Annual Report 2021 - Aida-global

To Our StakeholdersAiming to achieve sustainablegrowth and enhance corporatevalue, we will take on thechallenges of a new era whileaddressing universal issues.Kimikazu AidaChairman and President (CEO)11Review of the Fiscal Year Ended March 31, 2021Progress of the Medium-Term Management PlanDuring the fiscal year under review, the global economystarted recovering from the decline caused by the globalspread of COVID-19. However, the outlook remainsuncertain due to various factors, including the reemergence of COVID-19 variants, the conflict between theUnited States and China, and geopolitical risks. Orders inthe metalforming machinery industry decreased both inJapan and overseas, with the Japan Forming MachineryAssociation reporting that worldwide orders for pressmachines fell 26.2% year on year to 89.1 billion in theyear under review—dipping below 100 billion for the firsttime since the 2008 global financial crisis. However, ordersstarted recovering in the second half.Under these conditions, the Group reported a significant year-on-year decline in orders due to restrictions onsales and service activities caused by the spread ofCOVID-19 as well as a slowdown in capital investments inthe automobile industry. However, starting in the secondhalf of the year when economic activity resumed, the market began to recover, albeit gradually, supported by ordersrelated to electric vehicles. Accordingly, the Grouprecorded total orders of 52.7 billion, down 15.4% year onyear, and the order backlog at fiscal year-end totaled 38.7 billion, down 12.2% year on year. Net salesdeclined 16.0% to 58.0 billion, impacted by depressedconditions in the first quarter. However, sales have beenrecovering steadily since the second quarter with the normalization of operations. Due to the decline in revenue,operating income fell 39.7% to 3.7 billion, and ordinaryincome declined 41.6% to 3.7 billion. Net income attributable to owners of parent dropped 67.3% to 1.3 billion,mainly due to an extraordinary loss related to the impairment of assets at a plant in China and the suspension anddownsizing of plant operations due to the impact ofCOVID-19.“As a leading company, AIDA will contribute to society bysupporting efforts to protect the environment, reduceenergy consumption, and develop new technologies.” Thisis the Management Vision of “The Evolved AIDA PLAN523,” the medium-term management plan initiated in April2020. Under this plan, the development of measures toaddress ESG issues is one of the pillars of our businessactivities. We are focusing particular attention on providingsolutions to universal issues faced by society and our customers in order to achieve sustainable growth andenhance corporate value. These issues include the needto manufacture next-generation automobiles that are electrified and lighter in weight than previous models.Customers are also striving to boost productivity throughautomation and digitalization and to reduce their environmental impact by conserving energy and engaging indecarbonization at their production factories.Based on this management policy, the plan focuses onthree core strategies: (1) Technological innovation,(2) Strengthening our business infrastructure, and(3) Improving profitability. We will apply these strategies toour three business segments—our press business, ourautomation/FA business, and our service (maintenance/modernization) business. Our aim is to achieve sustainablegrowth by taking on new challenges in these transformative times.AIDA ENGINEERING, LTD.Core Strategies(1) Technological Innovation:Improving Product Competitiveness & Fostering andStrengthening Our Growth BusinessesIn response to the electrification of automobiles andgrowing demand in recent years for high-speed presses toproduce EV drive motors, we are developing optimizedtechnologies for these press lines. And to help reduce

