Integrated ReportNippon Pillar Packing Co., Ltd.

2020

1 2

Controlling Fluids

Since its founding, Nippon Pillar Packing has drawn on its technologies for

stopping fl uid leakage to develop new products and technologies that serve the

various technical requirements that spring from the needs of many industries, and

resultingly provided high-performance mechanical seals, gland packing, gaskets

and other products customers trust.

These products are used in a wide range of fi elds from the electric power,

shipbuilding and automotive industries to electronics. Utilizing materials, design

processing and other technologies cultivated to date, we also develop and provide

fl uororesin products for the semiconductor and LCD manufacturing equipment

industries.

Business Overview 3

Company History 5

To Our Stakeholders 7

Nippon Pillar Packing’s Corporate Spirit 8

Message from the President 9

New Medium-Term Management Plan

　 Basic Policies and Overview of “BTvision22” 13

　 Growth Strategies by Segment 15

　 Topics 18

Governance

　 Special Dialogue

　 Governance as a Foundation for Increasing Corporate Value 19

　 Corporate Governance System 21

　 Risk Management/External Directors 23

　 Offi cer Remuneration/Disclosure 24

　 Corporate Offi cers 25

Society

　Raising Human Resource Value

　　/Enhancing the Workplace Environment 26

　Enhancing Work-Life Balance 27

　Community Initiatives 28

Customer Initiatives/Supplier Initiatives

　　　　　　/Policy on Anti-Social Forces 29

Voice

Employees Share Their Thoughts on

Value Creation at Nippon Pillar Packing 30

Environment

　Environmental Activities 33

Data

　Financial Report 35

　Company Information

/Main Business Locations and Group Companies 38

Table of Contents

Integrated Report 2020 covers fiscal 2019 (April 2019 to March 2020). Some

information postdating April 2020 is also included. The report introduces the

Group’s environmental and social initiatives, governance and other non-financial

areas while also providing some information on its medium- and long-term strategy

and financial performance. The report is intended to enhance communication

with stakeholders and also further improve the Group’s initiatives. This report

was edited with reference to the International Integrated Reporting Framework

published by the International Integrated Reporting Council (IIRC) and the Guidance

for Collaborative Value Creation formulated by the Ministry of Economy, Trade and

Industry in May 2017.

Reporting period: April 1, 2019 through March 31, 2020

Reporting scope: Nippon Pillar Packing Co., Ltd. and its Group companies

Note: Also includes some information outside of the reporting period.

PriceCo-Creation Guidance

GasketsHandle

Valvebonnetgasket

Glandpacking

Valve body(spherical)

Mechanical seals

FilterChemical tank

Filter

Tanker truck

Cleaning tank

Chemical tank

Chemical supplyequipment

Cleaningequipment

Chemical supplyfloor

Clean room floor

Preventing all types of leaks to bring safety and security to people’s lives and the environment

Nippon Pillar Packing specializes in the design, development and manufacture of fluid control equipment to prevent leakages of fluids including water, oil, dangerous chemical solutions and gas.Our products are used in places absolutely essential to conducting daily life, and contribute to global environmental protection, resource conservation and protecting our lives and property.

3 4

Industrial Equipment Business Electronic Equipment Business

Gland packing Circulation products (for the clean market)

Seismic isolator/slide bearing

Sample Uses Sample Uses

Gaskets Mechanical seals

The industrial equipment business primarily handles mechanical seal

products, which control f luid leakage from rotating equipment like

centrifugal pumps that supply fluids, gland packing products, which are used

as seal materials for valve stem components, and gasket products, which go

between pipes. The segment provides products to various industries that

operate under severe conditions, such as high temperature and pressure.

Braided fiber packing is impregnated with fluororesin and other lubricants, balancing liquid leaking prevention performance with smooth sliding performance. Highly flexible and designed to fit the shaft, the product can be cut on site to an appropriate length for use.

Used for sealing stationary parts, including joints in pipes and equipment. Backed by solid technical capabilities and high reliability, these gaskets are used in a wide array of industries, from power plants and other types of energy plants to the oil refining, petrochemical and automobile industries.

Semiconductors and LCD displays are an essential part of modern life, found in

smartphones, personal computers, LCD televisions and other devices. Fluororesin

products are used not only in semiconductor and LCD manufacturing

equipment, but also in equipment found on the front lines of medicine. Our

products respond flexibly to a diverse range of high-level needs important to

semiconductor and LCD production lines, including safety, cleanliness, use under

high temperatures, adaptability to pipe size and ease of workability.

This product reduces and absorbs the forces bearing on base-isolated buildings, roofs, connecting bridges and other supporting structures through a rotating, sliding mechanism. Using our proprietary fluororesin technology, we have achieved outstanding low friction, contributing to the earthquake resistance and durability of buildings and structures.

Used to prevent fluid leakage from around

high-pressure, high-speed rotating shafts.

By offering precise control of leakage and

friction, this product achieves superior

sealing and high durability. High reliability

also means reduced maintenance costs.

The electronic equipment business is specialized in the high-tech market and

focuses particularly on the semiconductor, LCD and medical industries. Fittings,

pumps and other components made from fluororesin, which offers high chemical

resistance, heat resistance, and cleanliness, are not affected by a diverse range of

liquid chemicals, and this allows them to be used in silicon wafer cleaning. Our

products are garnering increasing attention from the semiconductor industry.

72nd Term Sales

29,21310,396 millionmillion¥ ¥

35.6%

Shipbuilding PCs/SmartphonesPower plants Game devicesAutomotive Commercial, educational and medical facilities

Rockets Skyscrapers

Sample Uses

Sample Uses

Sample UsesValves

Gland packing for pumps Spiral gaskets Bellows pumps

Uniton bearing

Fittings and tubes

Fluorogold

ARII Seal

Pipes Pumps

Clean room

Buildings

Business Overview

18,740 million¥

64.1%

With over 95 years of expertise in fluid control, we will contribute to the realization of a sus-tainable, affluent society

5 6

For over 90 years since its founding, Nippon Pillar Packing has worked to serve the needs of growing industries by quickly utilizing new materials in order to commercialize new products and thereby contribute to the realization of a prosperous, sustainable society.Going forward, we will continue to provide original, high-quality products and services while further improving of our fluid control technologies.

Established Nippon Pillar Packing Industries in Nada, Kobe

Developed and patented Pillar Packing No. 1

Established the Sanda Factory in Sanda City, Hyogo Prefecture

Established Korea Pillar Packing Co., Ltd., our first overseas joint venture

Established the Fukuchiyama Factory in Fukuchiyama City, Kyoto Prefecture

Listed on the Second Section of the Osaka Securities Exchange

Listed on the First Sections of the Tokyo Stock Exchange and Osaka Securities Exchange Established Taiwan Pillar Industry Co., Ltd. in Taiwan

Established Shanghai Pillar Trading Co., Ltd. in China

Moved the head office to Nishi, Osaka

Established Nippon Pillar Europe GmbH in Germany

Established PT. Nippon Pillar Indonesia

Construction of new Sanda Factory

Established Nippon Pillar Middle East FZCO in the UAEEstablished Nippon Pillar (Thailand) Co., Ltd. in ThailandEstablished Nippon Pillar Singapore Pte. Ltd's. ndonesia Representative Office in Indonesia

Established NIPPON PILLAR CORPORATION OF AMERICA in the US

1924

1924

1967 1980 1989 1995 2001

2007

2017

2018

2019

2020

2015

1999

Founder

Kaju Iwanami

*EDP is an acronym for “Emission Defense Packing.” It is a type of low-leak, high performance packing with features to prevent even permeation and leaking inside the packing.

1920 1940 1960 1980 1990 2000 2020

Bu

sin

ess

ex

pa

ns

ion

Ev

olu

tion

of p

rod

uc

ts/

tec

hn

olo

gie

s

Established a head office and factory in Yodogawa, Osaka

Reorganized the Company into a joint-stock company and founded Nippon Pillar Packing Co., Ltd. with capital of ¥2 million

Listed on the Osaka Securities Exchange as a specially appointed brand in the Second Section

Established Nippon Pillar Singapore Pte. Ltd., a subsidiary of Nippon Pillar Packing Co., Ltd. in Singapore, as a strategic sales point in Southeast Asia

50th anniversary

Became the first JIS-certified factory for spiral gaskets for JIS B 2404 pipes

1926

1948

1984 1993

1974

1969

Established Suzhou Pillar Industry Co., Ltd. in China

2003

Established the Kyushu Factory in Koshi City Kumamoto Prefecture

Established NPK Fluid Control Systems Mexico S.A. de C.V. in Mexico

2005

2016

Began production of gaskets for automobiles and marine engines

Developed and began production of a mechanical seal (shaft sealing device), a first in Japan

Began production of ISO series mechanical seals

Developed and commenced production of PILLAR Mark III, expanded graphite packing

Started full-scale shipments of EDP*, a new packing compliant with the US Clean Air Act

Began production of SUPER-300 Type PILLAR fitting with a revolutionary sealing mechanism, the first of its kind in the world

1932 1951 1981 1987 1994 2002

Developed a vertical gasket for high-temperature, high-pressure pipe flanges Began production of fluorine plastic products (Series name: PILAFLON)

Began production of PILLAR TECHNO BLACK No. 2603-EEE, helping in the conversion to non-asbestos products at an early stage

Began production of a new type of rotary joint for the semiconductor market

Began production of PILLAR CASSETTE SEAL (Outside Type), which solves various problems in gland packing for pumps

Started development of fluororesin products for semiconductor manufacturing equipment and launched initial sales of fittings (PILLAR Fittings)

1952

2003 2012 20151984

Developed and commenced production of carbonized fiber, a new alternative material to asbestos

1970

Business Overview

Consolidated Sales and Ordinary Income Segment Sales Fiscal 2019 Overview by Segment (Consolidated)

Industrialequipment

¥10,396 million35.6%FY2019FY2015 FY2016 FY2017 FY2018

3,725

29,213

3,493

22,960

5,255

27,225

5,156

29,461

5,227

30,963Other

¥76 million0.3%

Electronic equipment¥18,740 million

64.1%

FY2019¥29,213million

■Sales （Millions of yen）

■Ordinary Income

FY2019

FY2015

FY2016

FY2017

FY2018

10,39610,352 10,680 10,467 10,757

FY2019

FY2015

FY2016

FY2017

FY2018

18,740

12,52516,452

18,911 20,123

FY2019

FY2015

FY2016

FY2017

FY2018

10,39610,352 10,680 10,467 10,757

FY2019

FY2015

FY2016

FY2017

FY2018

18,740

12,52516,452

18,911 20,123Sales

（Millions of yen）

Sales（Millions of yen）Sales of mechanical seals for

precision machinery slowed,

but gland packing and gasket

products continued their solid

performance. As a result, sales

in this segment decreased 3.4%

year on year to ¥10,396 million

and operating income fell 11.5%

to ¥1,314 million.

Orders for PILAFLON products

for the semiconductor and LCD

manufacturing equipment in-

dustries dropped significantly due

to a slowdown in the semicon-

ductor market. As a result, sales

in this segment decreased 6.9%

year on year to ¥18,740 million

while operating income fell

36.0% to ¥2,329 million.

Industrial Equipment Business (Seal products) Electronic Equipment Business

Began full-scale production of seal packing for industrial use

1926

Company History

We will strengthen Group management under our new leadership, while striving to enhance corporate value

7

Since its founding in 1924, Nippon Pillar Packing has drawn on its technologies for stopping fl uid leakage,

utilizing material, design, processing and other unique fl uid control technologies to off er creative, high-qual-

ity products including mechanical seals, gland packing, gaskets and fl uororesin products (couplings, pumps,

valves, etc.). These products are used in a wide range of industries, from electric power, oil refining and

chemicals to the shipbuilding, automotive and semiconductor industries, and play an important role as

high-performance products.

Working quickly to respond to changes in our business environment, we aim to contribute to creating a

resource-effi cient, safe and clean global environment, while also complying with legal and social norms and

engaging in fair, sound business practices, acting as a good corporate citizen to contribute to the develop-

ment of richer communities.

　In June 2020, Yoshinobu Iwanami was newly appointed president, and Kiyohisa Iwanami, the former pres-

ident, was appointed chairman and CEO.

Under this new leadership, we will work to strengthen Group management, focusing on our starting point

in customer satisfaction as we strive to off er products that do even more to meet our customers’ needs in

the spirit of our corporate principles of Quality First, Cooperation and Harmony, and Steady Research.

To Our Stakeholders

Chairman & CEO President

8

Nippon Pillar Packing’s Corporate Spirit

Management Philosophy

ISO Certifi cation

Corporate Principles

Under its quality-first approach,

the Group has obtained both ISO 9001 and IATF certification.

Products for automotive use produced at the following factory have obtained IATF 16949 certifi cation, an international quality manage-ment system standard for the automobile industry. IATF 16949 was developed by West-ern automobile manufacturers and automo-bile industry-related organizations to prevent defects, reduce inconsistency and waste in the supply chain, and bring about continuous improvement by standardizing requirements for parts manufacturers. Based on ISO 9001, this quality management system incorporates a large number of unique requirements.

Registered site: Nippon Pillar Packing Co., Ltd. Sanda Factory

Scope of certifi cation: Gasket and packing design and manufacturing, exhaust

system molded products, fl uororesin substrate design and manufacturing

IATF Certifi cation

Our products do not use asbestos.

Non-Use of Asbestos

To contribute to the creation of a world that is pleasant to live in, with an a� uent social climate.

Quality First　／　Cooperation and Harmony　／　Steady Research

1

2 To o� er original, high-quality products, and strive to be a company that is essential to customers.

To comply with legal and social norms, and engage in proper, sound business practices.

3

In 1995, the Group became the first

domestic seal manufacturer to obtain

ISO 9001 certification for its quality

management system. The current cer-

tifying body is the Japan Quality Assur-

ance Organization, while accreditation

is provided by JAB (in Japan) and UKAS

(England). (The head of fice and the

Sanda and Fukuchiyama Factories have

obtained ISO 9001 certifi cation.)

