Investors Meeting for Operating Segments Reinvention of Business June 27, 2019 (Thu.)
Todayʼs Agenda 1 . Background of Reinvention of Business 2 . CDO-CIO Structure 3 . Progress of Medium-Term Management Plan in FY2019 4 . ITOCHUʼs Strengths Drive Reinvention 5 . Policies Going Forward and Path to Profitability 2
1 . Background of Reinvention of Business 3
External Environment Need to respond to game changes brought about by rapid structural changes and accelerating digitization. Rapid advancement Once-in-a-century of mobility revolution digital platforms Growing consumer Smart use and supply awareness on of electric power sustainable society 4
Path to Business Success in the Next Generation Utilization of R e a l technology o p e r a t i o n s × u n d e r p i n n e d b y i n d i v e r s e experience and b u s i n e s s f i e l d s expertise ITOCHU's Reinvention of Business Evolve business model in anticipation of structural changes brought about by digitization and data utilization 5
2 . CDO-CIO Structure 6
Newly established organizations under CDO-CIO Promote ITOCHU's reinvention Evolve business model through digitization and data utilization 7
Organizations under CDO - CIO I T P l a n n i n g D i v i s i o n Company-wide IT strategies and IT security measures Business Planning & Development Division CDO-CIO Development of new businesses and cross-divisional projects Drafting and implementation of overseas policies Business Innovation Department Promotion of the reinvention strategies of ITOCHU group 8
Missions of CDO-CIO Structure ICT General Metals Energy The 8th & Products CP T extile Food Machinery & & Company & Financial & Minerals Chemicals Realty Business CITIC 1 . Suppo r t r e inven tion o f e a c h d i v i s i o n c o m p a ny 2 . Lea d re i nven tion of b u sin ess i n c r o s s - d i v i s i o n a l f i e l d s a n d new f i elds E s t a b l i s h a n o f fe n s i ve a n d d e fe n s i ve 3 . c o m p a ny - w i d e IT fra mework 9
Missions of CDO-CIO Structure • Accelerate the development of an Support advanced foundation through reinvention 1 . next-generation investments of each division • Develop businesses and realize a profit company through cross-divisional cooperation • Encourage utilization of technology • Create next-generation businesses Lead reinvention in cross-divisional fields and new fields of business in 2 . • Optimize the Itochu groupʼs value cross-divisional fields chain through data management and and new fields data coordination Establish an • Lead the digitization of ITOCHU group 3 . offensive & defensive • Improve digital literacy of employees company-wide • Prepare for a data-driven economy and the AI era IT framework 10
3 . Progress of the Medium-Term Management Plan in FY2019 11
Medium-Term Management Plan Released in April 2018 12
Progress of Reinvention of Business in FY2019 Medium-Term Management Plan: Reinvention of Business FY2019 Total Investment ¥30.0 billion Consumer-Related Next-Generation Use of New Value Chain Mobility and Energy Technologies ¥19.0 billion ¥6.0 billion ¥5.0 billion M a i n I n v e s t m e n t s M a i n I n v e s t m e n t s M a i n I n v e s t m e n t s Paidy FreakOut Via Dishangtie TBM T raxens Musca PoC of WingArc1st JOOR Moixa Hiyacar FBN Spire Natural rubber • Investment in Chinese EV- • Promotion of digital strategies • Advanced foundation in related businesses of FamilyMart SDGs /ESG-related fields and • Capital alliance with a North • Strategic investment in fintech, IoT of business operations American rideshare operator advertising and marketing, etc. • Further strengthening of the storage battery field, etc. 13
4 . ITOCHUʼs Strengths for Reinvention 14
ITOCHUʼs Strengths Drive Reinvention Utilization of Technology and Foundation of Venture Investment 15
ITOCHUʼs Consumer-Related Value Chain Wholesale, Logistics Raw Materials and Retail Production and Finance Prima Meat Packers NIPPON ACCESS ITOCHU SHOKUHIN ITOCHU FEED MILLS SKY Perfect JSAT ITOCHU Food Sales and Marketing ITOCHU Retail Link HOKEN NO MADOGUCHI ITOCHU KENZAI ITOCHU Urban Community Huge growth opportunities through digitization and data utilization 16 16
Company-wide Sharing of Venture Network Company-wide sharing Domestic and International Venture Capital of the venture network used to date by ICT & Financial Business Company and Head Office Retail Construction Around 30 funds Apparel Portfolio Company-wide Automobiles Logistics Around 3,000 companies Sharing New Materials Screening Around 300 companies Agriculture Energy Investments and alliances etc. 10 to 20 companies 17
Group Companies and Partners Underpinning Reinvention G r o u p c o m p a n i e s Par tner investees AI- related Data- related 18
5 . Policies Going Forward and Path to Profitability 19
Cross-Industry Integration and Cross-Divisional Cooperation Energy Mobility Retail IT Energy Retail Data Mobility Automobiles ICT & Financial Business Multiple Division Machinery ICT & Financial Business Energy & Chemicals Machinery Companies Reinvention of consumer- Mobility Services Storage battery related value chain value chain Digital strategies Reused in retail business Rideshare (payment, advertising Automotive Business and marketing) Battery Business Data utilization 20
Realizing a Profit from Next-Generation Investments Acquisition of Strategic sales channels realize a profit transformation into (acquire trade rights or Way to business investment establish joint ventures) Investment ¥20.0 amount ¥10.0 billion billion Steadily realize a profit of each investment 21
Path to Profitability of Next-Generation Businesses Clarify our direction during the current medium-term management plan Develop foundations for sustainable growth based on consolidated net profit attributable to ITOCHU of ¥500.0 billion Continue Expand profit by evolving next-generation investments existing businesses and realize a profit Improve productivity, Accelerate next-generation investments, efficiency and profitability through pursue strategic transformation into digitization and data utilization business investments and acquisition of sales channels 22
ITOCHU Rising to the Challenge of Reinvention Further Accelerate our Evolution 23
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