Eda: I am aware of the view that although our ability to set out a solid growth strategy in our medium- to long-term management plan is one of our strengths, that value is not sufficiently reflected in our current share price. Enhancing corporate value is the mission of the Board of Directors. We must take the views of the capital markets seriously, address them as an important theme for the Board, and take steps to improve our market valuation.
It is important to not just talk about dreams but also examine whether they are actually leading to profit growth and improved capital efficiency. As an outside director, I will continue to monitor managementʼs progress and the outcomes of its initiatives, while encouraging management to reflect the views and expectations of the capital markets in its decision-making.
Suzuki: In the dialogue with an analyst held in January, the analyst noted that the capital markets have expressed appreciation for our proactive investments in growth fields adding that there is also concern that we appear to be allocating management resources to mature businesses in the same way, making it difficult to assess the Company appropriately. While this is something the Board has also discussed, the dialogue reaffirmed for me the need to present a clear direction for our business portfolio at this point.
In August 2026, we announced that we had begun considering strategic options, including a partial spin-off of the Business Innovation segment. I believe the capital markets responded positively to the direction we set out. Going forward, I would like to identify the optimal option for enhancing the combined corporate value of the Fujifilm Group and the Business Innovation segment after the separation.
Eda: Because we have been making long-term, large-scale investments in growth areas, the Board not only discusses the appropriateness of investment decisions but also continuously monitors progress in realizing returns on those investments and risks arising from changes in the business environment. It is also important for the Board to call on management to address risks when necessary. In particular, fiscal 2026 marks the third year of VISION2030, and the business environment has changed significantly since the plan was formulated. In such areas as the Bio CDMO business, where growth is rapid and the scale of the business has expanded significantly, the business environment and risk structure also continue to change. As Board members, we recognize the importance of grasping such changes in a timely manner and linking them to the necessary responses. I believe the Company makes timely course corrections toward achieving its plans based on STPD (See-Think-Plan-Do), our unique management cycle, but the Board must appropriately monitor the progress of execution and detect early signs of deviations from the plan or changes in underlying assumptions.
Currently, the Company is reviewing its processes so that business-specific risks are not simply left to each business division to manage but are integrated into Company-wide risk management from a management perspective. Using this framework, we will verify whether large-scale investments are steadily capturing growth opportunities and generating the expected returns and whether any new risks have emerged, while continuously assessing investment outcomes and the effectiveness of risk management.
Suzuki: To continue investing in areas where the outlook is difficult to predict due to numerous variables, such as geopolitical risks and regulatory trends, we must also detect signs of change early and monitor developments so as not to cause negative surprises for the capital markets. For the Board to detect such signs as early as possible, we might need to consider whether to introduce some kind of new mechanism, or in some cases, take measures that extend to addressing organization-specific mindsets, business processes, and practices. This problem cannot be solved simply by, for example, changing the corporate governance structure. As Board members, we want to support management in pursuing bold investments with confidence, while applying the brakes when necessary. To fulfill this role, we will enhance the effectiveness of the Boardʼs oversight function through constructive dialogue with management.
Eda: The Board regularly discusses updates on growth areas, particularly Bio CDMO and Semiconductor Materials, and on business risks. However, the business environment does not change to suit the timing of our deliberations. What matters is how promptly we can take up and discuss environmental changes or signs of risk that affect business opportunities as Board agenda items as soon as we sense them. With outside directors bringing a wide range of experience and expertise, I hope we can offer management fresh perspectives and raise considerations that might otherwise be overlooked.
Suzuki: Many of the manufacturing sites and markets of the Bio CDMO and Semiconductor Materials businesses are located overseas. This makes it difficult to gain timely, firsthand insight into changes in overseas business conditions, which I personally see as a major risk. I therefore proposed that, for the Bio CDMO business, we create opportunities to hear directly from people close to the front lines, such as our pharmaceutical company customers. This led to an opportunity for dialogue with executives of our overseas local subsidiaries who had only recently joined the Group from the customer side. What left a particularly strong impression on me was that when we asked them about the Groupʼs strengths, they immediately answered, “Our people.” I found it very reassuring to sense such strong pride and confidence in our Bio CDMO business among people who had only recently joined the Group. I hope we can create more of these opportunities in the future.
Eda: I agree. By meeting local executives face to face and talking with them directly, we can gain insights that cannot be fully grasped from reports through management alone. Particularly in terms of corporate culture, there are some things—such as whether people share the Group Purpose and corporate philosophy and are moving in the same direction—that can only be understood through direct dialogue. In that sense as well, it was extremely valuable to have the opportunity to engage in direct dialogue with executives on the front lines.
Suzuki: I believe we need to consider what kind of synergies each business generates within our portfolio and how the Groupʼs intangible assets as a whole contribute to generating such synergies and strengthening competitiveness. We have explained this point to investors, but I want to pay close attention to whether its essence has been sufficiently conveyed. We hold a variety of intangible assets across the Group, including human resources, technologies like AI and DX, intellectual property, and design. One of our major strengths is our ability to effectively utilize these shared assets across businesses, rather than tying them to specific businesses. I would like to determine the future direction of our business portfolio based on what roles these intangible assets will play as sources of future growth and a competitive advantage.
