Integrated Report 2022
Year ended March 31, 2022

Editorial Policy

Contents

We started creating the “Mitsui E&S Group Integrated Report” (the report) from 2019 (’19/4 - ’20/3), aiming to provide our
stakeholders with a deeper understanding of our business model and the process of realizing long-term sustainable corporate
value improvement. The report focuses on information that has a significant impact on corporate value. A wide range of IR
information and ESG-related information is disclosed comprehensively on our website, aiming for further improvement so thatvarious stakeholders in Japan and overseas can understand our unique business model.

Positioning of “Mitsui E&S Group Integrated Report”

Value Creation Story

Financial Information

Non-Financial Information
INTEGRATED REPORT

Gathers and summarizes key information
Financial Statement Reporthttps://www.mes.co.jp/investor/reports/financial_rep.html

Website Pages [ Sustainability ]Website Pages [ IR/Company Information ]https://www.mes.co.jp/sustainable/

https://www.mes.co.jp/investor/

Scope

PeriodReportingfrequency

Publication
date

Reference
Guidelines

Mitsui E&S Holdings Co., Ltd. and major companies of the Mitsui E&S Group
However, the applicable scope of reporting is specified on a case-by-case basis if it differs from the above.

This report covers the period from April 2021 to March 2022.
(However, some sections include information for April 2022 and thereafter.)Foundations ofValue Creation

Once a year in principle

November 2022

• “International Integrated Reporting Framework” International Integrated Reporting Council (IIRC)• “Guidance for Collaborative Value Creation” METI of Japan• ”Sustainability Reporting Standards issued” Global Reporting Initiative (GRI)

Inquiries

Disclaimers

Mitsui E&S Group’s
strategy

Mitsui E&S Holdings Co., Ltd. Corporate Planning Division Contact form
https://www.mes.co.jp/contact.html

Business Overview

This report contains plans and forecasts that were current as of the date of publication, as well as descriptions about our future business activities based on our management plans. Please note that this information is based on the currently available information, and the actual contents of our business activities may
differ from the contents of this report due to future circumstances or the environment, or due to unanticipated events that may occur after the publication of this report.

Data

Mitsui E&S Holdings agrees with the SDGs (Sustainable Development Goals), an international goal set by the United Nations tosolve global issues.

1

Mitsui E&S Group Integrated Report

Editorial Policy
Contents

1

New Group Strategic Goals
Material Issues
Transition to a new structure
Top Message
Value Creation Process
Strength of Mitsui E&S
Life Cycle Solution Business

3

2

4
5
7
13
15
16

Mid-Term Business Plan 2023
Review of Business Revival Plan
Outline of Mid-Term Business Plan 2023
Promoting the growth strategy
Growth Strategy Based on Marine Engines
Growth Strategy Based on Port Cranes
Financial strategy

17
18
19
20
21
23
25

Technology development

27

Human capital

29

Human resources strategy
Human resource development
Initiatives for Human Rights
Occupational safety and health
Health and Productivity Management
Manufactured capital
Supply chain management / Quality control
Natural capital
Environmental Preservation
Addressing climate change risks (TCFD)
Social and relationship capital Social Initiatives
Corporate Governance
GovernanceCompliance
Message from an Outside Director
Officers

Financial / Non-financial Highlights
Ship
Machinery
Ocean Development
Engineering

11-Year Financial Performance
Non-Financial Key Data : Environmental
Non-Financial Key Data : Human capitalCompany Profile / Stock and Bonds
Offices and Works

30
32
33
34
35
36
37
39
40
45
46
47

49
51
52
53
54

55
57
58
61
62

Mitsui E&S Group Integrated Report2

Value Creation Story

Topics

TopicsNew Group Strategic Goals

Material Issues

Reconsider the Meaning of Our Existence
and Redefine Our Group Strategic Goals

Define Material Issues in Pursuit of Solutions toSocial Issues

Mid-Term Business Plan 2023 redefined the Mitsui E&S Group’s Strategic Goals (Company Philosophy, Vision,
Management Policy, Standards of Conduct), in accordance with the quick shift to a sustainable society, environmental change and the transformation of the Group. All employees share a new the meaning of the Mitsui E&S
Group’s existence and work together to move forward.

Based on the new strategic goals, the Mitsui E&S Group seeks to enhance its corporate value by contributing tosolutions to social issues through its business activities.
To accelerate activities solving social issues, we have defined the material issues related to sustainability that
we should prioritize, as well as our medium- and long-term goals.

Our mission

Material Issues

We build trust and contribute to society through our engineering and services
The mission conveys the meaning of our existence (purpose), namely expanding our operations beyond thescope of conventional manufacturing, and contributing to the achievement of a sustainable society throughour engineering and services.

Material Issues

FY2030 Target

Related SDGs

CO2 reduction through the launch of environmentally friendly products onto the market

5.5 million t-CO2 / year

Vision in 2030

66% reduction compared to FY2019

Creating
a decarbonizedsocietyIn the marine domain, we create a carbon-free society
and resolve challenges induced by depopulation

Product life cycle total

110 million t-CO2
CO2 reduction resulting from the Mitsui E&S
Group’s production activities

Regarding our strengths in the marine domain that is the core of our operations, we will implement resolute
management.

0.9 tons CO2 per year
17% reduction compared to FY2019

Management Policy

Create new value
together with customers

Seek a sound financial
structure and steady profit

Accelerate the resolutionof sustainability issues

Business development

Finance & Corporate Planning

Personnel and general affairs(Commitment to customers andsuppliers)(Commitment to shareholders andfinancial institutions)(Commitment to employees andsociety)

Conduct business through needs-oriented marketing and innovation in relevant technologies

Manage and operate our group throughthe timely evaluation of marginal profit
and fixed costs

Address climate change, population
decline and diversity in considerationof employees’ health and safety

Mitsui E&S Group Integrated Report

Percentage of automatedTranstainers: 40%
Ratio of annual sales

Material Issue Identification Process

UniquePractical

We always focus on customer-centric products and services that fulfill
three kinds of value, develop healthy businesses and bring them into
the world to serve society

3

Automation products (Transtainer®)
onto the market

SimpleStandards of Conduct

Endeavor to provide simple, unique andpractical products and services

Resolving issues ofa society witha shrinking
population(1) Identifying social
issues(2) Create a draft ofmaterial issues(3) Specify material
issuesIdentify socially important
issues based on the SDGs
and domestic and global
trendsChoose the social issues thatare directly connected to ouroperations and managementbase from among the issues
that we must prioritize

The Group Management
Committee discusses theissues and the Management
Committee and Board of
Directors pass resolutions onthem alongside the MidTerm Business Plan 2023

Mitsui E&S Group Integrated Report

4Value Creation Story

TopicsTransition
to a newstructure
OccupationalsafetyandhealthIn July 2019, we established the Mitsui E&S Group Health Management Declaration to help maintain and improve the physicaland mental health of each Group employee, amid major changes in the Group’s business structure.

We Will Cease to Be a Pure Holding Company
and Will Make a Fresh Start as MITSUI E&S
In April 1, 2023, the Mitsui E&S Group will cease to be a pure holding
company and make a fresh start as a business holding company
named MITSUI E&S.
To ensure our growth and profitability in the future, we will bring ouroperations and management closer together, unite and transition to a
new structure to accelerate the formulation and implementation ofstrategies.

The Group shifted to a holding company structure toaccelerate efforts to deepen the level of Group management. At the same time the company name waschanged to Mitsui E&S Holdings, marking a a new
step forward for the new Mitsui E&S Group.

Mitsui E&S unified logo

Because of the significant damage to our financial foundation, the Mitsui E&S Group Business Revival Plan wasformulated in May 2019 (and partly revised in November 2019) and 120 billion yen in assets and businesses were soldto improve our financial structure which was near completion.

Established as the Shipbuilding Division of
the Former Mitsui & Co.

of Naval Ship
2021 Transfer
Business

Teijiro Kawamura

withdraws from the2022 Virtuallymerchant ship business

Salt field before factory construction

1960 - Expanding business domains

2022 Mid-Term Business Plan 2023 starts one year earlier

Evolving into a comprehensive heavy
engineering company

With our growth strategy as its core, Mid-Term Business Plan 2023 is started one year earlier.

Since the 1960s, we have expanded into the land
sector, including iron structures such as bridges,
and construction and mining equipment. While
promoting technical partnaerships , we expanded
our business domains to include container cranes,
rotary machinery, plant construction, etc.,and wegrew into a comprehensive heavy engineering
company.

2022
Our first open-cycle marine gas
turbine with 2,000 horsepower

Japan’s first quayside container crane iscompleted

Mitsui E&S Group Integrated Report

We cease to be a pure holding company and are renamed MITSUI E&S.Transitioning
to a new structure to accelerate the formulation and implementation of strategies

Transitioning to a new structure to accelerate theformulation and implementation of strategies

Establishes new business models
Our operations in marine engines expanded and wegrew into a profit maker.We also promote the establishment of new business models such as lifecycle
solution businesses. MODEC, our subsidiary,
engages in ocean development and goes beyond
the conventional framework of manufacturing.

A stock transfer agreement is concluded regardingthe large marine engines of IHI Power
Systems Co., Ltd. and its incidental businesses

a capital measure, nearly2022 As
17 billion yen in capital is raised.

2023

2000- Business restructuring

5

Mitsui E&S Group embarks on a journey
toward the next 100 years

2019 Formulates and implements a Business Revival Plan

1917- Established
In 1917, Teijiro Kawamura, who was the General
Manager of the Ship Division of former Mitsui & Co.
at the time, was acutely aware of the need to have a
shipyard and a repair factory and submitted apetition to the president. The Mitsui E&S Group
commenced from his passion.

to a pure holding
2018- Transitions
company

MODEC, Inc. is listed on the Tokyo
Stock Exchange

The cumulative total output of
Mitsui-MAN B&W-brand diesel
engines reaches 80 million
horsepower.

We will cease to be a pure holding company and transition to a businessholding company. Mitsui E&S Machinery and Mitsui E&S Business
Service (the former being the core of our future growth strategy and thelatter handling our corporate activities) are merged into Mitsui E&S
Holdings to structurally integrate their business management. In this way,
we seek to promote our growth strategy and streamline our business
management.

Mitsui E&S Group Integrated Report

6Value Creation Story

Top Message

What Can We Do about the Many
Different Social Issues?

Outlining a Growth Strategy
with a Market-in Mindset,

We Will Achieve Sustained Growth andEnhance Our Corporate Value.

Takeyuki Takahashi
President & CEO, Representative Director

Change our corporate culture and awarenessbased on a market-in perspective.
About becoming the president

7

Mitsui E&S Group Integrated Report

I am Takeyuki Takahashi and I became presi-

expertise, the Mitsui E&S Group has a strong

dent of Mitsui E&S Holdings in April 2022.

product-out mindset and has tended to believe

FY2022 is the final year of the Business Revivalthat good products should sell. Today, having aPlan by Mr.Oka, the former president. We

market-in perspective is very important. Aftershould make another great leap forward thisjoining the former Mitsui Engineering & Ship-

year. I will take the baton from Oka and com-building, I worked as a port crane salesperson

plete the Business Revival Plan. Furthermore,

and have traveled all over the world ports

we should step toward the next phase of our

except the South Pole. In the port crane busi-

growth and clearly show the results of ourness, I have always thought about what cus-

actions both internally and externally. This is my

tomers and society want or what troubles

mission.

them and what we could do about it. To my

Since the founding, every president of theunderstanding, my mission is to change theMitsui E&S has had a engineering background,

Mitsui E&S Group’s corporate culture and theand I am the first president from a sales back-awareness of each individual based on a

ground. Because of its high technologicalmarket-in perspective.

Mitsui E&S Group Integrated Report8Value Creation Story

Inprovement of financial position is now in sight.
The Business Revival Plan enters its final stage.
Progress of the Mitsui E&S Group’s Business Revival Planstructure.

for us to continue building ships on our own.

In addition, since the spin-off, the centrifugal

As mentioned above, we formulated theforce from the holding company has gradually

Business Revival Plan in 2019 and went so far

increased within the group.

as to streamline our business portfolio which

By becoming a business holding company, we

withdrew from plant engineering, shipbuilding

would regain the centripetal force to bring ourand other businesses. As a consequence, ouroperations and management closer and workbusinesses now are mainly focused on

together to speed up the formulation andSince FY2019, the Mitsui E&S Group has

Shipbuilding was deconsolidated to be an

implemented its Business Revival Plan underequity method affiliate.

the leadership of former president Mr.Oka. We

It was a heartbreaking decision for us to quit

have pushed forward with the improvement of

shipbuilding, our founding business. Consider-machinery.

implementation of our strategies. To this end,

our financial and earnings positions and withing our current business environment, howev-

As a result, the future core business and direc-

we decided to cease to be a pure holding

business restructuring which includes ourer, it would be very difficult for us to continue

tion became clear, and in order to secure profits

company and to reorganize ourselves into awithdrawal from unprofitable businesses.

the business on our own. We concluded thatand promote growth strategies, it would bebusiness holding company.

Some of the reforms included bitter moments,

joining other companies would enable us tomore efficient to return to a business-centered

but we have followed the plan for the last threepass on and continue the development of theyears. Finally we are seeing an exit from thetechnologies we had accumulated in our

tough situation. To improve our financial andshipbuilding business. While streamlining ourearnings positions, we have sold many assets

business portfolio, we thought about how weand businesses and obtained nearly 120 billion

could keep our shipbuilding business going andyen in capital, coming closer to achieving an

pushed forward with in-depth reforms.

improvement in our financial position. In our

In FY2019, we incurred a large loss on powerbusiness restructuring, we have withdrawn

plant civil engineering construction projects. Its

FY2022 is the final year of the Business Revival

will be very important for us to think over whatfrom unprofitable businesses and sold andconstruction had to be suspended due to thePlan. It is also a huge turning point for us as we

the Mitsui E&S Group can do about socialtransferred non-core businesses to streamline

COVID pandemic. Though there is still unfin-

take the first step toward a new phase after

issues and the significance of our existence

our business portfolio.

ished construction in some projects, all of thethe revival of our business. Looking at our(purpose) and to place it at the root of our

On October 1, 2021, our naval ship businessprojects have begun commercial operation. The

external environment, the future remains

operations. We dug into the external environ-

was transferred to Mitsubishi Heavy Industries,

incident significantly worried our stakeholders

uncertain due to events such as the COVID

ment, investigating matters such as climate

Ltd. And for our merchant ship business, we’vein terms of the posting of additional losses andpandemic and, more recently, Russia’s invasionchange and the arrival of a society with atransferred Mitsui E&S Shipbuilding’s 49%

the uncertainty of the future. Now we are ableof Ukraine. Considering these facts, we urgent-

shrinking population, and into the fields where

share on October 1, 2021 and its additional

to forecast the completion of the Businessly needed to begin the new Mid-Term Business

we would be able to provide solutions leverag-

17% share on October 3, 2022 to Tsuneishi

Revival Plan.

Plan before FY2023. Consequently, Mid-Terming our technical resources. As a result, weBusiness Plan 2023 was formulated one year

defined creating a decarbonized society and

New Groupearlier.

the resolving issues of a society with a shrink-

Strategic Goals

Mid-Term Business Plan 2023 redefined theing popuration as material issues. Solving

Mitsui E&S Group’s Strategic Goals (Company

these social issues is considered to be our goal

Philosophy, Vision, Management Policy, Stan-and vision to be achieved by the end of fiscal

dards of Conduct). In the Company Philosophy,

2030. We will proceed with efforts to make thisthe word “manufacturing” has been changed

happen.

Shipbuilding Co., Ltd. As a result, Mitsui E&S

Ceasing to be a pure holding company,
we make a fresh start as MITSUI E&S.
About the reorganization

9very severe and it became extremely difficult

Review of Business
Revival Plan
P18

Reconsider the meaning of our existence,
redefine the Mitsui E&S Group strategic goals.
Mid-Term Business Plan 2023: Strategic Goals
Business Plan 2023
P17~24

P3
Material Issues
P4

to “engineering and services.” As we have theOn April 1, 2023, Mitsui E&S Group will cease

Based on this idea, our three operationallargest shares of the marine engine and port

to be a pure holding company, Mitsui E&S

headquarters at that time, shipbuilding, ma-crane markets, we will remain a manufacturer.

Machinery and Mitsui E&S Business Service

chinery and plant engineering, became sepa-

Going forward, we need to build a businesswill be integrated into Mitsui E&S Holdings andrate companies in an effort to generate sur-model that extends the scope of our operations

the trade name will change to MITSUI E&S topluses in all of these businesses.

to be more than just a supplier and encompass

make a fresh start.

Right after the split-up, however, the loss wasperipheral businesses. To express our attitude

The transition to a pure holding company

incurred on the coal-fired thermal power plant

toward widening the scope of our operations

structure in 2018 was aimed at increasing thein Indonesia and we had to post additional

beyond conventional manufacturing, the word

mobility of management as an independent

losses. At the same time, the management“manufacturing” has been reexamined, andcompany for each business and building a man-environment surrounding our shipbuilding

we replaced it with “engineering and services.”

agement system with business responsibility.

business was continuously and structurally

As the importance of sustainability increases, it

Mitsui E&S Group Integrated Report

Mid-Term

Mitsui E&S Group Integrated Report10Value Creation Story

Shift from a passive to an aggressive attitude andto the phase of the implementation of our growth strategy.
Mid-Term Business Plan 2023: growth strategy

11

Change the managementfoundation to put the company
on a growth trajectory forsustainable development andimproved corporate value.

We have defined the green and the digital

capable of providing comprehensive services

strategy as the core of the growth strategy ofencompassing single products as well as their

Mid-Term Business Plan 2023. As mentioned

peripheral equipment and systems.

above, FY2022 is the final year of the BusinessOne example is our lifecycle solution business.

Revival Plan during which we take the first

Delivering a product is not the end of thesteps on our growth trajectory. First, we willprocess. We provide comprehensive services

increase our strengths in market-leading ma-utilizing DX throughout a product’s lifecycle,

Alongside the two material issues, ensuring

E&S Systems Research Inc. is centered onrine engines and port cranes with the goal ofincluding after-sales service. We also provide

the diversity of human resources is very im-technical resources for IT and systems, Mitsui

returning to profitability. One of the measuresservices, the scope of which is expanded toportant to us. Human resources from diverse

E&S Power Systems Inc. mainly deals in mid-for achieving this is the conclusion of a final

the peripheral equipment, centered on our

backgrounds add to the strengths of a compa-

and small-sized engines, induction heater andagreement for succession of marine large bore

main products. For gas-powered marine en-ny. Therefore, it is very important to secure realother mass-produced products, and MES

engine businesses of IHI Power Systems Co.,gines, we also provide an entire supply system

diversity, not only in terms of gender, but also

TOKKI & Engineering Co., Ltd. builds manyLtd. By increasing production capacity andthat includes a fuel gas supply system (FGSS),

in nationality and expertise. As we establish adifferent large structures and ship blocks andtechnical resources, we will accelerate thetanks and other peripheral equipment.

new structure for 2023, we are going to dra-provides maintenance service. We are confi-

development of a new fuel engine for decar-

On March 31, 2022, we announced the raisingmatically change our personnel system. As

dent that the utilization of the comprehensive

The growthstrategy
P20~P24

Initiatives for the changing
the management baseFinancial strategy
P25~P26

bonization and pursue the streamlining of oura total of nearly 17 billion yen in capital throughworkstyles are increasingly diverse today, ourstrengths of these companies of the Mitsui

production structure to lead the marine engine

the issuance of Type A preferred shares andpersonnel system needs to adapt to them. We

E&S Group will lead the Mitsui E&S Group tomarket.

the Warrants. The funds have been appropriat-

will proceed with the reform of our personnel

sustainably grow and enhance its corporate

In our growth strategy, we push forward withed to investments in equipment and R&D forsystem, aiming to enable human resources

value. Our business management maximizes

the greening of our main products to meet

the achievement of our growth strategy. The

from many different backgrounds to fully

the synergy of the companies of the Mitsui

global demand for the reduction of environ-

funds raised will be spent to implement ourdemonstrate their capabilities utilizing their

E&S Group.

mental impact through efforts such as the shift

growth strategy. At the same time, we will

own characteristics and skills.

of marine engines to multiple fuels, including

seek to enhance our financial soundness and

The companies of the Mitsui E&S Group have

LNG, ammonia and hydrogen and the develop-

build a structure that will enable us to returna wide variety of technical resources: Mitsui

ment of the zero-emission transtainer® for port

profits to stockholders at an early stage.

cranes. In the digital strategy, we will advanceFurther, we are developing a new businessthe digital transformation (DX) of marine en-model that incorporates schemes such asgines and port cranes by, for example, improv-

subscription and recurring business models.

ing remote and preventive maintenance ser-A new business model will be developed withvices for marine engines and remote operation,

the goal of changing the Mitsui E&S Group’s

automation and remote maintenance for tooperations into a stock-type business andreduce the labor required in port crane opera-

stabilizing our profit.

strategy
P29

What can we do about social issues?
Share the meaning of our existence and work together to move forward.
Toward the future
FY2022 is an important year for us to achieve a

convey the meaning of our existence (pur-tions. Implementing green and digital ap-

growth trajectory. Now we are entering apose), namely engaging in engineering andproaches, we will increase the added value ofphase where we should move aggressively. To

services to contribute to the achievement of aboth products representing our strengths andunite and move forward, we will clarify andsustainable society.

achieve continued improvement as our imme-

share the meaning of our existence (purpose)

Based on a market-in perspective, we continue

diate growth strategy.

anew by seeking answers to questions such as

to think about and provide the kinds of services

Medium- and long-term, we will expand thewhat we are supposed to do and what we canwe are able to offer leveraging our technicalservices and solutions domains by integrating

do about social issues.

resources to solve social issues. By doing this,the strengths of the Mitsui E&S Group andAs we make a fresh start as MITSUI E&S in

we will be indispensable to society and will

collaborating with outside partners. To date, the2023, we reviewed the meaning of the “E”

change into a company that steadily profits.

