President Message

We will contribute to improving energy efficiency
by utilizing our unique materials expertise.

Mitsuyoshi Shibata
President
ProfileBorn in Tokyo in 1953. Graduatedfrom the Department of Metal
Materials, Faculty of Engineering, The
University of Tokyo, and joined
Furukawa Electric in 1977. Beginningin with production technology in thecompany’s copper wire plant,experienced the development andcommercialization of semiconductor
lasers before heading the Patent &Licensing Department, the Yokohama
R&D Laboratories, the Corporate
Strategy Planning Department, andthe Metals Company. Following abroad range of experiences, including
the overseas investment related tocopper foil and restructuring of thecopper pipe business, appointed
President in April 2012.

7Furukawa Electric Group Sustainability Report 2012

My name is Mitsuyoshi Shibata, and I was appointed
President on April 1, 2012. I would like to thank all of our
stakeholders for their ongoing support. Having taken thereins of the Furukawa Electric Group during such difficult
times, I feel a strong sense of the seriousness of my task.

Review of Fiscal 2012
Japanese industry has faced a drastically changing
environment over the past several years, and theFurukawa Electric Group now confronts a situation inwhich we must fundamentally reconsider the businessstructure in place up to now. Although there was somerecovery after the Great East Japan Earthquake in fiscal
2012, the economic environment has continued to bedifficult, due to factors such as the global economic
slowdown, the persistently strong yen against the dollar
and the euro, and the Thailand floods.
The Furukawa Electric Group has taken measuresin the face of such headwinds, such as a complete
withdrawal from the glass substrate business and thestreamlining of our copper tube operations in Japan, but
at the same time we also engaged in growth initiatives
such as expanding capacity for production of copper foil
for lithium-ion batteries and expanding the range ofapplications for microcellular foamed sheet (MCPET).
Also, through our acquisition of the U.S. company
SuperPower, Inc., the Furukawa Electric Group became
the world’s only total supplier of second generation
high-temperature superconducting products, offering
everything from wire through equipment. We also
advanced our aluminum business globally by building
new production bases in North America and China.
Nonetheless, the Furukawa Electric Group’s
consolidated results for fiscal 2012 reflect decreased

revenue and earnings due to factors such as the difficult
operating environment and the fine paid for violating U.S.
antitrust laws, which was posted as an extraordinary
loss. This has forced us to forego payment of a year-end
dividend.

Embark on Reform for Real Victory
Taking the above into account, I view the Furukawa
Electric Group as having reached a stage where thesteps we take toward structural reform must be morebold and effective than ever before—we must embark onreform for real victory. As we are engaged in a diversity ofbusinesses, determining the direction of the Group andwhere to invest in also entails deciding which businesses
require streamlining. We are looking into measures suchas integrating operations in the optical fiber businessglobally, reorganizing production bases in the domestic
optical cable business to attain improved earnings, andaccelerating the shift from domestic production ofcopper foil and other products to overseas production.
While that reorganization takes place we will also
strengthen business in the social infrastructure sector,including energy and telecom, as well as in the nextgeneration vehicle sector, in which better environmental
features are called for. Our goal is to build a businessstructure capable of handling even greater demand fromglobal growth markets.

For a Sustainable Society
The world is currently facing some major energy issues,including steep rises in oil prices and the environmental
impact of mass consumption of fossil fuels. For the world

Furukawa Electric Group Sustainability Report 20128

President Message

to achieve sustainability, countries around the globe must
make progress in energy conservation and expand theuse of renewables. Energy supplies must be stabilized
while environmental impact is brought under control.
Furukawa Electric has been manufacturing andproviding useful products made from a variety ofmaterials, such as copper, aluminum, and plastic, since
our founding in 1884. In recent years we have beenusing our unique materials expertise to help solve global
issues, such as energy conservation and energy supply
stability. Our R&D is focused on three categories—nextgeneration vehicles, energy/smart grids, and high-density
optical telecommunications. The Furukawa ElectricGroup will concentrate our maximum materials
technology on achieving energy efficiency in each of
those categories.
For example, switching from copper wire harnesses
to lighter aluminum wire harnesses for the internal wiringof next-generation vehicles helps improve fuel economy
by making the vehicle lighter. We are also engaging in
the energy/smart grid sector by developing high-volumestorage batteries, which are vital to renewable energy