JQR-QMA16224

IATF Certifi cate No.0363056

9 10

Toward the 100th anniversary, and the future beyond

I assumed the offi ce of president as of June 25 of this year. With

this, the Company’s fi rst change of president in 31 years, former

president Kiyohisa Iwanami has taken on the position of chair-

man. Under this powerful new management structure, we will

work to further improve corporate value and to advance “BTvi-

sion22,” our new medium-term management plan.

After joining the Company in 2010, I was involved in work in the

Engineering/Production Headquarters and the Production Head-

quarters, where I learned what it means to develop technology

and the kinds of issues that come up in production. Since becom-

ing general manager of the Global Business Department, Sales

Headquarters in 2014, I have focused on our global expansion.

As I worked to build a production, engineering, sales and service

structure aligned with local needs, I struggled to overcome dif-

ferences of nationality, thought and values. I also had concerns in

the process of exercising quick decision-making and leadership,

but my hands-on experience and my time studying in the US

proved helpful. At the same time, I think this enabled me to reas-

sess the Company’s strengths and issues from a broader, global

perspective. Also, prior to joining the Company I worked as an

employee at an ordinary company, where I saw for myself how

messages from top management fi lter down through an organi-

zation, and how large organizations work.

Now, in my position as president, each of these experiences

should provide the driving force for moving this organization

called Nippon Pillar Packing forward, and by taking advantage of

everything I have learned from my experiences, I hope to devote

all of my energies to managing the Company.

I believe that the Company has enjoyed nearly consistent upward

growth for the past 96 years because we have responded to soci-

ety’s needs by continuing to provide diff erentiated products that

meet the demands of each age. Behind that success is the manage-

ment philosophy the Company has held dear since its founding, to

“contribute to society by providing original, high-quality products.”

Going forward, society will continue to change, bringing major

changes in society’s needs as well. If we strive under our philoso-

phy of contributing to society through our products while keeping

a close eye on those changes and staying tuned to society’s de-

mands, I believe we can continue to grow in perpetuity.

If you will excuse the abstract expression, my goal is for us to

become a company that garners respect, one that is seen as a

benchmark. That might include hearing a competitor say, “We need

to keep an eye on Pillar̶they’re always coming out with world’s

fi rst products,” or in sales, being feared for our ability to off er cus-

tomers the best solutions, effi ciently and with just a small team. It

might mean hearing from a shareholder with praise for our skill at

communicating information. That is the kind of company I hope

we will become. I hope that sharing this vision of our future and

our desired direction with our employees, and exchanging ideas

while building teamwork, will become the drivers that will open up

a new future for the Company.

Thinking about the future outlook of the Company, one of the

foundations it relies on is technology. I take pride in the fact that,

relative to our size, we have a great many unique technologies. We

will further intensify our eff orts to link our underlying technologies

to the needs of our customers, which change from day to day. At

the same time, by expanding the range of those technologies and

off ering products and services incorporating new technology to a

broader variety of industry segments, we will be able to achieve a

balance between our own growth and our contributions to society.

Human resources are another important foundation supporting

the future of the Company. The power of our people is what has

enabled us to continue growing. No other resource is as adaptable

as humans, and in an age of major change when old experiences

are of little use, it is extremely important that, more than ever, we

strengthen our use of human resources. Fortunately, the Company

has many talented personnel, capable of coming up with the kind

of ideas other companies cannot conceive of. They will be the driv-

ing force that enables us to get through these times of dramatic

change. My role is to plot an upward spiral, one in which our people

grow and the Company grows along with them; this is something I

really hope to achieve.

Next, I would like to briefl y discuss our results under “BTvision19”

Aiming to be seen as a benchmark company

� e Company’s future is supported by technology and people

Achieved last fi scal year’s target with a pay-out ratio of 36.8%

President

Born September 5, 1979. Graduated

from Kobe University. Joined Nip-

pon Pillar Packing in 2010. Served as

deputy general manager, Production

Headquarters and as general man-

ager, Global Business Department,

Sales Headquarters, before being

appointed senior executive offi cer in

2018. Assumed the post of president

(current) in June 2020.

Message from the President

In 2020, the Group renewed its leadership structure. As we push forward with “BTvision22,”

our new medium-term management plan, and the future that lies ahead, we also aim to be

seen as a benchmark company.

11 12

(fi scal 2017 through fi scal 2019), our previous medium-term man-

agement plan.

Fiscal 2017 saw sales of ¥29,461 million, operating income of

¥5,161 million, and an ROE of 8.9%, allowing us to achieve all of

our planned targets.

In fiscal 2018, sales reached ¥30,963 million, with operating

income of ¥5,126 million and an ROE of 9.1%, marking the first

time since our founding that sales broke through ¥30,000 million.

While operating income was slightly off target, overall we ex-

ceeded the plan in most respects.

In fi scal 2019, the fi nal year of the plan, slowdowns in the sem-

iconductor and petrochemical markets resulted in our failing to

reach our planned numbers, with sales at ¥29,213 million, operat-

ing income at ¥3,683 million, and an ROE of 6.2%.

Meanwhile in shareholder returns, a priority task for manage-

ment, we established a target payout ratio of 30% or greater. We

improved our payout ratio for two consecutive periods in fi scal

2018 and 2019, and as a result were able to deliver a payout ratio

of 36.8% for fi scal 2019.

Next, I would like to describe “BTvision22,” our new medium-term

management plan concluding in fi scal 2022.

With the 100th anniversary of the Company’s founding̶an

important milestone̶coming in 2024, we have positioned the

three years of “BTvision22” as a time for cementing the founda-

tions that will enable us to move up to a stage of greater growth.

Our policy will be to ensure we deliver results from the various

reforms we have worked on to date, while also proactively sow-

ing the seeds for growth in advance of our 100th anniversary.

With that understanding, we have set out fi ve basic policies un-

der “BTvision22.” These are (1) Enhancing business infrastructure;

(2) Achieving further globalization; (3) Creating new businesses;

(4) Promoting ESG/SDGs management; and (5) Financial strategy.

An important issue in (1) enhancing business infrastructure

is working to leverage our technology and expertise across a

broader range of markets. Unlike manufacturers that produce

finished products, we are an “upstream” company, positioned

close to raw materials. There is ample potential for us to expand

into a variety of markets by taking advantage of our expertise in

raw materials. The same goes for our unique fl uid control tech-

nologies, where we will also take on the challenge of expanding

into other markets. Specifi cally, we hope to off er new products

leveraging our technology for the automobile market̶which is

undergoing once-in-a-century technological innovations̶and in

the semiconductor market, where further advancements in min-

iaturization technology aimed at AI, IoT, and the next-generation

5G telecommunications standard are taking place. We also need

to respond to public and customer demands for lower costs. That

effort to enhance cost competitiveness will involve working to

seek out more effi cient production methods, while also improv-

ing productivity through automation and labor savings with the

full-scale operation of our new Sanda Factory.

With regards to (2) achieving further globalization, we will focus

on capturing new business opportunities in Asia, the Middle East

and Africa. At the same time, we will undertake steps including

strengthening collaboration between our overseas business bases

and developing our global human resources as we work to put in

place and enhance an organizational structure across the Group as

a whole. It can sometimes be diffi cult to deliver results from global

business in the short term, and while we have established new bas-

es, currently in some areas they have yet to create suffi cient value.

Under the previous medium-term management plan, we sowed

the seeds for creating business bases in other countries. Over the

next three years, we must till that soil, cultivate those seeds and

bring them to fruition so that we can harvest the results. Based on

the growth strategies developed for each overseas location, we

will push forward to expand their businesses, exceed our initial tar-

gets, and aim for even higher goals.

The key word in (3) creating new businesses is “new”̶new prod-

ucts, new markets, and new applications. Leveraging the Group’s

proprietary technology, we will work to create new products that

align with the needs of every possible market. Our goal is to create

new businesses that can become the third and fourth pillars sup-

porting the Group.

Nippon Pillar Packing has contributed to society and the environ-

ment through the proprietary technological capabilities the Com-

pany has accumulated since its founding. The concepts behind

ESG and the SDGs are perfectly aligned with our management

philosophy, and we see them as being an ideal opportunity for

increasing our corporate value and expanding our business. With

that understanding, we will engage in (4) promoting ESG/SDGs

management.

Part of that effort will include a focus on strengthening cor-

porate governance in response to society’s demands. We have

already ensured a greater degree of transparency and fairness by

increasing the ratio of outside directors and establishing a volun-

tary advisory committee. We also intend to strengthen our eff orts

in the area of diversity, increasing our hiring of non-Japanese em-

ployees and promoting more women to executive positions.　

The SDGs are common global targets, and an indication of

common global value. In that sense, being able to say that our

business contributes to achieving the SDGs is a statement under-

stood worldwide, and something that will also contribute to ad-

vancing our global business. With that point in mind, we will work

to deepen employee understanding and awareness of the SDGs,

and to balance our own growth with contributions to society and

the environment from the perspective of the SDGs.

Finally, an explanation of （5) fi nancial strategy.

One pillar of our fi nancial strategy is growth investment. We

plan to apply ¥10,000 million over the three years of “BTvision22”

to capital expenditures aimed at enhancing corporate competi-

tiveness. Following a similarly scaled investment in the previous

medium-term management plan, this is no small amount for a

company with about ¥30,000 in sales. Nevertheless, we believe

this investment is necessary for sustainable growth. We will also

continue to devote a budget equal to about 3% of sales to R&D

and technology development costs, while also focusing on prod-

uct development in new business segments and improvements

to and R&D in existing product segments.

The other pillar of our fi nancial strategy is shareholder returns.

The Company has positioned returning profi ts to shareholders as

an important management task, with a goal of a payout ratio of

30% or greater. To further increase the return of profi ts to share-

holders, we will also continue working to enhance our total re-

turn ratio, including implementing acquisition of treasury shares.

To conclude, “BTvision22” sets forth numerical targets for fi scal

2022, the final year of the plan, of ¥32,500 million in sales and

operating income of ¥5,100 million.

　Achieving these targets will not be easy. That said, if we re-

spond to the trust given to us by society and our customers

(Quality First), work together as one company (Cooperation and

Harmony), and further, remember the importance of product

improvements and development (Steady Research)̶in short, if

we are faithful to the spirit set out in our corporate principles̶I

believe these targets are achievable.

I also believe that Nippon Pillar Packing still has room to grow.

More than ever, we need to provide the shareholders and poten-

tial shareholders who will support our future growth with the in-

formation they need and deepen our communication with them.

We are determined to continue to value those things which repre-

sent the starting point of our business̶our corporate principles

and management philosophy, our pride as a manufacturer̶while

devoting ourselves to our work in anticipation of the 100th anni-

versary of our founding and the future that lies beyond.

Aiming to become a unique company seen as an industry benchmark

Message from the President

Leveraging our technology in a broader market

Building a structure compatible with global business

Growth investment and shareholder returns are the pillars of financial strategy

Balancing our own growth with contributions to society and the environment

FY2021 FY2022FY2017 FY2018 FY2019 FY2020

3,008

5,110

3,531

(Millions of yen)BTvision19

11.6 billion yenBTvision2210 billion yen

Investments forsustainable growth

131.06139.98

152.13

29.6％25.7％25.9％

108.57

Specialdividend5 yen

34 3645 40

36.8％

FY2016 FY2017 FY2018 FY2019

(Yen)　■ Profit per Share　■ Dividend 　ー Payout Ratio

1413

For Nippon Pillar Packing, which has worked to refine its technologies for stopping fluid leakage, the SDGs represent a major

opportunity to balance social contributions with our own growth. Proactive efforts will focus especially on the following goals.

Contribute to a clean global environment and resource

conservation through the development and widespread

use of products that reduce fluid leakage

Promote diversity regardless of gender or nationality Ensure transparency in decision-making by estab-

lishing committees

Contribute to the water business, including seawater

desalination, water and sewage, irrigation water, etc.

Realize high-quality education and training pro-

grams, and secure and retain human resources to

act as a growth driver Ensure compliance

Contribute to the clean energy and disaster-resistant

infrastructure businesses

Promote work style reforms and health and produc-

tivity management, improve work-life balance for

each employee

Environment Social Governance

Five Basic Policies

Enhancingbusiness

infrastructure

Achievingfurther

globalization

Creatingnew

businesses

Promoting ESG/SDGs

management

Financialstrategy

Financial Strategy

The Company will continue to make proactive invest-

ments aimed at sustainable growth. We also position

the return of profits to shareholders as a priority issue,

with dividends issued under a target for a consolidat-

ed payout ratio of 30% or greater. Acquisition of treas-

ury shares will be considered with a view to balancing

investments for sustainable growth with the return of

profits to shareholders.

Op

era

ting

ca

sh fl

ow

Shareholder returns

Growth investment

¥10,000 millionin capital expenditures aimed at enhancing corporate competitiveness

Payout ratio target of 30％ or greaterAcquisition of treasury shares*

(342,000 shares in 1Q, at an acquisition cost of ¥499 million)

Industrial Equipment Business Electronic Equipment Business

Enhancing

business

infrastructure

• Take on mass production markets and growth markets• Expand equipment at repair bases and allocate engineers• Pursue production rationalization and labor savings through

deployment of AGV, RFID and other technology• Build an organizational structure for passing on core

technologies and skills, develop data scientists

• Respond to next-generation telecommunications standards (5G), IoT, AI, etc.