Mitsui E&S Group has been a manufacturerand “S” of our company name. E&S in our new

With our fresh start, please look forward to theand an equipment supplier. Going forward, wetrade name signifies “Engineering & Services

new Mitsui E&S Group.

will strive to become an engineering supplierfor Evolution & Sustainability.” This is meant to

Mitsui E&S Group Integrated Report

Human resources

Mitsui E&S Group Integrated Report12Value Creation Story

Value Creation Process
The Mitsui E&S Group contributes to solving social issues by providing products, services and engineering in pursuit ofsustainable growth and the creation of corporate value.

External environment /social issues

We build trust and contribute to society through our engineering and services

Our mission

Material issues• Climate change• Declining birthrate andaging and reduction of
the population

Vision in 2030

• Evolution of IT

Business models

Input• Shareholders’ equity ratio:
14.0%

Products and services

Expand the core businesses of marine propulsion and port logistics
in the marine domain through green and digital strategies

Financial capital• Shareholders’ equity:¥57.1billion• Creating a decarbonized society• Resolving issues of a society witha shrinking population

In the marine domain, we create a carbon-free society andresolve challenges induced by depopulation

Core businesses

Life Cycle Solution Business

Marine propulsion

P16

Manufactured capitalMarketing• Capital expenditures:¥9.0billion

Marine engine• Consolidated subsidiary
52 companies
One non-consolidated equity method
subsidiary and 65 equity method affiliatedcompanies

Proposals

Port logistics

Datacollection

Intellectual capital• R&D expenses:¥2,1billion

Social and relationship capital• Trusting relationship withstakeholders

Green strategy
GX

Advancement ofcore products

Strengths
P15

Human capital• Number of employees
6,665

Products of ourcore businesses thathave an overwhelming
share of the market

Maintenanceand exploration

Services andengineering
MaintenanceDigital strategy
DX
Design,procurement andmanufacturing

Expandthe domainsof our services
and solutions

Installation anddelivery• Mitsui E&S brand built up
over the years

Robotics• Over 100 years of historyof the Mitsui Group

Financial strategy, technological development and personnel strategy• Energy consumption
732TJ**Main works in Japan

13

Mitsui E&S Group Integrated Report

Maintenance and exploration

OutputNatural capital• Water consumption
1,067,000m3 *Port cranes

Foundations ofValue Creation

P29

Personnel Development

Environment

Society

P25

Corporate GovernanceSocial Value
Reduction of environmental impact,labor reduction and economic reasonablenessEconomic Value
Expansion of our sales, stabilization of profits andcontinued improvement of financial position

Mitsui E&S Group Integrated Report

14

Value Creation Story

Strength of Mitsui E&S

Life Cycle Solution BusinessWe provide not only the products of our core businesses with their high market shares but also services and engineering tofully leverage the products. This is the integrated strength of Mitsui E&S fusing together the hardware and software.

In addition to our accumulation of technical prowess over many years, our engineering prowess makes it possible to provide
solutions that encompass after-sales service, ranging from maintenance to preventive maintenance, and solutions including
systems. Through the combination of these capabilities, our lifecycle solution business which undertakes comprehensive
involvement in the entire lifecycle of product has expanded into marine domains.

Marine engine

Port cranes

Since we signed a technical alliance with B&W,
Burmeister & Wain A/S (currently MAN Energy Solutions)in 1926, we have produced 110 million cumulative horsepower and have manufactured a total of more than 7,000
engines. As the globally leading company in marine
engines, we have established a track record of production and experience.

Since we delivered Japan’s first container crane to thePort of Kobe in 1968, we have delivered more than 430
Ship to Shore (STS) cranes and 1,600 yard cranes todomestic and overseas terminals. As the top manufacturer of industrial cranes, automated cranes and environmentally friendly cranes in Japan, we have an established track record of production and experience.

Utilization of digital technologies such as
condition monitoring systems adopting AI
and IoT.

Our engineering prowess makes it possible topropose solutions including systems

We develop systems incorporating technologies such as
IoT, M2M* and big data analysis, in partnership with thecompanies of the Mitsui E&S Group and outside partners
that undertake system development.

Our track record in the development of many different
products and the synergy of the Mitsui E&S Group enableengineering and proposals for a comprehensive systems
as well as individual products.

*Machine to Machine（M2M）

Track record in the manufacturing of manydifferent mechanical products

IoT, M2M and big data analysis

Group synergy

Marketing

Cumulative production

110 million horse power

Domestic market share(FY2021)58 %STS Crane
Domestic market share (FY2021)

67%

Yard crane
Domestic market share (FY2021)

92%

Data
collection

Products of our core businesses that havean overwhelming share of the market
The integrated strength
fusing together the
hardware and software

Life Cycle
Solution
Business

Maintenance

Services and engineering
Our service and engineering makes it possible to provide individual
products, their peripheral businesses and the entire systems.

System Software

15

Mitsui E&S Group Integrated Report

Design,procurement andmanufacturing

Installation anddeliveryAfter-sales services

We deliver lifecycle solutions by providing services thatcombine hardware and self-developed software. We
provide the remote monitoring and diagnosis system formarine engines, comprehensive systems for the optimal
management of container terminal operations for port
cranes and so on.

e-GICS series
Crane Advanced Remote Monitoring System

Proposals

CTMS Container Terminal
Management System

To ensure the maximum utilization of our products’features after delivery, we have established after-sales
service bases to meet requirements promptly including
inspection, maintenance, troubleshooting and technicalconsulting. We also propose improvements and modifications for purposes such as automation, environmental
measures and enhancements.

The service business encompasses everythingfrom maintenance (repair) to sales ofconsumables and preventive maintenanceSophisticated technologies and stable production capacity accumulated over our more than
100 years of history

We address various problems that occur in maintenance,
management and operations throughout the product life
cycle. As necessary, we propose improvements andmodifications to continuously provide high value-added
solutions to customers, such as energy conservation andenhanced efficiency.

Since our founding in 1917, we have remained a representative Japanese manufacturer and provided reliable products. We consistently supply high value-added products
based on the experience and technology we have accumulated over our long history.

Our service network consists of six bases inJapan and seven outside the country.

We enhance our development and production capabilities through M&A activities (marine engines)
High efficiency production system focased on the
manufacturing of cranes (Oita Works)

Mitsui E&S Group Integrated Report16

Mitsui E&S Group’s strategy

Mid-Term Business Plan 2023

Mid-Term Business Plan 2023 | Review of Business Revival Plan

Starting the new Mid-Term Business Plan
one year earlier
We will complete the Business Revival Planand strengthen our foundation
for carrying out the growth strategy.

Completion of the Business Revival Plan is now in sight by various initiatives
including sale of businesses and assets worth around nearly 120 billion yen as
well as virtual withdrawal from shipbuilding business.
Review of Business Revival Plan
By withdrawal from unprofitable businesses and sale and transfer of non-core businesses, we have streamlined our businessportfolio and have obtained nearly 120 billion yen to improve our financial position. In FY2022, we took capital measures
totaling approximately 17 billion yen for greater soundness of our financial position and growth investments.
Business Revival Subject

Initiatives

Achievements

Reorganize
shipbuilding
businesses• Naval Ship Business: All shares were transferred to Mitsubishi Heavy Industries(October 2021).
• Merchant Ship Business: 49% of the shares of the company were transferred to
Tsuneishi Shipbuilding (October 2021).
• Additional 17% of the shares were transfeered to Tsuneishi Shipbuilding to shift thecompany to an equity method affiliate (October 2022).

Control theEngineering
Business• Governance strengthened through Engineering Business Management
Department.
• All power plants which we had provided engineering and civil construction work
have started commercial operation.

Focus resourceson growing
businesses

Broaden the productlineup in the
Machinery Business• Broadened product and service lineups mainly in marine engines and port cranes• Final agreement reached regarding succession of marine large bore engine
businesses of IHI Power Systems Co., Ltd. (September 2022)

Sell off assets

Sell businesses andassets worth around
120 billion yen• Sales of 20 assets worth 120 billion yen were finished.

Reduce fixed
costs (personnel
and other
expenses)

Streamline byselling andreorganizing
businesses

Implement
Capital measures

Issue preferredstock and warrants

Mid-Term Business Plan Strategies
FY2022 is the final year of the Business Revival Plan which started in FY2019.This is also a huge turning point for us to takethe first step toward a new phase following the revival of our business. Considering uncertainty in the external environment
such as the COVID pandemic and, more recently, Russia’s invasion of Ukraine, we initiate Mid-Term Business Plan 2023 whichfeatures our growth strategy one year ahead without waiting for FY2023.

2019

2020

2021

2022

2023

2024

2025

Environmental changes• Lingering impact of COVID-19• Quick shift to a sustainable society• Destabilization of the global politicalbalanceStarting one
year earlier(2020 - 2022)• Improvement of financial position• Concentration of business domains andcollaboration• Reinforcement of the management basebalance(2019 - 2022)• Business restructuring• Improve financial and earnings positions(2022 - 2025)• Warrants worth around 8 billion yen issued in April 2022
• Class A preferred stock worth 9 billion yen issued in June 2022

Equity ratio: 8% (FY2019)17%* (planned for FY2022)*Figures for FY2022 represent values after deconsolidation of the Ocean Development business, which took place in November 2021.

Growth strategies• Green strategy (GX)
• Digital strategy (DX)• Growth Investments

Finishing the Business
Revival Plan
• Returning to profitability• Attaininghealthy balance
sheets• Compliance with the revised
Corporate Governance Code

Mitsui E&S Group Integrated Report• No. of employees (consolidated): 13,000 (FY2019) 6,000* (planned for FY2022)• Estimated labor costs: 110 billion yen (FY2019) 47 billion yen* (planned for
FY2022)

Mid-Term Business Plan 2023

Functional strategy

17(Fiscal Year)

Improvefinancial andearning
structure

Mid-Term Business Plan 2020

Business Revival Plan

Implement
business
restructuring

Liquidate andwithdraw
unprofitablebusinesses

Reorganization of
Shipbuilding Businesses
On October 1, 2021, our naval shipbusiness was transferred to Mitsubishi
Heavy Industries, Ltd. And for ourmerchant ship business, we’ve transferred Mitsui E&S Shipbuilding’s 49%
share on October 1, 2021 and its
additional 17% share on October 3,2022 to Tsuneishi Shipbuilding Co., Ltd.
As a result, Mitsui E&S Shipbuilding was
deconsolidated to be an equity method
affiliate.

Mitsui E&S Holdings
Mitsubishi Heavy
Industries
Mitsubishi
Heavy Industries
Maritime
Systems
Naval
Ship
Business

Transfer

Mitsui E&S Shipbuilding

Naval
Ship
Business

Merchant
Ship
Business
Niigata
Shipbuilding &RepairMES YURA
DOCKYARD

Tsuneishi
Shipbuilding
October 2021
Transfers 49%
stake
October 2022
Transfers 17%
stakeWith 33% equity
in total, thecompany becomes outside of
the scope of
consolidation.

Merchant
Ship
Business

Control of Engineering Business
Loss on power plant civil engineering construction projects in our engineering business is confined within the provisions under
the control of newly established Engineering Business Management Department. Though there still remains unfinished works,
all of the projects have begun commercial operation and the risk of additional cost has dramatically decreased.

Mitsui E&S Group Integrated Report18

Mitsui E&S Group’s strategy

Outline of Mid-Term Business Plan 2023

Promoting the growth strategy

Move to next phase where we get back on track and execute our growth strategy.
We will implement green strategy for increasing sales and digital strategy forstabilizing profit.

We build up profitability mainly in our core businesses.
With our growth investment of around 30 billion yen in marine propulsion andport logistics businesses, we aim to expand the scale of these businesses by 2025.

Outline of Mid-Term Business Plan 2023

Growth Strategy Roadmap

Mid-Term Business Plan 2023 lays out strategies based on Growth strategy, Completion of Business Revival Plan andFunctional strategy. We increase sales and stabilize profit through growth strategy to keep improving our financial position.

Mid-Term Business Plan 2023 sets forth green strategy and digital strategy as its two major growth strategies.We develop ourcore businesses of marine propulsion and port logistics in the marine domain through green and digital strategies and pursue
the increase of sales and the stabilization of profit.

Growth strategy
PolicyProvide products for the realization ofa carbon-neutral society
Green strategy(GX)

Digital strategy(DX)

Focus on the engineering of our environmental products

Sales
increase• Increase development and production capacity through M&A
activities and broaden the product lineup• Develop engines for new fuels (LNG ammonia) and hydrogenfuel cranes

FY2022Marine engines• Increase development and production
capacity through M&A activities• New fuel engines (LNG and ammonia)

Port cranes

Profitstabilization

Combine our service network with digital technologies
for developing services• Hydrogen fuel cranes

Marine engines• Optimize ship operations and improvefuel efficiency• Remotely maintain marine engines

Attaining healthybalance sheets

Capital-to-asset ratio

FY2021

FY2022▲10 billion yen

5 billion yen

19 billion yen

FY20198%

FY202114%

FY202217%

FY202526%

Services and solutions• Automate and remotely maintain port
cranesAdvance products in core businesses

Shift to stock-type businesses

Solution to challenges
related to thedecreasing population
Ratio of automation
products to annual sales

40%

Growth Investments• Pursue the realization of a carbon-free society and the resolution of challenges related
to the shrinking population as material issues• Focus on GX and DX as growth strategies to address these issues

Consolidated net sales

280 billion yen

Consolidated operating
income ratio

6%
26%

Use of funds
Research and development of ammonia fuel ships

Net interest-bearing debt
EBITDA multiple

5.0

CAPEX, R&D Financial
investments

30 billion yen*

*Total amount in the period of the Mid-Term Business Plan 2023 (FY2022-FY2025)

Mitsui E&S Group Integrated Report

Annual CO2 reduction

5.5 million t-CO2**Total reduction of CO2 emissions attributable to products shipped in 2030 replacing heavy oil fuel products

Associated businesses

Financing method

Investment amountType A preferredshares*3

Approx. 9 billion yen

Warrants*3

Approx. 4 billion yen

Own funds
Borrowings

Approx. 17 billion yen

MLIT*1 R&D project / NEDO*2
Green Innovation Fund project

Research and development of zero emission (hydrogen) Transtainers

NEDO subsidized project

Development of digital services in the domain where marine engines
and port services are connected-

Funds related to future M&A activities, alliances and other activities-

Reinforcement of fuel supply equipment for trial operation ofammonia / LNG fuel engines-

Reinforcement of manufacturing facilities for large LNG fuel engines-

Introduction of manufacturing facilities for engines for new fuels(LPG and methanol)
Introduction of facilities for the development of hydrogen fuel engine
technologies

MLIT*1 subsidized project

Reinforcement of other manufacturing facilities for new fuel engines-

Development of other services using DX

-

Total

19

Decarbonization in
the marine domain

Growth investment focuses on marine propulsion and port logistics as our core businesses to implement our growth strategies. The necessary fundung is to be obtained mainly from preferred shares issued and exercise of Warrants.

Targets (FY2025)

Capital-to-asset ratio• Hydrogen power generation andhydrogen compressors• Use of fuel cells (auxiliary engines)• Hydrogen transport and supply service

Targets to addresssocial issues

FY2025▲ 62 billion yen

Functional strategies
Compliance withthe revised Corporate
Governance Code

Peripheral marine domains• Provide optimal operation of ships andports• Provide logistics optimizing port services
and marine and land transport• Optimize energy based on advanced
forecasting

Port cranes

Business revival
FY2019Long term

Digital strategy (DX)

Invest 30 billion yen for growth in the four years from FY2022 to
FY2025 to implement the measures above

Operating Income

FY2030Medium Term

Green strategy (GX)

Offer services using digital technologies that arenecessary to address a society with a shrinking
population

Returning to
profitability

FY2025
Short term

• Provide remote maintenance and checkup services(for marine engines and port cranes)• Optimize ship operations and automate port cranes

Growthinvestment

Expand the core businesses of marine propulsion and port logistics in the marine
domain through green and digital strategies

Approx. 30 billion yen*1 The Ministry of Land, Infrastructure, Transport and Tourism *2 New Energy and Industrial Technology Development Organization *3 See our press release on March 31, 2022

Mitsui E&S Group Integrated Report20Mitsui E&S Group’s strategy

Growth Strategy Based on Marine Engines

Increase advantages mainly in marine engines by developing engines for new
fuels and enhance production capacity
In addition, step into incidental services and peripheral areas to enlarge
business domains

VisionCore products
Advancement of products• Develop technologies for hydrogen fuel propulsion systems

Green
strategy(GX)

In the short term, we will increase our advantages in market-leading marine engines by addressing new fuels and enhancing
production capacity. And in the medium and long terms, we will expand our products and sevices to these incidental services
and peripheral areas in an effort to enlarge our business domains.
Our business model will evolve from our being a supplier providing a single marine engine to being an engineering suppliersupporting entire propulsion systems of vessels. We will build a stable profit structure by shifting from the conventional
flow-based business to a stock-based business,• Develop ammonia fuel engines• Develop an ammonia fuel tankand supply system

Shift from an engine manufacturer to a propulsion system supplier

Advancement of services
Remote monitoring,
performance analysis andpreventive maintenanceservices

Online support• Collaborate with the industrial
machinery field

Marine engine• Provide remote maintenance andperformance analysis service

Digitalstrategy(DX)• Optimize ship operations andimprove fuel efficiency
e-GICS series
remote monitoring andperformance analysis service• Provide performance analysis
and preventive maintenanceservices• Establish connection to automated ship operations and operation
support services• Collaborate with ship-related
fieldsNext-generation operation
support system withsimulation based maintenance (SBM)
Increaseutilization of
next-generation
fuels

Our initiatives in FY2021 and 2022

Increase development and production capacity through M&A activities and broaden the product lineup

Initiatives for earliest social implementation of zero-emission ships

To reinforce the development, production and after-sales services provided in our core business of marine engines, wereached a final agreement on the succession of business related to marine large bore engine and its incidental business andconcluded a share puchase agreement with IHI Power Systems Co., Ltd. on September 27, 2022.
We will boost our development and production capacity under a double license system with MAN-ES*1 and Win-GD*2, andwill advance commercialization of new fuel engines.

Involved in an integrated project for development andsocial implementation of ammonia-fueled ships• Widening of Product Lineup• Increasing production capacity

IHI Power Systems
Aioi Plant

MAN B&W 8S70ME-C8.2-GI
LNG-fueled diesel engine

Development of an ammonia-fueled, high-efficiency
power generation system for marine use

MAN B&W 7S50ME-B9.3-LGIM methanol-burning diesel engine
Tamano Works
Oita Factory

Subsidiary

WinGD 6X72DF dual fuel engine

21

Mitsui E&S Group Integrated Report

S.E.M.T. 12PC2.6BV medium-speed
four-stroke engine

In cooperation with four other companies including ITOCHU
Corporation, we are committed to the next-generation
vessel development project and the development of ammonia-fueled ships which are a part of the Green Innovation
Fund project.Mitsui E&S Machinery is undertaking thedevelopment of ammonia-fueled propulsion systems.Under
Japanese leadership, ammonia-fueled ships will be implemented in society and we seek to enable the Japanesemaritime industry to keep its long-term advantage in the fieldof zero-emission ships.

Representative Office

Affiliate

Agent

Subcontractor

In the technical development of ammonia-fueled cells formarine use, which the Ministry of Land, Infrastructure,
Transport and Tourism selected as an R&D project, we
proceed with the development of technology for decomposing ammonia and extracting hydrogen for use in a power
generation system.By combining the high-efficiency power
generation system with the ammonia-fueled propulsion
system, we will contribute to the earliest social implementation of zero-emission ships.

CompanyRole

1. Development of ammonia fuel tank & fuel supply system
2. Development of technology related to ammonia-fueled
Mitsui E&S
engineMachinery Co., 3. Development of measures to maintain safety of ammoniaLtd.
fueled ship
4. Operational demonstration of ammonia-fueled ship
1. Development of hull equipped with ammonia fuel tank
NIHON
2. Onboard ammonia fuel handling system
SHIPYARD CO., 3. Onboard safety systemLTD.
4. Validation of research and development results throughdemonstration in actual service
ITOCHU
Corporation
Kawasaki Kisen Operational Demonstration of ammonia-fueled ships
Kaisha, Ltd.
in actual service
NS United Kaiun
Kaisha, Ltd.

