Message from the President

We have all experienced the dramatically shifting external environment over the past few years, yet I personally feel that this has also become the new norm for the future.
Despite the emerging recovery in socio-economic activities following the end of COVID-19, the world continues to face geopolitical issues like the conflicts in Ukraine and Israel, and has, for example, exhibited increasing complexity with the radicalization of these conflicts. At the same time, I am also aware that taking action on environmental problems is an issue of the utmost importance.
Amid the country’s inherent challenges of limited national territory and paucity of resources, Japan is expected to see its population decline by nearly 8 million people from 2023 to 2030. This situation is already placing severe strains on corporate activities. Despite these conditions, companies are expected to generate a virtuous cycle for the domestic economy in the immediate future by engaging in activities intended to steadily increase wages and prices. Yet these companies will also need to continuously improve the earnings that serve as capital if they are to achieve sustainable growth. A declining population will also lead to smaller markets and a shrinking labor force. Workers will then hold the power to choose companies during recruitment activities. As a company, we therefore stand today at a turning point: Will potential workers choose us? Will we survive? In light of these underlying questions and circumstances, we must take charge of the situation with the resolve to act upon these dramatic shifts.
In our quest for survival, the most important element as a company is competitiveness. Competitiveness indicates the level of acceptance among society, and Gunze’s competitiveness, specifically, stems from its ability to provide a “feeling of comfort.” Although our core technologies also serve as a method of realizing this feeling of comfort, these technologies alone will not ensure our survival. Which is why I recognize the importance of continuously providing value.

As our aspiration for 2030, we aim to create new value and deliver a feeling of comfort. Under VISION 2030 stage1, we included four pivotal strategies for achieving this goal, namely new value creation, capital cost-focused management, evolution of our corporate constitution, and environmentally responsible management. Through these strategies we have sought to provide a balanced-degree of value to four groups of stakeholders, namely business partners and customers, shareholders and investors, employees, and society and the environment. Although individuals interpret feelings of comfort differently, our business partners and customers have continued to use the many unique products and services that we have offered over the years because they recognize them as providing a feeling of comfort. As the central management policy on returning profits to shareholders and investors, we have established a policy of continuously delivering a total return ratio of 100% until consolidated ROE exceeds the cost of shareholders’ equity. In the fiscal year ended March 31, 2024, we issued a dividend of ¥153 per share, ¥6 higher than the previous year. As far as employees are concerned, we endeavor to improve the working environment by increasing wages and expanding employee benefits.
Turning to society and the environment, we have worked through our business activities to provide solutions to the challenges they face. This includes converting the Moriyama Plant (Moriyama City, Shiga Prefecture), one of our key facilities in the plastic films field, into a Circular FactoryTM (resource-recycling facility) and building plant buildings that are certified under the Comprehensive Assessment System for Building Environment Efficiency (CASBEE).
Under VISION 2030 stage1, we made steady progress in our efforts targeting these four groups of stakeholders. However, as we have yet to achieve our goals, I do not feel the outcomes have been sufficient. In FY2024, the final fiscal year of the Medium-term Management Plan, we will therefore conduct initiatives in each segment intended to increase productivity through automation and DX programs; to enhance cost competitiveness through a globally optimized production system; and to expand our raw material procurement network, as we continue to generate new value that captures changes in the market.

The Gunze Group engages in an extensive range of businesses, from apparel to plastic films and medical devices.
Despite the difficulty in bringing these together under one definition, we manage to leverage the respective characteristics of each business to execute business portfolio strategies in a way that generates Group-wide synergy. I therefore believe that we can provide the value of a feeling of comfort to society by ensuring that each division flexibly responds to the business environment in a way that builds competitiveness. In one example, we split off the medical business, which had originally been part of the functional solutions segment in FY2023, and have clearly positioned it as a driver of growth as an independent segment. Ahead of this move, we merged Medical U&A Inc. and Gunze Medical Japan Ltd., which had operated as sales subsidiaries for the medical group, to establish Gunze Medical Limited in October 2022. Moreover, in April 2023, we merged the R&D, pharmaceutical affairs, and management sections of the medical devices business, thereby creating an organizational structure dedicated to medical devices with the ability to manage all stages from R&D to sales in an integrated manner. At present, we are working to establish a unique business structure tailored to the medical industry by actively recruiting mid-career professionals.
Although we do not plan to announce details of the next Medium-term Management Plan VISION 2030 stage2 until May 2025, in working toward our next set of milestones we intend for the medical business to create new corporate value and lead as a pillar of the Gunze Group growth strategy. In particular, the medical business will do so by providing innovative medical devices with a focus on bioabsorbable products. Specifically, this effort will entail the three growth strategies of achieving sustainable growth by expanding the ratio of high-profitability, proprietary products; promoting area-specific portfolio strategies, including strengthening sales of products for the wound care (WOUND) and thoracic/abdominal (Surgical) areas; and developing new products and challenging new areas that enhance our presence as a company.
In order to accelerate these three strategies, we will construct a new plant (the third plant) on the site of the Ayabe Plant in Kyoto, which is the site of our founding. Scheduled for completion in February 2025, this plant will include expanded R&D facilities to enhance our development capabilities. The new plant will also be equipped to increase production of the absorbable adhesive barriers for which demand is growing. Meanwhile, in the engineering plastics field, which is expected to experience a huge increase in demand from the medical and semiconductor sectors, we will expand the main Konan Plant (Aichi Prefecture) with a completion target of March 2025.
Moreover, we will strengthen investments in growth businesses in the plastic films field, the area in which the Gunze Group is currently taking the most aggressive action on environmental problems. This move will include putting our Circular FactoryTM into full-scale operation and establishing recycling centers as the foundation of our transformation into a circular manufacturer.

