Management Policy
   
  1. Medium-Term Management Plan and Five Core Business Areas
   
 

(1) Fundamental Policies of the Medium-Term Management Plan 2005
Formulated in January 2002, the fundamental policies of the Medium-Term Management Plan 2005 are to maximize profitability, reinforce financial strength and implement structural reforms. By placing profitability at the forefront of these policies, Nissho Iwai creates a recurring cycle of self-improvement that reinforces financial strength and promotes restructuring. This cycle is the evolution of a sogo shosha and allows us to provide higher-quality, customer-oriented services.
      To create such a positive, recurring cycle in management, generating profits is of the foremost importance, and this is accomplished by all employees of the Nissho Iwai Group combining their expertise in the creation of value.

(2) Our Approaches under the Medium-Term Management Plan 2005
In trading activities, the weight of key factors in making businesses is shifting from the supply side to the demand or market side. Likewise, the principles and organizational orientation of a sogo shosha were generally at the suppliers' point of view. Recent changes in the global marketplace, however, are realigning the principles and organizational orientation to focus more on the needs of the demand side and market trends in the conception of a trade.
      Nissho Iwai aims to become a market-oriented, smooth-functioning sogo shosha through the sensible selection and development of each of its products under carefully considered transactions. To this end, the Company takes into account the clients of its own customers, social trends such as the environment and safety that affect markets, as well as lifestyle issues such as comfort, health, and self-realization.

(3) Five Core Business Areas
Nissho Iwai has specified five core business areas in its economic and social activities. By closely following the strategic direction, defining a theme for each one and reflecting it in each business, the Company will create and develop products and businesses, to which it has advantages.

   
  1) Energy & Natural Resources
In Energy & Natural Resources, Nissho Iwai is moving to be comprehensively involved in the entire energy sector, from upstream activities such as energy development and the securing of business rights, to downstream functions including natural resource processing, transport and utilization to the final consumer market.
     The Company will create a unique business model based on a partial reorganization of Energy & Mineral Resources and Machinery Companies. One example of such a business model is Nissho Iwai's acquisition of upstream business rights (investment) combining offshore energy production facilities and materials in southwest Africa and other areas, and then the Company's trading of the products (in this case, crude oil). In the future, Nissho Iwai aims to expand intricate business deals such as this.

2) Aerospace Industries
In the commercial aircraft sector, by using its strengths and expertise, Nissho Iwai provides a complete lineup of aircraft suited to market needs and expands its range of services that increase the management efficiency of airline companies.
     In the defense sector, the Company aims to contribute as an innovator and provider of new equipment and systems through technological advancement.
     Aiming to streamline not only itself but also subsidiaries, Nissho Iwai plans to create a highly efficient and earnings driven workforce.
     In Aerospace Industries, based on a newly established international jet travel company, Nissho Iwai is striving to become a business leader in 21st century aviation through renewed efforts in chartered planes, new emerging airline companies and by make inroads into Asian markets.

3) Automotive Industries
In closely monitoring the effects of automobiles on society in terms of lifestyle, the environment, fuel, technology, and information, Nissho Iwai aims to create new value and grow profits by formulating many new business models based on an approach beyond organization to traversing traditional divisions among product groups.
     Nissho Iwai's automobile business is proactive in overseas joint ventures. The Company expects substantial growth in demand from the introduction of new car models, especially in China and ASEAN countries. In addition to business channels in automobile knockdown kits, Nissho Iwai plans to provide a wide range of sources and services for components and parts through its logistics networks in the region, and support the installation of plant facilities and equipment at production centers. The Company is also promoting unique businesses that take the environment into consideration, such as the sale of the world's first scrap car recycling plants.

4) Electronics & Telecommunications
Making the maximization of corporate value and earnings power the foremost priority of Group companies, Nissho Iwai is promoting the reorganization, replacement, partnership and interaction of resources and businesses inside and outside the Group.
     Recent activities in this field include the sale of the Waste Treatment Tracking Management System, the trial introduction and marketing of the Electronic Seal System and others. Nissho Iwai is looking forward to growth in these areas in the future. In telecommunications operations, Fusion Communications Corporation is steadily gaining subscribers, and the Company will make every effort to blend it with Group synergies.