Our product portfolio
Ammoniafuel tank

Ammoniafuel supply
systemAmmonia dual fuelengine(for propulsion)

Remotemonitoring
systemAmmonia resolverHighefficiency
power
generation
systemMitsui E&S Group Integrated Report22Mitsui E&S Group’s strategy

Growth Strategy Based on Port Cranes

Step up advantages mainly in port cranes by addressing zero emissions andautomation. In addition, develop and offer products using next-generation fuels
to enlarge business domains.

VisionCore products
Advancement of products

Digitalstrategy(DX)

Portainer®

Transtainer®

Easing of congestion
before gates Gate in/out
reservation• Hydrogen supply-related
services• Active use of fuel cells• Active use of hydrogen

Data
platform

Ship operation data
CTMS

• Collaboration with
the industrial machinery field• Active use of energy
conservation technologies

CTMS Container Terminal
Management System

Become a globally leading company in port logistics business

Advancement of services• Zero-emission Transtainers®

Green
strategy(GX)

In the short-term, we will push forward with zero emissions, automation and other measures in market-leading port cranes
and will continue to increase our advantages.
In the medium and long term, we will strive to become a transportation system solution company supporting the entire
marine logistics by increasing and improving our service domains to provide stock-based digital services where marine engines and port services are connected.

• Performance analysis andpreventive maintenanceservices• Remote and automatedTranstainers

Incorporation of fuelcells into cargo handlingmachinery• Advance CTMS
Crane Advanced Remote Monitoring System

Supply of electric
power to ships in port

Our initiatives in FY2021 and 2022

Initiatives for Creating Carbon Neutral Port

Initiatives for achieving next-generation container terminals using digital technologies

Development of Zero-emission Transtainers®

Development of remote-controlled Transtainers®

In response to the global trend toward decarbonization, ourcorporate group is among the first to begin the developmentof decarbonization-oriented port cargo handling equipments.
In August 2022, we delivered the first Near Zero-emission(NZE) Transtainer® to Kobe International Container Terminal(KICT).
With a view toward the arrival of a hydrogen society, theTranstainer® are designed to be able to replace to zero
emissions using hydrogen fuel cell (FC) power supplies.

As a solution to the labor shortage stemming from the agingof the population and the declining birthrate, the Mitsui E&S
Group has developed remote-controlled Transtainers® withthe goal of improving the working environment, safety andproductivity at container terminals.A test yard opened on thepremises of the Oita Works in 2018 and we have strived to
improve our remote operation technologies.An order for the
intra-factory adjustment operation of a remote-controlled
Transtainer® that was received from Suzuyo & Co., Ltd.
started in August 2021.

Involved in a project for the implementationand demonstration of a model for local
hydrogen production for local consumption
Mitsui E&S Machinery and its U.S. subsidiary, PACECO®
CORP. have joined four other companies including Toyota
Tsusho Corporation in an implementation and demonstration
project at the Port of Los Angeles. That containes conversion
cargo handling machinery and trucks to hydrogen fuelcells
and local production-local consumption of hydrogen specifically for ports.
This demonstration and analysis will start in 2024 in a actual
use environment.Through the development project, we are
pursuing to achieve zero emissions Transtainers®.

23

Mitsui E&S Group Integrated Report

This Near Zero-emission (NZE) Transtainer® was delivered to KICT

• Diagram of the value chain of the implementationand demonstration
Produce

Supply＠ Merced

ConsumeTop Handler

RNG

BiogasUsing a remote-controlled, self-flying drone
to remotely inspect port cranes

＠San Pedro (Nearby POLA･POLB)
1

2
Pipeline

H2 prod.

High Pressured
H2 MobileRefueler

Yard Tractor
Port Terminal
Operator

Remote-controlled Transtainer®

1

RTGC
3

Drayage Truck
Drayage Fleet
Operator

In partnership with ZENRIN DataCom CO., LTD. and intechnical cooperation with DJI JAPAN, the Mitsui E&S Groupis conducting a demonstration experiment for remote
automated inspections using drones.
We will streamline operations and reduce the labor requiredin inspection work by partly replacing the inspection of a port
crane’s structure with real-time video visual inspections andphotography using a self-flying drone.

Remote operation and inspection
from the office

Automatically photographed
image of a part being inspected

Mitsui E&S Group Integrated Report24Mitsui E&S Group’s strategy

Financial strategy
We endeavor to enhance our corporate value by positioning fiscal 2022 as the year for finishing the Business Revival Plan andsolidifying our foundation for carrying out the growth strategy.

The current situation of Mitsui E&S and the background on our commitment to the financial strategy
The Mitsui E&S Group formulated the Mitsui E&S Group
Business Revival Plan in May 2019 in response to the damage that our financial base incurred due to a large loss
related to an overseas EPC project in the engineering business and the sluggish profitability of our existing businesses
such as shipbuilding. The pillars of the plan are the improvement of our financial and earnings positions and the reformof our business structure. Following the subsequent formulation of Mid-Term Business Plan 2020 in August 2020, we
have streamlined fixed costs as well as sold businesses andassets totaling 120 billion yen to shift the focus of our management resources from unprofitable businesses to growing
businesses. We have also taken capital measures to support
our commitments financially. We believe that these mea-sures have brought us closer to a recovery of our financial
foundation to a certain extent.
Meanwhile, we are still halfway through the process ofimproving our financial position due to the prolonged COVID
pandemic and other reasons. In addition, the businessenvironment surrounding us is changing dramatically, as you
can see in the rapid transition to a sustainable society, forexample. Considering those facts, we decided to start thenext Mid-Term Business Plan one year ahead of theschedule and announced the Mid-Term Business Plan 2023
in May 2022. We endeavor to enhance our corporate value
by positioning fiscal 2022 as the year for finishing thebusiness revival plan and solidifying our foundation forcarrying out the growth strategy.

• Financial Outlook
Trends in consolidated net sales and operating income■Core businesses ■Ocean development
Operating income ratio

Q3 FY2021
MODEC
deconsolidated

600
400

Mid-Term Business Plan 2023 aims to pursue steady profit
to establish a profitable structure that enables us to stay inthe black and make our balance sheet healthier to finish theBusiness Revival Plan. We will increase sales and profit witha focus on our core businesses; marine propulsion, port
logistics, maintenance and exploration. This includes market
expansion achieved by growth investing, M&A activities andother initiatives. Its goal is to achieve targets such as consolidated net sales of 280 billion yen, consolidated operating
income ratio of 6% and capital-to-asset ratio of 26%.
To ensure the achievement of these quantitative targets, weseek to identify problems and weaknesses in our profit• Numerical Targets
Item

Targets (FY2025)

Concept(billion yen)

200

0

2021

2022

Mid-Term
Business Plan
2023

150

40

26%
17%

100

50
-2.0

-8%

2020

(％)

Net interest-bearing debt
EBITDA multiple 4.0x

30

20

0.0

Increased sales ofcore businesses(2019)■Own capital

6.0

Consolidated
4.0
net sales
280 billion yen

2.0

Results

structure and financial position in a timely and fast mannerfrom multiple perspectives and move toward solutions.
Valuing speed, we will grasp management-related figures foreach product, conduct real-time management analysis andwork to improve. We will continue to focus on theevaluation of marginal profit and fixed costs in a timely
manner due to the need to make management decisions
quickly to reallocate resources for the steady generation of
profit while swiftly responding to changes in the
management environment. Based on these perspectives,
we will steadily manage and operate the Mitsui E&S Group’sbusinesses and the subsidiaries.

(％)

6%

2%

■Net interest-bearing debt
Capital-to-asset ratio

Operating
8.0
income ratio

200

2019

Our policy and goals in Mid-Term Business Plan 2023

■Other Businesses(billion yen)

800

Trends in consolidated equity ratio and interest-bearing debt

-4.0
2025 (FY)

10

8%

0
2019

2020
Results

2021

2022

Mid-Term
Business Plan2023

02025 (FY)

Capital measures to improve our financial soundness and to invest in growth businesses
Ensuring the financial soundness is important for the Mitsui
E&S Group. As mentioned above, we have made collective
efforts, such as streamlining unprofitable businesses andimproving our asset efficiency in accordance with the business revival plan. In and after fiscal 2021, we have completed the transfer of our naval ship business, some of theshares of our merchant ship business, Shikoku Dockyard andMES Facilities. We also made MODEC our affiliate. Thanks tothose measures and other efforts, our capital-to-asset ratioat the end of fiscal 2021 has recovered to 14.0% from 8.5%
at the end of fiscal 2020.
We determined that it is important to raise the necessary
funds to implement the green and digital strategies forfurther development of our core businesses (marine
propulsion and port logistics) and strengthen our equity

capital to enhance the financial soundness. Based on thethoughts, we have raised approx. 17 billion yen in capital byissuing Class A preferred shares and the 1st series of shareacquisition rights with exercise price amendment clauseboth through third-party allotment.
By promoting various measures in our growth strategy, we
seek to increase sales and stabilize profit. We endeavor to
expand our financial base and reduce interest-bearing debt
through the improvement of capital efficiency resulting fromthe utilization of the profit and generated cash, the CMS(cash management system) and other efforts. In this way,
we aim to achieve capital-to-asset ratio of 26% and net
interest-bearing debt to EBITDA ratio of 5.0 as set forth in
Mid-Term Business Plan 2023.

• Details of use of funds from Class A preferred shares
Consolidated net sales

Consolidated operating
income ratio

Capital-to-asset ratio

280 billion yen

6%

26%

• Expand core businesses through growth investing and M&A activities• Capture market share in GX products• Focus resources on core businesses and reduce fixed costs• Build a new profit model using DX• Enhance the financial foundation through capital measures and theaccumulation of profits• Complete overseas engineering projects to reduce risks

Specific use of capitalto EBITDA ratio

CAPEX, R&D Financial
investments

5.0

30 billion yen*

• Reduce interest-bearing debt with created cash flows• Take capital measures to procure funds for growth• Allocate investments to core businesses

Expenditure scheduled during:Funds for R&D related to the green and digitaltransformation of our marine propulsion and port logistics
businesses, future M&A activities and alliances, etc.

5,285

July 2022 and March 2026

Funds for capital expenditure related to ammonia and
LNG supply equipment

3,400

July 2022 and March 2026

• Details of the use of funds from the 1st series of share acquisition rights with exercise price amendment clauseSpecific use of capital

Net interest-bearing debt

Amount (million yen)Amount (million yen)

Expenditure scheduled during:

Investment related to the green transformation in our
marine propulsion system business

3,900

April 2022 and March 2026

Redemption of bonds payable

4,199

September 2022 and September 2023

*Total amount in the period of the Mid-Term Business Plan 2023 (FY2022-FY2025)

25

Mitsui E&S Group Integrated Report

Mitsui E&S Group Integrated Report26Mitsui E&S Group’s strategy

Technology development
In pursuit of a sustainable society and solutions to the problems faced by society which has a declining population, we consider the ever-changing needs of customers in the development of products and services.Our products in the marine domain,which represents our main business, will shift to zero emissions. Further, we employ digital technologies and seek to offer
services and solutions to enhance customer convenience.

Promoting the shift to zero emissions
In the area of marine engines, we have already completed
the introduction of natural gas and methanol-fueled engines
whose CO2 emissions are lower than heavy fuel oil. Currently, we are developing engines fueled by zero-emission
substances such as ammonia and hydrogen. In addition, weare actively developing peripheral equipment by supplying
the tank, pump and any other zero-emission fuel supply
systems, which should contribute to the enhancement ofcustomer convenience. We strive to be a marine propulsion
system supplier that provides entire propulsion systems,
including peripheral equipment.

In the area of port cranes, we are developing the fuelcell-powered Zero-emission Transtainer ®︎ that is scheduled tobe launched onto the market in 2023.We are also actively
involving in the initiative endorsed the Japanes government
for achieving Carbon Neutral Ports (CNP) and engaged in the
supply of electricity from zero-emission fuels and the technological development of products and services for supply
chains in an effort to contribute to the decarbonization ofports.

Foundations of Value Creation

Human capital
Human resources strategy

29

Human resource development

30

Initiatives for Human Rights

32

Occupational safety and health

33

Health and Productivity Management

34

Manufactured capital
Supply chain management /Quality control

High-pressure pump for gas-fueled marine engines

Zero-emission Transtainers®

Offering services and solutions
In the area of marine engines, we seek to expand the services for the diagnosis and remote maintenance of engines
and provide new solutions linked to new services increasingfuel efficiency and optimizing operations using engine dataand services assisting vessel operations.
In the area of port cranes, we develop services such as the
remote and automated operation of cranes and maintenanceUsing a drone to inspect a crane27

Mitsui E&S Group Integrated Reportand inspections using drones.We also develop businesses
by offering new solutions linking voyage operation data andport data to achieve seamless logistics in marine, port andland transportation. We will also contribute to solving the
problems faced by society which has a declining birthrate by
expanding maintenance and inspection services for social
infrastructure using radar and robot technologies.

35

Natural capital
Environmental Preservation

36

Addressing climate change risks (TCFD)

37

Social and relationship capitalSocial Initiatives

39

GovernanceCorporate Governance

40

Compliance

45

Message from an Outside Director

46

Officers

47

Complex exploration vehicle

Mitsui E&S Group Integrated Report28Foundations of Value Creation
Human capital

Human capital

Human resources strategy

Human resource development

The Mitsui E&S Group’s engineering and services are provided by the group’s humman resources. Therefore, we believe that
our human resources are our most important management resource for the manifestation of our company philosophy and theachievement of our growth strategy.

Employees are valuable assets to the company. Beyond the development of employees’ skills, we seek to build lively
workplaces by providing a comfortable work environment.

PolicyWe defined our company philosophy as “earn the trust ofpeople and contribute to society through engineering andservices.” The growth of our business operations in ourgreen strategy, one of the pillars of our growth strategy inaccordance with Mid-Term Business Plan 2023, is oriented
towards a focus on the engineering prowess that is characteristic of our environmentally friendly products. Our digitalstrategy, the other pillar, involves the development of services through the combination of our service network anddigital technologies. Engineering and services are provided
by the group’s human resources. We believe human resources are the most important management resource for the
manifestation of our company philosophy and the achieve-

ment of our growth strategy.
Mid-Term Business Plan 2023 describes our future growthstrategy after the revival plan, displays our aggressive attitude and lays out a roadmap for the Mitsui E&S Group’s
continuing growth and the enhancement of its corporate
value. To achieve continual growth and the enhancement ofcorporate value, we specify the following three visions
representing our ideal human resources. Realizing the threevisions and ensuring that our workforce is diverse are ourhuman resources strategies. To this end, we will pushforward with measures such as the reform of our personnel
system, the review of our staff training system and theimprovement of our development of executives.

Measures for staff training and development
facilitate employees’ development and stay up to date on
their development.
From fiscal 2020, we have also been increasing the numberof programs explaining our company and corporate group,
under the theme of getting to know our corporate group.
From the perspective of global human resources development, we provide English language courses and training
programs to improve employees’ communication skills in a
global business. Our staff training is divided into group-based
and online programs depending on the details of the program.

The Mitsui E&S Group conducts various training programswith the aims of encouraging collaborative efforts between
the employees of Group companies and stimulating growthfrom a medium to long-term perspective. In particular, we
provide middle- and higher level employees with position-specific training with the goal of improving the capabilities of our managers at an early stage. With the goal ofenabling young employees to be fully fledged players in theorganization within five years, our employees receive training
in their first and third years in the company and follow-up
interviews in their second and fourth years. In this way, weTargets

Job-class-specific training programs

Senior management training strategies

Early-stage enhancement of management abilities /Early-stage development of younger employees (fully-fledged within five years)

Selection-based training of senior management candidates
Senior management rotation and tough assignment(officer of subsidiary, etc.)

Human resource image
Managerial
position
employees

Current

Aims• Respond to explicit requests from customers
within the existing scope of duties• Respond beyond the existing framework to customers’latent needs• Act only to acquire the knowledge and experience
necessary to fulfill the duties assigned• Continuously learn new things and gain experience thatwill lead to the growth of the company• Interested only in things related to one’s own
duties and business• Interested extensively in social trends to properly
understand changes in the environment

Mid-level
employeesYoungemployees

Training for department management candidates
Department 6 months, total 12 days / online & group
Solving organizational problems
head

granted, to a more market-in perspective.
The other two aims are defined based on the understanding
that, in today’s rapidly changing business environment, only
the companies that adapt to change can survive. For thispurpose, change should be identified correctly and it isnecessary to accumulate knowledge and experience that isable to leverage change to move toward opportunities andgrowth.

1 year, total 16 days + external training course dispatch

Acquisition of both theoretical and practical management knowledge
Senior management training rotation(Corporate Planning Department) 2 years, as a general rule

Understanding of strategic operations through practical experience
Sectionmanagers

Training for section management 6 months (2 days x 2) / online
Basics of management / Learning and implementing leadership

Assistantmanagers

Getting to know one's own job execution abilities / Implementing problem solving

3rd yearNew
employees

The first aim, “Respond beyond the existing framework to
customers’ latent needs,” is connected to a statement in ourmanagement policy, “Achieve new value creation together
with customers – Promote our businesses through marketing activities that identify latent needs and the innovation of
peripheral technologies.” This is about trying to shift from thepractice of solely responding to explicit requests from
customers within the existing scope of duties, which istypical of an order-receiving industry and takes growth for

Expansion of management skills and mindset through practicalexperience in posts such as officers of subsidiaries
Senior management training

Training for self management and team building
6 months (1 day + half-day x 2) / online & group

Third year training 3 days / group
Clarifying roles as a fully-fledged employee
Introductory training for new employees

April hire: 1 year (5 days introductory training, 3 days FU training）
October hire: half year (2 days introductory training, 3 days FU training x 1)

Getting to know one's own job execution abilities / Implementing problem solving

Business Skills Training
The goals of the Business Skills Training program are enabling employees to acquire skills to solve the problems faced by theirbusiness, ensuring the early acquisition of the skills they will need in the future and enabling them to be capable of solving
future problems. As of FY2021, we have been increasing training by in-house trainers and providing training that is more
directly linked to company issues. It enables employee who want to learn to do so autonomously when they want to, throughonline and on-demand methods.
Business Skills Training

Securing diversity

6.8%

2.6%

10%

5%

4.1%

18.5%

10%

20%

*1 Figures of the three companies set to be integrated in April 2023: Mitsui E&S Holdings, Mitsui E&S
Machinery and Mitsui E&S Business Service. *2 Figure as of April 2022 *3 Average in the period from
FY2018 to FY2022

Education / training portal sites
Self-Improvement support
Book recommendations

E-learning for managers

Logicalthinking 2

New graduates
for engineer*3

Logicalthinking 1

Elementary

Implemented as
job-class-specific training

Acquisition of basic skills

TOEIC

Employees*2

Intermediate

English language course (online)

3%

Globalcommunication
training

5%

Development of
global human resources

Logicalthinking 3

0.0%

Problem solving anddecision making

Problem solving
and decision
making3.1%

Legal affairs training

Managers*2

Advanced

Accounting
training 3

Percentagesof foreign
national
employees

Financial, accounting, legal

Accounting
training 2

Percentagesof female
employees

Strategy

Accounting
training 1

Percentagesof foreign
national
employees

Leadership

Strategic
negotiation
skillsPercentagesof female
employees

Category

Strategic planning

Mitsui E&S Group Integrated Report

Goals for FY2030

Marketing fundamentals

29

Current*1

Leadership Challenge
Workshop

Mid-Term Business Plan 2023 specifies“securing diversity” as a goal and we will
work to achieve it. In particular, we plan
to increase the percentage of our workforce
as a whole that are not Japanese. We alsoplan to increase the percentage of new
graduate recruits assigned to engineer thatare women.
The inclusion of diversity & inclusion is often
interpreted as acceptance. Our interpretationof the word “inclusion” is more in-depth: itmeans incorporating into one’s own abilities.
Embracing and incorporating the diversity of
individuals and building a sense of unity
within the organization can facilitate growthand change.

PurposeEnable trainees to acquire business skills, basic skills required in the global environment, and basic engineering skills. Increase training by in-house trainer withthe aim of training employees who can understand and tackle company issues. Provide an environment where trainees can learn autonomously byincorporating online and on-demand training.

Basic engineering training

Young engineering employees
acquire basic knowledge necessary
to carry out their work, including
mechanics, combustion
engineering, materials engineeringand analysis techniques

Introductory training for new employees (new and mid-career employees)
Excel skill-up course

Information security
training (E-learning)

Human rights
training (E-learning)

Compliancetraining (E-learning)

Mitsui E&S Group Integrated Report30Foundations of Value Creation
Human capital

Human capital

Human resource development

Initiatives for Human Rights

Initiatives to Improve Skills

Each and every employee in the workplace is absolutely essential to the corporate activities of the Group and a work environment where human rights are respected enables employees to take satisfaction in the life and their job. It maximizes employees’ capabilities and leads to greater productivity.
Based on this idea, the Mitsui E&S Group has established its Basic Policy for Enlightening People about Human Rights. In
addition to the organization of training programs to increase all executives’ awareness of human rights, we are committed to arange of human rights enlightenment activities at every level of the workforce. In this way, we strive to create an equal andnon-discriminatory workplace environment that respects human rights.

• Skill improvement training• In-house skills competition

Each workplace of the Mitsui E&S Group conducts training
independently to improve skills on site. Skilled personnel
take the lead in providing guidance on procedures and worksafety precautions.

