TRUSCO Nakayama Corporation
Financial Results Briefing for the Fiscal Year Ended December 2023
February 9, 2024

Event Summary[Company Name]

TRUSCO Nakayama Corporation[Company ID]

9830-QCODE[Event Language]

JPN[Event Type]Earnings Announcement[Event Name]

Financial Results Briefing for the Fiscal Year Ended December 2023

[Fiscal Period]

FY2023 Annual[Date]

February 9, 2024

[Number of Pages]

25[Time]

15:30 – 16:34(Total: 64 minutes, Presentation: 39 minutes, Q&A: 25 minutes)[Venue]Webcast[Venue Size][Participants][Number of Speakers]

6
Tetsuya Nakayama
Atsushi Kazumi

Mayumi Takada
Atsushi Shimozu
Kyoko Yoshimi
Mika Takahashi[Analyst Names]*

Tomoki Komiya

President
Director, General Manager of the Business
Management Department and General
Manager of the Digital Service Strategy
Department
Manager of Corporate Planning Department
Manager of Accounting Department
Manager of Public Relations & Investor
Relations, Corporate Planning Department
Public Relations & Investor Relations Section,
Corporate Planning Department
Mitsubishi UFJ Securities Holdings*Analysts that SCRIPTS Asia was able to identify from the audio who spoke during Q&A or
whose questions were read by moderator/company representatives.
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Presentation
Takahashi: Thank you for waiting. Now we will begin TRUSCO Nakayama Corporation’s financial results
briefing for the fiscal year ended December 2023, the 61st business year. Thank you for joining us today
despite your busy schedule.
I’m Mika Takahashi from Public Relations & Investor Relations Section, Corporate Planning Department, andI will be your moderator today. Today’s event will be a hybrid of on-site and online session.
Now, I would like to introduce today’s attendees from the Company.
Tetsuya Nakayama, President.
Nakayama: Hello, I'm Nakayama. It’s a pleasure to meet you all.
Takahashi: Atsushi Kazumi, Director, General Manager of the Business Management Department andGeneral Manager of the Digital Service Strategy Department.
Kazumi: It is Kazumi. Thank you.
Takahashi: Mayumi Takada, Manager of the Corporate Planning Department.
Takada: I am Takada of the Corporate Planning Department. Thank you.
Takahashi: Atsushi Shimozu, Manager of the Accounting Department.
Shimozu: I am Shimozu. Thank you.
Takahashi: Kyoko Yoshimi, Manager of Public Relations & Investor Relations, Corporate Planning
Department.
Yoshimi: I am Yoshimi. Thank you.
Takahashi: Thank you in advance for your corporation.
I will continue with a brief overview of today’s proceedings. First, I, Takahashi, will provide an overview ofour financial results, and then President Nakayama will explain our initiatives. After the explanation, there
will be time for questions and answers. The financial results briefing will end when the Q&A session is over.
The briefing is planned to take approximately one hour.
And a reception will be held from 4:40 PM at the Green Terrace Café on the 11th floor. You can join thereception without prior application, please contact the nearest staff member.
For the Q&A session, questions will be answered in the following order: advance questions, on-site
participants, and online participants. We will tell you how to ask questions in the Q&A session. The video of
the briefing will be available on our official YouTube channel at a later date.
I will now explain the financial results. First, please see the presentation material of the briefing. We would
appreciate it if you could take a look at the other documents when you have time. We will be projecting
materials on the screen as well, but you can also download them from our website, so please use them.

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First, I would like to explain our business performance. Please see page three.
Consolidated net sales for the 61st business year were JPY268,154 million, up 8.8% YoY and 0.8% from thebudget; gross profit was JPY57,522 million, up 10.3% YoY and 1% from the budget; and SG&A expenses were
JPY39,003 million, up 4% YoY and down 0.1% from the budget, including depreciation of JPY6,206 million,
down 6.9% YoY and down 3.1% from the budget.
Operating income was JPY18,519 million, up 26.3% YoY and 3.3% from the budget; ordinary income was
JPY18,669 million, up 23.9% YoY and 2.5% from the budget; and profit attributable to owners of parent was
JPY12,268 million, up 15.4% YoY and 0.6% from the budget.
Net income per share was JPY186.05, up JPY24.90 YoY and JPY1.19 from the budget; dividend per share was
JPY46.50, up JPY6.50 YoY and the same from the budget; private brand sales were JPY48,313 million, up
5.3% YoY; and capital expenditures were JPY13,469 million.

