Makita : Report 2023 (Two-page spread view) (for viewing)

www.makita.biz

Makita Report

2023

Year Ended March 31, 2023

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 3

Makita strives to	Makita values	Makita is managed
exist in harmony	its customers	in a consistent and
with society	(a market-driven company).	proactive manner
(a company that observes		(a company that strives to
laws and regulations, acts		exist in perpetuity by
ethically and never allows		adhering to a sound
intervention of the		profit structure).
anti-social organizations).

Makita individual his or

(a

About This Report

Table of Contents

Management for Sustainable Growth

1. Makita's Value Creation History

1. Makita Today

1. Chairman's Message

1. President's Message

Makita's Value Creation

13 Makita's Vision and the Strengths That Support its Realization

15 Makita's Value Creation Process

17 Contributions to Solving Social Challenges

Makita's Sustainability Management

29 Progress of Makita's Sustainability Management and Material Issues

1. Society (Disclosure of Human Capital, etc.)

1. Environment
   39 Initiatives in Line with the TCFD Recommendations

1. Corporate Governance 49 List of Directors
   51 Messages from Outside Directors

Corporate Data

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 International Financial Reporting Standards Foundation (IFRS). Please see the Company website (https://www.makita.biz/) for more information. In addition, financial information, environmental information, and governance information is presented in detail in the Additional Information, Earnings Release and Fact Sheet in the Investor Relations section of the Company's website, Environmental Report, and the Corporate Governance Report, respectively.

Disclosure System Diagram

• This report covers 54 companies, including Makita Corporation and its 53 consolidated subsidiaries (as of March 31, 2023), but some of the information reported only covers Makita Corporation.

Reporting Period FYE 2023 (April 1, 2022 to March 31, 2023)

However, information from outside of this period is reported when it is

­appropriate to the presentation of past circumstances and data as well as recent examples.

Issued: July 2023

21	Business Overview
23	Financial & Non-financial Highlights

25 Message from the Director of the Administration Department

1. 11-YearSummary

1. Stock Information
2. Corporate Data

Main Content	Periodic Report	Latest Information
Financial	• Annual Securities Report
• Financial Results
Information
• Fact Sheet

Non-financial	• Environmental Report
• Corporate Governance
Information
Report	Makita Report	Makita's website

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 preparation. 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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Management for Sustainable Growth

Makita's Value Creation History

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

Makita began in 1915 as a repair and sales company handling such items as lighting equipment, electric motors, and transformers. Since then, we have pursued expansion on a global scale, evolving to overcome challenges while meeting the needs of our customers and the times. By leveraging our strengths, including a worldwide network of sales and service bases, we will continue to evolve, becoming "a Supplier of a Comprehensive Range of Cordless Products" and achieving further growth. Moving forward, Makita will ensure the provision of products and services that accurately meet the needs of our customers and the times and thereby achieve sustainable growth.

Revenue

(Consolidated)

¥764.7billion

(FYE 2023)

Highlights of Makita's Evolution

1958-59

Overcoming Adversity, Becoming a Power Tool Manufacturer

The recession following the Korean War caused a slump in sales, and developing original products became an important management issue. After much trial and error, in 1958, the first Japanese-made portable electric planers were launched with the catchphrase "20 times more efficient than a human." The electrification of this product was well received, and perfectly met the needs of carpenters nationwide amid a boom in construction demand. On the tailwind of the planers' popularity, in 1959, the Company decided to withdraw from the electric motor business and become

a power tool manufacturer.

1970

Taking the First Step toward Overseas Expansion

As Japan began to see a slowing of the rapid pace of postwar economic growth, Makita established its first overseas

subsidiary,­ Makita U.S.A. Inc. in the U.S., with the goal of expanding exports. In a fierce market crowded with competi- tors, including major power tool manufacturers, we had some difficulties at first. However, we developed a finely tuned sales strategy that reflected the value we place on being close to customers, and our products' excellent cost performance along with our high quality after-sales service earned high evaluations. As a result, we were able to ­successfully penetrate the North American market.

