HORIBA : Report 2021-2022

The corporate motto of HORIBA is Joy and Fun. We believe taking interest and pride in the work

that occupies so much of our lives, and in the workplaces

where many of us spend a large part of each day,

will increase our satisfaction in life and allow us to enjoy our lives even more.

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CEO Message

Atsushi Horiba

Chairman & Group CEO

Achieve steady growth by taking on challenges with "HONMAMON*" technologies and human assets

*HONMAMON: HONMAMON is a Japanese word, used especially often in Kyoto, where HORIBA is located. The word describes authenticity and excellence.

2021 was a year in which HORIBA achieved great growth due to the results of our continual investment. As society changes dramatically, HORIBA's products and solutions are being recognized by customers who understand "HONMAMON."

Based on HORIBA's exceptional technologies and human assets, we will continue to create new value and open up unexplored territory.

Realization of growth through balanced management

In 2021, while the world was still affected by the spread of COVID-19, economic activity gradually recovered in each region thanks in part to the progress of vaccination worldwide. When we look at economic trends, we see that the automotive industry is undergoing major changes in its industrial structure and the foundation of its core technologies. Meanwhile, the semiconductor and IT industries are booming like never before. In response to these trends in society, we have striven to make major changes to HORIBA's automotive business, which has built an overwhelming presence in the industry. The cost of these efforts has been fully covered by our brisk business in the semiconductor segment. Sales, operating income, and ordinary income reached record highs for the fiscal year ended December 2021, and we were able to secure 14.3% of our operating profit margin. This greatly exceeded the results of not only fiscal 2020 but also 2019.

The world is changing at an unprecedented speed. Even before the spread of COVID-19, I have argued that it is vital for us to address how to deal with and survive these changes, since global currents can be expected to change drastically in the future.

HORIBA has achieved growth through balanced management that flexibly leverages management resources to continually invest in each business division. Also, even in the midst of change, HORIBA has taken many measures centered around balanced management strategies. As you can see from our 2021 results, the entire company has achieved significant growth by continually investing in five businesses with different markets, and nurturing each business to adapt to its target market.

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CEO Message

Going ahead into unexplored territory by changing our business model.

Currently, the value of our business is expanding from products to solutions, and our business model is changing accordingly. Needless to say, it is important to utilize HORIBA's strengths in analysis and measurement technology to create high-precision products. Meanwhile, another essential value is providing the technology to properly handle and analyze samples, which are the target of analysis and measurement. In 2021, we established a new head office building for HORIBA Techno Service Co., Ltd., which is responsible for HORIBA's service business. The purpose of this building is to expand our contract test business, which is expected to increase in demand in the future. As soon as the new office building began operations, we were allowed to participate in the project which analyzed samples of the asteroid "Ryugu" collected by the asteroid explorer "Hayabusa 2." By contributing to Japanese national research projects in this way, we have gained the momentum to expand this business.

In 2022, the construction of the new facility of HORIBA FuelCon GmbH in Germany will at last be complete and it begins operation. We immediately decided to construct this new facility, where we manufacture fuel cell test equipment and water electrolysis cell/stack performance evaluation equipment, in 2019, the year following acquisition. I am convinced that this was the best timing, since demand related to hydrogen energy has recently increased sharply.

In this way, HORIBA is steadily preparing for future growth. The next step is not only to run new trains over existing tracks, but also to open up unexplored areas where the rails have not yet been laid. What we create from this perspective might be more dynamic than a new railroad or a new train. We believe that investment from a long-term perspective is vital for competing bravely on a new stage upon which we have never stood, and that this investment should be continued patiently.

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CEO Message

Invest generously in human assets and pursue "HONMAMON"

When it comes to investment by companies, hardware aspects such as equipment and buildings, R&D investment, and corporate acquisitions tend to be the focus of attention. However, I think that the most important investment target is human assets. The recruitment and development of excellent human assets center around the R&D investment which determines the future direction of a company. Also, HORIBA has incorporated new technologies by continuing to acquire companies and businesses. I think that the most important thing about acquisition is how new personnel will demonstrate their abilities as members of HORIBA. Fortunately, the companies we have acquired came into our tent because they sympathized with HORIBA's attitude toward R&D and our corporate culture. Since HORIBA invests in them continually, many engineers understand us and continue to stand at the forefront with satisfaction.

HORIBA describes the diversity of human assets as stained glass, and is proud of the results achieved by various activities such as our "Stained Glass Project," which promotes diversity. We believe that promoting the diversity of human assets is not just about gender and the recruitment of so-called global human assets, but also about utilizing the uniqueness and strengths of individuals. Each person understands their strengths, plays an active role in the fields where those strengths can be utilized, and becomes a leading expert who can compete in the world. HORIBA aims to become a group of "HONMAMON."

HORIBA appreciates personnel who take on challenges, even if they fail, rather than those who avoid challenges because they are afraid of failure. We evaluate the ideas, processes, and enthusiasm that they bring to challenges, and do not judge them only by their success or failure. Most people will avoid challenges if they are evaluated only on the consequences of failure. I encourage HORIBARIANs* to confront issues to which they do not always have an answer, and to find a valuable answer by trial and error, rather than finding the correct answer to a question by looking to textbooks. Fostering the wisdom and creativity of each individual is the most important factor for development of human assets in a company. Because customers who understand "HONMAMON" can recognize the value of HORIBA, we can obtain a high market share in industries that require high-quality products and services, such as automotive and semiconductors. Human power is important for meeting the expectations of our customers. And HORIBARIANs are human assets, by which we mean they are not "materials" but "assets." Needless to say, it takes at least five to ten years to develop excellent human assets, and we have been generously investing in human asset development since our founding. For example, the world is currently focusing on

*HORIBARIANs: All HORIBA workers are regarded as family and called HORBARIAN as a nickname.

hydrogen as a clean energy source to replace fossil fuels. Over the past ten years, when no one was focused on hydrogen, HORIBA had human assets who pursued hydrogen technology and developed related analyzers. The organizational restructuring that took place in the beginning of 2022 was made with the ambitious appointment of personnel and R&D investment in mind, in order to build a new business model.

Take up the challenge and overcome the rough seas of changing tides

HORIBA has identified three fields to focus on in its Mid- to Long Term Management Plan MLMAP 2023. These three fields are: Energy & Environment, which is expected to become a huge market in the future, Bio & Healthcare, which is the most important for humankind, and Materials & Semiconductor where the market environment is very favorable, and where we are accelerating business development.

In the unexplored territory of business, a company cannot survive with strategies that are solely focused on the interests of the country or region to which it belongs. HORIBA is expanding globally by taking advantage of overseas acquisitions, and therefore we have business and technical core locations around the world. Utilizing the technologies and ideas of each location in various parts of the earth, will multiply value and it will create even further value. We will continue to create such a rich cycle of value creation and open up new fields.

Our corporate motto is "Joy and Fun." If you devote yourself to your work like a hobby, which you enjoy during your leisure time, you can come up with original ideas and discover new worlds. In addition, my "Joy and Fun" is to take on challenges. The more difficulties you face, the greater the sense of accomplishment you feel when you succeed. We will always take on challenges and steadily overcome the rough waves of changing tides. I ask for your continued understanding and support in 2022.

May 2022

Atsushi Horiba

Chairman & Group CEO

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