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Please see page four. This is about the digest of financial results.
Net sales increased 8.8% YoY due to the consolidation of our trading area, which is a result of our abundantinventory of approximately 590,000 items, Niawase+U-choku services, use of state-of-the-art logistics
equipment, and measures to improve customer convenience and reduce environmental impact, such as
package consolidation and direct delivery to users.
With regard to gross profit, as in the previous year, inflation caused price increases for many products in thecurrent business year. Sales of inventory purchased at the old price before the purchase price increase after
the selling price revision led to an increase in profit margin of approximately JPY1.4 billion in H1,
approximately JPY1 billion in H2 and approximately JPY2.3 billion for the full year.
In addition, progress was made in transferring purchase prices to selling prices, although there were delays
in transferring prices in some segments. As for SG&A, personnel expenses increased approximately JPY1
billion YoY mainly due to the payment of monthly achievement incentives to employees and provision of
extra bonuses. Meanwhile, freight and packing expenses increased approximately JPY600 million YoY in linewith the increase in sales.
Depreciation decreased approximately JPY0.5 billion YoY and approximately JPY0.2 billion-minus from thebudget due to the expiration of software amortization period. SG&A expenses were consequently 4% higher
YoY and almost in line with the budget of the plan.
In addition, we recorded an extraordinary loss of approximately JPY800 million to review the valuation ofshares of GROUND Inc. and Cinnamon Co., Ltd. with whom we entered into a capital and business alliance in
2021. And net income attributable to owners of parent was up 15.4% YoY.

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4Next, please see page five. This shows the results by segment.
Factory route net sales were JPY182,188 million, up 6.8% YoY and up 0.1% from the budget; e-businessroute net sales were JPY59,121 million, up 14.6% YoY and up 2.1% from the budget; and home center route
net sales were JPY24,260 million, up 9.5% YoY and up 3% from the budget. Meanwhile, overseas route net
sales were JPY2,583 million, up 22.5% YoY and down 1.8% from the budget.
Each route has seen an increase in sales, thanks to the convenience of our comprehensive capabilities,
including Niawase+U-choku, which use our inventory and logistics.

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Next, on page six, we discuss SG&A expenses.
SG&A for the full business year increased 4% YoY to JPY39,003 million, attributable to a YoY increase of
JPY415 million in salaries and bonuses resulting from the payment of monthly achievement incentives and achange in the number of months for logistic course employee bonus payments. In addition, both net sales
and profits reached new record highs, and the Company decided to pay a total of JPY791 million in extra
bonuses to employees. For reference, the average salary of our career course employees was JPY8.24
million, up JPY530,000 compared to FY2022.
Next, freight and packing expenses increased JPY631 million YoY due to higher shipment volume andtransportation costs according to increasing sales.
Depreciation decreased JPY461 million YoY due to the expiration of software amortization period.

Next, please see page seven, capital expenditures. For a detailed breakdown, please see the document at
hand.
The total amount was 13,469 million yen, including Planet Aichi, which is scheduled to start operation in
2026, a new automated pallet warehouse building at Planet Higashi-Kanto for inventory expansion, a new
Sakai Stock Center, and improvements to the product database Sterra. This is all for the explanation ofbusiness results for the 61st fiscal year.

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Next, page 8, I would like to explain our business forecast for the present business year.
Consolidated net sales plan for the 62nd fiscal year is JPY284,710 million; gross profit JPY59,760 million;
SG&A JPY41,150 million; operating income JPY18,610 million; ordinary income JPY18,850 million; profit
attributable to owners of parent JPY14,740 million; and dividend per share JPY49. The above is our plans.

Next, page nine, I will discuss SG&A for the 62nd business year.

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Salaries and bonuses will increase by JPY633 million YoY because of the provision of monthly achievement
incentives, an increase in the number of part-time employees, and hourly wage hikes.
Freight and packing expenses will increase by JPY618 million YoY attributable to higher shipping volume,
higher transportation costs, and increasing packing and packaging volume.
We expect to increase depreciation due to the renovation of the Osaka head office building, which isscheduled to be relocated in May this year, as well as due to increased shipping capacity. A total of
JPY41,150 million is planned.

