Toyota Tsusho Corp Ord

like to walk you through the consolidated results for the previous fiscal year, fiscal year 2025, and the earnings forecast for the current fiscal year, fiscal year 2026. Phase 2 shows a summary, and the foreign exchange rates used are listed in the upper right For fiscal year 2025, P&L translation was based on a US dollar Japanese yen rate of 151 yen, a 2 yen appreciation of the yen, and a Euro Japanese yen rate of 175 yen, an 11 yen depreciation. Operating profit for fiscal year 2025 reached 545.2 billion yen and profit was 370.5 billion yen. I am pleased to report that we have achieved record high profits for the fifth consecutive year. As I will elaborate later, we recorded 15 billion yen in one-off losses for fiscal year 2025. When considering that fiscal year 2025 had recorded one-off gains, we reached this 370.5 billion yen profit despite a total negative swing of 26 billion yen in non-recurring items. Operating cash flow stood at 461.1 billion yen. This figure was heavily impacted by a substantial build-up of inventory, particularly in memory-related products, which increased by 400 billion yen alone. Regarding investing cash flow, while the headline figure may be slightly misleading, our actual cash outflow for investments exceeded 400 billion yen. This includes over 300 billion yen for the purchase of shares in Toyota Industries, which is reflected in the negative figure shown here. Our net DER has decreased 0.3 times, primarily because the funds allocated for the purchase of Toyota Industries shares are currently held as cash on hand. Conversely, ROE stands at 12.8%, which is a slightly underwhelming figure compared to our targets. Regarding dividends, we had initially announced a payout of 116 yen for fiscal year 2025. However, following our second upward revision, we have increased our dividend to 120 yen. For fiscal year 2026, we are planning 663.6 billion yen in share repurchases. Regarding cash dividends, consistent with our progressive dividend policy, we have set the payout at 125 yen. Consequently, the total payout ratio is projected to reach 195.2%. Next, this is the breakdown of our PL by profit stage. Both revenue at 11.5 trillion yen and gross profit at 1.2 trillion yen show substantial growth. This includes an impact of over 300 billion yen from the full acquisition of Radius Recycling. In addition, the Circular Economy Division contributed a surplus of over 400 billion yen. The digital solution division added upwards of 300 billion yen, driven by soaring memory prices, and the Africa division saw a roughly 250 billion yen increase due to the weaker yen. Combined, these three divisions boosted our revenue by approximately 1 trillion yen. Next, this waterfall chart illustrates the factors behind the ¥48.1 billion increase in operating profit. The primary drivers include a ¥10 billion gain from foreign exchange, ¥25.9 billion from demand and trading volume, and ¥21.5 billion from automobile sales-related factors. I will provide details for each division later. Regarding others, please refer to page 5. This category was significantly impacted by the reversal of the profit from the divestment of our gas-fired power generation business in the U.S., which was recorded in the previous fiscal year. As for taxes, we also saw a year-on-year impact due to the tax credits related to our solar power business in North America that were factored into the previous fiscal year. Consequently, while the bottom line figure remained relatively unchanged, the negative balance in the other category was increased by approximately 40 billion yen. I apologize for the level of detail, but here we have listed run-off gains and losses of 500 million yen or more. Starting from the top right, the metal division reported zero, and the circular economy division, the figures related to radius recycling, We recorded ¥4 billion in acquisition-related expenses in the second quarter. As I will explain later, Radius has since moved into the black, so from a one-off perspective, this cost is the only item recorded. Additionally, this segment includes a small write-down of fixed assets related to our plastic recycling operations. Turning to our operations in China, my apologies for jumping ahead to the mobility division. We have withdrawn from the automobile dealership business in the coastal regions. While we recorded losses related to this exit, the overall impact of the business restructuring netted out to nearly zero. We have significantly streamlined our operations in that area. Regarding Green Infrastructure Division, we recorded an 11 billion yen impact in the solar power business. This specifically concerns Terrace Energy. We decided to take an impairment loss for both its solar development unit and its balancing power unit. reflecting our updated future earnings projections and the impact of rising interest rates, that is 11 billion yen. Additionally, regarding EUR's energy and its wind power operations, We have begun a replacement program. This process inevitably leads to a loss on retirement of fixed assets as we are decommissioning facilities that still have one or two years of depreciation