The President commitment

President, Atsushi Hirochi President, Atsushi Hirochi

Strengthening CSV management to
enhance customer satisfaction and
corporate value

Gunze—founded on the spirit of social contribution

Gunze was founded in 1896 in the district of Ikaruga (now Ayabe City) in Kyoto. In establishing the company, our founder had a strong determination to contribute to the economic health of his hometown community through the development of local industry. He considered this to be more important than focusing exclusively on profits. Believing that this should be the policy of Ikaruga, he named his company Gunze Silk Manufacturing Co., Ltd. (presently Gunze Limited), as “Gunze” means the “policy of the district.” Based on the concept of the “policy of the district,” the Gunze Group has consistently lived up to its founding philosophy of “Striving for harmonious coexistence with all stakeholders surrounding the company through a people-oriented approach and a commitment to quality.” To use the analogy of weaving, this philosophy serves as the “warp” threads that must remain unchanged, and they have indeed been preserved to date.

As such, what has always lied at the heart of our 120+ year history is the spirit of social contribution underscored in our founding philosophy, and we believe that this is exactly aligned with the concept of Sustainable Development Goals, or SDGs.

Looking back on fiscal 2018 and plans for fiscal 2019

In fiscal 2018, with our “CAN 20” medium-term management plan’s key concept of “Focus and Concentration,” the Gunze Group focused on promoting further growth and enhancing profitability. To these ends, we strived to expand the market for our high value-added products developed by drawing on our technologies that set Gunze apart from others. At the same time, we worked to establish a more solid earnings structure through structural reform of sluggish business sectors. In fiscal 2018, our functional solutions business enjoyed robust sales mainly in the areas of plastic films and engineering plastics. Our apparel business was adversely impacted by increasing budget-mindedness among consumers and unfavorable weather conditions. However, new differentiated innerwear products such as BODYWILD “AIRZ” were introduced, and stronger efforts were made to promote high-growth sales channels.

As for our fiscal 2019 plans for the functional solutions business, with our plastic film business enjoying expansion, we will promote the development of new markets and products, and strengthen the global production system by setting up a new factory in Vietnam. In engineering plastics, the expansion of the Konan factory is being planned, with the aim of expanding our mainstay products targeting the office equipment market, as well as products employing Gunze’s fiber technology. In medical materials, Gunze will turn Medical U&A, Inc. into its subsidiary as we seek to expand our bone fixation device business.

In the apparel business, we will work to increase the number of stores handling BODYWILD “AIRZ” innerwear while also promoting sales of completely seamless and CUT OFF items, as well as sports category products. At the same time, we will seek to expand EC and other new sales channels. In legwear, we will strive to develop new markets and new products centered on mainstay brands such as SABRINA, by anticipating and meeting potential consumer needs and market trends.

In the lifestyle creation business, we will promote effective use of our assets by seeking investment efficiency, as we aim to improve the profitability of our commercial facilities and further strengthen the growth of our Group.

Toward the next medium-term management plan

As for our next medium-term management plan to begin in fiscal 2021, we will set a new theme of contributing to the circulation-oriented society in conformance with our founding philosophy. Specifically, we will challenge ourselves to developing new businesses that are friendly to the global environment. These include the development of environmentally responsible products to address the issue of marine plastic pollution, and products using plant-derived raw materials toward building a carbon-free society. We will work to further polish our differentiating factors to strengthen our market competitiveness. Moreover, we will aggressively promote QOL-related business, including medical materials, as our growth driver engine to accelerate future growth.

Since fiscal 2018, Gunze has been promoting CSV (Creating Shared Value)-based management aimed at resolving social issues through our business, by taking SDGs into consideration. With a firm determination to contribute to society through the supply of products and services that provide a “feeling of comfort,” Gunze remains committed to enhancing customer satisfaction and corporate value. We meet this commitment by continuously serving as a company that fulfills the needs of society and that grows sustainably alongside society.

Japan’s Corporate Governance Code, revised in June 2018, requires management to accurately identify the company’s cost of capital in order to make appropriate management decisions. These decisions can include business planning, formulation of capital policies, review of business portfolios, allocation of management resources, and strategic holdings of shares. With our focus on shareholders, the Gunze Group has been seeking to raise return on equity (ROE), which we view as the Group’s key performance indicator (KPI).

The current fiscal year marks the third year of the second phase of Gunze’s “CAN 20” medium-term management plan targeting fiscal 2020. As such, we will continue to promote our three pivotal strategies: implementation of segment-specific business strategies, creation of new businesses, and reinforcement of the management foundation. By so doing, we will steadily drive our initiatives aimed at achieving our strategic goals and KPIs set for the final year of “CAN 20” plan, as we head toward the next medium-term plan. Your continued support and patronage are greatly appreciated.

President, Atsushi Hirochi