Kanematsu’s Foundations

Business Segments(FY2023)

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(¥ billion)
300.0

255.5
226.1
200.0

Operating Profit

282.5
255.5

226.1

(¥ billion)
25.0(¥ billion)
25.0

20.0

20.0

17.6

200.0

100.0

Net Income*/ROIC(¥ billion)
10.0

19.1
17.6

20.3
19.1

20.3

8.0

(¥ billion)
10.0

8.5

2023

7.9

8.5

(%)
25

8.8

8.8
7.9 20

20

15

15

10

10

15.0

6.0

6.0

10.0

10.0

4.0

4.0
9.2

5.0

5.0

2.0

2.0

5

5

0

0

0

0

0

0

0

2021 (FY)2022
2021 20232022

8.0

(%)
25

15.0

100.0

0

(FY)

282.5

Revenue(FY)

2021(FY) 20222021 2023
2022

2023

(FY)

8.0

9.2
7.6

8.0

2021(FY) 2022
2021 2023
2022

7.6

2023

Net Income (left)Net Income (left)
ROIC (right)

Motor Vehicles &Aerospace

Other

1.5%

8.9%

Steel,
Materials &Plant

Electronics &Devices

31.0%¥911.4 billion

21.2%

Foods, Meat &
Grain

37.4%

ROIC (right)

Foods, Meat & Grain

Foods

Meat
Products• Foods (Agricultural Products,
Marine Products, Beverages, Liquor)• Cooked and Processed Foods• Processed Agricultural Products• Meat Product Ingredients (Beef, Pork,
Poultry, etc.)• Processed Meat Products(¥ billion)
400.0(¥ billion)
400.0

300.0

300.0

340.4
285.3

244.6
200.0

4.0

3.0

3.0

2.0

2.0

4.1

285.3

3.5

244.6

(¥ billion)
3.0

3.5

1.5

2.0

0

2021 (FY)2022
2021 20232022

2023

1.0

1.0

0

0

(FY)

2021(FY) 20222021 2023
2022

2023

10

(¥ billion)
200.0

150.0
148.0

150.0

100.0

(¥ billion)
200.0

96.8

100.0

193.4

193.4

148.0

(¥ billion)
15.0(¥ billion)
15.0

12.0

12.0

9.0

9.0

12.3

2.8

3.0

1.8
0

2021 (FY)2022
2021 20232022

(FY)

2023

(FY)

(%)
20

4.0

10

10

3.3
8.8

8.8

• Motor Vehicles and Parts• Aerospace(¥ billion)

100.0
80.0

(¥ billion)

100.0
80.0

71.1

60.0

(¥ billion)

71.1
65.8
60.0

40.0

40.0

20.0

20.0

(¥ billion)

3.0

81.3

(¥ billion)

3.0

2.5

81.3

0

2021(FY) 2022
2021 2023
2022

2.0

65.8

2.1

1.5

1.5 1.5

1.0

4.3
1.0

0.5

0.5

2023

0

0

2021 (FY)2022
2021 20232022

0

2023

(FY)

Steel,
Materials &
Plant

47.2%

¥18.6 billion

Foods, Meat &
Grain

11.8%

ROIC (right)

Total Assets

(%)

10

10

8

8

1.5

1.7

1.5

1.0

1.5 1.5

6

6

4.3
4

4

1.5

4.3 4.3
0.8

0.8

2
1.9

(FY)

0

(%)

2.5
2.0

4.3%

Electronics &Devices

Motor Vehicles &Aerospace

9.2%

Other

7.3%

Electronics &Devices

34.3%

2.1

2.0
1.7

1.0

(¥ billion)

2.0

0.6%

5

4.9

3.5

Net Income (left)Net Income (left)
ROIC (right)

Motor Vehicles & Aerospace

Other

36.0%

5

0

(FY)

Motor Vehicles &Aerospace

6.7

4.0

0

2023

(%)
20

15

3.5

2021(FY) 20222021 2023
2022

Net Income*

15

2.1
4.9

10.5%

ROIC (right)

