Happy New Year to all of you at the NAGASE Group. I am very pleased to welcome another new year with all of you as we continue to work together. 

Reflecting on 2024, we remember the 2024 Noto Peninsula Earthquake that struck during the New Year, as well as the disasters caused by heavy rains that occurred throughout the year, leaving many people affected. I sincerely pray for the swift recovery of those still struggling in their daily lives. 

Before reflecting further on 2024, I would like to share some of my thoughts. Since my high school days, I have set goals every three years. This approach became even more pronounced after I started my career. When I joined NAGASE, my initial three-year goal was to absorb the company’s management philosophy as a foundation for eventually becoming an independent entrepreneur. In fact, in my third year, I expressed my intention to resign to my superior. At the time, it was brushed off with a simple "Are you crazy?", but I haven't changed my mindset since then. Looking back now, it might seem humorous, but the fact remains that I have lived with three-year goals, and that has not changed even after becoming CEO. 

The goal I set in 2023 will reach its final year in 2025. In my first year as CEO in 2023, I focused on learning from Chairman Asakura while laying the groundwork for transformation. I outlined a vision for change, consolidated 11 business divisions into 7, revised growth strategies and our portfolio, and improved or exited unprofitable businesses. I initiated QUICK WIN to prompt action from everyone. 

In 2024, I deeply felt the intense and unpredictable changes in the external environment. Beyond growth strategies, I explored strategies for survival. I questioned our long-standing business model, which emphasized organic growth and expanding revenue, and aimed to transform NAGASE into a resilient and robust group capable of withstanding external changes.To that end, we implemented numerous measures, including improving gross profit margins, reducing inventory, improving or withdrawing from unprofitable businesses, delegating authority to field operations, integrating businesses, assigning decision makers to regions like India and Europe, launching a Corporate Venture Capital (CVC) initiative, introducing a CXO system, relocating employee engagement initiatives to the field, and establishing a mentoring system for young employees. Each measure may have seemed like an isolated effort, but they are like pieces of a puzzle. In my mind, I continuously adjusted and advanced these pieces to connect them to our three-year goals. This wave of external changes affects not just NAGASE but all companies. Many are implementing survival strategies aligned with the changing environment, and over the coming years, the gap between successful and unsuccessful companies will become evident. 

Many established and traditional companies are now compelled to pursue corporate structural reforms for survival while simultaneously implementing growth strategies. Each of the measures we are currently advancing is a piece of a puzzle that, when connected, will form the picture of the next NAGASE Group—one that will not succumb to external pressures and will continue to grow. Over the past year and nine months, I have been delighted to see changes in perspectives, speed, and behavioral standards among our members through collaboration. I hope that these changes have become second nature and that each action by each individual will interact with those of their colleagues to generate even greater strength as we head toward 2025. 

Now, let’s talk about the future. The movements of the new U.S. president in 2025 will undoubtedly be a focal point. His policies, which include further corporate tax cuts, forced deportation of illegal immigrants, withdrawal from the Paris Agreement, exclusion of Chinese products, reshoring of manufacturing industries, and using tariffs to pressure other countries into deal-making, all carry inflationary risks. 

China is expected to face a further slowdown in economic growth, potentially falling to 4% or even below due to heightened U.S.-China trade tensions. In Europe, especially in Germany, the economic downturn of its largest trading partner, China, combined with U.S. tariffs, will deliver a blow, while the suspension of gas supplies from Russia to Germany will make it extremely disadvantageous to continue manufacturing energy-intensive chemicals domestically. The global economy is expected to expand modestly, led by the robust U.S. economy despite stagnation in China and Europe. However, if the U.S.’s protectionist policies go too far, the global economy could quickly deteriorate. Since it is impossible to predict what actions the new U.S. president might take, we will approach the situation calmly and carefully, avoiding unnecessary concern while preparing for potential outcomes. As part of our ongoing efforts since 2024 to build resilience, we must also focus on four specific initiatives to adapt to the external environment in 2025. 

First, as an inflation countermeasure, strictly manage rates. Additionally, shift the portfolio towards products with strong competitive advantages. Second, in Japan, implement ROIC management thoroughly as an interest rate countermeasure, including inventory reduction and improvement in turnover rates. Third, as a measure against the increased activity of (activist) shareholders, enhance dialogue with shareholders. Fourth, as a measure against the growing differentiation between companies, ensure strict credit management to prevent bad debts. These are the four measures. 

The new normal is undoubtedly taking shape, with changes already evident in work styles, interpersonal relationships, and inter-state relations. These transformations, particularly in the U.S., will accelerate further. We must test how far the growth we have achieved over the past two years will hold up, whether we have developed resilience to sudden changes, and whether we can survive. Together, we aim to transform without fear of failure. The key lies in human growth, as people are the heart and soul of NAGASE. We aim to grow together, leaving no one behind and moving in the same direction. 

As 2025 marks the final year of ACE 2.0, I would like to explain four requests and points of understanding.  

First, during the first half of the year, we plan to thoroughly execute the incomplete initiatives identified as QUICK WIN, such as human resource development, DX, and cross-organizational collaboration,  and connect these efforts to the formulation of the next medium-term management plan. In terms of human resource development, we aim to establish systems for nurturing successors among management, developing leaders who are able to navigate this uncertain era, securing diverse talent, and further improving the environment for women’s empowerment. 

Second, we will continue to identify and refine unique business opportunities. This year, we will utilize CRM to facilitate direct information sharing between field teams and corporate departments, including myself. Currently, my understanding is that we are polishing three unique business opportunities within ONE NAGASE, and I expect this number to increase to six by the end of FY2025. Beyond identifying opportunities, we also consider human resource development to be a natural extension of this process. I believe in finding unique diamonds in the rough, adding my own ideas, and involving others to shape them into something truly distinctive. This is the ideal way to create products and build businesses. My goal is to develop the kind of talent who can make this happen. 

Third, we will continue to promote sustainability, compliance, and diversity. Regarding sustainability, we added three new material issues in September 2024 to our existing priorities of contributing to a decarbonized society, improving employee engagement, and ensuring transparency in  corporate governance. These new material issues include contributing to healthy life expectancy, achieving a sustainable supply chain, and driving a circular economy. For diversity, we will accelerate ongoing global human resource development and focus on cultivating new leaders from diverse backgrounds. As for improving employee engagement, the November 2024 engagement survey conducted by Nagase & Co. showed improvement compared to the previous year. Thank you for your cooperation. As defined by the Corporate Sustainability Office, engagement is not about the company and employees facing each other but rather facing the same direction together. We look forward to continuing improvement activities this year. 

Starting in 2024, the responsibility for improving employee engagement has been shifted from HR and general affairs to division heads, department heads, and group company presidents. Honestly, I recognize that there are significant differences in the approach to this initiative across various organizations. I read all the open-ended responses from the survey conducted in November 2024, and there were some very critical comments. I take these voices from the front lines seriously and intend to address them one by one, encouraging continuous improvement. 

Lastly, in July 2025, members of Asahi Kasei Pharma's Ohito Plant will join the NAGASE Group. Entering a new environment is nerve-wracking for anyone. I hope we can respect each other and learn together with the spirit of "everyone is a teacher." 

Finally, this year’s group slogan remains “Delivering next.” 

In conclusion, I would like to extend my best wishes for the continued prosperity of the NAGASE Group and the health and happiness of everyone in the NAGASE Group and their families throughout the year, and for a world free from war, where peace is restored and children can live happily. 

January 6, 2025 
Hiroyuki Ueshima