Ahresty : Report 2023

C O N T E N T S

01

Introduction

02

Ahresty's Value Creation

03

Strategy and

Performance

04

Initiatives to Support Sustainable Growth

4 ｜Ahresty's Corporate Philosophy and Vision

6 ｜Top Message

8 ｜Message from COO

10 ｜Ahresty's History

12 ｜FY2022 at a glance

14 ｜Ahresty's Businesses and Strengths

18 ｜Ahresty's Value Creation Process

20 ｜Strategy Viewpoints and Materiality Identification

Process

22 ｜Management Targets

24 ｜Responding to Shift to EVs

25 ｜Expansion of Business Domain to Vehicle Body

Components

26 ｜Digital Innovation

27 ｜Human Resources Development and Diversity

28 ｜Sustainability Roadmap

30 ｜Environment: An environment-friendly company

38 ｜Social: Development of a corporate culture in which everyone can work in good health and feel safe

42 ｜Governance: Improving corporate governance

45 ｜Introduction of new Independent Directors

46 ｜Interview with an Independent Director

05

Data Section

48｜Key financial, human resources and environmental data for the 10-year period

50｜Consolidated Financial Highlights

51｜Corporate Information

Editorial Policy

The Ahresty Report is intended to help shareholders, investors, and other stakeholders understand Ahresty's initiatives to achieve sustainable growth and enhance its corporate value by providing them with an integrated presentation of Ahresty's financial information, including management strategies, and non-financial information, including environmental, social, and governance (ESG) information. This report was compiled with reference to the "International Integrated Reporting Framework," which is recommended by the IFRS Foundation, and the "Guidance for Integrated Corporate Disclosure and Company-Investor Dialogue for Collaborative Value Creation

2.0," which was prepared by the Ministry of Economy, Trade and Industry.

■ Period Covered

Fiscal year 2022 (April 1, 2022 - March 31, 2023)

• Some of the information includes disclosure items and business activities that began in and after April 2023.

■ Scope of Coverage

Ahresty Corporation and the Ahresty Group

■ Cautionary Statement Regarding Future Outlook

This report contains Ahresty's plans for the future and forecasts and projections regarding its performance. Please note that actual results may differ from our projections.

01

Introduction

Ahresty's Corporate Philosophy and Vision

01

Ensure your satisfaction with Ahresty

RESEARCH

Mission SERVICE

TECHNOLOGY

Corporate Philosophy

Let us take pride in our work, respect theory and

Purpose

We aim to create an affluent society by pursuing and integrating each of these areas.

Research means continuous research, investigation, and development of new technologies, new markets, and new sales techniques. Service means providing warm, attentive service through personal interaction. Technology means truly excellent technology that incorporates both physical and soft

Value experimentation, value originality and invention and offer superior products and service to our customers

RST Way - Five criteria for action

The RST Way's five criteria for action-conscientious, proactive, speedy, learning, and challenge- are the basis of each employee's way of thinking and action to realize the Corporate Philosophy.

aspects and is highly beneficial for society.

Social Issues Ahresty addresses

Conscientious

Proactive

We earnestly and sincerely make efforts for our customers and all stakeholders. We strive to understand diverse opinions, thoughts and values, listening to them with open minds.

We are self-driven and enthusiastically strive for success.

Each of us takes the initiative so that our actions lead to significant improvements.

Ahresty's priority tasks are to achieve Goals 13 (mitigating climate change) and 7 (energy) of the Sustainable Development Goals (SDGs), the common goals of the international community decided at the UN Sustainable Development Summit, that it is hoped will contribute significantly to solving social issues and that are also closely related to manufacturing aluminum die castings, Ahresty's main business.

Speedy

Learning

Challenge

We act quickly, sensing changes in social needs and the global market.

We consistently strive to enhance and reform our work methods and our technologies.

We constantly evolve to reach our goals.

We advance ourselves by having inquiring minds to achieve expectations.

We work unflinchingly on aggressive targets to achieve them.

