Medium-Term Management Plan artience 2027 | Integrated Report 2026 Management Strategy: Increasing investments in growth areas to accomplish the business portfolio transformation

Many of our highly profitable existing businesses are of the highest class in terms of competitiveness in Japan. They are our revenue base. They are classified into three types of business: growing businesses, profitable core businesses and restructuring and strategy-rebuilding businesses. The roles of these businesses are clearly defined. 
For example, liquid inks, which drive the Packaging Materials Business, is categorized as a growing business outside Japan, and as a profitable core business in Japan. In this business, we first achieved a large market share in Japan. Packaging for food and daily necessities ultimately ends up in the hands of consumers, and growth is limited in markets where the population has peaked. Our strengths in the technologies and knowledge that we have cultivated will be utilized to increase profits in overseas markets where demographic dividends are anticipated and some earnings will be allocated to our next investments to support our corporate growth. This is the role that growing businesses have to play. 

We already operate businesses in 24 countries and regions, including India, Southeast Asia, China and Turkey. Our extensive network of bases enables us to respond flexibly to different markets. There are quite a few cases where new businesses are created when a customer launches a new business overseas. Our overseas operations are already responsible for at least 60% of the Group's total profit. I believe that this trend will continue.

Profitable core businesses in Japan are also important as they stably generate profits. We are keenly aware that the expertise we have developed in Japan drives our overseas expansion. We will more actively invest in Japan in FY2026. One example of these efforts is an approx. 4 billion JPY capital investment at the Saitama Factory, which manufactures inks and materials in the Packaging Materials Business. We attach importance to improving the working environment as well as streamlining and the reduction of labor, as the labor shortage is worsening. We will build a smart factory that people will want to work at. 
In FY2025, we achieved positive results in the restructuring and strategy-rebuilding businesses category, too, by revising prices and increasing added value. The profitability of the pigments business increased considerably. Offset inks also turned profitable in Japan. This is a good example of the structural reforms to achieve profitability even amid the contraction of the market.

Strategic priority businesses constitute a domain for developing new pillars for future growth. The artience2027 plan began amid the global shift to EVs. We initially expected that the CNT dispersions for LiBs business would make a big difference to the entire portfolio. However, its performance has not been as forecast, mainly due to changes in EV policies in the United States after the change of administration and delays in the construction of infrastructure. 
However, this does not mean that the shift to EVs has ended. We will expand target markets and product ranges to prepare to seize opportunities when the EV market expands again. In addition to our mainstay products for ternary battery cathode materials, we are developing materials for lithium manganese iron phosphate (LMFP) batteries and anode materials and researching all-solid-state batteries. We are also looking to hugely expand applications for our products from the automotive industry to the fields of backup power sources for data centers and consumer devices.

Another priority area compensating for the delays in CNT dispersions is the display and advanced electronics related businesses. We are making capital investments in a factory in Jiangmen, China to increase its optical pressure sensitive adhesive production capacity, as demand is high. In this area, a cycle has been established in which products developed in Japan are produced in China and provided to local customers. Business models like this that are premised on global operations have taken root, and they include cross-border collaboration in sales activities within the East Asia region and different bases engaging in complementary production. 
On the other hand, color filter materials, which are mainly for the Chinese and Taiwanese markets, were affected by Chinese competition in FY2025. To address this competition, we established a joint venture with China- based Shenzhen RongDa Photosensitive Science & Technology Co., Ltd. to construct a structure for selling locally manufactured products. 
In the domain of advanced electronics, we are accelerating our development of materials for smartphone components, data center applications and other products for growing markets.

To ensure that we capture business opportunities in promising areas, we have established a task force of about 20 people. I participate in its activities regularly. Some projects are already in the test marketing phase. We will step up our efforts with a view toward the next medium-term management plan. We possess unique materials such as polymer resins for semiconductors. We will expand the number of applications they have and the number of fields they are used in, including niche markets, through the development of products in multi-model projects to enable seedlings of new businesses to grow.