Itochu : FYE2023 1st Half Presentation Material

FYE 2023 1st Half

Presentation Material

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.

FYE2023 1st Half Results /The progress toward Annual Forecast

（Unit : billion yen）

• "Net profit attributable to ITOCHU" recorded ¥483.0 bil. The progress toward the FYE 2023 Initial Forecast of ¥700.0 bil. was 69%. Gross trading profit exceeded ¥1,000.0 bil. for the first time in all the half results and recorded all-time high, along with Trading income.
• "Core profit" was approximately ¥430.0 bil. renewed all-time high for a half year results resulting from the strong progress continued from the 1st quarter and further growth especially in non-resource sector. The progress toward the FYE 2023 Initial Forecast of ¥710.0 bil. was 61%.
• In accordance with the steady growth of core profit, FYE 2023 Annual Forecast was revised upward from ¥700.0 bil. to ¥800.0 bil., as announced on October 4. The progress toward the FYE 2023 Revised Forecast was 60%. "Core profit" is expected to reach the highest record of ¥770.0 bil.
• 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).

ITOCHU

Gross trading profit

Trading income

Equity in earnings of associates and joint ventures

Extraordinary gains and losses

Core profit(*)

(*) Core profit is shown in round figures.

FYE 2023	FYE 2023			FYE 2023
Q1-2 Results	Initial Forecast	Progress	Revised Forecast	Progress
		(Disclosed	on May 10)
	483.0	700.0	69%			800.0	60%
*	1,084.4	2,020.0	54%		*	2,140.0	51%		Dividend	Initial	Revised
											information	Forecast	Forecast
*	388.5		590.0	66%		*		700.0	56%
				(per share)	(Disclosed
									on May 10)
*	185.6		300.0	62%		*		300.0	62%
				Annual	130 yen	*140 yen
											(Planned)	(minimum)	(minimum)
	53.0	(*1)	(10.0)				(*2)	30.0
						Interim	65 yen	* 65 yen
*	430.0	710.0	61%		*	770.0	56%
		(*1) Including a loss buffer: (30.0)		(*2) Including a loss buffer: (20.0)

*:Record High	2

The 1st Half progress toward the Initial Forecast by Segment / the Initial Forecast vs. the Revised Forecast by Segment

Segments		FYE2023	FYE2023		The Progress toward the Initial Forecast
Q1-2Results Initial Forecast	Progress
			(Post (*1)
			Reclassification)
Textile	11.6	26.0	45%	Progressed stably due to the recovery in apparel-related companies and
					stable performance in overseas-related trading.
					Almost achieved the Initial Forecast due to the improvement in
Machinery	＊71.4	72.5	98%	profitability in ship-related companies resulting from the favorable
					shipping market and in YANASE, and the gain on the sale of a North
					American beverage-equipment-maintenance company.
Metals &	134.7	197.5		Progressed remarkably due to higher earnings in IMEA resulting from
68%	higher coal and iron ore prices than expected and the depreciation of
Minerals
			the yen in addition to the stable performance in Marubeni-Itochu Steel.
		＊＊			Progressed well due to the favorable performance in trading with the
Energy &	86.5	56%	surge of market prices, partially offset by the impact of high costs of raw
48.5
Chemicals				materials in chemical processing companies and sluggish for cargo
					movement resulting from the lockdown in China.
					Progressed as planned due to the improvement in profitability in North
					American grain-related companies and the gain on the group
Food	27.7	69.0	40%	reorganization in North American oils and fats companies, offset by the
					deterioration in profitability in fresh-food-related companies due to the
					struggles in exports to Japan with the depreciation of the yen and high
					costs such as the surge of raw materials/distribution costs.
General				Progressed remarkably due to high remaining pulp prices, the favorable
63.0	72.0	87%	performance in North American construction materials business, and
Products &
Realty				revaluation gain resulting from the conversion of a North American
			engineered wood products company into a consolidated subsidiary.
ICT &				Progressed slowly due to the decline in profit margin in mobile-phone-
25.4	86.0		related business, deterioration of remeasurement gains(losses) for fund
Financial	30%
Business				held investments resulting from the stagnation of stock market and the
			change of plan for asset replacement.
		19.5	24.0		Progressed as planed due to the increase in daily sales resulting from
The 8th	81%	product development including high value-added products and sales
					promotion, efforts for energy saving, and expense reduction.
Others,		＊81.3	66.5		Progressed remarkably mainly due to revaluation gain on securities
Adjustments &	122%
Eliminations				business in CITIC Limited.
Total		483.0	700.0	69%
Non-Resource		362.1	548.0	66%
Resource	115.4	190.0	61%	*: Record High
Others	5.6	(38.0)	－
			**: Record High for a first half year results
Non-Resource(%)(*2) 76%	74%

			（Unit : billion yen）
FYE2023		Summary of Changes from the Initial Forecast
Revised	(*1) Progress
Forecast

In line with the initial forecast due to the recovery especially in apparel-

26.0 45% 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.

