VISION
Message from the President and Representative Director

We will launch a new "fourth pillar" andpromote ESG management with a businessportfolio that is resilient to change.
Reaffirming the strength of businessdevelopment based on the "Three Pillars"
As the COVID-19 infection has been moved to Category 5 andeconomic activities continue to be normalized, the businessenvironment surrounding the Toho Titanium Group remains
uncertain, with factors such as heightened geopolitical risks
associated with the conflict in Ukraine and the rising cost of
global energy and raw materials. However, given the rapidlychanging business environment, we believe that FY2022 wasa good opportunity to examine the foundations for our Groupto demonstrate resilience, such as reevaluating country risks
and rebuilding our procurement network.
In our Titanium Metal Business, in which we possess
the manufacturing technology for titanium sponges that only
a few companies in the world have, sales volume to theaircraft industry is steadily turning bullish as the number ofairline passengers recovers. Also, in response to the Ukraine
conflict, the world's two largest aircraft manufacturers haveannounced plans to suspend or reduce purchases from
Russia's VSMPO-AVISMA, which holds the largest shareof titanium sponge production for aircrafts. As a result, thedemand for substitute providers has surged. That is why
our three production sites in Chigasaki, Wakamatsu, andSaudi Arabia are in full operation. Under this tight supply anddemand situation, we are implementing recovery measures,such as passing on the increase in costs due to soaring prices
of imported raw materials and electricity, to the sales price,
as we ask for the understanding of our customers in order toimprove profitability. Against this backdrop, we plan to improve
the facilities at our domestic production sites and increase
capacity by approximately 3,000 tons per year by FY2025.
Demand for aircrafts is expected to continue to grow at anannual rate of 4%, so we are considering further investment toincrease capacity, assuming a reliable return on investment.
On the other hand, the market environment for theCatalyst Business and Chemicals Business is currently
sluggish due to the slowing economic growth rate of China,
the largest consumer country. Given that both businesses
have a structure in which the profits are influenced by the ups

and downs of the Chinese economy, as well as geopoliticalrisks, we believe it is time to reconsider our strategies. We cansay that now is the time to set our sights on India and other
Southeast Asian countries, where high growth is expectedin the future, and consider whether to invest management
resources for market development.
The Medium-term Management Plan over the past three
years (FY2020-2022) have been a period of continuous changethat far exceeded our expectations. First, the COVID-19
pandemic caused a significant drop in aircraft demand, leading
to a slump in the Titanium Business. However, this significant
decline in sales was offset by the Catalyst Business, which
responded to increased demand for medical and sanitary
products such as masks, as well as the Chemicals Business,
which responded to increased demand for PCs and otheritems from consumers staying at home. Next, in 2022, special
demand for titanium stemming from the conflict in Ukraine
covered the slump in the Catalyst and Chemicals Businesses
due to the slowdown of the Chinese economy. As a result, net
sales and operating profit for the three-year cumulative period
were 122% and 155% of the planned figures, respectively,
resulting in significant increases in income and profit. We werealso able to clear all of the issues regarding the "Five Basic
Strategies" set forth in the previous medium-term plan, withthe exception of early profitability of the joint venture in Saudi
Arabia (ATTM). ATTM will be fully operational by the end of
this year, and I feel that the time is approaching when we cancontribute to profitability.
Looking back on these results, we are reminded once
again of the utmost importance for our company to develop
our business based on the "Three Pillars" of Titanium, Catalyst,
and Chemicals. The proof that management based on theseThree Pillars is functioning is the fact that the financial stabilityof the Group as a whole is ensured, in that if one businessfaces difficulties, another business can compensate. Moving
forward, our theme will be conglomerate premium, whichmeans increasing the synergistic effects obtained through thecollaboration of multiple businesses, and linking this to further
improvements in competitiveness and resilience.

