Bridge Report:（6498）KITZ the Fiscal Year ended December 2025

President Makoto Kohno	KITZ Corporation (6498)

Company Information

Stock Information

*Share price is as of closing on March 5. ROE is the result at the end of the previous fiscal year. The number of shares outstanding, DPS, EPS, and BPS are from the financial results for the fiscal year ended December 2025.

Consolidated Earnings Trends

*The estimated values are based on the forecasts made by the company. Unit: million-yen, yen. Net income is net income attributable to the owner of the parent company. Same as below.

This Bridge Report presents KITZ Corporation’s financial results for the fiscal year ended December 2025 and forecast for the fiscal year ending December 2026, etc.

Table of Contents

Key Points
1. Company Overview
2. Fiscal Year ended December 2025 Earnings Results
3. Fiscal Year ending December 2026 Earnings Forecasts
4. Medium-term Management Plan
5. Conclusion
<Reference1: Long-term Management Vision, “Beyond New Heights 2030 – Change the ‘Flow’ ”>
<Reference2: Regarding Corporate Governance>

Key Points

• In the fiscal year ended December 2025, sales grew 2.7% year on year to 176,682 million yen. The sales of the valve manufacturing business increased 1.3%, thanks to the price revision and the growth of sales quantities in the overseas market. The sales of the brass bar manufacturing business increased 9.0% due to the growth of sales quantities, etc. Operating income rose 8.7% year on year to 15,454 million yen. The profit of the valve manufacturing business increased 8.4% thanks to the sales growth caused by mainly the growth of sales quantities in the overseas market. The profit of the brass bar manufacturing business declined 2.4% due to the lingering effect of the augmentation of costs for repairing furnaces, etc. as planned in 1Q. Ordinary income grew 5.2% year on year to 16,071 million yen. Net income declined 3.0% to 11,465 million yen. They paid a year-end dividend of 32.00 yen/share, up 5.00 yen/share from the forecast, for 53.00 yen/share per year. They revised the dividend policy, revising their desirable payout ratio from around 35% to at least40%. Payout ratio was 40.2%.

   

• For the fiscal year ending December 2026, sales are expected to grow 10.4% year on year to 195 billion yen and operating income is projected to rise 10.0% year on year to 17 billion yen. The sales of the valve manufacturing business are forecast to increase 10.5%. In the growing markets, the sales of their products in all of the fields of semiconductor equipment, semiconductor materials (filters), fine chemicals, and hydrogen & clean energy are expected to grow by double digits. In their core markets, too, each category is projected to see a sales growth. The sales of the metal solutions (former brass bar manufacturing business) are forecast to rise 10.7%. The profits of both the valve manufacturing business and the metal solutions business are expected to grow by double digits. For dividends, they plan to pay 59.00 yen/share, including an interim dividend of 29.00 yen/share, up 6.00 yen/share from the previous fiscal year. The expected payout ratio is 40.4%.

   

• The new medium-term management plan “SHIN GLOBAL 2027” began in the fiscal year ended December 2025. With the aim of becoming a true global enterprise with three “SHINs,” they set a goal of achieving sales of 200 billion yen, an operating income of 20 billion yen, and an ROE of 11% or higher in the fiscal year ending December 2027. They also set target non-financial KPIs, including a CO2 reduction rate of 90%, employees’ engagement, and the ratio of female managers. They have raised the target payout ratio from around 35% to at least40%.

   

• In the fiscal year ended December 2025, which is the initial fiscal year of their second medium-term management plan, they revised prices steadily, and then sales and profit grew. For the fiscal year ending December 2026, sales and operating income are expected to increase 10.4% and 10.0%, respectively, both showing a double-digit growth. Recently, the valve manufacturing business has seen products for data centers, semiconductor equipment, etc. selling well. In addition, in the market of hydrogen & clean energy, they received a healthy number of orders for LNG projects in the fiscal year ended December 2025, which is expected to contribute to the sales in the fiscal year ending December 2026. In India, M&A is expected to produce significant effects. As they will promote the in-house production of parts, by constructing a new factory in Thailand and so on, it can be expected that profit margin will improve in the medium/long term. Share price has risen, thanks to their healthy performance, the thriving stock market, and enhanced IR activities. When the future outlook is taken into account, it can be considered that PER still remains low.

1．Company Overview

1-1 Corporate Philosophy

(Taken from the reference material of the company)

1-2 Overview of KITZ’s Business Segments

KITZ’s businesses consist of the valve manufacturing, brass bar manufacturing and other (including hotel and restaurant management) segments. During the fiscal year ended December 2025, these segments accounted for 80.0%, 18.4%, and 1.6% of total sales, respectively. The brass bar manufacturing business will be renamed the metal solutions (metal S) business in fiscal year ending December 2026.

(1) Valve Manufacturing Business
Valves are used to pass, stop, and adjust the flow of fluids in various pipe systems (water, air, gas, and other substances). They are used in building facilities, residential utility systems, water supply facilities, fresh water and sewer systems, fire prevention equipment, machinery and industrial equipment manufacturing facilities, chemical, medical, and petrochemical product manufacturing facilities, semiconductor manufacturing facilities, oil refineries and other industrial complexes, and hydrogen supply chains among other applications. The Company operates an integrated production system that begins with the casting process (KITZ was the first Japanese company to acquire ISO 9001 international quality standard certification). The Company’s product offerings include commercial valves, which are made of corrosion-resistant bronze and highly economical brass for use in the building construction sector, including building facilities and residential utility systems, and industrial stainless-steel valves such as high-value-added ball valves. The Company has a high share of the domestic market in these mainstay product areas.
In terms of sales, the company covers the country nationwide by expanding marketing bases in the domestic major cities and an elaborate network of distributors. As for overseas, the company has a global sales network where the company did not only establish representative offices in U.A.E but also marketing bases in China, Hong Kong, South Korea, Singapore, Malaysia, Thailand, Vietnam, India, the U.S., Brazil, Germany, and Spain. Regarding the manufacturing, the company has a production network that helps achieve global cost and optimal production locations as the company has deployed production bases in China, Taiwan, South Korea, Thailand, Vietnam, India, Germany, Spain, and Brazil in addition to the domestic factories.