vehicle weight, we are developing improved methodologies for forming lightweight materials such as high-tensilesteel, aluminum, and carbon fiber by improving the capacities of our servo motors and enhancing hydraulically controlled back-pressure forming. As a new growth area, weare working to introduce a digital transformation by furtherevolving the IoT technologies incorporated in our pressmachines and visualizing the operating status of entirepress lines with 3D monitors.since the fiscal year ended March 31, 2021 and make themfully operational. We will also streamline our production processes and make them smarter, including increased usageof 5-axis machining centers in our production plants, linkingour designing system with our machining center system,and introducing an IoT-based system for monitoring thestatus of factory operations. At the same time, we willreview and revamp existing production facilities.(3) Improving Profitability:Transforming Our Existing Profit StructureAmid intensifying competition in the press forming business, we will invest management resources to strengthenour service (maintenance/modernization) and automation/FA businesses, which deliver higher-value-added content.With regard to our press business, due to the acceleratingshift to EVs and other next-generation vehicles, we willbreak away from our dependence on conventionalpresses used to form parts, increase the sales ratios ofhigh-speed and precision presses, and improve our pressmachine product mix. As for mid-size and large presseswhich are experiencing declining profitability, we will shrinkour lineup of models to improve price competitiveness andwe will focus on cost reductions by reviewing our procurement and manufacturing processes.(2) Strengthening Our Business Infrastructure:Developing and Strengthening Infrastructure toSupport Technological InnovationDuring the fiscal year under review, we reorganized andrestructured our Chinese subsidiaries and merged domestic subsidiaries. In the fiscal year ending March 31, 2022,we will strengthen collaboration between functions by reorganizing our domestic operations by shifting from our existing function-specific vertically integrated system to asystem organized by business and product. We will alsointroduce a new personnel system to develop and promotea diverse range of manpower resources, including drivers oftechnological innovation, management personnel, andglobal personnel. In addition, we will complete the improvements to our core systems which we have been working onNet Sales by Business Segment in “The AIDA PLAN 523” Medium-Term Management Plan (Fiscal Year Ended March 2021)Press MachinesRatio of Net SalesAutomation/FANet Sales58.8% 34.1Ratio of Net SalesbillionService (Maintenance/Modernization)Net Sales13.7% 7.9Ratio of Net SalesbillionNet Sales27.5% 15.9Principal ProductsPrincipal ProductsPrincipal Services General-purpose servo presses Piling systems Retrofits/Modernization Mid-size and large servo presses Material feeders Overhauls Precision forming presses Coil feeders Preventive maintenance General-purpose presses Destack feeders, etc. Press inspections Mid-size and large presses Transfer equipment High-speed presses Transfer robots Cold forging presses Intermediate transfer feedersbillion Machine relocation Die changers, etc. Electrical control equipmentAnnual Report 202112

Priority Policies by Business SegmentIn line with these core strategies, we are implementing thefollowing priority policies for each of our business segments—our press business, our automation/FA business,and our service (maintenance/modernization) business.(2) Our Automation/FA BusinessLeveraging Control Technologies to Create ValueAdded ContentTo accommodate next-generation vehicles, we areimproving the functionality of the AIDA transfer feedersused to convey high-strength steel and aluminum materials as well as enhancing the functionality of the peripheralequipment used with our high-speed presses andhigh-precision presses. In recent years we have developedthe D-MAT press-to-press transfer feeder which has garnered high praise in the market for its high flexibility,including its usage of sensors to align the position ofmaterials and its ability to transfer materials based on theshape of the die, and we will continue to further improvethe performance of our products. In cooperation with REJCo., Ltd., we have completed the development of a control system that fits our servo press specifications, makingit possible to build the entire system within the AIDAGroup. Going forward we will begin equipping our presseswith this new system, and we will leverage our capabilitiesas a specialized manufacturer to further improve its capabilities and to drive down costs. We will also continue toaggressively expand into new non-press fields throughacquisitions and business alliances.(1) Our Press BusinessStrengthening Our Press Offerings for Next-GenerationVehicles and Enhancing Our Product MixThe growing popularity of EVs and other electric vehiclesis also driving demand for the high-speed presses used toproduce their drive motors. We are responding to thishigher demand by further improving the efficiency of ourTsukui Plant where we manufacture high-speed presses.We are also putting the new equipment installed in ourplant in Malaysia into operation, which had been delayeddue to COVID-19. With regard to mid-size and large pressmachines where we will be seeing stiffer price competition,we will focus on cost reductions and strive to differentiateour products by introducing new press machines that fullyleverage our servo technologies.Outline of the Medium-Term Management Plan “The Evolved AIDA PLAN 523” (Fiscal Years Ending March 2021–2023)Management VisionAs a leading company, AIDA will contribute to society by supporting efforts to protect the environment,reduce energy consumption, and develop new technologiesManagement PoliciesImprove corporate value through value creation and societal contributionsto achieve sustainable growth together with our stakeholdersOvercome Uncertainty toAchieve Sustained GrowthExpand Corporate ValueStakeholdersCore StrategiesCreTechnological Innovation Global Business StructureSales Network, Co-Engineering/Mfg., & Governance Management ResourcesPeople, Systems, Equipment, Supplier ChainCuSuppliersu esveSolStrengthening Business InfrastructureCommunitiesSustainableGrowth CycleIss Evolution of Press Forming & FA Technologies Environmentally Friendly Energy-Saving Technologies Production Systems That Leverage IoT & DigitalizationCustomersate New Valuestoalmer & SocietEmployeesBusiness PartnersImproving Profitability Improve Business Portfolio Improve Press Product Mix Improve Cost Competitiveness13AIDA ENGINEERING, LTD.Growth of StakeholdersShareholders/Investors

