Annual Report 2020

ANNUAL REPORT

Growing Together with Our Customers

2020

200, Ishida, Isehara-shi, Kanagawa 259-1196, Japan

Printed in Japan

Contents

Our Management Philosophy

23

Our Management Philosophy Introduction

Growing Together with Our Customers

Our company has been sharing this philosophy as a starting point for all of our business activities since its formation. We believe that the creation and provision of new values based on customers’perspectives will strengthen the relationship of mutual trust between our customers and the AMADA Group, and become a source of mutual development.

123

11 Performance Highlights 13 Message from the President 17 Corporate Governance 20 Directors, Audit and Supervisory Board Members 21 AMADA Group’s Divisions

Contribute to the international community through our business

23 Sheet Metal Division

Our company recognizes that contributing to “manufacturing”conducted by our customers throughout the world leads to the development not only of local communities, but also the international community as a whole, and we conduct our business activities with the aim of providing the highest quality of solutions in each market around the world by optimally distributing our Group’s management resources.

25 Supporting Customers in Manufacturing 27 Cutting and Grinding Division 29 Micro Welding Division 31 Press Automation Solutions Division

Develop human resources who pursue creative and challenging activities

33 Environmental Management

Rather than being content with the present situation, we are constantly in search of new and better ideas to put into action in order to improve and enhance our business activities. This is the AMADA Group’s basic philosophy of human resources development, and we believe that AMADA’s unique corporate culture will be further developed by continuing to practice this philosophy.

35 Communication with the Local Community 36 Communication with Our Customers 37 Communication with Our Employees 38 Communication with Our Suppliers and Investors

Conduct sound corporate activities based on high ethics and fairness

We promote transparency and we comply with regulations in the AMADA Group’s management and in all aspects of its business activities, and strive to further enhance its corporate value while conducting sound activities.

39 Financial Section

45

39 Financial Review 41 Consolidated Financial Statements 48 Notes to Consolidated Financial Statements 109 Independent Auditor’s Report

Take good care of people and the earth’s environment

By treating the AMADA Group’s stakeholders (such as shareholders, customers, business partners, employees and local residents) and the global environment with respect, we strive to continue to be a good company for both people and the Earth.

112 Corporate Data
112 The AMADA Group 116 Investor Information

We aim to contribute toward the achievement of the international Sustainable Development Goals (SDGs) through eco-conscious manufacturing rooted in the AMADA Group’s management philosophy.

A CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS:

This annual report includes performance projections and descriptions of future strategies for use in connection with presentations and the provision of answers to inquiries, and these projections and descriptions are based on the judgment of the Company’s management made in light of information available at the time of writing. Accordingly, these statements are not guarantees of future performance. Please be aware that actual results may diﬀer greatly from those in the statements due to factors such as ﬂuctuations in demand, currency exchange rates, and interest rates.

For more information on the Group’s eﬀorts related to the SDGs, please refer to page 33–38.

1

2

Introduction

AMADA’s Technology

Is Found Everywhere

Our Manufacturing

(Monozukuri)

Our manufacturing (monozukuri) contributes to the monozukuri of our customers all over the world, and we recognize that this is linked to the development of local and regional communities and the international community. It is our responsibility, as the AMADA Group, to continually enrich the futures of the people of the world through our metalworking industry.
We will continue to develop together with our customers and grow as a company which contributes to the community.

3

4

Introduction

Our Presence

Around the World

AMADA Solution Center Regional headquarters Other bases Revenue in ﬁscal 2019

Europe

Japan

¥59.7

billion
North

¥145.6

America

billion

¥69.2

Asia

billion

and Others

¥45.4

billion

AMADA Solution Center (Schaumburg)

AMADA Solution Center (Isehara)

338.1

13.3

320.1

10.8

AMADA Solution Center (Haan)

45.1
34.6

Revenue

Operating proﬁt

Billions of yen

2013

2014

2015

2016

2017

2018

IFRS

2019 FY

Operating proﬁt ratio

JGAAP

%

5

6

Introduction

Production with Our Machines

Our Operations

Machines Supplied by AMADA
Production in Our Customers’ Factories

Sheet metal fabrication:

and Value Chain

Metal sheets are cut by laser beams

Laser machine

Cutting, punching, bending, and welding of metal sheets

Operations

Cut sheets are bent to create various shapes

Bending machine + robot

Development

The development function creates the best technologies for customers to use. According to themes provided by customers, the AMADA Group staﬀ and suppliers cooperate with the customers to conduct technology development for higher-quality machines.

