LIXIL : Integrated Report 2021

LIXIL INTEGRATED REPORT 2021

MAKE BETTER HOMES A REALITY FOR EVERYONE, EVERYWHERE

The world is evolving, lifestyles are changing, but one thing remains the same: every person on the planet dreams of a better home.

At LIXIL, our purpose is to make better homes a reality for everyone, everywhere.

A better home is made up of

surprisingly simple things - showers and faucets to experience water in new ways, kitchens that unleash creativity, toilets that provide cleanliness and comfort, doors and windows that connect you with the world outside, interiors and exteriors that bring spaces to life, and baths to escape in after a long day.

Our purpose is the north star that inspires and guides every decision we make, helping us shape the future of living, achieve sustainable growth and contribute to society.

LIXIL BEHAVIORS

Driven by a strong sense of mission to contribute to society, our employees strive to realize our purpose by practicing the LIXIL Behaviors in their work every day.

01

1 OVERVIEW 2VALUE CREATION 3 STRATEGY 4 GOVERNANCE 5DATA

S E C T I O NS E C T I O NS E C T I O NS E C T I O NS E C T I O N

An overview of LIXIL, our purpose,	A look at how LIXIL creates
our vision, and messages from	sustainable value for our
our leaders.	stakeholders and society.

The progress we are making on our	Our approach to corporate governance	A summary of the data that defines
journey toward sustainable growth.	and the steps we are taking	our company and performance.
		in this area.

CONTENTS

04 LIXIL AT A GLANCE

08 CEO INTERVIEW

14 CFO INTERVIEW

16 CR CHAIRPERSON MESSAGE

18 EXECUTIVE OFFICERS

20 MEGATRENDS

22 VALUE CREATION PROCESS

24 THE RESOURCES WE RELY ON

26 THE WAY WE CREATE VALUE

28 THE VALUE WE CREATE

30 CORPORATE RESPONSIBILITY STRATEGY

32 LIXIL'S MATERIAL ISSUES

1. LIXIL'S EVOLUTION AND 10TH ANNIVERSARY
2. MANAGEMENT DIRECTION
3. THE LIXIL PLAYBOOK
4. 1. FOCUS AND SIMPLIFY OUR ORGANIZATION
   2. IMPROVE PROFITABILITY OF JAPANESE BUSINESS
      PROMOTE GROWTH OF
   3. INTERNATIONAL WATER TECHNOLOGY BUSINESS
      ESTABLISH FOUNDATION FOR
   4. LONG-TERMGROWTH THROUGH INNOVATION
   5. EMPOWERDELIVER OUR PEOPLE TO

SPECIAL FEATURE

44 GLOBAL PEOPLE ORGANIZATION STRATEGY

46 SPECIAL FEATURE

DIGITAL TRANSFORMATION

68 MESSAGE FROM THE CHAIRPERSON OF THE BOARD OF DIRECTORS

1. LIXIL BOARD OF DIRECTORS
2. CORPORATE GOVERNANCE AT LIXIL

74 NOMINATION COMMITTEE REPORT

1. AUDIT COMMITTEE REPORT
2. COMPENSATION COMMITTEE REPORT
3. EXECUTIVE COMPENSATION

81 GOVERNANCE COMMITTEE REPORT

82 INTERNAL CONTROL SYSTEMS AND COMPLIANCE

86 CONSOLIDATED 11-YEAR SUMMARY

PRINCIPAL GROUP COMPANIES /

88 GLOBAL MANUFACTURING AND SALES SITES

1. BASIC POLICY FOR INVESTOR RELATIONS
2. SHAREHOLDER INFORMATION
3. CORPORATE DATA

Note:

Due to our decision to divest Permasteelisa in May 2020 (divestment completed in September 2020) and LIXIL VIVA in June 2020 (divestment completed in November 2020), we have classified the operations of Permasteelisa and LIXIL VIVA as discontinued operations. Business results for FYE2020 shown in LIXIL' s Integrated Report 2020 have been retroactively restated.

Editorial Policy

This integrated report aims to enhance communication with LIXIL's stakeholders, especially investors, by presenting our initiatives to achieve long-term, sustainable growth. In editing, we focused on key content and aimed for an easy-to-understand structure. Information not included in this integrated report, such as detailed non-financial information, detailed financial information, and our latest news is available on our corporate website.

48 RESPONSE TO COVID-19

50 LIXIL'S CORE BUSINESSES - LWT

53 LIXIL'S CORE BUSINESSES - LHT

56 FINANCIAL HIGHLIGHTS

58 NON-FINANCIAL HIGHLIGHTS

60 REVIEW AND ANALYSIS OF OPERATING RESULTS AND FINANCIAL POSITION

66 PRINCIPAL RISKS AND COUNTERMEASURES

02	03

1 OVERVIEW

	LIXIL AT A GLANCE
S E C T I O N

This year we celebrate our 10th anniversary as LIXIL. As we accelerate our transformation, we are proud that our products touch the lives of more than a billion people every day and believe we have the potential to do so much more.