• Promote automation and energy savings, consider new factory• Develop analysis engineers, strengthen industry/academic

collaboration

Achieving further

globalization

• Ensure orders for overseas plants in the Middle East, Africa and Southeast Asia

• Aim to improve customer satisfaction by shortening lead times through promotion of local procurement and production

• Put a repair structure in place for each location

• Improve customer satisfaction by bringing US factories on line (shortened delivery times, cost reductions)

• Conquer overseas equipment manufacturers and the Chinese market

Creating new

businesses

• Develop new products that integrate the Company’s core technologies with new materials

• Develop new fittings for the clean environment markets, including medicine and food products

• Open new markets leveraging the characteristics of fluororesins

ESGSocial issue

Company initiatives

Climate

change,

environmental

pollution

Contribute to the environment through products that eliminate leakage of hazardous substances

○ ○ ○ ○ ○ ○ ○

Reduce waste by enhancing productivity ○ ○ ○ ○

Waterresources

Contribute to the seawater desalination

and purifying businesses ○ ○ ○ ○ ○ ○ ○ ○ ○

Natural disasters

Build infrastructure (roads, telecommunications, public facilities) to withstand earthquakes, floods and other natural disasters

○ ○ ○ ○

Healthvalue

(health and nutrition)

Contribute to the sensor business with

fluororesin substrates ○ ○ ○ ○ ○ ○

Labor practices

Develop human resources, promote

hiring and retention ○ ○ ○

Promote health and productivity

management, work style reforms ○ ○

Promote diversity ○ ○ ○

Corporate Governance

Ensure independence and transparency

of Board of Directors ○ ○

Assess effectiveness of Board of

Directors ○

Ensure compliance ○ ○

(Previous) BTvision19

Fiscal year ended March 2020 (1)

(New) BTvision22

Fiscal year ending March 2023 (2)Comparison between final year of new and old plans (2) ‒ (1)

Final fiscal year actual Final fiscal year plan Change Change ratio (%)

Sales 29,213 32,500 +3,287 11.3

Operating income 3,683 5,100 +1,417 38.5

Operating income ratio 12.6％ 15.7％ +3.1P ー

ROE 6.2％ 8.0％or higher +1.8P ー

Capital expenditure （Three-year cumulative） 11,649 （Three-year cumulative） 10,000 （1,649） （14.2）

Industrial equipment

Sales 10,396 10,400 +4 0.0

Operating income 1,314 1,100 （214） （16.3）

Electronic equipment

Sales 18,740 22,100 +3,360 17.9

Operating income 2,329 4,000 +1,671 71.7

Segment Sales

Profit per Share/Dividend/Payout RatioCapital Expenditures under Each Medium-Term Management Plan

(Millions of yen)

Strategy by Segment

ESG/SDGs Management

The Company commenced its new three-year medium-term management plan, “BTvi-

sion22” (Breakthrough Vision 22) in fiscal 2020. The name “BTvision22” carries the mean-

ing of leaping forward by breaking through all types of preconceptions (in processes,

technological development and costs) in order to work toward sustained enhancement of

corporate value in the midst of rapidly changing market conditions.

New Medium-Term Management Plan “BTvision22”

Shareholder ReturnsGrowth Investment

Basic Policies and Overview of “BTvision22”

*As of the end of August 2020

New Medium-Term Management Plan

En

viro

nm

en

tS

oc

iety

Go

ve

rna

nc

e

Renovation

In order to respond to diverse needs, the Company handles many

types of materials, and has many ways of processing them. Im-

portant materials are manufactured in-house, and automated

chemical processing machinery is also designed and manufac-

tured in-house.

　In fi scal 2019, the impact of a sluggish semiconductor market

brought a decrease in overall output compared to the previous

year. In industrial equipment, a ceremony was held in March 2020

to mark the completion of the new Sanda Factory, where work

was done to deploy a rational layout and automated equipment.

In electronic equipment, the Fukuchiyama Factory launched a

project to reduce defect rates for injection-molded parts, re-

sulting in a major drop in defect rates. At the Kyushu Factory,

production capacity for fi tting products was bolstered to address

the continually growing semiconductor market. In each of these

cases, we continue to engage in ongoing investment in automa-

tion to meet rapid changes in orders. Under “BTvision22,” we will

promote improvements in automated equipment and cross-train-

ing with a continued focus on enhancing productivity. We will

also establish a new manufacturing promotion department in an

eff ort to learn and establish VE methods, while also implement-

ing cost reductions from the perspective of product value.

Improve productivity while also reducing costs from the perspective of product value

16

From custom-made to mass-produced products, the diversity of our production technologies is one of the Company’s strengths.

Director, Senior Executive Offi cerIn charge of Engineering/Production DivisionGeneral Manager, Sanda Factory

Ikuo Hoshikawa

Managing Executive Offi cerGeneral Manager, Sales HeadquartersGeneral Manager, Sales Department 3

Junji Ohmiya

Taking on the challenge of becoming a company that can provide safety and security from every possible angle

New business creation

Our mission is to build a new business

to serve as the Company’s third pillar.

Our day-to-day work centers primarily around building a third

pillar to follow our industrial equipment and electronic equip-

ment businesses. We are working in particular on aggressively

opening up new markets for products based on three proprie-

tary materials: Fluororesin substrates, which are characterized

by low transmission loss; exceptionally durable silicon carbide

(SiC) fi lters; and graphite resin separators, which off er excellent

conductivity.

　In fi scal 2019, we began expanding sales of next-generation

automotive millimeter wave using fl uororesin substrate, while

at the same time advancing expansion of millimeter wave ap-

plications into public infrastructure such as 5G base stations

and data centers. In addition, we are working on developing

sensors that operate under harsh conditions, leveraging the du-

rability of fl uororesins. In SiC fi lters, we are working to improve

performance in air purifi cation, water quality improvement, and

sterilization and disinfection, expanding into new areas of use.

In graphite resin separators, we will work to develop new uses

for the material as a component of next-generation batteries.

　We have also established a department dedicated to new ma-

terial development with an eye on the next generation, and will

be bringing a sense of urgency to advancing that eff ort.

● Fluororesin substrates, SiC fi lters

　 Open up new markets with products based on proprietary materials such as graphite resin

separators and others

● Creating a new business to serve as a third pillar

15

A “Mother” Factory to Serve in Communicating Fluid Control Technology

Production structureTargets under “BTvision22”

● Improve productivity of production front lines

・Automate work through development of production technologies

・Systematic human resource development aimed at cross-training, skills transfer and work standardization

・Promote IT with the goal of visualizing process progress and shifting to paperless work orders and results

● Promote cost reductions from every perspective

・Use project activities to reduce defect rates

・Establish VE methods

・Strengthen procurement function for raw materials, parts and outsourced processing

Growth Strategies by SegmentAs we begin working toward achieving the targets set out in “BTvision22,” the new

medium-term management plan, we will look at five key areas‒production structure,

sales, new business creation, technology and finance‒reviewing past results and

describing growth strategies.

Currently, the driver of sales for the Company is products for

manufacturing equipment used to make semiconductors. In 2019,

we strongly emphasized (1) technology for automating molding

and processing and (2) products made in an exceptionally clean

production environment, resulting in all ten of the world’s major

semiconductor manufacturing equipment makers employing our

components. Also contributing to this success was the structure

we put in place to address a rapidly changing market, including

locating production bases close to the customer and securing in-

ventory. Against the backdrop of recent environmental problems,

we have also seen increased needs for our conventional gland

packing products for use as valve packing at petroleum and

petrochemical plants in the US. We will push forward with active

development of differentiated products that meet the newest

offi cial standards for addressing environmental problems.

　Going forward, we will be active in dispatching staff overseas

who have built their technology skills at our “mother” factory in

Japan, as we promote local human resource development over-

seas along with the after-sales service business. We will then fur-

ther expand our network of production, sales and service sites,

strengthening the organization to ensure we can aggressively

capture growing demand.

We will work to expand our production, sales and service sites at our overseas business bases

Construction of the new Sanda Factory was completed in March 2020.

　The Sanda Factory is one of Nippon Pillar Packing’s main factories, producing mechan-

ical seals, gland packing, gaskets and other sealing products for industrial equipment. It

has an R&D division as well and functions as the “mother” factory for the Group.

　The three items below form the concept for the new factory.

(1) Higher productivity through rational layout, automation and mechanization, and

greater utilization of IT

　(2) Enhanced working environment, safety and BCP* viability through renewal of ag-

ing buildings

　(3) Technology training center, analysis center, and showroom improvements to raise

trust and confi dence of visitors

　The technology training center has put in place a learning structure consistent across all

users, from sales partners and affi liates to the Company’s own employees. The showroom

has also been completely renovated to enhance sales activities aimed at customers who

come for factory visits. Displays off er cut-away models showing where products are actu-

ally in use, making visual understanding easier and playing a part in creating opportunities

for new business creation.

New Medium-Term Management Plan

＊BCP: Business Continuity Plan, a company's plan for minimizing damage in the event of an earthquake or other

emergency, and for ensuring the continuity and recovery of its business.

We will strive to continue being a companyour customers need by focusing on materials and quality.

SalesTargets under “BTvision22”

● Expand overseas locations・Automate work

● Develop human resources locally overseas

● Improve quality, costs and procurement

● Enhance after-sales services and business

Targets under “BTvision22”

Managing Executive Offi cerGeneral Manager, AE Business DepartmentDevelopment General ManagerGeneral Manager,Business Planning Department

Sadamitsu Yamauchi

　　　　　

We have a large-scale industrial clean room

at the Fukuchiyama Factory, which mainly

manufactures products for semiconductors

and liquid crystal displays (LCDs).

　Clean rooms are rooms designed to main-

tain cleanliness by keeping fi ne particles and

microorganisms f loating in the air below

certain limits and preventing impurities, dirt,

and so forth from entering the room. With

electronic components, even a tiny bit of re-

maining dust risks triggering abnormalities.

Therefore, clean rooms are very important

places where high-performance filters col-

lect things like dust and fine particles and

eliminate them using static electricity and so

forth.

In 2019, we fully deployed automated guided

vehicles (AGVs) and automated guided fork-

lifts (AGFs) at the Sanda Factory.

　Along with that, we introduced radio fre-

quency identif ication (RFID), a system for

identifi cation and management through near-

fi eld communication using IC tags.

　These measures lighten the workload of

course, and can be highly eff ective in eliminat-

ing human error, shortening lead times and

increasing productivity through unmanned

operation and reduction of the time spent

walking and transporting materials in the fac-

tory.In addition, a shift to more segmented,

automated, and paperless checkpoint man-

agement has enabled us to grasp production

process progress in real time. Issues with each

process have become clearer, which gives us

　The Fukuchiyama Factory is equipped with

a state-of-the-art clean room as a second

“mother” factory, and we will continue to

build systems capable of responding imme-

diately to needs in various countries amid

growing demand for semiconductors.

clues as to how to make improvements.

　While preparing for the introduction of the

equipment and system was tough on many

fronts including safety, destination data

preparation, and operation plans, we believe

they are essential for the Sanda Factory to

keep generating high-quality products in the

future as a “mother” factory.

Promoting factory automation to lighten the workload and maximize profi t

Responding right away to surging semiconductor demand with a high-level industrial clean room

18

TOPICS

Fukuchiyama Factory Clean Room

Sanda Factory’s Factory Automation (FA) Initiatives

One major topic on the fi nancial front is the completion of the new

Sanda Factory in March 2020. We invested about ¥6.5 billion over

the past three years in this factory that (1) has robust earthquake re-

sistance from a business continuity planning (BCP) perspective, (2)

a layout designed to raise productivity, and (3) will function as our

“mother” factory bringing together staff from around the world.

The new Sanda Factory uses our seismic isolation equipment and

has a showroom to deepen understanding of our products. As a

“mother” factory, we also want it to be a place that disseminates

information, and will tie it to our public relations moving ahead.

　Another key topic is further development of overseas sites. We

have focused on creating sites overseas to date. We have created

“vessels” so to speak. Going forward, a task will be giving those

“vessels” “souls;” in other words, establishing frameworks for them

to act independently. To that end, we also need to establish compli-

ance regulations for each country in which we operate. In addition,

we must consider utilizing new tools to facilitate smooth commu-

nication in each country and standardize technologies and produc-

tion. For example, creating and distributing videos of production

at the “mother” factory. While continuing to actively invest in those

areas, we look to strengthen the foundation for business continuity.

17

We deliver original high-quality products to society revolving around

our core technologies (in materials, application development, pro-

duction, evaluation, and molding), utilizing computer-aided engineer-

ing (CAE), virtual engineering (VE), and concurrent engineering to

further distinguish ourselves from other companies.

　In fi scal 2019, we honed our analysis and evaluation technologies.

In relation to industrial machinery, we commercialized a product that

utilizes diamond fi lm that has outstanding sliding friction properties

and is capable of withstanding even high load conditions. Also, we

developed new products that leverage new technologies and ideas

based on market needs such as a higher grade of the low-emissions

EPD Packing Series capable of reducing impact on the environment.

　In semiconductor business products, we aim to develop next-gen-

eration fittings with the ability to reduce pressure loss, discharge

particles, and so forth, and are preparing for mass production from

the upcoming fi scal year. We are also leveraging our strengths in in-

jection molding technologies to proactively address migration from

processed products to injection-molded products. Going forward,

we will evolve our analysis, evaluation, and other technologies,

aiming to develop products even faster as 5G (fi fth-generation mo-

bile communications system) and other IT infrastructure advances.

Moreover, we will provide more robust after-sales services than

companies in other countries, while emphasizing performance and

the added value therein.

Advancing technologies looking to faster, more diverse markets and enhancing added value

At the Production Headquarters, our mission is to enhance productivity and quality, while keeping in mind

the target of “generating profi t regardless of the business environment.”

In addition, creating safe workplaces that facilitate physical and mental health where employees can work

with greater energy and spirit is a basic objective, and we are introducing cutting-edge systems.

A Look at Measures for Achieving BTvision22

New Medium-Term Management Plan

Our products are unsung heroes that help make machines work.And the core that supports them are our technical capabilities.

Technologies

Targets under “BTvision22”

● Expand products for growth markets (automobiles, medical foods, semiconductors, etc.)

● Propose and adopt products that incorporate mar-ket needs such as ESG/SDG-compliant products and space-saving products (integrated/EDP series)

● Develop technologies that look a decade ahead and revamp manufacturing via greater use of IT

● Develop distinctive products that use new materi-als and new technologies and take on new markets

● Develop human resources

Executive Offi cerGeneral Manager, Engineering Headquarters

Masato Wada

We have worked hard creating “vessels” at sites in various countries to date.Going forward, steps to pour our “soul” into these “vessels” will be key.

