hosoya

Nov. 1973 Joined Tohmatsu Awoki & Co.
(currently Deloitte Touche Tohmatsu
LLC)

Apr. 1985 Registered as attorney-at-law (topresent)

Apr. 1978 Joined the Company

Apr. 1984 Joined the Company

Apr. 1983 Joined the Company

Jan. 2000 General Manager of International
Electronics Sales Dept.,
International Operation

Apr. 2006 President, Daitron Inc.

Dec. 2003 General Manager of System
Administration Dept.

Mar. 2001 Director
Jan. 2002 General Manager,
International Operation
Apr. 2003 Senior Corporate Officer
Dec. 2004 Vice General Manager of Electronics
Operation
Head of Business Strategy Office
Apr. 2007 Deputy General Manager ofMarketing & Sales Division
Jan. 2009 General Manager of Group Business
Strategy Division
General Manager of Business
Planning Dept.
Apr. 2009 Managing Director
Mar.2011 Appointed to President & CEO
Mar.2013 President and Corporate Officer
Chief Operating Officer
Jan. 2017 President, M&S Company
Mar.2021 Chairman and Representative
Director
Apr. 2021 Chief Executive Officer

Mar. 2013 Corporate Officer
Deputy General Manager ofMarketing & Sales Division
General Manager of Overseas
Business Development Dept.
Jan. 2014 General Manager of MachineryOperation
Head of Machinery Business
Promotion Office
Mar. 2015 General Manager of Overseas
Business Operation, Marketing &Sales Division
Jan. 2017 General Manager of Overseas
Business Operation, M&S Company
Jan. 2018 General Manager of Overseas
Business Division

July 2009 Head of Audit Office
Apr. 2011 General Manager of Finance Dept.,
Business Administration Division
Mar. 2013 Corporate Officer
Deputy General Manager ofBusiness Administration Division
Mar. 2015 Senior Corporate Officer
General Manager of Business
Administration Division (to present)
Jan. 2017 Corporate Officer
Jan. 2019 General Manager of Personnel andGeneral Affairs Dept., Business
Administration Division
Mar. 2019 Director

Mar. 2019 Director

Apr. 2019 Senior Corporate Officer

Apr. 2019 Senior Corporate Officer

Apr. 2021 Senior Managing Executive Officer(to present)

Mar. 2021 President and COO (to present)
Apr. 2021 President and Corporate Officer (topresent)
Chief Operating Officer (to present)

Sep. 1977 Registered as a certified public
accountant (to present)
July 1991 President and Representative
Director of Tohmatsu Consulting
Co., Ltd. (Currently ABeam
Consulting Ltd.)
July 1995 Senior Partner of Tohmatsu & Co.
(currently Deloitte Touche Tohmatsu
LLC)

Mar. 1989 Established Toru Wada Law Firm,
Director
Feb. 2003 Established and co-chaired Phoenix
Law Offices (to present)
Mar. 2003 Outside Corporate Auditor of theCompany
Mar. 2017 Outside Director of the Company (topresent)

Sep. 1999 Established KIMURA Certified Public
Accountants., Director (to present)
Mar. 2000 Outside Corporate Auditor of theCompany
Mar. 2007 Outside Director of the Company (topresent)

Apr. 1981 Joined Sharp Corporation

Apr. 1979 Joined Hioki E.E. Corporation

Jan. 2002 General Manager of System LCD
Division, Mobile LCD Business Dept.

Mar. 2005 Executive Officer, Director of ATE
Dept.

May 2005 General Manager of Mobile LCD
Business Dept.

Dec. 2006 Executive Officer, Director of R&D
Dept.

Sep. 2008 General Manager of Mobile
Business Development Dept.

Feb. 2011 Director, Executive Officer, Directorof R&D Dept.

Apr. 2009 General Manager of Personal
Solution Business Development
Dept.

Jan. 2013 Director, Managing Director
Executive Officer, Director of R&D
Dept.

Apr. 2013 Executive Officer
Oct. 2016 General Manager of Structural
Reform Dept., Display Device
Company

May 2013 Director, Managing Director
Executive Officer, Director of R&D
Dept. and Head of Corporate
Planning OfficeFeb. 2018 Vice President, Display Device
Company

Jan. 2017 Appointed to President
Jan. 2021 Director

Mar. 2021 Outside Director of the Company (topresent)

Feb. 2021 Special Advisor to the Company
Mar. 2023 Outside Director of the Company (topresent)

Mar. 2023 Senior Managing Director (topresent)

Apr. 2023 Chief Executive Officer (to present)

Mar.2023 Chairman and Director (to present)(Significant concurrent positions
outside the Company)
Director, Chairman, Daitron Inc.

