KITZ : Growth Strategies

Growth Strategies

Business Segments

The KITZ Group operates Valve Manufacturing Business that involves the manufacturing and sale of joints, purifiers, and industrial filters with a focus on valves as a type of fluid control device; Brass Bar Manufacturing Business that involves the manufacturing and sale of brass bars used as faucet fittings, gas equipment, and materials for home appliance components; and other businesses including the operation of hotels.

Moving forward, the KITZ Group will continue to pursue further growth as an all-round fluid control device manufacturer with a focus on valves.

• Overview of KITZ Group's Business Promotion Structure

Valve Manufacturing Business

Sales by segments 78.3%

Strengths

Providing a Wide Range of Products as an All- Round Valve Manufacturer

With a large number of valve manufacturers specializing in limited markets and fields and narrowing down the manufacturing and sale of valves to particular materials and shapes, the KITZ Group maintains a lineup of valves featuring an array of shapes in various materials including bronze, brass, stainless steel, cast iron, and cast steel. As an all-round valve

What Are Valves?

Valves are a general term for fluid control devices that have the function of flowing and stopping fluids (water, air, oil, gas, etc.) in pipes and controlling the flow.

The origin of valves dates back to woodcocks that were excavated from ancient Egyptian ruins dating from around 1000 BC. Around the mid-1800s, when boilers for spinning were imported, metal valves were used for the first time in Japan. At the

Value Creation Story

Valve Manufacturing Business

Domestic

Manufacturing and Sales Company

Shimizu Alloy Mfg. Co., Ltd.

KITZ SCT Corporation

KITZ Micro Filter Corporation

		Business Partners
Sales Company		Maintenance
Toyo Valve Co., Ltd.		KITZ Engineering Service
			Co., Ltd.

KITZ (Manufacturing and Sales)

Manufacturing Company

KITZ (Thailand) Ltd.

KITZ Corporation of Taiwan

KITZ Corporation of Kunshan

Overseas

Sales Company

KITZ Corporation of America

KITZ SCT America Corporation

KITZ Corporation of Asia Pacific Pte. Ltd.

KITZ Valve & Actuation Singapore Pte.

Ltd.

KITZ Valve & Actuation (Thailand) Co.,

Ltd.

KITZ Valve & Actuation (Malaysia) Sdn.

Bhd.

KITZ Valve & Actuation Vietnam Co., Ltd.

KITZ Corporation of Shanghai

KITZ Hong Kong Company Limited

KITZ Corporation of Korea

Manufacturing and Sales Company

KITZ Corporation of Europe, S.A.

Perrin GmbH

Metalúrgica Golden Art's Ltda.

manufacturer, we offer products that span numerous fields covering every area from our daily lives to industry.

KITZ Brand as a Mark of High Quality

The KITZ Group maintains casting equipment designed for the main materials of valves. We manufacture our products on the basis of an integrated production system that covers everything from material selection to casting, machining, assembly and inspection. By developing a quality assurance system that extends back to the materials we use, we have established the position of KITZ as a brand that stands for reliability.

High Market Share-

In the domestic market, we have established a strong sales network that can quickly respond to customer feedback through a network of distributors that covers all of Japan. We thus maintain a particularly high market share in bronze, brass, and stainless steel valves.

start of the Meiji era, when water service and town gas service commenced, valve manufacture began in Japan.

Today, valves are connected with diverse pipes in a wide range of fields from those close to our daily life, such as water and sewage, hot-water supply, gas, and air conditioning, to the production processes in industrial fields, such as oil, chemical and pharmaceutical products and food. Valves play an extremely important role. Although we are rarely aware of their existence in our daily life, valves strongly support our life behind the scenes.

Growth Strategies

Sustainability

Data Section

Brass Bar Manufacturing Business Others

Manufacturing and Sales Company

KITZ Metal Works Corporation

Hokutoh Giken Kogyo

Corporation

Hotel Beniya Co., Ltd.

KITZ Corporation of Jiangsu Kunshan

KITZ Corporation of Lianyungang

KITZ SCT Corporation of Kunshan

KITZ Corporation of Vietnam Co., Ltd.

Micro Pneumatics Pvt. Ltd.

Cephas Pipelines Corp.

Filcore Co., Ltd.

Supply of Products

Supply of Parts and Materials

Brass Bar Manufacturing Business

Sales by segments 20.3%

Strengths

Development of New Materials based on Alloy Technologies Cultivated over Many Years

Our business began with the manufacturing of brass bars, which is a main material of valves. Today, we respond to market needs by actively developing and selling new materials that are friendly toward people and the environment, including dezincified corrosion-resistant brass bars and lead-free brass bars.

