Progress toward Midterm Corporate Strategies
01.VALUE CREATION
MC's Sustainable Value Creation Story
02.SUSTAINABILITY
Management Platform Supporting Value Creation
- Sustainability Promotion Framework
- Risk Management
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Stakeholder Engagement
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Corporate Governance
03.DETAILED FACTS
Reference Information
- Members of the Board and Audit & Supervisory Board Members
- Executive Officers
- Organizational Structure
- Business Groups at a Glance
- Global Network (Countries and Regions)
- Balance of Risk Money Outstanding in 12 Countries
- Financial Highlights
- ESG Data
- Corporate Information
- Shareholder Information
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Description of Business Activities: Business Groups
Demonstrating adaptability to changes in the business environment, and executing management strategies from a long-term perspective
Midterm Corporate Strategy 2018
Evolving Our Business Model from Investing to Managing
Leverage our ingenuity to create new business models and generate value for societies, thereby developing the highest level of management expertise.
Awareness of Issues
Management Platform Reform
- Due to the deterioration in the market for natural resources, MC rebalanced its portfolio based on the fiscal year ended March 31, 2016, in which the Company recorded the first consolidated net loss since its founding
- In a rapidly changing business environment, focused on managing cash flow to maintain business stability amid economic uncertainty
Stable Shareholder Returns
- Recorded a consolidated net loss for the fiscal year ended March 31, 2016. Maintained a dividend of 50 yen per share (base portion). Necessity of stable shareholder returns based on ability to create cash flow
Acceleration of Asset Replacement and Shift to a Business Model Aimed at New Growth
Rebalancing of Resources and Non-Resources (Exposure of market-related segments: business-related segments = 3:7)
Replace "resources/non-resources," with "market-related segments/ business-related segments" based on risk sensitivity to market conditions
Achieve optimum balance by maintaining a constant investment balance for market-related segments
- For market-related segments (mainly resources), continue to invest in prime assets while maintaining investment balance, thereby optimizing portfolio quality
- For business-related segments (mainly non-resources), re-profile portfolios but increase their size by investing in growing businesses where we can proactively demonstrate our strengths and functions
Cash-Flow-Focused Management
- Controlling interest-bearing debt by managing investments and shareholder returns within our total cash flow
- To flexibly control cash flow, have corporate and Business Groups focus on managing cash flow to make steady progress toward autonomous Group management
Further Evolution from Investing to Managing
- Shift from the concept of investing in businesses to managing them and generating continuous value
Lifecycle-Based Portfolio Re-Profiling
- Promote re-profiling by assessing whether or not a business should be continued based on our functional engagement in the business and its lifecycle
Introduce a progressive dividend scheme, which increases in line with sustainable earnings growth, as a base, and flexibly buy back our stock when necessary
Review
Financial soundness improved under the stabilization of business performance through the rebalancing of market-related and business-related segments, and through the promotion of asset replacement based on strict investment discipline. Ordinary profits accumulated for both the business-related and market-related segments, hitting record highs. In addition to the continuation of dividend increases in line with profit growth based on a progressive dividend scheme, we carried out share buybacks (300 billion yen) to boost capital efficiency based on cash flow, investment leverage and other circumstances over the course of three years.
Awareness of Issues
- Building our envisioned business portfolio, adapted to changes in the external environment
- Building growth mechanisms that demonstrate our strengths and improve business value in line with business stage
- Deepening our business management model through early-stage HR development of highly skilled management professionals
Midterm Corporate Strategy 2021
Achieving Growth Through Business Management Model
Please scroll horizontally to look at table below.
Achieve growth premised on triple-value growth through our business management model, while adapting to rapidly changing developments including geopolitical shifts, digitalization and the transition to a low-carbon/decarbonized society
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Outline of Midterm Corporate Strategy 2021Progress for the fiscal year ended March 31, 2021
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Portfolio-based decision-making (strengthening of downstream and services sector businesses)
DX/EX progress in downstream areas, Energy & Power Generation segment and services segment
- Enhanced downstream businesses, including by acquiring Eneco (a European integrated energy company with a customer base of 6 million households primarily in the Netherlands) as well as by participating in BSD City district smart-city development in suburban Jakarta, Indonesia, and forming a partnership to start evaluation of urban city management
- Strengthened the Energy & Power Generation sector business through acquisitions including development rights for a large-scale offshore wind farm in the Netherlands following the acquisition of Eneco
- Enhanced the services sector business through the conclusion of an investment agreement with the world's leading location-based service company HERE Technologies
Upstream activities connected to the progress of electrification
- Development of the Quellaveco copper project in Peru, is on track to start production in 2022
- Acquired a 30% stake in the Aurukun Bauxite Project in Australia. Bauxite is a raw material source for lightweight, highly recyclable aluminum
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Enhancement of new business concepts and digital strategies
Value-Added Cyclical Growth Model & improved ROE
Progress of DX/EX initiatives to address key issues for the future
- Business partnership with the NTT Group in DX. Established Industry One, Inc. to deliver DX solutions for industry
- Established Chubu Electric Power Miraiz Connect Co., Inc. with the Chubu Electric Power Group to promote power and retail DX initiatives
- Currently considering and advancing over 70 DX projects companywide, through actions including the formation of a companywide industrial DX Task Force
- For EX, aiming to improve the sustainable competitiveness of industry while addressing environmental issues
- Aim to double renewable power generation capacity by the fiscal year ending March 31, 2031 relative to the fiscal year ended March 31, 2020 and achieve 100% non-fossil fuel generation by 2050
Progress in asset replacement under the Value-Added Cyclical Growth Model
- Implemented asset replacements of power generation and real estate development assets after improving their business value
