YOROZU : Integrated Report 2023

YOROZU

INTEGRATED

REPORT

Toward the Future of Monozukuri

3-7-60 Tarumachi, Kohoku-ku, Yokohama, Kanagawa 222-8560, Japan Tel: [phone]

https://www.yorozu-corp.co.jp/en/

Becoming a Byword for Suspensions

Yorozu has earned the trust of domestic and foreign automakers as a premier supplier of suspensions, having honed its technologies as an auto parts maker with a focus on suspensions. Leveraging its advanced developmental and technological capabilities, Yorozu will continue to expand globally as a suspension system manufacturer with

a fully integrated production system, from performance development to mass production, for suspension parts and peripheral components.

Corporate Vision

With the one and only technologies and developmental capabilities in suspensions, we deliver solutions to customers' needs and aim to become a 100-year sustainable and evolving company.

Corporate Philosophy

[Our Purpose]

Our primary mission is to contribute to society by continually striving to deliver technological innovation and create products that are benecial to people.

[Management Stance]

Our basic business creed is to conduct reliable management.

[Behavioral Guidelines]

1. Work is the foundation of life.

1. Trust is the basis of work.
2. Creativity in thought and action is the key to human progress.
3. Safety, quality, and productivity are fundamental to our corporate activities.
4. Risky endeavors are to be avoided while genuine endeavors are to be embraced.

CONTENTS

About Yorozu

1. Message from the President

1. Message from the CFO

1. Yorozu's Main Products

1. History of Value Creation

1. Value Creation Process

1. Yorozu at a Glance

Yorozu's Management Foundation

16 Medium-Term Business Plan Yorozu Sustainability Plan 2023

20 R&D Strategy

1. Human Resources Strategy

1. Environmental Management

1. Board of Directors
2. Corporate Governance

38 Roundtable Discussion between the President and Outside Directors

1. Compliance Initiatives
2. Risk Management

Editorial Policy

This is our fth integrated report since we rst published it in 2019. We see this report as a communication tool for promoting a better understanding of our corporate value and growth poten- tial, aiming to convey in an easy-to-understand format our various initiatives to realize a sustainable society, as well as the Group's management policies, business strategies, and nancial information, to all of our stakeholders, including shareholders, investors, suppliers, local communities, and employees.

The Yorozu Group will endeavor to provide its stakeholders with better reports to deepen their understanding of the Group. Please visit our ofcial website for the most recent information.

Yorozu Corporation Website https://www.yorozu-corp.co.jp/en/

Yorozu's Medium- to Long-Term Outlook

46 Materiality (Material Issues)

48 New Initiatives Toward the Next Medium-Term Business Plan

50 Medium- to Long-Term Vision and Roadmap

Data Section

1. Five-YearSummary of Financial and Non-Financial Data
2. Corporate Information

Period and Scope of Reporting

•Period: Fiscal 2022 (April 1, 2022-March 31, 2023) (Some information from outside this period is also included.)

•Scope: Yorozu Corporation and its Group companies

Guidelines and Entities Referenced

•The International Integrated Reporting Framework of the International Integrated Reporting Council (IIRC) •Guidance for Integrated Corporate Disclosure and Company-Investor Dialogues for Collaborative Value Creation

Disclaimer Regarding Forward-Looking Statements

This integrated report contains forward-looking statements, including the Company's current plans, projections, and strate- gies, based on information available at the time this report was created. Actual performance may differ signicantly from these projections due to a variety of factors.

About Yorozu

Message from the President

About Yorozu	Yorozu's	Yorozu's Medium- to	Data Section
Management Foundation	Long-Term Outlook

Pursuing Manufacturing that Supports the Automotive Industry in the Era of Electrification

Tsutomu Hiranaka

President and COO

Member of the Board

Reflecting on Fiscal 2022

Achieved Sales and Profit Growth and Established Innovative Technologies That Contribute to the Environment

Fiscal 2022 (ended March 31, 2023) marked a period where the global surge in inflation, propelled by escalating raw material and logistics expenses, coupled with monetary tightening measures enacted by various nations, impacted economic recovery. Moreover, the production of automobiles, to which the Yorozu Group's business is closely related, was sluggish due to semiconductor shortages and other factors. As a result, the production volume was on par with the level of the previous fiscal year.

Amid these circumstances, the Yorozu Group's commitment to enhancing profitability bore fruit. For fiscal 2022, consolidated sales grew 26.1%, and operating income surged 47.3% year on year, marking growth in both sales and profit.