(2) Brass Bar Manufacturing (Metal Solutions) Business 

This business will be renamed “the metal solutions business.” In addition to the manufacturing of brass bars, which are their core products, they will start processing new materials, to expand their business domain.

(3) Other

1-3 ROE Analysis

*The fiscal year ended December 2020 was a nine-month period. 

*Created by Investment Bridge based on disclosed material of the company.

The ROE in the fiscal year ended December 2025 stood at 10.1%, showing a decline from the previous fiscal year, but ROE remained double-digit for 4 consecutive fiscal years. As they aim to achieve an ROE of 13% or higher in the fiscal year ending December 2030, they plan to keep improving shareholder value (PBR).

2. Fiscal Year ended December 2025 Earnings Results

2-1 Consolidated Business Results

* Unit: million yen. Quarterly net income is quarterly net income attributable to owners of the parent company, same as below.

Sales grew 2.7% and operating income rose 8.7%.
Sales grew 2.7% year on year to 176,682 million yen. The sales of the valve manufacturing business increased 1.3% year on year. The recovery of sales of products for semiconductor equipment took longer than expected, but sales grew thanks to the price revision and the growth of sales quantities in the overseas market. The sales of the brass bar manufacturing business increased 9.0% year on year due to the growth of sales quantities, etc.
Operating income rose 8.7% year on year to 15,454 million yen. The profit of the valve manufacturing business increased 8.4% year on year thanks to the sales growth caused by mainly the growth of sales quantities in the overseas market. The profit of the brass bar manufacturing business declined 2.4% due to the lingering effect of the augmentation of costs for repairing furnaces, etc. as planned in 1Q. Regarding non-operating profit, ordinary income grew 5.2% year on year to 16,071 million yen, as insurance revenue increased, but they posted an exchange loss after posting an exchange gain in the previous fiscal year. Net income declined 3.0% to 11,465 million yen, as they sold a large number of strategically held shares in the previous fiscal year and did not do so in the fiscal year ended December 2025.
Both sales and all kinds of profits were almost in line with the company’s forecasts.
They paid a year-end dividend of 32.00 yen/share, up 5.00 yen/share from the forecast, for 53.00 yen/share per year. They revised the dividend policy, revising their desirable payout ratio from around 35% to at least40%. Payout ratio was 40.2%.

Exchange and raw materials

2-2 Business Segments’ results

* Unit: million yen. Composition of operating income is the ratio of profit to sales.

*Created by Investment Bridge based on disclosed material of the company. 

(1) Valve Manufacturing Business 
Sales grew 1.3% year on year, and operating income rose 8.4% year on year.
The recovery of sales of valves for semiconductor equipment took longer than expected, so the sales declined, but overall sales rose 1.3% year on year thanks to the price revision, the growth of sales quantities in the overseas market, etc., and operating income grew due to the increase in sales quantities.

(Performance in each market)
The medium/long-term target markets have been divided into eight market segments. Based on the current core markets (building & facilities, petrochemicals, water treatment, machinery & equipment), the company plans to change the revenue composition by strengthening the growth markets, which are growing and new fields, (semiconductor equipment, semiconductor materials (filters), fine chemicals, hydrogen& clean energy)..
The sales in the core markets declined 0.4% year on year. Building & facilities performed well due to the price hike and the demand for data centers in North America. The sales in the petrochemical market declined, as there were no longer large-scale projects like in China in the previous fiscal year. The sales in the water treatment market increased as domestic demand was favorable. The sales in the growing markets rose 0.4% year on year. The sales in the market of semiconductor equipment did not recover as expected, but the decline in sales was slight, and the sales in the market of semiconductor materials (filters) grew. The sales in the market of fine chemicals increased thanks to the sales from projects, etc. The sales in the market of hydrogen & clean energy declined as they received a healthy number of orders for LNG projects, but the favorable number of orders for hydrogen-related projects will lead to the posting of sales next fiscal year. The sales in other fields increased, as the price hike in the logistics field in Japan produced significant effects.

(Performance in each region)
In Japan, sales grew 2.4% year on year. Outside Japan, sales declined 0.1% year on year due to the fluctuations in exchange rates.
* The sales in North America increased, thanks to the good performance of commercial valves mainly for data centers, and industrial valves.
* The sales in ASEAN countries, South Korea, the Middle East, etc. were unchanged from the previous fiscal year, despite the variation among group companies in Indonesia and Singapore.
* The sales in China dropped, due to the lingering downturn of the entire market, including real-estate recession.
* The sales in India increased, due to the enhancement of marketing activities local distributors established in 2024.

(2) Brass Bar Manufacturing Business
Sales grew 9.0% year on year to 32,514 million yen, thanks to the increase in sales volume.
The operating income in the cumulative 3Q dropped 40.7% year on year, but annual operating income stood at 865 million yen, down 2.4% year on year, as the costs for repairing furnaces as planned in 1Q augmented, but they secured a profit margin thanks to the rise in market price of copper in 4Q.

(3) Other
As they operate the hotel business in Suwa City, Nagano Prefecture, sales and profit increased from the previous fiscal year, thanks to good performance.

2-3 Financial Conditions and Cash Flows

◎ BS

* Unit: million yen. Receivables include electronically recorded receivables. 

Although cash & deposits decreased, total assets increased 11,919 million yen from the end of the previous fiscal year to 184,325 million yen, due to the increase in inventories. Short-term interest-bearing liabilities decreased, but long-term interest-bearing liabilities augmented, and total liabilities grew 1,938 million yen from the end of the previous fiscal year to 64,535 million yen. Net assets increased 9,981 million yen from the end of the previous fiscal year to 119,790 million yen, due to the growth of retained earnings, etc.
Capital-to-asset ratio rose 1.2 points from the end of the previous fiscal year to 64.1%.

