CEO Message

Rapidly Transforming into the New, Strong and Agile Kao

The world today continues to experience great turmoil. Rising geopolitical tensions are fueling divisions among people, the pandemic is still with us, and environmental problems are increasing in severity. On the other hand, economic activities are necessary for people to continue living their lives. There have been long-running debates on how to balance human life and the economy, the environment and the economy, and so on. It is incumbent upon us to find this balance in the world in the 21st century. We have set our purpose as "to realize a Kirei World in which all life lives in harmony," and our vision as "protecting future lives" and "sustainability as the only path" in our Mid-Term Plan K25 in light of the tumultuous times that we are in. We have been driving dual-track reforms using two concepts: Reborn Kao to revitalize our existing business, and Another Kao to create new business.

The first year of K25 was a turbulent one. We must accelerate our business transformation if we want to get back on a path to grow our business despite the impact from external factors such as the prolonged COVID-19 pandemic and hikes in raw material prices.
Based on the awareness of these issues, the immediate priority to deliver on the Reborn Kao plan is to implement manufacturing and marketing reforms. To bring maximum value with minimum waste, we have been accelerating ESG-driven Yoki-Monozukuri. We will be making dynamic investments in category-leading brands and shift to loyalty marketing with a focus on connecting with customers. Next, regarding globalization, we will avoid fierce competition by ensuring we offer "only one" value to our customers and will also move toward local production and consumption model, grounded on local production. Another initiative is significant reform for highly profitable business. We have separated our business into three domains to clarify our direction for investment. The domains are Stable Earnings, which relies on high-margin category leading businesses to support the business base, Growth Drivers to accelerate our growth through targeted investment, and Business Transformation to press on by transforming business models to maintain and increase profitability.
Another Kao focuses on themes that we have not done, or have not been able to do, in the past. Our goal in this is stated in our Commitment to the Future. In Precision Life Care, which is included in the Commitment, we have launched specific initiatives. The business model mobilizes our deep expertise in monitoring technologies and allows us to deliver precise and customizable solutions. We have also started utilizing the Virtual Human Body Generative Model, which can be versatilely applied to meet diverse needs by estimating correlations. We will roll them out to various areas through collaboration with partners who share the same aspiration.

We will transform our manufacturing from an approach driven by consumption to one where resources are circulated. This represents a transition from a linear economic model on units and volumes to a circular economy based on quality and human connections. We will remain focused on developing a growing circular business model. We expect to enact business reforms in FY2022 amid the challenging business environment. We view the current turbulence as an opportunity to reform and are fully committed to transform rapidly into the new, stronger and more agile Kao, maximizing the capability of all our group employees.

July 2022

Yoshihiro Hasebe
President and Chief Executive Officer
Kao Corporation

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