During fiscal 2022, the second year of the three-yearmedium-term business plan, Yorozu Sustainability Plan 2023 (YSP2023), initiated in fiscal 2021 (see page 16), we successfully developed new technologies aimed at reducing CO2 emissions through life cycle assessment (LCA). YSP2023 prioritizes growth strategies centered on new technologies and methods contributing to the electrification of society and sales expansion. Notably, we developed two patented technologies for the Arm with a New Stamping Structure and the Arm Using Alternative Materials. These innovations were integrated into new products adopted by Nissan Motor Co., Ltd. and Toyota Motor Corporation for their latest electric vehicles (EVs).

In fiscal 2023, the final year of YSP2023, plans are under way for the launch of the new Tokai base, which has been positioned as a pivotal hub for sales expansion. This facility's energy requirements will be met entirely through green energy, including on-site solar power generation, ensuring zero CO2 emissions from even the heat source for boilers used in the coating facilities. As the entire automotive industry intensifies its efforts toward decarboniza- tion, we acknowledge that competitive evaluation

encompasses not only the product's quality, cost, and delivery (QCD) but also the processes driving its creation. With this holistic approach to customers, we aim to supply products for the numerous EVs in their pipeline.

The World Yorozu Aims to Create

Contributing to Stakeholders through Sustained Growth

Our Corporate Vision states, "With the one and only technologies and developmental capabilities in sus- pensions, we deliver solutions to customers' needs and aim to become a 100-year sustainable and evolving company." In line with this vision, our aim is particularly focused on contributing to stakeholders through sustainable growth.

Drawing on the expertise accumulated since our founding as a monozukuri company (manufacturer), we have supplied parts of exceptional quality, recognized for their reliability and safety, to the global market by creating optimal designs and production technologies. This stands as our core strength and a testament to the trust we have garnered from our customers. Moving forward, we will continue to refine the development of new technologies and methods, provide the global market with highly competitive suspension components that outperform the products of others, and meet our customers' expectations. The phrase "becoming a 100-year-old company" encapsulates our desire to be a business entity recognized over the long term by society.

To achieve our vision, it is crucial to effectively implement the various measures set forth in YSP2023 and solidify our ESG management foundation. This will lead to consistent performance and serve as the driving force toward further growth. In this endeavor, I believe that the role of human capital is of immense significance. It is crucial that every employee can adeptly respond to global shifts through their thoughts, actions, and sensibilities. Guided by my leadership, the entire company will unite to address a wide array of challenges.

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About Yorozu	Yorozu's	Yorozu's Medium- to	Data Section
Management Foundation	Long-Term Outlook

Long-Term Business Development

As a Driving Force behind the Era of Electrification

By around 2040, the global automotive industry is expected to see various countries strengthen environmental regulations to realize a decarbonized society. This could lead to EVs accounting for half or more of the automobile market. Moreover, as Mobility as a Service (MaaS) gains momentum, we can expect a transition from individual "ownership" of vehicles to an era of collective "sharing."

Amid these impending environmental shifts, we identify opportunities in two key domains: "increas- ingly sophisticated technological requirements such as weight reduction and addressing issues of sound and vibration" and "the growing prevalence of EV-related components." These developments open doors for us to explore new avenues beyond our established domains. Conversely, potential threats include "the likelihood of a decrease in automotive production volume" and "changes in the structure of the automotive industry, such as a shift from vertical integration to horizontal specialization."

Even as EVs become more prevalent, automobile suspensions will remain essential, and the expectations for strength and ride comfort will evolve

to more advanced levels. In addition, given the essential role of experience and a track record in manufacturing to shape the core performance of automobiles, we expect a growing reliance on specialized suspension manufacturers for development as automakers grapple with the challenges posed by CASE (connected, autonomous, shared, electric) technologies.

We contribute to our customers' vehicle development not just as a manufacturing entity but also as a participant in upstream processes such as automakers' vehicle conceptualization by leveraging our accumulated data and expertise. Furthermore, guided by the "Yorozu Production Way (YPW)," which defines our approach and vision for manufac- turing, we pursue standardization of all production equipment, dies, and all procedures to ensure safe and stable production with uniform quality world-

wide. We are dedicated to further enhancing our strengths and focusing on technology development, including ongoing patent acquisitions, to establish an overwhelming competitive edge. By doing so, we aim to strengthen our presence as a pivotal player supporting the automotive industry in the forthcoming era of electrification.

Prospects for the Next Medium-Term Business Plan

Broadening Management Scope through Enhanced ESG Management and Creation of a Collaboration System

To enhance corporate value in the advancing electrified society, we aim to strengthen ESG management while also building a collaboration system encompassing joint development projects to bolster new technologies and methods that drive growth. By promoting new initiatives in collaboration with business partners based on our in-house technological development, we will achieve an expansive management approach that is resilient to environmental changes.

While addressing the aforementioned threats, we are committed to pursuing multiple opportunities by following four Company-wide measures: "Step up the technology of applying ultra-high-tensile materials (980 MPa)," "Develop new items for automotive parts," "Develop new items from new materials," and "Go into the non-automotive parts business."