6.0

1.8
0

0

6.0

2.1 2.0¥38.9 billion

Kanematsu’s Foundations

3.0

0(¥ billion)
8.0

52.3%

2023

6.7

2.0

Steel,
Materials &Plant

Electronics &Devices

Foods, Meat &
Grain

3.3
0

3.3
4.1

1.7%

5

3.3

2021(FY) 2022
2021 2023
2022

6.0

4.1

50.0

0

12.3

96.8
6.0

50.0

(¥ billion)
8.0

10

4.85

4.8

Net Income (left)Net Income (left)
ROIC (right)• Steel• Steel Tubing• Chemicals• Energy• Plant & Ships• Machine Tools & Industrial Machinery

Other

31.7%

0

(FY)

2.2

1.5

2.8

Motor Vehicles &Aerospace

3.8%

2.2

1.0

0

(%)
15

2.5

2.0

1.0

1.5

(%)
15

2.5

4.1

1.5

100.0

0

(FY)

4.0

(¥ billion)
3.0

The Kanematsu Group’s Value Creation

Steel, Materials & Plant• Grain, Food Soybeans, Oilseeds• Feedstuff Materials, Mixed Feedstuff(¥ billion)
5.0

200.0

100.0

Grain,
Oilseeds &Feedstuff

340.4(¥ billion)
5.0

The Origins of Value Creation

Operating Income002021(FY) 20222021 2023
2022

2023

0

(FY)

2021(FY) 2022
2021 2023
2022

Net Income (left)Net Income (left)
ROIC (right)

2
1.9

0

0

2023
ROIC (right)

Steel,
Materials &Plant¥677.6 billion

23.9%

Foods,
Meat &
Grain

25.4%

* Profit for the year attributable to owners of the Parent

78

KANEMATSU Integrated Report 2023

KANEMATSU Integrated Report 2023

79

Kanematsu’s Foundations

Business Segments
China

Electronics & Devices

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

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.

Masahiro Harada

Germany• Printers

Silicon Valley• Semiconductor equipment• Semiconductor components andelectronic materials

Korea

Canada• Semiconductor equipment• Semiconductor components
and electronic materials

New Jersey• Printers• Printers

Japan

India

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

• ICT solutions

Key SDGs

ThailandThe Electronics & Devices segment employs constantly evolving digital technologies toengage in new business, helping to build foundations for industry and technologicalinnovation. The segment is also contributing to efforts to combat climate change by
expanding businesses related to next-generation batteries, including lithium-ion batteries
and solid-state batteries. By supporting the use of IT and DX
in traditional industries, we hope to build organic
partnerships, increase the overall efficiency and added valueof industry, and help achieve the SDGs.

• ICT solutions• Semiconductor components
and electronic materials• Printers

Texas• Semiconductor components andelectronic materials

TaiwanSingapore• Semiconductor equipment• Semiconductor components
and electronic materials

Malaysia• Semiconductor
equipment• Semiconductor equipment• Semiconductor components
and electronic materials

The Origins of Value Creation

Managing Executive Officer
COO Electronics & Devices• ICT solutions• Mobile• Semiconductor equipment• Semiconductor components
and electronic materials

Key Businesses
and Locations

The Kanematsu Group’s Accumulated ExpertiseMedium- to Long-Term Market Outlook
The market is expanding and changing extremely quickly. The keys to success will be selection and concentration and being keenly
alert to advanced technologies
Strategy

We cover the wide-ranging value chains of the electronics and devices industry, leveraging a multilateral, multifaceted business creation perspective.
The Kanematsu Group’s Accumulated Expertise
Development

Production

Processing

Distribution

Sale

Maintenance

The Kanematsu Group’s operations

Added value

Investment in innovation (seeds)

Added
value
Functions

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

Expansion of scale
Select and concentrate operations tobecome a major player in niche areas.
Respond to market changes by working toward being a major player inniche areas with an eye to trends on
the technological frontier. Deepen
relationships with business partners.

