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Mid-term Plan

Response to changes in the external environment

Since our founding, we have contributed to enriching people's lives by conducting our business around a core of maintaining cleanliness in their lifestyles. However, global issues such as climate change, aging societies, resource scarcity and plastic waste are becoming more serious year after year. Aside from the current COVID-19 pandemic, many infectious diseases such as dengue fever and malaria are widespread, and outbreaks are expected to become more frequent in the future.

The awareness of people around the world is also changing dramatically, and ethical consumption, in which consideration for the environment and human rights is a factor in purchasing decisions, is on the rise, mainly among the younger generation. Coupled with the spread of social media, these factors are leading to more diversified consumer purchasing behavior, with greater demand for more personalized products. Furthermore, e-commerce and other new distribution channels have grown substantially in recent years in tandem with the spread of the Internet and smartphones, significantly changing the environment in which Kao does business.

Considering these changes in our operating environment, we formulated the Kao Group Mid-term Plan 2025 (K25) for the period from fiscal 2021 through fiscal 2025, based on our sense of crisis that we cannot expect significant growth in the future unless we change our own mindset. In formulating K25, project members repeatedly engaged in dialogue with many employees around the world to consider the direction Kao should take. Eliminating all other options, we decided to move forward with a Vision of "Sustainability as the Only Path."

Kao's core business so far has focused on helping people live healthy and beautiful lives and contributing to ecosystem conservation to safeguard the well-being of the global environment. From now, we will also strive to contribute to safeguarding people's lives from harm and helping people lead longer, happy and fulfilling lives. We are committed to engaging with these interconnected aspects of life for people and the planet, and saving all future lives.

To this end, we have formulated three Kao policies focused on the Sustainable Development Goals (SDGs) adopted as international targets for global action to create a more sustainable, better world by 2030. We believe that if we proceed with initiatives in line with our three policies, by fiscal 2025 we will achieve record-high net sales of 1.8 trillion yen, record-high operating income of 250 billion yen and our 36th consecutive year of dividend increases, thus meeting the expectations of our many stakeholders including employees, consumers, customers, business partners and shareholders.

Three Policies

(1) Become an essential company in a sustainable world

We aim to achieve economic development while also making progress on solutions to social issues, and to be a leader that prompts many other companies to act. In addition, we will work to generate consistent financial returns from our investments in the environment and society that we have made to help resolve social issues.

(2) Transform to build robust business through investment

As "Another Kao," we will make full use of the technologies, expertise and digital resources we have cultivated to create new businesses that save future lives. At the same time, we will add new power to our existing business base for reinvigoration as "Reborn Kao." Kao's operations have targeted the mass market, but going forward we will build a completely different business model. We will also continue to grow our existing businesses, but the key to growth going forward will be precision life care and the digital transformation required to realize it.

For example, we have many unique technologies that are useful in prevention and diagnosis to safeguard people's lives, such as RNA Monitoring* to forecast diseases that are likely to manifest in the future and technology that detects changes in the body from its condition while walking. Using these technologies for highly accurate data analysis and combining the data on our digital life platform will enable us to predict health conditions in more detail and to propose the precise measures to be taken next. That is precision life care. Our digital life platform is not for our use alone. We intend to grow it through the use of Kao's monitoring technology by its many partners.

  • * RNA Monitoring
    A technology for extracting and analyzing ribonucleic acid (RNA) from facial sebum, which reflects day-to-day changes in skin condition. Unlike DNA, which is unique to each individual and does not change throughout a person's life, RNA is a copy of DNA that changes depending on environmental factors such as eating habits, ultraviolet rays and stress. Therefore, RNA helps to show skin condition, which changes day to day due to these various factors. Moreover, we are collaborating with Preferred Networks, Inc., which has strengths in deep learning using artificial intelligence. Use of Preferred Network's deep learning technology for advanced analysis of data obtained from RNA analysis will enable us to make predictions about a person's skin and health. We will use this technology to conduct joint research for early diagnosis of Parkinson's disease and other diseases.

(3) Maximize the power and potential of employees

To implement the two policies mentioned above, the drive and enthusiasm of engaged employees will be essential. Therefore, we have ended our previous system of using Key Performance Indicators (KPIs) for objectives management and introduced a new Objectives and Key Results (OKRs) organizational management system to maximize employees' spirit of challenge to meet ambitious targets they set for themselves. In addition, aggressive development of new businesses will require specialists with extensive knowledge in new fields, as well as collaboration with other companies with leading-edge technologies, so we will be proactive in recruiting such talent from outside the Kao Group.

Comparison of OKRs and KPIs

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Three Perspectives of OKRs

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If we accomplish our targets aligned with these three policies, we will be able to achieve record-high sales and profit (1.8 trillion yen in net sales, 250 billion yen in operating income and the 36th consecutive fiscal year of increases in cash dividends in 2025) and meet the expectations of a great many stakeholders including employees, consumers, customers, business partners and shareholders as a result.

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