LIXIL GROUP INTEGRATED REPORT 2020 - QUICK Disclosure
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LIXIL GROUP INTEGRATED REPORT 2020
Making Better
Homes a Reality
Every person on the planet dreams of a better home.
LIXIL makes that possible with pioneering water
and housing products.
for Everyone A better home is made up of surprisingly simple things – baths to escape
in after a long day, kitchens that unleash creativity, toilets that provide
cleanliness and comfort, doors and windows that connect you with the
world outside, showers and faucets to experience water in new ways, and
interiors and exteriors that bring spaces to life.
LIXIL makes better homes a reality for everyone, everywhere. We make
things that matter to all sorts of different people, to the many communities
we are part of, and to sustainably support the world around us. At LIXIL,
we are proud that our products touch the lives of more than a billion
people every day, but believe we have the potential to do so much more.
LIXIL CORE LIXIL BEHAVIORS
Our corporate philosophy defines The three LIXIL Behaviors provide a
what we set out to do in the world. unified way of working for all our
employees, helping to establish
The Group’s LIXIL as a purpose-led,
entrepreneurial company.
superior products
and services
contribute to
improving people’s
comfort and
lifestyles
01
Contents
SECTION 1 SECTION 2 SECTION 3 SECTION 4 SECTION 5
LIXIL IN FYE2020 VALUE CREATION PROCESS CR STRATEGY AND IMPACT GOVERNANCE BUSINESS RESULTS
An overview of LIXIL, our purpose, A deep dive into how LIXIL creates A summary of how our corporate A look at our approach to corporate A review of business results for the
strategy, and the progress we have sustainable value for our stakeholders responsibility strategy is making a governance and the steps we are year ended March 2020 and other
made over the fiscal year. and society. difference where it is needed the most. taking in this area. material information.
04 LIXIL at a Glance 32 Value Creation Process 44 CR Chairperson’s Message 56 Corporate Governance Dialogue 76 Consolidated 11-Year Summary
06 Stages of LIXIL’s Evolution 34 The Resources We Rely On 46 Corporate Responsibility Strategy 61 Group Governance Reform 78 Review and Analysis of Operating
Results and Financial Position
08 Financial Highlights 38 The Way We Create Value 48 LIXIL‘s Material Issues 62 Selection Process of Director
Candidates and Formulation of 82 Review of Operations by Segment
10 Non-Financial Highlights 40 The Value We Create 50 Global Sanitation & Hygiene Draft Reports to the Board of
Directors on the System for 84 Principal Group Companies
12 CEO Interview 52 Water Conservation &
Executive Officers
Environmental Sustainability 86 Basic Policy for Investor Relations
16 CFO Interview
63 LIXIL Group Board of Directors
54 Diversity & Inclusion 87 Shareholder Information
18 LIXIL Group Executive Officers
64 Corporate Governance at
88 Corporate Data
LIXIL Group
20 Megatrends
66 Nomination Committee Report
22 Progress of Management Strategy
67 Compensation Committee Report
24 LIXIL’s Businesses
68 Executive Compensation
30 Principal Risks and Countermeasures
70 Audit Committee Report
71 Governance Committee Report
72 Internal Control Systems and
Compliance
Editorial Policy Note:
This integrated report aims to enhance communication with LIXIL’s stakeholders, especially Due to our decision to divest Permasteelisa in May 2020,
investors, by presenting its initiatives to achieve long-term, sustainable growth. In editing, we we have classified the operations of Permasteelisa as
focused on key content and aimed for an easy-to understand structure. Information not included discontinued operations. Business results for FYE2019
in this integrated report, such as detailed non-financial information, detailed financial shown in LIXIL’ s Annual Report 2019 have been
information, and the latest news is available on our corporate website. retroactively restated.
02 03
SECTION 1 LIXIL IN FYE2020
LIXIL at a Glance
WE ARE A GLOBAL LEADER IN OUR INDUSTRY LIXIL IN THE HOME
1 billion people Present in Construction
methods Tiles
Solar energy
systems Windows
Bathrooms
and toilets
Garden
rooms
use our products every day over 150 countries
Approx. 75,000 employees Over 100 years
around the world of history
¥1,694.4 billion ¥58.6 billion
consolidated revenue core earnings
WE MAKE PRODUCTS THAT IMPROVE DAILY LIFE
16 household ¥27.5 billion
L
XI
product brands invested in R&D
LI
6 global 12,000 +
in-house patents and design
Housing Entrance Housing IoT systems Kitchens Smart water
design centers applications worldwide exteriors doors interiors products
WE STRIVE TO MAKE THE WORLD A BETTER PLACE MAJOR BRANDS
Improved access to Products and
sanitation for services helped reduce
18.6 million people 66 million tons of
CO2 emissions
in 38 countries
04 05
SECTION 1 LIXIL IN FYE2020
Stages of LIXIL’s Evolution
We continually strengthen LIXIL in order to create superior products
and services that improve the comfort and lifestyles
of people around the world.
FYE2012–2013 FYE2014–2016 FYE2017–
Created LIXIL through Established the foundation for Simplifying the balance sheet,
the merger of five companies business expansion and improving the organizational structure,
global growth and strengthening profitability Toward
LIXIL was born out of the merger of Tostem, INAX, Shin From 2011, LIXIL’s business rapidly globalized through a In becoming one of the most comprehensive companies in Sustainable
Nikkei, SUNWAVE, and Toyo Exterior in 2011. Through this
integration, we generated synergies between our businesses
series of acquisitions and investments, including integrating
some of the most iconic names in our industry such as
the industry, LIXIL developed a top-heavy organization with
areas of overlapping authority and a broad business Growth
and established a powerful foundation for sustainable GROHE, American Standard, and Permasteelisa. This portfolio. To achieve further growth, we began to simplify our
growth, opening the way to delivering a comprehensive provided us with the product and brand portfolio, as well as business structure, taking steps to transition from a holding As the world’s population and the middle
lineup of products that cover all aspects of living spaces. global infrastructure, to establish our foothold in key company to an operating company structure in order to income segment grow, the demand for
The brand name LIXIL is derived from the combination of markets around the world. focus on our core businesses and strengthen governance*1. housing and water technology products
“LI” from two words that closely represent our business: We also began to review our portfolio in order to strengthen and services will continue to expand. We
“LIVING” and “LIFE.” FYE2016 our balance sheet, focusing on businesses that have will harness LIXIL’s strengths to become a
In 2011, LIXIL adopted the corporate governance synergistic relationships with our core businesses and high
¥598.6 billion truly differentiated and unique housing
structure, a “Company with a Nomination Committee, etc.,” FYE2013 (IFRS) potential profitability, in turn enabling us to prioritize our and water technology company with the
as outlined in Japanese Corporation Law. Under this ¥205.1 billion 32%
investments in high growth areas*2. With a global foothold world’s most respected and powerful
(JGAAP)
governance system, we clearly separate the conduct of established, we established a virtual structure to centrally brands. To achieve this aim, we are
management from the surveillance of management with the manage our international operations, strengthening cross- focusing on actively managing our core
objective of creating a system where executive officers can regional collaboration and innovation. We will now continue businesses to enhance productivity and
make management decisions quickly and decisively while 14% to build on our competitive advantage through differentiated efficiency, driving synergies across our
securing management transparency. products, services, and business models, setting LIXIL on core business areas, as well as optimizing
the path to higher profitability and sustainable growth. our business portfolio to accelerate
*1 LIXIL decided in March 2020 to merge LIXIL Group Corporation and LIXIL growth and strengthen financial
International revenue
ratio reached
Corporation. Please refer to page 61 for more information. conditions. We will become an
*2 LIXIL announced its decision to transfer its shares owned in Permasteelisa and
32 % LIXIL VIVA in May and June 2020, respectively. organization that can adapt and innovate
faster, providing differentiated products
and services that will enable us to achieve
sustainable growth.