Stable earnings
base

Expansion ofscale

Social andrelationship capital

Action Plan

• Entrenchment of remote work
• The creation and expansion of related technology
and service markets driven by the adoption of AI,
IoT, robotics, and 5G• Accelerating DX and GX initiatives at companies inJapan• 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

Risks

Countermeasures• 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 or geopolitical risks• 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

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 and theability to create and manage businesses
Trust and longstanding relationships with business partners maintained by expert human resources

Longstanding Relationships

Progress toward the Medium-Term Vision: Main Initiatives in Fiscal 2023
In the ICT solutions business, we acquired shares in an infrastructure and systems development contractor, making it consolidated subsidiary. Further business expansion is expected in
the public and educational sectors. We also acquired additional shares in GLOBAL SECURITY EXPERTS Inc., which operates
wide-ranging businesses in the information security field,
strengthening our ability to meet growing security demand. In
the mobile business, we advanced efforts to acquire a primary
distributor of telecommunications operators based in the
Kansai area as well as secondary distributors across Japan as
subsidiaries and worked to improve operational efficiency at

80

KANEMATSU Integrated Report 2023

Kanematsu’s Foundations

Human capital

Opportunities

Customers • Markets • Share

Drivers of Strategy and Innovation (Key Capital)
Intellectual capitalBusiness Environment

The Kanematsu Group’s Value Creation

Investment ininnovation (seeds)

Become a platform operator by creating a platform for businessmatching

the individual store level. In the semiconductor component
and equipment businesses, we acquired a Singapore-based
depaneler manufacturer, while in the electronic devices andmaterials businesses we acquired a Canada-based manufacturer of passport photo printing systems. Through such business investment across the segment’s business fields, we
advanced the expansion of scale and acquisition of added
value—priority initiatives of the future135 medium-term
vision. In fiscal 2023, the final year of the medium-term vision,
we will continue to advance the priority initiatives toward theachievement of the vision’s targets.

A Word from Our Business Partner

JAPAN PURE CHEMICAL is a chemical productmanufacturer engaged in the development,
manufacture and sale of noble metal platingchemicals for electronic components andsemiconductors. Our business with theKanematsu Group goes back more than 30
years—more than half of our 53-year history.
Over the years, as the manufacturing ofelectronic components rapidly shifted firstfrom Japan to Taiwan and then from Taiwan
to mainland China, the Kanematsu Group leveraged its customer network to provide us
with immense support in marketing our

products overseas. Personnel exchange,
including sending our engineers to theKanematsu Group’s overseas locations andreceiving staff dispatched from theKanematsu Group, helped us enhance customer satisfaction.
In cutting-edge electronics manufacturing, the importance thereby connecting
directly with customers, and of building personal networks, is a constant. Going forward,
we will combine our strengths as manufacturer
with the Kanematsu Group’s network strengths
to aim for synergistic growth.

Tomoyuki Kojima
Representative Director andPresidentJAPAN PURE CHEMICAL CO., LTD.

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Kanematsu’s Foundations

Business Segments

Foods, Meat & Grain

Foods

China
Foods (Agricultural Products, Marine Products, Beverages, Liquor), Cooked and Processed Foods, Processed Agricultural
Products• Frozen dim sum manufacturing• Cooked meat product manufacturing
Dalian Tiantianli Food Co., Ltd.

Key Businesses
and Locations
Germany

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.

• Fruit processing
Shangdong Lufeng Foods Co., Ltd.

• Japanese food import and sales• Seaweed processing
Nantong Taiyang Foodstuff Co., Ltd.
• Confectionary and breads• Restaurant food ingredient wholesaling
Iwase-Esta Kanematsu Co., Ltd.

Key SDGs

Executive Officer,
COO Foods* MSC: Marine Stewardship Council; ASC: Aquaculture
Stewardship Council• Grape juice manufacturing
Exportadora de Mostos y
Vinos Jucosol S.A.

Indonesia• Frozen processed food
PT. Kanemory Food Service

Thailand• Aloe processing
Siam Aloe Vera(2005) Co., Ltd.

• Japanese restaurant chain franchise
operation
PT. Abadi Tunggal Lestari

The Origins of Value Creation

Koichi Nishimura

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 newsources 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.