At the core of these endeavors lies the deepening of ESG management. I believe that further advancing harmony with nature, boosting employee engagement, and fostering strong governance are indispensable for achieving sustained growth.

In terms of the environment, we completed the transition to 100% green energy for the electricity consumption of four domestic facilities (Yorozu Oita, headquarters, Shonai Yorozu, and Yorozu Engineering) by fiscal 2022, and will continue to progressively transition existing global factories to green energy based on our plan. With a sense of pride as a leading company in carbon neutrality, we

will continue to dedicate company-wide efforts toward this goal.

In our human resources strategy, we have shifted our focus from "workstyle reform" to "employee engagement reform." My goal is for every individual to experience the desire to work with us for his/her entire career and feel proud to be a part of our com- pany. While embracing diversity, we will leverage the talent management system to gain a holistic view of our human resources portfolio and establish a human resources strategy that aligns with our business strategy.

To strengthen governance, we will ensure proper opportunities for the involvement and advice of independent outside directors. We will also aim to further enhance the transparency and objectivity of decision-making processes within the Board of Directors. In fiscal 2022, we assessed the effectiveness of the Board of Directors through an evaluation by a third-party institution. Moving ahead, we will identify areas for improvement, consider appropriate measures, and put them into action.

To All Stakeholders

Toward a 100-Year-Old Company That Continues to Develop on the Dual Wheels of Social Contribution and Growth Strategy

As stated in our Corporate Philosophy, "Our primary mission is to contribute to society by continually striving to deliver technological innovation and create products that are beneficial to people." We have persevered and thrived because of our ability to contribute to society through manufacturing that others cannot emulate, and I am confident that we can continue along this path of sustained growth. Our commitment remains unwavering-to continue supporting the automotive industry by providing suspensions of exceptional quality, recognized for their reliability and safety, throughout the world.

When considering the current landscape, I sense various uncertainties, such as the rise in geopolitical risks, supply-demand tensions for raw materials, and surging energy prices. However, from a long-term

perspective, the trend toward the electrification of automobiles remains unshakable. To build Yorozu's growth strategy and demonstrate our solid presence in the age of electrification, we will accelerate the internally defined "5G (Growth, Green, diGital, Governance, Grit)" initiatives that we have been promoting since the previous fiscal year. Through a new growth strategy focused on harnessing the advantages of new technologies and methods toward sales expansion, we aim to become a 100-year-old company that will grow continuously. We will also initiate new endeavors that pave the way for the next medium-term business plan.

We will further strengthen our investor relations and communication activities to ensure a better understanding of our efforts to achieve medium-/long-term, sustained growth and enhance corporate value for the Yorozu Group. I look forward to hearing the opinions of our stakeholders as we seek to meet and exceed your expectations.

President and COO

Member of the Board

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About Yorozu

Message from the CFO

About Yorozu

Yorozu's	Yorozu's Medium- to
Management Foundation	Long-Term Outlook

Protability enhancement

Invest for growth

Data Section

Continuing to Grow and Increase Corporate Value through Sound Management

Invest in construction of the new Tokai plant as a base for expanding sales of products for EVs

Enhance revenue management for each project to improve prot margins and ensure investment returns

Invest proactively in carbon-neutral environmental initiatives and DX

Resilient to Changes

Cost of capital

Growth in ROE

Shareholder returns

Norio Hirano

Executive Vice President Member of the Board (CFO)

Streamline the balance sheet

Maintain an equity ratio within the range of 40% to 50% as a manufacturer in the industry requiring initial investment Ensure nancial soundness (raise funds while considering

the debt-equity ratio)

Suppress capital costs with consideration for leverage Consistently review cross-shareholdings

Provide stable, consistent dividends

Ensure a dividend payout ratio of 35% or more Determine dividend payout ratio in consideration

of performance and dividend levels Explore shareholder return measures to reward

shareholder support

Review of Fiscal 2022 and Progress of the Medium-Term Business Plan

Fiscal 2022 was a challenging year marked by the ongoing impact of semiconductor shortages on production volumes and the cost increases resulting from the escalation of raw material and logistics expenses triggered by the Russian invasion of Ukraine. Sales increased by 26.1% to ¥160.5 billion over the previous fiscal year. However, this sales figure reflects the impact of the depreciating Japanese yen and soaring prices in the steel market, and the actual production volume remained roughly on par with the previous fiscal year. Operating income, meanwhile, grew by 47.3% year on year to approximately ¥3.0 billion, owing to our efforts to flexibly change the production volume in line with demand, reduce fixed costs, and partially pass the energy cost hikes on product prices.

