Fujikura Group Integrated Report

Integrated Report 2025 of the Fujikura Group, which has just welcomed the 140th anniversary of the company’s founding, enables the reader to sense the current strengths of Fujikura in its management and organizational capabilities. The Group confronted the deterioration in performance in FY2019, which resulted in a net loss of 38.5 billion yen, head-on and resolutely carried out structural reforms through the 100-Day Plan from 2020 onward. As a result, the Group accomplished the Mid-term Management Plan that began in FY2023 one year ahead of schedule. It then went on to record-high net sales and net profit in consolidated results for FY2024. The current strength of the Fujikura Group is vividly illustrated in the individual indicators shown in the Financial Highlights—net sales, operating profit, total assets, equity-to-assets ratio, net income per share, ROE, ROIC, and cash flow.

Many, although not all, of the points I mentioned in the independent opinion last year have been reflected and I feel that the excellent content has become even more outstanding in this year’s Integrated Report. The two-page spread entitled Strengths of the Fujikura Group incorporates the keys to success of the Group as it continues to make great strides. Its strengths in both new product development capabilities, which generate industry-first and industry top-class products, and its manufacturing technological capabilities, which enable the manufacture of hard-to-replicate products, generate synergies. As stated in the Message from the CEO, we can also recognize the data center-related business, where a majority of the customers are companies in the top 10 worldwide in market capitalization, and the continual refinement of business management methods as Fujikura overcame past management crises as major strengths. I strongly feel the combination of these elements has led to the current “winning streak” of the Fujikura Group.

That is also reflected in the two-page spread on the Value Creation Process. Fujikura has simplified it from last year, refining each term used to deliver a clearer message. The content clearly explains how six types of capital provide the input, and the output and outcome generated through the value chain and the strengths of the Fujikura Group are consistent.

The establishment of the Special Assignment Project Department for new business creation is also noteworthy. This is an attempt to secure the time and budget for business development by creating a dedicated structure separate from existing operations to pursue commercialization of ideas proposed by employees. The five projects the department is currently pursuing are expected to produce major benefits in terms of human resource development of the employees who are participating in projects, in addition to the achievements in new business development.

The following three points are recommendations for improving future Integrated Reports and expanding initiatives.

• Strengthening Initiatives Aimed at Carbon Neutrality
  As also stated in the Message from the CEO, the Fujikura Group aims to “contribute to carbon neutrality through our businesses themselves” as part of Beyond2025, an initiative in business activities. This refers to the expectation that a huge volume of high temperature superconductors will be used in power generated through fusion energy, a potential source of safe, clean energy in the 2030s. Along with the dramatic expansion of data communication volume due to progress in AI and other areas, Fujikura maintains that the use of small-diameter and high-density fiber optic cables (SWR®/WTC®) in the countless fiber optic cables employed in rapidly growing data centers can incorporate more than 10 times the density of optical fibers compared to conventional fiber optic cables and increase space efficiency.
  Meanwhile, many clean energy companies and information technology companies, who are customers of Fujikura, are committed to achieving net zero carbon neutrality and the decarbonization of corporate customers is expected to progress rapidly. Reduction in CO₂ emissions in Fujikura Group business activities is an urgent matter and the 20.8% of electric power currently produced by renewable energy is insufficient. While Fujikura has joined the RE100 and is aiming for 100% renewable energy in 2050, I would like the Group to move the target timeline up further and increase product advantages and business activity initiatives aimed at carbon neutrality to put them on the same plane.
• Strengthening Elements of Human Rights in the Supply Chain
  In regard to supply chain management, Fujikura has increased the level of disclosure by disclosing the aggregated results of the CSR Supply Chain Questionnaire in Integrated Report 2025, enabling stakeholders to gain an overall picture of the status of initiatives in supplier sustainability and risks. However, human rights elements are not incorporated in the Fujikura Group Basic Procurement Policy. The supplier risk management demanded of companies these days is not limited to Tier 1 and is steadily expanding to Tier 2 and Tier 3. As the scope of disclosure demanded expands, human rights will be one of the most important elements. I recommend re-examining the elements that shareholders, investors, and other stakeholders recognize as risks and revising the Basic Procurement Policy.
• Re-examining Materiality and Integrating with Strategy
  In the Roadmap for the Medium- to- Long- Term Growth of the Fujikura Group, Beyond2025 and Long-term Environmental Vision 2050 are positioned as targets to specify the direction of future corporate management beyond FY2025, the final year of the Mid-term Management Plan. Materiality is a theme the Group should focus on as central to advancing business activities from the medium- to long-term perspective. Materiality includes some elements that should be undertaken as business activities that could have an impact on the environment and society, as well as those that should be undertaken as part of business strategy by recognizing sustainability issues as business risks and opportunities.
  For example, the CO₂ reduction addressed in Fujikura Group Long-term Environmental Vision 2050 is currently limited to the business activities of the Fujikura Group. However, the above-noted “contribute to carbon neutrality through our businesses themselves” could also be a strategic material element that leads to business opportunities. In addition to evaluating the impact on the global environment and society, I look forward to seeing the Group re-examine how sustainability issues affect the risks and opportunities of the Fujikura Group in relation to business strategy and link this to the specification of higher priority material issues.

The trend toward making disclosure of information on sustainability mandatory and developing uniform standards is accelerating at the global level. It can be said that one reason for this trend is the recognition that conventional financial results alone are insufficient and non-financial information needs to be included in evaluation. This recognition has now become mainstream among shareholders, investors, and other stakeholders who want to discern future corporate value. Amid this trend, I have high expectations for the Fujikura Group, precisely because its outstanding management and organizational capabilities will enable it to also fully integrate sustainability issues with business strategy, advance sustainability management, and disclose such initiatives in an even better way.

Hiro Motoki
President and CEO,
E-Square Inc.

I am deeply grateful for the opinions and recommendations of Mr. Motoki, which are always on-target. We will consider how we can reflect the carbon neutrality and human rights issues you pointed out in the re-examination of Materiality currently underway. The Fujikura Group aims to create customer value and contribute to society, and will continue to disclose information to our stakeholders through the Integrated Report as we carry out business activities.

Toru Hamasuna
Corporate Officer
Head of the Corporate Strategy Unit