Makita : General Overview of Business

Makita Corporation

Additional Information

for the year ended March 31, 2022

General Overview of Business

(Partial translation of "YUKASHOKEN HOKOKUSHO"

originally issued in Japanese)

CONTENTS

Management policies and Challenges the company faces…………………………………………………………...2

Risk factors…………………………………………………………………………………………………………..6

Analysis of Financial Position, Operating Results and Cash Flows…………………………………………………10

Production, Orders received and Sales……………………………………………………………………………....15

Research and Development………………………………………………………………………………………….15

Facilities and Equipment…………………………………………………………………………………………….16

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Partial Translation of "YUKASHOKEN HOKOKUSHO" originally issued in Japanese

【Management policies and Challenges the Company faces】

1. Basic Policies

Makita has set itself the goal of consolidating a strong position in the global power tool industry as a global supplier of a comprehensive range of power tools (mainly for DC type, gardening equipment, air tools, etc.) that assist people in creating homes and living environments. In order to achieve this, Makita has established strategic business approaches and quality policies such as "A management approach in symbiosis with society" "Managing to take good care of our customers," "Proactive, sound management" and "Emphasis on trustworthy and reliable corporate culture as well as management to draw out the capabilities of each employee." Makita aims to generate solid profitability so that Makita can promote its sustained corporate development and meet the needs of its shareholders, customers, and employees as well as regional societies where Makita operates.

2. Target Management Indicators

Makita believes that attaining sustained growth and maintaining high profitability are the ways to increase corporate value. Makita's specific numerical target is to maintain a stable ratio of operating income to net sales on a consolidated basis of 10% or more.

3. Medium-to-Long-Term Management Strategy

Makita aims to establish high brand recognition and become a "Strong Company" capable of acquiring and

maintaining the top market share as an international total supplier of power tools for professional use, gardening equipment, pneumatic tools and other tools in each international region. To achieve these objectives, we will put focus on maintaining and expanding our efforts to develop new products that guarantee great satisfaction to professional users, our global production structure realizing both high quality and cost competitiveness at the same time, and the best marketing and service structure of the power tools industry in Japan and in international regions. Especially having plenty stock in each region as we have production and sales sites in each country, that realizes not only marketing but also speedy after-sale service and distribution, and this leads to build the customer relationship.

In order to carry out this management strategy, Makita is focusing its management resources on the professional-use tool category, while maintaining its strong financial position that can withstand any unpredictable changes in the operational environment including those related to foreign exchange risk and country risk.

4. Preparing for the Future

In the future, the Makita Group expects that the prospect for the global economy will continue to be uncertain. Meanwhile, the Group believes that demand for environmental and human friendly tools that contribute to the solution of social issues, such as the labor shortage and environment conservation by increased efficiency of works, will continue to increase further both in emerging and developed countries.

To cope with these assumed conditions, Makita will:

• Strengthen its R&D and product development capabilities, mainly for the technologies of motors and technologies for discharge/charge of batteries, to take the initiative in cordless products market;
• Positioning cordless outdoor power equipment as the next pillar of our future business after power tools, we will contribute to the realization of a decarbonized society by promoting deep cultivation and development of the market.
• We will strengthen the development and sales expansion of new finished goods in new fields such as cleaning, outdoor activities, and disaster prevention, and work to evolve into a supplier of a comprehensive range of cordless products.
• Implement measures to strengthen and improve the efficiency of production, procurement and distribution, while further upgrading global production bases; and
• Strive to raise its brand power by promoting the establishment of a sales and after-sales service network to offer community-based and fine-tuned response to needs of customers around the world.

On the basis of these factors, the Group will strive to maintain a solid presence in the industry and contribute to achieve a sustainable society as a global supplier of a comprehensive range of tools for creating comfortable homes and living environments.

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Partial Translation of "YUKASHOKEN HOKOKUSHO" originally issued in Japanese

(Initiatives for the TCFD Recommendations)

The impact of climate change on society, such as frequent wind and flood disasters, is becoming more serious, and companies are playing an increasingly important role in realizing a decarbonized society. Our company views climate change as an important business issue.

For this reason, our company has prioritized contributing to the solution of climate change issues by, for example, focusing on cordless outdoor power equipment that does not emit exhaust gas when used. In order to further accelerate these efforts, we have newly set targets for reducing greenhouse gas (GHG) emissions. We are working on our targets are to reach net zero emissions by fiscal 2040 (FYE 2041).

In addition, recognizing the importance of dialogue with stakeholders on climate-related risks and opportunities, we disclosed information for the first time based on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

See our website for more information. (https://www.makita.co.jp/company/sustainability/environment)

[Governance]

In 2021, the Company established a Sustainability Committee (which met three times in fiscal 2021 (FYE 2022)), chaired by the President, to promote Companywide efforts to address sustainability issues through business activities. The committee considers climate change to be one of the most important sustainability issues, and deliberates on policies, measures, and plans to reduce GHG emissions. The Sustainability Committee reports and submits proposals on important matters to the Board of Directors, which deliberates on these matters and makes decisions in the course of monitoring and overseeing the Company's climate-related risks and opportunities.

[Strategy]

In identifying climate-related risks and opportunities that could affect our business, we have used climate change scenarios from the International Energy Agency (IEA), the Intergovernmental Panel on Climate Change (IPCC), and other organizations to organize our views into (1) a 1.5°C to 2°C worldview in which decarbonization progresses and

(2) a 3°C to 4°C worldview in which warming proceeds as it is now. The following is a summary of the results.

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Partial Translation of "YUKASHOKEN HOKOKUSHO" originally issued in Japanese

Based on these worldviews, we have identified our climate-related risks and opportunities and qualitatively assessed them. For more details, see our website.

Risks

Type

Category

Risk

Relevant

Possibili

period

ty

Large

Small

Increased operating costs based on own GHG

Short to

emissions

medium

Large

Rising carbon price/

Increased procurement costs of raw materials,

term

energy, etc.

Policies

energy conservation and

Increased capital expenditures

to

enhance

and

low-carbon regulations

Short

energy efficiency

regulati

Large

term

ons

Increased renewable energy procurement costs

Medium

Battery regulations

Increased battery procurement costs

to

Large

long term

Increased development costs for technologies

Product technology

and products with

Transitio

development

superior

environmental

performance

Short to

Technol

competition

(including portability and

n

medium

Large

ogy

operational efficiency)

term

Competition to

develop

Increased

development

costs

for

next-generation

battery

next-generation batteries with

technology

superior capacity, voltage, life, safety, etc.

Increased procurement costs due to increased

battery demand

Short

Large

Increased procurement costs due to increased

term

Market

Changes in market prices

demand for semiconductors

Increased

transportation

costs

due

to

Short to

medium

Large

decarbonization of transportation

term

Reputat

Increased disclosure

Reputational

damage due

to

inferiority of

Short

information disclosure

Medium

ion

requests

term

compared to other companies

Increased frequency and

Physical damage to our offices and facilities

Short

Medium

Physical

Acute

severity of wind and

Losses due to business interruption

term

flood disasters

Losses due to supply chain disruptions

Risk onset timing: Short-term: up to 3 years; Medium-term: over 3 years to 10 years; Long-term: over 10 years

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Partial Translation of "YUKASHOKEN HOKOKUSHO" originally issued in Japanese