Next, page 10, I would like to share capital expenditures for the present business year.
Capital expenditures for the present business year plan to invest approximately JPY21,879 million. As
mentioned earlier, construction of buildings and installation of equipment for Planet Aichi are currently
underway. In addition, a new tent warehouse construction and the introduction of logistics instrument,
Skypod, are scheduled at distribution centers and Planet Saitama, for further expansion of inventory items.
We will also invest in digital technology, such as the product search site, TRUSCO Orangebook.Com, andenhancements to our core system of Paradise. As regards the Three-Year Plan disclosed in the previous
business year, we will strive to achieve the 11 capability targets, which are our aspirations, as our mediumterm management capability targets.
President Nakayama will continue with an explanation of our initiatives. President Nakayama, please start.
Nakayama: Once again, ladies and gentlemen of the audience, thank you for taking time out of your busy
schedule to join us today. Also, thank you to all of you who are watching online for staying with us today.
Now I would like to talk a little about the initiatives.

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As we just mentioned, the source of our company's growth is logistics. Courage, perseverance, hard work,and enthusiasm are all important, of course, but these are no longer keys to success. So we are going tofocus on logistics investment.
Just as water flows from a high place to a low place, orders flow from inconvenient companies to convenientones. Since that has become obvious, we would like to improve and refine our convenience.
In addition, M&A is often talked about these days, and we have attached a single A4 sheet showing the
progress of the business and its results, as well as the progress and plans for key indicators.
What I am trying to say here is that many people make the mistake of thinking: if we were to acquire acompany with sales of JPY100 billion, sales could increase JPY100 billion and the Company could growaccordingly. In fact, there are various items shown here, such as first, the number of items in inventory, theamount of inventory, the total number of suppliers, and the inventory shipment ratio. But we aredetermined to thoroughly improve these figures and items in the functions that the Company has.
So we make no acquisitions, but we grow by ourselves as an organic company. And we are carrying out avariety of brush-ups. Although we say that sales increased by JPY100 billion because we bought a company
worth JPY100 billion, the contents of such company and our story are therefore slightly different. We aredetermined to continue to grow in this way.
M&A is said to be a panacea, but I believe it is important not to fall into the misconception of such panacea
addition.
Another thing is that various investments, including logistics investments, are underway. But, generally
speaking, people tend to assume the equation of training employees to grow a company, but it is a little
different.
It is more correct to think that if you develop a company, people will follow and grow along with it. If you
grow the company, people will follow and grow along with it. I think that is the way to look at it.

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9Next, as I said earlier, it is not about power versus power, guts versus guts, or enthusiasm versus enthusiasm,
but about how much we can create services that other companies cannot. This is important for success.
The first of these plans is the expansion of the number of manufacturers we handle. Last year, we dealt with
about 3,500 companies, which, to put it simply, means that just by doing business with one company, you
can obtain products from 3,500 companies through one-stop shopping, which is extremely convenient.
The second plan is to expand the number of items in stock. We have finally reached 600,000 items, and ourgoal is to reach 1 million items by 2030. In short, our basic power depends on the number of stock items.
The third plan is to expand the number of items available on TRUSCO Orange Book. Since physical catalogue
has limits, we plan to increase user usage of the book on the website

Next is the fourth plan. The plan is to enhance the popular service, Niawase+U-choku. The service, which
has been available for less than three years, is appreciated a lot. As you can see in the graph below, wedelivered a total of 4.86 million packages in FY2023, not to our customers(Retailers), but to users of ourcustomers. This is rare in the world.
It is rare for a wholesaler like us to ship directly to such users, but this has been very popular. So, if one ofyou, for example, orders a tool from Amazon, the shipping source is TRUSCO, and this will speed up thedelivery time.
With functon of Niawase, you need to pay charge not twice but once. I believe that not only our company,
but also other companies in the wholesale industry, should be more and more involved in direct delivery tousers from the standpoints of the environment and convenience.
If you are a wholesaler of pharmaceuticals, you can provide a targeted logistics service that sends drugs topatients, rather than to hospitals or pharmacies. If you are a wholesaler of pharmaceuticals, you can provide
a targeted logistics service that sends drugs to patients, rather than to hospitals or pharmacies. We now
work on this with the intention of making it a common practice in the distribution of machine tools to packand deliver products directly to users.