The Mitsui E&S Group holds in-house competitions for
operation of forklifts used in various tasks. External lecturers
are also invited to check the skills of workers and provide
guidance on operating procedures and safety.

Basic Policy for Enlightening People about Human Rights

人材育成

The Mitsui E&S Group is aware of its social responsibilities as a corporate entity. To create a truly discrimination-free corporate culture, it positions the ending of discrimination against Buraku people, sexual discrimination, racial discrimination and other human rights problems as important issues and strives to solve these
problems through its everyday business activities under the principle of respecting human rights.

Organizations and systems for promoting training

Work-life balance• Introduction of telecommuting
We have already introduced flexible working hours without core time and hourly annual leave. In addition, telecommuting wasintroduced in March 2018. In April 2019, regulations on telecommuting were expanded eligibility to any employee who canwork from home, as well as employees who are caring for a child or parent. Since July 2021, we have abolished restrictions
based on length of service and eased weekly restrictions on the number of telecommuting days. We aim to maximize theabilities of individuals through flexible and diverse work styles that are not bound by location or working hours.

Formulation of a General Employer Action Plan based on the Act on Advancement of
Measures to Support Raising Next-Generation Children
Based on the Act on Advancement of Measures to Support Raising Next-Generation Children*, Mitsui E&S Group companies
have formulated the following General Employer Action Plans in order to continue to improve the employment environment sothat employees can achieve their full potential in accordance with the status of their respective life events while balancing
work and family; and to continue being companies that contribute to local communities in supporting the development of thenext generation of children.
*A law to support the sound development of children who will play roles in the next generation of society, in response to Japan’s rapidly declining birthrate

Plan Period

2 years (plan period depends on the planning time of each company)

Goals and details of initiatives (Example: Mitsui E&S Holdings)
1. Improvement of employment environments to support a balance between work and family life for pregnant workers
and workers raising children
Targets 1

Increase the percentages of employees taking childcare leave, etc., to at least the following levels within the planned period• Male employees: Increase the percentage of employees taking childcare leave, accumulated / reserve annual leave for childcare
purposes and maternity leave to at least 80%• Female employees: Increase the percentage of employees taking childcare leave to 100%

Details of
initiatives

April 2021–• Disseminate information regarding internal schemes and information to create a workplace environment that makes it easy totake childcare leave• Increase the number of male employees taking childcare leave through individual approaches to superiors and individuals

Targets 2

Fostering a workplace culture that makes it easy for employees to make use of internal schemes

Details of
initiatives

April 2021–
We will make employees aware of leave and extended leave of absence schemes that can be used for childcare, and work schemesthat are useful for balancing work and family life (hourly incremented annual leave scheme, flextime scheme, telecommuting scheme)

In line with the Basic Policy for Enlightening People
about Human Rights whose formulation was patterned after the UN Guiding Principles on Businessand Human Rights, the Mitsui E&S Group Human
Rights Enlightenment Committee has been established with the goal of formulating policies and measures to increase awareness of human rights. Throughthe formulation and implementation of plans forfacilitating an increased awareness of human rights,
and following up on these plans, we stay properly up
to date on risks and the impact of human rights
issues and work to continually improve.

• Organization (for the promotion of human rights enlightenment)
Mitsui E&S Group Human Rights Enlightenment Committee

Chairman: Director in charge of HD Human Resources & General Affairs Dept.

Human Rights Secretariat

Head
Quarters

TamanoWorks

Oita
Factory

Chiba
Works

Human Rights Enlightenment Liaison Committee(domestic subsidiary)

Human rights enlightenment activities
To increase officers and employees’ understanding of
human rights, the Mitsui E&S Group seeks to build an equal,
discrimination-free workplace environment that respects
human rights by encouraging people’s participation in
in-house and external training programs, providing relevant
information and organizing related events.
In staff training, we consider the many different forms thatwork takes on such as telecommuting and on-site work, andhave introduced online training in addition to face-to-facetraining in an effort to provide employees with more
opportunities to participate in training programs.
We also share information related to human rights
periodically to provide opportunities to think about humanrights and increase understanding of them.

• Annual human rights enlightenment activity schedule
4

5

6

7

New employee training

Training
program8(month)

9

10

11

12

1

2

3

Training for subsidiaries’ human rights representatives

External courses for training human rights
enlightenment and recruitment representatives
Human rights training for managerial-level employees
Human rights training for officers
Human rights training for subsidiaries (conducted when necessary)
Watch human rights-related content on demand using an online library

2.Development of diverse working conditions that contribute to the review of work styles
Targets 1
Details of
initiatives

31

We will continue efforts to reduce overtime work and encourage employees to take annual paid leave, aiming to create work styles
that offer a healthy work-life balance.
April 2021–• Continue to disseminate information within the company on initiatives to reduce overtime work and improve productivity, andthoroughly implement initiatives• Encourage employees to take annual paid leave and seek to increase employee awareness of the memorial leave system (scheme
for taking planned individual annual leave)

Mitsui E&S Group Integrated Report

Information
sharing
Event

Regarding compliance, human rights-related topics are shared on our intranet every quarter

Human rights enlightenment slogans are solicited

Excellent entries are published

Mitsui E&S Group Integrated Report32

Foundations of Value Creation
Human capital

Human capitalOccupational safety and health

Health and Productivity Management

In line with the MES Occupational Safety and Health Management System Manual, the employer (president) announced thebasic policy on occupational safety and health. Accordingly, our Company-wide Occupational Safety and Health Management
Plan has been formulated and implemented. Even after we became a holding company on April 1, 2018, the pre-existing basic
policy on occupational safety and health was preserved as the principles the entire Mitsui E&S Group should uphold. At thesame time, the policy has continued to evolve to bring us closer in our efforts to prevent occupational accidents in ways thatare more meticulous than ever.

In July 2019, we established the Mitsui E&S Group Health Management Declaration to help maintain and improve the physicaland mental health of each Group employee, amid major changes in the Group’s business structure.

Mitsui E&S Group 2022 Policy on Health and Safety Management
1.Basic policy
We will achieve the followings by instilling a safety culture ineach workplace and fostering human assets:(1) Safety first principle, for manufacturing and engineering
practices as top priority to safety(2) Creating a comfortable workplace by proactively working on
physical and mental health management
2. Targets
Safety Targets:
Deaths, serious injuries, or lost-worktime accidents:

0

Accident frequency rate:

0.5 or lessHealth Targets:
Work-related illnesses:

0

Non work-related injuries and illnesses:

Days off work frequency
rate of 0.38% or less(Of which, mental healthdisorders are 0.11% or less)

3. High-priority issues(1) Safety
1. The 2S3TEI system of discipline and good habits
Implement the 2S3TEI system with thorough discipline to form
good habits.
2. Handing down safety and mutual development*
We will actively communicate, build good relationships of trust
between those communicating information and those receiving it,
ensure mutual understanding of information communicated, andcreate a state in which employees can work safely. In particular,
we place importance on handing down safety to young and/or
inexperienced employees and mutual development together withthem.

3. Thorough maintenance and management of equipment
Rather than post-maintenance where repairs are carried out eachtime a failure occurs, we conduct periodic inspections before abreakdown occurs, and implement thorough preventive
maintenance to repair and replace faulty parts. In order to ensurethat equipment operates safely, we conduct maintenance of
peripheral equipment, devices, and the operating environment.
4. Preserving past examples of severe occupational
accidents to hand them down and use them as lessons
Past examples of occupational accidents (especially those that
occurred in your own workplace) can be handed down and used
as a lesson, preventing the from being lost to history andpreventing the recurrence of similar accidents.
5. Facilitate the transition to a new safety management
structure after reorganization
With a view toward our ceasing to be a holding company, build a
new structure for safety management, facilitate the transition to it
and strengthen partnerships while elevating the level of safety
management throughout all of the companies of the Mitsui E&S
Group.
(2) Health
1. Promote health management
Think about health from a management perspective and understand health issues, strategically putting health management into
practice.
2. Promote mental health care
Create a good place to work by promoting these 4 types of care:
1. Self-care, 2. Line-care, 3. Care from occupational health staff,
and 4. Care from resources outside of the workplace.
3. Thorough measures to combat infectious diseases
We will protect the health of employees, their families andstakeholders including customers while ensuring the continuity ofour business operations by taking thorough measures to prevent
infectious disease infections such as COVID-19 and influenza,
ensuring that the practices of the new normal created by the
COVID-19 pandemic take root and become standard practice,ensuring that no one is infected and preventing group infection.

The Mitsui E&S Group aims to be a company that contributes to the development of society and the preservationof the global environment through the power of manufacturing, based on its corporate philosophy “to continue tobe a manufacturing company trusted by people and by society”.
“Safety first, health first” is the top priority and an important management issue for continuing to be a manufacturing company.The Company and health insurance society actively supports the mainte- nance and promotion of
the health of employees and their families, and actively engages in health management with the aim of creating asafe, comfortable and healthy work environment.

Priority Measures

Physical Health• Have health checks and based on their results take measures to prevent the onset of and not progress
lifestyle-related diseases• Implement the Health Attack program and health seminars in collaboration with health insurance societies• Sports days, softball tournaments, family festivals, etc. at works

Mental Health• Self-care: stress checks, mental health training• Line-care: Line-care training, solution-oriented communication training• Care by occupational health staff: interviews with occupational physicians, support for returning to work
after a leave of absence

Workplace Health• Thorough health management through physician interviews for those who work long hours• Ensuring holidays are reliably taken through the annual leave promotion month, recommended days fortaking annual leave, and designating memorial holidays• Efforts to improve the workplace environment for high-stress workplaces based on stress checks

Promoting collaboration between Group companies and health insurance society
To promote health management across the entire Mitsui E&S Group, the company (as the employer) is working together withthe health insurance society to develop a variety of health promotion measures.

• Utilization of periodic health checkup results

Initiatives

Based on the results of periodic health checkups, the five Mitsui E&S Group
companies provide specific health guidance to employees at risk of any lifestyle-related diseases (with the approach and advice tailored to the support level of theindividual), and personal guidance to those individuals at high risk to prevent any
increase in severity.

• Danger experience training• Workplace support for individual goals in Health Attack program*Mutual development refers to an aspect of teaching others where both thelearner and teacher learn and develop.

As part of its efforts to enhance safety education, the Mitsui E&S Group provides
training programs run by the Safety Group at each business location that enable employees to experience dangers for themselves. By establishing a safety training center at
each business site, employees will be made aware of the dangers of their daily worksites through scenarios based on actual accident / disaster cases. This training is conducted not only for employees working at the work sites themselves, but also for
employees working in the office. In this way, the entire Group is working to raise safety
awareness and achieve a zero incident rate for accidents and disasters.

• Conducting near-miss demonstration training to improve sensitivity to danger
The Mitsui E&S Group conducts regular near-miss demonstrations aimed mainly at
young employees and workers with few years of experience.
We seek to improve sensitivity to risks by conducting reconstruction tests and having
employees take part in hands-on training based on near-miss cases that actually occurred both inside and outside the company (cutting of sling wire ropes, falling heavy
objects, etc.)

33

Mitsui E&S Group Health Management Declaration

Mitsui E&S Group Integrated Report

The Health Attack program is a health improvement support measure that has
been conducted for the employees of Group companies and their dependents
since 2005. Employees select and work to tackle health issues that suit them, froma diverse range of courses for two months a year.

Health Attack program

Mitsui E&S Group
counseling hotline• Mental health measures
We systematically conduct mental health training seminars, and stress checks,
issue mental health news and hold interviews with counselors. At mental healthtraining seminars, occupational health consultants who are versed in industrial
mental health are invited to speak as lecturers, giving lectures at various locations
every year on themes tailored to the circumstances of each workplace.
Mitsui E&S Holdings has a collective Employee Support Program (EAP) support
agreement utilizing external resources (via outsourcing), with support available to
Mitsui E&S Group company employees and their families (around 6,000 persons).
This employee support service accepts health, mental and legal consultations via
phone, web, fax and interviews 24 hours a day, with strict protection of privacy, andhas been in place for over 10 years.

Mental health training session held for Tsukiji head
office area while avoiding the Three Cs (three
conditions that facilitate the transmission of infectious
diseases)

Mitsui E&S Group Integrated Report34Foundations of Value Creation
Manufactured capital

Natural capital

Supply chain management

Environmental Preservation

Contributing to society through engineering and services, the Mitsui E&S Group works to fulfill its social responsibility byseeking coexistence and shared prosperity based on fair, equitable and transparent transactions with partner companies in the
procurement of materials and parts, with the goal of providing sustainable products and services. We will advance digitalization for the visualization of our production and procurement processes and continually improve in cooperation with our partnercompanies, seeking to optimize our production processes.

In 1999, the Mitsui E&S Group established the Environment Charter consisting of the Global Environment Philosophy and the
Global Environmental Action Guidelines, and it has positioned the environment as an important part of the management of its
business. Mid-Term Business Plan 2023 specifies the realization of a decarbonized society as a material issue as we accelerate efforts to conserve the global environment.

Mitsui E&S Group Global Environmental Philosophy
Initiatives for supply chain management• Build fair and equitable trust-based relationships
Mitsui E&S has made the following declaration: As a basic principle, we fairly select business partners by providing all companies that desire to be our business partners with equal and fair opportunities for participation. Based on our thorough commitment to preventing corruption, we strive to build fair and equitable trust-based relationships with our partner companies.

• Achieve a sustainable society
Addressing the risks of overseas procurement today, our procurement of materials is based on a global perspective. We also
are engaged in green procurement that considers the reduction of environmental impact in pursuit of a sustainable society.

• Digital strategy
We are pursuing the shift to smart factories through the construction of a digitally integrated platform that encompasses
development, design, sales, procurement, manufacturing and other data. This will start with the improvement of data connections with partner companies.

Manufactured capital

Quality control
As a corporate group that is trusted by people and contributes to society through its engineering and services, the Mitsui E&S
Group aims to offer high-quality products. Always thinking from the customer’s perspective and acting quickly, we ensure thatthe specifications agreed upon with customers and all applicable laws, regulations and standards are met. Further, we operate
a quality management system that enhances the quality of our manufacturing processes. We also develop and operate digitaltechnologies such as failure prediction via remote monitoring systems and data analysis and drone-based inspections tomaintain and improve quality during the use of a product.

Initiatives for quality control• Quality management system
Both Tamano Works and Oita Works have acquired ISO 9001 certification, are regularly reviewed and effectively and properly
operate a quality management system.

• Quality inspection and prevention of recurrence
In the manufacturing stage, the design division leads continuing the activities to develop and establish the quality of products
at an early stage. This involves, for example, the sharing of construction-related information and risks with the departments
and companies involved to engage in array of verification activities beforehand. After product delivery, the after-sales service
division takes the lead in the gathering of a variety of information about problems that occur after a product begins operationand the provision of feedback for upstream processes, mainly design. In this way, we implement a PDCA cycle as we strive tocontinually improve the quality of our products.

• Digitalization of the monitoring of product operating conditions
Our products can be equipped with systems to monitor their operating conditions. This enables users to analyze the monitoring data, predict failures before they occur, share data with our engineers and ensure they are able to quickly recover following
a failure.

The Mitsui E&S Group views protecting the global environment as one of the most important issues given to it by society.
Through our corporate activities, we give care and consideration to maintaining human health and conserving the global
environment, and seek to contribute to the creation of an affluent society that is in harmony with the environment.

Mitsui E&S Group Global Environmental Action Guidelines
1. Complying with Environmental Regulations and Reducing Environmental Impact
The Group observes and complies with environment-related laws and agreements, etc., and creates its own voluntarystandards where necessary. It also gives care and consideration to reducing the environmental impact at each stage of its
business operations, from the research, development and design of its technologies and products to their production, distribution, use, and ultimate disposal as waste.
2. Promoting of Resource Conservation, Energy Saving and Recycling, and Reducing of Waste
The Group seeks to promote the conservation of resources, energy saving and recycling in all areas of its corporate activities, and endeavors to reduce waste output.
3. Contributing to Environmental Conservation through the Development of New Technologies and Products
The Group works proactively to develop technologies and products that contribute to environmental conservation, and toprovide them to society.
4. Caring and Consideration for the Environment in Overseas Business Activities
The Group also gives sufficient care and consideration to environmental conservation in the countries where it is engaged inoverseas business activities.
5. Promoting PR Activities and Contributing to Social Activities
In addition to engaging in proactive PR activities with regard to environmental conservation, the group also contributes tolocal communities and society as a whole through the provision of appropriate technologies and information.
6. Raising Awareness through Environmental Education and Participating in Social Activities
The Group seeks to increase employee awareness of environmental issues such as by providing environmental educationand conducting internal PR activities. Through voluntary participation in environmental conservation activities, employees
endeavor to build trusting relationships with local communities and wider society.
7. Establishing an Environmental Administrative Organization and Building an Environmental Management System
The Group endeavors to improve its environmental conservation efforts by establishing an environmental administrative
organization, and by building and maintaining an environmental management system.
8. Coordinating and Collaborating with Affiliate Companies
The Group endeavors to instill its environmental philosophy and action guidelines at each of its affiliate companies, andpromotes their comprehensive implementation, aiming to further increase the effectiveness of its environmental conservation activities.

Environmental management system

Improving the Environmental Management System

Our president is the highest ranking person in charge of ourenvironmental management system. We strive to become amore environmentally friendly company through the management and operation of this system involving every part ofour corporate activities.

The Company acquired ISO 14001 certification at the Tamano
Works in October 2000 and at the Chiba and Oita Works in
September 2001. In FY2018 (‘17/4-‘18/3), all factory works
moved to the ISO 14001:2015 standard.
Renewal inspections were conducted and certifications
renewed at Tamano Works in August 2021 and Oita Works in
July 2022.
Periodic surveillance is carried out at each factory works
twice a year by an external auditing body, checking theoperational conditions of the systems.

PresidentGroup-wide environmental conservation supervisor
Officer in charge of environmental management
Department in charge ofgroup-wide environmental
management
Head office environmental
conservation supervisor
Head office department incharge of environmental
management
Head office departments
Branches, sales offices
and subsidiaries

Office environmental
conservation supervisors
Office environmental
management managers
Departments in charge of
office environmental
management
Administrative departments andfactories operated by offices
Subsidiaries located on thepremises of offices

Renewal audit at the Oita Works

35

Mitsui E&S Group Integrated Report

Mitsui E&S Group Integrated Report36Foundations of Value Creation
Natural capital

Addressing climate change risks (TCFD)
Understanding that climate change is an important social issues that must be addressed, the Mitsui E&S Group is committed
to sustainability issues (green strategy) in pursuit of the achievement of Japan’s CO2 emissions reduction targets.

Our initiatives addressing climate change issues
In the machinery business, which is a future core businessof the Mitsui E&S Group, the Group’s products emit more
CO2 when in use than during their manufacture. So we will
endeavor to contribute to the achievement of Japan’s targetof reducing GHG emissions by 46% by the end of 2030 byincluding climate change in our business issues and focusing
on the development of products to help reduce CO2

emissions.
We believe the TCFD’s Recommendations enable thevisualization of the management of risks and opportunities
relating to climate change on the following four themes.
(1)Governance (2)Strategy (3)Risk management (4)Indicatorsand targets
Our specific contents for these themes are as follows.

Reports onimportant matters

Total Risk Management
and Internal Control
Committee
Monitoringand instruction

ReportCorporate divisions andoperating companies

Total Risk Management and Internal
Control Committee- Purpose: Systematically understand, evaluate andmanage risks related to the SDGs including climatechange*1 and risks and opportunities related to theactivities of management- Chairperson: Officer in charge, Corporate Planning
Dept.
- Members: Inside directors- Activities: Semiannually monitor risks related to the
SDGs
Based on the results of the committees’ evaluations,individual measures are approved and implemented
by internal committees.
*1 A total of 19 business risks that we identified
including political/geopolitical, natural disaster/
epidemic and exchange/interest rate risks(2)-1 Strategy: Impact on our business operations in terms of major risks and opportunities
Referencing the Climate Change Policy Division of the Global
Environment Bureau of the Ministry of the Environment’s“Recommendations for using the TCFD Recommendationsin the formulation of management strategies: a practicalguide to scenario analysis incorporating climate-related risks
and opportunities version 3.0, a scenario analysis of the
Mitsui E&S Group was conducted in terms of the transitionalrisks related to the transition to a low-carbon economy(changes in policies, laws, technology and the market) which
are broadly classified in the TCFD Recommendations; andthe physical risks connected to physical changes such as
natural disasters brought by climate change.
Risks and opportunities
Major events and social
Categorychanges

4°C

Major

Minor

NA

Major

Minor

Significant carbon emissions control⇒ Emissions rights may be sold as emissions tradingis introduced.

MediumMinor

MediumMinor

Widespread adoption of low-carbon (renewableenergy) technologies⇒ Demand for products using non-fossil fuels(ammonia, hydrogen) increases.

Major

Minor

MediumMinor

Customers’ environmental awareness increases➡ We are highly regarded for our environmental
consideration.
⇒ Can be expected to create business opportunities.

Major

Minor

Damage due to abnormal weather (e.g. typhoons, tornadoes,
floods, heavy rain)
Medium➡ Raw material suppliers stop operating⇒ Our factories stop operating

Major

NA

NA

NA

Physicalrisks

Damage due to abnormal weather (e.g. typhoons, tornadoes,
floods, heavy rain)
Medium➡ Our factories stop operating, our production decreases⇒ Additional investment in equipment repair accrues (costincrease)

Major

Avoidance of and early recovery from damage due toabnormal weather⇒ We serve as an alternative supplier.

