Integrated Report 2017
April 2016–March 2017

CONTENTS

Business
Principles

Business Principles ................................................. 01
Top Message .......................................................... 02
Three Strengths Driving SHI’s Growth ................... 10
Management Model for
Medium- to Long-Term Growth ............................. 12
STORY 1: Competitive Strength ............................ 14

Corporate Mission Statement

STORY 2: Management Capabilities ...................... 16
STORY 3: Corporate Culture .................................. 18

Editorial Policy
The Sumitomo Heavy Industries Group (SHI Group) is publishing an
Integrated Report for fiscal 2017 instead of the Annual Report that it has
published until now. Integrated Report 2017 contains reports on ­financial
information as well as the SHI Group’s unique strengths and the sourcesof its medium- to long-term growth with the aim of deepening understanding among a wide range of stakeholders, including shareholders
and investors. Please refer to our website for detailed information andfigures related to financial data (including Securities Reports) and nonfinancial data (such as CSR data).

Segment Overview ................................................ 20
At a Glance ......................................................... 20
Machinery Components ...................................... 22
Precision Machinery ............................................ 24◆ Website http://www.shi.co.jp/english

Construction Machinery ...................................... 26

Reference Guidelines· “International Integrated Reporting Framework,”
International Integrated Reporting Council (IIRC)· “WICI Intangibles Reporting Framework Version 1.0,”
World Intellectual Capital Initiative· “G4 Sustainability Reporting Guidelines,”
Global Reporting Initiative (GRI)

Industrial Machinery ........................................... 28
Ships ................................................................... 30
Environmental Facilities & Plants ........................ 32

Note: Reporting principles are used as a reference, but content does not always
comply with the guidelines.

Base Supporting SHI .............................................. 34

Cautionary Note Concerning Forward-Looking Statements

We will aim to become a machinery manufacturer
that continues to provide excellent products
and services to the world.
With integrity being a key principle in the Group,
we will contribute towards society by gaining
high respect and confidence from all stakeholders.

Integrated Report 2017 includes forward-looking statements regarding the future
performance of Sumitomo Heavy Industries, Ltd. These forward-looking statements are based on information currently available to the ­Company and determined subjectively. All information contained herein is subject to changes in actual
business performance.

Message from the External Directors ................. 34
Directors, Corporate Auditors,
and Executive Officers ........................................ 36

Our Values

Research and Development ................................ 38
Corporate Governance ....................................... 40

統合報告書 2017
Sumitomo Heavy Industries, Ltd.

CSR ..................................................................... 432016 年 4月～ 2017 年 3月

Customer First

 e exceed customer expectations by providing sophisticated efficient products
Wand services, giving the utmost consideration to their needs and requirements.

Embrace Changes

We will continue to drive and embrace changes without accepting the status quo.

 ommitment toCTechnology andInnovation

 e are passionate about contributing to society by further developing our unique,W
in-house technologies.

Respect People

 e will nurture an organizational climate that fosters mutual respect, tolerance andWlearning for growth.

Integrated Report 2017
April 2016–March 2017

Integrated Report 2017

Eleven-Year Summary and Non-Financial Data ....... 48
Major Subsidiaries and Affiliates ............................ 50
Corporate Data ...................................................... 52
Stock-Related Information/Our Website ................ 53

Cover

The SHI Group, as a machinery manufacturer that
continues to provide excellent products andservices to the world, hopes to contribute tosociety in various ways.
Consequently, it is not easy to come into
everyday contact with the Group’s products, sothey have been symbolized and expressed incolor tiles. We would be delighted if this helps tomake people feel closer to the SHI Group.

Sumitomo Heavy Industries, Ltd.

Integrated Report 201701

Top Message

Top Message

Earning the Trust of Society andWorking for Sustained Growth

In FY2016, the Japanese economy trended towards a gentle recovery as corporate income increased due to higher
export levels. Corporate capital investments into labor-saving plants and equipment as well as updates to aging plants
and equipment continued in response to progressive dilapidation in facilities as well as a shortage of labor supply.
In the global economy overall, the US and European economies recovered gradually while the Chinese economy was
supported by public sector investment. On the other hand, a profound lack of clarity persisted around political uncertainty and the risk of economic slowdown against a backdrop of a continued depression in private sector investment.
In this economic environment, the SHI Group proceeded steadily with business restructuring, implementing various
measures aimed at creating a robust business structure.

Review of Fiscal 2016

Shunsuke Betsukawa
President and CEO

In fiscal 2016, the final year of our Medium-Term­Management Plan 2016 (MTMP16), net sales and­operating income declined compared to fiscal 2015,
but orders and profit attributable to owners of parent
increased. (Table 1)
Orders totaled ¥711.1 billion, a substantial increase inparticular compared to fiscal 2015 and exceeding our¥700.0 billion target. The net interest-bearing debt ratio

was –0.4%, as we have continued to effectively bear
zero debt since fiscal 2015. The stock­holders’ equity
ratio was 50.0%.
Cash flows from operating activities were positive bya large margin due to improving working capital. We
actively conducted capital investments and other investments in development, human resources, M&A andother areas.

Financial Summary (Table 1)(Billions of yen)

02

Sumitomo Heavy Industries, Ltd. Integrated Report 2017

FY2015FY2016

ChangeOrders

685.9

711.1

25.2

Net Sales

700.8

674.3

(26.5)

Operating Income

50.6

48.4

(2.1)

Operating Income Ratio

7.2%

7.2%

—

Ordinary Income

49.1

48.3

(0.9)

Ordinary Income Ratio

7.0%

7.2%

0.2 pt

Extraordinary Income or Loss

(2.0)

(1.0)

1.0

Current Net Income before Tax Adjustments

47.2

47.3

0.1

Profit Attributable to Owners of Parent

33.1

33.6

0.5

Current Net Income Ratio

4.7%

5.0%

0.3 pt

Exchange Rate (Yen vs USD)¥  115¥  108¥   (7)

Sumitomo Heavy Industries, Ltd.

Integrated Report 201703

Top Message

On a Three-year Cumulative Basis, We Were Able to Achieve
the Targets of MTMP16 for Both Net Sales and Operating Income[Performance]
The initial financial targets of MTMP16, which was formulated in fiscal 2014, were net sales of ¥700.0 billion andoperating income of ¥52.5 billion, and these were nearly
achieved one year ahead of time in fiscal 2015, thesecond year of the plan. In fiscal 2016, due to yen appreciation, stagnating electrical/electronic-related demand,and continued slowing in the Chinese economy, we wereunable to achieve our targets on a single year basis.
However, on a cumulative basis, for the three years of
the MTMP16, we successfully met the targets for both
net sales and operating income. (Table 2)
Orders set a new record-high in fiscal 2014. In fiscal
2015 they decreased on slumping demand in China forhydraulic excavators, among other factors, but in fiscal

2016, they maintained a level above ¥700.0 ­billion
thanks to strong orders in Environmental Facilities &Plants. Net sales totaled record highs in both fiscal 2014
and fiscal 2015, and we achieved the MTMP16’s target
one year ahead of time. In fiscal 2016, the target was not
met due to a decline in Construction Machinery andother factors. Regarding operating income, the operating income ratio was 7.2% in fiscal 2015 and fiscal 2016,
and we nearly achieved the target level of MTMP16.
Construction Machinery was affected by declining
demand, but growth in Industrial Machinery and thehighly profitable Precision Machinery and Machinery
Components segments boosted operating income. The
Ships segment was profitable as planned.

Result of MTMP16 (Table 2)[Progress on Three Basic Policies]
MTMP16 established the three basic policies of “SteadyGrowth,” “Return to Higher Levels of ­Profitability,” and“Persistent Efforts for Operational Quality Improvements,” and we executed various initiatives on the basisof these policies.
① Steady Growth
Our specific policies for realizing steady growth are“Globalization (Expansion),” “Innovation (Change),” and“Group Synergies (Connect).”
First, we promoted “Globalization” by acquiring the
CFB boiler business of Amec Foster Wheeler, plc. andjointly developing all-electric injection molding machines
in Japan and Europe and entering the market for these.
In addition, for “Innovation,” we actively made investments exceeding our medium-term management plan,
centering on growth and high-profit businesses, seeking
to accelerate new product development. Furthermore,for “Group Synergies,” we strengthened our productcapabilities such as system technologies and advanced
production innovation in various businesses within theGroup, led by the technology division.
② Return to Higher Levels of Profitability
To “Return to Higher Levels of Profitability,” we took
over the industrial crane business of Mitsubishi Heavy
Industries Machinery Technology Corporation andworked to strengthen the business base for material

handling systems. In addition, for further businessgrowth, we actively conducted business reorganizationand M&A, including making Hitachi Sumitomo Heavy
Industries Construction Crane Co., Ltd. and Persimmon
Technologies Corporation, which manufactures and sells
vacuum robotics, into subsidiaries.
③ Persistent Efforts for Operational Quality
Improvements
Furthermore, for “Persistent Efforts for Operational
Quality Improvements,” under a basic principle of prioritizing compliance in all endeavors, we held training anddiscussions on preventing unfair competitive actions
overseas as well as e-learning-based training, andthereby worked to reinforce our compliance system. We
also strengthened compliance from the standpoint ofsafety and product quality through a variety of initiatives.
We achieved our financial targets in the first andsecond years of MTMP16, but our forecasts of external
factors were too optimistic, and the third year we cameup short. For this reason, in our Medium-Term Management Plan 2019 (MTMP19), we have set the basic policies
as “Steady Growth Based on Close Scrutiny of the­External Environment,” “Further Improvement in­Profitability to be a High-Profit Company,” and “Further
Improvement in Operational Quality.”

Performance(Billions of yen)

FY2014FY2015Plan

ActualDifference

Net Sales

650.0

667.1

Operating
Income37.0

Operating
Income Ratio
ROIC

FY2016

Plan

ActualDifference

17.1

670.0

700.8

46.0

9.0

49.0

5.7%

6.9%

1.2 pt5.3%

6.5%

1.2 ptReference: ROE

MTMP16 cumulative

FY2016 M&A

Plan

ActualDifference

Plan

ActualDifference

30.8

700.0

674.3

(25.7)

2,020.0

2,042.3

22.3

50.6

1.6

52.5

48.4

(4.1)

138.5

145.0

6.5

7.3%

7.2%

(0.1) pt

7.5%

7.2%

(0.3) pt

6.9%

7.1%

0.2 pt6.3%

7.6%

1.3 pt7.0%

7.3%

0.3 pt

—

—

—

—

—

—

7.1%

9.0%

8.7%

Mobile cranes
Made a consolidated subsidiary of Hitachi Sumitomo
Heavy Industries Construction Crane Co., Ltd.

Circulating fluidized bed (CFB) boilers
Acquired the CFB boiler business of Amec Foster
Wheeler, plc.

· Manufacture, repair and sales of construction machinery such as
crawler cranes and related machinery and equipment.
· Established in 2002 with equal investments from Hitachi Construction Machinery Co., Ltd. and Sumitomo Heavy Industries, Ltd.
· Consolidated as a subsidiary (66% ownership) in March 2017 with­acquisition of additional shares.
· Aim to expedite global competitive strength together with Link-Belt
Cranes, L.P., LLLP.

· Plant engineering for CFB boiler power generation plants and­service company.
· Holds the world No. 1 record for deliveries of CFB boilers.
· Promote growth strategies in the energy field and enhance theoverseas development of the CFB boiler business.

Cryogenic equipment
Acquired shares in Persimmon Technologies Corporation

Cryogenic equipment
Acquired shares in Ferran Technology, Inc.

· To expand sales of cryopumps, enhance lineup of peripheraldevices.
· Develop next-generation motor technologies for other businesses.

· Own a unique technology for vacuum gauges.
· Aim to expand business domains in the vacuum machinery market.

Investments (cumulative over three years)
CAPEX

04

R&D

Domestic recruitment

M&A

Plan

ActualPlan

ActualActualActual¥50.0 billion¥65.3 billion¥45.0 billion¥41.2 billion

1,392 people¥25.5 billion

Sumitomo Heavy Industries, Ltd. Integrated Report 2017

Sumitomo Heavy Industries, Ltd.

Integrated Report 201705

Top Message

In Fiscal 2019, We Plan to Achieve Net Sales of Over ¥800.0 Billion
and Operating Income of Over ¥60.0 Billion
Based on critical reflections on the previous plan, in the
MTMP19, we have established five basic policies andwill aim to be “a company that ­continually provides
excellent products.”
Regarding financial targets, in fiscal 2019, we are­targeting net sales of over ¥800.0 billion, operating
income of over ¥60.0 billion, and an operating income
ratio of over 7.5% (Table 3).
We will make capital investments of ¥80.0 billion over
the three years with a focus on growing and reinforcing
mainstay businesses and utilizing information technology
throughout the Company. For R&D expenses, we plan toinvest ¥52.0 billion over the three years to strengthen
product capabilities for growth. We will continue toactively hire personnel domestically, centering on people
capable of strengthening technology and service businesses. During the period of the medium-term management plan we are planning to hire 1,400 people. For
M&A, we will invest ¥30.0 billion over the three years to
identify and develop growth opportunities in ­mainstay
businesses (Table 4).

Medium-Term Management Plan 2019
Basic Concept
PursuecorporatemissionOur basic approach to shareholder returns is to maintain a payout ratio of 30%. When retention of surplus
funds is expected, we will also consider share buybacks.
Power transmission and controls, plastics machinery,
cryocoolers and other key products currently constituteour Group’s main pillar for revenue and growth. In addition to this, we will actively develop the areas of energy/
environment and material handling ­systems to turn theminto a second pillar. Also, as growth products for the
next generation, we will work to strengthen our businessbase in the areas of medicine, semiconductors and automotive products (Table 5).
Under MTMP19, in addition to these policies,“Actively Pursue CSR” was also established as a basic
policy. We emphasize contributing to society as a basic
aspect of corporate management and strive to earn thetrust of society.

1

2

4

M&A andformationof businessalliances

Become a“High Profit
Company”

Achieve“Steady
Growth”

35

Create excellent products andservices through “A Tireless Commitment to Improving Operational Quality”

CustomerFirst

Embrace
Changes“Actively Pursue CSR”

Commitment toTechnology
andInnovation

Respect
PeopleFramework for the Basic Principles of the MTMP19
Basic Concept of the Medium-Term Management Plan 2019 (MTMP19)
 ook to achieve “Steady Growth” after carrying out a stringent examination of theL­external environment
2 Make the conversion to become a “High Profit Company”
3 Create excellent products and services through “A Tireless Commitment to Improving
Operational Quality”
4 Actively participate in “Business integrations, M&A, and formation of business allianceswith third-party entities”
5 “Actively Pursue CSR”
1

Financial Targets (Table 3)

Capital Policy

FY2016 actual

FY2019 target

Net Sales¥674.3 billion¥800.0 billion

Operating Income¥48.4 billion¥60.0 billion

Operating Income Ratio

7.2%

7.5%

ROIC

7.3%

7.5% or more¥108 (Actual)

¥110

8.7%

9%

Exchange Rate (vs USD)
Reference: ROE• Prioritize growth investment (capital
investment, M&A)
• Basic policy on shareholder returns ofmaintaining a 30% payout ratio while
also considering share buybacks whenretention of capital surplus is expected.

(As of May 2017 when the financial targets were announced)

06

Sumitomo Heavy Industries, Ltd. Integrated Report 2017

Sumitomo Heavy Industries, Ltd.

Integrated Report 201707

Top Message“Corporate Mission Statement” and “Our Values”
Create Great Strength for the SHI Group

Contribute to Society by Providing Excellent Products
and Services and Earn the Trust of Society

The SHI Group’s Business Principles, based on the­“Sumitomo Business Philosophy,” guide the actions of
all members of the Group. Precisely because the social
environment is changing so rapidly and remains unclear,
the existence of Business Principles that provide Group
members with a shared set of values and generate solidarity for business growth serves as a solid base for theGroup’s strengths.
The Group completely revised its business principles in
November 2015. The business structure, financial condition and management environment of the Group havesignificantly changed. The Group remains mindful of thecorporate governance code, which forms the guiding
principles for improving corporate value. We re-defined
the “Corporate Mission Statement,” which outlines whatkind of corporate entity we want to be, and formulated“Our Values.”