FinancesTargets under “BTvision22”

● New Sanda Factory as a “mother” factory that actively disseminates information

● Establish and strengthen frameworks for overseas sites to act independently

● Compliance regulations in countries worldwide

Director, Senior Executive Offi cerGeneral Manager, Administration HeadquartersGeneral Manager, Corporate Planning DepartmentGeneral Manager, Security Trade Control Department

Katsuhiko　　 Shukunami

After establishing the new factory as a “mother” factory, work to enhance overseas sites’ systems

Executive Offi cerGeneral Manager,

Production HeadquartersGeneral Manager,

Sanda Production Department

Masaki Shibaike

Iwanami　Mr. Suzuki, we asked you to serve as an ex-

ternal director from the previous fiscal year. What is

your impression of Nippon Pillar Packing?

Suzuki　I feel most strongly that it is sound. Both in

terms of profit and losses as well as revenues, and,

even in terms of responding to markets, I think Nippon

Pillar Packing is managed steadily and soundly.

　The governance system meets social requirements,

with four of the nine directors being external directors

and voluntary advisory bodies in place. I look forward

to further enhancements in the future.

Iwanami　Enhancing governance is one of the Com-

pany’s key tasks. Within that, we regard crisis manage-

ment as a major theme. With the COVID-19 pandemic,

intensif ication of natural disasters, and other com-

pletely unforeseen events having become frequent in

recent years, I feel that crisis management and emer-

gency preparedness is becoming extremely challeng-

ing.

Suzuki　When I worked as a business department su-

pervisor, I placed importance on ongoing supply obli-

gations. That entails preparing to fulfil supply obliga-

tions including by diversifying risks so that customers

are not inconvenienced. Also, to that end, I think that

establishing real-time readiness, the ability to quickly

handle things that come up, is in a sense the most ef-

fective business continuity planning.

Iwanami　I think that is an extremely helpful opinion.

Considering the importance of promptly making deci-

sions when handling a crisis, I think the delegation of

authority is also an important point. I want to incorpo-

rate into business continuity planning mechanisms for

delegating authority after establishing levels in a de-

fined scope to enable prompt decision-making accord-

ing to changes on the front lines during an emergency.

Suzuki　As you say, responding right away is difficult

unless a decision is made to entrust it to someone

when there is an emergency. In that event, the aware-

ness of those entrusted with authority is key. I think it

is important to always cultivate an awareness that all

of us are managing operations.

●

Iwanami　One of the basic policies of our new medi-

um-term management plan BTvision22 is deepening

globalization. Within that, we plan to focus on actively

utilizing local human resources and establishing new

mechanisms for governance and compliance at over-

seas sites. External Director Suzuki, what do you think

is important to attain further globalization?

Suzuki　I think two things are important. The first is

human resources. As you say, having mechanisms to

ensure a certain level of ethics and legal compliance in

tandem with utilizing local human resources as much

as possible is key to successful globalization.

　The second is standardizing and sharing information

sources. I think it is important to be able to access in-

formation as needed such as information on overseas

market trends, the status of activities at overseas sites,

sales reports, and Companywide performance. I be-

lieve meetings and a variety of other things are being

conducted through the internet, but there are also oth-

er ways of communicating. I think building infrastruc-

ture that the entire Group can use to share information

is key to promoting globalization.

Iwanami　Links to information will be a base for rais-

ing the Group’s comprehensive abilities, and I really

want to deliver results in that area over the three years

of the current medium-term management plan. The

other point, human resources, is not an area where re-

sults can be produced right away. I think that is an area

we must steadfastly work on from a medium- to long-

term perspective.

●

Iwanami　I myself am resolved to settle in and work

on management under the medium- to long-term vi-

sion to create a roadmap for perpetual enhancement

of corporate value. But, on the other hand, responding

to the market’s needs comes with the territory as a list-

ed company, so expectations for increasing corporate

value over the short term must also be met.

Suzuki　President Iwanami, I think that making your

resolution clear and having the market assess it is one

option. In addition to proactively conveying our in-

tentions, doesn’t setting out to raise corporate value

together with investors that will treat Nippon Pillar

Packing well seem like a good plan?

Iwanami　That is very helpful advice. I want to beef

up communication with shareholders and potential

shareholders moving forward.

　That said, we must continue to be a company that

society needs to perpetually increase corporate value.

To accomplish that, I think we need to meet changing

needs on all fronts of quality, cost, and delivery plus

services, bring about technological innovations, and

deliver them to the market.

Suzuki　It is only natural that management aims to in-

crease corporate value; the problem is how corporate

value is perceived.

　For example, proactively conveying to employees

that “Customers are willing to pay for products and

services because they are of value to society, so the

Company’s profits are a barometer of its contribution

to society” would likely inspire them to be more pos-

itive about expanding sales and taking on new chal-

lenges.

Iwanami　I want many people to understand that our

operations contribute to society, regardless of wheth-

er they are part of Nippon Pillar Packing or not.

Suzuki　I think Nippon Pillar Packing places utmost

value on “contributing to society through its core oper-

ations.” If that is positioned as the central motto, unit-

ing employees should be easy too. President Iwanami,

I hope you bring all employees together and establish

new ways of contributing to society and running the

Company.

Iwanami　I want to develop human resources with a

professional manner and skills and exchange views

with them to put the Company on a growth trajectory.

Suzuki　In considering how to paint a new growth

trajectory, the construction of a foundation for it will

become an extremely important theme. What is now

called for during that process is not relying on strokes

of genius, but mechanisms for ordinary organizations

to generate innovations. President Iwanami, I would

like you to build such mechanisms into Nippon Pillar

Packing. I really hope to see that happen.

Iwanami　I think it takes people plus culture to gen-

erate innovations. I am determined to reform our

awareness and culture, including human resource

development, over the medium to long term. During

the process, I intend to take the advice I receive from

you, Mr. Suzuki, to heart and apply it to management.

Thank you very much for today.

19 20

Special Dialogue

Yoshinori Suzuki Director

Yoshinobu Iwanami President

Governance as a Foundation for Increasing Corporate Value

Governance　

21 22

Governance　

Corporate Governance System

Format of governance organization

Term of office for directors

Number of Board of Directors meetingsin fiscal 2019

Takeover defense measures

Advisory body to Board of Directors

Performance-linked remuneration

Company with an audit and supervisory committee

3 （including 2 external directors）

1 year

6

6

Implemented

Independent committees

4

Provided

General Meeting of Shareholders

Security Trade Control Office

Directors other than Audit&

SupervisoryCommittee members

Strategy Meeting

Audit &Supervisory Committee

Management Meeting

Directorswho are Audit &

Supervisory Committee members

Board of Directors

Nomination Advisory Committee

Remuneration Advisory Committee

Independent Auditors

(Audit Firm)

Debate strategy issues related

to management, technology, etc.

Representative Director

Report and plan business execution and

deliberate on important matters

Internal Audit Office

Internal ControlAssessment Committee

Corporate Ethics Committee

Global Environment Committee

CSR Committee

Crisis Management Committee

Disclosure Committee

Assess internal controls

Promote CSR activities

Ensure compliance

Risk management

Environmental protection

Timely andappropriate disclosure

Appoint/dismissAppoint/dismiss

Select/dismiss

Report/reply

Report on business execution

Audit

Coordinate

Coordinate

Report

Report

Report

Inquiry Reply

Governance Summary Board of DirectorsFour external directors (two who are not members of the Audit

& Supervisory Committee and two who are members of the

Audit & Supervisory Committee) have been invited to sit on the

Board of Directors, which meets regularly, and their opinions

are sought based on their wide-ranging knowledge and expe-

rience in order to further raise the quality and transparency of

management decisions and strengthen oversight. The schedule

for board meetings is provided to external directors in advance

and their attendance is coordinated.

Nomination Advisory Committee and Remuneration Advisory CommitteeOn March 17, 2020, Nippon Pillar Packing established the Nomination

Advisory Committee and the Remuneration Advisory Committee as

voluntary advisory bodies to the Board of Directors to strengthen the

Board of Directors’ supervisory function by ensuring the objectivity

and transparency of assessment and decision processes pertaining

to the nomination and compensation of directors, and enhance the

corporate governance system.

　The Nomination Advisory Committee, which is a voluntary adviso-

ry body, deliberates on matters pertaining to the appointment and

dismissal of directors and amendments to the Board of Directors,

and reports to the Board of Directors.

　The Remuneration Advisory Committee, which is a voluntary

advisory body, deliberates on matters pertaining to the content of

remuneration, policies for determining remuneration, and remuner-

ation structure for the Board of Directors, and reports to the Board

of Directors.

　Each committee is comprised of at least three directors selected by

the Board of Directors, and the majority of members are independ-

ent external directors.

Audit & Supervisory Committee and Internal Audit OfficeNippon Pillar Packing changed its legal format to a company with

an audit and supervisory committee upon approval by the Ordinary

General Meeting of Shareholders on June 23, 2017. The Audit & Su-

pervisory Committee is comprised of three directors who are Audit

& Supervisory Committee members (including two external direc-

tors) and is convened on a regular basis. Information and opinions

are exchanged among the directors who are Audit & Supervisory

Committee members and efforts are made to improve management

oversight. Along with audits by directors who are Audit & Superviso-

ry Committee members, the Internal Audit Office, comprising three

members, was established as an organization to conduct internal

audits from the standpoint of compliance and efficiency.

Basic Approach

Corporate Governance System

Customer satisfaction is the fundamental starting

point of the Group’s corporate activities and earning

the esteem and trust of customers makes it possible to

achieve sustained growth and profits. The Group rec-

ognizes corporate governance as an important task of

management for realizing its basic policy of connecting

this to higher corporate value and the satisfaction of

shareholders and other stakeholders. The Group be-

ComplianceIn order to strengthen our compliance system, we established the

Code of Corporate Ethics, a code of conduct that applies to all exec-

utives and employees. We also formulated the Code of Corporate

Conduct, which consists of specific behavioral standards, and it is

being used to enhance compliance and business ethics through an

internal training system and our Corporate Ethics Committee. In ad-

dition, the Global Environment Committee and Environmental Policy

were established to ensure safety and environmental protection are

sufficiently considered in product development. Based on this Envi-

ronmental Policy, we are working to reduce environmental impact

and to maintain and enhance our management system. Furthermore,

the Crisis Management Committee has been established to ensure

rapid response and resolution if a crisis related to business continuity

occurs, and the Crisis Management Rules have been formulated and

other measures taken to prepare in advance for such contingencies.

Along with this, for control of products with export restrictions, we

have established the Security Trade Control Office and are taking

every possible measure in this area.

　Nippon Pillar Packing subsidiaries are managed through a process

that consists of approval and final approval based on Affiliate Man-

agement Rules and reporting from the subsidiary, but their autono-

my as independent companies is also respected, and when there are

important managerial matters that occur between Group companies,

adequate discussions are conducted. In addition, the Internal Audit

Office conducts internal audits of subsidiaries on a regular basis.

　We also have action guidelines that apply to all Group companies,

and distribute the Employee Handbook, Code of Corporate Ethics

and Code of Corporate Conduct to them while ensuring there is full

awareness related to compliance with laws and regulations, internal

rules, social conventions and other standards.

lieves it is important to establish management organi-

zations and internal controls so that sound, transparent

decision-making can be conducted quickly. Corporate

governance fundamentally is not only compliance with

laws and regulations but also consists of promoting

business activities that respect corporate ethics, mo-

rality, and fairness and developing smooth, disciplined

and cooperative relationships with all stakeholders.

Self-Assessment by the Board of DirectorsIn order to further raise the effectiveness of the Board of Directors,

we administered a questionnaire to directors, conducted analysis

and assessment related to the board’s effectiveness in fiscal 2019,

and the findings were shared and discussed among the board. As a

result, the Board of Directors assessed that it is generally providing

adequate oversight, but there was also the opinion that further en-

hancements were needed with respect to the number and diversity

of board members. This will be considered going forward. In addi-

tion, we intend to increase points of contact between external di-

rectors and executive officers and reinforce training for prospective

future directors.

　As of the present, no women or foreign nationals have been ap-

pointed to the board, but gender, internationalism and other factors

will be considered in connection with future appointments based on

our aims in connection with globalization, the scale of our business,

and other factors.

Number of directors who are Audit & Supervisory Committee members

Number of external directors including Audit & Supervisory Committees members

Number of directors (excluding directors who are Audit & Supervisory Committee members)

Disclosure

23 24

Governance　

External Directors

Nippon Pillar Packing has established the Crisis Management Com-

mittee to oversee risk management overall. For risks related to busi-

ness activities, the Crisis Management Rules have been established

and applied to the Company and its Group companies in order to

ensure risks are addressed promptly, and a risk management system

has been established based on these rules. When unexpected situ-

The Company has four external directors, two of which are

members of the Audit & Supervisory Committee.

　External Directors Yoshinori Suzuki and Junichi Komamura

were appointed as directors to provide valuable, objective

opinions backed by the extensive knowledge and experi-

ence and broad insight as upper-level corporate managers

that they have cultivated in their respective careers to

date. External Director Eiichi Mori is an attorney at law and,

as a legal specialist, is an expert in corporate legal affairs.

He was appointed director who is an Audit & Supervisory

Committee member to utilize his ample knowledge and

broad-ranging experience related to corporate governance

Based on a resolution of the Ordinary General Meeting of Share-

holders on June 23, 2017, remuneration for the Company’s officers

has been limited to annual remuneration of ¥24.0 million or less

for directors (excluding Audit & Supervisory Committee members).

There are seven directors to which this applies, and their remu-

neration is determined by the Board of Directors based on the

calculation method resolved by the board and after deliberations

ations arise, a response headquarters is established that is headed

by a person appointed by the president, a system is launched to

minimize damage and impact, and the situation is quickly addressed.

In addition, in order to ensure the timely disclosure of risks and other

important information, we established the Disclosure Committee

and created a system for conducting timely, appropriate disclosure.

in auditing activities. External Director Kazumitsu Takaya, as

a certified public accountant, is an expert in financial affairs

and accounting. He was appointed director who is an Audit

& Supervisory Committee member to utilize his specialized

knowledge and broad-ranging experience in auditing activi-

ties.

