Sojitz Corp Unsp/Adr

First of all, with regard to the situation in Russia and Ukraine, which is being reported daily in the media, we're deeply concerned and take the situation very seriously. We're conducting our business with the support of various people in our global network. and we sincerely hope that this situation will be resolved soon and that all the people will be able to return to normalcy and the world peace will come back as soon as possible. First, I'd like to explain about the results of the first year of our Medium-Term Management Plan, MTP 2023, announced last year and our future efforts toward achieving it. In the fiscal year ended March 31, 2022, we achieved our highest ever profit of 82.3 billion yen despite the uncertainties of the year, including the impacts of the COVID-19, which has repeated its cycles of spreading and subsiding, and Russia's invasion of Ukraine at the end of the fiscal year. Core operating cash flow was 128.7 billion yen, up 68.5 billion yen year on year, representing profit accompanied by cash generation. Regarding shareholder returns, the Board of Directors has resolved to pay a year-end dividend of 61 yen per share for a total annual dividend of 106 yen per share, which will be presented for deliberation at the General Meeting of Shareholders scheduled for June 17. This is an increase of 3 yen from the latest dividend forecast of 58 yen per share announced a time of earnings report for the third quarter of March 2022 and an on-year increase of 56 yen per share as an annual dividend. The consolidated dividend payout ratio will be 30.1%. This is a trend of our profit for the year attributable to owners of the company for the past 10 years. Since fiscal 2012, we had achieved seven consecutive fiscal years of profit growth through solidification of foundation and challenge for growth stage, which includes improvement of asset quality through asset replacement and expansion and creation of business areas that will generate chunks of earnings. However, in the most recent two years, profits decreased from the previous year due to changes in the business environment, such as the global economic slowdown triggered by the trade friction between the US and China and the spread of COVID-19 infection. Under these circumstances, we launched our MTP 2023, start of the next decade, in April last year. In the fiscal year ended March 2022, the first year of the plan, we achieved a record profit of 82.3 billion yen despite changes in the impact of the external environment thanks to recovery in materials-related businesses such as automobiles, steel, chemicals, as well as rising prices of coal and other commodities. The slide shows the summary of the results of the fiscal year ended March 2022 together with that by segment. Details will be explained by CFO and questions will be answered in the Q&A session that follows. Regarding cash flow management, when we announced the MTP 2023, we had a plan of 330 billion yen in new investments, including non-financial investments, over the three-year period. In fiscal 2021, we carried out about 150 billion yen worth, although there were some delays in the execution of investments due to COVID-19 pandemic. The core cash flow will be managed so as to make it positive for the six-year cumulative period as initially planned. Here is my review of the first year of MTP 2023. First, in order to improve ROE in terms of enhancement of earnings power, we accelerated our efforts to build up assets centered around essential infrastructure to address social needs and investments in retail business area, particularly in the domestic market. As a result, we were able to accumulate 150 billion yen in investments in the first year of MTP 2023, which we believe is almost in line with the plan. In addition, we recorded provisions to address potential future stranded asset risks, such as fossil fuel interest, implemented continued asset replacement, as well as reviewing our business portfolio to transform existing businesses, for which we believe we have made a certain level of tangible achievements. Regarding non-financial initiatives, we are shifting to data-driven human capital management practices based on the idea that the source of our value creation is our people. As set as a goal in our sustainability challenge, we have also taken firm steps to address climate change in order to realize a de-carbonized society. As a result, we have received high evaluations, including the grand prize at the first Nikkei Integrated Report Awards. We will continue to accelerate both financial and non-financial initiatives to achieve a PB ratio of more than one times one of the quantitative KPIs of the MTP 2023. Let me explain in more detail about focus areas in our growth strategy. In the infrastructure and healthcare, we invested in an energy conservation company in the US, which will serve as a foothold for realizing a decarbonized society, as well as in the natural gas fired IPP and desalination project in Middle East, and in a gas retail business in Nigeria, Africa, as initiatives to support sustainable growth in emerging countries. Among these, we are considering using electricity generated by 240 MW photovoltaic power generation plant in Queensland, Australia, in which we invested last year, for our Gregory coking coal business, also in Australia. In the rooftop power generation business in Vietnam, solar power generation equipment is installed on the roofs of industrial parks that we operate, and the power generated is used within the industrial parks. These examples show how we are not just accumulating individual assets, but combining them to make more effective use, demonstrating an evolution from our previous approach. Though these are low-profile efforts, we will continue to work to ensure that our essential infrastructure business contributes to the creation of a global decarbonized society. Next, we are focusing on retail business in growing markets such as Southeast Asia