Net sales (JGAAP) / Revenue (IFRS) (Years ended March 31) (¥ billion) Permasteelisa classified as
discontinued operations
1,890.5
2,000 1,786.4 1,829.3 1,832.6
1,705.4 1,692.4 1,694.4
1,628.7
1,436.4
1,500 1,291.4
1,000
500
Japan
International
2012 2013 2014 2015 2016 2017 2018 2019 2019 2020
JGAAP IFRS
06 07
SECTION 1 LIXIL IN FYE2020
Financial Highlights
LIXIL Group Corporation and Consolidated Subsidiaries (Years ended March 31)
Revenue Core earnings / Core earning ratio EBITDA / EBITDA to sales ratio Net interest-bearing debt / Net debt-to-equity ratio
International Core earnings (left) EBITDA (left) Net interest-bearing debt (left)
Japan Core earning ratio (right) EBITDA to sales ratio (right) Net debt-to-equity ratio (right)
(¥ billion) (¥ billion) (%) (¥ billion) (%) (¥ billion) (%)
2,000 100 5.0 200 12 1,000 146.7 150.0
1,694.4 160.6
80 4.0 800 120.0
1,500 150
9.5
9 736.7
406.6
60 3.5 3.0 600 90.0
1,000 100 6
40 2.0 400 60.0
1,287.8
500 58.6 50 3
20 1.0 200 30.0
0 0 0 0 0 0 0.0
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
Due to strong first-half performance, revenue increased by 0.1% year on year to Core earnings increased by 7.5% year on year to ¥58.6 billion due to EBITDA increased by 33.7% year on year to ¥160.6 billion due to a ¥33.6 billion Net interest-bearing debt as of March 31, 2020 increased by ¥152.2 billion year
¥1,694.4 billion despite the decline in demand following the consumption tax hike improvements to production efficiency and domestic price revisions despite costs increase in depreciation resulting from the application of IFRS 16 “Leases.” on year to ¥736.7 billion due to an increase in lease liabilities resulting from the
in Japan and the impact of foreign currency translation. related to an early retirement incentive program. application of IFRS 16 “Leases.”
SG&A expenses / SG&A ratio Earnings (loss) per share (EPS) / Dividends per share / Net debt-to-EBITDA ratio Equity attributable to owners of the parent /
Dividend payout ratio Ratio of equity attributable to owners of the parent
SG&A expenses (left) Earnings (loss) per share (EPS) (left) Dividends per share (left) Equity attributable to owners of the parent (left)
SG&A ratio (right) Dividend payout ratio (right) Ratio of equity attributable to owners of the parent (right)
(¥ billion) (%) (Yen) (%) (Times) (¥ billion) (%)
600 60.0 200 200 8 800 40.0
500 506.9 50.0 162.2
100 100 6 600 30.0
400 40.0 34.4 43.15 502.2
4.6
300 30.0 0 70 0 4 400 24.0 20.0
29.9
200 20.0
-100 -100 2 200 10.0
100 10.0
0 0.0 -200 -179.98 -200 0 0 0.0
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
SG&A expenses increased by 1.6% year on year to ¥506.9 billion due to a one- Earnings per share increased year on year by ¥223.13 to ¥43.15 while the While interest-bearing debt increased due to the application of IFRS 16 “Leases,” The ratio of equity attributable to owners of the parent as of March 31, 2020 was
time expense associated with an early retirement incentive program; excluding this dividend remained constant at ¥70 per share. the application of this standard also resulted in increased EBITDA, slightly 24.0%, declining 1.9 percentage points year on year due to the increase in net
expense, SG&A expenses only increased by 0.1 percentage points. improving net debt-to-EBITDA ratio to 4.6. interest-bearing debt resulting from the application of IFRS 16 “Leases.”
Profit (loss) for the year attributable to owners of the parent / ROE Total assets / ROA Capital expenditures by business segment Depreciation by business segment
Profit (loss) for the year attributable to owners of the parent (left) Total assets (left) LWT LHT LBT D&R H&S LWT LHT LBT D&R H&S
ROE (right) ROA (right)
(¥ billion) (%) (¥ billion) (%) (¥ billion) (¥ billion)
60 10.0 2,400 4.0 40 40
2,091.5 38.6 39.0
30 5.0 1,200 2.0 30 30
2.4
0 12.5 0 0 0.6 0.0 20 20 23.5
17.5
-30 -5.0 -2.0 10 11.8 10
5.3
-60 -10.0 -4.0 0
3.2 0 1.7
0.7 1.1
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
Profit for the year attributable to owners of the parent increased by ¥64.7 billion Despite a holiday occurring at the end of FYE2019, the application of IFRS 16 Expenditures derived mainly from investment in new product development, Depreciation was primarily attributable to developing Group-wide IT systems and
year on year to ¥12.5 billion due to the increase in core earnings and decrease in “Leases” increased right-of-use assets recognized on the balance sheet, increasing business rationalization, and maintenance costs for LIXIL Water Technology (LWT) maintaining facilities. For LWT, depreciation increased due to initiatives to develop
loss associated with Permasteelisa. total assets by ¥32.0 billion year on year to ¥2,091.5 billion. and LIXIL Housing Technology (LHT). Improved production efficiency in LHT products for the domestic and international markets, while for LHT, depreciation
resulted in decreased capital expenditure. decreased sightly due to improved production efficiency.
