Sustained
Growth throughValue Creation
INTEGRATED REPORT 2022

Since 1889

The Kanematsu Group’s Origins

Fusajiro Kanematsu
1845–1913“Creating Shared Value”
The aspiration of founder Fusajiro Kanematsu
lives on today as the core heritage of Kanematsu.
In 1889, Fusajiro Kanematsu founded Kanematsu. Over the 133 years since its beginnings as an importer ofwool from Australia, the Company has expanded into diverse fields spanning fibers to steel, machinery,food, energy, and electronics, growing into a general trading company. Kanematsu has flexibly adapted tochanges in international society and the economic environment over the decades, overcoming numerous
obstacles and transforming itself. While the Group continues to change and evolve, the entrepreneurial
spirit valued by our founder and his aspiration to contribute to international society live on in the
Kanematsu Group today.

Corporate Principle“Let us sow and nurture the seeds of global prosperity”“Sow a seed now,” and take action to benefit people around the globe, bade our founder, Fusajiro Kanematsu,
setting a standard of public duty that we at Kanematsu continue to uphold through a commitment to ethicalbusiness principles and corporate responsibility.
The beliefs and philosophies that inspired Fusajiro Kanematsu in the late nineteenth century Meiji
period, a time when Japan was striving to build a national economy, were encapsulated in the document Our
Beliefs: Kanematsu’s Guiding Principles in 1967, on the occasion of our merger with The Gosho Company.

Our Beliefs: Kanematsu’s Guiding Principles
1.	Reflecting the pioneering spirit of our predecessors, we believe that fairness and justice should guide ourbusiness dealings and the wise use of creative imagination and ingenuity will bring prosperity.
2.	Our purpose as a Company is not only to build a sound and flourishing business, but to fulfill our
responsibilities as a corporate citizen, contributing to society and the security and well-being of all.
3. 	As members of a corporation, we act not as individuals but as representatives of that organization and assuch we are bound by Company rules and attendant loyalties and must work together with a spirit ofcooperation while cultivating mutual understanding and respect for fellow members.

From Kanematsu’s Origins to the Present

The Sayings of Fusajiro Kanematsu

Let Us Sow and Nurture the Seeds of Prosperity
for Japan

Statement of founding purpose,
written by Fusajiro Kanematsu

From Kanematsu’s Present to the FutureThis was part of Fusajiro Kanematsu’s founding purpose statement in 1889 andis part of our Corporate Principle today. It expresses the aim of contributing tosociety by building businesses and, in a modern context, of taking action toenrich the lives and well-being of people not only in Japan, but around theworld. This idea is highly compatible with the spirit of the Sustainable
Development Goals (SDGs) and aligns with the concept of creating sharedvalue for society by solving social issues through corporate business activities.

Belief in the Value of Work

Kobe Head Office shortly
after founding

Kanematsu’s FutureThis phrase expresses the idea that labor becomes meaningless if the individual
becomes too focused on their compensation and loses their passion for thework, and that focusing first and foremost on the work itself is essential.
Fusajiro Kanematsu’s fundamental spirit was to take interest in and enjoy thework, rather than simply laboring to make money. If one gives one’s all andenjoys the work, profit will eventually follow—this idea is compatible with aspirit of altruism and the SDGs.

Profit Is Just a By-Product of BusinessInvoice for the first Australianwool shipment, handwritten by
Fusajiro Kanematsu

Kanematsu’s Foundations

This saying expresses the idea that conducting business in an upstanding manner for the common good is more important than pursuing profit, and that one
should engage in businesses that result in profit naturally; it can also be taken
as a warning against business practices that go too far to force a profit. This
guidance against thinking that any kind of business practice is acceptable aslong as it is profitable ties into modern ideas of compliance and corporate governance and is fundamental to sustainable business and corporate activity.

Customers Come FirstThe principle of putting customers first is a traditional and fundamental attitude of Osaka merchants. In the late 19th century, however, the decadent
trade practices of foreign settlements had also taken root. As an intermediaryin product trading, Fusajiro Kanematsu stressed the importance of returning toa stance of dealing with both buyers and sellers with honesty. In teaching his
employees and associates, he often repeated the importance of treating customers with respect and honesty, saying that without customers, there could
be no Kanematsu Shoten. This focus on honesty and integrity is alive in the
Kanematsu Group’s people today.

Sydney Branch in 1891

KANEMATSU Integrated Report 2022

1

Editorial Policy, Contents

On the Publication of the Kanematsu Integrated Report 2022

In this integrated report for fiscal 2022, we lay out our enterprise value enhancement story,
beginning with the spirit of creating shared value (CSV) handed down since our founding, toillustrate the strengths and features of the Kanematsu Group today and draw a concreteroadmap toward our vision for the future.
In terms of looking toward the future, the report mainly focuses on the near future,
particularly progress under our future 135 medium-term vision, which will end in March 2024,
laying out our specific growth strategies and the challenges we face in both financial and nonfinancial areas over the medium to long term.
In preparing this report, we referenced the IFRS Foundation’s International Integrated
Reporting Framework and the Ministry of Economy, Trade and Industry’s Guidance forCollaborative Value Creation, with departments across the Company cooperating to ensure aproper editing process and the appropriateness of the report’s content.
The Kanematsu Group will continue to use its Integrated Report as a tool for dialogue
with shareholders, investors, and other stakeholders, working to enhance disclosure andincrease enterprise value.

Present

Shuji Masutani
Director, Executive Officer,
Chief Officer, Finance (PR & IR),
Accounting, Business Accounting

FutureKanematsu’s strengths and features• Scale (financial/non-financial)• Strengths • Position • External evaluations

Sustainability-oriented management for the future• Key issues (materiality) • Human resource strategy• Corporate governanceValue creation roadmap

Aiming for sustainable growth• Value creation process, medium-term vision, and special
features• Business Segments

Message from the President
Origins and Corporate Principle / Past

Message from the CFO

The development of CSV
since our founding
Kanematsu’s history• Since our founding• The medium-term plans since restructuring

FuturePresent• Kanematsu’s value creation (vision)• Roadmap

Kanematsu today
Past
Origins• Strengths• Features• History

Corporate Principle and Purpose

2

Editorial Policy

Forward-Looking Statements

Scope of Report

The content of the Kanematsu Group’s integrated
reports is based on an integrated reporting approachthat references the International Integrated
Reporting Framework of the IFRS Foundation, theGuidance for Collaborative Value Creation of the
Ministry of Economy, Trade andIndustry, and ISO 26000. We hopethat the report will help readersdeepen their understanding of theKanematsu Group.

This integrated report contains statements
regarding the Kanematsu Group’s plans,
strategies, and expectations for future performance. Such statements are inherently
subject to risk and uncertainty. Actual
results could diverge materially from theGroup’s projections due to changes in theeconomic and market environment surrounding the Group’s business areas, suchas exchange rate fluctuation.

Published:
Period covered:

KANEMATSU Integrated Report 2022

August 2022
April 1, 2021 to March 31, 2022 (fiscal
2022) (Includes some information about
events outside the period covered)
Scope of coverage:
Kanematsu Corporation and theKanematsu GroupAccounting standards: JGAAP for the year ended March 2014
and earlier and IRFS for the year ended
March 2015 and after, unlessotherwise notedFrom Kanematsu’s Origins to the Present

Contents

From Kanematsu’s Origins to the Present
The Kanematsu Group’s Origins

2 Editorial Policy and Contents

Past

Origins

Present

FutureKanematsu’s Disclosure

Corporate Principle and Purpose

4 The Kanematsu Group’s History

Non-financial
information

6 Review of the Medium-Term Visions
7

Pursuing Business Opportunities and Addressing Risks Leveraging
Four Strengths

Financialinformation

Corporate website

https://www.kanematsu.co.jp/en/

8 Value Creation Process

From Kanematsu’s Present to the Future
12 Message from the President
18 Message from the CFO

Past

Origins

Present

FutureCorporate Principle and Purpose

Kanematsu’s Future• Environmental
Report• Corporate
Governance
Report (Japanese
only)• Integrated
Report• Corporate Profile• Shareholder
Newsletter(Japanese only)

From Kanematsu’s Present to the Future

10 Business Model and Business Development• Financial Statements /Quarterly Reports• Financial Summary• Financial Highlights/
Supplementary Materials• Financial Overview(briefing presentationmaterials)

IR Disclosure

20 future 135 Medium-Term Vision
22 Special Feature 1: Dialogue on Realizing Innovation Investment
26 Special Feature 2: Promoting Digital Transformation (DX)
28 Special Feature 3: Promoting Green
Past

Origins

Present

Kanematsu’s Future

Transformation (GX)The Kanematsu Group strives to ensure transparency and foster
dialogue through prompt, accurate, and fair disclosure to all
stakeholders.

• General Meeting of Shareholders (once a year)
FutureCorporate Principle and Purpose• Financial Results Briefing (twice a year)• Meetings of institutional investors and analysts with thepresident and/or CFO

Kanematsu’s Foundations
30 Sustainability
30 Message from the Chair of the Sustainability
Management Committee

32 The Key Issues and Our Activities/

36 Addressing the Five Key Issues
64 Business Segments
66 Electronics & Devices

Kanematsu’s Foundations

The Process of Identifying Key Issues

34 Progress on Key Issues

36 Supply Chain Management
38 TCFD
40 Social Contribution
41 Human Resources Strategy
48	Roundtable Discussion with the
Chairman and Outside Directors
51	Message from the Newest
Outside Director
52 Corporate Governance
62 Corporate Officers

68 Foods
70 Meat Products
72 Grain, Oilseeds & Feedstuff
74 Steel, Materials & Plant
76 Motor Vehicles & Aerospace

Origins

Past

Present

FutureCorporate Principle and Purpose

78 Financial and ESG Highlights
80 Management’s Discussion and Analysis
82 Major Group Companies
83 Corporate Profile

Origins

Past

Present

FutureCorporate Principle and Purpose

KANEMATSU Integrated Report 2022

3

The Kanematsu Group’s History

In the 2000s, we focused on shrinking interest-bearing debt and improving our financial position to achieve
stability. Having done so, under the future 135 medium-term vision established 2018, we have aimed at becoming
a unique trading company, pushing toward new heights.

1889 –1950s

1960s –1980s

1990s–2000s

Founding

Development into a general trading company

Restructuring

Guided by Kanematsu’s founder, a pioneer in trade between Japan andAustralia, Kanematsu weathered financial panics and built a solid foundation.
Eventually, the Company expanded to
the United States and other countries.

Kanematsu grows larger, diversifying
functions as a trading company andexpanding geographically.

Following the expansion and collapse of Japan’s
economic bubble and the Asian Financial Crisis,
Kanematsu carried out decisive business selection
and concentration aimed at reinforcing its management framework. The Company also worked
to improve and strengthen its financial base.

1889

Fusajiro Kanematsu Shotenof Australian Trading
founded by Fusajiro
Kanematsu in Kobe

1890

Branch opened in Sydney
Direct importing of Australianwool began

1918

Company name changed toKanematsu Shoten Company

1935

Kanematsu Wool ResearchInstitute established (now
KANEYO Co., Ltd.)

1936

1989

1973

1990

Merged with the Gosho Company to form
Kanematsu-Gosho, Ltd.

100th anniversary of the Company’s
founding
Company name changed toKanematsu Corporation

Listed on the first section of theTokyo Stock ExchangeElectronics & Devices

1968

Kanematsu Denshi Service Ltd. established(now Kanematsu Electronics Ltd.)

1972

1943

1978

Kanematsu Kinzoku Hanbai Co., Ltd.
established (now Kanematsu Advanced
Materials Corp.)

Kanematsu Semiconductor Corporation estab- 1982
lished (now Kanematsu Futuretech Solutions
Nippon Office Systems Ltd. established
Corporation)
Pacific Western Systems Japan estab1974
lished (now Kanematsu PWS Ltd.)
Kanematsu Computer Systems Ltd. estab-Company name changed toKanematsu Corporation
Overseas affiliate establishedin New York, the first overseas office established by aJapanese trading company
after World War II

Kanematsu Hiryo Co., Ltd established (nowKanematsu Agritec Co., Ltd.)

Kanematsu Yuso Co., Ltd. established1977

Kaneshoku Corporation established(now Kanematsu Foods Corp.)

1960
1967

Kanematsu Kaseihin Co., Ltd established(now Kanematsu Chemicals Corp.)

Acquired a controlling interest in Fine Kuroda
Services Corp., renaming it Kanematsu Gosho
Machine Tool Sales Corp. (now Kanematsu
KGK Corp.)

1995

Kanematsu Sekiyu Hanbai Corp.
established (now Kanematsu
Petroleum Corp.)

1999

Carried out large-scale businessselection and concentration

Acquired a majority stake in
Shintoa Corp.
(100% stake acquired in 2010)

2012

1970

Kanematsu Kenzai Corporation established (now Kanematsu Trading Corp.)

Kanematsu Sekiyu Gasu Corp. established (nowKanematsu Petroleum Corp.)

Kanematsu Computer Systems Ltd.
began mobile phone sales(now Kanematsu Communications
Ltd.)

Kanematsu Electronics Ltd. becamea subsidiary

Steel, Materials & Plant

1959

Kanematsu Electronics Ltd. listedon the first section of the Tokyo
Stock Exchange

2005

Foods, Meat & Grain

1954

1991

1993

lished (now Kanematsu Communications Ltd.)

Branches opened in New Yorkand Seattle

1951

1967

1974

Acquired North American steel tubing company Benoit Machine LLC(now Benoit Premium Threading,
LLC)

1985

Began trading with Steel Service
Oilfield Tubular, Inc.

Motor Vehicles & Aerospace1985 Kanematsu Aerospace Corp. established
Major examples of social contribution and management oriented around creating shared value

1919 Donation and endowment to what has growninto the Kobe University Research Institute for
Economics and Business Administration(Kanematsu Memorial Hall)

4

KANEMATSU Integrated Report 2022

1927 Construction and endowment of
the Hitotsubashi University
Kanematsu Auditorium

1929 Endowment of construction funds

for the Sydney Hospital Kanematsu
Memorial Institute of Pathology

From Kanematsu’s Origins to the Present

2013–

Aggressive management
Shift toward aggressive management through M&A in highly specialized fields and business expansion
April 2013–March 2016

April 2018–March 2024

“VISION-130”– future 135 –• Took a positive stance to enable rapid
progress and to establish a solid growth
track in preparation for the 125th
anniversary.
• Development of VISION-130 coinciding
with the resumption of dividends• Approaching the 130th anniversary of the founding of
Kanematsu, we returned to our beginnings as a trading
company and to our Corporate Principle. Our management
objective was to “expand the earnings base” throughcoexistence and mutual development with our business
partners based on the long history of our trading business.
• We aimed to increase our enterprise value by furthering ourbusiness in areas of expertise and investing in new
challenges to create new businesses.
• We achieved the goals of the five-year plan in four years
and moved on to future 135.

Expansion of Scale
Acquisition of Added Value
Quality Improvement• Sustainable growth in fundamental businesses andexpansion of the revenue base through business
investment• Response to technical innovation• Establishment of management infrastructure for achieving
sustainable growth

2013

Resumed dividend payments

2014

2018

•Expanded the executive officer system•Established business investment standards•Acquired a majority stake in Kanematsu-NNK Corp.
(now Kanematsu Sustech Corporation)

From Kanematsu’s Present to the Future

April 2014 – March 2019

—Jump to next stage leading to
the future—•Formed the Technologies and Business Collaboration
Team to advance innovation investment•Established Kanematsu Ventures Inc.

2019

2015

Completed disposal of commercial real estate holdings

2016

2017

2021

Kanematsu’s Future•Carried out an absorption-type merger with
Diamondtelecom, Inc., aimed at expanding the mobile
business•Issued first series of straight corporate bonds (returnto the straight bond market)•130th anniversary of the Company’s founding•Formed strategic partnership with France-based Dawex
Systems, entering the data business•Revised and determined five issues of high materiality•Took over Seiko Epson Corporation’s IC test handler
business (now NS Technologies Inc.)•Received A- rating from Japan Credit Rating Agency, Ltd.
(JCR)

•Took over JVCKENWOOD Corporation’s cartridge
printer business (now G-Printec, Inc.)

Positive Effects of Restructuring
Net Interest-Bearing Debt Reduction

Total Market Valuation(Billions of yen)(Billions of yen)

543.8

150
100

Kanematsu’s Foundations

Greatly
improved andstrengthened thefinancial base

50

86.4
0

2000

2013

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022
(Years ended March 31)(Years ended March 31)

The Strengths We Have Built

Four Strengths

p7

Strength 1

Robust customer base and know-how
cultivated through business

Strength 2

Stable financial base and revenue structure

Strength 3Management prioritizing capital efficiency

Strength 4

Human resources and investment system
to advance business creation

KANEMATSU Integrated Report 2022

5

Review of the Medium-Term Visions

In 1999, a few years after the collapse of the Japanese economic bubble, the Kanematsu Group implemented large-scalebusiness selection and concentration. We made a decisive turn away from our previous approach of developing businessesof all kinds and toward carefully selecting businesses and concentrating management resources, working to improve
management and efficiency with the aim of becoming a new, lean trading company specializing in high-quality trading
rights. Since then, we have increased our equity by building up consolidated net income and shrunk interest-bearing debt
to construct a solid financial base. Aiming for further growth, we achieved the goals of the VISION-130 medium-term
vision and are now implementing future 135, aimed at the 135th anniversary of the Kanematsu’s Group’s founding.

Consolidated Net Income (Loss)
Structural
ReformPlan

New
medium-termbusiness plan

team KG120

New KG200

Medium-termbusiness plan

(Billions of yen)

25
20
17.3

15

future 135

VISION-130

S-Project

19.0

Deferred tax assets recorded

Final natural resource assets sold

16.3

16.6

14.4

13.3

10
5
0
-5

Efforts to improve our financial position eliminated unrealized loss and led tostable consolidated net income

-10
-15
-20

Impairment
accounting adopted

-25
(FY)

2000 2001

2002

2003

2004

2005

2006 2007

2008

Financial crisis
Reversal of deferred tax assets

2009 2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Results and Progress under Medium-Term Visions since the Resumption of
Dividend Payments in Fiscal 2014

“VISION-130”– First Three Years of future 135 –April 2014 – March 2019

April 2018–March 2021

Approaching the 130th anniversary of thefounding of Kanematsu, we designated as management objectives “Maintain a healthy financial position,” as well as “Expand our earningsbase” through cooperation and mutual development with our business partners, the very
foundation of our trading business.
Our aim was to increase our enterprisevalue by furthering business in our areas ofexpertise and investing in new business creation. Due in part to growth in ICT businesses,
the effects of mobile business acquisition andintegration, recovery from the crude oil market
crash in the steel tubing business, and the completion of commercial real estate disposal, wereached the targets of the five-year plan a year
early and moved on to the next vision.

Expansion of scale
Acquisition of added value
Quality improvement

Largely Completed a Year Early in
Fiscal 2018

Consolidated net income*
ROE
Shareholders’ equity
Net D/E ratio¥16.3 billion
15.1%¥116.0 billion
0.5 times* Profit for the year attributable to owners of the Parent

6

KANEMATSU Integrated Report 2022

During the first year of the future 135 medium-term vision, markets in andoutside Japan continued to gradually expand, and the Kanematsu Group
achieved solid year-on-year increases in revenue and profit. However, theeffects of the COVID-19 pandemic from late in the second year onward
resulted in a slower pace of growth than originally envisioned. Nevertheless,the negative impact of COVID-19 on the Group’s businesses were limited,albeit worse in some businesses than others, confirming the underlying
strength of the Kanematsu Group’s earnings base.
Initiatives related to the expansion of scale to bolster growth bore fruit
across a wide range of fields, including mobile, meat products, aircraft parts,
machinery, and chemicals. In terms of the acquisition of added value, we
advanced business development in areas unique to the Kanematsu Group,
including through the reorganization of the printer and semiconductorbusinesses and expansion in food markets in Asia.
Revised target

Quantitative Targets(Final year: the fiscal year
ending March 2024)

Fiscal 2021

Consolidated net income*¥20 billion¥13.3 billion

ROE

10—12%

9.7%

Total return ratio

30—35%

37.6%

Pursuing Business Opportunities andAddressing Risks Leveraging Four Strengths

Economic
growth inemerging
economies

Paris
Agreement
SDGs

Main Business Opportunities
Expanding opportunities for business
investment and M&A due to market
structure changes
Electronics& Devices

Market expansion due to
5G

Foods, Meat
& Grain

Asian market expansion,
consumer taste diversification

Steel, Materials
Changes in energy markets& Plant

DX

Motor Vehicles Next-generation mobility& Aerospace market expansion

Sources of Strength
Longstanding networks with customers,
suppliers, and business partners
Insight and business opportunities provided
by the robust customer baseStable financial base: Low net D/E ratio
Stable earnings structure: Earnings base andbusiness portfolio that are resistant tochanges in commodities and financial markets
Core heritage of Kanematsu passed downfrom our founder: Acting based on thefounder’s aspirations and guidance against
thinking that any kind of business practice is
acceptable as long as it is profitable

From Kanematsu’s Present to the Future

GX

From Kanematsu’s Origins to the Present

External
Environment

Risk management and investment
management expertise supporting solid andstable business

Main Business Risks
Slowing growth in trade businesses due topeaking of domestic markets

Globalpopulation
boom

Electronics& Devices
Foods, Meat
& GrainGrowing risks to stableprocurement, growing
demand for human rights
protection in the supply
chain

Steel, Materials Tightening regulations due& Plant
to decarbonization

Pandemic

Motor Vehicles Rapid industrial structure& Aerospace changes, logistics disruption

Strength 1

Robust customer base and know-how
cultivated through business

Strength 2

Stable financial base and revenue
structure

Strength 3Management prioritizing capitalefficiency

Strength 4

Human resources and investment
system to advance business creation

Kanematsu’s Future

Low birth rate
and graying
in Japan

The Strengths We Have Built
Shortage of digital talent

Kanematsu’s Foundations

Priority Initiatives of future 135
Sustainable growth in fundamental businesses and expansion of the revenue base through business investment
Response to technical innovation
Promote and expand new businesses with advanced technology (IoT, AI, etc.)
Establishment of management infrastructure for achieving sustainable growthBuild a framework for global strategy
Cultivate management-level human resources
Improve employee satisfaction (ES)DigitalSustainability

Establishment of the Digital Transformation
Committee
Considering DX in each business, setting up
common Group-wide IT environments, etc.

Special Feature 2

p26–27

Building a sustainable supply chain
Decarbonization Initiatives
Mutual development with local communities
Creating an environment that enables diverse
work styles
Enhancement of governance and compliance
The Key Issues and Our Activities

p32–33KANEMATSU Integrated Report 2022

7

Value Creation Process
The Kanematsu Group will help realize
the pursuit of expansion of scale, acquisition of
its traditional businesses and the creation of new

future 135
Medium-Term Vision
Basic Policy

CapitalHuman Capital
People who take on businesscreation

BusinessStrength 1

Strength 4

Robust customer base and knowhow cultivated through business

Human resources and investment
system to advance business creation

Consolidated employees: 7,446
Annual average training:
Approx. 41 hours/person1
Total annual training: Approx.
14,500 hours

Four Segments with
Unique Strengths

Intellectual Capital
Deep and broad product andindustry expertise
New business creation know-how
Risk management

Electronics & Devices

Business
investment

Trade

Semiconductor Equipment, Electronic
Components and Materials, Industrial
Electronics, Semiconductors & Devices,
ICT Solutions, Mobile, CCTV Systems,
Data, AI, and SaaS

Financial Capital

Foods, Meat & Grain

Invested capital andgrowth investment

Foods (Agricultural products, marine
products, beverages, etc.), Cooked andProcessed Foods, Processed Agricultural
Products, Meat Products, Grain,
Food Soybeans, Oilseeds, Feedstuff

Shareholders’ equity: ¥142.9 billion
Interest-bearing debt: ¥51.2 billion
Growth investment: Approx. ¥33.0
billion2

Manufactured Capital
Offices

Virtuous
cycle

Digitaltransformation(DX)

Domestic: 5; Overseas: 36

Greentransformation(GX)

Steel, Materials & Plant
Steel, Steel Tubing, Chemicals, Energy,
Plant & Ships, and Machine Tools &Industrial Machinery

Motor Vehicles &Aerospace

Social and Relationship
CapitalMotor Vehicles and Parts andAerospace

Partnerships
Robust customer base (business
partners of several decades, etc.)

Business
Segments

p64-77

Management

Relationships with diverse
stakeholders

Natural Capital

Stable financial base and revenue structure

Strength 2Contribution to the environment
and environmental development
in all communities involved inour businesses
Contribution to a low-carbon
society

Governance, risk management,
Heritage handed down

1. A
 verage hours of training for Kanematsu University participants

Human Resource Development

p43

2. Cumulative new investment in the first four years of future 135

8

KANEMATSU Integrated Report 2022

ModelFrom Kanematsu’s Origins to the Present

sustainable global economic growth and solve social issues throughadded value, and quality improvement and through the evolution ofbusinesses, aiming to advance into the next stage of growth.

Value produced

Society
Creating new businesses

Customers and suppliers

Investment ininnovation (seeds)
Added
value

Products and services useful
to society
Stable, ongoing procurement

Non-financial
Management by
Objectives (MBO)

Functions

Employeesatisfaction
surveys

Shareholders and investors

Maximizing shareholder
value
Employees

GHG emissions

Stable earnings
base

Customers • Markets • Share

Employee-friendly
corporate culture
Financial
Free cash flow

Kanematsu’s Future

Expansion ofscale

From Kanematsu’s Present to the Future

Monitoring/
management

Local communities andgovernments

Regional revitalization

ROIC
D/E ratio

Environment

Contribution to acarbon-neutral society

Evolving traditional businesses

Strength 3

Kanematsu’s Foundations

Kanematsu Group

Base
Management prioritizing capital efficiency

compliancesince our founding

Profit for the year
attributable to ownersof the Parent
ROE
Total return ratio

KANEMATSU Integrated Report 2022

9

Business Model and Business Development

Building on the trading businesses it has nurtured over the decades, the Kanematsu Group is advancing business investment
aimed at generating added value and scale expansion. At the same time, we are pursuing innovation investment aimed at
establishing a future business portfolio. Through these efforts, we are working to increase enterprise value.

Business Model and Vision for the Future
Securing new functions and roles

Creating a new portfolio

30
20
or
nf
sio
Vi

Added value
Seeds
Business investment
s
get
tar
24
20

Functions•Investment and financing•Providing people, networks, andknow-how•Taking business risks

Innovation investment•Insights into market needs andsocial issues•Create business opportunities
using advanced and digitaltechnologies•Utilize accumulated management
know-how

Trading•Business sourcing and production•Providing logistics, financing,marketing, and trading company
functions•Diverse and stable procurement
sources, robust customer baseMarket, product, andcustomer expansion

Business investment•Investment and financing•Providing people, networks,
and know-how•Taking business risks

Expansionof scaleStable earnings base•Promote•PromoteGroupwide
GroupwideDX
DX•Promote•Promoteandandexpandexpandnew
newbusinesses
businesseswith
withadvanced
advanced
technology
technology(IoT,(IoT,AI,AI,etc.)
etc.)•Promote•Promoteandandexpandexpandnew
newbusinesses
businesseswith
withadvanced
advanced

Customers • Markets • ShareBusiness Composition (Compared with Other Trading Companies)
The Kanematsu Group’s businesses are mainly in the Group’s areas of strength, where it possesses insight and know-how.
We do not invest in businesses that are easily swayed by commodity or financial markets, such as fossil fuels, real estate, or
financial businesses, and our stable revenue structure sets us apart from other general trading companies.
Kanematsu’s Revenue Structure
Non-resource:100
100%
Non-resource:%
MotorVehicles
Vehicles&&Motor
Aerospace
Aerospace

Other1.7
1.7%%
Other

Steel,
Steel,
Materials&&
Materials
Plant
Plant

8.6%%
8.6
19.3%%
19.3

33.3%%
33.3

Electronics&&
Electronics
Devices
Devices

37.1%%
37.1
FY2022
FY2022

10

KANEMATSU Integrated Report 2022

Foods,Meat
Meat&&Grain
Grain
Foods,

Other Trading Companies’ Revenue Structures
Company Resource:
Company
Resource: 27%%
AA

Non-resource: 73%

Company
CompanyBB

Resource: 49%
Resource:

Non-resource: 51%

Company
CompanyCC

Resource: 47%
Resource:

Non-resource: 53%

Company
CompanyDD

Resource: 54%%
Resource:

Non-resource: 46%
Non-resource:%

Note: Data according to Kanematsu’s research

These are core businesses developed by leveraging our robust customer base and know-how cultivated in traditional agency and trading businesses
since our founding while managing businesses directly and indirectly in line with the changing times.
Procurement

Logistics

Sourcing

Storage
Quality control

Sale
Marketing and financeBusiness Investment to Secure Added Value: Performing Roles Beyond Traditional Trading Company Functions
We will secure new functions and roles in our fields of strength. Going beyond traditional trading company functions, we will expand into upstream
areas of the value chain, such as planning, development, manufacturing, and processing, as well as downstream areas, such as maintenance andrecycling. By doing so, we will provide added value unique to the Kanematsu Group.

Planning

Development

Downstream

Manufacturing

Processing

Procurement

Logistics

Storage

MaintenanceSale

Recycling
Expanding Upstream and Downstream from Trading to Add Value

Scale Expansion Business Investment: Investing Resources in Areas of Insight and Strength
We will leverage our accumulated insight and know-how to expand our business scale and trading area. We will apply business models in which we
excel to different products, customers, and markets, adjusting our approach to expand our market share.
Upstream

Planning

Development

From Kanematsu’s Present to the Future

Upstream

From Kanematsu’s Origins to the Present

Trading: Stable Revenue Base Backed by Longstanding Networks and Know-How

Downstream

Manufacturing

Processing

Procurement

Logistics

Storage

Maintenance

Sale

Multifaceted development of business models in which we excel by changing our approach, including products, customers, and markets

Kanematsu’s Future

Recycling

Innovation Investment: Creating Next-Generation Businesses Centered on Advanced Technologies
We will create next-generation core businesses through investment in business models and startups with long-term growth potential centered on
advanced technologies in which the Kanematsu Group has strength.

p22-25Business Investment Process

p60-61Business Investment Process
Decision-making process
Application

Support divisions

Project Deliberation Committee

Decision

Considerations
Definition of investment
purpose and growthstrategy
Consider alignment with
future 135 (including
sustainability)

Examination of thebusiness plan

Alignment withinvestment criteria

Thoroughly examine thesoundness of the businessplan (including
responsiveness)

Examine investment
efficiency based on IRR andrecovery period using theinvestee’s free cash flow

Risk analysis

Examination of internal
controls

Establishing exit criteria

Examine the internal
controls of investees

Establish practicable exit
criteria upon investment•R isk analysis leveraging

the expertise of support
divisions• E SG risk assessment

Kanematsu’s Foundations

Special Feature 1: Dialogue on Realizing Innovation Investment

Investment
Monitoring and Asset Replacement
Review investees at support division monthly information sharing meetings
Annually evaluate investments both qualitatively (the objective of holding each
investment) and quantitatively (related revenue, dividends received, otherreturns, etc.) to determine if they are worth the cost of capital to Kanematsu

The support divisions provide sophisticated expertise during PMI afterinvestment, supporting management divisions
Replace low-efficiency assets and businesses when they meet exit criteria or
their strategic purpose in the portfolio has diminished

KANEMATSU Integrated Report 2022

11

Message from the President

12

KANEMATSU Integrated Report 2022

From Kanematsu’s Origins to the Present
From Kanematsu’s Present to the Future

In these uncertain times,
Kanematsu will be adriver of change
President

Yoshiya Miyabe

Lessons of My First Year as President
me the importance of building trust by engaging in ourwork with fairness, humility, and sincerity and of building
mutually beneficial relationships that will expand ourbusiness opportunities in order to maintain and deepen
these bonds.

Kanematsu’s Future

In the year since I took office as President, I have had theopportunity to meet with many stakeholders. Doing so
has made clear to me that the strong bonds we havewith business partners across supply chains in diverse
domains constitute the Kanematsu Group’s greatest
asset. The events of the past year have brought home toManagement Constantly Underpinned by Our Founding Purposeto the Earth.
The Kanematsu Group boasts a wealth of nonfinancial capital. In particular, we take pride in our
corporate culture of prioritizing our social mission. For
example, the Kanematsu Auditorium at Hitotsubashi
University was endowed by Kanematsu in 1927 with thevision of helping commercial science take root as an
academic discipline in Japan. In addition, the Company
continues to hold an annual memorial service for all thecurrent or former Group members who passed away inthe previous year. As this shows, Kanematsu’s culture andtraditions of valuing society and people, passed downfrom our forebears, are alive and well today. Leveraging
our non-financial capital, including this culture and ourpeople, I believe we can achieve even greater success for
Kanematsu in the future.

