Supplementary materials & data

TOYOTA BOSHOKU REPORT 2023

86

Materiality formulation process

Materiality formulation process and approach

From April 2019 to July 2020, we made a company-wide effort to identify important issues and formulated our materiality in six steps (see figure on the right for details).

The important issues identified were classified into those that "maximize the positive effects," which enrich people and their lives, and those that "minimize the negative effects," which avoid risk. They were then organized into "Issues Relating to Safety, Environment, and Comfort to Resolve through Our Business Operations," and "Issues Relating to the People and Organizations that are Our Sources for Exercising Competitiveness." The materiality of the Toyota Boshoku group was determined by adding the approach we adopt to resolve each issue.

As part of a series of processes, the management team and next-generation leaders, together with the Corporate Planning Division, the lead division, held a total of 27

consultations, after which the Board of Directors decided on the materiality.

The CSV Promotion Meeting (Chair: Chief Strategy Officer (CSO) responsible for the Corporate Planning Segment), which is held twice a year, reports and deliberates on issues and the direction to take in order to enhance corporate value based on the concept of CSV. In fiscal 2023, matters discussed included CSV management and human rights initiatives, and initiatives to enhance corporate value aimed at achieving the 2025 Mid-Term Business Plan. Going forward, we will also consider reviewing our materiality itself in response to changes in the environment.

Progress with the ESG KPIs (p. 34), which were drawn up in fiscal 2022, is also checked at the CSV Promotion Meeting, and the degree of achievement is followed up along with materiality.

Plotting of social issues and extraction of important issues

E Environment S Social G Governance

Matters for which positive effects are to be maximized

Matters for which negative effects are to be minimized

impact

High

environmental

Important Issues

Medium

Social and

Medium

High

Impact on the company's business

Safety

Environment

Comfort

Issues to

1.

Product safety

4.

Reduction of

9.

Comfortable spaces

environmental loads

2.

Reduction of

10. Promotion

Resolve through

5.

Improve productivity

traffic accidents

of innovation

Our Business

3.

Aging society

6.

Climate change

Operations

7.

Energy and resource

conservation

E S

8.

Cooperation with

business partners

People

Organization

Issues Relating

11.

Ensuring diversity

15.

Compliance

to Sources for

12.

Workstyle innovation

16.

Governance

Exercising

Competitiveness

13.

Respect for human rights

17.

Strengthened information security

S G

14.

Company-member health

18.

Fair and equitable procurement

and work safety

Toyota Boshoku Group's Materiality

p. 23

87 TOYOTA BOSHOKU REPORT 2023

Management resources and

Supplementary

Messages

Value creation story

strengthening them

Business portfolio

Governance

materials & data

Materiality formulation process

Participants

Company External Directors/ Members Stakeholders Officers

STEP0

STEP1

STEP2

STEP3

STEP4

STEP5

STEP6

STEP7

Comprehensive activities for CSR, CSV, ESG, SDGs, etc.

• Lecture for officers and division general managers

In addition to the regular members of the CSR Promotion Meeting (now the CSV Promotion

Meeting), officers and relevant division general managers involved in the formulation of the

2025 Mid-Term Business Plan attended the meeting to deepen their understanding of CSV

management.

• Lecture on SDGs for officers, entity top management, and next-generation leaders

Held as part of the "Global Week" program, where officers, entity top management and

next-generation leaders of the Toyota Boshoku group gathered to discuss the future of the

group and how to realize it, deepening understanding of the SDGs.

• SDGs card game and discussions on social issues (41 next-generation leaders from

13 countries participated)

A card game format was used to deepen understanding of the SDGs and social issues.

Subsequently, discussions were held on social issues surrounding the Toyota Boshoku group as well

as management issues, based on important concepts for the company included in our philosophy.

Understanding social issues

• Clarification of SDGs and other social issues

As well as the SDGs, identifying more than 100 social issues by focusing also on social

issues in the countries and regions in which the Toyota Boshoku group operates.

