Makita : Report 2022 (Two-page spread view) (for viewing)

Live Green &

Grow Strong

Makita Report 2022

Year Ended March 31, 2022

www.makita.biz

Long-term Target

Strong Company

Makita has set itself the goal of contributing to the creation of sustainable society and consolidating a strong position in the industry worldwide as a global supplier of a comprehensive range of tools for creating comfortable homes and living environments, including cordless power tools, battery-operated outdoor power equipment and pneumatic tools.

Management Policy/Quality Policy

1 2

Makita strives to exist	Makita values
in harmony with society	its customers

a company that observes laws and regulations, acts

ethically and never allows a market-driven company. intervention of the

anti-social organizations.

3	4
Makita is managed in	Valuing a stalwart
corporate culture,
a consistent and	Makita encourages each
proactive manner	individual to perform to
	his or her highest level
a company that strives
to exist in perpetuity by	a happy company.
adhering to a sound
profit structure.

Table of Contents

3 Business Summary

1. Financial & Non-financial Highlights

1. Makita's Value Creation History

1. Chairman's Message

11 President's Message

1. Makita's Value Creation Process

1. Value Creation Process Explained 17 Material Issues
   19 Makita's Strengths in the Value Chain
   21 Contribution to Solving Social Challenges

1. Business Review

1. Risks & Opportunities
2. Environment

1. Stakeholder Relations

41 Systems to Support Enhancement of Corporate Value-Corporate Governance

46 Messages from Outside Directors

47 List of Directors

1. Message from the Financial Officer

1. 11-YearSummary

1. Stock Information
2. Corporate Data

About This Report

Editorial Policy

The Makita Report is published with the objective of presenting the Company's initiatives for creating value over the medium- to long-term in a way that integrates both financial and non-financial information. In preparing the report, information that is particularly important for the Company's value creation was compiled concisely, referencing international frameworks such as those of the Value Reporting Foundation (VRF). Please see the Company website (https://www.makita.biz/) for more information. Detailed financial information, environmental information, and governance information are presented, respectively, in the Investor Relations section (under Additional Information in the IR Library), the Environmental Report, and the Corporate Governance Report.

• This report covers 53 companies, including Makita Corporation and its 52 consolidated subsidiaries (as of March 31, 2022), but some of the information reported only covers Makita Corporation.

Reporting Period FYE 2022 (April 1, 2021 to March 31, 2022)

However, information from outside of this period is reported when it is appropriate to ­present past circumstances and data, and recent examples.

Caution Regarding Forward-looking Statements

In this report, forward-looking statements are about future performance and are based on the Company's judgment derived from the information available at the time of its prepara- tion. Please understand that a number of important factors could cause actual results to differ materially from those presented in the forward-looking statements.

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Business Summary

Supporting the Creation of an Affluent Society on a Global Scale

As a global supplier of a comprehensive range of tools for creating comfortable homes and

­living environments, Makita supports the creation of an affluent society on a global scale. To this end, we are striving to solve social issues and contribute to the realization of a sustainable society by making a wide variety of products cordless and expanding our finely-tuned sales and service network while developing our business close to our customers.

Makita's Global Network

Makita operates 127 sales offices in Japan (as of April 2022), and directly managed sales bases in some 50 countries overseas, allowing us to carry out fine-tuned sales and services in approximately 180 countries. In addition to the one in Japan, we have plants in seven countries overseas and currently produce about 90% of our products overseas. By maintaining production sites and sales offices with ample inventories at locations around the world, we are able to ensure the swift and stable supply of our products.

Business Description

Power Tools

Outdoor Power Equipment, Household and Other Products

Parts, Repairs and Accessories

Makita power tools are used in many settings, such as residential and large-building construction sites and factories. Since becoming the first company in Japan to manufacture and sell portable electric planers in 1958, we have dedicated ourselves to daily technological development to enable better approaches to work that includes drilling, clamping, cutting, grinding, and more. We are responding to the diverse needs of customers with a robust lineup of products embodying our advanced technological expertise.

