Oiles : 統合報告書2023（English version）

https://www.oiles.co.jp/

Issuing department & contact information

◦Pertaining to the Integrated Report in general

Oiles Corporation General Affairs Dept., Corporate Planning & Administrative Division 8 Kirihara-cho,Fujisawa-shi, Kanagawa 252-0811, Japan

◦This report is also available on our website at https://www.oiles.co.jp/corporate/csr/

◦Please contact us to share any comments or impressions pertaining to this report at https://www.oiles.co.jp/en/contact/

INTEGRATED REPORT 2023

OILES CORPORATION

Management Philosophy

To become a world leader as a general

manufacturer of oil-less bearings and serve

society through technology

Company Vision

We have come together under the Oiles name.

We will grow together as Oiles, recognized the world over.

Onward	Idea	Liberty	Expert	Service
and Law
forward day	originality and	all of us	serving society
freedom and
by day	ingenuity	specialists
discipline

Long-Term Vision

• A company that contributes to the preservation of the global environment and delivers safety, security and comfort through the products and technologies required by the world
• A market-creating company that pursues tribology technology (friction, wear and lubrication) and damping technology (vibration control) to create one-of-a-kind products
• A company that fulfills its corporate social responsibility (CSR) and helps realize a sustainable society through business with high social contribution

Editorial Policy

The OILES Group started publishing its CSR report in PDF format in 2017 with the purpose of reporting to its stakeholders regarding the Group's stance and its efforts for realizing a sustainable society. It will communicate more broadly with stakeholders to further promote its activities into the future. To disclose an even more extensive set of information, the Group started publishing this integrated report combining financial and non-financial information in 2021.

⿟Reporting Period

Fiscal 2022 (April 1, 2022 to March 31, 2023)

The notation for the reporting period in English follows the Japanese (e.g., FY2022 = 2022年度).

Some information outside this period has also been included with indication of the date.

⿟Publication Date

October 2023 (next issue: planned for Autumn 2024)

⿟Scope of Report

This report covers Oiles Corporation and consolidated subsidiaries in Japan and overseas, adopting the following notations.

・"Oiles Corporation," "the company" and "non-consolidated" refer to Oiles Corporation ・"Domestic Group companies" collectively refers to Oiles Corporation with its eight

consolidated subsidiaries in Japan

・"Overseas Group" collectively refers to the eight Group companies outside Japan

・"Oiles Group," "the Group" and "we" collectively refer to Oiles Corporation with all companies in the Oiles Group

⿟Publication on the Website

This report is also available on our website at

https://www.oiles.co.jp/en/sustainability/integrated_report/

Financial and non-financial information not included in the integrated report is available on our website.

https://www.oiles.co.jp/en/

⿟Guidelines Used as Reference

・IFRS Foundation, "International Integrated Reporting Framework"

・Ministry of Economy, Trade and Industry, "Integrated Disclosure / Dialogue Guidance for Value Collaborative Creation"

・Ministry of the Environment, "Environmental Reporting Guidelines 2018 Edition" ・Ministry of the Environment, "Environmental Accounting Guidelines 2005 Edition" ・GRI, "GRI Sustainability Reporting Standard 2016/2018/2019/2020/2021"

・Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)

⿟Note on Forward-Looking Statements

This report contains forward-looking statements, including projections regarding the business plans, performance and management strategies of Oiles Corporation. These statements are based on the judgment of the company's management in light of information available at the time. Therefore, do not solely rely on these statements since actual results and management strategies may differ significantly due to changes in the business environment.

⿟Note on Financial Figures

• The figures in this report have been calculated based on Japanese GAAP.
• We have applied the "Accounting Standard for Revenue Recognition" (ASBJ Statement No.29, March 31, 2020) from the beginning of the fiscal year ended March 31, 2022, and the figures for each of the fiscal years ended March 31, 2015 through March 31, 2021 are calculated after retroactively applying the "Accounting Standard for Revenue Recognition".
• We have applied the "Partial Amendments to Accounting Standard for Tax Effect Accounting" (ASBJ Statement No. 28, February 16th, 2018) from the beginning of the fiscal year ended March 31, 2019, and the figures for each of the fiscal years ended March 31, 2015 through March 31, 2018 are calculated after retroactively applying the "Partial Amendments to Accounting Standard for Tax Effect Accounting".

Contents
Management Philosophy, Company	01
Vision, Long-Term Vision
Editorial Policy	02
Toward Sustainable Value Creation
Our Philosophy/DNA & Our History	03
Message from the President	05
Identifying Major Issues (Materiality) for	09
Sustainable Growth
Value Creation Process	11
Our Business
Oiles Business Activities	13
Bearings	15
Structural devices	19
Architectural devices	21
Intellectual Property Initiatives	23
ESG Initiatives
Management and Sustainability (CSR)	25
Corporate Governance	27
Interview with Outside Director	30
Compliance	31
Risk Management	32
Environmental Initiatives	33
Human Resource (Human Capital)	39
Development Initiatives
Product Quality Initiatives	45
Fair and Equitable Trade	47
Data Book
Corporate Data	49
Financial Data	51
Non-Financial Data	56
Financial Highlights	60

01 OILES CORPORATION INTEGRATED REPORT 2023

OILES CORPORATION INTEGRATED REPORT 2023 02

Our Philosophy/DNA & Our History

Toward Sustainable Value Creation	Our Business	ESG Initiatives	Data Book

1980s to 1990s

Sales (millions of yen)

60,000

2000s

Corporate Chronology 1930s to 1950s

1932	Founder Sozo Kawasaki obtained a patent for a method
for manufacturing oil-less wooden bearings.
1939	Sozo Kawasaki established Japan Oilless Bearing
Research Laboratory.
1942	Obtained a patent for Oil-impregnated expanded cast

1960s to 1970s

1966	Changed the company name to Oiles Industry Co., Ltd.
	Moved the company's headquarters to the newly
1967	established Fujisawa Plant in Fujisawa City, Kanagawa
	Pref.
1970	Established Shiga Plant in Ritto-cho (currently Ritto City),
Shiga Pref.

