LIXIL : Report for the 80th Fiscal Year >

The following is an English translation of the Report for the 80th Fiscal Year (the "Report") as Attachment to the Notice of Convocation of the 80th Annual Shareholders' Meeting of LIXIL Corporation (the "Company"). The Company provides this translation for your reference and convenience only and without any warranty as to its accuracy or otherwise. If there is any discrepancy between the Japanese version and the English translation, the Japanese version shall prevail.

Report for the 80th Fiscal Year

(From April 1, 2021 to March 31, 2022)

Disclosure via the Internet

The following items are posted on the Company's Internet website based on the laws and regulations as well as Article 16 of the Company's Articles of Incorporation, thus are not indicated on the Report.

1. Table of Explanatory Notes to Consolidated Financial Statements, and
2. Table of Explanatory Notes to Non-consolidated Financial Statements
   Company's website: https://www.lixil.com

The Consolidated Financial Statements and Non-consolidated Financial Statements audited by the Accounting Auditors and the Audit Committee are the statements indicated on the Report, and the Table of Explanatory Notes to Consolidated Financial Statements and the Table of Explanatory Notes to Non- consolidated Financial Statements posted on the Company's website above.

LIXIL Corporation

1-1 Ojima 2-chome,Koto-ku, Tokyo

(Securities Code 5938)

1. Matters regarding the current state of the group of companies

(1) Business developments and their results

Amid another year of COVID-19 this consolidated Fiscal Year, there was for a time signs that economic activities in the Japanese economy were recovering on hopes the pandemic was receding, but the emergence of a new variant brought a fresh wave of new cases meaning the economic outlook remains unclear. Residential investment was strong, boosted by higher residential demand due to COVID-19 and various government housing purchase support polices. Although the number of new housing developments rose for the first time in three years, rallying to 866,000 properties (up 6.6% on year), there remain concerns over construction delays and property delivery delays due to difficulties in procuring materials and components from abroad.

Globally, economic activity started to recover centering on developed countries as restrictions eased thanks to higher vaccination penetration, and although heading back towards normalization, economic activity continues to be impacted as in Japan by the reemergence of COVID-19 globally with the spread of new variants, unstable procurement and supply of components such as semiconductors, supply chain disruptions, soaring resource and energy prices, and steep rises in marine and other freight costs. Adding to this, the geopolitical risks from the Russian invasion of Ukraine in February and the economic sanctions levied by countries against Russia, make the future outlook more uncertain.

In this context, the revenue of the Company and its consolidated subsidiaries (the "Group") in this consolidated Fiscal Year increased to 1,428,578 million yen (up 3.7% on year), sustained by continued strong demand in the overseas business centering on Europe, the Middle East, Africa and North America, as well as a recovery in economic activity in the Asia Pacific, despite supply delays due to the impact of component procurement difficulties and distribution pressures in domestic business. Earnings were all up versus the previous consolidated Fiscal Year when the impact of COVID-19 infections peaked. Core earnings increased to 64,875 million yen (up 13.2% on year), with the rise in raw material and energy prices, especially sharp in the second half for both domestic and overseas business, as well as a substantial rise in costs from external factors such as higher distribution costs caused by supply chain disruptions being offset by the Company's prioritization of structural reform and price competitiveness to date and the outcome of improved profitability policies. Operating profit rose to 69,471 million yen (up 93.8% on year), thanks to the dropout of one-off costs for the voluntary retirement program implemented in the previous consolidated Fiscal Year. Profit before tax from continuing operations increased to 67,262 million yen (up 99.0% on year).

As a result, despite the dropout of profit in the previous consolidated Fiscal Year from discontinued operations including the profit on sale of subsidiaries, profit for this Fiscal Year attributable to the owners of the parent (net of non-controlling interests), rose to 48,603 million yen (up 47.1% on year).

Note: Core earnings are calculated by deducting the cost of sales and selling, general and administrative expenses from revenue.

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The overall conditions for each business sector are described below. Further, for each business, revenue indicates the amounts before eliminations for inter-business transactions, and core earnings indicate the amounts before deduction of company- wide expenses.

[Water Technology Business]

In the Water Technology Business, revenue increased to 862,157 million yen (up 10.0% on year), with demand recovering both domestically and overseas from the decline caused by COVID-19 the previous consolidated Fiscal Year, helped by strong demand in the overseas business, particularly Europe, the Middle East, Africa and North America. Core earnings improved to 76,615 million yen (up 23.3% on year), boosted by higher gross profit from the increase in revenue, sale price revisions due to higher raw material prices, and improved profitability from a better sales ratio of renovation products and luxury products.