Corporate Auditor

Corporate Officer System

Name

Responsibility

Shinsuke Tsuchiya

Chief Executive Officer and Chief Operating Officer

Senior Managing Executive
Officer

Shinji Ikutani

President, M&S Company

Senior Managing Executive
Officer

Hajimu Mouri

General Manager of Business Administration Division

Outside Corporate Auditor

Outside Corporate Auditor

Minoru Ujihara

Noriko Kitajima

Satoshi Nakayama

Senior Corporate Officer

Tsuneto Chihara

President, D&P Company

Oct. 2000 Registered as attorney-at-law (topresent)
Joined Takahiko Inoue Law Office

Oct. 1987 Joined Tohmatsu Awoki & Sanwa(currently Deloitte Touche Tohmatsu
LLC)

Corporate Officer

Kazuhiko Tanimori

General Manager of Equipment Business Operation, D&P
Company

Jan. 2012 Co-Chairman of the same law firm
(to present)

Aug. 1991 Registered as a certified public
accountant (to present)

Corporate Officer

Hiroshi Kurata

General Manager of Procurement Department, M&S Company

Mar. 2017 Outside Corporate Auditor of theCompany (to present)

June 2007 Partner of Deloitte Touche Tohmatsu(currently Deloitte Touche Tohmatsu
LLC)

Corporate Officer

Shinji Oka

General Manager of Green Facility Department, M&S Company

Corporate Officer

Takayuki Mio

General Manager of Parts Business Operation, D&P Company

Corporate Officer

Akio Tanaka

Division Manager - Global Business DivisionDec. 2004 General Manager of Accounting Dept.
Apr. 2007 Head of Audit Office
Apr. 2012 General Manager of Business
Administration Dept., Marketing &Sales Division
Jan. 2013 General Manager of Business
Management Dept., Business
Administration Division
July 2014 General Manager of Management
System Dept., Business
Administration Division
Mar. 2015 Deputy General Manager ofBusiness Administration Division
Mar. 2019 Standing Corporate Auditor of theCompany (to present)
Integrated Repor t 2023

Position

President and Corporate
OfficerStanding Corporate Auditor

Apr. 1981 Joined the Company

49

The Company has introduced a corporate officer system to vitalize the Board of Directors by separating
decision-making and supervisory functions from business execution. The following are our nine corporate
officers.

July 2020 Established Satoshi Nakayama
Certified Public Accountant Office,Director (to present)
Established Kyorisshi Audit
Corporation, Senior Partner (topresent)
Mar. 2023 Outside Corporate Auditor of theCompany (to present)

Integrated Repor t 2023

50

Chapter 5

GovernanceOutside Director Messages

As a technology-based company making rapid
advances, we look toward growth investments
and a focus on cultivating products forming
the core of our next generation
Outside Director

Yasutoshi Kimura

Daitron’s business environment may appear to have beenfavorable for the past several years. However, my feeling isthat, unless we expand to at least five times our current
scale, we are in danger of being swallowed up by today’s

A bright outlook toward a new stagefor Daitron

Outside Director

Toru Wada

When Daitron was Daito Electron, I once wrote an article
titled “My View of Daito Electron” in which I listed thefollowing three expectations for the Company. The first was
the transformation from a family-owned or owner-operated
company to a truly publicly-traded company. The second
was the enhancement of the integrated manufacturing andsales system, and the third was the emphasis on cash flow.

Growing expectations on future
strategic execution as Daitron’s
importance as a technology trading
company continues to growOutside Director

Akihiko Imaya

Looking at changes in the business environment of the
global electronics industry, in the medium- to long-term, theindustry is beginning to seek new management guidelinesthat pursue socially inclusive sustainability, rather than 20th-

Expectations on becoming a company withsustainable growth that can adapt to risks
in times of transition and grow by seizing
opportunities with certainty
Outside Director

Kazutoshi Hosoya

51

Integrated Repor t 2023

My 44 years working at electrical equipment manufacturers has
given me operational experience in engineering, development,
manufacturing, and sales units.
I have also been involved in the execution of company

trends if we wish to maintain our presence as a trading
company over the long term. On the other hand, one of ourstrengths as an electronics trading company is that we also
have a manufacturing unit, which also ensures high grossprofit margins. However, our manufacturing unit’s productlineup looks to have been largely unchanged in the past
two decades or so. Of course, if we look more closely, we
can see a few new products, but not enough to become asupporting backbone.
Thus, we are looking ahead to the next generation ofcore products, as the manufacturing unit’s current mainstay
products approach a stage of some maturity. The
manufacturing unit is where we likely need to invest acertain amount of resources with a clear intention and newpriority. Therefore, as a technology-based company that ismaking rapid advances, we hope that through upfront
investment in areas such as human resources and facilities,
we will be able to cultivate products forming the core of ournext generation.

