Itochu : FYE2023 1st Half Business Results Summary

FYE 2023 1st Half

Business Results Summary

November 4, 2022

Forward-Looking Statements

Data and projections contained in these materials are based on the information available at the time of publication, and various factors may cause the actual results to differ materially from those presented in such forward-looking statements. ITOCHU Corporation, therefore, wishes to caution that readers should not place undue reliance on forward-looking statements, and further, that ITOCHU Corporation has no obligation to update any forward-looking statements as a result of new information, future events or other developments.

Summary of Financial Results for FYE 2023 1st Half

（Unit : billion yen）

• "Net profit attributable to ITOCHU" recorded ¥483.0 bil., the 2nd highest following the same period of the previous fiscal year which renewed the highest record. The progress toward the FYE 2023 Revised Forecast of ¥800.0 bil announced on October 4 was steady, achieving 60%.
• "Core profit" was approximately ¥430.0 bil. renewed all-time high for a half year results resulting from
  the strong progress which continued from the 1st quarter and further growth especially in non-resource sector.
• "Ratio of group companies reporting profits" was 84.4% decreased by 1.9 points compared to the same period of the previous fiscal year, improved by 3.7 points compared to the 1st quarter of 80.7%.
• "Core operating cash flows" was ¥467.0 bil., renewed all-time high for a half year results.
• ITOCHU revised upward its annual dividend plan to ¥140 per share, an increase of ¥30 per share from the previous fiscal year (an increase of ¥10 per share from the Initial Forecast), as announced on October 4.

Net profit attributable to

ITOCHU

Extraordinary gains and losses

Core profit(*)

[Core profit(excluding the impact of COVID-19)](*)

(*) Core profit is shown in round figures.

Ratio (%) of group companies reporting profits

Core operating cash flows

FYE 2022

FYE 2023

Increase/

FYE 2023 Forecast

Q1-2 Results

Q1-2 Results

Decrease

Initial Forecast

Revised Forecast

Progress

(Disclosed

on May 10)

500.6

483.0

(17.6)

700.0

800.0

60%

122.0

53.0

(69.0)

(*1)

(10.0)

(*2)

30.0

378.5

＊

430.0

+

51.5

710.0

*

770.0

56%

[404.5]

[440.0]

[+

35.5]

(*1) Including a loss

buffer: (30.0)

(*2) Including a loss buffer: (20.0)

Dividend

Initial

Revised

information

Forecast

Forecast

(per share)

(Disclosed on May 10)

86.3%

84.4%

Decreased

1.9pt

Annual

130 yen

*

140 yen

(Planned)

(minimum)

(minimum)

400.0

＊

467.0

+

67.0

Interim

65 yen

*

65 yen

*: Record High

2

Net profit attributable to ITOCHU by Segment/1st Half Results

	FYE 2022		FYE 2023
	Q1-2 Results		Q1-2 Results
		500.6		483.0
500		10.0
		11.6
		45.5
450				71.4
			*
400
		135.2
350
				134.7
300		29.9
250		31.6
		**	48.5
200		72.5		27.7
150		66.7		63.0
100				25.4
	50.5		19.5
50			*	81.3
		58.7
0
Non-		375.1		362.1
Resource
Resource		130.5		115.4
Others		(5.0)		5.6
Non-	(*1)	74%		76%
Resource(%)

（Unit : billion yen）

Summary of Changes from the Same Period of the Previous Fiscal Year

Textile [Inc / (Dec):¥ 1.6 bil.(incl. Extra. G&L.（*2）:(2.5))]

Increased due to the improvement of apparel-related companies resulting from the alleviation of the impact

of COVID-19, partially offset by the absence of extraordinary gains in the same period of the previous fiscal year.

Machinery [Inc / (Dec):¥ 25.9 bil.(incl. Extra. G&L.:11.5)]

Increased due to the increase in charter income resulting from favorable shipping market and favorable sales in overseas automobile-related companies, in addition to the gain on the sale of a North American beverage-equipment-maintenance company, partially offset by the impairment losses on aircrafts leased to Russian airlines in a leasing-related company.

Metals & Minerals [Inc / (Dec):¥ (0.6) bil.(incl. Extra. G&L.:(22.0))]

Remained consistent due to lower iron ore prices and the absence of extraordinary gains in the same period of the previous fiscal year, offset by higher coal prices, the stable performance in North American business

in Marubeni-Itochu Steel, and the depreciation of the yen.

Energy & Chemicals [Inc / (Dec):¥18.6 bil.(incl. Extra. G&L.:ー)]

Increased due to the improvement in profitability in energy trading transactions and CIECO Azer (Crude oil exploration and production company) resulting from higher market prices, partially offset by the decrease in dividends.

Food [Inc / (Dec):¥ (3.9) bil.(incl. Extra. G&L.:2.5)]

Decreased due to the deterioration in profitability in meat-products-related companies and in packaged foods business in Dole, partially offset by the improvement in profitability in provisions-related transactions and the gain on

the group reorganization in North American oils and fats companies.

General Products & Realty [Inc / (Dec):¥ (9.5) bil.(incl. Extra. G&L.:(23.5))]

Decreased due to the absence of extraordinary gains in the same period of the previous fiscal year, partially offset by the stable performance in construction materials business, real estate business and IFL(European pulp-related company), in addition to revaluation gain resulting from the conversion of a North American engineered wood products company into a consolidated subsidiary.

