LIXIL : Integrated Report 2024

MAKE BETTER HOMESA REALITY FOR EVERYONE, EVERYWHERE

INTEGRATED REPORT 2 0 2 4

Our Philosophy

LIXIL's

MAKE BETTER HOMES A REALITY FOR EVERYONE, EVERYWHERE

LIXIL's Purpose is the north star that guides

LIXIL's employees in making decisions and inspires us to become a more agile,

entrepreneurial company for sustainable growth.

Our people are the ultimate drivers of value creation, and they realize LIXIL's Purpose by putting the LIXIL Behaviors into practice in their work every day.

LIXIL BEHAVIORS

Our Value Creation Story

LIXIL's Purpose

Make better homes a reality for everyone, everywhere

01

Our Value Creation Story

The Resources We Rely On

Diverse and

Meaningfully

"Monozukuri"

Global Sales

Unrivalled

Sustainable

Financial

Purpose-led People

Designed Products

Manufacturing Platform

Infrastructure

Portfolio of Brands

Resource Management

Foundation

We cultivate financial and non-financial capital,	02
which are the sources of value creation

Our Value Creation Story

The Way We Create Value

Our people are the ultimate drivers as we take on the challenge

of creating value as set out in the LIXIL Playbook

	A Modern	A Strong
	Work	Governance		The LIXIL Playbook
	Environment	Foundation
					Strategic Initiatives
Universal	Employees	Clear
"LIXIL	Strategic
	Our Foundation
Behaviors"			Goals
	An Efficient	A Clear
			Corporate Governance
	Operating	Corporate
	Structure	Purpose

03LIXIL's value creation comes from our people, who are empowered to act and create value for stakeholders via six enablers.

Our Value Creation Story

The Value We Create

Outputs		Outcomes
Enhancing corporate value through		Contributing to the resolution
business activities		of social and environmental issues

We aim to generate sustainable growth and a positive impact for

society through our businesses that bring people comfort and better living

04

LIXIL'S VALUE CREATION PROCESS

How We Create Value in a Sustainable and Meaningful Way for Our Stakeholders and Society

01 LIXIL's Purpose			The Value We Create	04
Make better homes a reality for everyone, everywhere	Outputs		Outcomes		Medium-term targets	Core earnings margin	7.5%
				Net interest-bearingdebt-to-EBITDA ratio	3.5 times or less
	Enhancing corporate		Contributing to the resolution		for sustainable growth
LIXIL Behaviors			Ratio of equity attributable to owners of the parent to total assets 35% or more
value through		of social and environmental			50% female directors and executive o‡cers by FYE2030
	business activities		issues		D&I targets	30% or more female managers by FYE2030

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Our people are the ultimate drivers of value creation

Megatrends and the Current Environment P.26

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LIXIL's Impact P.28

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Social impact	Net-zero by 2050
100% ratio of high-performance windows sold by FYE2026*
targets	90% waste recycling ratio by FYE2026
* For new detached houses	Contribute to reducing water use by 2 billion m3 annually by FYE2025
Improve access to sanitation for 100 million people by 2025
	LIXIL's Core Businesses P.43	Impact Strategy	P.46
	Stakeholders
		Employees Consumers Partners Local Communities	Shareholders

STRATEG

LIXIL'S VALUE

02

CREATION

PROCESS

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The Resources We Rely On

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The Way We Create Value

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Diverse and Purpose-led People

ly On

Approx. 49,300 employees worldwide* *Number of persons employed

A Modern Work

A Strong

Governance

Environment

Foundation

The LIXIL Playbook

Meaningfully Designed Products

"Monozukuri"Manufacturing Platform

6major global in-house design studios

78 factories worldwide

Universal

Employees

Clear

Strategic Initiatives

P.31

"LIXIL

Strategic

Global Sales Infrastructure

Sustainable Resource Management

Our Foundation

P.36

Behaviors"

