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CEO Message

Michitaka Sawada
President and Chief Executive Officer

By emphasizing profitable growth and ESG activities, Kao aims to become a "company with a global presence."

I would like to thank you, our shareholders, for your longstanding, exceptional understanding and support of the Kao Group's business and corporate activities.

The fiscal year ended December 31, 2017 was the first year of the Kao Group Mid-term Plan "K20," which covers the four years through 2020. With unified efforts, the Kao Group made a good start, achieving the eighth consecutive year of increases in operating income and net income and the fifth consecutive year of record-high operating income. As for shareholder returns, we decided to raise dividends for fiscal 2017 by 16 yen to 110 yen per share, the 28th consecutive increase in dividends.

Kao aims to become a "company with a global presence" by 2030 by achieving three goals: 1) Fostering a distinctive corporate image, 2) Profitable growth (becoming a highly profitable global consumer goods company that exceeds 2.5 trillion yen in net sales, a 17% operating margin, and 20% ROE), and 3) A high level of returns to stakeholders. K20 is an important milestone toward achieving these goals, and we must establish the cornerstones to support them by 2020.

One of those cornerstones is making full use of Kao Group assets at a high level. In particular, it will be necessary to maximize the use of our R&D assets, which play a central role in generating innovation-based offerings. We focus on fundamental research to develop technologies and materials that embody essential elements. We will utilize these technologies and materials more than ever to make innovative offerings that can contribute to changes in our society.

Another cornerstone is strengthening non-financial initiatives. Going forward, it will become vitally important to address environmental, social and governance (ESG) issues, three elements that contribute to the formation of a sustainable society, based on the Sustainable Development Goals (SDGs) adopted at the U.N. Summit in 2015. As a leading company in household and personal care products and cosmetics, the Kao Group intends to carry out advanced measures that serve as examples.

The Kao Group aims to both achieve profitable growth and contribute to the sustainability of society by making the slogan of K20 - "Transforming Ourselves to Drive Change" - relevant to all employees while ensuring that each of them shares and practices "integrity" as set forth in the Kao Way, our corporate philosophy.

I request your continuing understanding and support of the Kao Group's business and corporate activities.

March 2018

President and Chief Executive Officer
Kao Corporation

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