*Created by Investment Bridge based on disclosed material of the company. 

◎ CF

*　Unit: million yen.

Free cash flow declined, as operating cash flow decreased and the cash outflow from investment activities augmented. The cash position dropped.

3. Fiscal Year ending December 2026 Earnings Forecasts

3-1 Consolidated Earnings Forecast

Units: million yen.

Exchange and raw materials assumptions

It is expected that sales will grow 10.4% year on year and operating income will rise 10.0% year on year
For the fiscal year ending December 2026, sales are expected to grow 10.4% year on year to 195 billion yen and operating income is projected to rise 10.0% year on year to 17 billion yen.
The sales of the valve manufacturing business are forecast to increase 10.5%. In the growing markets, the sales of their products in all of the fields of semiconductor equipment, semiconductor materials (filters), fine chemicals, and hydrogen & clean energy are expected to grow by double digits. In their core markets, too, each category is projected to see a sales growth. The sales of the metal solutions (former brass bar manufacturing business) are forecast to rise 10.7%. The profits of both the valve manufacturing business and the metal solutions business are expected to grow by double digits.
For dividends, they plan to pay 59.00 yen/share, including an interim dividend of 29.00 yen/share, up 6.00 yen/share from the previous fiscal year. The expected payout ratio is 40.4%.

*Created by Investment Bridge based on disclosed material of the company. The figures for the fiscal year ending December 2026 are company's forecasts.

3-2 Sales and Operating Income by Segment 

* Unit: million yen. The composition ratio of operating income is the ratio of profit to sales.

(1) Valve Manufacturing Business
Sales and profit are projected to rise. It is expected that the sales of valves for semiconductor equipment and data centers will be promoted, the price revision will produce some effects, and sales quantities outside Japan will increase.

*Created by Investment Bridge based on disclosed material of the company. The figures for the fiscal year ending December 2026 are company's forecasts.

(2) Metal Solutions Business
Sales and profit are forecast to grow. Sales and profit are forecast to grow, as they will adopt new materials and promote the sales of high value-added products.

*Created by Investment Bridge based on disclosed material of the company. The figures for the fiscal year ending December 2026 are company's forecasts.

(3) Other
Sales are expected to grow, but profit is projected to drop.

*Created by Investment Bridge based on disclosed material of the company. The figures for the fiscal year ending December 2026 are company's forecasts.

3-3　Recent topics

① Revision to selling prices in Japan in March
After the price revision in June last year, copper price and logistics costs augmented further, so they will reflect the augmentation of manufacturing costs in prices.
The subject products are bronze and brass valves of the KITZ and TOYO brand (valve bodies only for automatic valves). Revision rate is over 15%, and they will conduct the price revision on March 2, 2026.

(Taken from the reference material of the company)

② Completion of a new factory for the semiconductor equipment market in Vietnam Plant
At a new factory for manufacturing valves for high-purity gas for semiconductor equipment, which was completed in the premises of KITZ Corporation of Vietnam Co., Ltd. in Vietnam, they conducted a completion ceremony on January 26, 2026, and started manufacturing while expecting the expansion of the semiconductor market.
At the new factory, they plan to improve the capacity to manufacture valves for high-purity gas by around 30%, to release products more swiftly.

(Taken from the reference material of the company)

③ Complete change of uniforms
As one of their initiatives for “empowering our workforce to lead the way to the future,” which is one of their material issues, they will completely change the uniforms worn by workers at 3 factories of KITZ in Japan, commemorating the 75th anniversary.
The new uniforms have improved features, including stretchability and breathability, and are made from plant-derived materials, reflecting the voices of on-site workers. They will make continuous efforts to enhance employees’ engagement, etc. to improve their corporate value further.

(Taken from the reference material of the company)
Employees wearing the new uniforms (second from left: Yui Susaki, women’s wrestling athlete)

④ Fostering of a corporate culture with feedback: “KaTaRibi (Bonfire Talk)” × “KaTaRibi (Discussion Day)”

In order to diffuse their long-term management vision inside the company and make collective efforts to attain goals involving all group companies, they have held “KITZ Group Engagement Forum,” in which the president visits each business establishment inside and outside Japan and directly talks with employees, 154 times since 2022, and the president has dialogued with a total of about 4,200 employees. Since 2026, they will evolve such initiatives and foster a culture with feedback by implementing the program “KaTaRibi (Bonfire Talk)” × “KaTaRibi (Discussion Day).”

(Taken from the reference material of the company)

4. Medium-term Management Plan

4-1 Second Medium-Term Management Plan (FY 12/25 – FY 12/27)

The new medium-term management plan “SHIN GLOBAL 2027” will start in the fiscal year ending December 2025, aiming for sales of 200.0 billion yen, an operating income of 20.0 billion yen and an ROE of 11% or higher in the fiscal year ending December 2027. The executive summary is as follows.

(Taken from the reference material of the company)They have changed the target payout ratio from around 35% to 40% or higher.

Quantitative targets

Unit: 100 million yen 

*CO2 reduction rate means the ratio of Scope 1 and 2 emissions from the domestic group companies with respect to the emissions in 2013. The values other than CO2 reduction ratio mean those of KITZ only.
*Regarding employees’ engagement, they considered that the diffusion of the culture of giving feedback would have employees feel that their jobs are worthwhile and comfortable, and therefore, from the fiscal year ending December 2026, they changed the evaluation items for improving employees’ engagement to “feedback indicators” for gauging the level of fostering and diffusion of the culture with feedback (a score out of 5). As they changed the company for surveying engagement, questions were changed, so it is impossible to calculate the relative scores in the fiscal year ended December 2025, so they are omitted.
*“Female managers” refers to employees in management professional positions.