1983	Established Oita Plant in Nakatsu City, Oita Pref.
	Started manufacturing Oiles LRB seismic isolators. The
1987	Fujisawa Plant was constructed as Japan's first building
	with a seismically isolated structure.
1989	Registered stock with the Japan Securities Dealers
Association as over-the-counter stock.
1991	Established a plant in North Carolina as a production
plant for the US subsidiary.

2002	Established Oiles (Thailand) Co., Ltd. in Thailand.	50,000
	Established Oiles Czech Manufacturing s.r.o. in the
	Czech Republic.
2003	Spun off the architectural devices business and
	integrated it with a sales subsidiary to form Oiles ECO	40,000
	Corporation.
2005	Established Oiles Suzhou Corporation in China.
		30,000
2011	Established the business currently named "Oiles India
Private Limited" in India, building a new plant in 2013.

Our Philosophy/DNA & Our History

	iron bearings (#300).
1952	Established Nippon Oilless Bearing Research and
Development Co., Ltd.
1958	Changed the company name to Nippon Oiles Industry
Co., Ltd.

	Started manufacturing and selling the Window Operator
1971	window opening/closing device for air ventilation and
	smoke exhaust.
1976	Established Oiles America Corporation as the first
overseas subsidiary.

1993	Established the Ashikaga Plant in Ashikaga, Tochigi Pref.	2018	Extended Oita Plant Building No. 2.	20,000
1997	Listed on the first section of the Tokyo Stock Exchange.	2021	Built the new NP Building as part of efforts to strengthen
R&D function at the Fujisawa Plant.
1998	Established Shanghai Oiles Bearing Inc. as the first	2022	Transferred to the Prime Market segment when the	10,000
	subsidiary in China.			Tokyo Stock Exchange restructured its markets.	Messagefrom the
						0

1953

1960

1970

1980

History of Oiles Technologies

It all started with a small wooden bearing.

While working at the Monopoly Bureau of the Ministry of Finance in the
early Showa period (1926-1989), the company's founder Sozo Kawasaki
saw a bearing that required no lubrication in an American-made cigarette
roller machine. He applied his characteristically inquisitive mind to unravel
the mystery and obtained a patent in 1932 for a method to manufacture
an oil-less wooden bearing.
This "DNA" of Mr. Kawasaki, as an inquisitive spirit stemming from
his desire to contribute to society through technology, has been and will
continue to be passed on by Oiles in its never-ending quest to develop
unique technologies and products.	Founder Sozo Kawasaki
Metallic Bearings #300	#500
◦Bearings

1990

2000

2010

20221

President

(FY)

Seismic Isolators and Vibration Control Devices

We applied tribology techniques to the seismic motion isolation

Seismic isolators for manufacturing equipment

technology and combined it with the damping technology to

Seismic isolators and vibration control

devices for residences

gain the skills for producing seismic

Building-use

Sliding Support

Wall-type

Friction

Wall-type Viscous

isolators and vibration control devices.

Lead Rubber

with Rubber-

Dampers

Pendulum

Identifying Major Issues

Bearing

pad

System

Friction Dampers

◦Structural

devices

Bridge-use Lead

OILES Cable Damper

Bingham Material -

High Performance

(Materiality)

for

Rubber Bearing

Stopper

Bearing

Sustainable

Bridge-use Bearing

(bearing plate)

Air Bearings

Oiles Air Bearing

Growth

Slide shifter

#550

Cam unit

Compact Floating Cutter

#2000

Plastic Bearings #250

#80

Wooden Bearings

#100

Multi-layered Bearings Drymet

◦Architectural devices

Control Cables

Lutech	Glitron	#81-B1,#83-B1
(Bio-based plastic)
Techmet	Hiplast

Window opening/closing device for air ventilation and smoke exhaust, Window Operator

Value Creation Process

03 OILES CORPORATION INTEGRATED REPORT 2023

By coating a wire with oil- impregnated resin, we developed a remotely operated window opening/closing device(s) for air

ventilation and smoke exhaust. We are applying this method, based on the functions of communication and transmission, to control and shield lights.

External blind for	Natural air ventilator,	External blind for	Window opening/
residences,	Ecorator	buildings,	closing device
BRIIL		Ecoshade	for roof skylight
			windows,
			Top Light

OILES CORPORATION INTEGRATED REPORT 2023 04

Message from the President

Aiming to sustainably increase corporate
value through businesses that help to	Our
solve social issues	Philosophy/DNA&Our
We aim to achieve market valuation and increase our corporate value by enhancing our efforts to address	History
sustainability issues along with growth strategies for our three businesses to solve social issues.

Masami Iida

President

05 OILES CORPORATION INTEGRATED REPORT 2023

Three businesses that help to solve social issues

Since founder Sozo Kawasaki invented Japan's first wooden oil-less bearing, we have brought countless products to market through our own original technologies, with tribology technology (friction, wear, and lubrication) and damping technology (vibration control) at the core.

