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Resources for the futur  Looking ahead to the next 100 years

Introduction

In 2015, Japan introduced a Corporate Governance Code, following the Principles for Responsible Institutional Investors (Japan's Stewardship Code) established last year, putting Japanese companies at a crucial turning point for corporate governance. In accordance with these two governance codes, Japanese companies have strived to reinforce their corporate governance and improve their operational efficiency. It is in this context that a number of corporate scandals involving management fraud have surfaced, jeopardizing the survival of these companies. Such incidents have strongly reminded us that corporate reforms cannot be achieved by superficial commitment; such reforms can be accomplished only through substantive practices. I believe that, to ensure the sustainable growth of the Company, it is important to secure the transparency of our organizations and to conduct our business activities based on a strong sense of ethics.
On the economic front, the “Abenomics” measures introduced by the government have had a positive effect in improving corporate performance and the employment environment. This, combined with strong inbound tourism demand due to a growing number of foreign visitors to Japan, has led to a gradual recovery in domestic consumption. Against such a backdrop, the Company endeavored to strengthen its overseas business and actively promote one-of-a-kind products, under its previous three-year medium-term management plan, “Global Evolution 2015,” which ended in May 2015. Consequently, we saw a substantial increase in net sales, and posted record operating income during the three-year period, thereby greatly expanding our business. In June 2015, the Company launched its new three-year medium-term management plan, “Advance Ahead 2018,” which set the following targets to be attained during the three-year period: net sales of 100,000 million yen, operating income of 5,000 million yen, and ROE at 8% or higher.



New Three-Year Medium-Term Management Plan, “Advance Ahead 2018”

[Further Reinforcement of Overseas Business]

Following the previous medium-term management plan, this new three-year plan is also intended to actively push forward our overseas business. In June 2015, we acquired Bondtex, Inc., a company engaged in the urethane-laminating of automotive interior materials. The Suminoe Textile Group has now expanded its overseas presence to include 13 establishments in six countries (the United States, China, Thailand, Indonesia, India, and Mexico).
As our business continues to develop on a global basis, I believe that the Suminoe Textile Group should be more mindful than ever of reducing its environmental impact across the supply chain, and of establishing a system that will ensure a stable supply of products even in the event of an emergency. Our Group will also seek to promote the diversification of human resources, which are indispensable for developing business overseas, and take good care of the relationships with regional communities that we have built up in each market.



[Active Promotion of One-of-a-kind Products]

Our Company has long delivered products of outstanding quality to diverse customers. Thanks to their patronage, we have been able to grow as a company with a history of more than a century. We will always remain committed to contributing to the enrichment of society through the provision of attractive interior products. At the same time, we will continue to take the lead in the industryfs efforts to realize a low-carbon society in the future, by offering many more products friendly to the environment.
In May 2015, Suminoe Textile Co., Ltd. concluded a business partnership agreement with Aquafil S.p.A, a world-renowned yarn manufacturer in Italy. Through this partnership, our Company employed Aquafil's 100% recycled nylon ECONYL® as the pile yarn for our mainstay product, ECOS®, recycled carpet tiles produced using horizontal recycling technology. The resulting synergy has enabled ECOS® to increase the post-consumption recycled material usage rate to 83% from 77%, the rate for conventional products, while also achieving up to 44% reduction in CO2 emissions (according to LCA results). These figures are unprecedented in the world.
Among carpet tiles using bulked continuous filament (BCF) nylon, which are dominant in the office interior market, ECOS® EX-7000, which uses ECONYL®, is particularly conducive to the reduction of environmental impact. We are proud to say that this product can satisfy customers around the globe. Henceforth we will continue to refine its recycling technologies to offer more environmentally friendly products, so as to contribute to society and natural environmental protection both in Japan and abroad.



[Relationships with Our Stakeholders]

We consider that forging appropriate relationships with all our stakeholders and moving forward together with them will bring sustainable development to our Company, and will enhance its corporate value as well. We will continue our efforts not only to strengthen partnerships with our shareholders, customers, and suppliers, but also to create a better working environment to ensure that individual employees can improve their work efficiency and live a fulfilling life.



[Preservation of Traditional Culture]

Suminoe Textile Co., Ltd. owns Tango Textile Co., Ltd., a subsidiary that produces plush hand-woven curtains and hand-woven carpets, and the Kyoto Traditional Art and Craft Factory, where Nishijin brocades are manufactured. To our regret, the number of people who are experts in hand-weaving techniques is on the decline each year. As part of our efforts to maintain the traditional culture of hand weaving, the Company is fostering young artisans, to pass on these precious techniques we have cultivated for more than 130 years to future generations.



As Suminoe Textile advances beyond the 100th anniversary of its incorporation, we reaffirm our determination to fulfill both goals of “growth” and “contribution to the environment and society,” aiming to be a sustainable company that continues to evolve for the next 200 to 300 years.

Ichizo Yoshikawa
Chairman and President
Suminoe Textile Co., Ltd.