KANEMATSU Integrated Report 2022

Kanematsu’s Foundations

The world today faces many challenges, from geopoliticalrisks to the adoption of digital technologies across allindustries and other changes to social structures as wellas the push for climate change-related disclosure being
spearheaded by the Task Force on Climate-Related
Financial Disclosures (TCFD). Companies are being called
upon to lead the way in solving these challenges. In thiscontext, when we ask what the Kanematsu Group’s
purpose is, the answer comes back to the universally
applicable values of our founding purpose, which arealigned with the concept of creating shared value (CSV)
for society by solving social issues through corporate
business activities undertaken with an entrepreneurial
spirit, imagination, and ingenuity. Putting our founding
spirit in contemporary terms, I think it comes down to
two elements: commitment to people and commitment

13

Message from the President

In line with our founding purpose,
we position the spirit of creating
shared value as the foundation of
our corporate activities.

Four Strengths of the Kanematsu GroupThe strengths of the Kanematsu Group, which
demonstrate its purpose in society, are summarized
below. By further enhancing these strengths, we will not
only achieve the goals of our current medium-term
vision, future 135, but fulfill our very founding purpose.
Leveraging Four Strengths

our financial performance has little downward volatility.
Going forward, we will continue to keep an eye on free
cash flow and maintain a sound financial balance as we
pursue efficient business investment.
Business Model

p10

p7

Strength 3
Strength 1

Robust customer base and know-how cultivatedthrough business
Adapting to the changing roles required of trading
companies over time, for more than 130 years, theKanematsu Group has met the needs of its customers andsociety in cooperation with numerous partner companies.
The customer base, insight and know-how built up throughthis history is the Kanematsu Group’s foremost strength.

Management prioritizing capital efficiency
Under future 135, we are targeting ROE of 10%–12%.
Although we fell temporarily short of this range due to the
COVID-19 pandemic, in fiscal 2022, the year ended March
2022, ROE recovered to 10.5%. We will continue toenhance the role that the Company plays through value
creation to further improve ROE. In addition, to control ROE,
we will advance management with an awareness of both
return on invested capital (ROIC) and the cost of capital.

Strength 2

Stable financial base and revenue structure
The Kanematsu Group does not invest in fossil fuels, realestate, or financial businesses, and has a revenue structurethat is not easily swayed by changes in commodities
markets, financial markets, or world events. Since
implementing business selection and concentration in theearly 2000s, we have increased our equity, reduced interestbearing debt, and concentrated management resources,
aiming to realize lean management. Through these efforts,
we have built a stable financial base. Recently, the businessoutlook has been unclear, complicated by the pandemic
and geopolitical factors, but, even amid this uncertainty,
14

KANEMATSU Integrated Report 2022

Message from the CFO

p18–19Strength 4

Human resources and investment system toadvance business creation
Seeking to leverage the innovation that comes fromdiversity to gain a competitive edge, the Kanematsu Group
regards human resource strategy as one of the mostimportant elements of management. In 2022, more thanhalf of our new graduate hires were women, and the
portion of these hires that are non-Japanese nationals is
also rising. Furthermore, in addition to local hiring atoverseas branches and Group companies, we are now

creating next-generation businesses that center on
advanced technologies. Through these three types ofinvestment, we will realize Groupwide synergies and seek
long-term growth far beyond our current targets.
Business model

p10–11

Diversity and Inclusion

Special Feature 1 p22–25

p45–46

Progress of future 135: Investment Aimed at Realizing a Conglomerate Premiumbusinesses are not focused on consulting, but actual handson business operations; the networks and expertise wehave built up through such operations are a strength thatenables us to effectively function as a hub for businesses.
Turning to innovation investment, from the beginningof future 135, we have sought to share information andnetworks not just within individual divisions, but at theGroupwide level. To this end, we formed the Technologies
and Business Collaboration Team, which includes Group
companies, to discuss issues in this area. In October 2021,
we established a new innovation investment system withan investment budget of ¥4 billion by March 2024. Thissystem provides a framework for discovering companies
and businesses that have innovative technologies andbusiness models that are on the way to commercialization.
Rather than simply injecting capital, we apply our networks
and know-how as a trading company to reinforce investees’
business models. Moving forward, we will proactively
increase our contact with advanced technologies and new
businesses through open innovation and other means,drawing on our strong internal and external relationships todrive the cultivation of fledgling sources of future growth.
KANEMATSU Integrated Report 2022

Kanematsu’s Foundations

Historically, our various divisions have been independent intheir pursuit of business investment and M&A. Last year,
however, the chief officers of each division andrepresentatives from key Group companies began regularly
exchanging information and discussing ways to enhanceexisting businesses and increase profit by leveraging theresources of other divisions. At first, there were someconcerns about how willing the participants would be towork for the profit of other divisions, but these concerns
proved unfounded. The proactive stance they have adopted
to taking action to benefit not just their own divisions but
the Group as a whole shows the true worth of theKanematsu Group. Our business partners often praise thecharacter of Kanematsu Group employees. Seeing the way
our people cooperate, I am surer than ever that by bringing
this strength to bear, we can achieve great successes. At
first, these efforts were oriented toward solving divisionspecific issues, but I am confident that we will see theemergence of new businesses that surpass divisionalboundaries in the near future. Combining multiple
businesses to form new businesses is the traditional modelof a trading company. In addition, the Kanematsu Group’s

Kanematsu’s Futureplan, fiscal 2024, we are targeting consolidated net incomeof ¥20 billion. Our forecast of ¥18 billion in fiscal 2023 isbacked by specific forecasts for our businesses, but theeffects of the three types of investment above, including
innovation investment, will be key to bridging theremaining ¥2 billion gap for fiscal 2024. Over the final two
years of the plan, we will focus even greater efforts on
investment and accelerating the realization of returns.

From Kanematsu’s Present to the Future

Progress of future 135: Reflecting on the First Year of the Latter Half
Fiscal 2022, the first year of the latter half of future 135, saw
year-on-year increases in both revenue and profit. Despite
logistics disruptions and the impacts of the weakening yen
and rising prices in the fourth quarter, profit for the year
attributable to owners of the Parent increased 20.1% year
on year. While I think we can count this as a modest success,I must acknowledge that we have not progressed at the
speed initially targeted in the plan. For the final year of the

From Kanematsu’s Origins to the Present

utilizing mid-career hiring and diversity hiring, enabling us
to better leverage the talent of the global Group as a whole.
In terms of investment, we are pursuing three forms ofgrowth-focused investment, as announced in future 135.
These are business investment aimed at providing added
value by taking on roles beyond that of a traditional trading
company; business investment aimed at achieving scale
expansion by concentrating on fields where we haveinsight and strength; and innovation investment aimed at

15

Message from the President

Uncertain Times Reveal a Trading Company’s True Strength
One of the core strengths a trading company needs is theability to detect and adapt to changes before anyone elseso that it can blaze the trail forward. In that light, for a
trading company, the current moment of rapid change
represents a major business opportunity. For example,
global supply chains that have been interrupted byantagonism between the United States and China, war, andthe COVID-19 pandemic must be rebuilt. At the same time,
digital transformation (DX) is upending industry structures.
Situations like these, in which frameworks must be built
from the ground up, are where the true capabilities of a
trading company shine. In this time of uncertainty, I believe
the way that Kanematsu Group can serve society is byhelping to secure economic stability.
To that end, the ability to detect market changes andgather information ahead of the market and to sniff out
new business opportunities is essential. For this, we mustsecure and develop proactive professionals with the skills
needed to keep a constant eye on developments at ourbusiness partners in order to generate new ideas and put
them into action. My personal credo is to first just takeaction. I strongly hope to see our executives and employees
take greater action more rapidly, unafraid to take risks.
Those who are not accustomed to thinking on their feetwhile taking action will not make it in today’s businessclimate. In addition to steadily implementing PDCA cycles,
we must now be able to quickly react to changes in themarket environment and industrial structures with agile
management.
I think that in the period after future 135, we will befocused on bringing together the wisdom of the entire
Group, with emphasis on DX, green transformation (GX),
and innovation, in order to achieve dramatic growth as a
trading company.

Leveraging Diversity to Develop Talent and Improve Engagement
In 2019, we launched the Kanematsu University training
system. This unique system teaches employees the basics ofmanagement early in their careers while offering a cultural
curriculum centered on character development as a trading
company professional. In addition, we are currently
updating our personnel systems to improve work
environments in order to realize diversity and inclusion andincrease employee engagement.
I think the most important factor in increasing
employee engagement is ensuring that employees are able
to do work that they are passionate about. For example,
younger employees may be hesitant to try to create new

businesses because of the inherent risk. It is therefore
important for the company to provide frameworks thatallow employees to take on such challenges without fear of
failure. I think that the experience of creating businesses incollaboration with other companies, as we have throughour tie-up with the venture capital firm WERU INVESTMENT
Co., Ltd., provides excellent opportunities to boost employee
motivation and engagement.
Human Resource Strategy

p41–47

Special Feature 1

p22–25

Advancing DX
In 2021, we launched the Digital Transformation
Committee, headed by the Chief Officer of the Electronics &Devices Division, which includes the ICT solutions business,to promote Groupwide DX. In addition, we set up sectional
meetings to address individual themes and address issues
at the operational level. In this way, we are advancing
Groupwide policy in concert with applied strategy.
We have made considerable progress in terms ofdigitizing operations. With the move to the new head officein November 2022, we will take major steps forward in this16

KANEMATSU Integrated Report 2022

area, including the use of activity-based working (ABW).* In
terms of utilizing digital technologies to transform businessmodels, we have launched a system for pooling businessdata from across the Group. We are still in the stage ofgathering and organizing data from our diverse businessareas, but this system will form the base of our information
assets going forward.
* A work style in which employees are free to choose when and where
they work based on the content and objectives of their work.

Special Feature 2

p26–27

From Kanematsu’s Origins to the Present

Building on the trust built up
over our long history, we aim
to advance to a new stage.

projects and carbon credit trading, which helps reduce
emissions. Thanks to such efforts, we expect to achieve net
zero greenhouse gas emissions (carbon neutrality) in 2025.
We have further announced that we aim to be carbon
negative—realizing reduction effects in excess ofemissions—by 2030.
Special Feature 3

p28–29TCFD

p38–39Kanematsu’s Future

In 2022, we launched the Green Transformation
Committee, led by the Chief Officer of the Steel, Materials &Plant Division, which boasts a wealth of expertise inenvironmental protection. We also announced our support
for the TCFD recommendations in 2021, beginning
disclosure based on climate scenarios. As a trading
company with no resource development businesses,
Kanematsu’s greenhouse gas emissions are low to begin
with, and we were quick to participate forest conservation

From Kanematsu’s Present to the Future

Promoting GX and TCFD-Compliant Disclosure

Continuing to Reinforce Corporate Governanceand appointed a director with corporate management
experience, which had previously been an issue. We willcontinue to reinforce corporate governance going forward.
Roundtable Discussion

p48–51

To Our Stakeholders
While factors remain that may slow the global economy, infiscal 2023 we are planning for consolidated revenue of¥850.0 billion, up 10.7% year on year, operating profit of¥31.5 billion, up 7.3%, and profit for the year attributableto owners of the Parent of ¥18.0 billion, up 12.6%. The
Kanematsu Group considers providing returns toshareholders to be one of its most important tasks and willcontinue to provide stable returns. For fiscal 2023, we plan
to pay an annual dividend per share of ¥70 (for a payout

Kanematsu’s Foundations

Looking at corporate governance, in the first three years of
future 135, we made the Board of Directors more nimble
and efficient and advanced the separation of management
oversight and business execution. In July 2022, we
increased the proportion of outside directors on the Board

ratio of 32.5%).
In this time of uncertainty, more than ever, each andevery one of us at the Kanematsu Group will constantly
seek out value that only Kanematsu can provide. Unafraidof change or failure, we will hone our ability to quickly andaccurately sniff out the needs of customers and society andraise our quality as professionals by developing our own
insight and expertise. In this way, we will continue working
to increase the enterprise value of the Kanematsu Group.

KANEMATSU Integrated Report 2022

17

Message from the CFO
Shuji Masutani
Director, Executive Officer, CFO

Review of the First Half of future 135
Fiscal 2022, the year ended March 2022, was the fourth yearof the future 135 medium-term vision (covering fiscal 2019 to
fiscal 2024). This year saw the emergence of number ofnegative factors affecting business, such as new variants of
COVID-19 and global supply chain disruptions. Nevertheless,the Kanematsu Group recorded profit growth in the ICT
solutions business, reflecting strong performance in areas
related to network security and storage, and in the meatproducts business, which benefitted from rising meat prices.
As a result, operating profit came to ¥29.3 billion, up ¥5.7
billion year on year, and profit for the year attributable toowners of the Parent (consolidated net income) came to¥16.0 billion, up ¥2.7 billion, marking a return to thepre-pandemic profit level of fiscal 2019.
Looking ahead, we forecast consolidated net income of¥18.0 billion for fiscal 2023, on track to achieve our target of¥20.0 billion in consolidated net income in fiscal 2024, thefinal year of future 135.
ROE fell to 9.7% due to the decrease in consolidated net
income in fiscal 2021, but recovered to 10.5% in fiscal 2022.
Although this is already within the range of 10% to 12%
targeted under future 135, we will continue working tofurther raise ROE. ROIC, which we use as an internal indicatorof capital efficiency, improved from 4.9% in the previous fiscal
year to 5.6%. The weighted average cost of capital (WACC)
was around 3.5%, but we secured an excess return (EVA
spread) of about 2%. We will continue working to optimally
allocate management resources with an eye to both
bolstering revenue and maintaining efficiency (Figure 1).

Investments Aimed at Business Expansion
Under the future 135 medium-term vision, we aim for the
expansion of scale and acquisition of added value throughbusiness investment. Because we had forgo a number ofpotential investments due to changes brought about by the
COVID-19 pandemic, we have not made as much progress ininvesting as planned. Nevertheless, business investment overthe four years ended March 2022 totaled approximately¥33.0 billion. We already have our eyes on further investment
opportunities and will maintain financial discipline while
continuing to proactively pursue new investment.

Promoting Investment in Future Growth—The
Innovation Investment System
We have created a new innovation investment system,
separate from investment aimed at growing or building on
existing businesses, to promote global business expansion in
growth fields.
Aiming to promote and expand new businesses focusedon advanced technologies, under the new system, we will
invest in businesses and companies that are developing,
manufacturing, and selling new products and services unlike
anything currently on the market. As a general rule, individual
investments are capped at ¥500 million, and we havedesignated a total investment budget of ¥4 billion for theperiod of the medium-term vision.
We have already made investments using the innovation
investment system.

Stable Financial Structure
We continue to maintain a stable financial base to support
investment.
In terms of cash generation, rapid increases in the prices of
petroleum products, agricultural products, and othercommodities near the end of fiscal 2022 led to an increase inworking capital, and core operating cash flows, excluding theincrease in working capital, came to an inflow of ¥26.6 billion.
Cash used in investing activities came to ¥10.5 billion, for a
net cash inflow of ¥16.1 billion.
In terms of fundraising, our credit rating from Japan Credit

Figure 1. ROE/ROIC/WACC

Figure 2. Risk Asset Ratio(%)(Billions of yen)
200

20

15.1

15

(Times)
0.8

159.5

150

13.8
11.2
9.7

10

10.5

100

143.9
116.0
0.40

125.2

0.4

0.33

6.7

6.4

5.3

5

4.9

0.30

0.30

39.5

43.4

0.31

5.6
50

0

46.7

41.0

49.0

0.2

0

2018
ROE

18

0.6

130.8

2019
ROIC

2020
WACC

KANEMATSU Integrated Report 2022

2021

2022

(FY)

0

2018
Risk Asset (left)

2019

2020

2021

Shareholders’ equity（left）

2022

(FY)

Risk Asset Ratio (right)

Risk Asset Measurement

For fiscal 2022, in light of business performance and theoperating environment, we raised the annual per-share
dividend ¥5 to ¥65 (an interim dividend of ¥30 and a yearend dividend of ¥35). This resulted in a consolidated dividend

(Yen)

20

200

37.6%

18.0

14.4

150

34.0%

13.3

32.5%

30.3%

10

100

60

5

65

60

60

0

2019

2020

Consolidated net income (left)
Payout ratio

2021

2022

(FY)
2023
(Forecast)
Annual dividend (right)* Profit for the year attributable to owners of the Parent

171.4
171.4

160
160

151.0
151.0
137.3
137.3

140
140

141.5
141.5
127.7
127.7

163.5
163.5

144.3
144.3

120
120

70
50

0

(%)
(%)
200
200
180
180

16.0

34.8%

15

Dialogue with capital markets is crucial to earning theconfidence of shareholders. Maintaining ongoing,
constructive dialogue and appropriately reflecting the advice
and criticism we receive in management is essential toincreasing enterprise value. I will continue to do my utmost to
help our shareholders and other stakeholders gain a deeper
understanding of the Kanematsu Group.

Figure 4. Total Shareholder Returns(Billions of yen)

16.6

Dialogue with Capital Markets

Kanematsu’s Foundations

Figure 3. Consolidated Net Income*/Payout Ratio

Kanematsu’s five-year total shareholder return at March 31,
2022, was 163.5%, exceeding the 144.3% of the TOPIX Total
Return Index (Figure 4). However, as of March 31, 2022, theprice-to-book ratio stood below 1.0, at approximately 0.7. We
take this market evaluation seriously and are striving toincrease enterprise value.
“Let us sow and nurture the seeds of global prosperity,”
part of Kanematsu’s founding purpose statement in 1889,
has guided the Group’s business activities for 133 years as its
Corporate Principle. It expresses the aim of taking action tobuild businesses in order to enrich the lives and well-being ofpeople around the world. I believe that solving social issues
through business and developing alongside society is theKanematsu Group’s purpose.
To ensure that we can continue to offer the value soughtby people around the world, we are going back to our
Corporate Principle and striving to put it into practice.

Kanematsu’s Future

Shareholder Returns

Our Share Price and Enterprise Value

From Kanematsu’s Present to the Future

The Kanematsu Group has laid out basic guidelines forcontrolling and managing risk in its Risk Management
Guidelines. Based on said guidelines, we classify and definerisks, then respond to each appropriately, aiming to minimize
losses to the Kanematsu Group and achieve sound businessgrowth and development.
The Group monitors quantifiable risks (market risk, credit risk,
investment risk, country risk, etc.) by regularly measuring suchrisks and reporting the results to management. Specifically, tomeasure maximum possible losses (risk assets) we apply a proprietary weighting scheme corresponding to the potential loss risk
to all assets included in the Consolidated Statement of Financial
Position as well as off-balance sheet items.
As of March 31, 2022, risk assets stood at ¥49.0 billion andshareholders’ equity at ¥159.5 billion, for a risk asset ratio of
0.31, approximately the same as at the previous fiscal yearend (Figure 2).
We will continue working to ensure a sound balance ofrisk assets and risk buffer (shareholders’ equity) and maintaina sound financial position while increasing enterprise value
through business creation and revenue expansion.

payout ratio of 34.0% and a total return ratio of 34.0%.
In fiscal 2023, we forecast consolidated net income of¥18.0 billion and plan to increase the annual dividend pershare another ¥5 to ¥70 (an interim dividend of ¥35 and a
year-end dividend of ¥35). As a result, the consolidated
dividend payout ratio is forecast at 32.5% (Figure 3).
Kanematsu regards the appropriate distribution of profits
to shareholders as an important management priority. We
will continue to pay stable, ongoing dividends based on
considerations of business performance, financial position,and the levels of internal reserves necessary for future growth.

From Kanematsu’s Origins to the Present

Rating Agency, Ltd. (JCR) was upgraded from BBB+ to A-. As
this shows, we are well positioned to stably procure funding
from outside sources. In March 2022, we issued a total of¥10.0 billion in straight corporate bonds, our first such
issuance in almost four years.
The increase in working capital driven by risingcommodities prices is, in turn, pushing up interest-bearing
debt, but we have maintained a low net D/E ratio of 0.3 andso have ample room for additional fundraising, even for large
investments.

100 100.0
100 100.0
80
80

115.9
115.9

100.0
100.0

2017
2017
Kanematsu
Kanematsu

2018
2018

110.0
110.0

2019
2019

99.6
99.6

2000
2000

2021
2021

2022 (FY)2022 (FY)TOPIX Total Return Index
TOPIX Total Return Index

Note: T he values above show fiscal year-end total shareholder returns
relative to the values at March 31, 2017, which have been set at 100
KANEMATSU Integrated Report 2022

19

future 135 Medium-Term Vision

future 135
April 2018 – March 2024 (Revised May 2021)

Investment ininnovation (seeds)
Added
value

The Kanematsu Group is pushing ahead with future 135, its
medium-term vision for the six years ending fiscal 2024, which
will mark the 135th anniversary of its founding. In May 2021,
following the conclusion of the first three years of the vision,
Kanematsu revisited the vision to reaffirm its business direction,
especially in light of the progress of business investments andthe impact of the COVID-19 pandemic. Although there havebeen no major changes in the basic policy, based on the
progress of business investments and the resulting earnings
growth, Kanematsu has revised the vision’s quantitative
targets. Moreover, Kanematsu has added addressing the SDGs
and promoting DX to the vision’s priority initiatives.

Functions

Basic Policy
Stable earnings
base

Expansion ofscale

Customers • Markets • ShareThe Kanematsu Group will help realize sustainable global economic
growth and solve social issues through the pursuit of expansion of scale,acquisition of added value, and quality improvement and through theevolution of its traditional businesses and the creation of new businesses,
aiming to advance into the next stage of growth.
Essentials
Continue to expand the strong businesses of the Kanematsu Group andachieve sustainable growth in business areas with a stable earnings
base. Aim to achieve consolidated net income* of ¥20 billion by pursuingthe expansion of scale and acquisition of added value through effective
business investments.
Focus on capital efficiency based on the stability of the earnings structureand financial structure, setting target ROE at 10% – 12% and the payout
ratio (total return ratio) at 30% – 35%.
*Profit for the year attributable to owners of the Parent

Priority Initiatives

Sustainable growth in fundamental businesses and expansion of
the revenue base through business investments
Achieve sustainable growth while achieving a balance between capital and risk assets
backed by a stable revenue structure and financial structure

Message from the CFO

p18-19Promote business investment in areas of strength to achieve expansion of scale andacquisition of added value
Invest in business segments related to environmental, social, and safety issues to help
achieve the SDGs

New investments so far

Response to technical innovation
Promote Groupwide DX

Special Feature 2

p26-27

Special Feature 1

p22-25

Human Resource Strategy

p41-47

Promote and expand new businesses with advanced technology (IoT, AI, etc.)
Invest in innovation (future-oriented development investment)

Establishment of management infrastructure for achieving sustainable growth
Build a framework for global strategy, including the reinforcement of the overseas
earnings base
Invest in human resources, including the cultivation of management-level human resources
Improve operational efficiency and employee satisfaction (ES) through continued work
style reforms

20

KANEMATSU Integrated Report 2022

The target for fiscal 2024 of ¥25 billion in consolidated net income announced in May 2018 was based on projections of growthboth in existing businesses and via new investment focused primarily on M&A. Subsequently, due to the COVID-19 pandemic,
the achievement of targets in multiple existing businesses was delayed, and planned new investments fell through as theirvaluations became unclear or dropped. These factors led to Kanematsu’s decision to revise the vision’s quantitative targets.
Revised target

Target announced in
May 2018

Fiscal 2022 results

Fiscal 2023 forecast¥20 billion¥25 billion¥16 billion¥18 billion

ROE

10% – 12%13% – 15%

10.5%

10.9%

Total return ratio

30% – 35%

25% – 30%

34.0%

32.5%

Consolidated net income(Profit for the year attributable toowners of the Parent)

From Kanematsu’s Present to the Future(Final year: the fiscal year
ending March 2024)

Consolidated net income*, ROE, and ROIC(Billions of yen)

20.0

20

18.0
16.0

15

13.3
10

9.7%

5

4.9%

10.5%
5.6%

2021

2022
ROE

2023 (Forecast)

2024 (Target )

(FY)

ROIC

* Profit for the year attributable to owners of the Parent

Kanematsu’s Future0

Consolidated net income

From Kanematsu’s Origins to the Present

Quantitative
Targets

Approximately ¥33 Billion in New Investment in Fields Where We Have Strengths and Insight(Four-Year Cumulative Total)
Electronics & Devices:
Approx. ¥9 billion(U.S.) Joined cyber security investment fund(U.S.) Invested in startup that develops equipment for
rescue helicopters(Europe) Purchased aircraft in the aircraft parts business(Japan) Made takeover bid for KANEYO Co., Ltd.
(Japan) Acquired company that develops andmanufactures dashboard cameras(Japan) Commercializing Advanced Air Mobility anddrone delivery(Japan) Invested in a carbon nanotube manufacturer(Japan) Made card printer manufacturer a wholly owned
subsidiary(Japan) Acquired semiconductor image sensor back-end
processing business(Japan) Invested in data exchange market development and data
consulting company(Japan)Expanded mobile communications business(Germany) Made equity investment in photo printer company(Japan) Acquired semiconductor manufacturing (marking)equipment trading company(Japan) Acquired semiconductor manufacturing equipment(IC test handler) manufacturing business(Japan) Invested in infrastructure-related app developer(Japan) Acquired industrial material trading company

Steel, Materials & Plant:
Approx. ¥12 billion(South Korea) Made equity investment in steel plate
processing company(Japan) Acquired specialized metal sash manufacturer(Japan) Acquired plant engineering company(Vietnam) Made equity investment in steel frame andbridge fabricator(U.S.) Established second steel tubing processing factory

New business
investment(Over four years)

Kanematsu’s Foundations

Motor Vehicles & Aerospace:
Approx. ¥8 billion

Foods, Meat & Grain:
Approx. ¥4 billion(China) Established beef primary processing and sales company(China) Established feedstuff material production plant(Indonesia) Increased investment in processed food productmanufacturer(Uruguay) Invested in Uruguayan beef producer(Japan) Invested in soy plant-based meat producer(Canada) Invested in chemical-free soybean startup(Indonesia) Invested in n general food product manufacturer

KANEMATSU Integrated Report 2022

21

Special Feature 1: Dialogue on
Realizing Innovation Investment

Combining Our Networks
and Expertise to Discover
the Seeds of New
Opportunities
Kanematsu

University-OriginatedVenture Capital Firm

WERU INVESTMENT

Kanematsu Corporation and WERU INVESTMENT Co.,
Ltd. have formed a business alliance for the purpose ofconnecting Kanematsu's business base with WERU's
startup investment knowledge and expertise to bolster
the structures of both for finding and developing
startups with promising advanced technologies andbusiness models in Japan and overseas.
WERU INVESTMENT Co., Ltd.
WERU INVESTMENT grew out of the Waseda University
Entrepreneurial Research Unit (WERU), becoming the first
venture capital firm in Japan to originate from university
resources. For over 20 years, WERU has worked to help
spur innovation across society.

Yoshiya Miyabe
President

Miyabe: To pursue the expansion of the revenue base andthe enhancement of added value through effective
business investments, as outlined in the future 135
medium-term vision, in November 2018, we established theTechnologies and Business Collaboration Team tocoordinate across all segments. In 2019, we formed thebusiness alliance with WERU, which we then reinforced in
2021 by entering into a comprehensive business
partnership. Each of these steps has helped to strengthen
the foundations underlying our innovation investment. In
2021, we jointly set up KaWäRu Workshop, through which
we are working to deepen the organic connections
between venture investment and management resources.
Takiguchi: At WERU, we have spent many years
connecting innovators with capital markets. However, we
had never before worked with a company as deeply rooted
in real, established business as Kanematsu, so working
together has been a breath of fresh air. As a trading
company, you do business with a wide range of partners
and have an up-close understanding of the challenges they
face. This is a perspective that we in venture capital do not
have. Besides simply being interesting, the quality of theinformation you have is high, and I sense there is a real
focus on solving the challenges in those businesses.

Tadashi Takiguchi, President & CEO.
Tadashi Takiguchi joined Nomura Securities Co., Ltd. in 1986. Heworked in venture capital fund and hedge fund management
before taking the position of President & CEO of WERUINVESTMENT Co., Ltd., a venture capital firm affiliated with
Waseda University, in 2005. He has supported the growth ofmany startups in and outside Japan and currently serves a
director of the Japan Academic Society for Ventures andEntrepreneurs, visiting professor at the Waseda University Facultyof Commerce, and Investment Committee member at RIKEN. He
holds an MOT/MBA from the Waseda Business School and Ph.D.
in International Management from Waseda University.

22

KANEMATSU Integrated Report 2022

Miyabe: Over the two decades or so since 1999, when we
underwent a business selection and concentration, we havemade strengthening our financial base our top priority andhave not been investing in innovation. As a result, going
into our partnership, we at Kanematsu knew how to run
existing businesses and expand horizontally, but we lacked
the know-how to create completely new businesses. The
key to future growth is in businesses that can make a leap
into the future. Creating these businesses requires
innovation. Today, having a superior business model isenough for a business to succeed, so I think that trading
companies are ideally positioned to become innovationhubs.

Investments so far

p24

Takiguchi: Yes, the conditions have been created, and I
hope they will allow even more active discussion going
forward. Kanematsu’s employees, being indeed good

Takiguchi: I think that prioritizing relationships over
immediate profit is conducive to innovation. For example,
I’ve heard that you welcome back employees who have left
Kanematsu for a time because it enables you to leverage
the experience they have gained elsewhere. Mid-careerhires are excelling in important roles, too. It seems to me
that, because you bring together a range of employeeswith differing backgrounds, Kanematsu has the diversity
needed for innovation.

Kanematsu’s Foundations

Miyabe: Kanematsu has many good natured, honest
people. Though this may at times seem to hold us backfrom a more aggressive approach to making money, we
have nevertheless survived for more than 130 years. This is
we were able to get help when we needed it. In that sense,
I think of our robust customer relationships and businessnetworks as strengths and assets that we should make themost of.

Miyabe: In October 2021, we set up the innovation
investment system, establishing a funding pool forinvestments aimed not at short-term returns, but major
growth over spans of five or ten years. As of June 2022, wehave invested in two projects through the system. Thanks inpart to the joint workshop, we have made progress increating the right conditions for innovation investment; I
think that we are seeing a change in the mindsets of notjust employees who propose new businesses, but also the
executives who have to approve them.

Kanematsu’s Future

Takiguchi: I think that what has been called “ambidexterity”
is crucial to innovation. This is the ability of a company toeffectively exploit its current businesses while simultaneously
exploring new business opportunities. Kanematsu is alreadygood at the exploiting side, but it seems like you view
exploration as still more of a challenge. There are two
important factors that facilitate exploration: a long history
and sufficient scale. History and scale enable a company todevelop a firmly rooted corporate culture and robust
management assets, including intellectual capital, humancapital, and social and relationship capital, all of whichfacilitate innovation. And, underlying all other factors,
effective communication is also essential. During our
discussions at the joint workshop, the participants from
Kanematsu seemed well-grounded and able to focus onwhat really matters, so communication has been quite easy.
I’m sure you’ll want to leverage that ability.

Takiguchi: Yes, there does seem to be some siloing, but, on
the other hand, the joint workshop brings together peopleinterested in innovation from across all divisions.
Considering their respective business partners and products
as an incorporated whole, they lay out their financial,human, social, and intellectual capital in order to formulate
growth trajectories and investment hypotheses. Theirdetermination to bring the comprehensive strengths of theCompany to bear in creating new core businesses for the
future is evident and, little by little, the way forward is coming into focus.

From Kanematsu’s Present to the Future

WERU INVESTMENT
Co., Ltd.
President & CEO

From Kanematsu’s Origins to the Present

Tadashi Takiguchi

proprietorships, and Kanematsu is no exception. There arewalls between individuals and walls that exist due to thevast differences between the domains in which various
divisions operate. That said, recently, digitalization and a
growing shared, global awareness of certain issues have led
to the emergence of a common language in such areas asDX, the SDGs, and GX, which presents new opportunities.
For example, we have seen cases where business partnersof the Grain, Oilseed & Feedstuff Division wanted to
implement DX, but didn’t know where to start; leveraging
the know-how and customer base of the Electronics &Devices Division, we were able to offer comprehensive
solutions and cross-sell.

Miyabe: At the same time, however, trading companies areoften described as operating like collections of sole

KANEMATSU Integrated Report 2022

23

Special Feature: Dialogue on Realizing Innovation Investment

natured, sometimes seem a little hesitant to assert
themselves, but I hope they will not let fear of failure orembarrassment prevent them from actively speaking up
and taking on new challenges. As Kanematsu’s president
and leader, you just have to keep encouraging that kind ofchange. It will be valuable for employees from a wide rangeof divisions to actively take part in KaWäRu Workshop, toexpose them to different ways of thinking. I think thatdoing so will spark greater innovation. I hope that we cannurture the flexibility and adaptability needed to continue
growing in these uncertain times.

Miyabe: I am constantly saying that the key of PDCA is not
the initial P, but D—the “do.” We have to keep taking action.
Building businesses from scratch, as we do in trading
companies, is interesting, engaging work. I am always
encouraging people to push forward and take action. As a
trading company, we don’t have our own products or
technologies—we cannot do anything by ourselves. For
that reason, the relationships and connections we build are
truly invaluable assets. Going forward, I hope we canengage in even more active discussion with WERU to findthe seeds of potential businesses together and spur one
another toward greater growth.