Based on our management philosophy of becoming a world leader as a general manufacturer of oil-less bearings and serving society through technology, we have a desire to serve society through technology that has been handed down from our founder. This is the universal value of our Group which we have always sought to embody.

Our Group's portfolio consists of three businesses: bearings, structural devices, and architectural devices. A bearing that is oil-less (a self-lubricating bearing) helps to reduce environmental impact. An example of this is in the automotive industry, where the shift to EVs is underway. The lighter weight and lower friction of oil-less bearings contribute to the long driving range of EVs.

In addition, structural devices (seismic isolators and vibration control devices) that protect people, buildings and facilities from large-scale earthquakes play an important role in providing safety and security in earthquake-prone Japan. Moreover, architectural devices such as our Window Operators not only protect human lives from smoke inhalation due to fire but also provide safety, security and comfort to society by helping to ventilate buildings, which is a key countermeasure against infection.

With such contributions, I believe that all three of our Group's businesses can help to solve the social issues identified in the United Nations' Sustainable Development Goals (SDGs). I believe that our businesses embody our corporate philosophy of serving society through technology. We aim to achieve sustainable growth by sharing our purpose (raison d'etre) of continuing to provide products and technologies that help solve social issues throughout the Group.

Our Strengths that Underpin Value

Our value creation is driven by the relentless pursuit of two core technologies: tribology, which is the science of friction, wear and lubrication, and damping technology for vibration control. As

a market-creating company, we are engaged in research and technological development with the desire to develop unique products and materials with outstanding performance and to help the customers who use our components in their final products to provide the world's best and the world's first products of that type. We are also committed to allocating management resources in a focused manner to deliver outcomes from this research and technological development. Our ratio of R&D expenses to consolidated net sales has been approximately 4.3% on average for the past five fiscal years, which is high even compared to other companies in the same industry.

Another of our strengths is our unique business model in which our sales, engineering, and R&D departments work together to provide value to our customers. We operate a distinctive sales activity called Technical Direct Sales (TDS), in which the sales and technology departments go hand in hand and participate from the initial stages of a customer's product development. These departments cooperate in addressing the customer's product development challenges from an early stage, offer proposals that maximize the performance of our products, develop and propose new materials, and work together with the customer to create a product. We also have our own technical service called EK, in which we evaluate products on behalf of our customers. By evaluating systems in a form more similar to the customer's actual item, we are able to offer proposals to address new issues.

Our production department is constantly endeavoring to improve efficiency based on the New Production System (NPS) derived from the Toyota Production System. We also conduct precise and meticulous quality control for each process.

This combination of our research and technology development capabilities, our sales and engineering departments'

OILES CORPORATION INTEGRATED REPORT 2023 06

Message from the President

Identifying Major Issues (Materiality) for Sustainable Growth

Value Creation Process

Message from the President

seamless response to customers, and our high quality production activities together form a three-pronged foundation that leads to sustainable value creation.

Status of the Medium-Term Management Plan

Consolidated net sales and consolidated operating profit are publicly announced indicators. The Medium-Term Management Plan (FY2021-FY2023) seeks to increase consolidated net sales and consolidated operating profit by more than 20% in the final year of the plan, FY2023, compared to FY2020, and the Plan seeks a consolidated ratio of operating profit to net sales of 10%.

In the general industrial field, our bearings business posted strong sales primarily for machine tools in FY2022. In the automotive industry, sales were impacted by lockdowns in China and by production cuts of cars in Europe, North America, and domestically in Japan accompanying the semiconductor shortage, but they were buoyed by a recovery in demand from India and ASEAN countries and a weaker yen, increasing 9% from the previous fiscal year. Raw materials costs and energy prices spiked, but profits still rose slightly as progress was made in passing on those costs to sales prices and curtailing fixed costs. Our structural devices business' sales of products for urban redevelopment properties and logistics centers were strong, but large-scale projects decreased compared to the previous year. Our architectural devices business' sales and profits increased from the previous fiscal year thanks to robust sales of Window Operators, which are a core product. As a result, consolidated net sales were 62.882 billion yen (+5.1% from the

of automotive products, our bearings business needs to develop products and technologies that can respond to major transformations of the times, i.e., CASE vehicles and Mobility as a Service (MaaS). As a result of reorganizing into two divisions, we aim to respond more quickly and adeptly to issues in both divisions.

In line with this reorganization, we have also established a Production Division to oversee domestic and overseas production divisions. Production departments are also facing a variety of challenges in the changing environment, such as rising raw material prices, CO2 emission reductions, and passing on production technology amidst a shrinking workforce. In light of these issues, the Production Division will further improve QCD (quality, cost, and delivery) and promote the automation and digitalization of production processes. Under this new organizational structure, we will strive to implement priority measures specified by each division.

FY2023 is the final year of the current Medium-Term Management Plan. We are in an uncertain economic environment involving continuing global price hikes and concerns over an economic slowdown in China, but we will continue with our efforts in the final year of the Plan to firmly link them to subsequent growth.

Increasing Our Corporate Value

Formulating a New Medium-Term Management Plan

A new Medium-Term Management Plan will begin in the next fiscal year (FY2024). We are internally discussing the formulation of a new Medium- Term Management Plan, and as a company listed in the Prime Market of the Tokyo Stock Exchange, we would like to formulate it with more emphasis on "evaluation by the market" than before.

an important management priority for companies. The Group considers promoting ESG, as exemplified by the SDGs, to be a foundational activity to promote corporate social responsibility (CSR) and at the same time to sustainably increase corporate value. Efforts to promote CSR and address sustainability issues are positioned as cornerstones of the Group's activities.