　External directors have no personal, capital, business or

other interests in the Company. In addition, in cases where

external directors also hold positions at other companies,

there are no significant transactions or other interests be-

tween those companies and the Company.

between the representative director and independent external

directors that include a qualitative assessment of activities during

the assessment period. In addition, annual remuneration for direc-

tors who are Audit & Supervisory Committee members has been

limited to ¥30 million or less, and there are three directors who are

Audit & Supervisory Committee members to which this applies.

Regarding disclosure, Nippon Pillar Packing has established

the Disclosure Committee and conducts appropriate and

timely disclosure.

　To administer our internal control system for financial

reporting, which was started in April 2008, we established

the Internal Control Assessment Committee and conduct

assessments of internal controls at the Group level. In order

to promote activities related to corporate social responsibil-

ity, the CSR Committee was established in May of the same

year. We work to build further trust with various stakehold-

ers and conduct initiatives for sustained development in

harmony with society, through such means as issuing the

CSR report annually. From fiscal 2020 we will continue to

issue this as the integrated report.

　The status of these committees is reported regularly to

the representative director.

IR Activities General Meeting of Shareholders Dividend Policy

Led by the director in charge of investor

relations, briefings are conducted twice

a year on general company information,

recent performance and other topics

for securities companies, trust banks,

investment advisory firms, investment

t rus ts and other analys ts . At these

briefings, the presentation is generally

provided directly by the representative

director. In addition, dialogue is con-

ducted separately throughout the year

with investors.

　Furthermore, the IR information page

on our website includes financial results

and presentation materials, securities

reports, quarterly reports and financial

indicators. In addition, the press releas-

es on the site also provide timely disclo-

sure of information other than financial

results.

We are committed to the smooth admin-

istration of the General Meeting of Share-

holders as the venue for important dialogue

where the president reports the Company’s

management status to shareholders, based

on the basic approach to fair and timely dis-

closure that we’ve had since our founding.

　The Ordinary General Meeting of Share-

holders is held in the main conference room

of the Osaka head office at the end of June

each year. Efforts are made to make busi-

ness reports easy to understand visually us-

ing video and graphs. Visualization tools are

also used to present sales results, business

summaries of individual product categories,

and issues that need to be addressed.

　Going forward, we will continue working

to ensure open General Meetings of Share-

holders to facilitate smooth communication

with shareholders and investors.

Nippon Pillar Packing positions share-

holder returns as one of the important

duties of management and has a basic

policy of working to provide a stable,

continuing dividend while raising divi-

dend levels. Based on the above policy,

we are targeting a payout ratio of 30% or

higher for dividends from the fiscal year

ending March 2021.

　We will effectively utilize internal re-

serves to strengthen our corporate com-

petitiveness and expand operations,

comprehensively considering medium-

to long-term capital expenditures, R&D

investments, other business expansion,

shareholder returns, and so forth.

Types of Managed Risks

Risks from changes in the semiconductor/LCD marketsPILAFLON, one of the Group’s mainstay products, is used widely in

semiconductor and LCD manufacturing equipment and other ap-

plications. Technological innovation in the semiconductor and LCD

industries progresses extremely rapidly, and while the markets

have been growing in recent years, a sudden, unexpected market

contraction could potentially impact the Group’s performance.

Risks related to material procurement and price trendsThe Group procures raw materials, parts and other products for its production activities, but

delays due to resource depletion or production capacity restrictions at suppliers, suspensions

due to business withdrawals, and suspensions or delays due to quality defects and other

such factors could potentially impact the Group’s performance. In addition, the main materi-

als in products produced and sold by the Group are special steel and fluororesins, and trends

in the prices of these materials could potentially impact the Group’s performance.

Risks related to technological developmentFollowing on from sealing products and semiconductor and LCD-related products, the

Group is working to develop new products for a third pillar of business in industries

such as renewable energy, the environment, and safety, where growth is expected.

These industries are characterized by the speed at which technological innovation

takes place and sudden changes in market trends. In addition, new product devel-

opment and market assessment are complex and uncertain, so if new products are

not launched in a timely manner due to sudden technological innovation or sudden

market changes, it could potentially impact the Group’s future growth and business

development.

Risks related to factory operationsThe Group has its main production sites in Hyogo Prefecture, Kyoto Prefecture and

Kumamoto Prefecture, and it works diligently to maintain and protect these facilities,

but a major earthquake in the immediate vicinity could make it difficult for factories

to continue to operate or the factories themselves could sustain major damage and

this has the potential to have a major impact on the Group’s operating results, perfor-

mance and financial position. In addition, while every effort is made to prevent acci-

dents and disasters, including fire prevention at factories, a fire, explosion or lightning

strike may force some operations to be suspended, and could potentially impact the

Group’s performance.

Risks related to the COVID-19 pandemicThe Group has continued business activities after implementing strict measures including telecommuting and staggered working hours. At the present

time, capacity utilization is being maintained at normal levels. However, if the COVID-19 pandemic is prolonged, it could potentially impact the Group’s

performance.

Risks related to qualityThe Group obtained ISO 9001 certification for its quality man-

agement system ahead of the rest of the industry and works to

raise quality through its quality assurance system. As a result,

our products have been adopted for use by customers in a wide

range of industries. However, since our products are functional

components that demonstrate their performance when utilized

in facilities and devices, unexpected defects could potentially

impact the Group’s performance.

Risks from overseas production/sales and foreign exchange trendsThe Group is building and further developing a system of produc-

tion sites in optimal locations, promoting local procurement of

supplies and machining parts, and strengthening overseas sales.

However, unexpected changes in political and economic systems,

natural disasters or disease outbreaks in the countries we have

entered could potentially impact the Group’s performance. In ad-

dition, sudden fluctuations in exchange rates could also potentially

impact the Group’s performance.

Officer classificationTotal remuneration, etc.

(Millions of yen)

Total remuneration, etc. by type (Millions of yen)Number of officers

(people)Fixed remuneration

Performance-linked remuneration

Retirement bonuses

Directors(excluding Audit & Supervisory Committee members and external directors) 104 55 48 － 4

Directors(Audit & Supervisory Committee members) (excluding external directors) 4 4 － － 1

External officers 11 11 － － 6

Risk Management Officer Remuneration

Enhancing the Workplace Environment

Our Vision for Human Resources

25 26

Nippon Pillar Packing works to increase human resource value to

ensure continuing, sustained growth.

　 Amid recent escalation of competition for human resources,

the rise of artifi cial intelligence (AI) and robotic process automa-

tion (RPA), and the important task of cultivating globally relevant

personnel, we are introducing new human resource systems

from April 2020 because we see a need to build a human re-

source framework that is in tune with the present day but also

looks to the longer term.

　With the future economic landscape likely to require more cre-

ative businesses and services than ever before, it is critical that

human resource development fosters a climate where an array

of ideas and views are incorporated and encourages employees

to actively take on challenges; communication that goes beyond

departmental, company, and other borders; and diversity within

the Company.

　We are therefore reworking all of our human resource systems

after determining our vision for human resources, which sums

up our targeted corporate culture, ideal human resources, and

human resource measures looking a decade down the road, and

is positioned between the long-term ideals that we constantly

Nippon Pillar Packing regards keeping the workplace environment

safe as an important management responsibility because acci-

dents at the workplace threaten the safety of employees and have

the potential to aff ect the surrounding environment and business

continuity.

　Based on this recognition, we conduct ongoing hazard predic-

tion activities and the Company’s president goes to factories to

conduct on-site inspections in order to prevent workplace acci-

dents from occurring. In addition, we are posting safe worksite

examples at the Sanda Factory, which is increasing employees’

safety consciousness.

keep in mind and are embodied in our Corporate Principles and

Management Philosophy and targets in our medium-term man-

agement plan that we will bear in mind over a shorter term.

　Specifi cally, we are revising the personnel ranking and evalua-

tion systems from April 2020, defi ning role expectations accord-

ing to what we want to see from personnel for each skill-based

ranking and will enable employees whose contributions exceed

those expectations to be promoted twice as fast as before. Going

forward, we plan on also fundamentally revising our compen-

sation systems, training systems, hiring processes, and organi-

zational culture with an eye to our vision for human resources in

2030.

　Moreover, we began fundamentally revising allowances and

benefi ts in April 2020. As part of those measures, we introduced

a membership-based benefits service and a cafeteria plan. The

cafeteria plan’s lineup includes benefi t options related to health,

parenting, caregiving, and self-enlightenment, and is compatible

with employees’ diverse values and work-life balance for employ-

ees engaged in parenting and/or caregiving. Moving ahead, we

will keep taking steps so that employees are motivated and ener-

gized in their jobs.

　Moreover, the Health and Safety Committee conducts work-

place inspections and risk assessments. Workplaces are assigned a

score based on risk types, frequency of occurrence and other fac-

tors; the higher the score, the higher the risk. Analysis of the caus-

es of issues is conducted on a priority basis starting with work-

places where risk is high, and eff ective risk response measures are

taken in order to prevent workplace accidents from occurring or

recurring.

　Through these activities and assessments, we will work to cre-

ate workplace transparency and a safe, secure workplace environ-

ment where each and every employee is energized in their job.

Executive Officers (Excluding Directors)

Managing Executive Offi cer

Managing Executive Offi cer

Executive Offi cer

Executive Offi cer

Executive Offi cer

Executive Offi cer

General Manager, Sales Headquarters;General Manager, Sales Department 3

General Manager, AE Business Department;Development General Manager;General Manager, Business Planning Department

General Manager, Production Headquarters; General Manager, Sanda Production Department

General Manager, Seismic Isolation Business Department

General Manager, Engineering Headquarters

General Manager, Production Engineering Headquarters; General Manager, Fukuchiyama Factory/Engineering Department; General Manager, Fukuchiyama Factory

Junji Ohmiya

Sadamitsu Yamauchi

Masaki Shibaike

Masaki Miyamoto

Masato Wada

Hiroshi Shingen

Joined the Company

Director

Managing Director

Executive Vice President

President

President and Executive Offi cer

Chairman & CEO (current)

Kiyohisa Iwanami

Chairman & CEO

Yoshinobu Iwanami

President

Ikuo Hoshikawa

Director, Senior Executive Offi cer

Katsuhiko Shukunami

Director, Senior Executive Offi cer

Yoshinori Suzuki

External Director

Junichi Komamura

External Director

Kazuhiro Maruoka

Director(Audit & Supervisory Committee member)

Eiichi Mori

External Director (Audit & Supervisory Committee member)

Kazumitsu Takaya

External Director(Audit & Supervisory Committee member)

Governance

10 years later Long term

Pe

riod

Is a portrait of ideal medium-to

long-term organizational human

resources linking our long-term

corporate philosophy and our

medium-term management plan

3 years later

Vision for Human Resources

・ Targeted organizationalculture

・ Ideal human resources

・ Human resource measures

Medium-Term Management Plan

・ Enhance businessinfrastructure

・ Achieve furtherglobalization

・ Create new businesses

・ Promote ESG/SDGs　management

・ Financial strategy

Basic policies

Corporate Officers（As of June 25, 2020）

Corporate Philosophy

Corporate Principles

Management Philosophy

Long-term vision

Society

Raising Human Resource Value

Joined the CompanyExecutive Offi cer

Deputy General Manager, Engineering/Production Headquarters

Director (current)

Deputy General Manager, Production Headquarters

General Manager, Global Business Department,Sales Headquarters

Managing Executive Offi cer

Senior Executive Offi cer General Manager, Sales Headquarters (current)

PresidentPresident and Executive Offi cer (current)

J u n . 2010

M a r . 2011

J u n . 2012

M ar. 2013

Mar. 2014

J u n . 2014

J u n . 2018

J u n . 2020

Executive Offi cer

Managing Executive Offi cer

General Manager, Sanda Factory (current)

Director (current)

In charge of Engineering/

Production Division (current)

General Manager,

Production Engineering Headquarters

General Manager, Production Headquarters

Senior Executive Offi cer (current)

J u n . 2010

J u n . 2014

Mar. 2016

J u n . 2016

A p r . 2018

J u n . 2018

Joined the Company

Director (current)Executive Offi cer

General Manager, Corporate Planning Department (current)

Managing Executive Offi cer (current)

General Manager, Security Trade Control Department (current)General Manager, Information System Department

General Manager, Administration Headquarters (current)

Senior Executive Offi cer (current)

May. 2014

J u n . 2014

M ar. 2015

J u n . 2016

J u n . 2017

J u n . 2018

J u n . 2020

Joined OMRON Tateisi Electronics Co. (now OMRON Corporation)

Executive Offi cer

Managing Executive Offi cer

Senior Managing Executive Offi cer

CFO and Senior Managing Director

Visiting Professor, Doshisha Business School (current)

Representative Director, Vice President and CFO, OMRON Corporation

Outside Director, SENQCIA CORPORATION (current)

Director of the Company (current)

A p r . 1975

J u n . 2003

J u n . 2006

A p r . 2013

J u n . 2013

A p r. 2014

J u n . 2014

J u n . 2018

J u n . 2019

Joined Mitsubishi Corporation

President, Miteni, a portfolio company of Mitsubishi Corporation (Italy)

Executive Offi cer, Morishita Jintan Co., Ltd.