Results by segment and future strategies
Restructuring the in-house organizations from organizations classified by function to BU systems classified by market
The in-house organizations were restructured into business units (BUs) classified by market, centered on eight markets, in step with the start of the second medium-term management plan. The delegation of authority to BU heads enabled faster decision-making.

Valve Manufacturing Business
The forecast for the fiscal year ending December 2027 is 167.2 billion yen in sales and 23.1 billion yen in operating income.
In the core markets, they will accelerate sustainable growth based on the results in each market. Regarding the business in each area, they will meet the demand stirred by the increase of data centers in the U.S. The local corporation will take the initiative, and accurately grasp growth opportunities. In the growing markets, they will accelerate the growth of revenues by investing in mainly highly growing domains. They will establish a growth driver based on products in the fields of semiconductors and fine chemicals.

Metal Solutions Business
The forecast for the fiscal year ending December 2027 is 30 billion yen in sales and 1.5 billion yen in operating income.
The company will promote technological tie-ups and collaborations for expanding sales of high value-added products and complying with RoHS regulations.

Financial strategies and capital policies
They aim to continuously improve shareholder value by “raising ROE” and “improving PER.” They aim to achieve an ROE of 11%or higher in the fiscal year ending December 2027 and an ROE of 13% or higher in the fiscal year ending December 2030.
In addition, they plan to invest 60 billion yen in the 3-year period of the second medium-term management plan. They plan to invest 20 billion yen in M&A, 14 billion yen as ordinary investment, and 26 billion yen as strategic investment. The breakdown of the strategic investment of 26 billion yen is as follows.

5. Conclusions

In the fiscal year ended December 2025, which is the initial fiscal year of their second medium-term management plan, they revised prices steadily, and then sales and profit grew. However, the 2.7% sales growth and the 8.7% operating income growth were not enough to consider KITZ as a growing enterprise. However, for the fiscal year ending December 2026, sales and operating income are expected to increase 10.4% and 10.0%, respectively, both showing a double-digit growth. Going forward, the outcomes of measures they have implemented so far are expected to be reflected in their financial results.
Recently, the valve manufacturing business has seen products for data centers, semiconductor equipment, etc. selling well. In addition, in the market of hydrogen & clean energy, they received a healthy number of orders for LNG projects in the fiscal year ended December 2025, which is expected to contribute to the sales in the fiscal year ending December 2026. While the business in India is growing, M&A is expected to produce some effects on a full-scale basis.
As they are promoting the in-house production of parts, by constructing a new factory in Thailand and so on, it can be expected that profit margin will improve in the medium/long term.
Share price has risen, thanks to their healthy performance, the thriving stock market, and enhanced IR activities. When the future outlook is taken into account, it can be considered that PER still remains low.

<Reference1: Long-term Management Vision, “Beyond New Heights 2030 – Change the ‘Flow’ ” > 

In February 2022, in order to realize the new KITZ’ Statement of Corporate Mission, for the purpose of further long-term growth and enhancement of corporate value along with the contribution to the realization of a sustainable society, we have formulated our long-term management vision, “Beyond New Heights 2030 - Change the 'Flow',” as well as our first Medium-term Management Plan 2024. 

(1) Our Aspirations for 2030 

The following are the four ideals. 

(2) Ideal Management Structure and Quantitative Goals 

① Quantitative goals
The goal for fiscal year 2030 is as follows.
☆ ROE: 13% or higher

② Management structure
The company aims to expand the business domain toward the growing fields of semiconductors, fine chemicals, hydrogen, new businesses etc. based on its current core businesses such as building facilities and petroleum/general chemistry.
The company will proactively allocate resources to growing fields and regions against the backdrop of digitalization and de-carbonization with emphasis on return on invested capital (ROIC).

(3) Ideal State for 2030: Shift in Business Domains 

They aim for two-sided management that can generate earnings in core businesses and growing areas.

(Taken from the reference material of the company)

① Long-term strategic investment policy 
The total investment budget (for nine years) is set at 80 billion yen, of which approximately 60% will be for strategic investment in growing and new areas (including DX and M&A). 
Management resources will be intensively allocated for shifting from core businesses. 

(4) Basic Sustainability Policy

① Basic sustainability policy and sustainability slogan 
The following are the basic sustainability policies and slogans. 
 
◎ Basic sustainability policy 
KITZ Group is committed to realizing its corporate philosophy, the KITZ’ Statement of Corporate Mission, through the following activities 
① Work to solve social issues through our business and enhance our corporate value and social value 
② Achieve efficient, fair, and transparent corporate management and become a company trusted by society. 
③ Build strong trusting relationships through dialogue with all stakeholders 

◎ Sustainability slogan
Create the Future, Preserve the Future 
 
Create the Future 
The KITZ Group will create a new future by acting with integrity and taking on challenges without fear of change, aiming to realize a recycling-oriented society that is friendly to the earth and people. 
 
Preserve the Future 
The KITZ Group will continue to protect the Earth's limited resources and human life and strive to realize a society that we can pass on to the next generation. 
 
◎ Sustainability management 
① Overall view
In our long-term strategy toward 2030, we have placed sustainability management at the core of our business strategy. 

(Taken from the reference material of the company)

② ESG Initiatives
The KITZ Group will establish key management themes for each of E (Environment), S (Society), and G (Governance) and work on concrete measures to address them.  

◎ E (environment) 
The company aims to realize a sustainable, recycling-oriented society in fiscal year 2050 by promoting Triple-Zero initiatives: zero CO2 emissions, zero environmental impact, and zero risk. 
The goals for fiscal year 2030 are i) a CO2 reduction rate of 90%, ii) a waste to landfill ratio of less than 1.0%, and iii) 100% reduction of water resources discharge. 
(All figures are comparisons with fiscal year 2013 in the domestic group) 

◎ S (society) 
To create an environment where each and every employee works professionally and energetically at their best performance, regardless of gender, age, nationality, culture, etc., with the aim of achieving the success of diversified human resources. 