We consistently challenge ourselves through theories and experiments without fear of failure, respecting originality and invention.

01

Introduction

Top Message

01

For Stakeholders

Looking back on FY2022 performance

Since the second half of FY2022, the semiconductor shortage and other issues have gradually eased and automobile production has recovered. As a result, our order volume increased from the second half of FY2022, and both sales and operating income improved in the second half of the year, and we were able to return to profitability in operating income for the full fiscal year. However, we recorded a large amount of impairment loss, and were not able to record a net profit. We apologize to our shareholders for this. In FY2023, the entire Group will work together to achieve a further recovery in business performance in anticipation of an increase in order volume due to the continued easing of the semiconductor shortage.

Initiatives and Progress for 2224 Medium-Term Management Plan*

profitability through production efficiency improvement and cost reduction, we continue promoting initiatives to establish a leaner production system throughout the Group. We have completed the integration of our die manufacturing sites in Japan (Tochigi, Hamamatsu, and Kumamoto), and are also currently promoting a plan to integrate the Higashimatsuyama Plant with Ahresty Tochigi.

New Management Structure

Thanks to the cooperation and support of many customers, business partners, and shareholders, as well as the efforts of Ahresty's team members, Ahresty has grown along with the increasing demand for die cast products from automobile manufacturers and the expansion of overseas production. However, since FY2019, we had been in an unfavorable profit situation due to the impact of the COVID-19 pandemic as well as sluggish sales to some of our major customers. Although the

D i r e c t o r s

Under these circumstances, we promoted the first-year plan of our 3-yearMedium-Term Management Plan from FY2022 to FY2024. In particular, we worked to capture new die casting demand for electric vehicles (EVs, HEVs, PHEVs, and FCVs), thereby shifting our die casting business portfolio. We set the target of 30% for the percentage of electric vehicles parts in die casting sales in FY2025, and the number of orders received is expected to exceed the target. All die casting sites in Japan, North America, China, and India are increasing production of parts related to electrification and receiving new orders. In China, where electrification is progressing and local manufacturers are making great strides, we are aggressively expanding transactions with local manufacturers and global suppliers (Tier 1) in addition to existing customers and cultivating new demand associated with electrification.

Furthermore, in the proprietary products business (MOVAFLOR), sales to semiconductor-related facilities in China and other Asian countries remained strong. Regarding customer satisfaction evaluations (commendations from customers), we received high evaluations for quality and other aspects from four major customers in Japan, four in China, and one in Mexico. To enhance

environment was very difficult, we have built a leaner production system and integrated our domestic production sites over the past three years. Also, the market environment is finally beginning to show signs of recovery. The automotive industry is undergoing a major transformation at a fast pace. This has created new demand for die cast products. On the management side, we have begun addressing new challenges, such as carbon neutrality, the SDGs, DX and diversity. It is precisely in this period of great change that Ahresty must make a generational shift to vigorously move forward with tackling new challenges. In the past four years, we have completed a generational shift in all of our site managers, and now we have decided to make a generational change in our management team. The average age of the President and the Chiefs of the four Commands (Quality Assurance, Manufacturing, Sales, and General Administrative) has been greatly lowered. With this new structure, we will continue to grow and evolve the new Ahresty.

We sincerely ask all our stakeholders for their continued support.

• 2224 Medium-Term Management Plan: 3-yearMedium-Term Management Plan from FY2022 to FY2024

01

Introduction

Message from COO

01

Responding to Shift to EVs

Diversity

To respond flexibly and continue to grow in the midst of constant change

President and COO

Shinichi Takahashi

I assumed the position of Representative Director, President and Chief Operating Officer of Ahresty Corporation in March 2023. I would like to express my sincere gratitude to all our stakeholders who have supported us since our founding in 1938.