Notes: 1. Excluding the FYE2020 impact of the application of IFRS 16 “Leases” Note: Excluding the FYE2020 impact of the application of IFRS 16 “Leases”
2. LBT: LIXIL Building Technology, D&R: Distribution & Retail Business, H&S:
Housing & Services Business
08 09
SECTION 1 LIXIL IN FYE2020
Non-Financial Highlights
(Years ended March 31)
Environment
Contribution to reduction in CO2 emissions from products and services CO2 emissions from Group activities (Scope 1 and 2)*1 Implementation of responsible procurement surveys*4 Community development expenditures*5
(Measure: number of multiples compared to FYE2016 base year)
Scope 1 (left) Scope 2 (left) Carbon intensity per unit of output (right) Japan International
(Times) (Thousand t-CO2) (%) (%) (¥ million)
1.5 1,200 100 2,000
1,063 97 1,751.7
1.4 90
800 90 1,500
525
1.3 1.29 80
400 1,000
1.2 538 70
0 0 500
1.1 60
1.0 -14.3 -20 50 0
2016 2018 2019 2020 2016 2018 2019 2020 2018 2019 2020 2018 2019 2020
We conduct environmental assessments on products at every stage of the By seeking to increase energy efficiency and utilize renewable energy to further We conduct surveys of our suppliers to promote responsible procurement and are We are working to return LIXIL assets appropriately and efficiently to society and
development process to make our products and services more energy conscious, reduce CO2 emissions, we achieved a reduction in carbon intensity per unit of achieving our target of a 90% implementation rate (based on purchased amount). pursuing various initiatives to help solve problems as a responsible member of the
and achieved a 1.29 times greater reduction in CO2 compared to FYE2016. output of 14.3%. community.
*The reduction possible when customers use LIXIL’s environmentally friendly products
and services (in comparison to the reduction due to previous versions of those products)
Governance
Water intake and discharge*2 Waste recycling ratio*1 Number and ratio of independent outside directors Compliance training take-up rate*6
(Basic training completion and pledge rate)
Water intake Discharge Japan and Europe Asia (excluding Japan) North America
(Million m3) (%) (%)
20 100 100
96
16.1 Internal
15
80 90 80 77.6
13.2 directors
60 5 60
10
40 Outside 40
5 27 directors
20 20
0 0
9 0
2018 2019 2020 2018 2019 2020 2018 2019 2020
By promoting water recycling, we reduced water intake to 16.1 million m3 and By working with stakeholders to minimize the use of newly introduced resources We place great emphasis on diversity in the Board of Directors both in terms of We experienced some delays in implementing pledges globally due to COVID-19,
water discharge to 13.2 million m3. and promote reuse and recycling, we achieved waste recycling ratios of 96% in attributes, and expertise or experience. resulting in a training take-up rate of 77.6% (partial data).
Japan and Europe, 90% in Asia (excluding Japan), and 27% in North America.
Social
*1 Scope of coverage: The entire Group (production and non-production bases in Japan,
Ratio of female participants in Stage 3 of the Talent Acceleration Number and ratio of employees with disabilities*3 Attendance rate at Board of Directors’ meetings and production bases outside Japan)
Program (TAP) for next-generation leaders (LIXIL Corporation, Japan) (LIXIL Corporation, Japan) *2 Scope of coverage: The entire Group (production and non-production bases in Japan,
and production bases outside Japan.) Excludes tenanted properties, etc. that we
Result Target Number (persons) (left) Ratio (right) cannot access to assess the water intake.
(%) (People) (%) *3 Directly hired employees in Japan only
40 500 5 FYE2018 and FYE2019 include LIXIL Senior Life Company
458.5 FYE2020: number of persons on June 1, 2019. FYE2018, FYE2019: number of
33.3 400 4 persons on March 31, 2017 and 2018, respectively.
30
Calculated based on the Employment Rate System for Persons with Disabilities issued
20
20.0
300
200 2.33
3
2
99.5% by Japan’s Ministry of Health, Labour and Welfare.
*4 Scope of coverage: Suppliers to LIXIL Corporation and its subsidiaries
10 Japan: Procurement by operating sites in Japan
100 1
International: Procurement by operating sites in international markets, excluding
0 0 0 GROHE Group and American Standard Brands
*5 FYE2018 excludes Permasteelisa Group
2018 2019 2020 2018 2019 2020 *6 *Breakdown: Japan 98%, international 53.7%
To encourage female participation in the workforce, we set and achieved a targeted We achieved a 2.33% ratio of employees with disabilities by adjusting working The Board of Directors met 16 times in FYE2020. The attendance rate for Board
20% ratio of female participants in the younger category of the Talent Acceleration environments to suit the needs of each employee in a broad range of areas, of Directors’ meetings was 99.5%.
Program (TAP) for nurturing next-generation leaders. including R&D, production, sales administration, and planning management. LIXIL Group’s sustainability policies and initiatives are on pages 46-55.
For more information on ESG data, please visit our corporate website.
www.lixil.com/en/sustainability/data/
10 11
SECTION 1 LIXIL IN FYE2020
CEO Interview
Q1
What do you feel were LIXIL’s main LIXIL is now ahead in
achievements over the past year?
embracing the “new normal”
Thanks to everyone’s contributions, we made that we are facing globally.
tremendous progress this past year to transform
ourselves into a more agile and entrepreneurial
company. Most visibly, we achieved a positive profit, but
far more important were the great efforts that went into
fundamentally improving our business, such as
changing our working style and our organizational pace of change beyond what anyone had anticipated,
structure. I am pleased to see that, thanks to the which is why our fast work in all these areas has been
strategic changes we have implemented, we are now so important.
ahead of our peers in embracing the “new normal” that
we are facing globally. In addition, we reached an
agreement on the sale of Permasteelisa under LIXIL’s Q3
building technology business, a strategic divestiture that
will enable us to focus on our core businesses and drive So how has the COVID-19 pandemic changed
long-term profitability and growth. how LIXIL works?
There are two significant areas of change. When it
Q2 comes to demand, we now see a greater focus on
hygiene and health-related products. In Japan and
You have pursued LIXIL’s Medium Term Plan many other countries, working people would leave
(MTP) since 2017. In the “new normal” of home early each morning and return late, basically just
a world affected by COVID-19, do you need to seeing the home as a place to sleep. We found that
recalibrate your strategy? many people seldom used their kitchens. But with
working at home and fewer long commutes, many have
Not at all. In fact, the strategy that we set out in our now begun to realize the value of their home. They now
MTP fundamentally prepared us for many of the want healthier and more stylish homes with better-
Kinya Seto changes that have come with this new reality. In the designed products and building materials.