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10That still accounts for only 11.0%(Y 2023) of our overall sales. Looking at the current rate of progress, it will
be possible to make it common sense in the near future.
But it takes more than just talk to do this. First, you can't do Niawase+U-choku without an abundance of
inventory anyway. We now have 600,000 items and need large distribution centers. Then we need state-ofthe-art logistics equipment in it. In addition to that, advanced digital technology is necessary, and I hopethat you will remember that this is not a device that can be easily copied by other companies.

Next is the MRO Stocker, which stores tools not medicines, has been well received. But although thenumber of installations has been increasing, sales are still low at JPY348 million. I would like to do my best
this year to increase the sales a little more.
Anyway, we will place the necessary products in user's factories. Honestly speaking, there is no reason why
these products do not sell; we will do our best to make them more useful in the future.

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11Next, the sixth service, which has not yet been launched, is called Youkle (tentative name), which is short for“users coming to us.” The service is tentatively named, but what it means is that if a user has a product thatthey are in a hurry to get, The service is tentatively named, but what it means is that if a user has a productthat they are in a hurry to get, Instead of waiting for a customer, distributor, or online retailer to deliver a
product that the user is in a hurry to get, the user can come directly to TRUSCO to pick up the product if
there is one. If you have such a product, please come to TRUSCO to pick it up.
We still do this, but it is only a small part of what we do. So we plan to invite more and more people to visit
us and see what they can do. First they can get products as soon as possible.
Then you can reduce costs such as delivery charges. And here's the other thing: this is the point. For online
retailers, such as Amazon and MonotaRO, shipping is the only means of delivery.
The only way to ship is to pack them in a box and send them out, but by providing this service, we will beable to provide another distribution service, not only shipping, but also picking them up at TRUSCO.
We have a system in place, but we need to develop applications and do other things. And we do not yet
offer this service on a large scale; we would like to do this as well.

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12Next is improving business efficiency. We have been using AI to automate the estimation process for many
years now, and the percentage has reached 27.6%. The purpose of this is to solve an issue that theestimation process is extremely time-consuming and labor-intensive. We face a challenge that the order
rate is low even though it takes time and effort.
So anyway, I tried to get back to you with an estimate as soon as possible. It was no good to take an hour,
two hours, half a day, or even a day to get a reply, so we decided to do it quickly and called it Sokutou Meijin,
which means “instant response expert.” The fastest one returns within five seconds of the input.
I am impressed that the system order rate has changed considerably to 87.1% now since days when noorders were received by the system, and all orders were received by salespeople and in-house personnel.
Thanks to the inventory, system orders can be placed. This was the most important factor that enabled us
to transform ourselves from a black or dark company into a white company. We therefore value the system.

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Next is the progress of capital expenditures.
We have written various indicators since starting the operation of Planet Saitama. We have invested
approximately JPY20 billion in Saitama for a long time, but on some occasions people have asked about the
cost-effectiveness of this investment.
As I will mention later, I believe that cost-effectiveness is not appropriate for management decisions, andhonestly speaking, you can't understand management until you try. So, we have invested JPY20 billion.
The resulting figure is so. But the most important thing is that without Planet Saitama, we would not havebeen able to achieve the results we have achieved this current fiscal year.

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Next, we share a summary of Aichi with a target of one million inventory items. In addition to that, we will
enhance Niawase+U-choku function, and the total investment will be about JPY30 billion for a distribution
center for Aichi to western Japan.
We estimate that the annual shipment capacity of the center on a stand-alone basis is around JPY100 billion.
We have secured a very good location, located only a 20-minute drive from Nagoya Station. And we intend
to enhance logistics in Aichi Prefecture and Shizuoka Prefecture, which are manufacturing centers.
In addition, there is a video of the construction status of Planet Aichi, so please watch it.
[Video Begins]
Music only…
[Video Ends]
Nakayama: Steel frame has not yet been fully erected, but the entire structure is seismically isolated, so ourgoal is to be able to ship immediately in the event of any disaster.
We have gone around Planet. Under the circumstances, the center will be completed in January of next year,
but it will take some time before it is operational in July of the year after next due to the installation oflogistics facilities.