Minor

Minor

37

Introduction of emissions trading and tightening of energy
saving regulations➡ Demands that companies to switch to renewable energy➡ Introduced renewable energy equipment in-house and thepurchase of green electricity⇒ Costs increase

Increasingly severe
abnormal weather
eventsMitsui E&S Group Integrated Report

Customers’ environmental awareness increases➡ Information disclosure and demands that environmental
consideration increases in relation to procurement⇒ Delayed action results in lost business opportunities

Details

scenario scenario

Risks increase
Opportunities
increase• Failure to promote CO2 emissions control and other related policies increases the severity of abnormal
weather• We systematically create a BCP (Business Continuity Plan) and risks are limited.
• The temperature change in 2030 is nearly as described in the 2°C scenario.

No change(2)-4 Strategy: Action we should takeLooking at the results of the climate change-related scenario analysis, we should take the following two measures. The green
strategy, one of the pillars of the growth strategy laid out in Mid-Term Business Plan 2023, is very resilient in its addressing ofclimate change issues.
(1) Develop products using non-fossil fuels and bring them to the market.
(2) Reduce CO2 emissions by reducing the consumption of fossil fuels and electricity in factories, and by using green electricity.
Based on the above, we set material issues and mid- and long-term targets related to sustainability.

From now on, the Total Risk Management and Internal Control Committee will take the steps below to follow up on the Mitsui
E&S Group’s efforts to address the material issues.
Short- and mid-term
Matters to follow up on
Progress in the development of
low-carbon products1) Grasp of actual
condition
Reduction of the CO 2 emissions(annual CO2 emissions of the Mitsui E&S Group’s
products
reduction survey)
Reduction of the CO 2 emissionsof the production activities of thecompanies of the Mitsui E&S
GroupOpportunities
2°C

Details

Widespread adoption of Widespread adoption of low-carbon (renewable energy)
renewable energy and technologies
energy-saving⇒ Demand for products using fossil fuels decreases
technologies
Change in reputation
among customers• Costs increase due to the introduction of carbon taxes and requirements to comply with CO2 emission
controls• Encouragement of the shift to low carbon increases demand for products using non-fossil fuels

4℃ scenario

Impact(3) Risk management(1) Requirements- Applicable to: Machinery, which is a future core business of the Mitsui E&S
Group- Deadline: 2030
*Main scenarios used in the scenario analysis: We referred to data from theIntergovernmental Panel on Climate Change (IPCC) and International Energy
Agency (IEA) in our use of the following two scenarios:
2 °C scenario: Global average temperature rises about 2 degrees frompreindustrial levels.
4 °C scenario: Global average temperature rises about 4 degrees frompreindustrial levels.
(2) Evaluation- Major events and social changes are limited to those related to the Mitsui E&S
Group- Impact of climate change-related risks and opportunities on our businessactivities are classified into three different grades: major, medium and minor.

Risk
Introduction of a carbon tax in different countries

Transitionrisks

2°C scenario

Business impacts

Introduction of carbon ➡ Taxation on fuel procurement costs
pricing⇒ Factories’ manufacturing costs increase
Carbon emission
targets and policies(including those of
subsidies) in different
countries

Results

Manufacturing costs are expected to increase after the introduction of carbon taxes and the procurement of green electricity.
However, we may be able to seize opportunities to gain recognition for our low-carbon products for their environmental advantages, thereby increasing sales. In other words, increasing our profit brought by opportunities will exert a greater impact thanworsening of our profit and loss due to risks.

• Governance structure
Board of Directors

Scenario(2)-3 Strategy: Impact on business(1) Governance: Managing risks and opportunities relating to climate change
Conventionally specialized in risk management, the Total Risk
Management and Internal Control Committee systematicallyunderstand, evaluate and manage all of the risks and opportunities related to managerial activities. We have specified 19
business risks including political/geopolitical, natural disaster/
epidemic and exchange/interest rate risks. These include
risks related to the SDGs and the committee also believes
that climate change-related risks and opportunities are
something that they should manage.
From now on, the existing Total Risk Management andInternal Control Committee will monitor our actions related
to climate change and report important matters to the Boardof Directors.

(2)-2 Strategy: Result of scenario analysis

2°C

4°C

NA

NA

Long term
Follow up method
Comparison with the development
schedule for the period of Mid-TermBusiness Plan 2023.
Confirmed with data calculated fromproduction horsepower, number of
products sold, and fuel efficiency at
the time of measurement during
internal factory trial operation.
Check annual energy consumption.

scenario scenario

2) Evaluation
3) Management

1) Conduct scenario
reanalyses

Evaluation any deviation from fiscal year targets

2) Check if material
issues need to berevisedIf any deficiencies are identified, notify the operating company and our
corporate division (Corporate Planning Dept. or Human Resources & General
Affairs Dept.) to formulate an improvement plan.

4) Indicators, targets and future challenges
To accelerate activities for solving social issues, we define sustainability material issues and medium- and long-term targets(FY2030) to prioritize activities in consideration of social issues which are important for the Mitsui E&S Group.
To date, some issues have not been addressed in the information disclosed in line with the TCFD Recommendations.
(1) Quantitative evaluation of financial risks (2) Calculating and gathering scope 3* data and formulation and implementation of
CO2 reduction measures
We will discuss measures to address these issues.
*Indirect emissions from sources other than in-house fuel combustion or electricity consumption

Mitsui E&S Group Integrated Report38Foundations of Value Creation
Social and relationship capital

GovernanceSocial Initiatives

Corporate Governance

The Mitsui E&S Group believes that communication with local communities is important and it seeks to create a sustainable
society through the environmental conservation activities of our employees and local CSR activities.

In the Mid-Term Business Plan 2023 announced in May 2022, we redefined the Group’s Company Philosophy and Vision inview of the quick shift to a sustainable society and other environmental changes. Based on this, we have established a system
to enable transparent, fair, prompt, and decisive decision making, and are working to continuously improve and enhance ourcorporate governance.

New industrial department established for nurturing engineering human resourcesin cooperation with Tamano City
Founded in Tamano City, Okayama Prefecture in 1917, theCompany, working together with Tamano City, has developed
the Tamano Human Resource Regional Development Project
centered on the establishment of a new industrial department at Tamano Shoko (Commercial and Industrial) HighSchool for the purpose of nurturing young people to support
the manufacturing industry. In addition to providing funds forthe establishment of the school’s mechanical engineering
department, which was established in April 2018, Mitsui
E&S provided a total of ¥100 million in support for training
facilities and sending technical instructors, etc. Tamano Cityand the Company’s efforts in this project were highly praisedwith both recently receiving the Ministerial Commendation
for Local Revitalization Support Tax System (hometown tax
for enterprises) established by the Cabinet Office. The
school’s mechanical engineering department is attracting
attention as the first department in Japan to use a mechanical engineering training facility in a company, with students
coming to learn not only from Tamano City but also fromnearby Okayama and Kurashiki cities.

Regarding the improvement of corporate governance, we shall follow the principles below.
1) Ensure shareholders’ substantial rights and the equality of shareholders
2) Properly collaborate with stakeholders, including shareholders
3) Ensure the appropriate and independent-minded disclosure of corporate information and transparency
4) Clarify the roles and responsibilities of the Board of Directors, corporate auditors and the Board of Corporate Auditors
5) Engage in dialogue with shareholders to facilitate sustainable growth and the enhancement of medium- and long-term corporate value

Our FY2021 corporate governance structure The descriptions of directors and corporate auditors are valid as of June 28, 2022.
The Company adopts a corporate governance system in the form of a company with a Board of Corporate Auditors and withAccounting Auditors.
Practical training on the lathe

Activities of the Mitsui Public Relations Committee
We have co-sponsored a range of social contribution activities as a member company of the Mitsui Public Relations
Committee, which consists of 24 Mitsui Group companies.
This committee carries out a variety of cultural and art
activities aimed at “enriching society by cherishing people
and respecting diverse personal characteristics,” working inline with the characteristics of the Mitsui Group described as“Mitsui is People.”

The 50th MITSUI Golden Glove Award Prizewinning players

Support for Fureai Concert
In 2003, the concert was started by the Fureai Trio wishing
to expose children and people with disabilities whose
exposure to classical music is often limited to live classicalmusic performances and help enrich their lives. Since 2019,the concert has been held with the participation of moreartists. The Mitsui E&S Group has cosponsored the concert
since its start and also provides support through employee
volunteers. For example, it is involved in volunteer activities
at the concert venues.

39

Mitsui E&S Group Integrated Report

A concert held at an elementary school in Morioka City, Iwate• Board of Directors
Our Board of Directors is composed of seven board members
including three part-time outside directors. The Board has twelve
regular meetings and seven extraordinary meetings to makeimportant decisions and supervise the execution of business. The
Board of Directors also reviews, when necessary, basic policies forthe construction of internal control systems.
• Board of Corporate Auditors
Our Board of Corporate Auditors consists of four board members
including two part-time outside corporate auditors. The Board of
Corporate Auditors appoints full-time corporate auditors, formulates audit plans, creates audit reports, audits the appropriatenessof proposals to be submitted to the annual meeting of shareholders and discusses other issues relating to the execution of theduties of the corporate auditors. The Board also discusses mattersrelating to issues the Board of Corporate Auditors is expected topass resolutions on, such as their agreement to the appointment,
removal or refusal to reappoint accounting auditors and remuneration for accounting auditors.
• Group Management Committee and Management Committee
In addition to the Board of Directors, we have established theGroup Management Committee and the Management Committee
to be additional managerial-level bodies working to execute theirduties in accordance with the basic policies decided by the Boardof Directors. The Group Management Committee is composed of
our full-time directors and the president of a major subsidiary(Mitsui E&S Machinery) under the umbrella of the Mitsui E&S
Group. The Committee discusses the directions of medium- andlong-term management plans and business strategies throughout
the Mitsui E&S Group. The Management Committee is composedof full-time directors and people appointed by the president. The
Committee deliberates and reports on the execution of the specificduties of and important matters related to Mitsui E&S Holdings or
its corporate group based on the direction discussed at the GroupManagement Committee.
The Group Management Committee meets four times annually
and, as mentioned earlier, focuses on discussion about the direction of the Mitsui E&S Group as a whole’s medium- and long-term
management plans. The Management Committee has twelve
regular meetings and two extraordinary meetings. As mentioned
earlier, the Committee deliberates the execution of specific duties.

• Systems of Corporate Governance andInternal Control
Shareholders' Meeting
Election/
Dismissal

Directors (Board of Directors)
Consultation

Recommen- Consuldation
tation(Advisory bodyto the Board of
Directors)

Election/
Dismissal

Audit(Advisory bodyto the Board of
Directors)

Election/
Dismissal

Decision oncontents ofagendas concerning
election or
Corporate Auditors dismissal Accounting

Auditors(Board of Corporate Auditors)

Recommendation

Personel Compensation
Advisory
Advisory
Committee Committees

ReportReportDiscussion ofimportant matters,
reports on businessexecutions

Audit

Audit

Election/Dismissal, Oversight
Instruction/Report

President (CEO)Deliberation/Report

Instruction

Management
Committee

Discussion

Group
Management
Committee

Instruction/
ReportAuditing
Department

Permanent
Committee
LawyerGroup
Compliance
Committee

Total Risk
Management
and Internal
ControlCommittee

Special Crisis
ControlCommittee*

Audit*To act in case ofcontingency

Audit(Help line)

MITSUI Golden Glove Award
We grant this award to professional baseball players who
have exhibited outstanding fielding performance throughout
the season.
Mitsui Golden Glove Baseball ClassThis is a baseball class specializing in fielding, which is
aimed at baseball coaches for juniors. We invite exprofessional baseball players who won the MITSUI Golden GloveAward to be instructors.
The MITSUI Golden Takumi Award
Founded in 2015 with the desire to support craftspeople
carrying the manufacturing of traditional Japanese crafts into
the future.

<Our mission>
We build trust and contribute to society through our engineering and services<Vision>In the marine domain, we create a carbon-free society and resolve challenges induced by depopulation<Management Policy>
Create new value together with customers
Seek a sound financial structure and steady profit
Accelerate the resolution of sustainability issues

Investigation

Divisions/Departments of
MES and Subsidiaries

Audit

Consultation/Reporting

Employees of the Company Group consistingof MES and Subsidiaries, and Clients

Mitsui E&S Group Integrated Report40Foundations of Value Creation
Governance

GovernanceRisk Management

Director skill matrix

We practice total risk management involving a comprehensive understanding and evaluation of all risks related to
management activities as a whole, and, on a managerial level, it continuously checks to ensure that risks are prioritized areproperly handled.

In selecting and determining candidates for Directors, the Company is striving to ensure a certain number of inside Directors
familiar with the business and management control of the Company Group. At the same time, with a view to meeting thedemand of the era of diversity, the Company is working to ensure a balance between knowledge, experience and capability, as
well as diversity within the Board of Directors as a whole, by inviting Outside Directors with abundant experience in otherindustries. The Company classifies the skills and areas of expertise specifically expected from Directors into the following six
categories:(1) Corporate management (2) International experience (3) Finance/M&A (4) Legal affairs/auditing (5) Marketing (6) Technologies/IT• System for promoting risk management
We set up the Total Risk Management and Internal Control Committee chaired by in charge of the Corporate Planning Dept.
officer and composed of all inside directors to effectively implement total risk management. Since the beginning of fiscal 2022,
the Committee considers itself to be responsible for addressing climate change-related issues and will report important issues
to the Board of Directors.

Skill matrix illustrating the skills and areas of expertise specifically expected from each candidate for Directors is as follows:• Risk management initiatives
In fiscal 2021, the Committee met twice and evaluated risks related to our management activities as a whole. Based on the
results of evaluate by the Committee, we implemented measures to address specific risks. More specifically, our consolidated
financial statements going into the red this business year is partly attributable to downward revision of the forecasts of equity
method affiliates’ performance, the impact of currency exchange rates and other events. The Committee implements improvement measures such as recommending that equity method affiliates enhance their governance and hedge risks throughexchange contracts.

List of directors
Name

Ryoichi Oka

Position andresponsibilities

Chairman

Takeyuki
Takahashi

President, Representative
Director
CEO, CCO (*1), and in charge ofGeneral Control, GrowthBusiness Promoting Dept. and
Auditing & Legal Dept.

Taketsune
MatsumuraVice President, Representative
Director
Assistant to President, CSO (*2),
CISO (*3), and in charge of Engineering Business Management
Dept. , Corporate Planning Dept.
and Human Resources &General Affairs Dept.

Keigo
Matsubara

Vice President, Representative
Director
Assistant to President, CFO (*4),
and in charge of Finance &Accounting Dept. and in chargeof IR Dept.

Attribute

Attendance atmeetings of theBoard of Directors
held in FY2021

Reason for Appointment

Reappointment

Attended
19 of 19
meetings

Since his appointment as President of the Company in 2019, Mr. Ryoichi
Oka has taken leadership to promote the Business Revival Plan and madeefforts to improve business performance of the Company Group. His
experience and insights are necessary for us to strengthen the Company
Group’s governance and to ensure the effectiveness of supervision over the
management as a whole.

Attended
13 of 13
meetings*

Mr. Takeyuki Takahashi has excellent marketing abilities acquired throughinternational sales experience and outstanding management abilities
acquired through his experience as President and Representative Director of
Mitsui E&S Machinery Co., Ltd. His experience and insights are necessary
for us to develop growth businesses and drive the Company Group’s
advancement.

Reappointment

Attended
19 of 19
meetings

Mr. Taketsune Matsumura is leading the preparation and execution of theBusiness Revival Plan of the Company Group as an executive in charge of
the Corporate Planning Dept. and playing a central role for promoting the
Mid-term Business Plan 2020 and preparing the Mid-term Business Plan
2023. His experience and insights are necessary for us to coordinate futuregroup strategies and complete the final stage of the structural reform.

Reappointment

Attended
19 of 19
meetings

Mr. Keigo Matsubara has made efforts to improve the financial structure of
the Company Group by utilizing his competent knowledge based on his
experience as an executive of a general trading company and outstanding
expertise acquired through his experience in financial affairs and accounting.
His experience and insights are necessary for us to further reinforce thefinancial structure and promote future financial strategies.

Attended
19 of 19
meetings

Mr. Toshikazu Tanaka has sufficient and overall experience and knowledgeof domestic and overseas business operations and corporate management
acquired as an executive of a major integrated chemical company for a long
period. Accordingly, we expect him to advise the overall management of theCompany Group with a broad perspective and to oversee and supervise
management of the Company from an independent position. Considering
those described above, we successively selected him as a candidate for
Outside Director.

Reappointment

Reappointment

Toshikazu
TanakaYoshio Haga

Outside Director

OutsideIndependent
Director

Outside Director

Reappointment
OutsideAttended
19 of 19
meetings

Mr. Yoshio Haga has sufficient and overall experience and knowledge ofdomestic and overseas business operations and corporate management
acquired as an executive of a major paper manufacturing company for a long
period. Accordingly, we expect him to advise the overall management of theCompany Group with a broad perspective and to oversee and supervise
management of the Company from an independent position. Considering
those described above, we successively selected him as a candidate for
Outside Director.

-

Mr. Haruyuki Nagata has been engaged in finance, risk management,internal audit and other operations at a major financial institution group for along period, and possesses sufficient and overall experience and knowledge
as an executive. Accordingly, we expect him to advise the overallmanagement of the Company Group with a broad perspective and tooversee and supervise management of the Company from an independent
position. Considering those described above, we have newly selected him asa candidate for Outside Director.

Independent
Director

New
Appointment

Haruyuki
NagataOutside Director

OutsideIndependent
Director

Name

Corporate
management

International
experience

Ryoichi Oka

●

●

●

Takeyuki
Takahashi●●●

Taketsune
Matsumura

●

●

●

Keigo
Matsubara●●●

Toshikazu
Tanaka●●●Yoshio Haga

●

●

●

Haruyuki
Nagata●Finance, M&A●

Legal affairs,
auditing

MarketingTechnologies, IT
●

●

●

●

●

●

*The above does not show all of the knowledge possessed by the directors or corporate auditors.

Evaluation of the effectiveness of the Board of Directors
We analyzed and evaluated the effectiveness of the Board of Directors as a whole in fiscal 2021 by examining the opinions ofoutside directors and outside corporate auditors for the self-appraisal results of all directors and corporate auditors. In theanalysis and review of the self-appraisals of all of the directors and corporate auditors, the Board of Directors analyzed andevaluated the results after receiving advice from outside organizations, directly responding to the outside organizations for the
purpose of securing greater anonymity and considering the results reported by outside organizations.

• Results of analysis and evaluation of effectiveness
It is evaluated that generally, the Board of Directors operates properly and the effectiveness of the Board of Directors islargely ensured. Their effectiveness is generally the same as in the previous fiscal year. The improvement measures wehave implemented are having a degree of impact in terms of sufficiently discussing the Company’s continuing growth,
the creation of medium- and long-term corporate value, potential risks and how to handle them and other matters thatsignificantly impact our management of our business. Therefore, the measures will continue.

• Issues emerged from the analysis and evaluation
I1. In the operations of the Board of Directors, the Board of Directors has worked to improve in terms of deadlines for
submitting meeting-related documents and their volume to ensure virtual deliberation time and shorten meeting time bystreamlining the proceedings. However, we need to do more to improve.
2. It is necessary to continue the discussion and consideration of the diversity of members of the Board of Directors,
particularly in terms of aspects such as gender and internationality.
3. Interest in basic sustainability policies and efforts to improve them, such as the commitment to ESG and the SDGs, isgrowing significantly. The Board need to actively work on these issues.

The results of the analysis and evaluation and the issues to be worked on are as shown above. Despite of this, our performance in fiscal 2021 was not as good as expected. The board clearly recognizes this face and will strive to increase the speed
and accuracy of its decision making, strengthen the Mitsui E&S Group’s governance structure and, based on Mid-Term Business Plan 2023 announced in May 2022, ensure the promotion of our growth strategy is the highest priority.

*Shows the frequency of attendance of Board of Directors meetings held since the director assumed their role.

