kao overview · by providing unique, high value-added skin care brands including bioré, as well as...

KaoOverview

*References to “Kao” in this report refer to the Kao Group. Any other Kao company is referred to specifically in full.

14-10, Nihonbashi Kayabacho 1-chome, Chuo-ku, Tokyo 103-8210, JapanCorporate Communications

Published May 2018

Kirei—Making Life Beautiful The Japanese word “kirei” means beautiful or clean, not only on the outside but also on the inside. For us at Kao, Kirei is the value we want to bring to everyday life with our brands, products and services. The little moments you enjoy, like the comfort of freshly washed sheets, the happiness you share with a smiling baby, the confidence you feel when you look in the mirror and see not only healthy skin and hair, but also your inner beauty shining through. The special pleasure that comes from using products you know have been crafted with care both for you and for the environment. We believe these moments and the positive feelings you share with others have the power to shape the future. We want minds, lives and society to be Kirei—Making Life Beautiful.

Toward a Global Presence

The Kao Way

CEO Message

* We define Yoki-Monozukuri as “a strong commitment

by all members to provide products and brands

of excellent value for consumer satisfaction”.

The Kao Group has made the Kao Way, the

Group’s corporate philosophy, the foundation

of all of its corporate activities. Our mission is

to strive for the wholehearted satisfaction and

enrichment of the lives of people globally and

to contribute to the sustainability of the world.

Since our foundation in 1887, we have

delivered products to people worldwide

through both our Consumer Products

Business, which contributes to cleanliness,

beauty, and well-being in everyday life, and

through our Chemical Business, which

contributes to the growth of a variety of

industries.

In fiscal year 2017, we launched the Kao

Group’s Mid-term Plan (K20) with the aim of

becoming a company with an even stronger

global presence. Our K20 goals include

developing a distinctive corporate image,

promoting profitable growth, and delivering

a high level of returns to stakeholders. We

also want to contribute to the sustainable

development of society through our ESG

initiatives. This requires environmental

consciousness, corporate activities aimed

at creating a society where people can live

life to the fullest, and operating under strong

corporate governance.

The Kao Group will continue to anticipate

changes in the times and people’s lifestyles.

Through consumer engagement and our

heartfelt Yoki-Monozukuri*, we will work

toward a more beautiful future for people and

the earth.

Michitaka SawadaPresident and Chief Executive Officer

Kao Overview 20182

Yoki-Monozukuri at Kao

We put our heart into our products. They’re our way to make your day better, brighter, and more beautiful.

Kao Overview 2018 Kao Overview 20184 5


Kao is developing products based on its research into the various special properties of foam, including foam’s ability to create a rich lather and rinse effectively, as well as the way it absorbs and captures dirt. For example, Bioré Foaming Hand Soap utilizes long-lasting, fine micro bubbles to provide a strong cleaning power that is gentle on the skin.

Product development at Kao starts with exhaustive surveys of local lifestyles. In Indonesia, for example, we found that many households wash laundry by hand and that the hardness of the local water makes it difficult to thoroughly clean clothes. Attack Jaz1 uses new technology developed by Kao to deliver superior washing power to local consumers.

Researching the essence of a gentle and thorough-cleansing foam

Attack Jaz1, created based on an Indonesian lifestyle survey

Creating new value through a consumer driven approachKao’s Consumer driven approach is expressed as Yoki-Monozukuri, a fundamental commitment

to user satisfaction. Yoki-Monozukuri results from painstaking quality assurance by all employees.

This stance, which dates all the way back to our founding, enables us to offer products of unique

value that bring a breath of fresh air to everyday life.



Consumer feedback generates products thattruly resonate The Genba is where the action is, on the front line of everyday business life. Kao is committed to

understanding every aspect of how people actually live: their lifestyle Genba. To offer people an

even better, more satisfying lifestyle, we must listen to those who use our products, and identify

exactly what they want, their fundamental needs. By using this information in the development

process, we can deliver products that both delight and surprise.

The Raku-raku Eco Pack Refill was developed in response to consumer calls for a convenient way to refill high viscosity products. The pack is easy to open and helps to reduce waste. You simply set it upside-down on top of the bottle for a quick refill with no spills and no liquid wasted.

CuCute CLEAR Foam Spray is a new type of dishwashing detergent that uses a simple spray to clean dishes that may be difficult to wash with a sponge. Since the product’s launch, feedback has been positive. Consumers enjoy the ease of not having to use a sponge as well as the convenience it brings to washing items like drinking cups with attached straws, which are used in caring for elderly family members.