Director, Representative Executive Officer, MTP, we emphasize differentiated products. With people The second part is in how we do business and the
Executive Officer and President, and CEO now spending more time at home, they have a better digitalization of our commerce model. It is now clear
understanding of the benefits of advanced technology that consumers appreciate the time-saving and
and meaningful designs. Second, the MTP emphasizes immediacy of video meetings where we can share
the need to motivate our employees and to help them to blueprints, design plans and mock-up designs all in a
LIXIL was able to reach a number of key milestones adapt to a new and more agile way of working. We
developed ahead of time the extensive technical
virtual world. Smartphones today can be employed to
work up the highly detailed measurements that
in the Medium Term Plan this past year. infrastructure, software and bandwidth needed to previously required physical visits, making the
enable the tens of thousands of video meetings that now purchasing process easier than ever.
We asked CEO Kinya Seto about the highlights and take place weekly across the organization. And most
importantly, steps taken to focus on our core businesses
where the Company is now headed. and to simplify our business structure are enabling us to
focus our resources to drive growth. Overall, I believe
COVID-19 and the global recession have sped up the
12 13
SECTION 1 LIXIL IN FYE2020
CEO Interview
Q4 Q5 In terms of our portfolio, we have also simplified our
investments with the sale of our controlling interest in the
There have been some big changes at LIXIL For LIXIL Water Technology (LWT), you have LIXIL VIVA chain of home improvement stores and the We are merging LIXIL Group
Housing Technology (LHT). What are you now talked about the importance of design and sale of Permasteelisa, which has been a goal for some
seeing as the key trends? brand awareness. Is that another key part of time. These are critical steps to enabling us to focus on
Corporation and LIXIL Corporation,
your strategy? our core businesses, drive investment in growth areas, a move that will enhance
We have been very successful in terms of bringing and improve governance.
down unit costs within LHT by continuously improving Yes, absolutely. Design is a very important element, not On top of this, we are merging LIXIL Group Corporation management efficiency and
the efficiency of our production lines as part of our only in how a product looks but also how people and LIXIL Corporation, a move that will enhance
platform strategy. This has helped us to bring down our experience it. Central to this is our in-house design management efficiency by eliminating duplication of
improve Group governance.
fixed costs and allows us to renew our product lines at organization under the global direction of Paul Flowers, resources and improve Group governance. This action in
a lower level of investment. We will continue these LIXIL’s Chief Design Officer. Because he oversees many ways symbolizes our broader efforts to create a flat
efforts through this year while also looking to build our products across all our product brands and organization that is ppurpose-led and entrepreneurial. I
brand equity. The key is to give customers a product geographies, we can provide an unmatched level of see this as our most important job ahead.
with better design and better technology. consistency. It may seem a small thing, but as a Q8
However, we need to be aware of the broader consumer, you want the color of your kitchen products
industry trends. The number of new housing units in all to match, so that an off-white in one LIXIL line will Q7 Based on what you have achieved this past year,
Japan, LHT’s largest market segment, is expected to match the off-white tone of other products. what lies ahead for LIXIL?
decline over the next few years. In addition, new Our brand strategy also provides an important point You have talked about making LIXIL a purpose-
houses are expected to use products and materials of differentiation within our industry. Rather than led organization. Does this mean there is a We know that we will face difficult headwinds for much
with longer lifespans going forward. This means that segment products by price, we have given each brand diminished emphasis on bottom-line profitability? of the fiscal year. We must leverage the programs that
our higher-quality and differentiated products can its own identity. If you want a sleek urban type of we put in place to continue holding down costs and to
continue to sell well. bathroom, GROHE might be your choice. For a more Just the opposite. In today’s world, you must embrace new ways of working and dealing with both
At the same time, we also expect long-term growth traditional look with luxurious spaces, American demonstrate that you stand for something. To achieve consumers and professionals in the building industry.
in the renovation market. Similar to what we see in our Standard would be suitable. If you want Japanese higher profits, you must create a meaningful company We will also keep an eye out for new market
water technology business, consumers are already technology with a more minimal look and feel, then culture. We know that this is very important for our opportunities anywhere in the world, using our portfolio
starting to look around their residences and trying to INAX would be the natural choice. By focusing on employees and consumers, and I believe that of brands to quickly fill market needs as we see them
find ways to improve space usage now that more lifestyle segments, we can avoid eroding brand equity stockholders are now coming to understand this emerge.
people will be working from home. As just one indicator, when we want to try new product types and exploit new principle as well. If a corporation demonstrates its And we must live up to our commitment of being a
we are seeing more website traffic for renovation- opportunities in new markets. commitment to improving the world, consumers will purpose-led organization. As part of this we have rolled
related products than ever before. take note and reward that company. We also believe out the SATO Tap, a new hand-washing solution. With
this is a central part of making employees more the outbreak of COVID-19, we know that the simple
Q6 engaged. If a LIXIL employee can see that their daily task of hand washing is one of the most important ways
work is making a contribution, they will help the to stop the spread of disease, but unfortunately, many
You have also instituted a number of changes Company prosper to the benefit of all our stakeholders. people are not in a position to do so regularly. Our
in your corporate structure. How does that help This can be clearly demonstrated by the success of ability to develop, manufacture and bring this product
Design is not only how LIXIL going forward? our SATO social business. Through SATO, we provide to the market just when it is needed demonstrates for
a product looks but also how basic solutions for the two billion people in the world me what LIXIL can deliver – for consumers, employees
Our goal is to create a flatter organization that enables who lack access to basic sanitation. This is no small and shareholders.
people experience it. front-line employees to do their work more efficiently mission, but it is an important part of our business. For
with less unnecessary oversight. In Japan, we delayered example, in a recent promotion for shower toilets, we
our sales structure and have reduced the number of said that each sale would be matched with the donation
branch offices, area branches and local outlets to drive of a SATO toilet in the developing world. Our employees
efficiency. This delayering has also applied to the most believed this was a great opportunity to get involved
senior levels of the company. Today there are 24 and our business partners, seeing the benefit, told us
corporate officers, down from 114 when I joined. that they wanted to promote more LIXIL products.
14 15
SECTION 1 LIXIL IN FYE2020
CFO Interview
Q2 talent. Furthermore, with the expansion of working from
home, we believe that there will be greater demand for
What progress have you made in our products and services as people seek to upgrade
strengthening the balance sheet? their workspaces and general environment at home.
What is your target in this area?