Modern companies, including the SHI Group, arerequired to contribute to resolving social issues as amember of society. We believe that CSR is essential for
a company to be trusted as a member of society andachieve sustained growth. In MTMP19, we established“Actively Pursue CSR” as one of its basic policies.
In fiscal 2016 we established the CSR Promotion Officeto actively advance these activities and concentratehuman resources from divisions associated with CSR.
This organization takes the lead in raising awarenesswithin the Company and delivering information outsideof the Company by clarifying challenges through dialogue with various business divisions about resolution ofsocial issues through formulation of CSR policies andplans and products and services. These activities enable
collecting information from inside and outside sources,
we organized our thinking on activities already being
conducted and activities that will be necessary going
forward, and established long-term goals for the SHIGroup’s CSR activities.
Providing excellent products and services and contributing to resolving social issues are a fundamental role ofthe manufacturing industry. The SHI Group is focused on
resolving social issues through its main business of providing products and services. For example, we connect
to the resolution of social issues through the provision of
products such as power generation equipment through
CFB boilers fueled by biomass, public water and sewer
facilities, industrial use water treatment plants and­medical equipment centered on cancer diagnosis and

The Corporate Mission Statement clarifies our commitment to becoming “a machinery manufacturer that continues to provide excellent products and services to theworld” and our direction of “we will contribute towards
society by gaining high respect and confidence from all
stakeholders.” We set out four values of “Customer
First,” “Embrace Changes,” “Commitment to Technology
and Innovation,” and “Respect People” that Group
members should emphasize.
Sharing these business principles throughout the entire
Group enables us to move forward in a drastically changing market environment without losing site of where weshould be headed, provides a focus for Group strengths
and enables creation of great strength.

Investment Plan (Table 4)

Key Points
Three-Year Total

Capital Investments

R&D Expenses

Domestic Hires

M&A

Focus investments in
key business areas andinformation systems

Enhance productcapabilities that target
growthContinue to actively fillpositions in technology andservice-related functions

Explore growth
proposals from key
business areas¥80.0 billion¥52.0 billion

1,400 people¥30.0 billion

Business Roles in Medium-Term Management Plan 2019 (Table 5)
Role

Positioning
NextGeneration
Businesses

Growth & High Profitability

Improve Profitability

Stabilize Profit Margins

Aim to achieve growth while
maintaining high levels of profitability(10% or greater)

Aim to achieve growth while
improving profitability

Ensure a stable levelof profit

InfrastructureRelated
Businesses

Shunsuke Betsukawa
President and CEO

Next-generation
Growth Devices

Cryogenic Equipment
Core pillar of profitability
and growth for the Group

DeviceRelated
Businesses

treatment, as well as by pursuing advanced functions
such as energy saving, automation and enhanced safetyin addition to supplying customers with components fortheir products and services.
In addition, we acquire society’s trust through greater
reduction of the load on the environment, emphasizing
relationships with various stakeholders, green procurement and strengthening internal governance and there
are numerous areas where we need to actively advance,
including the creation of workplace environments thatallow each and every Group company member to workin a lively manner.
As a part of this, fiscal 2016 was positioned as the FirstYear for Diversity Promotion to create the foundation for
an organization where diverse personnel can participate
and advance while leveraging their own personal­qualities, and we are, first of all, promoting women’s
participation and advancement as a key management
policy.
Through these initiatives, we will work to earn the trustof society and achieve sustained growth for the SHIGroup by contributing to resolution of social issues.

Power Transmission
and Controls
Injection Molding Machines(e.g. medical, semiconductor,
automotive)

Semiconductor Production
Equipment
Chemical Processing
Equipment(e.g. agitators, food-related machinery)

Industrial Cranes / Mobile Cranes / Turbines / Boilers /Water Treatment Facilities

Medical-related
Equipment
Metal Processing
Equipment(e.g. presses, flow forming, etc.)

Hydraulic Excavators
Stabilize business without
being concerned about scale
Shipbuilding

Maximize profitability and create a second core pillar of growth(e.g. energy, environmental, transportation, etc.)

08

Sumitomo Heavy Industries, Ltd. Integrated Report 2017

Sumitomo Heavy Industries, Ltd.

Integrated Report 201709

Three Strengths Driving SHI’s GrowthThree Strengths Driving SHI’s Growth

Cultivated strengths

The SHI Group has developed its business while responding to changes in society’s needs.
The Group has overcome adverse management environments with its strengths in“excellent products and services,” “management with effective governance,” and“a culture of transformation.” These three strengths have been cultivated throughout
the Group’s history. They will continue to be important factors in our growth over the
medium and long term.

1Competitive strength
Net Sales(Billionsof yen)Operating
Income(Billionsof yen)Net Sales and Operating Income

100.0

800.0

Top market share in
the power transmission
and controls industry
in Japan

700.8 billion
667.1 billion

660.8 billion
642.9 billion

600.0

674.3 billion
624.1 billion

Net Sales

600.3 billion

Excellent products
and services

615.3 billion

77.8 billion

566.7 billion

75.0

551.3 billion
521.3 billion

517.1 billion264.2 billion
516.2 billion

482.8 billion

513.8 billion

585.9 billion

548.0 billion

481.3 billion

Management capabilities

56.9 billion

Management witheffective governance50.6 billion

48.8 billion
400.045.8 billion

47.1 billion

46.0 billion

47.5 billion

50.0

48.4 billion

Creating a structure
for ensuring
profitability

40.2 billion
34.3 billion

31.3 billion
28.3 billion
200.0

25.0

Operating Income
14.2 billion

12.7 billion

3

17.2 billion

Corporate culture
7.5 billion

00Medium-termManagement Plans
10

1999

2000
C21

2001

2002

2003
Rebuild 04

Sumitomo Heavy Industries, Ltd. Integrated Report 2017

2004

2005

2006

2007

Leap to Excellence ’07

2008

2009
Global 21

2010

2011

2012

2013

Innovation 21

2014

2015

2016

Medium-termManagement Plan 2016

2017

2018

2019

Medium-termManagement Plan 2019

A culture oftransformation
Crisis response
capability and reformawareness

Sumitomo Heavy Industries, Ltd.

Integrated Report 201711

Management Model for
Medium- to Long-Term GrowthManagement Model for Medium- to Long-Term Growth

OUTPUT (FY2016 actual)

The SHI Group continually reforms its management model, drawing on the strengths it has
cultivated. We will continue to build a highly competitive business portfolio, and enhance
the profitability, stability and growth potential of management.

Excellent products and services¥674.3 billion

Net sales

INPUT¥48.4 billion

Operating income

Business Principles

Value provided to
stakeholders

Manufacturing capital

Medium-Term
Management Plan

1

Intellectual capital

Financial capital

2

Competitive strength

Management capabilities

Excellent products
and services

Management witheffective governanceTop market share in the powertransmission and controls
industry in Japan

Creating a structure for
ensuring profitability

P.14

P.16

Contribution to safety,
efficiency, comfort

Stockholders’equity ratio

50.0%

Net interestbearing debt ratio

Shareholders andinvestors–0.4%

Raise shareholder value
through shareholder
returns, etc.

Contribution to and impact onsociety and the environment

Business partners

29,345t
Recycled volume 29,253t
Total discharge

Waste volume
Human capital

Customers

Financial results from soundmanagement

Corporate
management strategy

Corporate Mission
Statement
Waste reduction

Growth throughcollaboration and sharing
expertise, etc.

21%

Employees(compared to Fiscal 2015)

Developing humanresources that raisecompetitivenessSocial capital3

Corporate
cultureA culture of transformation
Crisis response capability andreform awareness

P.18

CO2
emissions

6.77 10,000-tons
Overseas 6.85 10,000-tons

Domestic

Society and theenvironment

Natural capital

Water reduction

Corporate GovernanceOutside factorsthat impact the
SHI Group

12

Sumitomo Heavy Industries, Ltd. Integrated Report 2017

Economic conditions
in countries andmarkets

Technological­innovation andchanges in industrial
structures

Environmental contribution
through reducing
environmental impact, etc.

–40.1%(compared to Fiscal 2015)

Facilities investment
demand centeredon emerging
countries

Competitors
becoming morecompetitive

Increasing demandin life sciencefieldsContribution toexternal environment

Sumitomo Heavy Industries, Ltd.

Integrated Report 2017

13

1

STORY
Competitive
Strength

STORY 1 Competitive Strength

Excellent­products andservices
Nagoya Works (Obu-shi, Aichi)

Top market share in the power transmission andcontrols industry in JapanThe Story of the Power
Transmission and Controls
Business
The SHI Group’s power transmission and controls business began
in 1911 with the production of DC
motors for the Besshi copper mine,
so it already has over 100 years ofhistory. CYCLO®DRIVE, which was
first produced in 1939, remains
one of our mainstay products. It isan exceptional product that has
led the global power transmission
industry through developments inindustrial technology and changes
in society. It is an unshakable­presence as the trusted partner ofmany customers.
“We are always moving forward in
pursuit of new ideas that inspire ourpartners to create new values thatwill change the world.” Sumitomo

Drive Technologies, the brand of
our power transmission business,
was adopted in 2003 as a symbol of
our values. Through the brand, we
strive to provide even higher value
to customers by reaffirming our role
as a “dependable partner withreliable products of unique technologies and innovations solutions”
and further reinforcing “dynamic
and speedy support and services.”CYCLO®DRIVE
Precision speed reducer unit

14

Sumitomo Heavy Industries, Ltd. Integrated Report 2017

Development & Quality­Support Excellent Products
and Services
Listening closely to customers andworking with them to directly tackle theissues they face is the basic stance of
the SHI Group’s power transmission
and controls business. Out of working
with customers, we have developed an
extensive, industry-leading productlineup ranging from small-scale gear
motors of several watts to large-scale
gearboxes of several thousand kilowatts, along with inverters and various
types of motors.
Our R&D system forms the basis of
all the SHI Group’s technologies andallows us to produce technologies as
the top manufacturer of power transmissions. We conduct basic research on
gears, shafts, casing and lubricants—
the foundation technologies of powertransmissions—and carry out development to commercialize products thatmeet customer needs. It is these wideranging development capacities that
support our new products and newtechnologies.
The main reason customers choose
our products is dependability. To ensurethat quality built in at the development
stage is maintained on actual production lines and to deliver highly dependable products to customers, we haveestablished strict quality standards evenat the manufacturing stage, to the levelof the individual process.

Delivering Dependability to
Customers Globally
Simply having an extensive productlineup is not enough without a systemfor delivering what the customer wants
in a timely manner and supporting reliable and safe operation. We began
developing the business on a global
scale from an early stage to support thebusiness activities of our globalizing
customers. Sumitomo Machinery­Corporation of America was establishedin 1966, and, in Europe, in 1974 weinvested in CYCLO Getriebebau GmbH
(now Sumitomo (SHI) Cyclo Drive­Germany GmbH), the parent of the
CYCLO®DRIVE.

Our current sales and service system
has sales offices at 123 locations in 28
countries. We supply products andprovide service to diverse sectors andapplications, including steelmaking
machinery, distribution systems, foodproducts equipment, and semiconductor production equipment. Our regionalsales offices have built a knowledge
management system for sharing andrefining information that allows them toquickly search projects from around theworld to find and propose the optimal
solution for each customer.

Toshiharu Tanaka
Director, Executive Vice President
General Manager of Power
Transmission & Controls Group

Sumitomo Heavy Industries, Ltd.

Integrated Report 201715

STORY 2 Management Capabilities

2

STORY
Management
Capabilities

Managementwith effective
governance
Head Office (Shinagawa-ku, Tokyo)

Creating a structure for ensuring profitability
SHI Management for Maintaining Healthy Earnings

Opportunity Risks Visualized
through Order Evaluation“Transform into a high-profit company” is one of the basic policies
of MTMP19, not simply to increase
our own profitability, but because
we believe that healthy earnings
are necessary to earn the highesteem and trust of all stakeholders and to continue contributing
to society.
Through the plans so far, the SHIGroup has conducted a variety ofmeasures to build mechanisms tofurther pursue profit.

For sales opportunities in which
certain risks are anticipated, such as
when the monetary value or customer exceeds certain standards orwhen a newly developed technology
or new business model is to be
adopted, the SHI Group conducts
strict order evaluations involving the
judgment of top management that isbased on opinions received from
related specialist divisions within the
Company. The focus of the evaluations is broad, including not only
technologies and product quality but
legal interpretations of contractual
provisions and the precision ofreceivables collection. Visualizationof the risks inherent in sales opportunities and repeatedly and thoroughly

conducting advance preparations on
mitigating risks also enables us toaccumulate organizational knowledge in business divisions and takemeasures at an earlier stage.
By clarifying the risks at an earlystage, the transparency of decisions made by top management at
the final stage of the order evaluation is also raised and an organizational culture is fostered whererisks are debated with frankness ateach level of the organization
starting with the level directly
involved in sales activities.
This system has been createdout of our many experiences todate, and the fact that we are able
to execute it faithfully we believe
is one of the strengths of ourorganization.

Order Evaluation Flow (Example)
Operational
Divisions

Head Office
Divisions
President’s
Judgment

Finance
Division

Legal
Division

Executive
in Charge

Planning and
Administration
Division

Sales
Division

Reporting and Discussion at
the Executive & Operating
Officers Committee

Learning Cycle for Ensuring
Management Policies­Penetrate the GroupThe Executive & Operating Officers
Committee is convened every monthwith all directors, corporate auditors,
and operating officers from each division. The committee receives reports
on divisional performance and status,
shares market information for the SHIGroup’s wide-ranging businesses, andholds discussions on potential risks. For
example, power transmission market
reports, which make clear the response
to market trends at a relatively earlystage, are provided as reference toother business divisions and allow them
to formulate important insights forforecasting their own markets.
Sharing information on a regular basis
among the operating officers of eachbusiness division constantly exposes
the activities of each business division
to the eyes of third parties, including
external directors. For this reason,
when something is perceived as somehow irregular, it is not neglected; measures are taken at an early stage forproblems with the potential to have aserious impact on performance.
By ensuring that thorough reports
are given at the Executive & ­Operating
Officers Committee with a degree of
scrutiny and tension, governance of
the SHI Group functions in a very­tangible way.

Repeatedly implementing these various
measures serves to accelerate thelearning cycle in connection with mitigating risks and responding to problems.
This learning cycle is implemented inbusiness divisions as well to instill theentire Group with the direction soughtby management and effective governance and to generate the strengththat is needed to continue to provide
first-class products and services.

Hideo Suzuki
Senior Vice President
General Manager of Corporate
Finance, Accounting &Administration Group

Feedback

16

Sumitomo Heavy Industries, Ltd. Integrated Report 2017

Sumitomo Heavy Industries, Ltd.

Integrated Report 2017

17

3

STORY
Corporate
CultureSTORY 3 Corporate Culture

A culture oftransformation

Industrial Cranes: Our maiden business being constantly reborn
Value Creation by Sumitomo
Heavy Industries Material
Handling Systems Co., Ltd.
Sumitomo Heavy Industries­Material Handling Systems Co., Ltd.
has earned the strong trust of its
customers through comprehensive
engineering related to the design,
manufacture, assembly and installation of cranes and other material
handling systems used at ports,
shipyards, ironworks and in powerand energy-related applications aswell as of mechanical parking
structures and other facilities, andlifecycle support that includes
maintenance and after-sales service.
The company conducts design
and manufacturing at Ehime
Works—Niihama Factory ands­upplies products not only to thedomestic Japanese market but
also to overseas markets, primarilyin East Asia and Southeast Asia.
Specifically, the company boasts
the top share of the domestic
market in gateway-shaped Goliathshipping cranes, an indispensable
tool at large-scale shipyards, andcontinuous unloader (bucket

Continuous unloader

elevator type), which are used tounload coal and iron ore at power
stations and ironworks.
The company provides substantial value to customers through apositive cycle of raising customer
satisfaction through conscientious
service, listening to feedback from
customers, and improving productquality and function by incorporating that feedback into its products.