remaining. Although the negative impact is front-loaded to secure the new feed-in tariff and upgrade our assets, we have recorded approximately 2 billion yen in losses for this period. Regarding Digital Solutions Division, we recorded a one-off loss as we were impacted by a sharp spike in communication costs in the Middle East triggered by the blockade of the Strait of Hormuz. We are currently in negotiations with our clients regarding these costs. The final extent to which we will bear this burden remains subject to the outcome of these discussions. In the Lifestyle Division, we divested nine condominium buildings we held in the Nagoya area, resulting in a gain on sale. Regarding the Africa Division, the worsening situation in the middle east and the blockade of the strait of hormuz impacted our march results since our inventory is centralized in dubai we were unable to ship goods out meaning cells in the northern and eastern regions of africa failed to materialize as planned this resulted in a timing difference or a shift in sales recognition, or the inventory remains intact and there is no direct impact on the value of the stock itself, we recorded this here due to the absence of real-life sales for the period. Next, this shows the year-on-year comparison by division. In the metal division, while we saw an increase in production volume in North America, this was offset by weak steel market conditions, resulting in a slight year-on-year decline. Regarding the circular economy division, we had initially anticipated a loss of around 10 billion yen from radius. However, the overall impact was contained to a 5 billion yen loss, So, while this still represents a year-on-year decline, the outcome is an improvement of approximately 5 billion yen compared to our initial guidance. Regarding the supply chain division, our logistics flow remains very strong. We have successfully secured a significant amount of non-automotive business, which has contributed to the positive results. In the mobility division, the Asia-Oceania region performed exceptionally well. We saw a strong comeback in markets such as Sri Lanka, Cambodia, And Laos, while Papua New Guinea also maintained steady growth, leading to a substantial profit in this region. Conversely, while the Caucasus was strong in fiscal year 2024, it saw a decline in fiscal year 2025 as we were outcompeted by Chinese rivals over the whole year. After offsetting these factors, the division ended with a 6.6 billion yen surplus. As for Green Infrastructure Division, after accounting for the previously mentioned one-off losses such as the impairment at Terrace Energy, the result was an 18.6 billion yen decrease compared to the one-off gains recorded in fiscal year 2024. In the Digital Solutions Division, we achieved a positive result, driven by an increase in memory-related transaction volumes. In addition to the tailwind from rising prices, our system-related software business also showed significant growth. Regarding our lifestyle division, we believe the performance was primarily driven by one of factors. The food business itself is performing steadily, and the insurance business is also showing consistent growth centered on the Indian market. The Africa division performed strongly overall. Although the failure to realize sales in March had a profit impact of approximately 2 billion yen, the segment recorded a robust profit of 94 billion yen. This performance is primarily driven by the West Africa region. Notably, Nigeria has made a strong comeback and is performing well. Next, the balance sheet. you will notice it has expanded. As shown in the upper right, this growth is largely due to the significant depreciation of the yen, with the dollar at 160 yen and the euro at 183 yen. Additionally, the acquisition of Radius has contributed about 300 billion yen to this expansion. The balance sheet has expanded quite significantly and feels a bit large at this stage, The inventory grew by 444 billion yen. Even when excluding the impact of foreign exchange, the increase remains close to 400 billion yen, with memory-related products accounting for about 200 billion yen of that total. Regarding net worth, our figures expanded significantly and showed market improvement. primarily because the sale of Toyota Industries shares was recorded directly in equity, so while it had no impact on the PL, it bolstered our balance sheet. Net interest-bearing debt has fallen below the 1 trillion yen threshold. Our net DER currently stands at 0.3 times. We have just announced a share repurchase program of over 600 billion yen, which will be entirely debt-funded. Even after accounting for this, our forecast for the June Q1 balance sheet suggests that the net DER will remain at a healthy level of less than 0.7 times. Overall, I believe we are successfully maintaining our financial discipline. Page 9 covers cash flow. The reason the figures are lower than initially projected is mainly due to the inventory build-up, but if we exclude the inventory factor, I believe we have actually generated a surprisingly healthy level of cash flow. Free cash flow after dividend payments is a robust figure at plus 310 billion yen. Our