2005-

Moving toward Becoming "a Supplier of

a Comprehensive Range of Cordless Products" for Sustainable Growth with Society

In recent years, the world has seen a rise in the severity of such social issues as labor shortages and environmental problems. Looking to provide solutions, Makita has focused on lithium-ion batteries and, in 2005, was the first in the industry to launch professional-use cordless power tools with lithium-ion batteries. We are now taking steps to evolve into "a Supplier of a Comprehensive Range of Cordless Products," aiming to achieve our long-term goal of being a "Strong Company" and to resolve a wide range of social issues while balancing the sustainable growth of the Company.

1915 Mosaburo Makita founded Makita Electric Works (proprietorship) 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 Established Makita U.S.A. Inc., our first overseas subsidiary

1991 Changed company name to Makita Corporation

2005 Launched the TD130D cord- less impact driver, our first lithium-ion battery tool

1980 Started production of power tools in Canada,* our first overseas production site

* Production terminated in January 2009

2015 100th anniversary of Makita's founding

2019 Launched the Li-ion 40Vmax series

2022 • Discontinued engine-powered products

• Established the Electronic Control Development Center (Tokyo Office)

Social Changes and the Value Makita Offers

1910- 1950-

1970-

2000-

2010-

2020-

Social

Changes

Japan's modernization

• Increased demand for electric power

Japan's rapid postwar economic growth

• Arrival of the construction boom

Globalization of the economy triggered by two oil shocks

• Companies expanded overseas

Discovering the sustainable society concept

• Heightened interest in environmental­
  issues and strengthening measures to prevent global warming
• Growing demand for energy conservation and efficiency

Toward a diverse, inclusive society

• Adoption of SDGs leads to global efforts toward a sus- tainable society

Realizing a sustainable society

• Acceleration of initiatives to realize decarbonization

Began repairing and

­selling lighting equipment, electric motors, transform- ers, and other products

Released Japan's first

­portable electric planer

Beganbuilding a finely-tuned sales and ­service network that spans the globe

Began selling professional	Launched a varied lineup of cordless products that contribute
cordless tools with	to the resolution of social issues
lithium-ion batteries

The Value

Makita Offers

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Management for Sustainable Growth

Makita Today

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, utilizing diverse human resources, and developing our business close to our customers.

Business Description

Power Tools

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

dedicated ourselves to daily technological development better approaches to work that includes drilling, cutting, grinding, and more. We are responding to needs of customers with a robust lineup of products

our advanced technological expertise.

Outdoor Power Equipment, Household, and Other Products

Global Network and Diverse Human Resources

Makita operates 129 sales offices in Japan (as of April 2023), and directly manages sales bases in some 50 countries overseas, allowing us to sell our products in approximately 180 countries. Through the localization of management, we are able to provide fine-tuned sales and services in line with the needs of the customers in each country, and diverse human resources play an active role in business operation in the Company, with the ratio of overseas employees exceeding 80%. We have plants in eight countries, including Japan, and produce about 90% of our products overseas. By maintaining production sites and sales offices with inventories at locations around the world, we are able to ensure the swift and stable supply of our products.

Makita Corporation Head Office  Sales and Production Subsidiaries  Production Subsidiaries 

Sales Subsidiaries  Sales Subsidiary Branches   Service Centers  Technology Development Subsidiary

In the outdoor power equipment category, which includes lawn mowers, grass trimmers, chainsaws, and

blowers, we are focusing on developing cordless products are lightweight, low noise, and easy-to-handle for from all walks of life as well as emitting zero exhaust, also contributing to the realization of decarbonization.

household product line includes the cooler & warmer microwaves, and other items that fulfill key roles during

activities or even at times of disaster.