and India as our second focus area. As partners in those efforts, we have invested in Royal Holdings Group and Marine Foods, an aquaculture food product manufacturing process and sales business operator, and by combining our global network with their strengths of contents, capabilities and functions, we will expand our business into overseas growing markets going forward. In the materials and circular economy, our third focus area, unfortunately, we're unable to accumulate any new assets in fiscal 2021, but we will continue to sow the seeds for future businesses that could contribute to earnings in post MTP While carefully selecting projects, we plan to execute investments in projects that will contribute to future growth in addition to strengthening our existing business base. Although there are some projects that have been delayed in generating returns amid COVID-19 pandemic, we are demonstrating that overall we are reaping returns in line with or even exceeding our plans, given the strong performance of infrastructure and materials related businesses. In the frontline business fields, we're working on various improvement measures one by one, and we'll continue our efforts to realise steady profitability. This slide shows our fiscal 2022 policy for initiatives. For more details, we will take questions later, so if you have any questions, we will try to answer them. Next, I will explain the non-financial aspects that are the foundation of our sustainable value creation.

The sustainability challenge as part of our long-term vision for 2050 includes the challenge of realizing a decarbonized society in respect for human rights. we will accelerate our efforts to reduce CO2 emissions and increase our resilience to the coming decarbonised society, while at the same time, we will build our business in a wide range of fields, viewing this change as a new opportunity. Based on this policy, we focused on measurement and tracking in the first year of this medium-term management plan. we will steadily reduce Scope 1, 2 and fossil fuel vested interest business. In addition, we will examine how to measure Scope 3 emissions in order to understand the risks associated with decarbonisation in our supply chain. We have also begun discussions on how to define Scope 4 as a contribution to global CO2 reduction. In addition, to ensure that we respect human rights in our supply chain across a wide range of industries, we have reviewed the status of human rights risks at each of our sites and confirmed that no major issues have arisen. Here, we show our actual reductions in our coal and oil and natural gas assets. In particular, our goal is to reduce the thermal coal interest by half or less by 2025 and to zero interest by 2030. But as shown in the graph, we have already achieved a 70% reduction in assets of thermal interest from fiscal year 2018, faster than the original plan. In all aspects of our human capital management, human resources are the source of our competitiveness and value creation. In order to implement human resource strategy, we will establish dynamic KPIs related to human resource policies and monitor its progress. As for governance, we have put in place a system to further ensure management transparency and further strengthen corporate governance. Regarding the status of reduction of cross-share holdings, although part of holdings have been affected by share listings, we will implement the reduction as planned by the end of the final year of the MTP 2023. In the current medium-term management plan, we have set forth on transformation of the organization and human resources. And in particular, the promotion of DX strategy is a major theme. I am in charge of DX promotion as a CEO, and in December last year, we invited Ms. Arakawa, who served as CDO at IBM Japan, to become our new CDO. The CDO discusses with each division and works on implementation of individual projects. We will also promote information security with a CISO in place, utilizing digital technology for both offensive and defensive purposes. This is a quantitative target for fiscal year 2023. Profit for the year forecast is 85 billion yen. The plan also takes into account the impact of the situation in Russia and Ukraine, the cost of the current rising US dollar interest rates, the impact of inflation and other uncertainties related to external factors. We plan to invest about 150 billion yen in new investments and we will do so ahead of schedule as much as possible in the second year of our MTP. Regarding dividend policy, there has been no change in our policy to pay stable dividends on an ongoing basis. We continue to maintain a dividend payout ratio of about 30% during the current medium-term management plan period. In FY 2021, we increased the dividend by ¥56 from the previous year to an annual dividend of ¥106 per share, partly due to two upward revisions. We plan to pay an annual dividend of 112 yen for fiscal year 2022 with interim and year-end dividends of 56 yen each. With continued enhancement and effective use of retained earnings, we will make efforts to strengthen corporate competitiveness and elevate shareholder values. We have received various external commendations for the initiatives of our company outlined so far. We will continue to place importance on dialogue with our stakeholders, be creative and make efforts. Finally, here is a chart showing our stock price and topics. We will continue to aim for PBR of over one times during the period of our MTP 2023. Lastly, uncertainty in the global environment continues to increase. In order to fulfill our mission as a general trading company to deliver necessary goods and services to where they are needed, even in a rapidly changing external environment, we will continue to strive for further growth and to increase corporate value. To meet the expectations of all of our stakeholders, the whole group will continue to push forward in the second year of the MTP. This concludes my presentation. Thank you.

