Kao : Message from the President & CEO Updated

Kao Group aims to become a 'company with a global presence' as it works for both 'profitable growth' and 'contributions to the sustainability of the world.'

I would like to thank our shareholders for their longstanding, exceptional understanding and support of the Kao Group's business and corporate activities.

In the Kao Group, we positioned fiscal 2016 as a year to prepare for the Kao Group Mid-term Plan 'K20,' which covers the four years starting from fiscal 2017, while aiming to achieve our announced forecast for a seventh consecutive year of increases in consolidated net sales and profits.

As a result, net sales increased on a like-for-like basis, although they declined from the previous fiscal year due to the effect of currency translation and other factors. Operating income, income before income taxes and net income all exceeded the levels of the previous fiscal year, with operating income setting a new record high for the fourth consecutive fiscal year. For returns to our shareholders, we increased annual cash dividends per share by 14 yen compared with the previous fiscal year to 94 yen, achieving our 27th consecutive fiscal year of increases in dividends. We also announced 'K20' in December 2016 as planned.

By 2030, the Kao Group intends to achieve the goal of becoming a high-profit global consumer goods company that exceeds 2.5 trillion yen in net sales, a 17% operating margin and 20% ROE. By doing so, we want to make Kao a company with a global presence.

We have set the year 2020 as an important milestone toward achieving our vision by 2030, and formulated the Kao Group Mid-term Plan 'K20' to enhance corporate value. In 'K20,' we will act on three commitments: 'Commitment to fostering a distinctive corporate image,' 'Commitment to 'profitable growth,'' and 'Commitment to returns to shareholders.' Since fiscal 2017 is the initial year of 'K20,' we will steadily execute the various strategies in the plan one by one.

It is becoming difficult to foresee all aspects - including the speed, size and direction - of the various changes that are taking place worldwide. To deal with this situation, we will leverage the full capabilities of the Kao Group under the slogan 'Transforming Ourselves to Drive Change' in aiming to achieve 'K20' and realize our vision by 2030.

Furthermore, the Kao Group will work in unison as we devote ourselves to realizing our ambitious mission to 'strive for the wholehearted satisfaction and enrichment of the lives of people globally and to contribute to the sustainability of the world' as set forth in the Kao Way, our corporate philosophy, as well as our corporate message, 'enriching lives, in harmony with nature.'

I request your continuing understanding and support of the Kao Group's business and corporate activities.