We consider improving the balance sheet to be one of Q4
our top corporate priorities. Our agreements to sell
Permasteelisa and LIXIL VIVA, which are important Considering the results last fiscal year,
milestones in our strategy to realign our business what are the prospects for the medium
portfolio, will significantly help improve the strength of and long term?
our balance sheet. As key financial indicators, we are
targeting a net debt/equity ratio of 1.0 and a net debt/ The divestitures of Permasteelisa and our holdings in
EBITDA ratio of 3.5. We view these as important LIXIL VIVA are important steps in improving our overall
benchmarks and through the two divestitures, we balance sheet. With these on track to close, we can
believe that we are very much on target to meet those focus more fully on improving our core earnings ratio.
ratios by the fiscal year ending March 31, 2021. Our aim is to achieve 7.5% in the medium term and
On this note, due to the application of new 10% or more in the longer term. To meet these targets,
accounting standards (IFRS 16) in the previous fiscal we aim to increase our gross profit margin while
year, the debt ratios within LIXIL VIVA, primarily in achieving lower selling, general and administrative
relation to store leases, were recalculated at a higher expenses (SG&A).
level. The divestiture of the unit, therefore, will To improve our gross profit margin, it is important to
significantly help to reduce our lease liabilities and provide differentiated products and services. We are
bring us closer toward meeting our targets. also working to reduce costs by improving production
Sachio Matsumoto In addition, the proceeds from the sale of the two efficiency through the use of common platforms in
Director, Representative Executive Officer,
subsidiaries will help increase liquidity and reduce product development, and to reduce SG&A expenses
Executive Officer and Vice President, Finance, Treasury, external borrowing needs. through systematization and greater operational
and M&A, and CFO efficiency.
In relation to working capital, we have been working
Q3 for many years to improve our cash conversion cycle
(CCC) by reducing accounts receivable and inventories
LIXIL has steadily made progress Q1 With the shift to teleworking, do you see while raising the accounts payable level.
cost-saving opportunities from rent and In addition, we have greatly expanded the use of
in simplifying its business portfolio How do you view overall results last year? related areas in 2021 and beyond? ROIC (return on invested capital) to drive performance
throughout the Company. For the past two years we
and strengthening its balance sheet. Overall, we were able to achieve our key target for core The COVID-19 outbreak toward the end of the fiscal have created ROIC targets as key performance
earnings, even with Permasteelisa – which we reached year and the restrictions put in place by governments indicators on a global basis, while all executive officers
CFO Sachio Matsumoto discussed an agreement to sell–categorized as discontinued around the world changed how all of society works, and are now given specific compensation-linked targets. All
operations. This was because all of our business we believe we will be able to take advantage of reduced new capital investments will be prioritized on a
the Company’s focus and segments exceeded their initial targets, while in the commuting time to improve the productivity of our company-wide basis looking at investment efficiency
Japan market, we experienced strong demand across
opportunities going forward. the board ahead of the increase in consumption tax in
employees while even improving the quality of work. As
a result of this shift, a lot more work can be performed
and cash flow implications. Goals are established on a
monthly and quarterly basis to see where improvements
October 2019. We were also able to introduce important outside of the office environment, and therefore this are required. This approach of balancing returns
internal reforms ahead of schedule, such as the Career provides us with the opportunity to review our office against capital and SG&A costs will help to create long-
Option early retirement incentive program. Considering space requirements and look for potential savings. term profitability for the Group.
the impact of the COVID-19 pandemic from the fourth Fortunately, we had anticipated this trend and had
quarter onward, I believe we can be proud of our already put in place a more robust infrastructure and
achievements in the fiscal year ended March 31, 2020. work-style reforms to help facilitate this greater use of
workspaces outside the office in order to secure leading
16 17SECTION 1 LIXIL IN FYE2020
LIXIL Group Executive Officers
(As of June 30, 2020)
Executive officer photographs were taken at different locations around LIXIL’s Profiles and reasons for selection of executive officers of To read more about the innovative design of LIXIL’s WING
LIXIL Group are available on our corporate website. headquarters, read “Our Stories” here:
newly redesigned WING global headquarters, which was unveiled in November 2019.*
www.lixil.com/en/about/governance/board/ www.lixil.com/en/stories/stories_18/
*Due to the impact of COVID-19, Bijoy Mohan's image was taken in Singapore.
Kinya Seto Sachio Matsumoto Bijoy Mohan Hiroyuki Oonishi
Director, Representative Executive Officer, Director, Representative Executive Officer, Executive Officer and Senior Managing Director, Executive Officer and Senior Managing Director,
Executive Officer and President, and Executive Officer and Vice President, Finance, Treasury, and M&A, and LIXIL International LIXIL Water Technology (LWT) Japan
Chief Executive Officer (CEO) Chief Financial Officer (CFO)
Number of Company shares owned 243,308 Number of Company shares owned 86,344 Number of Company shares owned 0 Number of Company shares owned 13,910
Shares of Phantom Stocks 139,480 Shares of Phantom Stocks 44,600 Shares of Phantom Stocks 146,815 Shares of Phantom Stocks 10,706
Yugo Kanazawa Jin Song Montesano Satoshi Yoshida Shoko Kimijima
Executive Officer and Senior Managing Director, Director, Executive Officer and Senior Managing Director, Executive Officer and Senior Managing Director, Executive Officer and Senior Managing Director,
Marketing, Digital, and IT, and Human Resources and General Affairs, Public Affairs, LIXIL Housing Technology (LHT) Japan Legal and Compliance, and
Chief Digital Officer (CDO) Investor Relations, External Affairs, and Corporate Responsibility, and
Chief Legal & Compliance Officer (CLCO)
Chief People Officer (CPO)
Number of Company shares owned 10,086 Number of Company shares owned 7,758 Number of Company shares owned 10,043 Number of Company shares owned 0
Shares of Phantom Stocks 14,070 Shares of Phantom Stocks 17,128 Shares of Phantom Stocks 11,004 Shares of Phantom Stocks 5,961
18 19SECTION 1 LIXIL IN FYE2020
Megatrends
The world around us continues to evolve,
shaping and guiding LIXIL.