41

Mitsui E&S Group Integrated Report

Mitsui E&S Group Integrated Report42Foundations of Value Creation
Governance

GovernanceCompensation for directors and corporate auditors• Calculation of profit-linked compensation• Policy on determaining or the method for calculating directors executives’ compensation, etc.
At a meeting held on March 25, 2021, the Company’s Board of Directors resolved a policy for determining details of thecompensation for individual directors. Regarding the compensation of each director in fiscal 2021, the Board of Directors
conﬁrmed—with respect to the compensation for individual Directors for the ﬁscal year under review—that the method for
determining the details of compensation and details of determined compensation were consistent with the determination policy (adopted by a resolution of the Board of Directors) and that the reports of the Compensation Advisory Committee havebeen respected; and judged that the determination policy had been adhered to. Details of the policy for determining details ofcompensation for individual Directors are as follows.
1. Basic Policy
The basic policy is that compensation for the Company’s Directors
shall be a compensation system linked to shareholder returns tofully function as an incentive for the sustained enhancement ofcorporate value, and shall be set at an appropriate level based on
the job responsibilities of individual Directors when determining
compensation for them. Specifically, compensation for full-time
Directors consists of monthly compensation as fixed compensation, and performance-linked compensation (stock price-linked andprofit-linked compensation). Outside Directors responsible forsupervisory functions shall be paid only monthly compensation inlight of their responsibilities.
2. Policy for determining the amount of monthly compensation, etc., paid to individual Directors
The monthly compensation for Directors shall be fixed compensation, and a basic monthly salary determined by comprehensive
consideration shall be paid every month, taking into account thelevel of salaries at other companies, the Company’s performance,and levels of employee salaries according to the position.
3. Policy for determining the details of and calculating theamounts, or numbers, related to performance-linked compensation, etc.
Performance-linked compensation, etc., shall consist of thefollowing two items to raise awareness of performance improvements for each fiscal year.
Stock price-linked compensation
The basic amount of compensation for two months of the basic
monthly salary will be accumulated annually during the term ofoffice as cash compensation reflecting the Company’s stock price.
Payments shall begin one year after retirement, and shall be paid
once a year for the same period as the term of office. The amount
paid shall be the amount obtained by dividing the stock price on
the last business day of June of the year of office corresponding to
the year of payment by the stock price on the last business day ofJune of the actual year of payment, multiplied by the amount ofbasic compensation for the corresponding year in office.
Profit-linked compensation
Cash compensation reflecting performance indicators (KPIs) shallbe paid at a certain time each year, calculated according to the consolidated return on invested capital (ROIC) for each fiscal year. The

value of the consolidated ROIC on which the calculation is based
shall be reported to the Board of Directors based on the report of
the Compensation Advisory Committee.
4. Policy for determining percentages of compensation for
individual Directors accounted for by monetary compensationand performance-linked compensation
The ratio of monthly remuneration, stock price-linked compensation, and profit-linked compensation shall be a certain composition
regardless of the position. Profit-linked compensation shall vary
between 0% and 50% relative to the sum of monthly compensation and the basic amount of compensation for stock price-linked
compensation. The President and Representative Director shallrespect the content of reports made by the Compensation
Advisory Committee when determining the details of individualcompensation for directors.
5. Delegation to the President and Representative Director
Specific details of the amount of compensation for each individual
Director shall be delegated to the President and Representative
Director Takeyuki Takahashi, based on a resolution of the Board of
Directors, and the content of the delegated authority shall be theamount of monthly compensation for each director. The Board of
Directors shall ensure that such authority is appropriately exercised by the President and Representative Director, after a reportby the Compensation Advisory Committee, and the President andRepresentative Director subject to the above-mentioned delegation shall determine details of compensation according to thecontent of said report.
6. Matters relating to the determination of compensation, etc.,
other than the above
The Company’s non-statutory Compensation Committee determines the compensation, etc. provided to our directors. It consistsof three members, two independent outside directors and thepresident, and is chaired by an independent outside director. The
Committee’s resolutions are finalized when all of the independent
outside directors consent to the resolution. The President does notparticipate in the resolution process.
Monthly compensation of corporate auditors shall be decided inconsideration of compensation for directors, etc. and after
discussion by the corporate auditors.

• Goal of the adoption of the director compensation programs
Stock price-linked compensation
Stock price-linked compensation has been introduced as a medium-to-long-term incentive. This involves annually allocating acertain basic amount of stock price-linked compensation while the director is in office to pay the amount of compensation
linked to changes in the stock price from the price during the terms of office to the director after the director leaves office inaccordance with the allocation period. During the term of office, they are expected to help increase the Company’s mediumand long-term performance. Additionally, the allocation period and the payment period are the same in terms of length, so that
directors remain responsible for the management of the Company throughout a period.

Profit-linked compensation
The performance indicator is defined as the ROIC in Table 2, which is a standard that is in harmony with our management
strategy. It has been introduced with the aim of streamlining management and enhancing the connection between compensation and performance. Incidentally, ROIC was -2.9%.

43

Mitsui E&S Group Integrated Report

This involves using the formulas in Table 2 to calculate the amount of compensation in accordance with the performanceindicator defined in Table 1 based on the basic compensation, which is the total of of monthly compensation and the basic
amount of stock price-linked compensation. The period for execution of duties covered by profit-linked compensation is July 1,
2022 through June 30, 2023.
Basic amounts and the allocation of profit-linked compensation are as follows.
Basic compensation
Monthly compensation

Basic amount ofstock price-linked compensation

Range for the fluctuation of
profit-linked compensation*2(percentage of basic compensation)

Twelve-months of standard monthly pay*1

Two-months of standard monthly pay*1

0~50%*1 Fixed-amount compensation that is paid every month*2 The maximum value of the fluctuation range is the upper limit. The amount exceeding the upper limit will not be paid.

• Performance indicator (Table 1)
Position

Performance indicator

Percentage

Director

Consolidated return on
invested capital (ROIC)*3

100%*1 ROIC=(Operating Income + Interest and Dividend Income for the Fiscal Year Ending March 31, 2023) / (Average of Shareholders’ equity + Average of Interest-bearing Debt for
the Fiscal Year Ending March 31, 2023)• Calculation using the performance indicator (Table 2)
Performance indicator

FormulaUp to ROIC 2%

3.15% of basic compensationfor each percent of ROIC

ROIC greater than 2% and 9% or less

6.25% of basic compensationfor each percent of ROIC

Consolidated return on
invested capital (ROIC)• Total compensation, etc., for each classification of executives, and total compensation, etc.,
by compensation type and the number of eligible executives
Executiveclassification

Total
compensation, etc.
(million yen)

Director(except outside
directors)

Total compensation, etc. (million yen)

Number of
eligible
executives(persons)

Fixed
compensation

Profit-linked
compensation

Non-monetarycompensation, etc. of
the compensation at left

99

99

-

-

5

Corporate auditor(except outside
corporate auditors)

49

49

-

-

3

Outside officers

37

37

-

-

4

Total

186

186

-

-

12

(Note)
1. The above includes one director and one corporate auditor who resigned at the end of the 118th Annual Shareholders’ Meeting held on June 25, 2021.
2. The 107th Annual Shareholders’ Meeting held on June 25, 2010 passed a resolution to limit the annual compensation of a director to 630 million yen or less(excluding employee salaries) and to limit the annual compensation of a corporate auditor to 90 million yen or less.
3. The total compensation, etc. of directors does not include the employee salaries of the directors who are also employees.
4. The stock price-linked compensation of the directors during the terms of office is not included in the above compensation, etc., as the amount paid is notknown at the time of the preparation of this integrated report. Outside directors are not eligible for stock price-linked compensation.
5. The Board of Directors entrusts decisions regarding the monthly compensation of directors to the president. This is because president is deemed to be theright person to appraise directors’ performance while considering the company’s overall situation. Preliminarily, the Compensation Committee checks theappropriateness of the decisions entrusted to the president.
6. In addition to the above, five retired directors have been paid a stock price-linked compensation of 7 million yen during the terms of office.

Mitsui E&S Group Integrated Report44Foundations of Value Creation
Governance

GovernanceCompliance

Message from an Outside Director

We position compliance as one of our most important management issues. All of our executives and employees are aware of
the social responsibilities of the corporation and act in accordance with the Corporate Code of Conduct which was formulatedwith the goal of ensuring a a compliance-based perspective in all situations in our business activities. In this way, we live up to
the expectations and demands of many different stakeholders.

Compliance structure
We have a Group Compliance Committee
chaired by the Chief Compliance Officer
appointed from among the directors of
MES. The Committee is an organizationthat ensures that compliance measures
are sufficiently known throughout thecorporate group and that supervises thegroup for the compliance measures. The
Committee also monitors and raises
awareness regarding compliance withantitrust laws.
Based on the Group Compliance Management Regulations, the Group Compliance
Committee met twice in fiscal 2021 toexchange information in a cross-sectionalmanner throughout the corporate groupwith the goal of strengthening the compliance of the Company and its subsidiaries.

• Compliance system

Board Meeting
Management Meeting

President
Nominated fromamong the directors

Instruction

Accelerate historic structural reform
The whole company must unite andpush forward with efforts toachieve Mid-Term Business Plan 2023!
Outside Director

Toshikazu Tanaka

ReportChief Compliance Officer (CCO)

ReportReview of the implementation of the Business Revival Plan

Direction andsupervision

Direction and supervision

Group Compliance Committee
Compliance Officers (CO) of
Mitsui E&S Holdings Co., Ltd.
Mitsui E&S Machinery Co., Ltd.
Mitsui E&S Engineering Co., Ltd. etc.

LawyerDirection, supervision andinformation sharing

Picking up issues

Mitsui E&S
Holdings
Compliance
Committee

Mitsui E&S
MachineryCompliance
Committee

Mitsui E&S
Engineering
Compliance
Committee

Mitsui
E&S
Group
Directors

Mitsui E&S Group
Employees

OpinionGroup
Compliance
Secretariat(Auditing &Legal Dept.)

Reporting andconsultation(Helpline)

Auditing
Sect.,
Auditing& Legal
Dept.

AdviceSeminars andinformation
sharing

Investigation

Our shipbuilding business, which the Company was founded
to implement more than a century ago, declined structurally
as a result of the emergence of Korean and Chinese competitors characterized by their private-public cooperation. Worse,the successive and enormous losses of our engineeringbusiness endangered our continued existence as a corporation. In this predicament, we dramatically transformed ourbusiness portfolio and formulated and quickly implemented
the radical Business Revival Plan. Management decisions
were very fast and decisive.
The officer in charge led the implementation of theplan, uniting all of the departments and employees of theCompany through hard negotiations day and night, scrambling to explain the plan and enable people inside and outside the company to understand it. Enormous efforts havebeen made. In this process, all of the employees shared anawareness of the fundamental problems and the strategies

we should implement and worked together to carry themout. The results are significant and will benefit our future.
In the three-year period, we pushed through the bold selection and concentration of businesses by withdrawing fromshipbuilding, the business in which we started, as well asfrom engineering and other loss-making, non-core businesses. At the same time, we sold businesses valued at 120
billion yen to bolster our capital situation which was severe.
In my view, the plan is unrivaled in terms of both its content
and the speed of its implementation. This historic structuralreform helped us avoid an imminent crisis. In a true sense,
the evaluation of the plan depends on whether or not thegrowth strategy based on the structural reform succeeds inthe future. Becoming a stable, unshakable company andearning a reputation as such in society requires the continued work of the company’s management.

Regarding the evaluation of the effectiveness of the Board of Directors

Initiatives for encouraging compliance• Compliance with the Corporate Code of Conduct
Copies of the Corporate Code of Conduct are distributed to all executives and employees of the corporate group consisting of
Mitsui E&S Holdings and its domestic subsidiaries. Further, structurally we enable each employee to refer to guidebooks andexamples at any time in their work every day. The English version of the Corporate Code of Conduct is distributed to ouroverseas subsidiaries and, in accordance with the local situation, we talk with the presidents of the subsidiaries about theircompliance systems and the status of their implementation of compliance.

• Helpline (internal whistleblowing system)
In order to detect legal violations and other compliance issues at an early stage, we have established a helpline (internalreporting system) so that all executives and employees of the Company and its subsidiaries, as well as their business partners, may directly seek advice or report any issue. Based on our rules regarding the system for reporting compliance issues inaccordance with the Whistleblower Protection Act, we will respond appropriately in the event of any reports.

• Compliance training
We conduct compliance training for new employees andother Mitsui E&S Group’s employees, and provide employees of the Company and its subsidiaries with e-learning on
compliance. In this way, we continue education and awareness-raising activities for the executives and employees of
the Company and its subsidiaries.

45

Mitsui E&S Group Integrated Report• Number of employees who participated incompliance training
FY2017FY2018FY2019FY2020

FY2021

1,308

489

1,547

2,016

4,040

The portfolio reform corresponding our structural management difficulties was crucial, but the reinforcement ofgovernance was also the most important issue. To achievethis, we limited the number of directors and sought tosecure outside officers who would be able to provide constructive criticism to our top management. Currently, thenumber of directors has been reduced to seven (including
three outside directors) and we have a structure that enables
speedy decision making through the lively exchange of
opinions from a company-wide perspective. In particular,
handling problems related to an overseas project requiresthat the Board of Directors make decisions immediately
while construction is under way. Whenever a problem
occurred, we were able to make the right decision. Now, wehave both the Personel Advisory and Compensation Advisory
Committees, which improve the impartiality and transparency of the management of our business. These efforts toimprove our governance kept employees motivated andincreased the resilience of our corporate culture. At thesame time, we need to do more to address social issues
such as climate change and diversity.

Regarding the evaluation of and expectations for Mid-Term Business Plan 2023
Mid-Term Business Plan 2023 sets out an aggressive management plan to disrupt the persistent atmosphere ofstagnation and achieve dramatic growth. Our businessenvironment is characterized by the drastic change of society’s values as represented by AI and climate change. The
Mid-Term Business Plan is a touchstone for whether we will
be able to transform into a true market-in company
well-adapted to environmental change. The goals and strategy of the Mid-Term Business Plan are simple and reasonable. But our true development and sales capabilities will be
put to the test to achieve these goals. It is important for us

to accelerate our strategies in partnership with other companies and actively utilize M&A opportunities. To my understanding, many of our company members are serious-minded and highly skilled. But they seem to need to be a little
more aggressive. I think they need to cultivate a spirit oftaking on challenges to survive the drastic environmental
changes. Having come back from the bottom, we need tounite as company, achieve the Mid-Term Business Plan andstart over as a blue-chip company, living up to the expectations of people inside and outside the company. We expect
our executives and employees to do even more.

Mitsui E&S Group Integrated Report46

Foundations of Value Creation
Governance

Officers

April 1981
April 2014
April 2015
April 2016
April 2017
June 2017
April 2018
June 2018
April 2019
June 2019
November 2019
January 2020
April 2021
April 2022

Ryoichi Oka

Takeyuki Takahashi

Haruyuki Nagata

Yuichi Shiomi

Chairman,
Outside Director of MODEC, Inc.

President, Representative Director,
CEO, CCO*1 , and in charge of General
Control, Growth Business Promoting Dept.
and Auditing & Legal Dept.

Outside Director

Corporate Auditor

Joined the Company
Associate Executive Officer and General Manager of Technoservice
Dept., Machinery & Systems Hq.
Executive Officer
Deputy General Manager of Machinery & Systems Hq. (in charge ofindustrial machinery)
Managing Executive Officer and General Manager of Machinery &Systems Hq.
Director
President and Representative Director of Mitsui E&S MachineryCo., Ltd.
Retired from Director of the Company
President, COO, CISO and in charge of Corporate Planning Dept.
Representative Director in charge of Auditing Dept.
In charge of Engineering Business Management Dept.
CEOIn charge of Growth Business Promoting Dept.
Chairman (of the Board of Directors) (to date)Outside Director of MODEC, Inc. (to date)

April 1987
October 2007
June 2012
September 2015
October 2015
October 2016
February 2018
April 2018
April 2019
June 2019
June 2020
March 2021
April 2021
June 2021
November 2021
April 2022

Taketsune Matsumura

Keigo Matsubara

Vice President, Representative Director,
Assistant to President, CSO*2, CISO*3,
and in charge of Engineering Business
Management Dept. , Corporate Planning Dept.
and Human Resources & General Affairs Dept.
April 1991
April 2015
February 2018
March 2018
March 2019
June 2020
April 2022

Joined the Company
General Manager of Basic Design Dept., Ship & Ocean Project Hq.
General Manager of Strategic Planning Sect. of Corporate Planning
Dept., Corporate Planning Hq.
Director of MODEC, Inc.
General Manager of Corporate Planning Dept., the Company
Director, CISO and in charge of Corporate Planning Dept. (to date)
Vice President, Representative Director, Assistant to President,
CSO and in charge of Engineering Business Management Dept.
and Human Resources & General Affairs Dept. (to date)

Joined the Company
General Manager of Cranes & Systems Sales Dept., Steel Structure& Logistic Systems Hq.
General Manager of Cranes & Systems Sales Dept., Machinery &Systems Hq.
Manager of Corporate Planning Dept.
General Manager of Global Strategy Sect., Corporate Planning Dept.
General Manager of Strategic Planning Sect., Corporate Planning
Dept., Corporate Planning Hq.
Assistant to General Manger of Machinery & Systems Hq.
Executive Officer of Mitsui E&S Machinery Co., Ltd.
President and Representative Director of Mitsui E&S Machinery Co., Ltd.
Director of the Company
Retired from Director
Director of MODEC, Inc.
General Manager of Growth Business Promoting Dept.
and Human Resources & General Affairs Dept., the Company
Director, CCO and in charge of Auditing & Legal Dept. (to date)
In charge of Human Resources & General Affairs Dept.
Outside Director of MODEC, Inc.
President, Representative Director, CEO and in charge of General
Control and Growth Business Promoting Dept., the Company (to date)

April 1985
April 2011
April 2013
April 2015
April 2016
March 2018
April 2018
April 2019
June 2019
April 2021

June 2021
June 2022

Vice President, Representative Director,
Assistant to President, CFO*4,
and in charge of Finance & Accounting Dept.
and in charge of IR Dept.

April 1979
April 2007
April 2009
April 2011
April 2012
April 2015
June 2015
April 2017
April 2018
June 2018
March 2019
June 2019
January 2020

Joined Mitsui & Co.
Manager of Work Process Management Div. 1, Mitsui & Co.
General Manager of Finance Division, Mitsui & Co.
Manager of Accounting Division, Mitsui & Co.
Executive Officer and Assistant CFO of Mitsui & Co.
Senior Executive Officer and CFO of Mitsui & Co.
Representative Director, Senior Executive Officer and CFO of
Mitsui & Co.
Representative Director, Executive Managing Officer and CFO of
Mitsui & Co.
Director, Mitsui & Co.
Adviser, Mitsui & Co.
Adviser of the Company
Director, Vice President, Assistant to President, CFO and in chargeof Finance & Accounting Dept. and IR Dept. (to date)Representative Director (to date)Toshikazu Tanaka

Yoshio Haga

Outside Director

Outside Director

April 1985
June 2013
April 2014
April 2015
April 2016
March 2018
June 2019
March 2020
April 2020
April 2021
June 2021

Joined Mitsui Bank
General Manager of Financial Accounting Dept., Sumitomo Mitsui
Financial Group, Inc.
Executive Officer of Sumitomo Mitsui Banking Corporation
Managing Executive Officer of Sumitomo Mitsui Banking
Corporation
Managing Executive Officer of Sumitomo Mitsui Financial
Group, Inc.
Director and Managing Executive Officer of Sumitomo Mitsui
Banking Corporation
Director and Senior Managing Executive Officer of Sumitomo
Mitsui Banking Corporation
Senior Managing Corporate Executive Officer of Sumitomo Mitsui
Financial Group, Inc.
Director Senior Managing Executive Officer of Sumitomo Mitsui
Financial Group, Inc.
Retired from Director Senior Managing Executive Officer of
Sumitomo Mitsui Financial Group, Inc.
Retired from Director of Sumitomo Mitsui Banking Corporation
Retired from Senior Managing Executive Officer of Sumitomo
Mitsui Banking Corporation
President and Representative Director of Muromachi Co., Ltd. (to date)President and Representative Director of Muromachi Building Co.,
Ltd. (to date)Outside Director of the Company (to date)

April 1982
April 2010
May 2013
April 2014
April 2015
April 2017
June 2017
June 2019
April 2020
June 2020

Joined the Company
General Manager of Accounting Dept., Tamano WorksManager of Finance & Accounting Dept. and Export Control Dept.
Associate Executive Officer and General Manager of Financial
Affairs & Accounting Dept.
Executive Officer
Managing Executive Officer, CFO and in charge of IR Dept.
Director
President and Representative Director of Mitsui E&S Business
Service Co., Ltd.
Director of Mitsui E&S Business Service Co., Ltd. (to date)
Corporate Auditor of the Company (to date)

Shoichi Taguchi

Koichi Tanaka

Corporate Auditor

Outside Corporate Auditor

Joined the Company
General Manager of Machinery Factory, Machinery & Systems Hq.
Associate Executive Officer
Executive Officer
Managing Executive Officer, General Manager of Tamano Works andSpecial Mission by President (in charge of manufacturing)President and Representative Director of Mitsui E&S Business
Service Co., Ltd.
Director, CCO, and in charge of Human Resources & General
Affairs Dept. (to date) CISO, and in charge of Corporate Planning
Dept., Technical Co-ordination Dept., and Legal Dept.
Director of MODEC, Inc.
President and Representative Director of Mitsui E&S Business
Service Co., Ltd.
Director, and in charge of Auditing & Legal Dept., the Company
Corporate Auditor of the Company (to date)

April 1980
October 2003
April 2009
April 2010
April 2011
April 2012
June 2012
April 2014
April 2015
June 2015
June 2016
June 2018
June 2021

Joined Mitsui & Co., Ltd.
General Manager of Finance Division, Mitsui & Co., Ltd.
General Manager of Segment Controller Division, Mitsui & Co., Ltd.
Managing Officer and General Manager of Segment Controller
Division, Mitsui & Co., Ltd.
Managing Officer, Deputy CFO and General Manager of Segment
Controller Division, Mitsui & Co., Ltd.
Executive Managing Officer and CCO, Mitsui & Co., Ltd.
Representative Director, Executive Managing Officer and CCO,
Mitsui & Co., Ltd.
Representative Director, Senior Executive Managing Officer and
CCO, Mitsui & Co., Ltd.
Director, Mitsui & Co., Ltd.
Counselor, Mitsui & Co., Ltd. Outside Director of AIG Japan
Holdings KK
Outside Corporate Auditor (to date)Outside Corporate Auditor of Honda Trading Corporation (to date)
Retires from Outside Director of AIG Japan Holdings Kabushiki Kaisha.

