Management Policy

Marking our 70th anniversary with aspirations to further enhance corporate value

Toho Acetylene celebrated the 70th anniversary of its founding in March 2025. Since our establishment in 1955, when we began to manufacture and sell dissolved acetylene gas, which is indispensable for core industries, we have remained committed to “monozukuri” (Japanese term for manufacturing). We have supplied the gases society needed, thereby contributing to people’s better lives and enriched living. While endeavoring to resolve societal issues, which change with the times, we continue to grow. By responding to the changing times in every era, always keeping an eye on the future, and believing in the future and power of gas, we have remained one step ahead of industry rivals.

Pressing ahead with business activities as we look ahead to the next medium-term management plan

Our four-year medium-term management plan launched in FY2022 sets forth specific initiatives to achieve this goal. Even in the challenging external environment, such as the rising prices of raw materials and fuel, which continues to make it difficult to steer the company from a management perspective, we achieved increased revenue and profit for two consecutive years in FY2022 and FY2023. In FY2024, the third year of the plan, we were forced to operate amid a harsh business environment due to significant increases in expenses, such as repair expenses associated with the large-scale periodic maintenance of our liquid oxygen plant, as well as rising logistics costs. Regarding our FY2025 earnings projections, given the uncertain outlook, we announced forecasts that differ from the targets for the final year of the medium-term management plan. Even so, we will continue to make strategic investments for growth and emphasize human capital management, thus creating a solid foundation for the next medium-term management plan.

As of late, we have achieved specific results through relentless cost reduction, expanding the sales of high-value-added segments of gases used in food applications and promptly reflecting the rise in raw material and fuel costs in our product prices. However, we continue to face a harsh business environment, including rising resource and energy prices stemming from geopolitical risks, soaring logistics costs due to the “2024 problem” (an overtime cap placed on truck drivers in 2024 impacting the logistics industry), and increasing inflation caused by shortages of goods and labor. In addition, our business is being affected by the U.S. tariff hikes, and it is difficult to make predictions about the future. We thus recognize that further efforts are necessary to ensure that the Group remains on a sustainable growth trajectory toward our vision.

Even amid the harsh business environment, we must promote dual-strategy management by enhancing the competitiveness of existing businesses and actively investing in growth areas while also steadily implementing business portfolio reforms and aggressively strengthening the Group’s corporate value. So far, we have made proactive investments for future growth, such as upgrading and maintaining high-pressure gas filling plants, strengthening the functions of our Tokyo and Osaka branches, constructing new filling facilities, and capitalizing on the increasing demand for semiconductors and other products in the Tohoku region. About LP gas, we will positively consider M&A as opportunities arise that may help us maintain or expand our business, as consumer demand is on a downward trend due to the declining population and progress with electrification in the Tohoku region. Moreover, in industrial applications, demand for fuel conversion from heavy oil and other sources is expected to grow concerning reducing CO₂ emissions, and we are committed to addressing this opportunity proactively.

Additionally, we will focus on technological development and R&D to achieve the SDGs. While strengthening marketing activities, such as cultivating potential customers, we intend to continue generating innovation by taking on challenges with a sense of speed, and translating our successes into sustainable growth.

Action toward formulating the next medium-term management plan

The Group is now at a major turning point. We recognize that, through the steady advancement of business structure and portfolio reforms to date, we have built a business foundation to some degree. Going forward, we are entering a new stage, where we must consider how to evolve and develop these reform initiatives. At present, management is in the midst of ongoing discussions toward formulating the next medium-term management plan with long-term growth in mind.

Changes in the business environment are occurring more rapidly and intensely than ever before. Even in uncertain times, the Group must foresee changes, survive, and develop further. To that end, we intend to design the next medium-term management plan and long-term growth story with a future-oriented perspective, asking ourselves, “In which fields can we contribute to resolving societal issues?”

Further strengthening initiatives from an ESG perspective

The perspectives of ESG (Environmental, Social, and Governance), as the foundation of our business, are essential for a company to sustainably increase its value, and we are promoting related initiatives.

Regarding the environment, we place the highest priority on initiatives related to safety and quality, the foundation of the manufacturing industry. In addition to our ongoing efforts in pollution control and waste reduction, we currently place “response to climate change” as our top priority, under which we are working to systematically mitigate CO₂ emissions from our business activities by proactively promoting energy-saving and resource-saving activities. As the world aims for a decarbonized society, we, as an industrial gas producer, will fulfill the social responsibilities obligated to us by bringing together all our wisdom and technologies to provide products and technologies that benefit the environment.

Concerning society, we value “human resources” as the most significant management resource supporting the sustainable growth of our company. We are committed to creating a work environment where each employee can fully utilize their capabilities and grow with high levels of motivation while feeling pride and satisfaction in their work. From a long-term perspective, we are also implementing work style reforms that utilize diverse talent to improve work-life balance and productivity. In addition to introducing various systems, such as shortened working hours, in September 2024, we introduced a Parental Leave Workplace Support Allowance System and an Hourly Annual Paid Leave System to create a comfortable working environment. We believe that enriching employees’ lives enhances corporate sustainability.

In terms of governance, to further separate the supervisory and execution functions by introducing of an executive officer system and to enhance the effectiveness and diversity of the Board of Directors, we have structured our Board with seven directors, including one female director, of whom four are outside directors. Additionally, our Audit & Supervisory Board consists entirely of four outside auditors, with two serving as full-time auditors, thereby strengthening the supervision of directorial duties. In addition, we regard compliance with laws and regulations as fundamental and aim to further improve compliance awareness. Regarding internal control, we focus on thoroughly implementing and strengthening the system, and we are confident that this will contribute to the improvement of corporate value.
Going forward, we will be even more conscious of the SDGs as we further strengthen our ESG initiatives.

Looking ahead to future challenges and moving forward with our stakeholders

For our Group to achieve sustainable growth, it is crucial to look towards the future and move forward with all our stakeholders, including shareholders and investors.

I place great importance on returning profits to our shareholders. Therefore, we are committed to a progressive dividend policy, with a focus on maintaining stable dividends even when our earnings temporarily deteriorate. We have set ROE as a key management indicator, and while endeavoring to ensure that ROE exceeds our cost of equity capital, we will achieve both growth and profitability and aim for the enhancement of corporate value from a medium- to long-term perspective. We continue to make growth investments with an eye to the future, so please look forward to the fruits of these efforts.

While we anticipate that the business environment will remain challenging, we view the need to address various risks as an opportunity to enhance corporate value and expand our revenue. By courageously driving portfolio reforms and achieving growth, we aim to further strengthen the trust of our stakeholders. Our Group aims to be a “shining company originating from Tohoku” that contributes to society’s sustainability while growing sustainably. We hope that all of our stakeholders look forward to the future of the Toho Acetylene Group and support us as we continue to tackle challenges together.

In closing

Following the end of the transitional period for conformance with the Tokyo Stock Exchange’s new criteria for continued listings, we moved from the Prime Market to the Standard Market in December 2025. Although we had taken various measures, we have not met the criterion for continued listing on the Prime Market, which is a market capitalization of negotiable shares of 10.0 billion yen or more, and have determined that it will be difficult to meet the criteria by the end of the period for improvement.

Even in the Standard Market, we will not change our willingness, strategies and policies for growth and will work toward continued growth and the improvement of medium- to long-term corporate value by further improving corporate governance and taking action to implement management that is conscious of cost of capital and stock price. Going forward, we will continue to take on challenges, and will not stray from the course of corporate value enhancement that we have followed so far.