What are some characteristics of Unicharm?

One characteristic is that we deal with a product group that takes advantage of non-woven absorbent material processing and molding technology. Approximately 80% of the total sales of Unicharm Group are composed of this product group that holds in some way the top market shares in Japan. Among these are products that enjoy the largest share of the market, such as disposable diapers for babies and feminine napkins/tampons for which, despite our late entrance into the market, we are able to maintain a leading edge over our competitors by understanding the consumers needs and giving them what they want in the way of products that are on the leading edge of development.

Please share some details about the "Development of innovative products" which is a trademark policy of Unicharm.

Although the history of pull-up disposal diaper products is rather short since Unicharm developed them for the first time in the world on a commercial basis in 1992, they now consist of about half of the diaper market. They attracted widespread popularity right from the start because they're so easy to put on and take off they make changing a breeze, and have contributed significantly to the growth of Unicharm. We have since launched a good many new products such as "Oyasumiman", pull-ups to be worn overnight to prevent wetting the bed, "Trepanman", training pants for children getting ready to wear underwear and "Moony Man for Hai-Hai" (a new product released in 2001), pull-on diapers for crawlers, led to the company to its obtaining nearly 50% of the market share. In addition, we have developed lots of new feminine napkin products as well including "Charm Nap Sawayaka", napkins using newly developed non-woven materials with a dramatic absorbing effect, "Charm Nap Mini", ultra-slim napkins, and the "Sofy Active" series featuring for the first time anywhere a completely unique "three dimensional ultra snug elastic fit".

As the birthrate in Japan continues to decline, there is concern that there will be a certain impact on the market for disposable diapers for babies and feminine care products including napkins. What kind of countermeasures is Unicharm prepared to take?

It can't be denied that, due to the birth of fewer children, a decline in the population who use feminine care products, and the influence of a prolonged downward trend in individual consumption, the baby care related business and feminine care related business are now confronted with very severe circumstances regarding profitability. Accordingly, Unicharm is now actively coping with the development and sales enhancement of new products that will lead to the creation of a new product category, the sustention of sales and reform of the cost structure. Already, certain achievements have been noted, such as the creation of the new product category of feminine panty liners, and effective appropriation of sales promotion expenses through the introduction of the open price system. In the meantime, we keep striving with the operation of a Health Care Business that deals with incontinence care products etc. (formerly the Adult Incontinence Care Business), a Clean & Fresh Business that deals with cleaning products for home use, and the Pet Care Business, as well as the overseas operation with its focus on the Asian market.

We closely watch the development of adult incontinence care products with great interest since it focuses primarily on the elderly. What can you tell us about the latest work the company is doing in this area?

We sell adult incontinence care products under the "Lifree" brand to markets catering to the home healthcare as well as businesses, hospitals and healthcare facilities. Both markets are growing at a steady pace. Unicharm will tackle the measures needed to vitalize the home healthcare market by encouraging retailers to renovate their sales floor in order to make shopping easier and provide better service. We will seek to vitalize the business market sector by expanding the informational outreach of the business with the help of our professional staff, which will have the subsequent parallel effect of increasing sales, reducing cost, and improving productivity. We hope that these measures will serve effectively stimulate the growth of the company. We will also implement care support services to respond to problems related to excretion care or provide counseling as needed in an aim to expand the entire health care business.

Please advise us of the current status of the company's Clean & Fresh Business (C&F Business), and Pet Care Business.

We are focusing on the C&F business as it provides us with a good field of opportunity to utilize Unicharm's primary and advanced technology of processing non-woven absorbent materials. We successfully built up the "Wave" label with handy wipe last year. We will continue to do our best to expand this business by developing products that will create the market. With regard to the Pet Care business, we will reinforce the current line of care products applying non-woven absorbent technology, and strengthen the marketability of our pet food products, so as to enhance the profitability of this division.

It appears that the company is focusing overseas, particularly on the Asian markets, as the source of future growth for the company. Please tell us about the current status of the company.

In July 2001, we commenced marketing "Sofy" in the Vietnam market, which brought the number of Asian countries in which Unicharm had already gained ground up to 8 for feminine care products, and 6 for baby care related products. Among them, the biggest market for the company sales-wise is Taiwan, and the most significant growth markets are China and Thailand. Through Fiscal 2001, we managed to increase our market shares in most of the markets already tapped, and attained the No. 1 or No. 2 position in market share in Shanghai, Thailand, and Taiwan for both feminine care products and for disposable baby diaper products.

Q. Please advise me of the company's policy on the return of profits to shareholders.

The company deems returning profit to our shareholders as one of the most important aspects of its management policy, and endeavors to create cash flows so as to maximize our corporate value. With regard to the dividend payments, we firmly uphold a policy to maintain stable and continuously increasing dividend payments as long as possible, while endeavoring to enhance the corporate structure, increase profitability, and actively expand the business of the company. With regard to the utilization of free cash flows, while we place top priority on its allocation to business investments with a focus on the expansion of business in the overseas and domestic markets, R&D activities, and improvement in information systems, we will do the best, from a long-term perspective, to perform efficient management including the acquisition of our own shares as a mean to duly return profit to our shareholders from time to time.