FUTABA Integrated Report

2021

FUTABA WAY

Corporate Motto Quality Products at Lower Cost

Management Principle

We will continue with unceasing efforts to achieve the following.

  • Be a company that is trusted by and essential to our customers.
    ② Be a company that can be proud and worth living for
    associates we work with.
    ③ Be a company that is broadly supported and loved by the local society.

Corporate Charter・Code of Conduct・Action Guidelines of Futaba

The Company We Want to Be by FY2030

・A strong team with individuals taking initiatives and tackling challenges ・A global monozukuri company with leading technologies

・A sustainable company that shows creativity and takes action

Introduction

About

Value Creation

Foundation

Corporate

Data

FUTABA

Strategy

for Value Creation

Governance

Section

The Company We Want to Be by FY2030

● A strong team with individuals

● A global monozukuri company

● A sustainable company that

taking initiatives and tackling

with leading technologies

shows creativity and takes action

challenges

Action Statement

We will focus on mobility in order to contribute to society by employing ideas, wisdom, and prompt execution

exceeding customers' expectations to provide safety- and environment-related technologies.

Safety

Environmental

technology

Digital

Solution

Global

Prompt execution

Ideas

Wisdom

Welding technology

Durability evaluation technology

FY2021 to 2023 Mid-term Management Policy

① Strong measures to be a trusted and successful company

・Engage in business from the customer's perspective

(focus on proposing solutions to customer issues)

Fundamental

Equipment design

Stamping technology

Adsorption and desorption

Acoustic analysis

technologies

control technology

technology

CONTENTS

Internal

・Maximize profit in the automotive parts business

environmental

② Strong measures to be a true global company

change

・Globalize our HQ

・Implement a mid- to long-term business strategy

③ Strong measures for a sustainable corporate foundation

・Grow our corporate value

・Set up an infrastructure for the digital society

・Reform our mindset for a new era

External

environmental

change

Introduction

About FUTABA

03 Business Focus

04 FUTABA Group Sites

  1. Financial and Non-financial Highlights
  1. FUTABA History and Future

Value Creation Strategy

09 Message from the President

Foundation for Value Creation

  1. Manufactured Capital
  1. Intellectual Capital
  2. Human Capital
  1. Social and Relationship Capital
  1. Natural Capital

Corporate Governance

39 Corporate Governance

45 Directors and Audit & Supervisory Board Members

Daily management

Annual company policy

Policy management

Human resources development

  1. Priority Issues (Materiality): SDGs Initiatives
  1. Value Creation Process
  1. Mid-termManagement Policy
  1. Strategy by Product

47

Comments from Outside Directors

49

Compliance

50

Risk Management

Data Section

I Take on all challenges!

We will be united in our resolve to improve our manufacturing processes to ensure our clients and partners are always happy.

II The importance of being on site

FUTABAIII both in mind and body, and

Wisdom

Being present on site and assessing

and

the actual situation is the best way

Respect

to determine the root cause of any

for People

Kaizen

problem.

Be unassuming, humble, strong

when necessary be bold

It becomes easy to deal with difficult

issues and implement improvements

if you are modest, unassuming,

tough, and hardworking.

IV Think individually, act collectively

Maximize results by working as a team where each individual is driven and understands the importance of working together.

WAY

V People first

Trusted relationships are formed by always treating everybody the same way―our clients, suppliers, affiliates, employees and their families, and people in our local communities.

Editorial Policy

Starting this fiscal year, we have published the FUTABA Integrated Report to explain and provide a better understanding of our strategies and initiatives for solving social issues and enhancing the Futaba Group's corporate value over the medium to long term for a wide range of stakeholders, including shareholders and investors. This report has been prepared and edited primarily with reference to the International Integrated Reporting Framework of the International Integrated Reporting Council (IIRC).

We intend to position this integrated report as a tool for dialogue with our stakeholders so that it will help lead to sustainable enhancement of our corporate value. We will continue to make every effort to promote a better understanding of our company.

Structure of Information Disclosure

Financial information

Non-financial information

FUTABA Integrated

Report 2021

・Financial results

・Environmental and social initiatives

・Annual Securities Reports, etc.

・Corporate governance report, etc.

Futaba website https://www.futabasangyo.com/en/

  1. Financial Summary (Consolidated)
  1. Financial Review
  2. Consolidated Financial Statements
  1. Corporate and Stock Information

Reference Guidelines

● International Integrated Reporting Framework issued by the International Integrated Reporting Council (IIRC)

  • Guidance for Integrated Corporate Disclosure and Company-Investor Dialogue for Collaborative Value Creation issued by the Ministry of Economy, Trade and Industry

Reporting Period

Scope of Report

April 1, 2020 to March 31, 2021

Futaba Industrial Co., Ltd. and its consolidat-

*Some activities outside the reporting period

ed subsidiaries

are also introduced.

