Sustainability

Message from the President

Business Environment and Growth Opportunities
Strengthening Supply-chain Resilience and Addressing Environmental Challenges with Sincerity

I am now in my sixth year as President. When I first took office, our most urgent challenge was responding to the widespread social and economic impact of COVID‑19. Since then, a series of events with a significant impact on corporate management have occurred, including tensions in U.S.-China relations, the worsening situation in Russia and Ukraine, and military conflict in the Middle East.

Amid these shifts, one of our highest priorities is ensuring stable supply. I believe it is essential to earn our customers’ trust so that they can confidently rely on Nissan Chemical, not only for our existing products but also for those we newly develop.

As geopolitical risks intensify, it is no longer sufficient to focus solely on economic efficiency; we must build a robust system that guarantees stable supply through diversified procurement routes and strengthened production and supply capabilities. Our business divisions, procurement department, and related functions are working together to reinforce this foundation. For example, although we are affected by rising natural gas prices, we have been able to secure the volumes we need because our supplier sources natural gas from multiple producing countries. Conversely, for certain specialized raw materials with high dependence on specific suppliers, we will further diversify procurement sources and strengthen the resilience of the entire supply chain.

Another major shift we must closely monitor is the rising societal demand for environmental responsibility. Our customers increasingly expect not only functionality and quality but also reduced environmental impact across the entire product life cycle. For instance, to improve energy efficiency in electronic component manufacturing, there is growing demand to shift material processing from high‑temperature to low‑temperature conditions. This creates demand for materials that deliver sufficient performance even in low‑temperature environments.

We must view such changes in the business environment not as headwinds or risks, but as tailwinds or opportunities for growth. When customers confront new challenges, new demand emerges for products, services, and technologies that help solve them. In my view, both rising geopolitical risks and heightened environmental expectations can represent opportunities for growth. By accurately discerning the essence of these changes and swiftly delivering value that helps customers solve their challenges, we aim to further enhance corporate value.

Toward Sustainable Growth
Pursuing New Growth Centered on Performance Materials and Agricultural Chemicals

I believe that a sound growth strategy requires having a solid business foundation in fields that support people’s lives and society. We operate across a wide range of businesses, including Performance Materials, Agricultural Chemicals, Chemicals, and Healthcare. This diversified portfolio enables one business to drive growth while others provide earnings stability, even as times and market conditions change dramatically. In addition to this diverse portfolio, our product‑development capabilities—rooted in core technologies such as Fine Organic Synthesis, Biological Evaluation, and Functional Polymer Design—are the source of our competitive strength. Building on these strengths, we aspire to be a company that continually creates “Must-Have” value for our customers.

To continue generating Must‑Haves even in a rapidly changing environment, we position Performance Materials and Agricultural Chemicals as drivers of our future growth.

In Performance Materials, the semiconductor market continues to expand, supported by the widespread adoption of AI. In Agricultural Chemicals, climate change and population growth are increasing the need to address the global challenge of ensuring a stable food supply. Semiconductors, often described in Japan as the “rice of industry,” support human progress, while agriculture, including the production of “rice for food,” supports the foundation of human survival. Having strengths in both fields is one of our distinguishing characteristics.

In our growth domains, we emphasize two complementary approaches. One is a focused, in‑depth approach that deepens technologies to address specific market or customer challenges. The other is an approach focused on broadening the applications of products and technologies.

For example, semiconductor materials require a focused, in‑depth approach. As semiconductors become increasingly miniaturized and high‑performance, the functions and quality levels required of materials continue to rise. Strengthening competitiveness therefore depends on continually advancing our technologies while responding to evolving customer needs.

Conversely, inorganic materials exemplify an approach focused on broadening the range of applications. In addition to their use as polishing agents for semiconductors, they are being applied in glass coatings, the oil and gas sector, and other fields. By further expanding applications, we will continue creating new markets. In the Agricultural Chemicals business as well, we are expanding the value of existing products by broadening the range of applicable crops and extending these products’ reach into new markets. At the same time, we are moving beyond the traditional business model of supplying standalone materials or products and shifting toward solution‑based proposals that combines these materials or products with services and equipment. For example, by pairing agrochemicals with dedicated application tools, we aim to enable efficient spraying even in labor‑constrained farming environments, thereby further enhancing the value we deliver.