In terms of climate action, the Group set a new environmental target in FY2021: "reducing total CO2 emissions by 46% from their FY2013 level by FY2030." As a follow-up, we have now set a goal to achieve "carbon neutrality by 2050" as a Group. In order to reduce CO2 emissions, we are promoting solar power generation at our own facilities (our Fujisawa Plant), the use of LEDs, and the systematic upgrading of air conditioning and machinery with more energy-efficient equipment. In addition, we have also been promoting saving energy by procuring renewable electricity and gauging and displaying energy use in production processes since FY2022.

In our core business of providing society with products and

technologies that reduce environmental impact, we are also bolstering our efforts in the fields of EVs, renewable energy, and hydrogen energy, in addition to the development of biomass bearings primarily by our Bearing Division. Our efforts in technological and product development are driven by the conviction that our technologies and products have grand potential to contribute to the global environment. Carbon neutrality by 2050 is a very challenging and daunting goal. To provide products and technologies that help solve the world's problems, we will "tirelessly pursue technologies" to achieve innovation for our Group to achieve carbon neutrality by 2050.

"To create an environment and culture where employees' diversity is respected and employees can grow together with the company" as stated in our medium-term management policies, we are promoting initiatives to promote diversity and invest in human capital (e.g., human resources development) based on the conviction that human resources (human capital) are the source of value creation and increased corporate value. Valuing the diversity of our employees, we have set diversity targets, such as the ratio of female managers and the ratio of female new graduates, and we are working to achieve a workplace that is both diverse and inclusive. Management is committed to promoting initiatives related to human capital such as human resources development, work-life balance, and health and productivity management, and we are striving to create an environment in which employees, who are the source of increased corporate value, can grow and to boost "employee engagement" so that the Company and employees are on the same page.

In terms of governance, we have made a fresh start as a listed company by moving to the TSE's Prime Market in April 2022 and we have been working to achieve diversity on the Board of Directors and increase the ratio of outside directors (ratio of outside directors: one-third), but we continue to consider ways to further improve our governance system.

We celebrated our 70th anniversary in March 2022. All of our officers and employees have worked tirelessly to achieve sustainable growth and we will continue to strive to become a 100-year company or older. We look forward to the continued support of all our stakeholders.

Our Philosophy/DNA & Our History

Message from the President

Identifying Major

previous fiscal year) and consolidated operating profit was 5.056 billion yen (-13.7% from the previous fiscal year). Consolidated net sales exceeded the Medium-Term Management Plan, but consolidated operating profit was 9% below the Plan.

We implemented a large-scale reorganization in April at the start of FY2023, the final year of our Medium-Term Management Plan.

The most important thing to increasing corporate value is a "growth strategy," and we will formulate a "business strategy for sustainable growth" for our three businesses - bearings, structural devices, and architectural devices - in the next Medium-Term Management Plan. We will also consider how to utilize the cash flow we receive pursuant to that strategy, i.e., how to balance the amount of investment required and shareholder returns over the

Medium-Term Management Plan (FY2021-FY2023)

Medium-Term Management Policies

• Realize growth targets for each business by promoting global management
• Strengthen technological capabilities and improve productivity by effectively utilizing management resources through "Selection and Focus"
• Create an environment and culture where employees' diversity is respected and employees can grow together with the company

Issues (Materiality) for Sustainable

We have established two divisions within our Bearing Division, one for General Bearing Division and the other for Automotive Bearing Division. Our bearings business needs to enhance its efforts in the field of general industrial machinery, such as electronics for semiconductor manufacturing equipment, and in the field of renewable energy since these fields will become new earnings pillars in the future. In the field

medium to long term. In addition, we would also like to consider setting targets for a return on capital, such as a return on equity (ROE), from the perspective of allocating management resources with capital efficiency in mind.

In light of the three considerations above, we hope to implement, via the new Medium-Term Management Plan, a scenario of sustainable corporate growth that will lead to a higher valuation in the stock market. In order to sustainably increase corporate value, we will implement management with the balance sheet in mind as well as levels of sales and profits.

Enhancing Our Efforts to Address Sustainability

The world experienced record-breaking heat waves and geopolitical tensions continued in 2023. The need to achieve the SDGs, including a global environmental response, has been keenly felt. There is no longer a debate as to whether medium- to long-term sustainability, including ESG factors, is

Consolidated Net Sales

(millions of yen) 80,000

						64,400	67,500
			59,853	61,600	62,882
		58,200
60,000
52,954
40,000
20,000
0	FY	FY	FY	FY	FY	FY	FY
	2020	2021	2021	2022	2022	2023	2023
	(actual)	(plan)	(actual)	(plan)	(actual)	(plan)	(forecast)

• Plan: Values expected at the time of formulating the medium-term management plan Forecast: Financial results forecast announced on May 11, 2023

Consolidated Operating Profit and Consolidated Ratio of Operating Profit to Net Sales

■ ■ Consolidated Operating Profit	Consolidated Ratio of Operating Profit to Net Sales
(millions of yen)								(%)
12,000									12.0
				9.8			10.0
					9.0			9.0
9,000						8.0			9.0
		8.2					6,450
	5.9			5,861			6,100
			5,550
6,000					5,056			6.0
	4,750
	3,115
3,000									3.0
0	FY	FY		FY	FY	FY	FY	FY	0
	2020	2021		2021	2022	2022	2023	2023
	(actual)	(plan)	(actual)	(plan)	(actual)	(plan)	(forecast)

Growth

Value Creation Process

07 OILES CORPORATION INTEGRATED REPORT 2023

OILES CORPORATION INTEGRATED REPORT 2023 08

Identifying Materiality for Sustainable Growth

The Oiles Group recognizes that sustainable corporate growth based on the further evolution of non-financial capital, such as human, intellectual, manufacturing and natural capital, is important for achieving our medium-term management plan (fiscal 2021- 2023). Therefore, concurrently with the formulation of the plan we also identified the major issues (materiality) necessary for our sustainable growth.

