With our sights always set on the external environment,
we will boldly pursue the resolution of social issues with great passion while evolving DENSO Culture.

Fiscal 2023—A Year When an Air of Positivity Returned

Looking back on fiscal 2023, economic activities and various in-person events that had been suspended during the COVID-19 pandemic resumed, and interaction between people started to become livelier again. In this environment, we saw an increase in positive developments during the year, including the strong performance of Japan’s teams in the FIFA Men’s World Cup and the World Baseball Classic. For DENSO, we started to see a positive response to our efforts to promote management reforms and enhance our corporate structure, and in terms of performance, we successfully achieved record highs for both revenue and operating profit.

In other good news for the Company, we were awarded the IEEE Corporate Innovation Award for helping the world benefit from the dynamic capabilities of the QR Code®. The IEEE Corporate Innovation Award, one of the most prestigious technical awards in the world, is presented to organizations that have made a significant global impact with innovative technologies and products and contributed to the development of electrical and electronic engineering. Established by the Institute of Electrical and Electronics Engineers (IEEE) in 1985, the award has been presented to leading companies and organizations worldwide. The QR Code® was developed in 1994 by DENSO (currently DENSO WAVE) as a next-generation code with high capacity, high speed, and high reliability that can serve as a replacement for barcodes. The code was originally used for inventory management at our manufacturing plants, but later its use expanded significantly across the globe, including for electronic tickets and cashless payments. The use of QR Codes® for vaccination verification during the COVID-19 pandemic is a very recent example of their new application.

DENSO’s Culture Embodied through the QR Code®

While I will not get into the details regarding the creation and development of the QR Code®, DENSO’s ability to lead the way with the development of such groundbreaking information technology stems from the massive volume of data it has handled within its production activities as a global automotive components manufacturer. We have carried out these activities while exchanging a large volume of parts and materials with suppliers around the globe. Additionally, the receipt of the IEEE Corporate Innovation Award has given us an opportunity to reflect on the technological value and academic significance of the QR Code®. It also gave us a chance to reexamine DENSO’s culture, which helped support the code’s development. At the time of the code’s creation, we were promoting a shift in our Monozukuri activities from mass production to the production of a wide variety of products in small volumes. In addition to our ability to anticipate the trends of an era in which electronic transactions between companies were starting to become mainstream, the code’s development was made possible by rigorous research and benchmark-setting activities geared toward highly reliable code development. Its development was also made possible through collaboration with our business partners around the world in making patents free of charge to promote popularization of the QR Code®. In these ways, the QR Code® development process embodied the DENSO Creed at every step. The process also encapsulated DENSO Culture in terms of being pioneering, innovative, and creative while cherishing modesty, sincerity, and cooperation. I believe that these are the reasons why the QR Code® was able to inspire people and society at large and be adopted around the world as a truly useful technology.

Restoring DENSO Culture as We Move into the Future

In my time as president, I devoted my efforts to restoring DENSO Culture. My eight years in this position were marked with various chaotic events, including the once-in-a-century paradigm shift due in part to the progression of CASE as well as the occurrence of a quality-related issue, the COVID-19 pandemic, material shortages, and rapid price increases. Throughout this time, I endeavored to bring the Company back to its starting point and restore the spirit of our founding. As we expanded our business operations over the years, we lost sight of some very important things, including our commitment to quality, our customer-first approach, and our organizational culture of close relationships and open communication between employees. I therefore continued to engage in honest dialogue with employees in each workplace in a sincere effort to change their awareness and behavior.

As a result of Companywide initiatives, we have steadily fortified our management foundation and culture, which is a major prerequisite for corporate growth. I also feel that we have formulated a strong future outlook, including the vision for our business portfolio in 2035. In terms of our management indicators, in fiscal 2024 we forecast revenue of ¥6.7 trillion, an operating margin of 9.0%, and ROE of 9.3% (as of the release of our first quarter financial results for fiscal 2024). This means that we are well within the range of achieving our targets under the Mid-term Policy for 2025, which include an operating margin of 10% and ROE of 10% or higher. What has allowed us to reach this position has undoubtedly been the support of not only the customers and global suppliers who have assisted us on a daily basis, starting with car manufacturers, but also our shareholders and other investors, who have offered us their wholehearted encouragement. As a result of the many years of support from these stakeholders, our market capitalization has increased from roughly ¥3.9 trillion in 2015 to approximately ¥7.6 trillion in 2023, nearly doubling over this eight-year period (as of June 30, 2023). We are deeply grateful for the unrelenting support of all of our stakeholders, through-out the good times and the bad, and we are firmly committed to continue offering them good news and to meet their expectations moving forward.

Continuing to Provide Value to Society While Always Keeping Our Sights on the External Environment

As we boldly pursue the resolution of significant social issues, including the pressing global issues of carbon neutrality and circular economies, we will focus our attention on the flow of five essential elements in order to keep society in motion: people, goods, energy, resources, and data. By connecting these elements and managing them in an integrated manner, we aim to create a cycle of joy that ensures mutual happiness between people. To that end, we will further refine the three-pronged approach of mechanical parts, electronics, and software, which we have cultivated in the mobility domain, and seek to expand this approach into social domains. In addition, we will leverage our accumulated cutting-edge information technologies, such as the QR Code®. By doing so, we will pursue value creation that is uniquely DENSO. To accomplish this, it is imperative that we keep our sights on the external environment and maintain a firm understanding of society itself. In my role as chairman, I will put forth every effort to support internal business execution while striving to further enhance our involvement with external organizations. I also serve as chairman of the Japan Auto Parts Industries Association, and in this position I aim to lead efforts that help strengthen the competitiveness of the overall supply chain in the automotive industry while closely collaborating with small and medium-sized enterprises. Furthermore, I will strengthen connections with companies that are outside of the automotive industry and seek to reflect insight and ideas from other industries and opinions from a diverse range of customers in DENSO’s internal operations. With a firm awareness that DENSO’s growth is made possible by the support of its customers, I will strive to ensure that we remain a company that is truly useful to society through proactive dialogue with our customers.

Passionately Taking On Challenges under a New Management Structure to Bring Smiles to People and Greater Society

Looking at the world today, the operating environment continues to be challenging and the outlook of the global economy remains uncertain. In such an era, our resilience, willpower, and insight as a company are needed more than ever. If we lose our passion as a company, we then cannot face the changes occurring in the world and pursue bold challenges without the fear of failure. As we seek to restore DENSO Culture, we transitioned to a new management structure in June 2023, in which I finally passed the baton of management to the new president. It is my hope that, under this new structure, we can further boost our level of passion and push ahead with greater speed. The impetus for doing so is the passion we receive from our employees across the globe. As long as we can remain a passionate company empowered by the passion displayed by our employees in their interactions with each other, I believe that under this new structure we will surely be able to resolve social issues and create a future brimming with smiles. No matter what changes occur ahead of us, we will always cherish our starting point and continue our efforts to bring smiles to people and greater society, evolving DENSO Culture to cater to each generation. I kindly ask for the continued support of our shareholders and other investors as we endeavor to do so.


September 2023

Chairman & CEO
Representative Member of the Board