total investment amount, it reached ¥405.5 billion, which is distributed across 30 areas. The figure for the middle category is relatively large because it includes rally cycling. Since we had an initial investment plan of ¥400 billion, we're progressing exactly as scheduled. Page 11, Metal Division. As I mentioned earlier, despite the growth demands in North America, unfavorable market conditions resulted in an operating loss of 0.8 billion yen. The Circular Economy Division posted an operating profit of 5.9 billion yen. We're seeing a recovery in market conditions. We believe the overall market environment was favorable across the board, including for PGMs, rare earths, lithiums, and iodine. The supply chain division delivered very robust results, posting a 4.1 billion yen surplus. This was primarily driven by the expansion of our parts business in region outside of North America. We view this growth not as a one-off strike, but as a steady and sustainable expansion that is progressing as planned. Regarding the mobility division, the Asia-Oceania region saw a significant increase of 17.8 billion yen, while the figure for Europe, which specifically refers to the Caucasus, shows a 6.2 billion yen decline. I'd like to clarify that this does not mean the region is in the red. It appears as a negative simply because we're comparing it against the exceptionally strong performance of the previous fiscal year. Next, green infrastructure division. On the operating profit basis, the division saw a 6.9 billion yen decline. As indicated in the bottom left section, much of this was driven by one-off items. While the machinery business performed well, the renewable energy sector, particularly our wind power business, struggled in both Japan and Europe due to softening demand. In addition to that goodwill impairment, the positive impact recorded in Europe stems from a past legal matter. Years ago, the Spanish government retroactively altered the feed-and-tash scheme, leading to a breach of contract and a subsequent lawsuit. We prevailed in this litigation, and the figure shown here represents the settlement process we received as a result. The items in the lower section have also been categorized as one of factors. P16, Digital Solution Division. The segment saw an operating profit of 8.3 billion yen, largely driven by a substantial increase in memory-related transaction volume, which contributed 6.7 billion yen. Additionally, our system and software-related business expanded by 2.1 billion yen. Next, lifestyle division. Our poor business operations continue to perform steadily, even excluding the 9.3 billion yen pre-tax gain from the real estate divestments. The division generated an operating profit surplus of over 3 billion yen. Our Brazilian grain and logistics subsidiary Nova Agri is progressing well, and Manu, our oils and fats company, is also trending positively. The Africa division has delivered exceptionally robust results with an operating profit of 25.6 trillion yen. While the infrastructure business, still in its early stage, appears to show a year-on-year decline, this is simply a reflection of the strong prior year performance, which included a significant gain from the Angolan port project. The absence of that one-off gain makes last fiscal year's figure look smaller by comparison. In reality, you can consider all sub-segments within the Africa division to be performing profitably. Regarding our forecast and targets, we've set our profit goal at 400 billion yen. This figure reflects an anticipated 10 billion yen negative impact due to the situation in the Middle East. Our foreign exchange assumption is 150 yen to the dollar. Considering the current market environment, we believe it's a conservative estimate. Our forex sensitivity remains unchanged at 1.5 billion yen per one-year move. While the lock-style division shows a negative year-on-year trend, it is actually positive if we exclude one of factors. Consequently, our outlook is for all divisions to achieve positive results on an underlying basis. We factored in the estimated impact of the Middle East situation. This primarily accounts for the rising logistics costs resulting from supply chain disruption. Specifically, shipments originally departing from Dubai are being rerouted, leading to increased expenses. We factor it in a substantial negative impact for the time being. Regarding the circular economy division, the negative outlook is primarily driven by the surge in NAFTA prices. Domestic procurement prices in Japan have soared to about 2.5 times their previous levels. While we do not expect any supply disruptions, As we are successfully securing supply from the U.S. and other regions, we anticipate that passing these higher costs on to customers may be challenging, so we've taken a considerate view and factored in this negative impact. Regarding mobility division, many Asia-Oceania countries heavily dependent on Middle Eastern crude oil, such as Sri Lanka, Vietnam and Thailand, Cambodia and Indonesia. We anticipate that vehicle sales across Southeast Asia may slow down due to these energy-related risks. Consequently, we factor in a slight negative impact in our forecasts for this region. Now, shareholder returns. Our track record shows that total returns have now exceeded 1 trillion yen. We recorded 126.7 billion yen in fiscal year 2025 and 780.9 billion yen in 2026. For 2027, applying a 40% parent ratio to our 450 billion yen profit target gives us 180 billion yen. The sum of these three years reaches 1,087,600,000 yen, shy of 1.1 trillion yen mark. Thank you very much for your attention. Next, our President Imai will present to the next Dimension 2028 and provide an overview of the second year of the Medium-Term Management Plan fiscal year 2027.