Innovation Business Investments to Date

Investment and Business Alliance with UK Startup Skyports to Explore Advanced Air Mobility
Infrastructure Development and Operation and Drone Delivery
Kanematsu has entered into an investment and businessalliance with UK-based startup Skyports Limited. Skyports
is exploring the development and operation of advanced
air mobility (AAM) landing and takeoff infrastructure
known as Vertiports and is a world leader in the dronedelivery field. This alliance includes a basic agreement toestablish a joint venture company by 2024 to manage
joint business development and operations inside Japan.
Kanematsu and Skyports will act as exclusive partners
inside Japan to accelerate initiatives aimed at building,operating, and creating networks with Vertiports, as wellas commercializing drone delivery businesses.
Development of AAM is advancing around the world.
Flying vehicles are being hailed as a new form of mobility
that is promising in terms of the electrification of theaviation industry and decarbonization, and the AAM
market is estimated to reach US$1 trillion by 2040.
As the industry is still in the technologicaldevelopment and system design stages, Kanematsu
invested using the innovation investment system.
Kanematsu will promote joint business development
through its alliance with Skyports to accelerate initiatives
for AAM and drones while contributing to innovation in
the aviation industry, accessible air travel, logistics
development, lifestyle quality and local development, andenvironmental measures for mobility.

A Skyports Vertiport (concept art)

Investment in Emerging Carbon Nanotube Manufacturer CARBON FLY
In April 2022, Kanematsu invested in CARBON FLY, Inc., amanufacturer of carbon nanotubes (CNTs).
CNTs offer a number of physical and chemical
properties that are far superior to conventional materials.
Although these properties have raised hopes for applied
development, the technological challenge of ensuring
appropriate dispersion has long stood in the way of theirapplication in industrial products. CARBON FLY’s
proprietary technological development has enabled
stable, high-quality CNT production, garnering praisefrom experts. Kanematsu’s investment in CARBON FLY isaimed at rapidly applying that company’s technologies toindustrial products and expanding production capacity tobring said products to market and thereby grow sales.
Kanematsu’s investment in CARBON FLY was madeusing the innovation investment system because practical

24

KANEMATSU Integrated Report 2022

applications of CNT are still being developed and
CARBON FLY was in its seed round of fundraising.
Through the capital alliance with CARBON FLY,
Kanematsu will continue to strengthen its relationshipwith the company, working to realize the mass
production of nanocarbon materials and develop
composite material products.

CNT film

One of the priority initiatives under medium-term vision future 135 is to promote and expand
new businesses that boast advanced technology. Accordingly, in order to more actively drive
initiatives toward new business development and establish future trading rights, in October
2021, we established the innovation investment system.
Purposes of Creating the System
Create new investment criteria suited to innovation investment in new businesses with businessplans and investment recovery plans that carry a high degree of uncertainty of success in order toappropriately select, evaluate, and manage investments.

2

Because new businesses development requires upfront investment, including investment in humanresources, and takes time to provide revenue, the Technologies and Business Collaboration Teamwill bear the market research and marketing expenses to build and expand new businesses.

3

Actively promote entry into new business areas with significant potential profit to avoid having toforgo entry into new businesses in which no direct synergies with the businesses of the existing six
segments are expected.

ScopeFounding• Business concept isestablished

Overview• Company is establishedbut still in the researchand productdevelopment stage

Commercialization• Products are being
prototyped or justlaunched• Acquiring first
customers andbeginning marketing

Very early growth• Products are mostly
completed, and sales
expansion (massproduction) efforts
begin

Early growth• Business growth gains
momentum toward
expansion• Marketing clarifies how
products aredifferentiated fromthose of competitors• The business generates
sustained cash flows
and begins to consider
an IPO (exit)

Because innovative businesses tend to come with a high degree of uncertainty of successregarding the achievement of business plans and investment recovery plans, instead of setting
quantitative criteria, we make investment decisions based on the following three indicators.

Is it original?
Could it create a new market?

Business Viability

Profitability

Can it achieve commercialization within five years?

Can Kanematsu obtain

Kanematsu’s Foundations

Investment Criteria

Innovativeness

Kanematsu’s FutureStages targeted by the system

From Kanematsu’s Present to the Future1

From Kanematsu’s Origins to the Present

Overview of the Innovation Investment Systemsignificant profit?

KANEMATSU Integrated Report 2022

25

Special Feature 2:
Promoting Digital Transformation (DX)

Creating Next-Generation KanematsuGroup Businesses through DX
Under the future 135 medium-term vision, we have made “Promote
Groupwide DX” a part of the priority initiative “Response to technicalinnovation, ” in line with our aim to accelerate business transformation.
The Digital Transformation Committee was launched in July 2021. As
Chief Officer of the Electronics & Devices Division, I chair the committee. The
DX Project Office of Kanematsu Corporation’s IT Planning Department andthe DX Promotion Department of Kanematsu Electronics Ltd. are serving as
secretariat for the committee, while sectional meetings with specific themes,such as centralized ID management, enhancing data analysis platforms, andintegrating IT assets, are advancing Groupwide DX promotion.
One cross-divisional initiative is the digitization of food and meatproduct supply chain operations. In this area, we are working to incorporate
and utilize digital data, and we plan to expand these efforts to otherbusinesses in the future. At the same time, in response to an increasing
number of cyberattacks, we are focusing on enhancing cyber security andproviding security education to employees. And, to raise the level of IT
literacy across the Group, we are supporting employees working toward
public certifications and otherwise seeking to develop human resources.
As for the digitization business, the Group is diversifying its commercial
DX products. We have also established the Business Co-Creation Center as aplace to interact with SaaS startups. We are building a data marketplaceplatform and advancing efforts to enter the next-generation data trading
market through investment in data management companies.
As a trading company, Kanematsu is highly adaptable to technologicalinnovation. We will continue to work together as a Group to improve
internal and external productivity, create next-generation businesses, andstrengthen governance.

Masahiro Harada
Digital Transformation
Committee ChairDX Promotional Framework
General Meeting of Shareholders
Audit & Supervisory Board
Board of Directors
Management Committee
Advisory committees

Digital Transformation Committee (launched July 2021)
Chair
Members
Expert members

Masahiro Harada, Managing Executive Officer and Chief Officer of the Electronics & Devices Division, Kanematsu Corporation
Two executive officers of Kanematsu Corporation
One executive officer and the General Manager of the System Division, Kanematsu Electronics Ltd.

Groupwide DX sectional meetings
Sectional meeting—Secretariat—
DX Project Office, IT Planning Department,
Kanematsu Corporation

26

KANEMATSU Integrated Report 2022

Sectional meeting

Coordination

Sectional meeting—Secretariat—
DX Promotion Department,
Kanematsu Electronics Ltd.

From Kanematsu’s Origins to the Present

Initiatives

KEL, PSC, and GSX Collaborate to Launch Total Security Service

System integration

Comprehensive security service

Security Liaison
Cloud

Cyber Security
C 90%
M 60%
K 20%
K 80%

Joint Demonstration Project for Decarbonization in Indonesia

Kanematsu’s Future

Kanematsu has launched a joint proof-of-concept project with
Pertamina, a major oil company owned by the Indonesian
government, that combines decarbonization efforts with DX to
reduce CO2 emissions and improve logistics efficiency. Devices
manufactured by Datatec Co., Ltd., a Kanematsu Groupsubsidiary with strengths in vehicle behavior analysis
technology, can be used to monitor vehicle position andcondition as well as to identify patterns of dangerous activity
in vehicle usage histories and analyze driving safety using aproprietary logic algorithm. The project is being implemented
under the Ministry of the Environment’s Financing Programme
to Demonstrate Decarbonization Technology for Realizing
Co-Innovation. Aimed at achieving data-driven DX alongsidegreen transformation (GX), the project promotes
decarbonization through the customization and spread ofhigh-quality environmental technologies and products, and it
is attracting attention for its potential to contribute to theprevention of traffic accidents and reduction of CO2 emissions.

development. Once a product is commercialized,
Kanematsu considers equity participation in the company,
either for itself or by its customers, if there is potential for
major growth by strengthening the partnership. In thisway, we are advancing open innovation leveraging ourunique strengths as a trading company.

Kanematsu’s Foundations

Inviting External Partners to Join in Business Co-Creation
The Kanematsu Group has established the Business
Co-Creation Center, a platform for business co-creation. The
center seeks out external business partners to engage inbusiness co-creation with the Kanematsu Group and sets up
expert teams to rapidly turn ideas into new businesses. Many
startups in Japan are working to develop and promote the useof new SaaS. Some of these entities possess excellent
technological capabilities and astute business insight, but lack
the resources for market development and struggle to achieve
scale expansion. Through the Business Co-Creation Center,
Kanematsu leverages insight gleaned from its businesses
across many industries, formats, and customers to select SaaS
products with significant commercial potential and provide
business development support while introducing them to its
customers. Using its network as a trading company,
Kanematsu advances projects toward profitability so that SaaS
companies can concentrate their resources on technological

From Kanematsu’s Present to the Future

Kanematsu Electronics Ltd. (KEL), an Electronics & Devices
Division Group company in the ICT business, has launched
Security Liaison for Microsoft Security, a total security service,in collaboration with PSC Inc. (PSC), which boasts a trackrecord in the migration to and operation of cloudenvironments, and GLOBAL SECURITY EXPERTS Inc. (GSX),
which operates a specialized cyber security business.
The promotion of DX and reinforcement of security must
be addressed in tandem. The three companies will further
deepen their collaboration to support customer DX byproviding total security services ranging from cyber security
assessment to proposing measures, installing components,
and providing such operations as incident response.

SaaS partnercompanies

KANEMATSU Integrated Report 2022

27

Special Feature 3: Promoting Green Transformation (GX)

Promoting GX toward CarbonEiji Kan
GreenTransformation
Committee Chair

When did the world first begin to turn its attention to
reducing emissions of CO2 and other greenhouse gases(GHGs)?
As global calls to action, the Kyoto Protocol and Paris
Agreement are more famous, but these were actuallyproceeded by the 1992 Rio de Janeiro Earth Summit, a full
30 years ago. This conference marked the adoption of theUnited Nations Framework Convention on Climate Change,
which forms the foundation for the ways we think about
global environmental conservation and sustainable
development today. The agreement was, however, highly
conceptual and lacked practicability.
In 1997, the Kyoto Protocol became the first legallybinding agreement on global warming countermeasures.
However, with the exception of China and India, it applied
only to developed countries. Only with the signing of theParis Agreement in 2015 were GHG emission reduction
targets for 2030 covering the world’s major emitting

Initiatives

Reducing GHG Emissions Using the Joint Crediting Mechanism
Using the Joint Crediting Mechanism (JCM) to promote the useof energy-saving and renewable energy technologies indeveloping countries, Kanematsu installed an energy-saving
cardboard recycling system at a paper plant in Indonesia in 2014and high-efficiency electrolysis tanks at a chlorine production
plant in Saudi Arabia in 2015. Based on these projects, we issue
credits. Kanematsu KGK Corp. has also implemented solar power
generation projects in Thailand and Vietnam, and commenced asolar power generation and storage project in Thailand’s Suphan
Buri Province in 2021. To date, the Group has implemented eight
JCM projects that are expected to achieve an approximately
90,000 t-CO2 annual total reduction in GHG emissions. Goingforward, we will continue to look for
new opportunities to apply the JCM
framework and contribute to theachievement of the SDGs.

REDD+ Forest Conservation Initiatives
Since 2011, Kanematsu has been implementing a REDD+* forest
conservation project in Gorontalo Province, Indonesia, inpartnership with the Gobel Group. This project promotes cacao
farming to reduce slash-and-burn corn farming, a major cause of
deforestation. By helping conserve the rich tropical rainforests ofIndonesia, the project contributes to the reduction in greenhousegas (GHG) emissions covered by the Paris Agreement.
Implemented in cooperation with the local government, theproject helps to not only reduce deforestation and conserve

forests, but improve farmers’ livelihoods and cut GHG emissions,benefitting all parties involved. The project received a 2020
Minister of the Environment Awards
for Climate Action (Dissemination/
Promotion Division, Mitigation/
Adaptation Field) as an outstandingachievement in climate change
mitigation and adaptation.
※Reducing Emissions from Deforestation and Forest Degradation in developing countries

Renewable Energy Business Expansion
Kanematsu has been working to expand the scale of its businessin biomass energy for some time. In this area, the volume ofpalm kernel shells we handle has grown steadily. Going forward,
we will expand our lineup of pellets and other products, aiming
to replace one third of all the fuel we sell with biomass energy.
In the plant business, we are increasing our opportunities toengage in such renewable energy businesses as solar and wind

28

KANEMATSU Integrated Report 2022

power generation. Until recently, these efforts have centered onoverseas initiatives using the JCM, but we are advancing a wind
power generation project in Japan thatcame online in May 2022.
Going forward, we will continue todraw on our accumulated insight toexpand the renewable energy business.

Negative Operations

Reducing Supply Chain Emissions
renewable energy to burp-reducing animal feed, bio- and recycledmaterials, and transportation efficiency improvements, helping to
reduce emissions not only in Scope 1 and Scope 2, but also Scope 3.
By drawing on these solutions and Group expertise, we are working
with our business partners toward supply chain decarbonization.
To promote these initiatives, we are collaborating withoutside companies.

SupplySupplyChain
ChainEmissions
Emissions

SupplySupplyChain
ChainEmissions
Emissions

Materials
Materials
manumanufacturing
facturing

Parts
Parts
manumanufacturing
facturingTransTransTransTransProductProduct
portation
portation
portation
manumanu- portation
storage&&storage
storage facturing
facturing &&storage

Suppliers
Suppliers

Transportation
Transportation&&storage
storage

Use
Use

Disposal
DisposalCustomers
Customers

Provision
ProvisionofofAsuzero
AsuzeroSXSXconsulting
consulting

Cooperation
Cooperation

Proposal
Proposalandandprovision
provisionofof
reduction
reductionsolutions
solutions

Retailer
Retailer

RestauRestau-—Establishing—Establishinga aframework—
framework——Commercialization——Commercialization—
rants
rants
•Introducing•Introducingtechnologies
technologiesandand•Supply•Supplychain
chain
products
productsthat
thatreduce
reduceGHG
GHGemissions
emissions demonstrations
demonstrationsfrom
fromreduction
reduction•Developing•Developingrules
rulesforforcalculating
calculating
technologies
technologiestotosales
salesand
andreductions
reductionsand
andconducting
conducting
consortium
consortiumformation
formation
calculations
calculations•Product•Productsales
salessupport
supportCooperation
Cooperation

Business Alliance with Asuene Inc.

Alliance with the Norinchukin Bank

Asuene Inc. provides the Asuzero cloud service for visualizing
and reducing CO2 emissions throughout the supply chain,across Scopes 1, 2, and 3, and offers sustainability
transformation (SX) consulting to companies andmunicipalities. Kanematsu has formed a business alliance with
Asuene, creating a framework to provide comprehensive
support for corporate carbon neutrality initiatives, from CO2
emissions calculation to reduction.

The Norinchukin Bank’s vision is to be “the leading bank that
supports the agricultural, fishery and forestry industries, foodproduction and consumption, and the daily lives of local
communities.” The bank not only provides sustainable financeto the enterprises it finances, but, beginning in 2022, iscoordinating with a GHG measuring service company to help
its clients understand their GHG emissions. Kanematsu is
working with said company to facilitate each step of theprocess—from the establishment of a framework for
implementing CO2 reduction solutions to commercializationand market development—in an integrated manner,promoting the reduction of GHG emissions in the agriculture
and food industries.
KANEMATSU Integrated Report 2022

Kanematsu’s Foundations

Total
Totalsupport
supportfrom
fromcalculation
calculationtotoreduction
reduction

Raw
Raw
AgriAgriFeed
Feed
TransTransmaterialmaterial manucultural
cultural portation
Processors
manuportation Processors
producers
producers facturers
producers &&storage
facturers producers
storage

Kanematsu’s Future

As a trading company that links supply chains, Kanematsu aims topromote decarbonization through supply chains.
In 2021, Kanematsu formed a Groupwide GX Accelerator teamof about 20 people to identify products and services that contributeto decarbonization across all of Kanematsu’s business units andGroup companies. By doing so, we have developed a framework foroffering wide-ranging solutions on a one-stop basis, from

From Kanematsu’s Present to the Futureenvironmental awareness, switching to lower-carbon
fuels, mainly in the energy and plant businesses, andsteadily advancing initiatives in solar and wind power
generation and forest conservation. Looking at forest
conservation in particular, in addition to the projects wehave been implementing for more than a decade inIndonesia, we have more recently expanded our efforts
to Africa.
Now, as we continue to develop these existing
projects, we have put together a comprehensive support
team, utilizing the insights and diverse connections
accumulated through our efforts thus far to build aframework for decarbonization in close cooperation
with customers.
Going forward, we will further develop andaccelerate these measures to make the KanematsuGroup carbon negative by 2025 and help our customers
quickly achieve carbon neutrality.

From Kanematsu’s Origins to the Present

countries—including developing countries—finallyestablished. Since then, national governments have
stepped up efforts to increase corporations’ focus onenvironmental measures and sustainability.
Against this backdrop, new corporate management
indices and international targets have emerged,
including environmental, social, and governance (ESG)
metrics and the Sustainability Development Goals(SDGs). Corporate efforts to develop measures in
response have led to the emergence of the term “green
transformation” (GX). GX refers to the realization of asustainable society by solving environmental problems
and requires that companies grow alongside society.
While this means that companies must shoulder greater
responsibility, it also presents enormous opportunities.
Because Kanematsu does not hold interests in suchnatural resources as coal or oil, its environmental impact
is low. In addition, we have long acted with a strong29

Sustainability
Message from the Chair of the Sustainability Management Committee

Tetsuro Tsutano
Chair of the Sustainability
Management Committee

Contributing to Society as a Corporation

30

times for the Company’s businesses. It is a point of
pride for us that, amid such conditions, Kanematsu
took concrete steps to contribute to society as acorporation, and its usefulness and purpose in society
were appreciated overseas.
Group founder Fusajiro Kanematsu traveled toAustralia eight times over the course of his life,
leading through innovation by importing wool
through a Japanese company that eventually came tohandle more than 60% of all wool imported to Japan.
Looking at his life’s work, we can see not only how hecreated economic value as a pioneer of trade
between Japan and Australia, but that he possessed a
spirit of shared value creation in working to meetsociety’s needs.

Commemorating the Kanematsu Memorial Instituteof Pathology, the Kanematsu family crest of our
founder holds pride of place on a wall at Sydney
Hospital, located just east of the Consulate-General ofJapan in Sydney, Australia. Completed in 1933, theInstitute was founded to advance cutting-edge
research aimed at addressing the proliferation of
ophthalmological diseases among immigrants, aserious social issue in Australia at that time. During
World War II, Australia named Japanese the languageof the enemy and banned its use, but, thanks toforceful advocates on its behalf, an exception wasmade for the Institution. The family crest and name ofKanematsu are still displayed there today. The yearthat the funding for the institute was provided, 1929,
marked the start of the Great Depression and difficult

The Purpose of the Kanematsu GroupThe Kanematsu Memorial Institute of Pathology, Sydney Hospital

One of the targets that the Kanematsu Group has set
under the metrics and targets disclosed in line with
the Task Force on Climate-related Financial
Disclosures (TCFD) guidance is to be carbon negative,
with net negative emissions of 1 million t-CO2 (scopes
1 and 2) in 2050. Japan’s total emissions in 2020 were
1,027 million t-CO2, meaning that we are aiming tocontribute to society through a net negative amountequivalent to around 0.1% of current nationalemissions. On top of that, Japan represents only 3.2%of total global emissions. To achieve carbon neutrality
globally, we must therefore expand reduction

KANEMATSU Integrated Report 2022

Sustainability Promotion Framework
Board of Directors
Sustainability Management Committee
Chair
Senior executive officer (chief officer of corporate planning)

From Kanematsu’s Origins to the Present

Members
Executive officers(business division chief officers or deputy chief officers)
Electronics & Devices
Division
Foods Division
Meat Products Division

Grain, Oilseeds & Feedstuff Division
Steel, Materials & Plant Division
Motor Vehicles & Aerospace Division

Expert members
Managers of business division planning offices
Electronics
Planning Office
Foods & Grain
Planning Office

Steel, Materials & Plant Planning Office
Motor Vehicles & Aerospace
Planning OfficeSecretariat(Sustainability Management Section, Public & Investor Relations Section,
General Affairs Section)(As of June 24, 2022)

Kanematsu’s Future

General Manager, Finance Department(Public & Investor Relations)

From Kanematsu’s Present to the Future

initiatives to encompass the emissions of our business
partners (Scope 3).
In 2021, we launched the innovation investment
system, through which we are investing in innovative
businesses with the potential to change society.
Around 80% of the proposals that come through thissystem are related to decarbonization and mainly
focus on helping our suppliers and customers reduce
their CO2 emissions. Climate change is the greatest
challenge today’s society faces. Solving it will requirechanges in society itself through innovative businessmodels unlike anything that has come before.
Our founding purpose is “ Let us sow and nurturethe seeds of global prosperity.” To achieve this aim,
we have built a framework for active discussion by
establishing the Sustainability Management
Committee, which comprises executive officers
directly involved in business operations.
Going forward, we will create business models
that change society though innovation and strive tothe greatest extent of our abilities to solve social
issues, just as our forebears did. By doing so, we will
endeavor to assert and further our purpose as aGroup in the modern world and achieve sustainablegrowth alongside society.

CO2 Emissions by Country (2020)(Millions of t-CO2)
12,00010,503(32.8%)

9,894

10,000 (30.9%)
8,000

4,000
2,000
0

Kanematsu’s Foundations

6,000

4,432
(13.9%)
2,298(7.2%) 1,432 1,027(4.5%) (3.2%) 650 605 578 565(2.0%) (1.9%) (1.8%) (1.8%)
China United India Russia Japan
StatesIran Germany South Saudi Others
Korea Arabia

Source: Global Note “Global CO2 Emissions Ranking by Country(Based on BP Statistical Review of World Energy)”

The Sustainability Management Committee

For more details, please visit our website.

https://www.kanematsu.co.jp/en/sustainability/

KANEMATSU Integrated Report 2022

31

Sustainability

The Key Issues and Our Activities
In 2018, we sought to determine which issues the Kanematsu Group should focus on in its
corporate activities based on Kanematsu’s Corporate Principle, importance to management,
and stakeholder expectations. These efforts resulted in the establishment of five key issues(issues of high materiality). In response to the subsequent global increase in awareness of theimportance of sustainability and ESG management, we changed the composition of ourSustainability Management Committee to include mainly the top management of ourbusiness divisions and discussed our current projects and future direction. Based on these
efforts, in 2021, we newly identified key five issues of high materiality. The three issues linked
by the circle at right are issues to be address through business activities, while the two below
are key to the management base supporting said business activities.

Building a
Sustainable
Supply Chain

Major Initiatives

Business supplying high-value-added health foods for healthier living
Initiatives to introduce ICT (smart farming) to livestock farming
Security business to guard against cyber attacks

p27

Cloud-based farm management systems for chicken farming
Acquisition of Carbon Credits via the Joint Crediting Mechanism

p28

Business selling Miracle Meat plant-based meat madefrom sprouted soybeans
Aircraft rotable parts business and part-out business
Renewable energy power plant construction businessBusiness supplying high-efficiency industrial machinery employing low-carbon technologies
Business supplying heat reflective paint to combat global warming
Business selling biomass fuels to combat global warming

p28

Lumber preservation treatment technology helping reduce global warming
Business promoting the switch to LP gas fuelSecuring Traceability in Marine Products

Enhancement ofGovernance andCompliance

The Process of Identifying Key Issues
STEP

Create a list of issues

1

Based on the SDGs, the UN Global Compact, ISO
26000, and other international guidelines, we
identified issues in all of Kanematsu’s businesses
and compared them with the goals of eachdivision to create a list of issues that must be
addressed for the sustainable growth of society
and Kanematsu.

STEP

Evaluate the importance of eachissue to the company and to society

2Considering Kanematsu’s Corporate Principle,
individual divisions’ strengths, and the needs andexpectations of society, we plotted the issues
identified in step 1 on a materiality matrix,* with
importance to external stakeholders on the verticalaxis and importance to the Kanematsu Group on
the horizontal axis.
* The materiality matrix is disclosed on Kanematsu’s website.

32

KANEMATSU Integrated Report 2022

Sustainable coffee plantation-related initiatives

p28

Forest conservation initiatives (REDD+)

Environmentally friendly ground improvement using wooden piles

Mutual Developmentwith Local
Communities

Solar panel and converter supply business

Offering services closely tailored to local needs at mobile phone shops
Kanematsu Foundation for the Research of Foreign Trade

From Kanematsu’s Present to the Future

Establishment of a company to manage the TradeWaltz trade data
sharing platform

From Kanematsu’s Origins to the Present

Decarbonization
Initiatives

Volunteering
e-Net Caravan

p40

Member of SEMA

Kanematsu’s Future

Creating an Environment
That Enables Diverse
Work Styles

p40

p41-47

Promoting work style reforms
Human resource development initiatives
Activities to support the independence of persons with disabilities
p48-63

Enhancing the corporate governance system
Enhancing internal control and risk management systems

3

In addition to discussions by the Sustainability
Management Committee, which comprises mainly
officers from business divisions and the chief officerof corporate planning, we held discussions withthe outside directors and other stakeholders to
confirm the appropriateness of the identification
process and the issues under consideration.

STEP

Identify key issues

4Kanematsu’s Foundations

STEP

Discussion among internal andexternal stakeholders

In May 2021, the key issues wereapproved by the Sustainability
Management Committee and finalized
by resolution of the Board of Directors.

Periodic review in light of changes in the external environment

KANEMATSU Integrated Report 2022

33

Sustainability

Progress on Key Issues
Materiality

Building a Sustainable
Supply Chain

Decarbonization
Initiatives

Mutual Developmentwith Local Communities

We will respect the environmentand human rights, communicate
with diverse actors in society, andrealize stable and sustainableprocurement, supply, distribution,and services together with ourpartners and customers.

Aiming to achieve net zero
greenhouse gas emissions, wewill promote our clean fuel andrenewable energy business tocontribute to the mitigation of
global warming.

Through our global operations,
we will support the lives of people
around the globe, work on
improving social infrastructure,and contribute to the sustainablegrowth and development of local
communities.

We will create a work
environment that encourages
Creating aneach individual to leverage his or
Environment That
Enables Diverse Work Styles her unique talents and qualities,
supporting diverse work styles.
Furthermore, we will improvetraining programs to develop
managers capable of creatingand expanding businesses.

Enhancement ofGovernance andCompliance

34

KANEMATSU Integrated Report 2022

We will maintain a robust
supervisory system to prevent
accidents and fraud and aim forsustainable growth through thetransparent disclosure of
information to stakeholders.

Related SDGs

Risks

• Business continuity risk in existing
business models due to inadequate
response• Decreased competitiveness and trust
due to delay in addressing humanrights issues in the supply chain• Unbalanced food supply and demand
due to global population increase• Decrease in sales of related products
alongside decrease in demand forfossil fuels• Increased burden of carbon pricing
and carbon border taxes• Factory damage and supply chain
disruption due to increasingly severe
extreme weather events• Changes in food-producing regions
due to average temperature increases• Regulatory changes and business
continuity risk due to legal or politicalchanges• Decline in relationships of trust due todefects in infrastructure or services
provided• Business continuity risk due to humanrights issues in business regions• Declines in efficiency and productivity
due to delays in creating suitable
work environments• Loss of talent and business
opportunities due to inadequate
initiatives to create suitable work
environments• Business continuity risk due to internal
control dysfunction• Decrease in enterprise value due tolegal violations

• Growing demand for sustainable
and environmentally friendly
products, creation of newmarkets and services• Gaining customer trust and create
new businesses based on approachto addressing sustainability andhuman rights issues

Notable Initiatives (Fiscal 2022)

Increased sustainable coffee trading volume (up 1.8% year on year)
Kanematsu Sustech Corporation’s Eco Wood Pile used in 5,051 buildings (cumulative total: 38,216 buildings), with annual
timber volume of 24,518 m3 (cumulative total: 191,870 m3)
Established strategic investment company TW Link Corporation to promote the adoption of trade data sharing platform
TradeWaltz
Joined Space Port Japan Association to further contribute to the space industry• Food demand expansion anddiversification due to populationrise• Increase in new climate changeconscious applications andproducts• Creation of new commercial
channels alongside thedevelopment of food-producing
regions•Building relationships of trustand stabilizing businesses
through operations aligned with
the needs of local communities• Reinforcing competitiveness andestablishing a foundation forstable growth through diversityoriented management

Selected by JICA to implement Management of International Overloaded Freight Trucks by the Establishment of ICT Platform
Systems for Sharing Information Project in Laos
Began pilot test of a self-driving shuttle bus at Hiroshima University
Joined Social Emergency Management Alliance (SEMA), which helps provide vital supplies to disaster-affected areas

Launched D&I promotion project team (2021)
Held D&I web training (four times, with 33 participants each)Kanematsu University	Basic course (26 classes; 123 participants)		Advanced course (22 classes; 85 participants)		Professional course (23 classes; 38 participants)

Business plan training (September 2021–March 2022; 76 participants)
Executive management training (August 2021–March 2022; 63 participants)
Innovated work environments and work styles in preparation for the head office relocation (J-Project)• Clarification of decision-making
processes through the creation ofa robust governance system• Increase in enterprise value
through highly transparent
disclosure

Kanematsu’s Foundations• Creation of new value andinnovation

Held a naming and launch ceremony for hospital boat for the Marshall Islands
Kanematsu’s Future• New business creation based on
initiatives to solve social issues

Joint Crediting Mechanism projects: 1 new project, 7 projects in operation
Began small scale wind power generation project (total capacity: 96 kW)
Launched steel tubing business for new applications and demand, including EOR and other CCUS
Partnership to promote Advanced Air Mobility and drone delivery business development (U.K.-based Skyports Limited)
Launched joint demonstration project with Indonesian state-owned oil company Pertamina to reduce CO2 emissions andimprove logistics efficiency with an eye to decarbonization
Distributed DAIZ Inc.’s Miracle Meat plant-based meat made from sprouted soybeans (annual sales: 5,700 kg; cumulative total:
7,300 kg)
Launched GX accelerator activities (Groupwide decarbonization project team)
Kanematsu Petroleum Corporation joined the Japan Climate Leaders’ Partnership (JCLP), aiming to realize society-wide
sustainability and decarbonization

From Kanematsu’s Present to the Future• Introduction of new products andservices alongside development
and popularization of new andlow-carbon technologies

From Kanematsu’s Origins to the Present

Opportunities

Increased independent outside directors from 2 of 6 directors (33%) to 3 of 7 (43%)
Held compliance-related e-learning
Implemented management DX, fully digitized and improved transparency of meeting operations• Strengthening relationships withstakeholders

KANEMATSU Integrated Report 2022

35

Sustainability

Addressing the Five Key Issues
Building a Sustainable
Supply Chain

The Kanematsu Group’s Supply Chain Management
The Kanematsu Group has codified the founding purpose of Kanematsu’s founder, Fusajiro
Kanematsu, in its Corporate Principle. We engage in business in Japan and around the globe basedon our mission of contributing to international society and economic development. As we provide
all kinds of goods, functions, and services in our wide-ranging businesses and build diverse supply
chains, we recognize that protecting the global environment and human rights is an urgent issue.
With an eye toward cooperation and mutual development with our customers and business
partners, we will continue to leverage the insight and know-how accumulated over Kanematsu’slong history to provide goods and services with added value. Through these corporate activities, we
aim to achieve the sustained development of the global environment, society, economy, and of theKanematsu Group.

Business Highlights

Electronics & Devices

Easy-to-use inventory management
service

Foods

Generating Added Value through Business Co-Creation
Kanematsu has established the Business
Co-Creation Center as a platform for broadly
seeking partnerships with startups and othercompanies that develop SaaS, web services,
and apps to co-create businesses that willsolve customer challenges with new ideas,
technologies, and services. As a trading
company, Kanematsu receives many inquiries
about a wide variety of issues faced bycustomers. The new platform is aimed atmeeting wide-ranging customer needs
through cross-divisional efforts to createbusinesses. One project in this area is a

Saving Labor, Improving Accuracy, and Creating New Businesses with AI and Robotics
In the beverage and liquor business, webegan the overseas manufacture and importof instant coffee for major coffee chain
brands in 2019, working to meet demand
growth related to increased time spent at
home. Products manufactured overseas are
susceptible to cosmetic defects, such as label
misprints and peeling, as well as bottle
cracking during sea shipping. As such, until
recently, all products have been manuallyinspected prior to shipment.
However, faced with the challenge of not
being able to secure enough sorting

Meat Products

KANEMATSU Integrated Report 2022

personnel during the fall and winter, when
demand is highest, we developed an AI/
robot-based visual inspection system incollaboration with the Electronics andDevices Division to establish a sustainablesorting system that does not depend on
human labor. This system entered operationin October 2021 and has both saved laborand improved sorting accuracy.
Kanematsu will continue working to savelabor, improve accuracy, and create new
businesses through the adoption of digitaltechnologies in the food industry.