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Next, the third item in the progress of capital expenditures is the construction of Planet Niigata, which isscheduled to start the construction this summer. One of the objectives was to first improve the delivery andshipping capacity for home centers, as the existing centers do not have enough capacity.
We also try to stock such large products for eastern Japan in the factory route. Another objective is that, asa base for imports along the Sea of Japan route, we would like to reduce the cost of marine transportationand delivery time. And it would be much faster and cheaper for ships from China to arrive in Niigata than forships to circle around the Japanese archipelago and arrive at the port of Yokohama.
We would like to strengthen our procurement activities through this investment. The total investment isapproximately JPY18 billion.

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Then the fourth one, which is to strengthen the storage capacity of Planet Saitama, the first one is this one,a new tent warehouse. I don't really care about building a new tent warehouse, but we are alreadyoverflowing with products. And we are going to install a full-scale system called Skypod by Exotec in Aichi,
but I would like to try it out here in Saitama.
Simply put, this small robot runs up to the shelf, pulls out the necessary container from the shelf, puts it on
its back, goes down again, and takes it to the picker. This is a very efficient system with no conveyor belt anda couple of robots in a line.
We have also prepared a video of this as well. So please watch.
[Video Begins]
Skypod is a new-age picking system called “Goods to person,” in which the target item comes to picker's
hands, unlike the conventional system in which the picker goes to pick up target items.
The robot receives a delivery instruction, goes to target items, raises and lowers the rack by itself, andremoves target items. The robot with target items is automatically transported to a picker. The picker simply
performs picking operation as instructed by the monitor.
We will propose the best picking station for your operation.
The order mover type can easily join Skypod to an existing logistics chain. You can automate the supply ofpara containers and the discharge of containers. When you press a robot swap button, a waiting robot is
prepacked. After cargo matching is complete, press a pick complete button and eject the container. The
robot goes to the booster by itself once an hour for a quick charge.
Skypod can be scaled flexibly according to the size of warehouses, allowing for future expansion. Skypod is asystem that evolves according to your business growth.
[Video Ends]
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Nakayama: We would like to actively introduce this kind of machines from the viewpoint of being able toreceive and ship goods without relying on human labor as much as possible.

Next is the launch of female meeting for proposals. I have been thinking about how to appoint female Board
members for almost 30 years now, and this is one of the problems that I have not been able to solve yet.
We came up with this meeting to solve the issue. We have a management meeting once a month at thislocation, and female employees come out and make suggestions from their daily work, even if it is justchatting about what they think should be done, what could be done better, or what should be done
differently. It's okay if it's just a chat, but they come out and talk about all kinds of things.
The main goal is to change their mindsets. We hope some of them aim for the top management. As you cansee here, the members have a variety of experience in the Company, and some of them are still young,though I would offend you if I said they were just new hires. This is what we are trying to do.
In addition to the above, we now work to encourage female employees. Whenever I have a dinner meeting,it was normal for the head of the product division to be present for suppliers and the head of the sales
division to be present for customers, but they no longer have to come out. Anyway, take such a sales person
or a woman in charge of the products we purchase and have her meet with various presidents and talk tothem, or just breathe the air.
First, to have experience, we would like to start to let them experience such an occasion. Since it has juststarted, I can't say what the results will be, but we are going to get serious about it.
We try to make our own efforts to grow female employees in-house as much as possible. And so we are now
changing our policy to create female executives from among our own employees, rather than hiring them infrom somewhere else.

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Question & Answer

Nakayama [M]: I have three advance questions, so I will answer them.

Participant [Q]: First, as question one, you wrote the following question that the factory route had arelatively high revenue growth rate of just under 7% in the last fiscal year, the first time in a long time.
Nakayama [M]: The answer is as follows.
Nakayama [A]: As I mentioned earlier, orders are flowing from companies that are inconvenient to thosethat are convenient, and this trend toward convenience is accelerating. We can therefore sustain growth bymeeting these needs.
It is impossible to accurately count the industry share because of the complexity of products handled byeach company. We can achieve further growth by expanding the products and inventory we handle, as well
as by strengthening our logistics and digital capabilities since the number of customers and the market havegrown for sure. We are not content with our current market and customer base, but rather we will continue
to expand our business in various areas.
In the past, most of our customers were machine tool dealers, but as you can see from the breakdown ofcustomers, we have a very diverse range of customers in the online shopping area, and we now receive
many inquiries from major electronics retailers in the online shopping area. So I am confident that we can
expand even better.

