Matters concerning the future stated in this text are based on the judgment of our Group as of the date of submission of the latest Annual Securities Report.

 

Basic Management Policy

Our Group’s basic management policy is to be a company that is trusted by consumers, business partners, and other stakeholders including shareholders by making every effort to create and develop quality and value that satisfies customers and by continuing to make proactive efforts to protect the environment and conserve resources.

Through the realization of this philosophy, we aim to establish a management system that is consistent with the promotion of increasing profits for shareholders, corporate development, service to society, and the enrichment of the lives of employees.

In addition, our Group constantly strives to create and develop new markets, accurately grasp customer needs, and develop attractive products, while improving productivity and customer service, and establish a system to gain trust in our Group and our products.

 

Target Management Indicators

Our Group has positioned sales revenue in the medium- to long-term sales forecast, EBITDA, and return on equity as important management indicators.

 

Medium- to Long-Term Management Strategy

Expansion of applications through enhancement of product development, expansion into global markets, and establishment of a global brand

The functionality and designs required for polyurethane leather vary depending on its applications. In particular, various functions and cutting-edge designs are required for high-end leather. Daiichi Kasei and Ultrafabrics have worked together in product development for many years, and business integration has enabled the two companies to establish a system in which customer needs are directly reflected in product development and introduced in mass production more swiftly. We are expanding product applications in fields such as automobiles and aircraft, where quality requirements are high. In terms of regions, our products are globally marketed under the Ultrafabrics brand name from three bases in Tokyo, New York, and London. In addition to this, we plan to strengthen our sales in Japan and Asia in the future. In particular, the automotive and aircraft businesses continue to globalize, and we believe that the global expansion of our products will contribute to the adoption of our products in these fields. The expansion of product applications as high-end leather and the development of the global market will enable us to establish our position as a global brand, which is the main objective of our business integration. By ensuring high functionality, excellent design, and the stable quality of our products, we believe that being recognized as a global brand will greatly contribute to the adoption of our products by new customers and new applications.

 

Challenges to be Addressed by Our Company

(1)Expanding production capacity

As a supplier of premium materials that are lightweight and free of animal products, have a pleasing touch, and are easy to keep clean, we are seeing rising demand for our products amidst a growing consumer awareness of environmental issues and changes in lifestyles. We transitioned to a complete two-line production system in 2018, but in order to meet brisk demand we are working to upgrade ageing equipment, improve production efficiency, and expand product capacity including through domestic and overseas partner companies. To ensure our partners can meet our stringent quality standards, we are working hard to enhance technical guidance and inspection systems as a matter of priority.

(2)Diversification of revenue streams

Revenues from certain customers have risen sharply in recent years, triggering concerns that we are increasingly dependent on a particular sources of income. To address the possibility of order trends from these customers having a significant impact on our revenues, we are working to diversify income streams to obtain revenue from various sources. To this end, we aim to position aircraft applications—where our lightweight materials can contribute to client sustainability—as a growth pillar alongside the automotive industry, focus on supplying materials for use in residential as well as office furniture, and enhance our sales function in Europe as well as in North America.

(3)Emphasis on sustainability

Currently, there are various social issues related to sustainability around the world, ranging from climate change including global warming and resource challenges related to the need to create a more diverse society. Our Group promotes initiatives that contribute to sustainability with regard to five “P’s”: People, Product, Planet, Partner, and Profit. We will continue to actively utilize the superior technologies of other companies to strengthen our sustainability-related technologies, such as development of lightweight products that contribute to a reduction in carbon dioxide emissions, and development of bio and recycled materials. We will strive to provide sustainable value over the long term to all stakeholders, including customers, employees, business partners, and shareholders.