Diversifying Sourcing with Canadian Beef
Kanematsu is strengthening its efforts to
procure Canadian beef as part of its efforts todiversify its beef production areas in order toensure a stable supply of safe and reliable
beef. With export volumes on par with New
Zealand, Canada exports beef on a scalesurpassed only by such major exporters as
the United States and Australia.
Canada, known for its vast wild landscapes and cool climate, raises beef cattle,
that yield a product characterized by reliable
quality and tenderness. Seeking to ensure

36

cloud-based inventory management service
provided in partnership with ZAICO Inc. This
service has been well received for how easy it
is to use via mobile devices and how simple it
is to implement. It has been adopted for theinventory management of maintenanceparts at a Group company that sells semiconductor equipment. We will continue toexpand partnerships to solve issues faced by
all kinds of customers and contribute to therealization of a sustainable and prosperous
society.

stable procurement while bringing highquality beef to consumers, Kanematsu is
promoting the Alberta Beef brand, named
for the country’s greatest beef-producing
province. We are implementing sales promotion activities that emphasize the product’s
greatest feature: high quality, lean meat.
The beef, which fully realizes the value
promised by these activities, has been wellreceived by customers, and the number ofstores handling the product is steadily
increasing.

Group company Heisei Feed Manufacturing
Co. significantly reformed its manufacturing
processes in 2005 in line with the implementation of guidelines based on the BSE Special
Measures Act. Previously a manufacturer ofboth feed classified as specialized for ruminants (cattle) and other feed, the company
was relaunched as an exclusive manufacturerof cattle feed. Working to ensure the safetyof its feed as an upper link in the food chain,
the company continues to move forward. In
2017, the company acquired certification ofcompliance with Ministry of Agriculture,
Forestry and Fisheries’ Guidelines of Good
Manufacturing Practice for Feed regarding
antimicrobial feed additives, and in 2020
acquired ISO 22000 certification for its foodsafety management systems.

Interior and Exterior Construction Work Using People- andEnvironment-Friendly Printed Decorative Steel Sheets
not only the appearance but also the textureof the materials it is made to resemble.
Compared to sheet manufacturing methods
using pasting or papering, the production ofthis sheet is also much friendlier to bothconstruction workers and the environment,
producing minimal dioxin emissions in thecase of a building fire and helping to countersick house syndrome. These features make ita fitting product for Kanematsu’s SDGs
strategy, which the Group regards as apriority initiative. We will continue to aim forbusiness expansion with a focus on the Smart
Design Department.

Kanematsu’s Future

Kanematsu Trading Corp. has long been
engaged in wholesaling of steel, primarily
building materials. In 2019, the company
launched the Smart Design Department,
aiming to make a new leap forward basedon this area of expertise. The new department has begun contracting for interior andexterior construction work on condominiums, hotels, and office buildings using
printed decorative steel sheets in various
patterns and designs. This work has beenvery well received by customers.
The printed decorative steel sheets uses
advanced printing technology to reproduce

Working toward Decarbonization by Reducing CO2 Emissions andImproving Logistics Efficiency
Kanematsu and Group company Datatec Co.,
Ltd. are refining their vehicle behavior analysis technology with the aim of realizing asafe and accident-free mobility society. These
efforts promote careful driving without
sudden steering or braking, which reduces
vehicle emissions and improves fuelefficiency.
Kanematsu and Datatec have previously
conducted a joint demonstration project inIndonesia under the framework of the
Ministry of the Environment’s Financing
Programme to Demonstrate Decarbonization
Technology for Realizing Co-Innovation.
Recently, we launched a joint demonstration
project in collaboration with Indonesianstate-owned oil company Pertamina under
the same framework to improve the fuel efficiency of Pertamina’s trucks with the aim of
reducing carbon emissions and improving
logistics efficiency. Datatec’s vehicle behavior
analysis technology has a track record of
reducing road accidents by up to 50% andimproving fuel efficiency by up to 10% inJapan. While traffic and road conditions aredifferent in Indonesia, we aim to make asimilar or even greater contribution there.
Leveraging Datatec’s technologies, which
contribute to safety and environmental
friendliness, we are working globally toward
the realization of a sustainable yet comfortable world.

KANEMATSU Integrated Report 2022

Kanematsu’s Foundations

Motor Vehicles &Aerospace

In 2021, Heisei Feed Manufacturing
completely separated its production lines
and processes for feed with antimicrobial
feed additives and those for feed without,
executing capital expenditure of approximately ¥700 million for the lines and peripheral equipment. In 2022, the company aims
to obtain certification of compliance with the
Guidelines of Good Manufacturing Practicefor Feed for the prevention of contaminationof feed with harmful microorganisms,
contamination of feed with toxic substances
or foreign matter, contamination of cattle
feed with animal-derived protein, and inappropriate use of antimicrobial additives infeed. Through these efforts, Heisei Feed
Manufacturing continues striving to enhance
animal feed safety.

From Kanematsu’s Present to the Future

Steel, Materials &Plant

Acquiring Animal Feed Safety Certifications

From Kanematsu’s Origins to the Present

Grain, Oilseeds &Feedstuff

37

Sustainability

Decarbonization
Initiatives

Endorsement of the TCFD Recommendations and Scenario Analysis
Kanematsu endorsed the recommendations of the Task Force on Climate-Related Financial
Disclosures (TCFD) in June 2021. We strive to disclose information in accordance with the TCFD’s
framework to make it easier for stakeholders to learn about and understand the climate changerelated risks and opportunities associated with our business. A summary of this disclosure is provided
below, with more details available on a dedicated page on our website.
Please visit our website for details.

https://www.kanematsu.co.jp/en/sustainability/tcfd/
Kanematsu Is Constantly Working to Reduce Greenhouse Gas (GHG) Emissions• We have not been involved in high-environmental-impact businesses since implementing business selection andconcentration in the 2000s, nor do we plan to be in the future• Our annual Scope 1 and 2 emissions are currently around 30,000 t-CO2, and we plan to be carbon neutral by 2025
and work toward being carbon negative thereafter• We are engaged in REDD+ forest conservation projects, contributing to GHG reduction (carbon offset)• We endorsed the TCFD recommendations in June 2021 and are working to provide disclosure in accordance with
the TCFD framework

Governance and Risk Management
TCFD recommended disclosures

Our initiatives (summary)Describe the board’s oversight of climate-related risks and opportunities.

Monitoring organization

Board of Directors

Describe management’s role in assessing and managing climate-relatedrisks and opportunities.

Role of management

Discussion and reporting in the Sustainability Management Committee
meetings, which are attended mainly by the Chief Officer of Corporate
Planning and chief officers from business divisions (executive officers)

Governance System
Monitoring/
Supervision

Board of Directors
ReportSustainability Management Committee
Chief Officer of Corporate PlanningManagement

Execution

Secretariat

Executive
Officer

Executive
Officer

Executive
Officer

Executive
Officer

Executive
Officer

Executive
Officer

Electronics &Devices

Foods

Meat
Products

Grain,
Oilseeds &Feedstuff

Steel,
Materials &
Plant

Motor
Vehicles& Aerospace•Sustainability Management
Section•Public & Investor Relations
Section•General Affairs Section

Risk Management
TCFD recommended disclosures
Describe the organization's processes for identifying and assessing
climate-related risks
Describe the organization's processes for managing climate-related risks
Describe how processes for identifying, assessing, and managing climaterelated risks are integrated into the organization's overall risk management

Our initiatives (summary)
Identification andassessment
Management

Business divisions
Sustainability Management Committee

Integration (reporting,Business divisions → Sustainability Management Committee → Board ofmonitoring and supervision) Directors

Strategy
The promotion of investment in environment-related businessareas is one of the priority initiatives under our medium-term
vision, future135, and we consider addressing climate change to
be a business opportunity.
We have conducted a scenario analysis on the Group38

KANEMATSU Integrated Report 2022

businesses selected as subject to significant impact from climatechange. As a result of the analysis, we believe that even thoughboth risks and opportunities exist in all the scenarios, the impact
from opportunities surpasses that from risks.

Our initiatives (summary)
Risks andopportunities

Selected the North American beef business and steel tubing business for the scenario analysis on the basis ofclimate-related impacts (qualitative aspect) and sales/profit (quantitative aspect). The top priority areas ineach of these businesses are as follows.

North American beef business (short-, medium-, and long-term, 4°C scenario and below 2°C scenario)
Describe the climate-related risks andopportunities the organization has identified
over the short, medium, and long term

Rise in feedstuff and forage prices due to higher average temperature (physical risk)

Risks
Opportunity

New opportunities associated with the development/adoption of new technologies (plant-based meat)

Steel tubing business (short-, medium-, and long-term, 4°C scenario and below 2°C scenario)
Decline in fossil fuel demand (transition risk)
Risks
Opportunity
Describe the impact of climate-related risks
and opportunities on the organization's
businesses, strategy, and financial planning

Analysis results• Potential risks and opportunities exist for both the North American beef business and steel tubing business inboth scenarios• On the basis of the analysis, we are formulating business strategy that focuses on climate change-related
opportunities• We will promote investment in environment-related business areas as a priority initiative under our mediumterm vision, future135
Non-high-risk sectors

Selection of Businesses for Scenario Analysis
Quantitative aspect (sales)• Meat Products (North American
beef business)• Steel (Steel Tubing Business)• Grain, Oilseeds & Feedstuff• Energy• Machine Tools & Industrial
Machinery• Plant and Infrastructure*• Foods• Aerospace• Motor Vehicles and Parts• Functional Chemicals

Qualitative aspect (climate change)* The Kanematsu Group’s plant and infrastructure business mainly comprises
Official Development Assistance and Joint Crediting Mechanism projects

Metrics and Targets

TCFD recommended disclosures

CO2
emissions

Carbonneutral

AvoidedCO2emissions

Carbon negative
150,000 t-CO2

2020

2025

2030

Carbon negative
1,000,000 t-CO2

2050(Year)* Note: The above targets are for Scopes 1 and 2. Targets for Scope 3 will beestablished separately.

Our initiatives (summary)Disclose the metrics used by theorganization to assess climaterelated risks and opportunities inline with its strategy and risk
management process

MetricDisclose Scope 1, Scope 2, and, if
appropriate, Scope 3 GHG
emissions and the related risks

GHG emissions

CO2 emissions

Fiscal 2021: 27,800 t-CO2 (Kanematsu and 94 Group companies)(Estimated breakdown: Scope 1: 9,200 t-CO2 / Scope 2: 18,600 t-CO2)

Kanematsu’s Foundations

Our first target going forward is to achieve carbon neutrality by
2025. We will reduce CO₂ emissions by shifting to renewableenergy. Any remaining emissions that cannot be reduced in thisway will be offset with the credits generated from our businesses—converting our contribution to GHG emissions reduction
via REDD+ projects into credits—to achieve carbon neutrality.
From there, we will continue expanding our clean fuel andrenewable energy businesses, REDD+ projects, and Joint Crediting
Mechanism projects to increase avoided emissions, aiming tobecome carbon negative with negative net emissions of 150,000
t-CO₂ and 1,000,000 t-CO₂ by 2030 and 2050, respectively, andthereby contribute to the decarbonization of society.

Kanematsu’s Future

To evaluate the qualitative impact of climate change on theGroup’s businesses, we first classified them into high-risk sectors
and non-high-risk sectors as per the TCFD recommendations.
Next, we categorized the impact on the Group from the quantitative perspective of sales. Of the four businesses that showed alarge qualitative impact and quantitative impact, we selected
the North American beef business and steel tubing business,
which account for a relatively large portion of our sales on aconsolidated basis (IFRS revenue), for scenario analysis.

High-risk sectors• Mobile• ICT Solutions• Industrial Electronics, Electronic
Materials• Semiconductor Components,
Semiconductor Equipment

From Kanematsu’s Present to the Future

Describe the resilience of the organization's
strategy, taking into consideration different
climate-related scenarios, including a 2°C or
lower scenario

New opportunities associated with the development/adoption of new technologies (EOR, CCUS)
Categorize into large/medium/small

Impacts

From Kanematsu’s Origins to the Present

TCFD recommended disclosures

Visit our website for assured
fiscal 2022 figures

1
Targets and results 2025 Carbon neutral

Describe the targets used by theorganization to manage climaterelated risks and opportunities andperformance against targets

2030 Carbon negative2: -150,000 t-CO2
2050 Carbon negative: -1,000,000 t-CO2

1. Carbon neutral is a state in which the Group’s CO2 emissions (Scopes 1 and 2) are balanced with the credits generated by the Group throughforest conservation projects and Joint Crediting Mechanism projects and avoided emissions.
2. Carbon negative is a state in which the credits generated by the Group through forest conservation projects and Joint Crediting Mechanism
projects and avoided emissions exceed the Group’s CO₂ emissions (Scopes 1 and 2).
KANEMATSU Integrated Report 2022

39

Sustainability

Mutual Developmentwith Local Communities

Social Contribution through Our Operations
Every employee of the Kanematsu Group, as a good citizen, acts with an awareness of theimportance of their social responsibilities, proactively working to solve social issues throughbusiness and social contribution activities with the aim of realizing a sustainable society. At thesame time, through volunteering, employees broaden their horizons, learn new values and gain
new insights, helping to create richer and more vibrant communities.

Kanematsu Joins SEMA
Kanematsu has joined the Social Emergency Management
Alliance (SEMA). SEMA links private-sector companies and civilsociety organizations (CSOs) to provide support to areas inJapan affected by disasters. Information about the products andservices that member companies can provide is aggregated in a
database that can be used to rapidly provide goods and services
where they are needed when a major natural disaster strikes.
Kanematsu provides supplies that those affected need for daily

life, primarily alkaline batteries for use in LED flashlights andradios as well as for chargin­g smartphones—especially important in disasters as a means of communication and gathering
information. Through SEMA, Kanematsu will support disasterstricken communities by swiftly providing the batteries anddisaster-readiness products that it
handles in its businesses.

Products suppliedby Kanematsu

How SEMA works

Symposium on Safe ICT Use for Kids and Teens (Kanematsu Communications Ltd.)e-Net Caravan is an initiative targeting elementary throughhigh school students as well as their parents and teachers toraise awareness and provide guidance regarding safe internet
use. Kanematsu Communications Ltd. sends employees who
have been certified as instructors to carry out e-Net Caravan
activities. In fiscal 2022, the program reached 34,727 participants at 162 schools.
In November 2021, the Foundation for MultiMedia
Communications, which organizes e-Net Caravan, held asymposium on the safe use of ICT by minors and related

support for families and communities. As a representative ofindustry, Kanematsu Communications Ltd. engaged in panel
discussions with government officials and educators (participants: 124).
Through such activities, theKanematsu Group is working
to promote safe ICT use forminors and improve theinternet of the adults aroundthem.

Hitotsubashi University Clock Tower Renovation
In commemoration of its 145th anniversary, Hitotsubashi
University renovated and repaired its East Main Building. The
building’s clock tower was renovated using funds donated byKanematsu. The connection between the university and
Kanematsu goes back to the construction and endowment of
the Kanematsu Auditorium in 1927 as one of several commemorative projects undertaken to honor the wishes of Fusajiro
Kanematsu, the late founder of Kanematsu. Having been
selected for registration as a national cultural heritage site, theKanematsu Auditorium is an important piece of Japan’s history.
The extensive restoration of the auditorium from 2003 to 2004

40

KANEMATSU Integrated Report 2022

was funded largely by donations from the university's alumni,
with additional funding from Kanematsu.
The recent renovation of the East Main Building, on the same
campus as the Kanematsu Auditorium, included the restorationof the building’s clock tower.
The impressive clock displays
the time for all to see, including
faculty, students, and otherpassersby on the public roadrunning through the campus.

Message from the Chief Officer of Human Resources

Senior Executive Officer,
Chief Officer,
Human Resources, General Affairs, andLogistics and Insurance

KANEMATSU Integrated Report 2022

Kanematsu’s Foundations

total views, has reached 100%.
In addition, our corporate culture allows young employees
to take the initiative in their work, and we are expanding
opportunities for them to be more involved by, for example,
selecting them for teams related to DX, GX, and new businessinitiatives. Employee feedback has helped us identify areas toreinforce going forward, including leadership, strategy anddirection, cooperative frameworks, business processes andorganizational structure, and performance management. To
address these, management will take the initiative in making
changes, setting a positive example while further reinforcing
dialogue with employees. Ideas and resources will be shared
Companywide to promote business creation. In addition, weare beginning to revise our evaluation and compensation
system to ensure that it is appropriately flexible.
Turning to diverse work styles, we are steadily advancing
measures to create environments in which diverse employees
can exercise their abilities. In recognition of these efforts,
Kanematsu received “Platinum Kurumin” certification in
December 2020 and was selected as a Certified Health &Productivity Management Outstanding Organization for thesecond consecutive year in March 2022. In our diversity andinclusion efforts, launched in 2019, we have assembled the
D&I Team, consisting of members from across various divisions that are working to roll out activities on a Companywide
basis. In 2022, we set up a project under the direct control ofthe president, launching initiatives centered on innovationand inclusion that provide employees with the opportunity
for direct dialogue with the president. We will continue toadvance work style reforms, aiming to increase employee
engagement and contribute to the achievement of the SDGs.
No matter how times change, Kanematsu will work todevelop business professionals with strong basic qualities ofcharacter, such as fairness and integrity, as well as rich individuality. We will work to further enhance human resource
systems so that every employee can act with pride to build
strong relationships with business partners, thereby
supporting the development of the Kanematsu Group.

Kanematsu’s Future

Human resources are the Kanematsu Group’s most valuableassets. As expressed in our founding purpose, “Let us sow andnurture the seeds of global prosperity,” the core of our corporate activities has always been contributing to the public
interest, society, the international community, and humanity.
To solve the issues our business partners face and build
strong relationships of trust, the Kanematsu Group willcontribute through innovation to realize sustainable growth.
The foundation of sustainable growth is human capital. To
maximize the value of our human capital, we have been cultivating management-level human resources, improving
employee satisfaction, and realizing diverse work styles asthemes of the future 135 medium-term vision and actively
discussing them at the Board of Directors and Management
Committee.
To cultivate management-level human resources, we have
expanded Kanematsu University—our training program thatsystematically guides employees through the steps to
becoming next-generation management professionals(global leaders)—to cover all employees. This ensures that
employees are able to gain the basic knowledge they willneed as next-generation management professionals within
their first ten years at Kanematsu. So that they can move onto the next step, we have set up the university’s “graduate
school,” which gives employees the opportunity to amass
more advanced management knowledge.
In terms of enhancing employee satisfaction, theemployee engagement survey we implemented in August2021 found improvements in every category in comparison
with the previous survey in 2018. In particular, many
employees responded positively regarding education andtraining, respect for individuals, and authority and discretion,and it seems that having access to free, high-level recurrent
education through Kanematsu University has bolsteredemployee satisfaction. In addition, we continue to implement
initiatives that prioritize respect for individuals, encouraging
all employees, including management, to utilize e-learning on
diversity, harassment, unconscious bias, and LGBT issues.
Internal viewership of this content, calculated on the basis of

From Kanematsu’s Present to the Future

Kazuo Tanaka

From Kanematsu’s Origins to the Present

Creating an
Environment That
Enables Diverse Work Styles

41

Sustainability

Human Resource Development
Human resource development is a vital priority for the Kanematsu Group. In our personnel evaluations, we haveintroduced the Review & Challenge (R&C) system for setting specific personal targets based on organizational goals set
via management by objectives (MBO), as well as on each individual’s characteristics and future growth. In this way, we
cultivate human resources who ambitiously take on challenges. We also focus efforts on training programs, providing
one-year on-the-job training for each employee newly assigned to a workplace, as well as a selective program extending
to Group company employees (executive management training) and diverse e-learning content aimed at developing
more autonomous professionals. We continue to update training based on evolving needs and program effectiveness.

Kanematsu University
Kanematsu University, a reinforced, more systematic version of ourexisting training systems, was launched in July 2019 to develop
management professionals who will create new businesses.
All employees of Kanematsu and Group companies are
eligible to participate in the system, which grants credits andcertifications, and participation is mandatory for employees who
have been with the Group for fewer than 15 years. The curriculum comprises the three categories of general education, interpersonal knowledge and skills, and professional knowledge andskills. The system provides a rich range of courses administered
via e-learning or group training, depending on the content.
Content ranges from the fundamental, such as business manners
and foreign languages, to specialized knowledge and skills, suchas business investment, legal matters, and anger management.
Through Kanematsu University,
we are developing the next
generation of managementlevel human resources.

Overall Approach to Human Resource Development
Undergraduate Program Goal for Human Resources
Concept

Graduate School Program Goal for Human Resources

Gain comprehensive basic knowledge needed for management

Goal

Concept

Learn advanced management expertiseGoal

Has the discernment of a business creator and manager as a next-generation
management professional (global leader); can be entrusted with actual business
management in a management role
Knowledge: Overall management knowledge, including management strategy,
finance, and accounting
Experience: Experience in a project management office and in organizational
management

Has specialized management knowledge
Has progressed from theoretical understanding of management to practical ability
Specific knowledge of management strategy and M&A in multiple businesses
Knowledge of corporate governance and risk management
Practical skills in setting goals, operational management, team building, andhuman resource development
Practical skills in mission formulation, developing medium- and long-term
division strategy, and organizational design

Human Resource Development Programs and Participants (Fiscal 2022)
Category

Concept

Key programs and results

Executive Management Training

Graduate School
Years 11–15

Learn advanced
management expertise・Strategy formulation skills
・Human resource management skills
・Management knowledge

Implemented: August 2021–March 2022
Participants: 63 (including 14 from Group
companies)

e-learning, group training, etc.

ProfessionalcourseYears 8–10

Learn basic knowledge
needed as a next-generation
management professional(global leader)

AdvancedcourseYears 4–7

Learn knowledge needed
as an organizational/
project leader

M&A and business investment training
e-learning, group training, etc.
Business plan training

Undergraduate

Basic course
Years 1–3

42

KANEMATSU Integrated Report 2022

Implemented: March 2022
Participants: 14

・Critical thinking
・Management strategy and business planning・Accounting and financee-learning, group training, etc.
Learn knowledge needed to
be a fully competentprofessionale-learning, group training, etc.

Learn knowledge needed tolive as a fully-fledged adultTraining for new graduate hires

Implemented: September 2021–
March 2022
Participants: 76 (including 15 from Group
companies)

From Kanematsu’s Origins to the Present

Message from the Organizer of Kanematsu University

Toshinari MoriManager, Human Resources
Development Section, Human
Resources Department

Kanematsu University, launched in July 2019, is Kanematsu’s first training program
formally organized into courses. Previously, most training was carried out by internal
instructors, but this led to such issues as bias in the knowledge accumulated within theGroup and limited growth opportunities for employees. We felt that, left as it was, thisapproach would produce few personnel with the knowledge needed to create new businesses and manage operations into the future. We therefore established Kanematsu
University, aiming to nurture talented personnel with excellent leadership abilities, able
to create new businesses and handle management. Kanematsu University is still a young
program, but we will continue to encourage employees toward self-development by
providing broad-ranging content in order to grow the Kanematsu Group’s business.

Professional Course

Advanced Course

I gained a greater
understanding of
messaging from thestandpoint ofmanagement andsystematicallylearned about
approaches to
P.T. Kanematsu Trading
management duties.
Indonesia
I had the chance toTatsuya Nakano
engage in discussion
and work with people from Group companies and other departments outside of mynormal scope of contact, which helped me
make connections that I think will be usefulin future collaborations. Gaining the newviewpoint of a manager has helped me
broaden my perspective and deepen the way
I engage with business.

The M&A and business investment
training included
lectures from highly
experienced outside
instructors on corporate analysis and business valuation. The
Meat Products
lectures covered
Department No. 2
industries and fields
Motoki Morohoshi
other than those I
have worked in, and I think that learning about
the strategies and distinctive aspects of othercompanies has helped me think in new ways
and broaden my perspective. The course also
provided the opportunity to learn about theentire process of a business investment projectfrom proposal to execution. I found it to be avaluable program that imparts knowledge andskills that every employee needs to embody
Kanematsu’s founding purpose.

Before the introduction of
Kanematsu
University, I was toobusy with sales to
do much else, so
the opportunity it
provided to return
Kanematsu (China) Co.,to studying wasLtd.
very valuable.
Fumikazu Shikuma
Learning about critical thinking, for example, helped me tosystematically put into words and examine
the rules of thumb I was using in my ordinary work, which was very fruitful. I also got
to learn about using discounted cash flow
and internal rate of return as tools formaking investment decisions, which I had
never had the chance to formally study
before. This provided a good opportunity
for me to think about business investment
in my current business.

Kanematsu’s Future

Graduate School

From Kanematsu’s Present to the Future

Program Participant Perspectives

Monetary and Time Investment in Human Resource Development (Non-Consolidated)¥103 million; ¥130,000 per full-time employee1(Cost of Kanematsu University: ¥72 million; ¥290,000 per participant)

1. Number of employees calculated based on fulltime equivalent (FTE); does not include employees
on leave, re-hired retirees, or temporary employees

Training hours

Total training hours2: 14,500; 19 hours per full-time employee(Kanematsu University training hours: 10,100; 41 hours per participant)

2. T otal for Kanematsu University and executive
management training

Notes 1. Figures are for the 2021 training year (July 1, 2020–June 30, 2021), as the 2022 training year is still in progress.
2. Training time is the total for the three undergraduate courses, as the Graduate School course commenced in February 2021.
3. Figures by course are as follows. Basic course: 123 participants averaging 67 hours; Advanced course: 85 participants averaging 11 hours;Professional course: 38 participants averaging 21 hours.

Kanematsu’s Foundations

Monetary investment

Internal Recruiting System
To put the right people in the right places, invigorate ourhuman resources, and increase employee motivation, we havein place an internal recruiting system. Mainly when launching
new businesses or new Company-wide initiatives, the divisions
involved recruit team members from within the Group by
posting about the kind of people they need on the Group
intranet. This allows interested employees to step up to take on
new opportunities. In fiscal 2022, five employees were transferred through this system.

Internal Recruitment in Fiscal 2022
Division

Work description

Employees
transferred

Steel, Materials & Plant
Planning Office

Building a new business aimed atcountering climate change

1Motor Vehicles and Parts
Department No. 1

Building a new business using advanced
carbon nanotube materials

1

Electronics Planning Office

Building, promoting, and sales support for
a new SaaS business

2

Public & Investor Relations Communicating the Kanematsu Group’s
Sectionappeal through PR and IR

1

KANEMATSU Integrated Report 2022

43

Sustainability

Diverse Work Styles
Kanematsu is proactively committed to ensuring a good work-life balance and restricts working hours in order to fostera healthy workforce. We have been improving the working environment so that employees can treasure the time they
spend with their families as well as the time spent on hobbies and participating in social activities.

Flextime System

Remote Work System

In fiscal 2022, we implemented a full flextime system topromote flexible work styles. In principle, individuals can freely
adjust the times they begin and end their work in accordancewith the varying demands of their own schedules, enabling
more individually optimized and efficient work styles.

We have officially adopted a remote work system for the work
styles of a new era. When working remotely, employees arelimited to no more than two hours of overtime in principle, andwe provide an environment that enables employees to beefficient.

Systems for Using Paid Vacation/Leave
Bronze Week Plus

Childcare Support

Kanematsu has established the Bronze Week Plus System forencouraging the planned use of annual paid vacation days. This
is intended to make it easier for employees to take off the timethey are entitled to and create workplaces that are more
comfortable and rewarding. Any day can be selected for taking
paid vacation, and employees are required to take at least fivedays through the system, as we aim for a rate of annual vacation
days used of at least 70%. This rate reached 73.8% in fiscal
2020. We will continue working to create even more employeefriendly workplaces and aim to help employees maintain ahealthy balance between their work and private lives.

In addition to maternity and childcare leave systems, we have anumber of systems in place to allow parents to continue working
while pregnant or raising children. These include reduced duties
and time off for doctor’s visits during pregnancy, time off to carefor sick children, a system of shortened work hours and flextime
after returning from leave, and a system of providing discounts
on babysitting services. After returning from leave, employees are
eligible for reduced work hours up to the end of the child’s thirdyear of elementary school and may work reduced hours with no
reduction in pay until the child’s third birthday.
Many employees take childcare leave, and when they return
to work, as a rule, they are placed in the divisions in which they
worked before. These measures are taken to create a pleasantworking environment.

Annual Vacation Usage Rate (All Kanematsu Corporation Employees)
(%)
80

73.7%

73.8%

70
60

62.4%

66.7%

50

2018

2019

2020

2021

2022

(FY)

Bronze Week Plus System Outline
Definition: The Bronze Week Plus system makes it easier to take off a bridge day
between two ordinary days off, the day before or after a three-day weekend,or two days before or after a normal weekend, effectively extending thenumber of consecutive days off for the individual to four or more.
Purpose: This system is aimed at helping employees have special experiences thatare difficult to realize with shorter breaks so that they will feel refreshedand have new ideas that they can then put to use in their work.

The system, which encourages the use of paid annual vacation, especially multiple consecutive days off , is named “Bronze
Week Plus” in reference to the yearly clusters of public holidays
in Japan popularly known as “Golden Week” and “Silver Week.”

My Weekend System
The “My Weekend” system encourages employees to take their
paid annual vacation to, for example, pursue their hobbies or
enjoy special family occasions. This system is aimed at helping
employees feel comfortable taking days off for important
events and giving greater priority to their personal lives. In
particular, managerial employees, who often find it particularly
difficult to take time off, are asked to use at least five days per
year. This system thus provides support to help employees prioritize both their work and private lives.

Annual Paid Vacation Granted in Hour Units
Employees can use their paid vacation in one-hour units, giving
them greater flexibility than that provided by taking a half dayof paid time off to take care of personal errands.

44

KANEMATSU Integrated Report 2022

Family Care Support

64.8%

In addition to the conventional family care leave system,
Kanematsu provides special paid holidays for family care (“special
family care holidays”).
We have also created a handbook for using support systems
for balancing work and family care as part of efforts to provide
information to employees who have concerns about family care.
In addition, we have not only contracted with an external familycare consultation service that employees can use at any time, but
appointed a child-raising and family care consultation officer,
enabling one-to-one consultation on these matters.
Information about Kanematsu’s family care-related systems ispublicly available on the Ministry of Health, Labour and Welfare’s
Ryoritsu Shien no Hiroba website. In recognitionof such systems, Kanematsu has been granted“Tomonin” certification as a company thatprovides work environments that enable
employees to balance work with family care.
Employees Using Leave and Special Holidays for Childcare or Family Care
(FY*)

2018

2019

2020

2021

2022

18

18

20

24

31

0

2

0

4

6

12

12

14

7

10

Women

19

26

29

26

31

Men

18

23

20

18

21

Users of family care leave

0

1

1

0

0

Users of special family care Women
holidays
Men

11

11

13

11

12

13

10

10

7

8

Users of childcare leave

Women
Men

Users of special childbirthleave for men
Users of leave to care forsick children* Years ended March 31

Companywide Initiatives
Kanematsu has formed a Diversity and Inclusion (D&I) Team thatis promoting the recognition and acceptance of diverse values
and ways of thinking in order to create environments that will
make it easier for all employees to work and utilize their abilities. To encourage employees to take ownership of D&I issues,
we hold diversity lectures presented by outside speakers active
in a wide range of fields, provide Companywide e-learning, andimplement communications activities focusing on the use ofchildcare leave by male employees as well as diverse values.
Since fiscal 2022, we have been implementing D&I promotion
activities through the Companywide project team. These activities have led to the creation of guidelines for the use of names
other than employees’ legal names (such as pre-marriage
surnames) and a system for providing discounts on babysitting
services.

Promoting the Greater Professional Participation and Advancement of Diverse Employees
General Employer Action Plan (Women’s Participation and Advancement)
Duration

FY1

April 1, 2019 to March 31, 2024
Although Kanematsu hires a certain number of women every year, thepercentages of women among all new graduate hires, employees incore operations, and employees in management positions are low.

Targets

1. Increase the number of women working in core operations inassistant section manager-level or higher positions to 35 (from 27
at the end of fiscal 2019)
2. Increase the percentage of women among new graduate hires to
42% (from 34% in fiscal 2019).

Initiatives

Increasing the percentage of women among new graduate hires andcreating systems to promote female employee retention

2019

2020

2021

2022

52

54

64

66

3

4

5

7

27

28

31

31

34.0%

39.0%

51.0%

63.6%

1. Figures for Kanematsu Corporation (non-consolidated)
2. Employees for whom work location is determined according to theCompany’s needs and not restricted to any specific area. These employees
eventually move into core operations.

Kanematsu’s Future

Issues theCompany
Faces

2018

Female career-track employees2 at
54
fiscal year-end
Female employees at manager
2
level or above at fiscal year-end
Female responsibility band22
employees at fiscal year-end
Women among new graduate
34.4%
hires

From Kanematsu’s Present to the Future

Targets of the D&I team
For Kanematsu to achieve its management objectives as a business creation group, proactively incorporating many kinds of difference isessential. We aim to grow in size and strength as a global company that will continue to contribute to society over the next century and, tothis end, to be a flexible organization in which everyone is compensated fairly and equitably and able to fully utilize their diverse abilities.