By strengthening our efforts to address materiality, we will contribute to addressing the SDGs and other social issues to achieve sustainable growth and increase corporate value.

Reviewing Materiality from the Perspective of Sustainable Growth

	Identifying the social issues to be addressed
STEP 1	Based on sources that include international standards such as ISO 26000, major guidelines, external ratings,
international integration frameworks, we identified more than 50 social issues that companies are expected to
	address to achieve sustainable growth.

	Analyzing the importance to society and stakeholders (vertical axis assessment)
STEP 2	We assessed the level of importance of the issues identified above to society and stakeholders (vertical axis
	assessment) while referring to the assessment parameters of ESG assessment organizations and survey items from
	suppliers.

STEP 3	Analyzing the level of importance to the management of the Oiles Group (horizontal axis
assessment)
	We added the issues identified above to the Long-Term Vision and assessed their importance to the management of
	the Oiles Group from the perspectives of both our new medium-term management plan and the implementation of
STEP 4	each department's plans (horizontal axis assessment).

Identifying major issues (materiality)

Using the materiality matrix based on the above vertical and horizontal axis assessments, the Sustainability Promotion Council, composed of management members, identified the major issues (materiality) necessary for the sustainable growth of the Oiles Group.

Identifying Major Issues (Materiality) for Sustainable Growth

High

		Major Issues
Importancetosociety andstakeholders	(Materiality) for
Sustainable Growth
Low	Importance to the management of the
	Low	High
	Oiles Group

09 OILES CORPORATION INTEGRATED REPORT 2023

Toward Sustainable Value Creation	Our Business	ESG Initiatives	Data Book

Major Issues (Materiality) for Sustainable Growth

Our

Philosophy/DNA&

Materiality

Relevant SDGs

Opportunity

Risk

Major Initiatives

Developing advanced

◦Strengthening

◦Decreased

◦Continue prioritizing the

Our

products and

competitiveness and

competitiveness as

allocation of management

S: Society

History

technologies to satisfy

value as a market-

weakened ability to

personnel) to research and

enhancing corporate

a company due to a

resources (R&D expenses,

Developing and

and surpass customer

creating company

innovate

technology development

needs

◦Sustainable

◦Significantly expand

providing advanced

Contributing to the

enhancement of

floorspace for technology

products and

evolution of the

corporate value by

and R&D by restructuring

technologies that

mobility society

achieving sanpo-yoshi

the Fujisawa Plant

contribute to the

(good for three parties)

(construct new plant

for customers, society,

building)

resolution of social

and the Group

◦Promote the development

issues

Improving product

of products and technology

quality

that contribute to solutions

(See pages 13-24)

to climate change issues in

Message

areas such as EV readiness

and renewable energy

from

Preventing global

◦Increasing corporate

◦Loss of business

◦Promoting initiatives to

warming (addressing

value by providing

opportunities if the

achieve environmental

the

climate change

products and

company fails to

targets for carbon neutrality

President

technologies that help

develop and enhance

by 2050

issues)

resolve climate change

products that address

- Implementing full-scale

issues

climate change

solar power generation

E: Environment

◦Gaining stakeholder

◦Possibility of

at the Fujisawa Plant and

confidence through

losing credibility

other initiatives

recognition of

with customers,

◦Promote the development

Environmental

the company's

shareholders and

of products and technology

environmental

others if our CO2

that contribute to solutions

initiatives

Sustainable use

responsiveness

emissions reductions

to climate change issues in

(See pages 33-38)

of environmental

are inadequate

areas such as EV readiness

Identifying

resources

◦Interruption to the

and renewable energy

Group's production

activities due to

Major

unprecedented natural

disasters (especially

Issues

wind and water

damage)

(Materiality)

company by securing

decline in the working

- Improve our ratio of

Human Resource

◦Gaining growth

◦Impact on continuity of

◦Promote initiatives to

Development

opportunities as a

employment due to the

diversify our workforce

S: Society

Diversity and inclusion

talented and diverse

age population and

female employees, not

for

human resources who

increased competition

only by setting targets

Sustainable

share the company's

in recruitment

for female managers, but

Human resource

the hiring ratios of female

vision

◦Damage to corporate

also by setting targets for

measures

Respect for

◦Increased corporate

value due to penalties

new graduates

Growth

Human Rights and

value achieved by

and criticism of

(See pages 39-44)