Our Chemicals business plays a vital role in supporting Japanese manufacturing, and demand for high‑quality products remains strong. This business also serves as the foundation of our technological capabilities. The advanced technologies and manufacturing expertise accumulated through operating ammonia‑based plants contribute to developing talent with expertise in production technology and differentiating manufacturing processes across our entire group. Going forward, while steadily advancing structural reforms, we will accelerate a shift toward high‑value‑added products—including those for the semiconductor industry—to enhance profitability.

In the Healthcare business, we will carefully assess changes in the business environment, such as drug‑price revisions and the increasing difficulty of new drug development, while pursuing future growth potential. We are currently advancing research and development in pharmaceuticals—centered on oligonucleotide therapeutics—and materials related to regenerative medicine by integrating the materials‑development and biological‑evaluation technologies we have cultivated over many years. Looking ahead, we will also explore opportunities in veterinary pharmaceuticals for pets, leveraging insights gained from pharmaceuticals for human use to create new value in the life‑sciences domain.

Business Portfolio and ROIC
Strategic Investments for Growth

I would like to explain how we allocate management resources. We place priority on profitability and growth potential, positioning return on invested capital (ROIC) as our key evaluation indicator. It is essential to concentrate resources on businesses that possess strong competitive advantages and can secure appropriate returns. Based on ROIC for each business segment, we regularly review our business portfolio and continue to discuss which areas should receive priority in the allocation of our limited management resources.

Being a company that continually creates Must-Haves, as we aspire to be, is also a source of our earnings strength. Our competitive advantage stems from products that competitors cannot easily replace—such as materials with overwhelming market share in certain semiconductor‑manufacturing processes in Asia, and selective herbicides that effectively target only specific weeds at low application rates. In addition to these competitive strengths, disciplined resource allocation based on indicators such as capital efficiency, together with rigorous profitability management for each business, has supported our strong performance over many years. We will continue allocating management resources with ROIC in mind, focusing on Performance Materials and Agricultural Chemicals, which offer high profitability and strong growth potential.

In the Performance Materials, demand for semiconductor materials—particularly for AI servers and for cutting‑edge and advanced-generation applications—is projected to grow. To meet this robust demand, we are making phased investments to strengthen and expand the entire value chain, from research and development through manufacturing and sales. In FY2025, we began operating the “Analytical Laboratory Building 2” at the Toyama Plant, enhancing our capabilities in technology development, analysis, and inspection for semiconductor materials. We also established Nissan Chemical Semiconductor materials (Taiwan) Co., Ltd., a sales company for semiconductor materials in Taiwan, to strengthen customer responsiveness.

In the Agricultural Chemicals, we view rising expectations for sustainable agriculture as a new growth opportunity. In December 2025, we acquired an equity stake in INNOVA in Brazil to accelerate the expansion of our biologicals business. We aim to develop biological products with efficacy equal to or greater than synthetic agrochemicals, while leveraging Innova’s manufacturing and sales platform to promote adoption and expand our biologicals business in the Brazilian market. Through these initiatives, we will acquire Microbial Control technology, one of the priority technology domains in our long-term business plan “Atelier2050,” and establish them as a core technology. Looking ahead, we will also explore applications in the environmental and energy fields.

Under this resource‑allocation policy, we are currently making steady progress toward achieving the financial targets—such as sales and profit—outlined in our medium-term business plan “Vista2027 StageII.” We will continue investing for medium‑ to long‑term growth and enhancing our business portfolio.