Originally launched as a silk manufacturing company, today the Gunze Group shares the same DNA of differentiating products and services across its diverse range of businesses, underpinned by a commitment to quality. So, I would like to introduce an example that shows just how far this awareness has spread among our employees.
Many of you probably remember how masks flew off the shelves in Japan and could not be found in stores for months on end following the rampant spread of COVID-19 at the start of 2020. At the time, given our technologies in the apparel business, we could have moved immediately to manufacture and sell masks made using cloth fabrics to drive up profits. But because the frontlines of the apparel business were thoroughly committed to how the masks felt against the skin, if they fit easily, if they were gentle around the ears, and other aspects of mask quality when worn, it was only in May that we were able to launch sales of a gentle cloth mask that was uniquely made by an underwear manufacturer. As we continued to enhance the quality and provide a feeling of comfort by developing masks for the summer, we received praise from customers and ended up creating one of the top selling products on our e-commerce site. I believe this stance of the apparel business itself embodies our spirit, and our sense of ethics. Introducing this effort Group-wide has given rise to a synergistic effect within the Company.
The direction for which I feel the Gunze Group must continue to aim in looking to 2030 is sustainability-related initiatives, including those focused on environmental issues, primarily climate change, and those for strengthening human capital. Our founding spirit lives on within the human resources strategies that are essential for sustainable management. With the beliefs that “good people make good silk yarn” and “a good conscience produces a yarn of high luster,” our founder, Tsurukichi Hatano, worked hard to strengthen education for female mill workers in order to improve the quality of our yarn. People at that time spoke of the factory as “a factory on the outside but a school on the inside.” This reputation was built by Hatano, who steadfastly followed the policy of respect for people. This policy, as well as the commitment to cultivating and empowering people, has been preserved throughout Gunze’s history.
Today, as job-based employment and mid-career recruitment become more common, and the concept of lifetime employment is starting to change, we must take an approach that suits the needs of the times. Besides the obvious themes of promoting women’s empowerment and engaging in work style reforms, we will also work to enhance the awareness that all employees are involved in management, to reform the employee benefit system, and to support self-led career development.
In addition to training specialists like myself, after all, my career proceeded almost entirely within the plastic films field, we will work to train human resources in a way that helps develop future generations of management executives, including through personnel exchanges between business divisions.

When asked about our policy for developing management personnel, I answer that candidates must have acquired a certain degree of management sensibility, knowledge, experience, and skill, as described in textbooks. Yet these can also be acquired later on through effort. In contrast, the two things I think are absolutely essential for engaging in management are health and a personality that connects to management qualities. Health and personality are attributes with which we are born, and are greatly affected by where we come from. You cannot change these by suddenly making an effort. Yet both are extremely important for engaging in the work of management. Although direct competition among candidates only begins after we screen for these two aspects, candidates must make every effort at this point to acquire the skills they are lacking. Given the increase in job-based employment and the shift away from the concept of working for one company for an entire lifetime, however, we will flexibly address these changes as we develop human resources.
My motto is do my best to choose the right people and to leave the rest to chance. Although this might make some people mistake my stance as leaving things up to others, I believe these words convey the importance of first and foremost putting every effort into the duties with which we have been tasked. When performing our duties, the most important goal is for us to perfect competitiveness, no matter how small the task. And I ask that all employees continue to enhance their competitiveness within the Company as they identify the competitiveness of Gunze from the stance of its customers. Simply putting our best foot forward does not mean that we will proceed smoothly with our work. Yet I still think it is important to always stay at least one step ahead of our competition. We should not simply aim in one giant leap for the top, but should gradually accumulate duties in a steady manner, one step at a time. With 2024 marking our 129th year in business, I feel this very approach is exactly what the Gunze Group needs if it is to survive over the long-term.

We will continue to engage in the effort to “Transform and Challenge,” and we will tirelessly work to enhance customer satisfaction and corporate value with the intense desire to contribute to society by providing new products and services that create the future. Through sustainable management that aims to balance social and economic benefits, we intend to remain a company that will survive for the coming 50 and 100 years.
I therefore humbly ask for your further support and understanding. Thank you.