Others

Sales by segments 1.4%

Strengths

Operating One of the Largest Hotels in the Kamisuwa Onsen Hot Springs District

Our business is service-related operations, focusing on Hotel Beniya, located in Suwa, Nagano Prefecture. In addition to the hotel business, we also operate two service areas: the Suwako service area located along the Chuo Expressway (outbound) and the Tobu Yu-no-maru service area located along the Joshin-etsu Expressway (inbound).

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Business Summary and Strategy-Valve Manufacturing Business

Message from Unit General Manager, Flow Control Business Unit

We will accelerate initiatives targeting growth markets and aim to transform our business portfolio.

Yukinari Koide

Executive Officer, General Manager, Flow Control Business Unit

and Hydrogen & Clean Energy as target markets, while the Building System Department, Industrial Department, and Fine Chemical Department have executed business strategies for each target market. Additionally, in January 2023, we established the Hydrogen Division and Environmental Solutions Division under the direct control of executive officers. We are preparing to expand our Hydrogen & Clean Energy business in line with the future expansion of the demand, while in Water Treatment, we will leverage the KITZ Group's water-related technologies, products, and services to provide customers with solutions under our slogan, "Design Future with Water." We will accelerate initiatives aimed at each growth market while specifying and managing resource allocations in an effort to transform our business portfolio.

Initiatives in the Field of Hydrogen

are new needs to deal with the aging of experienced engineers and technicians, the decline in the working population, and the spread of infectious disease. As a solution, it is necessary to prevent equipment failures in a way that does not rely on human intervention. Using technologies based on unique sensing algorithms, AI and IoT, KITZ has launched KISMOS (KITZ SMART MONITORING SYSTEM), a monitoring service that detects signs of abnormalities in valves for batch production processes in plants and factories. This will provide a system for providing total support to customers from the selection of valves to planned maintenance. Going forward, KITZ will fully take on the challenge of solutions-oriented businesses.

Value Creation Story

Growth

Business Results in the Fiscal Year Under Review (FY2022)

In FY2022, we saw a recovery in economic activity with global progress on the COVID-19 pandemic response. However, due to China's zero-COVID policy, the Russian invasion of Ukraine, and other factors, difficult conditions continued, including

• Net Sales & Operating Income in Valve Manufacturing Business Segment

Net Sales

Operating Income

(Millions of yen)					125,189	(Millions of yen)
125,000									25,000
		109,969		106,754
		103,114
	98,162		95,335
100,000							20,000
		14,938					14,980
75,000	12,798								15,000
			10,627		12,088
50,000				9,306				10,000
25,000									5,000
0									0
	2017	2018	2019	2020	2021	2022	FY

• For the fiscal year ended December 2020, which is an irregular nine-month period due to the change in the fiscal year end, reference figures (unaudited) calculated as if the previous fiscal year ran from January to December 2020 are shown.
• The operating income of Valve Manufacturing Business shows the figures before the elimination of corporate expenses, etc.

supply chain disruptions, soaring energy resources and raw material prices, and the depreciation of the yen. Under these circumstances, we managed to achieve net sales that exceeded our plan in Valve Manufacturing Business, on the back of favorable conditions for semiconductor manufacturing equipment continued in Japan and overseas, price revisions in response to sharply rising raw material prices, increased sales in the Americas and ASEAN regions, and the impact of foreign exchange rates.

On the profit front, the effects of the price revisions offset soaring raw material prices. Favorable conditions for semiconductor manufacturing equipment and increased sales from domestic and overseas markets due to the economic recovery also led to increased profit.

As a result, net sales in Valve Manufacturing Business segment rose by ¥18,434 million year on year to ¥125,189 million. Operating income also increased by ¥2,892 million year on year to ¥14,980 million. This performance represents record highs for both net sales and operating income.