• Verification of social issues where we are already making contributions

Creating a life cycle value chain map of the Toyota Boshoku group's business, and

organizing contributions to resolving social issues that have already been implemented from

both positive (opportunities) and negative (risks) perspectives.

Extraction of social issues

• Verification of social issues to be tackled as the company's philosophy

Re-affirming and understanding the meaning embedded in our philosophy, and confirming

whether resolution of the social issues identified is consistent with the philosophy.

• Verification of social issues that can be resolved by maximizing the company's strengths

Confirming whether the issues can be solved by leveraging the identity of the Toyota

Boshoku group: R&D, MONOZUKURI, and HITOZUKURI.

• Discussions by the Materiality working group: 10 sessions (17 participants)

Verification of stakeholder expectations

• Investor interviews: 3 times (7 participants from 3 companies)

• Survey of company members: 1 time (covering 260 people)

• Verification of management issues: Based on the results of the above interviews and

questionnaires, confirm consistency with internal policy.

Plotting of social issues and extraction of important issues

• Organization of social issues and identification of important issues to prioritize

Verification from the perspectives of "social and environmental impact" and "impact on the

company's business," and identification of important issues to prioritize

• Formulation of five aspects of materiality in alignment with the company's Vision

Identifying five materiality issues, organized into two categories: "Issues Relating to Safety,

Environment, and Comfort to Resolve through Our Business Operations" and "Issues Relating

to the People and Organizations that are Our Sources for Exercising Competitiveness."

Verification of validity

• Discussion in a CSV Promotion Meeting

In February 2020, an extraordinary CSR Promotion Meeting (now the CSV Promotion

Meeting) was held to discuss the composition and wording of (expressions used in) our

materiality. In order to deepen company members' understanding of our materiality, it was

decided to compile the reasons for selecting this text as "Meaning and Concepts."

• Discussions with outside directors and outside Audit & Supervisory Board members

Two briefings were held for outside officers (in April and July 2020). Based on the points

raised, the positioning of materiality in management was clarified, and the management

system was organized as "Management Concept."

Decision on materiality

• Toyota Boshoku Group's Materiality was finalized at the Board of Directors meeting in July 2020.

Establishment of ESG KPIs

• We established ESG KPIs to measure social value. The goal is to achieve them with a view to

realizing our materiality.

TOYOTA BOSHOKU REPORT 2023

88

Our history

Revenue

FY2007

Exceed 1 trillion yen for the first time

1919

1965

2005

2011

Early beginnings

Shift to automotive

Evolution into a global

components business

system supplier

Toyoda Boshoku was founded by Sakichi Toyoda,

A major change was made in the

who believed in the importance of self-sufficiency

Company's business activity to

in high-quality yarn for the development of the

escape the downturn in the textile

automatic loom.

market. Production of automotive

components then became the

Company's core business.

With the aim of becoming a truly global system supplier, the three companies were merged to establish a global production structure, deepen our unique technologies and expand our fields of business.

1918

Toyoda Boshoku Corporation was founded by Sakichi Toyoda

1921

  • Entered China
  • Established Toyoda Boshoku Shou

1935

Formulated the Principles of Toyoda

1943

Merged with Toyota Motor Co., Ltd. (now Toyota Motor Corporation)

1947

Established Arakawa Sheet

Metal Industries Co., Ltd.

(later Araco Corporation)

1950

Established Minsei Spinning Co., Ltd. as a separate independent entity from Toyota Motor Co., Ltd.

1960

Established Takashimaya

Nippatsu Industries Co., Ltd.

(later Takanichi Co., Ltd.)