Ehime Works
Niihama Factory (Niihama-shi, Ehime)

Overcoming Crises to Foster
a Culture of Transformation

Further Growth through­Integrating Differing Cultures

The industrial crane business is themaiden business of SHI. In 1888, webegan machinery repairs as the production and repair shop for the Besshi
Copper Mine, and in 1912 we delivered
our first overhead crane, continuing
thereafter to conduct manufacturing
activities at the Niihama site.
Around 2000, capital investment
contracted amidst financial systemanxiety and plunging stock prices andso we conducted structural reforms toaccommodate these market changes.
Amid declining product sales, we
focused on service businesses, madeprogress on selecting certain models
and concentrating resources in them.
We put our business survival at stake byspinning off companies and began anew.
Subsequently, the business recovered
steadily; however, performance deteriorated again following the global financial crisis of 2008. The Company further
strengthened service businesses andrevamped manufacturing structures.
We have faced crises of business
continuity in the past, and we havealways overcome them by working
together as an organization to implement resolute structural reforms.

Japan’s industrial crane market ismaturing, and the service business is
growing in importance. Overseas markets, on the other hand, are expected
to grow, driven by infrastructure
demand, mainly in Asia. However,­competition with overseas companies
is also expected to increase.
In response to these changes,­Sumitomo Heavy Industries Material
Handling Systems integrated the­industrial crane business of ­Mitsubishi
Heavy Industries Machinery Technology
Corporation.
The fusion of the two companies’
traditions and backgrounds is no easytask. Discord can frequently occur due
to differences in approaches and values

that each has traditionally relied on.
Nevertheless, Mitsubishi Heavy­Industries Machinery Technology­Corporation and the Company havecomplementary models and technologies, which will enable us to provide
value to greater numbers of customers.
Within the culture of transformationthat Sumitomo Heavy Industries­Material Handling Systems has cultivated throughout its long history, we
will leverage both companies integration
synergies to the fullest extent, strengthening the service business in Japan andexpanding the business in overseas
markets to achieve further growth.

Tatsuya Endoh
Senior Vice President,
Representative Director andPresident of Sumitomo Heavy
Industries Material Handling
Systems Co., Ltd., General
Manager, Ehime Works

Container crane

18

Sumitomo Heavy Industries, Ltd. Integrated Report 2017

Sumitomo Heavy Industries, Ltd.

Integrated Report 201719

Segment Overview

Segment Overview At a Glance: SHI Group’s Business
Machinery
Components

Precision
Machinery

Construction
Machinery

Industrial
Machinery

Environmental
Facilities & Plants

Ships

Main
Products• Power transmission and controls• Motors• Plastics machinery• Film processing machines• Semiconductor equipment• Laser processing systems• Cryogenic equipment• XY stages • Precision forgings• Control system equipment• Defense equipment• Machine tools• Hydraulic excavators• Mobile cranes• Road machinery• Cyclotrons • Medical devices• Forging presses• Material handling systems• Logistics systems • Parking systems• Turbines • Pumps• Ships• Captive power generation systems• Boilers• Industrial waste treatment systems• Air pollution control systems• Water treatment systems• Process equipment • Pressure vessels• Mixing vessels• Air conditioning equipment• Food processing machinery

Business
ProfileThis segment’s main products are
power transmissions and controls,
which are essential for operating
motor drives. Our power transmission and controls lower the rotating
speed of a motor while increasing
torque. They are used widely invarious fields ranging from the­handling line of production plants torobot joints. We have the leading
domestic market share and a toplevel sales record globally.

Our injection molding machines
used to manufacture plastic products
excel in high-precision, high-cycle
work and have particular strength inelectric and electronic-related markets. Our cryogenic equipment is not
only used in the medical field for
MRI and the like, but is also widelyused in the field of semiconductor
equipment in cryopumps and more.

The products in this segment include
our hydraulic excavator models, whichwere the first pieces of construction
machinery awarded prizes for energy
efficiency. Moreover, our products
have also superior operability andsafety, and been bestowed with thegood design award in the past. Ourasphalt finishers are an essential
piece of equipment for pavement
finishing works.

This segment is responsible forv­ arious types of products including
advanced devices that use cyclotrons
to diagnose and treat cancer, forging
presses for automotive components,
large-scale cranes for shipyards andports and transport equipment for
logistics. We are focusing on steam
turbines for biomass captive power
generators overseas. Our continuous
unloaders hold the leading share in
Japan.

This segment specializes in mid-scale
oil tankers. By narrowing down thenumber of vessel types we handle, it
is possible to realize efficiencies indesign and manufacturing, andachieve further differentiation in
products.

Our circulating fluidized bed (CFB)
boilers that can be used with various
fuels, including biomass, boast the
top share in the global market. Our
effluent water treatment systems andsewage treatment systems used in
production plants are highly regarded
for their energy-saving performanceand are being provided for a wide
range of uses, from construction offacilities through to operation
management.

Net Sales
Operating
Income(Operating
Income Ratio)

Net Sales (left)
Operating Income (right)
Operating Income Ratio(Billions of yen)
150.0

Net Sales (left)
Operating Income (right)
Operating Income Ratio

9.2%(Billions of yen)
12.1%
225.0

15.0

8.9

100.0

98.6

9.1

10.0

150.0

154.6
18.7

15.0

2.2%
201.9

145.7

Net Sales (left)
Operating Income (right)
Operating Income Ratio(Billions of yen)
300.0

30.0

10.0%

8.3%
107.6

Net Sales (left)
Operating Income (right)
Operating Income Ratio

20.0

200.0

(Billions of yen)
120.0

11.3%

0.8%
182.5

10.0

87.9
10.0

Net Sales (left)
Operating Income (right)
Operating Income Ratio

10.9%

15.0

(Billions of yen)
45.0

3.3%

98.9
10.8
10.0

80.0

30.0

5.0

100.0

5.0

40.0

0

0

5.0

15.0

0

0

15.0

5.3%

109.7
2.0

100.0

1.0

50.0

0

0

107.6
9.1

10.0

5.8

1.0

4.4

8.5%

(Billions of yen)
150.0

1.3
10.0

75.0

3.0

4.1%
32.6

29.0

14.6
50.0

Net Sales (left)
Operating Income (right)
Operating Income Ratio

5.0

1.4
0

15

16

(FY)

0

0

15

16

(FY)

0

0

15

16

(FY)

Net Sales Ratio by Segment (Billions of yen)
Machinery Components
Precision Machinery
Construction Machinery
Industrial Machinery
Ships
Environmental Facilities & Plants

109.7
29.0
4.1%
87.9

10.1
1.4%

107.6
107.6
154.6

2015 22.1%
FY2015
年度

(FY)

8.3
1.2%

98.6

15

16

(FY)

15

16

0

(FY)

201.9

107.9

Europe16.0% 14.6%
14.7%

120.8

North America

145.7

2016 21.6%
FY2016
年度

339.1

Asia (excluding China)
China
Other
Overseas ships
Japan

17.2%

332.5

7.2%
182.5

27.8
4.0%

16.0 %

66.6

2015 9.5%
47.4% FY2015
年度
10.7%

27.1%

28.8%

Sumitomo Heavy Industries, Ltd. Integrated Report 2017

32.6
4.8%
98.9

Other

20

16

Sales by Region (Billions of yen)

15.7% 15.4%
12.5%

15

2016
50.3% FY2016
年度

75.0
31.2
4.6%

69.5

10.3%
7.4%

50.6
27.5
3.9%

7.9 %

53.5

50.2
22.9
3.4%

Sumitomo Heavy Industries, Ltd.

Integrated Report 201721

Segment Overview

Power Transmission & Controls

Market Environment
In FY2016, the domestic market was generally weak forheavy and chemical industries but strong for sectors related
to lightweight transport, construction, and LCDs, among
others. Overseas, momentum was relatively robust, led by
Europe, North America, and Asia as well as factory
automation.
In FY2017, despite a sense of uncertainty, domestic andoverseas trends are likely to be solid, mainly in sectors
related to robotics, food, and metal processing, driven by
investments in infrastructure equipment and labor-saving due
to labor shortages.
High-precision gearboxes used forindustrial robots

OrdersNet Sales(Billions of yen)
120.0

104.7

105.0

(Billions of yen)
120.0

102.6

97.4

107.6

(Billions of yen)
12.0

8.3%
8.0

40.0

40.0

4.0

15

16

(FY)

0.0

14

In FY2017, we will keep investing in overseas business sites.
We will also continue to heighten our product capabilities,
lead-time performance, and cost competitiveness by bol­stering our product planning capabilities, sales networks,
supply chains, and other aspects in Japan and around theworld. Moreover, we will successively launch new models
currently in development, as we strive for continuous busi­
ness growth by reinforcing product capabilities and entering
growth fields.
In April 2017, SHI integrated our gearbox business into theGroup company Sumitomo Heavy Industries Gearbox Co.,
Ltd. We aim to augment the large gearbox business throughthis unification of its management.

(%)
12.0

98.6

80.0

14

Fiscal 2017 Strategies and Initiatives

In new products, we launched the PARAMAX® 10 Series oflarge gearboxes. We focused on sales overseas, aiming tostrengthen the gearbox business. Regarding specific appli­
cations, we rolled out traveling motors for stacker cranes.
Specifically, SHI introduced water-resistant gear motors withan IP67 rating, primarily for food and hygiene equipment,
and the world’s first gear motors treated with an antimicro­bial coating to receive the Society of Industrial Technology
for Antimicrobial Articles (SIAA) KOHKIN certification.
In Japan, we established a full lineup of products compliant
with new efficiency rules for motors (top-runner efficiency
rules for motors) introduced in April 2015 ahead of othercompanies. We are also strengthening customer service
through standardization and support systems, and so forth,and responding to regulations overseas.
Overseas, we worked to bolster the mining, infrastructure,and other gearbox markets by launching and expanding
sales of PARAMAX® 10 Series gearboxes.

Operating Income/Operating Income Ratio

80.0

0.0

Fiscal 2016 Review and Key Topics

15

16

(FY)

0.0

9.2%
9.1
8.0

6.5%
6.6

4.0

14

Machinery
Components

15

16

(FY)

0.0

CYCLO®DRIVE

PARAMAX® 10 Series gear reducer

Main Products• Power transmission and controls• Motors
Major Applications/Markets
Factory automation machinery, Industrial robots, Machine tools, Conveying and logistics machinery,
Steel and iron making machinery, Chemical processing machinery, Material handling machinery,
Mining machinery, Food processing machinery, Water treatment plants, Elevators and escalators

22

Sumitomo Heavy Industries, Ltd. Integrated Report 2017

PREST® gear reducer (antimicrobial coating option)

HYPONIC® gear reducer (antimicrobial coating option)

Sumitomo Heavy Industries, Ltd.

Integrated Report 201723

Segment Overview

targets for orders, sales, and operating income. Sumitomo(SHI) Demag Plastics Machinery GmbH grew its market shareon the back of a rise in electric motor sales.
By sector, electrical and electronic-related markets saw
active investment around smartphones and VR lenses in
China from the latter half of FY2016. The domestic and US
automotive markets were also robust.

Plastics Machinery

Market Environment
Plastics machinery contracted in FY2016, hampered by
global economic weakness. Growth slowed particularly inemerging markets, which had been driving demand.
However, the market turned around as 2017 began, supported by brisk demand in North America and emerging
markets such as China and Southeast Asia. Notably, themarket for smartphone components and other electric andelectronic components remains brisk in China, and market
conditions are strong in Southeast Asia, the United States,and Mexico.

To realize a competitive product portfolio, we will redouble
efforts in related markets such as automotive and food containers in addition to our traditional electrical and electronicrelated domains. Further, we will strengthen sales, service,and brand channel collaboration with Sumitomo (SHI) Demag
Plastics Machinery GmbH under a common strategy.
With regard to the Internet of Things (IoT), we are making
proposals to boost productivity and realize smart factories.
These initiatives include centralized management of molding

In FY2016, plastics machinery missed targets for the single
fiscal year of 2016 as sales fell due to impact from market
deceleration in China, but achieved cumulative three-year

OrdersNet Sales

Operating Income/Operating Income Ratio(Billions of yen)
180.0(Billions of yen)
180.0(Billions of yen)
21.0

154.6

154.6

154.7

146.4

154.6

120.0

14.0

60.0

60.0

7.0

0.0

14

15

16

(FY)

0.0

14

15

16

0.0

(FY)

In the medical MRI market, we expect overall global conditions to remain largely unchanged in light of flat trends in oneof the biggest markets, China. The semiconductor market islikely to stay on a growth trajectory in FY2017, fueled by solid
demand for data centers along with smartphone capacity
growth and robust automotive and IoT demand. The display
market is expected to grow as organic EL display demand for
the China market and smartphones moves into full swing.

Fiscal 2016 Review and Key Topics
We are targeting greater market share with new products incryogenic coolers and cryopumps and aiming to capture
replacement demand. We launched highly efficient cryogenic
coolers boosting performance by 20%. Going forward, we
will keep helping customers to enhance their own productcapabilities. We will also focus on tapping into demand for
replacement of existing products. Our cryopumps launchedin 2015 use 40% less energy and double Ar gas storage

capacity compared with previous models, and these continue
to perform well. We are delivering value by contributing tocustomers’ cutting-edge processes and promoting replacement of older products on their existing production lines.

Fiscal 2017 Strategies and Initiatives
In October 2016, we acquired the shares of the vacuum
gauge developer Ferran Technology, Inc. (California, USA)and made it a subsidiary. Along with the cryopumps that wemanufacture and sell, vacuum gauges are a critical instrument for measuring and establishing the required vacuum
environment inside the chambers of semiconductor production equipment.
In March 2017, we acquired the shares of Persimmon­Technologies Corporation (Massachusetts, USA) and made it
a subsidiary. Persimmon’s customers are semiconductor andelectronic component production equipment manufacturers.
It primarily manufactures and sells vacuum robotics for use in
semiconductor manufacturing processes such as wafer transport, where clean, highly reliable products are required.
In addition to expanding business in this way through
M&A, we will leverage the production and quality systems
and sales networks we have developed in cryopumps to winmarket share. In doing so, we will broaden our businessdomain in the vacuum equipment market and tie our efforts
to semiconductor-related business growth.

14.6

13.5
120.0

(%)
15.0

18.7
12.1%

145.7

Precision Equipment and Others

Market Environment

Fiscal 2017 Strategies and Initiatives

Fiscal 2016 Review and Key Topics

cells around the iii-System (i cube system) for production
management, traceability via molding machine and producttrend analysis, and troubleshooting through the user support
site, Tomenai.net.

10.0%

9.2%

10.0

5.0

14

15

16

(FY)

0.0

SICERA® Ultra cryopump

Precision
Machinery
Main Products• Plastics machinery
Major Applications/Markets
Electronics,
Electric equipment,
Automobiles, Containers,
Medical equipment24• Ion-implantation systems• Laser processing systems• XY stages• Transfer-molding pressmachines
Major Applications/Markets
Semiconductors, LCDs

Sumitomo Heavy Industries, Ltd. Integrated Report 2017

• Cryogenic equipment
Major Applications/Markets
Medical equipment,
Measuring and analyzing
equipment, Semiconductors• Precision forgings
Major Applications/Markets
Jet engines for airplanes,
Turbines for power
generation• Defense equipment
Major Applications/Markets
DefenseAll-electric injection molder
machine SE100EV-A

Sumitomo Heavy Industries, Ltd.

Integrated Report 201725

Segment Overview

Hydraulic Excavators and Road Machinery
Sumitomo (S.H.I.) Construction Machinery Co., Ltd.