In the outdoor power equipment category, which includes lawn mowers, grass trimmers, chainsaws, and blowers, we are focusing on developing cordless products that are lightweight, low noise, and easy-to-handle for people from all walks of life, as well as emitting zero exhaust, thereby also contributing to the realization of decarbonization. Makita's household product line includes the Cordless Cooler & Warmer Box, Cordless Kettle, and other items that fulfill key roles during outdoor activities or even at times of disaster.

Accessories (including consumable parts such as saw blades and whetstones) have a significant impact on work quality and efficiency. Makita provides a lineup of long-life accessories optimized for work tasks. Additionally, we have a network of businesses in each part of the world to allow for rapid and stable repairs and parts supply, which enables Makita to contribute to improving its customers' production and work efficiency.

Makita Corporation Head Office	Sales and Production Subsidiaries	Production Subsidiaries
Sales Subsidiaries	Sales Subsidiary Branches	Service Centers	Technology Development Subsidiary

	Japan	16.0%
	Europe	47.7%		Overseas
Share of	North America	15.2%	Overseas and	93.0%
Asia	6.6%	Domestic
Revenue
(excluding Japan)	Production	Domestic
by Region
Central and	5.6%	(Product Unit Basis)	7.0%
(FYE 2022)
South America	(FYE 2022)
	Oceania	7.0%
	The Middle East	1.9%
	and Africa
	Power Tools			Non-Japanese
	57.1%
			83.9%
Share of	Outdoor Power		Breakdown of
Equipment,
Revenue by	Household and		Employees by	16,973 people
Product Category	Other Products		Nationality
(FYE 2022)	25.6%		16.1%
	(FYE 2022)	Japanese
	Parts, Repairs
	and Accessories
	17.3%			3,260 people

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Financial & Non-financial Highlights

Financial

Revenue

(Million yen)

800,000				739,260
700,000
600,000
500,000
400,000
0
2018	2019	2020	2021	2022	(FYE)

Operating profit & operating profit ratio

(Million yen)					(%)
100,000				91,728	25.0
80,000					20.0
60,000				12.4	15.0
40,000					10.0
20,000					5.0
0					0
2018	2019	2020	2021	2022	(FYE)

Operating profit		Operating profit ratio

Non-financial

Production output

(Million units)

60.00
50.00				50.05
40.00
30.00
20.00
0
2018	2019	2020	2021	2022	(FYE)

Number of employees

22,000
20,000				20,233
18,000
16,000
14,000
0
2018	2019	2020	2021	2022	(FYE)

Against the backdrop of robust tool demand for construction sites, both	Although the cost-of-sales ratio worsened due to an increase in trans-
domestic and overseas sales were strong, resulting in a 21.5% year-on-	portation costs, operating profit increased 3.7% year-on-year to ¥91,728
year increase in revenue to ¥739,260 million, a record high for the fifth	million, marking a record high for the second consecutive year. The
consecutive year.	­operating profit ratio was 12.4%, down 2.1 percentage points from the
	previous year.

As a result of the strong sales situation and efforts to increase produc-	Reflecting strong sales conditions, the number of employees increased
tion to meet demand in various regions, production output increased	by 1,609 from the end of the previous fiscal year to 20,233.
26.4% year-on-year to 50.05 million units, reaching a record high for the
second consecutive year.

Profit attributable to owners of the parent

ROE

Increasing presence of female employees

Greenhouse gas emissions (Scope 1, 2)

(Million yen)

70,000				64,770
60,000
50,000
40,000
30,000
0
2018	2019	2020	2021	2022	(FYE)

(%)

12.0

10.0

9.2

8.0

6.0

4.0

2.0

0

2018

2019

2020

2021

2022

(FYE)

Female	Percentage of
employees	female employees
6,999	34.6%
Female	Percentage of
managers	female managers
220	17.9%

(t-CO2)		(t-CO2/100 mil. yen)
100,000				25.0	Fiscal 2030 targets
		78,899
80,000			20.0	44,836 t-CO2
60,000				15.0
40,000		10.7	10.0	Fiscal 2040 targets
	Virtually
20,000				5.0
0	2021	2022	(FYE)	0	zero
Emissions	Intensity per unit of revenue

Income tax expenses totaled ¥27,146 million with an effective tax rate of	Despite the increase in profit attributable to owners of the parent, ROE
29.4%. As a result, profit attributable to owners of the parent increased	declined 0.9 percentage points from the previous year to 9.2%, reflect-
4.4% year-on-year to ¥64,770 million, reaching a record high for the sec-	ing the increase in equity attributable to owners of the parent.
ond consecutive year.