[Housing Technology Business]

In the Housing Technology Business, revenue decreased to 466,662 million yen (down 1.6% on year). Although a greater awareness of the "new normal" prompted firm demand for renovations as consumer sentiment shifted due to the increased time spent at home, this was offset by the impact from the sale of subsidiaries in the previous consolidated Fiscal Year. Core earnings fell to 28,203 million yen (down 10.3% on year). Better profitability from various policies for strengthening business structure such as continued revisions of sale prices, holding down of selling, general and administrative expenses and improved production efficiency was offset by higher costs from the greater than expected price increase of raw aluminum ingots, a primary raw material, and rising distribution costs.

[Building Technology Business]

In the Building Technology Business, delays in the materials supply timeline following a schedule review of mostly large-scale buildings resulted in revenue decreasing 4.3% on year to 89,321 million yen, but better profitability from continuous policies for strengthening structure and progress on productivity improvement measures helped core earning improve to 3,495 million yen (up 33.9% on year).

[Housing and Services Business, etc.]

In the Housing and Services Business, etc., the impact of the sale of subsidiaries the previous consolidated Fiscal Year weighed heavily on revenue, contributing to a 35.0% on year fall to 30,274 million yen. For core earnings, the holding down of selling, general and administrative expenses was offset by the impact of the sale of subsidiaries and spiking raw material prices, resulting in a loss of business of 139 million yen (core earnings of 2,136 million yen last year).

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Revenue and core earnings by business

	FYE2021	FYE2022	Year-on-year
	Consolidated Fiscal Year	Consolidated Fiscal Year
	(April 1, 2020	(April 1, 2021	increase/decrease
Business Category	to March 31, 2021)	to March 31, 2022)
	Revenue	Core	Revenue	Core	Revenue	Core
	Earnings	Earnings	Earnings
	(million yen)	(million yen)	(%)
	(million yen)	(million yen)	(%)
Water Technology Business	783,805	62,148	862,157	76,615	10.0	23.3
Housing Technology Business	474,291	31,435	466,662	28,203	(1.6)	(10.3)
Building Technology Business	93,375	2,611	89,321	3,495	(4.3)	33.9
Housing and Services	46,556	2,136	30,274	(139)	(35.0)	-
Business, etc.
Deletion or Common	(19,772)	(41,042)	(19,836)	(43,299)	-	-
throughout Company
Total	1,378,255	57,288	1,428,578	64,875	3.7	13.2

Note: Operations categorized as discontinued operations are not included.

(2) Status of Capital Investment

The amount of capital investment (including right of use assets) for this consolidated Fiscal Year is 61,462 million yen. Most of the amount was for investment in new product development and for streamlining and investment in facilities update and maintenance.

(3) Status of Financial Arrangements

In this consolidated Fiscal Year, 9,826 million yen was procured through long term loans to be applied to refinancing funds.

(4) Changes in Status of Assets and Income/Losses

			FYE2019	FYE2020	FYE2021	FYE2022
			Consolidated	Consolidated	Consolidated	Consolidated
Category			Fiscal Year	Fiscal Year	Fiscal Year	Fiscal Year
		(April 1, 2018	(April 1, 2019	(April 1, 2020	(April 1, 2021
			to March 31,	to March 31,	to March 31,	to March 31,
			2019)	2020)	2021)	2022)
Revenue (million yen)			1,692,432	1,514,449	1,378,255	1,428,578
Core earnings (million yen)		54,485	52,290	57,288	64,875
Operating profit (million yen)		49,011	32,010	35,842	69,471
Profit/loss for the year attributable
to owners of the parent (million	(52,193)	12,518	33,048	48,603
yen)
Basic profit/loss per share (yen)		(179.98)	43.15	113.92	167.21
Total assets (million yen)		2,059,544	2,091,529	1,741,814	1,782,882
Equity attributable to	owners	of	533,656	502,165	552,271	612,385
the parent (million yen)
Equity attributable to	owners	of	1,839.59	1,730.99	1,902.89	2,106.30
the parent per share (yen)
Equity ratio attributable to owners	25.9	24.0	31.7	34.3
of the parent (%)

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Notes:

1. Core earnings are calculated by deducting cost of sales and selling, general and administrative expenses from revenue.
2. The Company decided to sell its consolidated subsidiary Permasteelisa S.p.A. ("Permasteelisa") in May 2020, and accordingly, the Company classified operations of Permasteelisa and its subsidiaries as discontinued operations for FYE2020 consolidated Fiscal Year, and reclassified and presented revenue, core earnings and operating profit for FYE2019 consolidated Fiscal Year. The Company decided to sell its consolidated subsidiary LIXIL VIVA Corporation ("LIXIL VIVA") in June 2020, and accordingly, the Company classified operations of LIXIL VIVA as discontinued operations for FYE2021 consolidated Fiscal Year, and reclassified and presented revenue, core earnings and operating profit for FYE2020 consolidated Fiscal Year.