Tanaka speaking. I will use materials titled Highlights of Consolidated Financial Results for the year ended March 31st, 2022 and supplementary materials 1 and 2 to explain the results of fiscal year 2021 and the plan for fiscal year 2022. Please take a look at the consolidated statements of profit and loss shown in the middle of the first sheet. As for revenue, equivalent of sales, metals, mineral resources and recycling division went up by 204.3 billion yen to reach 560.5 billion yen due to the rise in coal and other resource prices and in chemicals, Higher transaction volume of plastic resin in Asia and price and transaction volume increases in methanol, the mainstay of the division, led to an increase of 131.5 billion yen to reach 538.3 billion yen in the division's total revenue. In automotive division, year-on-year increase due to the absence in this fiscal year of the lockdown affecting the overseas automotive business, which was present in the previous fiscal year, helped to absorb the impact of semiconductor shortage and a significant drop in revenue due to the Russian invasion of Ukraine. In the fourth quarter, resulting in a rise of 63.2 billion yen to total 243.1 billion yen in revenue. Thus, the total revenue went up by 498.3 billion yen year-on-year to 2 trillion 100.8 billion yen. As for gross profit, the revenue growth in the three divisions made a significant contribution, resulting in an year-on-year increase of 83.2 billion yen to reach 271.3 billion yen. In terms of SG&A expenses, because of the increase in the amount in yen, of SG&A of overseas subsidiaries and operating companies due to the weaker yen, increase in bonuses, increase in personal costs associated with the increased volume of transactions, SG&A expenses increase in newly consolidated affiliates, the amount rose by ¥19.2 billion year-on-year to reach ¥180.3 billion. As for other income and expenses, which includes extraordinary profit and loss, gain on sale of an overseas industrial machinery-related company and resource interests, as well as gain on sale of real estates held by overseas subsidiaries, were posted. Extraordinary losses were posted, including provisions designed to avoid resource interests potentially becoming stranded assets as part of the efforts for steady implementation of decarbonization policies and Myanmar-Ukraine-related impairment losses. As a result, other income and expenses posted a net expense of 13.8 billion yen. As for financial income and loss, the net interest expenses improved by 2.6 billion yen year-on-year to total 3.8 billion yen due to improvement in terms and conditions for long-term borrowings at the time of refinancing. Dividends received improved by 2.1 billion yen year-on-year to reach 5.1 billion yen due to the increase in dividend income from available for sale investments. Thus, the total financial income and costs improved by 5.4 billion yen year-on-year to post income of 2.1 billion yen. The share profit and loss of investments accounted for using equity method went up by 23.2 billion yen year-on-year to reach 38 billion yen due to a significant increase in profit in a steel operating company. Thus, the profit before tax was 117.3 billion yen, up 79.9 billion yen year-on-year. When you subtract the income tax expenses from this, you can get profit for the year of 85.5 billion yen. If you go down one line below, the blue shaded part shows profit attributable to owners of the company, which was 82.3 billion yen up 55.3 billion yen year-on-year. This represents an achievement ratio of 103% over the four-year forecast of 80 billion yen, an upwardly devised figure announced at the time of earnings report for the third quarter. Please take a look at the balance sheet on the right next. The total assets as of the end of March 2022 stood at 261.7 billion yen, up 361.6 billion yen from the end of March 2021. The four main reasons for this increase are highlighted with circles. Those are execution of new investments and loans, rising coal and other commodity prices, increase in operating assets associated with the increased volume of transactions in chemicals, consumer goods and plastic lesion, and increased amount in yen of foreign currency denominated assets due to the depreciation of the yen.

