To provide customers with truly excellent products, the Group is working to develop items that have new value that they have not had before and to raise the level of customer service through in-depth product quality management.
For Customer Satisfaction
KOKUYO has established “being useful to customers” as its basic principle in its sales activities, the structuring of its orga-nization, management planning, and other areas. KOKUYO always provides sincere and polite responses to customer inquiries and comments that are received by its Customer Center. In addition, the statements of customers are treated as valuable information to be used for improving KOKUYO products and services as well as are transmitted in real time to the staff inside KOKUYO.
Quality and Safety Management
As KOKUYO expands the percentage of its sales in overseas markets, KOKUYO is striving to adapt its standards for manu-facturing excellence from being a single standard fitting all areas to standards that appropriately meet the needs of indi-vidual markets. When considering quality standards, the oper-ating environment and business conditions vary by country and region for a number of reasons. These include differing cultures and values, such economic factors as per capita GDP, legal requirements for quality and meeting environmental standards, and other factors. While always giving top priority to ensuring safety, KOKUYO is moving forward with the preparation of
optimal quality standards that will gain the support of custom-ers in differing countries and regions. To continue to maintain and improve quality, KOKUYO is taking the following initiatives.
• Strengthening Quality Assurance Systems
Along with realignment of its quality assurance organization and strengthening of corporate governance, such as internal audit functions, KOKUYO reviewed its systems for attaining manufacturing excellence, and is carefully examining the content of its quality assurance operations.
• Active Introduction of Quality Cost Indicators The concept of “quality cost” is one indicator of the cost of measures implemented, including investments and expendi-tures devoted to quality control activities, to maintain quality.
These quality costs are divided into three types: preventive measures, evaluation, and dealing with failures. Beginning in 2010, KOKUYO began the full-scale introduction of the con-cept of “failure costs.” This has involved gaining an under-standing, not of the number of defective products and customer complaints, but the actual economic losses incurred in connection with them. These activities include clarifying the seriousness of customer complaints and the implementation of initiatives to make improvements.
• Introducing Product Risk Analysis Using the R-Map Method
To prevent product-related accidents, KOKUYO has begun to use the R-Map (Risk Map) method, taken from the field of “confidence engineering” to analyze the risks that may be inherent in its products. The analysis tool of the R-Map method is a matrix that has “frequency of occurrence” on the vertical axis and “level of seriousness of risk” on the horizontal axis.
This method visually expresses the level of risk.
• Conduct of Plant Diagnoses (Quality Audits)
To maintain and raise the level of product quality of KOKUYO’s more than 10,000 items, KOKUYO implements plant diagno-ses (quality audits) of its facilities in Japan and overseas. These diagnoses involve the examination of individual plants to deter-mine their strengths and weaknesses. Based on these diagno-ses, KOKUYO is endeavoring to improve its operations by increasing productivity and raising product quality at the same time.
KOKUYO Group Basic Procurement Policy The Kokuyo Group shares its Corporate Philosophy
of “Enrich the world through our products and ser-vices” with its suppliers, and, while working to cre-ate relationships of mutual understanding and confidence as well as fulfill its social responsibility, continues to contribute to social development.
• Pursuit of Quality and Safety
The Group strives to maintain its position as the first choice of its customers, while responding to the special needs of various countries and regions as well as pursuing the highest standards of quality and safety.
• Mutual Development
The Group respects and observes the regulations as well as social norms of various countries and regions, while also conducting fair and transparent transactions, as it works to structure sincere rela-tionships of mutual trust and achieve mutual devel-opment.
• Respect for Human Rights
The Group understands the culture and business customs of various countries and regions and aims for a society where the rights of all people are respected.
• Environmental Protection and Symbiosis with Local Communities
The Group takes environmental protection initia-tives on a global scale, and, by actively participat-ing in the life of the community and actparticipat-ing as a good corporate citizen, seeks to create mutually beneficial relationships with society.
Community Involvement and Development
KOKUYO is aware of its role as a member of society, and, to continue to be a good corporate citizen, KOKUYO strives to make many kinds of contributions to society based on its Corporate Philosophy of “Enrich the world through our prod-ucts and services.” Each of the companies of the KOKUYO Group undertakes its own activities to contribute to the com-munity. In 2012, these included offering guided tours of plants and showrooms, seminars, and contributions to the communi-ty that make use of the special features of KOKUYO’s various business locations, including having KOKUYO staff give talks in schools and elsewhere, and putting emphasis on community contributions in the educational field.