Now, I'd like to explain the progress we have made in the second year of our Medium-Term Management Plan. In the past, our company revised our rolling medium-term plan on an annual basis. However, starting this time, we have fixed the medium-term plan announced last year as a three-year plan, and we will report our progress in a format commonly used by other companies. Today's presentation focuses on our second-year progress. While we announced a new medium-term management plan last year without assigning it a formal name, we felt it would be better to give it a name and have now named it to the Next Dimension 2028. Traditionally, the cover of a medium-term plan has featured dark navy or deep blue tones, which may have conveyed a sense of stagnation. Under this theme, To the next dimension, we collaborated internally to develop a new cover design that visually conveys an upward trajectory. Now let me walk you through the details. First, regarding our quantitative targets for FY2027, We are targeting net profit after tax of 450 billion yen, an ROE of 15%, cumulative investment of 1.2 trillion yen, and a total payout ratio of 40%. After the first year, we announced our second year plan. As Mr. Iwamoto explained, the total payout ratio for this year will reach 195% due to share buybacks. All other metrics are progressing on track. As we explained at the time of last year's medium-term plan announcement, over these three years, we will remain firmly committed to enhancing corporate value. Specifically, we will focus on improving our PBR. To achieve this, we will focus on four key components shown on the left. First, a growth strategy for business operations. Second, a financial capital strategy which addresses our approach to shareholders. Third, our human capital and organizational strategy. And fourth, our sustainability strategy, which reflects our responsibilities to society. By advancing these four components to the next level, we will take a multi-stakeholder approach, and through their combined impact, we will enhance corporate value. We have clearly defined KPI targets for each of these components. For the first and second items, these are financial KPIs. For the third and fourth, they are non-financial KPIs. For example, we have set targets for metrics such as employee engagement and will continue to disclose them. I will explain the progress of our strategies for each of the four components for the next dimension. First, our growth strategy. As I always say, we aim to establish ourselves as a uniquely competitive Sogo Shosha. In our focus areas, we aim to achieve at least a number one position in Japan and ideally to become number one globally. We are focusing on four key areas. First, Africa, where we aim to triple our business, and the Gondwana economic zone, which means that we will focus on the global south. Second, the circular economy, where we aim to become number one globally. Third, next-generation mobility. And fourth, renewable energy. We will invest 1.2 trillion yen in growth over the next three years, mainly for these four areas. Of the 1.22 trillion yen investments, we plan to allocate 300 billion yen to our fundamental businesses, including our automotive-related operations such as steel centers and dealership businesses. We will allocate the remaining 900 billion yen to the four uniquely competitive areas. In particular, we plan to invest the majority of this amount in two areas, the Gondwana economic zone, including Africa, and the circular economy, where we aim to achieve a number one global position. I will now walk you through the progress and future plans for each of these four uniquely competitive areas. First, Africa. Last year, we presented the diagram shown at the bottom right. We have a proven track record of tripling our revenue over the seven years from 2017 to 2024, growing from 500 billion yen to 1.5 trillion yen. We have set a target to achieve another three-fold increase over the 10-year period from 2025 to 2035. One year into the plan, revenue reached nearly 2 trillion yen, an increase of over 4%. While this year's plan is conservative due to factors such as foreign exchange, our underlying business and profits continue to grow. We will maintain this momentum toward our goal of tripling the size of our business by 2035. Key growth drivers are automotive sales and pharmaceuticals, which we will expand through organic growth and acquisitions. Renewable energy is another key area. We have already built 1 GW in Africa and have 3 GW in the pipeline, targeting a total of 3 GW by 