Another important point is that the Companyʼs Board of Directors has a role in overseeing whether the direction of business execution balances social and economic value toward realizing a sustainable society and is aligned with the medium- to long-term value that society demands. Rather than making judgments based solely on economic rationality, we also need to consider how to combine businesses that generate social value and how to convey this externally. From this perspective, I think we need to articulate more clearly our thinking on what kind of value the Company will provide to society and what kind of value creation it will achieve through its business portfolio as a whole.
Eda: As you said, I believe that at the core of our strengths lie intangible assets that span our businesses, such as human resources, technologies, and brand. A typical example is that people who have gained experience in a variety of businesses are now playing active roles in growth areas, such as Bio CDMO and Semiconductor Materials. The Fujifilm Group has taken its current form precisely because it has multiple business segments, and we must continue carefully explaining the significance of a business portfolio built on such value. We have now begun considering a partial spin-off of the Business Innovation segment, and the Board must further discuss whether we can present a future vision of a business portfolio in which both that segment and the Fujifilm Group achieve solid growth after the separation. In doing so, as Ms. Suzuki mentioned, we need to look not only at economic value but also at what kind of value each business will bring to society over the medium to long term, while mapping out growth scenarios that enable both companies to make the most of their respective strengths after the separation.
In addition, operating outside the Fujifilm Group could open up new opportunities for that business to create value. It might enable more agile decision-making and exploration of new partnerships. Meanwhile, we must also map out a scenario for sustainable growth after separating that business, which has accounted for about one-third of the Groupʼs total revenue, by expanding growth areas, such as Healthcare and Semiconductor Materials, while continuing to focus on Imaging. What we have so far considered as a single group, we must now consider from the standpoint of both Fujifilm and the Business Innovation segment, each with its own growth strategy and value creation scenario.
Eda: In phases where growth investments precede returns, capital efficiency can temporarily come under pressure. What is fundamentally important, however, is whether current investments will lead to future profit growth and higher corporate value. In addition to checking the progress of investment projects, I want to emphasize the perspective of whether we are making investments that lead to medium- to long-term value creation, rather than evaluating them solely on short-term performance or capital efficiency. We assess investments from the perspective of both short-term and medium- to long-term risks and opportunities, with the aim of ultimately improving capital efficiency.
As an outside director, I will closely monitor the path and progress toward creating value that exceeds the cost of capital, while keeping in mind the balance among growth investments, business portfolio review, and shareholder returns. I am fully aware that the capital markets currently take a critical view of the Company, but at the same time, genuine value creation takes time in some respects. I will continue engaging in dialogue with the management team so that it can be steadily achieved.
Suzuki: The Companyʼs people are highly conscious of capital efficiency, and rather than mechanically reducing the denominator, they think carefully first and foremost about increasing earnings. We have firmly embedded various activities, such as improving profit margins and facility utilization rates, pricing measures including price increases, restructuring low-profit businesses, and reducing product varieties, into our operations. Moreover, even when reducing the denominator, we make decisions not just to balance the books but to ensure alignment with our business strategy and necessity—including decisions to dispose of non-core assets like idle facilities and real estate. For cross-shareholdings as well, we carefully examine the rationale of holding them and the investment returns before deciding whether to continue holding or reduce them. I think it is wonderful that these cumulative efforts have fostered a strong commitment to improving capital efficiency throughout the Company.
Having undergone a bold transformation of its business structure, I believe we have embraced a management style that prioritizes capital efficiency, including the mindset of not holding excess capital. Although the capital markets currently take a critical view of the Company, I believe that if this focus on capital efficiency takes root, we can ultimately achieve the levels expected by the capital markets.
Eda: To enhance corporate value, the ability to turn growth investments into returns and more sophisticated business risk management to support it are essential. The Company has a solid business foundation built on the human resources, technologies, and brand it has cultivated, and it is important to aim for even higher growth while leveraging these strengths. To that end, we must enhance our organizational ability to quickly identify changes in the business environment and signs of risk and respond appropriately. As the scale of our businesses and investments expands to unprecedented levels, I believe that the ability to detect risks early and manage them precisely will be an important factor in ensuring the success of our growth investments.
As Board members, we also want to continuously monitor whether the investments made so far are steadily producing results. At the same time, we need to communicate this progress and how the Board is overseeing it in an easy-to-understand manner.
Suzuki: When considering future growth, it is also important to take a fresh look at the value of the intangible assets the Company has cultivated. In recent years in particular, advances in AI and DX have connected the strengths of our intangible assets—including our unique technologies, human resources, and brand—in new ways, opening up possibilities for value creation that did not exist before.
When faced with the crisis of losing its main business, the Company took stock of its core technologies and identified growth areas. Today, we are seeing a major environmental change with advances in AI and DX, and I feel that new business opportunities are emerging as these technologies combine with the Companyʼs own unique technologies. Isnʼt it important to take stock once again of the strengths we have cultivated over the years and identify new possibilities for value creation? I would like the Board to actively discuss these themes as well and use those discussions to enhance corporate value.
