CFO Message

• In the year ended March 31, 2025, the first year of Medium-term Management Plan 2026—Set for Next Stage, Sojitz was able to deliver results that surpassed its initial forecasts. This impressive performance was achieved despite the sluggish results in certain business fields due to external factors such as larger-than-expected declines in resource prices. We were able to offset the impacts of such factors, however, with earnings contributions from new investments and growth in existing businesses. Our earnings foundation is becoming increasingly more stable due to a reduction in the portion of our earnings derived from resource businesses that are highly susceptible to market changes and growth in earnings gained from nonresource businesses. This increased stability of our earnings foundation can be seen in our ability to post profit for the year (attributable to owners of the Company) exceeding ¥100.0 billion for three consecutive years.

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At the same time, however, our price-to-book ratio (PBR) stood at a low 0.77 times on June 30, 2025. This indicates that the market has not been sufficiently convinced of the Company’s ability to accomplish the targets defined for its next stage, namely, profit for the year of ¥200.0 billion, return on equity (ROE) of 15%, and market capitalization of ¥2.0 trillion. Since the announcement of Medium-term Management Plan 2026, we have continued to meet with numerous investors to discuss how we can address this gap between Sojitz’s capabilities and the market’s appraisal of the Company’s potential. The input we have received from investors can largely be divided into two categories. The first category includes requests for further clarification regarding what exactly constitutes the Sojitz Growth Story and how we will craft this story to advance toward our next stage. In response to this feedback, we have proceeded to include examples of initiatives in business areas and segments embodying the Sojitz Growth Story alongside our quarterly financial results announcements. Through these ongoing explanations of our actual initiatives, policies, and numerical results, we are fostering understanding of Sojitz’s distinctive strengths and competitive edge. Examples of such initiatives have also been included within the pages of this integrated report. The second category includes queries about why our stock price remains low, despite offering praise for our management strategies, past performance, and current progress, all indicating that we are heading in the right direction. Possible reasons for our low stock prices include a lack of confidence from the capital market with regard to Sojitz’s future potential for ongoing growth and a disparity between our actual levels of profit and ROE and the returns expected by investors.

As for cost of capital, we maintain our estimate from last year of between 9% and 10%. At the same time, however, we recognize that the market expects returns of around 15%. Sojitz has defined an ROE target of 15% for its next stage. Accomplishing this target will require improvements from our current ROE level of between 11.7% and 12.0%, but we do not see this growth target as unrealistic. Our efforts to reach this level will entail continuing to boost the earnings power of existing businesses and the rigorous advancement of growth strategies for identifying new investment fields to organically link multiple businesses and thereby produce revenue-generating clusters of businesses (Katamari). Progress toward this target will be quantitatively gauged through comparison to the targets for cash return on invested capital (CROIC) set for each business division in order to drive improvements. We will be accelerating these efforts going forward.

With regard to shareholder returns, there has been no change to our basic policy of stable, ongoing returns. However, Sojitz is presently in a growth phase, and we therefore must place emphasis on growth investments. Nevertheless, we will continue to provide highly predictable shareholder returns based on a policy of allocating around 30% of core operating cash flow to returns. We have also put forth the policy of issuing progressive dividend payments targeting 4.5% of shareholders’ equity. I suspect that shareholders will find this level satisfactory, but I also recognize that it will be crucial for us to continue issuing shareholder returns while increasing returns through new investments.