Ahresty : Report 2021

AHRESTY REPORT 2021

For the year ended March 31, 2021

RESEARCH SERVICE TECHNOLOGY

We aim to create an affluent society by pursuing and integrating each of these areas.

Corporate Philosophy

Let us take pride in our work, respect theory and experimentation, value originality and invention

and offer superior products and service to our customers

RST Way - Five criteria for action

The RST Way's five criteria for action-conscientious, proactive, speedy, learning, and challenge -are the basis of each employee's way of thinking and action to realize the Corporate Philosophy.

Our corporate name, Ahresty, comes from "RST."

It was created by linking together the pronunciation of the first letters in Research, Service, and Technology. Research means continuous research, investigation, and development of new technologies,

new markets, and new sales techniques.

Service means providing warm, attentive service through personal interaction.

Technology means truly excellent technology that incorporates both physical and soft aspects and is highly beneficial for society.

These three areas of Research, Service, and Technology cannot be considered independently. Both technology and a spirit of service are necessary to accomplish the research involved in R&D.

To explain it in another way, research, service, and technology are intricately linked and each supports the others. It is an organic relationship in which each component refines the others to produce an end product

that is even better than the sum of its components.

We have therefore adopted this concept of integrated Research, Service, and Technology

as our corporate philosophy and named the company Ahresty to encompass it in our corporate name. We intend to use this corporate philosophy, wisely to fulfill our mission of being of service to society in many different ways, through our many products.

Conscientious

Proactive

Speedy

Learning

Challenge

We earnestly and sincerely make efforts for our customers and all stakeholders. We strive to understand diverse opinions, thoughts and values, listening to them with open minds.

We are self-driven and enthusiastically strive for success.

Each of us takes the initiative so that our actions lead to significant improvements.

We act quickly, sensing changes in social needs and the global market.

We consistently strive to enhance and reform our work methods and our technologies.

We constantly evolve to reach our goals.

We advance ourselves by having inquiring minds to achieve expectations.

We work unflinchingly on aggressive targets to achieve them.

We consistently challenge ourselves through theories and experiments without fear of failure, respecting originality and invention.

The Tag line "Casting Our Eyes on the Future" embodies our business attitude of always moving forward by taking the initiative in Research and Development, Service and Technology and by keeping all of our attention here at Ahresty focused on our customers, the global environment and the future of Ahresty itself, to realize the corporate philosophy represented in our name.

The word "Casting" in the tag line combines the meaning of "to throw one's gaze" with its other meaning of "to shape molten metal in a mold" which is our main line of business, die casting.

CONTENTS

2	| Corporate Philosophy	20	| Consolidated Financial Highlights
4	| Top Message	21	| For Sustainable Growth
6	| Ahresty's Value Creation	30	| Corporate Information
12	| Progress in the 1921 Medium-Term Management Plan	31	| Ahresty in numbers
16	| Efforts by Business Segments

2	AHRESTY REPORT 2021 3

Top Message For Shareholders & Investors

Driving EV Strategy to Expand Our Business Areas

Looking Back on FY20 and Initiatives for 1921 Medium -Term Management Plan

First of all, I would like to express my sympathies to those affected by COVID-19 and pray for their speedy recovery. I sincerely offer my deepest condolences to those who have lost their lives to COVID-19. I also express my sincere gratitude to professionals who are striving to prevent the spread of COVID-19 on the front line.

In FY20, our customers around the world suspended car production and some countries imposed lockdown restrictions. These had a considerable impact on our business. As a result, our shipment volume for the first quarter decreased by more than 50% on a year-over-year basis. From the second quarter, it showed a recovery trend and the shipment volume for the third quarter returned to the same level as the previous year. However, in the fourth quarter, a decrease in car production due to a semiconductor shortage and a sharp rise in aluminum market prices gave a tremendous impact to our business results again. Thanks to our concerted effort across the Ahresty Group to reduce costs and investments and due to the recovery of the shipment volume, the operating income for the second half became profitable. However, it could not be fully offset by the sharp drop in revenue for the first half, thus we unavoidably recorded an operating loss for the full year. That was a disappointing result again from the previous year. I sincerely apologize to our shareholders and investors for causing the disappointment and wor- ries. To turn around our performance in such a severe business environment, we are working hard to improve the finance foundation and enhance our competitiveness based on the 1921 Medium-Term Management Plan.