1 A World Affected by COVID-19 2 The Rise of the Middle Class 3 Japan’s Maturing Market 4 A New Type of Consumer
The COVID-19 pandemic shows how sudden events can have Despite the economic setbacks caused by COVID-19, the rise of a Japan has the fastest-greying population in the world but also The new generation of consumers, whether established millennials
long-term consequences. Such seismic events also serve to new global middle class is expected to continue in the long term*2. holds the world’s largest pool of private savings, a number that in developed economies or the new middle class in emerging
greatly accelerate social and economic change that was already Already constituting more than half of the world’s population, the continues to grow*5. Despite this wealth, Japan has a lower level markets, have different spending habits. Research shows that the
underway. Health awareness has risen, work has shifted from the number of those considered financially secure is expected to rise of investment in residential property than the US, the UK or sharing economy and a focus on experiences rather than the
office to the home, and digital commerce has soared, including a to more than five billion people by 2030*3. Established growth Germany*6, showing there is room for growth as people look for purchasing of goods are driving their spending patterns. At the
50-70% surge in digital traffic in developed economies as the markets of China and India are now being joined by the fast- more comfortable spaces for teleworking and other stay-at-home same time, young people in this new global middle class dedicate
virus spread*1. Agility, innovation and resilience will be key to growing nations of Southeast Asia. In all, 88% of the growth in this activities. Since the COVID-19 outbreak, more time is also being a large share of their spending to housing and spend at higher
traversing the “new normal.” new middle class is expected to come from Asia*4. spent on home improvements*7. rates than older people.
With people spending more time at home either for work Differentiate water and housing products to demonstrate
New health and hygiene-related products employing the Upgraded hygiene and housing are among the first
Opportunity Opportunity Opportunity or play, there is a growing market for renovations of Opportunity they are more than just products but a part of one’s
best technology are in greater demand priorities for people as they gain more disposable income
existing properties lifestyle
The economic cost of the outbreak and the longer-term The new middle class is still less affluent than their New housing starts, forecast to decline by one-third Mass production of limited items, which is better suited to
Risk risks to business growth remain uncertain throughout the Risk developed-economy counterparts. Competitive pricing Risk between 2020 and 2030, are being further impacted by Risk fast-growing markets, increases risk of being caught in
medium term and value for money will be vital to win their business the uncertainty of the COVID-19 pandemic the commodity trap
*1 SSR, April 2020 *2 Brookings Institution, March 2020 *5 Wisdom Tree Japan, September 2018 *8 Harris Group, May 2016
*3 Brookings, September 2018 *6 Mitsui Fudosan, May 2020 *9 Visa Business and Economic Insights, December 2018
*4 Brookings, February 2017 *7 Unruly Group, April 2020
5 All Things Digital 6 The Impact of Climate Change 7 The Changing World of Work 8 What Does a Company Stand For?
Impacted by COVID-19, the march to an internet-based world of The total cost of achieving carbon neutrality is estimated at US$50 The COVID-19 outbreak has given sudden impetus to the already More than ever before, a company’s commitment to social issues
commerce is now a sprint, with the transaction value of global trillion, while the economic impact is incalculable*11. But the changing way we work. A U.S. survey found that 48% of is vital to long-term success. Studies show that younger
mobile payments expected to grow nearly 25% annually over the United Nations warns that “the highest cost is the cost of doing employees planned to work from home at least part time even consumers look specifically at these issues when deciding on
next five years. This has created a new shopping model that can nothing*12.” Despite the growing evidence of the impact on the after COVID-19*13. In Japan, it has even shone a light on the which firms they will select in making their purchases. Among
match up consumers and suppliers from across the globe. environment, a global consensus on coordinated action remains prevalent inefficiencies of its corporate culture. Companies will be millennials in the US, more than 70% are willing to pay more for a
Consumers are now showing a willingness to purchase whole new elusive. A new sense of purpose is needed urgently before it pressed to cater to the new needs of employees. sustainable brand*14. Internally, the fair treatment of all employees
ranges of products through computer-assisted shopping that is far becomes too late. and the presence of comprehensive methods to reward and
beyond what could be imagined a few years ago. Augmented counsel are central to recruitment and retention.
reality and other powerful tools allow for entire kitchens to be
created and purchased online.
More advanced products and ways of working that reduce Leadership in this area as a socially aware company that
Gain consumer insight and leverage powerful digital tools Transform work style to create a highly engaged, diverse
Opportunity Opportunity the resources we use are an important contribution to Opportunity Opportunity brings together the best in global practices is a clear
to create an entire home environment online and productive workforce
solving the problem differentiating feature in dealings with all stakeholders
An area that will require continuous investment and A failure to overcome the steady rise in temperatures Inability to adjust organization and engage employees in Growing social movements have shown vigilance and
Risk upgrading to make sure the Company remains at the Risk could create massive dislocations that would overwhelm Risk the “new normal” could impact long-term resilience and Risk action beyond just words are vital to demonstrate
cutting edge of technology our abilities to combat them efficiency commitment
*10 Mordor Intelligence, June 2020 *11 Morgan Stanley, October 2019 *13 Gartner, June 2020 *14 The Nielsen Company, October 2015
*12 United Nations, April 2020
20 21SECTION 1 LIXIL IN FYE2020
Progress of Management Strategy
LIXIL unveiled the Medium Term Plan in 2017. Under the guidance of our four core pillars,
we have embarked on a journey that will transform us into an agile, entrepreneurial company that
can achieve sustainable growth by contributing to society.
Establish a purpose-driven Develop attractive and Drive growth through
1 entrepreneurial company
2 differentiated products
3 Achieve competitive costing 4 strategic marketing
LIXIL aims to develop a people-focused organizational culture that In the increasingly commoditized housing products and To further strengthen our financial position, LIXIL will leverage We will harness strategic marketing to increase LIXIL’s touch
can respond quickly to both the external and internal changes of a materials market, LIXIL will drive profitable growth by investing new technology and infrastructure to create a more efficient points with consumers and influencers such as contractors,
world in transition. We believe an entrepreneurial mindset is vital more in brand, design, technology and quality. We believe we and flexible manufacturing supply chain platform. In addition, designers and builders. In addition, through the promotion of
to achieving this, and today we are finding new ways to create a can better respond to the individual tastes and preferences of we will improve productivity of corporate functions while services such as “LIXIL PATTO Reform,” we will create new
more agile work environment and enabling greater and faster the growing middle-income and high-income segments by redeploying knowledgeable personnel to consumer-facing roles demand for home renovation in Japan by providing solutions to
exchange of ideas. We also believe that we must become a differentiating ourselves through products that are meaningful with resource needs, contributing to greater cost efficiency. challenges holding back market growth.
company that evokes passion and respect, inspiring and uniting and matter to people. This will further strengthen our intellectual
not only our own people around goals that go beyond everyday property base, and as we shift to a more asset-light business
life, but all of our stakeholders. And as our operating environment model, we will be able to bring more products to markets in
shifts, we have to be ready to consistently redefine our business shorter cycles.
domain to ensure future growth.
