Net sales under the current Medium-term Business Plan KAYAKU Vision 2025 (KV25) continued to set new records until FY2024, the third year of the plan, and are expected to exceed the target of 230 billion yen in FY2025.
　Meanwhile, operating income is trending below the target for each fiscal year due to factors such as soaring raw material prices, higher fixed costs, and the occurrence of license fees at the Life Science Business Unit. In FY2025, the final fiscal year of KV25, we will aim to achieve an operating income of 20 billion yen, which was the forecast as of May. At the same time, we will strengthen initiatives, such as passing on the costs to prices, and strive to get as close to the target as possible.
　For return on equity (ROE), we will work toward achieving the target of 8% together with our capital policy. We will also continue measures toward achieving the medium-term target of a return on invested capital (ROIC) of 10% through company-wide capital efficiency improvement initiatives.

The Nippon Kayaku Group pursues management that is strong to market changes through several business units. In the past, when the Safety Systems Business shifted to automotive safety components from its previous form as the industrial pyrotechnic business, it was supported by the Functional Chemicals Business and Pharmaceuticals Business until stable income was achieved.
　Currently, the Safety Systems Business is growing. It is under the Mobility & Imaging Business Unit, which has become an earning pillar of Nippon Kayaku. Meanwhile, the Pharmaceuticals Business—which is under the Life Science Business Unit—is in a business environment where its key products of generic drugs and biosimilars are easily affected by drug pricing revisions. Therefore, we invest in the new drug launches and such to improve the earning power of the Pharmaceuticals Business and use earnings from the other two business units to invigorate the Life Science Business Unit to seek overall growth for the Nippon Kayaku Group into the future.

We have clarified the positioning of the product groups in each business unit by evaluating and categorizing them in terms of growth and attractiveness of the market as well as profitability and competitiveness. We maximize cash generation by appropriately allocating management resources. At the same time, for product groups that need to improve profitability, we strive to keep their share of company-wide net sales to 2% or lower, such as by thoroughly searching for ways to improve profitability or withdrawing from those for which improvement is difficult.

Toward the next medium-term corporate plan, it is necessary to set high targets to achieve sustainable growth after fully reflecting on the reasons leading to underachievement of KV25. Therefore, we plan to set the Nippon Kayaku Group’s vision for 2035 as an ambitious long-term vision and formulate the medium-term corporate plan by back casting from 2035. The period until 2035 will be split into three phases, and the new medium-term corporate plan for Phase I, which spans FY2026 to FY2028, will be announced when we present our financial results for FY2025 (scheduled for May 2026).