power plants because of susceptibility to fluctuations inpower demand due to seasonal changes, as well as
superconducting electric power cables andsuperconducting magnetic energy storage (SMES) units
that broadly reduce power loss during transmission. Our
efforts in the high-density optical telecommunications
field include responding to the switch from metal to fiber
for large computer internal circuitry, and we areproceeding with optical interconnection development for
improved speeds and lower power consumption.
To develop new energy sector businesses, weestablished the Offshore Wind Power Project Team inMarch 2012 and the High-Temperature
Superconductivity Business Development Team in April.
We will contribute to solving social issues while at thesame time adding new value to the businesses of ourcustomers through our R&D and business development
focusing on environment and energy. Superconductivity
is a technology noted for its potential to create
fundamental change in our existing energy infrastructure.
We are evolving our business focus toward leading theworld in superconductivity technology. Please see theSpecial Feature (pages 11–16) for details.

Resolving Environmental Issues
Environmental conservation is our responsibility to thenext-generation, and as a socially responsible company
we are tackling environmental issues head-on. The
Furukawa Electric Group not only addresses societal
issues by reducing the environmental impact of products,
we also are moving forward with the indexing of productenvironmental performance based on lifecycle
assessment (LCA) methodology, which broadly

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Furukawa Electric Group Sustainability Report 2012

contributes to creating value for the customer. We
emphasize environmental contribution in conducting ourbusiness, and promote environmentally themed R&D.
The Furukawa Electric Group also announced
efforts to promote biodiversity in fiscal 2011, through ourefforts emphasizing eco-system impact assessment,sustainable use of resources, and increasing theawareness of each employee. During fiscal 2012, we
focused on eco-system impact and conducted risk
assessments on biodiversity in all fields of Groupbusinesses. Taking the results of those assessments intoaccount, we plan to establish a Long-Term
Environmental Vision and Activity Guidelines, so as topromote environmentally-conscious management acrossthe entire Group value chain.

Restoring TrustAs announced in September 2011, Furukawa Electric
paid a fine of US$200 million as part of a plea agreement
made with the United States Department of Justicerelated to cartel activities for automotive wire harnesses
and related products. Furukawa Electric Group formed
the “Third-Party Investigation Committee on Violations of
the Anti-Monopoly Act” in 2009, and in December of thatyear that Committee announced its findings. In parallelwith the Committee’s activities, a thorough investigation
by outside legal counsel was carried out. This
investigation confirmed that all conduct suspected ofbeing in violation of the Anti-Monopoly Act had ceased,and all illegal conduct had been eliminated by the time
the Committee’s report was issued. Although theautomotive wire harnesses case concerned past
conduct that was found by outside legal counsel

investigation rather than any new occurrences of illegal
conduct, we once again humbly ask the forgiveness ofour stakeholders for any distress or trouble this incident
may have caused.
We are working to restore public trust by enforcing
strict compliance at all affiliated companies in Japan andoverseas. We are focused on building a global
compliance structure through efforts this fiscal year suchas conducting compliance seminars in China andsupporting effective risk management and internal
controls at overseas bases.
As noted in the Furukawa Electric Group Corporate
Philosophy, contribution to the realization of a sustainable
society is our core principle. To realize this philosophy,
we are aware that we must maintain close
communications with society so as to meet our
stakeholders’ desires and expectations, and are also
aware that we must fulfill our corporate social
responsibilities fully so as to remain an indispensable
corporate citizen. It is my sincere hope that we maycontinue to enjoy the support of our stakeholders.

Mitsuyoshi ShibataPresident

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