Yasuji Yamao
President and Representative Director

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04

Rebuilding "Vision for 2030"
In 2022, our company has set the "promotion of ESG
management" as a basic policy. The aim of formulating thispolicy is for the entire company to share the will to contributeto the creation of a sustainable society while solving social
issues by leveraging our unique business characteristics.
As we celebrate our 70th anniversary in August 2023, we
would like to pursue sustainability by working on corporate
management and contributing to society from a longer-term
perspective.
As a milestone for the future, we have decided to update
the long-term vision we announced in 2020, "Vision for 2030".
First, we convened young and mid-career employees whowill be responsible for our company in the 2030s, and held
training camps where they freely exchanged opinions about
what their ideal future self would be like. The resulting vision
for 2030 is to "create advanced materials and technologies,
become a highly profitable company that is flexible toenvironmental changes, and contribute to the developmentof a highly recycling-oriented society." (p.13). With regards tothe "Promotion of ESG Management" basic policy, we haveestablished quantitative and qualitative targets and measureswith 2030 to 2040 as the goal period in order to unify theentire Group's vector and promote it while fostering a sense ofunity.
For "E = Environment," we will not only accelerate thedevelopment of existing products, but also the developmentof new materials and technological improvements that reduce
environmental impact. In the production process, we aredeveloping a new titanium smelting technology that saves
resources and energy, as well as promoting the introduction of
CO2-free electricity and carbon-neutral LNG, with the aim ofquickly achieving decarbonized management.
With regards to "S = Society", we have begun activities
in line with our policy to improve our contribution to society
and create an attractive workplace. "Aim to become acompany that is compassionate and kind to people bypromoting new values within the organization that are directly
linked to productivity, diversity and inclusion, and a pleasantwork environment" -- Based on this goal, we will promote

FY2020-2022 Medium-termManagement Plan
FY2020(results)

FY2021(results)

various measures while being conscious of our contribution
to society as we strive to create a more attractive workplace.
In June 2023, we became the first company to be selected
as a constituent of the FTSE Blossom Japan Index, arepresentative ESG index. Receiving this kind of evaluation
gives us confidence and pride in our employees who provide
support to the workplace on a daily basis.

Major measures of the FY2023-2025
Medium-term Management Plan
Moving towards "Vision for 2030", we have identified the gaps
between our goal and the current situation and have deviseda catch-up strategy to fill them. The 2023-2025 Medium-termManagement Plan we have recently formulated is positioned
as an action plan to be implemented over the first three years
to achieve this strategy (p.15).
Under the new Medium-term Management Plan, we
will promote carbon neutrality in the production processes of
our three existing business divisions, and polish our functions
and quality that will further contribute to our customers'
businesses. We will also make timely investment decisions
and aim to expand production capabilities in order to fulfill our
responsibility to supply to markets that are expected to grow,such as ultrafine nickel powder, which we have already started
investing in to increase capacity, as well as titanium spongeand polypropylene.
In the future business environment, we will need to
anticipate the emergence of more volatile changes anduncertainties than we have experienced in the past. Based on
this assumption, we would like to further diversify our business
items by developing and applying our proprietary technologies
in order to further increase the potential for business continuity.
During this medium-term plan period, we are drawing up a
strategy to add one new pillar to the current Three Pillars andestablish it as a new business.
I will also touch on the main policies for each businesssegment. First, in the Titanium Metal Business, we will
increase production at our sponge production joint venture in
Saudi Arabia towards full operation, in order to respond to thestrong demand for titanium which is mainly used in aircrafts.

FY2023-2025 Medium-termManagement Plan

FY2022(results)

FY2023(forecast)

FY2024(target)FY2025(target)FY2030(target)Net sales

36.2 billion yen

55.5 billion yen 80.4 billion yen

83.2 billion yen

107 billion yen

120 billion yen

170 billion yen

Operating profit

3.1 billion yen

5.2 billion yen 10.7 billion yen

4.6 billion yen

10 billion yen

13 billion yen

25 billion yen

ROS(1.2%)

9.3%

13.1%

5%

9%

11%

15% or more

ROE

(6.8%)

