Aerospace & IT Business Division – Main Businesses & Vision –

Business Overview

The aerospace business serves as the sales representative for commercial aircraft and military aircraft and related equipment. The marine business handles various types of ships including newbuilding and second-hand ships, as well as ship equipment. Also operates IT businesses such as data centers.

【Main Businesses】

Commercial aircraft sales representative for The Boeing Company, Bombardier Inc., etc.; military aircraft and related equipment agency and sales; business jets
Newbuilding, second-hand ships, ship chartering, ship equipment sales; ship owning
IT solutions and service; data centers

Marine and Aerospace

Boeing 787 Dreamliner
Securing the top Japanese market share in commercial aircraft distribution as sales representative for companies such as Boeing and Bombardier.
[Major Business Activities] Aircraft Sales
[Major Business Activities] Business Jet Operations

Marine Vehicles

’The Western Tokyo’, owned by Sojitz
Marine vehicle business with over 40 years of history, boasting comprehensive functions through synergy with Sojitz Marine Engineering, a fully owned Group subsidiary.
[Major Business Activities] Ship-Owning Business

IT Business

Sakura Internet Inc.
The Ishikari Data Center
The Ishikari Data Center of Sakura Internet Inc., a Sojitz Group affiliate (Sojitz: 40% ownership), is one of the largest in Japan.
[Major Business Activities] Internet Data Center Business
[Major Business Activities] Telecommunications Carrier Data Center Solutions Business

Business Overview and Vision

Creating value by building social infrastructure that supports the flow of people, goods and information

The Aerospace & IT Business Division creates value by building social infrastructure such as aircraft, ships and information technology (IT). Since business opportunities are sure to arise in places that support the flow of people, goods and information, we aim to grow into a division with higher added value by organically connecting these entities.

Of the various businesses in the division, the aerospace business has achieved strong results from its success as the sales representative for commercial and military aircraft and related equipment, placing Sojitz in the clear numberone spot in Japan. We also operate a wide range of aircraft-related businesses such as the business jet and part-out businesses. In the marine business, Sojitz has established an industry-leading position through its long experience in newbuilding and second-hand ships, primarily bulk carriers, and in supplying marine equipment to major domestic and overseas shipyards. In the IT business, we focus on building network infrastructure for major domestic telecommunications carriers and on operating data centers.

Strengths That Drive Value Creation

Carefully cultivated advantages that generate greater value

Business challenges, needs and opportunities are continually arising, and diverse knowledge is necessary for successfully addressing them. This division has accumulated expertise in aerospace, shipping and IT while building robust relationships with customers and partners.

In the aerospace business, for example, we are constantly working with major industry players such as The Boeing Company and Bombardier Inc., global airlines, parts suppliers and maintenance companies. This network is a strength other companies cannot duplicate. In recent years, we also began initiatives in the airport business, where we are mobilizing our unique expertise and networks as a general trading company. This includes our knowledge of airport demand in locations across Asia, our expertise in aircraft and maintenance, as well as our experience with commercial facilities, hotels and transportation infrastructure. These efforts create unique Sojitz value that contributes to the economy and tourism in each region.

Operating Environment and Value Creation Strategy

Building a strong portfolio of aircraftrelated businesses to generate stable earnings

The flow of people and goods is expected to increase in the future, centered on Asia. However, aircraft demand is exposed to event risks such as natural disasters, and the shipping market has shown weakness in recent years. In order to build a stable earnings foundation, we must expand and enhance businesses that are resilient to market fluctuations. At the same time, we must also establish a business portfolio that is resistant to demand fluctuations, based on factors including the differences between market cycles in the aircraft and shipping businesses, as well as the opposing trends in new and used aircraft depending on the economy.