Goals

Present in over 150 countries

34.7% reduction in CO2 emissions

from FYE2019*

*Scope 1 & 2

An E‡cient

A Clear

Unrivalled Portfolio of Brands

Financial Foundation

Operating

Corporate

Corporate Governance

P.67

Structure

Purpose

Over 70% consumer recognition rate

Long-term goal of10% core

in key markets in each region

earnings margin

E 03 GOVERNANC

04 DATA

VALUE CREATION CASE STUDY: CONTRIBUTING TO THE REALIZATION OF A DECARBONIZED AND CIRCULAR ECONOMY

Exemplifying our approach to achieving our purpose, LIXIL is expanding the development of PremiAL, a low-carbon aluminum building material. Combining our expertise and technological capabilities cultivated over 25 years, we were able to pioneer this low-carbon aluminum building material. Based on the LIXIL Playbook, we will achieve sustainable growth and support the realization of a decarbonized and circular economy.

01	LIXIL's Purpose	The Value We Create	04
	Make better homes a reality for everyone, everywhere

PremiAL

Outputs

Outcomes

By FYE2031:

PremiAL contributes to

Medium- to

Scope 3 CO2 reduction

the reduction of CO2

from PremiAL to contribute

long-term sales

04.T

*1 Compared

1

h

a third of LIXIL's 30% CO2 reduction*

to FYE2019

emissions, and mitigates

eV

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target

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the environmental

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Use of recycled aluminum

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¥

billion

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01

04

footprint of buildings

IX

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300

100%

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LIXIL'S VALUE

02

CREATION PROCESS

e

03

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The Resources We Rely On

a

The Way We Create Value

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A Modern

A Strong

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Work

Governance

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Foundation

rce

.T

Environment

s

3

Combining our expertise and technological

We

Rely On

0

capabilities cultivated over 25 years, we were

Diverse and Purpose-led People

Universal

Clear

able to pioneer a low-carbon aluminum

"LIXIL

Employees

Strategic

Product development that leverages diverse human resources

Behaviors"

Goals

building material in response to rapidly growing

Meaningfully Designed Products

An Efficient

A Clear

global demand for aluminum. We will achieve

"Monozukuri" Manufacturing Platform

sustainable growth and create an impact on

Operating

Corporate

Product design capabilities that resolve social

A "monozukuri" platform that utilizes

society based on the LIXIL Playbook.

Structure

Purpose

issues

accrued production technologies

Global Sales Infrastructure

Sustainable Resource Management

Focus

Transform

Grow

Innovate

Technologies that make effective use

Strategic

A sales base that captures needs worldwide

Divest Non-core

Tackle Inflation and

Optimize Japan and

Grow Global

Embed Robust

Develop

of limited resources

Initiatives

Businesses and

Supply Chain

Drive New Growth

Water Business

Environment

New Core

Simplify Organization

Challenges

Strategy

Unrivalled Portfolio of Brands

Financial Foundation

Impact Strategy

Global Sanitation

Water Conservation &

Diversity & Inclusion

Brand power that serves diverse customer

A financial foundation that supports product

Our

& Hygiene

Environmental Sustainability

Foundation

segments

development

Empower our people to deliver on strategy and create value

07

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E 03 GOVERNANC

04 DATA

CONTENTS

01 OVERVIEW

02 STRATEGY

03 GOVERNANCE

04 DATA

08

01 ROVEW VIE

Our corporate purpose, our value creation process, an overview of LIXIL, and management messages