We actively strived to lower the break-even point by cutting fixed costs and variable costs through labor-saving in manufacturing and back-office functions, reduction in capital investment, and improvement in productivity. With regard to our quality improvement efforts, we earned several Quality Awards from our major customers around the world. We will continue to

Directors

offer products with stable quality, which would build high reputation for our products among our customers.

Our Response to Growing Demand for EVs

While the Japanese government declared that Japan will become carbon neutral by 2050, many countries similarly have pushed forward the environmental policies. Automobile manufacturers are accelerating the shift to electric vehicles (battery electric vehicles, hybrid vehicles, plug-in hybrid ve- hicles, and fuel cell electric vehicles). Since hybrid vehicles and plug-in hybrid vehicles are driven by an engine and a transmission, i.e. our main products, and additionally equipped with an inverter, a converter and other electronic control components, they will increase demand for die casting products. With regard to battery electric vehicles and fuel cell electric vehicles, demand for internal combustion engines will disappear but they will create new demand for various casting products, including electric control compo- nents, motor housing, decelerators, and battery cases. Many of new orders and orders for mass-produced products that we are currently receiving are for EV components. We expect EV parts to account for 30% of the sales by 2025. We will continue to push forward our EV strategy by strengthening sales activity to expand our business areas while responding to changing situations in each country.

For Sustainable Growth

Aiming for the sustainable growth, the Ahresty Group will tackle two ini- tiatives: improvement in the energy consumption efficiency of vehicles by offering aluminum die casting products; and reduction in use of fossil fuel resources in the manufacturing process by improvement in energy efficiency. Most of aluminum we use for production is recycled aluminum. It generates only one-seventh as much CO2 emissions as iron. Furthermore, aluminum

has a specific gravity as low as approximately one-third that of iron. By taking advantage of these environmental properties and advancing our tech- nologies, we believe that we can make vehicles even lighter, contributing to climate change mitigation. We will also actively work to reduce CO2 emissions in the production process. The outlook for economic recovery remains uncertain and dramatic changes in business environments can be expected, but we will strive to improve corporate value through a unified effort as the Ahresty Group. We sincerely ask for your further support.

President & CEO

Arata Takahashi

Representative Director,	Representative Director,
Senior Managing Executive Officer,	Senior Managing Executive Officer,
Chief, Manufacturing Command	General Administrative Command
Junji Ito	Shinichi Takahashi

4

	Director,
Director,	Managing Executive Officer,
Senior Managing Executive Officer,	General Manager, Tokai Plant,
Chief, Sales Command	President, Ahresty Pretech Corporation
Naoyuki Kaneta	Shinichi Gamou

AHRESTY REPORT 2021 5

Ahresty's Value Creation Ahresty's Businesses and Strengths

"Creating High Quality Products."

Fully integrated production system and Ahresty's strengths

Use of sensing

technology to collect, analyze and visualize data

Since the company was founded in 1938, Ahresty has mainly focused its business on manufacturing aluminum die cast products for use in automobiles. Our streamlined production process improves productivity and maintains quality along the entire process, from aluminum alloy ingot production to design and manufacture of molds, casting, and machine processing. We also manufacture and sell MOVAFLOR, a proprietary raised floor system, and peripheral equipment for die cast production. We have also standardized our systems for quality, production, and maintenance at all locations and provide consistent production quality worldwide.

