サンゲツ（8130） – SANGETSU REPORT 2021

SANGETSUReport 2021SANGETSU Integrated Report Sangetsu Corporation1-4-1 Habashita, Nishi-ku, Nagoya-shi,Aichi 451-8575, Japanhttps://www.sangetsu.co.jp/english/SANGETSUReport 2021 SANGETSU Integrated ReportWe share the joy of design with those who create new space.The joy of fulfilling your dream at home.The joy of envisioning and realizing unconventional commercial spaces and facilities.The design that we pursue encompasses not only the design of products, such as the aesthetics and functions of the products themselves, but the design of spaces that set the context for the thinking and activities of people within those spaces.We will transform into a Space Creation Company including comprehensive interior design from the perspective of the design of products, spaces, and experiences.MSCI JapanESG Select Leaders IndexMSCI Japan Empowering Women IndexS&P/JPXCarbon Efficient Indexwork with Pride 2020Silver rankingGomez IR Site Ranking 2020 Silver Prize AwardsThe 2021 Certified Health & Productivity Management Organization Recognition Program (large enterprise category)SANGETSU Report 2021 Editorial PolicyThe SANGETSU Report is an integrated report that has been published annually since 2015 to facilitate Sangetsu stakeholders’ understanding of the Sangetsu Group’s corporate value and medium- to long-term growth potential. The 2021 report describes our activities to become a Space Creation Company and includes enhanced financial and non-financial information based on the opinions of our stakeholders referred to in our interviews of persons both inside and outside the company. In the editing process, we used the International Integrated Reporting Framework published by the International Integrated Reporting Council (IIRC) as a reference. We sincerely hope that this report will help more people understand the Sangetsu Group.l Scope of Reporting Organizations Sangetsu Corporation and its consolidated subsidiariesl Period Covered April 1, 2020 to March 31, 2021 l Date of Publication October 2021(includes some activities after the reporting period)Cautionary Statement with Respect to Forward-Looking StatementsAll statements, including forward-looking statements, other than historical facts in this report are based on forecasts, expectations, assumptions, plans, understanding, evaluation, and other matters and are prepared using the information currently available to the Sangetsu Group. To calculate quantitative forecasts, a certain set of assumptions essential in forecasting is also used in addition to facts that have been confirmed and accurately understood in the past.01SANGETSU Report 2021Co rporate PhilosophySangetsu’s corporate philosophy consists of: Company Creed, representing the timeless and unchanging spirit of Sangetsu since its founding; the Corporate Mission; and our Brand Concept.Company CreedSincerityRealizing what people expect with Sincerity is the starting point of our business. Sincerity is everlasting and unchanging Sangetsu original spirit.Corporate MissionTo contribute to society through interior design andstrive to create a daily culture of enrichment.Brand ConceptWe share joy of design with those who create new space.The Long-term Vision of Sangetsu Group [DESIGN 2030]The Entire Sangetsu GroupAims to Become a Space Creation Company.Social Values Sangetsu Group Aims to RealizeThe Sangetsu Group aims to contribute to the realization of a society that is:InclusiveSustainableAn equal and healthy inclusive societyA sustainable society that protects the global environmentEnjoyableA more affluent and enjoyable societyI N D E XAbout the Sangetsu Group 02 Corporate Philosophy04 Message from CEO08 Growth HistoryOur Direction 10 Value Creation Process12 Transforming the Business Model14 The Long-term Vision of Sangetsu Group [DESIGN 2030]16 Medium-term Business Plan (2020–2022) [D.C. 2022]Growth Strategy 18 Special Feature 1 Logistics Strategy for the Reinforcement of Service Functions20 Business strategy l Interior SegmentEfforts toward Sustainability 34 ESG Management23 24 26 l Exterior Segmentl Space Creation Segmentl Overseas Segment28 Financial Strategies30 Financial Highlights32 Non-financial Highlights (Non-Consolidated)36 Human Rights and Diverse Work Styles38 Fair Business Practices and Consumer Issues40 Community Involvement42 Safeguarding the Global Environment44 Special Feature 2Efforts in Reducing Environmental FootprintGovernance 46 Board of Directors48 Corporate Governance52 Message from an Outside Director53 Compliance54 Risk ManagementData Section 56 10 Year Consolidated Financial Summary58 ESG Data (Non-Consolidated)59 Corporate Profile / Stock Information0203SANGETSU Report 2021SANGETSU Report 2021Message from CEOMessage from CEOHow do you assess your financial results for fiscal 2020? Also, can you describe the progress you achieved during the first year of your Medium-term Management Plan?In fiscal 2020, the spread of the novel coronavirus (COVID-19) had a huge impact on our operations. In particular, the market for renovations at restaurants, hotels, and offices in the non-residential sector was extremely harsh. Owing to these factors, both consolidated net sales and gross profit decreased for the first time in 11 fiscal years since fiscal 2009. Essentially, it is precisely in such a harsh market envi-ronment that we should be able to leverage our competitive advantages and business strengths. So we are seriously reflecting on our inability to fully utilize these capabilities. Meanwhile, under our Medium-term Business Plan, we steadily implemented proactive measures just as in the past. These measures included establishing and integrating a new distribution base, the Kansai Logistics Center; opening the sangetsu Sample Books Recycling Center to reduce the environmental burden; acquiring the shares of and making into a subsidiary Wavelock Interior Co., Ltd., the largest vinyl wallpaper manufacturer in Japan; and launching the “KAGETOHIKARI” wallpaper and flooring collection in col-laboration with architect Kengo Kuma. On the other hand, I believe that our review of and improvements to our daily operations that serve as the basis of our business are still insufficient. We must strengthen our actual business foundation to fully utilize our proactive mea-sures. Going forward, I believe that enhancing on-site improvement capabilities without being constrained by past precedents will be a primary issue for ensuring a business recovery.Your overseas business is facing difficult circumstances. How will you undertake a review of your strategies?The Sangetsu Group has designated its business activity area as the Pacific Rim region and is undertaking its overseas business in the three markets consisting of North America, China/Hong Kong, and Southeast Asia. Koroseal Interior Products Holdings, Inc., which handles the North American market, is first of all reviewing costs and strengthening its sales structure to lower its break-even point. In the Chinese market, shares of Goodrich Global Hong Kong have been transferred from Goodrich Global Holdings Pte., Ltd. to Sangetsu as part of current efforts to build a system directly managed by Sangetsu. In the Southeast Asian mar-ket handled by Goodrich Holdings of Singapore, we will concentrate management resources on the four countries of Singapore, Malaysia, Thailand, and Vietnam; identify product strategies and priority markets; and work to strengthen profitability. been the hospitality market such as accommodation facilities. However, this market began to gradually stagnate even before the spread of COVID-19 and a shrinking of this market became clearer due to the impact of stay-at-home measures. In view of this, we are