Chile

The Kanematsu Group’s Accumulated ExpertiseMedium- to Long-Term Market Outlook

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

Consumer needs are diversifying alongside changes in lifestyles and values. The key to success will be a market-oriented approach.

The Kanematsu Group’s Accumulated Expertise

Strategy

Production

Procurement

Added
value

Stable earnings
base

Expansion ofscale

Investment in innovation (seeds)• 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

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 tocreate and manage businesses

Business Environment
Opportunities

Action Plan

• 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

• 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 and growbusinesses in local production for local consumption

Risks

Countermeasures• 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

Longstanding, deep, positive relationships of trust with business partners in Japan and overseas

Longstanding Relationships

Progress toward the Medium-Term Vision: Main Initiatives in Fiscal 2023
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 secure a stable supply of safe, reliable food. To meet demand for food prepared athome and ready-made meals, we work with food product manufacturers in Japan and overseas to strengthen the developmentof products for retail markets, including frozen foods, alcoholic
beverages, and coffee. Recently, in response to supply concerns
arising from the Russian invasion of Ukraine as well as rising
import costs due to global inflation and the depreciation of the82

KANEMATSU Integrated Report 2023

• 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’s Foundations

Drivers of Strategy and Innovation (Key Capital)

The Kanematsu Group’s Value Creation• 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)

Functions

Expansion of scale

Social andrelationship capitalSale

The Kanematsu Group’s operations• Obtain sustainability-related
certifications• Cultivate new production regions
and develop high-value-added
new products

Human capital

Production/
processing

Quality control

Added valueIntellectual capital

Distribution/
storageyen, we have been developing alternative production regionsthat offer price advantages and a stable supply of various imported raw materials.
In addition, in response to growing awareness of sustainability among consumers, we accelerated sales of sustainable raw
materials in such categories as coffee and marine products.
In Asian markets, we are working with Indonesian generalfood product manufacturer PT. Cisarua Mountain Dairy Tbk(Cimory), in which we have invested as a strategic business partner, not only collaborating in food products, but also advancing
initiatives that leverage the Group’s comprehensive strengths insuch areas as DX and GX.

A Word from Our Business Partner

The partnership formed in 2012 between
Cimory and Kanematsu, which resulted in theestablishment of PT. Kanemory Food Service,
has been a mutually beneficial venture.
Kanematsu has been able to expand its reachin the Indonesian market while Cimory has
capitalized on Kanematsu’s expertise toimprove its food processing capabilities. We
are thrilled to have developed a strong partnership over the years.
Kanematsu’s recent acquisition of sharesin Cimory is a strategic move that aims to fortify the Indonesian food value chain, enter thegeneral food wholesale business by tapping
into Cimory’s marketing channels, and offer
support to Japanese food companies andretailers intending to penetrate theIndonesian market. The success of this partnership highlights the value of collaborationand emphasizes the benefits of sharing
expertise and resources in creating value forthe end customer. We continue to look forward to working together for many years tocome, building on the strengths of our partnership to achieve even greater success.

Bambang Sutantio
Group Founder & President
Commissioner
PT. Cisarua Mountain Dairy Tbk(Cimory)

KANEMATSU Integrated Report 2023

83

Kanematsu’s Foundations

Business Segments

Foods, Meat & Grain

Meat Products

China
Meat Product Ingredients (Beef, Pork, Poultry, etc.), Processed Meat Products• Meat importing and sales• Meat processing

Key Businesses
and Locations

Hong Kong

Canada• Beef importing and sales

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 ofsafe, reliable, high-value-added products that meet customer needs.

• 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

Key SDGs

Brazil• Beef and porkpurchasing•Beef importing and sales• Chicken andprocessed chicken
product purchasing• Beef, pork, chicken, andturkey purchasing• Beef sales

MexicoIndonesia

ThailandThe 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 food technologies, such as those for meat
substitutes, to help secure sustainable food sources.

United States

Australia• Pork and chicken
purchasing

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

New ZealandExecutive Officer,
COO Meat Products• Beef and lamb purchasing

Uruguay

The Origins of Value Creation

Toru Hashimoto• Beef purchasing

The Kanematsu Group’s Accumulated ExpertiseMedium- 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 and deepening relationships of trust with our business partners in Japan and overseas.