Increased due to the improvement in profitability in North American IPP-

＊100.0 71% related business resulting from the surge of electricity prices and the favorable performance in automobile-related companies and construction

machinery companies.

• Increased due to higher earnings in IMEA resulting from higher coal prices

234.0 58% and the depreciation of the yen and the stable performance in Marubeni-

Itochu Steel.

Increased due to the favorable performance in energy trading resulting from

• 98.0 50% 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.
  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

69.0 40% 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.

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

94.0 67% a North American engineered wood products company into a consolidated subsidiary, partially offset by the decrease in ETEL (European tire-related company) resulting from the increase in interest rates and worsening economic conditions.

Decreased due to deterioration of remeasurement gains(losses) for fund held investments and the decline in profit margin in mobile-phone-related

64.0 40% 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.

In line with the initial forecast due to the increase in daily sales resulting from product development including high value-added products and sales

24.0 81% promotion, and expense reduction, offset by the increase in expenses such as franchisee support payments resulting from changes in external environment in FamilyMart.

1. 89% Increased due to higher earnings in CITIC Limited resulting from the depreciation of the yen and decrease in the loss buffer.

1. 60% (*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

• 613.0 59% Company as majority, and shares of such group companies are only held by the other Division Company.55%210.0

(23.0) － These changes are reflected from the FYE2023 Q3-4 forecast.

	(*2) % composition is calculated using the total of Non-Resource and	3
74%
Resource sectors as 100%.

Core Profit/The progress toward the Revised Forecast

（Unit : billion yen）

• With the strong growth primarily in non-resource sector, made stable progress toward the Revised Forecast as well as resource sector.

【Total】

	*: Record High	Th	e p	rogress in 1st Half Results was 56%
【 Non-Resource（73% →73%(*1)）】	【 Resource （27% →27%(*1)）】

	The progress in					The progress in
*: Record High	1st Half Results was 55%					1st Half Results was 55%
(*1):Non-resource/resource ratio of core profit		4

Extraordinary Gains and Losses

	FYE 2023	Major items
	Q1-2 Results
		・Gain on the sale of a North American
		beverage-equipment-maintenance company
		:22.0 (Machinery)
		・Revaluation gain on securities business in CITIC Limited
		:20.5 (Others, Adjustments & Eliminations)
		・Revaluation gain due to the conversion of
		a North American engineered wood products company
		into a consolidated subsidiary
		:8.5 (General Products & Realty)
Non-	50.0	・Gain on the group reorganization in North American
oils and fats companies
Resource
	:3.5 (Food)
		・Gain on the sale of a vehicle-related company
		:3.0 (Machinery)
		・Gains on a specific overseas project and business
		:2.5 (Machinery)
		・Impairment losses on aircrafts leased to Russian airlines
		in a leasing-related company
		:(8.5) (Machinery)
		・Impairment loss on sawn timber business in IFL
		:(1.5) (General Products & Realty)
Resource	－
Others	3.0	・Reversal of allowance for risk assets
		:3.0 (Others, Adjustments & Eliminations)
Total	53.0

(*) Major items and Main reasons are shown in round figures.

			（Unit : billion yen）
FYE 2023	FYE 2023	Increase/
Initial	Revised	Main reasons for changes
Decrease
Forecast	Forecast

		・Revaluation gain on securities business in CITIC Limited
		:+20.5 (Others, Adjustments & Eliminations)
20.0	47.0 + 27.0	・Revaluation gain resulting from the conversion of
a North American engineered wood products company
		into a consolidated subsidiary
		:+8.5 (General Products & Realty)

－	－		－
(30.0)	(17.0)	+	13.0	・Loss buffer for unexpected losses
				:+10.0 (Others, Adjustments & Eliminations)
(10.0)	30.0	+	40.0

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