1967

Company name changed from Minsei Spinning Co., Ltd. to Toyoda Boshoku Corporation

2000

  • Stock listed on the Tokyo Stock Exchange, First Section
  • Merged with Toyota Kakoh Co., Ltd

2004

  • Araco Corporation (car interior components business), Takanichi Co., Ltd. and Toyoda Boshoku Corporation merged to form Toyota Boshoku Corporation
  • Formulated Toyota Boshoku Earth Charter

2005

  • Formulated the TB Way
  • Introduced the One Hub per Region structure

Business and product changes

1970

2009

2013

Started development of automotive

Started production of cabin air filter material

seat fabrics

using the Dual Layer Melt Blown Method

Received first order for railway seats utilized in the Gran Class of the Hokuriku Bullet Train (Shinkansen)

(Photo provided by East Japan Railway Company)

1985

2013

Started full-scale production of

Started production of motor core

automotive filters

constituent parts using the FHS process

2013

First application of seats made using the Foam in Place Method

89 TOYOTA BOSHOKU REPORT 2023

Management resources and

Supplementary

Messages

Value creation story

strengthening them

Business portfolio

Governance

materials & data

Revenue

FY2023

1,604.0billion yen

2016 2017 2018 2019 2020 2021 2022 2023 2024 (FY)

Towards the future

From CSR to CSV management

Toyota Boshoku is accelerating reform and taking steps for the future, amid a once-in-a-century transformational period in the automotive industry.

Based on our materiality, Toyota Boshoku group is aiming to achieve sustainable growth in the face of changing social and economic conditions.

2015

Integrated the seat frame mechanism component businesses of Aisin Seiki Co., Ltd. (now Aisin Corporation) and Shiroki Corporation (now Aisin Shiroki Corporation) into the Company

2016

  • Changed management structure (product business-based organization)
  • Announced 2050 Environmental Vision
  • Announced 2020 Mid-term Business Implementation Plan

2018

2020

2022

• Announced 2020 Business

• Completed the main building at the

• Moved to the Prime Market, a new

Plan

Kariya headquarters

market segment of the Tokyo Stock

• Celebrated 100th anniversary

• Formulated Materiality

Exchange

• Announced 2025 Mid-Term Business

• Obtained DX-certified company status

2019

Plan

• Started investment in startups through

Established TOYOTA

• Endorsed the TCFD recommendations

CVC (Corporate Venture Capital)

BOSHOKU AKI USA, LLC as

• Signed agreements with Toyota Auto

a joint venture with Delta

2021

Body Co., Ltd. and Toyota Body Seiko

Kogyo Co., Ltd. and Toyo

• Introduced Chief Officer System

Co., Ltd. to make Toyota Body Seiko a

Seats Co., Ltd.

• Partially transferred Aisin Shiroki

subsidiary of Toyota Boshoku

Corporation's commercial rights in

2023

automotive seat frame mechanism

parts for Suzuki Motor Corporation,

• The company spun off from Aisin Shiroki

Daihatsu Motor Co., Ltd. and Mazda

Corporation was renamed Toyota

Motor Corporation

Boshoku Hirose Corporation and became

a subsidiary of Toyota Boshoku

• Participated in the Ministry of Economy,

Trade and Industry's GX League

• Concluded share transfer agreements for

PT. SHIROKI INDONESIA and SHIROKI

AUTOMOTIVE INDIA PVT. LTD.

2014

Started production of fuel cell-related products (separators)

2015

2020

MOOX

Participated in a demonstration test at Aichi Earth Expo Memorial Park

2021

Jointly developed the Company's first

MX221

Hall of Our Steps (opened in 2022)

aircraft seats with All Nippon Airways

Presented at CES 2022

Website (only available in Japanese)

Co., Ltd.

https://reserva.be/toyotaboshoku/about

TOYOTA BOSHOKU REPORT 2023

90

Past Mid-Term Business Plans

2005

Three-company merger "Period of

creating a robust corporate constitution"

Concentrate the technological capacity and collective strengths of all three companies, and realize global manufacturing

2008

Second founding "Solidifying our footing and

establishing a foundation for growth"

Mid-Term Business Plan

Objectives of Merger

Elements of our strategy

  • Integrate seating systems and interior systems operations previously pursued independently by the three companies, as well as develop and propose car interiors from a comprehensive perspective
  • Make use of the expertise and resources of all three companies to further accelerate overseas expansion

