Our quantitative targets include achieving a consolidated net income of ¥850 billion in the fiscal year ending March 31, 2023, and ¥800 billion in the fiscal year ending March 31, 2025. Given the major impact of market price volatility, our outlook for fiscal year ending March 31, 2025, is based on relatively conservative assumptions for resource prices. Applying the same resource price assumptions for fiscal year ending March 31, 2025, to the fincal year ending March 31, 2023, results in a profit outlook of ¥650 billion. Growth of existing projects, asset replacement based on the Value-Added Cyclical Growth Model, and new investments will be key in raising this profit from ¥650 billion (excluding resource price factors) to ¥800 billion in the fiscal year ending March 31, 2025. Steady growth in profits, excluding price factors due to market volatility, will allow us to keep ROE at double digits and raise it further.

In terms of shareholder returns, we will maintain a progressive dividend scheme that increases dividends in line with sustained profit growth while balancing financial soundness, stable dividend growth, and market expectations for returns, and will pursue a return policy targeting a total return ratio of approximately 30% to 40%.

We anticipate investment over the three-year period of Midterm Corporate Strategy 2024 will total around ¥3 trillion. While maintaining and expanding the earnings base, we will earmark cash flows generated to investments in EX, DX, and growth initiatives. With regard to EX investment, we will speed up the roughly ¥2 trillion in new spending by the fiscal year ending March 31, 2031, laid out in our October 2021 Roadmap, planning to invest approximately ¥1.2 trillion by the fiscal year ending March 31, 2025.

These investments will be made largely across three fields; namely, renewable energy such as wind power which we are already working on in Europe and Japan, such as copper and other base and rare metals to support the quickening pace of electrification, and nextgeneration energy such as natural gas, hydrogen and other transition energy sources.

We will expand investments in renewable energy which is the gateway for initiatives that address the societal issue of decarbonization and we will tackle these issues through our collective capabilities to create pivotal new carbon neutral industries and promote decarbonization solutions.

Natural gas, which we position as a transition energy source, will continue to be a priority from the perspective of our social responsibility to provide stable energy supplies. We will continue efforts in this area while paying careful attention to the overall balance of Japan’s energy security.

Considerable time is required for business development in energy and resources, which are representative sectors within EX. Recognizing future needs requires foresight spanning five to ten years into the future and also requires taking action ahead of others. It is for this reason that we intend to focus and accelerate investment in EX fields as a first priority. Through our business activities, we maintain contact points with various industries, and we have been involved for many years in the stable supply of resources and energy, and in building relevant supply systems on the ground. Utilizing our expertise and network of connections amassed through our broad business portfolio, we are committed to contributing to a balance between providing a stable supply and transitioning to a decarbonized society together with our trusted partners. Additionally, by moving ahead with EX investments in this manner, we will increase the ratio of EX investments in our business portfolio from 30% at present to approximately 40% by the end of the fiscal year ending March 31, 2025, and to approximately 50% beyond that.

In the new Midterm Corporate Strategy, we introduced “Growth Strategies”, “Business Management”, Management Mechanisms”, “HR Policies” and “Sustainability policies” in order to create MC Shared Value.

Firstly, there are three growth strategies: “EX Strategy”, “DX Strategy”, and “Creating a New Future” by utilizing integrated EX/DX initiatives through to regional revitalization. “Creating a New Future” involves utilizing our strengths in local and renewable energy resources to create new carbon neutral industries and vibrant communities through solutions to community issues. I will explain this in further detail below.

As for Business Management, we accelerated our efforts toward a Value-Added Cyclical Growth Model and introduced a business management mechanism based on asset replacement plans, Group ROE, and a cash flow management system in order to bolster each Business Group’s autonomous management. We will improve Group ROE by having Business Groups aim for profit growth, while at the same time replacing low-yielding investments based on the asset replacement plan, and accelerating capital gains from the sale of assets whose value has peaked, which will in turn help to maintain and improve MC’s own double-digit ROE. In addition, by introducing a cash flow management system, we will promote business portfolio transformation by setting aside a portion of the cash generated by each Business Group for companywide use and investment in companywide cross-functional projects. We will regularly conduct monitoring through “Value-Added Cyclical Growth Reviews” to enhance the effectiveness of these investments.

As for Management Mechanisms, we newly established the Industry DX Group, which is responsible for implementing our DX Strategy, and the Global Intelligence Committee, through which we will reflect changes in the external operating environment in our business strategy in a timelier manner. We will maximize our collective capabilities by increasing the resilience of “vertical” operations that enhance the ability of each Business Group to make forward progress, as well as by collaborating “horizontally” beyond industry borders. This cross-industry, companywide strategy will be promoted through the MC Shared Value Forum based on input from the Global Intelligence Committee.

Regarding HR Policies, we will ensure that all employees play an active role and grow both personally and professionally by fostering a corporate culture where our diverse and versatile talent pool takes pride in actively fulfilling its responsibilities in a dynamic, spirited and vibrant manner. These policies will be implemented using a three-pronged approach consisting of “HR Strategy”, “Strengthened Engagement”, and “Data Utilization”.

Looking at our Sustainability Policies, we updated our Materiality in response to changes in social and environmental challenges. By addressing societal issues including those reflected in our materiality, we will generate shared value through our business activities.

We will create a new future by utilizing integrated EX/DX initiatives to promote regional revitalization as a specific measure for achieving growth.

First, I would like to share our thinking behind “Creating a New Future” within MC’s growth strategy. Addressing the need for decarbonization solutions while maintaining industrial competitiveness is a shared issue facing all industries. Looking at Japan, the country has seen little in the way of GDP growth over the past three decades, and security issues are emerging such as a low self-sufficiency rate of energy and food and high dependence on foreign countries. I strongly feel that this urgent and fundamental issue must be addressed head on.

“Creating a New Future” represents a concept driven by renewable energy, one of our strengths. Renewable energy is the very source of energy that exists in local communities. We will work to create a future under the theme of “Regional Revitalization”, whereby we will increase self-sufficiency through the use of these local energy sources, create new Carbon Neutral (CN) industries, strengthen local industries, and address local challenges such as labor shortages due to a declining population.

The left side of the figure describes green electricity and green hydrogen derived from renewable energy. In addition to using this energy as electricity, we will aim to build manufacturing business using hydrogen as a raw material and establish the supply side as a new local industry. Capitalizing on our strength of close contacts with many different industries, we will work to identify needs and link them to real-world solutions.

The right side of the figure is about local communities. Firstly, renewable energy is a form of local infrastructure development itself, and renewable energy projects are expected to create jobs in the community by training personnel involved in the project and attracting other related industries. These efforts will contribute to improving the quality of life for local communities under the themes of “Collaborative Communities” and “Creating Vibrant Communities.” Through DX, we will link various local data to develop new lifestyle-related services and businesses to enhance convenience for consumers.

Last year, we were appointed as a developer of an offshore wind power generation project, and we received letters from local residents describing their expectations of the MC Group. How can we connect with the community over a time horizon of 10-20 years, how can we meet their expectations, and what steps can we take together? I feel a keen sense of responsibility which goes hand in hand with our commitment to fully live up to community expectations. This is not something our company can achieve alone. It is a grand plan with a long-term horizon. We will work with government, local authorities and communities, and with partners who share the same vision to advance regional revitalization. By addressing a variety of societal challenges, we will contribute to the development of the industry as a whole and to the realization of a future society with rich local color.