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19Participant [Q]: Second, you said that depreciation expenses rose to 3% of sales when the investment in thecenter, including Planet Saitama, was done at the same time.
Nakayama [M]: As to this question, the answers are as follows.
Nakayama [A]: Capital expenditures are essential for growth, and we make no calculations as to whatpercentage of sales is accounted for by depreciation. We make business decisions considering whether or
not an investment is necessary, and that they do not make any decisions to limit depreciation to apercentage of sales, which would curb capital investment.
The cost-effectiveness is not appropriate for management decisions. So we look at the total amount of
capital investment in relation to the level of profits and consider whether an investment is excessive or too
excessive.

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20Participant [Q]: Next is the third question, I think that most of the logistics companies have alreadyaddressed the 2024 problems. But looking a few years ahead, what are the next threats and challenges tologistics?
Nakayama [M]: The answer to this question is as follows.
Nakayama [A]: The logistics 2024 issue is a tailwind for our company with Niawase+U-choku. The tighter
logistics will become in the future, the more advantageous the environment will become for us, as webasically own logistics. Our practice of “not relying on other people's capital for the main artery of theCompany” for about 40 years will be very useful in the future.
For us, inventory is the root of energy for growth, and all, Niawase+U-choku, MRO Stocker, and theupcoming Youkle service, would not be possible without inventory. They are the services that we cannot
allow our competitors to follow.
Nevertheless, we cannot say we are not affected at all. The current cargo assortment service is a service thatpacks the products of various manufacturers into a single box.
If you buy products from an online retail company, many boxes will come with an order. But In the case of
our company, we pack everything into one box as much as possible and send it to you. So from the shipping
company's point of view, it is a very low delivery load and low environmental load. The logistics is therefore
not a big problem.
We have Approx. 130 employees who specialize in delivery, and all of them are full-time employees.
Accordingly, we have almost zero turnover rate. We have been often asked to hire employees from othercompanies. Since we have no temporary employees, we conduct business for ourselves. This has been avery advantageous situation for us.
That's about all I have to say now, and I'll leave it up to you to receive questions, Ms. Takahashi.

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Takahashi [M]: Now, if anyone in the audience has questions, please raise your hand and tell us the name ofyour company, your name, and the nature of your question.
Now, if you have any questions, please raise your hand.
Mr.Komiya [Q]: I too regret having writing too much about depreciation in reports and other documents
until now. Because the Company is so stable, when you look at it on a five-year basis, it is inevitable that theCompany's performance is explained in this way. I will be careful in the future.
Last year, gross profit improved for the second consecutive year, and in your explanation for H1 of last year,
you mentioned that the JPY1.4 billion price increase had a positive effect, but it would be difficult to predict
the effect in H2 of the year. How do you factor price increase effect in the plan of the present business year?
In other words, the gross profit assumption for this year is 21%, down 0.5 percentage point from last year.
Could you tell me how did you calculate this?
Nakayama [A]: We won't know until we finish the period. We however expect to make a total profit ofabout JPY500 million for the full year, but I'm sorry I am not convinced.
Mr.Komiya [Q]: Do you expect JPY500 million this year compared to JPY2,300 million of last year? I
understand.
Nakayama [A]: Regarding our stance on price increases, if a manufacturer requests such a price increase,
we will accept requests without hesitation. Then, we will soon start negotiations with customers on sales
price hikes without hesitation.
Mr.Komiya [Q]: I understand very well.
Second, I think one of the factors that is quite difficult to estimate now is quarterly accounting. I have heard
from IR that the gross profit tends to be high at the end of H1 and at the end of the fiscal year because of
the timing difference in the inventory amount for each quarter. I doubt from outside that the quarterly
accounting works well to show real figures. I'm not sure if the improvement will be made this year or not,but please tell me in detail.
Nakayama [A]: The current quarterly closing of accounts, such as Q1 or Q2, is very burdensome forcompanies, and there is a trend toward reviewing such quarterly closing. To be honest, we think that thebest way is to settle accounts once a year, or at most semiannually, or half-yearly at most.
I'm sorry, but I don't think it's a good idea to put too much effort into something that won't contribute to
the Company's performance.
Mr.Komiya [Q]: I understand that you don't need such a two-or three-month period to make a businessdecision.
Nakayama [A]: Yes, that’s what I mean.
Mr.Komiya [Q]: I understand.
Lastly, the economy in China is deteriorating and that various companies reported various financial results,
but I ask this question based on my full understanding that the percentage of your company's sales in Japanis high. How is the business confidence in Japan right now compared to this year or last year? Could you tellme as a business person who do business every day? That's all from me.

