Emerging societal issues also create opportunities for our growth.

The social and business environment surrounding us is changing faster than ever before. The challenges our customers face are becoming increasingly sophisticated. These include achieving carbon neutrality, responding to the growth of the semiconductor industry, rising interest in physical AI utilization in manufacturing sites, expanding the data center facilities that underpin the AI era, creating environments suited to new ways of working, and ensuring the sustainable operation of social infrastructure.

At the same time, I view these changes as significant opportunities for the azbil Group to create new value. The greater and more complex the challenges faced by our customers become, the greater the role we can play as an automation solution provider.

These challenges cannot be solved by any single product or technology alone. This is precisely why I am convinced that the measurement and control technologies we have cultivated over many years, together with our capability to create value at customer sites, will become even more valuable in the years ahead. What is expected of us is not merely to provide products and technologies, but to deliver solutions to the challenges faced by customers and society. Solving societal issues and achieving business growth are not mutually exclusive. I firmly believe that addressing societal issues with sincerity and contributing to their resolution is what drives our sustainable growth and enhances enterprise value.

Lessons I learned from customers

There is a particular experience that shaped this way of thinking.

Earlier in my career, I was involved in establishing a consulting company that operated as a joint venture with an architectural design firm. The important lesson I learned there was that customers do not seek to purchase equipment—they seek solutions and outcomes. In the case of energy conservation, for example, their objective is not simply to install energy-efficient equipment. Meaningful outcomes are achieved only when improvements in building operation, changes in human behavior, and the effective use of data are all brought together. Every site presents its own unique challenges. By understanding challenges from the customer’s perspective, developing solutions together, and putting them into practice, we create value. It is the accumulation of these efforts that makes the difference. Through this experience, I became convinced that the Group’s true strength lies not only in technology itself but also in its

capability to create value at the customers’ sites.

With measurement and control technologies at the core, we work closely with customers at their sites and together we solve their issues. This mindset is precisely the strength that has been passed down within the Group since our founding, and I believe it will continue to be a key foundation of our growth in the future.

Value creation unique to the azbil Group

I believe the reason we are able to achieve sustainable growth lies in the business model of the azbil Group. We have built our business on longstanding relationships of trust with a broad range of customers in Japan and overseas, involving factories and plants, commercial buildings, and lifeline utilities. Leveraging the technologies and expertise cultivated through our core businesses, we are capturing opportunities in our growth businesses spawned by technological innovation and emerging societal issues, including the growth of data centers, the expansion of the semiconductor industry, and the transition to carbon neutrality. In addition, we operate stock-type businesses centered on our core businesses, including retrofit projects and maintenance services that support customers’ sites throughout their life cycles. These businesses provide a stable revenue foundation for us.

Besides being unique to the azbil Group, this business model—where core businesses and growth businesses reinforce one another in a continuous cycle—is, I believe, the source of our sustainable growth.

Click to Zoom

Results achieved in the first year of the medium-term plan

FY2025 marked the first year of our medium-term plan. Overall, we made a solid start. While improved financial performance is certainly important, what I value most is that we are beginning to see tangible signs of change that will support future growth. Our efforts to reform our earnings structure, strengthen product competitiveness, and expand service businesses are beginning to gain traction, steadily enhancing our profit-generating capabilities.

Click to Zoom

We also see tangible progress from initiatives that we have been preparing, including efforts to cultivate the data center market, promote global key account management, and develop and provide differentiated products utilizing MEMS sensor technologies. Beyond achieving the targets of our medium-term plan, I take particular encouragement from the steady progress made in establishing the foundation to achieve our FY2030 long-term targets.

Click to Zoom

At the same time, uncertainties remain with respect to resource prices, logistics, and procurement, driven in part by heightened tensions in the Middle East. Given Japan’s dependence on overseas sources for much of its energy and raw materials, these developments could affect industrial activity more broadly. However, drawing on our experience navigating the COVID-19 pandemic and subsequent supply chain disruptions, we have strengthened our procurement capabilities and business continuity framework. Making good use of the lessons we have learned, we will continue to respond appropriately to emerging risks.

Furthermore, we have voluntarily adopted the International Financial Reporting Standards from FY2026. I regard this as an important step in further advancing our global management framework while helping international investors gain a deeper understanding of the Group’s businesses and growth potential.