From Kanematsu’s Origins to the Present

Diversity and Inclusion

Perspective of a Female Employee Working Overseas

Manager, Kanematsu GmbH

Kanematsu’s Foundations

Eriko Kikura

In April 2021, I was assigned to Dusseldorf, Germany, as manager of the local Foods & Grain
Division. My mission here is to find foods produced in Europe for the Japanese market and tosell food products in Europe. To find new food products, from a sustainability standpoint, I am
constantly gathering information about environmentally friendly European products that we
could bring to the Japanese market. At the same time, I am focused on sales of foods within
Europe. Navigating the rules of various European countries, with their different languages,
cultures, and dietary habits, is difficult, but with the help of our very capable staff, I have found
it rewarding to challenge myself this way. Leveraging the knowledge and experience built upby the employees stationed here before me, I am working to build sales frameworks in Europe.

General Employer Action Plan (Raising the Next Generation)
Under our General Employer Action Plan, we are advancing
initiatives to fully harness employee potential, with the principal
aim of creating work environments that enable employees toautonomously engage in their work and continue to fully participate professionally regardless of the ups and down of life
events.
In 2020, Kanematsu was granted “Platinum Kurumin” certification by the Ministry of Health, Labour and Welfare’s Tokyo
Labour Bureau. This special certification is granted to “Kurumin”

certified companies that are implementing
particularly high-level initiatives to support
their employees in balancing work and childcare. “Kurumin” certification is granted tocompanies that formulate action plans basedon the Act on Advancement of Measures to
Support Raising the Next Generation andreach said plans’ targets.
KANEMATSU Integrated Report 2022

45

Sustainability

D&I Measures
Systems to Support Flexible Work Styles

Hiring of People with Disabilities• System that allows non-career-track employees to takemanager or assistant manager positions•S ystem for rehiring employees who left the Company toaccompany a spouse who was transferred to another location•C hildcare support and family care support

Kanematsu has enshrined respect for human rights in its Codeof Conduct and strives to create workplaces where diverse
human resources can work and thrive together. As part ofthese efforts, we proactively hire people with disabilities. Taking
into consideration the skills and experience of the individuals
with disabilities currently working at Kanematsu, we are
creating environments that allow each individual to exercise
their abilities to the fullest.
The portion of employees with disabilities is 2.39% (as ofJune 2022).

Systems for Using Paid Vacation/Leave

Diversity Hiring

p44

With an eye to recruiting students with diverse backgrounds fromaround the world, we are hiring international students graduatingfrom Japanese universities and Japanese students graduating fromoverseas universities.
Diversity Hiring Rate (Among New Graduates Hired as Career-Track Employees)(Year of entry)
Graduates with nonJapanese citizenship
Graduates ofoverseas universities

2017

2018

2019

2020

2021

2022

0%

3%

0%

3%

26%

20%

0%

0%

3%

6%

16%

33%

Advanced Career System
We introduced the Advanced Career System from fiscal 2023
to support the careers and professional participation of
employees in their 40s and above. We hold career design andlife planning training for employees at ages 45, 50, and 52,
encouraging proactive career development in light of increasingly long average life spans.

Improving Employee Satisfaction
Kanematsu has made improving employee satisfaction a priority
initiative under future 135. As part of efforts in this area, we
carry out employee engagement surveys of all Kanematsu
employees to understand where we stand and the issues weface, verifying the effects of measures implemented as we work

to enhance employee satisfaction.
We carried out the first employee engagement survey in2018, using the results to understand the issues we faced. Wethen developed and executed measures to solve these issues.

Issues identified through the first employee engagement survey

Main measures to solve issues

Improving strategy and policy understanding, awareness, and support

J-Project (head office relocation plan), illustrated explanations of future 135, video streaming of monthly meetings

Work process improvement

Facilitating information sharing through Group use of cloud storage services, making internal approval processes
fully paperless, using the cloud for recording expenses, defining workflows for personnel evaluations andimplementing other procedures to improve operations

Promoting the growth of individuals and organizations

Creating a dynamic corporate culture through Kanematsu University and D&I promotion

Other

Work style reforms

Trial use of satellite offices, remote work system, Bronze Week Plus, My Weekend, individual-level flextime, full
flextime system

Work-life balance

Support for balancing childcare and family care with work, Platinum Kurumin certification, external family careconcierge service

Workplace environment improvement

Launched the Health Promotion Section within the Human Resources Department, certified as a Health &Productivity Management Outstanding Organization

In fiscal 2022, the halfway point of future 135, we carried out
our second employee engagement survey. The objective of thesecond survey was to measure employee satisfaction midway
through future 135 and to evaluate the results of the measures
we have implemented by comparing results with those of theprevious survey. The results showed improvement from the firstsurvey (Figures 1, 2). We believe these findings reflect the effectsof the measures we have implemented, including the launch of
Kanematsu University, workflow reform through systems andother infrastructure improvement, and the promotion of D&I
Figure 1. Survey Results on Employee Engagement1
(%)
80
60

and health and productivity management.
However, the survey also showed that our employee
engagement is still below the global average, and multiple
hurdles to increasing employee satisfaction remain. By examining ways of dealing with these hurdles and putting measures
into action, we will work to further increase employee
satisfaction.
We plan to implement a third employee engagement survey
before the end of future 135 to verify the effects of themeasures currently being implemented or considered.
Figure 2. Survey Results on Effective Employee Utilization2
（%）
80

56%

61%

56%

66%

60

40

40

20

20

0

1st survey(FY2019)

2nd survey(FY2022)Japan
average3

Globalaverage4

63%
51%

67%
55%

0

1st survey(FY2019)

2nd survey(FY2022)Japan
average3

Globalaverage4

1. Employee engagement: An indicator of employees’ commitment to the Company and motivation to proactively engage with their work
2. Effective employee utilization: An indicator of how appropriately human resources are allocated and whether work environments are employee-friendly in a way that helps themutilize their abilities to the fullest
3. Japan average calculated across approximately 90 companies with approximately 800,000 employees
4. Global average calculated across approximately 700 companies with approximately 7,000,000 employees (average score of the top 10% of global companies by financial performance in their respective industries)

46

KANEMATSU Integrated Report 2022

Issue title

Issue summary

Measures being implemented or considered

Leadership

Some felt that the management vision was not sufficiently shared, and there
is a gap in awareness between employees and management, so spurring
more two-way communication is an issue.

Strategy anddirection

Employees feel that response to changes in the broader world is too slow.

• Creating frameworks for two-way communication with management through theoffice relocation and by introducing activity-based work (ABW; including a freeaddress system)• GX- and DX-related additions to Company policies; Company communications;and organizational changes (launch of the DX Project Office and GX accelerator,i.e., decarbonization consulting, etc.)• Proactive communications though internal newsletters and videos• Dialogues between employees and the president about inclusion and innovation• Revamp of the Technologies and Business Collaboration Team and start of projects
involving all employees• Established the innovation investment system

Business
processes andorganizational
management

Issues were found with the speed of organizational decision making andorganization structures backing up ambitious new initiatives. Burdensome
procedures and red tape were raised as issues, pointing to an overemphasis
on procedure and form.

• Considering initiatives in line with the office relocation and introduction of ABW• Enhance productivity and autonomy with the introduction of ABW

There is a need to create a climate in which each employees can set
challenging goals for themselves and work to raise the level of the entire
organization as well as a need to create systems that reward their efforts
and achievements.

• Revising personnel systems

Performance
management

Initiatives for Health & Productivity Management

Establishment of the Kanematsu Health & Productivity Management Declaration
Kanematsu Health & Productivity Management Declaration

Kanematsu’s Future

On March 9, 2022, Kanematsu was recognized as a 2022 Certified Health & Productivity Management
Outstanding Organization in the large enterprise category of the Certified Health & Productivity
Management Organization Recognition Program organized by the Ministry of Economy, Trade and Industry
and Nippon Kenko Kaigi. This follows our recognition under the program in 2021.
Kanematsu’s people are its greatest asset. We believe that health and productivity management is essential to enabling employees to expand their abilities and potential while working with vigor and enthusiasm.
Our main health and productivity management initiatives are as follows.

From Kanematsu’s Present to the Future

Many felt that there is not enough cross-organizational sharing of ideas andresources, and the siloed organizational structure is an issue.

Cooperative
frameworks

From Kanematsu’s Origins to the Present

Issues Identified through the Second Employee Engagement Survey and Measures Being Implemented or Considered

Kanematsu believes that maintaining and improving employee health is a crucial management issue for achieving sustainable growth.
Accordingly, to advance health & productivity management, we strive to do the following.

1. Health management:
We support employees’ individual efforts to proactively maintain and improve their health.
2. Environment improvement: We create workplaces that ensure employees can work without endangering their health and participate fully.
3. Ongoing improvement:
We study, implement, confirm effectiveness, and take steps to improve measures related to health management andenvironmental improvement on an ongoing basis.

Kanematsu is promoting health & productivity management
based on a system comprising the Human Resources (Health
Promotion Section) Department, industrial physicians, theMedical Center, the Occupational Health Committee, and thehealth insurance society, with the Chief Officer of Human
Health & Productivity Promotion System
Board of Directors
Management Committee
Health & Productivity
Management Promotion Officer

Resources designated as the Health & Productivity Management
Promotion Officer.
Furthermore, we have established a framework for reportingon health & productivity management initiatives to theManagement Committee.

Lifestyle-Related Illness Prevention

Kanematsu’s Foundations

Establishment of the Health & Productivity
Promotion System

We are working toward the prevention and early detection oflifestyle-related illnesses through such measures as increasing
the proportion of employees who undergo regular medical
checkups and receive specific health guidance.

Mental Health Problem Prevention

Industrial Physician(Chief Officer of Human Resources& General Affairs)

Kanematsu Health
Insurance Society

Medical Center

Human Resources Department(Health Promotion Section)

Occupational HealthCommittee

We aim to prevent mental health problems and provide an environment where employees can work with confidence by suchmeans as providing an internal consultation hotline andincreasing the rate of employees who undergo stress checks.

KANEMATSU Integrated Report 202247

Roundtable Discussion with the
Chairman and Outside Directors

Chairman Kaoru Tanigawa, who is also the presiding
officer of the Board of Directors, and outside directors
Yuko Tahara and Kazuhiro Tanaka, who wereappointed in July 2022 as chairs of the Compensation
Committee and Nominating Committee, respectively,
sat down for a roundtable discussion about
Kanematsu’s governance system, the effectiveness of
the Board of Directors, and challenges going forward.

Impressions of Kanematsu’s Culture as an
Outside Director
Tahara In the three years that I have been a director at
Kanematsu, I think that, under future 135, efforts to reinforce
governance and implement DX strategy, which is at the core ofbusiness and internal control, have advanced extremely quickly.
Looking at human capital, my area of expertise, Kanematsu has
made numerous major steps forward in terms of improving
systems and changing mindsets, including the launch of adiversity & inclusion (D&I) project team and the Kanematsu
University internal business school. I have great expectations
for continued proactive management going forward.
Tanaka In my two years as outside director, whenever I haveraised concerns or offered suggestions, they have been taken
seriously, giving me an impression of a corporate culture ofhonesty. This makes me only more aware of the weight of myresponsibility as an outside director. In 2022, the number ofoutside directors increased by one, to three of seven total directors. Within the Nominating Committee, which carries out
director candidate selection, Chairman Tanigawa expressed theconviction that the Board of Directors should comprise amajority of outside directors. However, as an outside director, I
felt that securing a certain portion of standing directors wasimportant in terms of effectiveness at Kanematsu as it is now,and we settled on a ratio of four standing to three outside
directors.

Why the Current Governance System Works
Tanigawa I believe that the Board of Directors’ main role in
the Kanematsu Group is to provide management oversight,
while the Management Committee handles business execution. The Management Committee is chaired by the president
and comprises certain executive officers. To enable rapid andflexible management, the Board delegates a great deal of
authority to the Committee. The Management Committee duly
reports to the Board of Directors, and the directors who are also
executive officers ensure that information is shared quickly,
which has improved the speed and precision of our decision
making.
Tanaka The key to Kanematsu’s separation of oversight andexecution is, as you say, the Management Committee. The
Board of Directors is led by the chairman, and the Management
Committee by the president. I think that having a chairman
leading oversight who also has experience as president helps
enhance management decision-making effectiveness andspeed. Of course, I am keenly aware of my responsibility as an
outside director to always be on the lookout to make surethese systems aren’t settling into hollow formalities ordysfunction.

48

KANEMATSU Integrated Report 2022

Kaoru Tanigawa
Chairman

Tanigawa Important decisions and issues raised by the Boardof Directors are fed back to the executives, that is, theManagement Committee, which digests them and puts theminto action that the Board of Directors, in turn, oversees. While
oversight and execution are separated, they are also, of course,
connected through this cycle. I think that the chairman andpresident play key roles in maintaining that connection. I waspresident until just last year, so I have a vivid understanding of
the concerns the president faces as representative of the executives. I believe that being able to draw on that visceral understanding while providing advice and monitoring as the head of
the oversight side is a major strength.
Tanaka Oversight of the president by the chairman isperhaps the most effective kind. Also, because the presiding
officer of the Board of Directors, who leads supervision, is adirector from within the Company, the outside directors must
provide a restraining function. It is important to oversee theoverseers, if you will, and to promote accountability by nothesitating to seek answers about things that may seem normal
or obvious internally, but raise questions when viewed fromoutside. To meet the demands of investors and society, I think
that, in addition to making improvements to systems and functions, to make sure they do not devolve into complacentformalities, it is vital to constantly confirm that the current
governance system and selection of executives are the best
they can be.
Tanigawa In addition, the outside Audit & Supervisory Board
members, in particular, work to provide careful oversight of
directors. In that sense, I think that governance is strengthenedby the double and even triple overlapping of function. There
are times when an incisive question from an outside director oroutside Audit & Supervisory Board member catches me offbalance. I think it is particularly important to properly addressquestions that set me back, and I take great care in answering
them. Moreover, I am always aware that the outside directors
and Audit & Supervisory Board members are monitoring me in
my own supervisory role along with the entire Board of
Directors.

A New Step Forward for the Nominating Committee
Tanigawa Since July 2022, the Nominating Committee andCompensation Committee are both chaired by outside directors. The Nominating Committee has begun a major review of
its processes from a human resource management perspective,Outside Director (Chair of the Compensation Committee)
President and CEO, Basic Inc.
Professor, School of Professional Education, the Graduate Schoolof Social Design

Tanigawa Kanematsu University was created as a training
system to cultivate management-level human resources within
Kanematsu’s businesses. However, we are working on concreteplans to introduce practical training as soon as possible toproduce management candidates.

Tanigawa Yes, as with competency assessments, for succession planning and other aspects of human resource management, I think we need to improve our infrastructure using
digital technologies while also looking at specific individuals.
Going forward, we will need to dramatically increase the flexibility of human resource allocation. The Kanematsu Groupalready has the foundations needed to assign people based on
their achievements and character, regardless of background ororganization. For example, mid-career hires have gone on to

become executive officers. This culture is a strength. We havealso made great progress in improving the internal environment and rules to enable the professional advancement of
women, and I think the real remaining challenge will be tochange mindsets, including those of women themselves,
encouraging them to pursue advancement and growth.
Tahara Rather than trying to change them abruptly, raising
women’s awareness has to happen naturally—you must allow
them to understand for themselves that there are opportunities for them to excel that are natural extensions of their efforts
to develop their abilities and pursue the goals before them.
And, just like climbing a mountain, where one’s perspective on
the landscape changes with each step up, it will be important
for the Company to support them in having new experiences
and shifting their perspectives as they progress. These days,
people are living and working longer than ever, which meansthat more people should have the chance to develop careers.
We need women to feel that reaching one’s goals is not just fora select few, but rather that everyone can cultivate their potential. Women pass through different life events than men, so it
will be necessary to continue to create systems that balance
work and private life, such as the system already in use thatallows employees to become managers without the usualneed to relocate. Recently, we held an open talk session with
employees, led by myself, Kanematsu’s female executive officer
Kaori Kusuda, and Hideki Murakami, manager of the Human
Resources Department. The session generated a tremendous
response. I have received a wide range of messages about how
participants related to things I said, the new insights theygained, and questions they had. The Human Resources
Department is implementing initiatives with a personal touch
like this while also assiduously reforming systems, and I think
we can expect to see major, tangible results in the near future.

Kanematsu’s Foundations

Tahara As a Nominating Committee member, I also feel that
we must discuss the competencies and capabilities
Kanematsu’s management requires, as we will need to reflect
these in succession planning. Rather than deciding such things
based on implicit understanding, they should be made explicit
so that investors and society can readily understand the succession plan’s trajectory. I think it is also important to clearly lay out
and weigh the achievements and experiences, such as challenges overcome, of each potential candidate.

Professor, Graduate School of Business Administration,
Hitotsubashi University

Kanematsu’s Future

Tanaka The Nominating Committee is changing considerably. One of the committee’s key roles is to provide recommendations for director selection, but the other is to cultivate
management-level human resources. For the former, we areworking to enhance the existing system for making recommendations, referring to a skill matrix when selecting candidates
based on conventional considerations of character, skills, andexperience. To cultivate management-level human resources,
given that Kanematsu is working to step up its business investment, I think that we need to reinforce Kanematsu University
with an eye toward strategic successor development. The
Board of Directors has no business executives, so it’s relatively
insulated from bias toward any specific business division, but it
is still important to ensure that the process prioritizes transparency so candidates are selected based on solid rationale. I feelthat this is my greatest role as chair of the Nominating
Committee.

Outside Director (Chair of the Nominating Committee)

From Kanematsu’s Present to the Future

and the Compensation Committee has begun initiatives aimed
at the formulation of the next medium-term vision from a newperspective.

Kazuhiro Tanaka

From Kanematsu’s Origins to the Present

Yuko Tahara

Tanaka Each of those initiatives helps to build true diversity
and inclusion. Also, in terms of recent efforts to enhance governance, we have secured an outside director with corporate
management experience, which we had been lacking. We
welcomed Hiroyuki Sasa, who previously served as president of
Olympus Corporation.
Tanigawa I’m sure that, with his wealth of experience, Mr.
Sasa will bring new dimension to discussions of many topics.
When the Kanematsu Group implemented business selection
and concentration in the early 2000s, we created very strict
internal controls and restrictions on investment decisions in
KANEMATSU Integrated Report 2022

49

Roundtable Discussion with the Chairman and Outside Directors

response to requests from financial institutions. At the time,
this helped to stabilize our operations, but I think that in thelong run we inadvertently ended up with a shortage of experience. Going forward, as Kanematsu pursues more aggressive
management, including business investment, I hope we candraw greatly on the expertise of our outside directors to invigorate Board of Directors discussions and discuss management
issues that have been areas of weakness from new angles. We
see particular value in Mr. Sasa’s character. At Kanematsu, wecan’t have directors who live in an ivory tower, far removed
from the Company’s day-to-day reality. I think that understanding the perspectives of employees is an important part ofbeing a business manager. When rebuilding Olympus’s
management, Mr. Sasa placed emphasis on dialogue with
employees, and he is committed to such dialogue—this was amajor draw for us.

The Role of the Compensation Committee andIssues It Faces
Tahara As the chair of the Compensation Committee, I
believe the role expected of me is to increase the objectivity
and transparency of the process for deciding director compensation. The current compensation system has evolved graduallyin step with the formulation of medium-term visions and,through the consideration of wide-ranging standards, has
emerged in a form that fits the current needs of Company. In
terms of compensation system design, however, in conjunction
with the formulation of the next medium-term vision, we must
examine whether the system provides appropriate incentives
to realize the management strategies, whether it creates
shared interests with shareholders, and whether there areappropriate risk management mechanisms in place. We mustalso carefully consider the need to revise the system itself.
Furthermore, I think that in the near future we will have toconsider such issues as the ratio of fixed to variable compensation, individual evaluations of executive officers, and reflecting
non-financial performance in compensation. These have been
issues in need of discussion for some time.

Message from an Outside Audit & Supervisory Board
MemberYusaku Kurahashi
Audit & Supervisory Board
Member (Outside)

Kanematsu’s corporate governance is characterized byinitiatives to adapt to evolving needs while maintaining
a foundation rooted in the Company’s history. In
Kanematsu’s conventional trading company business, theseparation of business divisions and support divisions has
been effective in providing both support for and checks onfront-line businesses. In addition, the key to growth going
forward will be discovering high-quality investment opportunities. When deciding whether to invest, the Project
Deliberation Committee, Management Committee, and

50

KANEMATSU Integrated Report 2022

Thoughts as Directors about Achieving
Sustained Growth
Tahara From a human resource management perspective, I
believe that practical experience is the most important asset
when carrying out the work of a trading company.
Kanematsu’s employees create businesses from nothing andamid unfamiliar terrain almost like breathing. Identifying andutilizing the passion and expertise of each individual—
Kanematsu’s true human capital—and linking these with HRtech will create, I think, a great hope for the future of Kanematsu.
Tanaka I think that continuing to do business with aconscience, as expressed in Fusajiro Kanematsu’s founding
purpose, is the path to growth that best suits Kanematsu. By
applying this approach in its global businesses, Kanematsu has
earned its greatest asset, trust. I believe that this emphasis on
working with properly ordered systems, minds and hearts is notjust empty rhetoric, but a practicable way of operating as acompany.
Tanigawa Key to considerations of how governance should
work is to never be complacent. To realize ongoing growth,
governance must continually change to meet evolving needs.
Rather than simply being satisfied with the status quo, we will
constantly work to improve the effectiveness of governance. To
that end, we will continue consciously working to make governance more transparent by enhancing the quality of ourhuman resources and further digitizing our decision-making
frameworks and infrastructure.

Board of Directors examine such opportunities from many
angles, and the support divisions do their utmost to bolster
post-merger integration. In terms of the management
structure, responsibility is divided between the chairman
and the president, who, respectively, head the Board of
Directors and Management Committee, with the chairman
leading internal auditing, as part of efforts to reinforce
oversight of management. This structure is built on thelessons of successes and failures over the course ofKanematsu’s history of more than 130 years.
Building on that foundation, in recent years,
Kanematsu has been implementing numerous measures toadapt to changing management issues, such as increasing
diversity on the Board of Directors, welcoming outside
directors who can provide advice and oversight regarding
management strategy, and establishing the Sustainability
Management Committee. Kanematsu is focusing on realefficacy, not just form, and as an outside Audit &Supervisory Board member, I will do my utmost tocontribute to effective corporate governance.

Message from the Newest Outside Director

From Kanematsu’s Origins to the Present

Offering a New Perspective
Based on Distinct Experience
Hiroyuki Sasa

Apr. 2019
Jun. 2020
Jun. 2022

President and Representative Executive Director,
Olympus Corporation
Director, Olympus Corporation
Outside Director, Kyosan Electric ManufacturingCo., Ltd. (incumbent)
Outside Director, Kanematsu Corporation(incumbent)

The rapid changes in the operating environment brought about by such factors as the COVID-19
pandemic and the Russian invasion of Ukraine are profoundly affecting politics, the economy, andculture worldwide. The growing pace, scale, and scope of such changes in recent years have madeFrom Kanematsu’s Present to the Future

Apr. 2012

their impacts unavoidable for businesses everywhere. Amid such change, Kanematsu, having passed
the halfway point of its future 135 medium-term vision, has reaffirmed its commitment to the vision’s
while remaining firmly rooted in “the pioneering spirit of our predecessors” and “imagination andingenuity” (as outlined in “Our Beliefs: Kanematsu’s Guiding Principles”). I think that this is the essenceof Kanematsu’s management approach. Kanematsu’s policy under future 135 is to pursue“sustainable growth in fundamental businesses” and “promote business investment in areas ofKanematsu’s Futurebasic policy, which remains unchanged. This entails squarely facing change with unflinching resolve

strength to achieve expansion of scale and acquisition of added value.” As such, I’d like to share somethoughts on my role at Kanematsu.
I think that I can offer unique experience in three areas. The first is experience at a manufacturer.
I hope to use the ways of thinking and seeing things I learned there, which are completely different
from those of a trading company, to bring a breath a fresh air to ways of doing things andmanagement. Specifically, I think that my distinct experience could be put to use in investment aimed
threatened the survival of the company. I took the helm of management at Olympus after all the
directors had resigned following a scandal in 2011. The entire company worked together to face thecrisis—indeed, squarely, and with unflinching resolve—and came out the other side. Drawing on thisexperience, I aim to contribute to setting the right speed and scale of response to change. Third isexperience with transformation into a truly global company. At Olympus, around 80% of theKanematsu’s Foundationsat securing added value and new businesses. Second is the experience of weathering a crisis thatcompany’s sales were already overseas, but its internal organization and systems had not been
updated accordingly, and it was not really a global company in terms of Group management. I
resolutely advanced reforms, which are still ongoing today. I similarly hope to help make Kanematsu atruly global company in both form and substance.
I think that these three areas of experience will be particularly relevant to Kanematsu’s Guiding
Principles and future 135 in terms of diversity and responding to change. I will do my utmost tocontribute to the Company by leveraging this experience to provide precise, timely advice.

KANEMATSU Integrated Report 2022

51

Corporate Governance

Our Basic Stance on Corporate Governance
Kanematsu’s founder himself put down the words “Let us sow and nurture the seeds of global prosperity.” The
Kanematsu Group recognizes the pioneering spirit fostered by our predecessors along with the wise use of ourcreative imagination and ingenuity, fulfilling our corporate social responsibilities through sound, flourishingbusinesses, and adherence to Company rules as key parts of its Corporate Principle. We operate in accordance withthis principle and our Code of Conduct, striving to carry out corporate activities to serve our various stakeholders

Corporate Governance Structure (as of July 2022)
Role and composition of each body
Body

Board of Directors

Nominating Committee

Compensation Committee

Management Committee

7 members

4 members

4 members

12 members• Presiding officer: Chairman of
the Board of Directors• Committee chair: Outside
director• Committee chair: Outside
director• Presiding officer: President• Standing directors: 3• Chairman of the Board of
Directors• President• Chairman of the Board of Directors• Executive officers: 10• Outside directors: 3• Outside directors: 2

Composition

52•Outside directors: 2

Three of the seven directors areoutside directors in order topromote appropriate decision
making and further reinforce thesupervision of business execution.

Three of the four members,
including the committee chair, areindependent outside directors. The
committee reinforces the independence, objectivity, and accountability of the Board of Directors.

Three of the four members,
including the committee chair, areindependent outside directors. The
committee reinforces the independence, objectivity, and accountability of the Board of Directors.

The committee has 12 members,
comprising the chairman of theBoard of Directors and certain executive officers, including the president.

Objective,
Authority, andFunction

The Board of Directors decides onmatters required of it as set out inlaw and Kanematsu’s Articles ofIncorporation as well as management policy and other importantmatters related to business execution. The Board also provides oversight of the business execution of
directors and executive officers bytaking up important mattersreferred from the Management
Committee and receiving various
reports.
Decisions regarding the execution of other business operations(mainly matters to be reported as
stipulated in the Board of Directors
regulations) are delegated to theManagement Committee or executive officers in accordance withthe rules on administrative
authority established by the Boardof Directors.

In response to inquiries from theBoard of Directors, the Nominating
Committee deliberates on suchmatters as proposals for the
General Meeting of Shareholders
related to the appointment anddismissal of directors and thenecessary policy, rules, and procedures for reaching related resolutions. Based on these deliberations,the committee provides advice andrecommendations to the Board of
Directors.

In response to inquiries from theBoard of Directors, theCompensation Committee deliberates on such matters as policy
regarding the setting of compensation levels and types for individual directors and executive
officers, the compensation itself,
as well as the necessary policy,
rules, and procedures for reaching
related resolutions. Based onthese deliberations, the committee
provides advice and recommendations to the Board of Directors.

The executive officer system has
been adopted to improve the flexibility of business execution, speed
up management decision making,and further clarify roles and responsibilities through the separation ofsupervisory and executive functions,with the Management Committee
established as an executive body.
The Management Committee
establishes basic policies for
Companywide general businessexecution in accordance with policies
determined by the Board of Directors
and provides instruction and guidance on the execution of business.

Meeting
Frequency

Regular meetings: Once a month
Extraordinary meetings held asneededHeld as needed

Held as needed

Meetings in
Fiscal 2022

19

9

2

KANEMATSU Integrated Report 2022

Generally twice a month
Extraordinary meetings held asneeded26

OutsideStanding
Male

Project Deliberation Committee

Internal Control and Compliance
Committee

Female Male

Sustainability Management
Committee

4 members

3 members

5 members

7 members• Presiding officer: Standing Audit &Supervisory Board member• Presiding officer: Chief Officer ofCredit Control• Committee chair: Chairman of theBoard of Directors• Committee chair: Chief Officer ofCorporate Planning• Standing Audit & Supervisory Board
member: 1• Executive officers: 2 (chief officers offinance and accounting andcorporate planning)• Committee vice-chair: President• Executive officers: 6• Executive officers: 3• Outside Audit & Supervisory Board
members: 2

The committee comprises six officers
from business divisions (executive officers) and the chief officer of corporate
planning (an executive officer), whochairs the committee.

Kanematsu uses the audit & supervisoryboard system. The Audit & Supervisory
Board and its members act independently to audit directors’ performance of
their duties.
The Audit & Supervisory Board works
with the Board of Directors to provide
part of the Company’s auditing function
and audits the directors’ performance of
their duties as an independent bodyacting on behalf of shareholders.

As a Companywide internal body, theInternal Control and Compliance
Committee comprehensively assesses
risks facing the Kanematsu Group,seeks to enhance operational effectiveness and efficiency, and strives toensure the reliability of Group financial
reporting.

To help solve increasingly serious socialand environmental problems, including
climate change, Kanematsu established the Sustainability Management
Committee, which deliberates on
climate-related risks identified andevaluated by the business divisions.
The committee also regularly calculates the Group’s CO2 emissions anddiscusses changes in emissions andpolicy for related measures as part of
implementing comprehensive risk
management.

Regular meetings: Once a month
Extraordinary meetings held as needed13

To speed up the decision making,enhance deliberations, and minimize
business risks, prior to resolutions onsuch important matters as major
investments and loans, the Project
Deliberation Committee examines anddeliberates the matters in question
from a Company-wide perspective
and provides advice to the respective
decision-making bodies or individuals.

Extraordinary meetings held as needed(About twice a month)18

Generally held twice a year, in April
and July
2

Kanematsu’s Foundations

The committee has five members,
comprising the chairman of the Boardof Directors and certain executive officers, including the president.

Kanematsu’s Future

Two (half) of the four Audit & Supervisory The committee comprises the chief
Board members are outside members in officers of credit control, finance andorder to increase the transparency ofaccounting, and corporate planning
management and create a more equitable, efficient, and sound company.

From Kanematsu’s Present to the Future

Audit & Supervisory Board

From Kanematsu’s Origins to the Present

and help realize a sustainable society by providing socially valuable goods and services.
To this end, Kanematsu endeavors to strengthen corporate governance to increase the transparency ofmanagement and create a more equitable, efficient, and sound company. We work to improve corporate
governance with the aim of increasing our enterprise value and winning the support of all our stakeholders,
including shareholders, customers, business partners, and employees.

Held as needed

6

KANEMATSU Integrated Report 2022

53

Corporate Governance

The Evolution of Our Corporate Governance System (as of the end of the General Meeting of Shareholders
following each fiscal year-end)
2012

2013

System

2014

2015

2016

2017

2018

2019

2020

2021

2022

Expanded the executive officer system

Committees

Established the Nominating Committee and Compensation Committee

10

10

6

7

7

8

8

6

6

6

7

Standing directors

10

10

5

5

5

5

5

4

4

4

4

Outside director

0

0

1

2

2

3

3

2

2

2

3

Outside director ratio

0%

0%

17%

29%

29%

38%

38%

33%

33%

33%

43%

Audit & Supervisory Board
members

4

4

4

4

4

4

4

4

4

4

4

3

3

2

3

3

3

3

3

2

2

2

Standing

Standing

Standing

Standing

Standing

Standing

OutsideMembers

4

4

3

3

3

3

4

(Outside members)

3

3

2

2

2

2

3

Standing

Standing

Standing

Standing

Standing

Standing

OutsideMembers

4

4

3

3

3

3

4

(Outside members)

3

3

2

2

2

2

3

Directors

Outside Audit & Supervisory
Board members
Nominating
Committee

Committee chair

Compensation
Committee chair
Committee

Meeting Attendance (Fiscal 2022), Professional Background, and Skill Matrix
Board of Directors

Professional backgroundExperience as corporate officer or division chief officer at
Kanematsu
Kaoru Tanigawa

Chairman

Chief Officer, Electronics & Devices Division; Chief Officer,
Corporate Planning; President; Chairman; Chief Officer, Internal
Auditing Dept. (incumbent)

Yoshiya Miyabe

President

Deputy Chief Officer, Electronics & IT Division; Chief Officer, Motor U.S.A.
Vehicles & Aerospace Division; President (incumbent)(10 years)

19/19

Tetsuro Tsutano

Director

Chief Officer, Finance, Accounting, Business Accounting; Chief
Officer, Corporate Planning and IT Planning (incumbent)

U.S.A.
(4 years)

19/19

Shuji Masutani

Director

Chief Officer, Finance, Accounting, Business Accounting(incumbent)

U.K. (2 years)
Germany(2 years)

Yuko Tahara

Director (outside,
independent)

Outside director (incumbent)

19/19

Kazuhiro Tanaka

Director (outside,
independent)

Outside director (incumbent)

19/19

Hiroyuki Sasa

Director (outside,
independent)

Outside director (incumbent)

U.S.A.
(5 years)

Tetsuro Murao

Audit & Supervisory
Board member

Chief Officer, Machinery and Plant Division; Chief Officer, Human
Resources & General Affairs, Corporate Planning, and Sales
Administration; Audit & Supervisory Board member (incumbent)

Egypt (4 years)
Poland(4 years)

19/19

Motohisa Hirai

Audit & Supervisory
Board member

President, an overseas subsidiary (Hong Kong); Audit &Supervisory Board member (incumbent)

Germany(6 years)Hong Kong(3 years)

19/19

Yusaku Kurahashi

Audit & Supervisory
Board member
Outside Audit & Supervisory Board member (incumbent)(outside, independent)

18/19

Nobuko Inaba

Audit & Supervisory
Board member
Outside Audit & Supervisory Board member (incumbent)(outside, independent)

13/14

Details regarding the professional background of each directorand Audit & Supervisory Board member are available in the
Notice of the 128th Ordinary General Meeting of Shareholders.

