Daifuku Report 2019

Growth and VisionCEO MessagePriority measures1. Provide smart logistics for customers2. Establish Airport Technologies as the fourth core business3. Pursue the best combination of localization and globalizationIn e-commerce, a rapidly growing market, both commercial and physical distribution channels are “B to C (business to consumer).” Commercial distribution serving stores such as supermarkets is “B to B to C.” For physical distribution, distribution centers conduct “B to B” while consumers conduct “B to C.” Distribution centers for retail sales supply products directly to stores (B to B), and consumers pick up the products in the stores and put them in shopping carts (B to C). At e-commerce distribution centers, this process has been replaced by logistics staff picking out ordered items (B to C). When this consumer behavior at stores is replaced by work done at distribution centers, logistics workloads balloon and it becomes extremely difficult to find sufficient personnel to handle the work. Partially as a result of workforce shortages in recent years, there has been a dramatic increase in demand for laborsaving and automation at e-commerce B to C distribution centers. It is now commonplace in e-commerce for products to arrive at consumers’ doorsteps on the day they are ordered or on the following day. Consequently, the distribution centers that ship these products out are required to have systems that either will not stop working—or will quickly recover if they do stop working—and are robust like other social infrastructure such as public transportation, water, power, gas and other lifelines. Daifuku will continue to develop products and systems for customers in a diverse array of sectors, providing them with Smart Logistics worthy of social infrastructure status. The Airport Technologies business saw orders nearly double between fiscal 2016 and 2018, and it continues to emerge as our fourth core business. While we have to date mostly operated this business in North America, Europe, Asia (excluding Japan), and Oceania, we began taking orders for systems for airports in Japan for the first time in fiscal 2018. Going forward, we will expand the business from conventional baggage handling systems to include software with high-growth potential, and smart airport self-service solutions. Our non-Japan sales ratio was 72% in fiscal 2018, and we now have business facilities in 26 countries and regions. We are focusing on both globalization and localization and achieving self-reliance in sales, production, installation, and service in close connection with local communities. Investment in localized production is an area of particular focus, and in fiscal 2018 we completed an extension on a production facility in South Korea. With the aim to bolster production capacity, in fiscal 2019, along with the construction of new factories in the U.S., China, and Thailand, we acquired a material handling system manufacturer in India.10

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