8.1%

15.0%

5%

11%

13%

10% or more

0.9

0.9

0.8

1.0

0.9

0.8

Less than 1.0 times

D/E ratio

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At our domestic Wakamatsu and Chigasaki plants, we aim
to increase production capacity by a total of approximately
3,000 tons per year. We will also continue to work to achieve
appropriate sales prices that reflect these factors, amid asituation where the prices of raw materials remain high, andelectricity and fuel prices continue to soar. We are aiming
to capture the world's top share in global sales of titanium
sponge for aircrafts by 2030.
With regards to the Catalyst Business, we will improvethe efficiency of catalyst production by improving production
technology at our Kurobe and Chigasaki plants, and increase
production through capital investment in the medium to longterm, since demand for polypropylene, which is the main
application field for our products, is expected to increase. At
the same time, we will begin considering the next capacity
expansion plan with a focus on future sales expansion.
In 2030, we aim to be in the top 3 global market share ofcatalysts for polypropylene production.
In the Chemicals Business, we will deploy measures in
anticipation of a recovery and subsequent expansion in the
demand for multilayer ceramic capacitors (MLCC), which isthe application of our main product, ultra-fine nickel powder.
During the three-year period of the new medium-termbusiness plan, we expect that telecommunication equipment
and telecommunication base station applications, as well as
automotive applications that use MLCC, will return to a growthtrajectory. In particular, automotive applications are expected
to see high growth as the global market accelerates the shift
towards the use of electronics in equipment. Currently, thedemand for MLCC is expected to grow at an annual rate ofabout 7%. However, we are aiming for growth that exceeds
this level. We will be building a nickel powder supply systemthat can support small, large-capacity MLCC that meet thetechnical requirements of next-generation telecommunications
and next-generation EV. Based on this goal, we have begun
construction of the fifth plant at the Wakamatsu Plant, which isscheduled to be completed in FY2025. Through these capital
investments, we will increase our current production capacity
by approximately 20% over the next three years, aiming tobecome the top company in the domestic market share ofnickel powder by 2030. Since it is necessary to decentralize
our production bases from a BCP perspective, we will flesh
out plans for a sixth plant during this medium-term plan
period.
In addition to the above Three Pillars, we will establish
a New Materials Division with the aim of commercializing
porous titanium materials (WEBTi) and other products, in orderto make this the Fourth Pillar during the medium-term plan
period from FY2023 to 2025, to strengthen our organizationalfoundation (p.22). Porous titanium is a material used in waterelectrolysis hydrogen generators, an essential element forbuilding a hydrogen energy based society, which is expected
to be a means of reducing CO2 emissions. Up until now, ourTechnical Development Center has been playing a central rolein promoting R&D of porous titanium materials and handlingsamples for our customers. However, in recent years, as wehave been receiving increasing requests for mass production,
we have decided to establish and operate a new divisionalorganization with sales and management functions. We predictthat the market for water electrolysis hydrogen generators will
expand significantly in the future, starting with Europe, which
is an advanced carbon-neutral region. By 2030, which is thegoal of "Our Vision", we have envisioned a scenario in which
the market for porous titanium materials will grow to around 50
billion yen. Based on this assumption, we have set the sales
target for the New Materials Division at 10 billion yen for 2030.
We also have plans to commercialize several new materials by
FY2030 using our group's advanced powder manufacturing
technology, such as ultra-fine nickel powder and high-purity
titanium dioxide.

Financial strategy that considers thebalance between medium- to long-term
growth and risk management
Needless to say, our Group's business performance is affectedby the market environment of a given year. The impact may
be even greater due to the gap between current market
conditions and the contract details negotiated with customers,such as sales prices.
Using titanium sponge for aircrafts as an example,

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we adjust costs by taking into account factors such as
fluctuations in titanium ore prices in the relevant year andthe actual unit price of electricity in Japan, based on longterm contracts signed with customers, to determine theannual sales price for the next fiscal year. In other words, thetime when manufacturing costs are reflected in sales prices
is delayed by one year, resulting in a temporary decrease inprofits when costs rise, while on the contrary, there may be anincrease in profits during periods when costs go down.
As mentioned above, the supply and demand situation
has recently become tighter and the unit price of electricity
has increased, so in 2023 the price increased beyond therange stipulated in the long-term contract. Moving forward,
we will continue to engage in negotiations to make it easier toreflect cost fluctuations in sales prices, and aim to achieve theordinary profit to net sales ratio set for each business.
In 2021, we took a decisive step toward company-wide07

risk management and strengthened our organization. First,
with nickel powder raw materials, fluctuations in the nickel
LME price have the greatest impact on our profit and loss, so
we engaged in hedging through futures trading. In contrast
to the increasing trends in FY2021, there was a downturn
in FY2022 when we started futures trading. However, by
establishing a hedging system at that time, we were able tominimize the decrease in margin by subtracting the cost of
raw materials from the sales price. For currency, we have beenusing futures transactions for hedging, and we will continue to
strive to secure reasonable margins by combining them with
commodity futures.
Furthermore, with regards to borrowing interest rates,
we are striving to make timely and appropriate judgments,
including the timing and method of financing arrangements,
while maintaining financial soundness (D/E ratio of less than
1.0). With regards to risk management on the balance sheet,
we will individually quantify financial risks due to changes inthe business environment for all assets such as accounts
receivables, inventories, and fixed assets. We control this bysetting quantitative indicators so that the total amount is lessthan 70% of the total net assets, which is the company's
dissolution value.
In order to make a leap forward in 2030, we will needto invest in our Fourth Pillar, the New Materials Business.
The scale of investment in each business division will be
determined based on the ROIC (return on invested capital)
for each business. In order to achieve management that is
conscious of capital costs and stock prices, we will accurately
understand capital costs and capital returns, and proceed withbusiness operations that promote those improvements.
With regards to shareholder returns, we will continue ourprevious policy and set the dividend payout ratio at 30% of
the current net income. Also, given that our PBR is currently
more than double and our PER is more than 40 times, we feelthat our shareholders have high expectations regarding the
growth of our Titanium Metal Business, Catalyst Business,
and Chemicals Business, as well as the potential of our New
Materials Business. We will continue to strive to achieve theoptimal balance between growth investments and shareholder
returns, facilitate improvements in corporate value, and meetthe expectations of our shareholders.