Within this context, we are focusing our efforts in seven business segments outlined in our Medium-term Management Plan 2017: 1. Commercial aircraft sales representative business, 2. Business jet business, 3. Aircraft leasing business, 4. Used aircraft and part-out business, 5. Military-related business, 6. Airport business, and 7. Cyber security business. We will combine our capabilities with those of other Sojitz divisions to build these segments into stronger business clusters. The used aircraft and part-out business and the airport business are representative in this area. However, even in the IT field, in addition to providing ICT solutions, we will also incorporate the added value of IT in our existing businesses, as in the military-related and cyber security businesses, to make them strong.

Core Business: Part-Out Business

A business model that completes the value chain of the aircraft business

In the part-out business, we purchase retired and aged aircraft, and work with external partners to dismantle and sell the disassembled parts in the aircraft aftermarket. This business model provides an exit strategy that completes the value chain of the aircraft business, which begins with ordering the aircraft and continues through financing, leasing, operation and maintenance to remarketing. We expect the part-out business to be highly profitable. In operating this business, partnering with parts distributors is essential. Our division has built relationships with valuable partners through our extensive knowledge and networks in every stage of the remarketing business related to retired aircraft.

We entered the part-out business in Europe in 2013. With the number of aircraft handled in Europe gradually increasing, we are considering establishing an operating company there in the future. In 2015, we started another part-out business in North America. In Asia, we made equity investments in a used aircraft business in Singapore in June 2016 in advance of full-scale operations. Through it, we will further expand leasing, used aircraft sales and part-out operations.

Core Business: Airport Business

Moving into a new business area by bringing together our expertise and resources in airport-related businesses

In the airport business – one of our focus areas – we are working on concrete projects for entering and structuring businesses in airport operation in order to establish a business platform during the term of Medium-term Management Plan 2017. We are considering setting up businesses in Asia, which has a large population, growing markets and signs of accelerating privatization.

The business composition we are aiming for will have the profitability of the airport operation business at its core, with peripheral and secondary areas into which we will expand by leveraging Sojitz’s overall strength. Specifically, we are working to create a new business cluster by expanding in diverse areas. For example, we will expand non-aeronautical revenue in the commercial and other spaces inside airports, build various monitoring and management systems incorporating ICT, operate duty free stores, develop a peripheral real estate business and operate hotel tourism businesses.

Future Initiatives

Ensuring unshakable strength and creating diverse value

In the year ended March 31, 2016, the first year of Medium-term Management Plan 2017, the division recorded an impairment loss on our ships, yet were able to surpass plan targets due to the solid performance of the aerospace business. Going forward, we are aiming for a stronger earnings foundation as we actively conduct new investments and loans while working to accelerate businesses in each of the previously mentioned seven segments.

In terms of investment, our intention is to build a portfolio of investments in businesses with relatively short-term capital recovery, such as the used aircraft and part-out business; businesses with mid-term capital recovery, such as leasing; and businesses that can be expected to provide long-term returns, such as the airport business. The division has an investment and loan plan of approximately ¥20 billion under Medium-term Management Plan 2017. Currently, we expect to allocate this budget to the used aircraft and part-out business, the leasing business, the business jet business and the airport business.

Aerospace has continued to be our banner business as it has maintained the number-one spot in the industry for many years. The marine and IT businesses, however, are similarly strong and have long histories of their own. With the recent realignment of Sojitz’s divisions, we are working to evolve into a structure that consistently generates new value through synergies between divisions.

Aerospace & IT Business Division personnel possess the knowledge and capabilities to make this happen. We intend to focus more actively on developing our people to become an organization with unshakable strength that creates diverse value for customers and society as a representative Sojitz division.

Opportunities

▶  Increasing global aerospace demand and growing demand from tourists visiting Japan ahead of the 2020 Tokyo Olympics
▶  Increasing transaction volume for ships and related equipment due to rising demand for energy-efficient ships and LNG carriers
▶  Rapid growth in the Internet of Things market

Risks

▶  Decreasing aircraft demand due to a declining population in Japan
▶  Decreasing transaction volume due to deterioration of the shipbuilding industry in Japan
▶  Decreasing competitiveness with faster acceleration of the IT revolution (shortening lifespans for products and services)

 

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