Twelve years have passed since I assumed the office of President CEO, COO in 2014. Over the years, I have consistently confronted the challenges before me with determination while steering this company with a forward-looking perspective. Looking back, the excitement and fulfilment I gained from overcoming those challenges always outweighed any pressure or sense of intimidation I may have felt.
Time and again we have navigated dramatic shifts in the external environment, yet the Nitto Group has consistently and quickly identified emerging changes and leveraged them to sustain growth. Immediately prior to my appointment, our market capitalization stood at approximately 860.0 billion yen. As of the end of March 2026, it had increased 2.4-fold to 2,080.0 billion yen. I believe this demonstrates that the market has recognized and positively evaluated the direction of our management.
One of the reasons the Nitto Group has achieved remarkable growth is that we have always maintained the “readiness” that makes us essential to our customers. I believe management must take fundamentally different approaches to continuously evolving structural changes and to sporadic events. In the early 2010s, as the market for smartphones and other digital devices expanded, an increasing number of products became commoditized, and price competition intensified. We could foresee, with a certain degree of clarity, the arrival of an era in which greater scale alone would no longer necessarily enhance competitiveness.
On the other hand, while we can recognize the potential emergence of risks that could significantly impact corporate activities, such as the US-China trade friction after 2018, Russia’s invasion of Ukraine and other geopolitical risks, and the COVID-19 pandemic, it is difficult to anticipate their timing and magnitude.
With this recognition in mind, we focused on establishing competitive advantages less susceptible to changes in the external environment. In selected domains, we created unique value that competitors would find difficult to replicate and that would lead customers to believe, “It has to be Nitto.” Through these efforts, we have sustained both the resilience and growth of our business amid this highly volatile environment. The Niche Top Strategy, which I have pursued over the past 12 years, is the very embodiment of “readiness”—an approach that, rather than passively responding to changes in the external environment, enables us to demonstrate our value all the more during times of change.
Even today, we continue to witness irreversible changes in the industrial structure, including the tightening of environmental regulations driven by the push toward decarbonization, rapid advances in digital and AI technologies, and the growing importance of economic security. We therefore never cease in our efforts to remain “ready” for the future.
Over the past 12 years, I have focused on building a robust corporate character that is not easily affected by changes in the external environment. The key to this was our consistent decision-making regarding what to grow and what not to be preserved. While prioritizing the allocation of resources to business domains that will grow, such as semiconductors, automobiles, displays, HDDs, oligonucleotide therapeutics, membranes, and hygiene products, which we expected to expand through market growth or other factors, we also decided not to preserve businesses with little prospect of achieving high profitability due to market maturity, and accordingly withdrew from, downsized, or transferred them. Through this two-pronged overhaul of our business portfolio, we successfully strengthened our earnings structure, improving our operating margin from 9.6% for fiscal 2013, immediately prior to my appointment, to 17.9% for fiscal 2025.
Throughout this process, we pursued two seemingly conflicting objectives of speed and perfection in rapidly changing domains such as optronics. By steadily implementing one value-creation initiative after another, we succeeded in generating leading-edge technologies, products, and solutions that ultimately evolved into Niche Top products. Our employees embraced this direction and executed on it. Initially, our drive toward Niche Top was essentially “words first.” Over time, however, this approach permeated decision-making in the field and became embedded in our corporate culture. Today, Niche Top stands as the very source of the Nitto Group’s competitive advantages. We will continue adhering to this strategy so that we may remain an “essential entity” for our valued customers.
With a firm determination to place ESG at the core of our management, the Nitto Group aims to simultaneously solve social issues and create economic value. To this end, we will continue to pursue the creation and expansion of “double recognized products and services” that satisfy the criteria for both PlanetFlags™/HumanFlags™ (Flags) and Niche Top products and services. “Flags” refer to products and services recognized under Nitto’s unique recognition scheme of PlanetFlags™ and HumanFlags™ for their respective contributions to the environment and human society. We have made it crystal clear that we will not initiate any new development project unless it is designed to achieve such recognition.
When we first embarked on this ESG initiative, some within the company naturally viewed it skeptically. However, by consistently adhering to this policy, we have produced tangible results. A prime example is electrical release tape. I must admit that, until around 10 years ago, customers showed little interest in this technology. Nevertheless, believing it would eventually become essential, I personally spearheaded the project and continued its development. Today, the concept of the “Right to Repair” has gained traction across Europe and other regions, and electrical release tape has been adopted for smartphones. By enabling smartphone batteries to be removed more easily, this technology has made battery recycling more feasible. In addition, by contributing to reductions in CO₂ emissions throughout the product life cycle, this innovative product has delivered a significant positive impact on both society and the environment.