Toward Achieving the Long-term Management Vision

The Long-term Management Vision states a policy of aiming for expanded sales and profit by pursuing core businesses in greater depth and investing resources in growth markets. The first Medium-term Management Plan categorizes the businesses in which the KITZ Group excels as core businesses, namely Building & Facilities, Petrochemicals, Water Treatment, and Machinery & Equipment. We will further enhance the infrastructure of these businesses and lay solid foundations while investing resources in growth markets toward achieving "digitalization" and "decarbonization," two keywords to solve social issues. Specifically, we have categorized Semiconductor Equipment, Semiconductor Materials (Filters), Fine Chemicals

KITZ began selling valves for hydrogen stations that supply hydrogen gas as fuel for fuel cell vehicles and other uses in July 2012, and in April 2020, entered the packaged unit-type hydrogen station business. In recognition of the development of technologies to reduce the costs of hydrogen stations as part of the ultrahigh pressure hydrogen infrastructure widespread adoption and technological development project operated by NEDO*1, and for the technological development of large valves for liquefied hydrogen as part of a project to develop technologies to build a hydrogen society, KITZ was selected by METI*2 as a "Zero-Emission Challenge Company."

In addition, Kawasaki Heavy Industries, Ltd. proposed and was selected for its hydrogen-powered aircraft core technology development project as a "next-generation aircraft development project" as part of NEDO's Green Innovation Fund, and in November 2021, KITZ was selected by Kawasaki Heavy Industries as a project participant and subcontracted again for the development of valve technologies under hydrogen aircraft engine combustor and system technology development and liquefied hydrogen fuel storage tank development. We will pursue efforts in the field of hydrogen, one of our growth markets, including our aim of contributing to the realization of next-generation aircraft through the development of these technologies.

*1 NEDO: New Energy and Industrial Technology Development Organization

*2 METI: Ministry of Economy, Trade and Industry

Launch of a Monitoring Service

Domestically, there are many plants that were constructed during Japan's high economic growth periods and are still operating today. Due to their many years of operation, there is a heightened risk of trouble and accidents from deteriorating facilities, which increases the importance of regular inspec- tions, upkeep, and other maintenance tasks for securing safe operations. However, in the field of maintenance work, there

Valves equipped with sensors and other devices

As a Leading Company in the Valve Industry

As a leading company in the valve industry, KITZ has cultivated advanced technology and a wealth of experience over the course of many years. KITZ utilizes these to meet the diverse needs of customers. KITZ introduced the Valve Meister System for certifying employees who have reached a certain level of skills and knowledge regarding automated valves and metal materials for valves as Valve Meisters. Our Valve Meisters respond to requests for customer consultations and propose specific solutions. KITZ has also offered training programs (group training and online training) for trading companies that handle valves as well as construction companies, customers and plant-related companies to learn the basics of valve technologies. Through practical training in areas such as valve assembly and disassembly, piping, and automatic valve flow tests, along with lectures from veteran engineers with a wealth of practical experience, we will help improve knowledge and skills across the industry.

Strategies

Sustainability

Data Section

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To meet the world's water infrastructure demands

Working Toward Solving Water-Related Issues

We work actively on the development of environmentally friendly technologies, such as surface treatment technology to prevent the elution of nickel and lead from valves, and lead-free copper alloy materials, and meet the international standards for water quality. Moreover, our lineup includes equipment that breaks down organic substances dissolved into water by way of ozone, UV light, or photocatalysis, purification devices designed to handle every kind of water source

Value Creation Story

Supporting the Stable Supply of Water

Water is the source of life and essential for sustaining all lives on the earth, flora and fauna alike. The KITZ Group helps to make people's daily lives more comfortable by supporting the stable supply of clean and safe water through its safety-conscious products and services.

Evolution of Water Treatment Technology

The KITZ Group is steadily evolving technologies that meet the world's water infrastructure demands, including water purification technologies that use membranes to clean water, desalination technologies to purify and desalinate water that is not suitable for consumption, such as seawater, and technologies catering to the need for pure water and ultrapure water against the backdrop of an expanding semiconductor market.

and household water purifiers.

The world faces serious issues related to water resources and shortages. The KITZ Group is marshalling its combined strengths to ensure that all people have access to clean and safe water and is seeking new solutions for various water- related problems by harnessing the Group's combined capabilities, utilizing every group member's experience, know-how, technologies, products and services.

Growth Strategies

Water purification

Water meter units

Bronze and brass valves

Valves for water heaters

Tap water filters for

Water conditioners for

devices

Use membrane filter water purification systems to produce safe, delicious-tasting water.

An integrated unit comprised of a water supply meter and joint fittings

Utilized by many customers in all manner of fields, including the air conditioning and sanitation of building facilities such as office buildings and hotels, plant production facilities, and machine tools and devices.

Designed for	home use	commercial applications
easy installation	Hollow fiber	Groundbreaking water treatment
on compact,	membranes purify	devices that use a combination
space-saving	tap water. Used for	of ozone, UV light, and
type for water	water sources and	photocatalysis, together with
heaters.	purification	advanced oxidation treatment
	systems.