Our Challenges and New‑Product Creation
Strengthening Strategic Planning to Accelerate New‑product Creation

Although our current performance remains solid, ensuring sustainable growth requires further expanding the lineup of new products that will drive future growth. Under Vista2027 StageII, we plan to more than double new‑product sales compared with FY2024 results. Achieving this target will require accelerating the commercialization of the development themes now underway.

We possess technological capabilities cultivated over many years and deep expertise accumulated through R&D. In fields such as Performance Materials—including semiconductor materials—we maintain high market share even in intensely competitive environments. These strengths are important assets for our growth. To create products that can become new pillars of our business, we must further strengthen our strategic planning capabilities to translate these strengths into business growth. For example, we need to determine how best to apply our organic-synthesis and biological-evaluation technologies in the life sciences field and identify the most suitable partners for collaboration. I recognize that there is still room to enhance the strategic planning needed to develop these technologies into viable businesses.

We are building mechanisms to draw out these capabilities within the company. Each department regularly holds theme councils and review meetings, inviting heads of laboratories and heads of research departments from other fields, as well as members from related departments, to openly discuss the progress and direction of research themes. By having researchers present their own themes and incorporate perspectives from other departments, we aim to spark new ideas and insights—creating a kind of "chemical reaction.”

We have also established frameworks to evaluate R&D themes more objectively and revise their direction when necessary. Beginning in FY2025, we introduced multiple decision points within the R&D process for new‑product development themes led by the Planning and Development Division, enabling early decisions on whether to continue a theme or change its direction. In addition, we reorganized the Planning and Development Division and clarified target areas. As a result, our internal foundation for promoting new‑product creation is steadily being strengthened.

In the creation of new veterinary pharmaceuticals, we are conducting joint development with MSD Animal Health, the animal health division of Merck & Co., Inc. (U.S.). By combining our R&D capabilities with external expertise, we believe that we can generate new ideas and accelerate future growth.

Furthermore, we are advancing digitalization of processes that previously depended on individual researchers’ experience and knowledge. At the same time, we are working to improve R&D efficiency and accelerate commercialization by applying data‑science methods, including informatics. In April 2026, we established the position of Chief Digital Transformation Officer (CDXO) to further advance company‑wide digital transformation, led by the Digital Transformation Department—comprising the Digital Strategy Office and the Information Systems Office.

Through these initiatives, new “seeds” for 2030 and beyond are steadily beginning to grow alongside the development themes currently underway. By further increasing the speed of R&D, we will nurture these themes into major businesses and create new pillars that support future growth.

Talent as a Source of Competitive Advantage Supporting Growth
Discernment, Co‑creation, and Challenge We Seek in Our People

To create new products and achieve sustainable growth, the most important source of competitive advantage is our people. No matter how advanced a technology may be, it has no meaning unless there are individuals who can translate it into value for society and customers. Our company has both the power of people to turn technological capabilities into value and a corporate culture that supports it. The three behavioral qualities I value most are Discernment, Co-creation, and Challenge.

The first is Discernment, an ability that is particularly important for researchers. Here, Discernment means more than simply selecting promising technologies or development themes. It means identifying customers’ latent challenges and changes in the market, and to connecting these insights to our technologies and business opportunities. To cultivate this quality, we implement distinctive personnel rotations that give researchers experience in sales department or overseas assignments. Direct exposure to customer feedback and firsthand experience in the field, neither of which can be gained solely within research facilities, lead to product improvements based on actual demand and inspire ideas for new development themes.

The second is Co‑Creation. R&D cannot be accomplished through our own efforts alone. New ideas emerge when diverse knowledge and perspectives are brought together through dialogue with customers, external partners, and colleagues from different departments within the company. The foundation for this is our corporate culture of integrity, which we have long valued. Respecting one another, considering issues from the other party’s perspective, and being willing to make an extra effort for someone else—these attitudes form the basis for co‑creation.