Metal sheets

Parts are precision bonded

Welding machine + robot

Micro

Manufacturing

welding:

Micro

Precise bonding of parts

The manufacturing function translates the latest developed technologies into actual machines. Technicians who have necessary manufacturing techniques and knowledge about machine construction and other related items make actual machines.

welding machine

Micro welding of metals, processing, and marking

Stamping press:

Materials are stamped with dies

Stamping press

Forming of metal sheets

Sales

The sales function provides domestic and overseas customers involved in metal product manufacturing the best machine, software, and equipment solutions that will to allow them to engage in the kind of metalworking processes that are best suited to their needs. Expertise is put to use in supporting the management of customers.

Cutting:

Band saw and circular saw

Steel round bar is cut

Drilling and cutting of metal blocks

machine

Steel beams are drilled with holes

Drilling machine

Service

Metal blocks

The service function supports domestic and overseas customers by conducting periodic inspections and maintenance while providing technical consultations to ensure their machines run smoothly. This support is provided by the Company directly or through its network.

Grinding:

Metal surfaces are precision ﬁnished

Grinding machine

Grinding of metal blocks

7

8

Introduction

AMADA IoT

Factory Innovation

V-factory

The Future of Monozukuri Begins with Automation

Visualization

Oversight

Our solution packs, which combine metal fabrication machines with peripheral equipment, allow these machines to display their capabilities to the fullest, thereby creating time, creating space, and creating with people.

By automating machine setup, material setting, and sorting, it is possible to greatly reduce laborhours and shorten production lead time.

“Create Time”

1

Since materials are set in machines automatically and collected with consideration for the next stage of processing, work can take place in a compact space.

“Create Space”

2

IoT Support Front

Make connections between customer machines and AMADA and provide machine operational assistance

Though processes ranging from supplying materials to collecting and sorting parts, heavy-duty tasks and overall work load are reduced, creating a people-friendly work environment.

“Create with People”

3

Visualize machine operation, production, and consumption

• Factory-wide operation status • Machine work volume (production and operational performance)
• Material and energy use

Evolution

Standard model

• Preventative maintenance proposals • Early recovery support • Operational improvement proposals

8

-hour model

ENSIS-AJ+ASFH+TK-L

Visualize machine maintenance and utilization

Supports continuous operation for thin–mid thickness steel processing over long periods utilizing packaged materials with automated component separation and sorting

• Machine condition • Causes of machine stoppage • Operational analysis

Compact model

Thick sheet model

AMNC 3i Control Unit

4

-hour model

8

-hour model

The AMNC 3i control unit supports customers as a highly functional NC unit that can be operated like a smartphone and also functions as a V-factory compatible interface.

ENSIS-AJ+MPL-C

ENSIS-AJ+AS

Supports continuous operation for thin–mid thickness steel processing utilizing packaged materials
Supports continuous operation over long periods for thick steel processing

Fiber laser machines

High-speed punch/ﬁber laser

combination machines

Bending robot system

Bending machines

Software

Two-storage model that supports a variety of materials

-hour model

Long operating time with expanded variety of materials support model

-hour model

16

24

Sheet Metal Engineering System

VPSS 3i

ENSIS-AJ+AS-TFS

1

ENSIS-AJ+MPL-C＋MARS-N

8

7

2

Supports material production for a variety of materials, from thin to thick levels of thickness
Supports material production for a wide range of materials, with variable mix
The Sheet Metal Engineering System VPSS 3i developed by AMADA is a program process solution, which functions as the core means for converting a customer

8

functions supporting VPSS 3i

3

and lot production factory to a Smart Factory. This system creates ground-breaking results by tracing

the manufacturing process from products in their completed forms backwards while digitalizing processing know-how at every processing stage.