◦Establish an environment

Appropriate Labor

improving employee

inappropriate labor

Practices

engagement

practices

and culture for employees

to grow together with

the company and raise

employee engagement

Strengthening

◦Gaining trust from

◦Damage to corporate

◦Enhance the effectiveness

governance in light of

stakeholders by

value due to inadequate

of our Board of Directors

the market structural

enhancing corporate

corporate governance

- Increase the diversity of

governance

◦Occurrence of scandals

the Board of Directors

Value

reform of the Tokyo

◦Achieving stable

due to inadequate

and raise the ratio of

Stock Exchange

independent outside

Creation

G: Governance

management through

compliance

Solid compliance

appropriate risk

directors (ratio of

(See pages 27-32)

management

management and

independent outside

Process

a robust compliance

◦Improve how the Board

Corporate governance

the establishment of

directors: one third)

system

of Directors and other

management meetings

Risk Management

operate based on

questionnaires assessing

the effectiveness of the

Board of Directors

OILES CORPORATION INTEGRATED REPORT 2023

10

Value Creation Process

Management Philosophy

"To become a world leader as a general manufacturer of oil-less bearings and serve society through technology"

Long-Term Vision

In order to fulfill our management philosophy, we intend to be:

・A company that contributes to the preservation of the global environment and delivers safety, security and comfort through the products and technologies required by the world

・A market-creating company that pursues tribology technology (friction, wear, lubrication) and damping technology (vibration control) to create one- of-a-kind products

・A company that fulfills its corporate social responsibility (CSR) and helps realize a sustainable society through business with high social contribution

Toward Sustainable Value Creation	Our Business	ESG Initiatives	Data Book

Relevant

SDGs

Our Philosophy/DNA & Our History

Social Issues		INPUT (Strengths)*

OUTPUT*

OUTCOME

Manufacturing

Increasing risk of climate Capital change

Need for continuous	Financial
technological innovation	Capital

Declining birthrate, aging	Human
population and decreasing	Resources
workforce	Capital

Transition to a new	Intellectual
mobility society
Capital

Increasing natural
disasters and rising risk	Natural
of infectious diseases	Capital

Global Business Development

(Japan, Europe, North and South America, China, Asia)

Capital investment: 2.7 billion yen

Number of consolidated subsidiaries: 16

Number of domestic production bases: 13

Number of overseas production bases: 6

Stable Financial Base

Consolidated total assets: 87.0 billion yen

Consolidated net assets: 69.6 billion yen

Capital asset ratio: 79.3%

Global Human Resources

(Japan, Europe, North and South America, China, Asia)

Group employees: 2,512

Employees of domestic subsidiaries: 594

Employees of overseas subsidiaries: 838

High R&D and Technological Capabilities Based on Two Core Technologies

Number of domestic and overseas industrial property rights: 2,380

R&D expenses: 2.5 billion yen

R&D and Engineering Departments: 190 employees

Environmentally Friendly Use of Energy and Water

Group total energy input: 655,378 GJ

Group water consumption: 200 thousand m3

Developing Original	Improving the
Materials and
Applications	Reliability
by the R&D and Engineering	of product quality
Departments

Dealing with	Pursuit of two core	Human Resource
Customers	technologies	Development and
through collaboration among
			Respect for Diversity of
the Sales, Engineering and				Employees
R&D Departments	Tribology		Damping

Production System	Promoting
that promotes quality
Sustainability
improvement, cost reduction
and work safety, as well as	to create a sustainable society
automation using IoT

Products

・Oil-less bearings that reduce the environmental impact

・Seismic isolators and vibration control devices that reduce damage from major earthquakes

・Architectural devices that provide not only safety from fire but also healthy air conditioning

Operating Results

Consolidated net sales: 62.9 billion yen Consolidated operating profit:

5.1 billion yen

Operating cash flow: 8.0 billion yen

Promoting Diversity

Ratio of female employees in the Group:

24.6 %

Environment

CO2 emissions: 29,243 t-CO2

	Contributed to the Creation of
	a Sustainable Society
	Reduced environmental
Manufacturing	impact (decreased
greenhouse gases)
	Improved automobile
	functions (higher
Financial	energy efficiency, more
Results	comfortable space)
	A safe, secure and
	comfortable society
Human
Resources
	A better environment in
	which employees can have
	a sense of fulfillment in
	their work
Nature

Message from the President

Identifying Major Issues (Materiality) for Sustainable Growth

Value Creation Process

Ri

e

s

k

M

c

a

a

n

a

li

n

p

g

om

e

ment and

C

Sustainable Investment in Management Resources

*Data as of March 31, 2023 or FY2022

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Oiles Business Activities

Toward Sustainable Value Creation	Our Business	ESG Initiatives	Data Book

Oiles Group products, based on the two core technologies of tribology and damping, are vital components for various mechanisms that support the safety and security of society and people's daily lives, including many buildings and other structures.

We continue to strive and hone our techniques so that we remain instrumental in improving the quality of life and well-being of people and society.

Residences

Our external blinds, seismic isolators and vibration control devices are used in residences.

Offices

Our bearings are used in office automation equipment such as printers and multifunctional copiers.

Buildings, Condominiums, and Logistics Centers

Oiles Business Activities

Factories

Our bearings are used in molding

Ferris Wheels

Our seismic isolation rubber

Buildings

Our natural air ventilator

Towers

Our seismic isolators and vibration control devices are used to ensure the safety and security of

Lighthouses

Our seismic isolators are used in lighthouses across Japan to protect their lenses from earthquakes.

machinery, machine tools, semiconductor- related equipment and other kinds of factory equipment and machinery, while our seismic isolators, vibration control devices and Window Operator products are used in buildings. Our seismic isolators and vibration control devices are also used in production lines.

is used in large-scale Ferris wheels.

is used in offices to provide comfort.

Our seismic isolation rubber is used to providel seismic reinforcement.

Dams, Water Turbines and Water Gates

Our bearings are used in the mechanical systems of these structures.

residents and office workers.

