Message from the CEO

[Photo]Shigetaka Komori Chairman and Chief Executive Officer

Modern society faces a wide range of issues, such as poverty, hunger and environmental pollution. Each of these issues must be treated as problems facing the entire international community, and efforts must be made to solve them. In the process, I believe that companies have a responsibility to contribute to the solution of social issues through their business activities; that is, by providing their technologies, products and services. As valued members of society that contribute in these ways, companies are expected to remain in business over the long term and achieve continuous growth into the future as going concerns.

The Fujifilm Group was founded with the aim of manufacturing photographic film in Japan. Since our founding, we have encountered challenges such as the loss of a large part of the market for photographic film due to advances in digital technology. However, the Group has always overcome those challenges through ceaseless efforts. We have continued to grow by driving innovation and dramatically transforming our business models. We have reshaped our business portfolio according to changes in society. However, we have maintained an unwavering commitment to solving social issues through our business activities. This unwavering commitment has been handed to successive generations.

In 2017, FUJIFILM Holdings unveiled Sustainable Value Plan 2030 (SVP2030), a new CSR plan that reaffirms and clearly articulates this commitment. SVP2030 is consistent with the Sustainable Development Goals (SDGs) adopted by the United Nations for the year 2030. Under SVP2030, FUJIFILM Holdings will emphasize efforts to resolve social issues in the four fields of the “environment,” “health,” “daily life” and “work style”; strengthen CSR foundations in terms of environmental, ethical and human rights issues affecting the whole supply chain; and achieve further penetration of an “open, fair and clear” corporate culture as a corporate group.

In addition, the medium-term management plan VISION2019 is a concrete action plan to achieve SVP2030.

The VISION2019 maps out each of our businesses to the following three stages according to their growth phase: (1) improving profitability, (2) accelerating growth, and (3) investing for the future. Key measures are improving profitability to generate stable cash flow, accelerating the growth of main business areas to expand revenues and profits, and investing in businesses that will constitute the pillars of our future business operations. Through these measures, we will further enhance the business portfolio we have built to date.

In the fiscal year ended March 31, 2018 (FY2018/3), we implemented M&As in growth fields, particularly healthcare, and pushed ahead with structural reforms aimed at strengthening our business operations in the Document Solutions segment. Steady progress has been made on allfronts. Sales grew in the electronic imaging business, medical systems business, electronic materials business and other areas. Excluding one-time expenses related to structural reforms and others, performance has been progressing steadily against the medium-term management plan. In the fiscal year ending March 31, 2019 (FY2019/3), the plan’s second year, we will further accelerate activities to achieve the targets of the plan.

In order to continue to drive sustained growth as a company, it will be essential to develop technologies from a medium- and long-term perspective and execute upfront investments such as M&A deals.

The Group is also proactively investing in growth areas such as healthcare and highly functional materials, and will continue to execute these growth investments. In June 2018, we acquired Irvine Scientific Sales Company, Inc. and IS JAPAN CO., LTD. Both companies are leaders in cell culture media, which are essential to regenerative medicine. With these acquisitions, we will further accelerate business development in the areas of regenerative medicine and biopharmaceuticals. We will also spearhead the industrialization of regenerative medicine by strengthening collaboration with government and academia. By supplying products that address unmet medical needs for diseases that do not yet have effective treatments, we will contribute to the solution of social issues.

M&A is an effective means of enabling a company to “buy time” by gaining access to business resources that it does not possess internally, in order to accelerate business growth. To draw an analogy with trekking a mountain, M&As enable a company to start trekking not from the first station at the base of the mountain, but from the fifth station halfway up the mountain. If the strengths of both parties can be combined, the company could trek to the summit all at once. Based on consideration of various conditions, such as whether or not the cost effectiveness of an M&A deal is appropriate, the Group will proactively implement M&As, while taking full advantage of the technologies and other resources that it possesses, in order to nurture businesses that will support its future.

In the Document Solutions segment, we strengthened governance in response to an incident of inappropriate accounting at overseas sales subsidiaries of Fuji Xerox in New Zealand and Australia. In addition, we will continue to steadily implement the structural reforms we announced in January 2018, with a view to achieving a lean and resilient management structure.

Moreover, guided by Smart Work Innovation, a strategy that provides new value, the Group will provide solutions and services that leverage artificial intelligence (AI) and Internet of Things (IoT) technologies. By doing so, the Group will provide support for boosting office work efficiency, creative work-style reforms, and strengthening corporate competitiveness, which are priorities shared by many companies, thereby expanding its business.

There has been a wide range of reporting on the possible management combination of Fuji Xerox and Xerox Corporation. Our approach to this issue has consistently remained unchanged. If the scheme approved by both companies in this January is accepted, I believe that we will be able to strengthen business in an ideal manner for both parties.

The Fujifilm Group positions strengthening the Document Solutions segment as a top priority. To this end, we will see structural reforms at Fuji Xerox through to the very end as we proactively implement growth strategies. In the process, we will drive growth in the Document Solutions segment, ensuring that it serves as a stable earnings base for the entire Group.

The Fujifilm Group has set a clear course of aiming for sustained growth. To achieve this growth, it will be crucial to coordinate the leadership of management with the frontline operations responsible for executing business activities.

To do so, our global workforce of approximately 78,000 employees must conduct themselves responsibly as members of the Fujifilm Group. FY2018/3 was a year in which we made every effort to strengthen governance in response to the inappropriate accounting at certain overseas sales subsidiaries of Fuji Xerox.

In FY2019/3, we appointed a new female director and established the voluntary Nomination and Remuneration Advisory Committee chaired by an independent outside director. We will work to strengthen the system to enhance the decision-making transparency of the Board of Directors. Concurrently, we will once again rigorously instill the spirit of “open, fair and clear,” as laid out in the Group’s vision, throughout the Fujifilm Group worldwide.

The Fujifilm Group will conduct business fairly at all times and will provide innovative products and services leveraging cutting-edge, proprietary technologies. By doing so, the Group will constantly move forward as an enterprise that contributes to the solution of social issues and achieves continuous growth.

We ask for the continued support and understanding of all our shareholders as we endeavor to reach our goals.