54

Nominating Compensation
FY2022 Committee Committee
attendanceOverseas work
experience

KANEMATSU Integrated Report 2022

U.S.A.
(15 years)

Presiding
officer

19/19

–

Chair
Chair

–

Notice of the 128th Ordinary General Meeting of Shareholders p. 18

General Meeting of Shareholders
Appointment/Dismissal
Consultation

Board of Directors

Advice/Suggestions

Seven Directors(including threeoutside directors)

Appointment/
Dismissal

Appointment/Dismissal
Audit

From Kanematsu’s Origins to the Present

Corporate Governance Structure (as of June 24, 2022)

Audit & Supervisory Board
Four Audit & Supervisory
Board Members(including two outside members)

Collaboration

Nominating Committee
Compensation Committee

Appointment/Dismissal/
Supervision

Audit

Collaboration

President
Management Committee

Internal Control and Compliance Committee

Internal
controls

Sustainability Management Committee

Accounting audit

Accounting Auditor

Collaboration

Marketing Area/Support Area, Domestic and Overseas Offices, Subsidiaries

Audit & Supervisory Board

Skills needed for medium- and long-term management strategy and the Board of Directors
Medium- to long-term enhancement of corporate value

FY2022attendance

Corporate
management

Businessstrategyplanning

Human
resource
Governancemanagement

Business investment
Investment
decisions

Finance

Sustainability, DX
SDGs (ESG)
Technology/
management
DX
thinking

Innovation

Presiding
officer

13/13

13/13

10/10

Notes:
1. Areas in which individuals possess expertise and experience
are marked with “ ,” while areas in which they are particularly
expected to contribute are marked with “ .”2. Directors Shuji Masutani and Hiroyuki Sasa were appointed at
the June 24, 2022 General Meeting of Shareholders.
3. As Audit & Supervisory Board member Nobuko Inaba was
appointed at the June 23, 2021 General Meeting of
Shareholders, the numbers of meetings of the Board of
Directors and Audit & Supervisory Board that she was eligible
to attend differ from those for the other directors and Audit &Supervisory Board members.

Kanematsu’s Foundations

13/13

Kanematsu’s FutureManagement
Committee

From Kanematsu’s Present to the FutureInternal Auditing
Department

Project Deliberation Committee

https://www.kanematsu.co.jp/en/ir/files/Notice_of_the_128th_ordinary_General_Meeting_of_Shareholders.pdf
KANEMATSU Integrated Report 2022

55

Corporate GovernanceEvaluating the Effectiveness of the Board of Directors
improve the effectiveness of the Board of Directors. Based on
issues identified in the fiscal 2021 evaluation, the Board of
Directors and its secretariat implemented the measures listed
below in fiscal 2022. We will continue working to resolve issues
on an ongoing basis.

Each year, Kanematsu implements evaluations of the effectiveness of the Board of Directors to identify issues to address inthe following year and confirm the status of measures undertaken to address issues identified the previous year. Throughthis process of evaluation and the implementation of measures
to address issues identified, Kanematsu works to continually

Board of Directors Effectiveness Evaluation Process
Improvement initiatives

Self-evaluation

Analysis• Discussion at the Board of
Directors• Checking status of initiatives

Survey of all directors and Audit& Supervisory Board members

Identify issues• Survey collation and selfanalysis• Use of an external institution
once every three years

Discussion at the Board of
Directors

Initiatives to Address Issues Identified in the Previous Year
Issues

Initiatives in Fiscal 2022

Board of Directors composition• Secured the diversity of members and discussed skills needed in the Board of Directors identified in the skill matrix. Decided
to seek an outside director with corporate management experience from the perspective of promoting investment, part of
the future 135 medium-term vision.
• Raised the proportion of outside directors from two of six (33%) to three of seven (43%).

Board of Directors discussions and operations

Clarified the spheres and roles of the Board of Directors and Management Committee and narrowed down the proposals that
go to the Board of Directors for approval, mainly in areas of rules and personnel. Reduced the overall number of proposals put
before the Board by about 25%, enabling the Board to spend more time on discussions of management strategy, corporate
governance, and other important matters.

Knowledge and training necessary for Board
members

Considered implementing training on topics that many raised in the effectiveness evaluation. Held DX training for executives
with an outside expert.

Dialogue with shareholders and investors

Shared transcripts of IR meetings at the Board of Directors and created a feedback system for reflecting requests frominvestors in our messaging and disclosure.

Survey Items

Issues to Address Going Forward• Board of Directors composition, operation, and discussions• The monitoring function of the Board of Directors• Support system and training for directors and Audit & Supervisory
Board members• Dialogue with shareholders and investors• Initiatives undertaken by individuals• Composition of the Board of Directors and Management Committee• Medium- and long-term growth strategy; approach to financial andnon-financial aspects• Utilizing human capital and personnel system reform• Support system for outside directors

Director and Audit & Supervisory Board Member Compensation
Total Compensation
Total Compensation by Type (millions of yen)
Total Compensation(millions of yen)

56

Monetary Compensation
Basic Compensation

Performance-linked
Compensation

Non-monetary
Performance-linked Stock
Compensation

Number of Individuals
Receiving
Compensation

Directors (excluding outside directors)

236

152

40

43

4

Outside Directors

19

19

–

–

2

Audit & Supervisory Board Members(excluding outside members)

56

56

–

–

2

Outside Audit & Supervisory Board
Members

19

19

–

–

3

Total

331

247

40

43

11

KANEMATSU Integrated Report 2022

Specifically, compensation for executive directors consists ofbasic compensation as fixed compensation, performancelinked compensation, and stock compensation. Compensation
for Outside Directors, who provide oversight, consists of only
basic compensation in light of their duties.

Kanematsu’s basic policy for director compensation is to adopt
a compensation system that is linked to the interests of shareholders in order to ensure that the system sufficiently incentivizes the sustainable enhancement of corporate value, while
also ensuring that the compensation of individual directors is
set at levels appropriate to their respective responsibilities.

Director and Audit & Supervisory Board Member Compensation System
Executive Directors
Basic Compensation
Monthly fixedcompensation

Stock Compensation• Stock compensation that reflects the performance indicator (profit for
the year attributable to owners of the Parent); the number of shares tobe granted is calculated in accordance with the level of achievement of
performance targets set forth in the medium-term business plan andother factors, and shares are delivered upon retirement• This compensation is also granted to executive officers• Compensation is the total of amounts calculated each year during theterm of the medium-term business plan (April 1, 2018 to March 31,2024) (amounts less than ¥1 are rounded up to the nearest yen)
Stock compensation = Amount of performance-linked stockcompensation × The individual’s rank-based points ÷ Sum of rank-based
points awarded to all directors• An amount calculated based on the performance indicator (profit for
the year attributable to owners of the Parent) and its value is paid as abonus once a year
• Total payment amount: 0.25% of profit for the year attributable toowners of the Parent (or ¥0 if profit for the year attributable to ownersof the Parent is less than ¥5.0 billion) or ¥50 million, whichever is less
• The amounts paid to individual directors are determined by dividing
the total payment amount in proportion to points set out for each rank
Rank-Based Points and Maximum Individual Payment Amounts

Rank

Points

1.0

0.74

0.59

0.53

0.45

0.37

14,400 10,700

8,500

7,600

6,500

5,300

• Individual payment amount formula:
Individual payment amount = Total payment amount × The individual’srank-based points ÷ Sum of rank-based points awarded to all directors

Monetary compensation: Annual monetary compensation is capped at ¥300 million for directors (including¥40 million for outside directors) and ¥84 million for Audit & Supervisory Board members

15%–45% of total compensation

Policy and methods for
deciding compensation
amounts and calculation
methods¥5.0 billion toless than ¥25.0
billion

Performancelinked stockcompensation
amountformulaProfit for theProfit for the year
year attributable attributable to¥60 million
to owners of the owners of the
Parent × 0.18% Parent × 0.20%

0¥25.0 billion toless than ¥30.0
billion¥30.0
billion orabove• Individual payment formula (for individuals who were directors on the
final day of the evaluation period)
Stock issuance points = Stock compensation amount ÷ Per-share bookvalue of Kanematsu stock held by the trust• Maximum Shares (Stock Issuance Points) Awarded per Fiscal Year

Rank

Director
Director Director
Chairman
Director
and
and
and
of theandSeniorVice
Managing Senior
Board of
Executive
President Managing
Executive Executive
Directors
Officer
Executive
Officer
OfficerPresident
OfficerMaximumshares (stock
issuancepoints)53,000 39,000 31,000 28,000 23,000 19,000

The funds to be contributed by the Company to acquire Company shares
needed to for delivery to directors have been set at ¥450 million; shares
may be acquired through the stock market or through the disposal oftreasury stock.
15%–30% of total compensation

Board of Directors• Decides amounts within the maximum amount of director
compensation decided by resolution of the General Meeting of
Shareholders.
• Decides calculation methods and amount determination policies basedon recommendations from the General Meeting of Shareholders

Compensation Committee• Deliberates on policy for determining the content of compensation for individual
directors, the content of compensation, the basic policy necessary to makeresolutions on these, rules, and procedures and makes recommendations to theBoard of Directors.

Kanematsu’s Foundations

40%–70% of totalcompensation

Profit for theyear
Less than
attributable to¥5.0 billion
owners of the
ParentKanematsu’s Future

Maximum
individual
payment(thousandsof yen)Director
Director Director
Chairman
Director
and
and
and
of theandSeniorVice
Managing Senior
Board of
Executive
President Managing
Executive Executive
Directors
Officer
Executive
Officer
OfficerPresident
Officer

From Kanematsu’s Present to the Future

Performance-Linked Compensation• Cash compensation that reflects the performance indicator (profit for
the year attributable to owners of the Parent)

From Kanematsu’s Origins to the Present

Basic Policy

The Compensation Committee considers the proportion of each type of compensation for executive directors, taking into account compensation levels benchmarked against companies ofa similar business scale to the Company or in related industries or with similar business formats; the Board of Directors respects such considerations when determining the details ofcompensation for each director.

Outside Directors

Audit & Supervisory Board Members

Basic Compensation

Basic Compensation

Outside directors are paid only monthly compensation and are not paid performancelinked compensation.

Annual Securities Report (Japanese)

Audit & Supervisory Board members are paid monthly compensation determined by the
Audit & Supervisory Board and are not paid performance-linked compensation.

https://www.kanematsu.co.jp/ir/library/yuho.html
KANEMATSU Integrated Report 2022

57

Corporate GovernanceInternal Control
The Kanematsu Group’s Internal Control System
To provide systems for ensuring appropriate business operations
as stipulated in the Companies Act and the Regulations for
Enforcement of the Companies Act, Kanematsu has adopted the“Basic Policy on the Establishment of Internal Control Systems” byresolution of the Board of Directors (established May 1, 2006, last
amended June 24, 2022). The Company maintains and operates
an internal control system in accordance with this basic policy.
In addition, in line with internal control reporting systems
defined in the Financial Instruments and Exchange Law, we haveestablished the “Kanematsu Group’s Internal Control Overall

Policy”. The effectiveness of internal control regarding Groupwide
governance, settlement of accounts, IT, and operational processes
is internally monitored by the companies and divisions that implement such operations as well as by the Legal and ComplianceDepartment, which provides independent assessment.
Furthermore, we have established the Internal Control andCompliance Committee to head the Group’s overall internal
control. This committee carries out planning, conducts research,and provides recommendations and guidance regarding internal
control development, operation, and assessment.

Compliance
The Internal Control and Compliance Committee provides
support and guidance to ensure that the Group maintains
proper compliance. As part of such efforts, the committee has
prepared the Kanematsu Group Compliance Handbook, which
explains related measures with concrete examples and clearlystates that the Group rejects any and all ties with antisocial
forces. The Handbook has been made available through theCompany intranet to promote thorough awareness. The
Handbook also clearly lays out the system of division and Group
company compliance officers, rules for reporting Compliance
Matters, and the hotline systems for directly reporting to andconsulting with Internal Control and Compliance Committee
members or external counsel.
In addition to the Handbook, we are implementing internal
training to promote strict compliance, including the preventionof bribery and corruption. To educate employees about harassment, we have prepared and circulate a Harassment Handbookthat features concrete examples, and we highlight examples ofharassment as part of our internal compliance training. We also
implement management training on handling reports and incidents of bullying and harassment. Through these efforts, we areworking to further instill and enhance compliance awarenesson an ongoing basis.
Furthermore, at meetings of Group company presidents,
which bring together the top management of Kanematsu andits main subsidiaries and affiliates, participants discuss
Groupwide issues and share information related to internal
control, compliance, and risk management.
When a Compliance Matter occurs within the Group, it ispromptly reported to the Internal Control and Compliance
Committee, which provides opinions and directions regarding
the matter as necessary. The compliance officer of the division
or Group company where the matter occurred then takes corrective action and implements measures to prevent recurrences,respecting the committee’s opinions and directions to thegreatest extent possible.
* “Compliance Matter” means matters which may damage company
property or reputation of Kanematsu Group through violation of laws
and regulations, company regulations or general societal norms.

58

KANEMATSU Integrated Report 2022

Bribery Prevention Initiatives
The Kanematsu Group Compliance Handbook lays out theGroup’s prohibitions on bribery and excessive gifts and entertainment for business partners, both in Japan and overseas,with a view to ensuring fair business activities.
1. Prohibition of Bribery
Under the laws of the countries in which the Group operates,
the Kanematsu Group’s officers and employees are forbiddenfrom engaging in the bribery of public officials or persons incomparable positions (such as officers and employees of JBIC,JETRO, JICA, or foreign state-run companies).
2. Prohibition of Excessive Gifts and Entertainment
The Kanematsu Group prohibits the provision of entertainment,
gifts, or other tangible or intangible benefits in excess of reasonable, socially acceptable norms to officers and employees ofbusiness partners, whether in Japan or overseas, regardless ofwhether they are public or quasi-public officials or officers or
employees of private companies and regardless of whether
such provision is funded by the Company or personally by individuals. In addition, when entertainment or gifts are provided tobusiness partners for legitimate business purposes, such entertainment or gifts must be applied for and approved in advancein accordance with the internal rules established by each Group
company.
3. Raising Awareness of Compliance with the Laws of
Relevant Countries
The Kanematsu Group takes steps to raise awareness internallyof compliance not only with Japan’s Unfair Competition
Prevention Act, but also with laws under which acts committed
by Japanese companies outside the United States or United
Kingdom are punishable, such as the U.S. Foreign Corrupt
Practices Act and the U.K. Bribery Act.

Board of Directors

ReportManagement Committee

Support and Direction
AuditorInternal Control and Compliance Committee
Internal Control and Compliance Committee Members
Secretariat: Legal & Compliance Department(In the absence of a primary responsible division at Kanematsu Corporation）

Sales/Support Divisions

Each Group Company

Division Compliance Officer

Compliance Officer(President/MD or General Manager)

Officers & Employees of Kanematsu Corporation

Officers & Employees of Each Group Company* Indirectly-owned subsidiaries report through their parent company

Information Management System
Information Asset Retention

Under the leadership of departmental information officers(chief officers of business divisions and administrative departments), each organization within Kanematsu organizes theinformation assets handled in its business operations into three
categories of confidentiality (strictly confidential, internal use
only, and general). The categorization is reviewed annually topromote awareness among officers and employees.

In light of the demand for digitization, detailed rules for document retention have been integrated into the subordinate rulesof the Information Asset Management Rules, and data andpaper documents are retained for a specified period of time inaccordance with relevant laws and regulations.

Information Asset Management
Important information assets categorized as strictly confidential orinternal use only, whether recorded on paper, in digital form, or
using other analog media, are managed and utilized in accordancewith the Information Asset Management Rules, which stipulate
procedures for their appropriate handling, as well as detailed regulations for general employees and information system managers
that specify procedures and key points to be observed.

Implementing information
security management

Because the risk of information leaks cannot be completely
eliminated, Kanematsu has designated procedures for handlingleaks of important information assets and other such incidents.
In the event of such an incident, the Internal Control andCompliance Committee gathers information and works with
relevant departments to implement a response.

Incident Response System• Developing rules• Technological measures

President

Report on ongoingpreventive measures

PresidentInternal Control
and Compliance
Committee

Report on
implementation
Departmental information
officers (Chief officers ofbusiness divisions andadministrative departments)
Internal Control
and Compliance
Committee

Check

Report oncomplianceDirect,inspect

Employees

Information Security
Officer (Chief Officerof IT Planning)

Promote,educatePropose,reportInformation
System Manager(General Manager,
IT Planning Department)

Information Security Officer(Chief Officer of IT Planning)

Report on
progress

Direct on
response

Kanematsu’s Foundations

Information Security Management System

Incident Response

Kanematsu’s Future

Information Asset Categorization

From Kanematsu’s Present to the Future(Chief Officer of Sales Division and Officer in Charge of Support Division)

Checking the statusof measures

From Kanematsu’s Origins to the Present

Diagram of the Kanematsu Group Compliance System (as of June 24, 2022)

Report on incident detection
Information System Manager(General Manager,
IT Planning Department)

Report on incident detection
Departmental
information officers

Report on
incident detection

Report on incident detection
Employees
Inquire about failures, etc.

IT Planning Department

KANEMATSU Integrated Report 2022

59

Corporate GovernanceRisk Management System
The Kanematsu Group has established the following framework for managing risks by risk category. Specific risk countermeasures are disclosed in the notice of the Ordinary General Meeting of Shareholders and in the annual Securities Report(in Japanese).
Risk Management System (Japanese)

https://www.kanematsu.co.jp/ir/library/yuho.html

Business Risk Categories, Definitions, and Departments Responsible
The Risk Management Guidelines categorize and define theKanematsu Group’s business risks and specify the primary department responsible for the management of each. The designateddepartments regularly take steps to identify specific risks, understand the mechanisms of risk realization, frequency, and impact,
formulate responses for when risks are realized, and gather information to detect signs of risks.
The Kanematsu Group has established an internal approval
Category

Market risk

Subcategory

Definition

Department responsible

Commodity risk

The risk of incurring losses on trading of commodities and other goods in Japan or overseas due to severe
fluctuations in commodities markets or declining demand as a result of changes in market conditions, pricereductions due to competition, obsolescence due to technological innovation, etc.

Business Accounting
Department

Exchange rate risk

The risk of incurring losses on transactions denominated in foreign currencies due to exchange rate fluctuations

Finance Department

Interest rate risk

The risk of incurring losses due to interest rate fluctuations

Finance Department

Investment risk

Business investment
risk

Credit risk

request system based on the Rules on Delegation of Authority formaking judgments and decisions about business risks. The Project
Deliberation Committee evaluates important investments andloans, including their execution, continuance, and withdrawal,
based on the comprehensive examination of relevant risks,
aiming to minimize the Group’s losses and promote sound business growth.

Transactional credit
riskCountry risk
Legal risk
Information security
risk
Environmental risk
Operational risk
Operation risk

Compliance risk

• The risk of incurring losses in investment transactions of marketable securities due to stock market
Credit Control
fluctuations, etc.
Department• The risk of incurring losses due to inability to liquidate investments• The risk of incurring losses due to fluctuations in the value of business investments made to further develop
existing businesses or expand business areas attributable to market risks or investees’ financial condition or
Corporate Planningbusiness success or failure
Department• The risk of incurring losses due to inability to develop businesses as planned or withdraw because of local laws
or relationships with partners, etc.
• The risk of incurring losses due to late repayments or defaults on credit extended by the Group, such asaccounts receivable, advance payments, loans, and guarantees, because of deterioration in the financial
Credit Control
standing of trading partners, etc.
• The risk of being forced to honor obligations and thereby incur a monetary loss due to a trade partner’s default Department
on its obligation or contract in the course of forming and carrying out commodity supply agreements,
subcontract agreements, or other agreements
The risk of incurring losses in overseas transactions, investments, and loans due to the suspension of foreign
Credit Control
payments because of political and economic conditions in the relevant country, etc.
Department
The risk of incurring additional costs or other losses due to changes in laws and regulations or differences in the Legal and Compliancerecognition or interpretation of contracts with business partners
Department• The risk of negative effects on corporate activities due to information, either in tangible or intangible form, not IT Planning Department(General Affairs
being properly stored or preserved
Department)• The risk of incurring damages due to the leaking of confidential or personal information
The risk of incurring business disadvantage due to being avoided by business partners or society as a result ofGeneral Affairs
actions that are detrimental to the environment
Department
The risk of incurring losses due to designated business processes not being carried out or being overlooked
Support divisions
despite having in place internal rules and regulations governing corporate activities
Legal and ComplianceDepartment
The risk of incurring tangible or intangible losses due to the occurrence of legal or regulatory violations or(Logistics and Insurance
wrongdoing as a result of such issues being overlooked despite having in place preventive countermeasures
Dept, Food Safety
Management Office)Business Investment Process
The Kanematsu Group does not pursue investment to secure short-term gains, rather, it does so with the generalassumption that investments will be held long-term. After executing an investment, we make full use of theGroup’s functions to maximize the enterprise value of the investee, increase trading revenue, and improve consolidated earnings.
In addition, in order to grow business revenue and ensure prompt withdrawal from inefficient investments, we
conduct thorough periodic reviews and monitor investees, evaluating them both qualitatively (the purpose ofholding the investment) and quantitatively (related revenue, dividend income, and other returns, etc.) to determine whether each investment justifies the Company’s cost of capital.
60

KANEMATSU Integrated Report 2022

Application

Support divisions

Project Deliberation
Committee

Investment

Decision

Carefully deliberating each investment, we employ the insight and experience of the support divisions at every
step from initial consideration to execution. Depending on the size of the investment, particular deliberative
bodies select and decide on projects.

Business investment process details

p11

Business Investment Process Support System• PMI support• Monitoring• Directions and criteria
for the project

Corporate Planning
Department(Leader)

Accounting Department

Investee

Finance Department

Dispatch
staff

The Kanematsu Group works to enhance its system forongoing post-merger integration (PMI) to ensure that investees
are appropriately managed as members of the Group andmaximize their enterprise value. Specifically, the qualitative
standards of the investment guidelines applied when making
an investment include provisions for clarifying the officer at
Kanematsu responsible for PMI and dispatching a representative from Kanematsu who is highly knowledgeable about theinvestee’s business. This is intended to promote close collaboration with Kanematsu’s support divisions, which offer sophisticated expertise, and thereby make maximum use of theCompany’s functions.

Monitoring and Asset Replacement

Credit Control Department
External expert

Other support divisions

Groupwide Activities

Kanematsu’s Foundations

At their monthly information sharing meetings, the support
divisions share information about everything from pre-approval
investment planning to post-investment monitoring, progress,
and items of concern. This information is also reported tomembers of the Management Committee.
When a problem arises in business implementation
following an investment, the support divisions issue directions
for improvement to the relevant business divisions and reporton related measures and plans to Kanematsu’s deliberative
bodies as necessary.
Based on monitoring, we advance the replacement of lowefficiency assets and businesses when they meet our exit
criteria or their strategic purpose in the portfolio has diminished.

Kanematsu’s Future

Business
division(Officer incharge)Legal andCompliance Department

Post-Merger Integration Promotion System

From Kanematsu’s Present to the Future

Consideration of Sustainability and Issues of High Materiality
The importance of sustainability and ESG management is growing worldwide. In light of this and aiming to help
achieve the Sustainable Development Goals (SDGs), the Kanematsu Group has, since April 2020, included its
approach to sustainability and issues of high materiality as factors for consideration in its deliberations and decision making regarding all investments, as well as important contracts and the acquisition of important assets.

From Kanematsu’s Origins to the Present

Decision-Making Process

Group company presidents meet twice a year and at other times as necessary to share information on Groupwide
business activities. These meetings are aimed at ensuring mutual understanding and awareness with regard tocorporate governance issues.
Within the Kanematsu Group, Kanematsu Electronics Ltd. and Kanematsu Sustech Corporation are subsidiarycompanies, as defined in Article 8-3 of the Ordinance on Terminology, Forms, and Preparation Methods of Financial
Statements, etc., that are listed on a domestic securities exchange. Kanematsu respects these companies’ management
autonomy and, strictly in keeping with its position and level of authority as a shareholder, provides them with advice
regarding all types of issues and requires advance internal approval only regarding important matters. Furthermore, toprevent inappropriate transactions with these companies, their subsidiaries, or their affiliates, and to prevent improperaccounting, Kanematsu and the said two companies exchange information as needed while securing the independenceof the two companies and their subsidiaries, etc.
KANEMATSU Integrated Report 2022

61

Corporate Officers(As of June 24, 2022)

Directors and Audit & Supervisory Board Members

Kaoru Tanigawa

Yoshiya Miyabe

Tetsuro Tsutano

Shuji Masutani

ChairmanPresident

Director

Director

Shares held: 35,800

Shares held: 20,500

Shares held: 24,500

Shares held: 1,600

1981 Joined Kanematsu-Gosho Ltd.
2015 Director, Senior Managing Executive Officer
2017 President
2021 Chairman (incumbent)

1983 Joined Kanematsu-Gosho Ltd.
2018 Director, Senior Managing Executive Officer
2021 President (incumbent)

1992 Joined Kanematsu Corporation2017 Director, Executive Officer
2018 Director, Senior Executive Officer(incumbent)

1990 Joined Kanematsu Corporation
2021 Executive Officer
2022 Director, Executive Officer (incumbent)

Yuko Tahara

Kazuhiro Tanaka

Hiroyuki Sasa

Director (Outside)

Director (Outside)

Director (Outside)

Shares held: 0

Shares held: 0

Shares held: 0

1998 President and CEO, Basic Inc. (incumbent)
2012 Representative Director, Frame & Work
Module Promotion Association (incumbent)
2018 Outside Director & Member of the Audit
and Supervisory Committee, Sanyo Homes
Corporation (incumbent)
2019 Outside Director, Kanematsu Corporation(incumbent)
2021 Professor, School of Professional Education,
The Graduate School of Information &Communication (now the Graduate Schoolof Social Design) (incumbent)

2010 Professor, Graduate School of Commerceand Management, Hitotsubashi University
2018 Professor, Graduate School of Business
Administration, Hitotsubashi University(incumbent)
2019 Dean, Graduate School of Business
Administration and Faculty of Commerceand Management, Hitotsubashi University
2020 Outside Director, Kanematsu Corporation(incumbent)

2012 Director, Representative Executive Officer,
President, Olympus Corporation
2019 Director, Olympus Corporation
2020 Outside Director, Kyosan Electric
Manufacturing Co., Ltd. (incumbent)
2022 Outside Director, Kanematsu Corporation(incumbent)

Tetsuro Murao

Motohisa Hirai

Yusaku Kurahashi

Nobuko Inaba

Audit & Supervisory Board
Member (full-time)

Audit & Supervisory Board
Member (full-time)

Audit & Supervisory Board
Member (Outside)

Audit & Supervisory Board
Member (Outside)

Shares held: 9,500

Shares held: 4,600

Shares held: 0

Shares held: 01976 Joined Kanematsu-Gosho Ltd.
2014 Senior Managing Executive officer
2015 President, Shintoa Corporation2018 Outside Director (Audit & Supervisory
Committee Member), Kanematsu
Sustech Corporation
2019 Audit & Supervisory Board Member,
Kanematsu Corporation (incumbent)

1976 Joined Kanematsu-Gosho Ltd.
2014 Senior Managing Director, KanematsuNNK Corporation (now Kanematsu
Sustech Corporation)2020 Audit & Supervisory Board Member,
Kanematsu Corporation (incumbent)

2007 Registered as attorney at law and joined
Nakamura, Tsunoda & Matsumoto2015 Partner of Nakamura, Tsunoda & Matsumoto(incumbent)
2019 Audit & Supervisory Board Member,
Kanematsu Corporation (incumbent)
2020 Outside Director (Audit & Supervisory
Committee Member), UNITED ARROWS LTD.
(incumbent)

2005 President, Inaba C.P.A. Office(incumbent)
2007 Representative Director, PAS
Corporation (now Hayabusa
Consulting Corporation) (incumbent)
2014 Outside Audit & Supervisory Board
Member, Tokyo TY Financial Group,
Inc (now Tokyo Kiraboshi Financial
Group, Inc.) (incumbent)
2019 Outside Corporate Auditor, DeNA
Co., Ltd. (incumbent)
2021 Audit & Supervisory Board Member,
Kanematsu Corporation (incumbent)

1 Ms. Yuko Tahara, Mr. Kazuhiro Tanaka and Mr. Hiroyuki Sasa are outside directors.
2 Mr. Yusaku Kurahashi and Ms. Nobuko Inaba are outside Audit & Supervisory Board members.
3 Ms. Yuko Tahara, Mr. Kazuhiro Tanaka, Mr. Hiroyuki Sasa, Mr. Yusaku Kurahashi, and Ms. Nobuko Inaba are
independent officers, as defined by the Tokyo Stock Exchange.

62

KANEMATSU Integrated Report 2022

Executive Officers
From Kanematsu’s Origins to the Present

Toshihide Motoshita

Eiji Kan

Masahiro Harada

President

Senior Managing
Executive Officer

Senior Managing
Executive Officer

Managing Executive
Officer

Chief Officer, Credit Control,
Legal and Compliance

Chief Officer, Steel, Materials &Plant Division, Green
Transformation Committee Chair
General Manager, Osaka
Branch; General Manager,
Nagoya Branch

Chief Officer, Electronics &Devices Division, Digital
Transformation Committee Chair

Kazuo Tanaka

Tetsuro Tsutano

Ryoichi Kidokoro

Hiroshi Yamashina

Senior Executive Officer

Senior Executive Officer

Senior Executive Officer

Senior Executive Officer

Chief Officer, Human
Resources, General Affairs,
Logistics & Insurance

Chief Officer, Corporate
Planning, IT Planning,Technologies and Business
Collaboration

Chief Officer, Motor Vehicles& Aerospace Division

President, Kanematsu USA Inc.;
General Manager, Chicago
Head OfficeOsamu Iwata

Yoichiro Muramatsu

Jun Nakajima

Toru Hashimoto

Koichi Nishimura

Executive Officer

Executive Officer

Executive Officer

Executive Officer

Executive Officer

Deputy Chief Officer, Steel,Materials & Plant Division

President, Kanematsu GmbH;
President, Kanematsu Europe
PLC; General Manager, The
Representative of KanematsuGmbH Budapest; General
Manager, The Representative ofKanematsu GmbH Milano

Chief Officer, Grain, Oilseeds& Feedstuff Division

Chief Officer, Meat Products
Division

Chief Officer, Foods Division

Akihiro Fujita

Kaori Kusuda

Shuji Masutani

Executive Officer

Executive Officer

Executive Officer

Deputy Chief Officer,
Electronics & Devices
Division; General Manager,
Electronics Planning Office

Deputy Chief Officer,
Internal Auditing Dept.;
General Manager, Internal
Auditing Dept.