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Nakayama [A]: I'm sorry, I don't know if I'm going to offend you by saying this, but I've never actually paid
attention to business confidence, and even if I did, there's nothing I could do about it. For example, there isnothing we can do if we say, “What’s going on in the Chinese economy?” Rather than that, our main focus ison what measures we should take and how we should implement them to enhance the Company.
So even in management meetings, there are no discussions about whether the economy is good or bad, or
what the future holds for the Company. Our company is a little mysterious
Mr.Komiya [M]: I understand. I asked the same question about five years ago and was relieved to get thesame answer. That's all from me.
Nakayama [M]: It has not changed.
Mr.Komiya [M]: Thank you.
Takahashi [M]: Do you have any other questions?
Since there seem to be no further questions, we will now move on to the Q&A session with the online
participants.
Mr.Hiramatsu [Q]: Thank you for your support as always.
I have two questions. Since you offer such advanced solutions, such as Niawase+U-choku and a wide
selection of products, I wonder if it would be possible in the future to pass this on to the price of products orreceive a fee for the time and effort. Or are you going to take market share without doing so?
Nakayama [A]: At present, shipping costs are paid by online retailers. And then we ship products without
being involved in shipping fees. General dealers also pay so, basically with their own money.
But we have not received the packing and shipping fees that you just mentioned. So we will have to consider
billing customers for these in the future. I don't know whether it is JPY200, JPY300, or JPY500 per order. But
for online retailers, when they receive an order from a customer, they can simply throw the data directly
into TRUSCO. And we pack and ship it, so that they have no hassle at all. It is the current situation.
We have whispered to two companies about the need to improve this situation and we have received
responses such as, “Oh, we noticed?” We will continue to work on this issue in the future.
Mr.Hiramatsu: Thank you very much.
Second, if Planet Aichi is completed, I think one million SKUs and the HACOBUne project for example will becompleted, and what will be realized if that is done?
Net sales are expected to reach JPY100 billion here, but what kind of competitive advantage, for example, ora 100% shipment rate, or customers being able to get 10 out of 10 items from TRUSCO alone without having
to go elsewhere, or better productivity, can be achieved? If you have just an image, please let me know.
Nakayama [A]: I can't give you the name, but we have a machine tool manufacturer that consider selling not
only machine tools, but also a complete set of tools like cutting tools, tooling tools, and measuring tools,
which are used after selling machines.
So now, most of the machines are online, and users and manufacturers are already connected. And when
they receive an order, they throw the data into TRUSCO and ask us if we can send the product from TRUSCO