Challenges have become clearer.

Certain challenges have become clearer as we pursue our growth opportunities. While the expansion of overseas operations represents a significant opportunity, the Building Automation (BA) business remains concentrated on new construction projects overseas. Achieving both business expansion and improved profitability therefore remains an important issue. However, I view this expansion as a phase of investment that will support future growth.

In the Asian markets that are a focus of the BA business, demand is expected not only for new building projects such as office buildings and data centers but also for retrofits and upgrades to systems that we installed. Going forward, we will leverage these opportunities to expand our stock-type businesses—centered on our existing building and service businesses, which already constitute the mainstay of our business in Japan—and thereby achieve sustainable revenue growth. In the Advanced Automation business, we will capture demand in the semiconductor market as well as from an increasingly sophisticated manufacturing sector. We will also deploy competitive new automation products both in Japan and overseas. Product development requires up-front investment, but new offerings, including our sapphire capacitance diaphragm gauges, have been highly acclaimed and our sales channels continue to expand steadily. Going forward, we will accelerate the rollout and market penetration of products and solutions that reflect the Group’s unique strengths, including control valve total solutions and plant autonomy technologies, and translate these initiatives into sustained growth.

To provide global markets with products and services that embody the Group’s distinctive strengths and thereby achieve growth, we must continue to evolve our products while consistently delivering engineering and services of the highest quality. To that end, securing and developing human capital while improving its productivity is also a management priority. By addressing these challenges head-on, we will steadily convert growth opportunities into tangible outcomes.

In addition to strengthening our own capabilities, we place great importance on co-creation with external partners. We have allocated \50 billion for growth investments over the course of the three-year medium-term plan. We will use these initiatives to support the Group’s sustainable growth while actively exploring alliances and M&A opportunities that can strengthen our technologies, human capital, and business foundation.

Human capital as the key to realizing “Evolution and Co-creation”

As I have discussed, both our own evolution and co-creation with customers and partners are required if we are to continue harnessing market opportunities, and it is our employees who make that evolution and co-creation possible. Sustainable growth can only be achieved through people who create value at the customers’ sites. For this reason, I regard investing in human capital and enhancing employee engagement as among management’s highest priorities. When each employee embraces challenges, grows professionally, and applies those capabilities to creating value for customers and society, those individual efforts become the driving force behind the Group’s sustainable growth.

Sustainability management and the enhancement of enterprise value

I believe sustainability and the Group’s businesses are fundamentally interconnected. The concept of “human-centered automation” that has guided us since our founding is rooted in a commitment to creating value through the resolution of societal issues. Our current initiatives—including those for carbon neutrality, energy efficiency in data centers, the effective use of water resources, and the evolution of manufacturing—are a natural extension of that philosophy.

For the Group, solving societal issues means not only fulfilling our responsibility to society but also generating new business opportunities. I believe that solving societal issues, creating customer value, and enhancing enterprise value are inseparable.

Improving capital efficiency is also indispensable for achieving sustainable growth. By continuing to invest for future growth while pursuing management that is conscious of the cost of capital, we will strive to enhance both enterprise value and shareholder returns.

We are also continuously strengthening corporate governance through initiatives such as appointing an independent outside director as chairperson of the Board and enhancing the Board’s diversity. Through these efforts, we aim to realize the sustained enhancement of enterprise value.

Shaping our future through “Evolution and Co-creation”

To mark the 120th anniversary of our founding, we formulated our Purpose and Vision. We did so because we believe that to capture market opportunities and achieve sustainable growth, we must continue evolving while intensifying co-creation with customers and partners. Ultimately, our goal is not growth for its own sake. Rather, it is to realize the well-being of both society and our employees while helping to solve societal issues. If I were to choose one word to express the uniqueness of azbil, it would be “integrity.” Guided by the values that have been passed down since our founding, we create value at customers’ sites and seek solutions for societal issues with sincerity and commitment. I believe that these accumulated efforts win the trust of our customers and society, and ultimately lead to greater enterprise value. By bringing management and employees together as one team and working alongside customers and society as partners in value creation, the azbil Group will continue contributing “in series” to the achievement of a sustainable society while pursuing the well-being of both society and our employees.

We sincerely appreciate the continued understanding and support of all our stakeholders.