The challenging environment we currently face will pose difficulties in attaining the targets set in our medium-term business plan, Yorozu Sustainability Plan 2023 (YSP2023), unveiled in May 2021, including sales of ¥150 billion, an operating income ratio of 5.0%, and a return on equity (ROE) of 8.0%. In fiscal 2023, ending March 31, 2024, we forecast sales of ¥160 billion, which factors in the impact of rising steel prices and the depreciating yen. Excluding these fac- tors, the "net" sales figure is expected to be around ¥130 billion. On the other hand, our efforts to engage in ESG management, ensure stable profits, and develop new technologies and methods are proceeding smoothly. Our objectives for achieving carbon neutrality and weight reduction are progressing as planned and positively impacting our sales growth.

Toward Attainment of Our ROE Target

•Cash Flow Management

Yorozu strives to strengthen cash flow management as a financial strategy under YSP2023. In pursuit of our ROE target, it is important to enhance profitability and simultaneously improve the total asset turnover ratio. To this end, we will focus on making capital investments that consider cash flows. In addition to investment assessments based on the internal rate of return (IRR) and the net present value (NPV) of future cash flows, we will establish a depreciation-to-sales ratio target and make efficient investments within that range. By doing so, we aim to reduce depreciation expenses, control total assets, and improve ROE.

•Enhancing Profitability

We are striving to strengthen our project revenue management to boost profits. Enhancing the revenue of individual projects contributes to greater profitability at each site, ultimately driving improvement in Group profitability. Moreover, we will expedite the achievement of milestones for each project and enhance coordination with different departments and sites to achieve target profits and ensure investment returns. We will also continue to conduct simultaneous engineering activities, in which all departments participating in product development are involved in the design process from the initial stages, and make use of our cost consolidation system.

Cash Allocation

•Ensuring Financial Soundness

Our core products are suspensions, which entail substantial capital investments due to their significant size and weight. Furthermore, given that suspensions are critical for ensuring vehicle safety, maintaining a solid and stable financial foundation is essential for their consistent supply. Accordingly, we deem it necessary to maintain an equity ratio within the range of 40% to 50%.

In our capital policy, we recognize capital costs, such as the weighted average cost of capital (WACC) and shareholder capital costs. We also strive to increase overall corporate value by enhancing the return on capital, including return on invested capital (ROIC) and ROE. For our capital investments, we have established a target for the depreciation-to-sales ratio and set limits on general investments and project investments to ensure control and restraint. Moreover, by prioritizing investment items, we can make investments that align with changing sales patterns.

•Investing in Growth Areas that Address Social Challenges

With the progression of automotive electrification, customers are increasingly seeking improvements in weight reduction and quietness. At the new Tokai base scheduled to commence operation at the end of fiscal 2023, we will reinforce equipment for processing thin and lightweight high-tensile materials to meet these demands. In addition, we are preparing to achieve carbon neutrality by introducing 100% green energy. We take a proactive approach toward investments that enhance our competitiveness and address social challenges, such as initiatives for

digital transformation (DX) and carbon neutrality, as well as investments for developing new technologies and methods that drive future growth.

Returning Profit to Shareholders

At Yorozu, our basic policy is to return profits to shareholders based mainly on dividend payments upon ensuring an optimal balance with investments aimed at realizing financial soundness and growth. We are targeting a dividend payout ratio of 35% or more and aim to pay stable and consistent dividends based on our desire to share with all our shareholders the benefits of medium- to long-term increases in corporate value. We will continue to consider the business performance and dividend levels when determining the dividend payout ratio.

For fiscal 2023, we project sales to be on par with the previous fiscal year. However, the ratio of sales to Toyota Motor Corporation is expected to exceed 10% for the first time in our history. While there will be costs associated with facilitating growth, such as the establishment of the new Tokai base, the development of new technologies and methods for EVs, and expenses related to new model launches, all employees are united in implementing strategies to achieve our goals.

We look forward to your continued support as we embark on the final year of YSP2023.

Executive Vice President

Member of the Board (CFO)

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About Yorozu

Yorozu's Main Products

Our outstanding performance in all aspects of quality, cost, and delivery (QCD) has earned us a high reputation from the world's automakers as a reliable supplier of suspensions, for which we have the top-class market share in Japan.

Even in the age of electric vehicles (EVs), suspensions continue to be a vital component, and Yorozu's efforts in reducing weight (achieving a 30% reduction compared to fiscal 2018) for improved fuel efficiency contribute to carbon neutrality.