Market Environment
In FY2016, the domestic hydraulic excavator market contracted 4% from the previous fiscal year. This reflects a recoil
from the surge in demand especially focused around therental market in FY2014 prior to the change in emission rules.
The biggest market for hydraulic excavators, China, recoveredfrom the second half of FY2016 to expand 25% from theprevious fiscal year and drive global demand. Other markets,
including Europe and the ASEAN region, were also solid. As
a result, the overall global market grew 8% to 173,750 units
sold in FY2016.

Fiscal 2016 Review and Key Topics
Our domestic market share reached a record high of 11.7%,
thanks to bolstered marketing and servicing capabilities for
new model hydraulic excavators, which offset lower rental
demand. Moreover, our new model hydraulic excavator(SH250-7) introduced in July 2016 was the third generation ina row to be bestowed the Good Design Award. At our China
and Indonesia plants, we ensured operational capacity bycontinuing steps from the previous fiscal year including manufacturing plates for use in our domestic plants. At the China
plant, we ramped up production in line with market recovery
from the latter half of FY2016. Turning to the road paving
business, asphalt finisher export volumes grew and businessexpanded as production started at the China plant.

Fiscal 2017 Strategies and Initiatives
We expect global demand to grow from FY2016, buoyed bya surge in demand ahead of domestic emission regulation
changes and recovery in the China and ASEAN markets. For
the domestic market, we plan to roll out equipment meetingheightened needs for using ICT in construction, such as newmodel excavators and road machinery with our new model
safety operating support system “Field View Monitor-II”(FVM-II). Overseas, we aim to increase our market sharethrough reinforced marketing and servicing activities tailoredto specific areas around the world. In the service and components area, we are pushing for higher profitability. For production, including overseas, we will work even harder to cut
costs and improve production efficiency.

Crane Business

Hitachi Sumitomo Heavy Industries Construction Crane Co., Ltd.

Market Environment
In FY2016, the domestic mobile crane market was solid anddemand rose, underpinned by private sector construction,
including for the 2020 Tokyo Olympics, and the execution of
the second supplementary budget for government construction investment. Overseas demand declined sharply. Key
factors were less investment in North America due tocheaper crude oil, economic stagnation in Western Europe,
partially as a result of the UK’s departure from the EU, lower
raw material prices in emerging markets, and China’s economic slowdown.

Fiscal 2017 Strategies and Initiatives
We expect the domestic market’s strength to wane, andcompensated for the decrease by reinforcing our relationships built on trust with overseas sales agents to cultivate
customers abroad. Market conditions are likely to remain
uncertain; however, we will develop new model equipment
matching customer needs, thoroughly reduce costs, andstrengthen ties with affiliates and sales agents to enhancecustomer satisfaction. We will also bolster our corporate
structure, with an emphasis on internal controls, cash flow
improvement, and fixed cost ratio reduction. We look to
deepen ties with the SHI Group and continue to build a leanbusiness structure that is competitive.

Fiscal 2016 Review and Key Topics
OrdersNet Sales

Operating Income/Operating Income Ratio(Billions of yen)
270.0(Billions of yen)
270.0(Billions of yen)
15.0

206.5

197.1

202.0

190.3

201.9

(%)
9.0

11.9
182.5

180.0

180.0

10.0

90.0

90.0

5.0

6.0

5.9%

4.4

3.0

2.2%

Hitachi Sumitomo Heavy Industries Construction Crane Co.,
Ltd. (HSC), which had previously been equally owned,
became our consolidated subsidiary in March 2017 as aresult of a change in equity stakes in HSC to 66% for ­SHI
and 34% for Hitachi ­Construction Machinery Co., Ltd. In
FY2016, the Company’s consolidated subsidiary Link-Belt
Cranes, L.P., LLLP suffered from weak demand in North
America, but it will enhance cooperation with HSC in areas
such as sales, ­development, and procurement going forward.

1.4
0.8%
0.0

14

15

16

(FY)

0.0

14

15

16

(FY)

0.0

14

Construction
Machinery

15

16

(FY)

0.0

Hydraulic excavator SH250-7MH

Main Products• Hydraulic excavators
Major Applications/Markets
Construction,
Civil engineering, Scrap,
Forestry• Mobile cranes
Major Applications/Markets
Construction,
Civil engineering• Road machinery
Major Applications/Markets
Roadway construction

350-ton crawler crane
SCX3500-3

Hydraulic excavator SH250-7

26

Sumitomo Heavy Industries, Ltd. Integrated Report 2017

Sumitomo Heavy Industries, Ltd.

Integrated Report 201727

Segment Overview

Forging Presses

Market Environment
Overseas transplant investments are gaining steam, mainly
in North America, as automakers increasingly adopt highvalue-added parts. Domestic market investment is concentrated on maintaining production capacity including by
overhauling and updating existing equipment.

Fiscal 2016 Review and Key Topics

Fiscal 2017 Strategies and Initiatives

Fiscal 2016 Review and Key Topics

Fiscal 2017 Strategies and Initiatives

Continuing to aim for higher customer satisfaction, we will
enhance our servicing capabilities. In particular, we will workon preventative maintenance to help ensure customers’
stable operations. Additionally, we are developing a new FPZ
series of forging presses based on the concepts of stable,
suitable, and comfortable. Our goal is to contribute to abetter forging work environment and to expand our business.

In the diagnosis field, we got orders for cyclotron systems for
PET, especially in China and Japan. In the treatment field, wereached an “Agreement on Comprehensive Cooperation on
Fifth-Generation Quantum Beam Cancer Treatment Facility”
with the National Institutes for Quantum and Radiological
Science and Technology, and three other companies. Regarding boron neutron capture therapy (BNCT), which destroys
cancer cells after the uptake of boron compound, we began
Phase II clinical trials for head and neck cancer.

We are setting out to expand orders through stronger­marketing, forge ahead with new product and technology
development, and make our products even more competitive.
These efforts will be guided by our business vision of “delivering the best customer service and products in the material
handling domain to become the top domestic material­handling systems manufacturer.”

Medical Equipment

Amid robust overseas transplant investments, we received
orders for equipment used to manufacture automobile partsin North America and Southeast Asia. We also received
orders in the domestic market including for large-scale refurbishment and new projects. Additionally, in 2015 we won anorder for a world-leading automobile engine crankshaft­forging line and delivered it. It has now started operating,and has been well received by the customer.

Shin Nippon Machinery Co., Ltd.

Fiscal 2017 Strategies and Initiatives

Market Environment
The domestic and overseas markets are generally firm for
cyclotron systems for PET, which are used to manufactureradioactive pharmaceuticals for diagnoses related mainly tocancer, brain function, and other issues. Also, in terms of
cutting-edge treatment, there is a growing interest in protonand heavy-ion cancer therapy systems in Asia, Europe, andNorth America.

We will expand the business of PET cyclotron systems tooverseas, actively responding to the demand from research
institutions, delivery institutions, and so forth. With proton
beams, we will work to develop high-speed scanning technology. We will also contribute to overseas development withregard to heavy-ion beams. For BNCT, we will endeavor tocommercialize this medical device as soon as possible.

Material Handling Systems

Sumitomo Heavy Industries Material Handling Systems Co., Ltd.

OrdersNet Sales

Operating Income/Operating Income Ratio(Billions of yen)
120.0(Billions of yen)
120.0(Billions of yen)
12.0

89.6

92.6

98.9

91.3
75.8

80.0

87.9

11.3%
10.0

10.8

Market Environment
(%)
12.0

10.9%

7.6%

80.0

8.0

8.0

5.8
40.0

40.0

4.0

In material handling systems, demand for refurbishment ofaging facilities in the steelmaking sector is steady, and several thermal power investments are planned in the energy
sector. In logistics equipment, demand is rising for automation equipment to deal with labor shortages in distribution
industries. For machine-automated parking, redevelopment­projects are anticipated in connection with the 2020 Tokyo
Olympics as well as commercial and other facilities.

4.0

Fiscal 2016 Review and Key Topics
0.0

14

15

16

0.0

(FY)

14

15

16

0.0

(FY)

14

15

16

(FY)

0.0

Industrial
Machinery

Turbines and Pumps

We received orders for material handling systems from thebrisk steelmaking sector and secured a certain volume oforders from the shipbuilding industry, which made capital
investments to strengthen competitiveness. For logistics
equipment, we secured orders from a wide array of fields,
and we are focusing on new product development. We beatour order target for underground machine-automated­parking lots, thanks to the product capabilities supporting
our top market share and strong demand.

Market Environment
In the power generation business, projects for the domestic
Feed-in Tariff (FIT) system for renewable energy remainstrong. In the Southeast Asian private power generating
segment, delays on decisions for new projects are emerging
due in part to stricter conditions for construction permits.
However, we expect a rise in planned investments for electricity projects to meet growing power demand in countries
in the region. In the oil and gas business, excessive capacity
is contributing to a downtrend in investment. However, environmental initiative-related refinery projects are likely in Asia
and India as well as new petroleum distillation and petrochemical projects in the Middle East and North America.

Fiscal 2016 Review and Key Topics
In the power generation business, we attained higher domesticorder volume than in the previous fiscal year on brisk FIT business. Overseas order volume declined from the previous year,
partially because of delays on plant order decisions. In the oiland gas business, we won orders to increase the capacity ofexisting plants in South Korea and other places. Nevertheless,order volume fell from the previous fiscal year, largely owing to
new project cancellations and postponements. Overall, eventhough sales increased robustly, orders decreased slightly.

Fiscal 2017 Strategies and Initiatives
In the power generation business, we aim to expand orders
in the overseas private power generating segment and thepower selling segment by developing new markets and sustaining and adding to our loyal customer base. In the oil andgas business, we look to increase orders through marketingpromotions and our strengths in turbine and pump packages.

Main Products• Cyclotrons for
medical use
Major Applications/Markets
Medicalequipment28• Cyclotrons forresearch use
Major Applications/Markets
Research• Coating
systems
Major Applications/Markets
LCDs

Sumitomo Heavy Industries, Ltd. Integrated Report 2017

• Forging
presses
Major Applications/Markets
Automobiles,
Iron and steel,Non-ferrous
metals• Material handling machineryand systems
Major Applications/Markets
Iron and steel,Electric power,
Shipbuilding,Port logistics• Logistics &handling
systems
Major Applications/Markets
Logistics• Turbines
Major Applications/Markets
Power
generation• Pumps
Major Applications/Markets
Oil refineries,
Petrochemical
facilities
Steam turbine

Crankshaft forging lines

Sumitomo Heavy Industries, Ltd.

Integrated Report 201729

Segment Overview

Ships

Sumitomo Heavy Industries Marine & Engineering Co., Ltd.

Market Environment

In the shipbuilding market, oversupply of new vesselst­ emporarily improved as some overseas shipyards struggled
financially. However, sentiment for placing newly built vesselorders has not improved since the start of FY2016 con­sidering such factors as the continuing high volume of
newly built vessels, the accumulation of last-minute orders
ahead of new environmental regulations (NOx Tier III­regulations) in FY2015, and consideration for counter­measures regarding sulfur oxide (SOx) emissions regulations(SOx Global CAP2020).

In the shipping market, depression in the tanker sector was­generally mild compared with continued historical weakness
in the dry bulk sector from the previous fiscal year. However,
the tanker market has continued a downtrend since the startof FY2016, caused by geopolitical factors in places such as
the Middle East and Africa coupled with increasing uncertainty in the shipping market due to a large number of newly
built vessels.

Fiscal 2016 Review and Key Topics
The market situation for newly built vessel orders was
extremely tough since the price for newly built vessels has
been on a downtrend due to uncertain market prospectives
such as large numbers of newly built vessels still on-orderand countermeasures for new environmental regulations.
However, in contrast to such market difficulties, we received
three orders for newly built vessels in FY2016. As of the
beginning of FY2017, we had secured three years’ worth of

Fiscal 2017 Strategies and Initiatives
Global oil shipping volumes are projected to keep growing
for the foreseeable future as emerging markets’ import and/or consumption volumes continue to rise from FY2016, led
by India and China, and changes in crude oil trading patterns
lead to diversification of various countries’ crude oil suppliers—namely, an increase in crude oil exports from the US.
Meanwhile, completions of newly built vessels are expected
to remain at high levels in FY2017. However, new global
environmental regulations, such as those for ballast water

OrdersNet Sales

Operating Income/Operating Income Ratio(Billions of yen)
90.0(Billions of yen)
45.0(Billions of yen)
3.0

61.9
60.0

30.0

26.1

29.0

22.5

0.0

14

15

treatment, SOx and NOx, are expected to be a trigger toincrease the scrapping of existing tonnage in the future.
Against this situation, we will accelerate initiatives to receive
orders and enhance our vessels’ product capabilities. Specifically, we will quickly develop vessels compliant with newenvironmental regulations, changing customer requirements,
and diversifying trends. Further, we intend to raise shipbuilding efficiency through ongoing capital expenditures andimprove the profitability of individual shipbuilding ­projects
to increase profit levels from the previous fiscal year.

(%)
12.0

32.6
1.5

1.3

1.0
3.3%

30.0

work to be carried out. Also, we completed the constructionof three vessels during FY2016. By continuing to apply the
Toyota Production System and otherwise enhance productivity and improving the profitability of individual shipbuilding
projects, profit increased on a full-year basis. Moreover, weare proactively strengthening our flagship Aframax Tanker
and other mid-sized tankers, including adoption of NOx Tier
III regulations and new SOx emissions regulations.

6.0

4.1%

30.0
15.0

16

(FY)

0.0

0.0

14

15

16

(FY)

−1.5

0.0

−1.2 −4.8%
14

15

16

(FY)

−6.0

Aframax Tanker SOLOMON SEA

Aframax Tanker NORTH SEA

Aframax Tanker ALFA ALANDIA

Ships
Main Products• Ships
Major Applications/Markets
Marine transportation

30

Sumitomo Heavy Industries, Ltd. Integrated Report 2017

Sumitomo Heavy Industries, Ltd.

Integrated Report 201731

Segment Overview

Energy Plants

Market Environment
The domestic power generation market remains strong, witha number of projects under development on the Feed-in
Tariff (FIT) system launched in 2012 which use locally sourced
forest thinnings and biomass fuel from overseas including
palm kernel shells (PKS). Additionally major electricity companies are considering plans to construct large-scale biomass
power plants to reduce CO2 emissions. Overseas, there isrobust demand in emerging markets due to the lack of electricity, and planning and construction of coal-fired power
plants is underway in Asian countries.

Fiscal 2016 Review and Key Topics
During FY2016, we moved ahead with the construction anddelivery of boiler facilities to customers, including one overseas and four domestic power generation facilities. Also, we
received two new orders for circulating fluidized bed (CFB)

Ordersboilers. In the domestic biomass power plant market, we areseeing a shift in demand toward greater fuel diversity andlarger-scale facilities. We are drawing on our wealth of­experience to meet market needs to deliver high-quality
facilities, thereby helping to promote effective use of­biomass resources and reduction of CO2 emissions.

Fiscal 2017 Strategies and Initiatives
In Japan we aim to receive our first order for a large-scalebiomass power plant from a major electricity company. We
will also target projects that can utilize lower-priced biomasssourced from Asia.
We recently acquired the CFB boiler business of Amec
Foster Wheeler plc. and we will strengthen our overseas
business by harnessing the operational experience of the
newly established Sumitomo SHI FW Energia Oy. Looking to
the future, we will work to broaden our business area anddeploy our biomass boiler expertise globally, targeting
growth in energy fields for the Group.

Net Sales(Billions of yen)
150.0

113.4

(Billions of yen)
120.0

139.4

105.5

109.7

(Billions of yen)
12.0

107.6

The private sector market for wastewater treatment systems
is stable overall, supported by demand related to the refurbishment of aging facilities, rationalization (reducing operating costs and optimization), and environmental initiatives.
However, conditions on an individual project basis remaindifficult, owing partially to competition with other companies’ products and demand for lower costs.
Governmental and public sector business competition withrivals also remains fierce. However, demand for things like
upgrades and extending the life of aging facilities is underpinning solid market trends. Further, growing demand for
public finance initiative (PFI) and other public-private partnership business is creating huge opportunities.