Seiichi Ueno
Outside Corporate Auditor

April 1968
June 1999
June 2003
June 2004
June 2005
April 2007
June 2009
April 2014
June 2014
June 2015
June 2018
June 2020

47

Joined Toyo Koatsu Industries Co., Ltd. (Mitsui Toatsu Chemicals Inc.)
Director and General Manager of Phenols Division, Basic Chemicals
Business Sector of Mitsui Chemicals, Inc.
Managing Director and Deputy President of Basic Chemicals
Business Group of Mitsui Chemicals, Inc.
Basic Chemicals Business Group President of Mitsui Chemicals, Inc.
Vice President and Basic Chemicals Business Group President of
Mitsui Chemicals, Inc.
Responsible for Basic Chemicals Business Sector, Corporate
Planning Division, Group Management Division, Branch Offices andOverseas Subsidiaries & Affiliates of Mitsui Chemicals, Inc.
President of Mitsui Chemicals, Inc.
Director of Mitsui Chemicals, Inc.
Senior Advisor of Mitsui Chemicals, Inc.
Outside Director of the Company (to date)
Advisor of Mitsui Chemicals, Inc.
Honorary Advisor of Mitsui Chemicals, Inc. (to date)

Mitsui E&S Group Integrated Report

April 1974
July 1995
June 2002
June 2005
April 2006
June 2006
June 2007
May 2008
June 2008
April 2013
June 2014
June 2019
June 2020
June 2021

Joined Jujo Paper Co., Ltd.
General Manager of Pulp Production Dept., Ishinomaki Mill of Nippon
Paper Industries Co., Ltd.
Associative Director and General Manager of Komatsushima Mill of
Nippon Paper Industries Co., Ltd.
Director, General Manager of Corporate Planning Div. and Corporate
Planning Dept., Nippon Paper Industries Co., Ltd. Director of Nippon
Paper Group, Inc.
Managing Director and General Manager of Corporate Planning Div. of
Nippon Paper Industries Co., Ltd.
Director of Nippon Paper Group, Inc.
Director of Nippon Paper Group, Inc. and General Manager of Corporate
Planning Div. of Nippon Paper Group Co., Ltd.
Chairman of Japan Paper Association
President and Representative Director of Nippon Paper Group, Inc.
President and Representative Director of Nippon Paper Industries Co., Ltd.
President, Representative Director, and President Corporate Officer of
Nippon Paper Industries Co., Ltd.
Chairman and Representative Director of Nippon Paper Industries Co., Ltd.
Special Corporate Advisor of Nippon Paper Industries Co., Ltd.
Outside Director of the Company (to date)
Retired from Special Corporate Advisor of Nippon Paper Industries Co., Ltd.

April 1981
April 2007
April 2010
April 2012
May 2013
April 2014
June 2017
March 2020
June 2020

Joined Mitsui Bank
General Manager of Corporate Banking Dept. VI, Sumitomo Mitsui
Banking Corporation
Executive Officer and General Manager of Corporate Credit Dept.,
Sumitomo Mitsui Banking Corporation
Managing Executive Officer of Sumitomo Mitsui Banking Corporation
Managing Executive Officer and General Manager of Credit Control
Hq., Sumitomo Mitsui Card Company, Limited.
Senior Managing Executive Officer of Sumitomo Mitsui Card
Company, Limited.
Representative Director of Sumitomo Mitsui Card Company, Limited.
Retired from Representative Director of Sumitomo Mitsui Card
Company, Limited.
Outside Corporate Auditor (to date)
Retire from Senior Managing Executive Officer of Sumitomo Mitsui
Card Company, Limited.

*1 CCO:Chief Compliance Officer*2 CSO:Chief Strategy Officer*3 CISO:Chief Information Security Officer*4 CFO:Chief Financial Officer

Mitsui E&S Group Integrated Report48

Business Overview

Financial / Non-financial Highlights
Financial Highlights
New Orders

1200(Billions of Yen)

1,160.7

1000800

財務・非財務ハイライト
800
710.1

576.7

600

656.5

644.7

Net Income(Billions of Yen)

579.4

20

20

0

-20

0.1

-20

-10.1

-21.8

-40

400

2018/03

2019/032020/032021/03

Operating Income

2022/030(FY)(Billions of Yen)

40

20

20

0

0

-12.2

-10.0

2019/032020/032018/03-62.1

2019/032020/032021/032022/03

(FY)

-80

(FY)

-86.2
2018/03

2019/032020/032021/032022/03 (FY)

ROIC

(%)

-50.5
2018/03

2019/03-3.2

2020/032021/032022/03

(FY)

-30

-2.9

2019/03

2019/032020/032021/032022/03 (FY)(Billions of Yen)

255.3
204.6

173.9

164.5

150

142.4

50

-18.3
2018/032018/03

100

-12.0

-20

-77.0

200

-10

-60.5

-36.0

Interest-bearing Debt

250

0

-25.7

-100

300

0.4
-8.2

-34.9

-80

10

3.1

-60

-59.7

-69.6

20

-40

-60

2022/03(Billions of Yen)

-20

-40

2021/03

Ordinary Income

40

-5.2

2018/03

-4.1

-60

-80
-1,00

(%)

0.2

-40

-60
200

ROE (Return on Equity)

40

0

511.1

200

-80

703.2

786.5

600

400

-20

(Billions of Yen)

996.8

1000

0

Net Sales

2020/032021/032022/03 (FY)0

2018/03

2019/032020/032021/032022/03 (FY)Non-financial Highlights
Employees (Consolidated)

15,00013,421

13,607

13,408(People)Total energy consumption*1 ■ Fuel

(TJ)*3■ Electricity

1,500

12,703

1,395

1,360

10

1,270

1,000

5,000

2018/03

2019/032020/032021/032022/03(FY)

0

2018/03

2019/032020/032021/032022/03

Water consumption*1 ■ Industrial water

1,500

8.14

1,107

7.35

1,059

1,190

1,135

0

1,067

1,000

4.95

3.91
500

2

(FY)

(1,000 cubic meters)■ Service water

4

500

636
0

(10,000 t)

6

732

6,665

8.60

8

1,060
10,000CO2 emissions*1, 2459
2018/03

2019/032020/032021/032022/03 (FY)0

2018/03

2019/032020/032021/032022/03 (FY)

*1 Total energy consumption and CO2 emissions, Water consumption for former MES(Tamano Works, Chiba Works, Oita Factory) *2 CO2 emissions were calculated by following
the Guidelines for Calculating Corporate Greenhouse Gases Emissions issued by the Ministry of the Environment. CO2 emissions from electric power were calculated by using theadjusted CO2 emission coefficient for designated electric enterprises that was also published by the Ministry of the Environment. *3 TJ: Tera Joule (=1012J)

49

Mitsui E&S Group Integrated Report

Mitsui E&S Group Integrated Report50

Business Overview

Ship

Machinery
Main businesses

Main businesses

Manufacturing, sale, design, etc. of marine engines,
industrial machinery and port structures

Manufacturing, sales, design, engineering, repair, etc. ofvessels and other businesses

Main products and services

Main products and services

Marine and land engines, marine equipment, gas engines, steam
turbines, air blowers, compressors, gas turbines, cogeneration
facilities, process equipment, container cranes, industrial cranes,
container terminal management systems, remote control manipulators, radars for searching objects and structures buried underground,inductive heating devices and wave-making devices

Vessels, high-speed passenger ships, offshore structures, underwater equipment, design engineering
services, vessel-related devices and equipment andsteel structures

FY2021
topics• Mitsui E&S Shipbuilding has begun its fabless business leveraging its strengths in design and development after
transferring the naval ship and other businesses to Mitsubishi Heavy Industries, Ltd. and accepting funding from
Tsuneishi Shipbuilding Co., Ltd. (In October 2022 an additional 17% of shares were transferred to Tsuneishi
Shipbuilding and Mitsui E&S Shipbuilding became an equity method company)• Developed sales activities such as licensing designs and commissioned development and design of environmentallyfriendly vessels• Began vessel operations and maintenance support services using vessel DX technologies

FY2021
topics• One hundred and twenty large-sized marine engines (2.74 million horsepower) were delivered• Strong demand for Near Zero Emission (NZE) Transtainers® supporting zero emissions in the future• Following the approval of the machine-based inspection of social infrastructure, tunnel exploration vehicles

from the Mitsui E&S Group were chosen as device that could be used in these inspections• In the after-sales service business, sales of diesel components and domestic crane replacement

construction moved forward steadily.

FY2021 overview

FY2021 overview
Regarding general merchant ships, the chartered vessel
market, which includes container ships and bulk carriers, has
maintained high prices. However, both shipowners andshipyards are clearly taking a wait-and-see position as
materials and equipment prices have been rising since thelatter half of last year and Russia’s invasion of Ukraine has
increased economic uncertainty. Meanwhile, the movement
toward reducing environmental impact has not stagnatedand shipowners and shipyards are requesting discussion andconsideration of the introduction of vessels using new fuels.
Regarding businesses relating autonomous ships, theshortage of crew members in coastal shipping and the aging
of crew members are serious problems shaking the foundation of Japanese marine transportation. In fact, more than
70% of ocean accidents are attributed to human error.
Minimizing human error is vital in securing the safety ofmarine transportation. Further, the Ministry of Land, Infrastructure, Transport and Tourism released guidelines for thedesign of autonomous ships and the International Maritime
Organization (IMO) is more actively discussing rules forautonomous and automatically operated ships. The establishment of social systems for the actual implementation ofautonomous and automatically operated ships in society has
been progressing. Demand for these ships is expected to
grow in the near future.

Against this backdrop in the general merchant ship market,
the Mitsui E&S Group focuses on operational activities, suchas licensing its designs, developing environmentally friendly
ships and contracted design, utilizing the engineering capabilities we have accumulated over many years and working incooperation with domestic and international partners. In thisway, we are working to increase our revenue and contributeto society through energy engineering both domestically andglobally. We are also discussing vessel mediation and licensing (hull form development) with non-partner shipyards andreceiving orders to help our clients develop and design hull
forms.
For autonomous ships, we are promoting monitoring devices, ship operation devices and ship operation support devices for marine transportation companies. We have also
started promoting services supporting vessel operation andmaintenance using technologies for the DX of vessels,
though the amounts of orders are small. We are engaged inpioneering initiatives for the commercialization of autonomous ship operation devices designed to solve an important
challenge faced by the maritime industry, the improvementof vessel operations by increasing safety and labor reduction.
We are actively working to fully leverage our status as apioneer.

We delivered 120 marine engines totaling 2.74 million horsepower (a low figure) amid a severe business environment
defined by the impact of COVID-19, the rise of materials andequipment prices and other factors. Our plan is to deliver 137
marine engines totaling 2.88 million horsepower in the next
fiscal year, indicating recovery. In line with the trend toward
zero emissions, we will continue to be actively committed to
R&D and the reception of orders, and to respond to various
types of fuels such as LNG, methanol and ammonia.
Orders for cranes stagnated due to the impact of COVID which
continued from the previous fiscal year. For this reason, we
feared a possible decrease in crane operation. In actuality, we
have successively received large orders since the consolidated
cumulative second quarter and the number of new orders
received from overseas significantly rose YOY. The domestic
market has been less affected by COVID as we received
orders for the constructing or adding machines and systems
and renovating existing obsolete machines. There is steadydemand for the newly launched Near Zero Emissions Transtainer®, designed to decarbonize container yard cranes.
In industrial machinery, investment in petroleum refining wascurtailed, because of the trend toward decarbonization, andthis has added to the severe conditions in the environment forreceiving new orders for products such as reciprocating
compressors and axial compressors. On the other hand,process equipment performed steadily because of factors suchas domestic projects for medium- and small-scale renovationsof antiquated equipment. Going forward, we will build asystem encompassing the entire process from manufacturing
to after-sales service. At the same time, our efforts in hydrogen-related markets will accelerate and enable us to grow.
In the solution business, regular inspection guidelines havebeen revised to enable the use of next-generation inspection
technology (mechanization) as an alternative to the manual
inspection of roads, tunnels and bridges. It can be expected toresult in an increase in demand for our radar business, whichmakes products such as tunnel exploration vehicles. In addition
to robotics, we will focus on equipment-type machinery
including large wave-making devices and other hydraulicexperiment facilities, large-sized movable structures, particle
physics experiment equipment, and other machinery to expand
our businesses.
Regarding the LSS service, mainly including after-sales services (life-cycle solution services and the customer oriented
services), diesel components sold steadily while the conditions
surrounding industrial machinery will remain severe due to thecurtailment of investment, the partial discontinuation of blast
furnace operations and other reasons. Regarding cranes, there
was stagnation in overseas projects due to the impact of
COVID but domestic projects moved forward steadily thanks
to construction for replacement of existing cranes among otherfactors.

Achievements

Achievements

New orders received were 19.521 billion yen, down 18.283 billion yen (-48.4%) year on year. This was due to the low
number of new orders received for shipbuilding. Net sales were 28.088 billion yen, a 31.994 billion yen (- 53.3%) decrease
year on year, due to factors such as a decrease in orders for construction of new ships. Operating losses stood at 438
million yena, a 1.477 billion yen recovery from the previous fiscal year, mainly because of a decrease in unprofitable construction work.

New orders received were 148.769 billion yen, up 23.449 billion yen (+18.7%) YOY, as the COVID-induced curtailment ofinvestment is gradually being resolved in the different businesses we are engaged in. Mainly because of a decrease in the
shipment of marine engines following the drop in the number of orders received in the previous fiscal year, our net sales
stood at 153.736 billion yen, down 5.312 billion yen (-3.3%) YOY. Operating income was 8.156 billion yen, down 1.663
billion yen (-16.9%) YOY, due to factors such as a drop in net sales.

• Net Sales Composition• New Order(Billions of Yen)

• Net Sales(Billions of Yen)

• Operating Income (Billions of Yen)

• Net Sales Composition• New Order

60.1

4.9%

37.8

△0.4

28.1

19.5

125.3

(Billions of Yen)

• Net Sales(Billions of Yen)

• Operating Income (Billions of Yen)

148.8

159.0

153.7

9.8

2022/3 (FY)2021/32022/3 (FY)2021/3

8.2

26.5%

△1.9
2021/351

Mitsui E&S Group Integrated Report

2022/3(FY)

2021/32022/3(FY)

2021/32022/3 (FY)2021/32022/3(FY)

Mitsui E&S Group Integrated Report52

Business Overview

Ocean Development

Engineering

Main businesses

Main products and services
Power generation, overseas civil engineering andconstruction in general, etc.

EPCI (Engineering, Procurement, Construction andInstallation), sale, lease, charter, operation and maintenanceof floating offshore oil & gas production facilities

Main products and services
FPSO (Floating Production Storage and Offloading)system

FY2021
topics

FY2021 overview• Started charter services of FPSO for the Petrobras Sépia field off the coast of Brazil.
• An official agreement on FPSO for Equinor ASA’s Bacalhau field off the coast of Brazil went into effect• Converted from a consolidated subsidiary to an equity method affiliate due to the sale of some shares.

FY2021 overview
Although there have been some ups and downs dependingon the state of affairs at the time, crude oil prices recovered
to 80 USD per barrel at the beginning of 2022 as economic
activities gradually became normalized and expectations fora recovery of demand following progress in COVID vaccination increased. However, as a result of Russia’s invasion of
Ukraine in February, prices have risen to a level greater than
100 USD.

Following the decrease of equity, MODEC, Inc. and its
consolidated subsidiaries have changed to equity method
affiliates after the third quarter consolidated accounting
period.

Regarding businesses relating to the environment, all of theshares of BETSUKAI Biogas Power Generation and NishiIburi Environment we possesses were taken over by Mitsui
E&S Environment Engineering (hereinafter “MKE”), a consolidated subsidiary, on April 1, 2021 by means of andabsorption-type company split. After that, all of the shares of
MKE that we held were transferred to JFE Engineering
Corporation.

Achievements
New orders decreased 20.824 billion yen (- 92.6%) to 1.652 billion yen YOY, mainly due to the impact of the transfer ofsubsidiaries in the environment-related businesses in the previous fiscal year. Net sales were 7.629 billion yen, down
30.57 billion yen (- 80.0%) YOY, due to our having refrained from receiving new orders and a decrease in the number ofconsolidated subsidiaries. The operating loss was 10.81 billion yen, a worsening of 11.284 billion yen, due to the same
reasons mentioned above and a temporary increase in reserved foreign-currency-denominated costs resultant from theyear-end exchange rate, among other factors.

Meanwhile, the environment surrounding the ocean development business is changing significantly, such as decarbonization, continued popularization of renewable energy, andevolution of digital technology. Undertaking ocean development in the area of FPSO and others, MODEC, Inc. continually tries to secure profit in existing businesses by adapating
to such changes in the business environement and is alsosteadily developing future revenue sources such as floating
offshore wind turbines, seabed resource development, anddigital solutions businesses.

• Net Sales Composition• New OrderWith the recognition of orders, net sales, and operating income for this fiscal year was up to the consolidated cumulative
third quarter when MODEC, Inc. was a consolidated subsidiary, each year-on-year results are as follows: orders decreased
by 50.113 billion yen to 270.697 billion yen, net sales increased by 32.521 billion yen (+11.2%) to 323.322 billion yen, andoperating income improved by 13.696 billion yen to 8.086 billion yen of loss.
Equity method investment earnings related to MODEC, Inc. Group were 16.686 billion yen of loss as a result of a lower
profitability of construction work due to the COVID pandemic, additional costs to cover work delays, and the shutdown ofoperations and the repair costs of in-charter FPSOs.

320.8

270.7

• Net Sales
290.8(Billions of Yen)

• Operating Income (Billions of Yen)

△8.1

53

Mitsui E&S Group Integrated Report

2022/3 (FY)2021/32022/3 (FY)2021/32022/3

0.5

△10.8

7.6
2021/32022/3 (FY)2021/32022/3(FY)

Main products and services
Onshore diesel power plants, information and communications related equipment, systemdevelopment, gas-related engineering, specialized equipment for naval ships and aircraft

On a consolidated basis, new orders received were 70.4 billion yen, up 200 million yen YOY, while net sales amounted to
66.6 billion yen, down 30 billion yen YOY, due to factors such as a decrease in onshore diesel power plants and the transfer of a bridge operating subsidiary and other companies in the previous fiscal year. Operating income was 1.1 billion yen,remaining nearly unchanged from the previous fiscal year.
• Net Sales Composition• New Order(Billions of Yen)

70.3

70.4

2021/32022/3 (FY)• Net Sales(Billions of Yen)

96.6
66.6

• Operating Income (Billions of Yen)
1.2

1.1

11.5%

△21.8
2021/32022/3 (FY)

• Operating Income (Billions of Yen)

Achievements

323.3

55.8%

(Billions of Yen)

38.2

1.7

Others(Billions of Yen)

• Net Sales

1.3%

Achievements• New Order(Billions of Yen)

22.5

2021/3• Net Sales Composition

In overseas infrastructure, we are currently focusing on
unfailingly fulfilling two civil engineering and thermal power
plant construction projects in Indonesia. After the completion of the construction, we will withdraw from the businessand reallocate its resources to more promising businessesof the Mitsui E&S Group.