Aluminum Alloy

Ingot Production

[ Ahresty's Production System ]

Manufacturing

Process

[ Designing ]

[ Die Manufacturing ]

Monitoring the operation status of equipment in each process to improve quality and for preventive maintenance

Manufacture and Sales of Peripheral Equipment for Die Cast Production

[ Die Casting ]

[ Machining ]

No.1 share

for clean rooms

in Japan! MOVAFLOR proprietary raised floor system

Auto Parts

[ Delivery ]

[ Measures to Prevent the Spread of COVID-19 ]

[ Using statistical quality control to produce optimal manufacturing conditions ]

Reinforcing company-wide systems to prevent the spread of infection

Setting up a COVID-19 task force

Setting up anti-COVID-19 teams at each site (Implementing comprehensive measures to prevent infection based on the instructions and policies of local governments and municipalities)

Formulating and applying company-wide action guidelines and guidelines for each site

Formulating company-wide action guidelines and guidelines for each site

Clarifying instructions in a manual (Taking temperature upon arrival at work, wearing masks, face guards, etc., conducting periodic sanitization, etc.)

Taking an employee's temperature upon arrival at a plant (overseas)

[ Factors ]	[ 2D codes ]	[ Store/analyze data ]
Materials
		Improved
Equipment
(Casting machines, utilities)		productivity
	sample	and quality
Manufacturing conditions
	Linking measured production parameter	• Design of experiments
Dies
values to quality levels	• Statistical approach

Contributing to weight reduction and electrification of vehicles

Ahresty owns over 200 casting machines in Japan and overseas. When producing complex items, we cooperate with our customers from the development stage to reduce the weight of vehicles. In response to the tightening of fuel economy regulations by many governments to protect the environment and the acceleration of electrification of vehicles, we also proactively offer proposals on technology development for parts for electric vehicles (EVs, HEVs, PHEVs and FCVs). We plan to increase our share of sales of parts for electric vehicles from 11% in FY2020 to around 30% in FY2025.

6

Global presence

In addition to 14 sites in Japan, Ahresty has operations at eight sites in five countries, namely, the United States, Mexico, China, India and Thailand. Our die-casting plants are able to offer products of the same quality from a single drawing in response to the needs of the automobile industry, where commonization of parts and globalization of production have been accelerating. We have established a system of complementary production between plants across bor- ders, including Japan, capable of flexibly responding to changes in production resulting from fluctuations in sales volumes.

Improving productivity with OPCC*

Ahresty has introduced Optimal Process Condition Control (OPCC) at all sites to clarify, maintain and manage the conditions necessary to continuously make good products, thereby improving productivity and the product quality. Under OPCC, sensing technology is used to collect, analyze and visualize various data to find optimal manufacturing conditions. For each of the priority products, a 2D code is given in the casting process, so that the measured values of various production parameters correspond to the product quality, to enable a statistical approach to quality control.

* Optimal Process Condition Control

Developing human resources that underpin our

MONOZUKURI

Human resources development across the Group is the key to globally improving our technology and quality. Ahresty has established a system that allows employees at all sites to receive systematic training of the same quality. Now that the automobile industry is undergoing a once-in-a-century transformation, in response to the accelerating electrification of vehicles, Ahresty offers training programs focused on electrification. In fiscal 2020, a total of 258 employees (129 in Japan, 129 overseas) participated in these programs.

AHRESTY REPORT 2021 7

Ahresty's Value Creation Ahresty's History

Aiming to be the most trusted supplier "Conscientious" is part of the DNA we have inherited

Shimura Aluminum Co., Ltd., Ahresty's predecessor, was founded with a capital of 400,000 yen as a small factory in Itabashi, Tokyo, with three employees.

"Do not tell a lie for the convenience of business" and "Always propose what is best for the benefit of customers" are the words of the late Aiji Takahashi, our founder. This conscientious stance resulted in gaining the trust of the public, serving as the driving force for the subsequent development of the company.

Net sales
(billion yen)
Sales weight
																									March 2011
(tons)
																					September	2008				Great East	Japan
Employees																					Lehman's	Fall				Earthquake
(persons)
(Fiscal year) 2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011

2012

2013

2014

2015

FY2020

Sales weight

128,666tons

FY2020

Net sales 92.9billionyen

	FY2020
	Employees
	22 sites in six countries
	6,124persons
March 2020
COVID-19 pandemic

2016

2017

2018

2019

2020

1938 - Founded

1988 -Renamed Ahresty Corporation.