(5) Issues to be addressed

With the aim of building an organization full of entrepreneurial spirit and capable of contributing to society through sustainable growth, the Group is steadily promoting major policies based on the four pillars of the medium-term plan.

[The Four Pillars of the Medium-Term Plan]

1. Create an Organization for Sustainable Growth

In order to build an environment that enables us to respond quickly to changes, the Group is transforming its organizational culture. We will foster an organizational culture that encourages employees to exercise their entrepreneurial spirit, to actively exchange opinions and to engage in experimental initiatives. We also aim to create an environment in which employees can respect each other, be stimulated by each other, and work with enthusiasm, and to become a company in which employees can be united through the achievement of great goals which are socially meaningful.

2. Development of attractive and differentiated products

The Group has strong brands that correspond to diverse lifestyles, needs and preferences. By investing in these brands and strengthening the DNA that is the essence of these brands, the Group seeks to achieve growth with profits. In addition, we will further pursue innovation, design and quality improvements to meet changes in consumers' needs and preferences. We will shift to the "Asset-Light" business model so that we will be able to have a strong intellectual property base for product development and bring differentiated products to market in a short cycle, and we will review our domestic organizational structure in Japan to improve the speed of the product development cycle by integrating the product development, production and sales functions into one organization.

3. Achieving Competitive Costs

The Group will use new technologies and infrastructures to create an efficient and flexible supply chain management system, and improve cost control, for the improvement of its balance sheet and profit margins. In addition, the Group will improve cost efficiency through measures such as improving productivity in back- office departments and redeploying personnel to departments that need them.

4. Marketing to End User Influencers

The Group will expand its contacts with end users and influencers such as

contractors, designers and builders, etc. In addition, through the supply and promotion

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of new services, we will create new demand for renovation in Japan by eliminating end users' concerns about it.

Also, the Group formulated "LIXIL Playbook" as the new business direction which is in line with the direction shown in the mid-term plan, and the following four priority issues are focused on for the purpose of sustainable growth of the Group.

[Four priority issues and progress in the current consolidated Fiscal Year]

1. Focus on simplifying organization and core businesses

The Group believes sustained future growth is only achievable through the creation of a lean and efficient organization that can swiftly respond to market needs. To achieve this, the Group needs to exit non-core businesses and simplify its organization, as well as optimize its core business to seize growth opportunities.

This consolidated Fiscal Year, the Group has completed measures to simplify its organization and focus on its core businesses, and greatly reduced risk that is a significant earnings impactor.

The Group believes that it has been able to strengthen its financial base by strengthening the balance sheet, improving cash flow, reducing interest-bearing debt and improving working capital efficiency continuously since previous years., which enables it to make further investments in profitable growth areas in its core businesses.

1. Improved profitability of domestic business in Japan

Japan is the Group's largest market, and it has an important role in creating innovation that is expanded globally. However, the falling domestic population means the new build market is also shrinking. Amid these circumstances, the domestic business faces the issues of high-cost structure and traditional personnel system, which makes the business structure sensitive to market changes. Sustainable development in this challenging business environment requires higher productivity and profitability in the domestic business to turn it into a cash generator.

This consolidated Fiscal Year, the domestic Housing Technology Business completed a production line platform that enables it to produce multiple different products on a single production line, thereby improving productivity. In the domestic Water Technology Business, the Group is developing its business process to further stimulate and capture renovation demand by creating new value and bolstering its end user approach. As part of its personnel policy, the Group is continuing to promote a comprehensive employee-focused HR program called "Kawaranaito LIXIL" for the revitalization of its domestic business and is shifting to an organizational culture based on the meritocracy system, as well as implementing measures aimed at enhancing customer orientation, supporting career development for all generations, and strengthening employee engagement. The Group addresses the employees' age structure challenges faced by many Japanese companies through an early retirement incentive system ("Career Option" system).

(iii) Growth promotion of overseas business of Water Technology Business

The Group is focusing on entry into high-profitability categories in countries and regions in the plumbing business in particular with the aim of expanding global share, as well as bolder strategies in each region by leveraging its global assets and brand portfolio. The Group has created a unique position using power brands that drive regional markets and aims to maximize its strengths and reliability on the global market stage by clarifying and differentiating the definition of its brand to achieve

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further growth.

This consolidated Fiscal Year, the Group is focusing on establishing a solid foundation for achieving growth in the overseas business by policies such as strengthening supply chains for a more stable product supply, developing new products using the Group's excellent technology, increasing sales by leveraging diversified and differentiated sales channels, and entering new markets, improving synergies and expanding its product lineup.

(iv) Establishment of long-term growth structure through innovation

The Group believes long-term sustainable growth can only be achieved by investing time and resources into new businesses, and is generating opportunities for future growth through this approach. Investing its resources efficiently and flexibly, the Group is focusing on responding to a constantly changing global market and generating both promising innovation and innovation that can have an impact now.