◎ G (governance) 
In terms of corporate governance, the Company will strengthen portfolio management by incorporating an evaluation yardstick for the cost of capital and enhance the monitoring function and strengthen the implementation system by establishing a Sustainability Committee. 
In risk management, we will identify and assess risks, and implement, verify, and continuously update countermeasures throughout the Group, as well as seek to discover new business opportunities by shifting our thinking from risks related to social needs and market changes. 
In the area of compliance, we will shift to a compliance program that meets the needs of society (strengthening our measures for human rights, labor, the environment, anti-corruption, etc.) and aim to spread autonomous compliance throughout the Group, with each employee taking responsibility for his or her own compliance. 

(5) Toward DX 

They aim to transform into a customer-oriented and agile organization by thoroughly streamlining existing businesses and visualizing and mobilizing management resources in order to support the world's social infrastructure and create a prosperous future through fluid control and digital technology.
Following the business reforming (BX) activities through DX carried out in the first medium-term management plan, they plan to further streamline operations by reforming their organizations, systems, and processes (CX) in the entire corporate group in accordance with the second medium-term management plan.

(Taken from the reference material of the company)

(6) Road Map after Accomplishing the First Medium-Term Management Plan

Targets were achieved in the first medium-term management plan.
The target ROE in 2030 was revised from the initially targeted 10% or higher to 13% or higher.

(Taken from the reference material of the company)

<Reference 2: Regarding Corporate Governance> 

◎ Organizational structure, Composition of board of directors and company auditors 

◎ Corporate governance report (Updated on：July 11, 2025)
Basic policy
Based on its corporate philosophy system, the KITZ Group will strengthen its management foundation to support the enhancement of corporate and social value through sustainable growth and will realize effective corporate governance by establishing and continuously operating a system to enhance legal compliance, transparency, soundness, and efficiency in management, thereby further increasing the trust and confidence of its stakeholders.
[Our Group's Corporate Philosophy System]
■KITZ’ Statement of Corporate Mission (Corporate Philosophy)
We strive to build a robust global environment and sustainable future by supporting societal infrastructure through our advancements in fluid control technologies and materials.

■Long-term Management Vision
Beyond New Heights 2030－Change the “Flow”

■Action Guide
Do it KITZ Way
・Do it True (Integrity and truth)
・Do it Now (Speedy and timely)
・Do it New (Creativity and endeavor)

Our initiatives and efforts for sustainability and corporate governance are disclosed on our website.
・Initiatives toward sustainability
https://www.kitz.com/en/sustainability/about_sustainability/
・Efforts for corporate governance
https://www.kitz.com/en/sustainability/governance/
・"Basic Policy on Corporate Governance"
https://www.kitz.com/en/cms/wp-content/themes/kitz/images/sustainability/governance/corporate-governance/policy.pdf
・"Status of Implementation of the Corporate Governance Code" (Japanese only)
https://www.kitz.com/en/cms/wp-content/themes/kitz/images/sustainability/governance/corporate-governance/cgc.pdf

<Reasons for Non-Compliance with the Principles of the Corporate Governance Code> 
The Company implements all of the principles of the Corporate Governance Code.

<Disclosure Based on the Principles of the Corporate Governance Code (Excerpts)> 
[Principle 1-4]　Cross-shareholdings
We have established a “Policy on Cross-shareholdings,” which stipulates that, in principle, any shares for the purpose of forming stable shareholders will not be held, and that we will reduce, as much as possible, the number of the shares that are deemed not to meet this policy.
Every year at the beginning of the fiscal year, the Board of Directors scrutinize the purpose of holding individual strategically held shares own by the company, the quantitative economic rationality associated with holding, and the risks of holding such shares, etc. and check their appropriateness based on this policy.
At the Board of Directors’ meeting held in January 2025, the Board reviewed the status of strategic shareholding with reference to the status at the end of the fiscal year.

<Number of listed stocks held for purposes other than pure investment and the variation in ratio of strategically held shares to net assets>

(Note 1) The number of strategically held shares does not include stocks with small amounts held in single unit (approximately 1 million yen).
(Note 2) Ratio of strategically held shares to net assets [%] = Strategically held shares (amount recorded on the balance sheet) ÷ Consolidated net assets

■Standard for exercise of voting rights related to strategically held shares
Regarding the exercise of voting rights regarding strategically held shares, we comprehensively take into consideration the management situation and suitability of decision-making for improving the governance system and corporate value in a mid-to long-term of the share-issuing company, and whether an improvement of our company group’s corporate value can be expected or not and pass a judgement for or against in regard to each proposal.
Please refer to our company’s website for the “Policy Regarding Cross-shareholdings” and to the annual securities reports for the number of shares of each specific investment stock.

[Supplementary Principle 2-4-1]　Human Resources Development Policy and In-house Environment Development Policy for Ensuring the Diversity of Core Human Resources, and the State of Achievement
[1] Utilization of diverse human capital
Our company promotes “Diversity, Equity & Inclusion (DE&I)” as one of our important business strategies. We consider our employees to be our company's assets (human resources) and believe that our mission is to create an environment in which employees with diverse attributes (age, gender, nationality, occupation, position, and working style) and values can respect and appreciate each other and demonstrate their individual strengths. Based on this idea, we respect the satisfaction of employees in their work and the diversity of their values ​​and opinions, and are working to enhance the creativity of “each individual” employee and maximize organizational strength.
Moreover, our company has been promoting personnel based on the individual, placing importance on their ability and achievements, regardless of sex or nationality. We believe that respecting diverse viewpoints and values is vital for the realization of sustainable growth and the improvement of corporate value, and alongside proactive recruitment of human resources with different experiences, skills, and careers, we are developing a workplace environment that allows such personnel to flourish.
■Human Resources Development Policy
In order to achieve our long-term management vision, it is important that all of our diverse employees demonstrate their individual capabilities to the fullest. To that end, our human resources development policy is designed to form a base for developing innovative human capital and self-reliant employees who can accommodate changes in the environment.

