LIXIL is the most comprehensive and connected global company in the housing and building industry, delivering human-centric innovation that enhances people's living spaces.
Six years have passed since LIXIL Group Corporation adopted the corporate governance model of a "Company with Nomination Committee, etc." For the first five of these years the Group was led by former CEO Fujimori. LIXIL Group aimed for growth based on long-term management strategies, not only in the domestic Japanese market where room for growth is limited due to the declining population, but also through the expansion of business operations overseas. This vision for growth was shared by the Board of Directors. As a result, the LIXIL Group expanded its overseas businesses, which previously represented only a few percent of revenue, to 30 percent.
The long-term vision is shared between the Board of Directors and executive officers, and the Board of Directors verifies if management decisions are appropriate. This is the concept of governance held by the LIXIL Group.
We strengthened our auditing function having reflected on the fact that we could not prevent inappropriate accounting issues from occurring at Group companies in China. A system called "Speak Up!" has now been established, enabling employees overseas to directly report to Tokyo headquarters about any concerns in business operations. This allows us to grasp the details of problematic issues. In addition, we have unified our global crisis management processes to deal with issues that may arise.
CEO Seto's management, which pays attention to detail, has shed light on various issues and those issues have been cleared one by one. Following the discovery of performance issues in South Africa, the business was improved and South Africa operations returned to profitability. In Europe, a shower toilet developed and launched under the GROHE brand has made a positive start in the market. In the United States, American Standard recovered its momentum and has achieved solid results. In Asia, the LIXIL Group is expanding sales, taking advantage of the region's strong growth.
In Japan, we released the world's highest-performance heat insulating products for the windows business. We support construction companies with the expansion of ZEH (Net Zero Energy Housing) by designing and supporting ZEH construction with high-performance insulation and excellent earthquake-resistant products. In the kitchen business, sales of new ceramic countertops have grown rapidly, contributing to improved business performance. In addition, the ceramics business has also been performing well, supported by the introduction of sanitary ware products featuring ceramics that prevent stains.
With the aim of enhancing governance functions, we conducted an assessment of the effectiveness of the Board of Directors and ideas for improvement were discussed. As part of this initiative to improve supervision by the Board of Directors, the board resolved to limit the number of people who concurrently serve as a member of the board and the Executive Officers Meeting, which resulted in the CEO being the only executive officer who remains as a member of the Board of Directors. In addition, Mr. Hidehiko Sato stepped down from the Board of Directors after five years of contribution and Mr. Hiroto Yoshimura has joined the board in his place. Mr. Hirokazu Yamanashi has been appointed as Chairperson of the Nomination Committee, succeeding Mr. Sato. Also, Lady Barbara Judge has been appointed as Chairperson of the Compensation Committee.
The Board of Directors will continue to enhance governance through deeper understanding of business operations, sharing issues through regular discussions among outside directors and by exchanging opinions with the Chief Executive Officer.
Chairman of the Board