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to the user. Now we have started to receive such a request from manufacturers to send the products tothem.
This is an unprecedented request. And in the end, if we simply make logistics more sophisticated andefficient, it will not only make our existing business more efficient, but also open up more and morebusiness opportunities.
For example, we have a business relationship with IRIS OHYAMA Inc. They used to focus on plastic storageboxes and other such items. But now that they are making the transition to a home appliance manufacturer,
customers start to wonder whether they can buy IRIS's home appliances or not. Since there will becomplicated issues in the future, we have decided to sell everything anyway.
IRIS is now going to strengthen sales of water and rice as well, and so we will probably be forced to sell bothrice and water in the near future.
In any case, the business of transporting or distributing goods is an integral part of any industry or business.
And if we have such capabilities, such jobs will continue to increase, and in about 10 years, I wonder if wewill even do things I can’t expect. I look forward to the future a lot.
Mr.Hiramatsu [M]: Thank you very much. I understand very well.
Nakayama [M]: Thank you very much.
Takahashi [M]: Does anyone have any other questions? Please, go ahead.
Mr.Sakae [M]: Thank you very much.
Nakayama [M]: Please, ask your questions.
Mr.Sakae [Q]: Thank you. I have three questions.
First, about the plan of PB net sales for the present business year, I understand that your target increase is
JPY3,400 million YoY to JPY51,700 billion. Since the amount of sales increase is usually around JPY2,500
million, I was wondering if this is a slightly higher stage. If you have started any different initiatives from theprevious period in the area of PB products, could you please tell them to us?
I also know that PB sales fell a little short of the Company's plan for the previous year. Could you share its
reason?
Nakayama [A]: First, regarding PB products, it may seem that there is a sales target, but in fact there is not.
Our stance is to make products that customers can pick up and buy, rather than just recommend to themand have them buy them.
We plan a complete renewal of aerosol products, such as lubricants and various other types of products,
which are our specialty. We try to increase sales as much as possible in these areas by changing fromproduct numbers to product names to something easier to understand.
In the past, we had aerosol-related products that had product numbers that were impossible to remember,which is a funny story, but I wondered if products with such product numbers would sell. So we havedecided to make the number simple. We have such aerosol-related products. I'm sorry, I can’t remember all
the products immediately. But unless we brush up on our PB products, they will become obsolete, so wewould like to expand our sales by focusing on such products.

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Mr.Sakae [Q]: Thank you very much. The second point is to confirm the figures in your plan for FY2024.
Looking at the gross profit margin alone, it is expected to be 21%, which is 0.5 percentage point lower YoY. I
would like to know what the reasons are for the decrease.
Nakayama [A]: The reason is old prices. We have a lot of inventory, as mentioned earlier. We sold suchproducts and the profit from the old price will be reduced a little accordingly since the old price products
will be reduced. That's the reason for the decrease of the gross profit margin.
To be honest, we won't know the gross profit until after the period is over. It is a curious story, but in thepast, gross profit margins would drop dramatically when salespeople were sent to sell. The more people are
involved, the more the gross profit margin would decline. It is actually natural to say that gross profit
increases when people are not involved. Customers said, “Well, how nice of you to come.” So, theconversation would be, “How much are you going to charge me for that product?”
So, of course, we do business with, for example, special price registrations. Also, I feel that the focus has
shifted more and more from “how much we charge products to a customer?” to “how can a customer
procure and ship products with less hassle.”
Rather than asking which product is cheaper or more expensive, they ask which company can provide themost hassle-free procurement and shipping methods in total. We have come to appreciate this situation.
This is the current direction.
Mr.Sakae [Q]: Thank you very much. As for the third and final question, as you explained in the previous
answer to the advance question, I thought you were right about the flow of people from inconvenientcompanies to convenient companies. And you explained that this trend is accelerating.
What are some of accelerating trends in your industry? And I was wondering if you could tell me how I
should understand how it happened.
Nakayama [A]: This may sound like an onsite slapstick story, but let's say that TRUSCO had an order to send
this package directly to this user. Wait a minute. If you ask TRUSCO to send products and have otherproducts we plan to ask to another company, asking TRUSCO to ship those products together would
eliminate freight expenses and hassles. This process of cargo assortment service has the effect of attracting
orders with a dust collector.
Financial results announcement for the current period are not finished for all the companies. If you look atthem, however, you will understand in general that we performed well. One of the reasons for this is thatNiawase+U-choku has been very well received.
The 2024 issue is also a problem for freight rates. We must strive to reduce the burdens as much as possible.
For us, however, the situations have a significant tailwind effect.
Mr.Sakae [M]: Thank you very much.
Takahashi [M]: With that, we will conclude the Q&A session. If anyone has any further questions, pleasefeel free to contact us by e-mail or, as appropriate, for interview requests.
This concludes the financial results briefing for the fiscal year ended December 2023. Webinar participants
will be taken to a short survey regarding this information session after watching. Please answer if you would
like. Thank you very much for your kind attention to the end.
[END]

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______________
Document Notes
1.
2.
3.
4.

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TollfreePortions of the document where the audio is unclear are marked with [Inaudible].
Portions of the document where the audio is obscured by technical difficulty are marked with [TD].
Speaker speech is classified based on whether it [Q] asks a question to the Company, [A] provides ananswer from the Company, or [M] neither asks nor answers a question.
This document has been translated by SCRIPTS Asia.

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