In the years that have passed since then, significant progresshas been made in all respects. With respect to my first
expectation, the passive behavior of our officers andemployees has been eliminated, and they have begun toshow more initiative and proactivity. This has contributed tothe expansion of our business performance and scope ofbusiness. In the future, I look forward to seeing greater
activity that is both proactive and demonstrates ownership,especially in terms of expanding new and overseas
businesses. With respect to my second expectation, themanufacturing subsidiary merger has had a positive effect,
and manufacturing and sales have become morecoordinated and cooperative. Going forward, I would like to
see the manufacturing unit further enhanced throughcontinued efforts to hire talented personnel and further
promote research and development, among other measures.
Third, we now report on our cash conversion cycle monthly,
and accounts receivable and inventories are well managed.
Regardless of the scale that we reach in net sales, I would
like the Company not to lose its focus on cash flow.

century economic guidelines pursuing capital efficiency. In
the short term, the spread of COVID-19 and geopoliticalchanges have created an urgent need to restructure supply
and engineering chains. We believe that these changes
have increased Daitron’s importance as a technology
trading company. In addition to the ability to collaborate andbuild partnerships that we have accumulated as a trading
company, we will be required to practice our Management
Philosophy of balancing customer satisfaction andemployee satisfaction. We have completed our preparations

for future advances in management in terms of bothmanagement philosophies and management strategies,
and I look forward to our execution of the latter.
My hope is to contribute to the enhancement ofcorporate value by sharing and discussing with Daitron’s
management team the knowledge I have gained fromexperience in the display device business, enabling me toforesee what kind of financial impact the current policy
decisions and mechanisms in the field will have in the future.

management, where in the last few years I have felt changes
giving me the sense that we are at a turning point in history.
The world is becoming increasingly divided due toglobalization, and social and economic impacts are growing.
Furthermore, in this historic turning point, and furthermore atime of transformations like DX, GX, EX, and SX, the impact on
business activities and the diversity of what is required of acompany are also presenting difficulties for management.
Beyond that, changing times can present both risks andgreat opportunities for companies. I believe that Daitron’s recent

performance is linked to the growth trend of the electronics
industry, and that its Management Philosophy, Group Statement,
and Long-Term Vision are beginning to manifest. I am confident
that the organization can translate this into solid steps toward
growth through further strategic activities. As a new independent
outside director, I hope to understand Daitron’s “three actuals”(site, product, and situation), add principles, and even engage inthe right kind of discussions with the management team tocontribute to creating and improving customer value andmaximizing corporate value.

Integrated Repor t 2023

52

Chapter 6

Data Book

Financial Summary(Unit: Million yen)

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Net sales

36,06734,89938,702

43,21444,932

51,684

59,662

61,621

57,41872,341

87,639

Cost of sales

28,16827,42830,40533,74434,87940,193

46,84349,13845,94158,06070,052Gross profit

7,898

7,470

8,297

9,469

10,052

11,49012,81812,482

11,476

14,281

17,587

Consolidated management performance*1

Gross profit ratio (%)

21.9

21.4

21.4

21.9

22.4

22.2

21.5

20.3

20.0

19.7

20.1

Selling, general and administrative expenses

7,552

7,332

7,522

7,927

8,141

8,968

9,272

9,276

9,072

10,084

11,535

SG&A to net sales ratio (%)