Director, Managing Executive Offi cerand Head of Corporate Planning

Senior Managing Directorand Senior Managing Executive Offi cer

Representative Directorand Managing Executive Offi cer

Representative Director and President

Member of the Board, AnGes, Inc. (current)

External Director, Point Market Co., Ltd. (current)

External Director, TOKAI BUSSAN CO., LTD. (current)

Director of the Company (current)

A p r . 1973

A p r . 1996

Aug. 2003

J u n . 2004

A p r . 2005

No v. 2005

O c t . 2006

M a r . 2012

J u l . 2019

May. 2020

J u n . 2020

Joined the Company

Financial Department

General Manager,

Accounting & Financial Department

Director (Full-Time Audit & Supervisory

Committee member) (current)

J u l . 2009

M a r . 2011

J u n . 2018

Registered as an attorney at law

Established Eiichi Mori Law Offi ce

Established Daiwa Law Offi ce

Partner, Irokawa Law Offi ce (current)

Auditor, Sumitomo Precision Products Co., Ltd. (current)

Temporary Auditor of the Company

Auditor of the Company

Director of the Company (Audit & Supervisory Committee member) (current)

A p r . 1982

A p r . 1989

Mar. 2000

A pr. 2007

J u n . 2007

F eb . 2010

J u n . 2010

J u n . 2017

Registered as a certifi ed public accountant

Registered as a certifi ed publictax accountant

Established Takaya CPA Offi ce

Representative Partner, Nexus AuditCorporation (current)

Director, HIRANO TECSEED Co., Ltd. (Audit & Supervisory Committee member) (current)

Director of the Company (Audit & Supervisory Committee member) (current)

Mar. 1989

Aug. 1992

Mar. 2004

Dec. 2004

J u n . 2016

J u n . 2019

Aug. 1978

F eb . 1985

Aug. 1987

J u n . 1989

J u n . 2007

J u n . 2020

Governance

Support for Using the Childcare Leave Program

27

We have established eight days of planned annual leave and

maintain an environment that makes it easy to take vacation

days. In fiscal 2019, employees used their paid annual leave at

a rate of 70.5%. Five employees also took paid maternity leave,

nine employees took childcare leave, and four employees used

the shortened work hours for childcare program; the number of

employees taking leave has been increasing over the past several

years.

　In fi scal 2019, we also enhanced our fl ex-time program as part

of improving work-life balance. Core hours were revised from the

original 10 a.m.-3 p.m. to 11:30 a.m.-1 p.m., increasing the amount

of fl exible time. This will now apply to every department except

for production sites, and the program is now used by many em-

ployees.

　In addition, through work style reforms, which have included

streamlining administration by creating work flows for various

procedures and applications and instituting a telecommuting

program (primarily for sales divisions), diverse work styles are

making it possible to consistently create leisure time and are be-

ginning to take root among employees. These results have been

appreciated by our employees, and have led to our low turnover.

Going forward, we expect to continue promoting diversified

work styles.

I am in charge of our core system operations and maintenance and program development.

　In March 2020, I took one month of childcare leave, which my superiors and colleagues will-

ingly supported. This solid support structure goes beyond the program itself to include the

workplace, which enabled me to feel comfortable taking childcare leave and make a smooth

return to work.

　While my wife was in the hospital after giving birth, I was able to spend priceless, valuable

time at home with my children̶struggling with the task but being with them 24 hours a day,

waking up together, feeding and bathing them and putting them to bed.

　Taking childcare leave also got me into the habit of taking a more active part in raising our

children, and being able to share in those hardships has, I think, been another signifi cant bene-

fi t.

　As they say, “Child-rearing helps parents grow too.” This experience has indeed taught me

how to better balance work and home life, and I think I have grown both as a working adult

and as a parent.

Ryu Unho, System Administration Group, System Department

Employee InterviewEmployee InterviewEmployeeInterview

2015 2016 2017 2018 2019

（FY）

2015 2016 2017 2018 2019

（FY）

2015 2016 2017 2018 2019

（FY）

Paid Annual Leave Usage Rate

Childcare Leave Usage Rate

Average Length of Service

70.5%

100.0%

15.4years

72.7 71.6 71.475.7

70.5

100 100 100

83.3

100.0

14.8 15.1 15.0 15.1 15.4

As part of our contributions to the community, in fiscal 2019

Nippon Pillar Packing invited members of the public to tour its

Fukuchiyama Factory.

　The tour was put together by the Osadano Industrial Center

for the 40 companies located in the the Osadano Industrial Park;

Nippon Pillar Packing was asked to off er the tour for fi scal 2019.

　A total of 32 local residents̶more than the spaces allotted̶

visited the factory and gained a deeper understanding of our

approach to manufacturing and our eff orts with regards to the

environment.

Factory Tours for Community Members

Factory tour being conducted

With the promotion of ESG/SDG management now a part of

societal trends and of the basic policies of “BTvision22,” our new

medium-term management plan, Nippon Pillar Packing is work-

ing to familiarize its employees with the SDGs.

　SDG study sessions held for head office administration staff

gave employees the opportunity to think about the story behind

the need for the SDGs and what actions each individual can take

in their daily lives.

　Meanwhile at the Sanda Factory, SDG logos were posted in

places of high visibility in the workplace, cafeteria and else-

where as a way of enhancing employee awareness, and workers

are deepening their understanding of the SDGs through oppor-

tunities to discuss the individual goals at our morning meetings.

SDG Education

Staff study session A morning stand-up meeting at the Sanda Factory

Nippon Pillar Packing believes in the importance of interacting

with the communities in which its factories and offi ces are locat-

ed.

　With that in mind, and as part of our eff orts to enliven the city

of Osaka, where our head offi ce is located, since 2015 we have

continued our sponsorship of the Osaka Philharmonic Orchestra.

Through this kind of support, we will work to sustain not only

the vitalization of communities in which we are located, but the

promotion of culture and the arts worldwide.

Sponsorship of the Osaka Philharmonic Orchestra

Photo courtesy of the Osaka Philharmonic Orchestra

We conduct blood drives twice a year at the Sanda Factory,

Fukuchiyama Factory and the head office as part of ongoing

social contribution activities. Nippon Pillar Packing is officially

certifi ed by the Japanese Red Cross Society as a company that

supports blood donations.

　In fi scal 2019, the Fukuchiyama Factory was awarded the Golden

Order of Merit from the Japanese Red Cross Society for the blood

drives we have conducted for more than 20 years. Eight compa-

nies in Kyoto Prefecture received this award in fiscal 2019, with

Nippon Pillar Packing being the only recipient in Fukuchiyama City.

Blood Donation Recognition

Blood drive activities Blood donation recognition certificate

28

Enhancing Work-Life Balance Community Initiatives

Supplier Initiatives

Policy on Anti-Social Forces

Governance　

Nippon Pillar Packing recognizes that important hints for business

development are often concealed in the requests of customers

and organizes their requests and feedback using customer re-

quest cards. These requests are reported at the Strategy Meeting,

Management Meeting and meetings of other bodies and dis-

cussed in order to tie the feedback into product improvements

and new product development.

　Also, in order to serve customer requests, coordination be-

tween sales and engineering divisions is essential. We have en-

gineering personnel accompany sales personnel to equipment

manufacturers and end-users in an effort to appropriately ascer-

tain the essence of the issues customers are facing. This essence

is then brought back and utilized in product improvements and

In order to carry out sound and appropriate business activities,

we handle anti-social forces in accordance with the Guideline for

Prevention of Damages from Anti-Social Forces in Industry. This

means we take a resolute stance against such forces with firm

conviction, cut off any such relationships and work hard to con-

tinually maintain the public’s trust while also coordinating with

suppliers, having them send proof of confirmation, etc.

new development.

　Moreover, product quality assurance is recognized by the Com-

pany as the highest priority task for earning and maintaining the

trust of customers. Based on our ISO 9001 quality management

system, we implement a PDCA cycle for quality control activities

to comply with the quality standards required by countries and

industries.

　Customer evaluations of our products and services are collect-

ed by administering a customer satisfaction survey each year. The

results of the survey are discussed at the Management Meeting

and meetings of other bodies, fed back to the frontline divisions,

and used to further raise customer satisfaction.

There have been increasing calls from customers in recent years

to strengthen supply chain management. By appropriately as-

certaining production capacity based on supplier facilities, the

number of employees and other factors, we work to collect infor-

mation, in such ways as directly visiting suppliers, to ensure stable

procurement is maintained and to reduce excessive orders and

volumes that would exceed the production capacity of suppliers.

　Suppliers in recent years have been saddled with a number of

concerns, including the issue of finding successors as manage-

ment members age, so to ensure continuing, stable supplies,

communication with suppliers is all the more necessary.

　Going forward, from the standpoint of risk management and

based on information collected, we will expand the range of

products and parts we procure to include a larger number of sup-

pliers.

　Some of our products use materials that are becoming harder

to acquire or have no alternatives, and these materials have been

increasing, therefore we coordinate procurement with suppliers

in order to fulfill our supply responsibilities to customers, while

considering the balance between quality and cost. Going for-

ward, we will continue to pursue stable supply on a top-priority

basis and develop business mutually with suppliers.

　As part of these efforts, we honor suppliers each fiscal year

based on their degree of contribution to serving our customers,

although the impact of the coronavirus prevented us from doing

so in 2020. Through this initiative, we intend to further strengthen

relationships with exceptional suppliers and help raise the aware-

ness of other suppliers.

29 30

(1) Cut off all relationships, including transactions

(2) Respond as an organization and coordinate with outside specialists

(3) Prohibit under-the-table transactions and providing funds

(4) Issue legal response in emergency situations

Policy on Anti-Social Forces

VOICE

Employees Share Their Thoughts on Value Creation at Nippon Pillar PackingNippon Pillar Packing, a global business.

We asked employees in a variety of countries and regions for their thoughts on the value the Group creates as we work toward a sustainable society.

As responsible for the Sales Department, I have

worked closely with clients from different kinds

of industries, proposed solutions to their prob-

lems in different processes, and consequently,

created invaluable synergies with them. My

belief is that Pillar products can contribute to the

development of Mexico’s industry and society.

Therefore, I play an important role as a member

of the Pillar Group.

César RamírezNPK Fluid Control Systems Mexico S. A. de C. V.

Assistant Manager of Sales

I believe my work allows me to contribute to my country’s development

I belong to the Materials Development Group,

where we work to develop materials that meet

customer needs in anticipation of new markets.

By developing new materials one step ahead of

other companies, our goal is to create new value

for existing products and apply those materials

to next-generation products. I will keep in mind

our corporate principle of “Steady Research,”

and strive to create wonderful products, always

from the viewpoint of the customer.

Yuka AraiAE Business Department, Development Department,

Materials Development Group, Nippon Pillar Packing Co., Ltd.

Aiming to create products from the customer’s viewpoint

In November 2020, we established a new North

American production site intended to meet an

expansion in business with a major US semi-

conductor equipment manufacturer. Sales and

manufacturing will work together to build a

strong global team and capture new demand—

even given the cultural differences between Ja-

pan and the US —by respecting and having

a proper understanding of one another’s values.

By doing so, we hope to build a product supply

structure capable of responding to customer

requirements.

Naoki OkamotoNIPPON PILLAR CORPORATION OF AMERICA

Factory General Manager

Recognizing one another’s values enhances global teams

Since joining the Company, I have worked to

streamline sales administration. With my assign-

ment to the Sales Headquarters in April of last

year, though, I began engaging in sales myself

while also being put in charge of sales adminis-

tration reforms. I hope to take advantage of my

own insights from my sales activities, along with

my experiences to date, in my administrative

reforms, and also contribute to the Company’s

development while working closer with young-

er female employees.

Kiyoko MorinagaManager, 1st Sales Department and Administration Group,

Sales Headquarters, Nippon Pillar Packing Co., Ltd.

Contributing to the Company’s development while working closely with younger female employees

I am honored to have been part of the Nippon

Pillar family for 20 years. Much appreciation to

the bosses and fellow colleagues I have worked

with. My responsibilities are to perform ad-

ministrative tasks and as a sales assistant. Even

though I work in an office and have very rare

opportunities to meet with customers, I have

received words of gratitude, my greatest moti-

vation, through telecommunications and emails.

Moving forward, I want to continue improving

my work efficiency and contribute more to the Nippon Pillar Group.

Chris OngNippon Pillar Singapore Pte. Ltd.

Assistant Manager of Sales

Words of gratitude improve my motivation

I am in charge of developing products for vehi-

cles. Due to the shift to electric cars and so on

in recent years, the automobile industry is said

to be in the midst of a major transformation. By

developing products that incorporate our store

of proprietary technology, we can bring joy to

people the world over through our contributions

to preserving the environment. It is to achieve

that dream that I will continue taking on new

challenges alongside my fine colleagues.

Hideto HashiguchiGeneral Manager, MP Department, Engineering Headquarters,

Nippon Pillar Packing Co., Ltd.

Continuing to develop products incorporating our accumulated proprietary technology

Customer Initiatives

Environmental Risk ManagementEnvironmental Mission Statement

Harnessing our core fluid control technologies, we are committed to economically providing creative, high-quality products and services

that fulfill customer needs, contributing to the creation of a more livable planet and a richer social environment.

Response to Toxic Substances

Under the provisions of the Pollutant Release and Transfer Regis-

ter (PRTR), which requires companies to manage specified chem-

ical substances that have an environmental impact, we notify the

competent authorities every year regarding these substances.

We also have an ongoing program of considering switching to

non-specified alternatives and cutting usage, emission, and mi-

gration of specified substances.

Environmental Audit

We received a scheduled ISO 14001:2015 audit, which verified that

our environmental management system was performing appro-

priately and being continuously improved.

　As a result of the audit, efforts were made to promote energy

conservation by shutting down the heater when the molding ma-

chine was shut down. Data̶including total monthly shutdown

time, power used to maintain temperature and electric power

rates̶showed that this had the potential to be effective, and we

were given a high performance rating.

　We also conduct an internal environmental audit every year to

check that environmental management systems are in place and

appropriately implemented at all departments in the Sanda and

Fukuchiyama Factories so that we can maintain improvement.

　With regards to those findings, we will draft improvement plans

not only for non-conformities discovered in the audit, but for the

findings themselves, and will move forward with improvements

and actions to prevent a recurrence.

　We began the process of switching to an alternative to refrac-

tory ceramic fiber (RFC) used in gaskets and other products, but

with completion of the development of an alternative product in

fiscal 2019, all Company products are now RFC compliant.

　We are working to eliminate the use of all toxic substances in

our products to prepare for further tightening of requirements to

control and reduce their use.

31 32

We perform regular disaster drills to prepare for situations that

may have a severe impact on life, property and living environ-

ments.

　In fiscal 2019, a large-scale earthquake preparedness drill was

held at the Sanda Factory, with more than 350 employees par-

ticipating. This drill used photos from our Kyushu Factory, which

was damaged in the 2016 Kumamoto earthquakes, providing

participants an opportunity to reexamine hidden sources of risk

in their own surroundings while also validating the effectiveness

of a self-defense organization.