(%)
18.0

8.0

7.5
7.1%

50.0

40.0

15

Market Environment

9.1
80.0

14

Sumitomo Heavy Industries Environment Co., Ltd.

Operating Income/Operating Income Ratio

106.1

100.0

0.0

Water and Wastewater Treatment Plants

16

0.0

(FY)

4.0

14

15

16

(FY)

0.0

Despite a challenging market environment for private sector
wastewater treatment systems, we received several orders
for large-scale chemical industry projects as a result of concentrated sales activities targeting the food and chemicalmarkets. In the governmental and public sector business, westayed focused on introducing our units into sewage treatment plants.
To strengthen plant construction and service business­collaboration, Sumitomo Heavy Industries Environment Co.,
Ltd. merged with its wholly owned subsidiary Sumiju Environmental Engineering Co., Ltd., which handles maintenance,
repairs, and management of operations of existing facilities
on April 1, 2017.

Fiscal 2017 Strategies and Initiatives
In private sector effluent treatment systems, we will work to
expand orders by offering solutions to meet demand forextending the life of aging facilities that we have already supplied in sectors such as food and chemicals, and bolstering
integrated proposals for water and wastewater treatment. In
governmental and public sector business, we will keep concentrating on growing orders for our unit products, while advancing methodically and steadily with initiatives in areas such as
plant design-and-build projects. We will also take steps on the
public-private partnership business front and develop products
and technologies to add to our lineup of offerings.

12.0

5.8

8.5%
6.0

5.3%

14

Fiscal 2016 Review and Key Topics

15

16

(FY)

Industrial wastewater
treatment systems

0.0

Environmental
Facilities&Plants

Circulating fluidized bed (CFB) boiler power generation plant

Main Products• Power generation systems• Industrial wastewater
treatment systems
Major Applications/Markets
Electric utilities, Paper manufacturing, Steelmaking, Cement, Foodprocessing plants, Paper and pulp,
Chemicals, Electricity and­electronics, Machinery32• Water and sewage
treatment systems• Landfill leachate
treatment systems
Major Applications/Markets
Government agencies

Sumitomo Heavy Industries, Ltd. Integrated Report 2017

• Air pollution
control plants
Major Applications/Markets
Electric utilities,
Iron and steel
industry• Chemical
process equipment & plants
Major Applications/Markets
Petrochemicalplants• Pressure
vessels,
Mixing vessels
Major Applications/Markets
Oil refining,
Petrochemicalindustries• Steelstructures
Major Applications/Markets
Iron and steel
industry• Food processing machinery
Major Applications/Markets
Food processing
industry

Circulating fluidized bed (CFB) boiler power generation plant

Sumitomo Heavy Industries, Ltd.

Integrated Report 201733

Base Supporting SHI

Message from the External Directors
To contribute to the sustainable growth of Sumitomo Heavy Industries and to a midto long-term increase in corporate value, SHI appoints two external directors.
They offered the following messages regarding their role as external directors instrengthening corporate governance and increasing corporate value.

Contributing to Society through
Human Resource Development

The Role of the External Directorin Achieving the Goals of the
New Medium-Term Management Plan

Over the past several years, Japanese firms are said to havewhat such efforts are intended to accomplish and what kind

It is now three years since the Corporate Governance CodeAs an external director specializing in finance, accounting

made progress in governance reform efforts, and yet inci-of organization they aim to build, while working to change

was applied to listed firms. Since the Governance Code wasand auditing, I hope to be involved in these five basic poli-dents of misconduct continue. This may be due to the fact

the mindset of each individual employee.

first applied, SHI has been active in responding to its require-cies through our efforts to strengthen and enhance corporatethat improvements in governance are still developing, andThrough governance reforms, companies are expected notments, and has worked to enhance its ability to adapt to thegovernance, and thus contribute to achieving the goals ofthat efforts at compliance still remain mostly formalities. For

only to regulate their own conduct, but respond to the hopes

items included in the Code. In FY2016, we implemented an

the new medium-term management plan.

governance reforms to truly take hold, it is essential thatof their stakeholders and society in general. To respond,

evaluation of the effectiveness of the Board of Directors,

companies constantly return to the root of the issue and ask

companies must focus more than anything on increasing their

which had been an outstanding issue. We verified that theown value.

Board of Directors was functioning effectively and that there

Increasing corporate value requires more than short-term

were several areas for improvement, information which I

profitability. It also requires raising mid- to long-term profit-

think has proven helpful in subsequent efforts to improveability through active investment and R&D, and the key toeffectiveness.

tying those investments and R&D to increased sales and profitability is a company’s human resource capabilities. In that

­Corporate Governance Code is to increase corporate value

sense, it would also not be going too far to say that personnel

and thus achieve sustainable growth. At SHI, FY2017 marks

development is the secret to increasing corporate value.

the start of the MTMP19, our new three-year plan. Five basic

Some have pointed out that, under a long period of defla-

Susumu Takahashi
External Director

Chairman of The Japan Research Institute, Limited.
Appointed as a private sector member of thegovernment’s Economic and Financial Advisory
Council in January 2013 and as External Directorof the Company in June 2014.

34

Sumitomo Heavy Industries, Ltd. Integrated Report 2017

The primary objective behind the introduction of thepolicies have been established for achieving the plan’s targets.

tion, Japan has neglected to invest in its human resources. At

The primary objective is to achieve steady growth, a goal

the same time, given predictions of a shrinking labor force

which is deeply tied to achieving the other four goals:

amidst a lower birth rate and an aging society, awareness is

becoming a high-profit company; creating excellent products

growing that securing and developing human resources holds

and services through a tireless commitment to improving

the key to corporate growth, and thus to the revival of theoperational quality; actively conducting business integrations,Japanese economy. For firms to develop their own human

M&A and formation of business alliances with third-party

resources is to respond to the expectations of society, in effect.

entities and actively pursuing CSR. I believe that achieving

Through improved governance and efforts at compliance,these goals will only be possible through strengthened andI hope to take on my responsibilities as external director,

enhanced governance. In particular, becoming a high-profit

while helping to maintain the soundness of the organizationcompany and pursuing M&A and business ­alliances will

and remaining aware of the importance of human resource

require advanced management skill in selecting and focusingdevelopment.

on specific product lines and projects. Enhanced governancewill also support the goals of improving quality and actively
pursuing CSR.

Hideo Kojima
External Director

Certified Public Accountant.
Appointed External Auditor of the Company
in June 2011 and External Director in June 2015.

Sumitomo Heavy Industries, Ltd.

Integrated Report 201735

Directors, Corporate Auditors, and Executive Officers

Directors, Corporate Auditors, and Executive Officers(As of June 29, 2017)

Board of Directors

Corporate Auditors

Yoshinobu Nakamura

Shunsuke Betsukawa

Yuji Takaishi

Kazumi Fujita

Apr. 1975
Jun. 2002

Apr. 1978
Apr. 2007

Apr. 1977
Apr. 2007

Apr. 1976
Nov. 2000
Sep. 2005

Representative Director, Chairman of the Board

Jun. 2003
Jun. 2004
Oct. 2004
Jun. 2005
Apr. 2007
Apr. 2013

Joined the Company
Senior Vice President, General Manager of Laser
Business Center
General Manager of Precision Equipment Group
Executive Vice President
General Manager of Mechatronics Div.
Director
Representative Director, President and CEO
Representative Director, Chairman of the Board(current)

Representative Director, President and CEO

Apr. 2009
Jun. 2009
Apr. 2010
Apr. 2011
Apr. 2012
Apr. 2013

Joined the Company
Senior Vice President, General Manager of Finance& Accounting Div.
General Manager of Corporate Planning &Development Dept.
Director
Executive Vice President
Representative Director, CFO, General Manager ofExport Administration Dept.
Senior Executive Vice President
Representative Director, President and CEO(current)

Jun. 2007
Apr. 2010
Apr. 2012
Apr. 2013

Apr. 2014
Apr. 2015
Jun. 2016

Standing Corporate Auditor

Joined the Company
Senior Vice President, General Manager of Human
Resources Dept.
Director
Executive Vice President, General Manager of
Plastic Machinery Div.
General Manager of Corporate Planning &Development Dept.
Representative Director and Executive Vice
President, General Manager of Corporate Planning& Development Dept. and General Manager ofExport Administration Dept.
General Manager of Corporate Planning Group
General Manager of Kansai Office
Corporate Auditor (current)

Apr. 2010
Apr. 2011
Apr. 2014
Jun. 2014

Joined the Company
Director of SHI Financial Services Co., Ltd.
Representative Director and President of SHI
Financial Services Co., Ltd.
Senior General Manager of Internal Control Dept.
Senior Vice President, General Manager ofInternal Control Dept.
Adviser
Corporate Auditor (current)

Shinji Nishimura

Yoshiyuki Tomita

Takeo Wakae

Masaichi Nakamura

Apr. 1974
Jun. 2002
Apr. 2003

Apr. 1981
Apr. 2011

Apr. 1983
Apr. 1992

Mar. 1987
Aug. 2008
Jul. 2014

Representative Director, Senior Executive Vice President

Apr. 2005
Jun. 2005
Apr. 2006
Apr. 2007
Oct. 2014
Apr. 2016

Joined the Company
Senior Vice President
Vice President, General Manager of Ship & MarineDiv., Representative Director and President of
Sumitomo Heavy Industries Marine & Engineering
Co., Ltd.
Senior Vice President, General Manager ofCorporate Planning & Development Dept.
Director
Executive Vice President
Representative Director (current), Senior Executive
Vice President (current), General Manager of Power
Transmission & Controls Group
General Manager of Corporate Planning Group
General Manager of Export Administration Dept.
(current)

Director, Executive Vice President

Jun. 2012
Apr. 2014
Apr. 2016

Eiji Kojima

Apr. 1983
Apr. 2005

Apr. 1984
Nov. 2013
Apr. 2016
Jul. 2016

Apr. 2006
Apr. 2010
Apr. 2011
Apr. 2013
Jun. 2013
Apr. 2014
Oct. 2014
Apr. 2015

Joined the Company
Principal Engineer of Planning & Control Dept.,
Quantum and Advanced Equipment Center,
Precision Equipment Group
General Manager of Planning & Control Dept.,
Quantum Equipment Div.
Chief Staff Manager of Corporate Planning &Development Dept.
General Manager of Precision Equipment Div.
Senior Vice President
Director (current)
General Manager of Global Business Support
Dept., Power Transmission & Controls Group
General Manager of Power Transmission &Controls Group (current)
Executive Vice President (current)

Mikio Ide
Director
Apr. 1973
Mar. 2001
Jun. 2003
Jun. 2005
Apr. 2010
Apr. 2011

Apr. 2016

Joined the Company
Director of Sumitomo (S.H.I.) Construction
Machinery Co., Ltd.
Vice President
Director (current)
Senior Executive Vice President
Representative Director, President and CEO of
Sumitomo (S.H.I.) Construction Machinery Co., Ltd.,
Representative Director, President of Sumitomo(S.H.I.) Construction Machinery Sales, Co., Ltd.
Chairman of the Board, Sumitomo (S.H.I.)
Construction Machinery Co., Ltd. (current)

External Director
Feb. 2004
Aug. 2007
Jun. 2011
Jun. 2014

Counselor of The Japan Research Institute, Limited
Vice Chairman of The Japan Research Institute,
LimitedChairman of The Japan Research Institute, Limited(current)
Director (current)

Jun. 2017

Joined the Company
General Manager of Mechatronics Div.
Senior Vice President (current)
General Manager of Energy & Environment Group(current)
Director (current)

Shinji Shimomura

Jun. 2012
Apr. 2014

Sep. 2016
Jun. 2017

Registered as Certified Public Accountant
Managing Director of Ernst & Young ShinNihon LLC
Representative Partner and Vice President of Ernst& Young ShinNihon LLC, Representative Director ofErnst & Young Business Initiative Co., Ltd.
Established Masaichi Nakamura CPA Office
Corporate Auditor (current)

Executive Officers
President

Shunsuke Betsukawa

Senior Executive Vice President

Shinji Nishimura

CEO
General Manager of Export Administration Dept.

Executive Vice President

Toshiharu Tanaka

General Manager of Power Transmission & Controls Group

Executive Vice President

Yoshiyuki Tomita

General Manager of Corporate Technology Operations Group

Director, Senior Vice President

Senior Vice President

Tetsuya Okamura

General Manager of Industrial Equipment Div.

Apr. 1982
Apr. 2012

Senior Vice President

Akio Yoshikawa

Representative Director and President of Shin Nippon Machinery Co., Ltd.

Senior Vice President

Hideo Suzuki

General Manager of Corporate Finance, Accounting & Administration Group

Senior Vice President

Shinji Shimomura

Representative Director, President and CEO of Sumitomo (S.H.I.) Construction
Machinery Co., Ltd., Representative Director and President of Sumitomo (S.H.I.)
Construction Machinery Sales Co., Ltd.

Senior Vice President

Hiroo Morita

General Manager of Human Resources Group,
Chairman of Sumitomo Heavy Industries (China), Ltd.

Senior Vice President

Kazuo Hiraoka

General Manager of Plastics Machinery Div.

Senior Vice President

Tatsuya Endoh

Representative Director and President of Sumitomo Heavy Industries Material
Handling Systems Co., Ltd., General Manager, Ehime Works

Senior Vice President

Taiji Tsuchiya

General Manager of Precision Equipment Group

Senior Vice President

Eiji Kojima

General Manager of Energy & Environment Group

Senior Vice President

Hiroshi Arito

Representative Director, President and CEO of Nihon Spindle Manufacturing Co., Ltd.

Senior Vice President

Hideshi Shimamoto

General Manager of Ship & Marine Div., Representative Director and President of
Sumitomo Heavy Industries Marine & Engineering Co., Ltd.

Senior Vice President

Morihiro Kondo

General Manager of Corporate Planning Group

Vice President

Yukio Kumata

Deputy General Manager of Corporate Technology Operations Group

Vice President

Isao Kohno

General Manager of Gearmotor Business Unit,
Power Transmission & Controls Group, General Manager, Nagoya Works

Vice President

Toshihiko Chijiiwa

General Manager of Technology Research Center,
Corporate Technology Operations Group

Vice President

Shaun Dean

General Manager of Global HQ, Power Transmission & Controls Group,Managing Director and CEO of Sumitomo (SHI) Cyclo Drive Germany GmbH

Apr. 2013
Apr. 2014
Apr. 2015

Apr. 2016

Joined the Company
Director of Sumitomo (S.H.I.) Construction
Machinery Co., Ltd.
Executive Managing Director of Sumitomo (S.H.I.)
Construction Machinery Co., Ltd.
Executive Vice President of Sumitomo (S.H.I.)
Construction Machinery Co., Ltd., Vice President
Senior Vice President (current)
Representative Director and President of Sumitomo(S.H.I.) Construction Machinery Sales Co., Ltd.
(current)
Representative Director, President and CEO of
Sumitomo (S.H.I.) Construction Machinery Co., Ltd.
(current)
Director (current)

Hideo Kojima
External Director
Mar. 1980
May 1995
May 2000
May 2004
May 2006
Sep. 2010
Jun. 2011
Jun. 2013
Jun. 2015
Jun. 2016

Sumitomo Heavy Industries, Ltd. Integrated Report 2017

Apr. 2003

External Corporate Auditor

Registered as Lawyer
Civil conciliation commissioner at Tokyo District
Court (current)
Vice President of Daiichi Tokyo BAR Association(fiscal year 2003)
Corporate Auditor (current)
Executive Governors of Japan Federation of Bar
Associations (fiscal 2014)

Director, Senior Vice President

Jun. 2016

Susumu Takahashi

External Corporate Auditor

Joined the Company
Vice President, General Manager of Technology
Research Center, Corporate Technology
Operations Group
Director (current)
Senior Vice President, General Manager ofCorporate Technology Operations Group (current)
Executive Vice President (current)

Toshiharu Tanaka

Director, Executive Vice President

36Standing Corporate Auditor

Registered as Certified Public Accountant
Representative Employee of Ota Showa
Accounting Office
Representative Director of Ota Showa Century
Accounting Office
General Manager of the International Department,
Tokyo Office, ShinNihon Accounting Office
Deputy Director of ShinNihon Accounting OfficeSenior Adviser to Ernst & Young ShinNihon LLC
External Auditor of Alpine Electronics, Inc.,
Corporate Auditor
Established Hideo Kojima CPA Office
External Corporate Auditor of Mitsubishi UFJ
Financial Group, Inc.
Director (current)
External Director (Audit and Supervisory
Committee Member) of Alpine Electronics, Inc.

