MESSAGE from the PRESIDENT

Every action we take is for the customer and for society as a whole.

　Guided by this approach, we aim to be a corporate group in which all Group employees around the world take pride in the TOTO Group Corporate Philosophy, find fulfillment in their work,engage in honest dialogue, and feel empowered to take on new challenges.

　With this aspiration, we will seek to deliver an enriched future to the next generation while co-creating new value with our stakeholders.

On April 1, 2025, I was appointed as the 18th president of the TOTO Group. Since then, I have visited our offices across Japan to communicate our management policies to Group employees. In my conversations with employees, I gained a greater sense of the pride they take in the words, “Kindness Must Always Come First,” which were written by TOTO’s first president Kazuchika Okura in a letter to the second president Saburo Momoki. These Words of Our Founder are ingrained in the heart of TOTO and serve as the source for the Company Mottos and Corporate Philosophy, forming an unbreakable bond that unites the Group’s roughly 35,000 employees. Seeing our Group employees across the globe embrace the Corporate Philosophy and engage in passionate discussion with each other on a daily basis, I feel that this is something that is truly unique to TOTO. The essence of this message is in the one simple word—“kindness.” Being kind means that we are useful to people. In my office visits, I repeatedly asked employees what they felt kindness means for TOTO in today’s world. As a company, we have defined the areas in which we want to demonstrate kindness as the three material issues adopted under Shared Value Creation Strategy TOTO WILL2030 (WILL2030): Cleanliness and Comfort; Wellness, Environment, and Relationships. Serving people and society as a whole—this is our raison d'être.

　The Words of Our Founder go on to stress the importance of providing good products that satisfy the cus­tomer and that profit is merely something that comes as a consequence of doing so. To that end, it is crucial to determine how we will invest this profit in new ways to serve society. For example, one pressing issue for us to focus on is reducing the CO2 emitted during the ceramic firing process through research into kilns powered by hydrogen. In my policy briefing sessions with Group employees, before discussing our business performance, I talked about the results of our efforts to reduce CO2 and conserve water. I did so in order to share the true pur­pose of our business activities and to align all parts of our operations with the Corporate Philosophy.

My first task after being appointed president was overseeing the entrance ceremony for new employees. In my speech at the ceremony, I shared a message of encouragement, urging new employees to establish a personal foundation from which they can grow their own branches. If each employee can find their own area in which they, as a professional, can demonstrate their best possible performance, that becomes the foundation on which they can pursue personal growth. Looking back on my career, my first such foundation was developing products for people with disabilities as an engineer in the WASHLET Production Division. In collaboration with a woman in her twenties who was left paralyzed after a traffic accident and could no longer use the toilet without assistance, I helped develop an easy-to-use remote control that featured four buttons: wash, flush, stop, and dry. When testing the prototype for this product, this woman shed tears of joying, stating that she could finally use the toilet on her own again. Although this was just one person, I felt that I had been of use to her and that her life had changed for the better. This experience brought me joy and made me realize the great responsibili­ties I had in my work. It also ingrained in me the importance of “Kindness Must Always Come First.”

Another foundation for me in my career was working as president of TOTO Vietnam Co., Ltd. At that time, employee retention rate and production capacity at the company were low—as was morale. Wanting to create a new team spirit under the concept of “working is more fun when we work as one,” I suggested we organize a group choreography to spell out TOTO in celebration of the 10th anniversary of TOTO Vietnam’s founding. Around 2,000 people arrived at the national stadium in Vietnam via 40 buses, and within 10 minutes we made a formation spelling out TOTO. Our performance received a booming applause from the roughly 2,000 employee family members who came to watch. Through the detailed communication we built up from the early planning stages, this successful experience helped employees realize that bringing joy to others can be a source of their own happiness. I believe it also gave them a true sense of accomplishment that comes from working together to achieve something as one team. Following this, they began to take pride in being a part of the TOTO Group and feel a sense of belonging, and started to work with more enthusiasm on the front lines. I also decided to express the TOTO Group Corporate Philosophy in simpler terms, “All for the customer,” to encourage employees to thoroughly consider if they are truly being of use to the customer and who exactly their customer is. By doing so, we started to see improvement in employee both retention rate and production capacity. When it came time for me to return to Japan, all employees of TOTO Vietnam surprised me by lining up to send me off. It was then I thought to myself how lucky I was to work with such a great team. Now, in my position as leader of the TOTO Group, I will strive to communicate the joy and excitement that comes from working for the sake of others to all Group employees around the world.