2030. This time, we are introducing a new Global South strategy. Given the broad scope of the Global South, we will focus on India and South America and aim to drive growth in these regions alongside Africa. In ancient times, Africa, India and South America were once part of the same landmass known as the Gondwana continent. While they are now geographically separate, we see strong commonalities across these key global south regions. We will grow both shared and unique business opportunities across these regions. Across these three regions, we expect significant growth in mobility, which is one of our core strengths. For example, in India, our partners Suzuki and Toyota have announced targets to double both production and sales volumes. Through related and collaborative businesses, we will grow alongside our partners and aim to double our business. In South America, we will also expand in line with the strong growth plans of our partner, Toyota Motor Corporation. In addition, in India, for example, our insurance and healthcare businesses, shown in the upper right, have grown to generate post-tax profits in the billions of yen, and we are now scaling them further. In Rare Earths, we operate separation and refining facilities in India, and as already partially announced, we are also exploring upstream opportunities in Namibia as well as in South America. We aim to expand our critical minerals business across the global south. In Brazil, we have been engaged in our agribusiness for many years and the business environment has improved significantly. As a result, we will make additional investments this year to enhance capacity and expand our trading volumes. By 2030, Brazil, South America and India are expected to reach around 1.5 trillion yen. As Africa is already exceeding 2 trillion yen in 2026, we aim to make it 3 trillion yen. Together, we aim to build a 4.5 trillion yen Gondwana economic zone. Next, our second uniquely competitive area is the circular economy, where we aim to become the global leader. Within the resource-closed loop shown on the left, we focus on collection and recycling. In collection, we have historically handled in-plants collection, mainly from Toyota plants, across 45 sites in 14 countries. Last year we also acquired Radius Recycling, the largest post-consumer scrap collector in North America. Combined with our end-of-life vehicle recycling business, we have built a highly extensive collection network. We will continue to further expand this network going forward. In addition to steel, we are also advancing recycling initiatives in plastics, batteries, catalysts and aluminum, as shown below. We have set numerical targets. Currently, in base metals, primarily steel, we have over 10 million tons, representing just over a 2% global market share, which we believe places us among the leading players worldwide. We aim to increase this share to 5% by 2035. Geographically, we will continue to expand this business across Japan, North America, India, Europe, and the Asia-Oceania region. In terms of materials, as shown here, in addition to plastics, batteries, catalysts and aluminum, we will also advance recycling initiatives in rare earths. Our third uniquely competitive area is next mobility. In this area, we are mainly focusing on electrification and intelligentization. For electrification, we are working to establish a stable battery supply chain, which is a key device, through collaboration with global partners. In lithium resources, we partner with Rio Tinto. For cathode materials, which represent the highest value-added component, we collaborate with LG Chemical in South Korea. We also partner with SK Group in South Korea on copper foil and aluminum foil. As for recycling, we are working with LG as part of a Japan-South Korea alliance. While Chinese players currently lead the global market, we will continue to advance the development of a battery ecosystem through this Japan-South Korea collaboration to close the gap. This is about intelligentization. The value of semiconductors installed in vehicles is expected to increase by 2 to 3 times between 2020 and 2030. We have a strong track record in semiconductor supply, and in addition, we are expanding into software development and cloud-related businesses. Our transaction value grew from 1 trillion yen in 2019 to 1.7 trillion yen in 2025. and we aim to reach at least 2 trillion yen. In addition to electrification, including batteries, vehicles are increasingly incorporating autonomous driving and AI technologies. We aim to expand our involvement in these areas. Finally, our fourth uniquely competitive area is renewable energy. We currently have approximately 5 GW of gross generation capacity, and we aim to expand this to 10 GW by 2030, primarily in Africa. We have also participated in offshore wind tenders. While we have not yet secured any projects, we will continue to pursue opportunities with persistence. In this area, we are not only focused on generation, but also on aggregating, optimizing, and delivering energy. To support this, we have launched our proprietary energy management system, V-ERA, and will expand our energy management business. In