The Company’s Medium-term Management Plan will enter its final year FY2025. Regarding business performance so far, financial results left much to be desired, as the Group missed targets in areas such as communications. Nevertheless, it made some progress in its efforts to achieve the visionary outlook described in Vision 2030, which looks ahead beyond the period of 2025 Mid-term Plan. The 2025 Mid-term Plan sets out a goal of growth by strengthening and creating businesses that solve social issues in each or combination of the information, energy, and mobility domains, and in the communications field, the Group is steadily building up its ability to tap into the upcoming full-fledged recovery in demand. Furthermore, in the automotive products business, the Group is working to solve issues faced by customers in connection with high-speed communication, high output, and so on, while in the Functional Products business, it is leveraging highly functional and differentiated products to capture new domains and customers.

To stabilize and expand the Group’s growth and earnings, the Company’s Board of Directors increasingly formulates key strategies for each business axis, and discusses the identification of growth areas and business reorganization in order to build its desired business portfolio, while also taking into account regional axes. I feel that positive momentum is being generated at the corporate level and at the level of each business division toward achieving the objectives of the 2025 Mid-term Plan and Vision 2030. At actual meetings of the Board of Directors, we Outside Directors, having made use of pre-briefing sessions, engage in lively yet serious discussions while endeavoring to present new perspectives that reflect their diverse backgrounds to the executives.

With regard to human capital, under the 2025 Mid-term Plan, the Group is striving to have individuals and organizations grow together and improve their execution ability, and also developing successors with the aim of acquiring and retaining personnel who can implement the management and business strategies necessary to achieve Vision 2030. Last fiscal year saw the completion of the finalization of succession and development plans for all general managers, and this fiscal year the plans will be expanded to encompass section managers.

The accompanying text to the Furukawa Electric Group Purpose, which was established in March 2024 includes this statement: “Creating and delivering these ‘indispensables’ as the core of a better future.” For us, this purpose constitutes a bold declaration of the Group’s commitment to providing timeless value and solving issues in a world that has begun to ask fundamental questions about sustainability. Creating “indispensables” as the core of the future will only be possible if the Group continues to transform itself ahead of the times, and each of us is ready to move forward with a strong sense of ownership and determination.

In FY2023, there was a change of president, with President Moridaira coming in. Succession planning is the most important task for the Nominating/Compensation Committee, of which I am a member, so we took the time to carefully carry out the nomination process with sufficient fairness and transparency. Through serious exchanges of opinions, the members of the Nominating/Compensation Committee were able to deepen their understanding of the candidates, including the new president, and I suspect that the new president was mentally prepared when he got started.

Next, I would like to touch on the progress with and the outlook for the 2025 Mid-term Plan. The Company operates numerous businesses, and all of them are important, as new technologies discovered by existing businesses can be applied to new fields to create new businesses. However, from a capital efficiency point of view, it is impossible to retain every business, and so the business portfolio strategy will determine which businesses to select and focus on. The Communications Solutions business is in a domain that allows it to provide value to the AI and data center markets, so the Group is refining its strategy to attack this high-growth market. In the energy and mobility fields, too, the Group is stabilizing earnings to facilitate growth as businesses that solve social issues, which will contribute to society.

The Company is an enterprise with a history of more than 100 years. Through the efforts of the founder and so many of its employees, it has managed to overcome tough situations in the past. The Furukawa Electric Group Purpose also states that the Company has diligently honed its technological and problem-solving capabilities since its foundation. On the other hand, there have been many cases in recent years where the uncovering of wrongdoings by companies has thwarted all the efforts they have made over many years and harmed the trust that society places in them. At the Company, building compliance and risk management systems is fundamental for management, and is also an important matter for deliberation by the Board of Directors. Governance of the Company and Group companies is handled mainly by the Risk Management Division, which also works with other organizations such as the Quality Promotion Department, and governance issues are reported to the Board of Directors, which favors a “bad news first” approach. Pursuing an open organizational culture through efforts like this, and instilling a mindset of integrity among employees is also important for developing organizational strength. Without an attitude of always seeking to do the right thing, I do not think a company can prosper. And as an Outside Director, in order to fulfill my duty of care as a prudent manager, I am always mindful of that.

Over the past year, under the leadership of new President Moridaira, the Group has been taking action to improve the profitability of businesses, and is also making steady progress with optimizing its business portfolio. For example, it has been restructuring the communications business in North America, which is one of its core businesses, and strengthening marketing activities to capture new customers in the growing AI and data center markets. In this way, the Group is narrowing down its list of growth opportunity targets and gradually shifting to a bold and aggressive stance.

The Board of Directors discusses these medium- to long-term management issues and risks in a frank and lively manner, with the outside officers also leveraging their diverse expertise to share their insights. I also feel that the scheduling of meetings where the outside officers can exchange views freely with the executives is a useful initiative for enabling the former to fully understand and discuss the issues. In addition, at meetings of the Nominating/Compensation Committee, Outside Directors have firmly committed to the CEO Succession Plan, and ensured transparency by disclosing a clear policy for determining officer compensation. With both bodies, action is only taken after the Outside Directors and executives have engaged in constructive discussions with a healthy dose of tension, and I believe that the Company’s governance is functioning effectively.