Passenger Vehicle Products

About Yorozu	Yorozu's
Management Foundation

• Rear suspension member

Yorozu's Medium- to Long-Term Outlook

Data Section

	❸
❶	❹	❺

❷ ❺

❶ Brake pedal

❷ Front suspension member

					the
driver to control the vehicle's speed through foot operation	mounting points for various elements, such as the front sus-
alone. It serves as a direct interface with the driver, requiring	pension links, steering gearbox, and engine. It needs to provide
strength and rigidity to withstand input from the foot. The lever	strength, rigidity, and impact absorption during collisions to
contributes to reduced vehicle weight through various designs,	withstand the various forces exerted by the tires through the
including thick plates, pipes, and thin plate welding.	mounting points. To meet these requirements, suitable materi-
			als are strategically positioned to ensure optimal performance.

This component serves as the framework that consolidates the mounting points for elements, such as the rear suspension links and differential gears. It requires strength and rigidity to withstand various forces from the tires through the mounting points. By using high-tensile-strength materials, we achieve lightweight construction.

• Rear beam

in

small- and medium-sized passenger vehicles. The twisting central crossbeam allows independent movement of the left and right trailing arms, resulting in characteristics similar to an independent suspension. This component accommodates various structures, contributing to lightweight construction.

• Link

Positioned between the tires and the vehicle body, this is

a vital safety component that determines the posture of the tire. It requires strength and rigidity to withstand the various forces from the tires. Through advanced stamping techniques, we have developed an integrated link structure that balances strength and rigidity while contributing to lightweight construction.

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About Yorozu

History of Value Creation

Founded as Yorozu Automobile Works in April 1948, the Company has developed its business by specializing in suspensions, mainly in the area of automotive undercarriage mechanisms. As Yorozu has grown alongside the automotive industry, it has experienced a series of turbulent times over the years, defined by severe changes in its external business environment arising from the Nissan Revival Plan, the global financial crisis of 2008, and the COVID-19 pandemic.

Founding

1948	1950	1960	1970	1980	1990	2000
				Nissan-afliated				Foreign-afliated

About Yorozu	Yorozu's	Yorozu's Medium- to	Data Section
Management Foundation	Long-Term Outlook

However, despite the twists and turns, the Company has overcome a number of crises by promoting reforms and streamlining measures through the concerted efforts of all employees. Moving ahead, we will continue to enforce strategies that leverage the resilience, strengths, and advantages that have been fostered through this process of overcoming hardships to realize our vision of becoming a 100-year-old company.

2010

2020

2030

Independent

	Others
	16.5%
Change in Customers	FY1993
Four Dening Periods of Our Business	Nissan Group
83.5%

GM Group
6.3%	Others
	15.8%
	FY2010
Honda Group	Nissan Group
64.1%
13.8%

Toyota Group 8.1%

Honda Group 15.7%

Others

15.1%

FY2022

Nissan Group

61.1%

External Factors

Countermeasures by Yorozu

2000

Yorozu Survival Plan

Nissan Revival Plan

When Nissan Motor formed an alliance with French automaker Renault, then COO Carlos Ghosn announced the Nissan Revival Plan as its restructuring plan. It entailed the achievement of ¥1 trillion in cost reductions by scal 2002 on a consolidated basis and a reduction of interest-bearing debt, excluding sales nance, from ¥1.4 trillion to less than ¥700 billion.

The Nissan Revival Plan, which called for a 20% reduction in purchasing costs in three years and the disbanding of afliated companies, compelled us to formulate the Yorozu Survival Plan.

Cost reductions:

Streamlined production and reduced personnel Introduced the Toyota Production System Implemented a function-based matrix management system

 These measures enabled us to achieve cost reductions of ¥5.8 billion and counteract the disbanding of Nissan's afliated companies.

Formed a capital alliance with Tower Automotive, Inc., a U.S.- based automotive parts manufacturer to become a foreign- afliated company

Expanded overseas operations to increase orders for automotive parts from Japanese companies other than Nissan Motor

2008

Urgent Prot Improvement Measures

Global Financial Crisis of 2008

The bankruptcy of Lehman Brothers Inc. in the U.S. triggered a global economic downturn, which had a massive impact on Japan's automotive industry as automakers incurred losses and posted substantially less prots.

The global nancial crisis had a severe impact on automakers and sparked a rapid appreciation of the Japanese yen, cutting our sales by half. However, we took measures to improve protability based on a policy of "achieving maximum efciency with bare minimum cost."

Closed down one of the subsidiaries in North America Streamlined our production system

Drastically reduced costs through urgent prot improvement activities

Implemented reforms to reinforce the management structure, including monozukuri (manufacturing) and educational reforms

Relocated the R&D functions and related departments to Tochigi Prefecture to develop globally competitive products

As a result, we successfully posted positive earnings with an operating income of ¥4.8 billion, eclipsing the operating loss of ¥0.7 billion we had initially forecast.