This consolidated Fiscal Year, as well as LIXIL online showrooms in Japan and GROHE X in Europe, the Group also started its video distribution service LIXIL-X, a service that delivers the latest news and information useful for home building in Japan. These will improve customer and brand experience, and accelerate user connection enhancement both domestically and abroad using digital technology, and drive a digital shift of the entire industry, as well as make possible product development and market launches in line with the issues and needs of end users by understanding customer requirements.

Looking ahead to the next Fiscal Year, although we expect the economic environment to continue to recover both domestically and overseas on the back of measures such as vaccination penetration and the development of treatments to prevent the spread of COVID-19, continued negative earnings factors including the global instability caused by geopolitical risks such as the Russian-Ukrainian war, the continued spike in raw material and energy prices and higher freight costs due to container shortages are concerns, and we expect the outlook to remain unclear.

Amid this business environment, the Group has achieved steady results from bolstering its organizational flexibility and responsiveness to environment changes, as well as measures for the four priority issues set out in the management direction. We are confident we can achieve medium and long-term sustainable growth even amid the anticipated continuation of an unclear business environment. By taking measures to reach the targets set out in our LIXIL Group Corporate Responsibility strategy, we will not only be able to increase the value we provide to our stakeholders, but also strive towards achieving the Group's Purpose, to "Make better homes a reality for everyone, everywhere."

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(6) Principal business

The Group, is pursuing its purpose, "Make better homes a reality for everyone, everywhere" through business activities, and is developing business activities such as the Water Technology Business, Housing Technology Business, Building Technology Business and Housing and Services Business, etc. as the main businesses as well as other related services. The principal products and goods, etc. of each business are as follows:

Business	Business Breakdown (principal products and goods, etc.)
Category
	Plumbing facilities	(sanitation equipment, shower toilets, water faucet
		clasps, hand wash basin, bathtub, integrated baths,
Water Technology		smart products, showers, sinks, countertops, fitted
Business		kitchens, etc.)
	Other	(residential and office building exterior tiles, interior
		tiles, etc.)
	Metal building	(sashes for residences, front doors, various shutters,
Housing	materials	gates, carports, handrails, bridge railings, etc.)
Wood interior	(window frames, fixture materials, interior building
Technology	building materials	materials, etc.)
Business	Other building	(siding, roofing materials etc.)
	materials
	Others	(solar power systems, etc.)
Building	Metal building	(curtain wall, sashes for buildings and stores, etc.)
Technology	materials
Business
	Housing solutions	(development of franchise chains of builders,
Housing and		building contractor, etc.)
Real estate	(land, buildings, real estate, development support of
Services Business
	real-estate franchise chain business, etc.)
etc.
Financial service	(home loans, etc.)
	business

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(7) Status of significant subsidiaries

		Voting
		rights
Company Name	Capital	ownership	Principal Business
of the
		Company
		(%)
LIXIL Total Service	100 million yen	100	Sales of plumbing facilities and
Corporation			metal building materials
LIXIL Total Hanbai	75 million yen	100	Sales of metal building materials
Corporation
LIXIL Group Finance	100 million yen	100	Financial services business
Corporation
LIXIL Europe S.à r.l.	57,143 thousand EUR	100	Holding company of Grohe Group
ASD Holding Corp.	412,956 thousand	100	Holding company of American
	USD		Standard's North American
			business
A-S CHINA PLUMBING	24,907 thousand USD	100	Holding company of American
PRODUCTS Ltd.			Standard's China business
LIXIL Vietnam Corporation	743,386 million VND	100	Manufacturing and sales of
			plumbing facilities
TOSTEM THAI Co., Ltd.	2,767 million THB	100	Manufacturing and sales of metal
			building materials
LIXIL INTERNATIONAL Pte.	274,417 thousand	100	Supply chain controlling company
Ltd.	USD		for Asian region
LIXIL GLOBAL	40,700 thousand USD	100	Manufacturing and sales of metal
MANUFACTURING			building materials and plumbing
VIETNAM Co., Ltd.			facilities
LIXIL Manufacturing	43,500 thousand USD	100	Manufacturing and sales of wood
(Dalian) Corporation			interior building materials

Notes:

1. Voting rights ownership includes indirect ownership by the Company's subsidiaries.
2. There are 138 consolidated subsidiaries of the Company.
3. LIXIL Group Finance Corporation reduced its capital on March 15, 2022.
4. LIXIL Vietnam Corporation is included from this consolidated Fiscal Year as a significant subsidiary of the Company as its increased assets make it more important to the Group.
5. The Company decided, on May 12, 2022, to absorb and merge LIXIL Group Finance Corporation scheduled on July 1, 2022, whereby the Company will be a surviving company, and executed the Merger Agreement on the same date.

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