FYE2020 MILESTONES FYE2020 MILESTONES FYE2020 MILESTONES FYE2020 MILESTONES
Announced merger of LIXIL Group Corporation and LIXIL Brought design teams in-house under the Global Design Under the “Kawaranaito LIXIL” program to transform Japan Accelerated digital transformation under the impact of COVID-19
Corporation, which will enable accelerated decision-making, Organization and established a new design studio in Singapore, operations in light of long-term market challenges, LIXIL shifted to pandemic, harnessing available and proprietary technology that
enhanced management efficiency, and improved governance. joining existing studios in London, New York, Düsseldorf, Tokyo a more meritocratic employment system, including introducing a enables consumers to experience showrooms through online
LIXIL will transition from its current holding company structure to and Tokoname performance review system and new career planning support to consultations and 360-degree images, as well as generate 3D
a simplified operating company that places greater focus on Reworked the entire design process across the organization, help boost productivity, while accelerating the implementation of renderings and price quotations in real time
actively managing its core water and housing product businesses clearly differentiating brands from each other and from LIXIL’s digital transformation and HR policies in order to provide Targeted investments to support the development of e-commerce
Simplified business portfolio and continued to focus on water and competitors through design values and signature elements in employees with greater work-life balance and flexibility platforms, including strengthening direct-to-consumer channels in
housing products businesses by announcing the divestments of order to build consistency and enhance brand value Implemented the Career Option early retirement incentive program the US with new products such as the American Standard Filtered
Permasteelisa, LIXIL VIVA, Ken Depot, LIXIL Suzuki Shutter and Unveiled the latest design series of the INAX brand, which went in Japan, a solution beneficial to employees, to bring fresh Kitchen Faucet
others. In addition to enabling greater synergies through through LIXIL’s in-house design process, at Milano Salone last perspectives and energy to management positions and address the Expanded IoT products and service portfolio to define the next-
enhanced integration, these transactions will strengthen LIXIL’s year, resulting in multiple design awards in a single year due to aging management structure facing LIXIL and other major generation home and develop the home IoT ecosystem
balance sheet and financial position new consumer-centric design concepts companies in Japan Driving demand growth in the Japan renovation market by
Established LIXIL International to centrally oversee global Established tie-ups between LHT and renowned Swiss and Implemented Robotic Process Automation (RPA) through in-house developing and launching products as well as through new
businesses and enhance synergies and growth opportunities, Belgian companies to develop and introduce new high-end developers as a tool to improve productivity of primarily back-office marketing campaigns that address changing lifestyles and work
while also centralizing reporting lines for core corporate functions products, including frameless large windows and garden annexes, functions by automating recurring operations styles in the “new normal”
– Finance, Legal, HR and IT – enhancing alignment to achieve to tap into the growing luxury housing market segment in Japan Fully implemented new trading system introduced in FYE2019,
company-wide goals enabling faster decision-making on pricing in line with market
Embraced purpose-driven initiatives across the organization, demand
helping 18.6 million people to date gain access to basic sanitation Completed implementation of standardized core manufacturing
and achieving our carbon intensity targets two years in advance platforms for multiple products in interior and exterior factories in
Japan, improving cost control and enabling faster introduction of
new products to market
22 23SECTION 1 LIXIL IN FYE2020
LIXIL’s Businesses
LWT
LIXIL Water Technology Principal products and services SWOT analysis
Strengths Opportunities
Plumbing fixtures
Sanitaryware, shower toilets, water faucets, Combined capabilities managed by coordinated global team Growth opportunities related to COVID-19, which is driving focus on improving
LWT makes attractive and purposefully designed products for bathrooms and washstands, bathtubs, prefabricated bathrooms, Highly regarded brands and strong market positions across all major geographies health, hygiene, wellness and wellbeing
smart products, showerheads, washstand fixtures, Higher demand from population growth and increasing income levels around the
kitchens through powerful global brands such as INAX, GROHE, and American A product portfolio spanning all market segments, from the luxurious to the basic
washstand cabinet units, kitchen systems, etc. ends of the spectrum world
Standard, as well as product brands such as RICHELLE and SPAGE. Development of differentiated products for the global market by transferring and
Tile building materials Globalized and independent design team creating clear and separate propositions
for each brand and its target segments under the unified “LIXIL design thinking” consolidating technology and design within LWT, based on development of
Tiles for houses and buildings, interior decorative product platforms using Japanese technology
Sales network in more than 150 countries
tiles, etc. Increased demand for products catering to increased environmental awareness
Global supply chain network
Increased home renovation investment as consumers reflect the higher share of
time spent at home in their expenditure
Direct customers
Dealers Wholesalers Weaknesses Threats
Sales agencies uilding material
B Strongest footprint is in mature economies Decreasing new housing starts in Japan
Construction companies trading companies
Underinvesting in marketing and brand management in international markets Increase in labor cost and material prices
Architectural firms Volume retailers Shortage of skilled labor
Developers General consumers Rapid commoditization due to new business models
Downward pricing pressure
Rise of highly cost-competitive manufacturers from developing countries
Competitors Economic deterioration and sluggishness due to the impact of COVID-19,
particularly the impact on end users in the hospitality and commercial real estate
Kohler Geberit sectors
Roca TOTO
Hansgrohe Takara Standard
Masco (Delta) Cleanup
Fortune Brands (Moen) Panasonic luxurious to the basic ends of the spectrum, while catering to Key Initiatives in FYE2021
different lifestyle preferences and local tastes. Leveraging this
Major brands unique strength, we are now developing LWT’s business in Create clear and differentiated value for end users, professionals,
emerging markets in particular, where the middle class is designers and developers as main target groups that will drive
expected to grow further. industry growth
With the formation of LIXIL International in 2019, a business Drive sales growth through focus on target groups by strengthening
management structure that covers all operations outside of Japan, powerful channels, business partner legacies and brands
LWT is now capable of bringing the global resources of LIXIL, Optimize global manufacturing footprint and enable technology
American Standard Saybrook Filtered Kitchen Faucet including design, R&D and manufacturing capabilities, together platforms approach to maximize productivity, strengthen cost
across all regions. Through LIXIL International, we are also honing competitiveness, and enhance flexibility. These initiatives allow
our competitive edge by enhancing cross-regional and cross- us to flexibly react to demand fluctuations caused by COVID-19
brand synergies, which combined with improved production and ensure continued strong product availability
efficiency, will enable LWT to respond more flexibly to global Respond faster to increase in demand for renovation and the
Market Conditions long term, and COVID-19 is accelerating this trend. However, the demand. This global operations framework enables all factories end-user journey moving increasingly online