Fiscal 2025 marks the halfway point of TOTO WILL2030. At this juncture, we are starting to see clearly which areas are progressing well in each business and which are still facing challenges. Through an investigation and analysis of our success and failures, we have discovered that the speed at which we respond to change has been the underlying factor. Our goal of achieving over ¥1 trillion in sales by fiscal 2030 is not simply an idealis­tic target. Rather, it is a number that represents the collective satisfaction of TOTO fans around the world—and I firmly believe that it’s a goal we are fully capable of achieving. While remaining committed to this ultimate goal, we will make changes flexibly to our approach without hesitation, taking steps to reform our business structure as we push forward with efforts at full speed. To do so, we must identify needs with an awareness of who we want to enjoy our products and how we want them to do so, proactively preparing a variety of approaches in advance. Although the speed required for the Housing Equipment Business and the Advanced Ceramics Business differs greatly, they both share the same key to success: anticipating needs and responding promptly. To that end, we must accelerate the speed at which we make proposals in these businesses by drawing on the advancements of AI. However, our people, who possess insight and bold ideas, serve as the lifeblood of TOTO. We can make our organization stronger by empowering employees as individuals to engage in honest dialogue and close communication based on a conviction to “Kindness Must Always Come First.” Recently, we have revamped our executive team, who determines the direction of our organization. While I am still relatively young compared to other members, I will not hesitate to voice my opinion or take action. I believe that execu­tives, regardless of age or career history, should speak openly from the heart, as doing so helps accelerate decision-making and strategic execution, thereby strengthening the TOTO Group as a whole. I personally have seen many dramatic organizational changes at both our domestic and overseas locations. Based on this experi­ence, I believe the TOTO Group has limitless potentially if we can enable our employees to leverage their insight and generate ideas freely.

To truly accelerate our operations and realize open discussion, we must also pursue efficiency to deliver the best possible results with the least possible investment. To that extent, we will step up efforts to increase profits through Groupwide ROIC improvement activities, in which each employee pursues improvements with an awareness of capital efficiency.

I believe that rebuilding the Japan Housing Equipment Business and the Mainland China Housing Equipment Business is our most pressing issue. By boldly restructuring our position and establishing a foundation that supports Groupwide growth in both these regions, we will aim to achieve the targets of WILL2030.

In the core Japan Housing Equipment Business, we have steadily delivered results through ongoing cost reductions and flexible price adjustments. However, the impact of various cost increases has led to a decline in profits. We will therefore seek to reverse this trend by working to enhance profitability. To that end, we are pro­moting the sales of sustainable high-value-added products, advancing our “Anshin” Remodeling Strategy, and accelerating efforts to bolster productivity, thereby shifting to a highly profitable business structure resilient to changes in the external operating environment. In 1993, after Japan’s market for new housing had already peaked, TOTO made a bold commitment to its visionary Remodeling Declaration, shifting to a growth strategy focused on the market for existing housing. We take pride in the fact that we drove expansion in remodeling demand by doing so. As a company with the leading brand in Japan, we will continue to deliver new, untapped value to customers ahead of the curve, thereby making a lasting impact on society.

As a major step toward realizing the material issue Cleanliness and Comfort; Wellness, we launched NEOREST LS-W and NEOREST AS-W, two new products in our WASHLET integrated toilet bowl series, in Japan in August 2025, which are garnering a great amount of attention from the market. Equipped with the new Stool Scan function, the product automatically analyzes stool data and offers new proposals for daily wellness that can be confirmed through the TOTO Wellness smartphone app. If the habit of gaining health insights through daily toilet use becomes established, it will redefine the role and meaning of the bathroom space itself. This type of easily accessible health solution that can be pursued through daily living is a perfect example of the kindness that is unique to TOTO. Delivering new and exciting experience-based value to our customers is the essence of what we aim for under WILL2030. Guided by this aim, we will continue to explore the potential of daily wellness with a view to expanding solutions in kitchen and bathroom settings.