Vision: Aim to be a world-class interior system supplier and filter manufacturer

  1. Offer comfortable and pleasant interior spaces
  2. Offer world-class automotive filters
  3. Build a global supply system
  • Proactively implement policies to strengthen our capabilities, in terms of both "initiatives to solidify our footing" and "priority initiatives for future corporate growth", as well as aim to become a truly global company that can operate and flourish in regions around the world
  • Strengthen our technological capacity (development, production, manufacturing), product capacity, and profitability on a global scale

Main Achievements & Remaining Issues

Achievements

  • Introduction of the One Hub per Region structure
  • Development of new technology and beginning of production as an automotive interior system supplier
  • Strengthening of our filter and powertrain components development and evaluation systems, thanks to completion of construction of the Kariya Development Center
  • Re-evaluationand reorganization of our Japanese production systems
  • Building of a production system to follow Toyota Motor Corporation's overseas expansion

Issues

  • Systematically engendering a sense of unity throughout the entire company
  • Strengthening our business capacity as an interior system supplier (solidifying our business footing, implementing advanced measures focused on corporate growth, etc.)

Achievements

  • Establishment of a global management system
  • Creation of a development system that is consistent and integrated, from fundamental research all the way to cutting-edge technology, thanks to the establishment of the Research Laboratories (now called the New Value Creation Field), as well as completion of construction of the No.2 Building of the Sanage Technical Center
  • Development of lightweight seating frames that enable CO2 emissions reduction and products made using plant-derived materials
  • Establishment of the Global Learning Center, and opening of the Toyota Boshoku Technical Skills Academy, in order to help our company members develop their skills, and train them to be able to flourish on a global scale
  • Continuously bringing new production sites into operation at various location around the world

Issues

  • Reduction of profit as a result of shrinking operations after the 2008 global financial crisis
  • Response to changes in the automotive market (shifting trends from larger to smaller-size vehicles, etc.)

Revenue / Operating Profit / Change in ROE

Revenue (Millions of yen)

1,233,789

Operating profit (Millions of yen)

23.5

ROE (%)

1,082,755

65,596

1,079,497

979,775

953,729

983,727

964,295

877,596

20.5

17.5

48,381

12.9

36,856

33,764

25,302

456,311

25,143

7.0

20,910

17,867

9.1

14,054

4.3

2.0

2005*

2006

2007

2008

2009

-2.9

2010

2011

2012

2013

Japanese GAAP

  • Values for the first half of fiscal 2005 (April 1 to September 30, 2004) from pre-merger Toyoda Boshoku. Values for the second half of the year (October 1, 2004 to March 31, 2005) from post-merger Toyota Boshoku.

91 TOYOTA BOSHOKU REPORT 2023

Management resources and

Supplementary

Messages

Value creation story

strengthening them

Business portfolio

Governance

materials & data

2012

"Period of structural reform

2017 "Aiming for sustainable growth"

2021

for a quantum leap forward"

2015 Mid-Term Management Plan

2020 Business Plan

  • Pursue cutting-edge technology, in order to expand business fields
  • Accelerate global business expansion centered on emerging countries
  • Expand our business with a wide range of customers through business reforms and organizational restructuring
  • Thoroughly implement lean, highly-efficient, and high-value added business in Japan
  • Perform action to achieve corporate growth while fulfilling our responsibility in harmony with society, strengthen management foundation, strengthen competitiveness, offer multi-dimensional value, and expand business fields
  • Establish a corporate structure capable of securing an operating profit ratio of 5% or higher
  • Focus on the development of new products and technology that anticipate the mobility environment of 2030
  • Pay particular attention to environmental actions

Achievements

  • Making use of precise high-speed press technology to introduce HEV and FCV-focused products onto the market
  • Expansion of business into emerging nations
  • Creationbusinessand maintaining of foundation for new customer
  • Expansion into new fields, such as specialized racing car seats, railroad carriages, and aircraft

Issues

  • Creating operations that can respond to sudden expansion of our business
  • Worsening of profits due to disorganization resulting from new product being launched by our pre-existing business