■Internal Environment Improvement Policy
In order to achieve our long-term management vision, it is important that all of our diverse employees demonstrate their individual capabilities to the fullest. To that end, our internal environment improvement policy is designed to create an environment for realizing well-being, which is a state in which each and every employee is physically, mentally, and socially satisfied.

[2] Ensuring diversity in core human resources and appointment to managerial positions
Believing that it is essential to respect diverse perspectives and values in order to achieve sustainable growth and enhance our corporate value, our company proactively recruits human capital with different experiences, skills, and careers and continuously develops a workplace environment that allows such human capital to flourish, as well as appointing personnel on a person-oriented basis with a high value placed on each person’s capabilities and achievements regardless of gender or nationality. We consider it important to ensure diversity especially in the management layers that constitute the core of our business administration; thus, we focus on appointing female employees, employees with foreign nationality, and experienced hires to managerial positions.
1. Appointment of female employees to managerial positions
As part of the efforts to accomplish our aim of enabling female workers to equally participate in the decision-making process of the company or the organization without being held back by gender stereotypes, our company strives to appoint female employees to positions involved in the decision-making process, including managerial posts.
In addition, as a policy for gradually increasing the ratio of female employees in managerial positions, we enrich education and training programs targeted at female employees and their supervisors, enhance job rotations, appoint female workers to the post as leader (which is the assistant manager level) so that they will be the source of the next generation of female managers, newly employ female workers at the manager and assistant manager levels, and implement other various measures to expand the pool of female employees capable of serving as managers.
The ratio of female employes holding managerial positions was 7.5% in the fiscal year 2024 while the target was set at 10%. In the second medium-term management plan, we have set our target ratio of female workers appointed to managerial posts at 10% for the fiscal year 2025, 12% for the fiscal year 2027, and 15% for the fiscal year 2030.
Furthermore, our company is recruiting new female graduates and experienced female hires, and the ratio of new female graduates and experienced female hires recruited in the fiscal year 2024 was 23.6%, which exceeded the target of 23%. In the second medium-term management plan, we have set the target ratio of female employees at 24% for the fiscal years 2025 and 2027 and 25% for the fiscal year 2030. We will implement multifarious initiatives in order to reach the targets.

2 . Promotion of non-Japanese employees to managerial posts
In our group, 52.2% of employees work outside Japan. In addition, we are promoting the recruitment in each overseas region for our group companies and training locally hired employees to become managers.
In addition, in order to accelerate the globalization of our business toward 2030, it has become necessary to promote the localization of operations, which has become common around the world, and improve business efficiency from the perspective of overall optimization. In addition to hiring non-Japanese employees, we will actively promote the exchange of human resources across national and regional boundaries to achieve optimal human resource utilization on a global basis.
Meanwhile, at KITZ Corporation alone, the ratio of employees with foreign nationality to the total number of employees was 1.2% (Note 1) at the end of the fiscal year 2024 while the average number of employees with foreign nationality recruited over the past five years was 3.3 (Note 1), and KITZ Corporation has not yet appointed any of the employees with foreign nationality to any managerial position. In the second medium-term management plan, we have set the target ratio of employees with foreign nationality recruited at 2.2% (Note 2) for the fiscal year 2025 and 3.0% (Note 2) for the fiscal year 2027. We will implement myriad initiatives to appoint employees with foreign nationality to managerial positions.
(Note 1) The number of full-time employees
(Note 2) Employees directly employed by our company, including full-time employees

3. Appointment of experienced hires (mid-career hires) to managerial positions
The ratio of experienced hires recruited by our company was 49.6% and that of experienced hires holding managerial positions was 42.8% at the end of the fiscal year 2024, both of which are at high levels. We will strive to maintain these high ratios.

[Supplementary Principle 3-1-3]　Initiatives toward sustainability/enhancement of the quality and quantity of information disclosure based on frameworks developed by such organizations as the TCFD
[1] Initiatives to promote sustainability
In order to concurrently achieve the sustainable prosperity of the society and the medium- and long-term growth of our corporate group, our company considers sustainability management to be an important pillar. As we regard measures especially against issues about Environmental, Social, and Governance (ESG) as opportunities of creating our corporate group’s new corporate value as well as fulfilling our responsibilities as a company that constitutes the society, we have placed sustainability management at the core of our business strategies in the long-term management vision for 2030, “Beyond New Heights 2030 – Change the ‘Flow.’ ”
In addition, we have classified our aim for 2030 into four categories, which are technology/solutions, environmental conservation through business activities, core businesses/growth businesses, and diverse human resources, and identified material issues (key business priorities) for realizing the aforementioned four items.
We reviewed and revised the material issues (key business priorities) in the second medium-term management plan released in February 2025. Through the review and the revision, we have defined three items for growing our corporate group’s business, which are (1) contribution to the advancement of digital society, (2) contribution to environmental conservation, and (3) contribution to a prosperous life through evolution, and three items for establishing a business base that supports them, which are (4) empowerment of our workforce to lead the way to the future, (5) establishment of a sustainable supply chain, and (6) implementation of more active governance.
Our corporate group will pursue the creation of a sustainable future by proactively working on these six material issues.
In order to strongly promote sustainability management, our company operates a Sustainability Committee whose chair is the Director, Representative Executive Officer and President, vice chair is the Division Manager of the Corporate Planning Division, and standing committee members are the senior executive officers and executive officers of our company, and the representative directors and presidents of our group companies based in Japan. The missions of the Sustainability Committee are to play a leading role in achieving our corporate group’s sustainable growth and enhancing our corporate value in the medium and long term, as well as to help develop a sustainable society by striving to realize the long-term management vision and carrying out corporate activities aimed at solving environmental and social issues.
Furthermore, our company has set up a Sustainability Promotion Office, and promotes and supports sustainability management across our corporate group, in order to smoothly and effectively operate the Sustainability Committee and propel forward sustainability management.