*The scope of some sections is separately defined.

Publication

September 2021

Notes on forward-looking statements

This integrated report includes predictions and forecasts regarding future plans, strategies, and performance. These statements are based on information currently available, and do not guarantee future performance. Actual performance may diverge from the predictions and forward-looking statements in this integrated report due to changes in the business environment.

1 FUTABA Integrated Report 2021

FUTABA Integrated Report 2021

2

Business Focus

The Futaba Group's main business is the manufacture and sales of automotive parts, information and environment equipment parts, equipment for external sale, and agricultural products.

We produce products that contribute to "Safety, Environment, and Performance" by utilizing core technologies such as sound damping, heat management, stamping, and welding that we have cultivated.

Automotive parts

167.6 billion yen (35.9%)

27.1 billion yen

Body/Interior parts

Fuel system parts

(5.8%)

»P21-23

Canister

»P24

Body frame parts

Fuel inlet pipe

29.9 billion yen

Instrument panel reinforcement

Suspension parts

(6.4%)

183.4 billion yen (39.3%)

»P25-26

Exhaust system parts

Front suspension member

Exhaust system

Exhaust

Trailing arm

manifold

POWEREV®

Engine undercover

(Exhaust heat recovery device)

Information

21.0

environment

Other

37.8 billion yen (8.1%)

equipment

billion yen

(4.5%)

Equipment for external

sales business

Agricultural business

»P28

»P27

®

Tray module for copiers

Assembly and welding equipment

agleaf® CO2 accumulation and application device for

greenhouse cultivation

Introduction

About

Value Creation

Foundation

Corporate

Data

FUTABA

Strategy

for Value Creation

Governance

Section

Futaba Group Sites (As of June 30, 2021)

Since we opened the first global site in the United States in 1994, we have expanded our business globally, currently with more than 20 sites around the world. We are also working to enhance capability of our production sites in each region to respond quickly to customers not only in Japan but also overseas. The Futaba Group will strive to create new value that contributes to solving social issues using this global network.

Global sites

■ : Consolidated subsidiary ▲: Affiliated company

FUTABA MANUFACTURING U.K. LIMITED (UK)

[Supervisory company]

Futaba Czech, s.r.o. (Czech Republic)

TIANJIN SHUANG SHYE MECHANICAL

FUTABA NORTH AMERICA

ENGINEERING & MARKETING

INDUSTRIAL CO., LTD. (China)

CORPORATION (USA)

CHANGSHA FUTABA AUTO

TIANJIN FUTABA-SC

MECHANICAL CO., LTD. (China)

FIC AMERICA CORP.

FIO AUTOMOTIVE

PARTS CO.,LTD. (China)

[Supervisory company]

CANADA CORPORATION

(USA)

GUANGZHOU FUTABA AUTO

FUTABA (TIANJIN) CO., LTD. (China)

(Canada)

PARTS CO.,LTD. (China)

DONGGUAN FUTABA METAL PRODUCTS CO., LTD.

FUTABA INDIANA OF AMERICA

CORPORATION(USA)

Futaba Industrial Gujarat

(China)

SHYE SHYANG MECHANICAL INDUSTRIAL CO., LTD.

FUTABA INDUSTRIAL

Private Limited (India)

(Taiwan)

FUTABA TECHNOLOGY LIMITED (Hong Kong)

TEXAS CORP. (USA)

FMI Automotive Components

Private Limited (India)

PT.GREENLAND METAL STAMPING INDONESIA (Indonesia)

PT.FUTABA INDUSTRIAL INDONESIA (Indonesia)

Domestic sites

Domestic plants

Domestic subsidiaries and affiliated companies

: Head Office ●: Plant

■ : Consolidated subsidiary ▲: Affiliated company

Aichi Prefecture

Midori Plant

FUTABA HIRAIZUMI

Chiryu Plant

Crefact Corporation

CORPORATION

Head Office, Okazaki Plant

Takahashi Plant

FUTABA KYUSYU

FUTABA SUMI CORPORATION

Mutsumi Plant

Kota Plant

CORPORATION

Tahara Plant

FUTABA GENERAL CO., LTD.