FOR ALL LIFESTYLES

Construction	Tiles	Solar energy	Windows	Bathrooms	Garden
methods	systems	and toilets	rooms

A GLOBAL LEADER

Touching the lives of	Over100 years
over1billion people
of brand history
every day
Present in	Approx. 55,000
over 150 countries	employees
around the world
¥1,378.3 billion	80 factories
consolidated
revenue
¥ 57.3 billion	116 showrooms
core earnings

						A PRODUCT LEADER
						6 major	12,000 +
						design studios	patents and design
							applications worldwide
						16 household	¥ 24 billion
						product brands	invested in R&D
						A SUSTAINABILITY LEADER
						Products and services helped
						eliminate 66 million tons
						in CO2 emissions
						Enabled access to	48% of
						sanitation for 25 million
Housing	Entrance	Housing	IoT systems	Kitchens	Smart water	people in over 38 countries	new graduate hires
exteriors	doors	interiors	products	in Japan are women

04	05

SECTION 1 OVERVIEW

LIXIL AT A GLANCE

LIXIL BUSINESS

LWT LIXIL WATER TECHNOLOGY

Revenue

	56.1%
	¥ 783.8
	billion
Core earnings	¥ 62.1 billion
Employees	31,412 people
R&D	¥ 15.9 billion

LWT makes attractive and purposefully designed products for bathrooms and kitchens through powerful global brands such as INAX, GROHE, and American Standard, as well as product brands in Japan such as RICHELLE and SPAGE.

Principal products and services

Plumbing fixtures		Tile building materials
Sanitaryware, shower toilets,	Tiles for houses and buildings,
water faucets, washstands,	interior decorative tiles, etc.
bathtubs, prefabricated
bathrooms, smart products,
showerheads, washstand fixtures,
washstand cabinet units, kitchen
systems, etc.
Direct customers
Dealers	Architectural firms	Building material
Sales agencies	Developers		trading companies
Construction	Wholesalers		Volume retailers
companies			General consumers
Competitors
Kohler	Fortune Brands	Takara Standard
Roca	(Moen)		Cleanup
Hansgrohe	Geberit		Panasonic
Masco (Delta)	TOTO

Product brands

LIXIL BUSINESS

LHT LIXIL HOUSING TECHNOLOGY

Revenue

	33.9%
	¥ 474.3
	billion
Core earnings	¥ 31.4 billion
Employees	17,044 people
R&D	¥ 7.1 billion

LHT's brands such as TOSTEM, EXSIOR, INTERIO, SUPER WALL, and NODEA produce a range of housing-related products, from window sashes to entrance doors, exterior building materials, and interior furnishing materials, helping to make better homes a reality.

Principal products and services

Metal building materials		Other building materials
Housing window sashes, entrance	Siding, roofing materials, etc.
doors, shutters, gates, carports,	Other
banisters, high railings, etc.
	Solar power systems, etc.
Wooden interior furnishing materials
Window frames, wooden furnishing
materials, interior decorative
materials, etc.
Direct customers
Dealers	Homebuilders	Construction
Sales agencies	House		companies
Building materials	manufacturers	Architectural firms
wholesalers			Developers

Competitors

YKK AP

Sankyo Tateyama

Product brands

LIXIL BUSINESS

LBT LIXIL BUILDING TECHNOLOGY

Revenue

6.7%

¥ 93.4

billion

Core earnings	¥ 2.6 billion
Employees	1,427 people
R&D	¥ 0.9 billion

LBT manufactures products and offers services to support the construction of buildings that are environmentally conscious and that provide better spaces to live, work, study, and play.

Principal products and services

Metal building materials Curtain walls, building window sashes, store facades, etc.

Direct customers

Construction companies

Architectural firms

LIXIL BUSINESS

H&S HOUSING & SERVICES BUSINESS

Revenue

3.3%

¥ 46.6

billion

Core earnings	¥ 2.1 billion
Employees	715 people

H&S offers comprehensive housing and lifestyle support to consumers in Japan throughout all stages of their lives.

Principal products and services

Housing solution businesses	Real estate businesses
Development of homebuilding	Land, building, and real estate
franchise chains and construction	management services, support for
on order, etc.	development of real estate
	franchises, etc.

	Financial services business
	Housing loans, etc.
Direct customers
Housing franchise business:	Real estate brokerage franchise
Homebuilding franchise	business: General consumers
members

Product brands

06	07