Sustainability

Water source

	Office buildings and
	Hotels, Hospitals
	Apartment houses
	Water supply and
Water purification	distribution
facilities
plants
	Pumps
	Water distribution lines
	Drainage systems

	Pools and hot springs
Houses	Sewage plants

Data Section

Resilient seated gate valves

Widely used for water supply and distribution pipelines.

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Products for water distribution systems

A broad choice of products including shutoff valves, metal fittings, and snap taps for branching tap water

pipes

Valves for water	Valves for sewage plants
supply systems	Gate valves, ball-check
Made of special chemical	valves, and other valves
ingredients to minimize or	that are essential for
eliminate lead elution into	treatment of sewage
tap water for protection of	water
human health.

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Providing Valuable Energy Resources

That Keep Industry Running in an Endless Stream

For a Clean Energy Society

With the decarbonization of energy picking up speed in

the race to carbon neutrality, there is increased interest in liquefied natural gas (LNG), which produces fewer CO2 emissions during combustion than coal or oil and it can help curb global warming, as well as hydrogen, regarded as the mainstay of

Value Creation Story

Ensuring the Stable Supply of Energy

The KITZ Group provides a wide scope of products that play a key role in providing essential energy resources that keep industry running to oil refineries, petrochemical plants, chemical plants and innumerable other industrial processes through oil and gas pipelines, loading/off-loading terminals and other modes of transportation.

Controlling the Flow of Fluids in Extreme Harsh Environments

At energy plants, valves must be able to withstand severe conditions like extremely high temperatures and pressure with no possibility of failure. Before introducing any new product, the KITZ Group repeats stringent laboratory tests, analyses and evaluations based on actual on-site service environments. Only those products that have passed such verification procedures are added to our product lineup.

next-generation energy. Particularly with regard to hydrogen, we have begun to develop large-sized valves for the high volume transportation of liquid hydrogen and aim to have the KITZ Group's valves supplied throughout the supply chain for hydrogen.

We are focused on developing eco-friendly products to deliver clean, renewable energy to people all over the world with the aim of contributing to the realization of a decarbonized society.

High-pressure ball valves for hydrogen stations

Growth Strategies

Metal seated ball valves	Stainless steel valves	Automated valves
Offer high	Suited for use under high temperature, high	Automated
durability and are	pressure conditions in various types of	operation valves
also capable of	plants.	equipped with
handling high		actuators
temperature and
corrosive fluids.

Fully-welded type pipeline ball valves

Safety design ball valves guarantee leak-free control of fluid flow in pipelines.

Ultrahigh-pressure ball valves with excellent seal performance and durability, developed for use in hydrogen refueling stations

Valves for high-purity gas service

Clean stainless steel diaphragm valves or bellows seal valves for semiconductor manufacturing

Sustainability

Crude oil and natural gas excavation locations

Oil refineries and petrochemical plants	LNG terminal and	Thermal power plants		Semiconductor
	transportation facilities			manufacturing
			Hydrogen stations	facilities

Data Section

Three-piece trunnion mounted ball valves

From the oil refining to petrochemical industries, industrial floating and trunnion mounted ball valves are used in a wide range of chemistry, fine chemicals, and energy-

23 related fields.

Crude oil
Liquefied natural gas
Carbon steel	Actuated compact ball
valves	valves
Widely used in	Cater to automation
chemical plants	needs for small-
and petrochemical	diameter piping on
industry due to	industrial production
their superior	process lines.
corrosion resistance.

Cyrogenic and low temperature service control valves

Valves for LNG designed for control of flow rate of industrial low temperature fluids, under technical collaboration with Valtek Inc. USA (currently Flowserve Corp.)

Cyrogenic and low temperature service shut-off valves

Designed for handling ethylene and industrial low-temperature gas fluids in LNG produc- tion, intake, satellite terminals, and various other applications.

Microfiltration Filters

Micro-pore,low-leachinghollow-fiber membrane filters make significant contributions in the semiconductor and medical fields.

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Research and Development System Creating High Added Value

In order to meet the diverse needs of the times, we take immense pride in producing fluid control devices delivering safety, durability and reliability.

Earning the Trust of Users Globally with World-Class Valve Technologies

gone a step ahead of the needs of emerging markets and developed high value-added products, advancing from

R&D Concept

The KITZ Group's engineering section is actively and boldly engaged in research and development to realize KITZ' Statement of Corporate Mission: "We strive to build a robust global environment and sustainable future by supporting societal infrastructure through our advancements in fluid control technologies and materials."