20.9

21.0

19.4

18.3

18.1

17.4

15.5

15.1

15.8

13.9

13.2

Operating income

345

138

774

1,542

1,910

2,522

3,546

3,205

2,403

4,196

6,051

Ordinary income

466

252

861

1,537

1,863

2,583

3,592

3,220

2,436

4,325

6,210

Net income attributable to owners of parent

182

-77

641

1,131

1,217

1,867

2,274

2,171

1,610

2,953

4,237

Depreciation expense

381

414

272

233

231

278

272

348

337

322

327

Capital Investment

348

99

143

180

1,163

339

907

227

140

428

412

Research and development expense

161

129

141

139

167

150

166

150

146

93

150

Total assets

23,622

23,76627,312

28,681

32,06835,383

43,11445,757

46,24758,454

63,202

Net assets

11,525

11,63012,161

13,17913,914

15,492

16,977

18,765

19,79822,45526,012

Total interest-bearing debt

1,610

1,321

1,202

1,122

1,609

902

697

544

374

467

583

Earnings per share (yen)

16.49

-6.94

57.74

101.91109.62

169.15205.25195.86145.24266.18381.78

Net assets per share (yen)1,032.90

1047.04

1,094.87

1,186.64

1,252.94

1,397.97

1,530.94

1,691.87

1,784.66

2,023.23

2,342.79

Cash flows from operating activities

-762

288

722

447

1,472

-53

5,502

2,377

3,065

2,796

-275

Cash flows from investing activities

-218

-110

-123

15

-1,171

-292

-876

-313

-156

-371

-237

Cash flows from financing activities

-652

-434

-182

-278

201

-1,286

-758

-816

-762

-672

-1,004

Period-end cash and cash equivalents

5,718

5,581

6,092

6,251

6,727

5,094

8,923

10,15012,26014,183

12,882

60.6

―

26.0

24.5

27.4

26.6

26.8

30.6

34.4

30.1

30.1

10

5

15

25

30

45

55

60

50

80

115

1.6

-0.7

5.4

8.9

9.0

12.7

14.0

12.2

8.4

14.0

17.5

Consolidated financial position

Per-share information (consolidated)

Consolidated cash flows

Dividends
Payout ratio (consolidated, %)*1
Annual dividends (yen)Main Management Indices
Return on equity (ROE)*2 (%)
Return on assets (ROA)*2 (%)

0.7

-0.3

2.5

4.0

4.0

5.5

5.8

4.9

3.5

5.6

7.0

Debt-to-equity (D/E) ratio (times)

0.14

0.11

0.10

0.09

0.12

0.06

0.04

0.03

0.02

0.02

0.02

Shareholders' equity/Total assets (%)

48.8

48.9

44.5

45.9

43.4

43.8

39.4

41.0

42.8

38.4

41.1

Period-end share price (yen)

347

389

627

793

936

2,335

1,227

1,906

1,576

2,146

2,282

Number of consolidated employees

655

651

638

644

666

763

795

823

855

893

942

Number of consolidated subsidiaries

11

11

11

11

11

9

9

9

8

9

10

Electronic Equipment and Components (%)

69.9

79.5

79.4

73.6

75.6

78.2

74.6

66.2

73.3

75.5

72.2

Manufacturing Equipment Business (%)

Other

KPIs for business structure reform
Composition ratio by business

30.1

20.5

20.6

26.4

24.4

21.8

25.4

33.8

26.7

24.5

27.8

Original product ratio*3 (%)

23.2

22.2

22.4

24.8

24.0

24.2

26.0

21.9

18.3

15.8

16.0

Overseas sales ratio (%)

20.2

18.0

16.5

15.8

16.3

19.5

21.2

27.1

20.5

23.3

25.5

*1 From fiscal 2022, figures are calculated based on application of the Accounting Standard for Revenue Recognition*2 Shareholders' equity and total assets are calculated using the averages of those at the beginning and at the end of the period, respectively*3 From fiscal 2021, the definition of original products has been changed

53

Integrated Repor t 2023

Integrated Repor t 2023

54

Chapter 6

Data Book

Company Information/Stock Information

Company Information (as of April 1, 2023)
Trade Name

Daitron Co., Ltd.

Established

June 24, 1952

Group Companies Information (as of April 1, 2023)
Company Name

Representative

Shinsuke Tsuchiya, President

Capital2,200,708,560 Yen

Number of
Employees

942 (consolidated) *As of December 31, 2022

Business Place

Head OfficeOsaka
Headquarters
Tokyo
Sales Offices	Sendai, Utsunomiya, Ibaraki, Tokyo, Kunitachi,
Yokohama, Matsumoto, Shizuoka, Nagoya,
Kanazawa, Kyoto, Osaka, Kobe, Hiroshima,
Fukuoka, Kumamoto
Representative Offices Manila (Philippines) /Hanoi (Vietnam)
Logistecs Center
Kunitachi, Hashima, and Osaka
Factories
Tama, Ichinomiya, Nonoichi, Ritto, and Kameoka

Business Line
Number of Group
Companies

consolidated 11 (overseas 10)

DAITRON INC.