Creating a structure that maximizes theability and value of human resources
Among the companies listed on the TSE Prime Market, ourcompany has a small but elite workforce of around 1,000
employees, and each employee is a driving force behind our
growth. Based on the assumption that Japan's declining
birthrate and aging population will continue to be an issue,
we are promoting work style reforms that will lead to theacquisition of new human resources and improved employee
satisfaction.

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Nonetheless, there is considerable hard labor in hightemperature environments at our titanium smelting sites,
which is the core of our business. All the employees working
in the field are doing their best. As the number of older
employees increases, we are actively pushing for automationof tasks that can be automated and mechanized with robots
and automated equipment in order to reduce the risk ofoccupational accidents. However, when it comes to handing
down expertise and know-how that are difficult to replace
digitally, we believe that it is necessary to take sufficient timeto provide thorough education for knowledge transfer between
personnel. For example, for seasoned employees who havebecome concerned about their physical strength as they age,
we have them take on a new role as advisors, in an effort
to raise the level of technology and safety at the workplace,rather than having them leave the workplace.
Furthermore, the major benefits of automation andmechanization are that they can improve the plant's utilization
rate and make our operations more efficient by accumulating
and analyzing digital data acquired on-site. We are aiming toincrease employee labor productivity by around 30%. We arealso advancing DX initiatives starting this fiscal year by utilizing
digital data obtained from each site.
In order to accelerate these new initiatives that differ
from conventional practices, it is important to not only foster
a mindset, but also to create a system to increase motivation.
In addition to running existing human resource development
programs, we have also started implementing an awards
system that provides impactful incentives to members working
on-site, to increase their motivation for improvement.
It is essential that we swiftly move forward to resolvethese current issues while steadily developing the humanresources who will lead the future in 2030 and beyond.
Based on the succession plan formulated in 2022, we are
implementing a training program for executives and corehuman resources starting this fiscal year. On the other hand,
we recognize that there are still many issues to be addressedin terms of diversity and inclusion, which are included in themeasures of the medium-term plan. Aside from proactively
promoting foreign and female employees to managerial
positions, we will also actively recruit and promote digitaltalent, facility engineers, and other specialized technicians in
the future. If such human resources participate in decisionmaking in the workplace, it will be an opportunity to change
the mindset of other members, and it can be expected to havea revitalizing effect on the entire organization. We hope thateach and every one of us will change our mindset, graciously
let go of the negative practices common to old-fashioned
manufacturers, such as a "male-dominated society" and"seniority by length of service", and most of all, promote agileand effective utilization of human resources, with an emphasison accelerating innovation.

Grow into a company that can deliver
value to all stakeholders
In this medium-term plan, we have also launched measures tostrengthen the foundation of our management, "G = Corporate
Governance", as well as compliance and risk management.
Over the next three years, we will solidify our drive andoperational structure in line with each measure, starting withappropriate responses to disclosure requests.
The most significant feature of our capital relationships
is our parent-subsidiary listing with the ENEOS Group.
Regarding this point, from the perspective of protecting
minority shareholders, the Group Company Supervisory
Committee for Conflicts of Interest, which is comprised of all
independent outside directors, meets regularly to check thedetails of transactions with the parent company group. In
light of future risk concerns and the mandatory disclosure of
information on human capital, we are also asking our outside
directors to attend risk management meetings and various
internal meetings as much as possible, for us to receive
appropriate advice from them. As a result, discussions at theBoard of Directors' Meeting have clearly become more active,
with more substantive discussions from the perspective of risk
management and compliance inspections. We believe that
corporate governance that is conscious of transparency andeffectiveness is directly linked to protecting the interests ofshareholders and investors, so we would like to continue towork hard to further improve our functionality.
When updating "Vision for 2030", we coined thecatchphrase "Beyond Expectations 2030", to help makethis a reality. This represents the Toho Titanium Group's
determination to "Beyond the Expectations" of all stakeholders.
We believe that we have a duty to thoroughly explain BE2030
to everyone for their understanding, and work toward becominga "100-year Company" 30 years from now.
What I envision as a 100-year company in the future is
one in which our technology contributes to the establishmentof a completely carbon-neutral world, and in which we flexibly
change in response to the changing needs of the world, andI envision a corporate entity with a deep-rooted corporate
culture that allows employees of various nationalities tolive a secure life with their families while also taking on new
challenges. We will continue to aim to maximize corporate
value and practice management that is focused on constantly
moving quickly and producing results. I hope you will lookforward to the further evolution of the Toho Titanium Group.

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