TOP MESSAGE

Reinforcing capabilities for sustained growth with the goal of becoming a globally competitive building wall material specialist.

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Significant changes are taking place in the business climate of the Nichiha Group in Japan, notably the shrinking housing market as the population declines and the rising level of activities for carbon neutrality. To build a base for sustained growth, our group is moving quickly with measures for achieving our major goals in accordance with the New Medium-term Management Plan (April 2021 to March 2024).

1) A big increase in production capacity
We plan to build a flexible manufacturing infrastructure with extra capacity in order to meet growth in demand. This is needed to aim for steady market share growth and for entering new markets. Establishing this infrastructure will allow us to raise our sales volume by targeting opportunities created by demand that exceeds our forecasts. One activity is increasing the output of processes that are currently bottlenecks concerning manufacturing efficiency in Japan. Improving these processes will raise our production capacity at a much smaller cost than would be needed to build an entirely new production line. We expect this investment and other activities we have already taken to raise production efficiency to result in an increase of about 20% in the combined production capacity of our plants in Japan and the new U.S. plant.

2) Expansion outside Japan
Construction of the U.S. new plant gives us the ability to supply products in growing markets. In addition, this new plant improves our ability to develop products in a timely manner that meet the needs of customers in other markets with focus on North America. We also plan to increase our sales in other countries where we already have a presence, including China, Russia, Australia, South Korea and others. From a longer perspective, we plan to start establishing sales channels in Europe.

3) Growth in the non-residential building sector
We have developed a number of construction methods for the non-residential construction sector, including medium and high-rise buildings. Two examples are a new method using special metal brackets for siding products on buildings up to 45 meters tall and a new method for structures that are fire-resistant for one or two hours. Furthermore, we are combining these innovative construction methods with our products that are attractive and are fire and weather resistant. Our methods and products have the advantages of making construction work faster and more environmentally responsibility too. We plan to use these benefits to establish a sound position in the market for constructing non-residential buildings.

4) Growth of the metal siding business
Metal siding is widely used for newly constructed residential buildings and at renovation projects. As residential building construction declines in Japan, we anticipate steady growth of sales of metal siding for remodeling and repair work at existing residential structures. In addition, we believe there is much potential demand for metal siding in the non-residential building sector, just as there is in our core tile exterior wall panel operations. We are increasing metal siding sales activities for use at low-rise warehouses and factories, stores, and other non-residential structures. In addition, we are increasing our activities for creating new metal siding products, such as a siding for steel-frame structures that is fire-resistant for one hour. Our goal is to use our metal siding skills to enlarge this product category to more market sectors.

5) More activities for the environment, society and governance (ESG)
Our line of fiber reinforced cement sidings is highly competitive in terms of designs and performance as well as their ability to help protect the environment. For example, our core line of Moen Excelard (fiber reinforced cement siding) utilizes wood chips produced in Japan that would normally be discarded. Furthermore, these chips store carbon dioxide. As a result, the amount of CO2 sequestered in these panels is more than the CO2 generated when manufacturing them, making these panels very environmentally responsible. A recycling system of fiber reinforced cement siding is another illustration of our commitment to protecting the environment. At residential and other construction sites, we collect tile scraps for reuse in order to lower the amount of waste materials at these sites. We are promoting the use of this system by other companies too. The Nichiha Group will continue to step up a broad range of activities, such as cutting manufacturing CO2 emissions by reducing our energy intensity, in order to lower the environmental impact of all our operations.

President Narumitsu Yoshioka