We cover the wide-ranging value chains of the meat products industry, leveraging a multilateral, multifaceted business creation
perspective.
The Kanematsu Group’s Accumulated Expertise
Production

Strategy

Added
value

Stable earnings
base

Expansion ofscale

Investment in innovation (seeds)• 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 businessBusiness Environment
Opportunities• Expansion of imports due to reduced import tariffs
under the TPP11, the EPA with the European Union,
and the TAG with the United States• Advance business investment and M&A to reinforce domestic sales capabilities bystrengthening functions within the Meat Products group• Growing demand for meat products in Asian markets• Extend business models used in Japan to expand meat product businesses in Asianmarkets• 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 stream

Risks

Countermeasures

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

• Supply shortages due to conflicts, pandemics, oranimal disease outbreaks• Diversify production sites to better distribute suppliers• Raw ingredient price fluctuations• Reinforce procurement capabilities by deepening initiatives with suppliers• Decrease in Japan-bound supply availability due togrowth in demand for meat products in other Asianmarkets• Enter the meat substitute market

chain by investing in and establishing joint ventures withfood service companies.
In addition, we advanced DX by leveraging a variety ofdigital technologies, with efforts including building an online
platform for meat product trading and promoting consumer
recognition of imported meats through owned media.
Going forward, by developing producing regions, reinforcing the value chain and promoting DX and GX, we aim to leadthe meat product industry forward.

• Diversify customers and expand processing businesses to mitigate price fluctuation risk

• Future protein supply shortages due to global
population growthLongstanding Relationships

We continue to build value chains to establish stable a
supply of safe, reliable, high-quality products that meetcustomer needs. In upstream areas, we worked to develop
new producing regions and suppliers to address concerns
related to supply-related risks due to the Russian invasion of
Ukraine and rising prices in major producing regions. We also
worked to reinforce relationships with existing suppliers
through business tie-ups and investment, continuing to build astable supply structure for meat product ingredients. Furthermore, in Japan, China, and Indonesia, we expanded our value

Kanematsu’s Foundations

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

Progress toward the Medium-Term Vision: Main Initiatives in Fiscal 2023

KANEMATSU Integrated Report 2023

Action Plan

Customers • Markets • Share

Drivers of Strategy and Innovation (Key Capital)

84

Sale

The Kanematsu Group’s Value Creation

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)

Functions

Expansion of scale

Social andrelationship capital

Production/
processing

The Kanematsu Group’s operations

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

Human capital

Distribution/
storage

Quality control

Added valueIntellectual capital

Procurement

A Word from Our Business Partner

For more than half a century, theKanematsu Group has helped us procure
meat, the main raw ingredient in our
products.
In food product manufacturing, partners who are capable of providing stablesupplies of safe raw ingredients are essential. Kanematsu is crucial to our raw material procurement, playing a key role atevery stage from finding partners tobuilding relationships of trust.

Global conditions are changing rapidly, and the future is increasingly uncertain.
Working with the Kanematsu Group andits wide-ranging global network, we willcontinue to provide safe and reliable foodproducts in order to contribute to thehappiness of our customers via quality
foods.

Shigeki Fukushima
Managing Director and General
Manager, Meat Business Department
Marudai Food Co., Ltd.

KANEMATSU Integrated Report 2023

85

Kanematsu’s Foundations

Business Segments

Foods, Meat & Grain

Grain, Oilseeds & Feedstuff

Grain, Food Soybeans, Oilseeds, Feedstuff Materials, Mixed Feedstuff

Key Businesses
and Locations

EuropeChina• Pasta, frozen dough,and raw feedstuff
material supply

The Grain, Oilseeds & Feedstuff Division stably procures the grains andproduction materials that form the foundation for diverse food production fromaround the world, providing stable supplies to food product manufacturers inJapan and Asia.
While increases in grain prices have leveled off for the time being, the global
population continues to grow, and the increase in the middle-income population,in particular, is driving rapid growth in demand for protein. As such, demand forgrain used in protein production is also expected to see continued growth. Amid
mounting risks posed by climate change and geopolitical factors, we constantly
strive to enhance our ability to provide a stable supply and consistent quality.