The Raku-raku Eco Pack Refill, so easy to use

CuCute CLEAR Foam Spray removes stains from dishes without the need for a sponge


By providing unique, high value-added skin care brands including Bioré, as well as hair care brands like Merit, Essential, and John Frieda,we help consumers achieve truly healthy and beautiful skin and hair.

We offer unique brands such as Sofina, Kanebo, and Curél. Our globally available products use advanced technology to serve diverse beauty desires as well as help them resolve recurring skin problems.

We believe in the beauty of everyday living

The Human Health Care Business offers a broad selection of products such as Healthya, a functional health beverage developed through many years of research. Designed to contribute to a comfortable and healthy life, products range from, Laurier sanitary napkins and Merries baby diapers to oral care items such as Pure Oral.

The Fabric and Home Care Business provides products that boost cleanliness and comfort in everyday life. Fabric care brands include Attack laundry detergent and Flair Fragrance fabric softener, while home care products include CuCute dishwashing detergent and Magiclean household cleaner.

Consumer Products Business


Skin Care and Hair Care Business

Cosmetics Business

Human Health Care Business

Fabric and Home Care Business

Innovative technology that contributes to industrial development

Chemical Business


The Chemical Business offers an array of products including oleo chemicals and derivatives, surfactants, high-performance polymers, and fragrances. It continues to grow by developing and supplying industrial products to a wide range of businesses both globally and within the Kao Group. Paper and pulp, food, pharmaceuticals, civil engineering and construction, information materials, and electronics are among the many industries our products support.

Chemical Business

MIGHTY is a high-performance water-reducing additive that makes possible high-quality concrete featuring superior usability. This product responds to requirements in the civil engineering and construction industries for high-strength, high-durability concrete.

A water-reducing additive for high-strength,

high-durability concrete

New silica dispersion improver

essential for fuel-saving tires

High-quality, water-based pigment inkjet ink

that reduces environmental impact

* VOC: Volatile Organic Compounds

Kao’s new silica dispersion improver contributes to CO2 reduction by balancing both the fuel-saving and wet-grip performance of tires to the highest possible standards, using Kao’s interface control technology.

BRIDGESTONE

REGNO GR-Leggera

InformationMaterials

CivilEngineering and

Construction

Plastics and Rubbers

LubricantsDetergents, Perfumes, Cosmetics

FragranceMetal CastingColorantsPaper and Pulp

Pharmaceuticals

PolyurethanePrecision

Industries andElectronics

Agrochemicals

Food Products

Using new pigment nano-dispersion technology, Kao developed a water-based pigment inkjet ink thatenables high-speed, high-quality printing on clearfilm. Its VOC*-free designalso contributes toreducing impact to theenvironment.

Canada

USA

Mexico

Brazil

South Africa

Korea

China

Hong Kong

Vietnam

Thailand

Malaysia

Singapore

Indonesia

Australia

New Zealand

Japan

Taiwan

The Philippines

Sweden

Finland

Russia

Denmark

Norway

Germany

The Netherlands

UnitedKingdom

Spain

France

Belgium

Switzerland

Italy

Austria

Czech Republic

Asia

Europe

Americas

Our Consumer Products Business addresses

cleanliness, beauty, and health, while our Chemical

Business supports the growth of a variety of

industries. Kao is working to expand globally while

developing a synergy in these two fields.

Providing high-value products and ser vices in some 100 countries and areas

Global Expansion


Chemical Business

Consumer Products Business

Principal Locations and Business Development

To help ensure that people can continue to live comfortably in the future, Kao is engaged in a number of efforts to preserve limited resources. These efforts include expanding the use of plant-based, recyclable resources; introducing refill products to reduce the amount of plastic used; and developing easily recyclable, user-friendly containers.

Protecting the natural environment and resources, as well as procuring raw materials with the future in mind

In addition to offering products that make clean, hygienic lifestyles possible, Kao is also expanding its collaboration with various stakeholders to promote activities that both build healthy habits and improve hygiene awareness. For example, in Japan and other parts of Asia, Kao conducts hand-washing education programs that allow children to have fun while learning the correct way to wash their hands.

Helping people worldwide achieve clean, hygienic lifestyles

Sustainability

To a brighter future, for you and the worldWith its Sustainability Statement, Kao has clarified its commitment to contributing to the

resolution of global social issues through its business activities. We have identified main

themes—including resource efficiency, as well as cleanliness and hygiene—and are dedicated

to ensuring a brighter future for both people and planet.


Global Commitment

The United Nations Global Compact

Participation in the United Nations Global Compact represents a commitment by corporations around the world to support and act in accordance with ten key principles relating to human rights, labor, the environment, and the prevention of corruption. Kao has been engaged in the Global Compact since 2005.