Another recent development has been the establishment of the Furukawa Electric Group Purpose. Numerous employees from overseas and Group companies took part in the process that led to its establishment, and there was adequate debate on the Group’s reason for being, i.e., its role in supporting society. Going forward, I hope that the purpose will inspire communication in various forms, and that when personnel feel unsure about what to do, they will return to the purpose and think about it once again, as I expect this will lead to sustainable business growth and improvements in the motivation of individuals.
Furthermore, as a female director, I am actively providing support for the promotion and development of women for management positions. Through lectures and discussions, I would like to encourage a change in mindset by talking about my own experiences and situations outside the Group, and I intend to continue to promote not just women’s empowerment but also awareness of the importance of DE&I.

To achieve the goals of the 2025 Mid-term Plan and Vision 2030, I believe that the Company’s various technologies will be able to make a significant contribution to the resolution of conflicting social issues such as how to respond to climate change and what to do about rising levels of energy consumption. The Company has a fantastic culture of dependability and integrity that has been cultivated over its long history. However, urgent tasks for the Company are to foster a corporate climate of proactively proposing ways of meeting the needs of society and customers and embracing challenge to create new markets by itself, to develop diverse human resources, and to strengthen the organizational foundation for business creation, so I want everyone to work speedily to tackle these tasks.
And personally, I will continue to meet the expectations of stakeholders by appropriately monitoring and actively supporting management.

Until recently, it had been unclear when the optimization of the business portfolio would be completed, but now, under the 2025 Mid-term Plan, a specific time frame is being considered, and I expect to see business reorganization aimed at maximizing profitability accelerating in the future. On the other hand, since it is becoming difficult to increase sales and profits just with standalone technologies or products, it is necessary to create new business models that are aligned with market and technological trends. I hope that the Company will establish new business models in the areas of information, energy, and mobility, which it is targeting for accelerated growth, and also in new areas, by leveraging its four core technologies and MONOZUKURI (manufacturing) capabilities that enable it to translate them into commercial products, as well as equipment it has developed in-house and its production transformation activities.

The Company’s Board of Directors is composed of directors who each have different skills, and we have been deepening our discussions with corporate vice presidents and the general managers of responsible divisions on a daily basis not only through meetings of the Board of Directors and opinion exchange meetings, but also through internal events such as research presentations and factory tours. In addition, succession plans and the compensation system are designed and modified through various discussions, and I feel that a high level of transparency has been established.

I am also immensely impressed with the newly established Furukawa Electric Group Purpose. I hear it was decided on with input from numerous employees, and I believe that as a company that supports societal and industrial infrastructure, focusing on composing the core and contributing to the sustainability of the world will lead to increased motivation among employees. And in a climate in which “manufacturing” companies tend to be undervalued, I hope that the Company will lead a revival in the valuation of the manufacturing sector.
Alongside the purpose, the Company is also permeated by its founder’s “three valuable things (value employees, value customers, and value new technology).” Emphasizing these “three valuable things” and composing the core of a brighter world will also lead to improved business performance. I would like shareholders and investors to pay attention to the Company’s efforts and the information it puts out as it strives to realize the purpose going forward.

I became an Outside Director in June 2024. Right now, I am deepening my understanding of the Furukawa Electric Group’s management policies and business activities on a daily basis, and I will continue engaging in discussions with corporate vice presidents, exchanging opinions and information during visits to business sites and research laboratories, and making use of my background as a public servant and my position and experience as a researcher at a university to offer opinions on management strategy.
From my experience of being deeply involved in the environment and energy fields, I believe that the realization of carbon neutrality, moves toward which are continuing to accelerate internationally, and the realization of a “circular economy,” which are two sides of the same coin, are becoming increasingly important. The achievement of both is necessary for making societies around the world sustainable for the future. The key to realizing a circular economy is traceability for materials via an information network, and I hope that the Company will be able to contribute to the international community by bringing together all the information and communication-related technologies it has built up over the years.

In March 2024, the Furukawa Electric Group Purpose, “Composing the core of a brighter world,” was established. Hearing it, I felt that this succinct expression reflected the steadfast commitment of the Company’s leadership to combining the Group’s cutting-edge technologies and products, which span a wide range of fields, to bring about innovation and achieve sustainable growth for the future. To that end, the Company must constantly be endeavoring to select technologies where it has a competitive edge. It needs to have a system in place for gathering detailed information on the various trends shaping the world, swiftly adapting to changes in the supply situation for natural resources, and averting supply chain crises.

The Company’s business performance has been recovering in recent years as a result of various reforms, but I have seen that this transformation has required tremendous effort internally. Even so, I hope that the Company will steel itself once again, and take on the challenge of being a one-of-a-kind for advanced technology. It possesses various core technologies in each business area, but I am particularly impressed by its efforts to deploy cutting-edge technology in fields that offer promise in the near term, such as high-temperature superconducting wire materials for fusion reactors. I would also like to see it strengthen its cooperation with the government and work to flesh out its core technologies.

October 2024