Achievements

  • Strengthening competitiveness and management foundation, and steadily increasing earning power
  • Creation of the Business Management Structure, and maintaining a target management structure that is consistent and integrated, from individual sites all the way up to the management level
  • Creation of a stable, resilient BCP that can appropriately respond to unforeseen circumstances
  • Acceleration of cooperation and coordination between various divisions in relation to design, production engineering, and quality, thanks to completion of construction of the MONOZUKURI Innovation Center. Optimization of production and manufacturing preparations, thanks to use of digital technology.
  • Strengthening advanced development to envision and prepare for 2030, including cooperation with the Toyota Group (MX191)

Issues

  • Maintaining our management information infrastructure
  • Further promoting of vibrant work style innovation

1,415,772

1,357,913

1,399,530

1,417,376

1,372,616

1,305,502

1,272,140

1,218,399

71,936

71,198

21.2

61,257

59,492

57,103

17.3

47,785

28,823

32,393

9.6

10.0

8.5

6.4

2.5

1.9

2014

2015

2016

2017

2018

2019

2020

2021

(FY)

IFRS

TOYOTA BOSHOKU REPORT 2023

92

10-year summary

FY Years ended March 31

Revenue

Operating profit

Profit attributable to owners of the parent

Total assets

Capital stock

Total equity

Capital expenditures

Depreciation

R&D expenses

Per Share Data (Yen)

Basic earnings

Diluted earnings*

Cash dividends

Dividend payout ratio (consolidated) (%)

Equity attributable to owners of the parent

Cash Flow (Millions of yen)

Net cash provided by operating activities

Net cash provided by (used in) investing activities

Net cash provided by (used in) financing activities

Cash and cash equivalents

Financial Indicators (%)

Ratio of operating profit to revenue

ROE: Ratio of profit to equity attributable to owners of the parent

Ratio of equity attributable to owners of the parent

Price earnings ratio (PER)

Shareholders' Equity (at fiscal year-end)

Number of shares issued (Thousands)

Number of shareholders

Stock price (yen)

Number of company members (excluding temporary company members)

CO2 emissions (t-CO2)

Amount of waste (t)

Water consumption (thousand m3)

Percentage of local company members holding executives (officer, manager) positions at overseas business sites

Number of women at management positions (Toyota Boshoku)

Number of female group manager level (Toyota Boshoku)

Number of patents held (Japan)

Number of patents held (outside Japan)

Japanese GAAP

2014

2015

2016

1,218,399

1,305,502

1,415,772

28,823

32,393

59,492

12,610

5,204

3,900

659,008

719,680

725,895

8,400

8,400

8,400

249,082

264,038

243,146

51,116

50,190

36,898

36,302

40,121

41,012

40,189

38,821

38,450

68.05

28.08

21.02

-

-

21.02

18.00

18.00

30.00

26.5

64.1

142.7

1,115.69

1,164.36

1,065.72

49,590

65,536

78,912

(51,867)

(51,615)

(48,086)

(5,636)

516

(8,739)

126,648

143,493

160,904

2.4

2.5

4.2

6.4

2.5

1.9

31.4

30.0

27.3

15.3

53.6

87.3

187,665

187,665

187,665

22,191

16,746

14,517

1,043

1,504

1,834

38,198

41,509

41,624

312,348

311,975

310,465

22,661

21,990

23,464

4,303

4,352

4,271

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

  • With regard to diluted earnings per share [diluted net income per share of common stock] in fiscal 2014, 2015, 2018, 2019, 2020 and 2021, there were no latent shares with dilutive effects.