The automotive industry, which had been experiencing steady growth in global demand and production, has changed dramatically over the past five years, with the COVID-19 pandemic, natural disasters, the Russian invasion of Ukraine and other factors making it difficult to predict the future. In an age of VUCA and the era of a major transformation of the automotive industry, I myself will take the initiative in taking on the challenge of continuing to grow and respond flexibly in the midst of constant change.

Carbon Neutrality

Our group is working to "improve the energy consumption efficiency of vehicles by providing aluminum die cast products" and "reduce the use of fossil fuels by improving energy efficiency, etc." The use of aluminum, which has approximately one-third the specific gravity of steel, reduces automobile weight and improves fuel and electricity efficiency. We will continue to develop technologies to manufacture lighter and stronger products. Furthermore, 97% of the aluminum that we use in production is recycled. The amount of CO2 emissions in the production of recycled aluminum is one-fourth that of steel, and we are working to minimize greenhouse gas and CO2 emissions throughout the entire cycle by actively promoting the conversion of energy sources during production and reducing the amount of energy used.

⇒P28. Sustainability Roadmap /

Environment: An environment-friendly company

The automotive industry is now facing a once-in-a-century transformation. The most important factor affecting our company is the shift to electric vehicles (EVs). From a portfolio that has been dominated by engine and transmission parts, we are increasing the proportion of motors, batteries, and electric components, which are products for hybrid vehicles (HEVs) and other EVs. Aluminum die cast products, which have the four advantages of rigidity, dimensional accuracy, thermal conductivity, and light weight, have great potential for adoption and market expansion and are in demand amid the shift to EVs. In addition to this, we will continue to capture markets by leveraging our global production system that can respond to the rapid shift to EVs, stable quality, and attentive service. In FY2022, we began supplying battery-related structural components to China's Contemporary Amperex Technology Co., Ltd. (CATL), which has the world's largest EV battery installation volume and market share. We are also collaborating with G-TEKT Corporation, a major manufacturer of vehicle body frame components, to jointly develop next-generation vehicle body frame components using aluminum and steel, taking advantage of the strengths of the two companies.

⇒P24. Responding to Shift to EVs

Digital Innovation

It has been 10 years since the Third AI Boom began, and the use of AI has become widespread in the manufacturing industry. Factory automation systems, which until now have been interlocked solely by electronic circuits, have the potential to evolve into something more advanced with the addition of edge computing and network control. At our company, we are working to realize unmanned production by combining factory automation systems, sensing, and AI. Furthermore, we will collect data by utilizing sensing devices to promote productivity improvement by analyzing big data accumulated using statistical methods and AI. Also, in the launch of new products, we will advance our technology toward the realization of a digital twin that allows the production of conforming products from the first prototype stage through the use of simulation.

⇒P26. Digital Innovation

Employees are the driving force behind the company's evolution and growth. We aim to be a company where employees respect each other's values and can always work actively and lively, regardless of nationality, age, or gender. We are improving work processes with a focus on ergonomics to create a workplace that is easy to work in, regardless of age or gender. Furthermore, we established a special subsidiary company, Ahresty Inclusive Service Corporation, to expand employment of people with disabilities and promote their development. In the promotion of empowerment of women, we obtained a 3-star "Eruboshi" certification from the Minister of Health, Labour and Welfare. We will promote human capital strategy and management, implementation of career support, and designing of systems to enable diverse work styles.

⇒P27. Human Resources Development and Diversity

⇒P38. Social: Development of a corporate culture in which everyone can work in good health and feel safe

Security and Safety

Safety is the most important and highest priority. Unfortunately, we have not been able to achieve zero accidents or injuries. However, we believe that this can be achieved through the development of safe facilities and environments and the training of people. Additionally, information security is important. We will strengthen both tangible and intangible measures to prevent accidents and injuries and create a secure and safe company.

⇒P40. Social: Development of a corporate culture in which everyone can work in good health and feel safe [Occupational Safety and Health]

The Ahresty Group as a whole will continue to take on challenges and move forward to become a company that achieves "Beyond your expectations." We would like to ask all our stakeholders for continued support and encouragement.