[2] Impact of climate change-related risks and opportunities on the company's business activities and revenue
Based on the recognition that climate change is a serious issue affecting the global environment and our group's business activities, in December 2021, we expressed our support for the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and conducted trial climate scenario analysis as part of our efforts.
Going forward, we intend to further advance data-based analysis, identify risks and opportunities related to climate change, and gradually enhance the quality and quantity of information disclosure in line with the TCFD framework.
In addition, the environment, Safety and Health Committee (a committee specializing in the environment, safety, and health) checks the progress and achievements regarding the medium/long-term environmental targets of zero CO2, zero environmental impact, and zero risk, which are collectively referred to as “3ZEROs (Triple Zeros),” as set in our long-term environmental vision, and determines the direction and key policies. The committee reports the board of directors on particularly important matters.
We have disclosed information on our measures against climate change (disclosure in line with the TCFD framework) on our company’s website: 　https://www.kitz.com/en/sustainability/environment/env_warming/

■ 3ZERO (Triple Zeros)
1. Zero CO2
・ Initiatives to reduce CO2 emissions
On the basis of our integrated system for production from raw materials, our company has produced valves by melting such metals as copper and iron with electric furnaces since our foundation. As our production system requires a large amount of electricity and affects the environment, we have endeavored to procure CO2-free electricity at our major offices. Furthermore, we have strove to shift our fuel to liquefied natural gas (LNG) from heavy oil and liquefied petroleum gas (LPG) and procure carbon-neutral gas, as well as installing photovoltaic systems.
・Toward realization of carbon neutrality by 2050
Our company is working to cut down on CO2 emissions in the supply chain not only through efforts to reduce the amount of CO2 generated from our production and other processes (Scopes 1 and 2), but also by calculating the amount of CO2 emitted by the partner companies involved in our company’s business activities (Scope 3). We aim to provide environmentally friendly and sustainable valves.

2. Zero environmental impact
Aiming at a sustainable and recycling-oriented society, our company set up a task force on promotion of recycling of resources in the fiscal year 2022 and since then has taken measures targeted at water resources, waste, plastics, hazardous substances, and the like. In particular, with regard to water resources, we have set water neutrality as a KPI for fiscal year 2030, and are promoting water conservation, recycling, and groundwater recharging.
Regarding waste, we have defined the rate of landfill disposal as a KPI and taken measures for effective use of resources, such as recycling of molding sand generated in the course of our production process.

3. Zero risk
Our company strives to prevent environmental pollution, industrial injuries, and fire, and safely and stably produce products by obtaining the certificates of ISO 14001 and ISO 45001, performing mutual audits, promoting various educational programs, and establishing a system for managing the safety and health within our corporate group.

[3] Strategy for allocation of management resources and business portfolio, including investment in human capital and intellectual property
In our long-term management vision and Medium-term Management Plan, we have included strategies for allocating management resources, including investments in human capital and intellectual property, and our business portfolio as steps toward growth that will enable us to realize our long-term management vision.
Our basic policy on our business portfolio is disclosed on our website.

https://www.kitz.com/en/investor_ir/management-policy/m_vision/

In addition, with regard to investment in intellectual property, we have identified “Technology and Intellectual Property Strategy for Sustainable Growth” as one of our management strategies and issues, and have defined six fundamental technologies in which we should continuously invest management resources, and are promoting the enhancement of brand value by upgrading technology and pursuing better materials, as well as creating an environment for the next generation through human resources development and other measures. The details are disclosed on our website.

https://www.kitz.com/en/sustainability/products/

[4] Investment in human capital
1. Formulation of a human resources portfolio, and initiatives for strengthening human capital
In order to achieve the long-term management vision, our company has established a human resources portfolio in which our corporate group as a whole is taken into account and is developing a system that enables us to flexibly recruit, train, and allocate human capital among our group companies in Japan and overseas, with the aim of realizing “diverse human resources.” In addition, to strengthen our human capital, we have begun efforts centered on three pillars: “building a strong organization,” “creating a good organization,” and “fostering a corporate culture.” We aim to maximize the value of our human capital toward 2030 and become a company that continues to be chosen. We are also taking measures relating to respect for human rights, DE&I, promotion of the work-life balance, health management, improvement of employee engagement, and the like, based on the human resources development policy and the internal environment improvement policy that are the bases for implementing individual initiatives.
2. Respect for human rights
Amid growing expectations toward the leadership demonstrated by companies for solving global social issues that are becoming apparent these days, such as human rights, poverty, labor, and the environment, our company considers such issues to be one of the most important issues to tackle. As part of our measures against these social issues, our company expresses support for the United Nations Global Compact (UNGC) and takes initiatives to implement the 10 principles of the UNGC, and supports the Universal Declaration of Human Rights, the international standard related to human rights.
We conducted a questionnaire survey concerning human rights as one of the initiatives and use the results as reference for creating a worker-friendly working environment in which employees can express their candid opinions and the human rights of each of employees are respected. In addition, we utilize the compliance helpline and accept requests for advice and reports regarding human rights from our employees at all times, which means that our company has established a system that allows our employees to ask for help at any time with a sense of security.
Furthermore, our company has formulated the supplier guidelines and green procurement standards, which contain particulars related to human rights, so that our suppliers can understand our company’s corporate philosophy and value and work with us in unity. We conduct a survey (self-assessment) targeted at our company’s major suppliers based on these guidelines and regulations, and in fiscal year 2024, we performed a survey targeted at not only our suppliers, but also our group companies, based on which our company carries out procurement activities aimed at “creating a rich global environment and a sustainable future” as stated in our corporate philosophy.