Sumitomo Heavy Industries, Ltd.

Integrated Report 201737

Research and Development

Research and Development
In the Medium-Term Management Plan 2019, which began this fiscal year, we will­continue to promote technology and product development to fulfill the SHI Group’s
corporate mission, which is “to become a machinery manufacturer that continues toprovide excellent products and services to the world.”

TOPICS
Establishment of Production
Engineering Center

R&D Framework
are implementing an integrated development processthat involves conducting elemental technology development in advance at the center and commercialization development in our business divisions. In
addition, the Technology Research Center is also
focused on basic technology development, including
materials, analysis, control, ICT, AI and robotics, basedon a medium- to long-term roadmap.

The Group will differentiate itself through products
and services in order to convert to a high-earnings
business model, and it will pool its collective capacities
to create excellent products and services that deliverconfidence to customers.
For new product development, we are promoting
activities with close coordination between businessdivisions and the Technology Research Center, and we

Socialinfrastructure

Transportation

Automotive

Medicalequipment

Semiconductors

LivingServices

Wafer modification services

Systems
Equipment

SHI Group Value Chain

CFB boilers

Warehouses

Water treatment systems

Industrial cranes
Hydraulic excavators

Tankers

Road paving machines

Forklift trucks

PET diagnostic equipment

Agitators

Proton therapy systems

Food processing machinery

Plastics machinery
Laser processing equipment

Mobile cranes

Forging presses

Film extrusion molding machines

Ion-implantation systems

Flow forming

Turbines

Precision grinding machines

Components

Air stages

Pumps
BladesCryogenic equipment
Cryopumps

Rolls
Power transmission and controls

Gear motors Control modules Software

Basic technologies (mechanical elements, materials, analysis, control, ICT, AI, robotics) Proprietary technologies (cryogenics, quantum)

Collaborative Framework for Technology
Headquarters and Business Divisions

Intellectual property for the SHI Group is a source of competitive advantage.
With a focus on creating, by securing rights to intellectual
property, attacking, by utilizing exclusive rights, and defending, by respecting the rights of other companies, the SHIGroup actively works on a unified basis to create, protect andutilize the Group’s intellectual property.
In addition, to establish a direct connection between senior
management in business divisions and intellectual property
activities, we have appointed chief intellectual property officers(CIPO) in each division, and then assigned them a rank equivalent to the general managers of technology and development
departments. The Intellectual Property Department also­participates in the intellectual property activities of businessdivisions in all respects and conducts activities to enhanceinterdivisional synergies to raise intellectual property value
throughout the Group from a medium- to long-term standpoint
and to further vitalize related activities at the division level.

(Applications)
7,000

37.4

(%)
38.0

6,000

5,787 37.0

5,000

36.0

4,000

35.0

3,000

34.0

2,166
2,000

33.0

1,000

32.0

0

11

12

13

14

15

0

16

Number of Overseas Patents Acquired
Total Amount of Patents
Overseas Patents Percentage as Compared to Overall Patents

CIPO System

Corporate Technology
Operations Group

Development Strategy
Management Dept.
Intellectual
Property Dept.
Production
Engineering Center
Technology
Research Center

Acquisition of Patent Rights

Strategy

CIPO: Chief Intellectual Property Officer
Sub-CIPO: Deputy CIPO (Group Leader)
PL: Patent Leader

The technology headquarters works in close collaboration with thebusiness divisions through organizational units differentiated byfunction.

Operational
Divisions

We gather and analyze operating data and measurement data from our
products and are working to establish data-gathering mechanisms andanalytical tools in order to strengthen services that help customers raise
their profitability, including services that reduce unscheduled stoppages
due to failure prediction and that prevent efficiency declines caused bystatus monitoring.
We are also involved in development with a view to securing producttraceability and raising productivity by gathering and analyzing manufacturing data at our production facilities.

Intellectual Property

SHI Group Business Domains
Environment
and energy

We have established the Production
Engineering Center and will promote thedevelopment of technologies for production innovation and the further training of
human resources in order to achieve arobust form of manufacturing that is
responsive to diverse customer needs
while securing a competitive advantage.

Promoting ICT Utilization

Technology Research Center (Yokosuka, Kanagawa Prefecture)

President

Sumitomo(S.H.I.)
Construction
Machinery

Mechatronics
Division

Precision
EquipmentGroup

Industrial
Equipment
Division

Plastics
Machinery
Division

Power
Transmission& Controls
Group

Technology
ResearchCenter

CIPO

CIPO

CIPO

CIPO

CIPO

CIPO

CIPO

PL

PL

PL

PL

PL

PL

Sub-CIPOIntellectual
Property
Department

PL

38

Sumitomo Heavy Industries, Ltd. Integrated Report 2017

Sumitomo Heavy Industries, Ltd.

Integrated Report 201739

Corporate GovernanceCorporate Governance
Sumitomo Heavy Industries (SHI) believes that the essence of corporate governancelies in the establishment of a system that enables efficient and transparent management.
Sound corporate governance helps the Group achieve higher enterprise value and win
the trust of all of its stakeholders, including shareholders, customers, employees, andcommunities as a whole.
Corporate Governance System
Sumitomo Heavy Industries (SHI) has adopted the company with a board of corporate auditors system and,within this framework, introduced an executive officer
system to separate the business execution and supervision functions of corporate management.
The Company has a Board of Directors, comprising 10
directors, of whom two are external directors whose role
is to supervise management from an independent standpoint and are in charge of appropriately reflecting thestakeholders’ perspective.

External Directors and External Corporate Auditors
The Company has appointed two external directors and two external corporate auditors. Sumitomo Heavy Industries(SHI) ensures that all of its external directors have no risk of conflicts of interest with the Company’s general share­
holders and has reported them as independent officers to the Tokyo Stock Exchange on which the Company is listed.

Title

The Board of Corporate Auditors is comprised of four
corporate auditors, including two external corporate
auditors. The external corporate auditors have advanced
specialist knowledge and a wealth of experience in various fields and the standing corporate auditors havespecialist knowledge and a wealth of experience of SHI
management. They will utilize these and provide highly
effective audits.

External
Director

Susumu Takahashi

External
Director

Hideo Kojima

General Meeting of Shareholders
Ethics Committee

Board of Directors

Audit

Corporate Auditors/
Board of Corporate Auditors

Nominating Committee
Compensation Committee

Supervision

External Takeo Wakae
Corporate
AuditorCorporate Auditor’s Dept.

Audit

Internal Control Dept.
Internal Control
Internal Audit Dept.

Management Strategy Committee

Internal Auditing
Operational
Divisions

Subsidiaries andAffiliates

Executive & Operating
Officers Committee

Audit
Corporate Auditors at Subsidiaries and Affiliates

Board of Directors
The Board of Directors deliberates not only on matters
stipulated under the Japanese Corporate Law, but also on
important management issues in a preemptive manner.
Also, the Company’s Articles of Incorporation stipulatethat the Company must have no more than 12 directors.

Executive & Operating Officers Committee
The Executive & Operating Officers Committee, which iscomprised mainly of executive officers, meets on a regularbasis to oversee consolidated business results and to follow
up on the implementation status of management policies.

Management Strategy Committee
The Company has also established the Management Strategy Committee, comprising executive officers assigned to
the Company’s Head Office, as an advisory body to the
President and CEO. This Committee deliberates on important matters, including those to be submitted to the Boardof Directors, and, consequently, reports the results of any
deliberation to the Company’s President and CEO.

Corporate Auditors and the Board of­Corporate Auditors
The Company’s corporate auditors audit the execution of40

Sumitomo Heavy Industries, Ltd. Integrated Report 2017

duties by directors and executive officers from the perspectives of legality and appropriateness. At the sametime, corporate auditors of the Company and its subsidiaries and affiliates jointly hold regular meetings to
exchange audit-related information and reinforce­auditing functions covering the entire SHI Group. The­Company has appointed a lawyer and a certified public
accountant as external corporate auditors to reinforce
the overall system for checking compliance and corporate accounting. Also, the Company has established the
Corporate Auditor’s Department with staff directly­supporting this Board of Corporate Auditors.

Audit

Independent Auditor

President and Chief Executive Officer

Reason for Appointment

Attendance at Meetings ofthe Board of Directors/
Board of Corporate Auditors

Susumu Takahashi possesses a high level of insight into economic andmanagement matters. In addition, he has broad practical experience
within private corporations and government organizations. Based on
this insight and experience, Mr. Takahashi, as an external director,
objectively and independently directs the management of the­Company by providing advice on ways in which the Company canachieve sustainable growth and increase corporate value.

Mr. Takahashi attended 15 of 15
Board of Directors meetings
in FY2016.

Hideo Kojima is a certified public accountant and a specialist in
finance and accounting with many years of practical experience.
Based on this insight and experience, Mr. Kojima, as an external­director, has objectively and independently directed the managementof the Company by providing advice on ways in which the Company
can achieve ­sustainable growth and increase corporate value.

Mr. Kojima attended 14 of 15
Board of Directors meetings
in FY2016.

Name

External Masaichi Nakamura
Corporate
AuditorAs a lawyer, Takeo Wakae boasts a wealth of experience and has
skillful insight through the law. Based on this experience and insight,
he has independently and objectively audited the effectiveness of theCompany’s management through his role as external auditor.

Masaichi Nakamura is a certified public accountant and a specialist in
finance and accounting with many years of practical experience.
Based on this insight and experience, he can objectively and independently audit the effectiveness of the Company’s management throughhis role as external auditor.

Mr. Wakae attended 14 of 15
Board of Directors meetings
in FY2016.
Mr. Wakae attended 12 of 13
Board of Corporate Auditors
meetings in FY2016.

Appointed as an externalc­ orporate auditor onJune 29, 2017.

Compensation of Directors and Corporate Auditors
The maximum amount of compensation paid to directors
shall not exceed ¥40.0 million per month pursuant to theresolution of SHI’s Ordinary General Meeting of Shareholders ratified in June 2006. The Company has adopted
a director compensation scheme that is linked to SHI’soperating results. Individual director remuneration isdetermined by the Board of Directors on advice fromthe Compensation Committee regarding applicable

Classification­standards that reflect SHI’s performance.
The maximum amount of compensation paid to corporate auditors shall not exceed ¥7.5 million per monthpursuant to the June 2005 resolution of SHI’s Ordinary
General Meeting of Shareholders. Remuneration paid toindividual corporate auditors is determined through aprocess of deliberation among corporate auditors.

Amount of Compensation(Millions of yen)Amount by Type ofCompensation(Millions of yen)

Number of Eligible Officers

Annual Compensation
AmountNominating Committee and Compensation
Committee

Directors(excluding external directors)

330

330

The Nominating Committee makes recommendations to
the Board of Directors with regard to candidates for directors. Four of the current six members of the Compensation
Committee have been externally appointed. More specifically, as an advisory committee to the Board of Directors,
the Compensation Committee determines a level of director remuneration that reflects the Company’s businessperformance while ensuring transparency and ethicalappropriateness in remuneration decision processes.

Corporate auditors(excluding external corporate auditors)

69

69

External officers

38

38

9
3
5

Note: There were eight directors, two corporate auditors, and four external officers as of the end of the fiscal year under review.
Included in the figures presented in the table above are the number of officers and compensation amounts paid for the period between April 2016 and June 2017 to
one director who retired as of the close of the Company’s 120th Ordinary General Meeting of Shareholders held on June 29, 2016, one corporate auditor, and one
external officer. (Accordingly, the aggregate number of eligible officers for the business term under review was nine directors, three corporate auditors (excluding
external corporate auditors), and five external officers.)

Sumitomo Heavy Industries, Ltd.

Integrated Report 201741

Base Supporting SHI

CSRCompliance Activities

Risk Management

The Ethics Committee, chaired by the President andCEO, formulates the Company’s basic compliance policy.
The Internal Control Group undertakes the rigorous
implementation of the policy through a Group-wide
internal control system. In addition, the Company distributes the Ethics Cards and the Compliance Manual to all
employees (which all Group employees must carry at all
times) and undertakes regular ethics and compliancetraining. When necessary, the Company collects writtenagreements from directors, executive officers, and all
managers concerning individual compliance items.
­Moreover, each year on an anonymous basis, the­Company conducts surveys encompassing all employees
in an effort to assess and confirm levels of complianceawareness and understanding. The Company maintains
a resolute stance against organizations or individuals thatpose a threat to public order and safety and engages inno relations whatsoever with such organizations or individuals. The Company has established an ethics hotline(a whistleblowing system) as a point of contact to report
matters that violate or may violate laws, ordinances, or
corporate ethics, promotes the use of the hotline, andendeavors to uncover problems at an early stage. The
Company conducts audits of the execution of duties by
the Company’s executive officers and by staff under the
direct control of the executive officers through the­organization in charge and ensures that their executionof duties complies with laws, ordinances, and the Articles
of Incorporation.

The Company engages in risk management using theGroup-wide internal control system. The Company takes
a specialized approach to minimize risk. Through thisapproach, the business units in charge prepare regulations governing individual risks—such as environmental,
legal, disaster, IT, and export control risk—while providing education and guidance and conducting audits. In
the event of an emergency, in accordance with the­Company’s Emergency Reporting Procedures, theemployees involved immediately report to executive
management and take appropriate measures.

Information Disclosure and IR Activities
SHI diligently strives to ensure the timely disclosure of
relevant information. At the same time, the Company
actively promotes dialogue with shareholders and investors. In this regard, SHI recognizes dialogue as an appropriate means to ensure a deeper understanding of theCompany and to further enhance its enterprise value.
The President and CEO provides briefings (half-yearly
and yearly) on the Company’s interim and full fiscal year
results for the benefit of institutional investors and analysts. Telephone conferences are also conducted by theofficer responsible for finance and accounting. Moreover,
top management makes visits to institutional investors
and analysts in Japan and overseas and responds torequests for individual interviews related to IR. Briefings
are also held for individual investors as SHI strives fordeeper understanding of the Company among a broad
range of investors.

The SHI Group engages in CSR based on the ­Sumitomo ­Business Spirit and our businessprinciples. We are committed to realizing a sustainable society by working to solve
social issues and raise corporate value, not only through good relationships with society
and environmental preservation but also through our products and services.

Long-Term Objectives
1

The SHI Group will provide products and services that contribute to both­economic and technological development that targets the realization of a­sustainable society.

2

The SHI Group will make every effort to minimize the environmental load of its
products and services across the entire lifecycle. In addition, the Group will
­protect the safety, security and health of every person that interacts with any­corporate activity with the aim to create a vibrant workplace for every employee.

Four Priority Areas
Products/
Services

Develop products thattackle social issues

P.44

Employees
Society

P.47
Environment(Every Stakeholder)

P.46

Earn social trust

Minimize the environmental load
across the entire product lifecycle

Key areas
CSV*

Products/Services

P.45

Create a vibrant workplacefor every employee

PurposeDevelop products that tackle social issues

Environment “E”
Conventional
Society “S”
CSR
Employees

Minimize the environmental load across the entire product lifecycle

Create a vibrant workplace for every employee

Governance “G”

Earn social trust

Gain the trust of society* CSV stands for Creating Shared Value.
It refers to when companies and society cooperate to create shared value.

42

Sumitomo Heavy Industries, Ltd. Integrated Report 2017

Sumitomo Heavy Industries, Ltd.

Integrated Report 201743

Base Supporting SHI

Products and Services

Environment

We contribute to society through business activities
in each division with the goal of providing products
and services that help solve social issues. We work toraise customer satisfaction by rigorously pursuing
issues from the customer’s values, starting with the
product planning and development stages.