- Evaluated a companywide list of loss-making companies and strengthened turnaround and replacement policies
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HR system reform aiming for the continuous development of highly skilled management professionals
Fully introduced evaluation and compensation systems to ensure reciprocal growth between the Company and its employees
Revised the HR system in April 2019 to:
(1) ensure that employees gain the right experience to become management professionals earlier in their careers; (2) be more meritocratic to ensure that the right people are assigned to the right positions; and (3) utilize management professionals more widely and effectively throughout the MC Group- Efforts to place the right people at the right positions; assignment of management professionals to positions well aligned with their expertise
- Fair treatment of employees appropriate to their duties through well-balanced evaluation and compensation systems
- HR development for management professionals and growth support through reinforced talent management
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Financial Targets & Capital Policy
Shareholder Returns PolicyConsolidated net income for the fiscal year ended March 31, 2020: ¥535.4 billion; Consolidated net income for the fiscal year ended March 31, 2021: ¥172.6 billion
Forecast of consolidated net income for the fiscal year ending March 31, 2022: ¥380 billion Continued progressive dividends under a capital policy based on financial discipline*- Dividends in the fiscal year ended March 31, 2020: ¥132 per share; dividends in the fiscal year ended March 31, 2021: ¥134 per share; dividends forecast for the fiscal year ending March 31, 2022: ¥134 per share
* While maintaining cash flow management, we will work to make a clean break from "market-follower" investment practice by investing as necessary, regardless of the Group's business performance
Changes in the external environment recognized in the fiscal year ended March 31, 2021
- Vaccination against COVID-19 has started in earnest worldwide, and the economic environment is on track for a gradual recovery. Digitalization has progressed further due to changes in lifestyles brought on by the COVID-19 pandemic
- Governments around the world have declared targets to achieve net-zero GHG emissions, and the shift toward a low/zero carbon society has accelerated
- Geopolitical uncertainty centered around the hegemonic confrontation between the US and China has increased
Business Portfolio
- DX/EX progress in downstream areas, Energy & Power Generation segment and services segment
- Upstream activities connected to the progress of electrification
Growth Mechanisms:Enhancement of New Business Concepts and Digital Strategies
Progress of DX/EX initiatives to address key issues for the future
- Formed a business partnership with NTT Corporation and set up a companywide Industrial DX Task Force. As part of this initiative, established Industry One, Inc. as a DX services company to steadily promote industrial DX
- Established Chubu Electric Power Miraiz Connect Co., Inc. with the Chubu Electric Power Group to promote power and retail DX initiatives
- Aim to double renewable power generation capacity by the fiscal year ending March 31, 2031 relative to the fiscal year ended March 31, 2020 and achieve 100% non-fossil fuel generation by 2050
DX Actions
- Promote DX in a way that is unique to the MC Group by leveraging our knowledge and networks across a wide range of industries.
- Promote DX together with EX to reduce food loss and CO2 emissions through greater logistics efficiency
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Established Industry One with the NTT Group
MC and NTT aim to provide DX solutions for Japanese industry by leveraging respective strengths of industrial knowledge and ICT technology expertise
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Established Chubu Electric Power Miraiz Connect Co., Inc. with the Chubu Electric Power Group
The company provides solutions for the daily needs and events of a diverse customer base by integrating strong community connections and digital marketing expertise
(More than 70 other DX projects are underway in addition to the above)
EX Actions
- MC will present its unique optimal solution within the fiscal year ending March 31, 2022 targeting a carbon-neutral society by 2050
- We aim to achieve a balance between improving the sustainable competitiveness of industry and addressing environmental issues through initiatives from the following three perspectives:
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Strengthen efforts in renewable energy projects such as offshore wind and hydroelectric power generation
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Set thermal power divestment targets
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Contribute to stable energy supplies and the transition to low/zero-emission thermal power
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Strengthen carbon neutrality initiatives through carbon capture and utilization/storage (CCU/CCS), etc.
Growth Mechanisms:Asset Replacement under a Value-Added Cyclical Growth Model
- Implemented asset replacements of power generation and real estate development assets after improving their business value
- Evaluated a companywide list of loss-making companies and strengthened turnaround and replacement policies
Cash flow from replacement of assets:
Execute divestment and recovery totaling approximately 2.5 trillion yen over 5 years. Execute total of approximately 1 trillion yen over 2 years during the period of Midterm Corporate Strategy 2021, compared to the initial assumption of 0.7 trillion yen over 3 years.
HR System Reforms
- Efforts to place the right people at the right positions; assignment of management professionals to positions well aligned with their expertise
- Fair treatment of employees appropriate to their duties through well-balanced evaluation and compensation systems
- Progress in HR development in the area of management and growth support through the enhancement of talent management
Ideal Employees
Management-minded employees committed to enhancing business value
skills
Four Key Policies
Specific Initiatives
- As a result of efforts to place the right people at the right positions, increased the number of younger employees promoted to management positions by 50% from April 2019
- Shifted the evaluation and compensation systems for management positions to structures based on roles and achievements, and expanded the proportion of variable remuneration and conduct fairer evaluations
- Conducted growth dialogues for all employees, and considered transfers and placements from a wide group based on diverse evaluation and observation mechanisms by superiors, colleagues, subordinates, etc.
- Introduced new HR development programs such as the Innovators' Program and DX Acceleration Program
- Promoted the development of vibrant workplaces that can encourage the engagement of our diverse pool of talent (employee health and productivity management and supporting women's careers)
Note: The members removed their face masks only when this picture was taken.