6

4

c

5

9

10

Performance Highlights

AMADA CO., LTD. and its Consolidated Subsidiaries Years ended March 31

Financial Data
Non-Financial Data

Millions of yen

2016

2017

2018

2019

2020

CO2 (t-CO2

Overseas Domestic

)

JGAAP

2017

IFRS

18,497.0 29,617.2
18,110.0 29,928.8
20,388.0 32,598.5
16,274.2 32,623.3

19,752.6 31,815.4

2016

2018

2019

2020

For the year:

2007 (Base)

1.000

2017

2018

2019

2020

CO²Intensity (kg-CO2/kWh)

Revenue

¥304,018

(167,813) 136,204 (94,726) 42,526 43,112 27,425 13,540
6,258
¥278,840 (155,916) 122,923 (89,993) 33,030 36,219 25,894 17,119 15,306
8,949
¥300,655 (169,871) 130,783 (93,183) 37,965
¥301,732 (169,037) 132,694 (93,749) 39,723
¥338,175 (191,081) 147,094 (102,534)
45,145

¥320,112 (186,650)
133,461
(100,187)
34,682

Emission factor

0.840

0.890

0.852

0.891

Cost of sales Gross proﬁt

2016

2017

2018

2019

2020

Waste (t)

Overseas Domestic
Selling, general, and administrative expenses Operating proﬁt
2,432.3 3,775.7
2,512.1 3,548.2
2,643.3 3,421.0
2,757.3 3,789.0

2,515.9 3,580.4

Proﬁt before tax

43,271

40,765

47,742

33,789
Water Resources (thousand m³)

Proﬁt attributable to owners of parent Comprehensive income Purchase of property, plant, and equipment Depreciation and amortization Research and development costs

29,856

27,094

33,303

23,390

2016

96.6

2017

2018

2019

2020

32,954

30,030

33,395

17,032

Overseas Domestic
103.1 174.3
106.5 154.2
115.7 229.5

162.2 152.9

(14,182) 10,080
(14,219) 11,554
(13,093) 12,529

(26,263)
16,080

173.3
8,849

2016

2017

2018

2019

2020

Employees (people)

7,766

7,112

6,838

6,780

7,172

6,789

Number of employees

7,955

4,038
8,005 4,127
8,446 4,232
9,256 4,590

9,531 4,867

Number of overseas employees

At year-end:

Total equity Total assets
¥419,380
565,266
¥419,970
533,433
¥438,863
557,170
¥437,707
556,104
¥445,280
567,861

¥434,549
558,595

Per share of common stock (yen):

Net income —

TOPICS

Introduction of a BCP Location Conﬁrmation System

Basic

¥74.56

74.49 36.00
¥70.85
70.81 42.00
¥81.62
81.61 42.00
¥74.07
74.06 42.00
¥91.50
91.50 46.00

¥65.91
65.91 48.00

Diluted Cash dividends applicable to the year

We have introduced a system that allows us to confirm who is on location without any slip-ups, something that was previously carried out with roll calls or similar actions. In the unlikely event of a person going missing during a disaster, knowing where they went missing can help with the initial response in saving that person’s life.
Even amid measures such as flextime and teleworking, which were implemented to mitigate the effects of COVID-19, it is still possible to determine the status of employees at a location, which can lead to greater efficiency and a safer work environment. In the future we will continue to make the safety of our employees and their families our number one priority and implement workstyle reforms accordingly.