Domestically, female employees have an average of approximately 17.0 years of service and have been active in a variety of departments over long periods of time. Overseas, Makita has numerous female employees in management positions who are demonstrating a wide range of ­abilities in their respective fields.

With the goal of achieving virtually zero greenhouse gas emissions (Scope 1, 2) by fiscal 2040 (FYE 2041), we are actively utilizing renewable energy and engaging in thorough energy-saving activities. Greenhouse gas emissions (Scope 1, 2) decreased by 12.0% from the previous fiscal year to 78,899 t-CO2.

R&D costs

(Million yen)

15,000				14,145
10,000
5,000
0
2018	2019	2020	2021	2022	(FYE)

Capital expenditures

(Million yen)				59,937
60,000
50,000
40,000
30,000
20,000
10,000
0
2018	2019	2020	2021	2022	(FYE)

Water usage

(m3)				(m3/100 mil. yen)
400,000					100.0
300,000				317,185	75.0
				52.8
200,000					50.0
100,000				117,000	25.0
			21.8
0					0
2018	2019	2020	2021	2022	(FYE)

Water usage (Left axis)		Intensity per unit of revenue	(Makita Corporation)
Water usage (Left axis)		Intensity per unit of revenue	(Overseas production subsidiaries)

Waste emissions

				(t/100 mil.
(t)				29,957	yen)
30,000				10.0
25,000					8.0
20,000				5.0	6.0
15,000
10,000					4.0
			5,907
5,000				2.0
			1.1
0				0
2018	2019	2020	2021	2022	(FYE)

Waste emissions (Left axis)		Intensity per unit of revenue	(Makita Corporation*)
Waste emissions (Left axis)		Intensity per unit of revenue	(Overseas production subsidiaries)

To promote the use of rechargeable lithium-ion batteries, we focused on	Capital expenditures totaled ¥59,937 million, up 20.2% from the previ-
expanding our lineup of cordless products, including the 40Vmax series,	ous fiscal year, as a result of efforts to increase production capacity and
and R&D costs increased 10.7% year on year to ¥14,145 million.	establish and expand distribution centers, including the construction of
	a new factory in China, an additional factory building in Thailand, and a
	distribution center in Saitama Prefecture.

We carry out monthly monitoring of water usage at business bases and strive to reduce water usage. Although water usage in FYE 2022 increased given our strong sales, intensity per unit of revenue for Makita Corporation fell 17.7% year on year to 21.8 m3/100 million yen and for overseas production subsidiaries fell 31.2% to 52.8 m3/100 million yen.

We are striving to reduce our final disposal volume of waste by thoroughly sorting waste in order to promote recycling. Although final ­disposal volume of waste on FYE 2022 increased given our strong sales, intensity per unit of revenue for Makita Corporation* fell 15.3% year on year to 1.1 tons/100 million yen and for overseas production subsidiaries fell 18.2% to 5.0 tons/100 million yen.

* Applicable only to the Head Office, Okazaki Plant, and Nisshin Office.

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Makita's Value Creation History

Continuously Evolving to Meet the Needs of the Times and Our Customers

Since our founding, we have pursued expansion on a global scale by adapting to meet the needs of our customers and the times. We will continue to leverage our strengths, including a worldwide network of sales and service bases, and evolve into "a Supplier of a Comprehensive Range of Cordless Products" for further growth. By doing so, Makita will continue to provide products and services that accurately meet the needs of our customers and the times and thereby achieve sustainable growth.

Revenue

(Consolidated)

Overseas and Domestic Production (Product Unit Basis)¥739.3

billion

(FYE 2022)

FYE 2000

FYE 2022

	Overseas		Domestic		Overseas		Domestic
	53.6%		46.4%		93.0%		7.0%

Overseas and Domestic Revenue

1915

Mosaburo Makita founded Makita Electric Works (propri- etorship) in Nagoya, Japan

1938

Incorporated the proprietorship and established Makita Electric Works, Inc.