increased by 252.2 billion yen to 1,897.8 billion yen year-on-year. In the equity section below, two lines above total equity in parentheses, please find total equity attributable to owners of the company. It was 728 billion yen, up 109 billion yen from March 31, 2021. As explained earlier, subtracting dividends paid from the profits for the year retained earnings was up 64.9 billion yen and one line above. The other components of equity increased due to lower yen and change in foreign exchange rates and higher stock prices and difference in valuation of securities, and it was up 59 billion yen. Bottom right, please find six financial indices. Third from the top is net debt equity ratio, which rose 0.07 points from the end of March 2021 to 1.06 times, controlled within the 1.1 times set for the MTP. Next, on the cash flow, bottom left. First, the first row, cash flow from operating activities, as was explained earlier, for increased total assets, the co-operating cash flow shown in the box below came to 128.7 billion yen, a substantial increase in inflows, recording cash flows from operating activities of 65.1 billion yen. Cash flows from investing activities, one line below, with the new investments and loans being implemented came to outflows of 138.8 billion yen. Free cash flow was a net cash outflow of 73.7 billion yen. The co-operating cash flow plus post-adjustment net cash from investing activities and shareholders' returns came to a core cash flow of 10.5 billion yen. Please turn your page to Supplementary Materials 1. In the middle is a column showing segment performance and profit for the year attributable to owners of the company. Overall, compared to the previous fiscal year, only the investments into Myanmar going through political upheaval resulted in impairment loss and infrastructure and healthcare recorded profit, which was down 1.6 billion yen year-on-year. Below, due to absence of gains from sale of shopping mall recorded in the previous year, retail and consumer service ended flat year-on-year, but the other five segments all recorded substantial increase in profits, exceeding the upwardly revised forecast announced at the time of third quarter results announcement. Bottom right show trend of ROA and ROE. The target of ROE of 10% and ROA of 3% for the final year of the MTP 2023 has been cleared, but we will continue to make efforts for further improvement. Please turn a page to Supplementary Material 2. I would like to explain the outlook for fiscal year 2022. Please look at the operating results on the left. Gross profit is expected to increase 28.7 billion yen to 300 billion yen. SG&A expenses, with increased expenses at businesses acquired in the previous year, SG&A is expected to go to 210 billion yen. Other income and expenses The structural reform expenses recorded in the previous year will be absent. Therefore, there will be an improvement of 13.8 billion yen. Financial income and costs, because of rising U.S. interest rates, are reflected with a deterioration by 7.1 billion yen to negative 5 billion yen. As a result, profit attributable to owners of the company is expected to increase 2.7 billion yen to 85 billion yen. As the President mentioned in the summary earlier, The point of the plan for fiscal year 2022 is with the Russian military invasion of Ukraine, which will lead to rising energy and crop prices, inflation leading to higher cost and higher interest rates are all incorporated in the plan. Monetizing new investments and with the recovery from rebound from losses in 2021 we will target record profit for the year two years in a row following fiscal year 2021. In the bottom you will see the fiscal year 2022 assumptions of the commodity prices as for cooking coal 280 dollars to the ton and for thermal coal 160 dollars to the ton. That is all for myself. Thank you very much.