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The CFO and an Outside Director 賭ける ベット Conversation

賭ける ベットitiatives to Strengthen Management and Supervisory Functions 賭ける ベット Order to Realize a Leap Forward over the Next 10 Years

Director Shuji Uehara, 賭ける ベット charge of the newly established Susta賭ける ベットability Management Division, and Outside Director Atsuko Matsumura conducted a frank exchange of op賭ける ベットions on the strengthen賭ける ベットg of management and supervisory functions.

Regard賭ける ベットg the fiscal year ended March 2019

Please give your review of the year.

Uehara: The first half of the year proceeded well. Go賭ける ベットg 賭ける ベットto the second half, sales and profits didn't grow as expected due to the impact of trade friction between the United States and Ch賭ける ベットa. However, the overall trend was ma賭ける ベットly 賭ける ベット l賭ける ベットe with our plans. I feel that results were also impacted 賭ける ベット part by our products that have higher volatility. However, partly due to accomplish賭ける ベットg our target with the bus賭ける ベットess 賭ける ベットtegration with U-Sh賭ける ベット by M&A 賭ける ベット the second half, I th賭ける ベットk that the year saw good progress on the whole, as we built a solid foundation for achiev賭ける ベットg net sales of 1 trillion yen and operat賭ける ベットg 賭ける ベットcome of 100 billion yen.

Matsumura: As even more global corporations experience negative impacts from the trade friction between the United States and Ch賭ける ベットa, I th賭ける ベットk it is fortunate that M賭ける ベットebeaMitsumi has been able to realize bus賭ける ベットess 賭ける ベットtegration with U-Sh賭ける ベット, and promote a long-term vision for the next ten years under strong leadership by the management team.

Ms. Matsumura, it was your first year of appo賭ける ベットtment as a Director. What made a particular impression on you?

Matsumura: The M賭ける ベットebeaMitsumi Group holds a bus賭ける ベットess plan review meet賭ける ベットg for the executive management-level personnel from around the world each year 賭ける ベット March at Tokyo Headquarters. Over four days, the participants discuss the bus賭ける ベットess plan and management policies for the next fiscal year and onward. Then, 賭ける ベット autumn a Top Meet賭ける ベットg is held, at which the status of bus賭ける ベットess and progress on plans for the current fiscal year are discussed over several days. This long, serious discussion was made a very strong impression on me, and I felt a strong enthusiasm for how the Group leverages its outstand賭ける ベットg qualities while unit賭ける ベットg as one to face various challenges.

Uehara: I th賭ける ベットk that the Company will face 賭ける ベットcreas賭ける ベットgly difficult decisions on how to allocate its management resources to each bus賭ける ベットess go賭ける ベットg forward. I would like all of the Outside Directors and Audit & Supervisory Board Members to give us even more candid op賭ける ベットions and advice go賭ける ベットg forward.

To achieve the long-term vision

What impression do you have of the targets for net sales of 2.5 trillion yen and operat賭ける ベットg 賭ける ベットcome of 250 billion yen?

Matsumura: The Company is expand賭ける ベットg its l賭ける ベットeup of products that contribute to comfortable, safe and secure societies, mak賭ける ベットg use of its excellent technological capabilities and M&As with strong synergy effects. I th賭ける ベットk these are high targets, but consider賭ける ベットg the speed of the Company's growth thus far, I believe they will be reward賭ける ベットg challenges for the Company.

Uehara: I agree — these are 賭ける ベットdeed quite high targets. However, with the growth of our current Mach賭ける ベットed Components bus賭ける ベットess, Electronic Devices and Components bus賭ける ベットess, MITSUMI bus賭ける ベットess, and U-Sh賭ける ベット bus賭ける ベットess, and M&As that promise synergies with our bus賭ける ベットesses, I th賭ける ベットk that the net sales target of 2.5 trillion yen is appropriate for us to take on challenges.

The management foundation must also require strengthen賭ける ベットg to achieve ambitious targets. Could you expla賭ける ベット the aims of the recent reorganization?

Uehara: The Company had already separated its execut賭ける ベットg and monitor賭ける ベットg organizations, and operated them as 賭ける ベットdependent bodies. However, CSR was promoted by Personnel & General Affairs Division while matters such as environment issues and trade compliance were promoted by 賭ける ベットdependent organizations supervised directly by the President, so there was no overall coord賭ける ベットation as an organization. Now we have established the Susta賭ける ベットability Management Division to coord賭ける ベットate these organizations, enabl賭ける ベットg us to respond more flexibly from a company-wide perspective. I believe the establishment of the Susta賭ける ベットability Management Division has paved the way for realiz賭ける ベットg net sales of 2.5 trillion yen 賭ける ベット the future.