Activities with Deep Roots throughout Japan In addition to sponsoring plant visits, KOKUYO also invites members of the community to visit its showrooms as part of its educational support program and provides students with the opportunity to hear the inside story about product develop-ment and study universal and eco designs. In 2012, KOKUYO held training sessions with a theme well-suited to a stationery manufacturer, “Let’s be aware of the importance of writing!”. In total, 97 children and their parents or adult companions partici-pated in these sessions. In addition, in Tokyo and Osaka, the same sessions for a broader audience drew more than 7,000 persons from 272 groups. KOKUYO also sponsors visits by students in local communities to its plants, and, in 2012, 786 students from 12 schools visited KOKUYO Kogyo Shiga, the flagship plant for paper products. KOKUYO’s Mie furniture plant is also taking initiatives in preservation activities in the nearby Higashiyama Fureai no Mori forest area. At the plants and logistics centers of the KOKUYO Group in the vicinity of
the Osaka Head Office, KOKUYO staff participate actively in cleanup activities and blood donation drives throughout the Osaka metropolitan area. In the Tokyo metropolitan area, taking the Great East Japan Earthquake as a lesson (when numerous people working in offices around KOKUYO’s Tokyo Head Office were stranded overnight), KOKUYO is working together with the government of Tokyo’s Minato Ward to plan for major disasters in the future.
Working to Make Contributions to Communities Worldwide
Overseas, as part of activities to contribute to the community through educational pursuits, for 39 years, KOKUYO Camlin has sponsored its “All India Camel Colour Contest,” a painting contest for children, with the objective of increasing the interest of pupils in art and artistic activities. In 2012, close to five mil-lion children attending 5,400 schools participated in the con-test. In 2011, this competition was recognized by the Guinness World Records as the largest art competition in the world in terms of the number of participants. Also, in China, KOKUYO donates notebooks to children in economically deprived areas.
In Tanzania, East Africa, since 2008, KOKUYO has worked with the Tanzania Pole Pole Club, a citizen’s group engaging in international cooperation activities (gathering used stamps and cards) that works with villagers in tree-planting activities in the region. In 2012, KOKUYO donated 302,583 stamps and 672 cards to this group. As a result of the donation, about 800 tree seedlings were donated and planted as part of the afforesta-tion activities being conducted near Mt. Kilimanjaro (in
Tanzania), which has been designated as a World Heritage site.
KOKUYO holds special classes for children in its showrooms during summer vacations. KOKUYO contributes notebooks to communities in China.
The KOKUYO Group sponsors the “All India Camel Colour Contest” for children in India.
Annual Report 2012 29
Eleven-Year Summary
KOKUYO CO., LTD. AND CONSOLIDATED SUBSIDIARIES
The years ended March 31, 2003, 2004, 2005, 2006 and 2007 and the years ended December 31, 2007, 2008, 2009, 2010, 2011 and 2012
2012.12 2011.12 2010.12 2009.12
For the year:
Net sales ¥275,822 ¥260,005 ¥261,874 ¥266,726
Cost of sales 186,603 173,345 175,843 180,260
Selling, general and administrative expenses 84,366 82,587 82,749 85,887
Operating income 4,853 4,073 3,282 579
Net income (loss) 2,429 (5,460) 815 595
Capital expenditure 7,066 7,262 4,827 3,479
Depreciation and amortization 6,664 6,531 6,009 6,334
Net cash and cash equivalents provided by operating activities 10,788 10,653 8,966 13,737 Net cash and cash equivalents used in (provided by)
investing activities 796 (10,818) (4,730) (1,930)
Net cash and cash equivalents provided by (used in)
financing activities (2,837) 1,040 (2,625) (4,746)
At year-end:
Total assets 258,462 252,794 252,880 252,053
Working capital 56,787 41,289 50,601 49,483
Property, plant and equipment, net 67,835 70,866 77,134 78,050
Total liabilities 105,391 103,213 96,248 93,979
Interest-bearing debt 44,839 44,695 39,797 39,244
Total net assets 153,070 149,581 156,632 158,074
Minority interests 2,437 2,311 709 599
Net assets 150,633 147,270 155,923 157,475
Per share data:
Basic net income (loss) ¥ 20.53 ¥ (46.16) ¥ 6.89 ¥ 5.03
Diluted net income — — — —
Cash dividends applicable to the year 15.00 15.00 15.00 15.00
Net assets 1,273.46 1,245.08 1,318.22 1,331.30
Ratios:
Ratio of operating income to net sales 1.8% 1.6% 1.3% 0.2%
Return on sales 0.9 (2.1) 0.3 0.2
Return on equity 1.6 (3.6) 0.5 0.4
Return on assets 1.0 (2.2) 0.3 0.2
Equity ratio 58.3 58.2 61.7 62.5
Debt-to-equity ratio 25.7 30.3 25.5 24.9
Common stock:
Number of shares issued 128,742 128,742 128,742 128,742
Notes: 1. The U.S. dollar amounts are translated from yen, for convenience only, at the rate of ¥86.56=U.S.$1.00, the approximate exchange rate prevailing on December 31, 2012.
