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Message from the President

The Nitto Group Will Continue to Support Our Customers and Create New Values for the Next 100 Years to Realize a Sustainable Society

Building on the Nitto Group’s “DNA” to Bring about Innovations for the Next 100 Years to Come

The Nitto Group celebrated the centennial anniversary of its foundation in 2018. Reaching a major milestone is invigorating. In our quest to realize our Mission, “Contribute to customers’ value creation with innovative ideas,” we have identified the opportunities presented by changes in the market and the world at large since the inception of our business, thus creating values unique to the Nitto Group. Underlying this philosophy is a determination shared throughout the Group, that is, each and every employee should demonstrate a sense of ownership and listen with utmost care to what customers have to say to help them to find solutions to their issues. In this sense, all of our employees are in the business of marketing.
In the upcoming 100 years, we will be required to build a sustainable society where people can lead a sound and healthy life. If we - “Nitto Persons” with DNA of the Nitto Group - are to make such a future a reality, we must fulfill the important duty of “challenging ourselves to make innovations over the next 100 years.”
Because we are a B2B manufacturer finding ourselves somewhere between upstream and downstream of the value chain, a number of our products may not be visible to consumers. In the next 100 years, however, it will be important to enhance a public perception that the Nitto Group is a company that offers values essential for making innovations happen. For this, we must maintain an excellent reputation among our customers so that they will say, “Because of the Nitto Group’s involvement in the crucial part of our development process, we are able to realize products that we want to create.” I believe whether or not we can continue to offer such value will hold the key to our growth over the mid- and long-term.

Sanshin Activities and Niche Top Strategy - Nitto Group’s Unique Business Models to Achieve Sustainable Growth

Creating Values Only the Nitto Group Can - Age-old
Strengths and the Business Model that Make it Possible

On top of the fundamental strengths of corporate culture and core technological prowess based on polymer synthesis and processing technologies that have been honed over the years, the Nitto Group is privileged to have diverse business domains and competitive intellectual property rights that result from said fundamental strengths, as well as a valuable customer base that covers a wide spectrum of industrial sectors. For us to achieve sustainable growth and keep increasing our corporate value over the long term, we must make constant efforts to broaden our business domains, and it is “Sanshin Activities (three “new” activities)” and “Niche Top Strategy” - two of the Nitto Group’s original business models - that will make this possible.
Take, TEMISH®, as an example of “Sanshin Activities.” This porous resin filter was originally intended for clothing, repelling water but allowing the passage of air. We subsequently developed a “new” application as a vent for auto lamps and a “new” product as a micro filter featuring a new technology, successfully creating broad “new” demands in the form of air filters for clean rooms to mobile phone parts and electrical components for automobiles. Meanwhile, one of the Global Niche TopTM products, REVALPHA® was originally developed as a surface protection film but went on to create a market in which the Nitto Group has a competitive advantage, namely, an application for fixing electronic components at the production process.
The Nitto Group is proud to have a corporate culture of fostering technologies and products with perseverance. For instance, we began research and development of ITO (Indium-Tin Oxide) films, which is one of the essential components for touch panels, more than 40 years ago. They were ahead of their time though, as upon their release in the 1980s there was little demand for them in the market. Yet, we continued to develop new applications, believing that we should retain technologies that are half a step ahead of our customers’ needs. Our efforts paid off, and things made a sudden turn for the better with the advent of smartphones in the 2000s. Indeed, some of our current mainstay businesses started by catering to niche markets. As we produced one new product and business after another, they began to converge to shape the Nitto Group’s business portfolio.
What is also important is to keep advancing our business from merely selling products (=things) to customers, which we have been so accustomed to, to offering total solutions (= services) by tapping into the Nitto Group’s collective strengths in response to changing market environment.

Keeping Evolving Flexibly in the Ever-Changing Business Environment

The market environment that we find ourselves in keeps changing faster than ever before, a good example of which is the auto industry where technological innovation is making rapid progress as symbolized by the acronym, CASE (Connected, Autonomous, Shared, and Electric), while realignment beyond existing industry boundaries is on the cusp of beginning any time, such as between the energy industry and the information communication industry. Added to these are the ongoing progress in digitalization and other scientific technologies, such as artificial intelligence (AI) and the Internet of Things (IoT), the possible impact that the burgeoning protectionism in the U.S. could have on the economic activities of the world, and the intensifying global-scale competition among enterprises, all of which could bring about significant changes to the external environment.
For us to adequately respond to such changes in the world, we need to keep changing ourselves flexibly while moving forward, underpinned by our Corporate Philosophy and corporate culture, The Nitto Way. We will thus meet the expectations of our customers and the general public.