Our company also promotes DE&I as one of our important business strategies and is taking concrete measures to attain the goals set in the second medium-term management plan regarding gender equality, promotion of understanding about LGBTQ, enhancement of the recruitment of people with disabilities, and empowerment of workers with foreign nationality. With regard to the promotion of understanding about LGBTQ out of them, we implement measures for the five indicators of the PRIDE Index, and received the BRONZE rating in the PRIDE Index 2023 and the highest GOLD rating in the PRIDE Index 2024.

3. Improvement of work-life balance
①　Health-oriented management
To ensure that our employees can continue to work with peace of mind, we have set targets for the enhancement of work-life balance, support for employees who are raising children or caring for family members, and health-oriented management, and are working to create an environment in which employees can achieve harmony between their work and private lives. In addition, based on the recognition that the management and promotion of employees’ health is increasingly important for a company to achieve sustainable growth, we have established the KITZ Group’s Health Management Statement and Policy in 2021, which consists of five pillars (realizing a healthy work-life balance, improving working environments based on health and safety promotion, addressing lifestyle-related diseases with a focus on prevention, measures for mental health and reducing job stress, and employee education to improve health literacy), to strategically promote the physical and mental health of employees and create a vibrant organization. As a company that implements excellent health management, we have been certified as a “Excellent Corporations for Health Management” by the Ministry of Economy, Trade and Industry for the fourth consecutive year.

② Optimization of working hours
As part of our efforts to create a corporate culture that allows our employees to work healthily and energetically, our company endeavors to prevent long working hours, forbid unpaid overtime, and encourage our employees to take annual paid leaves through labor-management cooperation, as well as thoroughly making our employees comply with labor-related laws and regulations. We reduced the total hours worked by 1942 hours against the target of 1990 hours in the fiscal year 2024. When an employee works for a period exceeding the designated working hours, we will report the fact to the management and take care of the employee’s mind and body through such means as interviews with an industrial physician.

4. Initiatives regarding the reform of our organizational culture and mindset
Our company focuses on initiatives to encourage our employees to change their mindset, based on our idea of shifting from an attitude of clinging to traditional ways to an attitude of always seeking new methods, so that diverse human capital will be accepted while our tradition that has continued since the foundation can be preserved.
Aiming to make a company where each and every employee works with vitality and delivers their best performance as professionals beyond such biases as age, gender, nationality, and cultural background, our company carries out an engagement survey for the purpose of grasping what our current organizational culture is like while setting sustainable enhancement of employee engagement as one of our human capital strategies.
We performed an employee engagement survey targeted at our company and our group companies based in Japan in the fiscal year 2024. The results of the survey were provided to each workplace and reported to the management at meetings of the board of directors and the board of executive officers for checking and analyzing our current organizational culture, and we have determined specific plans of action and target values for helping each workplace conduct activities accordingly. In addition, we strive to continuously improve employees’ engagement by carrying out this survey regularly every year.

Detailed information on 1. through 4. is disclosed in the Integrated Report and on our company's website.

[Principle 5-1] Constructive dialogue with shareholders
[1] Promoting dialogue with shareholders
To promote dialogue with our shareholders, we are taking the following actions.
1. We have appointed an Executive Director in charge of IR, and we promote dialogue with shareholders through a system led by the head of the division in charge of IR.
2. In order to provide timely, accurate, and fair information to all shareholders and investors, we have established a Disclosure Policy, which is published on our website (Japanese Only.)
kitz.com/en/investor_ir/management-policy/disclosure_policy/
3. In principle, financial results presentations for institutional investors and analysts are held on a quarterly basis, and company briefings for individual investors are held annually. The President and Representative Executive Officer, the Executive Director in charge of IR or the head of the division in charge of IR provide explanations, and directors, including outside directors, attend as necessary to promote dialogue with shareholders.
4. When a shareholder requests an interview, in principle, the head of the division in charge of IR handles the request. Depending on the purpose of the interview and the number of shares held, the President and Representative Executive Officer or the Executive Director in charge of IR handles the request.
5. When engaging in dialogue with shareholders, our company appropriately manages information in order to prevent insider trading.
6. The long-term management vision and Medium-term Management Plan are explained in an easy-to-understand manner.
7. To support dialogue with shareholders, the relevant departments organically collaborate with each other as necessary.
8. The head of the division in charge of IR regularly reports to the President and Representative Executive Officer and the Executive Director in charge of IR on opinions, requests, and other information obtained through dialogue with institutional investors and analysts, and when necessary, the President and Representative Executive Officer reports the information to the Board of Directors for use in management improvement.
9. In addition to financial results information such as financial summaries and annual securities reports, IR information such as management information, stock-related information, and information on general meetings of shareholders is disclosed on our company website.

https://www.kitz.com/en/investor_ir/
10．We monitor our shareholder distribution as of the end of December each year.

[Measures to realize management that is conscious of capital costs and stock prices]
At the Board of Directors’ meeting, we evaluate and analyze the current situation of our company with regard to measures to realize management that is conscious of capital costs and stock prices and determine future policies and specific measures to increase corporate value. We analyze the cost of shareholders' equity from two perspectives: : calculation using the CAPM method and the expected rate of return to our company. While our company’s return on capital exceeds the investors’ expected rate of return at the moment, we understand that our challenge in the future is to gain the market confidence in growth potential of our medium/long-term earnings.
Our company, therefore, will strive to further generate profit, foster expectations for our growth, cut down on the cost of capital by classifying our policies into five categories, which are ROIC management, financial strategies, growth strategies, ESG management, and IR strategies/shareholder policies, taking measures, and performing evaluation and analysis, so that we can enhance our corporate value.
Regarding measures to achieve management that is conscious of cost of capital and stock price, we have disclosed this on our website.
https://www.kitz.co.jp/investor_ir/management-policy/m_vision/
[English disclosure] https://www.kitz.com/en/investor_ir/management-policy/m_vision/

For back numbers of Bridge Reports on KITZ Corporation (6498) and Bridge Salon (IR seminar), please go to our website at the following URL. www.bridge-salon.jp/