also shifting our business focus to markets where needs are increasing, namely healthcare markets such as nursing care and medical care as well as education-related markets. In overseas markets, our main market to the present has Will you change your business style due to the impact of COVID-19?COVID-19 has undoubtedly had an enormous impact on the market and has accelerated changes in social structures and people’s lifestyles and values. Nonetheless, we are not con-sidering significantly changing our policies in terms of what we must do to achieve further growth. At the same time, however, we are strongly aware of the growing importance of digital business. For example, digital sample books can be used as alternatives to real physical sample books. There is already a growing awareness among American designers and design-affiliated persons that “inspi-ration is from digital and final decisions are from real sam-ples.” Although digital sample books improve user conve-nience, as a company that has distributed hundreds of thousands of sample books and handles 12,000 items, we also believe that demonstrating our strengths on the basis of scale will become increasingly difficult. That said, our business cannot exist in digital form alone. Even if some sample books become digital books, confirming colors and textures in a real physical format is ultimately essential for the final product selection. Moreover, wallpaper and flooring materials must be delivered to and installed at actual sites so needs for these real physical capabilities that we possess will not change. I believe that extensively strengthening these real capabilities while also utilizing digital formats will become extremely important.Designing a New Business Model in Aiming for Improvement of Sustainable Corporate Value0405Shosuke YasudaPresident, CEOSANGETSU Report 2021SANGETSU Report 2021Message from CEOMessage from CEOToward becoming a Space Creation Company in 2030The “joy of design” to all stakeholdersWhat are your feelings in reflecting back on the seven years since you took over the duties of president?Over the past seven years we have been reforming Sangetsu’s actual business structure, and I feel that substan-tial aspects of this have changed considerably. In the future, I would like to ensure that the measures taken to the present lead to profits and that Sangetsu’s transformation can be demonstrated in the market through its solid business results. With the domestic construction market unlikely to grow significantly it might be difficult to achieve large and dramatic growth in the interior segment of the Japanese market, where we already command a high market share. Nevertheless, I believe we can still gradually increase quantity and share in the Japanese market and that improving our profitability in conjunction with this will enable growth over the medium term. Our basic thinking is that the two pillars of our medium- to long-term growth strategy will be to promote the conversion of business models and expand and convert business for-mats in the Japanese market toward becoming a Space Creation Company as well as to improve profitability and expand the scale of our overseas businesses. Since its establishment, Sangetsu has built its own busi-ness model that includes product development and delivery systems. In this sense, there are no other company models or precedents that can serve as a model. Therefore, to ensure we continue to grow as a company, we must continu-ously identify the services we should strengthen and design and build new business models that can create such ser-vices. The Space Creation Company we envision as the company we aim to become under the 2030 long-term vision involves shifting from our conventional business model of selling “products” to a new business model of proposing and selling “experiences” through space design. We will steadily build a business structure that can return value to all stake-holders by acquiring stronger and more proactive positions in the value chain and increasing profitability.the creation of a system that proposes comprehensive designs that starts with planning and designing the kinds of space we should propose to our customers and that also encompasses each product, space design, and installation. Another strength is our delivery functions. We provide extremely detailed services whereby we can cut products into units as small as 10 cm and provide same-day delivery in response to orders from a wide range of customers that include interior contractors served by our distributors, instal-lation sites nationwide, home builders, and general contrac-tors. Another feature of our business is sales activities in collaboration with distributors. To improve the efficiency of sales activities, Sangetsu handles sales to business owners, general contractors, design offices, house builders, builders, and developers while entrusting distributors with sales to interior contractors, which is their strength. In this way, we are strengthening important functions in space creation and are focusing on becoming a company whose business activities are “sales of materials and installa-tion” and “sales of space” as key elements of our conversion to a Space Creation Company.In addition, in the Space Creation Business, which is leading the conversion to this business model transformation, we will utilize the customer base, design capabilities, and installation capabilities cultivated to the present in our interior business and we are building a business structure that has comprehensive installation management capabilities with enhanced expertise. In 2020, we hired external human resources who have many years of experience at exterior companies to serve as Sangetsu’s executive officer in charge of space creation and Sungreen Co., Ltd.’s General Manager, Space Creation Division. One of Sangetsu’s unique strengths unmatched by any other company is its ability to make integrated proposals for exteriors and interiors. We are transforming our position in the market by transcending the boundaries of our business and strengthening proposal-based sales encompassing design across the entire Group.What are your strengths and competitive advantages as you transform into a Space Creation Company, which is your business model for the future?Our first strength is our comprehensive design capabilities for designing and proposing entire spaces. We are promoting What types of policies are you implementing in your sustainability activities?On the environmental front, we place importance not only on reducing GHG emissions and resources at offices and ware-houses during our business activities, but also on the follow-ing three points in particular. The first is to reduce GHG emissions, energy, and wood waste emitted from production plants. The second is to collect and recycle sample books. The third is to collect products actually installed in buildings. Our policy is to steadily proceed with these initiatives starting from areas close to our main business such as Group-wide initiatives that include overseas operations as well as collabo-ration with suppliers. In social-related areas, we are focusing on supporting the refurbishment of child welfare facilities and promoting gender diversity. Child welfare facilities sometimes have difficulty in providing comfortable interior spaces due to budget prob-lems. We believe that interior refurbishment support, whereby we use our products to create comfortable spaces for chil-dren, is a unique Sangetsu activity in which employees can proactively participate while utilizing the Company’s main business. In terms of gender diversity, promoting the active participation of diverse human resources is