　More appropriate evacuation procedures and methods were

also reviewed and reexamined with regards to issues uncovered

through this drill, and are being used in revising our BCP* and en-

hancing its effectiveness.

Environmental Policy

We have established the following basic policy items for sustained improvement of efforts to reduce environmental impact and prevent

environmental contamination.

1. Legal compliance

　 We will not only comply with environment-related laws, regulations, conventions/agreements, and commitments to stakeholders, but establish voluntary standards that are technologically and economically achievable to further our efforts to improve environmental conservation.

2. Sustained efforts to reduce environmental impact and prevent environmental contamination

　 2.1　 We endeavor to use energy sources as efficiently as possible to save energy and reduce greenhouse gas emissions.

　 2.2　 We strive to reduce the volume of waste and recycle the waste we generate.

　 2.3　 We work to continuously address regulations controlling substances which have an impact on the environment and to prevent pollution.

3. Development and improvement of environmentally friendly products　

As a fluid control equipment manufacturer, we endeavor to develop and improve products to minimize harmful effects on the environment, not only by improving the performance of seals, but also by seeking to reduce environmental impact throughout the entire product life cycle from manufacturing and shipment through to use and disposal.

4. Improvement of environmental management system

　 4.1　 We provide education, training, and information to all our employees to raise their awareness of environmental responsibility and improve their knowledge and skills.

　 4.2　 We endeavor to gain the understanding and cooperation of our affiliates, partners, and suppliers regarding our activities to improve the environment.

　 4.3　 We work to continuously improve our environmental management systems, including measures to reduce environmental impact.

5. Disclosure and communication of environmental policy

　 5.1　 We do our best to disclose appropriate information regarding our environmental policy and results of environmental activities to all stakeholders of our business.

　 5.2　 Mindful of the location and conditions of our factories and business sites, we communicate closely with competent government authorities and local residents to improve the environment of local communities.

Structure for Promoting the Environmental Policy

In September 1999, our Sanda Factory obtained ISO 14001 certification. The Fukuchiyama Fac-

tory was also certified in September 2002. We have an ongoing environmental improvement

program at these two sites. We have also established an environmental management structure

at the two sites. A Global Environment Committee chaired by the executive officer responsible

for the environment oversees environmental management, working to reduce our impact on

the community and local environment.

　Furthermore, each site has established environmental management committees with the

aim of reducing environmental impact of business activities and developing environmentally

conscious products. Regular reviews by the management team ensure sustained improvement

of environmental management.

President

Structure for promoting environmental conservation measures

Promote measures in each department

Executive officer responsible for the environment

Global Environment Committee

Sanda Factory Environment Management Committee

Fukuchiyama Factory Environmental Management Committee

Compliance Measures for Laws, Regulations, and Other Requirements

We always obtain the most up-to-date information to ensure we

comply with environmental laws, agreed values of municipalities,

etc., clearly setting out all compliance requirements in the “Envi-

ronmental laws, regulations, and other requirements list.” We also

conduct regular surveillance and measurement to ensure sched-

uled reporting and record-keeping to prevent violation of laws

and regulations and contamination of the local environment.

　The facilities governed by laws and regulations and the regu-

lated items at the Sanda and Fukuchiyama Factories are summa-

rized below. We conduct regular surveillance and measurement

to improve matters of concern and to maintain and preserve the

environment.

Applicable laws Applicable facilities Regulated items

Atmospheresystem

Air Pollution Control Act

Absorption-type water cooler / heater Soot and dust, sulfur oxides, nitrogen oxides

Exhaust gas cleaning system

Items stipulated in Fukuchiyama City Environmental Conservation Charter

Factory dust collector Smoke and soot

Water system

Sewerage Law Factory wastewater

Items stipulated in the Sanda municipal sewerage ordinance wastewater standard

Items stipulated in Fukuchiyama City Environmental Conservation Charter

Water Pollution Control Law

Storm drainage Chromium compounds, dichloromethane

Soil contaminationEnvironmental standards for soil contamination

Groundwater on siteSoil study of substances used, in association with geographical history survey

Noise Noise Regulation Law All factory facilities Noise at site boundary

Environment

＊BCP: Business Continuity Plan, a company’s plan for minimizing damage in the event of an earthquake or other emergency, and for ensuring the continuity and recovery of its business.

Environment

No. Challenges DepartmentEnvironmental

initiatives

Fiscal 2019 environmental

targetsContent and results of activities

1

Energy

saving

Production Technology

Division

Saving electricity

10% reduction in base electric power

(204.6 kWh)

[Result: 20% reduction]

Base electric power reduced

in work to expand capacity at the Sanda Factory

2Production Technology

Division

Saving energy with

equipment

Target figure: 1.38 kcal/￥1 million

[Result: 1.58 kcal/¥1 million (target not attained)]Energy-saving measure using nozzle covers on heating cylinders carried out on 15 units1.58 kcal/¥1 million for the year. Second half average was 1.4 kcal/¥1 million for an attainment rate of 99%

3Production Technology

Division

Saving energy with

equipment

Review of appropriate

number of units:8 units

[Result: 8 units]A survey was conducted of the appropriate number of PFGr welding machine compressors, with three units shut down and eight units operating

4

Waste

emissions

Production Technology

Division

Reducing waste

Number of transactions involving industrial

waste of liquid waste generated by

impregnation process: 7.3/year or fewer

[Result: 7/year]

Waste liquid reduced by installing water-saving nozzles in

two impregnation chambers

5Production Technology

Division

Reducing waste

Defect rate reduction: 3% or less

[Result: 2.68%]

Target was achieved through injection molding defect

reduction project, reduced costs, and internal collaboration

including built-in quality with ownership

6Noise

generatedFactory Staff

Division

Compliance with legal

requirements governing

noise at site boundary

Noise control measures:

Improvement at one location

[Result: 1]

Exhaust noise from test equipment reduced from 68 dB to

43 dB through use of silencer ducts and chambers

7

Development

of

environmentally

conscious

products

Technology and

Development Division

Development of bipolar plate for redox flow

batteries

70% progress

[Result: 70% progress]

Completed and delivered sample prototype to identify

materials and resin ratios that fulfill customer requirements

8

Technology and

Development Division

Development of angular adjustable mechanical

seal

Launch design review completed

[Result: Review completed]

Conducted performance verification test and prepared technical

report

Trial runs conducted by customer show significantly prolonged life

compared to current product

9

Technology and

Development Division

Development of PTFE CCL

with ceramic fillers

(Dk 3.0)

Development completed

[Result: Development incomplete (target not attained)]

The developed CCL has been cleared with target specification for

automotive application. Equipment improvement items arose that

delayed transfer to the Production Department and completion

of development, which continues

10

Technology and

Development Division

Development of low-emission

gasket for mass

production valves

He leakage concentration:

Less than 50 ppm

[Result: Development incomplete (target not attained)]

While ISO 15848-1 standard of 50 ppm was cleared with

regards to gasket gas seal performance, a structural analysis

to ensure stable performance is now under review

11

Technology and

Development Division

Development of

resource-saving products

Supplying samples of environmentally conscious products

(20 items)

[Result: 31 items]

Target obtained by providing samples of new and improved

products (couplings, pumps, sealing products)

Environmental Conservation Cost (Target Period: April 2019–March 2020) (Thousands of yen)

CostsCapital

expenditure Total Main items

（1）–1Pollution prevention cost

30,794 16,520 47,314

・Cost of inspection, testing, and administration of sewerage system and for prevention of water contamination; capital expenditure

・Cost of inspection, testing, and administration for the prevention of air pollution　

・Disaster prevention costs, capital expenditure

・Cost of eliminating the use of toxic chemical substances

・Inspection, management and maintenance costs

・Repairs to exhaust gas processing equipment　

（1）–2Global environmental conservation cost

38,682 58,085 96,767･Updating equipment to prevent climate change and conserve energy

・Costs associated with preventing fluorocarbon emissions

・LED light installation, AC duct insulation work, waterproofing work

（1）–3Resource circulation cost

23,942 4,590 28,532・Cost of industrial waste disposal　・Cost of general waste disposal　

・Cost of promoting industrial waste recycling

（2）Administration cost 34,008 1,749 35,757

･Cost of ISO 14001 audit

∙ In-house training costs, including training of internal environmental auditors　

∙ Environmental education costs, such as books on environmental laws and regulations

∙ Cost of cleanups in factories and surrounding areas

∙ Cost of disaster prevention and restoration following the occurrence of a disaster

∙ R&D-related administrative costs

（3）R&D cost 611,836 34,078 645,914･Cost of development and improvement of environmentally conscious products

･Capital expenditure for development of environmentally conscious products

･Capital expenditure for evaluation and testing of environmentally conscious products

（4）Social activity cost 8,000 0 8,000・Cost of cleanups of surrounding areas near factories　

・Contributions to local environmental funds

・Cost of issuing the CSR report

Total 747,262 115,022 862,284

Fiscal 2019 Voluntary Environmental Activity Targets and Track Record Energy Conservation Activities

Environmental Accounting

We use electricity, kerosene and gas as the main sources of en-

ergy for our factories and primarily conduct activities to reduce

electricity because of the large amount consumed.

　At the new Sanda Factory in fiscal 2019, work to install equip-

ment with low energy loss progressed, including automated

dust extraction dampers, fan speed control based on dust vol-

ume, and inverter air conditioning. By achieving optimal opera-

tion of ancillary facilities, we were able to reduce base electric

power by 20% over existing levels. Nozzle covers were also in-

stalled on injection molding machines to reduce standby power,

while the appropriate number of compressor units in use in the

production area was reviewed and three units shut down as

part of energy-reduction efforts.

　Despite these and other activities, factory energy use in fiscal

2019 rose by 1.3% over fiscal 2018 on a calorific basis.

Disposal of Industrial Waste

Industrial waste generated in our business includes scrap

metal, scrap fluorine resin, waste oils, liquids, plastic, glass,

ceramic and wood.

　Each factory works to curb the amount of waste gener-

ated, while also working toward ongoing communication

with industrial waste disposal and recycling companies to

promote recycling and reduce the volume of waste dis-

posed. Paper, cardboard and other general waste is recycled

by recycling companies. Our recycling process is designed

to prevent leaks of confidential information, with papers

containing confidential information discharged directly to

paper mills each year.

　In fiscal 2019, waste increased at the Sanda Factory in

conjunction with construction of the new Sanda Factory

and the transfer of operations. However, efforts to reduce

waste at the Fukuchiyama Factory, including reducing de-

fect rates for injection-molded products, resulted in a Com-

pany-wide drop of 9.0 points over fiscal 2018 on a waste

output index basis.

　Going forward, we will continue promoting ef forts to

lower the amount of waste discharged, both to make effec-

tive use of limited resources and to further curb the waste

generated by our business activities.

33 34

Environmental Activities

Re

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to e

xh

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as

pro

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qu

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（1）

35 36

During the current consolidated accounting period, the Japanese

economy saw an improved employment and income environ-

ment, but the impact of the consumption tax hike and sluggish

exports revealed weakness primarily in the manufacturing sec-

tor, and business confidence continues to worsen.

　In the global economy, concerns over a slowdown continue due

to ongoing US/China trade friction and various geopolitical risks.

The additional impact of the coronavirus pandemic has increased

the sense of uncertainty about the future of the economy.

　In this environment, the industrial equipment business did bring

Operating Environment

in overseas deals for service parts, etc., but the oil refining and

petrochemical markets were sluggish, and sales declined year on

year. Orders also continued to decline in the electronic equipment

business with the downturn in the semiconductor market, and

sales fell significantly compared to the previous year.

　As a result, consolidated sales were ¥29,213 million (-5.6% year

on year), operating income was ¥3,683 million (-28.1%), ordinary

income was ¥3,725 million (-28.7%) and profit attributable to

owners of parent was ¥2,635 million (-29.1%).

[Industrial equipment]

While sales of mechanical seal products for precision machine

equipment were sluggish, gland packing and gasket products

performed solidly.

　As a result, segment sales came to ¥10,396 million (-3.4% year

on year) and operating income to ¥1,314 million (-11.5%).

[Electronic equipment]

Orders for PILAFLON products for the semiconductor and LCD

Segment Information

production equipment fields fell significantly due to a sluggish

semiconductor market.

　As a result, segment sales were ¥18,740 million (-6.9% year on

year) and operating income was ¥2,329 million (-36.0%).

[Others (real estate rental, etc.)]

Segment sales were ¥76 million (-6.7% year on year) and operat-

ing income was ¥26 million (+68.8%).

Total assets from the end of the current consolidated accounting

period increased by ¥218 million to ¥53,190 million from the end

of the previous fiscal year. This was mainly due to a ¥1,704 million

increase in property, plant and equipment　

　Liabilities as of the end of the current consolidated accounting

period decreased by ¥621 million from the end of the previous

fiscal year to ¥10,180 million. The primary decrease was a ¥587

Statement of Financial Position

million drop in income taxes payable.

　Net assets increased by ¥840 million from the end of the previ-

ous fiscal year to ¥43,010 million. This was mainly due to a ¥1,541

million increase in retained earnings.

　As a result, our equity ratio was 80.9% (versus 79.6% for the

previous fiscal year).

Net cash provided by operating activities in the current

consolidated accounting period was ¥4,064 million (versus

¥5,035 million in the previous fiscal year), while net cash

used in investing activities was ¥2,950 million (versus ¥3,902

Statement of Cash Flows

million in the previous fiscal year) and net cash used in fi-

nancing activities was ¥1,862 million (versus ¥1,493 million

in the previous fiscal year). As a result, cash and cash equiva-

lents fell by ¥783 million to ¥10,798 million.

In seal products for the industrial equipment segments, the im-

pact of the coronavirus pandemic has raised concerns about the

delay or cancellation of investments in the oil and petrochemical

markets due to the drop in oil prices, and in domestic markets

there are also concerns about declining demand, curtailed facto-

ry operations and other impacts. While business activities have

resumed in China and the US, a recovery in demand is expected

to take time. While the external environment remains challeng-

ing, in the medium to long term, markets are expected to grow

in emerging economies, and we will work to expand our busi-

ness by boosting production and sales activities through expan-

sion of overseas bases and the introduction of new products.