ICT & Financial Business [Inc / (Dec):¥ (41.3) bil.(incl. Extra. G&L. :(30.5))]

Decreased due to lower sales volume in CONEXIO and the deterioration of remeasurement gains(losses) for fund held investments, in addition to the temporary increase in expenses and the absence of extraordinary gains in

the same period of the previous fiscal year, partially offset by the stable transactions in ITOCHU Techno-Solutions.

The 8th [Inc / (Dec):¥ (31.0) bil.(incl. Extra. G&L. :(29.5))]

Decreased due to the increase of franchisee support payments resulting from changes in external environment, increase in expenses resulting from promotion of store renovation and structural reform in logistics, in addition to the increase in impairment losses on stores and the absence of extraordinary gains in the same period of

the previous fiscal year, partially offset by the increase in daily sales in FamilyMart.

Others, Adjustments & Eliminations [Inc / (Dec):¥ 22.6 bil.(incl. Extra. G&L.:25.0)]

Increased due to higher earnings in CITIC Limited resulting from stable performance especially in comprehensive financial business and revaluation gain on securities business even with the impact of lower iron ore prices,

in addition to lower tax expenses, partially offset by lower earnings in C.P. Pokphand because of lower pork prices.

*: Record High
**: Record High for a first half year results
(*1) % composition is calculated using the total of Non-Resource and Resource sectors as 100%.	3
(*2) Extra. G&L. means "Extraordinary Gains and Losses".

Core Profit/1st Half Results

（Unit : billion yen）

• The strong progress continued from the 1st quarter and renewed all-time high for a half year results, especially resulting from further growth in non-resource sector.

【Total】

*: Record High

【Non-Resource (72%→73%(*1))】

【Resource (28%→27%(*1))】

*: Record High	4
(*1) Non-resource/resource ratio of core profit

Net profit attributable to ITOCHU by Segment/Annual Forecast

800

700

600

500

400

300

200

100

Non- 0

Resource

FYE 2023	FYE 2023	FYE 2023 (*1)
Initial Forecast	Initial Forecast	Revised Forecast
	(Post (*1)
	Reclassification)

800.0

26.0

700.0 700.0 * 100.0

26.0 26.0

72.0 72.5

		*	234.0
197.0	197.5
85.0	86.5	*	98.0
66.0	69.0		69.0
72.0	72.0		94.0
86.0	86.0		64.0
30.0	24.0		24.0
	91.0
66.0	66.5
548.0	548.0	* 613.0

（Unit : billion yen）

Summary of Changes from the Initial Forecast (Post Reclassification)

Textile [Inc / (Dec):¥ ±0 bil.]

In line with the initial forecast due to the recovery especially in apparel-related companies and extraordinary gains

in associates, offset by the impact of high costs such as the surge of raw materials/logistics costs and the depreciation of the yen.

Machinery [Inc / (Dec):¥ 27.5 bil.]

Increased due to the improvement in profitability in North American IPP-related business resulting from the surge of electricity prices and the favorable performance in automobile-related companies and construction machinery companies.

Metals & Minerals [Inc / (Dec):¥ 36.5 bil.]

Increased due to higher earnings in IMEA resulting from higher coal prices and the depreciation of the yen and the stable performance in Marubeni-Itochu Steel.

Energy & Chemicals [Inc / (Dec):¥ 11.5 bil.]

Increased due to the favorable performance in energy trading resulting from higher market prices, the improvement in profitability in upstream interests, and the stable performance in chemical trading transactions responding to the change in supply chains especially in Europe.

Food [Inc / (Dec):¥ ±0 bil.]

In line with the initial forecast due to the stable performance in North American grain-related companies and in food-distribution-related companies such as NIPPON ACCESS, and the improvement in group companies

resulting from the improvement in profitability and expense reduction, in addition to extraordinary gains in the group reorganization in domestic sugar companies, offset by the impact of high costs such as the surge of raw materials/logistics costs.

General Products & Realty [Inc / (Dec):¥ 22.0 bil.]

Increased due to high remaining pulp prices, the stable performance in North American construction materials business continuing from the favorable 1st half results and the revaluation gain resulting from the conversion of a North American engineered wood products company into a consolidated subsidiary, partially offset by

Resource		190.0	190.0	210.0
Others		(38.0)	(38.0)	(23.0)
Non-	(*2)	74%	74%	74%
Resource(%)
		*: Record High

(*1) As of October 1st, ITOCHU dissolved the mutual-holdings for certain group companies held by The 8th Company as minority and the other Division Company as majority, and shares of such group companies are only held by the other Division Company. These changes are reflected from the FYE2023 Q3-4 forecast.

the decrease in ETEL (European tire-related company) resulting from the increase in interest rates and worsening economic conditions.

ICT & Financial Business [Inc / (Dec):¥ (22.0) bil.]

Decreased due to deterioration of remeasurement gains(losses) for fund held investments and the decline in profit margin in mobile-phone-related business, partially offset by the growth in core profit resulting from the stable performance in ITOCHU Techno-Solutions and BELLSYSTEM24 and the recovery from the impact of COVID-19

in Financial & Insurance Business sector.

The 8th [Inc / (Dec):¥ ±0 bil.]

In line with the initial forecast due to the increase in daily sales resulting from product development including high value-added products and sales promotion, and expense reduction, offset by the increase in expenses such as franchisee support payments resulting from changes in external environment in FamilyMart.

(*2) % composition is calculated using the total of Non-Resource and Resource sectors as 100%.

Others, Adjustments & Eliminations [Inc / (Dec):¥ 24.5 bil.]

Increased due to higher earnings in CITIC Limited resulting from the depreciation of the yen and decrease in the loss buffer.

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