an indispensable initiative from the perspective of Sangetsu’s business format of proposing a wide range of interior spaces. Many women already play active roles in various workplaces at Sangetsu. I believe that changing to a more attractive workplace where everyone can utilize their individuality and deploy their strengths regardless of gender will enable a better and stron-ger company.Please explain the ideas embodied in the brand statement “Joy of Design,” which is the basis of all your activities.In our discussions of branding, I have placed value on “design” ever since I assumed the duties of president. This is a broad concept that encompasses not only the design of products, but that also includes the design of experiences and the design of our actual management itself. I want to place value on “design” not just in terms of product design but also for every aspect of our work. This strong feeling is embodied in our brand statement “Joy of Design.” Five years have passed since the statement was formu-lated in 2016. During this time, I sense that “Joy of Design” has taken on an even broader meaning as the way we work and the ways we should work within the company evolve. Our original idea was to “provide the joy of design to those people who create space.” In recent years, we have expanded this idea to encompass the meaning that Sangetsu itself feels and savors the joy of design in the same manner as its customers and connects this to the value provided to customers. This idea is also linked to the three social values the Sangetsu Group aims to realize under its a long-term vision. These are “Inclusive,” which aims to create an inclusive society not only in Japan but throughout the world; “Sustainable,” which aims to realize a sustainable society; and “Enjoyable,” which encapsulates our desire to realize a richer society filled with joy. We will increase the value of our existence as a company by sharing the “joy of design” with all stakeholders and return this as social value.0607SANGETSU Report 2021SANGETSU Report 2021Growth HistoryContributing to fulfilling lives and growingtogether with the interior industrySangetsu’s history runs hand in hand with the develop-ment of the Japanese construction and interior industries. More than 170 years have passed since Yasuke Hibi founded Sangetsudo. In the Edo period, he had started a picture framing business on the south side of Nagoya Castle’s Habashita Gate. Amid the rapid growth of hous-ing-related industries in Japan, we have been constantly enhancing our product development, sales, and distribu-tion systems, while contributing to the development of the interior industry. In 2014, Sangetsu formulated its first Medium-term Business Plan, Next Stage Plan G, under a new manage-ment structure led by the new president and then rein-forced and expanded its businesses. In 2020, Sangetsu presented DESIGN 2030, its long-term vision, to the public and developed the Medium-term Business Plan D.C. 2022. Sangetsu is working hard to become a Space Creation Company.The Long-term Vision [DESIGN 2030]Medium-term Business PlanMedium-term Business PlanMedium-term Business Plan▶ Details P. 16-17Next Stage Plan G2014-2016PLG 20192017-2019D.C. 20222020-2022Basic PoliciesBasic PoliciesBasic Policies1. Business strategy for growth1. Expand earnings through qualitative 1. Establish a sound corporate structure that allows employees to actively participate in management2. Restructure our business strategy3. Strengthen stakeholder value4. Passing on our corporate philosophy, principles, and vision since our founding2. Enhance human resources3. Bolster profit management system4. ESG and CSR policiesgrowth of core business2. Growth of profitability in next-generation business based on resources of core business3. Strengthen management and business foundations4. Realize social valueWorld War IITOKYO 1964 Olympic GamesJapan’s High Economic Growth PeriodCollapse of Bubble EconomyGlobal Financial CrisisDays beforeEstablishment Early YearsRapid Growth and Stability PeriodPeriod of Innovation1849 (Kaei 2)19531960197019801990200020102014201520162017201820192020202120221849Yasuke Hibi founds Sangetsudo, a picture framing business1953Establishes Sangetsudo Shoten Co., Ltd.1956Enters wallcovering business1965Launches first original wallpaper “Elite”1972Showroom opened in Minami Aoyama, Tokyo1979Enters flooring materials business1981Starts fabric sales1982Starts carpet sales1986Starts floor tile sales1988Starts carpet tile sales1994Starts upholstery sales1995Launches “REATEC” self-adhesive decorative film1996Lists on the First Section of the Tokyo Stock Exchange2000Launches curtain recycling system2005Makes Sungreen Co., Ltd. a subsidiary2014Shosuke Yasuda assumes presidency2015Relocates and reopens a renovated Tokyo Shinagawa Showroom2018Establishes Sangetsu Okinawa Co., Ltd.Establishes Nomination and Remuneration CommitteeTransitions to a Company with an Audit & Supervisory Committee structure2016Establishes Chinese subsidiary Sangetsu (Shanghai) Corporation2019Enters EC business with “WARDROBE sangetsu”Makes U.S. company Koroseal Interior Products Holdings, Inc. a subsidiaryEstablishes Renovation Division (Currently Space Creation Division)2021Makes Wavelock Interior Co., Ltd. a subsidiaryMakes Goodrich Global Holdings Pte., Ltd. a wholly owned subsidiaryKansai Logistics Center constructed to integrate two logistics hubs2017Makes Fairtone Co., Ltd. a subsidiaryEstablishes Sangetsu Vosne CorporationMakes Singapore-based Goodrich Global Holdings Pte., Ltd. a subsidiary2020Establishes Space Creation Business Unit in Sungreen Co., Ltd.Sangetsudo Shoten Co., Ltd.Minami Aoyama showroomThe sample book “82-83 Sungetsu Carpet”sangetsu design site FLAGSHIPShinagawa showroomKoroseal Interior Products Holdings, Inc.Goodrich Global Holdings Pte., Ltd.Kansai Logistics Center0809SANGETSU Report 2021SANGETSU Report 2021About the Sangetsu GroupAbout the Sangetsu GroupSangetsu GroupValue Creation ProcessThe Sangetsu Group’s corporate philosophy is to contribute to society through interior design and strive to create a daily culture of enrichment by providing the “Joy of Design.” Amid a constantly changing external environment, we will review and refine our process of creating value in response to vari-ous social issues and needs in order to enhance the value provided to society.PurposeCorporate MissionTo contribute to society through interior design and strive to create a daily culture of enrichmentBrand ConceptWe share joy of design with those who create new space.DetailsP.14︲15DetailsP.16︲17The Long-term Vision of the Sangetsu Group[DESIGN 2030]The Entire Sangetsu Group Aims to Become aSpace Creation Company.Medium-term Business Plan (2020-2022)[Design & Creation D.C. 2022]Basic Policies1. Expand earnings through qualitative growth of core business2. Growth of profitability in next-generation business based on resources of core business3. Strengthen management and business foundations4. Realize social valueThe Social Values the Sangetsu GroupAims to RealizeThe Sangetsu Group aims to contribute to the realization of a society that is:InclusiveSustainableEnjoyableAn equal and healthy inclusive societyA sustainable society that protects the global environmentA more affluent and enjoyable societyInputBusiness ModelOutputOutcomeIntellectual CapitalDesign archives, product development know-how, trademarks, and customer dataHuman CapitalSales professionals• Domestic interior business sales staff: Four companies 40 offices, 700 people• Domestic exterior business sales staff: 15 offices, 90 people• Overseas sales staff: Seven countries, 210 peopleDesign professionals• Product design professionals: 70 people• Professionals of proposals for total interior coordination: 160 people• Space creation professionals: 15 peopleLogistics professionals• Specialist staff and contractors: 800 peopleInstallation professionals• First-class and second-class certified architects: 25 people• Interior installation: 1,300 people / Exterior installation: 150 people• Building operation and management engineers: 85 peopleSocial and Relationship CapitalRelationships with suppliers• Interior business suppliers: 270 companies• Exterior business suppliers: 150 companiesRelationships with customers• Direct sales destinations: 6,000 companies• Related business partners: more than 200,000 companies• Overseas business partners: 29 countriesSolid corporate brandsManufactured CapitalManufacturing• Wavelock Interior (Japan’s largest wallcoverings manufacturer)• Koroseal in U.S. (state-of-the-art wallcovering manufacturing facilities)• Sample Book Recycling CenterInventory• Logistics, processing, and shipping hubs in Japan 8 hubs / Approx. 