Chief Officer, Finance,
Accounting, BusinessAccounting

From Kanematsu’s Present to the Future

Yoshiya Miyabe

Kanematsu’s Future
Kanematsu’s Foundations

KANEMATSU Integrated Report 2022

63

Business Segments

Revenue

Main BusinessElectronics & Devices• Semiconductor Equipment• Electronic Components and Materials• Industrial Electronics• Semiconductors & Devices• ICT Solutions• Mobile• CCTV Systems• Data, AI, and SaaS(¥ billion)

300.0

255.5

254.5
226.1

200.0

100.0

0

2020

(FY)

Foods, Meat & Grain

Foods• Foods (agricultural products,
marine products, beverages, etc.)• Cooked and Processed Foods• Processed Agricultural Products

Meat
Products• Meat Products

Grain,
Oilseeds &Feedstuff• Grain, Food Soybeans, Oilseeds• Feedstuff

Steel, Materials & Plant

2021

2022

(¥ billion)

300.0

285.3
251.4

244.6

2020

2021

200.0

100.0

• Steel• Steel Tubing• Chemicals• Energy• Plant & Ships• Machine Tools & Industrial Machinery

0

(FY)

2022

(¥ billion)

150.0
120.0

148.0
129.9
96.8

90.0
60.0
30.0
0

(FY)

Motor Vehicles & Aerospace• Motor Vehicles and Parts• Aerospace

2020

2021

2022

(¥ billion)

80.0

74.6

71.1

60.0

65.8

40.0

20.0

0

(FY)

64

KANEMATSU Integrated Report 2022

2020

2021

2022

(FY2022)

Operating Profit

20.0(¥ billion)

19.0

19.1

(%)

10.0

25

9.3

17.6

8.5

8.0

15.0

7.9

6.0
10.0
4.0
5.0

0

(FY)

2020

2021

2022

9.2

5

0

0

(FY)

2020

2021

2.0

1.3

1.0

1.5

0

2021

2022

2.5

2.8

2020

2021

Net Income (left)(¥ billion)

4.0

3.8

2.0

1.0

2.1

3.5

10
4.9

5

0

2020

2021

2022

0

(FY)

2020

2021

Net Income (left)(¥ billion)

2022

10

2.0
1.5

5.0

1.0

1.0

1.5

1.5

4.3

4.3

0

0

2021

¥16.0 billion

9.1%

Electronics &Devices

49.7%

20.4%

Foods, Meat &
Grain

15.8%

Motor Vehicles &Aerospace

8.5%

Other

8.9%

Electronics &Devices

33.8%

2022

6
4
2

0.5

2020

Steel,
Materials &
Plant

5.0%

1.7
1.7

(FY)

Other

8

2.1

2.0

Motor Vehicles &Aerospace

Total Assets

(%)

2.5

2.4

12.1%

ROIC (right)(¥ billion)

3.0¥29.3 billion

Kanematsu’s Foundations

0

4.1

65.0%

15

1.8

1.0

(FY)

20

2.3

2.0

Electronics &Devices

Net Income*

(%)

3.3

3.0

3.4%

Steel,
Materials &Plant

ROIC (right)

3.0

Other

2022

4.0

4.1

Motor Vehicles &Aerospace

Foods, Meat &Grain(¥ billion)

5.0

37.1%

13.8%

0

(FY)

Foods, Meat &
Grain

5

0

2020

19.3%

Kanematsu’s Future

(FY)

1.5
4.8

1.0

¥768.0 billion

5.7%
10

2.4

2.0

33.3%

From Kanematsu’s Present to the Future

15

2.5
3.5

Electronics &Devices

Operating Income

(%)

4.0
3.0

Steel,
Materials &Plant

ROIC (right)

3.0

1.7%

8.6%

2022

(¥ billion)

5.0

10

2.0

Net Income (left)(¥ billion)

8.0

Other

20
15

10.7

Motor Vehicles &Aerospace

From Kanematsu’s Origins to the Present(¥ billion)

Revenue

Net Income*/ROIC

0

(FY)

2020

Net Income (left)

2021

2022
ROIC (right)* Profit for the year attributable to owners of the Parent

Steel,
Materials &Plant¥634.5 billion

24.7%

Foods,
Meat &
Grain

23.9%
KANEMATSU Integrated Report 2022

65

Business Segments

Electronics & Devices
The Electronics & Devices segment handles a value chain spanning ICT
solutions, mobile, and electronics-related materials parts, devices andequipment, providing unique added value across a wide range of fields.
Using our solid technological prowess and wealth of know-how inelectronics, we are advancing new initiatives in the IoT and AI fields andoffering new value to contribute to society.
Key SDGs

Masahiro Harada
Managing Executive Officer
Chief Officer, Electronics & Devices Division

The Electronics & Devices segment is closely related to innovative digital technologies andoffers many opportunities for expansion into new businesses. Advanced technologies only
make a difference once implemented, making this achallenging area, but by building organic partnerships andcontinuing segment-wide efforts, we strive to contribute tosociety.

Medium- to Long-Term Market Outlook
The market is expanding and changing extremely quickly. The keys to success will be selection and concentration andbeing keenly alert to advanced technologies
Strategy
Added value
Investment ininnovation (seeds)

Become a platform operator by creating a platform for businessmatching

Select and concentrate operations tobecome a major player in nicheareas. Respond to market changes byworking toward being a major player
in niche areas with an eye to trends
on the technological frontier.
Deepen relationships with business
partners.

Added
value

Develop software business and combine it with hardware to expand theportfolio; support the digital transformation (DX) of business partners
by providing total solutions

Functions

Expansion of scale

Investment in innovation (seeds)

Stable earnings
base

Expansion ofscale

Customers • Markets • Share

Drivers of Strategy and Innovation (Key Capital)
Intellectual capital
Human capitalSocial andrelationship capital

50 years of accumulated expertise in the Electronics & Devices business
Expert human resources with practical experience in the production and sale of electronics and devices andthe ability to create and manage businesses
Trust and longstanding relationships with business partners maintained by expert human resources

Progress toward the Medium-Term Vision: Main Initiatives in Fiscal 2022
In the ICT solutions business, against a backdrop of robust strategic corporate investment, we expanded businesses focusedon building virtual desktop infrastructure (VDI) environments,
security solutions, and storage. The mobile business wasaffected by the emergence of online sales and difficulty
procuring new smartphone models due to semiconductor
shortages, but we continued to acquire mobile phone sales
agencies, aiming to maintain and expand our market position.

66

KANEMATSU Integrated Report 2022

In the semiconductor component and equipment businesses,
supported by the booming semiconductor market, orders andsales of IC test handlers and laser wafer marking equipment
expanded. Furthermore, in the electronic materials business, we
carried out business investment, including acquiring a company
that handles industrial materials and electronic components
with the aims of expanding our business scale and generatingsynergies.

ChinaKey Businesses
and Locations
Germany• Printer business

Silicon Valley• Semiconductor equipment• Semiconductor components andelectronic materials

Korea• Semiconductor equipment• Semiconductor components
and electronic materials

New Jersey• Printer business

Japan

India

• ICT solutions• Mobile• Semiconductor equipment• Semiconductor components
and electronic materials• CCTV system• Data, AI, and SaaS

• ICT solutions

Thailand• ICT solutions• Semiconductor components
and electronic materials• Printer business• Semiconductor components andelectronic materials

Taiwan• Semiconductor equipment• Semiconductor components
and electronic materials• Semiconductor equipment• Semiconductor components
and electronic materials

The Kanematsu Group’s Accumulated Expertise
Development

Production

Processing

Sale

Distribution

Maintenance

The Kanematsu Group’s operations

From Kanematsu’s Present to the Future

Singapore

We cover the wide-ranging value
chains of the electronics anddevices industry, leveraging a
multilateral, multifaceted business creation perspective.

Texas

From Kanematsu’s Origins to the Present• ICT solutions• Mobile• Semiconductor equipment• Semiconductor components
and electronic materials

Longstanding Relationships: A Word from Our Business Partner
Kanematsu’s Future

Ishii Hyoki develops, manufactures, and sells industrial electronics. Kanematsu has worked
with us for 17 years as a sales agency for the inkjet systems that we develop.
I still remember a time, at a final presentation we made with Kanematsu to a customer inSouth Korea around the time we began sales there, when the customer started asking about
the fine details of the equipment specifications and estimate. We had to work in a frenzy forseveral days to satisfy them, but finally secured the order.
After South Korea, we worked to expand sales to China and Taiwan. This presented majordifferences in business culture, but thanks to the support of Kanematsu’s local branches andaffiliates, we have obtained a large market share.
I look forward to continuing to work with Kanematsu to expand sales of our products
globally and further grow our market share.

Toshikazu Kuwada
Corporate Officer and General
Manager, Inkjet Business HQ
Ishii Hyoki Co., Ltd.

Business Environment• Growth of the remote work market• The creation and expansion of related technology
and service markets driven by the adoption of AI,
IoT, robotics, and 5G• Accelerating DX initiatives at companies in Japan

Risks• Increasing sophistication and complexity of information security, shortage of specialized professionals,
and tightening regulations• Industry reorganization, the impact of core technologies, and technological innovation• Supply chain interruptions due to changing international conditions, geopolitical risks, or pandemics

Action Plan
• Provide solutions and services in such areas as VDI and connectivity to reinforce theearnings base of the ICT solutions and mobile businesses• Provide new value to expand opportunities for profit by offering related solutions in
the ICT solutions and mobile businesses as well as related products in the semiconductor component and equipment businesses and the electronic devices and materials businesses• Promote M&A and innovation investment in solutions providers, including startups,
and expand profit through synergies with existing businesses

Kanematsu’s Foundations

Opportunities

Countermeasures• Acquire and expand solutions platforms based on capital alliances and partnerships
with companies in and outside Japan that have specialized technologies• Expand scale by acquiring companies and businesses and acquire and develop new
products and solutions through innovation investment• Optimize supply chains by expanding the functions of overseas locations and diversify
the portfolio using advanced technologies

KANEMATSU Integrated Report 2022

67

Business Segments

Foods, Meat & Grain

Foods
Committed to safe, secure food, this division applies a manufacturer’s
perspective to maintain an integrated supply system spanning raw material
procurement through finished product processing.
With a broad lineup that includes agricultural products, marine
products, coffee, alcoholic and non-alcoholic beverages, and cooked foods,
the Foods Division meets diverse market needs.
Key SDGs
The Foods division seeks to secure stable food sources and contribute to local communities bypromoting business in environmentally friendly and sustainable agricultural and marine products,
such as Rainforest Alliance-certified coffee and MSC/ASC-certified* marine products. Furthermore,by developing alternative foods, we are working to secure new sources of protein and thereby
improve access to nutrition while reducing the environmental burden and other negative impacts
of processed food products. Through these efforts, weare contributing to sustainability.

Koichi Nishimura
Executive Officer,
Chief Officer, Foods Division* MSC: Marine Stewardship Council; ASC: Aquaculture
Stewardship Council

Medium- to Long-Term Market Outlook
Consumer needs are diversifying alongside changes in lifestyles and values. The key to success will be a market-oriented approach.
Strategy
Added value

Expansion of scale• Expand business by developing
ingredients and products that
anticipate customer needs andclosely align with market demand• Expand business through the horizontal development of value chainsin Indonesia and other Asian countries with growing markets

Investment ininnovation (seeds)

Investment in innovation (seeds)

Added
value
Functions• Obtain sustainability-related
certifications• Cultivate new production regions
and develop high-value-added
new products

Stable earnings
base

Expansion ofscale• Develop alternative foods using
plant-based meat to avoid the protein crisis and help solve foodproblems• Implement digital technologies tosave labor, increase precision, andcreate new businesses in the foodproducts industry

Customers • Markets • Share

Drivers of Strategy and Innovation (Key Capital)
Intellectual capital
Human capitalSocial andrelationship capital

Expertise in food product distribution, manufacturing, sales, and quality control
Expert human resources with practical experience in food product processing and distribution and the ability
to create and manage businesses
Longstanding, deep, positive relationships of trust with business partners in Japan and overseas

Progress toward the Medium-Term Vision: Main Initiatives in Fiscal 2022
The Foods Division works with suppliers around the world via
investment, exclusive contracts, and facility loan agreements tostrengthen its ability to procure high-quality raw materials overseas. To ensure the level of quality that consumers in Japan
expect, we reinforce production and quality control systems,
which are overseen by specialists, working to ensure the stablesupply of safe, reliable food.
As consumer lifestyle changes caused by the COVID-19
pandemic have shifted eating from restaurants toward readymade meals and foods prepared at home, we have reinforced
the development of retail products. To meet growing demand
for the in-home consumption of liquor and beverages, we have

68

KANEMATSU Integrated Report 2022

developed a variety of products, including canned highballs,
bottled wine, coffee products and frozen fruits for use inbeverages.
In addition, demand for alternative foods is growing,reflecting growing consumer awareness of health and environmental concerns. In this market, we advanced the developmentof products using plant-based meat made by DAIZ Inc.
In Asian markets, we invested in Indonesian general foodproduct manufacturer PT Cisarua Mountain Dairy Tbk (Cimory)
as a strategic business partner. Using the Group’s sales channels,
we will build and reinforce food value chains together.

ChinaGermany• Fruit processing
Shangdong Lufeng Foods Co., Ltd.

• Japanese food import and sales• Seaweed processing
Nantong Taiyang Foodstuff Co., Ltd.

Chile

• Confectionary and breads• Restaurant food ingredient wholesaling
Iwase-Esta Kanematsu Co., Ltd.

• Grape juice manufacturing
Exportadora de Mostos y
Vinos Jucosol S.A.

Indonesia• Frozen processed food
PT. Kanemory Food Service

ThailandWe cover the wide-ranging value
chains of the food products industry, leveraging a multilateral,
multifaceted business creation
perspective.

• Japanese restaurant chain franchise
operation
PT. Abadi Tunggal Lestari
PT. Agrapana Niaga Gemilang

The Kanematsu Group’s Accumulated Expertise
Production

Procurement

Distribution/
storage

Production/
processing

Sale

Quality control

The Kanematsu Group’s operations

From Kanematsu’s Present to the Future• Aloe processing
Siam Aloe Vera(2005) Co., Ltd.

From Kanematsu’s Origins to the Present• Frozen dim sum manufacturing• Cooked meat product manufacturing
Dalian Tiantianli Food Co., Ltd.

Key Businesses
and Locations

Longstanding Relationships: A Word from Our Business Partner
Kanematsu’s Future

Our business with the Kanematsu Group goes back more than 30 years. In that time,
Kanematsu has worked with us over a wide range of operations, including supplying beverages and desert ingredients in Japan and supplying raw materials for tofu and selling products
overseas. As a business partner with an eye on the future, Kanematsu has repeatedly helped
us discover new products, such as fruit ingredients that no one had yet thought of and coffee
beans procured with a focus on the environment and fair trade. Working together as
pioneers, we have overcome many difficulties. Our corporate slogan, “For Ever Brighter
Smiles,” expresses our desire to make customers smile by providing value in terms of health,deliciousness, and fun through our products and businesses. We will continue to provide
smiles to our customers through our products and businesses. We hope to continue to workwith Kanematsu to make people smile.

Taketo Tohkura
Executive Managing Officer andDivision General Manager,
Procurement Division
MORINAGA MILK INDUSTRY CO., LTD.

Business Environment• Demographic graying of consumers and rising
health awareness• Personnel shortages and rising staffing costs in thefood products industry• Growing food demand and shift from focus on quantity toward quality in Asia

Risks
• Damage to agricultural products under cultivation oroperational disruptions of processing and manufacturing facilities or logistics attributable to global
warming or extreme weather events• Health hazards for consumers due to the contamination of food products• Global population growth and food resource depletion

Action Plan
• Develop production sites for fresh agricultural products that are safe and reliable• Develop and commercialize delicious and easy to prepare processed food products
targeted to specific markets around the world• Leverage DX to save labor in sorting and processing and improve quality• Expand mechanisms for providing safe, reliable food at Japanese standards andgrow businesses in local production for local consumption

Kanematsu’s Foundations

Opportunities

Countermeasures• Hedge risks by working with production sites distributed around the world; securewater resources and promote cultivation• Reinforce food safety management systems based on ISO 22000 and FSSC 22000• Trade in agricultural and marine products that are certified as sustainable by third
parties and promote the use of renewable products

KANEMATSU Integrated Report 2022

69

Business Segments

Foods, Meat & Grain

Meat Products
Leveraging our accumulated know-how as an industry leader in the meatproducts business, we build meat product value chains, from securing raw
ingredient sources to processing and sales, to provide a stable supply of safe,
reliable, high-value-added products that meet customer needs.

Key SDGs
The Meat Products division promotes business in animal products produced with low
environmental impact, such as Uruguayan beef; develops new producing regions and suppliers;and proactively engages in business using new foodtechnologies, such as those for meat substitutes, tohelp secure sustainable food sources.

Toru Hashimoto
Executive Officer,
Chief Officer, Meat Products Division

Medium- to Long-Term Market Outlook
Markets in Japan are mature, while markets in other parts of Asia are growing. The key to success will be maintaining anddeepening relationships of trust with our business partners in Japan and overseas.
Strategy
Added value

Expansion of scale
Expand the meat products businessthrough the horizontal developmentof value chains (production, processing, distribution, and sale) based oncollaboration with and investment in
partners in Japan and overseas

Investment ininnovation (seeds)

Investment in innovation (seeds)

Added
value
Functions

Promote trading in high-value-added
products and ingredients, including
reinforcing processing capabilities
and developing low-environmentalimpact meat products

Stable earnings
base

Expansion ofscale• Help solve the protein crisis by promoting new technologies, such asmeat substitutes and lab-grownmeat•Proactively promote the adoptionof digital technologies to bringinnovation to the meat business

Customers • Markets • Share

Drivers of Strategy and Innovation (Key Capital)
Intellectual capital
Human capitalSocial andrelationship capital

Wealth of expertise and a product lineup amassed over time as a pioneer in the meat product industry
boasting one of the industry’s top market shares
Expert human resources with practical experience in meat product production, processing and distribution, as
well as the ability to create and manage businesses
Relationships of trust with business partners in Japan and overseas built up over time

Progress toward the Medium-Term Vision: Main Initiatives in Fiscal 2022
We continue to build value chains to establish stable a supply ofsafe, reliable, high-quality products that meet customer needs.
In upstream areas, we are reinforcing relationships with
suppliers through business tie-ups and investment while diversifying our sources to secure a stable supply. In mid- and downstream areas, we have worked with Group companies and ourpartner companies to reinforce functions in sales, storage(refrigeration), processing, and other businesses. In theprocessing business, in 2019 we established a joint venture
plant in Kawasaki City, Kanagawa, to reinforce Group functions

70

KANEMATSU Integrated Report 2022

in the Japanese market. Responding to the rapid growth in
Asian markets, in 2018 we established Dalian Matsutomo Foods
Co., Ltd., as a joint venture with a local partner in China for the
primary processing and sale of beef. In the Chinese market,
which is beginning to emerge from the economic stagnation
caused by the COVID-19 pandemic, demand for beef is steadily
recovering and increasing. We aim to horizontally expand
similar initiatives in growing Asian markets to expand the earnings base.

China• Meat importing and sales• Meat processing

Hong Kong

Canada• Beef importing and sales• Beef and pork purchasingJapan• Meat importing and sales• Meat processing• Cooled and refrigerated storage
and distribution• Japanese beef and pork sales
and exporting

Europe• Beef and pork purchasing• Chicken andprocessed chicken
product purchasing• Beef, pork, chicken, andturkey purchasing• Beef sales

BrazilMexicoIndonesia

Thailand

United States• Pork purchasing•Beef importing and sales

Australia

Chile• Beef, lamb, and live
cattle purchasing• Pork purchasing

Uruguay• Beef and lamb purchasing• Beef purchasing

The Kanematsu Group’s Accumulated Expertise
Production

Procurement

Distribution/
storage

Production/
processing

Sale

Quality control

The Kanematsu Group’s operations

From Kanematsu’s Present to the Future

New Zealand

We cover the wide-ranging value
chains of the meat products
industry, leveraging a multilateral, multifaceted business creation
perspective.

• Pork and chicken
purchasing

From Kanematsu’s Origins to the Present

Key Businesses
and Locations

Longstanding Relationships: A Word from Our Business Partner
Kanematsu’s Future

The Monogatari Corporation operates approximately 600 restaurant locations in and outside
Japan, including the Yakiniku King and Marugen Ramen chains.
We have been working with Kanematsu since we opened our first suburban roadside yakiniku restaurant in 1995. Around that time, Kanematsu worked very hard to establish local
production in the United States to develop mainstay products for us. When supply was interrupted by the discovery of cattle infected with BSE in the United States in 2003, Kanematsu wasinstrumental in helping us secure an adequate supply of beef. Later, Kanematsu also helped usenter the Chinese market, providing support for the establishment of a cutting factory.
Going forward, we aim to further strengthen our partnership, working with Kanematsu to
realize a society with abundant food culture.

Masamichi Okada
Representative Director andSenior Managing Executive Officer
The Monogatari Corporation

Business Environment• Expansion of imports due to reduced import tariffs
under the TPP11, the EPA with the European Union, andthe TAG with the United States• Growing demand for meat products in Asian markets

Action Plan
• Advance business investment and M&A to reinforce domestic sales capabilities
by strengthening functions within the Meat Products group• Extend business models used in Japan to expand meat product businesses in
Asian markets• Growing consumer awareness of safety and reliability
issues• Step up initiatives undertaken with current suppliers and cultivate new production sites to develop safe, secure, high-value-added products with a stable supply
streamRisks

Countermeasures• Supply chain interruptions due to conflicts or pandemics• Diversify production sites to better distribute suppliers• Raw ingredient price fluctuations• Diversify customers and expand processing businesses to mitigate price fluctuationrisk• Decrease in Japan-bound supply availability due to growthin demand for meat products in other Asian markets• Future protein supply shortages due to global population growth

Kanematsu’s Foundations

Opportunities• Reinforce procurement capabilities by deepening initiatives with suppliers• Enter the meat substitute market

KANEMATSU Integrated Report 2022

71

Business Segments

Foods, Meat & Grain

Grain, Oilseeds & Feedstuff
The Grain, Oilseeds & Feedstuff Division stably procures the basic foodproducts and production materials that form the foundation for diverse foodproduction from around the world, providing stable supplies to food productmanufacturers in Japan and Asia.
The global population and demand for protein are increasing rapidly,
and are expected to continue growing in the decades to come. At the sametime, supply risks, such as those from extreme weather and tradeprotectionism, are growing. In these circumstances, we constantly strive toenhance our ability to stably supply high-quality products.
Key SDGs

Jun Nakajima
Executive Officer
Chief Officer, Grain, Oilseeds & Feedstuff
Division

As climate change advances and demand for food increases, global food production and supply
is becoming a more pressing issue. Kanematsu is working to secure food supply based onsustainably managed production in orderto support healthy and abundant diets. We
also support productivity improvements via
the adoption of new technologies.

Medium- to Long-Term Market Outlook
Demand for protein will grow, but supply risks due to extreme weather events and other factors will increase. The key tosuccess will be stabilizing production and quality control.
Strategy
Investment ininnovation (seeds)

Added value
Stable supply of food with quality(safety) assured by relevant
certifications

Investment in innovation (seeds)

Added
value
Functions

Develop seeds that will help stabilize
the production of rice, barley, soybeans, and corn, which are basic
food ingredients, in order to avoid aprotein crisis

Expansion of scale• Grow market share by expanding
the product lineup• Business scale expansion and horizontal development into overseas
markets through collaboration withand investment in partnercompanies

Stable earnings
base

Expansion ofscale

Customers • Markets • Share

Drivers of Strategy and Innovation (Key Capital)
Intellectual capital
Human capital• Value chain expertise capable of providing a stable supply of oilseeds and staple grains, such as rice, barley,soybeans, and corn, as well a wide range of related products• Quality control expertise capable of providing a supply of high-quality products from production sites in andoutside Japan
Human resources with a wealth of expert product knowledge

Manufactured capital

Supply bases in key food production regions worldwide capable of securing a stable food supply

Social andrelationship capital

Trust and longstanding relationships with business partners that help ensure stable supply

Progress toward the Medium-Term Vision: Main Initiatives in Fiscal 2022
In the rice business, we have a leading share of Japan’s imported
rice market and are seeing gradual growth in rice trading overseas, such as exports to Singapore and China. We are also
working to expand trading of high-value-added rice, such as
no-wash rice, in Vietnam.
In the food soybean and oilseed business, we are leveraging
our diverse supply network comprising a wholly owned sorting
plant and partner plants in North America to maintain a leading
market share in Japan. We are also working to provide evengreater added value and expand our market share through initiatives in such areas as seed improvement using genome editing
and AI analysis technology and soy materials for meat substitutes.

72

KANEMATSU Integrated Report 2022

In the domestic feedstuff business, we made an additional
capital investment in Heisei Feed Manufacturing Co., reinforcing
our supply of safe, reliable products. We will continue to enhance
our capacity to stably provide a full product lineup of diverse
feedstuff materials and enhance our customer service.
In the overseas feedstuff business, despite logistics disruptionsin the United States, our forage processing plant there remainedin full operation, producing a stable supply of products for Japanand other Asian markets. At our animal feedstuff soybean
processing plant in China, meanwhile, sales slowed somewhat
due to the COVID-19 pandemic, but we steadily built relationships with major feedstuff users.

EuropeChina• Pasta, frozen dough,and raw feedstuff
material supply• General raw feedstuff material
supply, local production
Mixed feedstuff manufacturer
Dalian Runsong Biological Feed
Co., Ltd.

North America

ASEAN region• Soybean and roughage
production and processing
KG Agri Products, Inc.
Sage Hill Northwest, Inc.
KAI Enterprises, Inc.

• Rice and dairy farming in Vietnam• Raw material supply to theaquaculture industry
Dalat Milk Joint Stock Company
Other partners

South America• Grain and roughage production and processing
Bodiam Pty Ltd.
Kangaroo Island Pure Grain Pty Ltd.

• Grains, oilseeds, fish meal
and fish oil, and roughage(cottonseed, etc.)

We cover the wide-ranging value
chains of the grain industry,
leveraging a multilateral, multifaceted business creation
perspective.

The Kanematsu Group’s Accumulated Expertise
Production

Procurement

Distribution/
storage

Production/
processing

Sale

Quality control

The Kanematsu Group’s operations

Kanematsu’s FutureLongstanding Relationships: A Word from Our Business Partner

In the procurement of materials for our mainstay products, Kanematsu has played an importantrole in ensuring stable procurement and setting appropriate prices and has worked with us todevelop new production regions and improve quality. The procurement of agricultural products, such as grains and fruits, is affected by a wide range of factors, including inclement
weather, geopolitical issues, and market fluctuations. In this environment, we have overcome
many difficulties, such as shortages due to sudden increases in demand or crop failures, bymaking full use of our global network, building up a solid track record, and leveraging our many
years of experience. In this era of uncertainty, with the conditions surrounding raw material
procurement becoming even more challenging, we have great trust in the Kanematsu Group’s
ability to fulfill its role and high expectations for it in that role. We look forward to Kanematsu’s
continued procurement support as we further strengthen our partnership.

Yosuke Tomoda
General Manager, Global
Procurement Division
Calbee, Inc.

Action Plan

• Increasing regularity of extreme weather events• Diversify supply regions leveraging our global network• Growing global demand• Capture growing demand in China and other Asian markets• Growing demand for quality• Enhance quality at production facilities for mixed feedstuff, fertilizer, soybeans,forage, and other products• Bringing in new technologies

Kanematsu’s Foundations

Business Environment
Opportunities

From Kanematsu’s Present to the Future

Australia

From Kanematsu’s Origins to the Present

Key Businesses
and Locations• Use IoT, genome editing, and other technologies to help increase the productivity ofour partner

Risks

Countermeasures• Price fluctuations• Enter into hedges via futures markets, such as the Chicago Mercantile Exchange• Supply disruptions due to extreme weather events• Secure stable supply by diversifying production sites and suppliers• Quality control• Enhance quality control through upstream production and sourcing businesses

KANEMATSU Integrated Report 2022

73

Business Segments

Steel, Materials & Plant
The Steel, Materials & Plant segment covers a full range of iron and steel
products, energy solutions, chemicals, industrial plant and infrastructure
facilities, and ships. Across a wide variety of operations, highly specialized
staff uphold Kanematsu’s commitment to supplying and developing highvalue-added products.

Key SDGs
The Steel, Materials & Plant segment contributes to environmental sustainability through thepromotion of biomass fuels and other sustainable energy as well as the use and reuse ofenvironmentally friendly materials.

Eiji Kan
Senior Managing Executive Officer,
Chief Officer, Steel, Materials & Plant
Division

Medium- to Long-Term Market Outlook
As carbon risk grows, green transformation needs are expanding. The key to success will be providing various forms of
support for customers’ decarbonization efforts.
Strategy
Investment ininnovation (seeds)

Added value
Added
value

Stable earnings
base

Expansion of scale
Respond to growing renewableenergy needs by developing renewable energy businesses worldwide,
including solar, wind, and biomass
power generation

Investment in innovation (seeds)

Functions

Provide customers with multiple
functions related to decarbonizationfrom various perspectives by bringing together our technologies andexpertise as a division that supports
infrastructure

Expansion ofscale

Create new businesses that will contribute to environmental protection,
carbon neutrality, and carbon recycling while supporting companies
with advanced or new decarbonization technologies

Customers • Markets • Share

Drivers of Strategy and Innovation (Key Capital)
Intellectual capital
Human capitalSocial andrelationship capital

Global value chain expertise via overseas locations and relationships with business partners
Human resources with expertise in value chains across industries and the ability to create businesses
Longstanding relationships of trust with influential business partners across industries

Progress toward the Medium-Term Vision: Main Initiatives in Fiscal 2022
In the chemicals business, we continue to focus on businesses inhigh-value-added functional chemicals, life science, and healthcare, and we are steadily achieving results in these areas.
In the iron and steel business, the South Korean steel material treatment company in which we have invested continues togrow steadily and is beginning to generate synergy with business related to domestic orders for building interiors. Goingforward, we will work to also generate synergies within theGroup with the steel frame design, manufacturing, and installation company in which we have invested in Vietnam. In specialty
steel, in addition to our conventional stainless steel business, wehave greatly expanded into businesses in environmentallyconscious fields, such as flue gas desulfurization equipment, airconditioners, electric vehicles, and hydrogen and ammonia

74

KANEMATSU Integrated Report 2022

production equipment.
In the steel tubing business, drilling demand recovered,reflecting the rise in crude oil prices, which significantly
improved revenue. The technical center in the United States
began operation, and we are focusing efforts on environmental
response, including the development of threading for steel
tubing used in subterranean CO2 injection.
In the energy business, the biomass fuel business continues
to steadily grow, while in the plant and ships business, awareness of green transformation (GX) and the Sustainable
Development Goals (SDGs) is growing across the sector, leading
to a deepening of initiatives related to solar power anddomestic wind power generation and major growth in related
businesses.

Europe• Pharmaceuticals• Functional foods• Specialty steel

China• General chemicals• Specialty steel

South Korea• Treated-surface steel
materials• Specialty steel

North America• Steel tubing• Specialty steel• Functional foods

Southeast Asia

Middle East
• Plant facilities• Iron and steel products

India

We cover the wide-ranging value
chains of several industries,
leveraging a multilateral, multifaceted business creation
perspective.

The Kanematsu Group’s Accumulated Expertise
Procurement

Production

Processing

Sale

Distribution

Recycling

The Kanematsu Group’s operations

From Kanematsu’s Present to the Future• High-performancesteel materials• General steel
materials• Bunker oil• Biomass fuel• General chemicals• Specialty steel• Plant/infrastructure• Shipbuilding

From Kanematsu’s Origins to the Present

Key Businesses
and Locations

Longstanding Relationships: A Word from Our Business Partner
Kanematsu’s Future

AJUSTEEL strives to provide the best value to its customers through ongoing research and development aimed at innovative product development and establishing world-firsts in steel plate
treatment technologies. Based on our diverse experience in the steel materials industry andcompetitive manufacturing technologies, we are building a foundation for sustainable growth.
The Kanematsu Group has provided us with the capabilities we needed to make the next
leap forward to becoming a global top-tier steel material company. For example, the KanematsuGroup’s global network, historical integrity backed by more than 130 years of tradition, and flexible financial strength backed by trust have enabled us to begin a range of new initiatives that
previously presented significant hurdles, including transactions with major customers and global
business expansion outside of East Asia. Through this partnership, our business is growing morestable, and we have been able to achieve further growth.
AJUSTEEL looks forward to the continued support of and collaboration with the KanematsuGroup as we continue to tackle new challenges and innovate. We will do our utmost to promote
an enduring and fruitful relationship.

Lee, Hak-Yeon
Representative Director
AJUSTEEL Co., Ltd.

Opportunities• Changes in the global energy market structure, including declining demand for fossil fuels• Growing global awareness of environmental problems,
as seen in GX efforts and the SDGs
• Diversifying consumer needs and behavior patterns

Action Plan
• Accelerate initiatives in renewable energy businesses• Expand business involving more environmentally friendly high-value-added products• Advance DX to both strengthen customer relationships and respond to new business environments by raising customer satisfaction

Risks

Countermeasures• Further changes to market structures and the realizationof geopolitical risks due to trade problem intensification• Mitigate the risk of trading right advantages being weakened by cultivating newmarkets, products, and trading partners• Temporary personnel shortages due to accelerating
business investment• Expand business in high-performance products and products made to proprietary
standards to reduce risk related to trade problems• Changes to the business environment due to tightening
environmental regulations or other factors arising fromthe international shift toward lower carbon emissions• Provide education and opportunities for employees to gain experience, mainly
through personnel exchanges with affiliated companies in and outside Japan

Kanematsu’s Foundations

Business Environment• Create new businesses that contribute to environmental preservation, including
CO2 reduction
KANEMATSU Integrated Report 2022

75

Business Segments

Motor Vehicles & Aerospace
The motor vehicles and parts business handles motorcycle and automobile
parts as well as complete built up vehicles, while the aerospace businesshandles aircraft and parts as well as space-related products. These businesses
operate on a global scale, leveraging the Group’s superb expertise andextensive information resources.