• 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

Key SDGs

Jun Nakajima

Australia

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.)

The Origins of Value Creation

Executive Officer
COO Grain, Oilseeds & Feedstuff

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 order tosupport healthy and abundant diets. We also
support productivity improvements via theadoption of new technologies.

The Kanematsu Group’s Accumulated ExpertiseMedium- to Long-Term Market Outlook

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

Demand for protein will grow, but supply risks due to extreme weather events and other factors will increase. The key to successwill be stabilizing production and quality control.

The Kanematsu Group’s Accumulated Expertise

Strategy

Production

Procurement

Distribution/
storage

Production/
processing

Sale

Quality control

Added value

Investment ininnovation (seeds)• Grow market share by expanding
the product lineup• Business scale expansion and horizontal development into overseas
markets through collaboration withand investment in partnercompanies

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

Functions

Expansion of scale

Added
value

Stable earnings
base

The Kanematsu Group’s operations

Investment in innovation (seeds)

Expansion ofscale

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• 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• 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

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

In the rice business, we have a leading share of Japan’s imported rice market and are expanding rice trading overseas, forexample, through exports to Southeast Asia and Europe.
Aiming to further expand the business, we are also working toreinforce the trading of high-value-added rice, such as no-wash
rice and jasmine 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 expand our market share through the provision of even greater added value via
initiatives in such areas as seed improvement using genome
KANEMATSU Integrated Report 2023

Action Plan

Customers • Markets • Share

Progress toward the Medium-Term Vision: Main Initiatives in Fiscal 2023

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Opportunities

Kanematsu’s Foundations

Intellectual capitalBusiness Environment• Bringing in new technologies

Drivers of Strategy and Innovation (Key Capital)

The Kanematsu Group’s Value Creation

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

editing and AI analysis technology, soy materials for meat substitutes, and soy ingredients certified by the Round Table on
Responsible Soy Association (RTRS), which provides certificationof sustainable soybean cultivation and social responsibility inthe soy sector.
In the domestic feedstuff business, we maintained a stablesupply of wide-ranging feedstuff materials from producing
regions around the world amidst impacts from the conflict in
Ukraine and turmoil in container shipping operations.
In the overseas feedstuff business, in the area of aquafeed
materials, we worked to obtain resource management certification
while expanding sales of fish meal and fish oil in Asian markets.

Longstanding Relationships

A Word from Our Business Partner

The Kanematsu Group is a key business partner for us in the procurement of raw materials
for our mainstay products.
Agricultural product procurement is
impacted by a wide range of factors, fromweather to market fluctuations and geopolitical risks. Recently, we have faced an unclear
outlook due to supply chain interruptions
caused by the COVID-19 pandemic and theRussian invasion of Ukraine, among other factors, and the environment surrounding raw
material procurement is growing increasingly
challenging.

Under these circumstances, theKanematsu Group has been working to build
a stable supply system that is highly agile andresilient by utilizing its diverse global supply
network and its own supply bases whileworking to incorporate crop varieties suitablefor product manufacturing.
I look forward to seeing the KanematsuGroup evolve these functions as it continues
to strengthen its relationship of trust with us
and carry out stable raw ingredient procurement.

Yuji Sasaki
Director and General Manager,
Purchasing Department
Kikkoman Business Service
Company

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Kanematsu’s Foundations

Business Segments

Steel, Materials & Plant

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

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 and environmentally friendly products.

Key Businesses
and Locations

Europe• Pharmaceuticals• Functional foods• Specialty steel

China• General chemicals• Specialty steel

South Korea• Treated-surface steel
materials• Specialty steel• Steel tubing• Specialty steel• Functional foods

Southeast Asia

Middle East

• Bunker oil• Biomass fuel• General chemicals• General steel materials• Specialty steel• Plant/infrastructure• Shipbuilding• Plant facilities• Iron and steel products

Key SDGs

North America

The Steel, Materials & Plant segment contributes to environmental sustainability through thepromotion of solar power, wind power, biomass fuels, and other sustainable energy as well as
the effective use of environmentally friendly materials.