1. LIXIL'S VALUE CREATION PROCESS

1. OVERVIEW

1. LIXIL'S HISTORY
2. OUR STRENGTHS
   (SOURCES OF OUR BUSINESS ACTIVITIES)
3. CEO MESSAGE

1. CFO MESSAGE

1. CPO MESSAGE

1. EXECUTIVE OFFICERS

Our management strategies to create long-term value for	Our approach to corporate governance and	A summary of the data that defines our
stakeholders and society, our initiatives for sustainable	the steps we are taking in this area	company and performance
growth, and their progress
26	MEGATRENDS AND THE CURRENT ENVIRONMENT	63	MESSAGE FROM THE CHAIRPERSON OF THE	80	CONSOLIDATED 11-YEAR SUMMARY
27	PRINCIPAL RISKS AND COUNTERMEASURES		BOARD OF DIRECTORS	81	FINANCIAL HIGHLIGHTS
28	LIXIL'S IMPACT	64	THE BOARD OF DIRECTORS' EFFECTIVENESS	83	NON-FINANCIAL HIGHLIGHTS
29	MEDIUM-TERM TARGETS		EVALUATION	85	REVIEW AND ANALYSIS OF OPERATING
30	MANAGEMENT DIRECTION	64	COMPOSITION OF THE BOARD OF DIRECTORS		RESULTS AND FINANCIAL POSITION
31	LIXIL PLAYBOOK	66	LIXIL BOARD OF DIRECTORS	91	PRINCIPAL GROUP COMPANIES/
	31	LIXIL PLAYBOOK LOOKBACK	67	CORPORATE GOVERNANCE AT LIXIL		GLOBAL MANUFACTURING AND SALES SITES
	32	LIXIL PLAYBOOK: GROW PHASE	68	GOVERNANCE REFORM	93	STAKEHOLDER ENGAGEMENT
	34	LIXIL PLAYBOOK: INNOVATE PHASE	68	SUPPORT SYSTEM FOR OUTSIDE DIRECTORS	95	BASIC POLICY FOR INVESTOR RELATIONS
36	OUR FOUNDATION	70	MESSAGE FROM THE CHAIRPERSON OF THE	96	SHAREHOLDER INFORMATION
	36 GLOBAL PEOPLE STRATEGY		NOMINATION COMMITTEE	97	CORPORATE DATA
	40	DIGITAL TRANSFORMATION	71	MESSAGE FROM THE CHAIRPERSON OF THE
	42	INTELLECTUAL PROPERTY STRATEGY		AUDIT COMMITTEE
43	LIXIL'S CORE BUSINESSES	72	MESSAGE FROM THE CHAIRPERSON OF THE
	43	WATER TECHNOLOGY BUSINESS (LWT)		COMPENSATION COMMITTEE
	45	HOUSING TECHNOLOGY BUSINESS (LHT)	73	EXECUTIVE COMPENSATION
46	IMPACT STRATEGY	75	MESSAGE FROM THE CHAIRPERSON OF THE
47	LIXIL'S MATERIAL ISSUES		GOVERNANCE COMMITTEE
49	GLOBAL SANITATION & HYGIENE	76	INTERNAL CONTROL SYSTEMS AND
50	WATER CONSERVATION & ENVIRONMENTAL SUSTAINABILITY		COMPLIANCE
	52	CLIMATE CHANGE MITIGATION AND ADAPTATION
	53	WATER SUSTAINABILITY

54 CIRCULAR ECONOMY

55 RESPONSE TO TCFD AND TNFD RECOMMENDATIONS

57 DIVERSITY & INCLUSION

59 HUMAN RIGHTS

61 RESPONSIBLE SUPPLY CHAIN MANAGEMENT

Y 02 STRATEG

E 03 GOVERNANC

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. Please refer to our corporate website for information not included in this integrated report, such as detailed non-financial and financial information, and our latest news.

Frameworks referenced

International initiatives LIXIL has joined

Organizations covered

LIXIL Corporation ("the Company") and its consolidated subsidiaries (collectively, "the LIXIL group")

Period covered

April 1, 2023 through March 31, 2024

Note: Some activities from before or after the reporting period are included.

04 DATA

ABOUT LIXIL

Our products and services helping people everywhere

Make better homes a reality for everyone, everywhere. LIXIL provides a wide range of high-quality products that resolve issues in everyday life globally by employing world-leading technologies and innovation.

Bathrooms and showers

Kitchens

09

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AT A GLANCE

As an industry leader, we fully leverage the various forms of capital we have developed over our history to expand our business globally.

E 03 GOVERNANC

Revenue

¥1,483.2 billion

Core earnings

¥23.2 billion

Business in over	Employees	Major design centers
150 countries	Approx. 49,300	6
worldwide
Production bases	Granted patents	Supporting the daily
78 factories	and design rights	lives of over
Over 13,000	1 billion people

Ratio of female managers

17.1%

Ratio of female directors and executive officers

31.3%

Outside directors ratio*

80.0%

* Since June 19, 2024

Ratio of male employees who took childcare leave (LIXIL Corporation)*

87.3%

• Including LIXIL's own paid childcare leave system for male employees

(2024.3.31)

04 DATA