3

FUTABA Integrated Report 2021

FUTABA Integrated Report 2021

4

Financial and Non-financial Highlights

Introduction

About

Value Creation

Foundation

Corporate

Data

FUTABA

Strategy

for Value Creation

Governance

Section

Consolidated financial data

Sales

(Billion yen)

500

461.7

476.1

466.8

440.4

412.3

400

300

200

100

0

2016

2017

2018

2019

2020

(FY)

Operating profit / Operating profit ratio

(Billion yen) ■ Operating profit

Operating profit ratio

(%)

12

11.2

8

10.6

9

8.9

6

7.7

6

6.7

4

3

2.2

2.6

1.5

2.2

2

1.7

0

0

2016

2017

2018

2019

2020

(FY)

Non-financial data

CO2 emissions (Non-consolidated)

(t-CO2)

80,000

63,518

64,171

61,979

59,549

60,000

54,145

40,000

20,000

0

2016

2017

2018

2019

2020

(FY)

Waste output (Non-consolidated)

(t)

1,200

1,101

900

904

861

820

774

600

300

0

2016

2017

2018

2019

2020

(FY)

Profit attributable to owners of parent / ROE

(Billion yen) ■ Profit attributable to owners of parent

ROE

(%)

12

30

10.7

9

20

6

17.9

6.3

4.8

4.0

10.0

3.5

9.5

10

3

5.6

5.3

0

0

2016

2017

2018

2019

2020

(FY)

Capital expenditures / Depreciation

(Billion yen) ■ Capital expenditures ■ Depreciation

45

41.3

30

27.3

23.7

21.0

23.0

24.4

20.2 20.5

19.4

16.3

15

0

2016

2017

2018

2019

2020

(FY)

Number of employees / Percentage of overseas employees

(Persons) ■ Number of consolidated employees

Percentage of overseas employees

(%)

12,000

100

10,590

10,540

10,865

9,960

9,969

9,000

75

59.8

59.3

60.2

59.4

59.1

6,000

50

3,000

25

Number of employees taking childcare leave by gender (Non-consolidated)

(Persons) ■ Number of employees taking childcare leave (Female)

50 ■ Number of employees taking childcare leave (Male)

44

40

1

41

0

30

26

25

2

20

43

41

6

17

1

10

24

Sales and operating profit by region

19

16

Europe (2 subsidiaries)

Asia

Europe

■ ■ Sales ■ ■ Operating profit

(Billion yen)

10.0%

7.0%

Japan (Futaba Industrial + 4 subsidiaries)

■ ■ Sales ■ ■ Operating profit

(Billion yen)

0

0

2016

2017

2018

2019

2020

(FY)

0

2016

2017

2018

2019

2020

(FY)

33.3

29.2

34.0

China

Sales ratio

26.3

0.7

0.9

16.8%

by region

(0.3)

North America

Japan

(0.9)

18.1%

48.1%

2017

2018

2019

2020 (FY)

258.9

266.1

264.2

233.8

5.7

5.1

2.6

1.9

2017

2018

2019

2020

(FY)

Percentage of employees with disabilities (Non-consolidated)

(%)

Futaba

Statutory employment rate

3

2.30

2.38

2.21

2.20

2.27

Frequency of industrial accidents

(Disabling injury frequency rate) (Non-consolidated)

0.8

Futaba

All industries

Manufacturing industry

*

Offices with 1,000 or more employees

0.69

0.6

Asia

(3 subsidiaries)

■ ■ Sales

■ ■ Operating profit

(Billion yen)

48.6

30.9

18.4

19.8

0.8

0.2

0.2

(0.1)

2017

2018

2019

2020

(FY)

China (9 subsidiaries)

■ ■ Sales ■ ■ Operating profit

(Billion yen)

81.7

58.0

68.2

53.3

3.4

2.5

3.0

3.0

2017

2018

2019

2020

(FY)

North America (5 subsidiaries)

■ ■ Sales ■ ■ Operating profit

(Billion yen)

103.2

105.2

100.4

88.0

3.2

2.3

1.5

0.9

2017

2018

2019

2020

(FY)

2

2.20

2.20

2.30

2.00 2.00

1

0

2016

2017

2018

2019

2020

(FY)

0.56

0.52

0.47

0.46

0.4

0.24

0.25

0.29

0.26

0.28

0.2

0.22

0.10

0.19

0

0.00

0.00

2016

2017

2018

2019

2020

(Year)

Note: The Asia segment has been reclassified into the China segment and the Asia segment (other than China) effective from this fiscal year.

Source: Survey on Industrial Accidents, Ministry of Health, Labour and Welfare

5

FUTABA Integrated Report 2021

FUTABA Integrated Report 2021

6

Sales (Billion yen)

500

Introduction

FUTABA History and Future

Since its foundation, the Futaba Group as "a team that tackles challenges to grow" has made contributions with its advanced technological development capability and manufacturing capability to ensure our clients and partners are always happy.

We will work as one to contribute to the coming mobility society by leveraging the strengths we have developed.