India

Eiji Kan
Senior Managing Executive Officer,
COO Steel, Materials & Plant

The Origins of Value Creation• High-performancesteel materials• General steel
materials

The Kanematsu Group’s Accumulated ExpertiseMedium- to Long-Term Market Outlook

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

As carbon risk grows, green transformation needs are expanding. The key to success will be providing various forms of support forcustomers’ decarbonization efforts.
Procurement

Strategy

Investment ininnovation (seeds)

Stable earnings
base

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

Expansion ofscale

Investment in innovation (seeds)
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

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

In the chemicals business, in addition to focusing on existing
businesses in functional chemicals, life science, and healthcare, we are proactively working toward business expansion,
including investing in new technologies for plastic recycling.
In the iron and steel business, the steel material treatment
businesses in which we have invested in South Korea andVietnam continue to grow steadily and are generating synergies with Group companies engaged in building construction.
In specialty steel, we have greatly expanded into businesses in environmentally conscious fields, such as flue gas desulfurization equipment, air conditioners, electric vehicles, andhydrogen and ammonia production equipment. We have also
expanded the range of products we handle from generalpurpose stainless steel to include such high-value-added
products as high alloy steel, nickel, and titanium.
KANEMATSU Integrated Report 2023

Sale

Recycling

Business Environment
Opportunities

Action Plan

• 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

In the steel tubing business, oil drilling demand was firm,
reflecting rising global energy demand. At the newly opened
technical center of our U.S.-based threading processing
subsidiary, we are focusing efforts on environmental response,
including the development of threading for steel tubing usedin subterranean CO2 injection.
In the energy business, the biomass fuel business continues to steadily grow, and we are creating frameworks to meetdemand for various forms of energy. In the plant and ships
business, performance in shipbuilding businesses in South
Korea, Taiwan, and elsewhere was strong, reflecting the postpandemic rise in logistics demand. In addition, we are working
to both contribute to the environment and achieve businessgrowth by deepening initiatives related to solar power anddomestic wind power generation.

• 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

Longstanding relationships of trust with influential business partners across industries

Progress toward the Medium-Term Vision: Main Initiatives in Fiscal 2023

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Distribution

Longstanding Relationships

Kanematsu’s Foundations

Drivers of Strategy and Innovation (Key Capital)

Social andrelationship capital

Processing

The Kanematsu Group’s Value Creation

Added
value
Functions

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

Human capital

Production

The Kanematsu Group’s operations

Added valueIntellectual capital

The Kanematsu Group’s Accumulated Expertise• Create new businesses that contribute to environmental preservation, including
CO2 reduction

A Word from Our Business Partner

Benoit’s key focus is innovative technology
and effective manufacturing that allows ourcustomers to progress from market challengers to market leaders. All companies need avision to achieve success.
Eleven years ago, Kanematsu acquiredpart ownership in Benoit to establish a complete supply chain for the manufacture anddistribution of next generation proprietary
thread technology. Kanematsu’s provided avision for Benoit. That vision continues today,with both financial investment and strategic
guidance supporting the plan to invest inpeople, technologies, and manufacturing
facilities that cater to the products needed forboth the traditional oil and gas sector and thegrowing Clean Energy market.
Within the past five years, Benoit’s strategic product development plan has added
newer, higher performing products designed
to meet the needs of emerging drilling activities, a new Research and Development Center,and a new modern manufacturing facility. All
these additions have resulted in these newtechnologies growing to 40% of thread technology sales. Benoit looks forward to expanding on Kanematsu’s vision and consolidating
our customers’ place as market leaders in an
continually evolving global market.

Paul Fullerton
President
Benoit Premium Threading, LLC.

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Kanematsu’s Foundations

Business Segments

Motor Vehicles & Aerospace

Motor Vehicles and Parts, 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. Thesebusinesses operate on a global scale, leveraging the Group’s superb
expertise and extensive 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 through next-generation mobility.

