MESSAGE from the PRESIDENT

With the TOTO Group Corporate Philosophy as an unbreakable bond, Group employees around the world will make a powerful leap forward and soar high on the winds of growth.
　We will co-create new value together with stakeholders and continue to be a company that is essential to society. 

In fiscal 2025 we achieved record-high net sales and operating profit. These results, however, were not accom- panied by any sense of exhilaration or accomplishment. Simply put, it was a year of perseverance and prepara- tion during which we had to make some difficult decisions and take some painful measures. A representative example of this was the reorganization of production sites and closure of two sanitary ware plants in China (TOTO (Beijing) Co., Ltd. and TOTO East China Co., Ltd.). This was a tough decision that we made in order to rebuild the Mainland China Housing Equipment Business, which is facing major challenges.
　It was a heart-wrenching experience to ask approximately 2,000 of our colleagues, who had long worked to build trust in the TOTO brand in China, to accept retirement or reassignment. I was prepared for a backlash, but many of them immediately accepted the Company’s decision with the attitude that if it means TOTO can advance to the next stage, they would cooperate. More than 100 of those employees transferred to participate in the launch of a new plant in Liaoning, and others volunteered to transfer from other production sites as well. In China, relocating one’s homebase to a different province is not a simple matter; it involves changes to the foundations of one’s life and social security programs.
　I have vowed to express as much gratitude as possible to everyone who takes pride in TOTO as a company, and acts based on that pride, and to honor their commitment by transforming the business into one that once again generates stable profits as a beloved brand.

There was also some happy news, though. In November 2025, cumulative shipments of WASHLET^® products surpassed 70 million units. Furthermore, in December the word “Washlet” was added to the Oxford English Dictionary, one of the world’s most authoritative dictionaries. These two events symbolize how WASHLET^® is becoming a truly global standard.
　The response from Group employees was considerable, with such comments as “I am proud that our prod- ucts have taken root broadly as a part of everyday culture” and “I hope to make products worthy of a term that has become a part of the world’s shared lexicon.” After nearly 40 years of selling WASHLET^® products overseas, refining designs and technology, and sowing the seeds to increase awareness of these products, our efforts are finally bearing fruit.
　I was once assigned to the WASHLET^® development division and served as head of global business. Having witnessed firsthand the efforts of my predecessors and colleagues as they worked tirelessly to raise awareness of these products, I am deeply moved to see them finally recognized by the world. That said, we are still only at the threshold of full-scale popularization. Now we must devote our full energy to making the WASHLET^® loved by even more people.

Our financial strategy clarifies the underlying purpose of each investment, in other words, what it is for, and allocates cash optimally between strategic investment and shareholder returns. We optimize investment in the base segments, which are in a period of structural reform, but it is the growth segments where we seek to allo- cate the most cash. In the new business domains, which serve as growth drivers for the Group, we decided to make large-scale investments to strengthen R&D and mass-production capabilities against the backdrop of expanding demand for AI semiconductors and other such products. We will proactively strengthen our R&D and production capabilities at the Chigasaki and Nakatsu Plants as well as the Buzen Plant, where a new building is being constructed, to capture the expansion of the semiconductor market as growth for the Group, thereby powerfully driving the growth segments forward.
　In the Global Housing Equipment Business too, we are investing in the development of new WASHLET® prod- ucts, the recognition of which is increasing worldwide, and investing in the transition to smart factories to improve production efficiency. Regarding shareholder returns, we have adopted an approach that focuses strongly on maximizing capital efficiency and reliably increasing earnings per share. To achieve this, in addition to maximizing cash obtained in business, we will appropriately allocate resources, including the planned sale of cross-shareholdings, to create an effective cycle that leads to further growth and returns.
　In fiscal 2025, taking stock price levels and other factors into account, we conducted flexible share buybacks, cancelled treasury shares, and increased the year-end dividend. In the current fiscal year too, we will demon- strate our commitment to take on the ambitious goal of achieving record high performance for the second con- secutive fiscal year while reliably distributing the gains to shareholders. By continuously driving both growth investment that will open up the future and active shareholder returns, we will achieve sustained enhancement of shareholder value over the medium to long term.