　In PILAFLON products for the semiconductor and LCD produc-

Outlook

tion equipment fields, the impact of the coronavirus pandemic

has not brought any major changes to fiscal 2020 investment

plans among foundries (semiconductor manufacturing plants)

and device manufacturers, and business continues to perform

robustly. That said, the latter part of the first half of fiscal 2020

remains uncertain. Still, in the medium to long term, we can

expect that semiconductor demand will see a multilayered ex-

pansion with the full-scale adoption of 5G next-generation tele-

communications systems, IoT and AI. To ensure we can respond

to this strong demand, we will actively invest in capital expendi-

tures and R&D. We will also engage in aggressive expansion of

sales of seismic isolation products for the construction industry,

both in Japan and overseas.

Financial Indicators

Non-Financial Indicators

Financial Indicators Non-Financial Indicators

FY2019

■ Disposed　■ Recycled　■ Sold (Tons) ● Recycling Rate (%)

FY2015

FY2016

FY2017

FY2018

FY2019

■ Female　■ Male ● Employee Turnover Rate (%)

FY2015

FY2016

FY2017

FY2018

■ Consolidated Employees ● Employee Turnover Rate (%)

FY2019

FY2015

FY2016

FY2017

FY2018

711 764695

797

665672753

49281.3

76.4 XX.X78.5

761

0.4 1.7 2.4 4.30.7 2.1 3.0 4.0

429457439429

102979594

523 534 554 531

809

3.33.9

432

101

533

FY2019

■ Consolidated Sales (Millions of yen) ● Operating Income Margin (％)

FY2015

FY2016

FY2017

FY2018

27,22529,461

22,960

30,963

19.017.5

15.1

16.6

29,213

12.6

FY2019

■ Profit per Share (Yen)■ Net Assets per Share (Yen)

FY2015

FY2016

FY2017

FY2018

1,5031,629

1,387

1,725

131 14097 152

1,781

109

FY2019

■ Net Assets (Millions of yen) ● ROE (％)

FY2015

FY2016

FY2017

FY2018

36,74039,834

33,905

42,169 43,010

9.1 8.97.2

9.1

FY2019

■ Dividend (Yen) ● Payout Ratio (％)

FY2015

FY2016

FY2017

FY2018

34 36

28

4525.9 25.728.8 29.6

40

36.8

FY2019

■ CO₂ Emissions (Tons of CO₂/year) ● Waste Output Index (FY2015 = 100)

FY2015

FY2016

FY2017

FY2018

FY2019

■ Energy Consumption (10₆ kcal/year) ● Waste Output Index (FY2015 = 100)

FY2015

FY2016

FY2017

FY2018

80.6 75.995.4

68.5 XX.X

55,59058,697

53,779 55,302 55,999

110.299.5100.0

73.2 71.4

972882

818

682 683

6.2

84.5 79.6

100.0

71.8 76.0

81.376.4

78.9

126 141106179

133 157128

178

141

188

413455

259

404337

81.3

FY2019

■ Disposed　■ Recycled　■ Sold (Tons) ● Recycling Rate (%)

FY2015

FY2016

FY2017

FY2018

FY2019

■ Female　■ Male ● Employee Turnover Rate (%)

FY2015

FY2016

FY2017

FY2018

■ Consolidated Employees ● Employee Turnover Rate (%)

FY2019

FY2015

FY2016

FY2017

FY2018

711 764695

797

665672753

49281.3

76.4 XX.X78.5

761

0.4 1.7 2.4 4.30.7 2.1 3.0 4.0

429457439429

102979594

523 534 554 531

809

3.33.9

432

101

533

FY2019

■ Consolidated Sales (Millions of yen) ● Operating Income Margin (％)

FY2015

FY2016

FY2017

FY2018

27,22529,461

22,960

30,963

19.017.5

15.1

16.6

29,213

12.6

FY2019

■ Profit per Share (Yen)■ Net Assets per Share (Yen)

FY2015

FY2016

FY2017

FY2018

1,5031,629

1,387

1,725

131 14097 152

1,781

109

FY2019

■ Net Assets (Millions of yen) ● ROE (％)

FY2015

FY2016

FY2017

FY2018

36,74039,834

33,905

42,169 43,010

9.1 8.97.2

9.1

FY2019

■ Dividend (Yen) ● Payout Ratio (％)

FY2015

FY2016

FY2017

FY2018

34 36

28

4525.9 25.728.8 29.6

40

36.8

FY2019

■ CO₂ Emissions (Tons of CO₂/year) ● Waste Output Index (FY2015 = 100)

FY2015

FY2016

FY2017

FY2018

FY2019

■ Energy Consumption (10₆ kcal/year) ● Waste Output Index (FY2015 = 100)

FY2015

FY2016

FY2017

FY2018

80.6 75.995.4

68.5 XX.X

55,59058,697

53,779 55,302 55,999

110.299.5100.0

73.2 71.4

972882

818

682 683

6.2

84.5 79.6

100.0

71.8 76.0

81.376.4

78.9

126 141106179

133 157128

178

141

188

413455

259

404337

81.3

FY2019

■ Disposed　■ Recycled　■ Sold (Tons) ● Recycling Rate (%)

FY2015

FY2016

FY2017

FY2018

FY2019

■ Female　■ Male ● Employee Turnover Rate (%)

FY2015

FY2016

FY2017

FY2018

■ Consolidated Employees ● Employee Turnover Rate (%)

FY2019

FY2015

FY2016

FY2017

FY2018

711 764695

797

665672753

49281.3

76.4 XX.X78.5

761

0.4 1.7 2.4 4.30.7 2.1 3.0 4.0

429457439429

102979594

523 534 554 531

809

3.33.9

432

101

533

FY2019

■ Consolidated Sales (Millions of yen) ● Operating Income Margin (％)

FY2015

FY2016

FY2017

FY2018

27,22529,461

22,960

30,963

19.017.5

15.1

16.6

29,213

12.6

FY2019

■ Profit per Share (Yen)■ Net Assets per Share (Yen)

FY2015

FY2016

FY2017

FY2018

1,5031,629

1,387

1,725

131 14097 152

1,781

109

FY2019

■ Net Assets (Millions of yen) ● ROE (％)

FY2015

FY2016

FY2017

FY2018

36,74039,834

33,905

42,169 43,010

9.1 8.97.2

9.1

FY2019

■ Dividend (Yen) ● Payout Ratio (％)

FY2015

FY2016

FY2017

FY2018

34 36

28

4525.9 25.728.8 29.6

40

36.8

FY2019

■ CO₂ Emissions (Tons of CO₂/year) ● Waste Output Index (FY2015 = 100)

FY2015

FY2016

FY2017

FY2018

FY2019

■ Energy Consumption (10₆ kcal/year) ● Waste Output Index (FY2015 = 100)

FY2015

FY2016

FY2017

FY2018

80.6 75.995.4

68.5 XX.X

55,59058,697

53,779 55,302 55,999

110.299.5100.0

73.2 71.4

972882

818

682 683

6.2

84.5 79.6

100.0

71.8 76.0

81.376.4

78.9

126 141106179

133 157128

178

141

188

413455

259

404337

81.3

∙ Employees include only full-time employees

∙ Employee turnover rate excludes those reaching

mandatory retirement age

∙ Employees include only full-time employees

∙ Employee turnover rate excludes those reaching

mandatory retirement age

∙ Waste for recycling includes scrap metal, scrap

fluorine resin, waste oils, liquids, plastics, and paper

∙ Recycling rate = (Recycled volume + Volume sold) /

Total volume of waste generated x 100

Consolidated Sales/Operating Income Margin

Dividend/Payout Ratio

Waste Generated/Recycling Rate

Profit per Share/Net Assets per Share

Energy Consumption (Factories)

Consolidated Employees/Employee Turnover Rate

Net Assets/ROE

CO₂ Emissions (Factories)

Nonconsolidated Employees (Male and Female)/Employee Turnover Rate

Data

Financial Report

Data

Company Information (As of June 30, 2020)

＊As of March 31, 2020

Main Business Locations and Group Companies

Domestic

Domestic Group Companies

Overseas

Company name Nippon Pillar Packing Co., Ltd.

Headquarters address 7-1, Shinmachi 1-chome, Nishi-ku, Osaka 550-0013, Japan

Establishment 1924

Representative President Yoshinobu Iwanami

Capital ¥4,966 million

Listed stock exchange First Section, Tokyo Stock Exchange

Total number of shares 25,042,406 shares

Number of stockholders 9,869*

Number of employees 809*

Main products Mechanical seals, gland packing, gaskets, fluororesin products, bearing products, new ceramic products

U R L https://www.pillar.co.jp/en/

〈Factories and business locations〉

Sanda Factory (Sanda City, Hyogo Prefecture), Fukuchiyama Factory (Fukuchiyama City, Kyoto Prefecture), Kyushu Factory (Koshi City, Kumamoto Prefecture)　

〈Branch offices〉

Tokyo Branch Office, Yokohama Branch Office, Nagoya Branch Office, Kyoto Branch Office, Osaka Branch Office, Kobe Branch Office, Hiroshima Branch Office, Kyushu Branch Office

Pillar Service Sales Co., Ltd.

Chubu Pillar Service Sales Co., Ltd.

Tokyo Pillar Co., Ltd.

Hokuriku Pillar Co., Ltd.

Pillar Engineering Service Co., Ltd.

Kanto Pillar Engineering Service Co., Ltd.

Sanyo Pillar Engineering Service Co., Ltd.

NP Kogyo Co., Ltd.

NIPPON PILLAR PRECISION MFG. CO., LTD.

Nippon Pillar Kyushu Co., Ltd.

Nippon Pillar Singapore Pte. Ltd.

PT. Nippon Pillar Manufacturing Indonesia

PT. Nippon Pillar Indonesia

Nippon Pillar (Thailand) Co., Ltd.

Taiwan Pillar Industry Co., Ltd.

Suzhou Pillar Industry Co., Ltd.

Shanghai Pillar Trading Co., Ltd.

Korea Pillar Packing Co., Ltd.

Nippon Pillar Middle East FZCO

NIPPON PILLAR CORPORATION OF AMERICA Houston Office

NIPPON PILLAR CORPORATION OF AMERICA Fremont Office

NPK Fluid Control Systems Mexico S.A. de C.V.

Nippon Pillar Europe GmbH

[For inquiries regarding our integrated report]

・ Corporate Planning Department

TEL: +81-(0)6-7166-8412 FAX: +81-(0)6-7166-8510

・ Factory Administration Department, Production Headquarters

TEL: +81-(0)79-567-2121 FAX: +81-(0)79-567-1624

37 38

(Millions of yen)

2015 2016 2017 2018 2019

Financial Data

Consolidated statement of income:

Sales 22,960 27,225 29,461 30,963 29,213

　Japan 19,156 22,416 23,124 23,904 21,427

　Asia 2,565 3,172 4,528 4,345 5,316

　Others 1,238 1,637 1,809 2,713 2,470

　Overseas sales ratio (%) 16.6 17.7 21.5 22.8 26.7

Operating income 3,469 5,166 5,161 5,126 3,683

Operating income margin (%) 15.1 19.0 17.5 16.6 12.6

Ordinary income 3,493 5,255 5,156 5,227 3,725

Profit before income taxes 3,595 4,609 5,014 5,456 3,653

Profit attributable to owners of parent 2,397 3,204 3,422 3,719 2,635

Cash flow from operating activities 3,074 3,220 3,752 5,035 4,064

Cash flow from investing activities （3,230） （2,363） （3,244） （3,902） （2,950）

Cash flow from financing activities （1,145） 813 （1,455） （1,493） （1,862）

Cash and cash equivalents 11,132 12,729 11,813 11,582 10,798

Capital expenditure 1,475 4,189 3,008 5,110 3,531

Depreciation 940 1,022 1,397 1,718 1,822

Consolidated statement of financial position:

Total assets 42,164 49,347 51,539 52,972 53,190

Property, plant and equipment 13,901 15,493 18,107 20,266 21,971

Interest-bearing debt 539 2,147 1,609 1,082 693

Net assets 33,905 36,740 39,834 42,169 43,010

Per-share indicators:

Profit (yen) 97 131 140 152 109

Net assets (yen) 1,387 1,503 1,629 1,725 1,781

Dividend (yen) 28.00 34.00 36.00 45.00 40.00

Management indicators:

Equity ratio (%) 80.4 74.5 77.3 79.6 80.9

ROA (%) 5.7 7.0 6.8 7.1 5.0

ROE (%) 7.2 9.1 8.9 9.1 6.2

Payout ratio (%) 28.8 25.9 25.7 29.6 36.8

Non-Financial Data

Energy consumption (10⁶ kcal) 53,779 55,590 58,697 55,302 55,999

　Waste output index (%)*1 100.0 84.5 79.6 71.8 76.0

CO₂ emissions (tons of CO₂) 818 972 882 682 683

　Waste output index (%)*1 100.0 110.2 99.5 73.2 71.4

Waste generated (tons) 492 672 753 761 665

　Volume sold (tons) 259 413 455 404 337

　Volume recycled (tons) 128 133 157 178 188

　Volume disposed (tons) 106 126 141 179 141

　Recycling rate (%) 78.5 81.3 81.3 76.4 78.9

　Waste output index (%)*1 100.0 111.6 73.6 107.9 98.9

Employees (consolidated basis)*2 695 711 764 797 809

Part-time employees including contract and part-time workers (consolidated basis) 236 213 193 170 167

Employees (nonconsolidated basis)*2 523 534 554 531 533

　Male employees 429 439 457 429 432

　Female employees 94 95 97 102 101

　Overseas employees 76 79 107 120 132

Consolidated employee turnover rate (%)*3 0.7 2.1 3.0 4.0 3.9

Nonconsolidated employee turnover rate (%)*3 0.4 1.7 2.4 4.3 3.3

＊1 Index based on FY2015 = 100　＊2 Full-time employees only　＊3 Full-time employees only; excludes those reaching mandatory retirement age

7-1, Shinmachi 1-chome, Nishi-ku, Osaka 550-0013, Japanhttps://www.pillar.co.jp/en/

November 2020