Bearings

Ships

Our bearings are used in rudders, anchoring gears, outboard motors, and hatch covers.

Bridges

Our seismic isolators are used in seismic isolation bridges, while our dampers are used in Vibration- controlled bridges.

Garbage Trucks

Our bearings are used in hopper linkages and other parts.

Construction Equipment

Our bearings are used in various parts of construction and industrial equipment.

Shrines and Temples

Our seismic isolators and vibration control devices are used to provide seismic reinforcement.

Supermarkets

Our seismic isolation materials are used to prevent products from falling off shelves during an earthquake.

Railways

Our bearings are used in coupling gears, pantographs, crossing bars

and turnouts. Our Window Operators are also used at many stations.

Art Museums

Our seismic isolation rubber and sliding seismic isolation devices are used in civic buildings and monuments.

Structural Devices

Architectural Devices

Bicycles and Motorcycles

Many Oiles products are used in brakes, clutches, gearboxes, suspensions, etc.

Intellectual Property Initiatives

Automobiles

Many Oiles products are used in automobile bodies and smaller components.

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Bearings

Toward Sustainable Value Creation	Our Business	ESG Initiatives	Data Book

General Industrial Field (General Bearing Division)

Oiles Bearings for Reduced Environmental Impact

Oiles bearings are used in a variety of fields related to manufacturing and daily life, from infrastructure and plant facilities to office equipment, and production equipment, construction machinery, dams, water turbines, water gates, and wind power generators. We offer an extensive product lineup for a range of specific applications.

is increasing in various fields such as precision instruments and electronics.

In addition, Oiles bearings help to reduce environmental impact across broad industrial areas. An example of an environmentally sound product we developed is the Biomass Plastic Bearing. Made from sugar cane and oil castor beans,

Oiles Business Activities

All types of machinery, including automobiles and motorcycles, as well as transportation, machine equipment, power generation and office equipment, are capable of rotational or reciprocating motion, and thus have moving parts that generate friction. The economic loss caused by friction, such as wear and tear of parts and loss of operation, is estimated to be over 15 trillion yen per year in Japan alone.* We develop tribology (friction, wear, and lubrication technologies) technologies and provide unique bearing products with oil-less(self-lubricating) characteristics to help develop the economy and society by reducing the various losses associated with friction and wear.

Bearings are broadly classified into plain bearings

and roller bearings. Oiles bearings are the plain type and can be used with either no lubrication at all or a reduced frequency and amount of lubrication. Thanks to our unique technology and expertise, our bearings exhibit superior durability and performance stability even under harsh environments where roller bearings and ordinary plain bearings cannot maintain performance.

In addition, Oiles bearings are environmentally sound because they use less lubricating oil and are smaller as well as lighter than roller bearings of a comparable size.

As the world strives to achieve carbon neutrality by 2050, we are helping to achieve that goal with Oiles bearings, which have less of an environmental impact.

Our products come in various shapes, materials and sizes, from components in precision equipment such as semiconductor manufacturing equipment to large products several meters in size for use in dams and water gates. For example, OABs (Oiles air bearings) produce a membrane of air between the shaft and bearing to achieve non-contact movement, enabling super high-accuracy positioning control and ultrafast machining by achieving a coefficient of friction of virtually zero (air resistance only). Thus, demand for such OABs

Biomass Plastic Bearing (#81-B1)

fillers were added to improve sliding performance. Combining excellent performance and high biomass content, these bearings reduce CO2 emissions compared to conventional, petroleum-based products.

In the field of renewable energy, we offer conventional bearings for hydroelectric and wind power generation facilities, and we are also working to acquire projects in the field of next- generation energy supply, both in Japan and overseas.

Oiles Air Bearings (OABs)

Bearings

Structural Devices

* According to the JOST Report, Japan Edition

Plain Bearing

Rolling Bearing

Compact & lightweight

Rolling element (balls, rollers)

Shaft	Shaft
(rotating	(rotating
body)	body)

Features Comparison

	Oiles Bearing	General Plain	Roller Bearing
	Bearing
Lubrica-	Can be used	Requires	Requires
tion	without lubrication	lubrication	lubrication
Size	Thin-walled and	Thin-walled and	Thick-walled and
compact	compact	large
Weight	Light	Normal	Heavy

Features of OABs

Architectural Devices

Surface contact

Point contact

Impact
Resis-	Superior	Slightly superior	Inferior
tance
Heat Re-	Can be used at	Slightly superior	Inferior (cannot
(generally up to	be used at high
sistance	high temperatures
150°C)	temperatures)
Wear Co-	Low	Slightly low	Extremely low
efficient

High Performance

Customization

Safety

Economical

Originally developed porous technology allows optimum compensation. Demonstrates high load performance and high bearing rigidity.

• The flow rate may be adjusted easily by material design. High-rigidity and other such specifications can be accommodated according to the usage application.
• Can be made in various shapes.

Oil-less bearings are less likely to seize even under solid contact conditions, feature superior safety, and are easy to work with.

OABs can reduce the flow rate remarkably in comparison with inherent-orifice or orifice compensation, reducing air source workload and running costs.

*Inherent-orifice and orifice compensation are structures to form an air membranes by compensating air flow with holes or grooves on the surface of the bearing.

Intellectual Property Initiatives

Environment	OABs can be used in cleanrooms.