236,000m2Delivery• Domestic delivery truck 500 units a dayFinancial Capital• Total assets ¥158.8 billion • Net assets ¥93.6 billion• Equity ratio 58.8%• Cash and equivalents at end of period ¥25.12 billionPlanningdesignlseaSgnirutcafunaMProcurementInventoryShippingyrevileDProduct developmentDesign of productsseitivitca ngiseDisphsreaeDlnoitcurtsnoc roiretnIynapmocrotcartnoc emirPsrekamesuoHsredliuB /noitallatsnIDesign of spacesDesign of servicesMateriality (key issues) Environment/Social/GovernanceDetailsP.12︲13ResidentialspaceNon-residential spaceDetailsP.34︲55Social Issues• Climate change, natural disasters • Lack of energy and resources• Move away from fossil fuels• Labor shortage due to declining birthrate and aging population • Pandemic threatNeeds of Society• Measures against aging of buildings and infrastructure• Expectations of improvement in QOL• From the consumption of products to the consumption of experiences • Use of ITInterior Industry Challenges• Decline in housing starts • Shortage of installer of interior products• Shortage of logistics companies capable of handling long and heavyweight loadsDetailsP.20︲27PositiveCreation of Economic Value Fiscal year ended March 2021Interior SegmentDeveloping, proposing, and delivering the optimal interior products for space creation• Approx. 12,000 original products offering superior design, functionality, and ease of installation• Issued 1.5 million sample books annually• Proposal sales to all customers in the value chain• Proposals for total interior coordination by design professionals• Items always in stock, minimum sales unit of 10 cm, and same-day shipment Daily product shipments 60,000/day Number of samples 40,000/day Consolidated net salesOperating incomeROEDomestic market shares• Wallcoverings• Flooring materials• FabricsOverseas market share¥145.3 billion¥6.7 billion5.12%50%30–50%23%Imagining spaces, proposing designs, and creating them• Design and proposal of services• Overall space design for interior and exterior• Comprehensive construction capabilities to implement various design plans• An installation network spread nationwide (Japan)Exterior SegmentProviding and installing all kinds of exterior products• Providing exterior space designs through a broad product portfolio• All-inclusive exterior product lineup• Providing installation servicesOverseas SegmentManufacturing wallcoverings and sourcing them to provide optimal products to North America and Asia• Manufacturing and distribution of wallcoverings and digitally printed wallcoverings in North America• Providing high-quality designs in the Pacific Rim• Non-residential wallcoverings market share in North America20%Consistently profitable since establishment in 1953Dividend increases for seven consecutive yearsTotal return ratio 82.4%Creation of Social ValueESG ratings • MSCI • FTSESCORE 5.2 (AA)2.9SCOREESG• GHG emissions 23.2% reduction• Management positions held by women • Child welfare facilities that received renovation support • Continuing to hold Sangetsu Wallpaper Design Awards17%20/year• Full compliance with Japan’s Corporate Governance CodeFull complianceNegative130,000 copies of out-of-date sample books collected annuallyGHG emissions in the supply chain 400,000 t-CO2Proposals for total interior coordinationSpace creationSpace Creation Segment1011SANGETSU Report 2021SANGETSU Report 2021Our DirectionOur DirectionTransforming the Business ModelSangetsu is transforming its business model to become a Space Creation Company. We are developing robust business structures through expanding and transforming business categories centered on the interior business by leveraging the Group’s long-established unique strengths.What is a Space Creation Company?Developing business to sell space designs, products, and installation/construction services for space creation in a comprehensive manner by leveraging the entire range of functions required from design to logistics and installation/constructionTransforming the business model to become a Space Creation CompanyWe are striving to transform ourselves into a Space Creation Company, which is the principal goal defined in the Long-term vision [DESIGN 2030]. By doing so, we will achieve further growth from business development centering around sales of interior products. Through this initiative, we intend to create a new business model to sell space designs, prod-ucts, and installation/construction services for space creation in a comprehensive manner by leveraging the entire range of functions required, from design to logistics and installation/construction. The new model deals with the space as a whole, which involves more than simply handling individual component items. Therefore, it will be vitally important to pay greater attention to the activities that will take place in target spaces and plan proposals accordingly. Toward this end, we are making group-wide efforts to build and refine business structures that underpin extensive proposal activities, and integrating designs for products, spaces, and experiences.Expanding and transforming business categories based on unique strengthsSangetsu is a fabless company with no manufacturing capa-bilities of its own. As such, we have previously developed business through forging cooperative relationships with many manufacturers to create a diverse spectrum of attractive products, with a focus on the interior business. We have also built solid customer service functions to fine tune proposals to various individual needs. Also, our “just-in-time” logistics services enable stable supply of the right item at the right time in the right amount, while ensuring that there are no stock shortages.The Group has solidified its presence in Japan’s interior market by pursuing the above business model based on its strong capabilities in product development, sales and pro-posals, as well as inventory control, shipping, and delivery. In order to obtain a larger market share in the future, it is essen-tial to enhance services and functions while taking advantage of the Group’s long-established unique strengths.Establishing a business model for integrated processes from manufacturing to sales to cover the entire value chainTo enable the entire Sangetsu Group to achieve further growth, we are aiming to transform our business model from a service provider centered on sales to dealerships and product logistics to a comprehensive space-related solution provider that covers the entire value chain. One key to the above transformation lies in manufactur-ing, a function that has previously been excluded from our operations as a fabless company. We will change this approach and prepare in-house manufacturing lines to cater to product characteristics more