2. Due to the change in KOKUYO’s fiscal year-end, the period ended December 31, 2007 was an irregular nine-month period.
Millions of yen
Thousands of U.S. dollars
2008.12 2007.12 2007.3 2006.3 2005.3 2004.3 2003.3 2012.12
¥326,120 ¥252,824 ¥339,559 ¥303,959 ¥283,519 ¥273,462 ¥272,199 $3,186,483
221,574 175,512 228,959 202,879 187,008 181,279 184,800 2,155,764
99,192 75,910 99,237 86,975 84,352 83,317 82,401 974,654
5,354 1,402 11,363 14,105 12,159 8,866 4,998 56,065
(11,991) (5,326) 5,622 4,145 5,207 1,949 231 28,061
4,988 7,733 4,999 6,042 6,431 9,369 8,186
6,488 4,430 6,057 6,082 6,220 6,197 6,722 76,987
16,153 3,286 7,936 11,488 10,168 7,457 18,148 124,630
(1,012) (11,333) 2,389 (17,217) (20,778) (7,112) (9,789) 9,196
(12,343) 7,349 (5,272) 2,059 7,075 (4,586) (10,353) (32,775)
266,419 301,187 320,033 314,573 291,651 289,194 285,789 2,985,929
50,755 44,584 56,120 50,733 58,486 57,790 54,242 656,042
79,534 81,195 79,349 89,733 94,778 97,134 98,482 783,676
106,599 120,780 130,125 121,063 104,268 103,693 103,913 1,217,560
41,448 52,069 42,958 36,491 26,770 17,777 20,188 518,011
159,820 180,407 189,908 193,522 187,378 185,501 181,876 1,768,369
741 1,225 1,235 1,678 340 360 446 28,154
159,079 179,182 188,673 191,844 187,038 185,141 181,430 1,740,215
Yen U.S. dollars
¥ (101.36) ¥ (45.02) ¥ 46.94 ¥ 33.82 ¥ 41.88 ¥ 15.38 ¥ 1.51 $ 0.24
— — — 31.80 41.88 15.38 — —
15.00 11.25 15.00 15.00 18.50 15.00 15.00 0.17
1,344.82 1,514.64 1,594.79 1,587.49 1,522.17 1,506.80 1,483.73 14.71
%
1.6% 0.6% 3.3% 4.6% 4.3% 3.2% 1.8%
(3.7) (2.1) 1.7 1.4 1.8 0.7 0.1
(7.1) (2.9) 3.0 2.2 2.8 1.1 0.1
(4.2) (1.7) 1.8 1.4 1.8 0.7 0.1
59.7 59.5 59.0 61.0 64.1 64.0 63.5
26.1 29.1 22.8 19.0 14.3 9.6 11.1
Thousands of shares
128,742 128,742 128,742 128,742 128,742 128,742 128,742
Annual Report 2012 31
Management’s Discussion and Analysis
Overview
During the KOKUYO Group’s fiscal year, ended December 31, 2012, the Japanese economy showed a moderate trend toward improvement. However, as a consequence of the slow-down in overseas economies and issues arising in the Japan-China relationship, uncertainties about future trends continued.
The KOKUYO Group made further improvements in its value chain in Japan, which is one of its important strengths. Also, under its policy of aiming for sustainable growth as an “Asian company,” the Group implemented a range of strategies to integrate domestic and overseas operations by creating value chains matched to the business conditions in various countries.
As a result of these strategic moves, the KOKUYO Group reported increases in both net sales and net income for the first time in five years.