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 23Our 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. 12311 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 4539 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. <ul style="display: flex;"><li style="flex:1">1</li><li style="flex:1">2</li></ul>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. <ul style="display: flex;"><li style="flex:1">3</li><li style="flex:1">4</li></ul>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 <ul style="display: flex;"><li style="flex:1">Revenue </li><li style="flex:1">Operating profit </li></ul>Billions of yen <ul style="display: flex;"><li style="flex:1">2013 </li><li style="flex:1">2014 </li><li style="flex:1">2015 </li><li style="flex:1">2016 </li><li style="flex:1">2017 </li><li style="flex:1">2017 </li><li style="flex:1">2018 </li></ul>IFRS 2019 FY Operating profit ratio JGAAP %<ul style="display: flex;"><li style="flex:1">5</li><li style="flex:1">6</li></ul>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 <ul style="display: flex;"><li style="flex:1">7</li><li style="flex:1">8</li></ul>Introduction AMADA IoT Factory Innovation V-factory The Future of Monozukuri Begins with Automation <ul style="display: flex;"><li style="flex:1">Visualization </li><li style="flex:1">Oversight </li></ul>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” 1Since 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” 2IoT 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” 3Visualize 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 <ul style="display: flex;"><li style="flex:1">Compact model </li><li style="flex:1">Thick sheet model </li></ul>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. <ul style="display: flex;"><li style="flex:1">ENSIS-AJ+MPL-C </li><li style="flex:1">ENSIS-AJ+AS </li></ul>Supports continuous operation for thin–mid thickness steel processing utilizing packaged materials Supports continuous operation over long periods for thick steel processing <ul style="display: flex;"><li style="flex:1">Fiber laser machines </li><li style="flex:1">High-speed punch/fiber laser </li></ul>combination machines <ul style="display: flex;"><li style="flex:1">Bending robot system </li><li style="flex:1">Bending machines </li></ul>Software Two-storage model that supports a variety of materials -hour model Long operating time with expanded variety of materials support model -hour model <ul style="display: flex;"><li style="flex:1">16 </li><li style="flex:1">24 </li></ul>Sheet Metal Engineering System VPSS 3i ENSIS-AJ+AS-TFS 1ENSIS-AJ+MPL-C＋MARS-N 872Supports 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 8functions supporting VPSS 3i 3and 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. <ul style="display: flex;"><li style="flex:1">6</li><li style="flex:1">4</li></ul>c5<ul style="display: flex;"><li style="flex:1">9</li><li style="flex:1">10 </li></ul>Performance Highlights AMADA CO., LTD. and its Consolidated Subsidiaries Years ended March 31 Financial Data Non-Financial Data Millions of yen <ul style="display: flex;"><li style="flex:1">2016 </li><li style="flex:1">2017 </li><li style="flex:1">2018 </li><li style="flex:1">2019 </li></ul>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 <ul style="display: flex;"><li style="flex:1">2016 </li><li style="flex:1">2018 </li><li style="flex:1">2018 </li><li style="flex:1">2019 </li></ul>2020 For the year: 2007 (Base) 1.000 <ul style="display: flex;"><li style="flex:1">2017 </li><li style="flex:1">2018 </li><li style="flex:1">2019 </li></ul>2020 CO2 Intensity (kg-CO2/kWh) <ul style="display: flex;"><li style="flex:1">Revenue </li><li style="flex:1">¥304,018 </li></ul>(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 <ul style="display: flex;"><li style="flex:1">Emission factor </li><li style="flex:1">0.840 </li><li style="flex:1">0.890 </li><li style="flex:1">0.852 </li></ul>0.891 Cost of sales Gross profit <ul style="display: flex;"><li style="flex:1">2016 </li><li style="flex:1">2017 </li><li style="flex:1">2018 </li><li style="flex:1">2019 </li></ul>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 <ul style="display: flex;"><li style="flex:1">Profit before tax </li><li style="flex:1">43,271 </li><li style="flex:1">40,765 </li><li style="flex:1">47,742 </li></ul>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 <ul style="display: flex;"><li style="flex:1">29,856 </li><li style="flex:1">27,094 </li><li style="flex:1">33,303 </li></ul>23,390 2016 96.6 <ul style="display: flex;"><li style="flex:1">2017 </li><li style="flex:1">2018 </li><li style="flex:1">2019 </li></ul>2020 <ul style="display: flex;"><li style="flex:1">32,954 </li><li style="flex:1">30,030 </li><li style="flex:1">33,395 </li></ul>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 <ul style="display: flex;"><li style="flex:1">2016 </li><li style="flex:1">2017 </li><li style="flex:1">2018 </li><li style="flex:1">2019 </li></ul>2020 Employees (people) <ul style="display: flex;"><li style="flex:1">7,766 </li><li style="flex:1">7,112 </li><li style="flex:1">6,838 </li><li style="flex:1">6,780 </li><li style="flex:1">7,172 </li></ul>6,789 <ul style="display: flex;"><li style="flex:1">Number of employees </li><li style="flex:1">7,955 </li></ul>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 <ul style="display: flex;"><li style="flex:1">Basic </li><li style="flex:1">¥74.56 </li></ul>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 <ul style="display: flex;"><li style="flex:1">Grinding Division </li><li style="flex:1">7,724 </li><li style="flex:1">6,744 </li><li style="flex:1">6,971 </li><li style="flex:1">7,006 </li></ul>Establishment of AMADA AI INNOVATION LABORATORY Others Total <ul style="display: flex;"><li style="flex:1">1,722 </li><li style="flex:1">1,291 </li><li style="flex:1">1,322 </li><li style="flex:1">1,420 </li><li style="flex:1">1,033 </li></ul>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. <ul style="display: flex;"><li style="flex:1">¥304,018 </li><li style="flex:1">¥278,840 </li><li style="flex:1">¥300,655 </li><li style="flex:1">¥301,732 </li><li style="flex:1">¥338,175 </li></ul>¥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. <ul style="display: flex;"><li style="flex:1">11 </li><li style="flex:1">12 </li></ul>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 <ul style="display: flex;"><li style="flex:1">300.6 </li><li style="flex:1">301.7 </li></ul>45.1 286.5 42.5 278.8 39.7 37.9 34.6 33.0 27.6 Tsutomu Isobe Representative Director, President <ul style="display: flex;"><li style="flex:1">2014 </li><li style="flex:1">2015 </li><li style="flex:1">2016 </li><li style="flex:1">2017 </li><li style="flex:1">2017 </li><li style="flex:1">2018 </li></ul>2019 FY <ul style="display: flex;"><li style="flex:1">JGAAP </li><li style="flex:1">IFRS </li></ul>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 <ul style="display: flex;"><li style="flex:1">67.5 </li><li style="flex:1">69.2 </li></ul>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 <ul style="display: flex;"><li style="flex:1">148.9 </li><li style="flex:1">145.6 </li></ul>2019 <ul style="display: flex;"><li style="flex:1">139.7 </li><li style="flex:1">129.9 </li></ul><ul style="display: flex;"><li style="flex:1">131.2 </li><li style="flex:1">130.6 </li><li style="flex:1">133.6 </li></ul>

Annual Report 2020

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