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Toward Sustainable Value Creation	Our Business	ESG Initiatives	Data Book

Bearings

Oiles Bearings for a Variety of Automotive Components

Automotive Industry (Automotive Bearing Division)

Steering

Seat Damper

Oiles Business

Oiles bearings are most widely used in the automotive industry. Our products are used across a wide range of applications that comprise a vehicle, including the suspension, steering, transmission, exhaust pipes, and the interior. Our market share is approximately 50% worldwide and more than 70% for some products by Japanese automobile manufacturers.

The automotive industry is undergoing a massive transformation, as represented by CASE*1 and MaaS*2, and we are responding to this transformation by providing products that help create new value. For example, accelerating the widespread adoption of electric vehicles (EVs) will require reducing their weight to resolve the challenges related to their driving range. Oiles bearings, both compact and lightweight, can reduce the weight of some products by more than 50% compared to roller bearings. We therefore believe that we can significantly contribute to the popularization of EVs by making them lighter.

automobile as a living space rather than a means of transportation. The demand for controlling sound and vibration is increasing as people place more importance on the quietness and comfort of riding inside a vehicle. In addition, new needs have arisen, such as requirements for a lighter weight to increase the driving distance, heat resistance for bearings to allow use in EVs, and high-speed rotation. We are developing products to meet those needs through the use of our core technologies and our knowledge.

We established the New Technology Development Office under the automotive engineering department in October 2020 to develop products that support the CASE and MaaS and promotes advanced development from a long-term perspective, looking 10 to 20 years into the future. We developed plastic bearings for EVs that improve the functionality and lifespan of electric water pumps, which are needed to cool batteries, motors, inverters, etc., and we began suggesting them to various manufacturers.

Transmission

Trunk Hinge Bushing

Activities

Bearings

And with the widespread use of EVs and practical application of automated driving, there is a growing trend to view the

*1 CASE: Connected, Autonomous/Automated, Shared, and Electric.

*2 MaaS: Mobility as a Service that integrates various means of transportation and makes them more efficient and convenient.

Suspension

Exhaust Pipe Spherical Bearing

Side Door Hinge Bushing

Structural Devices

Faster Business Operations as a Result of Reorganization into Two Divisions

In the field of general industrial machinery, our bearings business posted strong sales primarily for machine tools in FY2022 as production in domestic manufacturing recovered. In the field of automotive products, automobile production cutbacks in Europe, the US, and Japan due to the lockdowns in China and the semiconductor shortage in the first half of the year had an

For further growth per our Medium-Term Management Plan and beyond, in the field of general industrial machinery we will strive to enhance sales of OABs for precision machinery such as semiconductor manufacturing equipment and other ultra-high-precision,high-speed processing equipment and to provide products and technologies in fields that will help to create

Bearings Business Medium-Term Management Plan (FY2021-FY2023)

Architectural

effect, but a recovery in demand from India and ASEAN countries and a weaker yen resulted in higher sales than the previous fiscal year, and sales for the Division as a whole increased 9% from the previous fiscal year. High raw material costs and energy prices put pressure on profits, but operating profit for the Division as a whole remained slightly above the previous fiscal year's level due to the transfer of costs to sales prices and reductions in fixed costs. Consolidated operating profit from our bearings business in FY2022 was approximately 90% of the level in our Medium-Term Management Plan.

In April 2023, we reorganized into two divisions: the General Bearing Division, which is responsible for general industrial machinery, and the Automotive Bearing Division, which is responsible for automotive products. As a result of this reorganization, we aim to respond more quickly and adeptly to major issues in each area of business.

a decarbonized society, such as renewable energy and hydrogen energy. We are also working to create a market for biomass-based plastic bearings, with standard products to be launched in 2023. In the field of automotive products, we will continue to expand the use of our existing core products by emerging EV manufacturers around the world, while at the same time developing products and exploring the growing market for products like electric water pumps as a result of the shift to EVs.

There have been changes in external conditions that were not anticipated when the Medium-Term Management Plan was formulated, such as the spread of COVID-19, the crisis in Ukraine, and the global rise in prices, but we aim to expand new businesses and improve our profit structure to achieve the consolidated ratio of operating profit to net sales of approximately 10% as set forth in the Plan.

Consolidated Net Sales

• Automotive Industry ■ General Industrial Field

(millions of yen)

50,000					43,881	44,250	47,000
	38,900	40,261	41,850
40,000	35,155				14,447		15,000
			14,338
30,000	11,483
20,000
	23,672		25,922		29,434		32,000
10,000
0	FY	FY	FY	FY	FY	FY	FY
	2020	2021	2021	2022	2022	2023	2023
	(actual)	(plan)	(actual)	(plan)	(actual)	(plan)	(forecast)

• Plan: Values expected at the time of formulating the Medium-Term Management Plan Forecast: Financial results forecast announced on May 11, 2023

Consolidated Operating Profit and Consolidated Ratio of Operating Profit to Net Sales

■		Consolidated Operating Profit				Consolidated Ratio of Operating Profit to Net Sales
■
(millions of yen)	(%)

5,000						9.6	10.0
				8.0		4,250	8.5
			7.4			4,000
4,000			3,350	6.9		General	8.0
	6.7
				Bearing
			2,975		3,008		Division
3,000		2,600					1,150	6.0
2,000	3.1							4.0
	1,081						Automotive
						Bearing
1,000							Division	2.0
							2,850
0	FY	FY	FY	FY	FY	FY	FY	0
	2020	2021	2021	2022	2022	2023	2023
	(actual)	(plan)	(actual)	(plan) (actual)	(plan)	(forecast)

Devices

Intellectual Property Initiatives

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