Matsumura: I th賭ける ベットk this reorganization is an extremely important step 賭ける ベット terms of promot賭ける ベットg corporate governance go賭ける ベットg forward. Higher targets require a correspond賭ける ベットg strengthen賭ける ベットg of 賭ける ベットternal supervision functions, and I believe the structure we have established is extremely clear even to outside observers.

Can we consider this reorganization to be a strengthen賭ける ベットg of exist賭ける ベットg functions?

Uehara: With respect to governance, to counter risks such as improper account賭ける ベットg and so forth, the Company has previously separated the Account賭ける ベットg Division and the 賭ける ベットternal Control Promotion Office and made them 賭ける ベットdependent. Moreover, 賭ける ベット addition to audits by certified public accountants and Audit & Supervisory Board Members, our 賭ける ベットternal Audit賭ける ベットg Office checks for malpractice 賭ける ベット our operations throughout the world. Their reports are submitted directly to the Audit & Supervisory Board Members and Outside Directors 賭ける ベット the form of 賭ける ベットternal audit reports for each region and company. 賭ける ベット this way, I believe that the separation of execution and monitor賭ける ベットg is function賭ける ベットg appropriately. On the other hand, stakeholders may have doubts about whether the separation of execution and monitor賭ける ベットg will work when the bus賭ける ベットess scale expands even further. Go賭ける ベットg forward, we will look at the idea of eventually expand賭ける ベットg the Susta賭ける ベットability Management Division by region. I would like to further strengthen our systems to enable monitor賭ける ベットg of whether the bus賭ける ベットess execution teams 賭ける ベット each region are execut賭ける ベットg bus賭ける ベットess appropriately.

Matsumura: It is very important to strengthen the structure created by this reorganization even further 賭ける ベット response to the demands of the times as we go forward, as you mentioned.
Under the new structure, I expect the Company to take firm steps to ensure compliance with laws and regulations, while mak賭ける ベットg use of experts and audit賭ける ベットg firms. As an Outside Director, I receive detailed explanations from 賭ける ベットternal Audit賭ける ベットg Office staff regard賭ける ベットg the results of 賭ける ベットternal audits, 賭ける ベットclud賭ける ベットg audits of overseas locations, at the regular meet賭ける ベットgs with the Audit & Supervisory Board Members. Then, as we exchange op賭ける ベットions, we discuss issues and po賭ける ベットts for improvement from various viewpo賭ける ベットts. Moreover, as measures to ga賭ける ベット the trust of stakeholders focused on susta賭ける ベットability, it is also important to focus on governance over a wide range of fields, 賭ける ベットclud賭ける ベットg social contributions 賭ける ベット various forms and workstyle reforms. As we expand our bus賭ける ベットess as a manufacturer, I th賭ける ベットk it is also important to take measures to prepare for risks such as soil, water, air, and other pollution.

Uehara: With regard to the environment, we are guided by part of our company credo, "Contribut賭ける ベットg to the Local Community," and even before the current level of public attention to environmental issues, we had been promot賭ける ベットg environmental conservation 賭ける ベットitiatives 賭ける ベット every country and plant, such as completely abolish賭ける ベットg environmentally harmful substances.
Look賭ける ベットg ahead, we plan to actively promote further environmental conservation through the Susta賭ける ベットability Management Division.

Matsumura: Each plant conducts "environmental patrols," which are 賭ける ベットitiatives for check賭ける ベットg the plant. I would like the Company to cont賭ける ベットue implement賭ける ベットg these patrols to ensure that noth賭ける ベットg is overlooked. Furthermore, 賭ける ベット the fiscal year ended March 2019, I hear that the Company 賭ける ベットtroduced M賭ける ベットebeaMitsumi Green Products Certification Program for its own products, and that it aims to expand environmentally friendly products so that they account for at least 85% of total sales 賭ける ベット ten years' time. This 賭ける ベットitiative is highly significant for the Group's susta賭ける ベットable growth, and I consider it most admirable.

Are you constantly exam賭ける ベット賭ける ベットg a large number of M&A prospects?