Sales composition:

Metalworking Machinery Business Sheet Metal Division
¥250,825
228,001
22,823
¥229,492
206,051
23,441
¥249,214
223,165
26,048
¥249,952
223,905
26,047
¥272,872
243,241
29,630

¥257,126
228,556
28,569

Micro Welding Division Metal Machine Tools Business Cutting Division
¥51,470
33,827
9,919
¥48,056
31,888
9,423
¥50,118
33,762
9,383
¥50,359
33,891
9,460
¥64,269
38,629 17,383
8,257

¥61,744
35,916 19,241
6,587

Stamping Press Division

Grinding Division

7,724

6,744

6,971

7,006

Establishment of AMADA AI INNOVATION LABORATORY

Others Total

1,722

1,291

1,322

1,420

1,033

1,240

In order to conduct research that will grow the AMADA Group and to acquire cutting-edge technology rooted in artiﬁcial intelligence, the Group has established AMADA AI INNOVATION LABORATORY Inc. (AAIIL). AAIIL has two main roles. (1) Expand the potential of sheet metal processing by utilizing AI and other cuttingedge technology. AAIIL will collaborate with the AMADA Group companies to optimize the entire production process, impart advanced technical knowledge, and assist the processing needs of various regions around the world.

¥304,018

¥278,840

¥300,655

¥301,732

¥338,175

¥320,112

Note: 1. The Financial Data yen ﬁgures are rounded down to millions of yen, except for per share amounts.

The Logo for AMADA AI INNOVATION LABORATORY

(2) Conduct marketing activities to develop new businesses and technologies for the future.
The AMADA Group will consistently conduct innovative business activities as a company that grows with its customers and continues to contribute to society.

11

12

Message from the President

Looking forward, we will continue to take on challenges to ensure we remain the company of choice for customers in the manufacturing business

Recent Economic Environment and Business Performance

Regarding the consolidated operating results for the fiscal year under review, orders received amounted to ¥303.1 billion (down 9.6% year on year) and revenue was ¥320.1 billion (down 5.3% year on year). In Japan, discreet capital investment from the third quarter onward coupled with sluggish personal consumption stemming from the consumption tax hike caused a downward trend in domestic revenue, which fell to ¥145.6 billion (down 2.2% year on year). Overseas, while the sales for the Sheet Metal Division in North America remained relatively strong, sales in major European countries were sluggish, and sales in Asia decreased due to trade friction between the United States and China, resulting in overseas revenue of ¥174.4 billion (down 7.8% year on year).
Regarding profit and loss, profits increased due to more streamlined manufacturing and an improved product lineup, however, due to the impact of decreased sales and the strong yen, operating profit and profit attributable to owners of parent decreased, respectively, to ¥34.6 billion (down 23.2% year on year) and ¥23.3 billion (down 29.8% year on year).

Revenue / Operating Proﬁt

Billions of yen

338.1
320.1

Revenue Operating proﬁt

304.0

300.6

301.7

45.1

286.5

42.5

278.8

39.7
37.9

34.6
33.0

27.6

Tsutomu Isobe

Representative Director, President

2014

2015

2016

2017

2018

2019

FY

JGAAP

IFRS

Sales by Geographical Segment

Billions of yen Asia and others Europe North America

58.5 63.0
45.4 59.7
53.7
53.2

58.8
52.5
55.0
46.6

Japan

53.2 57.2
58.6 56.9

Aiming Toward a 100-Year Company

49.2 51.8
52.7 48.7

67.5

69.2

57.8

As of April 1, 2020, We, the AMADA Group, started with a new structure. business operations. In recent years, the environment which enfolds AMADA has undergone rapid change. We are looking toward our 100th anniversary with the intention of continuing forward as a company that contributes to society and our customers through monozukuri and will take on the challenge of doing so with more speed, strength, and professionalism than before.
Since our founding in 1946, AMADA has never ﬂagged in its management philosophy of“Growing Together with our Customers.”Under this philosophy, we have seen it as our mission to contribute to society through the monozukuri product creation process, and it is under this philosophy that we have pursued our

148.9

145.6

2019

139.7

129.9

131.2

130.6

133.6