Message from the President

In recent years, global uncertainties, including geopolitical risks, have been increasing. Against this backdrop, I believe Japan’s most pressing structural challenge is its declining population. This demographic shift will have far-reaching consequences, such as a decrease in demand for products, shrinking markets, diminished influence over the international community, and changes in the industrial structure. Notably, the contraction of a market inevitably results in fewer companies. As a business, we now stand at a critical crossroads. Will we be among the companies that are eliminated, or those that survive?
For this reason, we must heighten our sense of urgency and pursue a bold strategic transformation to ensure our survival. For Gunze, the central question is, “How do we increase our competitiveness in the global market?” Without overcoming this challenge, survival will be difficult.
Given our size, however, there are limits to our ability to compete head-on in a global market which is crowded with powerful competitors. I believe that a minimum annual net sales of 500-600 billion yen is necessary to compete in earnest.
Accordingly, rather than pursuing a broad-based global expansion, Gunze has adopted the unique strategy of carving out niche markets. For example, under our Medium-term Management Plan, we aim to grow in the global apparel market. Our sales strategy targets a specific price segment in men’s underwear segment—a deliberate and highly focused approach. To maximize our limited management resources, we will carefully select market segments and concentrate our resources in specific regions or markets, adopting a “local production or local consumption” approach.

Gunze operates in four business segments: functional solutions, medical, apparel, and lifestyle creations. A distinctive feature of our company is the breadth of these business domains relative to the size of our corporation. Each segment has its own value proposition, growth direction, and challenges. We concluded VISION 2030 stage1 in FY2024. If I were to assign it a score, it would be 70 out of 100. While this is a passing grade, it is by no means a satisfactory result.
The initial targets for the medical and functional solutions businesses were met, and this merits a positive evaluation. In the medical business, we focused on the development of proprietary technology in the bioabsorbable field, creating medical devices that provide value to both patients and physicians. We also cultivated niche, high-value-added markets in close collaboration with numerous university laboratories. In functional solutions, we developed products for semiconductors, environmental applications, and other sectors to meet the ever-evolving needs of the market.
However, we must now reassess the business strategies of the apparel and lifestyle creations businesses. Apparel, in particular, has faced a severe headwind. Our apparel products have a high import ratio, making them vulnerable to the fluctuation of foreign exchanges, and we are also confronting the structural challenge of a shrinking domestic apparel market due to Japan’s decreasing population. Moreover, as consumers increasingly choose their purchasing channels based on specific purposes, the sales floors of mass retailers and department stores, historically our core channels, have been in steady decline.
Even in these challenging conditions, I believe that apparel remains our flagship business. It is worth continuing and transforming. To act on this belief, we launched stage2 in FY2025, undertaking a structural reform and reassessing every aspect of the business.

In functional solutions, we have continued the investments we initiated in stage1 in both plastic film and engineering plastics.
In the plastic film field, we constructed the Circular Factory™ at our Moriyama Plant in Shiga Prefecture, and in engineering plastics, we added a seventh building at our Konan Plant in Aichi Prefecture. In stage2, we aim to fully leverage these facilities to continue to drive profitability.
In the medical business, we launched new products in stage1, including an absorbable adhesion barrier sheets that reduces postoperative organ-to-organ adhesion, which has helped us acquire new customers. To meet growing demand, we established a third plant in Ayabe City, Kyoto Prefecture in April 2025, and it is scheduled to begin operating in the second half of the fiscal year.
In apparel and lifestyle creations, we will implement a structural reform. In apparel, this will include a fundamental review of the competitiveness of brands, the optimization of inventories, sales channels and logistics systems. Our goal is not merely to improve profitability, but to lay the foundation for future growth by transforming the business so that it has a leaner and more resilient structure.
In doing this, we will advance the local-production-for-local- consumption global strategy, anchored in our “carving out niche markets” approach that I mentioned earlier. This strategy hinges on production and marketing. We will carefully decide what to produce, where to produce it, and at what scale, while evaluating profitability in each case. I believe this concept applies not only in apparel, but in all of our business segments.

In our financial strategy, we will transition from our historically prudent, slightly conservative financial strategy to a more dynamic and flexible capital policy. This shift is driven by two factors. The first is the challenge generally faced by Japanese companies in attracting global capital.
Led by the Tokyo Stock Exchange, the minimum investment criteria from the perspective of overseas investors, such as a return on equity (ROE) of 8% and a price-to-book ratio (PBR) of 1, have been set, and we too must aim to meet these baseline criteria. The second is our capital structure. Our current equity ratio exceeds 70%. We consider this to be somewhat excessive.
We will allocate management resources to proactive growth investments and shareholder return, while improving our capital efficiency through structural reforms to optimize our capital structure.
Mergers and acquisitions will be an important option as we work to achieve the three-to-fourfold growth of sales over the medium- to long-term. However, I believe in taking a strategic and cautious approach. The keys are compatibility and timing.
The results of rushing an acquisition may be unfavorable in the long term. We will focus on related business domains, carefully identify the right timing for acquisitions, and prioritize qualitative growth.

The Gunze Group plans to revise its personnel system in April 2026, introducing a job-based framework for managers to ensure that talented individuals are appropriately evaluated and rewarded. I believe there is no single definition of happiness. Some employees want to advance their careers, while others value a stable life in their hometowns. We will offer multiple career paths to accommodate both, creating a system that prioritizes each individual’s happiness and growth.
These reforms are also essential for preserving the founding spirit of Tsurukichi Hatano, “Good people make good silk.” What I most expect from our employees is their humanity.
Professional skills can be acquired later through effort, but sound character and the determination to persevere with a positive attitude cannot be developed overnight. These qualities, which include cooperation and teamwork, are essential attributes in Japanese companies. We aim to cultivate individuals who embody these fundamental qualities.
In parallel with our investments inhuman capital, we value environmental initiatives that ensure we remain a sustainable enterprise. As a company that handles plastics, we have long been mindful of our responsibilities regarding the global environment. To fulfill these responsibilities, we are advancing our vision of being a circular manufacturer. We used a green loan to build the Moriyama Circular Factory, Japan’s first resource-circulating model plant. Over 2,000 stakeholders have already visited the site, and in October 2024, we were commended by the Ministry of Economy, Trade and Industry. We believe these environmental initiatives directly contribute to the enhancement of our corporate value.

Gunze’s brand recognition is still too low among the younger generations of people, and older people’s perception that Gunze is just an underwear company persists. We have yet to gain wide recognition for the full scope of our business, including the engineering plastics and medical businesses. Without change, we will not be able to increase people’s awareness of our brand or achieve the broad growth of our brand.
That said, we have recently begun to see students applying for jobs that are interested in our medical business, indicating that our new growth fields are starting to resonate with the younger generation. As more prospective employees become interested in our diverse businesses, I believe people’s recognition of our brand will steadily rise.
When formulating VISION 2030, what I valued most was the idea of a “multi-stakeholder” approach. We aim to be a company that delivers well-balanced value and satisfaction to all of our stakeholders—our shareholders, employees, customers, local communities and beyond. At the heart of this is our commitment to delivering Comfort Solutions for Life. This idea of comfort is the essence of Gunze, and I am convinced that this will lead to the increase of our corporate value.
I will continue to communicate this vision clearly and share the appeals of the Company with as many people as possible. I look forward to your continued understanding and support.