effectively. At the same time, we will refine our design capabilities to satisfy market needs by demonstrating originality and creativity in planning and design. Also, sales activities are an essential area to boost. Utilizing collaborative relationships with dealerships, we will more aggressively approach interior contractors and reach out further to housing manufacturers, architects, and busi-ness owners. To this end, it is imperative to go beyond simply planning the coordination of general products and focus more on presenting overall space design proposals. In addition, we will build nationwide transportation and construction/installation service networks as a key means to support sales activities.Acquiring Wavelock Interior, Japan’s largest wallcoverings manufacturer, to facilitate integrated processes from manufacturing to salesIn October 2015, as part of a medium- to long-term strategy for enhancing production capacity, Sangetsu acquired shares in Wavelock Holdings Co., Ltd., the parent company of Japan’s largest wallcoverings manufacturer Wavelock Interior Co., Ltd. In March 2021, we acquired 51% of the shares of Wavelock Interior to make it a subsidiary to secure more stable and strategic procurement of wallcoverings. Wavelock Interior is our major wallcoverings supplier, and it delivers nearly 30% of our entire procurement of the product. Given this, the acquisition of the company is strategically important for boost-ing our competitive advantage and ensuring sufficient supply to expand the wallcoverings business. At the same time, it will facilitate integrated processes from manufacturing to sales, thus enabling streamlined operations.lseaSignpphSiyreviled dna23lseaSyrevileDOur previous business modelService provider centered on sales to dealerships and product logisticsOur previous business domainsgnirutcafunaMPurchasingDesign proposalsyrotnevnIisphsreaeDlnoitallatsnIisenapmocrotcartnoc emirPrenwo ssenisuBrenwo etavirp dnaOur new business modelComprehensive solution provider that covers the entire value chain for integrated processes from manufacturing to sales, leveraging capabilities for manufacturing, planning/design, sales, delivery, installation, and data utilizationOur new business model ngised dna gnnnaPlitnemerucorPyrotnevnIignpphSiisphsreaeDlnoitallatsnIisenapmocrotcartnoc emirPrenwo ssenisuBrenwo etavirp dna4 noitallatsnIResidentialspaceNon-residentialspaceProduct developmentCoordination proposalSpace creationDesign of productsDesign of spacesDesign of experiences1gnirutcafunaMseitivitca ngiseDFour strong functional areas to support design activities13Manufacturing, Planning and Design, ProcurementCapabilities to develop a diverse spectrum of products in cooperation with many manufacturers and to manufac-ture products in-house. Flexible procurement operations to ensure sufficient supply and broad product lineups.Inventory, Shipping, DeliveryCapabilities for advanced inventory control through utilizing our know-how and data, and quick and efficient warehouse processing to handle small-lot, bulk, and other types of orders. Nationwide logistics networks offering fine-tuned services.24Sales and ProposalsSales capabilities to respond to a large number of, and different types of, multi-layer market needs. Proposal capabilities for planning, design, and total coordination for the space as a whole, in addition to sales of products and installation services.Installation/ConstructionNationwide networks of installation and installation/construction services, enabled by group-wide engage-ment. Comprehensive capabilities to implement various design plans in the target space.1213SANGETSU Report 2021SANGETSU Report 2021Our DirectionOur DirectionThe Long-term Vision of Sangetsu Group [DESIGN 2030]The Sangetsu Group has formulated [DESIGN 2030] as its long-term vision that defines the Group’s ideal state and serves as a guide for realizing sustainable growth in the future.The Entire Sangetsu Group Aims to Become a“Space Creation Company”Business environmentExpansion of the economic value of experiencesDiversification in personal tastesFrom ownership to use and experiencesFocusing on the quality of lifePeace of mind, safety, and healthRapid penetration of digital technologies in personal lifeDesire for interpersonal connectionsFiscal Year Ended March 2030Consolidated Net Sales and Operating Income TargetsConsolidated net salesSales target¥161.26 billion*Adjustments for consolidation – ¥880 millionConsolidated operating income¥9.26 billion*Adjustments for consolidation + ¥50 million¥225.0 billionOperating income target¥18.5 billionFiscal year ended March 2020Fiscal year ended March 2030(Net sales, Billions of yen)(Operating income, Billions of yen)2502001501005004.1619.8016.08122.100.180.649.32-0.9350403020100225.018.5Net sales Operating incomeNet salesOperating income Interior Exterior Overseas Space CreationApproach for Achieving the Long-term Vision [DESIGN 2030]Applicable SDGsBasis of ManagementDesign-driven managementEnhance brand value and transform business through designManagement and Business FoundationsDiverse professionalsAn organization where diverse professionals with on-site capabilities fulfill an active roleCooperation and utilization for business-related dataUse DATA to increase the efficiency of business and transform businessMain FunctionComplete shift to service-oriented sales businessBusiness in which services are the source of added valueBusiness AreaAsia and North AmericaStrong business in Asia and North America, and global expansionCorporate VisionFrom an interior products company to a creative concept partner based on design, human resources, data, and services. (Bringing our clients’ visions to life through the joy of design)A global Space Creation Company based on design, human resources, DATA, and servicesAchieving social valueCreating an inclusive, sustainable, and enjoyable societyThe Social Values the Sangetsu Group Aims to RealizeAn equal and healthy inclusive societyInclusiveNot only hunger and poverty but education for children and disparity of living environments are worldwide issues as well. The Sangetsu Group will contribute to realizing an equal and healthy inclusive society, where diversity of gender will be respected, through the creation of healthy and comfortable spaces.SustainableEnjoyableThe global environmental protection with sustainable societyWhile climate change and sea and soil contamination are becoming serious, vacant housing and buildings are increasing, due to an aging and decreasing population. The Sangetsu Group will minimize our environmental footprint of the supply chain as a whole and will contribute to realizing a sustain-able society that will protect the global environment, through creation of spaces usable for the long term and utilization of stock buildings.A more affluent and enjoyable societyRegardless of the differences in nationality, gender, religion, disability, and sexual orientation, a safe and reliable working environment with equal employment opportunities is being demanded. In such a working environment, it is required to sustain economic growth per capita through working efficiently. society by promoting equal, safe, and efficient ways of working, which respect human rights, through the creation of spaces appro-priate to various cultures and living.The Sangetsu Group will contribute to realizing a more enjoyable 1415SANGETSU Report 2021SANGETSU Report 2021Our DirectionOur DirectionMedium-term Business Plan (2020–2022)[D.C. 2022]*The Medium-term Business Plan (2020–2022) [D.C. 2022] was formulated to provide a first step toward realizing the Long-term Vision [DESIGN 2030]. [D.C. 2022] has set forth the four basic policies to promote the transformation into a Space Creation Company.