We have reflected deeply on the fact that our delayed response to rapid market changes in the Mainland China Housing Equipment Business has led to a decline in profitability. As our first step in rectifying the situation, we will focus our resources on areas in which we can leverage our strengths, centered on remodeling. In addition, we will reorganize our production structure by closing two of our four sanitary ware plants. Looking ahead, we will transition to a business model that generates stable profits through reforms to our production, sales, and product structures. As part of this process, we will aim to return to profitability in fiscal 2026, with the goal of significantly increasing profitability by 2030.

We have no intention to withdraw from the business due to the prolonged market stagnation and poor per­formance. Based on the desire to draw on the insight we cultivated in Japan to be of use to an even greater number of customers, we expanded into Mainland China in 1985. For the past 40 years since entering the region, we have taken great pride in the growth of our brands and businesses, which we have built up with the support of local governments, business partners, and outstanding local employees. Throughout the years, we have continued to refine our quality, functions, and services together with local employees who passionately uphold the ideal of “Kindness Must Always Come First.” By doing so, we have fostered a brand that is whole­heartedly trusted by customers across Mainland China. Our business in the region has been nurtured by the positive feedback we have received from many customers who have used our products for a long period of time, including “I really just love TOTO” and “I am so glad to be using TOTO products.” The trust and support we receive from our customers will be the driving force behind our efforts toward business restoration. Moving forward, we will undertake dramatic reforms so that we can continue to be a company loved by our customers.

Meanwhile, the Americas Housing Equipment Business has been on a growth trajectory, gaining strong momentum. There are many who believe that this rapid growth was the result of increased demand for WASHLET toilets during the COVID-19 pandemic, but this success is not something that happened overnight. When we first entered into the Americas, we faced issues with promoting marketing activities and building cus­tomer contact points. It also took an extremely long time for WASHLET to gain traction in the market. Even amid these challenges, we continued to invest manpower and capital and steadily planted seeds for the business by continuously communicating the value of our brands. Through this persistence, we began to see success. An increasing number of customers began to use social media to convey their experience using WASHLET, and this helped spur an increase in demand. In addition, during the holiday season, our products began ranking among the top sellers on major e-commerce platforms. When I was serving as president of TOTO USA, Inc., I was surprised to see that WASHLET products were being purchased not only as part of new home purchases but also as gifts—signaling a new purchasing motivation.

For us at TOTO, customers purchasing our products is not the end but rather the beginning of a long-lasting relationship. Our service people, who embody the Corporate Philosophy of “Kindness Must Always Come First,” play a crucial role on the front lines in protecting the trustworthiness of our brand. In 63 metropolitan areas with populations exceeding 300,000, we have not only established customer contact points through showrooms and retail stores but also expanded our network for after-sales services. In these ways, we have been working to provide comprehensive support—from product selection to installation and repairs—and create an environment in which customers can rely on TOTO at any time. After-sales services are a crucial element for achieving growth—not only in the Americas—as we strive to prevail amid increasingly fierce competition. In 2025, we held the 2nd World Service Masters competition at our headquarters in Kitakyushu. At the competition, outstanding service staff from around the world, including representatives from the Americas, gathered after advancing through regional qualifying rounds. By competing against one another, these staff members inspired each other to further improve their own skills and customer service capabilities. Looking ahead, we will continue to enhance the quality of our products and services with the aim of accelerating our growth. By doing so, we will better establish the Americas Housing Equipment Business as an engine for growth in the Global Housing Equipment Business.

Following the Americas, our Asia and Oceania Housing Equipment Business is also gaining strong momentum. It spans a diverse set of regions, including high-growth markets with young populations such as India and Vietnam, developed markets like the Taiwan Region and Australia, and Middle Eastern countries such as Saudi Arabia, where numerous large-scale projects are underway. We are therefore confident in the continued growth potential of this business moving forward.