2011

Active Expansion of Overseas Business

Nissan's Aggressive Overseas Expansion Strategy (Nissan Power 88)

In June 2011, Nissan Motor introduced a mid-term plan in pursuit of a global market share of 8% and operating margin of 8%. As one of its measures, the company actively introduced new models and expanded production capacity in China, the ASEAN region, Brazil, and North America.

In response to the Nissan Power 88 plan, Yorozu pursued proactive overseas expansion.

Established six production facilities, mainly in emerging countries, in three years from 2011

Expanded two existing production sites each in China and Mexico and increased their production capacity to maximize returns on investment

Launched operations of our second production site in Alabama, U.S., in 2015

Launched operations of a second plant at one of our production bases in China in 2019

These measures resulted in gaining additional customers, particularly overseas,

and increasing the percentage of our sales abroad.

2019

COVID-19 and Measures to Improve Protability

COVID-19 Pandemic

Automakers were also forced to temporarily suspend operations of plants or adjust production due to the unstable supply of parts and the sluggish global demand caused by the pandemic.

While some production sites temporarily faced operational

difculties due to the global spread of COVID-19, we dealt with the situation through the following measures.

Identied the degree of risk on our products' lead time Reviewed proper inventory standards

Encouraged the development of personnel who can multitask Promoted the standardization and globalization of our

business, which led to the establishment of a system that enables production and delivery processes to be alternatively conducted at other facilities

As a result, we achieved the safety of our employees and fullled our

responsibility of supplying parts.

Hydroforming (1998-)

Aluminum Welding (2001-)

Full-Curl Method (2004-)

Tailor Welded Blanking

High-Tensile-Strength Materials

Complete Tack Welding and

Technological Achievements

A metal-forming process

While aluminum was

A method of shaping

Technology (2006-)

for Suspension Parts

Final Assembly Lines (2019-)

improved shape preci-

as costs.

ventional structure

ment previously

expanded to major structural

in which hydraulic pres-

previously considered

sheet metal into a

A technology used to

Although high-tensile-

A comprehensive assembly

sure is applied to the

more difcult to process

three-dimensional

weld sheet metals of

strength materials have lower

line made up of a tack welding

inside of pipe materials

and weld than steel, the

hollow shape.

different thicknesses

press formability, we have

line to ensure that the work

to form the pipe into the

optimization of each

Reduces welding

into a single panel,

addressed the issue by

pieces are perfectly aligned

mold's inner shape. It

process has signicantly

overlap and welding

which is then press-

improving design and form-

and a parallel main welding

can be made into com-

reduced the number of

length by half com-

formed, eliminating

ing technology. The applica-

line to complete the entire

plex shapes, leading to

processing steps as well

pared with the con-

the need for reinforce-

tion of this material has been

welding process

sion and reduced weld-

consisting of upper

required

components such as frames

ing time.

and lower parts

and arms.

(monaka structure).

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About Yorozu

About Yorozu

Yorozu's

Management Foundation

Yorozu's Medium- to Long-Term Outlook

Data Section

Value Creation Process

At Yorozu, we aim to continuously evolve as a company that constantly delivers solutions to customers' needs on the strengths of our one and only technologies and developmental capabilities in suspensions. To that end, we have developed a value creation process designed to constantly deliver value to society, and we continue to evolve this process by bearing in mind the needs and expectations of society.

By continuing to enhance its value creation capabilities throughout the entire process, Yorozu will strive to realize sustainable growth and enhance corporate value.

Realization of

a sustainable society

Input

Financial Capital

Net assets:	¥77,439 million
Owners' equity:	¥63,630 million
Equity ratio:	45.0%
Intellectual Capital
R&D expenditures	¥7,201 million

The Yorozu brand as a premier supplier of suspensions

Manufacturing Capital

Production sites in Japan:

5 locations

Production sites overseas:

14 locations

Human Capital

Number of employees

(consolidated):5,726

Ratio of women in managerial

positions:12.4%

Ratio of non-Japanese employees: 5.5%

Social and

Relationship Capital

Trust of customers and other stakeholders

Natural Capital

Purchase rate of green energy Domestic: 47.6% Overseas: 10.8%

(As of March 31, 2023)

Business model that capitalizes on our strengths

Ability to realize				Continuous
solutions for the				enhancement of
automotive		Proactive		development
industry		sales		capabilities
		expansion
		activities
	Fundamental technologies
	Stamping	Welding	Coating
	technology	technology	technology
External		DNA in		Development
sales of dies	monozukuri	of
and	lightweighting
equipment	(manufacturing)	technology

Construction
of the new	Integrated
Tokai base
Development of	production system
trust and	and prominent
customer base	supply chain
Technological innovation and improvement

Output

Products

High-quality products that outperform the competition

Development of lighter products that reduce CO2 emissions

Products geared to electric vehicles (EVs)