With respect to shareholder returns, we recognize thatincreasing profits for shareholders is one of our mostimportant management priorities. Accordingly, we strive toachieve continuous growth in corporate value and earningsper share by strengthening our business foundation,improving corporate quality, and developing our businessglobally. The basic policy of our Medium-Term ManagementPlan is to maintain consistent dividend payments and aconsolidated dividend payout ratio target of 40% while preserving the stability of our business and financial base andmaking strategic investments in future sustainable growth.In the fiscal year ended March 31, 2021, we declared acash dividend of 20 per share, for a payout ratio of 90.6%.To maintain dividend stability, in the fiscal year endingMarch 31, 2022 we plan to pay a dividend of 25 pershare, for a payout ratio of 49.7% in spite of predictions thatbusiness conditions will remain difficult.As stated in the Management Policy of our MediumTerm Management Plan, we are committed to deliveringsustainable growth by steadfastly addressing universalissues in society from a long-term perspective. To thisend, we look forward to the ongoing understanding andsupport of all our stakeholders.(3) Our Service (Maintenance/Modernization) BusinessStrengthening Our “Recommendation-Based SalesEfforts” Focused on Preventive Maintenance andEquipment EnhancementsWe will work to strengthen this business segment as partof our mission as a manufacturer that delivers safe andreliable machines. Together with improving preventivemaintenance for customers by leveraging IoT to promotethe visualization of the timing of component replacements,we will also focus on the visualization of press machineconditions via monitoring systems. And as press machinesage, there is a greater need to improve their peripheralequipment, and thus we are actively developing recommendations to improve productivity by updating existingsystems and introducing digital maintenance solutions. Topromote these new initiatives, we will also bolster ourmanpower resources and improve our service factories.Business Outlook and Shareholder ReturnPolicy for the Fiscal Year Ending March 31,2022The COVID-19 situation is improving and capital investments in automotive-related industries—especially electricvehicles—are recovering. Accordingly, for the fiscal yearending March 31, 2022 we forecast consolidated netsales of 62.0 billion, operating income of 4.5 billion,ordinary income of 4.6 billion, and net income attributableto owners of parent of 3.0 billion—representing year-onyear increases in both revenue and earnings.August 2021Chairman and President (CEO)Performance Forecasts in “The Evolved AIDA PLAN 523”Net SalesOperating Income/Operating Income RatioPress BusinessFactory Automation/FA BusinessService (Maintenance/Modernization) BusinessPress BusinessFactory Automation/FA BusinessService (Maintenance/Modernization) Business(Billions of yen)40.020.0Operating Income Ratio(Billions of yen)80.060.0* Rounded to the nearest 100 million61.0 58.159.0 62.017.0 16.018.0 19.09.08.07.935.0 34.28.533.0 34.566.019.070.020.011.0 11.09.05.03.336.0 39.01.00-1.000.090.366.373.42 3.8055.84.53.6 3.553.72.81 3.153.0(%)7.36.47.09.03.060.160.62 0.33-0.050.55 0.600.800.15 1.80 1.909310-1Original ResultsPlanOriginal RevisedPlanPlanOriginal RevisedPlanPlanOriginal ResultsPlanOriginal RevisedPlanPlanOriginal RevisedPlanPlan202120222023202120222023Annual Report 202114