Con

sum

er P

roduct

s B

usi

nes

s

Chem

ical B

usiness

Beauty Care B

usin

ess

¥586.0 billion 39.3

%

Human Health Care Business

¥294.3 billion 19.8%

Fabr

ic a

nd H

ome

Car

e B

usi

nes

s

¥335

.7 b

illio

n 2

2.5

%

Chemica

l Business

¥310

.3 billion 18.4%

¥1,489.4 billion

Consolidated Net Sales

Fiscal year ended December 31, 2017

Net Sales by Segment

Cash Dividends per Share

28

20181887

History131years

PATENTED

R&D Expenses

56.7billion yen

Consolidated Operating Income

¥204.8billion

33,560(As of December 31, 2017)

Consolidated Number of Employees

Number of Patents Held

No.1 among Japan’s public companies

consecutive fiscal years of increase

Fiscal year ended December 31, 2017

16,732

Kao Group by the Numbers

2017 Highlights

JuneKao decides to build a new aroma chemical manufac-turing facility at Pilipinas Kao Inc. (the Philippines), with completion scheduled for autumn 2018.

JuneKao decides to reorganize its sales-related subsidiaries within Japan and establish new companies that specialize in beauty counseling (operation began January 1, 2018).

FebruaryKao included in the FTSE4Good Index, a global SRI index, for the 10th consecutive year.

MarchKao selected for inclusion in the World’s Most Ethical Companies list for the 11th consecutive year.

JanuaryKao wins the Grand Prix at the Tokyo Stock Exchange’s 5th Corporate Value Improvement Award.

SeptemberKao and Fujifilm successfully develop“HD3 Dye Technology” a non-reactive,long-lasting hair dye through joint research.

NovemberConstruction of a new production building for beauty care products at Kao’s Hsinchu Plant (Tai-wan) completed.

DecemberKao announces acquisition of US company Oribe Hair Care, the owner of a super-premium brand for the professional salon segment.

JulyKao chosen for the new ESG indices FTSE Blossom Japan Index and MSCI Japan ESG Select Leaders Index selected by GPIF.

SeptemberKao selected for inclusion in the Dow Jones Sustainability World Index (DJSI World) for the fourth consecutive year.

Since the fiscal year ending December 2016, Kao has subscribed to International Financial Reporting Standards (IFRS). The composition of net sales shown on the graph is calculated based on net sales to external customers. Net sales for the Chemical Business includes internal sales between segments.


Kao Products that Changed Everyday Life Kao’s Yoki-Monozukuri began in 1890, with the introduction of Kao Sekken, a quality facial soap

made in Japan. In the 128 years since then, Kao has continued to generate dozens of innovative

products that have transformed everyday life.


Bioré

1980A new type of facial cleanser,

pH-neutral and gentle on the

skin, created as an alternative

to bar soap.

1985 2004 2009

By popularizing the word

“shampoo,” Kao changed hair-

washing habits in Japan.

Kao Shampoo

1932With quality to rival imported soaps of the

time, Kao Sekken, won fans nationwide.

Kao Sekken(Kao Soap)

1890

Merries

1983Baby diapers that offered absorbency,

leak prevention and a sensation of

dryness not found in cloth diapers.

1887

Kao Industrial (Thailand) Co., Ltd.

established as Kao’s first company

outside Japan.

1964

1960s 1980s1900sKao predecessor

Nagase Shoten founded

Kao announces Kao Environmental

Statement and unveils new corporate identity.

2000sKao Soap Co., Ltd.

renamed Kao Corporation.

Launch of the Kao Way, a

statement of the Kao Group's

corporate philosophy.

Quickle Wiper

1994A new floor cleaner for modern lifestyles.

Quiet, easy cleaning for all, whenever it was

needed.

Providing thorough cleaning with savings

in time and water usage, Attack Neo

offered an environmentally friendly way

to do laundry.

Attack Neo

2009A pioneer product among the government-

certificated FOSHU (Foods for Specified

Health Uses), Healthya was readily

incorporated into everyday life.

Healthya Green Tea

2003

Attack

1987Providing surprising whiteness with

just one scoop of detergent. The

compact size made shopping more

convenient.

Raku-raku Eco Pack Refill

2016Combining universal design and care

for the environment, this heralded a new

age in refills.

Kao Kona Sentaku (Wonderful)

1951Significantly reduced the time needed

for doing laundry by hand, and the

burden of housekeeping chores.

Sofina

1982Launched from a desire to

provide more women with

dermatologically tested,

high-quality cosmetics.

Laurier

1978Changed life for women by

offering constant peace of

mind and comfort.

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