Front suspension member

Rear beam

Rear suspension member

Link

Brake pedal

Outcome

Realize a safe and reliable automotive society

Financial Capital

Consolidated sales:	¥160,560 million
Operating income:	¥3,088 million
Free cash ow:	-¥2,240 million
Dividend per share (DPS):	¥25 (annual)

Intellectual and

Manufacturing Capital

Improved competitiveness through the adoption of new technologies and methods

Focus on developing new products with the use of unique technologies

Human Capital

Ratio of paid vacation taken:

72.5%

Human resources development through industry- academia collaboration with Tsuruoka National College of Technology

Social and Relationship Capital

Quality awards received from customers:

6

	Natural Capital
CO2 emissions:	90,060 t-CO2
Waste emissions:	3,653 tons
Water use:	1,157,000 m3
	(As of March 31, 2023)

Operating environment	Carbon neutrality by 2050	Stagnant global economy due to COVID-19 pandemic	Emergence of CASE	Large-scale investments	Strategic alliances	Advancement of
to address future needs	between automakers	workstyle reform

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About Yorozu

Yorozu at a Glance

The growing need for investments stemming from the increasing adoption of automated driving and EVs has prompted the formation ofalliances between automakers. In order to ensure that we maintain existing commercial rights and win new orders, even in the midst of major changes in the supply chain, we are proactively pursuing sales growth opportunities based on our three axes: customers, products, and regions.

Asia

Sales

¥59.25billion

Operating income

¥1.62billion

* Includes intersegment sales and transfers

Japan

Sales

¥50.89billion

Operating income

¥2.28billion

About Yorozu	Yorozu's	Yorozu's Medium- to	Data Section
Management Foundation	Long-Term Outlook

The Americas

Sales

¥58.25billion

					Operating loss
Asia				Japan	¥1.15billion
35.2%		30.2%

Sales

Composition

of the Three

Segments

The Americas

Financial highlights

Sales		Operating income
¥160.5billion	¥3.0billion
ROE		R&D expenditures
2.4%		¥7.2billion

Three Elemental

Non-nancial highlights

		Ratio of women in
Number of Group companies		management positions

Number of companies 21	12.4%
Number of countries 9
Number of employees	Ratio of
(consolidated)	non-Japanese employees
5,726		5.5%

Stamping Technology

34.6%

• Nissan Group*1	• Honda Group
• Volkswagen	• Mercedes-Benz Group
• Toyota Group*2	• Isuzu
• Suzuki	• Ford
• Mazda	• Kubota	*1 Including sales to Renault and Mitsubishi
• General Motors	• UD Trucks
*2 Including sales to Hino, Daihatsu, and Subaru

Welding Technology		Coating Technology

Technologies Underpinning

the Group's Innovation

We have continued to develop new stamping, welding, and coating technologies that catch the attention of the industry.

Yorozu has established a stamping technology that can form 780MPa- and 980MPa-classultra-high-tensile-strength sheet materials, which are difcult to process, into complex shapes, thereby achieving lighter products through the reduction of material thickness.

Moreover, a press machine is used to form multiple parts into a single component from the initial stage, instead of welding them together, thereby streamlining the welding process. We also engage in developing structural design and methods that fulll parts functions.

We work together with welding wire and welding machine manufacturers to develop products used in general arc welding processes; laser welding processes, which enable narrower welding with sufciently deep penetration; and plasma welding pro- cesses, which do not produce spatter and minimize distortion and electrode wear, enabling high-quality welding processes to be performed for long periods of time.

In addition to establishing stable welding technologies for ultra-high-tensile

materials, we are making an all-out effort to reduce CO2 emissions from welding processes.

Cationic coating is a painting process that uses electrolysis to cause a chemical reaction. Our ultra-thick cationic coating offers even more protection against rust as it is 1.7 times thicker than conventional coating.

Moving ahead, we will work on new methods (electrication of heat sources, etc.) to reduce CO2 emissions.

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YOROZU 2023 Integrated Report

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Yorozu's Management Foundation

Medium-Term Business Plan

Yorozu Sustainability Plan 2023

About Yorozu	Yorozu's	Yorozu's Medium- to	Data Section
Management Foundation	Long-Term Outlook

The Yorozu Group has been actively driving reforms to navigate the unpredictable times in line with our medium-term business plan, the Yorozu Sustainability Plan 2023 (YSP2023), launched in fiscal 2021. In fiscal 2023, the final year of the plan, we will expedite our internally defined "5G" initiatives aimed at building Yorozu's growth strategy to demonstrate our strong presence in the electrification era. By tackling various challenges, we seek to contribute to the realization of a sustainable society.

Fiscal 2023 Financial Targets

operational practices aligned with production volume fluctuations and to suppress fixed costs. Ordinary income was up 31.0%, due in part to the increase in operating income, while net income grew 62.3% year on year.