addition to our 1.2 trillion yen growth investments, we will also vigorously review our business portfolio to generate additional cash flow. As shown on the left, we are also advancing the unwinding of cross-share holdings within the group. As for low-profit businesses, as explained last year, we have been withdrawing from companies that are unable to generate post-tax profits of at least 100 million yen. We will now raise this threshold to 300 million yen and further accelerate these initiatives. In addition, as Mr. Iwamoto mentioned earlier, we will continue to exit businesses where growth has peaked. For example, we have withdrawn from a domestic condominium leasing business. We will also divest businesses that do not fit our strategy. In energy, our strategy is to move away from fuels extracted from the earth and instead harness natural sources such as solar and wind. In line with this, we exited fossil fuel-based power generation over the past two to three years and will continue withdrawing from non-strategic businesses. Next, I will explain the second component of the Yanagi model, capital allocation of the financial and capital strategy. As Mr. Iwamoto explained, we expect total cash inflows of approximately 2.2 trillion yen over the three-year period, including proceeds from the sales of shares in Toyota Industries Corporation. Of this amount, we will allocate 1.2 trillion yen. Third, next-generation mobility. And fourth, renewable energy. We will invest 1.2 trillion yen in growth over the next three years, mainly for these four areas. Of the 1.2 trillion yen investments, we plan to allocate 300 billion yen to our fundamental businesses, including our automotive-related operations such as steel centers and dealership businesses. We will allocate the remaining 900 billion yen to the four uniquely competitive areas. In particular, we plan to invest the majority of this amount in two areas, the Gondwana Economic Zone, including Africa, and the circular economy, where we aim to achieve a number one global position. I will now walk you through the progress and future plans for each of these four uniquely competitive areas. First, Africa. Last year, we presented the diagram shown at the bottom right. We have a proven track record of tripling our revenue over the seven years from 2017 to 2024, growing from 500 billion yen to 1.5 trillion yen. We have set a target to achieve another three-fold increase over the 10-year period from 2025 to 2035. One year into the plan, revenue reached nearly 2 trillion yen, an increase of over 400 billion yen year-on-year. While this year's plan is conservative due to factors such as foreign exchange, our underlying business and profits continue to grow. We will maintain this momentum toward our goal of tripling the size of our business by 2035. Key growth drivers are automotive sales and pharmaceuticals, which we will expand through organic growth and acquisitions. Renewable energy is another key area. We have already built 1 GW in Africa and have 3 GW in the pipeline, targeting a total of 3 GW by 2030. This time, we are introducing a new Global South strategy. Given the broad scope of the Global South, we will focus on India and South America and aim to drive growth in these regions alongside Africa. In ancient times, Africa, India, and South America were once part of the same landmass known as the Gondwana continent. While they are now geographically separate, we see strong commonalities across these key global south regions. We will grow both shared and unique business opportunities across these regions. Across these three regions, we expect significant growth in mobility, which is one of our core strengths. For example, in India, our partners Suzuki and Toyota have announced targets to double both production and sales volumes. Through related and collaborative businesses, we will grow alongside our partners and aim to double our business. In South America, we will also expand in line with the strong growth plans of our partner, Toyota Motor Corporation. In addition, in India, for example, our insurance and healthcare businesses, shown in the upper right, have grown to generate post-tax profits in the billions of yen, and we are now scaling them further. In Rare Earths, we operate separation and refining facilities in India, and as already partially announced, we are also exploring upstream opportunities in Namibia as well as in South America. We aim to expand our critical minerals business across the global south. In Brazil, we have been engaged in our agribusiness for many years and the business environment has improved significantly. As a result, we will make additional investments this year to enhance capacity and expand our trading volumes. By 2030, Brazil, South America and India are expected to reach around 1.5 trillion yen. As Africa is already exceeding 2 trillion yen in 2026, we aim to make it 3 trillion yen. Together, we aim to build a 4.5 trillion yen Gondwana economic zone. Next, our second uniquely competitive area is the circular economy, where we aim to become the global leader. Within the resource-closed loop shown on the left, we focus on collection and recycling.