Parts, Repairs, and Accessories

Accessories (including consumable parts such as saw blades and whetstones) have a significant impact on

work quality and efficiency. Makita provides a lineup of -life accessories optimized for work tasks. Additionally,

have a network of businesses in each part of the world for rapid and stable repairs and parts supply, which

Makita to contribute to improving its ­customers' and work efficiency.

Share of

Revenue

by Region

(FYE 2023)

Share of

Revenue by

Product Category

(FYE 2023)

	Japan	16.1%
	Europe	45.6%
	North America	15.6%
	Asia	7.0%
	(excluding Japan)
	Central and	6.2%
	South America
	Oceania	7.6%
	The Middle East	1.9%
	and Africa
	Power Tools	54.8%
	Outdoor Power
	Equipment,
	Household and	25.6%
	Other Products
	Parts, Repairs	19.6%
	and Accessories

Overseas and

Domestic

Production

(Product Unit Basis)

(FYE 2023)

Breakdown of

Employees by

Nationality

(FYE 2023)

Overseas

92.1%

Domestic7.9%

Non-Japanese

81.9%

15,405 people

Japanese

18.1%

3,399 people

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Management for Sustainable Growth

Chairman's Message

Focusing on the Market Shift to Cordless Products and Stepping up the Pace of Investment

Makita believes that the global shift toward decarbonization is what is driving the rapid increase in the transition from engine-powered to cordless products around the world. This is, in turn, triggering heightened demand for Makita's cordless outdoor power equipment (OPE), an area in which we were already making major investments in over the past few years. Looking to expand

cordless­ OPE sales, we have been investing in the

­construction and expansion of new distribution facilities and the establishment of sales offices in regions with strong potential markets for cordless OPE.

• The speed of the shift towards cordless products
  varies­ by region. In Europe and Oceania, the situation is expected to continue advancing rapidly while, in devel- oping countries, the pace remains slower. Nevertheless, around the world the march toward cordless products seems unstoppable. To ensure that we will not miss out on future demand, we are taking a five-year approach

to this issue, unlike other companies which tend to embrace 10-year investment timetables.

• The benefit of moving quickly is that it has enabled us to already acquire a large share of the market for cordless OPE, especially in Japan, where we are recognized as the leader in the field. This shift in our image is having a sig- nificant impact on how we do business. At a typical
  cruising­ speed, capital expenditures would be ¥15 to ¥20 billion per year, but we have invested ¥40 to ¥60 billion every year for the past three years. Right now, lawn mowers are our best-selling OPE, and are physically larger than other cordless power tools by 10 times, underscor- ing our need to establish a large distribution center. The global shift towards decarbonization will continue to accelerate, and we have already completed the neces- sary investments to keep up with it. With the market steadily shifting to cordless products, we expect to see these investments yield solid results moving forward.

Utilizing Our Unparalleled Strengths

Getting Close to Customers:

Leveraging Makita's Unique Business Model

in Production Resources to Further Makita's Distinct Business Model

Chairman,

Representative Director

Masahiko Goto

Makita has a distinctive business model in which we deliver products from bases located near our customers, which enables us to pick up products if they need repairs and deliver them back to the customers when repairs are complete. Makita's unique approach of establishing sales offices across the world in order to better reach customers has been a constant since the days of Jujiro Goto.

• A common characteristic of cordless power tools and OPE is that after-sales services like repairs are always essential. Our overseas competitors are overly focused on efficiency. The choice is simple: to be close to
  customers­ and thus enhance their convenience or to pursue efficiency. Makita believes that creating relation-
  ships with each and every one of its many customers­ is

the most valuable way to make the most of the sales network it has built up over the years, and this is what makes Makita stand out from its competitors.

• I believe that the recent upfront investments have allowed us to establish a system for providing services close to our customers. We will continue refining our strong after-sales services to differentiate ourselves from our competitors. At the same time, we will continue striving to become a "Strong Company" by properly responding to changes in the business environment while continuing to leverage our strengths as
  a global company.

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