President's New Year's Message for 2020

Tokuyama Corporation

Now, at the beginning of the year, I would like to extend my sincere wishes for a happy New Year.

1.Summary of 2019

In 2019, politics and the world economy became increasingly chaotic due to changing values, such as liberalism and free trade as well as the global rise of hegemonism and conservatism, including the Americas, East Asia, the Middle East and Europe. Under such circumstances, the Company saw its sales and profits decline significantly in Specialty Products segment, in which electronics-related products played a central role, due to a delay in the start of 5G resulting from the trade friction between the United States and China. Chemicals segment also ended with much lower results than planned due to the economic slowdown in China and India.

2. Management challenges facing the Company and the Actions Policy for 2020

Of the four priority issues set out in our Medium-Term Management Plan, three have yet to achieve satisfactory outcomes, excluding improvement of financial position. To realize our aspirations for 2025 set out in the Tokuyama Vision, we will strengthen our efforts for the remaining three priority issues (changing the Group's organizational culture and structure, rebuilding the Group's business strategies and strengthening the Group management). We will thoroughly pursue the strengths of the Company and pave the way for assessing and reorganizing its businesses, focusing on the future business portfolio of the Company.
In addition, we could label the reduction of CO2 emissions and medium- to long-term research and development strategies as major challenges. Regarding measures to reduce CO2, we have established a CO2 Project Group on January 1, 2020, to strongly promote the use and application of CO2 and process innovation including the introduction of new technologies and the utilization of IoT, in addition to the use of biomass fuel and energy saving. We will also accelerate cooperation with universities and public research institutions. With respect to medium- to long-term development, because the utilization of materials informatics (MI) and the building of human networks in advanced areas will be the most critical factors, we will actively pursue these efforts.

3. Toward the formulation of the next Medium-Term Management Plan

Because 2020 is the final year of the current Medium-Term Management Plan, each department should make efforts to achieve the targets set in the Plan, but we have already started discussions about the future. The highest priority issue in the next Medium-Term Management Plan is the "realization of top strategies." To achieve this, we will define the top strategies in each business and formulate strategies and action plans to realize them in 2020. This year is also positioned as extremely important in the sense that we need to gain a strong foothold for a great leap forward toward 2025.

4. All a company needs is the power of its human resources

It is essential for all officers and employees, including the management, to change their ways of thinking and behavior. Changes will start with curiosity, comes from routine study. If you think something is good, you should try from a playful perspective. It is important to act promptly. Changing the organizational culture and structure means that such behavior will become commonplace.
A new personnel system will start in the new fiscal year. Its largest aim is to develop human resources. I would like each of you to clarify a vision that you will aim toward, and set and practice a stretch objective. We will enhance on-the-job and off-the-job training and provide opportunities for growth for highly motivated people in Japan and overseas. I would like to create a group of competitive human resources with a strong sense of change not to lose to other companies.

Let's try hard to make 2020 a year for gaining a foothold to leap forward and achieve a vibrant and youthful organizational culture full of curiosity and a sense of speed.

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