* D.C. = Design & CreationBasic Policies1. Expand earnings through qualitative growth of core business2. Growth of profitability in next-generation business based on resources of core business3. Strengthen management and business foundations4. Realize social valueWe will promote design-driven management as a means to enhance brand value and transform business through design. This approach is centered on expanding earnings through qualitative growth of our core business and growth of profitability in next-generation businesses based on the resources of our core business in order to drive further growth in the future. Also, together with strengthening management and business foundations to enable business transformation to create a Space Creation Company, we will aim to realize social value as well as economic value.lisgnht fo euav eht gndnapxEisecruoser namuh fo ssenthgTiDesign-Driven Management1. Expand earnings through qualitativegrowth of core businessQualitative growth2. Growth of profitability in next-generation business based on resources of core businessTransfer of know-how of the core business in JapanResources of the core businessComplete transformation to selling serviceInterior SegmentExterior SegmentOverseas SegmentSpace Creation SegmentDesignStrategicpurchasingEnhance andupgrade servicefunctionsDeepencollaborationwith dealershipsand reinforcesalesstructureExpand qualitativelyand geographicallyEstablish strongmanagementfoundationsPursue optimummodel andensure localizationStrengthen branding andproduct portfolioBusiness resources+Professional capabilities3. Strengthen management and business foundationsStrengthen and streamline business execution capabilitiesEstablish system for advanced utilization of DATASpace Creation Company4. Realize social valueEnvironment (global environment) / Social (Social capital/Human capital) / GovernanceSpecify materiality themes (key issues) and implement related initiatives ▶ Details P. 35ksir egnahc etamiliC/cmednaPilygoonhcet latigd fo tnemecnavdAProgress in Fiscal 2020Fiscal 2020 was the first year of the Medium-term Business Plan. During that time, we strove to expand earnings of our core business, with a particular focus on the Interior Segment, through reinforcing design capabilities, pursuing strategic procure-ment, and enhancing and upgrading service functions. Additionally, in the Overseas Segment, we reorganized business struc-tures and promoted group-wide cooperation to help expand the Space Creation business.Reinforcement of Design Capabilities ▶Details P. 22We promoted design development projects for space creation in collaboration with archi-tects and design firms inside and outside of Japan. One such major project was for joint development of wallcoverings and flooring materials with Japanese architect Kengo Kuma. The resulting products were placed on the market under the brand name of “KAGETOHIKARI,” an industrial creation aimed at expressing ancient Japanese aesthet-ics. Among them was “SHITSURAHI,” a wallcoverings series characterized by ingenious use of Japan’s traditional materials. The series won the iF DESIGN AWARD 2021, a world-renowned design award. Among other collaborative achievements was “ENGLISH DESIGN AGENCY (EDA),” an upholstery collection developed jointly with the UK-based Sanderson Design Group. The new collection resulted from inventive arrangement efforts based on resources from traditional British design archives to create products that would appeal to today’s consumers.Strategic Procurement ▶Details P. 12We acquired 51% of the shares of Wavelock Interior Co., Ltd., Japan’s largest manufacturer of vinyl wallpaper, making the company a subsidiary. The acquisition will strengthen our wallcoverings business by increasing our competitive edge and ensur-ing a stable supply of products. It will also facilitate integrated processes from manufacturing to sales to enable streamlined operations and expanded earnings. In addition, we are bolstering alliances with other manufacturers in pursuit of strategic procurement aimed at even stronger business.Enhancement and Upgrade of Our Service Functions ▶Details P. 18Our logistics functions, an essential business infrastructure, have been upgraded. We have consolidated the previous logistics bases located separately in the Kansai region to undertake strategic warehousing, shipping, and delivery operations. We reorga-nized those functions into the newly established Kansai Logistics Center. Equipped with automation and labor-saving features, the Center serves as the warehouse for all of western Japan, as well as a regional delivery hub in Kansai.Business Restructuring in the Overseas Segment ▶Details P. 26In the face of severe business conditions due to the prolonged economic slowdown as a result of COVID-19, we implemented business restructuring plans to reinforce our management structure. Specifically, we acquired 100% ownership of Goodrich Global Holdings Pte., Ltd., headquartered in Singapore, and then bought shares held by the company in Goodrich Hong Kong, the company’s Chinese operation. We are building a management structure that allows us to directly participate in the manage-ment of Goodrich Hong Kong along with Sangetsu (Shanghai) Corporation. This represents cooperative marketing strategies based on geographical segregation, assigning Goodrich Global Holdings to Southeast Asia and Sangetsu to China, to enable the two partners to pursue respective regional initiatives.Expanding the Space Creation Business ▶Details P. 24The Space Creation business was initially targeted at the non-residential renovation market. It is now expanding its business field to residential markets, such as condominiums, and the Exterior Segment. Human capital is also being increased to support this expansion. We will strengthen group-wide efforts to enhance and expand the Space Creation business.Opening the Sample Book Recycling Center ▶Details P. 45Sangetsu publishes an average total of 1.5 million sample book copies every year. These books are revised every couple of years, resulting in a huge number of copies requiring disposal as industrial waste, leading to increased environmental impact. To address this issue, we have set up the Sample Book Recycling Center to scrap and sort collected out-of-date sample books. We will step up the related activities, expanding collection capacity and the collection area while promoting material recycling to further reduce environmental impact.1617SANGETSU Report 2021SANGETSU Report 2021Our DirectionOur DirectionSpecial FeatureLogistics Strategy for the Reinforcement of Service Functions1Sangetsu is reinforcing its service functions such as the inventory, in-warehouse processing, and delivery functions of its Logistics Department that are some of the functions to be augmented to “expand earnings through the qualitative growth of core business.” Special Feature 1 explains the idea behind the reinforcement of logistics functions and the specific measures to achieve our objectives.Restructuring of Logistics Centers We ship an average of about 60,000 merchandise items per day. The issues being faced by the logistics industry have come to the fore, including the increase of the cost of ship-ping and trend toward avoiding heavy cargo. To maintain and further improve the quality of delivery services despite these circumstances, the reinforcement of the Logistics Department’s service functions, such as inventory, in- warehouse processing, and delivery functions, is essential.To achieve this, since 2016 we have been restructuring logistics operations, starting with the Kita-Kanto Logistics Center. In January 2021 the Kansai Logistics Center was