About

Value Creation

Foundation

Corporate

Data

FUTABA

Strategy

for Value Creation

Governance

Section

400

300

Worked on pollution issues

Progressed further by leveraging

Took on a challenge to evolve the

Heat management technology

466.8 billion yen

(contribution through environmental

our core technologies (contribution

technological development (contribution

(contribution through

technologies)

through safety technologies)

through environmental technologies)

environmental technologies)

1960 Entered into the muffler business

1970- Expanded the parts business to con-

1990- Developed the world's first stainless steel exhaust

Developed an exhaust heat recovery device

SCR*

Contributed to the social demand for solving noise

tribute to the environment and safety in addi-

manifold using "Evaluation/Analysis" and "Functional

by combining core technologies with heat

* SCR (Selective Catalytic Reduction):

issues through our core technologies

tion to the muffler business by applying

design" technologies as a challenge to reduce weight and

management technology to recover and

Selective catalytic reduction for a diesel engine

stamping and welding technologies.

improve exhaust gas performance.

utilize heat energy from exhaust gas.

Origin of Futaba Industrial

"Futaba" comes from a Japanese proverb "Sendan

wa futaba yori kanbashi (The Japanese bead tree is

fragrant from when a sprout, which is a metaphor

for a genius always reveals himself or herself even

Entered into an

in childhood)."

Toyota Motor's first stainless

Toyota Motor's first exhaust heat

Technological

Iron canister

agricultural field utilizing

"Industrial" is an English translation of a Japanese

steel exhaust manifold

recovery device POWEREV®

core technologies

term sangyo, which has an implied meaning of "tak-

development

ing on any challenge to create business."

Took on a further challenge to enhance manufacturing

capability

1956

and technological development capabilities

Established research

(safety and environmental technology)

Started production of

mufflers for scooters

and evaluation facilities

Instrument panel reinforcement

The world's first pipe

Muffler with

DPF* for diesel-

Took on a new challenge as "a team that tackles challenges to grow" nurtured

intake manifold

variable valve

powered vehicles

since the foundation to enhance manufacturing capability by developing hot

Offered new value (contribution through

stamping based on safety technology and also a challenge to contribute to the

Developed and produced fish

environmental technologies)

environment with agleaf® using environmental technology.

FUTABA's

Leveraged our strength of an integrated system of product

* DPF (Diesel Particulate Filter): The filter that reduces particulate matter (PM) contained in exhaust gas from a diesel engine

netting machines at a remarkable

Strengths

pace to solve the food shortage

development, production technology, and manufacturing,

Built a global production system (Globalization)

which allowed us to propose products designed and evaluat-

ed by ourselves to our customers and to produce them.

We developed a global production system to meet customer needs. In addition to production, we also

promoted to develop an integrated functional system for supervising and managing production.

200

Produced high-grade reception

area seating sets utilizing core

technologies

Contributed to society through manufacturing capability

(contribution to local communities)

Futaba Industrial's first product was born from the desire to create products useful for society in the post-war era of food shortages, using our core technologies of stamping and welding cultivated by our predecessor Dengensha.

Manufacturing

capability

1970-

1970-

1980s

General purpose line for small-lot

2015

Introduced industrial

Introduced large

Commercialized the

production of various products

Introduced hot stamping in Mutsumi

robots for arc welding

transfer presses

world's first pipe-

Plant to meet customer needs

fabricated benders

Took on a challenge to develop new technology

"Pushing the limit of production efficiency"

(Innovation of the production line)

(Innovation of the production line)

1970- We quickly attempted automation and achieved it amid sluggish sales of

We have attempted to increase production efficiency through automation with

domestic automobiles, soaring resource prices, and a pressing need to improve

the aim of "Creating the world's No. 1 production line" and rebuilt the produc-

productivity and streamline operations.

tion lines one after another. The technology is still applied in production lines.

1940s1950s

100

Start-up period

We created our core businesses by taking on the

challenges of various businesses using our

technologies with the first priority of contributing to the local communities and our employees.

1960s

1970s

1980s

1990s

2000s

2010s

2020s

Period of expansion and growth of automobile parts business

Period of expansion of domestic and global sites

Regeneration period

Become a

sustainable

We expanded the automotive parts business by

The top management and

employees worked

We boldly took on challenges for

We strengthened our foundation

company that

values

utilizing our technologies and developed a

together to balance solid

investment with

becoming an industry leader and

to enhance compliance and

creativity and

system to fulfill our social responsibilities.

business expansion.

expanded our business globally.

ensure stable earnings.

action

0

1945

1950

1960

1970

1980

1990

2000

2010

2020

(FY)

7

FUTABA Integrated Report 2021

FUTABA Integrated Report 2021

8

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Futaba Industrial Co. Ltd. published this content on 07 December 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 December 2021 15:51:08 UTC.