Message from the President

Representative Director
and President Masaaki Ito

Dear Shareholders and Investors

In the fiscal year ended December 31, 2017 (“fiscal 2017”), concerns about the economic impact of political instability remained in the world economy. Consumption and investment continued to expand, and the world economy remained favorable overall. The Japanese economy gradually improved due to higher corporate profits backed by favorable exports as employment conditions improved. The U.S. and European economies continued to expand, underpinned by healthy corporate profits, personal consumption and employment conditions. In China, the economy continued to grow on the back of steady personal consumption despite the economic impact of the government’s tightening of monetary policy. Economies in emerging countries continued to gradually recover.

Under these circumstances, the Kuraray Group has successively implemented the business strategies outlined in GS-STEP, its medium-term management plan that ended in fiscal 2017, to realize “a high-profit specialty chemical company with a global presence.”

We expects geopolitical risks to persist in each region but the global economy to continue to expand and remain favorable overall in 2018. However, the Japanese economy is expected to stall with just very gradual growth due to sluggish personal consumption despite exports and investments continuing to expand against the backdrop of the favorable global economy. In addition, raw material and fuel prices that had been consistently low since fiscal 2015 began rising in 2017, leading to worries about higher production costs hurting earnings.

In its medium-term management plan “PROUD2020,” which began in 2018, the Group outlines four key management strategies: Pursue competitive superiority, Expand new business fields, Enhance comprehensive strength of the Kuraray Group, and Contribute to the environment. From 2018, the first year of the plan, the Group will reflect on the results of the previous medium-term management plan GS-STEP and work to resolve any remaining issues while steadily implementing specific measures under the key management strategies of “PROUD2020.”

In addition, the distribution of profits to shareholders is one of the Company’s top management issues. Kuraray will continuously and stably pay out dividends, taking into consideration business performance and financial standing while carefully securing internal reserves, which are its primary source of funds for business development.

We plan to pay out a ¥22-per-share year-end dividend for fiscal 2017 that, combined with the interim dividend, will bring the full-year dividend to ¥42 per share. Moreover, due to the acquisition of 1.3 million in treasury shares during fiscal 2017.

During PROUD2020, the medium-term management plan for fiscal 2018 through fiscal 2020, the Company will uphold a basic policy of increasing the distribution of profits through continuous improvement in business results. It has set targets of a total return ratio of 35% or more, reflecting net income attributable to owners of the parent, and annual dividends per share of ¥40 or higher.

On behalf of Kuraray, I would like to extend our gratitude for continuing understanding and generous support.

February 14, 2018
Masaaki Ito
Representative Director and President