built, integrating several hubs. This signaled the near comple-tion of the restructuring of the key logistics centers that are core to delivery services. Going forward, we will continue to arrange hubs around Japan to ensure more finely tuned delivery services.Sangetsu Okinawan Feb. 2019ConstructionChugoku/Shikoku LCKyushu LCHokkaido LCn Jan. 2019 Construction and integrationTohoku LCKita Kanto LCn Aug. 2016Construction and relocationTokyo LCn Jan. 2018 Construction and integrationTotal area236,000m2LC: Logistics CenterChubu LCn May 2017Construction and integrationKansai LCn Jan. 2021Construction and integrationFeatures of the Kansai Logistics Center In January 2021, the Kansai Logistics Center was con-structed, integrating the two hubs in Amagasaki, Hyogo and Higashiosaka, Osaka. The logistics center is in a good loca-tion close to the highway to enable trunk transport that fully covers Japan and the city of Osaka which is the key delivery area. The area of the warehouse is 36,300 m2, or about 1.6 times larger than the previous warehouse, and its volume is about two times larger.Approximately 12,000 merchandise items stored, covering all products, as a hub for West JapanThe logistics center stores about 12,000 merchandise items covering all products such as wallcoverings, flooring materials, and fabrics. It is also a hub for storing inventory to be shipped to other places in Kansai and West Japan. The goal is to ensure Automated Guided Vehicle (AGV)efficient inventory management and functions as an import/export hub for international transactions to improve services.The logistics center first introduced GTP, an autonomous Introduction of new equipment, reducing the amount of labor required and furthering automationThe Kansai Logistics Center is fully automated, enabling a reduction of the amount of labor necessary to address the recent issue of a labor force that is insufficient and aging while also increasing efficiency through the integration of hubs. delivery robot. It delivers shelves of wallcoverings to a ship-ping location. Shippers do not have to come to the shelves to pick up merchandise. The robot saves time and reduces the physical burdens on workers. The Automated Guided Vehicle (AGV) delivers products that would be transported via lift trucks. Other robots include automated packing machines and automated vinyl floor sheet cutting machines. These measures at the logistics center have enabled a reduction in the required labor by approximately 25%.Improvement and Sophistication of Logistics Functions The construction of the Kansai Logistics Center has com-pleted the restructuring of large logistics centers. We will clarify the roles of the hubs around Japan and improve and develop our logistics functions.Clarification of the roles of the hubsTo construct a more finely tuned delivery system and maintain a stable inventory, we will clarify the roles of the hubs around Japan to encourage organic coordination. For this, we will classify the hubs into three categories, namely flagship centers, regional centers, and satellite centers, to increase the efficiency of the logistics system and improve services.Insourcing of business and recruitment and development of professional human resourcesTo maintain and improve the finely tuned shipping and deliv-ery system that is our strength, we insource an array of businesses including warehouse operations and recruit and develop professional human resources specialized in logis-tics. To accomplish this, the logistics position program has been established to enable employees to gain technical knowledge and skills. Specifically, a technical skill sheet is prepared to guide employees in their study of technical knowledge and skills, and the skills and abilities that are required of each employee are visualized for each level and function. A buddy system has been set up for new employees so they are able to learn from their superiors how to handle tasks, how to maintain a good attitude at work, and receive advice for resolving social or work problems.lFlagship centers nRegional centers★Satellite centersExportImportChugoku/Shikoku LCKyushu LCChubu LCShikokuchuoKansai LCHokkaido LCTohoku LCKita Kanto LCTokyo LCFlagship centerSupplies merchandise to each LC and acts as a regional delivery hubRegional centerA regional delivery hubSatellite centerA hub handling deliveries to locations distant from an inventory hubControl delivery to control businessOkinawaYosuke MineExecutive OfficerGeneral Manager, Logistics DivisionWe believe that delivery capabilities are most effective when customers select merchandise. These capabilities allow us to deliver the desired quantity of the chosen merchandise to the desired place at the desired time. However, we have not been able to respond at the level we aim for capable of delivering products to every customer site at all times due to an insufficient system. While key hubs are being restructured, we will improve our satellite centers and construct a more finely tuned delivery system. In addition, we will introduce new systems such as the transport management system* to improve services.Under its philosophy, “Control Delivery to Control Business,” Sangetsu will continue to adjust and improve its logistics functions.* The transport management system comprehensively manages the transportation and delivery of merchandise from shipment at a logistics center to its destination.Shikokuchuo Satellite CenterOpened in August 20211819SANGETSU Report 2021SANGETSU Report 2021Growth StrategyGrowth StrategyBusiness strategyInterior SegmentWe are arranging and enhancing the development system to meet market needs based on our mainstay products comprised of wallcoverings, flooring materials, and fabrics such as curtains and upholstery, which are widely used in residential and non-residential sectors. Realization of product development with new concepts through the enhancement of design capabilitiesOur strengths lie in our provision of a one-stop service cover-ing everything from planning and manufacturing to installation with our full lineup of original interior products. Our goal is to provide more progressive services than competitors through the combination of design proposals, logistics, and installa-tion with a broad range of products. The Medium-term Business Plan includes the enhance-ment of design capabilities and strategic procurement, which are very important measures in the Interior Segment that plays a central role in the business activities of the Sangetsu Group. and external product development talent. In addition, we collect design inspiration from domestic and international exhibitions and jointly develop products with renowned architects and designers for the commercialization of many different products based on new, experiential design concepts. Regarding strategic procurement, we acquired Wavelock Interior Co., Ltd., Japan’s largest vinyl wallcoverings To enhance our design capabilities, we seek out internal Yoshiaki KanekoExecutive OfficerGeneral Manager, Interior Business Unitmanufacturer, in March 2021 to help secure a stable supply and increase efficiency through the integration of manufactur-ing and distribution. We also reinforced our alliances with our business partners, including our suppliers, to strengthen our value chain. During the fiscal year ended March 31, 2021 (fiscal 2020) we leveraged the Internet to share information and hold seminars due to the COVID-19 pandemic. We are planning to create opportunities to more effectively communicate the appeal of Sangetsu through the proposal of interior decora-tion ideas and the showcasing of trends in addition to the introduction of products. For example, real products and virtual images can