An annual dividend of ¥25 per share was paid, up ¥12 from the previous fiscal year, resulting in a dividend payout ratio of 42.4%.

Consolidated sales (¥ billion) / Operating income ratio (%)

		1.9
	1.6	160.5
118.8	127.3
0.3
2020	2021	2022	(FY)
(actual)	(actual)	(actual)

Sales

Operating Income Ratio

Capital Efciency

Progress of Initiatives under YSP2023

Consolidated sales	Consolidated operating	ROE
income ratio
¥150bil.	8.0%
5.0%
(FY2022 actual 160.5 bil.)	(FY2022 actual 1.9%)	(FY2022 actual 2.4%)

Management Policy

nMeasures in Fiscal 2022

The Yorozu Group implemented a number of measures in fiscal 2022, the second year of YSP2023.

The Carbon Neutrality Office, established on April 1, 2022, has played a central role in speeding up our efforts, successfully transitioning the power consumption of four domestic sites-Yorozu Oita, headquarters, Shonai Yorozu, and Yorozu Engineering-to 100% green energy by fiscal 2022. This shift has resulted in a 48% reduction in CO2 emissions in Japan.

In addition, we secured two patented technologies for Arm with a New Stamping Structure and Arm Using Alternative Materials, which help reduce CO2 emissions through life cycle assessment (LCA), benefiting both society and our customers. Innovative products incorporating these patented technologies have been adopted in the latest electric vehicles (EVs) by Nissan Motor Co., Ltd. and Toyota Motor Corporation.

ESG Management1

• Medium- to long-term sustainable growth
• Promotion of DX (digital transforma- tion) aimed at changing the corpo- rate culture

1. Engage in earth-friendlymonozukuri

1. Create a healthy and engaging workplace

1. Realize highly transparent governance

Stable2Profits

• Shift to optimum production capacity
• Recreate a strong gemba (frontline operations)
• Strengthen cash ow management
• Build a robust corporate structure that is less affected by production volume

New Technologies3

and Methods

• Develop products with high added value through weight reduction
• Propose products for EVs
• Engage in proactive sales expansion in the three axes (customers, products, and regions)
• Expand external sales of production equipment such as dies and tooling

nPriority Measures for Fiscal 2023

In fiscal 2023, we will focus on establishing a strong foothold in the era of electrification by implementing our strategy for sustainable growth and strengthening the foundation that supports our efforts.

First, our priority to lay the foundation for growth is to further evolve and strengthen ESG management, which is a cornerstone of our operations. We are committed to robust corporate governance by focusing on environmentally conscious factory operations, addressing

heightened corporate value.

Next, a key strategic focus is the development of new technologies and methods in pursuit of growth as well as sales expansion. We will accelerate our efforts for new technologies and methods that will constitute the core of our growth. In addition, we will undertake numerous initiatives to showcase our competitive strengths at the new Tokai base, scheduled to start operation in fiscal 2023, as a strategic base for sales expansion.

5G Initiatives of Yorozu

Fiscal 2022 Performance

In fiscal 2022, the rising costs of raw materials, logistics,

social responsibilities such as promoting diversity to drive our global growth, and upholding transparent and high governance standards. This enhanced corporate governance approach contributes to sustainable growth and

•Key Initiatives for FY2023

Firmly aligning these key initiatives for fiscal 2023 with the upcoming medium-term business plan to be announced next fiscal year will provide a springboard for enhancing corporate value.

Build and pave the way for Yorozu's growth strategy to

prove its strong presence in the electrication era

5G

and energy led to a worldwide spike in inflation. Monetary tightening measures by the respective countries to address this issue also impacted economic recovery.

While the production volume of the automotive indus-

Next Medium-term Business Plan (FY2024-FY2026)

Build and pave the way for Yorozu's growth strategy to prove its strong presence in the electrication era

Growth Strategy

Green

diGital

Governance

Contribution to a

Widespread

Advancement of

decarbonized society

innovation

corporate governance

Grit

Guts

Resilience

Initiative

Tenacity

try, to which our business is closely tied, is on a gradual recovery trend, the lingering impact of the semiconductor shortage and other factors continues to create an uncertain environment.

Against this backdrop, the Group's sales climbed 26.1% from the previous fiscal year owing to higher steel prices and yen depreciation. Operating income surged 47.3% year on year due primarily to efforts to enhance

Foundation for growth

E: Environmental consideration

Carbon neutrality

S: Social responsibility

Diversity

1. Transparency and dialog with stakeholders Enhanced corporate governance

Medium-term

Business Plan

YSP2023

(Stable prots)

Strategy for growth

Core of our growth

New technologies and methods,

and sales expansion

Proactive strategy

New base in Tokai

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YOROZU 2023 Integrated Report

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