Messages from Outside Directors

    Unicharm has formulated its 13th Medium-Term Management Plan, Project Renaissance, which sets aspirational targets of ¥1,500 billion in net sales and a core operating income ratio and ROE of 17% by fiscal 2030, with the aim of rebuilding a foundation for sustainable growth amid a challenging business environment. The purpose of the plan is to revamp Unicharm’s business and reconstruct the very way in which the Company competes, driven by the need to respond to multifaceted changes in markets, customer preferences and behavior, and the competitive environment, as well as rapid advancements in consumer communication methods and technologies such as AI. I highly commend the Company’s decision to establish new winning models, which acknowledges that it is unable to maintain the expected level of growth by prolonging existing business models.

    In our discussions at meetings of the Board of Directors, we confront current conditions head on, unconstrained by past successes, with a thorough understanding of the issues facing the Company and future risks and opportunities. Drawing on my expertise in corporate transformation, I strive to deepen these discussions by actively expressing my opinions and raising issues on important matters.

    While the individual strategies comprising Project Renaissance still have room for refinement, as an organization that is promoting business portfolio transformation and business model reform, the Company has taken a significant step forward with the introduction of a strategic business unit (SBU) system. I will monitor this system closely so that it becomes a catalyst for transformation, and I will support the SBU presidents to ensure they can fully exercise their leadership. Specifically, Project Renaissance’s priorities are to establish business models that position pet care and wellness care operations as drivers of growth, that enhance the profitability of feminine care and baby care operations, and that strengthen the growth foundation of feminine care operations. Regional portfolio transformation based on the SBU system—particularly the establishment of business foundations in India, Africa, and South America—is crucial, and I intend to support the appropriate allocation of resources for this purpose.

    Furthermore, it is essential to further strengthen the Company’s competitive advantage through initiatives like the expansion of the direct-to-consumer (D2C)^* business in the well-being domain, starting with Sofy Be, the rollout of RefF products across all domains, value chain innovation utilizing generative AI, and innovation leveraging the Company’s insight into consumers, which is one of its strengths. I will continue to support these initiatives to ensure that appropriate investment is secured and systems are established for their execution.

    To rebuild Unicharm’s foundation for sustainable growth, it is important to advance long-term investments in generating future innovations and establishing new business models while also strengthening the Company’s earnings power to maximize the cash flows that support these efforts. As an outside director, I will fulfill my responsibility of supporting this challenging transformation.

    Unicharm’s distinctive character is reflected throughout the strategies in the 13th Medium-Term Management Plan, Project Renaissance. While clearly stating the Company’s intention to leverage AI and other cutting-edge technologies, the new medium-term management plan is notably human-centered and goes beyond simple digitalization. It also strongly advocates balancing a left-brain approach of pursuing rationality and efficiency with right-brain values such as deep empathy for people and creativity.

    Another major feature of the new medium-term management plan is that it treats products not simply as goods but also as valuable services that fulfill customers’ expectations and address the issues they face, drawing on the Company’s long-cultivated spirit of monozukuri (manufacturing). Furthermore, the plan positions AI and digital transformation (DX) not as means for improving efficiency but as foundations for deepening the Company’s understanding of people and providing improved experiences, and it seeks to leverage them in maximizing co-created value with society in clear alignment with the Company’s sustainability promotion initiatives of recent years.

    What is critical, however, is how the Company will unlock this value creation. The goal is not simply to introduce AI and DX but to use them to transform management, business operations, and frontline decision-making. In my opinion, the Company’s ability to leverage AI and DX will become a key tactic for further strengthening its business and generating competitive advantage.

    Specifically, by integrating Unicharm’s extensive business experience and brand power in Asia and other regions across the world into a shared AI-powered platform, the Company will be able to leverage insight that transcend organizational boundaries. I believe that Unicharm will be able to establish a unique and resilient business ecosystem if an initiative like this enables it to make rapid decisions and anticipate people’s changing needs.

    To this end, it is essential that rather than thinking of data and AI as the preserve of specialists only, all employees see them as tools for enhancing their own work and keep improving their digital skills. Structuring the business know-how and other tacit knowledge employees have cultivated into data that can be leveraged across the organization through AI will accelerate value creation. As part of these efforts, the Company may need to review and streamline its operational processes and practices. However, I believe that Unicharm’s attitude of fearlessly embracing transformation while enhancing its agility in the market and pursuing new endeavors such as the implementation of AI and DX is one of its strengths and that its efforts will further enhance said strength.

    I wholeheartedly look forward to Unicharm’s achievement of sustainable growth as it continues to take on these challenges, and I will keep supporting the Company into the future.

    Love Your Possibilities!