The management policy we have established since I assumed the position of Chief Executive Officer is as follows.

The motivating force that transforms and grows a company is the ambition and passion of its people. In the past, when I was in charge of a workplace that had to shut down due to business failure, I often heard the phrase, “The company will figure it out.” I believe that if we move beyond merely relying on the company and doing only what we are told from above, and instead if each employee takes ownership, holds on to their dreams, possesses strong ambition and passion, and aligns with our direction, we can achieve a bright future. Last year, the Group established new Our Values. Through putting Our Values into practice, we aim to hone every “Genba-ryoku” (frontline capability), foster a sense of ownership and urgency among all employees, and build an organization where everyone thinks and acts proactively to make their workplace the best in the world.
When asked what our strength is, we want to be able to immediately point to specific products and services. In other words, we want to be creating and providing products and services that exceed customers’ expectations, namely new materials. I myself recognize that the lack of clearly defined specific businesses and products that will serve as growth drivers for the Group is a major challenge. We intend to realize and present these in the Management Strategy for the fiscal year ending March 2027 onward, which we are currently reviewing.
Moreover, the current economic environment is changing faster than anticipated and at an extremely large scale. To respond to these changes, we will also advance our own transformation.

During the three-year period of the Medium-term Management Strategy FY2031 (FY2031 Strategy) Phase 1 (fiscal year ended March 2024 to fiscal year ending March 2026), the external environment deviated significantly from our projections. In the automotive industry, we had anticipated accelerated adoption of EVs and sustained upward growth, but that did not materialize. The semiconductor industry was also expected to grow similarly, but after a pause in demand during the stay-at-home phase of COVID-19, demand declined. While AI server-related areas are currently performing well, the industry as a whole remains in the process of recovery. Furthermore, not only are tariffs imposed by the USA and various regulations and rules within the EU intensifying, but efforts to control the economy as a national strategy are also strengthening around the world. Additionally, resource hoarding is becoming evident across nations.

In light of these challenges, we have determined that fundamental structural reforms in business foundation restructuring and financial structure improvement are imperative to ensure profitability even when the external environment worsens. The FY2031 Strategy Phase 2 plan from fiscal year ending March 2027 to fiscal year ending March 2031 will be reset. We will proceed with its revision, while also taking decisive action where possible at an earlier stage.

Improving capital efficiency is the most important factor for business foundation restructuring. The Group’s investment profits are low. This is something that must be addressed immediately. We will shift our focus from quantity to quality and rigorously pursue management efforts regarding return on invested capital (ROIC), which are centered on rates and maximizing returns.
Within each business division, we will carefully identify which products and services are generating profits. We will then concentrate management resources on these key areas and commit the entire Company to this effort.
On the other hand, it may be necessary to withdraw from low-profit ventures or, in some cases, carve out entire businesses. The approach is to set specific KPIs, conduct thorough evaluations, grow where growth is needed, and streamline where streamlining is required. Within the Corporate Division, we will accelerate optimization efforts to decommission, simplify, and standardize operations, aggregate and streamline common operations, expand the use of shared services, and thoroughly manage personnel to rationalize the organization. Concurrently, we will enhance
Company-wide capital efficiency through the selection and concentration of R&D themes and the rebuilding of our DX strategy.
Already, we are scaling down copper concentrate processing at the Onahama Smelting & Refining Co., Ltd. in the Metals business and have started preparations for the integration of the Sakai Plant and Sambo Plant, with the aim of optimizing production systems and accelerating business growth in the Copper & Copper Alloy business. These initiatives are just the beginning. We will strive to rebuild our business foundation in a short timeframe with a sense of urgency.

Capital efficiency and enhancing ROIC are the foundations for financial structure improvement. To enhance ROIC, we must expand the numerator, which is profit, while simultaneously streamlining the denominator, which is invested capital. We will strive to enhance ROIC by dismantling it and rigorously applying it to the frontline. Furthermore, while the Company has traditionally tended to prioritize profits over cash flow, it is necessary to manage operations with greater focus on cash flow going forward. This includes flexibly and appropriately controlling investment allocation, such as applying the brakes on investments when operating cash flow becomes tight. Lowering interest-bearing debt is also necessary when considering factors such as credit ratings. We intend to further improve our net D/E ratio by allocating improved cash flow to lowering interest-bearing debt. In addition to these initiatives, we will also strive to reduce invested capital by implementing reforms in business foundation restructuring. On the other hand, to expand profits, we must not only reduce costs but also strive to offer products at a certain price level. While circumstances vary depending on the business or product, we will also advance initiatives to enhance the cost effectiveness of our products and services and raise prices.

We must respond appropriately to global environmental issues, taking into account factors such as the full-scale implementation of Japan’s emissions trading system scheduled to begin in the fiscal year ending March 2027. To achieve the Group’s goal of carbon neutrality by the fiscal year ending March 2046, we must further strengthen our efforts.
Regarding human capital enhancement, talent shortages are already becoming apparent. We plan to focus not only on talent acquisition but also on employee skill development.
Furthermore, we will continue to diligently address SCQ as we have done previously. “S” stands for Safety & Health, and part of this is eliminating occupational accidents. In the fiscal year ended March 2025, we conducted a Companywide questionnaire. Our findings indicated that both management and on-site employees have little confidence that all accidents can be eliminated. Some areas exhibited the attitude that accidents are inevitable. We must thoroughly address this issue. Since the latter half of last year, we have intensified our efforts and are determined to eliminate all occupational accidents as a fundamental pillar of the Company. “C” stands for Compliance & Environment, and there has been an increasing trend in incidents, including harassment and drunk driving. It could be said that things that were previously hidden are now coming to light, but the number of cases is increasing, and we will work diligently to eliminate them. “Q” stands for Quality, and in relation to this element, we have transitioned from preventive measures to ensure defective products are not provided to customers to a proactive quality management approach. This involves implementing controls while thoroughly managing trends within processes before defects occur. We plan to further accelerate this shift, ultimately leading to a reduction in customer complaints.

The fiscal year ending March 2026 will be a crucial year for enhancing the corporate value of the Group going forward. We will work as a unified Group with a sense of urgency to achieve business foundation restructuring and financial structure improvement, while clearly demonstrating to our stakeholders our vision for medium- to long-term growth and our path to becoming a globally competitive company. I am determined to drive the enhancement of the Group’s corporate value with ambition and passion. I ask for your understanding and cooperation as we work toward these goals.