Sustainability
Approaching Sustainability as a New Business Opportunity

We recognize that sustainability initiatives require action across the entire supply chain. For example, managing and reducing Scope 3 emissions (indirect emissions across the supply chain) is essential to reducing greenhouse gas (GHG) emissions throughout the supply chain. Accordingly, we ask upstream suppliers from whom we purchase raw materials for their cooperation with sustainability‑related procurement surveys and other initiatives. We ourselves are being asked by customers to take similar actions. Challenges related to sustainability—including decarbonization—cannot be addressed by our company alone. I believe it is essential to work in close collaboration with all stakeholders involved in the supply chain.

Sustainability initiatives also represent business opportunities for us. Climate change, for instance, has a significant impact on our agricultural business. As global temperatures rise, the regional distribution of heat‑tolerant and heat‑sensitive plants will shift. This creates demand for new cultivation‑management technologies and optimal agrochemicals suited to each region’s climate and vegetation—areas where we have the potential to contribute. Our Climate Change Committee discusses not only risk mitigation but also where we, as a chemical manufacturer, can create value and capture new business opportunities. To ensure that sustainability and climate change are understood and acted upon as matters that concern every employee, I actively promote company‑wide initiatives in my role as committee chair.

Corporate Governance
The Board of Directors Functions as a Forum for Constructive Discussion

Nissan Chemical has two Representative Directors: the Chairman & CEO and the President & COO. As President & COO and the head of business execution, I am responsible for the Company’s internal business operations and for making and implementing decisions. Meanwhile, the Chairman & CEO, as chair of the Board of Directors and chair of the Nomination and Remuneration Advisory Committee, is responsible for strengthening the Board’s supervisory function and enhancing governance. By clearly separating the roles of execution and oversight in this way, we maintain a sound system of checks and balances while enabling swift decision-making. Nissan Chemical considers this structure to be sound and rational. We also believe that the Board of Directors, comprising six Inside Directors and four Outside Directors, is appropriately balanced. Across all members of the Board of Directors and the Audit & Supervisory Board, outside members account for 50%, and women represent 29%. Members bring diverse experience and expertise, each contributing from a distinct perspective. Together, we have built an effective governance system.

We also place importance on mechanisms that provide outside directors with high‑quality information. We offer opportunities to explain agenda items in advance, ensuring that outside directors can prepare thoroughly. As a result, extremely lively and open discussions take place at meetings of the Board of Directors.

Specifically, outside directors provide candid and rigorous feedback on medium‑ to long‑term growth strategies and risk management. Their discussions address such questions as what kind of company Nissan Chemical should aim to become next, given that the achievement of past targets represents only a milestone, and how we should pursue the overseas expansion of semiconductor and display materials amid geopolitical risks. They also identify points that require careful consideration when contemplating business expansion in countries with high country risk. Based on these discussions, we recognize risk management in overseas expansion as an important theme under our current medium-term business plan. In FY2025, the Board held a free discussion session on approaches to risk‑taking in investment.

We also conduct an annual Board effectiveness evaluation, and the Board has been assessed as functioning effectively. We will continue considering how to develop a framework that contributes to enhancing corporate value.

Sustainable Enhancement of Corporate Value Founded on Trust
Remaining a Trusted Company through Business Activities Guided by Integrity

Guided by our corporate philosophy, our mission is to contribute to the protection of the global environment and to the existence and development of humanity by delivering the value society seeks. Our products support the evolution of various devices, the stable production of food, the provision of pharmaceuticals, and the improvement of healthcare solutions—contributing to richer, more fulfilling lives. At the same time, we work to protect the global environment set forth in our corporate philosophy. These efforts are the source of Nissan Chemical’s growth and social value.

To continue fulfilling this mission, strict adherence to compliance is essential. Violation of laws or social norms can cause a company to lose trust in an instant. At Nissan Chemical, we place great importance on every employee continuing to act with the utmost integrity. I also consistently communicate to employees the importance of acting with integrity and maintaining high ethical standards.

To remain a company trusted and chosen by all stakeholders, we will continue to conduct our business activities with integrity and high ethical standards and pursue the sustainable enhancement of corporate value. We sincerely ask for your continued understanding and support.