100%

DAITRON （MALAYSIA） SDN. BHD

2,500,000
MYR

100%

Sales and import/export of electronicequipment/components andmanufacturing equipment for Malaysianand South-East Asian markets

DAITRON (H.K.) CO., LTD.

3,800,000
HKD

100%

Sales, procurement, and import/exportof electronic equipment/components forHong Kong and South Chinese markets

550,000
USD

100%

Sales and import/export of electronicequipment/components andmanufacturing equipment for Chinese
markets

1,500,000,000
KRW

100%

Sales, procurement, and import/exportof electronic equipment/components forSouth Korean and East Asian markets

DAITRON (THAILAND) SDN. BHD

2,000,000
THB

DAITRON MALAYSIA）SDN. BHD
49%
A domestic Thai company(Japanese-affiliated financial institution)
51%

Sales and import/export of electronicequipment/components andmanufacturing equipment for Thai andSouth-East Asian markets

DAITRON (SHENZHEN) CO., LTD.

500,000RMB

DAITRON (H.K.) CO., LTD.
100%

Sales and import/export of electronicequipment/components for South
Chinese markets

Daito-Tec Co., Ltd.

10,000,000
JPY

100%

Manufacture and sales of electronicequipment/components

DAITRON (TAIWAN) CO., LTD.

20,000,000
TWD

100%

Sales and import/export of electronicequipment/components andmanufacturing equipment for Taiwanesemarkets

DAITRON (SINGAPORE) PTE. LTD.

500,000
SGD

100%

Sales and import/export of electronicequipment/components andmanufacturing equipment for Singaporean
and South-East Asian markets

DAITRON (NETHERLANDS) B. V.

700,000
EUR

100%

Sales and import/export of electronicequipment/components andmanufacturing equipment for European
markets

DAITRON (SHANGHAI) CO., LTD.

Stock Information (as of December 31, 2022)
Shareholder distribution by type

Total number of authorized shares

40,000,000

Securities
companies

Financial
institutions

Total number of issued shares

11,155,979

22 (0.5%)

18 (0.4%)

4,666

Other domestic
corporations

Number of shareholders

41 (0.9%)

Number ofshares held

Shareholding
ratio

1,012

9.12

1,000

9.00

923

8.31

(thousands of shares)

The Master Trust Bank of Japan ,Ltd.
(Trust account)
Public Interest Incorporated Foundation
Daitron Welfare Foundation
Custody Bank of Japan, Ltd.
(Trust account)Yasuyuki Ohmori

4,488 (96.1%)

Foreign individuals

Major shareholders
Shareholder nameIndividuals/other97 (2.1%)(%)

Shareholder distribution by region
Outside Japan89 (1.9%)400

Business Line
Manufacture, sales, and import/export ofelectronic equipment/components for North
American markets, sales and import/export ofsemiconductor manufacturing equipment for
North American markets

DAITRON (KOREA) CO., LTD.

Stock Information

Investment Ratio

4,000,000
USD▲Head Office

Manufacturing and sales of electronic components & assembly goods, semiconductors, embedded systems, power
supply equipment, image-related equipment & components, information systems, semiconductors & FPD manufacturing
equipment, electronic components manufacturing equipment, etc.
Import/export of the above products

Capital

3.60

Tohoku99 (2.1%)

399

3.59

159 (3.4%)

Daitron Employee Shareholding
Association

396

3.57

Kyushu/Okinawa

MUFG Bank, Ltd.

363

186 (4.0%)

Daitron Partner Shareholding Association

218

1.96

Nippon Life Insurance Company

181

1.63

Yoshiki Sasaki

180

1.62

82 (1.8%)
Hokkaido

48 (1.0%)

ChugokuMizuho Bank, Ltd.

3.27

Shikoku

Chubu

778 (16.7%)

Kanto

1,886 (40.4%)
Kinki

1,339 (28.7%)

For an updated list of Group companies, please visit our website.

https://www.daitron.co.jp/en/company/network/group.html*Shareholding ratios are calculated excluding treasury shares (55,427)

55

Integrated Repor t 2023

Integrated Repor t 2023

56

[ For inquiry concerning our IR activities ]Head Office: 6-11, Miyahara 4-chome, Yodogawa-ku, Osaka 532-0003
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Integrated Report 2023