• Core technologies
  We integrate process technologies in the field of sealing, material, and process engineering that serves as the core of our R&D operations.
• Providing solutions
  We focus on resolving customer problems and provide products and services that please our customers.

To Provide Next-generation Solutions

As part of KITZ's 70th anniversary project, the KITZ Group Innovation Center was constructed on the grounds of the Chino Plant.

On the second floor, which has an office area for development and design sections, there is ample meeting space. Thanks to the adoption of activity-based working (ABW)*, the space encourages the free and flexible exchange of ideas and knowledge.

In addition, on the third floor, we have set up an "innova- tion studio" for putting original design ideas that create new value into practice. This will be the starting point for the speedy provision of innovative products and services that will satisfy customers.

*ABW: A working style where people choose their work location based on the nature of the work at the time

The Product Development Department at KITZ is engaged in research and development to provide value to customers in a wide range of fields, including building utilities, petrochemi- cals, clean energy, water treatment, and semiconductors.

To maximize the synergy of the Group, engineers from Japan, Europe, the Americas, ASEAN, and China collaborate to promote product development and design, utilizing networks such as groupware, and have established a technology structure for design at the optimum sites worldwide. We also develop products with materials and specifications that are compatible with the markets and regulations in each country, and strive to improve efficiency through the active introduction of DX, such as promoting product development according to market needs through centrally managing product draw- ings, design drawings and component tables through the use of PLM*.

In response to the diverse needs of today's world, each and every engineer, by raising the level of his or her skills and continuing to take up the daily challenge of value creation, is

manually operated shut-off valves to automated control valves, and from single valves to complex modular products.

What makes it possible is sealing technology and materials development. Sealing technology has been developed in a wide range of fields from low pressure to ultra-high pressure, from extremely low temperature to high temperature, with up to more than 90,000 products created. The Company has also, based on its know-how cultivated over the long period of its history, developed optimum metal materials and introduced new products through high-level casting technology. These technologies are still evolving.

• Sealing technologies, the core of valves

Offering eco- and human-friendly	Achieving carbon neutrality and
products and services	hydrogen society
Support for	Stopping fluid
ISO-compliant low
emissions
	Shaft seal

n Speed and global network

We develop new products rapidly by utilizing the

worldwide group network to respond to the diverse needs

of customers.

creating fluid control devices that are outstandingly safe, durable and reliable.

* PLM: Product Lifecycle Management

Sealing Technology and Materials Development Supporting Lifelines in a Wide Range of Fields

KITZ Corporation started operations from manufacturing general-purpose valves. Over the years, KITZ has continually

Reducing			Seat seal
		Narrowing fluid
operating torque
		Temperature	Pressure
			Fluid properties
		Maintenance free			Flowing fluid
Automation and labor savings in			The challenge to zero emissions
plant and factory operations

Value Creation Story

Growth Strategies

Sustainability

● Valve Research and Development Process

Product	Product	3D-CAD
planning	development
	Material
	and process
	engineering

	Assessment
❶	of prototype
❷
Structural	3D prototype
analysis	verification

Process

design

					Mass			Evaluation		Mass	Launch of
					production			of mass
								production	product
					trial			production
	❸		❹				❺
	Casting		Mold design/						Reliability
	analysis		production						test

• Reliability test

Testing and analysis are carried out under every condition of use.

Data Section

Fluid analysis	Structural analysis
❶Structural analysis		❷3D prototype verification
The optimal structure of the product is designed by using	Prototypes can be verified at an
simulated fluid analysis, stress, or other structural analysis.	early stage using 3D printer
		modeling. Customers can check
		those prototypes by touch.

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• Casting analysis

Design for an optimal mold for casting is planned using solidification analysis.

CAM

• Mold design/production

The CAM* data used to design the molds is transferred to processing equipment, and molds are produced internally.

* Computer Aided Manufacturing

Cryogenic test

Liquefied natural gas (LNG) is a low-temperature fluid. We conduct tests to reproduce the low temperature conditions.

Fire test

We verify whether valve functions can be maintained, even if a fire occurs and the valve seal materials are burned out completely.

Blow-off test

Significant force is applied for high temperature and high pressure fluid flow control when valves are opened and closed. We verify the durability to ensure that valves can operate properly even under the conditions of application limits.

Low emission test

The company exclusively retains the only methane gas testing facility based on the API standard in Japan and performs external leak tests with actual fluid.

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