Now, at the beginning of the year, I would like to extend my sincere wishes that you all have a happy 2022.

1. Looking back at 2021

While the end of the COVID-19 pandemic remains uncertain, the world's values are changing more and more rapidly and confrontations arising from economic disparity and differences in political beliefs are intensifying. Struggling for the new world order has begun with global warming mitigation and human rights issues and has led to sharply rising prices of natural resources. We can say that the environment surrounding the Company has become more challenging. Now, we must prepare to admit that our business model, where we gain a competitive advantage from coal-fired power generation at the Tokuyama Factory, is no longer effective.

2. Progress in the Medium-Term Management Plan 2025

In this environment, we have started to transform into a value-creative company. The three pillars of the Medium-Term Management Plan are the transformation of the business portfolio, contributing to the mitigation of global warming, and practicing socially responsible management. Transforming from an energy-intensive company to a value-creative company will enable us to achieve the three pillars, which in turn will lead to the sustainable growth of the Company. The key to achieving the goals of the Medium-Term Management Plan is to expand the growth businesses: electronics, healthcare, and the environment. We are actively developing these businesses and making capital expenditures.
In the electronics field, we have started a demonstration operation for silicon nitride powder and bare substrates to prepare for mass production. Overseas, we have decided to establish a joint venture engaging in the production of high purity chemicals for the electronics manufacturing in Taiwan and South Korea. Moreover, the construction at Hantok Chemicals in South Korea to expand its facilities for Tetramethylammonium hydroxide.
In the healthcare field, the new manufacturing facilities within the Kashima Factory has been completed for the expansion of dental materials “OMUNICHROMA”. We are considering further expansion in view of the future growth of demand.
In research and development, we have also promoted joint development with the National Institute of Advanced Industrial Science and Technology and universities to expedite development in growth businesses and strengthen our pipeline.
We will continue our strategic management to transform into a value-creative company. We will increase earning power in the chemicals business and the cement business, which are expected to be cash cows, and will invest profits from these businesses into the growth businesses in a timely fashion to expand our new pillars of our businesses.

3. Message to Employees

Considering the above-mentioned circumstances, we will expedite the following initiatives this year.
I.To reduce carbon emissions and ensure competitiveness, reviewing the plan for low carbonization at the Tokuyama Factory
II.Strengthening research and development and marketing for the business portfolio transformation
III.Beginning a safety improvement project at the Tokuyama Factory with partner companies

As the world affairs and the business environment are changing rapidly, the Company is forced to change its business model, which we have developed over a hundred years. We cannot survive unless we transform into a value-creative company. Expanding the growth businesses, creating new businesses, and expanding overseas will be the keys to the transformation.
The greatest risk is being satisfied with the status quo. I ask that all of you be aware that we are standing at a crucial point and think seriously about overcoming the difficult situation together as we take action this year.

The courageous efforts of each employee will change Tokuyama.