Key SDGs
The Motor Vehicles & Aerospace segment aims to contribute to society by providing safe andpleasant mobility. We aim to build living environments that are environmentally friendly,
sustainable, and free of traffic accidents throughnext-generation mobility.

Ryoichi Kidokoro
Senior Executive Officer,
Chief Officer, Motor Vehicles & Aerospace
Division

Medium- to Long-Term Market Outlook
The next-generation mobility and space markets will expand. Market expansion will inevitably entail increased CO2 emissions, but
decarbonization efforts applying technological innovations in such areas as weight reduction and electric vehicles will accelerate, as
well. The key to success will be creating mobility businesses focused on the environment, safety, and comfort.
Strategy
Added value
Investment ininnovation (seeds)

Create and advance next-generation
mobility businesses focused on theenvironment, safety, and comfort

Investment in innovation (seeds)

Added
value
Functions

Expansion of scale
Meet expanding demand inSoutheast Asia by combining mobility and digital technologies

Stable earnings
base

Expansion ofscale• Develop vertiports for upcoming
Advanced Air Mobility that willcontribute to decarbonization• Business development of a completely new commercial spacestationCustomers • Markets • Share

Drivers of Strategy and Innovation (Key Capital)
Intellectual capital
Human capitalSocial andrelationship capital• Expertise in combining mobility and digital technologies• Supply chain management expertise leveraging distribution networks through overseas business locationsand Group companies
Human resources with a wealth of expertise• Longstanding relationships of trust with industry-leading business partners around the world• Global network for discovering new technologies and business models

Progress toward the Medium-Term Vision: Main Initiatives in Fiscal 2022
In the motorcycle and automobile business, both sales andproduction were severely repressed by the COVID-19 pandemic
and the global semiconductor shortage but are now showing
signs of recovery. As we move forward, our focus will include
developing service businesses that use vehicle data with Group
company Datatec Co., Ltd. in Southeast Asia, where demand is
expected to continue to grow. In the aircraft business, aiming forthe social implementation of eVTOL (or Advanced Air Mobility),
Kanematsu is accelerating its collaboration with the U.K.-based
Skyports Limited through an investment in said company, aiming

76

KANEMATSU Integrated Report 2022

to pioneer the vertiport infrastructure business in the Japanesemarket. In the space business, we have partnered with U.S.-based
Sierra Space to provide space business opportunities using acommercial space station in low-Earth orbit.
We have developed a platform for finding cutting-edge
technologies and promising startups in and outside Japan throughKanematsu Ventures Inc., established in Silicon Valley, and acomprehensive business tie-up with WERU INVESTMENT Co., Ltd.
Focusing on the environment, safety, and comfort, we will create
and advance cross-divisional next-generation mobility businesses.

North America• Motorcycle and automobile OEM components• Establishment and operation of joint-venture
plants with business partners• Motorcycle, automobile, ATV, and golf cart OEM
components, motorcycle aftermarket components• Export of aircraft fuselages and components to
Japan• Investment in VC funds, seeking out cutting-edge
technologies, and growth support for startups

South Korea(Germany, Italy, United
Kingdom, Austria,
Ireland, and Poland)• Motorcycle OEM components• Aerospace equipment andcomponent agency sales,business partners

Japan• Aircraft and helicopter
fuselages, components sales
agency, and space-related
sales agency (private/public)• Rocket downrange operations
Kanematsu Aerospace Corp.
KANEYO Co., Ltd.
Datatec Co., Ltd.

Europe(Mexico and Brazil)

India, Thailand, Indonesia• Motorcycle OEM components andwarehouse operation• Establishment and operation of
joint-venture plants with business
partners

We cover the wide-ranging value
chains of the motor vehicles andaerospace industries, leveraging
a multilateral, multifaceted business creation perspective.

Central &South America• Motorcycle andautomobile OEMcomponent trading

The Kanematsu Group’s Accumulated Expertise
Procurement

Production

Processing

Sale

Distribution

Recycling

The Kanematsu Group’s operations

Our relationship with Kanematsu started in 1983, when we began doing business withmajor overseas motorcycle manufacturers. Over the four decades since, we have worked
together to expand our sales channels, cultivating new customers and making new
product proposals. We have also established joint-venture plants in Europe and Asia, with
Kanematsu involved in management. Sharing good times and bad, and weathering manychanges in the external environment, from economic downturns to shifts in competitors,
we have built a strong partnership. This year, we have decided to jointly invest in a newcarbon nanotube manufacturer. We are very pleased to be taking on this new businessarea together, and we look forward to seeing the Kanematsu Group utilize its wideranging sales channels and expertise in support of this new endeavor.

Kanematsu’s FutureLongstanding Relationships: A Word from Our Business Partner

From Kanematsu’s Present to the Future• Motorcycle and automobile OEMcomponents and warehouse
operation• Export of helicopter and aircraftcomponents to Japan• Replacement, maintenance,leasing, and sale of aircraft rotablecomponents• Sales and maintenance ofcompleted four-wheel automobiles• Sales of engines, generators,
lawnmowers, and other generalpurpose machinery

From Kanematsu’s Origins to the Present

Key Businesses
and Locations

China

Yoshifumi Fuchigami
Senior Operating Officer
Sales Division,
F.C.C. Co., Ltd.

Business Environment
Action Plan

• Growing awareness of the environment and safety• Leverage data to create new businesses that reduce environmental impact and accidents• Diversification of mobility alongside accelerating technological innovation and DX• Advance partnerships with startups, mainly through our investment base in Silicon Valley,
to create new businesses• Changing ways of thinking about modes of transport indeveloped countries• Work to increase social acceptance and reinforce infrastructure business initiatives inorder to realize the widespread use of Advanced Air Mobility

Risks

Countermeasures• Logistics disruptions due to international conditions,geopolitical risks, or changes in demand arising fromenvironmental regulations or trade friction• Build next-generation business models centered on value creation and reinforce distribution networks• Rapid changes in consumer awareness or industry
structure that surpass the frameworks of existing value
chains and business models

Kanematsu’s Foundations

Opportunities• Bring in new technologies and business models through innovation investment anddevelop businesses in both product and service areas• Reinforce business in North America, where markets are recovering quickly• Changes in commercial air travel demand due to infectious disease pandemics
KANEMATSU Integrated Report 2022

77

Financial and ESG Highlights(As of March 31)

JGAAP

For the year:
Net sales
Revenue
Gross profit
Operating income/Operating profit
Income (loss) before income taxes andminority interests/Profit before tax
Net income (loss)/Profit for the year
attributable to owners of the Parent3
Cash flows from operating activities
Cash flows from investing activities
Free cash flow
At year-end:
Total assets
Net assets/Total equity
Shareholders’ equity/Total equity
attributable to owners of the Parent
Net interest-bearing debt
Per share (yen):
Net income/Basic earnings per share
attributable to owners of the Parent3
Net assets/Equity attributable to owners of
the Parent
Dividends
Financial indicators:
Return on equity (ROE) (%)
Equity ratio (%)
Net D/E ratio (times)

IFRS

2012

2013

2014

2015

2016

¥1,006,365—
80,90021,426¥1,019,232—
80,021
18,262¥1,114,539—
86,402
19,776—¥704,211
87,88023,547—¥668,374
86,23818,772

13,52916,781

19,07522,373

18,122

6,110

9,564

11,79910,546

8,959

15,822
1,291
17,113

1,355
1,466
2,821

22,384(1,111)
21,273

6,758(6,649)109

33,024(4,214)
28,810399,753
55,992

399,186
75,912

428,459
96,204

466,314
119,015

443,592
120,706

39,00854,51971,657

90,244

91,59990,01286,43968,03872,155

48,813¥14.60¥ 22.80¥ 28.09¥ 125.494¥ 106.464

93.16

129.82170.54

1,072.204

1,088.454

—

—

3.00

4.00

5.00

16.95
9.8
2.3

20.45
13.7
1.6

18.70
16.7
0.9

12.99
19.4
0.8

9.85
20.6
0.5

377.54
6,645,797
33.40
—
—
—

392.586,087,765
31.90
—
—
—

—

—

—
682,7176,002
813 (253)—
735,174
5,832
816 (259)

31

32

15.5
3.5
8.8
7 (2)

13.8
4.8
8.1
7 (2)

4 (3)

4 (3)

ESG* (Non-Financial) Data: *ESG: Short for environmental ( ), social ( ), and corporate governance ( ).
CO2 emissions (t-CO2)6, 7, 8
443.83471.42456.44
Total paper use (sheets)7
7,062,310
6,874,521
6,648,353
External disposal of waste (t)7, 10
46.57
48.95
37.60
Recycled waste (t)7———
Non-recycled waste (t)7———
Hazardous waste disposal (t)7———
Environment-related fines and———penalties paid (yen)7
7
Violations related to water quality/volume———
Total electricity consumption (kWh)7
871,965
828,514805,015
Employees—consolidated
4,770
5,522
5,747
Employees—non-consolidated (women)
795 (238)
782 (242)
800 (246)
Percentage of women among30
31
31
employees—non-consolidated (%)
Average length of service (years)
15.5
16.0
15.7
Three-year job separation rate (%)11
10.3
0
2.6
Average overtime worked (hours/month)
10.1
8.3
8.0
Directors (outside directors)1210 (0)
10 (0)6 (1)Audit & Supervisory Board members12
4 (3)
4 (3)
4 (2)
(outside Audit & Supervisory Board members)

Notes For the above items with two titles, the first applies to figures under JGAAP and the second to figures under IFRS.
1. Figures are rounded down to the nearest million yen. Percentages have been rounded off.
2. The U.S. dollar amounts represent the arithmetical results of translating yen to dollars at the rate of ¥122.39 to U.S.$1.00, the exchange rate prevailing on March 31,2022.
3. JGAAP: Net income attributable to owners of the Parent / IFRS: Profit for the year attributable to owners of the Parent.
4. Kanematsu executed a share consolidation on October 1, 2017, at a ratio of five common shares to one. The calculation of the above figures assumes that said shareconsolidation was implemented on April 1, 2014.
5. Kanematsu executed a share consolidation on October 1, 2017, at a ratio of five common shares to one. The calculation of the above figure assumes that said shareconsolidation was implemented on April 1, 2017.
6. The coefficients used to calculate the above figures are the most recent values published by the Japan Foreign Trade Council (originally published by the ElectricPower Council for a Low Carbon Society via the Japan Business Federation).

78

KANEMATSU Integrated Report 2022

IFRS
Thousands of
U.S. dollars2

2020

2021

2022

2022

—
¥675,579
100,139
22,633—¥714,790
106,371
26,160—¥723,849
110,01430,349—¥721,802
110,904
28,352—¥649,142
101,515
23,635—¥767,963
111,801
29,347—$6,274,724
913,488239,790

17,87526,04329,177

26,944

23,58028,765

235,035

8,049

16,317

16,605

14,39913,315

15,986130,618

11,852(14,691)(2,839)

434
1,103
1,537

24,698(6,575)
18,12324,259(10,215)
14,04436,984(9,927)
27,057

15,382(10,547)
4,835

125,687(86,181)
39,506

479,717
129,863

519,889
147,050

549,459
158,698

551,671
166,174

557,495
180,492

634,456
199,282

5,183,889
1,628,260

100,357

116,012125,246

130,829

143,926

159,484

1,303,083

55,42959,04549,96951,80740,52051,242

418,680

95.644¥ 193.794¥ 198.22¥ 172.43¥ 159.44¥ 191.42$ 1.56

1,192.214

1,377.664

1,499.86

1,566.60

1,723.42

1,909.64

15.60

6.00

48.00

60.00

60.00

60.00

65.00

0.53

8.39
20.9
0.6

15.08
22.3
0.5

13.77
22.8
0.4

11.25
23.7
0.4

9.69
25.8
0.3

10.54
25.1
0.3

398.686,256,363
32.70
—
—
—

400.745,920,960
29.50
—
—
—

358.31
5,510,121
35.00
—
—
—

304.05
4,919,786
34.43
21.93
12.50
0

265.44
3,099,900
42.20
36.56
5.64
0

274.432,503,6259
36.18
30.89
5.29
0

—

—

—

0

0

0

—
768,166
6,727
835 (273)—
772,137
6,666
842 (282)—
690,3786,915
765 (263)

0659,5347,182
775 (266)

0597,8457,296
795 (284)

0625,1327,446
788 (293)

33

33

34

34

36

37

15.4
5.2
11.6
8 (3)

15.5
9.4
12.1
8 (3)

15.0
10.5
12.5
6 (2)

14.0
17.1
17.5
6 (2)

13.8
—
18.1
6 (2)

15.0
—
19.6
7 (3)

4 (3)

4 (3)

4 (3)

4 (2)

4 (2)

4 (2)

¥

5

Kanematsu’s Foundations

2019

Kanematsu’s Future

2018

From Kanematsu’s Present to the Future

2017

From Kanematsu’s Origins to the Present

Millions of yen1

7. The figures above are the totals for Kanematsu’s domestic locations on a non-consolidated basis and are subject to change due to changes in officespace due to the consolidation of branches or sales offices, etc.
8. For data on Kanematsu’s Scope 1 and Scope 2 emissions, please refer to p. 39.
9. For the years ended March 2021 and earlier, paper use was calculated based on sheets of paper (copy paper, envelopes, and business cards) purchased; from the year ended March 2022 it is calculated as sheets of copy paper (with all types converted to A4 equivalent) purchased.
10. Due to a change in aggregation standards, data for past years (the years ended March 2020 and 2021) has been revised. Data is for waste from officeactivities at main locations.
11. The percentage of employees hired in the year in question who had left the Group as of three years later (for example, of the 42 employees hired in
April 2015, 2 had left the Group as of April 2018, so the rate for the year ended March 31, 2016 is calculated as (2/42)×100).
12. As of the conclusion of the General Meeting of Shareholders following each fiscal year-end.
KANEMATSU Integrated Report 2022

79

Management’s Discussion and Analysis
Business Results
For the fiscal year ended March 31, 2022, revenue increased¥118,821 million (18.3%) from the previous fiscal year to¥767,963 million. Gross profit increased ¥10,286 million (10.1%)
from the previous fiscal year to ¥111,801 million. Operating
profit rose ¥5,712 million (24.2%) year on year to ¥29,347
million, reflecting the increase in gross profit, despite a rise in
selling, general and administrative expenses. Profit before tax
increased ¥5,185 million (22.0%) year on year to ¥28,765
million, largely due to the rise in operating profit. Profit for theyear attributable to owners of the Parent rose ¥2,671 million(20.1%) year on year to ¥15,986 million. As a result, return on
equity (ROE) calculated on the basis of total equity attributableto owners of the Parent (shareholders’ equity) came to 10.5%.

Segment Information
Results for each business segment are described below.

Electronics & Devices
Revenue increased ¥29,354 million year on year to ¥255,463
million due to higher revenues in the electronic devices andmaterials businesses and the semiconductor parts and manufacturing equipment business. Operating profit rose ¥1,489 million
to ¥19,064 million due to higher profit in the ICT solutions business and the semiconductor parts and manufacturing equipment business. Profit attributable to owners of the Parent
decreased ¥540 million to ¥7,944 million.
Performance in terms of operating profit was as follows.
The ICT solutions business was strong, reflecting increased
network security- and storage-related sales. The mobile­business remained lackluster, reflecting a decrease in assistanceprovided to shops during the COVID-19 pandemic and otherfee income, despite recovery in store foot traffic. The semiconductor parts and manufacturing equipment business was
firm due to growth in shipments of automobile semiconductor
components and semiconductor manufacturing equipment,
reflecting booming demand.

Foods, Meat & Grain
Revenue increased ¥40,667 million year on year to ¥285,284

million reflecting increases in revenue in the meat products
business and grain and feedstuff business. Operating profit rose
¥2,043 million to ¥3,541 million due to higher profit in the meatproducts business and food business. Profit attributable to owners of the Parent increased ¥1,024 million to ¥2,519 million.
Performance in terms of operating profit was as follows. The
meat products business saw a significant increase in profit,
reflecting a rise in meat product prices generally and a reboundfrom struggling sales in the food service sector in the previous
fiscal year. Performance in the feedstuff business was weak,
mainly due to valuation losses resulting from rapidly rising prices
in the fourth quarter. The food business was strong, reflecting
growth in the trading of products for the retail market.

Steel, Materials & Plant
Revenue increased ¥51,162 million year on year to ¥147,993
million, due to the higher revenue in the energy business andsteel tubing business. Operating profit rose ¥2,212 million, to¥4,052 million due to stronger profit in the steel tubing businessand machine tools and industrial machinery business. Profit
attributable to owners of the Parent increased ¥1,199 million, to¥3,259 million.
Performance in terms of operating profit was as follows. The
steel tubing business was firm, reflecting the recovery of energy
demand. The machine tools and industrial machinery business
was strong, recovering from the impact of the COVID-19
pandemic on the business environment in the previous year.
Meanwhile, the energy business was weak due to valuation
losses on futures contracts.

Motor Vehicles & Aerospace
Revenue decreased ¥5,259 million year on year to ¥65,827 million
due to reduced revenue in the aerospace business. Operating
profit decreased ¥392 million to ¥1,663 million due to thedecrease in profit in the aerospace business. Profit attributable toowners of the Parent fell ¥40 million to ¥1,457 million.
Performance in terms of operating profit was as follows.
The aerospace business was sluggish as contracts with government agencies were in an off year. In the motor vehicles
and parts business, however, the trading of motor parts wasstrong, bolstered by market recovery from the COVID-19­pandemic and the depreciation of the yen.

Revenue

Operating Profit

Profit for the Year Attributable to Ownersof the Parent / Basic Earnings per Share(Millions of yen)

(Millions of yen)

(Millions of yen)

800,000

35,00020,000767,963714,790 723,849 721,802

30,34930,000649,142600,000

25,000193.7929,34728,352(Yen)

198.22

16,317172.43
16,60515,00026,160200

14,39923,635191.42
159.44

15,986150

13,31520,000400,000

10,000

100

5,000

50

15,00010,000200,000

5,000
0

(FY)

2019

2020

2021

2022

(FY)

0

0

0

2018

2018

2019

2020

2021

2022

(FY) 2018

2019

2020

2021

2022

Profit for the Year Attributable to Owners of the Parent
Basic Earnings per Share80

KANEMATSU Integrated Report 2022

OtherAnalysis of Financial Status
Assets, Liabilities and Net Assets

Cash Flows

Fundraising
The Kanematsu Group carries out fundraising in line with abasic policy of stably procuring funds at low cost as needed
to realize sustainable growth in line with its six-year
medium-term vision, future 135.

(Millions of yen)(Times)60,000 59,045

1.5
49,96951,807

Total Equity / Total Equity Attributable to
Owners of the Parent per ShareTotal Equity Attributable to Owners of
the Parent / Equity Ratio(Millions of yen)

40,520(Millions of yen)(%)

199,282 4,000

200,000

40

3,000

150,000

180,492

51,242150,000 147,050

40,000(Yen)

200,000

158,698

166,174

159,484
143,9261.0
116,0122,000

100,000

100,000

1,909.64
20,000

0.5
0.4

0.5

0.4
0.3

0.3

2021

2022

0

(FY) 2018

50,000 1,377.66

0

2019

2020

Net Interest-Bearing Debt

Net D/E Ratio*1	Net interest-bearing debt = Interest-bearing debt
–Cash and cash equivalents*2	Net D/E ratio = Net interest-bearing debt / Total
equity attributable to owners of the Parent

1,499.86 1,566.60

1,000

0

2019

2020

22.8

22.3

23.7

25.8

25.1

20

1,723.420(FY) 2018125,24630

130,829

Kanematsu’s Foundations

Net Interest-Bearing Debt*1 /Net D/E Ratio*2

Kanematsu’s Future

In the year under review, net cash provided by operating
activities totaled ¥15,382 million. Net cash used in investing
activities amounted to ¥10,547 million. Net cash provided byfinancing a­ ctivities amounted to ¥4,245 million. As a result,after the effect of exchange rate changes on cash and cash
equivalents, cash and cash equivalents at the end of the fiscal
year under review stood at ¥91,420 million, up ¥10,375­million from the end of the previous fiscal year.

From Kanematsu’s Present to the Future

Total assets at the end of the fiscal year under review increased¥76,961 million from the end of the previous fiscal year to¥634,456 million.
Interest-bearing debt increased ¥21,295 million from theend of the previous fiscal year to ¥143,452 million, mainly due
to a rise in short-term borrowings. Net interest-bearing debt
after deducting cash and deposits rose ¥10,722 million from theend of the previous fiscal year to ¥51,242 million. Interestbearing debt does not include lease liabilities.
In terms of equity, total equity attributable to owners of the
Parent rose ¥15,558 million from the end of the previous fiscal
year to ¥159,484 million, chiefly due to the accumulation of
profit attributable to owners of the Parent and increases inother capital components resulting from yen depreciation.
As a result, the equity ratio at the end of the fiscal year underreview was 25.1%. The net D/E ratio stood at 0.3 times.

The Group raises funds primarily through indirect financing
based on good relations with its main banks, regional banks, lifeand non-life insurers, and other financial institutions.
Kanematsu also raises funds from capital markets by issuingstraight corporate bonds as a means of long-term capitalprocurement. During the year under review, the Company
issued ¥10,000 million in straight bonds. At the end of the fiscal
year, debt procurement through direct financing accounted for
14% of consolidated interest-bearing debt.
To facilitate capital procurement, Kanematsu receives ratingsfrom Japan Credit Rating Agency, Ltd. (JCR) and Rating andInvestment Information, Inc. (R&I). The Group’s long-term
ratings as of the end of the fiscal year under review are A(stable) from JCR, one rank higher than a year earlier, and BBB+
(stable) from R&I.
To secure liquidity on hand, the Group maintains an ample
balance of cash and cash equivalents and has establishedcommitment lines with major financial institutions.
To efficiently procure capital on a consolidated basis, theGroup has adopted a cash management system under whichfundraising for major domestic subsidiaries and affiliates isconcentrated at the Parent Company and proceeds are thenallocated in response to capital requirements. At the end of the
fiscal period under review, the Company’s interest-bearing debt
accounted for 66% of the consolidated Group’s interest-bearing
debt, a reflection of the concentration of fund procurement at
the Parent Company.
As a result of the above fundraising activities, at the end of
the fiscal year under review, gross interest-bearing debt stood at¥143,452 million, an increase of ¥21,295 million from the end of
the previous fiscal year. Net interest-bearing debt stood at¥51,242 million, up ¥10,722 million from the end of theprevious fiscal year. As a result, the net D/E ratio stood at 0.3,
and Kanematsu’s financial position remained sound.
Corporate bonds and long-term borrowings (including theCurrent portion of corporate bonds and long-term borrowings) accounted for 63% of the balance of interest-bearing
debt at the end of the fiscal year under review (or 90% on
a non-consolidated basis). As such, Kanematsu’s fundraising
was stable.

From Kanematsu’s Origins to the Present

Revenue increased ¥2,898 million year on year to ¥13,395
million. Operating profit rose ¥313 million to ¥1,009 million.
Profit attributable to owners of the Parent grew ¥85 million to¥465 million.

2021

2022

50,0001000(FY) 2018

2019

2020

2021

2022

Total Equity

Total Equity Attributable to Owners of the Parent

Total Equity Attributable to Owners of the Parent per Share

Equity Ratio

KANEMATSU Integrated Report 2022

81

Major Group Companies(As of April 1, 2022)* Companies with shares listed on a stock exchangeElectronics Japan& Devices

Kanematsu Electronics Ltd.*
Nippon Office Systems Ltd.

NS Technologies Inc.

System integration of ICT and communications equipment
Development, sales, and maintenance of software for computers and computer peripherals, etc.
Manufacture and sales of home-construction materials; Ground inspection services and improvement work;
Installation and sales of security cameras
Sales of mobile communications devices; Mobile internet systems and services
Sales of mobile communications devices; ICT solution services
Sales of mobile communications devices; Internet connection services
Website planning, building, and operation; Content planning, production, and sales
Import, export, processing, development, design, manufacture, sales of semiconductors,
electronic components, and module products; EMS business
Import, export, storage, sales, and processing of materials and components for vehicle equipment, industrial
electronics, and communication devices
Sales of industrial materials and chemicals (to be renamed Kanematsu Kangawa Co., Ltd. as of July 1, 2022)
Design, development, and sales of semiconductor production equipment, testing equipment, and related
components; Technical services
Design, development, and manufacture of IC test handlers

Lumonics K. K.

Sales of and maintenance services for wafer marking systems

G-Printec, Inc.

Design, development, manufacture, sales, and maintenance services (OEM) for card printers and related equipment

Japan Data Exchange Inc.
Kanekoh Electronics (Shanghai) Co., Ltd.
KIS Global GmbHdi support GmbH

Data utilization consulting and data exchange support
Design, development, manufacture, and sales of control modules for lithium ion batteries
Sales of card printers
Sales of digital photo printers

Kanematsu Foods Corp.
Kanematsu Agritec Co., Ltd.

Food wholesaling and cold storage
Manufacture and sales of feed and fertilizer
Sales of soybeans, pulses & peas, and grain; Development and marketing of tofu and other ingredients forprocessed foods
Sales of pet food and other products
Primary processing of meat
Manufacture of dim sum and delicatessens
Production of processed vegetables and fruits
Wholesale of confectionery and baking ingredients
Primary processing of beef
Manufacture and sales of feedstuff (puffed soybeans, soybean meal)
Processing and sales of aloe vera
Manufacture of processed foods; Management of central kitchen
Sales of hay and roughage
Production of hay
Seed development; Contract farming; Sorting, processing, and sales of food soybeans

Kanematsu Sustech Corporation*
Kanematsu Communications Ltd.
NSC Company Limited
Kinkitelecom CO., LTD.
Kanematsu Granks, Corp.
Kanematsu Futuretech Solutions Corporation
Kanematsu Advanced Materials Corp.
Kangawa Shoji Co., Ltd.
Kanematsu PWS LTD.

China
Germany

Foods,
Meat &
Grain

Japan

Kanematsu Soytech Corp.

China

ThailandIndonesia
U.S.A.

GPC Holdings Co., Ltd.
Ks’ Meat Solution Co., Ltd.
Dalian Tiantianli Food Co., Ltd.
Shangdong Lufeng Foods Co., Ltd.
Iwase-Esta Kanematsu Co., Ltd.
Dalian Matsutomo Foods Co., Ltd.
Dalian Runsong Biological Feed Co., Ltd.
Siam Aloe Vera (2005) Co., Ltd.
PT. Kanemory Food Service
KAI Enterprises, Inc.
Sage Hill Northwest, Inc.
KG Agri Products, Inc.

Steel,
Japan
Materials& Plant

Kanematsu Trading Corp.
Sales of steel and construction materials
Kyowa Steel Co., Ltd.
Cutting and processing of steel sheet; Sales of construction materials
Eiwa Metal Co., Ltd.
Processing and sales of stainless steel, titanium, and high-alloy steels
Kenkosya Co., Ltd.
Construction, design, manufacture, installation, and sales of steel joinery
Kanematsu Petroleum Corp.
Sales of petroleum products and LPG
Kanematsu Yuso Co., Ltd.
Delivery and storage of petroleum products
Kanematsu Chemicals Corp.
Sales of petrochemicals, automobile-related chemicals, health food ingredients, and pharmaceuticals
Kanematsu Wellness Corp.
Sales of health foods and provision of medical information
Kanematsu KGK Corp.
Sales of machine tools and industrial machinery
KGK Engineering Corp.
Repair and sales of machine tools; Sales of paper-manufacturing machinery
Watachukikai Corp.
Wholesale of cutting tools and peripheral and auxiliary tools
Aioi Sekkei Co., Ltd.
Design, manufacture, and installation of plant equipment
South Korea AJUSTEEL Co., Ltd.*
Steel processing and fabrication
China
Kanematsu KGK Trade & Sales (Shanghai) Co., Ltd. Sales of machine tools and industrial machinery
ThailandKGK Engineering (Thai) Co., Ltd.
Sales of machine tools and industrial machinery
Vietnam
ATAD Steel Structure Corp.
Design, manufacture, transportation, and installation of various steel structures
U.S.A.
Steel Service Oilfield Tubular, Inc.
Sales of steel materials for natural resource excavation
Benoit Premium Threading, LLC
Steel tubing fabrication; Manufacture and sales of oil well-related parts
KGK International Corp.
Sales of machine tools

Motor
Japan
Vehicles &Aerospace

Kanematsu Aerospace Corp.
KANEYO Co., Ltd.
Datatec Co., Ltd.

Ireland
PolandOther

U.S.A.

KG Aircraft Rotables Co., Ltd.
Aries Motor Ltd.
Aries Power Equipment Ltd.
Kanematsu Ventures Inc.

Japan

Hokushin Co., Ltd.*
Shintoa Corp.

Indonesia

82

Kanematsu Logistics & Insurance Ltd.
Japan Logistics Co., Ltd.
PT. Dunia Express Transindo

KANEMATSU Integrated Report 2022

Sales of aircraft, defense, and aerospace-related products
Sales of bedding, fiber raw materials for industrial materials, and synthetic fiber raw materials
Development and sales of network services for vehicle operation management, driving safety analysis, etc.;
Development and sales of vehicle measuring instruments
Replacement and maintenance of aircraft rotable components; Leasing; Sales
Sales and maintenance of automobiles
Sales of engines, generators, lawnmowers, and other general-purpose machinery
Investment in VC funds; Seeking out advanced technologies; Growth support for startups
Manufacture and sales of medium-density fiberboard
Sales of pet food, feed materials, feed by-products, soft drinks for vending machines, metal products,
formulated resin, and aircraft engines
Insurance agency and forwarding business; Consigned freight forwarding business
Warehouse and self-storage operation
Total logistics services

Corporate Profile
Corporate Profile
Paid-in Capital*
Fiscal Year
General Meeting of
Shareholders
Number of Offices*

KANEMATSU CORPORATION
August 15, 1889
March 18, 1918
Yoshiya Miyabe
2-1, Shibaura 1-chome, Minato-ku,
Tokyo 105-8005, Japan¥27,781 million
April 1 to March 31
June

Domestic: Tokyo Head Office, Kobe Head Officeand branches 5
Overseas: 36
Number of Employees* 788 (Consolidated: 7,446)* As of March 31, 2022

Investor Information

From Kanematsu’s Origins to the Present

Company Name
EstablishedFoundation
President
Head Office(As of March 31, 2022)

Composition of Shareholders

Tokyo
8020
Sumitomo Mitsui Trust Bank, Limited
200,000,000
84,500,202 (including 262,430 treasury shares)
100
25,529Financial institutions

35.76%

Foreign institutions
and individuals

35.29%

From Kanematsu’s Present to the Future

Stock Exchange Listings
Stock CodeTransfer Agentfor Common Stock
Shares Authorized
Shares Outstanding
Minimum Trading Unit
Number of Shareholders

Individuals and others(including treasury shares) 19.92%
Other corporations

5.63%

Securities firms

3.40%

Principal Shareholders

Number of shares held (thousands)

Percentage of voting rights (%)

12,599

14.95

Custody Bank of Japan, Ltd. (trust account)

5,682

6.74

Tokio Marine & Nichido Fire Insurance Co., Ltd.

2,322

2.75

MSIP CLIENT SECURITIES

2,167

2.57

SSBTC CLIENT OMNIBUS ACCOUNT

2,128

2.52

The Bank of New York Mellon Corporation 140044

2,061

2.44

BBHFOR UMB BANK, NATIONAL ASSO-PEAR TREE POLARIS VAL SM CAP FD

1,693

2.00

BNYM AS AGT/CLTS NON TREATY JASDEC

1,505

1.78

MUFG Bank, Ltd.

1,417

1.68

The Norinchukin Bank

1,249

1.48

Kanematsu’s Future

The Master Trust Bank of Japan, Ltd. (trust account)Note: Calculated after deduction of treasury shares (262,430 shares)

Stock Price/Trading Volume(Thousands of shares)

1,800

40,0001,200

30,000600

20,0000

10,000Kanematsu’s Foundations

Trading Volume

Stock price
(¥)

0
17/4

6

8

10

12 18/2

4

6

8

10

12 19/2

4

6

8

10

12 20/2

4

6

8

10

12 21/2

4

6

8

10

12 22/2

Note: Kanematsu executed a share consolidation on October 1, 2017, at a ratio of five shares to one. All figures in the above graph for September 2017 and earlier are
calculated based on the assumption that said consolidation had already occurred.

KANEMATSU Integrated Report 2022

83For more information on this Integrated Report, or to obtain
additional copies, please contact:
Public & Investor Relations Section, Finance Department,
Kanematsu Corporation
2-1, Shibaura 1-chome, Minato-ku, Tokyo 105-8005, Japan
Tel: 81-3-5440-8000

We’re moving!
On November 21, 2022, Kanematsu’s head office will
relocate to the following address:
JP TOWER, 7-2 Marunouchi 2-chome, Chiyoda-ku,
Tokyo 100-7017, Japan

Printed in Japan