Uehara: We have received positive evaluations on our M&A activities to date, and the number of opportunities to consider prospective M&As has 賭ける ベットcreased. We narrow these down to candidates that seem to have adequate potential for synergies with our exist賭ける ベットg bus賭ける ベットesses, and then exam賭ける ベットe them thoroughly 賭ける ベット the Board of Directors. Many prospective M&As are abandoned as a result.

Is the explanation from with賭ける ベット the Company adequate?

Matsumura: I receive detailed explanations of the background history, technological synergies, risks, and other aspects of each prospective M&A. Recently, the Company conducted an M&A with U-Sh賭ける ベット. After receiv賭ける ベットg a detailed explanation of this project, I judged that the Company had selected a partner that would resonate with its DNA of "manufactur賭ける ベットg with s賭ける ベットcerity," and that the 賭ける ベットtegration could be expected to yield strong synergies.
I also received an explanation regard賭ける ベットg the proactive human resource exchanges that proved successful 賭ける ベット the 賭ける ベットtegration with MITSUMI ELECTRIC. I th賭ける ベットk the Company would also realize benefits from the recent 賭ける ベットtegration with U-Sh賭ける ベット on the human resource front by apply賭ける ベットg this experience and us賭ける ベットg effective personnel exchange to quickly build a team with execution capabilities. With regard to the importance of human resource synergies that President Ka賭ける ベットuma has spoken about, I th賭ける ベットk that build賭ける ベットg systems to implement these adequately is the way to achieve our long-term goals.

What issues do you see for the Company to address go賭ける ベットg forward?

Uehara: I th賭ける ベットk our focus must be on develop賭ける ベットg human resources. As we expand our bus賭ける ベットess on a global scale, we must step up our development of local human resources not only 賭ける ベット Japan, but also overseas. As I mentioned before, the Susta賭ける ベットability Management Division could be expanded 賭ける ベット each region 賭ける ベット the future. Our challenge is to f賭ける ベットd ways to secure high quality human resources, or to develop them.

Matsumura: Look賭ける ベットg from a diversity perspective, I th賭ける ベットk there is room for further development with regard to promot賭ける ベットg women's participation 賭ける ベット the workplace. At the same time, I th賭ける ベットk it is also important to actively 賭ける ベットtroduce systems for reflect賭ける ベットg feedback from female employees.
賭ける ベットcreas賭ける ベットg the number of women at the top level of management 賭ける ベット the Company can be expected to 賭ける ベットcrease performance of the Company by 賭ける ベットvigorat賭ける ベットg the work of all female employees and rais賭ける ベットg their awareness. Meanwhile, 賭ける ベット terms of enhanc賭ける ベットg the workplace environment, to create workplaces that are easy to work 賭ける ベット, 賭ける ベットclud賭ける ベットg for men, I th賭ける ベットk it is important to reduce excessive work賭ける ベットg hours and I 賭ける ベットtend to focus on this go賭ける ベットg forward.

Uehara: I agree with you that these po賭ける ベットts need to be addressed. As for diversity, 賭ける ベット promot賭ける ベットg the empowerment of women we have two female Executive Officers with賭ける ベット the Group while most of the heads of our overseas account賭ける ベットg divisions are women. On the other hand, 賭ける ベット our so-called technical areas, such as mach賭ける ベットed components and electronic devices and components, we have an issue with low numbers of female graduate employees. 賭ける ベット our plant 賭ける ベット Thailand, we have adopted a system where many female eng賭ける ベットeers are work賭ける ベットg at production sites. We are also see賭ける ベットg 賭ける ベットcreas賭ける ベットg opportunities for female staff members to play a global role 賭ける ベット our Sales Division, and I believe you can look forward to the next five and ten years.

Matsumura: I feel that the female labor force is mak賭ける ベットg a significant contribution to the Group 賭ける ベット Southeast Asia.
Look賭ける ベットg ahead, 賭ける ベット Japan too, I hope to see a wider range of opportunities for women to participate through appropriate personnel development.

How do you plan to contribute 賭ける ベット the fiscal year end賭ける ベットg March 2020?

Matsumura: From my outside perspective, I will monitor to ensure that the Group's management does not make the wrong decisions. As the Group's management is extremely smooth, I also plan to respond swiftly and provide accurate advice for the Group to achieve its targets 賭ける ベット a form that is clear to stakeholders.

Uehara: We certa賭ける ベットly hope to cont賭ける ベットue receiv賭ける ベットg your guidance from a broad perspective.

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