Azbil Corporation Publishes 2023 Integrated Report

— Highlights transformation to achieve growth by contributing to the sustainability of society —

Azbil Corporation (Tokyo Stock Exchange code 6845) has published its integrated report, azbil Report 2023. The report highlights the companys initiatives to make contributions leading directly (in series) to the achievement of a sustainable society through the automation business, as well as efforts at transformation to achieve further growth. Specifically, regarding the companys sustainability management efforts, the report clarifies the relationship between materiality*1 and the azbil Groups essential SDG goals,*2 the progress toward which provides KPIs for monitoring progress in addressing material issues. In addition, integrated explanations are given about the progress of both the current management plan and business measures for realizing the vision set forth by top management, together with the focus points for transformation, such as strengthening product competitiveness, R&D/capital investment, investment in human capital, and business foundations, the latter by risk management and corporate governance.

Changes in society and the business environment, such as the push for carbon neutrality, are creating new areas and business opportunities for automation, and demand is expected to expand. The azbil Group has formulated and is working to achieve a management plan*3 that aims to both contribute solutions to the problems facing society and achieve sustainable growth by responding to changing demand with focus on three growth fields*4 that have automation technology as a common base.

From the formulation of its medium-term plan (for fiscal years 2021–24) to today, the company has experienced various changes in the environment, including the COVID-19 pandemic, difficulties in parts procurement, and geopolitical risks. The report describes efforts at transformation to achieve further growth, including reforms such as development to strengthen product competitiveness, strengthening facilities and equipment at R&D bases, investing to improve the development environment, and introducing personnel systems that include human resource development and provide incentives, while maintaining past safety initiatives and taking advantage of various changes.

In addition, from an environmental, societal, and governance (ESG) perspective, which ensures the sustainable development of the azbil Group, explanations are given about initiatives for environmental conservation, from decarbonization to resource recycling and biodiversity conservation, as well as initiatives with business partners on human rights due diligence*5 and on CO2 emission reductions throughout the supply chain. In the area of risk management, the decision-making process is being changed to ensure that management has a thorough understanding of information from departments concerning work sites before decisions are made, and the system for mitigating identified risks is being strengthened. The report also describes the strengthening of corporate governance by various activities of the three committees of the Board of Directors (nomination, audit, and remuneration) and changes to the executive remuneration system. After transition to a three-committee Board structure in June 2022, which was designed to strengthen the effectiveness of the Board of Directors, the three committee chairs, who are outside directors, have provided their evaluations and opinions in a roundtable discussions.

With its philosophy of human-centered automation, the azbil Group plans to ensure its own medium- to long-term development by making contributions in series to the achievement of a sustainable society through its business activities, with the aim of continuously improving enterprise value.

*1. Five areas comprising ten material issues are environment (① climate change, ② resource recycling), ③ innovation, society (④ supply chain, ⑤ contribution to local communities), human resources (⑥ human rights, safety and health, ⑦ learning and human resource development), governance (⑧ product safety and quality, ⑨ corporate governance, ⑩ compliance).

*2. Essential goals of the azbil Group for the SDGs include the areas of (i) environment and energy, (ii) new automation, (iii) supply chain and social responsibility, and (iv) health and well-being management and education (as an organization that never stops learning).

*3. Long-term targets (for FY 2030) are net sales in the 400.0 billion yen range, operating income in the 60.0 billion yen range, an operating income margin of approximately 15%, and an ROE of approximately 13.5%.

Targets for the final year of the 2021–24 medium-term plan are net sales of 300.0 billion yen, operating income of 36.0 billion yen, an operating income margin of 12%, and ROE of approximately 12%.

*4. These three growth fields are new automation, environment and energy, and life-cycle solutions.

*5. According to the report, companies should identify human rights risks in their business operations, including those in the supply chain, strive to prevent and reduce them, and explain and disclose information on the effectiveness of their efforts and countermeasures.

* Posted information is accurate as of the date of announcement.