renovation market, while small, shows potential for growth driven and R&D hubs to be leveraged to supply all brands and regions, Invest in innovation for future growth and continue to build a
The global plumbing fixtures and fittings market is worth ¥5 trillion by increased focus on hygiene and healthy homes. With COVID- creating an efficient and flexible network that optimizes our global platform-based, global product pipeline across all brands. This
today and is forecast to grow in the future. In international markets, 19, the entire world is now also more focused on hygiene, which is footprint, creates scale competitiveness, and builds future-ready includes accelerating the development process for synergized
despite COVID-19-related restrictions causing significant losses in expected to further drive demand for products such as touchless processes for quality, demand planning, product development and products leveraging technologies from Japan for global launch
the global market, European and North American markets have faucets, shower toilets, and water filtration. customer service. This will enable us to deliver true value to Respond to the major macro-trends accelerated by COVID-19
been resilient against the backdrop of monetary easing. The world’s business partners and consumers by responding to specific by focusing on home renovation and accelerating development
growing population, which is expected to reach 8.5 billion people Key Strengths regional needs while leveraging our global operations footprint and for hygiene-related products, as well as strengthening retail in
in 2030, is also driving new growth. In particular, the growing managing innovation and manufacturing platforms. international markets
middle class and increasing need for energy and water Among LIXIL Water Technology’s (LWT) core strengths is a portfolio Transform business structure in the Japan market to suit its
conservation technology globally are among key trends expected to of powerful, industry-leading brands which include GROHE, mature economy, strengthening cost competitiveness
increase demand for water technology products in the future. In American Standard and INAX. Combined, these brands cover all Employ a scalable and repeatable, high ROIC model of filling
Japan, the demand for new housing has been decreasing over the bathroom product categories and all market segments, from the category white spots
24 25SECTION 1 LIXIL IN FYE2020
LIXIL’s Businesses
LHT
LIXIL Housing Technology Principal products and services SWOT analysis
Strengths Opportunities
Metal building materials
Housing window sashes, entrance doors, shutters, Top market share in residential window sashes and exterior products in Japan Increasing need for highly functional products due to increasing awareness of
LHT’s brands TOSTEM, INTERIO, EXSIOR, SUPER WALL, and Kawashima Selkon gates, carports, banisters, high railings, etc. Extensive nationwide sales and distribution network in Japan environmental and health factors among consumers in Japan
Textiles produce a range of housing-related products, from window sashes to Wooden interior furnishing materials Wide range of production facilities and technologies in Japan and Asia, from Growing demand for new products and services suitable for Japan’s aging society
Window frames, wooden furnishing materials, aluminum smelting and casting to manufacturing end products Increasing interest in renovations due to COVID-19
entrance doors, exterior building materials, interior furnishing materials, and fabrics,
interior decorative materials, etc. Wide range of products and product categories enabling coordination for the Expanding market for highly affluent consumers
helping to make better homes a reality. entire home Increasing need for differentiated products due to population growth and rising
Other building materials income levels in Asian markets
Siding, stone materials, roofing materials, etc.
Interior fabrics
Curtains, etc.
Other Weaknesses Threats
Solar power systems, etc.
Difficulty in developing differentiated products Decrease in new housing starts in Japan
Commoditization of products Increase in labor cost and material prices
Direct customers Profit and loss structure vulnerable to change in external factors such as material Decrease in housing-related spending due to stagnant income levels in Japan
price/demand fluctuations Stagnant consumer sentiment due to the impact of COVID-19
Dealers House manufacturers
Sales agencies Construction
Building materials companies
wholesalers Architectural firms
Homebuilders Developers
Competitors
YKK AP Sankyo Tateyama products can also be coordinated to provide a seamless design Improve production efficiency
experience in the entire home. In FYE2020, while continuing to reduce stock keeping units
Major brands Leveraging the strengths derived from a simple organization (SKUs), we adopted a platform approach for exteriors and
structure that facilitates the rapid development, manufacture, and wooden interior furnishing materials, which contributed to
sale of products, we are now strengthening LHT’s competitiveness shortening product development periods, improving capital
by innovating new designs and technologies, as well as enhancing efficiency, and strengthening profitability. In FYE2021, we are
efficiencies in product development and manufacturing processes steadily reforming the window sash business and expect to see
by means of synergies within the Group. By relying not only on the the effects from the following fiscal year.
Interio Lassisa resources within LHT but by also establishing business alliances Enhance promotional activities
with other companies that possess different technologies and We will strive to expand sales of products designed to create
know-how, we will launch differentiated, high-value-added healthy, comfortable, secure and safe homes through awareness-
products in quick response to market needs. raising activities. These include, for example, how to prevent heat
stroke indoors, prevent heat shock during winter, and prepare for
Market Conditions In international markets, the building materials market – Key Initiatives for FYE2021 natural disasters such as typhoons. We will also strengthen the
despite having been particularly heavily affected by COVID-19 in appeal of our power brands, such as TOSTEM, among
In Japan, the number of new housing starts has been decreasing Asia – is expected to continue expanding in the medium to long Expand sales of products for the “new normal” consumers and influencers to help drive sales of high-value-
over the long term as a result of the country’s aging and shrinking term against a backdrop of economic growth and increases in In response to the changing needs of consumers due to the added products.
population. COVID-19 is expected to accelerate this rate of decline. population and income levels. impact of COVID-19, as well as to stimulate and capture demand Expand existing business fields
Under these circumstances, it has become more important to for renovation, we will strengthen sales of products that are Aiming to expand our presence in the growing market for highly
stimulate and capture demand for renovation, and building material Key Strengths touchless and reduce close interaction, enable improved affluent consumers, we are collaborating with international
manufacturers are expected to increasingly focus on this field. In ventilation, support working from home, and help users “switch manufacturers to launch products of exceptional quality,
the renovation segment, since the quality, performance, and design LIXIL Housing Technology (LHT) possesses a wide variety of on and off” between work and their personal lives. This includes, performance, and design. We will further pursue activities
of the products themselves are of great significance for the owner, products with high market share and a robust nationwide sales for example, our IoT postal delivery box, which reduces face-to- through the Business Incubation Center, which was launched in
understanding the end user’s preferences as well as differentiation network. LHT’s products are designed to contribute not only to face interaction with delivery personnel. April 2019, to quickly place highly innovative products on the
– through new products, services, and business models that meet improving the comfort of the home but also address key social market.
diverse needs – will be key. issues such as climate change. Due to their wide variety, LHT
26 27You can also read