93 TOYOTA BOSHOKU REPORT 2023

Management resources and

Supplementary

Messages

Value creation story

strengthening them

Business portfolio

Governance

materials & data

IFRSMillions of yen

2017

2018

2019

2020

2021

2022

2023

1,357,913

1,399,530

1,417,376

1,372,616

1,272,140

1,421,451

1,604,036

71,936

71,198

61,257

47,785

57,103

60,290

47,672

45,359

42,762

27,457

24,786

31,188

39,260

14,679

691,921

744,558

793,599

780,714

845,778

964,740

1,007,392

8,400

8,400

8,400

8,400

8,400

8,400

8,400

276,274

308,620

329,329

321,701

369,650

423,835

436,894

35,500

52,095

61,341

58,715

46,731

38,326

50,773

36,228

34,755

35,153

37,575

38,194

40,386

44,965

37,884

47,393

46,965

45,902

41,831

44,845

47,306

244.28

230.27

147.85

132.88

166.93

210.15

78.57

244.27

-

-

-

-

210.13

78.56

50.00

54.00

56.00

54.00

45.00

64.00

70.00

20.5

23.5

37.9

40.6

27.0

30.5

89.1

1,240.77

1,414.91

1,573.44

1,557.93

1,792.56

2,066.53

2,144.33

95,389

86,117

60,720

79,673

74,483

122,933

89,428

(48,927)

(51,707)

(58,915)

(54,175)

(51,392)

(40,893)

(36,461)

(61,347)

(3,528)

(19,526)

(13,964)

2,756

(48,664)

(40,812)

144,889

178,372

158,192

163,377

195,180

237,952

248,195

5.3

5.1

4.3

3.5

4.5

4.2

3.0

21.2

17.3

9.6

8.5

10.0

10.9

3.7

33.3

35.3

36.8

37.3

39.6

40.0

39.8

10.6

9.5

11.3

9.7

11.0

9.5

27.2

187,665

187,665

187,665

187,665

187,665

187,665

187,665

12,226

13,287

14,066

14,715

16,177

15,959

16,123

2,583

2,184

1,675

1,287

1,830

2,002

2,137

41,428

41,409

43,103

44,375

44,154

44,264

44,581

324,528

330,235

322,977

318,431

304,455

307,218

255,804

23,727

24,018

24,925

25,458

23,087

23,217

26,737

4,143

4,321

3,994

3,731

3,590

3,266

3,369

-

14

19

23

25

21

25

-

17

20

23

24

29

33

-

53

51

55

57

65

64

1,941

2,112

2,174

2,195

1,924

1,760

1,899

1,207

1,371

1,546

1,753

1,589

1,476

1,502

TOYOTA BOSHOKU REPORT 2023

94

Business domains

Our three business domains provide the ultimate mobility life for customers around the world

In the three domains of seat, interior & exterior and unit components, the Toyota Boshoku group has delivered a variety of products that realize enriched and higher-quality time and space to people in mobility interior spaces in order to generate excellent quality and new value.

Seat Business

The Toyota Boshoku group

Automobile Seats

develops seats that elicit the

maximum potential of each car,

which make the vehicle easier to

drive and ensure the ultimate in

comfort and pleasure.

We aim to develop seats that

provide comfort and safety for

everyone in mobility in any setting

around the world.

Seats

Sports seats

Seat frames

(For automobile racing)

Interior & Exterior Business

We strive to deliver automobile interior spaces in which people from every country and region of the world can create unforgettable moments with family, friends and other loved ones that will last

a lifetime.

Staying one step ahead of the times, we develop interiors that enrich users' mobility life and ensure uncompromising comfort through total coordination of the automobile interior.

Interior Components

Door trims

Interior system

Unit Components Business

In order to develop cars that ensure smooth and stable driving under any tough conditions, we manufacture products that maximize engine performance while contributing to realizing a clean and comfortable vehicle interior space by developing next-generation filtration technology.

Filter Products

Air filters

Oil filters

For

FCEV

(Fuel Cell Electric Vehicle)

HEV

(Hybrid Electric Vehicle)

BEV

(Battery Electric Vehicle)

Dust removing filters

Protection filters

Chemical filters

FC separators

Fuel cell stack

Air cleaners

95 TOYOTA BOSHOKU REPORT 2023

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Toyota Boshoku Corporation published this content on 31 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 October 2023 05:32:44 UTC.