Ryoichi Kidokoro

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• Motorcycle OEM components• Aerospace equipment andcomponent agency sales,business partners

Kingdom, Austria,
Ireland, and Poland)

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• 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(Mexico and Brazil)

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

Central &South America• Motorcycle andautomobile OEMcomponent trading

The Origins of Value Creation

Senior Executive Officer,
COO Motor Vehicles & Aerospace

Key Businesses
and Locations (Germany, Italy, United

China

The Kanematsu Group’s Accumulated ExpertiseMedium- to Long-Term Market Outlook
The next-generation mobility and space markets are expected to 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.

We cover the wide-ranging value chains of the motor vehicles and aerospace industries, leveraging a multilateral, multifacetedbusiness creation perspective.
The Kanematsu Group’s Accumulated Expertise
Procurement

Production

Processing

Distribution

Sale

Recycling

The Kanematsu Group’s operations
Investment ininnovation (seeds)

Strategy

Functions

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

Stable earnings
base

Expansion of
scale

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

Business Environment• Develop vertiports for upcoming
Advanced Air Mobility that willcontribute to decarbonization• Business development of a lowEarth orbit commercial spacestation• Development of a data businessusing commercial vehicle data

Customers • Markets • ShareIntellectual capital
Human capitalSocial andrelationship capital• Expertise in combining mobility and digital technologies• Supply chain management expertise leveraging global networks through overseas business locations andGroup 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• 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 in orderto realize the widespread use of Advanced Air Mobility• Expectations for space development, which is increasingly
important in both the defense and commercial spheres• Reinforce the space safety assurance field and create businesses in the low-Earth orbit sector

Risks

Countermeasures• Logistics disruptions due to international conditions,geopolitical risks, or changes in demand arising fromenvironmental regulations or trade friction• Rapid changes in consumer awareness or industry
structure that surpass the frameworks of existing value
chains and business models

Longstanding Relationships

Progress toward the Medium-Term Vision: Main Initiatives in Fiscal 2023
In the aircraft and defense business, transactions increased,reflecting rising geopolitical risks. In the commercial aircraftbusiness, aiming for the social implementation of services
using Advanced Air Mobility, we are advancing pilot testing in
partnership with the U.K.-based Skyports Limited and with thecooperation of local governments. In the space business, wehave partnered with U.S.-based Sierra Space and are working
to expand our network toward the use of a commercial spacestation in low-Earth orbit.
The motorcycle and automobile business was affected by

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KANEMATSU Integrated Report 2023

rising shipping and materials costs, but markets showedsteady signs of recovery. We are also taking on new businesses
with an eye toward contributing to reducing carbon
emissions.
We also accelerated business development though
Kanematsu Ventures Inc. and WERU INVESTMENT Co., Ltd.,and invested in an emerging carbon nanotube manufacturer.
Focusing on the environment, safety, and comfort, we will
create and advance cross-divisional next-generation mobility
businesses.

Action Plan

Kanematsu’s Foundations

Drivers of Strategy and Innovation (Key Capital)

Opportunities

The Kanematsu Group’s Value Creation

Added
value

Added value

Investment in innovation (seeds)• Build next-generation business models centered on value creation and reinforce
distribution networks• Bring in new technologies and business models through innovation investment anddevelop businesses in both product and service areas

A Word from Our Business Partner

Our relationship with Kanematsu started in
1983, when we began doing business withmajor overseas motorcycle manufacturers.
Over the four decades since, we haveworked together to expand our sales channels, cultivating new customers and making
new product proposals. We have also established joint-venture plants in Europe andAsia, with Kanematsu involved in management. Sharing good times and bad, andweathering many changes in the external

environment, from economic downturns toshifts in competitors, we have built a strong
partnership. This year, we have decided tojointly invest in a new carbon nanotube
manufacturer. We are very pleased to be
taking on this new business area together,and we look forward to seeing theKanematsu Group utilize its wide-ranging
sales channels and expertise in support ofthis new endeavor.

Yoshifumi Fuchigami
Managing Officer
F.C.C. Co., Ltd.

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