In fiscal 2024, the Europe Housing Equipment Business finally achieved the milestone of achieving profit­ability as a local subsidiary. At International Sanitary and Heating (ISH) 2025, one of the world’s largest interna­tional trade fairs, held in Frankfurt, Germany, we held exhibits alongside some of Europe’s most distinguished, long-standing manufacturers. In Germany, we have strengthened collaboration with plumbing professionals, and in the United Kingdom and France, we have been growing our track record of supplying five-star hotels. These efforts have helped us enhance our presence as trendsetters in Europe.

The Advanced Ceramics Business has grown into a solid pillar of TOTO’s operations, with a rapid 85% year-on-year increase in operating profit in fiscal 2024. By leveraging the technologies cultivated through the production of bathroom and kitchen plumbing products and refining our advanced ceramic technologies over the past 40 years, we have built a unique and unmatched presence in the Advanced Ceramics Business. In this business, we offer a broad range of products for semiconductor manufacturing equipment, including electrostatic chucks, aerosol deposition (AD) components, and structural components, and have maintained stability in growth within the highly volatile semiconductor market. This market has a unique cycle of volatility, and we are facing intense competition in terms of the speed of development and production. To overcome these circumstances, it is essential that we prepare solutions for our customers that we can propose in a timely manner. For this reason, promoting technological development and products that anticipate needs well into the future is vital to our suc­cess. Also, facilitating honest discussion between members of the product and development divisions and fos­tering close collaboration with our customers are efforts that are directly linked to accelerating the speed of innovation. To that end, we will aim to achieve further growth by actively investing resources to bolster our R&D structure and evolve our smart factories, with a view toward the promising future of the semiconductor market.

Our financial strategy prioritizes investments based on their underlying purpose. Specifically, we aim to con­centrate investments in growth segments in order to enhance TOTO’s economic value.

To that end, we remain committed to proactively investing in future business growth, such as introducing highly efficient sanitary ware production equipment in the Americas Housing Equipment Business, expanding production capacity in the Advanced Ceramics Business domain to keep pace with market growth, and develop­ing next-generation products. Meanwhile, in consideration of our aim to enhance our social and environmental value, investments to reduce CO2 to achieve carbon neutrality by 2050 are indispensable. This kind of invest­ment approach is rooted in sustainability management. The profits we generate by addressing our three mate­rial issues and delivering unique value through our business activities will be reinvested in initiatives that help build a more sustainable society and a healthier planet for future generations. As we celebrate our 108th anni­versary, we will continue to pursue growth by setting in motion a cycle of value creation, so that we remain a company that is needed by society well into the future.

Our business activities are made possible through the support of our stakeholders, who act as our “fans.” In Relationships, one of our key material issues, we will sincerely work with stakeholders and strive to enhance value for each of them.

For customers, we will provide products that offer Cleanliness and Comfort; Wellness to create lifelong fans of the TOTO brand. For our stakeholders and other investors, we will not only seek to return profits through the issuance of dividends but also acquire treasury stock while taking into consideration capital costs, Stock price levels, and other factors. Furthermore, we will promote appropriate cash allocation that contributes to improvement in earnings per share, alongside the execution of growth investments. In fiscal 2025, we have decided to repurchase and cancel a portion of our treasury stock in consideration of such factors as the level of cash on hand and share price at the start of the period.

We aim to build even stronger partnerships with our business partners by sharing goals related to environ­mental and human rights initiatives, working together toward mutual growth and prosperity. For local commu­nity members, we will continue efforts to create enriched local communities while ensuring an understanding of our business activities.

Our people represent the source of the TOTO Group’s value creation. Accordingly, we will create an environ­ment that ensures employees can take pride and find joy in their work, encourages teamwork among them, and helps them build long-term careers. As the leader of the TOTO Group, I will lead by example under the slogan, Pursue your dreams, never give up in the face of challenges, and persevere until your goals are achieved. By doing so, I hope to create and pass on to the next generation an environment where all employees can take on challenges without hesitation. With our roughly 35,000 Group employees working together under our Corporate Philosophy, we will seek to increase the number of TOTO fans in each country and region around the world, while delivering greater kindness to them. As a global organization comprising diverse and strong individuals united through an unbreakable bond, we pledge to give our all for our customers and help create a more prosperous and comfortable future society.