be used concurrently to enable customers to experience the value of interior design that includes addi-tional elements such as lighting and furniture that we do not handle. We are also able to effectively communicate the benefits of aftersales maintenance to customers. Eventually, we would like to contribute to on-site support as well as the support of end users.Overview of fiscal 2020Demand for interior goods is shrinking 9.5% to 10% in the Japanese market partly due to the COVID-19 pandemic. The Interior Segment recorded net sales of ¥111.794 billion, down 8.4% year on year, while increasing market share mainly in wallcoverings and flooring materials.Interior Segment net sales ¥111.79 billion(Sales composition ratio 76.9%)116.27119.53118.08122.09111.79(Billions of yen)15010050020172018201920202021(Fiscal years ended March 31)* After adjustment of sales in the Interior Segment and the Space Creation Segment up to fiscal 2019Sales composition ratio of the Interior Segment(Fiscal 2020)Fabrics¥7.81 billion(7.0%)Flooring materials¥41.27 billion(36.9%)Others¥6.89 billion(6.2%)Wallcoverings¥55.81 billion(49.9%)Sangetsu’s market shares Flooring materialsApprox.3050%%–PVC Floor sheetsPrinted PVC Floor tilesCarpet tiles44%43%27%WallcoveringsApprox.50%Order-madecurtainsApprox.23%* Market share data is for fiscal 2020; domestic market share based on Sangetsu estimatesWall Coverings DivisionIn the wall coverings division, as the impact of COVID-19 resulted in a subdued market, the “RéSERVE 1000” and “REFORM Selection” home wallpaper sample books drove sales thanks to signs of rising demand in certain sectors of the rental housing and housing reform markets. Additionally, sales of “CLEAS,” the sample book of glass films, remained strong, while sales of antiviral products saw robust sales growth on the back of rising demand for products that give consumers peace of mind and safety. Overall, however, net sales of wallcoverings were ¥55.814 billion, down 7.3% year on year, impacted by the decline in new housing starts and market contraction centered on hotels and commercial facilities.Flooring DivisionSales were robust for “Floor Tile,” which can be used in a wide range of applications in both the residential and non-residential sectors, while “H Floor,” a cushioned floor sample book published in September 2020, further penetrated the market. “S Floor,” a flooring sample book for various types of facilities that was published in November 2020, also demon-strated strong growth among certain types of products centered on antiviral products and was well received despite the adverse market environment. In addition, in the office renovation market, products such as the “NT-350 Series” and “NT-700 Series” of well-designed carpet tiles in an affordable price range were well received. However, market conditions had yet to fully recover, and as such, net sales of flooring materials were ¥41.271 billion, down 7.8% year on year.Fabrics DivisionIn the residential market, “AC,” the curtain sample book, drove sales, and the sample book “UP” featuring chair uphol-stery fabric and the sample book published in September 2020, “Contract Curtains,” geared toward various types of facilities, performed well as it penetrated the market. In particular, the usage of curtains with antiviral and antibacterial properties expanded to include public and educational facilities, in addition to their existing usage in medical and welfare facilities. However, net sales of fabrics products, which are composed of curtains and upholstery, were ¥7.816 billion, down 7.7% year on year, as a result of the impact of market deflation and self-imposed restrictions and downsiz-ing of sales activities, including promotional events.20SANGETSU Report 202121SANGETSU Report 2021Growth StrategyGrowth StrategyInterior Segment Examples of the enhancement of design capabilitiesT O P I C SLaunch of the KAGETOHIKARI collection, a collaboration between Kengo Kuma and SangetsuThe KAGETOHIKARI collection was launched in April 2021. It is a collaboration with world-renowned architect Kengo Kuma. The collection is inspired by the beauty Kengo Kuma discov-ered in shades and shadow, and the designs were also inspired by onomatopoeia. Hopefully, users can freely create interior spaces inspired by the technique of onomatopoeia that different people perceive differently. This is our first project involving the product development of wallcoverings and flooring materials based on the same theme. This activity is the embodiment of the Sangetsu brand concept that shares the joy of design with those who create new space. We will continue to develop products that express the “Joy of Design” from diverse perspectives.SHITSURAHI wins international design awardThe SHITSURAHI series of wallcoverings is designed to adapt The SHITSURAHI wallcoverings based on traditional Japanese beauty won the iF DESIGN AWARD 2021*, an internationally authoritative design award. to today’s interior decorating using the traditional skills and tech-niques of Japan and old, traditional Japanese materials including washi (Japanese paper), metal leaf, textiles, and paper textiles. It expresses Japanese-style hospitality, comforts people, and brings fascinating indoor spaces into being, whether oriental or occidental.* The international design awards are held in Frankfurt, Germany, every year, organized by iF International Forum Design GmbH. With its long history dating back to 1954 it has been one of the most recognized global design awards.Growth StrategyBusiness strategyExterior SegmentWe provide doors, fences, carports, and garden related products for residences as well as exterior merchandise for various types of facilities to propose enriched lifestyles for people.Engaging in expansion of business activities without being limited to existing positionHirofumi TakedaPresidentSungreen Co., Ltd.Taking charge of the Exterior Segment, Sungreen is changing its position by expanding its business activities in the value chain in addition to wholesaling specialized in exterior prod-ucts, which is its mainstay existing business. We will work to create interior spaces with higher value added as a member of a Space Creation Company by continuing to extend our area of operations to the Kanto area and improving our construction capabilities and proposal capabilities for the design of interior spaces. We will continue to develop sales capabilities, earning power, and organizational power and increase our existential value as a corporation to ensure high quality work and trans-form into a truly strong company.Overview of fiscal 2020Regarding the situation around the Exterior Segment in fiscal 2020, public construction and other non-residential property construction declined, and sales of mainstay housing-related products, for example, fences, doors, and carports, strug-gled, as the market as a whole continued to stagnate. On the other hand, growing demand related to staying-at-home resulted in robust sales of mailboxes, storage sheds, wooden decks, and other products, while sales at home improvement retailers and e-commerce stores also grew significantly. As a result, net sales of the Exterior Segment were ¥14.626 billion, down 9.1% year on year.(Billions of yen)20151050Exterior Segment net sales ¥14.62 billion(Sales composition ratio10.0%)14.7715.0116.1216.0814.6220172018201920202021(Fiscal years ended March 31)22SANGETSU Report 202123SANGETSU Report 2021Growth StrategyBusiness strategySpace Creation SegmentAs a driving force in becoming a Space Creation Company, we engage in highly technical business activities and propose interior spaces using the resources that we have cultivated in the interior business.Proposing new value for div