Determining “Material Issues for Sustainability” to Draw up Mid- and Long-Term Management Plans

Now, what values will be in demand among customers and in the future world? To answer this question, we cannot be diverted from the perspective of sustainability. For the Nitto Group to sustain its growth, we definitely need to manage our company with the environmental, social, and governance (ESG) criteria in mind, in other words, “simultaneously solve social issues and enhance corporate value.” It is also important what innovations the Nitto Group creates and how it enhances the quality of its management.
This being the case, at the beginning of fiscal 2019 we came up with “material issues for sustainability” which include both issues to be addressed through products and services and issues to be tackled by reinforcing the management foundations, thus clearly defining the significance of ESG in the context of business management and prioritizing our initiatives. Our next challenge will be how we should incorporate such material issues in the mid- and long-term business plans. To do so, the management team needs to set a concrete model and, as the top manager, I will show the way forward and guide our employees accordingly.

Co-creating Value through Innovation (Issues to be Addressed through Products and Services)

In order to contribute to solutions to social issues that face the world, we are required to address them directly through our products and services. Our products are being supplied to a large variety of markets and, from among numerous social issues, we have narrowed the possibilities down to three areas where we can co-create values through innovations based on a matrix of: if a market offers high growth potential that promises business opportunities and if the Nitto Group can demonstrate its strengths in the market.

The first area is infrastructure development for digital equipment that facilitates human mobility by car and other means to reduce the number of accidents and traffic congestion and facilitates the move toward a smart-society. The second area deals with such issues as depletion of energy and resources and contamination. For this, we will reduce negative environmental impact by spreading use of renewable energy, encouraging energy-conservation, and developing products that promotes cyclic use of plastics, metals, water, and other resources. The third area concerns contributions to good health, medical services, and well-being of people. We will also engage in development of oligonucleotide medicines and other pharmaceutical products. By leveraging the Nitto Group’s strengths, we will proactively work on these issues.

Enhancing Management Quality for Co-creating Value (Issues to be Addressed by Reinforcing the Business Foundations)

Delivering products of paramount quality to customers is the primary mission of the Nitto Group. However, as recent years have seen growing attention being paid to the quality of manufacturing processes, in addition to quality, cost, and timely delivery, customers and other stakeholders are increasingly interested in the quality of our manufacturing processes. In response, we are surely implementing responsible manufacturing with a focus on product safety, work environment, human rights, and environmental conservation, among others. These activities need to be performed by involving the entire value chain. With the understanding of this by our suppliers and customers, the Nitto Group will fulfill our responsibilities.
At the same time, in order to reinforce the management foundations and bring about innovations, we must give diverse human resources full play. How we can attract able human resources and maximize employees’ competency has become a management issue that is more important than ever.

Establishing a Workplace Culture that Respects the Challenging Spirit and Supports Growth of Employees

The Nitto Group cherishes a culture that encourages and supports employees in their attempts to create innovations. One of the unique systems that facilitate such attempts and thus support their growth is a “management fund,” whose investment decisions are made quickly. This fund is typically invested in new businesses, as they often require us to move promptly. To raise small buds of research and development and new technologies, it is important to have a Group-wide, long-term perspective, in addition to being able to make speedy decisions. The “management fund” allows us to make flexible investment decisions for future business growth even in the rapidly changing business environment.

Human Resources are our Most Important Assets - Every Employee is a Representative of the Group

For the Nitto Group, “human resources” are the single most important assets in creating corporate values. The Group has manufacturing, processing, research and development, and sales bases in 28 countries and regions, and two thirds of its employees are non-Japanese nationals. Because of this, it has become more important than ever to maintain our unique corporate culture by developing “Nitto Persons” around the world, who, regardless of nationality or gender, comprehend the Nitto Group’s Corporate Philosophy, including The Nitto Way.
With this in mind, we have developed an original curriculum and a system for human resources development. At the same time, in order to foster a workplace environment where diverse human resources can work lively, we cannot do without the diversity and inclusion approach. If we can reflect multifaceted perspectives in our business management, I believe that it should be easier for us to create new values. Every employee is a representative of the Nitto Group. Wherever they go in the world, I hope that they act as a representative of the Group with pride and confidence.

The Nitto Group will continue to offer its unique added values to customers in a bid to assist them in the value creation process.

To Enhance “Management Safety”

At the base of the Nitto Group’s growth is “management safety.” Accordingly, we have implemented a series of corporate governance reforms, including the appointment of outside directors, introduction of stock options as a performance-linked compensation (which was later replaced by the performance-linked share-based remuneration and restricted share remuneration), and establishment of an advisory committee with third-party members. We doubly ensure compliance and carefully maintain the corporate governance structure in order to prevent any wrongdoing or information leakages from occurring. Going forward, we will ensure transparency of our management and constantly seek ways to enhance effectiveness of the sound corporate governance structure.

To Realize the Nitto Group’s Goal

I believe that, as a supplier of intermediate materials, the Nitto Group should continue to aim at the goal of contributing to the establishment of a sustainable society.
Together with our customers, we will continue creating innovations by offering products and services unique to the Nitto Group and work on various issues promptly and honestly while at the same time conducting business with ESG and capital cost in mind.
We will remain committed to creating new values for society, hand in hand with our customers.

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