The Advanced Ceramics Business achieved record high net sales and operating profit in fiscal 2025, reaching the targets initially set in STAGE 2 one year ahead of schedule. Against a backdrop of a strong advanced semiconduc- tor market and expanding demand, electrostatic chucks and aerosol deposition (AD) components, which are semiconductor manufacturing equipment parts, are expanding at a pace worthy of the growth segment status. The high yields and highly profitable business structure created from technological innovation and the transition to smart factories is a major strength of the TOTO Group.
　As the semiconductor industry dramatically evolves and expands, we have been recognized as a core partner that supplies key components to makers of semiconductor manufacturing equipment. In addition to conducting R&D by anticipating trends that will be necessary several steps in the future, we are already achieving techno- logical development that is several generations ahead, with our eyes on the AI era of the 2040s to 2050s. We have used this foresight to build relationships of trust with customers as partners envisioning the future together, and those relationships have become our greatest strength for winning amid fierce and speedy competition.
　In production and quality management, we share data regarding plant operating status and quality with customers, creating a mechanism that enables both sides to understand conditions in a timely manner and take immediate action. This advanced R&D and production and quality management are directly linked to the evolu- tion of semiconductor manufacturing processes, increasing opportunities for us to take on, in an integrated manner, not just the manufacture of components as in the past, but associated processes. We will use our unique relationships of trust as a strength and make upfront investments in R&D and increased production capacity with the aim of achieving further leaps forward.

The NEOREST LS-W with a new stool scan function was launched in Japan in August 2025 and won both the Overall Grand Prix and Gold Award in the Smart Wellness Appliances Category of the Home Appliance Awards 2025–26, which are selected through public voting, becoming the first toilet product ever to achieve this double award. The enthusiastic responses received from consumers, including such comments as “I have been waiting for a world where the toilet can help me take care of my health,” are a sign of the expansion of possibilities in the housing equipment business and represent a first step toward the “Daily Wellness” that we advocate.
　Pursuing a high-profit business structure is important, but relying solely on efficiency improvements will eventually lead to limitations on future growth. We want to feel excitement about taking on challenges that no one in the world has ever attempted. Creating products that naturally support healthy living as a part of day-to-day life without people even being aware of it is an aesthetic that we at TOTO value. The idea of using data collected by a toilet has opened a new door for our housing equipment business in the form of the data business.
　Going forward, we will combine sensing technology that measures physiological data with bathroom, kitchen, and washroom spaces to propose additional products to a wide range of customers. Also, there is opportunity in diversifying the value that we provide by engaging in co-creation with external collaboration partners, such as security services for the elderly, meal delivery services, and nursing care facilities, with infinite potential as a BtoB model. As a pioneer opening up new markets, the possession of groundbreaking and iconic products is one of our great strengths. My goal is to energize the daily wellness market by creating synergies with other indus- tries, and through entry by competitors, developing it into a major area with high growth potential.

The TOTO Group’s sustainability management tackles the challenges of elevating the aspirations of our prede- cessors into the possibilities of the future. While firmly holding onto our Group Corporate Philosophy, which serves as a pillar, we seek transformation on a higher level that goes beyond extending what we have already done in terms of both social and environmental value.
　To contribute to the creation of a sustainable society, we are pursuing zero CO2 emissions in sanitary ware manufacturing. Since 2026, the TOTO Sanitechno Ltd. Kokura Plant in Kitakyushu City has been conducting full- scale operation of a production line that reduces CO2 emissions during firing by combusting green hydrogen with city gas. Equipment for producing green hydrogen was installed on-site at the plant, strongly driving our efforts to contribute to the realization of carbon neutrality by 2050.
　The entire Group will continue its efforts to enhance our business activities and the value of each while engaging sincerely with all stakeholders who support us. This means collaborating with business partners to build even stronger partnerships, sharing targets for environmental and human rights initiatives, and pursuing relationships of mutual growth. It also means engaging with the local communities where we operate to help them thrive and prosper while gaining their understanding of our business activities.
As for shareholders and investors, we will respond in good faith by enhancing economic value and shareholder value over the medium to long term through appropriate capital allocation aligned with the financial strategy I discussed above, as well as proactive shareholder returns. The TOTO Group is achieving steady growth by making suitable investments in both the Global Housing Equipment Business and new business domains, each operating under unique market conditions, and by encouraging every individual to continuously improve their own work.
　I hope that we can take on challenges freely, without being swayed by changes in the business environment and with belief in our Group Corporate Philosophy and vision. I want TOTO to continue being a company that is forever needed in countries and regions around the world. To that end, based on their strong bonds with one another, I want our approximately 32,000 Group employees to continue their efforts to build an affluent and comfortable world by delivering even greater kindness.