Speaking of electrical release tape, we are currently expanding its applications beyond smartphones. To support this initiative, we are making substantial investments, including approximately 39.0 billion yen for the construction of a new plant, where we will also ramp up production capacity for components used in other high-end devices.
In recent years, there has been a growing perception that ESG and environmental initiatives merely increase costs. Even so, the Nitto Group remains firmly committed to the view that ESG initiatives are investments for the future. By directly confronting social issues and refining technologies that help address them, we will continue to create competitive advantages for our products and services.
In January 2024, we issued a press release regarding misconduct related to the acquisition of certification for municipal water supply membrane modules. We would like to take this opportunity to once again express our sincere apologies for the significant concern and inconvenience this matter may have caused to all affected parties.
This incident highlighted the need to reexamine the effectiveness of our corporate governance and gave us an opportunity to reassess the integrity of our organization based on the objective findings of the Investigation Committee.
We believe it is crucial not merely to prevent recurrence and implement corrective action, but also to revisit the very framework that underpins our business activities, so that we can strengthen our corporate governance structure. We will also redouble our efforts to strengthen the compliance frameworks of Nitto and its Group companies in a substantive and meaningful manner.
We believe the effectiveness of corporate governance should be ensured not only through the optimization of systems, but also through the management of human resources and organizations. The recent decision to appoint Tatsuya Akagi as COO was made following thorough deliberations by the Nomination and Remuneration Advisory Committee. After his appointment, I personally visited all our plants to explain the background to the decision and the rationale for his selection directly to our employees in order to gain their understanding. We will remain committed to ensuring transparent and autonomous management of our company.
The decision to transition to the new management framework co-led by the CEO and the COO is intended to build on the robust business foundation established to date and lead the company into the next stage of growth. As Nitto’s operating environment continues to change dramatically alongside the expansion and enhancement of our businesses and corporate value, it has become necessary to separate responsibility for setting the strategic direction of management from responsibility for executing business operations. Under the new framework, we will enhance the prospects for growth while further enhancing our organizational agility.
As changes in industrial structures gather pace, we must achieve both the solution of social issues and the creation of economic value at a higher dimension, while also ensuring business growth and increasing capital efficiency. To do so, we need to continually transform our business portfolio in close alignment with changes in the external environment. This is precisely the role we expect COO Akagi to fulfill.
With a profound understanding of the Niche Top Strategy, Tatsuya Akagi has led its implementation on the front lines. As such, he possesses the strategic insight to anticipate change while pursuing both business growth and structural reform, together with the ability to execute these initiatives effectively at the operational level. Going forward, he will assume full responsibility for business execution, leading the transformation of the business portfolio and accelerating business growth.
As CEO, I am entrusted with formulating management strategies and overseeing their progress, ensuring the effectiveness of our corporate governance, and setting the direction for medium- to long-term value creation. By having the CEO and the COO fulfill their respective roles and complement each other, we will enhance both the quality and speed of decision-making, thereby ensuring that these changes guide us into a renewed phase of growth.
Among the financial targets set forth in the previous medium-term management plan, we fell short of our ROE target of 15%, achieving 12.2%. Enhancing capital efficiency is one of the imperatives management should address seriously, and we will continue to monitor this indicator closely.
To achieve this target, we believe it is important to increase capital efficiency in a sustainable manner by further improving the profitability of our business through the Niche Top Strategy and ongoing transformation of the business portfolio, rather than relying on financial measures aimed at achieving temporary numerical improvements. Whatever initiatives we undertake, they must contribute to value creation, including the solution of social issues or the reduction of environmental impact. At the core of these business activities is the creation and expansion of double recognized products and services that satisfy the criteria for both Flags and Niche Top products. We will continue to position this initiative as a key priority under Nitto RISE 2028.
As CEO, engaging in dialogue with investors and other stakeholders to communicate the rationale behind the Nitto Group’s management direction and strategies is one of my most important responsibilities. I will take every available opportunity to consistently communicate how the Nitto Group’s growth strategy will lead to improved capital efficiency and enhanced corporate value.
For the Nitto Group to remain an “essential entity” not only for its customers, but also for the global environment and human life, we will seize every opportunity as it emerges from change and take on new challenges. The new management framework represents the first step toward this goal. By organically linking oversight and execution to achieve sustainable enhancement of corporate value, we will remain fully committed to meeting the expectations of our valued stakeholders.
