CEO Message to Shareholders and Investors

In a world where human demands outpace the world’s limited resources, we strive to create a “Kirei* ” lifestyle for all.

June 2023
Yoshihiro Hasebe
President and Chief Executive Officer

To our Stakeholders

The pandemic of 2020 brought unprecedented human and health crises, leaving many people around the world in extremely difficult circumstances. It highlighted how interdependent we are in this finite space on earth. The foundation of our daily lives hinges on our ability to live without fear or worry. That is why I believe it is more important than ever that we truly appreciate the value of each day and cherish the moments that bring us joy.
At Kao, our goal is to safeguard people’s daily lives and delight them with our product experience. We are simultaneously committed to protecting the environment, preventing illness and stresses, and creating a world where all life lives in harmony. This is the “Kirei” world we aspire to achieve as we position ourselves as a company that “protects future lives” and proactively shape a sustainable society for all.

Our Commitment to Integrity

Tomiro Nagase, the founder of Kao left us with the words “Good fortune is given only to those who work diligently and behave with integrity.” This timeless message from our predecessor holds immense significance for Kao today. It inspires us to stay true to our values and uphold the principles of hard work and honesty.
His message reminds us that our actions have consequences, and the choices we make shape our future. At Kao, we work diligently in pursuit of Yoki-Monozukuri and bringing joy to our customers. Customer satisfaction is our reward and reflects the value of our work. As we continue to grow as individuals and as a company, customer appreciation motivates and drives us forward. The message from our founder is ever-present as we go about our daily work – guiding us to take on challenges and make a positive impact on the world.
The importance of remaining true to our roots while embracing new values relevant in today’s rapidly changing world is well established at Kao. As our business environment continues to change, we must be prepared to handle unexpected challenges with strength and resilience. The recent sharp increase in raw material prices is a case in point, where we learned that success favors only those who are prepared. By staying agile and adapting to change, we will continue to thrive in a dynamic and unpredictable business landscape.
To succeed in business, it is imperative that we remain tuned into the shifting tides of the market and adapt our strategy. We are not alone in the vast global economy; there are countless great companies vying for the trust of customers. To rise above the competition, we must present compelling reasons for customers to choose us perhaps by being the most trusted company in a region or the “first and only choice” in moments of hardship. Customers buy from trusted companies. We must continue to earn this trust to in order to become an indispensable company in a sustainable society. Our journey is ongoing as we pursue this goal with determination.

Maximizing our corporate value

To enhance the value of our company, the management team has shared our strategic areas of focus with all members of the Kao Group. Our top priority is to revive our EVA (economic value added) management approach to maximize profits, with targeted strategies for each business segment. Additionally, we will prioritize ESG (environmental, social, and governance) considerations to increase our future value as a company. We understand that pursuing only short-term economic goals is not sustainable or supported by society, so we will also concentrate on improving our current businesses while creating new business opportunities. Our commitment to these twin goals guides us as we move forward into the future.
As part of this, we are committed to keeping our stakeholders informed of the progress of our initiatives across our five business segments.
Our Chemical Business is dedicated to creating sustainable industries. Our Hygiene and Living Care Business offers products that support people’s daily lives. Our Health and Beauty Care Business aims to support healthy lifestyles and well-being, while our Cosmetics Business offers products that empower individuals to express themselves and live vibrantly. Finally, our Lifecare Business focuses on protecting future lives and we will ensure to pursue this goal. All of these efforts are underpinned by two critical drivers: a commitment to leveraging digital technology to connect people with the right products and information, and our ability to unlock the strength and potential of our diverse, global team.

The power of open dialogue

At Kao, we have long embraced Diversity, Equity, and Inclusion as key principles. Our corporate philosophy, “The Kao Way,” embodies this spirit. The principles: how we behave, state “We care for the people and the planet”, and “We trust, respect and need each other” recognizing individual differences and honoring the wisdom that each unique perspective brings. “We act with courage”, creating fair opportunities for those who seek challenge and growth.
The Kao Way places great importance on open dialogue and communication across all levels of management. We don’t believe in addressing each other by executive titles for example; instead, we simply refer to one another by name and the honorific -san, as is common in Japanese culture. This reflects our belief that titles denote roles and responsibilities, not authority. We communicate with each other on a level playing field, conducting open and fair dialogue. Our culture of inclusivity and collaboration is deeply cherished and has served us well, fostering diverse opinions and triggering “chemical reactions” and innovations that propel us forward in new directions. Indeed, the COVID-19 pandemic somewhat weakened our culture of open discussion and dialogue. However, we are steadfastly committed to regaining lost ground and dramatically increasing the potential of our employees.