(FY)

2021/32022/3 (FY)2021/32022/3(FY)

Mitsui E&S Group Integrated Report

54

Data

11-Year Financial Performance(¥million)

2020/032021/032022/03

710,127

996,848576,668

511,089

703,216

656,504

786,477

644,686

579,363

8,304△ 5,224△ 59,703△ 62,079△ 12,243△ 10,029

15,07814,8593,061△ 50,502△ 60,457△ 8,223△ 25,742

9,463

7,599

12,194△ 10,137△ 69,599△ 86,210

134△ 21,825

14,49915,16729,802△ 7,843△ 3,555

66,176△ 37,213

7,478△ 20,265△ 12,100△ 37,312△ 32,385△ 34,599△ 28,753△ 9,046△ 130

84,125

21,115△ 70,923

25,07935,082△ 22,813△ 17,218△ 4,797△ 36,596△ 12,601

66,046

46,912

28,593△ 91,188

Financing Cash Flow (Loss)△ 32,415△ 4,793

15,531△ 4,374

48,216

19,401△ 14,813△ 53,340△ 26,825△ 6,813806

Cash and Cash Equivalents

72,007106,192

111,926

94,664

135,747

115,620

86,311

97,408116,691

135,482

50,818Net Assets

209,631207,313323,608347,305

343,853367,608

356,837

280,239

105,355

88,48062,949Total Assets

655,929

660,397

932,896

1,074,563

1,094,042

1,096,735

1,029,222

999,100

840,380759,029

409,150

Interest-bearing Debt*2

144,565

148,257

187,833

188,314

239,873

265,176

255,276

204,617173,934

164,531

142,374

EPS (Net Income per Share)

215.90△ 99.14517.98116.2694.03

150.87△ 125.42△ 861.09△ 1,066.47

1.67△ 269.94

BPS (Net Assets per Share)

2,191.74

2,122.39

2,666.42

2,928.59

2,904.80

3,097.79

2,958.83

1,973.91

796.36793.54706.06

Dividends per Share

4.0

3.0

2.0

2.0

4.0

3.0

-

-

-

-

-

Share Price at the year end*4

144

166

218

205

168

172

1,730

1,044

521

557

366

Shareholders’ Equity to Total Assets (%)

27.7

26.6

23.6

22.0

21.5

22.8

23.2

16.0

7.7

8.5

14.0

ROE (Return of Equity) (%)

10.3

△ 4.6

21.6

4.1

3.2

5.0

△ 4.1

△ 34.9△ 77.00.2△ 36.0D/E Ratio

0.8

0.8

0.9

0.8

1.0

1.1

1.1

1.3

2.7

2.6

2.5

2012/032013/03

2015/03

2016/032017/032018/03

New Orders Received

686,886

662,556

1,107,750

959,784

609,621516,577

1,160,662

Net Sales

571,852

577,093670,067

816,520805,413

731,464

Operating Income

31,42024,001

19,96913,298

11,813

Ordinary Income

32,345

26,162

26,17914,899Net Income*1

17,880△ 8,20742,854

Operating Cash Flow

13,56447,182

Investing Cash Flow (Loss)

11,515

Free Cash Flow

（FY）2014/03

2019/03

Financial Results

Cash Flow

Financial Position

Per Share Information*3

Key Financial Indicator*1 Profit (losses) attributable to owners of parent*2 Excluding lease liabilities*3 The Company consolidated shares on the basis of one new common share for every 10 common shares with an effective date of October 1, 2017. Shareprice shown in 2018 is of after the consolidation.

55

Mitsui E&S Group Integrated Report

Mitsui E&S Group Integrated Report

56

Data

Non-Financial Key Data
Environmental
Sources

The following data are from our major domestic works (Tamano Works, Oita Factory and Chiba Works).
Data from other sources are specified wherever applicable.

• Energy consumption and CO2
emissions
The data depicts change of our performanceover time in terms of the environmental
indicators of Mitsui E&S Holdings. Mitsui
E&S Shipbuilding’s Chiba Works was closed in
the end of March 2021. Mitsui E&S Shipbuilding’s Tamano Works was transferred to
Mitsubishi Heavy Industries, Ltd. on October
1, 2021. As can be seen from these actions,the reform of our business structure hascompressed our production system, which
has impacted us a great deal. These actions
combined with the replacement of lights withenergy-saving LED lighting led to a nearly
31% decrease of our total energy consumption in fiscal 2021 YOY. CO2 emissions werereduced nearly 21% YOY.

• Water consumption
The graph shows our consumption of service
water over the last five years. We use cleanwater (pure water) and industrial water(recycled water). We worked to conserve
water throughout fiscal 2021 and, as a result,
our total consumption of clean water andindustrial water dropped nearly 6% YOY.

• Amount of waste generated andwaste recycling rate
The illegal dumping of industrial waste has
become a major social issue and we doeverything to fulfill our responsibility as awaste generator. We rigorously control
manifests and visit waste disposers regularly
to conduct on-site inspections. More importantly, we are thoroughly committed to thesegregated collection and recycling of waste
to reduce the amount of waste. The graph to
the right shows the amounts of waste we
generated and our waste recycling rates overthe last five years and a breakdown of waste
in fiscal 2021. By changing our businessstructure, we worked to compress our
production system and reduce our generationof waste. As a result, we reduced waste
generation by nearly 44.9% YOY. At the sametime, advances in slag recycling achieved an
approx. 0.9% increase in the recycling rate,increasing it to 78.6%. We will stay committed to reducing the amount of waste we
generate and increasing the waste recycling
rate. Further, we will continue our rigorous
control to ensure the proper disposal ofwaste.

• Environmental management data
Investments and costs related to its environmental preservation efforts that MES spent
was 1,297.4 million yen in total. The environmental preservation cost categories are
based on the Environmental Conservation
Cost Categories in the Environmental Accounting Guidelines 2005.

57

Human capital

Mitsui E&S Group Integrated Report

Total energy consumption ■ Fuel ■ Electricity

Ratio of male employees to female employees and average years of service

Purchased electricity

1,395 1,360

150,000

1,270

115,923

1,060
1,000

121,901

65,06050,0002022/3 （FY）

2018/3 2019/3 2020/3 2021/3

2022/3(FY)*1 TJ: Tera Joule (=1012J)

2,346

People

3,493

3,373

3,315

2,848

2,178

％

92.8

92.7

92.3

93.6

92.8

Average years of service for men

Years

13.0

14.1

14.3

14.2

14.5

Female168

People

273

267

276

196

Percentages of female employees

％

7.2

7.3

7.7

6.4

7.2

Average years of service for women

Years

12.2

11.9

11.9

12.3

12.8

2023/03(10,000t)

8.60

8

6

8.14

4.95

4

5.27

5.39

7.35

6

Under 30

4

4.49

3.91
2

2018/3 2019/3 2020/3 2021/3

2022/3

0

(FY)

4.35

3.56

0.90

0.65

0.92

2020/32021/32022/330 - 39

Quantity (t)1,500

50,0001,107 1,059

1,190 1,135

1,067

40,0001,000

2018/3 2019/3 2020/3 2021/3(%)

2022/3(FY)

Scrap metal
52.7

0Invest- Cost
ment

80

13,60040
20

10,7002018/3 2019/3 2020/3 2021/3

2022/3Slag
14.7

Waste oil
8.6

Sludge Others
3.5
3.0

Waste wood
10.3

Waste plastic
3.8

Waste paper
and rag 3.3

Environmental preservation cost (= sum of investment and cost: 1,297 million yen)
Categories
corresponding
to business activities

100(JPY million)

Major initiatives and effects

1. Business Area Cost
31.9

66.3

(2) Global environmental
conservation cost

Exhaust gas measures, Wastewater treatment,
Soil contamination countermeasures, Noise countermeasures, etc.

12.2

54.7

Substitution to energy-saving equipment(3) Resource circulation cost-

5.7

Waste treatment

2. Upstream /downstream cost

-

-0.2

Green purchasing

44.0

Environmental management system implementation, Factory greening,
Integrated reports, Environmental education, and open space development, etc.

4. Research &development cost-of various
335.2 746.0 Development
environmentally friendly products

5. Social activity cost-

1.6

6. Environmental
remediation cost--

379.3 918.1

598

Number of men

People

1,183

1,037

963

790

547
91.5

Percentage of employees that are maleRoad cleaning, Activities of the Environmental Conservation Association,
Green donation, Seminar sponsorship, etc.

％

95.5

94.6

93.0

92.6

People

56

59

72

63

51

％

4.5

5.4

7.0

7.4

8.5
774

Total

People

1,121

1,139

1,182

1,036

Number of men

People

1,048

1,076

1,131

996

742

％

93.5

94.5

95.7

96.1

95.9

Percentage of employees that are male

People

73

63

51

40

32

％

6.5

5.5

4.3

3.9

4.1

Total

People

906

880

850

727

572

Number of men

People

830

810

777

674

525

％

91.6

92.0

91.4

92.7

91.8

Percentage of employees that are male

People

76

70

73

53

47

％

8.4

8.0

8.6

7.3

8.2

Total

People

500

525

524

428

402

Number of men

People

432

450

444

388

364

％

86.4

85.7

84.7

90.7

90.5

Percentage of employees that are male
Number of women
Percentages of female employees

People

68

75

80

40

38

％

13.6

14.3

15.3

9.3

9.5

Number of new graduate recruits Source: Two companies including Mitsui E&S Machinery and Mitsui E&S Business Service
Scope

Unit

2019/32020/32021/32022/32023/3People

82

82

116

69

48

Male

People

74

72

103

63

45

FemalePeople

8

10

13

6

3

％

9.8

12.2

11.2

8.7

6.3

7

19

20

9

2

3

9

9

4

0

％

42.9

47.4

45.0

44.4

0.0

People

50

31

50

33

31

People

3

0

3

1

1

Percentage of engineer recruits that are women

％

6.0

0.0

6.0

3.0

3.2

Number of administrative staff / engineer recruits

People

57

50

70

42

33

6

9

12

5

1

10.5

18.0

17.1

11.9

3.0

3

6

17

7

7

5.3

12.0

24.3

16.7

21.2

0

(FY)

(1) Pollution prevention cost

3. Administration cost

50 - 59

60

10,000459

853

Number of women

24,60020,000500

2022/03

1,035

Percentages of female employees

78.6

36,60030,000

Breakdown of waste

40 - 49

Recycle rate (%)

29,700 28,100

2021/03

1,096

Percentages of female employees■ Recycled amount ■ Disposed amount(1,000 cubic meters)

2020/03

1,239

Number of women(FY)

Total waste amount and recycle rate

■ Service water ■ Industrial water

2019/03

PeoplePercentages of female employees*2 CO 2 emissions were calculated by following the Guidelines for Calculating Corporate Greenhouse Gases Emissions issued by the
Ministry of the Environment. CO 2 emissions from electric power were calculated by using the adjusted CO 2 emission coefficient for
designated electric enterprises that was also published by the Ministry of the Environment.
*3 Emissions from each business site related to the machinery business of the Company and major domestic group companies.
Scope1:Direct emissions from combustion of fuel, etc. Scope2：Indirect emissions from use of electricity, etc.

Water consumption

Unit
Total

Number of women

4.21

2

Total

2023/03

3,044

Scope1 and 2 emissions from the Machinery businesshave been calculated*3(10,000t)

02022/03

3,591

Ratio of men to women by age group

Domestic main factories

02021/033,640

CO2 emissions*2 ■ Scope1 ■ Scope2

CO2 emissions*2

102020/03

3,766

Percentage of employees that are male636
2018/3 2019/3 2020/3 2021/3

2019/03

Male

99,2720

Unit
PeopleNumber of employees

116,787

100,000

732

500

0

The following data are from five companies: Mitsui E&S Holdings, Mitsui E&S Shipbuilding, Mitsui E&S Machinery, Mitsui E&S Engineering and Mitsui E&S
Business Service. Data from other sources are specified wherever applicable.

(10,000t)(TJ)*1

1,500

SourcesNumber of employees

Ratio of female hires
Number of administrative staff recruits
Number of administrative staff recruits
that are women
Percentage of administrative staff recruits
that are women
Number of engineer recruits
Number of engineer recruits that are women

NonPeople
consolidated/
all job types People

Number of administrative staff / engineer recruits
PeopleNonthat are womenconsolidated/
Percentage of administrative staff / engineer recruits％
that are womenadministrative/
Number of administrative staff / engineer recruits
technical staff
Peoplethat are non-Japanese
Percentage of administrative staff / engineer recruits％
that are non-Japanese

Mitsui E&S Group Integrated Report

58

Data

Non-Financial Key Data
Number of mid-career recruits

Total number of training session attendees and duration of session
Unit

2018/03

2019/032020/032021/032022/03Unit

2018/03

2019/032020/032021/032022/03

Male

People

37

36

69

38

20

FemalePeople

17

18

16

9

4

Number of attendees People

274

184

155

225

141

Total

People

54

54

85

47

24

Hours

10,688

7,644

6,768

9,544

3,736

Number of attendees People91

Not held

Not held

Not held

Mitsui E&S
Shipbuilding

Mitsui E&S
Machinery

Mitsui E&S
Engineering

Mitsui E&S
Business
Service

Total

Unit

2018/03

2019/032020/032021/032022/03

Number of workers used to calculate the statutory
number of employment of people with disabilities

People

185.5

176.5

169

49

49

Number of employees

People

2

2

2

1

1

Employment ratio

％

1.08

1.13

1.18

2.04

2.04

Number of workers used to calculate the statutory
number of employment of people with disabilities

People1,616

1,488.5

1,436

918

174

Number of employees

People

36

28

30

21

4

％

2.23

1.88

2.09

2.29

2.30

Number of workers used to calculate the statutory
number of employment of people with disabilities

People2,021

2,012.5

2,112.5

2,180

2,145

Number of employees

People

46

46

48

50

44

％

2.28

2.29

2.27

2.29

2.05

Number of workers used to calculate the statutory
number of employment of people with disabilities

People

449

293

104

50

38.5

Number of employees

PeopleEmployment ratio

Employment ratio

6

7

3

2

1

％

1.34

2.39

2.88

4.00

2.60

Number of workers used to calculate the statutory
number of employment of people with disabilities

People

103.5

134.5

91

100.5

112.5

Number of employees

PeopleEmployment ratio

2

3

1

1

1

％

1.93

2.23

1.10

1.00

0.89

Number of workers used to calculate the statutory
number of employment of people with disabilities

People

4,375

4,105

3,912.5

3,297.5

2,519

Number of employees

People

92

86

84

75

51

％

2.10

2.10

2.15

2.27

2.02

Employment ratio

Employment ratio

Monthly average overtime hours
Monthly average overtime hours

Duration

Basic management andteam building training

Number and percentage of employees with disabilities

Mitsui E&S
Holdings

Introductory training for
new employees

Unit

2018/03

2019/032020/032021/032022/03

Hours

24.8

26.1

26.7

21.6

21.0

Duration

103

Hours

2,321

Number of attendees People

23

68

77

52

53

Duration

Hours

552

3,264

3,696

1,664

1,696

Number of attendees People

18

36

48

36

30

Hours

1,584

3,744

4,992

3,744

2,640

Number of attendees People

16

-

16

-

10

Hours

1,408

-

1,792

-

1,040

Number of attendees People

41

94

150

54

208

Duration

574

1,316

2,128

758

3,016

Unit

2018/03

2019/032020/032021/032022/03

Number of attendees

People

238

106

297

151

234

Number of courses

courses

14

16

17

12

17

Number of attendees

People

179

153

138

177

135

Section management
training
Department manager
candidate training

Duration

Senior management
training (biennial)

Duration

Business skills training
Marketing fundamentals
Strategic planning
Strategic negotiation skills
Problem solving an decision making
Leadership
Global communication training

Hours

1,648

Technical training

Lecture-type technical training
e-learning(technical and skill
improvement courses)*Except managerial-level employees

Average number of annual paid leave days used
Average number of annual paid leave days used

Unit

2018/03

2019/032020/032021/032022/03

Days

16.9

17.4

17.9

19.2

18.2

2022/03*Except managerial-level employees

Frequency rate of lost-worktime accidents
Unit

2018/03

2019/032020/032021/03

Mitsui E&S Group

%

0.68

0.22

0.24

0.3

0.15

Manufacturers*1

%

1.02

1.20

1.20

1.21

1.31

The Shipbuilders’ Association of Japan*2

%

1.02

0.86

1.00

1.13

0.80

*1 Occupational accident statistics of Japan Advanced Information Center of Safety and Health*2 Statistic data from The Shipbuilders’ Association of Japan

Number of employees taking childcare leave
Unit

2018/03

2019/032020/032021/032022/03

Male

People

2

2

3

5

14

FemalePeople

15

19

22

8

19

Number of employees taking caregiving leave and volunteering leave

59

Unit

2018/03

2019/032020/032021/032022/03

Male

People

0

6

2

2

3

FemalePeople

1

0

1

2

1

Mitsui E&S Group Integrated Report

Mitsui E&S Group Integrated Report

60

Data

Company Profile (As of March 31, 2022)

Offices and Works

Company Name

Mitsui E&S Holdings Co., Ltd.

Number of shares authorized to be issued

150,000,000 Shares

Head Office Location

6-4, Tsukiji 5-Chome, Chuo-ku,
Tokyo 104-8439, Japan

Number of outstanding shares

83,098,717 Shares

Founded in

November 14, 1917

Number of shareholders

53,625

Established inJuly 31, 1937

Employees

6,665 (Consolidated)

Capital¥44,385 million

Domestic

Holdings

MachineryBusiness Service

Kansai OfficeOsaka Office
Kobe Office*Decreased capital to 2 billion yen on June 30, 2022.

Tamano General Office
Tamano Machinery Factory
Tamano Office

Stock and Bonds

Chiba Office

Okayama Office

Shareholding situation by each category of shareholders

Chiba General Office
Chiba Office

Oita General Office
Oita Works
Kyushu Office

The total number of shareholders: 52,318
Number ofshareholders

Number of
Shares Held

Shareholding
Ratio (%)

Financial institutions

42

20,233,719

24.3

Stock companies

60

2,228,556

2.7

Corporations other than financial
institutions or stock companies

374

10,020,023

12.1

Foreign nationals

267

17,615,638

21.2

Individuals, etc.

51,57533,000,781

39.7

Individuals,
etc.

Financial
institutions

39.7%

Chubu Office(Nagoya)
Nagoya Office24.3%

Keihin OfficeStockcompanies

Shareholding
situation byeach categoryof shareholders

Foreignnationals
21.2%

Head Office
Tokyo Office

2.7%

Overseas

Corporations
other than financial
institutions or
stock companies

11.9%

Holdings

MachineryEngineering●Mitsui E&S Machinery Europe Limited●TGE Marine Gas Engineering GmbH
●Burmeister & Wain Scandinavian Contractor A/S●Mitsuizosen Technoservice Hongkong Ltd.
●Mitsui E&S (CHINA) CO., LTD.
●MES Ferrotec China Co., Ltd.
●MES Technoservice (Shanghai) Co., Ltd.

Major 10 shareholders
Number of Shares’ Held(Thousand Shares)

Shareholding
Ratio (%)

The Master Trust Bank of Japan, Ltd. (Trust Account)

8,807

10.89

BBH FOR FIDELITY LOW-PRICED STOCK FUND
（PRINCIPAL ALL SECTOR SUBPORTFOLIO）

2,986

3.69

Imabari Shipbuilding Co., Ltd.

2,900

3.58

Custody Bank of Japan, Ltd. (Trust Account)

2,646

3.27

Mitsui & Co., Ltd.

2,550

3.15

BNP PARIBAS SECURITIES SERVICES LUXEMBOURG/JASDEC/ACCT BP2SDUBLIN CLIENTS-AIFM

2,348

2.90

2,331

2.88

1,893

2.34

Name

Custody Bank of Japan, Ltd.

(Trust Account for the retirement allowance for
Sumitomo Mitsui Trust Bank, Limited)

CITIBANK HONG KONG PBG CLIENTS H.K.
TAIJU LIFE INSURANCE COMPANY LIMITED
Sumitomo Mitsui Banking Corporation

1,600
1,364

1.97
1.68

Notes:
1. The Company owns 2,239,251 shares of treasury stock which is excluded from the major shareholders listed above. The treasury stock includes 400 shares that are not actually owned by the Company, although
they are in the name of the Company on the shareholder registry.
2. The shareholding ratio is calculated excluding treasury stock.
3. Company shares held by Custody Bank of Japan, Ltd. (Sumitomo Mitsui Trust Bank, Ltd. Retirement Benefit Trust Account) are the retirement benefit trust assets
entrusted by Sumitomo Mitsui Trust Bank, Limited.

61

Mitsui E&S Group Integrated Report●MES Technoservice
Machinery Construction
Logistics Industry andTrade Corporation●PACECO Corp.

●MES Technoservice
Middle East W.L.L●Mitsuizosen Technoservice Taiwan Co., Ltd.
●DASH ENGINEERING PHILIPPINES, INC.

●Jakarta Representative Oﬃce
●MES Technoservice Malaysia Sdn Bhd●MITSUI E&S ASIA PTE. LTD.
●AZUMA Engineering (S) Pte Ltd.

Major group company
Mitsui E&S Machinery Co., Ltd.
Mitsui E&S Power Systems Co., Ltd.

MES Ferrotec China Co., Ltd.

MES Technoservice Middle East W.L.L

MITSUI MEEHANITE METAL CO.,LTD.

MES Technoservice (Shanghai) Co., Ltd.

MES Technoservice Machinery Construction

SANZO MANUFACTURING & CONSTRUCTION CO. LTD.

PACECO Corp.

Logistics Industry and Trade Corporation

Mitsui E&S Technical Research Co., Ltd.

Mitsuizosen Technoservice Hongkong Ltd.

MES Technoservice Malaysia Sdn. Bhd.

AZUMA MACHINERY CO.,LTD.

MITSUI E&S ASIA PTE. LTD.

Mitsui E&S Machinery Europe Limited

Mitsuizosen Technoservice Taiwan Co., Ltd.

Mitsui E&S Engineering Co., Ltd.
Mitsui E&S Business Service Co., Ltd.
Mitsui E&S Systems Research Inc.
KAJl TECHNOLOGY CORPORATION

Akishima Laboratories (Mitsui Zosen) Inc.
MES TOKKI & ENGINEERING CO., LTD.
Burmeister & Wain Scandinavian Contractor A/S
Mitsui E&S（CHINA）CO., LTD.

DASH ENGINEERING PHILIPPINES, INC.
TGE Marine Gas Engineering GmbH

Mitsui E&S Group Integrated Report62Mitsui E&S Holdings Co., Ltd.

6-4, Tsukiji 5-chome, Chuo-ku, Tokyo 104-8439, Japan

www.mes.co.jp/english/