At the SHI Group, we have been promoting environmental management aware of the fact that businesses
have the social responsibility to protect the global
environment and engage in economic activities thatare oriented toward recycling. In particular, we will
step up efforts to curb CO2 emissions with a focus
on reducing environmental impact throughout­product lifecycles.
Tanashi Works/Forest of Inspiration

The Tanashi Works is preserving the Musashino Forest, which
occupies approximately 30% of the area of the campus.
Part of this forest has been named the Forest of Inspiration andis open to the public as a place for ordinary people to relax.

Service Skills Contest
Overseas, most Construction Machinery sales are made through sales agents,
so service skills contests are held to improve the skills of mechanics at sales
agents. Mechanics from various countries engage in a serious contest.

Circulating Fluidized Bed (CFB) Boiler Power
Generation Plants

Sumitomo Heavy Industries Group­Environmental Policy

Circulating fluidized bed (CFB) power generating systems generate
electricity through combustion of various fuels within sand flowing
actively at a high temperature. This technology makes it possible toutilize not only low-grade, flame-resistant coal but also diverse fuels likebiomass fuels (unused forest thinnings, coconut shells, construction
scrap, etc.) and waste products (scrap tires, etc.), which conventionallyhave been difficult to utilize. Use of non-fossil fuels allows coal to beconserved as a fuel resource and reduces CO2 emissions to help
­prevent global warming.
In addition, CFB power generation systems are being put to use inemerging countries that are struggling with power shortages due torapid economic development and so are also playing an important roleas environmentally sensitive infrastructure.

Environmental Philosophy
The SHI Group contributes to the realization of a sustainable
society by holding fast to the “Sumitomo Business Spirit”
and taking action throughout all its business activities toprotect the global environment.

Circulating fluidized bed (CFB) boiler power generation plant• Prevent environ­mental pollution• Realize a resourcerecycling society• Contribute to theachievement of alow-carbon society• Protect biodiversity• Comply with laws
and regulations• Reinforce and­constantly improve
environmental
management

Transition of the Environmental Policy
The Environmental Committee was established in 1992 and since then the SHI Group has been promoting compliance andenvironmental protection in local communities. Moreover, in November 1999, we established the SHI Group Environmental
Policy, to clarify the basic policy for activities across the Group and to expand environmental management across the Group
as a whole, including overseas facilities.

Sewage Treatment Equipment
Sewage facilities treat sewage that is emitted from the everyday activities of society, and the SHI Group contributes to society in this area
through its products and services. Power used in sewage treatment issaid to account for approximately 0.7% of the total power generated
in Japan. There is a constant need in this sector therefore for high-­
efficiency, energy-saving equipment. For example, the Micras® superfine bubble membrane tube diffuser provides substantial energy
savings due to high oxygen transfer efficiency made possible by superfine bubbles. Micras® is used at many treatment facilities and is helping
to reduce power consumption. It also has a strong track record in renovation projects involving improving facilities that have deteriorated inefficiency due to age.

Environmental Policy
The SHI Group is actively engaged in activities based on theEnvironment Philosophy.

Priority Issues
The SHI Group has formulated a Medium-Term Environmental Plan every three years since fiscal 2005 to achieve ourEnvironmental Policy and enhance environmental
management.
The 5th Medium-Term Environmental Plan (2017–2019)
outlines the following four areas as global priority issues,
and advances activities.

Environmental Management Framework
President and CEO
Director in Charge,
General Administration Group◆ Executive Board meeting reports(four times per year)◆ Evaluation by the General Manager(once per year)◆ Environmental audit (once per year)◆ Japan and China environmental

General Manager

management meetings (two times
per year)◆ Environment and Energy Conserva-

Environmental
Management Division

tion Conference for Prevention of
Global Warming (each area)

1. Strengthen environmental risk management
Micras® super-fine bubble membrane tube diffuser

Environmental Audit Team

2. Reduce CO2 emissions throughout product lifecycles
3. Reduce burdens placed on the environment bybusiness activities
4. Preserve ecosystems

Works

DivisionsGroup Companies
within Japan

Group Companies
outside Japan

Environmental
Committee
members

Environmental
Committee
members

Environmental
Committee
members

Environmental
Committee
members* SHI contributes to the attainment of Sustainable Development Goals (SDGs) through the provision of each product or service.

44

Sumitomo Heavy Industries, Ltd. Integrated Report 2017

Sumitomo Heavy Industries, Ltd.

Integrated Report 201745

Base Supporting SHISociety

Employees

We work to earn the trust of society by promoting
clean procurement of materials needed for businessactivities and supporting and contributing to local
communities. Further, we ensure work with suppliers
to follow procurement guidelines and comply withvarious laws, regulations and social norms to raise thecorporate value of both our suppliers and ourselves.

To create workplaces that motivate every employee,
we work to completely eliminate accidents, maintainconditions conducive to physical and mental health,and advance diversity promotion activities. In promoting diversity activities, we focus particularly on
active participation of women in the workforce aswell as work-life balance.

Cleanup Activities in Local Communities
We take part in community cleanup activities not only in thearea around our factories, but also near the Head Office.

Promoting Clean Procurement
Realizing clean procurement is an important element in­contributing to the SHI Group solving social issues throughproducts and services. As a result, we will conduct the following initiatives.

1

 ormulation and Disclosure of CSR Procurement
F
Guidelines

The SHI Group has determined items that it would like its business partners to advance, and formulated CSR Procurement
Guidelines.
The CSR Procurement Guidelines are scheduled to be­disclosed on the SHI Group website.

The six CSR Procurement Guidelines are:Supporting and Contributing to Local
Communities
The SHI Group has a broad spread of manufacturing works
and sales bases, including affiliated companies. These sites
carry out support and contribution activities in their respective regions. The activities consist of local cleanups,­participating in Company blood donation drives, disaster
preparedness agreements with local governments, participating in community festivals, athletic meets and other events,and factory tours.
In addition to contributing to society by providing productsthat are beneficial to people’s lives, we also believe that the
SHI Group’s contributions truly bear fruit when there is understanding and support from community residents in areas
where the factories that produce the products are located.

• Human rights, labor,
and safety and health• Environmental
considerations• Raising product­competitiveness andcustomer satisfaction• Compliance withlaws, regulations
and social ethics2• Fair competition
and trade• Disclosure◆ SHI supports Tobitate! (Leap for Tomorrow) Study Abroad Initia-

The SHI Group’s Basic Policy on Conflict Minerals
In the Democratic Republic of Congo, armed groups are forcing local
residents to mine tin, tungsten, tantalum and gold (hereinafter referred
to as “Conflict Minerals”) and are using the mined minerals to fund theiractivities. Moreover, the systematic violence against local residents isgaining international attention and condemnation.
The SHI Group has made it a policy not to become involved in the
procurement of Conflict Minerals. This has already been disclosed on the
SHI website.

1

Community Cleanups

SHI takes part in community cleanups in areas near business bases.

Educational Support Activities
tive, the Ministry of Education, Culture, Sports, Science, andTechnology (MEXT)’s campaign encouraging study overseas,
and cooperates with the development of human resources
capable of playing a role in the future international society.

◆ Sumitomo Heavy Industries Environment Co., Ltd. took part in

a community event held in Minami Ashigara City and continues
providing environmental education to elementary school children.
◆ Sumitomo (S.H.I.) Construction Machinery holds the Sumitomo(S.H.I.) Construction Machinery Youth Baseball Clinic as a social
contribution activity. The clinic started in 2004 with the objectives of youth development and regional revitalization and has
now been held on almost 60 occasions.
◆ Sumitomo Heavy Industries Marine & Engineering continues

2

SHI CSR and CSR Procurement Briefings for
Suppliers

Supplier briefings held by each business division are also used
as an opportunity to provide briefings on SHI CSR and CSR
Procurement Guidelines.

46

Sumitomo Heavy Industries, Ltd. Integrated Report 2017

to cooperate with the Blue Sea and Green Land Foundation’s
B&G Tokyo Bay Ocean Experience Academy. Programs forchildren gathered from throughout Japan include giving thema tour of a shipbuilding works, and the experiences of riding
on a tanker under construction and of seeing 3D CAD design
and welding simulations.

Global Service Meeting
The Service Department of the Precision Equipment Group, which supplies cryogenic equipment throughout the world, gathers members from bases around theworld in Japan to hold meetings about service issues and global growth strategies.

Promoting Diversity

Safety Initiatives

The Corporate Mission Statement of the SHI Group includes
the following: “We will aim to become a machinery manufacturer that continues to provide excellent products and services
to the world.” To continue to fulfill this mission, we believe it
will be essential to have an organizational foundation thatallows diverse personnel to participate while drawing on theirunique personal qualities. To do that, we designated fiscal
2016 the “First Year for Diversity Promotion,” and with­women’s participation and advancement as a key management policy, we are promoting diversity under the leadershipof top management. Specific activities in fiscal 2016 included
briefings on diversity promotion for management from eachGroup company and workshops for female employees. In
addition, training was given to people with female sub­ordinates, where they learned about such matters as“­unwitting bias” and “key points in the development offemale subordinates” as part of initiatives to transform
employee awareness and corporate culture. In addition, as a
medium- to long-term numerical target, the SHI Group moved
ahead on initiatives to increase the number of female employees by 1.5 times from April 2015 to April 2020, to double thenumber of women in management and to raise the ratio of
women among new graduate hires above 20%. In fiscal 2016,
women accounted for over 20% of new graduate hires.
Meanwhile, to promote a work-life balance, each businessdivision set annual goals to strive to reduce long working
hours and to get employees to use their annual paid leave.
Specifically, an initiative was promoted to achieve total
annual working hours below 2,000 by fiscal 2019.

The SHI Group positions safety as the prime management
issue and accordingly advances health and safety activities.
Currently, the Group has formulated and is implementing thethird execution phase of the Health and Safety Improvement
Plan for 2017–2019.
We have built a corporate culture of safety culture thatgives top priority in all matters to safety, and we aim tosecure the safety, security and good health of all working
people through the realization of comfortable work environments. We actively advance initiatives to develop a company
climate and temperature of safety in terms of the organization and individuals, we continuously strive to raise safety
morality in all workplaces.

Handbook for Bosses and Workers­Dealing with Work and Childcare
We have produced the Handbook for Bosses andWorkers Dealing with Work and Childcare, apamphlet summarizing the childcare support
system. This is not just for women, but for theirsuperiors and co-workers to read to gain insight
into some of the concerns felt by employees who
are also mothers, and to enable superiors and theirsubordinates to share and think about the issue.

Health Management
In recent years, based on a belief that maintenance and­promotion of employee health is an investment in raising
future corporate earnings, focus has been placed on healthmanagement with management of employees’ health gaining greater strategic weight from a management viewpoint.
The SHI Group is promoting occupational health and safety
activities to clear the required evaluation items set under the
Certified Health and Productivity Management Organization
Recognition Program being advocated by the Ministry of
Economy, Trade and Industry.
DIVERSITY & CSR MONTHLY NEWS email magazine

Create Our Future!
The Human Resources Group’s Diversity Promotion Group andthe CSR Promotion Office issue an email magazine for Group
employees to deepen their understanding.
Topics that have already been covered in the magazine include:• Work system labor regulations regarding childcare and nursing care revised• Maternity work uniform lending started• Breast cancer testing subsidies started• Action targets set for measures to support development of future
generations• Achieve a good work-life balance with the planned acquisition of annual leave• Foreign nationals talk about the difficulties of working in Japan• How CSR self-awareness connects to Sumitomo’s business spirit• Employee interviews

Sumitomo Heavy Industries, Ltd.

Integrated Report 201747

Eleven-Year Summary

Eleven-Year Summary and Non-Financial Data
Sumitomo Heavy Industries, Ltd. and Consolidated Subsidiaries
For the years ended March 31

Millions of yen

FY2006

FY2007

FY2008FY2009FY2010FY2011FY2012FY2013

FY2014FY2015FY2016

Summary of Income (for the year):Net sales
R&D expenses
Operating income
EBITDA (Note 1)
Ordinary income
Profit attributable to owners of parent¥600,256
8,581
64,22474,87365,34137,352¥660,769
9,908
77,79091,57875,46942,974¥642,918
10,04756,94075,26050,275
13,649¥516,165
8,187
28,25447,97926,333
13,280¥548,015
7,445
45,80363,74444,25327,926¥624,100
9,343
47,13564,95544,61919,492¥585,871
9,835
31,28849,57030,997
5,865¥615,271
10,71834,32952,94633,00017,891¥667,099
11,41545,99862,27945,11324,348¥700,838
12,29950,56870,28949,13133,133¥ 674,328
11,27648,431
68,742
48,27433,613

Cash Flows (for the year):
Cash flows from operating activities
Cash flows from investing activities
Free cash flows (Note 2)
Cash flows from financing activities
Cash and cash equivalents at the end of year

¥ 56,789(12,461)
44,328(41,193)
47,523¥ 29,096(41,250)(12,154)(5,238)29,879¥ 34,676(35,924)(1,248)15,62542,414¥ 57,513(13,954)
43,559(26,686)
61,452¥ 36,521(23,513)
13,008(22,020)
51,700¥ 23,309(22,672)
638
19,87972,376¥  2,660(19,660)(17,000)(11,428)
46,476¥ 63,661(27,622)36,039(9,498)76,418¥ 62,170(14,112)48,058(36,889)
90,324¥ 18,315(15,350)
2,965(23,789)
68,625¥

Financial Position (at year-end):
Total assets
Interest-bearing debt
Net interest-bearing debt (Note 3)
Total net assets¥600,890
88,04539,890206,010¥678,634
89,56759,311
246,371¥657,436
110,339
65,654
238,697¥610,087
87,66025,149254,153¥626,829
67,833
15,347269,380¥691,841
96,522
23,149282,145¥647,724
98,54750,732292,826¥724,182
107,433
29,607331,059¥786,027
83,644(8,779)365,101¥782,859
68,232(2,572)382,817¥ 796,484
60,460(3,360)409,171

Amounts per Share of Common Stock: (unit: Yen)
Profit (Note 4)
Total net assets
Cash dividends¥  61.99
338.957.00¥  71.19
392.8010.00¥  22.62
378.786.00¥  22.01
404.734.00¥  45.87
435.108.00¥  31.75
454.4310.00¥   9.56
470.698.00¥  29.17
532.287.00¥  39.71
587.3712.00¥  54.06
614.51
16.00¥   54.85
650.47
16.00

10.7
12.5
1.4
6.3
20.1
34.1
14.7
0.4
12.2

11.8
13.9
1.5
6.7
19.5
34.9
13.2
0.4
14.0

8.9
11.7
1.6
2.0
5.9
34.8
16.8
0.4
9.6

5.5
9.3
1.6
2.1
5.6
40.0
14.4
0.4
4.8

8.4
11.6
1.4
4.5
10.9
42.6
10.8
0.3
7.8

7.6
10.4
1.5
3.0
7.1
40.3
14.0
0.3
7.4

5.3
8.5
1.7
0.9
2.1
44.6
15.2
0.3
4.9

5.6
8.6
1.7
2.5
5.8
45.1
14.8
0.3
4.8

6.9
9.3
1.7
3.1
7.1
45.8
10.6
0.2
6.5

7.2
10.0
1.8
4.2
9.0
48.1
8.7
0.2
7.6

7.2
10.2
1.7
4.2
8.7
50.0
7.6
0.2
7.3

¥ 17,257
10,649¥ 28,180
13,788¥ 31,753
18,320¥ 24,465
19,725¥ 14,292
17,941¥ 19,682
17,820¥ 29,888
18,282¥ 20,329
18,617¥ 20,670
16,281¥ 23,721
19,720¥  27,539
20,311

12,561

14,40814,984

15,46317,025

18,13918,245

17,936

18,061

18,491

19,321

9.43
5.34
30,9489.30
5.71
33,813

8.44
5.83
33,9996.79
5.77
30,8367.21
6.08
29,0247.00
6.88
33,428

6.12
6.89
29,107

6.02
6.67
25,094

6.39
6.79
26,442

6.78
6.56
30,976

6.77
6.78
29,345

Financial Indexes: (unit: %)Operating income ratio
EBITDA ratio
R&D expenses ratio to net sales
Return on assets (ROA)
Return on equity (ROE)
Stockholders’ equity ratio
Interest-bearing debt ratio
D/E ratio (Times)
ROIC (Note 5)
Investment in Plant and Equipment, and Others:
Capital expenditures (Note 6)
Depreciation and amortization
Non-Financial Indexes:
Number of employees
Carbon dioxide (CO2) emissions(10,000 tons-CO2) (Japan) (Note 7)
Energy productivity (JYP million/CO2-tons) (Japan)
Volume of waste disposed (tons) (Japan)

38,158(25,852)
12,306(17,809)
61,017

Notes: 1. EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization) = Operating income + Depreciation and amortization
2. Free cash flows = Cash flows from operating activities + Cash flows from investing activities
3. Net interest-bearing debt = Interest-bearing debt – (Cash and time deposits + Short-term investment)
4. Net income per share of common stock is based on the weighted average number of shares outstanding in each year.
(Operating income + Interest and dividends received) x (1 – Effective tax rate*) * Effective tax rate = 45% until FY2013,
5. ROIC (Return on Invested Capital) =40% from FY2014, 35% from FY2015(FY average of stockholders’ equity + FY average of interest-bearing debt)
6. Capital expenditures are capitalized and recorded as assets.
7. The FY2000 figure of 3.78 (t-CO2/10,000 kWh) from the Federation of Electric Power Companies was used as a fixed emissions coefficient.