1945

Moved to the present location in Sumiyoshi-cho, Anjo City, to accommodate World War II related evacuations

1958

Released the 1000 portable electric planer, Japan's first such domestically produced tool

1959

• Decided to convert to a power tool manufacturer
• Shipped the 1300 hand-held electric planer to Australia, our first export of power tools

1962

Changed company name to

Makita Electric Works, Ltd.

1970	1991
Established Makita U.S.A. Inc.,	Changed company name to
our first overseas subsidiary	Makita Corporation
1980
Started production of power
tools in Canada,* our first
overseas production site

• Production terminated in January 2009

FYE 2000

FYE 2022

				Overseas		Domestic		Overseas		Domestic
2005	2015	2022		75.8%		24.2%		84.0%		16.0%
Launched the TD130D cordless	100th anniversary of Makita's	Discontinued engine-powered
impact driver, our first lithium-ion	founding	products

battery tool	2019
	Launched the Li-ion 40Vmax
	series

1910-	1950-	1970-	1990-
Founded in a time of	Overcoming adversity,	Developing Overseas	Renewed corporate
increased demand for	transforming into a	Markets as the First Step	image to become a com-
electric power	power tool manufacturer	Towards Becoming	prehensive supplier
1915		1958-59	a Global Company	1991
	1970
Taking advantage of the	The recession following the	With power tools the mainstay
electricity­	boom of World War I,	Korean War caused a slump in	Makita established its first over-	of the Company's business,
when demand for electricity	sales, and developing original	seas subsidiary, Makita U.S.A. Inc.	Makita renewed its corporate
surged, Mosaburo Makita	products became an important	in the U.S., with the goal of	image with the aim of evolving
founded Makita Electric Works	management issue. After much	expanding exports. In a fierce	into a comprehensive supplier of
(proprietorship) and began	trial and error, in 1958, the first	market crowded with competi-	all housing-related equipment,
repairing and selling lighting	Japanese-made portable elec-	tors, including major power tool	including cordless outdoor
equipment, electric motors,	tric planers were launched with	manufacturers, we had some dif-	power equipment (OPE) and
transformers, and other products.	the catchphrase "20 times more	ficulties at first. However, we	woodworking machinery, in
		efficient than a human." The	developed a finely tuned sales	order to meet the needs of a
		product was well received and	strategy, and our products' excel-	wide range of customers. The
		fulfilled the needs of building	lent cost performance along with	symbol and company name
		carpenters nationwide. In 1959,	our high quality after-sales ser-	logotype were all renewed to
		the Company decided to with-	vice earned high evaluations. As	express the Company's determi-
		draw from the electric motor	a result, we were able to success-	nation to move forward to
		business and become a power	fully penetrate the North	create­	a new Makita.
		tool manufacturer.	American market.

Makita's7 Makita Report 2022Value Creation

2000-	2010-
Introduced the world's	Renewing our commit-
first professional-use	ment to the next 100
power tools powered by	years on the 100th anni-
lithium-ion batteries	versary of our founding
2005	2015
Makita was the first in the indus-	Makita reached the major mile-
try to launch professional cord-	stone of 100 years in business.
less power tools that use	We renewed our determination
lithium-ion batteries with high	to continue to evolve and grow
energy density. Embraced by	to become a company that will
professionals, the lithium-ion	endure for the next 100 years.
batteries have realized longer	We continued to work on the
battery life and lighter weight	evolution toward "a Supplier of
and enabled more compact tools.	a Comprehensive Range of
	Cordless Products" as a major
	pillar of our efforts for future
	growth, and by expanding our
	lineup of cordless products, we
	are contributing to solving social
	issues, including decarbonization.

History

2020-

Discontinued production of engine-powered products to further contribute to solving social issues

2022

In light of the growing need for cordless products that help address concerns related to labor shortages and the environ- ment, which have become serious social issues worldwide, the Company terminated production of engine-powered products in order to concentrate management resources and accelerate the transition to cordless products.

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