2000 - Aiming to contribute to weight reduction of vehicles.

1938

Shimura Aluminum Co., Ltd.,

Ahresty's predecessor, found-

ed in Itabashi, Tokyo
Started manufacturing	alu-
minum alloy ingots, die cast
products and aluminum sand
mold castings.	Founder: Aiji Takahashi

1943

Fuso Light Alloys Co., Ltd. (now Ahresty Corpora- tion) established.

1961

Stock listed on the Second Section of the Tokyo Stock Exchange.

1962

Launched MOVAFLOR, first raised floor system in Japan.

1964

ICEPET developed by Fuso Light Alloys won the Champion Award at the International Home Show.

1983

Corporate Philosophy codified

1988

Company name changed from Fuso Light Alloys Co., Ltd. to Ahresty Corporation.

1989

Awarded Deming Prize for the year 1989 (Small and Mid-range Industries).

1996

Mass production of alternator brackets for automobiles by the NI (New Injection)method (Ahresty's proprietary casting method) started.

1997 Mass production of aluminum die- cast monocoque frame for scooters started for the first time in the world.

1999

Awarded in NADCA International Die-Casting Awards.

2003

Received the Minister of Economy, Trade and Industry Award in the 20th Materials Process Technology Commendation.

2004

Started RST Gakuen (academy) aimed at early development of engineers.

2006

Technical Center opened in Toyo- hashi, Aichi.

2014

Listing of the shares changed from the Second Section to the First Section of the Tokyo Stock Exchange.

2018

Celebrated the 80th anniversary.

[ Business expansion and global presence ]

•Hamamatsu Plant started operation.

•Japan Precision Die Mold Mfg. Co., Ltd.

(now Ahresty Die Mold Hamamatsu Corporation) (manufacturing dies) established.

•Tokai Seiko Co., Ltd. (now Ahresty Pretech Corporation) (processing) established.

•Kyoto Die Casting Co., Ltd. Toyohashi Plant (now Tokai Plant) started operation.

•Tochigi Fuso Co., Ltd. (now Ahresty Tochigi Corporation) established.

•Ditec Co., Ltd. (now Ahresty Die Mold Tochigi Corporation) (manufacturing dies) established.

•Kumamoto Fuso Co., Ltd. (now Ahresty Kumamoto Corporation) established.

•Ditec Co., Ltd., Kumamoto Plant (now Ahresty Die Mold Kumamoto Corporation) started operation.

•Kumagaya Plant (production of aluminum alloy ingots) started operation.

•Higashimatsuyama Plant started operation

•Pascal Trading Co., Ltd. (now Ahresty Techno Service Corporation) (manufacturing and sales of die-casting peripheral equipment) established.

•Ahresty Wilmington Corporation (US) established.

•Thai Ahresty Die Co., Ltd., an affiliated company for manufacturing dies in Thailand, established.

•Thai Ahresty Engineering Co., Ltd. (design / Thailand) established.

•Guangzhou Ahresty Casting Co., Ltd. (China) established.

•Ahresty Corporation merged with Kyoto Die Casting Co., Ltd.

•Ahresty Precision Die Mold (Guangzhou) Co., Ltd. (dies / China) established.

•Pascal Industry Co., Ltd. and Sugahara Precision Industry Co., Ltd. merged and renamed Ahresty Yamagata Corporation.

•Ahresty Mexicana, S.A. de C.V. (Mexico) established.

•Ahresty India Private Limited (India) established.

•Hefei Ahresty Casting Co., Ltd. (China) established.

•Integrated Hamamatsu Plant and Toyohashi Plant, and consolidated organizations as Tokai Plant.

•Ahresty Inclusive Service Corporation established.

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AHRESTY REPORT 2021 9