Mastering the art of quality and speed

We pride ourselves at Kao on our unique approach to matrix management – enabling us to acquire knowledge and expertise from various businesses and leverage collective wisdom across the organization. This approach has allowed us to work collaboratively and efficiently, historically resulting in the creation of innovative new business models.
However, as the market landscape rapidly changes, we have become acutely aware of the need to balance speed with quality. With the growth of the company, individual organizations have become more siloed and focused on their responsibilities, leading to less collaboration and cooperation across internal groups. To address this challenge, we are implementing Scrum-style team collaboration and management. The more compact and agile, delivery approach enables participation by key internal leaders and fast-tracking of results.
The impact of this change has simplified management styles and expedited business results at unprecedented speed. Teams across the company are questioning the status quo, exploring new approaches and propelling us forward.

The best way to predict the future is to create it

Looking back at Kao’s history, our most progressive era was arguably the twenty years starting in 1987. We introduced Attack, world’s first compact laundry detergent and Quickle Wiper, which revolutionized floor cleaning. Bioré Nose Pore Pack Sheet, was launched to unclog skin pores. MegRhythm introduced a completely new category of steam heating technology, and Blaune Foam Hair Color transformed hair dyeing. We also launched Curél, a product range and brand specially formulated for delicate and sensitive skin. These innovations showcase our ability to change norms and elevate consumer expectations. Even today, these products are in use, supporting the daily lives of our valued customers.
To maintain our longstanding reputation for innovation, we must continue to question norms and conventions. While we will continue to improve on existing products, our true and unique strength lies in our ability to create entirely new categories. Moving forward, our goal is to more deliberately tap into that strength and pave the way for creating new market opportunities. To achieve this, we will execute structural and management reforms within our current business, while also exploring new fields of business that positively impact society.

To be an essential company in the world

The Mid-term Plan 2027 (K27) is designed to achieve two strategic objectives: first, to focus on our current business and implement structural reforms through “Reborn Kao” initiatives, and second, to establish new business fields and categories that align with our future strategy, referred to as “Another Kao” initiatives. What unites this parallel approach is a focus on unique, state-of-the-art technology to drive global expansion. We are committed to fostering growth in both approaches to achieve our vision.
As we strive for continued global expansion, Kao’s core value of compact innovation will continue to take center stage. This means achieving maximum impact with minimum resources, emphasizing efficient resource management and timely product delivery. In a rapidly changing world, global sustainability goals demand reduced consumption. We remain pioneers in this regard, leading by example by maximizing manufacturing results and simultaneously minimizing resource inputs. This is increasingly enabling Kao to provide personalized products and services in full harmony with nature.
We are also clear that we cannot achieve the world we aspire to on our own. Our focus must be on co-creation, not competition. Collaboration and connection with other companies, each leveraging our unique strengths, is crucial to success. Guided by our founder’s evergreen wisdom, Kao’s journey towards a “Kirei life for all” has no finish line. We are committed in perpetuity to overcoming the most challenging obstacles to push forward with unwavering determination.

Corporate Philosophy: The Kao Way

The Kao Way embodies our corporate philosophy. It was established in 2004 to take the spirit and culture cultivated by our predecessors and pass them down to the next generation. We updated the Kao Way in 2021 with the aim to transform the company. We included the phrase “people and the planet” in our Mission, adding the phrase “beyond their expectation” in our Vision and including “We act with courage” within our Principles.
This corporate philosophy is deeply ingrained in every employee and brings consistency to all our activities. The Kao Way is the driving force that integrates our diverse assets and our employees’ strengths as we tackle social and business challenges. It also serves as a guide that links individual growth with the growth of the company and our social contributions. In this way, it makes our work more rewarding and instills us with a sense of purpose.

  • * The Japanese word kirei describes something that is clean, well-ordered, and beautiful all at once. For Kao, this concept of Kirei not only describes appearance but also attitude—a desire to create beauty for oneself, for other people, and for the natural world around us. At Kao, Kirei is the value we want to bring to everyday life through our brands, products, technologies, solutions, and services—now and in the future.
Page Top