Management Policy

Issues to Address
Management Policy, Business Environment, Issues to Address, etc.

Matters concerning future events as discussed in the following text are decisions made by the Group, current as of the latest Annual Securities Report's date of release.

The Company's Basic Management Policy

The basic philosophy behind our management is to do everything in our power so that our creative work and development lead to customer-satisfying quality and value. It also entails our continued proactive efforts to conserve the environment and save energy, as well as a goal of being a company that is trusted by stakeholders, including consumers, business partners and shareholders.

By adhering to this philosophy, we aspire to entrench a consistent management approach that increases shareholder return, develops the company, serves the public and empowers employees.

Furthermore, as we continuously strive to create and open up new markets, we accurately ascertain what customers want and develop appealing products. We also build an organization intended to improve productivity and customer service, as well as to gain trust in both our company and our products.

Goal-Setting with Performance Indicators

We consider net sales, EBITDA and return on equity important performance indicators that project our performance over the medium- and long-term.

Medium-/Long-Term Business Strategy

Through better product development, we shall extend their range of applications, expand into a global market, and establish a global brand.

The feature and design requirements for coagulated synthetic leather depend on its purpose. High-end synthetic leather in particular requires diverse features and cutting-edge design. We have already built up a collaborative relationship with Ultrafabrics Inc. in product development, but now, through our merger, we have an organization that can directly respond to what customers want by reflecting their needs in our product development and then rolling out mass production of those products in quick fashion. We can also expect our merged company to extend our products' range of applications into fields that require high quality standards, such as automotive and aviation. On a regional level, Ultrafabrics Inc. has always had a strong presence in North America, and expanded into Europe in earnest several years ago. In Japan, meanwhile, our company was selling products under our own brand, but without a clear strategy for Asia. Following the merger, we plan to roll out our products worldwide under the Ultrafabrics brand name from three central locations in Tokyo, New York and London. The business itself is becoming more global, especially in the automotive and aviation sectors, and our idea for offering products worldwide is to facilitate their adoption in these areas. By expanding the possible applications for high-end synthetic leather products and providing our offerings to a global market, we will be able to establish our position as a global brand, which is the overriding purpose of the merger. Gaining recognition as a global brand will guarantee in customers' minds that our brand means high-performance products, superior design, and reliable quality. We believe this will thus massively expedite our products' use by new customers and for new applications.

Issues for the Company to Address

1. Two production lines
For many years, we have manufactured with a single line at the Saitama Office in Gyoda, Saitama Prefecture, but in April 2016, a new plant in the town of Ora, Ora County, Gunma Prefecture came online, and some processes now utilize two lines. But production that can run entirely on two lines is what we need so we can aspire for wider applications in fields that demand higher quality and steadier supplies, such as automotive and aviation, and we are currently making the necessary capital investment. This project is slated for completion in spring 2018. The new two-line configuration will comprise one line suited to efficient, large-scale production, while the other will be flexible and better accommodates small-lot production. This system will enable us to address diverse customer needs.

2. Focus on sustainability
A growing global economy has boosted demand for high-end leather, but satisfying that demand with genuine leather alone would be unsustainable. The desire to avoid using animal-derived materials has meanwhile gained strength, especially among Western designers. Although our products have always followed these trends, the products themselves also have to be sustainable. Our understanding of these facts inspires a wish to minimize our production's environmental impact, as well as to manage our business with an emphasis on sustainability by using plant-derived or recycled materials and stepping up our CSR work.