48

Sumitomo Heavy Industries, Ltd. Integrated Report 2017

Sumitomo Heavy Industries, Ltd.

Integrated Report 201749

Major Subsidiaries and Affiliates

Major Subsidiaries and Affiliates(As of June 30, 2017)

Machinery Components Segment
Power Transmission& Controls

Sumitomo Heavy Industries Gearbox Co., Ltd.
Sumitomo Heavy Industries PTC Sales Co., Ltd.

Construction Machinery Segment
Hydraulic Excavators
and Road Machinery

Sumitomo (S.H.I.) Construction Machinery Co., Ltd.
Sumitomo (S.H.I.) Construction Machinery Sales Co., Ltd.

Sumitomo Heavy Industries Gearmotors Co., Ltd.

Sumitomo (S.H.I.) Construction Machinery (Tangshan) Co., Ltd.

Sumiju Tomida Machinery Co., Ltd.

Sumiju SCE (Xiamen) Construction Machinery Co., Ltd.

Sumiju Technos, Ltd.

Sumitomo Heavy Industries (China) Financial Leasing, Ltd.

Sumitomo (SHI) Cyclo Drive China, Ltd.

LBX Company, LLC

Sumitomo (SHI) Cyclo Drive Logistics, Ltd.

PT. SUMITOMO S.H.I. CONSTRUCTION MACHINERY INDONESIA

Sumitomo Heavy Industries (Tangshan), Ltd.

PT. SUMITOMO S.H.I. CONSTRUCTION MACHINERY SOUTHEAST ASIA

Sumitomo Machinery Corporation of America
Sumitomo (SHI) Cyclo Drive Germany GmbH

Mobile Cranes

Hitachi Sumitomo Heavy Industries Construction Crane Co., Ltd.
Link-Belt Cranes, L.P., LLLP

Hansen Industrial Transmissions NV
Sumitomo (SHI) Cyclo Drive Asia Pacific Pte. Ltd.
Sumitomo Heavy Industries (Vietnam) Co., Ltd.
Sumitomo Industrias Pesadas do Brasil Ltda.
Sumitomo (SHI) Cyclo Drive Korea, Ltd.

Material Handling
Systems

Sumitomo Heavy Industries Material Handling Systems Co., Ltd.

Turbines and Pumps

Shin Nippon Machinery Co., Ltd.

Sumitomo Heavy Industries Modern, Ltd.

Forklift Trucks

Sumitomo NACCO Forklift Co., Ltd.

Sumiju Platec Co., Ltd.

Quantum Equipment
and Cyclotron
Accelerators

SHI-ATEX Co., Ltd.

Precision Machinery Segment
Plastics Machinery

Industrial Machinery Segment

Sumiju Logitech Co., Ltd.
Izumi Seiki Co., Ltd.
Ningbo Sumiju Machinery, Ltd.

Sumimec Engineering Inc.

SHI Accelerator Service Ltd.
Sumiju Magnet (Kunshan) Co., Ltd.

Sumitomo (SHI) Demag Plastics Machinery GmbH
Sumitomo (SHI) Demag Plastics Machinery North America, Inc.
SHI Plastics Machinery (Hong Kong) Ltd.
S.H.I. Plastics Machinery (S) Pte. Ltd.
Cryogenic Equipment

Ships Segment
Ships

Sumitomo Heavy Industries Marine & Engineering Co., Ltd.

Sumitomo (SHI) Cryogenics of America, Inc.
Sumitomo (SHI) Cryogenics of Europe GmbH
Sumitomo (SHI) Cryogenics of Europe, Ltd.
Sumitomo (SHI) Cryogenics Korea Co., Ltd.
Sumitomo (SHI) Cryogenics Taiwan Co., Ltd.
Sumitomo (SHI) Cryogenics Shanghai, Ltd.
SHI Manufacturing & Services (Philippines), Inc.
Persimmon Technologies Corporation

Environmental Facilities & Plants Segment
Energy-Related andEnvironmental
Protection Systems

Sumiju Plant Engineering Co., Ltd.

Water Treatment Systems

Sumitomo Heavy Industries Environment Co., Ltd.

Pressure Vessels,
Chemical Processing
Equipment and Plants

Sumitomo Heavy Industries Process Equipment Co., Ltd.

Sumiju Environmental Technologies, Ltd.
Sumitomo SHI FW Energia Oy

Precision Equipment
and Components

Sumitomo Heavy Industries Himatex Co., Ltd.

LCD and Semi­conduc­tor
Equipment

Sumitomo Heavy Industries Ion Technology Co., Ltd.

Food Processing
MachineryIzumi Food Machinery Co., Ltd.

Machine Tools

Sumitomo Heavy Industries Finetech, Ltd.

Nihon Spindle Mfg. Co., Ltd.

Defense Equipment

Sumiju Business, Ltd.

Industrial andEnvironment Equipment

Sumiju Precision Forging Co., Ltd.

Sumiju Tokki Service Co., Ltd.

OthersOthersLightwell Co., Ltd.
Izumi Support Corporation
Sumitomo Heavy Industries Business Associates, Ltd.
Sumitomo Heavy Industries (China), Ltd.
Sumitomo Heavy Industries (USA), Inc.
PT. Sumitomo Heavy Industries Indonesia

50

Sumitomo Heavy Industries, Ltd. Integrated Report 2017

Sumitomo Heavy Industries, Ltd.

Integrated Report 201751

Corporate Data
Corporate Data

History

Stock Information

Head Office

1888 The Company was launched as a machinery production and repair shop for the
Besshi Copper Mine
1928 Name changed to Sumitomo Besshi Copper Mine, Ltd.—Niihama Works
1934 Incorporated as Sumitomo Machinery Co., Ltd.
1940 Name changed to Sumitomo Machinery Industries Co., Ltd.
1945 Name changed to Shikoku Machinery Industries Co, Ltd.
1952 Renamed Sumitomo Machinery Industries Co., Ltd.
1961 Established Nagoya Works
1962 Opened Hiratsuka Laboratory1965 Established Chiba Works
1969 Merged Sumitomo Machinery Industries Co., Ltd. and Uraga Heavy Industries
Co., Ltd. to form Sumitomo Heavy Industries, Ltd.
1972 Established Oppama Shipyard (currently known as Yokosuka Works)
1973 Established Toyo Factory (currently known as Ehime Works—Saijo Factory)
Merged Kogyo Co., Ltd. and Nihon Suiryoku to form Shin Nippon MachineryCo., Ltd.
1980 Established Sumitomo Heavy Industries Casting and Forging Co., Ltd.
(currently known as Sumitomo Heavy Industries Himatex Co, Ltd.)1982 Merged with Nittoku Metal Industry Co., Ltd., to form Precision Equipment
Division (currently known as Precision Equipment Group)
1983 Established Sumitomo Eaton Nova Corporation(currently known as Sumitomo Heavy Industries Ion Technology Co., Ltd.)
1986 Established Sumitomo (SHI) Construction Machinery Co., Ltd.
1988 Separated the Diesel Engine Group to form Diesel United Ltd. jointly with IHI
1995 Formed the naval venture Marine United jointly with IHI(current SHI stockholding ratio 0%)
1999 Acquired Osaka Chain and Machinery, Ltd.
(currently known as Sumitomo Heavy Industries Gearbox Co., Ltd.)
Established Sumitomo Heavy Industries Engineering & Services Co., Ltd.
(currently known as Sumitomo Heavy Industries Material Handling Systems Co., Ltd.)
2000 Separated the precision forging business from the Company and established
Sumiju Precision Forging Co., Ltd.
Established Sumitomo Heavy Industries Finetech, Ltd.
Acquired CBC Tech Co., Ltd., a manufacturer of extrusion molding machines
and renamed as Sumitomo Heavy Industries Modern Machinery, Ltd.
(currently known as Sumitomo Heavy Industries Modern, Ltd.)
2001 Split Sumitomo Construction Machinery Co., Ltd, into two companies:
Sumitomo Construction Machinery Co., Ltd., which focuses on roadwork­equipment and excavators, and Sumiju Construction Crane Co., Ltd., which
focuses on the crane business2002 Split the Company’s paper manufacturing machinery and press machine divisions
and; established Sumitomo Heavy Industries Techno-Fort Co., Ltd.
Established Hitachi Sumitomo Heavy Industries Construction Crane Co., Ltd.
jointly with Hitachi Construction Machinery Co., Ltd.
2003 Split the shipbuilding division and subsequently established Sumitomo Heavy
Industries Marine & Engineering Co., Ltd.
Made Shin Nippon Machinery Co., Ltd. a wholly owned subsidiary
Merged the film processing equipment business and Sumitomo Heavy Industries
Modern Machinery, Ltd. to form Sumitomo Heavy Industries Modern, Ltd.
2004 Established Sumitomo Heavy Industries (Shanghai), Limited
2006 Integrated the operations of the Research and Development Center(Niihama Factory) into Yokosuka Works
2007 Established Sumitomo Heavy Industries Environment Co., Ltd.
Established Sumitomo Heavy Industries (Tangshan), Ltd.
Established Sumitomo (S.H.I.) Construction Machinery (Tangshan) Co., Ltd.
Made Nihon Spindle Mfg. Co., Ltd. a subsidiary2008 Made Demag Plastics Group a subsidiary2009 Made SEN Corporation, an SHI and Axcelis Company Co., Ltd., a wholly owned
subsidiary (Currently known as SEN Corporation)
Established Sumitomo Heavy Industries Process Equipment Co., Ltd.
2010 Established Sumitomo Heavy Industries Business Associates Co., Ltd.
2011 Made Hansen Industrial Transmissions NV. a wholly owned subsidiary
Established Sumitomo Heavy Industries Gearmotors Co., Ltd.
2013 Integrated Sumitomo Heavy Industries Techno-Fort Co., Ltd.
Transferred logistics system and machine-automated-parking businesses to
Sumitomo Heavy Industries Material Handling Systems Co., Ltd.,2015 Established the new technology research center building at the Ehime Works
Transferred to Sumitomo Heavy Industries Material Handling Systems Co., Ltd.
the industrial crane business of Mitsubishi Heavy Industries Machinery­Technology Corporation2017 Made Hitachi Sumitomo Heavy Industries Construction Crane Co., Ltd.,a consolidated subsidiary
Acquired Amec Foster Wheeler plc.’s CFB Boiler BusinessTransfer Agent

Sumitomo Mitsui Trust Bank, Limited

Stock Exchange
ListingTokyo

SharesOutstanding

614,527,405

Number of
Shareholders

37,371

Sumitomo Heavy Industries, Ltd.
1-1, Osaki 2-chome, Shinagawa-ku, Tokyo
141-6025, JapanTel+81-3-6737-2331

URL

http://www.shi.co.jp/english/index.html

Founded1888

Incorporated November 1, 1934
Paid-in
CapitalJPY 30,871,651,300

Number of
Employees

19,321 (Consolidated)
2,772 (Non-consolidated)

Domestic Offices
Chubu Office 10-24, Higashi-sakura 1-chome, Higashi-ku,
Nagoya-shi, Aichi 461-0005, Japan
Tel: 81-52-971-3063
Kansai Office 3-33, Nakanoshima 2-chome, Kita-ku,
Osaka-shi, Osaka 530-0005, Japan
Tel: 81-6-7635-3610
Kyushu Office 8-30, Tenyamachi, Hakata-ku, Fukuoka-shi,
Fukuoka 812-0025, Japan
Tel: 81-92-283-1670
Tanashi Works 1-1, Yato-cho 2-chome, Nishitokyo-shi,
Tokyo 188-8585, Japan
Tel: 81-42-468-4104
Chiba Works731-1, Naganumahara-machi, Inage-ku,
Chiba-shi, Chiba 263-0001, Japan
Tel: 81-43-420-1351

YokosukaWorks

19, Natsushima-cho, Yokosuka-shi,
Kanagawa 237-8555, Japan
Tel: 81-46-869-1842

NagoyaWorks

1, Asahi-machi 6-chome, Obu-shi,
Aichi 474-8501, Japan
Tel: 81-562-48-5111

OkayamaWorks

8230, Tamashima-Otoshima, Kurashiki-shi,
Okayama 713-8501, Japan
Tel: 81-86-525-6101

Ehime Works 5-2, Sobiraki-cho, Niihama-shi,Ehime 792-8588, Japan– Niihama
Factory
Tel: 81-897-32-6211
Ehime Works 1501, Imazaike, Saijo-shi,– Saijo
Ehime 799-1393, Japan
Factory
Tel: 81-898-64-4811
Technology
ResearchCenter52

Stock-Related Information(As of March 31, 2017)19, Natsushima-cho, Yokosuka-shi,
Kanagawa 237-8555, Japan
Tel: 81-46-869-2300

Sumitomo Heavy Industries, Ltd. Integrated Report 2017

(As of March 31, 2017)

Major Shareholders
Name of shareholder

Percentage of total
shares issued
and outstanding

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

6.4

Japan Trustee Services Bank, Ltd. (Trust account)

5.2

Sumitomo Life Insurance Company

3.5

BNYMSANV AS AGENT/
CLIENTS LUX UCITS NON TREATY 1

3.0

Japan Trustee Services Bank, Ltd.
(Trust account 9)

2.3

Sumitomo Heavy Industries, Ltd. Kyoeikai

2.2

Sumitomo Mitsui Banking Corporation

2.2

Japan Trustee Services Bank, Ltd.
(Trust account 5)

1.8

12.95%(79,571)

THE BANK OF NEW YORK, NON-TREATYJASDEC ACCOUNT

1.6

The “Other Japanese Corporations” category also includes treasury stock,
government institutions, and local governments.
The number of shares held is rounded down to the nearest 1,000.

JPMorgan Securities Japan Co., Ltd.

1.5

Stock Information
Other JapaneseCorporations

Financial
Institutions

5.92%(36,378)

ForeignInvestors

35.38%(217,429)
614,52741.67%(256,071)
Individuals and Others

Securities
Companies

4.08%(25,078)

Our Website
Please refer to our website fordetailed information and figures
related to financial data (including
Securities Reports and timely­disclosure information) and non-­financial data (such as environmental
and CSR data).

Investor Relations
http://www.shi.co.jp/english/ir/

CSR
http://www.shi.co.jp/english/csr/

Sumitomo Heavy Industries, Ltd.

Integrated Report 201753

http://www.shi.co.jp/english/

Printed in Japan O056 E 171