5) Consumer Products
Based on the keywords safety, security, deliciousness and health, Nissho Iwai, with such basic concepts as discovering consumer needs and protecting the environment, aims to create high-value-added businesses and develop new business models using its accumulated experience in dealing with global brands in supply chain management (SCM), product development and supply source development. In consumer markets, the Company is making efforts to expand product development, supply development and security systems without committing excessive amounts of capital (investment) in retail networks.
     With its principle to balance the demands of food culture and the sustainable development of marine resources, Nissho Iwai is proposing such businesses as the imports of cultivated shrimp grown without antibiotics in Saudi Arabia, and tuna grown in fisheries in the Turkish sea.
     In addition, Nissho Iwai plans to engage in the environmental afforestation and CO2 emission rights businesses using its know-how gained through the smooth launch of its afforested wood chip business in Vietnam and Australia.
   
  2. Dividend Policy
Management places utmost importance on ensuring maximum returns on shareholder investment in the form of stock dividends, and dividend policy is one of the most important corporate policies of the Company. Nissho Iwai strives to ensure stable earnings and increased profitability through swift decision-making and judicious allocation and utilization of management resources. In addition, the Company is committed to ensuring a stable dividend stream to its shareholders while paying careful attention to reinforce the corporate base through retention of requisite reserves.
      Based on its strong commitment to achieving the ultimate goal of maximizing shareholders' value, management has decided to forgo interim dividend payments, although a great inconvenience to shareholders.
     Management has not reached a decision regarding dividend payments for the fiscal year ending March 31, 2003 at this point.

3. Compliance
Nissho Iwai formulated its Directors' Code of Conduct in December 2000. In September 2001, the Company added compliance functions to the Crisis Management Committee and organized the Compliance and Crisis Committee (C&C Committee). At the same time, the Company enacted the Code of Ethics and Business Conduct to implement its compliance policy. In November 2001, the Group Compliance Program was introduced and the C&C Committee's Committee-Web-Site was established on the Company's intranet to strengthen compliance through the entire Group. Further, Nissho Iwai installed hotlines to the CCO (a direct phone to the director in charge of compliance) and to lawyers for all employees to directly report. In this way, the Company is making efforts to quickly discover and prevent any illegal behavior, misconduct and suspicious activity.
     Nissho Iwai Group makes all its employees thoroughly aware of the importance of compliance as a key to be an excellent company.

4. Demands of a Sogo Shosha and Future Efforts
Trading companies are expected first and foremost to answer to the calling of new industrial fields and society by responding to changes in the times. Nissho Iwai is ready to aggressively invest in not only information technology (IT), but new technological fields such as bio and nano technology, which have grown quickly with advancements in IT and its use.
      Moreover, Nissho Iwai aims to strengthen access to global markets, together with all companies it deals with, including small and medium-sized enterprises, while following the trend toward a single global marketplace that is now occurring on a worldwide scale. While doing so, the Company will connect Japan's industry and economy with the world, and at the same time provide the benefits of participation in the global marketplace. To cope with the current slump in the Japanese economy, Nissho Iwai needs stronger overseas business activity, in addition to a stimulus of domestic demand.
      In fulfilling its role in the establishment of credit in business-to-business transactions and a smooth financing function, Nissho Iwai plans to jointly develop new strategic financing methods with related partners, including structured financing in addition to a traditional financing function of a sogo shosha, to grow transactions with its over forty hundred thousand customers.
      Seven months have passed since Nissho Iwai started the Medium-Term Management Plan 2005 in April 2002. Strongly aware of its operating environment, the Company is making every effort to reform its cost structure and is taking a great stride forward in realizing a positive, recurring cycle of self-improvement. Nissho Iwai believes its role in the world marketplace knows no bounds. By creating value on knowledge of market needs, Nissho Iwai continues to evolve itself for the sake of its customers and proves its worth as a sogo shosha.
   
Consolidated Financial Statements
Non-Consolidated Financial Statements
Management Policy
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