FeatureStoryAIDA INNOVATIONSAFETY & ECOLOGYPress Forming: Enabling Advances inSafety and Resource ConservationThe role of a seatbelt retractor is to forcibly hold the seatbeltin place in the event of an abrupt vehicle stop. Because ofthe high degree of difficulty in forming the required shape,retractors are generally manufactured by sintering metalpowder. However, using a press to form retractors hasresulted in higher-strength components as well as theconservation of resources.SDGs that we make efforts to contribute toAutomotive Seatbelt Retractor ClutchWinner of the “MF Technology Excellence Award 2020–2021”(sponsored by the Japan Forming Machinery Association)Photo courtesy ofTaiyo Industry Co., LTD.43Material Yield%Comparison of Material Properties between the ConventionalMethod (Sintering) and the Press Forming MethodBetter durability by changing the materialimprovementSintered metal alloy10 times harderto breakSintered metal alloy(conventional method)15AIDA ENGINEERING, LTD.Press Forming MethodDurabilityTaiyo Industry Co., LTD. (Suwa City, Nagano Prefecture) has succeeded in mass-producing this component using an AIDA servopress using a forging process with over 20 stages instead of asintering process using metal powder. This is done by taking asteel blank that is thinner than the finished product and applying awall-thickening forming process, and this forming methodologychange has improved material yield by 43%.Conventional MethodSteel material(press forming method)Steel material

Coil Material Usage DifferencesProgressive Forming 4 pieces from a given lengthPress-Forming DifferencesUses t 5.3 mm materialLots of scrapConventionalMethodMaterial widthPitchBlankChanging the forming method reduces material wasteTransfer FormingNewMethodThe shorter spacing between parts enables 6 piecesto be formed from the same length,and the coil width itself is also narrowerMaterial widthPitch5.35.3Hole formingThe thin plate thickening process further reduces scrapUses t 3.0 mm materialMinimal scrap5.33.0BlankHole formingThickening processfor thin plateAnnual Report 202116

FeatureStoryAIDA INNOVATIONENVIRONMENTAIDA’s Technologies Are Contributingto a Decarbonized SocietyOur MSP Series high-speed precision presses equippedwith AIDA’s proprietary technology can stamp 300 sheets ofEV drive motor cores per minute. With their outstandingaccuracy and productivity, these machines have garnered90%* of Japan’s domestic market.SDGs that we make efforts to contribute toMSP SeriesMulti-SuspensionPressesDomestic MarketShare90%** According to AIDA’s research. This is basedon data from the Japan Forming MachineryAssociation, and is calculated based on thedomestic market share of dedicated highspeed progressive presses with tonnagecapacities of 300 tons and higher.As electrical vehicle performance improves, motor core plates arebecoming progressively thinner with larger diameters. Ourhigh-performance, high-speed MSP Series multi-suspensionpresses deliver forming capacities of 300 tons or higher, makingthem well-suited for manufacturing electric vehicle motor cores.MSP presses have a 90%* market share in Japan, and are alsohighly regarded in Europe, the United States, and Asia.17AIDA ENGINEERING, LTD.Conventional PressThe wide spacing between the points causes major slidedeflection

AIDA’s MSP SeriesMotor Cores Used in Electric VehiclesMSP Series multi-suspension presses have narrow spacingbetween points, resulting in minimal slide deflectionAnnual Report 202118

FeatureStoryAIDA INNOVATIONADVANCED TECHNOLOGYDigital Transformation AcceleratesInnovative ManufacturingDigital transformation is leading to the development of newbusiness models and the creation of new value, thereby drivingsignificant changes in manufacturing industries. AIDA continuesto make inroads into not only “preventive maintenance” thatuses IoT technology to monitor the service life of parts, but also“predictive maintenance” that uses AI technology to learn andto detect early warning signs of impending issues.SDGs that we make efforts to contribute toLeveraging AITechnology forPredictive MaintenanceThe industry’s first servo pressequipped with learning functions (AI)DSF-N2-A Series(Announced in June 2021)Our press machines aggregate measurement data—for example, the temperature of each part and the servo motor currentand voltage values—and learn from it, enabling automatic diagnosis of the machine status and the quantification of abnormalconditions to help prevent problems before they occur.Also equipped with SCADA functionsto visualize the locations of faults in a3D display* AI and SCADA functions are provided as

Technology Center Japan Consolidated Net Sales (Fiscal Year Ended March 2021) Others Press Machines Service (Press-Related) 7.6 % 71.0 % 21.4 % 4.4 billion 41.2 billion 58.0 billion 12.4 billion Net Sales by Press Machine Industry Segment Automotive-Related Electrical/ Electronics-Related Other 29.3 billion 4.7 billion 7.2 billion .